Business Context and Reporting Period
This Form 8-K, filed on November 15, 2013, by American Express Company, provides Regulation FD disclosure regarding delinquency and write-off statistics for the U.S. Card Services (USCS) operating segment. The data covers the months ended August 31, September 30, and October 31, 2013.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | Aug 31, 2013 | Sep 30, 2013 | Oct 31, 2013 |
|---|---|---|---|
| Total Loans ($ Billions) | 55.0 | 54.5 | 54.9 |
| Average Loans ($ Billions) | 54.8 | 54.7 | 54.7 |
| 30+ Days Past Due (%) | 1.0% | 1.1% | 1.1% |
| Net Write-off Rate (Principal Only, %) | 1.7% | 1.6% (Corrected) | 1.5% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | Jul 26 - Aug 25 | Aug 26 - Sep 24 | Sep 25 - Oct 25 |
|---|---|---|---|
| Ending Principal Balance ($ Billions) | 29.5 | 29.0 | 28.8 |
| Defaulted Amount, Net of Recoveries ($ Billions) | 0.1 | 0.1 | 0.1 |
| Annualized Default Rate, Net of Recoveries (%) | 1.8% | 1.7% (Corrected) | 1.6% |
| Total 30+ Days Delinquent ($ Billions) | 0.3 | 0.3 | 0.4 |
Material Changes and Corrections
- USCS Write-off Correction: The net write-off rate for September 2013 was corrected from a previously reported 1.7% to 1.6%.
- Lending Trust Default Rate Correction: The annualized default rate for the period ending September 24, 2013, was corrected from a previously reported 1.8% to 1.7%.
- Trend Analysis: The USCS net write-off rate showed a declining trend from 1.7% in August to 1.5% in October. Conversely, the 30+ days past due ratio increased slightly from 1.0% to 1.1% over the same period.
Management Commentary and Risks
The filing clarifies that USCS statistics include both securitized and non-securitized loans, whereas the Lending Trust reports only on securitized loans. Management notes that credit performance between the two may differ due to:
- Differences in loan mix and vintage (e.g., a larger proportion of small business loans in the non-securitized portfolio).
- Differences in reporting periods (calendar month for USCS vs. specific monthly cycles for the Trust).
- Calculation mechanics, specifically the use of end-of-period balances for the Trust versus average balances for the total portfolio.
Investor Verification Checklist
- Verify the corrected September 2013 net write-off rate (1.6%) and annualized default rate (1.7%) against prior filings.
- Monitor the divergence between the declining write-off rates and the slight increase in 30+ days delinquency ratios.
- Review the composition of the non-securitized portfolio to understand its impact on overall credit metrics compared to the Lending Trust.
- Confirm the specific reporting period definitions used for the Lending Trust versus the USCS total portfolio to ensure accurate period-over-period comparisons.