Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on November 15, 2012, pursuant to Item 7.01 (Regulation FD Disclosure). The report provides supplemental delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment for the months ended August 31, September 30, and October 31, 2012. It also includes comparative credit performance data for the American Express Credit Account Master Trust (the "Lending Trust") for its three most recent monthly reporting periods.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | August 31, 2012 | September 30, 2012 | October 31, 2012 |
|---|---|---|---|
| Total Loans (Billions) | $53.0 | $52.9 | $53.3 |
| Average Loans (Billions) | $52.8 | $52.9 | $53.1 |
| 30+ Days Past Due (% of Total) | 1.2% | 1.3% | 1.3% |
| Net Write-off Rate (Principal Only) | 2.0% | 1.9% | 1.9% |
Lending Trust Portfolio
| Metric | July 26 - Aug 25, 2012 | Aug 26 - Sep 24, 2012 | Sep 25 - Oct 25, 2012 |
|---|---|---|---|
| Ending Total Principal Balance (Billions) | $30.8 | $30.6 | $30.5 |
| Defaulted Amount, Net of Recoveries (Billions) | $0.1 | $0.1 | $0.1 |
| Annualized Default Rate, Net of Recoveries | 2.1% | 2.0% | 1.9% |
| Total 30+ Days Delinquent (Billions) | $0.4 | $0.4 | $0.4 |
Material Changes and Trends
- USCS Delinquency: The percentage of loans 30 days past due increased slightly from 1.2% in August to 1.3% in September and remained at 1.3% in October.
- USCS Write-offs: The net write-off rate (principal only) improved from 2.0% in August to 1.9% in September and held steady at 1.9% in October.
- Lending Trust Defaults: The annualized default rate for the Lending Trust declined sequentially from 2.1% to 2.0% and then to 1.9% over the three reporting periods.
- Portfolio Size: USCS total loans fluctuated slightly, ending October at $53.3 billion, while the Lending Trust principal balance decreased slightly to $30.5 billion.
Management Commentary and Risks
The filing clarifies that the USCS statistics cover the total portfolio of cardmember loans (both securitized and non-securitized) in accordance with U.S. GAAP, whereas the Lending Trust data covers only securitized loans. Management notes that credit performance between the two may differ month-to-month due to:
- Differences in loan mix and vintage (e.g., a larger proportion of small business loans in the non-securitized portion).
- Differences in reporting periods (calendar month for USCS vs. specific monthly cycles for the Lending Trust).
- Calculation mechanics, such as the use of end-of-period balances for the Lending Trust versus average loan balances for the total portfolio.
The filing does not provide specific guidance, outlook, or commentary on future financial performance beyond the historical data presented.
Key Facts for Investor Verification
- Verify the distinction between the total USCS portfolio metrics and the Lending Trust metrics, as they are not directly comparable due to portfolio composition and calculation methods.
- Confirm the trend of the net write-off rate stabilizing at 1.9% for the USCS segment in Q3 2012.
- Note that the 30+ days delinquent rate for the USCS segment ticked up to 1.3% in September and October.
- Review the Lending Trust's annualized default rate improvement to 1.9% in the period ending October 25, 2012.