What is the "managed basis" versus "owned basis" for presenting loan data?

The "owned basis" is a GAAP measurement reflecting only cardmember loans included on the company's consolidated balance sheets. The "managed basis" presentation includes all securitized cardmember loans and related income as if they were on the balance sheet, providing a more comprehensive view of the lending business as management sees and manages it, especially when accounting for securitization activities.

Are the reported delinquency and write-off rates improving or worsening?

The statistics suggest a worsening trend, as anticipated by the company. The net write-off rate on a managed basis was 8.5% for the first quarter of 2009, and the American Express Credit Account Master Trust reported an increasing annualized default rate, reaching 9.7% by the end of March 2009. This aligns with the company's prior expectation of rising past-due loans and write-offs in early 2009.

Why do the statistics for the Credit Account Master Trust differ from the USCS managed basis?

The filing explains that the loans in the off-balance sheet Lending Trust may not have the same characteristics as the total managed portfolio of USCS loans. Differences can arise from variations in the mix and vintage of loans, the number of days in the reporting period, and how write-off statistics are calculated (end-of-period balances for the trust vs. average balances for managed statistics).

Did the sale of previously written-off loans in March 2009 impact the reported write-off rates?

Yes, the company notes that the net write-off rates reported for March 2009 and the first quarter of 2009 reflect the benefit of sale proceeds from certain previously written-off loans. These proceeds were treated as partial recoveries, thus reducing the net write-off figures for that period.

AXP 8-K: Regulation FD — Apr 15, 2009

Summary

This Form 8-K filing by American Express Company provides key delinquency and write-off statistics for its U.S. Card Services (USCS) operating segment for the months ending January 31, February 28, and March 31, 2009, as well as the first quarter of 2009. The report emphasizes the company's preferred "managed basis" presentation, which includes securitized loans, believing it offers investors a more comprehensive view of the business. As previously indicated, American Express anticipated a rise in past-due loans and write-offs in early 2009, and these preliminary statistics offer a snapshot of that trend. Investors should note that while the USCS managed basis shows a net write-off rate around 8.5% for the quarter, the "owned basis" (GAAP) figures indicate a slightly lower write-off rate for the same period, around 8.5% for the three months ended March 31, 2009. The filing also provides separate statistics for the American Express Credit Account Master Trust, which show an increasing annualized default rate, reaching 9.7% for the period ending March 26, 2009. The company highlights that these trust-level statistics may differ from the overall managed portfolio due to various factors including loan mix and reporting periods.

Key Highlights

1American Express is reporting preliminary delinquency and write-off statistics for its U.S. Card Services segment for the first quarter of 2009.
2The company continues to emphasize its "managed basis" reporting, which includes securitized loans, to provide a fuller picture of its lending business.
3The net write-off rate for the USCS managed basis for the three months ended March 31, 2009, was 8.5%.
4The owned basis (GAAP) net write-off rate for the same three-month period was also 8.5%.
5Total loans on a managed basis for USCS decreased from $59.5 billion in January 2009 to $56.5 billion by March 31, 2009.
6The American Express Credit Account Master Trust reported an increasing annualized default rate, reaching 9.7% for the period ending March 26, 2009.
7The company acknowledges that the trust-level credit performance may differ from the overall managed portfolio due to variations in loan characteristics and reporting methodologies.

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Apr 15, 2009)

Summary

Key Highlights

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