What is the 'managed basis' presentation and why does American Express use it?

The 'managed basis' presentation includes all cardmember loans, both those on the balance sheet ('owned basis') and those that have been securitized and removed from the balance sheet. American Express uses this method because management believes it provides a more comprehensive and accurate portrayal of the key dynamics and performance trends of their U.S. cardmember lending business over time, as it reflects the full portfolio performance regardless of securitization.

Are delinquency rates improving or worsening for American Express?

Delinquency rates, specifically the percentage of loans that are 30 days past due, showed a slight improvement over the period presented. On a managed basis, this figure decreased from 5.1% at the end of March 2009 to 4.7% at the end of May 2009. This indicates a modest positive trend in borrowers meeting their payment obligations within the 30-day window.

What do the net write-off rates indicate about credit quality?

The net write-off rates remained high, around 10%, during this period, suggesting that a significant portion of the outstanding loan balances were deemed unrecoverable. While there was a slight decrease from April to May (10.1% to 10.0%), these elevated rates reflect the challenging economic environment and its impact on consumer creditworthiness. The company also noted that sales of previously written-off loans in March and May improved the reported net write-off rates for those months.

How does the performance of the securitized portfolio (Lending Trust) compare to the overall managed portfolio?

The filing indicates that the performance of the American Express Credit Account Master Trust (representing the securitized portfolio) may differ from the overall managed portfolio on a month-to-month basis. For the periods presented, the annualized default rate in the Lending Trust increased from 9.7% to 10.4%, while 30+ day delinquencies decreased. The company attributes potential differences to factors such as loan mix, vintage, and reporting period variations.

AXP 8-K: Regulation FD — Jun 15, 2009

Summary

American Express Company (AXP) filed an 8-K on June 15, 2009, to provide investors with updated delinquency and write-off statistics for its U.S. Card Services operating segment for the months of March, April, and May 2009. The company emphasized its use of a 'managed basis' presentation, which includes securitized loans, to offer a more comprehensive view of its U.S. cardmember lending business. Key trends observed across the three months show a slight improvement in delinquency rates, with 30-day past due loans as a percentage of total loans decreasing from 5.1% to 4.7% on a managed basis. However, net write-off rates remained elevated, hovering around 10%, though a slight dip was noted from April to May. The filing also provides comparative data for the American Express Credit Account Master Trust, showing a stable annualized default rate and a decrease in 30+ day delinquencies.

Key Highlights

1AXP is providing updated delinquency and write-off statistics for U.S. Card Services as of March 31, April 30, and May 31, 2009.
2The company continues to emphasize the 'managed basis' presentation, which includes securitized loans, for a more comprehensive view of its lending business.
3On a managed basis, 30-day past due loans as a percentage of total loans decreased from 5.1% in March to 4.7% in May 2009.
4Net write-off rates on a managed basis remained elevated, around 10%, with a slight decrease from 10.1% in April to 10.0% in May.
5The filing includes data for the American Express Credit Account Master Trust, showing an annualized default rate that increased slightly from 9.9% to 10.4% and a decrease in 30+ day delinquencies.
6AXP sold previously written-off cardmember loans in March and May 2009, treating the proceeds as recoveries, which positively impacted reported net write-off rates for those months.

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

Summary

Key Highlights

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