What is the main takeaway from these credit statistics?

The main takeaway is that American Express is showing signs of improving credit quality within its U.S. Card Services lending portfolio. Both delinquency rates (30 days past due) and net write-off rates have decreased over the three-month period reported, indicating a positive trend in loan performance.

Why is American Express changing its reporting basis for the total portfolio?

Starting January 1, 2010, American Express is adopting a GAAP basis for its "Total Portfolio" measurement, which now includes both securitized and non-securitized cardmember loans. This change provides a more comprehensive view of the company's overall credit exposure under standard accounting principles and simplifies reporting by discontinuing the separate "non-securitized portfolio" (formerly "owned basis") metrics.

How do the Lending Trust statistics compare to the USCS total portfolio statistics?

While both sets of statistics generally show improving credit trends, they are not directly comparable month-to-month due to methodological differences. The USCS "Total Portfolio" uses average loan balances and a calendar month reporting period, whereas the Lending Trust uses end-of-period balances and a period typically starting around the 25th of the month. The Lending Trust also represents only the securitized portion of loans, which may have different characteristics than the overall portfolio.

Are these improvements significant given the economic environment at the time?

The reported improvements in delinquency and write-off rates are positive signs for American Express, suggesting their risk management strategies are effective. Given that this filing is from February 2010, it reflects credit performance during the aftermath of the 2008-2009 financial crisis. Any indication of declining credit losses would be viewed favorably by investors concerned about economic downturns and their impact on financial institutions.

AXP 8-K: Regulation FD — Feb 16, 2010

Summary

This 8-K filing by American Express Co. (AXP) on February 16, 2010, provides updated delinquency and write-off statistics for its U.S. Card Services (USCS) segment for the periods ending November 30, December 31, 2009, and January 31, 2010. The data reflects a general trend of improving credit quality within the company's cardmember lending portfolio. Specifically, the 30-day past due rates have seen a consistent decrease, and the net write-off rate has also trended downwards over the reported three-month period. Investors should note the shift in reporting basis starting January 1, 2010, where the "Total Portfolio" is now presented on a GAAP basis, encompassing both securitized and non-securitized loans. Prior to this, "managed basis" was used for the total portfolio, and "owned basis" for the non-securitized portion. The company also provides supplementary credit performance information for the American Express Credit Account Master Trust, which generally aligns with the positive credit trends observed in the USCS total portfolio, though direct month-to-month comparisons can vary due to methodological differences.

Key Highlights

1The 30-day past due rate for the USCS total portfolio decreased from 3.9% in November 2009 to 3.6% in January 2010.
2The net write-off rate for the USCS total portfolio also showed improvement, declining from 7.6% in November 2009 to 7.0% in January 2010.
3The total loan portfolio for USCS remained relatively stable, fluctuating between $50.9 billion and $52.6 billion over the reported periods.
4The non-securitized portfolio showed similar positive credit trends, with a decrease in the 30-day past due rate from 3.9% to 3.7% and a drop in the net write-off rate from 8.1% to 7.4% between November and December 2009.
5The company is transitioning to a GAAP basis for the "Total Portfolio" measurement starting January 1, 2010, which includes both securitized and non-securitized loans, and will no longer report the "non-securitized portfolio" separately.
6The American Express Credit Account Master Trust reported an annualized default rate, net of recoveries, that decreased from 7.5% in the period ending November 24, 2009, to 6.8% in the period ending January 25, 2010.
7The total 30+ days delinquent loans for the Lending Trust also saw a slight reduction, from $1.4 billion to $1.3 billion over the reported periods.

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Feb 16, 2010)

Summary

Key Highlights

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