What is the main takeaway from the updated delinquency and write-off statistics?

The main takeaway is that while American Express saw a slight increase in its net write-off rate in February 2010, this was anticipated and is expected to moderate in the following quarters. The company is managing credit risk in line with its previous forecasts and expects credit performance to improve in the second quarter of 2010.

How does the "Total portfolio" data differ from the "Non-securitized portfolio" data?

The "Total portfolio" (previously referred to as 'managed basis') reflects all cardmember loans, including both securitized and non-securitized loans, on a GAAP basis as of January 1, 2010. The "Non-securitized portfolio" (previously 'owned basis') reflects only loans that have not been securitized. American Express states it will generally no longer report metrics solely for the non-securitized portfolio starting January 2010.

What factors could affect American Express's future write-off rates?

Future write-off rates could be affected by the broader economic environment, including unemployment rates and the housing market, which impact consumer and small business spending and ability to repay debt. The effectiveness of the company's credit models, its strategies for managing delinquent accounts, and the actual levels of future delinquencies, recoveries, and bankruptcy filings are also key factors.

Why did the annualized default rate for the Credit Account Master Trust increase in the period ending February 22, 2010?

The filing suggests the increase in the annualized default rate for the Trust in the period ending February 22, 2010, was partly due to a shorter reporting period (28 days) compared to the prior period (32 days), which can impact the calculation of this metric on an annualized basis.

AXP 8-K: Regulation FD — Mar 15, 2010

Summary

This 8-K filing from American Express (AXP) on March 15, 2010, provides updated delinquency and write-off statistics for its U.S. Card Services (USCS) operating segment as of December 31, 2009, and January 31 and February 28, 2010. The report indicates a sequential increase in the net write-off rate for the total USCS lending portfolio in February 2010, reaching 7.4%. This increase is noted as being consistent with prior company disclosures regarding potential increases in the first quarter of 2010. Despite the short-term uptick, American Express reiterates its expectation that the USCS lending net write-off rate for the first quarter of 2010 will likely be similar to the fourth quarter of 2009. Furthermore, the company anticipates a lower net write-off rate in the second quarter of 2010, assuming existing trends in past-due accounts, recoveries, and bankruptcies continue. The filing also provides data for the American Express Credit Account Master Trust, showing an annualized default rate of 7.8% for the period ending February 22, 2010.

Key Highlights

1USCS lending net write-off rate increased to 7.4% in February 2010, up from 7.0% in January 2010 and 7.1% in December 2009.
2The February 2010 increase in the net write-off rate aligns with previous company guidance for sequential increases in Q1 2010.
3American Express expects the Q1 2010 USCS net write-off rate to be similar to Q4 2009, assuming stable delinquency, recovery, and bankruptcy trends.
4The company anticipates a decrease in the net write-off rate for the second quarter of 2010.
5The total loan portfolio for USCS decreased from $52.6 billion in December 2009 to $49.2 billion in February 2010.
6The American Express Credit Account Master Trust reported an annualized default rate, net of recoveries, of 7.8% for the period ending February 22, 2010.

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Mar 15, 2010)

Summary

Key Highlights

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