What is the main purpose of this 8-K filing?

The main purpose of this filing is to provide investors with preliminary delinquency and write-off statistics for American Express's U.S. Card Services (USCS) portfolio and its securitized lending trust for the months of July, August, and September 2010, and for the third quarter of 2010. This offers an early look at credit performance.

Are the credit performance numbers for the USCS portfolio and the Lending Trust the same?

No, they are not necessarily the same. The USCS portfolio statistics represent the total lending portfolio, including both securitized and non-securitized loans. The Lending Trust statistics pertain only to securitized loans. Differences can arise due to factors like the mix of loans (e.g., small business loans in the non-securitized portion), vintage of loans, and different calculation methodologies for write-off rates and reporting periods.

What does the trend in the net write-off rate suggest about AXP's credit quality?

The declining net write-off rate for the USCS portfolio, particularly the drop to 4.7% in September 2010, suggests an improvement in credit quality or a stabilization of credit losses towards the end of the third quarter of 2010. This is a positive sign for investors concerned about potential loan defaults.

What does the data indicate about potential loan defaults?

The data indicates a trend towards improvement or stabilization. The 30-day delinquency rates remained relatively stable, and the net write-off rates, especially in September, showed a decline. The annualized default rate for the securitized trust also decreased. This suggests that the rate of customers falling behind on payments and the company having to write off bad debt was moderating or improving during this period.

AXP 8-K: Regulation FD — Oct 15, 2010

Summary

This 8-K filing from American Express Co. (AXP) provides preliminary delinquency and write-off rate statistics for its U.S. Card Services (USCS) operating segment for the months of July, August, and September 2010, as well as for the third quarter of 2010. The data reveals a stabilization and slight improvement in credit performance towards the end of the third quarter. Specifically, the net write-off rate for the USCS portfolio decreased to 4.7% in September, down from 5.5% in July and August. Similarly, the percentage of loans 30 days past due remained relatively stable, hovering around 2.4% to 2.6%. Additionally, the report includes information on the American Express Credit Account Master Trust, which represents securitized cardmember loans. While the total USCS portfolio includes both securitized and non-securitized loans, the trust's data offers insight into a significant portion of the company's lending book. The trust data also shows a declining annualized default rate, falling to 5.3% in the period ending September 24, 2010, and a reduction in the total 30+ days delinquent amount. Investors should note that while the two data sets are related, they may differ due to various factors including loan mix and calculation methodologies, as detailed in the filing.

Key Highlights

1Preliminary net write-off rate for U.S. Card Services (USCS) improved in September 2010, decreasing to 4.7% from 5.5% in July and August.
2Total loans in the USCS portfolio were $48.7 billion as of September 30, 2010, down slightly from $49.6 billion in August.
3The percentage of USCS loans 30 days past due remained relatively stable, fluctuating between 2.4% and 2.6% across the reported months.
4The American Express Credit Account Master Trust (securitized loans) reported a declining annualized default rate, reaching 5.3% for the period ending September 24, 2010.
5The total 30+ days delinquent amount for the securitized trust decreased to $0.8 billion as of September 24, 2010.
6The filing clarifies that USCS total portfolio data includes both securitized and non-securitized loans, and may differ from the securitized trust data due to loan mix and calculation methods.

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

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Key Highlights

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