8-KRegulation FD

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

Filed November 15, 2010For Securities:AXP

Summary

This 8-K filing from American Express Company (AXP) provides an update on the credit performance of its U.S. Card Services (USCS) operating segment for the months ending August 31, September 30, and October 31, 2010. Investors should note the delinquency and net write-off rates, which are key indicators of credit risk. The filing also includes specific data for the American Express Credit Account Master Trust, which is a significant portion of the securitized loan portfolio. The data indicates a slight increase in 30-day delinquencies in September before a decrease in October, while net write-off rates remained stable at 4.7% for September and October, down from 5.5% in August. These figures offer insight into the company's ability to manage credit risk and the overall health of its lending portfolio during a period of economic recovery.

Key Highlights

  • 1AXP is providing updated delinquency and write-off statistics for its U.S. Card Services (USCS) lending portfolio for August, September, and October 2010.
  • 2Total cardmember loans in USCS were approximately $49.6 billion in August, $48.7 billion in September, and $49.1 billion in October 2010.
  • 3The 30-day past due loan rate for USCS was 2.4% in August, increased to 2.5% in September, and decreased to 2.3% in October 2010.
  • 4The net write-off rate for USCS was 5.5% in August, significantly decreasing to 4.7% in September and remaining at 4.7% in October 2010.
  • 5Data for the American Express Credit Account Master Trust shows an annualized default rate (net of recoveries) of 5.4% in late July 2010, decreasing to 5.3% in late August, and further decreasing to 4.5% in late September 2010.
  • 6The filing clarifies that USCS total portfolio statistics include both securitized and non-securitized loans, and may differ from the Trust's data due to various portfolio characteristics and calculation methodologies.

Frequently Asked Questions

The primary purpose of this 8-K filing is to provide investors with timely updates on the credit quality of American Express's U.S. Card Services lending portfolio, specifically detailing delinquency and net write-off rates for August, September, and October 2010.

For the U.S. Card Services portfolio, the 30-day delinquency rate showed a slight increase in September (2.5%) before improving in October (2.3%), returning to a level below August's (2.4%). The net write-off rate saw a significant improvement from 5.5% in August to a stable 4.7% in September and October.

The American Express Credit Account Master Trust represents a significant portion of the company's securitized loans. The data provided for the Trust, such as its annualized default rate, offers a granular view of credit performance within this specific segment of the portfolio, which can differ from the overall USCS portfolio due to varying loan characteristics and reporting methods.

The differences arise because the USCS total portfolio includes both securitized and non-securitized loans, and may have different loan mixes (e.g., small business loans in non-securitized portions). Additionally, the calculation methodologies for write-off rates and the reporting periods themselves can vary between the total portfolio and the specific Trust's reporting (Form 10-D), leading to potential month-to-month divergences.