8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Jun 15, 2011)

Filed June 15, 2011For Securities:AXP

Summary

This 8-K filing from American Express (AXP) provides updated delinquency and write-off statistics for its U.S. Card Services (USCS) operating segment for the months ending March 31, April 30, and May 31, 2011. The data indicates a positive trend in credit quality, with both the 30-day past due loan rate and the net write-off rate declining sequentially over the reported period. Total loans in the USCS portfolio also showed a slight increase, suggesting continued portfolio growth. Furthermore, the filing includes comparable credit performance data for the American Express Credit Account Master Trust (Lending Trust), which is a portion of the overall USCS portfolio. While the Lending Trust also shows improved credit metrics, the company notes that direct month-to-month comparisons between the total USCS portfolio and the Lending Trust can be influenced by differences in loan mix, securitization mechanics, and reporting period timing. Investors should note the general downward trend in delinquencies and write-offs as a positive indicator of the company's credit risk management.

Key Highlights

  • 1Delinquency rate (30+ days past due) for U.S. Card Services declined from 1.8% in March 2011 to 1.6% in May 2011.
  • 2Net write-off rate for U.S. Card Services decreased from 3.7% in March 2011 to 3.2% in May 2011.
  • 3Total loans in the U.S. Card Services portfolio grew from $49.2 billion in March 2011 to $50.3 billion in May 2011.
  • 4The American Express Credit Account Master Trust also showed a declining annualized default rate, falling from 3.9% to 3.2% over its reporting periods.
  • 5The filing clarifies potential differences in reported credit performance between the total USCS portfolio and the securitized Lending Trust due to varying methodologies and loan compositions.
  • 6These statistics are furnished in accordance with Regulation FD to provide additional, timely information on credit portfolio performance.

Frequently Asked Questions

The primary purpose of this 8-K filing is to furnish updated delinquency and write-off statistics for American Express's U.S. Card Services (USCS) operating segment, as well as for the American Express Credit Account Master Trust. This provides investors with more current information on the company's credit portfolio performance beyond their regular financial reports.

The trends presented in the filing are positive. Both the 30-day delinquency rate and the net write-off rate for the USCS segment showed sequential declines from March to May 2011. This indicates improving credit quality and potentially lower future loan losses for the company.

The filing presents data separately because the Lending Trust represents only a portion (securitized loans) of the total USCS portfolio (which includes both securitized and non-securitized loans). The company notes that differences in loan mix, accounting methods, and reporting periods can cause the credit performance of the Lending Trust to vary from the overall USCS portfolio on a month-to-month basis.

The increase in 'Total Loans' from $49.2 billion to $50.3 billion in the USCS portfolio suggests that American Express is continuing to extend credit and grow its lending business. This growth, coupled with declining delinquency and write-off rates, indicates a healthy expansion of the loan portfolio.