8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Feb 17, 2015)

Filed February 17, 2015For 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 of November and December 2014, and January 2015. The data primarily focuses on the Card Member lending portfolio. Investors should note that while overall 30-day delinquency rates remained stable at 1.0% of total loans, there was a slight fluctuation in net write-off rates. Of particular importance to investors is the disclosed change in charge-off timing for certain modified loans, moving from 180 days past due to 120 days past due starting January 2015. This change, if excluded, would have kept the January 2015 net write-off rate at 1.3% instead of the reported 1.4%. The filing also includes similar statistics for the American Express Credit Account Master Trust, which may differ from the total USCS portfolio due to variations in loan characteristics and reporting methodologies.

Key Highlights

  • 1Stable 30-day delinquency rate of 1.0% for the USCS Card Member lending portfolio across November 2014, December 2014, and January 2015.
  • 2Net write-off rate (principal only) for USCS was 1.4% in November 2014, 1.3% in December 2014, and 1.4% in January 2015.
  • 3Change in charge-off timing policy for certain modified loans from 180 to 120 days past due, effective January 2015.
  • 4Excluding the timing change, the January 2015 USCS net write-off rate would have remained at 1.3%.
  • 5Total loans in the USCS Card Member lending portfolio saw a slight increase from $59.9 billion in November 2014 to $62.6 billion in December 2014, before decreasing to $60.4 billion in January 2015.
  • 6Credit performance data for the American Express Credit Account Master Trust is also provided, showing consistent annualized default rates.
  • 7The reported statistics include both securitized and non-securitized Card Member loans within the USCS total portfolio.

Frequently Asked Questions

The primary purpose of this 8-K filing is to provide investors with updated statistics on the delinquency and write-off rates for American Express's U.S. Card Services (USCS) operating segment's lending portfolio, covering the months of November and December 2014, and January 2015. It also details a change in accounting policy regarding charge-offs.

The 30-day delinquency rate has remained consistently at 1.0% of total loans. The net write-off rate (principal only) saw a slight increase to 1.4% in January 2015, up from 1.3% in December 2014 and 1.4% in November 2014. However, it's important to note that this January figure is influenced by a change in how charge-offs are recognized for certain modified loans.

The change in charge-off timing from 180 days past due to 120 days past due for certain modified loans starting in January 2015 means that loans are now being written off sooner. If this accounting change were not made, the reported net write-off rate for January 2015 would have been 1.3%, consistent with the previous month, rather than the reported 1.4%. This change can impact the reported write-off figures but doesn't necessarily reflect a deterioration in underlying loan performance.

No, the filing explicitly states that the statistics for the USCS total portfolio and the American Express Credit Account Master Trust (Lending Trust) may differ. This is due to variations in loan characteristics (e.g., mix, vintage, inclusion of small business loans in the non-securitized portion) and differences in calculation methodologies and reporting periods between the total portfolio and the securitized trust.