Summary
This 8-K filing from American Express Co. (AXP) on March 16, 2015, provides an update on the credit performance of its U.S. Card Services (USCS) operating segment for the months ending December 31, 2014, January 31, 2015, and February 28, 2015. The company is furnishing key delinquency and write-off statistics, which are important indicators of the health of its lending portfolio and potential future credit losses. Overall, the data indicates stable to slightly increasing net write-off rates and consistent 30-day delinquency rates within the USCS portfolio. While the total loan balances are declining, the net write-off rate has seen a modest uptick, particularly in February. The filing also provides separate data for the American Express Credit Account Master Trust, which shows a more pronounced increase in the annualized default rate, net of recoveries. Management notes a change in charge-off timing for certain modified loans, which affects these rates, and emphasizes that the trust's portfolio characteristics differ from the total USCS portfolio.
Key Highlights
- 1American Express provided updated delinquency and write-off statistics for its U.S. Card Services (USCS) segment for December 2014, January 2015, and February 2015.
- 2Total loans in the USCS lending portfolio decreased from $62.6 billion in December 2014 to $58.5 billion in February 2015.
- 3The 30-day past due loan rate remained stable at 1.0% across all three reported months for the USCS portfolio.
- 4The net write-off rate (principal only) for the USCS portfolio increased from 1.3% in December 2014 to 1.5% in February 2015.
- 5A change in the timing of charge-offs for certain modified loans (from 180 to 120 days past due) beginning January 16, 2015, impacted reported write-off and default rates.
- 6The American Express Credit Account Master Trust reported an increasing annualized default rate, net of recoveries, rising from 1.3% in the period ending December 25, 2014, to 1.7% in the period ending February 22, 2015.
- 7The company clarifies that the USCS total portfolio and the securitized Lending Trust portfolio have different characteristics, which can lead to variations in reported credit performance metrics.