Why are the Costco and JetBlue loans no longer included in the USCS 'held for investment' figures?

Effective December 1, 2015, American Express reclassified these cobrand loans to 'held for sale' on its Consolidated Balance Sheets. This change impacts the composition of the USCS segment's 'held for investment' portfolio and means these specific loans are no longer reported within that category.

How do the presented delinquency and write-off rates compare to previous periods given the reclassification?

The reclassification of the Costco and JetBlue loans means direct year-over-year comparisons using the 'Total loans held for investment' figures may be misleading. However, the trends within the *remaining* USCS 'held for investment' portfolio show stable 30-day delinquency rates (1.0%) and a slightly declining net write-off rate (from 1.6% to 1.4%) over the periods presented.

What is the difference between the USCS 'held for investment' data and the Lending Trust data?

The USCS 'held for investment' data represents a broader mix of securitized and non-securitized loans within that segment. The Lending Trust data is specific to loans securitized through the American Express Credit Account Master Trust and may have different characteristics, reporting mechanics (e.g., use of average vs. end-of-period balances for write-offs), and thus can show different credit performance on a month-to-month basis.

Are the credit quality metrics improving or deteriorating based on this report?

For the USCS 'held for investment' portfolio, credit quality appears stable with a consistent 1.0% 30-day delinquency rate and a slight improvement in the net write-off rate to 1.4%. However, the Lending Trust data shows a slight increase in its annualized default rate from 1.1% to 1.4% over the same reporting periods.

AXP 8-K: Regulation FD — Mar 15, 2016

Summary

This 8-K filing from American Express (AXP) on March 15, 2016, provides updated delinquency and write-off statistics for its U.S. Consumer Services (USCS) operating segment's card member loans held for investment. Notably, the company reclassified significant loan portfolios related to its Costco and JetBlue cobrand partnerships to 'held for sale' as of December 1, 2015. This reclassification impacts the comparability of prior period data, as these loans are no longer included in the USCS segment's 'held for investment' figures. The filing also provides data on the American Express Credit Account Master Trust, highlighting some differences in how credit performance is reported compared to the USCS segment.

Key Highlights

1Updated delinquency and write-off statistics for USCS segment's card member loans held for investment are provided for February 2015 through February 2016.
2Effective December 1, 2015, Costco and JetBlue cobrand loans were reclassified from 'held for investment' to 'held for sale' within the USCS segment.
3This reclassification impacts the reported 'Total loans held for investment' for the company, showing a decrease from $49.2 billion in Feb 2015 to $41.7 billion in Feb 2016.
4The 30-day past due rate for USCS loans held for investment remained stable at 1.0% for the periods presented.
5The net write-off rate (principal only) for USCS loans held for investment remained stable at 1.4% for the latest three periods (Dec 2015, Jan 2016, Feb 2016), down from 1.6% in Feb 2015.
6The filing also presents credit performance data for the American Express Credit Account Master Trust, noting potential differences in reporting methodology compared to the USCS segment.
7Annualized default rates for the Lending Trust increased from 1.1% in December 2015 to 1.4% in February 2016.

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Mar 15, 2016)

Summary

Key Highlights

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