What is the main purpose of this 8-K filing?

The primary purpose of this 8-K filing is to provide investors with timely updates on American Express's credit quality by disclosing key delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member loan portfolios, as well as for its securitized assets held in the American Express Credit Account Master Trust.

Are the write-off rates increasing significantly?

The net write-off rates for both U.S. Consumer and U.S. Small Business Card Member loans show a modest increase from September to November 2019, with the consumer portfolio moving from 2.0% to 2.4% and the small business portfolio from 1.7% to 2.0%. While an increase, these figures are generally within historical ranges for such portfolios and do not represent a sharp deterioration at this point.

How do the reported portfolio statistics differ from the Lending Trust statistics?

The filing explicitly states that the Card Member loans securitized through the Lending Trust may not have identical characteristics to the total U.S. Consumer or U.S. Small Business Card Member loan portfolios. Differences in loan mix, vintage, aging, and the calculation methods for write-off rates (e.g., using end-of-period principal balances for the Trust vs. average balances for the total portfolios) can lead to variations in reported credit performance between the two sets of data.

What does 'net write-off rate – principal only' mean?

This metric refers to the rate at which loans are written off as uncollectible, specifically calculated based on the principal amount of the loan. It excludes any accrued interest or fees that may be outstanding, providing a clearer view of the loss on the original borrowed amount.

AXP 8-K: Regulation FD — Dec 16, 2019

Summary

This 8-K filing by American Express (AXP) on December 16, 2019, provides investors with updated credit performance statistics for its U.S. Consumer Card Member and U.S. Small Business Card Member lending portfolios, as well as for the American Express Credit Account Master Trust. The report covers the periods ending November 30, October 31, and September 30, 2019. These disclosures offer a glimpse into the company's credit quality and risk management, which are crucial metrics for evaluating the health of a financial services firm like American Express. Key data points include delinquency rates (30 days past due) and net write-off rates. While the reported statistics show a slight uptick in net write-off rates for both consumer and small business portfolios in November compared to prior months, the overall figures remain at levels that suggest stable credit performance. The filing also clarifies the distinction between the aggregate loan portfolios and securitized assets within the Lending Trust, noting potential differences in reporting metrics.

Key Highlights

1Furnishes updated delinquency and write-off statistics for U.S. Consumer and U.S. Small Business Card Member lending portfolios for September, October, and November 2019.
2U.S. Consumer Card Member loans totaled $60.4 billion, $60.0 billion, and $59.7 billion as of November 30, October 31, and September 30, 2019, respectively.
3U.S. Small Business Card Member loans totaled $13.8 billion, $13.7 billion, and $13.4 billion as of the same dates.
4The net write-off rate for the U.S. Consumer Card Member portfolio increased from 2.0% in September to 2.4% in November.
5The net write-off rate for the U.S. Small Business Card Member portfolio increased from 1.7% in September to 2.0% in November.
6Provides credit performance data for the American Express Credit Account Master Trust, including annualized default rates, which remained stable at 1.5% or 1.7% over the reporting periods.
7Clarifies that loan characteristics and reporting methodologies may differ between the total portfolios and the securitized assets within the Lending Trust.

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Dec 16, 2019)

Summary

Key Highlights

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