8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Mar 16, 2020)

Filed March 16, 2020For Securities:AXP

Summary

This 8-K filing from American Express (AXP) provides an update on delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios as of February 29, 2020, and January 31, 2020, compared to December 31, 2019. The report aims to offer additional insights beyond the data typically reported through the American Express Credit Account Master Trust. Overall, the statistics indicate stable credit performance across both consumer and small business segments during the reported periods, with slight fluctuations in total loan balances but consistent delinquency and write-off rates. This information is particularly relevant for investors to assess the company's credit risk management in the period leading up to the onset of widespread economic uncertainty.

Key Highlights

  • 1U.S. Consumer Card Member loans saw total loan balances decrease from $62.4 billion in December 2019 to $59.1 billion in February 2020.
  • 2The 30 days past due rate for U.S. Consumer Card Member loans remained stable at 1.6% across all reported periods.
  • 3The net write-off rate for U.S. Consumer Card Member loans increased slightly from 2.3% in January 2020 to 2.6% in February 2020, but was lower than 2.5% in December 2019.
  • 4U.S. Small Business Card Member loans showed a modest increase in total loan balances from $13.7 billion in December 2019 to $14.0 billion in February 2020.
  • 5The 30 days past due rate for U.S. Small Business Card Member loans remained consistent at 1.3% throughout the reported periods.
  • 6The net write-off rate for U.S. Small Business Card Member loans was stable at 1.9% for January and February 2020, down from 2.1% in December 2019.
  • 7Data for the American Express Credit Account Master Trust shows a slight decrease in the ending total principal balance and a marginal increase in the annualized default rate, net of recoveries, in February 2020 compared to January 2020.

Frequently Asked Questions

This 8-K filing is primarily to provide investors with updated delinquency and write-off statistics for American Express's U.S. Consumer and U.S. Small Business Card Member lending portfolios for the months of December 2019, January 2020, and February 2020. This information is furnished in addition to data typically reported through the company's Lending Trust.

The filing clarifies that the Card Member loans securitized through the Lending Trust may have different characteristics than the total U.S. Consumer or U.S. Small Business loan portfolios. Differences can arise from the mix, vintage, and aging of loans, as well as calculation methodologies (e.g., using end-of-period principal balances for write-off statistics in the Lending Trust versus average loan balances for the overall portfolios).

For the U.S. Consumer Card Member portfolio, total loans decreased, while the 30-day delinquency rate remained stable at 1.6%. The net write-off rate saw a slight increase in February 2020 but remained below the December 2019 level. For the U.S. Small Business portfolio, total loans increased slightly, with a consistently low 30-day delinquency rate of 1.3% and a stable or decreasing net write-off rate.

For the Lending Trust, the ending total principal balance decreased from December 2019 through February 2020. The annualized default rate, net of recoveries, saw a slight increase in February 2020 to 1.9% compared to the previous two months, while the 30+ days delinquent amount remained stable at $0.3 billion.