What is the significance of the $758 million reclassification of Lowe's cobrand portfolio loans?

This reclassification means that these loans are no longer considered part of American Express's "held for investment" portfolios. Investors should focus on the credit performance of the remaining "held for investment" loans as presented, as the loans held for sale have different accounting and risk profiles.

Are the increasing net write-off rates a cause for concern?

While the net write-off rates have shown a slight upward trend, they remain within historical ranges for the company and are presented separately for Consumer and Small Business segments. The 30-day delinquency rates have been stable. Investors should continue to monitor these trends, especially in conjunction with economic conditions, but the current increase does not appear to be an immediate cause for alarm based solely on this filing.

How do the Lending Trust's default rates compare to the overall portfolio's write-off rates?

The filing explicitly states that the Lending Trust's statistics may differ from the broader U.S. Consumer and U.S. Small Business portfolios. The Lending Trust's annualized default rate has increased from 1.2% to 1.8%, while the overall portfolio's net write-off rates have also increased but at slightly different magnitudes and ending points. The differences arise from loan mix, vintage, aging, and calculation methods, so direct month-over-month comparisons should be made with caution.

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

This metric refers to the rate at which loans are deemed uncollectible and written off, calculated based on the principal balance of the loan only, excluding any accrued interest or fees. This provides a clearer picture of the principal losses incurred by the company.

AXP 8-K: Regulation FD — Mar 17, 2025

01—Abstract

Summary

Summary of the 8-K filed March 17, 2025. Cited figures are marked; the original filing is the authoritative source.

American Express Company (AXP) has filed an 8-K report providing updated delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for the periods ending February 28, 2025, January 31, 2025, and December 31, 2024.

The filing also includes credit performance data for the American Express Credit Account Master Trust. Investors should note a reclassification of $758 million^a in Card Member loans related to the Lowe's small business cobrand portfolio to "held for sale" as of December 1, 2024, which are not included in the presented "held for investment" statistics. Overall, the data indicates a stable, albeit slightly increasing, net write-off rate for both the U.S. Consumer and U.S. Small Business portfolios in the most recent period.

The 30-day delinquency rates remained consistent across all reporting periods. The Lending Trust data shows a rising annualized default rate, which warrants monitoring, although it is presented separately from the broader portfolio statistics.

02—Key points

Key Highlights

Total U.S. Card Member loans (held for investment) decreased from $122.2 billion at December 31, 2024, to $118.0 billion at February 28, 2025.
The net write-off rate for the U.S. Consumer portfolio increased to 2.5% for the month ending February 28, 2025, up from 2.1% in December 2024.
The net write-off rate for the U.S. Small Business portfolio also saw an increase, reaching 2.6% for the month ending February 28, 2025, compared to 2.4% in December 2024.
30-day past due rates remained stable: 1.4% for U.S. Consumer and 1.5%-1.6% for U.S. Small Business throughout the reported periods.
$758 million of Card Member loans related to the Lowe's small business cobrand portfolio were reclassified to "held for sale" effective December 1, 2024, and are excluded from the furnished statistics.
The American Express Credit Account Master Trust experienced an increase in its annualized default rate, net of recoveries, from 1.2% in December 2024 to 1.8% in February 2025.
The filing clarifies that Lending Trust statistics may differ from broader portfolio data due to loan characteristics, calculation methodologies, and securitization mechanics.

03—Questions

Frequently Asked Questions

What is the significance of the $758 million reclassification of Lowe's cobrand portfolio loans?
This reclassification means that these loans are no longer considered part of American Express's "held for investment" portfolios. Investors should focus on the credit performance of the remaining "held for investment" loans as presented, as the loans held for sale have different accounting and risk profiles.
Are the increasing net write-off rates a cause for concern?
While the net write-off rates have shown a slight upward trend, they remain within historical ranges for the company and are presented separately for Consumer and Small Business segments. The 30-day delinquency rates have been stable. Investors should continue to monitor these trends, especially in conjunction with economic conditions, but the current increase does not appear to be an immediate cause for alarm based solely on this filing.
How do the Lending Trust's default rates compare to the overall portfolio's write-off rates?
The filing explicitly states that the Lending Trust's statistics may differ from the broader U.S. Consumer and U.S. Small Business portfolios. The Lending Trust's annualized default rate has increased from 1.2% to 1.8%, while the overall portfolio's net write-off rates have also increased but at slightly different magnitudes and ending points. The differences arise from loan mix, vintage, aging, and calculation methods, so direct month-over-month comparisons should be made with caution.
What does 'Net write-off rate – principal only' mean?
This metric refers to the rate at which loans are deemed uncollectible and written off, calculated based on the principal balance of the loan only, excluding any accrued interest or fees. This provides a clearer picture of the principal losses incurred by the company.

04—Continue

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