<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exhibit99_1pressrelease.txt
<DESCRIPTION>EXHIBIT 99.1 PRESS RELEASE
<TEXT>
EXHIBIT 99.1
News Release News Release News Release News Release News Release News
[LOGO OF AMERICAN EXPRESS COMPANY]
Contacts: Media: Joanna Lambert Michael O'Neill
212-640-9668 212-640-5951
joanna.g.lambert@aexp.com mike.o'neill@aexp.com
Investors/Analysts: Alex Hopwood Ron Stovall
212-640-5495 212-640-5574
alex.w.hopwood@aexp.com ronald.stovall@aexp.com
--------------------------------------------------------------------------------
AMERICAN EXPRESS REPORTS EARNINGS FROM CONTINUING OPERATIONS OF
$342 MILLION; EPS OF $0.09 INCLUDES $0.18 REDUCTION FROM
REPURCHASE OF PREFERRED SHARES
<TABLE>
<CAPTION>
(Millions, except per share amounts)
Quarters Ended Percentage Six Months Ended Percentage
June 30, Inc/(Dec) June 30, Inc/(Dec)
-------- --------- -------- ---------
2009 2008 2009 2008
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Total Revenues Net of Interest Expense $ 6,092 $ 7,455 (18)% $ 12,018 $ 14,695 (18)%
Income From Continuing Operations $ 342 $ 660 (48)% $ 785 $ 1,704 (54)%
Loss From Discontinued Operations $ (5) $ (7) (29)% $ (11) $ (60) (82)%
Net Income $ 337 $ 653 (48)% $ 774 $ 1,644 (53)%
Earnings Per Common Share - Diluted:
Income From Continuing Operations
Attributable to Common Shareholders(1) $ 0.09 $ 0.56 (84)% $ 0.41 $ 1.46 (72)%
Loss From Discontinued Operations $ - $ - -% $ (0.01) $ (0.05) (80)%
Net Income Attributable to Common Shareholders(1)
$ 0.09 $ 0.56 (84)% $ 0.40 $ 1.41 (72)%
Average Diluted Common Shares Outstanding 1,165 1,163 - % 1,161 1,163 - %
Return on Average Equity 13.2% 31.1% 13.2% 31.1%
Return on Average Common Equity 12.0% 30.9% 12.0% 30.9%
--------------------------------------------------------------------------------
</TABLE>
---------------------------------
(1) Represents income from continuing operations or net income, as
applicable, less:
(i) accelerated preferred dividend accretion of $212 million for the
three and six months ended June 30, 2009 due to the repurchase of
$3.39 billion of preferred shares issued as part of the Capital
Purchase Program (CPP),
(ii) preferred shares dividends and related accretion of $22 million and
$94 million for the three and six months ended June 30, 2009, and
(iii) earnings allocated to participating share awards of $1 million and $3
million for the three-months ended June 30, 2009 and 2008,
respectively, and $5 million and $9 million for the six months ended
June 30, 2009 and 2008, respectively.
Excluding an $0.18 per share reduction from the repurchase of preferred shares
discussed above, adjusted diluted earnings per share from continuing
operations and net income were $0.27 for the three-months ended June 30, 2009
and $0.59 and $0.58 for the six-months ended June 30, 2009, respectively.
Management believes the adjusted earnings per share provides a useful metric
to evaluate the ongoing operating performance of the company.
-1-
<PAGE>
New York - July 23, 2009 - American Express Company (NYSE: AXP) today reported
second-quarter income from continuing operations of $342 million, down 48
percent from $660 million a year ago. Diluted earnings per share from
continuing operations were $0.09, down 84 percent from $0.56 a year ago. The
per share results include a reduction of $0.18 from a repurchase of preferred
shares from the U.S. Treasury Department. Excluding this impact, adjusted
diluted earnings per share from continuing operations were $0.27.
Net income totaled $337 million for the quarter, down 48 percent from a year
ago. Per-share net income of $0.09 was down 84 percent from $0.56 a year ago,
also reflecting the repurchase of preferred shares discussed above.
Consolidated total revenues net of interest expense declined 18 percent to
$6.1 billion, down from $7.5 billion a year ago.
Consolidated provisions for losses totaled $1.6 billion compared to $1.8
billion in the year-ago period, primarily reflecting lower average cardmember
receivables and loans, offset by higher write-offs and past due loans.
Consolidated expenses totaled $4.1 billion, down 16 percent from $4.9 billion
a year ago, reflecting in part the results of the company's reengineering
initiatives.
At the end of the quarter, the company's tier-one risk based capital ratio was
9.6 percent. Its tier-one common risk based ratio was also 9.6 percent, which
compared favorably to the regulatory benchmark(2) of 4 percent.
The company's return on average equity (ROE) was 13.2 percent, down from 31.1
percent a year ago. Return on average common equity (ROCE), which excludes the
impact of preferred shares and other adjustments, was 12.0 percent, down from
30.9 percent a year ago.
"We continued to deliver on our three 2009 priorities by staying liquid,
staying profitable and investing selectively in key business initiatives this
quarter," said Kenneth I. Chenault, chairman and chief executive officer.
"Despite continued weakness in cardmember spending and historically high
levels of loan losses, we generated $342 million of earnings from continuing
operations, strengthened our capital base and further expanded our deposit
gathering initiatives.
"Our results benefited from successful reengineering efforts and from a
diverse business model that combines the roles of card issuer, network and
merchant processor."
---------------------------------
(2) The regulatory benchmark of 4 percent was used by the Federal Reserve to
conduct its capital assessment during the Stress Test earlier this year.
-2-
<PAGE>
"Given the cutbacks in discretionary spending among affluent consumers, small
businesses and corporations, our overall level of billed business is
performing well relative to most of the other major card issuers. During June,
the decline in cardmember spending moderated slightly from earlier in the
quarter.
"Although it is still too early to point to any sure signs of an economic
recovery, the number of cardmembers who are falling behind in their payments,
the volume of bankruptcy filings and the level of loan write-offs were better
than we had expected. If these trends continue, we expect U.S. lending
write-off rates on a managed basis(3) to be below 10 percent for the second
half of the year, which is lower than the outlook we offered earlier this
year.
"We plan to use a significant portion of any benefits from this trend
improvement on marketing and promotion, investments and other business
initiatives. Our priorities include growing our charge card portfolio, and
expanding our merchant business, corporate services, relationships with other
banks who issue cards on our network and information management capabilities.
We will also continue to focus on a premium lending strategy linked to
co-brand partners around the world.
"Just as in prior recessions, our aim is to be in position to gain competitive
advantage once the economy begins to improve."
The second quarter results included two previously disclosed items: $182
million ($118 million after-tax) of net reengineering charges and a $211
million ($135 million after-tax) gain on the sale of a portion of the
company's equity holding in Industrial and Commercial Bank of China (ICBC).
Year-ago results included a $136 million ($85 million after-tax) charge to the
fair market value of the company's retained interest in securitized cardmember
loans.
The lower tax provision for the quarter reflected lower pretax income and the
impact of recurring permanent benefits. The year-ago tax provision included a
benefit of $101 million, primarily related to resolution of certain prior
years' tax items.
During the second quarter, the translation effects of a comparatively stronger
U.S. dollar contributed to lower non-U.S. revenues, provisions and expenses.
---------------------------------
(3) The "managed basis" presentation includes on-balance sheet cardmember
loans and off-balance sheet securitized cardmember loans. The difference
between the "owned basis" (GAAP) information and "managed basis" information
is attributable to the effects of securitization activities. The Company is
not presenting estimates of owned net write-off rates comparable to the
managed data above because the owned write-off rates are not determinable at
this time.
-3-
<PAGE>
DISCONTINUED OPERATIONS
Discontinued operations for the second quarter generated a loss of $5 million
compared with a loss of $7 million during the year-ago period.
SEGMENT RESULTS
U.S. CARD SERVICES reported a second-quarter loss of $200 million, compared to
a net income of $21 million a year ago.
Total revenues net of interest expense for the second quarter decreased 22
percent to $2.8 billion, driven by reduced cardmember spending, lower loan
balances and lower securitization income, net.
Provisions for losses totaled $1.2 billion, a decrease of 22 percent from $1.5
billion a year ago. The decrease reflected lower loan receivables, which were
partially offset by higher write-offs and past due loans. On a managed
basis(4), the net loan write-off rate was 10.0%, up from 8.5% in the first
quarter and 5.3% a year ago. Owned net write-offs were 10.3% in the quarter,
up from 8.5% in the first quarter and 5.8% a year ago.
Total expenses decreased 9 percent. Marketing, promotion, rewards and
cardmember services expenses decreased 18 percent from the year-ago period,
reflecting reduced investments in marketing and promotion and lower rewards
costs. Salaries and employee benefits and other operating expenses increased 3
percent from year-ago levels. This increase reflected the unfavorable impact
of fair value hedge ineffectiveness, higher deposit-related FDIC assessment
costs and charges related to staff reductions. Offsetting these items were the
benefits of ongoing reengineering initiatives.
INTERNATIONAL CARD SERVICES reported second-quarter net income of $64 million,
compared to $115 million a year ago.
Total revenues net of interest expense decreased 13 percent to $1.1 billion,
primarily driven by reduced cardmember spending.
Provisions for losses totaled $302 million, an increase of 25 percent or $60
million from a year ago. The increase reflected higher write-offs and past due
loans, offset by lower receivables and loans.
Total expenses decreased 21 percent. Marketing, promotion, rewards and
cardmember services expenses decreased 29 percent from year-ago levels,
reflecting reduced marketing investments and lower volume-related rewards
costs. Salaries and employee benefits and other operating expenses decreased
16 percent from year-ago levels, primarily due to the benefits of ongoing
reengineering initiatives, partially offset by charges related to staff
reductions.
---------------------------------
(4) Please refer to the information set forth on Exhibit I for further
discussion of the owned and managed basis presentations.
-4-
<PAGE>
GLOBAL COMMERCIAL SERVICES reported a second-quarter net income of $71
million, compared to $227 million a year ago.
Total revenues net of interest expense decreased 23 percent to $1.0 billion,
reflecting reduced spending by corporate cardmembers and lower travel
commissions and fees.
Total expenses decreased 10 percent. Marketing, promotion, rewards and
cardmember services expenses decreased 25 percent from the year-ago period,
primarily reflecting lower volume-related rewards costs. Salaries and employee
benefits and other operating expenses decreased 8 percent from the year-ago
period, reflecting in part the benefits from ongoing reengineering
initiatives, partially offset by charges related to staff reductions.
GLOBAL NETWORK & MERCHANT SERVICES reported second-quarter net income of $236
million, down 21 percent from $299 million a year ago.
Total revenues net of interest expense decreased 16 percent to $910 million,
primarily reflecting lower merchant-related revenues driven by a decrease in
global card billed business.
Total expenses decreased 14 percent. Marketing and promotion expenses
decreased 37 percent from the year-ago period, reflecting lower brand
advertising and reduced investment spending in merchant services. Salaries and
employee benefits and other operating expenses decreased 7 percent. This
decrease primarily reflected the benefits of ongoing reengineering initiatives
and lower merchant related reserves. Offsetting these items were lower
litigation-related expenses in the year-ago quarter and charges related to
staff reductions this quarter.
CORPORATE AND OTHER reported a second-quarter net income of $171 million,
compared with net loss of $2 million a year ago. The second quarter 2009
results reflected the recognition of $220 million ($136 million after-tax) for
the previously announced MasterCard and Visa settlements compared to $70
million ($43 million after-tax) in the year-ago period related to Visa.
Results also included the ICBC gain discussed previously, partially offset by
reengineering charges incurred during the quarter.
American Express Company is a leading global payments and travel company
founded in 1850. For more information, visit www.americanexpress.com.
***
The 2009 Second Quarter Earnings Supplement will be available today on the
American Express web site at http://ir.americanexpress.com. An investor
conference call will be held at 5:00 p.m. (ET) today to discuss second-quarter
earnings results. Live audio and presentation slides for the investor
conference call will be available to the general public at the same web site.
A replay of the conference call will be available later today at the same web
site address.
-5-
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
U.S. Card Services
(Billions, except percentages)
Quarter Ended Quarter Ended Quarter Ended
June 30, 2009 March 31, 2009 June 30, 2008
<S> <C> <C> <C>
Cardmember lending - owned basis (A):
Average Loans $26.5 $30.2 $37.9
Net write-off rate 10.3% 8.5% 5.8%
Cardmember lending - managed basis (B):
Average Loans $55.1 $59.1 $64.2
Net write-off rate 10.0% 8.5% 5.3%
</TABLE>
(A) "Owned," a GAAP basis measurement, reflects only cardmember loans included
in the company's Consolidated Balance Sheets.
(B) The managed basis presentation assumes that there have been no off-balance
sheet securitization transactions, i.e., all securitized cardmember loans and
related income effects are reflected as if they were in the company's balance
sheets and income statements, respectively. The difference between the "owned
basis" (GAAP) information and "managed basis" information is attributable to
the effects of securitization activities. The company presents U.S. Card
Services information on a managed basis because that is the way the company's
management views and manages the business. Management believes that a full
picture of trends in the company's cardmember lending business can only be
derived by evaluating the performance of both securitized and non-securitized
cardmember loans. Management also believes that use of a managed basis
presentation presents a more comprehensive portrayal of the key dynamics of
the cardmember lending business. Irrespective of the on and off-balance sheet
funding mix, it is important for management and investors to see metrics for
the entire cardmember lending portfolio because they are more representative
of the economics of the aggregate cardmember relationships and ongoing
business performance and trends over time. It is also important for investors
to see the overall growth of cardmember loans and related revenue in order to
evaluate market share. These metrics are significant in evaluating the
company's performance and can only be properly assessed when all
non-securitized and securitized cardmember loans are viewed together on a
managed basis. The company does not currently securitize international loans.
-6-
<PAGE>
Forward Looking Statements:
THIS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WHICH ARE SUBJECT TO RISKS
AND UNCERTAINTIES. THE FORWARD-LOOKING STATEMENTS, WHICH ADDRESS THE COMPANY'S
EXPECTED BUSINESS AND FINANCIAL PERFORMANCE, AMONG OTHER MATTERS, CONTAIN
WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "OPTIMISTIC," "INTEND,"
"PLAN," "AIM," "WILL," "MAY," "SHOULD," "COULD," "WOULD," "LIKELY," AND
SIMILAR EXPRESSIONS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH
THEY ARE MADE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED
TO, THE FOLLOWING: THE COMPANY'S ABILITY TO MANAGE CREDIT RISK RELATED TO
CONSUMER DEBT, BUSINESS LOANS, MERCHANTS AND OTHER CREDIT TRENDS, WHICH WILL
DEPEND IN PART ON (I) THE ECONOMIC ENVIRONMENT, INCLUDING, AMONG OTHER THINGS,
THE HOUSING MARKET, THE RATES OF BANKRUPTCIES AND UNEMPLOYMENT, WHICH CAN
AFFECT SPENDING ON CARD PRODUCTS, DEBT PAYMENTS BY INDIVIDUAL AND CORPORATE
CUSTOMERS AND BUSINESSES THAT ACCEPT THE COMPANY'S CARD PRODUCTS, (II) THE
EFFECTIVENESS OF THE COMPANY'S CREDIT MODELS AND (III) THE IMPACT OF
LEGISLATIVE INITIATIVES AFFECTING THE CREDIT CARD BUSINESS, INCLUDING, WITHOUT
LIMITATION, THE CREDIT CARD ACCOUNTABILITY RESPONSIBILITY AND DISCLOSURE ACT
OF 2009; THE IMPACT OF THE COMPANY'S EFFORTS TO DEAL WITH DELINQUENT
CARDMEMBERS IN THE CURRENT CHALLENGING ECONOMIC ENVIRONMENT, WHICH MAY AFFECT
PAYMENT PATTERNS OF CARDMEMBERS AND THE PERCEPTION OF THE COMPANY'S SERVICES,
PRODUCTS AND BRANDS; THE COMPANY'S NEAR-TERM WRITE-OFF RATES, INCLUDING THOSE
FOR THE THIRD AND FOURTH QUARTERS OF 2009, WHICH WILL DEPEND IN PART ON
CHANGES IN THE LEVEL OF THE COMPANY'S LOAN BALANCES, DELINQUENCY RATES OF
CARDMEMBERS, UNEMPLOYMENT RATES AND THE VOLUME OF BANKRUPTCIES; DIFFERENCES
BETWEEN OWNED (I.E. GAAP) AND MANAGED WRITE-OFF RATES, WHICH CAN BE IMPACTED
BY FACTORS SUCH AS THE VARIOUS TYPES OF CUSTOMER ACCOUNTS IN THE PORTFOLIOS OF
THE COMPANY AND THE LENDING SECURITIZATION TRUST; CONSUMER AND BUSINESS
SPENDING ON THE COMPANY'S CREDIT AND CHARGE CARD PRODUCTS AND TRAVELERS
CHEQUES AND OTHER PREPAID PRODUCTS AND GROWTH IN CARD LENDING BALANCES, WHICH
DEPEND IN PART ON THE ECONOMIC ENVIRONMENT, AND THE ABILITY TO ISSUE NEW AND
ENHANCED CARD AND PREPAID PRODUCTS, SERVICES AND REWARDS PROGRAMS AND INCREASE
REVENUES FROM SUCH PRODUCTS, ATTRACT NEW CARDMEMBERS, REDUCE CARDMEMBER
ATTRITION, CAPTURE A GREATER SHARE OF EXISTING CARDMEMBERS' SPENDING, AND
SUSTAIN PREMIUM DISCOUNT RATES ON ITS CARD PRODUCTS IN LIGHT OF REGULATORY AND
MARKET PRESSURES, INCREASE MERCHANT COVERAGE, RETAIN CARDMEMBERS AFTER LOW
INTRODUCTORY LENDING RATES HAVE EXPIRED, AND EXPAND THE GLOBAL NETWORK
SERVICES BUSINESS; THE WRITE-OFF AND DELINQUENCY RATES IN THE MEDIUM- TO
LONG-TERM OF CARDMEMBERS ADDED BY THE COMPANY DURING THE PAST FEW YEARS, WHICH
COULD IMPACT THEIR PROFITABILITY TO THE COMPANY; THE COMPANY'S ABILITY TO
EFFECTIVELY IMPLEMENT CHANGES IN THE PRICING OF CERTAIN OF ITS PRODUCTS AND
SERVICES; FLUCTUATIONS IN INTEREST RATES (INCLUDING FLUCTUATIONS IN
BENCHMARKS, SUCH AS LIBOR AND OTHER BENCHMARK RATES, AND CREDIT SPREADS),
WHICH IMPACT THE COMPANY'S BORROWING COSTS, RETURN ON LENDING PRODUCTS AND THE
VALUE OF THE COMPANY'S INVESTMENTS; THE COMPANY'S ABILITY TO MEET ITS
LONG-TERM ON AVERAGE AND OVER TIME FINANCIAL TARGETS; THE ACTUAL AMOUNT TO BE
SPENT BY THE COMPANY ON MARKETING, PROMOTION, REWARDS AND CARDMEMBER SERVICES
BASED ON MANAGEMENT'S ASSESSMENT OF COMPETITIVE OPPORTUNITIES AND OTHER
FACTORS AFFECTING ITS JUDGMENT; THE ABILITY TO CONTROL AND MANAGE OPERATING,
INFRASTRUCTURE, ADVERTISING AND PROMOTION EXPENSES AS BUSINESS EXPANDS OR
CHANGES, INCLUDING THE ABILITY TO ACCURATELY ESTIMATE THE PROVISION FOR THE
COST OF THE MEMBERSHIP REWARDS PROGRAM; FLUCTUATIONS IN FOREIGN CURRENCY
EXCHANGE RATES; THE COMPANY'S ABILITY TO GROW ITS BUSINESS AND GENERATE EXCESS
CAPITAL AND EARNINGS IN A MANNER AND AT LEVELS THAT WILL ALLOW THE COMPANY TO
RETURN A PORTION OF CAPITAL TO SHAREHOLDERS, WHICH WILL DEPEND ON THE
COMPANY'S ABILITY TO MANAGE ITS CAPITAL NEEDS, AND THE EFFECT OF BUSINESS MIX,
ACQUISITIONS AND RATING AGENCY AND REGULATORY REQUIREMENTS, INCLUDING THOSE
ARISING FROM THE COMPANY'S STATUS AS A BANK HOLDING COMPANY; THE ABILITY OF
THE COMPANY TO MEET ITS OBJECTIVES WITH RESPECT TO THE GROWTH OF ITS BROKERED
RETAIL CD PROGRAM, BROKERAGE SWEEP ACCOUNT PROGRAM AND THE DIRECT DEPOSIT
INITIATIVE; THE SUCCESS OF THE GLOBAL NETWORK SERVICES BUSINESS IN PARTNERING
WITH BANKS IN THE UNITED STATES, WHICH WILL DEPEND IN PART ON THE EXTENT TO
WHICH SUCH BUSINESS FURTHER ENHANCES THE COMPANY'S BRAND, ALLOWS THE COMPANY
TO LEVERAGE ITS SIGNIFICANT PROCESSING SCALE, EXPANDS MERCHANT COVERAGE OF THE
NETWORK, PROVIDES GLOBAL NETWORK SERVICES' BANK PARTNERS IN THE UNITED STATES
THE BENEFITS OF GREATER CARDMEMBER LOYALTY AND HIGHER SPEND PER CUSTOMER, AND
MERCHANT BENEFITS SUCH AS GREATER TRANSACTION VOLUME AND ADDITIONAL HIGHER
SPENDING CUSTOMERS; THE ABILITY OF THE GLOBAL NETWORK SERVICES BUSINESS TO
MEET THE PERFORMANCE REQUIREMENTS CALLED FOR BY THE COMPANY'S SETTLEMENTS WITH
MASTERCARD AND VISA; TRENDS IN TRAVEL AND ENTERTAINMENT SPENDING AND THE
OVERALL LEVEL OF CONSUMER CONFIDENCE; THE UNCERTAINTIES ASSOCIATED WITH
BUSINESS ACQUISITIONS, INCLUDING, AMONG OTHERS, THE FAILURE TO REALIZE
ANTICIPATED BUSINESS RETENTION, GROWTH AND COST SAVINGS, AS WELL AS THE
ABILITY TO EFFECTIVELY INTEGRATE THE ACQUIRED BUSINESS INTO THE COMPANY'S
EXISTING OPERATIONS; THE UNDERLYING ASSUMPTIONS AND EXPECTATIONS RELATED TO
THE FEBRUARY 2008 SALE OF THE AMERICAN EXPRESS BANK LTD. BUSINESSES AND THE
TRANSACTION'S IMPACT ON THE COMPANY'S EARNINGS PROVING TO BE INACCURATE OR
UNREALIZED; THE SUCCESS, TIMELINESS AND FINANCIAL IMPACT (INCLUDING COSTS,
COST SAVINGS, AND OTHER BENEFITS, INCLUDING INCREASED REVENUES), AND
BENEFICIAL EFFECT ON THE COMPANY'S OPERATING EXPENSE TO REVENUE RATIO, BOTH IN
-7-
<PAGE>
THE SHORT-TERM (INCLUDING DURING 2009) AND OVER TIME, OF REENGINEERING
INITIATIVES BEING IMPLEMENTED OR CONSIDERED BY THE COMPANY, INCLUDING COST
MANAGEMENT, STRUCTURAL AND STRATEGIC MEASURES SUCH AS VENDOR, PROCESS,
FACILITIES AND OPERATIONS CONSOLIDATION, OUTSOURCING (INCLUDING, AMONG OTHERS,
TECHNOLOGIES OPERATIONS), RELOCATING CERTAIN FUNCTIONS TO LOWER-COST OVERSEAS
LOCATIONS, MOVING INTERNAL AND EXTERNAL FUNCTIONS TO THE INTERNET TO SAVE
COSTS, AND PLANNED STAFF REDUCTIONS RELATING TO CERTAIN OF SUCH REENGINEERING
ACTIONS; THE COMPANY'S ABILITY TO REINVEST THE BENEFITS ARISING FROM SUCH
REENGINEERING ACTIONS IN ITS BUSINESSES; BANKRUPTCIES, RESTRUCTURINGS,
CONSOLIDATIONS OR SIMILAR EVENTS (INCLUDING, AMONG OTHERS, THE DELTA AIR
LINES/NORTHWEST AIRLINES MERGER) AFFECTING THE AIRLINE OR ANY OTHER INDUSTRY
REPRESENTING A SIGNIFICANT PORTION OF THE COMPANY'S BILLED BUSINESS, INCLUDING
ANY POTENTIAL NEGATIVE EFFECT ON PARTICULAR CARD PRODUCTS AND SERVICES AND
BILLED BUSINESS GENERALLY THAT COULD RESULT FROM THE ACTUAL OR PERCEIVED
WEAKNESS OF KEY BUSINESS PARTNERS IN SUCH INDUSTRIES; THE TRIGGERING OF
OBLIGATIONS TO MAKE PAYMENTS TO CERTAIN CO-BRAND PARTNERS, MERCHANTS, VENDORS
AND CUSTOMERS UNDER CONTRACTUAL ARRANGEMENTS WITH SUCH PARTIES UNDER CERTAIN
CIRCUMSTANCES; A DOWNTURN IN THE COMPANY'S BUSINESSES AND/OR NEGATIVE CHANGES
IN THE COMPANY'S AND ITS SUBSIDIARIES' CREDIT RATINGS, WHICH COULD RESULT IN
CONTINGENT PAYMENTS UNDER CONTRACTS, DECREASED LIQUIDITY AND HIGHER BORROWING
COSTS; THE ABILITY OF THE COMPANY TO SATISFY ITS LIQUIDITY NEEDS AND EXECUTE
ON ITS FUNDING PLANS, WHICH WILL DEPEND ON, AMONG OTHER THINGS, THE COMPANY'S
FUTURE BUSINESS GROWTH, ITS CREDIT RATINGS, MARKET CAPACITY AND DEMAND FOR
SECURITIES OFFERED BY THE COMPANY, PERFORMANCE BY THE COMPANY'S COUNTERPARTIES
UNDER ITS BANK CREDIT FACILITIES AND OTHER LENDING FACILITIES, REGULATORY
CHANGES, INCLUDING CHANGES TO THE POLICIES, RULES AND REGULATIONS OF THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AND THE FEDERAL RESERVE BANK OF SAN
FRANCISCO, THE COMPANY'S ABILITY TO SECURITIZE AND SELL RECEIVABLES AND THE
PERFORMANCE OF RECEIVABLES PREVIOUSLY SOLD IN SECURITIZATION TRANSACTIONS AND
THE COMPANY'S ABILITY TO MEET THE CRITERIA FOR PARTICIPATION IN CERTAIN
LIQUIDITY FACILITIES AND OTHER FUNDING PROGRAMS, INCLUDING THE COMMERCIAL
PAPER FUNDING FACILITY AND THE TEMPORARY LIQUIDITY GUARANTEE PROGRAM, BEING
MADE AVAILABLE THROUGH THE FEDERAL RESERVE BANK OF NEW YORK, THE FEDERAL
DEPOSIT INSURANCE CORPORATION AND OTHER FEDERAL DEPARTMENTS AND AGENCIES;
ACCURACY OF ESTIMATES FOR THE FAIR VALUE OF THE ASSETS IN THE COMPANY'S
INVESTMENT PORTFOLIO AND, IN PARTICULAR, THOSE INVESTMENTS THAT ARE NOT
READILY MARKETABLE, INCLUDING THE VALUATION OF THE INTEREST-ONLY STRIP
RELATING TO THE COMPANY'S LENDING SECURITIZATIONS AND THE ABILITY OF OUR
CHARGE CARD AND LENDING TRUSTS TO MAINTAIN EXCESS SPREADS AT LEVELS SUFFICIENT
TO AVOID MATERIAL SET-ASIDES OR EARLY AMORTIZATION OF OUR CHARGE CARD AND
LENDING SECURITIZATIONS, WHICH WILL DEPEND ON VARIOUS FACTORS SUCH AS INCOME
DERIVED FROM THE RELEVANT PORTFOLIOS AND THEIR RESPECTIVE CREDIT PERFORMANCES;
THE INCREASE IN EXCESS SPREAD RESULTING FROM THE DESIGNATION OF DISCOUNT
OPTION RECEIVABLES WITH RESPECT TO THE AMERICAN EXPRESS CREDIT ACCOUNT MASTER
TRUST, WHICH WILL DEPEND IN PART ON THE MONTHLY PRINCIPAL PAYMENT RATE POSTED
TO ACCOUNTS IN, AND THE CREDIT PERFORMANCE OF, THE SECURITIZED LENDING
PORTFOLIO; THE COMPANY'S ABILITY TO AVOID MATERIAL LOSSES ON ITS INVESTMENT
PORTFOLIO, INCLUDING ITS INVESTMENTS IN STATE AND MUNICIPAL OBLIGATIONS, THE
ISSUERS OF WHICH COULD BE ADVERSELY AFFECTED BY THE CHALLENGING ECONOMIC
ENVIRONMENT; THE COMPANY'S ABILITY TO INVEST IN TECHNOLOGY ADVANCES ACROSS ALL
AREAS OF ITS BUSINESS TO STAY ON THE LEADING EDGE OF TECHNOLOGIES APPLICABLE
TO THE PAYMENT INDUSTRY; THE COMPANY'S ABILITY TO ATTRACT AND RETAIN EXECUTIVE
MANAGEMENT AND OTHER KEY EMPLOYEES; THE COMPANY'S ABILITY TO PROTECT ITS
INTELLECTUAL PROPERTY RIGHTS (IP) AND AVOID INFRINGING THE IP OF OTHER
PARTIES; THE POTENTIAL NEGATIVE EFFECT ON THE COMPANY'S BUSINESSES AND
INFRASTRUCTURE, INCLUDING INFORMATION TECHNOLOGY, OF TERRORIST ATTACKS,
NATURAL DISASTERS OR OTHER CATASTROPHIC EVENTS IN THE FUTURE; POLITICAL OR
ECONOMIC INSTABILITY IN CERTAIN REGIONS OR COUNTRIES, WHICH COULD AFFECT
LENDING AND OTHER COMMERCIAL ACTIVITIES, AMONG OTHER BUSINESSES, OR
RESTRICTIONS ON CONVERTIBILITY OF CERTAIN CURRENCIES; CHANGES IN LAWS OR
GOVERNMENT REGULATIONS; THE POTENTIAL IMPACT OF THE CREDIT CARD ACCOUNTABILITY
RESPONSIBILITY AND DISCLOSURE ACT OF 2009 AND REGULATIONS RECENTLY ADOPTED BY
FEDERAL BANK REGULATORS RELATING TO CERTAIN CREDIT AND CHARGE CARD PRACTICES,
INCLUDING, AMONG OTHERS, THE IMPOSITION BY CARD ISSUERS OF INTEREST RATE
INCREASES ON OUTSTANDING BALANCES AND THE ALLOCATION OF PAYMENTS IN RESPECT OF
OUTSTANDING BALANCES WITH DIFFERENT INTEREST RATES, WHICH COULD HAVE AN
ADVERSE IMPACT ON THE COMPANY'S NET INCOME; ACCOUNTING CHANGES, INCLUDING THE
FINANCIAL ACCOUNTING STANDARDS BOARD'S RECENT ADOPTION OF CHANGES TO THE
ACCOUNTING OF OFF-BALANCE SHEET ACTIVITIES OR OTHER POTENTIAL REGULATORY
INTERPRETATIONS IN THIS AREA, WHICH, WHEN EFFECTIVE, WILL RESULT IN THE
COMPANY'S HAVING TO CONSOLIDATE THE ASSETS AND LIABILITIES OF THE LENDING
SECURITIZATION TRUST, THEREBY REQUIRING THE COMPANY TO REESTABLISH LOSS
RESERVES, WHICH COULD REDUCE THE COMPANY'S REGULATORY CAPITAL RATIOS AND/OR
CHANGE THE PRESENTATION OF ITS FINANCIAL STATEMENTS; OUTCOMES AND COSTS
ASSOCIATED WITH LITIGATION AND COMPLIANCE AND REGULATORY MATTERS; AND
COMPETITIVE PRESSURES IN ALL OF THE COMPANY'S MAJOR BUSINESSES. A FURTHER
DESCRIPTION OF THESE AND OTHER RISKS AND UNCERTAINTIES CAN BE FOUND IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008, THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31,
2009 AND THE COMPANY'S OTHER REPORTS FILED WITH THE SEC.
-8-
<PAGE>
All information in the following tables is presented on a basis prepared in
accordance with U.S. generally accepted accounting principles (GAAP), unless
otherwise indicated.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
<Table>
<Caption>
Quarters Ended Six Months Ended
June 30, June 30,
----------------- Percentage ------------------ Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
------ ------ ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Non-interest revenues
Discount revenue $3,305 $3,991 (17)% $ 6,371 $ 7,709 (17)%
Net card fees 532 542 (2) 1,064 1,073 (1)
Travel commissions and fees 407 573 (29) 772 1,067 (28)
Other commissions and fees 439 590 (26) 892 1,212 (26)
Securitization income, net (2) 227 # 139 671 (79)
Other 670 578 16 1,120 1,038 8
------ ------ ------- -------
Total non-interest revenues 5,351 6,501 (18) 10,358 12,770 (19)
------ ------ ------- -------
Interest income
Interest and fees on loans 1,081 1,564 (31) 2,373 3,235 (27)
Interest and dividends on investment securities 196 217 (10) 350 403 (13)
Deposits with banks and other 11 76 (86) 39 161 (76)
------ ------ ------- -------
Total interest income 1,288 1,857 (31) 2,762 3,799 (27)
------ ------ ------- -------
Interest expense
Deposits 105 123 (15) 190 272 (30)
Short-term borrowings 7 136 (95) 34 297 (89)
Long-term debt 431 631 (32) 865 1,281 (32)
Other 4 13 (69) 13 24 (46)
------ ------ ------- -------
Total interest expense 547 903 (39) 1,102 1,874 (41)
------ ------ ------- -------
Net interest income 741 954 (22) 1,660 1,925 (14)
------ ------ ------- -------
Total revenues net of interest expense 6,092 7,455 (18) 12,018 14,695 (18)
------ ------ ------- -------
Provisions for losses
Charge card 237 241 (2) 573 586 (2)
Cardmember lending 1,303 1,537 (15) 2,717 2,346 16
Other 44 46 (4) 97 103 (6)
------ ------ ------- -------
Total provisions for losses 1,584 1,824 (13) 3,387 3,035 12
------ ------ ------- -------
Total revenues net of interest expense after provisions for
losses 4,508 5,631 (20) 8,631 11,660 (26)
------ ------ ------- -------
Expenses
Marketing and promotion 352 663 (47) 697 1,257 (45)
Cardmember rewards 1,029 1,129 (9) 1,875 2,169 (14)
Cardmember services 131 132 (1) 242 254 (5)
Salaries and employee benefits 1,370 1,495 (8) 2,623 2,965 (12)
Professional services 599 606 (1) 1,118 1,156 (3)
Occupancy and equipment 392 412 (5) 750 787 (5)
Communications 106 115 (8) 210 230 (9)
Other, net 111 305 (64) 154 607 (75)
------ ------ ------- -------
Total 4,090 4,857 (16) 7,669 9,425 (19)
------ ------ ------- -------
Pretax income from continuing operations 418 774 (46) 962 2,235 (57)
Income tax provision 76 114 (33) 177 531 (67)
------ ------ ------- -------
Income from continuing operations 342 660 (48) 785 1,704 (54)
Loss from discontinued operations, net of tax (5) (7) (29) (11) (60) (82)
------ ------ ------- -------
Net income $ 337 $ 653 (48) $ 774 $ 1,644 (53)
====== ====== ======= =======
Income from continuing operations attributable to common
shareholders (A) $ 107 $ 657 (84) $ 474 $ 1,695 (72)
====== ====== ======= =======
Net income attributable to common shareholders (A) $ 102 $ 650 (84) $ 463 $ 1,635 (72)
====== ====== ======= =======
</Table>
# - Denotes a variance of more than 100%.
(A) Represents income from continuing operations or net income, as applicable,
less (i) accelerated preferred dividend accretion of $212 million for the
three and six months ended June 30, 2009 due to the repurchase of $3.39
billion of preferred shares issued as part of the Capital Purchase Program
(CPP), (ii) preferred shares dividends and related accretion of $22 million
and $94 million for the three and six months ended June 30, 2009, and (iii)
earnings allocated to participating share awards of $1 million and $3 million
for the three months ended June 30, 2009 and 2008, respectively, and $5
million and $9 million for the six months ended June 30, 2009 and 2008,
respectively.
-9-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Billions)
<Table>
<Caption>
June 30, December 31,
2009 2008
-------- ------------
<S> <C> <C>
Assets
Cash $ 16 $ 21
Accounts receivable 35 37
Investment securities 22 13
Loans 30 41
Other assets 14 14
---- ----
Total assets $117 $126
==== ====
Liabilities and Shareholders' Equity
Customer deposits $ 20 $ 15
Short-term borrowings 2 9
Long-term debt 54 60
Other liabilities 28 30
---- ----
Total liabilities 104 114
---- ----
Shareholders' equity 13 12
---- ----
Total liabilities and shareholders' equity $117 $126
==== ====
</Table>
-10-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Millions)
<Table>
<Caption>
Quarters Ended Six Months Ended
June 30, June 30,
----------------- Percentage ------------------ Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
------ ------ ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUES NET OF INTEREST EXPENSE
U.S. Card Services $2,805 $3,593 (22)% $ 5,879 $ 7,315 (20)%
International Card Services 1,091 1,256 (13) 2,114 2,451 (14)
Global Commercial Services 1,003 1,308 (23) 1,947 2,452 (21)
Global Network & Merchant Services 910 1,083 (16) 1,746 2,086 (16)
------ ------ ------- -------
5,809 7,240 (20) 11,686 14,304 (18)
Corporate & Other,
including adjustments and eliminations 283 215 32 332 391 (15)
------ ------ ------- -------
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $6,092 $7,455 (18) $12,018 $14,695 (18)
====== ====== ======= =======
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS
U.S. Card Services $ (332) $ (63) # $ (382) $ 728 #
International Card Services 49 73 (33) 57 190 (70)
Global Commercial Services 99 326 (70) 227 544 (58)
Global Network & Merchant Services 360 455 (21) 725 790 (8)
------ ------ ------- -------
176 791 (78) 627 2,252 (72)
Corporate & Other 242 (17) # 335 (17) #
------ ------ ------- -------
PRETAX INCOME FROM CONTINUING OPERATIONS $ 418 $ 774 (46) $ 962 $ 2,235 (57)
====== ====== ======= =======
NET INCOME (LOSS)
U.S. Card Services $ (200) $ 21 # $ (225) $ 544 #
International Card Services 64 115 (44) 103 248 (58)
Global Commercial Services 71 227 (69) 157 378 (58)
Global Network & Merchant Services 236 299 (21) 473 522 (9)
------ ------ ------- -------
171 662 (74) 508 1,692 (70)
Corporate & Other 171 (2) # 277 12 #
------ ------ ------- -------
Income from continuing operations 342 660 (48) 785 1,704 (54)
Loss from discontinued operations, net of tax (5) (7) (29) (11) (60) (82)
------ ------ ------- -------
NET INCOME $ 337 $ 653 (48) $ 774 $ 1,644 (53)
====== ====== ======= =======
</Table>
# - Denotes a variance of more than 100%.
-11-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
<Table>
<Caption>
Quarters Ended Six Months Ended
June 30, June 30,
----------------- Percentage ---------------- Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations attributable to common
shareholders $ 0.09 $ 0.57 (84)% $ 0.41 $ 1.47 (72)%
Loss from discontinued operations - (0.01) # (0.01) (0.05) (80)
------ ------ ------ ------
Net income attributable to common shareholders $ 0.09 $ 0.56 (84)% $ 0.40 $ 1.42 (72)%
====== ====== ====== ======
Average common shares outstanding (millions) 1,162 1,154 1% 1,159 1,153 1%
====== ====== ====== ======
DILUTED
Income from continuing operations attributable to common
shareholders $ 0.09 $ 0.56 (84)% $ 0.41 $ 1.46 (72)%
Loss from discontinued operations - - - (0.01) (0.05) (80)
------ ------ ------ ------
Net income attributable to common shareholders $ 0.09 $ 0.56 (84)% $ 0.40 $ 1.41 (72)%
====== ====== ====== ======
Average common shares outstanding (millions) 1,165 1,163 -% 1,161 1,163 -%
====== ====== ====== ======
Cash dividends declared per common share $ 0.18 $ 0.18 -% $ 0.36 $ 0.36 -%
====== ====== ====== ======
</Table>
SELECTED STATISTICAL INFORMATION
<Table>
<Caption>
Quarters Ended Six Months Ended
June 30, June 30,
----------------- Percentage ---------------- Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Return on average equity (A) 13.2% 31.1% 13.2% 31.1%
Return on average common equity (A) 12.0% 30.9% 12.0% 30.9%
Return on average tangible common equity (A) 15.6% 37.5% 15.6% 37.5%
Common shares outstanding (millions) 1,189 1,159 3% 1,189 1,159 3%
Book value per common share $11.28 $10.58 7% $11.28 $10.58 7%
Shareholders' equity (billions) $13.4 $12.3 9% $13.4 $12.3 9%
</Table>
# - Denotes a variance of more than 100%.
(A) Refer to Appendix I for components of return on average equity, return on
average common equity and return on average tangible common equity.
-12-
</TEXT>
</DOCUMENT>