EX-99.2 3 exhibit99_2financials.txt FINANCIALS EXHIBIT 99.2 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)
Quarters Ended Years Ended December 31, December 31, ---------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Non-interest revenues Discount revenue $ 3,645 $ 3,468 5% $ 13,389 $ 15,025 (11)% Net card fees 549 536 2 2,151 2,150 - Travel commissions and fees 439 444 (1) 1,594 2,010 (21) Other commissions and fees 438 522 (16) 1,778 2,307 (23) Securitization income, net 190 199 (5) 400 1,070 (63) Other 518 566 (8) 2,087 2,157 (3) ---------- ---------- ---------- ---------- Total non-interest revenues 5,779 5,735 1 21,399 24,719 (13) ---------- ---------- ---------- ---------- Interest income Interest and fees on loans 1,036 1,364 (24) 4,468 6,159 (27) Interest and dividends on investment securities 225 168 34 804 771 4 Deposits with banks and other 11 36 (69) 59 271 (78) ---------- ---------- ---------- ---------- Total interest income 1,272 1,568 (19) 5,331 7,201 (26) ---------- ---------- ---------- ---------- Interest expense Deposits 126 73 73 425 454 (6) Short-term borrowings 1 72 (99) 37 483 (92) Long-term debt and other 435 652 (33) 1,745 2,618 (33) ---------- ---------- ---------- ---------- Total interest expense 562 797 (29) 2,207 3,555 (38) ---------- ---------- ---------- ---------- Net interest income 710 771 (8) 3,124 3,646 (14) ---------- ---------- ---------- ---------- Total revenues net of interest expense 6,489 6,506 - 24,523 28,365 (14) ---------- ---------- ---------- ---------- Provisions for losses Charge card 141 426 (67) 857 1,363 (37) Cardmember lending 560 927 (40) 4,266 4,231 1 Other 47 51 (8) 190 204 (7) ---------- ---------- ---------- ---------- Total provisions for losses 748 1,404 (47) 5,313 5,798 (8) ---------- ---------- ---------- ---------- Total revenues net of interest expense after provisions for losses 5,741 5,102 13 19,210 22,567 (15) ---------- ---------- ---------- ---------- Expenses Marketing and promotion 713 524 36 1,914 2,430 (21) Cardmember rewards 1,178 1,088 8 4,036 4,389 (8) Cardmember services 143 140 2 517 542 (5) Salaries and employee benefits 1,196 1,660 (28) 5,080 6,090 (17) Professional services 715 649 10 2,408 2,413 - Occupancy and equipment 495 456 9 1,619 1,641 (1) Communications 99 118 (16) 414 466 (11) Other, net 241 199 21 381 1,015 (62) ---------- ---------- ---------- ---------- Total 4,780 4,834 (1) 16,369 18,986 (14) ---------- ---------- ---------- ---------- Pretax income from continuing operations 961 268 # 2,841 3,581 (21) Income tax provision (benefit) 251 (38) # 704 710 (1) ---------- ---------- ---------- ---------- Income from continuing operations 710 306 # 2,137 2,871 (26) Income (Loss) from discontinued operations, net of tax 6 (66) # (7) (172) (96) ---------- ---------- ---------- ---------- Net income $ 716 $ 240 # $ 2,130 $ 2,699 (21) ========== ========== ========== ========== Income from continuing operations attributable to common shareholders (A) $ 701 $ 305 # $ 1,809 $ 2,856 (37) ========== ========== ========== ========== Net income attributable to common shareholders (A) $ 707 $ 239 # $ 1,802 $ 2,684 (33) ========== ========== ========== ==========
# - 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 twelve months ended December 31, 2009 due to the repurchase of $3.39 billion of preferred shares issued as part of the Capital Purchase Program (CPP), (ii) preferred share dividends and related accretion of $94 million for the twelve months ended December 31, 2009, and (iii) earnings allocated to participating share awards and other items of $9 million and $1 million for the three months ended December 31, 2009 and 2008, respectively, and $22 million and $15 million for the twelve months ended December 31, 2009 and 2008, respectively. -1- (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Billions)
December 31, December 31, 2009 2008 ------------ ------------ Assets Cash $ 16 $ 21 Accounts receivable 38 37 Investment securities 24 13 Loans 30 41 Other assets 16 14 ------------ ------------ Total assets $ 124 $ 126 ============ ============ Liabilities and Shareholders' Equity Customer deposits $ 26 $ 15 Short-term borrowings 2 9 Long-term debt 52 60 Other liabilities 30 30 ------------ ------------ Total liabilities 110 114 ------------ ------------ Shareholders' equity 14 12 ------------ ------------ Total liabilities and shareholders' equity $ 124 $ 126 ============ ============
-2- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Millions)
Quarters Ended Years Ended December 31, December 31, ------------------------ Percentage ------------------------ Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL REVENUES NET OF INTEREST EXPENSE U.S. Card Services $ 3,109 $ 3,223 (4)% $ 11,891 $ 13,997 (15)% International Card Services 1,221 1,098 11 4,483 4,781 (6) Global Commercial Services 1,102 1,044 6 4,046 4,696 (14) Global Network & Merchant Services 1,007 945 7 3,716 4,102 (9) ---------- ---------- ---------- ---------- 6,439 6,310 2 24,136 27,576 (12) Corporate & Other, including adjustments and eliminations 50 196 (74) 387 789 (51) ---------- ---------- ---------- ---------- CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,489 $ 6,506 - $ 24,523 $ 28,365 (14) ========== ========== ========== ========== PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS U.S. Card Services $ 567 $ 49 # $ 324 $ 1,141 (72) International Card Services 46 (38) # 230 153 50 Global Commercial Services 171 (42) # 568 693 (18) Global Network & Merchant Services 298 303 (2) 1,381 1,490 (7) ---------- ---------- ---------- ---------- 1,082 272 # 2,503 3,477 (28) Corporate & Other (121) (4) # 338 104 # ---------- ---------- ---------- ---------- PRETAX INCOME FROM CONTINUING OPERATIONS $ 961 $ 268 # $ 2,841 $ 3,581 (21) ========== ========== ========== ========== NET INCOME (LOSS) U.S. Card Services $ 365 $ 64 # $ 249 $ 852 (71) International Card Services 73 36 # 303 351 (14) Global Commercial Services 117 (7) # 390 505 (23) Global Network & Merchant Services 185 215 (14) 898 995 (10) ---------- ---------- ---------- ---------- 740 308 # 1,840 2,703 (32) Corporate & Other (30) (2) # 297 168 77 ---------- ---------- ---------- ---------- Income from continuing operations 710 306 # 2,137 2,871 (26) Income (Loss) from discontinued operations, net of tax 6 (66) # (7) (172) (96) ---------- ---------- ---------- ---------- NET INCOME $ 716 $ 240 # $ 2,130 $ 2,699 (21) ========== ========== ========== ==========
# - Denotes a variance of more than 100%. -3- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ------------------------ Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- EARNINGS PER COMMON SHARE BASIC Income from continuing operations attributable to common shareholders $ 0.59 $ 0.26 #% $ 1.55 $ 2.47 (37)% Income (Loss) from discontinued operations 0.01 (0.05) # (0.01) (0.14) (93) ---------- ---------- ---------- ---------- Net income attributable to common shareholders $ 0.60 $ 0.21 #% $ 1.54 $ 2.33 (34)% ========== ========== ========== ========== Average common shares outstanding (millions) 1,179 1,155 2% 1,168 1,154 1% ========== ========== ========== ========== DILUTED Income from continuing operations attributable to common shareholders $ 0.59 $ 0.26 #% $ 1.54 $ 2.47 (38)% Income (Loss) from discontinued operations 0.01 (0.05) # - (0.15) # ---------- ---------- ---------- ---------- Net income attributable to common shareholders $ 0.60 $ 0.21 #% $ 1.54 $ 2.32 (34)% ========== ========== ========== ========== Average common shares outstanding (millions) 1,184 1,155 3% 1,171 1,156 1% ========== ========== ========== ========== Cash dividends declared per common share $ 0.18 $ 0.18 -% $ 0.72 $ 0.72 -% ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION
Quarters Ended Years Ended December 31, December 31, ------------------------ Percentage ------------------------ Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Return on average equity (A) 14.6% 22.3% 14.6% 22.3% Return on average common equity (A) 13.6% 22.1% 13.6% 22.1% Return on average tangible common equity (A) 17.6% 28.0% 17.6% 28.0% Common shares outstanding (millions) 1,192 1,160 3% 1,192 1,160 3% Book value per common share $ 12.08 $ 10.21 18% $ 12.08 $ 10.21 18% Shareholders' equity (billions) $ 14.4 $ 11.8 22% $ 14.4 $ 11.8 22%
# - 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. -4- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ------------------------ Percentage ------------------------ Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Card billed business (A): United States $ 115.0 $ 112.7 2% $ 423.7 $ 471.1 (10)% Outside the United States 57.6 47.8 21 196.1 212.2 (8) ---------- ---------- ---------- ---------- Total $ 172.6 $ 160.5 8 $ 619.8 $ 683.3 (9) ========== ========== ========== ========== Total cards-in-force (millions) (B): United States 48.9 54.0 (9)% 48.9 54.0 (9)% Outside the United States 39.0 38.4 2 39.0 38.4 2 ---------- ---------- ---------- ---------- Total 87.9 92.4 (5) 87.9 92.4 (5) ========== ========== ========== ========== Basic cards-in-force (millions) (B): United States 38.2 42.0 (9)% 38.2 42.0 (9)% Outside the United States 34.3 33.4 3 $ 34.3 33.4 3 ---------- ---------- ---------- ---------- Total 72.5 75.4 (4) 72.5 75.4 (4) ========== ========== ========== ========== Average discount rate (C) 2.51% 2.53% 2.54% 2.55% Average basic cardmember spending (dollars) (D) $ 3,209 $ 2,792 15% $ 11,213 $ 12,025 (7)% Average fee per card (dollars) (D) $ 39 $ 34 15% $ 36 $ 34 6% Average fee per card adjusted (dollars) (D) $ 42 $ 38 11% $ 40 $ 39 3%
(A) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements, and certain insurance fees charged on proprietary cards. Card billed business is reflected in the United States or outside the United States based on where the cardmember is domiciled. (B) Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee cardmembers. Non-proprietary basic cards-in-force includes all cards that are issued and outstanding under network partnership agreements. (C) This calculation is designed to approximate merchant pricing. It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance. (D) Average basic cardmember spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs, plus card fees included in interest and fees on loans (including related amortization of deferred direct acquisition costs), divided by average worldwide proprietary cards-in-force. The card fees related to cardmember loans included in interest and fees on loans were $54 million and $41 million for the quarters ended December 31, 2009 and 2008, respectively, and $186 million and $146 million for the years ended December 31, 2009 and 2008, respectively. The adjusted average fee per card is computed in the same manner, but excludes amortization of deferred direct acquisition costs (a portion of which is charge card related and included in net card fees and a portion of which is lending related and included in interest and fees on loans). The amount of amortization excluded was $54 million and $243 million for the quarter and year ended December 31, 2009, and $76 million and $320 million for the quarter and year ended December 31, 2008. The Company presents adjusted average fee per card because management believes that this metric presents a useful indicator of card fee pricing across a range of its proprietary card products. -5- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (CONTINUED) (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ------------------------- Percentage ------------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Worldwide cardmember receivables: Total receivables $ 33.7 $ 33.0 2% $ 33.7 $ 33.0 2% Loss reserves (millions): Beginning balance $ 599 $ 1,134 (47)% $ 810 $ 1,149 (30)% Provision 141 426 (67) 857 1,363 (37) Net write-offs (A) (194) (669) (71) (1,131) (1,552) (27) Other - (81) # 10 (150) # ---------- ---------- ---------- ---------- Ending balance $ 546 $ 810 (33) $ 546 $ 810 (33) ========== ========== ========== ========== % of receivables 1.6% 2.5% 1.6% 2.5% Net write-off rate - USCS 1.9% 3.5% 3.8% 3.6% 30 days past due as a % of total - USCS 1.8% 3.7% 1.8% 3.7% Net loss ratio as a % of charge volume - ICS 0.37% 0.30% 0.36% 0.24% 90 days past due as a % of total - ICS 2.1% 3.1% 2.1% 3.1% Net loss ratio as a % of charge volume - GCS 0.14% 0.14% 0.19% 0.13% 90 days past due as a % of total - GCS 1.4% 2.7% 1.4% 2.7% Worldwide cardmember lending - owned basis (B): Total loans $ 32.8 $ 42.2 (22)% $ 32.8 $ 42.2 (22)% 30 days past due loans as a % of total 3.6% 4.4% 3.6% 4.4% Loss reserves (millions): Beginning balance $ 3,359 $ 2,640 27% $ 2,570 $ 1,831 40% Provision 544 897 (39) 4,209 4,106 3 Net write-offs - principal (589) (702) (16) (2,949) (2,643) 12 Write-offs - interest and fees (72) (143) (50) (448) (580) (23) Other (C) 26 (122) # (114) (144) # ---------- ---------- ---------- ---------- Ending balance $ 3,268 $ 2,570 27 $ 3,268 $ 2,570 27 ========== ========== ========== ========== Ending Reserves - principal $ 3,172 $ 2,379 33 $ 3,172 $ 2,379 Ending Reserves - interest and fees $ 96 $ 191 (50) $ 96 $ 191 % of loans 10.0% 6.1% 10.0% 6.1% % of past due 279% 137% 279% 137% Average loans $ 31.8 $ 43.0 (26)% $ 34.8 $ 47.6 (27)% Net write-off rate 7.4% 6.5% 8.5% 5.5% Net interest yield on cardmember loans (D) 9.5% 8.6% 9.7% 8.8% Worldwide cardmember lending - managed basis (E): Total loans $ 61.8 $ 72.0 (14)% $ 61.8 $ 72.0 (14)% 30 days past due loans as a % of total 3.6% 4.6% 3.6% 4.6% Net write-offs - principal (millions) $ 1,106 $ 1,181 (6) 5,366 4,065 32 Average loans $ 60.9 $ 72.8 (16)% $ 63.8 $ 75.0 (15)% Net write-off rate 7.3% 6.5% 8.4% 5.4% Net interest yield on cardmember loans (D) 10.0% 8.9% 10.2% 9.2%
# - Denotes a variance of more than 100%. (A) In the fourth quarter of 2008, the Company revised the time period in which past due cardmember receivables in U.S. Card Services are written off to 180 days past due, consistent with applicable regulatory guidance. Previously, receivables were written off when 360 days past due. The net write-offs for the fourth quarter and full year 2008 include write-offs of $341 million resulting from this write-off methodology change, which is not reflected in the net write-off rate for U.S. Card Services. Including the $341 million in write-offs, the net write-off rate was 11.0 percent and 5.4 percent for the fourth quarter and full year 2008, respectively. (B) "Owned," a GAAP basis measurement, reflects only cardmember loans included in the Company's Consolidated Balance Sheets. (C) This amount includes reserves of $(9) million for the quarter ended December 31, 2009 and $160 million for the year ended December 31, 2009 that were (added) removed in connection with (maturities) securitizations during the period. The offset is in the allocated cost of the associated retained subordinated securities. This amount also includes foreign currency translation adjustments. The prior period included foreign currency translation and other adjustments primarily related to the reclassification of certain waived fee reserves to a contra-cardmember receivable. (D) See Appendix III for discussion of net interest yield on cardmember loans. (E) 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. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. -6- (Preliminary) AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF INCOME (Millions)
Quarters Ended -------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Revenues Non-interest revenues Discount revenue $ 3,645 $ 3,373 $ 3,305 $ 3,066 $ 3,468 Net card fees 549 538 532 532 536 Travel commissions and fees 439 383 407 365 444 Other commissions and fees 438 448 439 453 522 Securitization income, net 190 71 (2) 141 199 Other 518 449 670 450 566 ------------- ------------- ------------- ------------- ------------- Total non-interest revenues 5,779 5,262 5,351 5,007 5,735 ------------- ------------- ------------- ------------- ------------- Interest income Interest and fees on loans 1,036 1,059 1,081 1,292 1,364 Interest and dividends on investment securities 225 229 196 154 168 Deposits with banks and other 11 9 11 28 36 ------------- ------------- ------------- ------------- ------------- Total interest income 1,272 1,297 1,288 1,474 1,568 ------------- ------------- ------------- ------------- ------------- Interest expense Deposits 126 109 105 85 73 Short-term borrowings 1 2 7 27 72 Long-term debt and other 435 432 435 443 652 ------------- ------------- ------------- ------------- ------------- Total interest expense 562 543 547 555 797 ------------- ------------- ------------- ------------- ------------- Net interest income 710 754 741 919 771 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense 6,489 6,016 6,092 5,926 6,506 ------------- ------------- ------------- ------------- ------------- Provisions for losses Charge card 141 143 237 336 426 Cardmember lending 560 989 1,303 1,414 927 Other 47 46 44 53 51 ------------- ------------- ------------- ------------- ------------- Total provisions for losses 748 1,178 1,584 1,803 1,404 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense after provision for losses 5,741 4,838 4,508 4,123 5,102 ------------- ------------- ------------- ------------- ------------- Expenses Marketing and promotion 713 504 352 345 524 Cardmember rewards 1,178 983 1,029 846 1,088 Cardmember services 143 132 131 111 140 Salaries and employee benefits 1,196 1,261 1,370 1,253 1,660 Professional services 715 575 599 519 649 Occupancy and equipment 495 374 392 358 456 Communications 99 105 106 104 118 Other, net 241 (14) 111 43 199 ------------- ------------- ------------- ------------- ------------- Total 4,780 3,920 4,090 3,579 4,834 ------------- ------------- ------------- ------------- ------------- Pretax income from continuing operations 961 918 418 544 268 Income tax provision (benefit) 251 276 76 101 (38) ------------- ------------- ------------- ------------- ------------- Income from continuing operations 710 642 342 443 306 Income (Loss) from discontinued operations, net of tax 6 (2) (5) (6) (66) ------------- ------------- ------------- ------------- ------------- Net income $ 716 $ 640 $ 337 $ 437 $ 240 ============= ============= ============= ============= ============= Income from continuing operations attributable to common shareholders (A) $ 701 $ 634 $ 107 $ 367 $ 305 ============= ============= ============= ============= ============= Net income attributable to common shareholders (A) $ 707 $ 632 $ 102 $ 361 $ 239 ============= ============= ============= ============= =============
(A) Represents income from continuing operations or net income, as applicable, less (i) accelerated preferred dividend accretion of $212 million for the quarter 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 share dividends and related accretion of $22 million for the quarter ended June 30, 2009 and $72 million for the quarter ended March 31, 2009, respectively, and (iii) earnings allocated to participating share awards of $9 million for the quarter ended December 31, 2009, $8 million for the quarter ended September 30, 2009, $1 million for the quarter ended June 30, 2009, $4 million for the quarter ended March 31, 2009, and $1 million for the quarter ended December 31, 2008, respectively. -7- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Millions)
Quarters Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- TOTAL REVENUES NET OF INTEREST EXPENSE U.S. Card Services $ 3,109 $ 2,903 $ 2,805 $ 3,074 $ 3,223 International Card Services 1,221 1,148 1,091 1,023 1,098 Global Commercial Services 1,102 997 1,003 944 1,044 Global Network & Merchant Services 1,007 963 910 836 945 ------------- ------------- ------------- ------------- ------------- 6,439 6,011 5,809 5,877 6,310 Corporate & Other, including adjustments and eliminations 50 5 283 49 196 ------------- ------------- ------------- ------------- ------------- CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,489 $ 6,016 $ 6,092 $ 5,926 $ 6,506 ============= ============= ============= ============= ============= PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS U.S. Card Services $ 567 $ 139 $ (332) $ (50) $ 49 International Card Services 46 127 49 8 (38) Global Commercial Services 171 170 99 128 (42) Global Network & Merchant Services 298 358 360 365 303 ------------- ------------- ------------- ------------- ------------- 1,082 794 176 451 272 Corporate & Other (121) 124 242 93 (4) ------------- ------------- ------------- ------------- ------------- PRETAX INCOME FROM CONTINUING OPERATIONS $ 961 $ 918 $ 418 $ 544 $ 268 ============= ============= ============= ============= ============= NET INCOME (LOSS) U.S. Card Services $ 365 $ 109 $ (200) $ (25) $ 64 International Card Services 73 127 64 39 36 Global Commercial Services 117 116 71 86 (7) Global Network & Merchant Services 185 240 236 237 215 ------------- ------------- ------------- ------------- ------------- 740 592 171 337 308 Corporate & Other (30) 50 171 106 (2) ------------- ------------- ------------- ------------- ------------- Income from continuing operations 710 642 342 443 306 Income (Loss) from discontinued operations, net of tax 6 (2) (5) (6) (66) ------------- ------------- ------------- ------------- ------------- NET INCOME $ 716 $ 640 $ 337 $ 437 $ 240 ============= ============= ============= ============= =============
-8- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED)
Quarters Ended ------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- EARNINGS PER COMMON SHARE BASIC Income from continuing operations attributable to common shareholders $ 0.59 $ 0.54 $ 0.09 $ 0.32 $ 0.26 Income (Loss) from discontinued operations 0.01 - - (0.01) (0.05) ------------- ------------- ------------- ------------- ------------- Net income attributable to common shareholders $ 0.60 $ 0.54 $ 0.09 $ 0.31 $ 0.21 ============= ============= ============= ============= ============= Average common shares outstanding (millions) 1,179 1,178 1,162 1,156 1,155 ============= ============= ============= ============= ============= DILUTED Income from continuing operations attributable to common shareholders $ 0.59 $ 0.54 $ 0.09 $ 0.32 $ 0.26 Income (Loss) from discontinued operations 0.01 (0.01) - (0.01) (0.05) ------------- ------------- ------------- ------------- ------------- Net income attributable to common shareholders $ 0.60 $ 0.53 $ 0.09 $ 0.31 $ 0.21 ============= ============= ============= ============= ============= Average common shares outstanding (millions) 1,184 1,181 1,165 1,156 1,155 ============= ============= ============= ============= ============= Cash dividends declared per common share $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 ============= ============= ============= ============= =============
SELECTED STATISTICAL INFORMATION
Quarters Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Return on average equity (A) 14.6% 11.7% 13.2% 16.3% 22.3% Return on average common equity (A) 13.6% 10.4% 12.0% 16.7% 22.1% Return on average tangible common equity (A) 17.6% 13.5% 15.6% 21.6% 28.0% Common shares outstanding (millions) 1,192 1,189 1,189 1,168 1,160 Book value per common share $ 12.08 $ 11.72 $ 11.28 $ 10.61 $ 10.21 Shareholders' equity (billions) $ 14.4 $ 13.9 $ 13.4 $ 15.8 $ 11.8
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity. -9- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Card billed business (A): United States $ 115.0 $ 106.5 $ 104.8 $ 97.4 $ 112.7 Outside the United States 57.6 50.1 46.6 41.8 47.8 ------------- ------------- ------------- ------------- ------------- Total $ 172.6 $ 156.6 $ 151.4 $ 139.2 $ 160.5 ============= ============= ============= ============= ============= Total cards-in-force (millions) (B): United States 48.9 49.4 49.8 53.4 54.0 Outside the United States 39.0 39.0 38.7 38.2 38.4 ------------- ------------- ------------- ------------- ------------- Total 87.9 88.4 88.5 91.6 92.4 ============= ============= ============= ============= ============= Basic cards-in-force (millions) (B): United States 38.2 38.6 38.7 41.6 42.0 Outside the United States 34.3 34.3 33.9 33.3 33.4 ------------- ------------- ------------- ------------- ------------- Total 72.5 72.9 72.6 74.9 75.4 ============= ============= ============= ============= ============= Average discount rate (C) 2.51% 2.54% 2.55% 2.56% 2.53% Average basic cardmember spending (dollars) (D) $ 3,209 $ 2,898 $ 2,712 $ 2,443 $ 2,792 Average fee per card (dollars) (D) $ 39 $ 37 $ 35 $ 34 $ 34 Average fee per card adjusted (dollars) (D) $ 42 $ 41 $ 39 $ 38 $ 38
(A) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements, and certain insurance fees charged on proprietary cards. Card billed business is reflected in the United States or outside the United States based on where the cardmember is domiciled. (B) Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee cardmembers. Non-proprietary basic cards-in-force includes all cards that are issued and outstanding under network partnership agreements. (C) This calculation is designed to approximate merchant pricing. It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance. (D) Average basic cardmember spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs, plus card fees included in interest and fees on loans (including related amortization of deferred direct acquisition costs), divided by average worldwide proprietary cards-in-force. The card fees related to cardmember loans included in interest and fees on loans were $54 million for the quarter ended December 31, 2009, $47 million for the quarter ended September 30, 2009, $45 million for the quarter ended June 30, 2009, $40 million for the quarter ended March 31, 2009, and $41 million for the quarter ended December 31, 2008, respectively. The adjusted average fee per card is computed in the same manner, but excludes amortization of deferred direct acquisition costs (a portion of which is charge card related and included in net card fees and a portion of which is lending related and included in interest and fees on loans). The amount of amortization excluded for these periods was $54 million for the quarter ended December 31, 2009, $57 million for the quarter ended September 30, 2009, $62 million for the quarter ended June 30, 2009, $70 million for the quarter ended March 31, 2009, and $76 million for the quarter ended December 31, 2008, respectively. The Company presents adjusted average fee per card because management believes that this metric presents a useful indicator of card fee pricing across a range of its proprietary card products. -10- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (CONTINUED) (Billions, except percentages and where indicated)
Quarters Ended ------------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Worldwide cardmember receivables: Total receivables $ 33.7 $ 32.1 $ 31.4 $ 30.3 $ 33.0 Loss reserves (millions): Beginning balance $ 599 $ 714 $ 810 $ 810 $ 1,134 Provision 141 143 237 336 426 Net write-offs (A) (194) (265) (340) (332) (669) Other - 7 7 (4) (81) ------------- ------------- ------------- ------------- ------------- Ending balance $ 546 $ 599 $ 714 $ 810 $ 810 ============= ============= ============= ============= ============= % of receivables 1.6% 1.9% 2.3% 2.7% 2.5% Net write-off rate - USCS (A) 1.9% 3.2% 5.2% 4.9% 3.5% 30 days past due as a % of total - USCS 1.8% 2.2% 2.6% 3.7% 3.7% Net loss ratio as a % of charge volume - ICS 0.37% 0.37% 0.36% 0.35% 0.30% 90 days past due as a % of total - ICS 2.1% 2.5% 3.0% 3.3% 3.1% Net loss ratio as a % of charge volume - GCS 0.14% 0.23% 0.22% 0.17% 0.14% 90 days past due as a % of total - GCS 1.4% 1.5% 1.9% 2.4% 2.7% Worldwide cardmember lending - owned basis (B): Total loans $ 32.8 $ 31.5 $ 32.5 $ 36.7 $ 42.2 30 days past due loans as a % of total 3.6% 4.0% 4.3% 4.9% 4.4% Loss reserves (millions): Beginning balance $ 3,359 $ 3,219 $ 3,013 $ 2,570 $ 2,640 Provision 544 973 1,291 1,401 897 Net write-offs - principal (589) (731) (847) (782) (702) Write-offs - interest and fees (72) (90) (131) (155) (143) Other (C) 26 (12) (107) (21) (122) ------------- ------------- ------------- ------------- ------------- Ending balance $ 3,268 $ 3,359 $ 3,219 $ 3,013 $ 2,570 ============= ============= ============= ============= ============= Ending Reserves - principal $ 3,172 $ 3,246 $ 3,035 $ 2,806 $ 2,379 Ending Reserves - interest and fees $ 96 $ 113 $ 184 $ 207 $ 191 % of loans 10.0% 10.7% 9.9% 8.2% 6.1% % of past due 279% 264% 230% 168% 137% Average loans $ 31.8 $ 32.3 $ 35.2 $ 39.0 $ 43.0 Net write-off rate 7.4% 9.1% 9.6% 8.0% 6.5% Net interest yield on cardmember loans (D) 9.5% 9.7% 9.2% 10.5% 8.6% Worldwide cardmember lending - managed basis (E): Total loans $ 61.8 $ 60.7 $ 62.9 $ 65.0 $ 72.0 30 days past due loans as a % of total 3.6% 4.0% 4.3% 5.0% 4.6% Net write-offs - principal (millions) $ 1,106 $ 1,327 $ 1,541 $ 1,392 $ 1,181 Average loans $ 60.9 $ 61.8 $ 63.9 $ 67.9 $ 72.8 Net write-off rate 7.3% 8.6% 9.7% 8.2% 6.5% Net interest yield on cardmember loans (D) 10.0% 10.0% 9.9% 10.9% 8.9%
(A) In the fourth quarter of 2008, the Company revised the time period in which past due cardmember receivables in U.S. Card Services are written off to 180 days past due, consistent with applicable regulatory guidance. Previously, receivables were written off when 360 days past due. The net write-offs for the fourth quarter of 2008 include write-offs of $341 million resulting from this write-off methodology change, which is not reflected in the net write-off rate for U.S. Card Services. Including the $341 million in write-offs, the net write-off rate was 11.0 percent for the fourth quarter of 2008. (B) "Owned," a GAAP basis measurement, reflects only cardmember loans included in the Company's Consolidated Balance Sheets. (C) This amount includes reserves of $(9) million for the quarter ended December 31, 2009, $25 million for the quarter ended September 30, 2009 and $144 million for the quarter ended June 30, 2009 that were (added) removed in connection with (maturities) securitizations during the period. The offset is in the allocated cost of the associated retained subordinated securities. This amount also includes foreign currency translation adjustments. Prior periods included foreign currency translation adjustments, and the quarter ended December 31, 2008 also included other adjustments primarily related to the reclassification of waived fee reserves to a contra-cardmember receivable. (D) See Appendix III for discussion of net interest yield on cardmember loans. (E) 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. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. -11- (Preliminary) U.S. CARD SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue, net card fees and other $ 2,380 $ 2,465 (3)% $ 9,125 $ 10,357 (12)% Securitization income, net 190 199 (5) 400 1,070 (63) Interest income 755 1,049 (28) 3,221 4,736 (32) Interest expense 216 490 (56) 855 2,166 (61) ---------- ---------- ---------- ---------- Net interest income 539 559 (4) 2,366 2,570 (8) ---------- ---------- ---------- ---------- Total revenues net of interest expense 3,109 3,223 (4) 11,891 13,997 (15) ---------- ---------- ---------- ---------- Provisions for losses 346 1,051 (67) 3,769 4,389 (14) ---------- ---------- ---------- ---------- Total revenues net of interest expense after provisions for losses 2,763 2,172 27 8,122 9,608 (15) ---------- ---------- ---------- ---------- Expenses Marketing, promotion, rewards and cardmember services 1,306 1,208 8 4,266 4,837 (12) Salaries and employee benefits and other operating expenses 890 915 (3) 3,532 3,630 (3) ---------- ---------- ---------- ---------- Total 2,196 2,123 3 7,798 8,467 (8) ---------- ---------- ---------- ---------- Pretax segment income 567 49 # 324 1,141 (72) Income tax provision (benefit) 202 (15) # 75 289 (74) ---------- ---------- ---------- ---------- Segment income $ 365 $ 64 # $ 249 $ 852 (71) ========== ========== ========== ==========
# - Denotes a variance of more than 100%. -12- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION MANAGED BASIS PRESENTATION (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- INCOME STATEMENT DATA Discount revenue, net card fees and other: Reported for the period (GAAP) $ 2,380 $ 2,465 (3)% $ 9,125 $ 10,357 (12) Securitization adjustments 71 110 (35) 331 400 (17) ---------- ---------- ---------- ---------- Managed discount revenue, net card fees and other $ 2,451 $ 2,575 (5) $ 9,456 $ 10,757 (12) ---------- ---------- ---------- ---------- Interest income: Reported for the period (GAAP) $ 755 $ 1,049 (28) $ 3,221 $ 4,736 (32) Securitization adjustments 726 902 (20) 3,097 3,512 (12) ---------- ---------- ---------- ---------- Managed interest income $ 1,481 $ 1,951 (24) $ 6,318 $ 8,248 (23) ---------- ---------- ---------- ---------- Securitization income, net: Reported for the period (GAAP) $ 190 $ 199 (5) $ 400 $ 1,070 (63) Securitization adjustments (190) (199) (5) (400) (1,070) (63) ---------- ---------- ---------- ---------- Managed securitization income, net $ - $ - - $ - $ - - ---------- ---------- ---------- ---------- Interest expense: Reported for the period (GAAP) $ 216 $ 490 (56) $ 855 $ 2,166 (61) Securitization adjustments 55 230 (76) 244 830 (71) ---------- ---------- ---------- ---------- Managed interest expense $ 271 $ 720 (62) $ 1,099 $ 2,996 (63) ---------- ---------- ---------- ---------- Provisions for losses: Reported for the period (GAAP) $ 346 $ 1,051 (67) $ 3,769 $ 4,389 (14) Securitization adjustments 572 577 (1) 2,573 2,002 29 ---------- ---------- ---------- ---------- Managed provisions for losses $ 918 $ 1,628 (44) $ 6,342 $ 6,391 (1) ---------- ---------- ---------- ----------
# - Denotes a variance of more than 100%. For U.S. Card Services, 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. For the managed basis presentation, revenue and expenses related to securitized cardmember loans are reflected in other commissions and fees (included above in discount revenue, net card fees and other), interest income, interest expense, and provisions for losses. On a managed basis, there is no securitization income, net as the managed basis presentation assumes no securitization transactions have occurred. 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. -13- (Preliminary) U.S. CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Card billed business $ 92.1 $ 92.0 -% $ 339.4 $ 382.0 (11)% Total cards-in-force (millions) 39.5 44.2 (11)% 39.5 44.2 (11)% Basic cards-in-force (millions) 29.5 32.9 (10)% 29.5 32.9 (10)% Average basic cardmember spending (dollars) $ 3,112 $ 2,758 13% $ 10,957 $ 11,594 (5)% U.S. Consumer Travel: Travel sales (millions) $ 609 $ 655 (7)% $ 2,561 $ 3,113 (18)% Travel commissions and fees/sales 8.5% 7.8% 8.4% 8.2% Total segment assets $ 57.9 $ 77.8 (26)% $ 57.9 $ 77.8 (26)% Segment capital (millions) (A) $ 6,510 $ 4,788 36% $ 6,510 $ 4,788 36% Return on average segment capital (B) 4.5% 18.0% 4.5% 18.0% Return on average tangible segment capital (B) 4.8% 19.0% 4.8% 19.0% Cardmember receivables: Total receivables $ 17.8 $ 17.8 -% $ 17.8 $ 17.8 -% 30 days past due receivables as a % of total 1.8% 3.7% 1.8% 3.7% Average receivables $ 16.5 $ 18.1 (9)% $ 16.1 $ 19.2 (16)% Net write-off rate (C) 1.9% 3.5% 3.8% 3.6% Cardmember lending - owned basis (D): Total loans $ 23.5 $ 32.7 (28)% $ 23.5 $ 32.7 (28)% 30 days past due loans as a % of total 3.7% 4.7% 3.7% 4.7% Average loans $ 22.7 $ 33.2 (32)% $ 25.9 $ 36.7 (29)% Net write-off rate 8.0% 7.0% 9.1% 5.8% Net interest yield on cardmember loans (E) 8.6% 8.2% 9.0% 8.5% Cardmember lending - managed basis (F): Total loans $ 52.6 $ 62.4 (16)% $ 52.6 $ 62.4 (16)% 30 days past due loans as a % of total 3.7% 4.7% 3.7% 4.7% Average loans $ 51.8 $ 63.0 (18)% $ 54.9 $ 64.0 (14)% Net write-off rate 7.5% 6.7% 8.7% 5.5% Net interest yield on cardmember loans (E) 9.7% 8.7% 9.9% 9.1%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. (C) In the fourth quarter of 2008, the Company revised the time period in which past due cardmember receivables in U.S. Card Services are written off to 180 days past due, consistent with applicable regulatory guidance. Previously, receivables were written off when 360 days past due. The net write-offs for the fourth quarter and full year 2008 include write-offs of $341 million resulting from this write-off methodology change, which is not reflected in the net write-off rate for U.S. Card Services. Including the $341 million in write-offs, the net write-off rate was 11.0 percent and 5.4 percent for the fourth quarter and full year 2008, respectively. (D) "Owned," a GAAP basis measurement, reflects only cardmember loans included in the Company's Consolidated Balance Sheets. (E) See Appendix IV for discussion of net interest yield on cardmember loans. (F) 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. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. -14- (Preliminary) U.S. CARD SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Revenues Discount revenue, net card fees and other $ 2,380 $ 2,267 $ 2,273 $ 2,205 $ 2,465 Securitization income, net 190 71 (2) 141 199 Interest income 755 772 748 946 1,049 Interest expense 216 207 214 218 490 ------------- ------------- ------------- ------------- ------------- Net interest income 539 565 534 728 559 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense 3,109 2,903 2,805 3,074 3,223 ------------- ------------- ------------- ------------- ------------- Provisions for losses 346 850 1,190 1,383 1,051 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense after provisions for losses 2,763 2,053 1,615 1,691 2,172 ------------- ------------- ------------- ------------- ------------- Expenses Marketing, promotion, rewards and cardmember services 1,306 1,050 1,021 889 1,208 Salaries and employee benefits and other operating expenses 890 864 926 852 915 ------------- ------------- ------------- ------------- ------------- Total 2,196 1,914 1,947 1,741 2,123 ------------- ------------- ------------- ------------- ------------- Pretax segment income (loss) 567 139 (332) (50) 49 Income tax provision (benefit) 202 30 (132) (25) (15) ------------- ------------- ------------- ------------- ------------- Segment income (loss) $ 365 $ 109 $ (200) $ (25) $ 64 ============= ============= ============= ============= =============
-15- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION MANAGED BASIS PRESENTATION (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- INCOME STATEMENT DATA Discount revenue, net card fees and other: Reported for the period (GAAP) $ 2,380 $ 2,267 $ 2,273 $ 2,205 $ 2,465 Securitization adjustments 71 82 79 99 110 ------------- ------------- ------------- ------------- ------------- Managed discount revenue, net card fees and other $ 2,451 $ 2,349 $ 2,352 $ 2,304 $ 2,575 ------------- ------------- ------------- ------------- ------------- Interest income: Reported for the period (GAAP) $ 755 $ 772 $ 748 $ 946 $ 1,049 Securitization adjustments 726 714 771 886 902 ------------- ------------- ------------- ------------- ------------- Managed interest income $ 1,481 $ 1,486 $ 1,519 $ 1,832 $ 1,951 ------------- ------------- ------------- ------------- ------------- Securitization income, net: Reported for the period (GAAP) $ 190 $ 71 $ (2) $ 141 $ 199 Securitization adjustments (190) (71) 2 (141) (199) ------------- ------------- ------------- ------------- ------------- Managed securitization income, net $ - $ - $ - $ - $ - ------------- ------------- ------------- ------------- ------------- Interest expense: Reported for the period (GAAP) $ 216 $ 207 $ 214 $ 218 $ 490 Securitization adjustments 55 58 48 83 230 ------------- ------------- ------------- ------------- ------------- Managed interest expense $ 271 $ 265 $ 262 $ 301 $ 720 ------------- ------------- ------------- ------------- ------------- Provisions for losses: Reported for the period (GAAP) $ 346 $ 850 $ 1,190 $ 1,383 $ 1,051 Securitization adjustments 572 529 836 636 577 ------------- ------------- ------------- ------------- ------------- Managed provisions for losses $ 918 $ 1,379 $ 2,026 $ 2,019 $ 1,628 ------------- ------------- ------------- ------------- -------------
See page 21 for discussion of managed basis presentation. -16- (Preliminary) U.S. CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Card billed business $ 92.1 $ 85.2 $ 84.1 $ 78.0 $ 92.0 Total cards-in-force (millions) 39.5 39.8 40.2 43.4 44.2 Basic cards-in-force (millions) 29.5 29.7 29.8 32.3 32.9 Average basic cardmember spending (dollars) $ 3,112 $ 2,851 $ 2,667 $ 2,391 $ 2,758 U.S. Consumer Travel: Travel sales $ 0.6 $ 0.6 $ 0.7 $ 0.6 $ 0.7 Travel commissions and fees/sales 8.5% 8.4% 8.5% 8.1% 7.8% Total segment assets $ 57.9 $ 53.2 $ 54.1 $ 55.6 $ 77.8 Segment capital (A) $ 6.5 $ 5.8 $ 5.9 $ 4.8 $ 4.8 Return on average segment capital (B) 4.5% -1.0% 1.6% 6.3% 18.0% Return on average tangible segment capital (B) 4.8% -1.1% 1.7% 6.7% 19.0% Cardmember receivables: Total receivables $ 17.8 $ 15.9 $ 15.9 $ 15.6 $ 17.8 30 days past due receivables as a % of total 1.8% 2.2% 2.6% 3.7% 3.7% Average receivables $ 16.5 $ 15.8 $ 15.7 $ 16.1 $ 18.1 Net write-off rate (C) 1.9% 3.2% 5.2% 4.9% 3.5% Cardmember lending - owned basis (D): Total loans $ 23.5 $ 22.7 $ 23.6 $ 28.2 $ 32.7 30 days past due loans as a % of total 3.7% 4.2% 4.4% 5.1% 4.7% Average loans $ 22.7 $ 23.4 $ 26.5 $ 30.2 $ 33.2 Net write-off rate 8.0% 9.8% 10.3% 8.5% 7.0% Net interest yield on cardmember loans (E) 8.6% 8.8% 8.3% 10.2% 8.2% Cardmember lending - managed basis (F): Total loans $ 52.6 $ 51.9 $ 54.0 $ 56.5 $ 62.4 30 days past due loans as a % of total 3.7% 4.1% 4.4% 5.1% 4.7% Average loans $ 51.8 $ 52.9 $ 55.1 $ 59.1 $ 63.0 Net write-off rate 7.5% 8.9% 10.0% 8.5% 6.7% Net interest yield on cardmember loans (E) 9.7% 9.6% 9.5% 10.8% 8.7%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. (C) In the fourth quarter of 2008, the Company revised the time period in which past due cardmember receivables in U.S. Card Services are written off to 180 days past due, consistent with applicable regulatory guidance. Previously, receivables were written off when 360 days past due. The net write-offs for the fourth quarter of 2008 include write-offs of $341 million resulting from this write-off methodology change, which is not reflected in the net write-off rate for U.S. Card Services. Including the $341 million in write-offs, the net write-off rate was 11.0 percent for the fourth quarter of 2008. (D) "Owned," a GAAP basis measurement, reflects only cardmember loans included in the Company's Consolidated Balance Sheets. (E) See Appendix IV for discussion of net interest yield on cardmember loans. (F) 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. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. -17- (Preliminary) INTERNATIONAL CARD SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue, net card fees and other $ 943 $ 864 9% $ 3,404 $ 3,758 (9)% ---------- ---------- ---------- ---------- Interest income 397 427 (7) 1,588 1,984 (20) Interest expense 119 193 (38) 509 961 (47) ---------- ---------- ---------- ---------- Net interest income 278 234 19 1,079 1,023 5 ---------- ---------- ---------- ---------- Total revenues net of interest expense 1,221 1,098 11 4,483 4,781 (6) ---------- ---------- ---------- ---------- Provisions for losses 324 243 33 1,211 1,030 18 ---------- ---------- ---------- ---------- Total revenues net of interest expense after provisions for losses 897 855 5 3,272 3,751 (13) ---------- ---------- ---------- ---------- Expenses Marketing, promotion, rewards and cardmember services 374 303 23 1,221 1,453 (16) Salaries and employee benefits and other operating expenses 477 590 (19) 1,821 2,145 (15) ---------- ---------- ---------- ---------- Total 851 893 (5) 3,042 3,598 (15) ---------- ---------- ---------- ---------- Pretax segment income (loss) 46 (38) # 230 153 50 Income tax benefit (27) (74) (64) (73) (198) (63) ---------- ---------- ---------- ---------- Segment income $ 73 $ 36 # $ 303 $ 351 (14) ========== ========== ========== ==========
# - Denotes variance of more than 100%. -18- (Preliminary) INTERNATIONAL CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Card billed business $ 27.5 $ 24.2 14% $ 94.9 $ 106.1 (11)% Total cards-in-force (millions) 15.0 16.3 (8)% 15.0 16.3 (8)% Basic cards-in-force (millions) 10.5 11.4 (8)% 10.5 11.4 (8)% Average basic cardmember spending (dollars) $ 2,618 $ 2,109 24% $ 8,758 $ 9,292 (6)% International Consumer Travel: Travel sales (millions) $ 278 $ 266 5% $ 985 $ 1,267 (22)% Travel commissions and fees/sales 9.0% 7.5% 8.6% 8.1% Total segment assets $ 20.4 $ 20.4 -% $ 20.4 $ 20.4 -% Segment capital (millions) (A) $ 2,164 $ 1,997 8% $ 2,164 $ 1,997 8% Return on average segment capital (B) 14.3% 16.7% 14.3% 16.7% Return on average tangible segment capital (B) 19.3% 22.5% 19.3% 22.5% Cardmember receivables: Total receivables $ 5.9 $ 5.6 5% $ 5.9 $ 5.6 5% 90 days past due as a % of total 2.1% 3.1% 2.1% 3.1% Net loss ratio as a % of charge volume 0.37% 0.30% 0.36% 0.24% Cardmember lending: Total loans $ 9.2 $ 9.5 (3)% $ 9.2 $ 9.5 (3)% 30 days past due loans as a % of total 3.3% 3.6% 3.3% 3.6% Average loans $ 9.0 $ 9.8 (8)% $ 8.9 $ 10.9 (18)% Net write-off rate 6.1% 5.1% 6.8% 4.8% Net interest yield on cardmember loans (C) 11.7% 9.8% 11.9% 9.8%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. (C) See Appendix IV for discussion of net interest yield on cardmember loans. -19- (Preliminary) INTERNATIONAL CARD SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Revenues Discount revenue, net card fees and other $ 943 $ 866 $ 823 $ 772 $ 864 ------------- ------------- ------------- ------------- ------------- Interest income 397 392 399 400 427 Interest expense 119 110 131 149 193 ------------- ------------- ------------- ------------- ------------- Net interest income 278 282 268 251 234 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense 1,221 1,148 1,091 1,023 1,098 ------------- ------------- ------------- ------------- ------------- Provisions for losses 324 250 302 335 243 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense after provisions for losses 897 898 789 688 855 ------------- ------------- ------------- ------------- ------------- Expenses Marketing, promotion, rewards and cardmember services 374 302 287 258 303 Salaries and employee benefits and other operating expenses 477 469 453 422 590 ------------- ------------- ------------- ------------- ------------- Total 851 771 740 680 893 ------------- ------------- ------------- ------------- ------------- Pretax segment income (loss) 46 127 49 8 (38) Income tax benefit (27) - (15) (31) (74) ------------- ------------- ------------- ------------- ------------- Segment income $ 73 $ 127 $ 64 $ 39 $ 36 ============= ============= ============= ============= =============
-20- (Preliminary) INTERNATIONAL CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Card billed business $ 27.5 $ 24.2 $ 22.7 $ 20.5 $ 24.2 Total cards-in-force (millions) 15.0 15.2 15.5 15.8 16.3 Basic cards-in-force (millions) 10.5 10.6 10.8 11.0 11.4 Average basic cardmember spending (dollars) $ 2,618 $ 2,273 $ 2,083 $ 1,823 $ 2,109 International Consumer Travel: Travel sales $ 0.3 $ 0.3 $ 0.2 $ 0.2 $ 0.3 Travel commissions and fees/sales 9.0% 8.5% 8.7% 8.3% 7.5% Total segment assets $ 20.4 $ 19.3 $ 19.3 $ 17.7 $ 20.4 Segment capital (A) $ 2.2 $ 2.3 $ 2.2 $ 2.0 $ 2.0 Return on average segment capital (B) 14.3% 12.4% 9.7% 12.3% 16.7% Return on average tangible segment capital (B) 19.3% 16.7% 13.1% 16.6% 22.5% Cardmember receivables: Total receivables $ 5.9 $ 5.6 $ 5.4 $ 5.0 $ 5.6 90 days past due as a % of total 2.1% 2.5% 3.0% 3.3% 3.1% Net loss ratio as a % of charge volume 0.37% 0.37% 0.36% 0.35% 0.30% Cardmember lending: Total loans $ 9.2 $ 8.8 $ 8.9 $ 8.5 $ 9.5 30 days past due loans as a % of total 3.3% 3.7% 4.0% 4.2% 3.6% Average loans $ 9.0 $ 8.9 $ 8.7 $ 8.8 $ 9.8 Net write-off rate 6.1% 7.1% 7.5% 6.4% 5.1% Net interest yield on cardmember loans (C) 11.7% 12.3% 12.2% 11.7% 9.8%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. (C) See Appendix IV for discussion of net interest yield on cardmember loans. -21- (Preliminary) GLOBAL COMMERCIAL SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue, net card fees and other $ 1,124 $ 1,150 (2)% $ 4,157 $ 5,081 (18)% ---------- ---------- ---------- ---------- Interest income 11 30 (63) 61 168 (64) Interest expense 33 136 (76) 172 553 (69) ---------- ---------- ---------- ---------- Net interest income (22) (106) (79) (111) (385) (71) ---------- ---------- ---------- ---------- Total revenues net of interest expense 1,102 1,044 6 4,046 4,696 (14) ---------- ---------- ---------- ---------- Provisions for losses 37 69 (46) 177 231 (23) ---------- ---------- ---------- ---------- Total revenues net of interest expense after provisions for losses 1,065 975 9 3,869 4,465 (13) ---------- ---------- ---------- ---------- Expenses Marketing, promotion, rewards and cardmember services 98 79 24 332 377 (12) Salaries and employee benefits and other operating expenses 796 938 (15) 2,969 3,395 (13) ---------- ---------- ---------- ---------- Total 894 1,017 (12) 3,301 3,772 (12) ---------- ---------- ---------- ---------- Pretax segment income (loss) 171 (42) # 568 693 (18) Income tax provision (benefit) 54 (35) # 178 188 (5) ---------- ---------- ---------- ---------- Segment income (loss) $ 117 $ (7) # $ 390 $ 505 (23) ========== ========== ========== ==========
# - Denotes variance of more than 100%. -22- (Preliminary) GLOBAL COMMERCIAL SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Card billed business $ 31.0 $ 28.7 8% $ 111.2 $ 129.2 (14)% Total cards-in-force (millions) 7.1 7.1 -% 7.1 7.1 -% Basic cards-in-force (millions) 7.1 7.1 -% 7.1 7.1 -% Average basic cardmember spending (dollars) $ 4,357 $ 4,070 7% $ 15,544 $ 18,527 (16)% Global Corporate Travel: Travel sales $ 4.1 $ 4.3 (5)% $ 14.6 $ 21.0 (30)% Travel commissions and fees/sales 8.8% 8.4% 8.8% 7.8% Total segment assets $ 22.9 $ 25.1 (9)% $ 22.9 $ 25.1 (9)% Segment capital (millions) (A) $ 3,445 $ 3,550 (3)% $ 3,445 $ 3,550 (3)% Return on average segment capital (B) 11.3% 15.8% 11.3% 15.8% Return on average tangible segment capital (B) 25.9% 34.3% 25.9% 34.3% Cardmember receivables: Total receivables $ 9.8 $ 9.4 4% $ 9.8 $ 9.4 4% 90 days past due as a % of total 1.4% 2.7% 1.4% 2.7% Net loss ratio as a % of charge volume 0.14% 0.14% 0.19% 0.13%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. -23- (Preliminary) GLOBAL COMMERCIAL SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Revenues Discount revenue, net card fees and other $ 1,124 $ 1,017 $ 1,035 $ 981 $ 1,150 ------------- ------------- ------------- ------------- ------------- Interest income 11 8 21 21 30 Interest expense 33 28 53 58 136 ------------- ------------- ------------- ------------- ------------- Net interest income (22) (20) (32) (37) (106) ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense 1,102 997 1,003 944 1,044 ------------- ------------- ------------- ------------- ------------- Provisions for losses 37 40 53 47 69 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense after provisions for losses 1,065 957 950 897 975 ------------- ------------- ------------- ------------- ------------- Expenses Marketing, promotion, rewards and cardmember services 98 81 74 79 79 Salaries and employee benefits and other operating expenses 796 706 777 690 938 ------------- ------------- ------------- ------------- ------------- Total 894 787 851 769 1,017 ------------- ------------- ------------- ------------- ------------- Pretax segment income (loss) 171 170 99 128 (42) Income tax provision (benefit) 54 54 28 42 (35) ------------- ------------- ------------- ------------- ------------- Segment income (loss) $ 117 $ 116 $ 71 $ 86 $ (7) ============= ============= ============= ============= =============
-24- (Preliminary) GLOBAL COMMERCIAL SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Card billed business $ 31.0 $ 27.9 $ 27.2 $ 25.1 $ 28.7 Total cards-in-force (millions) 7.1 7.1 7.2 7.3 7.1 Basic cards-in-force (millions) 7.1 7.1 7.2 7.3 7.1 Average basic cardmember spending (dollars) $ 4,357 $ 3,907 $ 3,746 $ 3,517 $ 4,070 Global Corporate Travel: Travel sales $ 4.1 $ 3.5 $ 3.6 $ 3.4 $ 4.3 Travel commissions and fees/sales 8.8% 8.8% 9.1% 8.6% 8.4% Total segment assets $ 22.9 $ 22.7 $ 21.1 $ 19.0 $ 25.1 Segment capital (A) $ 3.4 $ 3.4 $ 3.3 $ 3.4 $ 3.6 Return on average segment capital (B) 11.3% 7.7% 8.3% 12.8% 15.8% Return on average tangible segment capital (B) 25.9% 17.4% 18.9% 29.2% 34.3% Cardmember receivables: Total receivables $ 9.8 $ 10.4 $ 9.9 $ 9.6 $ 9.4 90 days past due as a % of total 1.4% 1.5% 1.9% 2.4% 2.7% Net loss ratio as a % of charge volume 0.14% 0.23% 0.22% 0.17% 0.14%
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. -25- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue, fees and other $ 979 $ 893 10% $ 3,625 $ 3,875 (6)% ---------- ---------- ---------- ---------- Interest income 3 1 # 6 5 20 Interest expense (25) (51) (51) (85) (222) (62) ---------- ---------- ---------- ---------- Net interest income 28 52 (46) 91 227 (60) ---------- ---------- ---------- ---------- Total revenues net of interest expense 1,007 945 7 3,716 4,102 (9) ---------- ---------- ---------- ---------- Provisions for losses 34 36 (6) 135 127 6 ---------- ---------- ---------- ---------- Total revenues net of interest expense after provisions for losses 973 909 7 3,581 3,975 (10) ---------- ---------- ---------- ---------- Expenses Marketing and promotion 206 118 75 521 553 (6) Salaries and employee benefits and other operating expenses 469 488 (4) 1,679 1,932 (13) ---------- ---------- ---------- ---------- Total 675 606 11 2,200 2,485 (11) ---------- ---------- ---------- ---------- Pretax segment income 298 303 (2) 1,381 1,490 (7) Income tax provision 113 88 28 483 495 (2) ---------- ---------- ---------- ---------- Segment income $ 185 $ 215 (14) $ 898 $ 995 (10) ========== ========== ========== ==========
# - Denotes variance of more than 100%. -26- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Global Card billed business (A) $ 172.6 $ 160.5 8% $ 619.8 $ 683.3 (9)% Global Network & Merchant Services: Total segment assets $ 7.3 $ 7.0 4% $ 7.3 $ 7.0 4% Segment capital (millions) (B) $ 1,764 $ 1,451 22% $ 1,764 $ 1,451 22% Return on average segment capital (C) 52.9% 75.4% 52.9% 75.4% Return on average tangible segment capital (C) 54.1% 77.4% 54.1% 77.4% Global Network Services: Card billed business $ 21.4 $ 16.0 34% $ 71.8 $ 67.4 7% Total cards-in-force (millions) 26.3 24.8 6% 26.3 24.8 6%
(A) Global Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements, and certain insurance fees charged on proprietary cards. (B) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (C) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. -27- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED INCOME STATEMENT DATA (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Revenues Discount revenue, fees and other $ 979 $ 945 $ 888 $ 813 $ 893 ------------- ------------- ------------- ------------- ------------- Interest income 3 1 1 1 1 Interest expense (25) (17) (21) (22) (51) ------------- ------------- ------------- ------------- ------------- Net interest income 28 18 22 23 52 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense 1,007 963 910 836 945 ------------- ------------- ------------- ------------- ------------- Provisions for losses 34 33 33 35 36 ------------- ------------- ------------- ------------- ------------- Total revenues net of interest expense after provisions for losses 973 930 877 801 909 ------------- ------------- ------------- ------------- ------------- Expenses Marketing and promotion 206 157 94 64 118 Salaries and employee benefits and other operating expenses 469 415 423 372 488 ------------- ------------- ------------- ------------- ------------- Total 675 572 517 436 606 ------------- ------------- ------------- ------------- ------------- Pretax segment income 298 358 360 365 303 Income tax provision 113 118 124 128 88 ------------- ------------- ------------- ------------- ------------- Segment income $ 185 $ 240 $ 236 $ 237 $ 215 ============= ============= ============= ============= =============
-28- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Global Card billed business (A) $ 172.6 $ 156.6 $ 151.4 $ 139.2 $ 160.5 Global Network & Merchant Services: Total segment assets $ 7.3 $ 7.7 $ 8.1 $ 6.6 $ 7.0 Segment capital (B) $ 1.8 $ 1.8 $ 1.8 $ 1.7 $ 1.5 Return on average segment capital (C) 52.9% 56.9% 61.2% 70.6% 75.4% Return on average tangible segment capital (C) 54.1% 58.1% 62.6% 72.4% 77.4% Global Network Services: Card billed business $ 21.4 $ 18.6 $ 17.0 $ 14.8 $ 16.0 Total cards-in-force (millions) 26.3 26.3 25.6 25.1 24.8
(A) Global Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements, and certain insurance fees charged on proprietary cards. (B) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (C) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital. -29- (Preliminary) AMERICAN EXPRESS COMPANY COMPONENTS OF RETURN ON AVERAGE EQUITY (ROE), RETURN ON AVERAGE COMMON EQUITY (ROCE), AND RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROTCE) APPENDIX I (Millions)
For the Twelve Months Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- ROE Net income $ 2,130 $ 1,654 $ 1,829 $ 2,145 $ 2,699 Average shareholders' equity $ 14,570 $ 14,151 $ 13,892 $ 13,147 $ 12,127 Return on average equity (A) 14.6% 11.7% 13.2% 16.3% 22.3% RECONCILIATION OF ROCE AND ROTCE Net income $ 2,130 $ 1,654 $ 1,829 $ 2,145 $ 2,699 Preferred shares dividends and related accretion $ 306 $ 306 $ 306 $ 72 $ - Earnings allocated to participating share awards and other $ 22 $ 14 $ 11 $ 13 $ 15 ------------- ------------- ------------- ------------- ------------- Net income attributable to common shareholders $ 1,802 $ 1,334 $ 1,512 $ 2,060 $ 2,684 ------------- ------------- ------------- ------------- ------------- Average shareholders' equity $ 14,570 $ 14,151 $ 13,892 $ 13,147 $ 12,127 Average preferred shares $ 1,303 $ 1,303 $ 1,303 $ 782 - ------------- ------------- ------------- ------------- ------------- Average common shareholders' equity $ 13,267 $ 12,848 $ 12,589 $ 12,365 $ 12,127 ------------- ------------- ------------- ------------- ------------- Average goodwill and other intangibles 3,009 2,944 2,886 2,830 2,533 ------------- ------------- ------------- ------------- ------------- Average tangible common shareholders' equity $ 10,258 $ 9,904 $ 9,703 $ 9,535 $ 9,594 ------------- ------------- ------------- ------------- ------------- Return on average common equity (A) 13.6% 10.4% 12.0% 16.7% 22.1% Return on average tangible common equity (A) 17.6% 13.5% 15.6% 21.6% 28.0%
(A) Return on average equity and return on average common equity are calculated by dividing one year period net income/net income attributable to common shareholders by one year average total shareholders' equity/average common shareholders' equity, respectively. Return on average tangible common equity is computed in the same manner as return on average common equity except the computation of average tangible common shareholders' equity excludes average goodwill and other intangibles. The Company believes that return on average tangible common equity is a useful measure of the profitability of its business growth. -30- (Preliminary) AMERICAN EXPRESS COMPANY COMPONENTS OF RETURN ON AVERAGE SEGMENT CAPITAL (ROSC) AND RETURN ON AVERAGE TANGIBLE SEGMENT CAPITAL (ROTSC) APPENDIX II (Millions)
For the Twelve Months Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- U.S. CARD SERVICES Segment income (loss) $ 249 $ (52) $ 83 $ 304 $ 852 Average segment capital 5,568 5,280 5,083 4,814 4,736 Average goodwill and other intangibles 432 383 338 294 243 ------------- ------------- ------------- ------------- ------------- Average tangible segment capital $ 5,136 $ 4,897 $ 4,745 $ 4,520 $ 4,493 ------------- ------------- ------------- ------------- ------------- Return on average segment capital (A) 4.5% -1.0% 1.6% 6.3% 18.0% Return on average tangible segment capital (A) 4.8% -1.1% 1.7% 6.7% 19.0% INTERNATIONAL CARD SERVICES Segment income $ 303 $ 266 $ 206 $ 257 $ 351 Average segment capital 2,122 2,141 2,123 2,096 2,107 Average goodwill and other intangibles 551 551 546 544 544 ------------- ------------- ------------- ------------- ------------- Average tangible segment capital $ 1,571 $ 1,590 $ 1,577 $ 1,552 $ 1,563 ------------- ------------- ------------- ------------- ------------- Return on average segment capital (A) 14.3% 12.4% 9.7% 12.3% 16.7% Return on average tangible segment capital (A) 19.3% 16.7% 13.1% 16.6% 22.5% GLOBAL COMMERCIAL SERVICES Segment income $ 390 $ 266 $ 284 $ 440 $ 505 Average segment capital 3,440 3,464 3,435 3,437 3,197 Average goodwill and other intangibles 1,937 1,938 1,933 1,930 1,724 ------------- ------------- ------------- ------------- ------------- Average tangible segment capital $ 1,503 $ 1,526 $ 1,502 $ 1,507 $ 1,473 ------------- ------------- ------------- ------------- ------------- Return on average segment capital (A) 11.3% 7.7% 8.3% 12.8% 15.8% Return on average tangible segment capital (A) 25.9% 17.4% 18.9% 29.2% 34.3% GLOBAL NETWORK & MERCHANT SERVICES Segment income $ 898 $ 928 $ 946 $ 1,009 $ 995 Average segment capital 1,697 1,632 1,547 1,430 1,320 Average goodwill and other intangibles 36 35 35 36 35 ------------- ------------- ------------- ------------- ------------- Average tangible segment capital $ 1,661 $ 1,597 $ 1,512 $ 1,394 $ 1,285 ------------- ------------- ------------- ------------- ------------- Return on average segment capital (A) 52.9% 56.9% 61.2% 70.6% 75.4% Return on average tangible segment capital (A) 54.1% 58.1% 62.6% 72.4% 77.4%
(A) Return on average segment capital is calculated by dividing one year period segment income by one year average segment capital. Return on average tangible segment capital is computed in the same manner as return on average segment capital except the computation of average tangible segment capital excludes average goodwill and other intangibles. The Company believes that return on average tangible segment capital is a useful measure of the profitability of its business growth. -31- (Preliminary) AMERICAN EXPRESS COMPANY NET INTEREST YIELD ON CARDMEMBER LOANS APPENDIX III (Millions)
Quarters Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- Owned Basis: Net interest income $ 710 $ 754 $ 741 $ 919 $ 771 Average loans (billions) $ 31.8 $ 32.3 $ 35.2 $ 39.0 $ 43.0 Adjusted net interest income (A) $ 764 $ 797 $ 814 $ 1,017 $ 929 Adjusted average loans (billions) (B) $ 31.9 $ 32.4 $ 35.4 $ 39.1 $ 43.1 Net interest yield on cardmember loans (C) 9.5% 9.7% 9.2% 10.5% 8.6% Managed Basis (D): Net interest income (E) $ 1,381 $ 1,410 $ 1,464 $ 1,722 $ 1,443 Average loans (billions) $ 60.9 $ 61.8 $ 63.9 $ 67.9 $ 72.8 Adjusted net interest income (F) $ 1,535 $ 1,554 $ 1,576 $ 1,835 $ 1,622 Adjusted average loans (billions) (G) $ 61.0 $ 62.0 $ 64.0 $ 68.0 $ 72.9 Net interest yield on cardmember loans (C) 10.0% 10.0% 9.9% 10.9% 8.9%
(A) Represents net interest income allocable to the Company's cardmember lending portfolio, which excludes the impact of card fees on loans and balance transfer fees attributable to the Company's cardmember lending portfolio. (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisition costs for cardmember loans. (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans. Net interest yield on cardmember loans (both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans, computed on an annualized basis. The calculation of net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible. For the owned basis presentation, reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending, and for the managed basis presentation, reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income, net; therefore, such reserves and net write-offs are not included in the net interest yield calculation. The Company believes net interest yield on cardmember loans (on both an owned and managed basis) is useful to investors because it provides a measure of profitability of the Company's cardmember lending portfolio. (D) Includes on-balance sheet cardmember loans and off-balance sheet securitized cardmember loans. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under U.S. Card Services Selected Financial Information managed basis presentation. (F) Represents net interest income allocable to the Company's managed cardmember lending portfolio, which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Company's managed cardmember lending portfolio. (G) Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans. -32- (Preliminary) U. S. CARD SERVICES AND INTERNATIONAL CARD SERVICES NET INTEREST YIELD ON CARDMEMBER LOANS APPENDIX IV (Millions)
Quarters Ended --------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2009 2009 2009 2009 2008 ------------- ------------- ------------- ------------- ------------- USCS Owned Basis: Net interest income $ 539 $ 565 $ 534 $ 728 $ 559 Average loans (billions) $ 22.7 $ 23.4 $ 26.5 $ 30.2 $ 33.2 Adjusted net interest income (A) $ 494 $ 521 $ 548 $ 763 $ 687 Adjusted average loans (billions) (B) $ 22.8 $ 23.5 $ 26.6 $ 30.3 $ 33.3 Net interest yield on cardmember loans (C) 8.6% 8.8% 8.3% 10.2% 8.2% USCS Managed Basis (D): Net interest income (E) $ 1,210 $ 1,221 $ 1,257 $ 1,531 $ 1,231 Average loans (billions) $ 51.8 $ 52.9 $ 55.1 $ 59.1 $ 63.0 Adjusted net interest income (F) $ 1,265 $ 1,278 $ 1,311 $ 1,581 $ 1,380 Adjusted average loans (billions) (G) $ 51.9 $ 53.0 $ 55.2 $ 59.2 $ 63.1 Net interest yield on cardmember loans (C) 9.7% 9.6% 9.5% 10.8% 8.7% ICS: Net interest income $ 278 $ 282 $ 268 $ 251 $ 234 Average loans (billions) $ 9.0 $ 8.9 $ 8.7 $ 8.8 $ 9.8 Adjusted net interest income (A) $ 270 $ 276 $ 265 $ 254 $ 242 Adjusted average loans (billions) (B) $ 9.1 $ 8.9 $ 8.8 $ 8.8 $ 9.8 Net interest yield on cardmember loans (C) 11.7% 12.3% 12.2% 11.7% 9.8%
(A) Represents net interest income allocable to the Company's cardmember lending portfolio, which excludes the impact of card fees on loans and balance transfer fees attributable to the Company's cardmember lending portfolio. (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisition costs for cardmember loans. (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans. Net interest yield on cardmember loans (both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans, computed on an annualized basis. The calculation of net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible. For the owned basis presentation, reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending, and for the managed basis presentation, reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income, net; therefore, such reserves and net write-offs are not included in the net interest yield calculation. The Company believes net interest yield on cardmember loans (on both an owned and managed basis) is useful to investors because it provides a measure of profitability of the Company's cardmember lending portfolio. (D) Includes on-balance sheet cardmember loans and off-balance sheet securitized cardmember loans. Refer to the information set forth under U.S. Card Services Selected Financial Information for further discussion of the managed basis presentation. (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under U.S. Card Services Selected Financial Information managed basis presentation. (F) Represents net interest income allocable to the Company's managed cardmember lending portfolio, which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Company's managed cardmember lending portfolio. (G) Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans. -33-