Attached files
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. On January 1, 2010, the Company consolidated its off-
balance sheet cardmember loans and related debt onto its balance sheet in
compliance with GAAP governing transfers of financial assets and
consolidation of variable interest entities (new GAAP adopted effective
January 1, 2010). Beginning in the first quarter of 2010, the consolidation
of these assets and liabilities resulted in certain incremental income and
expenses being reflected, as well as reclassifications of certain line items
within the Company's Consolidated Statements of Income. The changes described
above were made on a prospective basis; results for periods prior to 1Q'10
have not been restated. Refer to page 20 for additional discussion.
Additionally, prior period amounts have been revised to reflect various other
changes in financial and statistical reporting associated with changes in the
Company's methodology for allocating items such as interest and capital
across its reportable operating segments.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Revenues
Non-interest revenues
Discount revenue $ 3,466 $ 3,066 13%
Net card fees 521 532 (2)
Travel commissions and fees 386 365 6
Other commissions and fees 500 453 10
Securitization income, net (A) N/A 141 --
Other 426 450 (5)
----------- -----------
Total non-interest revenues 5,299 5,007 6
----------- -----------
Interest income
Interest and fees on loans 1,775 1,292 37
Interest and dividends on investment securities 117 154 (24)
Deposits with banks and other 13 28 (54)
----------- -----------
Total interest income 1,905 1,474 29
----------- -----------
Interest expense
Deposits 128 85 51
Short-term borrowings 1 27 (96)
Long-term debt and other 469 443 6
----------- -----------
Total interest expense 598 555 8
----------- -----------
Net interest income 1,307 919 42
----------- -----------
Total revenues net of interest expense 6,606 5,926 11
----------- -----------
Provisions for losses
Charge card 227 336 (32)
Cardmember loans 688 1,414 (51)
Other 28 53 (47)
----------- -----------
Total provisions for losses 943 1,803 (48)
----------- -----------
Total revenues net of interest expense after provisions for losses 5,663 4,123 37
----------- -----------
Expenses
Marketing and promotion 595 345 72
Cardmember rewards 1,218 846 44
Cardmember services 149 111 34
Salaries and employee benefits 1,327 1,253 6
Professional services 561 519 8
Occupancy and equipment 384 358 7
Communications 95 104 (9)
Other, net 82 43 91
----------- -----------
Total 4,411 3,579 23
----------- -----------
Pretax income from continuing operations 1,252 544 #
Income tax provision 367 101 #
----------- -----------
Income from continuing operations 885 443 100
Loss from discontinued operations, net of tax -- (6) #
----------- -----------
Net income $ 885 $ 437 #
=========== ===========
Income from continuing operations attributable to common shareholders (B) $ 873 $ 367 #
=========== ===========
Net income attributable to common shareholders (B) $ 873 $ 361 #
=========== ===========
# - Denotes a variance of more than 100%.
(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.
(B) Represents income from continuing operations or net income, as applicable,
less (i) preferred share dividends and related accretion of $72 million for
the quarter ended March 31, 2009, and (ii) earnings allocated to participating
share awards and other items of $12 million and $4 million for the quarters
ended March 31, 2010 and 2009, respectively.
8
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Billions)
March 31, December 31,
2010 2009
----------- ------------
Assets
Cash $ 21 $ 16
Accounts receivable 36 38
Investment securities 18 24
Loans 53 30
Other assets 15 16
----------- ------------
Total assets $ 143 $ 124
=========== ============
Liabilities and Shareholders' Equity
Customer deposits $ 28 $ 26
Short-term borrowings 2 2
Long-term debt 72 52
Other liabilities 28 30
----------- ------------
Total liabilities 130 110
----------- ------------
Shareholders' equity 13 14
----------- ------------
Total liabilities and shareholders' equity $ 143 $ 124
=========== ============
9
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
TOTAL REVENUES NET OF INTEREST EXPENSE
U.S. Card Services $ 3,538 $ 3,102 14%
International Card Services 1,139 1,044 9
Global Commercial Services 1,022 938 9
Global Network & Merchant Services 997 857 16
----------- -----------
6,696 5,941 13
Corporate & Other, including adjustments and eliminations (90) (15) #
----------- -----------
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,606 $ 5,926 11
=========== ===========
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS
U.S. Card Services $ 677 $ (22) #
International Card Services 184 29 #
Global Commercial Services 136 122 11
Global Network & Merchant Services 415 386 8
----------- -----------
1,412 515 #
Corporate & Other (160) 29 #
----------- -----------
PRETAX INCOME FROM CONTINUING OPERATIONS $ 1,252 $ 544 #
=========== ===========
NET INCOME (LOSS)
U.S. Card Services $ 428 $ (7) #
International Card Services 151 52 #
Global Commercial Services 92 81 14
Global Network & Merchant Services 267 250 7
----------- -----------
938 376 #
Corporate & Other (53) 67 #
----------- -----------
Income from continuing operations 885 443 100
Loss from discontinued operations, net of tax -- (6) #
----------- -----------
NET INCOME $ 885 $ 437 #
=========== ===========
# - Denotes a variance of more than 100%.
10
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations attributable to common shareholders $ 0.74 $ 0.32 #%
Loss from discontinued operations -- (0.01) #
----------- -----------
Net income attributable to common shareholders $ 0.74 $ 0.31 #%
=========== ===========
Average common shares outstanding (millions) 1,185 1,156 3%
=========== ===========
DILUTED
Income from continuing operations attributable to common shareholders $ 0.73 $ 0.32 #%
Loss from discontinued operations -- (0.01) #
----------- -----------
Net income attributable to common shareholders $ 0.73 $ 0.31 #%
=========== ===========
Average common shares outstanding (millions) 1,191 1,156 3%
=========== ===========
Cash dividends declared per common share $ 0.18 $ 0.18 -%
=========== ===========
SELECTED STATISTICAL INFORMATION
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Return on average equity (A) 18.0% 16.3%
Return on average common equity (A) 17.1% 16.7%
Return on average tangible common equity (A) 22.2% 21.6%
Common shares outstanding (millions) 1,198 1,168 3%
Book value per common share $ 11.21 $ 10.61 6%
Shareholders' equity (billions) $ 13.4 $ 15.8 (15)%
# - 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.
11
(Preliminary)
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Card billed business (A):
United States $ 108.0 $ 97.4 11%
Outside the United States 53.0 41.8 27
----------- -----------
Total $ 161.0 $ 139.2 16
=========== ===========
Total cards-in-force (millions) (B):
United States 48.8 53.4 (9)%
Outside the United States 39.2 38.2 3
----------- -----------
Total 88.0 91.6 (4)
=========== ===========
Basic cards-in-force (millions) (B):
United States 38.1 41.6 (8)%
Outside the United States 34.4 33.3 3
----------- -----------
Total 72.5 74.9 (3)
=========== ===========
Average discount rate (C) 2.55% 2.56%
Average basic cardmember spending (dollars) (D) $ 3,012 $ 2,443 23%
Average fee per card (dollars) (D) $ 37 $ 34 9%
Average fee per card adjusted (dollars) (D) $ 40 $ 38 5%
(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 reflect pricing at merchants accepting
general purpose American Express cards. 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 $51 million and $40 million
for the quarters ended March 31, 2010 and 2009, 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 $51 million and $70 million for the quarters ended
March 31, 2010 and 2009, 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.
12
(Preliminary)
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION (CONTINUED)
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Worldwide cardmember receivables:
Total receivables $ 33.7 $ 30.3 11%
Loss reserves (millions):
Beginning balance $ 546 $ 810 (33)%
Provision 184 336 (45)
Net write-offs (A) (244) (332) (27)
Other 12 (4) #
----------- -----------
Ending balance $ 498 $ 810 (39)
=========== ===========
% of receivables 1.5% 2.7%
Net write-off rate - USCS 1.7% 4.9%
30 days past due as a % of total - USCS 1.9% 3.7%
Net loss ratio (as a % of charge volume) - ICS/GCS (A) (B) 0.38% 0.24%
90 days past billing as a % of total - ICS/GCS (A) 0.9% 2.7%
Worldwide cardmember loans - GAAP basis portfolio (C):
Total loans $ 57.6 $ 36.7 57%
30 days past due as a % of total 3.3% 4.9%
Loss reserves (millions):
Beginning balance $ 3,268 $ 2,570 27%
Adoption of new GAAP consolidation standard (D) $ 2,531 N/A N/A
Provision 670 1,401 (52)
Net write-offs - principal (1,035) (782) 32
Net write-offs - interest and fees (114) (155) (26)
Other (6) (21) (71)
----------- -----------
Ending balance $ 5,314 $ 3,013 76
=========== ===========
Ending Reserves - principal $ 5,161 $ 2,806 84
Ending Reserves - interest and fees $ 153 $ 207 (26)
% of loans 9.2% 8.2%
% of past due 277% 168%
Average loans $ 59.3 $ 39.0 52%
Net write-off rate 7.0% 8.0%
Net interest income divided by average loans (E) (F) 8.9% 9.6%
Net interest yield on cardmember loans (E) 10.3% 10.8%
Worldwide cardmember loans - total portfolio (G):
Total loans $ 57.6 $ 65.0 (11)%
30 days past due as a % of total 3.3% 5.0%
Net write-offs - principal (millions) $ 1,035 $ 1,392 (26)
Average loans $ 59.3 $ 67.9 (13)%
Net write-off rate 7.0% 8.2%
Net interest yield on cardmember loans (E) 10.3% 11.1%
# - Denotes a variance of more than 100%.
(A) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in International Card Services and Global
Commercial Services are written off to when they are 180 days past due or
earlier, consistent with applicable bank regulatory guidance and the
write-off methodology adopted for U.S. Card Services in the fourth quarter of
2008. Previously, receivables were written off when they were 360 days past
billing or earlier. Therefore, the net write-offs for the first quarter of
2010 include net write-offs of approximately $60 million for International
Card Services and approximately $48 million for Global Commercial Services
resulting from this write-off methodology change, which increased the net
loss ratio and decreased the 90 days past billing metrics for these segments,
but did not have a substantial impact on provisions for losses. If these
amounts had been excluded from net write-offs, the combined net loss ratio
for International Card Services/Global Commercial Services would have been
0.13%.
(B) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
(C) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(D) Reflects the new GAAP adopted effective January 1, 2010, which resulted
in all securitization transactions being accounted for as secured borrowings
by the Company. This adoption resulted in the consolidation of the American
Express Credit Account Master Trust (the Lending Trust), reflecting $29.0
billion of additional cardmember loans along with a $2.5 billion allowance
for loan loss reserve on the Company's balance sheets.
(E) See Appendix III for calculations of net interest yield on cardmember
loans and the ratio of net interest income divided by average loans. The
Company believes net interest yield on cardmember loans (on both a GAAP and
non-GAAP basis) is useful to investors because it provides a measure of
profitability of the Company's cardmember loans portfolio.
(F) This calculation includes elements of total interest income and total
interest expense that are not attributable to the cardmember loan portfolio,
and thus is not representative of net interest yield on cardmember loans. The
calculation includes interest income and interest expense attributable to
investment securities and other interest-bearing deposits as well as to
cardmember loans, and interest expense attributable to other activities,
including cardmember receivables.
(G) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
13
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Revenues
Non-interest revenues
Discount revenue $ 3,466 $ 3,645 $ 3,373 $ 3,305 $ 3,066
Net card fees 521 549 538 532 532
Travel commissions and fees 386 439 383 407 365
Other commissions and fees 500 438 448 439 453
Securitization income, net (A) N/A 190 71 (2) 141
Other 426 518 449 670 450
------------ ------------ ------------- ------------ ------------
Total non-interest revenues 5,299 5,779 5,262 5,351 5,007
------------ ------------ ------------- ------------ ------------
Interest income
Interest and fees on loans 1,775 1,036 1,059 1,081 1,292
Interest and dividends on investment securities 117 225 229 196 154
Deposits with banks and other 13 11 9 11 28
------------ ------------ ------------- ------------ ------------
Total interest income 1,905 1,272 1,297 1,288 1,474
------------ ------------ ------------- ------------ ------------
Interest expense
Deposits 128 126 109 105 85
Short-term borrowings 1 1 2 7 27
Long-term debt and other 469 435 432 435 443
------------ ------------ ------------- ------------ ------------
Total interest expense 598 562 543 547 555
------------ ------------ ------------- ------------ ------------
Net interest income 1,307 710 754 741 919
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense 6,606 6,489 6,016 6,092 5,926
------------ ------------ ------------- ------------ ------------
Provisions for losses
Charge card 227 141 143 237 336
Cardmember loans 688 560 989 1,303 1,414
Other 28 47 46 44 53
------------ ------------ ------------- ------------ ------------
Total provisions for losses 943 748 1,178 1,584 1,803
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense
after provisions for losses 5,663 5,741 4,838 4,508 4,123
------------ ------------ ------------- ------------ ------------
Expenses
Marketing and promotion 595 713 504 352 345
Cardmember rewards 1,218 1,178 983 1,029 846
Cardmember services 149 143 132 131 111
Salaries and employee benefits 1,327 1,196 1,261 1,370 1,253
Professional services 561 715 575 599 519
Occupancy and equipment 384 495 374 392 358
Communications 95 99 105 106 104
Other, net 82 241 (14) 111 43
------------ ------------ ------------- ------------ ------------
Total 4,411 4,780 3,920 4,090 3,579
------------ ------------ ------------- ------------ ------------
Pretax income from continuing operations 1,252 961 918 418 544
Income tax provision 367 251 276 76 101
------------ ------------ ------------- ------------ ------------
Income from continuing operations 885 710 642 342 443
Income (Loss) from discontinued operations, net of tax -- 6 (2) (5) (6)
------------ ------------ ------------- ------------ ------------
Net income $ 885 $ 716 $ 640 $ 337 $ 437
============ ============ ============= ============ ============
Income from continuing operations attributable
to common shareholders (B) $ 873 $ 701 $ 634 $ 107 $ 367
============ ============ ============= ============ ============
Net income attributable to common shareholders (B) $ 873 $ 707 $ 632 $ 102 $ 361
============ ============ ============= ============ ============
(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.
(B) 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, and
(iii) earnings allocated to participating share awards of $12 million for the
quarter ended March 31, 2010, $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, and $4 million for the quarter ended March 31,
2009.
14
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
TOTAL REVENUES NET OF INTEREST EXPENSE
U.S. Card Services $ 3,538 $ 3,188 $ 2,982 $ 2,881 $ 3,102
International Card Services 1,139 1,215 1,157 1,113 1,044
Global Commercial Services 1,022 1,072 975 998 938
Global Network & Merchant Services 997 1,031 976 916 857
------------ ------------ ------------- ------------ ------------
6,696 6,506 6,090 5,908 5,941
Corporate & Other, including adjustments
and eliminations (90) (17) (74) 184 (15)
------------ ------------ ------------- ------------ ------------
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,606 $ 6,489 $ 6,016 $ 6,092 $ 5,926
============ ============ ============= ============ ============
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS
U.S. Card Services $ 677 $ 646 $ 218 $ (256) $ (22)
International Card Services 184 40 136 71 29
Global Commercial Services 136 141 148 94 122
Global Network & Merchant Services 415 322 371 366 386
------------ ------------ ------------- ------------ ------------
1,412 1,149 873 275 515
Corporate & Other (160) (188) 45 143 29
------------ ------------ ------------- ------------ ------------
PRETAX INCOME FROM CONTINUING OPERATIONS $ 1,252 $ 961 $ 918 $ 418 $ 544
============ ============ ============= ============ ============
NET INCOME (LOSS)
U.S. Card Services $ 428 $ 413 $ 158 $ (153) $ (7)
International Card Services 151 69 133 78 52
Global Commercial Services 92 100 102 67 81
Global Network & Merchant Services 267 200 248 239 250
------------ ------------ ------------- ------------ ------------
938 782 641 231 376
Corporate & Other (53) (72) 1 111 67
------------ ------------ ------------- ------------ ------------
Income from continuing operations 885 710 642 342 443
Income (Loss) from discontinued
operations, net of tax -- 6 (2) (5) (6)
------------ ------------ ------------- ------------ ------------
NET INCOME $ 885 $ 716 $ 640 $ 337 $ 437
============ ============ ============= ============ ============
15
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations
attributable to common shareholders $ 0.74 $ 0.59 $ 0.54 $ 0.09 $ 0.32
Income (Loss) from discontinued operations -- 0.01 -- -- (0.01)
------------ ------------ ------------- ------------ ------------
Net income attributable to common shareholders $ 0.74 $ 0.60 $ 0.54 $ 0.09 $ 0.31
============ ============ ============= ============ ============
Average common shares outstanding (millions) 1,185 1,179 1,178 1,162 1,156
============ ============ ============= ============ ============
DILUTED
Income from continuing operations
attributable to common shareholders $ 0.73 $ 0.59 $ 0.54 $ 0.09 $ 0.32
Income (Loss) from discontinued operations -- 0.01 (0.01) -- (0.01)
------------ ------------ ------------- ------------ ------------
Net income attributable to common shareholders $ 0.73 $ 0.60 $ 0.53 $ 0.09 $ 0.31
============ ============ ============= ============ ============
Average common shares outstanding (millions) 1,191 1,184 1,181 1,165 1,156
============ ============ ============= ============ ============
Cash dividends declared per common share $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18
============ ============ ============= ============ ============
SELECTED STATISTICAL INFORMATION
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Return on average equity (A) 18.0% 14.6% 11.7% 13.2% 16.3%
Return on average common equity (A) 17.1% 13.6% 10.4% 12.0% 16.7%
Return on average tangible common equity (A) 22.2% 17.6% 13.5% 15.6% 21.6%
Common shares outstanding (millions) 1,198 1,192 1,189 1,189 1,168
Book value per common share $ 11.21 $ 12.08 $ 11.72 $ 11.28 $ 10.61
Shareholders' equity (billions) $ 13.4 $ 14.4 $ 13.9 $ 13.4 $ 15.8
(A) Refer to Appendix I for components of return on average equity, return on
average common equity and return on average tangible common equity.
16
(Preliminary)
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Card billed business (A):
United States $ 108.0 $ 115.0 $ 106.5 $ 104.8 $ 97.4
Outside the United States 53.0 57.6 50.1 46.6 41.8
------------ ------------ ------------- ------------ ------------
Total $ 161.0 $ 172.6 $ 156.6 $ 151.4 $ 139.2
============ ============ ============= ============ ============
Total cards-in-force (millions) (B):
United States 48.8 48.9 49.4 49.8 53.4
Outside the United States 39.2 39.0 39.0 38.7 38.2
------------ ------------ ------------- ------------ ------------
Total 88.0 87.9 88.4 88.5 91.6
============ ============ ============= ============ ============
Basic cards-in-force (millions) (B):
United States 38.1 38.2 38.6 38.7 41.6
Outside the United States 34.4 34.3 34.3 33.9 33.3
------------ ------------ ------------- ------------ ------------
Total 72.5 72.5 72.9 72.6 74.9
============ ============ ============= ============ ============
Average discount rate (C) 2.55% 2.51% 2.54% 2.55% 2.56%
Average basic cardmember spending (dollars) (D) $ 3,012 $ 3,209 $ 2,898 $ 2,712 $ 2,443
Average fee per card (dollars) (D) $ 37 $ 39 $ 37 $ 35 $ 34
Average fee per card adjusted (dollars) (D) $ 40 $ 42 $ 41 $ 39 $ 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 reflect pricing at merchants accepting
general purpose American Express cards. 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 $51 million for the quarter
ended March 31, 2010, $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, and $40 million for the quarter ended March 31, 2009,
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 $51 million
for the quarter ended March 31, 2010, $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, and $70 million for the quarter
ended March 31, 2009. 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.
17
(Preliminary)
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION (CONTINUED)
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Worldwide cardmember receivables:
Total receivables $ 33.7 $ 33.7 $ 32.1 $ 31.4 $ 30.3
Loss reserves (millions):
Beginning balance $ 546 $ 599 $ 714 $ 810 $ 810
Provision 184 141 143 237 336
Net write-offs (A) (244) (194) (265) (340) (332)
Other 12 -- 7 7 (4)
------------ ------------ ------------- ------------ ------------
Ending balance $ 498 $ 546 $ 599 $ 714 $ 810
============ ============ ============= ============ ============
% of receivables 1.5% 1.6% 1.9% 2.3% 2.7%
Net write-off rate - USCS 1.7% 1.9% 3.2% 5.2% 4.9%
30 days past due as a % of total - USCS 1.9% 1.8% 2.2% 2.6% 3.7%
Net loss ratio (as a % of charge volume) - ICS/GCS
(A) (B) 0.38% 0.22% 0.28% 0.27% 0.24%
90 days past billing as a % of total - ICS/GCS (A) 0.9% 1.6% 1.9% 2.3% 2.7%
Worldwide cardmember loans - GAAP basis portfolio (C):
Total loans $ 57.6 $ 32.8 $ 31.5 $ 32.5 $ 36.7
30 days past due as a % of total 3.3% 3.6% 4.0% 4.3% 4.9%
Loss reserves (millions):
Beginning balance $ 3,268 $ 3,359 $ 3,219 $ 3,013 $ 2,570
Adoption of new GAAP consolidation standard (D) $ 2,531 N/A N/A N/A N/A
Provision 670 544 973 1,291 1,401
Net write-offs - principal (1,035) (589) (731) (847) (782)
Net write-offs - interest and fees (114) (72) (90) (131) (155)
Other (6) 26 (12) (107) (21)
------------ ------------ ------------- ------------ ------------
Ending balance $ 5,314 $ 3,268 $ 3,359 $ 3,219 $ 3,013
============ ============ ============= ============ ============
Ending Reserves - principal $ 5,161 $ 3,172 $ 3,246 $ 3,035 $ 2,806
Ending Reserves - interest and fees $ 153 $ 96 $ 113 $ 184 $ 207
% of loans 9.2% 10.0% 10.7% 9.9% 8.2%
% of past due 277% 279% 264% 230% 168%
Average loans $ 59.3 $ 31.8 $ 32.3 $ 35.2 $ 39.0
Net write-off rate 7.0% 7.4% 9.1% 9.6% 8.0%
Net interest income divided by average loans (E) (F) 8.9% 8.9% 9.3% 8.4% 9.6%
Net interest yield on cardmember loans (E) 10.3% 10.0% 10.2% 9.7% 10.8%
Worldwide cardmember loans - total portfolio (G):
Total loans $ 57.6 $ 61.8 $ 60.7 $ 62.9 $ 65.0
30 days past due as a % of total 3.3% 3.6% 4.0% 4.3% 5.0%
Net write-offs - principal (millions) $ 1,035 $ 1,106 $ 1,327 $ 1,541 $ 1,392
Average loans $ 59.3 $ 60.9 $ 61.8 $ 63.9 $ 67.9
Net write-off rate 7.0% 7.3% 8.6% 9.7% 8.2%
Net interest yield on cardmember loans (E) 10.3% 10.3% 10.2% 10.1% 11.1%
(A) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in International Card Services and Global
Commercial Services are written off to when they are 180 days past due or
earlier, consistent with applicable bank regulatory guidance and the
write-off methodology adopted for U.S. Card Services in the fourth quarter of
2008. Previously, receivables were written off when they were 360 days past
billing or earlier. Therefore, the net write-offs for the first quarter of
2010 include net write-offs of approximately $60 million for International
Card Services and approximately $48 million for Global Commercial Services
resulting from this write-off methodology change, which increased the net
loss ratio and decreased the 90 days past billing metrics for these segments,
but did not have a substantial impact on provisions for losses. If these
amounts had been excluded from net write-offs, the combined net loss ratio
for International Card Services/Global Commercial Services would have been
0.13%.
(B) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
(C) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(D) Reflects the new GAAP adopted effective January 1, 2010, which resulted
in all securitization transactions being accounted for as secured borrowings
by the Company. This adoption resulted in the consolidation of the Lending
Trust, reflecting $29.0 billion of additional cardmember loans along with a
$2.5 billion allowance for loan loss reserve on the Company's balance sheets.
(E) See Appendix III for calculations of net interest yield on cardmember
loans and the ratio of net interest income divided by average loans. The
Company believes net interest yield on cardmember loans (on both a GAAP and
non-GAAP basis) is useful to investors because it provides a measure of
profitability of the Company's cardmember loans portfolio.
(F) This calculation includes elements of total interest income and total
interest expense that are not attributable to the cardmember loan portfolio,
and thus is not representative of net interest yield on cardmember loans. The
calculation includes interest income and interest expense attributable to
investment securities and other interest-bearing deposits as well as to
cardmember loans, and interest expense attributable to other activities,
including cardmember receivables.
(G) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
18
(Preliminary)
U.S. CARD SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Revenues
Discount revenue, net card fees and other $ 2,317 $ 2,195 6%
Securitization income, net (A) N/A 141 --
Interest income 1,411 928 52
Interest expense 190 162 17
----------- -----------
Net interest income 1,221 766 59
----------- -----------
Total revenues net of interest expense 3,538 3,102 14
----------- -----------
Provisions for losses 687 1,383 (50)
----------- -----------
Total revenues net of interest expense after provisions for losses 2,851 1,719 66
----------- -----------
Expenses
Marketing, promotion, rewards and cardmember services 1,301 889 46
Salaries and employee benefits and other operating expenses 873 852 2
----------- -----------
Total 2,174 1,741 25
----------- -----------
Pretax segment income (loss) 677 (22) #
Income tax provision (benefit) 249 (15) #
----------- -----------
Segment income (loss) $ 428 $ (7) #
=========== ===========
# - Denotes a variance of more than 100%.
(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.
19
(Preliminary)
U.S. CARD SERVICES
SELECTED FINANCIAL INFORMATION
TOTAL PORTFOLIO BASIS PRESENTATION
The following table sets forth total portfolio financial information for the
quarters ended March 31, 2010 and March 31, 2009. The March 31, 2010 financial
information was determined in accordance with the new GAAP adopted effective
January 1, 2010. The March 31, 2009 information includes the GAAP ("Owned")
basis presentation, together with the adjustments for securitization activity
to arrive at the non-GAAP Total Portfolio ("Managed") basis presentation. For
additional information, please see "Total Portfolio Information" discussion
below.
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
INCOME STATEMENT DATA
Discount revenue, net card fees and other:
Reported for the period (GAAP) $ 2,317 $ 2,195 6%
Securitization adjustments N/A 99 --
----------- -----------
Total portfolio discount revenue, net card fees and other $ 2,317 $ 2,294 1
----------- -----------
Interest income:
Reported for the period (GAAP) $ 1,411 $ 928 52
Securitization adjustments N/A 886 --
----------- -----------
Total portfolio interest income $ 1,411 $ 1,814 (22)
----------- -----------
Securitization income, net (A):
Reported for the period (GAAP) N/A $ 141 --
Securitization adjustments N/A (141) --
----------- -----------
Total portfolio securitization income, net N/A $ -- --
----------- -----------
Interest expense:
Reported for the period (GAAP) $ 190 $ 162 17
Securitization adjustments N/A 83 --
----------- -----------
Total portfolio interest expense $ 190 $ 245 (22)
----------- -----------
Provisions for losses:
Reported for the period (GAAP) $ 687 $ 1,383 (50)
Securitization adjustments N/A 636(B) --
----------- -----------
Total portfolio provisions for losses $ 687 $ 2,019(B) (66)
----------- -----------
# - Denotes a variance of more than 100%.
(A) In accordance with the new GAAP adopted effective January 1, 2010,
the Company no longer reports securitization income, net in its income
statement.
(B) Includes provisions for losses for off-balance sheet cardmember loans
based on the same methodology as applied to on-balance sheet cardmember loans,
except that any quarterly adjustment to reserve levels for on-balance sheet
loans to address external environmental factors was not applied to adjust the
provision expense for the securitized portfolio.
TOTAL PORTFOLIO INFORMATION
In accordance with the new GAAP adopted effective January 1, 2010, the
Company's securitized portfolio of cardmember loans and related debt is
consolidated on its balance sheet. Going forward, the Company will present
certain financial and statistical information relating to the performance of
its business (or particular segments of its business, e.g., U.S. Card
Services) based on its "total portfolio" of cardmember loans and related debt
as follows:
- For periods ending after January 1, 2010, total portfolio information is
based on the Company's entire portfolio of cardmember loans and related
debt determined in accordance with GAAP; and
- For periods ending on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "managed"
basis presentation.
HISTORICAL PRESENTATION OF GAAP BASIS (PREVIOUSLY REFERRED TO AS "OWNED") VS.
TOTAL PORTFOLIO BASIS (PREVIOUSLY REFERRED TO AS "MANAGED")
For periods ended on or prior to December 31, 2009, the Company's cardmember
loan and related debt performance information on a GAAP basis were referred
to as the "owned" basis presentation. For such periods, the Company also
provided such information on a non-GAAP "managed" basis, which is now
referred to as total portfolio basis. The total portfolio basis presentation
assumed there had been no off-balance sheet securitizations for the Company's
U.S. Card Services segment (the Company does not currently securitize its
international cardmember loans), resulting in the inclusion of all
securitized cardmember loans and related debt in the Company's total
portfolio performance information.
Under the GAAP basis presentation prior to a securitization, revenues and
expenses from cardmember loans and related debt were reflected in the
Company's income statements in other commissions and fees, net interest
income and provisions for losses for cardmember loans. At the time of a
securitization transaction, the securitized cardmember loans were removed
from the Company's balance sheet, and the resulting gain on sale was
reflected in securitization income, net, as well as a reduction to provisions
for losses (credit reserves were no longer recorded for the cardmember loans
once sold). Over the life of a securitization transaction, the Company
recognized the net cash flow from interest and fee collections on interests
sold to investors (the investors interests) after deducting interest paid on
the investors' certificates, credit losses, contractual service fees, other
expenses and changes in the fair value of the interest-only strip (referred
to as "excess spread"). These amounts, in addition to servicing fees and the
non-credit components of the gains/(losses) from securitization activities,
were reflected in securitization income, net. The Company also recognized
interest income over the life of the securitization transaction related to
the interest it retained (i.e., the seller's interest). At the maturity of a
securitization transaction, cardmember loans on the balance sheet increased,
and the impact of the incremental required loss reserves was recorded in
provisions for losses.
Under the total portfolio basis presentation, revenues and expenses related
to securitized cardmember loans and related debt are reflected in other
commissions and fees (included in discount revenue, net card fees and other),
interest income, interest expense and provisions for losses. In addition,
there is no securitization income, net as this presentation assumes no
securitization transactions have occurred.
Historically, the Company included U.S. Card Services information on a total
portfolio basis, as that was the manner in which the Company's management
viewed and managed the business. Management believed that a full picture of
trends in the Company's cardmember loans business could only be derived by
evaluating the performance of both securitized and non-securitized cardmember
loans, as the presentation of the entire cardmember loan portfolio was more
representative of the economics of the aggregate cardmember relationships and
ongoing business performance and related trends over time. The total
portfolio basis presentation also provided investors a more comprehensive
assessment of the information necessary for the Company and investors to
evaluate the Company's market share.
20
(Preliminary)
U.S. CARD SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Card billed business $ 84.9 $ 78.0 9%
Total cards-in-force (millions) 39.5 43.4 (9)%
Basic cards-in-force (millions) 29.4 32.3 (9)%
Average basic cardmember spending (dollars) $ 2,884 $ 2,391 21%
U.S. Consumer Travel:
Travel sales (millions) $ 735 $ 627 17%
Travel commissions and fees/sales 7.8% 8.1%
Total segment assets $ 75.3 $ 55.6 35%
Segment capital (millions) (A) $ 5,311 $ 4,512 18%
Return on average segment capital (B) 15.8% 9.4%
Return on average tangible segment capital (B) 17.2% 10.1%
Cardmember receivables:
Total receivables $ 16.6 $ 15.6 6%
30 days past due as a % of total 1.9% 3.7%
Average receivables $ 16.7 $ 16.1 4%
Net write-off rate 1.7% 4.9%
Cardmember loans - GAAP basis portfolio (C):
Total loans $ 49.2 $ 28.2 74%
30 days past due as a % of total 3.3% 5.1%
Average loans $ 50.5 $ 30.2 67%
Net write-off rate 7.2% 8.5%
Net interest income divided by average loans (D) 9.8% 10.3%
Net interest yield on cardmember loans (D) 10.0% 10.4%
Cardmember loans - total portfolio (E):
Total loans $ 49.2 $ 56.5 (13)%
30 days past due as a % of total 3.3% 5.1%
Average loans $ 50.5 $ 59.1 (15)%
Net write-off rate 7.2% 8.5%
Net interest yield on cardmember loans (D) 10.0% 10.9%
(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) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(D) See Appendix IV for calculations of net interest yield on cardmember loans
and the ratio of net interest income divided by average loans. The Company
believes net interest yield on cardmember loans (on both a GAAP and non-GAAP
basis) is useful to investors because it provides a measure of profitability
of the Company's cardmember loans portfolio.
(E) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
21
(Preliminary)
U.S. CARD SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Revenues
Discount revenue, net card fees and other $ 2,317 $ 2,377 $ 2,262 $ 2,271 $ 2,195
Securitization income, net (A) N/A 190 71 (2) 141
Interest income 1,411 754 776 758 928
Interest expense 190 133 127 146 162
------------ ------------ ------------- ------------ ------------
Net interest income 1,221 621 649 612 766
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense 3,538 3,188 2,982 2,881 3,102
------------ ------------ ------------- ------------ ------------
Provisions for losses 687 346 850 1,190 1,383
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense
after provisions for losses 2,851 2,842 2,132 1,691 1,719
------------ ------------ ------------- ------------ ------------
Expenses
Marketing, promotion, rewards and
cardmember services 1,301 1,306 1,050 1,021 889
Salaries and employee benefits and
other operating expenses 873 890 864 926 852
------------ ------------ ------------- ------------ ------------
Total 2,174 2,196 1,914 1,947 1,741
------------ ------------ ------------- ------------ ------------
Pretax segment income (loss) 677 646 218 (256) (22)
Income tax provision (benefit) 249 233 60 (103) (15)
------------ ------------ ------------- ------------ ------------
Segment income (loss) $ 428 $ 413 $ 158 $ (153) $ (7)
============ ============ ============= ============ ============
(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.
22
(Preliminary)
U.S. CARD SERVICES
SELECTED FINANCIAL INFORMATION
TOTAL PORTFOLIO BASIS PRESENTATION
The following table sets forth total portfolio financial information for the
quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30,
2009, and March 31, 2009. The March 31, 2010 financial information was
determined in accordance with the new GAAP adopted effective January 1, 2010.
The December 31, 2009, September 30, 2009, June 30, 2009, and March 31, 2009
information includes the GAAP ("Owned") basis presentation, together with the
adjustments for securitization activity to arrive at the non-GAAP ("Managed")
basis presentation. For additional information, please see "Total Portfolio
Information" discussion on page 20.
(Millions)
Quarters Ended
----------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
INCOME STATEMENT DATA
Discount revenue, net card fees and other:
Reported for the period (GAAP) $ 2,317 $ 2,377 $ 2,262 $ 2,271 $ 2,195
Securitization adjustments N/A 71 82 79 99
------------ ------------ ------------- ------------ ------------
Total portfolio discount revenue,
net card fees and other $ 2,317 $ 2,448 $ 2,344 $ 2,350 $ 2,294
------------ ------------ ------------- ------------ ------------
Interest income:
Reported for the period (GAAP) $ 1,411 $ 754 $ 776 $ 758 $ 928
Securitization adjustments N/A 726 714 771 886
------------ ------------ ------------- ------------ ------------
Total portfolio interest income $ 1,411 $ 1,480 $ 1,490 $ 1,529 $ 1,814
------------ ------------ ------------- ------------ ------------
Securitization income, net (A):
Reported for the period (GAAP) N/A $ 190 $ 71 $ (2) $ 141
Securitization adjustments N/A (190) (71) 2 (141)
------------ ------------ ------------- ------------ ------------
Total portfolio securitization income, net N/A $ -- $ -- $ -- $ --
------------ ------------ ------------- ------------ ------------
Interest expense:
Reported for the period (GAAP) $ 190 $ 133 $ 127 $ 146 $ 162
Securitization adjustments N/A 55 58 48 83
------------ ------------ ------------- ------------ ------------
Total portfolio interest expense $ 190 $ 188 $ 185 $ 194 $ 245
------------ ------------ ------------- ------------ ------------
Provisions for losses:
Reported for the period (GAAP) $ 687 $ 346 $ 850 $ 1,190 $ 1,383
Securitization adjustments N/A 572(B) 529(B) 836(B) 636(B)
------------ ------------ ------------- ------------ ------------
Total portfolio provisions for losses $ 687 $ 918(B) $ 1,379(B) $ 2,026(B) $ 2,019(B)
------------ ------------ ------------- ------------ ------------
(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.
(B) Includes provisions for losses for off-balance sheet cardmember loans
based on the same methodology as applied to on-balance sheet cardmember loans,
except that any quarterly adjustment to reserve levels for on-balance sheet
loans to address external environmental factors was not applied to adjust the
provision expense for the securitized portfolio.
23
(Preliminary)
U.S. CARD SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Card billed business $ 84.9 $ 92.1 $ 85.2 $ 84.1 $ 78.0
Total cards-in-force (millions) 39.5 39.5 39.8 40.2 43.4
Basic cards-in-force (millions) 29.4 29.5 29.7 29.8 32.3
Average basic cardmember spending (dollars) $ 2,884 $ 3,112 $ 2,851 $ 2,667 $ 2,391
U.S. Consumer Travel:
Travel sales $ 0.7 $ 0.6 $ 0.6 $ 0.7 $ 0.6
Travel commissions and fees/sales 7.8% 8.5% 8.4% 8.5% 8.1%
Total segment assets $ 75.3 $ 57.9 $ 53.2 $ 54.1 $ 55.6
Segment capital (A) $ 5.3 $ 6.0 $ 5.5 $ 5.5 $ 4.5
Return on average segment capital (B) 15.8% 8.0% 2.6% 4.9% 9.4%
Return on average tangible segment capital (B) 17.2% 8.7% 2.8% 5.2% 10.1%
Cardmember receivables:
Total receivables $ 16.6 $ 17.8 $ 15.9 $ 15.9 $ 15.6
30 days past due as a % of total 1.9% 1.8% 2.2% 2.6% 3.7%
Average receivables $ 16.7 $ 16.5 $ 15.8 $ 15.7 $ 16.1
Net write-off rate 1.7% 1.9% 3.2% 5.2% 4.9%
Cardmember loans - GAAP basis portfolio (C):
Total loans $ 49.2 $ 23.5 $ 22.7 $ 23.6 $ 28.2
30 days past due as a % of total 3.3% 3.7% 4.2% 4.4% 5.1%
Average loans $ 50.5 $ 22.7 $ 23.4 $ 26.5 $ 30.2
Net write-off rate 7.2% 8.0% 9.8% 10.3% 8.5%
Net interest income divided by average loans (D) 9.8% 10.9% 11.0% 9.3% 10.3%
Net interest yield on cardmember loans (D) 10.0% 9.4% 9.4% 8.8% 10.4%
Cardmember loans - total portfolio (E):
Total loans $ 49.2 $ 52.6 $ 51.9 $ 54.0 $ 56.5
30 days past due as a % of total 3.3% 3.7% 4.1% 4.4% 5.1%
Average loans $ 50.5 $ 51.8 $ 52.9 $ 55.1 $ 59.1
Net write-off rate 7.2% 7.5% 8.9% 10.0% 8.5%
Net interest yield on cardmember loans (D) 10.0% 10.0% 9.8% 9.7% 10.9%
(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) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(D) See Appendix IV for calculations of net interest yield on cardmember loans
and the ratio of net interest income divided by average loans. The Company
believes net interest yield on cardmember loans (on both a GAAP and non-GAAP
basis) is useful to investors because it provides a measure of profitability
of the Company's cardmember loans portfolio.
(E) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
24
(Preliminary)
INTERNATIONAL CARD SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Revenues
Discount revenue, net card fees and other $ 882 $ 787 12%
----------- -----------
Interest income 363 365 (1)
Interest expense 106 108 (2)
----------- -----------
Net interest income 257 257 --
----------- -----------
Total revenues net of interest expense 1,139 1,044 9
----------- -----------
Provisions for losses 158 335 (53)
----------- -----------
Total revenues net of interest expense after provisions for losses 981 709 38
----------- -----------
Expenses
Marketing, promotion, rewards and cardmember services 350 258 36
Salaries and employee benefits and other operating expenses 447 422 6
----------- -----------
Total 797 680 17
----------- -----------
Pretax segment income 184 29 #
Income tax provision (benefit) 33 (23) #
----------- -----------
Segment income $ 151 $ 52 #
=========== ===========
# - Denotes variance of more than 100%.
25
(Preliminary)
INTERNATIONAL CARD SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Card billed business $ 24.4 $ 20.5 19%
Total cards-in-force (millions) 15.0 15.8 (5)%
Basic cards-in-force (millions) 10.4 11.0 (5)%
Average basic cardmember spending (dollars) $ 2,340 $ 1,823 28%
International Consumer Travel:
Travel sales (millions) $ 261 $ 218 20%
Travel commissions and fees/sales 7.3% 8.3%
Total segment assets $ 19.9 $ 17.7 12%
Segment capital (millions) (A) $ 2,117 $ 2,064 3%
Return on average segment capital (B) 19.7% 11.2%
Return on average tangible segment capital (B) 26.5% 14.9%
Cardmember receivables:
Total receivables $ 5.5 $ 5.0 10%
90 days past billing as a % of total (C) 1.1% 3.3%
Net loss ratio (as a % of charge volume) (C) (D) 0.53% 0.35%
Cardmember loans:
Total loans $ 8.4 $ 8.5 (1)%
30 days past due as a % of total 3.3% 4.2%
Average loans $ 8.8 $ 8.8 --%
Net write-off rate 5.5% 6.4%
Net interest income divided by average loans (E) 11.8% 11.8%
Net interest yield on cardmember loans (E) 11.7% 12.2%
(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) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in International Card Services are written
off to when they are 180 days past due or earlier, consistent with applicable
bank regulatory guidance and the write-off methodology adopted for U.S. Card
Services in the fourth quarter of 2008. Previously, receivables were written
off when they were 360 days past billing or earlier. Therefore, the net
write-offs for the first quarter of 2010 include net write-offs of
approximately $60 million for International Card Services resulting from this
write-off methodology change, which increased the net loss ratio and
decreased the 90 days past billing metric for this segment, but did not have
a substantial impact on provisions for losses. If this amount had been
excluded from net write-offs, the net loss ratio for International Card
Services would have been 0.17%.
(D) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
(E) See Appendix IV for calculations of net interest yield on cardmember loans
and the ratio of net interest income divided by average loans. The Company
believes net interest yield on cardmember loans is useful to investors because
it provides a measure of profitability of the Company's cardmember loans
portfolio.
26
(Preliminary)
INTERNATIONAL CARD SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Revenues
Discount revenue, net card fees and other $ 882 $ 944 $ 878 $ 838 $ 787
------------ ------------ ------------- ------------ ------------
Interest income 363 384 384 376 365
Interest expense 106 113 105 101 108
------------ ------------ ------------- ------------ ------------
Net interest income 257 271 279 275 257
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense 1,139 1,215 1,157 1,113 1,044
------------ ------------ ------------- ------------ ------------
Provisions for losses 158 324 250 302 335
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense after
provisions for losses
981 891 907 811 709
------------ ------------ ------------- ------------ ------------
Expenses
Marketing, promotion, rewards and
cardmember services 350 374 302 287 258
Salaries and employee benefits
and other operating expenses 447 477 469 453 422
------------ ------------ ------------- ------------ ------------
Total 797 851 771 740 680
------------ ------------ ------------- ------------ ------------
Pretax segment income 184 40 136 71 29
Income tax provision (benefit) 33 (29) 3 (7) (23)
------------ ------------ ------------- ------------ ------------
Segment income $ 151 $ 69 $ 133 $ 78 $ 52
============ ============ ============= ============ ============
27
(Preliminary)
INTERNATIONAL CARD SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Card billed business $ 24.4 $ 27.5 $ 24.2 $ 22.7 $ 20.5
Total cards-in-force (millions) 15.0 15.0 15.2 15.5 15.8
Basic cards-in-force (millions) 10.4 10.5 10.6 10.8 11.0
Average basic cardmember spending (dollars) $ 2,340 $ 2,618 $ 2,273 $ 2,083 $ 1,823
International Consumer Travel:
Travel sales $ 0.3 $ 0.3 $ 0.3 $ 0.2 $ 0.2
Travel commissions and fees/sales 7.3% 9.0% 8.5% 8.7% 8.3%
Total segment assets $ 19.9 $ 20.4 $ 19.3 $ 19.2 $ 17.7
Segment capital (A) $ 2.1 $ 2.3 $ 2.3 $ 2.2 $ 2.1
Return on average segment capital (B) 19.7% 15.1% 13.2% 9.8% 11.2%
Return on average tangible segment capital (B) 26.5% 20.1% 17.6% 13.0% 14.9%
Cardmember receivables:
Total receivables $ 5.5 $ 5.9 $ 5.6 $ 5.4 $ 5.0
90 days past billing as a % of total (C) 1.1% 2.1% 2.5% 3.0% 3.3%
Net loss ratio (as a % of charge volume) (C) (D) 0.53% 0.37% 0.37% 0.36% 0.35%
Cardmember loans:
Total loans $ 8.4 $ 9.2 $ 8.8 $ 8.9 $ 8.5
30 days past due as a % of total 3.3% 3.3% 3.7% 4.0% 4.2%
Average loans $ 8.8 $ 9.0 $ 8.9 $ 8.7 $ 8.8
Net write-off rate 5.5% 6.1% 7.1% 7.5% 6.4%
Net interest income divided by average loans (E) 11.8% 11.9% 12.4% 12.7% 11.8%
Net interest yield on cardmember loans (E) 11.7% 11.7% 12.4% 12.5% 12.2%
(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) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in International Card Services are written
off to when they are 180 days past due or earlier, consistent with applicable
bank regulatory guidance and the write-off methodology adopted for U.S. Card
Services in the fourth quarter of 2008. Previously, receivables were written
off when they were 360 days past billing or earlier. Therefore, the net
write-offs for the first quarter of 2010 include net write-offs of
approximately $60 million for International Card Services resulting from this
write-off methodology change, which increased the net loss ratio and
decreased the 90 days past billing metric for this segment, but did not have
a substantial impact on provisions for losses. If this amount had been
excluded from net write-offs, the net loss ratio for International Card
Services would have been 0.17%.
(D) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
(E) See Appendix IV for calculations of net interest yield on cardmember loans
and the ratio of net interest income divided by average loans. The Company
believes net interest yield on cardmember loans is useful to investors because
it provides a measure of profitability of the Company's cardmember loans
portfolio.
28
(Preliminary)
GLOBAL COMMERCIAL SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Revenues
Discount revenue, net card fees and other $ 1,069 $ 982 9%
----------- -----------
Interest income 1 1 --
Interest expense 48 45 7
----------- -----------
Net interest expense (47) (44) 7
----------- -----------
Total revenues net of interest expense 1,022 938 9
----------- -----------
Provisions for losses 78 47 66
----------- -----------
Total revenues net of interest expense after provisions for losses 944 891 6
----------- -----------
Expenses
Marketing, promotion, rewards and cardmember services 113 79 43
Salaries and employee benefits and other operating expenses 695 690 1
----------- -----------
Total 808 769 5
----------- -----------
Pretax segment income 136 122 11
Income tax provision 44 41 7
----------- -----------
Segment income $ 92 $ 81 14
=========== ===========
# - Denotes variance of more than 100%.
29
(Preliminary)
GLOBAL COMMERCIAL SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Card billed business $ 30.8 $ 25.1 23%
Total cards-in-force (millions) 7.0 7.3 (4)%
Basic cards-in-force (millions) 7.0 7.3 (4)%
Average basic cardmember spending (dollars) $ 4,400 $ 3,517 25%
Global Corporate Travel:
Travel sales $ 4.1 $ 3.4 21%
Travel commissions and fees/sales 7.4% 8.6%
Total segment assets $ 23.5 $ 19.0 24%
Segment capital (millions) (A) $ 3,394 $ 3,560 (5)%
Return on average segment capital (B) 10.1% 11.2%
Return on average tangible segment capital (B) 21.9% 24.7%
Cardmember receivables:
Total receivables $ 11.4 $ 9.6 19%
90 days past billing as a % of total (C) 0.8% 2.4%
Net loss ratio (as a % of charge volume) (C) (D) 0.28% 0.17%
(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) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in Global Commercial Services are written off
to when they are 180 days past due or earlier, consistent with applicable
bank regulatory guidance and the write-off methodology adopted for U.S. Card
Services in the fourth quarter of 2008. Previously, receivables were written
off when they were 360 days past billing or earlier. Therefore, the net
write-offs for the first quarter of 2010 include net write-offs of
approximately $48 million for Global Commercial Services resulting from this
write-off methodology change, which increased the net loss ratio and
decreased the 90 days past billing metric for this segment, but did not have
a substantial impact on provisions for losses. If this amount had been
excluded from net write-offs, the net loss ratio for Global Commercial
Services would have been 0.11%.
(D) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
30
(Preliminary)
GLOBAL COMMERCIAL SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Revenues
Discount revenue, net card fees and other $ 1,069 $ 1,120 $ 1,017 $ 1,039 $ 982
------------ ------------ ------------- ------------ ------------
Interest income 1 1 1 2 1
Interest expense 48 49 43 43 45
------------ ------------ ------------- ------------ ------------
Net interest expense (47) (48) (42) (41) (44)
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense 1,022 1,072 975 998 938
------------ ------------ ------------- ------------ ------------
Provisions for losses 78 37 40 53 47
------------ ------------ ------------- ------------ ------------
Total revenues net of interest
expense after provisions for losses
944 1,035 935 945 891
------------ ------------ ------------- ------------ ------------
Expenses
Marketing, promotion, rewards and
cardmember services 113 98 81 74 79
Salaries and employee benefits
and other operating expenses 695 796 706 777 690
------------ ------------ ------------- ------------ ------------
Total 808 894 787 851 769
------------ ------------ ------------- ------------ ------------
Pretax segment income 136 141 148 94 122
Income tax provision 44 41 46 27 41
------------ ------------ ------------- ------------ ------------
Segment income $ 92 $ 100 $ 102 $ 67 $ 81
============ ============ ============= ============ ============
31
(Preliminary)
GLOBAL COMMERCIAL SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Card billed business $ 30.8 $ 31.0 $ 27.9 $ 27.2 $ 25.1
Total cards-in-force (millions) 7.0 7.1 7.1 7.2 7.3
Basic cards-in-force (millions) 7.0 7.1 7.1 7.2 7.3
Average basic cardmember spending (dollars) $ 4,400 $ 4,357 $ 3,907 $ 3,746 $ 3,517
Global Corporate Travel:
Travel sales $ 4.1 $ 4.1 $ 3.5 $ 3.6 $ 3.4
Travel commissions and fees/sales 7.4% 8.8% 8.8% 9.1% 8.6%
Total segment assets $ 23.5 $ 22.9 $ 22.7 $ 21.1 $ 19.0
Segment capital (A) $ 3.4 $ 3.7 $ 3.7 $ 3.6 $ 3.6
Return on average segment capital (B) 10.1% 9.7% 6.6% 7.0% 11.2%
Return on average tangible segment capital (B) 21.9% 20.8% 14.2% 15.1% 24.7%
Cardmember receivables:
Total receivables $ 11.4 $ 9.8 $ 10.4 $ 9.9 $ 9.6
90 days past billing as a % of total (C) 0.8% 1.4% 1.5% 1.9% 2.4%
Net loss ratio (as a % of charge volume) (C) (D) 0.28% 0.14% 0.23% 0.22% 0.17%
(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) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in Global Commercial Services are written off
to when they are 180 days past due or earlier, consistent with applicable
bank regulatory guidance and the write-off methodology adopted for U.S. Card
Services in the fourth quarter of 2008. Previously, receivables were written
off when they were 360 days past billing or earlier. Therefore, the net
write-offs for the first quarter of 2010 include net write-offs of
approximately $48 million for Global Commercial Services resulting from this
write-off methodology change, which increased the net loss ratio and
decreased the 90 days past billing metric for this segment, but did not have
a substantial impact on provisions for losses. If this amount had been
excluded from net write-offs, the net loss ratio for Global Commercial
Services would have been 0.11%.
(D) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been restated for
this change as it was deemed immaterial.
32
(Preliminary)
GLOBAL NETWORK & MERCHANT SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Revenues
Discount revenue, fees and other $ 949 $ 807 18%
----------- -----------
Interest income 1 -- #
Interest expense (47) (50) (6)
----------- -----------
Net interest income 48 50 (4)
----------- -----------
Total revenues net of interest expense 997 857 16
----------- -----------
Provisions for losses 21 35 (40)
----------- -----------
Total revenues net of interest expense after provisions for losses 976 822 19
----------- -----------
Expenses
Marketing and promotion 166 64 #
Salaries and employee benefits and other operating expenses 395 372 6
----------- -----------
Total 561 436 29
----------- -----------
Pretax segment income 415 386 8
Income tax provision 148 136 9
----------- -----------
Segment income $ 267 $ 250 7
=========== ===========
# - Denotes variance of more than 100%.
33
(Preliminary)
GLOBAL NETWORK & MERCHANT SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
March 31,
------------------------- Percentage
2010 2009 Inc/(Dec)
----------- ----------- ------------
Global Card billed business (A) $ 161.0 $ 139.2 16%
Global Network & Merchant Services:
Total segment assets $ 10.8 $ 9.4 15%
Segment capital (millions) (B) $ 1,361 $ 1,459 (7)%
Return on average segment capital (C) 65.8% 90.8%
Return on average tangible segment capital (C) 67.4% 93.6%
Global Network Services:
Card billed business $ 20.1 $ 14.8 36%
Total cards-in-force (millions) 26.5 25.1 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.
34
(Preliminary)
GLOBAL NETWORK & MERCHANT SERVICES
SELECTED INCOME STATEMENT DATA
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Revenues
Discount revenue, fees and other $ 949 $ 986 $ 937 $ 872 $ 807
------------ ------------ ------------- ------------ ------------
Interest income 1 1 -- -- --
Interest expense (47) (44) (39) (44) (50)
------------ ------------ ------------- ------------ ------------
Net interest income 48 45 39 44 50
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense 997 1,031 976 916 857
------------ ------------ ------------- ------------ ------------
Provisions for losses 21 34 33 33 35
------------ ------------ ------------- ------------ ------------
Total revenues net of interest expense after
provisions for losses 976 997 943 883 822
------------ ------------ ------------- ------------ ------------
Expenses
Marketing and promotion 166 206 157 94 64
Salaries and employee benefits and other operating
expenses 395 469 415 423 372
------------ ------------ ------------- ------------ ------------
Total 561 675 572 517 436
------------ ------------ ------------- ------------ ------------
Pretax segment income 415 322 371 366 386
Income tax provision 148 122 123 127 136
------------ ------------ ------------- ------------ ------------
Segment income $ 267 $ 200 $ 248 $ 239 $ 250
============ ============ ============= ============ ============
35
(Preliminary)
GLOBAL NETWORK & MERCHANT SERVICES
SELECTED STATISTICAL INFORMATION
(Billions, except percentages and where indicated)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
Global Card billed business (A) $ 161.0 $ 172.6 $ 156.6 $ 151.4 $ 139.2
Global Network & Merchant Services:
Total segment assets $ 10.8 $ 11.1 $ 10.4 $ 10.3 $ 9.4
Segment capital (B) $ 1.4 $ 1.4 $ 1.5 $ 1.5 $ 1.5
Return on average segment capital (C) 65.8% 65.7% 71.0% 76.7% 90.8%
Return on average tangible segment capital (C) 67.4% 67.4% 72.8% 78.8% 93.6%
Global Network Services:
Card billed business $ 20.1 $ 21.4 $ 18.6 $ 17.0 $ 14.8
Total cards-in-force (millions) 26.5 26.3 26.3 25.6 25.1
(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.
36
(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
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
ROE
Net income $ 2,578 $ 2,130 $ 1,654 $ 1,829 $ 2,145
Average shareholders' equity $ 14,290 $ 14,570 $ 14,151 $ 13,892 $ 13,147
Return on average equity (A) 18.0% 14.6% 11.7% 13.2% 16.3%
RECONCILIATION OF ROCE AND ROTCE
Net income $ 2,578 $ 2,130 $ 1,654 $ 1,829 $ 2,145
Preferred shares dividends and related accretion 234 306 306 306 72
Earnings allocated to participating share
awards and other 30 22 14 11 13
------------ ------------ ------------- ------------ ------------
Net income attributable to common
shareholders $ 2,314 $ 1,802 $ 1,334 $ 1,512 $ 2,060
------------ ------------ ------------- ------------ ------------
Average shareholders' equity $ 14,290 $ 14,570 $ 14,151 $ 13,892 $ 13,147
Average preferred shares 782 1,303 1,303 1,303 782
------------ ------------ ------------- ------------ ------------
Average common shareholders' equity $ 13,508 $ 13,267 $ 12,848 $ 12,589 $ 12,365
------------ ------------ ------------- ------------ ------------
Average goodwill and other intangibles 3,081 3,009 2,944 2,886 2,830
------------ ------------ ------------- ------------ ------------
Average tangible common shareholders' equity $ 10,427 $ 10,258 $ 9,904 $ 9,703 $ 9,535
------------ ------------ ------------- ------------ ------------
Return on average common equity (A) 17.1% 13.6% 10.4% 12.0% 16.7%
Return on average tangible common equity (B) 22.2% 17.6% 13.5% 15.6% 21.6%
(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.
(B) 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.
37
(Preliminary)
AMERICAN EXPRESS COMPANY
COMPONENTS OF RETURN ON AVERAGE SEGMENT CAPITAL (ROSC) AND RETURN ON AVERAGE
TANGIBLE SEGMENT CAPITAL (ROTSC)
APPENDIX II (A)
(Millions)
For the Twelve Months Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
U.S. CARD SERVICES
Segment income $ 846 $ 411 $ 124 $ 223 $ 410
Average segment capital $ 5,367 $ 5,145 $ 4,835 $ 4,597 $ 4,342
Average goodwill and other intangibles 440 432 383 338 294
------------ ------------ ------------- ------------ ------------
Average tangible segment capital $ 4,927 $ 4,713 $ 4,452 $ 4,259 $ 4,048
------------ ------------ ------------- ------------ ------------
Return on average segment capital (B) 15.8% 8.0% 2.6% 4.9% 9.4%
Return on average tangible segment capital (B) 17.2% 8.7% 2.8% 5.2% 10.1%
INTERNATIONAL CARD SERVICES
Segment income $ 431 $ 332 $ 296 $ 219 $ 246
Average segment capital $ 2,183 $ 2,205 $ 2,234 $ 2,233 $ 2,194
Average goodwill and other intangibles 554 551 551 546 544
------------ ------------ ------------- ------------ ------------
Average tangible segment capital $ 1,629 $ 1,654 $ 1,683 $ 1,687 $ 1,650
------------ ------------ ------------- ------------ ------------
Return on average segment capital (B) 19.7% 15.1% 13.2% 9.8% 11.2%
Return on average tangible segment capital (B) 26.5% 20.1% 17.6% 13.0% 14.9%
GLOBAL COMMERCIAL SERVICES
Segment income $ 361 $ 350 $ 236 $ 250 $ 393
Average segment capital $ 3,581 $ 3,623 $ 3,603 $ 3,587 $ 3,524
Average goodwill and other intangibles 1,936 1,937 1,938 1,933 1,930
------------ ------------ ------------- ------------ ------------
Average tangible segment capital $ 1,645 $ 1,686 $ 1,665 $ 1,654 $ 1,594
------------ ------------ ------------- ------------ ------------
Return on average segment capital (B) 10.1% 9.7% 6.6% 7.0% 11.2%
Return on average tangible segment capital (B) 21.9% 20.8% 14.2% 15.1% 24.7%
GLOBAL NETWORK & MERCHANT SERVICES
Segment income $ 954 $ 937 $ 980 $ 1,005 $ 1,076
Average segment capital $ 1,449 $ 1,426 $ 1,381 $ 1,310 $ 1,185
Average goodwill and other intangibles 34 36 35 35 36
------------ ------------ ------------- ------------ ------------
Average tangible segment capital $ 1,415 $ 1,390 $ 1,346 $ 1,275 $ 1,149
------------ ------------ ------------- ------------ ------------
Return on average segment capital (B) 65.8% 65.7% 71.0% 76.7% 90.8%
Return on average tangible segment capital (B) 67.4% 67.4% 72.8% 78.8% 93.6%
(A) Beginning in the first quarter of 2010, the Company changed the manner in
which it allocates interest expense and capital to its reportable operating
segments. The change reflects modifications in allocation methodology that the
Company believes more accurately reflect funding and capital characteristics
of its segments. The segment results, and accordingly, ROSC and ROTSC for
periods prior to the first quarter of 2010 have been restated for this change.
(B) 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.
38
(Preliminary)
AMERICAN EXPRESS COMPANY
NET INTEREST YIELD ON CARDMEMBER LOANS
APPENDIX III (A)
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
GAAP basis portfolio (B):
Net interest income $ 1,307 $ 710 $ 754 $ 741 $ 919
Average loans (billions) $ 59.3 $ 31.8 $ 32.3 $ 35.2 $ 39.0
Adjusted net interest income (C) $ 1,498 $ 807 $ 837 $ 855 $ 1,041
Adjusted average loans (billions) (D) $ 59.2 $ 31.9 $ 32.4 $ 35.4 $ 39.1
Net interest income divided by average loans 8.9% 8.9% 9.3% 8.4% 9.6%
Net interest yield on cardmember loans (E) 10.3% 10.0% 10.2% 9.7% 10.8%
Total portfolio (F):
Net interest income (G) $ 1,307 $ 1,381 $ 1,410 $ 1,464 $ 1,722
Average loans (billions) $ 59.3 $ 60.9 $ 61.8 $ 63.9 $ 67.9
Adjusted net interest income (C) $ 1,498 $ 1,577 $ 1,594 $ 1,617 $ 1,858
Adjusted average loans (billions) (D) $ 59.2 $ 61.0 $ 62.0 $ 64.0 $ 68.0
Net interest yield on cardmember loans (E) 10.3% 10.3% 10.2% 10.1% 11.1%
(A) Beginning in the first quarter of 2010, the Company changed the manner in
which it allocates interest expense and capital to its reportable operating
segments. The change reflects modifications in allocation methodology that the
Company believes more accurately reflect funding and capital characteristics
of its segments. The change to interest allocation impacted the consolidated
net interest yield on cardmember loans on both a GAAP and non-GAAP basis.
Accordingly, the net interest yields for periods prior to the first quarter of
2010 have been restated for this change on both a GAAP and non-GAAP basis.
(B) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(C) Represents net interest income allocated to the Company's cardmember loans
portfolio on a GAAP or non-GAAP basis, as applicable, excluding the impact of
card fees on loans and balance transfer fees attributable to the Company's
cardmember loans on a GAAP or non-GAAP basis, as applicable.
(D) Represents average cardmember loans on a GAAP or non-GAAP basis, as
applicable, excluding the impact of deferred card fees, net of deferred direct
acquisition costs of cardmember loans on a GAAP or non-GAAP basis, as
applicable.
(E) Represents the net spread earned on cardmember loans. Net interest yield
on cardmember loans (both on a GAAP and non-GAAP 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 a GAAP and non-GAAP basis) includes interest that is deemed
uncollectible. For the GAAP and non-GAAP presentation, reserves and net
write-offs related to uncollectible interest are recorded through provisions
for losses - cardmember loans; therefore, such reserves and net write-offs are
not included in the net interest yield calculation.
(F) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
(G) For periods ended on or prior to December 31, 2009, the total portfolio
information presented includes the adjustments to the GAAP "owned basis"
presentation for such periods attributable to securitization activity for
interest income and interest expense to arrive at the non-GAAP "managed basis"
information, which adjustments are set forth under the U.S. Card Services
total portfolio presentation on page 23.
39
(Preliminary)
U. S. CARD SERVICES AND INTERNATIONAL CARD SERVICES
NET INTEREST YIELD ON CARDMEMBER LOANS
APPENDIX IV (A)
(Millions)
Quarters Ended
--------------------------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2010 2009 2009 2009 2009
------------ ------------ ------------- ------------ ------------
USCS - GAAP basis portfolio (B):
Net interest income $ 1,221 $ 621 $ 649 $ 612 $ 766
Average loans (billions) $ 50.5 $ 22.7 $ 23.4 $ 26.5 $ 30.2
Adjusted net interest income (C) $ 1,246 $ 537 $ 558 $ 581 $ 775
Adjusted average loans (billions) (D) $ 50.5 $ 22.8 $ 23.5 $ 26.6 $ 30.3
Net interest income divided by average loans 9.8% 10.9% 11.0% 9.3% 10.3%
Net interest yield on cardmember loans (E) 10.0% 9.4% 9.4% 8.8% 10.4%
USCS - total portfolio (F):
Net interest income (G) $ 1,221 $ 1,292 $ 1,305 $ 1,335 $ 1,569
Average loans (billions) $ 50.5 $ 51.8 $ 52.9 $ 55.1 $ 59.1
Adjusted net interest income (C) $ 1,246 $ 1,308 $ 1,315 $ 1,343 $ 1,592
Adjusted average loans (billions) (D) $ 50.5 $ 51.9 $ 53.0 $ 55.2 $ 59.2
Net interest yield on cardmember loans (E) 10.0% 10.0% 9.8% 9.7% 10.9%
ICS:
Net interest income $ 257 $ 271 $ 279 $ 275 $ 257
Average loans (billions) $ 8.8 $ 9.0 $ 8.9 $ 8.7 $ 8.8
Adjusted net interest income (C) $ 253 $ 269 $ 279 $ 274 $ 265
Adjusted average loans (billions) (D) $ 8.8 $ 9.1 $ 8.9 $ 8.8 $ 8.8
Net interest income divided by average loans 11.8% 11.9% 12.4% 12.7% 11.8%
Net interest yield on cardmember loans (E) 11.7% 11.7% 12.4% 12.5% 12.2%
(A) Beginning in the first quarter of 2010, the Company changed the manner in
which it allocates interest expense and capital to its reportable operating
segments. The change reflects modifications in allocation methodology that the
Company believes more accurately reflect funding and capital characteristics
of its segments. The change to interest allocation impacted the segment net
interest yield on cardmember loans on both a GAAP and non-GAAP basis.
Accordingly, the net interest yields for periods prior to the first quarter of
2010 have been restated for this change on both a GAAP and non-GAAP basis.
(B) For periods ended on or prior to December 31, 2009, the Company's
cardmember loans and related debt performance information on a GAAP basis was
referred to as the "Owned" basis presentation. Under the GAAP basis
presentation prior to a securitization, revenues and expenses from cardmember
loans and related debt were reflected in the Company's income statements in
other commissions and fees, net interest income and provisions for losses for
cardmember loans. In accordance with the new GAAP adopted effective
January 1, 2010, the Company's securitized portfolio of cardmember loans and
related debt is consolidated on its balance sheet.
(C) Represents net interest income allocated to the Company's cardmember loans
portfolio on a GAAP or non-GAAP basis, as applicable, excluding the impact of
card fees on loans and balance transfer fees attributable to the Company's
cardmember loans on a GAAP or non-GAAP basis, as applicable.
(D) Represents average cardmember loans on a GAAP or non-GAAP basis, as
applicable, excluding the impact of deferred card fees, net of deferred direct
acquisition costs of cardmember loans on a GAAP or non-GAAP basis, as
applicable.
(E) Represents the net spread earned on cardmember loans. Net interest yield
on cardmember loans (both on a GAAP and non-GAAP 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 a GAAP and non-GAAP basis) includes interest that is deemed
uncollectible. For the GAAP and non-GAAP presentation, reserves and net
write-offs related to uncollectible interest are recorded through provisions
for losses - cardmember loans; therefore, such reserves and net write-offs are
not included in the net interest yield calculation.
(F) For periods ended on or prior to December 31, 2009, total portfolio
information is based on the Company's historical non-GAAP, or "Managed" basis
presentation. For periods ending after January 1, 2010, total portfolio
information is based on the Company's entire portfolio of cardmember loans and
related debt determined in accordance with GAAP and is identical to the
numbers provided in the GAAP basis portfolio above for such period. See page
20 for discussion of total portfolio information.
(G) For periods ended on or prior to December 31, 2009, the total portfolio
information presented includes the adjustments to the GAAP "owned basis"
presentation for such periods attributable to securitization activity for
interest income and interest expense to arrive at the non-GAAP "managed basis"
information, which adjustments are set forth under the U.S. Card Services
total portfolio presentation on page 23.
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