EX-99.2 3 ex99_2.htm FINANCIALS ex99_2.htm

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. The Company revised the income statement reporting of card fees on lending products in the first quarter of 2012, increasing Net card fees and reducing Interest on loans. Corresponding amounts in prior periods have been reclassified to conform to the current period presentation. This change does not impact Total revenues net of interest expense in the income statement, or the Net interest yield on cardmember loans, a non-GAAP measure.
 
(Preliminary)

American Express Company
Consolidated Statements of Income
 
(Millions)
                                   
   
Quarters Ended
         
Nine Months Ended
       
   
September 30,
   
Percentage
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
   
2012
   
2011
   
Inc/(Dec)
 
                                     
Revenues
                                   
Non-interest revenues
                                   
Discount revenue
  $ 4,425     $ 4,218       5 %   $ 13,164     $ 12,398       6 %
Net card fees
    633       622       2       1,858       1,836       1  
Travel commissions and fees
    465       480       (3 )     1,437       1,457       (1 )
Other commissions and fees
    581       604       (4 )     1,739       1,717       1  
Other
    577       534       8       1,808       1,546       17  
Total non-interest revenues
    6,681       6,458       3       20,006       18,954       6  
Interest income
                                               
Interest on loans
    1,658       1,587       4       4,851       4,685       4  
Interest and dividends on investment securities
    60       68       (12 )     193       255       (24 )
Deposits with banks and other
    21       33       (36 )     73       71       3  
Total interest income
    1,739       1,688       3       5,117       5,011       2  
Interest expense
                                               
Deposits
    118       127       (7 )     362       395       (8 )
Long-term debt and other
    440       448       (2 )     1,320       1,350       (2 )
Total interest expense
    558       575       (3 )     1,682       1,745       (4 )
Net interest income
    1,181       1,113       6       3,435       3,266       5  
Total revenues net of interest expense
    7,862       7,571       4       23,441       22,220       5  
Provisions for losses
                                               
Charge card
    190       174       9       531       533       -  
Cardmember loans
    264       48       #       753       104       #  
Other
    25       27       (7 )     68       66       3  
Total provisions for losses
    479       249       92       1,352       703       92  
Total revenues net of interest expense after provisions for losses
    7,383       7,322       1       22,089       21,517       3  
                                                 
Expenses
                                               
Marketing and promotion
    764       757       1       2,168       2,261       (4 )
Cardmember rewards
    1,496       1,565       (4 )     4,425       4,755       (7 )
Cardmember services
    201       189       6       602       526       14  
Salaries and employee benefits
    1,516       1,598       (5 )     4,687       4,715       (1 )
Professional services
    690       690       -       2,092       2,098       -  
Occupancy and equipment
    453       433       5       1,337       1,218       10  
Communications
    93       93       -       284       280       1  
Other, net
    300       286       5       972       456       #  
Total
    5,513       5,611       (2 )     16,567       16,309       2  
Pretax income from continuing operations
    1,870       1,711       9       5,522       5,208       6  
Income tax provision
    620       476       30       1,677       1,501       12  
Income from continuing operations
    1,250       1,235       1       3,845       3,707       4  
Income from discontinued operations, net of tax
    -       -       -       -       36       #  
Net income
  $ 1,250     $ 1,235       1     $ 3,845     $ 3,743       3  
Income from continuing operations attributable to common shareholders (A)
  $ 1,236     $ 1,220       1     $ 3,803     $ 3,663       4  
Net income attributable to common shareholders (A)
  $ 1,236     $ 1,220       1     $ 3,803     $ 3,699       3  
Effective tax rate
    33.2 %     27.8 %             30.4 %     28.8 %        

# - Denotes a variance of more than 100%.

(A) Represents income from continuing operations or net income, as applicable, less earnings allocated to participating share awards of $14 million and $15 million for the three months ended September 30, 2012 and 2011, respectively, and $42 million and $44 million for the nine months ended September 30, 2012 and 2011, respectively.
 
 
1

 
 
(Preliminary)
 
American Express Company
Condensed Consolidated Balance Sheets
 
(Billions)
           
       
   
September 30,
   
December 31,
 
   
2012
   
2011
 
             
Assets
           
Cash & cash equivalents
  $ 25     $ 25  
Accounts receivable
    45       44  
Investment securities
    6       7  
Loans
    61       61  
Other assets
    16       16  
Total assets
  $ 153     $ 153  
                 
Liabilities and Shareholders' Equity
               
Customer deposits
  $ 37     $ 38  
Short-term borrowings
    4       4  
Long-term debt
    56       60  
Other liabilities
    37       32  
Total liabilities
    134       134  
                 
Shareholders' Equity
    19       19  
Total liabilities and shareholders' equity
  $ 153     $ 153  

 
2

 
 
(Preliminary)
American Express Company
Financial Summary
 
(Millions)
                                   
   
Quarters Ended
         
Nine Months Ended
       
   
September 30,
   
Percentage
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
   
2012
   
2011
   
Inc/(Dec)
 
                                     
Total revenues net of interest expense
                                   
U.S. Card Services
  $ 4,055     $ 3,838       6 %   $ 11,976     $ 11,174       7 %
International Card Services
    1,313       1,347       (3 )     3,909       3,906       -  
Global Commercial Services
    1,156       1,130       2       3,534       3,442       3  
Global Network & Merchant Services
    1,310       1,250       5       3,881       3,626       7  
      7,834       7,565       4       23,300       22,148       5  
Corporate & Other
    28       6       #       141       72       96  
                                                 
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
  $ 7,862     $ 7,571       4     $ 23,441     $ 22,220       5  
                                                 
Pretax income (loss) from continuing operations
                                               
U.S. Card Services
  $ 1,128     $ 1,151       (2 )   $ 3,457     $ 2,961       17  
International Card Services
    207       189       10       549       625       (12 )
Global Commercial Services
    275       269       2       818       799       2  
Global Network & Merchant Services
    561       514       9       1,662       1,477       13  
      2,171       2,123       2       6,486       5,862       11  
Corporate & Other
    (301 )     (412 )     (27 )     (964 )     (654 )     47  
                                                 
PRETAX INCOME FROM CONTINUING OPERATIONS
  $ 1,870     $ 1,711       9     $ 5,522     $ 5,208       6  
                                                 
Net income (loss)
                                               
U.S. Card Services
  $ 699     $ 733       (5 )   $ 2,169     $ 1,953       11  
International Card Services
    164       221       (26 )     539       571       (6 )
Global Commercial Services
    183       197       (7 )     579       558       4  
Global Network & Merchant Services
    360       332       8       1,089       969       12  
      1,406       1,483       (5 )     4,376       4,051       8  
Corporate & Other
    (156 )     (248 )     (37 )     (531 )     (344 )     54  
Income from continuing operations
    1,250       1,235       1       3,845       3,707       4  
Income from discontinued operations, net of tax
    -       -       -       -       36       #  
NET INCOME
  $ 1,250     $ 1,235       1     $ 3,845     $ 3,743       3  
 
# - Denotes a variance of more than 100%.
 
 
3

 
 
(Preliminary)
 
American Express Company
Financial Summary (continued)
 
   
Quarters Ended
         
Nine Months Ended
       
   
September 30,
   
Percentage
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
   
2012
   
2011
   
Inc/(Dec)
 
EARNINGS PER COMMON SHARE
                                   
                                     
BASIC
                                   
Income from continuing operations attributable to common shareholders
  $ 1.10     $ 1.04       6 %   $ 3.33     $ 3.09       8 %
Income from discontinued operations
    -       -       -       -       0.03       #  
Net income attributable to common shareholders
  $ 1.10     $ 1.04       6 %   $ 3.33     $ 3.12       7 %
                                                 
Average common shares outstanding (millions)
    1,126       1,175       (4 ) %     1,143       1,184       (3 ) %
                                                 
DILUTED
                                               
Income from continuing operations attributable to common shareholders
  $ 1.09     $ 1.03       6 %   $ 3.31     $ 3.08       7 %
Income from discontinued operations
    -       -       -       -       0.03       #  
Net income attributable to common shareholders
  $ 1.09     $ 1.03       6 %   $ 3.31     $ 3.11       6 %
                                                 
Average common shares outstanding (millions)
    1,132       1,181       (4 ) %     1,149       1,191       (4 ) %
                                                 
Cash dividends declared per common share
  $ 0.20     $ 0.18       11 %   $ 0.60     $ 0.54       11 %
 
Selected Statistical Information
 
   
Quarters Ended
         
Nine Months Ended
       
   
September 30,
   
Percentage
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
   
2012
   
2011
   
Inc/(Dec)
 
                                     
Return on average equity (A)
    26.3 %     27.8 %           26.3 %     27.8 %      
Return on average common equity (A)
    26.0 %     27.5 %           26.0 %     27.5 %      
Return on average tangible common equity (A)
    33.5 %     35.7 %           33.5 %     35.7 %      
Common shares outstanding (millions)
    1,122       1,169       (4 )  %     1,122       1,169       (4 )  %
Book value per common share
  $ 17.37     $ 15.49       12 %   $ 17.37     $ 15.49       12 %
Shareholders' equity (billions)
  $ 19.5     $ 18.1       8 %   $ 19.5     $ 18.1       8 %

# - 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, a non-GAAP measure.
 
 
4

 

(Preliminary)
American Express Company
Selected Statistical Information
 
(Millions, except percentages and where indicated)
                 
   
Quarters Ended
       
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
 
Card billed business (billions) (A):
                 
United States
  $ 146.9     $ 136.4       8 %
Outside the United States
    73.2       71.3       3  
Total
  $ 220.1     $ 207.7       6  
Total cards-in-force (B):
                       
United States
    51.8       50.2       3 %
Outside the United States
    49.6       45.6       9  
Total
    101.4       95.8       6  
Basic cards-in-force (B):
                       
United States
    40.2       38.9       3 %
Outside the United States
    39.8       36.4       9  
Total
    80.0       75.3       6  
                         
Average discount rate (C)
    2.53 %     2.54 %        
Average basic cardmember spending (dollars) (D)
  $ 3,885     $ 3,739       4 %
Average fee per card (dollars) (D)
  $ 39     $ 40       (3 ) %
Average fee per card adjusted (dollars) (D)
  $ 44     $ 43       2 %

(A)  Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards.  In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business.  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 cards-in-force includes all cards that are issued and outstanding under network partnership agreements, except for retail co-brand cardmember accounts that have no out-of-store spend activity during the prior 12 month period.

(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 card member 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 divided by average worldwide proprietary cards-in-force.  The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded was $65 million and $52 million for the quarters ended September  30, 2012 and 2011, respectively. The Company presents adjusted average fee per card because the Company believes this metric presents a useful indicator of card fees pricing across a range of its proprietary card products.

 
5

 
 
(Preliminary)
American Express Company
Selected Statistical Information (continued)

 
(Billions, except percentages and where indicated)
                 
   
Quarters Ended
       
   
September 30,
   
Percentage
 
   
2012
   
2011
   
Inc/(Dec)
 
Worldwide cardmember receivables:
                 
Total receivables
  $ 42.3     $ 39.8       6 %
Loss reserves (millions):
                       
Beginning balance
  $ 392     $ 415       (6 )  %
Provisions  (A)
    151       125       21  
Other additions (B)
    39       49       (20 )
Net write-offs (C)
    (141 )     (146 )     (3 )
Other deductions (D)
    (32 )     (55 )     (42 )
Ending balance
  $ 409     $ 388       5  
% of receivables
    1.0 %     1.0 %        
Net write-off rate (principal only) - USCS (E)
    1.6 %     1.8 %        
Net write-off rate (principal and fees) - USCS (E)
    1.7 %     1.9 %        
30 days past due as a % of total - USCS
    1.8 %     2.0 %        
Net loss ratio (as a % of charge volume) - ICS/GCS
    0.10 %     0.10 %        
90 days past billing as a % of total - ICS/GCS
    0.7 %     0.8 %        
                         
Worldwide cardmember loans:
                       
Total loans
  $ 61.8     $ 58.2       6 %
Loss reserves (millions):
                       
Beginning balance
  $ 1,547     $ 2,560       (40 )  %
Provisions (A)
    231       16       #  
Other additions (B)
    33       32       3  
Net write-offs - principal (C)
    (292 )     (383 )     (24 )
Net write-offs - interest and fees (C)
    (36 )     (44 )     (18 )
Other deductions (D)
    (24 )     (42 )     (43 )
Ending balance
  $ 1,459     $ 2,139       (32 )
Ending reserves - principal
  $ 1,411     $ 2,080       (32 )
Ending reserves - interest and fees
  $ 48     $ 59       (18 )
% of loans
    2.4 %     3.7 %        
% of past due
    182 %     238 %        
Average loans
  $ 61.4     $ 58.9       4 %
Net write-off rate (principal only) (E)
    1.9 %     2.6 %        
Net write-off rate (principal, interest and fees) (E)
    2.1 %     2.9 %        
30 days past due loans as a % of total
    1.3 %     1.5 %        
Net interest income divided by average loans (F)
    7.7 %     7.5 %        
Net interest yield on cardmember loans (F)
    9.3 %     9.1 %        
 
# - Denotes a variance of more than 100%.

(A)  Provisions for principal (resulting from authorized transactions) and fee reserve components.

(B) Provisions for unauthorized transactions.

(C) Consists of principal (resulting from authorized transactions)  interest and/or fees, less recoveries.

(D) For cardmember receivables, includes net write-offs for unauthorized transactions of $(37) million and $(46) million for the three months ended September 30, 2012 and 2011, respectively; foreign currency translation adjustments of $6 million and $(5) million for the three months ended September 30, 2012 and 2011, respectively; and other adjustments of $(1) million and $(4) million for the three months ended September 30, 2012 and 2011, respectively. For cardmember loans, includes net write-offs for unauthorized transactions of $(31) million and $(29) million for the three months ended September 30, 2012 and 2011, respectively; foreign currency translation adjustments of $10 million and $(14) million for the three months ended September 30, 2012 and 2011, respectively; and other adjustments of $(3) million and $1 million for the three months ended September 30, 2012 and 2011, respectively.
(E)  The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention.  In addition, because the Company's practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate including principal, interest and/or fees is also presented.

(F)  See Appendix III for calculations of net interest yield on cardmember loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Company's rationale for presenting net interest yield on cardmember loans.

 
6

 
 
(Preliminary)
American Express Company
Consolidated Statements of Income
 
(Millions)
                             
   
Quarters Ended
 
   
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2012
   
2012
   
2012
   
2011
   
2011
 
                               
Revenues
                             
Non-interest revenues
                             
Discount revenue
  $ 4,425     $ 4,482     $ 4,257     $ 4,336     $ 4,218  
Net card fees
    633       615       610       612       622  
Travel commissions and fees
    465       521       451       514       480  
Other commissions and fees
    581       575       583       552       604  
Other
    577       651       580       618       534  
Total non-interest revenues
    6,681       6,844       6,481       6,632       6,458  
Interest income
                                       
Interest on loans
    1,658       1,582       1,611       1,587       1,587  
Interest and dividends on investment securities
    60       67       66       72       68  
Deposits with banks and other
    21       22       30       26       33  
Total interest income
    1,739       1,671       1,707       1,685       1,688  
Interest expense
                                       
Deposits
    118       115       129       133       127  
Long-term debt and other
    440       435       445       442       448  
Total interest expense
    558       550       574       575       575  
Net interest income
    1,181       1,121       1,133       1,110       1,113  
Total revenues net of interest expense
    7,862       7,965       7,614       7,742       7,571  
Provisions for losses
                                       
Charge card
    190       163       178       237       174  
Cardmember loans
    264       277       212       149       48  
Other
    25       21       22       23       27  
Total provisions for losses
    479       461       412       409       249  
Total revenues net of interest expense after provisions for losses
    7,383       7,504       7,202       7,333       7,322  
                                         
Expenses
                                       
Marketing and promotion
    764       773       631       735       757  
Cardmember rewards
    1,496       1,462       1,467       1,463       1,565  
Cardmember services
    201       180       221       190       189  
Salaries and employee benefits
    1,516       1,536       1,635       1,537       1,598  
Professional services
    690       711       691       853       690  
Occupancy and equipment
    453       446       438       467       433  
Communications
    93       95       96       98       93  
Other, net
    300       422       250       242       286  
Total
    5,513       5,625       5,429       5,585       5,611  
Pretax income
    1,870       1,879       1,773       1,748       1,711  
Income tax provision
    620       540       517       556       476  
Net income
  $ 1,250     $ 1,339     $ 1,256     $ 1,192     $ 1,235  
Net income attributable to common shareholders (A)
  $ 1,236     $ 1,325     $ 1,242     $ 1,178     $ 1,220  
Effective tax rate
    33.2 %     28.7 %     29.2 %     31.8 %     27.8 %

(A) Represents net income, less earnings allocated to participating share awards of $14 million for the quarter ended September 30, 2012, $14 million for the quarter ended June 30, 2012, $14 million for the quarter ended March 31, 2012, $14 million for the quarter ended December 31, 2011 and $15 million for the quarter ended September 30, 2011.

 
7

 
 
(Preliminary)
American Express Company
Financial Summary
 
(Millions)
                             
   
Quarters Ended
 
   
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2012
   
2012
   
2012
   
2011
   
2011
 
                               
Total revenues net of interest expense
                             
U.S. Card Services
  $ 4,055     $ 4,037     $ 3,884     $ 3,897     $ 3,838  
International Card Services
    1,313       1,297       1,299       1,333       1,347  
Global Commercial Services
    1,156       1,221       1,157       1,183       1,130  
Global Network & Merchant Services
    1,310       1,323       1,248       1,316       1,250  
      7,834       7,878       7,588       7,729       7,565  
Corporate & Other
    28       87       26       13       6  
                                         
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
  $ 7,862     $ 7,965     $ 7,614     $ 7,742     $ 7,571  
                                         
Pretax income (loss)
                                       
U.S. Card Services
  $ 1,128     $ 1,149     $ 1,180     $ 1,168     $ 1,151  
International Card Services
    207       146       196       137       189  
Global Commercial Services
    275       299       244       276       269  
Global Network & Merchant Services
    561       562       539       502       514  
      2,171       2,156       2,159       2,083       2,123  
Corporate & Other
    (301 )     (277 )     (386 )     (335 )     (412 )
                                         
PRETAX INCOME
  $ 1,870     $ 1,879     $ 1,773     $ 1,748     $ 1,711  
                                         
Net income (loss)
                                       
U.S. Card Services
  $ 699     $ 718     $ 752     $ 727     $ 733  
International Card Services
    164       178       197       152       221  
Global Commercial Services
    183       219       177       180       197  
Global Network & Merchant Services
    360       372       357       324       332  
      1,406       1,487       1,483       1,383       1,483  
Corporate & Other
    (156 )     (148 )     (227 )     (191 )     (248 )
                                         
NET INCOME
  $ 1,250     $ 1,339     $ 1,256     $ 1,192     $ 1,235  

 
8

 
 
(Preliminary)
American Express Company
Financial Summary (continued)
 
 
    Quarters Ended  
   
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2012
   
2012
   
2012
   
2011
   
2011
 
EARNINGS PER COMMON SHARE
                             
                               
BASIC
                             
Net income attributable to common shareholders
  $ 1.10     $ 1.16     $ 1.07     $ 1.02     $ 1.04  
                                         
Average common shares outstanding (millions)
    1,126       1,145       1,160       1,157       1,175  
                                         
DILUTED
                                       
Net income attributable to common shareholders
  $ 1.09     $ 1.15     $ 1.07     $ 1.01     $ 1.03  
                                         
Average common shares outstanding (millions)
    1,132       1,152       1,166       1,163       1,181  
                                         
Cash dividends declared per common share
  $ 0.20     $ 0.20     $ 0.20     $ 0.18     $ 0.18  
 
Selected Statistical Information
 
   
Quarters Ended
 
   
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2012
   
2012
   
2012
   
2011
   
2011
 
                               
Return on average equity (A)
    26.3 %     26.6 %     27.1 %     27.7 %     27.8 %
Return on average common equity (A)
    26.0 %     26.3 %     26.8 %     27.3 %     27.5 %
Return on average tangible common equity (A)
    33.5 %     34.1 %     35.0 %     35.8 %     35.7 %
Common shares outstanding (millions)
    1,122       1,139       1,166       1,164       1,169  
Book value per common share
  $ 17.37     $ 16.92     $ 17.08     $ 16.15     $ 15.49  
Shareholders' equity (billions)
  $ 19.5     $ 19.3     $ 19.9     $ 18.8     $ 18.1  

(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.

 
9

 

(Preliminary)
American Express Company
Selected Statistical Information

(Millions, except percentages and where indicated)
                             
   
Quarters Ended