EX-99 2 axp_ex99.txt Exhibit 99.1
(Preliminary) American Express Company ------------------------ Financial Summary ----------------- (Unaudited) (Dollars in millions) Quarters Ended March 31, ------------------ Percentage 2001 2000 Inc/(Dec) ---- ---- ---------- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,465 $ 4,127 8 % American Express Financial Advisors 806 1,019 (21) American Express Bank 158 150 5 ------- ------- 5,429 5,296 3 Corporate and Other, including adjustments and eliminations (48) (37) (30) ------- ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,381 $ 5,259 2 ======= ======= Pretax Income ------------- Travel Related Services $ 737 $ 631 17 American Express Financial Advisors 70 355 (80) American Express Bank 14 8 84 ------- ------- 821 994 (17) Corporate and Other (80) (74) (9) ------- ------- PRETAX INCOME $ 741 $ 920 (19) ======= ======= Net Income ---------- Travel Related Services $ 522 $ 448 16 American Express Financial Advisors 51 245 (79) American Express Bank 9 7 19 ------- ------- 582 700 (17) Corporate and Other (44) (44) - ------- ------- NET INCOME $ 538 $ 656 (18) ======= =======
(A) Managed net revenues are reported net of interest expense, where applicable, and American Express Financial Advisors' provision for losses and benefits, and exclude the effect of TRS' securitization activities.
(Preliminary) American Express Company Financial Summary (continued) ----------------------------- (Unaudited) Quarters Ended March 31, --------------- Percentage 2001 2000 Inc/(Dec) ---- ---- ---------- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.41 $ 0.49 (16)% ====== ====== Average common shares outstanding (millions) 1,323 1,331 (1) ====== ====== Diluted ------- Earnings Per Common Share $ 0.40 $ 0.48 (17) ====== ====== Average common shares outstanding (millions) 1,344 1,362 (1) ====== ====== Cash dividends declared per common share $ 0.08 $ 0.08 - ====== ======
Selected Statistical Information -------------------------------- (Unaudited) Quarters Ended March 31, ---------------- Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Return on Average Equity* 23.5% 25.4% - Common Shares Outstanding (millions) 1,326 1,334 (1)% Book Value per Common Share: Actual $ 9.02 $ 7.69 17% Pro Forma* $ 8.94 $ 7.96 12% Shareholders' Equity (billions) $ 12.0 $ 10.3 16%
* Excludes the effect on Shareholders' Equity of SFAS No. 115 and SFAS No. 133. The Company adopted SFAS No. 133 on January 1, 2001.
(Preliminary) American Express Company ------------------------ Financial Summary ----------------- (Unaudited) (Dollars in millions) Quarters Ended -------------- March 31, 2001 ---- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,465 American Express Financial Advisors 806 American Express Bank 158 ------- 5,429 Corporate and Other, including adjustments and eliminations (48) ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,381 ======= Pretax Income ------------- Travel Related Services $ 737 American Express Financial Advisors 70 American Express Bank 14 ------- 821 Corporate and Other (80) ------- PRETAX INCOME $ 741 ======= Net Income ---------- Travel Related Services $ 522 American Express Financial Advisors 51 American Express Bank 9 ------- 582 Corporate and Other (44) ------- NET INCOME $ 538 ======= Quarters Ended -------------- December 31, 2000 ---- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,543 American Express Financial Advisors 1,066 American Express Bank 144 ------- 5,753 Corporate and Other, including adjustments and eliminations (39) ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,714 ======= Pretax Income ------------- Travel Related Services $ 641 American Express Financial Advisors 344 American Express Bank 8 ------- 993 Corporate and Other (80) ------- PRETAX INCOME $ 913 ======= Net Income ---------- Travel Related Services $ 470 American Express Financial Advisors 242 American Express Bank 6 ------- 718 Corporate and Other (41) ------- NET INCOME $ 677 ======= Quarters Ended -------------- September 30, 2000 ---- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,400 American Express Financial Advisors 1,052 American Express Bank 146 ------- 5,598 Corporate and Other, including adjustments and eliminations (44) ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,554 ======= Pretax Income ------------- Travel Related Services $ 721 American Express Financial Advisors 387 American Express Bank 8 ------- 1,116 Corporate and Other (87) ------- PRETAX INCOME $ 1,029 ======= Net Income ---------- Travel Related Services $ 507 American Express Financial Advisors 269 American Express Bank 7 ------- 783 Corporate and Other (46) ------- NET INCOME $ 737 ======= Quarters Ended -------------- June 30, 2000 ---- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,372 American Express Financial Advisors 1,081 American Express Bank 151 ------- 5,604 Corporate and Other, including adjustments and eliminations (46) ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,558 ======= Pretax Income ------------- Travel Related Services $ 721 American Express Financial Advisors 397 American Express Bank 10 ------- 1,128 Corporate and Other (82) ------- PRETAX INCOME $ 1,046 ======= Net Income ---------- Travel Related Services $ 505 American Express Financial Advisors 275 American Express Bank 7 ------- 787 Corporate and Other (47) ------- NET INCOME $ 740 ======= Quarters Ended -------------- March 31, 2000 ---- Net Revenues (Managed Basis) (A) -------------------------------- Travel Related Services $ 4,127 American Express Financial Advisors 1,019 American Express Bank 150 ------- 5,296 Corporate and Other, including adjustments and eliminations (37) ------- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,259 ======= Pretax Income ------------- Travel Related Services $ 631 American Express Financial Advisors 355 American Express Bank 8 ------- 994 Corporate and Other (74) ------- PRETAX INCOME $ 920 ======= Net Income ---------- Travel Related Services $ 448 American Express Financial Advisors 245 American Express Bank 7 ------- 700 Corporate and Other (44) ------- NET INCOME $ 656 =======
(A) Managed net revenues are reported net of interest expense, where applicable, and American Express Financial Advisors' provision for losses and benefits, and exclude the effect of TRS' securitization activities.
(Preliminary) American Express Company ------------------------ Financial Summary (continued) ----------------------------- (Unaudited) Quarters Ended -------------- March 31, 2001 ---- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.41 ====== Average common shares outstanding (millions) 1,323 ====== Diluted ------- Earnings Per Common Share $ 0.40 ====== Average common shares outstanding (millions) 1,344 ====== Cash dividends declared per common share $ 0.08 ====== Quarters Ended -------------- December 31, 2000 ---- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.51 ====== Average common shares outstanding (millions) 1,322 ====== Diluted ------- Earnings Per Common Share $ 0.50 ====== Average common shares outstanding (millions) 1,355 ====== Cash dividends declared per common share $ 0.08 ====== Quarters Ended -------------- September 30, 2000 ---- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.56 ====== Average common shares outstanding (millions) 1,326 ====== Diluted ------- Earnings Per Common Share $ 0.54 ====== Average common shares outstanding (millions) 1,361 ====== Cash dividends declared per common share $ 0.08 ====== Quarters Ended -------------- June 30, 2000 ---- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.56 ====== Average common shares outstanding (millions) 1,328 ====== Diluted ------- Earnings Per Common Share $ 0.54 ====== Average common shares outstanding (millions) 1,361 ====== Cash dividends declared per common share $ 0.08 ====== Quarters Ended -------------- March 31 2000 ---- EARNINGS PER SHARE Basic ----- Earnings Per Common Share $ 0.49 ======= Average common shares outstanding (millions) 1,331 ======= Diluted ------- Earnings Per Common Share $ 0.48 ======= Average common shares outstanding (millions) 1,362 ======= Cash dividends declared per common share $ 0.08 =======
Selected Statistical Information -------------------------------- (Unaudited) Quarters Ended -------------- March 31, 2001 ---- Return on Average Equity* 23.5% Common Shares Outstanding (millions) 1,326 Book Value per Common Share: Actual $ 9.02 Pro Forma* $ 8.94 Shareholders' Equity (billions) $ 12.0 Quarters Ended -------------- December 31, 2000 ---- Return on Average Equity* 25.3% Common Shares Outstanding (millions) 1,326 Book Value per Common Share: Actual $ 8.81 Pro Forma* $ 8.92 Shareholders' Equity (billions) $ 11.7 Quarters Ended -------------- September 30, 2000 ---- Return on Average Equity* 25.5% Common Shares Outstanding (millions) 1,329 Book Value per Common Share: Actual $ 8.44 Pro Forma* $ 8.68 Shareholders' Equity (billions) $ 11.2 Quarters Ended -------------- June 30, 2000 ---- Return on Average Equity* 25.5% Common Shares Outstanding (millions) 1,333 Book Value per Common Share: Actual $ 7.88 Pro Forma* $ 8.26 Shareholders' Equity (billions) $ 10.5 Quarters Ended -------------- March 31, 2000 ---- Return on Average Equity* 25.4% Common Shares Outstanding (millions) 1,334 Book Value per Common Share: Actual $ 7.69 Pro Forma* $ 7.96 Shareholders' Equity (billions) $ 10.3
* Excludes the effect on Shareholders' Equity of SFAS No. 115 and SFAS No. 113. The Company adopted SFAS No. 133 on January 1, 2001.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, Managed Basis) (Dollars in millions) Quarters Ended March 31, ------------------- Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Net Revenues: Discount Revenue $1,925 $1,805 6.6 % Net Card Fees 422 405 4.3 Lending: Finance Charge Revenue 1,120 887 26.2 Interest Expense 429 332 29.1 ------ ------ Net Finance Charge Revenue 691 555 24.5 Travel Commissions and Fees 418 438 (4.5) Travelers Cheque Investment Income 98 91 6.8 Other Revenues 911 833 9.5 ------ ------ Total Net Revenues 4,465 4,127 8.2 ------ ------ Expenses: Marketing and Promotion 296 331 (10.5) Provision for Losses and Claims: Charge Card 285 278 2.4 Lending 501 335 49.4 Other 24 29 (18.2) ------ ------ Total 810 642 26.0 Charge Card Interest Expense 393 314 25.6 Human Resources 1,034 1,016 1.8 Other Operating Expenses 1,195 1,193 0.1 ------ ------ Total Expenses 3,728 3,496 6.7 ------ ------ Pretax Income 737 631 16.8 Income Tax Provision 215 183 17.6 ------ ------ Net Income $ 522 $ 448 16.4 ====== ======
These Statements of Income are provided on a Managed Basis for analytical purposes only. They present the income statements of TRS as if there had been no securitization transactions. Under Statement of Financial Accounting Standards No. 125 (SFAS No. 125), which prescribes the accounting for securitized receivables, TRS recognized pretax gains of $42 million ($27 million after-tax) and $36 million ($23 million after-tax) in the first quarters of 2001 and 2000, respectively, related to the securitization of U.S. receivables. These gains were invested in card acquisition activities and had no material impact on Net Income or Total Expenses in either quarter. For purposes of this presentation such gains and corresponding changes in Marketing and Promotion and Other Operating Expenses have been eliminated in each quarter.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, GAAP Reporting Basis) (Dollars in millions) Quarters Ended March 31, ------------------- Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Net Revenues: Discount Revenue $1,925 $1,805 6.6 % Net Card Fees 422 405 4.3 Lending: Finance Charge Revenue 518 524 (1.2) Interest Expense 278 231 19.9 ------ ------ Net Finance Charge Revenue 240 293 (17.9) Travel Commissions and Fees 418 438 (4.5) Travelers Cheque Investment Income 98 91 6.8 Other Revenues 1,223 1,006 21.6 ------ ------ Total Net Revenues 4,326 4,038 7.1 ------ ------ Expenses: Marketing and Promotion 321 352 (8.9) Provision for Losses and Claims: Charge Card 249 241 3.4 Lending 287 175 63.7 Other 24 29 (18.2) ------ ------ Total 560 445 25.7 Charge Card Interest Expense 349 260 34.3 Net Discount Expense 113 126 (9.9) Human Resources 1,034 1,016 1.8 Other Operating Expenses 1,212 1,208 0.3 ------ ------ Total Expenses 3,589 3,407 5.4 ------ ------ Pretax Income 737 631 16.8 Income Tax Provision 215 183 17.6 ------ ------ Net Income $ 522 $ 448 16.4 ====== ======
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information -------------------------------- (Unaudited) (Amounts in billions, except percentages and where indicated) Quarters Ended March 31, ------------------------ Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Total Cards in Force (millions): United States 34.2 31.4 9.3 % Outside the United States 19.0 16.5 14.9 ------ ------- Total 53.2 47.9 11.3 ====== ======= Basic Cards in Force (millions): United States 26.9 24.5 9.8 Outside the United States 14.4 12.6 14.3 ------ ------- Total 41.3 37.1 11.3 ====== ======= Card Billed Business: United States $ 55.6 $ 50.6 9.8 Outside the United States 18.4 17.7 3.8 ------ ------- Total $ 74.0 $ 68.3 8.2 ====== ======= Average Discount Rate (A) 2.68 % 2.72 % - Average Basic Cardmember Spending (dollars) (A) $ 1,933 $ 1,980 (2.4) Average Fee per Card - Managed (dollars) (A) $ 35 $ 37 (5.4) Non-Amex Brand (B): Cards in Force (millions) 0.6 0.6 6.1 Billed Business $ 0.8 $ 0.5 45.0 Travel Sales $ 5.0 $ 5.5 (8.9) Travel Commissions and Fees/Sales (C) 8.4 % 8.0 % - Travelers Cheque: Sales $ 5.0 $ 5.1 (0.8) Average Outstanding $ 6.1 $ 6.1 - Average Investments $ 6.3 $ 6.0 5.8 Tax Equivalent Yield 9.1 % 8.9 % - Total Debt $ 35.5 $ 33.9 4.6 Shareholder's Equity $ 6.7 $ 5.8 15.3 Return on Average Equity (D) 33.0 % 31.6 % - Return on Average Assets (E) 3.1 % 3.0 % -
(A) Computed from proprietary card activities only. (B) This data relates to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (E) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity.
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information (continued) -------------------------------------------- (Unaudited, Managed Basis) (Amounts in billions, except percentages and where indicated) Quarters Ended March 31, --------------------- Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Charge Card Receivables: Total Receivables $ 26.4 $ 26.8 (1.4)% 90 Days Past Due as a % of Total 2.7 % 2.6 % - Loss Reserves (millions) $ 1,004 $ 894 12.4 % of Receivables 3.8 % 3.3 % - % of 90 Days Past Due 139 % 129 % - Net Loss Ratio 0.35 % 0.34 % - U.S. Lending: Total Loans $ 30.2 $ 24.2 24.8 Past Due Loans as a % of Total: 30-89 Days 2.0 % 1.8 % - 90+ Days 0.9 % 0.8 % - Loss Reserves (millions): Beginning Balance $ 820 $ 672 22.0 Provision 426 285 49.7 Net Charge-Offs/Other (339) (268) 27.1 -------- ------- Ending Balance $ 907 $ 689 31.5 ======== ======= % of Loans 3.0 % 2.8 % - % of Past Due 103 % 109 % - Average Loans $ 28.9 $ 23.6 22.4 Net Write-Off Rate 5.1 % 4.6 % - Net Interest Yield 8.3 % 7.8 % -
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, Managed Basis) (Dollars in millions) Quarters Ended -------------- March 31, 2001 ---- Net Revenues: Discount Revenue $1,925 Net Card Fees 422 Lending: Finance Charge Revenue 1,120 Interest Expense 429 ------ Net Finance Charge Revenue 691 Travel Commissions and Fees 418 Travelers Cheque Investment Income 98 Other Revenues 911 ------ Total Net Revenues 4,465 ------ Expenses: Marketing and Promotion 296 Provision for Losses and Claims: Charge Card 285 Lending 501 Other 24 ------ Total 810 Charge Card Interest Expense 393 Human Resources 1,034 Other Operating Expenses 1,195 ------ Total Expenses 3,728 ------ Pretax Income 737 Income Tax Provision 215 ------ Net Income $ 522 ====== Quarters Ended -------------- December 31, 2000 ---- Net Revenues: Discount Revenue $2,062 Net Card Fees 417 Lending: Finance Charge Revenue 1,090 Interest Expense 448 ------ Net Finance Charge Revenue 642 Travel Commissions and Fees 442 Travelers Cheque Investment Income 95 Other Revenues 885 ------ Total Net Revenues 4,543 ------ Expenses: Marketing and Promotion 314 Provision for Losses and Claims: Charge Card 262 Lending 432 Other 19 ------ Total 713 Charge Card Interest Expense 383 Human Resources 1,046 Other Operating Expenses 1,446 ------ Total Expenses 3,902 ------ Pretax Income 641 Income Tax Provision 171 ------ Net Income $ 470 ====== Quarters Ended -------------- September 30, 2000 ---- Net Revenues: Discount Revenue $1,963 Net Card Fees 420 Lending: Finance Charge Revenue 1,052 Interest Expense 429 ------ Net Finance Charge Revenue 623 Travel Commissions and Fees 433 Travelers Cheque Investment Income 103 Other Revenues 858 ------ Total Net Revenues 4,400 ------ Expenses: Marketing and Promotion 358 Provision for Losses and Claims: Charge Card 273 Lending 386 Other 29 ------ Total 688 Charge Card Interest Expense 362 Human Resources 1,017 Other Operating Expenses 1,254 ------ Total Expenses 3,679 ------ Pretax Income 721 Income Tax Provision 214 ------ Net Income $ 507 ====== Quarters Ended -------------- June 30, 2000 ---- Net Revenues: Discount Revenue $1,949 Net Card Fees 411 Lending: Finance Charge Revenue 948 Interest Expense 385 ------ Net Finance Charge Revenue 563 Travel Commissions and Fees 507 Travelers Cheque Investment Income 98 Other Revenues 844 ------ Total Net Revenues 4,372 ------ Expenses: Marketing and Promotion 345 Provision for Losses and Claims: Charge Card 344 Lending 332 Other 28 ------ Total 704 Charge Card Interest Expense 350 Human Resources 1,048 Other Operating Expenses 1,204 ------ Total Expenses 3,651 ------ Pretax Income 721 Income Tax Provision 216 ------ Net Income $ 505 ====== Quarters Ended -------------- March 31, 2000 ---- Net Revenues: Discount Revenue $1,805 Net Card Fees 405 Lending: Finance Charge Revenue 887 Interest Expense 332 ------ Net Finance Charge Revenue 555 Travel Commissions and Fees 438 Travelers Cheque Investment Income 91 Other Revenues 833 ------ Total Net Revenues 4,127 ------ Expenses: Marketing and Promotion 331 Provision for Losses and Claims: Charge Card 278 Lending 335 Other 29 ------ Total 642 Charge Card Interest Expense 314 Human Resources 1,016 Other Operating Expenses 1,193 ------ Total Expenses 3,496 ------ Pretax Income 631 Income Tax Provision 183 ------ Net Income $ 448 ======
These Statements of Income are provided on a Managed Basis for analytical purposes only. They present the income statements of TRS as if there had been no securitization transactions. Under Statement of Financial Accounting Standards No. 125 (SFAS No. 125), which prescribes the accounting for securitized receivables, TRS recognized pretax gains of $42 million ($27 million after-tax) in the first quarter of 2001, $26 million ($17 million after-tax) in the third quarter of 2000, $80 million ($52 million after-tax) in the second quarter of 2000 and $36 million ($23 million after-tax) in the first quarter of 2000, related to the securitization of U.S. receivables. These gains were invested in card acquisition activities and had no material impact on Net Income or Total Expenses in any quarter. For purposes of this presentation such gains and corresponding changes in Marketing and Promotion and Other Operating Expenses have been eliminated in each quarter.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, GAAP Reporting Basis) (Dollars in millions) Quarters Ended -------------- March 31, 2001 ---- Net Revenues: Discount Revenue $1,925 Net Card Fees 422 Lending: Finance Charge Revenue 518 Interest Expense 278 ------ Net Finance Charge Revenue 240 Travel Commissions and Fees 418 Travelers Cheque Investment Income 98 Other Revenues 1,223 ------ Total Net Revenues 4,326 ------ Expenses: Marketing and Promotion 321 Provision for Losses and Claims: Charge Card 249 Lending 287 Other 24 ------ Total 560 Charge Card Interest Expense 349 Net Discount Expense 113 Human Resources 1,034 Other Operating Expenses 1,212 ------ Total Expenses 3,589 ------ Pretax Income 737 Income Tax Provision 215 ------ Net Income $ 522 ====== Quarters Ended -------------- December 31, 2000 ---- Net Revenues: Discount Revenue $2,062 Net Card Fees 417 Lending: Finance Charge Revenue 498 Interest Expense 277 ------ Net Finance Charge Revenue 221 Travel Commissions and Fees 442 Travelers Cheque Investment Income 95 Other Revenues 1,184 ------ Total Net Revenues 4,421 ------ Expenses: Marketing and Promotion 314 Provision for Losses and Claims: Charge Card 228 Lending 277 Other 19 ------ Total 524 Charge Card Interest Expense 336 Net Discount Expense 114 Human Resources 1,046 Other Operating Expenses 1,446 ------ Total Expenses 3,780 ------ Pretax Income 641 Income Tax Provision 171 ------ Net Income $ 470 ====== Quarters Ended -------------- September 30, 2000 ---- Net Revenues: Discount Revenue $1,963 Net Card Fees 418 Lending: Finance Charge Revenue 504 Interest Expense 272 ------ Net Finance Charge Revenue 232 Travel Commissions and Fees 433 Travelers Cheque Investment Income 103 Other Revenues 1,190 ------ Total Net Revenues 4,339 ------ Expenses: Marketing and Promotion 373 Provision for Losses and Claims: Charge Card 236 Lending 267 Other 29 ------ Total 532 Charge Card Interest Expense 312 Net Discount Expense 119 Human Resources 1,017 Other Operating Expenses 1,265 ------ Total Expenses 3,618 ------ Pretax Income 721 Income Tax Provision 214 ------ Net Income $ 507 ====== Quarters Ended -------------- June 30, 2000 ---- Net Revenues: Discount Revenue $1,949 Net Card Fees 411 Lending: Finance Charge Revenue 500 Interest Expense 258 ------ Net Finance Charge Revenue 242 Travel Commissions and Fees 507 Travelers Cheque Investment Income 98 Other Revenues 1,117 ------ Total Net Revenues 4,324 ------ Expenses: Marketing and Promotion 393 Provision for Losses and Claims: Charge Card 302 Lending 170 Other 28 ------ Total 500 Charge Card Interest Expense 295 Net Discount Expense 131 Human Resources 1,048 Other Operating Expenses 1,236 ------ Total Expenses 3,603 ------ Pretax Income 721 Income Tax Provision 216 ------ Net Income $ 505 ====== Quarters Ended -------------- March 31, 2000 ---- Net Revenues: Discount Revenue $1,805 Net Card Fees 405 Lending: Finance Charge Revenue 524 Interest Expense 231 ------ Net Finance Charge Revenue 293 Travel Commissions and Fees 438 Travelers Cheque Investment Income 91 Other Revenues 1,006 ------ Total Net Revenues 4,038 ------ Expenses: Marketing and Promotion 352 Provision for Losses and Claims: Charge Card 241 Lending 175 Other 29 ------ Total 445 Charge Card Interest Expense 260 Net Discount Expense 126 Human Resources 1,016 Other Operating Expenses 1,208 ------ Total Expenses 3,407 ------ Pretax Income 631 Income Tax Provision 183 ------ Net Income $ 448 ======
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information -------------------------------- (Unaudited) (Amounts in billions, except percentages and where indicated) Quarters Ended -------------- March 31, 2001 ---- Total Cards in Force (millions): United States 34.2 Outside the United States 19.0 -------- Total 53.2 ======== Basic Cards in Force (millions): United States 26.9 Outside the United States 14.4 -------- Total 41.3 ======== Card Billed Business: United States $ 55.6 Outside the United States 18.4 -------- Total $ 74.0 ======== Average Discount Rate (A) 2.68 % Average Basic Cardmember Spending (dollars) (A) $ 1,933 Average Fee per Card - Managed (dollars) (A) $ 35 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $ 0.8 Travel Sales $ 5.0 Travel Commissions and Fees/Sales (C) 8.4 % Travelers Cheque: Sales $ 5.0 Average Outstanding $ 6.1 Average Investments $ 6.3 Tax Equivalent Yield 9.1 % Total Debt $ 35.5 Shareholder's Equity $ 6.7 Return on Average Equity (D) 33.0 % Return on Average Assets (E) 3.1 % Quarters Ended -------------- December 31, 2000 ---- Total Cards in Force (millions): United States 33.3 Outside the United States 18.4 -------- Total 51.7 ======== Basic Cards in Force (millions): United States 26.3 Outside the United States 13.9 -------- Total 40.2 ======== Card Billed Business: United States $ 59.0 Outside the United States 20.0 -------- Total $ 79.0 ======== Average Discount Rate (A) 2.69 % Average Basic Cardmember Spending (dollars) (A) $ 2,113 Average Fee per Card - Managed (dollars) (A) $ 35 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $ 1.1 Travel Sales $ 5.5 Travel Commissions and Fees/Sales (C) 8.0 % Travelers Cheque: Sales $ 5.1 Average Outstanding $ 6.2 Average Investments $ 6.2 Tax Equivalent Yield 9.1 % Total Debt $ 40.0 Shareholder's Equity $ 6.6 Return on Average Equity (D) 33.0 % Return on Average Assets (E) 3.0 % Quarters Ended -------------- September 30, 2000 ---- Total Cards in Force (millions): United States 32.9 Outside the United States 17.5 -------- Total 50.4 ======== Basic Cards in Force (millions): United States 25.8 Outside the United States 13.4 -------- Total 39.2 ======== Card Billed Business: United States $ 56.2 Outside the United States 18.6 -------- Total $ 74.8 ======== Average Discount Rate (A) 2.70 % Average Basic Cardmember Spending (dollars) (A) $ 2,041 Average Fee per Card - Managed (dollars) (A) $ 36 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $ 0.8 Travel Sales $ 5.4 Travel Commissions and Fees/Sales (C) 8.0 % Travelers Cheque: Sales $ 7.7 Average Outstanding $ 6.9 Average Investments $ 6.7 Tax Equivalent Yield 8.8 % Total Debt $ 35.2 Shareholder's Equity $ 6.3 Return on Average Equity (D) 32.6 % Return on Average Assets (E) 3.0 % Quarters Ended -------------- June 30, 2000 ---- Total Cards in Force (millions): United States 32.5 Outside the United States 16.9 -------- Total 49.4 ======== Basic Cards in Force (millions): United States 25.3 Outside the United States 12.9 -------- Total 38.2 ======== Card Billed Business: United States $ 55.8 Outside the United States 18.7 -------- Total $ 74.5 ======== Average Discount Rate (A) 2.69 % Average Basic Cardmember Spending (dollars) (A) $ 2,085 Average Fee per Card - Managed (dollars) (A) $ 36 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $ 0.7 Travel Sales $ 6.2 Travel Commissions and Fees/Sales (C) 8.2 % Travelers Cheque: Sales $ 6.7 Average Outstanding $ 6.5 Average Investments $ 6.2 Tax Equivalent Yield 8.9 % Total Debt $ 31.1 Shareholder's Equity $ 6.0 Return on Average Equity (D) 32.2 % Return on Average Assets (E) 3.0 % Quarters Ended -------------- March 31, 2000 ---- Total Cards in Force (millions): United States 31.4 Outside the United States 16.5 -------- Total 47.9 ======== Basic Cards in Force (millions): United States 24.5 Outside the United States 12.6 -------- Total 37.1 ======== Card Billed Business: United States $ 50.6 Outside the United States 17.7 -------- Total $ 68.3 ======== Average Discount Rate (A) 2.72 % Average Basic Cardmember Spending (dollars) (A) $ 1,980 Average Fee per Card - Managed (dollars) (A) $ 37 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $ 0.5 Travel Sales $ 5.5 Travel Commissions and Fees/Sales (C) 8.0 % Travelers Cheque: Sales $ 5.1 Average Outstanding $ 6.1 Average Investments $ 6.0 Tax Equivalent Yield 8.9 % Total Debt $ 33.9 Shareholder's Equity $ 5.8 Return on Average Equity (D) 31.6 % Return on Average Assets (E) 3.0 %
(A) Computed from proprietary card activities only. (B) This data relates to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (E) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity.
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information (continued) -------------------------------------------- (Unaudited, Managed Basis) (Amounts in billions, except percentages and where indicated) Quarters Ended -------------- March 31, 2001 ---- Charge Card Receivables: Total Receivables $ 26.4 90 Days Past Due as a % of Total 2.7 % Loss Reserves (millions) $ 1,004 % of Receivables 3.8 % % of 90 Days Past Due 139 % Net Loss Ratio 0.35 % U.S. Lending: Total Loans $ 30.2 Past Due Loans as a % of Total: 30-89 Days 2.0 % 90+ Days 0.9 % Loss Reserves (millions): Beginning Balance $ 820 Provision 426 Net Charge-Offs/Other (339) ------- Ending Balance $ 907 ======= % of Loans 3.0 % % of Past Due 103 % Average Loans $ 28.9 Net Write-Off Rate 5.1 % Net Interest Yield 8.3 % Quarters Ended -------------- December 31, 2000 ---- Charge Card Receivables: Total Receivables $ 29.0 90 Days Past Due as a % of Total 2.3 % Loss Reserves (millions) $ 964 % of Receivables 3.3 % % of 90 Days Past Due 142 % Net Loss Ratio 0.36 % U.S. Lending: Total Loans $ 28.7 Past Due Loans as a % of Total: 30-89 Days 1.9 % 90+ Days 0.9 % Loss Reserves (millions): Beginning Balance $ 731 Provision 377 Net Charge-Offs/Other (288) ------- Ending Balance $ 820 ======= % of Loans 2.9 % % of Past Due 104 % Average Loans $ 27.6 Net Write-Off Rate 4.4 % Net Interest Yield 7.7 % Quarters Ended -------------- September 30, 2000 ---- Charge Card Receivables: Total Receivables $ 28.1 90 Days Past Due as a % of Total 2.3 % Loss Reserves (millions) $ 987 % of Receivables 3.5 % % of 90 Days Past Due 152 % Net Loss Ratio 0.37 % U.S. Lending: Total Loans $ 27.1 Past Due Loans as a % of Total: 30-89 Days 1.8 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $ 686 Provision 328 Net Charge-Offs/Other (283) -------- Ending Balance $ 731 ======== % of Loans 2.7 % % of Past Due 103 % Average Loans $ 26.6 Net Write-Off Rate 4.3 % Net Interest Yield 7.8 % Quarters Ended -------------- June 30, 2000 ---- Charge Card Receivables: Total Receivables $ 27.4 90 Days Past Due as a % of Total 2.4 % Loss Reserves (millions) $ 986 % of Receivables 3.6 % % of 90 Days Past Due 153 % Net Loss Ratio 0.36 % U.S. Lending: Total Loans $ 25.9 Past Due Loans as a % of Total: 30-89 Days 1.6 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $ 689 Provision 268 Net Charge-Offs/Other (271) -------- Ending Balance $ 686 ======== % of Loans 2.6 % % of Past Due 109 % Average Loans $ 25.2 Net Write-Off Rate 4.4 % Net Interest Yield 7.4 % Quarters Ended -------------- March 31, 2000 ---- Charge Card Receivables: Total Receivables $ 26.8 90 Days Past Due as a % of Total 2.6 % Loss Reserves (millions) $ 894 % of Receivables 3.3 % % of 90 Days Past Due 129 % Net Loss Ratio 0.34 % U.S. Lending: Total Loans $ 24.2 Past Due Loans as a % of Total: 30-89 Days 1.8 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $ 672 Provision 285 Net Charge-Offs/Other (268) -------- Ending Balance $ 689 ======== % of Loans 2.8 % % of Past Due 109 % Average Loans $ 23.6 Net Write-Off Rate 4.6 % Net Interest Yield 7.8 %
(Preliminary) American Express Financial Advisors ----------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended March 31, ------------------- Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Net Revenues: Investment Income $ 368 $ 572 (35.7)% Management and Distribution Fees 638 688 (7.3) Other Revenues 277 246 12.3 ------ ------ Total Revenues 1,283 1,506 (14.8) Provision for Losses and Benefits: Annuities 238 259 (8.3) Insurance 157 139 13.0 Investment Certificates 82 89 (8.0) ------ ------ Total 477 487 (2.2) ------ ------ Net Revenues 806 1,019 (20.9) ------ ------ Expenses: Human Resources 548 498 10.1 Other Operating Expenses 188 166 12.8 ------ ------ Total Expenses 736 664 10.8 ------ ------ Pretax Income 70 355 (80.2) Income Tax Provision 19 110 (82.3) ------ ------ Net Income $ 51 $ 245 (79.2) ====== ======
(Preliminary) American Express Financial Advisors ----------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in millions, except where indicated) Quarters Ended March 31, ------------------------ Percentage 2001 2000 Inc/(Dec) ---- ---- --------- Investments (billions) $ 31.2 $ 30.3 3.0 % Client Contract Reserves (billions) $ 31.7 $ 31.0 2.3 Shareholder's Equity (billions) $ 4.7 $ 3.9 21.6 Return on Average Equity* 17.8 % 23.0 % - Life Insurance in Force (billions) $ 100.0 $ 91.7 9.0 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 53.7 $ 57.4 (6.3) Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 27.4 38.4 (28.7) Other Owned Assets 42.0 39.8 5.6 --------- -------- Total Owned Assets 69.4 78.2 (11.3) Managed Assets 99.8 122.7 (18.7) Administered Assets 30.8 31.2 (1.2) --------- -------- Total $ 253.7 $ 289.5 (12.4) ========= ======== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ (5,204) $ 2,332 - Other Owned Assets $ 608 $ (120) - Total Managed Assets $ (14,453) $ 7,020 - Cash Sales: Mutual Funds $ 9,889 $ 12,104 (18.3) Annuities 1,381 1,362 1.4 Investment Certificates 954 835 14.2 Life and Other Insurance Products 244 237 3.3 Institutional 2,506 1,551 61.6 Other 1,955 573 # --------- -------- Total Cash Sales $ 16,929 $ 16,662 1.6 ========= ======== Number of Financial Advisors 12,052 11,094 8.6 Fees from Financial Plans and Advice Services $ 27.6 $ 26.3 4.9 Percentage of Total Sales from Financial Plans and Advice Services 73.0 % 66.9 % -
* Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. # Denotes variance of more than 100%.
(Preliminary) American Express Financial Advisors ----------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended -------------- March 31, 2001 ---- Net Revenues: Investment Income $ 368 Management and Distribution Fees 638 Other Revenues 277 ------ Total Revenues 1,283 Provision for Losses and Benefits: Annuities 238 Insurance 157 Investment Certificates 82 ------ Total 477 ------ Net Revenues 806 ------ Expenses: Human Resources 548 Other Operating Expenses 188 ------ Total Expenses 736 ------ Pretax Income 70 Income Tax Provision 19 ------ Net Income $ 51 ====== Quarters Ended -------------- December 31, 2000 ---- Net Revenues: Investment Income $ 546 Management and Distribution Fees 722 Other Revenues 273 ------ Total Revenues 1,541 Provision for Losses and Benefits: Annuities 251 Insurance 134 Investment Certificates 90 ------ Total 475 ------ Net Revenues 1,066 ------ Expenses: Human Resources 540 Other Operating Expenses 182 ------ Total Expenses 722 ------ Pretax Income 344 Income Tax Provision 102 ------ Net Income $ 242 ====== Quarters Ended -------------- September 30, 2000 ---- Net Revenues: Investment Income $ 582 Management and Distribution Fees 700 Other Revenues 258 ------ Total Revenues 1,540 Provision for Losses and Benefits: Annuities 253 Insurance 146 Investment Certificates 89 ------ Total 488 ------ Net Revenues 1,052 ------ Expenses: Human Resources 527 Other Operating Expenses 138 ------ Total Expenses 665 ------ Pretax Income 387 Income Tax Provision 118 ------ Net Income $ 269 ====== Quarters Ended -------------- June 30, 2000 ---- Net Revenues: Investment Income $ 592 Management and Distribution Fees 701 Other Revenues 248 ------ Total Revenues 1,541 Provision for Losses and Benefits: Annuities 254 Insurance 138 Investment Certificates 68 ------ Total 460 ------ Net Revenues 1,081 ------ Expenses: Human Resources 528 Other Operating Expenses 156 ------ Total Expenses 684 ------ Pretax Income 397 Income Tax Provision 122 ------ Net Income $ 275 ====== Quarters Ended -------------- March 31, 2000 ---- Net Revenues: Investment Income $ 572 Management and Distribution Fees 688 Other Revenues 246 ------ Total Revenues 1,506 Provision for Losses and Benefits: Annuities 259 Insurance 139 Investment Certificates 89 ------ Total 487 ------ Net Revenues 1,019 ------ Expenses: Human Resources 498 Other Operating Expenses 166 ------ Total Expenses 664 ------ Pretax Income 355 Income Tax Provision 110 ------ Net Income $ 245 ======
(Preliminary) American Express Financial Advisors ----------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in millions, except where indicated) Quarters Ended -------------- March 31, 2001 ---- Investments (billions) $ 31.2 Client Contract Reserves (billions) $ 31.7 Shareholder's Equity (billions) $ 4.7 Return on Average Equity* 17.8 % Life Insurance in Force (billions) $ 100.0 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 53.7 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 27.4 Other Owned Assets 42.0 --------- Total Owned Assets 69.4 Managed Assets 99.8 Administered Assets 30.8 --------- Total $ 253.7 ========= Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ (5,204) Other Owned Assets $ 608 Total Managed Assets $ (14,453) Cash Sales: Mutual Funds $ 9,889 Annuities 1,381 Investment Certificates 954 Life and Other Insurance Products 244 Institutional 2,506 Other 1,955 --------- Total Cash Sales $ 16,929 ========= Number of Financial Advisors 12,052 Fees from Financial Plans and Advice Services $ 27.6 Percentage of Total Sales from Financial Plans and Advice Services 73.0 % Quarters Ended -------------- December 31, 2000 ---- Investments (billions) $ 30.5 Client Contract Reserves (billions) $ 31.4 Shareholder's Equity (billions) $ 4.4 Return on Average Equity* 22.6 % Life Insurance in Force (billions) $ 98.1 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 55.0 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 32.3 Other Owned Assets 41.3 --------- Total Owned Assets 73.6 Managed Assets 112.0 Administered Assets 34.4 --------- Total $ 275.0 ========= Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ (4,937) Other Owned Assets $ 153 Total Managed Assets $ (14,923) Cash Sales: Mutual Funds $ 9,890 Annuities 1,493 Investment Certificates 722 Life and Other Insurance Products 225 Institutional 1,571 Other 1,508 --------- Total Cash Sales $ 15,409 ========= Number of Financial Advisors 12,663 Fees from Financial Plans and Advice Services $ 21.4 Percentage of Total Sales from Financial Plans and Advice Services 70.3 % Quarters Ended -------------- September 30, 2000 ---- Investments (billions) $ 30.0 Client Contract Reserves (billions) $ 31.4 Shareholder's Equity (billions) $ 4.2 Return on Average Equity* 23.1 % Life Insurance in Force (billions) $ 95.8 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 56.7 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 36.6 Other Owned Assets 40.6 --------- Total Owned Assets 77.2 Managed Assets 122.0 Administered Assets 38.0 --------- Total $ 293.9 ========= Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ (203) Other Owned Assets $ 163 Total Managed Assets $ (76) Cash Sales: Mutual Funds $ 11,698 Annuities 1,465 Investment Certificates 868 Life and Other Insurance Products 220 Institutional 1,922 Other 815 --------- Total Cash Sales $ 16,988 ========= Number of Financial Advisors 12,137 Fees from Financial Plans and Advice Services $ 26.1 Percentage of Total Sales from Financial Plans and Advice Services 69.2 % Quarters Ended -------------- June 30, 2000 ---- Investments (billions) $ 30.0 Client Contract Reserves (billions) $ 31.0 Shareholder's Equity (billions) $ 4.0 Return on Average Equity* 23.1 % Life Insurance in Force (billions) $ 93.8 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 56.1 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 36.5 Other Owned Assets 39.9 --------- Total Owned Assets 76.4 Managed Assets 119.6 Administered Assets 34.1 --------- Total $ 286.2 ========= Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ (2,301) Other Owned Assets $ (90) Total Managed Assets $ (6,488) Cash Sales: Mutual Funds $ 10,376 Annuities 1,566 Investment Certificates 871 Life and Other Insurance Products 219 Institutional 1,557 Other 661 --------- Total Cash Sales $ 15,250 ========= Number of Financial Advisors 11,486 Fees from Financial Plans and Advice Services $ 23.9 Percentage of Total Sales from Financial Plans and Advice Services 66.1 % Quarters Ended -------------- March 31, 2000 ---- Investments (billions) $ 30.3 Client Contract Reserves (billions) $ 31.0 Shareholder's Equity (billions) $ 3.9 Return on Average Equity* 23.0 % Life Insurance in Force (billions) $ 91.7 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $ 57.4 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 38.4 Other Owned Assets 39.8 --------- Total Owned Assets 78.2 Managed Assets 122.7 Administered Assets 31.2 --------- Total $ 289.5 ========= Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $ 2,332 Other Owned Assets $ (120) Total Managed Assets $ 7,020 Cash Sales: Mutual Funds $ 12,104 Annuities 1,362 Investment Certificates 835 Life and Other Insurance Products 237 Institutional 1,551 Other 573 --------- Total Cash Sales $ 16,662 ========= Number of Financial Advisors 11,094 Fees from Financial Plans and Advice Services $ 26.3 Percentage of Total Sales from Financial Plans and Advice Services 66.9 %
* Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001.
(Preliminary) American Express Bank --------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended March 31, --------------- Percentage 2001 2000 Inc/(Dec) ---- ---- ---------- Net Revenues: Interest Income $187 $183 2.5 % Interest Expense 122 118 4.1 ---- ---- Net Interest Income 65 65 - Commissions and Fees 52 52 - Foreign Exchange Income & Other Revenue 41 33 25.0 ---- ---- Total Net Revenues 158 150 5.3 ---- ---- Expenses: Human Resources 62 66 (5.5) Other Operating Expenses 66 68 (4.2) Provision for Losses 16 8 # ---- ---- Total Expenses 144 142 1.1 ---- ---- Pretax Income 14 8 83.8 Income Tax Provision 5 1 # ---- ---- Net Income $ 9 $ 7 18.9 ==== ==== # Denotes variance of more than 100%.
(Preliminary) American Express Bank --------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in billions, except where indicated) Quarters Ended March 31, ------------------- Percentage 2001 2000 Inc/(Dec) ---- ---- -------- Total Shareholder's Equity (millions) $ 774 $ 697 11.0 % Return on Average Common Equity (A) 4.6% 3.5 % - Return on Average Assets (B) 0.26% 0.19 % - Total Loans $ 5.4 $ 5.0 8.2 Total Non-performing Loans (millions) $ 187 $ 174 7.4 Other Non-performing Assets (millions) $ 24 $ 31 (22.8) Reserve for Credit Losses (millions) (C) $ 164 $ 189 (13.4) Loan Loss Reserves as a % of Total Loans 2.8 % 3.4 % - Deposits $ 8.5 $ 8.4 2.0 Assets Managed (D) / Administered $ 10.7 $ 9.4 14.7 Assets of Non-Consolidated Joint Ventures $ 2.1 $ 2.4 (13.5) Risk-Based Capital Ratios: Tier 1 10.7% 10.1 % - Total 11.4% 11.6 % - Leverage Ratio 5.8% 5.6 % -
(A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity.
(C) Allocation: Loans $ 149 $ 170 Other Assets, primarily derivatives 12 15 Other Liabilities 3 4 ------ ------- Total Credit Loss Reserves $ 164 $ 189 ====== =======
(D) Includes assets managed by American Express Financial Advisors.
(Preliminary) American Express Bank Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended -------------- March 31, 2001 ---- Net Revenues: Interest Income $187 Interest Expense 122 ---- Net Interest Income 65 Commissions and Fees 52 Foreign Exchange Income & Other Revenue 41 ---- Total Net Revenues 158 ---- Expenses: Human Resources 62 Other Operating Expenses 66 Provision for Losses 16 ---- Total Expenses 144 ---- Pretax Income 14 Income Tax Provision 5 ---- Net Income $ 9 ==== Quarters Ended -------------- December 31, 2000 ---- Net Revenues: Interest Income $181 Interest Expense 122 ---- Net Interest Income 59 Commissions and Fees 52 Foreign Exchange Income & Other Revenue 33 ---- Total Net Revenues 144 ---- Expenses: Human Resources 60 Other Operating Expenses 68 Provision for Losses 8 ---- Total Expenses 136 ---- Pretax Income 8 Income Tax Provision 2 ---- Net Income $ 6 ==== Quarters Ended -------------- September 30, 2000 ---- Net Revenues: Interest Income $188 Interest Expense 125 ---- Net Interest Income 63 Commissions and Fees 54 Foreign Exchange Income & Other Revenue 29 ---- Total Net Revenues 146 ---- Expenses: Human Resources 65 Other Operating Expenses 67 Provision for Losses 6 ---- Total Expenses 138 ---- Pretax Income 8 Income Tax Provision 1 ---- Net Income $ 7 ==== Quarters Ended -------------- June 30, 2000 ---- Net Revenues: Interest Income $183 Interest Expense 120 ---- Net Interest Income 63 Commissions and Fees 56 Foreign Exchange Income & Other Revenue 32 ---- Total Net Revenues 151 ---- Expenses: Human Resources 65 Other Operating Expenses 69 Provision for Losses 7 ---- Total Expenses 141 ---- Pretax Income 10 Income Tax Provision 3 ---- Net Income $ 7 ==== Quarters Ended -------------- March 31, 2000 ---- Net Revenues: Interest Income $183 Interest Expense 118 ---- Net Interest Income 65 Commissions and Fees 52 Foreign Exchange Income & Other Revenue 33 ---- Total Net Revenues 150 ---- Expenses: Human Resources 66 Other Operating Expenses 68 Provision for Losses 8 ---- Total Expenses 142 ---- Pretax Income 8 Income Tax Provision 1 ---- Net Income $ 7 ====
(Preliminary) American Express Bank --------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in billions, except where indicated) Quarters Ended -------------- March 31, 2001 ---- Total Shareholder's Equity (millions) $ 774 Return on Average Common Equity (A) 4.6% Return on Average Assets (B) 0.26% Total Loans $ 5.4 Total Non-performing Loans (millions) $ 187 Other Non-performing Assets (millions) $ 24 Reserve for Credit Losses (millions) (C) $ 164 Loan Loss Reserves as a % of Total Loans 2.8 % Deposits $ 8.5 Assets Managed (D) / Administered $ 10.7 Assets of Non-Consolidated Joint Ventures $ 2.1 Risk-Based Capital Ratios: Tier 1 10.7% Total 11.4% Leverage Ratio 5.8% (A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity. (C) Allocation: Loans $ 149 Other Assets, primarily derivatives 12 Other Liabilities 3 ------- Total Credit Loss Reserves $ 164 ======= (D) Includes assets managed by American Express Financial Advisors. Quarters Ended -------------- December 31, 2000 ---- Total Shareholder's Equity (millions) $ 754 Return on Average Common Equity (A) 4.4 % Return on Average Assets (B) 0.26 % Total Loans $ 5.3 Total Non-performing Loans (millions) $ 137 Other Non-performing Assets (millions) $ 24 Reserve for Credit Losses (millions) (C) $ 153 Loan Loss Reserves as a % of Total Loans 2.6 % Deposits $ 8.0 Assets Managed (D) / Administered $ 10.6 Assets of Non-Consolidated Joint Ventures $ 2.1 Risk-Based Capital Ratios: Tier 1 10.1 % Total 11.4 % Leverage Ratio 5.9 % (A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity. (C) Allocation: $ 137 Loans 14 Other Assets, primarily derivatives 2 Other Liabilities -------- $ 153 Total Credit Loss Reserves ======== (D) Includes assets managed by American Express Financial Advisors. Quarters Ended -------------- September 30, 2000 ---- Total Shareholder's Equity (millions) $ 729 Return on Average Common Equity (A) 4.1 % Return on Average Assets (B) 0.24 % Total Loans $ 5.1 Total Non-performing Loans (millions) $ 156 Other Non-performing Assets (millions) $ 37 Reserve for Credit Losses (millions) (C) $ 179 Loan Loss Reserves as a % of Total Loans 3.1 % Deposits $ 8.0 Assets Managed (D) / Administered $ 10.2 Assets of Non-Consolidated Joint Ventures $ 2.3 Risk-Based Capital Ratios: Tier 1 10.4 % Total 11.9 % Leverage Ratio 5.8 % (A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity. (C) Allocation: $ 158 Loans 16 Other Assets, primarily derivatives 5 Other Liabilities -------- $ 179 Total Credit Loss Reserves ======== (D) Includes assets managed by American Express Financial Advisors. Quarters Ended -------------- June 30, 2000 ---- Total Shareholder's Equity (millions) $ 707 Return on Average Common Equity (A) 3.7 % Return on Average Assets (B) 0.21 % Total Loans $ 5.1 Total Non-performing Loans (millions) $ 174 Other Non-performing Assets (millions) $ 36 Reserve for Credit Losses (millions) (C) $ 187 Loan Loss Reserves as a % of Total Loans 3.3 % Deposits $ 8.2 Assets Managed (D) / Administered $ 9.8 Assets of Non-Consolidated Joint Ventures $ 2.3 Risk-Based Capital Ratios: Tier 1 10.3 % Total 11.9 % Leverage Ratio 5.8 % (A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity. (C) Allocation: Loans $ 166 Other Assets, primarily derivatives 16 Other Liabilities 5 -------- Total Credit Loss Reserves $ 187 ======== (D) Includes assets managed by American Express Financial Advisors. Quarters Ended -------------- March 31, 2000 ---- Total Shareholder's Equity (millions) $ 697 Return on Average Common Equity (A) 3.5 % Return on Average Assets (B) 0.19 % Total Loans $ 5.0 Total Non-performing Loans (millions) $ 174 Other Non-performing Assets (millions) $ 31 Reserve for Credit Losses (millions) (C) $ 189 Loan Loss Reserves as a % of Total Loans 3.4 % Deposits $ 8.4 Assets Managed (D) / Administered $ 9.4 Assets of Non-Consolidated Joint Ventures $ 2.4 Risk-Based Capital Ratios: Tier 1 10.1 % Total 11.6 % Leverage Ratio 5.6 % (A) Excludes the effect on Shareholder's Equity of SFAS No.115 and SFAS No.133. The Company adopted SFAS No.133 on January 1, 2001. (B) Excludes the effect on total assets of SFAS No.115 and SFAS No.133 to the extent that they directly affect Shareholder's Equity. (C) Allocation: Loans $ 170 Other Assets, primarily derivatives 15 Other Liabilities 4 -------- Total Credit Loss Reserves $ 189 ======== (D) Includes assets managed by American Express Financial Advisors.
(Preliminary) American Express Bank Exposures By Country and Region (Unaudited) ($ in billions) Net Guarantees 03/31/01 12/31/00 FX and and Total Total Country Loans Derivatives Contingents Other* Exposure** Exposure** ------------------ ----- ----------- ----------- ----- -------- -------- Hong Kong $ 0.9 - $ 0.1 $ 0.1 $ 1.0 $ 0.7 Indonesia 0.1 - - 0.1 0.2 0.3 Singapore 0.5 - 0.1 - 0.6 0.7 Korea 0.1 - - 0.2 0.4 0.4 Taiwan 0.2 - - 0.1 0.3 0.3 China - - - - - - Japan - - - - 0.1 0.1 Thailand - - - - - - Other - - - 0.2 0.2 0.2 ----- ----- ----- ----- ------ ------ Total Asia/ Pacific Region** 1.8 $ 0.1 0.3 0.7 2.9 2.9 ----- ----- ----- ----- ------ ------ Chile 0.2 - - 0.1 0.4 0.3 Brazil 0.2 - - 0.1 0.4 0.3 Mexico 0.1 - - - 0.1 0.1 Peru - - - - 0.1 0.1 Argentina 0.1 - - - 0.1 0.1 Other 0.3 - 0.2 0.1 0.6 0.5 ----- ----- ----- ----- ------ ------ Total Latin America** 0.9 0.1 0.3 0.3 1.6 1.4 ----- ----- ----- ----- ------ ------ India 0.3 - 0.1 0.3 0.7 0.7 Pakistan 0.1 - - 0.1 0.2 0.3 Other 0.1 - 0.1 0.1 0.2 0.2 ----- ----- ----- ----- ------ ------ Total Sub- continent** 0.4 - 0.1 0.5 1.1 1.2 ----- ----- ----- ----- ------ ------ Egypt 0.2 - - 0.2 0.5 0.5 Other 0.2 - - 0.1 0.3 0.2 ----- ----- ----- ----- ------ ------ Total Middle East & Africa** 0.4 - 0.1 0.3 0.7 0.7 ----- ----- ----- ----- ------ ------ Total Europe*** 1.6 0.1 0.4 3.0 5.1 4.5 Total North America** 0.3 - 0.3 1.5 2.1 2.1 ----- ----- ----- ----- ------ ------ Total Worldwide** $ 5.4 $ 0.3 $ 1.5 $ 6.2 $ 13.5 $ 12.7 ===== ===== ===== ===== ====== ======
* Includes cash, placements and securities. ** Individual items may not add to totals due to rounding. *** Total exposures at 3/31/01 and 12/31/00 include $2 million and $3 million of exposures to Russia, respectively. Note: Includes cross-border and local exposure and does not net local funding or liabilities against any local exposure. Exhibit 99.2 [American Express Logo Here] 2001 First Quarter Earnings Supplement The enclosed summary should be read in conjunction with the text and statistical tables included in American Express Company's (the "Company" or "AXP") First Quarter 2001 Earnings Release. -------------------------------------------------------------------------------- This summary contains certain forward-looking statements which are subject to risks and uncertainties and speak only as of the date on which they are made. Important factors that could cause actual results to differ materially from these forward-looking statements, including the Company's financial and other goals, are set forth on page 13 herein and in the Company's 2000 10-K Annual Report, and other reports, on file with the Securities and Exchange Commission. -------------------------------------------------------------------------------- AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 HIGHLIGHTS o As previously announced on April 2nd, results for the quarter were negatively impacted by the generally weaker economy and equity markets, as well as a pre-tax loss of $182MM from the write-down and sale of high-yield securities at AEFA. First quarter diluted EPS declined 17%, net revenue (managed basis) increased 2%, and ROE was 24%. Also, as previously announced, the Company expects that earnings per share growth for the full year is unlikely to meet its earlier target of 12% growth due to the weakened economy and equity markets. o Compared with the first quarter of 2000: - Worldwide billed business rose 8% (10% excluding foreign exchange translation); - TRS' worldwide lending balances on a managed asset basis of $33.5B were up 27% (20% excluding portfolio acquisitions); - Worldwide cards in force increased 11%, up 5.3MM from last year. In the first quarter, 1.5MM net new cards were added; and, - AEFA assets owned, managed and administered of $254B were 12% lower than last year due to substantial market depreciation during the quarter and last year. However, net asset flows remained positive during the quarter. o American Express expanded its products and services during the quarter as it: - Launched/announced several new card products and services: -- The Co-branded Platinum ShopRite Credit Card from American Express and the Bank of Hawaii Credit Card from American Express, marking the completion of these portfolio acquisitions; -- The previously announced new co-branded credit card program for British Airways UK Executive Club members, offering three different co-branded cards, each with its own level of rewards and benefits, in the UK; -- Blue for Students; and -- 16 new Membership Rewards partners from online, retail and travel businesses. - Acquired SierraCities.com Inc., a leader in small business equipment financing; - Issued the American Express Gold Credit Card in Ecuador through Filanbanco, marking an expansion of Filanbanco's current line of locally issued American Express charge and credit products; and - Introduced Brokerage for Blue, which provides online information, tools and resources to help make better investment decisions. o American Express continued to build its Internet presence as it: - Launched Account Profile, a free online account aggregation service, which is aimed at simplifying customer's financial lives by allowing them to track the value of all their financial accounts and assets, from AXP and other financial institutions, at one secure site using a single password; - Announced a strategic alliance with Oracle to integrate the Corporate Purchasing Card platform into the Oracle E-Business Suite; and - Invested in Telera, the Voice Web Infrastructure Company. o Additional progress was made in broadening relationships with existing AXP customers as: - Average lending balances per cardmember continued to increase; - Approximately 30% of new AEFA clients were again obtained from the cardmember base; and - AEFA-manufactured investment certificates sold by AEB to its international clients continued to grow. 1 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW CONSOLIDATED (unaudited)
(millions, except per share amounts) Quarters Ended Percentage March 31, Inc/(Dec) ------------------------------------------ ----------------- 2001 2000 ---- ---- Consolidated revenues: ---------------------- Net (managed basis) $5,381 $5,259 2% ====== ====== GAAP reporting basis $5,719 $5,657 1% ====== ====== Net income: $538 $656 (18)% ----------- ==== ==== EPS: ---- Basic $0.41 $0.49 (16)% ===== ===== Diluted $0.40 $0.48 (17)% ===== =====
o CONSOLIDATED REVENUES: Grew from an increase in cards in force, higher billed business volumes, larger loan balances and greater insurance premiums. These items were partially offset by lower spreads on AEFA's investment portfolio, which reflect a pre-tax loss of $182MM from the write-down and sale of certain high-yield securities, and lower management and distribution fees. Excluding the impact of F/X translation, net revenues would have grown approximately 4%. o CONSOLIDATED EXPENSES: Rose due to greater interest costs, larger provisions for losses, and higher human resource and operating expenses, which include the effect of a $67MM expense increase due to an adjustment of Deferred Acquisition Costs (DACs) for variable insurance and annuity products. These increases were partially offset by reengineering activities and expense control initiatives. o SHARE REPURCHASES: 9.3MM shares were purchased in 1Q `01; since the inception of repurchase programs in September 1994, 352.4MM shares have been acquired.
Millions of Shares ----------------------------------------------------------- - Average shares: 1Q`01 4Q`00 1Q`00 --------------- ----- ----- ----- Basic 1,323 1,322 1,331 ===== ===== ===== Diluted 1,344 1,355 1,362 ===== ===== ===== - Actual shares: Shares outstanding - beginning of period 1,326 1,329 1,341 Repurchase of common shares (9) (6) (8) Net settlements -3rd party share purchase agreements 9 2 - Employee benefit plans, compensation and other - 1 1 ----- ----- ----- Shares outstanding - end of period 1,326 1,326 1,334 ===== ===== =====
CORPORATE AND OTHER o The net expense of $44MM in 1Q '01 and 1Q '00 compared with $41MM in 4Q '00. - Both 1Q '01 and 1Q '00 include a $46MM ($39MM after-tax) Lehman Brothers preferred dividend based on its earnings which was offset by costs associated with various business building initiatives. 2 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW TRAVEL RELATED SERVICES (preliminary)
Statements of Income (unaudited, managed basis) Quarters Ended Percentage (millions) March 31, Inc/(Dec) --------------------------------------- ------------------- 2001 2000 ---- ---- Net revenues: Discount revenue $1,925 $1,805 7% Net card fees 422 405 4 Lending: Finance charge revenue 1,120 887 26 Interest expense 429 332 29 ----- ----- Net finance charge revenue 691 555 24 Travel commissions and fees 418 438 (4) TC investment income 98 91 7 Other revenues 911 833 10 ----- ----- Total net revenues 4,465 4,127 8 ----- ----- Expenses: Marketing and promotion 296 331 (10) Provision for losses and claims: Charge card 285 278 2 Lending 501 335 49 Other 24 29 (18) ----- ----- Total 810 642 26 ----- ----- Charge card interest expense 393 314 26 Human resources 1,034 1,016 2 Other operating expenses 1,195 1,193 - ----- ----- Total expenses 3,728 3,496 7 ----- ----- Pretax income 737 631 17 Income tax provision 215 183 18 ----- ----- Net income $522 $448 16 ===== =====
Note: Unless indicated otherwise, the following discussion addresses the "managed basis" Statements of Income. The GAAP Statements of Income are also included in the Company's Earnings Release. o Revenues benefited from increased cards in force, higher worldwide billed business and strong growth in cardmember loans outstanding. Growth was suppressed by approximately 2% due to the impact of F/X translation. o The higher expenses reflect greater provisions for losses, higher interest expenses, and increased operating costs, primarily due to business growth, which were partially offset by reduced marketing and promotion costs, expense control initiatives and the impact of F/X translation. o Under Statement of Financial Accounting Standards No. 125 (SFAS 125), which prescribes the accounting for securitizations, TRS recognized pre-tax gains of $42MM ($27MM after-tax) in 1Q '01 and $36MM ($23MM after-tax) in 1Q '00 related to the securitization of $1.0B of U.S. Lending receivables in each period. These gains were offset by expenses related to card acquisition initiatives and, therefore, had no material impact on net income or total expenses in either period. For purposes of the above "managed basis" Statements of Income, which present TRS' results as if there had been no securitizations, such gains (reported on the GAAP Statements of Income as a $23MM and $24MM reduction in the Lending Provision for Losses in 1Q `01 and 1Q `00, respectively, and increases in Other Revenue and Lending Interest Expense) and corresponding changes in Marketing and Promotion and Other Operating Expenses have been eliminated. o The pre-tax margin was 16.5% in 1Q `01 versus 15.3% last year. o The effective tax rate was 29% in 1Q '01, 27% in 4Q `00 and 29% in 1Q `00. The lower tax rate in 4Q `00 reflects true-ups relating to tax planning initiatives during the year and mix of business variances. The full year tax rate in 2000 was 29%. 3 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW TRAVEL RELATED SERVICES (Cont'd) o DISCOUNT REVENUE: Stronger billed business and a lower discount rate yielded a 7% increase in discount revenue. - The average discount rate in 1Q `01 was 2.68% versus 2.72% in 1Q `00 and 2.69% in 4Q `00. The decline from last year and 4Q '00 reflects the cumulative impact of stronger than average growth in the lower rate retail and other "everyday spend" merchant categories (e.g., supermarkets, discounters, etc.), as well as relatively weaker T&E spending within Corporate Services in 1Q '01. -- We believe the AXP value proposition is strong. However, continued changes in the mix of business, the continued shift to electronic data capture, volume related pricing discounts, and selective repricing initiatives will probably result in some rate erosion over time.
Quarters Ended Percentage March 31, Inc/(Dec) ---------------------------------- ------------------ 2001 2000 ---- ---- Card billed business (billions): United States $55.6 $50.6 10% Outside the United States 18.4 17.7 4 ----- ----- Total $74.0 $68.3 8 ===== ===== Cards in force (millions): United States 34.2 31.4 9 Outside the United States 19.0 16.5 15 ----- ----- Total 53.2 47.9 11 ===== ===== Basic cards in force (millions): United States 26.9 24.5 10 Outside the United States 14.4 12.6 14 ----- ----- Total 41.3 37.1 11 ===== ===== Spending per basic card in force (dollars) (a): United States $2,091 $2,123 (2) Outside the United States $1,535 $1,630 (6) Total $1,933 $1,980 (2) (a) Proprietary card activity only.
- BILLED BUSINESS: The 8% increase in billed business resulted from growth in cards in force, which was partially offset by lower spending per basic cardmember worldwide. -- U.S. billed business increased 10% reflecting double-digit growth within the consumer card business, high single-digit increases within small business services and mid single-digit volume expansion within Corporate Services. - Spending per basic card in force declined 2% reflecting the dilutive effect of multiple consecutive quarters of particularly strong card growth and weaker economic conditions. -- Excluding the impact of foreign exchange translation: - Total billed business outside the U.S. rose approximately 12% on double-digit increases in Europe and Latin America and mid to high single-digit growth in other regions. - Spending per proprietary basic card in force outside the U.S. rose 2%. -- Network partnership and Purchasing Card volumes sustained their stronger growth levels, in excess of the consolidated worldwide billed business growth rate. -- Retail and "everyday spend" categories continued to contribute more strongly to worldwide business growth. -- Airline related volume rose slightly as the average airline charge was down and transaction volume increased. - CARDS IN FORCE worldwide rose 11% versus last year. -- Strong U.S. card acquisitions during the quarter (900K net new cards added) reflect the continuation of proactive consumer card and small business services activities, including those related to the Blue and co-branded Costco card products, as well as benefits related to the Bank of Hawaii (closed 3/31/01) and ShopRite (closed 1/29/01) portfolio acquisitions. Excluding these portfolio acquisitions U.S. cards in force rose 8%. -- Outside the United States, 600K cards in force were added during the quarter on continued proprietary card growth and particularly strong network card results. 4 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW TRAVEL RELATED SERVICES (Cont'd) o NON-AMEX BRANDED STATISTICS: Total cards in force and billed business exclude activities on Non-Amex Branded cards (Visa and Eurocards) issued in connection with joint venture activities. These are reported as separate line items within TRS' selected statistical information. This disclosure is consistent with our previously discussed plans to broaden the scope of our card activities through possible acquisitions of card portfolios and additional joint ventures.
Quarters Ended Percentage March 31, Inc/(Dec) --------------------------------- --------------- 2001 2000 ---- ---- Cards in force (millions) 0.6 0.6 6% Billed business (billions) $0.8 $0.5 45%
o NET CARD FEES: Rose 4% as new cards in force were added. The average fee per card in force of $35 in 1Q `01 and 4Q `00 declined from $37 in 1Q `00 as the mix evolved toward lower and no fee products. o NET FINANCE CHARGE REVENUE: Rose 24% on strong growth in worldwide lending balances, which rose 24% on average during the quarter. - The yield on the U.S. portfolio rose to 8.3% in 1Q `01 from 7.8% in 1Q '00 and 7.7% in 4Q '00 as a decrease in the proportion of the portfolio on introductory rates and the benefit of lower funding costs, which lag in their effect on finance charge revenue, were partially offset by the evolving mix of products toward more lower-rate offerings. o TRAVEL COMMISSIONS AND FEES: Declined 4% on a 9% contraction in travel sales due to a weaker corporate travel environment and the sale in 2Q '00 of the leisure travel activities of Havas Voyages in France. Excluding the Havas impact, sales declined approximately 5%. The revenue earned per dollar of sales increase (8.4% in 1Q `01 versus 8.0% in 4Q '00 and 1Q '00) reflects new fees related to certain client services, which were partially offset by continued efforts by airlines to reduce distribution costs and by corporate clients to contain travel and entertainment expenses. o TC INVESTMENT INCOME: Was up 7% reflecting a higher TC investment yield and growth in Money Order related activities. o OTHER REVENUES: Increased 10% due to higher card-related and membership rewards fees, greater foreign exchange conversion revenues and larger insurance premiums. o MARKETING AND PROMOTION EXPENSES: Decreased 10% as we rationalized certain marketing efforts in light of the weaker business environment and realized benefits from the effect of F/X translation. o CHARGE CARD INTEREST EXPENSE: Rose 26% due to a greater worldwide effective cost of funds and higher billed business volumes. o Human Resource Expenses: Increased 2% versus last year as a result of merit increases and a higher average number of employees, partially offset by lower levels of incentive compensation. - The employee count at 3/01 of 75,600 was up approximately 600 versus last year primarily due to increased global technology business demands, greater business volumes and the substitution of contract programmers with full-time employees, which were partially offset by the sale on 6/30/00 of the leisure travel activities of Havas Voyages, which had approximately 1,500 employees. In the quarter, the number of employees rose by approximately 700. o OTHER OPERATING EXPENSES: Were flat as higher costs related to business growth, cardmember loyalty programs, professional fees for outsourcing activities and various business building initiatives were offset by reengineering activities and cost containment efforts. 5 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW TRAVEL RELATED SERVICES (Cont'd) o CREDIT QUALITY: - Reflecting a weaker economy and seasonal factors, overall credit quality deteriorated modestly in the quarter, but remained at relatively attractive levels. - The provision for losses on charge card products was 2% above last year reflecting higher volumes. - The lending provision for losses was 49% above last year on growth in outstanding loans and a higher past due and write-off rate. - Reserve coverage ratios at more than 100% of past due balances remained strong. - WORLDWIDE CHARGE CARD: -- The write-off rate stayed near its historically low level, decreasing from last quarter but increasing versus last year. Past due rates also rose versus last year and last quarter. The increase versus 12/00 partially reflects the normal seasonal effect of the relatively higher 4Q receivable balance level created by holiday spending.
3/01 12/00 3/00 --------- -------- -------- Loss ratio, net of recoveries 0.35% 0.36% 0.34% 90 days past due as a % of receivables 2.7% 2.3% 2.6% -- Reserve coverage of past due accounts remained strong. 3/01 12/00 3/00 --------- -------- -------- Reserves (MM) $1,004 $964 $894 % of receivables 3.8% 3.3% 3.3% % of past due accounts 139% 142% 129% - U.S. LENDING: -- The write-off rate and past due rate increased from last quarter and last year. 3/01 12/00 3/00 -------- -------- -------- Write-off rate, net of recoveries 5.1% 4.4% 4.6% 30 days past due as a % of loans 2.9% 2.8% 2.6% -- The lending reserve coverage of past due accounts remained strong as reserves increased during the quarter. 3/01 12/00 3/00 -------- -------- -------- Reserves (MM) $907 $820 $689 % of total loans 3.0% 2.9% 2.8% % of past due accounts 103% 104% 109%
6 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS FINANCIAL ADVISORS (preliminary)
Statements of Income (unaudited) (millions) Quarters Ended Percentage March 31, Inc/(Dec) ------------------------------- ------------------- 2001 2000 ---- ---- Revenues: Investment income $368 $572 (36)% Management and distribution fees 638 688 (7) Other revenues 277 246 12 ----- ----- Total revenues 1,283 1,506 (15) Provision for losses and benefits: Annuities 237 259 (8) Insurance 157 139 13 Investment certificates 82 89 (8) ----- ----- Total 477 487 (2) ----- ----- Total net revenues 806 1,019 (21) ----- ----- Expenses: Human resources 548 498 10 Other operating expenses 188 166 13 ----- ----- Total expenses 736 664 11 ----- ----- Pretax income 70 355 (80) Income tax provision 19 110 (82) ----- ----- Net income $51 $245 (79) ===== =====
o Net revenue declined 21% reflecting: - Lower spreads on investment portfolio products, including the effect of $182MM of pre-tax losses from the write-down and sale of certain high-yield securities; - Reduced management fees from lower average managed asset levels; - A decrease in distribution fees from weaker mutual fund sales levels; partially offset by - Higher insurance premiums and financial planning and advice services fees. o The pretax margin decline from 34.8% last year to 8.7% in 1Q '01 reflects the revenue dynamics discussed above, a $67MM expense increase reflecting an adjustment to the amortization of DACs(1) for variable insurance and annuity products, costs related to the new advisor platforms and the impact of larger investments in tax advantaged affordable housing projects, which were partially offset by reengineering activities and expense control initiatives. o The effective tax rate was 27.6% in 1Q '01, 29.6% in 4Q `00 and 31.0% in 1Q `00. The declining trend reflects the realization of greater tax credits from affordable housing project investments which should continue to provide tax benefits in future quarters. (1) DACs are certain costs of acquiring new business which are deferred and amortized according to a schedule that reflects a number of factors, the most significant of which are the anticipated profits and persistency of the product. The amortization schedule must be adjusted periodically to reflect changes in those factors. The DAC adjustment that was required for 1Q '01 recognizes the negative impact of weak equity markets on the anticipated profit for these products. 7
AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd) o ASSETS OWNED, MANAGED AND ADMINISTERED: Percentage (billions) March 31, Inc/(Dec) ---------------------------------- --------------- 2001 2000 ---- ---- Assets owned (excluding separate accounts) $42.0 $39.8 6% Separate account assets 27.4 38.4 (29) Assets managed 153.5 180.1 (15) Assets administered 30.8 31.2 (1) ------ ------ Total $253.7 $289.5 (12) ====== ======
o INVESTMENT INCOME: - Gross investment income decreased 36% due to the negative impact, in the current year, of deterioration in the high yield bond sector, as well as a generally lower average yield. Losses on directly owned high yield bonds and low grades in other structured investments reduced investment income by $182MM in 1Q '01 (including approximately $34MM related to the early implementation of a new FASB accounting rule involving certain structured investments) versus $18MM last year. Also included in investment income is the effect last year of an increase and this year a decrease in the value of options hedging outstanding stock market certificates, which was offset in the certificate provision. - Average invested assets of $33.4B (excluding unrealized appreciation/depreciation) rose 7% versus $32.4B in 1Q `00. - The average yield on invested assets was 6.8% versus 7.4% in 1Q '00 including income adjustments on the high yield structured investments and hedges on outstanding stock market certificates. - Insurance, annuity and certificates spreads were all down versus last year; insurance and annuity spreads were also down versus last quarter, while certificate spreads were flat. o ASSET QUALITY remains strong, except for continued deterioration in the high yield portfolio. - Non-performing assets relative to invested assets were 0.9% and were 58% covered by reserves, including those related to the impairment of high-yield securities. - High-yield investments totaled $3.5B at 3/31/01, or approximately 11% of AEFA's portfolio. Total losses on these investments for the remainder of 2001 are expected to be substantially lower than in 1Q '01. - The SFAS No. 115 related mark-to-market adjustment on the portfolio (reported in assets pre-tax) was depreciation of ($47MM) at 3/01 versus ($655MM) at 12/00 and ($881MM) at 3/00. - Unrealized appreciation/(depreciation) on securities held to maturity was $141MM at 3/01, $97MM at 12/00 and ($63MM) at 3/00. o MANAGEMENT AND DISTRIBUTION FEES: The decrease of 7% was due to lower average assets under management and weaker mutual fund sales, reflecting the negative impact of weak equity markets.
- Assets Managed: -------------- Percentage (billions) March 31, Inc/(Dec) ------------------------------ ----------------- 2001 2000 ---- ---- Assets managed for individuals $99.8 $122.7 (19)% Assets managed for institutions 53.7 57.4 (6) Separate account assets 27.4 38.4 (29) ------ ------ Total $180.9 $218.5 (17) ====== ======
-- The decline in managed assets since 3/00 resulted from $48.6B of market depreciation, offset in part by $11.0B of net new money. -- The $18.4B decrease in managed assets during 1Q `01 resulted from market depreciation of $19.7B, offset in part by net new money of $1.3B. 8 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd) o PRODUCT SALES: - Total gross cash sales from all products were up 2% over 1Q '00. - Mutual fund sales decreased 18% as both proprietary and non-proprietary fund sales declined. Non-proprietary fund sales continued to occur predominately in "wrap" accounts. Within proprietary funds: -- Bond fund sales grew; sales of equity and money market funds declined. -- Redemption rates continued to compare favorably with industry levels. - Annuity sales were up 1%, as variable annuity sales declined and fixed annuity sales improved significantly. - Sales of insurance products increased 3% reflecting the strength of new product offerings last year. - Certificate sales increased 14% reflecting particularly strong sales of certificates sold to clients outside the U.S. through a joint venture between AEFA and AEB. - Institutional sales rose 62% reflecting the success of new product offerings and the addition of new clients. - Other sales increased over 200% due to the addition of new plan sponsors within the 401(k) business and additional contributions from existing sponsors. - Advisor product sales generated through financial planning and advice services were 73% of total sales in 1Q `01 versus 67% in 1Q `00. o OTHER REVENUES: Were up 12% reflecting higher life and property-casualty insurance premiums, the addition in 2Q '01 of franchise fees from Platform 2 advisors and certain revenues related to non-proprietary funds. - Financial planning and advice services fees of $27.6MM rose 5% versus 1Q '00, despite the negative impact of a change in policy, which deferred certain 1Q `01 revenues and a comparable amount of human resource expense. Excluding this change, fees would have increased 10%. o PROVISIONS FOR LOSSES AND BENEFITS: Lower annuity product provisions resulted from a smaller inforce level, which offset a higher accrual rate. Insurance provisions rose due to higher inforce levels and accrual rates. Certificate provisions decreased as higher inforce levels and accrual rates were more than offset by the effect on the stock market certificate product of substantial appreciation last year and depreciation this year in the S&P 500. o HUMAN RESOURCES: Expenses were up 10% reflecting larger field force compensation-related expenses due to advisor growth and costs related to the new advisor platforms, partially reflecting higher relative compensation levels for advisors introduced in 2Q `00, and a $39MM expense during the quarter from the DAC amortization adjustment. These increases were partially offset by somewhat slower home office expense growth and the impact of slower volumes on advisor compensation. - TOTAL ADVISOR FORCE: 12,052 at 3/01; +958 advisors, or 9%, versus 3/00 and down 611 advisors versus 12/00. -- The decrease in advisors versus 12/00 reflects reduced recruiting activities, as we fine tune the advisor platform dynamics, and higher termination rates due to the weaker environment and proactive efforts to weed out unproductive advisors. - Veteran advisor retention rates remain strong. -- In light of current challenging market conditions, we expect to continue to moderate advisor growth in coming quarters to ensure overall field force costs are appropriately contained and the business benefits from last year's advisor additions are maximized. -- Total production, advisor productivity and client acquisitions were down versus last year reflecting an increase in the number of new advisors and the effect of a more difficult selling environment. - The total number of clients was up 8% and accounts per client were up slightly. Client retention exceeded 95%. o OTHER OPERATING EXPENSES: The 13% increase reflects the DAC amortization adjustment, which added $28MM of expense, costs related to the implementation of the new advisor platforms, including greater rent and equipment support costs, partially offset by reengineering activities and efforts to control core operating expense growth. 9 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS BANK (preliminary) Statements of Income (unaudited)
(millions) Quarters Ended Percentage March 31, Inc/(Dec) ----------------------------------- ---------------------- 2001 2000 ---- ---- Net revenues: Interest income $187 $183 2% Interest expense 122 118 4 ----- ----- Net interest income 65 65 - Commissions and fees 52 52 - Foreign exchange income and other revenue 41 33 25 ------ ----- Total net revenues 158 150 5 ------ ----- Expenses: Human resources 62 66 (6) Other operating expenses 66 68 (4) Provision for losses 16 8 # ------ ----- Total expenses 144 142 1 ------ ----- Pretax income 14 8 84 Income tax provision 5 1 # ------ ----- Net income $9 $7 19 ====== ===== # Denotes variance in excess of 100%.
o Revenues grew 5% as higher foreign exchange and other revenue was offset by flat commissions and fees and net interest income. AEB's two individual oriented businesses continued to grow, despite a more difficult market environment, as Private Banking client holdings rose 16% and client volumes in Personal Financial Services (PFS) increased 22%. Revenues within Corporate Banking declined as we continued to de-emphasize these activities. - Net interest income was flat with last year as the benefit of increases in consumer loans were offset by tighter spreads within the Financial Institutions Group (formerly Correspondent Banking) and decreases in Corporate Banking. - Commissions and fees were flat as lower results in Corporate Banking, due to AEB's decision to exit certain markets, were offset by higher results in the Financial Institutions Group and Private Banking. - Foreign exchange income and other revenue increased due to higher joint venture earnings, F/X trading revenues and security gains. o Human resource and other operating expenses were down reflecting the benefits of a lower employee level and reduced costs related to reengineering activities, partially offset by restructuring costs. o The provision for losses increased due to PFS loan growth and higher non-performing loans within Corporate Banking.
o AEB remained "well capitalized". 3/01 12/00 3/00 Well-Capitalized ---------------- ------------- --------------- --------------------- Tier 1 10.7% 10.1% 10.1% 6.0% Total 11.4% 11.4% 11.6% 10.0% Leverage Ratio 5.8% 5.9% 5.6% 5.0%
10 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS BANK (Cont'd) o EXPOSURES - AEB's loans outstanding were $5.4B at 3/01, versus $5.0B at 3/00 and $5.3B at 12/00. Activity since 3/00 included a $400MM decrease in corporate banking loans, a $700MM increase in consumer and private banking loans and a $60MM increase in financial institutions loans. Compared to 12/00, corporate banking loans decreased by $300MM and financial institution loans decreased by $100MM, while consumer and private banking loans increased by $500MM, including the transfer of $200MM of collateralized loans from Corporate Banking. As of 3/01, consumer and private banking loans comprised 50% of total loans versus 39% at 3/00 and 41% at 12/00; corporate banking loans comprised 27% of total loans versus 38% at 3/00 and 34% at 12/00; and financial institution loans comprised 23% of total loans versus 23% at 3/00 and 25% at 12/00. - In addition to the loan portfolio, there are other banking activities, such as forward contracts, various contingencies and market placements, which added approximately $8.1B to the credit exposures at 3/01, $7.4B at 12/00 and $7.7B at 3/00. Of the $8.1B of additional exposures at 3/01, $5.6B were relatively less risky cash and securities related balances.
($ in billions) 3/31/01 ------------------------------------------------------------------- Net Guarantees 12/31/00 FX and And Total Total Country Loans Derivatives Contingents Other(1) Exposure(2) Exposure(2) ------- ----- ----------- ----------- ----- -------- -------- Hong Kong` $0.9 - $0.1 $0.1 $1.0 $0.7 Indonesia 0.1 - - 0.1 0.2 0.3 Singapore 0.5 - 0.1 - 0.6 0.7 Korea 0.1 - - 0.2 0.4 0.4 Taiwan 0.2 - - 0.1 0.3 0.3 Japan - - - - 0.1 0.1 Other - - - 0.2 0.2 0.2 ---- ---- ---- ---- ----- ----- Total Asia/Pacific Region (2) 1.8 $0.1 0.3 0.7 2.9 2.9 ---- ---- ---- ---- ----- ----- Chile 0.2 - - 0.1 0.4 0.3 Brazil 0.2 - - 0.1 0.4 0.3 Mexico 0.1 - - - 0.1 0.1 Peru - - - - 0.1 0.1 Argentina 0.1 - - - 0.1 0.1 Other 0.3 - 0.2 0.1 0.6 0.5 ---- ---- ---- ---- ----- ----- Total Latin America (2) 0.9 0.1 0.3 0.3 1.6 1.4 ---- ---- ---- ---- ----- ----- India 0.3 - 0.1 0.3 0.7 0.7 Pakistan 0.1 - - 0.1 0.2 0.3 Other 0.1 - 0.1 0.1 0.2 0.2 ---- ---- ---- ---- ----- ----- Total Subcontinent (2) 0.4 - 0.1 0.5 1.1 1.2 ---- ---- ---- ---- ----- ----- Egypt 0.2 - - 0.2 0.5 0.5 Other 0.2 - - 0.1 0.3 0.2 ---- ---- ---- ---- ----- ----- Total Middle East and Africa (2) 0.4 - 0.1 0.3 0.7 0.7 ---- ---- ---- ---- ----- ----- Total Europe (2) (3) 1.6 0.1 0.4 3.0 5.1 4.5 Total North America (2) 0.3 - 0.3 1.5 2.1 2.1 ---- ---- ---- ---- ----- ----- Total Worldwide (2) $5.4 $0.3 $1.5 $6.2 $13.5 $12.7 ==== ==== ==== ==== ===== =====
(1) Includes cash, placements and securities. (2) Individual items may not add to totals due to rounding. (3) Total exposures at 3/31/01 and 12/31/00 include $2MM and $3MM of exposures to Russia, respectively. Note: Includes cross-border and local exposure and does not net local funding or liabilities against any local exposure. 11 AMERICAN EXPRESS COMPANY FIRST QUARTER 2001 OVERVIEW AMERICAN EXPRESS BANK (Cont'd) o Total non-performing loans of $187MM were up from $174MM at 3/00 and $137MM at 12/00 as a result of increases within the Corporate Banking business. This increase is consistent with our strategy to wind down Corporate Banking activities while growing the consumer lending business, as the more difficult Corporate credits will take longer to eliminate. While non-performing loans have increased, the overall risk profile of the loan portfolio is actually improving as the portfolio mix shifts towards the consumer loans. Our credit reserves incorporate expectations of this trend. o Other non-performing assets of $24MM at 3/01, primarily foreign exchange and derivatives contracts, compared with $31MM at 3/00 and $24MM at 12/00. o AEB's total reserves at 3/01 of $164MM compared with $189MM at 3/00 and $153MM at 12/00 and are allocated as follows:
(millions) 3/01 12/00 3/00 ------ ------- ------ Loans $149 $137 $170 Other Assets, primarily derivatives 12 14 15 Other Liabilities 3 2 4 ----- ----- ----- Total $164 $153 $189 ===== ===== =====
- Reserve coverage of non-performing loans decreased from 12/00 and 3/00 to 80% as of 3/01, however, coverage of total loans increased from 12/00. o Management formally reviews the loan portfolio and evaluates credit risk throughout the year. This evaluation takes into consideration the financial condition of the borrowers, fair market value of collateral, status of delinquencies, historical loss experience, industry trends, and the impact of current economic conditions. As of March 31, 2001 management considers the loss reserve to be appropriate. 12 INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS This summary contains forward-looking statements, which are subject to risks and uncertainties. The words "believe", "expect", "anticipate", "optimistic", "intend", "aim", "will", "should" and similar expressions are intended to identify such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: Fluctuation in the equity markets in 2001, which can affect the amount and types of investment products sold by AEFA, the market value of its managed assets, and management and distribution fees received based on those assets; potential deterioration in the high yield sector, which could result in further losses in AEFA's investment portfolio; developments relating to AEFA's new platform structure for financial advisors, including the ability to increase advisor productivity, moderate the growth of new advisors and create efficiencies in the infrastructure; AEFA's ability to effectively manage the economics in selling a growing volume of non-proprietary products to clients; investment performance in AEFA's mutual fund business; the success and financial impact of reengineering initiatives being implemented at the Company, including cost management, structural and strategic measures such as vendor and process consolidation, outsourcing and using lower cost internal distribution channels; the ability to control and manage operating, infrastructure, advertising and promotion, and other expenses as business expands or changes, including balancing the need for longer term investment spending; consumer and business spending on the Company's travel related services products, particularly credit and charge cards and growth in card lending balances, which depend in part on the ability to issue new and enhanced card products and increase revenues from such products, attract new cardholders, capture a greater share of existing cardholders' spending, sustain premium discount rates, increase merchant coverage, retain cardmembers after low introductory lending rates have expired, and expand the global network services business; successfully expanding the Company's on-line and off-line distribution channels and cross-selling financial, travel, card and other products and services to its customer base, both in the U.S. and abroad; effectively leveraging the Company's assets, such as its brand, customers and international presence, in the internet environment; investing in and competing at the leading edge of technology across all businesses; increasing competition in all of the Company's major businesses; fluctuations in interest rates, which impacts the Company's borrowing costs, return on lending products and spreads in the investment and insurance businesses; credit trends and the rate of bankruptcies, which can affect spending on card products, debt payments by individual and corporate customers and returns on the Company's investment portfolios; foreign currency exchange rates; political or economic instability in certain regions or countries, which could affect commercial lending activities, among other businesses; legal and regulatory developments, such as in the areas of consumer privacy and data protection; acquisitions; and outcomes in litigation. A further description of these and other risks and uncertainties can be found in the Company's 10-K Annual Report for the fiscal year ended December 31, 2000 and other reports filed with the SEC. 13