EX-99.2 FINANCIALS 3 ex_992.txt FINANCIALS EXHIBIT 99.2 All information in the following tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated. (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended Six Months Ended June 30, June 30, ----------------------- Percentage -------------------------- Percentage 2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue $ 2,529 $ 2,152 17.5 % $ 4,897 $ 4,128 18.6 % Management and distribution fees 750 569 31.8 1,529 1,089 40.4 Net investment income 785 780 0.6 1,526 1,547 (1.4) Cardmember lending net finance charge revenue 561 483 15.9 1,102 1,035 6.5 Net card fees 472 455 3.9 944 906 4.3 Travel commissions and fees 468 373 25.7 885 713 24.2 Other commissions and fees 565 466 21.1 1,094 943 15.9 Insurance and annuity revenues 378 341 11.2 742 655 13.3 Securitization income, net 282 300 (5.8) 512 511 0.1 Other 468 437 6.8 937 852 10.0 ---------- ---------- ---------- ---------- Total revenues 7,258 6,356 14.2 14,168 12,379 14.5 Expenses Human resources 1,839 1,576 16.6 3,618 3,066 18.0 Marketing, promotion, rewards and cardmember services 1,250 944 32.5 2,297 1,719 33.6 Provision for losses and benefits 1,080 1,075 0.5 2,102 2,185 (3.8) Interest 210 231 (9.2) 413 461 (10.5) Other operating expenses 1,613 1,433 12.6 3,224 2,855 13.0 ---------- ---------- ---------- ---------- Total expenses 5,992 5,259 14.0 11,654 10,286 13.3 ---------- ---------- ---------- ---------- Pretax income before accounting change 1,266 1,097 15.4 2,514 2,093 20.1 Income tax provision 390 335 16.1 773 639 21.0 ---------- ---------- ---------- ---------- Income before accounting change 876 762 15.1 1,741 1,454 19.7 Cumulative effect of accounting change, net of tax - - - (71)(A) - - ---------- ---------- ---------- ---------- Net income $ 876 $ 762 15.1 $ 1,670 $ 1,454 14.9 ========== ========== ========== ==========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. (A) Reflects a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1. 1 (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Billions) June 30, December 31, 2004 2003 ------------ ------------ Assets Cash and cash equivalents $ 6 $ 6 Accounts receivable 32 31 Investments 58 57 Loans 34 32 Separate account assets 33 31 Other assets 16 18 ------------ ------------ Total assets $ 179 $ 175 ============ ============ Liabilities and Shareholders' Equity Separate account liabilities $ 33 $ 31 Short-term debt 17 19 Long-term debt 23 21 Other liabilities 91 89 ------------ ------------ Total liabilities 164 160 ------------ ------------ Shareholders' Equity 15 15 ------------ ------------ Total liabilities and shareholders' equity $ 179 $ 175 ============ ============
2 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Unaudited)
(Millions) Quarters Ended Six Months Ended June 30, June 30, ----------------------- Percentage -------------------------- Percentage 2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- REVENUES (A) Travel Related Services $ 5,378 $ 4,734 13.6 % $ 10,428 $ 9,220 13.1 % American Express Financial Advisors 1,763 1,496 17.9 3,491 2,907 20.1 American Express Bank 203 200 1.8 413 397 4.2 ---------- ---------- ---------- ---------- 7,344 6,430 14.2 14,332 12,524 14.4 Corporate and other, including adjustments and eliminations (86) (74) (16.7) (164) (145) (13.0) ---------- ---------- ---------- ---------- CONSOLIDATED REVENUES $ 7,258 $ 6,356 14.2 $ 14,168 $ 12,379 14.5 ========== ========== ========== ========== PRETAX INCOME (LOSS) BEFORE ACCOUNTING CHANGE Travel Related Services $ 1,079 $ 937 15.2 $ 2,052 $ 1,795 14.3 American Express Financial Advisors 264 209 26.5 581 387 50.2 American Express Bank 42 39 9.4 90 68 32.3 ---------- ---------- ---------- ---------- 1,385 1,185 17.0 2,723 2,250 18.7 Corporate and other (119) (88) (37.2) (209) (157) (33.2) ---------- ---------- ---------- ---------- PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,266 $ 1,097 15.4 $ 2,514 $ 2,093 20.1 ========== ========== ========== ========== NET INCOME (LOSS) Travel Related Services $ 732 $ 634 15.6 $ 1,397 $ 1,218 14.7 American Express Financial Advisors 174 157 11.1 331 (B) 290 14.3 American Express Bank 28 27 3.6 58 46 25.2 ---------- ---------- ---------- ---------- 934 818 14.3 1,786 1,554 14.9 Corporate and other (58) (56) (4.3) (116) (100) (16.1) ---------- ---------- ---------- ---------- NET INCOME $ 876 $ 762 15.1 $ 1,670 (B) $ 1,454 14.9 ========== ========== ========== ==========
(A) Managed net revenues are reported net of American Express Financial Advisors' provision for losses and benefits and exclude the effect of TRS' securitization activities. The following table reconciles consolidated GAAP revenues to Managed Basis net revenues: GAAP revenues $ 7,258 $ 6,356 14.2 % $ 14,168 $ 12,379 14.5 % Effect of TRS securitizations 196 216 475 480 Effect of AEFA provisions (532) (526) (1,033) (1,032) ---------- ---------- ---------- ---------- Managed net revenues $ 6,922 $ 6,046 14.5 $ 13,610 $ 11,827 15.1 ========== ========== ========== ==========
(B) Reflects a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1. 3 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED) (UNAUDITED)
Quarters Ended Six Months Ended June 30, June 30, ----------------------- Percentage -------------------------- Percentage 2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- EARNINGS PER SHARE BASIC Income before accounting change $ 0.69 $ 0.59 17 % $ 1.37 $ 1.13 21 % Net income $ 0.69 $ 0.59 17 % $ 1.31 (A) $ 1.13 16 % ========== ========== ========== ========== Average common shares outstanding (millions) 1,263 1,283 (2) % 1,270 1,290 (2) % ========== ========== ========== ========== DILUTED Income before accounting change $ 0.68 $ 0.59 15 % $ 1.34 $ 1.12 20 % Net income $ 0.68 $ 0.59 15 % $ 1.29 (A) $ 1.12 15 % ========== ========== ========== ========== Average common shares outstanding (millions) 1,288 1,295 (1) 1,296 1,300 - ========== ========== ========== ========== Cash dividends declared per common share $ 0.10 $ 0.10 - $ 0.20 $ 0.18 11 % ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION (Unaudited)
Quarters Ended Six Months Ended June 30, June 30, ----------------------- Percentage -------------------------- Percentage 2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Return on average total shareholders' equity (B) 21.2% 20.1% 21.2% 20.1% Common shares outstanding (millions) 1,267 1,286 (1) % 1,267 1,286 (1) % Book value per common share $ 11.96 $ 11.27 6 % $ 11.96 $ 11.27 6 % Shareholders' equity (billions) $ 15.2 $ 14.5 5 % $ 15.2 $ 14.5 5 %
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax), or $0.06 on a basic per share basis and $0.05 on a diluted per share basis, related to the January 1, 2004 adoption of SOP 03-1. (B) Computed on a trailing 12-month basis using total shareholders' equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. 4 (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ Revenues Discount revenue $ 2,529 $ 2,368 $ 2,432 $ 2,221 $ 2,152 Management and distribution fees 750 779 758 603 569 Net investment income 785 741 786 730 780 Cardmember lending net finance charge revenue 561 541 531 476 483 Net card fees 472 472 467 462 455 Travel commissions and fees 468 417 445 349 373 Other commissions and fees 565 529 531 486 466 Insurance and annuity revenues 378 364 366 345 341 Securitization income, net 282 230 293 301 300 Other 468 469 459 446 437 ------------ ------------ ------------ ------------- ------------ Total revenues 7,258 6,910 7,068 6,419 6,356 Expenses Human resources 1,839 1,779 1,708 1,559 1,576 Marketing, promotion, rewards and cardmember services 1,250 1,047 1,166 1,016 944 Provision for losses and benefits 1,080 1,022 1,164 1,080 1,075 Interest 210 203 205 239 231 Other operating expenses 1,613 1,611 1,735 1,463 1,433 Restructuring charges - - - (2) - ------------ ------------ ------------ ------------- ------------ Total expenses 5,992 5,662 5,978 5,355 5,259 ------------ ------------ ------------ ------------- ------------ Pretax income before accounting change 1,266 1,248 1,090 1,064 1,097 Income tax provision 390 383 314 294 335 ------------ ------------ ------------ ------------- ------------ Income before accounting change 876 865 776 770 762 Cumulative effect of accounting change, net of tax - (71)(A) (13)(B) - - ------------ ------------ ------------ ------------- ------------ Net income $ 876 $ 794 $ 763 $ 770 $ 762 ============ ============ ============ ============= ============
Note: Certain prior period amounts have been reclassified to conform to current year presentation. (A) Reflects a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1. (B) Reflects a $20 million non-cash pretax charge ($13 million after-tax) related to the December 31, 2003 adoption of FIN 46, as revised. 5 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ REVENUES (A) Travel Related Services $ 5,378 $ 5,050 $ 5,211 $ 4,758 $ 4,734 American Express Financial Advisors 1,763 1,728 1,740 1,525 1,496 American Express Bank 203 210 205 199 200 ------------ ------------ ------------ ------------- ------------ 7,344 6,988 7,156 6,482 6,430 Corporate and other, including adjustments and eliminations (86) (78) (88) (63) (74) ------------ ------------ ------------ ------------- ------------ CONSOLIDATED REVENUES $ 7,258 $ 6,910 $ 7,068 $ 6,419 $ 6,356 ============ ============ ============ ============= ============ PRETAX INCOME (LOSS) BEFORE ACCOUNTING CHANGE Travel Related Services $ 1,079 $ 973 $ 884 $ 892 $ 937 American Express Financial Advisors 264 317 248 224 209 American Express Bank 42 48 42 41 39 ------------ ------------ ------------ ------------- ------------ 1,385 1,338 1,174 1,157 1,185 Corporate and other (119) (90) (84) (93) (88) ------------ ------------ ------------ ------------- ------------ PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,266 $ 1,248 $ 1,090 $ 1,064 $ 1,097 ============ ============ ============ ============= ============ NET INCOME (LOSS) Travel Related Services $ 732 $ 665 $ 606 $ 606 $ 634 American Express Financial Advisors 174 157 (B) 182 (C) 197 157 American Express Bank 28 30 29 27 27 ------------ ------------ ------------ ------------- ------------ 934 852 817 830 818 Corporate and other (58) (58) (54) (60) (56) ------------ ------------ ------------ ------------- ------------ NET INCOME $ 876 $ 794 (B) $ 763 (C) $ 770 $ 762 ============ ============ ============ ============= ============
(A) Managed net revenues are reported net of American Express Financial Advisors' provision for losses and benefits and exclude the effect of TRS' securitization activities. The following table reconciles consolidated GAAP revenues to Managed Basis net revenues: GAAP revenues $ 7,258 $ 6,910 $ 7,068 $ 6,419 $ 6,356 Effect of TRS securitizations 196 279 208 255 216 Effect of AEFA provisions (532) (501) (555) (535) (526) ------------ ------------ ------------ ------------- ------------ Managed net revenues $ 6,922 $ 6,688 $ 6,721 $ 6,139 $ 6,046 ============ ============ ============ ============= ============
(B) Reflects a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1. (C) Reflects a $20 million non-cash pretax charge ($13 million after-tax) related to the December 31, 2003 adoption of FIN 46, as revised. 6 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED) (Unaudited)
Quarters Ended -------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ----------- ------------ ------------ ------------- ------------ EARNINGS PER SHARE BASIC Income before accounting change $ 0.69 $ 0.68 $ 0.61 $ 0.60 $ 0.59 Net income $ 0.69 $ 0.62 (A) $ 0.60 (B) $ 0.60 $ 0.59 =========== ============ ============ ============= ============ Average common shares outstanding (millions) 1,263 1,277 1,277 1,278 1,283 =========== ============ ============ ============= ============ DILUTED Income before accounting change $ 0.68 $ 0.66 $ 0.60 $ 0.59 $ 0.59 Net income $ 0.68 $ 0.61 (A) $ 0.59 (B) $ 0.59 $ 0.59 =========== ============ ============ ============= ============ Average common shares outstanding (millions) 1,288 1,305 1,299 1,297 1,295 =========== ============ ============ ============= ============ Cash dividends declared per common share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 =========== ============ ============ ============= ============
SELECTED STATISTICAL INFORMATION (Unaudited)
Quarters Ended -------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ----------- ------------ ------------ ------------- ------------ Return on average total shareholders' equity (C) 21.2% 20.7% 20.6% 20.4% 20.1% Common shares outstanding (millions) 1,267 1,281 1,284 1,285 1,286 Book value per common share $ 11.96 $ 12.30 $ 11.93 $ 11.54 $ 11.27 Shareholders' equity (billions) $ 15.2 $ 15.7 $ 15.3 $ 14.8 $ 14.5
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax), or $0.06 on a basic per share basis and $0.05 on a diluted per share basis, related to the January 1, 2004 adoption of SOP 03-1. (B) Reflects a $20 million non-cash pretax charge ($13 million after-tax), or $0.01 per share on both a basic and diluted basis, related to the December 31, 2003 adoption of FIN 46, as revised. (C) Computed on a trailing 12-month basis using total shareholders' equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. 7 (Preliminary) TRAVEL RELATED SERVICES STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended June 30, --------------------------- Percentage 2004 2003 Inc/(Dec) ------------ ------------ ------------ Net revenues: Discount revenue $ 2,529 $ 2,152 17.5 % Lending: Finance charge revenue 697 598 16.3 Interest expense 136 115 18.1 ------------ ------------ Net finance charge revenue 561 483 15.9 Net card fees 472 455 3.9 Travel commissions and fees 468 373 25.7 Other commissions and fees 551 457 20.6 Travelers Cheque investment income 95 92 2.5 Securitization income, net 282 300 (5.8) Other revenues 420 422 (0.8) ------------ ------------ Total net revenues 5,378 4,734 13.6 ------------ ------------ Expenses: Marketing, promotion, rewards and cardmember services 1,225 918 33.3 Provision for losses and claims: Charge card 189 205 (7.1) Lending 314 278 13.0 Other 33 37 (13.0) ------------ ------------ Total 536 520 3.3 Charge card interest expense 175 204 (14.2) Human resources 1,081 965 12.0 Other operating expenses 1,282 1,190 7.7 ------------ ------------ Total expenses 4,299 3,797 13.2 ------------ ------------ Pretax income 1,079 937 15.2 Income tax provision 347 303 14.4 ------------ ------------ Net income $ 732 $ 634 15.6 ============ ============
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 8 (Preliminary) TRAVEL RELATED SERVICES SELECTED FINANCIAL INFORMATION (Unaudited)
Quarters Ended June 30, (Millions) GAAP Basis Securitization Effect Managed Basis --------------------- Percentage --------------------- --------------------- Percentage 2004 2003 Inc/(Dec) 2004 2003 2004 2003 Inc/(Dec) --------- --------- ---------- --------- --------- --------- --------- ---------- Net revenues: Discount revenue $ 2,529 $ 2,152 17.5 % Lending: Finance charge revenue 697 598 16.3 $ 489 $ 566 $ 1,186 $ 1,164 1.8 % Interest expense 136 115 18.1 61 95 197 210 (6.3) --------- --------- --------- --------- --------- --------- Net finance charge revenue 561 483 15.9 428 471 989 954 3.6 Net card fees 472 455 3.9 Travel commissions and fees 468 373 25.7 Other commissions and fees 551 457 20.6 50 45 601 502 19.8 Travelers Cheque investment income 95 92 2.5 Securitization income, net 282 300 (5.8) (282) (300) - - - Other revenues 420 422 (0.8) --------- --------- --------- --------- --------- --------- Total net revenues 5,378 4,734 13.6 196 216 5,574 4,950 12.6 --------- --------- --------- --------- --------- --------- Expenses: Marketing, promotion, rewards and cardmember services 1,225 918 33.3 (6) (48) 1,219 870 40.2 Provision for losses and claims: Charge card 189 205 (7.1) Lending 314 278 13.0 205 297 519 575 (9.8) Other 33 37 (13.0) --------- --------- --------- --------- --------- --------- Total 536 520 3.3 205 297 741 817 (9.3) Charge card interest expense 175 204 (14.2) Human resources 1,081 965 12.0 Other operating expenses 1,282 1,190 7.7 (3) (33) 1,279 1,157 10.4 --------- --------- --------- --------- --------- --------- Total expenses 4,299 3,797 13.2 $ 196 $ 216 $ 4,495 $ 4,013 12.0 --------- --------- --------- --------- --------- --------- Pretax income 1,079 937 15.2 Income tax provision 347 303 14.4 --------- --------- Net income $ 732 $ 634 15.6 ========= =========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. Securitization income, net represents revenue related to the Company's securitized loan receivables, which includes net gains and charges from securitization activity, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views the gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the above managed Selected Financial Information for the quarters ended June 30, 2004 and June 30, 2003 assume that net activity of $9 million and $81 million, respectively, from lending securitizations was offset by higher marketing, promotion, rewards and cardmember services expenses of $6 million and $48 million, respectively, and other operating expenses of $3 million and $33 million, respectively. Accordingly, the incremental expenses, as well as the net activity, have been eliminated. 9 (Preliminary) TRAVEL RELATED SERVICES SELECTED FINANCIAL INFORMATION (Unaudited)
Quarters Ended (Millions) GAAP Basis Securitization Effect Managed Basis ------------------------------ -------------------------------- ------------------------------ March December September March December September March December September 31, 31, 30, 31, 31, 30, 31, 31, 30, 2004 2003 2003 2004 2003 2003 2004 2003 2003 ------- -------- --------- ------- -------- --------- ------- -------- --------- Net revenues: Discount revenue $ 2,368 $ 2,432 $ 2,221 Lending: Finance charge revenue 668 654 592 $ 539 $ 532 $ 585 $ 1,207 $ 1,186 $ 1,177 Interest expense 127 123 116 83 84 74 210 207 190 ------- -------- --------- ------- -------- --------- ------- -------- --------- Net finance charge revenue 541 531 476 456 448 511 997 979 987 Net card fees 472 467 462 Travel commissions and fees 417 445 349 Other commissions and fees 510 515 465 53 53 45 563 568 510 Travelers Cheque investment income 93 93 90 Securitization income, net 230 293 301 (230) (293) (301) - - - Other revenues 419 435 394 ------- -------- --------- ------- -------- --------- ------- -------- --------- Total net revenues 5,050 5,211 4,758 279 208 255 5,329 5,419 5,013 ------- -------- --------- ------- -------- --------- ------- -------- --------- Expenses: Marketing, promotion, rewards and cardmember services 1,023 1,141 994 (4) - - 1,019 1,141 994 Provision for losses and claims: Charge card 198 227 213 Lending 287 330 279 287 208 255 574 538 534 Other 29 28 31 ------- -------- --------- ------- -------- --------- ------- -------- --------- Total 514 585 523 287 208 255 801 793 778 Charge card interest expense 168 187 186 Human resources 1,065 1,003 938 Other operating expenses 1,307 1,411 1,225 (4) - - 1,303 1,411 1,225 ------- -------- --------- ------- -------- --------- ------- -------- --------- Total expenses 4,077 4,327 3,866 $ 279 $ 208 $ 255 $ 4,356 $ 4,535 $ 4,121 ------- -------- --------- ------- -------- --------- ------- -------- --------- Pretax income 973 884 892 Income tax provision 308 278 286 ------- -------- --------- Net income $ 665 $ 606 $ 606 ======= ======== =========
Securitization income, net represents revenue related to the Company's securitized loan receivables, which includes net gains and charges from securitization activity, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views the gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the above managed Selected Financial Information for the quarter ended March 31, 2004 assumes that net activity of $8 million from lending securitizations was offset by higher marketing, promotion, rewards and cardmember services expenses of $4 million and other operating expenses of $4 million. Accordingly, the incremental expenses, as well as the net activity, have been eliminated. 10 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended June 30, ------------------------- Percentage 2004 2003 Inc/(Dec) ---------- ----------- ----------- Total cards-in-force (millions) (A): United States 37.5 35.4 5.8% Outside the United States 25.0 22.9 9.5 ---------- ----------- Total 62.5 58.3 7.3 ========== =========== Basic cards-in-force (millions): United States 28.5 27.3 4.3% Outside the United States 20.8 18.9 10.3 ---------- ----------- Total 49.3 46.2 6.8 ========== =========== Card billed business: United States $ 75.7 $ 64.6 17.3% Outside the United States 26.7 21.5 23.9 ---------- ----------- Total $ 102.4 $ 86.1 19.0 ========== =========== Average discount rate (A) 2.56% 2.59% Average basic cardmember spending (dollars) (A) $ 2,339 $ 2,054 13.9% Average fee per card - managed (dollars) (A) $ 34 $ 34 Non-Amex brand (B): Cards-in-force (millions) 0.7 0.7 6.4% Billed business $ 1.0 $ 1.0 8.7% Travel sales $ 5.2 $ 3.9 34.0% Travel commissions and fees/sales (C) 9.0% 9.6% Travelers Cheque and prepaid products: Sales $ 4.8 $ 4.4 7.9% Average outstanding $ 6.9 $ 6.4 6.5% Average investments $ 7.3 $ 6.9 6.2% Investment yield 5.5% 5.5% Tax equivalent yield 8.5% 8.4% Total debt $ 38.8 $ 34.2 13.4% Shareholder's equity $ 8.6 $ 7.8 11.1% Return on average total shareholder's equity (D) 32.1% 31.5% Return on average total assets (E) 3.4% 3.4%
(A) Cards-in-force include proprietary cards and cards issued under network partnership agreements outside the United States. Average discount rate, average basic cardmember spending and average fee per card are computed from proprietary card activities only. (B) These data relate to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (E) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. 11 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (CONTINUED) (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended June 30, ----------------------------- Percentage 2004 2003 Inc/(Dec) ------------ ------------ ----------- Worldwide charge card receivables: Total receivables $ 28.4 $ 26.0 9.2 % 90 days past due as a % of total 1.9% 2.1% Loss reserves (millions) $ 864 $ 943 (8.3)% % of receivables 3.0% 3.6% % of 90 days past due 163% 171% Net loss ratio as a % of charge volume 0.25% 0.29% Worldwide lending - owned basis: Total loans $ 26.4 $ 22.6 17.1 % Past due loans as a % of total: 30-89 days 1.5% 1.6% 90+ days 1.0% 1.2% Loss reserves (millions): Beginning balance $ 994 $ 1,025 (3.0)% Provision 282 256 10.2 Net charge-offs (267) (282) (5.2) Other 21 18 19.5 ------------ ------------ Ending balance $ 1,030 $ 1,017 1.3 ============ ============ % of loans 3.9% 4.5% % of past due 154% 161% Average loans $ 25.9 $ 22.0 18.2 % Net write-off rate 4.1% 5.1% Net interest yield 9.4% 9.7% Worldwide lending - managed basis: Total loans $ 45.1 $ 42.1 7.2 % Past due loans as a % of total: 30-89 days 1.5% 1.7% 90+ days 1.0% 1.1% Loss reserves (millions): Beginning balance $ 1,570 $ 1,582 (0.7)% Provision 486 552 (12.0) Net charge-offs (504) (558) (9.6) Other (17) 18 - ------------ ------------ Ending balance $ 1,535 $ 1,594 (3.7) ============ ============ % of loans 3.4% 3.8% % of past due 136% 137% Average loans $ 44.9 $ 41.2 9.3 % Net write-off rate 4.5% 5.4% Net interest yield 8.6% 9.0%
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 12 (Preliminary) TRAVEL RELATED SERVICES STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended -------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 -------------- -------------- -------------- -------------- -------------- Net revenues: Discount revenue $ 2,529 $ 2,368 $ 2,432 $ 2,221 $ 2,152 Lending: Finance charge revenue 697 668 654 592 598 Interest expense 136 127 123 116 115 -------------- -------------- -------------- -------------- -------------- Net finance charge revenue 561 541 531 476 483 Net card fees 472 472 467 462 455 Travel commissions and fees 468 417 445 349 373 Other commissions and fees 551 510 515 465 457 Travelers Cheque investment income 95 93 93 90 92 Securitization income, net 282 230 293 301 300 Other revenues 420 419 435 394 422 -------------- -------------- -------------- -------------- -------------- Total net revenues 5,378 5,050 5,211 4,758 4,734 -------------- -------------- -------------- -------------- -------------- Expenses: Marketing, promotion, rewards and cardmember services 1,225 1,023 1,141 994 918 Provision for losses and claims: Charge card 189 198 227 213 205 Lending 314 287 330 279 278 Other 33 29 28 31 37 -------------- -------------- -------------- -------------- -------------- Total 536 514 585 523 520 Charge card interest expense 175 168 187 186 204 Human resources 1,081 1,065 1,003 938 965 Other operating expenses 1,282 1,307 1,411 1,225 1,190 -------------- -------------- -------------- -------------- -------------- Total expenses 4,299 4,077 4,327 3,866 3,797 -------------- -------------- -------------- -------------- -------------- Pretax income 1,079 973 884 892 937 Income tax provision 347 308 278 286 303 -------------- -------------- -------------- -------------- -------------- Net income $ 732 $ 665 $ 606 $ 606 $ 634 ============== ============== ============== ============== ==============
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 13 (Preliminary) TRAVEL RELATED SERVICES SELECTED MANAGED BASIS INFORMATION (Unaudited)
(Millions) Quarters Ended -------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 -------------- -------------- -------------- -------------- -------------- Lending finance charge revenue $ 1,186 $ 1,207 $ 1,186 $ 1,177 $ 1,164 Lending interest expense 197 210 207 190 210 Other commissions and fees 601 563 568 510 502 Marketing, promotion, rewards and cardmember services 1,219 1,019 1,141 994 870 Lending provision 519 574 538 534 575 Other operating expenses 1,279 1,303 1,411 1,225 1,157
Note: Certain prior period amounts have been reclassified to conform to current year presentation. See prior page for comparable GAAP measures. 14 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended -------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 -------------- -------------- -------------- -------------- -------------- Total cards-in-force (millions) (A): United States 37.5 37.0 36.4 35.9 35.4 Outside the United States 25.0 24.6 24.1 23.4 22.9 -------------- -------------- -------------- -------------- -------------- Total 62.5 61.6 60.5 59.3 58.3 ============== ============== ============== ============== ============== Basic cards-in-force (millions): United States 28.5 28.1 27.7 27.3 27.3 Outside the United States 20.8 20.4 19.9 19.3 18.9 -------------- -------------- -------------- -------------- -------------- Total 49.3 48.5 47.6 46.6 46.2 ============== ============== ============== ============== ============== Card billed business: United States $ 75.7 $ 70.1 $ 72.3 $ 66.3 $ 64.6 Outside the United States 26.7 25.3 26.2 22.5 21.5 -------------- -------------- -------------- -------------- -------------- Total $ 102.4 $ 95.4 $ 98.5 $ 88.8 $ 86.1 ============== ============== ============== ============== ============== Average discount rate (A) 2.56% 2.59% 2.56% 2.60% 2.59% Average basic cardmember spending (dollars) (A) $ 2,339 $ 2,202 $ 2,314 $ 2,101 $ 2,054 Average fee per card - managed (dollars) (A) $ 34 $ 35 $ 35 $ 35 $ 34 Non-Amex brand (B): Cards-in-force (millions) 0.7 0.7 0.7 0.7 0.7 Billed business $ 1.0 $ 1.0 $ 1.1 $ 1.0 $ 1.0 Travel sales $ 5.2 $ 4.8 $ 4.7 $ 3.7 $ 3.9 Travel commissions and fees/sales (C) 9.0% 8.7% 9.5% 9.3% 9.6% Travelers Cheque and prepaid products: Sales $ 4.8 $ 4.4 $ 4.7 $ 6.0 $ 4.4 Average outstanding $ 6.9 $ 6.8 $ 6.6 $ 7.0 $ 6.4 Average investments $ 7.3 $ 7.3 $ 7.1 $ 7.4 $ 6.9 Investment yield 5.5% 5.4% 5.5% 5.2% 5.5% Tax equivalent yield 8.5% 8.3% 8.4% 8.0% 8.4% Total debt $ 38.8 $ 38.7 $ 38.4 $ 33.3 $ 34.2 Shareholder's equity $ 8.6 $ 8.1 $ 7.9 $ 8.0 $ 7.8 Return on average total shareholder's equity (D) 32.1% 31.7% 31.3% 31.2% 31.5% Return on average total assets (E) 3.4% 3.4% 3.4% 3.4% 3.4%
(A) Cards-in-force include proprietary cards and cards issued under network partnership agreements outside the United States. Average discount rate, average basic cardmember spending and average fee per card are computed from proprietary card activities only. (B) These data relate to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (E) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. 15 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (CONTINUED) (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended -------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 -------------- -------------- -------------- -------------- -------------- Worldwide charge card receivables: Total receivables $ 28.4 $ 27.9 $ 28.4 $ 26.4 $ 26.0 90 days past due as a % of total 1.9% 2.0% 1.9% 2.0% 2.1% Loss reserves (millions) $ 864 $ 896 $ 916 $ 921 $ 943 % of receivables 3.0% 3.2% 3.2% 3.5% 3.6% % of 90 days past due 163% 164% 171% 174% 171% Net loss ratio as a % of charge volume 0.25% 0.26% 0.27% 0.28% 0.29% Worldwide lending - owned basis: Total loans $ 26.4 $ 24.5 $ 25.8 $ 22.6 $ 22.6 Past due loans as a % of total: 30-89 days 1.5% 1.7% 1.6% 1.7% 1.6% 90+ days 1.0% 1.1% 1.1% 1.1% 1.2% Loss reserves (millions): Beginning balance $ 994 $ 998 $ 938 $ 1,017 $ 1,025 Provision 282 257 304 261 256 Net charge-offs (267) (264) (275) (282) (282) Other 21 3 31 (58) 18 -------------- -------------- -------------- -------------- -------------- Ending balance $ 1,030 $ 994 $ 998 $ 938 $ 1,017 ============== ============== ============== ============== ============== % of loans 3.9% 4.1% 3.9% 4.2% 4.5% % of past due 154% 145% 146% 150% 161% Average loans $ 25.9 $ 25.1 $ 23.8 $ 22.5 $ 22.0 Net write-off rate 4.1% 4.2% 4.6% 5.0% 5.1% Net interest yield 9.4% 9.4% 9.6% 9.2% 9.7% Worldwide lending - managed basis: Total loans $ 45.1 $ 44.8 $ 45.3 $ 42.1 $ 42.1 Past due loans as a % of total: 30-89 days 1.5% 1.7% 1.6% 1.7% 1.7% 90+ days 1.0% 1.0% 1.1% 1.1% 1.1% Loss reserves (millions): Beginning balance $ 1,570 $ 1,541 $ 1,519 $ 1,594 $ 1,582 Provision 486 545 511 518 552 Net charge-offs (504) (519) (520) (535) (558) Other (17) 3 31 (58) 18 -------------- -------------- -------------- -------------- -------------- Ending balance $ 1,535 $ 1,570 $ 1,541 $ 1,519 $ 1,594 ============== ============== ============== ============== ============== % of loans 3.4% 3.5% 3.4% 3.6% 3.8% % of past due 136% 128% 127% 128% 137% Average loans $ 44.9 $ 44.8 $ 43.3 $ 42.1 $ 41.2 Net write-off rate 4.5% 4.6% 4.8% 5.1% 5.4% Net interest yield 8.6% 8.7% 8.7% 9.0% 9.0%
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 16 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended June 30, ----------------------- Percentage 2004 2003 Inc/(Dec) ---------- ---------- ---------- Revenues: Management and distribution fees $ 752 $ 571 31.5 % Net investment income 603 571 5.6 Other revenues 408 354 15.8 ---------- ---------- Total revenues 1,763 1,496 17.9 ---------- ---------- Expenses: Provision for losses and benefits: Annuities 266 280 (5.3) Insurance 218 187 16.0 Investment certificates 48 59 (17.1) ---------- ---------- Total 532 526 1.0 Human resources 646 508 27.3 Other operating expenses 321 253 27.3 (A) ---------- ---------- Total expenses 1,499 1,287 16.5 ---------- ---------- Pretax income 264 209 26.5 Income tax provision 90 52 72.5 ---------- ---------- Net income $ 174 $ 157 11.1 ========== ==========
(A) Certain expenses that are included in other operating expenses in the condensed AEFA segment financial statements above are disaggregated into their respective reporting lines for consolidated reporting purposes. These expenses primarily relate to marketing, promotion, rewards and cardmember services and interest expenses and result in a 32 percent change in other operating expenses reported on page 3 of the earnings release as compared to a 27 percent change reported above. 17 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS SELECTED STATISTICAL INFORMATION (Unaudited)
(Millions, except percentages and where indicated) Quarters Ended June 30, ------------------------ Percentage 2004 2003 Inc/(Dec) ---------- ---------- ---------- Investments (billions) (A) $ 41.8 $ 42.4 (1.3)% Client contract reserves (billions) $ 41.9 $ 40.2 4.3 % Shareholder's equity (billions) $ 6.3 $ 6.7 (5.5)% Return on average total shareholder's equity before accounting change (B) 11.7% 9.6% Return on average total shareholder's equity (B) 10.5% 9.6% Life insurance inforce (billions) $ 139.1 $ 124.4 11.9 % Assets owned, managed or administered (billions): Assets managed for institutions (C) $ 125.5 $ 43.8 # Assets owned, managed or administered for individuals: Owned assets: Separate account assets (C) 32.9 24.1 36.8 % Other owned assets (C) 57.9 52.2 10.8 ---------- ---------- Total owned assets 90.8 76.3 19.0 Managed assets (C) 108.8 87.3 24.6 Administered assets (D) 55.3 37.4 47.7 ---------- ---------- Total $ 380.4 $ 244.8 55.4 ========== ========== Market appreciation (depreciation) during the period: Owned assets: Separate account assets $ (101) $ 2,620 # Other owned assets $ (1,476) $ 399 # Managed assets $ 232 $ 9,457 (97.5)% Cash sales: Mutual funds $ 8,480 $ 7,150 18.6 % Annuities 1,912 2,581 (26.0) Investment certificates 1,445 1,607 (10.0) Life and other insurance products 221 188 17.3 Institutional 2,841 722 # Other 1,116 1,531 (27.1) ---------- ---------- Total cash sales $ 16,015 $ 13,779 16.2 ========== ========== Number of financial advisors 11,943 11,667 2.4 % Fees from financial plans and advice services $ 39.3 $ 33.5 17.4 % Percentage of total sales from financial plans and advice services 74.6% 74.0%
# - Denotes a variance of more than 100%. (A) Excludes cash, derivatives, short-term and other investments. (B) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) At June 30, 2004, amounts reflect September 30, 2003 Threadneedle acquisition balances of $73.2 billion of assets managed for institutions, $2.6 billion of separate account assets, $1.0 billion of other owned assets and $7.9 billion of assets managed for individuals. (D) Excludes non-branded administered assets of $5.4 billion at June 30, 2003. Assuming such assets had been included, the increase in administered assets would have been 29%. 18 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ Revenues: Management and distribution fees $ 752 $ 781 $ 759 $ 606 $ 571 Net investment income 603 556 599 551 571 Other revenues 408 391 382 368 354 ------------ ------------ ------------ ------------- ------------ Total revenues 1,763 1,728 1,740 1,525 1,496 ------------ ------------ ------------ ------------- ------------ Expenses: Provision for losses and benefits: Annuities 266 255 274 277 280 Insurance 218 201 226 212 187 Investment certificates 48 45 55 46 59 ------------ ------------ ------------ ------------- ------------ Total 532 501 555 535 526 Human resources 646 603 592 511 508 Other operating expenses 321 307 345 255 253 ------------ ------------ ------------ ------------- ------------ Total expenses 1,499 1,411 1,492 1,301 1,287 ------------ ------------ ------------ ------------- ------------ Pretax income before accounting change 264 317 248 224 209 Income tax provision 90 89 53 27 52 ------------ ------------ ------------ ------------- ------------ Income before accounting change 174 228 195 197 157 Cumulative effect of accounting change, net of tax - (71)(A) (13)(B) - - ------------ ------------ ------------ ------------- ------------ Net income $ 174 $ 157 $ 182 $ 197 $ 157 ============ ============ ============ ============= ============
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1. (B) Reflects a $20 million non-cash pretax charge ($13 million after-tax) related to the December 31, 2003 adoption of FIN 46, as revised. 19 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS SELECTED STATISTICAL INFORMATION (Unaudited)
(Millions, except percentages and where indicated) Quarters Ended -------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ Investments (billions) (A) $ 41.8 $ 43.4 $ 42.1 $ 42.3 $ 42.4 Client contract reserves (billions) $ 41.9 $ 41.6 $ 41.2 $ 40.8 $ 40.2 Shareholder's equity (billions) $ 6.3 $ 7.4 $ 7.1 $ 7.1 $ 6.7 Return on average total shareholder's equity before accounting change (B) 11.7% 11.5% 10.4% 10.1% 9.6% Return on average total shareholder's equity (B) 10.5% 10.2% 10.2% 10.1% 9.6% Life insurance inforce (billions) $ 139.1 $ 135.0 $ 131.4 $ 127.5 $ 124.4 Assets owned, managed or administered (billions): Assets managed for institutions (C) $ 125.5 $ 123.4 $ 116.4 (F) $ 116.7 $ 43.8 Assets owned, managed or administered for individuals: Owned assets: Separate account assets (C) 32.9 32.4 30.8 27.6 24.1 Other owned assets (C) 57.9 58.9 53.8 (E) 53.3 52.2 ------------ ------------ ------------ ------------- ------------ Total owned assets 90.8 91.3 84.6 80.9 76.3 Managed assets (C) 108.8 109.3 110.2 96.6 87.3 Administered assets (D) 55.3 54.4 54.1 45.6 37.4 ------------ ------------ ------------ ------------- ------------ Total $ 380.4 $ 378.4 $ 365.3 $ 339.8 $ 244.8 ============ ============ ============ ============= ============ Market appreciation (depreciation) during the period: Owned assets: Separate account assets $ (101) $ 756 $ 2,752 $ 613 $ 2,620 Other owned assets $ (1,476) $ 713 $ (275) $ (388) $ 399 Managed assets $ 232 $ 5,453 $ 15,767 $ 2,134 $ 9,457 Cash sales: Mutual funds $ 8,480 $ 9,799 $ 9,096 $ 7,361 $ 7,150 Annuities 1,912 2,186 1,683 1,866 2,581 Investment certificates 1,445 1,324 1,520 1,542 1,607 Life and other insurance products 221 218 212 198 188 Institutional 2,841 1,415 939 680 722 Other 1,116 1,292 978 1,595 1,531 ------------ ------------ ------------ ------------- ------------ Total cash sales $ 16,015 $ 16,234 $ 14,428 $ 13,242 $ 13,779 ============ ============ ============ ============= ============ Number of financial advisors 11,943 12,070 12,121 11,742 11,667 Fees from financial plans and advice services $ 39.3 $ 33.2 $ 20.6 $ 34.9 $ 33.5 Percentage of total sales from financial plans and advice services 74.6% 75.3% 74.6% 75.0% 74.0%
(A) Excludes cash, derivatives, short-term and other investments. (B) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) At September 30, 2003, includes $73.2 billion of assets managed for institutions, $2.6 billion of separate account assets, $1.0 billion of other owned assets and $7.9 billion of assets managed for individuals related to the September 30, 2003 Threadneedle acquisition. (D) Excludes non-branded administered assets of $5.4 billion for the quarter ended June 30, 2003. (E) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, $0.5 billion of additional assets were consolidated. (F) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, managed assets decreased by $3.8 billion. 20 (Preliminary) AMERICAN EXPRESS BANK STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended June 30, ----------------------- Percentage 2004 2003 Inc/(Dec) ---------- ---------- ---------- Net revenues: Interest income $ 131 $ 148 (12.0)% Interest expense 51 57 (11.3) ---------- ---------- Net interest income 80 91 (12.4) Commissions and fees 70 57 23.7 Foreign exchange income and other revenues 53 52 2.5 ---------- ---------- Total net revenues 203 200 1.8 ---------- ---------- Expenses: Human resources 71 64 11.3 Other operating expenses 78 70 12.0 Provision for losses 12 27 (57.4) ---------- ---------- Total expenses 161 161 (0.1) ---------- ---------- Pretax income 42 39 9.4 Income tax provision 14 12 22.4 ---------- ---------- Net income $ 28 $ 27 3.6 ========== ==========
21 (Preliminary) AMERICAN EXPRESS BANK SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended June 30, ----------------------- Percentage 2004 2003 Inc/(Dec) ---------- ---------- ---------- Total shareholder's equity (millions) $ 953 $ 955 (0.2)% Return on average total shareholder's equity (A) 11.9% 10.5% Return on average total assets (B) 0.81% 0.75% Total loans $ 6.5 $ 5.8 10.4 % Total non-performing loans (millions) (C) $ 50 $ 102 (50.8)% Other non-performing assets (millions) $ 2 $ 16 (89.5)% Reserve for credit losses (millions) (D) $ 105 $ 151 (30.4)% Loan loss reserve as a % of total loans 1.6% 2.4% Total Personal Financial Services (PFS) loans $ 1.3 $ 1.5 (9.2)% 30+ days past due PFS loans as a % of total PFS loans 5.5% 5.5% Deposits $ 11.2 $ 10.1 11.0 % Assets managed (E) / administered $ 16.9 $ 14.1 19.6 % Assets of non-consolidated joint ventures (F) $ 1.7 $ 1.8 (4.0)% Risk-based capital ratios (G): Tier 1 12.0% 10.5% Total 11.8% 10.7% Leverage ratio 5.9% 5.5%
(A) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (B) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) AEB defines non-performing loans as loans (other than certain smaller-balance loans) on which the accrual of interest is discontinued because the contractual payment of principal or interest has become 90 days past due or if, in management's opinion, the borrower is unlikely to meet its contractual obligations. For smaller-balance loans, management establishes reserves it believes to be adequate to absorb credit losses inherent in the portfolio. Generally, these loans are written off in full when an impairment is determined or when the loan becomes 120 or 180 days past due, depending on loan type. (D) Allocation of reserves (millions): Loans $ 103 $ 142 Other assets, primarily matured foreign exchange and other derivative contracts 1 5 Other credit-related commitments 1 4 ---------- ----------- Total reserve for credit losses $ 105 $ 151 ========== ===========
(E) Includes assets managed by American Express Financial Advisors. (F) Excludes American Express International Deposit Company's total assets (which are 100% consolidated at AEFA) for each period presented (and which totaled $4.8 billion at June 30, 2004). (G) Based on legal entity financial information. 22 (Preliminary) AMERICAN EXPRESS BANK STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ Net revenues: Interest income $ 131 $ 134 $ 139 $ 139 $ 148 Interest expense 51 53 57 52 57 ------------ ------------ ------------ ------------- ------------ Net interest income 80 81 82 87 91 Commissions and fees 70 70 68 58 57 Foreign exchange income and other revenues 53 59 55 54 52 ------------ ------------ ------------ ------------- ------------ Total net revenues 203 210 205 199 200 ------------ ------------ ------------ ------------- ------------ Expenses: Human resources 71 75 75 71 64 Other operating expenses 78 81 67 69 70 Provision for losses 12 6 21 20 27 Restructuring charges - - - (2) - ------------ ------------ ------------ ------------- ------------ Total expenses 161 162 163 158 161 ------------ ------------ ------------ ------------- ------------ Pretax income 42 48 42 41 39 Income tax provision 14 18 13 14 12 ------------ ------------ ------------ ------------- ------------ Net income $ 28 $ 30 $ 29 $ 27 $ 27 ============ ============ ============ ============= ============
23 (Preliminary) AMERICAN EXPRESS BANK SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended ------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, June 30, 2004 2004 2003 2003 2003 ------------ ------------ ------------ ------------- ------------ Total shareholder's equity (millions) $ 953 $ 992 $ 949 $ 952 $ 955 Return on average total shareholder's equity (A) 11.9% 11.9% 10.8% 10.4% 10.5% Return on average total assets (B) 0.81% 0.81% 0.74% 0.74% 0.75% Total loans $ 6.5 $ 6.4 $ 6.5 $ 6.2 $ 5.8 Total non-performing loans (millions) (C) $ 50 $ 69 $ 78 $ 84 $ 102 Other non-performing assets (millions) $ 2 $ 10 $ 15 $ 15 $ 16 Reserve for credit losses (millions) (D) $ 105 $ 113 $ 121 $ 125 $ 151 Loan loss reserve as a % of total loans 1.6% 1.7% 1.7% 1.9% 2.4% Total Personal Financial Services (PFS) loans $ 1.3 $ 1.3 $ 1.4 $ 1.4 $ 1.5 30+ days past due PFS loans as a % of total PFS loans 5.5% 5.5% 6.6% 5.3% 5.5% Deposits $ 11.2 $ 10.7 $ 10.8 $ 10.6 $ 10.1 Assets managed (E) / administered $ 16.9 $ 16.8 $ 16.2 $ 15.0 $ 14.1 Assets of non-consolidated joint ventures (F) $ 1.7 $ 1.8 $ 1.7 $ 1.7 $ 1.8 Risk-based capital ratios (G): Tier 1 12.0% 11.7% 11.4% 10.5% 10.5% Total 11.8% 11.5% 11.3% 10.8% 10.7% Leverage ratio 5.9% 5.7% 5.5% 6.0% 5.5%
(A) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (B) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) AEB defines non-performing loans as loans (other than certain smaller-balance loans) on which the accrual of interest is discontinued because the contractual payment of principal or interest has become 90 days past due or if, in management's opinion, the borrower is unlikely to meet its contractual obligations. For smaller-balance loans, management establishes reserves it believes to be adequate to absorb credit losses inherent in the portfolio. Generally, these loans are written off in full when an impairment is determined or when the loan becomes 120 or 180 days past due, depending on loan type. (D) Allocation of reserves (millions): Loans $ 103 $ 106 $ 113 $ 117 $ 142 Other assets, primarily matured foreign exchange and other derivative contracts 1 6 6 6 5 Other credit-related commitments 1 1 2 2 4 ------------ ------------ ------------ ------------- ------------ Total reserve for credit losses $ 105 $ 113 $ 121 $ 125 $ 151 ============ ============ ============ ============= ============
(E) Includes assets managed by American Express Financial Advisors. (F) Excludes American Express International Deposit Company's total assets (which are 100% consolidated at AEFA ) for each period presented (and which totaled $4.8 billion at June 30, 2004). (G) Based on legal entity financial information. 24