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American Express EPS Up 15% for the Quarter; 14% for Full Year; Card Member Spending and Loans Rise; Investment Gain Used for Business Building Initiatives and Restructuring

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American Express Company (NYSE:AXP) today reported fourth-quarter net income of $1.4 billion, up 11 percent from $1.3 billion a year ago. Diluted earnings per share rose 15 percent to $1.39, from $1.21 a year ago.

(Millions, except percentages and per share amounts)

Quarters Ended

December 31,

Percentage

Inc/(Dec)

Years Ended

December 31,

Percentage

Inc/(Dec)

2014

2013

2014

2013

Total Revenues Net of Interest Expense $ 9,107 $ 8,547 7 % $ 34,292 $ 32,974 4 %
Net Income $ 1,447 $ 1,308 11 % $ 5,885 $ 5,359 10 %
Earnings Per Common Share – Diluted:

Net Income Attributable to Common Shareholders1

$ 1.39 $ 1.21 15 % $ 5.56 $ 4.88 14 %
Average Diluted Common Shares Outstanding 1,033 1,073 (4 )% 1,051 1,089 (4 )%
Return on Average Equity 29.1 % 27.8 % 29.1 % 27.8 %

Fourth-quarter consolidated total revenues net of interest expense rose to $9.1 billion from $8.5 billion a year ago, up 7 percent (9 percent when adjusted for foreign currency translations2). The revenue increase primarily reflected the previously reported gain of $719 million ($453 million after-tax) on the sale of the company’s investment in Concur Technologies. The increase also reflected a rise in Card Member spending and higher net interest income. Last year’s fourth quarter included revenue from the company’s business travel operations, which were deconsolidated as a result of the joint venture transaction that closed on June 30, 2014.

Consolidated provisions for losses totaled $582 million, up 22 percent from $479 million a year ago. The increase primarily reflected a build in reserves this quarter compared to a reserve release last year. Credit indicators continued to be at historically strong levels.

Consolidated expenses totaled $6.3 billion, up 3 percent (6 percent FX adjusted2) from $6.1 billion a year ago. As indicated last quarter, the company used a substantial portion of the Concur gain for:

  • Companywide initiatives to improve operating efficiencies, which entailed a restructuring charge of $313 million ($206 million after-tax);
  • Incremental investments in growth initiatives, which were largely reflected in higher marketing and promotion expenses; and
  • The renewal of the company’s partnership with Delta Air Lines, which created additional rewards costs of $109 million ($68 million after-tax).

In addition, fourth-quarter results were negatively affected by the impact of foreign currency translations on international operations.

The effective tax rate for the quarter was 35 percent, up from 34 percent from a year ago, driven by the geographic mix of earnings and the resolution of certain prior years’ items.

The company’s return on average equity (ROE) was 29.1 percent, up from 27.8 percent a year ago.

For the full year, the company reported net income of $5.9 billion, up 10 percent from $5.4 billion a year ago. Diluted earnings per share rose 14 percent to $5.56 from $4.88 a year ago.

Revenues net of interest expense for the full year increased 4 percent (5 percent FX adjusted2) to $34.3 billion from $33.0 billion a year ago. Consolidated expenses remained unchanged from 2013 at $23.3 billion. Adjusted for foreign currency translations2, consolidated expenses were up 1 percent.

“Solid results this quarter reflected the underlying themes that have characterized our performance throughout 2014: higher Card Member spending, increased loan balances, tight control of operating expenses and a substantial return of capital to shareholders through share repurchases,” said Kenneth I. Chenault, chairman and chief executive officer.

“Fourth-quarter Card Member spending rose 6 percent (8 percent FX adjusted). Volumes for the year crossed the trillion dollar mark for the first time, reflecting the progress we’ve made in building customer loyalty, adding new cards and expanding the network of merchants who accept our products. Loan balances were up 7 percent in the U.S., continuing the progress we’ve made throughout 2014. We continue to see opportunities to grow this portfolio with existing and new customers without significantly changing the overall risk profile of the company.

“Tight controls on the cost side of the ledger continued to give us the flexibility to invest in growth opportunities. And, as in the second quarter, a substantial gain allowed us to accelerate some critical initiatives: reengineering to make American Express more efficient; renewing a key partner relationship; and making additional investments to grow our business and drive innovation in the world of payments and commerce.

“We’ve made very good progress against the backdrop of an uneven global economy and the negative impact of a strengthening U.S. dollar. We see many opportunities for growth, but at the same time, we face competitive and regulatory challenges. Our aim is to continue to capitalize on the opportunities while dealing with the challenges as we enter 2015.”

Segment Results

U.S. Card Services reported fourth-quarter net income of $665 million, down 23 percent from $864 million a year ago.

Total revenues net of interest expense increased 5 percent to $4.6 billion from $4.4 billion a year ago. The increase reflected an 8 percent rise in Card Member spending and higher net interest income.

Provisions for losses totaled $399 million, up 25 percent from $319 million a year ago. The increase primarily reflected a build in reserves this quarter compared to a reserve release last year.

Total expenses increased 13 percent to $3.1 billion from $2.8 billion a year ago. The increase reflected a substantial portion of the initiatives related to the Concur gain and were reflected in higher rewards, marketing and operating expenses3.

The effective tax rate was 39 percent compared to 33 percent a year ago, reflecting the impact of certain prior years’ tax items.

International Card Services reported fourth-quarter net income of $33 million, down 68 percent from $103 million a year ago.

Total revenues net of interest expense decreased 5 percent (up 3 percent FX adusted2) to $1.4 billion.

Provisions for losses totaled $95 million, down 14 percent from $110 million a year ago. The decrease reflected a small reserve release in the current quarter compared with a reserve build a year ago.

Total expenses increased 4 percent (10 percent FX adjusted2) to $1.3 billion. The increase primarily reflected higher operating expenses, which included a portion of the restructuring charge, partially offset by a decrease in rewards costs.

Taxes for the quarter reflected the level of pretax income in combination with recurring permanent tax benefits.

Global Commercial Services reported fourth-quarter net income of $594 million, up from $182 million a year ago. The increase reflected the previously mentioned gain on the sale of the company’s investment in Concur Technologies. Year-ago results included earnings from the company’s business travel operations, which were deconsolidated as a result of the joint venture transaction referred to above. The company’s proportional share of the joint venture’s net income is now reported in Other Revenues.

Total revenues net of interest expense increased 28 percent (32 percent FX adjusted2) to $1.6 billion from $1.2 billion. The increase primarily reflected the previously mentioned Concur gain, partially offset by business travel revenues that were in the year-ago quarter.

Provisions for losses totaled $50 million, up from $36 million a year ago.

Total expenses decreased 36 percent (34 percent FX adjusted2) to $586 million from $915 million a year ago. Excluding business travel expenses, fourth quarter adjusted expenses increased 6 percent compared to the year-ago period.4

Global Network & Merchant Services reported fourth-quarter net income of $417 million, up 5 percent from $399 million a year ago.

Total revenues net of interest expense increased 2 percent (6 percent FX adjusted2) to $1.5 billion. The increase primarily reflected higher merchant-related revenues driven by an increase in global Card Member spending.

Provisions for losses totaled $35 million, up from $14 million a year ago, reflecting a reserve build in the current period.

Total expenses decreased 4 percent to $772 million (1 percent FX adjusted2) from $801 million a year ago. The decrease reflected merchant litigation settlement expenses a year ago, partially offset by higher marketing and promotion costs in the current quarter.

Corporate and Other reported fourth-quarter net loss of $262 million, compared with net loss of $240 million in the year-ago period. The current quarter included a portion of the previously mentioned restructuring charge.

About American Express

American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/companies/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.

Key links to products and services: charge and credit cards, business credit cards, travel services, gift cards, prepaid cards, merchant services, corporate card and business travel.

The 2014 Fourth Quarter/Full Year Earnings Supplement will be available today on the American Express website at http://ir.americanexpress.com. An investor conference call will be held at 5:00 p.m. (ET) today to discuss fourth-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public at the same website. A replay of the conference call will be available later today at the same website address.

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the company’s expected business and financial performance and are subject to risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements due to a variety of factors, including those contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2013, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 and the company’s other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update or revise any forward-looking statements.

1Represents net income less earnings allocated to participating share awards of $11 million for both the three months ended December 31, 2014 and 2013, and $46 million and $47 million for the twelve months ended December 31, 2014 and 2013, respectively.

2 As reported in this release, FX adjusted information, which constitute non-GAAP financial measures, assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the three months ended December 31, 2014 apply to the period(s) against which such results are being compared). The company believes the presentation of information on an FX adjusted basis is helpful to investors by making it easier to compare the company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

3 Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, communications and other, net.

4 The adjusted expense growth rate for Global Commercial Services is a non-GAAP measure. Management believes this metric is useful in evaluating the ongoing operating performance of the company. See Appendix V in the selected statistical tables for a reconciliation to total expenses for Global Commercial Services on a GAAP basis.

American Express Company

(Preliminary)

Consolidated Statements of Income

(Millions, except percentages and per share amounts)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Revenues
Non-interest revenues
Discount revenue $ 4,987 $ 4,915 $ 4,945 $ 4,646 $ 4,869 2 $ 19,493 $ 18,695 4
Net card fees 671 680 687 674 673 (0 ) 2,712 2,631 3
Travel commissions and fees 91 104 500 423 491 (81 ) 1,118 1,913 (42 )
Other commissions and fees 624 642 624 618 626 (0 ) 2,508 2,414 4
Other 1,310 593 585 501 569 # 2,989 2,274 31
Total non-interest revenues 7,683 6,934 7,341 6,862 7,228 6 28,820 27,927 3
Interest income
Interest on loans 1,769 1,753 1,696 1,711 1,715 3 6,929 6,718 3
Interest and dividends on investment securities 43 45 45 46 48 (10 ) 179 201 (11 )
Deposits with banks and other 17 17 18 19 19 (11 ) 71 86 (17 )
Total interest income 1,829 1,815 1,759 1,776 1,782 3 7,179 7,005 2
Interest expense
Deposits 97 91 91 94 110 (12 ) 373 442 (16 )
Long-term debt and other 308 329 352 345 353 (13 ) 1,334 1,516 (12 )
Total interest expense 405 420 443 439 463 (13 ) 1,707 1,958 (13 )
Net interest income 1,424 1,395 1,316 1,337 1,319 8 5,472 5,047 8
Total revenues net of interest expense 9,107 8,329 8,657 8,199 8,547 7 34,292 32,974 4
Provisions for losses
Charge card 198 196 183 215 174 14 792 648 22
Card Member loans 341 265 282 250 290 18 1,138 1,115 2
Other 43 27 24 20 15 # 114 69 65
Total provisions for losses 582 488 489 485 479 22 2,044 1,832 12
Total revenues net of interest expense after provisions for losses 8,525 7,841 8,168 7,714 8,068 6 32,248 31,142 4
Expenses
Marketing and promotion 913 809 985 613 809 13 3,320 3,043 9
Card Member rewards 1,881 1,695 1,773 1,582 1,717 10 6,931 6,457 7
Card Member services and other 203 205 192 222 188 8 822 767 7
Salaries and employee benefits 1,607 1,290 1,658 1,540 1,489 8 6,095 6,191 (2 )
Professional services 768 731 817 692 830 (7 ) 3,008 3,102 (3 )
Occupancy and equipment 446 432 467 462 510 (13 ) 1,807 1,904 (5 )
Communications 98 91 101 93 97 1 383 379 1
Other, net 384 342 (137 ) 302 448 (14 ) 891 1,411 (37 )
Total 6,300 5,595 5,856 5,506 6,088 3 23,257 23,254 0
Pretax income 2,225 2,246 2,312 2,208 1,980 12 8,991 7,888 14
Income tax provision 778 769 783 776 672 16 3,106 2,529 23
Net income $ 1,447 $ 1,477 $ 1,529 $ 1,432 $ 1,308 11 $ 5,885 $ 5,359 10
Net income attributable to common shareholders (A) $ 1,436 $ 1,466 $ 1,517 $ 1,420 $ 1,297 11 $ 5,839 $ 5,312 10
Effective tax rate 35.0 % 34.2 % 33.9 % 35.1 % 33.9 % 34.5 % 32.1 %

Earnings Per Common Share

BASIC
Net income attributable to common shareholders $ 1.40 $ 1.41 $ 1.44 $ 1.34 $ 1.22 15 $ 5.58 $ 4.91 14
Average common shares outstanding 1,028 1,041 1,052 1,060 1,067 (4 ) 1,045 1,082 (3 )
DILUTED
Net income attributable to common shareholders $ 1.39 $ 1.40 $ 1.43 $ 1.33 $ 1.21 15 $ 5.56 $ 4.88 14
Average common shares outstanding 1,033 1,047 1,058 1,067 1,073 (4 ) 1,051 1,089 (4 )
Cash dividends declared per common share $ 0.26 $ 0.26 $ 0.26 $ 0.23 $ 0.23 13 $ 1.01 $ 0.89 13
# – Denotes a variance of more than 100 percent.
American Express Company

Condensed Consolidated Balance Sheets

(Billions, except percentages, per share amounts and where indicated)
Quarters Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013
Assets
Cash & cash equivalents $ 22 $ 21 $ 18 $ 21 $ 19 16
Accounts receivable 47 47 49 47 47 -
Investment securities 4 5 5 5 5 (20 )
Loans 70 66 66 63 67 4
Other assets 16 15 14 15 15 7
Total assets $ 159 $ 154 $ 152 $ 151 $ 153 4
Liabilities and Shareholders’ Equity
Customer deposits $ 44 $ 43 $ 42 $ 43 $ 42 5
Short-term borrowings 3 3 3 3 5 (40 )
Long-term debt 58 56 55 54 55 5
Other liabilities 33 32 32 31 32 3
Total liabilities 138 134 132 131 134 3
Shareholders’ Equity 21 20 20 20 19 11
Total liabilities and shareholders’ equity $ 159 $ 154 $ 152 $ 151 $ 153 4

Selected Statistical Information

Return on average equity (B) 29.1 % 28.8 % 28.8 % 28.3 % 27.8 %
Return on average common equity (B) 29.0 % 28.6 % 28.5 % 28.1 % 27.6 %
Return on average tangible common equity (B) 35.9 % 35.6 % 35.8 % 35.4 % 34.9 %
Common shares outstanding (millions) 1,023 1,035 1,046 1,059 1,064 (4 )
Book value per common share (dollars) $ 20.21 $ 19.54 $ 19.32 $ 18.87 $ 18.32 10
Shareholders’ equity $ 20.7 $ 20.2 $ 20.2 $ 20.0 $ 19.5 6
# – Denotes a variance of more than 100 percent.
American Express Company

Financial Summary

(Millions)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013

Total revenues net of interest expense

U.S. Card Services $ 4,620 $ 4,527 $ 4,477 $ 4,290 $ 4,388 5 $ 17,914 $ 16,995 5
International Card Services 1,355 1,394 1,391 1,352 1,429 (5 ) 5,492 5,401 2
Global Commercial Services 1,585 900 1,269 1,194 1,238 28 4,948 4,853 2
Global Network & Merchant Services 1,477 1,450 1,455 1,365 1,447 2 5,747 5,513 4
9,037 8,271 8,592 8,201 8,502 6 34,101 32,762 4
Corporate & Other 70 58 65 (2 ) 45 56 191 212 (10 )
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 9,107 $ 8,329 $ 8,657 $ 8,199 $ 8,547 7 $ 34,292 $ 32,974 4

Pretax income (loss)

U.S. Card Services $ 1,083 $ 1,411 $ 1,200 $ 1,406 $ 1,292 (16 ) $ 5,100 $ 4,994 2
International Card Services 1 176 69 203 108 (99 ) 449 643 (30 )
Global Commercial Services 949 309 865 285 287 # 2,408 1,244 94
Global Network & Merchant Services 670 670 578 702 632 6 2,620 2,469 6
2,703 2,566 2,712 2,596 2,319 17 10,577 9,350 13
Corporate & Other (478 ) (320 ) (400 ) (388 ) (339 ) 41 (1,586 ) (1,462 ) 8
PRETAX INCOME $ 2,225 $ 2,246 $ 2,312 $ 2,208 $ 1,980 12 $ 8,991 $ 7,888 14

Net income (loss)

U.S. Card Services $ 665 $ 889 $ 770 $ 876 $ 864 (23 ) $ 3,200 $ 3,193 0
International Card Services 33 142 77 159 103 (68 ) 411 631 (35 )
Global Commercial Services 594 204 561 184 182 # 1,543 860 79
Global Network & Merchant Services 417 427 373 443 399 5 1,660 1,575 5
1,709 1,662 1,781 1,662 1,548 10 6,814 6,259 9
Corporate & Other (262 ) (185 ) (252 ) (230 ) (240 ) 9 (929 ) (900 ) 3
NET INCOME $ 1,447 $ 1,477 $ 1,529 $ 1,432 $ 1,308 11 $ 5,885 $ 5,359 10
# – Denotes a variance of more than 100 percent.
American Express Company (Preliminary)

Selected Statistical Information (continued)

(Billions, except percentages and where indicated)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Card billed business (C):
United States $ 182.5 $ 173.0 $ 173.4 $ 159.2 $ 169.1 8 $ 688.1 $ 637.0 8
Outside the United States 86.0 85.1 84.7 78.9 84.9 1 334.7 315.4 6
Total $ 268.5 $ 258.1 $ 258.1 $ 238.1 $ 254.0 6 $ 1,022.8 $ 952.4 7
Total cards-in-force (D) (millions):
United States 54.9 54.5 54.1 53.5 53.1 3 54.9 53.1 3
Outside the United States 57.3 56.6 55.8 54.7 54.1 6 57.3 54.1 6
Total 112.2 111.1 109.9 108.2 107.2 5 112.2 107.2 5
Basic cards-in-force (D) (millions):
United States 42.6 42.2 42.0 41.5 41.1 4 42.6 41.1 4
Outside the United States 47.0 46.3 45.6 44.6 44.0 7 47 44 7
Total 89.6 88.5 87.6 86.1 85.1 5 89.6 85.1 5
Average discount rate (E) 2.45 % 2.49 % 2.48 % 2.52 % 2.48 % 2.48 % 2.51 %
Average basic Card Member spending (dollars) (F) $ 4,377 $ 4,223 $ 4,288 $ 3,991 $ 4,292 2 $ 16,884 $ 16,334 3
Average fee per card (dollars) (F) $ 39 $ 40 $ 41 $ 40 $ 41 (5 ) $ 40 $ 40 -
Average fee per card adjusted (dollars) (F) $ 44 $ 45 $ 45 $ 45 $ 44 - $ 45 $ 44 2
Worldwide Card Member receivables:
Total receivables $ 44.9 $ 45.1 $ 45.3 $ 44.7 $ 44.2 2 $ 44.9 $ 44.2 2
Loss reserves (millions):
Beginning balance $ 432 $ 413 $ 414 $ 386 $ 396 9 $ 386 $ 428 (10 )
Provisions (G) 198 196 183 215 174 14 792 648 22
Net write-offs (H) (156 ) (168 ) (182 ) (177 ) (162 ) (4 ) (683 ) (669 ) 2
Other (I) (9 ) (9 ) (2 ) (10 ) (22 ) (59 ) (30 ) (21 ) 43
Ending balance $ 465 $ 432 $ 413 $ 414 $ 386 20 $ 465 $ 386 20
% of receivables 1.0 % 1.0 % 0.9 % 0.9 % 0.9 % 1.0 % 0.9 %
Net write-off rate (principal only) – USCS/ICS (J) 1.5 % 1.6 % 1.8 % 1.9 % (L) 1.7 % (L)
Net write-off rate (principal and fees) – USCS/ICS (J) 1.7 % 1.8 % 2.0 % 2.1 % (L) 1.9 % (L)
30 days past due as a % of total – USCS/ICS 1.6 % 1.6 % 1.5 % 1.7 % (L) 1.6 % (L)
Net loss ratio (as a % of charge volume) – GCS 0.08 % 0.09 % 0.09 % 0.09 % 0.08 % 0.09 % 0.08 %
90 days past billing as a % of total – GCS 0.8 % 0.8 % 0.7 % 0.7 % 0.9 % 0.8 % 0.9 %
Worldwide Card Member loans:
Total loans $ 70.4 $ 66.1 $ 66.3 $ 64.0 $ 67.2 5 $ 70.4 $ 67.2 5
Loss reserves (millions):
Beginning balance $ 1,146 $ 1,170 $ 1,191 $ 1,261 $ 1,281 (11 ) $ 1,261 $ 1,471 (14 )
Provisions (G) 341 265 282 250 290 18 1,138 1,115 2
Net write-offs – principal (H) (237 ) (245 ) (267 ) (274 ) (253 ) (6 ) (1,023 ) (1,141 ) (10 )
Net write-offs – interest and fees (H) (40 ) (40 ) (42 ) (42 ) (37 ) 8 (164 ) (150 ) 9
Other (I) (9 ) (4 ) 6 (4 ) (20 ) (55 ) (11 ) (34 ) (68 )
Ending balance $ 1,201 $ 1,146 $ 1,170 $ 1,191 $ 1,261 (5 ) $ 1,201 $ 1,261 (5 )
Ending reserves – principal $ 1,149 $ 1,093 $ 1,114 $ 1,135 $ 1,212 (5 ) $ 1,149 $ 1,212 (5 )
Ending reserves – interest and fees $ 52 $ 53 $ 56 $ 56 $ 49 6 $ 52 $ 49 6
% of loans 1.7 % 1.7 % 1.8 % 1.9 % 1.9 % 1.7 % 1.9 %
% of past due 167 % 165 % 171 % 159 % 169 % 167 % 169 %
Average loans $ 67.7 $ 66.4 $ 65.2 $ 64.5 $ 64.4 5 $ 66.0 $ 63.3 4
Net write-off rate (principal only) (J) 1.4 % 1.5 % 1.6 % 1.7 % 1.6 % 1.5 % 1.8 %
Net write-off rate (principal, interest and fees) (J) 1.6 % 1.7 % 1.9 % 2.0 % 1.8 % 1.8 % 2.0 %
30 days past due loans as a % of total 1.0 % 1.1 % 1.0 % 1.2 % 1.1 % 1.0 % 1.1 %
Net interest income divided by average loans (K) 8.4 % 8.5 % 8.1 % 8.4 % 8.1 % 8.3 % 8.0 %
Net interest yield on Card Member loans (K) 9.3 % 9.3 % 9.2 % 9.5 % 9.3 % 9.3 % 9.3 %
# – Denotes a variance of more than 100 percent.
U.S. Card Services (Preliminary)

Selected Income Statement Data

(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Revenues
Discount revenue, net card fees and other $ 3,279 $ 3,214 $ 3,222 $ 3,017 $ 3,132 5 $ 12,732 $ 12,123 5
Interest income 1,490 1,465 1,408 1,423 1,417 5 5,786 5,565 4
Interest expense 149 152 153 150 161 (7 ) 604 693 (13 )
Net interest income 1,341 1,313 1,255 1,273 1,256 7 5,182 4,872 6
Total revenues net of interest expense 4,620 4,527 4,477 4,290 4,388 5 17,914 16,995 5
Provisions for losses 399 316 339 342 319 25 1,396 1,250 12
Total revenues net of interest expense after provisions for losses 4,221 4,211 4,138 3,948 4,069 4 16,518 15,745 5
Expenses
Marketing, promotion, rewards,
Card Member services and other 2,064 1,790 1,865 1,582 1,789 15 7,301 6,825 7
Salaries and employee benefits
and other operating expenses 1,074 1,010 1,073 960 988 9 4,117 3,926 5
Total 3,138 2,800 2,938 2,542 2,777 13 11,418 10,751 6
Pretax segment income 1,083 1,411 1,200 1,406 1,292 (16 ) 5,100 4,994 2
Income tax provision 418 522 430 530 428 (2 ) 1,900 1,801 5
Segment income $ 665 $ 889 $ 770 $ 876 $ 864 (23 ) $ 3,200 $ 3,193 0
Effective tax rate 38.6 % 37.0 % 35.8 % 37.7 % 33.1 % 37.3 % 36.1 %

Selected Statistical Information

(Billions, except percentages and where indicated)
Card billed business $ 145.0 $ 136.2 $ 136.5 $ 124.3 $ 134.1 8 $ 542.0 $ 501.0 8
Total cards-in-force (millions) 45.6 45.2 44.7 44.1 43.7 4 45.6 43.7 4
Basic cards-in-force (millions) 34.0 33.7 33.3 32.8 32.5 5 34.0 32.5 5
Average basic Card Member spending (dollars) $ 4,281 $ 4,069 $ 4,133 $ 3,805 $ 4,138 3 $ 16,294 $ 15,689 4
U.S. Consumer Travel:
Travel sales (millions) $ 817 $ 956 $ 1,027 $ 974 $ 865 (6 ) $ 3,774 $ 3,967 (5 )
Travel commissions and fees/sales 7.5 % 7.4 % 7.4 % 6.5 % 7.4 % 7.2 % 7.1 %
Total segment assets $ 113.2 $ 103.3 $ 101.1 $ 98.9 $ 103.5 9 $ 113.2 $ 103.5 9
Segment capital (M) $ 10.4 $ 9.9 $ 9.9 $ 9.7 $ 9.3 13 $ 10.4 $ 9.3 13
Return on average segment capital (N) 32.5 % 35.5 % 35.3 % 35.6 % 35.6 % 32.5 % 35.6 %
Return on average tangible segment capital (N) 33.6 % 36.6 % 36.5 % 36.9 % 37.0 % 33.6 % 37.0 %
Card Member receivables:
Total receivables $ 22.5 $ 21.3 $ 21.2 $ 20.7 $ 21.8 3 $ 22.5 $ 21.8 3
30 days past due as a % of total 1.7 % 1.6 % 1.5 % 1.8 % 1.6 % 1.7 % 1.6 %
Average receivables $ 21.8 $ 21.4 $ 21.3 $ 20.6 $ 21.2 3 $ 21.3 $ 20.6 3
Net write-off rate (principal only) (J) 1.4 % 1.5 % 1.8 % 1.8 % 1.5 % 1.6 % 1.7 %
Net write-off rate (principal and fees) (J) 1.6 % 1.7 % 2.0 % 2.0 % 1.7 % 1.8 % 1.9 %
Card Member loans:
Total loans $ 62.6 $ 58.0 $ 57.7 $ 55.8 $ 58.4 7 $ 62.6 $ 58.4 7
30 days past due loans as a % of total 1.0 % 1.0 % 0.9 % 1.1 % 1.1 % 1.0 % 1.1 %
Average loans $ 59.7 $ 58.0 $ 56.8 $ 56.1 $ 55.8 7 $ 57.8 $ 54.7 6
Net write-off rate (principal only) (J) 1.3 % 1.4 % 1.6 % 1.7 % 1.5 % 1.5 % 1.8 %
Net write-off rate (principal, interest and fees) (J) 1.5 % 1.6 % 1.8 % 1.9 % 1.7 % 1.7 % 2.0 %
Net interest income divided by average loans (O) 9.0 % 9.1 % 8.9 % 9.2 % 8.9 % 9.0 % 8.9 %
Net interest yield on Card Member loans (O) 9.1 % 9.2 % 9.1 % 9.4 % 9.2 % 9.2 % 9.2 %
# – Denotes a variance of more than 100 percent.
International Card Services (Preliminary)

Selected Income Statement Data

(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Revenues
Discount revenue, net card fees and other $ 1,166 $ 1,206 $ 1,208 $ 1,157 $ 1,229 (5 ) $ 4,737 $ 4,644 2
Interest income 260 273 275 277 288 (10 ) 1,085 1,118 (3 )
Interest expense 71 85 92 82 88 (19 ) 330 361 (9 )
Net interest income 189 188 183 195 200 (6 ) 755 757 (0 )
Total revenues net of interest expense 1,355 1,394 1,391 1,352 1,429 (5 ) 5,492 5,401 2
Provisions for losses 95 98 90 87 110 (14 ) 370 388 (5 )
Total revenues net of interest expense after provisions for losses 1,260 1,296 1,301 1,265 1,319 (4 ) 5,122 5,013 2
Expenses
Marketing, promotion, rewards,
Card Member services and other 555 532 577 496 585 (5 ) 2,160 2,013 7
Salaries and employee benefits
and other operating expenses 704 588 655 566 626 12 2,513 2,357 7
Total 1,259 1,120 1,232 1,062 1,211 4 4,673 4,370 7
Pretax segment income 1 176 69 203 108 (99 ) 449 643 (30 )
Income tax provision/(benefit) (32 ) 34 (8 ) 44 5 # 38 12 #
Segment income $ 33 $ 142 $ 77 $ 159 $ 103 (68 ) $ 411 $ 631 (35 )
Effective tax rate # 19.3 % -11.6 % 21.7 % 4.6 % 8.5 % 1.9 %

Selected Statistical Information

(Billions, except percentages and where indicated)
Card billed business $ 34.0 $ 33.9 $ 34.1 $ 31.9 $ 35.5 (4 ) $ 133.8 $ 131.7 2
Total cards-in-force (millions) 15.7 15.8 15.7 15.7 15.7 0 15.7 15.7 0
Basic cards-in-force (millions) 11.0 10.9 10.9 10.9 10.7 3 11.0 10.7 3
Average basic Card Member spending (dollars) $ 3,109 $ 3,100 $ 3,137 $ 2,942 $ 3,336 (7 ) $ 12,297 $ 12,429 (1 )
International Consumer Travel:
Travel sales (millions) $ 353 $ 362 $ 354 $ 353 $ 367 (4 ) $ 1,422 $ 1,420 0
Travel commissions and fees/sales 7.4 % 6.9 % 6.8 % 6.2 % 7.1 % 6.8 % 6.9 %
Total segment assets $ 30.7 $ 31.1 $ 31.6 $ 30.4 $ 31.1 (1 ) $ 30.7 $ 31.1 (1 )
Segment capital (M) $ 3.0 $ 3.0 $ 3.0 $ 3.0 $ 3.1 (5 ) $ 3.0 $ 3.1 (5 )
Return on average segment capital (N) 13.6 % 15.8 % 15.7 % 20.0 % 20.9 % 13.6 % 20.9 %
Return on average tangible segment capital (N) 24.6 % 28.9 % 28.8 % 36.8 % 38.8 % 24.6 % 38.8 %
Card Member receivables:
Total receivables $ 7.7 $ 7.3 $ 7.5 $ 7.2 $ 7.8 (1 ) $ 7.7 $ 7.8 (1 )
30 days past billing as a % of total 1.3 % 1.4 % 1.3 % 1.4 % (L) 1.3 % (L)
Net write-off rate (principal only) (J) 1.8 % 1.9 % 1.9 % 2.2 % (L) 1.9 % (L)
Net write-off rate (principal and fees) (J) 1.9 % 2.1 % 2.0 % 2.3 % (L) 2.1 % (L)
90 days past billing as a % of total (L) (L) (L) (L) 1.1 % (L) 1.1 %
Net loss ratio (as a % of charge volume) (L) (L) (L) (L) 0.19 % (L) 0.20 %
Card Member loans:
Total loans $ 7.7 $ 8.0 $ 8.6 $ 8.2 $ 8.8 (13 ) $ 7.7 $ 8.8 (13 )
30 days past due loans as a % of total 1.6 % 1.6 % 1.6 % 1.7 % 1.4 % 1.6 % 1.4 %
Average loans $ 7.9 $ 8.3 $ 8.3 $ 8.3 $ 8.5 (7 ) $ 8.2 $ 8.5 (4 )
Net write-off rate (principal only) (J) 1.9 % 1.9 % 2.0 % 2.0 % 1.8 % 2.0 % 1.9 %
Net write-off rate (principal, interest and fees) (J) 2.4 % 2.4 % 2.4 % 2.4 % 2.2 % 2.4 % 2.3 %
Net interest income divided by average loans (O) 9.6 % 9.1 % 8.8 % 9.5 % 9.3 % 9.2 % 8.9 %
Net interest yield on Card Member loans (O) 10.5 % 9.9 % 9.6 % 10.1 % 10.0 % 10.0 % 9.9 %
# – Denotes a variance of more than 100 percent.
Global Commercial Services (Preliminary)

Selected Income Statement Data

(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Revenues
Discount revenue, net card fees and other $ 1,635 $ 957 $ 1,332 $ 1,249 $ 1,298 26 $ 5,173 $ 5,085 2
Interest income 4 4 3 4 4 - 15 13 15
Interest expense 54 61 66 59 64 (16 ) 240 245 (2 )
Net interest expense (50 ) (57 ) (63 ) (55 ) (60 ) (17 ) (225 ) (232 ) (3 )
Total revenues net of interest expense 1,585 900 1,269 1,194 1,238 28 4,948 4,853 2
Provisions for losses 50 49 43 38 36 39 180 129 40
Total revenues net of interest expense after provisions for losses 1,535 851 1,226 1,156 1,202 28 4,768 4,724 1
Expenses
Marketing, promotion, rewards,
Card Member services and other 178 161 177 166 162 10 682 604 13
Salaries and employee benefits
and other operating expenses 408 381 184 705 753 (46 ) 1,678 2,876 (42 )
Total 586 542 361 871 915 (36 ) 2,360 3,480 (32 )
Pretax segment income 949 309 865 285 287 # 2,408 1,244 94
Income tax provision 355 105 304 101 105 # 865 384 #
Segment income $ 594 $ 204 $ 561 $ 184 $ 182 # $ 1,543 $ 860 79
Effective tax rate 37.4 % 34.0 % 35.1 % 35.4 % 36.6 % 35.9 % 30.9 %

Selected Statistical Information

(Billions, except percentages and where indicated)
Card billed business $ 47.1 $ 46.5 $ 47.6 $ 45.5 $ 45.0 5 $ 186.7 $ 175.4 6
Total cards-in-force (millions) 6.9 6.9 7.0 7.1 7.1 (3 ) 6.9 7.1 (3 )
Basic cards-in-force (millions) 6.9 6.9 7.0 7.1 7.1 (3 ) 6.9 7.1 (3 )
Average basic Card Member spending (dollars) $ 6,817 $ 6,691 $ 6,781 $ 6,429 $ 6,361 7 $ 26,706 $ 24,924 7
Global Corporate Travel:
Travel sales (millions) $ 28 $ 80 $ 4,882 $ 4,698 $ 4,793 (99 ) $ 9,688 $ 18,869 (49 )
Travel commissions and fees/sales 7.1 % 10.0 % 8.2 % 7.2 % 8.3 % 7.7 % 8.1 %
Total segment assets $ 18.5 $ 20.6 $ 20.8 $ 21.6 $ 19.2 (4 ) $ 18.5 $ 19.2 (4 )
Segment capital (M) $ 3.8 $ 3.8 $ 3.8 $ 3.8 $ 3.7 4 $ 3.8 $ 3.7 4
Return on average segment capital (N) 40.9 % 30.3 % 32.0 % 23.2 % 23.6 % 40.9 % 23.6 %
Return on average tangible segment capital (N) 74.4 % 56.0 % 60.3 % 44.4 % 45.8 % 74.4 % 45.8 %
Card Member receivables:
Total receivables $ 14.6 $ 16.4 $ 16.5 $ 16.6 $ 14.4 1 $ 14.6 $ 14.4 1
90 days past billing as a % of total 0.8 % 0.8 % 0.7 % 0.7 % 0.9 % 0.8 % 0.9 %
Net loss ratio (as a % of charge volume) 0.08 % 0.09 % 0.09 % 0.09 % 0.08 % 0.09 % 0.08 %
# – Denotes a variance of more than 100 percent.
Global Network & Merchant Services (Preliminary)

Selected Income Statement Data

(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, 2014 vs.
2014 2014 2014 2014 2013 Dec 31, 2013 2014 2013 Dec 31, 2013
Revenues
Discount revenue, fees and other $ 1,399 $ 1,368 $ 1,366 $ 1,293 $ 1,373 2 $ 5,426 $ 5,229 4
Interest income 17 14 11 10 9 89 52 32 63
Interest expense (61 ) (68 ) (78 ) (62 ) (65 ) (6 ) (269 ) (252 ) 7
Net interest income 78 82 89 72 74 5 321 284 13
Total revenues net of interest expense 1,477 1,450 1,455 1,365 1,447 2 5,747 5,513 4
Provisions for losses 35 24 18 16 14 # 93 67 39
Total revenues net of interest expense after provisions for losses 1,442 1,426 1,437 1,349 1,433 1 5,654 5,446 4
Expenses
Marketing, promotion, rewards, Card Member services and other 185 201 277 156 158 17 819 704 16
Salaries and employee benefits
and other operating expenses 587 555 582 491 643 (9 ) 2,215 2,273 (3 )
Total 772 756 859 647 801 (4 ) 3,034 2,977 2
Pretax segment income 670 670 578 702 632 6 2,620 2,469 6
Income tax provision 253 243 205 259 233 9 960 894 7
Segment income $ 417 $ 427 $ 373 $ 443 $ 399 5 $ 1,660 $ 1,575 5
Effective tax rate 37.8 % 36.3 % 35.5 % 36.9 % 36.9 % 36.6 % 36.2 %

Selected Statistical Information

(Billions, except percentages and where indicated)
Global Card billed business (P) $ 268.5 $ 258.1 $ 258.1 $ 238.1 $ 254.0 6 $ 1,022.8 $ 952.4 7
Global Network & Merchant Services:
Total segment assets $ 18.1 $ 18.2 $ 18.7 $ 18.3 $ 17.1 6 $ 18.1 $ 17.1 6
Segment capital (M) $ 2.0 $ 2.0 $ 2.0 $ 1.9 $ 2.0 1 $ 2.0 $ 2.0 1
Return on average segment capital (N) 84.0 % 82.6 % 79.4 % 81.2 % 76.8 % 84.0 % 76.8 %
Return on average tangible segment capital (N) 92.9 % 91.3 % 87.8 % 89.7 % 84.9 % 92.9 % 84.9 %
Global Network Services:
Card billed business $ 42.5 $ 41.6 $ 40.1 $ 36.6 $ 39.3 8 $ 160.7 $ 144.1 12
Total cards-in-force (millions) 44.0 43.2 42.5 41.3 40.7 8 44.0 40.7 8
# – Denotes a variance of more than 100 percent.
American Express Company (Preliminary)

Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE), and Return on Average Tangible Common Equity (ROTCE)

Appendix I

(Millions, except percentages)
For the Twelve Months Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2014 2014 2014 2014 2013

ROE

Net income $ 5,885 $ 5,746 $ 5,635 $ 5,511 $ 5,359
Average shareholders’ equity $ 20,254 $ 19,948 $ 19,591 $ 19,442 $ 19,254
Return on average equity (Q) 29.1 % 28.8 % 28.8 % 28.3 % 27.8 %

Reconciliation of ROCE and ROTCE

Net income $ 5,885 $ 5,746 $ 5,635 $ 5,511 $ 5,359
Preferred shares dividends and related accretion - - - - -
Earnings allocated to participating share awards and other 46 46 47 48 47
Net income attributable to common shareholders $ 5,839 $ 5,700 $ 5,588 $ 5,463 $ 5,312
Average shareholders’ equity $ 20,254 $ 19,948 $ 19,591 $ 19,442 $ 19,254
Average preferred shares 114 - - - -
Average common shareholders’ equity $ 20,140 $ 19,948 $ 19,591 $ 19,442 $ 19,254
Average goodwill and other intangibles 3,888 3,941 3,994 4,012 4,055
Average tangible common shareholders’ equity $ 16,252 $ 16,007 $ 15,597 $ 15,430 $ 15,199
Return on average common equity (Q) 29.0 % 28.6 % 28.5 % 28.1 % 27.6 %
Return on average tangible common equity (R) 35.9 % 35.6 % 35.8 % 35.4 % 34.9 %
American Express Company (Preliminary)

Components of Return on Average Segment Capital (ROSC) and Return on Average Tangible Segment Capital (ROTSC)

Appendix II

(Millions, except percentages)
For the Twelve Months Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2014 2014 2014 2014 2013

U.S. Card Services

Segment income $ 3,200 $ 3,399 $ 3,292 $ 3,265 $ 3,193
Average segment capital $ 9,843 $ 9,580 $ 9,337 $ 9,180 $ 8,974
Average goodwill and other intangibles 319 299 311 323 334
Average tangible segment capital $ 9,524 $ 9,281 $ 9,026 $ 8,857 $ 8,640
Return on average segment capital (S) 32.5 % 35.5 % 35.3 % 35.6 % 35.6 %
Return on average tangible segment capital (S) 33.6 % 36.6 % 36.5 % 36.9 % 37.0 %

International Card Services

Segment income $ 411 $ 481 $ 481 $ 612 $ 631
Average segment capital $ 3,020 $ 3,043 $ 3,063 $ 3,053 $ 3,024
Average goodwill and other intangibles 1,350 1,376 1,394 1,389 1,396
Average tangible segment capital $ 1,670 $ 1,667 $ 1,669 $ 1,664 $ 1,628
Return on average segment capital (S) 13.6 % 15.8 % 15.7 % 20.0 % 20.9 %
Return on average tangible segment capital (S) 24.6 % 28.9 % 28.8 % 36.8 % 38.8 %

Global Commercial Services

Segment income $ 1,543 $ 1,131 $ 1,188 $ 853 $ 860
Average segment capital $ 3,771 $ 3,736 $ 3,707 $ 3,679 $ 3,647
Average goodwill and other intangibles 1,696 1,715 1,736 1,759 1,768
Average tangible segment capital $ 2,075 $ 2,021 $ 1,971 $ 1,920 $ 1,879
Return on average segment capital (S) 40.9 % 30.3 % 32.0 % 23.2 % 23.6 %
Return on average tangible segment capital (S) 74.4 % 56.0 % 60.3 % 44.4 % 45.8 %

Global Network & Merchant Services

Segment income $ 1,660 $ 1,642 $ 1,606 $ 1,645 $ 1,575
Average segment capital $ 1,976 $ 1,989 $ 2,022 $ 2,026 $ 2,050
Average goodwill and other intangibles 189 190 192 193 195
Average tangible segment capital $ 1,787 $ 1,799 $ 1,830 $ 1,833 $ 1,855
Return on average segment capital (S) 84.0 % 82.6 % 79.4 % 81.2 % 76.8 %
Return on average tangible segment capital (S) 92.9 % 91.3 % 87.8 % 89.7 % 84.9 %
American Express Company (Preliminary)

Net Interest Yield on Card Member Loans

Appendix III

(Millions, except percentages and where indicated)
Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2014 2014 2014 2014 2013
Net interest income $ 1,424 $ 1,395 $ 1,316 $ 1,337 $ 1,319
Exclude:
Interest expense not attributable to the Company’s
Card Member loan portfolio $ 250 $ 247 $ 259 $ 263 $ 279
Interest income not attributable to the Company’s
Card Member loan portfolio $ (92 ) $ (90 ) $ (89 ) $ (88 ) $ (91 )
Adjusted net interest income (T) $ 1,582 $ 1,552 $ 1,486 $ 1,512 $ 1,507
Average loans (billions) $ 67.7 $ 66.4 $ 65.2 $ 64.5 $ 64.4
Exclude:
Unamortized deferred card fees, net of direct
acquisition costs of Card Member loans, and other (billions) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 )
Adjusted average loans (billions) (U) $ 67.5 $ 66.2 $ 65.0 $ 64.3 $ 64.2
Net interest income divided by average loans (V) 8.4 % 8.5 % 8.1 % 8.4 % 8.1 %
Net interest yield on Card Member loans (W) 9.3 % 9.3 % 9.2 % 9.5 % 9.3 %
U.S. Card Services and International Card Services (Preliminary)

Net Interest Yield on Card Member Loans

Appendix IV

(Millions, except percentages and where indicated)
Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2014 2014 2014 2014 2013

USCS:

Net interest income $ 1,341 $ 1,313 $ 1,255 $ 1,273 $ 1,256
Exclude:
Interest expense not attributable to the Company’s
Card Member loan portfolio $ 39 $ 39 $ 40 $ 39 $ 43
Interest income not attributable to the Company’s
Card Member loan portfolio $ (3 ) $ (3 ) $ (3 ) $ (3 ) $ (2 )
Adjusted net interest income (T) $ 1,377 $ 1,349 $ 1,292 $ 1,309 $ 1,297
Average loans (billions) $ 59.7 $ 58.0 $ 56.8 $ 56.1 $ 55.8
Exclude:
Unamortized deferred card fees, net of direct
acquisition costs of Card Member loans (billions) $ - $ - $ - $ 0.1 $ -
Adjusted average loans (billions) (U) $ 59.7 $ 58.0 $ 56.8 $ 56.2 $ 55.8
Net interest income divided by average loans (V) 9.0 % 9.1 % 8.9 % 9.2 % 8.9 %
Net interest yield on Card Member loans (W) 9.1 % 9.2 % 9.1 % 9.4 % 9.2 %

ICS:

Net interest income $ 189 $ 188 $ 183 $ 195 $ 200
Exclude:
Interest expense not attributable to the Company’s
Card Member loan portfolio $ 26 $ 24 $ 21 $ 18 $ 21
Interest income not attributable to the Company’s
Card Member loan portfolio $ (9 ) $ (10 ) $ (10 ) $ (10 ) $ (11 )
Adjusted net interest income (T) $ 206 $ 202 $ 194 $ 203 $ 210
Average loans (billions) $ 7.9 $ 8.3 $ 8.3 $ 8.3 $ 8.5
Exclude:
Unamortized deferred card fees, net of direct
acquisition costs of Card Member loans, and other (billions) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 )
Adjusted average loans (billions) (U) $ 7.7 $ 8.1 $ 8.1 $ 8.1 $ 8.3
Net interest income divided by average loans (V) 9.6 % 9.1 % 8.8 % 9.5 % 9.3 %
Net interest yield on Card Member loans (W) 10.5 % 9.9 % 9.6 % 10.1 % 10.0 %
American Express Company (Preliminary)

Revenue and Expense Reconciliation

Appendix V

(Millions, except percentages)
Quarters Ended % Change Twelve Months Ended % Change
Dec 31, Dec 31, Dec 31, 2014 vs. Dec 31, Dec 31, Dec 31, 2014 vs.
2014 2013

31-Dec-13

2014 2013 Dec 31, 2013

Consolidated:

Reported total revenues net of interest expense $ 9,107 $ 8,547 7 $ 34,292 $ 32,974 4
Global Business Travel (“GBT”) revenues net of interest expense - 405 - 801
Adjusted total revenues net of interest expense 9,107 8,142 12 34,292 32,173 7
FX and GBT adjusted total revenues net of interest expense (X) 7,961 14 31,832 8
Reported total expenses 6,300 6,088 3 23,257 23,254 -
GBT expenses - 362 - 698
Adjusted total expenses 6,300 5,726 10 23,257 22,556 3
FX and GBT adjusted total expenses (X) 5,608 12 22,371 4

Global Commercial Services:

Reported total revenues net of interest expense 1,585 1,238 28 4,948 4,853 2
GBT revenues net of interest expense - 405 - 801
Adjusted total revenues net of interest expense 1,585 833 90 4,948 4,052 22
FX and GBT adjusted total revenues net of interest expense (X) 813 95 4,018 23
Reported total expenses 586 915 (36 ) 2,360 3,480 (32 )
GBT expenses - 362 - 698
Adjusted total expenses $ 586 $ 553 6 $ 2,360 $ 2,782 (15 )
FX and GBT adjusted total expenses (X) 542 8 2,767 (15 )
Note: Full-year GBT revenues and expenses represent operating performance as reported in Q3’13 and Q4’13. Adjustments do not include other Global Business Travel-related items, including equity earnings from the joint venture and impacts related to a transition services agreement that will phase out over time.
Appendix VI (Preliminary)
All Information in the preceding tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated. Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
(A) Represents net income, less earnings allocated to participating share awards of $11 million for the quarter ended December 31, 2014, $11 million for the quarter ended September 30, 2014, $12 million for the quarter ended June 30, 2014, $12 million for the quarter ended March 31, 2014, and $11 million for the quarter ended December 31, 2013.
(B) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.
(C) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business. Card billed business is reflected in the United States or outside the United States based on where the issuer is located.
(D) Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee Card Members. Non-proprietary cards-in-force includes all cards that are issued and outstanding under network partnership agreements, except for retail co-brand Card Member accounts that have no out-of-store spend activity during the prior 12 month period.
(E) This calculation is designed to reflect pricing at merchants accepting general purpose American Express cards. It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance.
(F) Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force. The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded for these periods was $79 million for the quarter ended December 31, 2014, $77 million for the quarter ended September 30, 2014, $77 million for the quarter ended June 30, 2014, $73 million for the quarter ended March 31, 2014, and $64 million for the quarter ended December 31, 2013. The Company presents adjusted average fee per card because the Company believes this metric presents a useful indicator of card fee pricing across a range of its proprietary card products.
(G) Provisions for principal (resulting from authorized transactions) and fee reserve components.
(H) Consists of principal (resulting from authorized transactions), interest and/or fees, less recoveries.
(I) Beginning in first quarter 2014, reserves related for card-related fraud losses are reflected in Other liabilities. All periods include foreign currency translation adjustments and other items.
(J) The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company’s practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate including principal, interest and/or fees is also presented.
(K) See Appendix III for quarterly calculations of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Company’s rationale for presenting net interest yield on Card Member loans. For calculations for the twelve months ended December 31, 2014 and 2013, please refer to Annex 3 of the Company’s 2014 Fourth Quarter/ Full Year Earnings Supplement on file with the Securities and Exchange Commission.
(L) Historically, net loss ratio as a % of charge volume and 90 days past billings as a % of receivables were presented for ICS and GCS. As a result of system enhancements, beginning in first quarter 2014, 30 days past due as a % of total, net write-off rate (principal only) and net write-off rate (principal and fees) will be presented for ICS.
(M) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.
(N) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.
(O) See Appendix IV for calculations of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Company’s rationale for presenting net interest yield on Card Member loans.
(P) Global Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business.
(Q) Return on average equity and return on average common equity are calculated by dividing one year period net income/net income attributable to common shareholders by one year average total shareholders’ equity/average common shareholders’ equity, respectively.
(R) Return on average tangible common equity, a non-GAAP measure, is computed in the same manner as return on average common equity except the computation of average tangible common shareholders’ equity, a non-GAAP measure, excludes from average common shareholders’ equity, average goodwill and other intangibles. The Company believes that return on average tangible common equity is a useful measure of the profitability of its business.
(S) Return on average segment capital is calculated by dividing one year period segment income by one year average segment capital. Return on average tangible segment capital, a non-GAAP measure, is computed in the same manner as return on average segment capital except the computation of average tangible segment capital, a non-GAAP measure, excludes average goodwill and other intangibles. The Company believes that return on average tangible segment capital is a useful measure of the profitability of its business.
(T) Adjusted net interest income, a non-GAAP measure, represents net interest income allocated to the Company’s Card Member loan portfolio excluding the impact of interest expense and interest income not attributable to the Company’s Card Member loan portfolio. The Company believes adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans.
(U) Adjusted average loans, a non-GAAP measure, represents average Card Member loans excluding the impact of deferred card fees, net of deferred direct acquisition costs of Card Member loans, and other. The Company believes adjusted average loans is useful to investors because it is a component of net interest yield on Card Member loans.
(V) This calculation includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on Card Member loans. The calculation includes interest income and interest expense attributable to investment securities and other interest-bearing deposits as well as to Card Member loans, and interest expense attributable to other activities, including Card Member receivables.
(W) Net interest yield on Card Member loans, a non-GAAP measure, is computed by dividing adjusted net interest income by adjusted average loans, computed on an annualized basis. The calculation of net interest yield on Card Member loans includes interest that is deemed uncollectible. For all presentations of net interest yield on Card Member loans, reserves and net write-offs related to uncollectible interest are recorded through provisions for losses – Card Member loans; therefore, such reserves and net write-offs are not included in the net interest yield calculation. The Company believes net interest yield on Card Member loans is useful to investors because it provides a measure of profitability of the Company’s Card Member loan portfolio.
(X) Revenue net of interest expense and total expenses on an FX adjusted basis are a non-GAAP measures. FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes Q3’14 foreign exchange rates apply to Q3’13 results). The Company’s calculations of non-GAAP measures may differ from the calculations of similarly titled measures of other companies.

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