EX-99.2 3 ex99_2.htm FINANCIALS ex99_2.htm
Exhibit 99.2

All information in the following tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated.  Certain reclassifications of prior period amounts have been made to conform to the current period presentation.

(Preliminary)

American Express Company
Consolidated Statements of Income

(Millions)

   
Quarters Ended
June 30,
    
Percentage
    
Six Months Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
    
2014
    
2013
    
Inc/(Dec)
  
                                     
Revenues
                                    
Non-interest revenues
                                    
Discount revenue
   $ 4,945     $ 4,729       5 %   $ 9,591     $ 9,167       5 %
Net card fees
     687       647       6       1,361       1,300       5  
Travel commissions and fees
     500       495       1       923       932       (1 )
Other commissions and fees
     624       605       3       1,242       1,178       5  
Other
     585       567       3       1,086       1,104       (2 )
Total non-interest revenues
     7,341       7,043       4       14,203       13,681       4  
Interest income
                                                
Interest on loans
     1,696       1,622       5       3,407       3,305       3  
Interest and dividends on investment securities
     45       52       (13 )     91       105       (13 )
Deposits with banks and other
     18       20       (10 )     37       46       (20 )
Total interest income
     1,759       1,694       4       3,535       3,456       2  
Interest expense
                                                
Deposits
     91       107       (15 )     185       221       (16 )
Long-term debt and other
     352       385       (9 )     697       790       (12 )
Total interest expense
     443       492       (10 )     882       1,011       (13 )
Net interest income
     1,316       1,202       9       2,653       2,445       9  
Total revenues net of interest expense
     8,657       8,245       5       16,856       16,126       5  
Provisions for losses
                                                
Charge card
     183       161       14       398       315       26  
Card Member loans
     282       334       (16 )     532       577       (8 )
Other
     24       23       4       44       42       5  
Total provisions for losses
     489       518       (6 )     974       934       4  
Total revenues net of interest expense after provisions for losses
     8,168       7,727       6       15,882       15,192       5  
                                                 
Expenses
                                                
Marketing and promotion
     985       786       25       1,598       1,407       14  
Card Member rewards
     1,773       1,601       11       3,355       3,121       7  
Card Member services and other
     192       193       (1 )     414       382       8  
Salaries and employee benefits
     1,658       1,543       7       3,198       3,158       1  
Professional services
     817       763       7       1,509       1,479       2  
Occupancy and equipment
     467       460       2       929       932       -  
Communications
     101       92       10       194       188       3  
Other, net
     (137 )     294       #       165       621       (73 )
Total
     5,856       5,732       2       11,362       11,288       1  
Pretax income
     2,312       1,995       16       4,520       3,904       16  
Income tax provision
     783       590       33       1,559       1,219       28  
Net income
   $ 1,529     $ 1,405       9     $ 2,961     $ 2,685       10  
Net income attributable to common shareholders (A)
   $ 1,517     $ 1,392       9     $ 2,937     $ 2,661       10  
Effective tax rate
     33.9 %     29.6 %             34.5 %     31.2 %        

# - Denotes a variance of more than 100 percent.

(A) Represents net income, less earnings allocated to participating share awards of $12 million and $13 million for the three months ended June 30, 2014 and 2013, respectively, and $24 million for both the six months ended June 30, 2013 and 2012, respectively.

 
-1-
 
 
(Preliminary)

American Express Company
Condensed Consolidated Balance Sheets

(Billions)
 
   
June 30,
2014
    
December 31,
2013
  
             
Assets
            
Cash & cash equivalents
   $ 18     $ 19  
Accounts receivable
     49       47  
Investment securities
     5       5  
Loans
     66       67  
Other assets
     14       15  
Total assets
   $ 152     $ 153  
                 
Liabilities and Shareholders' Equity
                
Customer deposits
   $ 42     $ 42  
Short-term borrowings
     3       5  
Long-term debt
     55       55  
Other liabilities
     32       32  
Total liabilities
     132       134  
                 
Shareholders' Equity
     20       19  
Total liabilities and shareholders' equity
   $ 152     $ 153  

 
-2-
 
 
(Preliminary)

American Express Company
Financial Summary

(Millions)
 
   
Quarters Ended
June 30,
    
Percentage
    
Six Months Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
    
2014
    
2013
    
Inc/(Dec)
  
                                     
Total revenues net of interest expense
                                    
U.S. Card Services
   $ 4,477     $ 4,239       6 %   $ 8,767     $ 8,321       5 %
International Card Services
     1,391       1,299       7       2,743       2,616       5  
Global Commercial Services
     1,269       1,231       3       2,463       2,394       3  
Global Network & Merchant Services
     1,455       1,384       5       2,820       2,687       5  
      8,592       8,153       5       16,793       16,018       5  
Corporate & Other
     65       92       (29 )     63       108       (42 )
                                                 
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
   $ 8,657     $ 8,245       5     $ 16,856     $ 16,126       5  
                                                 
Pretax income (loss)
                                                
U.S. Card Services
   $ 1,200     $ 1,175       2     $ 2,606     $ 2,445       7  
International Card Services
     69       156       (56 )     272       349       (22 )
Global Commercial Services
     865       333       #       1,150       616       87  
Global Network & Merchant Services
     578       647       (11 )     1,280       1,229       4  
      2,712       2,311       17       5,308       4,639       14  
Corporate & Other
     (400 )     (316 )     27       (788 )     (735 )     7  
                                                 
PRETAX INCOME
   $ 2,312     $ 1,995       16     $ 4,520     $ 3,904       16  
                                                 
Net income (loss)
                                                
U.S. Card Services
   $ 770     $ 743       4     $ 1,646     $ 1,547       6  
International Card Services
     77       208       (63 )     236       386       (39 )
Global Commercial Services
     561       226       #       745       417       79  
Global Network & Merchant Services
     373       412       (9 )     816       785       4  
      1,781       1,589       12       3,443       3,135       10  
Corporate & Other
     (252 )     (184 )     37       (482 )     (450 )     7  
                                                 
NET INCOME
   $ 1,529     $ 1,405       9     $ 2,961     $ 2,685       10  
 
# - Denotes a variance of more than 100 percent.

 
-3-
 
 
(Preliminary)

American Express Company
Financial Summary (continued)
 
   
Quarters Ended
June 30,
    
Percentage
    
Six Months Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
    
2014
    
2013
    
Inc/(Dec)
  
EARNINGS PER COMMON SHARE
                                    
                                     
BASIC
                                    
Net income attributable to common shareholders
   $ 1.44     $ 1.28       13     $ 2.78     $ 2.43       14 %
                                                 
Average common shares outstanding (millions)
     1,052       1,090       (3 )%     1,056       1,094       (3 )%
                                                 
DILUTED
                                                
Net income attributable to common shareholders
   $ 1.43     $ 1.27       13     $ 2.77     $ 2.42       14 %
                                                 
Average common shares outstanding (millions)
     1,058       1,097       (4 )%     1,062       1,101       (4 )%
                                                 
Cash dividends declared per common share
   $ 0.26     $ 0.23       13 %   $ 0.49     $ 0.43       14 %

 
Selected Statistical Information
 
   
Quarters Ended
June 30,
    
Percentage
    
Six Months Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
    
2014
    
2013
    
Inc/(Dec)
  
                                     
Return on average equity (A)
     28.8 %     23.6 %           28.8 %     23.6 %      
Return on average common equity (A)
     28.5 %     23.4 %           28.5 %     23.4 %      
Return on average tangible common equity (A)
     35.8 %     29.7 %           35.8 %     29.7 %      
Common shares outstanding (millions)
     1,046       1,084       (3 )%     1,046       1,084       (3 )%
Book value per common share
   $ 19.32     $ 17.57       10 %   $ 19.32     $ 17.57       10 %
Shareholders' equity (billions)
   $ 20.2     $ 19.0       6 %   $ 20.2     $ 19.0       6 %

# - Denotes a variance of more than 100 percent.
 
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.

 
-4-
 
 
(Preliminary)

American Express Company
Selected Statistical Information

(Millions, except percentages and where indicated)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Card billed business (billions) (A):
                  
United States
   $ 173.4     $ 159.7       9 %
Outside the United States
     84.7       78.0       9  
Total
   $ 258.1     $ 237.7       9  
Total cards-in-force (B):
                        
United States
     54.1       52.5       3 %
Outside the United States
     55.8       51.8       8  
Total
     109.9       104.3       5  
Basic cards-in-force (B):
                        
United States
     42.0       40.7       3 %
Outside the United States
     45.6       41.8       9  
Total
     87.6       82.5       6  
                         
Average discount rate (C)
     2.48 %     2.52 %        
Average basic Card Member spending (dollars) (D)
   $ 4,288     $ 4,097       5 %
Average fee per card (dollars) (D)
   $ 41     $ 40       3  
Average fee per card adjusted (dollars) (D)
   $ 45     $ 44       2  
 
(A) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards.  In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business.  Card billed business is reflected in the United States or outside the United States based on where the issuer is located.

(B) Total cards-in-force represents the number of cards that are issued and outstanding.  Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account.  Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee 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.

(C) This calculation is designed to reflect pricing at merchants accepting general purpose American Express cards.  It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance.

(D) Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force.  The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded was $77 million and $66 million for the quarters ended June 30, 2014 and 2013, respectively. The Company presents adjusted average fee per card because the Company believes this metric presents a useful indicator of card fees pricing across a range of its proprietary card products.

 
-5-
 
 
(Preliminary)

American Express Company
Selected Statistical Information (continued)

(Billions, except percentages and where indicated)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Worldwide Card Member receivables:
                  
Total receivables
   $ 45.3     $ 44.1       3 %
Loss reserves (millions):
                        
Beginning balance
   $ 414     $ 410       1 %
Provisions  (A)
     183       161       14  
Net write-offs (B)
     (182 )     (180 )     1  
Other (C)
     (2 )     (5 )     (60 )
Ending balance
   $ 413     $ 386       7  
% of receivables
     0.9 %     0.9 %        
Net write-off rate (principal only) - USCS/ICS (D)
     1.8 %  
(F)
          
Net write-off rate (principal and fees) - USCS/ICS (D)
     2.0 %  
(F)
          
30 days past due as a % of total - USCS/ICS
     1.5 %  
(F)
          
Net loss ratio (as a % of charge volume) - GCS
     0.09 %     0.08 %        
90 days past billing as a % of total - GCS
     0.7 %     0.7 %        
                         
Worldwide Card Member loans:
                        
Total loans
   $ 66.3     $ 63.1       5 %
Loss reserves (millions):
                        
Beginning balance
   $ 1,191     $ 1,367       (13 )%
Provisions (A)
     282       334       (16 )
Net write-offs - principal (B)
     (267 )     (309 )     (14 )
Net write-offs - interest and fees (B)
     (42 )     (39 )     8  
Other (C)
     6       (11 )     #  
Ending balance
   $ 1,170     $ 1,342       (13 )
Ending reserves - principal
   $ 1,114     $ 1,290       (14 )
Ending reserves - interest and fees
   $ 56     $ 52       8  
% of loans
     1.8 %     2.1 %        
% of past due
     171 %     188 %        
Average loans
   $ 65.2     $ 62.5       4 %
Net write-off rate (principal only) (D)
     1.6 %     2.0 %        
Net write-off rate (principal, interest and fees) (D)
     1.9 %     2.2 %        
30 days past due loans as a % of total
     1.0 %     1.1 %        
Net interest income divided by average loans (E)
     8.1 %     7.7 %        
Net interest yield on Card Member loans (E)
     9.2 %     9.1 %        
 
# - Denotes a variance of more than 100 percent.

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

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

(C) Beginning in first quarter 2014, reserves for card-related fraud losses are reflected in Other liabilities.  All periods include foreign currency translation adjustments and other items.

(D) 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.

(E) See Appendix III 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.

(F) 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.

 
-6-
 
 
(Preliminary)
American Express Company
Consolidated Statements of Income
(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Revenues
                              
Non-interest revenues
                              
Discount revenue
   $ 4,945     $ 4,646     $ 4,869     $ 4,659     $ 4,729  
Net card fees
     687       674       673       658       647  
Travel commissions and fees
     500       423       491       490       495  
Other commissions and fees
     624       618       626       610       605  
Other
     585       501       569       601       567  
Total non-interest revenues
     7,341       6,862       7,228       7,018       7,043  
Interest income
                                        
Interest on loans
     1,696       1,711       1,715       1,698       1,622  
Interest and dividends on investment securities
     45       46       48       48       52  
Deposits with banks and other
     18       19       19       21       20  
Total interest income
     1,759       1,776       1,782       1,767       1,694  
Interest expense
                                        
Deposits
     91       94       110       111       107  
Long-term debt and other
     352       345       353       373       385  
Total interest expense
     443       439       463       484       492  
Net interest income
     1,316       1,337       1,319       1,283       1,202  
Total revenues net of interest expense
     8,657       8,199       8,547       8,301       8,245  
Provisions for losses
                                        
Charge card
     183       215       174       159       161  
Card Member loans
     282       250       290       248       334  
Other
     24       20       15       12       23  
Total provisions for losses
     489       485       479       419       518  
Total revenues net of interest expense after provisions for losses
     8,168       7,714       8,068       7,882       7,727  
                                         
Expenses
                                        
Marketing and promotion
     985       613       809       827       786  
Card Member rewards
     1,773       1,582       1,717       1,619       1,601  
Card Member services and other
     192       222       188       197       193  
Salaries and employee benefits
     1,658       1,540       1,489       1,544       1,543  
Professional services
     817       692       830       793       763  
Occupancy and equipment
     467       462       510       462       460  
Communications
     101       93       97       94       92  
Other, net
     (137 )     302       448       342       294  
Total
     5,856       5,506       6,088       5,878       5,732  
Pretax income
     2,312       2,208       1,980       2,004       1,995  
Income tax provision
     783       776       672       638       590  
Net income
   $ 1,529     $ 1,432     $ 1,308     $ 1,366     $ 1,405  
Net income attributable to common shareholders (A)
   $ 1,517     $ 1,420     $ 1,297     $ 1,354     $ 1,392  
Effective tax rate
     33.9 %     35.1 %     33.9 %     31.8 %     29.6 %
 
(A) Represents net income, less earnings allocated to participating share awards of $12 million for the quarter ended June 30, 2014, $12 million for the quarter ended March 31, 2014, $11 million for the quarter ended December 31, 2013, $12 million for the quarter ended September 30, 2013 and $13 million for the quarter ended June 30, 2013.

 
-7-
 
 
(Preliminary)
American Express Company
Financial Summary
(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Total revenues net of interest expense
                              
U.S. Card Services
   $ 4,477     $ 4,290     $ 4,388     $ 4,286     $ 4,239  
International Card Services
     1,391       1,352       1,429       1,356       1,299  
Global Commercial Services
     1,269       1,194       1,238       1,221       1,231  
Global Network & Merchant Services
     1,455       1,365       1,447       1,379       1,384  
      8,592       8,201       8,502       8,242       8,153  
Corporate & Other
     65       (2 )     45       59       92  
                                         
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
   $ 8,657     $ 8,199     $ 8,547     $ 8,301     $ 8,245  
                                         
Pretax income (loss)
                                        
U.S. Card Services
   $ 1,200     $ 1,406     $ 1,292     $ 1,257     $ 1,175  
International Card Services
     69       203       108       186       156  
Global Commercial Services
     865       285       287       341       333  
Global Network & Merchant Services
     578       702       632       608       647  
      2,712       2,596       2,319       2,392       2,311  
Corporate & Other
     (400 )     (388 )     (339 )     (388 )     (316 )
                                         
PRETAX INCOME
   $ 2,312     $ 2,208     $ 1,980     $ 2,004     $ 1,995  
                                         
Net income (loss)
                                        
U.S. Card Services
   $ 770     $ 876     $ 864     $ 782     $ 743  
International Card Services
     77       159       103       142       208  
Global Commercial Services
     561       184       182       261       226  
Global Network & Merchant Services
     373       443       399       391       412  
      1,781       1,662       1,548       1,576       1,589  
Corporate & Other
     (252 )     (230 )     (240 )     (210 )     (184 )
                                         
NET INCOME
   $ 1,529     $ 1,432     $ 1,308     $ 1,366     $ 1,405  


 
-8-
 
 
(Preliminary)
American Express Company
Financial Summary (continued)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
EARNINGS PER COMMON SHARE
                              
                               
BASIC
                              
Net income attributable to common shareholders
   $ 1.44     $ 1.34     $ 1.22     $ 1.26     $ 1.28  
                                         
Average common shares outstanding (millions)
     1,052       1,060       1,067       1,074       1,090  
                                         
DILUTED
                                        
Net income attributable to common shareholders
   $ 1.43     $ 1.33     $ 1.21     $ 1.25     $ 1.27  
                                         
Average common shares outstanding (millions)
     1,058       1,067       1,073       1,081       1,097  
                                         
Cash dividends declared per common share
   $ 0.26     $ 0.23     $ 0.23     $ 0.23     $ 0.23  
 
Selected Statistical Information
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Return on average equity (A)
     28.8 %     28.3 %     27.8 %     24.3 %     23.6 %
Return on average common equity (A)
     28.5 %     28.1 %     27.6 %     24.1 %     23.4 %
Return on average tangible common equity (A)
     35.8 %     35.4 %     34.9 %     30.6 %     29.7 %
Common shares outstanding (millions)
     1,046       1,059       1,064       1,071       1,084  
Book value per common share
   $ 19.32     $ 18.87     $ 18.32     $ 17.94     $ 17.57  
Shareholders' equity (billions)
   $ 20.2     $ 20.0     $ 19.5     $ 19.2     $ 19.0  
 
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.

 
-9-
 
 
(Preliminary)
American Express Company
Selected Statistical Information

(Millions, except percentages and where indicated)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
Card billed business (billions) (A):
                              
United States
   $ 173.4     $ 159.2     $ 169.1     $ 158.2     $ 159.7  
Outside the United States
     84.7       78.9       84.9       78.0       78.0  
Total
   $ 258.1     $ 238.1     $ 254.0     $ 236.2     $ 237.7  
Total cards-in-force (B):
                                        
United States
     54.1       53.5       53.1       52.8       52.5  
Outside the United States
     55.8       54.7       54.1       52.6       51.8  
Total
     109.9       108.2       107.2       105.4       104.3  
Basic cards-in-force (B):
                                        
United States
     42.0       41.5       41.1       40.9       40.7  
Outside the United States
     45.6       44.6       44.0       42.6       41.8  
Total
     87.6       86.1       85.1       83.5       82.5  
                                         
Average discount rate (C)
     2.48 %     2.52 %     2.48 %     2.52 %     2.52 %
Average basic Card Member spending (dollars) (D)
   $ 4,288     $ 3,991     $ 4,292     $ 4,037     $ 4,097  
Average fee per card (dollars) (D)
   $ 41     $ 40     $ 41     $ 40     $ 40  
Average fee per card adjusted (dollars) (D)
   $ 45     $ 45     $ 44     $ 44     $ 44  
 
(A) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards.  In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business.  Card billed business is reflected in the United States or outside the United States based on where the issuer is located.

(B) Total cards-in-force represents the number of cards that are issued and outstanding.  Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account.  Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee 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.

(C) This calculation is designed to reflect pricing at merchants accepting general purpose American Express cards.  It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance.

(D) Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force.  The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded for these periods was $77 million for the quarter ended June 30, 2014, $73 million for the quarter ended March 31, 2014, $64 million for the quarter ended December 31, 2013, $67 million for the quarter ended September 30, 2013 and $66 million for the quarter ended June 30, 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.

 
-10-
 
 
(Preliminary)
American Express Company
Selected Statistical Information (continued)

(Billions, except percentages and where indicated)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Worldwide Card Member receivables:
                              
Total receivables
   $ 45.3     $ 44.7     $ 44.2     $ 43.5     $ 44.1  
Loss reserves (millions):
                                        
Beginning balance
   $ 414     $ 386     $ 396     $ 386     $ 410  
Provisions (A)
     183       215       174       159       161  
Net write-offs (B)
     (182 )     (177 )     (162 )     (149 )     (180 )
Other (C)
     (2 )     (10 )     (22 )     -       (5 )
Ending balance
   $ 413     $ 414     $ 386     $ 396     $ 386  
% of receivables
     0.9 %     0.9 %     0.9 %     0.9 %     0.9 %
Net write-off rate (principal only) - USCS/ICS (D)
     1.8 %     1.9 %  
(F)
    
(F)
    
(F)
  
Net write-off rate (principal and fees) - USCS/ICS (D)
     2.0 %     2.1 %  
(F)
    
(F)
    
(F)
  
30 days past due as a % of total - USCS/ICS
     1.5 %     1.7 %  
(F)
    
(F)
    
(F)
  
Net loss ratio (as a % of charge volume) - GCS
     0.09 %     0.09 %     0.08 %     0.06 %     0.08 %
90 days past billing as a % of total - GCS
     0.7 %     0.7 %     0.9 %     0.8 %     0.7 %
                                         
Worldwide Card Member loans:
                                        
Total loans
   $ 66.3     $ 64.0     $ 67.2     $ 63.0     $ 63.1  
Loss reserves (millions):
                                        
Beginning balance
   $ 1,191     $ 1,261     $ 1,281     $ 1,342     $ 1,367  
Provisions (A)
     282       250       290       248       334  
Net write-offs - principal (B)
     (267 )     (274 )     (253 )     (275 )     (309 )
Net write-offs - interest and fees (B)
     (42 )     (42 )     (37 )     (36 )     (39 )
Other (C)
     6       (4 )     (20 )     2       (11 )
Ending balance
   $ 1,170     $ 1,191     $ 1,261     $ 1,281     $ 1,342  
Ending reserves - principal
   $ 1,114     $ 1,135     $ 1,212     $ 1,234     $ 1,290  
Ending reserves - interest and fees
   $ 56     $ 56     $ 49     $ 47     $ 52  
% of loans
     1.8 %     1.9 %     1.9 %     2.0 %     2.1 %
% of past due
     171 %     159 %     169 %     179 %     188 %
Average loans
   $ 65.2     $ 64.5     $ 64.4     $ 63.0     $ 62.5  
Net write-off rate (principal only) (D)
     1.6 %     1.7 %     1.6 %     1.7 %     2.0 %
Net write-off rate (principal, interest and fees) (D)
     1.9 %     2.0 %     1.8 %     2.0 %     2.2 %
30 days past due loans as a % of total
     1.0 %     1.2 %     1.1 %     1.1 %     1.1 %
Net interest income divided by average loans (E)
     8.1 %     8.4 %     8.1 %     8.1 %     7.7 %
Net interest yield on Card Member loans (E)
     9.2 %     9.5 %     9.3 %     9.4 %     9.1 %
 
(A)  Provisions for principal (resulting from authorized transactions) and fee reserve components.

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

(C) 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.

(D)  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.

(E) See Appendix III 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.

(F) 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.

 
-11-
 
 
(Preliminary)

U.S. Card Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 3,222     $ 3,063       5 %
Interest income
     1,408       1,354       4  
Interest expense
     153       178       (14 )
Net interest income
     1,255       1,176       7  
Total revenues net of interest expense
     4,477       4,239       6  
Provisions for losses
     339       356       (5 )
Total revenues net of interest expense after provisions for losses
     4,138       3,883       7  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     1,865       1,735       7  
Salaries and employee benefits and other operating expenses
     1,073       973       10  
Total
     2,938       2,708       8  
Pretax segment income
     1,200       1,175       2  
Income tax provision
     430       432       -  
Segment income
   $ 770     $ 743       4  
Effective tax rate
     35.8 %     36.8 %        
 
# - Denotes a variance of more than 100 percent.

 
-12-
 
 
(Preliminary)

U.S. Card Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 136.5     $ 125.6       9 %
Total cards-in-force (millions)
     44.7       42.9       4 %
Basic cards-in-force (millions)
     33.3       31.9       4 %
Average basic Card Member spending (dollars)
   $ 4,133     $ 3,954       5 %
                         
U.S. Consumer Travel:
                        
Travel sales (millions)
   $ 1,027     $ 1,158       (11 ) %
Travel commissions and fees/sales
     7.4 %     6.7 %        
                         
Total segment assets
   $ 101.1     $ 96.5       5 %
Segment capital (millions) (A)
   $ 9,859     $ 8,694       13 %
Return on average segment capital (B)
     35.3 %     29.9 %        
Return on average tangible segment capital (B)
     36.5 %     31.2 %        
                         
Card Member receivables:
                        
Total receivables
   $ 21.2     $ 20.9       1 %
30 days past due as a % of total
     1.5 %     1.6 %        
Average receivables
   $ 21.3     $ 20.5       4 %
Net write-off rate (principal only) (C)
     1.8 %     1.9 %        
Net write-off rate (principal and fees) (C)
     2.0 %     2.1 %        
                         
Card Member loans:
                        
Total loans
   $ 57.7     $ 54.6       6 %
30 days past due loans as a % of total
     0.9 %     1.1 %        
Average loans
   $ 56.8     $ 54.0       5 %
Net write-off rate (principal only) (C)
     1.6 %     2.0 %        
Net write-off rate (principal, interest and fees) (C)
     1.8 %     2.2 %        
Net interest income divided by average loans (D)
     8.9 %     8.7 %        
Net interest yield on Card Member loans (D)
     9.1 %     9.1 %        
 
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

(C) 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.

(D) 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.

 
-13-
 
 
(Preliminary)

U.S. Card Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 3,222     $ 3,017     $ 3,132     $ 3,050     $ 3,063  
Interest income
     1,408       1,423       1,417       1,408       1,354  
Interest expense
     153       150       161       172       178  
Net interest income
     1,255       1,273       1,256       1,236       1,176  
Total revenues net of interest expense
     4,477       4,290       4,388       4,286       4,239  
Provisions for losses
     339       342       319       285       356  
Total revenues net of interest expense after provisions for losses
     4,138       3,948       4,069       4,001       3,883  
Expenses
                                        
Marketing, promotion, rewards Card Member services and other
     1,865       1,582       1,789       1,756       1,735  
Salaries and employee benefits and other operating expenses
     1,073       960       988       988       973  
Total
     2,938       2,542       2,777       2,744       2,708  
Pretax segment income
     1,200       1,406       1,292       1,257       1,175  
Income tax provision
     430       530       428       475       432  
Segment income
   $ 770     $ 876     $ 864     $ 782     $ 743  
Effective tax rate
     35.8 %     37.7 %     33.1 %     37.8 %     36.8 %


 
-14-
 
 
(Preliminary)

U.S. Card Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Card billed business
   $ 136.5     $ 124.3     $ 134.1     $ 124.6     $ 125.6  
Total cards-in-force (millions)
     44.7       44.1       43.7       43.4       42.9  
Basic cards-in-force (millions)
     33.3       32.8       32.5       32.2       31.9  
Average basic Card Member spending (dollars)
   $ 4,133     $ 3,805     $ 4,138     $ 3,882     $ 3,954  
                                         
U.S. Consumer Travel:
                                        
Travel sales
   $ 1.0     $ 1.0     $ 0.9     $ 0.9     $ 1.2  
Travel commissions and fees/sales
     7.4 %     6.5 %     7.4 %     7.9 %     6.7 %
                                         
Total segment assets
   $ 101.1     $ 98.9     $ 103.5     $ 95.2     $ 96.5  
Segment capital (A)
   $ 9.9     $ 9.7     $ 9.3     $ 9.1     $ 8.7  
Return on average segment capital (B)
     35.3 %     35.6 %     35.6 %     30.8 %     29.9 %
Return on average tangible segment capital (B)
     36.5 %     36.9 %     37.0 %     32.0 %     31.2 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 21.2     $ 20.7     $ 21.8     $ 20.3     $ 20.9  
30 days past due as a % of total
     1.5 %     1.8 %     1.6 %     1.7 %     1.6 %
Average receivables
   $ 21.3     $ 20.6     $ 21.2     $ 20.5     $ 20.5  
Net write-off rate (principal only) (C)
     1.8 %     1.8 %     1.5 %     1.4 %     1.9 %
Net write-off rate (principal and fees) (C)
     2.0 %     2.0 %     1.7 %     1.6 %     2.1 %
                                         
Card Member loans:
                                        
Total loans
   $ 57.7     $ 55.8     $ 58.4     $ 54.5     $ 54.6  
30 days past due loans as a % of total
     0.9 %     1.1 %     1.1 %     1.1 %     1.1 %
Average loans
   $ 56.8     $ 56.1     $ 55.8     $ 54.7     $ 54.0  
Net write-off rate (principal only) (C)
     1.6 %     1.7 %     1.5 %     1.7 %     2.0 %
Net write-off rate (principal, interest and fees) (C)
     1.8 %     1.9 %     1.7 %     1.9 %     2.2 %
Net interest income divided by average loans (D)
     8.9 %     9.2 %     8.9 %     9.0 %     8.7 %
Net interest yield on Card Member loans (D)
     9.1 %     9.4 %     9.2 %     9.3 %     9.1 %
 
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

(C) 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.

(D) 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.

 
-15-
 
 
(Preliminary)

International Card Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 1,208     $ 1,130       7 %
Interest income
     275       259       6  
Interest expense
     92       90       2  
Net interest income
     183       169       8  
Total revenues net of interest expense
     1,391       1,299       7  
Provisions for losses
     90       101       (11 )
Total revenues net of interest expense after provisions for losses
     1,301       1,198       9  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     577       478       21  
Salaries and employee benefits and other operating expenses
     655       564       16  
Total
     1,232       1,042       18  
Pretax segment income
     69       156       (56 )
Income tax provision
     (8 )     (52 )     (85 )
Segment income
   $ 77     $ 208       (63 )
Effective tax rate
     -11.6 %     -33.3 %        

# - Denotes a variance of more than 100 percent.

 
-16-
 
 
(Preliminary)

International Card Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 34.1     $ 32.3       6 %
Total cards-in-force (millions)
     15.7       15.6       1 %
Basic cards-in-force (millions)
     10.9       10.6       3 %
Average basic Card Member spending (dollars)
   $ 3,137     $ 3,058       3 %
                         
International Consumer Travel:
                        
Travel sales (millions)
   $ 354     $ 354       -  
Travel commissions and fees/sales
     6.8 %     6.8 %        
                         
Total segment assets
   $ 31.6     $ 29.7       6 %
Segment capital (millions) (A)
   $ 3,027     $ 3,070       (1 )%
Return on average segment capital (B)
     15.7 %     21.9 %        
Return on average tangible segment capital (B)
     28.8 %     41.7 %        
                         
Card Member receivables:
                        
Total receivables
   $ 7.5     $ 7.2       4  
30 days past billing as a % of total
     1.3 %  
(E)
          
Net write-off rate (principal only) (C)
     1.9 %  
(E)
          
Net write-off rate (principal and fees) (C)
     2.0 %  
(E)
          
90 days past billing as a % of total
  
(E)
       1.1 %        
Net loss ratio (as a % of charge volume)
  
(E)
       0.21 %        
                         
Card Member loans:
                        
Total loans
   $ 8.6     $ 8.4       2 %
30 days past due loans as a % of total
     1.6 %     1.6 %        
Average loans
   $ 8.3     $ 8.5       (2 )%
Net write-off rate (principal only) (C)
     2.0 %     1.9 %        
Net write-off rate (principal, interest and fees) (C)
     2.4 %     2.4 %        
Net interest income divided by average loans (D)
     8.8 %     8.0 %        
Net interest yield on Card Member loans (D)
     9.6 %     9.2 %        
 
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

(C) 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.

(D)  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.

(E) Historically, net loss ratio as a % of charge volume and 90 days past billings as a % of receivables were presented.  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.

 
-17-
 
 
(Preliminary)

International Card Services
Selected Income Statement Data
(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 1,208     $ 1,157     $ 1,229     $ 1,161     $ 1,130  
Interest income
     275       277       288       281       259  
Interest expense
     92       82       88       86       90  
Net interest income
     183       195       200       195       169  
Total revenues net of interest expense
     1,391       1,352       1,429       1,356       1,299  
Provisions for losses
     90       87       110       96       101  
Total revenues net of interest expense after provisions for losses
     1,301       1,265       1,319       1,260       1,198  
Expenses
                                        
Marketing, promotion, rewards Card Member services and other
     577       496       585       498       478  
Salaries and employee benefits and other operating expenses
     655       566       626       576       564  
Total
     1,232       1,062       1,211       1,074       1,042  
Pretax segment income
     69       203       108       186       156  
Income tax provision/(benefit)
     (8 )     44       5       44       (52 )
Segment income
   $ 77     $ 159     $ 103     $ 142     $ 208  
Effective tax rate
     -11.6 %     21.7 %     4.6 %     23.7 %     -33.3 %


 
-18-
 
 
(Preliminary)

International Card Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Card billed business
   $ 34.1     $ 31.9     $ 35.5     $ 32.5     $ 32.3  
Total cards-in-force (millions)
     15.7       15.7       15.7       15.5       15.6  
Basic cards-in-force (millions)
     10.9       10.9       10.7       10.6       10.6  
Average basic Card Member spending (dollars)
   $ 3,137     $ 2,942     $ 3,336     $ 3,076     $ 3,058  
                                         
International Consumer Travel:
                                        
Travel sales
   $ 0.4     $ 0.4     $ 0.4     $ 0.4     $ 0.4  
Travel commissions and fees/sales
     6.8 %     6.2 %     7.1 %     7.0 %     6.8 %
                                         
Total segment assets
   $ 31.6     $ 30.4     $ 31.1     $ 30.4     $ 29.7  
Segment capital (A)
   $ 3.0     $ 3.0     $ 3.1     $ 3.1     $ 3.1  
Return on average segment capital (B)
     15.7 %     20.0 %     20.9 %     20.8 %     21.9 %
Return on average tangible segment capital (B)
     28.8 %     36.8 %     38.8 %     39.1 %     41.7 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 7.5     $ 7.2     $ 7.8     $ 7.2     $ 7.2  
30 days past billing as a % of total
     1.3 %     1.4 %  
(E)
    
(E)
    
(E)
  
Net write-off rate (principal only) (C)
     1.9 %     2.2 %  
(E)
    
(E)
    
(E)
  
Net write-off rate (principal and fees) (C)
     2.0 %     2.3 %  
(E)
    
(E)
    
(E)
  
90 days past billing as a % of total
  
(E)
    
(E)
       1.1 %     1.1 %     1.1 %
Net loss ratio (as a % of charge volume)
  
(E)
    
(E)
       0.19 %     0.21 %     0.21 %
                                         
Card Member loans:
                                        
Total loans
   $ 8.6     $ 8.2     $ 8.8     $ 8.4     $ 8.4  
30 days past due loans as a % of total
     1.6 %     1.7 %     1.4 %     1.5 %     1.6 %
Average loans
   $ 8.3     $ 8.3     $ 8.5     $ 8.3     $ 8.5  
Net write-off rate (principal only) (C)
     2.0 %     2.0 %     1.8 %     1.9 %     1.9 %
Net write-off rate (principal, interest and fees) (C)
     2.4 %     2.4 %     2.2 %     2.4 %     2.4 %
Net interest income divided by average loans (D)
     8.8 %     9.5 %     9.3 %     9.3 %     8.0 %
Net interest yield on Card Member loans (D)
     9.6 %     10.1 %     10.0 %     10.4 %     9.2 %
 
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

(C) 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.

(D) 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.

(E) Historically, net loss ratio as a % of charge volume and 90 days past billings as a % of receivables were presented.  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.

 
-19-
 
 
(Preliminary)

Global Commercial Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 1,332     $ 1,290       3 %
Interest income
     3       3       -  
Interest expense
     66       62       6  
Net interest expense
     (63 )     (59 )     7  
Total revenues net of interest expense
     1,269       1,231       3  
Provisions for losses
     43       36       19  
Total revenues net of interest expense after provisions for losses
     1,226       1,195       3  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     177       144       23  
Salaries and employee benefits and other operating expenses
     184       718       (74 )
Total
     361       862       (58 )
Pretax segment income
     865       333       #  
Income tax provision
     304       107       #  
Segment income
   $ 561     $ 226       #  
Effective tax rate
     35.1 %     32.1 %        


 
-20-
 
 
(Preliminary)

Global Commercial Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 47.6     $ 44.4       7 %
Total cards-in-force (millions)
     7.0       7.0       -  
Basic cards-in-force (millions)
     7.0       7.0       -  
Average basic Card Member spending (dollars)
   $ 6,781     $ 6,317       7 %
                         
Global Corporate Travel:
                        
Travel sales (millions)
   $ 4,882     $ 4,954       (1 ) %
Travel commissions and fees/sales
     8.2 %     7.9 %        
                         
Total segment assets
   $ 20.8     $ 20.5       1 %
Segment capital (millions) (A)
   $ 3,774     $ 3,680       3 %
Return on average segment capital (B)
     32.0 %     18.3 %        
Return on average tangible segment capital (B)
     60.3 %     35.9 %        
                         
Card Member receivables:
                        
Total receivables
   $ 16.5     $ 15.9       4 %
90 days past billing as a % of total
     0.7 %     0.7 %        
Net loss ratio (as a % of charge volume)
     0.09 %     0.08 %        

(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

 
-21-
 
 
(Preliminary)

Global Commercial Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 1,332     $ 1,249     $ 1,298     $ 1,277     $ 1,290  
Interest income
     3       4       4       3       3  
Interest expense
     66       59       64       59       62  
Net interest expense
     (63 )     (55 )     (60 )     (56 )     (59 )
Total revenues net of interest expense
     1,269       1,194       1,238       1,221       1,231  
Provisions for losses
     43       38       36       29       36  
Total revenues net of interest expense after provisions for losses
     1,226       1,156       1,202       1,192       1,195  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     177       166       162       148       144  
Salaries and employee benefits and other operating expenses
     184       705       753       703       718  
Total
     361       871       915       851       862  
Pretax segment income
     865       285       287       341       333  
Income tax provision
     304       101       105       80       107  
Segment income
   $ 561     $ 184     $ 182     $ 261     $ 226  
Effective tax rate
     35.1 %     35.4 %     36.6 %     23.5 %     32.1 %
 

 
-22-
 
 
(Preliminary)

Global Commercial Services
Selected Statistical Information

(Billions, except percentages and where indicated)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Card billed business
   $ 47.6     $ 45.5     $ 45.0     $ 43.2     $ 44.4  
Total cards-in-force (millions)
     7.0       7.1       7.1       7.1       7.0  
Basic cards-in-force (millions)
     7.0       7.1       7.1       7.1       7.0  
Average basic Card Member spending (dollars)
   $ 6,781     $ 6,429     $ 6,361     $ 6,139     $ 6,317  
                                         
Global Corporate Travel:
                                        
Travel sales
   $ 4.9     $ 4.7     $ 4.8     $ 4.5     $ 5.0  
Travel commissions and fees/sales
     8.2 %     7.2 %     8.3 %     8.8 %     7.9 %
                                         
Total segment assets
   $ 20.8     $ 21.6     $ 19.2     $ 20.5     $ 20.5  
Segment capital (A)
   $ 3.8     $ 3.8     $ 3.7     $ 3.6     $ 3.7  
Return on average segment capital (B)
     32.0 %     23.2 %     23.6 %     20.4 %     18.3 %
Return on average tangible segment capital (B)
     60.3 %     44.4 %     45.8 %     39.9 %     35.9 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 16.5     $ 16.6     $ 14.4     $ 15.9     $ 15.9  
90 days past billing as a % of total
     0.7 %     0.7 %     0.9 %     0.8 %     0.7 %
Net loss ratio (as a % of charge volume)
     0.09 %     0.09 %     0.08 %     0.06 %     0.08 %
 
(A) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(B) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

 
-23-
 
 
(Preliminary)

Global Network & Merchant Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Revenues
                  
Discount revenue, fees and other
   $ 1,366     $ 1,313       4 %
Interest income
     11       8       38  
Interest expense
     (78 )     (63 )     24  
Net interest income
     89       71       25  
Total revenues net of interest expense
     1,455       1,384       5  
Provisions for losses
     18       21       (14 )
Total revenues net of interest expense after provisions for losses
     1,437       1,363       5  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     277       188       47  
Salaries and employee benefits and other operating expenses
     582       528       10  
Total
     859       716       20  
Pretax segment income
     578       647       (11 )
Income tax provision
     205       235       (13 )
Segment income
   $ 373     $ 412       (9 )
Effective tax rate
     35.5 %     36.3 %        


 
-24-
 
 
(Preliminary)

Global Network & Merchant Services
Selected Statistical Information
 
(Billions, except percentages and where indicated)
  
Quarters Ended
June 30,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Global Card billed business (A)
   $ 258.1     $ 237.7       9 %
                         
Global Network & Merchant Services:
                        
Total segment assets
   $ 18.7     $ 22.6       (17 )%
Segment capital (millions) (B)
   $ 2,046     $ 2,145       (5 )%
Return on average segment capital (C)
     79.4 %     71.0 %        
Return on average tangible segment capital (C)
     87.8 %     78.4 %        
                         
Global Network Services:
                        
Card billed business
   $ 40.1     $ 35.8       12 %
Total cards-in-force (millions)
     42.5       38.8       10 %
 
(A) 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.

(B) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(C) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

 
-25-
 
 
(Preliminary)

Global Network & Merchant Services
Selected Income Statement Data

(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
Revenues
                              
Discount revenue, fees and other
   $ 1,366     $ 1,293     $ 1,373     $ 1,309     $ 1,313  
Interest income
     11       10       9       8       8  
Interest expense
     (78 )     (62 )     (65 )     (62 )     (63 )
Net interest income
     89       72       74       70       71  
Total revenues net of interest expense
     1,455       1,365       1,447       1,379       1,384  
Provisions for losses
     18       16       14       13       21  
Total revenues net of interest expense after provisions for losses
     1,437       1,349       1,433       1,366       1,363  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     277       156       158       200       188  
Salaries and employee benefits and other operating expenses
     582       491       643       558       528  
Total
     859       647       801       758       716  
Pretax segment income
     578       702       632       608       647  
Income tax provision
     205       259       233       217       235  
Segment income
   $ 373     $ 443     $ 399     $ 391     $ 412  
Effective tax rate
     35.5 %     36.9 %     36.9 %     35.7 %     36.3 %


 
-26-
 
 
(Preliminary)

Global Network & Merchant Services
Selected Statistical Information

 
(Billions, except percentages and where indicated)
  
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Global Card billed business (A)
   $ 258.1     $ 238.1     $ 254.0     $ 236.2     $ 237.7  
                                         
Global Network & Merchant Services:
                                        
Total segment assets
   $ 18.7     $ 18.3     $ 17.1     $ 17.8     $ 22.6  
Segment capital (B)
   $ 2.0     $ 1.9     $ 2.0     $ 2.0     $ 2.1  
Return on average segment capital (C)
     79.4 %     81.2 %     76.8 %     73.4 %     71.0 %
Return on average tangible segment capital (C)
     87.8 %     89.7 %     84.9 %     81.1 %     78.4 %
                                         
Global Network Services:
                                        
Card billed business
   $ 40.1     $ 36.6     $ 39.3     $ 35.9     $ 35.8  
Total cards-in-force (millions)
     42.5       41.3       40.7       39.4       38.8  
 
(A) 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.

(B) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.

(C) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure.

 
-27-
 


(Preliminary)

American Express Company
Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE),
and Return on Average Tangible Common Equity (ROTCE)
Appendix I

(Millions)
 
   
For the Twelve Months Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
ROE
                              
                               
Net income
   $ 5,635     $ 5,511     $ 5,359     $ 4,688     $ 4,572  
Average shareholders' equity
   $ 19,591     $ 19,442     $ 19,254     $ 19,289     $ 19,372  
Return on average equity (A)
     28.8 %     28.3 %     27.8 %     24.3 %     23.6 %
                                         
Reconciliation of ROCE and ROTCE
                                        
                                         
Net income
   $ 5,635     $ 5,511     $ 5,359     $ 4,688     $ 4,572  
Earnings allocated to participating share awards and other
     47       48       47       43       45  
Net income attributable to common shareholders
   $ 5,588     $ 5,463     $ 5,312     $ 4,645     $ 4,527  
                                         
Average shareholders' equity
   $ 19,591     $ 19,442     $ 19,254     $ 19,289     $ 19,372  
Average common shareholders' equity
   $ 19,591     $ 19,442     $ 19,254     $ 19,289     $ 19,372  
Average goodwill and other intangibles
     3,994       4,012       4,055       4,091       4,128  
Average tangible common shareholders' equity
   $ 15,597     $ 15,430     $ 15,199     $ 15,198     $ 15,244  
Return on average common equity (A)
     28.5 %     28.1 %     27.6 %     24.1 %     23.4 %
Return on average tangible common equity (B)
     35.8 %     35.4 %     34.9 %     30.6 %     29.7 %
 
(A) Return on average equity and return on average common equity are calculated by dividing one year period net income/net income attributable to common shareholders by one year average total shareholders’ equity/average common shareholders' equity, respectively.

(B) Return on average tangible common equity, 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 total 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.

 
-28-
 
 
(Preliminary)

American Express Company
Components of Return on Average Segment Capital (ROSC) and Return on Average Tangible Segment Capital (ROTSC)
Appendix II

(Millions)
 
   
For the Twelve Months Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
U.S. Card Services
                              
Segment income
   $ 3,292     $ 3,265     $ 3,193     $ 2,752     $ 2,669  
Average segment capital
   $ 9,337     $ 9,180     $ 8,974     $ 8,940     $ 8,921  
Average goodwill and other intangibles
     311       323       334       345       357  
Average tangible segment capital
   $ 9,026     $ 8,857     $ 8,640     $ 8,595     $ 8,564  
Return on average segment capital (A)
     35.3 %     35.6 %     35.6 %     30.8 %     29.9 %
Return on average tangible segment capital (A)
     36.5 %     36.9 %     37.0 %     32.0 %     31.2 %
                                         
International Card Services
                                        
Segment income
   $ 481     $ 612     $ 631     $ 623     $ 645  
Average segment capital
   $ 3,063     $ 3,053     $ 3,024     $ 2,990     $ 2,946  
Average goodwill and other intangibles
     1,394       1,389       1,396       1,398       1,398  
Average tangible segment capital
   $ 1,669     $ 1,664     $ 1,628     $ 1,592     $ 1,548  
Return on average segment capital (A)
     15.7 %     20.0 %     20.9 %     20.8 %     21.9 %
Return on average tangible segment capital (A)
     28.8 %     36.8 %     38.8 %     39.1 %     41.7 %
                                         
Global Commercial Services
                                        
Segment income
   $ 1,188     $ 853     $ 860     $ 743     $ 665  
Average segment capital
   $ 3,707     $ 3,679     $ 3,647     $ 3,637     $ 3,639  
Average goodwill and other intangibles
     1,736       1,759       1,768       1,775       1,785  
Average tangible segment capital
   $ 1,971     $ 1,920     $ 1,879     $ 1,862     $ 1,854  
Return on average segment capital (A)
     32.0 %     23.2 %     23.6 %     20.4 %     18.3 %
Return on average tangible segment capital (A)
     60.3 %     44.4 %     45.8 %     39.9 %     35.9 %
                                         
Global Network & Merchant Services
                                        
Segment income
   $ 1,606     $ 1,645     $ 1,575     $ 1,530     $ 1,499  
Average segment capital
   $ 2,022     $ 2,026     $ 2,050     $ 2,084     $ 2,111  
Average goodwill and other intangibles
     192       193       195       197       199  
Average tangible segment capital
   $ 1,830     $ 1,833     $ 1,855     $ 1,887     $ 1,912  
Return on average segment capital (A)
     79.4 %     81.2 %     76.8 %     73.4 %     71.0 %
Return on average tangible segment capital (A)
     87.8 %     89.7 %     84.9 %     81.1 %     78.4 %
 
(A) 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.

 
-29-
 
 
(Preliminary)

American Express Company
Net Interest Yield on Card Member Loans
Appendix III

(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
                               
Net interest income
   $ 1,316     $ 1,337     $ 1,319     $ 1,283     $ 1,202  
                                         
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 259     $ 263     $ 279     $ 296     $ 295  
                                         
Interest income not attributable to the Company's Card Member loan portfolio
   $ (89 )   $ (88 )   $ (91 )   $ (87 )   $ (88 )
                                         
                                         
Adjusted net interest income (A)
   $ 1,486     $ 1,512     $ 1,507     $ 1,492     $ 1,409  
                                         
Average loans (billions)
   $ 65.2     $ 64.5     $ 64.4     $ 63.0     $ 62.5  
                                         
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 )   $ (0.3 )
                                         
Adjusted average loans (billions) (B)
   $ 65.0     $ 64.3     $ 64.2     $ 62.8     $ 62.2  
                                         
Net interest income divided by average loans (C)
     8.1 %     8.4 %     8.1 %     8.1 %     7.7 %
Net interest yield on Card Member loans (D)
     9.2 %     9.5 %     9.3 %     9.4 %     9.1 %
 
(A) 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.

(B) 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.

(C) 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.

(D) 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.

 
-30-
 
 
(Preliminary)

U. S. Card Services and International Card Services
Net Interest Yield on Card Member Loans
Appendix IV

(Millions)
 
   
Quarters Ended
  
   
June 30,
2014
    
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
  
USCS:
                              
Net interest income
   $ 1,255     $ 1,273     $ 1,256     $ 1,236     $ 1,176  
                                         
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 40     $ 39     $ 43     $ 45     $ 47  
                                         
Interest income not attributable to the Company's Card Member loan portfolio
   $ (3 )   $ (3 )   $ (2 )   $ (3 )   $ (2 )
                                         
Adjusted net interest income (A)
   $ 1,292     $ 1,309     $ 1,297     $ 1,278     $ 1,221  
                                         
Average loans (billions)
   $ 56.8     $ 56.1     $ 55.8     $ 54.7     $ 54.0  
                                         
Exclude:
                                        
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans (billions)
   $ -     $ 0.1     $ -     $ -     $ -  
                                         
Adjusted average loans (billions) (B)
   $ 56.8     $ 56.2     $ 55.8     $ 54.7     $ 54.0  
                                         
Net interest income divided by average loans (C)
     8.9 %     9.2 %     8.9 %     9.0 %     8.7 %
Net interest yield on Card Member loans (D)
     9.1 %     9.4 %     9.2 %     9.3 %     9.1 %
                                         
ICS:
                                        
Net interest income
   $ 183     $ 195     $ 200     $ 195     $ 169  
                                         
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 21     $ 18     $ 21     $ 23     $ 26  
                                         
Interest income not attributable to the Company's Card Member loan portfolio
   $ (10 )   $ (10 )   $ (11 )   $ (6 )   $ (5 )
                                         
Adjusted net interest income (A)
   $ 194     $ 203     $ 210     $ 212     $ 190  
                                         
Average loans (billions)
   $ 8.3     $ 8.3     $ 8.5     $ 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) (B)
   $ 8.1     $ 8.1     $ 8.3     $ 8.1     $ 8.3  
                                         
Net interest income divided by average loans (C)
     8.8 %     9.5 %     9.3 %     9.3 %     8.0 %
Net interest yield on Card Member loans (D)
     9.6 %     10.1 %     10.0 %     10.4 %     9.2 %
 
(A) 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.

(B) 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.

(C) 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.

(D) 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.
 
 
-31-