EX-99.2 3 ex99_2.htm EXHIBIT 99.2 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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Non-interest revenues
                  
Discount revenue
   $ 4,646     $ 4,438       5 %
Net card fees
     674       653       3  
Travel commissions and fees
     423       437       (3 )
Other commissions and fees
     618       573       8  
Other
     501       537       (7 )
Total non-interest revenues
     6,862       6,638       3  
Interest income
                        
Interest on loans
     1,711       1,683       2  
Interest and dividends on investment securities
     46       53       (13 )
Deposits with banks and other
     19       26       (27 )
Total interest income
     1,776       1,762       1  
Interest expense
                        
Deposits
     94       114       (18 )
Long-term debt and other
     345       405       (15 )
Total interest expense
     439       519       (15 )
Net interest income
     1,337       1,243       8  
Total revenues net of interest expense
     8,199       7,881       4  
Provisions for losses
                        
Charge card
     215       154       40  
Card Member loans
     250       243       3  
Other
     20       19       5  
Total provisions for losses
     485       416       17  
Total revenues net of interest expense after provisions for losses
     7,714       7,465       3  
                         
Expenses
                        
Marketing and promotion
     613       621       (1 )
Card Member rewards
     1,582       1,520       4  
Card Member services and other
     222       189       17  
Salaries and employee benefits
     1,540       1,615       (5 )
Professional services
     692       716       (3 )
Occupancy and equipment
     462       472       (2 )
Communications
     93       96       (3 )
Other, net
     302       327       (8 )
Total
     5,506       5,556       (1 )
Pretax income
     2,208       1,909       16  
Income tax provision
     776       629       23  
Net income
   $ 1,432     $ 1,280       12  
Net income attributable to common shareholders (A)
   $ 1,420     $ 1,269       12  
Effective tax rate
     35.1 %     32.9 %        

# - Denotes a variance of more than 100 percent.

(A) Represents net income, less earnings allocated to participating share awards of $12 million and $11 million for the three months ended March 31, 2014 and 2013, respectively.

 
-1-
 
 
(Preliminary)
American Express Company
Condensed Consolidated Balance Sheets

(Billions)

   
March 31,
2014
    
December 31,
2013
  
             
Assets
            
Cash & cash equivalents
   $ 21     $ 19  
Accounts receivable
     47       47  
Investment securities
     5       5  
Loans
     63       67  
Other assets
     15       15  
Total assets
   $ 151     $ 153  
                 
Liabilities and Shareholders' Equity
                
Customer deposits
   $ 43     $ 42  
Short-term borrowings
     3       5  
Long-term debt
     54       55  
Other liabilities
     31       32  
Total liabilities
     131       134  
                 
Shareholders' Equity
     20       19  
    Total liabilities and shareholders' equity
   $ 151     $ 153  

 
-2-
 
 
(Preliminary)
American Express Company
Financial Summary

(Millions)

   
Quarters Ended
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Total revenues net of interest expense
                  
U.S. Card Services
   $ 4,290     $ 4,082       5 %
International Card Services
     1,352       1,317       3  
Global Commercial Services
     1,194       1,163       3  
Global Network & Merchant Services
     1,365       1,303       5  
      8,201       7,865       4  
Corporate & Other
     (2 )     16       #  
                         
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
   $ 8,199     $ 7,881       4  
                         
Pretax income (loss)
                        
U.S. Card Services
   $ 1,406     $ 1,270       11  
International Card Services
     203       193       5  
Global Commercial Services
     285       283       1  
Global Network & Merchant Services
     702       582       21  
      2,596       2,328       12  
Corporate & Other
     (388 )     (419 )     (7 )
                         
PRETAX INCOME
   $ 2,208     $ 1,909       16  
                         
Net income (loss)
                        
U.S. Card Services
   $ 876     $ 804       9  
International Card Services
     159       178       (11 )
Global Commercial Services
     184       191       (4 )
Global Network & Merchant Services
     443       373       19  
      1,662       1,546       8  
Corporate & Other
     (230 )     (266 )     (14 )
                         
NET INCOME
   $ 1,432     $ 1,280       12  

# - Denotes a variance of more than 100 percent.

 
-3-
 
 
(Preliminary)
American Express Company
Financial Summary (continued)

   
Quarters Ended
 March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
EARNINGS PER COMMON SHARE
                  
                   
BASIC
                  
Net income attributable to common shareholders
   $ 1.34     $ 1.15       17  
                         
Average common shares outstanding (millions)
     1,060       1,099       (4 ) %
                         
DILUTED
                        
Net income attributable to common shareholders
   $ 1.33     $ 1.15       16  
                         
Average common shares outstanding (millions)
     1,067       1,106       (4 ) %
                         
Cash dividends declared per common share
   $ 0.23     $ 0.20       15 %

 
Selected Statistical Information

   
Quarters Ended
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Return on average equity (A)
     28.3 %     23.2 %      
Return on average common equity (A)
     28.1 %     23.0 %      
Return on average tangible common equity (A)
     35.4 %     29.3 %      
Common shares outstanding (millions)
     1,059       1,098       (4 )%
Book value per common share
   $ 18.87     $ 17.56       7 %
Shareholders' equity (billions)
   $ 20.0     $ 19.3       4 %

# - 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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Card billed business (billions) (A):
                  
United States
   $ 159.2     $ 150.0       6 %
Outside the United States
     78.9       74.5       6  
Total
   $ 238.1     $ 224.5       6  
Total cards-in-force (B):
                        
United States
     53.5       52.1       3 %
Outside the United States
     54.7       51.1       7  
Total
     108.2       103.2       5  
Basic cards-in-force (B):
                        
United States
     41.5       40.5       2 %
Outside the United States
     44.6       41.1       9  
Total
     86.1       81.6       6  
                         
Average discount rate (C)
     2.52 %     2.52 %        
Average basic Card Member spending (dollars) (D)
   $ 3,991     $ 3,905       2 %
Average fee per card (dollars) (D)
   $ 40     $ 40       -  
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 $73 million and $65 million for the quarters ended March 31, 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)

   
 
Quarter Ended
 March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Worldwide Card Member receivables:
                  
Total receivables
   $ 44.7     $ 43.4       3 %
Loss reserves (millions):
                        
Beginning balance
   $ 386     $ 428       (10 )%
Provisions  (A)
     215       154       40  
Net write-offs (B)
     (170 )     (178 )     (4 )
Other (C)
     (17 )     6       #  
Ending balance
   $ 414     $ 410       1  
% 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
     1.7 %  
(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
   $ 64.0     $ 62.3       3 %
Loss reserves (millions):
                        
Beginning balance
   $ 1,261     $ 1,471       (14 ) %
Provisions (A)
     250       243       3  
Net write-offs - principal (B)
     (280 )     (304 )     (8 )
Net write-offs - interest and fees (B)
     (42 )     (38 )     11  
Other (C)
     2       (5 )     #  
Ending balance
   $ 1,191     $ 1,367       (13 )
Ending reserves - principal
   $ 1,135     $ 1,316       (14 )
Ending reserves - interest and fees
   $ 56     $ 51       10  
% of loans
     1.9 %     2.2 %        
% of past due
     159 %     170 %        
Average loans
   $ 64.5     $ 62.8       3 %
Net write-off rate (principal only) (D)
     1.7 %     1.9 %        
Net write-off rate (principal, interest and fees) (D)
     2.0 %     2.2 %        
30 days past due loans as a % of total
     1.2 %     1.3 %        
Net interest income divided by average loans (E)
     8.4 %     8.0 %        
Net interest yield on Card Member loans (E)
     9.5 %     9.5 %        

# - 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) As of the three months ended March 31, 2014, reserves related to unauthorized transactions 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, effective March 31, 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
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Revenues
                              
Non-interest revenues
                              
Discount revenue
   $ 4,646     $ 4,869     $ 4,659     $ 4,729     $ 4,438  
Net card fees
     674       673       658       647       653  
Travel commissions and fees
     423       491       490       495       437  
Other commissions and fees
     618       626       610       605       573  
Other
     501       569       601       567       537  
Total non-interest revenues
     6,862       7,228       7,018       7,043       6,638  
Interest income
                                        
Interest on loans
     1,711       1,715       1,698       1,622       1,683  
Interest and dividends on investment securities
     46       48       48       52       53  
Deposits with banks and other
     19       19       21       20       26  
Total interest income
     1,776       1,782       1,767       1,694       1,762  
Interest expense
                                        
Deposits
     94       110       111       107       114  
Long-term debt and other
     345       353       373       385       405  
Total interest expense
     439       463       484       492       519  
Net interest income
     1,337       1,319       1,283       1,202       1,243  
Total revenues net of interest expense
     8,199       8,547       8,301       8,245       7,881  
Provisions for losses
                                        
Charge card
     215       174       159       161       154  
Card Member loans
     250       290       248       334       243  
Other
     20       15       12       23       19  
Total provisions for losses
     485       479       419       518       416  
Total revenues net of interest expense after provisions for losses
     7,714       8,068       7,882       7,727       7,465  
                                         
Expenses
                                        
Marketing and promotion
     613       809       827       786       621  
Card Member rewards
     1,582       1,717       1,619       1,601       1,520  
Card Member services and other
     222       188       197       193       189  
Salaries and employee benefits
     1,540       1,489       1,544       1,543       1,615  
Professional services
     692       830       793       763       716  
Occupancy and equipment
     462       510       462       460       472  
Communications
     93       97       94       92       96  
Other, net
     302       448       342       294       327  
Total
     5,506       6,088       5,878       5,732       5,556  
Pretax income
     2,208       1,980       2,004       1,995       1,909  
Income tax provision
     776       672       638       590       629  
Net income
   $ 1,432     $ 1,308     $ 1,366     $ 1,405     $ 1,280  
Net income attributable to common shareholders (A)
   $ 1,420     $ 1,297     $ 1,354     $ 1,392     $ 1,269  
Effective tax rate
     35.1 %     33.9 %     31.8 %     29.6 %     32.9 %

(A) Represents net income, less earnings allocated to participating share awards of $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, $13 million for the quarter ended June 30, 2013 and $11 million for the quarter ended March 31, 2013.

 
-7-
 
 
(Preliminary)
American Express Company
Financial Summary

(Millions)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Total revenues net of interest expense
                              
U.S. Card Services
   $ 4,290     $ 4,388     $ 4,286     $ 4,239     $ 4,082  
International Card Services
     1,352       1,429       1,356       1,299       1,317  
Global Commercial Services
     1,194       1,238       1,221       1,231       1,163  
Global Network & Merchant Services
     1,365       1,447       1,379       1,384       1,303  
      8,201       8,502       8,242       8,153       7,865  
Corporate & Other
     (2 )     45       59       92       16  
                                         
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE
   $ 8,199     $ 8,547     $ 8,301     $ 8,245     $ 7,881  
                                         
Pretax income (loss)
                                        
U.S. Card Services
   $ 1,406     $ 1,292     $ 1,257     $ 1,175     $ 1,270  
International Card Services
     203       108       186       156       193  
Global Commercial Services
     285       287       341       333       283  
Global Network & Merchant Services
     702       632       608       647       582  
      2,596       2,319       2,392       2,311       2,328  
Corporate & Other
     (388 )     (339 )     (388 )     (316 )     (419 )
                                         
PRETAX INCOME
   $ 2,208     $ 1,980     $ 2,004     $ 1,995     $ 1,909  
                                         
Net income (loss)
                                        
U.S. Card Services
   $ 876     $ 864     $ 782     $ 743     $ 804  
International Card Services
     159       103       142       208       178  
Global Commercial Services
     184       182       261       226       191  
Global Network & Merchant Services
     443       399       391       412       373  
      1,662       1,548       1,576       1,589       1,546  
Corporate & Other
     (230 )     (240 )     (210 )     (184 )     (266 )
                                         
NET INCOME
   $ 1,432     $ 1,308     $ 1,366     $ 1,405     $ 1,280  

 
-8-
 
 
(Preliminary)
American Express Company
Financial Summary (continued)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
EARNINGS PER COMMON SHARE
                              
                               
BASIC
                              
Net income attributable to common shareholders
   $ 1.34     $ 1.22     $ 1.26     $ 1.28     $ 1.15  
                                         
Average common shares outstanding (millions)
     1,060       1,067       1,074       1,090       1,099  
                                         
DILUTED
                                        
Net income attributable to common shareholders
   $ 1.33     $ 1.21     $ 1.25     $ 1.27     $ 1.15  
                                         
Average common shares outstanding (millions)
     1,067       1,073       1,081       1,097       1,106  
                                         
Cash dividends declared per common share
   $ 0.23     $ 0.23     $ 0.23     $ 0.23     $ 0.20  

 
Selected Statistical Information

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
                               
Return on average equity (A)
     28.3 %     27.8 %     24.3 %     23.6 %     23.2 %
Return on average common equity (A)
     28.1 %     27.6 %     24.1 %     23.4 %     23.0 %
Return on average tangible common equity (A)
     35.4 %     34.9 %     30.6 %     29.7 %     29.3 %
Common shares outstanding (millions)
     1,059       1,064       1,071       1,084       1,098  
Book value per common share
   $ 18.87     $ 18.32     $ 17.94     $ 17.57     $ 17.56  
Shareholders' equity (billions)
   $ 20.0     $ 19.5     $ 19.2     $ 19.0     $ 19.3  

(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
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
Card billed business (billions) (A):
                              
United States
   $ 159.2     $ 169.1     $ 158.2     $ 159.7     $ 150.0  
Outside the United States
     78.9       84.9       78.0       78.0       74.5  
Total
   $ 238.1     $ 254.0     $ 236.2     $ 237.7     $ 224.5  
Total cards-in-force (B):
                                        
United States
     53.5       53.1       52.8       52.5       52.1  
Outside the United States
     54.7       54.1       52.6       51.8       51.1  
Total
     108.2       107.2       105.4       104.3       103.2  
Basic cards-in-force (B):
                                        
United States
     41.5       41.1       40.9       40.7       40.5  
Outside the United States
     44.6       44.0       42.6       41.8       41.1  
Total
     86.1       85.1       83.5       82.5       81.6  
                                         
Average discount rate (C)
     2.52 %     2.48 %     2.52 %     2.52 %     2.52 %
Average basic Card Member spending (dollars) (D)
   $ 3,991     $ 4,292     $ 4,037     $ 4,097     $ 3,905  
Average fee per card (dollars) (D)
   $ 40     $ 41     $ 40     $ 40     $ 40  
Average fee per card adjusted (dollars) (D)
   $ 45     $ 44     $ 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 $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, $66 million for the quarter ended June 30, 2013 and $65 million for the quarter ended March 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.

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


(Billions, except percentages and where indicated)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Worldwide Card Member receivables:
                              
Total receivables
   $ 44.7     $ 44.2     $ 43.5     $ 44.1     $ 43.4  
Loss reserves (millions):
                                        
Beginning balance
   $ 386     $ 396     $ 386     $ 410     $ 428  
Provisions (A)
     215       174       159       161       154  
Net write-offs (B)
     (170 )     (162 )     (149 )     (180 )     (178 )
Other (C)
     (17 )     (22 )     -       (5 )     6  
Ending balance
   $ 414     $ 386     $ 396     $ 386     $ 410  
% of receivables
     0.9 %     0.9 %     0.9 %     0.9 %     0.9 %
Net write-off rate (principal only) - USCS/ICS (D)
     1.8 %  
(F)
    
(F)
    
(F)
    
(F)
  
Net write-off rate (principal and fees) - USCS/ICS (D)
     2.0 %  
(F)
    
(F)
    
(F)
    
(F)
  
30 days past due as a % of total - USCS/ICS
     1.7 %  
(F)
    
(F)
    
(F)
    
(F)
  
Net loss ratio (as a % of charge volume) - GCS
     0.09 %     0.08 %     0.06 %     0.08 %     0.08 %
90 days past billing as a % of total - GCS
     0.7 %     0.9 %     0.8 %     0.7 %     0.7 %
                                         
Worldwide Card Member loans:
                                        
Total loans
   $ 64.0     $ 67.2     $ 63.0     $ 63.1     $ 62.3  
Loss reserves (millions):
                                        
Beginning balance
   $ 1,261     $ 1,281     $ 1,342     $ 1,367     $ 1,471  
Provisions (A)
     250       290       248       334       243  
Net write-offs - principal (B)
     (280 )     (253 )     (275 )     (309 )     (304 )
Net write-offs - interest and fees (B)
     (42 )     (37 )     (36 )     (39 )     (38 )
Other (C)
     2       (20 )     2       (11 )     (5 )
Ending balance
   $ 1,191     $ 1,261     $ 1,281     $ 1,342     $ 1,367  
Ending reserves - principal
   $ 1,135     $ 1,212     $ 1,234     $ 1,290     $ 1,316  
Ending reserves - interest and fees
   $ 56     $ 49     $ 47     $ 52     $ 51  
% of loans
     1.9 %     1.9 %     2.0 %     2.1 %     2.2 %
% of past due
     159 %     169 %     179 %     188 %     170 %
Average loans
   $ 64.5     $ 64.4     $ 63.0     $ 62.5     $ 62.8  
Net write-off rate (principal only) (D)
     1.7 %     1.6 %     1.7 %     2.0 %     1.9 %
Net write-off rate (principal, interest and fees) (D)
     2.0 %     1.8 %     2.0 %     2.2 %     2.2 %
30 days past due loans as a % of total
     1.2 %     1.1 %     1.1 %     1.1 %     1.3 %
Net interest income divided by average loans (E)
     8.4 %     8.1 %     8.1 %     7.7 %     8.0 %
Net interest yield on Card Member loans (E)
     9.5 %     9.3 %     9.4 %     9.1 %     9.5 %

(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) As of the three months ended March 31, 2014, reserves related to unauthorized transactions 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, effective March 31, 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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 3,017     $ 2,878       5 %
Interest income
     1,423       1,386       3  
Interest expense
     150       182       (18 )
Net interest income
     1,273       1,204       6  
Total revenues net of interest expense
     4,290       4,082       5  
Provisions for losses
     342       290       18  
Total revenues net of interest expense after provisions for losses
     3,948       3,792       4  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     1,582       1,545       2  
Salaries and employee benefits and other operating expenses
     960       977       (2 )
Total
     2,542       2,522       1  
Pretax segment income
     1,406       1,270       11  
Income tax provision
     530       466       14  
Segment income
   $ 876     $ 804       9  
Effective tax rate
     37.7 %     36.7 %        

# - 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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 124.3     $ 116.7       7 %
Total cards-in-force (millions)
     44.1       42.5       4 %
Basic cards-in-force (millions)
     32.8       31.7       3 %
Average basic Card Member spending (dollars)
   $ 3,805     $ 3,709       3 %
                         
U.S. Consumer Travel:
                        
Travel sales (millions)
   $ 974     $ 1,044       (7 )%
Travel commissions and fees/sales
     6.5 %     6.4 %        
                         
Total segment assets
   $ 98.9     $ 97.8       1 %
Segment capital (millions) (A)
   $ 9,743     $ 9,073       7 %
Return on average segment capital (B)
     35.6 %     29.2 %        
Return on average tangible segment capital (B)
     36.9 %     30.4 %        
                         
Card Member receivables:
                        
Total receivables
   $ 20.7     $ 20.4       1 %
30 days past due as a % of total
     1.8 %     1.9 %        
Average receivables
   $ 20.6     $ 20.0       3 %
Net write-off rate (principal only) (C)
     1.8 %     2.0 %        
Net write-off rate (principal and fees) (C)
     2.0 %     2.2 %        
                         
Card Member loans:
                        
Total loans
   $ 55.8     $ 53.6       4 %
30 days past due loans as a % of total
     1.1 %     1.2 %        
Average loans
   $ 56.1     $ 54.0       4 %
Net write-off rate (principal only) (C)
     1.7 %     2.0 %        
Net write-off rate (principal, interest and fees) (C)
     1.9 %     2.2 %        
Net interest income divided by average loans (D)
     9.2 %     9.0 %        
Net interest yield on Card Member loans (D)
     9.4 %     9.4 %        

(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
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 3,017     $ 3,132     $ 3,050     $ 3,063     $ 2,878  
Interest income
     1,423       1,417       1,408       1,354       1,386  
Interest expense
     150       161       172       178       182  
Net interest income
     1,273       1,256       1,236       1,176       1,204  
Total revenues net of interest expense
     4,290       4,388       4,286       4,239       4,082  
Provisions for losses
     342       319       285       356       290  
Total revenues net of interest expense after provisions for losses
     3,948       4,069       4,001       3,883       3,792  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     1,582       1,789       1,756       1,735       1,545  
Salaries and employee benefits and other operating expenses
     960       988       988       973       977  
Total
     2,542       2,777       2,744       2,708       2,522  
Pretax segment income
     1,406       1,292       1,257       1,175       1,270  
Income tax provision
     530       428       475       432       466  
Segment income
   $ 876     $ 864     $ 782     $ 743     $ 804  
Effective tax rate
     37.7 %     33.1 %     37.8 %     36.8 %     36.7 %

 
-14-
 
 
(Preliminary)
U.S. Card Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Card billed business
   $ 124.3     $ 134.1     $ 124.6     $ 125.6     $ 116.7  
Total cards-in-force (millions)
     44.1       43.7       43.4       42.9       42.5  
Basic cards-in-force (millions)
     32.8       32.5       32.2       31.9       31.7  
Average basic Card Member spending (dollars)
   $ 3,805     $ 4,138     $ 3,882     $ 3,954     $ 3,709  
                                         
U.S. Consumer Travel:
                                        
Travel sales
   $ 1.0     $ 0.9     $ 0.9     $ 1.2     $ 1.0  
Travel commissions and fees/sales
     6.5 %     7.4 %     7.9 %     6.7 %     6.4 %
                                         
Total segment assets
   $ 98.9     $ 103.5     $ 95.2     $ 96.5     $ 97.8  
Segment capital (A)
   $ 9.7     $ 9.3     $ 9.1     $ 8.7     $ 9.1  
Return on average segment capital (B)
     35.6 %     35.6 %     30.8 %     29.9 %     29.2 %
Return on average tangible segment capital (B)
     36.9 %     37.0 %     32.0 %     31.2 %     30.4 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 20.7     $ 21.8     $ 20.3     $ 20.9     $ 20.4  
30 days past due as a % of total
     1.8 %     1.6 %     1.7 %     1.6 %     1.9 %
Average receivables
   $ 20.6     $ 21.2     $ 20.5     $ 20.5     $ 20.0  
Net write-off rate (principal only) (C)
     1.8 %     1.5 %     1.4 %     1.9 %     2.0 %
Net write-off rate (principal and fees) (C)
     2.0 %     1.7 %     1.6 %     2.1 %     2.2 %
                                         
Card Member loans:
                                        
Total loans
   $ 55.8     $ 58.4     $ 54.5     $ 54.6     $ 53.6  
30 days past due loans as a % of total
     1.1 %     1.1 %     1.1 %     1.1 %     1.2 %
Average loans
   $ 56.1     $ 55.8     $ 54.7     $ 54.0     $ 54.0  
Net write-off rate (principal only) (C)
     1.7 %     1.5 %     1.7 %     2.0 %     2.0 %
Net write-off rate (principal, interest and fees) (C)
     1.9 %     1.7 %     1.9 %     2.2 %     2.2 %
Net interest income divided by average loans (D)
     9.2 %     8.9 %     9.0 %     8.7 %     9.0 %
Net interest yield on Card Member loans (D)
     9.4 %     9.2 %     9.3 %     9.1 %     9.4 %

(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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 1,157     $ 1,124       3 %
Interest income
     277       290       (4 )
Interest expense
     82       97       (15 )
Net interest income
     195       193       1  
Total revenues net of interest expense
     1,352       1,317       3  
Provisions for losses
     87       81       7  
Total revenues net of interest expense after provisions for losses
     1,265       1,236       2  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     496       452       10  
Salaries and employee benefits and other operating expenses
     566       591       (4 )
Total
     1,062       1,043       2  
Pretax segment income
     203       193       5  
Income tax provision
     44       15       #  
Segment income
   $ 159     $ 178       (11 )
Effective tax rate
     21.7 %     7.8 %        

# - Denotes a variance of more than 100 percent.

 
-16-
 
 
(Preliminary)
International Card Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
 
Quarters Ended
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 31.9     $ 31.3       2 %
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)
   $ 2,942     $ 2,961       (1 )%
                         
International Consumer Travel:
                        
Travel sales (millions)
   $ 353     $ 340       4  
Travel commissions and fees/sales
     6.2 %     6.8 %        
                         
Total segment assets
   $ 30.4     $ 31.1       (2 )%
Segment capital (millions) (A)
   $ 3,019     $ 2,981       1 %
Return on average segment capital (B)
     20.0 %     20.9 %        
Return on average tangible segment capital (B)
     36.8 %     40.3 %        
                         
Card Member receivables:
                        
Total receivables
   $ 7.2     $ 7.1       1  
30 days past billing as a % of total
     1.4 %  
(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)
       0.18 %        
                         
Card Member loans:
                        
Total loans
   $ 8.2     $ 8.6       (5 )%
30 days past due loans as a % of total
     1.7 %     1.7 %        
Average loans
   $ 8.3     $ 8.8       (6 )%
Net write-off rate (principal only) (C)
     2.2 %     1.8 %        
Net write-off rate (principal, interest and fees) (C)
     2.7 %     2.3 %        
Net interest income divided by average loans (D)
     9.5 %     8.9 %        
Net interest yield on Card Member loans (D)
     10.1 %     10.0 %        

(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, effective March 31, 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
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 1,157     $ 1,229     $ 1,161     $ 1,130     $ 1,124  
Interest income
     277       288       281       259       290  
Interest expense
     82       88       86       90       97  
Net interest income
     195       200       195       169       193  
Total revenues net of interest expense
     1,352       1,429       1,356       1,299       1,317  
Provisions for losses
     87       110       96       101       81  
Total revenues net of interest expense after provisions for losses
     1,265       1,319       1,260       1,198       1,236  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     496       585       498       478       452  
Salaries and employee benefits and other operating expenses
     566       626       576       564       591  
Total
     1,062       1,211       1,074       1,042       1,043  
Pretax segment income
     203       108       186       156       193  
Income tax provision/(benefit)
     44       5       44       (52 )     15  
Segment income
   $ 159     $ 103     $ 142     $ 208     $ 178  
Effective tax rate
     21.7 %     4.6 %     23.7 %     -33.3 %     7.8 %

 
-18-
 
 
(Preliminary)
International Card Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
                               
Card billed business
   $ 31.9     $ 35.5     $ 32.5     $ 32.3     $ 31.3  
Total cards-in-force (millions)
     15.7       15.7       15.5       15.6       15.6  
Basic cards-in-force (millions)
     10.9       10.7       10.6       10.6       10.6  
Average basic Card Member spending (dollars)
   $ 2,942     $ 3,336     $ 3,076     $ 3,058     $ 2,961  
                                         
International Consumer Travel:
                                        
Travel sales
   $ 0.4     $ 0.4     $ 0.4     $ 0.4     $ 0.3  
Travel commissions and fees/sales
     6.2 %     7.1 %     7.0 %     6.8 %     6.8 %
                                         
Total segment assets
   $ 30.4     $ 31.1     $ 30.4     $ 29.7     $ 31.1  
Segment capital (A)
   $ 3.0     $ 3.1     $ 3.1     $ 3.1     $ 3.0  
Return on average segment capital (B)
     20.0 %     20.9 %     20.8 %     21.9 %     20.9 %
Return on average tangible segment capital (B)
     36.8 %     38.8 %     39.1 %     41.7 %     40.3 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 7.2     $ 7.8     $ 7.2     $ 7.2     $ 7.1  
30 days past billing as a % of total
     1.4 %  
(E)
    
(E)
    
(E)
    
(E)
  
Net write-off rate (principal only) (C)
     1.9 %  
(E)
    
(E)
    
(E)
    
(E)
  
Net write-off rate (principal and fees) (C)
     2.0 %  
(E)
    
(E)
    
(E)
    
(E)
  
90 days past billing as a % of total
  
(E)
       1.1 %     1.1 %     1.1 %     1.1 %
Net loss ratio (as a % of charge volume)
  
(E)
       0.19 %     0.21 %     0.21 %     0.18 %
                                         
Card Member loans:
                                        
Total loans
   $ 8.2     $ 8.8     $ 8.4     $ 8.4     $ 8.6  
30 days past due loans as a % of total
     1.7 %     1.4 %     1.5 %     1.6 %     1.7 %
Average loans
   $ 8.3     $ 8.5     $ 8.3     $ 8.5     $ 8.8  
Net write-off rate (principal only) (C)
     2.2 %     1.8 %     1.9 %     1.9 %     1.8 %
Net write-off rate (principal, interest and fees) (C)
     2.7 %     2.2 %     2.4 %     2.4 %     2.3 %
Net interest income divided by average loans (D)
     9.5 %     9.3 %     9.3 %     8.0 %     8.9 %
Net interest yield on Card Member loans (D)
     10.1 %     10.0 %     10.4 %     9.2 %     10.0 %

(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, effective March 31, 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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Revenues
                  
Discount revenue, net card fees and other
   $ 1,249     $ 1,220       2 %
Interest income
     4       3       33  
Interest expense
     59       60       (2 )
Net interest expense
     (55 )     (57 )     (4 )
Total revenues net of interest expense
     1,194       1,163       3  
Provisions for losses
     38       28       36  
Total revenues net of interest expense after provisions for losses
     1,156       1,135       2  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     166       150       11  
Salaries and employee benefits and other operating expenses
     705       702       -  
Total
     871       852       2  
Pretax segment income
     285       283       1  
Income tax provision
     101       92       10  
Segment income
   $ 184     $ 191       (4 )
Effective tax rate
     35.4 %     32.5 %        

 
-20-
 
 
(Preliminary)
Global Commercial Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
 
Quarters Ended
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Card billed business
   $ 45.5     $ 42.8       6 %
Total cards-in-force (millions)
     7.1       7.0       1  
Basic cards-in-force (millions)
     7.1       7.0       1  
Average basic Card Member spending (dollars)
   $ 6,429     $ 6,105       5 %
                         
Global Corporate Travel:
                        
Travel sales (millions)
   $ 4,698     $ 4,653       1 %
Travel commissions and fees/sales
     7.2 %     7.4 %        
                         
Total segment assets
   $ 21.6     $ 20.5       5 %
Segment capital (millions) (A)
   $ 3,786     $ 3,636       4 %
Return on average segment capital (B)
     23.2 %     18.0 %        
Return on average tangible segment capital (B)
     44.4 %     35.2 %        
                         
Card Member receivables:
                        
Total receivables
   $ 16.6     $ 15.7       6 %
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
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Revenues
                              
Discount revenue, net card fees and other
   $ 1,249     $ 1,298     $ 1,277     $ 1,290     $ 1,220  
Interest income
     4       4       3       3       3  
Interest expense
     59       64       59       62       60  
Net interest expense
     (55 )     (60 )     (56 )     (59 )     (57 )
Total revenues net of interest expense
     1,194       1,238       1,221       1,231       1,163  
Provisions for losses
     38       36       29       36       28  
Total revenues net of interest expense after provisions for losses
     1,156       1,202       1,192       1,195       1,135  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     166       162       148       144       150  
Salaries and employee benefits and other operating expenses
     705       753       703       718       702  
Total
     871       915       851       862       852  
Pretax segment income
     285       287       341       333       283  
Income tax provision
     101       105       80       107       92  
Segment income
   $ 184     $ 182     $ 261     $ 226     $ 191  
Effective tax rate
     35.4 %     36.6 %     23.5 %     32.1 %     32.5 %


 
-22-
 
 
(Preliminary)
Global Commercial Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Card billed business
   $ 45.5     $ 45.0     $ 43.2     $ 44.4     $ 42.8  
Total cards-in-force (millions)
     7.1       7.1       7.1       7.0       7.0  
Basic cards-in-force (millions)
     7.1       7.1       7.1       7.0       7.0  
Average basic Card Member spending (dollars)
   $ 6,429     $ 6,361     $ 6,139     $ 6,317     $ 6,105  
                                         
Global Corporate Travel:
                                        
Travel sales
   $ 4.7     $ 4.8     $ 4.5     $ 5.0     $ 4.7  
Travel commissions and fees/sales
     7.2 %     8.3 %     8.8 %     7.9 %     7.4 %
                                         
Total segment assets
   $ 21.6     $ 19.2     $ 20.5     $ 20.5     $ 20.5  
Segment capital (A)
   $ 3.8     $ 3.7     $ 3.6     $ 3.7     $ 3.6  
Return on average segment capital (B)
     23.2 %     23.6 %     20.4 %     18.3 %     18.0 %
Return on average tangible segment capital (B)
     44.4 %     45.8 %     39.9 %     35.9 %     35.2 %
                                         
Card Member receivables:
                                        
Total receivables
   $ 16.6     $ 14.4     $ 15.9     $ 15.9     $ 15.7  
90 days past billing as a % of total
     0.7 %     0.9 %     0.8 %     0.7 %     0.7 %
Net loss ratio (as a % of charge volume)
     0.09 %     0.08 %     0.06 %     0.08 %     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
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
Revenues
                  
Discount revenue, fees and other
   $ 1,293     $ 1,234       5 %
Interest income
     10       7       43  
Interest expense
     (62 )     (62 )     -  
Net interest income
     72       69       4  
Total revenues net of interest expense
     1,365       1,303       5  
Provisions for losses
     16       19       (16 )
Total revenues net of interest expense after provisions for losses
     1,349       1,284       5  
Expenses
                        
Marketing, promotion, rewards, Card Member services and other
     156       158       (1 )
Salaries and employee benefits and other operating expenses
     491       544       (10 )
Total
     647       702       (8 )
Pretax segment income
     702       582       21  
Income tax provision
     259       209       24  
Segment income
   $ 443     $ 373       19  
Effective tax rate
     36.9 %     35.9 %        


 
-24-
 
 
(Preliminary)
Global Network & Merchant Services
Selected Statistical Information


(Billions, except percentages and where indicated)

   
 
Quarters Ended
March 31,
    
Percentage
  
   
2014
    
2013
    
Inc/(Dec)
  
                   
Global Card billed business (A)
   $ 238.1     $ 224.5       6 %
                         
Global Network & Merchant Services:
                        
Total segment assets
   $ 18.3     $ 22.0       (17 )%
Segment capital (millions) (B)
   $ 1,931     $ 2,068       (7 )%
Return on average segment capital (C)
     81.2 %     69.1 %        
Return on average tangible segment capital (C)
     89.7 %     76.4 %        
                         
Global Network Services:
                        
Card billed business
   $ 36.6     $ 33.2       10 %
Total cards-in-force (millions)
     41.3       38.1       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.

 
-25-
 
 
(Preliminary)
Global Network & Merchant Services
Selected Income Statement Data

(Millions)

   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
Revenues
                              
Discount revenue, fees and other
   $ 1,293     $ 1,373     $ 1,309     $ 1,313     $ 1,234  
Interest income
     10       9       8       8       7  
Interest expense
     (62 )     (65 )     (62 )     (63 )     (62 )
Net interest income
     72       74       70       71       69  
Total revenues net of interest expense
     1,365       1,447       1,379       1,384       1,303  
Provisions for losses
     16       14       13       21       19  
Total revenues net of interest expense after provisions for losses
     1,349       1,433       1,366       1,363       1,284  
Expenses
                                        
Marketing, promotion, rewards, Card Member services and other
     156       158       200       188       158  
Salaries and employee benefits and other operating expenses
     491       643       558       528       544  
Total
     647       801       758       716       702  
Pretax segment income
     702       632       608       647       582  
Income tax provision
     259       233       217       235       209  
Segment income
   $ 443     $ 399     $ 391     $ 412     $ 373  
Effective tax rate
     36.9 %     36.9 %     35.7 %     36.3 %     35.9 %


 
-26-
 
 
(Preliminary)
Global Network & Merchant Services
Selected Statistical Information


(Billions, except percentages and where indicated)
 
   
Quarters Ended
  
   
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
                               
Global Card billed business (A)
   $ 238.1     $ 254.0     $ 236.2     $ 237.7     $ 224.5  
                                         
Global Network & Merchant Services:
                                        
Total segment assets
   $ 18.3     $ 17.1     $ 17.8     $ 22.6     $ 22.0  
Segment capital (B)
   $ 1.9     $ 2.0     $ 2.0     $ 2.1     $ 2.1  
Return on average segment capital (C)
     81.2 %     76.8 %     73.4 %     71.0 %     69.1 %
Return on average tangible segment capital (C)
     89.7 %     84.9 %     81.1 %     78.4 %     76.4 %
                                         
Global Network Services:
                                        
Card billed business
   $ 36.6     $ 39.3     $ 35.9     $ 35.8     $ 33.2  
Total cards-in-force (millions)
     41.3       40.7       39.4       38.8       38.1  

(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
  
 
 
  
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
 
  
 
    
 
    
 
    
 
    
 
  
ROE
  
 
    
 
    
 
    
 
    
 
  
                               
Net income
   $ 5,511     $ 5,359     $ 4,688     $ 4,572     $ 4,506  
Average shareholders' equity
   $ 19,442     $ 19,254     $ 19,289     $ 19,372     $ 19,426  
Return on average equity (A)
     28.3 %     27.8 %     24.3 %     23.6 %     23.2 %
                                         
Reconciliation of ROCE and ROTCE
                                        
                                         
Net income
   $ 5,511     $ 5,359     $ 4,688     $ 4,572     $ 4,506  
Earnings allocated to participating share awards and other
     48       47       43       45       46  
Net income attributable to common shareholders
   $ 5,463     $ 5,312     $ 4,645     $ 4,527     $ 4,460  
                                         
Average shareholders' equity
   $ 19,442     $ 19,254     $ 19,289     $ 19,372     $ 19,426  
Average common shareholders' equity
   $ 19,442     $ 19,254     $ 19,289     $ 19,372     $ 19,426  
Average goodwill and other intangibles
     4,012       4,055       4,091       4,128       4,181  
Average tangible common shareholders' equity
   $ 15,430     $ 15,199     $ 15,198     $ 15,244     $ 15,245  
Return on average common equity (A)
     28.1 %     27.6 %     24.1 %     23.4 %     23.0 %
Return on average tangible common equity (B)
     35.4 %     34.9 %     30.6 %     29.7 %     29.3 %

(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
  
 
 
  
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
 
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
U.S. Card Services
  
 
    
 
    
 
    
 
    
 
  
Segment income
   $ 3,265     $ 3,193     $ 2,752     $ 2,669     $ 2,644  
Average segment capital
   $ 9,180     $ 8,974     $ 8,940     $ 8,921     $ 9,053  
Average goodwill and other intangibles
     323       334       345       357       368  
Average tangible segment capital
   $ 8,857     $ 8,640     $ 8,595     $ 8,564     $ 8,685  
Return on average segment capital (A)
     35.6 %     35.6 %     30.8 %     29.9 %     29.2 %
Return on average tangible segment capital (A)
     36.9 %     37.0 %     32.0 %     31.2 %     30.4 %
                                         
International Card Services
                                        
Segment income
   $ 612     $ 631     $ 623     $ 645     $ 615  
Average segment capital
   $ 3,053     $ 3,024     $ 2,990     $ 2,946     $ 2,937  
Average goodwill and other intangibles
     1,389       1,396       1,398       1,398       1,412  
Average tangible segment capital
   $ 1,664     $ 1,628     $ 1,592     $ 1,548     $ 1,525  
Return on average segment capital (A)
     20.0 %     20.9 %     20.8 %     21.9 %     20.9 %
Return on average tangible segment capital (A)
     36.8 %     38.8 %     39.1 %     41.7 %     40.3 %
                                         
Global Commercial Services
                                        
Segment income
   $ 853     $ 860     $ 743     $ 665     $ 658  
Average segment capital
   $ 3,679     $ 3,647     $ 3,637     $ 3,639     $ 3,663  
Average goodwill and other intangibles
     1,759       1,768       1,775       1,785       1,796  
Average tangible segment capital
   $ 1,920     $ 1,879     $ 1,862     $ 1,854     $ 1,867  
Return on average segment capital (A)
     23.2 %     23.6 %     20.4 %     18.3 %     18.0 %
Return on average tangible segment capital (A)
     44.4 %     45.8 %     39.9 %     35.9 %     35.2 %
                                         
Global Network & Merchant Services
                                        
Segment income
   $ 1,645     $ 1,575     $ 1,530     $ 1,499     $ 1,459  
Average segment capital
   $ 2,026     $ 2,050     $ 2,084     $ 2,111     $ 2,110  
Average goodwill and other intangibles
     193       195       197       199       201  
Average tangible segment capital
   $ 1,833     $ 1,855     $ 1,887     $ 1,912     $ 1,909  
Return on average segment capital (A)
     81.2 %     76.8 %     73.4 %     71.0 %     69.1 %
Return on average tangible segment capital (A)
     89.7 %     84.9 %     81.1 %     78.4 %     76.4 %

(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
  
 
 
  
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
 
  
 
    
 
    
 
    
 
    
 
  
Net interest income
   $ 1,337     $ 1,319     $ 1,283     $ 1,202     $ 1,243  
 
                                        
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 263     $ 279     $ 296     $ 295     $ 311  
 
                                        
Interest income not attributable to the Company's Card Member loan portfolio
   $ (88 )   $ (91 )   $ (87 )   $ (88 )   $ (95 )
 
                                        
 
                                        
Adjusted net interest income (A)
   $ 1,512     $ 1,507     $ 1,492     $ 1,409     $ 1,459  
 
                                        
Average loans (billions)
   $ 64.5     $ 64.4     $ 63.0     $ 62.5     $ 62.8  
 
                                        
Exclude:
                                        
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans, and other (billions)
   $ (0.2 )   $ (0.2 )   $ (0.2 )   $ (0.3 )   $ (0.3 )
 
                                        
Adjusted average loans (billions) (B)
   $ 64.3     $ 64.2     $ 62.8     $ 62.2     $ 62.5  
 
                                        
Net interest income divided by average loans (C)
     8.4 %     8.1 %     8.1 %     7.7 %     8.0 %
Net interest yield on Card Member loans (D)
     9.5 %     9.3 %     9.4 %     9.1 %     9.5 %

(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
  
 
 
  
March 31,
2014
    
December 31,
2013
    
September 30,
2013
    
June 30,
2013
    
March 31,
2013
  
USCS:
  
 
    
 
    
 
    
 
    
 
  
Net interest income
   $ 1,273     $ 1,256     $ 1,236     $ 1,176     $ 1,204  
                                         
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 39     $ 43     $ 45     $ 47     $ 48  
                                         
Interest income not attributable to the Company's Card Member loan portfolio
   $ (3 )   $ (2 )   $ (3 )   $ (2 )   $ (2 )
                                         
                                         
Adjusted net interest income (A)
   $ 1,309     $ 1,297     $ 1,278     $ 1,221     $ 1,250  
                                         
Average loans (billions)
   $ 56.1     $ 55.8     $ 54.7     $ 54.0     $ 54.0  
                                         
Exclude:
                                        
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans (billions)
   $ 0.1     $ -     $ -     $ -     $ -  
                                         
Adjusted average loans (billions) (B)
   $ 56.2     $ 55.8     $ 54.7     $ 54.0     $ 54.0  
                                         
Net interest income divided by average loans (C)
     9.2 %     8.9 %     9.0 %     8.7 %     9.0 %
Net interest yield on Card Member loans (D)
     9.4 %     9.2 %     9.3 %     9.1 %     9.4 %
                                         
ICS:
                                        
Net interest income
   $ 195     $ 200     $ 195     $ 169     $ 193  
                                         
Exclude:
                                        
Interest expense not attributable to the Company's Card Member loan portfolio
   $ 18     $ 21     $ 23     $ 26     $ 23  
                                         
Interest income not attributable to the Company's Card Member loan portfolio
   $ (10 )   $ (11 )   $ (6 )   $ (5 )   $ (7 )
                                         
Adjusted net interest income (A)
   $ 203     $ 210     $ 212     $ 190     $ 209  
                                         
Average loans (billions)
   $ 8.3     $ 8.5     $ 8.3     $ 8.5     $ 8.8  
                                         
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)
   $ 8.1     $ 8.3     $ 8.1     $ 8.3     $ 8.5  
                                         
Net interest income divided by average loans (C)
     9.5 %     9.3 %     9.3 %     8.0 %     8.9 %
Net interest yield on Card Member loans (D)
     10.1 %     10.0 %     10.4 %     9.2 %     10.0 %

(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-