American Express Reports First Quarter EPS of $0.73, up 135% from $0.31 a Year Ago

http://www.businesswire.com/news/home/20100422006924/en

NEW YORK--(Business Wire)--
American Express Company (NYSE: AXP) today reported first-quarter net income of
$885 million, up 103 percent from $437 million a year ago. Diluted per-share net
income was $0.73, up 135 percent from $0.31.

(Millions, except per share amounts) Quarters Ended Percentage

March 31,
Inc/(Dec)
2010 2009
Total Revenues Net of Interest Expense1 $ 6,606 $ 5,926 11 %

Income From Continuing Operations $ 885 $ 443 100 %
Loss From Discontinued Operations $ - $ (6 ) #
Net Income $ 885 $ 437 #

Earnings Per Common Share - Diluted:
Income From Continuing Operations Attributable to Common
Shareholders(2) $ 0.73 $ 0.32 #
Loss From Discontinued Operations $ - $ (0.01 ) #
Net Income Attributable to Common Shareholders2 $ 0.73 $ 0.31 #

Average Diluted Common Shares Outstanding 1,191 1,156

Return on Average Equity 18.0 % 16.3 %
Return on Average Common Equity 17.1 % 16.7 %
# Denotes a variance of more than 100%.

1 Refer to discussion regarding revenue drivers within earnings release.
2 Represents income from continuing operations or net income, as applicable, less (i) preferred share dividends and related accretion of $72 million for the quarter ended March 31, 2009, and (ii) earnings allocated to participating share awards and other items of $12 million and $4 million for the quarters ended March 31, 2010 and 2009, respectively.

Consolidated revenues net of interest expense were $6.6 billion, up 11 percent,
compared to $5.9 billion in the year-ago period. The increase was the result of
the consolidation of securitized cardmember loans and related debt onto the
balance sheet in the first quarter3. Revenues also reflect higher cardmember
spending, offset by a smaller loan portfolio and lower yields on both the
securitized and non-securitized portions of the portfolio.

Consolidated provisions for losses totaled $943 million, down 48 percent
compared to $1.8 billion in the year-ago period. The decline reflected continued
improvement in credit quality on the overall portfolio3.

Consolidated expenses totaled $4.4 billion, up from $3.6 billion a year ago,
reflecting higher investment in business building initiatives and higher rewards
costs.

The company's return on average equity (ROE) was 18.0 percent, up from 16.3
percent a year ago.

During the first quarter, non-U.S. revenue, provision and expenses comparisons
were higher due to the translation effects of a comparatively weaker U.S.
dollar.

"Cardmember spending was up 16 percent, rebounding strongly from the
recessionary lows of last year," said Kenneth I. Chenault, chairman and chief
executive officer. "Credit metrics also continued the improvement that began in
the second half of 2009."

"The biggest turnarounds in spending came from corporate cardmembers and banks
who issue cards on our network. Consumer and small business volumes also rose in
part because of strength in travel, entertainment and other discretionary
categories.

"Throughout the industry - and at American Express - we saw further signs that
consumers are managing their post-recessionary finances more cautiously.

"Our ability to generate strong volumes comes at a time when cardmembers are
paying down their outstanding debt. This compares favorably to the major issuers
who traditionally have had to rely on lending-oriented customers to generate
billed business. At a time when so many consumers are focused on value, our
relative strength also reflects the importance of pay-in-full charge cards and
the appeal of our rewards, customer service and benefit programs.

"To help build on our momentum, we increased marketing and promotion investments
back to the pre-recessionary levels. We also made other substantial investments
to further strengthen our competitive position as we come out of the recession.

"Beyond those specific investments, we are carefully containing operating
expenses not directly tied to growth initiatives.

"Despite the progress we made this quarter, high unemployment levels and the
uncertain legislative environment remain challenges to continued growth.

"However, the global economy seems to be poised for continued improvement and
our strong competitive position is yielding high quality comparative results."

Segment Results

U.S. Card Services reported first-quarter net income of $428 million compared
with a loss of $7 million a year ago.

Total revenues net of interest expense increased 14 percent to $3.5 billion,
from $3.1 billion. The increase was the result of the consolidation of
securitized cardmember loans and related debt onto the balance sheet in the
first quarter3. Revenues also reflect higher cardmember spending, offset by a
smaller loan portfolio and lower yields on both the securitized and
non-securitized portions of the portfolio.

Provisions for losses totaled $687 million, down 50 percent from $1.4 billion in
the year-ago period. The decline reflected continued improvement in credit
quality on the overall portfolio3.

Total expenses increased 25 percent. Marketing, promotion, rewards and
cardmember services expenses increased 46 percent from the year-ago period,
driven by higher rewards costs and increased investment spending on marketing
initiatives. Salaries and employee benefits and other operating expenses
increased 2 percent from the year-ago quarter.

International Card Services reported first-quarter net income of $151 million,
up from $52 million a year ago.

Total revenues net of interest expense increased 9 percent to $1.1 billion,
driven by increased cardmember spending.

Provisions for losses totaled $158 million, down 53 percent from $335 million a
year ago, reflecting improved credit performance.

Total expenses increased 17 percent. Marketing, promotion, rewards and
cardmember services expenses increased 36 percent from year-ago levels, driven
by higher rewards costs and increased marketing investments. Salaries and
employee benefits and other operating expenses increased 6 percent from the
year-ago quarter.

Global Commercial Services reported first-quarter net income of $92 million, up
from $81 million a year ago.

Total revenues net of interest expense increased 9 percent to $1.0 billion,
reflecting increased spending by corporate cardmembers and higher travel
commissions and fees.

Provisions for losses totaled $78 million, up 66 percent from $47 million a year
ago, reflecting higher volumes and an enhancement to the reserve methodology.

Total expenses increased 5 percent. Marketing, promotion, rewards and cardmember
services expenses increased 43 percent from the year-ago period, reflecting
higher rewards costs and increased marketing investments. Salaries and employee
benefits and other operating expenses increased 1 percent from the year-ago
quarter.

Global Network & Merchant Services reported first-quarter net income of $267
million, up from $250 million a year ago.

Total revenues net of interest expense increased 16 percent to $997 million,
reflecting higher merchant-related revenues from the rise in global card billed
business, as well as an increase in revenues from Global Network Services` bank
partners.

Total expenses increased 29 percent. Marketing and promotion expenses increased
159 percent from year-ago levels, driven by increased brand and merchant-related
marketing investments. Salaries and employee benefits and other operating
expenses increased 6 percent from the year-ago period.

Corporate and Other reported a first-quarter net expense of $53 million,
compared with a net income of $67 million last year, reflecting higher operating
and liquidity expenses. The results for both periods reflected income of $220
million ($136 million after-tax) for the previously announced MasterCard and
Visa settlements.

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

* * *

The 2010 First Quarter Earnings Supplement will be available today on the
American Express web site at http://ir.americanexpress.com. An investor
conference call will be held at 5:00 p.m. (ET) today to discuss first-quarter
earnings results. Live audio and presentation slides for the investor conference
call will be available to the general public at the same web site. A replay of
the conference call will be available later today at the same web site address.

3 Upon the adoption of new accounting standards governing the accounting for transfers of financial assets and consolidation of variable interest entities on January 1, 2010, the company began consolidating the assets and liabilities of its previously unconsolidated American Express Credit Account Master Trust (Lending Trust). Among the changes arising from the consolidation of the Lending Trust, expenses related to written-off securitized cardmember loans moved from revenues net of interest expense into provisions
for losses.

INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which are subject to risks and
uncertainties.The forward-looking statements, which address the company`s
expected business and financial performance, among other matters, contain words
such as "believe", "expect", "anticipate", "optimistic", "intend", "plan",
"aim", "will", "may", "should", "could", "would", "likely", and similar
expressions.Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on which they are
made.The company undertakes no obligation to update or revise any
forward-looking statements.Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, the following:the company`s ability to exceed for 2010 its on-average,
over-time earnings per share growth target of 12 percent to 15 percent per
annum, which will depend on, among other things, the factors described below,
including the level of consumer and business spending, credit trends, expense
management, currency and interest rate fluctuations and general economic
conditions, such as unemployment and GDP growth; the company`s ability to manage
credit risk related to consumer debt, business loans, merchants and other credit
trends, which will depend in part on (i) the economic environment, including,
among other things, the housing market, the rates of bankruptcies and
unemployment, which can affect spending on card products, debt payments by
individual and corporate customers and businesses that accept the company`s card
products, (ii) the effectiveness of the company`s credit models and (iii) the
impact of recently enacted statutes and proposed legislative initiatives
affecting the credit card business, including, without limitation, The Credit
Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act");
the impact of the company`s efforts to deal with delinquent cardmembers in the
current challenging economic environment, which may affect payment patterns of
cardmembers and the perception of the company`s services, products and brands;
the company`s near-term write-off rates, including those for the second quarter
of 2010, which will depend in part on changes in the level of the company`s loan
balances, delinquency rates of cardmembers, unemployment rates, the volume of
bankruptcies and recoveries of previously written-off loans; consumer and
business spending on the company`s credit and charge card products and Travelers
Cheques and other prepaid products and growth in card lending balances, which
depend in part on the economic environment, and the ability to issue new and
enhanced card and prepaid products, services and rewards programs, and increase
revenues from such products, attract new cardmembers, reduce cardmember
attrition, capture a greater share of existing cardmembers` spending, and
sustain premium discount rates on its card products in light of regulatory and
market pressures, increase merchant coverage, retain cardmembers after low
introductory lending rates have expired, and expand the Global Network Services
business; the write-off and delinquency rates in the medium- to long-term of
cardmembers added by the company during the past few years, which could impact
their profitability to the company; the company`s ability to effectively
implement changes in the pricing of certain of its products and services;
fluctuations in interest rates (including fluctuations in benchmarks, such as
LIBOR and other benchmark rates that may give rise to basis risk, and credit
spreads), which impact the company`s borrowing costs, return on lending products
and the value of the company`s investments; the company`s net interest yield on
cardmember loans trending downward over time closer to historical levels, which
will be impacted by the affects of the CARD Act and changes in consumer behavior
that affect loan balances; the actual amount to be spent by the company on
marketing, promotion, rewards and cardmember services based on management`s
assessment of competitive opportunities and other factors affecting its judgment
and during 2010, the extent of provision benefit, if any, from lower than
expected write-offs; the ability to control and manage operating,
infrastructure, advertising and promotion expenses as business expands or
changes, including the ability to accurately estimate the provision for the cost
of the Membership Rewards program; fluctuations in foreign currency exchange
rates; the company`s ability to grow its business and generate excess capital
and earnings in a manner and at levels that will allow the company to return a
portion of capital to shareholders, which will depend on the company`s ability
to manage its capital needs, and the effect of business mix, acquisitions and
rating agency and regulatory requirements, including those arising from the
company`s status as a bank holding company; the ability of the company to meet
its objectives with respect to the growth of its brokered retail CD program,
brokerage sweep account program and the direct deposit initiative, which will
depend in part on customer demand, the perception of the company`s brand and
regulatory capital requirements; the success of the Global Network Services
business in partnering with banks in the United States, which will depend in
part on the extent to which such business further enhances the company`s brand,
allows the company to leverage its significant processing scale, expands
merchant coverage of the network, provides Global Network Services` bank
partners in the United States with the benefits of greater cardmember loyalty
and higher spend per customerand benefits merchants through, among other things,
greater transaction volume and additional higher spending customers; the ability
of the Global Network Services business to meet the performance requirements
called for by the company`s settlements with MasterCard and Visa; trends in
travel and entertainment spending and the overall level of consumer confidence;
the uncertainties associated with business acquisitions, including, among
others, the failure to realize anticipated business retention, growth and cost
savings, as well as the ability to effectively integrate the acquired business
into the company`s existing operations; the success, timeliness and financial
impact (including costs, cost savings, and other benefits, including increased
revenues), and beneficial effect on the company`s operating expense to revenue
ratio, both in the short-term and over time, of reengineering initiatives being
implemented or considered by the company, including cost management, structural
and strategic measures such as vendor, process, facilities and operations
consolidation, outsourcing (including, among others, technologies operations),
relocating certain functions to lower-cost overseas locations, moving internal
and external functions to the internet to save costs, and planned staff
reductions relating to certain of such reengineering actions, including, the
ability of the company to generate an annualized level of greater than $500
million of gross expense savings by 2012 from reengineering actions in its
Global Services unit; the company`s ability to reinvest the benefits arising
from such reengineering actions in its businesses; bankruptcies, restructurings,
consolidations or similar events affecting the airline or any other industry
representing a significant portion of the company`s billed business, including
any potential negative effect on particular card products and services and
billed business generally that could result from the actual or perceived
weakness of key business partners in such industries; the triggering of
obligations to make payments to certain co-brand partners, merchants, vendors
and customers under contractual arrangements with such parties under certain
circumstances; a downturn in the company`s businesses and/or negative changes in
the company`s and its subsidiaries` credit ratings, which could result in
contingent payments under contracts, decreased liquidity and higher borrowing
costs; the ability of the company to satisfy its liquidity needs and execute on
its funding plans, which will depend on, among other things, the company`s
future business growth, its credit ratings, market capacity and demand for
securities offered by the company, performance by the company`s counterparties
under its bank credit facilities and other lending facilities, regulatory
changes, including changes to the policies, rules and regulations of the Board
of Governors of the Federal Reserve System and the Federal Reserve Bank of San
Francisco, the company`s ability to securitize and sell receivables and the
performance of receivables previously sold in securitization transactions;
accuracy of estimates for the fair value of the assets in the company`s
investment portfolio and, in particular, those investments that are not readily
marketable; the ability of the company`s charge card and lending trusts to
maintain excess spreads at levels sufficient to avoid material set-asides or
early amortization of the company`s charge card and lending securitizations,
which will depend on various factors such as income derived from the relevant
portfolios and their respective credit performances; the increase in excess
spread resulting from the designation of discount option receivables with
respect to the American Express Credit Account Master Trust, which will depend
in part on the monthly principal payment rate posted to accounts in, and the
credit performance of, the securitized lending portfolio; the company`s ability
to invest in technology advances across all areas of its business to stay on the
leading edge of technologies applicable to the payments industry; the company`s
ability to attract and retain executive management and other key employees; the
company`s ability to protect its intellectual property rights (IP) and avoid
infringing the IP of other parties; the potential negative effect on the
company`s businesses and infrastructure, including information technology, of
terrorist attacks, natural disasters, intrusion into our infrastructure by
"hackers" or other catastrophic events in the future; political or economic
instability in certain regions or countries, which could affect lending and
other commercial activities, among other businesses, or restrictions on
convertibility of certain currencies; changes in laws or government regulations;
the administration`s proposal to impose a Financial Crisis Responsibility Fee at
the rate of approximately 15 basis points on certain liabilities of banks, bank
holding companies and other financial institutions with consolidated assets of
at least $50 billion; the potential failure of the U.S. Congress to extend the
active financing exception to Subpart F of the Internal Revenue Code, which
could increase the company`s effective tax rate and have an adverse impact on
net income; the potential impact of the CARD Act and regulations adopted by
federal bank regulators relating to certain credit and charge card practices,
including, among others, the imposition by card issuers of interest rate
increases on outstanding balances and the allocation of payments in respect of
outstanding balances with different interest rates, which could have an adverse
impact on the company`s net income; accounting changes, including the
implementation of changes to the accounting for off-balance sheet activities or
other potential regulatory interpretations in this area, which, effective
January 1, 2010, required the company to consolidate the assets and liabilities
of the lending securitization trust, thereby requiring the company to
reestablish loss reserves, which has in turn resulted in a reduction to the
company`s regulatory capital ratios and has also resulted in a change with
respect to the presentation of its financial statements beginning with the first
quarter of 2010, and which also could result in lower credit ratings on
securities issued by the company`s off-balance sheet securitization trusts as a
result of the uncertainty with respect to the ability of rating agencies to
continue to rely on the FDIC`s safe harbor rule regarding the isolation of
securitized assets in the event of a sponsoring bank`s receivership or
conservatorship, which in turn could adversely impact the company`s ability to
utilize securitizations as a component of its funding strategy; outcomes and
costs associated with litigation and compliance and regulatory matters; and
competitive pressures in all of the company`s major businesses.A further
description of these and other risks and uncertainties can be found in the
company`s Annual Report on Form 10-K for the year ended December 31, 2009, and
the company`s other reports filed with the SEC.

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. On January 1, 2010, the Company consolidated its
off-balance sheet cardmember loans and related debt onto its balance sheet in
compliance with GAAP governing transfers of financial assets and consolidation
of variable interest entities (new GAAP adopted effective January 1, 2010).
Beginning in the first quarter of 2010, the consolidation of these assets and
liabilities resulted in certain incremental income and expenses being reflected,
as well as reclassifications of certain line items within the Company`s
Consolidated Statements of Income. The changes described above were made on a
prospective basis; results for periods prior to 1Q`10 have not been restated.
Refer to page 20 for additional discussion. Additionally, prior period amounts
have been revised to reflect various other changes in financial and statistical
reporting associated with changes in the Company's methodology for allocating
items such as interest and capital across its reportable operating segments.

(Preliminary)
American Express Company
Consolidated Statements of Income

(Millions)
Quarters Ended
March 31, Percentage
2010 2009 Inc/(Dec)

Revenues
Non-interest revenues
Discount revenue $ 3,466 $ 3,066 13 %
Net card fees 521 532 (2 )
Travel commissions and fees 386 365 6
Other commissions and fees 500 453 10
Securitization income, net (A) N/A 141 -
Other 426 450 (5 )
Total non-interest revenues 5,299 5,007 6
Interest income
Interest and fees on loans 1,775 1,292 37
Interest and dividends on investment securities 117 154 (24 )
Deposits with banks and other 13 28 (54 )
Total interest income 1,905 1,474 29
Interest expense
Deposits 128 85 51
Short-term borrowings 1 27 (96 )
Long-term debt and other 469 443 6
Total interest expense 598 555 8
Net interest income 1,307 919 42
Total revenues net of interest expense 6,606 5,926 11
Provisions for losses
Charge card 227 336 (32 )
Cardmember loans 688 1,414 (51 )
Other 28 53 (47 )
Total provisions for losses 943 1,803 (48 )
Total revenues net of interest expense after provisions for losses 5,663 4,123 37

Expenses
Marketing and promotion 595 345 72
Cardmember rewards 1,218 846 44
Cardmember services 149 111 34
Salaries and employee benefits 1,327 1,253 6
Professional services 561 519 8
Occupancy and equipment 384 358 7
Communications 95 104 (9 )
Other, net 82 43 91
Total 4,411 3,579 23
Pretax income from continuing operations 1,252 544 #
Income tax provision 367 101 #
Income from continuing operations 885 443 100
Loss from discontinued operations, net of tax - (6 ) #
Net income $ 885 $ 437 #
Income from continuing operations attributable to common shareholders (B) $ 873 $ 367 #
Net income attributable to common shareholders (B) $ 873 $ 361 #

# - Denotes a variance of more than 100%.

(A) In accordance with the new GAAP adopted effective January 1, 2010, the
Company no longer reports securitization income, net in its income statement.

(B) Represents income from continuing operations or net income, as applicable,
less (i) preferred share dividends and related accretion of $72 million for the
quarter ended March 31, 2009, and (ii) earnings allocated to participating share
awards and other items of $12 million and $4 million for the quarters ended
March 31, 2010 and 2009, respectively.

(Preliminary)
American Express Company
Condensed Consolidated Balance Sheets

(Billions)

March 31, December 31,
2010 2009

Assets
Cash $ 21 $ 16
Accounts receivable 36 38
Investment securities 18 24
Loans 53 30
Other assets 15 16
Total assets $ 143 $ 124

Liabilities and Shareholders' Equity
Customer deposits $ 28 $ 26
Short-term borrowings 2 2
Long-term debt 72 52
Other liabilities 28 30
Total liabilities 130 110

Shareholders' equity 13 14
Total liabilities and shareholders' equity $ 143 $ 124

(Preliminary)
American Express Company
Financial Summary

(Millions)
Quarters Ended
March 31, Percentage
2010 2009 Inc/(Dec)

Total revenues net of interest expense
U.S. Card Services $ 3,538 $ 3,102 14 %
International Card Services 1,139 1,044 9
Global Commercial Services 1,022 938 9
Global Network & Merchant Services 997 857 16
6,696 5,941 13
Corporate & Other,
including adjustments and eliminations (90 ) (15 ) #

CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,606 $ 5,926 11

Pretax income (loss) from continuing operations
U.S. Card Services $ 677 $ (22 ) #
International Card Services 184 29 #
Global Commercial Services 136 122 11
Global Network & Merchant Services 415 386 8
1,412 515 #
Corporate & Other (160 ) 29 #

PRETAX INCOME FROM CONTINUING OPERATIONS $ 1,252 $ 544 #

Net income (loss)
U.S. Card Services $ 428 $ (7 ) #
International Card Services 151 52 #
Global Commercial Services 92 81 14
Global Network & Merchant Services 267 250 7
938 376 #

Corporate & Other (53 ) 67 #
Income from continuing operations 885 443 100
Loss from discontinued operations, net of tax - (6 ) #

NET INCOME $ 885 $ 437 #

# - Denotes a variance of more than 100%.

(Preliminary)
American Express Company
Financial Summary (continued)

Quarters Ended
March 31, Percentage
2010 2009 Inc/(Dec)
EARNINGS PER COMMON SHARE

BASIC
Income from continuing operations attributable to common shareholders $ 0.74 $ 0.32 # %
Loss from discontinued operations - (0.01 ) #
Net income attributable to common shareholders $ 0.74 $ 0.31 # %

Average common shares outstanding (millions) 1,185 1,156 3 %

DILUTED
Income from continuing operations attributable to common shareholders $ 0.73 $ 0.32 # %
Loss from discontinued operations - (0.01 ) #
Net income attributable to common shareholders $ 0.73 $ 0.31 # %

Average common shares outstanding (millions) 1,191 1,156 3 %

Cash dividends declared per common share $ 0.18 $ 0.18 - %

Selected Statistical Information

Quarters Ended
March 31, Percentage
2010 2009 Inc/(Dec)

Return on average equity (A) 18.0 % 16.3 %
Return on average common equity (A) 17.1 % 16.7 %
Return on average tangible common equity (A) 22.2 % 21.6 %
Common shares outstanding (millions) 1,198 1,168 3 %
Book value per common share $ 11.21 $ 10.61 6 %
Shareholders' equity (billions) $ 13.4 $ 15.8 (15 ) %

# - Denotes a variance of more than 100%.

(A) Refer to Appendix I for components of return on average equity, return on
average common equity and return on average tangible common equity.

American Express Company
Media:
Joanna Lambert, 212-640-9668
joanna.g.lambert@aexp.com
or
Michael O`Neill, 212-640-5951
mike.o`neill@aexp.com
or
Investors/Analysts:
Toby Willard, 212-640-1958
sherwood.s.willardjr@aexp.com
or
Ron Stovall, 212-640-5574
ronald.stovall@aexp.com

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