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Previous: AMERICAN EXPRESS CO, 8-K, 2000-10-23 |
Next: VAN KAMPEN EMERGING GROWTH FUND, N-30D, 2000-10-23 |
Exhibit 99.1
NEW YORK - October 23, 2000 -- AMERICAN EXPRESS COMPANY today reported
quarterly net income of $737 million, up from $648 million in the same period a
year ago. Diluted earnings per share rose 15 percent to $0.54 compared with
$0.47. Net revenues on a managed basis totaled $5.6 billion, up 13 percent from
$4.9 billion. The company's return on equity was 25.5 percent. These results
reflected strong earnings growth in all business segments, and met the company's
long-term targets of 12-15 percent earnings per share growth, at least 8 percent
growth in revenues and a return on equity of 18-20 percent.
TRAVEL RELATED SERVICES (TRS) reported record quarterly net income of
$507 million, up 14 percent from $446 million in the third quarter a year ago.
The TRS segment now includes earnings from Travelers Cheque (TC)
operations, which were unchanged from year-ago levels. Excluding TC, net income
for the remaining TRS business rose 15 percent from last year's third quarter.
TC results had previously been included in the American Express Bank/TC segment.
TRS net revenues increased 14 percent, reflecting higher billed
business as well as strong growth in Cardmember loans. These improvements
resulted from an increase of 5.6 million cards in force, up 13 percent from a
year ago, and higher average spending per Cardmember. The higher spending was
driven by several factors, including rewards programs and expanded merchant
coverage. The net interest yield on Cardmember loans decreased from a year ago,
but increased from second quarter levels. The year-to-year decline mainly
reflects a higher percentage of loan balances on lower-rate products. Other
revenues increased, primarily reflecting higher fee income.
The provision for losses on the charge card and lending portfolios rose
from the prior year as a result of higher volume, partly offset by improvement
in credit quality in the lending portfolio. Charge Card interest expense grew as
a result of higher volumes and an increased cost of funds. Other operating
expenses rose, reflecting in part the cost of Cardmember loyalty programs,
business growth and investment spending.
The above discussion presents TRS results "on a managed basis" as if
there had been no securitization transactions, which conforms to industry
practice. The attached financials present TRS results on both a managed and
reported basis. Net income is the same in both formats.
On a reported basis, TRS results for the third quarter of 2000 included
a securitization gain of $26 million ($17 million after-tax), compared with a
similar gain of $55 million ($36 million after-tax) a year ago. These gains were
offset by higher expenses related to card acquisition activities and therefore
had no material impact on net income or total expenses.
AMERICAN EXPRESS FINANCIAL ADVISORS (AEFA) reported quarterly net
income of $269 million, up 12 percent from $240 million a year ago.
Net revenues and earnings growth benefited from higher fee revenues due
to an increase in managed assets, which was partially offset by narrower spreads
on the investment portfolio. This increase reflected positive net sales and
market appreciation over the past 12 months. AEFA reported increases in sales of
mutual funds, annuities, and life and other insurance products. Human resources
expenses rose primarily as a result of an increase in financial advisors'
compensation, which reflected growth in sales and asset levels, the new advisor
platforms, and an increase in the total number of financial advisors.
AMERICAN EXPRESS BANK (AEB) reported quarterly net income of $7 million
compared with $5 million a year ago.
Results for the current quarter reflect greater commission and fee
revenues and lower operating expenses, reflecting savings from reengineering
initiatives. These were partially offset by a decline in net interest income,
mainly due to higher funding costs.
CORPORATE AND OTHER reported net expenses of $46 million, compared
with $43 million a year ago.
American Express Company (http://www.americanexpress.com), founded
in 1850, is a global travel, financial and network services provider.
* * *
Note: The 2000 Third Quarter Earnings Supplement will be available on the
American Express Web site at http://ir.americanexpress.com. In addition, an
investor conference call to discuss third quarter earnings results, operating
performance and other topics that may be raised during the discussion will be
held at 5 p.m. ET today. A live webcast of the conference call will be
accessible at the American Express Web site at http://ir.americanexpress.com. A
replay of the conference call will be available from October 23 through October
30 at that same Web address.
<PAGE>
(Preliminary)
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
--------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
<S> <C> <C> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 4,400 $ 3,864 14 %
American Express Financial Advisors 1,052 936 12
American Express Bank 146 157 (7)
------------ ------------
5,598 4,957 13
Corporate and Other,
including adjustments and eliminations (44) (37) (21)
------------ ------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,554 $ 4,920 13
============ ============
Pretax Income
-------------
Travel Related Services $ 721 $ 630 14
American Express Financial Advisors 387 350 10
American Express Bank 8 6 33
------------ ------------
1,116 986 13
Corporate and Other (87) (79) (8)
------------ ------------
PRETAX INCOME $ 1,029 $ 907 14
============ ============
Net Income
----------
Travel Related Services $ 507 $ 446 14
American Express Financial Advisors 269 240 12
American Express Bank 7 5 60
------------ ------------
783 691 13
Corporate and Other (46) (43) (7)
------------ ------------
NET INCOME $ 737 $ 648 14
============ ============
</TABLE>
(A) Managed net revenues are reported net of interest expense, where
applicable, and American Express Financial Advisors' provision for losses
and benefits, and exclude the effect of TRS' securitization activities.
<PAGE>
(Preliminary)
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 12,898 $ 11,125 16 %
American Express Financial Advisors 3,153 2,738 15
American Express Bank 447 474 (6)
------------ ------------
16,498 14,337 15
Corporate and Other,
including adjustments and eliminations (127) (81) (57)
------------ ------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 16,371 $ 14,256 15
============ ============
Pretax Income
-------------
Travel Related Services $ 2,073 $ 1,815 14
American Express Financial Advisors 1,138 1,015 12
American Express Bank 26 21 23
------------ ------------
3,237 2,851 14
Corporate and Other (242) (258) 7
------------ ------------
PRETAX INCOME $ 2,995 $ 2,593 16
============ ============
Net Income
----------
Travel Related Services $ 1,460 $ 1,286 14
American Express Financial Advisors 790 696 13
American Express Bank 22 18 24
------------ ------------
2,272 2,000 14
Corporate and Other (139) (131) (6)
------------ ------------
NET INCOME $ 2,133 $ 1,869 14
============ ============
</TABLE>
(A) Managed net revenues are reported net of interest expense, where
applicable, and American Express Financial Advisors' provision for losses
and benefits, and exclude the effect of TRS' securitization activities.
<PAGE>
(Preliminary)
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
--------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
EARNINGS PER SHARE
<S> <C> <C> <C>
Basic
-----
Earnings Per Common Share $ 0.56 $ 0.48 17 %
============ ============
Average common shares outstanding (millions) 1,326 1,338 (1)
============ ============
Diluted
-------
Earnings Per Common Share $ 0.54 $ 0.47 15
============ ============
Average common shares outstanding (millions) 1,361 1,369 (1)
============ ============
Cash dividends declared per common share $ 0.08 $0.075 7
============ ============
Nine Months Ended
September 30,
---------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
EARNINGS PER SHARE
<S> <C> <C> <C>
Basic
-----
Earnings Per Common Share $ 1.61 $ 1.39 16 %
============ ============
Average common shares outstanding (millions) 1,328 1,341 (1)
============ ============
Diluted
-------
Earnings Per Common Share $ 1.57 $ 1.36 15
============ ============
Average common shares outstanding (millions) 1,361 1,369 (1)
============ ============
Cash dividends declared per common share $ 0.24 $ 0.225 7
============ ============
</TABLE>
<PAGE>
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
--------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
<S> <C> <C> <C>
Return on Average Equity* 25.5 % 25.3 % -
Common Shares Outstanding (millions) 1,329 1,343 (1)%
Book Value per Common Share:
Actual $ 8.44 $ 7.26 16 %
Pro Forma* $ 8.68 $ 7.47 16 %
Shareholders' Equity (billions) $ 11.2 $ 9.7 15 %
Nine Months Ended
September 30,
---------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
<S> <C> <C> <C>
Return on Average Equity* 25.5 % 25.3 % -
Common Shares Outstanding (millions) 1,329 1,343 (1)%
Book Value per Common Share:
Actual $ 8.44 $ 7.26 16 %
Pro Forma* $ 8.68 $ 7.47 16 %
Shareholders' Equity (billions) $ 11.2 $ 9.7 15 %
</TABLE>
* Excludes the effect of SFAS No. 115.
<PAGE>
(Preliminary)
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
Quarters Ended
----------------
September 30,
2000
----
<S> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 4,400
American Express Financial Advisors 1,052
American Express Bank 146
----------------
5,598
Corporate and Other,
including adjustments and eliminations (44)
----------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,554
================
Pretax Income
-------------
Travel Related Services $ 721
American Express Financial Advisors 387
American Express Bank 8
----------------
1,116
Corporate and Other (87)
----------------
PRETAX INCOME $ 1,029
================
Net Income
----------
Travel Related Services $ 507
American Express Financial Advisors 269
American Express Bank 7
----------------
783
Corporate and Other (46)
----------------
NET INCOME $ 737
================
Quarters Ended
----------------
June 30,
2000
----
<S> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 4,372
American Express Financial Advisors 1,081
American Express Bank 151
----------------
5,604
Corporate and Other,
including adjustments and eliminations (46)
----------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,558
================
Pretax Income
-------------
Travel Related Services $ 721
American Express Financial Advisors 397
American Express Bank 10
----------------
1,128
Corporate and Other (82)
----------------
PRETAX INCOME $ 1,046
================
Net Income
----------
Travel Related Services $ 505
American Express Financial Advisors 275
American Express Bank 7
----------------
787
Corporate and Other (47)
----------------
NET INCOME $ 740
================
Quarters Ended
----------------
March 31,
2000
----
<S> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 4,127
American Express Financial Advisors 1,019
American Express Bank 150
----------------
5,296
Corporate and Other,
including adjustments and eliminations (37)
----------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,259
================
Pretax Income
-------------
Travel Related Services $ 631
American Express Financial Advisors 355
American Express Bank 8
----------------
994
Corporate and Other (74)
----------------
PRETAX INCOME $ 920
================
Net Income
----------
Travel Related Services $ 448
American Express Financial Advisors 245
American Express Bank 7
----------------
700
Corporate and Other (44)
----------------
NET INCOME $ 656
================
Quarters Ended
-----------------
December 31,
1999
----
<S> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 4,109
American Express Financial Advisors 999
American Express Bank 147
----------------
5,255
Corporate and Other,
including adjustments and eliminations (28)
----------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 5,227
================
Pretax Income
-------------
Travel Related Services $ 567
American Express Financial Advisors 347
American Express Bank 6
----------------
920
Corporate and Other (76)
----------------
PRETAX INCOME $ 844
================
Net Income
----------
Travel Related Services $ 406
American Express Financial Advisors 238
American Express Bank 4
----------------
648
Corporate and Other (42)
----------------
NET INCOME $ 606
================
Quarters Ended
----------------
September 30,
1999
----
<S> <C>
Net Revenues (Managed Basis) (A)
--------------------------------
Travel Related Services $ 3,864
American Express Financial Advisors 936
American Express Bank 157
----------------
4,957
Corporate and Other,
including adjustments and eliminations (37)
----------------
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $ 4,920
================
Pretax Income
-------------
Travel Related Services $ 630
American Express Financial Advisors 350
American Express Bank 6
----------------
986
Corporate and Other (79)
----------------
PRETAX INCOME $ 907
================
Net Income
----------
Travel Related Services $ 446
American Express Financial Advisors 240
American Express Bank 5
----------------
691
Corporate and Other (43)
----------------
NET INCOME $ 648
================
</TABLE>
(A) Managed net revenues are reported net of interest expense, where
applicable, and American Express Financial Advisors' provision for losses
and benefits, and exclude the effect of TRS' securitization activities.
<PAGE>
(Preliminary)
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
----------------
September 30,
2000
----
EARNINGS PER SHARE
<S> <C>
Basic
-----
Earnings Per Common Share $ 0.56
================
Average common shares outstanding (millions) 1,326
================
Diluted
-------
Earnings Per Common Share $ 0.54
================
Average common shares outstanding (millions) 1,361
================
Cash dividends declared per common share $ 0.08
================
<CAPTION>
Quarters Ended
----------------
June 30,
2000
----
EARNINGS PER SHARE
<S> <C>
Basic
-----
Earnings Per Common Share $ 0.56
================
Average common shares outstanding (millions) 1,328
================
Diluted
-------
Earnings Per Common Share $ 0.54
================
Average common shares outstanding (millions) 1,361
================
Cash dividends declared per common share $ 0.08
================
<CAPTION>
Quarters Ended
----------------
March 31,
2000
----
EARNINGS PER SHARE
<S> <C>
Basic
-----
Earnings Per Common Share $ 0.49
================
Average common shares outstanding (millions) 1,331
================
Diluted
-------
Earnings Per Common Share $ 0.48
================
Average common shares outstanding (millions) 1,362
================
Cash dividends declared per common share $ 0.08
================
<CAPTION>
Quarters Ended
----------------
December 31,
1999
----
EARNINGS PER SHARE
<S> <C>
Basic
-----
Earnings Per Common Share $ 0.45
================
Average common shares outstanding (millions) 1,335
================
Diluted
-------
Earnings Per Common Share $ 0.44
================
Average common shares outstanding (millions) 1,369
================
Cash dividends declared per common share $ 0.075
================
<CAPTION>
Quarters Ended
----------------
September 30,
1999
----
EARNINGS PER SHARE
<S> <C>
Basic
-----
Earnings Per Common Share $ 0.48
================
Average common shares outstanding (millions) 1,338
================
Diluted
-------
Earnings Per Common Share $ 0.47
================
Average common shares outstanding (millions) 1,369
================
Cash dividends declared per common share $ 0.075
================
</TABLE>
<PAGE>
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
----------------
September 30,
2000
----
<S> <C>
Return On Average Equity* 25.5%
Common Shares Outstanding (millions) 1,329
Book Value Per Common Share:
Actual $ 8.44
Pro Forma* $ 8.68
Shareholders' Equity (billions) $ 11.2
<CAPTION>
Quarters Ended
----------------
June 30,
2000
----
<S> <C>
Return On Average Equity* 25.5%
Common Shares Outstanding (millions) 1,333
Book Value Per Common Share:
Actual $ 7.88
Pro Forma* $ 8.26
Shareholders' Equity (billions) $ 10.5
<CAPTION>
Quarters Ended
----------------
March 31,
2000
----
<S> <C>
Return On Average Equity* 25.4%
Common Shares Outstanding (millions) 1,334
Book Value Per Common Share:
Actual $ 7.69
Pro Forma* $ 7.96
Shareholders' Equity (billions) $ 10.3
<CAPTION>
Quarters Ended
----------------
December 31,
1999
----
<S> <C>
Return On Average Equity* 25.3%
Common Shares Outstanding (millions) 1,341
Book Value Per Common Share:
Actual $ 7.52
Pro Forma* $ 7.74
Shareholders' Equity (billions) $ 10.1
<CAPTION>
Quarters Ended
----------------
September 30,
1999
----
<S> <C>
Return On Average Equity* 25.3%
Common Shares Outstanding (millions) 1,343
Book Value Per Common Share:
Actual $ 7.26
Pro Forma* $ 7.47
Shareholders' Equity (billions) $ 9.7
</TABLE>
* Excludes the effect of SFAS. No. 115.
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, Managed Basis)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
------------------------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $ 1,963 $ 1,700 15.5 %
Net Card Fees 420 399 5.3
Lending:
Finance Charge Revenue 1,052 747 40.8
Interest Expense 429 246 74.8
------------- ------------
Net Finance Charge Revenue 623 501 24.2
Travel Commissions and Fees 433 448 (3.2)
TC Investment Income 103 91 12.5
Other Revenues 858 725 18.5
------------- ------------
Total Net Revenues 4,400 3,864 13.9
------------- ------------
Expenses:
Marketing and Promotion 358 349 2.5
Provision for Losses and Claims:
Charge Card 273 247 10.6
Lending 386 312 23.8
Other 29 17 63.9
------------- ------------
Total 688 576 19.4
Charge Card Interest Expense 362 259 40.2
Human Resources 1,017 985 3.2
Other Operating Expenses 1,254 1,065 17.8
------------- ------------
Total Expenses 3,679 3,234 13.8
------------- ------------
Pretax Income 721 630 14.4
Income Tax Provision 214 184 16.7
------------- ------------
Net Income $ 507 $ 446 13.5
============= ============
</TABLE>
These Statements of Income are provided on a Managed Basis for analytical
purposes only. They present the income statements of TRS as if there had been no
securitization transactions. Under Statement of Financial Accounting Standards
No. 125 (SFAS No. 125), which prescribes the accounting for securitized
receivables, TRS recognized pretax gains of $26 million ($17 million after-tax)
and $55 million ($36 million after-tax) in the third quarters of 2000 and 1999,
respectively, related to the securitization of U.S. receivables. These gains
were invested in additional card acquisition activities and had no material
impact on Net Income or Total Expenses in either quarter. For purposes of this
presentation such gains and corresponding increases in Marketing and Promotion
and Other Operating Expenses have been eliminated in each quarter.
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, GAAP Reporting Basis)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
------------------------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $ 1,963 $ 1,700 15.5 %
Net Card Fees 418 395 5.8
Lending:
Finance Charge Revenue 504 513 (1.9)
Interest Expense 272 165 64.4
------------- ------------
Net Finance Charge Revenue 232 348 (33.3)
Travel Commissions and Fees 433 448 (3.2)
TC Investment Income 103 91 12.5
Other Revenues 1,190 841 41.5
------------- ------------
Total Net Revenues 4,339 3,823 13.5
------------- ------------
Expenses:
Marketing and Promotion 373 382 (2.3)
Provision for Losses and Claims:
Charge Card 236 222 6.5
Lending 267 187 43.1
Other 29 17 63.9
------------- ------------
Total 532 426 24.9
Charge Card Interest Expense 312 208 50.5
Net Discount Expense 119 105 13.3
Human Resources 1,017 985 3.2
Other Operating Expenses 1,265 1,087 16.3
------------- ------------
Total Expenses 3,618 3,193 13.3
------------- ------------
Pretax Income 721 630 14.4
Income Tax Provision 214 184 16.7
------------- ------------
Net Income $ 507 $ 446 13.5
============= ============
</TABLE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
------------------------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Total Cards in Force (millions):
United States 32.9 29.2 12.7 %
Outside the United States 17.5 15.6 12.6
------------- ------------
Total 50.4 44.8 12.6
============= ============
Basic Cards in Force (millions):
United States 25.8 22.9 12.7
Outside the United States 13.4 12.0 11.6
------------- ------------
Total 39.2 34.9 12.3
============= ============
Card Billed Business:
United States $ 56.2 $ 47.1 19.4
Outside the United States 18.6 17.0 9.7
------------- ------------
Total $ 74.8 $ 64.1 16.8
============= ============
Average Discount Rate (A) 2.70 % 2.73 % -
Average Basic Cardmember
Spending (dollars) (A) $ 2,041 $ 1,935 5.5
Average Fee per Card - Managed (dollars) (A) $ 36 $ 38 (5.3)
Non-Amex Brand (B):
Cards in Force (millions) 0.6 0.2 #
Billed Business $ 0.8 $ 0.2 #
Travel Sales $ 5.4 $ 5.5 (1.6)
Travel Commissions and Fees/Sales (C) 8.0 % 8.1 % -
Travelers Cheque:
Sales $ 7.7 $ 7.3 5.0
Average Outstanding $ 6.9 $ 6.5 6.3
Average Investments $ 6.7 $ 6.2 6.5
Tax Equivalent Yield 8.8 % 8.8 % -
Total Debt $ 35.2 $ 30.8 14.2
Shareholder's Equity $ 6.3 $ 5.7 10.5
Return on Average Equity (D) 32.6 % 30.5 % -
Return on Average Assets (D) 3.0 % 3.1 % -
</TABLE>
(A) Computed from proprietary card activities only.
(B) This data relates to Visa and Eurocards issued in connection with joint
venture activities.
(C) Computed from information provided herein.
(D) Excluding the effect of SFAS No. 115.
# Denotes variance of more than 100%.
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited, Managed Basis)
(Amounts in billions, except percentages and where indicated)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
------------------------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Charge Card Receivables:
Total Receivables $ 28.1 $ 25.3 11.0 %
90 Days Past Due as a % of Total 2.3 % 2.5 % -
Loss Reserves (millions) $ 987 $ 907 8.8
% of Receivables 3.5 % 3.6 % -
% of 90 Days Past Due 152 % 144 % -
Net Loss Ratio 0.37 % 0.41 % -
U.S. Cardmember Lending:
Total Loans $ 27.1 $ 20.6 31.7
Past Due Loans as a % of Total:
30-89 Days 1.8 % 2.0 % -
90+ Days 0.8 % 0.8 % -
Loss Reserves (millions):
Beginning Balance $ 686 $ 602 13.9
Provision 328 264 24.2
Net Charge-Offs/Other (283) (230) 22.8
------------- ------------
Ending Balance $ 731 $ 636 15.0
============= ============
% of Loans 2.7 % 3.1 % -
% of Past Due 103 % 111 % -
Average Loans $ 26.6 $ 19.8 34.8
Net Write-Off Rate 4.3 % 4.7 % -
Net Interest Yield 7.8 % 8.5 % -
</TABLE>
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, Managed Basis)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
-----------------
September 30,
2000
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,963
Net Card Fees 420
Lending:
Finance Charge Revenue 1,052
Interest Expense 429
----------------
Net Finance Charge Revenue 623
Travel Commissions and Fees 433
TC Investment Income 103
Other Revenues 858
----------------
Total Net Revenues 4,400
----------------
Expenses:
Marketing and Promotion 358
Provision for Losses and Claims:
Charge Card 273
Lending 386
Other 29
----------------
Total 688
Charge Card Interest Expense 362
Human Resources 1,017
Other Operating Expenses 1,254
----------------
Total Expenses 3,679
----------------
Pretax Income 721
Income Tax Provision 214
----------------
Net Income $ 507
================
<CAPTION>
Quarters Ended
-----------------
June 30,
2000
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,949
Net Card Fees 411
Lending:
Finance Charge Revenue 948
Interest Expense 385
----------------
Net Finance Charge Revenue 563
Travel Commissions and Fees 507
TC Investment Income 98
Other Revenues 844
----------------
Total Net Revenues 4,372
----------------
Expenses:
Marketing and Promotion 345
Provision for Losses and Claims:
Charge Card 344
Lending 332
Other 28
----------------
Total 704
Charge Card Interest Expense 350
Human Resources 1,048
Other Operating Expenses 1,204
----------------
Total Expenses 3,651
----------------
Pretax Income 721
Income Tax Provision 216
----------------
Net Income $ 505
================
<CAPTION>
Quarters Ended
-----------------
March 31,
2000
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,805
Net Card Fees 405
Lending:
Finance Charge Revenue 887
Interest Expense 332
----------------
Net Finance Charge Revenue 555
Travel Commissions and Fees 438
TC Investment Income 91
Other Revenues 833
----------------
Total Net Revenues 4,127
----------------
Expenses:
Marketing and Promotion 331
Provision for Losses and Claims:
Charge Card 278
Lending 335
Other 29
----------------
Total 642
Charge Card Interest Expense 314
Human Resources 1,016
Other Operating Expenses 1,193
----------------
Total Expenses 3,496
----------------
Pretax Income 631
Income Tax Provision 183
----------------
Net Income $ 448
================
<CAPTION>
Quarters Ended
-----------------
December 31,
1999
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,865
Net Card Fees 408
Lending:
Finance Charge Revenue 802
Interest Expense 302
----------------
Net Finance Charge Revenue 500
Travel Commissions and Fees 459
TC Investment Income 88
Other Revenues 789
----------------
Total Net Revenues 4,109
----------------
Expenses:
Marketing and Promotion 344
Provision for Losses and Claims:
Charge Card 227
Lending 332
Other 24
----------------
Total 583
Charge Card Interest Expense 300
Human Resources 1,033
Other Operating Expenses 1,282
----------------
Total Expenses 3,542
----------------
Pretax Income 567
Income Tax Provision 161
----------------
Net Income $ 406
================
<CAPTION>
Quarters Ended
-----------------
September 30,
1999
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,700
Net Card Fees 399
Lending:
Finance Charge Revenue 747
Interest Expense 246
----------------
Net Finance Charge Revenue 501
Travel Commissions and Fees 448
TC Investment Income 91
Other Revenues 725
----------------
Total Net Revenues 3,864
----------------
Expenses:
Marketing and Promotion 349
Provision for Losses and Claims:
Charge Card 247
Lending 312
Other 17
----------------
Total 576
Charge Card Interest Expense 259
Human Resources 985
Other Operating Expenses 1,065
----------------
Total Expenses 3,234
----------------
Pretax Income 630
Income Tax Provision 184
----------------
Net Income $ 446
================
</TABLE>
These Statements of Income are provided on a Managed Basis for analytical
purposes only. They present the income statements of TRS as if there had been no
securitization transactions. Under Statement of Financial Accounting Standards
No. 125 (SFAS No. 125), which prescribes the accounting for securitized
receivables, TRS recognized pretax gains of $26 million ($17 million after-tax)
in the third quarter of 2000, $80 million ($52 million after-tax) in the second
quarter of 2000, $36 million ($23 million after-tax) in the first quarter of
2000 and $55 million ($36 million after-tax) in the third quarter of 1999,
related to the securitization of U.S. receivables. These gains were invested in
additional card acquisition activities and had no material impact on Net Income
or Total Expenses in any quarter. For purposes of this presentation such gains
and corresponding increases in Marketing and Promotion and Other Operating
Expenses have been eliminated in each quarter.
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, GAAP Reporting Basis)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
-----------------
September 30,
2000
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,963
Net Card Fees 418
Lending:
Finance Charge Revenue 504
Interest Expense 272
----------------
Net Finance Charge Revenue 232
Travel Commissions and Fees 433
TC Investment Income 103
Other Revenues 1,190
----------------
Total Net Revenues 4,339
----------------
Expenses:
Marketing and Promotion 373
Provision for Losses and Claims:
Charge Card 236
Lending 267
Other 29
----------------
Total 532
Charge Card Interest Expense 312
Net Discount Expense 119
Human Resources 1,017
Other Operating Expenses 1,265
----------------
Total Expenses 3,618
----------------
Pretax Income 721
Income Tax Provision 214
----------------
Net Income $ 507
================
<CAPTION>
Quarters Ended
----------------
June 30,
2000
----
<S> <C>
Net Revenues:
Discount Revenue $ 1,949
Net Card Fees 411
Lending:
Finance Charge Revenue 500
Interest Expense 258
----------------
Net Finance Charge Revenue 242
Travel Commissions and Fees 507
TC Investment Income 98
Other Revenues 1,117
----------------
Total Net Revenues 4,324
----------------
Expenses:
Marketing and Promotion 393
Provision for Losses and Claims:
Charge Card 302
Lending 170
Other 28
----------------
Total 500
Charge Card Interest Expense 295
Net Discount Expense 131
Human Resources 1,048
Other Operating Expenses 1,236
----------------
Total Expenses 3,603
----------------
Pretax Income 721
Income Tax Provision 216
----------------
Net Income $ 505
================
<CAPTION>
Quarters Ended
-----------------
March 31,
2000
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,805
Net Card Fees 405
Lending:
Finance Charge Revenue 524
Interest Expense 231
----------------
Net Finance Charge Revenue 293
Travel Commissions and Fees 438
TC Investment Income 91
Other Revenues 1,006
----------------
Total Net Revenues 4,038
----------------
Expenses:
Marketing and Promotion 352
Provision for Losses and Claims:
Charge Card 241
Lending 175
Other 29
----------------
Total 445
Charge Card Interest Expense 260
Net Discount Expense 126
Human Resources 1,016
Other Operating Expenses 1,208
----------------
Total Expenses 3,407
----------------
Pretax Income 631
Income Tax Provision 183
----------------
Net Income $ 448
================
<CAPTION>
Quarters Ended
-----------------
December 31,
1999
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,865
Net Card Fees 408
Lending:
Finance Charge Revenue 526
Interest Expense 197
----------------
Net Finance Charge Revenue 329
Travel Commissions and Fees 459
TC Investment Income 88
Other Revenues 902
----------------
Total Net Revenues 4,051
----------------
Expenses:
Marketing and Promotion 344
Provision for Losses and Claims:
Charge Card 213
Lending 241
Other 24
----------------
Total 478
Charge Card Interest Expense 246
Net Discount Expense 101
Human Resources 1,033
Other Operating Expenses 1,282
----------------
Total Expenses 3,484
----------------
Pretax Income 567
Income Tax Provision 161
----------------
Net Income $ 406
================
<CAPTION>
Quarters Ended
-----------------
September 30,
1999
----
Net Revenues:
<S> <C>
Discount Revenue $ 1,700
Net Card Fees 395
Lending:
Finance Charge Revenue 513
Interest Expense 165
----------------
Net Finance Charge Revenue 348
Travel Commissions and Fees 448
TC Investment Income 91
Other Revenues 841
----------------
Total Net Revenues 3,823
----------------
Expenses:
Marketing and Promotion 382
Provision for Losses and Claims:
Charge Card 222
Lending 187
Other 17
----------------
Total 426
Charge Card Interest Expense 208
Net Discount Expense 105
Human Resources 985
Other Operating Expenses 1,087
----------------
Total Expenses 3,193
----------------
Pretax Income 630
Income Tax Provision 184
----------------
Net Income $ 446
================
</TABLE>
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
<TABLE>
<CAPTION>
Quarters Ended
----------------
September 30,
2000
----
<S> <C>
Total Cards in Force (millions):
United States 32.9
Outside the United States 17.5
----------------
Total 50.4
================
Basic Cards in Force (millions):
United States 25.8
Outside the United States 13.4
----------------
Total 39.2
================
Card Billed Business:
United States $ 56.2
Outside the United States 18.6
----------------
Total $ 74.8
================
Average Discount Rate (A) 2.70 %
Average Basic Cardmember
Spending (dollars) (A) $ 2,041
Average Fee per Card - Managed (dollars) (A) $ 36
Non-Amex Brand (B):
Cards in Force (millions) 0.6
Billed Business $ 0.8
Travel Sales $ 5.4
Travel Commissions and Fees/Sales (C) 8.0 %
Travelers Cheque:
Sales $ 7.7
Average Outstanding $ 6.9
Average Investments $ 6.7
Tax Equivalent Yield 8.8 %
Total Debt $ 35.2
Shareholder's Equity $ 6.3
Return on Average Equity (D) 32.6%
Return on Average Assets (D) 3.0%
<CAPTION>
Quarters Ended
-----------------
June 30,
2000
----
<S> <C>
Total Cards in Force (millions):
United States 32.5
Outside the United States 16.9
----------------
Total 49.4
================
Basic Cards in Force (millions):
United States 25.3
Outside the United States 12.9
----------------
Total 38.2
================
Card Billed Business:
United States $ 55.8
Outside the United States 18.7
----------------
Total $ 74.5
================
Average Discount Rate (A) 2.69 %
Average Basic Cardmember
Spending (dollars) (A) $ 2,085
Average Fee per Card - Managed (dollars) (A) $ 36
Non-Amex Brand (B):
Cards in Force (millions) 0.6
Billed Business $ 0.7
Travel Sales $ 6.2
Travel Commissions and Fees/Sales (C) 8.2 %
Travelers Cheque:
Sales $ 6.7
Average Outstanding $ 6.5
Average Investments $ 6.2
Tax Equivalent Yield 8.9 %
Total Debt $ 31.1
Shareholder's Equity $ 6.0
Return on Average Equity (D) 32.2 %
Return on Average Assets (D) 3.0 %
<CAPTION>
Quarters Ended
--------------
March 31,
2000
----
<S> <C>
Total Cards in Force (millions):
United States 31.4
Outside the United States 16.5
----------------
Total 47.9
================
Basic Cards in Force (millions):
United States 24.5
Outside the United States 12.6
----------------
Total 37.1
================
Card Billed Business:
United States $ 50.6
Outside the United States 17.7
----------------
Total $ 68.3
================
Average Discount Rate (A) 2.72 %
Average Basic Cardmember
Spending (dollars) (A) $ 1,980
Average Fee per Card - Managed (dollars) (A) $ 37
Non-Amex Brand (B):
Cards in Force (millions) 0.6
Billed Business $ 0.5
Travel Sales $ 5.5
Travel Commissions and Fees/Sales (C) 8.0 %
Travelers Cheque:
Sales $ 5.1
Average Outstanding $ 6.1
Average Investments $ 6.0
Tax Equivalent Yield 8.9 %
Total Debt $ 33.9
Shareholder's Equity $ 5.8
Return on Average Equity (D) 31.6 %
Return on Average Assets (D) 3.0 %
<CAPTION>
Quarters Ended
----------------
December 31,
1999
----
<S> <C>
Total Cards in Force (millions):
United States 29.9
Outside the United States 16.1
----------------
Total 46.0
================
Basic Cards in Force (millions):
United States 23.4
Outside the United States 12.3
----------------
Total 35.7
================
Card Billed Business:
United States $ 51.7
Outside the United States 19.1
----------------
Total $ 70.8
================
Average Discount Rate (A) 2.71 %
Average Basic Cardmember
Spending (dollars) (A) $ 2,102
Average Fee per Card - Managed (dollars) (A) $ 38
Non-Amex Brand (B):
Cards in Force (millions) 0.3
Billed Business $ 0.2
Travel Sales $ 5.6
Travel Commissions and Fees/Sales (C) 8.2 %
Travelers Cheque:
Sales $ 5.4
Average Outstanding $ 6.1
Average Investments $ 5.9
Tax Equivalent Yield 8.8 %
Total Debt $ 35.7
Shareholder's Equity $ 5.5
Return on Average Equity (D) 31.2 %
Return on Average Assets (D) 3.1 %
<CAPTION>
Quarters Ended
------------------
September 30,
1999
----
<S> <C>
Total Cards in Force (millions):
United States 29.2
Outside the United States 15.6
----------------
Total 44.8
================
Basic Cards in Force (millions):
United States 22.9
Outside the United States 12.0
----------------
Total 34.9
================
Card Billed Business:
United States $ 47.1
Outside the United States 17.0
----------------
Total $ 64.1
================
Average Discount Rate (A) 2.73 %
Average Basic Cardmember
Spending (dollars) (A) $ 1,935
Average Fee per Card - Managed (dollars) (A) $ 38
Non-Amex Brand (B):
Cards in Force (millions) 0.2
Billed Business $ 0.2
Travel Sales $ 5.5
Travel Commissions and Fees/Sales (C) 8.1 %
Travelers Cheque:
Sales $ 7.3
Average Outstanding $ 6.5
Average Investments $ 6.2
Tax Equivalent Yield 8.8 %
Total Debt $ 30.8
Shareholder's Equity $ 5.7
Return on Average Equity (D) 30.5 %
Return on Average Assets (D) 3.1 %
</TABLE>
(A) Computed from proprietary card activities only.
(B) This data relates to Visa and Eurocards issued in connection with joint
venture activities.
(C) Computed from information provided herein.
(D) Excluding the effect of SFAS No. 115.
<PAGE>
(Preliminary)
Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited, Managed Basis)
(Amounts in billions, except percentages and where indicated)
<TABLE>
<CAPTION>
Quarters Ended
----------------
September 30,
2000
----
<S> <C>
Charge Card Receivables:
Total Receivables $ 28.1
90 Days Past Due as a % of Total 2.3 %
Loss Reserves (millions) $ 987
% of Receivables 3.5 %
% of 90 Days Past Due 152 %
Net Loss Ratio 0.37 %
U.S. Cardmember Lending:
Total Loans $ 27.1
Past Due Loans as a % of Total:
30-89 Days 1.8 %
90+ Days 0.8 %
Loss Reserves (millions):
Beginning Balance $ 686
Provision 328
Net Charge-Offs/Other (283)
----------------
Ending Balance $ 731
================
% of Loans 2.7 %
% of Past Due 103 %
Average Loans $ 26.6
Net Write-Off Rate 4.3 %
Net Interest Yield 7.8 %
<CAPTION>
Quarters Ended
------------------
June 30,
2000
----
<S> <C>
Charge Card Receivables:
Total Receivables $ 27.4
90 Days Past Due as a % of Total 2.4 %
Loss Reserves (millions) $ 986
% of Receivables 3.6 %
% of 90 Days Past Due 153 %
Net Loss Ratio 0.36 %
U.S. Cardmember Lending:
Total Loans $ 25.9
Past Due Loans as a % of Total:
30-89 Days 1.6 %
90+ Days 0.8 %
Loss Reserves (millions):
Beginning Balance $ 689
Provision 268
Net Charge-Offs/Other (271)
----------------
Ending Balance $ 686
================
% of Loans 2.6 %
% of Past Due 109 %
Average Loans $ 25.2
Net Write-Off Rate 4.4 %
Net Interest Yield 7.4 %
<CAPTION>
Quarters Ended
-----------------
March 31,
2000
----
<S> <C>
Charge Card Receivables:
Total Receivables $ 26.8
90 Days Past Due as a % of Total 2.6 %
Loss Reserves (millions) $ 894
% of Receivables 3.3 %
% of 90 Days Past Due 129 %
Net Loss Ratio 0.34 %
U.S. Cardmember Lending:
Total Loans $ 24.2
Past Due Loans as a % of Total:
30-89 Days 1.8 %
90+ Days 0.8 %
Loss Reserves (millions):
Beginning Balance $ 672
Provision 285
Net Charge-Offs/Other (268)
----------------
Ending Balance $ 689
================
% of Loans 2.8 %
% of Past Due 109 %
Average Loans $ 23.6
Net Write-Off Rate 4.6 %
Net Interest Yield 7.8 %
<CAPTION>
Quarters Ended
---------------
December 31,
1999
----
<S> <C>
Charge Card Receivables:
Total Receivables $ 27.0
90 Days Past Due as a % of Total 2.5 %
Loss Reserves (millions) $ 857
% of Receivables 3.2 %
% of 90 Days Past Due 126 %
Net Loss Ratio 0.40 %
U.S. Cardmember Lending:
Total Loans $ 23.4
Past Due Loans as a % of Total:
30-89 Days 1.8 %
90+ Days 0.8 %
Loss Reserves (millions):
Beginning Balance $ 636
Provision 277
Net Charge-Offs/Other (241)
----------------
Ending Balance $ 672
================
% of Loans 2.9 %
% of Past Due 110 %
Average Loans $ 21.7
Net Write-Off Rate 4.5 %
Net Interest Yield 7.7 %
<CAPTION>
Quarters Ended
---------------
September 30
1999
----
<S> <C>
Charge Card Receivables:
Total Receivables $ 25.3
90 Days Past Due as a % of Total 2.5 %
Loss Reserves (millions) $ 907
% of Receivables 3.6 %
% of 90 Days Past Due 144 %
Net Loss Ratio 0.41 %
U.S. Cardmember Lending:
Total Loans $ 20.6
Past Due Loans as a % of Total:
30-89 Days 2.0 %
90+ Days 0.8 %
Loss Reserves (millions):
Beginning Balance $ 602
Provision 264
Net Charge-Offs/Other (230)
------------
Ending Balance $ 636
============
% of Loans 3.1 %
% of Past Due 111 %
Average Loans $ 19.8
Net Write-Off Rate 4.7 %
Net Interest Yield 8.5 %
</TABLE>
<PAGE>
(Preliminary)
American Express Financial Advisors
-----------------------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
---------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Investment Income $ 582 $ 566 2.8 %
Management and Distribution Fees 700 578 21.0
Other Revenues 259 224 15.6
------------ ------------
Total Revenues 1,541 1,368 12.6
Provision for Losses and Benefits:
Annuities 254 251 1.0
Insurance 146 135 8.2
Investment Certificates 89 46 94.4
------------ ------------
Total 489 432 13.1
------------ ------------
Net Revenues 1,052 936 12.4
------------ ------------
Expenses:
Human Resources 527 456 15.5
Other Operating Expenses 138 130 6.8
------------ ------------
Total Expenses 665 586 13.6
------------ ------------
Pretax Income 387 350 10.3
Income Tax Provision 118 110 6.8
------------ ------------
Net Income $ 269 $ 240 12.0
============ ============
</TABLE>
<PAGE>
(Preliminary)
American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
---------------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Investments (billions) $ 30.0 $ 30.7 (2.5)%
Client Contract Reserves (billions) $ 31.0 $ 31.0 0.1
Shareholder's Equity (billions) $ 4.2 $ 3.9 8.1
Return On Average Equity* 23.1 % 22.8 % -
Life Insurance in Force (billions) $ 95.8 $ 86.3 11.0
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 55.9 $ 48.2 15.9
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 36.6 28.9 26.8
Other Owned Assets 40.6 38.1 6.4
------------ ------------
Total Owned Assets 77.2 67.0 15.2
Managed Assets 122.0 99.5 22.7
Administered Assets 38.0 21.1 80.3
------------ ------------
Total $ 293.1 $ 235.8 24.3
============ ============
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ (203) $ (986) 79.4
Other Owned Assets $ 163 $ (273) -
Total Managed Assets $ (76) $(5,318) 98.6
Cash Sales:
Mutual Funds $11,698 $ 8,304 40.9
Annuities 1,465 1,190 23.2
Investment Certificates 868 1,061 (18.2)
Life and Other Insurance Products 220 196 12.1
Institutional 1,169 909 28.6
Other 815 953 (14.6)
------------ ------------
Total Cash Sales $16,235 $12,613 28.7
============ ============
Number of Financial Advisors 12,137 10,631 14.2
Fees From Financial Plans and Advice Services $ 26.1 $ 22.3 16.9
Percentage of Total Sales From Financial Plans
and Advice Services 69.2 % 67.7 % -
</TABLE>
* Excluding the effect of SFAS No. 115.
Note: In the first quarter of 2000, reporting of data related to cash sales
and assets owned, managed and administered was revised to better
reflect AEFA's multiple sales channel strategy and broadening of its
product portfolio through additional non-proprietary offerings.
<PAGE>
<TABLE>
<CAPTION>
(Preliminary)
American Express Financial Advisors
-----------------------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
Quarters Ended
----------------
September 30,
2000
----
<S> <C>
Net Revenues:
Investment Income $ 582
Management and Distribution Fees 700
Other Revenues 259
---------------
Total Revenues 1,541
Provision for Losses and Benefits:
Annuities 254
Insurance 146
Investment Certificates 89
---------------
Total 489
---------------
Net Revenues 1,052
---------------
Expenses:
Human Resources 527
Other Operating Expenses 138
---------------
Total Expenses 665
---------------
Pretax Income 387
Income Tax Provision 118
---------------
Net Income $ 269
===============
<CAPTION>
Quarters Ended
----------------
June 30,
2000
----
<S> <C>
Net Revenues:
Investment Income $ 592
Management and Distribution Fees 701
Other Revenues 248
---------------
Total Revenues 1,541
Provision for Losses and Benefits:
Annuities 254
Insurance 138
Investment Certificates 68
---------------
Total 460
---------------
Net Revenues 1,081
---------------
Expenses:
Human Resources 528
Other Operating Expenses 156
---------------
Total Expenses 684
---------------
Pretax Income 397
Income Tax Provision 122
---------------
Net Income $ 275
===============
<CAPTION>
Quarters Ended
----------------
March 31,
2000
----
<S> <C>
Net Revenues:
Investment Income $ 572
Management and Distribution Fees 688
Other Revenues 246
---------------
Total Revenues 1,506
Provision for Losses and Benefits:
Annuities 259
Insurance 139
Investment Certificates 89
---------------
Total 487
---------------
Net Revenues 1,019
---------------
Expenses:
Human Resources 498
Other Operating Expenses 166
---------------
Total Expenses 664
---------------
Pretax Income 355
Income Tax Provision 110
---------------
Net Income $ 245
===============
<CAPTION>
Quarters Ended
------------------
December 31,
1999
----
<S> <C>
Net Revenues:
Investment Income $ 668
Management and Distribution Fees 616
Other Revenues 245
---------------
Total Revenues 1,529
Provision for Losses and Benefits:
Annuities 276
Insurance 130
Investment Certificates 124
---------------
Total 530
---------------
Net Revenues 999
---------------
Expenses:
Human Resources 443
Other Operating Expenses 209
---------------
Total Expenses 652
---------------
Pretax Income 347
Income Tax Provision 109
---------------
Net Income $ 238
===============
<CAPTION>
Quarters Ended
-----------------
September 30,
1999
----
<S> <C>
Net Revenues:
Investment Income $ 566
Management and Distribution Fees 578
Other Revenues 224
---------------
Total Revenues 1,368
Provision for Losses and Benefits:
Annuities 251
Insurance 135
Investment Certificates 46
---------------
Total 432
---------------
Net Revenues 936
---------------
Expenses:
Human Resources 456
Other Operating Expenses 130
---------------
Total Expenses 586
---------------
Pretax Income 350
Income Tax Provision 110
---------------
Net Income $ 240
===============
</TABLE>
<PAGE>
(Preliminary)
American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
<TABLE>
<CAPTION>
Quarters Ended
-----------------
September 30,
2000
----
<S> <C>
Investments (billions) $ 30.0
Client Contract Reserves (billions) $ 31.0
Shareholder's Equity (billions) $ 4.2
Return on Average Equity* 23.1 %
Life Insurance in Force (billions) $ 95.8
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 55.9
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 36.6
Other Owned Assets 40.6
---------------
Total Owned Assets 77.2
Managed Assets 122.0
Administered Assets 38.0
---------------
Total $ 293.1
===============
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ (203)
Other Owned Assets $ 163
Total Managed Assets $ (76)
Cash Sales:
Mutual Funds $11,698
Annuities 1,465
Investment Certificates 868
Life and Other Insurance Products 220
Institutional 1,169
Other 815
---------------
Total Cash Sales $16,235
===============
Number of Financial Advisors 12,137
Fees from Financial Plans and Advice Services $ 26.1
Percentage of Total Sales from Financial Plans
and Advice Services 69.2 %
<CAPTION>
Quarters Ended
-----------------
June 30,
2000
----
<S> <C>
Investments (billions) $ 30.0
Client Contract Reserves (billions) $ 31.0
Shareholder's Equity (billions) $ 4.0
Return on Average Equity* 23.1 %
Life Insurance in Force (billions) $ 93.8
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 56.1
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 36.5
Other Owned Assets 39.9
----------------
Total Owned Assets 76.4
Managed Assets 119.6
Administered Assets 34.1
----------------
Total $ 286.2
================
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ (2,301)
Other Owned Assets $ (90)
Total Managed Assets $ (6,488)
Cash Sales:
Mutual Funds $ 10,376
Annuities 1,566
Investment Certificates 871
Life and Other Insurance Products 219
Institutional 1,557
Other 661
----------------
Total Cash Sales $ 15,250
================
Number of Financial Advisors 11,486
Fees from Financial Plans and Advice Services $ 23.9
Percentage of Total Sales from Financial Plans
and Advice Services 66.1 %
<CAPTION>
Quarters Ended
----------------
March 31,
2000
----
<S> <C>
Investments (billions) $ 30.3
Client Contract Reserves (billions) $ 31.0
Shareholder's Equity (billions) $ 3.9
Return on Average Equity* 23.0 %
Life Insurance in Force (billions) $ 91.7
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 57.4
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 38.4
Other Owned Assets 39.8
---------------
Total Owned Assets 78.2
Managed Assets 122.7
Administered Assets 31.2
---------------
Total $ 289.5
===============
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 2,332
Other Owned Assets $ (120)
Total Managed Assets $ 7,020
Cash Sales:
Mutual Funds $12,104
Annuities 1,362
Investment Certificates 835
Life and Other Insurance Products 237
Institutional 1,551
Other 573
---------------
Total Cash Sales $16,662
===============
Number of Financial Advisors 11,094
Fees from Financial Plans and Advice Services $ 26.3
Percentage of Total Sales from Financial Plans
and Advice Services 66.9 %
<CAPTION>
Quarters Ended
------------------
December 31,
1999
----
<S> <C>
Investments (billions) $ 30.3
Client Contract Reserves (billions) $ 31.0
Shareholder's Equity (billions) $ 3.9
Return on Average Equity* 22.9 %
Life Insurance in Force (billions) $ 89.2
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 55.5
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 35.9
Other Owned Assets 38.7
---------------
Total Owned Assets 74.6
Managed Assets 115.1
Administered Assets 24.8
---------------
Total $ 270.0
===============
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 6,726
Other Owned Assets $ (254)
Total Managed Assets $20,745
Cash Sales:
Mutual Funds $ 8,611
Annuities 939
Investment Certificates 993
Life and Other Insurance Products 224
Institutional 1,928
Other 870
---------------
Total Cash Sales $13,565
===============
Number of Financial Advisors 11,366
Fees from Financial Plans and Advice Services $ 22.1
Percentage of Total Sales from Financial Plans
and Advice Services 67.4 %
<CAPTION>
Quarters Ended
-----------------
September 30,
1999
----
<S> <C>
Investments (billions) $ 30.7
Client Contract Reserves (billions) $ 31.0
Shareholder's Equity (billions) $ 3.9
Return on Average Equity* 22.8 %
Life Insurance in Force (billions) $ 86.3
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $ 48.2
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 28.9
Other Owned Assets 38.1
---------------
Total Owned Assets 67.0
Managed Assets 99.5
Administered Assets 21.1
---------------
Total $ 235.8
===============
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ (986)
Other Owned Assets $ (273)
Total Managed Assets $(5,318)
Cash Sales:
Mutual Funds $ 8,304
Annuities 1,190
Investment Certificates 1,061
Life and Other Insurance Products 196
Institutional 909
Other 953
---------------
Total Cash Sales $12,613
===============
Number of Financial Advisors 10,631
Fees from Financial Plans and Advice Services $ 22.3
Percentage of Total Sales from Financial Plans
and Advice Services 67.7 %
</TABLE>
* Excluding the effect of SFAS No. 115.
Note: In the first quarter of 2000, reporting of data related to cash sales
and assets owned, managed and administered was revised to better
reflect AEFA's multiple sales channel strategy and broadening of its
product portfolio through additional non-proprietary offerings.
<PAGE>
(Preliminary)
American Express Bank
---------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
------------------------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Interest Income $ 188 $181 3.9
Interest Expense 125 106 17.3
------------- -------------
Net Interest Income 63 75 (15.2)
Commissions and Fees 54 46 17.7
Foreign Exchange Income & Other Revenue 29 36 (20.8)
------------- -------------
Total Net Revenues 146 157 (7.0)
------------- -------------
Expenses:
Human Resources 65 68 (4.2)
Other Operating Expenses 67 78 (14.7)
Provision for Losses 6 5 26.9
------------- -------------
Total Expenses 138 151 (8.7)
------------- -------------
Pretax Income 8 6 33.5
Income Tax Provision 1 1 (40.2)
------------- -------------
Net Income $ 7 $ 5 60.0
============= =============
</TABLE>
<PAGE>
(Preliminary)
American Express Bank
---------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in billions, except where indicated)
<TABLE>
<CAPTION>
Quarters Ended
September 30,
--------------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ----------
<S> <C> <C> <C>
Total Shareholder's Equity (millions) $ 729 $ 702 3.8
Return on Average Common Equity (A) 4.1 % 3.7 % -
Return on Average Assets (A) 0.24 % 0.20 % -
Total Loans $ 5.1 $ 5.1 0.8
Total Non-performing Loans (millions) $ 156 $ 181 (14.2)
Other Non-performing Assets (millions) $ 37 $ 40 (6.6)
Reserve for Credit Losses (millions) (B) $ 179 $ 204 (12.1)
Loan Loss Reserves as a % of Total Loans 3.1 % 3.5 % -
Deposits $ 8.0 $ 8.1 (1.7)
Assets Managed (C) / Administered $ 10.2 $ 7.7 33.5
Assets of Non-Consolidated Joint
Ventures $ 2.3 $ 2.4 (1.6)
Risk-Based Capital Ratios:
Tier 1 10.4 % 9.9 % -
Total 11.9 % 12.1 % -
Leverage Ratio 5.8 % 5.5 % -
</TABLE>
(A) Excludes the effect of SFAS No. 115 for all periods presented.
(B) Allocation:
<TABLE>
<S> <C> <C>
Loans $ 158 $ 179
Other Assets, primarily derivatives 16 23
Other Liabilities 5 2
------ ------
Total Credit Loss Reserves $ 179 $ 204
====== ======
</TABLE>
(C) Includes assets managed by American Express Financial Advisors.
<PAGE>
(Preliminary)
American Express Bank
---------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
--------------
September 30,
2000
----
<S> <C>
Net Revenues:
Interest Income $188
Interest Expense 125
----
Net Interest Income 63
Commissions and Fees 54
Foreign Exchange Income & Other Revenue 29
----
Total Net Revenues 146
----
Expenses:
Human Resources 65
Other Operating Expenses 67
Provision for Losses 6
----
Total Expenses 138
----
Pretax Income 8
Income Tax Provision 1
----
Net Income $ 7
====
<CAPTION>
Quarters Ended
--------------
June 30,
2000
----
<S> <C>
Net Revenues:
Interest Income $183
Interest Expense 120
----
Net Interest Income 63
Commissions and Fees 56
Foreign Exchange Income & Other Revenue 32
----
Total Net Revenues 151
----
Expenses:
Human Resources 65
Other Operating Expenses 69
Provision for Losses 7
----
Total Expenses 141
----
Pretax Income 10
Income Tax Provision 3
----
Net Income $ 7
====
<CAPTION>
Quarters Ended
--------------
March 31,
2000
----
<S> <C>
Net Revenues:
Interest Income $183
Interest Expense 118
----
Net Interest Income 65
Commissions and Fees 52
Foreign Exchange Income & Other Revenue 33
----
Total Net Revenues 150
----
Expenses:
Human Resources 66
Other Operating Expenses 68
Provision for Losses 8
----
Total Expenses 142
----
Pretax Income 8
Income Tax Provision 1
----
Net Income $ 7
====
<CAPTION>
Quarters Ended
--------------
December 31,
1999
----
<S> <C>
Net Revenues:
Interest Income $180
Interest Expense 112
----
Net Interest Income 68
Commissions and Fees 48
Foreign Exchange Income & Other Revenue 31
----
Total Net Revenues 147
----
Expenses:
Human Resources 69
Other Operating Expenses 68
Provision for Losses 4
----
Total Expenses 141
----
Pretax Income 6
Income Tax Provision 2
----
Net Income $ 4
====
<CAPTION>
Quarters Ended
--------------
September 30,
1999
----
<S> <C>
Net Revenues:
Interest Income $181
Interest Expense 106
----
Net Interest Income 75
Commissions and Fees 46
Foreign Exchange Income & Other Revenue 36
----
Total Net Revenues 157
----
Expenses:
Human Resources 68
Other Operating Expenses 78
Provision for Losses 5
----
Total Expenses 151
----
Pretax Income 6
Income Tax Provision 1
----
Net Income $ 5
====
</TABLE>
<PAGE>
(Preliminary)
American Express Bank
---------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in billions, except where indicated)
<TABLE>
<CAPTION>
Quarters Ended
--------------
September 30,
2000
----
<S> <C>
Total Shareholder's Equity (millions) $ 729
Return on Average Common Equity (A) 4.1 %
Return on Average Assets (A) 0.24 %
Total Loans $ 5.1
Total Non-performing Loans (millions) $ 156
Other Non-performing Assets (millions) $ 37
Reserve for Credit Losses (millions) (B) $ 179
Loan Loss Reserves as a % of Total Loans 3.1 %
Deposits $ 8.0
Assets Managed (C) / Administered $ 10.2
Assets of Non-Consolidated Joint
Ventures $ 2.3
Risk-Based Capital Ratios:
Tier 1 10.4 %
Total 11.9 %
Leverage Ratio 5.8 %
<CAPTION>
Quarters Ended
--------------
June 30,
2000
----
<S> <C>
Total Shareholder's Equity (millions) $ 707
Return on Average Common Equity (A) 3.7 %
Return on Average Assets (A) 0.21 %
Total Loans $ 5.1
Total Non-performing Loans (millions) $ 174
Other Non-performing Assets (millions) $ 36
Reserve for Credit Losses (millions) (B) $ 187
Loan Loss Reserves as a % of Total Loans 3.3 %
Deposits $ 8.2
Assets Managed (C) / Administered $ 9.8 (D)
Assets of Non-Consolidated Joint
Ventures $ 2.3
Risk-Based Capital Ratios:
Tier 1 10.3 %
Total 11.9 %
Leverage Ratio 5.8 %
<CAPTION>
Quarters Ended
--------------
March 31,
2000
----
<S> <C>
Total Shareholder's Equity (millions) $ 697
Return on Average Common Equity (A) 3.5 %
Return on Average Assets (A) 0.19 %
Total Loans $ 5.0
Total Non-performing Loans (millions) $ 174
Other Non-performing Assets (millions) $ 31
Reserve for Credit Losses (millions) (B) $ 189
Loan Loss Reserves as a % of Total Loans 3.4 %
Deposits $ 8.4
Assets Managed (C) / Administered $ 9.4
Assets of Non-Consolidated Joint
Ventures $ 2.4
Risk-Based Capital Ratios:
Tier 1 10.1 %
Total 11.6 %
Leverage Ratio 5.6 %
<CAPTION>
Quarters Ended
--------------
December 31,
1999
----
<S> <C>
Total Shareholder's Equity (millions) $ 691
Return on Average Common Equity (A) 3.5 %
Return on Average Assets (A) 0.20 %
Total Loans $ 5.1
Total Non-performing Loans (millions) $ 168
Other Non-performing Assets (millions) $ 37
Reserve for Credit Losses (millions) (B) $ 189
Loan Loss Reserves as a % of Total Loans 3.3 %
Deposits $ 8.3
Assets Managed (C) / Administered $ 8.6
Assets of Non-Consolidated Joint
Ventures $ 2.2
Risk-Based Capital Ratios:
Tier 1 9.9 %
Total 12.0 %
Leverage Ratio 5.6 %
<CAPTION>
Quarters Ended
--------------
September 30,
1999
----
<S> <C>
Total Shareholder's Equity (millions) $ 702
Return on Average Common Equity (A) 3.7 %
Return on Average Assets (A) 0.20 %
Total Loans $ 5.1
Total Non-performing Loans (millions) $ 181
Other Non-performing Assets (millions) $ 40
Reserve for Credit Losses (millions) (B) $ 204
Loan Loss Reserves as a % of Total Loans 3.5 %
Deposits $ 8.1
Assets Managed (C) / Administered $ 7.7
Assets of Non-consolidated Joint
Ventures $ 2.4
Risk-Based Capital Ratios:
Tier 1 9.9 %
Total 12.1 %
Leverage Ratio 5.5 %
</TABLE>
(A) Excludes the effect of SFAS No. 115 for all periods presented.
(B) Allocation:
<TABLE>
<S> <C> <C> <C> <C> <C>
Loans $ 158 $ 166 $ 170 $ 169 $ 179
Other Assets, primarily derivatives 16 16 15 16 23
Other Liabilities 5 5 4 4 2
------ ------ ------ ------ ------
Total Credit Loss Reserves $ 179 $ 187 $ 189 $ 189 $ 204
====== ====== ====== ====== ======
</TABLE>
(C) Includes assets managed by American Express Financial Advisors.
(D) Revised from previous disclosure.
<PAGE>
(Preliminary)
American Express Bank
Exposures By Country and Region
(Unaudited)
($ in billions)
<TABLE>
<CAPTION>
Net
Guarantees 9/30/00 6/30/00
FX and and Total Total
Country Loans Derivatives Contingents Other* Exposure** Exposure**
--------------------------------- ------- ----------- ----------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong $ 0.5 - $ 0.1 $ 0.1 $ 0.7 $ 0.6
Indonesia 0.2 - - 0.1 0.3 0.3
Singapore 0.5 - 0.1 0.1 0.7 0.6
Korea 0.2 - - 0.2 0.5 0.5
Taiwan 0.2 - - 0.1 0.4 0.4
China - - - - - -
Japan - - - - 0.1 0.1
Thailand - - - - - -
Other 0.1 - - 0.1 0.2 0.2
------ ------ ------ ------ ------- -------
Total Asia/Pacific Region** 1.7 - 0.4 0.7 2.8 2.7
------ ------ ------ ------ ------- -------
Chile 0.2 - - 0.1 0.3 0.4
Brazil 0.2 - - 0.1 0.3 0.3
Mexico - - - - 0.1 0.1
Peru - - - - - -
Argentina 0.1 - - - 0.1 0.1
Other 0.2 - 0.2 0.1 0.5 0.5
------ ------ ------ ------ ------- -------
Total Latin America** 0.8 - 0.2 0.3 1.3 1.4
------ ------ ------ ------ ------- -------
India 0.3 - 0.1 0.3 0.7 0.7
Pakistan 0.1 - - 0.2 0.3 0.3
Other 0.1 - 0.1 0.1 0.2 0.2
------ ------ ------ ------ ------- -------
Total Subcontinent** 0.4 - 0.2 0.6 1.2 1.2
------ ------ ------ ------ ------- -------
Egypt 0.3 - - 0.2 0.6 0.5
Other 0.1 - - - 0.2 0.2
------ ------ ------ ------ ------- -------
Total Middle East & Africa** 0.4 - 0.1 0.2 0.7 0.7
------ ------ ------ ------ ------- -------
Total Europe*** 1.4 $ 0.1 0.5 2.3 4.4 4.4
Total North America** 0.3 0.1 0.2 1.3 1.9 1.8
------ ------ ------ ------ ------- -------
Total Worldwide** $ 5.1 $ 0.3 $ 1.6 $ 5.3 $ 12.3 $ 12.3
====== ====== ====== ====== ======= =======
</TABLE>
* Includes cash, placements and securities.
** Individual items may not add to totals due to rounding.
*** Total exposures at 9/30/00 and 6/30/00 include $4 million and $5 million of
exposures to Russia, respectively.
Note: Includes cross-border and local exposure and does not net local funding or
liabilities against any local exposure.
<PAGE>
Exhibit 99.2
2000
Third Quarter
Earnings Supplement
The enclosed summary should be read in conjunction with the text and
statistical tables included in American Express Company's (the "Company" or
"AXP") Third Quarter 2000 Earnings Release.
This summary contains certain forward-looking statements, each indicated by an
asterisk (*), which are subject to risks and uncertainties and speak only as of
the date on which they are made. Important factors that could cause actual
results to differ materially from these forward-looking statements, including
the Company's financial and other goals, are set forth on pages 34-37 of the
Company's 1999 10-K Annual Report on file with the Securities and
Exchange Commission.
--------------------------------------------------------------------------------
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000
HIGHLIGHTS
o Diluted EPS growth of 15%, the net revenue (managed basis) increase of 13%,
and ROE of 25% met our financial targets.
o Solid performance continued. Compared with the third quarter of 1999:
- Worldwide billed business rose 17% (19% excluding foreign exchange
translation);
- Worldwide lending balances on a managed asset basis of $29.7B were up
32%;
- Worldwide cards in force increased 13%, up 5.6MM from last year,
surpassing the 50MM card mark for the first time. In the third
quarter, 1.0MM net new cards were added; and
- AEFA assets owned, managed and administered of $293B were 24% higher.
o American Express expanded its products and services during the quarter
as it:
- Launched/announced several new proprietary card products:
-- The Centurion Card in Hong Kong and the Platinum Card in New Zealand;
-- A co-branded credit card with Singapore Airlines in Singapore,
Hong Kong, Malaysia and Taiwan;
-- Amexblue, a new charge card designed to appeal to a younger target
group aged 23 to 35 years, in Sweden;
-- Indonesia's first co-branded telecommunications credit card with PT
Telkom; and
-- A co-branded Credit Card with Jammu & Kashmir Bank in India.
- Launched/announced new network card products and agreements:
-- The first locally-issued American Express Cards in Chile with Banco
Santiago;
-- American Express branded Credit Cards with Banco de la Provincia and
Banco Galicia in Argentina; and
-- In Venezuela, American Express Credit Cards with Corp Banca.
- Announced an agreement to acquire the ShopRite MasterCard credit card
portfolio from Valley National Bank;
- Formed a marketing alliance with Qwest Communications to offer low
rates on long distance calling and other Qwest telecom services for
American Express small business customers; and
- Formed strategic alliances with FleetBoston Financial and Comerica
Securities to build and distribute investment and annuity products
through their retail financial networks.
o American Express continued to implement its internet strategy as it:
- Announced a suite of online consumer privacy and security products,
including:
-- Private Payments, which provides a more secure way to pay online
using a random, unique number for each online purchase;
-- Signed an agreement with, and made a minority investment in, Privada,
Inc., to deliver a product that will enable customers to choose how
much of their information is shared when they browse any site on
the Web;
- Introduced The Offer Zone, a single web page that consolidates
company-wide values, savings and products from over 5,000 merchants;
- Signed an agreement with lastminute.com to provide exclusive deals and
offers to U.K. Cardmembers;
- Launched home equity installment loans and lines of credit through the
American Express Home Lending Program;
- Announced a marketing agreement with TheStreet.com that will create a
major presence for Membership B@nking on TheStreet.com's website;
- Announced an agreement with PeopleFirst.com, a leading online auto
lender, to offer auto loans through Membership B@nking;
- Entered into an agreement with Ventro Corporation to form a new company,
MarketMile, that will build and operate an Internet-based marketplace
that streamlines the purchasing of everyday business products and
services;
- Launched Smart eProcurement with ignite Application Services in the UK,
an electronic trading and payment portal offering customers a strategic,
managed move to e-procurement and significant cost savings;
- Unveiled a new monthly web service that helps corporations benchmark
global travel and entertainment costs; and
- Launched an online business-to-business directory offering cardmembers
access to a database of U.S. suppliers.
o Additional progress was made in broadening relationships with existing AXP
customers as:
- Spending and lending balances per cardmember continued to increase;
- Approximately 30% of new AEFA clients were again obtained from the
cardmember base; and
- AEFA-manufactured certificates and mutual funds sold by AEB to its
international clients continued to grow.
1
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
CONSOLIDATED
(unaudited)
(millions, except per share amounts) Quarters Ended Percentage
September 30, Inc/(Dec)
------------------------------------------ -----------------
2000 1999
---- ----
<S> <C> <C> <C>
CONSOLIDATED REVENUES:
Net (managed basis) $5,554 $4,920 13%
====== ======
GAAP reporting basis $5,981 $5,311 13%
====== ======
NET INCOME: $737 $648 14%
====== ======
EPS:
Basic $0.56 $0.48 17%
====== ======
Diluted $0.54 $0.47 15%
====== ======
</TABLE>
o CONSOLIDATED REVENUES: Grew from an increase in cards in force, strong
card spending, larger loan balances, and higher managed assets.
o CONSOLIDATED EXPENSES: Rose due to greater interest costs, larger
provisions for losses, and higher human resource and operating expenses.
o SHARE REPURCHASES: 4.9MM shares were purchased in 3Q '00; since the
inception of repurchase programs in September 1994, 336.7MM shares have
been acquired.
<TABLE>
<CAPTION>
Millions of Shares
-----------------------------------------------------------
- AVERAGE SHARES: 3Q '00 2Q '00 3Q '99
------ ------ ------
<S> <C> <C> <C>
Basic 1,326 1,328 1,338
===== ===== =====
Diluted 1,361 1,361 1,369
===== ===== =====
- ACTUAL SHARES:
Shares outstanding - beginning of period 1,333 1,334 1,347
Repurchase of common shares (5) (5) (7)
Employee benefit plans, compensation
and other 1 4 3
----- ----- -----
Shares outstanding - end of period 1,329 1,333 1,343
===== ===== =====
</TABLE>
o SEGMENT REPORTING REVISION:
Beginning in the third quarter of 2000, the Travelers Cheque (TC)
operations, which had been included in the American Express Bank/Travelers
Cheque (AEB/TC) segment since the first quarter of 1998, is included in the
Travel Related Services (TRS) segment to reflect organizational changes.
All prior year information has been restated to conform to this
classification.
CORPORATE AND OTHER
o The 3Q '00 net expense of $46MM compared with $43MM in 3Q '99 and $47MM in
2Q '00.
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
TRAVEL RELATED SERVICES
(preliminary) Statements of Income
(unaudited, managed basis)
Quarters Ended Percentage
(millions) September 30, Inc/(Dec)
--------------------------------------- -------------------
2000 1999
---- ----
<S> <C> <C> <C>
Net revenues:
Discount revenue $1,963 $1,700 15%
Net card fees 420 399 5
Lending:
Finance charge revenue 1,052 747 41
Interest expense 429 246 75
------ ------
Net finance charge revenue 623 501 24
Travel commissions and fees 433 448 (3)
TC investment income 103 91 13
Other revenues 858 725 18
------ ------
Total net revenues 4,400 3,864 14
------ ------
Expenses:
Marketing and promotion 358 349 3
Provision for losses and claims:
Charge card 273 247 11
Lending 386 312 24
Other 29 17 64
------ ------
Total 688 576 19
------ ------
Charge card interest expense 362 259 40
Human resources 1,017 985 3
Other operating expenses 1,254 1,065 18
------ ------
Total expenses 3,679 3,234 14
------ ------
Pretax income 721 630 14
Income tax provision 214 184 17
------ ------
Net income $507 $446 14
====== ======
</TABLE>
Note: Unless indicated otherwise, the following discussion addresses the
"managed basis" Statements of Income. The GAAP Statements of Income are
also included in the Company's Earnings Release.
o Net income within the TC business was flat while the remainder of TRS rose
15%.
o Revenues benefited from increased cards in force, higher worldwide billed
business and strong growth in cardmember loans outstanding. Growth was
suppressed by approximately 2% due to the impact of F/X translation.
o The higher expenses reflect increased operating costs, primarily due to
business growth, greater provisions for losses and higher interest
expenses, which were partially offset by the impact of F/X translation.
o Under Statement of Financial Accounting Standards No. 125 (SFAS 125), which
prescribes the accounting for securitizations, TRS recognized pre-tax gains
of $26MM ($17MM after-tax) in 3Q '00 and $55MM ($36MM after-tax) in 3Q '99
related to the securitization of $0.8B and $1.5B of U.S. Lending
receivables, respectively. These gains were offset by higher expenses
related to card acquisition initiatives and, therefore, had no material
impact on net income or total expenses in either period.
For purposes of the above "managed basis" Statements of Income, which
present TRS' results as if there had been no securitizations, such gains
(reported on the GAAP Statements of Income as a $15MM and $31MM reduction
in the Lending Provision for Losses in 3Q '00 and 3Q '99, respectively, and
increases in Other Revenue and Lending Interest Expense) and corresponding
growth in Marketing and Promotion and Other Operating Expenses have been
eliminated.
o The pre-tax margin was 16.4% in 3Q '00 versus 16.3% last year.
o The effective tax rate was 30% in 3Q '00 and 2Q '00 versus 29% in 3Q '99.
3
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
o DISCOUNT REVENUE: Stronger billed business and a lower discount rate
yielded a 15% increase in discount revenue.
- The average discount rate in 3Q '00 was 2.70% versus 2.73% in 3Q '99
and 2.69% in 2Q '00. The decline from last year reflects the
cumulative impact on our mix of business of stronger than average
growth in lower rate retail and other "everyday spend" merchant
categories (e.g., supermarkets, discounters, etc.)
-- We believe the AXP value proposition is strong. However,
continued changes in the mix of business, the continued shift to
electronic data capture, volume related pricing discounts, and
selective repricing initiatives will probably result in some rate
erosion over time.*
<TABLE>
<CAPTION>
Quarters Ended Percentage
September 30, Inc/(Dec)
---------------------------------- ------------------
2000 1999
---- ----
<S> <C> <C> <C>
Card billed business (billions):
United States $56.2 $47.1 19%
Outside the United States 18.6 17.0 10
----- -----
Total $74.8 $64.1 17
===== =====
Cards in force (millions):
United States 32.9 29.2 13
Outside the United States 17.5 15.6 13
----- -----
Total 50.4 44.8 13
===== =====
Basic cards in force (millions):
United States 25.8 22.9 13
Outside the United States 13.4 12.0 12
----- -----
Total 39.2 34.9 12
===== =====
Spending per basic card in force (dollars) (a):
United States $2,198 $2,069 6
Outside the United States $1,641 $1,613 2
Total $2,041 $1,935 5
</TABLE>
(a) Proprietary card activity only.
- BILLED BUSINESS: The 17% increase in billed business resulted from
growth in cards in force and higher spending per basic cardmember
worldwide (due in part to increased merchant coverage and the benefits
of rewards programs).
-- U.S. billed business increased 19% reflecting continued strong
growth, of approximately 20%, within the consumer and small
business areas and high-teens volume expansion within Corporate
Services.
- Spending per basic card in force grew 6% reflecting the
dilutive effect of multiple consecutive quarters of
particularly strong card growth.
-- Excluding the impact of foreign exchange translation:
- Total billed business outside the U.S. rose approximately 16%
on double-digit increases in all regions.
- Spending per proprietary basic card in force outside the U.S.
rose 8%.
-- Network partnership and Purchasing Card volumes sustained their
stronger growth levels, in excess of the consolidated worldwide
billed business growth rate.
-- Retail and "everyday spend" categories continued to contribute
strongly to worldwide business growth.
-- Airline related volume rose double digits as the average airline
charge was up and transaction volume increased.
- CARDS IN FORCE worldwide rose 13% versus last year.
-- Strong U.S. card acquisitions during the quarter (400K net new
cards added) reflect the continuation of proactive consumer card
and small business services activities, including those related
to the Blue and co-branded Costco card products.
-- Outside the United States, cards in force rose 13% on continued
proprietary card growth and particularly strong network card
results.
4
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
o NON-AMEX BRANDED STATISTICS: Total cards in force and billed business
exclude activities on Non-Amex Branded cards (Visa and Eurocards) issued in
connection with joint venture activities. These are reported as separate
line items within TRS' selected statistical information. This disclosure is
consistent with our previously discussed plans to broaden the scope of our
card activities through possible acquisitions of card portfolios and
additional joint ventures.
<TABLE>
<CAPTION>
Quarters Ended Percentage
September 30, Inc/(Dec)
--------------------------------- ---------------
2000 1999
---- ----
<S> <C> <C> <C>
Cards in force (millions) 0.6 0.2 #
Billed business (billions) $0.8 $0.2 #
# Denotes variance greater than 100%.
</TABLE>
o NET CARD FEES: Rose 5% as new cards in force were added. The average fee
per card in force of $36 in 3Q '00 was flat with 2Q '00, but declined
versus $38 in 3Q '99 as the mix evolved toward lower and no fee products.
o NET FINANCE CHARGE REVENUE: Rose 24% on strong 32% growth in worldwide
lending balances, which was partially offset by lower net interest yields.
- The yield on the U.S. portfolio declined to 7.8% in 3Q '00 versus 8.5%
in 3Q '99 as funding costs rose and the mix of products evolved toward
more fixed-rate and lower-rate offerings. The yield increase from 7.4%
in 2Q '00 reflects the lagged effect of 2Q '00 interest rate increases
on the revenue earned from cardmembers and a slight reduction in the
proportion of the portfolio on introductory rates.
- The variance between the gross revenue and interest expense growth
rates of 41% and 75%, respectively, reflects the evolving mix of
products.
o TRAVEL COMMISSIONS AND FEES: Declined 3% on a 2% contraction in travel
sales due to the sale in 2Q '00 of the leisure travel activities of Havas
Voyages in France. Excluding this impact, sales grew approximately 3%. The
revenue earned per dollar of sales (8.0% in 3Q '00 and 8.1% in 3Q '99)
reflects new fees related to certain client services, which were offset by
the mix of sales activities and continued efforts by airlines to reduce
distribution costs and by corporate clients to contain travel and
entertainment expenses.
o TC INVESTMENT INCOME: Was up 13% reflecting a higher TC investment pool and
growth in Money Order related activities.
o OTHER REVENUES: Increased 18% due to higher card-related and membership
rewards fees, greater foreign exchange conversion revenues and ATM
acquisitions.
o MARKETING AND PROMOTION EXPENSES: Decreased by 2% on a GAAP reporting basis
due to last year's Blue and Costco related activities and the effect of F/X
translation. On a Managed Statement of Income basis, costs were 3% higher
after the elimination of expenses corresponding to the SFAS 125 gains.
o CHARGE CARD INTEREST EXPENSE: Rose 40% due to higher billed business
volumes and a greater worldwide cost of funds.
o HUMAN RESOURCE EXPENSES: Increased 3% versus last year as a result of a
higher average number of employees and merit increases.
- The employee count at 9/00 of 74,300 was up approximately 1,200 versus
last year primarily due to increased global technology business
demands, greater business volumes and the substitution of contract
programmers with full-time employees. In the quarter, the number of
employees fell 800 reflecting the sale on 6/30/00 of the leisure
travel activities of Havas Voyages.
o OTHER OPERATING EXPENSES: Rose 18% on higher costs related to business
growth, cardmember loyalty programs, professional fees for outsourcing
activities and various business building initiatives.
5
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
o CREDIT QUALITY:
- Overall, charge card and lending credit quality remained stable in the
quarter at attractive levels.
- The provision for losses on charge card products was 11% above last
year due to higher volumes.
- The lending provision for losses was 24% above last year, as growth
in outstanding loans was partially offset by improved credit quality.
- Reserve coverage ratios at more than 100% of past due balances remained
strong.
- WORLDWIDE CHARGE CARD:
-- The write-off rate stayed near its historically low level, rising
slightly from last quarter, but remaining below last year. Past
due rates improved versus last year and last quarter.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
9/00 6/00 9/99
-------------- ------------ -------------
Loss ratio, net of recoveries 0.37% 0.36% 0.41%
90 days past due as a % of receivables 2.3% 2.4% 2.5%
-- Reserve coverage of past due accounts remained strong.
9/00 6/00 9/99
-------------- ------------- -------------
Reserves (MM) $987 $986 $907
% of receivables 3.5% 3.6% 3.6%
% of past due accounts 152% 153% 144%
- U.S. LENDING:
-- The write-off rate improved from last year and last quarter. The past due rate rose from last
quarter, but declined versus last year.
9/00 6/00 9/99
------------- ----------- -------------
Write-off rate, net of recoveries 4.3% 4.4% 4.7%
30 days past due as a % of loans 2.6% 2.4% 2.8%
-- The cardmember lending reserve coverage of past due accounts remained strong.
9/00 6/00 9/99
------------- ------------ -------------
Reserves (MM) $731 $686 $636
% of total loans 2.7% 2.6% 3.1%
% of past due accounts 103% 109% 111%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS FINANCIAL ADVISORS
(Preliminary) Statements of Income
(unaudited)
(millions) Quarters Ended Percentage
September 30, Inc/(Dec)
---------------------------------------- -------------------
2000 1999
---- ----
<S> <C> <C> <C>
Revenues:
Investment income $582 $566 3%
Management and distribution fees 700 578 21
Other revenues 259 224 16
----- -----
Total revenues 1,541 1,368 13
Provision for losses and benefits:
Annuities 254 251 1
Insurance 146 135 8
Investment certificates 89 46 94
----- -----
Total 489 432 13
----- -----
Total net revenues 1,052 936 12
----- -----
Expenses:
Human resources 527 456 16
Other operating expenses 138 130 7
----- -----
Total expenses 665 586 14
----- -----
Pretax income 387 350 10
Income tax provision 118 110 7
----- -----
Net income $269 $240 12
===== =====
</TABLE>
o Net revenue growth of 12% resulted from:
- Increased management fees from higher managed asset levels;
- Greater distribution fees from product sales and asset levels; and
- Higher insurance premiums; partially offset by
- Lower spreads on the investment portfolio products.
o The pretax margin decline from 37.4% last year to 36.8% in 3Q '00 reflects
the revenue dynamics discussed above, expense control initiatives, costs
related to the platform transition process and the impact of larger
investments in tax advantaged affordable housing projects. Excluding the
effect of the affordable housing project investments pretax income would
have grown faster.
o The effective tax rate was 30.4% in 3Q '00, 30.5% in 2Q '00 and 31.4% in 3Q
'99. 3Q '00 includes the realization of greater tax credits from affordable
housing project investments which should continue to provide tax benefits
in future quarters.*
o During 1Q '00, reporting of data related to assets owned, managed and
administered and cash sales was revised to better reflect AEFA's multiple
sales channel strategy and the broadening of its product portfolio through
additional non-proprietary offerings. Prior reporting did not capture the
full range of products sold by AEFA. Therefore, asset and sales data now
include all proprietary, non-proprietary and retirement services (e.g.,
401k) products. All non-proprietary product related assets held within a
"wrap-like" program are now included in "Assets Managed". All other
non-proprietary product related assets are included in "Assets
Administered", as are other non-proprietary assets within retirement
services. All prior period results have been restated to conform with this
presentation.
7
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd)
o ASSETS OWNED, MANAGED AND ADMINISTERED:
Percentage
(billions) September 30, Inc/(Dec)
---------------------------------- ---------------
2000 1999
<S> <C> <C> <C>
Assets owned (excluding separate accounts) $40.6 $38.1 6%
Separate account assets 36.6 28.9 27
Assets managed 177.9 147.7 20
Assets administered 38.0 21.1 80
------ ------
Total $293.1 $235.8 24
====== ======
</TABLE>
o INVESTMENT INCOME:
- Gross investment income increased 3% due to the effect last year of a
decrease in the value of options hedging outstanding stock market
certificates, which was offset by the negative impact in the current
year of deterioration in the high yield bond sector on directly owned
bonds and low grades in other structured investments, as well as a
generally lower average yield.
- Average invested assets of $32.9B (excluding unrealized
appreciation/depreciation) rose 3% versus $32.0B in 3Q '99.
- The average yield on invested assets was 7.1% versus 7.4% in 3Q '99
including the items discussed above.
- Insurance, annuity and certificates spreads were down versus last year
and last quarter.
o ASSET QUALITY remains strong despite deterioration in the high yield
portfolio.
- Non-performing assets relative to invested assets were 0.7% and were
38% covered by reserves.
- The SFAS No. 115 related mark-to-market adjustment on the portfolio
(reported in assets pre-tax) was depreciation of ($808MM) at 9/00
versus ($999MM) at 6/00 and ($490MM) at 9/99.
- Unrealized depreciation on securities held to maturity was ($61MM) at
9/00 and ($147MM) at 6/00 compared with appreciation of $89MM at 9/99.
o MANAGEMENT AND DISTRIBUTION FEES: The increase of 21% was due to higher
average assets under management, distribution fees from greater mutual fund
sales and asset levels, and higher brokerage fees.
<TABLE>
<CAPTION>
- Assets Managed:
Percentage
(billions) September 30, Inc/(Dec)
------------------------------ -----------------
2000 1999
---- ----
<S> <C> <C> <C>
Assets managed for individuals $122.0 $99.5 23%
Assets managed for institutions 55.9 48.2 16
Separate account assets 36.6 28.9 27
------ ------
Total $214.5 $176.6 21
====== ======
</TABLE>
-- The growth in managed assets since 9/99 resulted from $27.6B of
market appreciation and $10.3B of net new money.
-- The $2.3B increase in managed assets during 3Q '00 resulted from net
new money of $2.6B, offset by market depreciation of $0.3B.
o PRODUCT SALES:
- Total gross cash sales from all products were up 29% over 3Q '99.
- Mutual fund sales increased 41% on particularly strong non-proprietary
fund sales, which continued to occur predominately in "wrap" accounts.
Within proprietary funds:
-- Equity and money market fund sales grew; sales of bond funds
declined.
-- Sales of no-load funds improved; front-load and rear-load fund
sales were down.
-- Redemption rates continued to compare favorably with industry
levels.
- Annuity sales were up 23%, as variable annuity sales were particularly
strong as a result of new product offerings.
- Sales of insurance products increased 12% from new product offerings.
- Certificate sales decreased 18% reflecting particularly strong sales
last year in certificates sold to clients outside the U.S. through a
joint venture between AEFA and AEB.
- Institutional sales increased 29% reflecting both new accounts and
additional contributions.
- Advisor product sales generated through financial planning and advice
services were 69% of total sales in 3Q '00 versus 68% in 3Q '99.
8
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd)
o OTHER REVENUES: Were up 16% reflecting higher life and property-casualty
insurance premiums, greater fees from financial planning and advice
services, the addition in 2000 of franchise fees from Platform 2 advisors
and certain revenues related to non-prop funds.
- Financial planning and advice services fees of $26.1MM rose 17%
versus 3Q '99.
o PROVISIONS FOR LOSSES AND BENEFITS: Greater annuity product provisions
resulted from higher accrual rates, offset by a smaller inforce level.
Insurance provisions rose from higher inforce levels and accrual rates.
Certificate provisions increased due to higher inforce levels and accrual
rates, as well as the effect of substantial depreciation last year in the
S&P 500 on the stock market certificate product.
o HUMAN RESOURCES: Expenses were up 16% reflecting larger field force
compensation-related expenses due to growth in sales and asset levels, and
the new advisor platforms, offset somewhat by slower home office expense
growth.
- TOTAL ADVISOR FORCE: 12,137 at 9/00; +1,506 advisors, or 14%, versus
9/99 and up 651 advisors versus 6/00.
-- The increase in advisors versus 6/00 reflects appointments
related to the growing number of advisors in the pipeline over
the last 6-9 months and recruiting of experienced advisors, a key
platform strategy goal.
- Veteran advisor retention rates remain strong.
-- While we continue to see strength in applicant testing and
licensing activities, we plan to somewhat moderate advisor growth
in coming quarters to ensure overall field force costs are
appropriately contained and the benefits from recent advisor
additions are maximized.*
-- Total production, advisor productivity and client acquisition
increased double digits versus last year.
- The total number of clients was up 13% while accounts per
client were down slightly versus 3Q '99 reflecting the
impact of new product offerings, including property and
casualty insurance and brokerage. Client retention continued
above 95%.
o OTHER OPERATING EXPENSES: The 7% increase reflects costs related to higher
business volumes and the implementation of the new advisor platforms,
including greater rent and equipment support costs, which were partially
offset by efforts to control core operating expense growth.
9
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS BANK
(Preliminary) Statements of Income
(unaudited)
(millions) Quarters Ended Percentage
September 30, Inc/(Dec)
----------------------------------- ----------------------
2000 1999
---- ----
<S> <C> <C> <C>
Net revenues:
Interest income $188 $181 4%
Interest expense 125 106 17
---- ---
Net interest income 63 75 (15)
Commissions and fees 54 46 18
Foreign exchange income and other revenue 29 36 (21)
---- ---
Total net revenues 146 157 (7)
---- ---
Expenses:
Human resources 65 68 (4)
Other operating expenses 67 78 (15)
Provision for losses 6 5 27
---- ---
Total expenses 138 151 (9)
---- ---
Pretax income 8 6 33
Income tax provision 1 1 (40)
---- ---
Net income $7 $5 60
==== ===
</TABLE>
o Revenues fell 7% as higher commissions and fees were offset by lower
foreign exchange and other revenue and net interest income. AEB's two
individual oriented businesses continued to grow as Private Banking client
holdings rose 18% and client volumes in Personal Financial Services
increased 26%.
- Net interest income was down 15% versus last year primarily due to the
effects of higher funding costs.
- Commissions and fees rose 18% on higher Private Banking, Correspondent
Banking and Personal Financial Services fees.
- Foreign exchange income and other revenue declined due to lower
security gains and joint venture earnings.
o Human resources and other operating expenses were down reflecting
reengineering saves, and lower related costs, as AEB rationalizes certain
country activities.
o AEB remained "well capitalized".
<TABLE>
<CAPTION>
9/00 6/00 9/99 Well-Capitalized
---------------- ------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Tier 1 10.4% 10.3% 9.9% 6.0%
Total 11.9% 11.9% 12.1% 10.0%
Leverage Ratio 5.8% 5.8% 5.5% 5.0%
</TABLE>
10
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS BANK (Cont'd)
o EXPOSURES
- AEB's loans outstanding were $5.1B at 9/00, 9/99 and 6/00. Activity
since 9/99 included a $200MM decrease in corporate and correspondent
bank loans and a $560MM increase in consumer and private banking
loans, before the effect of asset sales and securitizations. Compared
to 2Q '00, corporate and correspondent bank loans decreased $100MM,
while consumer and private banking loans increased by $100MM. As of
9/00, consumer and private banking loans comprised 39% of total loans
versus 35% at 9/99.
- In addition to the loan portfolio, there are other banking activities,
such as forward contracts, various contingencies and market
placements, which added approximately $7.2B to the credit exposures at
9/00 and 6/00, and $7.7B at 9/99. Of the $7.2B of additional exposures
at 9/00, $4.7B were relatively less risky cash and securities related
balances.
<TABLE>
<CAPTION>
($ in billions) 9/30/00
-------------------------------------------------------------------
Net
Guarantees 6/30/00
FX and and Total Total
Country Loans Derivatives Contingents Other(1) Exposure(2) Exposure(2)
------- ----- ----------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong $0.5 - $0.1 $0.1 $0.7 $0.6
Indonesia 0.2 - - 0.1 0.3 0.3
Singapore 0.5 - 0.1 0.1 0.7 0.6
Korea 0.2 - - 0.2 0.5 0.5
Taiwan 0.2 - - 0.1 0.4 0.4
China - - - - - -
Japan - - - - 0.1 0.1
Thailand - - - - - -
Other 0.1 - - 0.1 0.2 0.2
----- ----- ----- ----- ----- -----
Total Asia/Pacific Region (2) 1.7 - 0.4 0.7 2.8 2.7
----- ----- ----- ----- ----- -----
Chile 0.2 - - 0.1 0.3 0.4
Brazil 0.2 - - 0.1 0.3 0.3
Mexico - - - - 0.1 0.1
Peru - - - - - -
Argentina 0.1 - - - 0.1 0.1
Other 0.2 - 0.2 0.1 0.5 0.5
----- ----- ----- ----- ----- -----
Total Latin America (2) 0.8 - 0.2 0.3 1.3 1.4
----- ----- ----- ----- ----- -----
India 0.3 - 0.1 0.3 0.7 0.7
Pakistan 0.1 - - 0.2 0.3 0.3
Other 0.1 - 0.1 0.1 0.2 0.2
----- ----- ----- ----- ----- -----
Total Subcontinent (2) 0.4 - 0.2 0.6 1.2 1.2
----- ----- ----- ----- ----- -----
Egypt 0.3 - - 0.2 0.6 0.5
Other 0.1 - - - 0.2 0.2
----- ----- ----- ----- ----- -----
Total Middle East and Africa (2) 0.4 - 0.1 0.2 0.7 0.7
----- ----- ----- ----- ----- -----
Total Europe (2) (3) 1.4 $0.1 0.5 2.3 4.4 4.4
Total North America (2) 0.3 0.1 0.2 1.3 1.9 1.8
----- ----- ----- ----- ----- -----
Total Worldwide (2) $5.1 $0.3 $1.6 $5.3 $12.3 $12.3
===== ===== ===== ===== ===== =====
</TABLE>
(1) Includes cash, placements and securities.
(2) Individual items may not add to totals due to rounding.
(3) Total exposures at 9/30/00 and 6/30/00 include $4MM and $5MM of
exposures to Russia, respectively.
Note: Includes cross-border and local exposure and does not net local
funding or liabilities against any local exposure.
11
<PAGE>
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2000 OVERVIEW
AMERICAN EXPRESS BANK (Cont'd)
o Total non-performing loans of $156MM were down from $181MM at 9/99 and
$174MM at 6/00 reflecting loan payments and write-offs, as well as
changes in the credit status of loans.
o Other non-performing assets of $37MM at 9/00, primarily foreign
exchange and derivatives contracts, decreased from $40MM at 9/99, and
compared with $36MM at 6/00. The decline versus last year primarily
reflects changes in the credit status of assets.
o AEB's total reserves at 9/00 of $179MM compared with $204MM at 9/99
and $187MM at 6/00 and are allocated as follows:
<TABLE>
<CAPTION>
(millions) 9/00 6/00 9/99
---------- ----------- -----------
<S> <C> <C> <C>
Loans $158 $166 $179
Other Assets, primarily derivatives 16 16 23
Other Liabilities 5 5 2
---- ---- ----
Total $179 $187 $204
==== ==== ====
</TABLE>
- The decline versus both periods reflects the write-offs cited above.
o Management formally reviews the loan portfolio and evaluates credit risk
throughout the year. This evaluation takes into consideration the financial
condition of the borrowers, fair market value of collateral, status of
delinquencies, historical loss experience, industry trends, and the impact
of current economic conditions. As of September 30, 2000 management
believes the loss reserve is appropriate.
12
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