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Previous: ALCAN ALUMINIUM LTD /NEW, 8-K, 2000-04-26 |
Next: AMBASSADOR FOOD SERVICES CORP, 10-K, 2000-04-26 |
<PAGE>
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------------------------
Date of Report (Date of earliest event reported): April 24, 2000
--------------------------
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
--------------------------
New York 1-7657 13-4922250
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
200 Vesey Street, World Financial Center
New York, New York 10285
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 640-2000
---------------------------------------------------
(Former name or former address, if changed since last report)
===============================================================================
<PAGE>
Item 5. Other Events
On April 24, 2000, the Registrant issued a press release announcing its
2000 first quarter earnings and distributed a 2000 First Quarter Earnings
Supplement. Such press release is filed herein as Exhibit 99.1,
and such Earnings Supplement is filed herein as Exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial Information And Exhibits
(c) Exhibits
99.1 Press release of American Express Company announcing its
2000 first quarter earnings, dated April 24, 2000.
99.2 2000 First Quarter Earnings Supplement of American Express
Company.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN EXPRESS COMPANY
(REGISTRANT)
By /s/ Stephen P. Norman
---------------------
Name: Stephen P. Norman
Title: Secretary
DATE: April 26, 2000
<PAGE>
EXHIBIT INDEX
Item No. Description
- ---------- -----------
99.1 Press release of American Express Company announcing its
2000 first quarter earnings, dated April 24, 2000.
99.2 2000 First Quarter Earnings Supplement of American
Express Company.
NEW YORK -- APRIL 24, 2000 -- American Express Company today reported record
first quarter net income of $656 million, up from $575 million in the same
period a year ago. Diluted earnings per share rose 14 percent to $1.44 compared
with $1.26. Net revenues on a managed basis totaled $5.3 billion, up 16 percent
from $4.5 billion. The Company's return on equity was 25.4 percent. These
results reflected strong earnings and revenue growth at Travel Related Services
and American Express Financial Advisors, 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 $416
million, up 15 percent from $363 million in the first quarter a year ago.
TRS' net revenues increased 18 percent, reflecting higher billed business as
well as strong growth in Cardmember loans. These improvements resulted from
higher average spending per Cardmember and an increase of five million cards in
force, up 12 percent from a year ago. The higher average spending was driven by
several factors, including rewards programs and expanded merchant coverage. The
net interest yield on Cardmember loans decreased from year-ago levels, but
increased slightly from year-end. The year-over-year decline reflects a greater
number of Cardmembers on introductory rates and a broader mix of lower-rate
products. Other revenues increased, reflecting higher fee income.
The provision for losses on the charge card and lending portfolios grew as a
result of higher volume, partly offset by a continued improvement in credit
quality in the lending portfolio. Charge Card interest expense rose due to
higher volumes and rates. Human resources expenses rose as a result of increased
business volumes. Other operating expenses increased, reflecting in part the
cost of Cardmember loyalty programs, business growth and investment spending.
Results include a gain on an investment in an Internet company that TRS was
required to write-up when that company was acquired by a third party. This gain
was offset by increased spending on Internet initiatives and therefore had no
material impact on net income or total expenses.
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 first quarter of 2000 included a
securitization gain of $23 million ($36 million pre-tax). This gain was 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 record quarterly net income
of $245 million, up 15 percent from $214 million a year ago.
Net revenues and earnings growth benefited from higher fee revenues due to an
increase in managed assets, reflecting positive net sales and market
appreciation over the past 12 months. This growth was partly offset by losses on
high yield investments. AEFA reported strong increases in sales of mutual funds,
annuities, investment certificates, and life and other insurance products. Human
resources expenses rose, largely because of compensation costs associated with
higher sales and asset levels. Other operating expenses increased slightly from
year-ago levels due to higher business volumes and ongoing investments to build
the business.
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (AEB/TC) reported quarterly net income of
$40 million compared with $41 million a year ago.
Net income at American Express Bank was unchanged from year ago levels. The
results reflected lower net interest income related to higher funding costs and
lower trading results, which were offset by improved commission and fee
revenues. Travelers Cheque results fell slightly due to higher marketing and
promotion spending.
CORPORATE AND OTHER reported net expenses of $45 million, compared with $43
million a year ago. Results for both years include a preferred stock dividend
based on earnings from Lehman Brothers. That dividend was offset by expenses
related to business building initiatives in both years and by Y2K expenses a
year ago.
American Express Company (http://www.americanexpress.com), founded in 1850,
is a global travel, financial and network services provider.
<PAGE>
<TABLE>
<CAPTION>
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions)
Quarters Ended
March 31,
-------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $4,044 $3,434 18 %
American Express Financial
Advisors 1,019 885 15
American Express Bank/
Travelers Cheque 251 247 2
----- -----
5,314 4,566 16
Corporate and Other,
including adjustments and
eliminations (55) (42) 32
----- -----
CONSOLIDATED NET REVENUES
(MANAGED BASIS) (A) $5,259 $4,524 16
===== =====
Pretax Income
- -------------
Travel Related Services $636 $554 15
American Express Financial
Advisors 355 312 14
American Express Bank/
Travelers Cheque 3 12 (77)
--- ---
994 878 13
Corporate and Other (74) (87) (15)
--- ---
PRETAX INCOME $920 $791 16
=== ===
Net Income
- ----------
Travel Related Services $416 $363 15
American Express Financial
Advisors 245 214 15
American Express Bank/
Travelers Cheque 40 41 (3)
--- ---
701 618 13
Corporate and Other (45) (43) 5
--- ---
NET INCOME $656 $575 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.
<TABLE>
<CAPTION>
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
Quarters Ended
March 31,
------------ Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.48 $1.28 16 %
==== ====
Average common shares
outstanding (millions) 443.7 447.7 (1)
===== =====
Diluted
- -------
Earnings Per Common Share $1.44 $1.26 14
==== ====
Average common shares
outstanding (millions) 454.1 456.2 -
===== =====
Cash dividends declared per
common share $0.225 $0.225 -
===== =====
</TABLE>
<TABLE>
<CAPTION>
Selected Statistical Information
--------------------------------
(Unaudited)
Quarters Ended
March 31,
------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Return on Average Equity* 25.4 % 25.1 % -
Common Shares Outstanding (millions) 444.6 450.0 (1) %
Book Value per Common Share:
Actual $23.11 $21.74 6 %
Pro Forma* $23.93 $20.92 14 %
Shareholders' Equity (billions) $10.3 $9.8 5 %
* Excludes the effect of SFAS No. 115.
</TABLE>
<TABLE>
<CAPTION>
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions)
Quarters Ended
March 31,
2000
----
<S> <C>
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $4,044
American Express Financial Advisors 1,019
American Express Bank/Travelers Cheque 251
-----
5,314
Corporate and Other,
including adjustments and eliminations (55)
-----
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,259
=====
Pretax Income
- -------------
Travel Related Services $636
American Express Financial Advisors 355
American Express Bank/Travelers Cheque 3
---
994
Corporate and Other (74)
---
PRETAX INCOME $920
===
Net Income
- ----------
Travel Related Services $416
American Express Financial Advisors 245
American Express Bank/Travelers Cheque 40
---
701
Corporate and Other (45)
---
NET INCOME $656
===
Quarters Ended
December 31,
1999
----
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $4,021
American Express Financial Advisors 999
American Express Bank/Travelers Cheque 252
-----
5,272
Corporate and Other,
including adjustments and eliminations (45)
-----
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,227
=====
Pretax Income
- -------------
Travel Related Services $573
American Express Financial Advisors 347
American Express Bank/Travelers Cheque -
---
920
Corporate and Other (76)
---
PRETAX INCOME $844
===
Net Income
- ----------
Travel Related Services $375
American Express Financial Advisors 238
American Express Bank/Travelers Cheque 35
---
648
Corporate and Other (42)
---
NET INCOME $606
===
Quarters Ended
September 30,
1999
----
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $3,778
American Express Financial Advisors 936
American Express Bank/Travelers Cheque 261
-----
4,975
Corporate and Other,
including adjustments and eliminations (55)
-----
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $4,920
=====
Pretax Income
- -------------
Travel Related Services $632
American Express Financial Advisors 350
American Express Bank/Travelers Cheque 4
---
986
Corporate and Other (79)
---
PRETAX INCOME $907
===
Net Income
- ----------
Travel Related Services $413
American Express Financial Advisors 240
American Express Bank/Travelers Cheque 38
---
691
Corporate and Other (43)
---
NET INCOME $648
===
Quarters Ended
June 30,
1999
----
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $3,669
American Express Financial Advisors 916
American Express Bank/Travelers Cheque 259
-----
4,844
Corporate and Other,
including adjustments and eliminations (33)
-----
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $4,811
=====
Pretax Income
- -------------
Travel Related Services $628
American Express Financial Advisors 353
American Express Bank/Travelers Cheque 6
---
987
Corporate and Other (92)
---
PRETAX INCOME $895
===
Net Income
- ----------
Travel Related Services $411
American Express Financial Advisors 242
American Express Bank/Travelers Cheque 38
---
691
Corporate and Other (45)
---
NET INCOME $646
===
Quarters Ended
March 31,
1999
----
Net Revenues (Managed Basis) (A)
- --------------------------------
Travel Related Services $3,434
American Express Financial Advisors 885
American Express Bank/Travelers Cheque 247
-----
4,566
Corporate and Other,
including adjustments and eliminations (42)
-----
CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $4,524
=====
Pretax Income
- -------------
Travel Related Services $554
American Express Financial Advisors 312
American Express Bank/Travelers Cheque 12
---
878
Corporate and Other (87)
---
PRETAX INCOME $791
===
Net Income
- ----------
Travel Related Services $363
American Express Financial Advisors 214
American Express Bank/Travelers Cheque 41
---
618
Corporate and Other (43)
---
NET INCOME $575
===
</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.
<TABLE>
<CAPTION>
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
Quarters Ended
March 31,
2000
----
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.48
====
Average common shares outstanding (millions) 443.7
=====
Diluted
- -------
Earnings Per Common Share $1.44
====
Average common shares outstanding (millions) 454.1
=====
Cash dividends declared per common share $0.225
=====
Quarters Ended
December 31,
1999
----
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.36
====
Average common shares outstanding (millions) 445.1
=====
Diluted
- -------
Earnings Per Common Share $1.33
====
Average common shares outstanding (millions) 456.2
=====
Cash dividends declared per common share $0.225
=====
Quarters Ended
September 30,
1999
----
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.45
====
Average common shares outstanding (millions) 446.0
=====
Diluted
- -------
Earnings Per Common Share $1.42
====
Average common shares outstanding (millions) 456.4
=====
Cash dividends declared per common share $0.225
=====
Quarters Ended
June 30,
1999
----
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.44
====
Average common shares outstanding (millions) 447.4
=====
Diluted
- -------
Earnings Per Common Share $1.41
====
Average common shares outstanding (millions) 457.1
=====
Cash dividends declared per common share $0.225
=====
Quarters Ended
March 31,
1999
----
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $1.28
====
Average common shares outstanding (millions) 447.7
=====
Diluted
- -------
Earnings Per Common Share $1.26
====
Average common shares outstanding (millions) 456.2
=====
Cash dividends declared per common share $0.225
=====
</TABLE>
<TABLE>
<CAPTION>
Selected Statistical Information
--------------------------------
(Unaudited)
Quarters Ended
March 31,
2000
----
<S> <C>
Return on Average Equity* 25.4 %
Common Shares Outstanding (millions) 444.6
Book Value per Common Share:
Actual $23.11
Pro Forma* $23.93
Shareholders' Equity (billions) $10.3
Quarters Ended
December 31,
1999
----
Return on Average Equity* 25.3 %
Common Shares Outstanding (millions) 446.9
Book Value per Common Share:
Actual $22.57
Pro Forma* $23.23
Shareholders' Equity (billions) $10.1
Quarters Ended
September 30,
1999
----
Return on Average Equity* 25.3 %
Common Shares Outstanding (millions) 447.6
Book Value per Common Share:
Actual $21.77
Pro Forma* $22.41
Shareholders' Equity (billions) $9.7
Quarters Ended
June 30,
1999
----
Return on Average Equity* 25.3 %
Common Shares Outstanding (millions) 449.0
Book Value per Common Share:
Actual $21.74
Pro Forma* $21.77
Shareholders' Equity (billions) $9.8
Quarters Ended
March 31,
1999
----
Return on Average Equity* 25.1 %
Common Shares Outstanding (millions) 450.0
Book Value per Common Share:
Actual $21.74
Pro Forma* $20.92
Shareholders' Equity (billions) $9.8
* Excludes the effect of SFAS No. 115.
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, Managed Basis)
(Dollars in millions)
Quarters Ended
March 31,
---------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $1,805 $1,514 19.3 %
Net Card Fees 405 403 0.5
Travel Commissions and Fees 438 426 2.7
Other Revenues 841 639 31.6
Lending:
Finance Charge Revenue 887 652 36.1
Interest Expense 332 200 66.5
----- -----
Net Finance Charge Revenue 555 452 22.6
----- -----
Total Net Revenues 4,044 3,434 17.7
----- -----
Expenses:
Marketing and Promotion 318 270 17.6
Provision for Losses and Claims:
Charge Card 278 233 19.5
Lending 335 282 18.9
Other 21 14 50.9
----- -----
Total 634 529 20.0
----- -----
Charge Card Interest Expense 314 241 29.6
Human Resources 998 912 9.5
Other Operating Expenses 1,144 928 23.4
----- -----
Total Expenses 3,408 2,880 18.3
----- -----
Pretax Income 636 554 14.7
Income Tax Provision 220 191 14.7
----- -----
Net Income $416 $363 14.7
===== =====
</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 a pretax gain of $36 million ($23 million after-tax)
in the first quarter of 2000 related to the securitization of U.S.
receivables. This gain was invested in additional card acquisition
activities in the first quarter of 2000 and had no material impact
on Net Income or Total Expenses. For purposes of this presentation
such gain and a corresponding increase in Marketing and Promotion
and Other Operating Expenses has been eliminated in the first
quarter of 2000.
<TABLE>
(Preliminary) Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, GAAP Reporting Basis)
(Dollars in millions)
Quarters Ended
March 31,
-------------- Percentage
2000 1999 Inc/(Dec)
---- ---- ---------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $1,805 $1,514 19.3 %
Net Card Fees 405 403 0.5
Travel Commissions and Fees 438 426 2.7
Other Revenues 1,014 731 38.8
Lending:
Finance Charge Revenue 524 503 4.2
Interest Expense 231 156 48.6
----- -----
Net Finance Charge Revenue 293 347 (15.7)
----- -----
Total Net Revenues 3,955 3,421 15.6
----- -----
Expenses:
Marketing and Promotion 339 270 25.6
Provision for Losses and Claims:
Charge Card 241 182 31.9
Lending 175 235 (25.2)
Other 21 14 50.9
----- -----
Total 437 431 1.4
----- -----
Charge Card Interest Expense 260 183 42.0
Net Discount Expense 126 143 (11.9)
Human Resources 998 912 9.5
Other Operating Expenses 1,159 928 24.9
----- -----
Total Expenses 3,319 2,867 15.8
----- -----
Pretax Income 636 554 14.7
Income Tax Provision 220 191 14.7
----- -----
Net Income $416 $363 14.7
===== =====
</TABLE>
<TABLE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarters Ended
March 31,
-------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Total Cards in Force (millions):
United States 31.4 27.9 12.2 %
Outside the United States 16.5 15.0 10.5
---- ----
Total 47.9 42.9 11.6
==== ====
Basic Cards in Force (millions):
United States 24.5 21.8 12.2
Outside the United States 12.6 11.5 9.9
---- ----
Total 37.1 33.3 11.4
==== ====
Card Billed Business:
United States $50.6 $41.6 21.6
Outside the United States 17.7 15.2 16.7
---- ----
Total $68.3 $56.8 20.3
==== ====
Average Discount Rate (A) 2.72 % 2.73 % -
Average Basic Cardmember
Spending (dollars) (A) $1,980 $1,781 11.2
Average Fee per Card -
Managed (dollars) (A) $37 $40 (7.5)
Non-Amex Brand (B):
Cards in Force (millions) 0.6 0.2 #
Billed Business $0.5 $0.2 #
Travel Sales $5.5 $5.3 3.4
Travel Commissions and Fees/Sales (C) 8.0 % 8.0 % -
Total Debt $34.0 $28.2 20.6
Shareholder's Equity $5.6 $5.1 8.8
Return on Average Equity (D) 30.5 % 28.4 % -
Return on Average Assets (D) 3.2 % 3.3 % -
(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 a variance of greater than 100%
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited, Managed Basis)
(Amounts in billions, except percentages and where indicated)
Quarters Ended
March 31,
--------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Charge Card Receivables:
Total Receivables $26.8 $23.5 14.1 %
90 Days Past Due as a % of Total 2.6 % 3.0 % -
Loss Reserves (millions) $894 $876 2.1
% of Receivables 3.3 % 3.7 % -
% of 90 Days Past Due 129 % 126 % -
Net Loss Ratio 0.34 % 0.43 % -
U.S. Cardmember Lending:
Total Loans $24.2 $16.7 44.6
Past Due Loans as a % of Total:
30-89 Days 1.8 % 2.1 % -
90+ Days 0.8 % 1.0 % -
Loss Reserves (millions):
Beginning Balance $672 $619 8.4
Provision 285 244 17.0
Net Charge-Offs/Other (268) (240) 11.5
--- ---
Ending Balance $689 $623 10.6
=== ===
% of Loans 2.8 % 3.7 % -
% of Past Due 109 % 121 % -
Average Loans $23.6 $16.7 41.6
Net Write-Off Rate 4.6 % 5.9 % -
Net Interest Yield 7.8 % 9.4 % -
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, Managed Basis)
(Dollars in millions)
Quarters Ended
March 31,
2000
----
<S> <C>
Net Revenues:
Discount Revenue $1,805
Net Card Fees 405
Travel Commissions and Fees 438
Other Revenues 841
Lending:
Finance Charge Revenue 887
Interest Expense 332
-----
Net Finance Charge Revenue 555
-----
Total Net Revenues 4,044
-----
Expenses:
Marketing and Promotion 318
Provision for Losses and Claims:
Charge Card 278
Lending 335
Other 21
-----
Total 634
-----
Charge Card Interest Expense 314
Human Resources 998
Other Operating Expenses 1,144
-----
Total Expenses 3,408
-----
Pretax Income 636
Income Tax Provision 220
-----
Net Income $416
=====
Quarters Ended
December 31,
1999
----
Net Revenues:
Discount Revenue $1,865
Net Card Fees 408
Travel Commissions and Fees 459
Other Revenues 789
Lending:
Finance Charge Revenue 802
Interest Expense 302
-----
Net Finance Charge Revenue 500
-----
Total Net Revenues 4,021
-----
Expenses:
Marketing and Promotion 338
Provision for Losses and Claims:
Charge Card 227
Lending 332
Other 17
-----
Total 576
-----
Charge Card Interest Expense 300
Human Resources 1,012
Other Operating Expenses 1,222
-----
Total Expenses 3,448
-----
Pretax Income 573
Income Tax Provision 198
-----
Net Income $375
=====
Quarters Ended
September 30,
1999
----
Net Revenues:
Discount Revenue $1,700
Net Card Fees 399
Travel Commissions and Fees 448
Other Revenues 730
Lending:
Finance Charge Revenue 747
Interest Expense 246
-----
Net Finance Charge Revenue 501
-----
Total Net Revenues 3,778
-----
Expenses:
Marketing and Promotion 340
Provision for Losses and Claims:
Charge Card 247
Lending 312
Other 10
-----
Total 569
-----
Charge Card Interest Expense 259
Human Resources 968
Other Operating Expenses 1,010
-----
Total Expenses 3,146
-----
Pretax Income 632
Income Tax Provision 219
-----
Net Income $413
=====
Quarters Ended
June 30,
1999
----
Net Revenues:
Discount Revenue $1,662
Net Card Fees 393
Travel Commissions and Fees 469
Other Revenues 669
Lending:
Finance Charge Revenue 684
Interest Expense 208
-----
Net Finance Charge Revenue 476
-----
Total Net Revenues 3,669
-----
Expenses:
Marketing and Promotion 267
Provision for Losses and Claims:
Charge Card 288
Lending 260
Other 14
-----
Total 562
-----
Charge Card Interest Expense 257
Human Resources 968
Other Operating Expenses 987
-----
Total Expenses 3,041
-----
Pretax Income 628
Income Tax Provision 217
-----
Net Income $411
=====
Quarters Ended
March 31,
1999
----
Net Revenues:
Discount Revenue $1,514
Net Card Fees 403
Travel Commissions and Fees 426
Other Revenues 639
Lending:
Finance Charge Revenue 652
Interest Expense 200
-----
Net Finance Charge Revenue 452
-----
Total Net Revenues 3,434
-----
Expenses:
Marketing and Promotion 270
Provision for Losses and Claims:
Charge Card 233
Lending 282
Other 14
-----
Total 529
-----
Charge Card Interest Expense 241
Human Resources 912
Other Operating Expenses 928
-----
Total Expenses 2,880
-----
Pretax Income 554
Income Tax Provision 191
-----
Net Income $363
=====
</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 $36 million ($23
million after-tax) in the first quarter of 2000, $55 million ($36
million after-tax) in the third quarter of 1999 and $99 million
($64 million after-tax) in the second quarter of 1999, related to
the securitization of U.S. receivables. These gains were invested
in additional card acquisition activities and other business
building initiatives 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.
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Statements of Income
--------------------
(Unaudited, GAAP Reporting Basis)
(Dollars in millions)
Quarters Ended
March 31,
2000
----
<S> <C>
Net Revenues:
Discount Revenue $1,805
Net Card Fees 405
Travel Commissions and Fees 438
Other Revenues 1,014
Lending:
Finance Charge Revenue 524
Interest Expense 231
-----
Net Finance Charge Revenue 293
-----
Total Net Revenues 3,955
-----
Expenses:
Marketing and Promotion 339
Provision for Losses and Claims:
Charge Card 241
Lending 175
Other 21
-----
Total 437
-----
Charge Card Interest Expense 260
Net Discount Expense 126
Human Resources 998
Other Operating Expenses 1,159
-----
Total Expenses 3,319
-----
Pretax Income 636
Income Tax Provision 220
-----
Net Income $416
=====
Quarters Ended
December 31,
1999
----
Net Revenues:
Discount Revenue $1,865
Net Card Fees 408
Travel Commissions and Fees 459
Other Revenues 902
Lending:
Finance Charge Revenue 526
Interest Expense 197
-----
Net Finance Charge Revenue 329
-----
Total Net Revenues 3,963
-----
Expenses:
Marketing and Promotion 338
Provision for Losses and Claims:
Charge Card 213
Lending 241
Other 17
-----
Total 471
-----
Charge Card Interest Expense 246
Net Discount Expense 101
Human Resources 1,012
Other Operating Expenses 1,222
-----
Total Expenses 3,390
-----
Pretax Income 573
Income Tax Provision 198
-----
Net Income $375
=====
Quarters Ended
September 30,
1999
----
Net Revenues:
Discount Revenue $1,700
Net Card Fees 395
Travel Commissions and Fees 448
Other Revenues 846
Lending:
Finance Charge Revenue 513
Interest Expense 165
-----
Net Finance Charge Revenue 348
-----
Total Net Revenues 3,737
-----
Expenses:
Marketing and Promotion 373
Provision for Losses and Claims:
Charge Card 222
Lending 187
Other 10
-----
Total 419
-----
Charge Card Interest Expense 208
Net Discount Expense 105
Human Resources 968
Other Operating Expenses 1,032
-----
Total Expenses 3,105
-----
Pretax Income 632
Income Tax Provision 219
-----
Net Income $413
=====
Quarters Ended
June 30,
1999
----
Net Revenues:
Discount Revenue $1,662
Net Card Fees 393
Travel Commissions and Fees 469
Other Revenues 845
Lending:
Finance Charge Revenue 465
Interest Expense 156
-----
Net Finance Charge Revenue 309
-----
Total Net Revenues 3,678
-----
Expenses:
Marketing and Promotion 325
Provision for Losses and Claims:
Charge Card 249
Lending 137
Other 14
-----
Total 400
-----
Charge Card Interest Expense 198
Net Discount Expense 131
Human Resources 968
Other Operating Expenses 1,028
-----
Total Expenses 3,050
-----
Pretax Income 628
Income Tax Provision 217
-----
Net Income $411
=====
Quarters Ended
March 31,
1999
----
Net Revenues:
Discount Revenue $1,514
Net Card Fees 403
Travel Commissions and Fees 426
Other Revenues 731
Lending:
Finance Charge Revenue 503
Interest Expense 156
-----
Net Finance Charge Revenue 347
-----
Total Net Revenues 3,421
-----
Expenses:
Marketing and Promotion 270
Provision for Losses and Claims:
Charge Card 182
Lending 235
Other 14
-----
Total 431
-----
Charge Card Interest Expense 183
Net Discount Expense 143
Human Resources 912
Other Operating Expenses 928
-----
Total Expenses 2,867
-----
Pretax Income 554
Income Tax Provision 191
-----
Net Income $363
=====
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
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 %
Total Debt $34.0
Shareholder's Equity $5.6
Return on Average Equity (D) 30.5 %
Return on Average Assets (D) 3.2 %
Quarters Ended
December 31,
1999
----
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 %
Total Debt $35.8
Shareholder's Equity $5.4
Return on Average Equity (D) 30.1 %
Return on Average Assets (D) 3.2 %
Quarters Ended
September 30,
1999
----
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 %
Total Debt $30.8
Shareholder's Equity $5.4
Return on Average Equity (D) 29.3 %
Return on Average Assets (D) 3.3 %
Quarters Ended
June 30,
1999
----
Total Cards in Force (millions):
United States 28.7
Outside the United States 15.2
----
Total 43.9
====
Basic Cards in Force (millions):
United States 22.5
Outside the United States 11.7
----
Total 34.2
====
Card Billed Business:
United States $46.0
Outside the United States 16.4
----
Total $62.4
====
Average Discount Rate (A) 2.73 %
Average Basic Cardmember
Spending (dollars) (A) $1,933
Average Fee per Card - Managed (dollars) (A) $38
Non-Amex Brand (B)
Cards in Force (millions) 0.2
Billed Business $0.2
Travel Sales $6.0
Travel Commissions and Fees/Sales (C) 7.8 %
Total Debt $30.6
Shareholder's Equity $5.3
Return on Average Equity (D) 28.8 %
Return on Average Assets (D) 3.3 %
Quarters Ended
March 31,
1999
----
Total Cards in Force (millions):
United States 27.9
Outside the United States 15.0
----
Total 42.9
====
Basic Cards in Force (millions):
United States 21.8
Outside the United States 11.5
----
Total 33.3
====
Card Billed Business:
United States $41.6
Outside the United States 15.2
----
Total $56.8
====
Average Discount Rate (A) 2.73 %
Average Basic Cardmember
Spending (dollars) (A) $1,781
Average Fee per Card - Managed (dollars) (A) $40
Non-Amex Brand (B)
Cards in Force (millions) 0.2
Billed Business $0.2
Travel Sales $5.3
Travel Commissions and Fees/Sales (C) 8.0 %
Total Debt $28.2
Shareholder's Equity $5.1
Return on Average Equity (D) 28.4 %
Return on Average Assets (D) 3.3 %
(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.
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited, Managed Basis)
(Amounts in billions, except percentages and where indicated)
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 %
Quarters Ended
December 31,
1999
----
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 %
Quarters Ended
September 30,
1999
----
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 %
Quarters Ended
June 30,
1999
----
Charge Card Receivables:
Total Receivables $24.6
90 Days Past Due as a % of Total 2.6 %
Loss Reserves (millions) $932
% of Receivables 3.8 %
% of 90 Days Past Due 148 %
Net Loss Ratio 0.39 %
U.S. Cardmember Lending:
Total Loans $18.3
Past Due Loans as a % of Total:
30-89 Days 1.8 %
90+ Days 0.9 %
Loss Reserves (millions):
Beginning Balance $623
Provision 209
Net Charge-Offs/Other (230)
---
Ending Balance $602
===
% of Loans 3.3 %
% of Past Due 124 %
Average Loans $17.4
Net Write-Off Rate 5.3 %
Net Interest Yield 9.3 %
Quarters Ended
March 31,
1999
----
Charge Card Receivables:
Total Receivables $23.5
90 Days Past Due as a % of Total 3.0 %
Loss Reserves (millions) $876
% of Receivables 3.7 %
% of 90 Days Past Due 126 %
Net Loss Ratio 0.43 %
U.S. Cardmember Lending:
Total Loans $16.7
Past Due Loans as a % of Total:
30-89 Days 2.1 %
90+ Days 1.0 %
Loss Reserves (millions):
Beginning Balance $619
Provision 244
Net Charge-Offs/Other (240)
---
Ending Balance $623
===
% of Loans 3.7 %
% of Past Due 121 %
Average Loans $16.7
Net Write-Off Rate 5.9 %
Net Interest Yield 9.4 %
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Financial Advisors
-----------------------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
Quarters Ended
March 31,
------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Net Revenues:
Investment Income $572 $595 (3.9) %
Management and Distribution Fees 688 522 31.7
Other Revenues 246 228 8.2
----- -----
Total Revenues 1,506 1,345 12.0
Provision for Losses and Benefits:
Annuities 259 270 (4.3)
Insurance 139 126 10.4
Investment Certificates 89 64 40.6
----- -----
Total 487 460 6.0
----- -----
Net Revenues 1,019 885 15.1
----- -----
Expenses:
Human Resources 498 416 19.7
Other Operating Expenses 166 157 5.5
----- -----
Total Expenses 664 573 15.8
----- -----
Pretax Income 355 312 13.8
Income Tax Provision 110 98 12.3
----- -----
Net Income $245 $214 14.5
===== =====
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
Quarters Ended
March 31,
-------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Investments (billions) $30.3 $30.6 (1.0) %
Client Contract Reserves (billions) $31.0 $30.5 1.6
Shareholder's Equity (billions) $3.9 $4.1 (4.9)
Return on Average Equity* 23.0 % 22.6 % -
Life Insurance in Force (billions) $91.7 $82.9 10.6
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $57.4 $46.8 22.7
Assets Owned, Managed or
Administered for Individuals:
Owned Assets:
Separate Account Assets 38.4 28.2 36.2
Other Owned Assets 39.8 37.4 6.4
----- -----
Total Owned Assets 78.2 65.6 19.2
Managed Assets 122.7 96.0 27.8
Administered Assets 31.2 18.7 66.8
----- -----
Total $289.5 $227.1 27.5
===== =====
Market Appreciation (Depreciation)
During the Period:
Owned Assets:
Separate Account Assets $2,332 $912 #
Other Owned Assets $(120) $(204) (41.2)
Total Managed Assets $7,020 $3,018 #
Cash Sales:
Mutual Funds $12,104 $8,483 42.7
Annuities 1,362 793 71.7
Investment Certificates $835 702 18.9
Life and Other Insurance Products $237 158 50.1
Institutional 1,551 743 #
Other 573 885 (35.0)
------ ------
Total Cash Sales $16,662 $11,764 41.6
====== ======
Number of Financial Advisors 11,094 10,372 7.0
Fees from Financial Plans and
Advice Services $26.3 $21.3 23.6
Percentage of Total Sales from
Financial Plans and Advice Services 66.9 % 66.5 % -
* Excluding the effect of SFAS No. 115.
# Denotes variance of more than 100%.
</TABLE>
Note: Reporting of data related to cash sales and assets
owned, managed and administered has been revised to better
reflect AEFA's multiple sales channel strategy and
broadening of its product portfolio through additional
non-proprietary offerings.
<TABLE>
<CAPTION>
(Preliminary) American Express Financial Advisors
-----------------------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
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
=====
Quarters Ended
December 31,
1999
----
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
=====
Quarters Ended
September 30,
1999
----
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
=====
Quarters Ended
June 30,
1999
----
Net Revenues:
Investment Income $615
Management and Distribution Fees 553
Other Revenues 226
-----
Total Revenues 1,394
Provision for Losses and Benefits:
Annuities 273
Insurance 132
Investment Certificates 73
-----
Total 478
-----
Net Revenues 916
-----
Expenses:
Human Resources 430
Other Operating Expenses 133
-----
Total Expenses 563
-----
Pretax Income 353
Income Tax Provision 111
-----
Net Income $242
=====
Quarters Ended
March 31,
1999
----
Net Revenues:
Investment Income $595
Management and Distribution Fees 522
Other Revenues 228
-----
Total Revenues 1,345
Provision for Losses and Benefits:
Annuities 270
Insurance 126
Investment Certificates 64
-----
Total 460
-----
Net Revenues 885
-----
Expenses:
Human Resources 416
Other Operating Expenses 157
-----
Total Expenses 573
-----
Pretax Income 312
Income Tax Provision 98
-----
Net Income $214
=====
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
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 %
Quarters Ended
December 31,
1999
----
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 %
Quarters Ended
September 30,
1999
----
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 %
Quarters Ended
June 30,
1999
----
Investments (billions) $30.7
Client Contract Reserves (billions) $30.8
Shareholder's Equity (billions) $4.0
Return on Average Equity* 22.8 %
Life Insurance in Force (billions) $84.6
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $49.8
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 30.1
Other Owned Assets 37.8
-----
Total Owned Assets 67.9
Managed Assets 102.1
Administered Assets 20.8
-----
Total $240.6
=====
Market Appreciation (Depreciation)
During the Period:
Owned Assets:
Separate Account Assets $1,520
Other Owned Assets $(395)
Total Managed Assets $5,329
Cash Sales:
Mutual Funds $8,872
Annuities 980
Investment Certificates 835
Life and Other Insurance Products 169
Institutional 1,432
Other 805
------
Total Cash Sales $13,093
======
Number of Financial Advisors 10,489
Fees from Financial Plans and Advice Services $22.8
Percentage of Total Sales from Financial Plans
and Advice Services 65.2 %
Quarters Ended
March 31,
1999
----
Investments (billions) $30.6
Client Contract Reserves (billions) $30.5
Shareholder's Equity (billions) $4.1
Return on Average Equity* 22.6 %
Life Insurance in Force (billions) $82.9
Assets Owned, Managed or
Administered (billions):
Assets Managed for Institutions $46.8
Assets Owned, Managed or Administered
for Individuals:
Owned Assets:
Separate Account Assets 28.2
Other Owned Assets 37.4
-----
Total Owned Assets 65.6
Managed Assets 96.0
Administered Assets 18.7
-----
Total $227.1
=====
Market Appreciation (Depreciation)
During the Period:
Owned Assets:
Separate Account Assets $912
Other Owned Assets $(204)
Total Managed Assets $3,018
Cash Sales:
Mutual Funds $8,483
Annuities 793
Investment Certificates 702
Life and Other Insurance Products 158
Institutional 743
Other 885
------
Total Cash Sales $11,764
======
Number of Financial Advisors 10,372
Fees from Financial Plans and Advice Services $21.3
Percentage of Total Sales from Financial Plans
and Advice Services 66.5 %
* Excluding the effect of SFAS No. 115.
</TABLE>
Note: Reporting of data related to cash sales and assets
owned, managed and administered has been revised to better
reflect AEFA's multiple sales channel strategy and
broadening of its product portfolio through additional
non-proprietary offerings.
<TABLE>
<CAPTION>
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Statements of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarters Ended
March 31,
------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Net Revenues:
Interest Income $183 $193 (5.2) %
Interest Expense 118 119 (1.3)
--- ---
Net Interest Income 65 74 (11.5)
TC Investment Income 91 79 15.0
Commissions and Fees 54 43 26.7
Foreign Exchange Income &
Other Revenue 41 51 (20.8)
--- ---
Net Revenues 251 247 1.7
--- ---
Expenses:
Human Resources 84 82 2.2
Other Operating Expenses 148 136 9.2
Provision for Losses 16 17 (4.4)
--- ---
Total Expenses 248 235 5.8
--- ---
Pretax Income 3 12 (76.9)
Income Tax Benefit (37) (29) 28.4
--- ---
Net Income $40 $41 (2.9)
=== ===
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in billions, except where indicated)
Quarters Ended
March 31,
-------------- Percentage
2000 1999 Inc/(Dec)
---- ---- --------
<S> <C> <C> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $943 $1,148 (17.8) %
Return on Average Common Equity * 17.3 % 19.7 % -
Return on Average Assets * 0.81 % 0.90 % -
American Express Bank:
Shareholder's Equity (millions) $697 $733 (4.9)
Total Loans $5.0 $5.3 (5.1)
Total Non-performing Loans (millions) $174 $209 (16.9)
Other Non-performing Assets (millions) $31 $64 (51.6)
Reserve for Credit Losses (millions)** $189 $261 (27.7)
Loan Loss Reserves as a % of
Total Loans 3.4 % 4.1 % -
Deposits $8.4 $7.9 6.6
Assets Managed / Administered *** $9.4 $6.3 49.7
Assets of Non-Consolidated Joint
Ventures $2.4 $2.6 (8.2)
Risk-Based Capital Ratios:
Tier 1 10.1 % 9.8 % -
Total 11.6 % 12.1 % -
Leverage Ratio 5.6 % 5.4 % -
Travelers Cheque:
Sales $5.1 $4.6 10.5
Average Outstanding $6.1 $5.8 4.7
Average Investments $6.0 $5.6 6.1
Tax Equivalent Yield 8.9 % 8.9 % -
* Excludes the effect of SFAS No. 115 for all periods presented.
</TABLE>
<TABLE>
<CAPTION>
** Allocation:
<S> <C> <C>
Loans $170 $218
Other Assets, primarily derivatives 15 41
Other Liabilities 4 2
--- ---
Total Credit Loss Reserves $189 $261
=== ===
*** Includes assets managed by American Express Financial Advisors.
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Statements of Income
--------------------
(Unaudited)
(Dollars in millions)
Quarters Ended
March 31,
2000
----
<S> <C>
Net Revenues:
Interest Income $183
Interest Expense 118
---
Net Interest Income 65
TC Investment Income 91
Commissions and Fees 54
Foreign Exchange Income & Other Revenue 41
---
Net Revenues 251
---
Expenses:
Human Resources 84
Other Operating Expenses 148
Provision for Losses 16
---
Total Expenses 248
---
Pretax Income 3
Income Tax Benefit (37)
---
Net Income $40
===
Quarters Ended
December 31,
1999
----
Net Revenues:
Interest Income $180
Interest Expense 112
---
Net Interest Income 68
TC Investment Income 88
Commissions and Fees 51
Foreign Exchange Income & Other Revenue 45
---
Net Revenues 252
---
Expenses:
Human Resources 90
Other Operating Expenses 151
Provision for Losses 11
---
Total Expenses 252
---
Pretax Income -
Income Tax Benefit (35)
---
Net Income $35
===
Quarters Ended
September 30,
1999
----
Net Revenues:
Interest Income $181
Interest Expense 106
---
Net Interest Income 75
TC Investment Income 91
Commissions and Fees 49
Foreign Exchange Income & Other Revenue 46
---
Net Revenues 261
---
Expenses:
Human Resources 86
Other Operating Expenses 159
Provision for Losses 12
---
Total Expenses 257
---
Pretax Income 4
Income Tax Benefit (34)
---
Net Income $38
===
Quarters Ended
June 30,
1999
----
Net Revenues:
Interest Income $183
Interest Expense 108
---
Net Interest Income 75
TC Investment Income 86
Commissions and Fees 47
Foreign Exchange Income & Other Revenue 51
---
Net Revenues 259
---
Expenses:
Human Resources 85
Other Operating Expenses 150
Provision for Losses 18
---
Total Expenses 253
---
Pretax Income 6
Income Tax Benefit (32)
---
Net Income $38
===
Quarters Ended
March 31,
1999
----
Net Revenues:
Interest Income $193
Interest Expense 119
---
Net Interest Income 74
TC Investment Income 79
Commissions and Fees 43
Foreign Exchange Income & Other Revenue 51
---
Net Revenues 247
---
Expenses:
Human Resources 82
Other Operating Expenses 136
Provision for Losses 17
---
Total Expenses 235
---
Pretax Income 12
Income Tax Benefit (29)
---
Net Income $41
===
</TABLE>
<TABLE>
<CAPTION>
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in billions, except where indicated)
Quarters Ended
March 31,
2000
----
<S> <C>
Selected Statistical Information
Total Shareholder's Equity (millions) $943
Return on Average Common Equity * 17.3 %
Return on Average Assets * 0.81 %
American Express Bank:
Shareholder's Equity (millions) $697
Total Loans $5.0
Total Non-performing Loans (millions) $174
Other Non-performing Assets (millions) $31
Reserve for Credit Losses (millions)** $189
Loan Loss Reserves as a % of Total Loans 3.4 %
Deposits $8.4
Assets Managed / 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 %
Travelers Cheque:
Sales $5.1
Average Outstanding $6.1
Average Investments $6.0
Tax Equivalent Yield 8.9 %
Quarters Ended
December 31,
1999
----
Selected Statistical Information
Total Shareholder's Equity (millions) $875
Return on Average Common Equity * 17.5 %
Return on Average Assets * 0.82 %
American Express Bank:
Shareholder's Equity (millions) $691
Total Loans $5.1
Total Non-performing Loans (millions) $168
Other Non-performing Assets (millions) $37
Reserve for Credit Losses (millions)** $189
Loan Loss Reserves as a % of Total Loans 3.3 %
Deposits $8.3
Assets Managed / 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 %
Travelers Cheque:
Sales $5.4
Average Outstanding $6.1
Average Investments $5.9
Tax Equivalent Yield 8.8 %
Quarters Ended
September 30,
1999
----
Selected Statistical Information
Total Shareholder's Equity (millions) $956
Return on Average Common Equity * 17.7 %
Return on Average Assets * 0.83 %
American Express Bank:
Shareholder's Equity (millions) $702
Total Loans $5.1
Total Non-performing Loans (millions) $181
Other Non-performing Assets (millions) $40
Reserve for Credit Losses (millions)** $204
Loan Loss Reserves as a % of Total Loans 3.5 %
Deposits $8.1
Assets Managed / 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 %
Travelers Cheque:
Sales $7.3
Average Outstanding $6.5
Average Investments $6.2
Tax Equivalent Yield 8.8 %
Quarters Ended
June 30,
1999
----
Selected Statistical Information
Total Shareholder's Equity (millions) $1,048
Return on Average Common Equity * 18.5 %
Return on Average Assets * 0.86 %
American Express Bank:
Shareholder's Equity (millions) $714
Total Loans $5.2
Total Non-performing Loans (millions) $210
Other Non-performing Assets (millions) $55
Reserve for Credit Losses (millions)** $249
Loan Loss Reserves as a % of Total Loans 4.1 %
Deposits $8.0
Assets Managed / Administered *** $7.0
Assets of Non-Consolidated Joint
Ventures $2.2
Risk-Based Capital Ratios:
Tier 1 9.8 %
Total 12.1 %
Leverage Ratio 5.7 %
Travelers Cheque:
Sales $6.1
Average Outstanding $6.1
Average Investments $5.7
Tax Equivalent Yield 8.8 %
Quarters Ended
March 31,
1999
----
Selected Statistical Information
Total Shareholder's Equity (millions) $1,148
Return on Average Common Equity * 19.7 %
Return on Average Assets * 0.90 %
American Express Bank:
Shareholder's Equity (millions) $733
Total Loans $5.3
Total Non-performing Loans (millions) $209
Other Non-performing Assets (millions) $64
Reserve for Credit Losses (millions)** $261
Loan Loss Reserves as a % of Total Loans 4.1 %
Deposits $7.9
Assets Managed / Administered *** $6.3
Assets of Non-Consolidated Joint
Ventures $2.6
Risk-Based Capital Ratios:
Tier 1 9.8 %
Total 12.1 %
Leverage Ratio 5.4 %
Travelers Cheque:
Sales $4.6
Average Outstanding $5.8
Average Investments $5.6
Tax Equivalent Yield 8.9 %
* Excludes the effect of SFAS No. 115 for all periods presented.
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended
--------------
03/00 12/99 09/99 06/99 03/99
** Allocations: ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Loans $170 $169 $179 $216 $218
Other Assets,
primarily derivatives 15 16 23 32 41
Other Liabilities 4 4 2 1 2
--- --- --- --- ---
Total Credit Loss
Reserves $189 $189 $204 $249 $261
=== === === === ===
***Includes assets managed by American Express Financial Advisors.
</TABLE>
<TABLE>
<CAPTION>
American Express Bank
---------------------
Exposures By Country and Region
-------------------------------
(Unaudited)
($ in billions)
Net
Guarantees
FX and and 3/31/00 12/31/99
Deriva- Contin- Total Total
Country Loans tives gents Other* Exposure**Exposure**
- ------- ----- ------ ------ ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong $0.5 - $0.1 $0.1 $0.7 $0.8
Indonesia 0.2 - - 0.1 0.3 0.4
Singapore 0.5 - 0.1 0.1 0.7 0.6
Korea 0.1 - - 0.2 0.4 0.3
Taiwan 0.3 - 0.1 0.1 0.4 0.4
China - - - - - -
Japan - - - - 0.1 0.1
Thailand - - - - - -
Other - - - 0.2 0.3 0.3
--- --- --- --- ---- ----
Total Asia/Pacific
Region** 1.6 - 0.3 0.9 2.9 2.9
--- --- --- --- ---- ----
Chile 0.2 - - 0.1 0.4 0.3
Brazil 0.2 - - 0.1 0.3 0.3
Mexico 0.1 - - - 0.1 0.1
Peru - - - - - -
Argentina 0.1 - - - 0.1 0.1
Other 0.2 - 0.1 0.1 0.5 0.5
--- --- --- --- ---- ----
Total Latin
America** 0.7 - 0.2 0.3 1.3 1.2
--- --- --- --- ---- ----
India 0.3 - 0.1 0.3 0.7 0.7
Pakistan 0.1 - - 0.1 0.3 0.3
Other 0.1 - 0.1 0.1 0.2 0.2
--- --- --- --- ---- ----
Total Sub-
continent** 0.4 - 0.2 0.6 1.2 1.2
--- --- --- --- ---- ----
Egypt 0.3 - - 0.2 0.5 0.5
Other 0.1 - - - 0.2 0.2
--- --- --- --- ---- ----
Total Middle East
& Africa** 0.4 - 0.1 0.2 0.8 0.8
--- --- --- --- ---- ----
Total Europe*** 1.4 0.1 0.7 2.5 4.7 4.7
Total North
America** 0.3 0.1 0.2 1.3 1.8 2.0
--- --- --- --- ---- ----
Total Worldwide** $5.0 $0.3 $1.6 $5.8 $12.7 $12.7
=== === === === ==== ====
* Includes cash, placements and securities.
** Individual items may not add to totals due to rounding.
*** Total exposures at 3/31/00 and 12/31/99 include
$10 million and $11 million of exposures to Russia,
respectively.
</TABLE>
Note: Includes cross-border and local exposure and does not net
local funding or liabilities against any local exposure.
AMERICAN EXPRESS LOGO
2000
FIRST 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") FIRST 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
------------------------
FIRST QUARTER 2000
------------------
HIGHLIGHTS
----------
o Diluted EPS growth of 14%, net revenue (managed basis) increase of 16% (14%
on a GAAP basis), and ROE of 25% met our financial targets.
o Solid performance continued. Compared with the first quarter of 1999:
- Worldwide billed business rose 20%;
- Worldwide lending balances on a managed asset basis of $26.4B were up
44%;
- Worldwide cards in force increased 12%, up 5MM from last year. In the
first quarter, 1.9MM net new cards were added; and
- AEFA assets owned, managed and administered of $289B were 27% higher.
o American Express expanded its products and services during the quarter as
it:
- Added several new partners to the Membership Rewards and Membership
Rewards Plus programs, expanding our relationships to include
additional airlines, hotels and several popular retail establishments.
- Launched an American Express Blue Credit Card in New Zealand, which
offers consumers attractive interest rates and money-back rebates.
- Added Winn-Dixie, one of the largest U.S. supermarket chains to our
list of merchants accepting Cards.
- Signed an agreement with Hong Leong Bank in Malaysia to issue a new
credit card that will be accepted on American Express' global merchant
network.
- Announced the signing of a network license agreement with Swedbank to
issue American Express branded cards in Sweden, beginning later this
year.
- Expanded our sponsorship as the Official Card of the National Basketball
Association to leverage many of the NBA's marquee events, media
vehicles, teams and players, to provide exclusive access and experiences
for American Express cardmembers.
- Rolled out AEFA's advisor platform strategy, providing advisors with the
choice of different career tracks, including the first franchise option
offered by a major financial services company.
- Acquired over 4,500 ATMs located in 7-Eleven stores nationwide and
announced a strategic alliance with 7-Eleven to introduce interactive
kiosks, initially in a few hundred stores in Texas. The kiosks will
provide customers with convenient access to financial services products
24 hours-a-day, seven days-a-week.
- Purchased the non-attest assets of Hausser + Taylor, Ohio's largest
independent regional accounting and business consulting firm.
- Launched new investment products in Mexico through AEB, providing a
range of personal financial services.
o American Express continued to implement its internet strategy as it:
- Introduced BlueLoot in the U.S., a free rewards program which offers one
point for every dollar charged on Blue, both online and off.
- Announced a strategic agreement with Ariba to accelerate and streamline
B2B e-commerce through the joint development of a suite of electronic
payment services.
- Signed an agreement with MedicinePlanet, a comprehensive travel health
information, product and service resource, whereby we will offer its
customers our Travel Medical Protection insurance.
- Announced investments in:
-- OpenTable.com and foodline.com, providers of diner information and
real-time online reservation management services to the restaurant
industry;
-- Lipstream Networks, Inc., a leader in live voice communication over
the internet;
-- EncrypTix, Inc., which provides highly secure, authenticated online
printing technologies for the events, movie, travel and financial
service industries;
-- Respond.com, a "Shop By Request" online service that connects buyers
with sellers;
-- PeopleFirst.com, one of the largest online automobile lenders; and
-- BigVine.com, which is pioneering an e-marketplace that enables
businesses to trade their excess goods and services through barter.
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 sold by AEB to its international clients
grew.
1
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
CONSOLIDATED
------------
(UNAUDITED)
(millions, except per share amounts) Quarters Ended Percentage
March 31, Inc/(Dec)
------------------------------------------ -----------------
2000 1999
---- ----
<S> <C> <C> <C>
Consolidated revenues:
Net (managed basis) $5,259 $4,524 16%
====== ======
GAAP reporting basis $5,657 $4,971 14%
====== ======
NET INCOME: $656 $575 14%
==== ====
EPS:
Basic $1.48 $1.28 16%
===== =====
Diluted $1.44 $1.26 14%
===== =====
</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 marketing and promotion and
interest costs, larger provisions for losses, and higher human resource and
operating expenses.
o SHARE REPURCHASES: 2.8MM shares were purchased in 1Q `00; since the
inception of repurchase programs in September 1994, 108.8MM shares have
been acquired.
<TABLE>
<CAPTION>
Millions of Shares
-----------------------------------------------------------
<S> <C> <C> <C>
- AVERAGE SHARES: 1Q `00 4Q `99 1Q `99
------ ------ ------
Basic 443.7 445.1 447.7
===== ===== =====
Diluted 454.1 456.2 456.2
===== ===== =====
- ACTUAL SHARES:
Shares outstanding - beginning of period 446.9 447.6 450.5
Repurchase of common shares (2.8) (1.8) (2.6)
Rockford acquisition - - 0.5
Employee benefit plans, compensation
and other 0.5 1.1 1.6
----- ----- -----
Shares outstanding - end of period 444.6 446.9 450.0
===== ===== =====
</TABLE>
CORPORATE AND OTHER
-------------------
o The 1Q `00 net expense of $45MM compared with $43MM in 1Q `99 and $42MM in
4Q `99.
- Both 1Q `00 and 1Q `99 include a $46MM ($39MM after-tax) Lehman
Brothers preferred dividend based on its earnings which was offset by
costs associated with various business building initiatives and, in
1999, Y2K related expenditures.
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES
-----------------------
(preliminary) STATEMENTS OF INCOME
--------------------
(UNAUDITED, MANAGED BASIS)
Quarters Ended Percentage
(millions) March 31, Inc/(Dec)
--------------------------------------- -------------------
2000 1999
---- ----
<S> <C> <C> <C>
Net revenues:
Discount revenue $1,805 $1,514 19%
Net card fees 405 403 1
Travel commissions and fees 438 426 3
Other revenues 841 639 32
Lending:
Finance charge revenue 887 652 36
Interest expense 332 200 66
----- -----
Net finance charge revenue 555 452 23
----- -----
Total net revenues 4,044 3,434 18
----- -----
Expenses:
Marketing and promotion 318 270 18
Provision for losses and claims:
Charge card 278 233 20
Lending 335 282 19
Other 21 14 51
----- -----
Total 634 529 20
----- -----
Charge card interest expense 314 241 30
Human resources 998 912 9
Other operating expenses 1,144 928 23
----- -----
Total expenses 3,408 2,880 18
----- -----
Pretax income 636 554 15
Income tax provision 220 191 15
----- -----
Net income $416 $363 15
===== =====
</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 Revenues benefited from increased cards in force and worldwide billed
business and growth in cardmember loans outstanding.
o The higher expenses reflect increased operating costs, primarily due to
business growth, greater provisions for losses, higher interest costs and
larger marketing and promotion expenditures.
o Under Statement of Financial Accounting Standards No. 125 (SFAS 125),
which prescribes the accounting for securitizations, TRS recognized a
pre-tax gain of $36MM ($23MM after-tax) in 1Q `00 related to the
securitization of $1.0B of U.S. Lending receivables. This gain was offset
by higher expenses related to card acquisition initiatives and, therefore,
had no material impact on net income or total expenses.
For purposes of the above "managed asset basis" Statements of Income, which
present TRS' results as if there had been no securitizations, such gain
(reported on the GAAP Statement of Income as a $24MM reduction in the
Lending Provision for Losses and increases in Other Revenue and Lending
Interest Expense) and corresponding growth in Marketing and Promotion and
Other Operating Expenses have been eliminated.
o We have made a number of investments in e-commerce companies to further
our strategic initiatives. Our policy is to carry these investments at
cost or, if publicly traded, at market value with changes recorded as
adjustments to shareholders' equity. When a company in which we have made
an investment is acquired, any gain or loss is recognized through the
income statement. During 1Q `00 Infospace Inc. acquired Prio Inc., in
which we held an investment. This resulted in a gain (reported in Other
Operating Expenses) which was offset by higher investments in internet
related activities and, therefore, had no material effect on net income or
total expenses.
o The pre-tax margin was 15.7% in 1Q `00 versus 16.1% last year as we
continued to invest heavily in business building activities.
o The effective tax rate was 35% in 1Q `00, 1Q `99 and 4Q `99.
3
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES (CONT'D)
--------------------------------
o DISCOUNT REVENUE: Stronger billed business and a slightly lower discount
rate yielded a 19% increase in discount revenue.
- The average discount rate in 1Q `00 was 2.72% versus 2.73% in 1Q `99
and 2.71% in 4Q `99.
-- We believe the AXP value proposition is strong. However, changes
in the mix of business, e.g., growing card acceptance at
supermarkets, discounters, etc., 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
March 31, Inc/(Dec)
---------------------------------- ------------------
2000 1999
---- ----
<S> <C> <C> <C>
Card billed business (billions):
United States $50.6 $41.6 22%
Outside the United States 17.7 15.2 17
----- -----
Total $68.3 $56.8 20
===== =====
Cards in force (millions):
United States 31.4 27.9 12
Outside the United States 16.5 15.0 11
----- -----
Total 47.9 42.9 12
===== =====
Basic cards in force (millions):
United States 24.5 21.8 12
Outside the United States 12.6 11.5 10
----- -----
Total 37.1 33.3 11
===== =====
Spending per basic card in force (dollars) (a):
United States $2,123 $1,915 11
Outside the United States $1,630 $1,472 11
Total $1,980 $1,781 11
(a) Proprietary card activity only.
</TABLE>
- BILLED BUSINESS: The 20% increase in billed business resulted from
higher spending per basic cardmember worldwide (due in part to
increased merchant coverage and the benefits of rewards programs) and
growth in cards in force.
-- U.S. spending per basic card in force increased 11% reflecting
continued strong growth in the consumer and small business areas
and a return to double-digit volume expansion within Corporate
Services.
-- Excluding foreign exchange translation:
- Total billed business outside the U.S. rose approximately 19%
on strong double-digit increases in all regions.
- Spending per proprietary basic card in force outside the U.S.
rose 13%.
-- 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 12% versus last year.
-- The improvement in U.S. card acquisitions during the quarter
(1.5MM net new cards added) reflects more proactive consumer card
and small business services activities, including the successful
launch of Blue and co-branded Costco cards. This is consistent
with a strategy shift late in 1998 towards reenergizing
acquisition programs while maintaining our focus on expanding
existing relationships.
-- Outside the United States, cards in force rose 11% on continued
proprietary card growth and particularly strong network card
results.
4
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST 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 now 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
March 31, Inc/(Dec)
--------------------------------- ---------------
2000 1999
---- ----
<S> <C> <C> <C>
Cards in force (millions) 0.6 0.2 #
Billed business (billions) $0.5 $0.2 #
# Denotes variance greater than 100%.
</TABLE>
o NET CARD FEES: Rose slightly as new cards in force were added. The average
fee per card in force was $37 in 1Q `00, versus $40 in 1Q `99 and $38 in
4Q `99, as the mix evolved toward lower and no fee products.
o TRAVEL COMMISSIONS AND FEES: Were up 3% on 3% growth in travel sales. The
revenue earned per dollar of sales (8.0% in both 1Q `00 and 1Q `99)
reflects a relatively larger contribution from non-U.S. transactions and
new fees related to certain client services, which were offset by
continued efforts by airlines to reduce distribution costs and by
corporate clients to contain travel and entertainment expenses.
o OTHER REVENUES: Increased 32% due to Tax and Business Services and ATM
acquisitions, higher lending and membership rewards fees, greater foreign
exchange conversion revenues, and larger interest revenues.
o NET FINANCE CHARGE REVENUE: Rose 23% on strong 44% growth in worldwide
lending balances that was partially offset by lower net interest yields.
- The yield on the U.S. portfolio declined to 7.8% in 1Q `00 versus 9.4%
in 1Q `99 as a higher proportion of the portfolio was on introductory
rates and the mix of products evolved toward more fixed-rate and
lower-rate products. The yield increased from 7.7% in 4Q `99 on
slightly lower introductory rate usage.
o MARKETING AND PROMOTION EXPENSES: Increased by 26% on a GAAP reporting
basis on expanded card acquisition and media advertising activities. On a
Managed Statement of Income basis, expenses were 18% higher after the
elimination of expenses corresponding to the SFAS 125 gain.
o CHARGE CARD INTEREST EXPENSE: Rose 30% due to higher billed business
volumes and a greater worldwide cost of funds.
o HUMAN RESOURCE EXPENSES: Increased 9% versus last year as a result of a
higher average number of employees and merit increases.
- The employee count at 3/00 of 73,700 was up approximately 3,000 versus
last year and 950 versus 4Q `99 primarily due to increased global
technology business demands, greater business volumes and the
substitution of contract programmers with full-time employees.
o OTHER OPERATING EXPENSES: Rose 23% on higher costs related to business
growth, cardmember loyalty programs, professional fees for the outsourcing
of certain collection activities and various business building
initiatives.
5
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES (CONT'D)
--------------------------------
o CREDIT QUALITY:
- Overall, charge card and lending credit quality remained stable in the
quarter and improved versus last year.
- The provision for losses on charge card products was 20% above last
year due to higher volumes.
- The lending provision for losses was 19% 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 hit a new historical low while the past due
rate improved versus 3/99. The past due rate was up versus 12/99
reflecting the normal seasonal effect of the relatively high 4Q
receivable balance level created by holiday spending.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3/00 12/99 3/99
-------------- ------------ -------------
Loss ratio, net of recoveries 0.34% 0.40% 0.43%
90 days past due as a % of receivables 2.6% 2.5% 3.0%
-- Reserve coverage of past due accounts remained strong.
3/00 12/99 3/99
-------------- ------------- -------------
Reserves (MM) $894 $857 $876
% of receivables 3.3% 3.2% 3.7%
% of past due accounts 129% 126% 126%
- U.S. Lending:
------------
-- The write-off and past due rates improved from last year and were
stable versus 12/99.
3/00 12/99 3/99
------------- ------------- -------------
Write-off rate, net of recoveries 4.6% 4.5% 5.9%
30 days past due as a % of loans 2.6% 2.6% 3.1%
-- The cardmember lending reserve increased and coverage of past due
accounts remained strong.
3/00 12/99 3/99
------------- -------------- -------------
Reserves (MM) $689 $672 $623
% of total loans 2.8% 2.9% 3.7%
% of past due accounts 109% 110% 121%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS
-----------------------------------
(Preliminary) STATEMENTS OF INCOME
--------------------
(UNAUDITED)
(millions) Quarters Ended Percentage
March 31, Inc/(Dec)
---------------------------------------- -------------------
2000 1999
---- ----
<S> <C> <C> <C>
Revenues:
Investment income $572 $595 (4)%
Management and distribution fees 688 522 32
Other revenues 246 228 8
----- -----
Total revenues 1,506 1,345 12
Provision for losses and benefits:
Annuities 259 270 (4)
Insurance 139 126 10
Investment certificates 89 64 41
----- -----
Total 487 460 6
----- -----
Total net revenues 1,019 885 15
----- -----
Expenses:
Human resources 498 416 20
Other operating expenses 166 157 6
----- -----
Total expenses 664 573 16
----- -----
Pretax income 355 312 14
Income tax provision 110 98 12
----- -----
Net income $245 $214 15
===== =====
</TABLE>
o Net revenue growth of 15% resulted from:
- Increased management fees from larger managed asset levels;
- Greater distribution fees from product sales and asset levels; and
- Higher insurance premiums.
o Pretax margin trends reflect higher human resource expenses on
substantially greater sales and asset levels, partially offset by
relatively higher expenses related to business building initiatives last
year. Core operating expense growth was well controlled.
o The effective tax rate was 31% in 1Q `00, 4Q `99 and 1Q `99.
o Reporting of data related to assets owned, managed and administered and
product sales has been revised to reflect better AEFA's multiple sales
channel strategy and the broadening of its product portfolio through
additional non-proprietary offerings. Prior reporting did not fully
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
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS (CONT'D)
--------------------------------------------
o ASSETS OWNED, MANAGED AND ADMINISTERED:
Percentage
(billions) March 31, Inc/(Dec)
---------------------------------- ---------------
2000 1999
---- ----
<S> <C> <C> <C>
Assets owned (excluding separate accounts) $39.8 $37.4 6%
Separate account assets 38.4 28.2 36
Assets managed 180.1 142.8 26
Assets administered 31.2 18.7 67
------ ------
Total $289.5 $227.1 27
====== ======
</TABLE>
o INVESTMENT INCOME:
- Gross investment income decreased 4% due to a lower average yield on
invested assets and losses related to the high yield investment
portfolio, consistent with rising default rates and declining
recoveries within the industry. These were partially offset by a
higher level of invested assets and an increase in the value of
options hedging outstanding stock market certificates.
- Average invested assets of $32.4B (excluding unrealized
appreciation/depreciation) were up 5% versus $31.0B in 1Q `99.
- The average yield on invested assets was 7.4% versus 7.6% in 1Q `99.
- Insurance, annuity and certificates spreads were down versus last year
and last quarter.
o Asset Quality remains strong despite some deterioration in the high yield
portfolio.
- Non-performing assets relative to invested assets were 0.5% and were
48% covered by reserves.
- The SFAS No. 115 related mark-to-market adjustment on the portfolio
(reported in assets pre-tax) was depreciation of ($881MM) at 3/00 and
($744MM) at 12/99 versus appreciation of $178MM at 3/99.
- Unrealized depreciation on securities held to maturity was ($63MM) at
3/00 and ($111MM) at 12/99 compared with appreciation of $448MM at
3/99.
o MANAGEMENT AND DISTRIBUTION FEES: The increase of 32% was due to higher
average assets under management, distribution fees from greater mutual
fund sales and asset levels, and substantially higher brokerage fees.
<TABLE>
<CAPTION>
- ASSETS MANAGED:
Percentage
(billions) March 31, Inc/(Dec)
------------------------------ -----------------
2000 1999
---- ----
<S> <C> <C> <C>
Assets managed for individuals $122.7 $96.0 28%
Assets managed for institutions 57.4 46.8 23
Separate account assets 38.4 28.2 36
------ ------
Total $218.5 $171.0 28
====== ======
</TABLE>
-- The growth in managed assets since 3/99 resulted from $37.4B of
market appreciation and $10.1B of net new money.
-- The $12.0B increase in managed assets during 1Q `00 resulted from
$9.4B of market appreciation and net new money of $2.6B.
o PRODUCT SALES:
- Total gross cash sales from all products were up 42% over 1Q `99.
- Mutual fund sales increased 43% on strong double-digit growth in
proprietary funds and particularly strong non-proprietary fund sales,
especially in "wrap" accounts. Within proprietary funds:
-- There was continued strong double-digit growth in equity and money
market fund sales; sales of bond funds declined.
-- Sales of no-load funds improved; front-load and rear-load fund
sales were down slightly.
-- Redemption rates continued to compare favorably with industry
levels.
- Annuity sales were up 72%, as variable annuity sales were particularly
strong.
- Sales of insurance products increased 50% from new product offerings.
- Certificate sales were also strong reflecting the growth of
certificates sold to clients outside the U.S. through a joint venture
between AEFA and AEB and strength in advisor sales.
- Institutional sales increased 109% reflecting both new accounts and
additional contributions.
- Product sales generated through financial planning and advice services
were 67% of total sales in 1Q `00 and 1Q `99.
8
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS (CONT'D)
--------------------------------------------
o OTHER REVENUES: Were up 8% as a result of higher life and
property-casualty insurance premiums and greater fees from financial
planning and advice services.
- Financial planning and advice services fees of $26.3MM rose 24% versus
1Q `99.
o PROVISIONS FOR LOSSES AND BENEFITS: Lower annuity product provisions
resulted from a smaller fixed annuity inforce level. Insurance provisions
rose reflecting a larger inforce level and, to a lesser extent, a higher
accrual rate. Certificate provisions increased on a higher inforce level
and accrual rate and the effect of appreciation in the S&P 500 on the
stock market certificate product.
o HUMAN RESOURCES: Expenses were up 20% because of larger field force
compensation-related expenses due to growth in sales and asset levels, as
well as higher home office expenses reflecting growth in the client
services organization and costs for technology-related initiatives.
- TOTAL ADVISOR FORCE: 11,094 at 3/00; +722 advisors, or 7%, versus 3/99
and down 272 advisors versus 12/99.
-- The decline in advisors versus 12/99 reflects both seasonal
patterns and transitional factors related to the implementation of
the platform strategy.
- Historically, advisor appointment levels are relatively weaker
in the first quarter and stronger in the third and fourth
quarters as field force management pushes harder toward their
annual recruitment goals during the second half of the year.
This phenomenon was somewhat exaggerated during 4Q `99 as
platform related changes in new advisor compensation programs
further stimulated the advisor appointment process. Advisor
growth in 4Q `99 exceeded historical growth rates without this
effect.
- The 1Q `00 platform strategy implementation created some
shakeout within the field force as certain advisors resigned.
Others moved to a para-planner status and are not included in
the advisor count under the new structure. The median
production level for this combined group was less than 10% of
the average veteran advisor level.
-- Transitional factors are expected to also constrain the advisor
growth rate in 2Q '00. However, assuming a continuation of
reasonable market dynamics, effective recruiting results and a
waning transitional effect of the platform implementation, the
current strength in applicants, licensing activities and
recruiting of experienced advisors makes us optimistic about
future advisor growth.* Our optimism is based on a number of
factors, including:
- 1Q `00 applicant testing levels were up significantly versus
1Q `99.
- Greater volumes of hires, who are not appointed to advisor
status until training and licensing is completed (typically
12-16 weeks).
- Field leader proficiency in managing the platform dynamics
should improve as the year progresses.* This was evident in
the accelerated net advisor growth experienced in the two test
markets where the platform changes were implemented in 1999.
- Recruiting of experienced advisors, a key platform
implementation goal, showed excellent results in 1Q `00.
- Veteran advisor retention rates remain at record levels.
-- Overall, field force dynamics were strong as production was up
over 20% versus 1Q `99, productivity improved and client
acquisition rose double digits versus last year.
-- The number of clients and accounts per client were up 7% and 1%,
respectively, versus 1Q `99. Client retention continued above 95%.
o OTHER OPERATING EXPENSES: The 6% increase reflects particularly high
levels of spending on business building initiatives (e.g., new advisor
platforms) last year, an investment spending plan in 2000 that is more
skewed toward coming quarters and continued core operating expense growth
control.
9
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE
--------------------------------------
(Preliminary) STATEMENTS OF INCOME
--------------------
(UNAUDITED)
(millions) Quarters Ended Percentage
March 31, Inc/(Dec)
----------------------------------- ----------------------
2000 1999
---- ----
<S> <C> <C> <C>
Net revenues:
Interest income $183 $193 (5)%
Interest expense 118 119 (1)
----- -----
Net interest income 65 74 (11)
TC investment income 91 79 15
Commissions and fees 54 43 27
Foreign exchange income and other revenue 41 51 (21)
----- -----
Total net revenues 251 247 2
----- -----
Expenses:
Human resources 84 82 2
Other operating expenses 148 136 9
Provision for losses 16 17 (4)
----- -----
Total expenses 248 235 6
----- -----
Pretax income 3 12 (77)
Income tax benefit (37) (29) 28
----- -----
Net income $40 $41 (3)
===== =====
</TABLE>
o Net income at American Express Bank was unchanged versus last year, while
Travelers Cheque results fell slightly.
o Revenues rose 2% as higher commissions and fees and TC investment income
were partially offset by lower foreign exchange and net interest income.
AEB's two individual oriented businesses continued to grow as Private
Banking client holdings rose 27% and client volumes in Personal Financial
Services increased 24%.
- Net interest income at AEB was down 11% versus last year primarily due
to the effects of a lower loan portfolio and higher funding costs.
- TC investment income increased 15% reflecting a higher TC investment
pool and growth in Money Order related activities.
- Commissions and fees rose 27% on higher Private Banking, Correspondent
Banking and Personal Financial Services fees.
- Foreign exchange income and other revenue declined as stable
currencies in key markets decreased client related trading activities.
o Human resources expense rose only 2% reflecting personnel reductions as
AEB rationalizes certain country activities. Other operating expenses
increased 9% as Travelers Cheque business building initiatives were
partially offset by lower costs at AEB.
o AEB remained "well capitalized".
<TABLE>
<CAPTION>
3/00 12/99 3/99 Well-Capitalized
---------------- ------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Tier 1 10.1% 9.9% 9.8% 6.0%
Total 11.6% 12.0% 12.1% 10.0%
Leverage Ratio 5.6% 5.6% 5.4% 5.0%
</TABLE>
10
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (CONT'D)
-----------------------------------------------
o EXPOSURES
- AEB's loans outstanding declined to $5.0B at 3/00 versus $5.3B at 3/99
and $5.1B at 12/99. The reduction since 3/99 resulted from a $600MM
decrease in corporate and correspondent bank loans and a $540MM
increase in consumer and private banking loans, before the effect of
asset sales and securitizations. In 1Q `00, corporate and
correspondent bank loans were $200MM lower and consumer and private
banking loans were up $77MM. As of 3/00, consumer and private banking
loans comprised 40% of total loans versus 32% at 3/99.
- In addition to the loan portfolio, there are other banking activities,
such as forward contracts, various contingencies and market
placements, which added approximately $7.7B to the credit exposures at
3/00 and $7.6B at 3/99 and 12/99. Of the $7.7B of additional exposures
at 3/00, $5.2B were relatively less risky cash and securities related
balances.
<TABLE>
<CAPTION>
($ in billions) 3/31/00
-------------------------------------------------------------------
Net
Guarantees 12/31/99
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 $0.8
Indonesia 0.2 - - 0.1 0.3 0.4
Singapore 0.5 - 0.1 0.1 0.7 0.6
Korea 0.1 - - 0.2 0.4 0.3
Taiwan 0.3 - 0.1 0.1 0.4 0.4
China - - - - - -
Japan - - - - 0.1 0.1
Thailand - - - - - -
Other - - - 0.2 0.3 0.3
----- ----- ----- ----- ----- -----
Total Asia/Pacific Region (2) 1.6 - 0.3 0.9 2.9 2.9
----- ----- ----- ----- ----- -----
Chile 0.2 - - 0.1 0.4 0.3
Brazil 0.2 - - 0.1 0.3 0.3
Mexico 0.1 - - - 0.1 0.1
Peru - - - - - -
Argentina 0.1 - - - 0.1 0.1
Other 0.2 - 0.1 0.1 0.5 0.5
----- ----- ----- ----- ----- -----
Total Latin America (2) 0.7 - 0.2 0.3 1.3 1.2
----- ----- ----- ----- ----- -----
India 0.3 - 0.1 0.3 0.7 0.7
Pakistan 0.1 - - 0.1 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 0.5 0.5
Other 0.1 - - - 0.2 0.2
----- ----- ----- ----- ----- -----
Total Middle East and Africa (2) 0.4 - 0.1 0.2 0.8 0.8
----- ----- ----- ----- ----- -----
Total Europe (2) (3) 1.4 $0.1 0.7 2.5 4.7 4.7
Total North America (2) 0.3 0.1 0.2 1.3 1.8 2.0
----- ----- ----- ----- ----- -----
Total Worldwide (2) $5.0 $0.3 $1.6 $5.8 $12.7 $12.7
===== ===== ===== ===== ===== =====
</TABLE>
(1) Includes cash, placements and securities.
(2) Individual items may not add to totals due to rounding.
(3) Total exposures at 3/31/00 and 12/31/99 include $10MM and $11MM,
respectively, of exposures to Russia.
Note: Includes cross-border and local exposure and does not net local
funding or liabilities against any local exposure.
11
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 2000 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (CONT'D)
-----------------------------------------------
o Total non-performing loans for AEB of $174MM were down from $209MM at 3/99
and up slightly from $168MM at 12/99. The decline versus last year
reflects write-offs, mainly in Indonesia, and loan payments.
o Other non-performing assets at AEB of $31MM at 3/00, primarily foreign
exchange and derivatives contracts, decreased from $64MM at 3/99 and $37MM
at 12/99. The decline in both periods primarily reflects upgrades of the
risk status of assets in Indonesia and, versus 3/99, write-offs mainly in
Indonesia.
<TABLE>
<CAPTION>
o AEB's total reserves at 3/00 and 12/99 were $189MM compared with $261MM at
3/99 and are allocated as follows:
(millions) 3/00 12/99 3/99
---------- ----------- -----------
<S> <C> <C> <C>
Loans $170 $169 $218
Other Assets, primarily derivatives 15 16 41
Other Liabilities 4 4 2
---- ---- -----
Total $189 $189 $261
==== ==== ====
</TABLE>
- The decline versus 3/99 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 March 31, 2000 management
believes the loss reserve is appropriate.
12
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