We continue to progress through the parallel run phase of Basel III advanced approaches implementation. Depending on how the advanced approaches are ultimately implemented for our asset types, our capital ratios calculated under the advanced approaches may be lower than under the standardized approach. In such a case, we may need to hold significantly more regulatory capital in order to maintain a given capital ratio.

For more information on capital adequacy requirements, see “Capital ~~Leverage~~ and Liquidity Regulation” under “Supervision and Regulation.”

We are subject to restrictions that limit our ability to pay dividends and repurchase our capital stock. Our subsidiaries are also subject to restrictions that limit their ability to pay dividends to us, which may adversely affect our liquidity.

We are limited in our ability to pay dividends and repurchase capital stock by our regulators, who have broad authority to prohibit any action that would be considered an unsafe or unsound banking practice. For example, wethe Federal Reserve prohibited share repurchases in the third and fourth quarters of 2020 for all banking organizations participating in CCAR and has limited distributions for the first quarter of 2021. We are subject to a requirement to submit capital plans to the Federal Reserve for review that include, among other things, projected dividend payments and repurchases of capital ~~stock to the Federal Reserve for review.~~stock. As part of the capital planning and stress testing process, our proposed capital actions are assessed against our ability to satisfy applicable capital requirements in the event of a stressed market environment. If ~~the Federal Reserve objects to our capital plan or if~~ we fail to satisfy applicable capital requirements, including the stress capital buffer, our ability to undertake capital actions may be restricted.

In addition, the Capital Rules include a capital conservation buffer and a countercyclical capital buffer, which is currently set at zero but which could be increased by the Federal Reserve in the future. These buffers can be satisfied only with CET1 capital. If our risk-based capital ratios were to fall below the applicable buffer levels, we would be subject to certain restrictions on dividends, stock repurchases and other capital distributions, as well as discretionary bonus payments to executive officers.

A failure to increase dividends along with our competitors, or any reduction of, or elimination of, our common stock dividend or share repurchase program would likely adversely affect the market price of our common stock and market perceptions of American Express.

Our ability to declare or pay dividends on, or to purchase, redeem or otherwise acquire, shares of our common stock will be prohibited, subject to certain exceptions, in the event that we do not declare and pay in full dividends for the last preceding dividend period of our Series B and Series C preferred stock.

American Express Company relies on dividends from its subsidiaries for liquidity, and ~~federal and state laws limit the amount of~~such dividends ~~that our subsidiaries~~ may ~~pay to the parent company. In particular,~~be limited by law, regulation or supervisory policy. For example, our U.S. bank ~~subsidiaries are~~subsidiary, AENB, is subject to various statutory and regulatory limitations on ~~their~~its declaration and payment of dividends. These limitations may hinder our ability to access funds we may need to make payments on our obligations, make dividend payments on outstanding American Express Company capital stock or otherwise achieve strategic objectives.

Any future reduction or elimination of our common stock dividend or share repurchase program could adversely affect the market price of our common stock and market perceptions of American Express. For more information on bank holding company and depository institution dividend restrictions, see “Stress Testing and Capital Planning” and “Dividends and Other Capital Distributions” under “Supervision and Regulation,” as well as “Consolidated Capital Resources and Liquidity—Dividends and Share ~~Repurchases and Dividends”~~Repurchases” under “MD&A” and Note 2322 to our “Consolidated Financial Statements.”

Regulation in the areas of privacy, data protection, data governance, account access and information and cyber security could increase our costs and affect or limit our business opportunities and how we collect and/or use personal information.

~~As privacy, data protection~~Legislators and information and cyber security laws, including data localization, authentication and account access laws, are interpreted and applied, compliance costs may increase, particularly in the context of ensuring that adequate data protection, data transfer and account access mechanisms are in place. In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information security in the United States and in various countries in which we operate.

~~In addition, state and federal legislators and/or~~ regulators in the United States and other countries in which we operate are increasingly adopting or revising privacy, data protection,, data governance, account access and information and cyber security laws, including data localization, authentication and notification laws. As such laws are interpreted and applied (in some cases, with significant differences or conflicting requirements across jurisdictions), compliance and technology costs will continue to increase, particularly in the context of ensuring that ~~potentially could have significant impact on our~~adequate data governance, data protection, data transfer and account access mechanisms are in place.

Compliance with current ~~and planned~~or future privacy, data protection, data governance, account access and information and cyber ~~security-related practices,~~security laws could significantly impact our collection, use, sharing, retention and safeguarding of consumer and/or ~~employee~~colleague information and some of our current or planned business activities. New legislation or regulation could increase our costs of compliance and business operations and could reduce revenues from certain business initiatives. Moreover, the application of existing or new laws to existing technology and practices can be uncertain and may lead to additional compliance risk and cost.

Compliance with current or future privacy, data protection, account access and information and cyber security laws relating to consumer and/or employee data could result in higher compliance and technology costs and could restrict our ability to fully maximize our closed-loop capability or provide certain products and services, which could materially and adversely affect our profitability. Our failure to comply with ~~privacy, data protection, account access and information and cyber security~~such laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, customer attrition, decreases in the use or acceptance of our cards and damage to our reputation and our brand. In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information and cyber security in the United States, the EU and various other countries in which we operate.

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For more information on regulatory and legislative activity in this area, see “Privacy, Data Protection, Data Governance, Information and Cyber Security” under “Supervision and Regulation.”

We may not be able to effectively manage the operational and compliance risks to which we are exposed.

We consider operational risk to be the risk of ~~not achieving business objectives~~loss due to, among other things, inadequate or failed processes, people or information systems, ~~poor data quality, human error~~ or impacts from the external environment (e.g., natural disasters). Operational risk includes, among others, the risk that ~~employee~~ error or ~~intentional~~ misconduct could result in a material financial misstatement, a failure to monitor a third party’s compliance with ~~a service level agreement or~~ regulatory or legal requirements, or a failure to adequately monitor and control access to, or use of, data in our systems we grant to ~~third-party service providers.~~third parties. As processes or organizations are changed, or new products and services are introduced, we may not fully appreciate or identify new operational risks that may arise from such changes. Through human error, fraud or malfeasance, conduct risk can result in harm to customers, broader markets and the company and its employees.

Compliance risk arises from the failure to adhere to applicable laws, rules, regulations and internal policies and procedures. We need to continually update and enhance our control environment to address operational and compliance risks. Operational and compliance ~~risks~~failures or deficiencies in our control environment can expose us to reputational and legal risks as well as fines,

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civil money penalties or payment of damages and can lead to diminished business opportunities and diminished ability to expand key operations.

If we are not able to protect our intellectual property, or successfully defend against any infringement or misappropriation assertions brought against us, our revenue and profitability could be negatively affected.

We rely on a variety of measures to protect our intellectual property and control access to, and distribution of, our trade secrets and other proprietary information. These measures may not prevent infringement of our intellectual property rights or misappropriation of our proprietary information and a resulting loss of competitive advantage. The ability to enforce intellectual property rights to prevent disclosure of our trade secrets and other proprietary information may be limited in certain jurisdictions. In addition, competitors or other third parties may allege that our products, systems, processes or technologies infringe on their intellectual property rights. Given the complex, rapidly changing and competitive technological and business environments in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, a future assertion of an infringement or misappropriation claim against us could cause us to lose significant revenues, incur significant defense, license, royalty or technology development expenses, and/or pay significant monetary damages.

Tax legislative initiatives or assessments ~~by governmental authorities~~ could adversely affect our results of operations and financial condition.

We are subject to income and other taxes in the United States and in various foreign jurisdictions. The laws and regulations related to tax matters are extremely complex and subject to varying interpretations. Although management believes our positions are reasonable, we are subject to audit by the Internal Revenue Service in the United States and by tax authorities in all the jurisdictions in which we conduct business operations. We are being challenged in a number of countries regarding our application of value-added taxes (VAT) to certain transactions. While we believe we comply with all applicable VAT and other tax laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional taxes or apply existing laws and regulations more broadly, which could result in a significant increase in liabilities for taxes and interest in excess of accrued liabilities.

New tax legislative initiatives, including increases in the corporate tax rate, may be ~~proposed from time to time, which may impact~~enacted, impacting our effective tax rate and ~~could~~potentially adversely ~~affect~~affecting our tax positions or tax liabilities. For example, the impacts of the Tax Cuts and Jobs Act in the United States resulted in a $2.6 billion charge in the fourth quarter of 2017, representing our current estimate of taxes primarily on the deemed repatriation of certain overseas earnings and the remeasurement of U.S. deferred tax assets and liabilities. In addition, unilateral or multi-jurisdictional actions by various tax authorities, including an increase in tax audit activity, could have an adverse impact on our tax liabilities.

~~Changes in accounting principles or standards could adversely affect our reported financial results in a particular period, even if there are no underlying changes in the economics of the business.~~

We are subject to changes in and interpretations of financial accounting matters that govern the measurement of our performance, which could change the way we account for certain of our transactions even if we do not change the way in which we transact. A change in accounting guidance can have a significant effect on our reported results, may retroactively affect previously reported results and could cause fluctuations in our reported results. For more information on recently issued accounting standards, see Note 1 to our “Consolidated Financial Statements.”

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Credit, Liquidity and Market Risks

Our risk management policies and procedures may not be effective.

Our risk management framework seeks to identify and mitigate risk and appropriately balance risk and return. We have established policies and procedures intended to identify, monitor and manage the types of risk to which we are subject, including credit risk, market risk, asset liability risk, liquidity risk, operational risk, compliance risk, model risk, strategic and business risk and reputational risk. See “Risk Management” under “MD&A” for a discussion of the policies and procedures we use to identify, monitor and manage the risks we assume in conducting our businesses. Although we have devoted significant resources to develop our risk management policies and procedures and expect to continue to do so in the future, these policies and procedures, as well as our risk management techniques, such as our hedging strategies, may not be fully effective. There may also be risks that exist, or develop in the future, that we have not appropriately ~~anticipated,~~ identified or mitigated. As regulations and ~~markets in which we operate~~competition continue to evolve, our risk management framework may not always keep sufficient pace with those changes. If our risk management framework does not effectively identify or mitigate our risks, we could suffer unexpected losses and could be materially adversely affected.

Management of our risks in some cases depends upon the use of analytical and/or forecasting models. Although we have a governance framework for model development and independent model validation, the modeling methodology or key assumptions could be erroneous or the models could be misused. In addition, issues with the quality or effectiveness of our data aggregation and validation procedures, as well as the quality and integrity of data inputs, could result in ineffective or inaccurate model outputs and reports. For example, models based on historical data sets might not be accurate predictors of future outcomes and their ability to appropriately predict future outcomes may degrade over time. The CECL methodology requires measurement of expected credit losses for the estimated life of certain financial instruments, not only based on historical experience and current conditions, but also by including forecasts incorporating forward-looking information. Our ability to accurately forecast future losses under that methodology may be impaired by the significant uncertainty surrounding the pandemic and the lack of comparable precedent. If our business decisions or estimates for credit losses are based on incorrect or misused ~~model outputs~~models and ~~reports,~~assumptions or we ~~may face adverse consequences, such as~~fail to manage data inputs effectively and to aggregate or analyze data in an accurate and timely manner, our results of operations and financial ~~loss, poor business and strategic decision-making, or damage to our reputation. In addition, some decisions our regulators make, including those related to our capital distribution plans,~~condition may be materially adversely ~~impacted if they perceive the quality of our models to be insufficient.~~affected.

We ~~may not be able~~are exposed to ~~effectively manage individual or institutional~~ credit risk ~~or credit~~and trends that ~~can~~ affect Card Member spending ~~on card products~~ and the ability of customers and partners to pay us, which could have a material adverse effect on our results of operations and financial condition.

We are exposed to both individual credit risk, principally from consumer and small business Card Member ~~receivables~~loans and ~~loans,~~receivables, and institutional credit risk, principally from corporate Card Member loans and receivables, merchants, ~~GNS~~network partners, ~~GCS clients,~~ loyalty coalition partners and treasury and investment counterparties. Third parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. ~~Country, regional~~General economic factors, such as GDP, unemployment, inflation and interest rates, may result in greater delinquencies that lead to greater credit losses. A customer’s ability and willingness to repay us can be negatively impacted not only by economic, market, political ~~risks~~and social conditions but

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also by a customer’s other payment obligations, and increasing leverage can ~~contribute~~result in a higher risk that customers will default or become delinquent in their obligations to us. Our caution about the potential for a significant downturn in the pace of economic recovery is reflected in the macroeconomic outlook that informs our reserves for credit ~~risk.~~losses.

We rely principally on the customer’s creditworthiness for repayment of loans or receivables and therefore have no other recourse for collection. Our ability to assess creditworthiness may be impaired if the criteria or models we use to manage our credit risk ~~become less predictive of~~prove inaccurate in predicting future losses, which could cause our losses to rise and have a negative impact on our results of operations. ~~Rising~~Further, our pricing strategies may not offset the negative impact on profitability caused by increases in delinquencies and ~~rising rates of bankruptcy are often precursors of future write-offs~~losses; thus any material increases in delinquencies and ~~may require us to increase~~losses beyond our reserve for loan losses. We are continuing to experience relatively low delinquency and write-off rates, but expect that these rates will increase over time. Higher write-off rates and the resulting increase in our reserve for loan losses adversely affect our profitability and the performance of our securitizations, and may increase our cost of funds.

current estimates could have a material adverse impact on us. Although we make estimates to provide for credit losses in our outstanding portfolio of loans and receivables, these estimates may not be accurate. In addition, the information we use in managing our credit risk may be inaccurate or incomplete.

Rising delinquencies and rising rates of bankruptcy are often precursors of future write-offs and may require us to increase our reserve for credit losses. Higher write-off rates and the resulting increase in our reserves for credit losses adversely affect our profitability and the performance of our securitizations, and may increase our cost of funds.

Although we regularly review our credit exposure to specific clients and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. In addition, our ability to manage credit risk or collect amounts owed to us may be adversely affected by legal or regulatory changes (such as restrictions on collections or changes in bankruptcy laws, ~~and~~ minimum payment ~~regulations)~~regulations and re-age guidance). Increased credit risk, whether resulting from underestimating the credit losses inherent in our portfolio of loans and receivables, deteriorating economic conditions (particularly in the United States where, for example, Card Members were responsible for approximately 7487 percent of our ~~revenues are generated)~~total Card Member loans outstanding as of December 31, 2020), increases in the level of loan balances, changes in our mix of business or otherwise, could require us to increase our provisions for losses and could have a material adverse effect on our results of operations and financial condition.

Interest rate ~~increases~~changes could materially adversely affect our earnings.

Our interest expense was approximately $2.1 billion for the year ended December 31, 2020. If the rate of interest we pay on our borrowings increases more or decreases less than the rate of interest we earn on our loans, our net interest yield, and consequently our net interest income, could ~~fall. Our interest expense was approximately $2.1 billion for the year ended~~decrease. As of December 31, ~~2017. A~~2020, a hypothetical immediate 100 basis point increase in market interest rates would have ~~resulted in~~ a ~~decrease to~~detrimental impact on our annual net interest income of ~~approximately $167 million as of December 31, 2017.~~up to $113 million. A hypothetical immediate 100 basis point decrease in market interest rates would have a smaller but still detrimental impact on our annual net interest income. We expect the rates we pay on our deposits will ~~increase as~~change if benchmark interest rates ~~increase.~~change. In addition, interest rate changes may affect customer behavior, such as impacting the loan balances Card Members carry on their credit cards or their ability to make payments as higher interest rates lead to higher payment requirements, further impacting our results of operations.

For a further discussion of our interest r~~ate~~rate risk, see “Risk Management ― Market Risk Management Process” under “MD&A.”

The discontinuance of LIBOR may negatively impact our access to funding and the value of our financial instruments and commercial agreements.

Central banks and global regulators have called for financial market participants to prepare for the discontinuance of the London interbank offered rate (LIBOR) and the establishment of alternative reference rates. Certain of our financial instruments and commercial agreements reference LIBOR, which will need to be amended or otherwise modified to replace LIBOR with an alternative reference rate. Some of those instruments and agreements contain provisions to replace LIBOR as the benchmark following the occurrence of specified transition events. Such provisions may not be sufficient to trigger a change in the benchmark at all times when LIBOR is no longer representative of market interest rates, or that these events will align with similar events in the market generally or in other parts of the financial markets, such as the derivatives market.

Alternative reference rates are calculated using components different from those used in the calculation of LIBOR and may fluctuate differently than, and not be representative of, LIBOR. In order to compensate for these differences, certain of our financial instruments and commercial agreements allow for a benchmark replacement adjustment. However, there is no assurance that any benchmark replacement adjustment will be sufficient to produce the economic equivalent of LIBOR, either at the benchmark replacement date or over the life of such instruments and agreements.

Uncertainty as to the nature and timing of the potential discontinuance or modification of LIBOR, the replacement of LIBOR with one or more alternative reference rates or other reforms may negatively impact market liquidity, our access to funding and the trading market for our financial instruments. Furthermore, the timing of implementation and use of alternative reference rates and corresponding adjustments or other reforms could be subject to disputes, could cause the interest payable on our outstanding financial instruments and commercial agreements to be materially different than expected and may impact the value of such instruments and agreements.

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Adverse ~~financial~~ market conditions may significantly affect our access to, and cost of, capital and ability to meet liquidity ~~needs, access to capital and cost of capital.~~

We need liquidity to pay merchants, operating and other expenses, interest on debt and dividends on capital stock and to repay maturing liabilities. The principal sources of our liquidity are payments from Card Members, cash flows from our investment portfolio, cash and cash equivalents, proceeds from the issuance of unsecured medium- and long-term notes and asset securitizations and direct and third-party sourced deposits, securitized borrowings through our secured financing facilities, a committed bank borrowing facility and the Federal Reserve discount window.needs.

Our ability to obtain financing in the debt capital markets for unsecured term debt and asset securitizations is dependent on financial market conditions. Disruptions, uncertainty or volatility across the financial markets, as well as adverse developments affecting our competitors and the financial industry generally, could negatively impact market liquidity and limit our access to funding required to operate our business. Such market conditions may also limit our ability to replace, in a timely manner, maturing liabilities, satisfy regulatory capital requirements and access the funding necessary to grow our business. In some circumstances, we may incur an unattractive cost to raise capital, which could decrease profitability and significantly reduce financial flexibility.

For a further discussion of our liquidity and funding needs, see “Consolidated Capital Resources and ~~Liquidity ― Funding Programs and Activities”~~Liquidity” under “MD&A.”

Any reduction in our and our subsidiaries’ credit ratings could increase the cost of our funding from, and restrict our access to, the capital markets and have a material adverse effect on our results of operations and financial condition.

Rating agencies regularly evaluate us and our subsidiaries, and their ratings of our and our subsidiaries’ long-term and short-term debt and deposits are based on a number of factors, including financial strength, as well as factors not within our control, including conditions affecting the financial services industry generally, and the wider state of the economy. Our and our subsidiaries’ ratings could be downgraded at any time and without any notice by any of the rating agencies, which could, among other things, adversely limit our access to the capital markets and adversely affect the cost and other terms upon which we and our subsidiaries are able to obtain funding.

Adverse currency fluctuations and foreign exchange controls could decrease earnings we receive from our international operations and impact our capital.

During ~~2017,~~2020, approximately 2622 percent of our total revenues net of interest expense were generated from activities outside the United States. We are exposed to foreign exchange risk from our international operations, and accordingly the revenue we generate outside the United States is subject to unpredictable fluctuations if the values of other currencies change relative to the U.S. dollar (including as a result of Brexit), which could have a material adverse effect on our results of operations.

Foreign exchange regulations or capital controls might restrict or prohibit the conversion of other currencies into U.S. dollars or our ability to transfer them. Political and economic conditions in other countries could also impact the availability of foreign exchange for the payment to us by the local card issuer offor obligations arising out of local Card Members’ spending outside such country and for the payment ~~of card bills~~ by Card Members who are billed in a currency other than their local currency. Substantial and sudden devaluation of local Card Members’ currency can also affect their ability to make payments to the local issuer of the card in connection with spending outside the local country. The occurrence of any of these circumstances could further impact our results of operations.

Continuing concerns regarding the overall stability of the euro and the suitability of the euro as a single currency given the diverse economic and political circumstances in individual Eurozone countries may cause the value of the euro to fluctuate more widely than in the past and could lead to the reintroduction of individual currencies in one or more Eurozone countries, or, in more extreme circumstances, the possible dissolution of the euro currency entirely. If there is a significant devaluation of the euro and we are unable to hedge our foreign exchange exposure to the euro, the value of our euro-denominated assets and liabilities would be correspondingly reduced when translated into U.S. dollars for inclusion in our financial statements. Similarly, the reintroduction of certain individual country currencies or the complete dissolution of the euro could adversely affect the value of our euro-denominated assets and liabilities. The reintroduction of individual country currencies would require us to reconfigure our billing and other systems to reflect individual country currencies in place of the euro. Implementing such changes could be costly and failures in the currency reconfiguration could cause disruptions in our normal business operations. In addition, foreign currency derivative instruments to hedge our market exposure to re-introduced currencies may not be immediately available or may not be available on terms that are acceptable to us.

The potential developments regarding Europe and the euro, or market perceptions concerning these and related issues, could continue to have an adverse impact on consumer and business behavior in Europe and globally, which could have a material adverse effect on our business, financial condition and results of operations.

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An inability to accept or maintain deposits due to market demand or regulatory constraints could materially adversely affect our liquidity position and our ability to fund our business.

Our U.S. bank ~~subsidiaries accept~~subsidiary, AENB, accepts deposits directly from consumers, as well as from individuals through third-party brokerage networks, ~~as well as directly from consumers through American Express Personal Savings,~~ and ~~use~~uses the proceeds as a source of funding. As of December 31, ~~2017,~~2020, we had approximately ~~$63.7~~$86 billion in total U.S. retail deposits, a portion of which ~~a significant amount~~ had been raised through third-party brokerage networks. We face strong and increasing competition with regard to deposits, and pricing and product changes may adversely affect our ability to attract and retain cost-effective deposit balances. IfTo the extent we ~~are required to~~ offer higher interest rates to attract or maintain deposits, our funding costs will be adversely impacted.

Our ability to obtain deposit funding and offer competitive interest rates on deposits is also dependent on AENB’s capital ~~levels of our U.S. bank subsidiaries.~~levels. The FDIA’s brokered deposit provisions and related FDIC rules in certain circumstances prohibit banks from accepting or renewing brokered deposits and apply other restrictions, such as a cap on interest rates that can be paid. ~~See “Prompt Corrective Action” under “Supervision and Regulation” for additional information.~~

While Centurion Bank and American Express Bank were considered “well capitalized” as of December 31, 2017 and had no restrictions regarding acceptance of brokered deposits or setting of interest rates, there can be no assurance they will continue to meet this definition. The Capital Rules require bank holding companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity. Additionally, our regulators can adjust ~~the~~applicable capital requirements ~~to be “well capitalized”~~ at any time and have authority to place limitations on our deposit ~~businesses, including the interest rates we pay on deposits.~~businesses. An inability to attract or maintain deposits in the future could materially adversely affect our ~~liquidity position and our~~ ability to fund our business.

The value of our ~~assets or liabilities~~investments may be adversely impacted by economic, political or market conditions.

Market risk includes the loss in value of portfolios and financial instruments due to adverse changes in market variables, which could negatively impact our financial condition. We held approximately ~~$3.2~~$22 billion of investment securities as of December 31, ~~2017.~~2020. In the event that actual default rates of these investment securities were to significantly change from historical patterns due to ~~challenges in the economy~~economic conditions or otherwise, it could have a material adverse impact on the value of our investment portfolio, potentially resulting in impairment charges. Defaults or economic disruptions, even in countries or territories in which we do not have material investment exposure, conduct business or have operations, could adversely affect us.

~~ITEM 1B.~~

~~UNRESOLVED STAFF COMMENTS~~

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ITEM 1B.UNRESOLVEDSTAFF COMMENTS

Not applicable.

~~ITEM 2.~~

ITEM 2. PROPERTIES

Our principal executive offices are in a 2.2 million square foot building located in lower Manhattan on land leased from the Battery Park City Authority for a term expiring in 2069. We have an approximately 49 percent ownership interest in the building and an affiliate of Brookfield Financial Properties owns the remaining approximately 51 percent interest in the building. We also lease space in the building from Brookfield’s affiliate.

Other owned or leased principal locations include American Express offices in Phoenix, Arizona, Sunrise, Florida, ~~Phoenix, Arizona, Salt Lake City, Utah, Mexico City, Mexico, Sydney, Australia, Singapore,~~ Gurgaon, India, Brighton, England, Manila, Philippines, Tokyo, Japan, Kuala Lumpur, Malaysia and ~~Brighton, England;~~Sydney, Australia; the American Express data centers in Phoenix, Arizona and Greensboro, North Carolina; the headquarters for AENB in Sandy, Utah; the headquarters for American Express Services Europe Limited in London, England; ~~and~~ the headquarters for American Express Europe, S.A. in Madrid, Spain; the headquarters for Amex Bank of Canada and Amex Canada Inc. ~~headquarters~~ in Toronto, Ontario, ~~Canada.~~

~~Generally, we~~Canada; and the headquarters for American Express Bank (Mexico) S.A. Institucion de Banca Multiple and American Express Company (Mexico) S.A. de C.V. in Mexico City, Mexico. We also lease ~~the premises we occupy in other locations. We believe the facilities we own or occupy suit our needs~~ and ~~are well maintained.~~

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~~ITEM 3.~~

~~LEGAL PROCEEDINGS~~

In the ordinary course of business, we are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).

We do not believe we are a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages and seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings could have a material impact on our results of operations. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experienceoperate multiple travel lounges as a ~~result of the DOJ or merchant cases described later~~benefit for our Card Members in ~~this section could have a material adverse effect on our business. Certain legal proceedings involving us or our subsidiaries are described below. For additional information, see~~major U.S. and global hub airports.

ITEM 3. LEGAL PROCEEDINGS

Refer to Note 1312 to our “Consolidated Financial ~~Statements.~~Statements,” which is incorporated herein by reference.

~~Antitrust Matters~~

In 2010, the DOJ, along with Attorneys General from Arizona, Connecticut, Hawaii (Hawaii has since withdrawn its claim), Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont filed a complaint in the U.S. District Court for the Eastern District of New York against us alleging a violation of Section 1 of the Sherman Antitrust Act. The complaint included allegations that provisions in our merchant agreements prohibiting merchants from steering a customer to use another network’s card or another type of general-purpose card (“anti-steering” and “non-discrimination” contractual provisions) violate the antitrust laws. The complaint sought a judgment permanently enjoining us from enforcing our non-discrimination contractual provisions. The complaint did not seek monetary damages.ITEM 4. MINE SAFETY DISCLOSURES

Following a non-jury trial, the trial court found that the challenged provisions were anticompetitive and on April 30, 2015, the court issued a final judgment entering a permanent injunction. Following our appeal of this judgment, on September 26, 2016, the Court of Appeals for the Second Circuit reversed the trial court decision and judgment in favor of American Express was entered on January 25, 2017. Eleven of the 17 states that are party to the case filed a petition with the Supreme Court seeking a review of the Second Circuit’s decision. On October 16, 2017, the Supreme Court granted certiorari and oral argument is scheduled for February 26, 2018 in the case, now captioned ~~Ohio v. American Express Co~~.Not applicable.

~~In addition, individual merchant cases and a putative class action, which were consolidated in 2011 and collectively captioned~~ ~~In re: American Express Anti-Steering Rules Antitrust Litigation (II)~~, are pending in the Eastern District of New York against us alleging that our anti-steering provisions in merchant card acceptance agreements violate U.S. antitrust laws. The individual merchant cases seek damages in unspecified amounts and injunctive relief.

~~In July 2004, we were named as a defendant in another putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned~~ ~~The Marcus Corporation v. American Express Co., et al.~~, in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws. The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.

~~In re: American Express Anti-Steering Rules Antitrust Litigation (II)~~ ~~and~~ ~~The Marcus Corporation v. American Express Co., et al., including a trial previously scheduled in the individual merchant cases, are stayed pending resolution of the appeal in~~ ~~Ohio v. American Express Co~~. ~~Further proceedings are anticipated.~~

Individual merchants have also initiated arbitration proceedings raising similar claims concerning the anti-steering provisions in our card acceptance agreements and seeking damages. We are vigorously defending against those claims, which are similarly stayed.

~~On March 8, 2016, plaintiffs B&R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, on behalf of themselves and others, filed a suit, captioned~~ ~~B&R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al.~~, for violations of the Sherman Antitrust Act, the Clayton Antitrust Act, California’s Cartwright Act and unjust enrichment in the United States District Court for the Northern District of California, against American Express Company, other credit and charge card networks, other issuing banks and EMVCo, LLC. Plaintiffs allege that the defendants, through EMVCo, conspired to shift liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to merchants after the implementation of EMV chip payment terminals. Plaintiffs seek damages and injunctive relief. An amended complaint was filed on July 15, 2016. On September 30, 2016, the court denied our motion to dismiss as to claims brought by merchants who do not accept American Express cards, and on May 4, 2017, the California court transferred the case to the United States District Court for the Eastern District of New York.

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~~Corporate Matters~~

~~On July 30, 2015, plaintiff Plumbers and Steamfitters Local 137 Pension Fund, on behalf of themselves and other purchasers of American Express stock, filed a suit, captioned~~ ~~Plumbers and Steamfitters Local 137 Pension Fund v. American Express Co., Kenneth I. Chenault and Jeffrey C. Campbell~~, in the United States District Court for the Southern District of New York for violation of federal securities law, alleging that the Company deliberately issued false and misleading statements to, and omitted important information from, the public relating to the financial importance of the Costco cobrand relationship to the Company, including, but not limited to, the decision to accelerate negotiations to renew the cobrand agreement. The plaintiff sought damages and injunctive relief. On October 2, 2017, the Court granted defendants’ motion to dismiss the plaintiff’s amended complaint. The plaintiff has appealed the court’s decision.

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

~~Not applicable.~~

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~ITEM 5.~~

~~MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~

~~(a)~~

Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP. As of December 31, 2017, we had 22,262 common shareholders of record. You can find price and dividend information concerning our common stock in Note 27 to our “Consolidated Financial Statements.” For information on dividend restrictions, see “Dividends and Other Capital Distributions” under “Supervision and Regulation” and Note 23 to our “Consolidated Financial Statements.” You can find information on securities authorized for issuance under our equity compensation plans under the caption “Executive Compensation — Equity Compensation Plans” to be contained in our definitive 2018 proxy statement for our Annual Meeting of Shareholders, which is scheduled to be held on May 7, 2018. The information to be found under such caption is incorporated herein by reference. Our definitive 2018 proxy statement for our Annual Meeting of Shareholders is expected to be filed with the Securities and Exchange Commission (SEC) in March 2018 (and, in any event, not later than 120 days after the close of our most recently completed fiscal year).

(a)Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP. As of December 31, 2020, we had 19,446 common shareholders of record. You can find dividend information concerning our common stock in Note 26 to our "Consolidated Financial Statements." For information on dividend restrictions, see “Dividends and Other Capital Distributions” under “Supervision and Regulation” and Note 22 to our “Consolidated Financial Statements.” You can find information on securities authorized for issuance under our equity compensation plans under the caption “Executive Compensation — Equity Compensation Plans” to be contained in our definitive 2021 proxy statement for our Annual Meeting of Shareholders, which is scheduled to be held on May 4, 2021. The information to be found under such caption is incorporated herein by reference. Our definitive 2021 proxy statement for our Annual Meeting of Shareholders is expected to be filed with the SEC in March 2021 (and, in any event, not later than 120 days after the close of our most recently completed fiscal year).

Stock Performance Graph

The information contained in this Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act.

The following graph compares the cumulative total shareholder return on our common shares with the total return on the S&P 500 Index and the S&P Financial Index for the last five years. It shows the growth of a $100 investment on December 31, ~~2012,~~2015, including the reinvestment of all dividends.

Year-end Data 2012 2013 2014 2015 2016 2017
American Express $ 100.00 $ 159.84 $ 165.70 $ 125.57 $ 136.34 $ 185.70
S&P 500 Index $ 100.00 $ 132.37 $ 150.48 $ 152.55 $ 170.78 $ 208.05
S&P Financial Index $ 100.00 $ 135.59 $ 156.17 $ 153.72 $ 188.69 $ 230.47


Year-end Data	2015		2016		2017		2018		2019		2020
American Express	$	100.00	$	108.57	$	147.88	$	143.99	$	190.82	$	188.62
S&P 500 Index	$	100.00	$	111.95	$	136.38	$	130.39	$	171.44	$	202.96
S&P Financial Index	$	100.00	$	122.75	$	149.92	$	130.37	$	172.21	$	169.19

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(b) Not applicable.

The table below sets forth the information with respect to purchases of our common stock made by us or on ~~our~~ behalf of us during the quarter ended December 31, ~~2017.~~2020.

Total Number of Shares Purchased Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(c)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2017
Repurchase program^(a)
4,040,661 $ 91.78 4,040,661 94,655,567
Employee transactions^(b)
― ― N/A N/A
November 1-30, 2017
Repurchase program^(a)
3,932,622 $ 94.78 3,932,622 90,722,945
Employee transactions^(b)
4,907 $ 95.22 N/A N/A
December 1-31, 2017
Repurchase program^(a)
5,720,526 $ 98.79 5,720,526 85,002,419
Employee transactions^(b)
― ― N/A N/A
Total
Repurchase program^(a)
13,693,809 $ 95.57 13,693,809 85,002,419
Employee transactions^(b)
4,907 $ 95.22 N/A N/A

~~(a)~~

On September 26, 2016, the Board of Directors authorized the repurchase of up to 150 million shares of common stock from time to time, subject to market conditions and the Federal Reserve’s non-objection to our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date.


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(c)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2020
Repurchase program(a)	—	$	—	—	102,171,653
Employee transactions(b)	—	$	—	N/A	N/A
November 1-30, 2020
Repurchase program(a)	—	$	—	—	102,171,653
Employee transactions(b)	19,140	$	91.24	N/A	N/A
December 1-31, 2020
Repurchase program(a)	—	$	—	—	102,171,653
Employee transactions(b)	—	$	—	N/A	N/A
Total
Repurchase program(a)	—	$	—	—	102,171,653
Employee transactions(b)	19,140	$	91.24	N/A	N/A

~~(b)~~

Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under our incentive compensation plans) in satisfaction of the exercise price and/or tax withholding obligation of such holders and (ii) restricted shares withheld (under the terms of grants under our incentive compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. Our incentive compensation plans provide that the value of the shares delivered or attested to, or withheld, be based on the price of our common stock on the date the relevant transaction occurs.

(a)On September 23, 2019, the Board of Directors authorized the repurchase of up to 120 million common shares from time to time, subject to market conditions and in accordance with our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date. See “MD&A – Consolidated Capital Resources and Liquidity” for additional information regarding share repurchases.

~~(c)~~

Share purchases under publicly announced programs are made pursuant to open market purchases or privately negotiated transactions (including employee benefit plans) as market conditions warrant and at prices we deem appropriate.

(b)Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under our incentive compensation plans) in satisfaction of the exercise price and/or tax withholding obligation of such holders and (ii) restricted shares withheld (under the terms of grants under our incentive compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. Our incentive compensation plans provide that the value of the shares delivered or attested to, or withheld, be based on the price of our common stock on the date the relevant transaction occurs.

(c)Share purchases under publicly announced programs are made pursuant to open market purchases or privately negotiated transactions (including employee benefit plans) as market conditions warrant and at prices we deem appropriate.

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ITEM 6. SELECTED FINANCIAL DATA

2017 2016 2015 2014 2013
Operating Results ($ in Millions)

Total revenues net of interest expense $ 33,471 $ 32,119 $ 32,818 $ 34,188 $ 32,870
Provisions for losses^(a)
2,759 2,026 1,988 2,044 1,832
Expenses^(b)
23,298 21,997 22,892 23,153 23,150
Pretax income 7,414 8,096 7,938 8,991 7,888
Income tax provision 4,678 2,688 2,775 3,106 2,529
Net income $ 2,736 $ 5,408 $ 5,163 $ 5,885 $ 5,359
Return on average equity^(c)
13.1 % 26.0 % 24.0 % 29.1 % 27.8 %
Return on average assets^(c)
1.6 % 3.4 % 3.3 % 3.8 % 3.5 %
Balance Sheet ($ in Millions)

Cash and cash equivalents $ 32,927 $ 25,208 $ 22,762 $ 22,288 $ 19,486
Card Member loans and receivables HFS ― ― 14,992 ― ―
Accounts receivable, net 56,689 50,073 46,695 47,000 47,185
Loans, net 74,300 65,461 58,799 70,104 66,585
Investment securities 3,159 3,157 3,759 4,431 5,016
Total assets 181,159 158,893 161,184 159,103 153,375
Customer deposits 64,452 53,042 54,997 44,171 41,763
Travelers Cheques outstanding and other prepaid products 2,593 2,812 3,247 3,673 4,240
Short-term borrowings 3,278 5,581 4,812 3,480 5,021
Long-term debt 55,804 46,990 48,061 57,955 55,330
Shareholders’ equity $ 18,227 $ 20,501 $ 20,673 $ 20,673 $ 19,496
Average shareholders' equity to average total assets ratio 12.4 % 13.1 % 13.5 % 13.1 % 12.6 %
Common Share Statistics
Earnings per share:
Net income attributable to common shareholders:^(d)

Basic $ 2.98 $ 5.67 $ 5.07 $ 5.58 $ 4.91
Diluted 2.97 5.65 5.05 5.56 4.88
Cash dividends declared per common share 1.34 1.22 1.13 1.01 0.89
Dividend payout ratio^(e)
45.0 % 21.5 % 22.3 % 18.1 % 18.1 %
Book value per common share 19.38 20.93 19.71 20.21 18.32
Market price per share:
High 100.53 75.74 93.94 96.24 90.79
Low 74.74 50.27 67.57 78.41 58.31
Close $ 99.31 $ 74.08 $ 69.55 $ 93.04 $ 90.73
Average common shares outstanding (millions):

Basic 883 933 999 1,045 1,082
Diluted 886 935 1,003 1,051 1,089
Shares outstanding at period end (millions)
859 904 969 1,023 1,064
Other Statistics
Number of employees at period end (thousands):

United States 20 21 21 22 26
Outside the United States 35 35 34 32 37
Total 55 56 55 54 63
Number of shareholders of record 22,262 23,572 24,704 25,767 22,238

~~(a)~~

Beginning December 1, 2015 through to the sale completion dates, did not reflect provisions for Card Member loans and receivables related to our cobrand partnerships with JetBlue Airways Corporation (JetBlue) and Costco Wholesale Corporation (Costco) in the United States (the HFS portfolios).


	2020			2019			2018			2017			2016
Operating Results ($ in Millions)
Total revenues net of interest expense	$	36,087		$	43,556		$	40,338		$	36,878		$	35,438
Provisions for credit losses(a)	4,730			3,573			3,352			2,760			2,027
Expenses	27,061			31,554			28,864			26,693			25,369
Pretax income	4,296			8,429			8,122			7,425			8,042
Income tax provision	1,161			1,670			1,201			4,677			2,667
Net income	3,135			$	6,759		$	6,921		$	2,748		$	5,375
Return on average equity(b)	14.2		%	29.6		%	33.5		%	13.2		%	25.8		%
Balance Sheet ($ in Millions)
Cash and cash equivalents(c)	$	32,965		$	24,446		$	27,808		$	33,263		$	25,494

Card Member receivables, net	43,434			56,794			55,320			53,526			46,841
Loans, net	70,643			89,624			83,396			74,300			65,461
Investment securities	21,631			8,406			4,647			3,159			3,157
Total assets	191,367			198,321			188,602			181,196			158,917
Customer deposits	86,875			73,287			69,960			64,452			53,042
Short-term borrowings	1,878			6,442			3,100			3,278			5,581
Long-term debt	42,952			57,835			58,423			55,804			46,990
Shareholders’ equity	$	22,984		$	23,071		$	22,290		$	18,261		$	20,523
Common Share Statistics(d)
Earnings per share:
Net income attributable to common shareholders:(e)
Basic	$	3.77		$	8.00		$	7.93		$	3.00		$	5.63
Diluted	3.77			7.99			7.91			2.99			5.61
Cash dividends declared per common share	1.72			$	1.64		$	1.48		$	1.34		$	1.22
Book value per common share	26.58			$	26.51		$	24.45		$	19.42		$	20.95
Average common shares outstanding (millions):
Basic	805			828			856			883			933
Diluted	806			830			859			886			935
Shares outstanding at period end (millions)	805			810			847			859			904
Other Statistics
Number of colleagues at period end (thousands):
United States	23			23			21			20			21
Outside the United States	41			41			38			35			35
Total	64			64			59			55			56
Number of shareholders of record	19,446			19,974			21,078			22,262			23,572

~~(b)~~

~~Beginning December 1, 2015 through to the sale completion dates, included the valuation allowance adjustment associated with the HFS portfolios.~~

(a)Results for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. Refer to Note 3 to the "Consolidated Financial Statements" for further information.

~~(c)~~

~~Return on average equity and return on average assets are calculated by dividing one-year period of net income by one-year average of total shareholders’ equity or total assets, respectively.~~

(b)Return on average equity is calculated by dividing one-year period of net income by one-year average of total shareholders’ equity.

~~(d)~~

~~Represents net income, less earnings allocated to participating share awards and dividends on preferred shares.~~

(c)Effective December 31, 2020, we reclassified restricted cash from Other assets to Cash and cash equivalents on the Consolidated Balance Sheets. Prior period amounts have been revised to conform to the current period presentation.

~~(e)~~

~~Calculated on year’s dividends declared per common share as a percentage of the year’s net income available per common share.~~

(d)Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP.

(e)Represents net income, less earnings allocated to participating share awards and dividends on preferred shares.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

EXECUTIVE OVERVIEW

BUSINESS INTRODUCTION

We are a ~~global services~~globally integrated payments company with ~~four~~three reportable operating segments: ~~U.S.~~Global Consumer Services ~~(USCS), International Consumer and Network Services (ICNS)~~Group (GCSG), Global Commercial Services (GCS) and Global Merchant and Network Services ~~(GMS)~~(GMNS). Corporate functions and certain other businesses and operations are included in Corporate & Other.

Our range of products and services includes:

•Credit card, charge card and other payment and financing products

•Merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants

•Network services

•Other fee services, including fraud prevention services and the design and operation of customer loyalty programs

•Expense management products and services

•Travel and lifestyle services

Our various products and services are sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are sold through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. Business travel-related services are offered through our non-consolidated joint venture, American Express Global Business Travel (the GBT JV).

The following types of revenue are generated from our various products and services:

•Discount revenue, our largest revenue source, primarily represents the amount we earn on transactions occurring at merchants that have entered into a card acceptance agreement with us, or a Global Network Services (GNS) partner or other third-party merchant acquirer, for facilitating transactions between the merchants and Card Members. The amount of fees ~~generally~~ charged ~~to merchants~~ for accepting our cards as payment for goods or services, ~~sold. The fees charged,~~ or merchant discount, ~~which is generally expressed as a percentage of the charge amount,~~ varies with, among other factors, the industry in which the merchant does business, the ~~charge amount and the~~ merchant’s overall ~~charge~~American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of ~~charges, the timing and method of payment to the merchant~~transactions and, in certain instances, the geographic scope for the related card acceptance agreement between the merchant and us (e.g., domestic or global). and the transaction amount. In some instances, an additional flat transaction fee is assessed as part of the merchant discount, and additional fees may be charged such as a variable fee for “non-swiped” card transactions or for transactions using cards issued outside the United States at merchants located in the United States;

•Interest on loans, principally represents interest income earned on outstanding balances;

•Net card fees, represent revenue earned from annual card membership fees, which ~~varies~~vary based on the type of card and the number of cards for each account;

•Other fees and commissions, primarily represent Card Member delinquency fees, foreign currency conversion fees charged to Card Members, loyalty coalition-related fees, service fees earned from merchants, travel commissions and fees, ~~service fees~~ and ~~fees related to our~~ Membership Rewards ~~program;~~program fees; and

•Other revenue, primarily represents revenues arising from contracts with partners of our ~~Global Network Services (GNS)~~GNS business (including commissions and signing ~~fees)~~fees less issuer rate payments), cross-border Card Member spending, ~~insurance premiums,~~ ancillary merchant-related fees, ~~prepaid card and Travelers Cheque-related revenue, revenues related to the American Express Global Business Travel Joint Venture (the GBT JV) transition services agreement and~~ earnings (losses) from equity method investments (including the GBT JV).

, insurance premiums earned from Card Members, and prepaid card and Travelers Cheque-related revenue.

~~TAX CUTS AND JOBS ACT~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. federal corporate income tax rules that, beginning in 2018, will significantly decrease our income tax expense and reduce our effective tax rate to the low 20s, before discrete items. Most notably, effective January 1, 2018, the Tax Act reduces the U.S. federal statutory corporate income tax rate from 35 percent to 21 percent, introduces a territorial tax system in which future dividends paid from earnings outside the United States to a U.S. corporation are not subject to U.S. federal taxation and imposes new U.S. federal corporate income taxes on certain foreign operations.

While the Tax Act will positively impact our earnings in future periods, two provisions of the Tax Act drove a 2017 charge of $2.6 billion, which impacted our earnings in the fourth quarter. In particular, the Tax Act imposes a one-time deemed repatriation tax on previously undistributed earnings of certain non-U.S. subsidiaries. In addition, the reduction of the federal statutory tax rate from 35 percent to 21 percent required us to remeasure our U.S. federal deferred tax assets and liabilities. The 2017 charge for these provisions reflects our best estimate based on information currently available and our current interpretation of the Tax Act. Refer to Note 21 to the “Consolidated Financial Statements” for additional information.

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~~FINANCIAL~~ ~~HIGHLIGHTS~~

For 2017, we reported net income of $2.7 billion and diluted earnings per share of $2.97. This compared to $5.4 billion of net income and $5.65 diluted earnings per share for 2016, and $5.2 billion of net income and $5.05 diluted earnings per share for 2015.

~~2017 results included:~~

~~A $2.6 billion tax charge related to the Tax Act.~~

~~2016 results included:~~

~~A $1.1 billion ($677 million after tax) gain on the sale of Card Member loans and receivables related to our cobrand partnership with Costco in the second quarter;~~

~~$410 million ($266 million after tax) of net restructuring charges; and~~

~~A $127 million ($79 million after tax) gain on the sale of Card Member loans and receivables related to our cobrand partnership with JetBlue in the first quarter.~~

~~2015 results included:~~

~~A $419 million ($335 million after tax) charge related to the Prepaid Services business, which was driven primarily by the impairment of goodwill and technology, and certain restructuring costs.~~

NON-GAAP MEASURES

We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this report constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies.

BUSINESS ENVIRONMENT

The COVID-19 pandemic has brought unprecedented challenges to businesses and economies around the world. Our 2020 financial results for 2017 reflect a strong finish to our two-year game plan as we successfully executed against our key priorities of accelerating revenue growth, optimizing our investments and resetting our cost base. Billings and revenue performance were strong across our business segments and accelerated during the fourth quarter. We continued to invest in new products and benefits, new card acquisitions and expanding our merchant network, and we returned a significant amount of capital to shareholders through share repurchases and dividends. In addition, our results reflect a tax charge related to the Tax Act.

~~Our worldwide billed business increased 5 percent over the prior year,~~significantly down year-over-year, reflecting growth across our diverse customer segments and geographies. U.S. proprietary consumer billings growth increased sequentially during the year and international proprietary consumer billings growth rates remained strong. We also saw strong performance from middle market and small business customers, while large and global commercial customers grew at a more modest pace. Global Network Services billed business grew at a slower rate over the year than our proprietary business as a result of the impact of the ~~evolving regulatory~~deterioration in the global economy due to the pandemic and the related containment measures. There remains a high degree of uncertainty relating to the ongoing spread and severity of the virus and new variants, as well as the availability, distribution and use of effective treatments and vaccines. To the extent that the global economy continues to be negatively impacted by the pandemic, our results will be affected, with credit trends and spending volumes being the key drivers of our financial performance. Throughout 2020, we focused and made substantial progress on our four priorities to manage through this period of uncertainty: supporting our colleagues and winning as a team; protecting our customers and our brand; structuring the company for growth in the future; and remaining financially strong.

Since the first quarter of 2020, our colleague base has successfully operated in a mostly remote working environment and we have sought to ensure that our colleagues have the flexibility and resources they needed to stay safe, healthy and productive. To support our customers and merchants, we offered financial and other assistance, added product benefits to reflect today’s environment, and provided the high level of customer service they expect and rely on. We experienced lower voluntary attrition rates on our proprietary products compared to the prior year. In addition, our Card Members continued to recognize our commitment to service excellence, ranking us number one in ~~Europe~~the J.D. Power U.S. Credit Card Satisfaction Study for the tenth time. We worked with our strategic partners on initiatives to support our communities and ~~Australia.~~launched our largest ever Shop Small campaign to help support small merchants. In addition, we remained committed to strengthening inclusion and diversity, and committed to an action plan to promote racial, ethnic and gender equity for our colleagues, customers and communities.

Reflective of the impacts of the pandemic and the broader macroeconomic environment, our billed business for the year was down 19 percent compared to the prior year, with a low in mid-April followed by a gradual recovery over the remainder of the year. Proprietary billed business, which accounted for 86 percent of our total billings and drives most of our financial results, was also down by 19 percent. Since mid-April, we have seen steady improvement in our overall billed business, with different recovery trends in T&E and non-T&E spend. Non-T&E spend, which has historically accounted for a large portion of our billed business, recovered to pre-pandemic levels in the second half of the year resulting in a full year decline of 1 percent compared to the prior year. T&E spend continued to be significantly impacted throughout the course of the year, although we saw a modest improvement from the lows of mid-April primarily driven by proprietary consumer T&E spend, resulting in a year-over-year decline of 61 percent.

Revenues net of interest expense ~~grew year-over-year primarily due~~decreased 17 percent compared to ~~growth~~the prior year, consistent with the trend in billings. Discount revenue, our largest revenue line, decreased 22 percent, which was a larger contraction than the decline in billed business ~~net interest income and net card fees, partially offset by an expected decline~~for the year due to a decrease in the average discount rate. ~~Our net interest yield increased year-over-year primarily related to~~The average discount rate decrease was driven by a shift in spend mix to non-T&E categories. Other fees and commissions and Other revenues declined year-over-year, primarily driven by a reduction in travel-related revenues. Card fee revenues, which are recognized over ~~time towards non-cobrand lending products that generally attract more revolving loan balances,~~ a ~~lower percentage of total loans at introductory interest rates, specific pricing actions~~twelve-month period and ~~a benefit from increases in benchmark interest rates. During~~therefore are slower to react to economic shifts, continued to grow as compared to the ~~fourth quarter, we saw net interest yield begin to stabilize sequentially.~~

prior year. While Card Member ~~loan and receivables~~retention remained high throughout the year, net card fee growth ~~was strong year-over-year,~~decelerated as we ~~continue~~slowed new card acquisitions to ~~expand our relationships with existing customers and acquired new Card Members. We continue to see opportunities to increase our share~~manage through the peak of ~~our customers’ borrowings.~~ uncertainty during the crisis. Net interest income declined by 7 percent year-over-year, primarily driven by lower average loans.

As ~~expected, provisions for losses increased as~~ a result of ~~higher~~the spend-centric nature of our business model, Card Member loans and receivables declined 16 percent and ~~increases in lending delinquencies and net write-off rates. The increases in the delinquencies and net write-off rates were~~24 percent year-over-year, respectively, due to lower billed business volumes. Provisions for credit losses increased, primarily due to a higher reserve build reflecting the ~~seasoning~~deterioration of ~~recent~~the global macroeconomic outlook, including unemployment and gross domestic product (GDP), partially offset by improved credit performance and lower loan ~~vintages~~ and receivable volumes.

In order to provide support to our customers impacted by the pandemic, we created a ~~shift~~short-term Customer Pandemic Relief program and enhanced our longer-term financial relief programs. The total balance of loans and receivables that were in ~~mix over time towards non-cobrand lending products, which have higher write-off rates but also drive higher net interest yields. We expect these trends to continue, resulting~~a delinquent status or in ~~continued increases~~one of our financial relief programs peaked in ~~lending write-off rates,~~the second quarter and then declined sequentially through the remainder of the year. In addition, our write-offs and delinquencies were down year-over-year reflecting our strong risk management practices, the record levels of government stimulus and ~~provisions for losses.~~the broad availability of forbearance programs.

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~~Spending on~~ Card Member ~~engagement (the aggregate of~~ rewards, Card Member services and business development expenses are generally correlated to billings or are variable based on usage, and were lower this year due to the decline in billing volumes and lower usage of travel-related benefits. During the year, we remained focused on controlling operating expenses, while investing in marketing ~~and promotion expenses) increased year-over-year and primarily reflected the recent~~initiatives to support our customers, such as enhancements that we made to ~~rewards on our U.S. Platinum products, continued strong growth in our Delta cobrand portfolio and higher levels of engagement in~~value propositions for many of our ~~premium services. Marketing~~card products and ~~promotion expense decreased due~~our largest ever Shop Small campaign.

Throughout the year, our liquidity levels and capital position remained strong, with capital ratios that are well above our targets and regulatory requirements. These robust liquidity and capital levels provide us with significant flexibility to ~~elevated spending on growth initiatives during~~maintain the ~~prior year~~strength of our balance sheet through this uncertain period. Looking forward, we remain committed to capital distributions through dividend payments and ~~as we realized efficiencies in~~resuming share repurchases up to our ~~marketing spend. Operating expense increased year-over-year, driven~~maximum capacity authorized by the ~~prior year gains on~~Federal Reserve in the sales of certain cobrand portfolios, which were recognized as a reduction in other expenses. Excluding these gains, operating expense decreased year-over-year reflecting the benefits from our cost reduction initiatives during the past two years.

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~~In the fourth~~first quarter of 2017, we recognized a tax charge of $2.6 billion related to the Tax Act, which drove a decline in net income versus 2016. This charge represents our current estimate of taxes on deemed repatriations of certain overseas earnings and the remeasurement of U.S. net deferred tax assets. Our effective tax rate for 2017 was up substantially from 33 percent in 2016. Excluding the impacts of the Tax Act, our effective tax rate for the year would have decreased compared to 2016, primarily due to the realization of certain foreign tax credits in the current year and a continuing shift in the geographic mix of earnings. We continue to analyze and interpret the Tax Act, and its impact on our earnings; however, for 2018, we currently estimate our tax rate will be approximately 22 percent, before discrete tax items. The upfront charge triggered by the Tax Act reduced our capital ratios and, as a result, while we will be continuing our quarterly dividends at the current level, we suspended our share buyback program for the first half of 2018 in order to rebuild our capital.

2021.

Our ~~strong performance~~progress in ~~2017 reflects benefits from~~managing through the ~~investments we have made in a variety of growth opportunities~~pandemic over the last ~~several years. Although we continue to see some headwinds from regulation in markets~~year confirms the resilience of our differentiated business model, which includes a loyal and diverse customer base, a valued brand, our global merchant network, and our integrated payments platform. All of this, supported by our resilient colleagues around the world, ~~and intense competition,~~provides us with a solid foundation as we ~~remain focused~~move into 2021, which we see as a transition year. We will still be managing through the effects of the pandemic, but with an increased focus on ~~delivering differentiated value~~maximizing investments in areas that will enable us to our merchants, customers and business partners, while delivering appropriate returns to our shareholders. With Stephen J. Squeri as our new Chairman and Chief Executive Officer, effective February 1, 2018 as previously announced, we will be focused on strengthening our leadership position with premium consumers, extending our strong position in the commercial payments space, making American Express an essential part of our customers’ digital lives and strengthening our global, integrated network to provide unique value.

rebuild growth momentum.

See “Supervision and Regulation” in “Business” for information on legislative and regulatory changes that could have a material adverse effect on our results of operations and financial condition and ~~“Legal, Regulatory~~“Risk Factors” and ~~Compliance Risk” in “Risk Factors”~~“Cautionary Note Regarding Forward Looking Statements” for information on additional potential impacts of the COVID-19 pandemic and the potential impacts of ~~an adverse decision in the Department of Justice case~~economic, geopolitical and ~~related merchant litigations~~competitive conditions and certain litigation and regulatory matters on our business.

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CONSOLIDATED RESULTS OF OPERATIONS

Refer to the "Glossary of Selected Terminology" for the definitions of certain key terms and related information appearing within this section.

~~Effective December 1, 2015, we transferred~~The discussions in the ~~Card Member loans~~“Financial Highlights”, “Consolidated Results of Operations” and ~~receivables related to our HFS portfolios to Card Member loans and receivables HFS~~“Business Segment Results of Operations” provide commentary on the ~~Consolidated Balance Sheets. On March 18, 2016~~variances for the year ended December 31, 2020 compared to the year ended December 31, 2019, as presented in the accompanying tables. These discussions should be read in conjunction with the discussion under "Business Environment," which contains further information on the COVID-19 pandemic and ~~June 17, 2016, we completed~~ the ~~sales~~related impacts on our consolidated results of operations. For a discussion of the ~~JetBlue~~financial condition and Costco cobrand card portfolios, respectively. For the periods from December 1, 2015, through the sale completion dates, the primary impacts beyond the HFS classification on the Consolidated Balance Sheets wereresults of operations for 2019 compared to ~~provisions for losses~~2018, please refer to Part II, Item 7. "Management's Discussion and ~~credit metrics, which did not reflect amounts related to these HFS loans~~Analysis of Financial Condition and receivables, as credit costs were reported in Other expenses through a valuation allowance adjustment. Other, non-credit related metrics (i.e., billed business, cards-in-force, net interest yield) reflected amounts related to the HFS portfolios through the sale completion dates. Additionally, for periods after the sale completion dates, activities associated with these cobrand partnerships and the HFS portfolios were no longer includedResults of Operations" in our ~~Consolidated Results~~Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 13, 2020.

As a result of ~~Operations. Specifically, these impacts included: Discount revenue from Costco in~~ the ~~United States for spend~~adoption of CECL on all American Express cards and from other merchants for spend on the Costco cobrand card; Other fees and commissions and Interest income from Costco cobrand Card Members; and Card Member rewards expense related to the Costco cobrand card, resulting inJanuary 1, 2020, there is a lack of comparability ~~between~~in both the reserves and provisions for credit losses for the periods presented.

~~The relationship of~~ Results for reporting periods beginning after January 1, 2020 are presented using the ~~U.S. dollar~~CECL methodology, while comparative information continues to ~~various foreign currencies over~~be reported in accordance with the ~~periods of comparison has had an impact on our results of operations. Where meaningful~~incurred loss methodology in ~~describing our performance, foreign currency-adjusted amounts, which exclude~~effect for prior periods. Refer to Note 3 to the ~~impact of changes in the foreign exchange (FX) rates, have been provided.~~

"Consolidated Financial Statements" for further information.

TABLE 1: SUMMARY OF FINANCIAL PERFORMANCE

Years Ended December 31, Change Change
(Millions, except percentages and per share amounts) 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Total revenues net of interest expense $ 33,471 $ 32,119 $ 32,818 $ 1,352 4 % $ (699 ) (2 )%
Provisions for losses 2,759 2,026 1,988 733 36 38 2
Expenses 23,298 21,997 22,892 1,301 6 (895 ) (4 )
Pretax income 7,414 8,096 7,938 (682 ) (8 ) 158 2
Income tax provision 4,678 2,688 2,775 1,990 74 (87 ) (3 )
Net income 2,736 5,408 5,163 (2,672 ) (49 ) 245 5
Earnings per common share — diluted^(a)
$ 2.97 $ 5.65 $ 5.05 $ (2.68 ) (47 )% $ 0.60 12 %
Return on average equity^(b)
13.1 % 26.0 % 24.0 %
Effective tax rate (ETR) 63.1 % 33.2 % 35.0 %
Impact of Tax Act charge on ETR 34.7 %
ETR, excluding the Tax Act charge^(c)
28.4 %


Years Ended December 31,										Change				Change
(Millions, except percentages and per share amounts)	2020			2019			2018			2020 vs. 2019				2019 vs. 2018
Total revenues net of interest expense	$	36,087		$	43,556		$	40,338		$	(7,469)	(17)	%	$	3,218	8	%
Provisions for credit losses	4,730			3,573			3,352			1,157		32		221		7
Expenses	27,061			31,554			28,864			(4,493)		(14)		2,690		9
Pretax income	4,296			8,429			8,122			(4,133)		(49)		307		4
Income tax provision	1,161			1,670			1,201			(509)		(30)		469		39
Net income	3,135			6,759			6,921			(3,624)		(54)		(162)		(2)
Earnings per common share — diluted(a)	$	3.77		$	7.99		$	7.91		$	(4.22)	(53)	%	$	0.08	1	%
Return on average equity(b)	14.2		%	29.6		%	33.5		%
Effective tax rate (ETR)	27.0		%	19.8		%	14.8		%
Adjustments to ETR(c)							6.1		%
Adjusted ETR(c)							20.9		%

~~(a)~~

Earnings per common share — diluted was reduced by the impact of (i) earnings allocated to participating share awards and other items of $21 million, $43 million and $38 million for the years ended December 31, 2017, 2016 and 2015, respectively, and (ii) dividends on preferred shares of $81 million, $80 million and $62 million for the years ended December 31, 2017, 2016 and 2015.

(a)Represents net income, less (i) earnings allocated to participating share awards of $20 million, $47 million and $54 million for the years ended December 31, 2020, 2019 and 2018, respectively, and (ii) dividends on preferred shares of $79 million, $81 million and $80 million for the years ended December 31, 2020, 2019 and 2018, respectively.

~~(b)~~

Return on average equity (ROE) is computed by dividing (i) one-year period net income ($2.7 billion, $5.4 billion and $5.2 billion for 2017, 2016 and 2015, respectively) by (ii) one-year average total shareholders’ equity ($20.8 billion, $20.8 billion and $21.5 billion for 2017, 2016 and 2015, respectively).

(b)Return on average equity (ROE) is computed by dividing (i) one-year period of net income ($3.1 billion, $6.8 billion and $6.9 billion for 2020, 2019 and 2018, respectively) by (ii) one-year average of total shareholders’ equity ($22.0 billion, $22.8 billion and $20.7 billion for 2020, 2019 and 2018, respectively).

(c)The adjusted ETR for 2018 is a non-GAAP measure. The 2018 adjusted ETR excludes a benefit of $496 million relating to changes in the tax method of accounting for certain expenses, the resolution of certain prior years’ tax audits, and a final adjustment to our 2017 provisional tax charge related to the Tax Cuts and Jobs Act enacted on December 22, 2017 (Tax Act).

~~(c)~~

The effective tax rate for 2017 excluding the $2.6 billion charge related to the Tax Act is a non-GAAP measure. Management believes the effective tax rate excluding the impacts of the Tax Act is useful in evaluating the company’s tax rate in comparison with the prior-year periods. Refer to Note 21 of the “Consolidated Financial Statements” for additional information.

TABLE 2: TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY


Years Ended December 31,							Change				Change
(Millions, except percentages)	2020		2019		2018		2020 vs. 2019				2019 vs. 2018
Discount revenue	$	20,401	$	26,167	$	24,721	$	(5,766)	(22)	%	$	1,446	6	%
Net card fees	4,664		4,042		3,441		622		15		601		17
Other fees and commissions	2,163		3,297		3,153		(1,134)		(34)		144		5
Other	874		1,430		1,360		(556)		(39)		70		5
Total non-interest revenues	28,102		34,936		32,675		(6,834)		(20)		2,261		7
Total interest income	10,083		12,084		10,606		(2,001)		(17)		1,478		14
Total interest expense	2,098		3,464		2,943		(1,366)		(39)		521		18
Net interest income	7,985		8,620		7,663		(635)		(7)		957		12
Total revenues net of interest expense	$	36,087	$	43,556	$	40,338	$	(7,469)	(17)	%	$	3,218	8	%

Years Ended December 31, Change Change
(Millions, except percentages) 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Discount revenue $ 19,186 $ 18,680 $ 19,297 $ 506 3 % $ (617 ) (3 )%
Net card fees 3,090 2,886 2,700 204 7 186 7
Other fees and commissions 3,022 2,753 2,866 269 10 (113 ) (4 )
Other 1,732 2,029 2,033 (297 ) (15 ) (4 ) ―
Total non-interest revenues 27,030 26,348 26,896 682 3 (548 ) (2 )
Total interest income 8,553 7,475 7,545 1,078 14 (70 ) (1 )
Total interest expense 2,112 1,704 1,623 408 24 81 5
Net interest income 6,441 5,771 5,922 670 12 (151 ) (3 )
Total revenues net of interest expense $ 33,471 $ 32,119 $ 32,818 $ 1,352 4 % $ (699 ) (2 )%

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TOTAL REVENUES NET OF INTEREST EXPENSE

Discount revenue ~~increased in 2017 compared to 2016,~~decreased, primarily due to ~~growth~~a decrease in worldwide billed business ~~and decreased in 2016 compared to 2015 primarily due to lower Costco-related revenues. Both periods~~ of comparison also reflected decreases in the average discount rate and increases in contra-discount revenues. The increase in contra-discount revenue in 2017 compared to 2016 was primarily due to higher corporate client incentives and cobrand partner payments, both driven by higher volumes; the increase in 2016 compared to 2015 was primarily due to an increase in cash rebate rewards.

~~Overall, billed business increased in 2017 compared to 2016.~~19 percent. U.S. billed business ~~increased 1~~decreased 16 percent and non-U.S. billed business decreased 23 percent due to the impacts of the COVID-19 pandemic during 2020.

Additional billed business highlights for the full year 2020 as compared to full year 2019:

•Worldwide non-T&E billed business decreased 1 percent and T&E billed business decreased 61 percent.

•Proprietary consumer billed business decreased by 17 percent, primarily driven by declines in T&E, and offline non-T&E spend, which were partially offset by increased ~~12 percent.~~ online and card-not-present spend at non-T&E merchants.

•Proprietary commercial billed business decreased by 21 percent, primarily driven by year-over-year decreases in T&E spend by large and global corporate card customers, with less pronounced billed business declines from small and mid-sized enterprises, where T&E volumes made up a lower proportion of spend.

See Tables 5 and 6 for more details on billed business performance.

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The ~~average~~decrease in discount ~~rate~~revenue was ~~2.43 percent, 2.45 percent and 2.46 percent for 2017, 2016 and 2015, respectively. The~~also driven by a decrease in the average discount rate primarily due to a shift in ~~2017 compared~~spend mix to 2016 primarily reflected rate pressure from merchant negotiations, including those resulting from the recent regulatory changes affecting competitor pricing in certain international markets, the continued growth of the OptBlue program, and changes in industry and geographic mix. We expect thenon-T&E categories. The average discount rate ~~will continue to decline over time due to a greater shift of existing merchants into OptBlue, merchant negotiations~~was 2.28 percent for 2020 and ~~competition, volume related pricing discounts, certain pricing initiatives mainly driven by pricing regulation (including regulation of competitors’ interchange rates) and other factors.~~2.37 percent for 2019.

Net card fees increased, ~~in both periods. The increase in 2017 was~~ primarily driven by ~~growth in~~our premium card product portfolios. Card fees, which are recognized over a twelve-month period, are slower to react to economic shifts, such as those arising from the ~~Platinum and Delta portfolios and growth in key international markets. The increase in 2016 was primarily driven by growth in~~impacts of the ~~Platinum, Gold and Delta portfolios.~~COVID-19 pandemic.

Other fees and commissions ~~increased~~decreased, primarily due to the impacts of travel restrictions related to the COVID-19 pandemic, which resulted in ~~2017 compared~~lower foreign exchange conversion revenue related to ~~2016,~~decreased cross-border Card Member spending and ~~decreased~~lower travel commissions and fees from our consumer travel business, as well as a decline in ~~2016 compared to 2015. The increase in 2017 was primarily driven by an increase in delinquency~~late fees due to ~~a change in the late fee assessment date for certain U.S. charge cards and an increase in foreign exchange conversion revenue. The decrease in 2016 was primarily due to~~ lower ~~Costco-related fees, partially offset by an increase in delinquency and loyalty coalition-related fees.~~delinquencies.

Other revenues decreased, in 2017 compared to 2016, and were relatively flat in 2016 compared to 2015. The decrease in 2017 was primarily driven by prior-year revenues related to the Loyalty Edge business, which was sold in the fourth quarter of 2016, and a contractual payment from a GNS partner also in the prior year. 2016 included the previously-mentioned contractual payment from a GNS partner and higher revenues from our Prepaid Services business compared to 2015, offset by lower revenues related to Costco, Loyalty Edge and the GBT JV transition services agreement.

Interest income increased in 2017 compared to 2016 and decreased in 2016 compared to 2015. The increase in 2017 primarily reflected higher average Card Member loans and higher yields. The growth in average Card Member loans was primarily driven by a ~~mix shift over time towards non-cobrand lending products, where~~net loss in the current year, as compared to net income in the prior year, from the GBT JV and lower revenue earned on cross-border Card ~~Members tend~~Member spending due to ~~revolve more~~the impacts of ~~their loan balances. The increase in yields was~~the COVID-19 pandemic, including travel restrictions.

Interest income decreased, primarily driven by a ~~greater percentage of loans at higher rate buckets, specific pricing actions, and increases~~reduction in benchmark interest ~~rates. The decrease in 2016 was~~rates and lower average Card Member loan volumes.

Interest expense decreased, primarily driven by lower ~~Costco cobrand loans and the associated interest income, partially offset by modestly higher yields and an increase in average Card Member loans across other lending products.~~

~~Interest expense increased in both periods. The increase in 2017 was primarily driven by higher~~ interest rates paid on deposits and ~~higher average long-term debt. The increase~~a reduction in ~~2016 was primarily driven by higher average customer deposit balances, partially offset by lower average long-term~~outstanding debt.

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TABLE 3: PROVISIONS FOR CREDIT LOSSES SUMMARY

Years Ended December 31, Change Change
(Millions, except percentages) 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Charge card $ 795 $ 696 $ 737 $ 99 14 % $ (41 ) (6 )%
Card Member loans 1,868 1,235 1,190 633 51 45 4
Other 96 95 61 1 1 34 56
Total provisions for losses^(a)
$ 2,759 $ 2,026 $ 1,988 $ 733 36 % $ 38 2 %


Years Ended December 31,							Change				Change
(Millions, except percentages)	2020		2019		2018		2020 vs. 2019				2019 vs. 2018
Card Member receivables
Net write-offs	$	881	$	900	$	859	$	(19)	(2)	%	$	41	5	%
Reserve build	134		63		78		71		113		(15)		(19)
Total	1,015		963		937		52		5		26		3
Card Member loans
Net write-offs	2,170		2,235		1,843		(65)		(3)		392		21
Reserve build	1,283		227		423		1,056		#		(196)		(46)
Total	3,453		2,462		2,266		991		40		196		9
Other
Net write-offs - Other loans(a)	111		98		79		13		13		19		24
Net write-offs - Other receivables(b)	27		20		32		7		35		(12)		(38)
Reserve build - Other loans(a)	66		28		44		38		#		(16)		(36)
Reserve build (release) - Other receivables(b)	58		2		(6)		56		#		8		(133)
Total	262		148		149		114		77		(1)		(1)
Total provisions for credit losses	$	4,730	$	3,573	$	3,352	$	1,157	32	%	$	221	7	%

~~(a)~~

~~Beginning December 1, 2015 through to the sale completion dates, did not reflect the HFS portfolios.~~

# Denotes a variance greater than 100 percent

(a)Relates to Other loans of $2.9 billion, $4.8 billion, and $3.8 billion less reserves of $238 million, $152 million, and $124 million, as of December 31, 2020, 2019 and 2018, respectively.

(b)Relates to Other receivables included in Other assets on the Consolidated Balance Sheets of $3 billion, $3.1 billion, and $2.9 billion, less reserves of $85 million, $27 million, $25 million as of December 31, 2020, 2019, and 2018, respectively.

PROVISIONS FOR CREDIT LOSSES

Charge card provision for losses increased in 2017 compared to 2016 and decreased in 2016 compared to 2015. The increase in 2017 was primarily driven by growth in receivables due to charge volume and higher net write-offs. The decrease in 2016 was driven by lower net write-offs and improved delinquencies.

Card Member loans and receivables provision for credit losses increased, ~~in both periods. The increases were~~ primarily driven by ~~strong loan growth,~~a higher reserve build reflecting the deterioration of the global macroeconomic outlook, including unemployment and GDP, partially offset by improved credit performance and a decline in the outstanding balance of Card Member loans and receivables.

Other provision for credit losses increased, primarily driven by a higher reserve build and higher net write-offs.

Refer to Note 1 to the "Consolidated Financial Statements" for further information about CECL, including the January 1, 2020 implementation impact on reserves.

TABLE 4: EXPENSES SUMMARY


Years Ended December 31,							Change				Change
(Millions, except percentages)	2020		2019		2018		2020 vs. 2019				2019 vs. 2018
Marketing and business development	$	6,747	$	7,125	$	6,477	$	(378)	(5)	%	$	648	10	%
Card Member rewards	8,041		10,439		9,696		(2,398)		(23)		743		8
Card Member services	1,230		2,223		1,777		(993)		(45)		446		25
Total marketing, business development, rewards and Card Member services	16,018		19,787		17,950		(3,769)		(19)		1,837		10
Salaries and employee benefits	5,718		5,911		5,250		(193)		(3)		661		13
Other, net	5,325		5,856		5,664		(531)		(9)		192		3
Total expenses	$	27,061	$	31,554	$	28,864	$	(4,493)	(14)	%	$	2,690	9	%

EXPENSES

In January 2020, we re-launched our Delta cobrand products following the renewal extending our cobrand relationship with Delta Air Lines on March 31, 2019. The contract renewal included new pricing terms, some of which became effective upon contract signing and others that were tied to the product re-launch. These pricing changes, as well as ~~increases~~changes in ~~net write-off rates~~the expense classification of certain benefits associated with the re-launch, resulted in an increase to Marketing and ~~delinquencies,~~business development and decreases to both Card Member rewards and Card Member services expenses, as compared to the prior year.

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Marketing and business development expense decreased, primarily due to a temporary reduction in proactive marketing for Card Member acquisitions, as well as decreases in corporate client incentives and network partner payments due to lower billed business, all of which were a result of the ~~seasoning~~impacts of ~~recent loan vintages and a shift in mix over time towards non-cobrand lending products, which tend to have higher write-off rates. The increase in 2016 was~~the COVID-19 pandemic, partially offset by incremental investments in limited time enhancements to our Card Member value proposition to maintain customer engagement and the ~~impact of the HFS portfolios, as 2016 did not reflect the associated credit costs, as previously mentioned.~~

Other provision for losses was relatively flat in 2017 compared to 2016 and increased in 2016 compared to 2015. 2017 compared to 2016 reflected growth in the non-card lending portfolio, which was offset by improving credit performance in the commercial financing portfolio. The increase in 2016 was primarily driven by growth in the commercial financing portfolio, which resulted in higher net write-offs.

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~~TABLE 4: EXPENSES SUMMARY~~

Years Ended December 31, Change Change
(Millions, except percentages) 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Marketing and promotion $ 3,217 $ 3,650 $ 3,109 $ (433 ) (12 )% $ 541 17 %
Card Member rewards 7,608 6,793 6,996 815 12 (203 ) (3 )
Card Member services and other 1,439 1,133 1,018 306 27 115 11
Total marketing, promotion, rewards and Card Member services and other 12,264 11,576 11,123 688 6 453 4
Salaries and employee benefits 5,258 5,259 4,976 (1 ) ― 283 6
Other, net^(a)
5,776 5,162 6,793 614 12 (1,631 ) (24 )
Total expenses $ 23,298 $ 21,997 $ 22,892 $ 1,301 6 % $ (895 ) (4 )%

~~(a)~~

~~Beginning December 1, 2015 through to the sale completion dates, included the valuation allowance adjustment associated with the HFS portfolios.~~

~~EXPENSES~~

Marketing and promotion expense decreased in 2017 compared to 2016 and increased in 2016 compared to 2015. The variances for both periods were primarily driven by higher levels of spending on growth initiatives in 2016 compared to the preceding and subsequent years.Delta changes described above.

Card Member rewards expense ~~increased in 2017 compared to 2016 and~~ decreased, ~~in 2016 compared to 2015. The increase in 2017 was~~ primarily driven by ~~increases~~decreases in Membership Rewards ~~expense~~and cash back rewards expenses of ~~$750~~$1,579 million and cobrand rewards expense of $65 million. The increase in Membership Rewards expense was primarily driven by enhancements to U.S. Consumer and Small Business Platinum rewards and higher spending volumes. The increase in cobrand rewards expense reflected growth in spending volumes across certain cobrand card products,$819 million, both of which ~~more than offset the absence of Costco-related expense in 2017. The decrease in 2016 was~~were primarily driven by lower cobrand rewards expense of $518 million, primarily reflecting lower Costco-related expense and a shift in volumes to cash rebate cards for which the rewards costs are classified as contra-discount revenue, partially offset by increased spending volumes across other cobrand card products. The lower cobrand rewards expense in 2016 was partially offset by higher Membership Rewards expense of $315 million, primarily driven by an increase in new points earnedbilled business as a result of ~~higher spending volumes, enhancements~~the impacts of the COVID-19 pandemic. In addition, changes in redemption mix due to ~~U.S. Consumer and Small Business Platinum rewards and less of~~ a decline in higher cost travel redemptions since the onset of the COVID-19 pandemic contributed to a decrease in the Membership Rewards weighted average cost (WAC) per ~~point.~~reward point and expense. Cobrand rewards expense also reflected the impact of the Delta changes described above.

The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 9596 percent (~~rounded down~~)(rounded up) at both December 31, ~~2017, 2016~~2020 and ~~2015.~~2019.

Card Member services ~~and other~~ expense ~~increased for both periods of comparison,~~decreased, primarily ~~driven by higher~~due to lower usage of travel-related benefits ~~in both periods, and additionally in 2017 by~~as a result of the ~~enhanced Platinum card benefits.~~impacts of the COVID-19 pandemic, as well as the Delta changes described above.

Salaries and employee benefits expense ~~was flat for 2017 compared to 2016 and increased in 2016 compared to 2015. Salaries and employee benefits~~decreased, primarily driven by lower incentive compensation expenses, ~~for 2017 reflected higher performance-related employee compensation~~partially offset by ~~lower restructuring charges~~increased payroll costs due to a higher full year average headcount as compared to the prior year. ~~The increase in 2016 was~~

Other expenses decreased, primarily driven by ~~higher restructuring charges compared to 2015.~~

~~Other~~a prior year litigation-related charge, lower employee-related operating costs and lower professional services expense, increased in 2017 compared to 2016 and decreased in 2016 compared to 2015. The increase in 2017 was primarily driven by the prior-year gains on the sales of the HFS portfolios, which were recognized as an expense reduction, partially offset by ~~lower technology-related costs in 2017 and Loyalty Edge-related costs in the~~a prior ~~year. The decrease in 2016 was primarily driven by the previously-mentioned gains on the sales~~year non-income tax-related benefit.

Table of ~~the HFS portfolios, as well as goodwill and technology impairment charges in 2015.~~

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INCOME TAXES

The effective tax rate for ~~2017~~2020 was ~~63.1 percent and reflects a substantial charge of $2.6 billion~~27.0 percent. The effective tax rate for 2019 was 19.8 percent. The increase in the effective tax rate in the current period primarily reflected discrete tax charges related to the ~~income tax effects of the Tax Act, which are required to be recorded in the period of enactment. The $2.6 billion charge represents our current estimate of taxes primarily on the deemed repatriation~~realizability of certain ~~overseas earnings and the remeasurement of U.S. federal net~~foreign deferred tax assets, ~~to the lower federal tax rate. Our accounting for~~resulting from cumulative losses in certain non-U.S. legal entities that were exacerbated by the impacts of the Tax Act is provisional and amounts may be revised in future periods as described in the SEC Staff Accounting Bulletin No. 118, which was issued on December 22, 2017 to provide guidance on the accounting for the effects of the Tax Act. Refer to Note 21 to the “Consolidated Financial Statements” for additional information.

Excluding the impacts of the Tax Act, the effective tax rate for 2017 would have been 28.4 percent compared to 33.2 percent in 2016 and 35.0 percent in 2015. See Table 1 for a reconciliation of the effective tax rate for 2017 on a GAAP basis. The tax rate for 2017 includes discrete tax benefits of $156 million related to the realization of certain foreign tax credits.COVID-19 pandemic. The tax rates for 2017, 2016, and 2015 include benefits of $76 million, $60 million and $33 million respectively, related to the resolution of certain prior years’ items. The tax rate for 2015 also includes an expense of $75 million related to the impact of the nondeductible portion of a goodwill impairment charge. In addition, the decrease in ~~tax rates in each period reflects~~both periods reflect the level of pretax income in relation to recurring permanent tax benefits and the geographic mix of business.

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TABLE 5: SELECTED CARD-RELATED STATISTICAL INFORMATION

Change Change
Years Ended December 31, 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Card billed business: (billions)

United States $ 708.3 $ 700.4 $ 721.8 1 % (3 )%
Outside the United States 376.9 337.1 317.9 12 6
Worldwide $ 1,085.2 $ 1,037.5 $ 1,039.7 5 ―
Proprietary $ 900.6 $ 863.8 $ 875.3 4 % (1 )%
Global Network Services 184.6 173.7 164.4 6 6
Worldwide $ 1,085.2 $ 1,037.5 $ 1,039.7 5 ―
Total cards-in-force: (millions)

United States 50.0 47.5 57.6 5 (18 )
Outside the United States 62.8 62.4 60.2 1 4
Worldwide 112.8 109.9 117.8 3 (7 )
Proprietary 64.6 61.3 70.4 5 (13 )
Global Network Services 48.2 48.6 47.4 (1 ) 3
Worldwide 112.8 109.9 117.8 3 (7 )
Basic cards-in-force: (millions)

United States 39.4 37.4 44.8 5 (17 )
Outside the United States 52.2 51.7 49.5 1 4
Worldwide 91.6 89.1 94.3 3 (6 )
Average basic Card Member spending: (dollars)^(a)

United States $ 20,317 $ 18,808 $ 18,066 8 4
Outside the United States $ 14,277 $ 13,073 $ 12,971 9 1
Worldwide Average $ 18,519 $ 17,216 $ 16,743 8 3
Card Member loans: (billions)

United States $ 64.5 $ 58.3 $ 51.5 11 13
Outside the United States 8.9 7.0 7.1 27 (1 )
Worldwide $ 73.4 $ 65.3 $ 58.6 12 11
Average discount rate 2.43 % 2.45 % 2.46 %
Average fee per card (dollars)^(a)
$ 49 $ 44 $ 39 11 % 13 %

~~(a)~~

Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees divided by average worldwide proprietary cards-in-force.


										Change		Change
Years Ended December 31,	2020			2019			2018			2020 vs. 2019		2019 vs. 2018
Billed business: (billions)
U.S.	$	693.1		$	827.7		$	777.6		(16)	%	6	%
Outside the U.S.	317.5			413.1			406.4			(23)		2
Total	$	1,010.6		$	1,240.8		$	1,184.0		(19)		5
Proprietary	$	870.7		$	1,070.5		$	1,002.6		(19)		7
GNS	139.9			170.3			181.4			(18)		(6)
Total	$	1,010.6		$	1,240.8		$	1,184.0		(19)		5
Cards-in-force: (millions)
U.S.	53.8			54.7			53.7			(2)		2
Outside the U.S.	58.2			59.7			60.3			(3)		(1)
Total	112.0			114.4			114.0			(2)		—
Proprietary	68.9			70.3			69.1			(2)		2
GNS	43.1			44.1			44.9			(2)		(2)
Total	112.0			114.4			114.0			(2)		—
Basic cards-in-force: (millions)
U.S.	42.2			43.0			42.3			(2)		2
Outside the U.S.	49.1			50.0			50.3			(2)		(1)
Total	91.3			93.0			92.6			(2)		—
Average proprietary basic Card Member spending: (dollars)
U.S.	$	18,085		$	21,515		$	20,840		(16)		3
Outside the U.S.	$	12,264		$	16,351		$	15,756		(25)		4
Worldwide Average	$	16,352		$	19,972		$	19,340		(18)		3
Average discount rate	2.28		%	2.37		%	2.37		%
Average fee per card (dollars)(a)	$	67		$	58		$	51		16	%	14	%

(a)Average fee per card is computed based on proprietary net card fees divided by average proprietary total cards-in-force.

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TABLE 6: BILLED ~~BUSINESS GROWTH~~BUSINESS-RELATED STATISTICAL INFORMATION

2017 2016
Percentage Increase (Decrease) Percentage Increase (Decrease) Assuming No Changes in FX Rates
^(a)
Percentage Increase (Decrease) Percentage Increase (Decrease) Assuming No Changes in FX Rates
^(a)
Worldwide^(b)

Total billed business 5 % 4 % ― % 1 %
Proprietary billed business 4 4 (1) (1)
GNS billed business^(c)
6 5 6 10
Airline-related volume 3 3 (4) (3)
(8% of worldwide billed business for both 2017 and 2016)
United States^(b)

Billed business 1 (3)
Proprietary consumer card billed business^(d)
(2) (7)
Proprietary small business and corporate services billed business^(e)
6 2
T&E-related volume
(25% of U.S. billed business for both 2017 and 2016) ― (3)
Non-T&E-related volume
(75% of U.S. billed business for both 2017 and 2016) 1 (3)
Airline-related volume
(7% of U.S. billed business for both 2017 and 2016) ― (7)
Outside the United States^(b)

Billed business 12 11 6 10
Japan, Asia Pacific & Australia (JAPA) billed business 13 12 14 14
Latin America & Canada (LACC) billed business 10 9 (6) 6
Europe, the Middle East & Africa (EMEA) billed business 12 10 2 8
Proprietary consumer card billed business^(c)
13 13 4 8
Proprietary small business and corporate services billed business^(e)
14 % 12 % 3 % 7 %

~~(a)~~

The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current year apply to the corresponding prior year period against which such results are being compared).


	2020				2019
	Percentage Increase (Decrease)		Percentage Increase (Decrease) Assuming No Changes in FX Rates(a)		Percentage Increase (Decrease)		Percentage Increase (Decrease) Assuming No Changes in FX Rates(a)
Worldwide
Proprietary
Proprietary consumer	(17)	%	(17)	%	8	%	9	%
Proprietary commercial	(21)		(21)		6		6
Total Proprietary	(19)		(19)		7		8
GNS	(18)		(17)		(6)		(2)
Worldwide Total	(19)		(18)		5		6
T&E-related volume (14% and 30% of Worldwide Total for 2020 and 2019, respectively) (b)	(61)		(60)		4		6
Non-T&E-related volume (86% and 70% of Worldwide Total for 2020 and 2019, respectively) (b)	(1)		(1)		6		7
Airline-related volume (3% and 8% of Worldwide Total for 2020 and 2019, respectively) (b)	(76)		(76)		1		3

U.S.
Proprietary
Proprietary consumer	(15)				7
Proprietary commercial	(18)				5
Total Proprietary	(16)				6
U.S. Total	(16)				6
T&E-related volume (13% and 25% of U.S. Total for 2020 and 2019, respectively) (b)	(57)				6
Non-T&E-related volume (87% and 75% of U.S. Total for 2020 and 2019, respectively) (b)	(1)				6
Airline-related volume (2% and 7% of U.S. Total for 2020 and 2019, respectively) (b)	(75)				4

Outside the U.S.
Proprietary
Proprietary consumer	(21)		(21)		10		14
Proprietary commercial	(32)		(31)		7		11
Total Proprietary	(26)		(25)		9		13
Outside the U.S. Total	(23)		(22)		2		6
Asia Pacific, Australia and New Zealand	(16)		(16)		1		5
Latin America & Canada	(32)		(26)		4		10
Europe, the Middle East & Africa	(30)	%	(31)	%	1	%	5	%

~~(b)~~

~~Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.~~

(a)The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current year apply to the corresponding prior-year period against which such results are being compared).

~~(c)~~

~~Included in the ICNS segment.~~

~~(d)~~

~~Included in the USCS segment.~~

~~(e)~~

~~Included in the GCS segment.~~

(b)Based on billed business from merchants we acquire or merchants acquired by third parties on our behalf (e.g., OptBlue merchants).

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TABLE 7: SELECTED CREDIT-RELATED STATISTICAL INFORMATION


As of or for the Years Ended December 31,										Change		Change
(Millions, except percentages and where indicated)	2020			2019			2018			2020 vs. 2019		2019 vs. 2018
Worldwide Card Member loans:
Card Member loans: (billions)
U.S.	$	64.2		$	76.0		$	72.0		(16)	%	6	%
Outside the U.S.	9.2			11.4			9.9			(19)		15
Total	$	73.4		$	87.4		$	81.9		(16)		7
Credit loss reserves:
Beginning balance (a)	$	4,027		$	2,134		$	1,706		89		25
Provisions - principal, interest and fees	3,453			2,462			2,266			40		9
Net write-offs — principal less recoveries	(1,795)			(1,860)			(1,539)			(3)		21
Net write-offs — interest and fees less recoveries	(375)			(375)			(304)			—		23
Other (b)	34			22			5			55		#
Ending balance	$	5,344		$	2,383		$	2,134		#		12
% of loans	7.3		%	2.7		%	2.6		%
% of past due	727		%	177		%	182		%
Average loans (billions)	$	74.6		$	82.8		$	75.8		(10)		9
Net write-off rate — principal only (c)	2.4		%	2.2		%	2.0		%
Net write-off rate — principal, interest and fees (c)	2.9		%	2.7		%	2.4		%
30+ days past due as a % of total	1.0		%	1.5		%	1.4		%

Worldwide Card Member receivables:
Card Member receivables: (billions)
U.S.	$	30.5		$	39.0		$	39.0		(22)		—
Outside the U.S.	13.2			18.4			16.9			(28)		9
Total	$	43.7		$	57.4		$	55.9		(24)		3
Credit loss reserves:
Beginning balance (a)	$	126		$	573		$	521		(78)		10
Provisions - principal and fees	1,015			963			937			5		3
Net write-offs - principal and fees less recoveries	(881)			(900)			(859)			(2)		5
Other (b)	7			(17)			(26)			#		(35)
Ending balance	$	267		$	619		$	573		(57)	%	8	%
% of receivables	0.6		%	1.1		%	1.0		%
Net write-off rate — principal and fees (c)(d)	2.0		%	1.6		%	1.6		%

As of or for the Years Ended December 31, Change Change
(Millions, except percentages and where indicated) 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Worldwide Card Member loans ^(a)

Total loans (billions)
$ 73.4 $ 65.3 $ 58.6 12 % 11 %
Loss reserves:
Beginning balance 1,223 1,028 1,201 19 (14 )
Provisions ^(b)
1,868 1,235 1,190 51 4
Net write-offs — principal only ^(c)
(1,181 ) (930 ) (967 ) 27 (4 )
Net write-offs — interest and fees ^(c)
(227 ) (175 ) (162 ) 30 8
Transfer of reserves on HFS loan portfolios ― ― (224 ) ― #
Other ^(d)
23 65 (10 ) (65 ) #
Ending balance $ 1,706 $ 1,223 $ 1,028 39 19
Ending reserves — principal $ 1,622 $ 1,160 $ 975 40 19
Ending reserves — interest and fees $ 84 $ 63 $ 53 33 19
% of loans 2.3 % 1.9 % 1.8 %
% of past due 177 % 161 % 164 %
Average loans (billions)^(a)
$ 66.7 $ 59.9 $ 67.9 11 % (12 )%
Net write-off rate — principal only ^(e)
1.8 % 1.6 % 1.4 %
Net write-off rate — principal, interest and fees ^(e)
2.1 % 1.8 % 1.7 %
30+ days past due as a % of total ^(e)
1.3 % 1.2 % 1.1 %

Worldwide Card Member receivables^(a)

Total receivables (billions)
$ 54.0 $ 47.3 $ 44.1 14 % 7 %
Loss reserves:
Beginning balance 467 462 465 1 (1 )
Provisions ^(b)
795 696 737 14 (6 )
Net write-offs ^(c)
(736 ) (674 ) (713 ) 9 (5 )
Other ^(f)
(5 ) (17 ) (27 ) (71 ) (37 )
Ending balance $ 521 $ 467 $ 462 12 % 1 %
% of receivables 1.0 % 1.0 % 1.0 %
Net write-off rate — principal only ^(e)
1.6 % 1.5 % 1.8 %
Net write-off rate — principal and fees ^(e)
1.7 % 1.8 % 2.0 %
30+ days past due as a % of total ^(e)
1.4 % 1.4 % 1.5 %
Net loss ratio as a % of charge volume — GCP 0.10 % 0.09 % 0.09 %
90+ days past billing as a % of total — GCP 0.9 % 0.9 % 0.9 %

# Denotes a variance greater than 100 percent

~~(a)~~

~~Beginning December 1, 2015 through to the sale completion dates, did not reflect the HFS portfolios.~~

~~(b)~~

~~Reflects provisions for principal, interest and/or fees on Card Member loans and receivables. Refer to Table 3 footnote (a).~~

(a)Includes an increase of $1,643 million and decrease of $493 million to the beginning reserve balances for Card Member loans and receivables, respectively, as of January 1, 2020, related to the adoption of the CECL methodology. Refer to Note 3 to the "Consolidated Financial Statements" for further information.

~~(c)~~

~~Write-offs, less recoveries.~~

(b)Other includes foreign currency translation adjustments.

~~(d)~~

2016 included reserves associated with Card Member loans reclassified from HFS to held for investment. Refer to Changes in Card Member loans reserve for losses under Note 4 to the “Consolidated Financial Statements” for additional information.

(c)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

~~(e)~~

We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because we consider uncollectible interest and/or fees in our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented. The net write-off rates and 30+ days past due as a percentage of total for Card Member receivables relate to USCS, ICNS and Global Small Business Services (GSBS) Card Member receivables. The twelve months ended December 31, 2015 reflect the impact of a change in the timing of charge-offs for Card Member loans and receivables in certain modification programs from 180 days past due to 120 days past due.

(d)Refer to Tables 10 and 13 for Net write-off rate - principal only and 30+ days past due metrics for GCSG and Global Small Business Services (GSBS) receivables, respectively. A net write-off rate based on principal losses only for Global Corporate Payments (GCP), which reflects global, large and middle market corporate accounts, is not available due to system constraints.

~~(f)~~

~~2015 included the impact of the transfer of the HFS receivables portfolio, which was not significant.~~

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TABLE 8: NET INTEREST YIELD ON AVERAGE CARD MEMBER LOANS

Years Ended December 31,
(Millions, except percentages and where indicated) 2017 2016 2015
Net interest income $ 6,441 $ 5,771 $ 5,922
Exclude:
Interest expense not attributable to our Card Member loan portfolio ^(a)
1,170 984 952
Interest income not attributable to our Card Member loan portfolio ^(b)
(636 ) (403 ) (357 )
Adjusted net interest income ^(c)
$ 6,975 $ 6,352 $ 6,517
Average Card Member loans including HFS loan portfolios (billions)^(d)
$ 66.7 $ 65.8 $ 69.0

Net interest income divided by average Card Member loans 9.7 % 8.8 % 8.6 %
Net interest yield on average Card Member loans ^(c)
10.5 % 9.6 % 9.4 %

~~(a)~~

~~Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.~~

Effective for the first quarter of 2020, we made certain enhancements to our methodology related to the allocation of certain funding costs primarily related to our Card Member loan and Card Member receivable portfolios. These enhancements resulted in a change to the interest expense not attributable to our Card Member loan portfolio and therefore also on our Net Interest Yield on Average Card Member loans. Prior period amounts have been revised to conform to the current period presentation.

~~(b)~~

~~Primarily represents interest income attributable to Other loans, interest-bearing deposits and our Travelers Cheque and other stored-value investment portfolio.~~


Years Ended December 31,
(Millions, except percentages and where indicated)	2020			2019			2018
Net interest income	$	7,985		$	8,620		$	7,663
Exclude:
Interest expense not attributable to our Card Member loan portfolio (a)	1,295			1,833			1,592
Interest income not attributable to our Card Member loan portfolio (b)	(668)			(1,227)			(1,010)
Adjusted net interest income (c)	$	8,612		$	9,226		$	8,245
Average Card Member loans (billions)	$	74.6		$	82.8		$	75.8
Net interest income divided by average Card Member loans (c)	10.7		%	10.4		%	10.1		%
Net interest yield on average Card Member loans (c)	11.5		%	11.1		%	10.9		%

~~(c)~~

Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans.

(a)Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.

~~(d)~~

Beginning December 1, 2015 through to the sale completion dates, for the purposes of the calculation of net interest yield on average Card Member loans, average Card Member loans included the HFS loan portfolios.

(b)Primarily represents interest income attributable to Other loans, interest-bearing deposits and the fixed income investment portfolios.

(c)Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans.

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BUSINESS SEGMENT RESULTS OF OPERATIONS

TABLE ~~21:~~17: SUMMARY OF CONSOLIDATED DEBT AND CUSTOMER DEPOSITS


(Billions)	2020		2019
Short-term borrowings	$	1.9	$	6.4
Long-term debt	43.0		57.8
Total debt	44.9		64.2
Customer deposits	86.9		73.3
Total debt and customer deposits	$	131.8	$	137.5

We may redeem from time to time certain debt securities prior to the original contractual maturity dates in accordance with the optional redemption provisions of those debt securities.

(Billions) 2017 2016
Short-term borrowings $ 3.3 $ 5.6
Long-term debt 55.8 47.0
Total debt 59.1 52.6
Customer deposits 64.5 53.0
Total debt and customer deposits $ 123.6 $ 105.6

Our funding plan for the full year ~~2018~~2021 includes, among other sources, ~~approximately $6 billion to $13 billion~~a limited amount of unsecured ~~term debt issuance~~ and ~~approximately $5 billion to $12 billion of~~ secured term debt issuance. ~~Our~~Actual funding activities can vary from our plans ~~are subject~~due to various ~~risks and uncertainties,~~factors, such as future business growth, the impact of global economic, political and other events on market capacity and funding needs, demand for securities offered by us, regulatory changes, ability to securitize and sell receivables, and the performance of receivables previously sold in securitization transactions. Many of these ~~risks and uncertainties~~factors are beyond our control.

Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard & Poor’s (S&P), and Fitch Ratings (Fitch) ~~and Dominion Bond Rating Services (DBRS)~~. Such ratings help support our access to cost-effective unsecured funding as part of our overall funding strategy. Our asset securitization activities are rated separately.

TABLE ~~22:~~18: UNSECURED DEBT RATINGS

Credit Agency

American Express Entity

Short-Term Ratings

Long-Term Ratings

Outlook

~~DBRS~~Fitch

All rated entities

~~R-1 (middle)~~F1

A ~~(high)~~

~~Stable~~Negative

~~Fitch~~Moody’s

~~All rated entities~~

~~Stable~~

~~Moody’s~~

~~TRS and rated operating subsidiaries~~^(a)

~~Prime 1~~

~~Stable~~

~~Moody's~~

~~American Express Company~~

~~Prime 2~~

~~Stable~~

~~S&P~~

~~TRS~~^(a)

~~N/A~~

A-

~~Stable~~

~~S&P~~

~~Other rated operating subsidiaries~~

~~A-2~~

A-

~~Stable~~

~~S&P~~

~~American Express Company~~

~~A-2~~

~~BBB+~~

~~Stable~~

~~(a)~~

American Express Travel Related Services Company, Inc.

N/A

Negative

Moody's

American Express Credit Corporation

Prime-1

Negative

Moody’s

American Express National Bank

Prime-1

Negative

Moody's

American Express Company

N/A

Negative

S&P

American Express Travel Related Services Company, Inc.

N/A

A-

Stable

S&P

American Express Credit Corporation and American Express National Bank

A-2

A-

Stable

S&P

American Express Company

A-2

BBB+

Stable

These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

Downgrades in the ratings of our unsecured debt or asset securitization program securities could result in higher funding costs, as well as higher fees related to borrowings under our unused ~~lines of credit.~~credit facilities. Declines in credit ratings could also reduce our borrowing capacity in the unsecured debt and asset securitization capital markets. We believe our funding mix, including the proportion of U.S. retail deposits insured by the Federal Deposit Insurance Corporation (FDIC), to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs.

Table of Contents

SHORT-TERM FUNDING PROGRAMS

Short-term borrowings, such as commercial paper, are defined as any debt with an original maturity of twelve months or less, as well as interest-bearing overdrafts with banks. Our short-term funding programs are used primarily to ~~meet~~fund working capital needs, such as managing seasonal variations in receivables balances. The amount of short-term borrowings issued in the future will depend on our funding strategy, our needs and market conditions.As of December 31, ~~2017,~~2020, we had ~~$1.2 billion~~nil in commercial paper outstanding and we had an average of ~~$1.1 billion~~$628 million in commercial paper outstanding during ~~2017.~~2020. Refer to Note 98 to the “Consolidated Financial Statements” for a further description of these borrowings.

DEPOSIT PROGRAMS

We offer deposits within our ~~Centurion Bank and American Express Bank subsidiaries.~~U.S. bank subsidiary, AENB. These funds are currently insured up to an amount that is at least $250,000 per account holder through the FDIC. Our ability to obtain deposit funding and offer competitive interest rates is dependent on, among other factors, the capital ~~levels~~level of ~~Centurion Bank and American Express Bank. We, through American Express Bank, have a direct~~AENB. Direct retail ~~deposit program, Personal Savings from American Express, which~~deposits offered by AENB is our primary deposit product ~~channel. The direct retail program~~channel, which makes FDIC-insured high-yield savings account and certificates of deposit (CDs) ~~and high-yield savings account~~ products available directly to consumers. WeAENB also ~~source~~sources deposits through third-party distribution channels as needed to meet our overall funding objectives. As of December 31, ~~2017~~2020, we had ~~$64.5~~$86.9 billion in ~~customer~~ deposits. Refer to Note 7 to the “Consolidated Financial Statements” for a further description of these deposits.

LONG-TERM DEBT AND ASSET SECURITIZATION PROGRAMS

As of December 31, 2020, we had $43.0 billion in long-term debt outstanding, including unsecured debt and asset-backed securities. Refer to Note 8 to the “Consolidated Financial Statements” for a further description of these ~~deposits.~~

~~LONG-TERM DEBT PROGRAMS~~

As of December 31, 2017 we had $55.8 billion in long-term debt outstanding. During 2017, we and our subsidiaries issued $24.5 billion of unsecured debt and asset-backed securities with maturities ranging from 2 to 10 years. Refer to Note 9 to the “Consolidated Financial Statements” for a further description of these borrowings.

~~Table of Contents~~

~~ASSET SECURITIZATION PROGRAMS~~

We periodically securitize Card Member loans and receivables arising from our card business, as the securitization market provides us with cost-effective funding. Securitization of Card Member loans and receivables is accomplished through the transfer of those assets to a trust, which in turn issues securities collateralized by the transferred assets to third-party investors. The proceeds from issuance are distributed to us, through our ~~wholly-owned~~wholly owned subsidiaries, as consideration for the transferred assets. Refer to Note 65 to the “Consolidated Financial Statements” for a further description of ~~these borrowings.~~our asset securitizations.

On February 1, 2020, we removed U.S. consumer and small business Card Member receivables from the American Express Issuance Trust II (the Charge Trust) and substantially replaced them with U.S. corporate Card Member receivables.

On April 20, 2020, we added approximately $1.7 billion of additional U.S. corporate Card Member receivables to the Charge Trust.

Given the significant reductions in our business volumes and our resulting substantial cash and liquidity position, we did not issue any unsecured or secured term debt during 2020.

~~Our 2017 long-term debt and asset securitization issuances were as follows:~~

Table of Contents

~~TABLE 23: DEBT ISSUANCES~~

(Billions) 2017
American Express Company:
Fixed Rate Senior Notes (weighted-average coupon of 2.58%) $ 5.0
Floating Rate Senior Notes (3-month LIBOR plus 45 basis points) 0.9
American Express Credit Corporation:
Fixed Rate Senior Notes (weighted-average coupon of 2.56%) 7.3
Floating Rate Senior Notes (3-month LIBOR plus 45 basis points) 1.2
American Express Credit Account Master Trust:
Fixed Rate Class A Certificates (weighted-average coupon of 1.90%) 8.1
Fixed Rate Class B Certificates (weighted-average coupon of 2.21%) 0.2
Floating Rate Class A Certificates (1-month LIBOR plus 33 basis points) 1.8
Floating Rate Class B Certificates (1-month LIBOR plus 41 basis points) -
Total $ 24.5

LIQUIDITY MANAGEMENT

~~We incur liquidity risk that arises in the course of offering our products and services.~~ Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources. We seek to maintain liquidity sources ~~even in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions,~~ in amounts sufficient to meet our expected future financial obligations and business requirements for liquidity for a period of at least twelve ~~months. Our liquidity risk policy sets out our objectives and approach to managing liquidity risk.~~

~~The liquidity risks that~~months in the event we are ~~exposed~~unable to ~~could arise from~~raise new funds under our regular funding programs during a ~~wide variety of scenarios.~~ substantial weakening in economic conditions.

Our liquidity management strategy ~~thus~~ includes a number of elements, including, but not limited to:

	~~Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);~~

•Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);

	~~Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;~~

•Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;

	~~Projecting cash inflows and outflows under a variety of economic and market scenarios;~~

•Projecting cash inflows and outflows under a variety of economic and market scenarios; and

	~~Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements; and~~

	~~Incorporating liquidity risk management as appropriate into our capital adequacy framework.~~

•Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements.

We seek to maintain access to a diverse set of on-balance sheet and off-balance sheet liquidity sources, including cash and other liquid assets, committed bank credit facilities and ~~asset securitization conduit~~secured borrowing facilities. Through our U.S. bank ~~subsidiaries, Centurion Bank and American Express Bank,~~subsidiary, AENB, we also hold collateral eligible for use at the Federal Reserve’s discount window.

The amount and type of liquidity resources we maintain can vary over time, based upon the results of stress scenarios required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, ~~and other various regulatory liquidity requirements, such as the~~ ~~Liquidity Coverage Ratio (LCR),~~ as well as additional stress scenarios required under our liquidity risk policy. These stress scenarios possess distinct characteristics, varying by cash flow assumptions, time horizon and qualifying liquidity sources, among other factors. Scenarios under our liquidity risk policy include market-wide, firm-specific and combined liquidity stresses. ~~The LCR rule prescribes cash flow assumptions over a 30-day period and establishes qualifying criteria for high-quality liquid assets.~~ We consider other factors in determining the amount and type of liquidity we maintain, such as economic and financial market conditions, seasonality in business operations, growth in our businesses, potential acquisitions or dispositions, the cost and availability of alternative liquidity sources and credit rating agency guidelines and requirements.

We believe that we currently maintain sufficient liquidity to meet all internal and regulatory liquidity requirements. As of December 31, 2020, we had a total of $54.6 billion in Cash and cash equivalents and Investment securities (which are substantially comprised of U.S. Government Treasury obligations). The increase of $21.7 billion from $32.9 billion as of December 31, 2019 was primarily driven by the decline in the balances of our Card Member loans and receivables and the growth in our direct retail deposits.

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~~The investment income we receive on liquidity resources, such as cash, is less than the interest expense on the sources of funding for these balances.~~ The net interest ~~costs~~expense to maintain these liquidity resources ~~have been substantial. The level of future net interest costs~~ depends on the amount of liquidity resources we maintain and the difference between our cost of funding these amounts and their investment yields. As the amount of our liquidity resources has substantially increased, the level of future net interest expense to maintain these resources is expected to be significant, as the investment income is less than the cost of funding.

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Securitized Borrowing Capacity

As of December 31, ~~2017,~~2020, we maintained our committed, revolving, secured borrowing facility, with a maturity date of July 15, ~~2020,~~2022, which gives us the right to sell up to $3.0 billion face amount of eligible AAA notes from the ~~American Express Issuance~~Charge Trust. As the balance of Card Member receivables in the Charge Trust ~~II (the~~fluctuates over time in line with business volumes, our capacity to draw on the Charge ~~Trust).~~Trust facility may be reduced when volumes decline. We also maintained our committed, revolving, secured borrowing facility, with a maturity date of September 15, ~~2020,~~2022, which gives us the right to sell up to $2.0 billion face amount of eligible AAA certificates from the American Express Credit Account Master Trust (the Lending Trust). Both facilities are used in the ordinary course of business to fund ~~seasonal~~ working capital needs, as well as to further enhance our contingent funding resources. As of December 31, ~~2017, $3.0 billion was~~2020, no amounts were drawn on the Charge Trust facility ~~which was subsequently repaid on January 16, 2018. No amounts were drawn on~~or the Lending Trust facility.

Federal Reserve Discount Window

As an insured depository ~~institutions, Centurion Bank and American Express Bank~~institution, AENB may borrow from the Federal Reserve Bank of San Francisco, subject to the amount of qualifying collateral that ~~they~~it may pledge. The Federal Reserve has indicated that both credit and charge card receivables are a form of qualifying collateral for secured borrowings made through the discount window. Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral remain at the discretion of the Federal Reserve.

We had approximately ~~$68.0~~$64.8 billion as of December 31, ~~2017~~2020 in U.S. credit card loans and charge card receivables that could be sold over time through our securitization trusts or pledged in return for secured borrowings to provide further liquidity, subject in each case to applicable market conditions and eligibility criteria.

Committed Bank Credit Facility

In addition to the secured borrowing facilities described ~~earlier in this section,~~above, we maintained a committed syndicated bank credit facility as of December 31, ~~2017~~2020 of $3.5 billion, ~~which expires on~~with a maturity date of October ~~16, 2020.~~15, 2022. The availability of this credit line is subject to ~~our~~ compliance with certain ~~financial~~ covenants ~~principally the maintenance~~ by American Express Credit Corporation (Credco), principally the maintenance by Credco of a ~~certain~~1.25 ratio of its combined earnings, certain capital contributions and fixed charges, to fixed charges. As of December 31, ~~2017, we were~~2020 and 2019, Credco was in compliance with each of ~~our~~these covenants. As of December 31, ~~2017,~~2020, no amounts were drawn on the committed credit facility. ~~The capacity~~We may, from time to time, use this facility in the ordinary course of business to fund working capital needs. Any undrawn portion of this facility could serve as backstop for the ~~facility mainly served to further enhance our contingent funding resources.~~amount of commercial paper outstanding.

Our committed bank credit facility does not contain a material adverse change clause, which might otherwise preclude borrowing under the credit facility, nor is it dependent on our credit rating.

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CASH FLOWS

The following table summarizes our cash flow activity, followed by a discussion of the major drivers impacting operating, investing and financing cash ~~flows.~~

flows for the year ended December 31, 2020 compared to the year ended December 31, 2019.

TABLE ~~24:~~19: CASH FLOWS

(Billions) 2017 2016 2015
Total cash provided by (used in):
Operating activities $ 13.5 $ 8.3 $ 10.7
Investing activities (18.2 ) 1.9 (8.2 )
Financing activities 12.2 (7.6 ) (1.8 )
Effect of foreign currency exchange rates on cash and cash equivalents 0.2 (0.2 ) (0.2 )
Net increase in cash and cash equivalents $ 7.7 $ 2.4 $ 0.5


(Billions)	2020		2019		2018
Total cash provided by (used in):
Operating activities	$	5.6	$	13.6	$	8.9
Investing activities	11.6		(16.7)		(19.6)
Financing activities	(9.1)		(0.5)		5.1
Effect of foreign currency exchange rates on cash and cash equivalents	0.4		0.2		0.1
Net increase (decrease) in cash and cash equivalents	$	8.5	$	(3.4)	$	(5.5)

Cash Flows from Operating Activities

Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions for credit losses, depreciation and amortization, deferred taxes and stock-based compensation and (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

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The ~~increase~~decrease in net cash provided by operating activities was primarily driven by decreases in Net income and Accounts payable due to decreases in merchant payables reflecting the significant decline in billed business in the current ~~period was driven by net income adjusted~~year, and an increase in Other assets due to purchases of loyalty program points from certain of our cobrand partners. These points are held as prepaid assets until they are used for ~~non-cash items, including changes in provisions for losses, depreciation~~rewards, promotions and ~~amortization, deferred taxes and stock-based compensation, and changes in operating assets and liabilities, primarily accounts payable and other liabilities as a result of normal business operations.~~incentives.

Cash Flows from Investing Activities

Our cash flows from investing activities primarily include changes in Card Member loans and receivables, as well as changes in our available-for-sale investment securities portfolio.

The increase in net cash ~~used in~~provided by investing activities was primarily due to a decline in the ~~current period primarily reflects growth in~~outstanding balances of Card Member loans and receivables driven by a significant decline in Card Member spending during the period as ~~well as the sales~~a result of the ~~HFS portfolios~~continued impacts of the COVID-19 pandemic and the resulting containment measures, combined with pay down of outstanding balances by Card Members, partially offset by a net increase in the ~~prior period.~~

investment securities portfolio.

Cash Flows from Financing Activities

Our cash flows from financing activities primarily include changes in customer deposits, long-term debt and short-term borrowings, ~~and customer deposits~~ as well as ~~our regular common share~~ dividend payments and share ~~repurchase program.~~

repurchases.

The increase in net cash ~~provided by~~used in financing activities ~~in the current period~~ was primarily driven by ~~an increase~~higher net repayment of debt, partially offset by higher growth in customer deposits ~~during~~and the ~~current period, versus a decrease in~~suspension of the ~~prior period, and a net increase in long-term debt during the current period, versus a net decrease in the prior period.~~share repurchase program.

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INSTITUTIONAL CREDIT RISK

Institutional credit risk arises principally within our ~~Global Commercial Services, Global Merchant Services, GNS, Prepaid Services~~GCS and ~~Foreign Exchange Services~~GMNS businesses, as well as investment and liquidity management activities. Unlike individual credit risk, institutional credit risk is characterized by a lower loss frequency but higher severity. It is affected both by general economic conditions and by client-specific events. The absence of large losses in any given year or over several years is not necessarily representative of the level of risk of institutional portfolios, given the infrequency of loss events in such portfolios.

Similar to ~~Individual Credit Risk,~~individual credit risk, business units taking institutional credit risks are supported by Chief Credit Officers. These officers are guided by the Institutional Risk Management Committee (IRMC), which is responsible for implementation and enforcement of the Institutional Credit Risk Management Policy and for providing guidance to the credit officers of each business unit with substantial institutional credit risk exposures. The committee, along with the business unit Chief Credit Officers, makes investment decisions in core risk capabilities, ensures proper implementation of the underwriting standards and contractual rights offor risk mitigation, monitors risk exposures, and determines risk mitigation actions. The IRMC formally reviews large institutional risk exposures to ensure compliance with ERMC guidelines and procedures and escalates them to the ERMC as appropriate. At the same time, the IRMC provides guidance to the business unit risk management teams to optimize risk-adjusted returns on capital. A centralized risk rating unit ~~and a specialized airline risk group provide~~provides risk assessment of our institutional obligors.

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Exposure to the Airline and Travel Industry

We have multiple important cobrand, rewards, merchant acceptance and corporate payments arrangements with airlines. The ERM program evaluates the risks posed by our airline partners and the overall airline strategy ~~companywide~~company-wide through comprehensive business analysis of global ~~airlines.~~airlines, and the travel industry more broadly, including cruise lines, travel agencies and tour operators. Our largest airline partner is Delta, and this relationship includes an exclusive cobrand credit card ~~partnerships~~partnership and other arrangements including Membership Rewards redemption, merchant acceptance, travel and corporate payments. See "We face intense competition for partner relationships, which could result in a loss or renegotiation of these arrangements that could have a material adverse impact on our business and results of operations" and "Arrangements with our business partners represent a significant portion of our business. We are exposed to risks associated with our business partners, including reputational issues, business slowdowns, bankruptcies, liquidations, restructurings and consolidations, and the possible obligation to make payments to our partners" under “Risk ~~Factors.”~~Factors” for additional information.

Debt Exposure

As part of our ongoing risk management process, we monitor our financial exposure to both sovereign and non-sovereign customers and counterparties, and measure and manage concentrations of risk by geographic regions, as well as by economic sectors and industries. A primary focus area for monitoring is credit deterioration due to weaknesses in economic and fiscal profiles. We evaluate countries based on the market assessment of the riskiness of their sovereign debt and our assessment of the economic and financial outlook and closely monitor those deemed high risk. As of December 31, ~~2017,~~2020, we considered our gross credit exposures to government entities, financial institutions and corporations in those countries deemed high risk to be individually and collectively not material.

OPERATIONAL RISK MANAGEMENT PROCESS

We ~~define~~consider operational risk asto be the risk of ~~not achieving business objectives~~loss due to, among other things, inadequate or failed processes, people or information systems, or impacts from the external environment, including failures to comply with laws and ~~regulations.~~regulations as well as impacts from relationships with third parties. Operational risk is inherent in all business activities and can impact an organization through direct or indirect financial loss, brand damage, customer dissatisfaction, or legal and regulatory penalties.

To appropriately measure and manage operational risk, we have implemented a comprehensive operational risk framework that is defined in the Operational Risk Management Policy approved by the Risk Committee. The Operational Risk Management Committee (ORMC), chaired by the Chief Operational Risk Officer, coordinates with all control groups on effective risk assessments and controls and oversees the preventive, responsive and mitigation efforts by Operational Excellence teams in the business units and staff groups.

We use the operational risk framework to identify, measure, monitor and report inherent and emerging operational risks. This framework, supervised by the ORMC, consists of (a) operational risk event capture, (b) a project office to coordinate issue management and control enhancements, (c) key risk indicators, ~~such as customer complaints or pre-implementation test metrics,~~ and (d) process and entity-level risk assessments.

The framework requires the assessment of operational risk events to determine root causes, impact to customers and/or us, and resolution plan accountability to correct any defect, remediate customers, and enhance controls and testing to mitigate future issues. The impact is assessed from an operational, financial, brand, regulatory compliance and legal perspective.

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INFORMATION AND CYBER SECURITY

We ~~have implemented an Information Security Program~~define information and ~~Operating Model~~cyber security risk as the risk that a security incident could impact the confidentiality, integrity or availability of American Express customer, colleague or proprietary information.

Our information and cyber security program is designed to protect the confidentiality, integrity, and availability of information and information systems from unauthorized access, use, disclosure, disruption, modification, or destruction.

~~Our Information Security Program~~ The program is built upon a foundation of advanced security technology, a well-staffed and ~~Operating Model are~~highly trained team of experts, and robust operations based on the National Institute of Standards and Technology ~~(NIST)~~ Cybersecurity ~~Common Standards Framework, which consist~~Framework. This consists of controls designed to identify, protect, detect, respond and recover from information and cyber security incidents. ~~The framework defines risks and associated controls which are embedded~~We continue to invest in our processes and technology. Those controls are measured and monitored by a combination of subject matter experts and a security operations center with our integrated cyber detection, response and recovery capabilities.

Chaired by the Chief Information Security Officer, our Information Security Risk Management Committee, a sub-committee of the ORMC, provides governance for our information security risk management program. In addition, the committee is responsible for establishing cyber risk tolerances and in managing cyber crisis preparedness. The Information Security and Technology Oversight team provides independent challenge and assessment of the information,enhancements to cyber security capabilities and ~~technology risk management programs.~~engage in industry and government forums to promote advancements to the broader financial services cyber security ecosystem.

See ~~“A significant operating disruption, a~~“A major information or cyber security incident or an increase in fraudulent activity could lead to reputational damage to our brand and ~~significant~~material legal, regulatory and financial exposure, and could reduce the use and acceptance of our ~~charge and credit~~ cards” under “Risk Factors” for additional information.

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INFORMATION TECHNOLOGY

We define information technology risk as the risk that events or circumstances could compromise the processing, stability, capacity, performance, or resilience of information technology and cause financial, reputational, and/or regulatory impacts.

We manage information technology risk through our policies, procedures, governance structure, and control framework to preserve the confidentiality, integrity, and availability of systems and processes across the Company.

See “The uninterrupted operation of our information systems is critical to our success and a significant disruption could have a material adverse effect on our business and results of operations” under “Risk Factors” for additional information.

PRIVACY ~~AND DATA GOVERNANCE~~

~~Our~~We define privacy risk as the risk of financial loss, reputational damage, or regulatory or legal action resulting from decisions related to the violation of applicable laws, rules, regulations, contractual obligations, or the non-adherence to privacy policies, disclosures, or standards that apply to the processing of personal data.

The Global Privacy ~~Framework~~Policy establishes the privacy framework and ~~Operating Model follow a similar structure.~~defines the American Express Data Protection & Privacy Principles, which governs the way we collect, use, store, share, transmit, delete or otherwise process our customer and colleague personal data globally. Chaired by the Chief Privacy Officer, ~~our~~the Privacy Risk Management Committee, a sub-committee of the ORMC, provides oversight and governance for our privacy program.

DATA MANAGEMENT AND GOVERNANCE

We define data management and governance risk as the risk of inadequate data governance and/or data management practices adversely impacting the accuracy, completeness, timeliness, comprehensiveness or usability of data within or throughout its lifecycle.

Our Enterprise Data Governance Policy establishes the framework and requirements for defining in-scope critical data and outlining the elements for managing data as a critical corporate asset. This policy is approved by the ERMC.

Chaired by the Chief Data Officer, our Enterprise Data Committee, a sub-committee of the ERMC, provides governance and oversight for our enterprise-wide data governance and management activities. The committee is responsible for overseeing the standards and procedures, governance ~~over the collection, notice, use, sharing, transfer, confidentiality~~structure and ~~retention~~oversight framework, which includes independent assessments and validations, monitoring and reporting of ~~personal data.~~

~~Our Enterprise Data Governance Framework~~data governance and ~~Policy defines governance requirements for data used in critical processes.~~management-related issues and concerns.

COMPLIANCE RISK MANAGEMENT PROCESS

We define compliance risk as the risk of legal or reputational harm, fines, monetary penalties and payment of damages or other forms of sanction as a result of non-compliance with applicable laws and/or regulations, ~~rules~~internal policies and procedures and related practices, or ~~standards of conduct.~~ethical standards.

We view our ability to effectively mitigate compliance risk as an important aspect of our business model. Our Global Compliance and Ethics organization is responsible for establishing and maintaining our corporate-wide Compliance Risk Management Program. Pursuant to this program, we seek to manage and mitigate compliance risk by assessing, controlling, monitoring, measuring and reporting the legal and regulatory risks to which we are exposed. The Compliance Risk Management Committee (CRMC), chaired by the Chief Compliance and Ethics Officer, is responsible for identifying, evaluating, managing, and escalating compliance risks. The CRMC has a dual reporting relationship directly to both the ERMC and the Audit and Compliance Committee.

We have a comprehensive Anti-Money Laundering program that monitors and reports suspicious activity to the appropriate government authorities. As part of that program, the Global Risk Oversight team provides independent risk assessment of the ~~models and~~ rules used by the Anti-Money Laundering team. In addition, the Internal Audit Group reviews the processes for practices consistent with regulatory guidance.

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REPUTATIONAL RISK MANAGEMENT PROCESS

We define reputational risk as the risk that negative stakeholder reaction to our products, services, client and partner relationships, business activities and policies, management and workplace culture, or our response to unexpected events, could cause sustained critical media coverage, a decline in revenue or investment, talent attrition, litigation, or government or regulatory ~~scrutiny~~.scrutiny.

We view protecting our reputation for excellent customer service, trust, security and high integrity as core to our vision of providing the world’s best customer experience and fundamental to our long-term success.

Our business leaders are responsible for considering the reputational risk implications of business activities and strategies and ensuring the relevant subject matter experts are engaged as needed. The ERMC is responsible for ensuring reputational risk considerations are included in the scope of appropriate subordinate risk policies and committees and properly reflected in all decisions escalated to the ERMC.

MARKET RISK MANAGEMENT PROCESS

Market risk is the risk to earnings or asset and liability values resulting from movements in market prices. Our market risk exposures ~~include:~~

	Interest rate risk due to changes in the relationship between interest rates on our assets (such as loans, receivables and investment securities) and our interest rates on our liabilities (such as debt and deposits); and



~~Foreign exchange risk related to~~include interest rate risk and foreign exchange risk. Interest rate risk is driven by the relationship between interest rates on assets (such as loans, receivables and investment securities) and interest rates on liabilities (such as debt and deposits). Foreign exchange risk arises from transactions, funding, investments and earnings in currencies other than the U.S. dollar.

Our ~~Asset-Liability Management (ALM) and Market Risk~~risk policies establish the framework that guides and governs market risk management, including quantitative limits and escalation triggers. These policies are approved by the ~~Risk~~ERMC, Asset Liability Committee ~~of the Board of Directors~~ or Market Risk Management Committee.

Market risk is managed by the Market Risk Management Committee. The Market Risk Oversight Officer provides an independent risk assessment and oversight over the policies and exposure management for market risk and ~~ALM~~Asset Liability Management activities, as well as overseeing compliance with ~~the Volcker Rule and other~~associated regulatory requirements. Market risk management is also guided and governed by policies covering the use of derivative financial instruments, funding, liquidity and investments.

Interest Rate Risk

We analyze a variety of interest rate scenarios to inform us of the potential impacts from interest rate changes on earnings and the value of assets, liabilities and the economic value of equity. Our interest rate exposure can vary over time as a result of, among other things, the proportion of our total funding provided by ~~variable-and~~variable and fixed-rate debt and deposits compared to our Card Member loans and receivables. Interest rate swaps are used from time to time to effectively convert debt issuances to ~~(or from)~~ variable-rate from ~~(or to) fixed-rate. We do not engage in derivative financial instruments for trading purposes other than with respect to our Foreign Exchange International Payments business activities.~~fixed-rate, or vice versa. Refer to Note 1413 to the “Consolidated Financial Statements” for further discussion of our derivative financial instruments.

~~Table~~In 2020, the composition of ~~Contents~~

our balance sheet shifted substantially. There was a substantial net reduction in total fixed-rate assets within Card Member loans and Card Member receivables and an increase in certain floating-rate assets such as Cash and cash equivalents. As of December 31, ~~2017,~~2020, a hypothetical immediate 100 basis point increase in market interest rates would have a detrimental ~~effect~~impact of approximately $113 million on our annual net interest ~~income of approximately $167 million.~~income. A hypothetical immediate 100 basis point decrease in market interest rates, which are assumed to remain at or above zero percent, would have a smaller but still detrimental impact on our annual net interest income. This measure first projects net interest income over the following twelve-month time horizon considering forecasted business growth and anticipated future market interest rates. The detrimental impact from a rate ~~increase~~changes is then measured by instantaneously increasing or decreasing the anticipated future interest rates by 100 basis points. ~~It is further assumed~~Our estimated repricing risk assumes that our interest-rate sensitive assets and ~~the majority of our~~ liabilities that reprice within the twelve-month horizon generally reprice by ~~100 basis points. Our estimated repricing risk assumes~~the same magnitude as benchmark rate changes. It is further assumed that, within our interest-rate sensitive liabilities, certain ~~deposit liabilities~~deposits reprice at a lower ~~magnitude~~magnitudes than benchmark rate movements, and the magnitude of this repricing in turn depends on, among other factors, the direction of rate movements. These assumptions are consistent with historical deposit repricing experience in the industry and within our own portfolio. Actual changes in our net interest income will depend on many factors, and therefore may differ from our estimated risk to changes in market interest rates.

~~In addition~~

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LIBOR Transition

Due to ~~parallel~~uncertainty surrounding the suitability and sustainability of LIBOR, central banks and global regulators have called for financial market participants to prepare for the discontinuance of LIBOR and the establishment of alternative reference rates.

We have financial instruments and commercial agreements that will be impacted by the discontinuance of LIBOR, including floating rate ~~changes,~~debt and equity instruments, derivatives, borrowings and other contracts. We have established an enterprise-wide, cross-functional initiative to identify, assess and monitor risks associated with LIBOR, engage with the industry participants and regulators and to transition to new alternative reference rates. As part of this initiative, we are updating our ~~net interest income is subject~~operational processes, IT systems and models for a timely transition.

See “The discontinuance of LIBOR may negatively impact our access to ~~changes in~~funding and the ~~relationship between market benchmark rates. For example, movements in Prime rate change the yield on a large portion~~value of our ~~variable-rate U.S. lending receivables~~financial instruments and loans, while LIBOR rates determine the effective interest rate on a significant portion of our outstanding funding. Differences in the rate of change of these two benchmark indices, commonly referred to as basis risk, would thus impact our net interest income. The detrimental effect on our net interest income of a hypothetical 10 basis point decrease in the spread between Prime and one-month LIBOR over the next twelve months is estimated to be $33 million. We currently have approximately $44 billion of Prime-based, variable-rate U.S. lending receivables and loans and $33 billion of LIBOR-indexed debt, including asset securitizations. The replacement of LIBOR as a benchmark rate can have a further detrimental impact on our LIBOR-indexed debt if rates suddenly rise as new market activity transfers to other benchmark curves, such as the Secured Overnight Financing Rate.commercial agreements” under “Risk Factors” for additional information.

Foreign Exchange Risk

Foreign exchange exposures arise in four principal ways: 1)(1) Card Member spending in currencies that are not the billing currency, 2)(2) cross-currency transactions and balances from our funding activities, 3)(3) cross-currency investing activities, such as in the equity of foreign subsidiaries, and 4)(4) revenues generated and expenses incurred in foreign currencies, which impact earnings.

These foreign exchange risks are managed primarily by entering into foreign exchange spot transactions or hedged with foreign exchange forward contracts when the hedge costs are economically justified and in notional amounts designed to offset pretax impacts from currency movements in the period in which they occur. As of December 31, ~~2017 and 2016,~~2020, foreign currency derivative instruments with total notional amounts of approximately ~~$30 billion and $28~~$26 billion were ~~outstanding, respectively.~~outstanding.

With respect to Card Member spending and cross-currency transactions, including related foreign exchange forward contracts outstanding, the impact of a hypothetical 10 percent strengthening of the U.S. dollar would ~~result in an~~have been immaterial ~~impact~~ to projected earnings as of December 31, ~~2017.~~2020. With respect to translation exposure of foreign subsidiary equity balances, including related foreign exchange forward contracts outstanding, a hypothetical 10 percent strengthening of the U.S. dollar would result in an immaterial reduction in other comprehensive income and equity as of December 31, ~~2017.~~2020. With respect to anticipated earnings denominated in foreign currencies for the next twelve months, the adverse impact on pretax income of a hypothetical 10 percent strengthening of the U.S. dollar ~~related to anticipated overseas operating results for the next twelve months~~ would be approximately ~~$198~~$33 million as of December 31, ~~2017.~~2020.

To a much lesser extent, we are also subject to market risk arising from activities conducted by our Foreign Exchange International Payments business. We aim to minimize market risk from these activities through hedging, where appropriate, and the establishment of ~~limits to define and protect the company from excessive exposure.~~limits.

The actual impact of interest rate and foreign exchange rate changes will depend on, among other factors, the timing of rate changes, the extent to which different rates do not move in the same direction or in the same direction to the same degree, changes in the cost, volume and mix of our hedging activities and changes in the volume and mix of our businesses.

FUNDING & LIQUIDITY RISK MANAGEMENT PROCESS

~~Liquidity~~Funding and liquidity risk is defined as our inability to meet our ongoing financial and business obligations as they become due at a reasonable cost.

Our Board-approved Liquidity Risk Policy establishes the framework that guides and governs liquidity risk management.

Funding and Liquidity risk is managed by the Funding and Liquidity Committee. In addition, the Market Risk Oversight Officer provides independent oversight of liquidity risk management. We manage liquidity risk by maintaining access to a diverse set of cash, readily-marketable securities and contingent sources of liquidity, such that we can continuously meet our business requirements and expected future financing obligations for at least a twelve-month period ~~even~~ in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions. We consider the trade-offs between maintaining too much liquidity, which can be costly and limit financial flexibility, and having inadequate liquidity, which may result in financial distress during a liquidity event.

Funding and Liquidity risk is managed at an aggregate consolidated level as well as at certain subsidiaries in order to ensure that sufficient and accessible liquidity resources are maintained. The Funding and Liquidity Committee reviews forecasts of our aggregate and subsidiary cash positions and financing requirements, approves funding plans designed to satisfy those requirements under normal and stressed conditions, establishes guidelines to identify the amount of liquidity resources required and monitors positions and determines any actions to be taken.

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MODEL RISK MANAGEMENT PROCESS

We define model risk as the risk of adverse consequences, such as financial loss, poor business and strategic decision making, or damage to our reputation, from decisions based on incorrect or misused model outputs and reports.

We manage model risk through a comprehensive model governance framework, including policies and procedures for model development, independent model validation and change management capabilities that seek to minimize erroneous model methodology, outputs and misuse. We also assess model performance on an ongoing basis.

We utilize artificial intelligence and machine Learning (AI/ML) approaches for a variety of business use cases. We perform extensive reviews and testing to reduce the risk that these AI/ML techniques do not perform as intended.

STRATEGIC AND BUSINESS RISK MANAGEMENT PROCESS

Strategic and business risk is the risk related to our inability to achieve our business objectives due to poor strategic decisions, including decisions related to mergers, acquisitions, and divestitures, poor implementation of strategic decisions or declining demand for our products and services.

Strategic decisions are reviewed and approved by business leaders and various committees and must be aligned with company policies. We seek to manage strategic and business risks through risk controls embedded in these processes as well as overall risk management oversight over business goals. Existing product performance is reviewed periodically by committees and business leaders. Mergers, acquisitions and divestitures can only be approved following ~~Deal~~Executive Committee due diligence, a comprehensive risk assessment by operational, market, credit and oversight leaders provided to the Chief Risk Officer and approval by either the Chief Risk Officer or appropriate risk committees. All new products and material changes in business processes are reviewed and approved by the New Products Committee and appropriate credit or risk committees.

COUNTRY RISK MANAGEMENT PROCESS

Country risk is defined as the risk that economic, social, and/or political conditions and events in a country might adversely impact us, primarily as a result of greater credit losses, increased operational or market risk or the inability to repatriate capital.

We manage country risk as part of the normal course of business. Policies and procedures establish country risk escalation thresholds to control and limit exposure, driven by processes that enable the monitoring of conditions in countries where we have exposure.

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CRITICAL ACCOUNTING ESTIMATES

Refer to Note 1 to the “Consolidated Financial Statements” for a summary of our significant accounting policies. Certain of our accounting policies requiring significant management assumptions and judgments are as follows:

RESERVES FOR CARD MEMBER CREDIT LOSSES

Reserves for Card Member credit losses represent our best estimate of the ~~probable~~expected credit losses ~~inherent~~ in our outstanding portfolio of Card Member loans and receivables as of the balance sheet date. The CECL methodology, which became effective January 1, 2020, requires us to estimate lifetime expected credit losses by incorporating historical loss experience and current and future economic conditions over a reasonable and supportable period (R&S Period) beyond the balance sheet date.

In estimating ~~these~~expected credit losses, we use ~~statistical~~a combination of statistically based models and ~~analytical~~analysis of the results produced by these models ~~that analyze portfolio performance~~to determine the quantitative and ~~reflect~~qualitative components of our total balance sheet reserves for credit losses. These quantitative and qualitative components entail a significant amount of judgment. The primary areas of judgment ~~regarding~~used in measuring the quantitative components of our reserves relate to the ~~reserve.~~determination of the appropriate R&S Period, the modeling of the probability of and exposure at default, and the methodology to incorporate current and future economic conditions. We use these models and assumptions, combined with historical loss experience, to determine the reserve rates that are applied to the outstanding loan or receivable balances to produce our reserves for expected credit losses for the R&S Period. The ~~models take into account several factors, including delinquency-based loss migration rates, loss emergence periods and average~~qualitative component is intended to capture expected losses ~~over an appropriate historical period, as well as expected future recoveries. We also consider whether to adjust~~that may not have been fully captured in the quantitative ~~reserve for~~component. Through an established governance structure, we consider certain external and internal ~~qualitative~~ factors, ~~that~~including emerging portfolio characteristics and trends, which consequentially may increase or decrease the reserves for ~~losses on~~ Card Member ~~loans~~credit losses.

The R&S Period, which is approximately three years, represents the maximum time-period beyond the balance sheet date over which we can reasonably estimate expected credit losses, using all available portfolio information, current economic conditions and ~~receivables.~~forecasts of future economic conditions. Card Member loan products do not have a contractual term and balances can revolve if minimum required payments are made, causing some balances to remain outstanding beyond the R&S Period. To determine expected credit losses beyond the R&S Period, we immediately revert to long-term average loss rates. Card Member receivable products are contractually required to be paid in full; therefore, we have assumed the balances will be either paid or written-off within the R&S Period.

Within the R&S Period, our models use past loss experience and current and future economic conditions to estimate the probability of default, exposure at default and expected recoveries to estimate net losses at default. A significant area of judgment relates to how we apply future Card Member payments to the reporting period balances when determining the exposure at default. The nature of revolving loan products inherently includes a relationship between future payments and spend behavior, which creates complexity in the application of how future payments are either partially or entirely attributable to the existing balance at the end of the reporting period. Using historical customer behavior and other factors, we have assumed that future payments are first allocated to interest and fees associated with the reporting period balance and future spend. We then allocate a portion of the payment to the estimated higher minimum payment amount due because of any future spend. Any remaining portion of the future payment is then allocated to the remaining reporting period balance.

CECL requires that the R&S Period include an assumption about current and future economic conditions. We incorporate multiple macroeconomic scenarios obtained from an independent third party. The estimated credit losses calculated from each macroeconomic scenario are reviewed and weighted to reflect management's judgment about uncertainty around the scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real GDP, that are significant to our models.

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Macroeconomic Sensitivity

To demonstrate the sensitivity of estimated credit losses to the macroeconomic scenarios, we compared our modeled estimates under a baseline scenario to that under a pessimistic downside scenario. For every 10 percentage points change in weighting from the baseline scenario to the pessimistic downside scenario, the estimated credit losses increased by approximately $200 million.

The modeled estimates under these scenarios were influenced by the duration, severity and timing of changes in economic variables within each scenario and these macroeconomic scenarios, under different conditions or using different assumptions, could result in significantly different estimated credit losses. It is difficult to estimate how potential changes in specific factors might affect the estimated credit losses, and current results may not be indicative of the potential future impact of macroeconomic forecast changes.

In addition, this sensitivity analysis relates only to the modeled credit loss estimates under two scenarios without considering management’s judgment on the relative weighting for those and other scenarios, including the weight that has been placed on downside scenarios at the balance sheet date, or any potential changes in other adjustments to the quantitative reserve component or the impact of management judgment for the qualitative reserve component, which may have a positive or negative effect on the results. Thus, the results of this sensitivity analysis are hypothetical and are not intended to estimate or reflect our expectations of any changes in the overall reserves for credit losses due to changes in the macroeconomic environment.

The following table reflects the range of key variables in the macroeconomic scenarios utilized for the computation of Reserves for Card Member credit losses as of December 31, 2020:


			December 31, 2020
U.S. Unemployment Rate
Fourth quarter of 2020			7%
First quarter of 2021			7% - 8%
Fourth quarter of 2021			7% - 11%
Fourth quarter of 2022			6% - 12%
U.S. GDP Growth (Contraction) (a)
Fourth quarter of 2020			3%
First quarter of 2021			4% - (5%)
Fourth quarter of 2021			6% - (2%)
Fourth quarter of 2022			4% - 3%

(a)Real GDP quarter over quarter percentage change seasonally adjusted to annualized rates.

Refer to "Business Environment" and Table 3 in MD&A and Note 1 and Note 3 to the "Consolidated Financial Statements" for a further description of the impact of CECL, both at implementation and for the year ended December 31, 2020.

The process of estimating these reserves requires a high degree of judgment. To the extent ~~historical~~our expected credit ~~experience, updated for any external and internal qualitative factors such as environmental trends, is~~loss models are not indicative of future performance, actual losses could differ significantly from our judgments and expectations, resulting in either higher or lower future provisions for ~~Card Member~~credit losses in any ~~quarter.~~period.

Table of December 31, 2017, a 10 percent increase in our estimate of losses inherent in the outstanding portfolio of Card Member loans and receivables, evaluated collectively for impairment, would increase reserves for losses with a corresponding change to provisions for losses by approximately $223 million. This sensitivity analysis is provided as a hypothetical scenario to assess the sensitivity of the provisions for losses. It does not represent our expectations for losses in the future, nor does it include how other portfolio factors such as delinquency-based loss migration rates or recoveries, or the amount of outstanding balances, may impact the level of reserves for losses and the corresponding impact on the provisions for losses.Contents

LIABILITY FOR MEMBERSHIP REWARDS ~~EXPENSE~~

The Membership Rewards program is our largest card-based rewards program. Card Members can earn points for purchases charged on their enrolled card products. A significant portion of our cards, by their terms, allow Card Members to earn bonus points for purchases at merchants in particular industry categories. Membership Rewards points are redeemable for a broad variety of rewards, including travel, shopping, gift cards, and covering eligible charges. Points typically do not expire, and there is no limit on the number of points a Card Member may earn. Membership Rewards expense is driven by charge volume on enrolled cards, customer participation in the program and contractual arrangements with redemption partners.

We record a Membership Rewards liability that represents the estimated cost of points earned that are expected to be redeemed by Card Members in the future. The Membership Rewards liability is impacted over time by enrollment levels, attrition, the volume of points earned and redeemed, and the associated redemption costs. We estimate the Membership Rewards liability by determining the URR and the WAC per point, which are applied to the points of current enrollees. Refer to Note 109 to the “Consolidated Financial Statements” for additional information.

The URR assumption is used to estimate the number of points earned by current enrollees that will ultimately be redeemed in future periods. We use statistical and actuarial models to estimate the URR of points earned to date by current Card Members based on redemption trends, card product type, enrollment tenure, card spend levels and credit attributes. The WAC per point assumption is used to estimate future redemption costs and is primarily based on redemption choices made by Card Members, reward offerings by partners, and Membership Rewards program changes. The WAC per point assumption is derived from ~~the previous~~ 12 months of redemptions and is adjusted as appropriate for certain changes in redemption costs that are not representative of future cost ~~expectations.~~expectations and expected developments in redemption patterns.

We periodically evaluate our liability estimation process and assumptions based on developments in redemption patterns, cost per point redeemed, partner contract changes and other factors.

The process of estimating the Membership Rewards liability includes a high degree of judgment. Actual redemptions and associated redemption costs could differ significantly from our estimates, resulting in either higher or lower Membership Rewards expense.

Changes in the Membership Rewards URR and WAC per point have the effect of either increasing or decreasing the liability through the current period ~~Marketing, promotion, rewards and Card Member services~~Membership Rewards expense by an amount estimated to cover the cost of all points previously earned but not yet redeemed by current enrollees as of the end of the reporting period. As of December 31, ~~2017,~~2020, an increase in the estimated URR of current enrollees of 25 basis points would increase the Membership Rewards liability and corresponding rewards expense by approximately ~~$103~~$128 million. Similarly, an increase in the WAC per point of 1 basis point would increase the Membership Rewards liability and corresponding rewards expense by approximately ~~$98~~$141 million.

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~~FAIR VALUE MEASUREMENT~~

Our investment securities and derivative instruments are carried at fair value on the Consolidated Balance Sheets, which require management to make assumptions and apply judgments when assessing fair value.

The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability by utilizing the three-level hierarchy of inputs to valuation techniques used to measure fair value. When available, we use quoted market prices to determine fair value (Level 1). If quoted market prices are not available, we will measure fair value based on pricing models with significant observable inputs (Level 2). We do not have any financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3). For additional information on our fair value hierarchy, refer to Note 15 to the “Consolidated Financial Statements.”

~~Investment Securities~~

~~Our investment securities are mostly composed of fixed-income securities issued by states and municipalities in the United States, the U.S. Government and its Agencies and select foreign governments.~~

The fair value of our investment securities, including investments comprising defined benefit pension plan assets, are obtained primarily from third-party pricing services. The fair values provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. We did not apply any adjustments to prices received from the pricing services used as of December 31, 2017 and 2016. For additional information on our investment securities, refer to Note 5 to the “Consolidated Financial Statements.”

~~Derivative Instruments~~

~~Our primary derivative instruments are interest rate swaps and foreign currency forward agreements.~~

The fair value of our derivative instruments is estimated internally by using third-party pricing models, where the inputs to those models are readily observable from actively quoted markets. For additional information on our derivatives and hedging activities, refer to Note 14 to the “Consolidated Financial Statements.”

In the measurement of fair value for our investment securities and derivative instruments, although the underlying inputs used in the pricing models are based on observable markets inputs, the pricing models do entail a certain amount of subjectivity, and therefore differing judgments in the underlying inputs, or how they are modeled, could result in a different estimate of fair value. While we rely on the third-party pricing model, we reaffirm our understanding of the valuation techniques at least annually and validate the valuation output on a quarterly basis.

GOODWILL RECOVERABILITY

Goodwill represents the excess of acquisition cost of an acquired business over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level annually or when events or circumstances arise, such as adverse changes in the business climate, that would more likely than not reduce the fair value of the reporting unit below its carrying value. Our methodology for conducting this goodwill impairment testing contains both a qualitative and quantitative assessment.

We have the option to initially perform an assessment of qualitative factors in order to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other company and reporting unit-specific events. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we then perform the impairment evaluation using a more detailed quantitative assessment. We could also directly perform this quantitative assessment for any reporting unit, bypassing the qualitative assessment.

Our methodology for conducting the quantitative goodwill impairment testing is fundamentally based on the measurement of fair value for our reporting units, which inherently entails the use of significant management judgment. For valuation, we use a combination of the income approach (discounted cash flows) and market approach (market multiples) in estimating the fair value of our reporting units.

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When preparing discounted cash flow models under the income approach, we estimate future cash flows using the reporting unit’s internal multi-year forecast, and a terminal value calculated using a growth rate that we believe is appropriate in light of current and expected future economic conditions. To discount these cash flows we use our expected cost of equity, determined using a capital asset pricing model. When using the market method under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings, revenues) to our reporting units’ actual results. The judgment in estimating forecasted cash flows, discount rates and market comparables is significant, and imprecision could materially affect the fair value of our reporting units.

We could be exposed to an increased risk of further goodwill impairment if future operating results or macroeconomic conditions differ significantly from management’s current assumptions.

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INCOME TAXES

We are subject to the income tax laws of the United States, its states and municipalities and those of the foreign jurisdictions in which we operate. These tax laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. In establishing a provision for income tax expense, we must make judgments about the application of inherently complex tax laws.

In particular, the Tax Act is complex and requires interpretation of certain provisions to estimate the impact on our income tax expense. The estimates are based on the information available and our current interpretation of the Tax Act, and may change due to changes in interpretations and assumptions we make and additional guidance or context from the Internal Revenue Service, the U.S. Treasury Department, the Financial Accounting Standards Board or others regarding the Tax Act. Our accounting for the impacts of the Tax Act is provisional and actual income tax expense could differ from our estimates. Refer to Note 21 to the “Consolidated Financial Statements” for additional information.

Unrecognized Tax Benefits

We establish a liability for unrecognized tax benefits, which are the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized in the financial statements.

In establishing a liability for an unrecognized tax benefit, assumptions may be made in determining whether, and the extent to which, a tax position should be sustained. A tax position is recognized only when it is more likely than not to be sustained upon examination by the relevant taxing authority, based on its technical merits. The amount of tax benefit recognized is the largest benefit that we believe is more likely than not to be realized on ultimate settlement. As new information becomes available, we evaluate our tax positions and adjust our unrecognized tax benefits, as appropriate.

Tax benefits ultimately realized can differ from amounts previously recognized due to uncertainties, with any such differences generally impacting the provision for income tax.

Deferred Tax Asset Realization

Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates expected to be in effect for the years in which the differences are expected to reverse.

Since deferred taxes measure the future tax effects of items recognized in the Consolidated Financial Statements, certain estimates and assumptions are required to determine whether it is more likely than not that all or some portion of the benefit of a deferred tax asset will not be realized. In making this assessment, we analyze and estimate the impact of future taxable income, reversing temporary differences and available tax planning strategies. These assessments are performed quarterly, taking into account any new information.

Changes in facts or circumstances can lead to changes in the ultimate realization of deferred tax assets due to uncertainties.

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OTHER MATTERS

RECENTLY ISSUED ACCOUNTING STANDARDS

Refer to the Recently Issued and Adopted Accounting Standards section of Note 1 to the “Consolidated Financial Statements.”

GLOSSARY OF SELECTED TERMINOLOGY

Adjusted net interest income — A non-GAAP measure that represents net interest income attributable to our Card Member loans ~~and loans HFS~~ (which includes, on a GAAP basis, interest that is deemed uncollectible), excluding the impact of interest expense and interest income not attributable to our Card Member loans. ~~We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and it is~~

Airline-related volume — Represents spend at airlines as a ~~component of net interest yield on average Card Member loans.~~merchant.

Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as asset-backed securities, that are secured by the transferred loans and receivables. The trust uses the proceeds from the sale of such securities to pay the purchase price for the ~~underlying~~transferred loans or receivables. The securitized loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) ~~securitized~~ are reported as assets and the securities issued by the Trusts are reported as liabilities on our ~~“Consolidated~~Consolidated Balance Sheets.”

Average discount rate —This calculation is generally designed to reflect the average pricing at all merchants accepting ~~general-purpose~~ American Express ~~cards. It~~cards and represents the percentage of ~~billed business (generated from both~~ proprietary and GNS ~~Card Member spending)~~billed business retained by us from merchants we acquire, or ~~for~~from merchants acquired by a third ~~party~~parties on our behalf, net of amounts retained by such third ~~party.~~parties. The average discount rate, together with billed business, drive our discount revenue.

~~Basic cards-in-force~~ — Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner, (i.e., not including additional supplemental cards issued on accounts). Proprietary basic small business and corporate cards-in-force includes both basic and supplemental cards issued. Non-proprietary basic cards-in-force includes cards that are issued and outstanding under network partnership agreements, except for supplemental cards and retail cobrand Card Member accounts which have had no out-of-store spending activity during the prior twelve-month period.

Billed business— ~~Includes activities~~Represents transaction volumes (including cash advances) ~~related to proprietary~~on cards and other payment products issued by American Express (proprietary billed business) and cards issued under network partnership agreements ~~(non-proprietary~~with banks and other institutions, including joint ventures (GNS billed business)~~, corporate payment services and certain insurance fees charged on proprietary cards.~~. In-store spending activity within GNS retail cobrand portfolios, ~~in GNS,~~ from which we earn no revenue, is not included in ~~non-proprietary~~ billed business. ~~Card billed~~Billed business is ~~included in~~reported as inside the United States or outside the United States based on ~~where~~ the ~~issuer is located.~~location of the issuer. Billed business, together with the average discount rate, drive our discount revenue.

Capital ratios — Represents the minimum standards established by ~~the~~ regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates. Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related definitions under ~~Transitional Basel III and Fully Phased-in~~ Basel III.

Cards-in-force — Represents the number of cards that are issued and outstanding by American Express (proprietary cards-in-force) and cards issued and outstanding under network partnership agreements with banks and other institutions, including joint ventures (GNS cards-in-force), except for GNS retail cobrand cards that had no out-of-store spending activity during the prior twelve months. Basic cards-in-force excludes supplemental cards issued on consumer accounts. Cards-in-force is useful in understanding the size of our Card Member base.

Card Member— The individual holder of an issued American Express-branded ~~charge, credit and certain prepaid cards.~~card.

Card Member loans — Represents the outstanding amount due from Card Members for charges made on their American Express credit cards, as well as any interest charges and card-related fees. Card Member loans also include revolving balances on certain American Express charge card products.

~~Card Member loans and receivables HFS~~ — Beginning as of December 1, 2015 and continuing until the sales were completed, represents Card Member loans and receivables related to our cobrand partnerships with Costco in the United States and JetBlue. The JetBlue and Costco portfolio sales were completed on March 18 and June 17, 2016, respectively.

Card Member receivables — Represents the outstanding amount due from Card Members for charges made on their American Express charge cards, as well as any card-related ~~fees.~~fees, other than revolving balances on certain American Express charge cards with Pay Over Time features. Such revolving balances are included within Card Member loans.

Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Charge Card Members generally must pay the full amount billed each month. No finance charges are assessed on charge cards. Each charge card transaction is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns. Some charge ~~card accounts~~cards have additional Pay Over Time feature(s) that allow revolving of certain charges.

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Cobrand cards— Cards issued under cobrand agreements with selected commercial ~~firms.~~partners. Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. ~~In some cases, the~~The partner is then liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program.

Credit cards — Represents cards that have a range of revolving payment terms, grace periods, and rate and fee structures.

Discount revenue — ~~Represents revenue~~Primarily represents the amount earned ~~from fees generally charged to~~on transactions occurring at merchants ~~who~~that have entered into a card acceptance ~~agreement. The discount fee generally is deducted from our payment~~agreement with us, a GNS partner or other third-party merchant acquirer, for facilitating transactions between the merchants and Card Member purchases. Discount revenue is reduced by incentive payments made to merchants, payments to third-party card issuing partners, cash-back reward costs and statement credits, corporate incentive payments and other similar items.Members.

Interest expense— Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity ~~needs, and is recognized as incurred.~~needs. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term financing and short-term borrowings, (e.g., commercial paper, federal funds purchased, bank overdrafts and other short-term borrowings), as well as the realized impact of derivatives hedging interest rate risk on our long-term debt.

Interest income— Includes (i) interest on loans, (ii) interest and dividends on investment securities and (iii) interest income on deposits with banks and other.

Interest on loans— Assessed using the average daily balance method for Card Member ~~loans and loans HFS.~~loans. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or written off.

Interest and dividends on investment securities— Primarily relates to our performing fixed-income securities. Interest income is recognized ~~as earned~~ using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so a constant rate of return is recognized on the outstanding balance of the related investment security throughout its term. Amounts are recognized until securities are in default or when it is likely that future interest payments will not be made as scheduled.

Interest income on deposits with banks and other — ~~Recognized as earned, and primarily~~Primarily relates to the placement of cash in excess of near-term funding requirements in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

~~Liquidity Coverage Ratio~~ Loyalty Coalitions — ~~Represents~~Programs that enable consumers to earn rewards points and use them to save on purchases from a variety of participating merchants through multi-category rewards platforms. Merchants in these programs generally fund the ~~minimum standards established~~consumer offers and are responsible to us for the cost of rewards points; we earn revenue from operating the loyalty platform and by ~~the regulatory agencies as a measure to determine whether the regulated entity has sufficient liquidity to meet liquidity needs in periods of financial and economic stress.~~providing marketing support.

~~Merchant acquisition~~ ~~— Represents our process of entering into agreements with merchants to accept American Express-branded cards.~~

Net card fees — Represents the card membership fees earned during the ~~period. These fees are~~period recognized as revenue over the covered card membership period (typically one year), net of the provision for projected refunds for Card Membership cancellation and deferred acquisition costs.

Net interest yield on average Card Member loans — A non-GAAP measure that is computed by dividing adjusted net interest income by average Card Member loans, computed on an annualized basis. Reserves and net write-offs related to uncollectible interest are recorded through ~~provisions~~provision for credit losses and are thus not included in the net interest yield calculation. ~~We believe net interest yield on average Card Member loans is useful to investors because it provides a measure of profitability of our Card Member loan portfolio.~~

~~Net loss ratio~~ — Represents the ratio of GCP charge card write-offs, consisting of principal (resulting from authorized transactions) and fee components, less recoveries, on Card Member receivables expressed as a percentage of gross amounts billed to corporate Card Members.

Net write-off rate—principal only — Represents the amount of proprietary consumer or small business Card Member loans or receivables written off, consisting of principal (resulting from authorized transactions), less recoveries, as a percentage of the average loan or ~~receivables~~receivable balance during the period.

Net write-off rate—principal, interest and fees— Includes, in the calculation of the net write-off rate, amounts for interest and fees in addition to principal for Card Member loans, and fees in addition to principal for Card Member receivables.

Operating expenses — Represents salaries and employee benefits, professional services, occupancy and equipment, and other expenses.

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Reserve build (release) — Represents the portion of the provisions for credit losses for the period related to increasing or decreasing reserves for credit losses as a result of, among other things, changes in volumes, macroeconomic outlook, portfolio composition and credit quality of portfolios. Reserve build represents the amount by which the provision for credit losses exceeds net write-offs, while reserve release represents the amount by which net write-offs exceed the provision for credit losses.

Return on average equity — Calculated by dividing one-year period net income by one-year average total shareholders’ equity.

~~Total cards-in-force~~ T&E-related volume — Represents ~~the total number of charge~~spend on travel and ~~credit cards that are issued~~entertainment, which primarily includes airline, cruise, lodging and ~~outstanding and accepted on our network. Non-proprietary cards-in-force~~dining merchant categories. Non-T&E-related volume includes spend in all charge and credit cards that are issued and outstanding under network partnership agreements, except for retail cobrand Card Member accounts which have no out-of-store spending activity during the prior twelve-month period.

other merchant categories.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


Year Ended December 31 (Millions)	2020		2019		2018
Net income	$	3,135	$	6,759	$	6,921
Other comprehensive (loss) income:
Net unrealized securities gains (losses), net of tax	32		41		(8)
Foreign currency translation adjustments, net of tax	(40)		(56)		(172)
Net unrealized pension and other postretirement benefits, net of tax	(150)		(125)		11
Other comprehensive (loss) income	(158)		(140)		(169)
Comprehensive income	$	2,977	$	6,619	$	6,752

See Notes to Consolidated Financial Statements.

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CONSOLIDATED BALANCE SHEETS


December 31 (Millions, except share data)	2020		2019
Assets
Cash and cash equivalents
Cash and due from banks	$	2,984	$	3,613
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2020, $92; 2019, $87)	29,824		20,610
Short-term investment securities (includes restricted cash of consolidated variable interest entities: 2020 $47; 2019, $85)	157		223
Total cash and cash equivalents	32,965		24,446
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2020, $4,296; 2019, $8,284), less reserves for credit losses: 2020, $267; 2019, $619	43,434		56,794

Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2020, $25,908; 2019, $32,230), less reserves for credit losses: 2020, $5,344; 2019, $2,383	68,029		84,998
Other loans, less reserves for credit losses: 2020, $238; 2019, $152	2,614		4,626
Investment securities	21,631		8,406
Premises and equipment, less accumulated depreciation and amortization: 2020, $7,540; 2019, $6,562	5,015		4,834
Other assets, less reserves for credit losses: 2020, $85; 2019, $27	17,679		14,217
Total assets	$	191,367	$	198,321
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits	$	86,875	$	73,287
Accounts payable	9,444		12,738
Short-term borrowings	1,878		6,442
Long-term debt (includes debt issued by consolidated variable interest entities: 2020, $12,760; 2019, $19,668)	42,952		57,835
Other liabilities	27,234		24,948
Total liabilities	$	168,383	$	175,250
Contingencies and Commitments (Note 12)	0		0
Shareholders’ Equity
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of December 31, 2020 and 2019 (Note 16)	0		0
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 805 million shares as of December 31, 2020 and 810 million shares as of December 31, 2019	161		163
Additional paid-in capital	11,881		11,774
Retained earnings	13,837		13,871
Accumulated other comprehensive loss
Net unrealized debt securities gains, net of tax of: 2020, $20; 2019, $11	65		33
Foreign currency translation adjustments, net of tax of: 2020, $(381); 2019, $(319)	(2,229)		(2,189)
Net unrealized pension and other postretirement benefits, net of tax of: 2020, $(236); 2019, $(208)	(731)		(581)
Total accumulated other comprehensive loss	(2,895)		(2,737)
Total shareholders’ equity	22,984		23,071
Total liabilities and shareholders’ equity	$	191,367	$	198,321

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS


Years Ended December 31 (Millions)	2020		2019		2018
Cash Flows from Operating Activities
Net income	$	3,135	$	6,759	$	6,921
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses	4,730		3,573		3,352
Depreciation and amortization	1,543		1,188		1,293
Deferred taxes and other	(256)		426		455
Stock-based compensation	249		283		283
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other assets	(1,785)		(368)		991
Accounts payable & other liabilities	(2,025)		1,771		(4,365)
Net cash provided by operating activities	5,591		13,632		8,930
Cash Flows from Investing Activities
Sale of investment securities	69		22		4
Maturities and redemptions of investment securities	7,159		7,329		3,499
Purchase of investments	(20,562)		(11,166)		(5,434)
Net decrease (increase) in Card Member loans and receivables, and other loans	26,906		(11,047)		(15,854)
Purchase of premises and equipment, net of sales: 2020, $1; 2019, $43; 2018, $1	(1,478)		(1,645)		(1,310)
Acquisitions/dispositions, net of cash acquired	(597)		(352)		(520)
Other investing activities	135		152		0
Net cash provided by (used in) investing activities	11,632		(16,707)		(19,615)
Cash Flows from Financing Activities
Net increase in customer deposits	13,542		3,330		5,542
Net (decrease) increase in short-term borrowings	(4,627)		3,316		(148)
Proceeds from long-term debt	69		12,706		21,524
Payments of long-term debt	(15,593)		(13,850)		(18,895)
Issuance of American Express common shares	44		86		87
Repurchase of American Express common shares and other	(1,029)		(4,685)		(1,685)
Dividends paid	(1,474)		(1,422)		(1,324)
Net cash (used in) provided by financing activities	(9,068)		(519)		5,101
Effect of foreign currency exchange rates on cash and cash equivalents	364		232		129
Net increase (decrease) in cash and cash equivalents	8,519		(3,362)		(5,455)
Cash and cash equivalents at beginning of year	24,446		27,808		33,263
Cash and cash equivalents at end of year	$	32,965	$	24,446	$	27,808

Supplemental cash flow information


Cash, cash equivalents and restricted cash reconciliation	Dec-20		Dec-19		Dec-18
Cash and cash equivalents per Consolidated Balance Sheets	$	32,965	$	24,446	$	27,808
Restricted cash included in Cash and cash equivalents	606		514		363
Total Cash and cash equivalents, excluding restricted cash	$	32,359	$	23,932	$	27,445

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


(Millions, except per share amounts)	Total		Preferred Shares		Common Shares		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings
Balances as of December 31, 2017	$	18,261	$	0	$	172	$	12,210	$	(2,428)	$	8,307
Net income	6,921		—		—		—		—		6,921
Other comprehensive loss	(169)		—		—		—		(169)		0
Repurchase of common shares	(1,570)		—		(3)		(216)		—		(1,351)
Other changes, primarily employee plans	200		—		1		224		—		(25)
Cash dividends declared preferred Series B, $52.00 per share	(39)		—		—		—		—		(39)
Cash dividends declared preferred Series C, $49.00 per share	(41)		—		—		—		—		(41)
Cash dividends declared common, $1.48 per share	(1,273)		—		—		—		—		(1,273)
Balances as of December 31, 2018	22,290		0		170		12,218		(2,597)		12,499
Net income	6,759		—		—		—		—		6,759
Other comprehensive loss	(140)		—		—		—		(140)		0
Repurchase of common shares	(4,585)		—		(8)		(671)		—		(3,906)
Other changes, primarily employee plans	186		—		1		227		—		(42)
Cash dividends declared preferred Series B, $52.00 per share	(39)		—		—		—		—		(39)
Cash dividends declared preferred Series C, $49.00 per share	(42)		—		—		—		—		(42)
Cash dividends declared common, $1.64 per share	(1,358)		—		—		—		—		(1,358)
Balances as of December 31, 2019	23,071		0		163		11,774		(2,737)		13,871
Cumulative effect of change in accounting principle - Reserve for Credit Losses (a)	(882)		—		—		—		—		(882)
Net income	3,135		—		—		—		—		3,135
Other comprehensive loss	(158)		—		—		—		(158)		0
Repurchase of common shares	(875)		—		(2)		(105)		—		(768)
Other changes, primarily employee plans	164		—		0		212		—		(48)
Cash dividends declared preferred Series B, $45.81 per share	(34)		—		—		—		—		(34)
Cash dividends declared preferred Series C, $52.93 per share	(45)		—		—		—		—		(45)
Cash dividends declared common, $1.72 per share	(1,392)		—		—		—		—		(1,392)
Balances as of December 31, 2020	$	22,984	$	0	$	161	$	11,881	$	(2,895)	$	13,837

(a)Represents $1,170 million, net of tax of $288 million, related to the impact as of January 1, 2020 of adopting the new accounting guidance for the recognition of credit losses on certain financial instruments.

See Notes to Consolidated Financial Statements.

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NOTES TO ~~CONSOLIDATED~~CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE ~~COMPANY~~COMPANY

~~American Express Company (the Company) is~~We are a ~~global services~~globally integrated payments company that provides our customers with access to products, insights and experiences that enrich lives and build business success. ~~The Company’s~~Our principal products and services are ~~charge~~credit and ~~credit payment~~charge card products, along with travel and ~~travel-related~~lifestyle related services, offered to consumers and businesses around the world. Business travel-related services are offered through the non-consolidated joint venture, American Express Global Business ~~Travel (the GBT JV). The Company’s~~Travel. Our various products and services are sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are sold through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party vendors and business partners, direct mail, ~~online applications,~~telephone, in-house ~~and third-party~~ sales ~~forces~~teams, and direct response advertising.

Effective for the first quarter of 2016, the Company realigned its segment presentation to reflect the organizational changes announced during the fourth quarter of 2015. Prior periods have been restated to conform to the new reportable operating segments. Refer to Note 2524 for additional discussion of the products and services that comprise each segment. Corporate functions and certain other businesses and operations are included in Corporate & Other.

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements ~~of the Company~~ are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Significant intercompany transactions are eliminated.

~~The Company consolidates~~We consolidate entities in which ~~it holds~~we hold a “controlling financial interest.” For voting interest entities, ~~the Company is~~we are considered to hold a controlling financial interest when ~~it is~~we are able to exercise control over the investees’ operating and financial decisions. For variable interest entities (VIEs), the determination of which is based on the amount and characteristics of the entity’s equity, ~~the Company is~~we are considered to hold a controlling financial interest when ~~it is~~we are determined to be the primary beneficiary. A primary beneficiary is the party that has both: (1) the power to direct the activities that most significantly impact that VIE’s economic performance, and (2) the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE.

Entities in which ~~the Company’s~~our voting interest in common equity does not provide it with control, but allows ~~the Company~~us to exert significant influence over operating and financial decisions, are accounted for under the equity method. ~~All other~~We also have investments in equity securities where our voting interest is below the level of significant influence, including investments that we make in non-public companies in the ordinary course of business. Such investments are initially recorded at cost and adjusted to fair value through earnings for observable price changes in orderly transactions for identical or similar transactions of the ~~extent~~same company or if they are ~~not considered~~determined to be impaired. See Note 4 for the accounting policy for our marketable ~~securities, are accounted for under the cost method.~~

equity securities.

FOREIGN CURRENCY

Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of the reporting period; non-monetary assets and liabilities are translated at the historic exchange rate at the date of the transaction; revenues and expenses are translated at the average month-end exchange rates during the year. Resulting translation adjustments, along with any related qualifying hedge and tax effects, are included in accumulated other comprehensive income (loss) (AOCI), a component of shareholders’ equity. Translation adjustments, including qualifying hedge and tax effects, are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Gains and losses related to transactions in a currency other than the functional currency are reported ~~net~~ in Other, net expenses in the ~~Company’s~~ Consolidated Statements of Income. Net foreign currency transaction gains amounted to approximately $7 million and $68 million in 2017 and 2015, respectively, and net foreign currency transaction losses amounted to $18 million in 2016.

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AMOUNTS BASED ON ESTIMATES AND ASSUMPTIONS

Accounting estimates are an integral part of the Consolidated Financial Statements. These estimates are based, in part, on management’s assumptions concerning future events. Among the more significant assumptions are those that relate to reserves for Card Member credit losses on loans and receivables, ~~the proprietary point liability for~~ Membership Rewards ~~costs, fair value measurements,~~liability, goodwill and income taxes. These accounting estimates reflect the best judgment of management, but actual results could differ.

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INCOME STATEMENT

Discount Revenue

Discount revenue ~~generally~~primarily represents the amount ~~earned by the Company~~we earn on transactions occurring at merchants that have entered into a card acceptance agreement with ~~which the Company,~~us, or a Global Network Services (GNS) partner ~~has entered into a card acceptance agreement~~or other third-party merchant acquirer, for facilitating transactions between the merchants and ~~the Company’s~~ Card Members. The amount of fees charged for accepting our cards as payment for goods or services, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount. The merchant discount is generally deducted from the payment to the merchant and recorded as discount revenue at the time athe Card Member ~~enters into~~transaction occurs.

The card acceptance agreements, which include the agreed-upon terms for charging the merchant discount fee, vary in duration. Our contracts with small- and medium-sized merchants generally have no fixed contractual duration, while those with large merchants are generally for fixed periods, which typically range from three to seven years in duration. Our fixed-period agreements may include auto-renewal features, which may allow the existing terms to continue beyond the stated expiration date until a ~~point-of-sale transaction with~~new agreement is reached. We satisfy our obligations under these agreements over the contract term, often on a ~~merchant.~~daily basis, including through the processing of Card Member transactions and the availability of our payment network.

~~Where the Company acts as~~In cases where the merchant acquirer ~~and the card presented at~~is a ~~merchant~~third party (which is ~~issued by a third-party financial institution, such as in~~ the case, for example, under our OptBlue program, or with certain of our GNS ~~partners, the Company makes financial~~partners), we receive a network rate fee in our settlement towith the merchant acquirer, which is individually negotiated between us and ~~receives~~that merchant acquirer and is recorded as discount revenue at the ~~discount revenue.~~time the Card Member transaction occurs. In ~~the Company’s~~our role as the operator of the ~~card~~American Express network, itwe also ~~receives financial settlement from the~~settle with merchants on behalf of our GNS card ~~issuer, which~~issuing partners, who in turn ~~receives~~receive an issuer rate that is individually negotiated between that issuer and the Company. The difference between the merchant discount the Company receives from the merchant (which is directly agreed between a merchant and the Company, and is not based on the issuer rate) and the issuer rate received by the GNS card issuer is recorded as discount revenue.

In cases where the Company is the card issuer and the merchant acquirer is a third party (which can be the case in a country in which an Independent Operator partner is the local merchant acquirer or in the United States under our OptBlue program with certain third-party merchant acquirers), the Company receives a network rate in its settlement with the merchant acquirer, which is individually negotiated between the Company and that merchant acquirerus and is recorded as expense in Marketing and business development (see below) or as contra-revenue in Other revenue.

Revenue expected to be recognized in future periods related to contracts that have an original expected duration of one year or less and contracts with variable consideration (e.g. discount ~~revenue. In contrast~~revenue) is not required to be disclosed. Non-interest revenue expected to be recognized in future periods through remaining contracts with ~~networks such as those operated by Visa Inc. and MasterCard Incorporated, there are no collectively set interchange rates on the American Express network, issuer rates do~~customers is not ~~serve as a basis for merchant discount rates and no fees are agreed or due between the third-party financial institution participants on the network.~~material.

Net Card Fees

Net card fees represent revenue earned from annual card membership fees, which vary based on the type of card and the number of cards for each account. These fees, net of acquisition costs and a reserve for projected refunds for Card Member cancellations, are deferred and recognized on a straight-line basis over the twelve-month card membership period as Net ~~Card Fees~~card fees in the Consolidated Statements of Income. The unamortized net card fee balance is reported in Other ~~Liabilities~~liabilities on the Consolidated Balance Sheets (refer to Note ~~10)~~9).

Other Fees and Commissions

Other fees and commissions ~~represent~~includes certain fees charged to Card ~~Member~~Members, including delinquency fees and foreign currency conversion ~~fees, loyalty coalition-related fees, travel commissions and fees and service~~ fees, which are primarily recognized in the period in which they are charged to the Card ~~Member (refer to Note 19).~~Member. Other fees and commissions also includes Membership Rewards program fees, which are deferred and recognized over the period covered by the fee, typically one year, the unamortized portion of which is included in Other liabilities on the Consolidated Balance Sheets. In addition, Other fees and commissions includes loyalty coalition-related fees, travel commissions and fees and service fees ~~are also~~ earned from ~~other customers (e.g., merchants) for a variety of services and~~merchants, that are recognized when the service is performed, which is generally in the period the fee is charged. Also included are fees related to the Company’s Membership Rewards program, which are deferred and recognized over the period covered by the fee, typically one year; the unamortized portion of which is included in Other Liabilities on the Consolidated Balance Sheets (referRefer to Note ~~10).~~18 for additional information.

Contra-revenue

~~The Company regularly makes payments through~~Payments made pursuant to contractual arrangements with our merchants, ~~corporate payments clients, Card Members, third-party issuing~~GNS partners, and ~~certain~~ other ~~customers. These payments, including cash rebates and statement credits provided to Card Members,~~customers are ~~generally~~ classified as contra-revenue, ~~unless a specifically identifiable benefit (e.g.,~~except where we receive goods, services or ~~services) is received by the Company or its Card Members in consideration~~other benefits for ~~that payment, and~~which the fair value ~~of such benefit~~ is determinable and measurable. If such conditions are met, then the payment is classified as expense up to the estimated fair value of the benefit. If no such benefit is identified, then the entire payment is classified as contra-revenue and includedmeasurable, in ~~the Consolidated Statements of Income in the revenue line item where the related transactions~~which case they are recorded ~~(e.g., Discount revenue or Other fees and commissions).~~as expense.

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Interest Income

Interest on Card Member loans is assessed using the average daily balance method. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding, in accordance with the terms of the applicable account agreement, until the outstanding balance is paid, or written off.

Interest and dividends on investment securities primarily relate to ~~the Company’s~~our performing fixed-income securities. Interest income is recognized as earned using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so that a constant rate of return is recognized on the investment security’s outstanding balance. Amounts are recognized until securities are in default or when it becomes likely that future interest payments will not be made as scheduled.

~~Table of Contents~~

Interest on deposits with banks and other is recognized as earned, and primarily relates to the placement of cash, in excess of near-term funding requirements, in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

Interest Expense

Interest expense includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs, and is recognized as incurred. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on ~~the Company’s~~our long-term debt and short-term borrowings, as well as the realized impact of derivatives used to hedge interest rate risk on ~~the Company’s~~our long-term debt.

~~Expenses~~Marketing and Business Development

Marketing and ~~promotion~~business development expense includes costs incurred in the development and initial placement of advertising, which are expensed in the year in which the advertising first takes place. Also included in Marketing and business development expense are payments to our cobrand partners, Card Member statement credits for qualifying charges on eligible card accounts, corporate incentive payments earned on achievement of pre-set targets, and certain payments to GNS card issuing partners. These costs are generally expensed as incurred.

Card Member Rewards

We issue charge and credit cards that allow Card Members to participate in various rewards programs (e.g., Membership Rewards, cobrand and cash back). Rewards expense is recognized in the period Card Members earn rewards, generally by spending on their enrolled card products. We record a Card Member rewards liability that represents the estimated cost of points earned that are expected to be redeemed. Pursuant to cobrand agreements, we make payments to our cobrand partners based primarily on the amount of Card Member spending and corresponding rewards earned on such spending. The partner is then liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program. Card Member rewards liabilities are impacted over time by enrollment levels, attrition, the volume of points earned and redeemed, and the associated redemption costs. Changes in the Card Member rewards liabilities during the period are taken as an increase or decrease to the Card Member rewards expense in the Consolidated Statements of Income.

BALANCE SHEET

Cash and Cash Equivalents

During the fourth quarter of 2015, it was determined the Company would sell the Card Member loans and receivables related to its cobrand partnerships with JetBlue Airways Corporation (JetBlue) and Costco Wholesale Corporation (Costco) in the United States (the HFS portfolios). As a result, the HFS portfolios were presented as held for sale (HFS)equivalents on the Consolidated Balance ~~Sheets within Card Member~~Sheets.

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RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

In March 2020, the Financial Accounting Standards Board issued new accounting guidance related to the effects of reference rate reform on financial reporting. The guidance, effective for reporting periods through December 31, 2022, provides accounting relief for contract modifications that replace an interest rate impacted by reference rate reform (e.g., LIBOR) with a new alternative reference rate. The guidance is applicable to investment securities, receivables, loans, debt, leases, derivatives and ~~receivables HFS~~hedge accounting elections and other contractual arrangements. We adopted the guidance as of ~~December~~March 31, ~~2015. During~~2020, with no material impact on our financial position, results of operations and cash flows. There were no significant changes to our accounting policies, business processes or internal controls as a result of adopting the ~~first half~~new guidance.

Effective January 1, 2020, we adopted the new credit reserving methodology, applicable to certain financial instruments, known as the Current Expected Credit Loss (CECL) methodology under a modified retrospective transition. The CECL methodology requires measurement of ~~2016,~~expected credit losses for the ~~Company completed~~estimated life of the ~~sales of substantially all of these outstanding Card Member loans~~financial instrument, not only based on historical experience and ~~receivables HFS~~current conditions, but also by including reasonable and ~~recognized gains, as an expense reduction in Other expenses, of $127~~supportable forecasts incorporating forward-looking information. Upon implementation, total loan reserves increased by $1,663 million and ~~$1.1 billion during~~total receivable reserves decreased by $493 million, along with the ~~three months ended March 31, 2016~~associated current and ~~June 30, 2016, respectively. The~~deferred tax impact of $288 million, and an offset to the ~~sales, including~~opening balance of retained earnings, net of tax, of $882 million. There were no material changes to our business processes or internal controls as a result of adopting the new guidance. Refer to Note 3 for additional information on how management estimates reserves for credit losses in accordance with the CECL methodology.

In addition, for available-for-sale debt securities, the new methodology replaces the other-than-temporary impairment model and requires the recognition of ~~the proceeds received and the reclassification of the retained Card Member loans and receivables, was reported within the investing section of the Consolidated Statements of Cash Flows as~~an allowance for reductions in a net decrease in Card Member receivables and loans, including HFS. From the point of classification as HFS through the sale completion dates, the Company continued to recognize discount revenue, interest income, other revenues and expenses related to the HFS portfolios in the respective line items on the Consolidated Statements of Income, with changes in the valuation of the HFS portfolios recognized in Other expenses.

~~GOODWILL AND TECHNOLOGY IMPAIRMENT~~

~~As discussed in Note 1, the Company evaluates goodwill for impairment annually, or more frequently if events occur or circumstances change that would more likely than not reduce the~~security’s fair value of one or more of the Company’s reporting units below its carrying value. Based on its annual assessment as of June 30, 2015, the Company determined that goodwill was not impaired; however, during the fourth quarter of 2015, the Company announced changesattributable to ~~its management organizational structure under which reconsideration of the Company’s Prepaid Services business (a reporting unit that is included~~declines in Corporate & Other) occurred. As a result, the Company determined that sufficient indicators of potential impairment of goodwill existed and performed an impairment evaluation. In performing its quantitative impairment assessment, it was determined the carrying value of the Prepaid Services business’ goodwill exceeded its implied fair value and the Company recognized an impairment loss. The fair value of the Prepaid Services business asset group was measured based on an income approach (discounted cash flow valuation methodology), with the assistancecredit quality, instead of a third-party valuation firm. Prior to completing the assessment of goodwill for impairment, the Company performed a recoverability test of certain long-lived assets in the Prepaid Services business and determined that certain long-lived assets, primarily technology assets, were not recoverable. As a result, during the fourth quarter of 2015, the Company recorded a $384 million impairment charge, comprising a $219 milliondirect write-down of the ~~entire balance of goodwill in the Prepaid Services business and~~security, when a ~~$165 million write-down of technology and other assets~~valuation decline is determined to ~~fair value. These charges were reported in Other expenses.~~be other-than-temporary. There was no financial impact related to this implementation. Refer to Note 74 for ~~further discussion of the Company’s goodwill and intangible assets.~~additional information.

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NOTE 32

LOANS AND ~~ACCOUNTS RECEIVABLE~~CARD MEMBER RECEIVABLES

~~The Company’s~~Our lending and charge payment card products result in the generation of Card Member loans and Card Member ~~receivables, respectively.~~receivables. We also extend credit to consumer and commercial customers through non-card financing products, resulting in Other loans. Reserves for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods.

CARD MEMBER AND OTHER LOANS

Card Member loans are recorded at the time a Card Member enters into a point-of-sale transaction with a merchant and represent revolving amounts due on lending card products, as well as amounts due from charge Card Members who utilize the Pay Over Time features on their account and ~~elect to~~ revolve a portion of the outstanding balance by entering into a revolving payment arrangement with ~~the Company.~~us. These loans have a range of terms such as credit limits, interest rates, fees and payment structures, which can be revised over time based on new information about Card Members, and in accordance with applicable regulations and the respective product’s terms and conditions. Card Members holding revolving loans are typically required to make monthly payments based on pre-established amounts and the amounts that Card Members choose to revolve are subject to finance charges.

Card Member loans are presented on the Consolidated Balance Sheets net of reserves for credit losses (refer to Note 4)3), and include principal and any related accrued interest and fees. ~~The Company’s~~Our policy generally is to cease accruing interest on a Card Member loan at the time the account is written off, and establish reserves for interest that ~~the Company believes~~we believe will not be collected.

Other loans are recorded at the time any extension of credit is provided to consumer and commercial customers for non-card financing products. These loans have a range of fixed terms such as interest rates, fees and repayment periods. Borrowers are typically required to make pre-established monthly payments over the term of the loan. Non-card financing products are not associated with a Card Member agreement, and instead are governed by a separate borrowing relationship. Other loans are presented on the Consolidated Balance Sheets net of reserves for credit losses, and include principal and any related accrued interest and fees.

Card Member loans by segment and Other loans as of December 31, ~~2017~~2020 and ~~2016~~2019 consisted of:


(Millions)	2020		2019
Global Consumer Services Group(a)	$	60,084	$	73,266
Global Commercial Services	13,289		14,115
Card Member loans	73,373		87,381
Less: Reserve for credit losses	5,344		2,383
Card Member loans, net	$	68,029	$	84,998
Other loans, net(b)	$	2,614	$	4,626

(a)Includes approximately $25.9 billion and $32.2 billion of gross Card Member loans available to settle obligations of a consolidated VIE as of December 31, 2020 and 2019, respectively.

(b)Other loans represent consumer and commercial non-card financing products, and Small Business Administration Paycheck Protection Program (PPP) loans. There were $0.6 billion of gross PPP loans outstanding as of December 31, 2020. Other loans are presented net of reserves for credit losses of $238 million and $152 million as of December 31, 2020 and 2019, respectively.

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(Millions) 2017 2016
U.S. Consumer Services^(a)
$ 53,668 $ 48,758
International Consumer and Network Services 8,651 6,971
Global Commercial Services 11,080 9,536
Card Member loans 73,399 65,265
Less: Reserve for losses 1,706 1,223
Card Member loans, net $ 71,693 $ 64,042
Other loans, net^(b)
$ 2,607 $ 1,419

~~(a)~~

~~Includes approximately $25.7 billion and $26.1 billion of gross Card Member loans available to settle obligations of a consolidated VIE as of December 31, 2017 and 2016, respectively.~~

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~~(b)~~

Other loans primarily represent personal and commercial financing products. Other loans are presented net of reserves for losses of $80 million and $42 million as of December 31, 2017 and 2016, respectively.

CARD MEMBER ~~AND OTHER~~ RECEIVABLES

Card Member receivables are also recorded at the time a Card Member enters into a point-of-sale transaction with a merchant and represent amounts due on charge card products. Each charge card transaction is authorized based on its likely economics, a Card Member’s most recent credit information and spend patterns. ~~Additionally, global spend limits are established to limit the maximum exposure for the Company.~~

Charge Card Members generally must pay the full amount billed each month. Card Member receivable balances are presented on the Consolidated Balance Sheets net of reserves for credit losses (refer to Note 4)3), and include principal and any related accrued fees.

Card Member ~~accounts receivable~~receivables by segment ~~and Other receivables~~ as of December 31, ~~2017~~2020 and ~~2016~~2019 consisted of:

(Millions) 2017 2016
U.S. Consumer Services^(a)
$ 13,143 $ 12,302
International Consumer and Network Services 7,803 5,966
Global Commercial Services 33,101 29,040
Card Member receivables 54,047 47,308
Less: Reserve for losses 521 467
Card Member receivables, net $ 53,526 $ 46,841
Other receivables, net^(b)
$ 3,163 $ 3,232

~~(a)~~

~~Includes $8.9 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of both December 31, 2017 and 2016.~~


(Millions)	2020		2019
Global Consumer Services Group (a)	$	18,685	$	22,844
Global Commercial Services (b)	25,016		34,569
Card Member receivables	43,701		57,413
Less: Reserve for credit losses	267		619
Card Member receivables, net	$	43,434	$	56,794

~~(b)~~

Other receivables primarily represent amounts related to (i) GNS partner banks for items such as royalty and franchise fees, (ii) certain merchants for billed discount revenue, (iii) tax-related receivables, and (iv) loyalty coalition partners for points issued, as well as program participation and servicing fees. Other receivables are presented net of reserves for losses of $31 million and $45 million as of December 31, 2017 and 2016, respectively.

(a)Includes NaN and $8.3 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of December 31, 2020 and 2019, respectively.

(b)Includes $4.3 billion and NaN of gross Card Member receivables available to settle obligations of a consolidated VIE as of December 31, 2020 and 2019, respectively.

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CARD MEMBER LOANS AND ~~CARD MEMBER~~ RECEIVABLES AGING

Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of December 31, ~~2017~~2020 and ~~2016:~~

2017 (Millions)
Current
30-59
Days Past Due

60-89
Days Past Due

90+
Days Past Due
Total
Card Member Loans:
U.S. Consumer Services $ 52,961 $ 201 162 344 $ 53,668
International Consumer and Network Services 8,530 37 28 56 8,651
Global Commercial Services
Global Small Business Services 10,892 43 31 59 11,025
Global Corporate Payments^(a)
(b) (b) (b) ― 55
Card Member Receivables:
U.S. Consumer Services $ 12,993 53 33 64 $ 13,143
International Consumer and Network Services 7,703 29 21 50 7,803
Global Commercial Services
Global Small Business Services 15,868 91 54 106 16,119
Global Corporate Payments^(a)
(b) (b) (b) 148 16,982

2016 (Millions)
Current
30-59
Days Past Due

60-89
Days Past Due

90+
Days Past Due
Total
Card Member Loans:
U.S. Consumer Services $ 48,216 $ 156 $ 119 $ 267 $ 48,758
International Consumer and Network Services 6,863 32 24 52 6,971
Global Commercial Services
Global Small Business Services 9,378 34 23 49 9,484
Global Corporate Payments^(a)
(b) (b) (b) ― 52
Card Member Receivables:
U.S. Consumer Services $ 12,158 $ 45 $ 30 $ 69 $ 12,302
International Consumer and Network Services 5,888 22 15 41 5,966
Global Commercial Services
Global Small Business Services 14,047 77 47 102 14,273
Global Corporate Payments^(a)
(b) (b) (b) 135 14,767

~~(a)~~

For Global Corporate Payments (GCP) Card Member loans and receivables in GCS, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan and receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).

2019:

~~(b)~~

Delinquency data for periods other than 90 days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.


2020 (millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Global Consumer Services Group	$	59,442	$	177	$	148	$	317	$	60,084
Global Commercial Services
Global Small Business Services	13,132		27		20		47		13,226
Global Corporate Payments(a)	(b)		(b)		(b)		0		63
Card Member Receivables:
Global Consumer Services Group	18,570		33		26		56		18,685
Global Commercial Services
Global Small Business Services	$	14,023	$	37	$	21	$	38	$	14,119
Global Corporate Payments(a)	(b)		(b)		(b)		$	60	$	10,897


2019 (millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Global Consumer Services Group	$	72,101	$	322	$	253	$	590	$	73,266
Global Commercial Services
Global Small Business Services	13,898		56		40		85		14,079
Global Corporate Payments(a)	(b)		(b)		(b)		0		36
Card Member Receivables:
Global Consumer Services Group	22,560		86		58		140		22,844
Global Commercial Services
Global Small Business Services	$	17,113	$	99	$	58	$	134	$	17,404
Global Corporate Payments(a)	(b)		(b)		(b)		$	136	$	17,165

(a)Global Corporate Payments (GCP) reflects global, large and middle market corporate accounts. Delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan or receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).

(b)Delinquency data for periods other than 90+ days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.

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CREDIT QUALITY INDICATORS FOR CARD MEMBER LOANS AND RECEIVABLES

The following tables present the key credit quality indicators as of or for the years ended December 31:

2017 2016
Net Write-Off Rate Net Write-Off Rate

Principal
Only^(a)

Principal,
Interest, &
Fees^(a)

30+
Days Past Due
as a % of
Total

Principal
Only^(a)

Principal,
Interest, &
Fees^(a)

30+
Days Past Due
as a % of
Total

Card Member Loans:
U.S. Consumer Services 1.8 % 2.1 % 1.3 % 1.5 % 1.8 % 1.1 %
International Consumer and Network Services 2.1 % 2.5 % 1.4 % 2.0 % 2.5 % 1.6 %
Global Small Business Services 1.6 % 1.9 % 1.2 % 1.4 % 1.7 % 1.1 %
Card Member Receivables:
U.S. Consumer Services 1.3 % 1.4 % 1.1 % 1.4 % 1.6 % 1.2 %
International Consumer and Network Services 2.0 % 2.1 % 1.3 % 2.0 % 2.2 % 1.3 %
Global Small Business Services 1.6 % 1.8 % 1.6 % 1.5 % 1.7 % 1.6 %

2017 2016

Net Loss
Ratio as
a % of
Charge
Volume

90+
Days Past Billing
as a % of
Receivables

Net Loss
Ratio as
a % of
Charge
Volume

90+
Days Past Billing
as a % of
Receivables

Card Member Receivables:
Global Corporate Payments 0.10 % 0.9 % 0.09 % 0.9 %

~~(a)~~

The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company considers uncollectible interest and/or fees in estimating its reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.


	2020						2019
	Net Write-Off Rate						Net Write-Off Rate
	Principal Only(a)		Principal, Interest, & Fees(a)		30+ Days Past Due as a % of Total		Principal Only(a)		Principal, Interest, & Fees(a)		30+ Days Past Due as a % of Total
Card Member Loans:
Global Consumer Services Group	2.5	%	3.0	%	1.1	%	2.3	%	2.8	%	1.6	%
Global Small Business Services	2.1	%	2.4	%	0.7	%	1.9	%	2.2	%	1.3	%
Card Member Receivables:
Global Consumer Services Group	1.7	%	1.9	%	0.6	%	1.7	%	1.9	%	1.2	%
Global Small Business Services	2.1	%	2.3	%	0.7	%	1.9	%	2.1	%	1.7	%
Global Corporate Payments	(b)		1.9	%	(c)		(b)		(d)		(c)

(a)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because we consider uncollectible interest and/or fees in estimating our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

(b)Net write-off rate based on principal losses only is not available due to system constraints.

(c)For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ Days Past Billing as a % of total was 0.6% and 0.8% for the years ended December 31, 2020 and 2019, respectively.

(d)Net loss ratio was the credit quality indicator for GCP Card Member receivables for prior periods and represents the ratio of GCP Card Member receivables write-offs, consisting of principal (resulting from authorized transactions) and fee components, less recoveries, on Card Member receivables expressed as a percentage of gross amounts billed to corporate Card Members. The net loss ratio for the year ended December 31, 2019 was 0.08%.

Refer to Note 43 for additional indicators, including external environmental qualitative factors, management considers in its ~~monthly~~ evaluation process for reserves for credit losses.

IMPAIRED ~~CARD MEMBER~~ LOANS AND RECEIVABLES

Impaired ~~Card Member~~ loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that ~~the Company~~we will be unable to collect all amounts due according to the original contractual terms of the ~~Card Member~~customer agreement. ~~The Company considers~~We consider impaired loans and receivables to ~~include:~~include (i) loans over 90 days past due still accruing interest, (ii) nonaccrual loans and (iii) loans and receivables modified as troubled debt restructurings (TDRs).

In instances where the ~~Card Member~~customer is experiencing financial difficulty, ~~the Company~~we may modify, through various financial relief programs, ~~Card Member~~ loans and receivables ~~in order~~with the intention to minimize losses and improve collectability, while providing ~~Card Members~~customers with temporary or permanent financial relief. ~~The Company has~~We have classified ~~Card Member~~ loans and receivables in these modification programs as TDRs and ~~continues~~continue to classify ~~Card Member~~customer accounts that have exited a modification program as a TDR, with such accounts identified as “Out of Program TDRs.”

Such modifications to the loans and receivables primarily include (i) temporary interest rate reductions (possibly as low as zero percent, in which case the loan is characterized as non-accrual in ~~the Company’s~~our TDR disclosures), (ii) placing the ~~Card Member~~customer on a fixed payment plan not to exceed 60 months and (iii) suspending delinquency fees until the ~~Card Member~~customer exits the modification program. Upon entering the modification program, the ~~Card Member’s~~customer’s ability to make future purchases is either ~~cancelled,~~limited, canceled, or in certain cases suspended until the ~~Card Member~~customer successfully exits from the modification program. In accordance with the modification agreement with the ~~Card Member,~~customer, loans and/or receivables may revert back to the original contractual terms (including the contractual interest ~~rate)~~rate where applicable) when the ~~Card Member~~customer exits the modification program, which is (i) when all payments have been made in accordance with the modification agreement or (ii) when the ~~Card Member~~customer defaults out of the modification program. ~~The Company establishes a reserve for Card Member interest charges and fees considered to be uncollectible.~~

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Reserves for ~~Card Member loans and receivables modified as~~modifications deemed TDRs are ~~determined as the difference between the~~measured individually and incorporate a discounted cash flows expected to be received from the Card Member (taking into consideration the probability of subsequent defaults), discounted at the original effective interest rates, and the carrying value of the related Card Member loan or receivables balance. The Company determines the original effective interest rate as the interest rate in effect prior to the imposition of any penalty interest rate.flow model. All changes in the impairment measurement are included ~~in Provisions~~within provisions for ~~losses~~credit losses.

In response to the COVID-19 pandemic, the United States enacted legislation that provided the option to temporarily suspend (i) certain requirements under U.S. GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be treated as TDRs and (ii) any determination that a loan modified as a result of the COVID-19 pandemic is a TDR (including impairment for accounting purposes). Based on the nature of our programs, we have not elected the accounting and reporting relief afforded by this legislation and continue to report modifications as TDRs.

In the first quarter of 2020, we created a Customer Pandemic Relief (CPR) program for customers who have been impacted by the COVID-19 pandemic to provide a concession in the ~~Consolidated Statements~~form of ~~Income.~~

payment deferrals and waivers of certain fees and interest. We assessed the CPR program and determined that eligible loan modifications were temporary in nature, for example, less than three months, and not considered TDRs. Our short-term CPR programs are no longer widely available with immaterial balances remaining in the program as of December 31, 2020.

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The following tables provide additional information with respect to ~~the Company’s~~our impaired ~~Card Member~~ loans and ~~receivables. Impaired Card Member~~ receivables ~~are not significant for ICNS~~ as of December 31, ~~2017, 2016~~2020, 2019 and ~~2015; therefore, this segment’s receivables~~2018.


	As of December 31, 2020
					Accounts Classified as a TDR (c)
(Millions)	Over 90 days Past Due & Accruing Interest(a)		Non-Accruals(b)		In Program(d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Global Consumer Services Group	$	203	$	146	$	1,586	$	248	$	2,183	$	782
Global Commercial Services	21		29		478		67		595		285
Card Member Receivables:
Global Consumer Services Group	0		0		240		34		274		60
Global Commercial Services	0		0		534		75		609		139
Other Loans(f)	2		1		248		6		257		80
Total	$	226	$	176	$	3,086	$	430	$	3,918	$	1,346


	As of December 31, 2019
					Accounts Classified as a TDR (c)
(Millions)	Over 90 days Past Due & Accruing Interest(a)		Non-Accruals(b)		In Program(d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Global Consumer Services Group	$	384	$	284	$	500	$	175	$	1,343	$	137
Global Commercial Services	44		54		97		38		233		22
Card Member Receivables:
Global Consumer Services Group	0		0		56		16		72		3
Global Commercial Services	0		0		109		30		139		6
Total	$	428	$	338	$	762	$	259	$	1,787	$	168


	As of December 31, 2018
					Accounts Classified as a TDR (c)
(Millions)	Over 90 days Past Due & Accruing Interest(a)		Non-Accruals(b)		In Program(d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Global Consumer Services Group	$	344	$	236	$	313	$	131	$	1,024	$	80
Global Commercial Services	43		43		59		29		174		14
Card Member Receivables:
Global Consumer Services Group	0		0		29		13		42		2
Global Commercial Services	0		0		61		25		86		5
Total	$	387	$	279	$	462	$	198	$	1,326	$	101

(a)Our policy is generally to accrue interest through the date of write-off (typically 180 days past due). We establish reserves for interest that we believe will not be collected. Amounts presented exclude loans classified as a TDR.

(b)Non-accrual loans not in modification programs primarily include certain loans placed with outside collection agencies for which we have ceased accruing interest. Amounts presented exclude loans classified as TDRs.

(c)Accounts classified as a TDR include $32 million, $26 million and $17 million that are over 90 days past due and accruing interest and $11 million, $10 million and $6 million that are non-accruals as of December 31, 2020, 2019 and 2018, respectively.

(d)In Program TDRs include accounts that are currently enrolled in a modification program.

(e)Out of Program TDRs include $316 million, $188 million and $148 million of accounts that have successfully completed a modification program and $114 million, $72 million and $50 million of accounts that were not ~~included~~ in compliance with the ~~following tables.~~terms of the modification programs as of December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2017

Accounts Classified
as a TDR ^(c)

(Millions) Over 90 days Past Due & Accruing Interest ^(a) Non-Accruals ^(b) In Program ^(d) Out of Program ^(e) Total Impaired Balance Unpaid Principal Balance Allowance for TDRs
Card Member Loans:
U.S. Consumer Services $ 233 $ 168 $ 178 $ 131 $ 710 $ 639 $ 49
International Consumer and Network Services 56 ― ― ― 56 55 ―
Global Commercial Services 38 31 31 27 127 118 8
Card Member Receivables:
U.S. Consumer Services ― ― 15 9 24 24 1
Global Commercial Services ― ― 37 19 56 56 2
Total $ 327 $ 199 $ 261 $ 186 $ 973 $ 892 $ 60

As of December 31, 2016

Accounts Classified
as a TDR ^(c)

(Millions) Over 90 days Past Due & Accruing Interest ^(a) Non-Accruals ^(b) In Program ^(d) Out of Program ^(e) Total Impaired Balance
Unpaid
Principal
Balance
Allowance for TDRs
Card Member Loans:
U.S. Consumer Services $ 178 $ 139 $ 165 $ 129 $ 611 $ 558 $ 51
International Consumer and Network Services 52 ― ― ― 52 51 ―
Global Commercial Services 30 30 26 26 112 103 9
Card Member Receivables:
U.S. Consumer Services ― ― 11 6 17 17 7
Global Commercial Services ― ― 28 10 38 38 21
Total $ 260 $ 169 $ 230 $ 171 $ 830 $ 767 $ 88

As of December 31, 2015

Accounts Classified
as a TDR ^(c)

(Millions) Over 90 days Past Due & Accruing Interest ^(a) Non-Accruals ^(b) In Program ^(d) Out of Program ^(e) Total Impaired Balance
Unpaid
Principal
Balance
Allowance for TDRs
Card Member Loans:
U.S. Consumer Services $ 140 $ 124 $ 149 $ 89 $ 502 $ 463 $ 44
International Consumer and Network Services 52 ― ― ― 52 51 ―
Global Commercial Services 24 26 23 18 91 85 9
Card Member Receivables:
U.S. Consumer Services ― ― 11 3 14 14 8
Global Commercial Services ― ― 16 3 19 19 12
Total $ 216 $ 150 $ 199 $ 113 $ 678 $ 632 $ 73

~~(a)~~

The Company’s policy is generally to accrue interest through the date of write-off (typically 180 days past due). The Company establishes reserves for interest that it believes will not be collected. Amounts presented exclude Card Member loans classified as a TDR.

~~(b)~~

Non-accrual loans not in modification programs primarily include certain Card Member loans placed with outside collection agencies for which the Company has ceased accruing interest. Amounts presented exclude Card Member loans classified as a TDR.

~~(c)~~

Accounts classified as a TDR include $15 million, $20 million and $20 million that are over 90 days past due and accruing interest and $5 million, $11 million and $18 million that are non-accruals as of December 31, 2017, 2016 and 2015, respectively.

~~(d)~~

~~In Program TDRs include Card Member accounts that are currently enrolled in a modification program.~~

~~(e)~~

Out of Program TDRs include $141 million, $132 million and $84 million of Card Member accounts that have successfully completed a modification program and $45 million, $39 million and $29 million of Card Member accounts that were not in compliance with the terms of the modification programs as of December 31, 2017, 2016 and 2015, respectively.

(f)Other loans primarily represent consumer and commercial non-card financing products. Prior period balances were not significant.

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The following table provides information with respect to the Company’s average balances and interest income recognized from Impaired Card Member loans and the average balances of impaired Card Member receivables for the years ended December 31:

2017 (Millions)
Average Balance Interest Income Recognized
Card Member Loans:
   U.S. Consumer Services $ 643 $ 68
   International Consumer and Network Services 56 17
   Global Commercial Services 120 17
Card Member Receivables:
   U.S. Consumer Services 20 ―
   Global Commercial Services 45 ―
Total $ 884 $ 102

2016 (Millions)
Average Balance
Interest Income
Recognized

Card Member Loans:
   U.S. Consumer Services $ 559 $ 53
   International Consumer and Network Services 53 15
   Global Commercial Services 103 13
Card Member Receivables:
   U.S. Consumer Services 14 ―
   Global Commercial Services 28 ―
Total $ 757 $ 81

2015 (Millions)
Average Balance
Interest Income
Recognized

Card Member Loans:
   U.S. Consumer Services $ 569 $ 48
   International Consumer and Network Services 54 14
   Global Commercial Services 104 11
Card Member Receivables:
   U.S. Consumer Services 13 ―
   Global Commercial Services 20 ―
Total $ 760 $ 73

~~Table of Contents~~

~~CARD MEMBER~~ LOANS AND RECEIVABLES MODIFIED AS ~~TDRS~~TDRs

The following table provides additional information with respect to ~~the USCS and GCS Card Member~~ loans and receivables modified as TDRs for the years ended December ~~31, 2017, 2016~~31:


2020	Number of Accounts (thousands)	Outstanding Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	272	$	2,347	14	(b)
Card Member Receivables	47	1,202		(c)	19
Other Loans(d)	9	$	345	3	16
Total	328	$	3,894


2019	Number of Accounts (thousands)	Outstanding Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	78	$	602	13	(b)
Card Member Receivables	9	210		(c)	26
Total	87	$	812


2018	Number of Accounts (thousands)	Outstanding Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	51	$	377	12	(b)
Card Member Receivables	6	110		(c)	28
Total	57	$	487

(a)Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and ~~2015. The ICNS~~accrued interest on loans and principal and fees on receivables. Modifications did not reduce the principal balance.

(b)For Card Member loans, there have been no payment term extensions.

(c)We do not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.

(d)Other loans primarily represent consumer and ~~receivables modifications~~commercial non-card financing products. Prior period balances were not ~~significant; therefore, this segment is not included in the following TDR disclosures.~~

2017
Number of Accounts
(in thousands)

Outstanding Balances
($ in millions) ^(a)

Average Interest Rate Reduction
(% points)

Average Payment Term Extensions
(# of months)

Troubled Debt Restructurings:
Card Member Loans 33 $ 224 10 (b)
Card Member Receivables 6 83 (c) 28
Total 39 $ 307

2016
Number of Accounts
(in thousands)

Outstanding Balances
($ in millions) ^(a)

Average Interest Rate Reduction
(% points)

Average Payment Term Extensions
(# of months)

Troubled Debt Restructurings:
Card Member Loans 31 $ 220 9 (b)
Card Member Receivables 9 123 (c) 18
Total 40 $ 343

2015
Number of Accounts
(in thousands)

Outstanding Balances
($ in millions) ^(a)

Average Interest Rate Reduction
(% points)

Average Payment Term Extensions
(# of months)

Troubled Debt Restructurings:
Card Member Loans 40 $ 285 9 (b)
Card Member Receivables 12 147 (c) 12
Total 52 $ 432

~~(a)~~

Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables. Modifications did not reduce the principal balance.

~~(b)~~

~~For Card Member loans, there have been no payment term extensions.~~

~~(c)~~

~~The Company does not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.~~

significant.

~~100~~

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The following table provides information with respect to ~~the USCS and GCS Card Member~~ loans and receivables modified as TDRs that subsequently defaulted within 12 months of modification for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015.~~2018. A ~~Card Member is~~customer can miss up to three payments before being considered in default, ~~of a modification program after one and up to two missed payments,~~ depending on the terms of the modification program. For all ~~Card Members~~customers that defaulted from a modification program, the probability of default is factored into the reserves for ~~Card Member~~ loans and receivables.


2020	Number of Accounts (thousands)	Aggregated Outstanding Balances Upon Default(a) (millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	17	$	127
Card Member Receivables	3	55
Other Loans(b)	3	$	6
Total	23	$	188

Number of Accounts
Aggregated Outstanding Balances Upon Default^(a)

2017 (thousands) (millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans 6 $ 39
Card Member Receivables 3 7
Total 9 $ 46

Number of Accounts
Aggregated Outstanding Balances Upon Default^(a)

2016 (thousands) (millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans 7 $ 41
Card Member Receivables 3 4
Total 10 $ 45

Number of Accounts
Aggregated Outstanding Balances Upon Default^(a)

2015 (thousands) (millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans 8 $ 52
Card Member Receivables 3 5
Total 11 $ 57

~~(a)~~

~~The outstanding balances upon default include principal, fees and accrued interest on Card Member loans, and principal and fees on Card Member receivables.~~


	Number of Accounts	Aggregated Outstanding Balances Upon Default(a)
2019	(thousands)	(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	12	$	86
Card Member Receivables	4	20
Total	16	$	106


	Number of Accounts	Aggregated Outstanding Balances Upon Default(a)
2018	(thousands)	(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	8	$	46
Card Member Receivables	4	11
Total	12	$	57

(a)The outstanding balances upon default include principal, fees and accrued interest on loans, and principal and fees on receivables.

(b)Other loans primarily represent consumer and commercial non-card financing products. Prior period balances were not significant.

~~NOTE 4~~

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NOTE 3

RESERVES FOR CREDIT LOSSES

Reserves for credit losses ~~relating to Card Member loans and receivables~~ represent ~~management’s~~our best estimate of the ~~probable inherent~~expected credit losses in ~~the Company’s~~our outstanding portfolio of Card Member loans and receivables as of the balance sheet date. ~~Management’s evaluation process~~The CECL methodology, which became effective January 1, 2020, requires ~~certain estimates~~us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and ~~judgments.~~future economic conditions over a reasonable and supportable period (R&S Period), which is approximately three years, beyond the balance sheet date. We make various judgments combined with historical loss experience to determine a reserve rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.

~~Reserves for losses are primarily based upon statistical and analytical~~We use a combination of statistically-based models that ~~analyze portfolio performance~~incorporate current and ~~reflect management’s judgment~~future economic conditions throughout the R&S Period. The process of estimating expected credit losses is based on several key models: Probability of Default (PD), Exposure at Default (EAD), and future recoveries for each month of the R&S Period. Beyond the R&S Period, we estimate expected credit losses by immediately reverting to long-term average loss rates.

•PD models are used to estimate the likelihood an account will be written-off.

•EAD models are used to estimate the balance of an account at the time of write-off. This includes balances less expected repayments based on historical payment and revolve behavior, which vary by customer. Due to the nature of revolving loan portfolios, the EAD models are complex and involve assumptions regarding the relationship between future spend and payment behaviors.

•Recovery models are used to estimate amounts that are expected to be received from Card Members after default occurs, typically as a result of collection efforts. Future recoveries are estimated taking into consideration the time of default, time elapsed since default and macroeconomic conditions.

We also estimate the likelihood and magnitude of recovery of previously written off accounts considering how long ago the account was written off and future economic conditions. Our models are developed using historical loss experience covering the economic cycle and consider the impact of account characteristics on expected losses.

Future economic conditions that are incorporated over the R&S Period include multiple macroeconomic scenarios provided to us by an independent third party. Management reviews these economic scenarios and applies judgment to weight them in order to reflect the uncertainty surrounding these scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real gross domestic product, that are significant to our models.

We also evaluate whether to include qualitative reserves to cover losses that are expected but, in our assessment, may not be adequately represented in the quantitative ~~components of~~methods or the reserve. The models take into account several factors, including delinquency-based loss migration rates, loss emergence periods and average losses and recoveries over an appropriate historical period. Management considerseconomic assumptions. We consider whether to adjust the quantitative reserves ~~for certain external and internal qualitative~~(higher or lower) to address possible limitations within the models or factors ~~which may increase or decrease~~not included within the reserves for losses on Card Member loans and receivables. These external factors include employment, spend, sentiment, housing and credit, and changes in the legal and regulatory environment, while the internal factors include increased risk in certain portfolios, impact of risk management initiatives, changes in underwriting requirements and overall process stability. As part of this evaluation process, management also considers various reserve coverage metrics,models, such as ~~reserves as a percentage~~external conditions, emerging portfolio trends, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due ~~amounts, reserves as a percentage~~accounts, or management risk actions.

Lifetime losses for most of ~~Card Member loans or receivables, and net write-off coverage ratios.~~

~~Card Member~~our loans and receivables are evaluated at an appropriate level of granularity, including assessment on a pooled basis where financial assets share similar risk characteristics, such as past spend and remittance behaviors, credit bureau scores where available, delinquency status, tenure of balance outstanding, amongst others. Credit losses on accrued interest are measured and presented as part of Reserves for credit losses on the Consolidated Balance Sheets and within the Provisions for credit losses in the Consolidated Statements of Income, rather than reversing interest income. Separate models are used for accounts deemed a troubled debt restructuring, which are measured individually using a discounted cash flow model. See Note 2 for information on troubled debt restructurings.

Loans and receivable balances are written off when ~~management considers~~we consider amounts to be uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past ~~due. Card Member~~due for pay in full or revolving loans and 120 days past due for term loans. Loans and receivables in bankruptcy or owed by deceased individuals are generally written off upon ~~notification,~~notification.

Results for reporting periods beginning January 1, 2020 are presented using the CECL methodology while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior years. Reserves for credit losses under the incurred loss methodology were primarily based upon statistical and analytical models that analyzed portfolio performance and reflected management’s judgments regarding the quantitative components of the reserve. The models considered several factors, including delinquency-based loss migration rates, loss emergence periods and average losses and recoveries ~~are~~ ~~recognized as they are collected.~~

~~This Note is presented excluding amounts associated with~~over an appropriate historical period. Similar to the ~~Card Member loans~~CECL methodology, we considered whether to adjust the quantitative reserves for certain external and ~~receivables HFS as of December 31, 2015;~~internal qualitative factors, which may increase or decrease the ~~Company did not have any Card Member loans and receivables HFS as of December 31, 2017 or 2016.~~

reserves for credit losses.

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CHANGES IN CARD MEMBER LOANS RESERVE FOR CREDIT LOSSES

Card Member loans reserve for credit losses increased for the year ended December 31, 2020, primarily driven by deterioration of the global macroeconomic outlook, including unemployment and GDP, partially offset by improved credit performance and a decline in outstanding balances.

The following table presents changes in the Card Member loans reserve for credit losses for the years ended December 31:

(Millions) 2017 2016 2015
Balance, January 1 $ 1,223 $ 1,028 $ 1,201
Provisions^(a)
1,868 1,235 1,190
Net write-offs
Principal^(b)
(1,181 ) (930 ) (967 )
Interest and fees^(b)
(227 ) (175 ) (162 )
Transfer of reserves on HFS loan portfolios ― ― (224 )
Other^(c)
23 65 (10 )
Balance, December 31 $ 1,706 $ 1,223 $ 1,028

~~(a)~~

~~Provisions for principal, interest and fee reserve components.~~


(Millions)	2020		2019		2018
Beginning Balance(a)	$	4,027	$	2,134	$	1,706
Provisions(b)	3,453		2,462		2,266
Net write-offs (c)
Principal	(1,795)		(1,860)		(1,539)
Interest and fees	(375)		(375)		(304)
Other(d)	34		22		5
Ending Balance	$	5,344	$	2,383	$	2,134

~~(b)~~

~~Principal write-offs are presented less recoveries of $409~~(a)For the year ended December 31, 2020, beginning balance includes an increase of $1,643 million $379 million and $418 million, and include net write-offs from TDRs of $30 million, $34 million and $41 million, for the years ended December 31, 2017, 2016 and 2015, respectively. Recoveries of interest and fees were not significant.

~~(c)~~

Includes foreign currency translation adjustments of $8 million, $(10) million and $(20) million, and other adjustments of $15 million, $8 million and $10 million for the years ended December 31, 2017, 2016 and 2015, respectively. The year ended December 31, 2016 included reserves of $67 million associated with $265 million of retained Card Member loans reclassified from HFS to held for investment as a result of retaining certain loans in connection with the respective sales of JetBlue and Costco cobrand card portfolios.

~~CARD MEMBER LOANS EVALUATED INDIVIDUALLY AND COLLECTIVELY FOR IMPAIRMENT~~

~~The following table presents Card Member loans evaluated individually and collectively for impairment and related reserves~~ as of January 1, 2020, related to the adoption of the CECL methodology.

(b)Provisions for principal, interest and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.

(c)Principal write-offs are presented less recoveries of $568 million, $525 million and $444 million for the years ended December ~~31:~~

(Millions) 2017 2016 2015
Card Member loans evaluated individually for impairment ^(a)
$ 367 $ 346 $ 279
Related reserves^(a)
$ 57 $ 60 $ 53
Card Member loans evaluated collectively for impairment ^(b)
$ 73,032 $ 64,919 $ 58,294
Related reserves^(b)
$ 1,649 $ 1,163 $ 975

~~(a)~~

~~Represents loans modified as a TDR and related reserves.~~

31, 2020, 2019 and 2018, respectively. Recoveries of interest and fees were not significant. Amounts include net (write-offs) recoveries from TDRs of $(134) million, $(79) million and $(33) million for the years ended December 31, 2020, 2019 and 2018, respectively.

~~(b)~~

Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans. The reserves include the quantitative results of analytical models that are specific to individual pools of loans, and reserves for internal and external qualitative risk factors that apply to loans that are collectively evaluated for impairment.

(d)Primarily includes foreign currency translation adjustments of $35 million, $4 million and $(11) million for the years ended December 31, 2020, 2019 and 2018, respectively.

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CHANGES IN CARD MEMBER RECEIVABLES RESERVE FOR CREDIT LOSSES

Card Member receivables reserve for credit losses increased for the year ended December 31, 2020, primarily driven by deterioration of the global macroeconomic outlook, including unemployment and GDP, partially offset by improved credit performance and a decline in outstanding balances.

The following table presents changes in the Card Member receivables reserve for credit losses for the years ended December 31:

(Millions) 2017 2016 2015
Balance, January 1 $ 467 $ 462 $ 465
Provisions^(a)
795 696 737
Net write-offs^(b)
(736 ) (674 ) (713 )
Other^(c)
(5 ) (17 ) (27 )
Balance, December 31 $ 521 $ 467 $ 462

~~(a)~~

~~Provisions for principal and fee reserve components.~~


(Millions)	2020		2019		2018
Beginning Balance(a)	$	126	$	573	$	521
Provisions(b)	1,015		963		937
Net write-offs(c)	(881)		(900)		(859)
Other(d)	7		(17)		(26)
Ending Balance	$	267	$	619	$	573

~~(b)~~

Principal and fee write-offs are presented less recoveries of $359 million, $391 million and $401 million, including net write-offs from TDRs of $(2) million, $16 million and $60 million, for the years ended December 31, 2017, 2016 and 2015, respectively.

(a)For the year ended December 31, 2020, beginning balance includes a decrease of $493 million as of January 1, 2020, related to the adoption of the CECL methodology.

~~(c)~~

Includes foreign currency translation adjustments of $12 million, $(12) million and $(16) million, and other adjustments of $(17) million, $(5) million and $(11) million for the years ended December 31, 2017, 2016 and 2015, respectively. Additionally, 2015 included the impact of the transfer of the HFS receivables portfolio, which was not significant.

(b)Provisions for principal and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.

(c)Net write-offs are presented less recoveries of $386 million, $374 million and $367 million for the years ended December 31, 2020, 2019 and 2018, respectively. Amounts include net recoveries (write-offs) from TDRs of $(47) million, $(16) million and NaN, for the years ended December 31, 2020, 2019 and 2018, respectively.

(d)Primarily includes foreign currency translation adjustments of $5 million, NaN and $(6) million for the years ended December 31, 2020, 2019 and 2018, respectively.

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~~CARD MEMBER RECEIVABLES EVALUATED INDIVIDUALLY AND COLLECTIVELY FOR IMPAIRMENT~~

~~The following table presents Card Member receivables evaluated individually and collectively for impairment and related reserves as of December 31:~~

(Millions) 2017 2016 2015
Card Member receivables evaluated individually for impairment^(a)
$ 80 $ 55 $ 33
Related reserves^(a)
$ 3 $ 28 $ 20
Card Member receivables evaluated collectively for impairment $ 53,967 $ 47,253 $ 44,100
Related reserves^(b)
$ 518 $ 439 $ 442

~~(a)~~

~~Represents receivables modified as a TDR and related reserves.~~

~~(b)~~

The reserves include the quantitative results of analytical models that are specific to individual pools of receivables, and reserves for internal and external qualitative risk factors that apply to receivables that are collectively evaluated for impairment.

NOTE 54

INVESTMENT SECURITIES

Investment securities principally include available-for-sale debt securities carried at fair value on the ~~Company classifies~~Consolidated Balance Sheets. The CECL methodology, which became effective January 1, 2020, requires us to estimate lifetime expected credit losses for all available-for-sale debt securities in an unrealized loss position. Comparative information continues to be reported in accordance with the methodology in effect for prior periods. When estimating a security’s probability of default and the recovery rate, we assess the security’s credit indicators, including credit ratings. If our assessment indicates that an expected credit loss exists, we determine the portion of the unrealized loss attributable to credit deterioration and record a reserve for the expected credit loss through the Consolidated Statements of Income in Other loans Provision for credit losses. Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We had accrued interest on our available-for-sale debt securities totaling $26 million and $20 million, as ~~available-for-sale~~of December 31, 2020 and ~~carries~~2019, respectively, presented as Other assets on the Consolidated Balance Sheets.

Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets with unrealized gains and losses recorded in ~~AOCI,~~the Consolidated Statements of Income as Other, net ~~of income taxes.~~ expense.

Realized gains and losses are recognized upon disposition of the securities using the specific identification method.

Refer to Note 1514 for a description of ~~the Company’s~~our methodology for determining the fair value of investment securities.

The following is a summary of investment securities as of December 31:

2017 2016 2015
Description of Securities (Millions)
Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
State and municipal obligations $ 1,369 $ 11 $ (3 ) $ 1,377 $ 2,019 $ 28 $ (11 ) $ 2,036 $ 2,813 $ 85 $ (5 ) $ 2,893
U.S. Government agency obligations 11 ― ― 11 12 ― ― 12 2 ― ― 2
U.S. Government treasury obligations 1,051 3 (9 ) 1,045 465 3 (8 ) 460 406 4 (1 ) 409
Corporate debt securities 28 ― ― 28 19 ― ― 19 29 1 ― 30
Mortgage-backed securities ^(a)
67 2 ― 69 92 3 ― 95 117 4 ― 121
Foreign government bonds and obligations 581 ― ― 581 486 1 (1 ) 486 250 6 (1 ) 255
Equity securities ^(b)
51 ― (3 ) 48 51 ― (2 ) 49 51 ― (2 ) 49
Total $ 3,158 $ 16 $ (15 ) $ 3,159 $ 3,144 $ 35 $ (22 ) $ 3,157 $ 3,668 $ 100 $ (9 ) $ 3,759

~~(a)~~

~~Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.~~


	2020								2019
Description of Securities (Millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
State and municipal obligations	$	172	$	7	$	0	$	179	$	236	$	8	$	(1)	$	243
U.S. Government agency obligations	7		0		0		7		9		0		0		9
U.S. Government treasury obligations	20,655		76		0		20,731		7,395		35		(1)		7,429
Corporate debt securities	22		0		0		22		27		0		0		27
Mortgage-backed securities (a)	28		2		0		30		39		2		0		41
Foreign government bonds and obligations	581		0		0		581		578		1		0		579
Equity securities (b)	56		27		(2)		81		55		25		(2)		78
Total	$	21,521	$	112	$	(2)	$	21,631	$	8,339	$	71	$	(4)	$	8,406

~~(b)~~

~~Equity securities comprise investments in common stock and various mutual funds.~~

(a)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

(b)Equity securities comprise investments in common stock, exchange-traded funds and mutual funds.

The following table provides information about ~~the Company’s investment~~our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of December ~~31:~~31, 2019. There were 0 available-for-sale debt securities with gross unrealized losses as of December 31, 2020.


	2019
		Less than 12 months	12 months or more
Description of Securities (Millions)			Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
State and municipal obligations			$	18	$	(1)	$	0	$	0
U.S. Government treasury obligations			0		0		324		(1)
Total			$	18	$	(1)	$	324	$	(1)

2017 2016
Less than 12 months 12 months or more Less than 12 months 12 months or more
Description of Securities (Millions)
Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses
State and municipal obligations $ 157 $ (3 ) $ ― $ ― $ 153 $ (11 ) $ ― $ ―
U.S. Government treasury obligations 650 (3 ) 175 (6 ) 298 (8 ) ― ―
Equity securities ― ― 36 (2 ) ― ― 32 (2 )
Total $ 807 $ (6 ) $ 211 $ (8 ) $ 451 $ (19 ) $ 32 $ (2 )

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The following table summarizes the gross unrealized losses ~~due to temporary impairments~~ by ratio of fair value to amortized cost as of December ~~31:~~

Less than 12 months 12 months or more Total
Ratio of Fair Value to
Amortized Cost (Dollars in millions)
Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses
2017:
90%–100% 34 $ 807 $ (6 ) 13 $ 211 $ (8 ) 47 $ 1,018 $ (14 )
Total as of December 31, 2017 34 $ 807 $ (6 ) 13 $ 211 $ (8 ) 47 $ 1,018 $ (14 )
2016:
90%–100% 33 $ 411 $ (13 ) 6 $ 32 $ (2 ) 39 $ 443 $ (15 )
Less than 90% 4 40 (6 ) ― ― ― 4 40 (6 )
Total as of December 31, 2016 37 $ 451 $ (19 ) 6 $ 32 $ (2 ) 43 $ 483 $ (21 )

~~The~~31, 2019. There were 0 available-for-sale debt securities with gross unrealized losses are attributed to wider credit spreads for specific issuers, adverse changes in benchmark interest rates, or a combination thereof, all compared to those prevailing when the investment securities were purchased.as of December 31, 2020.

Overall, for the investment securities in gross unrealized loss positions, (i) the Company does not intend to sell the investment securities, (ii) it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and (iii) the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairment during the periods presented.


	Less than 12 months					12 months or more					Total
Ratio of Fair Value to Amortized Cost (Dollars in millions)	Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses



2019:
90%–100%	2	$	18	$	(1)	3	$	324	$	(1)	5	$	342	$	(2)
Total as of December 31, 2019	2	$	18	$	(1)	3	$	324	$	(1)	5	$	342	$	(2)

Weighted average yields and contractual maturities for investment securities with stated maturities as of December 31, ~~2017~~2020 were as follows:

(Millions)
Due within
1 year

Due after 1
year but
within 5 years

Due after 5
years but
within 10 years

Due after
10 years
Total
State and municipal obligations^(a)
$ 18 $ 87 $ 98 $ 1,174 $ 1,377
U.S. Government agency obligations ― ― ― 11 11
U.S. Government treasury obligations 30 879 125 11 1,045
Corporate debt securities 4 24 ― ― 28
Mortgage-backed securities^(a)
― ― ― 69 69
Foreign government bonds and obligations 573 4 ― 4 581
Total Estimated Fair Value $ 625 $ 994 $ 223 $ 1,269 $ 3,111

Total Cost $ 625 $ 1,000 $ 222 $ 1,260 $ 3,107
Weighted average yields^(b)
3.65 % 1.95 % 4.39 % 4.47 % 3.49 %

~~(a)~~

The expected payments on state and municipal obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.


(Millions)	Due within 1 year			Due after 1 year but within 5 years			Due after 5 years but within 10 years			Due after 10 years			Total
State and municipal obligations(a)	$	15		$	21		$	49		$	94		$	179
U.S. Government agency obligations(a)	0			0			0			7			7
U.S. Government treasury obligations	19,097			1,621			13			0			20,731
Corporate debt securities	11			11			0			0			22
Mortgage-backed securities(a)	0			0			0			30			30
Foreign government bonds and obligations	580			1			0			0			581
Total Estimated Fair Value	$	19,703		$	1,654		$	62		$	131		$	21,550

Total Cost	$	19,685		$	1,598		$	55		$	127		$	21,465
Weighted average yields(b)	0.31		%	1.87		%	5.53		%	4.06		%	0.46		%

~~(b)~~

Average yields for investment securities have been calculated using the effective yield on the date of purchase. Yields on tax-exempt investment securities have been computed on a tax-equivalent basis using the U.S. federal statutory tax rate of 35 percent. Effective January 1, 2018, the U.S. federal statutory tax rate was reduced to 21 percent. Refer to Note 21 for additional information.

(a)The expected payments on state and municipal obligations, U.S. government agency obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

(b)Average yields for investment securities have been calculated using the effective yield on the date of purchase. Yields on tax-exempt investment securities have been computed on a tax-equivalent basis using the U.S. federal statutory tax rate of 21 percent.

~~NOTE 6~~

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NOTE 5

ASSET SECURITIZATIONS

~~The Company~~We periodically ~~securitizes~~securitize Card Member loans and receivables arising from ~~its~~our card businesses through the transfer of those assets to securitization ~~trusts. The~~ trusts, ~~then issue debt securities collateralized by the transferred assets to third-party investors.~~

~~Card Member loans are transferred to the~~ American Express Credit Account Master Trust (the Lending Trust) and ~~Card Member receivables are transferred to the~~ American Express Issuance Trust II (the Charge Trust and together with the Lending Trust, the Trusts). The Trusts ~~are consolidated~~then issue debt securities collateralized by the ~~Company.~~ transferred assets to third-party investors.

The Trusts are considered VIEs as they have insufficient equity at risk to finance their activities, which are to issue debt securities that are collateralized by the underlying Card Member loans and receivables. Refer to Note 1 for further details on the principles of consolidation.

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~~The Company performs~~ We perform the servicing and key decision making for the Trusts, and therefore ~~has~~have the power to direct the activities that most significantly impact the Trusts’ economic performance, which are the collection of the underlying Card Member loans and receivables. In addition, ~~the Company holds~~we hold all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors. As of December 31, ~~2017, the Company’s~~2020 and 2019, our ownership of variable interests was ~~$11.6~~$13.4 billion and $12.9 billion, respectively, for the Lending Trust and ~~$4.6~~$4.3 billion and $8.3 billion, respectively, for the Charge Trust. These variable interests held by ~~the Company~~us provide itus with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, ~~the Company is~~we are the primary beneficiary of ~~both~~the Trusts and therefore ~~consolidates both~~consolidate the Trusts.

The debt securities issued by the Trusts are non-recourse to ~~the Company.~~us. The securitized Card Member loans and receivables held by the Lending Trust and the Charge Trust, respectively, are available only for payment of the debt securities or other obligations issued or arising in the securitization transactions (refer to Note 3)2). The long-term debt of each Trust is payable only out of collections on their respective underlying securitized assets (refer to Note 9)8).

~~The following table provides information on the restricted~~Restricted cash held by the Lending Trust and ~~the~~ Charge Trust was $47 million and NaN, respectively, as of December 31, ~~2017~~2020 and ~~2016, included in Other assets on the Consolidated Balance Sheets:~~

(Millions) 2017 2016
Lending Trust $ 55 $ 35
Charge Trust 7 3
Total $ 62 $ 38

$85 million and NaN, respectively, as of December 31, 2019. These amounts relate to collections of Card Member loans and receivables to be used by the Trusts to fund future expenses and obligations, including interest on debt securities, credit losses and upcoming debt maturities.

Under the respective terms of the Lending Trust and the Charge Trust agreements, the occurrence of certain triggering events associated with the performance of the assets of each Trust could result in payment of trust expenses, establishment of reserve funds, or, in a worst-case scenario, early amortization of debt securities. During the ~~year~~years ended December 31, ~~2017,~~2020 and 2019, no such triggering events occurred.

119

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NOTE 6

OTHER ASSETS

The following is a summary of Other assets as of December 31:

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The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of December 31:

Other Assets Fair Value Other Liabilities Fair Value
(Millions) 2017 2016 2017 2016
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts^(a)
$ 11 $ 111 $ 34 $ 69
Net investment hedges - Foreign exchange contracts 117 347 89 35
Total derivatives designated as hedging instruments 128 458 123 104
Derivatives not designated as hedging instruments:
Foreign exchange contracts, including certain embedded derivatives^(b)
82 308 95 176
Total derivatives, gross 210 766 218 280
Less: Cash collateral netting^{(c) (d)}
(6 ) (54 ) (45 ) (68 )
Derivative asset and derivative liability netting^(e)
(80 ) (157 ) (80 ) (157 )
Total derivatives, net $ 124 $ 555 $ 93 $ 55

~~(a)~~

Effective January 2017, the Central Clearing Party (CCP) changed the legal characterization of variation margin payments for centrally cleared derivatives to be settlement payments, as opposed to collateral. As of December 31, 2017, there was no unsettled derivative asset or liability with the CCP. The Company also maintained several bilateral interest rate contracts that are not subject to the CCP’s rule change and amounts related to such contracts are shown gross of any collateral exchanged.


	Other Assets Fair Value				Other Liabilities Fair Value
(Millions)	2020		2019		2020		2019
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts(a)	$	500	$	185	$	0	$	0
Net investment hedges - Foreign exchange contracts	24		24		474		186
Total derivatives designated as hedging instruments	524		209		474		186
Derivatives not designated as hedging instruments:
Foreign exchange contracts	105		134		228		254
Total derivatives, gross	629		343		702		440
Derivative asset and derivative liability netting(b)	(98)		(90)		(98)		(90)
Cash collateral netting(c) (d)	(500)		(185)		(16)		(9)
Total derivatives, net	$	31	$	68	$	588	$	341

~~(b)~~

~~Includes foreign currency derivatives embedded in certain operating agreements.~~

(a)For our centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral.

~~(c)~~

Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to reclaim cash collateral or the obligation to return cash collateral.

(b)Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.

~~(d)~~

~~The Company held no non-cash collateral as of December 31, 2017. As of December 31, 2016, t~~he Company received non-cash collateral from a counterparty in the form of security interests in U.S. Treasury securities, with a fair value of $18 million, none of which was sold or repledged. Such non-cash collateral economically reduced the Company’s risk exposure to $537 million as of December 31, 2016, but did not reduce the net exposure on the Company’s Consolidated Balance Sheets. Additionally, the Company posted $146 million and $169 million as of December 31, 2017 and 2016, respectively, as initial margin on its centrally cleared interest rate swaps; such amounts are recorded within Other receivables on the Consolidated Balance Sheets and are not netted against the derivative balances.

(c)Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to cash collateral held from the counterparty or cash collateral posted with the counterparty.

~~(e)~~

~~Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.~~

(d)We posted $34 million and $47 million as of December 31, 2020 and 2019, respectively, as initial margin on our centrally cleared interest rate swaps; such amounts are recorded within Other assets on the Consolidated Balance Sheets and are not netted against the derivative balances.

DERIVATIVE FINANCIAL INSTRUMENTS THAT QUALIFY FOR HEDGE ACCOUNTING

Derivatives executed for hedge accounting purposes are documented and designated as such when ~~the Company enters~~we enter into the contracts. In accordance with ~~its~~our risk management policies, ~~the Company structures its~~we structure our hedges with terms similar to those of the item being hedged. ~~The Company~~We formally ~~assesses,~~assess, at inception of the hedge accounting relationship and on a quarterly basis, whether derivatives designated as hedges are highly effective in offsetting the fair value or cash flows of the hedged items. These assessments usually are made through the application of a regression analysis method. If it is determined that a derivative is not highly effective as a hedge, ~~the Company~~we will discontinue the application of hedge accounting.

FAIR VALUE HEDGES

A fair value hedge involves a derivative designated to hedge ~~the Company’s~~our exposure to future changes in the fair value of an asset or a liability, or an identified portion thereof, that is attributable to a particular risk.

Interest Rate Contracts

~~The Company is~~We are exposed to interest rate risk associated with ~~its~~our fixed-rate ~~long-term~~ debt obligations. At the time of issuance, certain fixed-rate long-term debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. ~~The Company has $23.8~~We have $15.8 billion and ~~$17.7~~$22.6 billion of fixed-rate debt obligations designated in fair value hedging relationships as of December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

~~To the extent~~Gains or losses on the fair value ~~hedge is effective, the gain or loss on the~~ hedging instrument ~~offsets~~principally offset the ~~loss~~losses or ~~gain~~gains on the hedged item attributable to the hedged risk. ~~Any difference between the~~The changes in the fair value of the derivative and the changes in the hedged item ~~is referred~~may not fully offset due to ~~as hedge ineffectiveness and is reported as a component of Other expenses. Hedge ineffectiveness may be caused by~~ differences between a debt obligation’s interest rate and the benchmark rate, primarily due to credit spreads at inception of the hedging relationship that are not reflected in the fair value of the interest rate swap. Furthermore, ~~hedge ineffectiveness~~the difference may be caused by changes in 1-month LIBOR, 3-month LIBOR and the overnight indexed swap rate, as spreads between these rates impact the fair value of the interest rate swap without ~~causing~~ an exact offsetting impact to the fair value of the hedged debt.

~~For~~The following table presents the ~~periods presented,~~gains and losses recognized in Interest expense on the ~~Company considers all~~Consolidated Statements of Income associated with the fair value hedges ~~to be highly effective and did not de-designate any fair value hedge relationships.~~of our fixed-rate long-term debt for the years ended December 31:


	Gains (losses)
(Millions)	2020		2019		2018
Fixed-rate long-term debt	$	(405)	$	(458)	$	59
Derivatives designated as hedging instruments	409		462		(43)
Total	$	4	$	4	$	16

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The ~~following table summarizes~~carrying values of the ~~gains (losses) recognized in Other expenses associated with~~hedged liabilities, recorded within Long-term debt on the ~~Company’s~~Consolidated Balance Sheets, were $16.4 billion and $22.7 billion as of December 31, 2020 and 2019, respectively, including the cumulative amount of fair value ~~hedges~~hedging adjustments of $622 million and $217 million for the ~~year ended December 31:~~respective periods.

(Millions)
2017 2016 2015
Other expenses:
Interest rate derivative contracts $ (246 ) $ (184 ) $ (83 )
Hedged items 206 163 93
Net hedge ineffectiveness (losses) gains $ (40 ) $ (21 ) $ 10

~~The Company also~~We recognized a net ~~reduction~~decrease of $256 million and net increases of $102 million and $51 million in ~~interest~~Interest expense on ~~long-term~~Long-term debt ~~of $133 million, $224 million and $284 million~~ for the years ended December 31, ~~2017, 2016~~2020, 2019, and ~~2015,~~2018, respectively, primarily related to the net settlements ~~(interest accruals)~~including interest accruals on ~~the Company’s~~our interest rate derivatives designated as fair value hedges.

NET INVESTMENT HEDGES

A net investment hedge is used to hedge future changes in currency exposure of a net investment in a foreign operation. ~~The Company~~We primarily ~~designates~~designate foreign currency derivatives, typically foreign exchange forwards, and on occasion foreign currency denominated debt, as hedges of net investments in certain foreign operations. These instruments reduce exposure to changes in currency exchange rates on ~~the Company’s~~our investments in non-U.S. subsidiaries. ~~The effective portion~~We had notional amounts of ~~the~~approximately $10.5 billion and $9.8 billion of foreign currency derivatives designated as net investment hedges as of December 31, 2020 and 2019, respectively. The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, ~~was a loss~~were losses of ~~$370~~$252 million and ~~gains of $281~~$140 million and ~~$577~~a gain of $328 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015, respectively,~~2018, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income associated with ~~any ineffective portion recognized in Other expenses during~~ the ~~period.~~ ~~The~~sale or liquidation of a business, net ~~hedge ineffectiveness recognized was nil~~of taxes, were $1 million, NaN and $1 million for the years ended December 31, ~~2017~~2020, 2019, and ~~December 31, 2016,~~ ~~and a gain~~2018, respectively.

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Table of ~~$1 million for the year ended December 31,~~ 2015. Accumulated losses within AOCI of $31 million, $5 million and nil for the years ended December 31, 2017, 2016 and 2015, respectively, were reclassified to Other expenses upon investment sales or liquidations.Contents

DERIVATIVES NOT DESIGNATED AS HEDGES

~~The Company has~~We have derivatives that act as economic hedges, but are not designated as such for hedge accounting purposes. Foreign currency transactions from time to time may be partially or fully economically hedged through foreign currency contracts, primarily foreign exchange forwards. These hedges generally mature within one year. Foreign currency contracts involve the purchase and sale of designated currencies at an agreed upon rate for settlement on a specified date.

~~The Company~~We also ~~has~~have certain operating agreements containing payments that may be linked to a market rate or price, primarily foreign currency rates. The payment components of these agreements may meet the definition of an embedded derivative, in which case the embedded derivative is accounted for separately and is classified as a foreign exchange contract based on its primary risk exposure.

The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in ~~a net loss of $29 million for the year ended December 31, 2017 and~~ net gains of $1$10 million, $64 million and ~~$83~~$60 million for the years ended December 31, ~~2016~~2020, 2019, and ~~2015,~~2018, respectively, ~~and~~that are recognized in Other, ~~expenses.~~

~~The changes~~net expenses in the Consolidated Statements of Income. Changes in the fair value of an embedded derivative ~~was nil~~were NaN for the year ended December 31, ~~2017 and resulted~~2020. Included in ~~gains~~the net gain of ~~$9 million and $5~~$64 million for the ~~years~~year ended December 31, ~~2016 and 2015, respectively, and are~~2019, is a gain of $3 million, related to a change in the fair value of an embedded derivative. The change in the fair value of the embedded derivative for the year ended December 31, 2018 resulted in a loss of $11 million that is recognized in Card Member services ~~and other expenses.~~expense in the Consolidated Statements of Income.

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NOTE 1514

FAIR VALUES

Fair value is defined as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the ~~Company’s~~ principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

	~~Level 1 ― Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.~~

•Level 1 ― Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.

	Level 2 ― Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

•Level 2 ― Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

– Quoted prices for similar assets or liabilities in active markets;

– Quoted prices for identical or similar assets or liabilities in markets that are not active;

– Inputs other than quoted prices that are observable for the asset or liability; and

– Inputs that are derived principally from or corroborated by observable market data by correlation or other means.



Level 3 ― Inputs that are unobservable and reflect the Company’s own estimates about the estimates market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). The Company did not measure any financial instruments presented on the Consolidated Balance Sheets at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2017 and 2016, although the disclosed fair value of certain assets that are not carried at fair value, as presented later in this Note, are classified within Level 3.

•Level 3 ― Inputs that are unobservable and reflect our own estimates about the estimates market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). We did not measure any financial instruments presented on the Consolidated Balance Sheets at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2020 and 2019, although the disclosed fair value of certain assets that are not carried at fair value, as presented later in this Note, are classified within Level 3.

~~The Company monitors~~We monitor the market conditions and ~~evaluates~~evaluate the fair value hierarchy levels at least quarterly. For ~~any transfers in and out of the levels of the fair value hierarchy, the Company discloses the fair value measurement at the beginning of the reporting period during which the transfer occurred. For~~ the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, there were no ~~significant transfers between levels.~~

Level 3 transfers.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE

The following table summarizes ~~the Company’s~~our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy (as described in the preceding paragraphs), as of December 31:

2017 2016
(Millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets:
Investment securities:^(a)

Equity securities and other $ 48 $ 1 $ 47 $ ― $ 49 $ 1 $ 48 $ ―
Debt securities 3,111 1,045 2,066 ― 3,108 460 2,648 ―
Derivatives^(a)
210 ― 210 ― 765 ― 765 ―
Total Assets 3,369 1,046 2,323 ― 3,922 461 3,461 ―
Liabilities:
Derivatives^(a)
218 ― 218 ― 280 ― 280 ―
Total Liabilities $ 218 $ ― $ 218 $ ― $ 280 ― 280 ―

~~(a)~~

~~Refer to Note 5 for the fair values of investment securities and to Note 14 for the fair values of derivative assets and liabilities, on a further disaggregated basis.~~


	2020								2019
(Millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Investment securities:(a)
Equity securities	$	81	$	80	$	1	$	0	$	78	$	77	$	1	$	0
Debt securities	21,550		0		21,550		0		8,328		0		8,328		0
Derivatives, gross(a)	629		0		629		0		343		0		343		0
Total Assets	22,260		80		22,180		0		8,749		77		8,672		0
Liabilities:
Derivatives, gross(a)	702		0		702		0		440		0		440		0
Total Liabilities	$	702	$	0	$	702	$	0	$	440	$	0	$	440	$	0

(a)Refer to Note 4 for the fair values of investment securities and to Note 13 for the fair values of derivative assets and liabilities, on a further disaggregated basis.

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VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE

For the financial assets and liabilities measured at fair value on a recurring basis (categorized in the valuation hierarchy table above) ~~the Company applies~~, we apply the following valuation techniques:

Investment Securities

When available, quoted prices of identical investment securities in active markets are used to estimate fair value. Such investment securities are classified within Level 1 of the fair value hierarchy.

When quoted prices of identical investment securities in active markets are not available, the fair values for ~~the Company’s~~our investment securities are obtained primarily from pricing services engaged by ~~the Company,~~us, and ~~the Company receives~~we receive one price for each security. The fair values provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. Such investment securities are classified within Level 2 of the fair value hierarchy. The inputs to the valuation techniques applied by the pricing services vary depending on the type of security being priced but are typically benchmark yields, benchmark security prices, credit spreads, prepayment speeds, reported trades and broker-dealer quotes, all with reasonable levels of transparency. The pricing services did not apply any adjustments to the pricing models used. In addition, ~~the Company~~we did not apply any adjustments to prices received from the pricing services.

~~The Company reaffirms its~~We reaffirm our understanding of the valuation techniques used by ~~its~~our pricing services at least annually. In addition, ~~the Company corroborates~~we corroborate the prices provided by ~~its~~our pricing services by comparing them to alternative pricing sources. In instances where price discrepancies are identified between different pricing sources, ~~the Company evaluates~~we evaluate such discrepancies to ensure that the prices used for ~~its~~our valuation represent the fair value of the underlying investment securities. Refer to Note 54 for additional fair value information.

Derivative Financial Instruments

The fair value of ~~the Company’s~~our derivative financial instruments is estimated internally by using third-party pricing models, where the inputs to those models are readily observable from ~~actively quoted~~active markets. The pricing models used are consistently applied and reflect the contractual terms of the derivatives as described below. ~~The Company reaffirms its~~We reaffirm our understanding of the valuation techniques at least annually and ~~validates~~validate the valuation output on a quarterly basis. ~~The Company’s~~Our derivative instruments are classified within Level 2 of the fair value hierarchy.

The fair value of ~~the Company’s~~our interest rate swaps is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the swap such as the notional amount, fixed coupon rate, floating coupon rate and tenor, as well as discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated.

The fair value of foreign exchange forward contracts is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the forward contracts such as the notional amount, maturity dates and contract rate, as well as relevant foreign currency forward curves, and discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated.

Credit valuation adjustments are necessary when the market parameters, such as a benchmark curve, used to value derivatives are not indicative of ~~the~~our credit quality or that of ~~the Company or its~~our counterparties. ~~The Company considers~~We consider the counterparty credit risk by applying an observable forecasted default rate to the current exposure. Refer to Note 1413 for additional fair value information.

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FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE

The following table summarizes the estimated fair values of ~~the Company’s~~our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of December 31, ~~2017~~2020 and ~~2016.~~2019. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of December 31, ~~2017~~2020 and ~~2016,~~2019, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of ~~the Company~~American Express be estimated by aggregating the amounts presented.

Carrying Corresponding Fair Value Amount
2017 (Billions)
Value Total Level 1 Level 2 Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents^(a)
$ 33 $ 33 $ 32 $ 1 $ ―
Other financial assets^(b)
57 57 ― 57 ―
Financial assets carried at other than fair value
Loans, net^(c)
74 75 ― ― 75

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value 76 76 ― 76 ―
Financial liabilities carried at other than fair value
Certificates of deposit^(d)
17 17 ― 17 ―
Long-term debt^(c)
$ 56 $ 57 $ ― $ 57 $ ―

Carrying Corresponding Fair Value Amount
2016 (Billions)
Value Total Level 1 Level 2 Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents^(a)
$ 25 $ 25 $ 22 $ 3 $ ―
Other financial assets^(b)
51 51 ― 51 ―
Financial assets carried at other than fair value
Loans, net^(c)
65 66 ― ― 66

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value 67 67 ― 67 ―
Financial liabilities carried at other than fair value
Certificates of deposit^(d)
12 12 ― 12 ―
Long-term debt^(c)
$ 47 $ 48 $ ― $ 48 $ ―

~~(a)~~

~~Level 2 amounts reflect time deposits and short-term investments.~~


2020 (Billions)	Carrying Value		Corresponding Fair Value Amount
			Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents(a)	$	33	$	33	$	31	$	2	$	0
Other financial assets(b)	46		46		0		46		0
Financial assets carried at other than fair value
Card Member and Other loans, less reserves(c)	71		75		0		0		75

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value	101		101		0		101		0
Financial liabilities carried at other than fair value
Certificates of deposit(d)	8		8		0		8		0
Long-term debt(c)	$	43	$	45	$	0	$	45	$	0

~~(b)~~

~~Includes Card Member receivables (including fair values of Card Member receivables of $8.9 billion and $8.8~~


2019 (Billions)	Carrying Value		Corresponding Fair Value Amount
			Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents(a)	$	24	$	24	$	23	$	1	$	0
Other financial assets(b)	60		60		0		60		0
Financial assets carried at other than fair value
Card Member and Other loans, less reserves(c)	90		91		0		0		91

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value	92		92		0		92		0
Financial liabilities carried at other than fair value
Certificates of deposit(d)	10		10		0		10		0
Long-term debt(c)	$	58	$	60	$	0	$	60	$	0

(a)Level 2 amounts reflect time deposits and short-term investments.

(b)Balances includeCard Member receivables (including fair values of Card Member receivables of $4.2 billion and $8.2 billion held by a consolidated VIE ~~as of December 31, 2017 and 2016, respectively), Other receivables, restricted cash and other miscellaneous assets.~~

~~(c)~~

Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $25.6 billion and $26.0 billion as of December 31, 2017 and 2016, respectively, and the fair values of long-term debt were $18.6 billion and $15.2 billion as of December 31, 2017 and 2016, respectively.

~~(d)~~

~~Presented as a component of customer deposits on the Consolidated Balance Sheets.~~

~~The fair values of these financial instruments are estimates based upon the market conditions and perceived risks~~ as of December 31, ~~2017,~~2020 and ~~require management judgment. These figures may not be indicative~~2019, respectively), other receivables and other miscellaneous assets.

(c)Balances include amounts held by a consolidated VIE for which the fair values of ~~future~~Card Member loans were $25.8 billion and $32.0 billion as of December 31, 2020 and 2019, respectively, and the fair ~~values. The fair value~~values of Long-term debt were $13.0 billion and $19.8 billion as of December 31, 2020 and 2019, respectively.

(d)Presented as a component of Customer deposits on the ~~Company cannot be reliably estimated by aggregating the amounts presented.~~

Consolidated Balance Sheets.

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VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE

For the financial assets and liabilities that are not required to be carried at fair value on a recurring basis (categorized in the valuation hierarchy table) ~~the Company applies~~, we apply the following valuation techniques to measure fair value:

Financial Assets For Which Carrying Values Equal Or Approximate Fair Value

Financial assets for which carrying values equal or approximate fair value include cash and cash equivalents, Card Member receivables, accrued interest and certain other assets. For these assets, the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate.

Financial Assets Carried At Other Than Fair Value

~~Loans, net~~Card Member and Other loans, less reserves

~~Loans~~Card Member and Other loans are recorded at historical cost, less reserves, on the Consolidated Balance Sheets. In estimating the fair value for ~~the Company’s~~our loans, ~~the Company uses~~we use a discounted cash flow model. Due to the lack of a comparable whole loan sales market for similar loans and the lack of observable pricing inputs thereof, ~~the Company uses~~we use various inputs ~~derived from an equivalent securitization market~~ to estimate fair value. Such inputs include projected income, ~~pay-down rates,~~ discount rates ~~relevant credit costs~~ and ~~cost of funding assumptions.~~forecasted write-offs. The valuation does not include economic value attributable to future receivables generated by the accounts associated with the loans.

Financial Liabilities For Which Carrying Values Equal Or Approximate Fair Value

Financial liabilities for which carrying values equal or approximate fair value include accrued interest, customer deposits (excluding certificates of deposit, which are described further below), Travelers Cheques and other prepaid products outstanding, accounts payable, short-term borrowings and certain other liabilities for which the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate.

Financial Liabilities Carried At Other Than Fair Value

Certificates of Deposit

Certificates of deposit (CDs) are recorded at their historical issuance cost on the Consolidated Balance Sheets. Fair value is estimated using a discounted cash flow methodology based on the future cash flows and the discount rate that reflects the current market rates for similar types of CDs within similar markets.

Long-term Debt

Long-term debt is recorded at historical issuance cost on the Consolidated Balance Sheets adjusted for (i) unamortized discount and unamortized fees, (ii) the impact of movements in exchange rates on foreign currency denominated debt and (iii) the impact of fair value hedge accounting on certain fixed-rate notes ~~and current translation rates for foreign-denominated debt.~~that have been swapped to floating rate through the use of interest rate swaps. The fair value of ~~the Company’s~~our long-term debt is measured using quoted offer prices when quoted market prices are available. If quoted market prices are not available, the fair value is determined by discounting the future cash flows of each instrument at rates currently observed in publicly-traded debt markets for debt of similar terms and credit risk. For long-term debt, where there are no rates currently observable in publicly traded debt markets of similar terms and comparable credit risk, ~~the Company uses~~we use market interest rates and ~~adjusts~~adjust those rates for necessary risks, including ~~its~~our own credit risk. In determining an appropriate spread to reflect ~~its~~our credit standing, ~~the Company considers~~we consider credit default swap spreads, bond yields of other long-term debt offered by ~~the Company,~~us, and interest rates currently offered to ~~the Company~~us for similar debt instruments of comparable maturities.

NONRECURRING FAIR VALUE MEASUREMENTS

~~The Company has~~We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be ~~impaired.~~impaired or where there are observable price changes for equity investments without readily determinable fair values. During the years ended December 31, ~~2017~~2020 and ~~2016, the Company~~2019, we did ~~not~~0t have any material assets that were measured at fair value due to ~~impairment.~~impairment and there were no material fair value adjustments for equity investments without readily determinable fair values.

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NOTE 1615

GUARANTEES

~~As of December 31, 2017, the~~The maximum potential undiscounted future payments and related liability resulting from guarantees and indemnifications provided by ~~the Company~~us in the ordinary course of business were $1 billion and ~~$52~~$24 million, respectively, and related primarily to the Company’s real estate and business dispositions. As of December 31, 2016, the maximum potential undiscounted future payments and related liability were $48 billion and $86 million, respectively. Amounts related to the Company’s Card Member protection plans were included as of December 31, ~~2016, in addition~~2020, and $1 billion and $29 million, respectively, as of December 31, 2019, all of which were primarily related to ~~its~~our real estate and business dispositions.

To date, ~~the Company has~~we have not experienced any significant losses related to guarantees or indemnifications. ~~The Company’s~~Our recognition of these instruments is at fair value. In addition, ~~the Company establishes~~we establish reserves when a loss is probable and the amount can be reasonably estimated.

NOTE 1716

COMMON AND PREFERRED SHARES

The following table shows authorized shares and provides a reconciliation of common shares issued and outstanding for the years ended December 31:

(Millions, except where indicated)    2017    2016 2015
Common shares authorized (billions)^(a)
   3.6    3.6 3.6
Shares issued and outstanding at beginning of year    904    969 1,023
Repurchases of common shares    (50)    (70) (59)
Other, primarily stock option exercises and restricted stock awards granted    5    5 5
Shares issued and outstanding as of December 31    859    904 969

~~(a)~~

~~Of the common shares authorized but unissued as of December 31, 2017, approximately 29 million shares are reserved for issuance under employee stock and employee benefit plans.~~


(Millions, except where indicated)	2020	2019	2018
Common shares authorized (billions)(a)	3.6	3.6	3.6
Shares issued and outstanding at beginning of year	810	847	859
Repurchases of common shares	(7)	(40)	(15)
Other, primarily stock option exercises and restricted stock awards granted	2	3	3
Shares issued and outstanding as of December 31	805	810	847

(a)Of the common shares authorized but unissued as of December 31, 2020, approximately 23 million shares are reserved for issuance under employee stock and employee benefit plans.

On September ~~26, 2016,~~23, 2019, the Board of Directors authorized the repurchase of ~~150~~up to 120 million of common shares ~~over~~from time to time, subject to market conditions and in accordance with ~~the Company’s~~our capital ~~distribution plans submitted to the Board of Governors of the Federal Reserve System (the Federal Reserve) and subject to market conditions.~~plans. This authorization ~~replaces all~~replaced the prior repurchase ~~authorizations.~~authorization and does not have an expiration date. During ~~2017, 2016~~2020, 2019 and ~~2015, the Company~~2018, we repurchased 507 million common shares with a cost basis of ~~$4.3~~$0.9 billion, 7040 million common shares with a cost basis of ~~$4.4~~$4.6 billion, and 5915 million common shares with a cost basis of ~~$4.5~~$1.6 billion, respectively. The cost basis includes commissions paid of ~~$2.9~~$1.0 million, ~~$1.2~~$6.2 million and ~~$1.1~~$2.2 million in ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. As of December 31, ~~2017, the Company~~2020, we had approximately 85102 million common shares remaining under the Board share repurchase authorization. ~~Such authorization does not have an expiration date.~~

Common shares are generally retired by ~~the Company~~us upon repurchase (except for ~~2.9~~2.5 million, ~~3.0~~2.6 million and ~~3.0~~2.7 million shares held as treasury shares as of December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively); retired common shares and treasury shares are excluded from the shares outstanding in the table above. The treasury shares, with a cost basis of ~~$217~~$279 million, ~~$197~~$292 million and ~~$242~~$207 million as of December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively, are included as a reduction to ~~additional~~Additional paid-in capital in ~~shareholders’~~Shareholders’ equity on the Consolidated Balance Sheets.

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PREFERRED SHARES

The Board of Directors is authorized to permit ~~the Company~~us to issue up to 20 million Preferred Shares at a par value of $1.662/3 without further shareholder approval. ~~The Company has~~We have the following perpetual Fixed Rate/Floating Rate Noncumulative Preferred Share series issued and outstanding as of December 31, ~~2017:~~2020:

Series B Series C
Issuance date November 10, 2014 March 2, 2015
Securities issued 750 Preferred Shares; represented by 750,000 depositary shares 850 Preferred Shares; represented by 850,000 depositary shares
Aggregate liquidation preference $750 million $850 million
Fixed dividend rate per annum 5.20% 4.90%
Semi-annual fixed dividend payment dates Beginning May 15, 2015 Beginning September 15, 2015
Floating dividend rate per annum 3 month LIBOR+ 3.428% 3 month LIBOR+ 3.285%
Quarterly floating dividend payment dates Beginning February 15, 2020 Beginning June 15, 2020
Fixed to floating rate conversion date^(a)
November 15, 2019 March 15, 2020

~~(a)~~

~~The date on which dividends convert from a fixed-rate calculation to a floating rate calculation.~~

Series B

Series C

Issuance date

November 10, 2014

March 2, 2015

Securities issued

750 Preferred Shares; represented by 750,000 depositary shares

850 Preferred Shares; represented by 850,000 depositary shares

Aggregate liquidation preference

$750 million

$850 million

Fixed dividend rate per annum

5.20%

4.90%

Semi-annual fixed dividend payment dates

Beginning May 15, 2015

Beginning September 15, 2015

Floating dividend rate per annum

3 month LIBOR+ 3.428%

3 month LIBOR+ 3.285%

Quarterly floating dividend payment dates

Beginning February 15, 2020

Beginning June 15, 2020

Fixed to floating rate conversion date(a)

November 15, 2019

March 15, 2020

(a)The date on which dividends convert from a fixed-rate calculation to a floating rate calculation.

In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the preferred stock then outstanding takes precedence over ~~the Company’s~~our common stock for the payment of dividends and the distribution of assets out of funds legally available for distribution to shareholders. Each outstanding series of Preferred Shares has a liquidation price of $1 million per Preferred Share, plus any accrued but unpaid dividends. ~~The Company~~We may redeem these Preferred Shares at $1 million per Preferred Share (equivalent to $1,000 per depositary share) plus any declared but unpaid dividends in whole or in part, from time to time, on any dividend payment date on or after the respective fixed to floating rate conversion date, or in whole, but not in part, within 90 days of certain bank regulatory changes.

There were no0 warrants issued and outstanding as of December 31, ~~2017, 2016~~2020, 2019 and ~~2015.~~2018.

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NOTE 1817

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME

AOCI is a balance sheet item in ~~the~~ Shareholders’ ~~Equity section of~~equity on the ~~Company’s~~ Consolidated Balance Sheets. It is comprised of items that have not been recognized in earnings but may be recognized in earnings in the future when certain events occur. Changes in each component for the three years ended December 31 were as follows:

(Millions), net of tax
Net Unrealized Gains (Losses) on Investment Securities Foreign Currency Translation Adjustments Net Unrealized Pension and Other Postretirement Benefit Gains (Losses) Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2014 $ 96 $ (1,499 ) $ (516 ) $ (1,919 )
Net unrealized losses (37 ) ― ― (37 )
Decrease due to amounts reclassified into earnings (1 ) (1 ) ― (2 )
Net translation loss of investments in foreign operations ― (1,122 ) ― (1,122 )
Net gains related to hedges of investments in foreign operations ― 578 ― 578
Pension and other postretirement benefit ― ― (32 ) (32 )
Net change in accumulated other comprehensive loss (38 ) (545 ) (32 ) (615 )
Balances as of December 31, 2015 58 (2,044 ) (548 ) (2,534 )
Net unrealized losses (45 ) ― ― (45 )
(Decrease) increase due to amounts reclassified into earnings (6 ) 4 ― (2 )
Net translation loss of investments in foreign operations ― (503 ) ― (503 )
Net gains related to hedges of investment in foreign operations ― 281 ― 281
Pension and other postretirement benefit ― ― 19 19
Net change in accumulated other comprehensive (loss) income (51 ) (218 ) 19 (250 )
Balances as of December 31, 2016 7 (2,262 ) (529 ) (2,784 )
Net unrealized losses (7 ) ― ― (7 )
Decrease due to amounts reclassified into earnings ― (7 ) ― (7 )
Net translation gain of investments in foreign operations^(a)
― 678 ― 678
Net losses related to hedges of investment in foreign operations ― (370 ) ― (370 )
Pension and other postretirement benefit ― ― 62 62
Net change in accumulated other comprehensive (loss) income (7 ) 301 62 356
Balances as of December 31, 2017 $ ― $ (1,961 ) $ (467 ) $ (2,428 )

~~(a)~~

~~Includes $289 million of recognized tax benefits in the year ended December 31, 2017 (refer to Note 21).~~


(Millions), net of tax	Net Unrealized Gains (Losses) on Debt Securities		Foreign Currency Translation Adjustment Gains (Losses)		Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)		Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2017	$	0	$	(1,961)	$	(467)	$	(2,428)
Net unrealized losses	(10)		0		0		(10)
Net translation on investments in foreign operations	0		(500)		0		(500)
Net hedges of investments in foreign operations	0		328		0		328
Pension and other postretirement benefits	0		0		11		11
Other	2		0		0		2
Net change in accumulated other comprehensive (loss) income	(8)		(172)		11		(169)
Balances as of December 31, 2018	(8)		(2,133)		(456)		(2,597)
Net unrealized gains	41		0		0		41
Net translation on investments in foreign operations	0		84		0		84
Net hedges of investments in foreign operations	0		(140)		0		(140)
Pension and other postretirement benefits	0		0		(125)		(125)
Net change in accumulated other comprehensive (loss) income	41		(56)		(125)		(140)
Balances as of December 31, 2019	33		(2,189)		(581)		(2,737)
Net unrealized gains	32		0		0		32
Amounts reclassified into earnings	0		(3)		0		(3)
Net translation on investments in foreign operations	0		215		0		215
Net hedges of investments in foreign operations	0		(252)		0		(252)
Pension and other postretirement benefits	0		0		(150)		(150)
Net change in accumulated other comprehensive (loss) income	32		(40)		(150)		(158)
Balances as of December 31, 2020	$	65	$	(2,229)	$	(731)	$	(2,895)

The following table shows the tax impact for the years ended December 31 for the changes in each component of AOCI presented above:

Tax expense (benefit)
(Millions) 2017 2016 2015
Investment securities $ (4 ) $ (27 ) $ (20 )
Foreign currency translation adjustments^(a)
(172 ) (15 ) (124 )
Net investment hedges (215 ) 139 340
Pension and other postretirement benefit 7 37 ―
Total tax impact $ (384 ) $ 134 $ 196

~~(a) Includes $289 million of recognized tax benefits in the year ended December 31, 2017 (refer to Note 21).~~


	Tax expense (benefit)
(Millions)	2020		2019		2018
Net unrealized investment securities	$	9	$	12	$	(2)
Net translation on investments in foreign operations	17		24		(44)
Net hedges of investments in foreign operations	(79)		(43)		107
Pension and other postretirement benefits	(28)		(38)		9
Total tax impact	$	(81)	$	(45)	$	70

The following table presents the effects of reclassifications out of AOCI and into the Consolidated Statements of Income associated with the sale or liquidation of a business, net of taxes for the years ended December 31:


		Gains (losses) recognized in earnings
Description (Millions)	Income Statement Line Item	2020		2019		2018
Foreign currency translation adjustments
Reclassification of translation adjustments and related hedges	Other expenses	$	3	$	0	$	1
Related income tax	Income tax provision	0		0		(1)
Reclassification of foreign currency translation adjustments		$	3	$	0	$	0

Gains (losses) recognized in earnings
Description (Millions)
Income Statement Line Item 2017 2016
Available-for-sale securities
Reclassifications for previously unrealized net gains on investment securities Other non-interest revenues $ ― $ 9
Related income tax expense Income tax provision ― (3 )
Reclassification to net income related to available-for-sale securities ― 6
Foreign currency translation adjustments
Reclassification of realized losses on translation adjustments and related net investment hedges Other expenses (7 ) (4 )
Related income tax benefit Income tax provision 14 ―
Reclassification to net income related to foreign currency translation adjustments 7 (4 )
Total $ 7 $ 2

~~124~~

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NOTE 18

~~NOTE 19~~

~~NON-INTEREST REVENUE~~OTHER FEES AND ~~EXPENSE DETAIL~~COMMISSIONS AND OTHER EXPENSES

The following is a detail of Other fees and commissions for the years ended December 31:

(Millions) 2017 2016 2015
Delinquency fees $ 888 $ 762 $ 788
Foreign currency conversion fee revenue 851 809 852
Loyalty coalition-related fees 453 410 379
Travel commissions and fees 354 338 349
Service fees 309 291 361
Other^(a)
167 143 137
Total Other fees and commissions $ 3,022 $ 2,753 $ 2,866

~~(a)~~

~~Other primarily includes fees related to Membership Rewards programs.~~


(Millions)	2020		2019		2018
Fees charged to Card Members:
Delinquency fees	$	772	$	1,028	$	959
Foreign currency conversion fee revenue	433		982		921
Other customer fees:
Loyalty coalition-related fees	435		456		461
Service fees and other(a)	421		407		417
Travel commissions and fees	102		424		395
Total Other fees and commissions	$	2,163	$	3,297	$	3,153

~~The following is a detail of~~ (a)Other ~~revenues for the years ended December 31:~~

(Millions) 2017 2016 2015
Global Network Services partner revenues $ 615 $ 654 $ 640
Other^(a)
1,117 1,375 1,393
Total Other revenues $ 1,732 $ 2,029 $ 2,033

~~(a)~~

Other includes revenues arising from net revenue earned on cross-border Card Member spending, insurance premiums earned from Card Member travel and other insurance programs, merchant-related fees, Prepaid card and Travelers Cheque-related revenues, revenues related to the GBT JV transition services agreement, earnings from equity method investments (including the GBT JV) and other miscellaneous revenue and fees.

includes Membership Rewards program fees that are not related to contracts with customers.

The following is a detail of Other expenses for the years ended December 31:

(Millions) 2017 2016 2015
Professional services $ 2,070 $ 2,583 $ 2,750
Occupancy and equipment 2,019 1,838 1,854
Communications 276 302 345
Gain on sale of HFS portfolios^(a)
― (1,218 ) ―
Other^(b)
1,411 1,657 1,844
Total Other expenses $ 5,776 $ 5,162 $ 6,793

~~(a)~~

~~Refer to Note 2 for additional information.~~


(Millions)	2020		2019		2018
Occupancy and equipment	$	2,334	$	2,168	$	2,033
Professional services	1,789		2,091		2,125
Other(a)	1,202		1,597		1,506
Total Other expenses	$	5,325	$	5,856	$	5,664

~~(b)~~

Other expense primarily includes general operating expenses, goodwill and technology impairment costs (refer to Note 2), Card and merchant-related fraud losses, foreign currency-related gains and losses (including the favorable impact from the reassessment of the functional currency of certain UK legal entities in the year ended December 31, 2015) and insurance costs. In addition, beginning December 1, 2015 through to the portfolio sale completion dates, included the valuation allowance adjustment associated with the HFS portfolios.

(a)Other expense primarily includes general operating expenses, communication expenses, non-income taxes, unrealized gains and losses on certain equity investments, Card Member and merchant-related fraud losses and litigation expenses. For the year ended December 31, 2018, Other expense also includes the loss on a transaction involving the operations of our prepaid reloadable and gift card business.

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NOTE 2019

RESTRUCTURING

~~The Company initiates~~We periodically initiate restructuring programs to support new business strategies and to enhance ~~its~~our overall effectiveness and efficiency. In connection with these programs, ~~the Company~~we will typically ~~will~~ incur severance and other exit costs.

~~The following table summarizes the Company’s~~We had $197 million, $135 million and $69 million accrued in total restructuring reserves ~~activity~~as of December 31, 2020, 2019 and 2018, respectively. New charges, including net revisions to existing restructuring reserves, which primarily relate to the redeployment of displaced colleagues to other positions, were $125 million, $125 million and $(23) million, for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015:~~

(Millions) Severance
Other^(a)
Total
Liability balance as of December 31, 2014 $ 435 $ 35 $ 470
Restructuring charges, net of $61 in revisions^(b)
(33 ) 7 (26 )
Payments (141 ) (14 ) (155 )
Other non-cash^(c)
(23 ) (5 ) (28 )
Liability balance as of December 31, 2015 238 23 261
Restructuring charges, net of $81 in revisions^(b)
305 24 329
Payments (171 ) (21 ) (192 )
Other non-cash^(c)
(12 ) (3 ) (15 )
Liability balance as of December 31, 2016 360 23 383
Restructuring charges^(d)
34 8 42
Payments (219 ) (16 ) (235 )
Other non-cash^(c)
11 (2 ) 9
Liability balance as of December 31, 2017^(e)
$ 186 $ 13 $ 199

~~(a)~~

~~Other primarily includes facility exit and contract termination costs.~~

~~(b)~~

~~Revisions primarily relate to higher than anticipated redeployments of displaced employees to other positions within the Company, business changes and modifications to existing initiatives.~~

~~(c)~~

~~Consists primarily of foreign exchange impacts and other non-cash charges.~~

~~(d)~~

~~Net revisions to existing restructuring reserves were immaterial for the year ended December 31, 2017.~~

~~(e)~~

The majority of cash payments related to the remaining restructuring liabilities are expected to be completed in 2018, and to a lesser extent certain contractual long-term severance arrangements and lease obligations are expected to be completed in 2019 and 2023, respectively.

Restructuring charges related to severance obligations are included in salaries and employee benefits in the Company’s Consolidated Statements of Income, while charges pertaining to other exit costs are included in occupancy and equipment and other expenses.

The following table summarizes the Company’s restructuring charges, net of revisions, by reportable operating segment and Corporate & Other for the year ended December 31, 2017, and the cumulative amounts2018, respectively. Cumulatively, we recognized $383 million relating to the restructuring programs that were in progress during ~~2017~~2020 and initiated at various dates between ~~2011~~2016 and ~~2017.~~

2017
Cumulative Restructuring Expense Incurred To Date On
In-Progress Restructuring Programs

(Millions) Total Restructuring Charges, net revisions Severance Other Total
USCS $ (8 ) $ 54 $ ― $ 54
ICNS (6 ) 132 ― 132
GCS (10 ) 85 8 93
GMS 5 40 ― 40
Corporate & Other 61 322 81 403 ^(a)
Total $ 42 $ 633 $ 89 $ 722 ^(b)

~~(a)~~

Corporate & Other includes certain severance and other charges of $336 million related to companywide support functions which were not allocated to the Company’s reportable operating segments, as these were corporate initiatives, which is consistent with how such charges were reported internally.

~~(b)~~

As of December 31, 2017, the total expenses to be incurred for previously approved restructuring activities that were in progress are not expected to be materially different than the cumulative expenses incurred to date for these programs.

2020, the majority of which has been reflected within Corporate & Other.

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NOTE 2120

INCOME TAXES

The Tax Act, enacted by the U.S. government on December 22, 2017, makes broad and complex changes to the U.S. tax code which will require time to interpret. The SEC issued Staff Accounting Bulletin No. 118 (SAB 118) in December, 2017, to provide guidance on accounting for the effects of the Tax Act. SAB 118 provides for a measurement period of up to one year from the Tax Act enactment date for companies to complete their assessment of and accounting for those effects of the Tax Act required under ASC 740 “Implementation Guidance on Accounting for Uncertainty in Income Taxes” to be reported in the period of enactment. Under SAB 118, a company must first reflect the income tax effects of the Tax Act for which the accounting is complete in the period of the date of enactment. To the extent the accounting for other income tax effects is incomplete, but a reasonable estimate can be determined, companies must record a provisional estimate to be included in their financial statements. For any income tax effect for which a reasonable estimate cannot be determined, an entity must continue to apply ASC 740 based on the provisions of the tax laws in effect immediately prior to the Tax Act being enacted until such time as a reasonable estimate can be determined.

The Company has recorded a discrete net charge of $2.6 billion in the period ended December 31, 2017 related to the Tax Act. For the reasons stated below, the Company requires additional time to complete its analysis of the impacts of the Tax Act and therefore its accounting for the Tax Act is provisional.



~~Impacts of Deemed Repatriation:~~ The Tax Act imposed a one-time transition tax on unrepatriated post-1986 accumulated earnings and profits of certain foreign subsidiaries (E&P). To calculate this tax, the Company must determine the cumulative amount of E&P, as well as the amount of foreign taxes paid on such earnings. In addition, the Company made a decision to no longer assert that the accumulated post-1986 E&P of its non-U.S. subsidiaries that are subject to this one-time transition tax are intended to be permanently reinvested outside the United States. As a result, the Company recorded a deferred tax liability for the state income and foreign withholding tax consequences of any future cash dividends paid from such E&P. The Company has recorded reasonable estimates based on data available for both the deemed repatriation tax for 2017 of $1.7 billion and the deferred state income and foreign withholding taxes on potential future distributions of these earnings of $0.3 billion. Until the Company fully completes its analysis, the accounting for these items is provisional.



~~Remeasurement of Deferred Tax Assets and Liabilities:~~ The Company has recorded a deferred charge of $0.6 billion related to the remeasurement of its U.S. federal net deferred tax assets for 2017. This charge reflects the change in the corporate tax rate from 35 percent to 21 percent, effective January 1, 2018, as well as other provisions of the Tax Act. Certain components of the remeasurement are reasonable estimates based on available information. Until the Company fully completes its analysis of all components, the accounting for the remeasurement of the Company’s net deferred tax assets is provisional.

~~The Company will complete its analysis of, and finalize its accounting for, these provisional estimates during the one-year measurement period as prescribed by SAB 118.~~

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:

(Millions) 2017 2016 2015
Current income tax expense:
U.S. federal^(a)
$ 3,408 $ 2,179 $ 2,107
U.S. state and local 259 272 335
Non-U.S. 386 342 416
Total current income tax expense 4,053 2,793 2,858
Deferred income tax (benefit) expense:
U.S. federal^(b)
541 (45 ) (23 )
U.S. state and local (7 ) (8 ) (5 )
Non-U.S. 91 (52 ) (55 )
Total deferred income tax (benefit) expense 625 (105 ) (83 )
Total income tax expense $ 4,678 $ 2,688 $ 2,775

~~(a)~~

~~2017 includes a charge of $1.7 billion related to the Tax Act deemed repatriation tax on certain non-U.S. earnings.~~

~~(b)~~

2017 includes charges related to the Tax Act of $0.6 billion due to the remeasurement of certain federal net deferred tax assets to the lower federal tax rate of 21 percent and $0.3 billion due to deferred state income and foreign withholding tax consequences of future cash distributions from non-U.S. subsidiaries.

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(Millions)	2020		2019		2018
Current income tax expense:
U.S. federal	$	1,122	$	1,108	$	70
U.S. state and local	339		276		150
Non-U.S.	639		437		681
Total current income tax expense	2,100		1,821		901
Deferred income tax (benefit) expense:
U.S. federal	(931)		(58)		276
U.S. state and local	(119)		(31)		78
Non-U.S.	111		(62)		(54)
Total deferred income tax (benefit) expense	(939)		(151)		300
Total income tax expense	$	1,161	$	1,670	$	1,201

A reconciliation of the U.S. federal statutory rate of 3521 percent as of December 31, ~~2017,~~2020, 2019 and 2018, to ~~the Company’s~~our actual income tax rate ~~for the years ended December 31 on continuing operations~~ was as follows:

2017 2016 2015
U.S. statutory federal income tax rate 35.0 % 35.0 % 35.0 %
(Decrease) increase in taxes resulting from:
Tax-exempt income (1.7) (1.7) (1.7)
State and local income taxes, net of federal benefit 2.3 2.7 2.8

Non-U.S. subsidiaries’ earnings^(a)
(5.7) (2.0) (1.8)

Tax settlements^(b)
(0.7) (0.6) (0.2)

Non deductible expenses^(c)
― ― 0.9

U.S. Tax Act^(d)
34.8 ― ―
Other (0.9) (0.2) ―
Actual tax rates 63.1 % 33.2 % 35.0 %

~~(a)~~

Results for all years primarily included tax benefits associated with the undistributed earnings of certain non-U.S. subsidiaries that were deemed to be reinvested indefinitely. In addition, 2017 included tax benefits of $156 million, which decreased the actual tax rate by 2.1 percent, related to the realization of certain foreign tax credits.


	2020		2019		2018
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
(Decrease) increase in taxes resulting from:
Tax-exempt income	(4.1)		(1.9)		(1.7)
State and local income taxes, net of federal benefit	3.7		2.8		2.8
Non-U.S. subsidiaries' earnings	2.4		(0.5)		(1.0)
Tax settlements(a)	(0.3)		(0.3)		(1.9)

U.S. Tax Act and related adjustments(b)	0		0		(4.3)
Valuation allowances	4.0		(0.2)		0.5
Other	0.3		(1.1)		(0.6)
Actual tax rates	27.0	%	19.8	%	14.8	%

~~(b)~~

~~Relates to the resolution of tax matters in various jurisdictions.~~

(a)2018 primarily included a settlement of the IRS examination for tax years 2008-2014, as well as the resolution of certain tax matters in various jurisdictions.

~~(c)~~

~~Relates to the nondeductible portion of the Prepaid Services goodwill impairment in 2015.~~

(b)2018 included changes to the tax method of accounting for certain expenses and adjustments to the 2017 provisional Tax Act charge.

~~(d)~~

~~Relates to the $2.6 billion charge for the impacts of the Tax Act.~~

~~The Company records~~We record a deferred income tax (benefit) provision when there are differences between assets and liabilities measured for financial reporting and for income tax return purposes. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse. ~~In particular, the 2017 balances were reduced to reflect the remeasurement~~

145

Table of ~~certain federal net deferred tax assets due to the enacted lower federal tax rate of 21 percent.~~Contents

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:

(Millions) 2017 2016
Deferred tax assets:
Reserves not yet deducted for tax purposes $ 2,724 $ 3,889
Employee compensation and benefits 403 595
Other 409 592
Gross deferred tax assets 3,536 5,076
Valuation allowance (46 ) (54 )
Deferred tax assets after valuation allowance 3,490 5,022
Deferred tax liabilities:
Intangibles and fixed assets 1,057 1,691
Deferred revenue 306 441
Deferred interest 183 305
Investment in joint ventures 137 209
Other 259 121
Gross deferred tax liabilities 1,942 2,767
Net deferred tax assets $ 1,548 $ 2,255


(Millions)	2020		2019
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	3,905	$	2,633
Employee compensation and benefits	383		365
Net operating loss and tax credit carryforwards	399		119
Other	765		417
Gross deferred tax assets	5,452		3,534
Valuation allowance	(418)		(66)
Deferred tax assets after valuation allowance	5,034		3,468
Deferred tax liabilities:
Intangibles and fixed assets	1,433		1,279
Deferred revenue	252		315
Deferred interest	148		162
Investment in joint ventures	135		122
Other	366		129
Gross deferred tax liabilities	2,334		2,007
Net deferred tax assets	$	2,700	$	1,461

The net operating loss and tax credit carryforward balance as of December 31, 2020, shown in the table above, is related to pre-tax U.S. federal and non-U.S. net operating loss (NOL) carryforwards of $140 million and $1.0 billion, respectively, and foreign tax credit (FTC) carryforwards of $100 million. If not utilized, certain U.S. federal and non-U.S. NOL carryforwards will expire between 2021 and 2037, whereas others have an unlimited carryforward period. The FTC carryforwards will expire between 2029 and 2030.

A valuation allowance is established when management determines that it is more likely than not that all or some portion of the benefit of the deferred tax assets will not be realized. The valuation allowances for both periods presented above are associated with certain non-U.S. deferred tax assets. In addition, the valuation allowances as of December 31, ~~2017 and 2016~~2020 are also associated with ~~net operating losses and other deferred tax assets in~~FTC carryforwards.

Accumulated earnings of certain non-U.S. ~~operations~~subsidiaries, which totaled approximately $1.0 billion as of December 31, 2020, are intended to be permanently reinvested outside the ~~Company.~~U.S. We do not provide for state income and foreign withholding taxes on foreign earnings intended to be permanently reinvested outside the U.S. Accordingly, state income and foreign withholding taxes, which would have aggregated to approximately $0.1 billion as of December 31, 2020, have not been provided on those earnings.

Net income taxes paid by ~~the Company~~us during ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, were approximately ~~$1.4~~$2.2 billion, ~~$3.0~~$1.7 billion and ~~$3.4~~$2.0 billion, respectively. These amounts include estimated tax payments and cash settlements relating to prior tax years.

~~The Company is~~We are subject to the income tax laws of the United States, its states and municipalities and those of the foreign jurisdictions in which ~~the Company operates.~~we operate. These tax laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. Given these inherent complexities, ~~the Company~~we must make judgments in assessing the likelihood that a tax position will be sustained upon examination by the taxing authorities based on the technical merits of the tax position. A tax position is recognized only when, based on management’s judgment regarding the application of income tax laws, it is more likely than not that the tax position will be sustained upon examination. The amount of benefit recognized for financial reporting purposes is based on management’s best judgment of the largest amount of benefit that is more likely than not to be realized on ultimate settlement with the taxing authority given the facts, circumstances and information available at the reporting date. ~~The Company adjusts~~We adjust the level of unrecognized tax benefits when there is new information available to assess the likelihood of the outcome.

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~~Table of Contents~~

~~The Company is~~We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which ~~the Company has~~we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. ~~In February 2017, the Company received notification that all matters outstanding with~~We are currently under examination by the IRS for the 2017 and 2018 tax years 1997-2007 were resolved. The resolution of such matters did not have a material impact on the Company’s effective tax rate. The Company is currently under examination with the IRS for tax years 2008 through 2014.

years.

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The following table presents changes in unrecognized tax benefits:


(Millions)	2020		2019		2018
Balance, January 1	$	726	$	701	$	821
Increases:
Current year tax positions	57		66		152
Tax positions related to prior years	105		78		47
Effects of foreign currency translations	0		10		0
Decreases:
Tax positions related to prior years	(24)		(14)		(74)
Settlements with tax authorities(a)	(15)		(40)		(192)
Lapse of statute of limitations	(58)		(75)		(44)
Effects of foreign currency translations	(1)		0		(9)
Balance, December 31	$	790	$	726	$	701

161

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PART IV

~~ITEM 15.~~

~~EXHIBITS,~~ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a)

~~Financial Statements~~:

1. Financial Statements:

See the “Index to Consolidated Financial Statements” under “Financial Statements and Supplementary Data.”

~~Financial Statement Schedules~~:

2. Financial Statement Schedules:

All schedules are omitted since the required information is either not applicable, not deemed material, or shown in the Consolidated Financial Statements.

3. Exhibits:

The following exhibits are filed as part of this report. The exhibit numbers preceded by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference. Exhibits numbered 10.1 through 10.41 are management contracts or compensatory plans or arrangements.

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	3.
3.1		~~Exhibits~~:Company's Amended and Restated Certificate of Incorporation as amended through February 27, 2015 (incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2015).

3.2		Company's By-Laws, as amended through September 26, 2016 (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated September 26, 2016).

4.1		The instruments defining the rights of holders of long-term debt securities of the Company and its subsidiaries are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Company hereby agrees to furnish copies of these instruments to the SEC upon request.

*4.2		Description of American Express Company’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

10.1		American Express Company Deferred Compensation Plan for Directors and Advisors, as amended and restated effective April 1, 2018 (incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2018).

10.2		American Express Company 2007 Pay-for-Performance Deferral Program Document (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated November 20, 2006 (filed November 22, 2006)).

10.3		Description of amendments to 1994–2006 Pay-for-Performance Deferral Programs (incorporated by reference to Exhibit 10.13 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2006).

10.4		American Express Company 2006 Pay-for-Performance Deferral Program Guide (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated November 21, 2005 (filed November 23, 2005)).

10.5		American Express Company 2005 Pay-for-Performance Deferral Program Guide (incorporated by reference to Exhibit 10.10 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2004).

10.6		Description of American Express Company Pay-for-Performance Deferral Program (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated November 22, 2004 (filed January 28, 2005)).

10.7		Amendment to the Pre-2008 Nonqualified Deferred Compensation Plans of American Express Company (incorporated by reference to Exhibit 10.19 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2008).

10.8		American Express Company Retirement Plan for Non-Employee Directors, as amended (incorporated by reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1988).

10.9		Certificate of Amendment of the American Express Company Retirement Plan for Non-Employee Directors dated March 21, 1996 (incorporated by reference to Exhibit 10.11 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1995).

10.10		American Express Key Executive Life Insurance Plan, as amended (incorporated by reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the fiscal year ended December 31, 1991).

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10.11			Amendment to American Express Company Key Executive Life Insurance Plan (incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 1994).
10.12			Amendment to American Express Company Key Executive Life Insurance Plan, effective as of January 22, 2007 (incorporated by reference to Exhibit 10.22 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2006).

10.13			Amendment to American Express Company Key Executive Life Insurance Plan, effective as of January 1, 2011 (incorporated by reference to Exhibit 10.24 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2010).

10.14			American Express Key Employee Charitable Award Program for Education (incorporated by reference to Exhibit 10.13 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1990).

10.15			American Express Directors' Charitable Award Program (incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1990).

10.16			American Express Company Salary/Bonus Deferral Plan (incorporated by reference to Exhibit 10.20 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1988).

10.17			Amendment to American Express Company Salary/Bonus Deferral Plan (incorporated by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 1994).

10.18			American Express Senior Executive Severance Plan, as amended and restated effective May 1, 2018 (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended June 30, 2018).

10.19			Amendments of (i) the American Express Salary/Bonus Deferral Plan and (ii) the American Express Key Executive Life Insurance Plan (incorporated by reference to Exhibit 10.37 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1997).

10.20			Second Amendment and Restatement of the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (as amended and restated effective as of January 1, 2012) (incorporated by reference to Exhibit 10.28 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2011).

10.21			Third Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated March 29, 2012) (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2012).

10.22			Fourth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated October 24, 2012) (incorporated by reference to Exhibit 10.31 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2012).

10.23			Fifth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated May 1, 2013) (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2013).

10.24			Sixth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated August 16, 2013) (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2013).

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10.25			Seventh Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated September 26, 2013) (incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2013).

10.26			Eighth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated December 1, 2013) (incorporated by reference to Exhibit 10.36 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2013).

10.27			Ninth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated December 14, 2016) (incorporated by reference to Exhibit 10.30 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).

10.28			Tenth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated December 17, 2018) (incorporated by reference to Exhibit 10.28 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2018).

10.29			American Express Company 2003 Share Equivalent Unit Plan for Directors, as amended and restated, effective January 1, 2015 (incorporated by reference to Exhibit 10.38 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2015).

10.30			Description of Compensation Payable to Non-Management Directors effective January 1, 2015 (incorporated by reference to Exhibit 10.39 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2014).

10.31			American Express Company 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated April 23, 2007 (filed April 27, 2007)).

10.32			American Express Company 2007 Incentive Compensation Plan Master Agreement (as amended and restated effective January 1, 2011) (incorporated by reference to Exhibit 10.8 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2010).

10.33			American Express Company 2007 Incentive Compensation Plan Master Agreement (as amended and restated effective January 23, 2012) (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated January 23, 2012 (filed January 27, 2012)).

10.34			Form of nonqualified stock option award agreement for executive officers under the American Express Company 2007 Incentive Compensation Plan (for awards made after January 26, 2016) (incorporated by reference to Exhibit 10.43 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2015).


10.35			American Express Company 2016 Incentive Compensation Plan (as amended and restated effective May 5, 2020) (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated May 5, 2020).

10.36			Form of nonqualified stock option award agreement for executive officers under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.41 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).

10.37			Form of restricted stock unit award agreement for executive officers under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.42 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).

10.38			Form of award agreement for executive officers in connection with Performance Grant awards (a/k/a Executive Annual Incentive Awards) under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.43 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).

~~The list~~

165

Table of ~~exhibits required to be filed as exhibits to this Report is listed on pages E-1 through E-4 hereof under “Exhibit Index.”~~Contents

~~ITEM 16.~~

10.39			Form of award agreement for executive officers in connection with Portfolio Grant awards under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.44 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).

10.40			Amendment to the Form of nonqualified stock option award agreement and Form of restricted stock unit award for executive officers under the American Express Company 2016 Incentive Compensation Plan (for awards made after January 29, 2020) (incorporated by reference to Exhibit 10.41 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2019).

10.41			Form of notice agreement in connection with Annual Incentive Awards under the American Express Company 2016 Incentive Compensation Plan (incorporated by reference to Exhibit 10.42 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2019).

10.42			Restated Letter Agreement, dated May 6, 2019, between American Express Company and Berkshire Hathaway Inc., on behalf of itself and its subsidiaries (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (Commission File No. 1-7657), dated May 6, 2019).

10.43			Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri (incorporated by reference to Exhibit 10.48 of the Company's Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2017).

10.44			Amendment No. 1, dated March 29, 2019, to the Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2019).

10.45			Amendment No. 2, dated July 26, 2019, to the Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2019).

*10.46			Amendment No. 3, dated December 15, 2020, to the Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri.

*21			Subsidiaries of the Company.

*23			Consent of PricewaterhouseCoopers LLP.

*31.1			Certification of Stephen J. Squeri, Chief Executive Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

*31.2			Certification of Jeffrey C. Campbell, Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

*32.1			Certification of Stephen J. Squeri, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2			Certification of Jeffrey C. Campbell, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS			XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document

*101.SCH			XBRL Taxonomy Extension Schema Document

*101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

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*101.LAB			XBRL Taxonomy Extension Label Linkbase Document

*101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

*101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

*104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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ITEM 16. FORM 10-K SUMMARY

Not applicable.

168

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


						AMERICAN EXPRESS COMPANY
						/s/ JEFFREY C. CAMPBELL
						Jeffrey C. Campbell
~~Executive Vice President and~~ Chief Financial Officer

February ~~16, 2018~~12, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated.


/s/ STEPHEN J. SQUERI				/s/ ~~ANNE LAUVERGEON~~ MICHAEL O. LEAVITT
Stephen J. Squeri Chairman, Chief Executive Officer and Director		~~Anne Lauvergeon~~		Michael O. Leavitt Director

/s/ JEFFREY C. CAMPBELL		~~/s/ MICHAEL O. LEAVITT~~
~~Jeffrey C. Campbell~~ ~~Executive Vice President and Chief Financial Officer~~	~~Michael O. Leavitt~~ ~~Director~~

~~/s/ LINDA ZUKAUCKAS~~	/s/ THEODORE J. LEONSIS
~~Linda Zukauckas~~ Jeffrey C. Campbell Chief Financial Officer				Theodore J. Leonsis Director

/s/ JESSICA LIEBERMAN QUINN				/s/ KAREN L. PARKHILL
Jessica Lieberman Quinn Executive Vice President and Corporate Controller		~~Theodore J. Leonsis~~ ~~Director~~
(Principal Accounting Officer)			Karen L. Parkhill Director

/s/ THOMAS J. BALTIMORE, JR.				/s/ CHARLES E. PHILLIPS, JR.
Thomas J. Baltimore, Jr. Director				Charles E. Phillips, Jr. Director
				Director
/s/ CHARLENE BARSHEFSKY				/s/ ~~RICHARD C. LEVIN~~ LYNN A. PIKE
Charlene Barshefsky Director		~~Richard C. Levin~~		Lynn A. Pike Director

/s/ JOHN J. BRENNAN		~~/s/ SAMUEL J. PALMISANO~~
~~John J. Brennan~~ ~~Director~~	~~Samuel J. Palmisano~~ ~~Director~~

~~/s/ URSULA M. BURNS~~	/s/ DANIEL L. VASELLA
~~Ursula M. Burns~~ John J. Brennan Director				Daniel L. Vasella Director

/s/ PETER CHERNIN				/s/ ~~ROBERT D. WALTER~~ RONALD A. WILLIAMS
Peter Chernin Director		~~Robert D. Walter~~		Ronald A. Williams Director

/s/ RALPH DE LA VEGA				/s/ ~~RONALD A. WILLIAMS~~ CHRISTOPHER D. YOUNG
Ralph de la Vega Director				~~Ronald A. Williams~~ Christopher D. Young Director

/s/ ANNE LAUVERGEON
Anne Lauvergeon Director

February ~~16, 2018~~12, 2021

169

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Appendix

~~GUIDE 3 –~~ STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES

The accompanying supplemental information should be read in conjunction with the “MD&A”, “Consolidated Financial Statements” and notes thereto. The disclosures presented are excluding amounts associated with Card Member loans and receivables HFS, unless otherwise indicated. Refer to Note 2 to the “Consolidated Financial Statements” for additional information.

Certain reclassifications of prior period amounts have been made to conform to the current period presentation. These reclassifications did not have a material impact on ~~the Company’s~~our financial position or results of operations.

A-1

Table of Contents

Distribution of Assets, Liabilities, and Shareholders’ Equity; Interest Rates and Interest Differential

The following tables provide a summary of ~~the Company’s~~our consolidated average balances including major categories of interest-earning assets and interest-bearing liabilities along with an analysis of net interest earnings. Consolidated average balances, interest, and average yields are segregated between U.S. and non-U.S. offices. Assets, liabilities, interest income and interest expense are attributed to the United States and outside the United States based on the location of the office recording such items.

	2017							2016							2015
Years Ended December 31,	Average		Interest		Average			Average		Interest		Average			Average		Interest		Average
(Millions, except percentages)	Balance^(a)		Income		Yield			Balance ^(a)		Income		Yield			Balance ^(a)		Income		Yield
																									2020											2019											2018
Years Ended December 31, (Millions, except percentages)																						Years Ended December 31, (Millions, except percentages)			Average Balance (a)				Interest Income			Average Yield				Average Balance (a)				Interest Income			Average Yield				Average Balance (a)				Interest Income			Average Yield
Interest-earning assets																						Interest-earning assets
Interest-bearing deposits in other banks ^(b)
Interest-bearing deposits in other banks																						Interest-bearing deposits in other banks
U.S.	$	24,510	$	277		1.1	%	$	21,282	$	116		0.5	%	$	19,255	$	50		0.3	%	U.S.			$	31,446			$	100		0.3	%			$	22,169			$	517		2.3	%			$	24,570			$	485		2.0	%
Non-U.S.		1,773		17		1.0			1,884		11		0.6			2,137		16		0.7		Non-U.S.			2,367				51			2.2				2,085				48			2.3				1,830				33			1.8
Federal funds sold and securities purchased under agreements to resell																						Federal funds sold and securities purchased under agreements to resell
U.S.																						U.S.			—				—			—				19				3			15.8				—				—			—
Non-U.S.		80		6		7.5			110		5		4.5			188		6		3.2		Non-U.S.			184				11			6.0				56				6			10.7				58				7			12.1
Short-term investment securities																						Short-term investment securities
U.S.		182		1		0.5			170		―		―			12		―		―		U.S.			658				7			1.1				409				11			2.7				434				6			1.4
Non-U.S.		1,070		7		0.7			551		4		0.7			393		3		0.8		Non-U.S.			97				1			1.0				93				1			1.1				149				1			0.7
Card Member loans, including loans HFS ^(c)(d)
Card Member loans (b)																						Card Member loans (b)
U.S.		58,853		6,884		11.7			58,900		6,160		10.5			61,911		6,258		10.1		U.S.			65,559				8,196			12.5				72,422				9,452			13.1				66,620				8,387			12.6
Non-U.S.		7,847		1,038		13.2			6,828		907		13.3			7,093		930		13.1		Non-U.S.			9,018				1,196			13.3				10,362				1,400			13.5				9,136				1,206			13.2
Other loans ^(c)(b)
U.S.		1,887		195		10.3			1,077		110		10.2			891		93		10.4		U.S.			4,078				342			8.4				4,101				413			10.1				3,110				312			10.0
Non-U.S.		148		27		18.2			150		28		18.7			154		28		18.2		Non-U.S.			139				45			32.4				170				43			25.3				145				36			24.8
Taxable investment securities ^(e)(c)
U.S.		1,216		24		2.0			721		12		1.7			607		10		1.7		U.S.			14,002				100			0.7				6,335				147			2.3				3,025				68			2.2
Non-U.S.		547		17		3.1			543		15		2.8			535		14		2.7		Non-U.S.			612				21			3.4				589				27			4.6				562				23			4.1
Non-taxable investment securities ^(e)(c)
U.S.		1,510		48		4.9			2,390		104		6.9			3,083		133		6.9		U.S.			128				5			5.1				237				11			5.9				855				25			3.7
Other assets ^(f)(d)
Primarily U.S.		1		12	n.m.				1		3	n.m.				1		4	n.m.			Primarily U.S.			38				8			n.m.				17				5			n.m.				1				17			n.m.
Total interest-earning assets ^(g)(e)	$	99,624	$	8,553		8.6	%	$	94,607	$	7,475		8.0	%	$	96,260	$	7,545		7.9	%		$	128,326			$	10,083			7.9	%		$	119,064			$	12,084			10.2	%		$	110,495			$	10,606			9.6	%
U.S.		88,159		7,441					84,541		6,505					85,760		6,548				U.S.			115,909				8,758							105,709				10,559							98,615				9,300
Non-U.S.		11,465		1,112					10,066		970					10,500		997				Non-U.S.			12,417				1,325							13,355				1,525							11,880				1,306

n.m. Denotes rates determined to not be meaningful.

~~(a)~~

~~Averages based on month-end balances.~~

(a)Averages based on month-end balances.

~~(b)~~

Amounts include (i) average interest-bearing restricted cash balances of $868 million, $358 million and $818 million for 2017, 2016 and 2015, respectively, which are included in other assets on the Consolidated Balance Sheets, and (ii) the associated interest income.

(b)Average non-accrual loans were included in the average Card Member loan balances in amounts of $275 million, $307 million and $230 million in U.S. for 2020, 2019 and 2018, respectively. Average other loan balances for U.S. include average non-accrual loans of $3 million, $7 million and $4 million for 2020, 2019 and 2018, respectively. Average non-accrual loans are considered to determine the average yield on loans.

~~(c)~~

Average non-accrual loans were included in the average Card Member loan balances in amounts of $187 million, $173 million and $202 million in U.S. for 2017, 2016 and 2015, respectively. Average other loan balances for U.S. include average non-accrual loans of $3 million, $5 million and $1 million for 2017, 2016 and 2015, respectively. Average non-accrual loans are considered to determine the average yield on loans.

(c)Average yields for both taxable and non-taxable investment securities have been calculated using amortized cost balances and do not include changes in fair value recorded in other comprehensive loss. Average yield on non-taxable investment securities is calculated on a tax-equivalent basis using the U.S. federal statutory tax rate of 21 percent for 2020, 2019 and 2018.

~~(d)~~

Amounts for 2016 and 2015 included average Card Member loans HFS of $5,828 million and $1,143 million, respectively, and the associated interest income. During the first half of 2016, the Company completed the sales of substantially all of its outstanding Card Member loans HFS. Refer to Note 2 to the “Consolidated Financial Statements” for additional information.

(d)Amounts include (i) average equity securities balances, which are included in investment securities on the Consolidated Balance Sheets, and (ii) the associated income.

~~(e)~~

Average yields for both taxable and non-taxable investment securities have been calculated using amortized cost balances and do not include changes in fair value recorded in other comprehensive loss. Average yield on non-taxable investment securities is calculated on a tax-equivalent basis using the U.S. federal statutory tax rate of 35 percent. Effective January 1, 2018, the U.S. federal statutory tax rate was reduced to 21 percent.

~~(f)~~

~~Amounts include (i) average equity securities balances, which are included in investment securities on the Consolidated Balance Sheets, and (ii) the associated income.~~

~~(g)~~

~~The average yield on total interest-earning assets is adjusted for the impacts of the items mentioned in footnote (e).~~

(e)The average yield on total interest-earning assets is adjusted for the impacts of the items mentioned in footnote (c).

A-2

~~A-1~~

Table of Contents


Years Ended December 31, (Millions, except percentages)	2020 Average Balance (a)			2019 Average Balance (a)			2018 Average Balance (a)
Non-interest-earning assets
Cash and due from banks
U.S.	$	2,205		$	2,842		$	2,793
Non-U.S.	823			732			527
Card Member receivables, net
U.S.	27,414			27,724			26,435
Non-U.S.	16,009			28,040			27,100
Reserves for credit losses on Card Member and other loans
U.S.	(4,682)			(2,057)			(1,740)
Non-U.S.	(526)			(258)			(217)
Other assets (b)
U.S.	14,680			12,689			12,351
Non-U.S.	5,830			5,593			5,077
Total non-interest-earning assets	61,753			75,305			72,326
U.S.	39,617			41,198			39,839
Non-U.S.	22,136			34,107			32,487
Total assets	$	190,079		$	194,369		$	182,821
U.S.	155,526			146,908			138,454
Non-U.S.	34,553			47,461			44,367

Percentage of total average assets attributable to non-U.S. activities	18.2		%	24.4		%	24.3		%

2017 2016 2015
Years Ended December 31, (Millions, except percentages)

Average Balance ^(a)

Average Balance ^(a)

Average Balance ^(a)

Non-interest-earning assets
Cash and due from banks
U.S. $ 2,393 $ 2,653 $ 2,501
Non-U.S. 489 478 565
Card Member receivables, net, including receivables HFS^(b)

⁺
U.S. 21,262 22,622 22,126
Non-U.S. 27,621 22,102 21,667
Other receivables, net
U.S. 1,722 1,720 1,678
Non-U.S. 1,103 1,093 1,032
Reserves for Card Member and other loans losses
U.S. (1,264 ) (961 ) (1,004 )
Non-U.S. (177 ) (150 ) (153 )
Other assets ^(c)

⁺
U.S. 10,726 10,189 10,218
Non-U.S. 3,889 3,947 3,837
Total non-interest-earning assets 67,764 63,693 62,467
U.S. 34,839 36,223 35,519
Non-U.S. 32,925 27,470 26,948
Total assets $ 167,388 $ 158,300 $ 158,727
U.S. 122,998 120,764 121,279
Non-U.S. 44,390 37,536 37,448

Percentage of total average assets attributable to non-U.S. activities 26.5 % 23.7 % 23.6 %
(a)Averages based on month-end balances.

~~(a)~~

~~Averages based on month-end balances.~~

~~(b)~~

Amounts for 2016 and 2015 included average Card Member receivables HFS of $51 million and $10 million, respectively. During the first half of 2016, the Company completed the sale of substantially all of its outstanding Card Member receivables HFS. Refer to Note 2 to the “Consolidated Financial Statements” for additional information.

~~(c)~~

~~Includes premises and equipment, net of accumulated depreciation and amortization.~~

(b)Includes premises and equipment, net of accumulated depreciation and amortization.

A-3

~~A-2~~

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	2017								2016								2015									2020							2019							2018
Years Ended December 31,	Average			Interest		Average			Average			Interest		Average			Average			Interest		Average
(Millions, except percentages)	Balance^(a)			Expense		Rate			Balance^(a)			Expense		Rate			Balance^(a)			Expense		Rate

Years Ended December 31, (Millions, except percentages)																									Years Ended December 31, (Millions, except percentages)	Average Balance (a)			Interest Expense		Average Rate		Average Balance (a)			Interest Expense		Average Rate		Average Balance (a)			Interest Expense		Average Rate
Interest-bearing liabilities																									Interest-bearing liabilities
Customer deposits																									Customer deposits
U.S.																									U.S.
Savings	$	42,134		$	471		1.1	%	$	39,975		$	334		0.8	%	$	36,706		$	283		0.8	%	Savings	$	69,796		$	697	1.0	%	$	59,087		$	1,247	2.1	%	$	50,499		$	919	1.8	%
Time		14,701			301		2.0			13,450			258		1.9			10,171			185		1.8		Time	9,898			237		2.4		12,179			298		2.4		15,975			357		2.2
Demand		215			3		1.4			162			1		0.6			185			1		0.5		Demand	752			5		0.7		447			9		2.0		285			6		2.1
Non-U.S.																									Non-U.S.
Other time and savings		17			1		5.9			10			1		10.0			21			2		9.5		Other time and savings	11			1		9.1		16			1		6.3		21			1		4.8
Other demand		18			3		16.7			74			4		5.4			87			4		4.6		Other demand	11			3		27.3		10			4		40.0		12			4		33.3
Short-term borrowings																									Short-term borrowings
U.S.		1,188			15		1.3			1,017			6		0.6			1,416			4		0.3		U.S.	769			18		2.3		407			22		5.4		274			14		5.1
Non-U.S.		2,145			18		0.8			2,048			19		0.9			2,198			15		0.7		Non-U.S.	2,017			11		0.5		2,621			15		0.6		2,106			19		0.9
Long-term debt and other ^(b)																									Long-term debt and other (b)
U.S.		51,366			1,281		2.5			46,521			1,057		2.3			51,623			1,094		2.1		U.S.	48,690			1,123		2.3		57,936			1,859		3.2		54,631			1,613		3.0
Non-U.S.		725			19		2.6			931			24		2.6			1,271			35		2.8		Non-U.S.	336			3		0.9		325			9		2.8		390			10		2.6
Total interest-bearing liabilities	$	112,509		$	2,112		1.9	%	$	104,188		$	1,704		1.6	%	$	103,678		$	1,623		1.6	%	Total interest-bearing liabilities	$	132,280		$	2,098	1.6	%	$	133,028		$	3,464	2.6	%	$	124,193		$	2,943	2.4	%
U.S.		109,604			2,071					101,125			1,656					100,101			1,567				U.S.	129,905			2,080				130,056			3,435				121,664			2,909
Non-U.S.		2,905			41					3,063			48					3,577			56				Non-U.S.	2,375			18				2,972			29				2,529			34

Non-interest-bearing liabilities																									Non-interest-bearing liabilities
Travelers Cheques and other prepaid products
U.S.		2,501								2,779								3,160
Non-U.S.		78								86								110
Accounts payable																									Accounts payable
U.S.		6,788								7,005								7,238							U.S.	4,642							7,116							7,120
Non-U.S.		5,254								4,757								4,589							Non-U.S.	4,737							6,202							6,064
Customer Deposits ^(c)																									Customer Deposits(c)
U.S.		351								372								386							U.S.	766							385							377
Non-U.S.		331								311								324							Non-U.S.	682							387							370
Other liabilities																									Other liabilities
U.S.		13,880								13,429								13,435							U.S.	18,954							18,360							18,619
Non-U.S.		4,876								4,568								4,313							Non-U.S.	6,016							6,079							5,428
Total non-interest-bearing liabilities		34,059								33,307								33,555							Total non-interest-bearing liabilities	35,797							38,529							37,978
U.S.		23,520								23,585								24,219							U.S.	24,362							25,861							26,116
Non-U.S.		10,539								9,722								9,336							Non-U.S.	11,435							12,668							11,862
Total liabilities		146,568								137,495								137,233							Total liabilities	168,077							171,557							162,171
U.S.		133,124								124,710								124,320							U.S.	154,267							155,917							147,780
Non-U.S.		13,444								12,785								12,913							Non-U.S.	13,810							15,640							14,391
Total shareholders' equity		20,820								20,805								21,494							Total shareholders' equity	22,002							22,812							20,650
Total liabilities and shareholders' equity	$	167,388							$	158,300							$	158,727							Total liabilities and shareholders' equity	$	190,079						$	194,369						$	182,821

Percentage of total average liabilities attributable to non-U.S. activities		9.2	%							9.3	%							9.4	%						Percentage of total average liabilities attributable to non-U.S. activities	8.2		%					9.1		%					8.9		%
Interest rate spread							6.7	%							6.4	%							6.3	%	Interest rate spread						6.3	%						7.6	%						7.2	%
Net interest income and net average yield on interest-earning assets ^(d)				$	6,441		6.5	%				$	5,771		6.2	%				$	5,922		6.2	%
Net interest income and net average yield on interest-earning assets(d)`																									Net interest income and net average yield on interest-earning assets(d)`				$	7,985	6.2	%				$	8,620	7.2	%				$	7,663	6.9	%

~~(a)~~

~~Averages based on month-end balances.~~

(a)Averages based on month-end balances.

~~(b)~~

~~Interest expense primarily reflects interest on long-term financing and interest incurred on derivative instruments in qualifying hedging relationships on the hedged debt instruments.~~

(b)Interest expense primarily reflects interest on long-term financing and interest incurred on derivative instruments in qualifying hedging relationships on the hedged debt instruments.

~~(c)~~

~~U.S. non-interest-bearing Customer deposits include average Card Member credit balances of $314 million, $328 million and $326 million for 2017, 2016 and 2015~~, ~~respectively. Non-U.S. non-interest-bearing Customer deposits include average Card Member credit balances of $318 million, $297 million and $311 million for 2017, 2016 and 2015, respectively~~.

(c)U.S. non-interest-bearing Customer deposits include average Card Member credit balances of $742 million, $353 million and $342 million for 2020, 2019 and 2018, respectively. Non-U.S. non-interest-bearing Customer deposits include average Card Member credit balances of $679 million, $381 million and $359 million for 2020, 2019 and 2018, respectively.

~~(d)~~

Net average yield on interest-earning assets is defined as net interest income divided by average total interest-earning assets as adjusted for the items mentioned in footnote (e) from the previous table.

(d)Net average yield on interest-earning assets is defined as net interest income divided by average total interest-earning assets as adjusted for the items mentioned in footnote (c) from the table on A-1.

A-4

~~A-3~~

Table of Contents

Changes in Net Interest Income − Volume and Rate Analysis (a)

The following table presents the amount of changes in interest income and interest expense due to changes in both average volume and average rate. Major categories of interest-earning assets and interest-bearing liabilities have been segregated between U.S. and non-U.S. offices. Average volume/rate changes have been allocated between the average volume and average rate variances on a consistent basis based upon the respective percentage changes in average balances and average rates.


	2020 Versus 2019						2019 Versus 2018
	Increase (Decrease) due to change in:						Increase (Decrease) due to change in:
Years Ended December 31, (Millions)	Average Volume		Average Rate		Net Change		Average Volume		Average Rate		Net Change
Interest-earning assets
Interest-bearing deposits in other banks
U.S.	$	216	$	(633)	$	(417)	$	(47)	$	79	$	32
Non-U.S.	6		(3)		3		5		10		15
Federal funds sold and securities purchased under agreements to resell
U.S.	(3)		—		(3)		—		3		3
Non-U.S.	14		(9)		5		—		(1)		(1)
Short-term investment securities
U.S.	7		(11)		(4)		—		5		5
Non-U.S.	—		—		—		—		—		—
Card Member loans
U.S.	(896)		(360)		(1,256)		730		335		1,065
Non-U.S.	(182)		(22)		(204)		162		32		194
Other loans
U.S.	(2)		(69)		(71)		99		2		101
Non-U.S.	(8)		10		2		6		1		7
Taxable investment securities
U.S.	177		(224)		(47)		72		7		79
Non-U.S.	1		(7)		(6)		1		3		4
Non-taxable investment securities
U.S.	(7)		1		(6)		(18)		4		(14)
Other assets
Primarily U.S.	6		(3)		3		272		(284)		(12)
Change in interest income	(671)		(1,330)		(2,001)		1,282		196		1,478
Interest-bearing liabilities
Customer deposits
U.S.
Savings	226		(776)		(550)		156		172		328
Time	(56)		(5)		(61)		(85)		26		(59)
Demand	6		(10)		(4)		3		—		3
Non-U.S.
Other time and savings	—		—		—		—		—		—
Other demand	—		(1)		(1)		(1)		1		—
Short-term borrowings
U.S.	20		(24)		(4)		7		1		8
Non-U.S.	(3)		(1)		(4)		5		(9)		(4)
Long-term debt and other
U.S.	(297)		(439)		(736)		98		148		246
Non-U.S.	—		(6)		(6)		(2)		1		(1)
Change in interest expense	(104)		(1,262)		(1,366)		181		340		521
Change in net interest income	$	(567)	$	(68)	$	(635)	$	1,101	$	(144)	$	957

2017 Versus 2016 2016 Versus 2015
Increase (Decrease) Increase (Decrease)
due to change in: due to change in:
Average Average Average Average
Years Ended December 31, (Millions)
Volume Rate
Net Change
Volume Rate Net Change

Interest-earning assets
Interest-bearing deposits in other banks
U.S. $ 18 $ 143 $ 161 $ 5 $ 61 $ 66
Non-U.S. (1 ) 7 6 (2 ) (3 ) (5 )
Federal funds sold and securities purchased under agreements to resell
Non-U.S. (1 ) 2 1 (2 ) 1 (1 )
Short-term investment securities
U.S. ― 1 1 ― ― ―
Non-U.S. 4 (1 ) 3 1 ― 1
Card Member loans, including loans HFS
U.S. (5 ) 729 724 (304 ) 206 (98 )
Non-U.S. 135 (4 ) 131 (35 ) 12 (23 )
Other loans
U.S. 83 2 85 19 (2 ) 17
Non-U.S. ― (1 ) (1 ) (1 ) 1 ―
Taxable investment securities
U.S. 9 3 12 2 ― 2
Non-U.S. ― 2 2 ― 1 1
Non-taxable investment securities
U.S. (37 ) (19 ) (56 ) (29 ) ― (29 )
Other assets
Primarily U.S. ― 9 9 ― (1 ) (1 )
Change in interest income 205 873 1,078 (346 ) 276 (70 )
Interest-bearing liabilities
Customer deposits
U.S.
Savings 18 119 137 25 26 51
Time 24 19 43 60 13 73
Demand ― 2 2 ― ― ―
Non-U.S.
Other time and savings 1 (1 ) ― (1 ) ― (1 )
Other demand (3 ) 2 (1 ) (1 ) 1 ―
Short-term borrowings
U.S. 1 8 9 (1 ) 3 2
Non-U.S. 1 (2 ) (1 ) (1 ) 5 4
Long-term debt and other
U.S. 110 114 224 (108 ) 71 (37 )
Non-U.S. (5 ) ― (5 ) (9 ) (2 ) (11 )
Change in interest expense 147 261 408 (36 ) 117 81
Change in net interest income $ 58 $ 612 $ 670 $ (310 ) $ 159 $ (151 )

~~(a)~~

~~Refer to footnotes from “Distribution of Assets, Liabilities and Shareholders’ Equity” for additional information.~~

(a)Refer to footnotes from “Distribution of Assets, Liabilities and Shareholders’ Equity” for additional information.

A-5

~~A-4~~

Table of Contents

~~Loans~~ ~~and Card Member Receivables Portfolios~~

The following table presents gross loans and Card Member receivables by customer type, segregated between U.S. and non-U.S., based on the domicile of the borrowers. Refer to Notes 3 and 4 to the “Consolidated Financial Statements” for additional information.

December 31, (Millions)
2017 2016 2015 2014 2013
Loans ^{(a) (b)}

U.S. loans
Card Member ^(c)
$ 64,542 $ 58,242 $ 51,446 $ 62,592 $ 58,530
Other ^(d)
2,554 1,350 1,073 726 411
Non-U.S. loans
Card Member ^(c)
8,857 7,023 7,127 7,793 8,708
Other ^(d)
133 111 201 206 210
Total loans $ 76,086 $ 66,726 $ 59,847 $ 71,317 $ 67,859

Card Member receivables ^{(a) (b)}

U.S. Card Member receivables
Consumer ^(e)
26,754 24,768 23,255 22,468 21,842
Commercial ^(f)
10,868 9,685 8,961 9,082 8,480
Non-U.S. Card Member receivables
Consumer ^(e)
10,311 7,772 7,101 7,800 7,930
Commercial ^(f)
6,114 5,083 4,816 5,501 5,911

Total Card Member receivables $ 54,047 $ 47,308 $ 44,133 $ 44,851 $ 44,163

~~(a)~~

As of December 31, 2017, the Company had approximately $273 billion of unused credit available to Card Members as part of established lending product agreements. Total unused credit available to Card Members does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn. The Company’s charge card products generally have no preset spending limit, the associated credit limit on charge products is not quantifiable, and therefore is not reflected in unused credit available to Card Members.

~~(b)~~

As of December 31, 2017, the Company’s exposure to any concentration of gross loans and Card Member receivables combined, which exceeds 10 percent of total loans and Card Member receivables is further split between $112 billion for individuals and $18 billion for commercial. Loans and Card Member receivables concentrations are defined as loans and Card Member receivables due from multiple borrowers engaged in similar activities that would cause these borrowers to be impacted similarly to certain economic or other related conditions. Refer to Note 24 to the “Consolidated Financial Statements” for additional information on concentrations.

~~(c)~~

~~Primarily represents loans to individuals and small businesses.~~

~~(d)~~

~~Other loans primarily represent personal and commercial financing products.~~

~~(e)~~

~~Represents receivables from individual and small business charge card customers.~~

~~(f)~~

~~Represents receivables from corporate charge card clients.~~

~~A-5~~

~~Table of Contents~~

Maturities and Sensitivities to Changes in Interest Rates

The following table presents contractual maturities of loans and Card Member receivables by customer type, and segregated between U.S. and non-U.S. based on domicile of the borrowers, and distribution between fixed and floating interest rates for loans due after one year based upon the stated terms of the loan agreements.


December 31, (Millions)	2020
	Within 1 year (a)		1-5 years (b) (c)		5-15 years (c)		After 15 years (c)		Total
Loans
U.S. loans
Card Member	$	63,662	$	482	$	—	$	—	$	64,144
Other	497		2,068		112		57		2,734
Non-U.S. loans
Card Member	9,229		—		—		—		9,229
Other	92		26		—		—		118
Total loans	$	73,480	$	2,576	$	112	$	57	$	76,225

Loans due after one year at fixed interest rates
Card Member			$	482	$	—	$	—	$	482
Other			2,070		—		57		2,127
Loans due after one year at variable interest rates
Card Member			—		—		—		—
Other			24		112		—		136
Total loans			$	2,576	$	112	$	57	$	2,745
Card Member receivables
U.S.	$	30,287	$	193	$	—	$	—	$	30,480
Non-U.S.	13,221		—		—		—		13,221
Total Card Member receivables	$	43,508	$	193	$	—	$	—	$	43,701

(a)Card Member loans have no stated maturity and are therefore included in the due within one year category. However, many of our Card Members will revolve their balances, which may extend their repayment period beyond one year for balances outstanding as of December 31, 2020. Card member receivables are due upon receipt of Card Member statements and have no stated interest rate and are therefore included in the due within one year category.

December 31, (Millions)
2017
Within 1-5 After

1 year^(a)(b)

years^(b)(c)

5 years^(c)
Total
Loans
U.S. loans
Card Member $ 64,413 $ 129 $ ― $ 64,542
Other 978 1,389 187 2,554
Non-U.S. loans
Card Member 8,856 ― 1 8,857
Other 91 42 ― 133
Total loans $ 74,338 $ 1,560 $ 188 $ 76,086

Loans due after one year at fixed interest rates $ 1,523 $ 61 $ 1,584
Loans due after one year at variable interest rates 37 127 164
Total loans $ 1,560 $ 188 $ 1,748
Card Member receivables
U.S. Card Member receivables
Consumer $ 26,722 $ 32 $ ― $ 26,754
Commercial 10,868 ― ― 10,868
Non-U.S. Card Member receivables
Consumer 10,311 ― ― 10,311
Commercial 6,114 ― ― 6,114
Total Card Member receivables $ 54,015 $ 32 $ ― $ 54,047
(b)Card Member loans and receivables due after one year represent Troubled Debt Restructurings (TDRs). Card Members experiencing financial difficulties are offered modification programs wherein a long-term concession (more than 12 months) has been granted to the borrower and are classified as TDRs.

~~(a)~~

Card Member loans have no stated maturity and are therefore included in the due within one year category. However, many of the Company’s Card Members will revolve their balances, which may extend their repayment period beyond one year for balances outstanding as of December 31, 2017.

~~(b)~~

Card Member receivables are immediately due upon receipt of Card Member statements, have no stated interest rate and are included within the due within one year category. Receivables due after one year represent modification programs classified as Troubled Debt Restructurings (TDRs), wherein the terms of a receivable have been modified for Card Members that are experiencing financial difficulties and a long-term concession (more than 12 months) has been granted to the borrower.

~~(c)~~

~~Card Member and other loans due after one year primarily represent installment loans and TDRs~~.

(c)Other loans due after one year primarily represents installment loans.

A-6

~~A-6~~

Table of Contents

Credit Quality Indicators for Loans and Card Member Receivables

As a result of the adoption of CECL on January 1, 2020, there is a lack of comparability in both the reserves and provisions for credit losses for the periods presented. Results for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. Refer to Note 1 and Note 3 to the “Consolidated Financial Statements” for further information.

~~Risk Elements~~

The following table ~~presents~~summarizes the ~~amounts~~ratio of ~~non-performing~~all loans and Card Member receivables ~~that~~categories.


Years Ended December 31, (Millions, except percentages and where indicated)	2020			2019
Card Member loans
Net write-offs — principal less recoveries	$	1,795		$	1,860
Net write-offs — interest and fees less recoveries	$	375		$	375
Average Card Member loans (billions)(a)	$	74.6		$	82.8
Principal only net write-offs / average Card Member loans outstanding (b)	2.4		%	2.2		%
Principal, interest and fees net write-offs / average Card Member loans outstanding (b)	2.9		%	2.7		%
Other loans
Net write-offs	$	111		$	97
Average Other loans (billions)(a)	$	4.2		$	4.3
Net write-offs/average other loans outstanding (b)	2.6		%	2.3		%
Card Member receivables
Net write-offs — principal and fees less recoveries	$	881		$	900
Average Card Member receivables (billions)(a)	$	43.9		$	56.4
Net write-offs / average Card Member receivables outstanding (b)	2.0		%	1.6		%

Reserve for credit losses	$	5,849		$	3,154
Non-accrual loans (c)	$	176		$	346
Reserve for credit losses to total loans and Card Member receivables (d)	4.9		%	2.1		%
Non-accrual loans to total loans (e)	0.2		%	0.4		%
Reserve for credit losses to non-accrual loans (f)	3171.4		%	732.8		%

(a)Averages are ~~either non-accrual, past due,~~ based on month-end balances for the periods presented.

(b)The net write-off rate presented is on a worldwide basis and is based on principal losses only (i.e., excluding interest and/or ~~restructured, segregated between U.S. and non-U.S. borrowers. Past due loans are loans that are contractually past due 90 days~~ fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or ~~more~~fees as topart of our total provision for credit losses, a net write-off rate including principal, interest and/or ~~interest payments. Restructured loans and Card Member receivables are those that meet the definition of a TDR~~.fees is also presented.

December 31, (Millions)
2017 2016 2015 2014 2013
Loans
Non-accrual loans ^(a)

U.S. $ 203 $ 173 $ 154 $ 241 $ 294
Non-U.S. ― ― ― ― 4
Total non-accrual loans 203 173 154 241 298

Loans contractually 90 days past-due and still accruing interest ^(b)

U.S. 273 208 164 162 174
Non-U.S. 56 52 52 58 54
Total loans contractually 90 days past-due and still accruing interest 329 260 216 220 228

Restructured loans ^(c)

U.S. 367 346 279 286 351
Non-U.S. ― ― ― ― 5
Total restructured loans 367 346 279 286 356
Total non-performing loans $ 899 $ 779 $ 649 $ 747 $ 882

Card Member receivables
Restructured Card Member receivables ^(c)

U.S. 80 55 33 48 50
Total restructured Card Member receivables $ 80 $ 55 $ 33 $ 48 $ 50

~~(a)~~ (c)Non-accrual loans not in modification programs primarily include certain ~~Card Member~~ loans placed with outside collection agencies for which ~~the Company has~~we have ceased accruing interest. Amounts presented exclude loans classified as TDR. Lower non-accrual loans are primarily driven by higher enrollments under In House TDR programs and lower delinquencies.

(d)Represents the reserve for credit losses as a percentage of total loans and Card Member receivables. Refer to “Maturities and Sensitivities to Changes in Interest Rates” for total outstanding balance of loans and Card Member receivables.

(e)Represents percentage of non-accrual loans to total loans.

(f)Represents the total reserve for credit losses on Card Member loans ~~classified~~and other loans as a ~~TDR.~~

~~(b)~~

~~(c)~~

In instances where the Card Member is experiencing financial difficulty, the Company may modify, through various programs, Card Member loans and receivables in order to minimize losses and improve collectability, while providing Card Members with temporary or permanent financial relief. The Company has classified Card Member loans and receivables in these modification programs as TDRs and continues to classify Card Member accounts that have exited a modification program as a TDR, with such accounts identified as “Out of Program TDRs.” Such modifications to the loans and receivables primarily include (i) temporary interest rate reductions (possibly as low as zero percent, in which case the loan is characterized as non-accrual in the Company’s TDR disclosures), (ii) placing the Card Member on a fixed payment plan not to exceed 60 months and (iii) suspending delinquency fees until the Card Member exits the modification program. Refer to Note 3 to the “Consolidated Financial Statements” for additional information.

percentage of total non-accrual loans. Refer to “Allocation of reserve for credit losses” for reserve related to Card Member loans and other loans.

A-7

~~A-7~~

Table of Contents

~~Impact~~Allocation of ~~Non-performing Loans on Interest Income~~Reserve for Credit Losses

The following table ~~presents~~shows the ~~gross interest income~~reserve for ~~both non-accrual~~credit losses allocated to each of loans and ~~restructured loans for 2017 that would have been recognized if such loans had been current in accordance with their original contractual terms~~Card Member receivables by customer type, and had been outstanding throughout the period or since origination if held for only part of 2017. The table also presents the interest income related to these loans that was actually recognized for the period. These amounts are segregated between U.S. and non-U.S. borrowers.


December 31,	2020				2019
(Millions, except percentages) Reserve for credit losses at end of year applicable to	Amount		Percentage (a)		Amount		Percentage (a)
Loans U.S. loans
Card Member	$	4,820	86	%	$	2,085	82	%
Other	228		4		150		6
Non-U.S. loans
Card Member	524		10		298		12
Other	10		—		2		—
	$	5,582	100	%	$	2,535	100	%

Card Member receivables
U.S.	$	216	81	%	$	406	66	%
Non-U.S.	51		19		213		34
	$	267	100	%	$	619	100	%

2017
Year Ended December 31, (Millions)
U.S. Non-U.S. Total
Gross amount of interest income that would have been recorded in accordance with the original contractual terms ^(a)
$ 64 $ ― $ 64
Interest income actually recognized 16 ― 16
Total interest revenue foregone $ 48 $ ― $ 48

~~(a)~~

~~The Company determines the original effective interest rate as the interest rate in effect prior to the imposition of any penalty interest rate.~~

~~Potential Problem Loans and Receivables~~

~~This disclosure presents outstanding amounts as well as specific reserves for certain loans and receivables where information about possible credit problems~~(a)Percentage of ~~the borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present repayment terms. At December 31,~~ ~~2017, the Company did not identify any potential problem loans or receivables within the Card Member loans and receivables portfolio that were not already included in the “Risk Elements” section.~~

~~A-8~~

~~Table of Contents~~

~~Cross-border Outstandings~~

~~Cross-border disclosure is based upon the Federal Financial Institutions Examinations Council’s (FFIEC) guidelines governing the determination of cross-border risk.~~

The primary differences between the FFIEC and Guide 3 guidelines for reporting cross-border exposure are: i) the FFIEC methodology includes mark-to-market exposures of derivative assets, which are excluded under Guide 3; and ii) investments in unconsolidated subsidiaries are included under FFIEC but excluded under Guide 3.

The following table presents the aggregate amount of cross-border outstandings from borrowers or counterparties for each foreign country that exceeds 1 percent of consolidated total assets for any of the periods reported below. Cross-border outstandings include loans, receivables, interest-bearing deposits with other banks, other interest-bearing investments and other monetary assets that are denominated in either dollars or other non-local currency.

The table separately presents the amounts of cross-border outstandings by type of borrower including Governments and official institutions, Banks and other financial institutions, Non-Bank Financial Institutions (NBFIs) and Other.

Banks and Gross Total
Governments other Total foreign- exposure
Years Ended December 31, and official financial cross-border office (net of Cross-border
(Millions) institutions institutions NBFIs Other outstandings liabilities liabilities) commitments
Australia 2017 $ ― $ 259 $ ― $ 3,594 $ 3,853 $ 504 $ 3,349 $ 6,635
2016 ― 389 ― 2,986 3,375 453 2,922 5,567
2015 ― 193 ― 2,786 2,979 419 2,560 5,410
Canada 2017 $ 355 $ 992 $ 40 $ 2,730 $ 4,117 $ 1,032 $ 3,085 $ 12,174
2016 1,284 1,028 35 2,408 4,755 977 3,778 11,590
2015 356 705 36 2,433 3,530 1,383 2,147 11,845
United Kingdom 2017 $ 68 $ 1,286 $ 86 $ 4,568 $ 6,008 $ 3,884 $ 2,124 $ 15,578
2016 77 2,213 63 3,390 5,743 3,222 2,521 11,919
2015 107 2,068 32 3,422 5,629 3,174 2,455 12,293
Mexico 2017 $ 85 $ 97 $ 7 $ 2,229 $ 2,418 $ 556 $ 1,862 $ 1,125
2016 106 167 6 1,820 2,099 531 1,568 961
2015 98 61 8 1,890 2,057 552 1,505 1,053
Japan 2017 $ 4 $ 74 $ 177 $ 3,082 $ 3,337 $ 3,106 $ 231 $ 2,290
2016 5 55 130 2,504 2,694 2,526 168 87
2015 4 56 92 2,058 2,210 2,071 139 79
Other countries ^(a)
2017 $ 156 $ 142 $ 14 $ 4,255 $ 4,567 $ 591 $ 3,976 $ 682
2016 137 135 13 3,229 3,514 466 3,048 562
2015 77 96 5 3,177 3,355 503 2,852 613

~~(a)~~

Cross-border outstandings between 0.75 percent and 1.0 percent of consolidated total assets are included in Other Countries. For comparability, countries that meet the threshold for any year presented are included for all years. Countries included are France, Italy and the Netherlands.

~~A-9~~

~~Table of Contents~~

~~Summary of Loan Loss Experience – Analysis of the Allowance for Loan Losses~~

~~The following table summarizes the changes to the Company’s allowance for Card Member loan losses. The table segregates such changes between U.S. and non-U.S. borrowers.~~

Years Ended December 31, (Millions, except percentages)
2017 2016 2015 2014 2013

Card Member loans
Allowance for loan losses at beginning of year
U.S. loans $ 1,068 $ 882 $ 1,036 $ 1,083 $ 1,274
Non-U.S. loans 155 146 165 178 197
Total allowance for losses 1,223 1,028 1,201 1,261 1,471

Card Member lending provisions ^(a)

U.S. loans 1,655 1,056 1,032 944 916
Non-U.S. loans 213 179 158 194 199
Total Card Member lending provisions 1,868 1,235 1,190 1,138 1,115

Write-offs
U.S. loans (1,572 ) (1,262 ) (1,321 ) (1,346 ) (1,463 )
Non-U.S. loans (245 ) (222 ) (226 ) (269 ) (280 )
Total write-offs (1,817 ) (1,484 ) (1,547 ) (1,615 ) (1,743 )

Recoveries
U.S. loans 356 325 359 356 368
Non-U.S. loans 53 54 59 72 84
Total recoveries 409 379 418 428 452
Net write-offs ^(b)
(1,408 ) (1,105 ) (1,129 ) (1,187 ) (1,291 )

Transfer of reserves on HFS loans portfolios
U.S. loans ― ― (224 ) ― ―

Other ^(c)

U.S. loans ― 67 ― (1 ) (12 )
Non-U.S. loans 23 (2 ) (10 ) (10 ) (22 )
Total other 23 65 (10 ) (11 ) (34 )

Allowance for loan losses at end of year
U.S. loans 1,507 1,068 882 1,036 1,083
Non-U.S. loans 199 155 146 165 178
Total allowance for losses $ 1,706 $ 1,223 $ 1,028 $ 1,201 $ 1,261

Principal only net write-offs / average Card Member loans outstanding ^{(d) (e)}
1.8 % 1.6 % 1.4 % 1.5 % 1.8 %
Principal, interest and fees net write-offs / average Card Member loans outstanding ^{(d) (e)}
2.1 % 1.8 % 1.7 % 1.8 % 2.0 %

~~(a)~~

~~Refer to Note 4 to the “Consolidated Financial Statements” for a discussion of management’s process for evaluating the allowance for loan losses.~~

~~(b)~~

~~Net write-offs include principal, interest and fees balances.~~

~~(c)~~

Includes foreign currency translation adjustments and other items. The year ended December 31, 2016, included reserves of $67 million associated with $265 million of retained Card Member loans reclassified from HFS to held for investment ~~as a result of retaining certain loans in connection with the respective sales of JetBlue and Costco cobrand card portfolios. The year ended December 31, 2014, included an adjustment related to reserves for card related fraud losses of $(6) million, which was reclassified to Other liabilities.~~

~~(d)~~

The net write-off rate presented is on a worldwide basis and is based on principal losses only (i.e., excluding interest and fees) to be consistent with industry convention. In addition, because the Company considers uncollectible interest and fees in estimating its reservesreserve for credit losses, a net write-off rate including principal, interest and fees is also presented. The year ended December 31, 2015, reflected the impact of a change in the timing of charge-offs for Card Member loans in certain modification programs from 180 days past due to 120 days past due, which was fully recognized during the three months ended March 31, 2015.

~~(e) Average Card Member loans outstanding are based on month-end balances.~~

~~A-10~~

~~Table of Contents~~

~~The following table summarizes the changes to the Company’s allowance for other loan losses. The table segregates such changes between U.S. and non-U.S. borrowers.~~

Years Ended December 31, (Millions, except percentages)
2017 2016 2015 2014 2013
Other loans
Allowance for loan losses at beginning of year
U.S. loans $ 39 $ 17 $ 8 $ 8 $ 8
Non-U.S. loans 3 3 4 5 12
Total allowance for losses 42 20 12 13 20

Provisions for other loan losses ^(a)

U.S. loans 71 56 21 5 3
Non-U.S. loans 1 1 1 3 4
Total provisions for other loan losses 72 57 22 8 7

Write-offs
U.S. loans (37 ) (39 ) (15 ) (7 ) (7 )
Non-U.S. loans (3 ) (2 ) (3 ) (7 ) (13 )
Total write-offs (40 ) (41 ) (18 ) (14 ) (20 )

Recoveries
U.S. loans 5 5 3 2 4
Non-U.S. loans 1 1 1 3 3
Total recoveries 6 6 4 5 7
Net write-offs (34 ) (35 ) (14 ) (9 ) (13 )

Other ^(b)

Non-U.S. loans ― ― ― ― (1 )
Total other ― ― ― ― (1 )

Allowance for loan losses at end of year
U.S. loans 78 39 17 8 8
Non-U.S. loans 2 3 3 4 5
Total allowance for losses $ 80 $ 42 $ 20 $ 12 $ 13

Net write-offs/average other loans outstanding ^(c)
1.7 % 2.9 % 1.3 % 1.2 % 2.3 %

~~(a)~~

~~Provisions for other loan losses are determined based on a specific identification methodology and models that analyze specific portfolio statistics.~~

~~(b)~~

~~Includes primarily foreign currency translation adjustments.~~

~~(c)~~

~~The net write-off rate presented is on a worldwide basis and is based on write-offs of principal, interest and fees. Average other loans outstanding are based on month~~-~~end balances.~~

~~A-11~~

~~Table of Contents~~

~~The following table summarizes the changes to the Company’s allowance for Card Member receivables losses. The table segregates such changes between U.S. and non-U.S. borrowers.~~

Years Ended December 31, (Millions, except percentages)
2017 2016 2015 2014 2013
Card Member receivables
Allowance for losses at beginning of year
U.S. receivables
Consumer $ 266 $ 268 $ 276 $ 216 $ 273
Commercial 53 51 53 35 37
Total U.S. receivables 319 319 329 251 310
Non-U.S. receivables
Consumer 95 93 93 98 86
Commercial 53 50 43 37 32
Total non-U.S. receivables 148 143 136 135 118
Total allowance for losses 467 462 465 386 428

Provisions for losses ^(a)

U.S. receivables
Consumer 413 366 420 451 336
Commercial 114 69 76 98 53
Total U.S. provisions 527 435 496 549 389
Non-U.S. receivables
Consumer 201 176 169 172 188
Commercial 67 85 72 71 71
Total non-U.S. provisions 268 261 241 243 259
Total provisions for losses 795 696 737 792 648

Write-offs
U.S. receivables
Consumer (633 ) (637 ) (698 ) (618 ) (662 )
Commercial (139 ) (112 ) (123 ) (120 ) (92 )
Total U.S. write-offs (772 ) (749 ) (821 ) (738 ) (754 )
Non-U.S. receivables
Consumer (227 ) (215 ) (204 ) (211 ) (227 )
Commercial (96 ) (101 ) (89 ) (92 ) (90 )
Total non-U.S. write-offs (323 ) (316 ) (293 ) (303 ) (317 )
Total write-offs $ (1,095 ) $ (1,065 ) $ (1,114 ) $ (1,041 ) $ (1,071 )

~~(a)~~

~~Refer to Note 4 to the “Consolidated Financial Statements” for a discussion of management’s process for evaluating the allowance for receivable losses.~~

~~A-12~~

~~Table of Contents~~

Years Ended December 31, (Millions, except percentages)
2017 2016 2015 2014 2013
Card Member receivables
Recoveries
U.S. receivables
Consumer $ 233 $ 269 $ 271 $ 230 $ 279
Commercial 45 43 45 41 38
Total U.S. recoveries 278 312 316 271 317
Non-U.S. receivables
Consumer 56 56 57 58 57
Commercial 25 23 28 29 28
Total non-U.S. recoveries 81 79 85 87 85
Total recoveries 359 391 401 358 402
Net write-offs ^(a)
(736 ) (674 ) (713 ) (683 ) (669 )

Other ^(b)

U.S. receivables
Consumer (2 ) ― (1 ) (3 ) (10 )
Commercial ― 2 ― (1 ) (1 )
Total U.S. other (2 ) 2 (1 ) (4 ) (11 )
Non-U.S. receivables
Consumer (6 ) (15 ) (22 ) (24 ) (6 )
Commercial 3 (4 ) (4 ) (2 ) (4 )
Total non-U.S. other (3 ) (19 ) (26 ) (26 ) (10 )
Total other (5 ) (17 ) (27 ) (30 ) (21 )

Allowance for losses at end of year
U.S. receivables
Consumer 277 266 268 276 216
Commercial 73 53 51 53 35
Total U.S. receivables 350 319 319 329 251
Non-U.S. receivables
Consumer 119 95 93 93 98
Commercial 52 53 50 43 37
Total non-U.S. receivables 171 148 143 136 135
Total allowance for losses $ 521 $ 467 $ 462 $ 465 $ 386

Net write-offs/average Card Member receivables outstanding ^{(c) (d)}
1.5 % 1.5 % 1.6 % 1.5 % 1.6 %

~~(a)~~

~~Net write-offs include principal and fees balances.~~

~~(b)~~

Includes foreign currency translation adjustments and other adjustments. Additionally, 2015 included the impact of transfer of the HFS receivables portfolio, which was not significant and 2014, included an adjustment related to reserves for card-related fraud losses of $(7) million, which was reclassified to Other liabilities.

~~(c)~~

The net write-off rate presented is on a worldwide basis and is based on write-offs of principal and fees. The year ended December 31, 2015, reflected the impact of a change in the timing of charge-offs for Card Member receivables in certain modification programs from 180 days past due to 120 days past due, which was fully recognized during the three months ended March 31, 2015.

~~(d)~~

~~Averages Card Member receivables outstanding are based on month-end balances.~~

~~A-13~~

~~Table of Contents~~

~~Allocation of Allowance for Losses~~

~~The following table presents an allocation of the allowance for loans and Card Member receivables and the percentage of allowance for~~ losses on loans and Card Member receivables in each category to the total ~~allowance, respectively, by customer type. The table segregates allowance for losses on loans and Card Member receivables between U.S. and non-U.S. borrowers.~~reserve.

A-8

Table of Contents

December 31,
(Millions, except percentages) 2017 2016 2015 2014 2013
Allowance for losses
at end of year applicable to Amount Percentage
^(a)
Amount Percentage
^(a)
Amount Percentage
^(a)
Amount Percentage
^(a)
Amount Percentage
^(a)
Loans
U.S. loans
Card Member $ 1,507 85 % $ 1,068 85 % $ 882 84 % $ 1,036 85 % $ 1,083 85 %
Other 78 4 39 3 17 2 8 1 8 1
Non-U.S. loans
Card Member 199 11 155 12 146 14 165 14 178 14
Other 2 ― 3 ― 3 ― 4 ― 5 ―
$ 1,786 100 % $ 1,265 100 % $ 1,048 100 % $ 1,213 100 % $ 1,274 100 %

Card Member receivables
U.S. Card Member receivables
Consumer $ 277 53 % $ 266 57 % $ 268 58 % $ 276 59 % $ 216 56 %
Commercial 73 14 53 11 51 11 53 12 35 9
Non-U.S. Card Member receivables
Consumer 119 23 95 21 93 20 93 20 98 25
Commercial 52 10 53 11 50 11 43 9 37 10
$ 521 100 % $ 467 100 % $ 462 100 % $ 465 100 % $ 386 100 %

~~(a)~~

~~Percentage of allowance for losses on loans and Card Member receivables in each category to the total allowance.~~

Uninsured Time Certificates of Deposit ~~of $100,000 or More~~

The following table presents the amount of uninsured time certificates of deposit ~~of $100,000 or more~~ issued by ~~the Company~~us in ~~its~~our U.S. and Non U.S. offices, further segregated by time remaining until maturity. For any account holder with aggregate deposits in excess of insured limits, the uninsured deposits are calculated proportionately as a percentage of total deposits for each category of deposits held as of the reporting date.


	By remaining maturity as of December 31, 2020
(Millions)	3 months or less		Over 3 months but within 6 months		Over 6 months but within 12 months		Over 12 months		Total
U.S. (a)	$	65	$	53	$	100	$	118	$	336
Non U.S. (b)	$	2	$	1	$	4	$	—	$	7

By remaining maturity as of December 31, 2017
   Over 3 Over 6
    months months
3 months but within but within Over
(Millions) or less 6 months 12 months 12 months Total
U.S. time certificates of deposit ($100,000 or more) $77 $12 $26 $84 $199
(a)We offer deposits within our U.S. bank subsidiary, AENB. These funds are currently insured up to $250,000 per account holder through the FDIC.

~~As of December 31, 2017, time certificates of deposit and other~~(b)Includes time deposits in ~~amounts~~certain of ~~$100,000 or more issued~~our Non-U.S. offices, that exceed the insurance limit as defined by ~~non-U.S. offices was $14 million.~~

~~A-14~~

~~Table of Contents~~

the regulatory rules in individual markets.

~~EXHIBIT INDEX~~

A-9

The following exhibits are filed as part of this Annual Report. The exhibit numbers preceded by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference. Exhibits numbered 10.1 through 10.43 are management contracts or compensatory plans or arrangements.

~~3.1~~	Company’s Amended and Restated Certificate of Incorporation as amended through February 27, 2015 (incorporated by reference to Exhibit 3.1 the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2015).
~~3.2~~	Company’s By-Laws, as amended through September 26, 2016 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated September 26, 2016).
~~4.1~~	The instruments defining the rights of holders of long-term debt securities of the Company and its subsidiaries are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Company hereby agrees to furnish copies of these instruments to the SEC upon request.
~~10.1~~	American Express Company Deferred Compensation Plan for Directors and Advisors, as amended through March 23, 2015 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2015).
~~10.2~~	American Express Company 2007 Pay-for-Performance Deferral Program Document (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated November 20, 2006 (filed November 22, 2006)).
~~10.3~~	Description of amendments to 1994–2006 Pay-for-Performance Deferral Programs (incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2006).
~~10.4~~	American Express Company 2006 Pay-for-Performance Deferral Program Guide (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated November 21, 2005 (filed November 23, 2005)).
~~10.5~~	American Express Company 2005 Pay-for-Performance Deferral Program Guide (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2004).
~~10.6~~	Description of American Express Company Pay-for-Performance Deferral Program (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated November 22, 2004 (filed January 28, 2005)).
~~10.7~~	Amendment to the Pre-2008 Nonqualified Deferred Compensation Plans of American Express Company (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2008).
~~10.8~~	American Express Company Retirement Plan for Non-Employee Directors, as amended (incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1988).
~~10.9~~	Certificate of Amendment of the American Express Company Retirement Plan for Non-Employee Directors dated March 21, 1996 (incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1995).
~~10.10~~	American Express Key Executive Life Insurance Plan, as amended (incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the fiscal year ended December 31, 1991).
~~10.11~~	Amendment to American Express Company Key Executive Life Insurance Plan (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 1994).
~~10.12~~	Amendment to American Express Company Key Executive Life Insurance Plan, effective as of January 22, 2007 (incorporated by reference to Exhibit 10.22 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2006).
~~10.13~~	Amendment to American Express Company Key Executive Life Insurance Plan, effective as of January 1, 2011 (incorporated by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2010).

~~E-1~~

~~Table of Contents~~

~~10.14~~	American Express Key Employee Charitable Award Program for Education (incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1990).
~~10.15~~	American Express Directors’ Charitable Award Program (incorporated by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1990).
~~10.16~~	American Express Company Salary/Bonus Deferral Plan (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1988).
~~10.17~~	Amendment to American Express Company Salary/Bonus Deferral Plan (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 1994).
~~10.18~~	American Express Senior Executive Severance Plan, effective January 1, 1994 (as amended and restated through January 1, 2011) (incorporated by reference to Exhibit 10.30 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2010).
~~10.19~~	First Amendment to the American Express Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2012).
~~10.2~~0	Second Amendment to the American Express Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated July 22, 2013 (filed July 25, 2013)).
~~10.21~~	Amendments of (i) the American Express Salary/Bonus Deferral Plan and (ii) the American Express Key Executive Life Insurance Plan (incorporated by reference to Exhibit 10.37 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1997).
~~10.22~~	Second Amendment and Restatement of the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (as amended and restated effective as of January 1, 2012) (incorporated by reference to Exhibit 10.28 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2011).
~~10.23~~	Third Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated March 29, 2012) (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended March 31, 2012).
~~10.24~~	Fourth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated October 24, 2012) (incorporated by reference to Exhibit 10.31 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2012).
~~10.25~~	Fifth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated May 1, 2013) (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended June 30, 2013).
~~10.26~~	Sixth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated August 16, 2013) (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2013).
~~10.27~~	Seventh Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated September 26, 2013) (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 2013).
~~10.28~~	Eighth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated December 1, 2013) (incorporated by reference to Exhibit 10.36 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2013).
~~10.29~~	Ninth Amendment to the American Express Retirement Restoration Plan (f/k/a Supplemental Retirement Plan) (dated December 14, 2016) (incorporated by reference to Exhibit 10.30 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).
~~10.3~~0	American Express Company 2003 Share Equivalent Unit Plan for Directors, as amended and restated, effective January 1, 2015 (incorporated by reference to Exhibit 10.38 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2015).
~~10.31~~	Description of Compensation Payable to Non-Management Directors effective January 1, 2015 (incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2014).

~~E-2~~

~~Table of Contents~~

~~10.32~~	American Express Company 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated April 23, 2007 (filed April 27, 2007)).
~~10.33~~	American Express Company 2007 Incentive Compensation Plan Master Agreement (as amended and restated effective January 1, 2011) (incorporated by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2010).
~~10.34~~	American Express Company 2007 Incentive Compensation Plan Master Agreement (as amended and restated effective January 23, 2012) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated January 23, 2012 (filed January 27, 2012)).
~~10.35~~	Form of nonqualified stock option award agreement for executive officers under the American Express Company 2007 Incentive Compensation Plan (for awards made after January 26, 2016) (incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2015).
~~10.36~~	Form of restricted stock unit award agreement for executive officers under the American Express Company 2007 Incentive Compensation Plan (for awards made after January 26, 2016) (incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2015).
~~10.37~~	Form of award agreement for executive officers in connection with Portfolio Grant awards under the American Express Company 2007 Incentive Compensation Plan (for awards made after January 29, 2013) (incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2012).
~~10.38~~	~~American Express Company 2016 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated May 2, 2016).~~
~~10.39~~	Form of nonqualified stock option award agreement for executive officers under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.41 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).
~~10.4~~0	Form of restricted stock unit award agreement for executive officers under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.42 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).
~~10.41~~	Form of award agreement for executive officers in connection with Performance Grant awards (a/k/a Executive Annual Incentive Awards) under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).
~~10.42~~	Form of award agreement for executive officers in connection with Portfolio Grant awards under the American Express Company 2016 Incentive Compensation Plan (for awards made after May 2, 2016) (incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2016).
~~10.43~~	~~Post-Employment Arrangements with Kenneth I. Chenault (see Item 9B. Other Information above)~~.
~~10.44~~	Agreement dated February 27, 1995 between the Company and Berkshire Hathaway Inc., on behalf of itself and its subsidiaries (incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 1994).
~~10.45~~	Agreement dated July 20, 1995 between the Company and Berkshire Hathaway Inc. and its subsidiaries (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (Commission File No. 1-7657) for the quarter ended September 30, 1995).
~~10.46~~	Amendment dated September 8, 2000 to the agreement dated February 27, 1995 between the Company and Berkshire Hathaway Inc., on behalf of itself and its subsidiaries (incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated January 22, 2001 (filed January 22, 2001)).
~~10.47~~	Amendment dated January 29, 2018 to the agreement dated February 27, 1995 between the Company and Berkshire Hathaway Inc., on behalf of itself and its subsidiaries (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated January 29, 2018 (filed January 30, 2018)).

~~E-3~~

~~Table of Contents~~

*10.48	~~Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri~~.
*12	~~Computation in Support of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.~~
*21	~~Subsidiaries of the Company.~~
*23	~~Consent of PricewaterhouseCoopers LLP.~~
*31.1	~~Certification of Stephen J. Squeri, Chief Executive Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.~~
*31.2	~~Certification of Jeffrey C. Campbell, Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.~~
*32.1	~~Certification of Stephen J. Squeri, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
*32.2	~~Certification of Jeffrey C. Campbell, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
*101.INS	~~XBRL Instance Document~~
*101.SCH	~~XBRL Taxonomy Extension Schema Document~~
*101.CAL	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
*101.LAB	~~XBRL Taxonomy Extension Label Linkbase Document~~
*101.PRE	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
*101.DEF	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~E-4~~

☑
☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, ~~2017~~2020

	☐
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares (par value $0.20 per Share)	AXP	New York Stock Exchange


We Back Our Customers						We Embrace Diversity
We Make It Great						We Stand for Inclusion
We Do What's Right						We Win as A Team
We Respect People						We Support Our Communities


Form 10-K Item Number		Page

	PART I

1.	Business

	Introduction	1

	Business Operations	2

	Competition	4

	Supervision and Regulation	5

	Executive Officers of the Company	15

	Employees	16

	Additional Information	16

1A.	Risk Factors	16

1B.	Unresolved Staff Comments	30

2.	Properties	30

3.	Legal Proceedings	31

4.	Mine Safety Disclosures	32

	PART II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33

6.	Selected Financial Data	35

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)	36

	Executive Overview	36

	Consolidated Results of Operations	39

	Business Segment Results	46

	Consolidated Capital Resources and Liquidity	55

	Off-Balance Sheet Arrangements and Contractual Obligations	63

	Risk Management	65

	Critical Accounting Estimates	71

	Other Matters	74

7A.	Quantitative and Qualitative Disclosures about Market Risk	79

8.	Financial Statements and Supplementary Data	79

	Management’s Report on Internal Control Over Financial Reporting	79

	Report of Independent Registered Public Accounting Firm	80

	Index to Consolidated Financial Statements	82

	Consolidated Financial Statements	83

	Notes to Consolidated Financial Statements	88

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	139

9A.	Controls and Procedures	139

9B.	Other Information	139


Form 10-K Item Number		Page
	PART I
1.	Business	1
	Competition	9
	Supervision and Regulation	11

	Additional Information	22
1A.	Risk Factors	23
1B.	Unresolved Staff Comments	38
2.	Properties	38
3.	Legal Proceedings	38
4.	Mine Safety Disclosures	38
	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	39
6.	Selected Financial Data	41
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)	42
	Executive Overview	42
	Consolidated Results of Operations	45
	Business Segment Results of Operations	53
	Consolidated Capital Resources and Liquidity	62
	Off-Balance Sheet Arrangements and Contractual Obligations	70
	Risk Management	72
	Critical Accounting Estimates	80
	Other Matters	84
7A.	Quantitative and Qualitative Disclosures about Market Risk	90
8.	Financial Statements and Supplementary Data	90
	Management’s Report on Internal Control Over Financial Reporting	90
	Report of Independent Registered Public Accounting Firm	91
	Index to Consolidated Financial Statements	94
	Consolidated Financial Statements	95
	Notes to Consolidated Financial Statements	100
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	159
9A.	Controls and Procedures	159
9B.	Other Information	159


	PART III
10.	Directors, Executive Officers and Corporate Governance	160
11.	Executive Compensation	160
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	160
13.	Certain Relationships and Related Transactions, and Director Independence	160
14.	Principal Account ant Fees and Services	161
	PART IV
15.	Exhibit and Financial Statement Schedules	162
16.	Form 10-K Summary	168

	Signatures	169
	Statistical Disclosure by Bank Holding Companies	A-1


	PART III

10.	Directors, Executive Officers and Corporate Governance	140

11.	Executive Compensation	140

12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	140

13.	Certain Relationships and Related Transactions, and Director Independence	140

14.	Principal Accounting Fees and Services	140

	PART IV

15.	Exhibits, Financial Statement Schedules	141
16.	Form 10-K Summary	141

	Signatures	142
	Guide 3 — Statistical Disclosure by Bank Holding Companies	A-1
	Exhibit Index	E-1


DOUGLAS E. BUCKMINSTER —			Group President, Global Consumer Services Group
Mr. Buckminster (60) has been Group President, Global Consumer Services Group since February 2018. Prior thereto, he had been President, Global Consumer Services Group since October 2015.

JEFFREY C. CAMPBELL —			Chief Financial Officer
Mr. Campbell (60) has been Chief Financial Officer since August 2013.

MARC D. GORDON —			Chief Information Officer
Mr. Gordon (60) has been Chief Information Officer since September 2012.

MONIQUE HERENA —			Chief Colleague Experience Officer
Ms. Herena (49) has been Chief Colleague Experience Officer since April 2019. Ms. Herena joined American Express from BNY Mellon, where she served as the Chief Human Resources Officer and Senior Executive Vice President, Human Resources, Marketing and Communications since 2014.

RAYMOND JOABAR —			Chief Risk Officer and President, Global Risk & Compliance
Mr. Joabar (55) has been Chief Risk Officer and President, Global Risk & Compliance since September 2019. Prior thereto, he had been President of International Consumer Services and Global Travel and Lifestyle Services since February 2018. He also served as Executive Vice President, Global Servicing Network from February 2016 to February 2018 and Executive Vice President, World Service from November 2015 to February 2016.

ANNA MARRS —			President, Global Commercial Services
Ms. Marrs (47) has been President, Global Commercial Services since September 2018. Ms. Marrs joined American Express from Standard Chartered Bank, where she served as Regional CEO, ASEAN and South Asia since November 2016 and CEO, Commercial and Private Banking since October 2015.

DENISE PICKETT —			President, Global Services Group
Ms. Pickett (55) has been President, Global Services Group since September 2019. Prior thereto, she had been Chief Risk Officer and President, Global Risk, Banking & Compliance since February 2018 and President, U.S. Consumer Services since October 2015.

ELIZABETH RUTLEDGE —			Chief Marketing Officer
Ms. Rutledge (59) has been Chief Marketing Officer since February 2018. Prior thereto, she had been Executive Vice President, Global Advertising & Media since February 2016 and Executive Vice President, Card Products & Benefits since May 2013.

LAUREEN E. SEEGER —			Chief Legal Officer
Ms. Seeger (59) has been Chief Legal Officer since July 2014.

JENNIFER SKYLER —			Chief Corporate Affairs Officer
Ms. Skyler (44) has been Chief Corporate Affairs Officer since October 2019. Ms. Skyler joined American Express from The We Company, where she had been Chief Communications Officer from January 2018 to September 2019. Prior thereto, she had been Global Head of Public Affairs from January 2016 to January 2018.
STEPHEN J. SQUERI —			Chairman and Chief Executive Officer
Mr. Squeri (61) has been Chairman and Chief Executive Officer since February 2018. Prior thereto, he had been Vice Chairman since July 2015.

ANRÉ WILLIAMS —			Group President, Global Merchant and Network Services
Mr. Williams (55) has been Group President, Global Merchant and Network Services since February 2018. Prior thereto, he had been President of Global Merchant Services and Loyalty since October 2015.

Year-end Data	2012		2013		2014		2015		2016		2017
American Express	$	100.00	$	159.84	$	165.70	$	125.57	$	136.34	$	185.70
S&P 500 Index	$	100.00	$	132.37	$	150.48	$	152.55	$	170.78	$	208.05
S&P Financial Index	$	100.00	$	135.59	$	156.17	$	153.72	$	188.69	$	230.47

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(c)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2017
Repurchase program^(a)		4,040,661	$	91.78		4,040,661		94,655,567
Employee transactions^(b)		―		―		N/A		N/A
November 1-30, 2017
Repurchase program^(a)		3,932,622	$	94.78		3,932,622		90,722,945
Employee transactions^(b)		4,907	$	95.22		N/A		N/A
December 1-31, 2017
Repurchase program^(a)		5,720,526	$	98.79		5,720,526		85,002,419
Employee transactions^(b)		―		―		N/A		N/A
Total
Repurchase program^(a)		13,693,809	$	95.57		13,693,809		85,002,419
Employee transactions^(b)		4,907	$	95.22		N/A		N/A

		2017				2016
		Percentage Increase (Decrease)		Percentage Increase (Decrease) Assuming No Changes in FX Rates	^(a)	Percentage Increase (Decrease)		Percentage Increase (Decrease) Assuming No Changes in FX Rates	^(a)
Worldwide^(b)
Total billed business		5	%	4	%	―	%	1	%
Proprietary billed business		4		4		(1)		(1)
GNS billed business^(c)		6		5		6		10
Airline-related volume		3		3		(4)		(3)
	(8% of worldwide billed business for both 2017 and 2016)
United States^(b)
Billed business		1				(3)
Proprietary consumer card billed business^(d)		(2)				(7)
Proprietary small business and corporate services billed business^(e)		6				2
T&E-related volume
	(25% of U.S. billed business for both 2017 and 2016)	―				(3)
Non-T&E-related volume
	(75% of U.S. billed business for both 2017 and 2016)	1				(3)
Airline-related volume
	(7% of U.S. billed business for both 2017 and 2016)	―				(7)
Outside the United States^(b)
Billed business		12		11		6		10
	Japan, Asia Pacific & Australia (JAPA) billed business	13		12		14		14
	Latin America & Canada (LACC) billed business	10		9		(6)		6
	Europe, the Middle East & Africa (EMEA) billed business	12		10		2		8
Proprietary consumer card billed business^(c)		13		13		4		8
Proprietary small business and corporate services billed business^(e)		14	%	12	%	3	%	7	%

			~~Basel III Standards 2017~~^(a)		~~Ratios as of December 31, 2017~~
~~Risk-Based Capital~~
	~~Common Equity Tier 1~~		~~5.8~~	%
		~~American Express Company~~			~~9.0~~	%
		~~American Express Centurion Bank~~			~~12.7~~
		~~American Express Bank, FSB~~			~~12.9~~
	~~Tier 1~~		~~7.3~~
		~~American Express Company~~			~~10.1~~
		~~American Express Centurion Bank~~			~~12.7~~
		~~American Express Bank, FSB~~			~~12.9~~
	~~Total~~		~~9.3~~
		~~American Express Company~~			~~11.8~~
		~~American Express Centurion Bank~~			~~14.0~~
		~~American Express Bank, FSB~~			~~14.2~~
~~Tier 1 Leverage~~			~~4.0~~
		~~American Express Company~~			~~8.6~~
		~~American Express Centurion Bank~~			~~10.2~~
		~~American Express Bank, FSB~~			~~11.7~~
~~Supplementary Leverage Ratio~~ ^(b)			~~3.0~~	%
		~~American Express Company~~			~~7.4~~
		~~American Express Centurion Bank~~			~~8.1~~
		~~American Express Bank, FSB~~			~~9.7~~	%

American Express Company ($ in Billions)	December 31, 2017
Risk-Based Capital
Common Equity Tier 1	$	13.2
Tier 1 Capital		14.7
Tier 2 Capital^(a)		2.4
Total Capital		17.1

Risk-Weighted Assets		145.9
Average Total Assets to calculate the Tier 1 Leverage Ratio		171.2
Total Leverage Exposure to calculate SLR	$	198.8


	Effective Minimum (a)		Ratios as of December 31, 2020
Risk-Based Capital
Common Equity Tier 1	7.0	%
American Express Company			13.5	%
American Express National Bank			16.2
Tier 1	8.5
American Express Company			14.7
American Express National Bank			16.2
Total	10.5
American Express Company			16.2
American Express National Bank			18.3
Tier 1 Leverage	4.0	%
American Express Company			11.0
American Express National Bank			10.9%

($ in Billions)	December 31, 2017
Estimated Common Equity Tier 1 Ratio under Fully Phased-In Basel III^(a)		8.8	%
Estimated Tier 1 Capital Ratio under Fully Phased-In Basel III ^(a)		9.9

Estimated Tier 1 Leverage Ratio under Fully Phased-In Basel III^(b)		8.5
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III ^(b)		7.3	%

Estimated Risk-Weighted Assets under Fully Phased-In Basel III^(c)	$	146.7
Estimated Average Total Assets to calculate the Tier 1 Leverage Ratio^(b)		171.0
Estimated Total Leverage Exposure to calculate SLR under Fully Phased-In Basel III ^(d)	$	198.7

(Billions)	CET1			Tier 1
Risk-Based Capital under Transitional Basel III	$	13.2		$	14.7
Adjustments related to:
AOCI		(0.1	)		(0.1	)
Transition provisions for intangible assets		(0.2	)		(0.2	)
Estimated CET1 and Tier 1 Risk-Based Capital under Fully Phased-in Basel III	$	12.9		$	14.4

(Billions)	2017
American Express Company:
Fixed Rate Senior Notes (weighted-average coupon of 2.58%)	$	5.0
Floating Rate Senior Notes (3-month LIBOR plus 45 basis points)		0.9
American Express Credit Corporation:
Fixed Rate Senior Notes (weighted-average coupon of 2.56%)		7.3
Floating Rate Senior Notes (3-month LIBOR plus 45 basis points)		1.2
American Express Credit Account Master Trust:
Fixed Rate Class A Certificates (weighted-average coupon of 1.90%)		8.1
Fixed Rate Class B Certificates (weighted-average coupon of 2.21%)		0.2
Floating Rate Class A Certificates (1-month LIBOR plus 33 basis points)		1.8
Floating Rate Class B Certificates (1-month LIBOR plus 41 basis points)		-
Total	$	24.5

	Payments due by year^(a)

(Millions)	2018			2019-2020		2021-2022	2023 and thereafter		Total
Long-term debt	$	11,934	$	28,926	$	10,527	$	5,535	$	56,922
Interest payments on long-term debt^(b)		1,195		1,532		691		1,545		4,963
Certificates of deposit		5,256		8,278		3,460		―		16,994
Other long-term liabilities^{(c) (d)}		340		112		13		21		486
Operating lease obligations		131		222		129		831		1,313
Purchase obligations^(e)		454		294		141		7		896
Deemed repatriation tax^(f)		8		286		268		1,141		1,703
Total	$	19,318	$	39,650	$	15,229	$	9,080	$	83,277


	Payments due by year(a)
(Millions)	2021		2022-2023		2024-2025		2026 and thereafter		Total
Long-term debt	$	11,829	$	21,324	$	5,757	$	4,132	$	43,042
Certificates of deposit	3,828		3,698		483		—		8,009
Interest payments on long-term debt(b)	713		760		402		1,058		2,933
Lease obligations	141		273		232		1,024		1,670
Deemed repatriation tax(c)	—		14		582		416		1,012
Purchase obligations(d)	231		174		34		—		439
Other long-term liabilities(e) (f)	243		36		6		38		323
Total	$	16,985	$	26,279	$	7,496	$	6,668	$	57,428


CONSOLIDATED FINANCIAL STATEMENTS		PAGE
Consolidated Statements of Income – For the Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		83 95
Consolidated Statements of Comprehensive Income – For the Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		84 96
Consolidated Balance Sheets – December 31, ~~2017~~20 20 and ~~2016~~2019		85 97
Consolidated Statements of Cash Flows – For the Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		86 98
Consolidated Statements of Shareholders’ Equity – For the Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		87 99

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		100
Note 1 – Summary of Significant Accounting Policies		88 100
Note 2 – ~~Business Events~~Loans and Card Member Receivables		93 106
Note 3 – ~~Loans and Accounts Receivable~~Reserves for Credit Losses		94 114
Note 4 ~~– Reserves for Losses~~		~~101~~
~~Note 5~~ – Investment Securities	~~103~~ 117
Note 6 5 – Asset Securitizations		~~104~~ 119
Note 7 6 – Other Assets		~~105~~ 120
Note 8 7 – Customer Deposits		~~107~~ 122
Note 9 8 – Debt		~~108~~ 123
Note 10 9 – Other Liabilities		~~110~~ 126
Note 111 0 – Stock Plans		~~111~~ 127
Note 121 1 – Retirement Plans		~~113~~ 129
Note 131 2 – Contingencies and Commitments		~~113~~ 130
Note 141 3 – Derivatives and Hedging Activities		~~115~~ 133
Note 151 4 – Fair Values		~~118~~ 137
Note 161 5 – Guarantees		~~122~~ 141
Note 171 6 – Common and Preferred Shares		~~122~~ 141
Note 181 7 – Changes in Accumulated Other Comprehensive Income		~~124~~ 143
Note 1918 – ~~Non-Interest Revenue and Expense Detail~~		~~125~~
~~Includes further details of:~~
Other Fees and Commissions
~~Other Revenues~~
and Other Expenses	144
Note 20 19 – Restructuring		~~126~~ 144
Note 212 0 – Income Taxes		~~127~~ 145
Note 222 1 – Earnings Per Common Share (EPS)		~~130~~ 148
Note 232 2 – Regulatory Matters and Capital Adequacy		~~130~~ 149
Note 242 3 – Significant Credit Concentrations		~~132~~ 151
Note 252 4 – Reportable Operating Segments and Geographic Operations		~~133~~ 152
Note 262 5 – Parent Company		~~136~~ 155
Note 272 6 – Quarterly Financial Data (Unaudited)		~~138~~ 158

Years Ended December 31 (Millions, except per share amounts)	2017		2016		2015
Revenues
Non-interest revenues
Discount revenue	$	19,186	$	18,680	$	19,297
Net card fees		3,090		2,886		2,700
Other fees and commissions		3,022		2,753		2,866
Other		1,732		2,029		2,033
Total non-interest revenues		27,030		26,348		26,896
Interest income
Interest on loans		8,138		7,205		7,309
Interest and dividends on investment securities		89		131		157
Deposits with banks and other		326		139		79
Total interest income		8,553		7,475		7,545
Interest expense
Deposits		779		598		475
Long-term debt and other		1,333		1,106		1,148
Total interest expense		2,112		1,704		1,623
Net interest income		6,441		5,771		5,922
Total revenues net of interest expense		33,471		32,119		32,818
Provisions for losses
Charge card		795		696		737
Card Member loans		1,868		1,235		1,190
Other		96		95		61
Total provisions for losses		2,759		2,026		1,988
Total revenues net of interest expense after provisions for losses		30,712		30,093		30,830
Expenses
Marketing and promotion		3,217		3,650		3,109
Card Member rewards		7,608		6,793		6,996
Card Member services and other		1,439		1,133		1,018
Salaries and employee benefits		5,258		5,259		4,976
Other, net		5,776		5,162		6,793
Total expenses		23,298		21,997		22,892
Pretax income		7,414		8,096		7,938
Income tax provision		4,678		2,688		2,775
Net income	$	2,736	$	5,408	$	5,163
Earnings per Common Share — (Note 22)^(a)
Basic	$	2.98	$	5.67	$	5.07
Diluted	$	2.97	$	5.65	$	5.05
Average common shares outstanding for earnings per common share:
Basic		883		933		999
Diluted		886		935		1,003


Year Ended December 31 (Millions, except per share amounts)	2020		2019		2018
Revenues
Non-interest revenues
Discount revenue	$	20,401	$	26,167	$	24,721
Net card fees	4,664		4,042		3,441
Other fees and commissions	2,163		3,297		3,153
Other	874		1,430		1,360
Total non-interest revenues	28,102		34,936		32,675
Interest income
Interest on loans	9,779		11,308		9,941
Interest and dividends on investment securities	127		188		118
Deposits with banks and other	177		588		547
Total interest income	10,083		12,084		10,606
Interest expense
Deposits	943		1,559		1,287
Long-term debt and other	1,155		1,905		1,656
Total interest expense	2,098		3,464		2,943
Net interest income	7,985		8,620		7,663
Total revenues net of interest expense	36,087		43,556		40,338
Provisions for credit losses
Card Member receivables	1,015		963		937
Card Member loans	3,453		2,462		2,266
Other	262		148		149
Total provisions for credit losses	4,730		3,573		3,352
Total revenues net of interest expense after provisions for credit losses	31,357		39,983		36,986
Expenses
Marketing and business development	6,747		7,125		6,477
Card Member rewards	8,041		10,439		9,696
Card Member services	1,230		2,223		1,777
Salaries and employee benefits	5,718		5,911		5,250
Other, net	5,325		5,856		5,664
Total expenses	27,061		31,554		28,864
Pretax income	4,296		8,429		8,122
Income tax provision	1,161		1,670		1,201
Net income	$	3,135	$	6,759	$	6,921
Earnings per Common Share — (Note 21)(a)
Basic	$	3.77	$	8.00	$	7.93
Diluted	$	3.77	$	7.99	$	7.91
Average common shares outstanding for earnings per common share:
Basic	805		828		856
Diluted	806		830		859

	Increase (Decrease)
December 31 (Millions)	2017			2016
Revenues
Discount revenue	$	3,707		$	3,699
Other		(278	)		(253	)
Expenses
Marketing and promotion		2,350			2,420
Card Member rewards	$	1,079		$	1,026

2017 (Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
U.S. Consumer Services	$	52,961	$	201		162		344	$	53,668
International Consumer and Network Services		8,530		37		28		56		8,651
Global Commercial Services
Global Small Business Services		10,892		43		31		59		11,025
Global Corporate Payments^(a)	(b)		(b)		(b)			―		55
Card Member Receivables:
U.S. Consumer Services	$	12,993		53		33		64	$	13,143
International Consumer and Network Services		7,703		29		21		50		7,803
Global Commercial Services
Global Small Business Services		15,868		91		54		106		16,119
Global Corporate Payments^(a)	(b)		(b)		(b)			148		16,982

2016 (Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
U.S. Consumer Services	$	48,216	$	156	$	119	$	267	$	48,758
International Consumer and Network Services		6,863		32		24		52		6,971
Global Commercial Services
Global Small Business Services		9,378		34		23		49		9,484
Global Corporate Payments^(a)	(b)		(b)		(b)			―		52
Card Member Receivables:
U.S. Consumer Services	$	12,158	$	45	$	30	$	69	$	12,302
International Consumer and Network Services		5,888		22		15		41		5,966
Global Commercial Services
Global Small Business Services		14,047		77		47		102		14,273
Global Corporate Payments^(a)	(b)		(b)		(b)			135		14,767

	As of December 31, 2017
									Accounts Classified as a TDR ^(c)
(Millions)	Over 90 days Past Due & Accruing Interest			^(a)	Non-Accruals			^(b)	In Program			^(d)	Out of Program			^(e)	Total Impaired Balance			Unpaid Principal Balance			Allowance for TDRs
Card Member Loans:
U.S. Consumer Services		$	233			$	168			$	178			$	131			$	710		$	639		$	49
International Consumer and Network Services			56				―				―				―				56			55			―
Global Commercial Services			38				31				31				27				127			118			8
Card Member Receivables:
U.S. Consumer Services			―				―				15				9				24			24			1
Global Commercial Services			―				―				37				19				56			56			2
Total		$	327			$	199			$	261			$	186			$	973		$	892		$	60

	As of December 31, 2016
									Accounts Classified as a TDR ^(c)
(Millions)	Over 90 days Past Due & Accruing Interest			^(a)	Non-Accruals			^(b)	In Program			^(d)	Out of Program			^(e)	Total Impaired Balance			Unpaid Principal Balance			Allowance for TDRs
Card Member Loans:
U.S. Consumer Services		$	178			$	139			$	165			$	129			$	611		$	558		$	51
International Consumer and Network Services			52				―				―				―				52			51			―
Global Commercial Services			30				30				26				26				112			103			9
Card Member Receivables:
U.S. Consumer Services			―				―				11				6				17			17			7
Global Commercial Services			―				―				28				10				38			38			21
Total		$	260			$	169			$	230			$	171			$	830		$	767		$	88

	As of December 31, 2015
									Accounts Classified as a TDR ^(c)
(Millions)	Over 90 days Past Due & Accruing Interest			^(a)	Non-Accruals			^(b)	In Program			^(d)	Out of Program			^(e)	Total Impaired Balance			Unpaid Principal Balance			Allowance for TDRs
Card Member Loans:
U.S. Consumer Services		$	140			$	124			$	149			$	89			$	502		$	463		$	44
International Consumer and Network Services			52				―				―				―				52			51			―
Global Commercial Services			24				26				23				18				91			85			9
Card Member Receivables:
U.S. Consumer Services			―				―				11				3				14			14			8
Global Commercial Services			―				―				16				3				19			19			12
Total		$	216			$	150			$	199			$	113			$	678		$	632		$	73

2017 (Millions)	Average Balance		Interest Income Recognized
Card Member Loans:
U.S. Consumer Services	$	643		$	68
International Consumer and Network Services		56			17
Global Commercial Services		120			17
Card Member Receivables:
U.S. Consumer Services		20			―
Global Commercial Services		45			―
Total	$	884		$	102

2016 (Millions)	Average Balance		Interest Income Recognized
Card Member Loans:
U.S. Consumer Services	$	559		$	53
International Consumer and Network Services		53			15
Global Commercial Services		103			13
Card Member Receivables:
U.S. Consumer Services		14			―
Global Commercial Services		28			―
Total	$	757		$	81

2015 (Millions)	Average Balance		Interest Income Recognized
Card Member Loans:
U.S. Consumer Services	$	569		$	48
International Consumer and Network Services		54			14
Global Commercial Services		104			11
Card Member Receivables:
U.S. Consumer Services		13			―
Global Commercial Services		20			―
Total	$	760		$	73

2017	Number of Accounts (in thousands)		Outstanding Balances ($ in millions) ^(a)		Average Interest Rate Reduction (% points)		Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans		33	$	224		10	(b)
Card Member Receivables		6		83	(c)			28
Total		39	$	307

2016	Number of Accounts (in thousands)		Outstanding Balances ($ in millions) ^(a)		Average Interest Rate Reduction (% points)		Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans		31	$	220		9	(b)
Card Member Receivables		9		123	(c)			18
Total		40	$	343

2015	Number of Accounts (in thousands)		Outstanding Balances ($ in millions) ^(a)		Average Interest Rate Reduction (% points)		Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans		40	$	285		9	(b)
Card Member Receivables		12		147	(c)			12
Total		52	$	432

	Number of Accounts			Aggregated Outstanding Balances Upon Default^(a)
2017		(thousands)		(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans			6		$	39
Card Member Receivables			3			7
Total			9		$	46

	Number of Accounts			Aggregated Outstanding Balances Upon Default^(a)
2016		(thousands)		(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans			7		$	41
Card Member Receivables			3			4
Total			10		$	45

	Number of Accounts			Aggregated Outstanding Balances Upon Default^(a)
2015		(thousands)		(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans			8		$	52
Card Member Receivables			3			5
Total			11		$	57

(Millions)	Due within 1 year			Due after 1 year but within 5 years			Due after 5 years but within 10 years			Due after 10 years			Total
State and municipal obligations^(a)	$	18		$	87		$	98		$	1,174		$	1,377
U.S. Government agency obligations		―			―			―			11			11
U.S. Government treasury obligations		30			879			125			11			1,045
Corporate debt securities		4			24			―			―			28
Mortgage-backed securities^(a)		―			―			―			69			69
Foreign government bonds and obligations		573			4			―			4			581
Total Estimated Fair Value	$	625		$	994		$	223		$	1,269		$	3,111

Total Cost	$	625		$	1,000		$	222		$	1,260		$	3,107
Weighted average yields^(b)		3.65	%		1.95	%		4.39	%		4.47	%		3.49	%

(Millions)	USCS		ICNS			GCS			GMS			Corporate & Other			Total
Balance as of January 1, 2016	$	122	$	620		$	1,715		$	291		$	1		$	2,749
Acquisitions		―		―			―			201			―			201
Dispositions		―		―			―			―			―			―
Other^(a)		―		(16	)		(3	)		(3	)		(1	)		(23	)
Balance as of December 31, 2016	$	122	$	604		$	1,712		$	489		$	―		$	2,927
Acquisitions		4		15			―			―			―			19
Dispositions		―		―			―			―			―			―
Other^(a)		1		41			12			9			―			63
Balance as of December 31, 2017	$	127	$	660		$	1,724		$	498		$	―		$	3,009


(Millions)	GCSG		GCS		GMNS		Total
Balance as of December 31, 2018	$	707	$	1,718	$	647	$	3,072
Acquisitions	189		66		0		255
Dispositions	0		0		0		0
Other(a)	(7)		(3)		(2)		(12)
Balance as of December 31, 2019	$	889	$	1,781	$	645	$	3,315
Acquisitions	0		442		52		494
Dispositions	0		0		0		0
Other(a)	25		11		7		43
Balance as of December 31, 2020	$	914	$	2,234	$	704	$	3,852


(Millions)	2021		2022		2023		2024		2025		Thereafter		Total
American Express Company (Parent Company only)	$	5,000	$	5,675	$	4,350	$	5,000	$	750	$	2,122	$	22,897
American Express Credit Corporation	2,975		2,050		0		0		0		2,000		7,025
Lending Trust	3,709		6,381		2,685		0		0		0		12,775

Other	145		86		97		7		0		10		345
	$	11,829	$	14,192	$	7,132	$	5,007	$	750	$	4,132	$	43,042
Unamortized Underwriting Fees													(64)
Unamortized Discount and Premium													(648)
Impacts due to Fair Value Hedge Accounting													622
Total Long-Term Debt													$	42,952


	Stock Options			Service-Based RSUs			Service and Performance-Based RSUs
(Shares in thousands)	Shares	Weighted-Average Exercise Price		Shares	Weighted- Average Grant Price		Shares	Weighted- Average Grant Price
Outstanding as of December 31, 2019	4,172	$	72.70	2,412	$	91.42	3,392	$	88.25
Granted	422	131.68		816	127.56		1,089	122.15
Exercised/vested	(822)	53.50		(1,042)	82.77		(1,193)	78.52
Forfeited	(21)	65.43		(108)	105.32		(142)	101.38
Expired	0	0		—	—		—	—
Outstanding as of December 31, 2020	3,751	83.59		2,078	$	109.23	3,146	$	103.08
Options vested and expected to vest as of December 31, 2020	3,751	83.59
Options exercisable as of December 31, 2020	2,706	$	72.26

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

200 Vesey Street
New York, New York

(Address of principal executive offices)

(Zip Code)