EXHIBIT 99.2
All information in the following tables is presented on a basis prepared in
accordance with U.S. generally accepted accounting principles (GAAP), unless
otherwise indicated.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
--------------------- Percentage ------------------------ Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
--------- --------- ---------- -------- --------- ----------
Revenues
Discount revenue $ 2,817 $ 2,432 15.8% $ 10,249 $ 8,781 16.7%
Net investment income 826 786 5.1 3,118 3,063 1.8
Management and distribution fees 788 728 8.4 3,023 2,420 24.9
Cardmember lending net finance charge
revenue 560 531 5.5 2,224 2,042 8.9
Net card fees 491 467 5.2 1,909 1,835 4.1
Travel commissions and fees 484 445 8.6 1,795 1,507 19.1
Other commissions and fees 616 531 16.1 2,284 1,960 16.5
Insurance and annuity revenues 394 366 7.4 1,525 1,366 11.6
Securitization income, net 325 293 10.9 1,132 1,105 2.4
Other 470 459 2.5 1,856 1,757 5.7
--------- --------- -------- ---------
Total revenues 7,771 7,038 10.4 29,115 25,836 12.7
--------- --------- -------- ---------
Expenses
Human resources 1,971 1,678 17.5 7,359 6,303 16.7
Marketing, promotion, rewards
and cardmember services 1,472 1,166 26.3 5,083 3,901 30.3
Provision for losses and benefits 1,162 1,164 (0.1) 4,318 4,429 (2.5)
Interest 238 205 16.3 867 905 (4.1)
Other operating expenses 1,745 1,735 0.5 6,537 6,051 8.0
--------- --------- -------- ---------
Total expenses 6,588 5,948 10.8 24,164 21,589 11.9
--------- --------- -------- ---------
Pretax income before accounting change 1,183 1,090 8.6 4,951 4,247 16.6
Income tax provision 287 314 (8.5) 1,435 1,247 15.1
--------- --------- -------- ---------
Income before accounting change 896 776 15.5 3,516 3,000 17.2
Cumulative effect of accounting change,
net of tax - (13)(B) # (71)(A) (13)(B) #
--------- --------- -------- ---------
Net income $ 896 $ 763 17.5 $ 3,445 $ 2,987 15.3
========= ========= ======== =========
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
# - Denotes a variance of more than 100%.
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-1-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Billions)
<Table>
<Caption>
December 31, December 31,
2004 2003
------------ ------------
Assets
Cash and cash equivalents $ 10 $ 6
Accounts receivable 35 31
Investments 61 57
Loans 35 32
Separate account assets 36 31
Other assets 16 18
------------ ------------
Total assets $ 193 $ 175
============ ============
Liabilities and Shareholders' Equity
Separate account liabilities $ 36 $ 31
Short-term debt 14 19
Long-term debt 33 21
Other liabilities 94 89
------------ ------------
Total liabilities 177 160
------------ ------------
Shareholders' Equity 16 15
------------ ------------
Total liabilities and shareholders' equity $ 193 $ 175
============ ============
</Table>
-2-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
--------------------- Percentage ------------------------ Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
--------- --------- ---------- --------- --------- ----------
REVENUES
Travel Related Services $ 5,788 $ 5,211 11.0% $ 21,578 $ 19,189 12.4%
American Express Financial Advisors 1,856 1,710 8.5 7,035 6,142 14.5
American Express Bank 207 205 1.1 825 801 3.0
--------- --------- --------- ---------
7,851 7,126 10.2 29,438 26,132 12.6
Corporate and other, including
adjustments and eliminations (80) (88) 11.0 (323) (296) (8.6)
--------- --------- --------- ---------
CONSOLIDATED REVENUES $ 7,771 $ 7,038 10.4 $ 29,115 $ 25,836 12.7
========= ========= ========= =========
PRETAX INCOME (LOSS) BEFORE ACCOUNTING
CHANGE
Travel Related Services $ 1,018 $ 884 15.1 $ 4,117 $ 3,571 15.3
American Express Financial Advisors 248 248 0.5 1,086 859 26.5
American Express Bank 7 42 (83.6) 146 151 (3.1)
--------- --------- --------- ---------
1,273 1,174 8.5 5,349 4,581 16.8
Corporate and other (90) (84) (7.2) (398) (334) (19.4)
--------- --------- --------- ---------
PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,183 $ 1,090 8.6 $ 4,951 $ 4,247 16.6
========= ========= ========= =========
NET INCOME (LOSS)
Travel Related Services $ 729 $ 606 20.2 $ 2,852 $ 2,430 17.4
American Express Financial Advisors 218 182(B) 20.2 735(A) 669(B) 9.9
American Express Bank 6 29 (79.1) 96 102 (6.1)
--------- --------- --------- ---------
953 817 16.7 3,683 3,201 15.0
Corporate and other (57) (54) (5.8) (238) (214) (11.1)
--------- --------- --------- ---------
NET INCOME $ 896 $ 763(B) 17.5 $ 3,445(A) $ 2,987(B) 15.3
========= ========= ========= =========
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-3-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(UNAUDITED)
<Table>
<Caption>
Quarters Ended
December 31,
---------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- ------------
EARNINGS PER COMMON SHARE
BASIC
Income before accounting change $ 0.72 $ 0.61 18.0%
Net income $ 0.72 $ 0.60(B) 20.0%
======== ========
Average common shares outstanding (millions) 1,242 1,277 (2.7)%
======== ========
DILUTED
Income before accounting change $ 0.71 $ 0.60 18.3%
Net income $ 0.71 $ 0.59(B) 20.3%
======== ========
Average common shares outstanding (millions) 1,270 1,299 (2.2)%
======== ========
Cash dividends declared per common share $ 0.12 $ 0.10 20.0%
======== ========
<Caption>
Years Ended
December 31,
---------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- ------------
EARNINGS PER COMMON SHARE
BASIC
Income before accounting change $ 2.79 $ 2.34 19.2%
Net income $ 2.74(A) $ 2.33(B) 17.6%
======== ========
Average common shares outstanding (millions) 1,259 1,284 (2.0)%
======== ========
DILUTED
Income before accounting change $ 2.74 $ 2.31 18.6%
Net income $ 2.68(A) $ 2.30(B) 16.5%
======== ========
Average common shares outstanding (millions) 1,285 1,298 (1.0)%
======== ========
Cash dividends declared per common share $ 0.44 $ 0.38 15.8%
======== ========
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax),
or $0.05, on a basic per share basis and $0.06 on a diluted per share
basis, related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax),
or $0.01 per share on both a basic and diluted basis, related to the
December 31, 2003 adoption of FIN 46, as revised.
SELECTED STATISTICAL INFORMATION
(Unaudited)
<Table>
<Caption>
Quarters Ended
December 31,
--------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- -----------
Return on average total shareholders' equity (C) 22.0% 20.6%
Common shares outstanding (millions) 1,249 1,284 (2.7)%
Book value per common share $ 12.83 $ 11.93 7.5%
Shareholders' equity (billions) $ 16.0 $ 15.3 4.6%
<Caption>
Years Ended
December 31,
--------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- -----------
Return on average total shareholders' equity (C) 22.0% 20.6%
Common shares outstanding (millions) 1,249 1,284 (2.7)%
Book value per common share $ 12.83 $ 11.93 7.5%
Shareholders' equity (billions) $ 16.0 $ 15.3 4.6%
</Table>
(C) Computed on a trailing 12-month basis using total shareholders' equity
as included in the Consolidated Financial Statements prepared in
accordance with GAAP.
-4-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
---------------------------------------------
December 31, September 30, June 30,
2004 2004 2004
------------- ------------- -------------
Revenues
Discount revenue $ 2,817 $ 2,535 $ 2,529
Net investment income 826 766 785
Management and distribution fees 788 732 724
Cardmember lending net finance charge revenue 560 562 561
Net card fees 491 474 472
Travel commissions and fees 484 426 468
Other commissions and fees 616 574 565
Insurance and annuity revenues 394 389 378
Securitization income, net 325 295 282
Other 470 449 468
------------- ------------- -------------
Total revenues 7,771 7,202 7,232
------------- ------------- -------------
Expenses
Human resources 1,971 1,796 1,813
Marketing, promotion, rewards
and cardmember services 1,472 1,314 1,250
Provision for losses and benefits 1,162 1,054 1,080
Interest 238 216 210
Other operating expenses 1,745 1,568 1,613
------------- ------------- -------------
Total expenses 6,588 5,948 5,966
------------- ------------- -------------
Pretax income before accounting change 1,183 1,254 1,266
Income tax provision 287 375 390
------------- ------------- -------------
Income before accounting change 896 879 876
Cumulative effect of accounting change, net of tax - - -
------------- ------------- -------------
Net income $ 896 $ 879 $ 876
============= ============= =============
<Caption>
Quarters Ended
---------------------------------
March 31, December 31,
2004 2003
------------- -------------
Revenues
Discount revenue $ 2,368 $ 2,432
Net investment income 741 786
Management and distribution fees 779 728
Cardmember lending net finance charge revenue 541 531
Net card fees 472 467
Travel commissions and fees 417 445
Other commissions and fees 529 531
Insurance and annuity revenues 364 366
Securitization income, net 230 293
Other 469 459
------------- -------------
Total revenues 6,910 7,038
------------- -------------
Expenses
Human resources 1,779 1,678
Marketing, promotion, rewards
and cardmember services 1,047 1,166
Provision for losses and benefits 1,022 1,164
Interest 203 205
Other operating expenses 1,611 1,735
------------- -------------
Total expenses 5,662 5,948
------------- -------------
Pretax income before accounting change 1,248 1,090
Income tax provision 383 314
------------- -------------
Income before accounting change 865 776
Cumulative effect of accounting change, net of tax (71)(A) (13)(B)
------------- -------------
Net income $ 794 $ 763
============= =============
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-5-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
----------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------ ------------- ---------- ---------- ------------
REVENUES
Travel Related Services $ 5,788 $ 5,362 $ 5,378 $ 5,050 $ 5,211
American Express Financial Advisors 1,856 1,714 1,737 1,728 1,710
American Express Bank 207 205 203 210 205
------------ ------------- ---------- ---------- ------------
7,851 7,281 7,318 6,988 7,126
Corporate and other,
including adjustments and
eliminations (80) (79) (86) (78) (88)
------------ ------------- ---------- ---------- ------------
CONSOLIDATED REVENUES $ 7,771 $ 7,202 $ 7,232 $ 6,910 $ 7,038
============ ============= ========== ========== ============
PRETAX INCOME (LOSS) BEFORE
ACCOUNTING CHANGE
Travel Related Services $ 1,018 $ 1,047 $ 1,079 $ 973 $ 884
American Express Financial Advisors 248 257 264 317 248
American Express Bank 7 49 42 48 42
------------ ------------- ---------- ---------- ------------
1,273 1,353 1,385 1,338 1,174
Corporate and other (90) (99) (119) (90) (84)
------------ ------------- ---------- ---------- ------------
PRETAX INCOME BEFORE ACCOUNTING
CHANGE $ 1,183 $ 1,254 $ 1,266 $ 1,248 $ 1,090
============ ============= ========== ========== ============
NET INCOME (LOSS)
Travel Related Services $ 729 $ 726 $ 732 $ 665 $ 606
American Express Financial Advisors 218 186 174 157(A) 182(B)
American Express Bank 6 32 28 30 29
------------ ------------- ---------- ---------- ------------
953 944 934 852 817
Corporate and other (57) (65) (58) (58) (54)
------------ ------------- ---------- ---------- ------------
NET INCOME $ 896 $ 879 $ 876 $ 794(A) $ 763(B)
============ ============= ========== ========== ============
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-6-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(Unaudited)
<Table>
<Caption>
Quarters Ended
-------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------ ------------- ---------- ---------- ------------
EARNINGS PER COMMON SHARE
BASIC
Income before accounting change $ 0.72 $ 0.70 $ 0.69 $ 0.68 $ 0.61
Net income $ 0.72 $ 0.70 $ 0.69 $ 0.62(A) $ 0.60(B)
============ ============= ========== ========== ============
Average common shares
outstanding (millions) 1,242 1,251 1,263 1,277 1,277
============ ============= ========== ========== ============
DILUTED
Income before accounting change $ 0.71 $ 0.69 $ 0.68 $ 0.66 $ 0.60
Net income $ 0.71 $ 0.69 $ 0.68 $ 0.61(A) $ 0.59(B)
============ ============= ========== ========== ============
Average common shares
outstanding (millions) 1,270 1,275 1,288 1,305 1,299
============ ============= ========== ========== ============
Cash dividends declared per common
share $ 0.12 $ 0.12 $ 0.10 $ 0.10 $ 0.10
============ ============= ========== ========== ============
</Table>
SELECTED STATISTICAL INFORMATION
(Unaudited)
<Table>
<Caption>
Quarters Ended
-------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------ ------------- ---------- ---------- ------------
Return on average total shareholders'
equity (C) 22.0% 21.5% 21.2% 20.7% 20.6%
Common shares outstanding (millions) 1,249 1,255 1,267 1,281 1,284
Book value per common share $ 12.83 $ 12.62 $ 11.96 $ 12.30 $ 11.93
Shareholders' equity (billions) $ 16.0 $ 15.8 $ 15.2 $ 15.7 $ 15.3
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$102 million pretax ($66 million after-tax) for initiatives executed
during 2004, of which $79 million was recorded in human resources and
$23 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax),
or $0.06 on a basic per share basis and $0.05 on a diluted per share
basis, related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax),
or $0.01 per share on both a basic and diluted basis, related to the
December 31, 2003 adoption of FIN 46, as revised.
(C) Computed on a trailing 12-month basis using total shareholders' equity
as included in the Consolidated Financial Statements prepared in
accordance with GAAP.
-7-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
-------------------------- Percentage -------------------------- Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
---------- ---------- ---------- ---------- ---------- ----------
Net revenues:
Discount revenue $ 2,817 $ 2,432 15.8% $ 10,249 $ 8,781 16.7%
Lending:
Finance charge revenue 716 654 9.4 2,795 2,525 10.7
Interest expense 156 123 26.1 571 483 18.1
---------- ---------- ---------- ----------
Net finance charge revenue 560 531 5.5 2,224 2,042 8.9
Net card fees 491 467 5.2 1,909 1,835 4.1
Travel commissions and fees 484 445 8.6 1,795 1,507 19.1
Other commissions and fees 606 515 17.5 2,230 1,901 17.3
Travelers Cheque investment income 94 93 1.0 378 367 2.9
Securitization income, net 325 293 10.9 1,132 1,105 2.4
Other revenues 411 435 (5.5) 1,661 1,651 0.6
---------- ---------- ---------- ----------
Total net revenues 5,788 5,211 11.0 21,578 19,189 12.4
---------- ---------- ---------- ----------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,416 1,141 24.1 4,944 3,814 29.6
Provision for losses and claims:
Charge card 240 227 5.3 833 853 (2.4)
Lending 296 330 (10.4) 1,130 1,218 (7.2)
Other 30 28 6.0 176 127 38.4
---------- ---------- ---------- ----------
Total 566 585 (3.5) 2,139 2,198 (2.7)
Charge card interest expense 196 187 4.9 713 786 (9.2)
Human resources 1,169 1,003 16.6 4,389 3,822 14.8
Other operating expenses:
Professional services 619 567 9.2 2,101 1,958 7.3
Occupancy and equipment 366 371 (1.3) 1,300 1,199 8.4
Communications 118 116 1.6 465 452 2.8
Other 320 357 (10.4) 1,410 1,389 1.5
---------- ---------- ---------- ----------
Total 1,423 1,411 0.8 5,276 4,998 5.5
---------- ---------- ---------- ----------
Total expenses 4,770 4,327 10.2 17,461 15,618 11.8
---------- ---------- ---------- ----------
Pretax income 1,018 884 15.1 4,117 3,571 15.3
Income tax provision 289 278 4.0 1,265 1,141 10.9
---------- ---------- ---------- ----------
Net income $ 729 $ 606 20.2 $ 2,852 $ 2,430 17.4
========== ========== ========== ==========
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$64 million pretax ($42 million after-tax) for initiatives executed
during 2004, of which $46 million was recorded in human resources and
$18 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
-8-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED FINANCIAL INFORMATION
(Unaudited)
Quarters Ended December 31,
(Millions)
<Table>
<Caption>
GAAP Basis
-------------------------- Percentage
2004 2003 Inc/(Dec)
---------- ---------- ----------
Net revenues:
Discount revenue $ 2,817 $ 2,432 15.8%
Lending:
Finance charge revenue 716 654 9.4
Interest expense 156 123 26.1
---------- ----------
Net finance charge revenue 560 531 5.5
Net card fees 491 467 5.2
Travel commissions and fees 484 445 8.6
Other commissions and
fees 606 515 17.5
Travelers Cheque
investment income 94 93 1.0
Securitization income, net 325 293 10.9
Other revenues 411 435 (5.5)
---------- ----------
Total net revenues 5,788 5,211 11.0
---------- ----------
Expenses:
Marketing, promotion,
rewards and cardmember services 1,416 1,141 24.1
Provision for losses and claims:
Charge card 240 227 5.3
Lending 296 330 (10.4)
Other 30 28 6.0
---------- ----------
Total 566 585 (3.5)
Charge card interest expense 196 187 4.9
Human resources 1,169 1,003 16.6
Other operating expenses:
Professional services 619 567 9.2
Occupancy and equipment 366 371 (1.3)
Communications 118 116 1.6
Other 320 357 (10.4)
---------- ----------
Total 1,423 1,411 0.8
---------- ----------
Total expenses 4,770 4,327 10.2
---------- ----------
Pretax income 1,018 884 15.1
Income tax provision 289 278 4.0
---------- ----------
Net income $ 729 $ 606 20.2
========== ==========
<Caption>
Securitization Effect Managed Basis
--------------------------- -------------------------- Percentage
2004 2003 2004 2003 Inc/(Dec)
---------- ---------- ---------- ---------- ----------
Net revenues:
Discount revenue
Lending:
Finance charge revenue $ 621 $ 532 $ 1,337 $ 1,186 12.7%
Interest expense 132 84 288 207 37.8
---------- ---------- ---------- ----------
Net finance charge revenue 489 448 1,049 979 7.3
Net card fees
Travel commissions and fees
Other commissions and fees 54 53 660 568 16.1
Travelers Cheque
investment income
Securitization income, net (325) (293) - - -
Other revenues
---------- ---------- ---------- ----------
Total net revenues 218 208 6,006 5,419 10.8
---------- ---------- ---------- ----------
Expenses:
Marketing, promotion,
rewards and cardmember services
Provision for losses and claims:
Charge card
Lending 218 208 514 538 (4.5)
Other
---------- ---------- ---------- ----------
Total 218 208 784 793 (1.3)
Charge card interest expense
Human resources
Other operating expenses:
Professional services
Occupancy and equipment
Communications
Other
Total
---------- ---------- ---------- ----------
Total expenses $ 218 $ 208 $ 4,988 $ 4,535 10.0
---------- ---------- ---------- ----------
Pretax income
Income tax provision
Net income
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$64 million pretax ($42 million after-tax) for initiatives executed
during 2004, of which $46 million was recorded in human resources and
$18 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
Securitization income, net represents the non-credit provision components of
the net gains and charges from securitization activities, the amortization
and related impairment charges, if any, of the related interest-only strip,
excess spread related to securitized loans, net finance charge revenue on
retained interests in securitized loans and servicing income, net of related
discounts or fees. Management views any net gains from securitizations as
discretionary benefits to be used for card acquisition expenses, which are
reflected in both marketing, promotion, rewards and cardmember services
expenses and other operating expenses. There were no new securitizations
during the quarters ended December 31, 2004 and 2003.
-9-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED FINANCIAL INFORMATION
(Unaudited)
Years Ended December 31,
(Millions)
<Table>
<Caption>
GAAP Basis Securitization Effect
--------------------- Percentage ----------------------
2004 2003 Inc/(Dec) 2004 2003
--------- --------- ----------- --------- ---------
Net revenues:
Discount revenue $ 10,249 $ 8,781 16.7%
Lending:
Finance charge revenue 2,795 2,525 10.7 $ 2,222 $ 2,172
Interest expense 571 483 18.1 384 317
--------- --------- --------- ---------
Net finance charge revenue 2,224 2,042 8.9 1,838 1,855
Net card fees 1,909 1,835 4.1
Travel commissions and fees 1,795 1,507 19.1
Other commissions and fees 2,230 1,901 17.3 210 193
Travelers Cheque investment
income 378 367 2.9
Securitization income, net 1,132 1,105 2.4 (1,132) (1,105)
Other revenues 1,661 1,651 0.6
--------- --------- --------- ---------
Total net revenues 21,578 19,189 12.4 916 943
--------- --------- --------- ---------
Expenses:
Marketing, promotion, rewards
and cardmember services 4,944 3,814 29.6 (16) (74)
Provision for losses and
claims:
Charge card 833 853 (2.4)
Lending 1,130 1,218 (7.2) 942 1,067
Other 176 127 38.4
--------- --------- --------- ---------
Total 2,139 2,198 (2.7) 942 1,067
Charge card interest expense 713 786 (9.2)
Human resources 4,389 3,822 14.8
Other operating expenses:
Professional services 2,101 1,958 7.3
Occupancy and equipment 1,300 1,199 8.4
Communications 465 452 2.8
Other 1,410 1,389 1.5 (10) (50)
--------- --------- --------- ---------
Total 5,276 4,998 5.5 (10) (50)
--------- --------- --------- ---------
Total expenses 17,461 15,618 11.8 916 943
--------- --------- --------- ---------
Pretax income 4,117 3,571 15.3
Income tax provision 1,265 1,141 10.9
--------- ---------
Net income $ 2,852 $ 2,430 17.4
========= =========
<Caption>
Managed Basis
------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- -----------
Net revenues:
Discount revenue
Lending:
Finance charge revenue $ 5,017 $ 4,697 6.8%
Interest expense 955 800 19.3
-------- --------
Net finance charge revenue 4,062 3,897 4.3
Net card fees
Travel commissions and fees
Other commissions and fees 2,440 2,094 16.5
Travelers Cheque investment
income
Securitization income, net - - -
Other revenues
-------- --------
Total net revenues 22,494 20,132 11.7
-------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services 4,928 3,740 31.8
Provision for losses and
claims:
Charge card
Lending 2,072 2,285 (9.4)
Other
-------- --------
Total 3,081 3,265 (5.7)
Charge card interest expense
Human resources
Other operating expenses:
Professional services
Occupancy and equipment
Communications
Other 1,400 1,339 4.5
-------- --------
Total 5,266 4,948 6.4
-------- --------
Total expenses 18,377 16,561 11.0
-------- --------
Pretax income
Income tax provision
Net income
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$64 million pretax ($42 million after-tax) for initiatives executed
during 2004, of which $46 million was recorded in human resources and
$18 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
Securitization income, net represents the non-credit provision components of the
net gains and charges from securitization activities, the amortization and
related impairment charges, if any, of the related interest-only strip, excess
spread related to securitized loans, net finance charge revenue on retained
interests in securitized loans and servicing income, net of related discounts or
fees. Management views any net gains from securitizations as discretionary
benefits to be used for card acquisition expenses, which are reflected in both
marketing, promotion, rewards and cardmember services expenses and other
operating expenses. Consequently, the managed Selected Financial Information
above for the years ended December 31, 2004 and 2003 assumes that gains from new
issuances and charges from the amortization and maturities of outstanding
lending securitization transactions of $26 million and $124 million,
respectively, are offset by higher marketing, promotion, rewards and cardmember
services expenses of $16 million and $74 million, respectively, and other
operating expenses of $10 million and $50 million, respectively. Accordingly,
the incremental expenses, as well as the impact of this net activity, have been
eliminated.
-10-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED FINANCIAL INFORMATION
(Unaudited)
Quarters Ended
(Millions)
<Table>
<Caption>
GAAP Basis Securitization Effect
--------------------------------------- -----------------------------------------
September 30, June 30, March 31, September 30, June 30, March 31,
2004 2004 2004 2004 2004 2004
------------- ---------- ---------- ------------- ---------- ----------
Net revenues:
Discount revenue $ 2,535 $ 2,529 $ 2,368
Lending:
Finance charge revenue 714 697 668 $ 573 $ 489 $ 539
Interest expense 152 136 127 108 61 83
------------- ---------- ---------- ------------- ---------- ----------
Net finance charge revenue 562 561 541 465 428 456
Net card fees 474 472 472
Travel commissions and fees 426 468 417
Other commissions and fees 563 551 510 53 50 53
Travelers Cheque investment income 96 95 93
Securitization income, net 295 282 230 (295) (282) (230)
Other revenues 411 420 419
------------- ---------- ---------- ------------- ---------- ----------
Total net revenues 5,362 5,378 5,050 223 196 279
------------- ---------- ---------- ------------- ---------- ----------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,280 1,225 1,023 (6) (6) (4)
Provision for losses and claims:
Charge card 206 189 198
Lending 233 314 287 232 205 287
Other 84 33 29
------------- ---------- ---------- ------------- ---------- ----------
Total 523 536 514 232 205 287
Charge card interest expense 174 175 168
Human resources 1,074 1,081 1,065
Other operating expenses:
Professional services 525 488 469
Occupancy and equipment 313 313 308
Communications 112 114 121
Other 314 367 409 (3) (3) (4)
------------- ---------- ---------- ------------- ---------- ----------
Total 1,264 1,282 1,307 (3) (3) (4)
------------- ---------- ---------- ------------- ---------- ----------
Total expenses 4,315 4,299 4,077 $ 223 $ 196 $ 279
------------- ---------- ---------- ------------- ---------- ----------
Pretax income 1,047 1,079 973
Income tax provision 321 347 308
------------- ---------- ----------
Net income $ 726 $ 732 $ 665
============= ========== ==========
<Caption>
Managed Basis
---------------------------------------
September 30, June 30, March 31,
2004 2004 2004
------------- ---------- ----------
Net revenues:
Discount revenue
Lending:
Finance charge revenue $ 1,287 $ 1,186 $ 1,207
Interest expense 260 197 210
------------- ---------- ----------
Net finance charge revenue 1,027 989 997
Net card fees
Travel commissions and fees
Other commissions and fees 616 601 563
Travelers Cheque investment income
Securitization income, net - - -
Other revenues
------------- ---------- ----------
Total net revenues 5,585 5,574 5,329
------------- ---------- ----------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,274 1,219 1,019
Provision for losses and claims:
Charge card
Lending 465 519 574
Other
------------- ---------- ----------
Total 755 741 801
Charge card interest expense
Human resources
Other operating expenses:
Professional services
Occupancy and equipment
Communications
Other 311 364 405
------------- ---------- ----------
Total 1,261 1,279 1,303
------------- ---------- ----------
Total expenses $ 4,538 $ 4,495 $ 4,356
------------- ---------- ----------
Pretax income
Income tax provision
Net income
</Table>
Securitization income, net represents the non-credit provision components of the
net gains and charges from securitization activities, the amortization and
related impairment charges, if any, of the related interest-only strip, excess
spread related to securitized loans, net finance charge revenue on retained
interests in securitized loans and servicing income, net of related discounts or
fees. Management views any net gains from securitizations as discretionary
benefits to be used for card acquisition expenses, which are reflected in both
marketing, promotion, rewards and cardmember services expenses and other
operating expenses. Consequently, the managed Selected Financial Information
above for the quarters ended September 30, 2004, June 30, 2004 and March 31,
2004 assumes that gains from new issuances and charges from the amortization and
maturities of outstanding lending securitization transactions of $9 million, $9
million and $8 million, respectively, are offset by higher marketing, promotion,
rewards and cardmember services expenses of $6 million, $6 million and $4
million, respectively, and other operating expenses of $3 million, $3 million
and $4 million, respectively. Accordingly, the incremental expenses, as well as
the impact of this net activity, have been eliminated.
-11-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
-------------------- Percentage -------------------- Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
-------- -------- ---------- -------- -------- ----------
Total cards-in-force (millions) (A):
United States 39.9 36.4 9.5% 39.9 36.4 9.5%
Outside the United States 25.5 24.1 5.9 25.5 24.1 5.9
-------- -------- -------- --------
Total 65.4 60.5 8.1 65.4 60.5 8.1
======== ======== ======== ========
Basic cards-in-force (millions):
United States 30.6 27.7 10.4% 30.6 27.7 10.4%
Outside the United States 21.0 19.9 5.4 21.0 19.9 5.4
-------- -------- -------- --------
Total 51.6 47.6 8.4 51.6 47.6 8.4
======== ======== ======== ========
Card billed business:
United States $ 83.4 $ 72.3 15.3% $ 304.8 $ 262.1 16.3%
Outside the United States 32.1 26.2 22.9 111.3 90.1 23.6
-------- -------- -------- --------
Total $ 115.5 $ 98.5 17.3 $ 416.1 $ 352.2 18.1
======== ======== ======== ========
Average discount rate (A) 2.54% 2.56% 2.56% 2.59%
Average basic cardmember spending (dollars) (A) $ 2,589 $ 2,314 11.9% $ 9,460 $ 8,367 13.1%
Average fee per card - managed (dollars) (A) $ 35 $ 35 -% $ 34 $ 35 (2.9)%
Travel sales $ 5.3 $ 4.7 14.3% $ 19.9 $ 16.0 24.9%
Travel commissions and fees/sales (B) 9.1% 9.5% 9.0% 9.4%
Travelers Cheque and prepaid products:
Sales $ 4.9 $ 4.7 5.3% $ 19.9 $ 19.2 3.5%
Average outstanding $ 7.0 $ 6.6 4.9% $ 7.0 $ 6.6 4.7%
Average investments $ 7.6 $ 7.1 6.7% $ 7.5 $ 7.1 5.7%
Investment yield 5.4% 5.5% 5.4% 5.4%
Tax equivalent yield 8.3% 8.4% 8.4% 8.4%
Total debt $ 45.4 $ 38.4 18.1% $ 45.4 $ 38.4 18.1%
Shareholder's equity $ 8.8 $ 7.9 11.2% $ 8.8 $ 7.9 11.2%
Return on average total shareholder's equity (C) 33.4% 31.3% 33.4% 31.3%
Return on average total assets (D) 3.5% 3.4% 3.5% 3.4%
</Table>
(A) Cards-in-force include proprietary cards and cards issued under network
partnership agreements both within and outside the United States. Average
discount rate, average basic cardmember spending and average fee per card
are computed from proprietary card activities only.
(B) Computed from information provided herein.
(C) Computed on a trailing 12-month basis using total shareholder's equity as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(D) Computed on a trailing 12-month basis using total assets as included in
the Consolidated Financial Statements prepared in accordance with GAAP.
-12-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION (CONTINUED)
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
--------------------- Percentage --------------------- Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
-------- -------- ---------- -------- -------- ----------
Worldwide charge card receivables:
Total receivables $ 31.1 $ 28.4 9.4% $ 31.1 $ 28.4 9.4%
90 days past due as a % of total 1.8% 1.9% 1.8% 1.9%
Loss reserves (millions) $ 806 $ 916 (12.0)% $ 806 $ 916 (12.0)%
% of receivables 2.6% 3.2% 2.6% 3.2%
% of 90 days past due 146% 171% 146% 171%
Net loss ratio as a % of charge volume 0.25% 0.27% 0.26% 0.28%
Worldwide lending - owned basis:
Total loans $ 26.9 $ 25.8 4.1% $ 26.9 $ 25.8 4.1%
Past due loans as a % of total:
30-89 days 1.5% 1.6% 1.5% 1.6%
90+ days 0.9% 1.1% 0.9% 1.1%
Loss reserves (millions):
Beginning balance $ 1,008 $ 938 7.5% $ 998 $ 1,030 (3.1)%
Provision 272 304 (10.4) 1,016 1,121 (9.4)
Net charge-offs (254) (275) 7.9 (1,040) (1,148) 9.5
Other (54) 31 # (2) (5) (41.4)
-------- -------- -------- --------
Ending balance $ 972 $ 998 (2.6) $ 972 $ 998 (2.6)
======== ======== ======== ========
% of loans 3.6% 3.9% 3.6% 3.9%
% of past due 151% 146% 151% 145%
Average loans $ 26.2 $ 23.8 9.8% $ 25.9 $ 22.6 14.5%
Net write-off rate 3.9% 4.6% 4.0% 5.1%
Net interest yield 9.3% 9.6% 9.3% 9.8%
Worldwide lending - managed basis:
Total loans $ 47.2 $ 45.3 4.0% $ 47.2 $ 45.3 4.0%
Past due loans as a % of total:
30-89 days 1.5% 1.6% 1.5% 1.6%
90+ days 0.9% 1.1% 0.9% 1.1%
Loss reserves (millions):
Beginning balance $ 1,537 $ 1,519 1.2% $ 1,541 $ 1,529 0.8%
Provision 463 511 (9.4) 1,931 2,188 (11.8)
Net charge-offs (471) (520) 9.5 (1,957) (2,171) 9.9
Other (54) 31 # (40) (5) #
-------- -------- -------- --------
Ending balance $ 1,475 $ 1,541 (4.3) $ 1,475 $ 1,541 (4.3)
======== ======== ======== ========
% of loans 3.1% 3.4% 3.1% 3.4%
% of past due 129% 127% 129% 127%
Average loans $ 46.5 $ 43.3 7.2% $ 45.4 $ 41.6 9.2%
Net write-off rate 4.1% 4.8% 4.3% 5.2%
Net interest yield 8.5% 8.7% 8.6% 9.1%
</Table>
# - Denotes a variance of more than 100%.
-13-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
-----------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Net revenues:
Discount revenue $ 2,817 $ 2,535 $ 2,529 $ 2,368 $ 2,432
Lending:
Finance charge revenue 716 714 697 668 654
Interest expense 156 152 136 127 123
------------- ------------- ------------- ------------- -------------
Net finance charge revenue 560 562 561 541 531
Net card fees 491 474 472 472 467
Travel commissions and fees 484 426 468 417 445
Other commissions and fees 606 563 551 510 515
Travelers Cheque investment income 94 96 95 93 93
Securitization income, net 325 295 282 230 293
Other 411 411 420 419 435
------------- ------------- ------------- ------------- -------------
Total net revenues 5,788 5,362 5,378 5,050 5,211
------------- ------------- ------------- ------------- -------------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,416 1,280 1,225 1,023 1,141
Provision for losses and claims:
Charge card 240 206 189 198 227
Lending 296 233 314 287 330
Other 30 84 33 29 28
------------- ------------- ------------- ------------- -------------
Total 566 523 536 514 585
Charge card interest expense 196 174 175 168 187
Human resources 1,169 1,074 1,081 1,065 1,003
Other operating expenses:
Professional services 619 525 488 469 567
Occupancy and equipment 366 313 313 308 371
Communications 118 112 114 121 116
Other 320 314 367 409 357
------------- ------------- ------------- ------------- -------------
Total 1,423 1,264 1,282 1,307 1,411
------------- ------------- ------------- ------------- -------------
Total expenses 4,770 4,315 4,299 4,077 4,327
------------- ------------- ------------- ------------- -------------
Pretax income 1,018 1,047 1,079 973 884
Income tax provision 289 321 347 308 278
------------- ------------- ------------- ------------- -------------
Net income $ 729 $ 726 $ 732 $ 665 $ 606
============= ============= ============= ============= =============
</Table>
Note: Fourth quarter 2004 results reflect aggregate restructuring charges of
$64 million pretax ($42 million after-tax) for initiatives executed
during 2004, of which $46 million was recorded in human resources and
$18 million within other operating expenses. In addition, other
operating expenses include a $117 million net gain recorded in the
fourth quarter on the sale of AEBF's leasing product line.
-14-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED MANAGED BASIS INFORMATION
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
-----------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Lending finance charge revenue $ 1,337 $ 1,287 $ 1,186 $ 1,207 $ 1,186
Lending interest expense 288 260 197 210 207
Other commissions and fees 660 616 601 563 568
Marketing, promotion, rewards
and cardmember services 1,416 1,274 1,219 1,019 1,141
Lending provision 514 465 519 574 538
Other operating expenses 320 311 364 405 357
</Table>
Note: See prior page for comparable GAAP measures.
-15-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended
---------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Total cards-in-force (millions) (A):
United States 39.9 38.0 37.5 37.0 36.4
Outside the United States 25.5 25.3 25.0 24.6 24.1
------------- ------------- ------------- ------------- -------------
Total 65.4 63.3 62.5 61.6 60.5
============= ============= ============= ============= =============
Basic cards-in-force (millions):
United States 30.6 28.9 28.5 28.1 27.7
Outside the United States 21.0 20.8 20.8 20.4 19.9
------------- ------------- ------------- ------------- -------------
Total 51.6 49.7 49.3 48.5 47.6
============= ============= ============= ============= =============
Card billed business:
United States $ 83.4 $ 75.6 $ 75.7 $ 70.1 $ 72.3
Outside the United States 32.1 27.2 26.7 25.3 26.2
------------- ------------- ------------- ------------- -------------
Total $ 115.5 $ 102.8 $ 102.4 $ 95.4 $ 98.5
============= ============= ============= ============= =============
Average discount rate (A) 2.54% 2.57% 2.56% 2.59% 2.56%
Average basic cardmember spending
(dollars) (A) $ 2,589 $ 2,330 $ 2,339 $ 2,202 $ 2,314
Average fee per card - managed
(dollars) (A) $ 35 $ 34 $ 34 $ 35 $ 35
Travel sales $ 5.3 $ 4.6 $ 5.2 $ 4.8 $ 4.7
Travel commissions and
fees/sales (B) 9.1% 9.2% 9.0% 8.7% 9.5%
Travelers Cheque and prepaid
products:
Sales $ 4.9 $ 5.8 $ 4.8 $ 4.4 $ 4.7
Average outstanding $ 7.0 $ 7.1 $ 6.9 $ 6.8 $ 6.6
Average investments $ 7.6 $ 7.6 $ 7.3 $ 7.3 $ 7.1
Investment yield 5.4% 5.4% 5.5% 5.4% 5.5%
Tax equivalent yield 8.3% 8.3% 8.5% 8.3% 8.4%
Total debt $ 45.4 $ 39.1 $ 38.8 $ 38.7 $ 38.4
Shareholder's equity $ 8.8 $ 9.0 $ 8.6 $ 8.1 $ 7.9
Return on average total
shareholder's equity (C) 33.4% 32.7% 32.1% 31.7% 31.3%
Return on average total assets (D) 3.5% 3.5% 3.4% 3.4% 3.4%
</Table>
(A) Cards-in-force include proprietary cards and cards issued under network
partnership agreements both within and outside the United States.
Average discount rate, average basic cardmember spending and average fee
per card are computed from proprietary card activities only.
(B) Computed from information provided herein.
(C) Computed on a trailing 12-month basis using total shareholder's equity
as included in the Consolidated Financial Statements prepared in
accordance with GAAP.
(D) Computed on a trailing 12-month basis using total assets as included in
the Consolidated Financial Statements prepared in accordance with GAAP.
-16-
<Page>
(Preliminary)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION (CONTINUED)
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended
---------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Worldwide charge card receivables:
Total receivables $ 31.1 $ 28.6 $ 28.4 $ 27.9 $ 28.4
90 days past due as a % of total 1.8% 1.8% 1.9% 2.0% 1.9%
Loss reserves (millions) $ 806 $ 847 $ 864 $ 896 $ 916
% of receivables 2.6% 3.0% 3.0% 3.2% 3.2%
% of 90 days past due 146% 160% 163% 164% 171%
Net loss ratio as a % of charge
volume 0.25% 0.26% 0.25% 0.26% 0.27%
Worldwide lending - owned basis:
Total loans $ 26.9 $ 25.2 $ 26.4 $ 24.5 $ 25.8
Past due loans as a % of total:
30-89 days 1.5% 1.6% 1.5% 1.7% 1.6%
90+ days 0.9% 0.9% 1.0% 1.1% 1.1%
Loss reserves (millions):
Beginning balance $ 1,008 $ 1,030 $ 994 $ 998 $ 938
Provision 272 205 282 257 304
Net charge-offs (254) (255) (267) (264) (275)
Other (54) 28 21 3 31
------------- ------------- ------------- ------------- -------------
Ending balance $ 972 $ 1,008 $ 1,030 $ 994 $ 998
============= ============= ============= ============= =============
% of loans 3.6% 4.0% 3.9% 4.1% 3.9%
% of past due 151% 159% 154% 145% 146%
Average loans $ 26.2 $ 26.2 $ 25.9 $ 25.1 $ 23.8
Net write-off rate 3.9% 3.9% 4.1% 4.2% 4.6%
Net interest yield 9.3% 9.3% 9.4% 9.4% 9.6%
Worldwide lending - managed basis:
Total loans $ 47.2 $ 45.6 $ 45.1 $ 44.8 $ 45.3
Past due loans as a % of total:
30-89 days 1.5% 1.6% 1.5% 1.7% 1.6%
90+ days 0.9% 0.9% 1.0% 1.0% 1.1%
Loss reserves (millions):
Beginning balance $ 1,537 $ 1,535 $ 1,570 $ 1,541 $ 1,519
Provision 463 437 486 545 511
Net charge-offs (471) (463) (504) (519) (520)
Other (54) 28 (17) 3 31
------------- ------------- ------------- ------------- -------------
Ending balance $ 1,475 $ 1,537 $ 1,535 $ 1,570 $ 1,541
============= ============= ============= ============= =============
% of loans 3.1% 3.4% 3.4% 3.5% 3.4%
% of past due 129% 132% 136% 128% 127%
Average loans $ 46.5 $ 45.3 $ 44.9 $ 44.8 $ 43.3
Net write-off rate 4.1% 4.1% 4.5% 4.6% 4.8%
Net interest yield 8.5% 8.6% 8.6% 8.7% 8.7%
</Table>
-17-
<Page>
(Preliminary)
AMERICAN EXPRESS FINANCIAL ADVISORS
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
December 31,
------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- ----------
Revenues:
Net investment income $ 635 $ 599 6.0%
Investment management and service fees 463 415 11.4
Distribution fees 327 314 3.9
Variable life insurance and variable annuity charges* 113 107 7.0
Life and health insurance premiums 91 94 (2.5)
Property-casualty insurance premiums 114 100 15.4
Other 113 81 36.5
-------- --------
Total revenues 1,856 1,710 8.5
-------- --------
Expenses:
Provision for losses and benefits:
Interest credited on annuities
and universal life-type contracts 286 306 (6.7)
Benefits on insurance and annuities 124 113 10.2
Interest credited on investment certificates 86 55 54.0
Losses and expenses on property-casualty insurance 89 81 11.4
-------- --------
Total 585 555 5.5
Human resources - Field 339 295 14.6
Human resources - Non-field 253 206 22.4
Amortization of deferred acquisition costs 116 102 13.6
Other 315 304 3.8
-------- --------
Total expenses 1,608 1,462 9.9
-------- --------
Pretax income before accounting change 248 248 0.5
Income tax provision 30 53 (42.8)
-------- --------
Income before accounting change 218 195 12.1
Cumulative effect of accounting change, net of tax - (13)(B) #
-------- --------
Net income $ 218 $ 182 20.2
======== ========
<Caption>
Years Ended
December 31,
------------------- Percentage
2004 2003 Inc/(Dec)
-------- -------- ----------
Revenues:
Net investment income $ 2,375 $ 2,279 4.2%
Investment management and service fees 1,732 1,336 29.6
Distribution fees 1,298 1,092 18.8
Variable life insurance and variable annuity charges* 444 424 4.9
Life and health insurance premiums 356 351 1.5
Property-casualty insurance premiums 422 326 29.6
Other 408 334 21.8
-------- --------
Total revenues 7,035 6,142 14.5
-------- --------
Expenses:
Provision for losses and benefits:
Interest credited on annuities
and universal life-type contracts 1,128 1,224 (7.9)
Benefits on insurance and annuities 459 440 4.6
Interest credited on investment certificates 224 201 11.4
Losses and expenses on property-casualty insurance 327 257 27.3
-------- --------
Total 2,138 2,122 0.8
Human resources - Field 1,332 1,067 24.8
Human resources - Non-field 919 729 26.2
Amortization of deferred acquisition costs 405 476 (14.9)
Other 1,155 889 29.8
-------- --------
Total expenses 5,949 5,283 12.6
-------- --------
Pretax income before accounting change 1,086 859 26.5
Income tax provision 280 177 58.8
-------- --------
Income before accounting change 806 682 18.1
Cumulative effect of accounting change, net of tax (71)(A) (13)(B) #
-------- --------
Net income $ 735 $ 669 9.9
======== ========
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
# - Denotes a variance of more than 100%.
* - Variable life insurance and variable annuity charges include variable
universal life and universal life insurance charges.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-18-
<Page>
(Preliminary)
AMERICAN EXPRESS FINANCIAL ADVISORS
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Millions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended
December 31,
------------------------ Percentage
2004 2003 Inc/(Dec)
---------- ---------- ----------
Investments (billions) (A) $ 44.9 $ 42.1 6.7%
Client contract reserves (billions) $ 44.3 $ 41.2 7.6%
Shareholder's equity (billions) $ 6.4 $ 7.1 (8.9)%
Return on average total shareholder's equity
before accounting change (B) 11.8% 10.4%
Return on average total shareholder's equity (B) 10.8% 10.2%
Life insurance inforce (billions) $ 145.8 $ 131.4 10.9%
Assets owned, managed or
administered (billions):
Assets managed for institutions $ 139.3 $ 116.4 (C) 19.7%
Assets owned, managed or administered
for individuals:
Owned assets:
Separate account assets 35.9 30.8 16.5
Other owned assets 61.2 53.8 (D) 13.9
---------- ----------
Total owned assets 97.1 84.6 14.9
Managed assets 117.5 110.2 6.6
Administered assets 58.8 54.1 8.6
---------- ----------
Total $ 412.7 $ 365.3 13.0
========== ==========
Market appreciation (depreciation) and foreign
currency translation during the period:
Owned assets:
Separate account assets $ 2,920 $ 2,752 6.1%
Other owned assets $ 56 $ (275) #
Managed assets $ 17,956 $ 15,767 13.9
Cash sales:
Mutual funds $ 8,680 $ 9,096 (4.6)%
Annuities 1,835 1,683 9.0
Investment certificates 2,586 1,520 70.1
Life and other insurance products 229 212 7.9
Institutional 1,763 939 87.8
Other 1,078 978 10.2
---------- ----------
Total cash sales $ 16,171 $ 14,428 12.1
========== ==========
Number of financial advisors 12,344 12,121 1.8%
Fees from financial plans and advice services $ 38.2 $ 20.6 85.5%
Percentage of total sales from financial plans
and advice services 75.9% 74.6%
<Caption>
Years Ended
December 31,
------------------------ Percentage
2004 2003 Inc/(Dec)
---------- ---------- ----------
Investments (billions) (A) $ 44.9 $ 42.1 6.7%
Client contract reserves (billions) $ 44.3 $ 41.2 7.6%
Shareholder's equity (billions) $ 6.4 $ 7.1 (8.9)%
Return on average total shareholder's equity
before accounting change (B) 11.8% 10.4%
Return on average total shareholder's equity (B) 10.8% 10.2%
Life insurance inforce (billions) $ 145.8 $ 131.4 10.9%
Assets owned, managed or
administered (billions):
Assets managed for institutions $ 139.3 $ 116.4 (C) 19.7%
Assets owned, managed or administered
for individuals:
Owned assets:
Separate account assets 35.9 30.8 16.5
Other owned assets 61.2 53.8 (D) 13.9
---------- ----------
Total owned assets 97.1 84.6 14.9
Managed assets 117.5 110.2 6.6
Administered assets 58.8 54.1 8.6
---------- ----------
Total $ 412.7 $ 365.3 13.0
========== ==========
Market appreciation (depreciation) and foreign
currency translation during the period:
Owned assets:
Separate account assets $ 3,198 $ 5,514 (42.0)%
Other owned assets $ 45 $ (244) #
Managed assets $ 23,447 $ 26,213 (10.6)
Cash sales:
Mutual funds $ 35,025 $ 30,407 15.2%
Annuities 7,820 8,335 (6.2)
Investment certificates 7,141 5,736 24.5
Life and other insurance products 907 760 19.4
Institutional 7,683 3,033 #
Other 4,477 5,787 (22.6)
---------- ----------
Total cash sales $ 63,053 $ 54,058 16.6
========== ==========
Number of financial advisors 12,344 12,121 1.8%
Fees from financial plans and advice services $ 138.8 $ 120.7 15.0%
Percentage of total sales from financial plans
and advice services 75.3% 74.8%
</Table>
# - Denotes a variance of more than 100%.
(A) Excludes cash, derivatives, short-term and other investments.
(B) Computed on a trailing 12-month basis using total shareholder's equity as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(C) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised,
managed assets decreased by $3.8 billion.
(D) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised,
$0.5 billion of additional assets were consolidated.
-19-
<Page>
(Preliminary)
AMERICAN EXPRESS FINANCIAL ADVISORS
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
---------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------ ------------- ------------ ------------ ------------
Revenues:
Net investment income $ 635 $ 581 $ 603 $ 556 $ 599
Investment management and service fees 463 429 411 429 415
Distribution fees 327 304 315 352 314
Variable life insurance and
variable annuity charges* 113 111 111 109 107
Life and health insurance premiums 91 91 88 86 94
Property-casualty insurance premiums 114 109 103 96 100
Other 113 89 106 100 81
------------ ------------- ------------ ------------ ------------
Total revenues 1,856 1,714 1,737 1,728 1,710
------------ ------------- ------------ ------------ ------------
Expenses:
Provision for losses and benefits:
Interest credited on annuities
and universal life-type contracts 286 279 280 283 306
Benefits on insurance and annuities 124 112 124 99 113
Interest credited on investment
certificates 86 45 48 45 55
Losses and expenses on
property-casualty insurance 89 84 80 74 81
------------ ------------- ------------ ------------ ------------
Total 585 520 532 501 555
Human resources - Field 339 312 333 348 295
Human resources - Non-field 253 235 210 221 206
Amortization of deferred acquisition
costs 116 100 125 64 102
Other 315 290 273 277 304
------------ ------------- ------------ ------------ ------------
Total expenses 1,608 1,457 1,473 1,411 1,462
------------ ------------- ------------ ------------ ------------
Pretax income before accounting change 248 257 264 317 248
Income tax provision 30 71 90 89 53
------------ ------------- ------------ ------------ ------------
Income before accounting change 218 186 174 228 195
Cumulative effect of accounting change,
net of tax - - - (71)(A) (13)(B)
------------ ------------- ------------ ------------ ------------
Net income $ 218 $ 186 $ 174 $ 157 $ 182
============ ============= ============ ============ ============
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
* - Variable life insurance and variable annuity charges include variable
universal life and universal life insurance charges.
(A) Reflects a $109 million non-cash pretax charge ($71 million after-tax)
related to the January 1, 2004 adoption of SOP 03-1.
(B) Reflects a $20 million non-cash pretax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
-20-
<Page>
(Preliminary)
AMERICAN EXPRESS FINANCIAL ADVISORS
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Millions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended
----------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------ ------------- ----------- ------------ ------------
Investments (billions) (A) $ 44.9 $ 43.1 $ 41.8 $ 43.4 $ 42.1
Client contract reserves (billions) $ 44.3 $ 42.9 $ 41.9 $ 41.6 $ 41.2
Shareholder's equity (billions) $ 6.4 $ 6.9 $ 6.3 $ 7.4 $ 7.1
Return on average total shareholder's equity
before accounting change (B) 11.8% 11.4% 11.7% 11.5% 10.4%
Return on average total shareholder's equity (B) 10.8% 10.1% 10.5% 10.2% 10.2%
Life insurance inforce (billions) $ 145.8 $ 142.5 $ 139.1 $ 135.0 $ 131.4
Assets owned, managed or
administered (billions):
Assets managed for institutions $ 139.3 $ 127.4 $ 125.5 $ 123.4 $ 116.4 (C)
Assets owned, managed or administered
for individuals:
Owned assets:
Separate account assets 35.9 32.4 32.9 32.4 30.8
Other owned assets 61.2 59.6 57.9 58.9 53.8 (D)
------------ ------------- ----------- ------------ ------------
Total owned assets 97.1 92.0 90.8 91.3 84.6
Managed assets 117.5 108.6 108.8 109.3 110.2
Administered assets 58.8 55.3 55.3 54.4 54.1
------------ ------------- ----------- ------------ ------------
Total $ 412.7 $ 383.3 $ 380.4 $ 378.4 $ 365.3
============ ============= =========== ============ ============
Market appreciation (depreciation) and foreign
currency translation during the period:
Owned assets:
Separate account assets $ 2,920 $ (377) $ (101) $ 756 $ 2,752
Other owned assets $ 56 $ 752 $ (1,476) $ 713 $ (275)
Managed assets $ 17,956 $ (194) $ 232 $ 5,453 $ 15,767
Cash sales:
Mutual funds $ 8,680 $ 8,066 $ 8,480 $ 9,799 $ 9,096
Annuities 1,835 1,887 1,912 2,186 1,683
Investment certificates 2,586 1,786 1,445 1,324 1,520
Life and other insurance products 229 239 221 218 212
Institutional 1,763 1,664 2,841 1,415 939
Other 1,078 991 1,116 1,292 978
------------ ------------- ------------ ------------ ------------
Total cash sales $ 16,171 $ 14,633 $ 16,015 $ 16,234 $ 14,428
============ ============= ============ ============ ============
Number of financial advisors 12,344 12,071 11,943 12,070 12,121
Fees from financial plans and advice services $ 38.2 $ 28.1 $ 39.3 $ 33.2 $ 20.6
Percentage of total sales from financial plans
and advice services 75.9% 75.4% 74.6% 75.3% 74.6%
</Table>
(A) Excludes cash, derivatives, short-term and other investments.
(B) Computed on a trailing 12-month basis using total shareholder's equity as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(C) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised,
managed assets decreased by $3.8 billion.
(D) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised,
$0.5 billion of additional assets were consolidated.
-21-
<Page>
(Preliminary)
AMERICAN EXPRESS BANK
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
----------------------- Percentage ----------------------- Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
---------- ---------- ---------- ---------- ---------- ----------
Net revenues:
Interest income $ 145 $ 139 4.8% $ 542 $ 575 (5.8)%
Interest expense 67 57 16.2 227 226 0.1
---------- ---------- ---------- ----------
Net interest income 78 82 (3.3) 315 349 (9.5)
Commissions and fees 74 68 6.8 283 238 18.6
Foreign exchange income and other revenues 55 55 0.5 227 214 6.0
---------- ---------- ---------- ----------
Total net revenues 207 205 1.1 825 801 3.0
---------- ---------- ---------- ----------
Expenses:
Human resources 81 75 8.1 298 271 10.0
Other operating expenses 76 67 13.3 300 279 7.7
Provision for losses 8 21 (59.8) 37 102 (63.9)
Restructuring charges 35 - # 44 (2) #
---------- ---------- ---------- ----------
Total expenses 200 163 23.0 679 650 4.4
---------- ---------- ---------- ----------
Pretax income 7 42 (83.6) 146 151 (3.1)
Income tax provision 1 13 (93.3) 50 49 3.2
---------- ---------- ---------- ----------
Net income $ 6 $ 29 (79.1) $ 96 $ 102 (6.1)
========== ========== ========== ==========
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
# - Denotes a variance of more than 100%.
-22-
<Page>
(Preliminary)
AMERICAN EXPRESS BANK
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended Years Ended
December 31, December 31,
-------------------- Percentage --------------------- Percentage
2004 2003 Inc/(Dec) 2004 2003 Inc/(Dec)
-------- -------- ---------- -------- -------- ----------
Total shareholder's equity (millions) $ 924 $ 949 (2.6)% $ 924 $ 949 (2.6)%
Return on average total shareholder's equity (A) 10.0% 10.8% 10.0% 10.8%
Return on average total assets (B) 0.70% 0.74% 0.70% 0.74%
Total loans $ 6.9 $ 6.5 6.2% $ 6.9 $ 6.5 6.2%
Non-Consumer Financial Services (CFS) loans:
Total Non-CFS loans (C) $ 5.5 $ 5.1 7.9% $ 5.5 $ 5.1 7.9%
Non-CFS loan loss reserves (millions):
Beginning balance $ 57 $ 61 (6.3)% $ 59 $ 92 (37.1)%
Provision 1 - # 5 9 (39.0)
Net charge-offs - (2) # (9) (39) (75.4)
Other - - - 3 (3) #
-------- -------- -------- --------
Ending balance $ 58 $ 59 (0.8) $ 58 $ 59 (0.8)
======== ======== ======== ========
% of Non-CFS loans 1.0% 1.1% 1.0% 1.1%
Total non-performing loans (millions) $ 37 $ 78 (52.3)% $ 37 $ 78 (52.3)%
CFS loans:
Total CFS Loans (D) $ 1.4 $ 1.4 (0.4)% $ 1.4 $ 1.4 (0.4)%
Past due as a % of total CFS loans:
30-89 days past due 3.8% 5.6% 3.8% 5.6%
90+ days past due 0.7% 1.0% 0.7% 1.0%
CFS loan loss reserves (millions):
Beginning balance $ 39 $ 56 (30.7)% $ 54 $ 59 (7.3)%
Provision 7 21 (65.4) 33 93 (64.0)
Net charge-offs (10) (23) (55.7) (50) (99) (47.9)
Other 1 - # - 1 #
-------- -------- -------- --------
Ending balance $ 37 $ 54 (31.3) $ 37 $ 54 (31.3)
======== ======== ======== ========
% of CFS loans 2.7% 4.0% 2.7% 4.0%
% of 30 days past due CFS loans 61% 60% 61% 60%
Net write-off rate 3.0% 6.6% 3.8% 6.8%
Deposits $ 10.4 $ 10.8 (3.1)% $ 10.4 $ 10.8 (3.1)%
Assets owned, managed (E) / administered:
Owned $ 13.4 $ 14.2 (6.0) $ 13.4 $ 14.2 (6.0)
Managed (E) / administered 19.2 16.2 18.9 19.2 16.2 18.9
-------- -------- -------- --------
Total $ 32.6 $ 30.4 7.1 $ 32.6 $ 30.4 7.1
======== ======== ======== ========
Assets of non-consolidated joint ventures (F) $ 1.8 $ 1.7 4.0% $ 1.8 $ 1.7 4.0%
Risk-based capital ratios (G):
Tier 1 11.0% 11.4% 11.0% 11.4%
Total 10.1% 11.3% 10.1% 11.3%
Leverage ratio 5.8% 5.5% 5.8% 5.5%
</Table>
# - Denotes a variance of more than 100%.
(A) Computed on a trailing 12-month basis using total shareholder's equity as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(B) Computed on a trailing 12-month basis using total assets as included in
the Consolidated Financial Statements prepared in accordance with GAAP.
(C) Loans other than certain smaller-balance consumer loans (including loans
impaired under Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan"), are placed on
non-performing status when payments of principal or interest are 90 days
past due or if, in management's opinion, the borrower is unlikely to meet
its contractual obligations. When loans are placed on non-performing
status, all previously accrued but unpaid interest is reversed against
current interest income. Cash receipts of interest on non-performing
loans are recognized either as interest income or as a reduction of
principal, based on management's judgment as to the ultimate
collectibility of principal. Generally, a non-performing loan may be
returned to performing status when all contractual amounts due are
reasonably assured of repayment within a reasonable period and the
borrower shows sustained repayment performance, in accordance with the
contractual terms of the loan or when the loan has become well-secured
and is in the process of collection.
(D) For smaller-balance consumer loans included in CFS loans, management
establishes reserves it believes to be adequate to absorb credit losses
inherent in the portfolio. Generally, these loans are written off in full
when an impairment is determined or when the loan becomes 120 or 180 days
past due, depending on loan type.
(E) Includes assets managed by American Express Financial Advisors.
(F) Excludes American Express International Deposit Company's total assets
(which are 100% consolidated at AEFA) for each period presented (and
which totaled $5.9 billion at December 31, 2004).
(G) Based on legal entity financial information.
-23-
<Page>
(Preliminary)
AMERICAN EXPRESS BANK
STATEMENTS OF INCOME
(Unaudited)
(Millions)
<Table>
<Caption>
Quarters Ended
-----------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Net revenues:
Interest income $ 145 $ 132 $ 131 $ 134 $ 139
Interest expense 67 56 51 53 57
------------- ------------- ------------- ------------- -------------
Net interest income 78 76 80 81 82
Commissions and fees 74 69 70 70 68
Foreign exchange income and other revenues 55 60 53 59 55
------------- ------------- ------------- ------------- -------------
Total net revenues 207 205 203 210 205
------------- ------------- ------------- ------------- -------------
Expenses:
Human resources 81 71 71 75 75
Other operating expenses 76 74 78 72 67
Provision for losses 8 11 12 6 21
Restructuring charges 35 - - 9 -
------------- ------------- ------------- ------------- -------------
Total expenses 200 156 161 162 163
------------- ------------- ------------- ------------- -------------
Pretax income 7 49 42 48 42
Income tax provision 1 17 14 18 13
------------- ------------- ------------- ------------- -------------
Net income $ 6 $ 32 $ 28 $ 30 $ 29
============= ============= ============= ============= =============
</Table>
Certain prior period amounts have been reclassified to conform to current year
presentation.
-24-
<Page>
(Preliminary)
AMERICAN EXPRESS BANK
SELECTED STATISTICAL INFORMATION
(Unaudited)
(Billions, except percentages and where indicated)
<Table>
<Caption>
Quarters Ended
-------------------------------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
------------- ------------- ------------- ------------- -------------
Total shareholder's equity (millions) $ 924 $ 931 $ 953 $ 992 $ 949
Return on average total shareholder's
equity (A) 10.0% 12.4% 11.9% 11.9% 10.8%
Return on average total assets (B) 0.70% 0.85% 0.81% 0.81% 0.74%
Total loans $ 6.9 $ 6.4 $ 6.5 $ 6.4 $ 6.5
Non-Consumer Financial Services
(CFS) loans:
Total Non-CFS loans (C) $ 5.5 $ 5.1 $ 5.2 $ 5.1 $ 5.1
Non-CFS loan loss reserves (millions):
Beginning balance $ 57 $ 62 $ 61 $ 59 $ 61
Provision 1 2 2 - -
Net charge-offs - (6) (5) 2 (2)
Other - (1) 4 - -
------------- ------------- ------------- ------------- -------------
Ending balance $ 58 $ 57 $ 62 $ 61 $ 59
============= ============= ============= ============= =============
% of Non-CFS loans 1.0% 1.1% 1.2% 1.2% 1.1%
Total non-performing loans (millions) $ 37 $ 32 $ 50 $ 69 $ 78
CFS loans:
Total CFS Loans (D) $ 1.4 $ 1.3 $ 1.3 $ 1.3 $ 1.4
Past due as a % of total CFS loans:
30-89 days past due 3.8% 4.3% 4.6% 4.6% 5.6%
90+ days past due 0.7% 0.8% 0.9% 0.9% 1.0%
CFS loan loss reserves (millions):
Beginning balance $ 39 $ 41 $ 45 $ 54 $ 56
Provision 7 9 10 7 21
Net charge-offs (10) (11) (13) (16) (23)
Other 1 - (1) - -
------------- ------------- ------------- ------------- -------------
Ending balance $ 37 $ 39 $ 41 $ 45 $ 54
============= ============= ============= ============= =============
% of CFS loans 2.7% 2.9% 3.1% 3.4% 4.0%
% of 30 days past due CFS loans 61% 57% 57% 62% 60%
Net write-off rate 3.0% 3.6% 4.0% 4.9% 6.6%
Deposits $ 10.4 $ 10.5 $ 11.2 $ 10.7 $ 10.8
Assets owned, managed (E) / administered:
Owned $ 13.4 $ 13.4 $ 14.1 $ 13.8 $ 14.2
Managed (E) / administered 19.2 17.6 16.9 16.8 16.2
------------- ------------- ------------- ------------- -------------
Total $ 32.6 $ 31.0 $ 31.0 $ 30.6 $ 30.4
============= ============= ============= ============= =============
Assets of non-consolidated joint
ventures (F) $ 1.8 $ 1.7 $ 1.7 $ 1.8 $ 1.7
Risk-based capital ratios (G):
Tier 1 11.0% 10.8% 12.0% 11.7% 11.4%
Total 10.1% 10.6% 11.8% 11.5% 11.3%
Leverage ratio 5.8% 5.7% 5.9% 5.7% 5.5%
</Table>
(A) Computed on a trailing 12-month basis using total shareholder's equity as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(B) Computed on a trailing 12-month basis using total assets as included in
the Consolidated Financial Statements prepared in accordance with GAAP.
(C) Loans other than certain smaller-balance consumer loans (including loans
impaired under Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan"), are placed on
non-performing status when payments of principal or interest are 90 days
past due or if, in management's opinion, the borrower is unlikely to meet
its contractual obligations. When loans are placed on non-performing
status, all previously accrued but unpaid interest is reversed against
current interest income. Cash receipts of interest on non-performing
loans are recognized either as interest income or as a reduction of
principal, based on management's judgment as to the ultimate
collectibility of principal. Generally, a non-performing loan may be
returned to performing status when all contractual amounts due are
reasonably assured of repayment within a reasonable period and the
borrower shows sustained repayment performance, in accordance with the
contractual terms of the loan or when the loan has become well-secured
and is in the process of collection.
(D) For smaller-balance consumer loans included in CFS loans, management
establishes reserves it believes to be adequate to absorb credit losses
inherent in the portfolio. Generally, these loans are written off in full
when an impairment is determined or when the loan becomes 120 or 180 days
past due, depending on loan type.
(E) Includes assets managed by American Express Financial Advisors.
(F) Excludes American Express International Deposit Company's total assets
(which are 100% consolidated at AEFA) for each period presented (and
which totaled $5.9 billion at December 31, 2004).
(G) Based on legal entity financial information.
-25-