EXHIBIT 99.1
Release News Release News Release News Release News Release News
[LOGO OF AMERICAN EXPRESS COMPANY] American Express Company
200 Vesey Street
World Financial Center
New York, NY 10285
Contacts: Media: Michael O'Neill
- --------- 212-640-5951
mike.o'neill@aexp.com
Investors/Analysts: Ronald Stovall
212-640-5574
ronald.stovall@aexp.com
FOR IMMEDIATE RELEASE
STRESS TEST FINDS "NO CAPITAL NEED"
Indicates Ability to Generate Earnings under Prolonged Adverse Conditions
Company Files for Permission to Repay Government Investment
New York - May 7, 2009 -- American Express said today that it has received a
final report from the Federal Reserve which concludes that there would be "no
capital need" under the assumptions used by the Supervisory Capital Assessment
Program.(1)
The assessment, or stress test, confirms the strength of the company's
financial position, indicating that American Express:
o had a year-end 2008 Tier One Common Risk-based ratio of 9.7 percent,
one of the highest in the industry. That translates into a capital
level approximately $6 billion above the regulatory benchmark of 4.0
percent.
o had a year-end 2008 Tier One Risk-Based Capital ratio of 9.7 percent
-- or 13.0 percent on a pro forma basis reflecting the issuance of
preferred shares in January as part of the Capital Purchase Program
(CPP).
o would generate earnings in 2009-10 even under the `more adverse
scenario' used by the regulators.
"We believe our strong capital base gives us the resources to accommodate the
spending needs of our creditworthy consumer, small business and corporate
cardmembers," said Kenneth I. Chenault, chairman and chief executive officer,
American Express Company.
"Based on the results of the test, we have filed a request with the Federal
Reserve Board of Governors and the Department of the Treasury to repay the
$3.4 billion of preferred shares issued to the Treasury," said Mr. Chenault.
In accordance with the guidance of our bank regulators, the company would be
required to issue long term debt in the public markets that is not backed by
government guarantees, prior to or at the time the preferred shares would be
repurchased.
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(1) Estimates reported by the Federal Reserve represent values for a
hypothetical `what if' scenario and are not forecasts.
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"We've always viewed CPP as a temporary program, and we believe that repaying
the investment at this time is not only in the best interest of American
Express shareholders, but also good public policy," Mr. Chenault said.
CPP was established last year at a time of extraordinary stress in the
financial system and designed to ensure that participating banks were in a
position to provide access to the credit facilities that are needed to help
get the economy back on its feet.
Since then, financial markets have become more stable, and American Express
has made substantial progress in adapting to a very difficult economic
environment.
"At a time when some parts of the card industry were incurring substantial
losses, the diversity of our payments businesses has allowed us to remain
solidly profitable, strengthen our capital ratios and maintain our commitment
to world-class customer service," said Mr. Chenault. "Moreover, we have
broadened our funding activities with more than $17 billion of retail deposits
outstanding and have $25 billion of excess cash and marketable securities on
hand - well above our projected funding needs for the next 12 months.
"While we continue to be very cautious about the economic environment, we
believe that we will be able to continue authorizing credit responsibly and
contribute to an economic recovery in the U.S. after repaying the CPP
investment."
About American Express
American Express Company is a leading global payments and travel company
founded in 1850. For more information, visit www.americanexpress.com.
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Forward Looking Statements:
THIS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS, WHICH ARE SUBJECT TO RISKS
AND UNCERTAINTIES. THE FORWARD-LOOKING STATEMENTS, WHICH ADDRESS THE COMPANY'S
EXPECTED BUSINESS AND FINANCIAL PERFORMANCE, AMONG OTHER MATTERS, CONTAIN
WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "OPTIMISTIC," "INTEND,"
"PLAN," "AIM," "WILL," "MAY," "SHOULD," "COULD," "WOULD," "LIKELY," AND
SIMILAR EXPRESSIONS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH
THEY ARE MADE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED
TO, THE FOLLOWING: THE COMPANY'S ABILITY TO GENERATE EARNINGS AND CONTINUE TO
STAY PROFITABLE IN THE PERIOD 2009 - 2010, WHICH WILL DEPEND IN PART ON
CARDMEMBER SPENDING AND CREDIT PERFORMANCE, THE SUCCESS OF THE COMPANY'S
REENGINEERING INITIATIVES AND THE SEVERITY OF THE ECONOMIC ENVIRONMENT; THE
COMPANY'S ABILITY TO MAINTAIN SUFFICIENT CAPITAL LEVELS TO ENABLE IT TO
ACCOMMODATE THE SPENDING NEEDS OF ITS CUSTOMERS, WHICH LEVELS CAN BE IMPACTED
BY THE COMPANY'S NET INCOME IN EXCESS OF ITS DIVIDENDS, ACQUISITIONS, BUSINESS
GROWTH AND MIX, AMONG OTHER FACTORS; THE COMPANY'S ABILITY TO ISSUE IN THE
FUTURE LONG TERM DEBT IN THE PUBLIC MARKETS, WHICH WILL DEPEND IN PART ON
INVESTOR DEMAND AND MARKET CONDITIONS AT THE TIME; AND THE COMPANY'S ABILITY
TO SATISFY ITS OVERALL LIQUIDITY NEEDS, WHICH WILL DEPEND IN PART ON THE
ABILITY OF THE COMPANY TO CONTINUE TO GROW ITS BROKERED RETAIL DEPOSIT
PROGRAMS AND THE IMPLEMENTATION OF ITS DIRECT DEPOSIT INITIATIVE, AS WELL AS
CREDIT RATINGS, MARKET CAPACITY, INVESTOR PERCEPTION OF THE COMPANY AND OF THE
FINANCIAL INDUSTRY GENERALLY, AND THE DEMAND FOR THE COMPANY'S SECURITIES; AND
THE COMPANY'S ABILITY TO MANAGE CREDIT RISK RELATED TO CONSUMER DEBT, BUSINESS
LOANS, MERCHANTS AND OTHER CREDIT TRENDS, WHICH WILL DEPEND IN PART ON (I) THE
ECONOMIC ENVIRONMENT, INCLUDING, AMONG OTHER THINGS, THE HOUSING MARKET, THE
RATES OF BANKRUPTCIES AND UNEMPLOYMENT, WHICH CAN AFFECT SPENDING ON CARD
PRODUCTS, DEBT PAYMENTS BY INDIVIDUAL AND CORPORATE CUSTOMERS AND BUSINESSES
THAT ACCEPT THE COMPANY'S CARD PRODUCTS, (II) THE EFFECTIVENESS OF THE
COMPANY'S CREDIT MODELS AND (III) THE ULTIMATE OUTCOME OF CERTAIN PROPOSED
LEGISLATIVE INITIATIVES AFFECTING THE CREDIT CARD BUSINESS. A FURTHER
DESCRIPTION OF THESE AND OTHER RISKS AND UNCERTAINTIES CAN BE FOUND IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008,
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2009, AND THE COMPANY'S OTHER REPORTS
FILED WITH THE SEC.
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