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American Express Fourth Quarter EPS Rises To $1.21 From $0.56 Last Year; Revenues And Loans Increase As Card Member Spending Ends Year On Strong Note; Credit Indicators Remain At Historical Lows; Operating Expenses Well Contained In The Quarter

Stocks in this article: AXP

1 Represents net income less earnings allocated to participating share awards of $11 million and $7 million for the three months ended December 31, 2013 and 2012, respectively, and $47 million and $49 million for the twelve months ended December 31, 2013 and 2012, respectively.

2 Management believes adjusted net income and adjusted earnings per share, which are non-GAAP measures, provide useful metrics to evaluate the ongoing operating performance of the company. See Appendix V in the selected statistical tables for a reconciliation of adjusted net income and adjusted earnings per share.

3 As reported in this release, FX adjusted information, which constitute non-GAAP financial measures, assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the three months ended December 31, 2013 apply to the period(s) against which such results are being compared). The company believes the presentation of information on an FX adjusted basis is helpful to investors by making it easier to compare the company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

4 Operating expenses include salaries and employee benefits, professional services, occupancy and equipment, communications and other, net.

 
 
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. Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
                                   
 
(Preliminary)

American Express Company

Consolidated Statements of Income

 
(Millions)
Quarters Ended Years Ended
December 31, Percentage Inc/(Dec) December 31, Percentage Inc/(Dec)
2013 2012 2013 2012
 
Revenues
Non-interest revenues
Discount revenue $ 4,869 $ 4,575 6 % $ 18,695 $ 17,739 5 %
Net card fees 673 648 4 2,631 2,506 5
Travel commissions and fees 491 503 (2 ) 1,913 1,940 (1 )
Other commissions and fees 626 578 8 2,414 2,317 4
Other   569     644   (12 )   2,274     2,425   (6 )
Total non-interest revenues   7,228     6,948   4   27,927     26,927   4
Interest income
Interest on loans 1,715 1,660 3 6,718 6,511 3
Interest and dividends on investment securities 48 53 (9 ) 201 246 (18 )
Deposits with banks and other   19     24   (21 )   86     97   (11 )
Total interest income   1,782     1,737   3   7,005     6,854   2
Interest expense
Deposits 110 118 (7 ) 442 480 (8 )
Long-term debt and other   353     426   (17 )   1,516     1,746   (13 )
Total interest expense   463     544   (15 )   1,958     2,226   (12 )
Net interest income   1,319     1,193   11   5,047     4,628   9
Total revenues net of interest expense   8,547     8,141   5   32,974     31,555   4
Provisions for losses
Charge card 199 211 (6 ) 789 742 6
Card Member loans 308 396 (22 ) 1,229 1,149 7
Other   21     31   (32 )   92     99   (7 )
Total provisions for losses   528     638   (17 )   2,110     1,990   6
Total revenues net of interest expense after provisions for losses   8,019     7,503   7   30,864     29,565   4
 
Expenses
Marketing and promotion 809 722 12 3,043 2,890 5
Card Member rewards 1,717 1,857 (8 ) 6,457 6,282 3
Card Member services 188 197 (5 ) 767 772 (1 )
Salaries and employee benefits 1,489 1,910 (22 ) 6,191 6,597 (6 )
Professional services 830 871 (5 ) 3,102 2,963 5
Occupancy and equipment 510 486 5 1,904 1,823 4
Communications 97 99 (2 ) 379 383 (1 )
Other, net   399     432   (8 )   1,133     1,404   (19 )
Total   6,039     6,574   (8 )   22,976     23,114   (1 )
Pretax income 1,980 929 # 7,888 6,451 22
Income tax provision   672     292   #   2,529     1,969   28
Net income $ 1,308   $ 637   # $ 5,359   $ 4,482   20
Net income attributable to common shareholders (A) $ 1,297   $ 630   # $ 5,312   $ 4,433   20
Effective tax rate 33.9 % 31.4 % 32.1 % 30.5 %
 
# - Denotes a variance of more than 100 percent.
 
(A) Represents net income, less earnings allocated to participating share awards of $11 million and $7 million for the three months ended December 31, 2013 and 2012, respectively, and $47 million and $49 million for the twelve months ended December 31, 2013 and 2012, respectively.
 
 
(Preliminary)

American Express Company

Condensed Consolidated Balance Sheets

 
(Billions)
 
December 31, December 31,
2013 2012
 
Assets
Cash & cash equivalents $ 19 $ 22
Accounts receivable 47 46
Investment securities 5 6
Loans 67 64
Other assets   15     15  
Total assets $ 153   $ 153  
 
Liabilities and Shareholders' Equity
Customer deposits $ 42 $ 40
Short-term borrowings 5 3
Long-term debt 55 59
Other liabilities   32     32  
Total liabilities   134     134  
 
Shareholders' Equity   19     19  
Total liabilities and shareholders' equity $ 153   $ 153  
 
 
(Preliminary)

American Express Company

Financial Summary

 
(Millions)
Quarters Ended Years Ended
December 31, Percentage Inc/(Dec) December 31, Percentage Inc/(Dec)
2013 2012 2013 2012
 

Total revenues net of interest expense

U.S. Card Services $ 4,388 $ 4,070 8 % $ 16,995 $ 16,046 6 %
International Card Services 1,429 1,397 2 5,401 5,306 2
Global Commercial Services 1,238 1,215 2 4,853 4,749 2
Global Network & Merchant Services   1,447     1,390   4   5,513     5,271   5
8,502 8,072 5 32,762 31,372 4
Corporate & Other   45     69   (35 )   212     183   16
 
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 8,547   $ 8,141   5 $ 32,974   $ 31,555   4
 

Pretax income (loss)

U.S. Card Services $ 1,292 $ 612 # $ 4,994 $ 4,069 23
International Card Services 108 110 (2 ) 643 659 (2 )
Global Commercial Services 287 142 # 1,244 960 30
Global Network & Merchant Services   632     557   13   2,469     2,219   11
2,319 1,421 63 9,350 7,907 18
Corporate & Other   (339 )   (492 ) (31 )   (1,462 )   (1,456 ) -
 
PRETAX INCOME $ 1,980   $ 929   # $ 7,888   $ 6,451   22
 

Net income (loss)

U.S. Card Services $ 864 $ 423 # $ 3,193 $ 2,592 23
International Card Services 103 95 8 631 634 -
Global Commercial Services 182 65 # 860 644 34
Global Network & Merchant Services   399     354   13   1,575     1,443   9
1,548 937 65 6,259 5,313 18
Corporate & Other   (240 )   (300 ) (20 )   (900 )   (831 ) 8
 
NET INCOME $ 1,308   $ 637   # $ 5,359   $ 4,482   20
 
# - Denotes a variance of more than 100 percent.
 
 
(Preliminary)

American Express Company

Financial Summary (continued)

 
 
Quarters Ended Years Ended
December 31, Percentage Inc/(Dec) December 31, Percentage Inc/(Dec)
2013 2012 2013 2012
EARNINGS PER COMMON SHARE
 
BASIC
Net income attributable to common shareholders $ 1.22   $ 0.57   # $ 4.91   $ 3.91   26 %
 
Average common shares outstanding (millions)   1,067     1,110   (4 ) %   1,082     1,135   (5 ) %
 
DILUTED
Net income attributable to common shareholders $ 1.21   $ 0.56   # $ 4.88   $ 3.89   25 %
 
Average common shares outstanding (millions)   1,073     1,116   (4 ) %   1,089     1,141   (5 ) %
 
Cash dividends declared per common share $ 0.23   $ 0.20   15 % $ 0.89   $ 0.80   11 %
 
 

Selected Statistical Information

 
Quarters Ended Years Ended
December 31, Percentage Inc/(Dec) December 31, Percentage Inc/(Dec)
2013 2012 2013 2012
 
Return on average equity (A) 27.8 % 23.1 % 27.8 % 23.1 %
Return on average common equity (A) 27.6 % 22.8 % 27.6 % 22.8 %
Return on average tangible common equity (A) 34.9 % 29.2 % 34.9 % 29.2 %
Common shares outstanding (millions) 1,064 1,105 (4 ) % 1,064 1,105 (4 ) %
Book value per common share $ 18.32 $ 17.09 7 % $ 18.32 $ 17.09 7 %
Shareholders' equity (billions) $ 19.5 $ 18.9 3 % $ 19.5 $ 18.9 3 %
 
# - Denotes a variance of more than 100 percent.
 
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.
           
 
(Preliminary)

American Express Company

Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE),

and Return on Average Tangible Common Equity (ROTCE)

Appendix I

 
(Millions)
For the Twelve Months Ended
December 31, September 30, June 30, March 31, December 31,
2013 2013 2013 2013 2012
 

ROE

 
Net income $ 5,359 $ 4,688 $ 4,572 $ 4,506 $ 4,482
Average shareholders' equity $ 19,254 $ 19,289 $ 19,372 $ 19,426 $ 19,425
Return on average equity (A) 27.8 % 24.3 % 23.6 % 23.2 % 23.1 %
 

Reconciliation of ROCE and ROTCE

 
Net income $ 5,359 $ 4,688 $ 4,572 $ 4,506 $ 4,482
Earnings allocated to participating share awards and other   47     43     45     46     49  
Net income attributable to common shareholders $ 5,312   $ 4,645   $ 4,527   $ 4,460   $ 4,433  
 
Average shareholders' equity $ 19,254   $ 19,289   $ 19,372   $ 19,426   $ 19,425  

Average common shareholders' equity

$ 19,254   $ 19,289   $ 19,372   $ 19,426   $ 19,425  
Average goodwill and other intangibles   4,055     4,091     4,128     4,181     4,232  
Average tangible common shareholders' equity $ 15,199   $ 15,198   $ 15,244   $ 15,245   $ 15,193  
Return on average common equity (A) 27.6 % 24.1 % 23.4 % 23.0 % 22.8 %
Return on average tangible common equity (B) 34.9 % 30.6 % 29.7 % 29.3 % 29.2 %
 
(A) Return on average equity and return on average common equity are calculated by dividing one year period net income/net income attributable to common shareholders by one year average total shareholders’ equity/average common shareholders' equity, respectively.
 
(B) Return on average tangible common equity, a non-GAAP measure, is computed in the same manner as return on average common equity except the computation of average tangible common shareholders' equity, a non-GAAP measure, excludes from average total shareholders' equity, average goodwill and other intangibles. The Company believes that return on average tangible common equity is a useful measure of the profitability of its business.
 
 
           
(Preliminary)

American Express Company

Net Income and EPS Reconciliation

Appendix V

 
(Millions, except per share amounts)

Quarter Ended December 31, 2013

Year Ended December 31, 2013
 

Net income:

 
Reported Net income $ 1,308 $ 5,359
 
Q4'13 Merchant Litigation Settlement (after-tax) $ 41 $ 41
 
Adjusted Net income (A) $ 1,349 $ 5,400
 

Diluted EPS:

 
Reported Net income attributable to common shareholders $ 1.21 $ 4.88
 
Q4'13 Merchant Litigation Settlement (after-tax) $ 0.04 $ 0.03
 
Adjusted Net income attributable to common shareholders (A) $ 1.25 $ 4.91
 
(A) Adjusted net income and adjusted net income attributable to common shareholders, which are non-GAAP measures, represent net income excluding the impact of the merchant litigation settlement recognized in Q4’13. The Company believes adjusted net income and adjusted net income attributable to common shareholders provide useful metrics to evaluate the ongoing operating performance of the Company.
 
 




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