(Includes updated stock prices.)American Express ( AXP) said its credit book continued to deteriorate in the second quarter, but not as bad as the credit card issuer originally expected. The New York based company said in its earnings release Friday that on a managed basis, net loans charged off in its U.S. card member business totaled 10%, up from 8.5% in the first quarter and 5.3% a year ago. But the company now expects charge-off rates in the unit to be below 10% for the second half of the year, lower than that outlook offered earlier in the year. "Although it is still too early to point to any sure signs of an economic recovery, the number of card members who are falling behind in their payments, the volume of bankruptcy filings and the level of loan write-offs were better than we had expected," Chairman and CEO Ken Chenault said in a company statement. AmEx offered the results in its second-quarter earnings release, in which it said net income from continuing operations fell 48% from the year-earlier period to $342 million, or 9 cents a share. Shares were up fractionally in recent after-hours action to $28.97. The earnings results include an 18-cents-a-share reduction from the repurchase of preferred shares worth $3.39 billion from the U.S. Treasury Department. Excluding the Troubled Asset relief Program repayment, earnings would have been 27 cents a share, AmEx said, beating consensus estimates by a penny. Revenue, net of interest expense, fell 18% to $6.1 billion. The company took a $1.6 billion provision for the three months ending June 30, down slightly from the $1.8 billion it took in the first quarter. The provision, which is allocated primarily for its U.S. card services business, reflected "lower average cardmember receivables and loans, offset by higher write-offs and past due loans," the company said.