NEW YORK ( TheStreet) -- American Express' ( AXP) third-quarter profit dropped 21% compared to the year-earlier period, but the credit card company did show an improvement in the amount of bad loans it had to write off. The company said net income for the three months ending Sept. 30 fell 21% to $640 million vs. $815 million in the year-earlier quarter. Net income attributable to common shareholders was 53 cents a share in the quarter vs. 70 cents a share in the year earlier period. Total revenue, net of interest expense, fell 16% year-over-year to $6.02 billion. American Express said its net income attributable to common shareholders excludes the impact of accelerated preferred dividend accretion of $212 million for the nine months ended Sept. 30 related to the company's previous repurchase of $3.39 billion of TARP preferred shares. It also excludes the impact of preferred shares dividends and related accretion of $94 million for the nine months ended Sept. 30 , among other things. The latest results also included a $180 million ($113 million after-tax) non-recurring benefit associated with the company's accounting for a net investment in consolidated foreign subsidiaries. Excluding that benefit, adjusted diluted earnings per share were 43 cents a share in the September quarter. Analysts on average were looking for the credit card company to earn a profit of 38 cents a share in the quarter ending Sept. 30, according to Thomson Reuters. The company's provision for loan losses fell 13% to $1.2 billion from a year-earlier.
Cardmember spending and loan volumes fell from year-ago levels. Still charge-offs related to American Express' cardmember loans improved a bit -- totaling 8.9% on a managed basis for the quarter, down from 10% in the second quarter. "At the start of the year the economy appeared to be in a freefall, the drop in cardmember spending was accelerating and loan loss rates were rising rapidly," CEO Ken Chenault said in a statement. "Today, while there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality, the trends in cardmember spending are encouraging and there are signs that the recession may be approaching an end. "Our three priorities remain: staying liquid, staying profitable and investing selectively for growth," he said. "However, in anticipation of sequential improvement in our loan loss provision during the fourth quarter, we are focused more and more on the third priority - investing in the business to make sure we capitalize on growth opportunities." This month American Express detailed plans to streamline its technology and operations units and ramp up its focus on payments processing, especially in emerging markets, in order to position itself for an environment of slower billings growth. The news came in conjunction with the resignation of Alfred F. Kelly Jr. from the president position. Kelly will remain with the company until early in 2010. A desire to eventually become a CEO was the stated reason for Kelly's departure, which is unlikely to happen anytime soon at American Express since CEO Ken Chenault isn't going anywhere.
The stock closed up 3.8% at $36.44 on Thursday. The finish was its high for the day, and just below the shares' 52-week high of $36.50, set in mid-September. The stock has now doubled this year, and was more than 1% higher in after-hours action, according to Yahoo! Finance. --Written by Laurie Kulikowski in New York.