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AMERICAN EXPRESS CO - Quarter Report: 2022 September (Form 10-Q)


Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ____ to ____
Commission file number 1-7657
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York13-4922250
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
200 Vesey Street, New York, New York
10285
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code                                          (212) 640-2000
None
Former name, former address and former fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common shares (par value $0.20 per share)AXPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ      No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes þ      No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer
☐Smaller reporting company☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐      No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at October 12, 2022
Common Shares (par value $0.20 per share)747,232,696 Shares



Table of Contents

AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Page No.
Throughout this report the terms “American Express,” “we,” “our” or “us,” refer to American Express Company and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise. The use of the term “partner” or “partnering” in this report does not mean or imply a formal legal partnership, and is not meant in any way to alter the terms of American Express’ relationship with any third parties. Refer to the “MD&A― Glossary of Selected Terminology” for the definitions of other key terms used in this report.

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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Business Introduction
We are a globally integrated payments company that provides our customers with access to products, insights and experiences that enrich lives and build business success. Our principal products and services are credit and charge card products, along with travel and lifestyle related services, offered to consumers and businesses around the world. Our range of products and services includes:
•Credit card, charge card, banking and other payment and financing products
•Merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants
•Network services
•Other fee services, including fraud prevention services and the design and operation of customer loyalty programs
•Expense management products and services
•Travel and lifestyle services
Our various products and services are offered globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.
We compete in the global payments industry with card networks, issuers and acquirers, paper-based transactions (e.g., cash and checks), bank transfer models (e.g., wire transfers and Automated Clearing House (ACH)), as well as evolving and growing alternative payment and financing providers. As the payments industry continues to evolve, we face increasing competition from non-traditional players that leverage new technologies, business models and customer relationships to create payment or financing solutions.
Effective for the first quarter of 2022, we made the following reporting presentation changes to our Consolidated Statements of Income:
Within Non-interest revenues:
•Processed revenue represents revenues earned from processed volumes, previously reported in Discount revenue, Other fees and commissions and Other revenue.
•Service fees and other revenue combines the remaining balances from Other fees and commissions and Other revenue.
Within Total expenses:
•Disaggregated Marketing and business development expense into Business development expense and Marketing expense.
Prior period amounts have been recast to conform with current period presentation; there was no impact to Total non-interest revenues or Total expenses.
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Effective for the third quarter of 2022, we realigned our reportable segments to reflect organizational changes announced during the second quarter of 2022. Prior periods have been recast to conform to the new reportable operating segments, which are: U.S. Consumer Services (USCS), Commercial Services (CS), International Card Services (ICS) and Global Merchant and Network Services (GMNS), with corporate functions and certain other businesses and operations included in Corporate & Other. Refer to Note 1 to the “Consolidated Financial Statements” for additional information.
Refer to the “Glossary of Selected Terminology” for the definitions of certain key terms and related information appearing within this Form 10-Q.
Forward-Looking Statements and Non-GAAP Measures
Certain of the statements in this Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the “Cautionary Note Regarding Forward-Looking Statements” section. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this Form 10-Q constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies.
Bank Holding Company
American Express is a bank holding company under the Bank Holding Company Act of 1956 and The Board of Governors of the Federal Reserve System (the Federal Reserve) is our primary federal regulator. As such, we are subject to the Federal Reserve’s regulations, policies and minimum capital standards.
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Table 1: Summary of Financial Performance
As of or for the Three Months Ended
September 30,
Change
2022 vs. 2021
As of or for the Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages, per share amounts and where indicated)2022202120222021
Selected Income Statement Data
Total revenues net of interest expense$13,556$10,928$2,628 24 %$38,686$30,235$8,451 28 %
Provisions for credit losses778(191)969 #1,155(1,472)2,627 #
Expenses10,3198,6691,650 19 29,81723,3246,493 28 
Pretax income2,4592,4509 — 7,7148,383(669)(8)
Income tax provision580624(44)(7)1,7722,042(270)(13)
Net income1,8791,82653 3 5,9426,341(399)(6)
Earnings per common share — diluted (a)
$2.47$2.27$0.20 9 %$7.77$7.82$(0.05)(1)%
Common Share Statistics (b)
Cash dividends declared per common share$0.52$0.43$0.09 21 %$1.56$1.29$0.27 21 %
Average common shares outstanding:
Basic748786(38)(5)%752796(44)(6)%
Diluted749787(38)(5)%753797(44)(6)%
Selected Metrics and Ratios
Network volumes (Billions)
$394.4$330.7$64 19 %$1,139.5$916.1$223 24 %
Return on average equity (c)
31.9 %29.2 %34.5 %34.7 %
Net interest income divided by average Card Member loans10.5 %10.4 %10.3 %10.2 %
Net interest yield on average Card Member loans (d)
10.8 %10.8 %10.6 %10.9 %
Effective tax rate23.6 %25.5 %23.0 %24.4 %
Common Equity Tier 1 10.6 %12.6 %10.6 %12.6 %
Selected Balance Sheet Data
Cash and cash equivalents$31,182$27,916$3,266 12 %$31,182$27,916$3,266 12 %
Card Member receivables55,27548,7586,517 13 55,27548,7586,517 13 
Card Member loans99,03877,02622,012 29 99,03877,02622,012 29 
Customer deposits103,46384,32619,137 23 103,46384,32619,137 23 
Long-term debt$42,393$34,483$7,910 23 %$42,393$34,483$7,910 23 %
# Denotes a variance of 100 percent or more
(a)Represents net income, less (i) earnings allocated to participating share awards of $14 million for both the three months ended September 30, 2022 and 2021 and $45 million for both the nine months ended September 30, 2022 and 2021, (ii) dividends on preferred shares of $14 million and $20 million for the three months ended September 30, 2022 and 2021, respectively, and $43 million and $49 million for the nine months ended September 30, 2022 and 2021, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for both the three and nine months ended September 30, 2021.
(b)Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP.
(c)Return on average equity (ROE) is calculated by dividing (i) annualized net income for the period by (ii) average shareholders’ equity for the period. Effective for the first quarter of 2022, the interim period calculation methodology for ROE was modified to present the returns for the period on an annualized basis rather than the preceding twelve months. Prior period amounts have been recast to conform with current period presentation.
(d)Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to Table 8 for a reconciliation to Net interest income divided by average Card Member loans.
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Business Environment
Our results for the third quarter reflect strong performance and continued strength in our premium Card Member base, despite uncertainties in the macroeconomic environment. We continue to invest in our brand, value propositions, customers, colleagues, technology and coverage, which is driving growth across our businesses.
Our network volumes for the third quarter increased 19 percent year-over-year (23 percent on an FX-adjusted basis1) and billed business, which accounts for the majority of our total network volumes and is the most significant driver of our financial results, increased 21 percent year-over-year (24 percent on an FX-adjusted basis1). The increase in billed business across our segments was driven by sustained growth in Goods & Services spending and the continued momentum in T&E spending, including T&E spending in our international markets exceeding pre-pandemic levels on an FX-adjusted basis1. U.S. Consumer billed business grew by 22 percent year-over-year, reflecting continued strength in spending trends from our premium U.S. consumer Card Members. Billed business in our Commercial Services segment grew by 20 percent on a year-over-year basis reflecting continued strength in spending by our U.S. small and mid-sized enterprise customers, as well as continued recovery in spending by our U.S. large and global corporate clients. International billed business grew by 21 percent year-over-year (37 percent on an FX-adjusted basis1), driven by increased spending by both consumer and commercial customers. Inflation was a modest contributor to our strong billed business growth, while the continuing strengthening of the U.S. dollar, relative to the prior year, against most major currencies in which we operate, had a negative impact on our international billings.
Total revenues net of interest expense increased 24 percent year-over-year (27 percent on an FX-adjusted basis1) reflecting strong growth in all our revenue lines. Discount revenue, our largest revenue line, increased 23 percent year-over-year, driven primarily by growth in Card Member spending. Service fees and other revenue increased 39 percent year-over-year, driven in part by higher travel-related revenues. Net card fees grew 17 percent year-over-year, as new card acquisitions increased and Card Member retention remained high due to the investments we have been making in our premium value propositions. Net interest income grew by 29 percent year-over-year, primarily driven by growth in loans, partially offset by higher interest expense due to higher rates.
Card Member loans grew 29 percent year-over-year, driven by ongoing strong growth in billed business. The interest-bearing portion of our loan balances also continues to increase quarter-over-quarter. Provisions for credit losses increased, primarily driven by reserve builds in the current period, as compared to reserve releases in the prior period, and higher net write-offs. The reserve builds in the current period reflected the strong growth in loans and changes in the macroeconomic outlook. Write-off and delinquency rates remained low in the current quarter; however, delinquency rates modestly increased on a sequential basis.
Card Member rewards, Business development and Card Member services are generally correlated to volumes or are variable based on usage and increased year-over-year primarily due to network volume growth and higher usage of travel-related benefits. Card Member rewards expense growth was also driven by a larger proportion of billed business in categories that earn incremental rewards such as travel.
Operating expenses increased 22 percent year-over-year primarily due to higher compensation costs in the current quarter and net losses on Amex Ventures investments in the current period as compared to net gains in the prior period, partially offset by the impact of the strengthening U.S. dollar on our international expenses. During the quarter, we maintained our capital ratios within our target range and returned $1.0 billion of capital to our shareholders through share buybacks and dividends. We plan to continue to return to shareholders the excess capital we generate while supporting our balance sheet growth.
Our strong performance continues to give us confidence in our business model, although we recognize the uncertainty of the geopolitical and macroeconomic environment. We remain committed to executing on our strategy for building sustainable long-term growth.
See “Certain Legislative, Regulatory and Other Developments” and “Risk Factors” for information on certain matters that could have a material adverse effect on our results of operations and financial condition.
1 The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted revenues is a non-GAAP measure. We believe the presentation of information on a foreign currency
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adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
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Results of Operations
The discussions in both the “Consolidated Results of Operations” and “Business Segment Results of Operations” provide commentary on the variances for the three and nine months ended September 30, 2022 compared to the same periods in the prior year, as presented in the accompanying tables.
Consolidated Results of Operations
Table 2: Total Revenues Net of Interest Expense Summary
Three Months Ended
September 30,
Change
2022 vs. 2021
Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages)2022202120222021
Discount revenue$7,848 $6,369 $1,479 23 %$22,556 $17,414 $5,142 30 %
Net card fees
1,541 1,312 229 17 4,445 3,851 594 15 
Service fees and other revenue1,169 839 330 39 3,340 2,182 1,158 53 
Processed revenue420 414 6 1 1,208 1,146 62 5 
Total non-interest revenues10,978 8,934 2,044 23 31,549 24,593 6,956 28 
Total interest income3,374 2,301 1,073 47 8,693 6,633 2,060 31 
Total interest expense796 307 489 #1,556 991 565 57 
Net interest income2,578 1,994 584 29 7,137 5,642 1,495 26 
Total revenues net of interest expense$13,556 $10,928 $2,628 24 %$38,686 $30,235 $8,451 28 %
# Denotes a variance of 100 percent or more
Total Revenues Net of Interest Expense
Discount revenue increased for both the three and nine month periods, primarily driven by increases in billed business of 21 percent and 27 percent, respectively. See Tables 5 and 6 for more details on billed business performance.
Net card fees increased for both the three and nine month periods, primarily driven by growth in our premium card portfolios.
Service fees and other revenue increased for both the three and nine month periods, primarily driven by higher travel related revenues from foreign exchange-related revenues associated with Card Member cross-currency spending and higher travel commissions and fees from our consumer travel business. The increase for the nine month period also reflected income from equity method investments in the current period, which included a portion of the revenue allocated to a joint venture partner as described in Business development expense below, versus a net loss in the prior period.
Processed revenue increased for both the three and nine month periods, primarily driven by increases in processed volumes, partially offset by the repositioning of certain of our alternative payment solutions.
Interest income increased for both the three and nine month periods, primarily reflecting higher average Card Member loan balances and higher interest rates.
Interest expense increased for both the three and nine month periods, primarily driven by higher interest rates.
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Table 3: Provisions for Credit Losses Summary
Three Months Ended
September 30,
Change
2022 vs. 2021
Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages)2022202120222021
Card Member loans
Net write-offs
$259 $161 $98 61 %$721 $708 $13 2 %
Reserve (release) build (a)
337 (338)675 #36 (1,854)1,890 #
Total
596 (177)773 #757 (1,146)1,903 #
Card Member receivables
Net write-offs
122 32 90 #284 89 195 #
Reserve (release) build (a)
43 (44)87 #99 (236)335 #
Total
165 (12)177 #383 (147)530 #
Other
Net write-offs - Other loans (b)
6 — 6 — 12 19 (7)(37)
Net write-offs - Other receivables (c)
4 9 (5)(56)13 25 (12)(48)
Reserve (release) build - Other loans (a)(b)
8 (5)13 #(6)(171)165 96 
Reserve (release) build - Other receivables (a)(c)
(1)(6)5 83 (4)(52)48 92 
Total
17 (2)19 #15 (179)194 #
Total provisions for credit losses$778 $(191)$969 # %$1,155 $(1,472)$2,627 # %
# Denotes a variance of 100 percent or more
(a)Refer to the “Glossary of Selected Terminology” for a definition of reserve (release) build.
(b)Relates to Other loans of $4.8 billion and $2.9 billion, less reserves of $46 million and $52 million, as of September 30, 2022 and December 31, 2021, respectively; and $2.4 billion and $2.9 billion, less reserves of $66 million and $238 million, as of September 30, 2021 and December 31, 2020, respectively.
(c)Relates to Other receivables included in Other assets on the Consolidated Balance Sheets of $3.0 billion and $2.7 billion, less reserves of $22 million and $25 million, as of September 30, 2022 and December 31, 2021, respectively; and $2.7 billion and $3.0 billion, less reserves of $33 million and $85 million, as of September 30, 2021 and December 31, 2020, respectively.
Provisions for Credit Losses
Card Member loans provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve builds in the current periods were primarily driven by increases in loans outstanding and deterioration in the macroeconomic outlook, partially offset, for the current nine month period, by a reduction in COVID-19 pandemic-driven reserves. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in loans outstanding.
Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve build in the current three month period was primarily driven by higher delinquencies. The reserve build in the current nine month period was primarily driven by an increase in receivables outstanding and higher delinquencies. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in receivables outstanding.
Other loans provision for credit losses increased for both the three and nine month periods. The increase for the three month period was primarily due to a reserve build in the current period, driven by higher non-card balances, versus a reserve release in the prior period, and higher net write-offs. The increase for the nine month period was primarily due to a lower reserve release in the current period, partially offset by lower net write-offs. The reserve releases in the prior periods were due to improved credit performance and lower non-card loans outstanding.
Refer to Note 3 to the "Consolidated Financial Statements" for further information regarding our reserves for credit losses.
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Table 4: Expenses Summary
Three Months Ended
September 30,
Change
2022 vs. 2021
Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages)2022202120222021
Card Member rewards$3,571 $3,020 $551 18 %$10,273 $7,975 $2,298 29 %
Business development1,194 943 251 27 3,641 2,634 1,007 38 
Card Member services774 579 195 34 2,078 1,328 750 56 
Marketing1,458 1,412 46 3 4,184 3,706 478 13 
Salaries and employee benefits1,748 1,497 251 17 5,218 4,586 632 14 
Other, net1,574 1,218 356 29 4,423 3,095 1,328 43 
Total expenses$10,319 $8,669 $1,650 19 %$29,817 $23,324 $6,493 28 %
Expenses
Card Member rewards expense increased for both the three and nine month periods, driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $319 million and $1.5 billion, and cobrand rewards expense of $232 million and $824 million for the three and nine month periods, respectively, all of which were primarily driven by higher billed business. The increases in Membership Rewards expense were also driven by a larger proportion of spend in categories that earn incremental rewards such as travel, partially offset by a lower mix of redemptions in travel-related categories, as compared to the prior periods.
The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 96 percent (rounded down) at September 30, 2022 and 96 percent at September 30, 2021.
Business development expense increased for both the three and nine month periods, primarily due to increased partner payments and client incentives, both of which were driven by higher network volumes and, for the nine month period, a charge related to revenue allocated to a joint venture partner for certain categories of transactions.
Card Member services expense increased for both the three and nine month periods, primarily due to higher usage of travel-related benefits.
Marketing expense increased for both the three and nine month periods, primarily due to increases in business investments to continue building growth momentum.
Salaries and employee benefits expense increased for both the three and nine month periods, primarily due to higher compensation expenses driven by increased headcount and compensation decisions.
Other expenses increased for both the three and nine month periods, primarily driven by net losses on Amex Ventures investments in the current periods, as compared to net gains in the prior periods, higher technology costs and increases in professional services expenses in the current periods.
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Income Taxes
The effective tax rate was 23.6 percent and 25.5 percent for the three months ended September 30, 2022 and 2021, respectively, and 23.0 percent and 24.4 percent for the nine months ended September 30, 2022 and 2021, respectively. The decrease in the effective tax rate for the three month period primarily reflected changes in the geographic mix of pretax income. The decrease in the effective tax rate for the nine month period primarily reflected discrete tax benefits in the current period related to the resolution of certain prior years’ tax items and stock-based compensation.
Table 5: Selected Card-Related Statistical Information
As of or for the
Three Months Ended
September 30,
Change
2022
vs.
2021
As of or for the
Nine Months Ended
September 30,
Change
2022
vs.
2021
2022202120222021
Network volumes (billions)
$394.4$330.719 %$1,139.5$916.124 %
Billed business$339.0$280.421 $980.9$773.627 
Processed volumes$55.4$50.310 $158.6$142.511 
Cards-in-force (millions)
131.4119.210 131.4119.210 
Proprietary cards-in-force75.670.67 75.670.67 
Basic cards-in-force (millions)
109.998.312 109.998.312 
Proprietary basic cards-in-force58.254.08 58.254.08 
Average proprietary basic Card Member spending (dollars)
$5,886$5,23113 $17,399$14,55520 
Average discount rate2.36 %2.32 %2.34 %2.30 % 
Average fee per card (dollars)(a)
$82$759 %$81$749 %
(a)Average fee per card is computed on an annualized basis based on proprietary Net card fees divided by average proprietary total cards-in-force.
Table 6: Network Volumes-Related Statistical Information
Three Months Ended
September 30, 2022
Nine Months Ended
September 30, 2022
Year over Year Percentage
Increase (Decrease)
Year over Year Percentage Increase (Decrease) Assuming No Changes in FX Rates (a)
Year over Year Percentage
Increase (Decrease)
Year over Year Percentage Increase (Decrease) Assuming No Changes in FX Rates (a)
Network volumes19 %23 %24 %28 %
Total billed business21 24 27 29 
U.S. Consumer Services22 28 
Commercial Services20 20 26 26 
International Card Services21 37 27 40 
Processed volumes10 19 11 18 
Merchant Industry Metrics
G&S-related (74% and 75% of billed business for the three and nine months ended September 30, 2022, respectively)13 16 16 18 
T&E-related (26% and 25% of billed business for the three and nine months ended September 30, 2022, respectively)52 57 77 81 
Airline-related (6% of billed business for both the three and nine months ended September 30, 2022)110 %118 %149 %155 %
(a)The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared).
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Table 7: Selected Credit-Related Statistical Information
As of or for the
Three Months Ended
September 30,
Change
2022
vs.
2021
As of or for the
Nine Months Ended
September 30,
Change
2022
vs.
2021
(Millions, except percentages and where indicated)2022202120222021
Card Member loans:
Card Member loans (billions)
$99.0$77.029 %$99.0$77.029 %
Credit loss reserves:
Beginning balance
$2,997$3,835(22)$3,305$5,344(38)
Provisions - principal, interest and fees596(177)#757(1,146)#
Net write-offs — principal less recoveries(203)(118)72 (560)(544)3 
Net write-offs — interest and fees less recoveries(56)(43)30 (161)(164)(2)
Other (a)
(15)(8)(88)(22)(1)#
Ending balance$3,319$3,489(5)$3,319$3,489(5)
% of loans3.4 %4.5 %3.4 %4.5 %
% of past due393 %666 %393 %666 %
Average loans (billions)
$97.7$76.428 $92.3$73.426 
Net write-off rate — principal, interest and fees (b)
1.1 %0.8 %1.0 %1.3 %
Net write-off rate — principal only (b)
0.8 %0.6 %0.8 %1.0 %
30+ days past due as a % of total
0.9 %0.7 %0.9 %0.7 %
Card Member receivables:
Card Member receivables (billions)
$55.3$48.813 $55.3$48.813 
Credit loss reserves:
Beginning balance$119$7363 $64$267(76)
Provisions - principal and fees165(12)#383(147)#
Net write-offs — principal and fees less recoveries (c)
(122)(32)#(284)(89)#
Other (a)
(3)1#(4)(1)#
Ending balance$159$30# %$159$30# %
% of receivables0.3 %0.1 %0.3 %0.1 %
Net write-off rate — principal and fees (d)
0.9 %0.3 %0.7 %0.3 %
# Denotes a variance of 100 percent or more
(a)Other includes foreign currency translation adjustments.
(b)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.
(c)The prior nine-month period includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which resulted in a write-off in 2020 in the ICS segment.
(d)Refer to Tables 10, 12 and 14 for Net write-off rate — principal only and 30+ days past due metrics for U.S. consumer receivables, U.S. small business receivables and International small business and consumer receivables, respectively. A net write-off rate based on principal losses only and delinquency data for periods other than 90+ days past billing for corporate receivables are not available due to system constraints.
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Table 8: Net Interest Yield on Average Card Member Loans
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Millions, except percentages and where indicated)2022202120222021
Net interest income$2,578$1,994$7,137$5,642
Exclude:
Interest expense not attributable to our Card Member loan portfolio (a)
374172743603
Interest income not attributable to our Card Member loan portfolio (b)
(300)(92)(572)(281)
Adjusted net interest income (c)
$2,652$2,074$7,308$5,964
Average Card Member loans (billions)
$97.7$76.4$92.3$73.4
Net interest income divided by average Card Member loans (c)
10.5 %10.4 %10.3 %10.2 %
Net interest yield on average Card Member loans (c)
10.8 %10.8 %10.6 %10.9 %
(a)Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.
(b)Primarily represents interest income attributable to Other loans, interest-bearing deposits and the fixed income investment portfolios.
(c)Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans.
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Business Segment Results of Operations
U.S. Consumer Services
Table 9: USCS Selected Income Statement Data
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
(Millions, except percentages)20222021
2022 vs. 2021
20222021
2022 vs. 2021
Revenues
Non-interest revenues$4,233$3,372$861 26 %$12,024$9,291$2,733 29 %
Interest income2,2511,613638 40 5,8804,6471,233 27 
Interest expense27489185 #513310203 65 
Net interest income1,9771,524453 30 5,3674,3371,030 24 
Total revenues net of interest expense6,2104,8961,314 27 17,39113,6283,763 28 
Provisions for credit losses403(119)522 #479(910)1,389 #
Total revenues net of interest expense after provisions for credit losses5,8075,015792 16 16,91214,5382,374 16 
Total expenses4,4983,764734 20 12,7989,8612,937 30 
Pretax segment income$1,309$1,251$58 5 %$4,114$4,677$(563)(12)%
# Denotes a variance of 100 percent or more
USCS issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products.
Non-interest revenues increased for both the three and nine month periods across all revenue categories.
Discount revenue increased 23 percent and 29 percent for the three and nine month periods, respectively, primarily driven by increases in U.S. consumer billed business.
See Tables 5, 6 and 10 for more details on billed business performance.
Net card fees increased 27 percent and 23 percent for the three and nine month periods, respectively, primarily driven by growth in our premium card portfolios.
Service fees and other revenue increased 56 percent and 55 percent for the three and nine month periods, respectively, primarily driven by higher travel commissions and fees from our consumer travel business.
Net interest income increased for both the three and nine month periods, primarily driven by an increase in average Card Member loan balances.
Card Member loans provision for credit losses increased for both the three and nine month periods. The increase for the three month period was primarily due to a reserve build in the current period, versus a reserve release in the prior period, and higher net write-offs. The increase for the nine month period was primarily due to a lower reserve release in the current period and higher net write-offs. The reserve build in the current three month period was driven by an increase in loans outstanding and deterioration in the macroeconomic outlook. The reserve release in the current nine month period was primarily driven by reduction in COVID-19 pandemic-driven reserves, partially offset by an increase in loans outstanding and deterioration in the macroeconomic outlook. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by increases in loans outstanding.
Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve builds in the current periods were primarily driven by higher delinquencies. The reserve build in the current three month period was partially offset by a decrease in receivables outstanding. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by increases in receivables outstanding.
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Total expenses increased for both the three and nine month periods across all expense categories.
Card Member rewards expense increased for both the three and nine month periods, primarily driven by higher billed business as well as higher travel-related redemptions.
Business development expense increased for both the three and nine month periods, primarily due to increased partner payments driven by higher billed business.
Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.
Marketing expense increased for both the three and nine month periods, primarily driven by increases in business investments.
Salaries and employee benefits and other operating expenses increased for both the three and nine month periods, primarily driven by higher technology, servicing and compensation costs.
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Table 10: USCS Selected Statistical Information
As of or for the
Three Months Ended
September 30,
Change
2022
vs.
2021
As of or for the
Nine Months Ended
September 30,
Change
2022
vs.
2021
(Millions, except percentages and where indicated)2022202120222021
Billed business (billions)
$140.3$114.922 %$404.1$314.728 %
Proprietary cards-in-force41.238.76 41.238.76 
Proprietary basic cards-in-force28.927.26 28.927.26 
Average proprietary basic Card Member spending (dollars)
$4,908$4,25515 $14,387$11,73123 
Total segment assets (billions)
$84.8$68.424 $84.8$68.424 
Card Member loans:
Total loans (billions)
$66.3$52.626 $66.3$52.626 
Average loans (billions)
$65.3$52.325 $61.7$50.522 
Net write-off rate - principal, interest and fees (a)
1.1 %0.8 %1.1 %1.2 %
Net write-off rate - principal only (a)
0.8 %0.5 %0.8 %0.9 %
30+ days past due as a % of total0.9 %0.7 %0.9 %0.7 %
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income$1,977$1,524$5,366$4,337
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)
343195135
Interest income not attributable to our Card Member loan portfolio (c)
(61)(27)(155)(74)
Adjusted net interest income (d)
$1,950$1,528$5,306$4,398
Average Card Member loans (billions)
$65.3$52.3$61.7$50.5
Net interest income divided by average Card Member loans (d)
12.0 %11.7 %11.6 %11.5 %
Net interest yield on average Card Member loans (d)
11.9 %11.6 %11.5 %11.7 %
Card Member receivables:
Total receivables (billions)
$13.2$12.65 %$13.2$12.65 %
Net write-off rate – principal and fees (a)
0.6 %0.1 %0.5 %— %
Net write-off rate – principal only (a)
0.6 %— %0.4 %— %
30+ days past due as a % of total0.9 %0.4 %0.9 %0.4 %
(a)Refer to Table 7 footnote (b).
(b)Refer to Table 8 footnote (a).
(c)Refer to Table 8 footnote (b).
(d)Refer to Table 8 footnote (c).
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Commercial Services
Table 11: CS Selected Income Statement Data
Three Months Ended
September 30,
Change
2022 vs. 2021
Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages)2022202120222021
Revenues
Non-interest revenues$3,145$2,558$587 23 %$8,986$7,053$1,933 27 %
Interest income552365187 51 1,4351,020415 41 
Interest expense20181120 #409253156 62 
Net interest income35128467 24 1,026767259 34 
Total revenues net of interest expense3,4962,842654 23 10,0127,8202,192 28 
Provisions for credit losses196(67)263 #294(429)723 #
Total revenues net of interest expense after provisions for credit losses3,3002,909391 13 9,7188,2491,469 18 
Total expenses2,5262,210316 14 7,3856,0301,355 22 
Pretax segment income$774$699$75 11 %$2,333$2,219$114 5 %
# Denotes a variance of 100 percent or more
CS issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.
Non-interest revenues increased for both the three and nine month periods, primarily driven by higher Discount revenue.
Discount revenue increased 24 percent and 30 percent for the three and nine month periods, respectively, primarily reflecting increases in commercial billed business.
See Tables 5, 6 and 12 for more details on billed business performance.
Net card fees increased 23 percent and 20 percent for the three and nine month periods, respectively, primarily driven by growth in our premium card portfolios.
Service fees and other revenue increased 56 percent and 62 percent for the three and nine month periods, respectively, primarily due to higher foreign exchange related revenues associated with Card Member cross-currency spending and higher delinquency fees.
Processed revenue decreased 75 percent for both the three and nine month periods, primarily driven by the repositioning of certain of our alternative payment solutions.
Net interest income increased for both the three and nine month periods, primarily driven by higher revolving Card Member loan balances.
Card Member loans provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve builds in the current three and nine month periods were primarily driven by increases in loans outstanding, deterioration in the macroeconomic outlook and higher delinquencies. The reserve build in the current nine month period was partially offset by reductions in COVID-19 pandemic-driven reserves. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in loans outstanding.
Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve builds in the current periods were primarily driven by higher delinquencies and, for the current nine month period, an increase in receivables outstanding. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in receivables outstanding.
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Total expenses increased for both the three and nine month periods across all expense categories.
Card Member rewards expense increased for both the three and nine month periods, primarily driven by higher billed business as well as higher travel-related redemptions.
Business development expense increased for both the three and nine month periods, primarily due to increased client incentive payments driven by higher billed business.
Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.
Marketing expense increased for both the three and nine month periods, primarily driven by higher marketing investments to continue building growth momentum.
Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily driven by higher technology and servicing costs.
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Table 12: CS Selected Statistical Information
As of or for the
Three Months Ended
September 30,
Change
2022
vs
2021
As of or for the
Nine Months Ended
September 30,
Change
2022
vs
2021
(Millions, except percentages and where indicated)2022202120222021
Billed business (billions)
$127.6$106.120 %$369.0$293.726 %
Proprietary cards-in-force14.613.111 14.613.111 
Average Card Member spending (dollars)
$8,848$8,2128 $26,377$23,09914 
Total segment assets (billions)
$51.3$40.527 $51.3$40.527 
Card Member loans:
Total loans (billions)
$20.7$14.939 $20.7$14.939 
Average loans (billions)
$20.1$14.737 $18.7$13.836 
Net write-off rate - principal, interest and fees (a)
0.8 %0.5 %0.8 %0.8 %
Net write-off rate - principal only (a)
0.7 %0.4 %0.6 %0.7 %
30+ days past due as a % of total0.7 %0.5 %0.7 %0.5 %
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income$351$284$1,026$767
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)
12461272195
Interest income not attributable to our Card Member loan portfolio (c)
(24)(16)(57)(61)
Adjusted net interest income (d)
$451$329$1,241$901
Average Card Member loans (billions)
$20.1$14.7$18.7$13.8
Net interest income divided by average Card Member loans (d)
6.9 %7.7 %7.4 %7.4 %
Net interest yield on average Card Member loans (d)
8.9 %8.9 %8.9 %8.7 %
Card Member receivables:
Total receivables (billions)
$27.6$23.020 %$27.6$23.020 %
Net write-off rate - principal and fees (e)
0.7 %0.1 %0.6 %0.2 %
Net write-off rate - principal only (a) - small business
0.9 %0.1 %0.7 %0.1 %
30+ days past due as a % of total - small business
1.4 %0.6 %1.4 %0.6 %
90+ days past billing as a % of total (e) - corporate
0.6 %0.3 %0.6 %0.3 %
(a)Refer to Table 7 footnote (b).
(b)Refer to Table 8 footnote (a).
(c)Refer to Table 8 footnote (b).
(d)Refer to Table 8 footnote (c).
(e)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.
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International Card Services
Table 13: ICS Selected Income Statement Data
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
(Millions, except percentages)20222021
2022 vs. 2021
20222021
2022 vs. 2021
Revenues
Non-interest revenues$2,066$1,732$334 19 %$6,065$4,814$1,251 26 %
Interest income36427886 31 1,035827208 25 
Interest expense17811464 56 445309136 44 
Net interest income18616422 13 59051872 14 
Total revenues net of interest expense2,2521,896356 19 6,6555,3321,323 25 
Provisions for credit losses176(6)182 #374(96)470 #
Total revenues net of interest expense after provisions for credit losses2,0761,902174 9 6,2815,428853 16 
Total expenses1,9101,633277 17 5,6884,5391,149 25 
Pretax segment income$166$269$(103)(38)%$593$889$(296)(33)%
# Denotes a variance of 100 percent or more
ICS issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.
Non-interest revenues increased for both the three and nine month periods, primarily driven by higher Discount revenue.
Discount revenue increased 23 percent and 31 percent for the three and nine month periods, respectively, and increased 39 percent and 43 percent for the same respective periods on an FX-adjusted basis, primarily reflecting increases in billed business.1
See Tables 5, 6 and 14 for more details on billed business performance.
Net card fees remained flat and increased 2 percent for the three and nine month periods, respectively, and increased 15 percent and 12 percent for the same respective periods on an FX-adjusted basis, primarily driven by growth in our premium card portfolios.1
Service fees and other revenue increased 34 percent and 46 percent for the three and nine month periods, respectively, and increased 51 percent and 60 percent for the same respective periods on an FX-adjusted basis, primarily due to higher foreign exchange-related revenues associated with Card Member cross-currency spending, higher delinquency fees and, for the nine month period, higher income from equity method investments, which included a portion of the revenue allocated to a joint venture partner as described in Business development expense below, versus a net loss in the prior nine month period.1
Processed revenue increased 20 percent and 36 percent for the three and nine month periods, respectively, and increased 26 percent and 43 percent for the same respective periods on an FX-adjusted basis, primarily driven by increases in processed volumes.1
Net interest income increased for both the three and nine month periods, primarily driven by higher revolving Card Member loan balances, partially offset by higher interest expense due to higher rates and the negative impact of the strengthening U.S. dollar on interest income.
1 The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted revenues is a non-GAAP measure. We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
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Card Member loans provision for credit losses increased for both the three and nine month periods. The increase for the three month period was primarily due to a reserve build in the current period, versus a reserve release in the prior period, and higher net write-offs. The increase for the nine month period was primarily due to a reserve build in the current period, versus a reserve release in the prior period, partially offset by lower net write-offs. The reserve builds in the current three month and nine month periods were primarily driven by higher delinquencies and deterioration in the macroeconomic outlook. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in loans outstanding.
Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to reserve builds in the current periods, versus reserve releases in the prior periods, and higher net write-offs. The reserve builds in the current three month and nine month periods were primarily driven by higher delinquencies. The reserve releases in the prior periods were driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in receivables outstanding.
Card Member rewards expense increased for both the three and nine month periods, primarily driven by higher billed business as well as higher travel-related redemptions.
Business development expense increased for both the three and nine month periods, primarily due to increased partner payments and client incentives driven by higher billed business. The year-over-year increase for the nine month period included a charge related to revenue allocated to a joint venture partner for certain categories of transactions.
Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.
Marketing expense decreased 3 percent and increased 6 percent for the three and nine month periods, respectively. The year-over-year movements in both the three and nine month periods reflect higher marketing investments to continue building growth momentum.
Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily driven by higher technology, servicing and compensation costs.
In addition to the variance drivers described above, provisions for losses and all expense categories for ICS benefited from the strengthening of the U.S. dollar for both the three and nine month periods.
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Table 14: ICS Selected Statistical Information
As of or for the
Three Months Ended
September 30,
Change
2022
vs.
2021
As of or for the
Nine Months Ended
September 30,
Change
2022
vs.
2021
(Millions, except percentages and where indicated)2022202120222021
Billed business (billions)
$70.2$58.221 %$204.5$160.627 %
Proprietary cards-in-force19.818.85 19.818.85 
Proprietary basic cards-in-force14.713.77 14.713.77 
Average proprietary basic Card Member spending (dollars)
$4,824$4,25813 $14,300$11,80121 
Total segment assets (billions)
$32.9$29.711 $32.9$29.711 
Card Member loans - consumer and small business:
Total loans (billions)
$12.0$9.526 $12.0$9.526 
Average loans (billions)
$12.3$9.431 $11.9$9.032 
Net write-off rate - principal, interest and fees (a)
1.4 %1.7 %1.3 %2.5 %
Net write-off rate - principal only (a)
1.2 %1.3 %1.1 %1.9 %
30+ days past due as a % of total1.0 %1.0 %1.0 %1.0 %
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income$186$164$590$518
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)
7255187154
Interest income not attributable to our Card Member loan portfolio (c)
(7)(3)(16)(8)
Adjusted net interest income (d)
$251$216$761$664
Average Card Member loans (billions)
$12.4$9.4$12.0$9.1
Net interest income divided by average Card Member loans (d)
6.0 %6.9 %6.6 %7.6 %
Net interest yield on average Card Member loans (d)
8.0 %9.1 %8.5 %9.8 %
Card Member receivables:
Total receivables (billions)
$14.5$13.210 %$14.5$13.210 %
Net write-off rate - principal and fees (e)
1.4 %0.7 %1.1 %0.6 %
Net write-off rate - principal only (a) - consumer and small business
1.6 %0.7 %1.3 %0.9 %
30+ days past due as a % of total - consumer and small business
1.2 %0.6 %1.2 %0.6 %
90+ days past billing as a % of total (e) - corporate
0.5 %0.3 %0.5 %0.3 %
(a)Refer to Table 7 footnote (b).
(b)Refer to Table 8 footnote (a).
(c)Refer to Table 8 footnote (b).
(d)Refer to Table 8 footnote (c).
(e)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.
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Global Merchant and Network Services
Table 15: GMNS Selected Income Statement and Other Data
Three Months Ended
September 30,
Change
2022 vs. 2021
Nine Months Ended
September 30,
Change
2022 vs. 2021
(Millions, except percentages and where indicated)2022202120222021
Revenues
Non-interest revenues$1,562$1,294$268 21 %$4,502$3,589$913 25 %
Interest income642 50 13121 8 
Interest expense(97)(24)(73)#(202)(61)(141)#
Net interest income1032875 #21573142 #
Total revenues net of interest expense1,6651,322343 26 4,7173,6621,055 29 
Provisions for credit losses3—3 —6(37)43 #
Total revenues net of interest expense after provisions for credit losses1,6621,322340 26 4,7113,6991,012 27 
Total expenses87080961 8 2,4482,300148 6 
Pretax segment income792513279 54 2,2631,399864 62 
Network volumes (billions)
394.4330.7$64 19 1,139.5916.1$223 24 
Total segment assets (billions)
$15.4$14.38 %$15.4$14.38 %
# Denotes a variance of 100 percent or more
GMNS operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.
Non-interest revenues increased for both the three and nine month periods across all revenue categories.
Discount revenue increased 22 percent and 28 percent for the three and nine month periods, respectively, primarily driven by increases in billed business.
See Tables 5 and 6 for more details on billed business performance.
Service fees and other revenue increased 30 percent and 32 percent for the three and nine month periods, respectively, primarily due to higher foreign currency-related revenue.
Processed revenue increased 12 percent and 16 percent for the three and nine month periods, respectively, primarily driven by higher processed volumes.
GMNS receives an interest expense credit relating to internal transfer pricing due to its merchant payables. Net interest income increased for both the three and nine month periods, primarily due to higher interest expense credits, largely driven by increases in average merchant payables related to year-over-year billed business growth and higher interest rates.
Business development expense increased for both the three and nine month periods, primarily due to increased partner payments driven by higher network volumes.
Marketing expense decreased for both the three and nine month periods, primarily due to lower levels of spending on growth initiatives in the current periods compared to the prior periods.
Salaries and employee benefits and other operating expenses increased for both the three and nine month periods, primarily driven by higher compensation expense and a prior year reserve release for merchant exposure associated with Card Member travel-related purchases earlier in the COVID-19 pandemic.
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Corporate & Other
Corporate functions and certain other businesses are included in Corporate & Other.
Corporate & Other pretax loss was $582 million for the three months ended September 30, 2022, compared to $282 million for the same period in the prior year, and $1.6 billion for the nine months ended September 30, 2022, compared to $801 million for the same period in the prior year. The increases in pretax loss were primarily driven by net losses on Amex Ventures investments in the current periods as compared to net gains on Amex Ventures investments in the prior periods and higher compensation costs, partially offset by lower net losses from Global Business Travel Group, Inc.
CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY
Our balance sheet management objectives are to maintain:
•A solid and flexible equity capital profile;
•A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements; and
•Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve month period in the event we are unable to continue to raise new funds under our regular funding programs during a substantial weakening in economic conditions.
We continue to see volatility in the capital markets due to a variety of factors and manage our balance sheet to reflect evolving circumstances.
Capital
We believe capital allocated to growing businesses with a return on risk-adjusted equity in excess of our costs will generate shareholder value. Our objective is to retain sufficient levels of capital generated through net income and other sources, such as the exercise of stock options by employees, to maintain a strong balance sheet, provide flexibility to support future business growth, and distribute excess capital to shareholders through dividends and share repurchases. See “Dividends and Share Repurchases” below.
We seek to maintain capital levels and ratios in excess of the minimum regulatory requirements, specifically within a 10 to 11 percent target range for American Express Company's Common Equity Tier 1 (CET1) risk-based capital ratio.
We maintain certain flexibility to shift capital across our businesses as appropriate. For example, we may infuse additional capital into subsidiaries to maintain capital at targeted levels in consideration of debt ratings and regulatory requirements. These infused amounts can affect the capital and liquidity positions at the American Express parent company level or in other subsidiaries.
We report our capital ratios using the Basel III capital definitions and the Basel III standardized approach for calculating risk-weighted assets.
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The following table presents our regulatory risk-based capital and leverage ratios and those of our U.S. bank subsidiary, American Express National Bank (AENB), as of September 30, 2022:
Table 16: Regulatory Risk-Based Capital and Leverage Ratios
Effective Minimum (a)
Ratios as of September 30, 2022
Risk-Based Capital
Common Equity Tier 17.0 %
American Express Company10.6 %
American Express National Bank11.2 
Tier 18.5 %
American Express Company11.5 
American Express National Bank11.2 
Total10.5 %
American Express Company13.3 
American Express National Bank13.1 
Tier 1 Leverage4.0 %
American Express Company10.1 
American Express National Bank9.5 %
(a)Represents Basel III minimum requirements and applicable regulatory buffers as defined by the federal banking regulators, which includes the stress capital buffer (SCB) for American Express Company and the capital conservation buffer for AENB.
The following table presents American Express Company's regulatory risk-based capital and risk-weighted assets as of September 30, 2022:
Table 17: Regulatory Risk-Based Capital Components and Risk Weighted Assets
American Express Company
($ in Billions)
September 30, 2022
Risk-Based Capital
Common Equity Tier 1$19.3 
Tier 1 Capital20.9 
Tier 2 Capital
3.2 
Total Capital24.1 
Risk-Weighted Assets181.7 
Average Total Assets to calculate the Tier 1 Leverage Ratio$207.6 
The following are definitions for our regulatory risk-based capital ratios and leverage ratio, which are calculated as per standard regulatory guidance:
Risk-Weighted Assets — Assets are weighted for risk according to a formula used by the Federal Reserve to conform to capital adequacy guidelines. On- and off-balance sheet items are weighted for risk, with off-balance sheet items converted to balance sheet equivalents, using risk conversion factors, before being allocated a risk-adjusted weight. Off-balance sheet exposures comprise a minimal part of the total risk-weighted assets.
Common Equity Tier 1 Risk-Based Capital Ratio — Calculated as CET1 capital, divided by risk-weighted assets. CET1 capital is common shareholders’ equity, adjusted for ineligible goodwill and intangible assets and certain deferred tax assets. CET1 capital is also adjusted for the Current Expected Credit Loss (CECL) final rules, as described below.
Tier 1 Risk-Based Capital Ratio — Calculated as Tier 1 capital divided by risk-weighted assets. Tier 1 capital is the sum of CET1 capital, preferred shares and third-party non-controlling interests in consolidated subsidiaries, adjusted for capital held by insurance subsidiaries. The minimum requirement for the Tier 1 risk-based capital ratio is 1.5 percent higher than the minimum for the CET1 risk-based capital ratio. We have $1.6 billion of preferred shares outstanding to help address a portion of the Tier 1 capital requirements in excess of common equity requirements.
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Total Risk-Based Capital Ratio — Calculated as the sum of Tier 1 capital and Tier 2 capital, divided by risk-weighted assets. Tier 2 capital is the sum of the reserve for loan and receivable credit losses adjusted for the CECL final rules (limited to 1.25 percent of risk-weighted assets) and $990 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries. The $990 million of eligible subordinated notes includes the $750 million subordinated debt issued in May 2022 and the $240 million remaining Tier 2 capital credit for the $600 million subordinated debt issued in December 2014.
Tier 1 Leverage Ratio — Calculated by dividing Tier 1 capital by our average total consolidated assets for the most recent quarter.
We elected to delay the impact of the adoption of the CECL methodology on regulatory capital for two years followed by a three-year phase-in period pursuant to rules issued by federal banking regulators (the CECL final rules).We have begun phasing in the $0.7 billion cumulative amount that is not recognized in regulatory capital at 25 percent per year beginning January 1, 2022.
As a Category IV firm, we participated in the Federal Reserve's supervisory stress tests in 2022. On August 4, 2022, the Federal Reserve confirmed our SCB of 2.5 percent, which resulted in a minimum CET1 ratio of 7 percent, effective October 1, 2022.
Dividends and Share Repurchases
We return capital to common shareholders through dividends and share repurchases. The share repurchases reduce common shares outstanding and generally more than offset the issuance of new shares as part of employee compensation plans.
During the three and nine months ended September 30, 2022, we returned $1.0 billion and $3.9 billion, respectively, to our shareholders in the form of common stock dividends of $0.4 billion and $1.2 billion, respectively, and share repurchases of $0.6 billion and $2.7 billion, respectively. We repurchased 4.0 million common shares at an average price of $149.33 in the third quarter of 2022.
In addition, during the three and nine months ended September 30, 2022, we paid $14 million and $43 million, respectively, in dividends on non-cumulative perpetual preferred shares outstanding.
Funding Strategy
Our principal funding objective is to maintain broad and well-diversified funding sources to allow us to finance our global businesses and to maintain a strong liquidity profile.
We aim to satisfy our financing needs with a diverse set of funding sources. The diversity of funding sources by type of instrument, by tenor and by investor base, among other factors, mitigates the impact of disruptions in any one type of instrument, tenor or investor. We seek to achieve diversity and cost efficiency in our funding sources by maintaining scale and market relevance in unsecured debt, asset securitizations and deposits, and access to secured borrowing facilities and a committed bank credit facility.
Summary of Consolidated Debt
We had the following customer deposits and consolidated debt outstanding as of September 30, 2022 and December 31, 2021:
Table 18: Summary of Customer Deposits and Consolidated Debt
(Billions)September 30, 2022December 31, 2021
Customer deposits$103.5 $84.4 
Short-term borrowings1.5 2.2 
Long-term debt42.4 38.7 
Total customer deposits and debt$147.4 $125.3 
We may redeem from time to time certain debt securities prior to the original contractual maturity dates in accordance with the optional redemption provisions of those debt securities.
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Our funding needs are driven by, among other factors, maturing obligations, our liquidity position and the pace of growth in our loans and receivables balances. Actual funding activities can vary from our plans due to various factors, such as future business growth, the impact of global economic, political and other events on market capacity and funding needs, demand for securities offered by us, regulatory changes, ability to securitize and sell loans and receivables, and the performance of loans and receivables previously sold in securitization transactions. Many of these factors are beyond our control.
The following table presents our debt issuances for the three months ended September 30, 2022:
Table 19: Debt Issuances
(Billions)Three Months Ended
September 30, 2022
American Express Company:
Fixed Rate Senior Notes (weighted-average coupon of 3.95%)$2.25 
Fixed-to-Floating Rate Senior Notes (4.42% coupon during the fixed rate period and compounded SOFR(a) plus 1.76% during the floating rate period)
1.25 
American Express Credit Account Master Trust:
Fixed Rate Class A Certificates (weighted-average coupon of 3.75%)
2.25 
Total$5.75 
(a)Secured overnight financing rate (SOFR).
Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard & Poor’s (S&P) and Fitch Ratings (Fitch). Such ratings help support our access to cost-effective unsecured funding as part of our overall funding strategy. Our asset securitization activities are rated separately.
Table 20: Unsecured Debt Ratings
American Express EntityMoody'sS&PFitch
American Express CompanyLong TermA2BBB+A
Short TermN/AA-2F1
OutlookStableStableStable
American Express Travel Related Services Company, Inc.Long TermA2A-A
Short TermPrime-1A-2F1
OutlookStable StableStable
American Express National BankLong TermA3A-A
Short TermPrime-1A-2F1
OutlookStableStableStable
American Express Credit CorporationLong TermA2A-A
Short TermN/AN/AN/A
OutlookStableStableStable
These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.
Downgrades in the ratings of our unsecured debt or asset securitization program securities could result in higher funding costs, as well as higher fees related to borrowings under our unused credit facilities. Declines in credit ratings could also reduce our borrowing capacity in the unsecured debt and asset securitization capital markets. We believe our funding mix, including the proportion of U.S. retail deposits insured by the Federal Deposit Insurance Corporation (FDIC) to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs.
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Liquidity Management
Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources. We seek to maintain liquidity sources in amounts sufficient to meet our expected future financial obligations and business requirements for liquidity for a period of at least twelve months in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions.
Our liquidity management strategy includes a number of elements, including, but not limited to:
•Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);
•Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;
•Projecting cash inflows and outflows under a variety of economic and market scenarios; and
•Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements.
The amount and type of liquidity resources we maintain can vary over time, based upon the results of stress scenarios required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as additional stress scenarios required under our liquidity risk policy. The future net interest margin associated with our liquidity resources depends on the difference between our cost of funding these resources and their investment yields.
Securitized Borrowing Capacity
As of September 30, 2022, we maintained our committed, revolving, secured borrowing facility, with a maturity date of July 15, 2024, which gives us the right to sell up to $3.0 billion face amount of eligible AAA notes from the American Express Issuance Trust II (the Charge Trust). We also maintained our committed, revolving, secured borrowing facility with a maturity date of September 16, 2024, which gives us the right to sell up to $2.0 billion face amount of eligible AAA certificates from the American Express Credit Account Master Trust (the Lending Trust). Both facilities are used in the ordinary course of business to fund working capital needs, as well as to further enhance our contingent funding resources. As of September 30, 2022, no amounts were drawn on the Charge Trust facility or the Lending Trust facility.
Federal Reserve Discount Window
As an insured depository institution, AENB may borrow from the Federal Reserve Bank of San Francisco, subject to the amount of qualifying collateral that it may pledge. The Federal Reserve has indicated that both credit and charge card receivables are a form of qualifying collateral for secured borrowings made through the discount window. Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral remain at the discretion of the Federal Reserve.
As of September 30, 2022, we had approximately $96.2 billion in U.S. credit card loans and charge card receivables that could be sold over time through our securitization trusts or pledged in return for secured borrowings to provide further liquidity, subject in each case to applicable market conditions and eligibility criteria.
Committed Bank Credit Facility
In addition to the secured borrowing facilities described above, we maintained a committed syndicated bank credit facility of $3.5 billion as of September 30, 2022, with a maturity date of October 15, 2024. We use this facility from time to time in the ordinary course of business to fund working capital needs. As of September 30, 2022, $300 million was drawn on this facility, which was repaid in full on October 5, 2022.
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Unused Credit Outstanding
As of September 30, 2022, we had approximately $345 billion of unused credit available to Card Members as part of established lending product agreements. Total unused credit available to Card Members does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn. Our charge card products generally have no pre-set spending limit and therefore are not reflected in unused credit available to Card Members.
Cash Flows
The following table summarizes our cash flow activity, followed by a discussion of the major drivers impacting operating, investing and financing cash flows for the nine months ended September 30:
Table 21: Cash Flows
(Billions)20222021
Total cash provided by (used in):
Operating activities$12.6 $9.6 
Investing activities(22.9)0.8 
Financing activities18.9 (15.3)
Effect of foreign currency exchange rates on cash and cash equivalents0.5 (0.2)
Net increase (decrease) in cash and cash equivalents$9.1 $(5.1)
Cash Flows from Operating Activities
Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions for credit losses, depreciation and amortization, stock-based compensation, deferred taxes and other non-cash items and (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.
In 2022, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, primarily resulting from higher accounts payable to merchants and an increase in Membership Rewards liability driven by higher Card Member spending.
In 2021, the net cash provided by operating activities was primarily driven by cash generated from net income for the period
and higher net operating liabilities, primarily resulting from an increase in Membership Rewards liability driven by higher Card Member spending.
Cash Flows from Investing Activities
Our cash flows from investing activities primarily include changes in Card Member loans and receivables, as well as changes in our available-for-sale investment securities portfolio.
In 2022, the net cash used in investing activities was primarily driven by higher Card Member loans and receivables outstanding and net purchases of investment securities.
In 2021, the net cash provided by investing activities was primarily driven by net maturities of our investment securities,
partially offset by higher Card Member loans and receivables outstanding.
Cash Flows from Financing Activities
Our cash flows from financing activities primarily include changes in customer deposits, long-term debt and short-term borrowings, as well as dividend payments and share repurchases.
In 2022, the net cash provided by financing activities was primarily driven by proceeds from debt issuances and growth in customer deposits, partially offset by debt repayments, share repurchases and dividend payments.
In 2021, the net cash used in financing activities was primarily driven by debt repayments, share repurchases, decreases in customer deposits, dividend payments and redemption of preferred shares, partially offset by the proceeds from the issuance of preferred shares.
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OTHER MATTERS
Certain Legislative, Regulatory and Other Developments
Supervision & Regulation
We are subject to extensive government regulation and supervision in jurisdictions around the world, and the costs of compliance are substantial. The financial services industry is subject to rigorous scrutiny, high regulatory expectations, a range of regulations and a stringent and unpredictable enforcement environment.
Governmental authorities have focused, and we believe will continue to focus, considerable attention on reviewing compliance by financial services firms with laws and regulations, and we continually work to evolve and improve our risk management framework, governance structures, practices and procedures. Reviews by us and governmental authorities to assess compliance with laws and regulations, as well as our own internal reviews to assess compliance with internal policies, including errors or misconduct by employees or third parties or control failures, have resulted in, and are likely to continue to result in, changes to our products, practices and procedures, restitution to our customers and increased costs related to regulatory oversight, supervision and examination. We have also been subject to regulatory actions and may continue to be the subject of such actions, including governmental inquiries, investigations, enforcement proceedings and the imposition of fines or civil money penalties, in the event of noncompliance or alleged noncompliance with laws or regulations. External publicity concerning investigations can increase the scope and scale of those investigations and lead to further regulatory inquiries.
For example, as previously disclosed, beginning in May 2020 we began responding to a regulatory review led by the Office of the Comptroller of the Currency and the Department of Justice Civil Division regarding historical sales practices relating to certain small business card sales. In January 2021, we received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York regarding the sales practices for small business cards and a Civil Investigative Demand from the Consumer Financial Protection Bureau (CFPB) seeking information on sales practices related to consumers. We are cooperating with all inquiries into our sales practices and related compliance practices. We continue to review and enhance our processes and controls related to our sales practices and business conduct generally, take disciplinary and remedial actions where appropriate, and provide information regarding our reviews to our regulators, including the Federal Reserve. We do not believe these matters will have a material adverse impact on our business or results of operations.
Please see the “Supervision and Regulation” and “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2021 (the 2021 Form 10-K) for further information.
Consumer Financial Products Regulation
In the United States, our marketing, sale and servicing of consumer financial products and our compliance with certain federal consumer financial laws are supervised and examined by the CFPB, which has broad rulemaking and enforcement authority over providers of credit, savings and payment services and products and authority to prevent “unfair, deceptive or abusive” acts or practices. In addition, a number of U.S. states have significant consumer credit protection, disclosure and other laws (in certain cases more stringent than U.S. federal laws). U.S. federal law also regulates abusive debt collection practices, which along with bankruptcy and debtor relief laws, can affect our ability to collect amounts owed to us or subject us to regulatory scrutiny. Other jurisdictions around the world are increasingly focusing on consumer financial protection.
For more information on consumer financial products regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2021 Form 10-K.
Payments Regulation
Legislators and regulators in various countries in which we operate have focused on the operation of card networks, including through enforcement actions, legislation and regulations to change certain practices or pricing of card issuers, merchant acquirers and payment networks, and, in some cases, to establish broad and ongoing regulatory oversight regimes for payment systems.
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The European Union, Australia, Canada and other jurisdictions have focused on interchange fees (that is, the fee paid by the bankcard merchant acquirer to the card issuer in payment networks like Visa and Mastercard), as well as the rules, contract terms and practices governing merchant card acceptance. Regulation and other governmental actions relating to pricing or practices could affect all networks directly or indirectly, as well as adversely impact consumers and merchants. Among other things, regulation of bankcard fees has negatively impacted, and may continue to negatively impact, the discount revenue we earn, including as a result of downward pressure on our merchant discount rates from decreases in competitor pricing in connection with caps on interchange fees. In some cases, regulations also extend to certain aspects of our business, such as network and cobrand arrangements or the terms of card acceptance for merchants. There is uncertainty as to when or how interchange fee caps and other provisions of the EU and U.K. payments legislation might apply when we work with cobrand partners and agents in the EU and the U.K. Given differing interpretations by regulators and participants in cobrand arrangements, we are subject to regulatory action, penalties and the possibility we will not be able to maintain our existing cobrand and agent relationships in the EU or the U.K.
Broad regulatory oversight over payment systems can also include, in some cases, requirements for international card networks to localize aspects of their operations, such as processing infrastructure and data storage, which increases our costs and could diminish the value of our closed loop. The development and enforcement of payment system regulatory regimes generally continue to grow and may adversely affect our ability to compete effectively and maintain and extend our global network. On August 24, 2022, the Reserve Bank of India lifted the restrictions it imposed on American Express Banking Corp.'s ability to onboard new customers as a result of local investments in technology, infrastructure and resources to comply with a regulation requiring storage of payment transaction data exclusively in India.
For more information on payments regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2021 Form 10-K.
Surcharging
In various countries, such as certain Member States in the EU and Australia, merchants are permitted by law to surcharge card purchases. In addition, the laws of a number of states in the United States that prohibit surcharging have been overturned and certain states have passed or are considering laws to permit surcharging by merchants. Effective October 6, 2022, merchants in Canada (other than in Quebec) are now permitted to surcharge card purchases up to a maximum of 2.4 percent as a result of a litigation settlement with Visa and Mastercard. Surcharging is an adverse customer experience and could have a material adverse effect on us, particularly where it only or disproportionately impacts credit card usage or card usage generally, our Card Members or our business. In addition, other steering or differential acceptance practices that are permitted by regulation in some jurisdictions could also have a material adverse effect on us.
For more information on the potential impacts of surcharging and other actions that could impair the Card Member experience, please see the “Risk Factors” section of the 2021 Form 10-K.
Merchant Litigation
We continue to vigorously defend antitrust and other claims initiated by merchants. See Note 7 to the “Consolidated Financial Statements” for descriptions of the cases. It is possible that actions impairing the Card Member experience, or the resolution of one or any combination of these merchant claims, could have a material adverse effect on our business. For more information on the potential impacts of an adverse decision in the merchant litigations on our business, please see the “Risk Factors” section of the 2021 Form 10-K.
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Privacy, Data Protection, Data Governance, Information and Cyber Security
Regulatory and legislative activity in the areas of privacy, data protection, data governance, resiliency and information and cyber security continues to increase worldwide. We have established, and continue to maintain, policies and a governance framework to comply with applicable laws, meet evolving customer and industry expectations and support and enable business innovation and growth. Global financial institutions like us, as well as our customers, employees, regulators, service providers and other third parties, have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyberattacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing, impersonation and identity takeover attempts), corporate espionage, hacking, website defacement, denial-of-service attacks, exploitation of vulnerabilities and other attacks and similar disruptions from the misconfiguration or unauthorized use of or access to computer systems. For more information on privacy, data protection and information and cyber security regulation and the potential impacts of a major information or cyber security incident on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2021 Form 10-K.
Anti-Money Laundering
We are subject to significant supervision and regulation, and an increasingly stringent enforcement environment, with respect to compliance with anti-money laundering (AML) laws and regulations. In the United States, the majority of AML requirements are derived from the Currency and Foreign Transactions Reporting Act and the accompanying regulations issued by the U.S. Department of the Treasury (collectively referred to as the Bank Secrecy Act), as amended by the USA PATRIOT Act of 2001. The Anti-Money Laundering Act of 2020 (the AMLA), enacted in January 2021, amended the Bank Secrecy Act and is intended to comprehensively reform and modernize U.S. AML laws. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, the effects of which are not known at this time. In Europe, AML requirements are largely the result of countries transposing the 5th and 6th EU Anti-Money Laundering Directives (and preceding EU Anti-Money Laundering Directives) into local laws and regulations. Numerous other countries have also enacted or proposed new or enhanced AML legislation and regulations applicable to American Express.
Among other things, these laws and regulations require us to establish AML programs that meet certain standards, including, in some instances, expanded reporting, particularly in the area of suspicious transactions, and enhanced information gathering and recordkeeping requirements. Our AML programs have become the subject of heightened scrutiny in some countries, including certain member states in the EU. Any errors, failures or delays in complying with AML and counter-terrorist financing laws, perceived deficiencies in our AML programs or association of our business with money laundering, terrorist financing, tax fraud or other illicit activity can give rise to significant supervisory, criminal and civil proceedings and lawsuits, which could result in significant penalties and forfeiture of assets, loss of licenses or restrictions on business activities, or other enforcement actions. For more information on AML regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2021 Form 10-K.
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Environmental, Social and Governance (ESG) Matters
On August 4, 2022, we published our 2021-2022 ESG Report, which includes our ESG strategy and objectives in three areas: Promoting Diversity, Equity and Inclusion (DE&I); Advancing Climate Solutions; and Building Financial Confidence. The Report follows the Global Reporting Initiative, Sustainability Accounting Standards Board and Task Force on Climate-related Financial Disclosures (TCFD) reporting guidelines, including the results of a qualitative climate-related risk assessment. Potential physical risks related to climate change identified in the TCFD index include severe weather conditions across some of our critical sites. Potential transition risks and opportunities identified in the TCFD index relate to current and emerging regulations, shifting consumer preferences, reputational risks, increased operating costs, impacts to travel patterns and geographic or location-based risks. We continue to identify and assess climate-related risks and opportunities, as well as pursue initiatives to promote DE&I and build financial resilience for our colleagues, customers and communities.
Other Developments
As part of an internal review, we identified that over time certain current and former U.S. Card Members with multiple cards were not credited certain Membership Rewards points that they had earned. This review is expected to be completed by the end of 2022. We currently expect that this review will likely lead to an increase in the liability for Membership Rewards, with a corresponding increase in Card Member rewards expenses, and could result in customer remediation costs. The amount of the increase in the liability, expenses and remediation costs has not yet been determined, but we do not believe it will have a material adverse impact on our results of operations or financial condition.
Recently Issued Accounting Standards
Refer to the Recently Issued Accounting Standards section of Note 1 to the “Consolidated Financial Statements.”
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Glossary of Selected Terminology
Adjusted net interest income — A non-GAAP measure that represents net interest income attributable to our Card Member loans (which includes, on a GAAP basis, interest that is deemed uncollectible), excluding the impact of interest expense and interest income not attributable to our Card Member loans.
Airline-related volume — Represents spend at airlines as a merchant, which is included within T&E-related volume.
Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as asset-backed securities that are secured by the transferred loans and receivables. The trust uses the proceeds from the sale of such securities to pay the purchase price for the transferred loans or receivables. The securitized loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) are reported as assets and the securities issued by the Trusts are reported as liabilities on our Consolidated Balance Sheets.
Average discount rate — This calculation is generally designed to reflect the average pricing at all merchants accepting American Express cards and represents the percentage of network volumes retained by us from spend at merchants we acquire, or from merchants acquired by third parties on our behalf, net of amounts retained by such third parties. The average discount rate, together with billed business, drive our discount revenue.
Billed business (Card Member spending) — Represents transaction volumes (including cash advances) on payment products issued by American Express.
Capital ratios — Represents the minimum standards established by regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates. Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related definitions under Basel III.
Card Member — The individual holder of an issued American Express-branded card.
Card Member loans — Represents revolve-eligible transactions on our card products, as well as any interest charges and associated card-related fees.
Card Member receivables — Represents transactions on our card products and card related fees that need to be paid in full on or before the Card Member's payment due date.
Cards-in-force — Represents the number of cards that are issued and outstanding by American Express (proprietary cards-in-force) and cards issued and outstanding under network partnership agreements with banks and other institutions, except for retail cobrand cards issued by network partners that had no out-of-store spending activity during the prior twelve months. Basic cards-in-force excludes supplemental cards issued on consumer accounts. Cards-in-force is useful in understanding the size of our Card Member base.
Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Each charge card transaction is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns. Charge Card Members must pay the full amount of balances billed each month, with the exception of balances that can be revolved under lending features offered on certain charge cards, such as Pay Over Time and Plan It, that allow Card Members to pay for eligible purchases with interest over time.
Cobrand cards — Cards issued under cobrand agreements with selected commercial partners. Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. The partner is then liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program.
Credit cards — Represents cards that have a range of revolving payment terms, structured payment features (e.g. Plan It), grace periods, and rate and fee structures.
Discount revenue — Represents the proportion of billed business earned and retained by us for facilitating transactions between Card Members and merchants on payment products issued by American Express.
Goods and Services (G&S)-related volume — Includes spend in merchant categories other than T&E-related merchant categories, which includes B2B spending by small and mid-sized enterprise customers in our CS and ICS segments.
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Interest expense — Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term financing and short-term borrowings, (e.g., commercial paper, federal funds purchased, bank overdrafts and other short-term borrowings), as well as the realized impact of derivatives hedging interest rate risk on our long-term debt.
Interest income — Includes (i) interest on loans, (ii) interest and dividends on investment securities and (iii) interest income on deposits with banks and other.
Interest on loans — Assessed using the average daily balance method for Card Member loans. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or written off.
Interest and dividends on investment securities — Primarily relates to our performing fixed-income securities. Interest income is recognized using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so a constant rate of return is recognized on the outstanding balance of the related investment security throughout its term. Amounts are recognized until securities are in default or when it is likely that future interest payments will not be made as scheduled.
Interest income on deposits with banks and other — Primarily relates to the placement of cash in excess of near-term funding requirements in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.
Loyalty coalitions — Programs that enable consumers to earn rewards points and use them to save on purchases from a variety of participating merchants through multi-category rewards platforms. Merchants in these programs generally fund the consumer offers and are responsible to us for the cost of rewards points; we earn revenue from operating the loyalty platform and by providing marketing support.
Net card fees — Represents the card membership fees earned during the period recognized as revenue over the covered card membership period (typically one year), net of the provision for projected refunds for Card Membership cancellation and deferred acquisition costs.
Net interest yield on average Card Member loans — A non-GAAP measure that is computed by dividing adjusted net interest income by average Card Member loans, computed on an annualized basis. Reserves and net write-offs related to uncollectible interest are recorded through provision for credit losses and are thus not included in the net interest yield calculation.
Net write-off rate — principal only — Represents the amount of proprietary consumer or small business Card Member loans or receivables written off, consisting of principal (resulting from authorized transactions), less recoveries, as a percentage of the average loan or receivable balance during the period.
Net write-off rate — principal, interest and fees — Includes, in the calculation of the net write-off rate, amounts for interest and fees in addition to principal for Card Member loans, and fees in addition to principal for Card Member receivables.
Network volumes — Represents the total of billed business and processed volumes.
Operating expenses — Represents salaries and employee benefits, professional services, data processing and equipment, and other expenses.
Processed revenue — Represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners. Processed revenue also includes fees earned on alternative payment solutions facilitated by American Express.
Processed volumes — Represents transaction volumes (including cash advances) on cards issued under network partnership agreements with banks and other institutions, including joint ventures, as well as alternative payment solutions facilitated by American Express.
Reserve build (release) — Represents the portion of the provisions for credit losses for the period related to increasing or decreasing reserves for credit losses as a result of, among other things, changes in volumes, macroeconomic outlook, portfolio composition and credit quality of portfolios. Reserve build represents the amount by which the provision for credit losses exceeds net write-offs, while reserve release represents the amount by which net write-offs exceed the provision for credit losses.
T&E-related volume — Represents spend on travel and entertainment, which primarily includes airline, cruise, lodging and dining merchant categories.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address our current expectations regarding business and financial performance, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “predict,” “potential,” “continue” 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. We undertake 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:
•our ability to grow earnings per share in the future, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations and our ability to continue investing at high levels in areas that can drive sustainable growth (including our brand, value propositions, customers, colleagues, technology and coverage), controlling operating expenses, effectively managing risk and executing our share repurchase program, any of which could be impacted by, among other things, the factors identified in the subsequent paragraphs as well as the following: macroeconomic conditions, such as recession risks, effects of inflation, labor shortages, supply chain issues, higher interest rates and energy costs and the continued effects of the pandemic; the military conflict between Russia and Ukraine and related geopolitical impacts; issues impacting brand perceptions and our reputation; the impact of any future contingencies, including, but not limited to, restructurings, investment gains or losses, impairments, changes in reserves, legal costs and settlements, the imposition of fines or civil money penalties and increases in Card Member remediation; impacts related to new or renegotiated cobrand and other partner agreements; and the impact of regulation and litigation, which could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with Card Members, partners and merchants;
•our ability to grow revenues net of interest expense, which could be impacted by, among other things, the factors identified above and in the subsequent paragraphs, as well as the following: a deterioration in macroeconomic conditions; consumer and business spending, including in T&E categories and by large and global corporate clients, not growing in line with expectations; the strengthening of the U.S. dollar beyond expectations; an inability to address competitive pressures, invest with a longer-term view and implement strategies and business initiatives, including within the premium consumer space, commercial payments, the global merchant network and digital environment; uncertainty regarding the continued spread of COVID-19 (including new variants) and the availability, distribution and use of effective treatments and vaccines; prolonged measures to contain the spread of COVID-19 (including travel restrictions), concern of the possible imposition of further containment measures and health concerns associated with the pandemic continuing to affect customer behaviors and travel patterns and demand, any of which could further exacerbate the effects on economic activity and travel-related revenues; and merchant discount rates changing by a greater or lesser amount than expected;
•net card fees not performing consistently with expectations, which could be impacted by, among other things, a deterioration in macroeconomic conditions impacting the ability and desire of Card Members to pay card fees; higher Card Member attrition rates; the pace of Card Member acquisition activity; and our inability to address competitive pressures, develop attractive value propositions and implement our strategy of refreshing card products and enhancing benefits and services;
•net interest income and the growth rate of loans outstanding being higher or lower than expectations, which could be impacted by, among other things, the behavior of Card Members and their actual spending, borrowing and paydown patterns; our ability to effectively manage risk and enhance Card Member value propositions; changes in benchmark interest rates; changes in capital and credit market conditions and the availability and cost of capital; credit actions, including line size and other adjustments to credit availability; the yield on Card Member loans not remaining consistent with current expectations; and the effectiveness of our strategies to capture a greater share of existing Card Members’ spending and borrowings, and attract new, and retain existing, customers;
•future credit performance, the level of future delinquency and write-off rates and the amount and timing of future reserve builds and releases, which will depend in part on changes in consumer behavior that affect loan and receivable balances (such as paydown and revolve rates); macroeconomic factors such as unemployment rates, GDP and the volume of bankruptcies; the ability and willingness of Card Members to pay amounts owed to us, particularly as forbearance and government support programs end; the enrollment in, and effectiveness of, financial relief programs and the performance of accounts as they exit from such programs; collections capabilities and recoveries of previously written-off loans and receivables; and governmental actions that provide forms of relief with respect to certain loans and fees, such as limiting debt collections efforts and encouraging or requiring extensions, modifications or forbearance;
•the actual amount we spend on marketing in the future, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance; management’s identification and assessment of attractive investment opportunities and the receptivity of Card Members and prospective customers to advertising
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and customer acquisition initiatives; our ability to balance expense control and investments in the business; and management’s ability to drive increases in revenues and realize efficiencies and optimize investment spending;
•the actual amount to be spent on Card Member rewards and services and business development, and the relationship of these variable customer engagement costs to revenues, which could be impacted by continued changes in macroeconomic conditions and Card Member behavior as it relates to their spending patterns (including the level of spend in bonus categories), the redemption of rewards and offers (including travel redemptions) and usage of travel-related benefits; the costs related to reward point redemptions; higher-than-expected customer remediation expenses; inflation; further enhancements to product benefits to make them attractive to Card Members and prospective customers, potentially in a manner that is not cost-effective; new and renegotiated contractual obligations with business partners; and the pace and cost of the expansion of our global lounge collection;
•our ability to control operating expenses and the actual amount we spend on operating expenses in the future, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent, including with respect to an increased colleague headcount; a persistent inflationary environment; management’s decision to increase or decrease spending in such areas as technology, business and product development, sales force, premium servicing and digital capabilities depending on overall business performance; our ability to innovate efficient channels of customer interactions and the willingness of Card Members to self-service and address issues through digital channels; our ability to increase automation; restructuring activity; supply chain issues; fraud costs; information security or compliance expenses or consulting, legal and other professional services fees, including as a result of litigation or internal and regulatory reviews; the level of M&A activity and related expenses; information or cyber security incidents; the payment of civil money penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements; the performance of Amex Ventures investments; impairments of goodwill or other assets; and the impact of changes in foreign currency exchange rates on costs;
•our tax rate not remaining consistent with current levels, which could be impacted by, among other things, further changes in tax laws and regulation, our geographic mix of income, unfavorable tax audits and other unanticipated tax items;
•changes affecting our plans regarding the return of capital to shareholders, which will depend on factors such as capital levels and regulatory capital ratios; changes in the stress testing and capital planning process and new guidance from the Federal Reserve; our results of operations and financial condition; our credit ratings and rating agency considerations; and the economic environment and market conditions in any given period;
•changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may materially impact the prices charged to merchants that accept American Express cards, the desirability of our premium card products, competition for new and existing cobrand relationships, competition from new and non-traditional competitors and the success of marketing, promotion and rewards programs;
•our ability to expand our leadership in the premium consumer space, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and our ability to develop and market new benefits and value propositions that appeal to Card Members and new customers, offer attractive services and rewards programs and build greater customer loyalty, which will depend in part on identifying and funding investment opportunities, addressing changing customer behaviors, new product innovation and development, Card Member acquisition efforts and enrollment processes, including through digital channels, continuing to realize the benefits from strategic partnerships, and evolving infrastructure to support new products, services and benefits;
•our ability to build on our leadership in commercial payments, which will depend in part on competition, the willingness and ability of companies to credit and charge cards for procurement and other business expenditures as well as use our other products and services for financing needs, perceived or actual difficulties and costs related to setting up card-based B2B payment platforms, our ability to offer attractive value propositions and new products to potential customers, our ability to enhance and expand our payment and lending solutions, and build out a multi-product digital ecosystem to integrate our broad product set, which is dependent on our continued investment in capabilities, features, functionalities, platforms and technologies;
•our ability to expand merchant coverage globally and our success, as well as the success of OptBlue merchant acquirers and network partners, in signing merchants to accept American Express, which will depend on, among other factors, the value propositions offered to merchants and merchant acquirers for card acceptance, the awareness and willingness of Card Members to use American Express cards at merchants, scaling marketing and expanding programs to increase card usage, identifying new-to-plastic industries and businesses as they form, working with commercial buyers and suppliers to establish B2B acceptance, increasing coverage in priority international cities and countries and key industry verticals, and executing on our plans in China and for continued technological developments, including capabilities that allow for greater digital integration and modernization of our authorization platform;
•our ability to stay on the leading edge of technology and digital payment and travel solutions, which will depend in part on our success in evolving our products and processes for the digital environment, developing new features in the Amex app and enhancing our digital channels, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and increasing automation to address servicing and other customer needs, and supporting the use of our products as a means of payment through online and mobile channels, all of which will be impacted by investment levels, new product innovation and development and infrastructure to support new products, services, benefits and partner integrations;
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•our ability to grow internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access, favoring local competitors or prohibiting or limiting foreign ownership of certain businesses; the success of our network partners in acquiring Card Members and/or merchants; political or economic instability or regional hostilities, including as a result of Russia’s invasion of Ukraine and related geopolitical impacts, which could affect commercial activities; our ability to tailor products and services to make them attractive to local customers; and competitors with more scale and experience and more established relationships with relevant customers, regulators and industry participants;
•a failure in or breach of our operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyberattacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt our operations, reduce the use and acceptance of American Express cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm;
•changes in capital and credit market conditions, which may significantly affect our ability to meet our liquidity needs and expectations regarding capital ratios; our access to capital and funding costs; the valuation of our assets; and our credit ratings or those of our subsidiaries;
•our funding plan being implemented in a manner inconsistent with current expectations, which will depend on various factors such as future business growth, the impact of global economic, political and other events on market capacity, demand for securities we offer, regulatory changes, ability to securitize and sell loans and receivables and the performance of loans and receivables previously sold in securitization transactions;
•our ability to implement our ESG strategies and initiatives, which depend in part on the amount and efficacy of our investments in product innovations, marketing campaigns, our supply chain and operations, and philanthropic, colleague and community programs; customer behaviors; and the cost and availability of solutions for a low carbon economy;
•legal and regulatory developments, which could affect the profitability of our business activities; limit our ability to pursue business opportunities or conduct business in certain jurisdictions; require changes to business practices or alter our relationships with Card Members, partners, merchants and other third parties, including our ability to continue certain cobrand relationships in the EU and UK; exert further pressure on the merchant discount rates and our network business; result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or civil money penalties; materially affect capital or liquidity requirements, results of operations or ability to pay dividends; or result in harm to the American Express brand;
•changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including of cobrand partners and merchants that represent a significant portion of our business, such as the airline industry, network partners or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations; and
•factors beyond our control such as a further escalation of the military conflict between Russia and Ukraine, future waves of COVID-19 cases, the severity and contagiousness of new variants, severe weather conditions, natural disasters, power loss, disruptions in telecommunications, terrorism and other catastrophic events, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.
A further description of these uncertainties and other risks can be found in the 2021 Form 10-K, the Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2022, and other reports filed with the Securities and Exchange Commission.
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ITEM 1. FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30 (Millions, except per share amounts)20222021
Revenues
Non-interest revenues
Discount revenue$7,848 $6,369 
Net card fees1,541 1,312 
Service fees and other revenue1,169 839 
Processed revenue420 414 
Total non-interest revenues10,978 8,934 
Interest income
Interest on loans3,164 2,256 
Interest and dividends on investment securities27 18 
Deposits with banks and other183 27 
Total interest income3,374 2,301 
Interest expense
Deposits440 109 
Long-term debt and other356 198 
Total interest expense796 307 
Net interest income2,578 1,994 
Total revenues net of interest expense13,556 10,928 
Provisions for credit losses
Card Member receivables165 (12)
Card Member loans596 (177)
Other17 (2)
Total provisions for credit losses778 (191)
Total revenues net of interest expense after provisions for credit losses12,778 11,119 
Expenses
Card Member rewards3,571 3,020 
Business development1,194 943 
Card Member services774 579 
Marketing1,458 1,412 
Salaries and employee benefits1,748 1,497 
Other, net1,574 1,218 
Total expenses10,319 8,669 
Pretax income2,459 2,450 
Income tax provision580 624 
Net income$1,879 $1,826 
Earnings per Common Share (Note 14)(a)
Basic$2.47 $2.27 
Diluted$2.47 $2.27 
Average common shares outstanding for earnings per common share:
Basic748 786 
Diluted749 787 
(a)Represents net income less (i) earnings allocated to participating share awards of $14 million for both the three months ended September 30, 2022 and 2021, (ii) dividends on preferred shares of $14 million and $20 million for the three months ended September 30, 2022 and 2021, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for the three months ended September 30, 2021.
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30 (Millions, except per share amounts)20222021
Revenues
Non-interest revenues
Discount revenue$22,556 $17,414 
Net card fees4,445 3,851 
Service fees and other revenue3,340 2,182 
Processed revenue1,208 1,146 
Total non-interest revenues31,549 24,593 
Interest income
Interest on loans8,344 6,494 
Interest and dividends on investment securities62 66 
Deposits with banks and other287 73 
Total interest income8,693 6,633 
Interest expense
Deposits749 356 
Long-term debt and other807 635 
Total interest expense1,556 991 
Net interest income7,137 5,642 
Total revenues net of interest expense38,686 30,235 
Provisions for credit losses
Card Member receivables383 (147)
Card Member loans757 (1,146)
Other15 (179)
Total provisions for credit losses1,155 (1,472)
Total revenues net of interest expense after provisions for credit losses37,531 31,707 
Expenses
Card Member rewards10,273 7,975 
Business development3,641 2,634 
Card Member services2,078 1,328 
Marketing4,184 3,706 
Salaries and employee benefits5,218 4,586 
Other, net4,423 3,095 
Total expenses29,817 23,324 
Pretax income7,714 8,383 
Income tax provision1,772 2,042 
Net income$5,942 $6,341 
Earnings per Common Share (Note 14)(a)
Basic$7.78 $7.84 
Diluted$7.77 $7.82 
Average common shares outstanding for earnings per common share:
Basic752 796 
Diluted753 797 
(a)Represents net income less (i) earnings allocated to participating share awards of $45 million for both the nine months ended September 30, 2022 and 2021, (ii) dividends on preferred shares of $43 million and $49 million for the nine months ended September 30, 2022 and 2021, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for the nine months ended September 30, 2021.
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions)2022202120222021
Net income$1,879 $1,826 $5,942 $6,341 
Other comprehensive income (loss):
Net unrealized debt securities (losses) gains, net of tax(39)(8)(92)(31)
Foreign currency translation adjustments, net of hedges and tax(200)(83)(377)(81)
Net unrealized pension and other postretirement benefits, net of tax5 9 37 44 
Other comprehensive income (loss)(234)(82)(432)(68)
Comprehensive income$1,645 $1,744 $5,510 $6,273 
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions, except share data)September 30,
2022		December 31,
2021
Assets
Cash and cash equivalents
Cash and due from banks (includes restricted cash of consolidated variable interest entities: 2022, $4; 2021, $11)
$3,012 $1,292 
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2022, $293; 2021, $463)
27,167 20,548 
Short-term investment securities (includes restricted investments of consolidated variable interest entities: 2022, $903; 2021, $32)
1,003 188 
Total cash and cash equivalents31,182 22,028 
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2022, $5,849; 2021, $5,175), less reserves for credit losses: 2022, $159; 2021, $64
55,116 53,581 
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2022, $26,713; 2021, $26,587), less reserves for credit losses: 2022, $3,319; 2021, $3,305
95,719 85,257 
Other loans, less reserves for credit losses: 2022, $46; 2021, $52
4,797 2,859 
Investment securities4,539 2,591 
Premises and equipment, less accumulated depreciation and amortization: 2022, $9,519; 2021, $8,602
5,095 4,988 
Other assets, less reserves for credit losses: 2022, $22; 2021, $25
18,467 17,244 
Total assets$214,915 $188,548 
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits$103,463 $84,382 
Accounts payable11,021 10,574 
Short-term borrowings1,515 2,243 
Long-term debt (includes debt issued by consolidated variable interest entities: 2022, $12,444; 2021, $13,803)
42,393 38,675 
Other liabilities32,583 30,497 
Total liabilities$190,975 $166,371 
Contingencies (Note 7)
Shareholders’ Equity
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of September 30, 2022 and December 31, 2021
— — 
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 747 million shares as of September 30, 2022 and 761 million shares as of December 31, 2021
150 153 
Additional paid-in capital11,482 11,495 
Retained earnings
15,685 13,474 
Accumulated other comprehensive income (loss)(3,377)(2,945)
Total shareholders’ equity23,940 22,177 
Total liabilities and shareholders’ equity$214,915 $188,548 
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30 (Millions)
20222021
Cash Flows from Operating Activities
Net income$5,942 $6,341 
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses1,155 (1,472)
Depreciation and amortization1,208 1,276 
Stock-based compensation282 256 
Deferred taxes(749)153 
Other non-cash items (a)
535 (599)
Originations of loans held-for-sale(185)— 
Proceeds from sales of loans held-for-sale180 — 
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
     Other assets409 863 
     Accounts payable & other liabilities3,870 2,819 
Net cash provided by operating activities12,647 9,637 
Cash Flows from Investing Activities
Sale of investment securities25 37 
Maturities and redemptions of investment securities1,738 12,803 
Purchase of investments(3,890)(1,179)
Net increase in Card Member loans and receivables, and other loans(19,431)(9,790)
Purchase of premises and equipment, net of sales: 2022, $1; 2021, $41
(1,342)(1,079)
Acquisitions/dispositions, net of cash acquired(15)1 
Net cash (used in) provided by investing activities(22,915)793 
Cash Flows from Financing Activities
Net increase (decrease) in customer deposits19,148 (2,534)
Net (decrease) increase in short-term borrowings(438)428 
Proceeds from long-term debt20,740 38 
Payments of long-term debt(16,549)(8,247)
Issuance of American Express preferred shares— 1,584 
Redemption of American Express preferred shares— (850)
Issuance of American Express common shares54 54 
Repurchase of American Express common shares and other(2,862)(4,681)
Dividends paid(1,160)(1,090)
Net cash provided by (used in) financing activities18,933 (15,298)
Effect of foreign currency exchange rates on cash and cash equivalents489 (181)
Net increase (decrease) in cash and cash equivalents9,154 (5,049)
Cash and cash equivalents at beginning of period22,028 32,965 
Cash and cash equivalents at end of period$31,182 $27,916 
Supplemental cash flow information
Cash and cash equivalents reconciliationSep-22Dec-21Sep-21Dec-20
Cash and cash equivalents per Consolidated Balance Sheets$31,182 $22,028 $27,916 $32,965 
Restricted balances included in Cash and cash equivalents1,360 525 475 606 
Total Cash and cash equivalents, excluding restricted balances$29,822 $21,503 $27,441 $32,359 
(a)Includes net gains and losses on fair value hedges, changes in equity method investments and net gains and losses on Amex Ventures investments.
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
Three months ended September 30, 2022 (Millions, except per share amounts)TotalPreferred
Shares		Common
Shares		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Retained
Earnings
Balances as of June 30, 2022$23,235 $— $151 $11,476 $(3,143)$14,751 
Net income1,879 — — — — 1,879 
Other comprehensive loss(234)— — — (234)— 
Repurchase of common shares(600)— (1)(61)— (538)
Other changes, primarily employee plans65 — — 67 — (2)
Cash dividends declared preferred Series D, $9,072.22 per share
(14)— — — — (14)
Cash dividends declared common, $0.52 per share
(391)— — — — (391)
Balances as of September 30, 2022$23,940 $— $150 $11,482 $(3,377)$15,685 
Nine months ended September 30, 2022 (Millions, except per share amounts) TotalPreferred SharesCommon SharesAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings
Balances as of December 31, 2021$22,177 $— $153 $11,495 $(2,945)$13,474 
Net income5,942 — — — — 5,942 
Other comprehensive loss(432)— — — (432)— 
Repurchase of common shares(2,694)— (3)(240)— (2,451)
Other changes, primarily employee plans168 — — 227 — (59)
Cash dividends declared preferred Series D, $27,019.44 per share
(43)— — — — (43)
Cash dividends declared common, $1.56 per share
(1,178)— — — — (1,178)
Balances as of September 30, 2022$23,940 $— $150 $11,482 $(3,377)$15,685 
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
Three months ended September 30, 2021 (Millions, except per share amounts) TotalPreferred SharesCommon SharesAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings
Balances as of June 30, 2021$25,539 $— $160 $11,858 $(2,881)$16,402 
Net income1,826 — — — — 1,826 
Other comprehensive loss(82)— — — (82)— 
Preferred shares issued1,584 — — 1,584 — — 
Redemption of preferred shares(850)— — (841)— (9)
Repurchase of common shares(3,300)— (4)(266)— (3,030)
Other changes, primarily employee plans66 — — 66 — — 
Cash dividends declared preferred Series B, $9,059.25 per share
(7)— — — — (7)
Cash dividends declared preferred Series C, $8,698.80 per share
(7)— — — — (7)
Cash dividends declared preferred Series D, $4,240.28 per share
(6)— — — — (6)
Cash dividends declared common, $0.43 per share
(337)— — — — (337)
Balances as of September 30, 2021$24,426 $— $156 $12,401 $(2,963)$14,832 
Nine months ended September 30, 2021 (Millions, except per share amounts) TotalPreferred SharesCommon SharesAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings
Balances as of December 31, 2020$22,984 $— $161 $11,881 $(2,895)$13,837 
Net income6,341 — — — — 6,341 
Other comprehensive loss(68)— — — (68)— 
Preferred shares issued1,584 — — 1,584 — — 
Redemption of preferred shares(850)— — (841)— (9)
Repurchase of common shares(4,646)— (6)(400)— (4,240)
Other changes, primarily employee plans160 — 1 177 — (18)
Cash dividends declared preferred Series B, $27,438.85 per share
(21)— — — — (21)
Cash dividends declared preferred Series C, $26,317.47 per share
(22)— — — — (22)
Cash dividends declared preferred Series D, $4,240.28 per share
(6)— — — — (6)
Cash dividends declared common, $1.29 per share
(1,030)— — — — (1,030)
Balances as of September 30, 2021$24,426 $— $156 $12,401 $(2,963)$14,832 
See Notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation
The Company
We are a globally integrated payments company that provides our customers with access to products, insights and experiences that enrich lives and build business success. Our principal products and services are credit and charge card products, along with travel and lifestyle related services, offered to consumers and businesses around the world. Our various products and services are offered globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams and direct response advertising.
The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the 2021 Form 10-K). If not materially different, certain note disclosures included therein have been omitted from these Consolidated Financial Statements.
The interim Consolidated Financial Statements included in this report have not been audited. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim Consolidated Financial Statements, have been made. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates reflect the best judgment of management, but actual results could differ.
Effective for the first quarter of 2022, we made the following reporting presentation changes to our Consolidated Statements of Income:
Within Non-interest revenues:
•Processed revenue represents revenues earned from processed volumes, previously reported in Discount revenue, Other fees and commissions and Other revenue.
•Service fees and other revenue combines the remaining balances from Other fees and commissions and Other revenue.
Within Total expenses:
•Disaggregated Marketing and business development expense into Business Development expense and Marketing expense.
Prior period amounts have been recast to conform with current period presentation; there was no impact to Total non-interest revenues or Total expenses.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Effective for the third quarter of 2022, we realigned our reportable segments to reflect organizational changes announced during the second quarter of 2022. Prior periods have been recast to conform to the new reportable operating segments, which are as follows:
•U.S. Consumer Services (USCS), which issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products.
•Commercial Services (CS), which issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.
•International Card Services (ICS), which issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.
•Global Merchant and Network Services (GMNS), which operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.
Corporate functions and certain other businesses and operations are included in Corporate & Other.
The significant Consolidated Statements of Income accounting policies below provides updates to the significant accounting policy disclosures as presented in the 2021 Form 10-K to reflect the reporting presentation changes.
Discount Revenue
Discount revenue represents the amount we earn and retain from the merchant payable for facilitating transactions on payment products issued by American Express. The amount of fees charged for accepting our cards as payment, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount. Discount revenue is generally recorded at the time the Card Member transaction occurs.
Card acceptance agreements, which include the agreed-upon terms for charging the merchant discount fee, vary in duration. Our contracts with small- and mid-sized merchants generally have no fixed contractual duration, while those with large merchants are generally for fixed periods, which typically range from three to seven years in duration. Our fixed-period agreements may include auto-renewal features, which may allow the existing terms to continue beyond the stated expiration date until a new agreement is reached. We satisfy our obligations under these agreements over the contract term, often on a daily basis, including through the processing of Card Member transactions and the availability of our payment network.
In cases where the merchant acquirer is a third party (which is the case, for example, under our OptBlue program, or with certain of our network partners), we receive a network rate fee in our settlement with the merchant acquirer, which is individually negotiated between us and that merchant acquirer and is recorded as discount revenue at the time the Card Member transaction occurs.
Service Fees and Other Revenue
Service fees and other revenue includes service fees earned from merchants and other customers and travel commissions and fees, which are generally recognized in the period when the service is performed, and delinquency and foreign currency-related fees, which are primarily recognized in the period when they are charged to the Card Member. In addition, Service fees and other revenue includes income (losses) from our investments in which we have significant influence and therefore account for under the equity method.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Processed Revenue
Processed revenue primarily represents amounts earned for facilitating transactions on cards issued by network partners. In our role as the operator of the American Express network, we settle with merchants and our third-party merchant acquirers on behalf of our network card issuing partners. The amount of fees charged for accepting American Express-branded cards are generally deducted from the payment to the merchant or third-party merchant acquirer and recorded as Processed revenue at the time the Card Member transaction occurs. Our network card issuing partners receive an issuer rate that is individually negotiated between that issuer and us and is recorded as contra-revenue within Processed revenue to the extent that there is revenue from the same customer, after which any additional issuer rate is recorded as expense in Business development. Processed revenue also includes other fees related to network partnership agreements and fees earned on alternative payment solutions, all of which are generally recognized when the service is performed.
Business Development
Business development expense includes payments to our cobrand partners, corporate client incentive payments earned on achievement of pre-set targets and certain payments to network partners. These costs are generally expensed as incurred.
Marketing
Marketing includes costs incurred in the development and initial placement of advertising, which are expensed in the period in which the advertising first takes place. All other marketing expenses are generally expensed as incurred.
Recently Issued Accounting Standards
In March 2022, the Financial Accounting Standards Board issued new accounting guidance on troubled debt restructuring (TDR) and write-offs, effective January 1, 2023, with early adoption permitted. The amendments eliminate the existing TDR guidance for those entities that have adopted Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, create a single loan modification accounting model and enhance disclosure requirements for loan modifications and write-offs. We anticipate that we will adopt the updated guidance on January 1, 2023 on a prospective basis and do not expect a material impact to our Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Loans and Card Member Receivables
Our lending and charge payment card products that we offer to consumer, small business and corporate customers result in the generation of Card Member loans and Card Member receivables. We also extend credit to customers through non-card financing products, resulting in Other loans.
Card Member and Other loans as of September 30, 2022 and December 31, 2021 consisted of:
(Millions)20222021
Consumer (a)
$76,966 $70,467 
Small Business22,018 18,040 
Corporate54 55 
Card Member loans99,038 88,562 
Less: Reserves for credit losses3,319 3,305 
Card Member loans, net$95,719 $85,257 
Other loans, net (b)
$4,797 $2,859 
(a)Includes approximately $26.7 billion and $26.6 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of September 30, 2022 and December 31, 2021, respectively.
(b)Other loans are presented net of reserves for credit losses of $46 million and $52 million as of September 30, 2022 and December 31, 2021, respectively.
Card Member receivables as of September 30, 2022 and December 31, 2021 consisted of:
(Millions)20222021
Consumer
$20,366 $22,392 
Small Business18,969 17,977 
Corporate (a)
15,940 13,276 
Card Member receivables55,275 53,645 
Less: Reserves for credit losses159 64 
Card Member receivables, net$55,116 $53,581 
(a)Includes $5.8 billion and $5.2 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of September 30, 2022 and December 31, 2021, respectively.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Card Member Loans and Receivables Aging
Generally, a Card Member account is considered past due if payment due is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of September 30, 2022 and December 31, 2021:
2022 (Millions)Current30-59
Days
Past Due		60-89
Days
Past Due		90+
Days
Past Due		Total
Card Member Loans:
Consumer$76,283 $229 $154 $300 $76,966 
Small Business21,857 61 38 62 22,018 
Corporate (a)
(b)(b)(b)— 54 
Card Member Receivables:
Consumer20,161 77 47 81 20,366 
Small Business$18,722 $103 $57 $87 $18,969 
Corporate (a)
(b)(b)(b)$98 $15,940 
2021 (Millions)Current30-59
Days
Past Due		60-89
Days
Past Due		90+
Days
Past Due		Total
Card Member Loans:
Consumer$69,960 $158 $112 $237 $70,467 
Small Business17,950 34 19 37 18,040 
Corporate (a)
(b)(b)(b)— 55 
Card Member Receivables:
Consumer22,279 41 24 48 22,392 
Small Business$17,846 $59 $28 $44 $17,977 
Corporate (a)
(b)(b)(b)$42 $13,276 
(a)For corporate accounts, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan or receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).
(b)Delinquency data for periods other than 90+ days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Credit Quality Indicators for Card Member Loans and Receivables
The following tables present the key credit quality indicators as of or for the nine months ended September 30:
20222021
Net Write-Off RateNet Write-Off Rate
Principal Only(a)
Principal, Interest & Fees(a)
30+ Days Past Due as a % of Total
Principal Only(a)
Principal, Interest & Fees(a)
30+ Days Past Due as a % of Total
Card Member Loans:
Consumer0.9 %1.1 %0.9 %1.1 %1.4 %0.7 %
Small Business0.6 %0.7 %0.7 %0.7 %0.8 %0.5 %
Card Member Receivables:
Consumer0.7 %0.8 %1.0 %0.3 %0.4 %0.5 %
Small Business0.9 %1.0 %1.3 %0.3 %0.4 %0.6 %
Corporate (d)
(b)0.3 %(c)(b)(0.1)%(c)
(a)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.
(b)Net write-off rate based on principal losses only is not available due to system constraints.
(c)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ days past billing as a % of total was 0.6% and 0.3% as of September 30, 2022 and 2021, respectively.
(d)The net write-off rate for the nine months ended September 30, 2021 includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which resulted in a write-off in 2020.
Refer to Note 3 for additional indicators, including external environmental qualitative factors, management considers in its evaluation process for reserves for credit losses.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Impaired Loans and Receivables
Impaired loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that we will be unable to collect all amounts due according to the original contractual terms of the customer agreement. We consider impaired loans and receivables to include (i) loans over 90 days past due still accruing interest, (ii) non-accrual loans and (iii) loans and receivables modified as troubled debt restructurings (TDRs).
In instances where the customer is experiencing financial difficulty, we may modify, through various financial relief programs, loans and receivables with the intention to minimize losses and improve collectability, while providing customers with temporary or permanent financial relief. We have classified loans and receivables in these modification programs as TDRs and continue to classify customer accounts that have exited a modification program as a TDR, with such accounts identified as “Out of Program TDRs.”
The following tables provide additional information with respect to our impaired loans and receivables as of September 30, 2022 and December 31, 2021:
As of September 30, 2022
Accounts Classified as a TDR (c)
2022 (Millions)
Over 90 days Past Due & Accruing Interest(a)
Non-
Accruals(b)
In
Program(d)
Out of Program(e)
Total
Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Consumer
$197 $110 $672 $1,057 $2,036 $302 
Small Business38 24 210 372 644 92 
Corporate— — — — — — 
Card Member Receivables:
Consumer— — 204 171 375 13 
Small Business— — 341 405 746 32 
Corporate— — 1 6 7 — 
Other Loans (f)
3 1 25 1 30 — 
Total$238 $135 $1,453 $2,012 $3,838 $439 
As of December 31, 2021
Accounts Classified as a TDR (c)
2021 (Millions)
Over 90 days Past Due & Accruing Interest(a)
Non-
Accruals(b)
In
Program(d)
Out of Program(e)
Total
Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Consumer
$149 $82 $708 $997 $1,936 $415 
Small Business19 14 176 332 541 132 
Corporate— — — — — — 
Card Member Receivables:
Consumer— — 133 130 263 9 
Small Business— — 247 297 544 39 
Corporate— — 1 6 7 — 
Other Loans (f)
1 — 67 2 70 1 
Total$169 $96 $1,332 $1,764 $3,361 $596 
(a)Our policy is generally to accrue interest through the date of write-off (typically 180 days past due). We establish reserves for interest that we believe will not be collected. Amounts presented exclude loans classified as a TDR.
(b)Non-accrual loans not in modification programs primarily include certain loans placed with outside collection agencies for which we have ceased accruing interest. Amounts presented exclude loans classified as TDRs.
(c)Accounts classified as a TDR include $45 million and $41 million that are over 90 days past due and accruing interest as of September 30, 2022 and December 31, 2021, respectively, and $14 million and $19 million that are non-accruals as of September 30, 2022 and December 31, 2021, respectively.
(d)In Program TDRs include accounts that are currently enrolled in a modification program.
(e)Out of Program TDRs include $1.9 billion and $1.6 billion of accounts that have successfully completed a modification program and $141 million and $143 million of accounts that were not in compliance with the terms of the modification programs as of September 30, 2022 and December 31, 2021, respectively.
(f)Other loans primarily represent consumer and commercial non-card financing products.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loans and Receivables Modified as TDRs
The following tables provide additional information with respect to loans and receivables that were modified as TDRs during the three and nine months ended September 30, 2022 and 2021:
Three Months Ended
September 30, 2022		Nine Months Ended
September 30, 2022
Number of
Accounts
(thousands)
Account
Balances
(millions)(a)
Average Interest
Rate Reduction
(% points)		Average Payment
Term Extensions
(# of months)		Number of
Accounts
(thousands)
Account
Balances
(millions)(a)
Average Interest
Rate Reduction
(% Points)		Average Payment
Term Extension
(# of Months)
Troubled Debt Restructurings:
Card Member Loans
44 $285 14 (b)97 $633 14 (b)
Card Member Receivables
7 258 (c)2018 591 (c)19
 Other Loans (d)
1 3 2 163 $5 2 16
Total52 $546 118 $1,229 
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
Number of
Accounts
(thousands)
Account
Balances
(millions)(a)
Average Interest
Rate Reduction
(% points)		Average Payment
Term Extensions
(# of months)		Number of
Accounts
(thousands)
Account
Balances
(millions)(a)
Average Interest
Rate Reduction
(% Points)		Average Payment
Term Extension
(# of Months)
Troubled Debt Restructurings:
Card Member Loans
26 $177 13 (b)87 $636 13 (b)
Card Member Receivables
5 114 (c)1716 314 (c)18
Other Loans (d)
1 $2 3 173 $12 3 16
Total32 $293 106 $962 
(a)Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on loans and principal and fees on receivables. Modifications did not reduce the principal balance.
(b)For Card Member loans, there have been no payment term extensions.
(c)We do not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.
(d)Other loans primarily represent consumer and commercial non-card financing products.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables provide information with respect to loans and receivables modified as TDRs that subsequently defaulted within twelve months of modification. A customer can miss up to three payments before being considered in default, depending on the terms of the modification program.
Three Months Ended
September 30, 2022		Nine Months Ended
September 30, 2022
Number of Accounts (thousands)
Aggregated Outstanding Balances Upon Default (millions)(a)
Number of
Accounts
(thousands)
Aggregated
Outstanding
Balances Upon
Default (millions)(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans4 $18 12 $70 
Card Member Receivables1 7 3 27 
Other Loans (b)
— — — — 
Total5 $25 15 $97 
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
Number of Accounts (thousands)
Aggregated Outstanding Balances Upon Default (millions)(a)
Number of
Accounts
(thousands)
Aggregated
Outstanding
Balances Upon
Default (millions)(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans4 $32 20 $148 
Card Member Receivables1 10 5 48 
Other Loans (b)
1 1 3 $9 
Total6 $43 28 $205 
(a)The outstanding balances upon default include principal, fees and accrued interest on loans, and principal and fees on receivables.
(b)Other loans primarily represent consumer and commercial non-card financing products.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Reserves for Credit Losses
Reserves for credit losses represent our best estimate of the expected credit losses in our outstanding portfolio of Card Member loans and receivables as of the balance sheet date. The CECL methodology requires us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period), which is approximately three years, beyond the balance sheet date. We make various judgments combined with historical loss experience to determine a reserve rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.
We use a combination of statistically-based models that incorporate current and future economic conditions throughout the R&S Period. The process of estimating expected credit losses is based on several key models: Probability of Default (PD), Exposure at Default (EAD), and future recoveries for each month of the R&S Period. Beyond the R&S Period, we estimate expected credit losses by immediately reverting to long-term average loss rates.
•PD models are used to estimate the likelihood an account will be written-off.
•EAD models are used to estimate the balance of an account at the time of write-off. This includes balances less expected repayments based on historical payment and revolve behavior, which vary by customer. Due to the nature of revolving loan portfolios, the EAD models are complex and involve assumptions regarding the relationship between future spend and payment behaviors.
•Recovery models are used to estimate amounts that are expected to be received from Card Members after default occurs, typically as a result of collection efforts. Future recoveries are estimated taking into consideration the time of default, time elapsed since default and macroeconomic conditions.
We also estimate the likelihood and magnitude of recovery of previously written off accounts considering how long ago the account was written off and future economic conditions, even if such expected recoveries exceed expected losses. Our models are developed using historical loss experience covering the economic cycle and consider the impact of account characteristics on expected losses.
Future economic conditions that are incorporated over the R&S Period include multiple macroeconomic scenarios provided to us by an independent third party. Management reviews these economic scenarios each period and applies judgment to weight them in order to reflect the uncertainty surrounding these scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real gross domestic product (GDP), that are significant to our models.
We also evaluate whether to include qualitative reserves to cover losses that are expected but, in our assessment, may not be adequately represented in the quantitative methods or the economic assumptions. We consider whether to adjust the quantitative reserves (higher or lower) to address possible limitations within the models or factors not included within the models, such as external conditions, emerging portfolio trends, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due accounts, or management risk actions.
Lifetime losses for most of our loans and receivables are evaluated at an appropriate level of granularity, including assessment on a pooled basis where financial assets share similar risk characteristics, such as past spend and remittance behaviors, credit bureau scores where available, delinquency status, tenure of balance outstanding, amongst others. Credit losses on accrued interest are measured and presented as part of Reserves for credit losses on the Consolidated Balance Sheets and within the Provisions for credit losses in the Consolidated Statements of Income, rather than reversing interest income. Separate models are used for accounts deemed a troubled debt restructuring, which are measured individually and incorporate a discounted cash flow model.
Loans and receivable balances are written off when we consider amounts to be uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past due for pay in full or revolving loans and 120 days past due for term loans. Loans and receivables in bankruptcy or owed by deceased individuals are generally written off upon notification.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table reflects the range of macroeconomic scenario key variables used, in conjunction with other inputs, to calculate reserves for credit losses:
U.S. Unemployment Rate
U.S. GDP Growth (Contraction) (a)
September 30, 2022December 31, 2021September 30, 2022December 31, 2021
Third quarter of 2022
4%
4% - 8%
2%
3% - (2)%
Fourth quarter of 2022
4% - 6%
4% - 9%
1% - (1)%
2% - 1%
Fourth quarter of 2023
4% - 8%
3% - 7%
3% - 2%
4% - 3%
Fourth quarter of 2024
4% - 6%
4% -6%
4% - 3%
3%
(a)Real GDP quarter over quarter percentage change seasonally adjusted to annualized rates.
Changes in Card Member Loans Reserve for Credit Losses
Card Member loans reserve for credit losses increased for the three months ended September 30, 2022, primarily driven by an increase in loans outstanding and deterioration in the macroeconomic outlook.
Card Member loans reserve for credit losses increased for the nine months ended September 30, 2022, primarily driven by an increase in loans outstanding and deterioration in the macroeconomic outlook, partially offset by a reduction in COVID-19 pandemic-driven reserves.
Card Member loans reserve for credit losses decreased for both the three and nine months ended September 30, 2021, driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in loans outstanding.
The following table presents changes in the Card Member loans reserve for credit losses for the three and nine months ended September 30:
Three Months Ended September 30,Nine Months Ended September 30,
(Millions)2022202120222021
Beginning Balance
$2,997 $3,835 $3,305 $5,344 
Provisions (a)
596 (177)757 (1,146)
Net write-offs (b)
Principal(203)(118)(560)(544)
Interest and fees(56)(43)(161)(164)
Other (c)
(15)(8)(22)(1)
Ending Balance$3,319 $3,489 $3,319 $3,489 
(a)Provisions for principal, interest and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.
(b)Principal write-offs are presented less recoveries of $133 million and $167 million for the three months ended September 30, 2022 and 2021, respectively, and $415 million and $507 million for the nine months ended September 30, 2022 and 2021, respectively. Recoveries of interest and fees were not significant. Amounts include net (write-offs) recoveries from TDRs of $(48) million and $(36) million for the three months ended September 30, 2022 and 2021, respectively, and $(156) million and $(124) million for the nine months ended September 30, 2022 and 2021, respectively.
(c)Primarily includes foreign currency translation adjustments of $(16) million and $(8) million for the three months ended September 30, 2022 and 2021, respectively, and $(22) million and $(2) million for the nine months ended September 30, 2022 and 2021, respectively.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Changes in Card Member Receivables Reserve for Credit Losses
Card Member receivables reserve for credit losses increased for the three months ended September 30, 2022, primarily driven by higher delinquencies.
Card Member receivables reserve for credit losses increased for the nine months ended September 30, 2022, primarily driven by an increase in receivables outstanding and higher delinquencies.
Card Member receivables reserve for credit losses decreased for both the three and nine months ended September 30, 2021, driven by lower delinquencies and improved portfolio quality and macroeconomic outlook, partially offset by an increase in receivables outstanding.
The following table presents changes in the Card Member receivables reserve for credit losses for the three and nine months ended September 30:
Three Months Ended September 30,Nine Months Ended September 30,
(Millions)2022202120222021
Beginning Balance
$119 $73 $64 $267 
Provisions (a)
165 (12)383 (147)
Net write-offs (b)
(122)(32)(284)(89)
Other (c)
(3)1 (4)(1)
Ending Balance$159 $30 $159 $30 
(a)Provisions for principal and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.
(b)Net write-offs are presented less recoveries of $60 million and $79 million for the three months ended September 30, 2022 and 2021, respectively, and $195 million and $303 million for the nine months ended September 30, 2022 and 2021, respectively. Amounts include net (write-offs) recoveries from TDRs of $(19) million and $(15) million for the three months ended September 30, 2022 and 2021, respectively, and $(48) million and $(51) million for the nine months ended September 30, 2022 and 2021, respectively.
(c)Primarily includes foreign currency translation adjustments of $(2) million and nil for the three months ended September 30, 2022 and 2021, respectively, and $(4) million and $(1) million for the nine months ended September 30, 2022 and 2021, respectively.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Investment Securities
Investment securities principally include available-for-sale debt securities carried at fair value on the Consolidated Balance Sheets. Unrealized losses attributable to credit deterioration are recorded in the Consolidated Statements of Income in Other loans Provision for credit losses. Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We had accrued interest on our available-for-sale debt securities totaling $15 million and $12 million as of September 30, 2022 and December 31, 2021, respectively, presented as Other assets on the Consolidated Balance Sheets.
Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets with unrealized gains and losses recorded in the Consolidated Statements of Income as Other, net expense.
Realized gains and losses are recognized upon disposition of the securities using the specific identification method and recorded in the Consolidated Statements of Income as Other, net expense.
The following is a summary of investment securities as of September 30, 2022 and December 31, 2021:
20222021
Description of Securities
(Millions)
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value		CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
Available-for-sale debt securities:
State and municipal obligations$66 $— $(11)$55 $106 $5 $— $111 
U.S. Government agency obligations5 — — 5 6 — — 6 
U.S. Government treasury obligations3,844 — (77)3,767 1,680 25 (1)1,704 
Mortgage-backed securities (a)
13 — — 13 17 1 — 18 
Foreign government bonds and obligations627 — (3)624 630 — — 630 
Other (b)
32 — — 32 43 — — 43 
Equity securities (c)
53 — (10)43 66 17 (4)79 
Total$4,640 $— $(101)$4,539 $2,548 $48 $(5)$2,591 
(a)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
(b)Represents investments in Corporate debt securities and debt securities issued by Community Development Financial Institutions.
(c)Equity securities comprise investments in common stock, exchange-traded funds and mutual funds.
The following table provides information about our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2022 and December 31, 2021:
20222021
Less than 12 months12 months or moreLess than 12 months12 months or more
Description of Securities (Millions)
Estimated Fair ValueGross
Unrealized
Losses		Estimated Fair ValueGross
Unrealized
Losses		Estimated Fair ValueGross
Unrealized
Losses		Estimated Fair ValueGross
Unrealized
Losses
State and municipal obligations$52 $(11)$— $— $— $— $— $— 
U.S. Government treasury obligations3,709 (75)48 (2)477 (1)— — 
Foreign government bonds and obligations600 (3)— — — — — — 
Total$4,361 $(89)$48 $(2)$477 $(1)$— $— 
The gross unrealized losses on our available-for-sale debt securities are primarily attributable to an increase in the current benchmark interest rate. Overall, for the available-for-sale debt securities in gross unrealized loss positions, (i) we do not intend to sell the securities, (ii) it is not more likely than not that we will be required to sell the securities before recovery of the unrealized losses, and (iii) we expect that the contractual principal and interest will be received on the securities. We concluded that there was no credit loss attributable to the securities in an unrealized loss position for the periods presented.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the gross unrealized losses by ratio of fair value to amortized cost as of September 30, 2022 and December 31, 2021:    
Less than 12 months12 months or moreTotal
Ratio of Fair Value to
Amortized Cost
(Dollars in millions)
Number of
Securities		Estimated
Fair Value		Gross
Unrealized
Losses		Number of
Securities		Estimated
Fair Value		Gross
Unrealized
Losses		Number of
Securities		Estimated
Fair Value		Gross
Unrealized
Losses
2022:
90–100%84 $4,333 $(79)1$48 $(2)85 $4,381 $(81)
Less than 90%12 28 (10)— $— $— 12 $28 $(10)
Total as of September 30, 202296 $4,361 $(89)1 $48 $(2)97 $4,409 $(91)
2021:
90–100%5 $477 $(1)— $— $— 5 $477 $(1)
Less than 90%— $— $— — $— $— — $— $— 
Total as of December 31, 20215 $477 $(1)— $— $— 5 $477 $(1)
Contractual maturities for available-for-sale debt securities with stated maturities as of September 30, 2022 were as follows:
(Millions)CostEstimated
Fair Value
Due within 1 year$2,359 $2,328 
Due after 1 year but within 5 years2,137 2,088 
Due after 5 years but within 10 years30 30 
Due after 10 years61 50 
Total$4,587 $4,496 
The expected payments on state and municipal obligations, U.S. Government agency obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Asset Securitizations
We periodically securitize Card Member loans and receivables arising from our card businesses through the transfer of those assets to securitization trusts, American Express Credit Account Master Trust (the Lending Trust) and American Express Issuance Trust II (the Charge Trust and together with the Lending Trust, the Trusts). The Trusts then issue debt securities collateralized by the transferred assets to third-party investors.
The Trusts are considered VIEs as they have insufficient equity at risk to finance their activities, which are to issue debt securities that are collateralized by the underlying Card Member loans and receivables. We perform the servicing and key decision making for the Trusts, and therefore have the power to direct the activities that most significantly impact the Trusts’ economic performance, which are the collection of the underlying Card Member loans and receivables. In addition, we hold all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors. Our ownership of variable interests for the Lending Trust was $14.4 billion and $15.0 billion as of September 30, 2022 and December 31, 2021, respectively, and for the Charge Trust was $5.9 billion and $3.2 billion as of September 30, 2022 and December 31, 2021, respectively. These variable interests held by us provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, we are the primary beneficiary of the Trusts and therefore consolidate the Trusts.
Restricted cash and cash equivalents held by the Lending Trust was $907 million and $42 million as of September 30, 2022 and December 31, 2021, respectively, and for the Charge Trust was nil and $1 million as of September 30, 2022 and December 31, 2021, respectively. These amounts relate to collections of Card Member loans and receivables to be used by the Trusts to fund future expenses and obligations, including interest on debt securities, credit losses and upcoming debt maturities.
Under the respective terms of the Lending Trust and the Charge Trust agreements, the occurrence of certain triggering events associated with the performance of the assets of each Trust could result in payment of trust expenses, establishment of reserve funds, or, in a worst-case scenario, early amortization of debt securities. During the nine months ended September 30, 2022 and the year ended December 31, 2021, no such triggering events occurred.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Customer Deposits
As of September 30, 2022 and December 31, 2021, customer deposits were categorized as interest-bearing or non-interest-bearing as follows:
(Millions)20222021
U.S.:
Interest-bearing$102,441 $83,304 
Non-interest-bearing (includes Card Member credit balances of: 2022, $509; 2021, $527)
556 553 
Non-U.S.:
Interest-bearing15 18 
Non-interest-bearing (includes Card Member credit balances of: 2022, $448; 2021, $503)
451 507 
Total customer deposits$103,463 $84,382 
Customer deposits by deposit type as of September 30, 2022 and December 31, 2021 were as follows:
(Millions)20222021
Savings and transaction accounts$72,862 $66,142 
Certificates of deposit:
Direct1,998 1,415 
Third-party (brokered)11,216 3,095 
Sweep accounts – Third-party (brokered)16,388 12,658 
Other deposits42 42 
Card Member credit balances957 1,030 
Total customer deposits$103,463 $84,382 
The scheduled maturities of certificates of deposit as of September 30, 2022 were as follows:
(Millions)20222023202420252026After 5 YearsTotal
Certificates of deposit$373 $4,557 $6,069 $1,647 $29 $539 $13,214 
As of September 30, 2022 and December 31, 2021, certificates of deposit in denominations of $250,000 or more, in the aggregate, were as follows:
(Millions)20222021
U.S.$735 $521 
Non-U.S.1 1 
Total$736 $522 

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. Contingencies
In the ordinary course of business, we and our subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, regulatory proceedings, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).
Based on our current knowledge, and taking into consideration our litigation-related liabilities, we do not believe we are a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings could have a material impact on our results of operations. Certain legal proceedings involving us or our subsidiaries are described below.
On February 25, 2020, we were named as a defendant in a case filed in the Superior Court of California, Los Angeles County, captioned Laurelwood Cleaners LLC v. American Express Co., et al., in which the plaintiff seeks a public injunction in California prohibiting American Express from enforcing its anti-steering and non-discrimination provisions and from requiring merchants “to offer the service of Amex-card acceptance for free.” The case has been stayed pending the outcome of arbitration proceedings.
On January 29, 2019, we were named in a putative class action brought in the United States District Court for the Eastern District of New York, captioned Anthony Oliver, et al. v. American Express Company and American Express Travel Related Services Company Inc., in which the plaintiffs are holders of MasterCard, Visa and/or Discover credit cards (but not American Express cards) and allege they paid higher prices as a result of our anti-steering and non-discrimination provisions in violation of federal antitrust law and the antitrust and consumer laws of various states. Plaintiffs seek unspecified damages and other forms of relief. The court dismissed plaintiffs’ federal antitrust claim, numerous state antitrust and consumer protection claims and their unjust enrichment claim. The remaining claims in plaintiffs’ complaint arise under the antitrust laws of 11 states and the consumer protection laws of six states.
On March 8, 2016, plaintiffs B&R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, on behalf of themselves and others, filed a suit, captioned B&R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al., for violations of the Sherman Antitrust Act, the Clayton Antitrust Act, California’s Cartwright Act and unjust enrichment in the United States District Court for the Northern District of California, against American Express Company, other credit and charge card networks, other issuing banks and EMVCo, LLC. Plaintiffs allege that the defendants, through EMVCo, conspired to shift liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to merchants after the implementation of EMV chip payment terminals. Plaintiffs seek damages and injunctive relief. An amended complaint was filed on July 15, 2016. On September 30, 2016, the court denied our motion to dismiss as to claims brought by merchants who do not accept American Express cards, and on May 4, 2017, the California court transferred the case to the United States District Court for the Eastern District of New York. On August 28, 2020, the court granted plaintiffs' motion for class certification.
In July 2004, we were named as a defendant in a putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned The Marcus Corporation v. American Express Co., et al., in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws. The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.
In 2006, Mawarid Investments Limited filed a request for confidential arbitration under the 1998 London Court of International Arbitration Rules in connection with certain claims arising under a shareholders agreement between Mawarid and American Express Travel Related Services Company, Inc. relating to a joint venture between the parties, Amex (Middle East) BSC(c) (AEME). In 2008, the tribunal rendered a partial award, including a direction that an audit should take place to verify whether acquirer discount revenue related to transactions occurring with airlines located in the Middle East region had been properly allocated to AEME since its inception in 1992. In September 2021, the tribunal rendered a further partial award regarding the location of transactions through non-physical channels. In May 2022, the tribunal further clarified the 2021 partial award and the discount rate that should apply to transactions through non-physical channels. A final award is now expected in the first half of 2023.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We are being challenged in a number of countries regarding our application of value-added taxes (VAT) to certain of our international transactions, which are in various stages of audit, or are being contested in legal actions. While we believe we have complied with all applicable tax laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional VAT. In certain jurisdictions where we are contesting the assessments, we were required to pay the VAT assessments prior to contesting.
Our legal proceedings range from cases brought by a single plaintiff to class actions with millions of putative class members to governmental proceedings. These legal proceedings involve various lines of business and a variety of claims (including, but not limited to, common law tort, contract, application of tax laws, antitrust and consumer protection claims), some of which present novel factual allegations and/or unique legal theories. While some matters pending against us specify the damages sought, many seek an unspecified amount of damages or are at very early stages of the legal process. Even when the amount of damages claimed against us are stated, the claimed amount may be exaggerated and/or unsupported. As a result, some matters have not yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate an amount of loss or a range of possible loss, while other matters have progressed sufficiently such that we are able to estimate an amount of loss or a range of possible loss.
We have accrued for certain of our outstanding legal proceedings. An accrual is recorded when it is both (a) probable that a loss has occurred and (b) the amount of loss can be reasonably estimated. There may be instances in which an exposure to loss exceeds the accrual. We evaluate, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the accrual that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.
For those disclosed legal proceedings where a loss is reasonably possible in future periods, whether in excess of a recorded accrual for legal or tax contingencies, or where there is no such accrual, and for which we are able to estimate a range of possible loss, the current estimated range is zero to $160 million in excess of any accruals related to those matters. This range represents management’s estimate based on currently available information and does not represent our maximum loss exposure; actual results may vary significantly. As such legal proceedings evolve, we may need to increase our range of possible loss or recorded accruals. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience as a result of an adverse resolution in one or any combination of the disclosed merchant cases could have a material adverse effect on our business and results of operations.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Derivatives and Hedging Activities
We use derivative financial instruments to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates and foreign exchange rates, and are carried at fair value on the Consolidated Balance Sheets. These instruments enable end users to increase, reduce or alter exposure to various market risks and, for that reason, are an integral component of our market risk management. We do not transact in derivatives for trading purposes.
A majority of our derivative assets and liabilities as of September 30, 2022 and December 31, 2021 are subject to master netting agreements with our derivative counterparties. Accordingly, where appropriate, we have elected to present derivative assets and liabilities with the same counterparty on a net basis in the Consolidated Balance Sheets.
In relation to our credit risk, certain of our bilateral derivative agreements include provisions that allow our counterparties to terminate the agreement in the event of a downgrade of our debt credit rating below investment grade and settle the outstanding net liability position. As of September 30, 2022, these derivatives were not in a material net liability position. Based on our assessment of the credit risk of our derivative counterparties and our own credit risk as of September 30, 2022 and December 31, 2021, no credit risk adjustment to the derivative portfolio was required.
The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of September 30, 2022 and December 31, 2021:
Other Assets Fair ValueOther Liabilities Fair Value
(Millions)2022202120222021
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts (a)
$— $204 $223 $— 
Net investment hedges - Foreign exchange contracts954 219 75 54 
Total derivatives designated as hedging instruments954 423 298 54 
Derivatives not designated as hedging instruments:
Foreign exchange contracts and other
941 167 270 85 
Total derivatives, gross1,895 590 568 139 
Derivative asset and derivative liability netting (b)
(269)(93)(269)(93)
Cash collateral netting (c)
(64)(204)(223)(4)
Total derivatives, net$1,562 $293 $76 $42 
(a)For our centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral.
(b)Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.
(c)Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to cash collateral held from the counterparty or cash collateral posted with the counterparty.
We posted $10 million and $11 million as of September 30, 2022 and December 31, 2021, respectively, as initial margin on our centrally cleared interest rate swaps; such amounts are recorded within Other assets on the Consolidated Balance Sheets and are not netted against the derivative balances.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Fair Value Hedges
We are exposed to interest rate risk associated with our fixed-rate debt obligations. At the time of issuance, certain fixed-rate long-term debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. We had $8.1 billion and $12.9 billion of fixed-rate debt obligations designated in fair value hedging relationships as of September 30, 2022 and December 31, 2021, respectively.
The following table presents the gains and losses recognized in Interest expense on the Consolidated Statements of Income associated with the fair value hedges of our fixed-rate long-term debt for the three and nine months ended September 30:
Gains (losses)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions)2022202120222021
Fixed-rate long-term debt $121 $59 $485 $257 
Derivatives designated as hedging instruments(121)(58)(488)(257)
Total$— $1 $(3)$— 
The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $7.8 billion and $13.1 billion as of September 30, 2022 and December 31, 2021, respectively, including the cumulative amount of fair value hedging adjustments of $(248) million and $237 million for the respective periods.
We recognized in Interest expense on Long-term debt a net increase of $3 million and a net decrease $60 million for the three months ended September 30, 2022 and 2021, respectively, and net decreases of 88 million and $196 million for the nine months ended September 30, 2022 and 2021, respectively, primarily related to the net settlements including interest accruals on our interest rate derivatives designated as fair value hedges.
Net Investment Hedges
We primarily designate foreign currency derivatives as net investment hedges to reduce our exposure to changes in currency exchange rates on our investments in non-U.S. subsidiaries. We had notional amounts of approximately $12.5 billion and $12.6 billion of foreign currency derivatives designated as net investment hedges as of September 30, 2022 and December 31, 2021, respectively. The gain or loss on net investment hedges, net of taxes, recorded in Accumulated other comprehensive income (loss) (AOCI) as part of the cumulative translation adjustment, were gains of $520 million and $155 million for the three months ended September 30, 2022 and 2021, respectively, and gains of $728 million and $53 million for the nine months ended September 30, 2022 and 2021, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income were not significant for any of the three and nine months ended September 30, 2022 and 2021.
Derivatives Not Designated as Hedges
The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. We had notional amounts of approximately $19.7 billion and $19.0 billion as of September 30, 2022 and December 31, 2021, respectively. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net gain of $23 million and a net loss of $10 million for the three months ended September 30, 2022 and 2021, respectively, and a net gain of $10 million and a net loss of $24 million for the nine months ended September 30, 2022 and 2021, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.
During the quarter ended June 30, 2022, we recorded an embedded derivative with a notional amount of $78 million, related to seller earnout shares granted to us upon the completion of a business combination between our equity method investee, American Express Global Business Travel, and Apollo Strategic Growth Capital. This embedded derivative had a fair value of $19 million as of September 30, 2022. The changes in the fair value of the embedded derivative resulted in losses of nil and $4 million for the three and nine months ended September 30, 2022, respectively, which were recognized in Service Fees and Other Revenue in the Consolidated Statements of Income.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. Fair Values
Financial Assets and Financial Liabilities Carried at Fair Value
The following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy, as of September 30, 2022 and December 31, 2021:
20222021
(Millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Investment securities: (a)
Equity securities$43 $42 $1 $— $79 $78 $1 $— 
Debt securities
4,496 — 4,464 32 2,512 — 2,480 32 
Derivatives, gross (a)(b)
1,895 — 1,876 19 590 — 590 — 
Total Assets6,434 42 6,341 51 3,181 78 3,071 32 
Liabilities:
Derivatives, gross (a)
568 — 568 — 139 — 139 — 
Total Liabilities$568 $— $568 $— $139 $— $139 $— 
(a)Refer to Note 4 for the fair values of investment securities and to Note 8 for the fair values of derivative assets and liabilities on a further disaggregated basis.
(b)Level 3 fair value reflects an embedded derivative. Management reviews and applies judgment to the valuation of the embedded derivative that is performed by an independent third party using a Monte Carlo simulation that models a range of probable future stock prices based on implied volatility in a risk neutral framework. Refer to Note 8 for additional information about this embedded derivative.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Financial Assets and Financial Liabilities Carried at Other Than Fair Value
The following table summarizes the estimated fair values of our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of September 30, 2022 and December 31, 2021. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of September 30, 2022 and December 31, 2021, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of American Express be estimated by aggregating the amounts presented.
Carrying
Value		Corresponding Fair Value Amount
2022 (Billions)TotalLevel 1Level 2Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents (a)
$31 $31 $29 $2 $— 
Other financial assets (b)
58 58 — 58 — 
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)
101 104 — — 104 
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value115 115 — 115 — 
Financial liabilities carried at other than fair value
Certificates of deposit (d)
13 13 — 13 — 
Long-term debt (c)
$42 $41 $— $41 $— 
Carrying
Value		Corresponding Fair Value Amount
2021 (Billions)TotalLevel 1Level 2Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents (a)
$22 $22 $20 $2 $— 
Other financial assets (b)
56 56 — 56 — 
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)
88 91 — — 91 
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value105 105 — 105 — 
Financial liabilities carried at other than fair value
Certificates of deposit (d)
5 5 — 5 — 
Long-term debt (c)
$39 $40 $— $40 $— 
(a)Level 2 fair value amounts reflect time deposits and short-term investments.
(b)Balances include Card Member receivables (including fair values of Card Member receivables of $5.8 billion and $5.2 billion held by a consolidated VIE as of September 30, 2022 and December 31, 2021, respectively), other receivables and other miscellaneous assets.
(c)Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $26.7 billion as of both September 30, 2022 and December 31, 2021, and the fair values of Long-term debt were $12.1 billion and $13.9 billion as of September 30, 2022 and December 31, 2021, respectively.
(d)Presented as a component of Customer deposits on the Consolidated Balance Sheets.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Nonrecurring Fair Value Measurements
We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired or where there are observable price changes for equity investments without readily determinable fair values.
We estimate the Level 3 fair value of equity investments without readily determinable fair values based on price changes as of the date of new similar equity financing transactions completed by the companies in our portfolio. The carrying value of equity investments without readily determinable fair values totaled $1.2 billion and $1.3 billion as of September 30, 2022 and December 31, 2021, respectively. These amounts are included within Other assets on the Consolidated Balance Sheets. We recorded unrealized gains of $6 million and $103 million for the three months ended September 30, 2022 and 2021, respectively, and $94 million and $730 million for the nine months ended September 30, 2022 and 2021, respectively. Unrealized losses including any impairments were $51 million and nil for the three months ended September 30, 2022 and 2021, respectively, and $153 million and $2 million for the nine months ended September 30, 2022 and 2021 respectively. Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $1.2 billion and $1.1 billion as of September 30, 2022 and December 31, 2021, respectively, and cumulative unrealized losses including any impairments were $159 million and $10 million as of September 30, 2022 and December 31, 2021, respectively.
In addition, we also have certain equity investments measured at fair value using the net asset value practical expedient. Such investments were immaterial as of both September 30, 2022 and December 31, 2021.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10. Guarantees
The maximum potential undiscounted future payments and related liability resulting from guarantees and indemnifications provided by us in the ordinary course of business were $1 billion and $28 million, respectively, as of September 30, 2022, and $1 billion and $24 million, respectively, as of December 31, 2021, all of which were primarily related to our real estate arrangements and business dispositions.
To date, we have not experienced any significant losses related to guarantees or indemnifications. Our recognition of these instruments is at fair value. In addition, we establish reserves when a loss is probable and the amount can be reasonably estimated.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
11. Changes in Accumulated Other Comprehensive Income (Loss)
AOCI is comprised of items that have not been recognized in earnings but may be recognized in earnings in the future when certain events occur. Changes in each component for the three and nine months ended September 30, 2022 and 2021 were as follows:
Three Months Ended September 30, 2022 (Millions), net of taxNet Unrealized
Gains (Losses) on
Debt Securities
Foreign Currency
Translation Adjustment Gains (Losses), net of hedges (a)
Net Unrealized
Pension and Other
Postretirement
Benefit Gains
(Losses)		Accumulated Other
Comprehensive
Income (Loss)
Balances as of June 30, 2022$(30)$(2,569)$(544)$(3,143)
Net change(39)(200)5 (234)
Balances as of September 30, 2022$(69)$(2,769)$(539)$(3,377)
Nine Months Ended September 30, 2022 (Millions), net of taxNet Unrealized
Gains (Losses) on
Debt Securities
Foreign Currency
Translation Adjustment Gains (Losses), net of hedges (a)
Net Unrealized
Pension and Other
Postretirement
Benefit Gains
(Losses)		Accumulated Other
Comprehensive
 Income (Loss)
Balances as of December 31, 2021$23 $(2,392)$(576)$(2,945)
Net change(92)(377)37 (432)
Balances as of September 30, 2022$(69)$(2,769)$(539)$(3,377)
Three Months Ended September 30, 2021 (Millions), net of taxNet Unrealized Gains (Losses) on Debt Securities
Foreign Currency
Translation
Adjustment Gains (Losses), net of hedges (a)
Net Unrealized
Pension and Other
Postretirement
Benefit Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balances as of June 30, 2021$42 $(2,227)$(696)$(2,881)
Net change(8)(83)9 (82)
Balances as of September 30, 2021$34 $(2,310)$(687)$(2,963)
Nine Months Ended September 30, 2021 (Millions), net of taxNet Unrealized Gains (Losses) on Debt Securities
Foreign Currency
Translation
Adjustment Gains (Losses), net of hedges (a)
Net Unrealized
Pension and Other
Postretirement
Benefit Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balances as of December 31, 2020$65 $(2,229)$(731)$(2,895)
Net change(31)(81)44 (68)
Balances as of September 30, 2021$34 $(2,310)$(687)$(2,963)
(a)Refer to Note 8 for additional information on hedging activity.
The following table shows the tax impact for the three and nine months ended September 30 for the changes in each component of AOCI presented above:
Tax expense (benefit)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions)2022202120222021
Net unrealized (losses) gains on debt securities$(13)$(3)$(29)$(9)
Foreign currency translation adjustment, net of hedges169 45 231 15 
Pension and other postretirement benefits16 5 33 18 
Total tax impact$172 $47 $235 $24 
Reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, were not significant for any of the three and nine months ended September 30, 2022 and 2021.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
12. Service Fees and Other Revenue and Other Expenses
The following is a detail of Service fees and other revenue for the three and nine months ended September 30:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions)2022202120222021
Service fees$353 $340 $1,072 $1,014 
Foreign currency-related revenue338 169 867 414 
Delinquency fees211 167 583 460 
Travel commissions and fees155 74 374 165 
Other fees and revenues112 89 444 129 
Total Service fees and other revenue$1,169 $839 $3,340 $2,182 
The following is a detail of Other expenses for the three and nine months ended September 30:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions)2022202120222021
Data processing and equipment
$651 $613 $1,874 $1,772 
Professional services500 490 1,473 1,351 
Net unrealized and realized losses (gains) on Amex Ventures investments
47 (142)68 (773)
Other
376 257 1,008 745 
Total Other expenses$1,574 $1,218 $4,423 $3,095 

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
13. Income Taxes
The effective tax rate was 23.6 percent and 25.5 percent for the three months ended September 30, 2022 and 2021, respectively, and 23.0 percent and 24.4 percent for the nine months ended September 30, 2022 and 2021, respectively. The decrease in the effective tax rate for the three month period primarily reflected changes in the geographic mix of pretax income. The decrease in the effective tax rate for the nine month period primarily reflected discrete tax benefits in the current period related to the resolution of certain prior years' tax items and stock-based compensation.
We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. We are currently under examination by the IRS for the 2017 and 2018 tax years.
We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next twelve months by as much as $173 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $173 million of unrecognized tax benefits, approximately $137 million relates to amounts that, if recognized, would impact the effective tax rate in a future period.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
14. Earnings Per Common Share (EPS)
The computations of basic and diluted EPS for the three and nine months ended September 30 were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(Millions, except per share amounts)2022202120222021
Numerator:
Basic and diluted:
Net income$1,879 $1,826 $5,942 $6,341 
Preferred dividends (14)(20)(43)(49)
Equity-related adjustment (a)
— (9)— (9)
Net income available to common shareholders$1,865 $1,797 $5,899 $6,283 
Earnings allocated to participating share awards (b)
(14)(14)(45)(45)
Net income attributable to common shareholders$1,851 $1,783 $5,854 $6,238 
Denominator:(a)
Basic: Weighted-average common stock748 786 752 796 
Add: Weighted-average stock options (c)
1 1 1 1 
Diluted749 787 753 797 
Basic EPS$2.47 $2.27 $7.78 $7.84 
Diluted EPS$2.47 $2.27 $7.77 $7.82 
(a)Represents the difference between the redemption value and carrying value of the Series C preferred shares, which were redeemed on September 15, 2021. The carrying value represents the original issuance proceeds, net of underwriting fees and offering costs for the Series C preferred shares.
(b)Our unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.
(c)The dilutive effect of unexercised stock options excludes from the computation of EPS 0.26 million and 0.01 million of options for the three months ended September 30, 2022 and 2021, respectively, and 0.23 million and 0.01 million of options for the nine months ended September 30, 2022 and 2021, respectively, because inclusion of the options would have been anti-dilutive.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
15. Reportable Operating Segments
Effective for the third quarter of 2022, we realigned our reportable operating segments to reflect organizational changes announced during the second quarter of 2022. Refer to Note 1 for further details. Prior periods have been recast to conform to the new reportable operating segments.
The following table presents certain selected financial information for our reportable operating segments and Corporate & Other as of or for the three and nine months ended September 30:
Three Months Ended September 30, 2022 (Millions, except where indicated)USCSCSICSGMNS
Corporate & Other (a)
Consolidated
Total non-interest revenues$4,233 $3,145 $2,066 $1,562 $(28)$10,978 
Revenue from contracts with customers (b)
3,200 2,791 1,332 1,423 (13)8,733 
Interest income2,251 552 364 6 201 3,374 
Interest expense274 201 178 (97)240 796 
Total revenues net of interest expense6,210 3,496 2,252 1,665 (67)13,556 
Pretax segment income (loss)$1,309 $774 $166 $792 $(582)$2,459 
Total assets (billions)
$85 $51 $33 $15 $31 $215 
Nine Months Ended September 30, 2022 (Millions, except where indicated)USCSCSICSGMNS
Corporate & Other (a)
Consolidated
Total non-interest revenues$12,024 $8,986 $6,065 $4,502 $(28)$31,549 
Revenue from contracts with customers (b)
9,139 8,003 3,857 4,131 14 25,144 
Interest income5,880 1,435 1,035 13 330 8,693 
Interest expense513 409 445 (202)391 1,556 
Total revenues net of interest expense17,391 10,012 6,655 4,717 (89)38,686 
Pretax segment income (loss)$4,114 $2,333 $593 $2,263 $(1,589)$7,714 
Total assets (billions)
$85 $51 $33 $15 $31 $215 
Three Months Ended September 30, 2021 (Millions, except where indicated)USCSCSICSGMNS
Corporate & Other (a)
Consolidated
Total non-interest revenues$3,372 $2,558 $1,732 $1,294 $(22)$8,934 
Revenue from contracts with customers (b)
2,566 2,250 1,116 1,212 (6)7,138 
Interest income1,613 365 278 4 41 2,301 
Interest expense89 81 114 (24)47 307 
Total revenues net of interest expense4,896 2,842 1,896 1,322 (28)10,928 
Pretax segment income (loss)$1,251 $699 $269 $513 $(282)$2,450 
Total assets (billions)
$68 $41 $30 $14 $31 $184 
Nine Months Ended September 30, 2021 (Millions, except where indicated)USCSCSICSGMNS
Corporate & Other (a)
Consolidated
Total non-interest revenues$9,291 $7,053 $4,814 $3,589 $(154)$24,593 
Revenue from contracts with customers (b)
6,967 6,174 3,060 3,370 (18)19,553 
Interest income4,647 1,020 827 12 127 6,633 
Interest expense310 253 309 (61)180 991 
Total revenues net of interest expense13,628 7,820 5,332 3,662 (207)30,235 
Pretax segment income (loss)$4,677 $2,219 $889 $1,399 $(801)$8,383 
Total assets (billions)
$68 $41 $30 $14 $31 $184 
(a)Corporate & Other includes adjustments and eliminations for intersegment activity.
(b)Includes discount revenue, certain service fees and other revenue and processed revenues from customers.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk to earnings or asset and liability values resulting from movements in market prices. Our market risk exposures include (i) interest rate risk due to changes in the relationship between the interest rates on our assets (such as loans, receivables and investment securities) and the interest rates on our liabilities (such as debt and deposits); and (ii) foreign exchange risk related to transactions, funding, investments and earnings in currencies other than the U.S. dollar. Since December 31, 2021, there have been no material changes in market risk exposures associated with foreign exchange risk.
We analyze a variety of interest rate scenarios to inform us of the potential impacts from interest rate changes on earnings and the value of assets, liabilities and the economic value of equity. Our interest rate exposure can vary over time as a result of, among other things, the proportion of our total funding provided by variable and fixed-rate debt and deposits compared to our Card Member loans and receivables. Interest rate swaps are used from time to time to effectively convert debt issuances to variable-rate from fixed-rate, or vice versa.
Compared to December 31, 2021, the adverse impact of changes in market interest rates on our net interest income decreased, primarily due to the issuance of fixed rate liabilities. As of September 30, 2022, a hypothetical, immediate 100 basis point increase in market interest rates would have a detrimental impact of approximately $101 million on our annual net interest income. A hypothetical immediate 100 basis point decrease in market interest rates would have a smaller but still detrimental impact on our annual net interest income. This measure first projects net interest income over the following twelve-month time horizon considering forecasted business growth and anticipated future market interest rates. The detrimental impact from rate changes is then measured by instantaneously increasing or decreasing the anticipated future interest rates by 100 basis points. Our estimated repricing risk assumes that our interest-rate sensitive assets and liabilities that reprice within the twelve-month horizon generally reprice by the same magnitude as benchmark rate changes. It is further assumed that, within our interest-rate sensitive liabilities, certain deposits reprice at lower magnitudes than benchmark rate movements, and the magnitude of this repricing in turn depends on, among other factors, the direction of rate movements. These assumptions are consistent with historical deposit repricing experience in the industry and within our own portfolio. Actual changes in our net interest income will depend on many factors, and therefore may differ from our estimated risk to changes in market interest rates.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information that updates the disclosures set forth under Part I, Item 3. “Legal Proceedings” in our 2021 Form 10-K, refer to Note 7 to the “Consolidated Financial Statements” in this Form 10-Q.
ITEM 1A. RISK FACTORS
For a discussion of our risk factors, see Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 (the 2021 Form 10-K) and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (the First Quarter Form 10-Q). The information included in the “Risk Factors” section of the First Quarter Form 10-Q is incorporated by reference herein. The risks and uncertainties that we face are not limited to those set forth in the 2021 Form 10-K, as supplemented and updated in the First Quarter Form 10-Q. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our securities.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c)   ISSUER PURCHASES OF SECURITIES
The table below sets forth the information with respect to purchases of our common stock made by or on behalf of us during the three months ended September 30, 2022.
Total Number of Shares PurchasedAverage Price Paid Per Share
Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs (c)
Maximum Number of Shares that
May Yet Be Purchased Under the
Plans or Programs
July 1-31, 2022
Repurchase program(a)
2,587,134 $144.422,587,134 42,014,767 
Employee transactions(b)
9 $142.19N/AN/A
August 1-31, 2022
Repurchase program(a)
1,430,825 $158.211,430,825 40,583,942 
Employee transactions(b)
13,955 $154.02N/AN/A
September 1-30, 2022
Repurchase program(a)
— — — 40,583,942 
Employee transactions(b)
— — N/AN/A
Total
Repurchase program(a)
4,017,959 $149.334,017,959 40,583,942 
Employee transactions(b)
13,964 $154.01N/AN/A
(a)On September 23, 2019, the Board of Directors authorized the repurchase of up to 120 million common shares from time to time, subject to market conditions and in accordance with our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date. See “MD&A – Consolidated Capital Resources and Liquidity” for additional information regarding share repurchases.
(b)Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under our incentive compensation plans) in satisfaction of the exercise price and/or tax withholding obligation of such holders and (ii) restricted shares withheld (under the terms of grants under our incentive compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. Our incentive compensation plans provide that the value of the shares delivered or attested to, or withheld, be based on the price of our common stock on the date the relevant transaction occurs.
(c)Share purchases under publicly announced programs are made pursuant to open market purchases, 10b5-1 plans, privately negotiated transactions (including employee benefit plans) or other purchases, including block trades, accelerated share repurchase programs or any combination of such methods as market conditions warrant and at prices we deem appropriate.
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ITEM 5. OTHER INFORMATION
On October 19, 2022, our Board of Directors amended our By-Laws, effective immediately, to enhance procedural mechanics and disclosure requirements in connection with shareholder nominations of directors, including by requiring: (i) a shareholder delivering a nomination notice pursuant to Rule 14a-19 under the Exchange Act to certify that such shareholder has met the requirements of Rule 14a-19(a); (ii) a shareholder providing such a nomination notice to update and supplement such notice, if necessary, to be true and correct as of the record date for the shareholder meeting and the date that is 10 business days prior to the shareholder meeting; (iii) any proposed director nominee to submit to interviews with the Board of Directors or any committee thereof; and (iv) a shareholder directly or indirectly soliciting proxies from other shareholders to use a proxy card color other than white.
The amendments to the By-Laws also incorporated gender neutral terms and included certain other modifications that provide clarification and consistency.
The foregoing description of the amendments to the By-Laws is qualified in its entirety by the text of the By-Laws, as amended, a copy of which is attached as Exhibit 3.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report:
ExhibitDescription
3.1
10.1
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN EXPRESS COMPANY
(Registrant)
Date: October 21, 2022By/s/ Jeffrey C. Campbell
Jeffrey C. Campbell
Vice Chairman and Chief Financial Officer
Date: October 21, 2022By/s/ Jessica Lieberman Quinn
Jessica Lieberman Quinn
Executive Vice President and
Corporate Controller
(Principal Accounting Officer)

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