American Express 2003 Annual Report Download - page 73

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(p.71_axp_ financial review)
Liquidity and Capital Resources
SELECTED BALANCE SHEET INFORMATION (GAAP BASIS)
December 31, (Billions, except percentages and where indicated) 2003 2002
Total loans $6.5 $5.6
Total non-performing loans (millions) $78 $119
Other non-performing assets (millions) $15 $15
Reserve for credit losses (millions)* $121 $158
Loan loss reserve as a percentage of total loans 1.7% 2.7%
Total Personal Financial Services (PFS) loans $1.4 $1.6
30+ days past due PFS loans as a percentage of total PFS loans 6.6% 5.4%
Assets managed**/administered $16.2 $12.5
Assets of non-consolidated joint ventures $1.7 $1.8
Total assets $14.2 $13.2
Deposits $10.8 $9.5
Total liabilities $13.3 $12.3
Total shareholder’s equity (millions) $949 $947
Return on average total assets*** 0.74% 0.66%
Return on average total shareholder’s equity**** 10.8% 9.6%
Risk-based capital ratios:
Tier 1 11.4% 10.9%
Total 11.3% 11.4%
Leverage ratio 5.5% 5.3%
*Allocation of reserves (millions):
Loans $113 $151
Other assets, primarily foreign exchange and other derivatives 66
Unfunded contingents 21
Total reserve for credit losses $121 $158
** Includes assets managed by AEFA.
*** Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP.
**** Computed on a trailing 12-month basis using total shareholder’s equity as included in the Consolidated Financial Statements prepared in accordance with GAAP.
Contingent Liquidity Planning
AEB has in place a contingent funding plan that enables it to meet daily customer obligations during periods in which its cus-
tomers do not roll over maturing deposits. This plan is designed to ensure that AEB could meet these customer withdrawals
by selling a portion of its investment securities or by obtaining financing through repurchase agreements.
AEB had worldwide loans outstanding at December 31, 2003 of approximately $6.5 billion, up from $5.6 billion at Decem-
ber 31, 2002. The increase since 2002 resulted from a $600 million net increase in consumer and Private Banking loans,
consisting of an $800 million increase in Private Banking loans and a $200 million decrease in PFS and other loans, and a
$500 million increase in Financial Institution loans, partially offset by a $200 million decrease in Corporate Banking loans.
As of December 31, 2003, consumer and Private Banking loans comprised 68 percent of total loans versus 69 percent at
December 31, 2002. Corporate Banking comprised 3 percent of total loans at December 31, 2003 versus 6 percent at Decem-
ber 31, 2002. Financial Institution loans comprised 29 percent of total loans at December 31, 2003 versus 25 percent at
December 31, 2002. In addition to the loan portfolio, other banking activities, such as securities, unrealized gains on for-
eign exchange and derivatives contracts, various contingencies and market placements added approximately $7.6 billion
and $8.0 billion to AEB’s credit exposures at December 31, 2003 and 2002, respectively. Included in these additional expo-
sures are relatively lower risk cash and securities related balances totaling $5.4 billion at December 31, 2003.