American Express 2008 Annual Report Download - page 39

2008 financial review
american express company
The Company’s 2008 offerings, which include those
made by the Parent Company, Credco, Centurion Bank, FSB,
American Express Receivables Financing Corporation LLC V
(the Charge Trust) and the American Express Credit Account
Master Trust (the Lending Trust), are presented in the following
table on both a GAAP and managed basis:
(Billions) Amount
American Express Company (Parent Company only):
Fixed and Floating Rate Senior Notes $ 3.0
American Express Credit Corporation:
Fixed and Floating Rate Senior Notes 6.2
American Express Bank, FSB:
Fixed and Floating Rate Senior Notes 8.1
American Express Receivables Financing
Fixed and Floating Rate Senior Notes and
Subordinated Notes 1.9
GAAP Basis 19.2
American Express Credit Account
Master Trust:
Trust Investor Certificates 11.0
Managed Basis (a) $30.2
(a) On a managed basis, issuances from the Charge Trust, an on-balance sheet
entity, and the Lending Trust, an off-balance sheet entity, include $125 million
and $1.3 billion, respectively, of the related A-rated and BBB-rated securities
retained by the Charge and Lending trusts during the year.
asset securitization programs
The Company periodically securitizes cardmember receivables
and loans arising from its card business. The securitization market
provides the Company with cost-effective funding; however, the
asset securitization market has been broadly unavailable since
September 2008. Securitization of cardmember receivables and
loans is accomplished through the transfer of those assets to
a trust, which in turn issues certificates or notes (securities) to
third-party investors collateralized by the transferred assets. The
proceeds from issuance are distributed to the Company, through
its wholly-owned subsidiaries, as consideration for the transferred
assets. Securitization transactions are accounted for as either a sale
or secured borrowing, based upon the structure of the transaction.
As of December 31, 2008, the Company held the
following deposits:
(Billions) 2008 2007
Retail:
Cash sweep accounts $ 7.1 $ 2.1
CDs 6.2 —
Institutional 0.8 10.9
Others 1.4 2.4
Total customer deposits $15.5 $15.4
long-term debt programs
In 2008, the Company and its subsidiaries issued debt and
asset securitizations with maturities ranging from 1 to 30 years.
These amounts included approximately $11.5 billion of
AAA-rated charge and lending securitization certificates and
$17.4 billion of unsecured debt across a variety of maturities
and markets. During the year, the Company retained
approximately $656 million of related A-rated securities and
$783 million of BBB-rated securities, as the pricing and yields
for these securities were not attractive for the Company due to
the market conditions.
On October 14, 2008, the FDIC announced the establishment
of the Temporary Liquidity Guarantee Program (TLGP), to
temporarily guarantee newly-issued senior unsecured debt
of eligible entities, including insured banks, and to provide
guarantee coverage to non-interest-bearing transaction accounts
in FDIC-insured institutions, regardless of amount. Centurion
Bank and FSB, as FDIC depository institutions, are both eligible
to participate in this program and issue up to $13.3 billion of
unsecured debt that would be guaranteed under the TLGP. The
$17.4 billion of unsecured debt issued in 2008 included the
issuance of $5.9 billion of unsecured debt in December by FSB
through its access to the TLGP.
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