American Express 2010 Annual Report Download - page 54

U.S. CARD SERVICES
SELECTED INCOME STATEMENT DATA
GAAP BASIS PRESENTATION
Years Ended December 31,
(Millions) 2010 2009 2008
Revenues
Discount revenue, net card fees and other $ 10,038 $ 9,105 $ 10,345
Securitization income, net
(a)
—400 1,070
Interest income 5,390 3,216 4,425
Interest expense 812 568 1,641
Net interest income 4,578 2,648 2,784
Total revenues net of interest expense 14,616 12,153 14,199
Provisions for losses 1,591 3,769 4,389
Total revenues net of interest expense
after provisions for losses 13,025 8,384 9,810
Expenses
Marketing, promotion, rewards and
cardmember services 5,651 4,266 4,837
Salaries and employee benefits and other
operating expenses 3,837 3,532 3,630
Total 9,488 7,798 8,467
Pretax segment income 3,537 586 1,343
Income tax provision 1,291 175 365
Segment income $ 2,246 $ 411 $ 978
(a) In accordance with new GAAP effective January 1, 2010, the Company no
longer reports securitization income, net in its income statement.
SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Billions, except percentages
and where indicated) 2010 2009 2008
Card billed business $ 378.1 $ 339.4 $ 382.0
Total cards-in-force (millions) 39.9 39.5 44.2
Basic cards-in-force (millions) 29.7 29.5 32.9
Average basic cardmember
spending (dollars)
*
$ 12,795 $ 10,957 $ 11,594
U.S. Consumer Travel:
Travel sales (millions) $ 3,116 $ 2,561 $ 3,113
Travel commissions and fees/sales 8.2% 8.4% 8.2%
Total segment assets $ 91.3 $ 57.6
(f)
$ 77.8
(f)
Segment capital (millions) $ 7,411 $ 6,021 $ 4,199
Return on average segment capital
(a)
35.4% 8.0% 22.3%
Return on average tangible segment
capital
(a)
38.1% 8.7% 23.6%
Cardmember receivables:
Total receivables $ 19.2 $ 17.8 $ 17.8
30 days past due as a % of total 1.5% 1.8% 3.7%
Average receivables $ 17.1 $ 16.1 $ 19.2
Net write-off rate
(b)
1.6% 3.8% 3.6%
Cardmember loans —
GAAP basis portfolio:
(c)
Total loans $ 51.6 $ 23.5 $ 32.7
30 days past due loans as a % of total 2.1% 3.7% 4.7%
Average loans $ 49.8 $ 25.9 $ 36.7
Net write-off rate 5.8% 9.1% 5.8%
Net interest income divided by average
loans
(d)(e)
9.2% 10.2% 7.6%
Net interest yield on cardmember
loans
(d)
9.4% 9.4% 8.4%
Cardmember loans —
Managed basis portfolio:
(c)
Total loans $ 51.6 $ 52.6 $ 62.4
30 days past due loans as a % of total 2.1% 3.7% 4.7%
Average loans $ 49.8 $ 54.9 $ 64.0
Net write-off rate 5.8% 8.7% 5.5%
Net interest yield on cardmember
loans
(d)
9.4% 10.1% 9.0%
* Proprietary cards only.
(a) Return on average segment capital is calculated by dividing (i) one-year
period segment income ($2.2 billion, $411 million and $978 million for 2010,
2009 and 2008, respectively) by (ii) one-year average segment capital
($6.4 billion, $5.1 billion and $4.4 billion for 2010, 2009 and 2008,
respectively). Return on average tangible segment capital is computed in
the same manner as return on average segment capital except the
computation of average tangible segment capital excludes from average
segment capital average goodwill and other intangibles of $459 million,
$432 million and $243 million at December 31, 2010, 2009 and 2008,
respectively. The Company believes that return on average tangible
segment capital is a useful measure of the profitability of its business.
(b) In the fourth quarter of 2008, the Company revised the time period in which
past due cardmember receivables in USCS are written off to 180 days past
due, consistent with applicable bank regulatory guidance. Previously,
receivables were written off when 360 days past billing. The net write-
offs for 2008 include approximately $341 million resulting from this write-
off methodology change, which is not reflected in the table above. If the
$341 million had been included in USCS write-offs, the net write-off rate
would have been 5.4 percent for 2008.
52
AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW