American Express 2012 Annual Report Download - page 35

Download and view the complete annual report

Please find page 35 of the 2012 American Express annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

AMERICAN EXPRESS COMPANY
2012 FINANCIAL REVIEW
The Company had the following short-term borrowings
outstanding as of December 31:
(Billions) 2012 2011
Commercial paper $—$ 0.6
Other short-term borrowings 3.3 3.7
Total $3.3$ 4.3
Refer to Note 10 to the Consolidated Financial Statements for
further description of these borrowings.
The Company’s short-term borrowings as a percentage of total
debt was 5.3 percent and 6.8 percent as of December 31, 2012
and 2011, respectively.
As of December 31, 2012, the Company had no commercial
paper outstanding. Average commercial paper outstanding was
$0.4 billion and $0.6 billion in 2012 and 2011, respectively.
American Express Credit Corporation’s (Credco) total back-
up liquidity coverage, which includes its undrawn committed
bank facilities, was 73 percent and 62 percent of its net short-
term borrowings as of December 31, 2012 and 2011, respectively.
The undrawn committed bank credit facilities were $3.0 billion
as of December 31, 2012.
DEPOSIT PROGRAMS
The Company offers deposits within its American Express
Centurion Bank and American Express Bank, FSB (FSB)
subsidiaries (together, the Banks). These funds are currently
insured up to $250,000 per account through the FDIC. The
Company’s ability to obtain deposit funding and offer
competitive interest rates is dependent on the Banks’ capital
levels. The Company, through the FSB, has a direct retail deposit
program, Personal Savings from American Express, to
supplement its distribution of deposit products sourced through
third-party distribution channels. The direct retail program
makes FDIC-insured certificates of deposit (CDs) and high-yield
savings account products available directly to consumers.
The Company held the following deposits as of December 31:
(Billions) 2012 2011
U.S. retail deposits:
Savings accounts — Direct $ 18.7 $ 14.6
Certificates of deposit:(a)
Direct 0.7 0.9
Third-party 8.9 10.8
Sweep accounts — Third-party 11.4 11.0
Other deposits 0.1 0.6
Total customer deposits $ 39.8 $ 37.9
(a) The weighted average remaining maturity and weighted average rate at
issuance on the total portfolio of U.S. retail CDs, issued through direct and
third-party programs, were 18.5 months and 2.1 percent, respectively, as of
December 31, 2012.
LONG-TERM DEBT PROGRAMS
During 2012, the Company and its subsidiaries issued debt and
asset securitizations with maturities ranging from 3 to 5 years.
These amounts included approximately $4.6 billion of AAA-
rated lending securitization certificates, $0.6 billion of
subordinated certificates and $5.6 billion of unsecured debt
across a variety of maturities and markets. During the year, the
Company retained approximately $0.4 billion of subordinated
securities, as the pricing and yields for these securities were not
attractive compared to other sources of financing available to the
Company.
The Company’s 2012 debt issuances were as follows:
(Billions) Amount(a)
American Express Credit Corporation:
Fixed Rate Senior Notes (weighted-average coupon of 2.0%) $3.5
Floating Rate Senior Notes (3-month LIBOR plus 110 basis
points) 0.8
American Express Centurion Bank:
Fixed Rate Senior Notes (0.9% coupon) 0.8
Floating Rate Senior Notes (3-month LIBOR plus 45 basis
points) 0.5
American Express Credit Account Master Trust:(b)
Fixed Rate Senior Certificates (weighted-average coupon of
0.7%) 2.1
Fixed Rate Subordinated Certificates (weighted-average coupon
of 1.1%) 0.3
Floating Rate Senior Certificates (1-month LIBOR plus 21 basis
points on average) 2.5
Floating Rate Subordinated Certificates (1-month LIBOR plus 76
basis points on average) 0.3
Total $ 10.8
(a) Does not include new notes issued as a result of the debt exchange
transaction the Company entered into in the fourth quarter of 2012. See
Debt Exchange section below for further details on this transaction.
(b) Issuances from the American Express Credit Account Master Trust (the
Lending Trust) do not include $0.4 billion of subordinated securities
retained by the Company during the year.
DEBT EXCHANGE
During the fourth quarter of 2012, the Company completed an
exchange of $1.1 billion of its outstanding $1.75 billion 8.125
percent notes maturing on May 20, 2019 for $1.3 billion of 2.65
percent notes maturing on December 2, 2022 and cash; in
addition, the Company exchanged $0.8 billion of its outstanding
$1.0 billion 8.15 percent notes maturing on March 19, 2038 for
$1.1 billion of 4.05 percent notes maturing on December 3, 2042
and cash. The exchange was completed to retire high coupon
debt in the current favorable interest rate environment.
33