American Express 2013 Annual Report Download - page 41

AMERICAN EXPRESS COMPANY
2013 FINANCIAL REVIEW
The Company had the following short-term borrowings outstanding
as of December 31:
TABLE 22: SHORT-TERM BORROWINGS OUTSTANDING
(Billions) 2013 2012
Commercial paper $ 0.2 $—
Other short-term borrowings(a) 4.8 3.3
Total $ 5.0 $ 3.3
(a) Includes $2.0 billion draw on American Express Credit Account Master Trust
(Lending Trust) secured borrowing facility, maturing on September 15, 2015,
which was repaid on February 18, 2014.
Refer to Note 10 to the Consolidated Financial Statements for further
description of these borrowings.
As of December 31, 2013, the Company had $0.2 billion
commercial paper outstanding. Average commercial paper
outstanding was $0.1 billion and $0.4 billion in 2013 and 2012,
respectively.
DEPOSIT PROGRAMS
The Company offers deposits within its American Express Centurion
Bank (Centurion Bank) and American Express Bank, FSB (FSB)
subsidiaries (together, the Banks). These funds are currently insured
up to $250,000 per account holder 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:
TABLE 23: CUSTOMER DEPOSITS
(Billions) 2013 2012
U.S. retail deposits:
Savings accounts – Direct $ 24.6 $ 18.7
Certificates of deposit:(a)
Direct 0.5 0.7
Third-party 6.9 8.9
Sweep accounts – Third-party 8.9 11.4
Other retail deposits:
Non-U.S. deposits and U.S. non-interest Bearing 0.1 0.1
Card Member credit balances – U.S. and non-U.S.(b) 0.8 —
Total customer deposits $ 41.8 $ 39.8
(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 25.3 months and 1.8 percent, respectively, as of
December 31, 2013.
(b) Beginning 2013, the Company reclassified prospectively Card Member credit
balances from Card Member loans, Card Member receivables and Other
liabilities to Customer deposits.
LONG-TERM DEBT PROGRAMS
During 2013, the Company and its subsidiaries issued debt and asset
securitizations with maturities ranging from 3 to 5 years. These
amounts included approximately $3.3 billion of AAA-rated
securitization certificates and notes, $0.2 billion of subordinated
securities and $5.5 billion of unsecured debt across a variety of
maturities and markets. During the year, the Company retained
approximately $0.3 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 2013 debt issuances were as follows:
TABLE 24: DEBT ISSUANCES
(Billions) Amount
American Express Company:
Fixed Rate Senior Notes (weighted-average coupon of 1.55%) $ 1.0
Floating Rate Senior Notes (3-month LIBOR plus 59 basis points) 0.9
American Express Credit Corporation:
Fixed Rate Senior Notes (weighted-average coupon of 1.82%) 2.3
Floating Rate Senior Notes (3-month LIBOR plus 51 basis points) 1.2
American Express Centurion Bank:
Floating Rate Senior Notes (3-month LIBOR plus 30 basis points) 0.1
American Express Credit Account Master Trust:(a)
Floating Rate Senior Certificates (1-month LIBOR plus 42 basis
points on average) 1.6
Floating Rate Subordinated Certificates (1-month LIBOR plus 70
basis points on average) 0.1
Fixed Rate Senior Certificates (weighted-average coupon of 0.98%) 0.5
American Express Issuance Trust II:(a)
Floating Rate Senior Notes (1-month LIBOR plus 37 basis points) 1.2
Floating Rate Subordinated Notes (1-month LIBOR plus 64 basis
points) 0.1
Total $ 9.0
(a) Issuances from the Lending Trust and the American Express Issuance Trust II
(Charge Trust II) do not include $0.3 billion of subordinated securities
retained by the Company during the year.
ASSET SECURITIZATION PROGRAMS
The Company periodically securitizes Card Member receivables and
loans arising from its card business, as the securitization market
provides the Company with cost-effective funding. Securitization of
Card Member receivables and loans is accomplished through the
transfer of those assets to a trust, which in turn issues securities
collateralized by the transferred assets to third-party investors. The
proceeds from issuance are distributed to the Company, through its
wholly owned subsidiaries, as consideration for the transferred assets.
The receivables and loans being securitized are reported as assets
on the Company’s Consolidated Balance Sheets and the related
securities issued to third-party investors are reported as long-term
debt.
Under the respective terms of the securitization 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 investor certificates. During the year ended
December 31, 2013, no such triggering events occurred.
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