Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP), and includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —Integrated Framework (2013).

Based on management’s assessment and those criteria, we conclude that, as of December 31, 2022, our internal control over financial reporting is effective.

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has issued an audit report appearing on the following page on the effectiveness of our internal control over financial reporting as of December 31, 2022.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of American Express Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of American Express Company and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for credit losses on certain financial instruments in 2020.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Reserves for Credit Losses on Card Member Loans

As described in Note 3 to the consolidated financial statements, reserves for credit losses on Card Member loans represent management’s estimate of the expected credit losses in the Company’s outstanding portfolio of Card Member loans as of the balance sheet date. The reserves for credit losses on Card Member loans was $3.7 billion as of December 31, 2022. Management estimates lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period) beyond the balance sheet date. As disclosed by management, in estimating expected credit losses, management uses a combination of statistically-based models that entail a significant amount of judgment. The primary areas of judgment used in measuring the quantitative components of the Company’s reserves relate to the determination of the appropriate R&S Period, the modeling of the probability of and exposure at default, and the methodology to incorporate current and future economic conditions. Management uses these models and assumptions, combined with historical loss experience, to determine the reserve rates that are applied to the outstanding loan balances to produce its reserves for expected credit losses. Within the R&S Period, the Company’s models use past loss experience and current and future economic conditions to estimate the probability of default, exposure at default and expected recoveries to estimate net losses at default. Beyond the R&S Period, expected credit losses are estimated by immediately reverting to long-term average loss rates. Management also estimates the likelihood and magnitude of recovery of previously written off loans considering how long ago the loan was written off and future economic conditions. Additionally, management evaluates whether to include qualitative reserves to cover losses that are expected but may not be adequately represented in the quantitative methods or the economic assumptions. The qualitative reserves address possible limitations within the models or factors not included within the models, such as external conditions, emerging portfolio trends, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due accounts, or management risk actions.

The principal considerations for our determination that performing procedures relating to the reserves for credit losses on Card Member loans is a critical audit matter are (i) the estimate of the reserves for credit losses on Card Member loans involved significant judgment by management, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the models, significant inputs, qualitative reserves, and significant assumptions, including the R&S Period and the loss rates used to estimate expected credit losses beyond the R&S Period and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the reserves for credit losses on Card Member loans. These procedures also included, among others, testing management’s process for estimating the reserves for credit losses on Card Member loans through (i) evaluating the appropriateness of management’s methodology, (ii) testing the completeness and accuracy of significant inputs and (iii) evaluating the reasonableness of certain qualitative reserves and significant assumptions used to estimate the reserves. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methodology and the reasonableness of certain qualitative reserves and certain significant assumptions, including the R&S Period and the loss rates used to estimate expected credit losses beyond the R&S Period.

Membership Rewards Liability

As described in Note 9 to the consolidated financial statements, the Membership Rewards liability represents management’s estimate of the cost of Membership Rewards points earned that are expected to be redeemed in the future. The Membership Rewards liability was $12.8 billion as of December 31, 2022. The weighted average cost (WAC) per point and the Ultimate Redemption Rate (URR) are key assumptions used to estimate the liability. As disclosed by management, the URR assumption is used by management to estimate the number of points earned that will ultimately be redeemed in future periods. Management uses statistical and actuarial models to estimate the URR based on redemption trends, card product type, enrollment tenure, card spend levels and credit attributes. The WAC per point assumption is derived from 12 months of redemptions and is adjusted as appropriate for certain changes in redemption costs that are not representative of future cost expectations and expected developments in redemption patterns.

The principal considerations for our determination that performing procedures relating to the Membership Rewards liability is a critical audit matter are (i) the estimate of the URR involved significant judgment by management, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the audit evidence relating to the models, significant inputs and assumptions used by management and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the estimate of the Membership Rewards liability, including the URR and WAC assumptions. These procedures also included, among others, (i) testing the completeness and accuracy of significant inputs to the statistical and actuarial models used to estimate the URR assumption, including redemption trends, card product type, enrollment tenure, and card spend levels, (ii) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of the URR assumption and comparing the independent estimate to management’s assumption to evaluate its reasonableness and (iii) comparing our independently calculated Membership Rewards liability to management’s estimate.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 10, 2023

We have served as the Company’s auditor since 2005.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


CONSOLIDATED FINANCIAL STATEMENTS			PAGE
Consolidated Statements of Income – For the Years Ended December 31, 20 2 2 , 20 2 1 and 2020			93
Consolidated Statements of Comprehensive Income – For the Years Ended December 31, 20 2 2 , 20 2 1 and 2020			94
Consolidated Balance Sheets – December 31, 20 2 2 and 2021			95
Consolidated Statements of Cash Flows – For the Years Ended December 31, 20 2 2 , 20 2 1 and 2020			96
Consolidated Statements of Shareholders’ Equity – For the Years Ended December 31, 202 2 , 202 1 and 20 20			97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			98
Note 1 – Summary of Significant Accounting Policies			98
Note 2 – Loans and Card Member Receivables			104
Note 3 – Reserves for Credit Losses			112
Note 4 – Investment Securities			115
Note 5 – Asset Securitizations			117
Note 6 – Other Assets			118
Note 7 – Customer Deposits			120
Note 8 – Debt			121
Note 9 – Other Liabilities			124
Note 1 0 – Stock -Based Compensation			125
Note 1 1 – Retirement Plans			127
Note 1 2 – Contingencies and Commitments			128
Note 1 3 – Derivatives and Hedging Activities			131
Note 1 4 – Fair Values			134
Note 1 5 – Guarantees			139
Note 1 6 – Common and Preferred Shares			139
Note 17 – Changes in Accumulated Other Comprehensive Income (Loss)			141
Note 18 – Service Fees and Other Revenue and Other Expenses			142
Note 19 – Restructuring			142
Note 2 0 – Income Taxes			143
Note 21 – Earnings Per Common Share (EPS)			146
Note 2 2 – Regulatory Matters and Capital Adequacy			147
Note 2 3 – Significant Credit Concentrations			149
Note 2 4 – Reportable Operating Segments and Geographic Operations			150
Note 2 5 – Parent Company			153

CONSOLIDATED STATEMENTS OF INCOME


Year Ended December 31 (Millions, except per share amounts)	2022		2021		2020
Revenues
Non-interest revenues
Discount revenue	$	30,739	$	24,563	$	19,435
Net card fees	6,070		5,195		4,664
Service fees and other revenue	4,521		3,316		2,702
Processed revenue	1,637		1,556		1,301
Total non-interest revenues	42,967		34,630		28,102
Interest income
Interest on loans	11,967		8,850		9,779
Interest and dividends on investment securities	96		83		127
Deposits with banks and other	595		100		177
Total interest income	12,658		9,033		10,083
Interest expense
Deposits	1,527		458		943
Long-term debt and other	1,236		825		1,155
Total interest expense	2,763		1,283		2,098
Net interest income	9,895		7,750		7,985
Total revenues net of interest expense	52,862		42,380		36,087
Provisions for credit losses
Card Member receivables	627		(73)		1,015
Card Member loans	1,514		(1,155)		3,453
Other	41		(191)		262
Total provisions for credit losses	2,182		(1,419)		4,730
Total revenues net of interest expense after provisions for credit losses	50,680		43,799		31,357
Expenses
Card Member rewards	14,002		11,007		8,041
Business development	4,943		3,762		3,051
Card Member services	2,959		1,993		1,230
Marketing	5,458		5,291		3,696
Salaries and employee benefits	7,252		6,240		5,718
Other, net	6,481		4,817		5,325
Total expenses	41,095		33,110		27,061
Pretax income	9,585		10,689		4,296
Income tax provision	2,071		2,629		1,161
Net income	$	7,514	$	8,060	$	3,135
Earnings per Common Share — (Note 21)(a)
Basic	$	9.86	$	10.04	$	3.77
Diluted	$	9.85	$	10.02	$	3.77
Average common shares outstanding for earnings per common share:
Basic	751		789		805
Diluted	752		790		806

(a)Represents net income less (i) earnings allocated to participating share awards of $57 million, $56 million and $20 million for the years ended December 31, 2022, 2021 and 2020, respectively, (ii) dividends on preferred shares of $57 million, $71 million and $79 million for the years ended December 31, 2022, 2021 and 2020, respectively, and (iii) equity-related adjustments of $16 million related to the redemption of preferred shares for the year ended December 31, 2021.

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


Year Ended December 31 (Millions)	2022		2021		2020
Net income	$	7,514	$	8,060	$	3,135
Other comprehensive (loss) income:
Net unrealized debt securities (losses) gains, net of tax	(87)		(42)		32
Foreign currency translation adjustments, net of hedges and tax	(230)		(163)		(40)
Net unrealized pension and other postretirement benefits, net of tax	52		155		(150)
Other comprehensive (loss) income	(265)		(50)		(158)
Comprehensive income	$	7,249	$	8,010	$	2,977

See Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEETS


December 31 (Millions, except share data)	2022		2021
Assets
Cash and cash equivalents
Cash and due from banks (includes restricted cash of consolidated variable interest entities: 2022, $5; 2021, $11)	$	5,510	$	1,292
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2022, $318; 2021, $463)	28,097		20,548
Short-term investment securities (includes restricted investments of consolidated variable interest entities: 2022, $54; 2021, $32)	307		188
Total cash and cash equivalents	33,914		22,028
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2022, $5,193; 2021, $5,175), less reserves for credit losses: 2022, $229; 2021, $64	57,384		53,581

Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2022, $28,461; 2021, $26,587), less reserves for credit losses: 2022, $3,747; 2021, $3,305	104,217		85,257
Other loans, less reserves for credit losses: 2022, $59; 2021, $52	5,357		2,859
Investment securities	4,578		2,591
Premises and equipment, less accumulated depreciation and amortization: 2022, $9,850; 2021, $8,602	5,215		4,988
Other assets, less reserves for credit losses: 2022, $22; 2021, $25	17,689		17,244
Total assets	$	228,354	$	188,548
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits	$	110,239	$	84,382
Accounts payable	12,133		10,574
Short-term borrowings	1,348		2,243
Long-term debt (includes debt issued by consolidated variable interest entities: 2022, $12,662; 2021, $13,803)	42,573		38,675
Other liabilities	37,350		30,497
Total liabilities	$	203,643	$	166,371
Contingencies and Commitments (Note 12)
Shareholders’ Equity
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of December 31, 2022 and 2021 (Note 16)	—		—
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 743 million shares as of December 31, 2022 and 761 million shares as of December 31, 2021	149		153
Additional paid-in capital	11,493		11,495
Retained earnings	16,279		13,474
Accumulated other comprehensive income (loss)	(3,210)		(2,945)
Total shareholders’ equity	24,711		22,177
Total liabilities and shareholders’ equity	$	228,354	$	188,548

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS


Years Ended December 31 (Millions)	2022		2021		2020
Cash Flows from Operating Activities
Net income	$	7,514	$	8,060	$	3,135
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses	2,182		(1,419)		4,730
Depreciation and amortization	1,626		1,695		1,543
Stock-based compensation	375		330		249
Deferred taxes	(1,189)		294		(939)
Other items (a)	365		(772)		683
Originations of loans held-for-sale	(277)		—		—
Proceeds from sales of loans held-for-sale	277		—		—
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other assets	1,391		1,068		(1,785)
Accounts payable & other liabilities	8,815		5,389		(2,025)
Net cash provided by operating activities	21,079		14,645		5,591
Cash Flows from Investing Activities
Sale of investment securities	26		62		69
Maturities and redemptions of investment securities	1,892		20,032		7,159
Purchase of investments	(4,175)		(1,517)		(20,562)
Net (increase) decrease in Card Member loans and receivables, and other loans	(29,562)		(27,557)		26,906
Purchase of premises and equipment, net of sales: 2022, $1; 2021, $88; 2020, $1	(1,855)		(1,550)		(1,478)
Acquisitions/dispositions, net of cash acquired	(15)		1		(597)
Other investing activities	—		—		135
Net cash (used in) provided by investing activities	(33,689)		(10,529)		11,632
Cash Flows from Financing Activities
Net increase (decrease) in customer deposits	25,902		(2,468)		13,542
Net (decrease) increase in short-term borrowings	(706)		461		(4,627)
Proceeds from long-term debt	23,230		7,788		69
Payments of long-term debt	(18,906)		(11,662)		(15,593)
Issuance of American Express preferred shares	—		1,584		—
Redemption of American Express preferred shares	—		(1,600)		—
Issuance of American Express common shares	56		64		44
Repurchase of American Express common shares and other	(3,502)		(7,652)		(1,029)
Dividends paid	(1,565)		(1,448)		(1,474)
Net cash provided by (used in) financing activities	24,509		(14,933)		(9,068)
Effect of foreign currency exchange rates on cash and cash equivalents	(13)		(120)		364
Net increase (decrease) in cash and cash equivalents	11,886		(10,937)		8,519
Cash and cash equivalents at beginning of year	22,028		32,965		24,446
Cash and cash equivalents at end of year	$	33,914	$	22,028	$	32,965

Supplemental cash flow information


Cash and cash equivalents reconciliation	2022		2021		2020
Cash and cash equivalents per Consolidated Balance Sheets	$	33,914	$	22,028	$	32,965
Restricted balances included in Cash and cash equivalents	544		525		606
Total cash and cash equivalents, excluding restricted balances	$	33,370	$	21,503	$	32,359

(a)Includes net gains and losses on fair value hedges, net gains and losses on Amex Ventures investments and changes in equity method investments.

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


(Millions, except per share amounts)	Total		Preferred Shares		Common Shares		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
Balances as of December 31, 2019	$	23,071	$	—	$	163	$	11,774	$	(2,737)	$	13,871
Cumulative effect of change in accounting principle - Reserve for Credit Losses (a)	(882)		—		—		—		—		(882)
Net income	3,135		—		—		—		—		3,135
Other comprehensive loss	(158)		—		—		—		(158)		—
Repurchase of common shares	(875)		—		(2)		(105)		—		(768)
Other changes, primarily employee plans	164		—		—		212		—		(48)
Cash dividends declared preferred Series B, $45,807.57 per share	(34)		—		—		—		—		(34)
Cash dividends declared preferred Series C, $52,919.91 per share	(45)		—		—		—		—		(45)
Cash dividends declared common, $1.72 per share	(1,392)		—		—		—		—		(1,392)
Balances as of December 31, 2020	22,984		—		161		11,881		(2,895)		13,837

Net income	8,060		—		—		—		—		8,060
Other comprehensive loss	(50)		—		—		—		(50)		—
Preferred shares issued	1,584		—		—		1,584		—		—
Redemption of preferred shares	(1,600)		—		—		(1,584)		—		(16)
Repurchase of common shares	(7,598)		—		(9)		(631)		—		(6,958)
Other changes, primarily employee plans	227		—		1		245		—		(19)
Cash dividends declared preferred Series B, $36,419.41 per share	(27)		—		—		—		—		(27)
Cash dividends declared preferred Series C, $26,317.47 per share	(23)		—		—		—		—		(23)
Cash dividends declared preferred Series D, $13,213.89 per share	(21)		—		—		—		—		(21)
Cash dividends declared common, $1.72 per share	(1,359)		—		—		—		—		(1,359)
Balances as of December 31, 2021	22,177		—		153		11,495		(2,945)		13,474
Net income	7,514		—		—		—		—		7,514
Other comprehensive loss	(265)		—		—		—		(265)		—


Repurchase of common shares	(3,332)		—		(4)		(302)		—		(3,026)
Other changes, primarily employee plans	242		—		—		300		—		(58)


Cash dividends declared preferred Series D, $35,993.05 per share	(57)		—		—		—		—		(57)
Cash dividends declared common, $2.08 per share	(1,568)		—		—		—		—		(1,568)
Balances as of December 31, 2022	$	24,711	$	—	$	149	$	11,493	$	(3,210)	$	16,279

(a)Represents $1,170 million, net of tax of $288 million, related to the impact as of January 1, 2020 of adopting the Current Expected Credit Loss (CECL) methodology for the recognition of credit losses on certain financial instruments.

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLID****ATED FINANCIAL STATEMENTS

NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE C****OMPANY

We are a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Our principal products and services are credit and charge card products, along with travel and lifestyle related services, offered to consumers and businesses around the world. Our various products and services are offered globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

Refer to Note 24 for additional discussion of the products and services that comprise each segment. Corporate functions and certain other businesses and operations are included in Corporate & Other.

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Significant intercompany transactions are eliminated.

We consolidate entities in which we hold a “controlling financial interest.” For voting interest entities, we are considered to hold a controlling financial interest when we are able to exercise control over the investees’ operating and financial decisions. For variable interest entities (VIEs), the determination of which is based on the amount and characteristics of the entity’s equity, we are considered to hold a controlling financial interest when we are determined to be the primary beneficiary. A primary beneficiary is the party that has both: (1) the power to direct the activities that most significantly impact that VIE’s economic performance, and (2) the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE.

Entities in which our voting interest in common equity does not provide it with control, but allows us to exert significant influence over operating and financial decisions, are accounted for under the equity method. We also have investments in equity securities where our voting interest is below the level of significant influence, including investments that we make in non-public companies in the ordinary course of business. Such investments are initially recorded at cost and adjusted to fair value through earnings for observable price changes in orderly transactions for identical or similar instruments of the same company or if they are determined to be impaired. See Note 4 for the accounting policy for our marketable equity securities.

FOREIGN CURRENCY

Transactions conducted in currencies other than the applicable functional currency of an entity are converted to the functional currency at the exchange rate on the transaction date. At the period end, monetary assets and liabilities are remeasured to the functional currency using period end rates. The resulting transaction gains and losses are recorded in Other, net expenses in the Consolidated Statements of Income.

For subsidiaries where the functional currency is not the U.S. dollar, the monetary assets and liabilities and results of operations are translated for consolidation purposes into U.S. dollars at period-end rates for monetary assets and liabilities and generally at average rates for results of operations. The resulting translation adjustments, along with any related qualifying hedge and tax effects, are included in accumulated other comprehensive income (loss) (AOCI), a component of shareholders’ equity. Translation adjustments, including qualifying hedge and tax effects, are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations.

AMOUNTS BASED ON ESTIMATES AND ASSUMPTIONS

Accounting estimates are an integral part of the Consolidated Financial Statements. These estimates are based, in part, on management’s assumptions concerning future events. Among the more significant assumptions are those that relate to reserves for Card Member credit losses on loans and receivables, Membership Rewards liability, goodwill and income taxes. These accounting estimates reflect the best judgment of management, but actual results could differ.

INCOME STATEMENT

Revenue is recognized when obligations under the terms of a contract with our customers are satisfied. We are not required to disclose revenue that is expected to be recognized in future periods related to contracts that have an original expected duration of one year or less and contracts with variable consideration (e.g., discount revenue). Non-interest revenue expected to be recognized in future periods related to all other contracts with customers is not material.

Discount Revenue

Discount revenue represents the amount we earn and retain from the merchant payable for facilitating transactions between Card Members and merchants on payment products issued by American Express. The amount of fees charged for accepting our cards as payment, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount. Discount revenue is generally recorded at the time the Card Member transaction occurs.

Card acceptance agreements, which include the agreed-upon terms for charging the merchant discount fee, vary in duration. Our contracts with small- and mid-sized merchants generally have no fixed contractual duration, while those with large merchants are generally for fixed periods, which typically range from three to seven years in duration. Our fixed-period agreements may include auto-renewal features, which may allow the existing terms to continue beyond the stated expiration date until a new agreement is reached. We satisfy our obligations under these agreements over the contract term, often on a daily basis, including through the processing of Card Member transactions and the availability of our payment network.

In cases where the merchant acquirer is a third party (which is the case, for example, under our OptBlue program, or with certain of our network partners), we receive a network rate fee in our settlement with the merchant acquirer, which is individually negotiated between us and that merchant acquirer and is recorded as discount revenue at the time the Card Member transaction occurs.

Net Card Fees

Net card fees represent revenue earned from annual card membership fees, which vary based on the type of card and the number of cards for each account. These fees, net of acquisition costs and a reserve for projected refunds for Card Member cancellations, are deferred and recognized on a straight-line basis over the twelve-month card membership period as Net card fees in the Consolidated Statements of Income and are therefore more stable in relation to short term business or economic shifts. The unamortized net card fee balance is reported in Other liabilities on the Consolidated Balance Sheets.

Service Fees and Other Revenue

Service fees and other revenue includes service fees earned from merchants and other customers and travel commissions and fees, which are generally recognized in the period when the service is performed, and delinquency and foreign currency-related fees, which are primarily recognized in the period when they are charged to the Card Member. In addition, Service fees and other revenue includes income (losses) from our investments in which we have significant influence and therefore account for under the equity method. Refer to Note 18 for additional information.

Processed Revenue

Processed revenue primarily represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners. In our role as the operator of the American Express network, we settle with merchants and our third-party merchant acquirers on behalf of our network card issuing partners. The amount of fees charged for accepting American Express-branded cards is generally deducted from the payment to the merchant or third-party merchant acquirer and recorded as Processed revenue at the time the Card Member transaction occurs. Our network card issuing partners receive an issuer rate that is individually negotiated between that issuer and us and is recorded as contra-revenue within Processed revenue to the extent that there is revenue from the same customer, after which any additional issuer rate is recorded as expense in Business development. Processed revenue also includes fees related to alternative payment solutions, which are generally recognized when the service is performed.

Contra-revenue

Payments made pursuant to contractual arrangements with our merchants, network partners, and other customers are classified as contra-revenue, except where we receive goods, services or other benefits for which the fair value is determinable and measurable, in which case they are recorded as expense.

Interest Income

Interest on Card Member loans is assessed using the average daily balance method. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding, in accordance with the terms of the applicable account agreement, until the outstanding balance is paid, or written off.

Interest and dividends on investment securities primarily relate to our performing fixed-income securities. Interest income is recognized as earned using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so that a constant rate of return is recognized on the investment security’s outstanding balance. Amounts are recognized until securities are in default or when it becomes likely that future interest payments will not be made as scheduled.

Interest on deposits with banks and other is recognized as earned, and primarily relates to the placement of cash, in excess of near-term funding requirements, in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

Interest Expense

Interest expense includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs, and is recognized as incurred. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term debt and short-term borrowings, as well as the realized impact of derivatives used to hedge interest rate risk on our long-term debt.

Card Member Rewards

We issue charge and credit cards that allow Card Members to participate in various rewards programs (e.g., Membership Rewards, cash back and cobrand). Rewards expense is recognized in the period Card Members earn rewards, generally by spending on their enrolled card products. For Membership Rewards and cash back, we record a liability that represents the rewards that are expected to be redeemed, as well as, for Membership Rewards, the estimated cost of points earned. For cobrand, we record a liability based primarily on rewards earned on Card Member spending on cobrand cards, and make associated payments to our cobrand partners. The partner is liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program. Card Member rewards liabilities are impacted over time by enrollment levels, attrition, the volume of points earned and redeemed, and the associated redemption costs. Changes in the Card Member rewards liabilities during the period are taken as an increase or decrease to the Card Member rewards expense in the Consolidated Statements of Income.

Business Development

Business development expense includes payments to our cobrand partners, corporate client incentive payments earned on achievement of pre-set targets and certain payments to network partners. These costs are generally expensed as incurred.

Card Member Services

Card Member services expense represents costs incurred in providing our Card Members with various value-added benefits and services, which are generally expensed as incurred.

Marketing

Marketing expense includes costs incurred in the development and initial placement of advertising, which are expensed in the period in which the advertising first takes place. All other marketing expenses are generally expensed as incurred.

BALANCE SHEET

Cash and Cash Equivalents

Cash and cash equivalents include cash and amounts due from banks, interest-bearing bank balances, including securities purchased under resale agreements, restricted cash, and other highly liquid investments with original maturities of 90 days or less. Restricted cash primarily represents amounts related to Card Member credit balances as well as upcoming debt maturities of consolidated VIEs.

Goodwill

Goodwill represents the excess of the acquisition cost of an acquired business over the fair value of assets acquired and liabilities assumed. We allocate goodwill to our reporting units for the purpose of impairment testing. A reporting unit is defined as an operating segment, or a business that is one level below an operating segment, for which discrete financial information is regularly reviewed by the operating segment manager.

We evaluate goodwill for impairment annually as of June 30, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of one or more of our reporting units below its carrying value. Prior to completing the assessment of goodwill for impairment, we also perform a recoverability test of certain long-lived assets. We have the option to perform a qualitative assessment of goodwill impairment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Alternatively, we can perform a more detailed quantitative assessment of goodwill impairment.

This qualitative assessment entails the evaluation of factors such as economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other company and reporting unit-specific events. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we then perform the impairment evaluation using the quantitative assessment.

The quantitative assessment compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds the reporting unit's fair value, an impairment loss is recognized for the amount over and above the reporting unit's fair value.

When measuring the fair value of our reporting units in the quantitative assessment, we use widely accepted valuation techniques, applying a combination of the income approach (discounted cash flows) and market approach (market multiples). When preparing discounted cash flow models under the income approach, we use internal forecasts to estimate future cash flows expected to be generated by the reporting units. To discount these cash flows, we use the expected cost of equity, determined by using a capital asset pricing model. We believe the discount rates appropriately reflect the risks and uncertainties in the financial markets generally and specifically in our internally-developed forecasts. When using market multiples under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings or revenues) to our reporting units’ operating results.

For the years ended December 31, 2022 and 2021, we performed a qualitative assessment in connection with our annual goodwill impairment evaluation and determined that it was more likely than not that the fair values of each of our reporting units exceeded their carrying values. In addition, during the year ended December 31, 2022, we performed a quantitative goodwill impairment assessment for those reporting units which were impacted by the realignment of our operating segments and concluded that their fair values exceeded their carrying values. Refer to Note 24 for further information on the realignment of our operating segments.

Premises and Equipment

Premises and equipment, including leasehold improvements, are carried at cost less accumulated depreciation. Costs incurred during construction are capitalized and are depreciated once an asset is placed in service. Depreciation is generally computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 10 years for equipment, furniture and building improvements, and from 40 to 50 years for premises, which are depreciated based upon their estimated useful life at the acquisition date.

Certain costs associated with the acquisition or development of internal-use software are also capitalized and recorded in Premises and equipment. Once the specific software feature is ready for its intended use, these costs are amortized on a straight-line basis over the software’s estimated useful life, generally 5 years. We review these assets for impairment using the same impairment methodology used for our intangible assets.

Leasehold improvements are depreciated using the straight-line method over the lesser of the remaining term of the leased facility, or the economic life of the improvement, and range from 5 to 10 years. We recognize lease restoration obligations at the fair value of the restoration liabilities when incurred and amortize the restoration assets over the lease term.

Leases

We have operating leases worldwide for facilities and equipment, which, for those leases with terms greater than 12 months, are recorded as lease-related assets and liabilities. We do not separate lease and non-lease components. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs and lease incentives. Lease liabilities are recognized at the present value of the contractual fixed lease payments, discounted using our incremental borrowing rate as of the lease commencement date or upon modification of the lease. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

OTHER SIGNIFICANT ACCOUNTING POLICIES

The following table identifies our other significant accounting policies, along with the related Note.


Significant Accounting Policy	Note Number	Note Title
Loans and Card Member Receivables	Note 2	Loans and Card Member Receivables
Reserves for Credit Losses	Note 3	Reserves for Credit Losses
Investment Securities	Note 4	Investment Securities
Asset Securitizations	Note 5	Asset Securitizations
Legal Contingencies	Note 12	Contingencies and Commitments
Derivative Financial Instruments and Hedging Activities	Note 13	Derivatives and Hedging Activities
Fair Value Measurements	Note 14	Fair Values
Guarantees	Note 15	Guarantees
Income Taxes	Note 20	Income Taxes

CLASSIFICATION OF VARIOUS ITEMS

Certain reclassifications of prior period amounts have been made to conform to the current period presentation.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

In March 2022, the Financial Accounting Standards Board issued new accounting guidance on troubled debt restructuring (TDR) and write-offs, effective January 1, 2023, with early adoption permitted. The amendments eliminate the existing TDR guidance for those entities that have adopted Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, create a single loan modification accounting model and enhance disclosure requirements for loan modifications and write-offs. Beginning with the quarter ending March 31, 2023, our financial statements will reflect the adoption of this standard on a prospective basis. The updated guidance will not have a material impact to our Consolidated Financial Statements.

Effective January 1, 2020, we adopted the new credit reserving methodology, applicable to certain financial instruments, known as the Current Expected Credit Loss (CECL) methodology resulting in an increase in the reserves for total loans and receivables credit losses on adoption, which was recorded under a modified retrospective transition with an offset to the opening balance of retained earnings. Refer to Note 3 for how management estimates reserves for credit losses in accordance with the CECL methodology.

NOTE 2

LOANS AND CARD MEMBER RECEIVABLES

Our lending and charge payment card products that we offer to consumer, small business and corporate customers result in the generation of Card Member loans and Card Member receivables. We also extend credit to customers through non-card financing products, resulting in Other loans.

CARD MEMBER AND OTHER LOANS

Card Member loans are generally recorded at the time a Card Member enters into a point-of-sale transaction with a merchant and represent revolve-eligible transactions on our card products, as well as any finance charges and associated card-related fees. Card Members with outstanding revolving loans are required to make a minimum monthly payment, and the balances that Card Members choose to revolve are subject to finance charges. These loans have varying terms such as credit limits, interest rates, fees and payment structures, which can be revised over time based on new information about Card Members, and in accordance with applicable regulations and the respective product’s terms and conditions.

Card Member loans are presented on the Consolidated Balance Sheets net of reserves for credit losses (refer to Note 3), and include principal and any related accrued interest and fees. Our policy generally is to cease accruing interest on a Card Member loan at the time the account is written off, and establish reserves for interest that we believe will not be collected.

Other loans are recorded at the time any extension of credit is provided to consumer and commercial customers for non-card financing products. These loans have a range of fixed terms such as interest rates, fees and repayment periods. Borrowers are typically required to make pre-established monthly payments over the term of the loan. Non-card financing products are not associated with a Card Member agreement, and instead are governed by a separate borrowing relationship. Other loans are presented on the Consolidated Balance Sheets net of reserves for credit losses, and include principal and any related accrued interest and fees.

Card Member and Other loans as of December 31, 2022 and 2021 consisted of:


(Millions)	2022		2021
Consumer (a)	$	84,964	$	70,467
Small Business	22,947		18,040
Corporate	53		55
Card Member loans	107,964		88,562
Less: Reserves for credit losses	3,747		3,305
Card Member loans, net	$	104,217	$	85,257
Other loans, net (b)	$	5,357	$	2,859

(a)Includes approximately $28.5 billion and $26.6 billion of gross Card Member loans available to settle obligations of a consolidated VIE as of December 31, 2022 and 2021, respectively.

(b)Other loans represent consumer and commercial non-card financing products, and Small Business Administration Paycheck Protection Program (PPP) loans. There were $7 million and $36 million of gross PPP loans outstanding as of December 31, 2022 and 2021, respectively. Other loans are presented net of reserves for credit losses of $59 million and $52 million as of December 31, 2022 and 2021, respectively.

CARD MEMBER RECEIVABLES

Card Member receivables are recorded at the time a Card Member enters into a point-of-sale transaction with a merchant and represent amounts due on our card products and card-related fees that need to be paid in full on or before the Card Member’s payment due date.

Charge Card Members generally must pay the full amount billed each month. Card Member receivable balances are presented on the Consolidated Balance Sheets net of reserves for credit losses (refer to Note 3), and include principal and any related accrued fees.

Card Member receivables as of December 31, 2022 and 2021 consisted of:


(Millions)	2022		2021
Consumer	$	22,885	$	22,392
Small Business	19,629		17,977
Corporate(a)	15,099		13,276
Card Member receivables	57,613		53,645
Less: Reserves for credit losses	229		64
Card Member receivables, net	$	57,384	$	53,581

(a)Includes $5.2 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of both December 31, 2022 and 2021.

CARD MEMBER LOANS AND RECEIVABLES AGING

Generally, a Card Member account is considered past due if payment due is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of December 31, 2022 and 2021:


2022 (Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Consumer	$	84,102	$	281	$	198	$	383	$	84,964
Small Business	22,731		81		49		86		22,947
Corporate (a)	(b)		(b)		(b)		—		53
Card Member Receivables:
Consumer	22,634		83		56		112		22,885
Small Business	$	19,330	$	120	$	69	$	110	$	19,629
Corporate (a)	(b)		(b)		(b)		$	85	$	15,099


2021 (Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Consumer	$	69,960	$	158	$	112	$	237	$	70,467
Small Business	17,950		34		19		37		18,040
Corporate (a)	(b)		(b)		(b)		—		55
Card Member Receivables:
Consumer	22,279		41		24		48		22,392
Small Business	$	17,846	$	59	$	28	$	44	$	17,977
Corporate (a)	(b)		(b)		(b)		$	42	$	13,276

(a)For corporate accounts, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan or receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).

(b)Delinquency data for periods other than 90+ days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.

CREDIT QUALITY INDICATORS FOR CARD MEMBER LOANS AND RECEIVABLES

The following tables present the key credit quality indicators as of or for the years ended December 31:


	2022						2021
	Net Write-Off Rate						Net Write-Off Rate
	Principal Only (a)		Principal, Interest & Fees (a)		30+ Days Past Due as a % of Total		Principal Only (a)		Principal, Interest & Fees (a)		30+ Days Past Due as a % of Total
Card Member Loans:
Consumer	0.9	%	1.2	%	1.0	%	0.9	%	1.3	%	0.7	%
Small Business	0.7	%	0.8	%	0.9	%	0.6	%	0.8	%	0.5	%
Card Member Receivables:
Consumer	0.8	%	0.9	%	1.1	%	0.3	%	0.4	%	0.5	%
Small Business	1.1	%	1.2	%	1.5	%	0.3	%	0.4	%	0.7	%
Corporate (d)	(b)		0.4	%	(c)		(b)		—	%	(c)

(a)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

(b)Net write-off rate based on principal losses only is not available due to system constraints.

(c)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ days past billing as a % of total was 0.6% and 0.3% as of December 31, 2022 and 2021, respectively.

(d)The net write-off rate for the year ended December 31, 2021 includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which had resulted in a write-off in the year ended December 21, 2020.

Refer to Note 3 for additional indicators, including external environmental qualitative factors, management considers in its evaluation process for reserves for credit losses.

IMPAIRED LOANS AND RECEIVABLES

Impaired loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that we will be unable to collect all amounts due according to the original contractual terms of the customer agreement. We consider impaired loans and receivables to include (i) loans over 90 days past due still accruing interest, (ii) non-accrual loans and (iii) loans and receivables modified as troubled debt restructurings (TDRs).

In instances where the customer is experiencing financial difficulty, we may modify, through various financial relief programs, loans and receivables with the intention to minimize losses and improve collectability, while providing customers with temporary or permanent financial relief. We have classified loans and receivables in these modification programs as TDRs and continue to classify customer accounts that have exited a modification program as a TDR, with such accounts identified as “Out of Program TDRs.”

Such modifications to the loans and receivables primarily include (i) temporary interest rate reductions (possibly as low as zero percent, in which case the loan is characterized as non-accrual in our TDR disclosures), (ii) placing the customer on a fixed payment plan not to exceed 60 months and (iii) suspending delinquency fees until the customer exits the modification program. Upon entering the modification program, the customer’s ability to make future purchases is either limited, canceled, or in certain cases suspended until the customer successfully exits from the modification program. In accordance with the modification agreement with the customer, loans and/or receivables may revert back to the original contractual terms (including the contractual interest rate where applicable) when the customer exits the modification program, which is (i) when all payments have been made in accordance with the modification agreement or (ii) when the customer defaults out of the modification program.

Reserves for modifications deemed TDRs are measured individually and incorporate a discounted cash flow model. All changes in the impairment measurement are included within provisions for credit losses.

The following tables provide additional information with respect to our impaired loans and receivables as of December 31, 2022, 2021 and 2020:


	As of December 31, 2022
					Accounts Classified as a TDR (c)
2022 (Millions)	Over 90 days Past Due & Accruing Interest (a)		Non-Accruals (b)		In Program (d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Consumer	$	252	$	155	$	781	$	1,098	$	2,286	$	335
Small Business	54		34		267		380		735		108
Corporate	—		—		—		—		—		—
Card Member Receivables:
Consumer	—		—		257		179		436		20
Small Business	—		—		403		402		805		40
Corporate	—		—		6		7		13		1
Other Loans (f)	3		2		19		2		26		—
Total	$	309	$	191	$	1,733	$	2,068	$	4,301	$	504


	As of December 31, 2021
					Accounts Classified as a TDR (c)
2021 (Millions)	Over 90 days Past Due & Accruing Interest (a)		Non-Accruals (b)		In Program (d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Consumer	$	149	$	82	$	708	$	997	$	1,936	$	415
Small Business	19		14		176		332		541		132
Corporate	—		—		—		—		—		—
Card Member Receivables:
Consumer	—		—		133		130		263		9
Small Business	—		—		247		297		544		39
Corporate	—		—		1		6		7		—
Other Loans (f)	1		—		67		2		70		1
Total	$	169	$	96	$	1,332	$	1,764	$	3,361	$	596


	As of December 31, 2020
					Accounts Classified as a TDR (c)
2020 (Millions)	Over 90 days Past Due & Accruing Interest (a)		Non-Accruals (b)		In Program (d)		Out of Program(e)		Total Impaired Balance		Reserve for Credit Losses - TDRs
Card Member Loans:
Consumer	$	203	$	146	$	1,586	$	248	$	2,183	$	782
Small Business	21		29		478		67		595		285
Corporate	—		—		—		—		—		—
Card Member Receivables:
Consumer	—		—		240		34		274		60
Small Business	—		—		516		73		589		136
Corporate	—		—		18		2		20		3
Other Loans (f)	2		1		248		6		257		80
Total	$	226	$	176	$	3,086	$	430	$	3,918	$	1,346

(a)Our policy is generally to accrue interest through the date of write-off (typically 180 days past due). We establish reserves for interest that we believe will not be collected. Amounts presented exclude loans classified as a TDR.

(b)Non-accrual loans not in modification programs primarily include certain loans placed with outside collection agencies for which we have ceased accruing interest. Amounts presented exclude loans classified as TDRs.

(c)Accounts classified as a TDR include $48 million, $41 million and $32 million that are over 90 days past due and accruing interest and $17 million, $19 million and $11 million that are non-accruals as of December 31, 2022, 2021 and 2020, respectively.

(d)In Program TDRs include accounts that are currently enrolled in a modification program.

(e)Out of Program TDRs include $1,922 million, $1,621 million and $316 million of accounts that have successfully completed a modification program and $146 million, $143 million and $114 million of accounts that were not in compliance with the terms of the modification programs as of December 31, 2022, 2021 and 2020, respectively.

(f)Other loans primarily represent consumer and commercial non-card financing products.

LOANS AND RECEIVABLES MODIFIED AS TDRs

The following tables provide additional information with respect to loans and receivables that were modified as TDRs during the years ended December 31:


2022	Number of Accounts (thousands)	Account Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	149	$	1,002	14	(b)
Card Member Receivables	27	900		(c)	20
Other Loans (d)	4	$	8	2	17
Total	180	$	1,910


2021	Number of Accounts (thousands)	Account Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	112	$	789	13	(b)
Card Member Receivables	21	437		(c)	18
Other Loans (d)	4	$	13	3	16
Total	137	$	1,239


2020	Number of Accounts (thousands)	Account Balances (millions) (a)		Average Interest Rate Reduction (% points)	Average Payment Term Extensions (# of months)
Troubled Debt Restructurings:
Card Member Loans	272	$	2,347	14	(b)
Card Member Receivables	47	1,202		(c)	19
Other Loans (d)	9	$	345	3	16
Total	328	$	3,894

(a)Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on loans and principal and fees on receivables. Modifications did not reduce the principal balance.

(b)For Card Member loans, there have been no payment term extensions.

(c)We do not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.

(d)Other loans primarily represent consumer and commercial non-card financing products.

The following tables provide information with respect to loans and receivables modified as TDRs that subsequently defaulted within twelve months of modification. A customer can miss up to three payments before being considered in default, depending on the terms of the modification program.


2022	Number of Accounts (thousands)	Aggregated Outstanding Balances Upon Default (millions) (a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	14	$	81
Card Member Receivables	3	38
Other Loans (b)	1	1
Total	18	$	120


2021	Number of Accounts (thousands)	Aggregated Outstanding Balances Upon Default (millions) (a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	24	$	174
Card Member Receivables	5	56
Other Loans (b)	3	9
Total	32	$	239


2020	Number of Accounts (thousands)	Aggregated Outstanding Balances Upon Default (millions) (a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans	17	$	127
Card Member Receivables	3	55
Other Loans (b)	3	6
Total	23	$	188

(a)The outstanding balances upon default include principal, fees and accrued interest on loans, and principal and fees on receivables.

(b)Other loans primarily represent consumer and commercial non-card financing products.

NOTE 3

RESERVES FOR CREDIT LOSSES

Reserves for credit losses represent our best estimate of the expected credit losses in our outstanding portfolio of Card Member loans and receivables as of the balance sheet date. The CECL methodology requires us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period), which is approximately three years, beyond the balance sheet date. We make various judgments combined with historical loss experience to determine a reserve rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.

We use a combination of statistically-based models that incorporate current and future economic conditions throughout the R&S Period. The process of estimating expected credit losses is based on several key models: Probability of Default (PD), Exposure at Default (EAD), and future recoveries for each month of the R&S Period. Beyond the R&S Period, we estimate expected credit losses by immediately reverting to long-term average loss rates.

PD models are used to estimate the likelihood an account will be written-off.
EAD models are used to estimate the balance of an account at the time of write-off. This includes balances less expected repayments based on historical payment and revolve behavior, which vary by customer. Due to the nature of revolving loan portfolios, the EAD models are complex and involve assumptions regarding the relationship between future spend and payment behaviors.
Recovery models are used to estimate amounts that are expected to be received from Card Members after default occurs, typically as a result of collection efforts. Future recoveries are estimated taking into consideration the time of default, time elapsed since default and macroeconomic conditions.

We also estimate the likelihood and magnitude of recovery of previously written off accounts considering how long ago the account was written off and future economic conditions, even if such expected recoveries exceed expected losses. Our models are developed using historical loss experience covering the economic cycle and consider the impact of account characteristics on expected losses.

Future economic conditions that are incorporated over the R&S Period include multiple macroeconomic scenarios provided to us by an independent third party. Management reviews these economic scenarios each period and applies judgment to weight them in order to reflect the uncertainty surrounding these scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real gross domestic product (GDP), that are significant to our models.

We also evaluate whether to include qualitative reserves to cover losses that are expected but, in our assessment, may not be adequately represented in the quantitative methods or the economic assumptions. We consider whether to adjust the quantitative reserves (higher or lower) to address possible limitations within the models or factors not included within the models, such as external conditions, emerging portfolio trends, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due accounts, or management risk actions.

Lifetime losses for most of our loans and receivables are evaluated at an appropriate level of granularity, including assessment on a pooled basis where financial assets share similar risk characteristics, such as past spend and remittance behaviors, credit bureau scores where available, delinquency status, tenure of balance outstanding, amongst others. Credit losses on accrued interest are measured and presented as part of Reserves for credit losses on the Consolidated Balance Sheets and within the Provisions for credit losses in the Consolidated Statements of Income, rather than reversing interest income. Separate models are used for accounts deemed a troubled debt restructuring, which are measured individually and incorporate a discounted cash flow model. See Note 2 for information on troubled debt restructurings.

Loans and receivable balances are written off when we consider amounts to be uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past due for pay in full or revolving loans and 120 days past due for term loans. Loans and receivables in bankruptcy or owed by deceased individuals are generally written off upon notification.

The following table reflects the range of macroeconomic scenario key variables used, in conjunction with other inputs, to calculate reserves for credit losses:


	U.S. Unemployment Rate		U.S. GDP Growth (Contraction) (a)
	December 31, 2022	December 31, 2021		December 31, 2022		December 31, 2021
Fourth quarter of 2022	4%		4% - 9%		(0.1)%		2% -1%
First quarter of 2023	3% - 6%		3% - 9%		5% - (1)%		3% - 1%
Fourth quarter of 2023	3% - 8%		3% - 7%		6% - 0.2%		4% - 3%
Fourth quarter of 2024	3% - 7%		4% - 6%		3% - 2%		3%

(a)Real GDP quarter over quarter percentage change seasonally adjusted to annualized rates.

CHANGES IN CARD MEMBER LOANS RESERVE FOR CREDIT LOSSES

Card Member loans reserve for credit losses increased for the year ended December 31, 2022, primarily driven by an increase in loans outstanding, higher delinquencies and changes in macroeconomic forecasts, partially offset by the release of COVID-19 pandemic-driven reserves.

Card Member loans reserve for credit losses decreased for the year ended December 31, 2021, primarily due to improved portfolio quality and macroeconomic forecasts, in large part driven by improvement in unemployment rate projections, partially offset by an increase in loans outstanding.

The following table presents changes in the Card Member loans reserve for credit losses for the years ended December 31:


(Millions)	2022		2021		2020
Beginning Balance	$	3,305	$	5,344	$	4,027
Provisions(a)	1,514		(1,155)		3,453
Net write-offs (b)
Principal	(837)		(672)		(1,795)
Interest and fees	(229)		(207)		(375)
Other(c)	(6)		(5)		34
Ending Balance	$	3,747	$	3,305	$	5,344

(a)Provisions for principal, interest and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.

(b)Principal write-offs are presented less recoveries of $539 million, $657 million and $568 million for the years ended December 31, 2022, 2021 and 2020, respectively. Recoveries of interest and fees were not significant. Amounts include net (write-offs) recoveries from TDRs of $(209) million, $(171) million and $(134) million for the years ended December 31, 2022, 2021 and 2020, respectively.

(c)Primarily includes foreign currency translation adjustments of $(6) million for both the years ended December 31, 2022 and 2021, and $35 million for the year ended December 31, 2020.

CHANGES IN CARD MEMBER RECEIVABLES RESERVE FOR CREDIT LOSSES

Card Member receivables reserve for credit losses increased for the year ended December 31, 2022, primarily driven by higher delinquencies and growth in receivables outstanding.

Card Member receivables reserve for credit losses decreased for the year ended December 31, 2021, primarily due to improved portfolio quality and macroeconomic forecasts, in large part driven by improvement in unemployment rate projections, partially offset by an increase in receivables outstanding.

The following table presents changes in the Card Member receivables reserve for credit losses for the years ended December 31:


(Millions)	2022		2021		2020
Beginning Balance	$	64	$	267	$	126
Provisions (a)	627		(73)		1,015
Net write-offs (b)	(462)		(129)		(881)
Other (c)	—		(1)		7
Ending Balance	$	229	$	64	$	267

(a)Provisions for principal and fee reserve components. Provisions for credit losses includes reserve build (release) and replenishment for net write-offs.

(b)Net write-offs are presented less recoveries of $257 million, $378 million and $386 million for the years ended December 31, 2022, 2021 and 2020, respectively. Amounts include net recoveries (write-offs) from TDRs of $(73) million, $(64) million and $(47) million, for the years ended December 31, 2022, 2021 and 2020, respectively.

(c)Primarily includes foreign currency translation adjustments of $2 million, $(1) million and $5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTE 4

INVESTMENT SECURITIES

Investment securities principally include available-for-sale debt securities carried at fair value on the Consolidated Balance Sheets. The methodology for estimating credit losses for available for sale debt securities requires us to estimate lifetime credit losses for all available-for-sale debt securities in an unrealized loss position. When estimating a security’s probability of default and the recovery rate, we assess the security’s credit indicators, including credit ratings. If our assessment indicates that an estimated credit loss exists, we determine the portion of the unrealized loss attributable to credit deterioration and record a reserve for the estimated credit loss through the Consolidated Statements of Income in Other loans Provision for credit losses. Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We had accrued interest on our available-for-sale debt securities totaling $12 million as of both December 31, 2022 and 2021, presented as Other assets on the Consolidated Balance Sheets.

Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets with unrealized gains and losses recorded in the Consolidated Statements of Income as Other, net expense.

Realized gains and losses are recognized upon disposition of the securities using the specific identification method and recorded in the Consolidated Statements of Income as Other, net expense.

Refer to Note 14 for a description of our methodology for determining the fair value of investment securities.

The following is a summary of investment securities as of December 31:


	2022								2021
Description of Securities (Millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
State and municipal obligations	$	64	$	—	$	(10)	$	54	$	106	$	5	$	—	$	111
U.S. Government agency obligations	5		—		—		5		6		—		—		6
U.S. Government treasury obligations	3,859		—		(73)		3,786		1,680		25		(1)		1,704
Mortgage-backed securities (a)	13		—		—		13		17		1		—		18
Foreign government bonds and obligations	633		—		(1)		632		630		—		—		630
Other (b)	47		—		—		47		43		—		—		43
Equity securities (c)	50		—		(9)		41		66		17		(4)		79
Total	$	4,671	$	—	$	(93)	$	4,578	$	2,548	$	48	$	(5)	$	2,591

(a)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

(b)Represents investments in debt securities issued by Community Development Financial Institutions. Investments as of December 31, 2021 also include corporate debt securities.

(c)Equity securities comprise investments in common stock, exchange-traded funds and mutual funds.

The following table provides information about our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2022 and 2021:


	2022								2021
	Less than 12 months				12 months or more				Less than 12 months				12 months or more
Description of Securities (Millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
State and municipal obligations	$	52	$	(10)	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government treasury obligations	3,710		(72)		52		(1)		477		(1)		—		—
Foreign government bonds and obligations	549		(1)		—		—		—		—		—		—
Total	$	4,311	$	(83)	$	52	$	(1)	$	477	$	(1)	$	—	$	—

The gross unrealized losses on our available-for-sale debt securities are primarily attributable to an increase in the current benchmark interest rate. Overall, for the available-for-sale debt securities in gross unrealized loss positions, (i) we do not intend to sell the securities, (ii) it is more likely than not that we will not be required to sell the securities before recovery of the unrealized losses, and (iii) we expect that the contractual principal and interest will be received on the securities. We concluded that there was no credit loss attributable to the securities in an unrealized loss position for the periods presented.

The following table summarizes the gross unrealized losses for available-for-sale debt securities by ratio of fair value to amortized cost as of December 31, 2022 and 2021:


	Less than 12 months					12 months or more					Total
Ratio of Fair Value to Amortized Cost (Dollars in millions)	Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses
2022:
90%–100%	74	$	4,287	$	(74)	3	$	52	$	(1)	77	$	4,339	$	(75)
Less than 90%	14	24		(9)		—	—		—		14	24		(9)
Total as of December 31, 2022	88	$	4,311	$	(83)	3	$	52	$	(1)	91	$	4,363	$	(84)
2021:
90%–100%	5	$	477	$	(1)	—	$	—	$	—	5	$	477	$	(1)
Less than 90%	—	—		—		—	—		—		—	—		—
Total as of December 31, 2021	5	$	477	$	(1)	—	$	—	$	—	5	$	477	$	(1)

Weighted average yields and contractual maturities for available-for-sale debt securities with stated maturities as of December 31, 2022 were as follows:


(Millions)	Due within 1 year			Due after 1 year but within 5 years			Due after 5 years but within 10 years			Due after 10 years			Total
State and municipal obligations (a)	$	—		$	—		$	21		$	33		$	54
U.S. Government agency obligations (a)	—			—			1			4			5
U.S. Government treasury obligations	2,668			1,109			9			—			3,786

Mortgage-backed securities (a)(b)	—			—			—			13			13
Foreign government bonds and obligations	631			1			—			—			632
Other (c)	—			42			5			—			47
Total Estimated Fair Value	$	3,299		$	1,152		$	36		$	50		$	4,537

Total Cost	$	3,348		$	1,177		$	36		$	60		$	4,621
Weighted average yield (d)	2.63		%	3.19		%	5.06		%	2.85		%	2.80		%

(a)The expected payments on state and municipal obligations, U.S. Government agency obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

(b)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

(c)Represents investments in debt securities issued by Community Development Financial Institutions.

(d)Average yields for investment securities have been calculated using the effective yield on the date of purchase. Yields on tax-exempt investment securities have been computed on a tax-equivalent basis using the U.S. federal statutory tax rate of 21 percent.

NOTE 5

ASSET SECURITIZATIONS

We periodically securitize Card Member loans and receivables arising from our card businesses through the transfer of those assets to securitization trusts, American Express Credit Account Master Trust (the Lending Trust) and American Express Issuance Trust II (the Charge Trust and together with the Lending Trust, the Trusts). The Trusts then issue debt securities collateralized by the transferred assets to third-party investors.

The Trusts are considered VIEs as they have insufficient equity at risk to finance their activities, which are to issue debt securities that are collateralized by the underlying Card Member loans and receivables. Refer to Note 1 for further details on the principles of consolidation. We perform the servicing and key decision making for the Trusts, and therefore have the power to direct the activities that most significantly impact the Trusts’ economic performance, which are the collection of the underlying Card Member loans and receivables. In addition, we hold all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors. Our ownership of variable interests in the Lending Trust was $16.0 billion and $15.0 billion as of December 31, 2022 and 2021, respectively, and in the Charge Trust was $5.2 billion and $3.2 billion as of December 31, 2022 and 2021, respectively. These variable interests held by us provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, we are the primary beneficiary of the Trusts and therefore consolidate the Trusts.

The debt securities issued by the Trusts are non-recourse to us. The securitized Card Member loans and receivables held by the Lending Trust and the Charge Trust, respectively, are available only for payment of the debt securities or other obligations issued or arising in the securitization transactions (refer to Note 2). The long-term debt of each Trust is payable only out of collections on their respective underlying securitized assets (refer to Note 8).

Restricted cash and cash equivalents held by the Lending Trust was $59 million and $42 million as of December 31, 2022 and 2021, respectively, and by the Charge Trust was nil and $1 million as of December 31, 2022 and 2021, respectively. These amounts relate to collections of Card Member loans and receivables to be used by the Trusts to fund future expenses and obligations, including interest on debt securities, credit losses and upcoming debt maturities.

Under the respective terms of the Lending Trust and the Charge 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 debt securities. During the years ended December 31, 2022 and 2021, no such triggering events occurred.

NOTE 6

OTHER ASSETS

The following is a summary of Other assets as of December 31:


(Millions)	2022		2021
Goodwill	$	3,786	$	3,804
Other intangible assets, at amortized cost	146		201
Other (a)	13,757		13,239
Total	$	17,689	$	17,244

(a)Primarily includes net deferred tax assets, other receivables net of reserves, investments in non-consolidated entities, prepaid assets, tax credit investments and right-of-use lease assets.

GOODWILL

The changes in the carrying amount of goodwill reported in our reportable operating segments were as follows:


(Millions)	USCS		CS		ICS		GMNS		Total
Balance as of December 31, 2020	$	369	$	2,124	$	799	$	560	$	3,852
Acquisitions	—		—		—		—		—
Dispositions	—		—		(3)		—		(3)
Other (a)	(1)		(1)		(43)		—		(45)
Balance as of December 31, 2021	$	368	$	2,123	$	753	$	560	$	3,804
Acquisitions	13		—		—		—		13
Dispositions	—		—		—		—		—
Other (a)	(2)		(1)		(28)		—		(31)
Balance as of December 31, 2022	$	379	$	2,122	$	725	$	560	$	3,786

(a)Primarily includes foreign currency translation.

During the year ended December 31, 2022, we performed a quantitative goodwill impairment assessment for those reporting units which were impacted by the realignment of our operating segments and concluded that their fair values exceeded their carrying values. Accumulated impairment losses were $221 million as of both December 31, 2022 and 2021.

OTHER INTANGIBLE ASSETS

Intangible assets are amortized on a straight-line basis over their estimated useful lives of 1 to 22 years. We review long-lived assets and asset groups, including intangible assets, for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable. An impairment is recognized if the carrying amount is not recoverable and exceeds the asset or asset group’s fair value.

The gross carrying amount for other intangible assets as of December 31, 2022 and 2021 was $720 million and $733 million, respectively, with accumulated amortization of $574 million and $532 million, respectively.

Amortization expense was $51 million, $57 million and $54 million for the years ended December 31, 2022, 2021 and 2020, respectively. For other intangible assets on the Consolidated Balance Sheets as of December 31, 2022, amortization expense is expected to be $49 million in 2023, $44 million in 2024, $20 million in 2025, $10 million in 2026, $9 million in 2027 and $14 million thereafter.

TAX CREDIT INVESTMENTS

We account for our qualified affordable housing (QAH) investments using the proportional amortization method (PAM), which we elected to implement on January 1, 2021 on a prospective basis, and other tax credit investments using the equity method of accounting. As of December 31, 2022 and 2021, we had $1,207 million and $1,124 million in tax credit investments, respectively, included in Other assets on the Consolidated Balance Sheets, of which $1,146 million and $1,084 million, respectively, related to QAH investments. Included in QAH investments as of December 31, 2022 and 2021, we had $980 million and $994 million, respectively, related to investments in unconsolidated VIEs for which we do not have a controlling financial interest.

As of December 31, 2022, we committed to provide funding related to certain of these QAH investments, which is expected to be paid between 2023 and 2040, resulting in $348 million in unfunded commitments reported in Other liabilities, of which $222 million specifically related to unconsolidated VIEs.

In addition, as of December 31, 2022 we had contractual off-balance sheet obligations to provide additional funding up to $13 million for these QAH investments, fully related to unconsolidated VIEs. We may be required to fund these amounts between 2023 and 2036.

During the years ended December 31, 2022 and 2021, we recognized QAH investment losses of $161 million and $226 million, respectively, with associated tax credits of $141 million and $135 million, respectively, in Income tax provision. During the year ended December 31, 2020 we recognized QAH investment equity method losses of $128 million, in Other, net expenses, with associated tax credits of $129 million, recognized in Income tax provision.

NOTE 7

CUSTOMER DEPOSITS

As of December 31, customer deposits were categorized as interest-bearing or non-interest-bearing as follows:


(Millions)	2022		2021
U.S.:
Interest-bearing	$	109,119	$	83,304
Non-interest-bearing (includes Card Member credit balances of: 2022, $605; 2021, $527)	663		553
Non-U.S.:
Interest-bearing	15		18
Non-interest-bearing (includes Card Member credit balances of: 2022, $439; 2021, $503)	442		507
Total customer deposits	$	110,239	$	84,382

Customer deposits by deposit type as of December 31 were as follows:


(Millions)	2022		2021
Savings and transaction accounts	$	76,731	$	66,142
Certificates of deposit:
Direct	2,765		1,415
Third-party (brokered)	13,331		3,095
Sweep accounts ―Third-party (brokered)	16,297		12,658
Other deposits	71		42


Card Member credit balances	1,044		1,030
Total customer deposits	$	110,239	$	84,382

The scheduled maturities of certificates of deposit as of December 31, 2022 were as follows:


(Millions)						2023						2024						2025						2026						2027						After 5 years						Total
Certificates of deposit						$	5,790					$	6,554					$	2,939					$	27					$	786					$	—					$	16,096

As of December 31, certificates of deposit in denominations of $250,000 or more, in the aggregate, were as follows:


(Millions)	2022		2021
U.S.	$	998	$	521
Non-U.S.	1		1
Total	$	999	$	522

NOTE 8

DEBT

SHORT-TERM BORROWINGS

Our short-term borrowings outstanding, defined as borrowings with original contractual maturity dates of less than one year, as of December 31 were as follows:


	2022				2021
(Millions, except percentages)	Outstanding Balance		Year-End Stated Interest Rate on Debt (a)		Outstanding Balance		Year-End Stated Interest Rate on Debt (a)

Short-term borrowings (b)	$	1,348	0.94	%	$	2,243	0.58	%
Total	$	1,348	0.94	%	$	2,243	0.58	%

(a)For floating-rate issuances, the stated interest rates are weighted based on the outstanding principal balances and interest rates in effect as of December 31, 2022 and 2021.

(b)Includes borrowings from banks and book overdrafts with banks due to timing differences arising in the ordinary course of business.

We maintained a three-year committed, revolving, secured borrowing facility that gives us the right to sell up to $2.0 billion face amount of eligible certificates issued from the Lending Trust at any time through September 16, 2024. The facility was undrawn as of both December 31, 2022 and 2021. Additionally, certain of our subsidiaries maintained total committed lines of credit of $186 million and $145 million as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, $20.9 million and $7.2 million were drawn on these committed lines, respectively.

We paid $7.8 million in fees to maintain the secured borrowing facility in both 2022 and 2021. The committed facility does not contain a material adverse change clause, which might otherwise preclude borrowing under the facility, nor is it dependent on our credit rating.

LONG-TERM DEBT

Our long-term debt outstanding, defined as debt with original contractual maturity dates of one year or greater, as of December 31 was as follows:


	2022							2021
(Millions, except percentages)	Original Contractual Maturity Dates	Outstanding Balance(a)		Year-End Interest Rate on Debt(b)		Year-End Interest Rate with Swaps(b)(c)		Outstanding Balance(a)		Year-End Interest Rate on Debt(b)		Year-End Interest Rate with Swaps(b)(c)
American Express Company (Parent Company only)
Fixed Rate Senior Notes	2023 - 2042	$	23,813	3.34	%	4.00	%	$	18,324	3.02	%	2.03	%
Floating Rate Senior Notes	2023 - 2026	3,000		4.78		—		3,300		0.69		—
Fixed-to-Floating Rate Senior Notes	2033	1,250		4.42		—		—		—		—
Fixed Rate Subordinated Notes	2024	574		3.63		5.46		599		3.63		1.38
Fixed-to-Floating Rate Subordinated Notes	2033	750		4.99		—		—		—		—
American Express Credit Corporation
Fixed Rate Senior Notes	2027	328		3.30		—		2,078		2.80		1.32
Floating Rate Senior Notes		—		—		—		300		0.87		—
Lending Trust
Fixed Rate Senior Notes	2023 - 2025	10,499		2.81		—		8,199		2.01		1.82
Floating Rate Senior Notes	2023	2,125		4.67		—		3,325		0.49		—
Fixed Rate Subordinated Notes		—		—		—		212		2.72		—
Floating Rate Subordinated Notes	2023	61		4.89		—		79		0.68		—
Charge Trust
Floating Rate Conduit Borrowings		—		—		—		2,000		0.40		—

Other
Finance Leases	2023 - 2024	3		5.76		—		14		5.49		—
Floating Rate Borrowings	2023 - 2025	254		0.41		—	%	297		0.42		—	%
Unamortized Underwriting Fees		(84)						(52)
Total Long-Term Debt		$	42,573	3.42	%			$	38,675	2.22	%

(a)The outstanding balances include (i) unamortized discount, (ii) the impact of movements in exchange rates on foreign currency denominated debt and (iii) the impact of fair value hedge accounting on certain fixed-rate notes that have been swapped to floating rate through the use of interest rate swaps. Refer to Note 13 for more details on our treatment of fair value hedges.

(b)For floating-rate issuances, the stated interest rate on debt is weighted based on the outstanding principal balances and interest rates in effect as of December 31, 2022 and 2021.

(c)Interest rates with swaps are only presented when swaps are in place to hedge the underlying debt. The interest rates with swaps are weighted based on the outstanding principal balances and the interest rates on the floating leg of the swaps in effect as of December 31, 2022 and 2021.

Aggregate annual maturities on long-term debt obligations (based on contractual maturity or anticipated redemption dates) as of December 31, 2022 were as follows:


(Millions)	2023		2024		2025		2026		2027		Thereafter		Total
American Express Company (Parent Company only)	$	5,750	$	7,500	$	5,250	$	2,450	$	4,911	$	4,273	$	30,134
American Express Credit Corporation	—		—		—		—		339		—		339
Lending Trust	2,685		2,750		7,250		—		—		—		12,685

Other	76		114		67		—		—		—		257
	$	8,511	$	10,364	$	12,567	$	2,450	$	5,250	$	4,273	$	43,415
Unamortized Underwriting Fees													(84)
Unamortized Discount and Premium													(522)
Impacts due to Fair Value Hedge Accounting													(236)
Total Long-Term Debt													$	42,573

We maintained a committed syndicated bank credit facility of $3.5 billion as of December 31, 2022 and 2021, all of which was undrawn as of the respective dates. The facility has a maturity date of October 15, 2024, and the availability of the facility is subject to compliance with certain covenants, principally our maintenance of a minimum Common Equity Tier 1 (CET1) risk-based capital ratio of 4.5 percent, with certain restrictions in relation to either accessing the facility or distributing capital to common shareholders in the event our CET1 risk-based capital ratio falls between 4.5 percent and 6.5 percent. As of December 31, 2022 and 2021, we were in compliance with the covenants contained in the credit facility.

Additionally, we maintained a three-year committed, revolving, secured borrowing facility that gives us the right to sell up to $3.0 billion face amount of eligible notes issued from the Charge Trust at any time through July 15, 2024. As of December 31, 2022 and 2021, nil and $2.0 billion were outstanding on this facility, respectively.

We paid $14.1 million and $15.7 million in fees to maintain these lines in 2022 and 2021, respectively. These committed facilities do not contain material adverse change clauses, which might otherwise preclude borrowing under the credit facilities, nor are they dependent on our credit rating.

We paid total interest, primarily related to short- and long-term debt, corresponding interest rate swaps and customer deposits, of $2.2 billion, $1.1 billion and $2.0 billion in 2022, 2021 and 2020, respectively.

NOTE 9

OTHER LIABILITIES

The following is a summary of Other liabilities as of December 31:


(Millions)	2022		2021
Membership Rewards liability	$	12,789	$	11,398
Deferred card and other fees, net	3,027		2,516
Employee-related liabilities (a)	2,530		2,528
Card Member rebate and reward accruals (b)	2,126		1,809
Income tax liability (c)	1,651		1,576
Other (d)	15,227		10,670
Total	$	37,350	$	30,497

(a)Includes employee benefit plan obligations and incentive compensation.

(b)Card Member rebate and reward accruals include payments to third-party reward partners and cash-back rewards.

(c)Includes repatriation tax liability of $1,012 million as of both December 31, 2022 and 2021, which represents our remaining obligation under the Tax Cuts and Jobs Act enacted on December 22, 2017 (Tax Act) to pay a one-time transition tax on unrepatriated earnings and profits of certain foreign subsidiaries, the net position for current federal, state and non-U.S. income tax liabilities, and deferred tax liabilities for foreign jurisdictions.

(d)Primarily includes negative cash balances for accounts without an associated overdraft credit facility, Travelers Cheques and other prepaid products, lease liabilities, accruals for general operating expenses, payments to cobrand partners, client incentives and dividends payable.

MEMBERSHIP REWARDS

The Membership Rewards program allows enrolled Card Members to earn points that can be redeemed for a broad variety of rewards including, but not limited to, travel, shopping, gift cards, and covering eligible charges. We record a Membership Rewards liability that represents management’s best estimate of the cost of points earned that are expected to be redeemed by Card Members in the future. The weighted average cost (WAC) per point and the Ultimate Redemption Rate (URR) are key assumptions used to estimate the liability. We use statistical and actuarial models to estimate the URR based on redemption trends, card product type, enrollment tenure, card spend levels and credit attributes. The WAC per point assumption is derived from 12 months of redemptions and is adjusted as appropriate for certain changes in redemption costs that are not representative of future cost expectations and expected developments in redemption patterns.

The expense for Membership Rewards points is included in Card Member rewards expense. We periodically evaluate our liability estimation process and assumptions based on developments in redemption patterns, cost per point redeemed, partner contract changes and other factors.

DEFERRED CARD AND OTHER FEES, NET

The carrying amount of deferred card and other fees, net of deferred direct acquisition costs and reserves for membership cancellations, as of December 31, 2022 was as follows:


(Millions)	2022		2021
Deferred card and other fees (a)	$	3,380	$	2,838
Deferred direct acquisition costs	(173)		(169)
Reserves for membership cancellations	(180)		(153)
Deferred card and other fees, net	$	3,027	$	2,516

(a)Includes deferred fees for Membership Rewards program participants.

NOTE 10

STOCK-BASED COMPENSATION

STOCK OPTION AND AWARD PROGRAMS

Under our 2016 Incentive Compensation Plan (amended and restated effective May 5, 2020) and previously under our 2007 Incentive Compensation Plan (collectively, Incentive Compensation Plans), awards may be granted to employees and other key individuals who perform services for us and our participating subsidiaries. These awards may be in the form of stock options, restricted stock units or awards (collectively referred to as RSUs) or other incentives or similar awards designed to meet the requirements of non-U.S. jurisdictions.

For our Incentive Compensation Plans, there were a total of 9 million, 12 million and 14 million common shares unissued and available for grant as of December 31, 2022, 2021 and 2020, respectively, as authorized by our Board of Directors and shareholders. We generally issue new common shares upon exercise of options and vesting of RSUs.

Stock-based compensation expense recognized in Salaries and employee benefits in the Consolidated Statements of Income was $373 million, $326 million and $247 million in 2022, 2021 and 2020, respectively, with corresponding income tax benefits of $90 million, $78 million and $59 million in those respective periods.

A summary of stock option and RSU activity as of December 31, 2022, and corresponding changes during the year, are as follows:


	Stock Options			Service-Based RSUs			Service and Performance-Based RSUs
(Shares in thousands)	Shares	Weighted-Average Exercise Price		Shares	Weighted- Average Grant Price		Shares	Weighted- Average Grant Price
Outstanding as of December 31, 2021	3,104	$	93.33	1,875	$	117.36	3,741	$	114.22
Granted	1,168	154.57		798	174.48		1,064	163.60
Options exercised/RSUs vested	(638)	88.81		(751)	113.19		(1,097)	89.58
Forfeited	—	—		(134)	139.77		(236)	137.42
Expired	—	—		—	—		—	—
Outstanding as of December 31, 2022	3,634	113.80		1,788	$	142.92	3,472	$	135.57
Options vested and expected to vest as of December 31, 2022	3,607	113.54
Options exercisable as of December 31, 2022	1,699	$	80.57

Stock-based compensation expense is generally recognized ratably based on the grant-date fair value of the awards, net of expected forfeitures, over the vesting period. Generally, the vesting period is the shorter of the vesting schedule as defined in each award agreement or the date an individual will become eligible to retire. Retirement eligibility is dependent upon age and/or years of service.

STOCK OPTIONS

Each stock option has an exercise price equal to the market price of our common stock on the date of grant. Stock options generally vest on the third anniversary of the grant date and have a contractual term of 10 years from the date of grant.

The fair value of options without market conditions is estimated on the date of grant using a Black-Scholes-Merton option-pricing model. The following weighted-average assumptions were used for options granted in 2022, 2021 and 2020:


	2022			2021			2020
Dividend yield	1.0		%	1.5		%	1.4		%
Expected volatility(a)	31		%	31		%	20		%
Risk-free interest rate	1.7		%	0.8		%	1.6		%
Expected life of stock option (in years)(b)	7.1			7.2			7.1
Weighted-average fair value per option	$	55.30		$	32.38		$	25.83

(a)The expected volatility is based on both weighted historical and implied volatilities of our common stock price.

(b)The expected life of stock options was determined using both historical data and expectations of option exercise behavior.

Certain executives were awarded a grant of stock options on October 31, 2022 that vest, subject to achieving performance and market conditions. These options vest in tranches on the third and fourth anniversaries from the grant date, subject to continued employment through the applicable anniversary, and have a contractual term of seven years. The fair value was estimated at the

grant date using a Monte Carlo valuation model assuming a dividend yield of 1.4 percent, expected volatility (based on both weighted historical and implied volatilities of our common stock price) of 34 percent, risk-free rate of 3.9 percent and an expected life of seven years, resulting in a fair value of $50.10.

The weighted-average remaining contractual life and the aggregate intrinsic value (the amount by which the fair value of our stock price exceeds the exercise price of the option) of the stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2022, were as follows:


	Outstanding		Exercisable		Vested and Expected to Vest
Weighted-average remaining contractual life (in years)	5.6		3.6		5.6
Aggregate intrinsic value (millions)	$	131	$	114	$	131

As of December 31, 2022, there was $46 million of total unrecognized compensation cost related to unvested options, which will be recognized over the weighted-average remaining vesting period of 3.0 years.

For stock options that were exercised during 2022, 2021 and 2020, the intrinsic value, based upon the fair value of our stock price at the date the options were exercised, was $56 million, $86 million and $47 million, respectively; cash received by the Company from the exercise of stock options was $56 million, $64 million and $44 million during those respective periods. The income tax benefit recognized in the Consolidated Statements of Income related to stock option exercises was $9 million, $14 million and $7 million in 2022, 2021 and 2020, respectively.

RESTRICTED STOCK UNITS/AWARDS

We grant RSUs that contain either a) service conditions or b) both service and performance conditions. RSUs containing only service conditions generally vest ratably over three years, or four years for awards granted prior to 2022, beginning with the first anniversary of the grant date. RSUs containing both service and performance conditions generally vest on the third anniversary of the grant date, and the number of shares earned depends on the achievement of predetermined Company metrics. RSU holders receive dividend equivalents or dividends.

Performance-based RSUs include a relative total shareholder return (r-TSR) modifier so that our actual shareholder return relative to a comparable peer group is one of the performance conditions that determines the number of shares ultimately issued upon vesting.

The fair value of RSUs that do not include the r-TSR modifier, including those that contain only service conditions, is measured using our stock price on the grant date. The fair value of service and performance-based RSUs that include the r-TSR modifier is determined using a Monte Carlo valuation model with the following weighted-average assumptions in 2022, 2021 and 2020:


	2022		2021		2020
Expected volatility(a)	42	%	41	%	19	%
Risk-free interest rate	1.4	%	0.2	%	1.4	%
Remaining performance period (in years)	2.9		2.9		2.9

(a)The expected volatility is based on historical volatility of our common stock price.

As of December 31, 2022, there was $247 million of total unrecognized compensation cost related to non-vested RSUs, which will be recognized over the weighted-average remaining vesting period of 1.7 years.

The weighted-average grant date fair value of RSUs granted in 2022, 2021 and 2020 was $168.26, $123.66 and $124.47, respectively.

For RSUs vested during 2022, 2021 and 2020, the total fair value, based upon our stock price at the date the RSUs vested, was $323 million, $227 million and $291 million, respectively.

LIABILITY-BASED AWARDS

Other incentive awards can be settled with cash or equity shares at our discretion and final Compensation and Benefits Committee approval. These awards are generally settled with cash and thus are classified as liabilities; therefore, the fair value is determined at the date of grant and remeasured quarterly as part of compensation expense over the vesting period. Cash paid upon vesting of these awards in 2022, 2021 and 2020 was $50 million, $53 million and $81 million, respectively.

NOTE 11

RETIREMENT PLANS

DEFINED CONTRIBUTION RETIREMENT PLANS

We sponsor defined contribution retirement plans, the principal plan being the Retirement Savings Plan (RSP), a 401(k) savings plan with a profit-sharing component. The RSP is a tax-qualified retirement plan subject to the Employee Retirement Income Security Act of 1974 and covers most employees in the United States. The total expense for all defined contribution retirement plans globally was $259 million, $269 million and $267 million in 2022, 2021 and 2020, respectively.

DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Our primary defined benefit pension plans that cover certain employees in the United States and United Kingdom are closed to new entrants and existing participants do not accrue any additional benefits. Some employees outside the United States and United Kingdom are covered by local retirement plans, some of which are funded, while other employees receive payments at the time of retirement or termination under applicable labor laws or agreements. We comply with minimum funding requirements in all countries. We also sponsor unfunded other postretirement benefit plans that provide health care and life insurance to certain retired U.S. employees. For these plans, the total net benefit was $24 million, $26 million and $8 million in 2022, 2021 and 2020, respectively.

We recognize the funded status of our defined benefit pension plans and other postretirement benefit plans, measured as the difference between the fair value of the plan assets and the projected benefit obligation, on the Consolidated Balance Sheets. As of December 31, 2022 and 2021, the unfunded status related to the defined benefit pension plans and other postretirement benefit plans was $278 million and $414 million, respectively, and is recorded in Other liabilities.

NOTE 12

CONTINGENCIES AND COMMITMENTS

CONTINGENCIES

In the ordinary course of business, we and our subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, regulatory proceedings, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).

Based on our current knowledge, and taking into consideration our litigation-related liabilities, we do not believe we are a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings could have a material impact on our results of operations. Certain legal proceedings involving us or our subsidiaries are described below.

On February 25, 2020, we were named as a defendant in a case filed in the Superior Court of California, Los Angeles County, captioned Laurelwood Cleaners LLC v. American Express Co., et al., in which the plaintiff seeks a public injunction in California prohibiting American Express from enforcing its anti-steering and non-discrimination provisions and from requiring merchants “to offer the service of Amex-card acceptance for free.” The case has been stayed pending the outcome of arbitration proceedings.

On January 29, 2019, we were named in a putative class action brought in the United States District Court for the Eastern District of New York, captioned Anthony Oliver, et al. v. American Express Company and American Express Travel Related Services Company Inc., in which the plaintiffs are holders of MasterCard, Visa and/or Discover credit cards (but not American Express cards) and allege they paid higher prices as a result of our anti-steering and non-discrimination provisions in violation of federal antitrust law and the antitrust and consumer laws of various states. Plaintiffs seek unspecified damages and other forms of relief. The court dismissed plaintiffs’ federal antitrust claim, numerous state antitrust and consumer protection claims and their unjust enrichment claim. The remaining claims in plaintiffs’ complaint arise under the antitrust laws of 11 states and the consumer protection laws of six states.

On March 8, 2016, plaintiffs B&R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, on behalf of themselves and others, filed a suit, captioned B&R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al., for violations of the Sherman Antitrust Act, the Clayton Antitrust Act, California’s Cartwright Act and unjust enrichment in the United States District Court for the Northern District of California, against American Express Company, other credit and charge card networks, other issuing banks and EMVCo, LLC. Plaintiffs allege that the defendants, through EMVCo, conspired to shift liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to merchants after the implementation of EMV chip payment terminals. Plaintiffs seek damages and injunctive relief. An amended complaint was filed on July 15, 2016. On September 30, 2016, the court denied our motion to dismiss as to claims brought by merchants who do not accept American Express cards, and on May 4, 2017, the California court transferred the case to the United States District Court for the Eastern District of New York. On August 28, 2020, the court granted plaintiffs' motion for class certification.

In July 2004, we were named as a defendant in a putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned The Marcus Corporation v. American Express Co., et al., in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws. The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.

In 2006, Mawarid Investments Limited filed a request for confidential arbitration under the 1998 London Court of International Arbitration Rules in connection with certain claims arising under a shareholders agreement between Mawarid and TRS relating to a joint venture between the parties, Amex (Middle East) BSC(c) (AEME). In 2008, the tribunal rendered a partial award, including a direction that an audit should take place to verify whether acquirer discount revenue related to transactions occurring with airlines located in the Middle East region had been properly allocated to AEME since its inception in 1992. In September 2021, the tribunal rendered a further partial award regarding the location of transactions through non-physical channels. In May 2022, the tribunal further clarified the 2021 partial award and the discount rate that should apply to transactions through non-physical channels. A final award is now expected in 2023.

In May 2020, we began responding to a review by the Office of the Comptroller of the Currency (OCC) and the Department of Justice (DOJ) Civil Division regarding historical sales practices relating to sales to small business customers in the United States. In January 2021, we received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York (EDNY) regarding these sales practices issues, as well as a Civil Investigative Demand from the Consumer Protection Bureau (CFPB) pertaining to its investigation into sales practices related to consumers. In January 2023, the CFPB notified us that its investigation was completed and that it does not intend to recommend an enforcement action be taken against us at this time. The OCC, DOJ and EDNY reviews and investigations are ongoing and could result in enforcement actions or other regulatory proceedings against us seeking fines or other remedial actions. We are cooperating with all inquiries.

We are being challenged in a number of countries regarding our application of value-added taxes (VAT) to certain of our international transactions, which are in various stages of audit, or are being contested in legal actions. While we believe we have complied with all applicable tax laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional VAT. In certain jurisdictions where we are contesting the assessments, we were required to pay the VAT assessments prior to contesting.

Our legal proceedings range from cases brought by a single plaintiff to class actions with millions of putative class members to governmental proceedings. These legal proceedings involve various lines of business and a variety of claims (including, but not limited to, common law tort, contract, application of tax laws, antitrust and consumer protection claims), some of which present novel factual allegations and/or unique legal theories. While some matters pending against us specify the damages sought, many seek an unspecified amount of damages or are at very early stages of the legal process. Even when the amount of damages claimed against us are stated, the claimed amount may be exaggerated and/or unsupported. As a result, some matters have not yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate an amount of loss or a range of possible loss, while other matters have progressed sufficiently such that we are able to estimate an amount of loss or a range of possible loss.

We have accrued for certain of our outstanding legal proceedings. An accrual is recorded when it is both (a) probable that a loss has occurred and (b) the amount of loss can be reasonably estimated. There may be instances in which an exposure to loss exceeds the accrual. We evaluate, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the accrual that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.

For those disclosed legal proceedings where a loss is reasonably possible in future periods, whether in excess of a recorded accrual for legal or tax contingencies, or where there is no such accrual, and for which we are able to estimate a range of possible loss, the current estimated range is zero to $200 million in excess of any accruals related to those matters. This range represents management’s estimate based on currently available information and does not represent our maximum loss exposure; actual results may vary significantly. As such legal proceedings evolve, we may need to increase our range of possible loss or recorded accruals. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience as a result of an adverse resolution in one or any combination of the disclosed merchant cases could have a material adverse effect on our business and results of operations.

COMMITMENTS

Total lease expense includes rent expenses, adjustments for rent concessions, rent escalations and leasehold improvement allowances and is recognized on a straight-line basis over the lease term. Total lease expense for the years ended December 31, 2022, 2021 and 2020 was $188 million, $161 million and $177 million, respectively.

Lease liabilities are recognized at the present value of the contractual fixed lease payments, discounted using our incremental borrowing rate as of the lease commencement date or upon modification of the lease. For lease liabilities outstanding as of December 31, 2022, the weighted average remaining lease term was 19 years and the weighted average rate used to discount lease commitments was 3 percent.

The following represents the maturities of our outstanding lease commitments as of December 31, 2022:


(Millions)
2023	$	157
2024	144
2025	121
2026	105
2027	93
Thereafter	892
Total Outstanding Fixed Lease Payments	$	1,512
Less: Amount representing interest	$	(539)
Lease Liabilities	$	973

As of December 31, 2022, we had approximately $2.0 billion in financial commitments outstanding related to agreements with certain cobrand partners under which we are required to make a certain level of minimum payments over the life of the agreement, generally ranging from five to ten years. Such commitments are designed to be satisfied by the payment we make to such cobrand partners primarily based on Card Members’ spending and earning rewards on their cobrand cards and as we acquire new Card Members. In the event these payments do not fully satisfy the commitment, we generally pay the cobrand partner up to the amount of the commitment in exchange for an equivalent value of reward points.

NOTE 13

DERIVATIVES AND HEDGING ACTIVITIES

We use derivative financial instruments to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates and foreign exchange rates, and are carried at fair value on the Consolidated Balance Sheets. These instruments enable end users to increase, reduce or alter exposure to various market risks and, for that reason, are an integral component of our market risk management. We do not transact in derivatives for trading purposes.

Market risk is the risk to earnings or asset and liability values resulting from movements in market prices. Our market risk exposures include:

Interest rate risk due to changes in the relationship between the interest rates on our assets (such as loans, receivables and investment securities) and the interest rates on our liabilities (such as debt and deposits); and
Foreign exchange risk related to transactions, funding, investments and earnings in currencies other than the U.S. dollar.

We centrally monitor market risks using market risk limits and escalation triggers as defined in our Asset/Liability Management Policy. Our market exposures are in large part by-products of the delivery of our products and services.

Interest rate risk primarily arises through the funding of Card Member receivables and fixed-rate loans with variable-rate borrowings, as well as through the risk to net interest margin from changes in the relationship between benchmark rates such as Prime, the secured overnight financing rate and the overnight indexed swap rate. Interest rate exposure within our charge card and fixed-rate lending products is managed by varying the proportion of total funding provided by short-term and variable-rate debt and deposits compared to fixed-rate debt and deposits. In addition, interest rate swaps are used from time to time to economically convert fixed-rate debt obligations to variable-rate obligations, or to convert variable-rate debt obligations to fixed-rate obligations. We may change the mix between variable-rate and fixed-rate funding based on changes in business volumes and mix, among other factors.

Foreign exchange exposures arise in four principal ways: (1) Card Member spending in currencies that are not the billing currency, (2) cross-currency transactions and balances from our funding activities, (3) cross-currency investing activities, such as in the equity of foreign subsidiaries, and (4) revenues generated and expenses incurred in foreign currencies, which impact earnings. Our foreign exchange risk is managed primarily by entering into agreements to buy and sell currencies on a spot basis or by hedging this market exposure, to the extent it is economical, through various means, including the use of derivatives such as foreign exchange forwards.

Derivatives may give rise to counterparty credit risk, which is the risk that a derivative counterparty will default on, or otherwise be unable to perform pursuant to, an uncollateralized derivative exposure. We manage this risk by considering the current exposure, which is the replacement cost of contracts on the measurement date, as well as estimating the maximum potential future exposure of the contracts over the next 12 months, considering such factors as the volatility of the underlying or reference index. To mitigate derivative credit risk, counterparties are required to be pre-approved by us and rated as investment grade, and counterparty risk exposures are centrally monitored.

A majority of our derivative assets and liabilities as of December 31, 2022 and 2021 are subject to master netting agreements with our derivative counterparties. Accordingly, where appropriate, we have elected to present derivative assets and liabilities with the same counterparty on a net basis in the Consolidated Balance Sheets. To further mitigate counterparty credit risk, we exercise our rights under executed credit support agreements with the respective derivative counterparties for our bilateral interest rate swaps and select foreign exchange contracts. These agreements require that, in the event the fair value change in the net derivatives position between the two parties exceeds certain dollar thresholds, the party in the net liability position posts collateral to its counterparty. All derivative contracts cleared through a central clearinghouse are collateralized to the full amount of the fair value of the contracts.

In relation to our credit risk, certain of our bilateral derivative agreements include provisions that allow our counterparties to terminate the agreement in the event of a downgrade of our debt credit rating below investment grade and settle the outstanding net liability position. As of December 31, 2022, these derivatives were not in a material net liability position and we had no material risk exposure to any individual derivative counterparty. Based on our assessment of the credit risk of our derivative counterparties and our own credit risk as of December 31, 2022 and 2021, no credit risk adjustment to the derivative portfolio was required.

Our derivatives are carried at fair value on the Consolidated Balance Sheets. The accounting for changes in fair value depends on the instruments’ intended use and the resulting hedge designation, if any, as discussed below. Refer to Note 14 for a description of our methodology for determining the fair value of derivatives.

The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of December 31:


	Other Assets Fair Value				Other Liabilities Fair Value
(Millions)	2022		2021		2022		2021
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts (a)	$	—	$	204	$	211	$	—
Net investment hedges - Foreign exchange contracts	350		219		251		54
Total derivatives designated as hedging instruments	350		423		462		54
Derivatives not designated as hedging instruments:
Foreign exchange contracts and other	171		167		339		85
Total derivatives, gross	521		590		801		139
Derivative asset and derivative liability netting (b)	(257)		(93)		(257)		(93)
Cash collateral netting (c)	(11)		(204)		(212)		(4)
Total derivatives, net	$	253	$	293	$	332	$	42

(a)For our centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral.

(b)Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.

(c)Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to cash collateral held from the counterparty or cash collateral posted with the counterparty.

We posted $8 million and $11 million as of December 31, 2022 and 2021, respectively, as initial margin on our centrally cleared interest rate swaps; such amounts are recorded within Other assets on the Consolidated Balance Sheets and are not netted against the derivative balances.

DERIVATIVE FINANCIAL INSTRUMENTS THAT QUALIFY FOR HEDGE ACCOUNTING

Derivatives executed for hedge accounting purposes are documented and designated as such when we enter into the contracts. In accordance with our risk management policies, we structure our hedges with terms similar to those of the item being hedged. We formally assess, at inception of the hedge accounting relationship and on a quarterly basis, whether derivatives designated as hedges are highly effective in offsetting the fair value or cash flows of the hedged items. These assessments usually are made through the application of a regression analysis method. If it is determined that a derivative is not highly effective as a hedge, we will discontinue the application of hedge accounting.

FAIR VALUE HEDGES

A fair value hedge involves a derivative designated to hedge our exposure to future changes in the fair value of an asset or a liability, or an identified portion thereof, that is attributable to a particular risk.

Interest Rate Contracts

We are exposed to interest rate risk associated with our fixed-rate debt obligations. At the time of issuance, certain fixed-rate long-term debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. We had $8.1 billion and $12.9 billion of fixed-rate debt obligations designated in fair value hedging relationships as of December 31, 2022 and 2021, respectively.

Gains or losses on the fair value hedging instrument principally offset the losses or gains on the hedged item attributable to the hedged risk. The changes in the fair value of the derivative and the changes in the hedged item may not fully offset due to differences between a debt obligation’s interest rate and the benchmark rate, primarily due to credit spreads at inception of the hedging relationship that are not reflected in the fair value of the interest rate swap.

The following table presents the gains and losses recognized in Interest expense on the Consolidated Statements of Income associated with the fair value hedges of our fixed-rate long-term debt for the years ended December 31:


	Gains (losses)
(Millions)	2022		2021		2020
Fixed-rate long-term debt	$	473	$	385	$	(405)
Derivatives designated as hedging instruments	(476)		(385)		409
Total	$	(3)	$	—	$	4

The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $7.8 billion and $13.1 billion as of December 31, 2022 and 2021, respectively, including the cumulative amount of fair value hedging adjustments of $(236) million and $237 million for the respective periods.

We recognized in Interest expense on Long-term debt a net decrease of $57 million for the year ended December 31, 2022 and net decreases of $256 million for both the years ended December 31, 2021 and 2020. These were primarily related to the net settlements including interest accruals on our interest rate derivatives designated as fair value hedges.

NET INVESTMENT HEDGES

A net investment hedge is used to hedge future changes in currency exposure of a net investment in a foreign operation. We primarily designate foreign currency derivatives as net investment hedges to reduce our exposure to changes in currency exchange rates on our investments in non-U.S. subsidiaries. We had notional amounts of approximately $12.5 billion and $12.6 billion of foreign currency derivatives designated as net investment hedges as of December 31, 2022 and 2021, respectively. The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, were gains of $237 million and $176 million and losses of $253 million for the years ended December 31, 2022, 2021 and 2020, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income were not significant for the years ended December 31, 2022, 2021 and 2020, respectively.

DERIVATIVES NOT DESIGNATED AS HEDGES

We have derivatives that act as economic hedges, but are not designated as such for hedge accounting purposes. Foreign currency transactions from time to time may be partially or fully economically hedged through foreign currency contracts, primarily foreign exchange forwards. These hedges generally mature within one year. Foreign currency contracts involve the purchase and sale of designated currencies at an agreed upon rate for settlement on a specified date.

The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. We had notional amounts of approximately $21.7 billion and $19.0 billion as of December 31, 2022 and 2021, respectively. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net gain of $8 million, a net loss of $21 million and a net gain of $10 million for the years ended December 31, 2022, 2021 and 2020, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.

In 2022, we recorded an embedded derivative with a notional amount of $78 million, related to seller earnout shares granted to us upon the completion of a business combination between our equity method investee, Global Business Travel Group, and Apollo Strategic Growth Capital. This embedded derivative had a fair value of $27 million as of December 31, 2022. The changes in the fair value of the embedded derivative resulted in gains of $4 million for the year ended December 31, 2022, which were recognized in Service fees and other revenue in the Consolidated Statements of Income.

NOTE 14

FAIR VALUES

Fair value is defined as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

Level 1 ― Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.
Level 2 ― Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

– Quoted prices for similar assets or liabilities in active markets;

– Quoted prices for identical or similar assets or liabilities in markets that are not active;

– Inputs other than quoted prices that are observable for the asset or liability; and

– Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 ― Inputs that are unobservable and reflect our own estimates about the estimates market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows).

We monitor the market conditions and evaluate the fair value hierarchy levels at least quarterly. For the years ended December 31, 2022 and 2021, there were no Level 3 transfers.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE

The following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy (as described in the preceding paragraphs), as of December 31:


	2022								2021
(Millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Investment securities: (a)
Equity securities	$	41	$	40	$	1	$	—	$	79	$	78	$	1	$	—
Debt securities	4,537		—		4,490		47		2,512		—		2,480		32
Derivatives, gross (a)(b)	521		—		494		27		590		—		590		—
Total Assets	5,099		40		4,985		74		3,181		78		3,071		32
Liabilities:
Derivatives, gross (a)	801		—		801		—		139		—		139		—
Total Liabilities	$	801	$	—	$	801	$	—	$	139	$	—	$	139	$	—

(a)Refer to Note 4 for the fair values of investment securities and to Note 13 for the fair values of derivative assets and liabilities, on a further disaggregated basis.

(b)Level 3 fair value reflects an embedded derivative. Management reviews and applies judgment to the valuation of the embedded derivative that is performed by an independent third party using a Monte Carlo simulation that models a range of probable future stock prices based on implied volatility in a risk neutral framework. Refer to Note 13 for additional information about this embedded derivative.

VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE

For the financial assets and liabilities measured at fair value on a recurring basis (categorized in the valuation hierarchy table above), we apply the following valuation techniques:

Investment Securities

When available, quoted prices of identical investment securities in active markets are used to estimate fair value. Such investment securities are classified within Level 1 of the fair value hierarchy.

When quoted prices of identical investment securities in active markets are not available, the fair values for our investment securities are obtained primarily from pricing services engaged by us, and we receive one price for each security. The fair values provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. Such investment securities are classified within Level 2 of the fair value hierarchy. The inputs to the valuation techniques applied by the pricing services vary depending on the type of security being priced but are typically benchmark yields, benchmark security prices, credit spreads, prepayment speeds, reported trades and broker-dealer quotes, all with reasonable levels of transparency. The pricing services did not apply any adjustments to the pricing models used. In addition, we did not apply any adjustments to prices received from the pricing services.

We reaffirm our understanding of the valuation techniques used by our pricing services at least annually. In addition, we corroborate the prices provided by our pricing services by comparing them to alternative pricing sources. In instances where price discrepancies are identified between different pricing sources, we evaluate such discrepancies to ensure that the prices used for our valuation represent the fair value of the underlying investment securities. Refer to Note 4 for additional information on investment securities.

Within Level 3 of the fair value hierarchy are our holdings of debt securities issued by Community Development Financial Institutions. We take the carrying value for these investment securities to be a reasonable proxy for their fair value unless we determine, based on our internal credit model, that there are indicators that the contractual cash flows will not be received in full.

Derivative Financial Instruments

The fair value of our Level 2 derivative financial instruments is estimated by using third-party pricing models, where the inputs to those models are readily observable from active markets. The pricing models used are consistently applied and reflect the contractual terms of the derivatives as described below. We reaffirm our understanding of the valuation techniques at least annually and validate the valuation output on a quarterly basis.

The fair value of our interest rate swaps is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the swap such as the notional amount, fixed coupon rate, floating coupon rate and tenor, as well as discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated.

The fair value of foreign exchange forward contracts is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the forward contracts such as the notional amount, maturity dates and contract rate, as well as relevant foreign currency forward curves, and discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated.

Our Level 3 derivative financial instrument represents an embedded derivative in the form of seller earnout shares granted to us following the completion of a business combination between our equity method investee, Global Business Travel Group, and Apollo Strategic Growth Capital. The fair valuation is performed by an independent third party using a Monte Carlo Simulation technique that models a range of probable future stock prices using the following significant inputs: term of the earnout, initial stock price, annual expected volatility of the common stock over the expected term, annual risk-neutral rate of return over the contractual term and dividend yield, which is further reviewed by management.

Credit valuation adjustments are necessary when the market parameters, such as a benchmark curve, used to value derivatives are not indicative of our credit quality or that of our counterparties. We consider the counterparty credit risk by applying an observable forecasted default rate to the current exposure. Refer to Note 13 for additional information on derivative financial instruments.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE

The following table summarizes the estimated fair values of our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of December 31, 2022 and 2021. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of December 31, 2022 and 2021, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of American Express be estimated by aggregating the amounts presented.


2022 (Billions)	Carrying Value		Corresponding Fair Value Amount
	Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents(a)	$	34	$	34	$	32	$	2	$	—
Other financial assets(b)	60		60		—		60		—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves(c)	110		113		—		—		113

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value	123		123		—		123		—
Financial liabilities carried at other than fair value
Certificates of deposit(d)	16		16		—		16		—
Long-term debt(c)	$	43	$	42	$	—	$	42	$	—


2021 (Billions)	Carrying Value		Corresponding Fair Value Amount
	Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents(a)	$	22	$	22	$	20	$	2	$	—
Other financial assets(b)	56		56		—		56		—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves(c)	88		91		—		—		91

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value	105		105		—		105		—
Financial liabilities carried at other than fair value
Certificates of deposit(d)	5		5		—		5		—
Long-term debt(c)	$	39	$	40	$	—	$	40	$	—

(a)Level 2 fair value amounts reflect time deposits and short-term investments.

(b)Balances include Card Member receivables (including fair values of Card Member receivables of $5.2 billion held by a consolidated VIE as of both December 31, 2022 and 2021), other receivables and other miscellaneous assets.

(c)Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $28.4 billion and $26.7 billion as of December 31, 2022 and 2021, respectively, and the fair values of Long-term debt were $12.3 billion and $13.9 billion as of December 31, 2022 and 2021, respectively.

(d)Presented as a component of Customer deposits on the Consolidated Balance Sheets.

VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE

For the financial assets and liabilities that are not required to be carried at fair value on a recurring basis (categorized in the valuation hierarchy table), we apply the following valuation techniques to measure fair value:

Financial Assets For Which Carrying Values Equal Or Approximate Fair Value

Financial assets for which carrying values equal or approximate fair value include cash and cash equivalents, Card Member receivables, accrued interest and certain other assets. For these assets, the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate.

Financial Assets Carried At Other Than Fair Value

Card Member and Other loans, less reserves

Card Member and Other loans are recorded at historical cost, less reserves, on the Consolidated Balance Sheets. In estimating the fair value for our loans, we use a discounted cash flow model. Due to the lack of a comparable whole loan sales market for similar loans and the lack of observable pricing inputs thereof, we use various inputs to estimate fair value. Such inputs include projected income, discount rates and forecasted write-offs. The valuation does not include economic value attributable to future receivables generated by the accounts associated with the loans.

Financial Liabilities For Which Carrying Values Equal Or Approximate Fair Value

Financial liabilities for which carrying values equal or approximate fair value include accrued interest, customer deposits (excluding certificates of deposit, which are described further below), Travelers Cheques and other prepaid products outstanding, accounts payable, short-term borrowings and certain other liabilities for which the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate.

Financial Liabilities Carried At Other Than Fair Value

Certificates of Deposit

Certificates of deposit (CDs) are recorded at their historical issuance cost on the Consolidated Balance Sheets. Fair value is estimated using a discounted cash flow methodology based on the future cash flows and the discount rate that reflects the current market rates for similar types of CDs within similar markets.

Long-term Debt

Long-term debt is recorded at historical issuance cost on the Consolidated Balance Sheets adjusted for (i) unamortized discount and unamortized fees, (ii) the impact of movements in exchange rates on foreign currency denominated debt and (iii) the impact of fair value hedge accounting on certain fixed-rate notes that have been swapped to floating rate through the use of interest rate swaps. The fair value of our long-term debt is measured using quoted offer prices when quoted market prices are available. If quoted market prices are not available, the fair value is determined by discounting the future cash flows of each instrument at rates currently observed in publicly-traded debt markets for debt of similar terms and credit risk. For long-term debt, where there are no rates currently observable in publicly traded debt markets of similar terms and comparable credit risk, we use market interest rates and adjust those rates for necessary risks, including our own credit risk. In determining an appropriate spread to reflect our credit standing, we consider credit default swap spreads, bond yields of other long-term debt offered by us, and interest rates currently offered to us for similar debt instruments of comparable maturities.

NONRECURRING FAIR VALUE MEASUREMENTS

We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired or where there are observable price changes for equity investments without readily determinable fair values.

We estimate the Level 3 fair value of equity investments without readily determinable fair values based on price changes as of the date of new similar equity financing transactions completed by the companies in our portfolio. Impairments on such investments are recorded to account for the difference between the estimated fair value and carrying value of an investment based on a qualitative assessment of impairment indicators such as business performance, general market conditions and the economic and regulatory environment. When an impairment triggering event occurs, the fair value measurement is generally derived by taking into account all available information, such as share prices of publicly traded peer companies, internal valuations performed by our investees, and other third-party fair value data. The fair value of impaired investments represents a Level 3 fair value measurement. The carrying value of equity investments without readily determinable fair values totaled $1.0 billion and $1.3 billion as of December 31, 2022 and 2021, respectively. As of December 31, 2022, approximately $0.6 billion represented a nonrecurring Level 3 fair value measurement for certain of our equity investments. There were no nonrecurring Level 3 fair value measurements related to our equity investments without readily determinable fair values as of December 31, 2021. These amounts are included within Other assets on the Consolidated Balance Sheets. We recorded unrealized gains of $94 million, $729 million and $113 million for the years ended December 31, 2022, 2021 and 2020, respectively. Unrealized losses representing impairments were $388 million, $2 million and $20 million for the years ended December 31, 2022, 2021 and 2020, respectively. Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $1.2 billion and $1.1 billion as of December 31, 2022 and 2021, respectively, and cumulative unrealized losses representing impairments were $394 million and $10 million as of December 31, 2022 and 2021, respectively.

In addition, we also have certain equity investments measured at fair value using the net asset value practical expedient. Such investments were immaterial as of both December 31, 2022 and 2021.

NOTE 15

GUARANTEES

The maximum potential undiscounted future payments and related liability resulting from guarantees and indemnifications provided by us in the ordinary course of business were $1 billion and $21 million, respectively, as of December 31, 2022 and $1 billion and $24 million, respectively, as of December 31, 2021, all of which were primarily related to our real estate arrangements and business dispositions.

To date, we have not experienced any significant losses related to guarantees or indemnifications. Our recognition of these instruments is at fair value. In addition, we establish reserves when a loss is probable and the amount can be reasonably estimated.

NOTE 16

COMMON AND PREFERRED SHARES

The following table shows authorized shares and provides a reconciliation of common shares issued and outstanding for the years ended December 31:


(Millions, except where indicated)	2022	2021	2020
Common shares authorized (billions) (a)	3.6	3.6	3.6
Shares issued and outstanding at beginning of year	761	805	810
Repurchases of common shares	(20)	(46)	(7)
Other, primarily stock option exercises and restricted stock awards granted	2	2	2
Shares issued and outstanding as of December 31	743	761	805

(a)Of the common shares authorized but unissued as of December 31, 2022, approximately 18 million shares are reserved for issuance under employee stock and employee benefit plans.

On September 23, 2019, the Board of Directors authorized the repurchase of up to 120 million common shares from time to time, subject to market conditions and in accordance with our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date. During 2022, 2021 and 2020, we repurchased 20 million common shares with a cost basis of $3.3 billion, 46 million common shares with a cost basis of $7.6 billion, and 7 million common shares with a cost basis of $0.9 billion, respectively. The cost basis includes commissions paid of $4.2 million, $5.6 million and $1.0 million in 2022, 2021 and 2020, respectively. As of December 31, 2022, we had approximately 36 million common shares remaining under the Board share repurchase authorization.

Common shares are generally retired by us upon repurchase (except for 2.4 million shares held as treasury shares as of December 31, 2022 and 2.5 million shares held as treasury shares as of both December 31, 2021 and 2020); retired common shares and treasury shares are excluded from the shares outstanding in the table above. The treasury shares, with a cost basis of $262 million, $271 million and $279 million as of December 31, 2022, 2021 and 2020, respectively, are included as a reduction to Additional paid-in capital in Shareholders’ equity on the Consolidated Balance Sheets.

PREFERRED SHARES

The Board of Directors may authorize the issuance of up to 20 million preferred shares at a par value of $1.662/3 per share without further shareholder approval. We have the following perpetual Fixed Rate Reset Noncumulative Preferred Share series issued and outstanding as of December 31, 2022:


						Series D
Issuance date						August 3, 2021
Securities issued						1,600 Preferred shares; represented by 1,600,000 depositary shares
Dividend rate per annum						3.55% through September 14, 2026; resets September 15, 2026 and every subsequent 5-year anniversary at 5-year Treasury rate plus 2.854%
Dividend payment date						Quarterly beginning September 15, 2021
Earliest redemption date						September 15, 2026
Aggregate liquidation preference						$1,600 million
Carrying value (a)						$1,584 million

(a)Carrying value, presented in the Statements of Shareholders' Equity, represents the issuance proceeds, net of underwriting fees and offering costs.

In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the preferred shares then outstanding take precedence over our common shares for the payment of dividends and the distribution of assets out of funds legally available for distribution to shareholders. We may redeem the outstanding series of preferred shares at $1 million per preferred share (equivalent to $1,000 per depositary share) plus any declared but unpaid dividends in whole or in part, from time to time, on any dividend payment date on or after the earliest redemption date, or in whole, but not in part, within 90 days of certain bank regulatory changes.

In 2021, we paid $1.6 billion to redeem in full the previously outstanding Series B and Series C preferred shares. The difference between the redemption value and carrying value of the redeemed Series B and Series C preferred shares resulted in a $16 million reduction to net income available to common shareholders for the year ended December 31, 2021.

There were no warrants issued and outstanding as of December 31, 2022, 2021 and 2020.

NOTE 17

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

AOCI is a balance sheet item in Shareholders’ equity on the Consolidated Balance Sheets. It is comprised of items that have not been recognized in earnings but may be recognized in earnings in the future when certain events occur. Changes in each component for the three years ended December 31 were as follows:


(Millions), net of tax	Net Unrealized Gains (Losses) on Debt Securities		Foreign Currency Translation Adjustment Gains (Losses), Net of Hedges (a)		Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balances as of December 31, 2019	$	33	$	(2,189)	$	(581)	$	(2,737)





Net change	32		(40)		(150)		(158)
Balances as of December 31, 2020	65		(2,229)		(731)		(2,895)




Net change	(42)		(163)		155		(50)
Balances as of December 31, 2021	23		(2,392)		(576)		(2,945)





Net change	(87)		(230)		52		(265)
Balances as of December 31, 2022	$	(64)	$	(2,622)	$	(524)	$	(3,210)

(a)Refer to Note 13 for additional information on hedging activity.

The following table shows the tax impact for the years ended December 31 for the changes in each component of AOCI presented above:


	Tax expense (benefit)
(Millions)	2022		2021		2020
Net unrealized (losses) gains on debt securities	$	(27)	$	(13)	$	9

Foreign currency translation adjustment, net of hedges	75		51		(62)
Pension and other postretirement benefits	27		52		(28)
Total tax impact	$	75	$	90	$	(81)

Reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, were not significant for the years ended December 31, 2022, 2021 and 2020.

NOTE 18

SERVICE FEES AND OTHER REVENUE AND OTHER EXPENSES

The following is a detail of Service fees and other revenue for the years ended December 31:


(Millions)	2022		2021		2020
Service fees	$	1,444	$	1,385	$	1,280
Foreign currency-related revenue	1,202		624		517
Delinquency fees	809		637		772
Travel commissions and fees	507		244		102
Other fees and revenues	559		426		31
Total Service fees and other revenue	$	4,521	$	3,316	$	2,702

The following is a detail of Other expenses for the years ended December 31:


(Millions)	2022		2021		2020
Data processing and equipment	$	2,606	$	2,431	$	2,334
Professional services	2,074		1,958		1,789
Net unrealized and realized losses (gains) on Amex Ventures investments	302		(767)		(152)
Other	1,499		1,195		1,354
Total Other expenses	$	6,481	$	4,817	$	5,325

NOTE 19

RESTRUCTURING

We periodically initiate restructuring programs to support new business strategies and to enhance our overall effectiveness and efficiency. In connection with these programs, we will typically incur severance and other exit costs.

We had $135 million, $67 million and $197 million accrued in total restructuring reserves as of December 31, 2022, 2021 and 2020, respectively. Restructuring expense, which primarily relates to new severance charges, net of revisions to existing reserves, was $142 million, $(10) million and $125 million for the years ended December 31, 2022, 2021 and 2020, respectively. The cumulative expense relating to the restructuring programs that were in progress during 2022 and initiated at various dates between 2019 and 2022 was $270 million, the majority of which has been reflected within Corporate & Other.

NOTE 20

INCOME TAXES

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:


(Millions)	2022		2021		2020
Current income tax expense:
U.S. federal	$	2,445	$	1,656	$	1,122
U.S. state and local	339		351		339
Non-U.S.	476		328		639
Total current income tax expense	3,260		2,335		2,100
Deferred income tax (benefit) expense:
U.S. federal	(763)		231		(931)
U.S. state and local	(117)		22		(119)
Non-U.S.	(309)		41		111
Total deferred income tax (benefit) expense	(1,189)		294		(939)
Total income tax expense	$	2,071	$	2,629	$	1,161

A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2022, 2021 and 2020, to our actual income tax rate was as follows:


	2022		2021		2020
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
(Decrease) increase in taxes resulting from:
Tax credits and tax-exempt income (a)	(0.9)		(0.1)		(4.1)
State and local income taxes, net of federal benefit	3.1		3.0		3.7
Non-U.S. subsidiaries' earnings	(0.1)		1.1		2.4
Tax settlements and lapse of statute of limitations	(2.1)		(0.3)		(1.6)


Valuation allowances	(0.1)		—		4.0
Other	0.7		(0.1)		1.6
Actual tax rates	21.6	%	24.6	%	27.0	%

(a)Includes the implementation of PAM related to investments in QAH projects for the year ended December 31, 2021.

We record a deferred income tax (benefit) provision when there are differences between assets and liabilities measured for financial reporting and for income tax return purposes. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse.

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:


(Millions)	2022		2021
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	4,052	$	3,637
Employee compensation and benefits	353		359
Net operating loss and tax credit carryforwards	411		398
Other	776		809
Gross deferred tax assets	5,592		5,203
Valuation allowance	(537)		(472)
Deferred tax assets after valuation allowance	5,055		4,731
Deferred tax liabilities:
Intangibles and fixed assets	671		1,320
Deferred revenue	126		189
Deferred interest	118		133
Investment in joint ventures	17		183
Other	618		521
Gross deferred tax liabilities	1,550		2,346
Net deferred tax assets	$	3,505	$	2,385

The net operating loss and tax credit carryforward balance as of December 31, 2022, shown in the table above, is related to pre-tax U.S. federal and non-U.S. net operating loss (NOL) carryforwards of $27 million and $1.0 billion, respectively, and foreign tax credit (FTC) carryforwards of $121 million. If not utilized, certain U.S. federal and non-U.S. NOL carryforwards will expire between 2023 and 2037, whereas others have an unlimited carryforward period. The FTC carryforwards will expire between 2030 and 2032.

A valuation allowance is established when management determines that it is more likely than not that all or some portion of the benefit of the deferred tax assets will not be realized. The valuation allowances for both periods presented above are associated with certain non-U.S. deferred tax assets, state NOLs, and FTC carryforwards.

Accumulated earnings of certain non-U.S. subsidiaries, which totaled approximately $1.1 billion as of December 31, 2022, are intended to be permanently reinvested outside the U.S. We do not provide for state income and foreign withholding taxes on foreign earnings intended to be permanently reinvested outside the U.S. Accordingly, state income and foreign withholding taxes, which would have aggregated to approximately $0.1 billion as of December 31, 2022, have not been provided on those earnings.

Net income taxes paid by us during 2022, 2021 and 2020, were approximately $3.0 billion, $1.6 billion and $2.2 billion, respectively. These amounts include estimated tax payments and cash settlements relating to prior tax years.

We are subject to the income tax laws of the United States, its states and municipalities and those of the foreign jurisdictions in which we operate. These tax laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. Given these inherent complexities, we must make judgments in assessing the likelihood that a tax position will be sustained upon examination by the taxing authorities based on the technical merits of the tax position. A tax position is recognized only when, based on management’s judgment regarding the application of income tax laws, it is more likely than not that the tax position will be sustained upon examination. The amount of benefit recognized for financial reporting purposes is based on management’s best judgment of the largest amount of benefit that is more likely than not to be realized on ultimate settlement with the taxing authority given the facts, circumstances and information available at the reporting date. We adjust the level of unrecognized tax benefits when there is new information available to assess the likelihood of the outcome.

We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. We are currently under examination by the IRS for the 2017 and 2018 tax years.

The following table presents changes in unrecognized tax benefits:


(Millions)	2022		2021		2020
Balance, January 1	$	1,024	$	790	$	726
Increases:
Current year tax positions	119		64		57
Tax positions related to prior years	30		225		105
Effects of foreign currency translations	—		—		—
Decreases:
Tax positions related to prior years	(30)		(14)		(24)
Settlements with tax authorities	(74)		(15)		(15)
Lapse of statute of limitations	(104)		(17)		(58)
Effects of foreign currency translations	(3)		(9)		(1)
Balance, December 31	$	962	$	1,024	$	790

Included in the unrecognized tax benefits of $1.0 billion, $1.0 billion and $0.8 billion for December 31, 2022, 2021 and 2020, respectively, are approximately $750 million, $780 million and $580 million, respectively, that, if recognized, would favorably affect the effective tax rate in a future period.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next twelve months by as much as $150 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $150 million of unrecognized tax benefits, approximately $118 million relates to amounts that, if recognized, would impact the effective tax rate in a future period.

Interest and penalties relating to unrecognized tax benefits are reported in the income tax provision. For the years ended December 31, 2022, 2021 and 2020, we recognized approximately $10 million, $40 million and $260 million, respectively, in expenses for interest and penalties.

We had approximately $380 million accrued for the payment of interest and penalties as of both December 31, 2022 and 2021.

NOTE 21

EARNINGS PER COMMON SHARE (EPS)

The computations of basic and diluted EPS for the years ended December 31 were as follows:


(Millions, except per share amounts)	2022		2021		2020
Numerator:
Basic and diluted:
Net income	$	7,514	$	8,060	$	3,135
Preferred dividends	(57)		(71)		(79)
Equity-related adjustments (a)	—		(16)		—
Net income available to common shareholders	7,457		7,973		3,056
Earnings allocated to participating share awards (b)	(57)		(56)		(20)
Net income attributable to common shareholders	$	7,400	$	7,917	$	3,036
Denominator: (b)
Basic: Weighted-average common stock	751		789		805
Add: Weighted-average stock options (c)	1		1		1
Diluted	752		790		806
Basic EPS	$	9.86	$	10.04	$	3.77
Diluted EPS	$	9.85	$	10.02	$	3.77

(a)Represents the difference between the redemption value and carrying value of the Series C and Series B preferred shares, which were redeemed on September 15, 2021 and November 15, 2021, respectively. The carrying value represents the original issuance proceeds, net of underwriting fees and offering costs for the preferred shares.

(b)Our unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.

(c)The dilutive effect of unexercised stock options excludes from the computation of EPS 0.39 million, 0.01 million and 0.53 million of options for the years ended December 31, 2022, 2021 and 2020, respectively, because inclusion of the options would have been anti-dilutive.

NOTE 22

REGULATORY MATTERS AND CAPITAL ADEQUACY

We are supervised and regulated by the Board of Governors of the Federal Reserve System (the Federal Reserve) and are subject to the Federal Reserve’s requirements for risk-based capital and leverage ratios. Our U.S. bank subsidiary, American Express National Bank (AENB), is subject to supervision and regulation, including regulatory capital and leverage requirements, by the OCC.

Under the risk-based capital guidelines of the Federal Reserve, we are required to maintain minimum ratios of CET1, Tier 1 and Total (Tier 1 plus Tier 2) capital to risk-weighted assets, as well as a minimum Tier 1 leverage ratio (Tier 1 capital to average adjusted on-balance sheet assets).

Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional, discretionary actions by regulators, that, if undertaken, could have a direct material effect on our operating activities.

As of December 31, 2022 and 2021, we met all capital requirements to which we were subject and maintained regulatory capital ratios in excess of those required to qualify as well capitalized.

The following table presents the regulatory capital ratios:


(Millions, except percentages)	CET 1 capital		Tier 1 capital		Total capital		CET 1 capital ratio		Tier 1 capital ratio		Total capital ratio		Tier 1 leverage ratio
December 31, 2022: (a)
American Express Company	$	20,030	$	21,627	$	24,926	10.3	%	11.1	%	12.8	%	9.9	%
American Express National Bank	$	14,820	$	14,820	$	17,273	11.3	%	11.3	%	13.2	%	9.7	%
December 31, 2021: (a)
American Express Company	$	17,554	$	19,186	$	21,506	10.5	%	11.5	%	12.9	%	10.5	%
American Express National Bank	$	13,085	$	13,085	$	15,283	11.8	%	11.8	%	13.7	%	10.5	%
Well-capitalized ratios (b)
American Express Company							N/A		6.0	%	10.0	%	N/A
American Express National Bank							6.5	%	8.0	%	10.0	%	5.0	%
Minimum capital ratios (c)							4.5	%	6.0	%	8.0	%	4.0	%
Effective Minimum (d)
American Express Company							7.0	%	8.5	%	10.5	%	4.0	%
American Express National Bank							7.0	%	8.5	%	10.5	%	4.0	%

(a)Capital ratios reported using Basel III capital definitions and risk-weighted assets using the Basel III standardized approach.

(b)Represents requirements for bank holding companies and banking subsidiaries to be considered “well capitalized” pursuant to regulations issued under the Federal Reserve Regulation Y and the Federal Deposit Insurance Corporation Improvement Act, respectively. There is no CET1 capital ratio or Tier 1 leverage ratio requirement for a bank holding company to be considered “well capitalized.”

(c)As defined by the regulations issued by the Federal Reserve and OCC.

(d)Represents Basel III minimum capital requirement and applicable regulatory buffers as defined by the federal banking regulators, which includes the stress capital buffer for American Express Company and the capital conservation buffer for American Express National Bank.

RESTRICTED NET ASSETS OF SUBSIDIARIES

Certain of our subsidiaries are subject to restrictions on the transfer of net assets under debt agreements and regulatory requirements. These restrictions have not had any effect on our shareholder dividend policy and management does not anticipate any impact in the future. Procedures exist to transfer net assets between the Company and its subsidiaries, while ensuring compliance with the various contractual and regulatory constraints. As of December 31, 2022, the aggregate amount of net assets of subsidiaries that are restricted to be transferred was approximately $12.0 billion.

BANK HOLDING COMPANY DIVIDEND RESTRICTIONS

We are limited in our ability to pay dividends by the Federal Reserve, which could prohibit a dividend that would be considered an unsafe or unsound banking practice. It is the policy of the Federal Reserve that bank holding companies generally should pay dividends on preferred and common stock only out of net income available to common shareholders generated over the past year, and only if prospective earnings retention is consistent with the organization’s current and expected future capital needs, asset quality and overall financial condition. Moreover, bank holding companies are required by statute to be a source of strength to their insured depository institution subsidiaries and should not maintain dividend levels that undermine their ability to do so. On an annual basis, we are required to develop and maintain a capital plan, which includes planned dividends. We may be subject to limitations and restrictions on our dividends, if, among other things, (i) our regulatory capital ratios do not satisfy applicable minimum requirements and buffers or (ii) we are required to resubmit our capital plan.

BANK DIVIDEND RESTRICTIONS

In the year ended December 31, 2022, AENB paid dividends from retained earnings to its parent of $4.6 billion. AENB is limited in its ability to pay dividends by banking statutes, regulations and supervisory policy. In general, applicable federal and state banking laws prohibit, without first obtaining regulatory approval, insured depository institutions, such as AENB, from making dividend distributions if such distributions are not paid out of available retained earnings or would cause the institution to fail to meet capital adequacy standards. If AENB’s risk-based capital ratios do not satisfy minimum regulatory requirements and applicable buffers, it will face graduated constraints on dividends and other capital distributions. In determining the dividends to pay its parent, AENB must also consider the effects on applicable risk-based capital and leverage ratio requirements, as well as policy statements of the federal regulatory agencies. In addition, AENB's banking regulators have authority to limit or prohibit the payment of a dividend by AENB under a number of circumstances, including if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound banking practice in light of the financial condition of the banking organization.

NOTE 23

SIGNIFICANT CREDIT CONCENTRATIONS

Concentrations of credit risk exist when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to American Express’ total credit exposure. Our customers operate in diverse industries, economic sectors and geographic regions.

The following table details our maximum credit exposure of the on-balance sheet assets by category as of December 31:


(Billions)	2022		2021
Individuals: (a)	$	156	$	131
United States	129		108
Outside the United States (b)	27		23
Institutions:
Financial services (c)	36		24
Other (d)	17		15
U.S. Government and agencies (e)	4		2
Total on-balance sheet	$	213	$	172

(a)Primarily reflects loans and receivables from global consumer and small business Card Members, which are governed by individual credit risk management.

(b)The geographic regions with the largest concentration outside the United States include the United Kingdom, Japan, the European Union, Australia, Canada and Mexico.

(c)Represents banks, broker-dealers, insurance companies and savings and loan associations, which are governed by institutional credit risk management.

(d)Primarily reflects loans and receivables from global corporate Card Members, which are governed by institutional credit risk management.

(e)Represent debt obligations of the U.S. Government and its agencies, states and municipalities and government-sponsored entities. Risk management for these balances is governed by our Asset and Liability Management Committee.

As of December 31, 2022 and 2021, our most significant concentration of credit risk was with individuals. These amounts are generally advanced on an unsecured basis. However, we review each potential customer’s credit application and evaluate the applicant’s financial history and ability and willingness to repay. We also consider credit performance by customer tenure, industry and geographic location in managing credit exposure.

As of December 31, 2022 and 2021, we had approximately $350 billion and $327 billion, respectively of unused credit, primarily available to customers as part of established lending product agreements, of which approximately 80 percent was related to customers within the United States in both periods. Total unused credit does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn. Our charge card products generally have no pre-set spending limit and therefore are not reflected in unused credit.

NOTE 24

REPORTABLE OPERATING SEGMENTS AND GEOGRAPHIC OPERATIONS

REPORTABLE OPERATING SEGMENTS

We consider a combination of factors when evaluating the composition of our reportable operating segments, including the results reviewed by the chief operating decision maker, economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus outside the United States), and regulatory environment considerations.

Effective for the first quarter of 2022, we updated the methodology used to allocate certain revenues; prior period amounts have been recast to conform to current period presentation.

Effective for the third quarter of 2022, we realigned our reportable segments to reflect organizational changes announced during the second quarter of 2022. Prior periods have been recast to conform to the new reportable operating segments.

The following is a brief description of the primary business activities of our four new reportable operating segments:

U.S. Consumer Services (USCS), which issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products.
Commercial Services (CS), which issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.
International Card Services (ICS), which issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.
Global Merchant and Network Services (GMNS), which operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.

Corporate functions and certain other businesses and operations are included in Corporate & Other.

The following table presents certain selected financial information for our reportable operating segments and Corporate & Other as of or for the years ended December 31, 2022, 2021 and 2020:


(Millions, except where indicated)	USCS		CS		ICS		GMNS		Corporate & Other (a)		Consolidated
2022
Total non-interest revenues	$	16,440	$	12,196	$	8,262	$	6,123	$	(54)	$	42,967
Revenue from contracts with customers (b)	12,478		10,844		5,301		5,603		(7)		34,219
Interest income	8,457		2,070		1,453		23		655		12,658
Interest expense	983		697		654		(329)		758		2,763
Total revenues net of interest expense	23,914		13,569		9,061		6,475		(157)		52,862
Pretax income (loss)	5,400		2,880		578		2,954		(2,227)		9,585
Total assets (billions)	$	94	$	51	$	37	$	20	$	26	$	228
2021
Total non-interest revenues	$	12,989	$	9,833	$	6,761	$	5,021	$	26	$	34,630
Revenue from contracts with customers (b)	9,823		8,659		4,368		4,694		172		27,716
Interest income	6,328		1,408		1,116		16		165		9,033
Interest expense	395		330		442		(92)		208		1,283
Total revenues net of interest expense	18,922		10,911		7,435		5,129		(17)		42,380
Pretax income (loss)	5,958		2,936		929		1,874		(1,008)		10,689
Total assets (billions)	$	77	$	45	$	33	$	15	$	19	$	189
2020
Total non-interest revenues	$	10,125	$	8,210	$	5,877	$	4,209	$	(319)	$	28,102
Revenue from contracts with customers (b)	7,261		7,123		3,663		3,948		(21)		21,974
Interest income	7,009		1,532		1,244		18		280		10,083
Interest expense	787		508		379		(82)		506		2,098
Total revenues net of interest expense	16,347		9,234		6,742		4,309		(545)		36,087
Pretax income (loss)	3,103		1,013		521		1,294		(1,635)		4,296
Total assets (billions)	$	65	$	35	$	28	$	14	$	49	$	191

(a)Corporate & Other includes adjustments and eliminations for intersegment activity.

(b)Includes discount revenue, certain service fees and other revenue and processed revenues from customers.

Total Revenues Net of Interest Expense

We allocate discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the USCS, CS and ICS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue being allocated.

Net card fees, processed revenue and certain other revenues are directly attributable to the segment in which they are reported.

Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported. Interest expense represents an allocated funding cost based on a combination of segment funding requirements and internal funding rates.

Provisions for Credit Losses

The provisions for credit losses are directly attributable to the segment in which they are reported.

Expenses

Card Member rewards and Card Member services expenses are included in each segment based on the actual expenses incurred. Business development and Marketing expenses are included in each segment based on the actual expenses incurred. Global brand advertising is primarily allocated to the segments based on the relative levels of revenue.

Salaries and employee benefits and other expenses reflect both costs incurred directly within each segment, as well as allocated expenses. The allocated expenses include service costs, which primarily reflect salaries and benefits associated with our technology and customer servicing groups, and overhead expenses. Service costs are allocated based on activities directly attributable to the segment, and overhead expenses are allocated based on the relative levels of revenue and Card Member loans and receivables.

GEOGRAPHIC OPERATIONS

The following table presents our total revenues net of interest expense and pretax income (loss) from continuing operations in different geographic regions based, in part, upon internal allocations, which necessarily involve management’s judgment.

Effective for the first quarter of 2022, we changed the way in which we allocate certain overhead expenses by geographic region. As a result, prior period pretax income (loss) from continuing operations by geography has been recast to conform to current period presentation; there was no impact at a consolidated level.


(Millions)	United States		EMEA(a)		APAC(a)		LACC(a)		Other Unallocated(b)		Consolidated
2022
Total revenues net of interest expense	$	41,396	$	4,871	$	3,835	$	2,917	$	(157)	$	52,862
Pretax income (loss) from continuing operations	10,383		550		376		500		(2,224)		9,585
2021
Total revenues net of interest expense	$	33,103	$	3,643	$	3,418	$	2,238	$	(22)	$	42,380
Pretax income (loss) from continuing operations	10,325		460		420		494		(1,010)		10,689
2020
Total revenues net of interest expense	$	28,263	$	3,087	$	3,271	$	2,019	$	(553)	$	36,087
Pretax income (loss) from continuing operations	5,422		187		328		273		(1,914)		4,296

(a)EMEA represents Europe, the Middle East and Africa; APAC represents Asia Pacific, Australia and New Zealand; and LACC represents Latin America, Canada and the Caribbean.

(b)Other Unallocated includes net costs which are not directly allocated to specific geographic regions, including costs related to the net negative interest spread on excess liquidity funding and executive office operations expenses.

NOTE 25

PARENT COMPANY

PARENT COMPANY – CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


Years Ended December 31 (Millions)	2022		2021		2020
Revenues
Non-interest revenues
Other	$	388	$	343	$	480
Total non-interest revenues	388		343		480
Interest income	614		96		228
Interest expense	857		482		630
Total revenues net of interest expense	145		(43)		78
Expenses
Salaries and employee benefits	408		359		333
Other	372		346		562
Total expenses	780		705		895
Pretax loss	(635)		(748)		(817)
Income tax benefit	(244)		(248)		(236)
Net loss before equity in net income of subsidiaries and affiliates	(391)		(500)		(581)
Equity in net income of subsidiaries and affiliates	7,905		8,560		3,716
Net income	$	7,514	$	8,060	$	3,135
Net unrealized pension and other postretirement benefits, net of tax	10		151		(91)
Other comprehensive (loss) income, net	(275)		(201)		(67)
Comprehensive income	$	7,249	$	8,010	$	2,977

PARENT COMPANY – CONDENSED BALANCE SHEETS


As of December 31 (Millions)	2022		2021
Assets
Cash and cash equivalents	$	8,188	$	5,341
Equity in net assets of subsidiaries and affiliates	24,702		22,623
Loans to subsidiaries and affiliates	22,658		17,848
Due from subsidiaries and affiliates	1,342		1,207
Other assets	156		158
Total assets	57,046		47,177
Liabilities and Shareholders’ Equity
Liabilities
Accounts payable and other liabilities	2,271		2,107
Due to subsidiaries and affiliates	632		443
Debt with subsidiaries and affiliates	—		136
Long-term debt	29,432		22,314
Total liabilities	32,335		25,000
Shareholders’ Equity
Total shareholders’ equity	24,711		22,177
Total liabilities and shareholders’ equity	$	57,046	$	47,177

PARENT COMPANY – CONDENSED STATEMENTS OF CASH FLOWS


Years Ended December 31 (Millions)	2022		2021		2020
Cash Flows from Operating Activities
Net income	$	7,514	$	8,060	$	3,135
Adjustments to reconcile net income to cash provided by operating activities:
Equity in net income of subsidiaries and affiliates	(7,905)		(8,560)		(3,716)
Dividends received from subsidiaries and affiliates	5,549		9,102		2,679
Other operating activities, primarily with subsidiaries and affiliates	160		(305)		732
Net cash provided by operating activities	5,318		8,297		2,830
Cash Flows from Investing Activities

(Increase) decrease in loans to subsidiaries and affiliates	(4,850)		(176)		11,434
Investments in subsidiaries and affiliates	(1)		(60)		(52)
Other investing activities	—		—		74
Net cash (used in) provided by investing activities	(4,851)		(236)		11,456
Cash Flows from Financing Activities
Net decrease in short-term debt from subsidiaries and affiliates	(136)		(2,636)		(3,289)
Proceeds from long-term debt	13,202		3,000		—
Payments of long-term debt	(5,675)		(5,000)		(2,000)
Issuance of American Express preferred shares	—		1,584		—
Redemption of American Express preferred shares	—		(1,600)		—
Issuance of American Express common shares	56		64		44
Repurchase of American Express common shares and other	(3,502)		(7,652)		(1,029)
Dividends paid	(1,565)		(1,448)		(1,474)
Net cash provided by (used in) financing activities	2,380		(13,688)		(7,748)
Net increase (decrease) in cash and cash equivalents	2,847		(5,627)		6,538
Cash and cash equivalents at beginning of year	5,341		10,968		4,430
Cash and cash equivalents at end of year	$	8,188	$	5,341	$	10,968


Supplemental cash flow information
Years Ended December 31 (Millions)	2022		2021		2020
Non-Cash Investing Activities
Loans to subsidiaries and affiliates	$	—	$	(1,787)	$	(4,971)
Non-Cash Financing Activities
Short-term debts from subsidiaries and affiliates	—		—		4,971
Proceeds from long-term debt	$	—	$	1,787	$	—

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