Item 1. FINANCIAL STATEMENTS

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended September 30 (Millions, except per share amounts)						2021						2020
Revenues
Non-interest revenues
Discount revenue						$	6,676					$	4,999
Net card fees						1,312						1,191
Other fees and commissions						632						478
Other						314						209
Total non-interest revenues						8,934						6,877
Interest income
Interest on loans						2,256						2,266
Interest and dividends on investment securities						18						33
Deposits with banks and other						27						25
Total interest income						2,301						2,324
Interest expense
Deposits						109						202
Long-term debt and other						198						248
Total interest expense						307						450
Net interest income						1,994						1,874
Total revenues net of interest expense						10,928						8,751
Provisions for credit losses
Card Member receivables						(12)						117
Card Member loans						(177)						571
Other						(2)						(23)
Total provisions for credit losses						(191)						665
Total revenues net of interest expense after provisions for credit losses						11,119						8,086
Expenses
Marketing and business development						2,355						1,822
Card Member rewards						3,020						2,004
Card Member services						579						259
Salaries and employee benefits						1,497						1,408
Other, net						1,218						1,229
Total expenses						8,669						6,722
Pretax income						2,450						1,364
Income tax provision						624						291
Net income						$	1,826					$	1,073
Earnings per Common Share (Note 14)(a)
Basic						$	2.27					$	1.31
Diluted						$	2.27					$	1.30
Average common shares outstanding for earnings per common share:
Basic						786						804
Diluted						787						805

(a)Represents net income less (i) earnings allocated to participating share awards of $14 million and $7 million for the three months ended September 30, 2021 and 2020, respectively, (ii) dividends on preferred shares of $20 million and $16 million for the three months ended September 30, 2021 and 2020, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for the three months ended September 30, 2021.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Nine Months Ended September 30 (Millions, except per share amounts)						2021						2020
Revenues
Non-interest revenues
Discount revenue						$	18,245					$	14,852
Net card fees						3,851						3,442
Other fees and commissions						1,712						1,647
Other						785						707
Total non-interest revenues						24,593						20,648
Interest income
Interest on loans						6,494						7,543
Interest and dividends on investment securities						66						98
Deposits with banks and other						73						155
Total interest income						6,633						7,796
Interest expense
Deposits						356						788
Long-term debt and other						635						920
Total interest expense						991						1,708
Net interest income						5,642						6,088
Total revenues net of interest expense						30,235						26,736
Provisions for credit losses
Card Member receivables						(147)						1,069
Card Member loans						(1,146)						3,416
Other						(179)						356
Total provisions for credit losses						(1,472)						4,841
Total revenues net of interest expense after provisions for credit losses						31,707						21,895
Expenses
Marketing and business development						6,340						4,889
Card Member rewards						7,975						5,745
Card Member services						1,328						923
Salaries and employee benefits						4,586						4,152
Other, net						3,095						3,748
Total expenses						23,324						19,457
Pretax income						8,383						2,438
Income tax provision						2,042						741
Net income						$	6,341					$	1,697
Earnings per Common Share (Note 14)(a)
Basic						$	7.84					$	2.01
Diluted						$	7.82					$	2.01
Average common shares outstanding for earnings per common share:
Basic						796						805
Diluted						797						806

(a)Represents net income less (i) earnings allocated to participating share awards of $45 million and $10 million for the nine months ended September 30, 2021 and 2020, respectively, (ii) dividends on preferred shares of $49 million and $65 million for the nine months ended September 30, 2021 and 2020, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for the nine months ended September 30, 2021.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Net income						$	1,826					$	1,073					$	6,341					$	1,697
Other comprehensive income (loss):
Net unrealized debt securities (losses) gains, net of tax						(8)						(9)						(31)						43
Foreign currency translation adjustments, net of tax						(83)						40						(81)						(159)
Net unrealized pension and other postretirement benefits, net of tax						9						8						44						(19)
Other comprehensive income (loss)						(82)						39						(68)						(135)
Comprehensive income						$	1,744					$	1,112					$	6,273					$	1,562

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Millions, except share data)						September 30, 2021						December 31, 2020
Assets
Cash and cash equivalents
Cash and due from banks						$	2,944					$	2,984
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2021, $369; 2020, $92)						24,864						29,824
Short-term investment securities (includes restricted investments of consolidated variable interest entities: 2021, $25; 2020, $47)						108						157
Total cash and cash equivalents						27,916						32,965
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2021, $5,101; 2020, $4,296), less reserves for credit losses: 2021, $30; 2020, $267						48,728						43,434
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2021, $24,675; 2020, $25,908), less reserves for credit losses: 2021, $3,489; 2020, $5,344						73,537						68,029
Other loans, less reserves for credit losses: 2021, $66; 2020, $238						2,349						2,614
Investment securities						9,589						21,631
Premises and equipment, less accumulated depreciation and amortization: 2021, $8,371; 2020, $7,540						4,960						5,015
Other assets, less reserves for credit losses: 2021, $33; 2020, $85						17,182						17,679
Total assets						$	184,261					$	191,367
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits						$	84,326					$	86,875
Accounts payable						9,641						9,444
Short-term borrowings						2,253						1,878
Long-term debt (includes debt issued by consolidated variable interest entities: 2021, $9,059; 2020, $12,760)						34,483						42,952
Other liabilities						29,132						27,234
Total liabilities						$	159,835					$	168,383
Contingencies (Note 7)
Shareholders’ Equity
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 2,350 shares as of September 30, 2021 and 1,600 shares as of December 31, 2020						—						—
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 778 million shares as of September 30, 2021 and 805 million shares as of December 31, 2020						156						161
Additional paid-in capital						12,401						11,881
Retained earnings						14,832						13,837
Accumulated other comprehensive income (loss)
Net unrealized debt securities gains, net of tax of: 2021, $11; 2020, $20						34						65
Foreign currency translation adjustments, net of tax of: 2021, $(366); 2020, $(381)						(2,310)						(2,229)
Net unrealized pension and other postretirement benefits, net of tax of: 2021, $(218); 2020, $(236)						(687)						(731)
Total accumulated other comprehensive income (loss)						(2,963)						(2,895)
Total shareholders’ equity						24,426						22,984
Total liabilities and shareholders’ equity						$	184,261					$	191,367

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30 (Millions)						2021						2020
Cash Flows from Operating Activities
Net income						$	6,341					$	1,697
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses						(1,472)						4,841
Depreciation and amortization						$	1,276					1,115
Deferred taxes and other						(446)						79
Stock-based compensation						256						175
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other assets						863						(1,432)
Accounts payable & other liabilities						2,819						(4,384)
Net cash provided by operating activities						9,637						2,091
Cash Flows from Investing Activities
Sale of investment securities						37						58
Maturities and redemptions of investment securities						12,803						4,881
Purchase of investments						(1,179)						(18,977)
Net (increase) decrease in Card Member loans and receivables, and other loans						(9,790)						32,262
Purchase of premises and equipment, net of sales: 2021, $41; 2020, $1						(1,079)						(1,042)
Other investing activities						1						7
Net cash provided by investing activities						793						17,189
Cash Flows from Financing Activities
Net (decrease) increase in customer deposits						(2,534)						12,158
Net increase (decrease) in short-term borrowings						428						(4,737)
Proceeds from long-term debt						38						—
Payments of long-term debt						(8,247)						(13,699)
Issuance of American Express preferred shares						1,584						—
Redemption of American Express preferred shares						(850)						—
Issuance of American Express common shares						54						34
Repurchase of American Express common shares and other						(4,681)						(1,026)
Dividends paid						(1,090)						(1,112)
Net cash used in financing activities						(15,298)						(8,382)
Effect of foreign currency exchange rates on cash and cash equivalents						(181)						283
Net (decrease) increase in cash and cash equivalents						(5,049)						11,181
Cash and cash equivalents at beginning of period						32,965						24,446
Cash and cash equivalents at end of period						$	27,916					$	35,627

Supplemental cash flow information
Cash and cash equivalents reconciliation						Sep-21						Dec-20						Sep-20						Dec-19
Cash and cash equivalents per Consolidated Balance Sheets						$	27,916					$	32,965					$	35,627					$	24,446
Restricted balances included in Cash and cash equivalents						475						606						2,597						514
Total cash and cash equivalents excluding restricted balances						$	27,441					$	32,359					$	33,030					$	23,932

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

Three months ended September 30, 2021 (Millions, except per share amounts)						Total						Preferred Shares						Common Shares						Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings
Balances as of June 30, 2021						$	25,539					$	—					$	160					$	11,858					$	(2,881)					$	16,402
Net income						1,826						—						—						—						—						1,826
Other comprehensive income						(82)						—						—						—						(82)						—
Preferred shares issued						1,584						—						—						1,584						—						—
Redemption of preferred shares						(850)						—						—						(841)						—						(9)
Repurchase of common shares						(3,300)						—						(4)						(266)						—						(3,030)
Other changes, primarily employee plans						66						—						—						66						—						—
Cash dividends declared preferred Series B, $9.06 per depositary share						(7)						—						—						—						—						(7)
Cash dividends declared preferred Series C, $8.70 per depositary share						(7)						—						—						—						—						(7)
Cash dividends declared preferred Series D, $4.24 per depositary share						(6)						—						—						—						—						(6)
Cash dividends declared common, $0.43 per share						(337)						—						—						—						—						(337)
Balances as of September 30, 2021						$	24,426					$	—					$	156					$	12,401					$	(2,963)					$	14,832

Nine months ended September 30, 2021 (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, 2020						$	22,984					$	—					$	161					$	11,881					$	(2,895)					$	13,837
Net income						6,341						—						—						—						—						6,341
Other comprehensive income						(68)						—						—						—						(68)						—
Preferred shares issued						1,584						—						—						1,584						—						—
Redemption of preferred shares						(850)						—						—						(841)						—						(9)
Repurchase of common shares						(4,646)						—						(6)						(400)						—						(4,240)
Other changes, primarily employee plans						160						—						1						177						—						(18)
Cash dividends declared preferred Series B, $27.44 per depositary share						(21)						—						—						—						—						(21)
Cash dividends declared preferred Series C, $26.32 per depositary share						(22)						—						—						—						—						(22)
Cash dividends declared preferred Series D, $4.24 per depositary share						(6)						—						—						—						—						(6)
Cash dividends declared common, $1.29 per share						(1,030)						—						—						—						—						(1,030)
Balances as of September 30, 2021						$	24,426					$	—					$	156					$	12,401					$	(2,963)					$	14,832

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

Three months ended September 30, 2020 (Millions, except per share amounts)						Total						Preferred Shares						Common Shares						Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings
Balances as of June 30, 2020						$	21,062					$	—					$	161					$	11,760					$	(2,911)					$	12,052
Net income						1,073						—						—						—						—						1,073
Other comprehensive income						39						—						—						—						39						—
Other changes, primarily employee plans						59						—						—						58						—						1
Cash dividends declared preferred Series B, $9.98 per depositary share						(7)						—						—						—						—						(7)
Cash dividends declared preferred Series C, $9.20 per depositary share						(9)						—						—						—						—						(9)
Cash dividends declared common, $0.43 per share						(348)						—						—						—						—						(348)
Balances as of September 30, 2020						$	21,869					$	—					$	161					$	11,818					$	(2,872)					$	12,762

Nine months ended September 30, 2020 (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						1,697						—						—						—						—						1,697
Other comprehensive loss						(135)						—						—						—						(135)						—
Repurchase of common shares						(875)						—						(2)						(105)						—						(768)
Other changes, primarily employee plans						102						—						—						149						—						(47)
Cash dividends declared preferred Series B, $36.44 per depositary share						(27)						—						—						—						—						(27)
Cash dividends declared preferred Series C, $43.99 per depositary share						(38)						—						—						—						—						(38)
Cash dividends declared common, $1.29 per share						(1,044)						—						—						—						—						(1,044)
Balances as of September 30, 2020						$	21,869					$	—					$	161					$	11,818					$	(2,872)					$	12,762

(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 methodology for the recognition of credit losses on certain financial instruments.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The Company

We are a globally integrated payments company that provides our 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. Business travel-related services are offered through our non-consolidated joint venture, American Express Global Business Travel. Our various products and services are sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are sold through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. If not materially different, certain note disclosures included therein have been omitted from these Consolidated Financial Statements.

The interim Consolidated Financial Statements included in this report have not been audited. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim Consolidated Financial Statements, have been made. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates reflect the best judgment of management, but actual results could differ.

Effective April 1, 2021, we prospectively changed the recognition of certain costs paid to a third party previously recognized over the twelve month card membership period in Net card fees in the Consolidated Statements of Income; such costs are now recorded as incurred in Marketing and business development expense. This change is not material to the Consolidated Financial Statements.

Recently Adopted Accounting Standards

Effective January 1, 2021, we elected to change our accounting for investments in qualified affordable housing projects from the equity method of accounting to the proportional amortization method (PAM) in accordance with the accounting guidance. PAM results in the amortization of the initial cost of the investment in proportion to the related tax credits, and recognition of the net investment performance in the statement of income as a component of Income tax provision, while the equity method reflected losses related to the investments as a component of Other, net expenses. As a result, we believe PAM is preferable as it better reflects the economics of our tax credit investments. Since the impact of this change is immaterial to our prior and current period financial statements, we implemented PAM on a prospective basis which resulted in a one-time charge to Income tax provision of $55 million in the first quarter of 2021, reflecting the cumulative impact of the difference in the timing of expense recognition between the equity method and PAM.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Loans and Card Member Receivables

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

Card Member loans by segment and Other loans as of September 30, 2021 and December 31, 2020 consisted of:

(Millions)						2021						2020
Global Consumer Services Group (a)						$	61,625					$	60,084
Global Commercial Services						15,401						13,289
Card Member loans						77,026						73,373
Less: Reserves for credit losses						3,489						5,344
Card Member loans, net						$	73,537					$	68,029
Other loans, net (b)						$	2,349					$	2,614

(a)Includes approximately $24.7 billion and $25.9 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of September 30, 2021 and December 31, 2020, respectively.

(b)Other loans represent consumer and commercial non-card financing products, and Small Business Administration Paycheck Protection Program (PPP) loans. There were $0.1 billion and $0.6 billion of gross PPP loans outstanding as of September 30, 2021 and December 31, 2020, respectively. Other loans are presented net of reserves for credit losses of $66 million and $238 million as of September 30, 2021 and December 31, 2020, respectively.

Card Member receivables by segment as of September 30, 2021 and December 31, 2020 consisted of:

(Millions)						2021						2020
Global Consumer Services Group						$	19,499					$	18,685
Global Commercial Services (a)						29,259						25,016
Card Member receivables						48,758						43,701
Less: Reserves for credit losses						30						267
Card Member receivables, net						$	48,728					$	43,434

(a)Includes $5.1 billion and $4.3 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of September 30, 2021 and December 31, 2020, respectively.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Card Member Loans and Receivables Aging

Generally, a Card Member account is considered past due if payment 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 September 30, 2021 and December 31, 2020:

2021 (Millions)						Current						30-59 Days Past Due						60-89 Days Past Due						90+ Days Past Due						Total
Card Member Loans:
Global Consumer Services Group						$	61,178					$	144					$	100					$	203					$	61,625
Global Commercial Services
Global Small Business Services						15,272						29						19						29						15,349
Global Corporate Payments (a)						(b)						(b)						(b)						—						52
Card Member Receivables:
Global Consumer Services Group						19,400						38						22						39						19,499
Global Commercial Services
Global Small Business Services						$	16,684					$	42					$	24					$	31					$	16,781
Global Corporate Payments (a)						(b)						(b)						(b)						$	35					$	12,478

2020 (Millions)						Current						30-59 Days Past Due						60-89 Days Past Due						90+ Days Past Due						Total
Card Member Loans:
Global Consumer Services Group						$	59,442					$	177					$	148					$	317					$	60,084
Global Commercial Services
Global Small Business Services						13,132						27						20						47						13,226
Global Corporate Payments (a)						(b)						(b)						(b)						—						63
Card Member Receivables:
Global Consumer Services Group						18,570						33						26						56						18,685
Global Commercial Services
Global Small Business Services						$	14,023					$	37					$	21					$	38					$	14,119
Global Corporate Payments (a)						(b)						(b)						(b)						$	60					$	10,897

(a)Global Corporate Payments (GCP) reflects global, large and middle market 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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Quality Indicators for Card Member Loans and Receivables

The following tables present the key credit quality indicators as of or for the nine months ended September 30:

						2021																		2020
			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:
Global Consumer Services Group						1.1		%				1.4		%				0.7		%				2.7		%				3.2		%				1.2		%
Global Small Business Services						0.7		%				0.8		%				0.5		%				2.1		%				2.4		%				1.1		%
Card Member Receivables:
Global Consumer Services Group						0.3		%				0.4		%				0.5		%				2.0		%				2.2		%				0.8		%
Global Small Business Services						0.3		%				0.4		%				0.6		%				2.3		%				2.6		%				1.0		%
Global Corporate Payments (d)						(b)						(0.1)		%				(c)						(b)						2.2		%				(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 GCP Card Member 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 0.3% and 0.6% as of September 30, 2021 and 2020, respectively.

(d)The net write-off rate for the current year includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which had resulted in a $53 million write-off in the prior year.

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.”

The following tables provide additional information with respect to our impaired loans and receivables as of September 30, 2021 and December 31, 2020:

						As of September 30, 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:
Global Consumer Services Group						$	134					$	77					$	845					$	891					$	1,947					$	491
Global Commercial Services						14						15						209						299						537						165
Card Member Receivables:
Global Consumer Services Group						—						—						138						101						239						24
Global Commercial Services						—						—						254						265						519						46
Other Loans (f)						1						—						97						3						101						9
Total						$	149					$	92					$	1,543					$	1,559					$	3,343					$	735

						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:
Global Consumer Services Group						$	203					$	146					$	1,586					$	248					$	2,183					$	782
Global Commercial Services						21						29						478						67						595						285
Card Member Receivables:
Global Consumer Services Group						—						—						240						34						274						60
Global Commercial Services						—						—						534						75						609						139
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 $32 million and $32 million that are over 90 days past due and accruing interest as of September 30, 2021 and December 31, 2020, respectively, and $17 million and $11 million that are non-accruals as of September 30, 2021 and December 31, 2020, respectively.

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

(e)Out of Program TDRs include $1,413 million and $316 million of accounts that have successfully completed a modification program and $146 million and $114 million of accounts that were not in compliance with the terms of the modification programs as of September 30, 2021 and December 31, 2020, respectively.

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loans and Receivables Modified as TDRs

The following tables provide additional information with respect to loans and receivables that entered a financial relief program and were modified as TDRs during the three and nine months ended September 30, 2021 and 2020:

						Three Months Ended September 30, 2021																								Nine Months Ended September 30, 2021
						Number of Accounts (thousands)						Account Balances (millions)(a)						Average Interest Rate Reduction (% Points)						Average Payment Term Extensions (# of Months)						Number of Accounts (thousands)						Account Balances (millions)(a)						Average Interest Rate Reduction (% Points)						Average Payment Term Extension (# of Months)
Troubled Debt Restructurings:
Card Member Loans						26						$	177					13						(b)						87						$	636					13						(b)
Card Member Receivables						5						114						(c)						17						16						314						(c)						18
Other Loans (d)						1						2						3						17						3						$	12					3						16
Total						32						$	293																	106						$	962

						Three Months Ended September 30, 2020																								Nine Months Ended September 30, 2020
						Number of Accounts (thousands)						Account Balances (millions)(a)						Average Interest Rate Reduction (% Points)						Average Payment Term Extensions (# of Months)						Number of Accounts (thousands)						Account Balances (millions)(a)						Average Interest Rate Reduction (% Points)						Average Payment Term Extension (# of Months)
Troubled Debt Restructurings:
Card Member Loans						76						$	649					14						(b)						216						$	1,947					14						(b)
Card Member Receivables						13						231						(c)						18						38						1,049						(c)						19
Other Loans (d)						3						$	165					3						17						8						$	319					3						16
Total						92						$	1,045																	262						$	3,315

(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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

						Three Months Ended September 30, 2021												Nine Months Ended September 30, 2021
			Number of Accounts (thousands)						Aggregated Outstanding Balances Upon Default (millions)(a)						Number of Accounts (thousands)						Aggregated Outstanding Balances Upon Default (millions)(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans						4						$	32					20						$	148
Card Member Receivables						1						10						5						48
Other Loans (b)						1						1						3						9
Total						6						$	43					28						$	205

						Three Months Ended September 30, 2020												Nine Months Ended September 30, 2020
			Number of Accounts (thousands)						Aggregated Outstanding Balances Upon Default (millions)(a)						Number of Accounts (thousands)						Aggregated Outstanding Balances Upon Default (millions)(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans						4						$	32					11						$	84
Card Member Receivables						1						16						3						34
Other Loans (b)						1						1						2						$	2
Total						6						$	49					16						$	120

(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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. 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 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 using a discounted cash flow model.

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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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)
						September 30, 2021												December 31, 2020						September 30, 2021												December 31, 2020
Third quarter of 2021						5%												7% - 11%						8%												3% - (3)%
Fourth quarter of 2021						5% - 7%												7% - 11%						6% - (4)%												6% - (2)%
Fourth quarter of 2022						4% - 9%												6% - 12%						2% - 1%												4% - 3%
Fourth quarter of 2023						3% - 7%												4% -10%						4% - 3%												5% - 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 decreased for the three and nine months ended September 30, 2021, driven by improved portfolio quality and macroeconomic outlook, partially offset by an increase in the outstanding balance of loans, and for the current nine month period, the decrease in reserves was also driven by lower delinquencies.

Card Member loans reserve for credit losses increased for the three and nine months ended September 30, 2020, driven by the deterioration of the global macroeconomic outlook as a result of the COVID-19 pandemic, partially offset by a decline in the outstanding balance of loans and lower delinquencies.

The following table presents changes in the Card Member loans reserve for credit losses for the three and nine months ended September 30:

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Beginning Balance						$	3,835					$	5,628					$	5,344					$	4,027
Provisions (a)						(177)						571						(1,146)						3,416
Net write-offs (b)
Principal						(118)						(432)						(544)						(1,449)
Interest and fees						(43)						(91)						(164)						(301)
Other (c)						(8)						12						(1)						(5)
Ending Balance						$	3,489					$	5,688					$	3,489					$	5,688

(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 $167 million and $142 million for the three months ended September 30, 2021 and 2020, respectively, and $507 million and $421 million for the nine months ended September 30, 2021 and 2020, respectively. Recoveries of interest and fees were not significant. Amounts include net (write-offs) recoveries from TDRs of $(36) million and $(35) million for the three months ended September 30, 2021 and 2020, respectively, and $(124) million and $(98) million for the nine months ended September 30, 2021 and 2020, respectively.

(c)Primarily includes foreign currency translation adjustments of $(8) million and $13 million for the three months ended September 30, 2021 and 2020, respectively, and $(2) million and $(4) million for the nine months ended September 30, 2021 and 2020, respectively.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Changes in Card Member Receivables Reserve for Credit Losses

Card Member receivables reserve for credit losses decreased for the three and nine months ended September 30, 2021, driven by improved portfolio quality and macroeconomic outlook, partially offset by an increase in the outstanding balance of receivables.

Card Member receivables reserve for credit losses decreased for the three months ended September 30, 2020, primarily driven by lower delinquencies. Card Member receivables reserve for credit losses increased for the nine months ended September 30, 2020, driven by the deterioration of the global macroeconomic outlook as a result of the COVID-19 pandemic, partially offset by a decline in the outstanding balance of receivables.

The following table presents changes in the Card Member receivables reserve for credit losses for the three and nine months ended September 30:

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Beginning Balance						$	73					$	519					$	267					$	126
Provisions (a)						(12)						117						(147)						1,069
Net write-offs (b)						(32)						(219)						(89)						(776)
Other (c)						1						5						(1)						3
Ending Balance						$	30					$	422					$	30					$	422

(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 $79 million and $103 million for the three months ended September 30, 2021 and 2020, respectively, and $303 million and $283 million for the nine months ended September 30, 2021 and 2020, respectively. Amounts include net (write-offs) recoveries from TDRs of $(15) million and $(15) million for the three months ended September 30, 2021 and 2020, respectively, and $(51) million and $(31) million for the nine months ended September 30, 2021 and 2020, respectively.

(c)Primarily includes foreign currency translation adjustments of nil and $3 million for the three months ended September 30, 2021 and 2020, respectively, and $(1) million and $2 million for the nine months ended September 30, 2021 and 2020, respectively.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Investment Securities

Investment securities principally include available-for-sale debt securities carried at fair value on the Consolidated Balance Sheets. Unrealized losses attributable to credit deterioration are recorded in 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 $38 million and $26 million as of September 30, 2021 and December 31, 2020, respectively, 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.

The following is a summary of investment securities as of September 30, 2021 and December 31, 2020:

						2021																								2020
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						$	102					$	5					$	(1)					$	106					$	172					$	7					$	—					$	179
U.S. Government agency obligations						6						—						—						6						7						—						—						7
U.S. Government treasury obligations						8,718						39						—						8,757						20,655						76						—						20,731
Mortgage-backed securities (a)						19						2						—						21						28						2						—						30
Foreign government bonds and obligations						556						—						—						556						581						—						—						581
Other (b)						41						—						—						41						22						—						—						22
Equity securities (c)(d)						58						46						(2)						102						56						27						(2)						81
Total						$	9,500					$	92					$	(3)					$	9,589					$	21,521					$	112					$	(2)					$	21,631

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

(b)Represents investments in Corporate debt securities and debt securities issued by Community Development Financial Institutions.

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

(d)During the third quarter of 2021, certain equity securities were reclassified from Other assets to Investment securities following the completion of initial public offerings by the issuers of the securities. The investments had a fair value of $51 million with an associated cost basis of $7 million as of September 30, 2021. The gross unrealized gains amount includes $5 million that was recognized during 2018.

There were no available-for-sale debt securities with gross unrealized losses as of both September 30, 2021 and December 31, 2020.

Contractual maturities for investment securities with stated maturities as of September 30, 2021 were as follows:

(Millions)						Cost						Estimated Fair Value
Due within 1 year						$	8,453					$	8,460
Due after 1 year but within 5 years						879						909
Due after 5 years but within 10 years						35						41
Due after 10 years						75						77
Total						$	9,442					$	9,487

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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. 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. As of September 30, 2021 and December 31, 2020, our ownership of variable interests was $15.8 billion and $13.4 billion, respectively, for the Lending Trust and $5.1 billion and $4.3 billion, respectively, for the Charge Trust. 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.

Restricted cash and cash equivalents held by the Lending Trust and Charge Trust was $25 million and nil, respectively, as of September 30, 2021 and $47 million and nil, respectively, as of December 31, 2020. 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 nine months ended September 30, 2021 and the year ended December 31, 2020, no such triggering events occurred.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Customer Deposits

As of September 30, 2021 and December 31, 2020, customer deposits were categorized as interest-bearing or non-interest-bearing as follows:

(Millions)						2021						2020
U.S.:
Interest-bearing						$	83,299					$	85,583
Non-interest-bearing (includes Card Member credit balances of: 2021, $467; 2020, $576)						489						599
Non-U.S.:
Interest-bearing						19						19
Non-interest-bearing (includes Card Member credit balances of: 2021, $515; 2020, $671)						519						674
Total customer deposits						$	84,326					$	86,875

Customer deposits by deposit type as of September 30, 2021 and December 31, 2020 were as follows:

(Millions)						2021						2020
U.S. retail deposits:
Savings accounts – Direct						$	65,721					$	63,512
Certificates of deposit:
Direct						1,665						2,440
Third-party (brokered)						3,274						5,561
Sweep accounts – Third-party (brokered)						12,637						14,070
Other deposits:
U.S. deposits						24						23
Non-U.S. deposits						23						22
Card Member credit balances ― U.S. and non-U.S.						982						1,247
Total customer deposits						$	84,326					$	86,875

The scheduled maturities of certificates of deposit as of September 30, 2021 were as follows:

(Millions)						U.S.						Non-U.S.						Total
2021						$	567					$	2					$	569
2022						3,123						5						3,128
2023						738						—						738
2024						284						—						284
2025						211						—						211
After 5 years						16						—						16
Total						$	4,939					$	7					$	4,946

As of September 30, 2021 and December 31, 2020, certificates of deposit in denominations of $250,000 or more, in the aggregate, were as follows:

(Millions)						2021						2020
U.S.						$	627					$	930
Non-U.S.						1						1
Total						$	628					$	931

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. 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.

A putative merchant class action in the Eastern District of New York, consolidated in 2011 and collectively captioned In re: American Express Anti-Steering Rules Antitrust Litigation (II), alleged that provisions in our merchant agreements prohibiting merchants from differentially surcharging our cards or steering a customer to use another network’s card or another type of general-purpose card (“anti-steering” and “non-discrimination” contractual provisions) violate U.S. antitrust laws. On January 15, 2020, our motion to compel arbitration of claims brought by merchants who accept American Express and to dismiss claims of merchants who do not was granted. Plaintiffs have appealed part of this decision.

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 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.

In July 2004, we were named as a defendant in another 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.

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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 American Express Travel Related Services Company, Inc. (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. The consequences of the tribunal’s 2008 and 2021 partial awards on the allocation of airline acquirer revenues will be determined in the remaining phase of the arbitration.

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 material 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 $210 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.

In addition, we face exposure associated with Card Member purchases, including with respect to the following:

• Return Protection — refunds the price of qualifying purchases made with eligible cards, where the merchant will not accept the return, for up to 90 days from the date of purchase; and

• Merchant Protection — protects Card Members primarily against non-delivery of purchases, usually in the event of the bankruptcy or liquidation of a merchant. When this occurs, the Card Member may dispute the transaction for which we will generally credit the Card Member’s account. If we are unable to collect the amount from the merchant, we may bear the loss for the amount credited to the Card Member. The largest component of the exposure relates to Card Member transactions associated with travel-related merchants, primarily through business arrangements where we have remitted payment to such merchants for a Card Member travel purchase that has not yet been used or “flown.”

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We have an accrual of $18 million related to these exposures as of September 30, 2021. To date, we have not experienced significant losses related to these exposures; however, our historical experience may not be representative in the current environment given the economic and financial disruptions caused by the COVID-19 pandemic and resulting containment measures. A reasonably possible loss related to these exposures in excess of the recorded accrual cannot be quantified as the Card Member purchases that may include or result in claims are not sufficiently estimable, although we believe our risk of loss has increased as a result of the COVID-19 pandemic.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. 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.

A majority of our derivative assets and liabilities as of September 30, 2021 and December 31, 2020 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.

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 September 30, 2021, these derivatives were not in a material net liability position. Based on our assessment of the credit risk of our derivative counterparties and our own credit risk as of September 30, 2021 and December 31, 2020, no credit risk adjustment to the derivative portfolio was required.

The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of September 30, 2021 and December 31, 2020:

						Other Assets Fair Value												Other Liabilities Fair Value
(Millions)						2021						2020						2021						2020
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts (a)						$	308					$	500					$	—					$	—
Net investment hedges - Foreign exchange contracts						102						24						47						474
Total derivatives designated as hedging instruments						410						524						47						474
Derivatives not designated as hedging instruments:
Foreign exchange contracts						121						105						72						228
Total derivatives, gross						531						629						119						702
Derivative asset and derivative liability netting (b)						(74)						(98)						(74)						(98)
Cash collateral netting (c)						(310)						(500)						(3)						(16)
Total derivatives, net						$	147					$	31					$	42					$	588

(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 $15 million and $34 million as of September 30, 2021 and December 31, 2020, 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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair Value Hedges

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 $12.9 billion and $15.8 billion of fixed-rate debt obligations designated in fair value hedging relationships as of September 30, 2021 and December 31, 2020, respectively.

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 three and nine months ended September 30:

						Gains (losses)
						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Fixed-rate long-term debt						$	59					$	96					$	257					$	(497)
Derivatives designated as hedging instruments						(58)						(97)						(257)						504
Total						$	1					$	(1)					$	—					$	7

The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $13.2 billion and $16.4 billion as of September 30, 2021 and December 31, 2020, respectively, including the cumulative amount of fair value hedging adjustments of $365 million and $622 million for the respective periods.

We recognized net decreases of $60 million and $81 million in Interest expense on Long-term debt for the three months ended September 30, 2021 and 2020, respectively, and net decreases of $196 million and $183 million for the nine months ended September 30, 2021 and 2020, respectively, primarily related to the net settlements including interest accruals on our interest rate derivatives designated as fair value hedges.

Net Investment Hedges

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 $11.4 billion and $10.5 billion of foreign currency derivatives designated as net investment hedges as of September 30, 2021 and December 31, 2020, respectively. The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, was a gain of $155 million and a loss of $170 million for the three months ended September 30, 2021 and 2020, respectively, and gains of $53 million and $223 million for the nine months ended September 30, 2021 and 2020, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, were not significant for any of the three and nine months ended September 30, 2021 and 2020.

Derivatives Not Designated as Hedges

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 $16.8 billion and $14.4 billion as of September 30, 2021 and December 31, 2020, respectively. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net loss of $10 million and a net gain of $4 million for the three months ended September 30, 2021 and 2020, respectively, and a net loss of $24 million and a net gain of $22 million for the nine months ended September 30, 2021 and 2020, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Fair Values

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 of September 30, 2021 and December 31, 2020:

						2021																								2020
(Millions)						Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
Assets:
Investment securities: (a)
Equity securities						$	102					$	101					$	1					$	—					$	81					$	80					$	1					$	—
Debt securities (b)						9,487						—						9,462						25						21,550						—						21,550						—
Derivatives, gross (a)						531						—						531						—						629						—						629						—
Total Assets						10,120						101						9,994						25						22,260						80						22,180						—
Liabilities:
Derivatives, gross (a)						119						—						119						—						702						—						702						—
Total Liabilities						$	119					$	—					$	119					$	—					$	702					$	—					$	702					$	—

(a)Refer to Note 4 for the fair values of investment securities and to Note 8 for the fair values of derivative assets and liabilities on a further disaggregated basis.

(b)Level 3 fair value amount represents investments in debt securities issued by Community Development Financial Institutions.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 September 30, 2021 and December 31, 2020. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of September 30, 2021 and December 31, 2020, 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.

						Carrying Value						Corresponding Fair Value Amount
2021 (Billions)									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)						$	28					$	28					$	26					$	2					$	—
Other financial assets (b)						51						51						—						51						—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)						76						79						—						—						79
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value						103						103						—						103						—
Financial liabilities carried at other than fair value
Certificates of deposit (d)						5						5						—						5						—
Long-term debt (c)						$	34					$	36					$	—					$	36					$	—

						Carrying Value						Corresponding Fair Value Amount
2020 (Billions)									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)						$	33					$	33					$	31					$	2					$	—
Other financial assets (b)						46						46						—						46						—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)						71						75						—						—						75
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value						101						101						—						101						—
Financial liabilities carried at other than fair value
Certificates of deposit (d)						8						8						—						8						—
Long-term debt (c)						$	43					$	45					$	—					$	45					$	—

(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 $5.1 billion and $4.2 billion held by a consolidated VIE as of September 30, 2021 and December 31, 2020, respectively), 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 $24.7 billion and $25.8 billion as of September 30, 2021 and December 31, 2020, respectively, and the fair values of Long-term debt were $9.2 billion and $13.0 billion as of September 30, 2021 and December 31, 2020, respectively.

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. During the nine months ended September 30, 2021 and the year ended December 31, 2020, we did not have any material assets that were measured at fair value due to impairment.

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. The carrying value of equity investments without readily determinable fair values totaled $1.3 billion and $530 million as of September 30, 2021 and December 31, 2020, respectively. These amounts are included within Other assets on the Consolidated Balance Sheets. We recorded net unrealized gains of $103 million and $25 million for the three months ended September 30, 2021 and 2020, respectively, and $728 million and $47 million for the nine months ended September 30, 2021 and 2020, respectively. Unrealized losses including any impairments were not significant for any of the three and nine months ended September 30, 2021 and 2020. Beginning in January 2018, cumulative net unrealized gains for equity investments without readily determinable fair values totaled $1.1 billion and $347 million as of September 30, 2021 and December 31, 2020, 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 September 30, 2021 and December 31, 2020.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. 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 $25 million, respectively, as of September 30, 2021, and $1 billion and $24 million, respectively, as of December 31, 2020, all of which were primarily related to our real estate 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.

11. Changes in Accumulated Other Comprehensive Income (Loss)

AOCI 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 and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended September 30, 2021 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of June 30, 2021						$	42					$	(2,227)					$	(696)					$	(2,881)
Net unrealized losses						(8)						—						—						(8)
Net translation on investments in foreign operations						—						(238)						—						(238)
Net hedges of investments in foreign operations						—						155						—						155
Pension and other postretirement benefits						—						—						9						9
Net change in accumulated other comprehensive income (loss)						(8)						(83)						9						(82)
Balances as of September 30, 2021						$	34					$	(2,310)					$	(687)					$	(2,963)

Nine Months Ended September 30, 2021 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of December 31, 2020						$	65					$	(2,229)					$	(731)					$	(2,895)
Net unrealized losses						(31)						—						—						(31)
Net translation on investments in foreign operations						—						(134)						—						(134)
Net hedges of investments in foreign operations						—						53						—						53
Pension and other postretirement benefits						—						—						44						44
Net change in accumulated other comprehensive income (loss)						(31)						(81)						44						(68)
Balances as of September 30, 2021						$	34					$	(2,310)					$	(687)					$	(2,963)

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three Months Ended September 30, 2020 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of June 30, 2020						$	85					$	(2,388)					$	(608)					$	(2,911)
Net unrealized losses						(9)						—						—						(9)
Net translation on investments in foreign operations						—						210						—						210
Net hedges of investments in foreign operations						—						(170)						—						(170)
Pension and other postretirement benefits						—						—						8						8
Net change in accumulated other comprehensive income (loss)						(9)						40						8						39
Balances as of September 30, 2020						$	76					$	(2,348)					$	(600)					$	(2,872)

Nine Months Ended September 30, 2020 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses)						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 unrealized gains						43						—						—						43
Decrease due to amounts reclassified into earnings						—						(3)						—						(3)
Net translation on investments in foreign operations						—						(379)						—						(379)
Net hedges of investments in foreign operations						—						223						—						223
Pension and other postretirement benefits						—						—						(19)						(19)
Net change in accumulated other comprehensive income (loss)						43						(159)						(19)						(135)
Balances as of September 30, 2020						$	76					$	(2,348)					$	(600)					$	(2,872)

The following table shows the tax impact for the three and nine months ended September 30 for the changes in each component of AOCI presented above:

						Tax expense (benefit)
						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Net unrealized (losses) gains on debt securities						$	(3)					$	(3)					$	(9)					$	13
Net translation on investments in foreign operations						(2)						(14)						3						10
Net hedges of investments in foreign operations						47						(57)						12						67
Pension and other postretirement benefits						5						(1)						18						10
Total tax impact						$	47					$	(75)					$	24					$	100

Reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, were not significant for any of the three and nine months ended September 30, 2021 and 2020.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12. Other Fees and Commissions and Other Expenses

The following is a detail of Other fees and commissions for the three and nine months ended September 30:

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Fees charged to Card Members:
Delinquency fees						$	166					$	159					$	460					$	615
Foreign currency conversion fee revenue						142						86						347						336
Other customer fees:
Loyalty coalition-related fees						123						112						368						309
Travel commissions and fees						74						19						164						84
Service fees and other (a)						127						102						373						303
Total Other fees and commissions						$	632					$	478					$	1,712					$	1,647

(a)Other includes Membership Rewards program fees that are not related to contracts with customers.

Revenue 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) are not required to be disclosed. Non-interest revenue expected to be recognized in future periods through remaining contracts with customers is not material.

The following is a detail of Other expenses for the three and nine months ended September 30:

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions)						2021						2020						2021						2020
Data processing and equipment (a)						$	613					$	577					$	1,772					$	1,690
Professional services						490						421						1,351						1,266
Net unrealized and realized gains on Amex Ventures equity investments						(142)						(66)						(773)						(116)
Other (b)						257						297						745						908
Total Other expenses						$	1,218					$	1,229					$	3,095					$	3,748

(a)Effective for the first quarter of 2021, we changed the expense category name from Occupancy and equipment to Data processing and equipment to better reflect the nature and components of the expense.

(b)Other primarily includes general operating expenses, communication expenses, non-income taxes, Card Member and merchant-related fraud losses, foreign currency-related gains and losses and litigation expenses.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Income Taxes

The effective tax rate was 25.5 percent and 21.3 percent for the three months ended September 30, 2021 and 2020, respectively, and 24.4 percent and 30.4 percent for the nine months ended September 30, 2021 and 2020, respectively. The increase in the effective tax rate for the three month period primarily reflected changes in the level and geographic mix of pretax income and discrete tax charges in the current period. The decrease in the effective tax rate for the nine month period primarily reflected discrete tax charges in the prior period related to the realizability of certain foreign deferred tax assets. The current period effective tax rates also reflect the implementation of PAM. Refer to Note 1 for further information.

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.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next twelve months by as much as $144 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 $144 million of unrecognized tax benefits, approximately $114 million relates to amounts that, if recognized, would impact the effective tax rate in a future period.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14. Earnings Per Common Share (EPS)

The computations of basic and diluted EPS for the three and nine months ended September 30 were as follows:

						Three Months Ended September 30,												Nine Months Ended September 30,
(Millions, except per share amounts)						2021						2020						2021						2020
Numerator:
Basic and diluted:
Net income						$	1,826					$	1,073					$	6,341					$	1,697
Preferred dividends						(20)						(16)						(49)						(65)
Equity-related adjustment (a)						(9)						—						(9)						—
Net income available to common shareholders						$	1,797					$	1,057					$	6,283					$	1,632
Earnings allocated to participating share awards (b)						(14)						(7)						(45)						(10)
Net income attributable to common shareholders						$	1,783					$	1,050					$	6,238					$	1,622
Denominator:(b)
Basic: Weighted-average common stock						786						804						796						805
Add: Weighted-average stock options (c)						1						1						1						1
Diluted						787						805						797						806
Basic EPS						$	2.27					$	1.31					$	7.84					$	2.01
Diluted EPS						$	2.27					$	1.30					$	7.82					$	2.01

(a)Represents the difference between the redemption value and carrying value of the Series C preferred shares, which were redeemed on September 15, 2021. The carrying value represents the original issuance proceeds, net of underwriting fees and offering costs for the Series C 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 0.01 million and 0.88 million of options for the three months ended September 30, 2021 and 2020, respectively, and 0.01 million and 0.61 million of options for the nine months ended September 30, 2021 and 2020, respectively, because inclusion of the options would have been anti-dilutive.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

15. Preferred Shares

The Board of Directors is authorized to permit us to issue up to 20 million preferred shares at a par value of $1.662/3 without further shareholder approval. The following table summarizes our preferred shares issued and outstanding as of September 30, 2021:

						Series B						Series D
Issuance Date						November 10, 2014						August 3, 2021
Securities issued						750 Preferred shares; represented by 750,000 depositary shares						1,600 Preferred shares; represented by 1,600,000 depositary shares
Dividend rate per annum						5.20% through November 14, 2019; 3-month LIBOR plus 3.428% thereafter						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						Semi-annual beginning May 15, 2015 and, quarterly beginning February 15, 2020						Quarterly beginning September 15, 2021
Earliest redemption date						November 15, 2019						September 15, 2026
Aggregate liquidation preference						$750 million						$1,600 million
Carrying value (a)						$742 million						$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 each 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 respective earliest redemption date, or in whole, but not in part, within 90 days of certain bank regulatory changes.

We paid $850 million to redeem in full the outstanding 4.900% Fixed Rate/Floating Rate Noncumulative Preferred Shares, Series C, on September 15, 2021. The difference between the redemption value and carrying value of the redeemed Series C preferred shares resulted in a $9 million reduction to net income available to common shareholders. On October 15, 2021, we issued a redemption notice for all outstanding Series B preferred shares; the redemption date will be November 15, 2021.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

16. Reportable Operating Segments

As a result of organizational changes announced during the second quarter of 2021, our loyalty coalition businesses results, which were previously reported within the Global Merchant and Network Services (GMNS) segment, are now reported within the Global Consumer Services Group (GCSG) segment. Prior period segment results have been revised to conform with current period presentation.

The following table presents certain selected financial information for our reportable operating segments and Corporate & Other as of or for the three and nine months ended September 30:

Three Months Ended September 30, 2021 (Millions, except where indicated)						GCSG						GCS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	4,699					$	2,978					$	1,280					$	(23)					$	8,934
Revenue from contracts with customers (b)						3,392						2,556						1,198						(7)						7,139
Interest income						1,879						378						4						40						2,301
Interest expense						174						111						(24)						46						307
Total revenues net of interest expense						6,404						3,245						1,308						(29)						10,928
Pretax segment income (loss)						$	1,488					$	718					$	529					$	(285)					$	2,450
Total assets (billions)						$	92					$	48					$	14					$	30					$	184

Nine Months Ended September 30, 2021 (Millions, except where indicated)						GCSG						GCS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	12,982					$	8,225					$	3,545					$	(159)					$	24,593
Revenue from contracts with customers (b)						9,229						7,019						3,327						(20)						19,555
Interest income						5,436						1,059						12						126						6,633
Interest expense						536						338						(61)						178						991
Total revenues net of interest expense						17,882						8,946						3,618						(211)						30,235
Pretax segment income (loss)						$	5,525					$	2,222					$	1,441					$	(805)					$	8,383
Total assets (billions)						$	92					$	48					$	14					$	30					$	184

Three Months Ended September 30, 2020 (Millions, except where indicated)						GCSG						GCS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	3,632					$	2,327					$	997					$	(79)					$	6,877
Revenue from contracts with customers (b)						2,476						1,969						941						(6)						5,380
Interest income						1,916						351						4						53						2,324
Interest expense						244						139						(19)						86						450
Total revenues net of interest expense						5,304						2,539						1,020						(112)						8,751
Pretax segment income (loss)						$	1,125					$	272					$	326					$	(359)					$	1,364
Total assets (billions)						$	82					$	40					$	12					$	53					$	187

Nine Months Ended September 30, 2020 (Millions, except where indicated)						GCSG						GCS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	10,662					$	7,129					$	3,057					$	(200)					$	20,648
Revenue from contracts with customers (b)						7,205						5,993						2,857						(22)						16,033
Interest income						6,298						1,252						14						232						7,796
Interest expense						844						493						(61)						432						1,708
Total revenues net of interest expense						16,116						7,888						3,132						(400)						26,736
Pretax segment income (loss)						$	2,227					$	269					$	1,039					$	(1,097)					$	2,438
Total assets (billions)						$	82					$	40					$	12					$	53					$	187

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

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