Item 1. FINANCIAL STATEMENTS

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended June 30 (Millions, except per share amounts)						2023						2022
Revenues
Non-interest revenues
Discount revenue						$	8,481					$	7,873
Net card fees						1,789						1,481
Service fees and other revenue						1,232						1,265
Processed revenue						447						416
Total non-interest revenues						11,949						11,035
Interest income
Interest on loans						4,213						2,707
Interest and dividends on investment securities						34						22
Deposits with banks and other						528						70
Total interest income						4,775						2,799
Interest expense
Deposits						1,196						187
Long-term debt and other						474						252
Total interest expense						1,670						439
Net interest income						3,105						2,360
Total revenues net of interest expense						15,054						13,395
Provisions for credit losses
Card Member receivables						230						138
Card Member loans						923						272
Other						45						—
Total provisions for credit losses						1,198						410
Total revenues net of interest expense after provisions for credit losses						13,856						12,985
Expenses
Card Member rewards						3,956						3,591
Business development						1,388						1,404
Card Member services						949						678
Marketing						1,408						1,502
Salaries and employee benefits						1,875						1,816
Other, net						1,546						1,451
Total expenses						11,122						10,442
Pretax income						2,734						2,543
Income tax provision						560						579
Net income						$	2,174					$	1,964
Earnings per Common Share (Note 14)(a)
Basic						$	2.89					$	2.57
Diluted						$	2.89					$	2.57
Average common shares outstanding for earnings per common share:
Basic						740						752
Diluted						741						753

(a)Represents net income less (i) earnings allocated to participating share awards of $17 million and $15 million for the three months ended June 30, 2023 and 2022, respectively, and (ii) dividends on preferred shares of $15 million for both the three months ended June 30, 2023 and 2022.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Six Months Ended June 30 (Millions, except per share amounts)						2023						2022
Revenues
Non-interest revenues
Discount revenue						$	16,428					$	14,708
Net card fees						3,502						2,904
Service fees and other revenue						2,450						2,171
Processed revenue						867						788
Total non-interest revenues						23,247						20,571
Interest income
Interest on loans						8,152						5,180
Interest and dividends on investment securities						64						35
Deposits with banks and other						975						104
Total interest income						9,191						5,319
Interest expense
Deposits						2,190						309
Long-term debt and other						913						451
Total interest expense						3,103						760
Net interest income						6,088						4,559
Total revenues net of interest expense						29,335						25,130
Provisions for credit losses
Card Member receivables						452						218
Card Member loans						1,709						161
Other						92						(2)
Total provisions for credit losses						2,253						377
Total revenues net of interest expense after provisions for credit losses						27,082						24,753
Expenses
Card Member rewards						7,722						6,702
Business development						2,781						2,447
Card Member services						1,932						1,304
Marketing						2,749						2,726
Salaries and employee benefits						3,889						3,470
Other, net						3,108						2,849
Total expenses						22,181						19,498
Pretax income						4,901						5,255
Income tax provision						911						1,192
Net income						$	3,990					$	4,063
Earnings per Common Share (Note 14)(a)
Basic						$	5.30					$	5.30
Diluted						$	5.29					$	5.30
Average common shares outstanding for earnings per common share:
Basic						741						755
Diluted						742						756

(a)Represents net income less (i) earnings allocated to participating share awards of $31 million for both the six months ended June 30, 2023 and 2022, and (ii) dividends on preferred shares of $29 million for both the six months ended June 30, 2023 and 2022.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Net income						$	2,174					$	1,964					$	3,990					$	4,063
Other comprehensive income (loss):
Net unrealized debt securities gains (losses), net of tax						1						(25)						20						(53)
Foreign currency translation adjustments, net of hedges and tax						25						(157)						53						(177)
Net unrealized pension and other postretirement benefits, net of tax						(4)						12						53						32
Other comprehensive income (loss)						22						(170)						126						(198)
Comprehensive income						$	2,196					$	1,794					$	4,116					$	3,865

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Millions, except share data)						June 30, 2023						December 31, 2022
Assets
Cash and cash equivalents
Cash and due from banks (includes restricted cash of consolidated variable interest entities: 2023, $5; 2022, $5)						$	3,379					$	5,510
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2023, $314; 2022, $318)						38,869						28,097
Short-term investment securities (includes restricted investments of consolidated variable interest entities: 2023, $663; 2022, $54)						710						307
Total cash and cash equivalents						42,958						33,914
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2023, $5,049; 2022, $5,193), less reserves for credit losses: 2023, $210; 2022, $229						58,011						57,384
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2023, $27,400; 2022, $28,461), less reserves for credit losses: 2023, $4,390; 2022, $3,747						110,212						104,217
Other loans, less reserves for credit losses: 2023, $98; 2022, $59						6,235						5,357
Investment securities						4,087						4,578
Premises and equipment, less accumulated depreciation and amortization: 2023, $10,594; 2022, $9,850						5,177						5,215
Other assets, less reserves for credit losses: 2023, $24; 2022, $22						18,224						17,689
Total assets						$	244,904					$	228,354
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits						$	122,756					$	110,239
Accounts payable						12,359						12,133
Short-term borrowings						1,583						1,348
Long-term debt (includes debt issued by consolidated variable interest entities: 2023, $14,789; 2022, $12,662)						46,725						42,573
Other liabilities						34,778						37,350
Total liabilities						$	218,201					$	203,643
Contingencies (Note 7)
Shareholders’ Equity
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of June 30, 2023 and December 31, 2022						—						—
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 736 million shares as of June 30, 2023 and 743 million shares as of December 31, 2022						148						149
Additional paid-in capital						11,509						11,493
Retained earnings						18,130						16,279
Accumulated other comprehensive income (loss)						(3,084)						(3,210)
Total shareholders’ equity						26,703						24,711
Total liabilities and shareholders’ equity						$	244,904					$	228,354

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30 (Millions)						2023						2022
Cash Flows from Operating Activities
Net income						$	3,990					$	4,063
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses						2,253						377
Depreciation and amortization						800						795
Stock-based compensation						248						198
Deferred taxes						(852)						(402)
Other items (a)						240						128
Originations of loans held-for-sale						(54)						(90)
Proceeds from sales of loans held-for-sale						59						88
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other assets						(563)						246
Accounts payable & other liabilities						(2,575)						2,736
Net cash provided by operating activities						3,546						8,139
Cash Flows from Investing Activities
Sale of investment securities						—						16
Maturities and redemptions of investment securities						1,149						1,096
Purchase of investments						(671)						(2,674)
Net increase in Card Member loans and receivables, and other loans (b)						(9,013)						(12,916)
Purchase of premises and equipment, net of sales: 2023, $1; 2022, nil						(736)						(899)
Acquisitions/dispositions, net of cash acquired						(64)						(15)
Net cash used in investing activities						(9,335)						(15,392)
Cash Flows from Financing Activities
Net increase in customer deposits						12,516						12,060
Net increase (decrease) in short-term borrowings (b)						194						(63)
Proceeds from long-term debt						7,966						14,710
Payments of long-term debt						(3,856)						(12,529)
Issuance of American Express common shares						22						54
Repurchase of American Express common shares and other						(1,349)						(2,261)
Dividends paid						(867)						(753)
Net cash provided by financing activities						14,626						11,218
Effect of foreign currency exchange rates on cash and cash equivalents						207						284
Net increase in cash and cash equivalents						9,044						4,249
Cash and cash equivalents at beginning of period						33,914						22,028
Cash and cash equivalents at end of period						$	42,958					$	26,277

Cash and cash equivalents reconciliation						Jun-23						Dec-22						Jun-22						Dec-21
Cash and cash equivalents per Consolidated Balance Sheets						$	42,958					$	33,914					$	26,277					$	22,028
Restricted balances included in Cash and cash equivalents						1,231						544						1,086						525
Total Cash and cash equivalents, excluding restricted balances						$	41,727					$	33,370					$	25,191					$	21,503

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

(b)Excludes an increase of $117 million related to non-cash activity during the first quarter of 2023.

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

Three months ended June 30, 2023 (Millions, except per share amounts)						Total						Preferred Shares						Common Shares						Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings
Balances as of March 31, 2023						$	25,992					$	—					$	149					$	11,522					$	(3,106)					$	17,427
Net income						2,174						—						—						—						—						2,174
Other comprehensive loss						22						—						—						—						22						—
Repurchase of common shares						(1,117)						—						(1)						(106)						—						(1,010)
Other changes, primarily employee plans						92						—						—						93						—						(1)
Cash dividends declared preferred Series D, $9,072.22 per share						(15)						—						—						—						—						(15)
Cash dividends declared common, $0.60 per share						(445)						—						—						—						—						(445)
Balances as of June 30, 2023						$	26,703					$	—					$	148					$	11,509					$	(3,084)					$	18,130

Six months ended June 30, 2023 (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, 2022						$	24,711					$	—					$	149					$	11,493					$	(3,210)					$	16,279
Net income						3,990						—						—						—						—						3,990
Other comprehensive loss						126						—						—						—						126						—
Repurchase of common shares						(1,312)						—						(1)						(123)						—						(1,188)
Other changes, primarily employee plans						112						—						—						139						—						(27)
Cash dividends declared preferred Series D, $17,947.22 per share						(29)						—						—						—						—						(29)
Cash dividends declared common, $1.20 per share						(895)						—						—						—						—						(895)
Balances as of June 30, 2023						$	26,703					$	—					$	148					$	11,509					$	(3,084)					$	18,130

See Notes to Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

Three months ended June 30, 2022 (Millions, except per share amounts)						Total						Preferred Shares						Common Shares						Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings
Balances as of March 31, 2022						$	22,383					$	—					$	151					$	11,451					$	(2,973)					$	13,754
Net income						1,964						—						—						—						—						1,964
Other comprehensive loss						(170)						—						—						—						(170)						—
Repurchase of common shares						(611)						—						—						(53)						—						(558)
Other changes, primarily employee plans						77						—						—						78						—						(1)
Cash dividends declared preferred Series D, $9,072.22 per share						(15)						—						—						—						—						(15)
Cash dividends declared common, $0.52 per share						(393)						—						—						—						—						(393)
Balances as of June 30, 2022						$	23,235					$	—					$	151					$	11,476					$	(3,143)					$	14,751

Six months ended June 30, 2022 (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, 2021						$	22,177					$	—					$	153					$	11,495					$	(2,945)					$	13,474
Net income						4,063						—						—						—						—						4,063
Other comprehensive loss						(198)						—						—						—						(198)						—
Repurchase of common shares						(2,094)						—						(2)						(179)						—						(1,913)
Other changes, primarily employee plans						103						—						—						160						—						(57)
Cash dividends declared preferred Series D, $17,947.22 per share						(29)						—						—						—						—						(29)
Cash dividends declared common, $1.04 per share						(787)						—						—						—						—						(787)
Balances as of June 30, 2022						$	23,235					$	—					$	151					$	11,476					$	(3,143)					$	14,751

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

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, 2022 (the 2022 Form 10-K). 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.

Recently Adopted and Issued Accounting Standards

Effective January 1, 2023, we adopted new accounting guidance on troubled debt restructurings (TDR) and vintage disclosures (Update 2022-02) on a prospective basis. The new guidance eliminated the existing TDR guidance for those entities that have adopted Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, created a single loan modification accounting model and enhanced disclosure requirements for loan modifications and write-offs. The implementation did not have a material impact on our Consolidated Financial Statements, and we do not expect it to have a material impact to our Consolidated Financial Statements prospectively. Refer to Note 2 for further information, including the enhanced disclosures.

In March 2023, the Financial Accounting Standards Board issued updated accounting guidance to allow the proportional amortization method (PAM) to be applied to tax credit structures beyond low-income housing tax credit (LIHTC) investments. Having implemented PAM in relation to LIHTC investments in January 2021, we plan to early adopt the updated guidance with respect to other qualifying investments in the second half of 2023. We do not expect the updated guidance to have a material impact to our Consolidated Financial Statements.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Loans and Card Member Receivables

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

Card Member and Other loans as of June 30, 2023 and December 31, 2022 consisted of:

(Millions)						2023						2022
Consumer (a)						$	88,905					$	84,964
Small Business						25,638						22,947
Corporate						59						53
Card Member loans						114,602						107,964
Less: Reserves for credit losses						4,390						3,747
Card Member loans, net						$	110,212					$	104,217
Other loans, net (b)						$	6,235					$	5,357

(a)Includes approximately $27.4 billion and $28.5 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of June 30, 2023 and December 31, 2022, respectively.

(b)Other loans are presented net of reserves for credit losses of $98 million and $59 million as of June 30, 2023 and December 31, 2022, respectively.

Card Member receivables as of June 30, 2023 and December 31, 2022 consisted of:

(Millions)						2023						2022
Consumer						$	22,476					$	22,885
Small Business						19,543						19,629
Corporate (a)						16,202						15,099
Card Member receivables						58,221						57,613
Less: Reserves for credit losses						210						229
Card Member receivables, net						$	58,011					$	57,384

(a)Includes $5.0 billion and $5.2 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of June 30, 2023 and December 31, 2022, 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 due is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of June 30, 2023 and December 31, 2022:

2023 (Millions)						Current						30-59 Days Past Due						60-89 Days Past Due						90+ Days Past Due						Total						90+ Days Past Due and Still Accruing Interest (c)						Non-Accruals(d)
Card Member Loans:
Consumer						$	87,914					$	309					$	216					$	466					$	88,905					$	333					$	235
Small Business						25,323						112						74						129						25,638						89						66
Corporate (a)						(b)						(b)						(b)						—						59						—						—
Card Member Receivables:
Consumer						22,258						71						46						101						22,476						—						—
Small Business						$	19,247					$	109					$	64					123						19,543						—						—
Corporate (a)						(b)						(b)						(b)						$	82					$	16,202					$	—					$	—

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

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

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

(c)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.

(d)Non-accrual loans primarily include certain loans placed with outside collection agencies for which we have ceased accruing interest.

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 six months ended June 30:

						2023																		2022
			Net Write-Off Rate																		Net Write-Off Rate
			Principal Only (a)						Principal, Interest & Fees (a)						30+ Days Past Due as a % of Total						Principal Only (a)						Principal, Interest & Fees (a)						30+ Days Past Due as a % of Total
Card Member Loans:
Consumer						1.7		%				2.1		%				1.1		%				0.8		%				1.1		%				0.7		%
Small Business						1.4		%				1.6		%				1.2		%				0.6		%				0.7		%				0.6		%
Card Member Receivables:
Consumer						1.6		%				1.7		%				1.0		%				0.6		%				0.6		%				0.8		%
Small Business						2.2		%				2.4		%				1.5		%				0.8		%				0.9		%				0.9		%
Corporate						(b)						0.6		%				(c)						(b)						0.3		%				(c)

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

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

(c)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ days past billing as a % of total was 0.5% and 0.4% as of June 30, 2023 and 2022, respectively.

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loans and Receivables Restructurings for Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, we prospectively adopted Accounting Standards Update 2022-02 guidance that eliminated the recognition and measurement of TDRs. Following the adoption of this guidance, we evaluate all loans and receivables restructurings according to the accounting guidance for loan refinancing and restructuring to determine whether such loan modification should be accounted for as a new loan or a continuation of the existing loan. Our loans and receivables restructurings for borrowers experiencing financial difficulty are generally accounted for as a continuation of the existing loan, which reflects the ongoing effort to support our customer and recover our investment in the existing loan.

We offer several types of loans and receivables modification programs to customers experiencing financial difficulty. In such instances, we may modify loans and receivables with the intention to minimize losses and improve collectability, while providing customers with temporary or permanent financial relief.

Such modifications to the loans and receivables primarily include (i) temporary interest rate reductions (reducing interest rates to as low as zero percent, in which case the loan is characterized as non-accrual), and/or (ii) placing the customer on a fixed payment plan not to exceed 60 months. Upon entering the modification program, the customer’s ability to make future purchases is limited, canceled or, in certain cases, suspended until the customer successfully exits from the modification program. As of June 30, 2023, we had $29 million of unused credit available to customers with loans modified during the six months ended June 30, 2023. In accordance with the modification agreement with the customer, loans and/or receivables may revert to the original contractual terms (including the contractual interest rate where applicable) when the customer exits the modification program, which is either (i) when all payments have been made in accordance with the modification agreement or (ii) when the customer defaults out of the modification program.

The following table provides information relating to loans and receivables modifications for borrowers experiencing financial difficulty during the three and six months ended June 30, 2023:

						Three Months Ended June 30, 2023																								Six Months Ended June 30, 2023
						Account Balances (Millions) (a)						% of Total Class of Financing Receivables						Weighted Average Interest Rate Reduction (% points)						Weighted Average Payment Term Extensions (# of months)						Account Balances (Millions) (a)						% of Total Class of Financing Receivables						Weighted Average Interest Rate Reduction (% points)						Weighted Average Payment Term Extensions (# of months)
Interest Rate Reduction
Card Member Loans
Consumer						$	348					0.4		%				15.9		%				(b)						$	642					0.7		%				15.7		%				(b)
Small Business						149						0.6		%				15.5		%				(b)						277						1.1		%				15.4		%				(b)
Corporate						—						—						—						(b)						—						$	—					—						(b)
Term Extension
Card Member Receivables
Consumer						108						0.5		%				(c)						27						200						0.9		%				(c)						25
Small Business						194						1.0		%				(c)						28						352						1.8		%				(c)						26
Corporate						10						0.1		%				(c)						10						15						0.1		%				(c)						10
Other Loans						9						0.1		%				—						17						14						0.2		%				—						17
Interest Rate Reduction and Term Extension
Other Loans						8						0.1		%				2.0		%				19						13						0.2		%				2.0		%				19
Total						$	826																							$	1,513

(a)Represents the outstanding balances as of June 30, 2023 of all modifications undertaken in the past three and six months, respectively, for loans and receivables that remain in modification programs as of, or that defaulted on or before, June 30, 2023. The outstanding balances include 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.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A customer can miss up to three payments before being considered in default, depending on the terms of the modification program. For loans and receivables modified on or after January 1, 2023, the amount of defaulted balances was immaterial for the three months and six months ended June 30, 2023.

The following table provides information relating to the performance of loans and receivables that were modified on or after January 1, 2023.

						As of June 30, 2023
Account Balances (Millions) (a)						Current						30-89 Days Past Due						90+ Days Past Due
Card Member Loans
Consumer						$	579					$	47					$	16
Small Business						236						33						8
Corporate						—						—						—
Card Member Receivables:
Consumer						182						14						4
Small Business						293						50						9
Corporate						13						1						1
Other Loans						25						2						—
Total						$	1,328					$	147					$	38

(a)Represents the outstanding balances as of June 30, 2023 of all modifications undertaken on or after January 1, 2023 for loans and receivables that remain in modification programs as of, or that defaulted on or before, June 30, 2023.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Troubled Debt Restructuring Disclosures Prior to Our Adoption of ASU 2022-02

Prior to our adoption of ASU 2022-02, we accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. Loans that were classified as a TDR prior to the adoption of ASU 2022-02 will continue to be accounted for under the historical TDR accounting until the loan is entirely paid off or written off.

The following table provides additional information with respect to our impaired loans and receivables as of December 31, 2022:

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

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

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

(c)Accounts classified as a TDR include $48 million that were over 90 days past due and accruing interest as of December 31, 2022 and $17 million that were non-accruals as of December 31, 2022.

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

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loans and Receivables Modified as TDRs Prior to Our Adoption of ASU 2022-02

The following table provides additional information with respect to loans and receivables that were modified as TDRs during the three and six months ended June 30, 2022:

						Three Months Ended June 30, 2022																								Six Months Ended June 30, 2022
						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 Extensions (# of Months)
Troubled Debt Restructurings:
Card Member Loans						26						$	171					14						(b)						53						$	348					14						(b)
Card Member Receivables						5						162						(c)						19						11						333						(c)						18
Other Loans						1						1						3						17						2						2						3						16
Total						32						$	334																	66						$	683

(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.

Loans and Receivables Modified and Subsequently Defaulted Prior to Our Adoption of ASU 2022-02

The following table provides 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 June 30, 2022												Six Months Ended June 30, 2022
						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						$	23					$	8					$	52
Card Member Receivables						1						10						2						20
Other Loans						—						—						—						—
Total						5						$	33					10						$	72

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

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, even if such expected recoveries exceed expected losses. Our models are developed using historical loss experience covering the economic cycle and consider the impact of account characteristics on expected losses. This history includes the performance of loans and receivables modifications for borrowers experiencing financial difficulty, including their subsequent defaults.

Future economic conditions that are incorporated over the R&S Period include multiple macroeconomic scenarios provided to us by an independent third party. Management reviews these economic scenarios each period and assigns probability weights to each scenario, generally with a consistent initial distribution. At times, due to macroeconomic uncertainty and volatility, management may apply judgment and assign different probability weights to scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real gross domestic product (GDP), that are significant to our models.

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

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

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)
						June 30, 2023						December 31, 2022						June 30, 2023						December 31, 2022
Second quarter of 2023						3%						3% - 7%						2%						5% - (7)%
Fourth quarter of 2023						3% - 6%						3% - 8%						4% - (3)%						6% - 0.2%
Fourth quarter of 2024						3% - 8%						3% - 7%						2% - 1%						3% - 2%
Fourth quarter of 2025						4% - 6%						3% - 6%						3% - 2%						4% - 3%

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

Changes in Card Member Loans Reserve for Credit Losses

Card Member loans reserve for credit losses increased for the three months ended June 30, 2023, primarily driven by an increase in loans outstanding.

Card Member loans reserve for credit losses increased for the six months ended June 30, 2023, primarily driven by an increase in loans outstanding and higher delinquencies.

Card Member loans reserve for credit losses increased for the three months ended June 30, 2022, primarily driven by an increase in loans outstanding and a slight deterioration in the macroeconomic outlook at that time, partially offset by improved portfolio quality.

Card Member loans reserve for credit losses decreased for the six months ended June 30, 2022, primarily driven by improved portfolio quality and a reduction in COVID-19 pandemic-driven reserves, partially offset by an increase in loans outstanding and a slight deterioration in the macroeconomic outlook at that time.

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Beginning Balance						$	4,053					$	2,981					$	3,747					$	3,305
Provisions (a)						923						272						1,709						161
Net write-offs (b)
Principal						(490)						(192)						(887)						(357)
Interest and fees						(107)						(55)						(196)						(105)
Other (c)						11						(9)						17						(7)
Ending Balance						$	4,390					$	2,997					$	4,390					$	2,997

(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 $130 million and $138 million for the three months ended June 30, 2023 and 2022, respectively, and $258 million and $283 million for the six months ended June 30, 2023 and 2022, respectively. Recoveries of interest and fees were not significant.

(c)Primarily includes foreign currency translation adjustments of $12 million and $(8) million for the three months ended June 30, 2023 and 2022, respectively, and $18 million and $(6) million for the six months ended June 30, 2023 and 2022, 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 both the three and six months ended June 30, 2023, primarily driven by lower delinquencies, partially offset by increases in receivables outstanding.

Card Member receivables reserve for credit losses increased for the three months ended June 30, 2022, primarily driven by an increase in receivables outstanding and a slight deterioration in the macroeconomic outlook at that time, partially offset by improved portfolio quality.

Card Member receivables reserve for credit losses increased for the six months ended June 30, 2022, primarily driven by an increase in receivables outstanding and higher delinquencies.

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Beginning Balance						$	223					$	76					$	229					$	64
Provisions (a)						230						138						452						218
Net write-offs (b)						(243)						(95)						(473)						(162)
Other (c)						—						—						2						(1)
Ending Balance						$	210					$	119					$	210					$	119

(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 $76 million and $67 million for the three months ended June 30, 2023 and 2022, respectively, and $145 million and $134 million for the six months ended June 30, 2023 and 2022, respectively.

(c)Primarily includes foreign currency translation adjustments.

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 $5 million and $12 million as of June 30, 2023 and December 31, 2022, 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 and recorded in the Consolidated Statements of Income as Other, net expense.

The following is a summary of investment securities as of June 30, 2023 and December 31, 2022:

						2023																								2022
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						$	63					$	—					$	(9)					$	54					$	64					$	—					$	(10)					$	54
U.S. Government agency obligations						4						—						—						4						5						—						—						5
U.S. Government treasury obligations						3,205						—						(48)						3,157						3,859						—						(73)						3,786
Mortgage-backed securities (a)						13						—						(1)						12						13						—						—						13
Foreign government bonds and obligations						754						—						—						754						633						—						(1)						632
Other (b)						64						—						—						64						47						—						—						47
Equity securities (c)						50						—						(8)						42						50						—						(9)						41
Total						$	4,153					$	—					$	(66)					$	4,087					$	4,671					$	—					$	(93)					$	4,578

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

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

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

The following table provides information about our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2023 and December 31, 2022:

						2023																								2022
						Less than 12 months												12 months or more												Less than 12 months												12 months or more
Description of Securities (Millions)						Estimated Fair Value						Gross Unrealized Losses						Estimated Fair Value						Gross Unrealized Losses						Estimated Fair Value						Gross Unrealized Losses						Estimated Fair Value						Gross Unrealized Losses
State and municipal obligations						$	—					$	—					$	30					$	(9)					$	52					$	(10)					$	—					$	—
U.S. Government treasury obligations						1,009						(19)						2,138						(29)						3,710						(72)						52						(1)
Mortgage-backed securities						—						—						4						(1)						—						—						—						—
Foreign government bonds and obligations						—						—						—						—						549						(1)						—						—
Total						$	1,009					$	(19)					$	2,172					$	(39)					$	4,311					$	(83)					$	52					$	(1)

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the gross unrealized losses for available-for-sale debt securities by ratio of fair value to amortized cost as of June 30, 2023 and December 31, 2022:

						Less than 12 months																		12 months or more																		Total
Ratio of Fair Value to Amortized Cost (Dollars in millions)						Number of Securities						Estimated Fair Value						Gross Unrealized Losses						Number of Securities						Estimated Fair Value						Gross Unrealized Losses						Number of Securities						Estimated Fair Value						Gross Unrealized Losses
2023:
90–100%						24						$	1,009					$	(19)					23						$	2,147					$	(30)					47						$	3,156					$	(49)
Less than 90%						—						$	—					$	—					14						$	25					$	(9)					14						$	25					$	(9)
Total as of June 30, 2023						24						$	1,009					$	(19)					37						$	2,172					$	(39)					61						$	3,181					$	(58)
2022:
90–100%						74						$	4,287					$	(74)					3						$	52					$	(1)					77						$	4,339					$	(75)
Less than 90%						14						$	24					$	(9)					—						$	—					$	—					14						$	24					$	(9)
Total as of December 31, 2022						88						$	4,311					$	(83)					3						$	52					$	(1)					91						$	4,363					$	(84)

Contractual maturities for available-for-sale debt securities with stated maturities as of June 30, 2023 were as follows:

(Millions)						Cost						Estimated Fair Value
Due within 1 year						$	3,792					$	3,751
Due after 1 year but within 5 years						212						204
Due after 5 years but within 10 years						41						41
Due after 10 years						58						49
Total						$	4,103					$	4,045

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. Our ownership of variable interests for the Lending Trust was $14.8 billion and $16.0 billion as of June 30, 2023 and December 31, 2022, respectively, and for the Charge Trust was $3.1 billion and $5.2 billion as of June 30, 2023 and December 31, 2022, respectively. These variable interests held by us provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, we are the primary beneficiary of the Trusts and therefore consolidate the Trusts.

Restricted cash and cash equivalents held by the Lending Trust was $668 million and $59 million as of June 30, 2023 and December 31, 2022, respectively, and for the Charge Trust was nil as of both June 30, 2023 and December 31, 2022. 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 six months ended June 30, 2023 and the year ended December 31, 2022, no such triggering events occurred.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Customer Deposits

As of June 30, 2023 and December 31, 2022, customer deposits were categorized as interest-bearing or non-interest-bearing as follows:

(Millions)						2023						2022
U.S.:
Interest-bearing						$	121,758					$	109,119
Non-interest-bearing (includes Card Member credit balances of: 2023, $464; 2022, $605)						514						663
Non-U.S.:
Interest-bearing						14						15
Non-interest-bearing (includes Card Member credit balances of: 2023, $467; 2022, $439)						470						442
Total customer deposits						$	122,756					$	110,239

Customer deposits by deposit type as of June 30, 2023 and December 31, 2022 were as follows:

(Millions)						2023						2022
Savings and transaction accounts						$	85,932					$	76,731
Certificates of deposit:
Direct						4,595						2,765
Third-party (brokered)						15,061						13,331
Sweep accounts – Third-party (brokered)						16,175						16,297
Other deposits						62						71
Card Member credit balances						931						1,044
Total customer deposits						$	122,756					$	110,239

The scheduled maturities of certificates of deposit as of June 30, 2023 were as follows:

(Millions)						2023						2024						2025						2026						2027						After 5 Years						Total
Certificates of deposit						$	4,115					$	9,787					$	3,777					$	651					$	781					$	545					$	19,656

As of June 30, 2023 and December 31, 2022, certificates of deposit in denominations of $250,000 or more, in the aggregate, were as follows:

(Millions)						2023						2022
U.S.						$	1,551					$	998
Non-U.S.						—						1
Total						$	1,551					$	999

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.

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

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

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

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

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In May 2020, we began responding to a review by the Office of the Comptroller of the Currency (OCC) and the Department of Justice (DOJ) Civil Division regarding historical sales practices relating to sales to small business customers in the United States. In January 2021, we received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York (EDNY) regarding these sales practices issues, as well as a Civil Investigative Demand from the Consumer Financial Protection Bureau (CFPB) pertaining to its investigation into sales practices related to consumers. We have also been made aware of a related investigation by the New York Department of Financial Services (NYDFS).

In January 2023, the CFPB notified us that its investigation was completed and that it does not intend to recommend an enforcement action be taken against us at this time. In July 2023, we reached a settlement with the OCC to resolve its review of historical sales practices to certain U.S. small business card customers that occurred between 2015 and 2017, with a civil money penalty of $15 million. The DOJ, EDNY and NYDFS investigations are ongoing, and we are cooperating with all inquiries. Any additional negotiated resolution or litigated proceedings arising from these matters could result in fines or other remedial actions.

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

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

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

For those disclosed legal proceedings where a loss is reasonably possible in future periods, whether in excess of a recorded accrual for legal or tax contingencies, or where there is no such accrual, and for which we are able to estimate a range of possible loss, the current estimated range is zero to $310 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.

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 June 30, 2023 and December 31, 2022 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 relevant agreement in the event of a downgrade of our debt credit rating below investment grade and settle the outstanding net liability position. As of June 30, 2023, 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 June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022:

						Other Assets Fair Value												Other Liabilities Fair Value
(Millions)						2023						2022						2023						2022
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts (a)						$	—					$	—					$	176					$	211
Net investment hedges - Foreign exchange contracts						55						350						420						251
Total derivatives designated as hedging instruments						55						350						596						462
Derivatives not designated as hedging instruments:
Foreign exchange contracts and other						150						171						232						339
Total derivatives, gross						205						521						828						801
Derivative asset and derivative liability netting (b)						(118)						(257)						(118)						(257)
Cash collateral netting (c)						(2)						(11)						(187)						(212)
Total derivatives, net						$	85					$	253					$	523					$	332

(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 $7 million and $8 million as of June 30, 2023 and December 31, 2022, 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 $4.6 billion and $8.1 billion of fixed-rate debt obligations designated in fair value hedging relationships as of June 30, 2023 and December 31, 2022, 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 six months ended June 30:

						Gains (losses)
						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Fixed-rate long-term debt						$	15					$	106					$	(38)					$	364
Derivatives designated as hedging instruments						(16)						(106)						37						(367)
Total						$	(1)					$	—					$	(1)					$	(3)

The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $4.4 billion and $7.8 billion as of June 30, 2023 and December 31, 2022, respectively, including the cumulative amount of fair value hedging adjustments of $(198) million and $(236) million for the respective periods.

We recognized in Interest expense on Long-term debt a net increase of $44 million and a net decrease of $34 million for the three months ended June 30, 2023 and 2022, respectively, and a net increase of $83 million and a net decrease of $91 million for the six months ended June 30, 2023 and 2022, 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 $12.7 billion and $12.5 billion of foreign currency derivatives designated as net investment hedges as of June 30, 2023 and December 31, 2022, respectively. The gain or loss on net investment hedges, net of taxes, recorded in Accumulated other comprehensive income (loss) (AOCI) as part of the cumulative translation adjustment, were a loss of $307 million and a gain of $293 million for the three months ended June 30, 2023 and 2022, respectively, and a loss of $505 million and a gain of $208 million for the six months ended June 30, 2023 and 2022, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income were not significant for any of the three and six months ended June 30, 2023 and 2022.

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 $23.2 billion and $21.7 billion as of June 30, 2023 and December 31, 2022, respectively. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net gain of $25 million and a net loss of $1 million for the three months ended June 30, 2023 and 2022, respectively, and a net gain of $30 million and a net loss of $13 million for the six months ended June 30, 2023 and 2022, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.

Our embedded derivative related to seller earnout shares granted to us upon the completion of a business combination in the second quarter of 2022 between our equity method investee, American Express Global Business Travel, and Apollo Strategic Growth Capital had a notional amount of $78 million as of both June 30, 2023 and December 31, 2022. The changes in the fair value of the embedded derivative resulted in a gain of $4 million and a loss of $4 million for the three months ended June 30, 2023 and 2022, respectively, and losses of nil and $4 million for the six months ended June 30, 2023 and 2022, respectively, which were recognized in Service fees and other revenue 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 June 30, 2023 and December 31, 2022:

						2023																								2022
(Millions)						Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
Assets:
Investment securities: (a)
Equity securities						$	42					$	42					$	—					$	—					$	41					$	40					$	1					$	—
Debt securities						4,045						—						3,981						64						4,537						—						4,490						47
Derivatives, gross (a)(b)						205						—						178						27						521						—						494						27
Total Assets						4,292						42						4,159						91						5,099						40						4,985						74
Liabilities:
Derivatives, gross (a)						828						—						828						—						801						—						801						—
Total Liabilities						$	828					$	—					$	828					$	—					$	801					$	—					$	801					$	—

(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 reflects an embedded derivative. Management reviews and applies judgment to the valuation of the embedded derivative that is performed by an independent third party using a Monte Carlo simulation that models a range of probable future stock prices based on implied volatility in a risk neutral framework. Refer to Note 8 for additional information about this embedded derivative.

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 June 30, 2023 and December 31, 2022. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of June 30, 2023 and December 31, 2022, 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
2023 (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)						$	43					$	43					$	41					$	2					$	—
Other financial assets (b)						61						61						—						61						—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)						116						120						—						—						120
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value						129						129						—						129						—
Financial liabilities carried at other than fair value
Certificates of deposit (d)						20						19						—						19						—
Long-term debt (c)						$	47					$	46					$	—					$	46					$	—

						Carrying Value						Corresponding Fair Value Amount
2022 (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)						$	34					$	34					$	32					$	2					$	—
Other financial assets (b)						60						60						—						60						—
Financial assets carried at other than fair value
Card Member and Other loans, less reserves (c)						110						113						—						—						113
Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value						123						123						—						123						—
Financial liabilities carried at other than fair value
Certificates of deposit (d)						16						16						—						16						—
Long-term debt (c)						$	43					$	42					$	—					$	42					$	—

(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 $5.0 billion and $5.2 billion held by a consolidated VIE as of June 30, 2023 and December 31, 2022, 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 $27.4 billion and $28.4 billion as of June 30, 2023 and December 31, 2022, respectively, and the fair values of Long-term debt were $14.4 billion and $12.3 billion as of June 30, 2023 and December 31, 2022, 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.

We estimate the Level 3 fair value of equity investments without readily determinable fair values, which include investments in our Amex Ventures portfolio, based on price changes as of the date of new similar equity financing transactions completed by the companies in the portfolio. In addition, impairments on such investments are recorded to account for the difference between the estimated fair value and carrying value of an investment based on a qualitative assessment of impairment indicators such as business performance, general market conditions and the economic and regulatory environment. When an impairment triggering event occurs, the fair value measurement is generally derived by taking into account all available information, such as share prices of publicly traded peer companies, internal valuations performed by our investees, and other third-party fair value data. The fair value of impaired investments represents a Level 3 fair value measurement.

The carrying value of equity investments without readily determinable fair values totaled $0.9 billion and $1.0 billion as of June 30, 2023 and December 31, 2022, respectively, of which approximately nil and $0.6 billion as of June 30, 2023 and December 31, 2022, respectively, represented a nonrecurring Level 3 fair value measurement for certain of our equity investments. These amounts are included within Other assets on the Consolidated Balance Sheets.

We recorded unrealized gains of nil and $76 million for the three months ended June 30, 2023 and 2022, respectively, and nil and $88 million for the six months ended June 30, 2023 and 2022, respectively. Unrealized losses representing impairments were $10 million and $84 million for the three months ended June 30, 2023 and 2022, respectively, and $105 million and $102 million for the six months ended June 30, 2023 and 2022, respectively. Unrealized gains and losses are recorded in Other, net on the Consolidated Statements of Income. Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $1.2 billion as of both June 30, 2023 and December 31, 2022, and cumulative unrealized losses representing impairments were $504 million and $394 million as of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022.

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 $24 million, respectively, as of June 30, 2023, and $1 billion and $21 million, respectively, as of December 31, 2022, all of which were primarily related to our real estate arrangements and business dispositions.

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

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30, 2023 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses), net of hedges (a)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of March 31, 2023						$	(45)					$	(2,594)					$	(467)					$	(3,106)
Net change						1						25						(4)						22
Balances as of June 30, 2023						$	(44)					$	(2,569)					$	(471)					$	(3,084)

Six Months Ended June 30, 2023 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses), net of hedges (a)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of December 31, 2022						$	(64)					$	(2,622)					$	(524)					$	(3,210)
Net change						20						53						53						126
Balances as of June 30, 2023						$	(44)					$	(2,569)					$	(471)					$	(3,084)

Three Months Ended June 30, 2022 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses), net of hedges (a)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of March 31, 2022						$	(5)					$	(2,412)					$	(556)					$	(2,973)
Net change						(25)						(157)						12						(170)
Balances as of June 30, 2022						$	(30)					$	(2,569)					$	(544)					$	(3,143)

Six Months Ended June 30, 2022 (Millions), net of tax						Net Unrealized Gains (Losses) on Debt Securities						Foreign Currency Translation Adjustment Gains (Losses), net of hedges (a)						Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balances as of December 31, 2021						$	23					$	(2,392)					$	(576)					$	(2,945)
Net change						(53)						(177)						32						(198)
Balances as of June 30, 2022						$	(30)					$	(2,569)					$	(544)					$	(3,143)

(a)Refer to Note 8 for additional information on hedging activity.

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

						Tax expense (benefit)
						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Net unrealized gains (losses) on debt securities						$	—					$	(7)					$	6					$	(16)
Foreign currency translation adjustment, net of hedges						(53)						92						(98)						62
Pension and other postretirement benefits						(5)						10						—						17
Total tax impact						$	(58)					$	95					$	(92)					$	63

Reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, for the three and six months ended June 30, 2023 and 2022 were not significant.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12. Service Fees and Other Revenue and Other Expenses

The following is a detail of Service fees and other revenue for the three and six months ended June 30:

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Service fees						$	373					$	370					$	739					$	719
Foreign currency-related revenue						359						304						697						529
Delinquency fees						239						193						472						372
Travel commissions and fees						158						131						293						219
Other fees and revenues						103						267						249						332
Total Service fees and other revenue						$	1,232					$	1,265					$	2,450					$	2,171

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions)						2023						2022						2023						2022
Data processing and equipment						$	677					$	623					$	1,337					$	1,223
Professional services						467						501						907						973
Net unrealized and realized losses on Amex Ventures investments (a)						11						10						106						21
Other						391						317						758						632
Total Other expenses						$	1,546					$	1,451					$	3,108					$	2,849

(a)Refer to Note 9 for further information regarding Amex Ventures investments accounted for as equity investments without readily determinable fair values.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Income Taxes

The effective tax rate was 20.5 percent and 22.8 percent for the three months ended June 30, 2023 and 2022, respectively, and 18.6 percent and 22.7 percent for the six months ended June 30, 2023 and 2022, respectively. The lower effective tax rate for the three-month period primarily reflected discrete tax benefits related to a legal entity restructuring in the current period. The lower effective tax rate for the six-month period primarily reflected discrete tax benefits related to the resolution of certain prior-year tax items and a legal entity restructuring in the current period.

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 $123 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 $123 million of unrecognized tax benefits, approximately $97 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 six months ended June 30 were as follows:

						Three Months Ended June 30,												Six Months Ended June 30,
(Millions, except per share amounts)						2023						2022						2023						2022
Numerator:
Basic and diluted:
Net income						$	2,174					$	1,964					$	3,990					$	4,063
Preferred dividends						(15)						(15)						(29)						(29)
Net income available to common shareholders						$	2,159					$	1,949					$	3,961					$	4,034
Earnings allocated to participating share awards (a)						(17)						(15)						(31)						(31)
Net income attributable to common shareholders						$	2,142					$	1,934					$	3,930					$	4,003
Denominator:(a)
Basic: Weighted-average common stock						740						752						741						755
Add: Weighted-average stock options (b)						1						1						1						1
Diluted						741						753						742						756
Basic EPS						$	2.89					$	2.57					$	5.30					$	5.30
Diluted EPS						$	2.89					$	2.57					$	5.29					$	5.30

(a)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.

(b)The dilutive effect of unexercised stock options excludes from the computation of EPS 1.4 million and 0.25 million of options for the three months ended June 30, 2023 and 2022, respectively, and 1.4 million and 0.21 million of options for the six months ended June 30, 2023 and 2022, respectively, because inclusion of the options would have been anti-dilutive.

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

15. Reportable Operating Segments

As disclosed in the 2022 Form 10-K, we realigned our reportable operating segments to reflect organizational changes effective for the third quarter of 2022. Prior periods have been recast to conform to the new reportable operating segments.

The following table presents certain selected financial information for our reportable operating segments and Corporate & Other:

As of or for the Three Months Ended June 30, 2023 (Millions, except where indicated)						USCS						CS						ICS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	4,643					$	3,301					$	2,349					$	1,675					$	(19)					$	11,949
Revenue from contracts with customers (b)						3,479						2,910						1,528						1,523						(7)						9,433
Interest income						2,934						792						497						14						538						4,775
Interest expense						647						364						261						(174)						572						1,670
Total revenues net of interest expense						6,930						3,729						2,585						1,863						(53)						15,054
Pretax income (loss)						$	1,250					$	713					$	253					$	963					$	(445)					$	2,734
Total assets (billions)						$	95					$	54					$	38					$	17					$	41					$	245

For the Six Months Ended June 30, 2023 (Millions)						USCS						CS						ICS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	9,002					$	6,408					$	4,616					$	3,271					$	(50)					$	23,247
Revenue from contracts with customers (b)						6,718						5,641						2,969						2,971						(20)						18,279
Interest income						5,709						1,498						964						28						992						9,191
Interest expense						1,198						685						485						(305)						1,040						3,103
Total revenues net of interest expense						13,513						7,221						5,095						3,604						(98)						29,335
Pretax income (loss)						$	2,380					$	1,343					$	442					$	1,848					$	(1,112)					$	4,901

As of or for the Three Months Ended June 30, 2022 (Millions, except where indicated)						USCS						CS						ICS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	4,154					$	3,122					$	2,140					$	1,568					$	51					$	11,035
Revenue from contracts with customers (b)						3,197						2,791						1,326						1,434						23						8,771
Interest income						1,893						468						347						5						86						2,799
Interest expense						136						121						144						(61)						99						439
Total revenues net of interest expense						5,911						3,469						2,343						1,634						38						13,395
Pretax income (loss)						$	1,273					$	778					$	183					$	802					$	(493)					$	2,543
Total assets (billions)						$	82					$	49					$	34					$	16					$	24					$	205

For the Six Months Ended June 30, 2022 (Millions)						USCS						CS						ICS						GMNS						Corporate & Other (a)						Consolidated
Total non-interest revenues						$	7,791					$	5,841					$	3,999					$	2,940					$	—					$	20,571
Revenue from contracts with customers (b)						5,939						5,212						2,525						2,708						27						16,411
Interest income						3,629						883						671						7						129						5,319
Interest expense						239						208						267						(105)						151						760
Total revenues net of interest expense						11,181						6,516						4,403						3,052						(22)						25,130
Pretax income (loss)						$	2,805					$	1,559					$	427					$	1,471					$	(1,007)					$	5,255

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

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