@americanexpress A network of possibilities AmericA n e x press c o mpA n y AnnuAl RepoRt 2010 01 Consolidated Financial Highlights 02 @americanexpress 08 Letter to Shareholders 19 2010 Financial Results AMERICAN E XPRESS C OMPANY ConSolIDAteD FInAnCIAl HIGHlIGHtS (Millions, except per share amounts, percentages and employees) 2010 2009 % INC/(DEC) TOTAL REVENUES NET OF INTEREST EXPENSE $ 27,819 $ 24,523 13% INCOME FROM CONTINUING OPERATIONS $ 4,057 $ 2,137 90% LOSS FROM DISCONTINUED OPERATIONS — $ (7) — NET INCOME $ 4,057 $ 2,130 90% RETURN ON AVERAGE EQUITY 27.5% 14.6% TOTAL ASSETS $ 147,042 $ 125,145 17% SHAREHOLDERS’ EQUITY $ 16,230 $ 14,406 13% DILUTED INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 3.35 $ 1.54 # DILUTED LOSS FROM DISCONTINUED OPERATIONS — — — DILUTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 3.35 $ 1.54 # CASH DIVIDENDS DECLARED PER SHARE $ 0.72 $ 0.72 — BOOK VALUE PER SHARE $ 13.56 $ 12.08 12% AVERAGE COMMON SHARES OUTSTANDING FOR DILUTED EARNINGS PER COMMON SHARE 1,195 1,171 2% COMMON SHARE CASH DIVIDENDS DECLARED $ 867 $ 855 1% COMMON SHARE REPURCHASES $ 14 — # NUMBER OF EMPLOYEES 60,500 59,200 2% # denotes a variance of more than 100% TOTAL REVENUES RETURN ON AVERAGE EQUITY NET INCOME NET OF INTEREST EXPENSE (in billions) (in billions) $27.8 27.5% $4.1 10 10 10 Various forward-looking statements are made in this Annual Report, which generally include the words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “should,” “could,” “would,” “likely,” and similar expressions. Certain factors that may affect these forward- looking statements, including American Express Company’s ability to achieve its goals referred to herein, are discussed on page 63. @americanexpress we connect millions of consumers and businesses around the world. As we process payments, we identify customer preferences and market trends and then turn this knowledge into real value. Cardmembers get relevant benefits, rewards, savings and experiences. Merchants get access to high-spending customers and business-building insights. Our network creates new possibilities for people to pursue their passions and realize their potential. Meet the band e xclusive Access @ a mericanexpress The right connections still get you places, like the front of the line and even backstage. Live for music? Have a passion for fashion? Serious foodie? Our cardmembers receive special offers to rub shoulders with rockers, entertainers, designers, chefs and more. Make us part of your social network and you might even receive a once-in-a-lifetime surprise, like an autographed guitar from your favorite band. Rest assured e n h A n c e d v A l u e @ americanexpress No competitor does rewards, benefits and service like American Express. So it’s no wonder that we lead the industry in customer satisfaction. We help our cardmembers shop with confidence, earn perks, manage their spending and protect their purchases. And we never stop looking for new ways to add value and deliver peace of mind. Save big cost control @ americanexpress Control is a good thing when it comes to spending. We help mid-size companies and large corporations save money by streamlining their billing and payments processes, improving data management and accessing supplier discounts. Many companies turn to us for expense management expertise, and we help them achieve millions in savings. Support Main Street building communities @ americanexpress Big retailers have Black Friday. Online merchants have Cyber Monday. Now Main Street shops across the U.S. have Small Business Saturday. American Express started a national movement to support the small businesses that fuel local economies. The result: an energized community of more than one million Facebook fans and a three-fold rise in spending at small retailers by enrolled cardmembers. Attract a crowd business-building insights @ americanexpress Our insights and customer access turn information into profits for our merchant partners. For instance, when a major restaurant chain wanted to boost same-store sales, we helped cook up a plan. By analyzing transaction data from our closed-loop network, we pinpointed strategies to increase foot traffic and win new converts. We provide these services while strictly safeguarding customer data. AMERICAN E XPRESS C OMPANY to ouR SHAReHolDeRS Everyone likes a comeback story. Our company ’s return to growth after the recession was just that and more. We earned $4.1 billion in 2010, nearly double the amount from a year earlier. Sharply higher spending by cardmembers, even in these budget-conscious times, and steadily improving credit quality drove our results. As we brought earnings back to our pre-recession peak, we also invested heavily in capabilities and products that we expect will serve us, and our customers, well in the years ahead. 08 AMERICAN E XPRESS C OMPANY Coming into 2010, we made some fundamental accounting change drove much of this increase. assumptions about the needs of our customers The benefits of higher cardmember spending were in a changing environment. We believed that partially offset by lower net interest income from people would be looking for greater value our managed lending portfolio. While we would for their money, service they could count on, have liked to see higher absolute revenue growth, financial control, convenient online experiences, we turned in a strong performance relative to our and connections that could help enhance their peers who rely much more heavily on lending. lives and build their businesses. Our results say Growing the business remains a top priority, and that we are answering those needs. we have a wide range of efforts underway designed Cardmembers spent a record $713 billion to generate additional revenue. on their American Express cards during 2010, a 15 percent increase from a year ago. We saw broad-based growth in billings among consumers, g r owth A n d e f ficiency small businesses and large companies around Where did we invest in 2010? Marketing and the world. Our billings grew faster than those promotion expenses rose 60 percent to support of any other major card issuer by a wide margin. customer acquisition, new products and brand We also far outpaced economic indicators such advertising. Spending on cardmember rewards, as retail sales growth. These accomplishments which help to drive charge volume and credit show the quality of our premium customer base quality, rose 25 percent. We expanded the sales and our ability to earn their loyalty by providing forces in our commercial card and merchant industry-leading service, benefits and rewards. services organizations, staffed up to grow Our cardmembers spent more; they also new fee service businesses, and built out our spent responsibly. Fewer fell behind on payments. Enterprise Growth team. We also consolidated Many paid down outstanding debt. These factors, and upgraded technology platforms and as well as steps we took to better manage risk, made other infrastructure enhancements to helped improve our key credit indicators to increase efficiency. levels we had not seen since before the recession. We look for opportunities in challenging Write-offs in our worldwide lending portfolio times. That’s one reason why we chose to invest were 4.3 percent in the fourth quarter, down heavily instead of letting more funds flow from 7.4 percent a year earlier. Accounts 30-days directly to our bottom line. This isn’t a new past due declined to 2.1 percent from 3.6 percent. philosophy for us. Higher investment spending These results stood out as the best among all in the latter half of 2009 contributed to our major card issuers. strong business volumes in 2010. Similarly, we As credit trends improved, we reduced the think our investments in 2010 will help support funds we set aside for problem loans, while still revenue growth in the years ahead. Some of keeping our reserves at appropriate levels. We set these investments are meant for short-term aside $2.2 billion in provisions for losses, down payback, while others are for multi-year efforts 58 percent from 2009. This aided earnings and that lay a foundation for growth for the moderate gave us more money to in vest in the business. to long term. Total revenues net of interest expense rose We have built considerable flexibility into our 13 percent to $27.8 billion, although a required expense base to adjust investment spending—up 09 AMERICAN E XPRESS C OMPANY or down—based on business conditions and put us in a strong position for the future. Some windows of opportunity. In 2010, we accelerated examples include our: our investments to take advantage of our strong Enhanced charge card and premium co-brand financial performance. As we manage through lineup: New products and features have given 2011, we will likely reduce this spending from the our customers more reasons to use our cards. We historically high level of the past year. Even so, we launched Centurion, Platinum and Gold cards plan to continue making substantial investments. in several countries, as well as co-brands with While we ramped up investments in 2010, outstanding partners. As part of our focus on we kept ongoing operating expenses well- premium customers, we now have Centurion controlled. Across the company, we stress the cards in 30 countries around the world. link between efficiency and growth. We search for ways to improve both costs and quality in all Rewards as a virtual currency: Membership our major business processes. By following this Rewards, one of the world’s largest loyalty formula, we continue to generate reengineering platforms, has essentially become a virtual benefits and free up funds to invest in growth. currency. Cardmembers can increasingly redeem their points online for a broad array of purchases directly at merchants’ websites. The sheer size c r e A t ing m o mentum of our points bank, combined with the appeal of Membership Rewards to our cardmembers We are excited about the momentum we and redemption partners, is fueling this trend.