American Express Reports Third Quarter EPS of $0.90, Up 70% From a Year Ago (Millions, except per share amounts)
Quarters Ended
September 30, Percentage Nine Months Ended
September 30, Percentage
2010 2009 Inc/(Dec) 2010 2009 Inc/(Dec)
Total revenues net of interest expense(1) $ 7,033 $ 6,016 17 % $ 20,497 $ 18,034 14 %
Income From Continuing Operations $ 1,093 $ 642 70 $ 2,995 $ 1,427 #
Loss From Discontinued Operations $ - $ (2 ) - $ - $ (13 ) -
Net Income $ 1,093 $ 640 71 $ 2,995 $ 1,414 #

Earnings Per Common Share - Diluted:
Income From Continuing Operations Attributable to Common Shareholders(2) $ 0.90 $ 0.54 67 $ 2.47 $ 0.95 #
Loss From Discontinued Operations $ - $ (0.01 ) - $ - $ (0.01 ) -
Net Income Attributable to Common Shareholders(2) $ 0.90 $ 0.53 70 $ 2.47 $ 0.94 #

Average Diluted Common Shares Outstanding 1,199 1,181 2 % 1,195 1,166 2 %
Return on Average Equity 25.9% 11.7% 25.9% 11.7%
Return on Average Common Equity 25.6% 10.4% 25.6% 10.4%

# Denotes a variance of more than 100%

(1) Refer to discussion regarding revenue drivers on page 2 of earnings release.
(2) Represents income from continuing operations or net income, as applicable, less (i) accelerated preferred dividend accretion of $212 million for the nine months ended September 30, 2009 due to the repurchase of preferred shares from the U.S. Treasury Department, (ii) preferred shares dividends and related accretion of $94 million for the nine months ended September 30, 2009, and (iii) earnings allocated to participating share awards and other items of $13 million and $8 million for the three months ended September 30, 2010 and 2009, respectively, and $38 million and $13 million for the nine months ended September 30, 2010 and 2009, respectively.

NEW YORK, October 21, 2010 -- American Express Company (NYSE: AXP) today reported third-quarter net income of $1.1 billion, up 71 percent from $640 million a year ago. Diluted per share net income was $0.90, up 70 percent from $0.53 a year ago.

Consolidated total revenues net of interest expense were $7.0 billion, up 17 percent from $6.0 billion a year ago. The increase reflects the consolidation of securitized cardmember loans and related debt onto the balance sheet in the first quarter(3). Revenues also reflect higher cardmember spending and higher travel commissions and fees, offset by lower interest income due to a smaller loan portfolio and lower yields on both the securitized and non-securitized portions of the portfolio.

Consolidated provisions for losses totaled $373 million compared to $1.2 billion in the year-ago period, reflecting continued improvement in credit quality for the charge and credit card portfolios(3).

Consolidated expenses totaled $5.0 billion, up 28 percent from $3.9 billion a year ago, reflecting higher investment in business building initiatives and higher rewards costs.

The company's return on average equity (ROE) was 25.9 percent, up from 11.7 percent a year ago.

“Cardmember spending rose a strong 14 percent with the largest increases coming from businesses where we’ve been making significant investments: charge and premium co-brand products, corporate cards and cards issued by our bank partners,” said Kenneth I. Chenault, chairman and chief executive officer.

“Lending volumes, however, remain below pre-recessionary levels as cardmembers continued to manage their finances carefully and pay down outstanding debt. While this translated into lower net interest income, it also helped to improve our overall risk profile.

“Our credit indicators, in fact, continued to lead the market and our write-off rate dropped below 5 percent in September for the first time since early 2008.

“Against the backdrop of regulatory and legislative changes that are reshaping the industry, we have been able to improve our competitive position relative to those issuers who rely more heavily on revolving credit and back-end fees.

“While we remain cautious about the economic outlook, we plan to capitalize on that advantage by investing to strengthen relationships with high spending cardmembers and the merchants who accept our products.”

Year-ago results included a non-recurring $180 million ($113 million after-tax) benefit associated with the company’s accounting for a net investment in consolidated foreign subsidiaries.

The effective tax rate was 33 percent compared to 30 percent in the year-ago quarter.