What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-10 compared with 2022-02-11 · 335 added, 353 removed, 1541 unchanged (31% of the section changed)

68 unchanged sentences

The WAC per point assumption is derived from 12 months of redemptions and is adjusted as appropriate for certain changes in redemption costs that are not representative of future cost expectations and expected developments in redemption patterns.

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

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

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the estimate of the Membership Rewards liability, including the URR and WAC assumptions.

These procedures also included, among others, (i) testing the completeness and accuracy of significant inputs to the statistical and actuarial models used to estimate the URR assumption, including redemption trends, card product type, enrollment tenure, and card spend levels, (ii) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of the URR assumption and comparing the independent estimate to management’s assumption to evaluate its reasonableness, (iii) evaluating management’s methodology for determining the WAC assumption and (iv) comparing our independently calculated Membership Rewards liability to management’s estimate.

These procedures also included, among others, (i) testing the completeness and accuracy of significant inputs to the statistical and actuarial models used to estimate the URR assumption, including redemption trends, card product type, enrollment tenure, and card spend levels, (ii) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of the URR assumption and comparing the independent estimate to management’s assumption to evaluate its reasonableness and (iii) comparing our independently calculated Membership Rewards liability to management’s estimate.

/s/ PricewaterhouseCoopers LLP

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Note 9 – Other Liabilities

Note 1 0 – Stock Plans

Note 1 0 – Stock -Based Compensation

Note 1 1 – Retirement Plans

5 unchanged sentences

Note 17 – Changes in Accumulated Other Comprehensive Income (Loss)

Note 18 – Other Fees and Commissions and Other Expenses

Note 18 – Service Fees and Other Revenue and Other Expenses

Note 19 – Restructuring

11 unchanged sentences

Net card fees 6,070 5,195 4,664

Other fees and commissions 2,392 2,163 3,297

Other 1,316 874 1,430

Service fees and other revenue 4,521 3,316 2,702

Processed revenue 1,637 1,556 1,301

Total non-interest revenues 42,967 34,630 28,102

16 unchanged sentences

Total revenues net of interest expense after provisions for credit losses 50,680 43,799 31,357

Marketing and business development 9,053 6,747 7,125

Card Member rewards 14,002 11,007 8,041

Business development 4,943 3,762 3,051

Card Member services 2,959 1,993 1,230

Marketing 5,458 5,291 3,696

Salaries and employee benefits 7,252 6,240 5,718

17 unchanged sentences

Other comprehensive (loss) income:

Net unrealized debt securities gains (losses), net of tax ( 42 ) 32 41

Foreign currency translation adjustments, net of tax ( 163 ) ( 40 ) ( 56 )

Net unrealized debt securities (losses) gains, net of tax ( 87 ) ( 42 ) 32

Foreign currency translation adjustments, net of hedges and tax ( 230 ) ( 163 ) ( 40 )

Net unrealized pension and other postretirement benefits, net of tax 52 155 ( 150 )

10 unchanged sentences

2021, $ 463 )

28,097 20,548

Short-term investment securities (includes restricted investments of consolidated variable interest entities:

4 unchanged sentences

2022, $ 229 ;

57,384 53,581

Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity:

31 unchanged sentences

Accumulated other comprehensive income (loss) ( 3,210 ) ( 2,945 )

Net unrealized debt securities gains, net of tax of:

Foreign currency translation adjustments, net of tax of:

2021, $( 330 );

2020, $( 381 )

( 2,392 ) ( 2,229 )

Net unrealized pension and other postretirement benefits, net of tax of:

2021, $( 184 );

2020, $( 236 )

( 576 ) ( 731 )

Total accumulated other comprehensive income (loss) ( 2,945 ) ( 2,895 )

Total shareholders’ equity 24,711 22,177

11 unchanged sentences

Deferred taxes ( 1,189 ) 294 ( 939 )

Other non-cash items (a)

Other items (a)

365 ( 772 ) 683

Originations of loans held-for-sale ( 277 ) — —

Proceeds from sales of loans held-for-sale 277 — —

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:

13 unchanged sentences

Cash Flows from Financing Activities

Net (decrease) increase in customer deposits ( 2,468 ) 13,542 3,330

Net increase (decrease) in short-term borrowings 461 ( 4,627 ) 3,316

Net increase (decrease) in customer deposits 25,902 ( 2,468 ) 13,542

Net (decrease) increase in short-term borrowings ( 706 ) 461 ( 4,627 )

Proceeds from long-term debt 23,230 7,788 69

5 unchanged sentences

Dividends paid ( 1,565 ) ( 1,448 ) ( 1,474 )

Net cash used in financing activities ( 14,933 ) ( 9,068 ) ( 519 )

Net cash provided by (used in) financing activities 24,509 ( 14,933 ) ( 9,068 )

Effect of foreign currency exchange rates on cash and cash equivalents ( 13 ) ( 120 ) 364

Net (decrease) increase in cash and cash equivalents ( 10,937 ) 8,519 ( 3,362 )

Net increase (decrease) in cash and cash equivalents 11,886 ( 10,937 ) 8,519

Cash and cash equivalents at beginning of year 22,028 32,965 24,446

5 unchanged sentences

Total cash and cash equivalents, excluding restricted balances $ 33,370 $ 21,503 $ 32,359

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

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

See Notes to Consolidated Financial Statements.

5 unchanged sentences

Balances as of December 31, 2019 $ 23,071 $ — $ 163 $ 11,774 $ ( 2,737 ) $ 13,871

Cumulative effect of change in accounting principle - Reserve for Credit Losses (a)

( 882 ) — — — — ( 882 )

Net income 3,135 — — — — 3,135

9 unchanged sentences

Balances as of December 31, 2020 22,984 — 161 11,881 ( 2,895 ) 13,837

Cumulative effect of change in accounting principle - Reserve for Credit Losses (a)

( 882 ) — — — — ( 882 )

Net income 8,060 — — — — 8,060

Other comprehensive loss ( 50 ) — — — ( 50 ) —

Preferred shares issued 1,584 — — 1,584 — —

Redemption of preferred shares ( 1,600 ) — — ( 1,584 ) — ( 16 )

Repurchase of common shares ( 7,598 ) — ( 9 ) ( 631 ) — ( 6,958 )

4 unchanged sentences

( 23 ) — — — — ( 23 )

Cash dividends declared preferred Series D, $ 13,213.89 per share

( 21 ) — — — — ( 21 )

Cash dividends declared common, $ 1.72 per share

3 unchanged sentences

Other comprehensive loss ( 265 ) — — — ( 265 ) —

Preferred shares issued 1,584 — — 1,584 — —

Redemption of preferred shares ( 1,600 ) — — ( 1,584 ) — ( 16 )

Repurchase of common shares ( 3,332 ) — ( 4 ) ( 302 ) — ( 3,026 )

Other changes, primarily employee plans 242 — — 300 — ( 58 )

Cash dividends declared preferred Series B, $ 36,419.41 per share

( 27 ) — — — — ( 27 )

Cash dividends declared preferred Series C, $ 26,317.47 per share

( 23 ) — — — — ( 23 )

Cash dividends declared preferred Series D, $ 35,993.05 per share

7 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We are a globally integrated payments company that provides our customers with access to products, insights and experiences that enrich lives and build business success.

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 sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations.

These products and services are sold through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

Our various products and services are offered globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations.

These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

Refer to Note 24 for additional discussion of the products and services that comprise each segment.

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We also have investments in equity securities where our voting interest is below the level of significant influence, including investments that we make in non-public companies in the ordinary course of business.

Such investments are initially recorded at cost and adjusted to fair value through earnings for observable price changes in orderly transactions for identical or similar transactions of the same company or if they are determined to be impaired.

Such investments are initially recorded at cost and adjusted to fair value through earnings for observable price changes in orderly transactions for identical or similar instruments of the same company or if they are determined to be impaired.

See Note 4 for the accounting policy for our marketable equity securities.

FOREIGN CURRENCY

Monetary assets and liabilities denominated in foreign currencies are translated into U.S.

dollars based upon exchange rates prevailing at the end of the reporting period;

non-monetary assets and liabilities are translated at the historic exchange rate at the date of the transaction;

revenues and expenses are translated at the average month-end exchange rates during the year.

Resulting translation adjustments, along with any related qualifying hedge and tax effects, are included in accumulated other comprehensive income (loss) (AOCI), a component of shareholders’ equity.

Transactions conducted in currencies other than the applicable functional currency of an entity are converted to the functional currency at the exchange rate on the transaction date.

At the period end, monetary assets and liabilities are remeasured to the functional currency using period end rates.

The resulting transaction gains and losses are recorded in Other, net expenses in the Consolidated Statements of Income.

For subsidiaries where the functional currency is not the U.S.

dollar, the monetary assets and liabilities and results of operations are translated for consolidation purposes into U.S.

dollars at period-end rates for monetary assets and liabilities and generally at average rates for results of operations.

The resulting translation adjustments, along with any related qualifying hedge and tax effects, are included in accumulated other comprehensive income (loss) (AOCI), a component of shareholders’ equity.

Translation adjustments, including qualifying hedge and tax effects, are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations.

Gains and losses related to transactions in a currency other than the functional currency are reported in Other, net expenses in the Consolidated Statements of Income.

AMOUNTS BASED ON ESTIMATES AND ASSUMPTIONS

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INCOME STATEMENT

Revenue is recognized when obligations under the terms of a contract with our customers are satisfied.

We are not required to disclose revenue that is expected to be recognized in future periods related to contracts that have an original expected duration of one year or less and contracts with variable consideration (e.g., discount revenue).

Non-interest revenue expected to be recognized in future periods related to all other contracts with customers is not material.

Discount Revenue

Discount revenue primarily represents the amount we earn on transactions occurring at merchants that have entered into a card acceptance agreement with us, or a Global Network Services (GNS) partner or other third-party merchant acquirer, for facilitating transactions between the merchants and Card Members.

The amount of fees charged for accepting our cards as payment for goods or services, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount.

The merchant discount is generally deducted from the payment to the merchant and recorded as discount revenue at the time the Card Member transaction occurs.

The card acceptance agreements, which include the agreed-upon terms for charging the merchant discount fee, vary in duration.

Our contracts with small- and medium-sized merchants generally have no fixed contractual duration, while those with large merchants are generally for fixed periods, which typically range from three to seven years in duration.

Discount revenue represents the amount we earn and retain from the merchant payable for facilitating transactions between Card Members and merchants on payment products issued by American Express.

The amount of fees charged for accepting our cards as payment, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount.

Discount revenue is generally recorded at the time the Card Member transaction occurs.

Card acceptance agreements, which include the agreed-upon terms for charging the merchant discount fee, vary in duration.

Our contracts with small- and mid-sized merchants generally have no fixed contractual duration, while those with large merchants are generally for fixed periods, which typically range from three to seven years in duration.

Our fixed-period agreements may include auto-renewal features, which may allow the existing terms to continue beyond the stated expiration date until a new agreement is reached.

We satisfy our obligations under these agreements over the contract term, often on a daily basis, including through the processing of Card Member transactions and the availability of our payment network.

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

In our role as the operator of the American Express network, we also settle with merchants on behalf of our GNS card issuing partners, who in turn receive an issuer rate that is individually negotiated between that issuer and us and is recorded as expense in Marketing and business development (see below) or as contra-revenue in Other revenue.

Revenue expected to be recognized in future periods related to contracts that have an original expected duration of one year or less and contracts with variable consideration (e.g.

discount revenue) is not required to be disclosed.

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

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

Net Card Fees

2 unchanged sentences

The unamortized net card fee balance is reported in Other liabilities on the Consolidated Balance Sheets.

Effective April 1, 2021, we prospectively changed the recognition of certain costs paid to a third party previously recognized over the twelve month card membership period in Net card fees in the Consolidated Statements of Income;

such costs are now recorded as incurred in Marketing and business development expense.

This change is not material to the Consolidated Financial Statements.

Other Fees and Commissions

Other fees and commissions includes certain fees charged to Card Members, including delinquency fees and foreign currency conversion fees, which are primarily recognized in the period in which they are charged to the Card Member.

Other fees and commissions also includes Membership Rewards program fees, which are deferred and recognized over the period covered by the fee, typically one year, the unamortized portion of which is included in Other liabilities on the Consolidated Balance Sheets.

In addition, Other fees and commissions includes loyalty coalition-related fees, travel commissions and fees and service fees earned from merchants, that are recognized when the service is performed, which is generally in the period the fee is charged.

Service Fees and Other Revenue

Service fees and other revenue includes service fees earned from merchants and other customers and travel commissions and fees, which are generally recognized in the period when the service is performed, and delinquency and foreign currency-related fees, which are primarily recognized in the period when they are charged to the Card Member.

In addition, Service fees and other revenue includes income (losses) from our investments in which we have significant influence and therefore account for under the equity method.

Refer to Note 18 for additional information.

Processed Revenue

Processed revenue primarily represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners.

In our role as the operator of the American Express network, we settle with merchants and our third-party merchant acquirers on behalf of our network card issuing partners.

The amount of fees charged for accepting American Express-branded cards is generally deducted from the payment to the merchant or third-party merchant acquirer and recorded as Processed revenue at the time the Card Member transaction occurs.

Our network card issuing partners receive an issuer rate that is individually negotiated between that issuer and us and is recorded as contra-revenue within Processed revenue to the extent that there is revenue from the same customer, after which any additional issuer rate is recorded as expense in Business development.

Processed revenue also includes fees related to alternative payment solutions, which are generally recognized when the service is performed.

Contra-revenue

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

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

Interest Income

9 unchanged sentences

(i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term debt and short-term borrowings, as well as the realized impact of derivatives used to hedge interest rate risk on our long-term debt.

Marketing and Business Development

Marketing and business development expense includes costs incurred in the development and initial placement of advertising, which are expensed in the year in which the advertising first takes place.

Also included in Marketing and business development expense are payments to our cobrand partners, Card Member statement credits and promotional rewards-based incentives for qualifying charges on eligible card accounts, corporate client incentive payments earned on achievement of pre-set targets, and certain payments to GNS partners.

These costs are generally expensed as incurred.

Card Member Rewards

6 unchanged sentences

Changes in the Card Member rewards liabilities during the period are taken as an increase or decrease to the Card Member rewards expense in the Consolidated Statements of Income.

Business Development

Business development expense includes payments to our cobrand partners, corporate client incentive payments earned on achievement of pre-set targets and certain payments to network partners.

These costs are generally expensed as incurred.

Card Member Services

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

Marketing expense includes costs incurred in the development and initial placement of advertising, which are expensed in the period in which the advertising first takes place.

All other marketing expenses are generally expensed as incurred.

BALANCE SHEET

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We believe the discount rates appropriately reflect the risks and uncertainties in the financial markets generally and specifically in our internally-developed forecasts.

When using market multiples under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings or revenues) to our reporting units’ actual results.

When using market multiples under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings or revenues) to our reporting units’ operating results.

For the years ended December 31, 2022 and 2021, we performed a qualitative assessment in connection with our annual goodwill impairment evaluation and determined that it was more likely than not that the fair values of each of our reporting units exceeded their carrying values.

In addition, during the year ended December 31, 2022, we performed a quantitative goodwill impairment assessment for those reporting units which were impacted by the realignment of our operating segments and concluded that their fair values exceeded their carrying values.

Refer to Note 24 for further information on the realignment of our operating segments.

Premises and Equipment

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

RECENTLY ADOPTED ACCOUNTING STANDARDS

Effective January 1, 2021, we elected to change our accounting for investments in qualified affordable housing (QAH) projects from the equity method of accounting to the proportional amortization method (PAM) in accordance with the accounting guidance.

PAM results in the amortization of the initial cost of the investment in proportion to the related tax credits, and recognition of the net investment performance in the statement of income as a component of Income tax provision, while the equity method reflected losses related to the investments as a component of Other, net expenses.

As a result, we believe PAM is preferable as it better reflects the economics of our tax credit investments.

Since the impact of this change is immaterial to our prior and current year financial statements, we implemented PAM on a prospective basis which resulted in a one-time charge to Income tax provision of $ 55 million in the first quarter of 2021, reflecting the cumulative impact of the difference in the timing of expense recognition between the equity method and PAM.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

In March 2022, the Financial Accounting Standards Board issued new accounting guidance on troubled debt restructuring (TDR) and write-offs, effective January 1, 2023, with early adoption permitted.

The amendments eliminate the existing TDR guidance for those entities that have adopted Update 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, create a single loan modification accounting model and enhance disclosure requirements for loan modifications and write-offs.

Beginning with the quarter ending March 31, 2023, our financial statements will reflect the adoption of this standard on a prospective basis.

The updated guidance will not have a material impact to our Consolidated Financial Statements.

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

Refer to Note 3 for additional information on impact of adoption and how management estimates reserves for credit losses in accordance with the CECL methodology.

Refer to Note 3 for how management estimates reserves for credit losses in accordance with the CECL methodology.

LOANS AND CARD MEMBER RECEIVABLES

Our lending and charge payment card products result in the generation of Card Member loans and Card Member receivables.

We also extend credit to consumer and commercial customers through non-card financing products, resulting in Other loans.

Reserves for reporting periods beginning on and after January 1, 2020 are presented using the CECL methodology, while information as of and for the year ended December 31, 2019 continues to be reported in accordance with the incurred loss methodology then in effect.

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

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Other loans are presented on the Consolidated Balance Sheets net of reserves for credit losses, and include principal and any related accrued interest and fees.

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

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

(Millions) 2022 2021

Global Consumer Services Group (a)

$ 84,964 $ 70,467

Global Commercial Services 18,095 13,289

Small Business 22,947 18,040

Corporate 53 55

Card Member loans 107,964 88,562

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Card Member receivable balances are presented on the Consolidated Balance Sheets net of reserves for credit losses (refer to Note 3), and include principal and any related accrued fees.

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

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

(Millions) 2022 2021

Global Consumer Services Group

$ 22,392 $ 18,685

Global Commercial Services (a)

Consumer $ 22,885 $ 22,392

Small Business 19,629 17,977

Corporate (a)

15,099 13,276

2 unchanged sentences

Card Member receivables, net $ 57,384 $ 53,581

(a) Includes $ 5.2 billion and $ 4.3 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of December 31, 2021 and 2020, respectively.

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

CARD MEMBER LOANS AND RECEIVABLES AGING

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Card Member Loans:

Global Consumer Services Group $ 69,960 $ 158 $ 112 $ 237 $ 70,467

Global Commercial Services

Global Small Business Services 17,950 34 19 37 18,040

Global Corporate Payments (a)

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:

Global Consumer Services Group 22,279 41 24 48 22,392

Global Commercial Services

Global Small Business Services $ 17,846 $ 59 $ 28 $ 44 $ 17,977

Global Corporate Payments (a)

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

3 unchanged sentences

Card Member Loans:

Global Consumer Services Group $ 59,442 $ 177 $ 148 $ 317 $ 60,084

Global Commercial Services

Global Small Business Services 13,132 27 20 47 13,226

Global Corporate Payments (a)

Consumer $ 69,960 $ 158 $ 112 $ 237 $ 70,467

Small Business 17,950 34 19 37 18,040

Corporate (a)

(b) (b) (b) — 55

Card Member Receivables:

Global Consumer Services Group 18,570 33 26 56 18,685

Global Commercial Services

Global Small Business Services $ 14,023 $ 37 $ 21 $ 38 $ 14,119

Global Corporate Payments (a)

Consumer 22,279 41 24 48 22,392

Small Business $ 17,846 $ 59 $ 28 $ 44 $ 17,977

Corporate (a)

(b) (b) (b) $ 42 $ 13,276

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

Delinquency data is tracked based on days past billing status rather than days past due.

(a) 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.

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Card Member Loans:

Global Consumer Services Group 0.9 % 1.3 % 0.7 % 2.5 % 3.0 % 1.1 %

Global Small Business Services 0.6 % 0.8 % 0.5 % 2.1 % 2.4 % 0.7 %

Consumer 0.9 % 1.2 % 1.0 % 0.9 % 1.3 % 0.7 %

Small Business 0.7 % 0.8 % 0.9 % 0.6 % 0.8 % 0.5 %

Card Member Receivables:

Global Consumer Services Group 0.3 % 0.4 % 0.5 % 1.7 % 1.9 % 0.6 %

Global Small Business Services 0.3 % 0.4 % 0.7 % 2.1 % 2.3 % 0.7 %

Global Corporate Payments (d)

Consumer 0.8 % 0.9 % 1.1 % 0.3 % 0.4 % 0.5 %

Small Business 1.1 % 1.2 % 1.5 % 0.3 % 0.4 % 0.7 %

Corporate (d)

(b) 0.4 % (c) (b) — % (c)

2 unchanged sentences

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

(c) For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due.

Delinquency data for periods other than 90+ days past billing is not available due to system constraints.

90+ days past billing as a % of total was 0.6 % and 0.3 % as of December 31, 2022 and 2021, respectively.

(d) The net write-off rate for the year ended December 31, 2021 includes a $ 37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which had resulted in a $ 53 million write-off in the year ended December 21, 2020.

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

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All changes in the impairment measurement are included within provisions for credit losses.

In response to the COVID-19 pandemic, the United States enacted legislation that provided the option to temporarily suspend (i) certain requirements under U.S.

GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be treated as TDRs and (ii) any determination that a loan modified as a result of the COVID-19 pandemic is a TDR (including impairment for accounting purposes).

Based on the nature of our programs, we have not elected the accounting and reporting relief afforded by this legislation and continue to report modifications as TDRs.

In the first quarter of 2020, we created a Customer Pandemic Relief (CPR) program for customers who had been impacted by the COVID-19 pandemic to provide a concession in the form of payment deferrals and waivers of certain fees and interest.

We assessed the CPR program and determined that eligible loan modifications were temporary in nature, for example, less than three months, and not considered TDRs.

Our short-term CPR programs are no longer widely available and have no remaining balances in the program as of December 31, 2021.

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

7 unchanged sentences

Card Member Loans:

Global Consumer Services Group

$ 252 $ 155 $ 781 $ 1,098 $ 2,286 $ 335

Global Commercial Services 19 14 176 332 541 132

Small Business 54 34 267 380 735 108

Corporate — — — — — —

Card Member Receivables:

Global Consumer Services Group — — 133 130 263 9

Global Commercial Services — — 248 303 551 39

Consumer — — 257 179 436 20

Small Business — — 403 402 805 40

Corporate — — 6 7 13 1

Other Loans (f)

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Card Member Loans:

Global Consumer Services Group

$ 149 $ 82 $ 708 $ 997 $ 1,936 $ 415

Global Commercial Services 21 29 478 67 595 285

Small Business 19 14 176 332 541 132

Corporate — — — — — —

Card Member Receivables:

Global Consumer Services Group — — 240 34 274 60

Global Commercial Services — — 534 75 609 139

Consumer — — 133 130 263 9

Small Business — — 247 297 544 39

Corporate — — 1 6 7 —

Other Loans (f)

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Card Member Loans:

Global Consumer Services Group

$ 384 $ 284 $ 500 $ 175 $ 1,343 $ 137

Global Commercial Services 44 54 97 38 233 22

Consumer $ 203 $ 146 $ 1,586 $ 248 $ 2,183 $ 782

Small Business 21 29 478 67 595 285

Corporate — — — — — —

Card Member Receivables:

Global Consumer Services Group — — 56 16 72 3

Global Commercial Services — — 109 30 139 6

Consumer — — 240 34 274 60

Small Business — — 516 73 589 136

Corporate — — 18 2 20 3

Other Loans (f)

2 1 248 6 257 80

Total $ 226 $ 176 $ 3,086 $ 430 $ 3,918 $ 1,346

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

Balances as of December 31, 2019 were not significant.

LOANS AND RECEIVABLES MODIFIED AS TDRs

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Card Member Receivables 47 1,202 (c) 19

Other Loans (d)

Total 328 $ 3,894

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

Balances for the year ended December 31, 2019 were not significant.

The following tables provide information with respect to loans and receivables modified as TDRs that subsequently defaulted within twelve months of modification.

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Total 18 $ 120

2020 Number of Accounts (thousands) Aggregated

2021 Number of Accounts

(thousands) Aggregated

Outstanding Balances

Upon Default (millions) (a)

(millions) (a)

Troubled Debt Restructurings That Subsequently Defaulted:

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Total 32 $ 239

2019 Number of Accounts (thousands) Aggregated

2020 Number of Accounts

(thousands) Aggregated

Outstanding Balances

Upon Default (millions) (a)

(millions) (a)

Troubled Debt Restructurings That Subsequently Defaulted:

1 unchanged sentence

Card Member Receivables 3 55

Other Loans (b)

Total 23 $ 188

1 unchanged sentence

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

Balances for the year ended December 31, 2019 were not significant.

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, which became effective January 1, 2020, 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.

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 .

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Loans and receivables in bankruptcy or owed by deceased individuals are generally written off upon notification.

Results for reporting periods beginning on and after January 1, 2020 are presented using the CECL methodology, while information as of and for the year ended December 31, 2019 continues to be reported in accordance with the incurred loss methodology then in effect.

Reserves for credit losses under the incurred loss methodology were primarily based upon statistical and analytical models that analyzed portfolio performance and reflected management’s judgments regarding the quantitative components of the reserve.

The models considered several factors, including delinquency-based loss migration rates, loss emergence periods and average losses and recoveries over an appropriate historical period.

Similar to the CECL methodology, we considered whether to adjust the quantitative reserves for certain external and internal qualitative factors, which may increase or decrease the reserves for credit losses.

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

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CHANGES IN CARD MEMBER LOANS RESERVE FOR CREDIT LOSSES

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

Card Member loans reserve for credit losses increased for the year ended December 31, 2020, primarily driven by deterioration

of the global macroeconomic outlook as a result of the COVID-19 pandemic, partially offset by a decline in outstanding loan balances and lower delinquencies.

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

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

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

(Millions) 2022 2021 2020

Beginning Balance (a)

$ 5,344 $ 4,027 $ 2,134

Provisions (b)

Beginning Balance $ 3,305 $ 5,344 $ 4,027

Provisions (a)

1,514 ( 1,155 ) 3,453

Net write-offs (c)

Net write-offs (b)

Principal ( 837 ) ( 672 ) ( 1,795 )

Interest and fees ( 229 ) ( 207 ) ( 375 )

( 6 ) ( 5 ) 34

Ending Balance $ 3,747 $ 3,305 $ 5,344

(a) For the year ended December 31, 2020, beginning balance includes an increase of $ 1,643 million as of January 1, 2020, related to the adoption of the CECL methodology.

(b) Provisions for principal, interest and fee reserve components.

(a) Provisions for principal, interest and fee reserve components.

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

(c) Principal write-offs are presented less recoveries of $ 657 million, $ 568 million and $ 525 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(b) Principal write-offs are presented less recoveries of $ 539 million, $ 657 million and $ 568 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Recoveries of interest and fees were not significant.

Amounts include net (write-offs) recoveries from TDRs of $( 209 ) million, $( 171 ) million and $( 134 ) million for the years ended December 31, 2022, 2021 and 2020, respectively.

(d) Primarily includes foreign currency translation adjustments of $( 6 ) million, $ 35 million and $ 4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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

CHANGES IN CARD MEMBER RECEIVABLES RESERVE FOR CREDIT LOSSES

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

Card Member receivables reserve for credit losses increased for the year ended December 31, 2020, primarily driven by

deterioration of the global macroeconomic outlook as a result of the COVID-19 pandemic, partially offset by a decline in outstanding receivable balances.

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

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

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

(Millions) 2022 2021 2020

Beginning Balance (a)

$ 267 $ 126 $ 573

Provisions (b)

( 73 ) 1,015 963

Net write-offs (c)

Beginning Balance $ 64 $ 267 $ 126

Provisions (a)

627 ( 73 ) 1,015

Net write-offs (b)

( 462 ) ( 129 ) ( 881 )

Ending Balance $ 229 $ 64 $ 267

(a) For the year ended December 31, 2020, beginning balance includes a decrease of $ 493 million as of January 1, 2020, related to the adoption of the CECL methodology.

(b) Provisions for principal and fee reserve components.

(a) Provisions for principal and fee reserve components.

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

(c) Net write-offs are presented less recoveries of $ 378 million, $ 386 million and $ 374 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(b) Net write-offs are presented less recoveries of $ 257 million, $ 378 million and $ 386 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Amounts include net recoveries (write-offs) from TDRs of $( 73 ) million, $( 64 ) million and $( 47 ) million, for the years ended December 31, 2022, 2021 and 2020, respectively.

(d) Primarily includes foreign currency translation adjustments of $( 1 ) million, $ 5 million and nil for the years ended December 31, 2021, 2020 and 2019, respectively.

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

INVESTMENT SECURITIES

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Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax.

We had accrued interest on our available-for-sale debt securities totaling $ 12 million and $ 26 million, as of December 31, 2021 and 2020, respectively, presented as Other assets on the Consolidated Balance Sheets.

We had accrued interest on our available-for-sale debt securities totaling $ 12 million as of both December 31, 2022 and 2021, presented as Other assets on the Consolidated Balance Sheets.

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

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

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

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

Investments as of December 31, 2021 also include corporate debt securities.

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

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

Less than 12 months 12 months or more

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

Fair Value Gross Unrealized

Losses Estimated

Fair Value Gross Unrealized

Losses Estimated

Fair Value Gross Unrealized

Losses Estimated

Fair Value Gross Unrealized

State and municipal obligations $ 52 $ ( 10 ) $ — $ — $ — $ — $ — $ —

Government treasury obligations 3,710 ( 72 ) 52 ( 1 ) 477 ( 1 ) — —

Foreign government bonds and obligations 549 ( 1 ) — — — — — —

Total $ 4,311 $ ( 83 ) $ 52 $ ( 1 ) $ 477 $ ( 1 ) $ — $ —

The following table summarizes the gross unrealized losses by ratio of fair value to amortized cost as of December 31, 2021.

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

The gross unrealized losses on our available-for-sale debt securities are primarily attributable to an increase in the current benchmark interest rate.

Overall, for the available-for-sale debt securities in gross unrealized loss positions, (i) we do not intend to sell the securities, (ii) it is more likely than not that we will not be required to sell the securities before recovery of the unrealized losses, and (iii) we expect that the contractual principal and interest will be received on the securities.

We concluded that there was no credit loss attributable to the securities in an unrealized loss position for the periods presented.

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

Less than 12 months 12 months or more Total

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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 )

Weighted average yields and contractual maturities for investment securities with stated maturities as of December 31, 2021 were as follows:

90%–100% 5 $ 477 $ ( 1 ) — $ — $ — 5 $ 477 $ ( 1 )

Less than 90% — — — — — — — — —

Total as of December 31, 2021 5 $ 477 $ ( 1 ) — $ — $ — 5 $ 477 $ ( 1 )

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

(Millions) Due within 1 year Due after 1 year but within 5 years Due after 5 years but within 10 years Due after 10 years Total

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Total Cost $ 3,348 $ 1,177 $ 36 $ 60 $ 4,621

Weighted average yields (d)

Weighted average yield (d)

2.63 % 3.19 % 5.06 % 2.85 % 2.80 %

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

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

(d) Average yields for investment securities have been calculated using the effective yield on the date of purchase.

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In addition, we hold all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors.

As of December 31, 2021 and 2020, our ownership of variable interests was $ 15.0 billion and $ 13.4 billion, respectively, for the Lending Trust and $ 3.2 billion and $ 4.3 billion, respectively, for the Charge Trust.

Our ownership of variable interests in the Lending Trust was $ 16.0 billion and $ 15.0 billion as of December 31, 2022 and 2021, respectively, and in the Charge Trust was $ 5.2 billion and $ 3.2 billion as of December 31, 2022 and 2021, respectively.

These variable interests held by us provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust.

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The long-term debt of each Trust is payable only out of collections on their respective underlying securitized assets (refer to Note 8).

Restricted cash and cash equivalents held by the Lending Trust and Charge Trust was $ 42 million and $ 1 million, respectively, as of December 31, 2021 and $ 47 million and nil , respectively, as of December 31, 2020.

Restricted cash and cash equivalents held by the Lending Trust was $ 59 million and $ 42 million as of December 31, 2022 and 2021, respectively, and by the Charge Trust was nil and $ 1 million as of December 31, 2022 and 2021, respectively.

These amounts relate to collections of Card Member loans and receivables to be used by the Trusts to fund future expenses and obligations, including interest on debt securities, credit losses and upcoming debt maturities.

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Total $ 17,689 $ 17,244

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

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

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

(Millions) GCSG GCS GMNS Total

(Millions) USCS CS ICS GMNS Total

Balance as of December 31, 2020 $ 369 $ 2,124 $ 799 $ 560 $ 3,852

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Dispositions — — ( 3 ) — ( 3 )

( 1 ) ( 1 ) ( 43 ) — ( 45 )

Balance as of December 31, 2021 $ 368 $ 2,123 $ 753 $ 560 $ 3,804

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(a) Primarily includes foreign currency translation.

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

Accumulated impairment losses were $ 221 million as of both December 31, 2022 and 2021.

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TAX CREDIT INVESTMENTS

We account for our QAH investments using PAM, which we elected to implement on January 1, 2021 on a prospective basis, and other tax credit investments using the equity method of accounting.

Refer to Note 1 for further information on the implementation of PAM .

We account for our qualified affordable housing (QAH) investments using the proportional amortization method (PAM), which we elected to implement on January 1, 2021 on a prospective basis, and other tax credit investments using the equity method of accounting.

As of December 31, 2022 and 2021, we had $ 1,207 million and $ 1,124 million in tax credit investments, respectively, included in Other assets on the Consolidated Balance Sheets, of which $ 1,146 million and $ 1,084 million, respectively, related to QAH investments.

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We may be required to fund these amounts between 2023 and 2036.

During the year ended December 31, 2021, we recognized QAH investment losses of $ 226 million, with associated tax credits of $ 135 million, in Income tax provision.

These losses included the one-time charge related to the implementation of PAM.

During the years ended December 31, 2020 and 2019 we recognized QAH investment equity method losses of $ 128 million and $ 101 million, respectively, in Other, net expenses, with associated tax credits of $ 129 million and $ 119 million, respectively, recognized in Income tax provision.

During the years ended December 31, 2022 and 2021, we recognized QAH investment losses of $ 161 million and $ 226 million, respectively, with associated tax credits of $ 141 million and $ 135 million, respectively, in Income tax provision.

During the year ended December 31, 2020 we recognized QAH investment equity method losses of $ 128 million, in Other, net expenses, with associated tax credits of $ 129 million, recognized in Income tax provision.

CUSTOMER DEPOSITS

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

(Millions) Total

After 5 years —

Total $ 4,510

(Millions) 2023 2024 2025 2026 2027 After 5 years Total

Certificates of deposit $ 5,790 $ 6,554 $ 2,939 $ 27 $ 786 $ — $ 16,096

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

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Interest Rate on

Commercial paper (b)

$ — — % $ — — %

Other short-term borrowings (c)

Short-term borrowings (b)

$ 1,348 0.94 % $ 2,243 0.58 %

1 unchanged sentence

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

(b) Average commercial paper outstanding was nil and $ 628 million in 2021 and 2020, respectively.

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

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

We maintained a three-year committed, revolving, secured borrowing facility that gives us the right to sell up to $ 2.0 billion face amount of eligible certificates issued from the Lending Trust at any time through September 16, 2024 .

1 unchanged sentence

Additionally, certain of our subsidiaries maintained total committed lines of credit of $ 186 million and $ 145 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2021 and 2020, $ 7.2 million and nil were drawn on these committed lines, respectively.

We paid $ 7.8 million and $ 7.7 million in fees to maintain the secured borrowing facility in 2021 and 2020, respectively.

As of December 31, 2022 and 2021, $ 20.9 million and $ 7.2 million were drawn on these committed lines, respectively.

We paid $ 7.8 million in fees to maintain the secured borrowing facility in both 2022 and 2021.

The committed facility does not contain a material adverse change clause, which might otherwise preclude borrowing under the facility, nor is it dependent on our credit rating.

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Floating Rate Senior Notes 2023 - 2026 3,000 4.78 — 3,300 0.69 —

Fixed-to-Floating Rate Senior Notes 2033 1,250 4.42 — — — —

Fixed Rate Subordinated Notes 2024 574 3.63 5.46 599 3.63 1.38

Fixed-to-Floating Rate Subordinated Notes 2033 750 4.99 — — — —

American Express Credit Corporation

21 unchanged sentences

Lending Trust 2,685 2,750 7,250 — — — 12,685

Charge Trust — — 2,000 — — — 2,000

Other 76 114 67 — — — 257

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We maintained a committed syndicated bank credit facility of $ 3.5 billion as of December 31, 2022 and 2021, all of which was undrawn as of the respective dates.

This facility was maintained by our wholly owned subsidiary American Express Credit Corporation (Credco) through September 30, 2021 and the availability of the credit line was subject to compliance with certain covenants by Credco, principally the maintenance by Credco of a 1.25 ratio of its combined earnings, certain capital contributions and fixed charges, to fixed charges.

Effective October 1, 2021, this facility was terminated, and we entered into a new committed syndicated bank credit facility for the same amount with a maturity date of October 15, 2024 with American Express Company and American Express Travel Related Services Company, Inc.

(TRS) as co-borrowers and co-obligors.

The availability of the new credit facility is subject to our maintenance of a minimum Common Equity Tier 1 (CET1) risk-based capital ratio of 4.5 percent, with certain restrictions in relation to either accessing the facility or distributing capital to common shareholders in the event our CET1 risk-based capital ratio falls between 4.5 percent and 6.5 percent.

As of December 31, 2021, we were in compliance with the covenants contained in the new credit facility.

The facility has a maturity date of October 15, 2024, and the availability of the facility is subject to compliance with certain covenants, principally our maintenance of a minimum Common Equity Tier 1 (CET1) risk-based capital ratio of 4.5 percent, with certain restrictions in relation to either accessing the facility or distributing capital to common shareholders in the event our CET1 risk-based capital ratio falls between 4.5 percent and 6.5 percent.

As of December 31, 2022 and 2021, we were in compliance with the covenants contained in the credit facility.

Additionally, we maintained a three-year committed, revolving, secured borrowing facility that gives us the right to sell up to $ 3.0 billion face amount of eligible notes issued from the Charge Trust at any time through July 15, 2024 .

As of December 31, 2021 and 2020, $ 2.0 billion and nil were drawn on this facility, respectively.

The amount drawn as of December 31, 2021 was repaid in full on January 18, 2022.

As of December 31, 2022 and 2021, nil and $ 2.0 billion were outstanding on this facility, respectively.

We paid $ 14.1 million and $ 15.7 million in fees to maintain these lines in 2022 and 2021, respectively.

5 unchanged sentences

$ 12,789 $ 11,398

Employee-related liabilities (a)

Deferred card and other fees, net

Employee-related liabilities (a)

Card Member rebate and reward accruals (b)

6 unchanged sentences

income tax liabilities, and deferred tax liabilities for foreign jurisdictions.

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

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

MEMBERSHIP REWARDS

The Membership Rewards program allows enrolled Card Members to earn points that can be redeemed for a broad variety of rewards including travel, shopping, gift cards, and covering eligible charges.

The Membership Rewards program allows enrolled Card Members to earn points that can be redeemed for a broad variety of rewards including, but not limited to, travel, shopping, gift cards, and covering eligible charges.

We record a Membership Rewards liability that represents management’s best estimate of the cost of points earned that are expected to be redeemed by Card Members in the future.

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

STOCK-BASED COMPENSATION

STOCK OPTION AND AWARD PROGRAMS

Under our 2016 Incentive Compensation Plan (amended and restated effective May 5, 2020) and previously under our 2007 Incentive Compensation Plan (collectively, Incentive Compensation Plans), awards may be granted to employees and other key individuals who perform services for us and our participating subsidiaries.

These awards may be in the form of stock options, restricted stock units or awards (collectively referred to as RSUs), portfolio grants (PGs) or other incentives or similar awards designed to meet the requirements of non-U.S.

These awards may be in the form of stock options, restricted stock units or awards (collectively referred to as RSUs) or other incentives or similar awards designed to meet the requirements of non-U.S.

jurisdictions.

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Granted 1,168 154.57 798 174.48 1,064 163.60

Exercised/vested ( 992 ) 64.96 ( 842 ) 102.05 ( 951 ) 98.56

Options exercised/RSUs vested ( 638 ) 88.81 ( 751 ) 113.19 ( 1,097 ) 89.58

Forfeited — — ( 134 ) 139.77 ( 236 ) 137.42

4 unchanged sentences

Stock-based compensation expense is generally recognized ratably based on the grant-date fair value of the awards, net of expected forfeitures, over the vesting period.

The vesting period is the shorter of the vesting schedule as defined in each award agreement or the date an individual will become eligible to retire.

Generally, the vesting period is the shorter of the vesting schedule as defined in each award agreement or the date an individual will become eligible to retire.

Retirement eligibility is dependent upon age and/or years of service.

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Stock options generally vest on the third anniversary of the grant date and have a contractual term of 10 years from the date of grant.

The weighted-average remaining contractual life and the aggregate intrinsic value (the amount by which the fair value of our stock price exceeds the exercise price of the option) of the stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2021, were as follows:

Outstanding Exercisable Vested and

Expected to Vest

Weighted-average remaining contractual life (in years)

Aggregate intrinsic value (millions)

$ 218 $ 166 $ 218

As of December 31, 2021, there was $ 4 million of total unrecognized compensation cost related to unvested options, which will be recognized ratably over the weighted-average remaining vesting period of 1.3 years.

The fair value of each option is estimated on the date of grant using a Black-Scholes-Merton option-pricing model.

The fair value of options without market conditions is estimated on the date of grant using a Black-Scholes-Merton option-pricing model.

The following weighted-average assumptions were used for options granted in 2022, 2021 and 2020:

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

Certain executives were awarded a grant of stock options on October 31, 2022 that vest, subject to achieving performance and market conditions.

These options vest in tranches on the third and fourth anniversaries from the grant date, subject to continued employment through the applicable anniversary, and have a contractual term of seven years .

The fair value was estimated at the

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

Outstanding Exercisable Vested and

Expected to Vest

Weighted-average remaining contractual life (in years)

Aggregate intrinsic value (millions)

$ 131 $ 114 $ 131

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

For stock options that were exercised during 2022, 2021 and 2020, the intrinsic value, based upon the fair value of our stock price at the date the options were exercised, was $ 56 million, $ 86 million and $ 47 million, respectively;

3 unchanged sentences

We grant RSUs that contain either a) service conditions or b) both service and performance conditions.

RSUs containing only service conditions generally vest 25 percent per year beginning with the first anniversary of the grant date.

RSUs containing only service conditions generally vest ratably over three years , or four years for awards granted prior to 2022, beginning with the first anniversary of the grant date.

RSUs containing both service and performance conditions generally vest on the third anniversary of the grant date, and the number of shares earned depends on the achievement of predetermined Company metrics.

All RSU holders receive non-forfeitable dividends or dividend equivalents.

Beginning in 2019, a relative total shareholder return (r-TSR) modifier was added to the performance-based RSUs, so that our actual shareholder return relative to a competitive peer group is one of the performance conditions that determines the number of shares ultimately granted upon vesting.

RSU holders receive dividend equivalents or dividends.

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

The fair value of RSUs that do not include the r-TSR modifier, including those that contain only service conditions, is measured using our stock price on the grant date.

6 unchanged sentences

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

As of December 31, 2021, there was $ 256 million of total unrecognized compensation cost related to non-vested RSUs, which will be recognized ratably over the weighted-average remaining vesting period of 1.9 years.

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

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

1 unchanged sentence

LIABILITY-BASED AWARDS

In 2018, certain employees were awarded PGs and other incentive awards that can be settled with cash or equity shares at our discretion and final Compensation and Benefits Committee payout approval;

beginning in 2019, we discontinued granting PGs.

These awards earn value based on performance, market and/or service conditions, and vest over a period of three years .

PGs and other incentive awards are generally settled with cash and thus are classified as liabilities;

Other incentive awards can be settled with cash or equity shares at our discretion and final Compensation and Benefits Committee approval.

These awards are generally settled with cash and thus are classified as liabilities;

therefore, the fair value is determined at the date of grant and remeasured quarterly as part of compensation expense over the vesting period.

7 unchanged sentences

Our primary defined benefit pension plans that cover certain employees in the United States and United Kingdom are closed to new entrants and existing participants do not accrue any additional benefits.

Most employees outside the United States and United Kingdom are covered by local retirement plans, some of which are funded, while other employees receive payments at the time of retirement or termination under applicable labor laws or agreements.

Some employees outside the United States and United Kingdom are covered by local retirement plans, some of which are funded, while other employees receive payments at the time of retirement or termination under applicable labor laws or agreements.

We comply with minimum funding requirements in all countries.

We also sponsor unfunded other postretirement benefit plans that provide health care and life insurance to certain retired U.S.

For these plans, the total net benefit was $ 26 million in 2021 and $ 8 million in both 2020 and 2019.

For these plans, the total net benefit was $ 24 million, $ 26 million and $ 8 million in 2022, 2021 and 2020, respectively.

We recognize the funded status of our defined benefit pension plans and other postretirement benefit plans, measured as the difference between the fair value of the plan assets and the projected benefit obligation, on the Consolidated Balance Sheets.

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Certain legal proceedings involving us or our subsidiaries are described below.

A putative merchant class action in the Eastern District of New York, consolidated in 2011 and collectively captioned In re:

American Express Anti-Steering Rules Antitrust Litigation (II) , alleged that provisions in our merchant agreements prohibiting merchants from differentially surcharging our cards or steering a customer to use another network’s card or another type of general-purpose card (“anti-steering” and “non-discrimination” contractual provisions) violate U.S.

antitrust laws.

On January 15, 2020, our motion to compel arbitration of claims brought by merchants who accept American Express and to dismiss claims of merchants who do not was granted.

On November 22, 2021, that decision was affirmed on appeal.

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.

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The remaining claims in plaintiffs’ complaint arise under the antitrust laws of 11 states and the consumer protection laws of six states.

In July 2004, we were named as a defendant in another putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned The Marcus Corporation v.

American Express Co., et al.

, in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws.

The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.

On March 8, 2016, plaintiffs B&R Supermarket, Inc.

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On August 28, 2020, the court granted plaintiffs' motion for class certification.

In July 2004, we were named as a defendant in a putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned The Marcus Corporation v.

American Express Co., et al.

, in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws.

The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.

In 2006, Mawarid Investments Limited filed a request for confidential arbitration under the 1998 London Court of International Arbitration Rules in connection with certain claims arising under a shareholders agreement between Mawarid and TRS relating to a joint venture between the parties, Amex (Middle East) BSC(c) (AEME).

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In September 2021, the tribunal rendered a further partial award regarding the location of transactions through non-physical channels.

The consequences of the tribunal’s 2008 and 2021 partial awards on the allocation of airline acquirer revenues will be determined in the remaining phase of the arbitration.

In May 2022, the tribunal further clarified the 2021 partial award and the discount rate that should apply to transactions through non-physical channels.

A final award is now expected in 2023.

In May 2020, we began responding to a review by the Office of the Comptroller of the Currency (OCC) and the Department of Justice (DOJ) Civil Division regarding historical sales practices relating to sales to small business customers in the United States.

In January 2021, we received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York (EDNY) regarding these sales practices issues, as well as a Civil Investigative Demand from the Consumer Protection Bureau (CFPB) pertaining to its investigation into sales practices related to consumers.

In January 2023, the CFPB notified us that its investigation was completed and that it does not intend to recommend an enforcement action be taken against us at this time.

The OCC, DOJ and EDNY reviews and investigations are ongoing and could result in enforcement actions or other regulatory proceedings against us seeking fines or other remedial actions.

We are cooperating with all inquiries.

We are being challenged in a number of countries regarding our application of value-added taxes (VAT) to certain of our international transactions, which are in various stages of audit, or are being contested in legal actions.

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In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience as a result of an adverse resolution in one or any combination of the disclosed merchant cases could have a material adverse effect on our business and results of operations.

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

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

• Merchant Protection — protects Card Members primarily against non-delivery of purchases, usually in the event of the bankruptcy or liquidation of a merchant.

When this occurs, the Card Member may dispute the transaction for which we will generally credit the Card Member’s account.

If we are unable to collect the amount from the merchant, we may bear the loss for the amount credited to the Card Member.

The largest component of the exposure relates to Card Member transactions associated with travel-related merchants, primarily through business arrangements where we have remitted payment to such merchants for a Card Member travel purchase that has not yet been used or “flown.”

A reasonably possible loss related to these exposures in excess of any recorded accruals cannot be quantified as the Card Member purchases that may include or result in claims are not sufficiently estimable.

To date, we have not experienced significant losses related to these exposures;

however, our historical experience may not be representative given the disruptions in the travel industry as a result of the COVID-19 pandemic.

Total lease expense includes rent expenses, adjustments for rent concessions, rent escalations and leasehold improvement allowances and is recognized on a straight-line basis over the lease term.

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Our market exposures are in large part by-products of the delivery of our products and services.

Interest rate risk primarily arises through the funding of Card Member receivables and fixed-rate loans with variable-rate borrowings, as well as through the risk to net interest margin from changes in the relationship between benchmark rates such as Prime, the London interbank offered rate (LIBOR), the secured overnight financing rate and the overnight indexed swap rate.

Interest rate risk primarily arises through the funding of Card Member receivables and fixed-rate loans with variable-rate borrowings, as well as through the risk to net interest margin from changes in the relationship between benchmark rates such as Prime, the secured overnight financing rate and the overnight indexed swap rate.

Interest rate exposure within our charge card and fixed-rate lending products is managed by varying the proportion of total funding provided by short-term and variable-rate debt and deposits compared to fixed-rate debt and deposits.

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Derivatives not designated as hedging instruments:

Foreign exchange contracts

Foreign exchange contracts and other

171 167 339 85

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

Furthermore, the difference may be caused by changes in 1-month LIBOR, 3-month LIBOR and the overnight indexed swap rate, as spreads between these rates impact the fair value of the interest rate swap without an exact offsetting impact to the fair value of the hedged debt.

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

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

We recognized in Interest expense on Long-term debt net decreases of $ 256 million for both the years ended December 31, 2021 and 2020 and a net increase of $ 102 million for the year ended December 31, 2019.

We recognized in Interest expense on Long-term debt a net decrease of $ 57 million for the year ended December 31, 2022 and net decreases of $ 256 million for both the years ended December 31, 2021 and 2020.

These were primarily related to the net settlements including interest accruals on our interest rate derivatives designated as fair value hedges.

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We had notional amounts of approximately $ 12.5 billion and $ 12.6 billion of foreign currency derivatives designated as net investment hedges as of December 31, 2022 and 2021, respectively.

The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, were gains of $ 176 million and losses of $ 253 million and $ 140 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, were gains of $ 237 million and $ 176 million and losses of $ 253 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income were no t significant for the years ended December 31, 2022, 2021 and 2020, respectively.

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Foreign currency contracts involve the purchase and sale of designated currencies at an agreed upon rate for settlement on a specified date.

We also have certain operating agreements containing payments that may be linked to a market rate or price, primarily foreign currency rates.

The payment components of these agreements may meet the definition of an embedded derivative, in which case the embedded derivative is accounted for separately and is classified as a foreign exchange contract based on its primary risk exposure.

The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures.

We had notional amounts of approximately $ 21.7 billion and $ 19.0 billion as of December 31, 2022 and 2021, respectively.

The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net loss of $ 21 million and net gains of $ 10 million and $ 64 million for the years ended December 31, 2021, 2020 and 2019, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.

Changes in the fair value of an embedded derivative were nil for both the years ended December 31, 2021 and 2020.

Included in the net gain of $ 64 million for the year ended December 31, 2019 is a gain of $ 3 million related to a change in the fair value of an embedded derivative.

The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net gain of $ 8 million, a net loss of $ 21 million and a net gain of $ 10 million for the years ended December 31, 2022, 2021 and 2020, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income.

In 2022, we recorded an embedded derivative with a notional amount of $ 78 million, related to seller earnout shares granted to us upon the completion of a business combination between our equity method investee, Global Business Travel Group, and Apollo Strategic Growth Capital.

This embedded derivative had a fair value of $ 27 million as of December 31, 2022.

The changes in the fair value of the embedded derivative resulted in gains of $ 4 million for the year ended December 31, 2022, which were recognized in Service fees and other revenue in the Consolidated Statements of Income.

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

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Debt securities 4,537 — 4,490 47 2,512 — 2,480 32

Derivatives, gross (a)

Derivatives, gross (a)(b)

521 — 494 27 590 — 590 —

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

(b) Level 3 fair value reflects an embedded derivative.

Management reviews and applies judgment to the valuation of the embedded derivative that is performed by an independent third party using a Monte Carlo simulation that models a range of probable future stock prices based on implied volatility in a risk neutral framework.

Refer to Note 13 for additional information about this embedded derivative.

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

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In instances where price discrepancies are identified between different pricing sources, we evaluate such discrepancies to ensure that the prices used for our valuation represent the fair value of the underlying investment securities.

Refer to Note 4 for additional fair value information.

Refer to Note 4 for additional information on investment securities.

Within Level 3 of the fair value hierarchy are our holdings of debt securities issued by Community Development Financial Institutions.

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Derivative Financial Instruments

The fair value of our derivative financial instruments is estimated internally by using third-party pricing models, where the inputs to those models are readily observable from active markets.

The fair value of our Level 2 derivative financial instruments is estimated by using third-party pricing models, where the inputs to those models are readily observable from active markets.

The pricing models used are consistently applied and reflect the contractual terms of the derivatives as described below.

We reaffirm our understanding of the valuation techniques at least annually and validate the valuation output on a quarterly basis.

Our derivative instruments are classified within Level 2 of the fair value hierarchy.

The fair value of our interest rate swaps is determined based on a discounted cash flow method using the following significant inputs:

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the contractual terms of the forward contracts such as the notional amount, maturity dates and contract rate, as well as relevant foreign currency forward curves, and discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated.

Our Level 3 derivative financial instrument represents an embedded derivative in the form of seller earnout shares granted to us following the completion of a business combination between our equity method investee, Global Business Travel Group, and Apollo Strategic Growth Capital.

The fair valuation is performed by an independent third party using a Monte Carlo Simulation technique that models a range of probable future stock prices using the following significant inputs:

term of the earnout, initial stock price, annual expected volatility of the common stock over the expected term, annual risk-neutral rate of return over the contractual term and dividend yield, which is further reviewed by management.

Credit valuation adjustments are necessary when the market parameters, such as a benchmark curve, used to value derivatives are not indicative of our credit quality or that of our counterparties.

We consider the counterparty credit risk by applying an observable forecasted default rate to the current exposure.

Refer to Note 13 for additional fair value information.

Refer to Note 13 for additional information on derivative financial instruments.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE

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Card Member and Other loans, less reserves (c)

110 113 — — 113

Financial Liabilities:

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

(b) Balances include Card Member receivables (including fair values of Card Member receivables of $ 5.2 billion and $ 4.2 billion held by a consolidated VIE as of December 31, 2021 and 2020, respectively), other receivables and other miscellaneous assets.

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

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

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

During the years ended December 31, 2021 and 2020, we did no t have any material assets that were measured at fair value due to impairment.

We estimate the Level 3 fair value of equity investments without readily determinable fair values based on price changes as of the date of new similar equity financing transactions completed by the companies in our portfolio.

The carrying value of equity investments without readily determinable fair values totaled $ 1.3 billion and $ 530 million as of December 31, 2021 and 2020, respectively.

Impairments on such investments are recorded to account for the difference between the estimated fair value and carrying value of an investment based on a qualitative assessment of impairment indicators such as business performance, general market conditions and the economic and regulatory environment.

When an impairment triggering event occurs, the fair value measurement is generally derived by taking into account all available information, such as share prices of publicly traded peer companies, internal valuations performed by our investees, and other third-party fair value data.

The fair value of impaired investments represents a Level 3 fair value measurement.

The carrying value of equity investments without readily determinable fair values totaled $ 1.0 billion and $ 1.3 billion as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, approximately $ 0.6 billion represented a nonrecurring Level 3 fair value measurement for certain of our equity investments.

There were no nonrecurring Level 3 fair value measurements related to our equity investments without readily determinable fair values as of December 31, 2021.

These amounts are included within Other assets on the Consolidated Balance Sheets.

We recorded net unrealized gains of $ 727 million, $ 93 million and $ 80 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Unrealized losses including any impairments were not significant for each of the years ended December 31, 2021, 2020 and 2019.

Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative net unrealized gains for equity investments without readily determinable fair values totaled $ 1.1 billion and $ 347 million as of December 31, 2021 and 2020, respectively.

We recorded unrealized gains of $ 94 million, $ 729 million and $ 113 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Unrealized losses representing impairments were $ 388 million, $ 2 million and $ 20 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $ 1.2 billion and $ 1.1 billion as of December 31, 2022 and 2021, respectively, and cumulative unrealized losses representing impairments were $ 394 million and $ 10 million as of December 31, 2022 and 2021, respectively.

In addition, we also have certain equity investments measured at fair value using the net asset value practical expedient.

Such investments were immaterial as of both December 31, 2022 and 2021.

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 both December 31, 2021 and 2020, all of which were primarily related to our real estate and business dispositions.

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

To date, we have not experienced any significant losses related to guarantees or indemnifications.

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As of December 31, 2022, we had approximately 36 million common shares remaining under the Board share repurchase authorization.

Common shares are generally retired by us upon repurchase (except for 2.5 million shares held as treasury shares as of both December 31, 2021 and 2020 and 2.6 million shares held as treasury shares as of December 31, 2019);

Common shares are generally retired by us upon repurchase (except for 2.4 million shares held as treasury shares as of December 31, 2022 and 2.5 million shares held as treasury shares as of both December 31, 2021 and 2020);

retired common shares and treasury shares are excluded from the shares outstanding in the table above.

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PREFERRED SHARES

The Board of Directors is authorized to permit us to issue up to 20 million preferred shares at a par value of $1.66 2/3 without further shareholder approval.

The Board of Directors may authorize the issuance of up to 20 million preferred shares at a par value of $1.66 2/3 per share without further shareholder approval.

We have the following perpetual Fixed Rate Reset Noncumulative Preferred Share series issued and outstanding as of December 31, 2022:

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

In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the preferred shares then outstanding takes precedence over our common shares for the payment of dividends and the distribution of assets out of funds legally available for distribution to shareholders.

In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the preferred shares then outstanding take precedence over our common shares for the payment of dividends and the distribution of assets out of funds legally available for distribution to shareholders.

We may redeem the outstanding series of preferred shares at $ 1 million per preferred share (equivalent to $ 1,000 per depositary share) plus any declared but unpaid dividends in whole or in part, from time to time, on any dividend payment date on or after the earliest redemption date, or in whole, but not in part, within 90 days of certain bank regulatory changes.

We paid $ 850 million to redeem in full the outstanding 4.900 % Fixed Rate/Floating Rate Noncumulative Preferred Shares, Series C, on September 15, 2021 and paid $ 750 million to redeem in full the outstanding 5.200 % Fixed Rate/Floating Rate Noncumulative Preferred Shares, Series B on November 15, 2021.

The difference between the redemption value and carrying value of the redeemed Series C and Series B preferred shares resulted in a $ 16 million reduction to net income available to common shareholders.

In 2021, we paid $ 1.6 billion to redeem in full the previously outstanding Series B and Series C preferred shares.

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

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

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Translation Adjustment

Gains (Losses) Net Unrealized Pension

Gains (Losses), Net of Hedges (a)

Net Unrealized Pension

and Other Postretirement Benefit

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Balances as of December 31, 2019 $ 33 $ ( 2,189 ) $ ( 581 ) $ ( 2,737 )

Net unrealized gains 41 — — 41

Net translation on investments in foreign operations — 84 — 84

Net hedges of investments in foreign operations — ( 140 ) — ( 140 )

Pension and other postretirement benefits — — ( 125 ) ( 125 )

Net change in accumulated other comprehensive income (loss) 41 ( 56 ) ( 125 ) ( 140 )

Net change 32 ( 40 ) ( 150 ) ( 158 )

Balances as of December 31, 2020 65 ( 2,229 ) ( 731 ) ( 2,895 )

Net unrealized gains 32 — — 32

Net translation on investments in foreign operations

Net hedges of investments in foreign operations — ( 253 ) — ( 253 )

Pension and other postretirement benefits — ( 150 ) ( 150 )

Net change in accumulated other comprehensive income (loss) 32 ( 40 ) ( 150 ) ( 158 )

Net change ( 42 ) ( 163 ) 155 ( 50 )

Balances as of December 31, 2021 23 ( 2,392 ) ( 576 ) ( 2,945 )

Net unrealized losses ( 42 ) — — ( 42 )

Net translation on investments in foreign operations — ( 339 ) — ( 339 )

Net hedges of investments in foreign operations — 176 — 176

Pension and other postretirement benefits — — 155 155

Net change in accumulated other comprehensive income (loss) ( 42 ) ( 163 ) 155 ( 50 )

Net change ( 87 ) ( 230 ) 52 ( 265 )

Balances as of December 31, 2022 $ ( 64 ) $ ( 2,622 ) $ ( 524 ) $ ( 3,210 )

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

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

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Net unrealized (losses) gains on debt securities $ ( 27 ) $ ( 13 ) $ 9

Net translation on investments in foreign operations

Net hedges of investments in foreign operations 52 ( 79 ) ( 43 )

Foreign currency translation adjustment, net of hedges 75 51 ( 62 )

Pension and other postretirement benefits 27 52 ( 28 )

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Reclassifications out of AOCI into the Consolidated Statements of Income, net of taxes, were no t significant for the years ended December 31, 2022, 2021 and 2020.

OTHER FEES AND COMMISSIONS AND OTHER EXPENSES

The following is a detail of Other fees and commissions for the years ended December 31:

SERVICE FEES AND OTHER REVENUE AND OTHER EXPENSES

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

(Millions) 2022 2021 2020

Fees charged to Card Members:

Service fees $ 1,444 $ 1,385 $ 1,280

Foreign currency-related revenue 1,202 624 517

Delinquency fees 809 637 772

Foreign currency conversion fee revenue 523 433 982

Other customer fees:

Loyalty coalition-related fees 508 435 456

Travel commissions and fees 507 244 102

Service fees and other (a)

Total Other fees and commissions $ 2,392 $ 2,163 $ 3,297

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

Other fees and revenues

Total Service fees and other revenue $ 4,521 $ 3,316 $ 2,702

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

(Millions) 2022 2021 2020

Data processing and equipment (a)

$ 2,431 $ 2,334 $ 2,168

Data processing and equipment $ 2,606 $ 2,431 $ 2,334

Professional services 2,074 1,958 1,789

Net unrealized and realized gains on Amex Ventures equity investments ( 767 ) ( 152 ) ( 77 )

Net unrealized and realized losses (gains) on Amex Ventures investments 302 ( 767 ) ( 152 )

1,499 1,195 1,354

Total Other expenses $ 6,481 $ 4,817 $ 5,325

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

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

RESTRUCTURING

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We had $ 135 million, $ 67 million and $ 197 million accrued in total restructuring reserves as of December 31, 2022, 2021 and 2020, respectively.

New charges, including net revisions to existing restructuring reserves, which primarily relate to the redeployment of displaced colleagues to other positions, were $( 10 ) million for the year ended December 31, 2021 and $ 125 million for each of the years ended December 31, 2020 and 2019, respectively.

Cumulatively, we recognized $ 223 million relating to the restructuring programs that were in progress during 2021 and initiated at various dates between 2019 and 2020, the majority of which has been reflected within Corporate & Other.

Restructuring expense , which primarily relates to new severance charges, net of revisions to existing reserves, was $ 142 million, $( 10 ) million and $ 125 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The cumulative expense relating to the restructuring programs that were in progress during 2022 and initiated at various dates between 2019 and 2022 was $ 270 million, the majority of which has been reflected within Corporate & Other.

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

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( 0.1 ) 1.1 2.4

Tax settlements

Tax settlements and lapse of statute of limitations

( 2.1 ) ( 0.3 ) ( 1.6 )

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

Refer to Note 1 for further information.

We record a deferred income tax (benefit) provision when there are differences between assets and liabilities measured for financial reporting and for income tax return purposes.

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federal and non-U.S.

net operating loss (NOL) carryforwards of $ 84 million and $ 910 million, respectively, and foreign tax credit (FTC) carryforwards of $ 110 million.

net operating loss (NOL) carryforwards of $ 27 million and $ 1.0 billion, respectively, and foreign tax credit (FTC) carryforwards of $ 121 million.

If not utilized, certain U.S.

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The valuation allowances for both periods presented above are associated with certain non-U.S.

deferred tax assets and FTC carryforwards.

deferred tax assets, state NOLs, and FTC carryforwards.

Accumulated earnings of certain non-U.S.

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For the years ended December 31, 2022, 2021 and 2020, we recognized approximately $ 10 million, $ 40 million and $ 260 million, respectively, in expenses for interest and penalties.

We had approximately $ 380 million and $ 350 million accrued for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

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

EARNINGS PER COMMON SHARE (EPS)

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We are supervised and regulated by the Board of Governors of the Federal Reserve System (the Federal Reserve) and are subject to the Federal Reserve’s requirements for risk-based capital and leverage ratios.

bank subsidiary, American Express National Bank (AENB), is subject to supervision and regulation, including regulatory capital and leverage requirements, by the Office of the Comptroller of the Currency (OCC).

bank subsidiary, American Express National Bank (AENB), is subject to supervision and regulation, including regulatory capital and leverage requirements, by the OCC.

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

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Moreover, bank holding companies are required by statute to be a source of strength to their insured depository institution subsidiaries and should not maintain dividend levels that undermine their ability to do so.

On an annual basis, we are required to develop and maintain a capital plan, which includes planned dividends over a two-year horizon.

On an annual basis, we are required to develop and maintain a capital plan, which includes planned dividends.

We may be subject to limitations and restrictions on our dividends, if, among other things, (i) our regulatory capital ratios do not satisfy applicable minimum requirements and buffers or (ii) we are required to resubmit our capital plan.

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If AENB’s risk-based capital ratios do not satisfy minimum regulatory requirements and applicable buffers, it will face graduated constraints on dividends and other capital distributions.

As of December 31, 2021, AENB's retained earnings available for the payment of dividends was $ 3.6 billion.

In determining the dividends to pay its parent, AENB must also consider the effects on applicable risk-based capital and leverage ratio requirements, as well as policy statements of the federal regulatory agencies.

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(Billions) 2022 2021

Individuals (a)

Financial services (b)

Government and agencies (c)

Institutions (d)

United States 129 108

Outside the United States (b)

Institutions:

Financial services (c)

Government and agencies (e)

Total on-balance sheet $ 213 $ 172

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

(b) Represents banks, broker-dealers, insurance companies and savings and loan associations.

Government and its agencies, states and municipalities and government-sponsored entities.

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

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

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

As of December 31, 2021 and 2020, our most significant concentration of credit risk was with individuals, including Card Member loans and receivables.

(e) Represent debt obligations of the U.S.

Government and its agencies, states and municipalities and government-sponsored entities.

Risk management for these balances is governed by our Asset and Liability Management Committee.

As of December 31, 2022 and 2021, our most significant concentration of credit risk was with individuals.

These amounts are generally advanced on an unsecured basis.

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We also consider credit performance by customer tenure, industry and geographic location in managing credit exposure.

The following table details our Card Member loans and receivables exposure (including unused lines-of-credit available to Card Members as part of established lending product agreements) in the United States and outside the United States as of December 31:

(Billions) 2021 2020

On-balance sheet:

On-balance sheet 142 117

Unused lines-of-credit:

Total unused lines-of-credit $ 327 $ 314

(a) Total unused credit available to Card Members does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn.

Our charge card products generally have no pre-set spending limit, and therefore are not reflected in unused credit available to Card Members.

As of December 31, 2022 and 2021, we had approximately $ 350 billion and $ 327 billion, respectively of unused credit, primarily available to customers as part of established lending product agreements, of which approximately 80 percent was related to customers within the United States in both periods.

Total unused credit does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn.

Our charge card products generally have no pre-set spending limit and therefore are not reflected in unused credit.

REPORTABLE OPERATING SEGMENTS AND GEOGRAPHIC OPERATIONS

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

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

• Global Consumer Services Group (GCSG) primarily issues a wide range of proprietary consumer cards globally.

GCSG also provides services to consumers, including travel and lifestyle services and non-card financing products, and manages certain international joint ventures, our partnership agreements in China and our loyalty coalition businesses operated in certain countries.

• Global Commercial Services (GCS) primarily issues a wide range of proprietary corporate and small business cards globally.

GCS also provides payment, expense management and financing solutions to businesses.

• Global Merchant and Network Services (GMNS) operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network.

GMNS manages our partnership relationships with third-party card issuers, merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.

Effective for the first quarter of 2022, we updated the methodology used to allocate certain revenues;

prior period amounts have been recast to conform to current period presentation.

Effective for the third quarter of 2022, we realigned our reportable segments to reflect organizational changes announced during the second quarter of 2022.

Prior periods have been recast to conform to the new reportable operating segments.

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

Consumer Services (USCS), which issues a wide range of proprietary consumer cards and provides services to U.S.

consumers, including travel and lifestyle services as well as banking and non-card financing products.

• Commercial Services (CS), which issues a wide range of proprietary corporate and small business cards and provides services to U.S.

businesses, including payment and expense management, banking and non-card financing products.

CS also issues proprietary corporate cards and provides services to select global corporate clients.

• International Card Services (ICS), which issues a wide range of proprietary consumer, small business and corporate cards outside the United States.

ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.

• Global Merchant and Network Services (GMNS), which operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network.

GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.

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

As a result of organizational changes announced during the second quarter of 2021, our loyalty coalition businesses results, which were previously reported within the GMNS segment, are now reported within the GCSG segment.

Prior period segment results have been revised to conform with current period presentation.

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

(Millions, except where indicated) GCSG GCS GMNS Corporate & Other (a)

(Millions, except where indicated) USCS CS ICS GMNS Corporate & Other (a)

Total non-interest revenues $ 16,440 $ 12,196 $ 8,262 $ 6,123 $ ( 54 ) $ 42,967

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

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

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

Total Revenues Net of Interest Expense

We allocate discount revenue and certain other revenues among segments using a transfer pricing methodology.

Within the GCSG and GCS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members;

within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue.

Net card fees and other fees and commissions are directly attributable to the segment in which they are reported.

Within the USCS, CS and ICS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members;

within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue being allocated.

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

Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported.

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

Marketing and business development expense is included in each segment based on the actual expenses incurred.

Card Member rewards and Card Member services expenses are included in each segment based on the actual expenses incurred.

Business development and Marketing expenses are included in each segment based on the actual expenses incurred.

Global brand advertising is primarily allocated to the segments based on the relative levels of revenue.

Rewards and Card Member services expenses are included in each segment based on the actual expenses incurred.

Salaries and employee benefits and other operating expenses reflect both costs incurred directly within each segment, as well as allocated expenses.

The allocated expenses include service costs allocated based on activities directly attributable to the segment, and overhead expenses allocated based on the relative levels of revenue and Card Member loans and receivables.

Salaries and employee benefits and other expenses reflect both costs incurred directly within each segment, as well as allocated expenses.

The allocated expenses include service costs, which primarily reflect salaries and benefits associated with our technology and customer servicing groups, and overhead expenses.

Service costs are allocated based on activities directly attributable to the segment, and overhead expenses are allocated based on the relative levels of revenue and Card Member loans and receivables.

GEOGRAPHIC OPERATIONS

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

Effective for the first quarter of 2022, we changed the way in which we allocate certain overhead expenses by geographic region.

As a result, prior period pretax income (loss) from continuing operations by geography has been recast to conform to current period presentation;

there was no impact at a consolidated level.

(Millions) United States EMEA (a)

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PARENT COMPANY

PARENT COMPANY – CONDENSED STATEMENTS OF INCOME

PARENT COMPANY – CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Years Ended December 31 (Millions)

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Net income $ 7,514 $ 8,060 $ 3,135

Net unrealized pension and other postretirement benefits, net of tax 10 151 ( 91 )

Other comprehensive (loss) income, net ( 275 ) ( 201 ) ( 67 )

Comprehensive income $ 7,249 $ 8,010 $ 2,977

PARENT COMPANY – CONDENSED BALANCE SHEETS

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Cash Flows from Investing Activities

Maturities and redemptions of investment securities — — 1

(Increase) decrease in loans to subsidiaries and affiliates ( 4,850 ) ( 176 ) 11,434

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Dividends paid ( 1,565 ) ( 1,448 ) ( 1,474 )

Net cash used in financing activities ( 13,688 ) ( 7,748 ) ( 1,693 )

Net (decrease) increase in cash and cash equivalents ( 5,627 ) 6,538 1,143

Net cash provided by (used in) financing activities 2,380 ( 13,688 ) ( 7,748 )

Net increase (decrease) in cash and cash equivalents 2,847 ( 5,627 ) 6,538

Cash and cash equivalents at beginning of year 5,341 10,968 4,430

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data