AMERICAN EXPRESS COMPANY

Red flags

• Card Member loans were $151.8 billion gross at year-end, with $5.9 billion of reserves; other loans added $10.6 billion net and carried $323 million of reserves.
• Maximum on-balance-sheet credit exposure increased to $280 billion from $255 billion, including $211 billion to individuals; these exposures are generally unsecured.
• Customers had approximately $513 billion of unused credit available, 80% tied to U.S. customers, creating potential draw and loss exposure during a downturn even though management does not expect all of it to be drawn.
• Long-term debt increased to $56.4 billion from $49.7 billion, while short-term borrowings carried a 4.41% year-end rate.
• Approximately 3.9 million direct-deposit accounts and $152.5 billion of total deposits make deposit retention and funding costs important balance-sheet risks.