UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~June 30, 2017~~March 31, 2018

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Transition Period from ____ to ____

Commission file number 1-7657

AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)

New York		13-4922250
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Vesey Street, New York, New York		10285
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (212) 640-2000

None

Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 	Accelerated filer 
Non-accelerated filer (Do not check if a smaller reporting company)	Smaller reporting company  Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class			Outstanding at ~~July~~April 18, ~~2017~~2018
Common Shares (par value $0.20 per share)			~~883,979,644~~860,362,205 Shares

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AMERICAN EXPRESS COMPANY

FORM 10-Q

INDEX


Part I.	Financial Information		Page No.
	Item 1.	Financial Statements
		Consolidated Statements of Income – Three Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	1
		Consolidated Statements of Comprehensive Income – ~~Six~~Three Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	2
		Consolidated ~~Statements of Comprehensive Income~~Balance Sheets – ~~Three~~March 31, 2018 and ~~Six Months Ended June 30,~~December 31, 2017 ~~and 2016~~	3
		~~Consolidated Balance Sheets – June 30, 2017 and December 31, 2016~~	4
		Consolidated Statements of Cash Flows – ~~Six~~Three Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	54
		Notes to Consolidated Financial Statements	65
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2830
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5957
	Item 4.	Controls and Procedures	5957
Part II.	Other Information
	Item 1.	Legal Proceedings	6260
	Item 1A.	Risk Factors	6260
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6361
	Item 5.	Other Information	6462
	Item 6.	Exhibits	6462
Signatures				6563
Exhibit Index				E-1

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERICAN EXPRESS COMPANY

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(Unaudited)~~

Three Months Ended June 30 (Millions, except per share amounts)
2017 2016
Revenues
Non-interest revenues
Discount revenue $ 4,815 $ 4,824
Net card fees 771 715
Other fees and commissions 752 702
Other 439 545
Total non-interest revenues 6,777 6,786
Interest income
Interest on loans 1,947 1,818
Interest and dividends on investment securities 23 34
Deposits with banks and other 82 33
Total interest income 2,052 1,885
Interest expense
Deposits 176 150
Long-term debt and other 346 286
Total interest expense 522 436
Net interest income 1,530 1,449
Total revenues net of interest expense 8,307 8,235
Provisions for losses
Charge card 163 153
Card Member loans 404 285
Other 17 25
Total provisions for losses 584 463
Total revenues net of interest expense after provisions for losses 7,723 7,772
Expenses
Marketing and promotion 830 788
Card Member rewards 1,926 1,766
Card Member services and other 349 281
Salaries and employee benefits 1,293 1,451
Other, net 1,376 470
Total expenses 5,774 4,756
Pretax income 1,949 3,016
Income tax provision 609 1,001
Net income $ 1,340 $ 2,015
Earnings per Common Share (Note 15):^(a)

Basic $ 1.47 $ 2.11
Diluted $ 1.47 $ 2.10
Average common shares outstanding for earnings per common share:
Basic 890 938
Diluted 893 941
Cash dividends declared per common share $ 0.32 $ 0.29

~~(a)~~

Represents net income less (i) earnings allocated to participating share awards of $11 million and $17 million for the three months ended June 30, 2017 and 2016, respectively, and (ii) dividends on preferred shares of $19 million for both the three months ended June 30, 2017 and 2016.

~~Table of Contents~~

~~AMERICAN EXPRESS COMPANY~~

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Six Months Ended June 30 (Millions, except per share amounts)
2017 2016
Revenues
Non-interest revenues
Discount revenue $ 9,334 $ 9,467
Net card fees 1,519 1,414
Other fees and commissions 1,465 1,382
Other 848 1,031
Total non-interest revenues 13,166 13,294
Interest income
Interest on loans 3,807 3,756
Interest and dividends on investment securities 46 70
Deposits with banks and other 142 64
Total interest income 3,995 3,890
Interest expense
Deposits 325 300
Long-term debt and other 640 561
Total interest expense 965 861
Net interest income 3,030 3,029
Total revenues net of interest expense 16,196 16,323
Provisions for losses
Charge card 376 322
Card Member loans 741 512
Other 40 63
Total provisions for losses 1,157 897
Total revenues net of interest expense after provisions for losses 15,039 15,426
Expenses
Marketing and promotion 1,530 1,515
Card Member rewards 3,733 3,469
Card Member services and other 670 563
Salaries and employee benefits 2,557 2,789
Other, net 2,783 1,890
Total expenses 11,273 10,226
Pretax income 3,766 5,200
Income tax provision 1,189 1,759
Net income $ 2,577 $ 3,441
Earnings per Common Share (Note 15):^(a)

Basic $ 2.81 $ 3.55
Diluted $ 2.80 $ 3.54
Average common shares outstanding for earnings per common share:
Basic 895 949
Diluted 898 952
Cash dividends declared per common share $ 0.64 $ 0.58

Three Months Ended March 31 (Millions, except per share amounts)	2018		2017
Revenues
Non-interest revenues
Discount revenue	$	5,889	$	5,387
Net card fees		830		748
Other fees and commissions		781		711
Other		377		361
Total non-interest revenues		7,877		7,207
Interest income
Interest on loans		2,326		1,862
Interest and dividends on investment securities		21		23
Deposits with banks and other		115		60
Total interest income		2,462		1,945
Interest expense
Deposits		270		149
Long-term debt and other		351		294
Total interest expense		621		443
Net interest income		1,841		1,502
Total revenues net of interest expense		9,718		8,709
Provisions for losses
Charge card		242		213
Card Member loans		499		337
Other		34		23
Total provisions for losses		775		573
Total revenues net of interest expense after provisions for losses		8,943		8,136
Expenses
Marketing and business development		1,345		1,285
Card Member rewards		2,347		2,061
Card Member services		409		317
Salaries and employee benefits		1,326		1,264
Other, net		1,434		1,370
Total expenses		6,861		6,297
Pretax income		2,082		1,839
Income tax provision		448		588
Net income	$	1,634	$	1,251
Earnings per Common Share (Note 15):^(a)
Basic	$	1.86	$	1.36
Diluted	$	1.86	$	1.35
Average common shares outstanding for earnings per common share:
Basic		859		899
Diluted		861		903
Cash dividends declared per common share	$	0.35	$	0.32

(a)

Represents net income less (i) earnings allocated to participating share awards of ~~$21~~$13 million and ~~$28~~$10 million for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, and (ii) dividends on preferred shares of ~~$40~~$21 million for both the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016.~~2017.

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(Millions)	2017		2016			2017		2016
Three Months Ended March 31 (Millions)											2018			2017
Net income	$	1,340	$	2,015		$	2,577	$	3,441		$	1,634		$	1,251
Other comprehensive income (loss):
Net unrealized securities gains, net of tax		―		5			6		7
Net unrealized debt securities (losses) gains, net of tax												(11	)		6
Foreign currency translation adjustments, net of tax		33		(130	)		349		(126	)		30			316
Net unrealized pension and other postretirement benefits, net of tax		9		6			1		32			28			(8	)
Other comprehensive income (loss)		42		(119	)		356		(87	)
Other comprehensive income												47			314
Comprehensive income	$	1,382	$	1,896		$	2,933	$	3,354		$	1,681		$	1,565

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30,			December 31,			March 31,			December 31,
(Millions, except share data)	2017			2016			2018			2017
Assets
Cash and cash equivalents
Cash and due from banks	$	2,709		$	3,278		$	3,627		$	5,148
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2017, $102; 2016, $115)		26,363			20,779
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2018, $49; 2017, $48)								27,315			27,709
Short-term investment securities		1,370			1,151			150			70
Total cash and cash equivalents		30,442			25,208			31,092			32,927
Accounts receivable
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2017, $7,949; 2016, $8,874), less reserves: 2017, $475; 2016, $467		48,930			46,841
Other receivables, less reserves: 2017, $32; 2016, $45		2,832			3,232
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2018, $7,807; 2017, $8,919), less reserves: 2018, $565; 2017, $521								53,676			53,526
Other receivables, less reserves: 2018, $31; 2017, $31								3,194			3,209
Loans
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2017, $24,521; 2016, $26,129), less reserves: 2017, $1,320; 2016, $1,223		64,651			64,042
Other loans, less reserves: 2017, $54; 2016, $42		1,855			1,419
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2018, $24,058; 2017, $25,695), less reserves: 2018, $1,786; 2017, $1,706								71,034			71,693
Other loans, less reserves: 2018, $91; 2017, $80								2,872			2,607
Investment securities		3,360			3,157			3,388			3,159
Premises and equipment, less accumulated depreciation and amortization: 2017, $5,596; 2016, $5,145		4,445			4,433
Other assets (includes restricted cash of consolidated variable interest entities: 2017, $55; 2016, $38)		10,482			10,561
Premises and equipment, less accumulated depreciation and amortization: 2018, $5,732; 2017, $5,455								4,271			4,329
Other assets (includes restricted cash of consolidated variable interest entities: 2018, $147; 2017, $62)								10,429			9,746
Total assets	$	166,997		$	158,893		$	179,956		$	181,196
Liabilities and Shareholders’ Equity
Liabilities
Customer deposits	$	57,726		$	53,042		$	66,665		$	64,452
Travelers Cheques and other prepaid products		2,503			2,812			2,435			2,555
Accounts payable		12,106			11,190			14,038			14,657
Short-term borrowings		3,426			5,581			1,852			3,278
Long-term debt (includes debt issued by consolidated variable interest entities: 2017, $16,002; 2016, $15,113)		51,945			46,990
Long-term debt (includes debt issued by consolidated variable interest entities: 2018, $15,800; 2017, $18,560)								52,461			55,804
Other liabilities		18,116			18,777			22,892			22,189
Total liabilities		145,822			138,392		$	160,343		$	162,935
Contingencies (Note 8)
Shareholders’ Equity
Preferred shares, $1.66^2/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of June 30, 2017 and December 31, 2016		―			―
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 885 million shares as of June 30, 2017 and 904 million shares as of December 31, 2016		177			181
Preferred shares, $1.66^2/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of March 31, 2018 and December 31, 2017								―			―
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 860 million shares as of March 31, 2018 and 859 million shares as of December 31, 2017								172			172
Additional paid-in capital		12,456			12,733			12,225			12,210
Retained earnings		10,970			10,371			9,597			8,307
Accumulated other comprehensive loss
Net unrealized securities gains, net of tax of: 2017, $8; 2016, $5		13			7
Foreign currency translation adjustments, net of tax of: 2017, $(362); 2016, $24		(1,913	)		(2,262	)
Net unrealized pension and other postretirement benefits, net of tax of: 2017, $(194); 2016, $(186)		(528	)		(529	)
Net unrealized debt securities losses, net of tax of: 2018, $(2); 2017, $1								(11	)		―
Foreign currency translation adjustments, net of tax of: 2018, $(415); 2017,$(363)								(1,931	)		(1,961	)
Net unrealized pension and other postretirement benefits, net of tax of: 2018, $(176); 2017, $(179)								(439	)		(467	)
Total accumulated other comprehensive loss		(2,428	)		(2,784	)		(2,381	)		(2,428	)
Total shareholders’ equity		21,175			20,501			19,613			18,261
Total liabilities and shareholders’ equity	$	166,997		$	158,893		$	179,956		$	181,196

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30 (Millions)
2017 2016
Cash Flows from Operating Activities
Net income $ 2,577 $ 3,441
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for losses 1,157 897
Depreciation and amortization 615 536
Deferred taxes and other 2 (852 )
Stock-based compensation 152 133
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other receivables 832 293
Other assets 181 (107 )
Accounts payable and other liabilities (902 ) (697 )
Travelers Cheques and other prepaid products (330 ) (444 )
Net cash provided by operating activities 4,284 3,200
Cash Flows from Investing Activities
Sales of available-for-sale investment securities 1 45
Maturities and redemptions of available-for-sale investment securities 1,502 567
Purchases of investments (1,768 ) (791 )
Net (increase) decrease in Card Member receivables and loans, including held for sale^(a)
(3,169 ) 13,002
Purchase of premises and equipment, net of sales: 2017, $1; 2016, $2 (538 ) (649 )
Acquisitions/dispositions, net of cash acquired (174 ) (162 )
Net (increase) decrease in restricted cash (12 ) 126
Net cash (used in) provided by investing activities (4,158 ) 12,138
Cash Flows from Financing Activities
Net increase (decrease) in customer deposits 4,666 (594 )
Net decrease in short-term borrowings (2,124 ) (2,520 )
Issuance of long-term debt 17,124 3,778
Principal payments on long-term debt (12,349 ) (1,558 )
Issuance of American Express common shares 44 75
Repurchase of American Express common shares (1,767 ) (2,914 )
Dividends paid (620 ) (601 )
Net cash provided by (used in) financing activities 4,974 (4,334 )
Effect of foreign currency exchange rates on cash and cash equivalents 134 1
Net increase in cash and cash equivalents 5,234 11,005
Cash and cash equivalents at beginning of period 25,208 22,762
Cash and cash equivalents at end of period $ 30,442 $ 33,767

~~(a)~~

~~Refer to Note 2 for additional information.~~

Three Months Ended March 31 (Millions)	2018			2017
Cash Flows from Operating Activities
Net income	$	1,634		$	1,251
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for losses		775			573
Depreciation and amortization		348			296
Deferred taxes and other		(254	)		18
Stock-based compensation		84			89
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other receivables		122			786
Other assets		(85	)		351
Accounts payable and other liabilities		(431	)		(2,072	)
Travelers Cheques and other prepaid products		(130	)		(132	)
Net cash provided by operating activities		2,063			1,160
Cash Flows from Investing Activities
Maturities and redemptions of investment securities		886			860
Purchases of investments		(1,215	)		(1,294	)
Net decrease in Card Member receivables and loans^(a)		348			1,450
Purchase of premises and equipment, net of sales: 2018, nil; 2017, nil		(237	)		(277	)
Acquisitions/dispositions, net of cash acquired		(475	)		(28	)
Net cash (used in) provided by investing activities		(693	)		711
Cash Flows from Financing Activities
Net increase in customer deposits		2,206			735
Net decrease in short-term borrowings		(1,489	)		(1,941	)
Proceeds from long-term borrowings		3,984			8,420
Payments of long-term borrowings		(7,203	)		(3,801	)
Issuance of American Express common shares		11			31
Repurchase of American Express common shares		(134	)		(926	)
Dividends paid		(324	)		(313	)
Net cash (used in) provided by financing activities		(2,949	)		2,205
Effect of foreign currency exchange rates on cash and cash equivalents		(178	)		107
Net increase in cash, cash equivalents and restricted cash		(1,757	)		4,183
Cash, cash equivalents and restricted cash at beginning of period		33,264			25,494
Cash, cash equivalents and restricted cash at end of period	$	31,507		$	29,677

(a) Refer to Note 2 for additional information.

Supplementary cash flow information

	Mar-18		Dec-17		Mar-17		Dec-16
Cash and cash equivalents per Consolidated Balance Sheets	$	31,092	$	32,927	$	29,366	$	25,208
Restricted cash included in Other assets per Consolidated Balance Sheets		415		337		311		286
Total cash, cash equivalents and restricted cash	$	31,507	$	33,264	$	29,677	$	25,494

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The Company

American Express Company ~~(the Company)~~ is a global services company that provides customers with access to products, insights and experiences that enrich lives and build business success. ~~The Company’s~~Our principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses around the world. Business travel-related services are offered through the non-consolidated joint venture, American Express Global Business Travel (the GBT JV). ~~The Company’s~~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, direct mail, ~~online applications,~~ in-house ~~and~~sales teams, third-party ~~sales forces~~vendors and direct response advertising.

The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the Annual Report). If not materially different, certain footnote disclosures included therein have been omitted from this Quarterly Report on Form 10-Q.

The interim consolidated financial information in this report has not been audited. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim period consolidated financial information, have been made. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates reflect the best judgment of management, but actual results could differ.

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, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall transaction volume, the timing and method of payment to the merchant, the method of submission of transactions and, in certain instances, the geographic scope of the card acceptance agreement signed with 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 outline 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. 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, through the processing of Card Member transactions and the availability of our payment network.

In cases where we are the card issuer and 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. In contrast with networks such as those operated by Visa Inc. and Mastercard Incorporated, there are no collectively set interchange rates or network rates on the American Express network, and no fees are agreed or due between the GNS partners on the network.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Net Card Fees

Net card fees represent revenue earned from annual card membership fees, which vary based on the type of card and the number of cards for each account. These fees, net of acquisition costs and a reserve for projected refunds for Card Member cancellations, are deferred and recognized on a straight-line basis over the twelve-month card membership period as Net Card Fees in the Consolidated Statements of Income. The unamortized net card fee balance is reported in Other Liabilities on the Consolidated Balance Sheets.

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. Refer to Note 13 for additional information.

Contra-revenue

Payments made through contractual arrangements with our merchants, GNS partners, and other customers are classified as expense where we receive goods, services or other benefits, for which the fair value is determinable and measurable. If these conditions are not met, the payment is classified as contra-revenue with the related revenue transaction (e.g., Discount revenue or Other revenue) and recorded when incurred.

Interest Income

Interest on Card Member loans is assessed using the average daily balance method. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding, in accordance with the terms of the applicable account agreement, until the outstanding balance is paid, or written off.

Interest and dividends on investment securities primarily relate to our performing fixed-income securities. Interest income is recognized as earned using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so that a constant rate of return is recognized on the investment security’s outstanding balance. Amounts are recognized until securities are in default or when it becomes likely that future interest payments will not be made as scheduled.

Interest on deposits with banks and other is recognized as earned, and primarily relates to the placement of cash, in excess of near-term funding requirements, in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

Interest Expense

Interest expense includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs, and is recognized as incurred. Interest expense is divided principally into two categories: (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.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Marketing and Business Development

As further described below under “Recently Adopted Accounting Standards,” effective January 1, 2018, in conjunction with the adoption of the new revenue recognition standard, the previously disclosed “Marketing and Promotion” line on the Consolidated Statements of Income was changed to “Marketing and Business Development” to reflect the inclusion of certain reclassified costs from Contra-discount revenue and Other expenses. Marketing and business development provides a more comprehensive view of costs related to building and growing our business, including the reclassified costs.

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 Card Member statement credits for qualifying charges on eligible card accounts, corporate incentive payments earned on achievement of preset targets, and certain payments to GNS card issuing partners. These costs are generally expensed as incurred.

Card Member Rewards

We issue charge and credit cards that allow Card Members to participate in various rewards programs (e.g., Membership Rewards, cobrand and cash back). Rewards expense is recognized in the period Card Members earn rewards, generally by spending on their enrolled card products. We record a Card Member rewards liability that represents the estimated cost of points earned that are expected to be redeemed. Card Member rewards liabilities are impacted over time by enrollment levels, attrition, the volume of points earned and redeemed, and the associated redemption costs. Changes in the Card Member rewards liabilities during the period are taken as a charge or release to the Card Member rewards line.

Effective January 1, 2018, in conjunction with the new revenue recognition standard, Card Member rewards also includes cash-back rewards, which were reclassified from contra discount revenue.

Classification of various items

Certain reclassifications of prior period amounts have been made to conform to the current period ~~presentation.~~presentation, including the reclassification of certain business development expenses from Other expenses to Marketing and business development, that were not directly attributable to the adoption of the new revenue recognition guidance.

Recently Issued Accounting Standards

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (FASB) issued new accounting guidance on revenue recognition. The accounting standard establishes the principles to apply to determine the amount and timing of revenue recognition, specifying the accounting for certain costs related to revenue, and requiring additional disclosures about the nature, amount, timing and uncertainty of revenues and related cash flows. The guidance, as amended, supersedes most of the current revenue recognition requirements, and is effective January 1, 2018.

Upon adoption of the new revenue recognition guidance, the Company anticipates using the full retrospective method, which applies the new standard to each prior reporting period presented. The Company has been working on the implementation of the standard since its issuance in 2014 and has made significant progress in evaluating the potential impact on its Consolidated Financial Statements. There will be changes to the recognition timing and classification of revenues and expenses, including potential changes to the presentation of certain credit and charge card related costs that are currently netted against discount revenue. The Company does not expect a significant impact to pretax income upon adoption. The Company is also in the process of implementing changes to its accounting policies, business processes, systems and internal controls to support the recognition, measurement and disclosure requirements under the new standard.

In January 2016, the FASB issued new accounting guidance on the recognition and measurement of financial assets and financial liabilities. The guidance, which is effective January 1, 2018, makes targeted changes to current GAAP, specifically to the classification and measurement of equity securities, and to certain disclosure requirements associated with the fair value of financial instruments. In the ordinary course of business, the Company makes investments in non-public companies currently recognized under cost method accounting. Under the new guidance, these investments will be prospectively adjusted for observable price changes upon identification of identical or similar transactions of the same issuer. The Company continues to evaluate the impact this guidance will have on its financial position, results of operations and cash flows, as well as the impact the standard will have on its accounting policies, business processes, systems and internal controls.

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~~AMERICAN EXPRESS COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~In February 2016, the FASB issued new accounting guidance on~~ leases. The guidance, ~~which is~~ effective January 1, 2019, with early adoption permitted, requires virtually all leases to be recognized on the Consolidated Balance Sheets. ~~The Company currently anticipates adopting~~We will adopt the standard effective January 1, ~~2019, using the~~2019. The new guidance currently requires a modified retrospective transition approach, which ~~requires recording~~would cause us to record existing operating leases on the Consolidated Balance Sheets upon adoption and in the comparative period. ~~The Company is~~In January 2018, the FASB released an exposure draft that, if issued in its current form, would provide us with the option to adopt the provisions of the new guidance prospectively, without adjusting the comparative periods presented. We are in the process of upgrading ~~its existing~~our lease administration software ~~for new lease accounting functionality~~,and changing business processes and internal controls in preparation for the ~~implementation.~~adoption. Specifically, ~~the Company is~~we are currently reviewing ~~its~~our lease portfolio and isare evaluating and interpreting the requirements under the guidance, including the available accounting policy elections, in order to determine the impacts ~~to the Company’s~~on our financial position, results of operations and cash flows upon adoption.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In June 2016, the FASB issued new accounting guidance for recognition of credit losses on financial instruments, ~~which is~~ effective January 1, 2020, with early adoption permitted on January 1, 2019. The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which is based on expected losses, and differs significantly from the incurred loss approach used today. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. In addition, for available-for-sale debt securities, the new guidance replaces the other-than-temporary impairment model, and requires the recognition of an allowance for reductions in a security’s fair value attributable to declines in credit quality, instead of a direct write-down of the security when a valuation decline is determined to be other-than-temporary. The guidance also requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption. ~~The Company does~~We do not intend to adopt the new standard early and isare currently evaluating the impact the new guidance will have on ~~its~~our financial position, results of operations and cash flows; however, it is expected that the CECL model will alter the assumptions used in estimating credit losses on Card Member loans and receivables, ~~among other financial instruments (e.g., investments in available-for-sale debt securities),~~ and may result in material increases to ~~the Company’s~~our credit reserves as the new guidance involves earlier recognition of expected losses for the life of the assets. ~~The Company has~~We have established an enterprise-wide, cross-discipline governance structure to implement the new ~~standard. The Company is currently identifying~~standard, and continue to identify and conclude on key interpretive issues ~~and is~~along with evaluating our existing credit loss forecasting models and processes in relation to the new guidance to determine what modifications may be required.

In February 2018, as a result of the enactment of the Tax Cuts and Jobs Act (the Tax Act), the FASB issued new accounting guidance on the reclassification of certain tax effects from accumulated other comprehensive income (loss) (AOCI) to retained earnings. The optional guidance is effective January 1, 2019, with early adoption permitted. We are evaluating whether we will adopt the new guidance along with any impacts on our financial position, results of operations and cash flows, none of which are expected to be material.

Recently Adopted Accounting Standards

Effective January 1, 2018, we adopted new revenue recognition guidance issued by the FASB related to contracts with customers. The scope of the new guidance excludes financial instruments such as credit and charge card arrangements. We elected to adopt the standard using the full retrospective method, which we believe is most useful to our investors. Under the full retrospective method, we are applying the standard back to January 1, 2016. As shown below, the most significant impacts of adoption are changes to the classification of certain revenues and expenses, including certain credit and charge card related costs previously netted against discount revenue, such as Card Member cash-back reward costs and statement credits, corporate incentive payments, as well as payments to third-party GNS card issuing partners. Under the new revenue standard, these costs are not considered components of the transaction price of our card acceptance agreements with merchants and thus are not netted against discount revenue, but instead are recognized as expenses. Our payments to third-party GNS card issuing partners are presented net of related revenues earned from the partners.

The impact to the 2017 fiscal quarters and years ended December 31, 2017 and 2016 were as follows:

	Increase (Decrease)
	Three months ended																Year Ended December
(Millions)	December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017				2017				2016
Revenues
Discount revenue		$	981			$	930			$	928			$	868			$	3,707			$	3,699
Other			(78	)			(71	)			(64	)			(65	)			(278	)			(253	)
Expenses
Marketing and business development			617				591				593				549				2,350				2,420
Card Member rewards		$	286			$	268			$	271			$	254			$	1,079			$	1,026

In addition, the cumulative impact to our retained earnings on January 1, 2016 was an increase of $55.2 million.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The adoption of the new guidance also resulted in changes to the recognition timing of certain revenues, the impact of which is not material to net income. Similarly, the adoption did not have a material impact on our Consolidated Balance Sheets or Statements of Cash Flows. We had no material contract assets, contract liabilities or deferred contract costs recorded on the Consolidated Balance Sheet as of March 31, 2018 and December 31, 2017. Contracts assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In adopting the guidance, we implemented changes to our accounting policies, business processes, systems and internal controls to support the recognition, measurement and disclosure requirements under the new standard. Such changes were not material.

In January 2016, the FASB issued new accounting guidance on the recognition and measurement of financial assets and financial liabilities, which was effective and adopted by us as of January 1, 2018. The guidance makes targeted changes to GAAP; specifically to the classification and measurement of equity securities, and to certain disclosure requirements associated with the fair value of financial assets and liabilities. This applies to investments we make in non-public companies in the ordinary course of business, which historically were recognized under the cost method of accounting. These investments will be prospectively adjusted through earnings for observable price changes upon the identification of identical or similar transactions of the same company. The adoption of the guidance did not have a material impact on our financial position, results of operations and cash flows. We implemented changes to our accounting policies, business processes and internal controls in support of the new guidance. Such changes were not material.

In August 2017, the FASB issued new accounting guidance providing targeted improvements to the accounting for hedging activities, effective January 1, 2019, with early adoption permitted in any interim period or fiscal year before the effective date. The guidance introduces a number of amendments, several of which are optional, that are designed to simplify the application of hedge accounting, improve financial statement transparency and more closely align hedge accounting with an entity’s risk management strategies. Effective January 1, 2018, we adopted the guidance, with no material impact on our financial position, results of operations and cash flows, along with associated changes to our accounting policies, business processes and internal controls in support of the new guidance. Such changes were not material.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Business Events

During the ~~fourth~~first quarter of ~~2015, it was determined~~2018, we acquired from Citibank, N.A. its existing Hilton Worldwide Holdings Inc. cobrand credit card loan portfolio (the acquired Hilton portfolio). The Hilton portfolio had an outstanding principal and interest balance of approximately $1 billion at acquisition. None of the ~~Company would sell the Card Member~~credit card loans ~~and receivables~~acquired were considered purchased credit impaired at acquisition date. The cash outflows related to its cobrand partnerships with JetBlue Airways Corporation (JetBlue) and Costco Wholesale Corporation (Costco) in the United States (the HFS portfolios). As a result, the HFS portfolios were presented as held for sale (HFS) on the Consolidated Balance Sheets within Card Member loans and receivables HFS as of December 31, 2015.

During the first half of 2016, the Company completed the sales of substantially all of its outstanding Card Member loans and receivables HFS and recognized gains, as an expense reduction, in Other expenses, of $127 million and $1.1 billion during the three months ended March 31, 2016 and June 30, 2016, respectively. The impact of the sales, including the recognition of the proceeds received and the reclassification of the retained Card Member loans and receivables, isthis acquisition are reported within the investing section of the Consolidated Statements of Cash Flows as a net ~~decrease~~increase in Card Member receivables and ~~loans, including HFS.~~loans.

From the point of classification as HFS through the sale completion dates, the Company continued to recognize discount revenue, interest income, other revenues and expenses related to the HFS portfolios in the respective line items on the Consolidated Statements of Income, with changes in the valuation of the HFS portfolios recognized in Other expenses.

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~~AMERICAN EXPRESS COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

3. Loans and Accounts Receivable

~~The Company’s~~Our lending and charge payment card products result in the generation of Card Member loans and Card Member receivables, respectively.

Card Member loans by segment and Other loans as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 consisted of:

(Millions)	2017		2016		2018		2017
U.S. Consumer Services^(a)	$	48,348	$	48,758	$	52,655	$	53,668
International Consumer and Network Services		7,245		6,971		8,667		8,651
Global Commercial Services		10,378		9,536		11,498		11,080
Card Member loans		65,971		65,265		72,820		73,399
Less: Reserve for losses		1,320		1,223		1,786		1,706
Card Member loans, net	$	64,651	$	64,042	$	71,034	$	71,693
Other loans, net^(b)	$	1,855	$	1,419	$	2,872	$	2,607

(a)

Includes approximately ~~$24.5~~$24.1 billion and ~~$26.1~~$25.7 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The balance as of March 31, 2018 also includes the acquired Hilton portfolio (refer to Note 2).

(b)	Other loans primarily represent personal and commercial financing products. Other loans are presented net of reserves for losses of ~~$54~~$91 million and ~~$42~~$80 million as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Card Member accounts receivable by segment and Other receivables as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 consisted of:

(Millions)	2017		2016		2018		2017
U.S. Consumer Services^(a)	$	11,344	$	12,302	$	11,659	$	13,143
International Consumer and Network Services		5,988		5,966		7,071		7,803
Global Commercial Services		32,073		29,040		35,511		33,101
Card Member receivables		49,405		47,308		54,241		54,047
Less: Reserve for losses		475		467		565		521
Card Member receivables, net	$	48,930	$	46,841	$	53,676	$	53,526
Other receivables, net^(b)	$	2,832	$	3,232	$	3,194	$	3,209

(a)	Includes ~~$7.9~~$7.8 billion and $8.9 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

(b)

Other receivables primarily represent amounts related to (i) ~~Global Network Services (GNS) partner banks~~GNS partners for items such as royalty and franchise fees, (ii) tax-related receivables, (iii) certain merchants for billed discount revenue, and (~~iii)~~(iv) loyalty coalition partners for points issued, as well as program participation and servicing fees. Other receivables are presented net of r~~eserves~~reserves for losses of ~~$32~~$31 million and ~~$45~~$31 million as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Card Member Loans and Card Member Receivables Aging

Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

2018(Millions)											Current			30-59 Days Past Due			60-89 Days Past Due			90+ Days Past Due			Total
Card Member Loans:
U.S. Consumer Services												$	51,922		$	201		$	156		$	376		$	52,655
International Consumer and Network Services													8,524			46			31			66			8,667
Global Commercial Services
Global Small Business Services													11,278			45			33			71			11,427
Global Corporate Payments^(a)											(b)			(b)			(b)					1			71
Card Member Receivables:
U.S. Consumer Services													11,510			48			35			66			11,659
International Consumer and Network Services													6,967			33			22			49			7,071
Global Commercial Services
Global Small Business Services												$	15,931		$	93		$	68		$	126		$	16,218
Global Corporate Payments^(a)											(b)			(b)			(b)				$	163		$	19,293

2017(Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total		Current			30-59 Days Past Due			60-89 Days Past Due			90+ Days Past Due			Total
Card Member Loans:
U.S. Consumer Services	$	47,797	$	155	$	119	$	277	$	48,348		$	52,961		$	201		$	162		$	344		$	53,668
International Consumer and Network Services		7,124		38		25		58		7,245			8,530			37			28			56			8,651
Global Commercial Services
Global Small Business Services	$	10,207	$	35	$	25	$	57	$	10,324			10,892			43			31			59			11,025
Global Corporate Payments^(a)	(b)		(b)		(b)		$	―	$	54	(b)			(b)			(b)					―			55
Card Member Receivables:
U.S. Consumer Services	$	11,220	$	42	$	24	$	58	$	11,344			12,993			53			33			64			13,143
International Consumer and Network Services		5,903		25		16		44		5,988			7,703			29			21			50			7,803
Global Commercial Services
Global Small Business Services	$	14,967	$	75	$	41	$	102	$	15,185		$	15,868		$	91		$	54		$	106		$	16,119
Global Corporate Payments^(a)	(b)		(b)		(b)		$	136	$	16,888	(b)			(b)			(b)				$	148		$	16,982

2016(Millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
U.S. Consumer Services	$	48,216	$	156	$	119	$	267	$	48,758
International Consumer and Network Services		6,863		32		24		52		6,971
Global Commercial Services
Global Small Business Services	$	9,378	$	34	$	23	$	49	$	9,484
Global Corporate Payments^(a)	(b)		(b)		(b)		$	―	$	52
Card Member Receivables:
U.S. Consumer Services	$	12,158	$	45	$	30	$	69	$	12,302
International Consumer and Network Services		5,888		22		15		41		5,966
Global Commercial Services
Global Small Business Services	$	14,047	$	77	$	47	$	102	$	14,273
Global Corporate Payments^(a)	(b)		(b)		(b)		$	135	$	14,767

(a)

For Global Corporate Payments (GCP) Card Member loans and receivables in Global Commercial Services (GCS), delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if ~~the Company initiates~~we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan and receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).

(b)

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

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Quality Indicators for Card Member Loans and Receivables

The following tables present the key credit quality indicators as of or for the ~~six~~three months ended ~~June 30:~~March 31:

		2017						2016						2018									2017
		Net Write-Off Rate						Net Write-Off Rate						Net Write-Off Rate									Net Write-Off Rate
		Principal Only^(a)		Principal, Interest & Fees^(a)		30+ Days Past Due as a % of Total		Principal Only^(a)		Principal, Interest & Fees^(a)		30+ Days Past Due as a % of Total		Principal Only^(a)			Principal, Interest & Fees^(a)			30+ Days Past Due as a % of Total			Principal Only^(a)			Principal, Interest & Fees^(a)			30+ Days Past Due as a % of Total
Card Member Loans:	Card Member Loans:
	U.S. Consumer Services	1.7	%	2.0	%	1.1	%	1.5	%	1.7	%	1.1	%
	International Consumer and Network Services	2.0	%	2.5	%	1.7	%	2.0	%	2.4	%	1.7	%
	Global Small Business Services	1.5	%	1.8	%	1.1	%	1.3	%	1.6	%	1.1	%
U.S. Consumer Services															2.0	%		2.4	%		1.4	%		1.7	%		2.0	%		1.2	%
International Consumer and Network Services															2.1	%		2.6	%		1.6	%		2.0	%		2.5	%		1.7	%
Global Small Business Services															1.6	%		1.9	%		1.3	%		1.6	%		1.8	%		1.2	%
Card Member Receivables:	Card Member Receivables:
	U.S. Consumer Services	1.4	%	1.5	%	1.1	%	1.5	%	1.8	%	1.2	%
	International Consumer and Network Services	2.0	%	2.2	%	1.4	%	2.2	%	2.4	%	1.4	%
	Global Small Business Services	1.7	%	1.9	%	1.4	%	1.7	%	2.0	%	1.4	%

						2017				2016
						Net Loss Ratio as a % of Charge Volume		90+ Days Past Billing as a % of Receivables		Net Loss Ratio as a % of Charge Volume		90+ Days Past Billing as a % of Receivables
Card Member Receivables:
	Global Corporate Payments					0.10	%	0.8	%	0.09	%	0.7	%
U.S. Consumer Services															1.3	%		1.5	%		1.3	%		1.5	%		1.7	%		1.3	%
International Consumer and Network Services															2.0	%		2.2	%		1.5	%		2.1	%		2.3	%		1.5	%
Global Small Business Services															1.7	%		1.9	%		1.8	%		1.8	%		2.0	%		1.6	%

	2018						2017
	Net Loss Ratio as a % of Charge Volume			90+ Days Past Billing as a % of Receivables			Net Loss Ratio as a % of Charge Volume			90+ Days Past Billing as a % of Receivables
Card Member Receivables:
Global Corporate Payments		0.10	%		0.8	%		0.11	%		0.7	%

(a)

~~The Company presents~~We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because ~~the Company considers~~we consider uncollectible interest and/or fees in estimating its reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

Impaired Card Member Loans and Receivables

Impaired Card Member loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that ~~the Company~~we will be unable to collect all amounts due according to the original contractual terms of the Card Member agreement. In certain cases, these Card Member loans and receivables are included in one of ~~the Company’s~~our various Troubled Debt Restructuring (TDR) modification programs.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables provide additional information with respect to ~~the Company’s~~our impaired Card Member loans and receivables. Impaired Card Member receivables are not significant for International Consumer and Network Services (ICNS) as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016;~~2017; therefore, this segment’s receivables are not included in the following tables.

As of June 30, 2017

Accounts Classified as a TDR^(c)

2017 (Millions)

Over 90 days Past Due & Accruing Interest^(a)

Non-Accruals^(b)

In Program^(d)

Out of Program^(e)
Total Impaired Balance Unpaid Principal Balance Allowance for TDRs
Card Member Loans:
U.S. Consumer Services $ 175 $ 156 $ 153 $ 132 $ 616 $ 560 $ 47
International Consumer and Network Services 58 ― ― ― 58 57 ―
Global Commercial Services 33 34 26 27 120 110 9
Card Member Receivables:
U.S. Consumer Services ― ― 10 8 18 18 4
Global Commercial Services ― ― 25 15 40 40 9
Total $ 266 $ 190 $ 214 $ 182 $ 852 $ 785 $ 69

	As of March 31, 2018

							Accounts Classified as a TDR^(c)
2018 (Millions)	Over 90 days Past Due & Accruing Interest^(a)			Non-Accruals^(b)			In Program^(d)			Out of Program^(e)			Total Impaired Balance			Unpaid Principal Balance			Allowance for TDRs
Card Member Loans:
U.S. Consumer Services		$	254		$	182		$	209		$	125		$	770		$	691		$	52
International Consumer and Network Services			66			―			―			―			66			65			―
Global Commercial Services			46			35			38			25			144			134			8
Card Member Receivables:
U.S. Consumer Services			―			―			19			10			29			29			1
Global Commercial Services			―			―			48			21			69			69			3
Total		$	366		$	217		$	314		$	181		$	1,078		$	988		$	64

	As of December 31, 2016														As of December 31, 2017

					Accounts Classified as a TDR^(c)																Accounts Classified as a TDR^(c)
2016 (Millions)	Over 90 days Past Due & Accruing Interest^(a)		Non-Accruals^(b)		In Program^(d)		Out of Program^(e)		Total Impaired Balance		Unpaid Principal Balance		Allowance for TDRs
2017 (Millions)															Over 90 days Past Due & Accruing Interest^(a)			Non-Accruals^(b)			In Program^(d)			Out of Program^(e)			Total Impaired Balance			Unpaid Principal Balance			Allowance for TDRs
Card Member Loans:
U.S. Consumer Services	$	178		139		165		129		611		558		51		$	233		$	168		$	178		$	131		$	710		$	639		$	49
International Consumer and Network Services		52		―		―		―		52		51		―			56			―			―			―			56			55			―
Global Commercial Services		30		30		26		26		112		103		9			38			31			31			27			127			118			8
Card Member Receivables:
U.S. Consumer Services		―		―		11		6		17		17		7			―			―			15			9			24			24			1
Global Commercial Services		―		―		28		10		38		38		21			―			―			37			19			56			56			2
Total	$	260	$	169	$	230	$	171	$	830	$	767	$	88		$	327		$	199		$	261		$	186		$	973		$	892		$	60

(a)

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

(b)	Non-accrual loans not in modification programs primarily include certain Card Member loans placed with outside collection agencies for which ~~the Company has~~we have ceased accruing interest. Amounts presented exclude Card Member loans classified as a TDR.

(c)	Accounts classified as a TDR include ~~$18~~$15 million and ~~$20~~$15 million that are over 90 days past due and accruing interest and $7$4 million and ~~$11~~$5 million that are non-accruals as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

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

(e)

Out of Program TDRs include ~~$139~~$137 million and ~~$132~~$141 million of Card Member accounts that have successfully completed a modification program and ~~$43~~$44 million and ~~$39~~$45 million of Card Member accounts that were not in compliance with the terms of the modification programs as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides information with respect to ~~the Company’s~~our average balances ~~of,~~ and interest income recognized from impaired Card Member loans and the average balances of impaired Card Member receivables for the three ~~and six~~ months ended ~~June 30:~~March 31:

	Three Months Ended June 30, 2017					Six Months Ended June 30, 2017					2018						2017
(Millions)		Average Balance		Interest Income Recognized			Average Balance		Interest Income Recognized
Card Member Loans:
U.S. Consumer Services		$	618	$	16		$	616	$	32
International Consumer and Network Services			56		4			55		8
Global Commercial Services			120		4			117		8
Card Member Receivables:
U.S. Consumer Services			18		―			18		―
Global Commercial Services			41		―			40		―
Total		$	853	$	24		$	846	$	48

														Interest						Interest
	Three Months Ended June 30, 2016					Six Months Ended June 30, 2016					Average			Income			Average			Income
(Millions)		Average Balance		Interest Income Recognized			Average Balance		Interest Income Recognized		Balance			Recognized			Balance			Recognized
Card Member Loans:
U.S. Consumer Services		$	551	$	12		$	555	$	24		$	740		$	21		$	616		$	16
International Consumer and Network Services			54		4			53		8			61			5			53			4
Global Commercial Services			102		3			103		6			136			5			116			4
Card Member Receivables:
U.S. Consumer Services			13		―			12		―			27			―			18			―
Global Commercial Services			25		―			20		―			63			―			40			―
Total		$	745	$	19		$	743	$	38		$	1,027		$	31		$	843		$	24

Card Member Loans and Receivables Modified as TDRs

The following table provides additional information with respect to the U.S. Consumer Services (USCS) and GCS Card Member loans and receivables modified as TDRs for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016.~~2017. The ICNS Card Member loans and receivables modifications were not significant; therefore, this segment is not included in the following TDR disclosures.

	Three Months Ended									Six Months Ended
	June 30, 2017									June 30, 2017
	Number of Accounts (in thousands)		Outstanding Balances ($ in millions)^(a)			Average Interest Rate Reduction (% Points)		Average Payment Term Extension (# of Months)		Number of Accounts (in thousands)		Outstanding Balances ($ in millions)^(a)			Average Interest Rate Reduction (% Points)		Average Payment Term Extension (# of Months)
Troubled Debt Restructurings:
Card Member Loans		7		$	46		10	(b)			15		$	103		11	(b)
Card Member Receivables		1			18	(c)			32		3			46	(c)			26
Total		8		$	64						18		$	149
																			Three Months Ended March 31, 2018
	Three Months Ended									Six Months Ended									Number of		Outstanding			Average Interest			Average Payment
	June 30, 2016									June 30, 2016									Accounts		Balances^(a)			Rate Reduction			Term Extensions
	Number of Accounts (in thousands)		Outstanding Balances ($ in millions)^(a)			Average Interest Rate Reduction (% Points)		Average Payment Term Extension (# of Months)		Number of Accounts (in thousands)		Outstanding Balances ($ in millions)^(a)			Average Interest Rate Reduction (% Points)		Average Payment Term Extension (# of Months)		(in thousands)		($ in millions)			(% Points)			(# of Months)
Troubled Debt Restructurings:
Card Member Loans		7		$	50		10	(b)			15		$	107		11	(b)			11		$	81			11	(b)
Card Member Receivables		2			27	(c)			17		5			65	(c)			17		1			29		(c)			28
Total		9		$	77						20		$	172						12		$	110

Three Months Ended

March 31, 2017

Number of

Outstanding

Average Interest

Average Payment

Accounts

Balances^(a)

Rate Reduction

Term Extensions

(in thousands)

($ in millions)

(% Points)

(# of Months)

Troubled Debt Restructurings:

Card Member Loans

(b)

Card Member Receivables

(c)

Total

(a)	Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables. Modifications did not reduce the principal balance.

(b)	For Card Member loans, there have been no payment term extensions.

(c)	~~The Company does~~We do not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides information with respect to the USCS and GCS Card Member loans and receivables modified as TDRs that subsequently defaulted within 12 months of modification, for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016.~~2017. A Card Member is considered in default of a modification program after one and up to two missed payments, depending on the terms of the modification program. For all Card Members that defaulted from a modification program, the probability of default is factored into the reserves for Card Member loans and receivables.

	Three Months Ended						Six Months Ended						2018					2017
	June 30, 2017						June 30, 2017						Number of Accounts		Aggregated Outstanding Balances Upon Default^(a)			Number of Accounts		Aggregated Outstanding Balances Upon Default^(a)
		Number of Accounts (in thousands)		Aggregated Outstanding Balances Upon Default ($ in millions)^(a)				Number of Accounts (in thousands)		Aggregated Outstanding Balances Upon Default ($ in millions)^(a)			(thousands)		(millions)			(thousands)		(millions)
Troubled Debt Restructurings That Subsequently Defaulted:
Troubled Debt Restructurings That
Subsequently Defaulted:
Card Member Loans			2		$	10			4		$	21		2		$	9		2		$	11
Card Member Receivables			1			2			2			3		1			2		1			1
Total			3		$	12			6		$	24		3		$	11		3		$	12


	Three Months Ended						Six Months Ended
	June 30, 2016						June 30, 2016
		Number of Accounts (in thousands)		Aggregated Outstanding Balances Upon Default ($ in millions)^(a)				Number of Accounts (in thousands)		Aggregated Outstanding Balances Upon Default ($ in millions)^(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans			1		$	9			2		$	18
Card Member Receivables			1			1			2			2
Total			2		$	10			4		$	20

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

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Reserves for Losses

Reserves for losses relating to Card Member loans and receivables represent management’s best estimate of the probable inherent losses in ~~the Company’s~~our outstanding portfolio of loans and receivables as of the balance sheet date. Management’s evaluation process requires certain estimates and judgments.

Changes in Card Member Loans Reserve for Losses

The following table presents changes in the Card Member loans reserve for losses for the ~~six~~three months ended ~~June 30:~~March 31:

(Millions)	2017			2016			2018			2017
Balance, January 1	$	1,223		$	1,028		$	1,706		$	1,223
Provisions^(a)		741			512			499			337
Net write-offs^(b)
Principal		(557	)		(437	)		(358	)		(272	)
Interest and fees		(106	)		(80	)		(71	)		(51	)
Other^(c)		19			68			10			11
Balance, June 30	$	1,320		$	1,091
Balance, March 31							$	1,786		$	1,248

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

(b)

Principal write-offs are presented less recoveries of ~~$205~~$106 million and ~~$179~~$100 million, and include net write-offs from TDRs of ~~$21~~$7 million and ~~$17~~$12 million, for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. Recoveries of interest and fees were ~~de minimis.~~not significant.

(c)

Includes foreign currency translation adjustments of ~~$10~~$6 million and ~~$(2)~~$7 million and other adjustments of $9$4 million and $3$4 million for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. The six months ended June 30, 2016 also includes reserves of $7 million in the first quarter and $60 million in the second quarter associated with $20 million and $245 million of retained Card Member loans, respectively, reclassified from HFS to held for investment during those periods as a result of retaining certain loans in connection with the respective sales of JetBlue and Costco cobrand card portfolios.

Card Member Loans Evaluated Individually and Collectively for Impairment

The following table presents Card Member loans evaluated individually and collectively for impairment and related reserves as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

(Millions)	2017		2016		2018		2017
Card Member loans evaluated individually for impairment^(a)	$	338	$	346	$	397	$	367
Related reserves ^(a)	$	56	$	60	$	60	$	57
Card Member loans evaluated collectively for impairment^(b)	$	65,633	$	64,919	$	72,423	$	73,032
Related reserves ^(b)	$	1,264	$	1,163	$	1,726	$	1,649

(a)	Represents loans modified as a TDR and related reserves.

(b)

Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans. The reserves include the quantitative results of analytical models that are specific to individual pools of loans, and reserves for internal and external qualitative risk factors that apply to loans that are collectively evaluated for impairment.

~~Table of Contents~~

~~AMERICAN EXPRESS COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Changes in Card Member Receivables Reserve for Losses

The following table presents changes in the Card Member receivables reserve for losses for the ~~six~~three months ended ~~June 30:~~March 31:

(Millions)	2017			2016			2018			2017
Balance, January 1	$	467		$	462		$	521		$	467
Provisions^(a)		376			322			242			213
Net write-offs^(b)		(373	)		(359	)		(199	)		(194	)
Other^(c)		5			(2	)		1			5
Balance, June 30	$	475		$	423
Balance, March 31							$	565		$	491

(a)	Provisions for principal and fee reserve components.

(b)

Principal and fee ~~components~~write-offs are presented less recoveries of ~~$181~~$88 million and ~~$202~~$93 million, including net write-offs (recoveries) from TDRs of $7$(2) million and ~~$16~~$6 million, for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

(c)	Includes foreign currency translation adjustments of ~~$14~~$10 million and ~~$(1)~~$9 million and other adjustments of $(9) million and ~~$(1)~~$(4) million for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

Table of Contents

AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Card Member Receivables Evaluated Individually and Collectively for Impairment

The following table presents Card Member receivables evaluated individually and collectively for impairment, and related reserves, as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

(Millions)	2017		2016		2018		2017
Card Member receivables evaluated individually for impairment^(a)	$	58	$	55	$	98	$	80
Related reserves ^(a)	$	13	$	28	$	4	$	3
Card Member receivables evaluated collectively for impairment	$	49,347	$	47,253	$	54,143	$	53,967
Related reserves ^(b)	$	462	$	439	$	561	$	518

(a)	Represents receivables modified as a TDR and related reserves.

(b)	The reserves include the quantitative results of analytical models that are specific to individual pools of receivables, and reserves for internal and external qualitative risk factors that apply to receivables that are collectively evaluated for impairment.

5. Investment Securities

Investment securities principally include available-for-sale debt securities ~~the Company classifies as available-for-sale and carries~~carried at fair value on the Consolidated Balance Sheets, with unrealized gains and losses recorded in ~~accumulated other comprehensive income (loss) (AOCI),~~AOCI, net of income taxes. Realized gains and losses are recognized upon disposition of the securities using the specific identification method.

Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets. Effective January 1, 2018, unrealized gains and losses are recorded in the Consolidated Statements of Income; prior to January 1, 2018, unrealized gains and losses were recorded in AOCI, net of income taxes.

The following is a summary of investment securities as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

	2017									2016									2018													2017
			Gross		Gross			Estimated				Gross		Gross			Estimated					Gross			Gross				Estimated						Gross			Gross				Estimated
			Unrealized		Unrealized			Fair				Unrealized		Unrealized			Fair					Unrealized			Unrealized				Fair						Unrealized			Unrealized				Fair
Description of Securities (Millions)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value		Cost			Gains			Losses				Value			Cost			Gains			Losses				Value
Available-for-sale debt securities:
State and municipal obligations	$	1,563	$	20	$	(2	)	$	1,581	$	2,019	$	28	$	(11	)	$	2,036		$	1,122		$	8		$	(5	)		$	1,125		$	1,369		$	11		$	(3	)		$	1,377
U.S. Government agency obligations		12		―		―			12		12		―		―			12			10			―			―				10			11			―			―				11
U.S. Government treasury obligations		1,114		9	��	(4	)		1,119		465		3		(8	)		460			1,678			4			(21	)			1,661			1,051			3			(9	)			1,045
Corporate debt securities		―		―		―			―		19		―		―			19			29			―			―				29			28			―			―				28
Mortgage-backed securities ^(a)		79		2		―			81		92		3		―			95			63			2			(1	)			64			67			2			―				69
Equity securities		1		―		―			1		1		―		―			1
Foreign government bonds and obligations		518		1		(1	)		518		486		1		(1	)		486			451			―			―				451			581			―			―				581
Other ^(b)		50		―		(2	)		48		50		―		(2	)		48
Equity securities ^(b)																					51			―			(3	)			48			51			―			(3	)			48
Total	$	3,337	$	32	$	(9	)	$	3,360	$	3,144	$	35	$	(22	)	$	3,157		$	3,404		$	14		$	(30	)		$	3,388		$	3,158		$	16		$	(15	)		$	3,159

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

(b)	~~Other comprises~~Equity securities comprise investments in ~~various~~common stock and mutual funds.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides information about ~~the Company’s investment~~our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

	2017										2016										2018														2017
	Less than 12 months					12 months or more					Less than 12 months					12 months or more					Less than 12 months							12 months or more							Less than 12 months							12 months or more
			Gross					Gross					Gross					Gross						Gross							Gross							Gross							Gross
Description of Securities (Millions)	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value			Unrealized Losses				Estimated Fair Value			Unrealized Losses				Estimated Fair Value			Unrealized Losses				Estimated Fair Value			Unrealized Losses
State and municipal obligations	$	99	$	(2	)	$	―	$	―		$	153	$	(11	)	$	―	$	―			$	144		$	(4	)		$	―		$	―			$	157		$	(3	)		$	―		$	―
U.S. Government treasury obligations		366		(4	)		―		―			298		(8	)		―		―				811			(14	)			173			(7	)			650			(3	)			175			(6	)
Other		―		―			32		(2	)		―		―			32		(2	)
Equity securities^(a)																							―			N/A				―			N/A				―			―				36			(2	)
Total	$	465	$	(6	)	$	32	$	(2	)	$	451	$	(19	)	$	32	$	(2	)		$	955		$	(18	)		$	173		$	(7	)		$	807		$	(6	)		$	211		$	(8	)

(a)	Effective January 1, 2018, unrealized gains and losses on equity securities are recorded in the Consolidated Statements of Income and are no longer assessed for other-than-temporary impairment.

The following table summarizes the gross unrealized losses due to temporary impairments by ratio of fair value to amortized cost as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

	Less than 12 months							12 months or more							Total							Less than 12 months									12 months or more									Total
Ratio of Fair Value to					Gross							Gross							Gross								Gross									Gross									Gross
Amortized Cost	Number of		Estimated		Unrealized			Number of		Estimated		Unrealized			Number of		Estimated		Unrealized			Number of		Estimated			Unrealized				Number of		Estimated			Unrealized				Number of		Estimated			Unrealized
(Dollars in millions)	Securities		Fair Value		Losses			Securities		Fair Value		Losses			Securities		Fair Value		Losses			Securities		Fair Value			Losses				Securities		Fair Value			Losses				Securities		Fair Value			Losses
2018:
90%–100%																							30		$	955		$	(18	)		5		$	173		$	(7	)		35		$	1,128		$	(25	)
Total as of March 31, 2018																							30		$	955		$	(18	)		5		$	173		$	(7	)		35		$	1,128		$	(25	)

2017:
90%–100%		23	$	465	$	(6	)		6	$	32	$	(2	)		29	$	497	$	(8	)		34		$	807		$	(6	)		13		$	211		$	(8	)		47		$	1,018		$	(14	)
Total as of June 30, 2017		23	$	465	$	(6	)		6	$	32	$	(2	)		29	$	497	$	(8	)

2016:
90%–100%		33	$	411	$	(13	)		6	$	32	$	(2	)		39	$	443	$	(15	)
Less than 90%		4		40		(6	)		―		―		―			4		40		(6	)
Total as of December 31, 2016		37	$	451	$	(19	)		6	$	32	$	(2	)		43	$	483	$	(21	)
Total as of December 31, 2017																							34		$	807		$	(6	)		13		$	211		$	(8	)		47		$	1,018		$	(14	)

The gross unrealized losses for available-for-sale debt securities are attributed to ~~overall~~ wider credit spreads for specific issuers, adverse changes in ~~market~~ benchmark interest rates, or a combination thereof, all compared to those prevailing when the investment securities were ~~acquired.~~purchased.

Overall, for the ~~investment~~available-for-sale debt securities in gross unrealized loss positions, (i) ~~the Company does~~we do not intend to sell the ~~investment~~ securities, (ii) it is more likely than not that ~~the Company~~we will not be required to sell the ~~investment~~ securities before recovery of the unrealized losses, and (iii) ~~the Company expects~~we expect that the contractual principal and interest will be received on the ~~investment~~ securities. As a result, ~~the Company~~we recognized no other-than-temporary impairment during the periods presented.

Contractual maturities for investment securities with stated maturities as of ~~June 30, 2017~~March 31, 2018 were as follows:

			Estimated				Estimated
(Millions)	Cost		Fair Value		Cost		Fair Value
Due within 1 year	$	623	$	623	$	465	$	465
Due after 1 year but within 5 years		979		984		1,653		1,639
Due after 5 years but within 10 years		294		298		218		214
Due after 10 years		1,390		1,406		1,017		1,022
Total	$	3,286	$	3,311	$	3,353	$	3,340

The expected payments on state and municipal obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Asset Securitizations

~~The Company~~We periodically ~~securitizes~~securitize Card Member loans and receivables arising from ~~its~~our card businesses through the transfer of those assets to securitization ~~trusts.~~trusts, American Express Credit Account Master Trust (the Lending Trust) and American Express Issuance Trust II (the Charge Trust and together with the Lending Trust, the Trusts). The ~~trusts~~Trusts then issue debt securities collateralized by the transferred assets to third-party investors.

We perform the servicing and key decision making for the Trusts, and therefore have the power to direct the activities that most significantly impact the Trusts’ economic performance, which are the collection of the underlying Card Member loans and receivables. In addition, we hold all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors. As of March 31, 2018, our ownership of variable interests was $9.2 billion for the Lending Trust and $7.1 billion for the Charge Trust. These variable interests held by us provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, we are the primary beneficiary of both Trusts and therefore consolidate both Trusts.

The following table provides information on the restricted cash held by the ~~American Express Credit Account Master~~Lending Trust ~~(the Lending Trust)~~ and the ~~American Express Issuance Trust II (the~~ Charge Trust ~~collectively the Trusts)~~ as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, included in Other assets on the Consolidated Balance Sheets:

(Millions)	2017		2016		2018		2017
Lending Trust	$	53	$	35	$	145	$	55
Charge Trust		2		3		2		7
Total	$	55	$	38	$	147	$	62

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.

American Express Travel Related Services Company, Inc. (TRS), in its role as servicer of the Trusts, has the power to direct the activities that most significantly impact the Trusts’ economic performance, which are the collection of the underlying Card Member loans and receivables. In addition, TRS directly and indirectly (through its consolidated subsidiaries) holds all of the variable interests in both Trusts, with the exception of the debt securities issued to third-party investors. As of June 30, 2017, TRS’ direct and indirect ownership of variable interests was ~~$9.8~~ ~~billion for the Lending Trust and~~ ~~$6.5~~ billion for the Charge Trust. These variable interests held by TRS provide it with the right to receive benefits and the obligation to absorb losses, which could be significant to both the Lending Trust and the Charge Trust. Based on these considerations, TRS is the primary beneficiary of both Trusts and therefore consolidates both Trusts.

Under the respective terms of the Lending Trust and the Charge Trust agreements, the occurrence of certain triggering events associated with the performance of the assets of each Trust could result in payment of trust expenses, establishment of reserve funds, or, in a worst-case scenario, early amortization of debt securities.

During the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and the year ended December 31, ~~2016,~~2017, no such triggering events occurred.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Customer Deposits

As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, customer deposits were categorized as interest bearing or non-interest bearing as follows:

(Millions)	2017		2016		2018		2017
U.S.:
Interest bearing	$	57,012	$	52,316	$	65,913	$	63,666
Non-interest bearing (includes Card Member credit balances of: 2017, $309 million; 2016, $331 million)		348		367
Non-interest bearing (includes Card Member credit balances of: 2018, $319 million; 2017, $358 million)						353		395
Non-U.S.:
Interest bearing		29		58		42		34
Non-interest bearing (includes Card Member credit balances of: 2017, $325 million; 2016, $285 million)		337		301
Non-interest bearing (includes Card Member credit balances of: 2018, $344 million; 2017, $344 million)						357		357
Total customer deposits	$	57,726	$	53,042	$	66,665	$	64,452

Customer deposits by deposit type as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:

(Millions)	2017		2016		2018		2017
U.S. retail deposits:
Savings accounts – Direct	$	30,276	$	30,980	$	34,544	$	31,915
Certificates of deposit:^(a)
Direct		285		291		325		290
Third-party (brokered)		14,997		11,925		16,453		16,684
Sweep accounts – Third-party (brokered)		11,454		9,120		14,591		14,777
Other retail deposits:
Non-U.S. deposits and U.S. non-interest bearing deposits		80		110
Other deposits:
U.S. non-interest bearing deposits						34		37
Non-U.S. deposits						55		47
Card Member credit balances ― U.S. and non-U.S.		634		616		663		702
Total customer deposits	$	57,726	$	53,042	$	66,665	$	64,452

(a)	The weighted average remaining maturity and weighted average interest rate at issuance on the total portfolio of U.S. retail certificates of deposit issued through direct and third-party programs were 4639 months and ~~2.05~~2.16 percent, respectively, as of ~~June 30, 2017.~~March 31, 2018.

The scheduled maturities of certificates of deposit as of ~~June 30, 2017~~March 31, 2018 were as follows:

(Millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
2017	$	2,400	$	7	$	2,407
2018		4,463		9		4,472	$	4,984	$	16	$	5,000
2019		3,447		―		3,447		4,610		11		4,621
2020		3,069		―		3,069		3,693		―		3,693
2021		917		―		917		1,317		―		1,317
2022								2,149		―		2,149
After 5 years		986		―		986		25		―		25
Total	$	15,282	$	16	$	15,298	$	16,778	$	27	$	16,805

As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, certificates of deposit in denominations of $250,000 or more, in the aggregate, were as follows:

(Millions)	2017		2016		2018		2017
U.S.	$	103	$	117	$	126	$	114
Non-U.S.		5		7		17		11
Total	$	108	$	124	$	143	$	125

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. Contingencies

In the ordinary course of business, ~~the Company~~we and ~~its~~our subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings). ~~The Company discloses its~~We disclose our material legal proceedings under Part II, Item 1. “Legal Proceedings” in this Quarterly Report on Form 10-Q and Part I, Item 3. “Legal Proceedings” in the Annual Report.

In addition to the matters disclosed under “Legal Proceedings,” ~~the Company is~~we are being challenged in a number of countries regarding ~~its~~our application of value-added taxes (VAT) to certain of ~~its~~our international transactions, which are in various stages of audit, or are being contested in legal actions (collectively, VAT matters). While ~~the Company believes it has~~we believe we have complied with all applicable tax laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that ~~the Company owes~~we owe additional VAT. In certain jurisdictions where ~~the Company is~~we are contesting the assessments, ~~it was~~we were required to pay the VAT assessments prior to contesting.

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

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

For those disclosed material legal proceedings and VAT matters where a loss is reasonably possible in future periods, whether in excess of a related reserve for legal or tax contingencies or where there is no such reserve, and for which ~~the Company is~~we are able to estimate a range of possible loss, the current estimated range is zero to ~~$450~~$420 million in excess of any reserves related to those matters. This range represents management’s estimate based on currently available information and does not represent ~~the Company’s~~our maximum loss exposure; actual results may vary significantly. As such legal proceedings evolve, ~~the Company~~we may need to increase ~~its~~our range of possible loss or reserves.

Based on ~~its~~our current knowledge, and taking into consideration ~~its~~our litigation-related liabilities, ~~the Company believes it is~~we believe we are not a party to, nor are any of ~~its~~our properties the subject of, any legal proceeding that would have a material adverse effect on ~~the Company’s~~our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, it is possible that the outcome of legal proceedings, including the possible resolution of merchant claims, could have a material impact on ~~the Company’s~~our results of operations.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Derivatives and Hedging Activities

~~The Company uses~~We use derivative financial instruments (derivatives) to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates, foreign exchange rates, and equity index or price, and are carried at fair value on the Consolidated Balance Sheets. These instruments enable end users to increase, reduce or alter exposure to various market risks and, for that reason, are an integral component of ~~the Company’s~~our market risk management. ~~The Company does~~We do not transact in derivatives for trading purposes.

In relation to ~~the Company’s~~our credit risk, under the terms of the derivative agreements ~~it has~~we have with ~~its~~our various counterparties, ~~the Company is~~we are not required to either immediately settle any outstanding liability balances or post collateral upon the occurrence of a specified credit risk-related event. Based on ~~its~~our assessment of the credit risk of ~~the Company’s~~our derivative counterparties as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, no credit risk adjustment to the derivative portfolio was required.

The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~:2017:

	Other Assets Fair Value						Other Liabilities Fair Value						Other Assets Fair Value						Other Liabilities Fair Value
(Millions)	2017			2016			2017			2016			2018			2017			2018			2017
Derivatives designated as hedging instruments:
Fair value hedges - Interest rate contracts^(a)	$	39		$	111		$	―		$	69		$	3		$	11		$	95		$	34
Net investment hedges - Foreign exchange contracts		28			347			265			35			71			117			167			89
Total derivatives designated as hedging instruments		67			458			265			104			74			128			262			123
Derivatives not designated as hedging instruments:
Foreign exchange contracts, including certain embedded derivatives^(b)		144			308			170			176			77			82			117			95
Total derivatives, gross		211			766			435			280			151			210			379			218
Less: Cash collateral netting^(c)(d)		(20	)		(54	)		(1	)		(68	)		―			(6	)		(94	)		(45	)
Derivative asset and derivative liability netting^(e)		(73	)		(157	)		(73	)		(157	)		(85	)		(80	)		(85	)		(80	)
Total derivatives, net^(f)	$	118		$	555		$	361		$	55		$	66		$	124		$	200		$	93

(a)

~~Effective January 2017, the Central Clearing Party (CCP) changed the legal characterization of~~For centrally cleared derivatives, variation margin payments ~~for centrally cleared derivatives to be~~are legally characterized as settlement payments as opposed to collateral. ~~As of June 30, 2017~~Accordingly, the amounts disclosed for centrally cleared derivatives are ~~fully collateralized. The Company~~based on gross assets and gross liabilities, net of variation margin. We also maintained several bilateral interest rate contracts that ~~are not subject to the CCP’s rule change and amounts related to such contracts~~ are shown gross of any collateral exchanged.

(b)	Includes foreign currency derivatives embedded in certain operating agreements.

(c)

~~Primarily represents~~Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to reclaim cash collateral ~~(a receivable)~~ or the obligation to return cash ~~collateral (a payable) arising from derivatives executed with the same counterparty under an enforceable master netting arrangement.~~collateral.

(d)

~~The Company held no non-cash collateral as of June 30, 2017. As of December 31, 2016, the Company received non-cash collateral from a counterparty in the form of security interests in U.S. Treasury securities, with a fair value of $18~~We posted $125 million ~~none of which was sold or repledged. Such non-cash collateral economically reduced the Company’s risk exposure to $537~~and $146 million as of ~~December~~March 31, ~~2016, but did not reduce the net exposure on the Company’s Consolidated Balance Sheets.~~ ~~Additionally, the Company posted $170 million and $169 million as of June 30, 2017~~2018 and December 31, ~~2016,~~2017, respectively, as initial margin on ~~its~~our centrally cleared interest rate swaps; such amounts are recorded within Other receivables on the Consolidated Balance Sheets and are not netted against the derivative balances.

(e)	Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.

~~(f)~~

The Company has no individually significant derivative counterparties and therefore, no significant risk exposure to any single derivative counterparty. The total net derivative assets and net derivative liabilities are presented within Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets.

A majority of ~~the Company’s~~our derivative assets and liabilities as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are subject to master netting agreements with ~~its~~our derivative counterparties. ~~The Company has~~We have no derivative amounts subject to enforceable master netting arrangements that are not offset on the Consolidated Balance Sheets.

Fair Value Hedges

~~The Company is~~We are exposed to interest rate risk associated with ~~its~~our fixed-rate long-term debt obligations. At the time of issuance, certain fixed-rate debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. ~~The Company has $19.5~~We have $23.4 billion and ~~$17.7~~$23.8 billion of fixed-rate debt obligations designated in fair value hedging relationships as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

The following table represents the total amounts of income and expense line items associated with the fair value hedges of our fixed-rate long-term debt on the Consolidated Statements of Income for the three months ended March 31:

	Gains (losses)
(Millions)	2018				2017
	Interest expense^(a)				Other expenses
Hedged items		$	210			$	50
Derivatives designated as hedging instruments			(191	)			(75	)
Total		$	19			$	(25	)

(a)

We adopted new accounting guidance providing targeted improvements to the accounting for hedging activities effective January 1, 2018. In compliance with the standard, amounts previously recorded in Other expenses have been prospectively recorded in Total interest expense. Refer to Note 1 for additional information.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The ~~following table summarizes~~carrying values of the ~~gains (losses) recognized in Other expenses associated with~~hedged liabilities, recorded within Long-term debt on the ~~Company’s~~Consolidated Balance Sheets, were $22.9 billion and $23.6 billion as of March 31, 2018 and December 31, 2017, respectively, including offsetting amounts of $392 million and $182 million for the respective periods, related to the cumulative amount of fair value ~~hedges for the three and six months ended June 30:~~hedging adjustments.

Three Months Ended
June 30,

Six Months Ended
June 30,

(Millions) 2017 2016 2017 2016
Interest rate derivative contracts $ 6 $ 61 $ (69 ) $ 226
Hedged items (25 ) (53 ) 25 (224 )
Net hedge ineffectiveness $ (19 ) $ 8 $ (44 ) $ 2

~~The Company also~~We recognized a net reduction in interest expense on long-term debt of ~~$37~~$14 million and ~~$59~~$44 million for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $81 million and $118 million for the six months ended June 30, 2017 and 2016,~~ respectively, primarily related to the net settlements (interest accruals) on ~~the Company’s~~our interest rate derivatives designated as fair value hedges.

Net Investment Hedges

The ~~effective portion of the gain or loss~~losses on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, ~~was a loss of $102~~were $162 million and ~~a gain of $135~~$229 million for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and a loss~~respectively. Accumulated gains within AOCI of ~~$331~~$1 million and ~~a gain of $43 million for the six months ended June 30, 2017 and 2016, respectively, with any ineffective portion recognized in Other expenses during the period.~~ ~~The net hedge ineffectiveness recognized was~~ nil ~~for each of the three and six months ended~~ ~~June 30, 2017 and 2016~~. ~~Other amounts related to foreign exchange contracts reclassified from AOCI into Other expenses included nil and a gain of $5 million~~ for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, ~~and nil and a gain of $5 million for the six months ended June 30, 2017 and 2016, respectively.~~were reclassified into Other expenses upon investment sales or liquidations.

Derivatives Not Designated as Hedges

The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net ~~loss~~losses of $4$21 million and ~~a net gain of $6~~$17 million for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and net losses of $21 million and $8 million for the six months ended~~ ~~June 30, 2017 and 2016~~, respectively, and are recognized in Other expenses.

The changes in the fair value of an embedded derivative resulted in a loss of ~~$3 million and nil for the three months ended~~ ~~June 30, 2017 and 2016, respectively, and a loss of~~ $2 million and a gain of $6$1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016~~, respectively, ~~which~~and are recognized in Card Member services ~~and other~~ expense.

10.

10. Fair Values

Financial Assets and Financial Liabilities Carried at Fair Value

The following table summarizes ~~the Company’s~~our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy, as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

	2017								2016								2018												2017
(Millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3
Assets:
Investment securities:^(a)
Equity securities and other	$	49	$	1	$	48	$	―	$	49	$	1	$	48	$	―
Equity securities																		$	48		$	1		$	47		$	―		$	48		$	1		$	47		$	―
Debt securities		3,311		1,119		2,192		―		3,108		460		2,648		―			3,340			1,661			1,679			―			3,111			1,045			2,066			―
Derivatives^(a)		211		―		211		―		765		―		765		―			151			―			151			―			210			―			210			―
Total Assets		3,571		1,120		2,451		―		3,922		461		3,461		―			3,539			1,662			1,877			―			3,369			1,046			2,323			―
Liabilities:
Derivatives^(a)		435		―		435		―		280		―		280		―			379			―			379			―			218			―			218			―
Total Liabilities	$	435	$	―	$	435	$	―	$	280	$	―	$	280	$	―		$	379		$	―		$	379		$	―		$	218		$	―		$	218		$	―

(a)	Refer to Note 5 for the fair values of investment securities and to Note 9 for the fair values of derivative assets and liabilities, on a further disaggregated basis.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Financial Assets and Financial Liabilities Carried at Other Than Fair Value

The following table summarizes the estimated fair values of ~~the Company’s~~our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and require management’s judgment. These figures may not be indicative of future fair values, nor can ~~the~~our fair value ~~of the Company~~ be estimated by aggregating the amounts presented.

	Carrying		Corresponding Fair Value Amount								Carrying		Corresponding Fair Value Amount
2017 (Billions)	Value		Total		Level 1		Level 2		Level 3
2018 (Billions)											Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents^(a)	$	30	$	30	$	28	$	2	$	―	$	31	$	31	$	30	$	1	$	―
Other financial assets^(b)		52		52		―		52		―		57		57		―		57		―
Financial assets carried at other than fair value
Loans, net^(c)		67		67		―		―		67		74		75		―		―		75

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value		67		67		―		67		―		77		77		―		77		―
Financial liabilities carried at other than fair value
Certificates of deposit^(d)		15		15		―		15		―		17		17		―		17		―
Long-term debt^(c)	$	52	$	53	$	―	$	53	$	―	$	52	$	53	$	―	$	53	$	―

	Carrying		Corresponding Fair Value Amount
2016 (Billions)	Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents^(a)	$	25	$	25	$	22	$	3	$	―
Other financial assets^(b)		51		51		―		51		―
Financial assets carried at other than fair value
Loans, net^(c)		65		66		―		―		66

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value		67		67		―		67		―
Financial liabilities carried at other than fair value
Certificates of deposit^(d)		12		12		―		12		―
Long-term debt^(c)	$	47	$	48	$	―	$	48	$	―

	Carrying		Corresponding Fair Value Amount
2017 (Billions)	Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Financial assets for which carrying values equal or approximate fair value
Cash and cash equivalents^(a)	$	33	$	33	$	32	$	1	$	―
Other financial assets^(b)		57		57		―		57		―
Financial assets carried at other than fair value
Loans, net^(c)		74		75		―		―		75

Financial Liabilities:
Financial liabilities for which carrying values equal or approximate fair value		76		76		―		76		―
Financial liabilities carried at other than fair value
Certificates of deposit^(d)		17		17		―		17		―
Long-term debt^(c)	$	56	$	57	$	―	$	57	$	―

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

(b)

Includes Card Member receivables (including fair values of Card Member receivables of ~~$7.9~~$7.8 billion and ~~$8.8~~$8.9 billion held by a consolidated VIE as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively), Other receivables, restricted cash and other miscellaneous assets.

(c)

Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were ~~$24.4~~$23.9 billion and ~~$26.0~~$25.6 billion as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, and the fair values of long-term debt were ~~$16.1~~$15.7 billion and ~~$15.2~~$18.6 billion as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

(d)	Presented as a component of customer deposits on the Consolidated Balance Sheets.

Nonrecurring Fair Value Measurements

~~The Company has~~We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired. During the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~during~~ the year ended December 31, ~~2016, the Company~~2017, we did not have any material assets that were measured at fair value due to impairment. Equity investments previously held at cost that are adjusted through earnings for observable price changes are not material.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

11. Guarantees

~~The Company provides Card Member protection plans that cover losses associated with purchased products, as well as certain guarantees and indemnifications in the ordinary course of business.~~

As of ~~June 30, 2017,~~March 31, 2018, the maximum potential undiscounted future payments and related liability resulting from ~~these arrangements~~guarantees and indemnifications provided by us in the ordinary course of business were $1 billion and ~~$50~~$46 million, respectively, and related primarily to ~~the Company’s~~our real estate and business dispositions. As of December 31, ~~2016,~~2017, the maximum potential undiscounted future payments and related liability were ~~$48~~$1 billion and ~~$86~~$52 million, respectively. ~~Amounts related to the Company’s Card Member protection plans were included as of December 31, 2016, in addition to its real estate and business dispositions.~~

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

12. Changes In Accumulated Other Comprehensive Income

AOCI is comprised of items that have not been recognized in earnings but may be recognized in earnings in the future when certain events occur. Changes in each component for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

Three Months Ended June 30, 2017 (Millions), net of tax
Net Unrealized Gains (Losses) on Investment Securities Foreign Currency Translation Adjustments Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains Accumulated Other Comprehensive (Loss) Income
Balances as of March 31, 2017 $ 13 $ (1,946 ) $ (537 ) $ (2,470 )
Net unrealized gains (losses) ― ― ― ―
Increase (decrease) due to amounts reclassified into earnings ― ― ― ―
Net translation gain of investments in foreign operations ― 135 ― 135
Net losses related to hedges of investments in foreign operations ― (102 ) ― (102 )
Pension and other postretirement benefit ― ― 9 9
Net change in accumulated other comprehensive loss ― 33 9 42
Balances as of June 30, 2017 $ 13 $ (1,913 ) $ (528 ) $ (2,428 )

Six Months Ended June 30, 2017 (Millions), net of tax
Net Unrealized Gains (Losses) on Investment Securities Foreign Currency Translation Adjustments Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2016 $ 7 $ (2,262 ) $ (529 ) $ (2,784 )
Net unrealized gains 6 ― ― 6
Increase (decrease) due to amounts reclassified into earnings ― ― ― ―
Net translation gain of investments in foreign operations^(a)
― 680 ― 680
Net losses related to hedges of investments in foreign operations ― (331 ) ― (331 )
Pension and other postretirement benefit ― ― 1 1
Net change in accumulated other comprehensive loss 6 349 1 356
Balances as of June 30, 2017 $ 13 $ (1,913 ) $ (528 ) $ (2,428 )

2018 (Millions), net of tax	Net Unrealized Gains (Losses) on Debt Securities			Foreign Currency Translation Adjustments			Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)			Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2017	$	―		$	(1,961	)	$	(467	)	$	(2,428	)
Net unrealized losses		(13	)		―			―			(13	)
Net translation gain of investments in foreign operations		―			192			―			192
Net losses related to hedges of investments in foreign operations		―			(162	)		―			(162	)
Pension and other postretirement benefits		―			―			28			28
Other^(a)		2			―			―			2
Net change in accumulated other comprehensive (loss) income		(11	)		30			28			47
Balances as of March 31, 2018	$	(11	)	$	(1,931	)	$	(439	)	$	(2,381	)


2017 (Millions), net of tax	Net Unrealized Gains (Losses) on Investment Securities		Foreign Currency Translation Adjustments			Net Unrealized Pension and Other Postretirement Benefit Gains (Losses)			Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2016	$	7	$	(2,262	)	$	(529	)	$	(2,784	)
Net unrealized gains		6		―			―			6
Net translation gain of investments in foreign operations		―		545			―			545
Net losses related to hedges of investments in foreign operations		―		(229	)		―			(229	)
Pension and other postretirement benefits		―		―			(8	)		(8	)
Net change in accumulated other comprehensive income (loss)		6		316			(8	)		314
Balances as of March 31, 2017	$	13	$	(1,946	)	$	(537	)	$	(2,470	)

(a)	Represents unrealized gains and losses pertaining to equity securities moved from AOCI to retained earnings as of January 1, 2018, due to the prospective adoption of the financial instruments guidance effective January 1, 2018 (refer to Note 1).

~~(a) Includes $289 million of recognized tax benefits (Refer to Note 14).~~

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three Months Ended June 30, 2016 (Millions), net of tax
Net Unrealized Gains (Losses) on Investment Securities Foreign Currency Translation Adjustments Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains Accumulated Other Comprehensive (Loss) Income
Balances as of March 31, 2016 $ 60 $ (2,040 ) $ (522 ) $ (2,502 )
Net unrealized gains 5 ― ― 5
Net translation loss of investments in foreign operations ― (265 ) ― (265 )
Net gains related to hedges of investments in foreign operations ― 135 ― 135
Pension and other postretirement benefit ― ― 6 6
Net change in accumulated other comprehensive loss 5 (130 ) 6 (119 )
Balances as of June 30, 2016 $ 65 $ (2,170 ) $ (516 ) $ (2,621 )

Six Months Ended June 30, 2016 (Millions), net of tax
Net Unrealized Gains (Losses) on Investment Securities Foreign Currency Translation Adjustments Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains Accumulated Other Comprehensive (Loss) Income
Balances as of December 31, 2015 $ 58 $ (2,044 ) $ (548 ) $ (2,534 )
Net unrealized gains 9 ― ― 9
Decrease due to amounts reclassified into earnings (2 ) ― ― (2 )
Net translation loss of investments in foreign operations ― (169 ) ― (169 )
Net gains related to hedges of investments in foreign operations ― 43 ― 43
Pension and other postretirement benefit ― ― 32 32
Net change in accumulated other comprehensive loss 7 (126 ) 32 (87 )
Balances as of June 30, 2016 $ 65 $ (2,170 ) $ (516 ) $ (2,621 )

The following table shows the tax impact for the three ~~and six~~ months ended ~~June 30~~March 31 for the changes in each component of AOCI presented above:

Tax expense (benefit)
Three Months Ended June 30,
Six Months Ended
June 30,

(Millions) 2017 2016 2017 2016
Investment securities $ ― $ 2 $ 3 $ 2
Foreign currency translation adjustments^(a)
12 22 (179 ) 37
Net investment hedges (67 ) 78 (207 ) 24
Pension and other postretirement benefits 1 10 (8 ) 29
Total tax impact $ (54 ) $ 112 $ (391 ) $ 92

~~(a) Includes $289 million of tax benefits recognized in the six months ended June 30, 2017 (Refer to Note 14).~~

	Tax expense (benefit)
(Millions)	2018			2017
Investment securities	$	(3	)	$	3
Foreign currency translation adjustments		2			(191	)
Net investment hedges		(54	)		(140	)
Pension and other postretirement benefits		3			(9	)
Total tax impact	$	(52	)	$	(337	)

~~Table of Contents~~

~~AMERICAN EXPRESS COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table presents the effects of reclassifications out of AOCI and into the Consolidated Statements of ~~Income:~~Income for the three months ended March 31, 2018 and 2017:

Gains (losses) recognized in earnings
Three Months Ended Six Months Ended
June 30, June 30,
Amount Amount
Description (Millions)
Income Statement Line Item 2017 2016 2017 2016
Available-for-sale securities
Reclassifications for previously unrealized net gains on investment securities Other non-interest revenues $ ― $ ― $ ― $ 4
Related income tax expense Income tax provision ― ― ― (2 )
Reclassification to net income related to available-for-sale securities ― ― ― 2
Total $ ― $ ― $ ― $ 2

		Gains (losses) recognized in earnings
			Amount
Description (Millions)	Income Statement Line Item	2018				2017
Foreign currency translation adjustments
Reclassification of translation adjustments and related hedges	Other expenses			1			―
Related income tax	Income tax provision			(1	)		―
Reclassification of foreign currency translation adjustments				―			―
Total			$	―		$	―

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. ~~Non-Interest Revenue~~Other Fees and ~~Expense Detail~~Commissions, Other Revenues and Other Expenses

The following is a detail of Other fees and ~~commissions:~~commissions for the three months ended March 31:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Millions)	2017		2016		2017		2016		2018		2017
Fees charged to Card Members:
Delinquency fees	$	218	$	192	$	432	$	392	$	242	$	214
Foreign currency conversion fee revenue		212		207		411		403		225		199
Other customer fees:
Loyalty coalition-related fees		114		104		216		198		111		102
Travel commissions and fees		90		87		174		167		99		90
Other^(a)		118		112		232		222
Service fees and other^(a)										104		106
Total Other fees and commissions	$	752	$	702	$	1,465	$	1,382	$	781	$	711

(a)	Other ~~primarily~~ includes ~~service~~Membership Rewards program fees ~~and fees~~that are not related to ~~Membership Rewards programs.~~contracts with customers.

The following is a detail of Other ~~revenues:~~revenues for the three months ended March 31:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Millions)	2017			2016			2017			2016			2018		2017
Global Network Services partner revenues		$	150		$	197		$	306		$	342	$	79	$	94
Other^(a)			289			348			542			689		298		267
Total Other revenues		$	439		$	545		$	848		$	1,031	$	377	$	361

(a)

Other includes revenues arising from net revenue earned on cross-border Card Member spending, insurance premiums earned from Card Member travel and other insurance programs, merchant-related fees, prepaid card and Travelers Cheque-related revenues, revenues related to the GBT JV transition services agreement, ~~Prepaid card and Travelers Cheque-related revenues,~~ earnings from equity method investments (including the GBT JV) and other miscellaneous revenue and fees.

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

The following is a detail of Other ~~expenses:~~expenses for the three months ended March 31:

	Three Months Ended							Six Months Ended
	June 30,							June 30,
(Millions)	2017			2016				2017			2016				2018		2017
Occupancy and equipment															$	520	$	474
Professional services		$	521		$	628			$	1,033		$	1,232			457		501
Occupancy and equipment			484			438				959			903
Gain on sale of HFS portfolios^(a)			―			(1,091	)			―			(1,218	)
Other^(b)			371			495				791			973
Other^(a)																457		395
Total Other expenses		$	1,376		$	470			$	2,783		$	1,890		$	1,434	$	1,370

(a)	~~Refer to Note 2 for additional information.~~

~~(b)~~

~~Other~~For the three months ended March 31, 2018, other expense ~~primarily~~includes the loss on a transaction involving the operations of our prepaid reloadable and gift card business and gains on the re-measurement of certain equity investments previously carried at cost. For both periods, other expense also includes general operating expenses, Card and merchant-related fraud losses, communication expenses, foreign currency-related gains and losses ~~certain loyalty coalition-related expenses~~ and insurance costs. ~~In addition, for 2016, Other expenses includes the valuation allowance adjustment associated with loans and receivables HFS.~~

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14. Income Taxes

The effective tax rate was ~~31.2~~21.5 percent and ~~33.2~~32.0 percent for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and 31.6 percent and 33.8 percent for the six months ended June 30, 2017 and 2016,~~ respectively. The ~~changes~~change in tax rates primarily ~~reflected~~reflects the ~~geographic mix of business and~~reduction in the ~~level of pretax income in relation to recurring permanent tax benefits. In addition, the effective~~U.S. federal statutory tax rate as a result of the Tax Act. The tax rates in ~~the current year reflected~~both periods also reflect the resolution of certain prior years’ tax items. In 2017, we recorded an estimated net discrete tax charge of $2.6 billion related to the Tax Act that was accounted for as a provisional charge under SAB 118. There were no material changes to these estimates for the current period. We continue to analyze the impacts of the Tax Act; therefore, the 2017 charge continues to be provisional.

~~The Company is~~We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which ~~the Company has~~we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. ~~In February 2017, the Company received notification that all matters outstanding with the IRS for tax years 1997-2007 were resolved.~~ The resolution of such matters did not have a material impact on ~~the Company’s~~our effective tax rate. ~~The Company is~~We are currently under examination with the IRS for tax years 2008 through 2014.

~~The Company believes~~We believe it is reasonably possible that ~~its~~our unrecognized tax benefits could decrease within the next 12 months by as much as ~~$133~~$319 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the ~~$133~~$319 million of unrecognized tax benefits, approximately ~~$90~~$291 million relates to amounts that, if recognized, would impact the effective tax rate in a future period. During the six months ended June 30, 2017, the Company’s unrecognized tax benefits decreased by $280 million. The decrease was primarily due to the resolution with the IRS of an uncertain tax position in January 2017, which resulted in the recognition of $289 million in shareholders’ equity, specifically within AOCI.

15. Earnings Per Common Share (EPS)

The computations of basic and diluted EPS for the three months ended March 31 were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Millions, except per share amounts)	2017			2016			2017			2016			2018			2017
Numerator:
Basic and diluted:
Net income	$	1,340		$	2,015		$	2,577		$	3,441		$	1,634		$	1,251
Preferred dividends		(19	)		(19	)		(40	)		(40	)		(21	)		(21	)
Net income available to common shareholders		1,321			1,996			2,537			3,401		$	1,613		$	1,230
Earnings allocated to participating share awards^(a)		(11	)		(17	)		(21	)		(28	)		(13	)		(10	)
Net income attributable to common shareholders	$	1,310		$	1,979		$	2,516		$	3,373		$	1,600		$	1,220
Denominator:^(a)
Basic: Weighted-average common stock		890			938			895			949			859			899
Add: Weighted-average stock options ^(b)		3			3			3			3			2			4
Diluted		893			941			898			952			861			903

Basic EPS	$	1.47		$	2.11		$	2.81		$	3.55		$	1.86		$	1.36
Diluted EPS	$	1.47		$	2.10		$	2.80		$	3.54		$	1.86		$	1.35

(a)

~~The Company’s~~Our unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.

(b)

The dilutive effect of unexercised stock options excludes from the computation of EPS ~~1.2~~0.6 million and ~~2.5~~1.2 million of options for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and 1.2 million and 1.7 million of options for the six months ended June 30, 2017 and 2016,~~ respectively, because inclusion of the options would have been anti-dilutive.

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AMERICAN EXPRESS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

16. Reportable Operating Segments

~~The Company is~~We are a global services company that is principally engaged in businesses comprising four reportable operating segments: USCS, ICNS, GCS and ~~GMS.~~Global Merchant Services (GMS). Corporate functions and certain other businesses and operations are included in Corporate & Other. Effective January 1, 2018, we changed the methodology used to allocate certain corporate overhead costs and interest income and expense to the operating segments. Prior period amounts have been revised to conform to the current period presentation.

The following table presents certain selected financial information for ~~the Company’s~~our reportable operating segments and Corporate & ~~Other:~~Other as of or for the three months ended March 31:

																								Corporate &
Three Months Ended June 30, 2017 (Millions, except where indicated)	USCS		ICNS		GCS		GMS			Corporate & Other^(a)			Consolidated
Non-interest revenues	$	1,999	$	1,247	$	2,368	$	1,086		$	77		$	6,777
(Millions, except where indicated)															USCS		ICNS		GCS		GMS			Other^(a)			Consolidated
2018
Total non-interest revenues															$	2,294	$	1,551	$	2,838	$	1,110		$	84		$	7,877
Revenue from contracts with customers^(b)																1,799		1,093		2,495		1,110			84			6,581
Interest income		1,369		246		334		1			102			2,052		1,656		294		377		―			135			2,462
Interest expense		171		60		129		(65	)		227			522		253		78		171		(63	)		182			621
Total revenues net of interest expense		3,197		1,433		2,573		1,152			(48	)		8,307		3,697		1,767		3,044		1,173			37			9,718
Net income (loss)	$	440	$	209	$	500	$	430		$	(239	)	$	1,340	$	640	$	291	$	552	$	472		$	(321	)	$	1,634
Total assets (billions)	$	87	$	38	$	51	$	26		$	(35	)	$	167	$	94	$	42	$	58	$	29		$	(43	)	$	180
Total equity (billions)	$	7	$	3	$	7	$	3		$	1		$	21


Six Months Ended June 30, 2017 (Millions, except where indicated)	USCS		ICNS		GCS		GMS			Corporate & Other^(a)			Consolidated
Non-interest revenues	$	3,856	$	2,442	$	4,639	$	2,103		$	126		$	13,166
2017
Total non-interest revenues															$	2,118	$	1,400	$	2,603	$	1,021		$	65		$	7,207
Revenue from contracts with customers^(b)																1,657		1,009		2,297		1,021			63			6,047
Interest income		2,677		481		653		1			183			3,995		1,310		235		319		―			81			1,945
Interest expense		317		113		238		(123	)		420			965		161		54		123		(43	)		148			443
Total revenues net of interest expense		6,216		2,810		5,054		2,227			(111	)		16,196		3,267		1,581		2,799		1,064			(2	)		8,709
Net income (loss)	$	909	$	427	$	918	$	793		$	(470	)	$	2,577	$	494	$	252	$	409	$	357		$	(261	)	$	1,251
Total assets (billions)	$	87	$	38	$	51	$	26		$	(35	)	$	167	$	85	$	36	$	52	$	26		$	(38	)	$	161
Total equity (billions)	$	7	$	3	$	7	$	3		$	1		$	21


Three Months Ended June 30, 2016 (Millions, except where indicated)	USCS		ICNS		GCS		GMS			Corporate & Other^(a)			Consolidated
Non-interest revenues	$	2,069	$	1,242	$	2,280	$	1,087		$	108		$	6,786
Interest income		1,278		234		310		1			62			1,885
Interest expense		139		58		104		(61	)		196			436
Total revenues net of interest expense		3,208		1,418		2,486		1,149			(26	)		8,235
Net income (loss)	$	1,067	$	228	$	576	$	373		$	(229	)	$	2,015
Total assets (billions)	$	81	$	35	$	46	$	24		$	(26	)	$	160
Total equity (billions)	$	7	$	3	$	8	$	2		$	1		$	21


Six Months Ended June 30, 2016 (Millions, except where indicated)	USCS		ICNS		GCS		GMS			Corporate & Other^(a)			Consolidated
Non-interest revenues	$	4,098	$	2,382	$	4,470	$	2,128		$	216		$	13,294
Interest income		2,669		461		631		1			128			3,890
Interest expense		279		112		199		(120	)		391			861
Total revenues net of interest expense		6,488		2,731		4,902		2,249			(47	)		16,323
Net income (loss)	$	1,761	$	416	$	1,061	$	730		$	(527	)	$	3,441
Total assets (billions)	$	81	$	35	$	46	$	24		$	(26	)	$	160
Total equity (billions)	$	7	$	3	$	8	$	2		$	1		$	21

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

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

17. Subsequent Event

Effective April 1, 2018, American Express Centurion Bank and American Express Bank, FSB were merged to become American Express National Bank, regulated, supervised and examined by the Office of the Comptroller of the Currency. The merger did not have any impact on our consolidated financial position, results of operations or cash flows.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Introduction

When we use the terms “American Express,~~” “the Company,~~” “we,” “our” or “us,” we mean American Express Company and its subsidiaries on a consolidated basis, unless we state or the context implies otherwise.

We are a global services company with four ~~reportable~~ operating ~~segments:~~segments used for financial reporting in the first quarter: U.S. Consumer Services (USCS), International Consumer and Network Services (ICNS), Global Commercial Services (GCS) and Global Merchant Services (GMS). Corporate functions and certain other businesses and operations are included in Corporate & Other.

During the first quarter of 2018, we announced organizational changes that combined our U.S. and International consumer businesses into a global consumer services organization, and combined our merchant and network-related businesses, among other changes. Our financial disclosures will reflect these organizational changes starting in the second quarter of 2018, which is consistent with when our executives will begin to review financial information aligned to the new segments. Our reportable operating segments will be as follows:

Global Consumer Services Group, including our U.S. and International Consumer Card Services businesses;

Global Merchant and Network Services, including our Global Merchant Services business, the Global Network Services business, and our Loyalty Coalition programs; and

Global Commercial Services, including our Global Corporate Payments business and our small business services.

We provide our customers with access to products, insights and experiences that enrich lives and build business success. Our principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses around the world. Our range of products and services includes:

• Charge card, credit card and other payment and financing products

• ~~Network services~~

• Merchant acquisition and processing, servicing and settlement, ~~marketing~~ and point-of-sale marketing and information products and services for merchants

Network services

• Other fee services, including fraud prevention services and the design and operation of customer loyalty programs

• Expense management products and services

• Travel-related services

• Stored-value/prepaid products

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, direct mail, in-house sales teams, third-party vendors and direct response advertising. Business travel-related services are offered through our non-consolidated joint venture, American Express Global Business Travel (the GBT JV).

We compete in the global payments industry with charge, credit and debit card networks, issuers and acquirers, paper-based transactions (e.g., cash and checks), bank transfer models (e.g., wire transfers and ACH), as well as evolving and growing alternative payment and financing providers. As the payments industry continues to evolve, we face increasing competition from non-traditional players that leverage new technologies and customer relationships to create payment or financing solutions.

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The following types of revenue are generated from our various products and services:

Discount revenue, our largest revenue source, represents fees generally charged to merchants for accepting our cards as payment for goods or services sold;

Interest on loans, principally represents interest income earned on outstanding balances;

Net card fees, represent revenue earned from annual card membership fees, which varies based on the type of card and the number of cards for each account;

Other fees and commissions, represent Card Member delinquency fees, foreign currency conversion fees charged to Card Members, ~~Card Member delinquency fees,~~ loyalty coalition-related fees, travel commissions and fees, service fees and fees related to our Membership Rewards program; and

Other revenue, primarily represents revenues arising from contracts with partners of our Global Network Services (GNS) business (including commissions and signing ~~fees)~~fees less issuer rate payments), cross-border Card Member spending, insurance premiums earned from Card Members, ancillary merchant-related fees, revenues related to the GBT JV transition services agreement, prepaid card and Travelers Cheque-related revenue and earnings from equity method investments (including the GBT JV).

~~Table~~Effective January 1, 2018, we adopted new revenue recognition guidance using the full retrospective method, which applies the new standard to each prior reporting period presented, starting January 1, 2016. The adoption changed the recognition timing and classification of ~~Contents~~certain revenues and expenses, including changes to the presentation of certain credit and charge card related costs that were previously netted against discount revenue. The adoption did not have a significant impact on our consolidated financial position, net income, equity or cash flows. Refer to Note 1 to the “Consolidated Financial Statements” for additional information. In addition, we reclassified certain business development expenses, from other expenses to marketing and business development, which was not directly attributable to the adoption of the new revenue recognition guidance.

Forward-Looking Statements and Non-GAAP Measures

Certain of the statements in this Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the “Cautionary Note Regarding Forward-Looking Statements” section. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this Form 10-Q constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies.

Bank Holding Company

American Express ~~Company~~ is a bank holding company under the Bank Holding Company Act of 1956 and The Board of Governors of the Federal Reserve System (the Federal Reserve) is our primary federal regulator. As such, we are subject to the Federal Reserve’s regulations, policies and minimum capital standards.

Business Environment

Our results for the ~~second~~first quarter reflect a solid start to the year as we continue to ~~reflect solid progress against~~invest across our ~~current priorities~~four key focus areas – strengthening our leadership position with premium consumers, extending our strong position in the commercial payments space, making American Express an essential part of ~~accelerating revenue growth, optimizing investments~~our customers’ digital lives and ~~resetting~~strengthening our global, integrated network. The increase in earnings per share versus the ~~cost base. Billed business and revenue for the second quarter increased slightly, while net income was down. The~~ prior year ~~quarter included revenues and expenses related~~reflected growth across our businesses as well as a lower tax provision due to the ~~Costco Wholesale Corporation (Costco) relationship~~reduction in the U.S. ~~that has since been discontinued, the gain~~corporate income tax rate resulting from the ~~sale of the related loan portfolio~~Tax Cuts and a restructuring charge. During the current quarter, our strong balance sheet position allowed us to continue to return a significant amount of capital to shareholders through share repurchases and dividends.

Jobs Act (the Tax Act).

Our worldwide ~~billings adjusted for foreign currency exchange rates~~billed business increased ~~and, after excluding Costco-related billings from~~12 percent over the prior year, ~~grew consistent with the first quarter,~~ reflecting growth across all of our ~~diverse~~ customer segments and geographies. ~~We continued to see~~Our U.S. and international proprietary consumer card issuing businesses saw a sequential improvement in billings growth. U.S. billings growth benefited from the acquisition from Citibank, N.A. of the portion of the Hilton cobrand portfolio that we did not previously own (the acquired Hilton portfolio), growth from existing customers and strong ~~performance~~growth in our Platinum portfolios, which was driven by prior year investments. Commercial billings growth also accelerated driven by growth from large and global commercial customers, as well as middle market and small business ~~customers, while spending by large corporations was up only slightly compared~~customers. As anticipated, Global Network Services billed business grew at a slower rate than our proprietary business due to ~~last year. Internationally, our consumer~~the impact of the evolving regulatory environment in Europe and ~~small business billings growth rates remained strong.~~Australia.

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Revenues net of interest expense ~~increased slightly year-over-year on~~grew, reflecting higher Card Member spending, loans and fee income, partially offset by a ~~reported basis. Excluding Costco-related revenues~~decline in the ~~prior year~~average discount rate. We are focused on driving discount revenue growth, not on maximizing the average discount rate, which has led us to selectively adjust such rate in order to drive higher volume growth and the effect of foreign currency exchange rates, adjusted revenues net of interest expense grew primarily due to an increase in net interest income and higher adjusted billed business, as well as higher net card fees across our premium card portfolios.overall economics. Our net interest yield increased year-over-year, ~~due~~primarily related to a shift in mix ~~shift~~over time towards non-cobrand lending products ~~where Card Members tend to revolve~~that generally attract more ~~of their~~revolving loan balances, ~~as well as~~ a lower percentage of total loans at introductory interest rates and specific pricing ~~actions, and a benefit from increases in benchmark~~actions. We continue to expect net interest ~~rates.~~

yield to stabilize sequentially.

Card Member ~~loan and receivable growth was strong~~loans grew year-over-year as we ~~continue~~continued to ~~grow loans from~~expand our lending relationships with existing customers ~~as well as through the acquisition of~~and acquired new Card ~~Members.~~Members, including the previously mentioned acquired Hilton portfolio. Provisions for losses increased ~~as expected,~~ as a result of higher Card Member loans and receivables ~~as well as a slight increase~~and increases in lending delinquencies and ~~higher~~ net write-off rates. ~~These~~The increases in the delinquencies and net write-off rates ~~increased,~~were in line with our expectations and primarily due to the seasoning of ~~loans related to newer Card Members~~recent loan vintages and a shift in mix over time towards non-cobrand lending products, which have ~~slightly~~ higher write-off ~~rates.~~rates but also drive higher net interest yields. We expect ~~as a result of~~ these trends relating to lending write-off rates, delinquencies and provisions for losses ~~will continue~~ to ~~grow faster than loans during the balance of the year.~~

continue.

Spending on ~~Card Member~~customer engagement (the aggregate of rewards, Card Member services and marketing and ~~promotion~~business development expenses) increased year-over-year, ~~and primarily reflected the recent enhancements to rewards on our U.S. Platinum products, continued strong~~driven in part by growth in ~~our Delta cobrand portfolio~~rewards, which reflects the growth in billings, and continued higher levels of ~~engagement in~~usage across many of our premium travel services. ~~Operating~~Marketing and business development expense increased due to partner payments related to our recent cobrand agreements and higher corporate client incentives. We expect marketing and business development expenses ~~increased, primarily as a result~~to be higher over the balance of the ~~Costco cobrand portfolio sale gain in~~year due to increased investments. Operating expense increased year-over-year, reflecting the ~~prior year, which was classified as an expense reduction in Other expenses. Excluding~~impact of foreign currency exchange rate changes and a number of discrete items, including a loss on a transaction related to our prepaid business operations and gains on the ~~gain and the restructuring charge in the prior year, adjusted operating expenses decreased reflecting progress against~~re-measurement of certain equity investments previously held at cost.

As previously announced, we have suspended our ~~cost reduction initiatives.~~

~~The momentum in~~share buyback program for the first half of 2018 in order to rebuild our capital, and as a result, we saw our capital ratios improve during the ~~year reflects~~first quarter. We continued to return capital to shareholders through our dividend distributions.

While we continue to see some headwinds from a rising interest rate environment, regulation in countries around the ~~investments we have made in a variety of growth opportunities over the last several years. Although~~world and intense competition, ~~remains intense and the regulatory environment is uncertain,~~ we remain focused on delivering differentiated value to our merchants, customers and business partners, while delivering appropriate returns to our shareholders.

See “Certain legislative, regulatory and other developments” in “Other Matters” for information on ~~legislative and regulatory changes~~certain matters that could have a material adverse effect on our results of operations and financial condition.

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American Express Company

Consolidated Results of Operations

Refer to the “Glossary of Selected Terminology” for the definitions of certain key terms and related information appearing within this section.

Effective December 1, 2015, we transferred the Card Member loans and receivables related to our cobrand partnerships with Costco and JetBlue Airways Corporation (JetBlue) (collectively, the HFS portfolios) to Card Member loans and receivables HFS on the Consolidated Balance Sheets. On March 18, 2016 and June 17, 2016, we completed the sales of the JetBlue and Costco cobrand card portfolios, respectively. For the periods from December 1, 2015, through the sale completion dates, the primary impacts beyond the HFS classification on the Consolidated Balance Sheets were to provisions for losses and credit metrics, which do not reflect amounts related to these HFS loans and receivables, as credit costs were reported in Other expenses through a valuation allowance adjustment. Other, non-credit related metrics (i.e., billed business, cards-in-force, net interest yield) reflect amounts related to the HFS portfolios through the sale completion dates. Additionally, for periods after the sale completion dates, activities associated with these cobrand partnerships and the HFS portfolios are no longer included in our Consolidated Results of Operations. Specifically, these impacts include: Discount revenue from Costco in the United States for spend on all American Express cards and from other merchants for spend on the Costco cobrand card; Other fees and commissions and Interest income from Costco cobrand Card Members; and Card Member rewards expense related to the Costco cobrand card, resulting in a lack of comparability between 2017 and 2016.

The discussions in both the Consolidated Results of Operations and Business Segment Results provide commentary on the variances for the three ~~and six month periods~~months ended ~~June 30, 2017~~March 31, 2018 compared to same ~~periods~~period in the prior year, as presented in the accompanying tables. Effective January 1, 2018, we changed the methodology used to allocate certain corporate overhead costs and interest income and expense to the operating segments. Prior period amounts have been revised to conform to the current period presentation.

Table 1: Summary of Financial Performance

	Three Months Ended											Six Months Ended											Three Months Ended
	June 30,						Change					June 30,						Change					March 31,						Change
(Millions, except percentages and per share amounts)	2017			2016			2017 vs. 2016					2017			2016			2017 vs. 2016					2018			2017			2018 vs. 2017
Total revenues net of interest expense	$	8,307		$	8,235		$	72		1	%	$	16,196		$	16,323		$	(127	)	(1	)%	$	9,718		$	8,709		$	1,009		12	%
Provisions for losses		584			463			121		26			1,157			897			260		29			775			573			202		35
Expenses		5,774			4,756			1,018		21			11,273			10,226			1,047		10			6,861			6,297			564		9
Pretax income																								2,082			1,839			243		13
Income tax provision																								448			588			(140	)	(24	)
Net income		1,340			2,015			(675	)	(33	)		2,577			3,441			(864	)	(25	)		1,634			1,251			383		31
Earnings per common share - diluted^(a)	$	1.47		$	2.10		$	(0.63	)	(30	)%	$	2.80		$	3.54		$	(0.74	)	(21	)%
Earnings per common share — diluted^(a)																							$	1.86		$	1.35		$	0.51		38	%
Return on average equity^(b)		21.7	%		26.4	%							21.7	%		26.4	%							15.2	%		24.9	%
Effective tax rate																								21.5	%		32.0	%

(a)

Earnings per common share — diluted was reduced by the impact of (i) earnings allocated to participating share awards and other items of ~~$11~~$13 million and ~~$17~~$10 million for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $21 million and $28 million for the six months ended June 30, 2017 and 2016,~~ respectively, and (ii) dividends on preferred shares of ~~$19~~$21 million for both the three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016, and $40 million for both the six months ended June 30, 2017 and 2016.~~2017.

(b)

Return on average equity (ROE) is computed by dividing (i) one-year period net income ($~~4.5~~3.1 billion and ~~$5.6~~$5.2 billion for ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively) by (ii) one-year average total shareholders’ equity ($~~20.9~~20.5 billion and ~~$21.2~~$20.8 billion for ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively).

Table 2: Total Revenue Net of Interest Expense Summary

	Three Months Ended									Six Months Ended									Three Months Ended
	June 30,				Change					June 30,				Change					March 31,				Change
(Millions, except percentages)	2017		2016		2017 vs. 2016					2017		2016		2017 vs. 2016					2018		2017		2018 vs. 2017
Discount revenue	$	4,815	$	4,824	$	(9	)	―	%	$	9,334	$	9,467	$	(133	)	(1	)%	$	5,889	$	5,387	$	502	9	%
Net card fees		771		715		56		8			1,519		1,414		105		7			830		748		82	11
Other fees and commissions		752		702		50		7			1,465		1,382		83		6			781		711		70	10
Other		439		545		(106	)	(19	)		848		1,031		(183	)	(18	)		377		361		16	4
Total non-interest revenues		6,777		6,786		(9	)	―			13,166		13,294		(128	)	(1	)		7,877		7,207		670	9
Total interest income		2,052		1,885		167		9			3,995		3,890		105		3			2,462		1,945		517	27
Total interest expense		522		436		86		20			965		861		104		12			621		443		178	40
Net interest income		1,530		1,449		81		6			3,030		3,029		1		―			1,841		1,502		339	23
Total revenues net of interest expense	$	8,307	$	8,235	$	72		1	%	$	16,196	$	16,323	$	(127	)	(1	)%	$	9,718	$	8,709	$	1,009	12	%

~~Table of Contents~~

Total Revenues Net of Interest Expense

Discount revenue ~~was flat for the three month period and decreased slightly for the six month period,~~increased, primarily ~~driven~~due to growth in billed business, partially offset by ~~Costco-related revenue included~~a decrease in the ~~prior year, substantially offset by billed business growth across other card products in the current periods.~~

average discount rate. Worldwide billed business ~~was flat for both the three and six month periods. U.S. billed business decreased 4~~increased by 12 percent, driven by 10 percent and 517 percent ~~for the three~~increases in U.S. and ~~six month periods respectively, primarily driven by Costco-related volumes in the prior year. Non-U.S.~~non-U.S. billed business, ~~increased 9 percent and 11 percent for the three and six month periods,~~ respectively. See Tables 5 6 and 76 for more details on the average discount rate and billed business performance.

The ~~increase~~decrease in the average discount rate ~~for both the three and six month periods~~ primarily reflected ~~the absence of Costco merchant volumes in the current year, which were at a lower discount~~ rate ~~than the average, partially offset by rate pressure~~reductions from merchant negotiations, including those resulting from the recent regulatory changes affecting competitor pricing in ~~the European Union, changes in industry and regional mix and~~certain international markets, the continued growth of the OptBlue ~~program.~~program, and changes in industry and geographic mix. We expect the average discount rate will ~~likely~~continue to decline over time due to a greater shift of existing merchants into OptBlue, merchant negotiations and competition, volume related pricing discounts, ~~and~~ certain pricing initiatives mainly driven by pricing regulation (including regulation of competitors’ interchange rates).

~~Net card fees increased for both the three~~ and ~~six month periods, primarily driven by growth in the Platinum and Delta portfolios as well as growth in certain key international markets.~~

Other fees and commissions increased for both the three and six month periods, primarily driven by an increase in delinquency fees as a result of a change in the date on which late fees are assessed on our U.S. consumer charge cards, partially offset by Costco-related fees in the prior year.

Other revenues decreased for both the three and six month periods, primarily driven by a contractual payment from a GNS partner and revenues related to our Loyalty Edge business, both in the prior year.

Interest income increased for both the three and six month periods, primarily driven by growth in average Card Member loans and higher yields in the current year, partially offset by Costco cobrand-related interest income included in the prior year.

~~Interest expense increased for both the three and six month periods, primarily driven by marginally higher interest rates and higher average long-term debt.~~

~~Table 3: Provisions for Losses Summary~~

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(Millions, except percentages) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Charge card $ 163 $ 153 $ 10 7 % $ 376 $ 322 $ 54 17 %
Card Member loans 404 285 119 42 741 512 229 45
Other 17 25 (8 ) (32 ) 40 63 (23 ) (37 )
Total provisions for losses^(a)
$ 584 $ 463 $ 121 26 % $ 1,157 $ 897 $ 260 29 %

~~(a)~~

~~Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios.~~

~~Provisions for Losses~~

~~Charge card provision for losses increased for both the three and six month periods, primarily driven by growth in charge volume in the GCS segment and higher net write-offs.~~

Card Member loans provision for losses increased for both the three and six month periods, primarily driven by strong momentum in our lending growth initiatives, as well as a slight increase in delinquencies and higher net write-off rates, primarily due to the seasoning of loans related to newer Card Members and a shift towards non-cobrand lending products, which have slightly higher write-off rates.other factors.

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Net card fees increased, primarily driven by growth in certain key international countries as well as growth in the Platinum and Delta portfolios.

Other fees and commissions increased, primarily driven by increases in delinquency fees, due to a change in the late fee assessment date for certain U.S. charge cards, foreign exchange conversion revenue and loyalty coalition-related fees.

Other revenues increased, primarily driven by an increase in the profit distribution from the GBT JV.

Interest income increased, primarily reflecting higher average Card Member loans and higher yields. The growth in average Card Member loans was primarily driven by expanding relationships with existing customers, as well as the inclusion of the acquired Hilton portfolio. The increase in yields was primarily driven by a greater percentage of loans at higher rate buckets, specific pricing actions, and a mix shift over time towards non-cobrand lending products, where Card Members tend to revolve more of their loan balances.

Interest expense increased, primarily driven by higher interest rates and higher average deposits and long-term debt, partially offset by fair value hedge ineffectiveness previously reported in Other expense.

Table 3: Provisions for Losses Summary

	Three Months Ended
	March 31,						Change
(Millions, except percentages)	2018			2017			2018 vs. 2017
Charge card		$	242		$	213		$	29	14	%
Card Member loans			499			337			162	48
Other			34			23			11	48
Total provisions for losses		$	775		$	573		$	202	35	%

Provisions for Losses

Charge card provision for losses increased, primarily driven by growth in receivables due to increased billed business.

Card Member loans provision for losses increased, driven by continued strong loan growth and higher delinquencies and write-offs due to the seasoning of recent loan vintages and a shift in mix over time towards non-cobrand products.

Other provision for losses ~~decreased for both the three and six month periods,~~increased, primarily ~~driven by improving credit performance~~due to growth in the ~~commercial financing~~non-card lending portfolio.

Table 4: Expenses Summary

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(Millions, except percentages) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Marketing and promotion $ 830 $ 788 $ 42 5 % $ 1,530 $ 1,515 $ 15 1 %
Card Member rewards 1,926 1,766 160 9 3,733 3,469 264 8
Card Member services and other 349 281 68 24 670 563 107 19
Total marketing, promotion, rewards, Card Member services and other 3,105 2,835 270 10 5,933 5,547 386 7
Salaries and employee benefits 1,293 1,451 (158 ) (11 ) 2,557 2,789 (232 ) (8 )
Other, net^(a)
1,376 470 906 # 2,783 1,890 893 47
Total expenses $ 5,774 $ 4,756 $ 1,018 21 % $ 11,273 $ 10,226 $ 1,047 10 %

~~# Denotes a variance greater than 100 percent.~~

	Three Months Ended
	March 31,				Change
(Millions, except percentages)	2018		2017		2018 vs. 2017
Marketing and business development^(a)	$	1,345	$	1,285	$	60	5	%
Card Member rewards		2,347		2,061		286	14
Card Member services		409		317		92	29
Total marketing, business development, rewards, Card Member services		4,101		3,663		438	12
Salaries and employee benefits		1,326		1,264		62	5
Other, net^(a)		1,434		1,370		64	5
Total expenses	$	6,861	$	6,297	$	564	9	%

(a)

~~Beginning December 1, 2015 through~~Includes reclassification of certain business development expenses from Other expenses to Marketing and business development that are not directly attributable to the ~~portfolio sale completion dates, includes~~adoption of the ~~valuation allowance adjustment associated with~~new revenue recognition guidance. The prior period has been conformed to the ~~HFS portfolios.~~current period presentation.

Table of Contents

Expenses

Marketing and ~~promotion~~business development expenses increased, ~~marginally during the three month period~~primarily due to higher cobrand partner payments as a result of recent cobrand agreements, and ~~were relatively flat during the six month period.~~increased corporate client incentives driven by higher volumes, partially offset by lower spending on growth initiatives.

Card Member rewards expenses increased, ~~for both the three and six month periods,~~ primarily ~~driven by an increase~~due to increases in Membership Rewards expense of ~~$243~~$141 million and ~~$472 million for the three and six month periods, respectively, partially offset by a reduction in~~ cobrand rewards expense of ~~$84~~$127 million, ~~and $208 million for the same respective periods. The increases in Membership Rewards expense~~both of which were primarily driven by ~~enhancements to U.S. Consumer and Small Business Platinum rewards and~~ higher spending volumes. ~~The decreases in cobrand rewards expense reflected Costco-related expenses in the prior year, partially offset by increased spending volumes across other cobrand card products in the current periods.~~

The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 95 percent (rounded down) at both ~~June 30, 2017~~March 31, 2018 and ~~2016.~~2017.

Card Member services ~~and other~~ expenses increased, ~~for both the three and six month periods,~~ primarily driven by higher usage of ~~cobrand~~ travel-related benefits and the enhanced Platinum card benefits.

Salaries and employee benefits expenses ~~decreased for both the three~~increased, primarily driven by increases in payroll costs and ~~six month periods, reflecting restructuring charges in the prior year and benefits from our cost reduction initiatives in the current year.~~incentive compensation.

Other expenses increased, ~~for both the three and six month periods,~~ primarily driven by a loss on a transaction involving the ~~prior-year gain on the sale~~operations of ~~the Costco HFS portfolio~~our prepaid reloadable and ~~in the six month period, the gain on the sale of the JetBlue HFS portfolio, also in the prior year. The increases were~~gift card business, partially offset by ~~lower technology-related costs and a benefit in~~gains on the ~~current year from a change in the liability related to non-delivery~~re-measurement of ~~goods and services by merchants, as well as the HFS valuation allowance adjustment, Loyalty Edge-related costs and a contribution to the AXP Foundation in the prior year.~~certain equity investments previously carried at cost.

Income Taxes

The effective tax rate decreased, ~~for both the three and six month periods,~~ primarily reflecting the ~~geographic mix of business and the level of pretax income in relation to recurring permanent tax benefits. In addition, the effective tax rates~~reduction in the ~~current year periods reflected~~U.S. federal statutory tax rate as a result of the ~~resolution of certain prior years’ tax items in the six month period.~~Tax Act.

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Table 5: Selected Card-Related Statistical Information

	As of or for the						Change			As of or for the						Change			As of or for the						Change
	Three Months Ended						2017			Six Months Ended						2017			Three Months Ended						2018
	June 30,						vs.			June 30,						vs.			March 31,						vs.
	2017			2016			2016			2017			2016			2016			2018			2017			2017
Card billed business: (billions)
United States	$	177.6		$	185.1			(4	)%	$	343.0		$	361.4			(5	)%	$	182.5		$	165.4			10	%
Outside the United States		92.0			84.2			9			178.9			161.7			11			101.3			86.9			17
Worldwide	$	269.6		$	269.3			―		$	521.9		$	523.1			―		$	283.8		$	252.3			12
Proprietary																			$	236.9		$	208.9			13
Global Network Services																				46.9			43.4			8
Worldwide																			$	283.8		$	252.3			12
Total cards-in-force: (millions)
United States		48.9			47.0			4			48.9			47.0			4			51.3			48.2			6
Outside the United States		63.3			61.2			3			63.3			61.2			3			62.9			63.0			―
Worldwide																				114.2			111.2			3
Proprietary																				66.4			62.2			7
Global Network Services																				47.8			49.0			(2	)
Worldwide		112.2			108.2			4			112.2			108.2			4			114.2			111.2			3
Basic cards-in-force: (millions)
United States		38.6			37.0			4			38.6			37.0			4			40.4			38.1			6
Outside the United States		52.6			50.5			4			52.6			50.5			4			52.4			52.2			―
Worldwide		91.2			87.5			4			91.2			87.5			4			92.8			90.3			3
Average basic Card Member spending: (dollars)^(a)
United States	$	5,128		$	4,672			10		$	9,989		$	8,941			12		$	5,015		$	4,859			3
Outside the United States		3,468			3,319			4			6,752			6,404			5			3,869			3,283			18
Worldwide Average		4,633			4,313			7			9,022			8,280			9		$	4,677		$	4,387			7
Card Member loans: (billions)
United States		58.5			53.2			10			58.5			53.2			10		$	63.9		$	56.6			13
Outside the United States		7.5			6.7			12			7.5			6.7			12			8.9			7.0			27
Worldwide	$	66.0		$	59.9			10		$	66.0		$	59.9			10		$	72.8		$	63.6			14
Average discount rate		2.44	%		2.43	%					2.44	%		2.43	%
Average discount rate^(b)																				2.37	%		2.43	%
Average fee per card (dollars)^(a)	$	49		$	42			17	%	$	49		$	41			20	%	$	51		$	48			6	%

(a)	Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees divided by average worldwide proprietary cards-in-force.

(b)

Effective January 1, 2018, we began including billings volumes related to certain business-to-business products in the calculation of the average discount rate to reflect our expanding business to business product offerings. Prior period rates have been revised to conform to the current period presentation.

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Table 6: Billed Business Growth

	Three Months Ended				Three Months Ended
	June 30, 2017				March 31, 2018
			Percentage Increase					Percentage Increase
	Percentage		(Decrease) Assuming		Percentage			(Decrease) Assuming
	Increase		No Changes in		Increase			No Changes in
	(Decrease)		FX Rates^(a)		(Decrease)			FX Rates^(a)
Worldwide^(b)
Total billed business	―	%	1	%		12	%		10	%
Proprietary billed business	(1)		―			13			11
GNS billed business^(c)	5		5			8			3
Airline-related volume (8% of worldwide billed business)	1		1
Airline-related volume (9% of worldwide billed business)						10			6
United States^(b)
Billed business	(4)					10
Proprietary consumer card billed business^(d)	(9)					11
Proprietary small business and corporate services billed business^(e)	4					10
T&E-related volume (26% of U.S. billed business)	(3)
Non-T&E-related volume (74% of U.S. billed business)	(4)
Airline-related volume (7% of U.S. billed business)	(1)
T&E-related volume (27% of U.S. billed business)						8
Non-T&E-related volume (73% of U.S. billed business)						11
Airline-related volume (8% of U.S. billed business)						7
Outside the United States^(b)
Billed business	9		11			17			9
Japan, Asia Pacific & Australia (JAPA) billed business	12		13			16			10
Latin America & Canada (LACC) billed business	8		9			12			11
Europe, the Middle East & Africa (EMEA) billed business	7		10			20			7
Proprietary consumer card billed business^(c)	9		12			25			16
Proprietary small business and corporate services billed business^(e)	8	%	10	%		23	%		14	%

(a)

The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared).

(b)	Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.

(c)	Included in the ICNS segment.

(d)	Included in the USCS segment.

(e)	Included in the GCS segment.

~~Table of Contents~~

~~Table 7: Billed Business Growth~~

Six Months Ended
June 30, 2017
Percentage Increase
Percentage (Decrease) Assuming
Increase No Changes in
(Decrease)
FX Rates^(a)

Worldwide^(b)

Total billed business ― % ― %
Proprietary billed business (1) (1)
GNS billed business^(c)
6 6
Airline-related volume (9% of worldwide billed business) 1 2
United States^(b)

Billed business (5)
Proprietary consumer card billed business^(d)
(11)
Proprietary small business and corporate services billed business^(e)
3
T&E-related volume (26% of U.S. billed business) (4)
Non-T&E-related volume (74% of U.S. billed business) (6)
Airline-related volume (8% of U.S. billed business) (3)
Outside the United States^(b)

Billed business 11 12
     Japan, Asia Pacific & Australia billed business 14 14
     Latin America & Canada billed business 9 9
     Europe, the Middle East & Africa billed business 7 11
Proprietary consumer card billed business^(c)
8 12
Proprietary small business and corporate services billed business^(e)
11 % 12 %

~~(a)~~

~~Refer to Note (a) in Table 6.~~

~~(b)~~

~~Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.~~

~~(c)~~

~~Included in the ICNS segment.~~

~~(d)~~

~~Included in the USCS segment.~~

~~(e)~~

~~Included in the GCS segment.~~

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Table 8:7: Selected Credit-Related Statistical Information

As of or for the Change As of or for the Change
Three Months Ended 2017 Six Months Ended 2017
June 30, vs. June 30, vs.
(Millions, except percentages and where indicated) 2017 2016 2016 2017 2016 2016
Worldwide Card Member loans: ^(a)

Total loans (billions)
$ 66.0 $ 59.9 10 $ 66.0 $ 59.9 10
Loss reserves:
Beginning balance $ 1,248 $ 1,012 23 $ 1,223 $ 1,028 19
Provisions ^(b)
404 285 42 741 512 45
Net write-offs — principal only ^(c)
(285 ) (223 ) 28 (557 ) (437 ) 27
Net write-offs — interest and fees ^(c)
(55 ) (40 ) 38 (106 ) (80 ) 33
Other ^(d)
8 57 (86 ) 19 68 (72 )
Ending balance $ 1,320 $ 1,091 21 $ 1,320 $ 1,091 21
Ending reserves — principal $ 1,247 $ 1,037 20 $ 1,247 $ 1,037 20
Ending reserves — interest and fees $ 73 $ 54 35 $ 73 $ 54 35
% of loans 2.0 % 1.8 % 2.0 % 1.8 %
% of past due 167 % 160 % 167 % 160 %
Average loans (billions)^(a)
$ 65.1 $ 58.8 11 % $ 64.6 $ 58.2 11 %
Net write-off rate — principal only ^(e)
1.8 % 1.5 % 1.7 % 1.5 %
Net write-off rate — principal, interest and fees ^(e)
2.1 1.8 2.1 1.8
30+ days past due as a % of total ^(e)
1.2 % 1.1 % 1.2 % 1.1 %

Worldwide Card Member receivables: ^(a)

Total receivables (billions)
$ 49.4 $ 45.2 9 % $ 49.4 $ 45.2 9 %
Loss reserves:
Beginning balance $ 491 $ 446 10 $ 467 $ 462 1
Provisions ^(b)
163 153 7 376 322 17
Net write-offs ^(c)
(179 ) (173 ) 3 (373 ) (359 ) 4
Other ― (3 ) # 5 (2 ) #
Ending balance $ 475 $ 423 12 $ 475 $ 423 12
% of receivables 1.0 % 0.9 % 1.0 % 0.9 %
Net write-off rate — principal only ^(e)
1.5 1.6 1.6 1.7
Net write-off rate — principal and fees ^(e)
1.7 1.8 1.8 2.0
30+ days past due as a % of total ^(e)
1.3 1.3 1.3 1.3
Net loss ratio as a % of charge volume — GCP 0.10 0.09 0.10 0.09
90+ days past billing as a % of total — GCP 0.8 % 0.7 % 0.8 % 0.7 %

~~# Denotes a variance greater than 100 percent.~~

	As of or for the						Change
	Three Months Ended						2018
	March 31,						vs.
(Millions, except percentages and where indicated)	2018			2017			2017
Worldwide Card Member loans:
Total loans (billions)	$	72.8		$	63.6			14	%
Loss reserves:
Beginning balance	$	1,706		$	1,223			39
Provisions ^(a)		499			337			48
Net write-offs — principal only ^(b)		(358	)		(272	)		32
Net write-offs — interest and fees ^(b)		(71	)		(51	)		39
Other		10			11			(9	)
Ending balance	$	1,786		$	1,248			43
Ending reserves — principal	$	1,691		$	1,179			43
Ending reserves — interest and fees	$	95		$	69			38
% of loans		2.5	%		2.0	%
% of past due		174	%		158	%
Average loans (billions)	$	72.7		$	63.9			14
Net write-off rate — principal only ^(c)		2.0	%		1.7	%
Net write-off rate — principal, interest and fees ^(c)		2.4	%		2.0	%
30+ days past due as a % of total ^(c)		1.4	%		1.2	%

Worldwide Card Member receivables:
Total receivables (billions)	$	54.2		$	47.6			14
Loss reserves:
Beginning balance	$	521		$	467			12
Provisions ^(a)		242			213			14
Net write-offs ^(b)		(199	)		(194	)		3
Other		1			5			(80	)
Ending balance	$	565		$	491			15	%
% of receivables		1.0	%		1.0	%
Net write-off rate — principal only ^(c)		1.6	%		1.7	%
Net write-off rate — principal and fees ^(c)		1.8	%		2.0	%
30+ days past due as a % of total ^(c)		1.5	%		1.5	%
Net loss ratio as a % of charge volume — GCP		0.10	%		0.11	%
90+ days past billing as a % of total — GCP		0.8	%		0.7	%

(a)	~~Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios.~~

~~(b)~~

Reflects provisions for principal, interest and/or fees on Card Member loans and receivables. ~~Refer to Table 3 footnote (a).~~

~~(c)~~(b)

Write-offs, less recoveries.

~~(d)~~

Includes reserves associated with Card Member loans reclassified from HFS to held for investment. Refer to Changes in Card Member loans reserve for losses under Note 4 to our Consolidated Financial Statements for additional information.

~~(e)~~(c)

We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because we consider uncollectible interest and/or fees in our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented. The net write-off rates and 30+ days past due as a percentage of total for Card Member receivables relate to USCS, ICNS and Global Small Business Services (GSBS) Card Member receivables.

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Table 9:8: Net Interest Yield on Average Card Member Loans

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(Millions, except percentages and where indicated)	2017			2016			2017			2016			2018			2017
Net interest income	$	1,530		$	1,449		$	3,030		$	3,029		$	1,841		$	1,502
Exclude:
Interest expense not attributable to our Card Member loan portfolio(a)		302			247			554			485			302			247
Interest income not attributable to our Card Member loan portfolio(b)		(155	)		(102	)		(285	)		(205	)		(213	)		(130	)
Adjusted net interest income ^(a)(c)	$	1,677		$	1,594		$	3,299		$	3,309		$	1,930		$	1,619
Average loans including HFS loan portfolios (billions)^(b)	$	65.1		$	67.6		$	64.6		$	69.2
Net interest income divided by average loans		9.4	%		8.6	%		9.4	%		8.8	%
Net interest yield on Card Member loans ^(a)		10.3	%		9.5	%		10.3	%		9.6	%
Average Card Member loans (billions)													$	72.7		$	63.9
Net interest income divided by average Card Member loans^(c)														10.1	%		9.4	%
Net interest yield on average Card Member loans ^(c)														10.8	%		10.3	%

(a)	Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.

(b)	Primarily represents interest income attributable to Other loans, interest-bearing deposits and our Travelers Cheque and other stored-value investment portfolio.

(c)

Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.

~~(b)~~

~~Beginning December 1, 2015 through~~ Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the ~~sale completion dates, for the purposes of the calculation~~Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member ~~loans, average loans included the HFS loan portfolios.~~loans.

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Business Segment Results

U.S. Consumer Services

Table ~~10:~~9: USCS Selected Income Statement Data

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(Millions, except percentages) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Revenues
Non-interest revenues $ 1,999 $ 2,069 $ (70 ) (3 )% $ 3,856 $ 4,098 (242 ) (6 )%
Interest income 1,369 1,278 91 7 2,677 2,669 8 ―
Interest expense 171 139 32 23 317 279 38 14
Net interest income 1,198 1,139 59 5 2,360 2,390 (30 ) (1 )
Total revenues net of interest expense 3,197 3,208 (11 ) ― 6,216 6,488 (272 ) (4 )
Provisions for losses 345 237 108 46 639 427 212 50
Total revenues net of interest expense after provisions for losses 2,852 2,971 (119 ) (4 ) 5,577 6,061 (484 ) (8 )
Expenses
Marketing, promotion, rewards, Card Member services and other 1,469 1,369 100 7 2,766 2,717 49 2
Salaries and employee benefits and other operating expenses 714 (96 ) 810 # 1,442 559 883 #
Total expenses 2,183 1,273 910 71 4,208 3,276 932 28
Pretax segment income 669 1,698 (1,029 ) (61 ) 1,369 2,785 (1,416 ) (51 )
Income tax provision 229 631 (402 ) (64 ) 460 1,024 (564 ) (55 )
Segment income $ 440 $ 1,067 $ (627 ) (59 )% $ 909 $ 1,761 (852 ) (48 )%
Effective tax rate 34.2 % 37.2 % 33.6 % 36.8 %

~~# Denotes a variance greater than 100 percent.~~

	Three Months Ended
	March 31,						Change
(Millions, except percentages)	2018			2017			2018 vs. 2017
Revenues
Non-interest revenues	$	2,294		$	2,118		$	176		8	%
Interest income		1,656			1,310			346		26
Interest expense		253			161			92		57
Net interest income		1,403			1,149			254		22
Total revenues net of interest expense		3,697			3,267			430		13
Provisions for losses		423			294			129		44
Total revenues net of interest expense after provisions for losses		3,274			2,973			301		10
Expenses
Marketing, business development, rewards, Card Member services		1,771			1,564			207		13
Salaries and employee benefits and other operating expenses		690			671			19		3
Total expenses		2,461			2,235			226		10
Pretax segment income		813			738			75		10
Income tax provision		173			244			(71	)	(29	)
Segment income	$	640		$	494		$	146		30	%
Effective tax rate		21.3	%		33.1	%

USCS issues a wide range of proprietary consumer cards and provides services to consumers in the United States, including ~~consumer~~ travel services.

Non-interest revenues ~~decreased for both the three and six month periods,~~increased, primarily ~~due to lower~~driven by discount revenue, which ~~decreased $124~~increased $142 million, ~~and $325 million for the three and six month periods, respectively,~~or 9 percent, reflecting ~~decreases~~an increase in billed business of ~~9 percent and~~ 11 percent for the three and six month periods, respectively. The decreases in both discount revenue and billed business were driven by Costco-related volumes included in the prior year. The decreases in discount revenue were partially offset, in both the three and six month periods, by an increase in netpercent. Net card fees and other fees and commissions increased, driven primarily ~~from~~by growth in the Platinum and Delta portfolios ~~as well as~~and higher delinquency ~~fees.~~fees, respectively.

Net interest income increased, ~~for the three month period and was relatively flat for the six month period,~~ primarily driven by growth in average Card Member loans and higher yields, ~~in the current year,~~partially offset ~~(partially in the case of the three month period)~~ by ~~Costco cobrand-related interest income included in the prior year and~~ higher interest expense, ~~in the current year,~~ primarily driven by higher cost of funds. The growth in average Card Member loans was primarily driven by expanding relationships with existing customers, as well as the inclusion of the acquired Hilton portfolio. The increase in yields was primarily driven by a greater percentage of loans at higher rate buckets, specific pricing actions, and a mix shift over time towards non-cobrand lending products, where Card Members tend to revolve more of their loan balances.

~~Provisions~~Provision for losses increased, ~~for both the three and six month periods, primarily~~ driven by Card Member ~~loans~~loan provision, which increased ~~$97~~by $136 million ~~and $177 million in the three and six month periods, respectively,~~primarily due to strong ~~momentum in our~~ lending growth ~~initiatives, as well as slight increases in~~and higher delinquencies and ~~higher net write-off rates primarily~~write-offs due to ~~the~~continued seasoning of ~~loans related to newer Card Members~~recent loan vintages and a shift in mix over time towards non-cobrand ~~lending products, which have slightly higher write-off rates.~~

~~Table of Contents~~

products.

Marketing, ~~promotion,~~business development, rewards, Card Member services ~~and other~~ expenses increased ~~for~~across all expense categories. Card Member rewards expense increased $132 million, driven by increased spending volumes across both ~~the three~~proprietary and ~~six month periods, reflecting higher marketing and promotion and~~cobrand portfolios. Card Member services ~~and other expenses in both periods, partially offset in the six month period by a decrease in Card Member rewards expenses. Marketing and promotion~~ expenses increased, $59 million and $38 million for the three and six month periods, respectively, due to continued spending on growth initiatives. Card Member services and other expenses increased $37 million and $56 million for the three and six month periods, respectively, driven by higher usage of ~~cobrand~~ travel-related benefits and enhanced Platinum card benefits. ~~Card Member rewards expense~~Marketing and business development expenses increased, ~~$4 million for the three month period and decreased $45 million for the six month period, reflecting Costco-related expenses in the prior year, which were more than~~driven by higher cobrand partner payments, partially offset ~~in the three month period~~ by ~~enhancements to Platinum rewards and increased~~lower spending ~~volumes.~~on growth initiatives.

Salaries and employee benefits and other operating expenses increased, ~~for both the three and six month periods,~~ primarily driven by ~~the prior-year gain on the sale of the Costco HFS portfolio, partially offset by lower~~higher technology and other servicing-related costs, partially offset by gains on the re-measurement, in the current ~~year~~period, of certain equity investments previously carried at cost and ~~the~~ prior ~~year HFS valuation allowance adjustment and restructuring charges.~~period hedge ineffectiveness now included in Interest expense.

The effective tax rate ~~was lower for both the three and six month periods,~~decreased, primarily reflecting the ~~level of pretax income in relation to recurring permanent tax benefits and the resolution of certain prior years’ tax items~~reduction in the ~~six month period.~~U.S. federal statutory tax rate as a result of the Tax Act.

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Table ~~11:~~10: USCS Selected Statistical Information

	As of or for the						Change			As of or for the						Change			As of or for the						Change
	Three Months Ended						2017			Six Months Ended						2017			Three Months Ended						2018
	June 30,						vs.			June 30,						vs.			March 31,						vs.
(Millions, except percentages and where indicated)	2017			2016			2016			2017			2016			2016			2018			2017			2017
Card billed business (billions)	$	84.8		$	93.4			(9	)%	$	162.2		$	182.4			(11	)%	$	86.0		$	77.5			11	%
Total cards-in-force		33.8			31.8			6			33.8			31.8			6			36.1			33.2			9
Basic cards-in-force		24.2			22.6			7			24.2			22.6			7			25.8			23.7			9
Average basic Card Member spending (dollars)	$	3,538		$	3,417			4		$	6,837		$	6,523			5		$	3,371		$	3,297			2
Total segment assets (billions)	$	86.8		$	81.3			7		$	86.8		$	81.3			7		$	93.8		$	85.3			10
Segment capital (billions)	$	7.1		$	6.8			4		$	7.1		$	6.8			4
Return on average segment capital ^(a)		23.3	%		38.9	%					23.3	%		38.9	%
Card Member loans: ^(b)
Card Member loans:
Total loans (billions)	$	48.3		$	44.6			8		$	48.3		$	44.6			8		$	52.7		$	46.7			13
Average loans (billions)	$	47.7		$	43.5			10		$	47.6		$	43.1			10		$	52.9		$	47.2			12
Net write-off rate – principal only ^(c)		1.8	%		1.5	%					1.7	%		1.5	%
Net write-off rate – principal, interest and fees ^(c)		2.1	%		1.7	%					2.0	%		1.7	%
Net write-off rate – principal only ^(a)																				2.0	%		1.7	%
Net write-off rate – principal, interest and fees ^(a)																				2.4	%		2.0	%
30+ days past due loans as a % of total		1.1	%		1.1	%					1.1	%		1.1	%					1.4	%		1.2	%
Calculation of Net Interest Yield on
Card Member loans:
Calculation of Net Interest Yield on Average Card Member loans:
Net interest income	$	1,198		$	1,139					$	2,360		$	2,390					$	1,403		$	1,149
Exclude:
Interest expense not attributable to our Card Member loan portfolio		28			20						51			39
Interest income not attributable to our Card Member loan portfolio		(23	)		(5	)					(41	)		(10	)
Interest expense not attributable to our Card Member loan portfolio ^(b)																				37			34
Interest income not attributable to our Card Member loan portfolio ^(c)																				(38	)		(18	)
Adjusted net interest income ^(d)	$	1,203		$	1,154					$	2,370		$	2,419					$	1,402		$	1,165

Average loans including HFS loan portfolios (billions)^(e)	$	47.7		$	50.8					$	47.6		$	52.3

Net interest income divided by average loans		10.0	%		9.0	%					9.9	%		9.1	%
Net interest yield on Card Member loans^(d)		10.1	%		9.1	%					10.0	%		9.3	%
Card Member receivables: ^(b)
Average Card Member loans (billions)																			$	52.9		$	47.2
Net interest income divided by average Card Member loans ^(d)																				10.6	%		9.7	%
Net interest yield on average Card Member loans^(d)																				10.7	%		10.0	%
Card Member receivables:
Total receivables (billions)	$	11.3		$	10.6			7	%	$	11.3		$	10.6			7	%	$	11.7		$	10.9			7	%
Net write-off rate – principal only ^(c)		1.2	%		1.3	%					1.4	%		1.5	%
Net write-off rate – principal and fees ^(c)		1.4	%		1.6	%					1.5	%		1.8	%
Net write-off rate – principal only ^(a)																				1.3	%		1.5	%
Net write-off rate – principal and fees ^(a)																				1.5	%		1.7	%
30+ days past due as a % of total		1.1	%		1.2	%					1.1	%		1.2	%					1.3	%		1.3	%

(a)

Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.7 billion and $2.8 billion for the twelve months ended June 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($7.1 billion and $7.3 billion for the twelve months ended June 30, 2017 and 2016, respectively)Refer to Table 7 footnote (c).

(b)	Refer to Table 8 footnote (a).

(c)	Refer to Table 8 footnote ~~(e)~~(b).

(d)

Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.

~~(e)~~

Refer to Table 98 footnote ~~(b)~~(c).

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International Consumer and Network Services

Table ~~12:~~11: ICNS Selected Income Statement Data

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(Millions, except percentages) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Revenues
Non-interest revenues $ 1,247 $ 1,242 $ 5 ― % $ 2,442 $ 2,382 $ 60 3 %
Interest income 246 234 12 5 481 461 20 4
Interest expense 60 58 2 3 113 112 1 1
Net interest income 186 176 10 6 368 349 19 5
Total revenues net of interest expense 1,433 1,418 15 1 2,810 2,731 79 3
Provisions for losses 84 78 6 8 150 149 1 1
Total revenues net of interest expense after provisions for losses 1,349 1,340 9 1 2,660 2,582 78 3
Expenses
Marketing, promotion, rewards, Card Member services and other 561 500 61 12 1,066 981 85 9
Salaries and employee benefits and other operating expenses 513 567 (54 ) (10 ) 1,027 1,073 (46 ) (4 )
Total expenses 1,074 1,067 7 1 2,093 2,054 39 2
Pretax segment income 275 273 2 1 567 528 39 7
Income tax provision 66 45 21 47 140 112 28 25
Segment income $ 209 $ 228 $ (19 ) (8 )% $ 427 $ 416 $ 11 3 %
Effective tax rate 24.0 % 16.5 % 24.7 % 21.2 %

	Three Months Ended
	March 31,						Change
(Millions, except percentages)	2018			2017			2018 vs. 2017
Revenues
Non-interest revenues	$	1,551		$	1,400		$	151		11	%
Interest income		294			235			59		25
Interest expense		78			54			24		44
Net interest income		216			181			35		19
Total revenues net of interest expense		1,767			1,581			186		12
Provisions for losses		108			66			42		64
Total revenues net of interest expense after provisions for losses		1,659			1,515			144		10
Expenses
Marketing, business development, rewards, Card Member services		857			726			131		18
Salaries and employee benefits and other operating expenses		432			441			(9	)	(2	)
Total expenses		1,289			1,167			122		10
Pretax segment income		370			348			22		6
Income tax provision		79			96			(17	)	(18	)
Segment income	$	291		$	252		$	39		15	%
Effective tax rate		21.4	%		27.6	%

ICNS issues a wide range of proprietary consumer cards outside the United States and enters into partnership agreements with third-party card issuers and acquirers, licensing the American Express brand and extending the reach of the global network. It also provides travel services ~~to consumers~~ outside the United States.

Non-interest revenues ~~were flat for the three month period and~~ increased, ~~for the six month period,~~ primarily driven by ~~higher~~ discount revenue, ~~in both periods,~~which increased $98 million, due to an increase in ~~both~~ proprietary ~~and non-proprietary (i.e., GNS)~~ billed business ~~as well as higher net~~and the impact of changes in the foreign exchange rates. Net card fees ~~offset~~and other fees and commissions increased, primarily driven by growth in ~~the three month period by a prior-year contractual payment from a GNS partner.~~cards-in-force and higher delinquency fees, respectively. Total billed business increased, ~~for both the three and six months,~~ reflecting higher proprietary cards-in-force and average spend per card. Refer to Tables 6, 7 and 1312 for additional information on billed business.

Net interest income increased for ~~both~~ the three ~~and six~~ month ~~periods,~~period, primarily driven by higher average loan ~~balances.~~balances, partially offset by higher cost of funds.

Provisions for losses increased due to strong growth in both Card Member receivables and loans resulting in higher delinquencies and write-offs.

Marketing, ~~promotion,~~business development, rewards, Card Member services ~~and other~~ expenses increased, ~~for both the three and six month periods,~~ primarily driven by ~~higher~~ Card Member rewards expense, which increased $83 million, due to higher spending ~~volumes.~~volumes, and marketing and business development expense primarily due to increased investment levels in our proprietary business.

Salaries and employee benefits and other operating expenses decreased, ~~for both the three and six month periods,~~ primarily driven by lower ~~salaries and employee benefits costs, including restructuring charges in the prior year, partially offset by higher~~ technology and other servicing-related costs.

The effective tax rate decreased, primarily reflecting the reduction in ~~all periods reflects~~ the ~~impact~~U.S. federal statutory tax rate as a result of ~~recurring permanent tax benefits both in relation to~~ the segment’s ongoing funding activities outside the United States, which is allocated to ICNS under our internal tax allocation process, and on varying levels of pretax income. The effective tax rates for the prior year periods also reflects the allocated share of tax benefits related to the resolution of certain prior years’ tax items.Tax Act.

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Table ~~13:~~12: ICNS Selected Statistical Information

	As of or for the						Change			As of or for the						Change			As of or for the						Change
	Three Months Ended						2017			Six Months Ended						2017			Three Months Ended						2018
	June 30,						vs.			June 30,						vs.			March 31,						vs.
(Millions, except percentages and where indicated)	2017			2016			2016			2017			2016			2016			2018			2017			2017
Card billed business (billions)
Proprietary	$	28.9		$	26.5			9	%	$	55.5		$	51.2			8	%	$	33.3		$	26.6			25	%
GNS		45.8			43.8			5			89.2			84.3			6			47.0			43.4			8
Total	$	74.7		$	70.3			6		$	144.7		$	135.5			7		$	80.3		$	70.0			15
Total cards-in-force
Proprietary		15.4			15.0			3			15.4			15.0			3			16.2			15.3			6
GNS		49.2			48.0			3			49.2			48.0			3			47.8			49.0			(2	)
Total		64.6			63.0			3			64.6			63.0			3			64.0			64.3			―
Proprietary basic cards-in-force		10.6			10.3			3			10.6			10.3			3			11.3			10.5			8
Average proprietary basic Card Member spending (dollars)	$	2,726		$	2,609			4		$	5,269		$	5,066			4		$	3,001		$	2,542			18
Total segment assets (billions)	$	37.6		$	35.0			7		$	37.6		$	35.0			7		$	42.0		$	36.1			16
Segment capital (billions)	$	2.8		$	2.6			8		$	2.8		$	2.6			8
Return on average segment capital ^(a)		25.2	%		25.5	%					25.2	%		25.5	%
Card Member loans: ^(b)
Card Member loans:
Total loans (billions)	$	7.2		$	6.6			9		$	7.2		$	6.6			9		$	8.7		$	6.8			28
Average loans (billions)	$	7.1		$	6.8			4		$	7.0		$	6.8			3	%	$	8.6		$	6.9			25
Net write-off rate – principal only ^(c)		2.0	%		2.1	%					2.0	%		2.0	%
Net write-off rate – principal, interest and fees ^(c)		2.5	%		2.5	%					2.5	%		2.4	%
Net write-off rate – principal only ^(a)																				2.1	%		2.0	%
Net write-off rate – principal, interest and fees ^(a)																				2.6	%		2.5	%
30+ days past due loans as a % of total		1.7	%		1.7	%					1.7	%		1.7	%					1.6	%		1.7	%
Calculation of Net Interest Yield on Card Member loans:
Calculation of Net Interest Yield on Average Card Member loans:
Net interest income	$	186		$	176					$	368		$	349					$	216		$	181
Exclude:
Interest expense not attributable to our Card Member loan portfolio		14			10						24			21
Interest income not attributable to our Card Member loan portfolio		(3	)		(4	)					(6	)		(7	)
Interest expense not attributable to our Card Member loan portfolio ^(b)																				21			12
Interest income not attributable to our Card Member loan portfolio^(c)																				(4	)		(4	)
Adjusted net interest income ^(d)	$	197		$	182					$	386		$	363					$	233		$	189

Average loans (billions)	$	7.1		$	6.8					$	7.0		$	6.8

Net interest income divided by average loans		10.5	%		10.4	%					10.5	%		10.3	%
Net interest yield on Card Member loans ^(d)		11.2	%		10.8	%					11.1	%		10.8	%
Card Member receivables: ^(b)
Average Card Member loans (billions)																			$	8.6		$	6.9
Net interest income divided by average Card Member loans ^(d)																				10.0	%		10.5	%
Net interest yield on average Card Member loans ^(d)																				10.9	%		11.1	%
Card Member receivables:
Total receivables (billions)	$	6.0		$	5.6			7	%	$	6.0		$	5.6			7	%	$	7.1		$	5.5			29	%
Net write-off rate – principal only ^(c)		1.9	%		2.2	%					2.0	%		2.2	%
Net write-off rate – principal and fees^(c)		2.0	%		2.3	%					2.2	%		2.4	%
30+ days past due as a % of total		1.4	%		1.4	%					1.4	%		1.4	%
Net write-off rate – principal only ^(a)																				2.0	%		2.1	%
Net write-off rate – principal and fees^(a)																				2.2	%		2.3	%
30+ days past due loans as a % of total																				1.5	%		1.5	%

(a)

Return on average segment capital is calculated by dividing (i) one-year period segment income ($666 million and $711 million for the twelve months ended June 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($2.6 billion and $2.8 billion for the twelve months ended June 30, 2017 and 2016, respectively)Refer to Table 7 footnote (c).

(b)	Refer to Table 8 footnote (a).

(c)	Refer to Table 8 footnote ~~(e)~~(b).

(d)

~~Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures.~~ Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.Table 8 footnote (c).

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Global Commercial Services

Table ~~14:~~13: GCS Selected Income Statement Data

	Three Months Ended											Six Months Ended											Three Months Ended
	June 30,						Change					June 30,						Change					March 31,						Change
(Millions, except percentages)	2017			2016			2017 vs. 2016					2017			2016			2017 vs. 2016					2018			2017			2018 vs. 2017
Revenues
Non-interest revenues	$	2,368		$	2,280		$	88		4	%	$	4,639		$	4,470		$	169		4	%	$	2,838		$	2,603		$	235		9	%
Interest income		334			310			24		8			653			631			22		3			377			319			58		18
Interest expense		129			104			25		24			238			199			39		20			171			123			48		39
Net interest income		205			206			(1	)	―			415			432			(17	)	(4	)		206			196			10		5
Total revenues net of interest expense		2,573			2,486			87		3			5,054			4,902			152		3			3,044			2,799			245		9
Provisions for losses		154			139			15		11			362			299			63		21			240			208			32		15
Total revenues net of interest expense after provisions for losses		2,419			2,347			72		3			4,692			4,603			89		2			2,804			2,591			213		8
Expenses
Marketing, promotion, rewards, Card Member services and other		949			841			108		13			1,887			1,607			280		17
Marketing, business development, rewards, Card Member services																								1,373			1,290			83		6
Salaries and employee benefits and other operating expenses		697			596			101		17			1,402			1,325			77		6			714			684			30		4
Total expenses		1,646			1,437			209		15			3,289			2,932			357		12			2,087			1,974			113		6
Pretax segment income		773			910			(137	)	(15	)		1,403			1,671			(268	)	(16	)		717			617			100		16
Income tax provision		273			334			(61	)	(18	)		485			610			(125	)	(20	)		165			208			(43	)	(21	)
Segment income	$	500		$	576		$	(76	)	(13	)%	$	918		$	1,061		$	(143	)	(13	)%	$	552		$	409		$	143		35	%
Effective tax rate		35.3	%		36.7	%							34.6	%		36.5	%							23.0	%		33.7	%

GCS issues a wide range of proprietary corporate and small business cards and provides payment and expense management services globally. In addition, GCS provides commercial financing products.

Non-interest revenues increased, ~~for both the three and six month periods,~~ primarily driven by ~~higher~~ discount revenue, which increased $203 million, due to ~~increases~~growth in ~~billed business, partially offset by Costco-related revenues in the prior year and increased contra-discount revenue in the current year, driven by higher client incentives due to increased~~ billed business. The increase in non-interest revenues was also driven by higher other fees and commissions and higher net card fees, ~~for both the three and six month periods,~~ primarily due to higher delinquency fees and growth in the U.S. small business Platinum ~~portfolio.~~portfolio, respectively.

Net interest income ~~was relatively flat for the three month period and decreased for the six month period,~~increased, primarily driven by higher ~~interest expense, reflecting an increase in the~~average loan balances, partially offset by higher cost of funds and ~~Costco cobrand interest income in the prior year, substantially offset by an increase in~~higher average ~~Card Member loans and higher net interest yield.~~debt.

Provisions for losses increased, ~~for both the three and six month periods~~primarily due to ~~strong growth in both Card Member receivables and loans, partially offset by improving credit performance in~~ the ~~commercial financing~~charge portfolio.

Marketing, ~~promotion,~~business development, rewards, Card Member services ~~and other~~ expenses increased, ~~for both the three and six month periods,~~primarily driven by ~~higher~~increases in Card Member rewards ~~expenses, which increased $119 million and $246 million for the three and six month periods, respectively. The higher Card Member rewards expenses were primarily driven by enhancements~~expense, due to ~~Platinum rewards and~~ higher spending volumes, partially offset by Costco-related expenses in the prior year. Marketing and promotion expenses decreased in the three month period, but increased in the six month period reflecting spending on growth initiatives.volumes.

Salaries and employee benefits and other operating expenses increased, ~~for both the three and six month periods,~~ primarily driven by ~~the prior-year gain on the sale of the Costco HFS portfolio,~~higher technology costs, partially offset by ~~lower technology-related expenses and the HFS valuation allowance~~prior-period hedge ineffectiveness now included in ~~the prior year.~~interest expense.

The effective tax rate ~~was lower for both the three and six months,~~decreased, primarily reflecting the ~~geographic mix of business and the resolution of certain prior years’ tax items~~reduction in the ~~six month period.~~U.S. federal statutory tax rate as a result of the Tax Act.

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Table ~~15:~~14: GCS Selected Statistical Information

	As of or for the						Change			As of or for the						Change			As of or for the						Change
	Three Months Ended						2017			Six Months Ended						2017			Three Months Ended						2018
	June 30,						vs.			June 30,						vs.			March 31,						vs.
(Millions, except percentages and where indicated)	2017			2016			2016			2017			2016			2016			2018			2017			2017
Card billed business (billions)	$	109.0		$	104.3			5	%	$	211.9		$	202.8			4	%	$	115.7		$	102.8			13	%
Total cards-in-force		13.8			13.4			3			13.8			13.4			3			14.1			13.7			3
Basic cards-in-force		13.8			13.4			3			13.8			13.4			3			14.1			13.7			3
Average basic Card Member spending (dollars)	$	7,920		$	7,060			12		$	15,455		$	13,592			14		$	8,233		$	7,533			9
Total segment assets (billions)	$	51.0		$	46.2			10		$	51.0		$	46.2			10		$	57.8		$	51.5			12
Segment capital (billions)	$	7.4		$	7.7			(3	)	$	7.4		$	7.7			(3	)
Return on average segment capital ^(a)		24.2	%		28.1	%					24.2	%		28.1	%
Card Member loans (billions)	$	10.4		$	8.7			20		$	10.4		$	8.7			20		$	11.5		$	10.0			15
Card Member receivables (billions)	$	32.1		$	29.1			10		$	32.1		$	29.1			10		$	35.5		$	31.2			14
Card Member loans: ^(b)
Card Member loans:
Total loans - GSBS (billions)	$	10.3		$	8.6			20		$	10.3		$	8.6			20		$	11.4		$	10.0			14
Average loans - GSBS (billions)	$	10.1		$	8.5			19		$	9.8		$	8.3			18		$	11.1		$	9.6			16
Net write-off rate (principal only) - GSBS ^(c)		1.5	%		1.3	%					1.5	%		1.3	%
Net write-off rate (principal, interest and fees) - GSBS ^(c)		1.8	%		1.6	%					1.8	%		1.6	%
Net write-off rate (principal only) - GSBS ^(a)																				1.6	%		1.6	%
Net write-off rate (principal, interest and fees) - GSBS ^(a)																				1.9	%		1.8	%
30+ days past due as a % of total - GSBS		1.1	%		1.1	%					1.1	%		1.1	%					1.3	%		1.2	%
Calculation of Net Interest Yield on Card Member loans:
Calculation of Net Interest Yield on Average Card Member loans:
Net interest income	$	205		$	206					$	415		$	432					$	206		$	196
Exclude:
Interest expense not attributable to our Card Member loan portfolio		99			80						182			152
Interest income not attributable to our Card Member loan portfolio		(27	)		(29	)					(54	)		(57	)
Interest expense not attributable to our Card Member loan portfolio ^(b)																				126			96
Interest income not attributable to our Card Member loan portfolio ^(c)																				(36	)		(27	)
Adjusted net interest income^(d)	$	277		$	257					$	543		$	527					$	296		$	265

Average loans including HFS loan portfolios (billions)^(e)	$	10.2		$	10.0					$	10.0		$	10.1

Net interest income divided by average loans		8.0	%		8.2	%					8.3	%		8.5	%
Net interest yield on Card Member loans ^(d)		10.9	%		10.3	%					11.0	%		10.5	%
Card Member receivables: ^(b)
Average Card Member loans (billions)																			$	11.2		$	9.7
Net interest income divided by average Card Member loans^(d)																				7.4	%		8.1	%
Net interest yield on average Card Member loans ^(d)																				10.7	%		11.1	%
Card Member receivables:
Total receivables - GCP (billions)	$	16.9		$	15.3			10		$	16.9		$	15.3			10		$	19.3		$	16.6			16
90+ days past billing as a % of total - GCP ^(f)		0.8	%		0.7	%					0.8	%		0.7	%
90+ days past billing as a % of total - GCP ^(e)																				0.8	%		0.7	%
Net loss ratio (as a % of charge volume) - GCP		0.10	%		0.09	%					0.10	%		0.09	%					0.10	%		0.11	%
Total receivables - GSBS (billions)	$	15.2		$	13.7			11	%	$	15.2		$	13.7			11	%	$	16.2		$	14.6			11	%
Net write-off rate (principal only) - GSBS ^(c)		1.6	%		1.6	%					1.7	%		1.7	%
Net write-off rate (principal and fees) - GSBS ^(c)		1.8	%		1.9	%					1.9	%		2.0	%
Net write-off rate (principal only) - GSBS ^(a)																				1.7	%		1.8	%
Net write-off rate (principal and fees) - GSBS ^(a)																				1.9	%		2.0	%
30+ days past due as a % of total - GSBS		1.4	%		1.4	%					1.4	%		1.4	%					1.8	%		1.6	%

(a)

Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.8 billion and $2.0 billion for the twelve months ended June 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($7.3 billion and $7.2 billion for the twelve months ended June 30, 2017 and 2016, respectively)Refer to Table 7 footnote (c).

(b)

Refer to Table 8 footnote (a).

(c)

Refer to Table 8 footnote ~~(e)~~(b).

(d)

(e)

~~Refer to Table 9 footnote (b).~~

~~(f)~~

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

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Global Merchant Services

Table ~~16:~~15: GMS Selected Income Statement Data

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(Millions, except percentages) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Revenues
Non-interest revenues $ 1,086 $ 1,087 $ (1 ) ― % $ 2,103 $ 2,128 $ (25 ) (1 )%
Interest income 1 1 ― ― 1 1 ― ―
Interest expense (65 ) (61 ) (4 ) 7 (123 ) (120 ) (3 ) 3
Net interest income 66 62 4 6 124 121 3 2
Total revenues net of interest expense 1,152 1,149 3 ― 2,227 2,249 (22 ) (1 )
Provisions for losses ― 5 (5 ) # 3 13 (10 ) (77 )
Total revenues net of interest expense after provisions for losses 1,152 1,144 8 1 2,224 2,236 (12 ) (1 )
Expenses
Marketing, promotion, rewards, Card Member services and other 37 58 (21 ) (36 ) 69 116 (47 ) (41 )
Salaries and employee benefits and other operating expenses 435 489 (54 ) (11 ) 908 952 (44 ) (5 )
Total expenses 472 547 (75 ) (14 ) 977 1,068 (91 ) (9 )
Pretax segment income 680 597 83 14 1,247 1,168 79 7
Income tax provision 250 224 26 12 454 438 16 4
Segment income $ 430 $ 373 $ 57 15 % $ 793 $ 730 $ 63 9 %
Effective tax rate 36.8 % 37.5 % 36.4 % 37.5 %

~~# Denotes a variance greater than 100 percent.~~

	Three Months Ended
	March 31,						Change
(Millions, except percentages)	2018			2017			2018 vs. 2017
Revenues
Non-interest revenues	$	1,110		$	1,021		$	89		9	%
Interest expense		(63	)		(43	)		(20	)	47
Net interest income		63			43			20		47
Total revenues net of interest expense		1,173			1,064			109		10
Provisions for losses		5			3			2		67
Total revenues net of interest expense after provisions for losses		1,168			1,061			107		10
Expenses
Marketing, business development, rewards, Card Member services		74			71			3		4
Salaries and employee benefits and other operating expenses		440			432			8		2
Total expenses		514			503			11		2
Pretax segment income		654			558			96		17
Income tax provision		182			201			(19	)	(9	)
Segment income	$	472		$	357		$	115		32	%
Effective tax rate		27.8	%		36.0	%

GMS operates a global payments network that processes and settles proprietary and non-proprietary card transactions. GMS acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global ~~closed-loop~~integrated network. GMS also operates loyalty coalition businesses in certain countries around the world.

Non-interest revenues ~~were relatively flat for both the three and six month periods,~~increased, primarily ~~due to lower discount revenue~~ driven by ~~Costco cobrand-related revenues in the prior year as well as higher contra-revenues in the current year, offset by billed business growth across other card products and~~ an increase in ~~loyalty coalition revenues.~~discount revenue, which reflected growth in billed business, partially offset by a decline in the average discount rate.

Net interest income increased, reflecting a higher interest expense credit relating to internal transfer pricing, which results in a net benefit for GMS due to its merchant payables.

Marketing, ~~promotion,~~business development, rewards, Card Member services ~~and other~~ expenses ~~decreased for both the three and six month periods,~~increased, reflecting higher levels of spending on growth initiatives, partially offset by a reduction in ~~the prior year.~~external sales agent commissions.

Salaries and employee benefits and other operating expenses ~~decreased for both the three and six month periods,~~increased, primarily driven by ~~a benefit~~increased payroll costs.

The effective tax rate decreased, primarily reflecting the reduction in the ~~current year from~~U.S. federal statutory tax rate as a ~~change in the liability related to non-delivery of goods and services by merchants and growth~~result of the ~~OptBlue program, which does not entail merchant acquirer payments.~~Tax Act.

Table 16: GMS Selected Statistical Information

	As of or for the								Change
	Three Months Ended								2018
	March 31,								vs.
(Millions, except percentages and where indicated)	2018				2017				2017
Loyalty Coalition revenue		$	111			$	102			9	%
Average discount rate^(a)			2.37	%			2.43	%
Total segment assets (billions)		$	29.3			$	25.9			13	%

(a)	Effective January 1, 2018, we changed the methodology used to calculate the average discount rate. Prior period rates have been revised to conform to the current period presentation.

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~~Table 17: GMS Selected Statistical Information~~

As of or for the Change As of or for the Change
Three Months Ended 2017 Six Months Ended 2017
June 30, vs. June 30, vs.
(Millions, except percentages and where indicated) 2017 2016 2016 2017 2016 2016
Loyalty Coalition revenue $ 114 $ 104 10 % $ 216 $ 198 9 %
Average discount rate 2.44 % 2.43 % 2.44 % 2.43 %
Total segment assets (billions)
$ 25.5 $ 24.1 6 % $ 25.5 $ 24.1 6 %
Segment capital (billions)
$ 2.7 $ 2.4 13 % $ 2.7 $ 2.4 13 %
Return on average segment capital ^(a)
59.8 % 61.9 % 59.8 % 61.9 %

~~(a)~~

Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.5 billion for both the twelve months ended June 30, 2017 and 2016) by (ii) one-year average segment capital ($2.5 billion and $2.4 billion for the twelve months ended June 30, 2017 and 2016, respectively).

Corporate & Other

Corporate functions and certain other businesses, including our Prepaid Services business, ~~and other operations,~~ are included in Corporate & Other.

Corporate & Other net expense ~~increased to $239~~was $321 million for the three ~~month period,~~months ended March 31, 2018, compared to ~~$229 million in the same period a year ago and decreased to $470 million for the six month period compared to $527~~$261 million in the same period a year ago. The ~~decrease for the six month period~~increase was primarily driven by ~~prior-year restructuring charges.~~a loss on a transaction involving the operations of our prepaid reloadable and gift card business, partially offset by gains on the re-measurement of certain equity investments previously carried at cost.

Results for both periods included net interest expense related to maintaining the liquidity requirements discussed in “Consolidated Capital Resources and Liquidity – Liquidity Management,” as well as interest expense related to other corporate indebtedness.

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CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY

Our balance sheet management objectives are to maintain:

A solid and flexible equity capital profile;

A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements; and

Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve-month period, even in the event we are unable to continue to raise new funds under our traditional funding programs during a substantial weakening in economic conditions.

~~Table of Contents~~

~~Transitional~~ Basel III

The following table presents our regulatory risk-based capital ratios and leverage ratios and those of our significant bank subsidiaries, American Express Centurion Bank ~~(Centurion Bank)~~ and American Express Bank, FSB, ~~(American Express Bank),~~ as of ~~June 30, 2017.~~March 31, 2018. Effective April 1, 2018, American Express Centurion Bank and American Express Bank, FSB were merged to become American Express National Bank.

Table ~~18:~~17: Regulatory Risk-Based Capital and Leverage Ratios

		Basel III			~~Basel III~~		Ratios as of
					Standards		~~June 30,~~	March 31,
					~~2017~~2018^(a)		~~2017~~	2018
Risk-Based Capital

Common Equity Tier 1		~~5.8~~	6.4	%

American Express Company				~~12.3~~			9.4	%
		American Express Centurion Bank				~~16.9~~			14.2
		American Express Bank, FSB				~~13.9~~			12.3
		Tier 1		~~7.3~~	7.9
		American Express Company				~~13.5~~			10.5
		American Express Centurion Bank				~~16.9~~			14.2
		American Express Bank, FSB				~~13.9~~			12.3
	Total			~~9.3~~	9.9
		American Express Company				~~15.2~~			12.2
		American Express Centurion Bank				~~18.2~~			15.4
		American Express Bank, FSB				~~15.2~~			13.6
Tier 1 Leverage			4.0
		American Express Company				~~11.0~~			8.8
		American Express Centurion Bank				~~16.5~~			10.8
		American Express Bank, FSB				~~12.0~~			10.8
Supplementary Leverage Ratio^(b)			3.0	%

American Express Company				~~9.4~~			7.6
		American Express Centurion Bank				~~12.7~~			8.6
		American Express Bank, FSB				~~9.9~~			8.9	%

(a)	~~Transitional~~ Basel III minimum capital requirement and additional transitional capital conservation buffer as defined by the Federal Reserve for calendar year ~~2017~~2018 for advanced approaches institutions.

(b)	~~The~~We became subject to the minimum supplementary leverage ratio (SLR) requirement of 3 percent is effective January 1, 2018.

Table ~~19:~~18: Regulatory Risk-Based Capital Components and Risk Weighted Assets

American Express Company	June 30,		March 31,
($ in Billions)	2017		2018
Risk-Based Capital(a)
Common Equity Tier 1	$	16.4	$	13.9
Tier 1 Capital		18.0		15.5
Tier 2 Capital^(a)(b)		2.3		2.4
Total Capital		20.3		17.9

Risk-Weighted Assets		133.5		147.4
Average Total Assets to calculate the Tier 1 Leverage Ratio		164.2		175.0
Total Leverage Exposure to calculate SLR	$	190.4
Total Leverage Exposure to calculate supplementary leverage ratio			$	204.4

(a)	Regulatory capital adjustments and deductions have been fully transitioned effective January 1, 2018.

(b)	Tier 2 capital is the sum of the allowance for loan and receivable losses (limited to 1.25 percent of risk-weighted assets) and $600 million of subordinated notes adjusted for capital held by insurance subsidiaries.

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We seek to maintain capital levels and ratios in excess of the minimum regulatory requirements and finance such capital in a cost efficient manner; failure to maintain minimum capital levels could affect our status as a financial holding company and cause the regulatory agencies with oversight of American Express ~~Centurion Bank~~ and American Express National Bank to take actions that could limit our business operations.

Our primary source of equity capital has been the generation of net income. ~~Historically, capital~~Capital generated through net income and other sources, such as the exercise of stock options by employees, ~~has exceeded the annual~~is used to maintain a strong balance sheet, support asset growth and engage in ~~our capital requirements. To the extent capital has exceeded business, regulatory and rating agency requirements, we have historically returned~~acquisitions, with excess ~~capital~~available for distribution to shareholders through ~~our regular common share dividend~~dividends and share ~~repurchase program.~~

~~Table~~repurchases. We currently expect that the portion of ~~Contents~~

generated capital we allocate to support asset growth will be greater going forward than it has been historically due to projected asset growth.

We maintain certain flexibility to shift capital across our businesses as appropriate. For example, we may infuse additional capital into subsidiaries to maintain capital at targeted levels in consideration of debt ratings and regulatory requirements. These infused amounts can affect the capital profile and liquidity levels at the American Express parent company level. ~~We do not currently intend or foresee a need to shift capital from non-U.S. subsidiaries with permanently reinvested earnings to a U.S. parent company.~~

The following are definitions for our regulatory risk-based capital ratios and leverage ratio, which are calculated as per standard regulatory guidance:

Risk-Weighted Assets — Assets are weighted for risk according to a formula used by the Federal Reserve to conform to capital adequacy guidelines. On- and off-balance sheet items are weighted for risk, with off-balance sheet items converted to balance sheet equivalents, using risk conversion factors, before being allocated a risk-adjusted weight. Off-balance sheet exposures comprise a minimal part of the total risk-weighted assets.

Common Equity Tier 1 Risk-Based Capital Ratio — Calculated as Common Equity Tier 1 capital (CET1), divided by risk-weighted assets. CET1 is the sum of common shareholders’ equity, adjusted for ineligible goodwill and intangible assets, certain deferred tax assets, as well as certain other comprehensive income items as follows: net unrealized gains/losses on securities and derivatives, and net unrealized pension and other postretirement benefit/losses, all net of ~~tax and subject to transition provisions.~~tax.

Tier 1 Risk-Based Capital Ratio — Calculated as Tier 1 capital divided by risk-weighted assets. Tier 1 capital is the sum of CET1, our perpetual preferred stock and third-party non-controlling interests in consolidated subsidiaries adjusted for capital held by insurance subsidiaries and deferred tax assets from net operating losses not deducted from CET1. The minimum requirement for the Tier 1 risk-based capital ratio is 1.5 percent higher than the minimum for the CET1 risk-based capital ratio. We have $1.6 billion of preferred shares outstanding to help address a portion of the Tier 1 capital requirements in excess of common equity requirements.

Total Risk-Based Capital Ratio — Calculated as the sum of Tier 1 capital and Tier 2 capital, divided by risk-weighted assets. Tier 2 capital is the sum of the allowance for loan and receivable losses (limited to 1.25 percent of risk-weighted assets), a portion of the unrealized gains on equity securities and $600 million of subordinated notes, adjusted for capital held by insurance subsidiaries.

Tier 1 Leverage Ratio — Calculated by dividing Tier 1 capital by our average total consolidated assets for the most recent quarter.

Supplementary Leverage Ratio — Calculated by dividing Tier 1 capital by total leverage exposure under Basel III. Leverage exposure, which reflects average total consolidated assets with adjustments for Tier 1 capital deductions, average off-balance sheet derivatives exposures, securities purchased under agreements to resell and credit equivalents of undrawn commitments that are both conditionally and unconditionally cancellable.

~~Fully Phased-in Basel III~~

Basel III, when fully phased in, will require bank holding companies and their bank subsidiaries to maintain more capital than prior requirements, with a greater emphasis on common equity. The following table presents our estimates for our regulatory risk-based capital ratios and leverage ratios had Basel III been fully phased in as of June 30, 2017. These ratios are calculated using the standardized approach for determining risk-weighted assets. We are currently taking steps toward Basel III advanced approaches implementation in the United States. We believe the presentation of these ratios is helpful to investors by showing the impact of future regulatory capital standards on our capital and leverage ratios.

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~~Table 20: Estimated Fully Phased-in Basel III Capital and Leverage Ratios~~

June 30,
($ in Billions) 2017
Estimated Common Equity Tier 1 Ratio under Fully Phased-In Basel III^(a)
12.0 %
Estimated Tier 1 Capital Ratio under Fully Phased-In Basel III ^(a)
13.1

Estimated Tier 1 Leverage Ratio under Fully Phased-In Basel III^(b)
10.8
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III 9.3 %

Estimated Risk-Weighted Assets under Fully Phased-In Basel III^(c)
$ 135.0
Estimated Average Total Assets to calculate the Tier 1 Leverage Ratio^(b)
164.0
Estimated Total Leverage Exposure to calculate SLR under Fully Phased-In Basel III ^(d)
$ 190.2

~~(a)~~

The Fully Phased-in Basel III Common Equity Tier 1 and Tier 1 risk-based capital ratios, non-GAAP measures, are calculated as Common Equity Tier 1 or Tier 1 capital under Fully Phased-in Basel III rules, as applicable, divided by risk-weighted assets under Fully Phased-in Basel III rules. Refer to Table 21 for a reconciliation of Common Equity Tier 1 and Tier 1 capital under Fully Phased-in Basel III rules to Common Equity Tier 1 and Tier 1 capital under Transitional Basel III rules.

~~(b)~~

The Fully Phased-in Basel III Tier 1 and supplementary leverage ratios, non-GAAP measures, are calculated by dividing Fully Phased-in Basel III Tier 1 capital by our average total assets and Fully Phased-in total leverage exposure for supplementary leverage ratio purposes under Fully Phased-in Basel III, respectively.

~~(c)~~

Estimated Fully Phased-in Basel III risk-weighted assets, a non-GAAP measure, reflect our Basel III risk-weighted assets, with all transition provisions fully phased in. This includes incremental risk weighting applied to deferred tax assets and significant investments in unconsolidated financial institutions, as well as exposures to past due accounts, equities and sovereigns.

~~(d)~~

Estimated Fully Phased-in Basel III Leverage Exposure, a non-GAAP measure, reflects average total consolidated assets with adjustments for Tier 1 capital deductions on a fully phased-in basis, off-balance sheet derivatives, undrawn conditionally and unconditionally cancellable commitments and other off-balance sheet liabilities.

The following table presents a comparison of our CET1 and Tier 1 risk-based capital under Transitional Basel III rules to our estimated CET1 and Tier 1 risk-based capital under Fully Phased-in Basel III rules as of June 30, 2017.

~~Table 21: Transitional Basel III versus Fully Phased-in Basel III~~

(Billions) CET1 Tier 1
Risk-Based Capital under Transitional Basel III $ 16.4 $ 18.0
Adjustments related to:
AOCI (0.1 ) (0.1 )
Transition provisions for intangible assets (0.2 ) (0.2 )
Other ― ―
Estimated CET1 and Tier 1 Risk-Based Capital under Fully Phased-in Basel III $ 16.1 $ 17.7

~~Fully Phased-in Basel III Risk-Weighted Assets~~ — Reflects our Basel III risk-weighted assets, with all transition provisions fully phased in. This includes incremental risk weighting applied to deferred tax assets and significant investments in unconsolidated financial institutions, as well as exposures to past due accounts, equities and sovereigns.

~~Fully Phased-in Basel III Tier 1 Leverage Ratio~~ ~~— Calculated by dividing Fully Phased-in Basel III Tier 1 capital by our average total consolidated assets.~~

~~Fully Phased-in Basel III Supplementary Leverage Ratio~~ ~~— Calculated by dividing Fully Phased-in Basel III Tier 1 capital by our Fully Phased-in total leverage exposure for supplementary leverage ratio purposes under Fully Phased-in Basel III.~~

Share Repurchases and Dividends

We return capital to common shareholders through dividends and share repurchases. The share repurchases reduce common shares outstanding and more than offset the issuance of new shares as part of employee compensation plans.

We decided to suspend our share buyback program for the first half of 2018 in order to rebuild our capital levels and ratios. We intend to continue our quarterly dividends during the first half of 2018 at the current level.

During the three ~~and six~~ months ended ~~June 30, 2017,~~March 31, 2018, we returned ~~$1.1~~$0.3 billion ~~and $2.3 billion, respectively,~~ to our shareholders in the form of common stock dividends ($0.3 billion and $0.6 billion, respectively) and share repurchases ($0.8 billion and $1.7 billion, respectively). We repurchased 11 million common shares at an average price of $79.72 in the second quarter of 2017.dividends. These ~~dividend and share repurchase amounts collectively~~dividends represent approximately ~~83 percent and 87~~19 percent of total capital generated during the ~~three and six-month periods, respectively.~~quarter.

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Authorization for share repurchases and dividends beginning in the second half of 2018 was submitted as part of our capital plan within the Comprehensive Capital Analysis and Review (CCAR) 2018 process as discussed below.

In addition, during the three months ended ~~June 30, 2017,~~March 31, 2018, we had $750 million of non-cumulative perpetual preferred shares (the ~~“Series~~Series B Preferred ~~Shares”)~~Shares) and $850 million of non-cumulative perpetual preferred shares (the ~~“Series~~Series C Preferred ~~Shares”)~~Shares) outstanding. Dividends declared and paid on Series BC Preferred Shares during the ~~second~~first quarter of ~~2017~~2018 were ~~$19~~$21 million.

~~On June 28, 2017, we were informed that~~Bank holding companies with $50 billion or more in total consolidated assets, including us, are required to develop and maintain a capital plan, and to submit the capital plan to the Federal Reserve ~~did not object~~for review under its CCAR process. All such bank holding companies were required to ~~our~~submit their capital ~~plan~~plans and stress testing results to ~~return capital~~the Federal Reserve by April 5, 2018. The Federal Reserve is expected to ~~shareholders through share repurchases of up to $4.4 billion during~~publish the ~~period beginning with~~decisions for all the ~~third quarter of 2017 through and~~bank holding companies participating in CCAR 2018, including the ~~second quarter~~reasons for any objection to capital plans, by June 30, 2018. In addition, the Federal Reserve will separately publish the results of ~~2018, as well as an increase in our quarterly dividend~~its supervisory stress test under both the supervisory severely adverse and adverse scenarios. The information to ~~$0.35 per share, from $0.32 per share, beginning with~~be released will include, among other things, the ~~third quarter 2017 dividend declaration, subject to approval by our Board~~Federal Reserve’s projection of ~~Directors. The timing~~company-specific information, including post-stress capital ratios and ~~amount~~the minimum value of common shares purchased under our authorized capital plan will depend on various factors, including our business plans, financial performance and market conditions. To facilitate repurchases, we may, from time to time, make purchases pursuant to one or more trading plans under Rule 10b5-1 underthese ratios over the Securities Exchange Act of 1934, as amended, which allows us to repurchase common shares during periods when we might otherwise be prevented from doing so under applicable law or because of self-imposed trading blackout periods.planning horizon.

Funding Strategy

Our principal funding objective is to maintain broad and well-diversified funding sources to allow us to meet our maturing obligations, cost-effectively finance current and future asset growth in our global businesses as well as to maintain a strong liquidity profile.

We meet our funding needs through a variety of sources, including direct and third-party distributed deposits and debt instruments, such as senior unsecured debentures, asset securitizations, borrowings through secured borrowing facilities and a long-term committed bank borrowing facility. While we diversify our funding sources by maintaining scale and relevance in unsecured debentures, asset securitizations and deposits, we currently expect that the Personal Savings High Yield Savings Account direct retail deposit program will become a larger proportion over time.

Summary of Consolidated Debt

We had the following consolidated debt and customer deposits outstanding as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

Table ~~22:~~19: Summary of Consolidated Debt and Customer Deposits

(Billions)	June 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Short-term borrowings	$	3.4	$	5.6	$	1.8	$	3.3
Long-term debt		51.9		47.0		52.5		55.8
Total debt		55.3		52.6		54.3		59.1
Customer deposits		57.7		53.0		66.7		64.5
Total debt and customer deposits	$	113.0	$	105.6	$	121.0	$	123.6

Management does not currently expect to make any significant changes to our funding programs in order to satisfy Basel III’s Liquidity Coverage Ratio (LCR) standard based upon our current understanding of the requirements, which may be subject to change as we receive additional clarification and implementation guidance from regulators relating to the requirements and as the interpretation of requirements evolves over time.

During the three months ended ~~June 30, 2017,~~March 31, 2018, we issued (i) ~~$3.3~~$2.0 billion of asset-backed securities from the American Express Credit Account Master Trust (the Lending Trust) consisting of ~~$1.7 billion of three year Class A Certificates at a fixed rate of 1.77%, and $1.6~~$1.0 billion of two year Class A Certificates at a fixed rate of ~~1.64%,~~2.67 percent, $500 million of five year Class A Certificates at a fixed rate of 3.01 percent and $500 million of five year Class A Certificates at a floating rate of 1-month LIBOR plus 32 basis points, and (ii) ~~$4.0~~$2.0 billion of senior unsecured notes from American Express ~~Credit Corporation~~Company consisting of ~~$1.5~~$1.6 billion of ~~two~~five year notes at a fixed rate of ~~1.88%, $500~~3.40 percent and $400 million of ~~two~~five year notes at a floating rate of 3-month LIBOR plus 3365 basis ~~points, and $2.0 billion of ten year notes at a fixed rate of 3.30%.~~points.

Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard & Poor’s (S&P), Fitch Ratings (Fitch) and Dominion Bond Rating Services (DBRS). Such ratings help support our access to cost-effective unsecured funding as part of our overall funding strategy. Our asset securitization activities are rated separately.

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Table ~~23:~~20: Unsecured Debt Ratings

Credit Agency	American Express Entity		Short-Term Ratings	Long-Term Ratings				Outlook
DBRS	All rated entities		R-1 (middle)	A (high)				Stable
Fitch	All rated entities		F1	A			~~Negative~~Stable
Moody’s	TRS and rated operating subsidiaries^(a)		Prime 1		A2		Stable
Moody's	American Express Company		Prime 2		A3		Stable
S&P	TRS ^(a)	N/A	~~N/A~~	A-		Stable
S&P	Other rated operating subsidiaries	A-2	~~A-2~~	A-		Stable
S&P	American Express Company		A-2			BBB+		Stable

(a)	American Express Travel Related Services Company, Inc.

Downgrades in the ratings of our unsecured debt or asset securitization program securities could result in higher funding costs, as well as higher fees related to borrowings under our unused lines of credit. Declines in credit ratings could also reduce our borrowing capacity in the unsecured debt and asset securitization capital markets. We believe our funding mix, including the proportion of U.S. retail deposits insured by the Federal Deposit Insurance Corporation (FDIC), should reduce the impact that credit rating downgrades would have on our funding capacity and costs.

Liquidity Management

We incur liquidity risk that arises in the course of offering our products and services. Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources. We seek to maintain liquidity sources, even in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions, in amounts sufficient to meet our expected future financial obligations and business requirements for liquidity for a period of at least twelve months. Our liquidity risk policy sets out our objectives and approach to managing liquidity risk.

The liquidity risks that we are exposed to could arise from a wide variety of scenarios. Our liquidity management strategy thus includes a number of elements, including, but not limited to:

Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);

Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;

Projecting cash inflows and outflows under a variety of economic and market scenarios;

Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements; and

Incorporating liquidity risk management as appropriate into our capital adequacy framework.

The amount and type of liquidity resources we maintain can vary over time, based upon the results of stress scenarios required under the Dodd-Frank Wall Street Reform and Consumer Protection Act ~~(Dodd-Frank)~~ and other various regulatory liquidity requirements, such as the ~~LCR,~~Liquidity Coverage Ratio (LCR), as well as additional stress scenarios required under our liquidity risk policy.

The investment income we receive on liquidity resources, such as cash, is less than the interest expense on the sources of funding for these balances. The net interest costs to maintain these resources have been substantial. The level of future net interest costs depends on the amount of liquidity resources we maintain and the difference between our cost of funding these amounts and their investment yields.

Securitized Borrowing Capacity

As of ~~June 30, 2017,~~March 31, 2018, we maintained our committed, revolving, secured borrowing facility, with a maturity date of July ~~16, 2018, that~~15, 2020, which gives us the right to sell up to $3.0 billion face amount of eligible AAA notes from the American Express Issuance Trust II (the Charge Trust). ~~On July 14, 2017, we extended the Charge Trust’s $3.0 billion facility by two years to mature on July 15, 2020.~~ We also maintained our committed, revolving, secured borrowing facility, with a maturity date of September ~~17, 2018, that~~15, 2020, which gives us the right to sell up to $2.0 billion face amount of eligible AAA certificates from the Lending Trust. Both facilities are used in the ordinary course of business to fund seasonal working capital needs, as well as to further enhance our contingent funding resources. As of ~~June 30, 2017,~~March 31, 2018, no amounts were drawn on the Charge Trust or Lending Trust facilities.

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Federal Reserve Discount Window

As an insured depository ~~institutions, Centurion Bank and~~institution, American Express National Bank may borrow from the Federal Reserve Bank of San Francisco, subject to the amount of qualifying collateral that they may pledge. The Federal Reserve has indicated that both credit and charge card receivables are a form of qualifying collateral for secured borrowings made through the discount window. Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral, remain at the discretion of the Federal Reserve.

We had approximately ~~$61.1~~$70.1 billion as of ~~June 30, 2017~~March 31, 2018 in U.S. credit card loans and charge card receivables that could be sold over time through our securitization trusts or pledged in return for secured borrowings to provide further liquidity, subject in each case to applicable market conditions and eligibility criteria.

Committed Bank Credit Facility

In addition to the secured borrowing facilities described earlier in this section, we maintained a committed syndicated bank credit facility as of ~~June 30, 2017~~March 31, 2018 of ~~$3.0~~$3.5 billion, which expires on ~~December 9, 2018.~~October 16, 2020. As of ~~June 30, 2017,~~March 31, 2018, no amounts were drawn on this facility.

Unused Credit Outstanding

As of ~~June 30, 2017,~~March 31, 2018, we had approximately ~~$259~~$289 billion of unused credit outstanding as part of established lending product agreements. 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 limit, and therefore are not reflected in unused credit available to Card Members.

Cash Flows

The following table summarizes our cash flow activity for the ~~six~~three months ended ~~June 30:~~March 31:

Table ~~24:~~21: Cash Flows

(Billions)	2017			2016			2018			2017
Total cash provided by (used in):
Total cash (used in) provided by:
Operating activities	$	4.3		$	3.2		$	2.0		$	1.2
Investing activities		(4.2	)		12.1			(0.7	)		0.7
Financing activities		5.0			(4.3	)		(2.9	)		2.2
Effect of foreign currency exchange rates on cash and cash equivalents		0.1			―			(0.2	)		0.1
Net increase in cash and cash equivalents	$	5.2		$	11.0
Net increase in cash, cash equivalents and restricted cash							$	(1.8	)	$	4.2

Cash Flows from Operating Activities

Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income and (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

~~Net~~The increase in net cash provided by operating activities in the current period was driven by net income ~~of $2.6 billion and $3.4 billion for the current and prior periods, respectively,~~ adjusted for non-cash items, including changes in provisions for losses, depreciation and amortization, deferred taxes and stock-based ~~compensation. The prior period net income includes gains of $1.2 billion on the sales of the HFS portfolios, which are presented~~compensation, and changes in ~~Net (increase) decrease in Card Member receivables~~operating assets and ~~loans, including held for sale, within cash flows from investing activities. The increase during the periods of comparison was driven~~liabilities, primarily ~~by impacts from movements in Other receivables~~accounts payable and ~~Other assets~~other liabilities as a result of normal business ~~operating activities.~~operations.

Cash Flows from Investing Activities

Our cash flows from investing activities primarily include changes in Card Member ~~receivables and loans, including Card Member~~ loans and receivables, ~~HFS, along with gains on sales related thereto,~~ as well as changes in our ~~available for sale~~available-for-sale investment securities portfolio.

The ~~decrease~~increase in net cash ~~provided by~~used in investing activities was primarily ~~reflected the sale of the HFS portfolios~~driven by a net increase in the ~~prior period~~investment securities portfolio.

Cash Flows from Financing Activities

Our cash flows from financing activities primarily include changes in long-term debt, short-term borrowings and customer deposits as well as ~~growth~~our regular common share dividend and share repurchase program.

The increase in ~~Card Member loans~~net cash used in ~~the current period.~~financing activities was primarily driven by a net decrease in long-term debt and short-term borrowings, partially offset by an increase in customer deposits.

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~~Cash Flows from Financing Activities~~

~~Our cash flows from financing activities primarily include issuing and repaying debt, changes in customer deposits, issuing and repurchasing our common shares, and paying dividends.~~

The increase in net cash provided by financing activities primarily resulted from a higher net increase in customer deposits and higher net long-term debt issuances in the current year as well as higher share repurchases in the prior period.

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OTHER MATTERS

Certain Legislative, Regulatory and Other Developments

We are subject to comprehensive government regulation and supervision in jurisdictions around the world, and the costs of compliance are substantial. In recent years, the financial services industry has been subject to rigorous scrutiny, high regulatory expectations, and a stringent and unpredictable regulatory enforcement environment.

Please see the “Supervision and Regulation” and “Risk Factors” sections of the Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~2016~~2017 Form 10-K) for further information.

Payments Regulation

Legislators and regulators in various countries in which we operate have focused on the operation of card networks, including through antitrust actions, legislation and regulations to change certain practices or pricing of card issuers, merchant acquirers and payment networks, and, in some cases, to establish broad and ongoing regulatory oversight regimes for payment systems.

The European Union, Australia and other jurisdictions have focused on the fees merchants pay to accept cards, including the way bankcard network members collectively set the “interchange” (that is, the fee paid by the bankcard merchant acquirer to the card issuer in “four party” networks like Visa and MasterCard), as well as the rules, contract terms and practices governing merchant card acceptance. Even where we are not directly regulated, regulation of bankcard fees can significantly negatively impact the discount revenue derived from our business, including as a result of downward pressure on our discount rate from decreases in competitor pricing in connection with caps on interchange fees. In some cases, such regulation extends to certain aspects of our business. For example, the EU regulation might apply price caps as well as other regulatory measures in circumstances where three-party networks issue cards with a cobrand partner or through an agent. We have brought a legal challenge and seek a ruling from the EU Court of Justice to clarify the interpretation and validity of that part of the regulation. As a precursor to the Court’s final ruling, an advisory opinion was issued on July 6, 2017 advising the Court that (a) the case should be declared inadmissible and (b) if the Court determines to treat the case as admissible, the law should be considered valid and applicable. The advisory opinion is not binding on the Court and there can be no assurance as to the outcome of our legal challenge. For more information on the European Union ~~payments legislation, our related legal challenge~~ and ~~the Australia~~Australian payments regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the ~~2016~~2017 Form 10-K.

Broad regulatory oversight over payment systems can also include, in some cases, requirements for international card networks to localize aspects of their operations, such as processing infrastructure, which could increase our costs and diminish the value of our closed loop. The development and enforcement of payment system regulatory regimes generally continue to grow and may adversely affect our ability to compete effectively and maintain and extend our global network.

Surcharging

In certain countries, such as certain Member States in the European Union and Australia, merchants are permitted by law to surcharge card purchases. While surcharging continues to be actively considered in certain jurisdictions, the benefits to customers have not been apparent in countries that have allowed it, and in some cases regulators are addressing concerns about excessive surcharging by merchants. For example, the Reserve Bank of Australia amended its rules to limit surcharging in Australia to the actual cost of card acceptance paid to the merchant acquirer.

Surcharging, particularly where it disproportionately impacts American Express Card Members, which is known as differential surcharging, as well as other steering practices that are permitted by regulation in some countries, could have a material adverse effect on us if it becomes widespread. As revisions to the Payment Services Directive in the European Union are transposed into national law by each Member State, there may be increased instances of differential surcharging of our cards, customer and merchant confusion as to which transactions may be surcharged and Card Member dissatisfaction. ~~On July 19, 2017, the U.K. indicated it would ban surcharging on consumer cards starting January 2018.~~ In addition, the laws of a number of states in the United States that prohibit surcharging are being challenged in litigation brought by merchant groups.

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For more information on the potential impacts of surcharging and other actions that could impair the Card Member experience, please see the “Risk Factors” section of the ~~2016~~2017 Form 10-K.

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Consumer Financial Products Regulation

In the United States, our marketing, sale and ~~sale~~servicing of consumer financial products and our compliance with certain federal consumer financial laws are supervised and examined by the Consumer Financial Protection Bureau (CFPB), which has broad rulemaking and enforcement authority over providers of credit, savings and payment services and products and authority to prevent “unfair, deceptive or abusive” acts or practices. In addition, a number of U.S. states have significant consumer credit protection, disclosure and ~~disclosure~~other laws (in certain cases more stringent than U.S. federal laws). U.S. federal law also regulates abusive debt collection practices, which along with bankruptcy and debtor relief laws, can affect our ability to collect amounts owed to ~~us.~~us or subject us to regulatory scrutiny.

Internal and regulatory reviews to assess compliance with such laws and regulations have resulted in, and are likely to continue to result in, changes to our practices, products and procedures, substantial restitution to our Card Members and increased costs related to regulatory oversight, supervision and examination. Such reviews may also result in additional regulatory actions, including civil money penalties.

These types of reviews will be a continuing focus for the CFPB and regulators more broadly, as well as for the ~~company~~Company itself. As an example, federal banking regulators announced they are conducting horizontal reviews of banking sales practices and we are cooperating with regulators in those reviews. Also, in prior years, certain cards issued in Puerto Rico, the U.S. Virgin Islands and other U.S. Territories, largely through our international business, did not uniformly carry the same terms, conditions and features as the cards we offered to Card Members in the continental U.S. We conducted an internal review beginning in 2012, voluntarily provided customer remediation in prior periods and reported this matter to our regulators. We have been cooperating with the CFPB’s review as to whether this discontinued practice complied with applicable laws and regulations. We do not believe this matter will have a material adverse impact on our operations or results.

On July 10, 2017, the CFPB issued a final rule that, among other changes, would prohibit providers of certain consumer financial products and services from using a pre-dispute arbitration agreement to bar consumers from filing or participating in a class action. The rule would apply to agreements entered into on or after March 19, 2018. As a result of the rule, we may face increased class claims and therefore be subject to the complexities and costs associated with class action litigation. Given the inherent uncertainties involved in litigation, and the very large or indeterminate damages sought in some class action matters, there is significant uncertainty as to the ultimate impact of this rule.

For more information on consumer financial products regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the ~~2016~~2017 Form 10-K.

Antitrust Litigation

The U.S. Department of Justice (DOJ) and certain states’ attorneys general brought an action against us in 2010 alleging that the provisions in our card acceptance agreements with merchants that prohibit merchants from engaging in various actions to discriminate against our card products violate the U.S. antitrust laws. The trial court ruled that the challenged provisions violate U.S. antitrust laws and issued an injunction. Following our appeal of this judgment, the Court of Appeals for the Second Circuit reversed the trial court decision and directed the trial court to enter a judgment for American Express, which occurred on January 25, 2017. We continue to vigorously defend this and similar antitrust claims initiated by merchants in other court and arbitration proceedings. See Part II, Item 1. “Legal Proceedings” below and the “Legal Proceedings” section in our ~~2016~~2017 Form 10-K for descriptions of the DOJ and related cases. It is possible that significantly increased merchant steering or other actions impairing the Card Member experience, or the resolution of one or any combination of these merchant claims for damages, could have a material adverse effect on our business. For more information on the potential impacts of an adverse decision in the merchant litigations on our business, please see the “Risk Factors” section of the ~~2016~~2017 Form 10-K.

Privacy, Data Protection, Information and Cyber Security

Regulatory and legislative activity in the areas of privacy, data protection and information and cyber security continues to increase worldwide. We have established and continue to maintain policies that provide a framework for compliance with applicable laws, meet evolving customer expectations and support and enable business innovation and growth. Global financial institutions like us have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyber attacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing and impersonation), hacking, denial-of-service attacks and other attacks and similar disruptions from the unauthorized use of or access to computer systems. For more information on privacy, data protection and information and cyber security regulation and the potential impacts of a major information or cyber security incident on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2017 Form 10-K.

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Recently Issued Accounting Standards

Refer to the Recently Issued Accounting Standards section of Note 1 to the “Consolidated Financial Statements.”

Glossary of Selected Terminology

Adjusted net interest income — A non-GAAP measure that represents net interest income attributable to our Card Member loans ~~and loans HFS~~ (which includes, on a GAAP basis, interest that is deemed uncollectible), excluding the impact of interest expense and interest income not attributable to our Card Member loans. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and it is a component of net interest yield on average Card Member loans.

Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as asset-backed securities that are secured by the transferred loans and receivables. The trust uses the proceeds from the sale of such securities to pay the purchase price for the underlying loans or receivables. The loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) securitized are reported as assets and the securities issued by the Trusts are reported as liabilities on our ~~Consolidated~~“Consolidated Balance Sheets.”

Average discount rate — This calculation is generally designed to reflect pricing at merchants accepting ~~general-purpose~~general purpose American Express cards. It represents the percentage of billed business (generated from both proprietary and GNS Card Member spending) retained by us from merchants we acquire, or for merchants acquired by a third party on our behalf, net of amounts retained by such third party.

Basic cards-in-force — Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner, (i.e., not including additional supplemental cards issued on accounts). Proprietary basic small business and corporate cards-in-force includes both basic and supplemental cards issued. Non-proprietary basic cards-in-force includes cards that are issued and outstanding under network partnership agreements, except for supplemental cards and retail cobrand Card Member accounts which have had no out-of-store spending activity during the prior twelve-month period.

Billed business — Includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), corporate payment services and certain insurance fees charged on proprietary cards. In-store spending activity within retail cobrand portfolios in GNS, from which we earn no revenue, is not included in non-proprietary billed business. Card billed business is included in the United States or outside the United States based on where the issuer is located.

Capital ratios — Represents the minimum standards established by the regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates. Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related definitions under ~~Transitional Basel III and Fully Phased-in~~ Basel III.

Card Member — The individual holder of an issued American Express-branded charge, credit and certain prepaid cards.

Card Member loans — Represents the outstanding amount due from Card Members for charges made on their American Express credit cards, as well as any interest charges and card-related fees. Card Member loans also include revolving balances on certain American Express charge card products.

Card Member ~~loans and receivables HFS~~ — Beginning as of December 1, 2015 and continuing until the sales were completed, represents Card Member loans and receivables related to our cobrand partnerships with Costco in the United States and JetBlue. The JetBlue and Costco portfolio sales were completed on March 18 and June 17, 2016, respectively.

~~Card Member~~ receivables — Represents the outstanding amount due from Card Members for charges made on their American Express charge cards, as well as any card-related ~~fees.~~fees, other than revolving balances on certain American Express charge cards with Pay Over Time features. Such revolving balances are included within Card Member loans.

Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Charge Card Members generally must pay the full amount billed each month. No finance charges are assessed on charge cards. Each charge card transaction is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns. Some charge card accounts have additional ~~“Pay~~Pay Over ~~Time”~~Time feature(s) that allow revolving of certain ~~balances.~~

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charges.

Cobrand cards — Cards issued under cobrand agreements with selected commercial firms. Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. In some cases, the partner is liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program.

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Credit cards — Represents cards that have a range of revolving payment terms, grace periods, and rate and fee structures.

Discount revenue — Represents revenue earned from fees generally charged to merchants who have entered into a card acceptance agreement. The discount fee generally is deducted from our payment for Card Member purchases. Discount revenue is reduced by incentive payments made to merchants, payments to third-party card issuing partners, cash-back reward costs and statement credits, corporate incentive payments and other similar items.

Interest expense — Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs, and is recognized as incurred. Interest expense is divided principally into two categories: (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 financing and short-term borrowings, (e.g., commercial paper, federal funds purchased, bank overdrafts and other short-term borrowings), as well as the realized impact of derivatives hedging interest rate risk on our long-term debt.

Interest income — Includes (i) interest on loans, (ii) interest and dividends on investment securities and (iii) interest income on deposits with banks and other.

Interest on loans — Assessed using the average daily balance method for Card Member ~~loans and loans HFS.~~loans. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or written off.

Interest and dividends on investment securities — Primarily relates to our performing fixed-income securities. Interest income is recognized as earned using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so a constant rate of return is recognized on the outstanding balance of the related investment security throughout its term. Amounts are recognized until securities are in default or when it is likely that future interest payments will not be made as scheduled.

Interest income on deposits with banks and other — Recognized as earned, and primarily relates to the placement of cash in excess of near-term funding requirements in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

Liquidity Coverage Ratio — Represents the minimum standards established by ~~the~~ regulatory agencies as a measure to determine whether the regulated entity has sufficient liquidity to meet liquidity needs in periods of financial and economic stress.

Merchant acquisition — Represents our process of entering into agreements with merchants to accept American Express-branded cards.

Net card fees — Represents the card membership fees earned during the period. These fees are recognized as revenue over the covered card membership period (typically one year), net of the provision for projected refunds for Card Membership cancellation and deferred acquisition costs.

Net interest yield on average Card Member loans —A non-GAAP measure that is computed by dividing adjusted net interest income by average Card Member loans, computed on an annualized basis. Reserves and net write-offs related to uncollectible interest are recorded through provisions for losses, and are thus not included in the net interest yield calculation. We believe net interest yield on average Card Member loans is useful to investors because it provides a measure of profitability of our Card Member loan portfolio.

Net loss ratio — Represents the ratio of GCP charge card write-offs, consisting of principal (resulting from authorized transactions) and fee components, less recoveries, on Card Member receivables expressed as a percentage of gross amounts billed to corporate Card Members.

Net write-off rate — principal only — Represents the amount of proprietary consumer or small business Card Member loans or receivables written off, consisting of principal (resulting from authorized transactions), less recoveries, as a percentage of the average loan or receivables balance during the period.

Net write-off rate — principal, interest and fees — Includes, in the calculation of the net write-off rate, amounts for interest and fees in addition to principal for Card Member loans and fees in addition to principal for Card Member receivables.

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Operating expenses — Represents salaries and employee benefits, professional services, occupancy and equipment, and other expenses.

Return on average equity — Calculated by dividing one-year period net income by one-year average total shareholders’ equity.

~~Return on average segment capital~~ ~~— Calculated by dividing one-year period segment income by one-year average segment capital.~~

~~Segment capital~~ ~~— Represents the capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements.~~

Total cards-in-force — Represents the total number of charge and credit cards that are issued and outstanding and accepted on our network. Non-proprietary cards-in-force includes all charge and credit cards that are issued and outstanding under network partnership agreements, except for retail cobrand Card Member accounts which have no out-of-store spending activity during the prior twelve-month period.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk to earnings or asset and liability values resulting from movements in market prices. Our market risk exposures include (i) interest rate risk due to changes in the relationship between the interest rates on our assets (such as loans, receivables and investment securities) and the interest rates on our liabilities (such as debt and deposits); and (ii) foreign exchange risk related to transactions, funding, investments and earnings in currencies other than the U.S. dollar. There were no material changes in these market risks since December 31, ~~2016.~~2017.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Cautionary Note Regarding Forward-looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address our expected business and financial performance, among other matters, contain words such as “believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:

our ability to grow in the future, which will depend in part on the following: revenues growing consistently with current expectations, which could be impacted by, among other things, the factors identified in the subsequent bullet; ~~the level of spend in bonus categories on rewards-based and/or cash-back cards and redemptions of Card Member rewards and offers;~~credit performance remaining consistent with current expectations; the impact of any future contingencies, including, but not limited to, litigation-related settlements, judgments or expenses, the imposition of fines or civil money penalties, an increase in Card Member reimbursements, restructurings, impairments and changes in reserves; ~~write-downs of deferred tax assets as a result of tax law or other changes; credit performance remaining consistent with current expectations;~~ the ability to ~~continue to realize benefits from restructuring actions and~~control operating ~~leverage at levels consistent with current expectations;~~expense growth; the amount we spend on ~~Card Member~~customer engagement and our ability to drive growth from such investments; changes in interest rates beyond current expectations (including the impact of hedge ineffectiveness and deposit rate increases); a greater impact from certain cobrand agreements than expected, which could be affected by volumes and Card Member engagement; the impact of regulation and litigation, which could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with partners, merchants and Card Members; our tax rate remaining in line with current expectations, which could be impacted by, among other things, changes to the fourth quarter 2017 provisional tax charge due to changes in interpretations and assumptions we have made as well as actions we may take as a result of the Tax Act, our geographic mix of income, ~~being weighted more to higher tax jurisdictions than expected,~~further changes in tax laws and regulation, ~~and~~ unfavorable tax audits and other unanticipated tax items; and the impact of accounting changes and reclassifications; ~~and our ability to continue executing the share repurchase program;~~

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our ability to grow revenues net of interest expense, which could be impacted by, among other things, weakening economic conditions in the United States or internationally, a decline in consumer confidence impacting the willingness and ability of Card Members to sustain and grow spending, continued growth of Card Member loans, a greater erosion of the average discount rate than expected, the strengthening of the U.S. dollar, ~~a greater impact on discount revenue from cash back and cobrand partner and client incentive payments,~~ more cautious spending by large and global corporate Card Members, the willingness of Card Members to pay higher card fees, ~~and~~ lower spending on new cards acquired than estimated; and ~~will depend on factors such as~~ our ~~success in addressing~~ability to address competitive pressures and ~~implementing~~implement our strategies and business initiatives, including ~~growing profitable spending from existing~~within the premium consumer segment, commercial payments, the global network and ~~new Card Members, increasing penetration among middle market and small business clients, expanding our international footprint and increasing merchant acceptance;~~digital environment;

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changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may impact the prices we charge merchants that accept our cards, competition for cobrand relationships, competition from new and non-traditional competitors and the success of marketing, promotion or rewards programs;

the erosion of the average discount rate by a greater amount than anticipated, including as a result of changes in the mix of spending by location and industry, merchant negotiations (including merchant incentives, concessions and volume-related pricing discounts), competition, pricing regulation (including regulation of competitors’ interchange rates in the European Union and elsewhere), a greater shift of existing merchants into the OptBlue program and other factors;

our delinquency and write-off rates and growth of provisions for losses being higher or lower than current expectations, which will depend in part on changes in the level of loan and receivable balances and delinquencies, mix of balances, loans and receivables related to new Card Members and other borrowers performing as expected, credit performance of new and enhanced lending products, unemployment rates, the volume of bankruptcies, collections capabilities and recoveries of previously written-off loans and receivables;

our ability to continue to grow loans and receivables, which may be affected by increasing competition, brand perceptions and reputation, our ability to manage risk, the behavior of Card Members and their actual spending and borrowing patterns, and our ability to issue new and enhanced card products, offer attractive non-card lending products, capture a greater share of existing Card Members’ spending and borrowings, reduce Card Member attrition and attract new customers;

our net interest yield on average Card Member loans not remaining consistent with current levels, which will be influenced by, among other things, interest rates, changes in consumer behavior that affect loan balances, such as paydown rates, Card Member acquisition strategy, product mix, cost of funds, credit actions, including line size and other adjustments to credit availability, potential pricing changes and deposit rates, which could be impacted by, among other things, changes in benchmark interest rates, competitive pressure and regulatory constraints;

rewards expense and cost of Card Member services growing inconsistently from expectations, which will depend in part on Card Member behavior as it relates to their spending patterns, including the level of spend in bonus categories, and ~~actual usage and~~the redemption of rewards and offers, as well as the degree of interest of Card Members in the value proposition we offer; increasing competition, which could result in greater rewards offerings; our ability to enhance card products and services to make them attractive to Card Members; and the amount we spend on the promotion of enhanced services and rewards categories and the success of such promotion;

the actual amount to be spent on marketing and ~~promotion,~~business development, which will be based in part on management’s assessment of competitive opportunities; overall business performance and changes in macroeconomic conditions; the actual amount of advertising and Card Member acquisition costs; ~~competitive pressures that may require additional expenditures;~~ our ability to continue to shift Card Member acquisition to digital channels; contractual obligations with business partners and other fixed costs and prior commitments; management’s ability to identify attractive investment opportunities and make such investments, which could be impacted by business, regulatory or legal complexities; and our ability to realize efficiencies, optimize investment spending and control expenses to fund such spending;

our ability to reduce our overall cost base, which will depend in part on the timing and financial impact of reengineering plans, which could be impacted by factors such as our inability to mitigate the operational and other risks posed by potential staff reductions, our inability to develop and implement technology resources to realize cost savings and underestimating hiring and other employee needs; our ability to reduce annualcontrol operating expenses, which could be impacted by, among other things, the factors identified below; our ability to optimize marketing and promotion expenses, which could be impacted by the factors identified in the preceding bullet;

~~the ability to reduce annual operating expenses,~~expense growth, which could be impacted by the need to increase significant categories of operating expenses, such as consulting or professional fees, including as a result of increased litigation, compliance or regulatory-related costs, or fraud costs; ~~our ability~~continuing to ~~develop,~~ implement and achieve ~~substantial~~ benefits from reengineering ~~plans;~~plans, which could be impacted by factors such as an inability to mitigate the operational and other risks posed by potential staff reductions and underestimating hiring and other employee needs; higher than expected employee levels; an ability to innovate efficient channels of customer interactions, such as chat supported by artificial intelligence, or customer acquisition; the impact of changes in foreign currency exchange rates on costs; the payment of civil money penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements; impairments of goodwill or other assets; management’s decision to increase or decrease spending in such areas as technology, business and product development and sales forces; ~~greater than expected~~greater-than-expected inflation; ~~our ability to balance expense control and investments in the business; the impact of accounting changes and reclassifications;~~ and the level of M&A activity and related expenses;

our ~~delinquency~~ability to satisfy our commitments to certain of our cobrand partners as part of the ongoing operations of the business, which will be impacted in part by competition, brand perceptions and ~~write-off rates~~reputation, and ~~growth of provisions for losses being higher than~~our ability to develop and market value propositions that appeal to current ~~expectations,~~cobrand Card Members and new customers and offer attractive services and rewards programs, which will depend in part on ~~changes~~ongoing investment in ~~the level of loan balances~~marketing and ~~delinquencies, mix of loan balances, loans~~promotion expenses, new product innovation and receivables related to new Card Members and other borrowers performing as expected, credit performance of new and enhanced lending products, unemployment rates, the volume of bankruptcies and recoveries of previously written-off loans;

~~our ability to execute against our lending strategy to grow loans, which may be affected by increasing competition, brand perceptions and reputation, our ability to manage risk in a growing~~development, Card Member ~~loan portfolio,~~acquisition efforts and ~~the behavior of Card Members~~enrollment processes, including through digital channels, and ~~their actual spending~~infrastructure to support new products, services and borrowing patterns, which in turn may be driven by our ability to issue new and enhanced card products, offer attractive non-card lending products, capture a greater share of existing Card Members’ spending and borrowings, reduce Card Member attrition and attract new customers;benefits;

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the possibility that we will not execute on our plans to significantly increase merchant coverage, which will depend in part on the success of OptBlue merchant acquirers in signing merchants to accept American Express, which could be impacted by the pricing set by the merchant acquirers, the value proposition offered to small merchants and the efforts of OptBlue merchant acquirers to sign merchants for American Express acceptance, as well as the awareness and willingness of Card Members to use American Express cards at small merchants and of those merchants to accept American Express cards;

changes affecting our ~~ability or desire to~~plans regarding the return of capital to shareholders through dividends and share repurchases, which will depend on factors such as the pace at which we are able to rebuild our capital levels and regulatory ratios, including from earnings and a lower effective tax rate; changes in the stress testing and capital planning process and the approval of our capital plans by our primary regulators in 2018; the amount we spend on acquisitions of ~~companies~~companies; and our results of operations and ~~capital needs and~~the economic environment in any given period;

implementation of legislation and additional guidance or context from the Internal Revenue Service, the U.S. Treasury Department, state and foreign taxing authorities, the Financial Accounting Standards Board or others regarding the Tax Act, and any future changes or amendments to that legislation;

a failure in or breach of our operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyber attacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt our operations, reduce the use and acceptance of our cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm;

our deposit rates increasing faster or slower than current expectations and changes affecting our ability to accept, maintain or grow Personal Savings deposits due to ~~changes in our funding mix,~~ market ~~pressures, regulatory constraints or~~demand, changes in benchmark interest rates or regulatory restrictions on our ability to obtain deposit funding or offer competitive interest rates, which could affect our net interest yield and ability to fund our ~~funding costs;~~

net interest yield on Card Member loans remaining consistent with current expectations, which will be influenced by, among other things, interest rates, changes in consumer behavior that affect loan balances, such as paydown rates, Card Member acquisition strategy, product mix, cost of funds, credit actions, including line size and other adjustments to credit availability, potential pricing changes and deposit rates, which could be impacted by, among other things, the factors identified in the preceding bullet;businesses;

changes in global economic and business conditions, consumer and business spending generally, the availability and cost of capital, unemployment rates, geopolitical conditions, ~~(including potential impacts resulting from the U.S. Administration and the proposed exit of the United Kingdom from the European Union),~~trade policies, foreign currency rates and interest rates, all of which may significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances and other aspects of our business and results of operations;

changes in capital and credit market conditions, including sovereign creditworthiness, which may significantly affect our ability to meet our liquidity needs, expectations regarding capital and liquidity ratios, access to capital and cost of capital, including changes in interest rates; changes in market conditions affecting the valuation of our assets; or any reduction in our credit ratings or those of our subsidiaries, which could materially increase the cost and other terms of our funding or restrict our access to the capital ~~markets or result in contingent payments under contracts;~~markets;

legal and regulatory developments, including with regard to broad payment system regulatory regimes, actions by the CFPB and other regulators and the stricter regulation of financial institutions, which could require us to make fundamental changes to many of our business practices, including our ability to continue certain GNS and other partnerships; exert further pressure on the average discount rate and GNS volumes; result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or civil money penalties; materially affect our capital or liquidity requirements, results of operations or ability to pay dividends or repurchase our stock; or result in harm to the American Express brand;

~~potential actions~~uncertainty relating to the ultimate outcome of the antitrust lawsuit filed against us by the ~~FDIC~~U.S. Department of Justice and ~~credit rating agencies applicable to securitization trusts, which could~~certain state attorneys general, including the review of the case by the U.S. Supreme Court and the impact ~~our asset securitization program;~~on existing private merchant cases and potentially additional litigation and/or arbitrations;

~~potential~~our funding plan being implemented in a manner inconsistent with current expectations, which will depend on various factors such as future business growth, the impact of global economic, political and other events on market capacity, demand for securities we offer, regulatory changes, ability to securitize and sell receivables and the ~~taxation~~performance of ~~our businesses, the allowance of deductions for significant expenses, or the incidence of consumption taxes on our transactions, products and services;~~receivables previously sold in securitization transactions;

changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including merchants that represent a significant portion of our business, such as the airline industry, or our partners in GNS or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations; and

factors beyond our control such as fire, power loss, disruptions in telecommunications, severe weather conditions, natural disasters, health pandemics or terrorism, ~~cyberattacks or fraud, all~~any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.

A further description of these uncertainties and other risks can be found in the ~~2016~~2017 Form 10-K and our other reports filed with the Securities and Exchange Commission.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).

We do not believe we are a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings, including the possible resolution of merchant claims, could have a material impact on our results of operations. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience could have a material adverse effect on our business. Certain legal proceedings involving us or our subsidiaries are described in this section and others, for which there have been no subsequent material developments since the filing of our ~~2016~~2017 Form 10-K, are described in such report. For additional information, see Note 8 to our “Consolidated Financial Statements.”

In 2010, the DOJ, along with Attorneys General from Arizona, Connecticut, Hawaii (Hawaii has since withdrawn its claim), Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont filed a complaint in the U.S. District Court for the Eastern District of New York against us ~~MasterCard International Incorporated and Visa, Inc.,~~ alleging a violation of Section 1 of the Sherman Antitrust ~~Act (the DOJ case).~~Act. The complaint included allegations that provisions in our merchant agreements prohibiting merchants from steering a customer to use another network’s card or another type of general-purpose card (“anti-steering” and “non-discrimination” contractual provisions) violate the antitrust laws. The complaint sought a judgment permanently enjoining us from enforcing our non-discrimination contractual provisions. The complaint did not seek monetary damages.

Following a non-jury trial, ~~in the DOJ case,~~ the trial court found that the challenged provisions were anticompetitive and on April 30, 2015, the court issued a final judgment entering a permanent injunction. Following our appeal of this judgment, on September 26, 2016, the Court of Appeals for the Second Circuit reversed the trial court decision and ~~directed the trial court to enter a~~ judgment ~~for American Express. Following denial~~in favor of ~~rehearing en banc by the Court of Appeals for the Second Circuit, the trial court entered judgment for~~ American Express was entered on January 25, 2017. ~~On June 2, 2017, the DOJ announced it would not petition the U.S. Supreme Court to review the Second Circuit’s decision in favor of American Express. At the same time, 11~~Eleven of the 17 states that are party to the case filed a petition with the Supreme Court seeking ~~such~~ a ~~review.~~review of the Second Circuit’s decision. On October 16, 2017, the Supreme Court granted certiorari and oral argument was held on February 26, 2018 in the case, now captioned Ohio v. American Express Co.

ITEM 1A. RISK FACTORS

For a discussion of our risk factors, see Part I, Item 1A. “Risk Factors” of the ~~2016~~2017 Form 10-K. There are no material changes from the risk factors set forth in the ~~2016~~2017 Form 10-K. However, the risks and uncertainties that we face are not limited to those set forth in the ~~2016~~2017 Form 10-K. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our securities.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth the information with respect to purchases of our common stock made by or on behalf of us during the three months ended ~~June 30, 2017.~~March 31, 2018.

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(c)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs		Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(c)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

April 1-30, 2017
January 1-31, 2018
Repurchase program^(a)		2,360,576	$	78.69		2,360,576		122,161,288		―		―		―		85,002,419
Employee transactions^(b)		―		―		N/A		N/A		―		―		N/A		N/A

May 1-31, 2017
February 1-28, 2018
Repurchase program^(a)		2,983,000	$	77.62		2,983,000		119,178,288		―		―		―		85,002,419
Employee transactions^(b)		25,353	$	79.25		N/A		N/A		841,343	$	99.39		N/A		N/A

June 1-30, 2017
March 1-31, 2018
Repurchase program^(a)		5,266,678	$	81.36		5,266,678		113,911,610		―		―		―		85,002,419
Employee transactions^(b)		1,018	$	76.85		N/A		N/A		43	$	97.98		N/A		N/A

Total
Repurchase program^(a)		10,610,254	$	79.72		10,610,254		113,911,610		―		―		―		85,002,419
Employee transactions^(b)		26,371	$	79.16		N/A		N/A		841,386	$	99.39		N/A		N/A

(a)

On September 26, 2016, the Board of Directors authorized the repurchase of up to 150 million shares of common stock from time to time, subject to market conditions and the Federal Reserve’s non-objection to our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date. See "MD&A – Consolidated Capital Resources and Liquidity" for additional information regarding share repurchases.

(b)

Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under our incentive compensation plans) in satisfaction of the exercise price and/or tax withholding obligation of such holders and (ii) restricted shares withheld (under the terms of grants under our incentive compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. Our incentive compensation plans provide that the value of the shares delivered or attested to, or withheld, be based on the price of our common stock on the date the relevant transaction occurs.

(c)	Share purchases under publicly announced programs are made pursuant to open market purchases or privately negotiated transactions (including employee benefit plans) as market conditions warrant and at prices we deem appropriate.

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ITEM 5. OTHER INFORMATION

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Exchange Act, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted outside the United States by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

American Express Global Business Travel (GBT) and certain entities that may be considered affiliates of GBT have informed us that during the ~~second~~ quarter ~~of 2017~~ended March 31, 2018, approximately 9540 visas were obtained from Iranian embassies and consulates around the world in connection with certain travel arrangements on behalf of ~~clients.~~clients and reservations were booked at two hotels that may be owned, directly or indirectly, or may otherwise be affiliated with, the Government of Iran. GBT had negligible gross revenues and net profits attributable to these transactions and intends to continue to engage in these activities on a limited basis so long as such activities are permitted under U.S. law.

ITEM 6. EXHIBITS

The list of exhibits required to be filed as exhibits to this report are listed on page E-1 hereof, under “Exhibit Index” which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	AMERICAN EXPRESS COMPANY
		(Registrant)

Date: ~~July~~April 25, ~~2017~~2018	By	/s/ Jeffrey C. Campbell
		Jeffrey C. Campbell
		Executive Vice President and
		Chief Financial Officer

Date: ~~July~~April 25, ~~2017~~2018	By	/s/ ~~Linda Zukauckas~~Richard Petrino
		~~Linda Zukauckas~~Richard Petrino
		Executive Vice President and
		Corporate Controller
		(Principal Accounting Officer)

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EXHIBIT INDEX

The following exhibits are filed as part of this Quarterly ~~Report:~~Report. The exhibit numbers preceded by an asterisk (*) indicate exhibits electronically filed herwith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference.

Exhibit	Description
10.1	Amendment dated January 29, 2018 to the agreement dated February 27, 1995 by and between American Express Company and Berkshire Hathaway Inc., on behalf of itself and its subsidiaries (incorporated by reference to Exhibit 10.1 of American Express Company’s Current Report on Form 8-K (Commission File No. 1-7657), dated January 29, 2018 (filed January 30, 2018)).
10.2	Time Sharing Agreement, dated February 13, 2018, by and between American Express Travel Related Services Company, Inc. and Stephen J. Squeri (incorporated by reference to Exhibit 10.48 of American Express Company’s Annual Report on Form 10-K (Commission File No. 1-7657) for the year ended December 31, 2017).
*10.3	American Express Company Deferred Compensation Plan for Directors and Advisors, as amended and restated effective April 1, 2018.
*12	Computation in Support of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
*31.1	Certification of ~~Kenneth I. Chenault~~Stephen J. Squeri pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
*31.2	Certification of Jeffrey C. Campbell pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
*32.1	Certification of ~~Kenneth I. Chenault~~Stephen J. Squeri pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2	Certification of Jeffrey C. Campbell pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*101.INS	XBRL Instance Document
*101.SCH	XBRL Taxonomy Extension Schema Document
*101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
*101.LAB	XBRL Taxonomy Extension Label Linkbase Document
*101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
*101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

E-1

Six Months Ended June 30 (Millions)	2017			2016
Cash Flows from Operating Activities
Net income	$	2,577		$	3,441
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for losses		1,157			897
Depreciation and amortization		615			536
Deferred taxes and other		2			(852	)
Stock-based compensation		152			133
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Other receivables		832			293
Other assets		181			(107	)
Accounts payable and other liabilities		(902	)		(697	)
Travelers Cheques and other prepaid products		(330	)		(444	)
Net cash provided by operating activities		4,284			3,200
Cash Flows from Investing Activities
Sales of available-for-sale investment securities		1			45
Maturities and redemptions of available-for-sale investment securities		1,502			567
Purchases of investments		(1,768	)		(791	)
Net (increase) decrease in Card Member receivables and loans, including held for sale^(a)		(3,169	)		13,002
Purchase of premises and equipment, net of sales: 2017, $1; 2016, $2		(538	)		(649	)
Acquisitions/dispositions, net of cash acquired		(174	)		(162	)
Net (increase) decrease in restricted cash		(12	)		126
Net cash (used in) provided by investing activities		(4,158	)		12,138
Cash Flows from Financing Activities
Net increase (decrease) in customer deposits		4,666			(594	)
Net decrease in short-term borrowings		(2,124	)		(2,520	)
Issuance of long-term debt		17,124			3,778
Principal payments on long-term debt		(12,349	)		(1,558	)
Issuance of American Express common shares		44			75
Repurchase of American Express common shares		(1,767	)		(2,914	)
Dividends paid		(620	)		(601	)
Net cash provided by (used in) financing activities		4,974			(4,334	)
Effect of foreign currency exchange rates on cash and cash equivalents		134			1
Net increase in cash and cash equivalents		5,234			11,005
Cash and cash equivalents at beginning of period		25,208			22,762
Cash and cash equivalents at end of period	$	30,442		$	33,767

	As of June 30, 2017

					Accounts Classified as a TDR^(c)
2017 (Millions)	Over 90 days Past Due & Accruing Interest^(a)		Non-Accruals^(b)		In Program^(d)		Out of Program^(e)		Total Impaired Balance		Unpaid Principal Balance		Allowance for TDRs
Card Member Loans:
U.S. Consumer Services	$	175	$	156	$	153	$	132	$	616	$	560	$	47
International Consumer and Network Services		58		―		―		―		58		57		―
Global Commercial Services		33		34		26		27		120		110		9
Card Member Receivables:
U.S. Consumer Services		―		―		10		8		18		18		4
Global Commercial Services		―		―		25		15		40		40		9
Total	$	266	$	190	$	214	$	182	$	852	$	785	$	69

		Three Months Ended June 30,								Six Months Ended June 30,
(Millions)	2017				2016				2017				2016
Interest rate derivative contracts		$	6			$	61			$	(69	)		$	226
Hedged items			(25	)			(53	)			25				(224	)
Net hedge ineffectiveness		$	(19	)		$	8			$	(44	)		$	2

	Tax expense (benefit)
		Three Months Ended June 30,						Six Months Ended June 30,
(Millions)	2017				2016			2017				2016
Investment securities		$	―			$	2		$	3			$	2
Foreign currency translation adjustments^(a)			12				22			(179	)			37
Net investment hedges			(67	)			78			(207	)			24
Pension and other postretirement benefits			1				10			(8	)			29
Total tax impact		$	(54	)		$	112		$	(391	)		$	92

(Billions)	CET1			Tier 1
Risk-Based Capital under Transitional Basel III	$	16.4		$	18.0
Adjustments related to:
AOCI		(0.1	)		(0.1	)
Transition provisions for intangible assets		(0.2	)		(0.2	)
Other		―			―
Estimated CET1 and Tier 1 Risk-Based Capital under Fully Phased-in Basel III	$	16.1		$	17.7