American Express AXP · USD

REPORTABLE OPERATING SEGMENTS AND GEOGRAPHIC OPERATIONSREPORTABLE OPERATING SEGMENTSWe consider a combination of factors when evaluating the composition of our reportable operating segments, including the results regularly provided to our Chief Executive Officer, who is our chief operating decision maker (CODM), economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus outside the United States), and regulatory environment considerations.The following is a brief description of the primary business activities of our four reportable operating segments:•U.S. Consumer Services (USCS), which issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products. USCS also manages our dining platform that provides digital tools for restaurants and reservation bookings for diners.•Commercial Services (CS), which issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.•International Card Services (ICS), which issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition business.•Global Merchant and Network Services (GMNS), which operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers, merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.Corporate functions and certain other businesses and operations are included in Corporate & Other. Pretax income is used by our CODM to assess the relative performance of our operating segments and their contribution to enterprise profitability.

SERVICE FEES AND OTHER REVENUE AND OTHER EXPENSESThe following is a detail of Service fees and other revenue for the years ended December 31:TABLE 17.1: COMPONENTS OF SERVICE FEES AND OTHER REVENUE(Millions)202520242023Network partnership revenue (a)$1,773 $1,636 $1,705 Loyalty coalition, merchant and other service fees (b)1,711 1,609 1,518 Foreign currency-related revenue1,697 1,527 1,428 Delinquency fees966 941 963 Travel commissions and fees625 596 637 Other fees and revenues700 456 459 Total Service fees and other revenue (a)$7,471 $6,765 $6,710 (a)Beginning in 2025, network partnership revenue, previously reported as Processed revenue on our Consolidated Statements of Income, is consolidated within Service fees and other revenue. Prior period amounts have been recast to conform to the current period presentation.(b)Beginning in 2025, the revenue line previously reported as Service fees was renamed to Loyalty coalition, merchant and other service fees to better reflect its nature and components.The following is a detail of Other expenses for the years ended December 31:TABLE 17.2: COMPONENTS OF OTHER EXPENSE(Millions)202520242023Data processing and equipment$2,986 $2,888 $2,805 Professional services2,424 2,274 2,029 Gain on sale of Accertify (a)— (531)— Other1,577 1,733 1,973 Total Other expenses$6,987 $6,364 $6,807 (a)Refer to Note 1 for additional information.

CONTINGENCIES, COMMITMENTS AND GUARANTEESCONTINGENCIESIn the ordinary course of business, we and our subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, regulatory proceedings, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).Based on our current knowledge, and taking into consideration our litigation-related liabilities, 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, penalties or fines, it is possible that the outcome of legal proceedings could have a material impact on our results of operations. Certain legal proceedings involving us or our subsidiaries are described below.On September 30, 2024, we were named as a defendant in a case filed in the United States District Court for the District of Massachusetts, captioned Pizza Hazel, Inc., et al. v. American Express Co., et al., in which plaintiffs allege that the anti-steering and non-discrimination provisions in our merchant agreements violate federal antitrust law and that the arbitration provision in our merchant agreements violates federal antitrust law to the extent it prevents antitrust challenges to our anti-steering and non-discrimination provisions. Plaintiffs seek, on behalf of themselves and a class of merchants that accept through the OptBlue Program, unspecified damages and an injunction prohibiting us from enforcing our anti-steering and non-discrimination provisions and prohibiting us from enforcing our arbitration provision to the extent the arbitration provision prevents antitrust challenges to our anti-steering and non-discrimination provisions. The court rejected our motion to compel the case to arbitration; we have appealed the decision to the Court of Appeals for the First Circuit.On March 21, 2024, we were named as a defendant in a case filed in the United States District Court for the District of Rhode Island, captioned 5-Star General Store aka Bento LLC, et al. v. American Express Co., et al.

DEBTSHORT-TERM BORROWINGSOur short-term borrowings outstanding, defined as borrowings with original contractual maturity dates of one year or less than one year as of December 31, 2025 and 2024 were as follows:TABLE 8.1: SHORT-TERM BORROWINGS20252024(Millions, except percentages)Outstanding BalanceYear-End Stated Interest Rate on Debt (a)Outstanding BalanceYear-End Stated Interest Rate on Debt (a)Short-term borrowings (b)$1,371 4.41 %$1,374 2.47 %Total$1,371 4.41 %$1,374 2.47 %(a)For floating-rate issuances, the stated interest rates are weighted based on the outstanding principal balances and interest rates in effect as of December 31, 2025 and 2024.(b)Includes borrowings from banks and book overdrafts with banks, which represents negative cash balances for accounts with an associated overdraft facility, due to timing differences arising in the ordinary course of business.As of December 31, 2025, we maintained a committed, revolving, secured borrowing facility, with a maturity date of September 15, 2028, which gives us the right to sell up to $2.0 billion face amount of eligible certificates issued from the Lending Trust. This facility enhances our contingent funding resources and is also used in the ordinary course of business to fund working capital needs. The facility was undrawn as of both December 31, 2025 and 2024. Additionally, certain of our subsidiaries maintained total committed lines of credit of $123 million and $191 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, $12 million and $16 million were drawn on these committed lines of credit, respectively.We paid $13.1 million and $11.9 million in fees to maintain the secured borrowing facility in 2025 and 2024, respectively. The committed facility does not contain a material adverse change clause, which might otherwise preclude borrowing under the facility, nor is it dependent on our credit rating.LONG-TERM DEBTOur long-term debt outstanding, defined as debt with original contractual maturity dates of greater than one year as of December 31, 2025 and 2024 was as follows:TABLE 8.2: LONG-TERM DEBT20252024(Millions, except percentages)Original Contractual Maturity DatesOutstanding Balance(a)Year-End Interest Rate on Debt(b)Year-End Interest Rate with Swaps(b)(c)Outstanding Balance(a)Year-End Interest Rate on Debt(b)Year-End Interest Rate with Swaps(b)(c)American Express Company(Parent Company only)Fixed Rate Senior Notes2026 - 2042$9,865 3.79 %3.

INCOME TAXESIn December 2023, the Financial Accounting Standards Board issued updated accounting guidance on disclosure for income taxes which the Company adopted prospectively as of January 1, 2025. Refer to Note 1 for additional information.As required under the updated guidance, the components of pretax income for the year ended December 31, 2025 included in the Consolidated Statements of Income were as follows:TABLE 19.1: COMPONENTS OF PRETAX INCOME(Millions)2025Income (loss) from continuing operations before income tax expense (benefit):U.S.$8,302 Non-U.S.5,493 Total$13,795 The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:TABLE 19.2: COMPONENTS OF INCOME TAX EXPENSE(Millions)202520242023Current income tax expense:U.S. federal$1,735 $2,368 $2,455 U.S. state and local497 494 351 Non-U.S.1,272 894 662 Total current income tax expense3,504 3,756 3,468 Deferred income tax (benefit) expense:U.S. federal(328)(797)(952)U.S. state and local(120)(146)(139)Non-U.S.(95)(47)(238)Total deferred income tax (benefit) expense(542)(990)(1,329)Total income tax expense$2,962 $2,766 $2,139 A reconciliation of the U.S. federal statutory rate of 21 percent to our actual income tax rate as of December 31, 2025, prepared under the updated guidance was as follows:TABLE 19.3: RECONCILIATION OF ACTUAL INCOME TAX RATE FOR 20252025(Millions, except percentages)$%U.S. statutory federal income tax rate$2,897 21.0 %(Decrease) increase in taxes resulting from:State and local income taxes, net of federal benefit (a)265 1.9 Foreign tax effects:Jersey – Statutory tax rate differential(423)(3.1)Jersey – Multinational corporate income tax & other182 1.3 Other foreign jurisdictions (b)148 1.1 Effect of cross-border tax laws(42)(0.3)Tax credits(146)(1.0)Changes in valuation allowances22 0.2 Non-taxable or non-deductible items(9)(0.1)Changes in unrecognized tax benefits69 0.5 Actual tax rates$2,962 21.5 %(a)State and local income taxes in California, New York, New York City and Florida comprise the majority of the state and local income taxes, net of federal benefit as of December 31, 2025.(b)In certain jurisdictions outside the United States, we benefit from agreements that temporarily lower our income tax expense. The impact of these agreements was not material to our Consolidated Statements of Income.A reconciliation of the U.S.

STOCK-BASED COMPENSATIONSTOCK OPTION AND AWARD PROGRAMSUnder our 2016 Incentive Compensation Plan (amended and restated effective May 6, 2024) and previously under our 2007 Incentive Compensation Plan, awards may be granted to colleagues and other individuals who perform services for us. These awards may be in the form of stock options, or in the form of restricted stock units and awards (collectively referred to as RSUs), or other incentives or similar awards designed to meet the requirements of non-U.S. jurisdictions.There were a total of 18 million, 20 million and 7 million common shares unissued and available for grant as of December 31, 2025, 2024 and 2023, respectively, as authorized by our Board of Directors and shareholders. We generally issue new common shares upon exercise of options, vesting of restricted stock units and granting of restricted stock awards. Stock-based compensation expense recognized in Salaries and employee benefits in the Consolidated Statements of Income was $550 million, $508 million and $450 million in 2025, 2024 and 2023, respectively, with corresponding income tax benefits of $171 million, $124 million and $110 million in those respective periods.Our stock options and RSUs outstanding as of December 31, 2025, and changes during the year, are as follows:TABLE 10.1: STOCK OPTIONS AND RSUs OUTSTANDING Stock OptionsService-Based RSUsService and Performance-Based RSUs(Numbers in thousands)NumberWeighted-Average Exercise PriceNumberWeighted-Average Grant- Date Fair ValueNumberWeighted-Average Grant- Date Fair ValueOutstanding as of December 31, 20242,718 $139.54 1,807 $183.41 3,026 $170.97 Granted176 315.25 662 315.35 1,468 275.92 Options exercised/RSUs vested(570)98.68 (943)173.90 (1,111)163.38 Forfeited(22)148.45 (52)244.26 (70)213.00 Expired— — — — — — Outstanding as of December 31, 20252,301 163.02 1,475 $246.57 3,314 $219.15 Options vested and expected to vest as of December 31, 20252,301 163.02 Options exercisable as of December 31, 20251,415 $137.16 Stock-based compensation expense is generally recognized ratably based on the grant-date fair value of the awards, net of expected forfeitures, over the vesting period. Generally, the vesting period is the time from the grant date to the earlier of the vesting date defined in each award agreement or the date the colleague will become eligible to retire. Retirement eligibility is dependent upon age and/or years of service.

We define information security and cybersecurity risk as the risk that the confidentiality, integrity or availability of our information and information systems are impacted by unauthorized or unintended access, use, disclosure, disruption, modification or destruction. Information security and cybersecurity risk is an operational risk under our enterprise risk taxonomy, which is measured and managed as part of our operational risk management framework. Operational risk is incorporated into our risk governance framework, which we use to identify, assess, control, measure & monitor and report & escalate risks. For more information on our risk governance framework, see “Risk Management” under “MD&A.”Our Technology Risk and Information Security (TRIS) program, which is our enterprise information security and cybersecurity program incorporated in our risk governance framework and led by our Chief Information Security Officer (CISO), is designed to (i) ensure the security, confidentiality, integrity and availability of our information and information systems; (ii) protect against any anticipated threats or hazards to the security, confidentiality, integrity or availability of such information and information systems; and (iii) protect against unauthorized access to or use of such information or information systems that could result in substantial harm or inconvenience to us, our colleagues or our customers. The TRIS program is built upon a foundation of advanced security technology, employs a highly trained team of experts and is designed to operate in alignment with global regulatory requirements. The program deploys multiple layers of controls, including embedding security into our technology investments, which are designed to identify, protect, detect, respond to and recover from information security and cybersecurity incidents. Those controls are measured and monitored by a combination of subject matter experts and a security operations center with integrated cyber detection, response and recovery capabilities. The TRIS program includes our Enterprise Incident Response Program, which manages information security incidents involving compromises of sensitive information, and our Cyber Crisis Response Plan, which provides a documented framework for handling critical security incidents and facilitates coordination across multiple parts of the Company to manage response efforts.

FAIR VALUESFair value is defined as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the principal or, in the absence of a principal, most advantageous market for the specific asset or liability.GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:•Level 1 ― Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.•Level 2 ― Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:– Quoted prices for similar assets or liabilities in active markets;– Quoted prices for identical or similar assets or liabilities in markets that are not active;– Inputs other than quoted prices that are observable for the asset or liability; and– Inputs that are derived principally from or corroborated by observable market data by correlation or other means.•Level 3 ― Inputs that are unobservable and reflect our own estimates about the estimates market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). We monitor the market conditions and evaluate the fair value hierarchy levels at least quarterly. For the years ended December 31, 2025 and 2024, there were no Level 3 transfers.FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUEThe following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy (as described in the preceding paragraphs), as of December 31, 2025 and 2024:TABLE 14.