American Express Bank reported net income of $80 million in 2002, compared with a net loss of $13 million in 2001. 2001 results included restructuring charges of $96 million ($65 million after-tax). Net revenues rose 15 percent in 2002, primarily due to higher net interest income and foreign exchange income and other revenue. In 2001, net revenues rose 10 percent. Net interest income in 2002 increased from a year ago due to the effects of lower funding costs. In 2001, net interest income increased, primarily due to higher consumer loans and the effects of lower funding costs, partially offset by decreases in corporate banking volumes. In 2002, commissions and fees increased due to growth in loan originations in the Personal Financial Services (PFS) business and greater non-credit transactions in the Financial Institutions Group, partially offset by lower results in Corporate Banking. In 2001, commissions and fees decreased due to lower results in corporate banking and lower mutual fund fees within the financial institution business, partially offset by higher loan volumes in PFS. In 2002, foreign exchange income and other revenue increased primarily because of higher joint venture income, due to lower funding costs within the premium deposits joint venture with AEFA. In 2001, foreign exchange income and other revenue increased due to higher income from the premium deposit joint venture, partially offset by lower corporate banking revenue and other joint venture income. Combined human resources and other operating expenses declined in both 2002 and 2001, reflecting the benefits of reengineer- ing activities and tighter expense controls. Provision for losses increased substantially in 2002 primarily due to higher bank- ruptcy related write-offs in the consumer lending portfolio in Hong Kong. In 2001, provisions for losses increased primarily due to higher PFS loan volumes. ** Computed on a trailing 12-month basis excluding the effect on total assets of unrealized gains or losses related to SFAS No. 115 and SFAS No. 133 to the extent that they directly affect Shareholder’s Equity. *** Computed on a trailing 12-month basis excluding the effect on Shareholder’s Equity of unrealized gains or losses related to SFAS No. 115 and SFAS No. 133. I 50 AXP I FINANCIAL REVIEW Liquidity and Capital Resources SELECTED BALANCE SHEET INFORMATION December 31, (Billions) 2002 2001 2000 Assets managed*/administered $ 12.5 $ 11.4 $ 10.6 Assets of non-consolidated joint ventures $ 1.8 $ 1.9 $ 2.1 * Includes assets managed by American Express Financial Advisors. December 31, (Billions, except percentages and where indicated) 2002 2001 Total loans $ 5.6 $ 5.3 Total non-performing loans (millions) $ 119 $ 123 Other non-performing assets (millions) $1 5 $2 Reserve for credit losses (millions)* $ 158 $ 148 Loan loss reserve as a % of total loans 2.7% 2.4 % Total PFS loans $ 1.6 $ 1.6 30+ days past due PFS loans as a % of total 5.4% 4.5% Total assets $ 13.2 $ 11.9 Deposits $ 9.5 $ 8.4 Total liabilities $ 12.3 $ 11.1 Total shareholder’s equity (millions) $ 947 $ 761 Return on average assets** 0.67% (0.11)% Return on average common equity*** 11.5% (2.0)% Risk-based capital ratios: Tier I 10.9% 11.1 % Total 11.4% 12.2 % Leverage ratio 5.3% 5.3 % *Allocation of reserves (millions): Loans $ 151 $ 128 Other assets, primarily derivatives 6 4 Other liabilities 1 16 Total reserve for credit losses $ 158 $ 148 SELECTED STATISTICAL INFORMATION