Ron Stovall – Senior Vice President Investor Relations Daniel T. Henry – Chief Financial Officer & Executive Vice President

Christopher Brendler – Stifel Nicolaus David Hochstim – Buckingham Research Bill Carcache – Fox-Pitt Kelton Donald Fandetti – Citi Meredith Whitney – Meredith Whitney Advisory Group Sanjay Sakhrani – Keefe, Bruyette & Woods Ken Bruce – Bank of America Jason Arnold – RBC Capital Markets Richard Shane, Jr. – Jefferies & Company Michael Taiano – Sandler O’Neill & Partners

Welcome to the American Express Q2 09 earnings call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session giving instructions at that time. (Operator Instructions) As a reminder, today’s conference is being recorded. I would now like to turn the conference over to our host Senior Vice President of Investor Relations, Ron Stovall.

As usual, it’s my job to remind you that the discussions today contain certain forward-looking statements about the company’s future financial performance and business prospects which are subject to risks and uncertainties and speak only as of today. The words believe, expect, anticipate, optimistic, intend, plan, aim, will, should, could, likely and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements including the company’s financial and other goals are set forth within today’s earnings press release which was filed in an 8K report and in the company’s 2008 10K report already on file with the Securities & Exchange Commission, in the second quarter 2009 earnings release and our earnings supplement on file with the SEC in an 8K report as well as the presentation slides all of which are now posted on our website at IR.AmericanExpress.com. We have provided information that describes the company’s managed basis and other non-GAAP financial measures and the comparable GAAP financial information. We encourage you to review that information in conjunction with today’s discussion. Dan Henry, Executive Vice President and Chief Financial Officer will review some key points related to the quarter’s earnings through the series of slides included within the earnings documents and provide some brief summary comments. Once Dan completes his remarks, we will turn to the moderator who will announce your opportunity to get in to the queue for the Q&A period where Dan will be available to respond to your questions. Up until then no one is actually registered to ask questions. While we will attempt to respond to as many of your questions as possible before we end the call, we do have a limited amount of time. Based on this, we ask that you limit yourself to one question at a time during the Q&A. With that, let me turn the discussion over to Dan. Daniel T. Henry: I will start with the slides, Slide Two, summary of financial performance; we can see that total revenues decreased by 18%. If you looked at that on a managed and an fx adjusted basis it would be 10%. We had earnings from continuing operations of $342 million and diluted EPS from continuing operations of $0.09. Now, if you back out the $0.18 related to the repayment of the CPP preferred we would be at $0.27. When we issued the preferred we also issued a warrant that we valued at $230 million. The preferred stock was carried on our books at $3.4 billion issuance less that $230 million and that difference would be amortized over the five years that the preferred could have been outstanding. So, when we repaid the preferred we repaid $3.4 billion and the difference between the par and book value was $218 million. Now, this is not a reduction in net income but it is a reduction in EPS of $0.18 and excluding it our EPS was $0.27. Now, comparing our EPS to consensus is very difficult. Some analysts included the $0.18, others did not, some handled the ICBC gain and our restructuring charge differently and as a result of that the range of consensus was anywhere from zero up to $0.44. [First Call], in an effort to have consistency only included six of the 19 firms that provide estimates so in the end it’s all pretty confusing when you try to compare our results to consensus. I think the important thing is we had $0.27 of EPS and earned above our stated goal which is to earn in excess of our dividend. Let me turn to Slide Three, significant items; in the quarter we had a gain on the sale of 50% of our holdings in ICBC. That took place in April, the pre-tax gain was $211 million, after tax that was $135 million. Next, related to our reengineering we set up a reserve for the reengineering that we announced in May that primarily relates to the reduction in staff levels. Pre-tax that’s $182 million and after tax $118 million. The combination of the reengineering that we announced in the fourth quarter of ’08 and the second quarter of ’09 is expected to eliminate approximately 11,000 positions or 17% of our global jobs. Moving to Slide Four, this lays out in tabular form what I discussed a few minutes ago. Based on net income, EPS would have been $0.29. Deducting the preferred dividend and the related accretion we take it to $0.27 and then you see deducting the $212 or $0.18 you get down to the $0.09. So, this is a tabular form of what I described a few minutes ago. Turning to metric performance of Slide Five, you can see that the billed business on a reported basis was 16% or 13% on an fx adjusted basis. This compares to the first quarter of 16% reported or the same number or 12% on an fx basis so a little more deterioration on an fx basis. As we’ve said, the first five months of 2009 billed business was relatively flat. In June and month-to-date July, the year-over-year spending decline has moderated slightly compared to May. Transactions have continued to hold up well and were only down about 3% so that’s a good thing that customers continue to pull their cards out of their wallet so it’s really a story of lower spending per transaction. Now, if you look at cards in force, they are down 2% and impacting that is the fact that we cancelled 2.7 million inactive cards and we did that for credit reasons to reduce our exposure. Those were cards that were both balance and spend inactive for 24 months. Now, you may note that our average spending decline is 15% compared to 18% in the first quarter and that is largely driven by the cancellation of the inactive cards as opposed to a change in spending. The percentage change in owned loans you can note is literally higher than the managed and that’s because the securitized loans are about or slightly higher than where they were last year and that’s what’s really causing the difference when you look at managed compared to owned. As you can see worldwide sales continues to be significantly impacted by the economy. Now, moving to Slide Six, revenue performance you can see that discount revenues is down 17% and that’s a combination of billed business being down 16% and discount rate being at 2.55% or only down one basis point from last year. So, that has held up very well. If you look at net card fees, it is only down 2% which is another reflection that our fees have held up well. I think these two things reflect the value that merchants and cardholders see in our network and our card products. If you look at net interest and securitization income it’s down 37%. Securitization income is down $229 million basically driven by higher credit losses and net interest income is lower primarily driven by lower loan balances. Travel commissions and fees are being impacted by the economy. If you looked at all other revenues it’s down 5% but it includes the gain from ICBC and if you exclude that it would be down about 23% in line with the decline in business volumes. Moving to Slide Seven, provision for losses you can see that the charge card provision continues to be comparable to last year and later we’ll see that while there is somewhat higher write offs, delinquencies are slightly lower compared to last quarter and receivables balances are down about 21%. On the other hand, the lending provision is having a significant impact on our results. I’d remind you that last year in the second quarter of ’08 the provision included a $600 million addition so despite average owned loans decreasing 29% in ’09 compared to ’08, provision remains high driven by the metrics that we’ll discuss on the next few slides and the fact that we continue to build reserves and coverage ratios given the uncertainty in the economic environment. Looking at expenses on page eight, you can see that marketing and promotion is down 47% and that’s part of our reengineering plan although it is having an impact on cards in force growth. Now, looking at rewards expense, rewards expense is down 8% and that’s a combination of lower spending volumes of 16% partially offset by slightly higher MR redemption rates which tend to fluctuation a little bit from period-to-period and relatively lower declines in co-brand spending and co-brand spending generally has a slightly higher cost per point. If you look at salaries and benefits, it’s down 8% but if you exclude the reengineering charge, it’s down 19%. Looking at other operating expense, it’s down 16% but 2009 includes $150 million of MasterCard settlement payments which were not in ’08 and if you exclude that it’s down about 6%. Overall, we are controlling operating expenses very well. While looking at the metrics for the segments starting with USCS on Slide Nine, you can see that the billed business is down 16%, that compares with 15% in the first quarter. If you look at cards in force you can see that it’s down 9% and that’s being impacted by the cancellation of inactive cards. Excluding that, it would have been down around 3%. If you looked at the mix between charge and lending they are both down around the same percentage. What’s happening is the lower average card member spending is really what’s driving the lower billed business. If you look at loans, fortunately managed loans are decreasing at a similar rate in the drop in billed business. Moving to international consumer services, you can see the billed business is down 20% of 7% on an fx adjusted basis. In the first quarter reported was down 21% and fx was down about 5%. We see a decline across all geographies although Latin America while down is slightly better than the other regions on an fx adjusted basis. Looking at cards in force were down about 5% and over recent quarters we have cancelled about 400,000 cards. If you excluded that we would be down about 2%. Again here, loans are tracking with billed business which is good. Looking at travel sales, you can see that it’s being substantially impacted by the economy. Moving to global commercial services, you can see that billed business is down 23% on a reported basis and 18% on an fx basis, the same as the first quarter. So, what we are seeing is a significant pull back on T&E by many companies and we’re seeing that globally. If you look at the US, we’re down about 17%. Outside the US we’re down about 33% but 21% on an fx adjusted basis. Again here, it’s across all geographies but again, Latin America on an fx basis is down slightly less than the others but this very broad base. The increase in cards in force is being driven by the cards that are moving to the AMEX network as part of our CPS or GE acquisition that we did last year and again here, you can see the economy is having a significant impact on travel sales. Next, moving to global network and merchant services, Slide 12, you can see here billings were down 16% in the quarter, same as the first quarter. Now, in the US we continued to be impacted more in the United States than we are outside of the United States on an fx adjusted basis which is consistent with last quarter. Now, you if you look at US everyday spending, that declined about 12% which represents 71% of our US billings and US T&E spending has declined about 20%. Again here you see that the average discount rate is at 2.5% down only one basis point that is very good. Now, global network services billed business continues to perform well on a relative basis and in fact is up 6% on an fx adjusted basis. This is being driven by the 13% growth in cards in force and this is largely being driven by new cards coming from new products being launched with existing customers. Moving to credit metrics on Slide 13 we’ll look at the charge card net write off and 30 day past due related to the US consumer business. Now, as I mentioned before, the charge card provision has performed relatively well. While the write off rate is up, write off dollars in the second quarter of ’09 are very similar to the write off dollars we had in the first quarter of ’09 and the second quarter of ’08. Here we’re being impacted quite a bit by the fact that accounts receivable is 20% lower than last year. If you look at past dues, it has improved somewhat and the dollar amount of past dues are down compared to both the first quarter and the second quarter of last year. Moving to Slide 14, charge card net loss ratio and the 90 day past due relating to international consumer and global commercial card, you can see that the write off rates are either comparable or up slightly compared to the first quarter of ’09 and the 90 day past due rates have improved slightly as the past due dollars are similar to the first quarter of ’09 and the second quarter of ’08. Now, the charge card provision for commercial card and international consumer are not the main driving force in the lower earnings that we have in those segments. Let me turn to Slide 15, lending managed debt write off rate, now this is having a significant impact driving lower earnings. Now here, we are being impacted by both higher write off dollars and lower average loans. Now, the US managed write off rate we had forecasted for the second quarter to be between 10.5% and 11% and the actual is coming in at 10%. Now, the write off rate is made up of contractual write offs which are balances that really roll through the various aging buckets current to 30 and ultimately to 210 days when they are written off, early write offs which are bankruptcies and recoveries. Now, within our forecast our estimate for contractual and recoveries were pretty good. However, early write offs while higher than the first quarter came in better than we had forecasted. So, the fact that the actual are better than forecasted are a positive but I would still want to remind people that write off rates are at historically high levels. Now, when we look to forecasts for the third and fourth quarter of this year for US managed write off rates we think they will be below 10% and I’ll discuss that more in a minute. Now, if we look at international we can see that we have an increase in write off rates and we are having lower balances and therefore that’s causing the write off rate to be up but not to the same degree that we’re seeing in the US. Slide 16 is really attempting to dimension the denominator impact which is the fact that balances are falling over this period. So, here we’re showing you both the reported write off rate as well as a lag calculation. The lag calculation is the write offs in the current period compared to loan balances two quarters prior basically when those dollars were generated. So here you can see that they’re still rising but not nearly as sharply as they are on a reported basis. Moving to Slide 17 lending managed 30 day past dues and you can see that we are having positive results in the second quarter both in the US and international compared to the first quarter. Now, this is benefitting from the risk actions that we have taken both from underwriting in terms of the new accounts that we’re approving, customer management which includes things like line reductions and enhanced collection practices as we try to work with card members who are having temporary difficulties. Now, I would note that we did change our policy related to forgiveness of interest and fees and are moving more towards industry practice and that fact is contributing to the lower 30 day past due rates that we have. Although, without that change the 30 day past due rates are still improving. I’ll talk about delinquencies more on the next slide. Slide 18, so this is an important slide so let me take a few minutes here. Write offs are a combination of the accounts that roll from current to 30 days past due and that’s the top chart and it also is impacted by the amount that eventually roll from 30 days past due to write off and that’s the bottom chart. Now, if we look at the bottom chart and we look at the red triangles this is the period over which the rate started to climb and that occurred through March of ’08 through August of ’08 and then it stabilized which is dimensioned by the yellow triangles but I would note that it stabilized at a high rate and that high rate is causing higher write offs. Now, if we move to the top chart, this is being compounded by the fact that the number of accounts moving from current to 30 days past due started to increase in June of ’08. Now, if you look at the red triangles which are from August of ’08 to January of ’09 these are the accounts that wrote off in the first and second quarter. The yellow triangles are what we will see write off in the third and fourth quarter. So, our forecast for the third and fourth quarter is really based on the fact that the yellow triangles are improving and we’re assuming that the amount of 30 day past due to write off which is the bottom chart will stay at consistent levels. Now, what we’re forecasting obviously will be impacted by whether the bottom chart actually worsens in which case they’d be higher than we’re currently estimating or they get better and would be actually lower. Now, in addition to that, not on that chart is that we have an estimate for bankruptcies which we’re forecasting to increase and recoveries which we’re forecasting to be constant. Now, the first yellow triangle on the top chart which is February of ’09 will influence the write offs that we see in July and since that is lower than the prior triangle which is what generated write off in June, if all other things stay constant as I described we would see lower write offs in the month of July. You can see that those yellow triangles are improving modestly thereafter. That was somewhat complicated but I hope it was helpful in terms of you understanding what has driven the write offs that we saw in the first and second quarter and the basis for our forecast for the third and fourth quarter. To summarize, if we move to Slide 19, the second quarter ’09 write off rate of 10% was 50 to 100 basis points better than the previous estimates driven largely by better than expected bankruptcy trends. Assuming delinquencies continue around their current level and bankruptcies increase somewhat, third quarter ’09 and fourth quarter ’09 net write off rates will likely be better than previously estimated and fall below 10%. A significant portion of the provision benefits versus our prior estimates will likely be used to selectively increase spending on marketing and promotions and other business initiatives so this is very important. Our focus has always been and is now on the medium to long term. We have reduced investments in the short term which have impacted cards in force, our investment in sales force and the network. We will take a significant portion of the provision benefit and selectively increase marketing and promotions and other business initiatives. Let’s move now to Slide 20 which is our worldwide lending provision. Now, then yellow bar is the amount that we write off each quarter, the blue bar is our provision. Now, we said provision we’ve taken in to account our models, key metrics and the economic outlook. We’ve increased reserves in the second quarter based on our perceived inherent risk in our portfolio. Now, let me go to the next slide that shows coverage ratios. Now, this slide shows reserves as a percentage of owned loans and as you can see this coverage has increased significantly. Now, another metric that is not on this slide but that some analyst look at is months coverage of principle write offs. Now, historically we did not provide information that enabled people to do this calculation. Now, in the tables in the press release we split out write offs for principle and write offs for interest and fees as well as splitting the reserve between the reserve for principle and the reserves for interest and fees and this is page 14 in the tables. If you look at that, you would see that the principle coverage ratio on a worldwide basis is 10.7%. Let me now move to another look at billed business. This chart we showed last quarter. The blue line relates to credit card billings which is the solid line and lending managed loans which is the dotted line and you can see that loans continue to move in line with billings. The yellow line is charge cards, the solid line is billings and the dotted line is card member receivables and again, they are moving together. Now, spending is not the only factor, payment rate is also very important but that has held up well for us during this period. So net/net this is a positive story for us. Moving to Slide 23 and capital ratios, if you looked at the second quarter of ’09 these ratios are all well above either well capitalized or the benchmark rates. Now, the increase in these ratios that you see from the fourth quarter of ’08 through the first quarter of ’09 is largely driven by the CPP preferreds that we issued. Now, we have provided a pro forma first quarter reflecting the issuance of $500 million of common equity, the credit enhancement actions that we took related to our trust in the second quarter and the repayment of the CPP preferred. As you can see the second quarter ratios are very similar to the first quarter. Now, I think it’s also important if you’re comparing the second quarter ratios to the fourth quarter as a result of the enhancement actions we took in the second quarter, for regulatory purposes we brought those securitized receivables back in to the risk weighted asset calculation. So, in there as we look at the second quarter those assets are all within the calculations when they weren’t in the fourth quarter of ’08. These are very strong ratios that we continue to have in the second quarter. Moving to Slide 24, this is our excess cash and readily marketable securities, most of you are familiar with the activity here. We start with the ending balance in March. As you know, we paid the CPP preferred. As I’ll talk about more in a minute, we’ve increased our retail deposits, we’ve also issued $3 billion in unguaranteed debt as well as $500 million in common equity. We have met the maturities of long term debt in the quarter and we shifted $2 billion from cash over to the liquidity investment portfolio. That brings us to $16 million in cash. We always back out the operating cash that we need to run the business as well as short term oustandings and then we add in our liquidity investment portfolio and stand at $22 billion. When you compare that to maturities over the next 12 months which is on Slide 25, you can see that we have cash and marketable securities in excess of our maturities for the next 12 months. Next, moving to Slide 26 this is just a little bit more information on our brokered retail deposits. You can see that we raised $4 billion in the quarter. The average duration on those were 22 months and the average rate was 1.7%. Our sweep accounts are relatively stable and we did a soft launch of our direct deposit program in June as well. The next page is page 27 and I would point out that we view deposits as our primary source of funding for the balance of the year although we’re likely to tap the debt markets as well. You can see here our additional sources and contingent sources although we currently don’t plan to utilize those over the balance of 2009. With that, let me conclude with a few final comments. While operating results were down significantly compared to last year due to the difficult economy, we remain focused on our three key priorities: to stay liquid; to stay profitable; and to selectively invest for the long term. We believe we are making good progress against each of these goals. Obtaining them should position us to emerge from this down turn in a strong competitive position. From the liquidity perspective we had $22 billion of excess cash and marketable securities on hand at the end of the quarter. This balance met our goals of holding cash in readably marketing securities at least equal to the next 12 months of maturities on a rolling basis. In the quarter, as I said, we successfully continued to build our US retail deposit base. We raised $4 billion of retail deposits in the quarter, bringing our total to approximately $19 billion including a small contribution from the initial soft launch of our direct deposit program in June. During the quarter we demonstrated our ability to access various unsecured and secured funding sources. However, for the remainder of 2009 we continue to view deposits as our primary funding source although we will likely also tap the debt markets again. The designation by the Federal Reserve board that American Express had no capital needs under the supervisory capital assessment program, the subsequent repayment of the $3.4 billion of CPP preferred shares provided by the Treasury and the related $500 million common equity offering are all evidence of the strength of our capital position. Turning to our second goal, we remain profitable in the quarter generating $342 million of earnings from continuing operations. These reflect the competitive strength of our diverse business model, given the multiple roles we play as a payment issuer, processor and network provider. Additionally, they underscore the flexibility of our model and the ability to adapt to a very difficult economic environment that is still characterized by weak spending levels and rising unemployment. As we indicated during the quarter, card member spending remained under pressure within all our business activities. While the year-over-year spending decline was fairly consistent through the first five months of the year, the decline has moderated slightly in June and July year-to-date and will likely moderate further later in the year as comparisons for last year continued to get easier. Overall, in light of our proportionately greater level of corporate and consumer discretionary spending, we continue to feel good about the relative level of our spending volumes compared to the other major card competitors. Our operating expense trends in the quarter also reflect the savings we have been able to achieve through the two previously announced reengineering programs. Based on our progress to date we are on track to realize substantial additional operating expense benefits this year. In the quarter we increased the reserve balance as lending write off rates rose sharply and the outlooks in the economy and for unemployment remains uncertain. However, the increase in write offs was less than we anticipated mostly due to the lower than expected bankruptcy levels. In addition, lending past due trends continued to improve. Assuming delinquencies continue around current levels and bankruptcies increase somewhat, we believe that it is highly likely that we will perform better than we previous forecasted. In fact, we now expect US managed lending net write off rate during the next two quarters to be below 10%. We continue to be focused on generating earnings in excess of our dividend. While some of the recent trends give us confidence in our ability to meet this goal, the benefits relating to lower than expected credit provision costs will most likely be directed towards investments and other business initiatives. The net result of all these factors position us to selectively increase marketing and promotions and other investments to a level higher than we planned. This would reduce the $1.5 billion of investment related savings included in the $2.6 billion of total reengineering benefits targeted through our two previously announced programs. Our investments in the third and fourth quarter will focus on a number of key business goals including our premium lending strategy evidenced by the investments in our partnership expansion with Delta and the recent extension of our Starwood partnership, activities surrounding our proactive charge card product and marketing efforts, various merchant acceptance, corporate services and G&S expansion initiatives and activities surrounding our data and information management capabilities. Our ability to balance these investments against our financial goals will require continued flexibility. As we move forward, we believe our historic success in achieving this balance positions us well to further build upon our competitor strengths. We recognize that this will continue to be a very difficult and uncertain operating environment. In addition to dealing with the uncertain economy, we also need to adopt the new regulatory climate in the US and some overseas markets. Given that approximately 80% of our revenues come from fees rather than interest charges we expect to be affected less than competitors who rely on promotional rates, balance transfers, penalty fees and back end charges. However, the impact of new regulations will be more negative than positive and unfortunately provide new limits to the industry’s ability to appropriately price for higher levels of risk and may have the unintended consequence of restricting credit availability to some borrowers. Now in closing, our business model comprises a diverse set of activities that span the payment industry. Our brand is an important asset that is recognized and respected around the globe. Our premium card member base remains a key advantage as it retains the capacity to grow spending substantially when the economy improves. Our global merchant network is positioned to capitalize on future growth opportunities within the payment industry. We’re focused on our balance sheet in order to have the capital, funding and liquidity profile that is appropriate for these volatile times. And of course, across all of our businesses we’ve instilled a strong focus on the customer, someone we need to stay close to regardless of the environment. Thanks for listening and we are now ready to take questions.

(Operator Instructions) Your first question comes from Christopher Brendler – Stifel Nicolaus. Christopher Brendler – Stifel Nicolaus: I wanted to ask you if you could give us a little more detail on what you’re seeing on the credit side? The amount of improvement you saw this quarter sounds like it was a little better than you thought certainly, better than I thought just given what we’re seeing in the macro environment. Do you give any credence to the theory that we’re seeing some of the overleveraged consumers sort of burn off and we’re left with a deteriorating trend not nearly as bad as we saw in the second half just because you’ve seen some of the worst of that impact last year? Any color you can give on just what you’re seeing on the credit side. Daniel T. Henry: I guess what I’d point out is that the better than expected performance that we saw in the quarter was really driven by bankruptcies coming in better than we thought. Now, bankruptcies were higher than the first quarter but not to the magnitude that we expected. We’re actually continuing to forecast that bankruptcies will increase in the third and fourth quarter. By contrast, our forecast for the third and fourth quarter is really predicated on the fact that we have seen an improvement in the low rate from current to 30 days past due. Now, you might remember that back on the first quarter call we saw delinquencies were a little better in February and March but at that juncture we weren’t certain whether that was just a seasonal trend or whether it was going to continue but we’ve seen in continuing to improve as you can see on that one slide that is included in the package. The real question is kind of where do we go from here but at least we have about five months where we’ve seen a trend down and that really improvement in the roll rate from current to 30 days past due is the basis for our improved forecast as we go over the balance of the year. Christopher Brendler – Stifel Nicolaus: A follow up question, any improvement that you think you might see in the second half of the year on the spending side? I think there’s obviously going to be some easier comparisons as we get to the fourth quarter but, anything that you saw in the quarter that suggested that we might see spending pick up a little bit if you sort of x out any of those easier comps or just core spending trends, is there any signs of improvement yet? Daniel T. Henry: I think the first five months of the year were pretty consistent but in June and month-to-date July the year-over-year decline has moderated slightly. So, the question is will that continue. Certainly, as we look at year-over-year growth as we go over the balance of the year they’re going to have easier grow overs because it was right around this time last year that we started to see the impact on spending. I guess I would not that the slight moderation that we saw was really driven in the US so we’ll have to see what we see from here.

Your next question comes from David Hochstim – Buckingham Research. David Hochstim – Buckingham Research: I wonder could you give a little more color on what you saw in the changes in spending in June and July? Was there more travel, more discretion spending? More transactions, fewer transactions, bigger transactions? Daniel T. Henry: I guess I would leave it David that we in June and July month-to-date saw a slight moderation. I tried to provide a little color in that is really coming from the US as opposed to international but at this juncture we haven’t broken it down to a final level in terms of where that is coming from. I’d want to emphasize that it’s a slight moderation so you’ll probably see different categories moving quite a bit as they always do within the aggregate number. David Hochstim – Buckingham Research: Can you just clarify what you’re guiding to in the way of the improvement in charge off rate? What are you assuming in the way of balance declines, how much is the denominator factoring in and then can you be more specific about what happened in bankruptcies? Bankruptcies overall are up 35% to 40% pretty consistently across the year for the nation so your experience is obviously different. I wonder if you can help relate that? Daniel T. Henry: What I would say is bankruptcies are up and we think they’ll continue to trend up. I actually think across the industry, in June in particular, I think the industry saw that the filings were probably less than had been anticipated so I don’t know that it was completely unique to us in June. Now, the first part of your question around write off rates was? David Hochstim – Buckingham Research: Well, you’re guiding to lower write off rates than you had previously but there’s some issue with the denominator and I was just wondering if you could help us understand. So, if we thought about dollar charge offs do you see dollar charge offs flat? Down? Daniel T. Henry: I would think that it is really more the change in our forecast from the first quarter to the second quarter is really being guided by the change that we saw in the dollar amount that was rolling from current to 30 days past due. That’s really the driving force in the change in the write off rate. We have really not changed notably in the last three months our forecast for where loan balances will be. So, it’s really the improvement in the roll rate from current to 30 days past due that’s impacting the guidance that we’re now giving. David Hochstim – Buckingham Research: Are you assuming the same kind of rate of decline in balances that you had in the second quarter? Daniel T. Henry: Well, I think we already see all of the buckets that are going to impact the balance of the year have already been baked if you look at those yellow triangles in the top of that chart. The question is whether the roll rates for the accounts that are 30 days past due to write off, whether they improve or deteriorate. For purposes of our forecast we’ve assumed that they stay at a consistent level that we’ve seen over the last several months.

Your next question comes from Bill Carcache – Fox-Pitt Kelton. Bill Carcache – Fox-Pitt Kelton: I have a question on the reserve build, one of your competitors announced that it elected to release reserves and said the release was due to lower loan balances. Your loan balances are also down 34% and you’re now reserved at 240% of accounts past due but you mentioned that you expect future losses to help you fund greater investment. I’m just trying to understand the thought process behind booking a big reserve build now when it sounds like you expect to release reserves in the second half of ’09. So net/net that build now impacts your results but it sounds like you’re going to release it later but then there’s going to be some investment in marketing. I guess is this just a conservative outlook so you’re well positioned in case delinquencies start to rise again or can you just kind of help me kind of thing through that? Daniel T. Henry: Looking at the second quarter certainly loan balances are down 18% on a managed basis and a higher number on an owned bases however, let’s remember that our write off rate while better than we had forecasted was at 10% which is almost double the rate we had a year ago. So, we are seeing a significant increase in the quarter in write off rates. While delinquencies have improved, if you look at the rate that rolls from 30 days past due to write offs, they are at very high levels. So, those are the things that we were looking at. We also look at coverage ratios and we look at the outlook for the economy and quite frankly, we think the economy is very uncertain in terms of where it is going to go from here. If you look at the most recent Blue Chip forecasts for unemployment, it has unemployment continuing to rise, I think it peaks in the first quarter of next year at 10.1% but still staying stubbornly high. So, when we factor all those things together we think the inherent risk in the portfolio warranted us to build reserves, I think we built them by about $200 million. Now, to answer the second question, in terms of the balance of the year and the fact that we’ll have provision benefit, that is based on the fact that we will have lower write off rates which will therefore have lower provision. It’s not making any statement about a reserve release. It’s largely being driven by the fact that we anticipate lower write offs in the third and fourth quarter. Bill Carcache – Fox-Pitt Kelton: Then last question is you talked about changes in practices that had an impact on delinquency rates that you’re now more in line with the [inaudible] convention. Can you talk about those? Daniel T. Henry: Yes, it’s just our policy in terms of forgiving interest and fees is now more in line with the industry. By doing that it really provides a lower amount that the customer needs to pay that enables them to do that and work through this difficult time and that has an impact in terms of the level of delinquencies we have. But, it is very much in line with industry practice.

Your next question comes from Donald Fandetti – Citi. Donald Fandetti – Citi: A quick question Dan, I was wondering if you can comment on your expectations for interchange regulation? It sounds like it’s probably on hold until the [GAO] study. I wanted to see if you could just comment on your expectation and any impact to the business as you look out? Daniel T. Henry: As you know, at one juncture there was an interchange like provision in the credit card bill, I think there was a fair amount of concern and opposition to that and it was taken off the bill. There have been a number of other proposals discussed. As we have said in the past, it’s not clear to us why Congress would charge to basically be fixing pricing in this industry and wouldn’t let the market place drive pricing. Having said that, what actions Washington will take we’ll have to wait and see. We will obviously be talking to people on the Hill and expressing our perspective in terms of what we think is the appropriate action to be taken for the economy. \ Donald Fandetti – Citi: What is sort of your expectation? I mean, do you think there’s real risk to interchange or is it the type of situation where you don’t know at this point? Daniel T. Henry: Clearly the fact that that original provision was taken off the bill I think indicates that there’s a fair number of people that have concern and opposition to it and we wouldn’t think it would be a logical action to be taken. That said, we don’t control what actions could potentially be taken in Washington.

Your next question comes from Meredith Whitney – Meredith Whitney Advisory Group. Meredith Whitney – Meredith Whitney Advisory Group: I have a few questions, one is related to the 2000 cards that you deactivated. What were the balances or the credit lines associated with those? Daniel T. Henry: It was 2.7 million cards, the criteria that we used was that the card was both balance and spend in active. So, these are cards that had no spending for 24 months and had no balances. Meredith Whitney – Meredith Whitney Advisory Group: But what were their open available balances at the time you cut them? Daniel T. Henry: You will see that our credit lines have come down quite a bit over the quarter, total available lines have come down quite a bit over the quarter. The cancellation of these cards are a sizeable piece of that decline without giving you an exact number. Meredith Whitney – Meredith Whitney Advisory Group: I don’t think you release those quarterly that’s why I was trying to get you to do that because I think you just put those ones out on an annual basis? Daniel T. Henry: I think that if you look at Treasury information you would be able to see on a monthly basis the movement in the available lines that are out there. Meredith Whitney – Meredith Whitney Advisory Group: Then, just to follow up on that question and then I’m going to move on to another one real quick, of the cards that you deactivated was there a meaningful response to your customers so that they said we actually want the card? Was there any push back on that? Daniel T. Henry: To the extent we had calls from customers then we could effectively reunderwrite them and if we considered them to be credit worthy then we would issue them new cards. Meredith Whitney – Meredith Whitney Advisory Group: Was that a meaningful number or not a meaningful number? Daniel T. Henry: It’s not information that we’ve disclosed. Meredith Whitney – Meredith Whitney Advisory Group: Then with respect to the pricing of the core card business, the fact that you no longer have the securitization fees would argue that you would need to reprice your card business in a fairly meaningful way. Can you talk about your efforts? And also, particularly because of the credit card legislation that has changed, can you talk about your repricing efforts, where you are, where you’re going to be and obviously that’s based towards potentially margin expansion? Daniel T. Henry: As I talked about I think in the last call, we did some repricing of customers back in the January/February time frame and so those are reflected in our numbers. Because of the Credit Card Act, which will affect our ability to reprice customers because of credit in the future, we will take actions to mitigate that impact which we think is important to us remaining profitable. So, I think it’s reasonable to expect that we will take actions going forward that will mitigate the revenue losses that resulted from the credit act that was just passed. Meredith Whitney – Meredith Whitney Advisory Group: But I also mean from the cost of funding as well. Daniel T. Henry: Well cost of funding right now? Meredith Whitney – Meredith Whitney Advisory Group: Structurally the funding mixed has changed therefore you would argue that the pricing would change too. Daniel T. Henry: If you look at deposits for example which we’re building up, the price of deposits is really pretty stable over time whether you’re in a high interest rate environment or a low interest rate environment. So, we think by expanding that, that will be a positive. In terms of what the cost will be, when the credit markets reopen in a more fulsome way than they are now and what the spreads above benchmarks will be, quite frankly it’s completely unclear. Now, I think it’s reasonable to assume that the likelihood that we’ll move back to a period where we’re paying 20 basis points above the benchmark is probably unlike but thinking that they would stay where they are today I would think is equally unlikely. The question is where in between there will it fall and quite frankly, I think we’ll have to wait and see how the market develops but I think it’s not unreasonable to think it will be at some level that’s higher than we experienced over the last five years.

Your next question comes from Sanjay Sakhrani – Keefe, Bruyette & Woods. Sanjay Sakhrani – Keefe, Bruyette & Woods: Can you help us think about the expectation to reinvest any gains from better credit relative to some of the targets you guys have out there specifically the one kind of post cycle that low 20% ROE? I’m just trying to think about when that target applies or are we kind of in a wait and see mode? Daniel T. Henry: Well, I think while we’ve seen some slight improvement here in credit metrics, I think we need to remember that our spending levels this quarter are still down double digits. Having lower billed business has a significant impact on our P&L. In addition to that, write off rates are at 10% and that has a significant impact. So, both spending will have to improve quite a bit and write off rates will have to improve quite a bit before we get to the point where we would be looking for normalized earnings or ROE. Sanjay Sakhrani – Keefe, Bruyette & Woods: Then I guess I was wondering on the improved delinquency trends, is there any way to extrapolate kind of what’s being cyclically driven versus the seasonal impact because you guys had a lot of growth and some of the vintages that we’re seasoning are kind of running off right so is there any way to isolate that element of the improvement in delinquencies? Daniel T. Henry: At this juncture clearly we’ve been putting out fewer new cards than we have historically although that really has taken place over the last four quarters or so. Generally, credit losses from cards in the first six to nine months are very negligible so I think that will start to be more of a factor maybe when we get a couple of quarters out from here. Although, notwithstanding that I think it is a more tenured card base but I wouldn’t describe it at this point that being a major factor in what we’re seeing right now. To go back to what you mentioned a minute ago, I just wanted to say that we haven’t established a target for ROE at this juncture. We have simply said that we think when we get back to normalcy that the ROE target will be something north of 20%. Where it’s actually going to settle will be very dependent on what capital requirements we have when we get back to a normal period. Sanjay Sakhrani – Keefe, Bruyette & Woods: Then I guess two just follow up questions, on this FAS 166, 167 is it fair to assume you guys will elect carrying value and not fair value? Daniel T. Henry: I think we are required to bring them back on to the books at fair value when they first come on. Sanjay Sakhrani – Keefe, Bruyette & Woods: The liabilities? Daniel T. Henry: The answer is we have an option to value them at fair value, we will not do that. Sanjay Sakhrani – Keefe, Bruyette & Woods: Then just finally, do you have an updated number on kind of fixed versus variable dynamics on both the assets and liabilities side? I would assume the asset side would have become more variably driven, do you have an updated number on that? Daniel T. Henry: I don’t think we’ve put out a new updated number although it’s historically been around 60% variably funding. Now, having said that part of the fixed piece was balance transfers. Balance transfer activity as you know has declined precipitously so while we haven’t updated the number, I think it’s logical to think that the variable piece is probably higher and it would be something that we could well update as part of the 10Q. Sanjay Sakhrani – Keefe, Bruyette & Woods: I’m assuming the liabilities, a lot of these deposits that you guys are taking are probably fixed, right? Daniel T. Henry: The liabilities we’re taking are fixed.

Your next question comes from Ken Bruce – Bank of America. Ken Bruce – Bank of America: Could you elaborate on maybe some of your strategies around the cards in force, specifically are you planning to continue to take deactivated cards and essentially move them out? Was that a onetime adjustment you were trying to make to your risk management practices? What’s the dynamic as it relates to obviously you’ve got slower originations at this point or acquisitions, that may pick up as you reinvest but it looks like you’re proactively trying to identify which customers within your portfolios you want to retain. Is that going to continue? Daniel T. Henry: I think we took the action on the in active customers, the concern was if someone was not using your product and then all of a sudden decided to activate after being dormant for 24 months, it could well be that it was driven by the fact that the customer had some credit issues and we wanted to really pull in the lines we had related to those customers because we viewed them as potentially risky. That was the motivating factor for that action although I’d say that we periodically look at inactive accounts and decide whether we should cancel them or not. So that was the reason. As you note, cards in force is being impacted by investment levels although based on our forecast for write offs now we will be investing at a higher level in the third and fourth quarter than we previously planned. Ken Bruce – Bank of America: Just to be clear, you don’t necessarily have a program where you will continue to move out inactive cards without balances. That was more of a onetime and you may reassess that from time-to-time but that’s not an ongoing program. Daniel T. Henry: So this was a onetime action although we will continue to review individual accounts that are inactive on a regular basis. Ken Bruce – Bank of America: Within the context of the reduced average card spending, are there specific either demographics or any additional information you could provide in terms of what trends you are seeing within sub segments of your portfolio? Daniel T. Henry: We certainly look at that by category so certainly airline would be one category where pricing has dropped very significantly. There are other categories that have held up well but I think it’s really pretty broad based and this might be something that we drill down to a little bit more at the financial community meeting that we’re going to have in August.

Your next question comes from Jason Arnold – RBC Capital Markets. Jason Arnold – RBC Capital Markets: I actually just had a quick follow up question on the seasonality aspect, I know that seasonality tend to play a part through mid year and consumer credit trends so I guess I was wondering if you could comment a little bit further on really what component of the delinquency improvement that you commented on earlier as being a key driver of your expectations here for later this year is being driven by this. Daniel T. Henry: Yes, I think we saw even when we had the first quarter earnings call that we had seen some improvement in the current 30 day past due roll rate. But at that juncture we thought it could well be just a seasonal move and so when we did our forecast for the balance of the year that was our thought process, it could be seasonal. We now have three more data points and we see that it is continuing at that improved level and so now that is influencing our view of the forecast for the balance of the year. So, it’s really that change in terms of the roll rate from current to 30 days past due that’s influencing the forecast. Jason Arnold – RBC Capital Markets: So it’s more magnitude because it seems like some of the delinquency trends roll through maybe May, June data as well so maybe it’s magnitude is what you are saying? Daniel T. Henry: Well, it’s really the continuation of that trend that’s causing to inform our estimate of the third and fourth quarter. Jason Arnold – RBC Capital Markets: Then just to follow up on one that Meredith had asked, I guess really with the rate hikes and line cuts you and others in the industry have been making, I was curious if you can share with us what you are seeing from a behavior shift in spending and account credit performance on these cards and accounts? Daniel T. Henry: It’s very hard to correlate any one thing when so many other factors are moving. So, I would say the lower spending and the higher write off rates are largely being driven by the economy not the actions that we have taken in terms of card members. Certainly, there’s some impact on spending and write off rates from the customer management actions we’ve taken such as line reductions but I think the major factor here is the economy.

Your next question comes from Richard Shane, Jr. – Jefferies & Company. Richard Shane, Jr. – Jefferies & Company: Obviously everybody is pretty fixated on what’s going on with spend and the notion that the declines are moderating. If I could just ask one question related to that, is the decline moderating sequentially May, June, July or is it moderating on a year-over-year basis just because June and July is when the trend last year started to become so negative? Daniel T. Henry: So we’re looking at the sequential trend year-over-year. So we’re comparing June year-over-year rate of decline to the year-over-year rate of decline in May. So, we have a May year-over-year rate of decline, if we do that same calculation for June and month-to-date July, there has been some slightly moderation in the decline. Richard Shane, Jr. – Jefferies & Company: What I’m trying to figure out is last year sequentially from May to June did you see some sort of precipitous decline or some sort of decline and the reason that June 2009 looks a little bit better on a year-over-year basis versus May 2009 was only because June 2008 is such an easy comp? Daniel T. Henry: If you look historically over a number of years, generally there’s a drop in billed business from May to June and we saw that last year which was consistent with seasonal trends. This year we did not see a drop from May to June so the billings in June were very similar to the billings that we saw in May and that’s what’s resulting in this slight moderation.

Your final question comes from Michael Taiano – Sandler O’Neill & Partners. Michael Taiano – Sandler O’Neill & Partners: How should we think about the correlation of your charge off rate with the unemployment rate going forward? Do you think it will be more or less in line or do you think you’ll perform better because some of the factors that were causing your credit performance to be worse than your peers are starting to succeed? I know you guys talked about the seasoning impact and having small business and the exposure to California and Florida. Are some of those factors starting to subs cede relative to your peers do you think? Daniel T. Henry: That’s difficult to access at this juncture. What I would say is that our forecast from the third and fourth quarter is based on what we’re seeing within American Express and what we’re seeing in the roll rates. It’s not being driven by forecasts of unemployment so it’s our actual data and what we’re anticipating within card members at American Express. Now, notwithstanding that, you look at that and then you look at the Blue Chip forecast for unemployment, now certainly if you went back to ’91 or 2001, what we saw at that juncture was that write off rates both for the industry and for American Express peaked before unemployment peaked. Now, whether that’s going to be the case this time or not, we’re going to have to wait and see. Michael Taiano – Sandler O’Neill & Partners: Are you willing to give us some quantification of what the change in the reage policies have done for your delinquencies? The, could you also maybe give us – I know you securitized some loans during the quarter, what impact did that have on your provision? Daniel T. Henry: As it relates to the first question delinquencies have improved, the change in policy has an impact on that but if you excluded that change in policy, delinquencies would have improved in any event. Now, in terms of securitization, the securitization really doesn’t have any impact on our provision, we are providing a credit provision for our owned receivables, that was driven by our own receivables not impacted by the actual securitization that we had in the month. Michael Taiano – Sandler O’Neill & Partners: So you don’t release the reserve when you securitize the receivables off balance sheets? Daniel T. Henry: We do release the reserves but the provision you’re looking at is for the owned assets that are on the books. Thank you everyone very much for joining the call. Good night.

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