American Express Ignores Investment Account

American Express (AXP) announced what should be no surprise. Its card holders are falling behind in their payments to the point where American Express is starting to lose money. They claim that the losses are from every segment and not just from newer unseasoned cards. The press release and conference call went on at great length to discuss and review all the minutiae of running a charge card operation.

The press release embedded income statement abstracts but neglected to include balance sheet info. (Wonder why? Most folks include balance sheet stuff!) While most followers of American Express find the information provided useful let’s consider this. On the balance sheet they have approximately $16 Billion in long term investments. The entire category is 160% of the firm’s net worth.

In today’s traumatized financial market, asset quality is a prime consideration. American Express should have spent more time explaining where their financial assets are in addition to their portfolio of loans to card holders. Are they exposed to derivatives, sub prime problems or other difficulties?

The best that I can find is the following quote attributable to Daniel T. Henry - EVP and CFO

“Our investment optimization process positions us to identify opportunities to increase or decrease our business building investments quickly and thoughtfully. We have a strong planning and forecasting process which dynamically incorporates changes in the environmental conditions, and we remain focused on reengineering, which in recent years has yielded a far leaner expense base.”

Why can we not shine some light into all the cormners and just be safe?