Better than expected, still pretty bad. That seems to be the case for most banks these days, and it was no exception for American Express (NYSE:AXP).

Net income for the high-end card giant sank to $437 million, or $0.31 per share, down 64% from the same period a year ago. Excluding one-time gains on legal payouts from Visa (NYSE:V) and MasterCard (NYSE:MA), AmEx would have earned $0.20 per share. Analysts were only looking for $0.14 per share, which accordingly sent the stock up more than 20% as of this writing. Low expectations can be a powerful thing these days.

"At a time when some parts of the card industry were incurring substantial losses, we remained solidly profitable thanks, in part, to our flexibility in adapting to a very difficult economic environment and the diversity of our business model." said CEO Ken Chenault. He's right, of course. Banks with heavy card exposure, such as Citigroup (NYSE:C) and Bank of America (NYSE:BAC), are feeling the heat from a surge in charge-offs, without the offsetting transaction processing revenue AmEx, Visa, and MasterCard enjoy.

Nevertheless, both sides of the equation -- credit quality and transaction volume -- are anything but healthy. Transaction volume fell a massive 16% from a year ago, highlighting how quickly consumers have slammed their wallets shut. Investors must grapple with the question of when, if ever, that spending will rebound. Is consumption irrationally low right now, or was it unsustainably high in the past? While the world is indeed paralyzed by a fear that won't last forever, most signs suggest that consumer behavior will shift toward a more permanent frugality, not a temporary cutback that'll swiftly rebound to the levels of the glory days.

On the credit side, things aren't looking so hot, either. After years of extending credit on a host of optimistic -- if not false -- assumptions, customers are defaulting at a harrowing rate. Net charge-offs jumped to 8.5%, from 6.7% last quarter and 4.3% in the same period last year. Management expects the charge-off rate to bounce beyond 10% by next quarter as unemployment surges.

Last month, Warren Buffett said of AmEx "their earnings will suffer to some degree accordingly. But that doesn't mean that American Express isn't a hell of a buy at $10. American Express is going to be around forever."

Well, here we are at $25 a share. Is there still value in this stock? The AmEx brand name is about as valuable as it gets, but between rising unemployment that could last not months, but years, and consumers permanently shifting toward a saving-oriented economy, I have a hard time getting jazzed about the prospects of any consumer finance company these days -- even if it will be around forever.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. American Express is a Motley Fool Inside Value pick. The Fool owns shares of American Express and has a disclosure policy.