EX-99.2 3 dfs12312024ex992.htm EX-99.2 Document

DISCOVER FINANCIAL SERVICES Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
 Quarter EndedTwelve Months Ended
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023		Dec 31, 2024Dec 31, 20232024 vs. 2023
EARNINGS SUMMARY       
Interest Income$4,989 $5,112 $4,971 $4,948 $4,868 $121 2 %$20,020 $17,845 $2,175 12 %
Interest Expense1,359 1,457 1,447 1,461 1,400 (41)(3 %)5,724 4,746 978 21 %
Net Interest Income3,630 3,655 3,524 3,487 3,468 162 5 %14,296 13,099 1,197 9 %
Discount/Interchange Revenue1,157 1,142 1,153 1,024 1,142 15 1 %4,476 4,460 16 — %
Rewards Cost758 779 716 703 788 (30)(4 %)2,956 3,079 (123)(4 %)
Discount and Interchange Revenue, net399 363 437 321 354 45 13 %1,520 1,381 139 10 %
Protection Products Revenue43 42 42 42 43 — — %169 172 (3)(2 %)
Loan Fee Income200 214 205 200 217 (17)(8 %)819 763 56 7 %
Transaction Processing Revenue83 84 91 87 82 1 1 %345 303 42 14 %
Other Income404 95 239 23 16 388 NM761 76 685 NM
Total Non-Interest Income1,129 798 1,014 673 712 417 59 %3,614 2,695 919 34 %
Revenue Net of Interest Expense4,759 4,453 4,538 4,160 4,180 579 14 %17,910 15,794 2,116 13 %
Provision for Credit Losses1,202 1,473 739 1,497 1,909 (707)(37 %)4,911 6,018 (1,107)(18 %)
Employee Compensation and Benefits792 703 658 671 646 146 23 %2,824 2,434 390 16 %
Marketing and Business Development299 263 258 250 372 (73)(20 %)1,070 1,164 (94)(8 %)
Information Processing & Communications208 197 167 163 170 38 22 %735 608 127 21 %
Professional Fees363 323 296 292 312 51 16 %1,274 1,041 233 22 %
Premises and Equipment25 25 23 20 25 — — %93 89 4 4 %
Other Expense168 277 336 148 263 (95)(36 %)929 803 126 16 %
Total Operating Expense1,855 1,788 1,738 1,544 1,788 67 4 %6,925 6,139 786 13 %
Income/ (Loss) Before Income Taxes1,702 1,192 2,061 1,119 483 1,219 252 %6,074 3,637 2,437 67 %
Tax Expense411 322 538 268 117 294 251 %1,539 841 698 83 %
Net Income/ (Loss)$1,291 $870 $1,523 $851 $366 $925 253 %$4,535 $2,796 $1,739 62 %
Net Income/ (Loss) Allocated to Common Stockholders$1,284 $834 $1,515 $813 $364 $920 253 %$4,446 $2,715 $1,731 64 %
Effective Tax Rate24.1 %27.0 %26.1 %24.0 %24.0 %25.3 %23.1 %
Net Interest Margin11.96 %11.38 %11.17 %11.03 %10.98 %98 bps11.38 %11.07 %31 bps
Operating Efficiency39.0 %40.1 %38.3 %37.1 %42.8 %(380)bps38.7 %38.9 %(20)bps
ROE29 %21 %40 %24 %10 %28 %20 %
ROCE31 %23 %43 %8 %11 %30 %22 %
Capital Returned to Common Stockholders$160 $155 $178 $180 $144 $16 11 %$674 $2,541 ($1,867)(73 %)
Payout Ratio12 %19 %12 %22 %40 %15 %94 %
Ending Common Shares Outstanding251 251 251 251 250 1 — %251 250 1 — %
Weighted Average Common Shares Outstanding251 251 251 250 250 1 — %251 254 (3)(1 %)
Weighted Average Common Shares Outstanding (fully diluted)251 251 251 250 250 1 — %251 254 (3)(1 %)
PER SHARE STATISTICS       
Basic EPS$5.11 $3.32 $6.04 $3.25 $1.45 $3.66 252 %$17.72 $10.71 $7.01 65 %
Diluted EPS$5.11 $3.32 $6.03 $3.25 $1.45 $3.66 252 %$17.72 $10.70 $7.02 66 %
Common Dividends Declared Per Share$0.70 $0.70 $0.70 $0.70 $0.70 $— — %$2.80 $2.70 $0.10 4 %
Common Stock Price (period end)$173.23 $140.29 $130.81 $131.09 $112.40 $60.83 54 %$173.23 $112.40 $60.83 54 %
Book Value per share $71.32 $68.11 $63.76 $58.54 $56.92 $14.40 25 %$71.32 $56.92 $14.40 25 %
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY
(unaudited, in millions)
 Quarter Ended  
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023
BALANCE SHEET SUMMARY       
Assets       
Cash and Investment Securities$28,552 $26,423 $24,405 $27,965 $25,383 $3,169 12 %
Loans Held-for-Sale— 8,484 10,145 — — — — %
Loan Portfolio121,118 118,509 117,504 126,555 128,409 (7,291)(6 %)
Total Loan Receivables121,118 126,993 127,649 126,555 128,409 (7,291)(6 %)
Allowance for Credit Losses(8,323)(8,512)(8,481)(9,258)(9,283)960 10 %
Net Loan Receivables112,795 118,481 119,168 117,297 119,126 (6,331)(5 %)
Premises and Equipment, net1,072 1,085 1,087 1,107 1,091 (19)(2 %)
Goodwill and Intangible Assets, net255 255 255 255 255 — — %
Other Assets4,966 5,371 5,973 6,083 5,858 (892)(15 %)
Total Assets$147,640 $151,615 $150,888 $152,707 $151,713 ($4,073)(3 %)
Liabilities & Stockholders' Equity       
           Certificates of Deposits 1
29,296 30,296 25,881 25,921 24,151 5,145 21 %
           Savings, Money Market, and Other Deposits 1, 2
61,316 60,013 61,414 61,412 59,882 1,434 2 %
Total Direct to Consumer Deposits 1, 2
90,612 90,309 87,295 87,333 84,033 6,579 8 %
Brokered Deposits and Other Deposits16,397 19,543 21,055 23,097 24,898 (8,501)(34 %)
Deposits107,009 109,852 108,350 110,430 108,931 (1,922)(2 %)
   Securitized Borrowings 3
8,475 9,307 9,608 10,933 11,743 (3,268)(28 %)
   Other Borrowings 3
7,778 8,870 9,533 9,542 9,588 (1,810)(19 %)
Borrowings16,253 18,177 19,141 20,475 21,331 (5,078)(24 %)
Accrued Expenses and Other Liabilities6,452 6,477 7,387 7,132 7,216 (764)(11 %)
Total Liabilities129,714 134,506 134,878 138,037 137,478 (7,764)(6 %)
Total Equity17,926 17,109 16,010 14,670 14,235 3,691 26 %
Total Liabilities and Stockholders' Equity$147,640 $151,615 $150,888 $152,707 $151,713 ($4,073)(3 %)
LIQUIDITY       
Liquidity Portfolio$27,325 $24,804 $22,371 $25,739 $23,254 $4,071 18 %
Private Asset-backed Securitization Capacity3,500 2,750 3,500 3,500 2,750 750 27 %
Federal Home Loan Bank Borrowing Capacity4,679 3,853 3,383 3,087 2,551 2,128 83 %
Federal Reserve Discount Window 4
46,489 46,118 39,569 41,710 41,199 5,290 13 %
Undrawn Credit Facilities 4
54,668 52,721 46,452 48,297 46,500 8,168 18 %
Total Liquidity$81,993 $77,525$68,823$74,036$69,754$12,23918 %
¹ Includes Affinity relationships
² Savings, Money Market, and Other Deposits and reflects both interest-bearing and non-interest bearing direct to consumer deposits
³ Includes short-term and long-term borrowings
⁴ Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023
BALANCE SHEET STATISTICS       
Total Common Equity$16,870 $16,053 $14,954 $13,614 $13,179 $3,691 28 %
Total Common Equity/Total Assets11.4 %10.6 %9.9 %8.9 %8.7 %
Total Common Equity/Net Loans15.0 %13.5 %12.5 %11.6 %11.1 %
Tangible Assets$147,385 $151,360 $150,633 $152,452 $151,458 ($4,073)(3 %)
Tangible Common Equity  1
$16,615 $15,798 $14,699 $13,359 $12,924 $3,691 29 %
Tangible Common Equity/Tangible Assets  1
11.3 %10.4 %9.8 %8.8 %8.5 %
Tangible Common Equity/Net Loans  1
14.7 %13.3 %12.3 %11.4 %10.8 %
Tangible Common Equity per share  1
$66.10 $62.89 $58.53 $53.31 $51.67 $14.43 28 %
Basel III
Quarter Ended
REGULATORY CAPITAL RATIOS 2
Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023  
Total Risk Based Capital Ratio16.5 %14.9 %14.2 %13.3 %13.2 %  
Tier 1 Risk Based Capital Ratio15.0 %13.4 %12.6 %11.7 %11.6 %  
Tier 1 Leverage Ratio 12.3 %11.4 %11.1 %10.1 %10.3 %  
Common Equity Tier 1 Capital Ratio 14.1 %12.5 %11.8 %10.9 %10.8 %
1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule
2 Based on the final rule published September 30, 2020. Capital ratios reflect the impact of CECL reserves on regulatory capital with transition impacts
  Note: See Glossary of Financial Terms for definitions of financial terms



DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
 Quarter Ended  
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023
AVERAGE BALANCES       
Assets       
Cash and Investment Securities$29,724 $24,023 $24,193 $25,662 $22,448 $7,276 32 %
Restricted Cash399 641 590 558 104 295 NM
Credit Card Loans101,059 100,290 99,584 100,310 99,610 1,449 1 %
Private Student Loans 1
1,458 9,631 10,304 10,577 10,369 (8,911)(86 %)
Personal Loans10,421 10,428 10,266 10,004 9,754 667 7 %
Other Loans7,826 7,358 6,829 6,235 5,654 2,172 38 %
Total Loans120,764 127,707 126,983 127,126 125,387 (4,623)(4 %)
Total Interest Earning Assets150,887 152,371 151,766 153,346 147,939 2,948 2 %
Allowance for Credit Losses(8,510)(8,480)(9,245)(9,279)(8,668)158 2 %
Other Assets7,401 7,756 7,953 7,709 7,462 (61)(1 %)
Total Assets$149,778 $151,647 $150,474 $151,776 $146,733 $3,045 2 %
Liabilities and Stockholders' Equity       
Non-Interest-bearing Direct to Consumer Deposits 2
$1,103 $1,063 $1,071 $1,037 $987 $116 12 %
                       Certificates of Deposits 2
29,634 27,839 25,906 25,625 22,496 7,138 32 %
                       Savings, Money Market, and Other Deposits 2
59,571 59,258 59,973 59,212 58,766 805 1 %
Interest-bearing Direct to Consumer Deposits 2
89,205 87,097 85,879 84,837 81,262 7,943 10 %
Brokered Deposits and Other Deposits17,515 20,189 21,631 23,792 23,271 (5,756)(25 %)
Total Interest-bearing Deposits106,720 107,286 107,510 108,629 104,533 2,187 2 %
Securitized Borrowings 3
8,852 9,971 10,432 11,340 11,045 (2,193)(20 %)
Other Borrowings 3
8,098 9,416 9,521 9,572 9,228 (1,130)(12 %)
Total Interest-bearing Liabilities123,670 126,673 127,463 129,541 124,806 (1,136)(1 %)
Other Liabilities & Stockholders' Equity25,005 23,911 21,940 21,198 20,940 4,065 19 %
Total Liabilities and Stockholders' Equity$149,778 $151,647 $150,474 $151,776 $146,733 $3,045 2 %
AVERAGE YIELD       
Assets       
Cash and Investment Securities4.24 %4.46 %4.51 %4.51 %4.36 %(12)bps
Restricted Cash5.69 %5.73 %8.33 %7.03 %16.71 %(1,102)bps
Credit Card Loans16.22 %16.23 %15.99 %15.79 %15.63 %59 bps
Private Student Loans 1
9.85 %10.08 %9.97 %10.04 %10.16 %(31)bps
Personal Loans13.84 %13.72 %13.60 %13.40 %13.20 %64 bps
Other Loans7.50 %7.45 %7.45 %7.39 %7.14 %36 bps
Total Loans15.37 %15.06 %14.85 %14.71 %14.61 %76 bps
Total Interest Earning Assets13.15 %13.35 %13.18 %12.98 %13.05 %10 bps
AVERAGE RATES
Liabilities and Stockholders' Equity       
                       Certificates of Deposits 2
4.61 %4.67 %4.62 %4.53 %4.24 %37 bps
                       Savings, Money Market, and Other Deposits 2
3.99 %4.27 %4.29 %4.35 %4.39 %(40)bps
Interest-bearing Direct to Consumer Deposits 2
4.19 %4.40 %4.39 %4.41 %4.35 %(16)bps
Brokered Deposits and Other Deposits4.76 %4.95 %4.85 %4.75 %4.64 %12 bps
Total Interest-bearing Deposits4.29 %4.50 %4.48 %4.48 %4.41 %(12)bps
Securitized Borrowings 3
4.60 %4.81 %4.89 %4.71 %4.68 %(8)bps
Other Borrowings 3
5.24 %5.23 %5.12 %4.94 %4.55 %69 bps
Total Interest-bearing Liabilities4.37 %4.58 %4.56 %4.54 %4.45 %(8)bps
Net Interest Margin11.96 %11.38 %11.17 %11.03 %10.98 %98 bps
Net Yield on Interest-earning Assets9.57 %9.54 %9.34 %9.15 %9.30 %27 bps
1 Private student loans were classified as held-for-sale effective June 30, 2024, and subsequently completed the sale during the fourth quarter of 2024
2 Includes Affinity relationships
3 Includes short-term and long-term borrowings
Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  Twelve Months Ended
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023		Dec 31, 2024Dec 31, 20232024 vs. 2023
TOTAL LOAN RECEIVABLES       
Ending Loans  1
$121,118 $126,993 $127,649 $126,555 $128,409 ($7,291)(6 %)$121,118 $128,409 ($7,291)(6 %)
Average Loans  1
$120,764 $127,707 $126,983 $127,126 $125,387 ($4,623)(4 %)$125,638 $118,311 $7,327 6 %
Interest Yield 1
15.37 %15.06 %14.85 %14.71 %14.61 %76 bps14.99 %14.33 %66 bps
Gross Principal Charge-off Rate 2
5.77 %5.91 %5.77 %5.74 %4.82 %95 bps5.80 %4.17 %163 bps
Net Principal Charge-off Rate 2
4.64 %4.86 %4.83 %4.92 %4.11 %53 bps4.81 %3.42 %139 bps
Delinquency Rate (30 or more days) 2
3.48 %3.46 %3.33 %3.38 %3.45 %3 bps3.48 %3.45 %3 bps
Delinquency Rate (90 or more days) 2
1.71 %1.65 %1.62 %1.64 %1.59 %12 bps1.71 %1.59 %12 bps
Gross Principal Charge-off Dollars 2
$1,730 $1,756 $1,820 $1,812 $1,521 $209 14 %$7,118 $4,927 $2,191 44 %
Net Principal Charge-off Dollars 2
$1,391 $1,442 $1,522 $1,556 $1,298 $93 7 %$5,911 $4,042 $1,869 46 %
Net Interest and Fee Charge-off Dollars 2
$334 $335 $344 $348 $279 $55 20 %$1,361 $873 $488 56 %
Loans Delinquent 30 or more days 2
$4,216 $4,105 $3,917 $4,282 $4,427 ($211)(5 %)$4,216 $4,427 ($211)(5 %)
Loans Delinquent 90 or more days 2
$2,071 $1,960 $1,903 $2,079 $2,045 $26 1 %$2,071 $2,045 $26 1 %
Allowance for Credit Losses (period end)$8,323 $8,512 $8,481 $9,258 $9,283 ($960)(10 %)$8,323 $9,283 ($960)(10 %)
Reserve Change Build/ (Release) 3, 4
($189)$31 ($777)($25)$618 ($807)($960)$1,977 ($2,937)
Reserve Rate 2
6.87 %7.18 %7.22 %7.32 %7.23 %(36)bps6.87 %7.23 %(36)bps
CREDIT CARD LOANS       
Ending Loans$102,786 $100,489 $100,066 $99,475 $102,259 $527 1 %$102,786 $102,259 $527 1 %
Average Loans$101,059 $100,290 $99,584 $100,310 $99,610 $1,449 1 %$100,313 $94,205 $6,108 6 %
Interest Yield16.22 %16.23 %15.99 %15.79 %15.63 %59 bps16.06 %15.33 %73 bps
Gross Principal Charge-off Rate6.28 %6.46 %6.66 %6.61 %5.50 %78 bps6.50 %4.76 %174 bps
Net Principal Charge-off Rate5.03 %5.28 %5.55 %5.66 %4.68 %35 bps5.38 %3.90 %148 bps
Delinquency Rate (30 or more days) 3.84 %3.84 %3.69 %3.83 %3.87 %(3)bps3.84 %3.87 %(3)bps
Delinquency Rate (90 or more days) 1.93 %1.87 %1.83 %1.95 %1.87 %6 bps1.93 %1.87 %6 bps
Gross Principal Charge-off Dollars$1,596 $1,629 $1,648 $1,649 $1,380 $216 16 %$6,522 $4,481 $2,041 46 %
Net Principal Charge-off Dollars$1,278 $1,332 $1,373 $1,411 $1,175 $103 9 %$5,394 $3,674 $1,720 47 %
Loans Delinquent 30 or more days$3,944 $3,857 $3,697 $3,810 $3,955 ($11)— %$3,944 $3,955 ($11)— %
Loans Delinquent 90 or more days$1,980 $1,883 $1,834 $1,941 $1,917 $63 3 %$1,980 $1,917 $63 3 %
Allowance for Credit Losses (period end)$7,403 $7,586 $7,591 $7,541 $7,619 ($216)(3 %)$7,403 $7,619 ($216)(3 %)
Reserve Change Build/ (Release) 4
($183)($5)$50 ($78)$549 ($732)($216)$1,802 ($2,018)
Reserve Rate7.20 %7.55 %7.59 %7.58 %7.45 %(25)bps7.20 %7.45 %(25)bps
Total Discover Card Volume$58,306 $56,593 $56,441 $53,239 $60,917 ($2,611)(4 %)$224,579 $232,785 ($8,206)(4 %)
Discover Card Sales Volume$55,252 $53,380 $53,482 $50,137 $57,145 ($1,893)(3 %)$212,251 $217,914 ($5,663)(3 %)
Rewards Rate1.35 %1.44 %1.32 %1.39 %1.37 %(2)bps1.38 %1.40 %(2)bps
1 Total Loans includes private student loans, home equity and other loans
2 Excludes loans classified as held-for-sale as of June 30, 2024
3 Includes the adjustment to eliminate the allowance for credit losses upon classifying the private student loan portfolio as held-for-sale as of June 30, 2024
4 Excludes any build/release of the liability for expected credit losses on unfunded commitments as the offset is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition

Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  Twelve Months Ended
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023		Dec 31, 2024Dec 31, 20232024 vs. 2023
PRIVATE STUDENT LOANS 1
       
Organic Student Loans$— $8,101 $9,740 $10,050 $9,894 ($9,894)(100 %)$— $9,894 ($9,894)(100 %)
Purchased Student Loans— 383 405 430 458 (458)(100 %)— 458 (458)(100 %)
Total Private Student Loans$— $8,484 $10,145 $10,480 $10,352 ($10,352)(100 %)$— $10,352 ($10,352)(100 %)
Interest Yield9.85 %10.08 %9.97 %10.04 %10.16 %(31)bps10.02 %9.95 %7 bps
Net Principal Charge-off Rate 2
N/AN/A1.85 %1.58 %1.52 %NM1.72 %1.29 %43 bps
Delinquency Rate (30 or more days) 2
N/AN/AN/A2.59 %2.62 %NMN/A2.62 %NM
Reserve Rate 3
N/AN/AN/A8.29 %8.29 %NMN/A8.29 %NM
PERSONAL LOANS       
Ending Loans$10,314 $10,438 $10,321 $10,107 $9,852 $462 5 %$10,314 $9,852 $462 5 %
Interest Yield13.84 %13.72 %13.60 %13.40 %13.20 %64 bps13.64 %12.83 %81 bps
Net Principal Charge-off Rate4.24 %4.01 %3.98 %4.02 %3.39 %85 bps4.06 %2.60 %146 bps
Delinquency Rate (30 or more days)1.69 %1.66 %1.54 %1.46 %1.45 %24 bps1.69 %1.45 %24 bps
Reserve Rate7.56 %7.65 %7.68 %7.48 %7.33 %23 bps7.56 %7.33 %23 bps
1 Private student loans were classified as held-for-sale effective June 30, 2024, and subsequently completed the sale during the fourth quarter of 2024
2 Excludes loans classified as held-for-sale as of June 30, 2024
3 The allowance for credit losses was reversed upon classifying the private student loan portfolio as held-for-sale
  Note: See Glossary of Financial Terms for definitions of financial terms



DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS AND VOLUME STATISTICS
(unaudited, in millions)
 Quarter Ended  Twelve Months Ended
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023Dec 31, 2024 vs.
Dec 31, 2023		Dec 31, 2024Dec 31, 20232024 vs. 2023
DIGITAL BANKING       
Interest Income$4,989 $5,112 $4,971 $4,948 $4,868 $121 2 %$20,020 $17,845 $2,175 12 %
Interest Expense1,359 1,457 1,447 1,461 1,400 (41)(3 %)5,724 4,746 978 21 %
Net Interest Income3,630 3,655 3,524 3,487 3,468 162 5 %14,296 13,099 1,197 9 %
Non-Interest Income1,001 669 691 541 595 406 68 %2,902 2,245 657 29 %
Revenue Net of Interest Expense4,631 4,324 4,215 4,028 4,063 568 14 %17,198 15,344 1,854 12 %
Provision for Credit Losses1,202 1,473 739 1,497 1,909 (707)(37 %)4,911 6,018 (1,107)(18 %)
Total Operating Expense1,801 1,743 1,692 1,494 1,725 76 4 %6,730 5,945 785 13 %
Income/ (Loss) Before Income Taxes$1,628 $1,108 $1,784 $1,037 $429 $1,199 279 %$5,557 $3,381 $2,176 64 %
Net Interest Margin11.96 %11.38 %11.17 %11.03 %10.98 %98 bps11.38 %11.07 %31 bps
Pretax Return on Loan Receivables5.36 %3.45 %5.65 %3.28 %1.35 %401 bps4.42 %2.86 %156 bps
Allowance for Credit Losses (period end)$8,323 $8,512 $8,481 $9,258 $9,283 ($960)(10 %)$8,323 $9,283 ($960)(10 %)
Reserve Change Build/ (Release) ($189)$31 ($777)($25)$618 ($807)($960)$1,977 ($2,937)
PAYMENT SERVICES       
Interest Income$— $— $— $— $— $— — %$— $— $— — %
Interest Expense— — — — — — — %— — — — %
Net Interest Income— — — — — — — %— — — — %
Non-Interest Income (Loss)128 129 323 132 117 11 9 %712 450 262 58 %
Revenue Net of Interest Expense128 129 323 132 117 11 9 %712 450 262 58 %
Provision for Credit Losses— — — — — — — %— — — — %
Total Operating Expense54 45 46 50 63 (9)(14 %)195 194 1 1 %
Income/ (Loss) Before Income Taxes$74 $84 $277 $82 $54 $20 37 %$517 $256 $261 102 %
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network977 954 936 883 974 3 — %3,750 3,728 22 1 %
PULSE Network2,463 2,421 2,413 2,312 2,308 155 7 %9,609 7,705 1,904 25 %
Total3,440 3,375 3,349 3,195 3,282 158 5 %13,359 11,433 1,926 17 %
NETWORK VOLUME
PULSE Network$84,900 $82,573 $81,749 $79,073 $79,194 $5,706 7 %$328,295 $285,616 $42,679 15 %
Network Partners6,081 7,512 8,111 11,070 8,736 (2,655)(30 %)32,774 39,671 (6,897)(17 %)
Diners Club International 1
11,435 10,388 9,421 10,181 10,468 967 9 %41,425 39,299 2,126 5 %
Total Payment Services102,416 100,473 99,281 100,324 98,398 4,018 4 %402,494 364,586 37,908 10 %
Discover Network - Proprietary57,120 55,184 55,351 51,764 58,419 (1,299)(2)%219,419 224,572 (5,153)(2)%
Total$159,536 $155,657 $154,632 $152,088 $156,817 $2,719 2 %$621,913 $589,158 $32,755 6 %
1 Volume is derived from data provided by licencees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES - GLOSSARY OF FINANCIAL TERMS
Balance Sheet & Regulatory Capital Terms
Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments
Regulatory Capital Ratios are preliminary
•
Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets
•
Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets
•
Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets
•
Common Equity Tier 1 Capital Ratio represents common equity tier 1 capital divided by risk weighted assets
Tangible Assets represents total assets less goodwill and intangibles
Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data
Tangible Common Equity/Net Loans, a non-GAAP measure, represents TCE divided by total loans less the allowance for credit losses (period end)
Tangible Common Equity per Share, a non-GAAP measure, represents TCE divided by ending common shares outstanding
Tangible Common Equity/Tangible Assets, a non-GAAP measure, represents TCE divided by total assets less goodwill and intangibles
Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)
Credit Related Terms
Delinquency Rate (30 or more days) represents loans delinquent thirty days or more divided by ending loans (total or respective product loans, as appropriate)
Delinquency Rate (90 or more days) represents loans delinquent ninety days or more divided by ending loans (total or respective product loans, as appropriate)
Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Reserve Rate represents the allowance for credit losses divided by total loans (total or respective product loans, as appropriate)
Earnings and Shareholder Return Terms
Book Value per share represents total equity divided by ending common shares outstanding
Capital Returned to Common Stockholders represents common stock dividends declared and treasury share repurchases, excluding common stock issued under employee benefit plans and stock based compensation
Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding
Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Income Allocated to Common Stockholders represents net income less preferred stock dividends and income allocated to participating securities
Net Interest Margin represents net interest income (annualized) divided by average total loans for the period
Net Yield on Interest Earning Assets represents net interest income (annualized) divided by average total interest earning assets for the period
Operating Efficiency represents total operating expense divided by revenue net of interest expense
Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period
Payout Ratio represents capital returned to common stockholders divided by net income allocated to common stockholders
Return on Common Equity represents net income available for common stockholders (annualized) divided by average total common equity for the reporting period
Return on Equity represents net income (annualized) divided by average total equity for the reporting period
Rewards Rate represents Credit Card rewards cost divided by Discover Card sales volume
Volume Terms
Discover Card Sales Volume represents Discover card activity related to sales net of returns
Discover Card Volume represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity
Discover Network Proprietary Volume represents gross Discover Card sales volume on the Discover Network


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA
(unaudited, in millions)
 Quarter Ended
 Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024Dec 31, 2023
GAAP Total Common Equity$16,870 $16,053 $14,954 $13,614 $13,179 
Less: Goodwill(255)(255)(255)(255)(255)
Less: Intangibles— — — — — 
Tangible Common Equity 1
$16,615 $15,798 $14,699 $13,359 $12,924 
GAAP Book Value Per Share$71.32 $68.11 $63.76 $58.54 $56.92 
Less: Goodwill(1.02)(1.02)(1.02)(1.02)(1.03)
Less: Intangibles— — — — — 
   Less: Preferred Stock(4.20)(4.20)(4.21)(4.21)(4.22)
Tangible Common Equity Per Share $66.10 $62.89 $58.53 $53.31 $51.67 
¹ Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE and definitions may vary, so users of this information are advised to exercise caution in comparing TCE of different companies. TCE is included because management believes that common equity excluding goodwill and intangibles is a more meaningful measure to investors of the true net asset value of the Company
  Note: See Glossary of Financial Terms for definitions of financial terms