Exhibit 99.2
Discover Financial Services | ||||||||||||||||||||||||||||
GAAP Basis | ||||||||||||||||||||||||||||
(unaudited, dollars in thousands, except per | ||||||||||||||||||||||||||||
share statistics) | Quarter Ended | Feb 28, 2009 | ||||||||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | vs Feb 29, 2008 | |||||||||||||||||||||||
Earnings Summary | ||||||||||||||||||||||||||||
Interest Income | $ | 815,793 | $ | 736,006 | $ | 681,692 | $ | 612,063 | $ | 662,802 | $ | 152,991 | 23 | % | ||||||||||||||
Interest Expense | 312,720 | 329,672 | 305,643 | 313,248 | 339,441 | (26,721 | ) | (8 | %) | |||||||||||||||||||
Net Interest Income | 503,073 | 406,334 | 376,049 | 298,815 | 323,361 | 179,712 | 56 | % | ||||||||||||||||||||
Other Income 1 | 1,189,956 | 1,568,901 | 875,121 | 844,892 | 975,544 | 214,412 | 22 | % | ||||||||||||||||||||
Revenue Net of Interest Expense | 1,693,029 | 1,975,235 | 1,251,170 | �� | 1,143,707 | 1,298,905 | 394,124 | 30 | % | |||||||||||||||||||
Provision for Loan Losses | 937,813 | 714,176 | 364,838 | 210,969 | 305,632 | 632,181 | NM | |||||||||||||||||||||
Employee Compensation and Benefits | 219,488 | 187,306 | 222,426 | 218,290 | 217,370 | 2,118 | 1 | % | ||||||||||||||||||||
Marketing and Business Development | 111,433 | 119,382 | 137,928 | 132,038 | 141,553 | (30,120 | ) | (21 | %) | |||||||||||||||||||
Information Processing & Communications | 74,897 | 81,543 | 76,675 | 79,449 | 78,276 | (3,379 | ) | (4 | %) | |||||||||||||||||||
Professional Fees | 70,123 | 111,645 | 82,775 | 81,392 | 73,672 | (3,549 | ) | (5 | %) | |||||||||||||||||||
Premises and Equipment | 18,072 | 20,676 | 20,274 | 19,803 | 19,641 | (1,569 | ) | (8 | %) | |||||||||||||||||||
Other Expense | 65,110 | 73,530 | 72,469 | 75,853 | 71,831 | (6,721 | ) | (9 | %) | |||||||||||||||||||
Total Other Expense | 559,123 | 594,082 | 612,547 | 606,825 | 602,343 | (43,220 | ) | (7 | %) | |||||||||||||||||||
Income (Loss) Before Income Taxes 1 | 196,093 | 666,977 | 273,785 | 325,913 | 390,930 | (194,837 | ) | (50 | %) | |||||||||||||||||||
Tax Expense | 75,699 | 223,336 | 94,885 | 124,370 | 152,101 | (76,402 | ) | (50 | %) | |||||||||||||||||||
Income From Continuing Operations 1 | 120,394 | 443,641 | 178,900 | 201,543 | 238,829 | (118,435 | ) | (50 | %) | |||||||||||||||||||
Discontinued Operations, Net of Tax 2 | 0 | (11,306 | ) | 1,153 | 32,605 | (157,615 | ) | 157,615 | 100 | % | ||||||||||||||||||
Net Income (Loss) 1, 2 | $ | 120,394 | $ | 432,335 | $ | 180,053 | $ | 234,148 | $ | 81,214 | $ | 39,180 | 48 | % | ||||||||||||||
Effective Tax Rate From Continuing Operations | 38.6 | % | 33.5 | % | 34.7 | % | 38.2 | % | 38.9 | % | ||||||||||||||||||
Balance Sheet Statistics 3 | ||||||||||||||||||||||||||||
Total Assets | $ | 40,605,873 | $ | 39,892,382 | $ | 37,283,548 | $ | 34,020,245 | $ | 34,222,732 | $ | 6,383,141 | 19 | % | ||||||||||||||
Total Equity | $ | 5,998,706 | $ | 5,915,823 | $ | 6,000,393 | $ | 5,849,691 | $ | 5,654,341 | $ | 344,365 | 6 | % | ||||||||||||||
Total Tangible Common Equity | $ | 5,541,887 | $ | 5,457,083 | $ | 5,539,274 | $ | 5,538,240 | $ | 5,341,020 | $ | 200,867 | 4 | % | ||||||||||||||
Tangible Common Equity/Total Owned Assets 4 | 13.8 | % | 13.8 | % | 15.0 | % | 16.4 | % | 15.8 | % | ||||||||||||||||||
ROE 1, 2 | 8 | % | 29 | % | 12 | % | 16 | % | 6 | % | ||||||||||||||||||
ROE from Continuing Operations 1 | 8 | % | 30 | % | 12 | % | 14 | % | 17 | % | ||||||||||||||||||
Allowance for Loan Loss (period end) | $ | 1,878,942 | $ | 1,374,585 | $ | 959,769 | $ | 846,775 | $ | 860,378 | $ | 1,018,564 | 118 | % | ||||||||||||||
Change in Loan Loss Reserves | $ | 504,357 | $ | 414,816 | $ | 112,994 | $ | (13,603 | ) | $ | 100,453 | $ | 403,904 | NM | ||||||||||||||
Reserve Rate | 6.70 | % | 5.45 | % | 4.41 | % | 4.28 | % | 4.16 | % | 254 | bps | ||||||||||||||||
Interest-only Strip Receivable (period end) | $ | 198,536 | $ | 300,120 | $ | 408,649 | $ | 447,994 | $ | 468,059 | $ | (269,523 | ) | (58 | %) | |||||||||||||
Net Revaluation of Retained Interests | $ | (98,242 | ) | $ | (116,335 | ) | $ | (33,513 | ) | $ | (44,473 | ) | $ | 74,997 | $ | (173,239 | ) | NM | ||||||||||
Per Share Statistics | ||||||||||||||||||||||||||||
Basic EPS 1, 2 | $ | 0.25 | $ | 0.90 | $ | 0.38 | $ | 0.49 | $ | 0.17 | $ | 0.08 | 47 | % | ||||||||||||||
Basic EPS from Continuing Operations 1 | $ | 0.25 | $ | 0.92 | $ | 0.38 | $ | 0.42 | $ | 0.50 | $ | (0.25 | ) | (50 | %) | |||||||||||||
Diluted EPS 1, 2 | $ | 0.25 | $ | 0.89 | $ | 0.37 | $ | 0.48 | $ | 0.17 | $ | 0.08 | 47 | % | ||||||||||||||
Diluted EPS from Continuing Operations 1 | $ | 0.25 | $ | 0.92 | $ | 0.37 | $ | 0.42 | $ | 0.50 | $ | (0.25 | ) | (50 | %) | |||||||||||||
Stock Price (period end) | $ | 5.73 | $ | 10.23 | $ | 16.45 | $ | 17.15 | $ | 15.09 | $ | (9.36 | ) | (62 | %) | |||||||||||||
Tangible Common Equity | $ | 11.51 | $ | 11.37 | $ | 11.55 | $ | 11.55 | $ | 11.15 | $ | 0.36 | 3 | % | ||||||||||||||
Book Value | $ | 12.46 | $ | 12.32 | $ | 12.51 | $ | 12.20 | $ | 11.80 | $ | 0.66 | 6 | % | ||||||||||||||
Ending Shares Outstanding (000's) | 481,459 | 479,987 | 479,764 | 479,346 | 479,127 | 2,332 | 0 | % | ||||||||||||||||||||
Weighted Average Shares Outstanding (000's) | 480,497 | 479,931 | 479,618 | 479,270 | 478,518 | 1,979 | 0 | % | ||||||||||||||||||||
Weighted Average Shares Outstanding (fully diluted) (000's) | 485,043 | 484,558 | 484,128 | 483,753 | 481,744 | 3,299 | 1 | % | ||||||||||||||||||||
Loan Receivables 3 | ||||||||||||||||||||||||||||
Total Loans - Owned | $ | 28,034,208 | $ | 25,216,611 | $ | 21,767,483 | $ | 20,502,063 | $ | 21,042,681 | $ | 6,991,527 | 33 | % | ||||||||||||||
Average Total Loans - Owned | $ | 27,733,143 | $ | 22,945,494 | $ | 21,053,804 | $ | 19,890,330 | $ | 21,523,606 | $ | 6,209,537 | 29 | % | ||||||||||||||
Interest Yield | 11.24 | % | 11.36 | % | 11.41 | % | 10.40 | % | 10.34 | % | 90 | bps | ||||||||||||||||
Net Principal Charge-off Rate | 6.34 | % | 5.25 | % | 4.76 | % | 4.49 | % | 3.83 | % | 251 | bps | ||||||||||||||||
Delinquency Rate (over 30 days) | 5.04 | % | 4.35 | % | 3.58 | % | 3.54 | % | 3.63 | % | 141 | bps | ||||||||||||||||
Delinquency Rate (over 90 days) | 2.57 | % | 2.06 | % | 1.73 | % | 1.81 | % | 1.82 | % | 75 | bps | ||||||||||||||||
Transactions Processed on Networks (000's) | ||||||||||||||||||||||||||||
Discover Network | 369,647 | 377,356 | 388,504 | 370,596 | 378,912 | (9,265 | ) | (2 | %) | |||||||||||||||||||
PULSE Network | 686,527 | 644,045 | 713,791 | 703,404 | 621,072 | 65,455 | 11 | % | ||||||||||||||||||||
Total | 1,056,174 | 1,021,401 | 1,102,295 | 1,074,000 | 999,984 | 56,190 | 6 | % | ||||||||||||||||||||
Volume | ||||||||||||||||||||||||||||
PULSE Network | $ | 27,454,173 | $ | 25,033,235 | $ | 28,364,575 | $ | 27,830,403 | $ | 24,783,895 | $ | 2,670,278 | 11 | % | ||||||||||||||
Third-Party Issuers | 1,362,446 | 1,538,013 | 1,711,617 | 1,603,006 | 1,545,943 | (183,497 | ) | (12 | %) | |||||||||||||||||||
Diners Club International 5 | 6,293,574 | 7,457,893 | 5,227,795 | - | - | 6,293,574 | NM | |||||||||||||||||||||
Total Third-Party Payments | 35,110,193 | 34,029,141 | 35,303,987 | 29,433,409 | 26,329,838 | 8,780,355 | 33 | % | ||||||||||||||||||||
Discover Network - Proprietary 6 | 22,424,367 | 22,875,272 | 25,117,321 | 23,621,519 | 24,074,331 | (1,649,964 | ) | (7 | %) | |||||||||||||||||||
Total | $ | 57,534,560 | $ | 56,904,413 | $ | 60,421,308 | $ | 53,054,928 | $ | 50,404,169 | $ | 7,130,391 | 14 | % | ||||||||||||||
1 The quarter ended November 30, 2008 and February 28, 2009 include $863 million pre-tax (estimated $535 million after-tax) and $475 million pre-tax (estimated $297 million after-tax), respectively related to the antitrust settlement. | ||||||||||||||||||||||||||||
2 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million related to the Goldfish business operations. The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the Goldfish business as held for sale and income of $14 million related to the Goldfish business operations. | ||||||||||||||||||||||||||||
3 Based on Continuing Operations except equity and ROE. Equity is based on company's equity. | ||||||||||||||||||||||||||||
4 Represents common equity less goodwill and intangibles divided by total assets less goodwill and intangibles. | ||||||||||||||||||||||||||||
5 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment. | ||||||||||||||||||||||||||||
6 Gross proprietary sales volume on the Discover Network. |
Discover Financial Services | ||||||||||||||||||||||||||||
Managed Basis 1 | ||||||||||||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||||||||||
Quarter Ended | Feb 28, 2009 | |||||||||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | vs Feb 29, 2008 | |||||||||||||||||||||||
Earnings Summary | ||||||||||||||||||||||||||||
Interest Income | $ | 1,603,849 | $ | 1,682,267 | $ | 1,638,250 | $ | 1,572,697 | $ | 1,652,615 | $ | (48,766 | ) | (3 | %) | |||||||||||||
Interest Expense | 438,417 | 602,450 | 534,887 | 550,629 | 668,953 | (230,536 | ) | (34 | %) | |||||||||||||||||||
Net Interest Income | 1,165,432 | 1,079,817 | 1,103,363 | 1,022,068 | 983,662 | 181,770 | 18 | % | ||||||||||||||||||||
Other Income 2 | 923,457 | 1,287,213 | 536,997 | 492,207 | 636,679 | 286,778 | 45 | % | ||||||||||||||||||||
Revenue Net of Interest Expense | 2,088,889 | 2,367,030 | 1,640,360 | 1,514,275 | 1,620,341 | 468,548 | 29 | % | ||||||||||||||||||||
Provision for Loan Losses | 1,333,673 | 1,105,971 | 754,028 | 581,537 | 627,068 | 706,605 | 113 | % | ||||||||||||||||||||
Employee Compensation and Benefits | 219,488 | 187,306 | 222,426 | 218,290 | 217,370 | 2,118 | 1 | % | ||||||||||||||||||||
Marketing and Business Development | 111,433 | 119,382 | 137,928 | 132,038 | 141,553 | (30,120 | ) | (21 | %) | |||||||||||||||||||
Information Processing & Communications | 74,897 | 81,543 | 76,675 | 79,449 | 78,276 | (3,379 | ) | (4 | %) | |||||||||||||||||||
Professional Fees | 70,123 | 111,645 | 82,775 | 81,392 | 73,672 | (3,549 | ) | (5 | %) | |||||||||||||||||||
Premises and Equipment | 18,072 | 20,676 | 20,274 | 19,803 | 19,641 | (1,569 | ) | (8 | %) | |||||||||||||||||||
Other Expense | 65,110 | 73,530 | 72,469 | 75,853 | 71,831 | (6,721 | ) | (9 | %) | |||||||||||||||||||
Total Other Expense | 559,123 | 594,082 | 612,547 | 606,825 | 602,343 | (43,220 | ) | (7 | %) | |||||||||||||||||||
Income (Loss) Before Income Taxes 2 | 196,093 | 666,977 | 273,785 | 325,913 | 390,930 | (194,837 | ) | (50 | %) | |||||||||||||||||||
Tax Expense | 75,699 | 223,336 | 94,885 | 124,370 | 152,101 | (76,402 | ) | (50 | %) | |||||||||||||||||||
Income From Continuing Operations 2 | 120,394 | 443,641 | 178,900 | 201,543 | 238,829 | (118,435 | ) | (50 | %) | |||||||||||||||||||
Discontinued Operations, Net of Tax 2, 3 | 0 | (11,306 | ) | 1,153 | 32,605 | (157,615 | ) | 157,615 | 100 | % | ||||||||||||||||||
Net Income (Loss) 2, 3 | $ | 120,394 | $ | 432,335 | $ | 180,053 | $ | 234,148 | $ | 81,214 | $ | 39,180 | 48 | % | ||||||||||||||
Balance Sheet Statistics 4 | ||||||||||||||||||||||||||||
Total Assets | $ | 63,231,013 | $ | 65,620,476 | $ | 65,632,825 | $ | 62,148,577 | $ | 61,937,501 | $ | 1,293,512 | 2 | % | ||||||||||||||
Total Equity 5 | $ | 5,998,706 | $ | 5,915,823 | $ | 6,000,393 | $ | 5,849,691 | $ | 5,654,341 | $ | 344,365 | 6 | % | ||||||||||||||
Total Tangible Common Equity 5 | $ | 5,541,887 | $ | 5,457,083 | $ | 5,539,274 | $ | 5,538,240 | $ | 5,341,020 | $ | 200,867 | 4 | % | ||||||||||||||
Tangible Common Equity/Net Managed Receivables | 11.3 | % | 11.0 | % | 11.2 | % | 11.8 | % | 11.5 | % | ||||||||||||||||||
Tangible Common Equity/Total Managed Assets 6 | 8.8 | % | 8.4 | % | 8.5 | % | 9.0 | % | 8.7 | % | ||||||||||||||||||
Net Yield on Loan Receivables | 9.11 | % | 8.56 | % | 8.95 | % | 8.57 | % | 8.10 | % | 101 | bps | ||||||||||||||||
Return on Loan Receivables 2 | 0.94 | % | 3.52 | % | 1.45 | % | 1.69 | % | 1.97 | % | (103 | ) | bps | |||||||||||||||
Loan Receivables 4 | �� | |||||||||||||||||||||||||||
Total Loans - Managed | $ | 50,888,704 | $ | 51,095,278 | $ | 50,427,305 | $ | 47,841,491 | $ | 47,500,410 | $ | 3,388,294 | 7 | % | ||||||||||||||
Average Total Loans - Managed | $ | 51,877,845 | $ | 50,707,090 | $ | 49,019,083 | $ | 47,472,077 | $ | 48,863,166 | $ | 3,014,679 | 6 | % | ||||||||||||||
Managed Interest Yield | 12.17 | % | 12.65 | % | 12.67 | % | 12.41 | % | 12.70 | % | (53 | ) | bps | |||||||||||||||
Managed Net Principal Charge-off Rate | 6.48 | % | 5.48 | % | 5.20 | % | 4.99 | % | 4.33 | % | 215 | bps | ||||||||||||||||
Managed Delinquency Rate (over 30 days) | 5.25 | % | 4.56 | % | 3.85 | % | 3.81 | % | 3.90 | % | 135 | bps | ||||||||||||||||
Managed Delinquency Rate (over 90 days) | 2.69 | % | 2.17 | % | 1.88 | % | 1.96 | % | 1.96 | % | 73 | bps | ||||||||||||||||
Total Discover Card Volume | $ | 23,964,577 | $ | 25,318,553 | $ | 28,611,680 | $ | 25,596,794 | $ | 26,207,028 | $ | (2,242,451 | ) | (9 | %) | |||||||||||||
Discover Card Sales Volume | $ | 21,293,757 | $ | 22,025,264 | $ | 24,601,611 | $ | 22,457,651 | $ | 23,155,253 | $ | (1,861,496 | ) | (8 | %) | |||||||||||||
Segment - Income Before Income Taxes | ||||||||||||||||||||||||||||
U.S. Card | $ | 167,167 | $ | 646,427 | $ | 245,241 | $ | 309,123 | $ | 375,403 | $ | (208,236 | ) | (55 | %) | |||||||||||||
Third-Party Payments | 28,926 | 20,550 | 28,544 | 16,790 | 15,527 | 13,399 | 86 | % | ||||||||||||||||||||
Total | $ | 196,093 | $ | 666,977 | $ | 273,785 | $ | 325,913 | $ | 390,930 | $ | (194,837 | ) | (50 | %) | |||||||||||||
1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are presented. See Reconciliation of GAAP to Managed Data schedule. | ||||||||||||||||||||||||||||
2 The quarter ended November 30, 2008 and February 28, 2009 include $863 million pre-tax (estimated $535 million after-tax) and $475 million pre-tax (estimated $297 million after-tax), respectively related to the antitrust settlement. | ||||||||||||||||||||||||||||
3 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million related to the Goldfish business operations. The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the Goldfish business as held for sale and income of $14 million related to the Goldfish business operations. | ||||||||||||||||||||||||||||
4 Based on Continuing Operations. Equity is based on company's equity. | ||||||||||||||||||||||||||||
5 Balance on a GAAP and Managed basis is the same. | ||||||||||||||||||||||||||||
6 Represents common equity less goodwill and intangibles divided by total assets less goodwill and intangibles. |
Discover Financial Services | ||||||||||||||||||||||||||||
U.S. Card Segment | ||||||||||||||||||||||||||||
Managed Basis1 | ||||||||||||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||||||||||
Quarter Ended | Feb 28, 2009 | |||||||||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | vs Feb 29, 2008 | |||||||||||||||||||||||
Earnings Summary | ||||||||||||||||||||||||||||
Interest Income | $ | 1,603,362 | $ | 1,680,925 | $ | 1,637,588 | $ | 1,572,164 | $ | 1,651,987 | $ | (48,625 | ) | (3 | %) | |||||||||||||
Interest Expense | 438,338 | 602,386 | 534,870 | 550,629 | 668,951 | (230,613 | ) | (34 | %) | |||||||||||||||||||
Net Interest Income | 1,165,024 | 1,078,539 | 1,102,718 | 1,021,535 | 983,036 | 181,988 | 19 | % | ||||||||||||||||||||
Other Income 2 | 863,223 | 1,234,100 | 482,311 | 455,074 | 602,411 | 260,812 | 43 | % | ||||||||||||||||||||
Revenue Net of Interest Expense | 2,028,247 | 2,312,639 | 1,585,029 | 1,476,609 | 1,585,447 | 442,800 | 28 | % | ||||||||||||||||||||
Provision for Loan Losses | 1,333,673 | 1,105,971 | 754,028 | 581,537 | 627,068 | 706,605 | 113 | % | ||||||||||||||||||||
Total Other Expense | 527,407 | 560,241 | 585,760 | 585,949 | 582,976 | (55,569 | ) | (10 | %) | |||||||||||||||||||
Income (Loss) Before Income Taxes 2 | $ | 167,167 | $ | 646,427 | $ | 245,241 | $ | 309,123 | $ | 375,403 | $ | (208,236 | ) | (55 | %) | |||||||||||||
Net Yield on Loan Receivables | 9.11 | % | 8.55 | % | 8.95 | % | 8.56 | % | 8.09 | % | 102 | bps | ||||||||||||||||
Pretax Return on Loan Receivables 2 | 1.31 | % | 5.13 | % | 1.99 | % | 2.59 | % | 3.09 | % | (178 | ) | bps | |||||||||||||||
Loan Receivables | ||||||||||||||||||||||||||||
Total Loans | $ | 50,888,704 | $ | 51,095,278 | $ | 50,427,305 | $ | 47,841,491 | $ | 47,500,410 | $ | 3,388,294 | 7 | % | ||||||||||||||
Average Total Loans | $ | 51,877,845 | $ | 50,707,090 | $ | 49,019,083 | $ | 47,472,077 | $ | 48,863,166 | $ | 3,014,679 | 6 | % | ||||||||||||||
Managed Interest Yield | 12.17 | % | 12.65 | % | 12.67 | % | 12.41 | % | 12.70 | % | (53 | ) | bps | |||||||||||||||
Managed Net Principal Charge-off Rate | 6.48 | % | 5.48 | % | 5.20 | % | 4.99 | % | 4.33 | % | 215 | bps | ||||||||||||||||
Managed Delinquency Rate (over 30 days) | 5.25 | % | 4.56 | % | 3.85 | % | 3.81 | % | 3.90 | % | 135 | bps | ||||||||||||||||
Managed Delinquency Rate (over 90 days) | 2.69 | % | 2.17 | % | 1.88 | % | 1.96 | % | 1.96 | % | 73 | bps | ||||||||||||||||
Credit Card Loans | ||||||||||||||||||||||||||||
Credit Card Loans - Managed | $ | 49,011,177 | $ | 49,692,974 | $ | 49,348,507 | $ | 47,124,842 | $ | 47,014,539 | $ | 1,996,638 | 4 | % | ||||||||||||||
Average Credit Card Loans - Managed | $ | 50,254,235 | $ | 49,420,412 | $ | 48,168,124 | $ | 46,857,480 | $ | 48,487,812 | $ | 1,766,423 | 4 | % | ||||||||||||||
Managed Interest Yield | 12.28 | % | 12.72 | % | 12.70 | % | 12.43 | % | 12.72 | % | (44 | ) | bps | |||||||||||||||
Managed Net Principal Charge-off Rate | 6.61 | % | 5.59 | % | 5.28 | % | 5.05 | % | 4.37 | % | 224 | bps | ||||||||||||||||
Managed Delinquency Rate (over 30 days) | 5.41 | % | 4.66 | % | 3.92 | % | 3.85 | % | 3.93 | % | 148 | bps | ||||||||||||||||
Managed Delinquency Rate (over 90 days) | 2.78 | % | 2.22 | % | 1.92 | % | 1.99 | % | 1.98 | % | 80 | bps | ||||||||||||||||
Total Discover Card Volume | $ | 23,964,577 | $ | 25,318,553 | $ | 28,611,680 | $ | 25,596,794 | $ | 26,207,028 | $ | (2,242,451 | ) | (9 | %) | |||||||||||||
Discover Card Sales Volume | $ | 21,293,757 | $ | 22,025,264 | $ | 24,601,611 | $ | 22,457,651 | $ | 23,155,253 | $ | (1,861,496 | ) | (8 | %) | |||||||||||||
1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are presented. See Reconciliation of GAAP to Managed Data schedule. | ||||||||||||||||||||||||||||
2 The quarter ended November 30, 2008 and February 28, 2009 include $863 million pre-tax (estimated $535 million after-tax) and $475 million pre-tax (estimated $297 million after-tax), respectively related to the antitrust settlement. | ||||||||||||||||||||||||||||
Discover Financial Services | ||||||||||||||||||||||||||||
Third-Party Payments Segment | ||||||||||||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||||||||||
Quarter Ended | Feb 28, 2009 | |||||||||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | vs Feb 29, 2008 | |||||||||||||||||||||||
Earnings Summary | ||||||||||||||||||||||||||||
Interest Income | $ | 487 | $ | 1,342 | $ | 662 | $ | 533 | $ | 628 | $ | (141 | ) | (22 | %) | |||||||||||||
Interest Expense | 79 | 64 | 17 | - | 2 | 77 | 100 | % | ||||||||||||||||||||
Net Interest Income | 408 | 1,278 | 645 | 533 | 626 | (218 | ) | (35 | %) | |||||||||||||||||||
Other Income | 60,234 | 53,113 | 54,686 | 37,133 | 34,268 | 25,966 | 76 | % | ||||||||||||||||||||
Revenue Net of Interest Expense | 60,642 | 54,391 | 55,331 | 37,666 | 34,894 | 25,748 | 74 | % | ||||||||||||||||||||
Provision for Loan Losses | - | - | - | - | - | - | 0 | % | ||||||||||||||||||||
Total Other Expense | 31,716 | 33,841 | 26,787 | 20,876 | 19,367 | 12,349 | 64 | % | ||||||||||||||||||||
Income (Loss) Before Income Taxes | $ | 28,926 | $ | 20,550 | $ | 28,544 | $ | 16,790 | $ | 15,527 | $ | 13,399 | 86 | % | ||||||||||||||
Volume | ||||||||||||||||||||||||||||
PULSE Network | $ | 27,454,173 | $ | 25,033,235 | $ | 28,364,575 | $ | 27,830,403 | $ | 24,783,895 | $ | 2,670,278 | 11 | % | ||||||||||||||
Third-Party Issuers | 1,362,446 | 1,538,013 | 1,711,617 | 1,603,006 | 1,545,943 | (183,497 | ) | (12 | %) | |||||||||||||||||||
Diners Club International 1 | 6,293,574 | 7,457,893 | 5,227,795 | - | - | 6,293,574 | NM | |||||||||||||||||||||
Total Third-Party Payments | $ | 35,110,193 | $ | 34,029,141 | $ | 35,303,987 | $ | 29,433,409 | $ | 26,329,838 | $ | 8,780,355 | 33 | % | ||||||||||||||
Transactions Processed on PULSE Network (000's) | 686,527 | 644,045 | 713,791 | 703,404 | 621,072 | 65,455 | 11 | % | ||||||||||||||||||||
1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment. | ||||||||||||||||||||||||||||
DISCOVER FINANCIAL SERVICES | ||||||||||||
RECONCILIATION OF GAAP TO MANAGED DATA | ||||||||||||
The following pages present a reconciliation for certain information disclosed in the financial data supplement. | ||||||||||||
The data is presented on both a "managed" loan basis and as reported under generally accepted accounting principles ("owned" loan basis). Managed | ||||||||||||
loan data assume that the company's securitized loan receivables have not been sold and presents the results of securitized loan receivables in the same | ||||||||||||
manner as the company's owned loans. The company operates its business and analyzes its financial performance on a managed basis. Accordingly, | ||||||||||||
underwriting and servicing standards are comparable for both owned and securitized loans. The company believes that managed loan information is | ||||||||||||
useful to investors because it provides information regarding the quality of loan origination and credit performance of the entire managed portfolio and | ||||||||||||
allows investors to understand the related credit risks inherent in owned loans and retained interests in securitizations. Managed loan data is also | ||||||||||||
relevant because the company services the securitized and owned loans, and the related accounts, in the same manner without regard to ownership of the | ||||||||||||
loans. In addition, investors often request information on a managed basis which provides a more meaningful comparison to industry competitors. |
Discover Financial Services | ||||||||||||||||||||
Reconciliation of GAAP to Managed Data 1 | ||||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | ||||||||||||||||
Interest Income | ||||||||||||||||||||
GAAP Basis | $ | 815,793 | $ | 736,006 | $ | 681,692 | $ | 612,063 | $ | 662,802 | ||||||||||
Securitization Adjustments 1 | 788,056 | 946,261 | 956,558 | 960,634 | 989,813 | |||||||||||||||
Managed Basis | $ | 1,603,849 | $ | 1,682,267 | $ | 1,638,250 | $ | 1,572,697 | $ | 1,652,615 | ||||||||||
Interest Expense | ||||||||||||||||||||
GAAP Basis | $ | 312,720 | $ | 329,672 | $ | 305,643 | $ | 313,248 | $ | 339,441 | ||||||||||
Securitization Adjustments | 125,697 | 272,778 | 229,244 | 237,381 | 329,512 | |||||||||||||||
Managed Basis | $ | 438,417 | $ | 602,450 | $ | 534,887 | $ | 550,629 | $ | 668,953 | ||||||||||
Net Interest Income | ||||||||||||||||||||
GAAP Basis | $ | 503,073 | $ | 406,334 | $ | 376,049 | $ | 298,815 | $ | 323,361 | ||||||||||
Securitization Adjustments | 662,359 | 673,483 | 727,314 | 723,253 | 660,301 | |||||||||||||||
Managed Basis | $ | 1,165,432 | $ | 1,079,817 | $ | 1,103,363 | $ | 1,022,068 | $ | 983,662 | ||||||||||
Other Income | ||||||||||||||||||||
GAAP Basis | $ | 1,189,956 | $ | 1,568,901 | $ | 875,121 | $ | 844,892 | $ | 975,544 | ||||||||||
Securitization Adjustments | (266,499 | ) | (281,688 | ) | (338,124 | ) | (352,685 | ) | (338,865 | ) | ||||||||||
Managed Basis | $ | 923,457 | $ | 1,287,213 | $ | 536,997 | $ | 492,207 | $ | 636,679 | ||||||||||
Revenue Net of Interest Expense | ||||||||||||||||||||
GAAP Basis | $ | 1,693,029 | $ | 1,975,235 | $ | 1,251,170 | $ | 1,143,707 | $ | 1,298,905 | ||||||||||
Securitization Adjustments | 395,860 | 391,795 | 389,190 | 370,568 | 321,436 | |||||||||||||||
Managed Basis | $ | 2,088,889 | $ | 2,367,030 | $ | 1,640,360 | $ | 1,514,275 | $ | 1,620,341 | ||||||||||
Provision for Loan Losses | ||||||||||||||||||||
GAAP Basis | $ | 937,813 | $ | 714,176 | $ | 364,838 | $ | 210,969 | $ | 305,632 | ||||||||||
Securitization Adjustments | 395,860 | 391,795 | 389,190 | 370,568 | 321,436 | |||||||||||||||
Managed Basis | $ | 1,333,673 | $ | 1,105,971 | $ | 754,028 | $ | 581,537 | $ | 627,068 | ||||||||||
Total Assets | ||||||||||||||||||||
GAAP Basis | $ | 40,605,873 | $ | 39,892,382 | $ | 37,283,548 | $ | 34,020,245 | $ | 34,222,732 | ||||||||||
Securitization Adjustments | 22,625,140 | 25,728,094 | 28,349,277 | 28,128,332 | 27,714,769 | |||||||||||||||
Managed Basis | $ | 63,231,013 | $ | 65,620,476 | $ | 65,632,825 | $ | 62,148,577 | $ | 61,937,501 | ||||||||||
Tangible Common Equity/Total Assets | ||||||||||||||||||||
GAAP Basis | 13.8 | % | 13.8 | % | 15.0 | % | 16.4 | % | 15.8 | % | ||||||||||
Securitization Adjustments | 24.5 | % | 21.2 | % | 19.5 | % | 19.7 | % | 19.3 | % | ||||||||||
Managed Basis | 8.8 | % | 8.4 | % | 8.5 | % | 9.0 | % | 8.7 | % | ||||||||||
Loan Receivables | ||||||||||||||||||||
Total Loans | ||||||||||||||||||||
GAAP Basis | $ | 28,034,208 | $ | 25,216,611 | $ | 21,767,483 | $ | 20,502,063 | $ | 21,042,681 | ||||||||||
Securitization Adjustments | 22,854,496 | 25,878,667 | 28,659,822 | 27,339,428 | 26,457,729 | |||||||||||||||
Managed Basis | $ | 50,888,704 | $ | 51,095,278 | $ | 50,427,305 | $ | 47,841,491 | $ | 47,500,410 | ||||||||||
Average Total Loans | ||||||||||||||||||||
GAAP Basis | $ | 27,733,143 | $ | 22,945,494 | $ | 21,053,804 | $ | 19,890,330 | $ | 21,523,606 | ||||||||||
Securitization Adjustments | 24,144,702 | 27,761,596 | 27,965,279 | 27,581,747 | 27,339,560 | |||||||||||||||
Managed Basis | $ | 51,877,845 | $ | 50,707,090 | $ | 49,019,083 | $ | 47,472,077 | $ | 48,863,166 | ||||||||||
Discover Financial Services | ||||||||||||||||||||
Reconciliation of GAAP to Managed Data 1 | ||||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
Feb 28, 2009 | Nov 30, 2008 | Aug 31, 2008 | May 31, 2008 | Feb 29, 2008 | ||||||||||||||||
Interest Yield | ||||||||||||||||||||
GAAP Basis | 11.24 | % | 11.36 | % | 11.41 | % | 10.40 | % | 10.34 | % | ||||||||||
Securitization Adjustments | 13.24 | % | 13.71 | % | 13.61 | % | 13.86 | % | 14.56 | % | ||||||||||
Managed Basis | 12.17 | % | 12.65 | % | 12.67 | % | 12.41 | % | 12.70 | % | ||||||||||
Net Principal Charge-off Rate | ||||||||||||||||||||
GAAP Basis | 6.34 | % | 5.25 | % | 4.76 | % | 4.49 | % | 3.83 | % | ||||||||||
Securitization Adjustments | 6.65 | % | 5.68 | % | 5.54 | % | 5.34 | % | 4.73 | % | ||||||||||
Managed Basis | 6.48 | % | 5.48 | % | 5.20 | % | 4.99 | % | 4.33 | % | ||||||||||
Delinquency Rate (over 30 days) | ||||||||||||||||||||
GAAP Basis | 5.04 | % | 4.35 | % | 3.58 | % | 3.54 | % | 3.63 | % | ||||||||||
Securitization Adjustments | 5.52 | % | 4.77 | % | 4.06 | % | 4.01 | % | 4.11 | % | ||||||||||
Managed Basis | 5.25 | % | 4.56 | % | 3.85 | % | 3.81 | % | 3.90 | % | ||||||||||
Delinquency Rate (over 90 days) | ||||||||||||||||||||
GAAP Basis | 2.57 | % | 2.06 | % | 1.73 | % | 1.81 | % | 1.82 | % | ||||||||||
Securitization Adjustments | 2.83 | % | 2.27 | % | 2.00 | % | 2.07 | % | 2.08 | % | ||||||||||
Managed Basis | 2.69 | % | 2.17 | % | 1.88 | % | 1.96 | % | 1.96 | % | ||||||||||
Credit Card Loans | ||||||||||||||||||||
Credit Card Loans | ||||||||||||||||||||
GAAP Basis | $ | 26,156,681 | $ | 23,814,307 | $ | 20,688,685 | $ | 19,785,414 | $ | 20,556,810 | ||||||||||
Securitization Adjustments | 22,854,496 | 25,878,667 | 28,659,822 | 27,339,428 | 26,457,729 | |||||||||||||||
Managed Basis | $ | 49,011,177 | $ | 49,692,974 | $ | 49,348,507 | $ | 47,124,842 | $ | 47,014,539 | ||||||||||
Average Credit Card Loans | ||||||||||||||||||||
GAAP Basis | $ | 26,109,533 | $ | 21,658,816 | $ | 20,202,845 | $ | 19,275,733 | $ | 21,148,252 | ||||||||||
Securitization Adjustments | 24,144,702 | 27,761,596 | 27,965,279 | 27,581,747 | 27,339,560 | |||||||||||||||
Managed Basis | $ | 50,254,235 | $ | 49,420,412 | $ | 48,168,124 | $ | 46,857,480 | $ | 48,487,812 | ||||||||||
Interest Yield | ||||||||||||||||||||
GAAP Basis | 11.39 | % | 11.45 | % | 11.45 | % | 10.40 | % | 10.35 | % | ||||||||||
Securitization Adjustments | 13.24 | % | 13.71 | % | 13.61 | % | 13.86 | % | 14.56 | % | ||||||||||
Managed Basis | 12.28 | % | 12.72 | % | 12.70 | % | 12.43 | % | 12.72 | % | ||||||||||
Net Principal Charge-off Rate | ||||||||||||||||||||
GAAP Basis | 6.58 | % | 5.47 | % | 4.92 | % | 4.63 | % | 3.90 | % | ||||||||||
Securitization Adjustments | 6.65 | % | 5.68 | % | 5.54 | % | 5.34 | % | 4.73 | % | ||||||||||
Managed Basis | 6.61 | % | 5.59 | % | 5.28 | % | 5.05 | % | 4.37 | % | ||||||||||
Delinquency Rate (over 30 days) | ||||||||||||||||||||
GAAP Basis | 5.32 | % | 4.55 | % | 3.72 | % | 3.63 | % | 3.69 | % | ||||||||||
Securitization Adjustments | 5.52 | % | 4.77 | % | 4.06 | % | 4.01 | % | 4.11 | % | ||||||||||
Managed Basis | 5.41 | % | 4.66 | % | 3.92 | % | 3.85 | % | 3.93 | % | ||||||||||
Delinquency Rate (over 90 days) | ||||||||||||||||||||
GAAP Basis | 2.73 | % | 2.16 | % | 1.81 | % | 1.87 | % | 1.86 | % | ||||||||||
Securitization Adjustments | 2.83 | % | 2.27 | % | 2.00 | % | 2.07 | % | 2.08 | % | ||||||||||
Managed Basis | 2.78 | % | 2.22 | % | 1.92 | % | 1.99 | % | 1.98 | % | ||||||||||
1 Securitization Adjustments present the effect of loan securitization by recharacterizing as securitization income the portions of the following items that relate to the securitized loans: interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues. Securitization income is reported in other income. | ||||||||||||||||||||