Document_and_Entity_Informatio
Document and Entity Information Document | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Document Information [Line Items] | ' | ' |
Document type | '10-Q | ' |
Amendment flag | 'false | ' |
Document period end date | 30-Sep-14 | ' |
Document fiscal year focus | '2014 | ' |
Document fiscal period focus | 'Q3 | ' |
Entity registrant name | 'Discover Financial Services | ' |
Entity central index key | '0001393612 | ' |
Current fiscal year end date | '--12-31 | ' |
Entity filer category | 'Large Accelerated Filer | ' |
Entity common stock, shares outstanding | ' | 453,479,765 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Financial Condition (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Assets | ' | ' | ||
Cash and cash equivalents | $7,382 | $6,554 | ||
Restricted cash | 103 | 182 | ||
Investment securities: | ' | ' | ||
Available-for-sale (amortized cost of $3,881 and $4,900 at September 30, 2014 and December 31, 2013, respectively) | 3,913 | [1] | 4,931 | [1] |
Held-to-maturity (fair value of $82 and $58 at September 30, 2014 and December 31, 2013, respectively) | 82 | [2] | 60 | [2] |
Total investment securities | 3,995 | 4,991 | ||
Loan receivables: | ' | ' | ||
Mortgage loans held for sale, measured at fair value | 148 | [3] | 148 | [3] |
Loan portfolio: | ' | ' | ||
Credit card | 53,699 | 53,150 | ||
Other | 9,731 | 8,295 | ||
Purchased credit-impaired loans | 3,788 | 4,178 | ||
Total loan portfolio | 67,218 | 65,623 | ||
Total loan receivables | 67,366 | 65,771 | ||
Allowance for loan losses | -1,644 | -1,648 | ||
Net loan receivables | 65,722 | 64,123 | ||
Premises and equipment, net | 661 | 654 | ||
Goodwill | 284 | 284 | ||
Intangible assets, net | 177 | 185 | ||
Other assets | 2,272 | 2,367 | ||
Total assets | 80,596 | 79,340 | ||
Deposits: | ' | ' | ||
Interest-bearing deposit accounts | 45,177 | 44,766 | ||
Non-interest bearing deposit accounts | 205 | 193 | ||
Total deposits | 45,382 | 44,959 | ||
Short-term borrowings | 139 | 140 | ||
Long-term borrowings | 20,918 | 20,474 | ||
Accrued expenses and other liabilities | 2,856 | 2,958 | ||
Total liabilities | 69,295 | 68,531 | ||
Commitments, contingencies and guarantees (Notes 8, 11 and 12) | ' | ' | ||
Stockholders’ Equity: | ' | ' | ||
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 558,160,815 and 555,349,629 shares issued at September 30, 2014 and December 31, 2013, respectively | 5 | 5 | ||
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 575,000 shares issued or outstanding and aggregate liquidation preference of $575 at September 30, 2014 and December 31, 2013 | 560 | 560 | ||
Additional paid-in capital | 3,775 | 3,687 | ||
Retained earnings | 11,182 | 9,611 | ||
Accumulated other comprehensive loss | -70 | -68 | ||
Treasury stock, at cost; 102,763,441 and 83,105,578 shares at September 30, 2014 and December 31, 2013, respectively | -4,151 | -2,986 | ||
Total stockholders’ equity | 11,301 | 10,809 | ||
Total liabilities and stockholders’ equity | 80,596 | 79,340 | ||
Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Assets | ' | ' | ||
Restricted cash | 100 | 179 | ||
Loan portfolio: | ' | ' | ||
Allowance for loan losses | -800 | -861 | ||
Other assets | 37 | 34 | ||
Deposits: | ' | ' | ||
Long-term borrowings | 16,276 | 16,986 | ||
Accrued expenses and other liabilities | 10 | 9 | ||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | ' | ' | ||
Assets | ' | ' | ||
Restricted cash | 15 | 90 | ||
Loan portfolio: | ' | ' | ||
Credit card | 29,505 | [4] | 31,112 | [4] |
Allowance for loan losses | -772 | [4] | -833 | [4] |
Other assets | 37 | 34 | ||
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | ' | ' | ||
Assets | ' | ' | ||
Restricted cash | 85 | 89 | ||
Loan portfolio: | ' | ' | ||
Purchased credit-impaired loans | 2,038 | [5] | 2,248 | [5] |
Allowance for loan losses | ($28) | [5] | ($28) | [5] |
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||
[4] | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. | |||
[5] | The Company maintains its allowance for loan losses on purchased credit-impaired loans sufficient to absorb probable decreases in cash flows that were previously expected. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company's balance sheet in accordance with GAAP. |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Financial Condition (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
Statement of Financial Position [Abstract] | ' | ' | ||
Available-for-sale investment securities, amortized cost (in dollars) | $3,881,000,000 | [1] | $4,900,000,000 | [1] |
Held-to-maturity investment securities, fair value (in dollars) | 82,000,000 | [2] | 58,000,000 | [2] |
Common stock, par value per share | $0.01 | $0.01 | ||
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | ||
Common stock, shares issued | 558,160,815 | 555,349,629 | ||
Preferred stock, par or stated value per share | $0.01 | $0.01 | ||
Preferred stock, shares authorized | 200,000,000 | 200,000,000 | ||
Preferred stock, shares issued | 575,000 | 575,000 | ||
Preferred stock, shares outstanding | 575,000 | 575,000 | ||
Preferred stock, liquidation preference (in dollars) | $575,000,000 | $575,000,000 | ||
Treasury stock, shares | 102,763,441 | 83,105,578 | ||
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Interest income: | ' | ' | ' | ' |
Credit card loans | $1,613 | $1,513 | $4,710 | $4,427 |
Other loans | 291 | 255 | 848 | 730 |
Investment securities | 17 | 16 | 50 | 55 |
Other interest income | 5 | 3 | 14 | 10 |
Total interest income | 1,926 | 1,787 | 5,622 | 5,222 |
Interest expense: | ' | ' | ' | ' |
Deposits | 153 | 169 | 457 | 539 |
Short-term borrowings | 0 | 1 | 1 | 3 |
Long-term borrowings | 135 | 108 | 374 | 331 |
Total interest expense | 288 | 278 | 832 | 873 |
Net interest income | 1,638 | 1,509 | 4,790 | 4,349 |
Provision for loan losses | 354 | 333 | 986 | 732 |
Net interest income after provision for loan losses | 1,284 | 1,176 | 3,804 | 3,617 |
Other income: | ' | ' | ' | ' |
Discount and interchange revenue, net | 295 | 276 | 876 | 847 |
Protection products revenue | 78 | 90 | 239 | 266 |
Loan fee income | 85 | 78 | 248 | 235 |
Transaction processing revenue | 46 | 46 | 136 | 146 |
Gain on investments | 0 | 0 | 4 | 3 |
Gain on origination and sale of mortgage loans | 19 | 25 | 57 | 127 |
Other income | 29 | 38 | 90 | 122 |
Total other income | 552 | 553 | 1,650 | 1,746 |
Other expense: | ' | ' | ' | ' |
Employee compensation and benefits | 320 | 292 | 928 | 867 |
Marketing and business development | 182 | 174 | 519 | 528 |
Information processing and communications | 87 | 81 | 258 | 244 |
Professional fees | 111 | 97 | 322 | 302 |
Premises and equipment | 23 | 21 | 68 | 60 |
Other expense | 104 | 118 | 313 | 355 |
Total other expense | 827 | 783 | 2,408 | 2,356 |
Income before income tax expense | 1,009 | 946 | 3,046 | 3,007 |
Income tax expense | 365 | 353 | 1,127 | 1,139 |
Net income | 644 | 593 | 1,919 | 1,868 |
Net income allocated to common stockholders | $630 | $579 | $1,878 | $1,826 |
Basic earnings per common share (in dollars per share) | $1.37 | $1.20 | $4.03 | $3.73 |
Diluted earnings per common share (in dollars per share) | $1.37 | $1.20 | $4.02 | $3.72 |
Dividends declared per common share (in dollars per share) | $0.24 | $0.20 | $0.68 | $0.40 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net income | $644 | $593 | $1,919 | $1,868 |
Other comprehensive income (loss), net of taxes | ' | ' | ' | ' |
Unrealized (loss) gain on securities available for sale, net of tax | -9 | 4 | 1 | -38 |
Unrealized gain (loss) on cash flow hedges, net of tax | 12 | -7 | -2 | 0 |
Foreign currency translation adjustments, net of tax | -1 | 1 | -1 | 1 |
Other comprehensive income (loss) | 2 | -2 | -2 | -37 |
Comprehensive income | $646 | $591 | $1,917 | $1,831 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] |
In Millions, except Share data, unless otherwise specified | |||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2012 | $9,873 | $560 | $5 | $3,598 | $7,472 | ($72) | ($1,690) |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2012 | ' | 575,000 | ' | ' | ' | ' | ' |
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2012 | ' | ' | 553,351,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Net income | 1,868 | ' | ' | ' | 1,868 | ' | ' |
Other comprehensive loss | -37 | ' | ' | ' | ' | -37 | ' |
Purchases of treasury stock | -950 | ' | ' | ' | ' | ' | -950 |
Common stock issued under employee benefit plans (in shares) | ' | ' | 51,000 | ' | ' | ' | ' |
Common stock issued under employee benefit plans | 2 | ' | 0 | 2 | ' | ' | ' |
Common stock issued and stock-based compensation expense (in shares) | ' | ' | 1,875,000 | ' | ' | ' | ' |
Common stock issued and stock-based compensation expense | 71 | ' | 0 | 71 | ' | ' | ' |
Dividends — common stock | -197 | ' | ' | ' | -197 | ' | ' |
Dividends — preferred stock | -28 | ' | ' | ' | -28 | ' | ' |
Stockholders' equity, balance at end of period at Sep. 30, 2013 | 10,602 | 560 | 5 | 3,671 | 9,115 | -109 | -2,640 |
Preferred stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2013 | ' | 575,000 | ' | ' | ' | ' | ' |
Common stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2013 | ' | ' | 555,277,000 | ' | ' | ' | ' |
Stockholders' equity, balance at beginning of period at Dec. 31, 2013 | 10,809 | 560 | 5 | 3,687 | 9,611 | -68 | -2,986 |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2013 | 575,000 | 575,000 | ' | ' | ' | ' | ' |
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2013 | ' | ' | 555,350,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Net income | 1,919 | ' | ' | ' | 1,919 | ' | ' |
Other comprehensive loss | -2 | ' | ' | ' | ' | -2 | ' |
Purchases of treasury stock | -1,165 | ' | ' | ' | ' | ' | -1,165 |
Common stock issued under employee benefit plans (in shares) | ' | ' | 45,000 | ' | ' | ' | ' |
Common stock issued under employee benefit plans | 3 | ' | 0 | 3 | ' | ' | ' |
Common stock issued and stock-based compensation expense (in shares) | ' | ' | 2,766,000 | ' | ' | ' | ' |
Common stock issued and stock-based compensation expense | 85 | ' | 0 | 85 | ' | ' | ' |
Dividends — common stock | -320 | ' | ' | ' | -320 | ' | ' |
Dividends — preferred stock | -28 | ' | ' | ' | -28 | ' | ' |
Stockholders' equity, balance at end of period at Sep. 30, 2014 | $11,301 | $560 | $5 | $3,775 | $11,182 | ($70) | ($4,151) |
Preferred stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2014 | 575,000 | 575,000 | ' | ' | ' | ' | ' |
Common stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2014 | ' | ' | 558,161,000 | ' | ' | ' | ' |
Condensed_Consolidated_Stateme5
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities | ' | ' |
Net income | $1,919 | $1,868 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Provision for loan losses | 986 | 732 |
Deferred income taxes | 76 | 154 |
Depreciation and amortization on premises and equipment | 93 | 83 |
Amortization of deferred revenues | -160 | -143 |
Other depreciation and amortization | 181 | 164 |
Accretion of accretable yield on acquired loans | -198 | -205 |
Gain on investments | -4 | -3 |
Loss on equity method and other investments | 19 | 13 |
Gain on origination and sale of loans | -57 | -127 |
Stock-based compensation expense | 46 | 45 |
Proceeds from sale of mortgage loans originated for sale | 1,962 | 3,553 |
Net principal disbursed on mortgage loans originated for sale | -1,903 | -3,201 |
Changes in assets and liabilities: | ' | ' |
Increase in other assets | -94 | -112 |
Decrease in accrued expenses and other liabilities | -40 | -286 |
Net cash provided by operating activities | 2,826 | 2,535 |
Cash flows from investing activities | ' | ' |
Maturities and sales of available-for-sale investment securities | 1,395 | 1,364 |
Purchases of available-for-sale investment securities | -390 | -258 |
Maturities of held-to-maturity investment securities | 9 | 27 |
Purchases of held-to-maturity investment securities | -31 | -1 |
Net principal disbursed on loans originated for investment | -2,243 | -752 |
Purchases of loan receivables | 0 | -136 |
Purchases of other investments | -42 | -76 |
Decrease in restricted cash | 79 | 107 |
Purchases of premises and equipment | -102 | -177 |
Net cash (used for) provided by investing activities | -1,325 | 98 |
Cash flows from financing activities | ' | ' |
Net decrease in short-term borrowings | -1 | -246 |
Proceeds from issuance of securitized debt | 3,849 | 3,250 |
Maturities and repayment of securitized debt | -4,590 | -3,537 |
Proceeds from issuance of other long-term borrowings | 1,147 | 1,248 |
Payment of contingent consideration for purchase of net assets of a business, at fair value | 0 | -9 |
Proceeds from issuance of common stock | 4 | 12 |
Purchases of treasury stock | -1,165 | -950 |
Net increase in deposits | 431 | 932 |
Dividends paid on common and preferred stock | -348 | -294 |
Net cash (used for) provided by financing activities | -673 | 406 |
Net increase in cash and cash equivalents | 828 | 3,039 |
Cash and cash equivalents, at beginning of period | 6,554 | 2,584 |
Cash and cash equivalents, at end of period | $7,382 | $5,623 |
Background_and_Basis_of_Presen
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Background and Basis of Presentation | ' |
Background and Basis of Presentation | |
Description of Business | |
Discover Financial Services (“DFS” or the “Company”) is a direct banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 as well as a financial holding company under the Gramm-Leach-Bliley Act and therefore is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Through its Discover Bank subsidiary, a Delaware state-chartered bank, the Company offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products. Through its Discover Home Loans, Inc. subsidiary, the Company offers its customers home loans. Through its DFS Services LLC subsidiary and its subsidiaries, the Company operates the Discover Network, the PULSE network (“PULSE”) and Diners Club International (“Diners Club”). The Discover Network is a payment transaction processing network for Discover branded credit cards and credit, debit and prepaid cards, issued by third parties, which the Company refers to as network partners. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to ATMs domestically and internationally, as well as point-of-sale terminals at retail locations throughout the U.S. for debit card transactions. Diners Club is a global payments network of licensees that issue Diners Club branded charge cards and/or provide card acceptance services. | |
The Company’s business segments are Direct Banking and Payment Services. The Direct Banking segment includes consumer banking and lending products, specifically Discover branded credit cards issued to individuals and small businesses on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans, home equity loans, prepaid cards and other consumer lending and deposit products. The majority of Direct Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income. | |
The Payment Services segment includes PULSE, Diners Club and the Company’s network partners business, which includes credit, debit and prepaid cards issued on the Discover Network by third parties. This segment also includes the business operations of Diners Club Italy, which primarily consist of issuing Diners Club charge cards. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue (included in other income) from Diners Club. | |
Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company’s 2013 audited consolidated financial statements filed with the Company’s annual report on Form 10-K for the calendar year ended December 31, 2013. | |
Recently Issued Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this update supersedes existing revenue recognition requirements in Topic 605, Revenue Recognition, including an assortment of transaction-specific and industry-specific rules. The ASU establishes a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. ASU Topic 606 does not apply to rights or obligations associated with financial instruments (for example, interest income from loans or investments, or interest expense on debt), and therefore the Company’s net interest income should not be affected. The Company’s revenue from discount and interchange, protection products, transaction processing and certain fees are within the scope of these rules. Management has not yet completed its evaluation of the impact, if any, of the new guidance on these revenues. The new revenue recognition model will become effective for the Company on January 1, 2017. Upon adoption in 2017, the Company will record an adjustment to retained earnings as of the beginning of the year of initial application, which can be either the earliest comparative period presented, with all periods presented under the new rules, or January 1, 2017, without restating prior periods presented. Management has not yet determined which transition reporting option it will apply. | |
In January 2014, the FASB issued ASU No. 2014-01, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. This standard will permit a reporting entity to make an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under this new method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). This treatment will replace the effective yield method currently permitted for certain investments of this kind. The Company has not historically utilized the effective yield method, and as a result, implementation of this ASU will not impact the Company’s accounting for its investments in qualified affordable housing projects unless a subsequent election is made to apply it. In addition to establishing the conditions under which the proportional amortization method can be used, the ASU calls for additional disclosures that will enable the reader to understand the nature of the investment and the effect of its measurement and related tax credits on the company’s financial position and results of operations. The new guidance is effective for annual reporting periods beginning after December 15, 2014 and interim periods within those periods, with early adoption permitted. The standard will require additional disclosure about the nature of the Company's affordable housing investments, but unless the Company subsequently elects to apply the proportional amortization model, the new guidance will have no effect on the Company’s financial condition, results of operations or cash flows. |
Investments
Investments | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||
Investments | ' | |||||||||||||||||||
Investments | ||||||||||||||||||||
The Company’s investment securities consist of the following (dollars in millions): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
U.S. Treasury securities(1) | $ | 1,335 | $ | 2,058 | ||||||||||||||||
U.S. government agency securities | 1,038 | 1,561 | ||||||||||||||||||
States and political subdivisions of states | 10 | 15 | ||||||||||||||||||
Other securities: | ||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | ||||||||||||||||||
Residential mortgage-backed securities - Agency(2) | 1,612 | 1,351 | ||||||||||||||||||
Total other securities | 1,612 | 1,357 | ||||||||||||||||||
Total investment securities | $ | 3,995 | $ | 4,991 | ||||||||||||||||
-1 | Includes $15 million and $9 million of U.S. Treasury securities that have been pledged as swap collateral in lieu of cash as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
-2 | Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. | |||||||||||||||||||
The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1,318 | $ | 16 | $ | — | $ | 1,334 | ||||||||||||
U.S. government agency securities | 1,022 | 16 | — | 1,038 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,541 | 6 | (6 | ) | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 3,881 | $ | 38 | $ | (6 | ) | $ | 3,913 | |||||||||||
Held-to-Maturity Investment Securities(2) | ||||||||||||||||||||
U.S. Treasury securities(3) | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||
States and political subdivisions of states | 10 | — | — | 10 | ||||||||||||||||
Residential mortgage-backed securities - Agency(4) | 71 | — | — | 71 | ||||||||||||||||
Total held-to-maturity investment securities | $ | 82 | $ | — | $ | — | $ | 82 | ||||||||||||
At December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 2,030 | $ | 27 | $ | — | $ | 2,057 | ||||||||||||
U.S. government agency securities | 1,535 | 26 | — | 1,561 | ||||||||||||||||
Credit card asset-backed securities of other issuers | 6 | — | — | 6 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,329 | — | (22 | ) | 1,307 | |||||||||||||||
Total available-for-sale investment securities | $ | 4,900 | $ | 53 | $ | (22 | ) | $ | 4,931 | |||||||||||
Held-to-Maturity Investment Securities(2) | ||||||||||||||||||||
U.S. Treasury securities(3) | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||
States and political subdivisions of states | 15 | — | (1 | ) | 14 | |||||||||||||||
Residential mortgage-backed securities - Agency(4) | 44 | — | (1 | ) | 43 | |||||||||||||||
Total held-to-maturity investment securities | $ | 60 | $ | — | $ | (2 | ) | $ | 58 | |||||||||||
-1 | Available-for-sale investment securities are reported at fair value. | |||||||||||||||||||
-2 | Held-to-maturity investment securities are reported at amortized cost. | |||||||||||||||||||
-3 | Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. | |||||||||||||||||||
-4 | Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. | |||||||||||||||||||
The following table provides information about investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions): | ||||||||||||||||||||
Number of | Less than 12 months | More than 12 months | ||||||||||||||||||
Securities | ||||||||||||||||||||
in a Loss | ||||||||||||||||||||
Position | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||
Value | Losses | Value | Losses | |||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 16 | $ | 370 | $ | (1 | ) | $ | 480 | $ | (5 | ) | |||||||||
At December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 23 | $ | 1,097 | $ | (20 | ) | $ | 48 | $ | (2 | ) | |||||||||
Held-to-Maturity Investment Securities | ||||||||||||||||||||
State and political subdivisions of states | 4 | $ | 8 | $ | (1 | ) | $ | 3 | $ | — | ||||||||||
Residential mortgage-backed securities - Agency | 2 | $ | 40 | $ | (1 | ) | $ | — | $ | — | ||||||||||
The Company records gains and losses on investment securities in other income when investments are sold or liquidated, when the Company believes an investment is other than temporarily impaired prior to the disposal of the investment, or in certain other circumstances. Gains and losses on sales of available-for-sale investment securities are calculated using the specific identification method and are recorded entirely in earnings. The Company records unrealized gains and losses on its available-for-sale investment securities in other comprehensive income. Other-than-temporary impairment for investments is calculated using the specific identification method. No gains or losses related to other-than-temporary impairments were recorded during the three and nine months ended September 30, 2014 and 2013. | ||||||||||||||||||||
The following table provides information about proceeds related to maturities and redemptions of investment securities and proceeds from sales, recognized gains and losses and net unrealized gains and losses on available-for-sale securities (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Proceeds related to maturities or redemptions of investment securities | $ | 65 | $ | 94 | $ | 184 | $ | 672 | ||||||||||||
Proceeds from the sales of available-for-sale investment securities, comprised of U.S. Treasury securities and U.S. government agency securities | $ | — | $ | — | $ | 1,220 | $ | 719 | ||||||||||||
Gains on sales of available-for-sale investment securities | $ | — | $ | — | $ | 4 | $ | 2 | ||||||||||||
Net unrealized (losses) gains recorded in other comprehensive income, before-tax | $ | (15 | ) | $ | 6 | $ | 1 | $ | (61 | ) | ||||||||||
Net unrealized (losses) gains recorded in other comprehensive income, after-tax | $ | (9 | ) | $ | 4 | $ | 1 | $ | (38 | ) | ||||||||||
Maturities of available-for-sale debt securities and held-to-maturity debt securities at the end of the period are provided in the table below (dollars in millions): | ||||||||||||||||||||
One Year | After One | After Five | After Ten | Total | ||||||||||||||||
or | Year | Years | Years | |||||||||||||||||
Less | Through | Through | ||||||||||||||||||
Five Years | Ten Years | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale—Amortized Cost(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 567 | $ | 751 | $ | — | $ | — | $ | 1,318 | ||||||||||
U.S. government agency securities | 401 | 621 | — | — | 1,022 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 520 | 1,021 | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 968 | $ | 1,372 | $ | 520 | $ | 1,021 | $ | 3,881 | ||||||||||
Held-to-Maturity—Amortized Cost(2) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 71 | 71 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 81 | $ | 82 | ||||||||||
Available-for-Sale—Fair Values(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 571 | $ | 763 | $ | — | $ | — | $ | 1,334 | ||||||||||
U.S. government agency securities | 406 | 632 | — | — | 1,038 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 519 | 1,022 | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 977 | $ | 1,395 | $ | 519 | $ | 1,022 | $ | 3,913 | ||||||||||
Held-to-Maturity—Fair Values(2) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 71 | 71 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 81 | $ | 82 | ||||||||||
-1 | Available-for-sale investment securities are reported at fair value. | |||||||||||||||||||
-2 | Held-to-maturity investment securities are reported at amortized cost. | |||||||||||||||||||
Other Investments | ||||||||||||||||||||
As a part of the Company's community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing, as well as stimulate economic development in low to moderate income communities. These investments are accounted for using the equity method of accounting, and are recorded within other assets, and the related commitment for future investments is recorded in accrued expenses and other liabilities within the statement of financial condition. The portion of each investment's operating results allocable to the Company is recorded in other expense within the condensed consolidated statement of income. The Company earns a return primarily through the receipt of tax credits allocated to the affordable housing projects and the community revitalization projects. These investments are not consolidated as the Company does not have a controlling financial interest in the entities. As of September 30, 2014 and December 31, 2013, the Company had outstanding investments in these entities of $317 million and $308 million, respectively, and related contingent liabilities of $44 million and $52 million, respectively. |
Loan_Receivables
Loan Receivables | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | ' | |||||||||||||||||||
Loan Receivables | ' | |||||||||||||||||||
Loan Receivables | ||||||||||||||||||||
The Company has three loan portfolio segments: credit card loans, other loans and purchased credit-impaired ("PCI") student loans, as well as mortgage loans held for sale. | ||||||||||||||||||||
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Mortgage loans held for sale(1) | $ | 148 | $ | 148 | ||||||||||||||||
Loan portfolio: | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | 53,503 | 52,952 | ||||||||||||||||||
Discover business card | 196 | 198 | ||||||||||||||||||
Total credit card loans | 53,699 | 53,150 | ||||||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 4,830 | 4,191 | ||||||||||||||||||
Private student loans | 4,706 | 3,969 | ||||||||||||||||||
Other | 195 | 135 | ||||||||||||||||||
Total other loans | 9,731 | 8,295 | ||||||||||||||||||
Purchased credit-impaired loans(3) | 3,788 | 4,178 | ||||||||||||||||||
Total loan portfolio | 67,218 | 65,623 | ||||||||||||||||||
Total loan receivables | 67,366 | 65,771 | ||||||||||||||||||
Allowance for loan losses | (1,644 | ) | (1,648 | ) | ||||||||||||||||
Net loan receivables | $ | 65,722 | $ | 64,123 | ||||||||||||||||
-1 | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||||||||||||||||||
-2 | Amounts include $20.2 billion underlying investors’ interest in trust debt at September 30, 2014 and December 31, 2013, and $9.3 billion and $10.9 billion in seller's interest at September 30, 2014 and December 31, 2013, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for further information. | |||||||||||||||||||
-3 | Amounts include $2.0 billion and $2.2 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2014 and December 31, 2013. See Note 4: Credit Card and Student Loan Securitization Activities. Of the remaining $1.8 billion and $2.0 billion at September 30, 2014 and December 31, 2013, respectively, that were not pledged as collateral, approximately $23 million and $22 million, respectively, represents loans eligible for reimbursement through an indemnification claim. Discover Bank must purchase such loans from the trust before a claim may be filed. | |||||||||||||||||||
Credit Quality Indicators | ||||||||||||||||||||
The Company regularly reviews its collection experience (including delinquencies and net charge-offs) in determining its allowance for loan losses. Credit card and closed-end consumer loan receivables are placed on non-accrual status upon receipt of notification of the bankruptcy or death of a customer or suspected fraudulent activity on an account. Upon completion of the fraud investigation, non-fraudulent credit card and closed-end consumer loan receivables may resume accruing interest. | ||||||||||||||||||||
Information related to the delinquent and non-accruing loans in the Company’s loan portfolio, which excludes loans held for sale, is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): | ||||||||||||||||||||
30-89 Days | 90 or | Total Past | 90 or | Total | ||||||||||||||||
Delinquent | More Days | Due | More Days | Non-accruing(1) | ||||||||||||||||
Delinquent | Delinquent | |||||||||||||||||||
and | ||||||||||||||||||||
Accruing | ||||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | $ | 479 | $ | 439 | $ | 918 | $ | 401 | $ | 164 | ||||||||||
Discover business card | 1 | 1 | 2 | 1 | 1 | |||||||||||||||
Total credit card loans | 480 | 440 | 920 | 402 | 165 | |||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans(3) | 26 | 10 | 36 | 9 | 5 | |||||||||||||||
Private student loans (excluding PCI)(4) | 61 | 24 | 85 | 24 | — | |||||||||||||||
Other | — | 2 | 2 | — | 24 | |||||||||||||||
Total other loans (excluding PCI) | 87 | 36 | 123 | 33 | 29 | |||||||||||||||
Total loan receivables (excluding PCI) | $ | 567 | $ | 476 | $ | 1,043 | $ | 435 | $ | 194 | ||||||||||
At December 31, 2013 | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | $ | 464 | $ | 445 | $ | 909 | $ | 406 | $ | 154 | ||||||||||
Discover business card | 1 | 2 | 3 | 2 | 1 | |||||||||||||||
Total credit card loans | 465 | 447 | 912 | 408 | 155 | |||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans(3) | 21 | 8 | 29 | 8 | 5 | |||||||||||||||
Private student loans (excluding PCI)(4) | 48 | 18 | 66 | 18 | — | |||||||||||||||
Other | 1 | 2 | 3 | — | 40 | |||||||||||||||
Total other loans (excluding PCI) | 70 | 28 | 98 | 26 | 45 | |||||||||||||||
Total loan receivables (excluding PCI) | $ | 535 | $ | 475 | $ | 1,010 | $ | 434 | $ | 200 | ||||||||||
-1 | The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million for the three months ended September 30, 2014 and 2013 and was $20 million and $22 million for the nine months ended September 30, 2014 and 2013, respectively. The Company does not separately systematically compute the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' quarterly average balances and rates prior to non-accrual status. | |||||||||||||||||||
-2 | Consumer credit card loans that are 90 or more days delinquent and accruing interest include $40 million and $41 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
-3 | Personal loans that are 90 or more days delinquent and accruing interest include $2 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013. | |||||||||||||||||||
-4 | Private student loans that are 90 or more days delinquent and accruing interest include $4 million and $3 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||
The Company's net charge-offs include the principal amount of loans charged off less principal recoveries and exclude charged-off interest and fees, recoveries of interest and fees and fraud losses. Charged-off and recovered interest and fees are recorded in interest income and loan fee income, respectively, which is effectively a reclassification of the loan loss provision, while fraud losses are recorded in other expense. Credit card loan receivables are charged off at the end of the month during which an account becomes 180 days contractually past due. Personal loans and private student loans, which are closed-end consumer loan receivables, are generally charged off at the end of the month during which an account becomes 120 days contractually past due. Generally, customer bankruptcies and probate accounts are charged off at the end of the month 60 days following the receipt of notification of the bankruptcy or death but not later than the 180-day or 120-day contractual time frame. | ||||||||||||||||||||
Information related to the net charge-offs in the Company's loan portfolio, which excludes loans held for sale, is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Net | Net | Net | Net | |||||||||||||||||
Charge-offs | Charge-off | Charge-offs | Charge-off | |||||||||||||||||
Rate | Rate | |||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card | $ | 288 | 2.16 | % | $ | 257 | 2.05 | % | ||||||||||||
Discover business card | 1 | 1.82 | % | 1 | 2.12 | % | ||||||||||||||
Total credit card loans | 289 | 2.16 | % | 258 | 2.05 | % | ||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 23 | 1.92 | % | 20 | 2.01 | % | ||||||||||||||
Private student loans (excluding PCI) | 12 | 1.14 | % | 12 | 1.33 | % | ||||||||||||||
Other | — | 0.6 | % | 1 | 2.35 | % | ||||||||||||||
Total other loans (excluding PCI) | 35 | 1.5 | % | 33 | 1.65 | % | ||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 324 | 2.06 | % | $ | 291 | 2 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 324 | 1.94 | % | $ | 291 | 1.86 | % | ||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Net | Net | Net | Net | |||||||||||||||||
Charge-offs | Charge-off | Charge-offs | Charge-off | |||||||||||||||||
Rate | Rate | |||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card | $ | 880 | 2.27 | % | $ | 827 | 2.25 | % | ||||||||||||
Discover business card | 3 | 1.75 | % | 4 | 2.31 | % | ||||||||||||||
Total credit card loans | 883 | 2.27 | % | 831 | 2.25 | % | ||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 66 | 1.98 | % | 58 | 2.18 | % | ||||||||||||||
Private student loans (excluding PCI) | 40 | 1.25 | % | 32 | 1.25 | % | ||||||||||||||
Other | 1 | 0.88 | % | 1 | 1.72 | % | ||||||||||||||
Total other loans (excluding PCI) | 107 | 1.58 | % | 91 | 1.66 | % | ||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 990 | 2.16 | % | $ | 922 | 2.17 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 990 | 2.03 | % | $ | 922 | 2.01 | % | ||||||||||||
As part of credit risk management activities, on an ongoing basis the Company reviews information related to the performance of a customer’s account with the Company as well as information from credit bureaus, such as FICO or other credit scores, relating to the customer’s broader credit performance. FICO scores are generally obtained at origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that a significant proportion of delinquent accounts have FICO scores below 660. | ||||||||||||||||||||
The following table provides the most recent FICO scores available for the Company’s customers as a percentage of each class of loan receivables: | ||||||||||||||||||||
Credit Risk Profile | ||||||||||||||||||||
by FICO Score | ||||||||||||||||||||
660 and | Less than 660 | |||||||||||||||||||
Above | or No Score | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Discover card | 83 | % | 17 | % | ||||||||||||||||
Discover business card | 92 | % | 8 | % | ||||||||||||||||
Personal loans | 97 | % | 3 | % | ||||||||||||||||
Private student loans (excluding PCI)(1) | 95 | % | 5 | % | ||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||
Discover card | 83 | % | 17 | % | ||||||||||||||||
Discover business card | 92 | % | 8 | % | ||||||||||||||||
Personal loans | 97 | % | 3 | % | ||||||||||||||||
Private student loans (excluding PCI)(1) | 95 | % | 5 | % | ||||||||||||||||
-1 | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." | |||||||||||||||||||
For private student loans, additional credit risk management activities include monitoring the amount of loans in forbearance. Forbearance allows borrowers experiencing temporary financial difficulties, but still willing to make payments, the ability to temporarily suspend payments. Eligible borrowers have a lifetime cap on forbearance of 12 months. At September 30, 2014 and December 31, 2013, there were $44 million and $110 million of private student loans, including PCI, in forbearance, respectively. In addition, at September 30, 2014 and December 31, 2013, there were 0.8% and 1.9% of private student loans in forbearance as a percentage of student loans in repayment and forbearance, respectively. At September 30, 2014, the dollar amount of loans in forbearance and loans in forbearance as a percentage of private student loans in repayment and forbearance were lower when compared to December 31, 2013 due to the implementation of temporary reduced payment programs, which normally consist of a reduction of the minimum payment for a period of no longer than 12 months at a time. Loans in these programs are not considered to be in forbearance. | ||||||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||
The Company maintains an allowance for loan losses at an appropriate level to absorb probable losses inherent in the loan portfolio. The Company considers the collectibility of all amounts contractually due on its loan receivables, including those components representing interest and fees. Accordingly, the allowance for loan losses represents the estimated uncollectible principal, interest and fee components of loan receivables. The allowance is evaluated monthly and is maintained through an adjustment to the provision for loan losses. Charge-offs of principal amounts of loans outstanding are deducted from the allowance and subsequent recoveries of such amounts increase the allowance. Charge-offs of loan balances representing unpaid interest and fees result in a reversal of interest and fee income, respectively, which is effectively a reclassification of provision for loan losses. | ||||||||||||||||||||
The Company bases its allowance for loan losses on several analyses that help estimate incurred losses as of the balance sheet date. While the Company’s estimation process includes historical data and analysis, there is a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance. The Company uses a migration analysis to estimate the likelihood that a loan will progress through the various stages of delinquency. The Company uses other analyses to estimate losses incurred on non-delinquent accounts. The considerations in these analyses include past performance, risk management techniques applied to various accounts, historical behavior of different account vintages, economic conditions, recent trends in delinquencies, bankruptcy filings, account collection management, policy changes, account seasoning, loan volume and amounts, payment rates and forecasting uncertainties. The Company primarily estimates its allowance for loan losses on a pooled basis, which includes loans that are delinquent and/or no longer accruing interest and/or certain loans that have defaulted from a loan modification program, as discussed below under the section entitled "— Troubled Debt Restructurings." Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. | ||||||||||||||||||||
The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,359 | $ | 109 | $ | 128 | $ | 18 | $ | 1,614 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 318 | 22 | 16 | (2 | ) | 354 | ||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (400 | ) | (26 | ) | (14 | ) | — | (440 | ) | |||||||||||
Recoveries | 111 | 3 | 2 | — | 116 | |||||||||||||||
Net charge-offs | (289 | ) | (23 | ) | (12 | ) | — | (324 | ) | |||||||||||
Balance at end of period | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,360 | $ | 98 | $ | 82 | $ | 16 | $ | 1,556 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 291 | 28 | 14 | — | 333 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (381 | ) | (21 | ) | (13 | ) | (1 | ) | (416 | ) | ||||||||||
Recoveries | 123 | 1 | 1 | — | 125 | |||||||||||||||
Net charge-offs | (258 | ) | (20 | ) | (12 | ) | (1 | ) | (291 | ) | ||||||||||
Balance at end of period | $ | 1,393 | $ | 106 | $ | 84 | $ | 15 | $ | 1,598 | ||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 865 | 62 | 59 | — | 986 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (1,223 | ) | (74 | ) | (44 | ) | (1 | ) | (1,342 | ) | ||||||||||
Recoveries | 340 | 8 | 4 | — | 352 | |||||||||||||||
Net charge-offs | (883 | ) | (66 | ) | (40 | ) | (1 | ) | (990 | ) | ||||||||||
Balance at end of period | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 611 | 65 | 41 | 15 | 732 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (1,220 | ) | (63 | ) | (34 | ) | (1 | ) | (1,318 | ) | ||||||||||
Recoveries | 389 | 5 | 2 | — | 396 | |||||||||||||||
Net charge-offs | (831 | ) | (58 | ) | (32 | ) | (1 | ) | (922 | ) | ||||||||||
Balance at end of period | $ | 1,393 | $ | 106 | $ | 84 | $ | 15 | $ | 1,598 | ||||||||||
Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the table above. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ | 69 | $ | 66 | $ | 211 | $ | 213 | ||||||||||||
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ | 16 | $ | 14 | $ | 50 | $ | 44 | ||||||||||||
The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio (which excludes loans held for sale) by impairment methodology (dollars in millions): | ||||||||||||||||||||
Credit Card | Personal | Student | Other | Total | ||||||||||||||||
Loans | Loans | Loans | ||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,228 | $ | 103 | $ | 94 | $ | 2 | $ | 1,427 | ||||||||||
Evaluated for impairment in accordance with | 160 | 5 | 10 | 14 | 189 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||
Total allowance for loan losses | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 52,654 | $ | 4,779 | $ | 4,672 | $ | 133 | $ | 62,238 | ||||||||||
Evaluated for impairment in accordance with | 1,045 | 51 | 34 | 62 | 1,192 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 3,788 | — | 3,788 | |||||||||||||||
Total recorded investment | $ | 53,699 | $ | 4,830 | $ | 8,494 | $ | 195 | $ | 67,218 | ||||||||||
At December 31, 2013 | ||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,218 | $ | 109 | $ | 76 | $ | 1 | $ | 1,404 | ||||||||||
Evaluated for impairment in accordance with | 188 | 3 | 9 | 16 | 216 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||
Total allowance for loan losses | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 52,027 | $ | 4,160 | $ | 3,941 | $ | 56 | $ | 60,184 | ||||||||||
Evaluated for impairment in accordance with | 1,123 | 31 | 28 | 79 | 1,261 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 4,178 | — | 4,178 | |||||||||||||||
Total recorded investment | $ | 53,150 | $ | 4,191 | $ | 8,147 | $ | 135 | $ | 65,623 | ||||||||||
-1 | Loan receivables evaluated for impairment in accordance with ASC 310-10-35 include credit card loans, personal loans and student loans collectively evaluated for impairment in accordance with ASC Subtopic 310-40, Receivables, which consists of modified loans accounted for as troubled debt restructurings. Other loans are individually evaluated for impairment and generally do not represent troubled debt restructurings. | |||||||||||||||||||
-2 | The unpaid principal balance of credit card loans was $883 million and $900 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of personal loans was $51 million and $31 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of student loans was $33 million and $26 million at September 30, 2014 and December 31, 2013, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. | |||||||||||||||||||
Troubled Debt Restructurings | ||||||||||||||||||||
The Company has internal loan modification programs that provide relief to credit card, personal loan and student loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs which vary by product. External loan modification programs are also available for credit card and personal loans. Credit card, personal and student loans that have permanent, and certain temporary, modifications, as well as certain grants of student loan forbearance, are considered to be individually impaired. In addition, loans that defaulted or graduated from modification programs or forbearance are considered to be individually impaired. As a result, the above mentioned loans are considered troubled debt restructurings and are accounted for in accordance with ASC Subtopic 310-40, Troubled Debt Restructurings by Creditors. | ||||||||||||||||||||
For credit card customers, the temporary hardship program primarily consists of a reduced minimum payment and an interest rate reduction, both lasting for a period no longer than 12 months. The permanent workout program involves changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months and reducing the interest rate on the loan. The permanent modification program does not normally provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program (referred to here as external programs). These loans typically receive a reduced interest rate but continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees. | ||||||||||||||||||||
To assist student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company may offer hardship forbearance periods of up to 12 months over the life of the loan. The Company does not anticipate significant shortfalls in the contractual amount due for borrowers using a first hardship forbearance period as the historical performance of these borrowers is not significantly different from the overall portfolio. However, when a borrower is 30 or more days delinquent and granted a second hardship forbearance period, the forbearance is considered a troubled debt restructuring. In addition, the Company offers temporary reduced payment programs, which normally consist of a reduction of the minimum payment for a period of no longer than 12 months at a time. When a student loan borrower is enrolled in the temporary reduced payment program for 12 months or fewer over the life of the loan, the modification is not considered a troubled debt restructuring. However, when a borrower is enrolled in the temporary reduced payment program for more than 12 months over the life of the loan, the modification is considered a troubled debt restructuring. | ||||||||||||||||||||
For personal loan customers, in certain situations the Company offers various payment programs, including temporary and permanent programs. The temporary programs normally consist of a reduction of the minimum payment for a period of no longer than 12 months with the option of a final balloon payment required at the end of the loan term or an extension of the maturity date with the total term not exceeding nine years. Further, in certain circumstances the interest rate on the loan is reduced. The permanent program involves changing the terms of the loan in order to pay off the outstanding balance over a longer term and also in certain circumstances reducing the interest rate on the loan. Similar to the temporary programs, the total term may not exceed nine years. The Company also allows loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency. Personal loans included in temporary and permanent programs are accounted for as troubled debt restructurings. Beginning in first quarter of 2014, loan modifications through external sources are accounted for as troubled debt restructurings. | ||||||||||||||||||||
The Company monitors borrower performance after using payment programs or forbearance and the Company believes the programs help to prevent defaults and are useful in assisting customers experiencing financial difficulties. The Company plans to continue to use payment programs and forbearance and, as a result, expects to have additional loans classified as troubled debt restructurings in the future. | ||||||||||||||||||||
Loans classified as troubled debt restructurings are recorded at their present value with impairment measured as the difference between the loan balance and the discounted present value of cash flows expected to be collected. Consistent with the Company’s measurement of impairment of modified loans on a pooled basis, the discount rate used for credit card loans in internal programs is the average current annual percentage rate applied to non-impaired credit card loans, which approximates what would have applied to the pool of modified loans prior to impairment. The discount rate used for credit card loans in external programs reflects a rate that is consistent with rates offered to cardmembers not in a program that have similar risk characteristics. For student and personal loans, the discount rate used is the average contractual rate prior to modification. | ||||||||||||||||||||
Interest income from loans accounted for as troubled debt restructurings is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not in such programs. | ||||||||||||||||||||
Additional information about modified loans classified as troubled debt restructurings is shown below (dollars in millions): | ||||||||||||||||||||
Average recorded investment in loans | Interest income recognized during period loans were impaired(1) | Gross interest income that would have been recorded with original terms(2) | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 248 | $ | 11 | $ | 1 | ||||||||||||||
Internal programs | $ | 449 | $ | 3 | $ | 15 | ||||||||||||||
External programs | $ | 353 | $ | 7 | $ | 4 | ||||||||||||||
Personal loans | $ | 49 | $ | 2 | $ | — | ||||||||||||||
Student loans(4) | $ | 33 | $ | 1 | N/A | |||||||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 263 | $ | 12 | $ | — | ||||||||||||||
Internal programs | $ | 457 | $ | 2 | $ | 17 | ||||||||||||||
External programs | $ | 447 | $ | 9 | $ | 3 | ||||||||||||||
Personal loans | $ | 27 | $ | 1 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 22 | $ | — | N/A | |||||||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 251 | $ | 34 | $ | 3 | ||||||||||||||
Internal programs | $ | 452 | $ | 9 | $ | 46 | ||||||||||||||
External programs | $ | 374 | $ | 21 | $ | 10 | ||||||||||||||
Personal loans | $ | 46 | $ | 4 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 31 | $ | 2 | N/A | |||||||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 271 | $ | 37 | $ | 2 | ||||||||||||||
Internal programs | $ | 473 | $ | 7 | $ | 50 | ||||||||||||||
External programs | $ | 477 | $ | 28 | $ | 8 | ||||||||||||||
Personal loans | $ | 24 | $ | 2 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 20 | $ | 1 | N/A | |||||||||||||||
-1 | The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average interest rate to the average loans in the various modification programs. | |||||||||||||||||||
-2 | The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. | |||||||||||||||||||
-3 | This balance is considered impaired, but is excluded from the internal and external program amounts reflected in this table. Represents credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. | |||||||||||||||||||
-4 | Student loan customers who have been granted a forbearance are not given interest rate reductions. | |||||||||||||||||||
In order to evaluate the primary financial effects that resulted from credit card loans entering into a loan modification program during the three and nine months ended September 30, 2014 and 2013, the Company quantified the amount by which interest and fees were reduced during the periods. During the three months ended September 30, 2014 and 2013, the Company forgave approximately $11 million and $10 million, respectively, of interest and fees as a result of accounts entering into a credit card loan modification program. During the nine months ended September 30, 2014 and 2013, the Company forgave approximately $30 million of interest and fees as a result of accounts entering into a credit card loan modification program. | ||||||||||||||||||||
The following table provides information on loans that entered a loan modification program during each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs | 12,115 | $ | 80 | 10,671 | $ | 67 | ||||||||||||||
External programs | 8,203 | $ | 42 | 8,665 | $ | 47 | ||||||||||||||
Personal loans | 980 | $ | 12 | 665 | $ | 8 | ||||||||||||||
Student loans | 393 | $ | 6 | 292 | $ | 5 | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs | 35,199 | $ | 232 | 30,149 | $ | 190 | ||||||||||||||
External programs | 24,458 | $ | 128 | 26,652 | $ | 144 | ||||||||||||||
Personal loans | 2,512 | $ | 30 | 1,618 | $ | 20 | ||||||||||||||
Student loans | 1,045 | $ | 15 | 590 | $ | 12 | ||||||||||||||
The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a troubled debt restructuring during the 15 months preceding the end of each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs(1)(2) | 2,488 | $ | 15 | 1,778 | $ | 11 | ||||||||||||||
External programs(1)(2) | 1,874 | $ | 8 | 2,178 | $ | 9 | ||||||||||||||
Personal loans(2) | 118 | $ | 2 | 74 | $ | 1 | ||||||||||||||
Student loans(3) | 286 | $ | 4 | 214 | $ | 4 | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs(1)(2) | 7,282 | $ | 44 | 7,170 | $ | 45 | ||||||||||||||
External programs(1)(2) | 5,440 | $ | 23 | 6,399 | $ | 27 | ||||||||||||||
Personal loans(2) | 321 | $ | 4 | 159 | $ | 2 | ||||||||||||||
Student loans(3) | 820 | $ | 12 | 405 | $ | 9 | ||||||||||||||
-1 | The outstanding balance upon default is the loan balance at the end of the month prior to default. Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain revoked in most cases. | |||||||||||||||||||
-2 | A customer defaults from a modification program after two consecutive missed payments. | |||||||||||||||||||
-3 | Student loan defaults have been defined as loans that are 60 or more days delinquent. | |||||||||||||||||||
Of the account balances that defaulted as shown above for the three months ended September 30, 2014 and 2013, approximately 34% and 33%, respectively, of the total balances charged off at the end of the month in which they defaulted. Of the account balances that defaulted as shown above for the nine months ended September 30, 2014 and 2013, approximately 36% and 42%, respectively, of the total balances charged off at the end of the month in which they defaulted. For accounts that have defaulted from a loan modification program and have not subsequently charged off, the balances are included in the allowance for loan loss analysis discussed above under "— Allowance for Loan Losses." | ||||||||||||||||||||
Purchased Credit-Impaired Loans | ||||||||||||||||||||
Purchased loans with evidence of credit deterioration since origination for which it is probable that not all contractually required payments will be collected are considered impaired at acquisition and are reported as PCI loans. The private student loans acquired in the SLC transaction as well as the additional private student loan portfolio acquired from Citibank, comprise the Company’s only PCI loans at September 30, 2014 and December 31, 2013. Total PCI student loans had an outstanding balance of $4.1 billion and $4.6 billion, including accrued interest, and a related carrying amount of $3.8 billion and $4.2 billion as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||
The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Balance at beginning of period | $ | 1,450 | $ | 1,952 | $ | 1,580 | $ | 2,072 | ||||||||||||
Accretion into interest income | (64 | ) | (66 | ) | (198 | ) | (205 | ) | ||||||||||||
Other changes in expected cash flows | — | (1 | ) | 4 | 18 | |||||||||||||||
Balance at end of period | $ | 1,386 | $ | 1,885 | $ | 1,386 | $ | 1,885 | ||||||||||||
Periodically, the Company updates the estimate of cash flows expected to be collected based on management's latest expectations of future credit losses, borrower prepayments and certain other assumptions that affect cash flows. The Company recorded no provision expense during the three and nine months ended September 30, 2014 and 2013. The allowance for PCI loan losses at September 30, 2014 and December 31, 2013 was $28 million. For the three months ended September 30, 2014, there were no changes in other cash flow assumptions. For the nine months ended September 30, 2014, changes in other cash flow assumptions resulted in an increase in accretable yield primarily related to change in borrower prepayments. While there were no changes to overall credit loss assumptions during the nine months ended September 30, 2013, changes to other cash flow expectations during nine months ended September 30, 2013 resulted in the changes to accretable yield reflected in the table above. Changes to accretable yield are recognized prospectively as an adjustment to yield over the remaining life of the pools. | ||||||||||||||||||||
At September 30, 2014, the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which includes loans not yet in repayment) were 2.36% and 0.78%, respectively. At December 31, 2013, the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which includes loans not yet in repayment) were 2.33% and 0.80%, respectively. These rates include private student loans that are greater than 120 days delinquent that are covered by an indemnification agreement or insurance arrangements through which the Company expects to recover a substantial portion of the loan. The net charge-off rate on PCI student loans was 0.63% and 1.09% for the three months ended September 30, 2014 and 2013, respectively, and 0.63% and 1.33% for the nine months ended September 30, 2014 and 2013, respectively. The decrease in net charge-off rate on PCI student loans is primarily due to seasoning of the portfolio and introduction of the temporary interest-only programs, which reduce the borrower's minimum payment for a period of no longer than 12 months at a time. | ||||||||||||||||||||
Mortgage Loans Held For Sale | ||||||||||||||||||||
The Company originates all of its residential real estate loans, except for home equity loans, with the intent to sell them in the secondary market. Loans held for sale consist primarily of residential first mortgage loans that are secured by residential real estate throughout the United States. Mortgage loans are funded through a warehouse line of credit and are recorded at fair value. Changes in the fair value of mortgage loans are recorded through other income prior to the sale of the loans to investors. The gain or loss on the sale of loans is recognized on the date the loans are sold and is based on the difference between the sale proceeds received and the carrying value of the loans, adjusted for the impact of the related hedges. See Note 14: Derivatives and Hedging Activities for further discussion of the mortgage loan related hedging activities. The Company sells its loans on a servicing released basis in which the Company gives up the right to service the loans. | ||||||||||||||||||||
The following table provides a summary of the initial unpaid principal balance of mortgage loans sold during each period, by type of loan (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 704 | 90.03 | % | $ | 705 | 77.64 | % | ||||||||||||
FHA(2) | 64 | 8.18 | 202 | 22.25 | ||||||||||||||||
Jumbo(3) | 11 | 1.41 | 1 | 0.11 | ||||||||||||||||
VA(4) | 3 | 0.38 | — | — | ||||||||||||||||
Total | $ | 782 | 100 | % | $ | 908 | 100 | % | ||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 1,723 | 90.16 | % | $ | 2,208 | 64.5 | % | ||||||||||||
FHA(2) | 161 | 8.42 | 1,214 | 35.47 | ||||||||||||||||
Jumbo(3) | 24 | 1.26 | 1 | 0.03 | ||||||||||||||||
VA(4) | 3 | 0.16 | — | — | ||||||||||||||||
Total | $ | 1,911 | 100 | % | $ | 3,423 | 100 | % | ||||||||||||
-1 | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||||||||||||||||||
-2 | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||||||||||||||||||
-3 | Jumbo loans are loans with an initial amount larger than the limits set by a Government Sponsored Enterprise. | |||||||||||||||||||
-4 | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. | |||||||||||||||||||
The following table represents the loans held for sale by type of loan (dollars in millions): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 129 | 87.16 | % | $ | 136 | 91.89 | % | ||||||||||||
FHA(2) | 15 | 10.14 | 11 | 7.43 | ||||||||||||||||
Jumbo(3) | 2 | 1.35 | 1 | 0.68 | ||||||||||||||||
VA(4) | 2 | 1.35 | — | — | ||||||||||||||||
Total | $ | 148 | 100 | % | $ | 148 | 100 | % | ||||||||||||
-1 | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||||||||||||||||||
-2 | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||||||||||||||||||
-3 | Jumbo loans are loans with an initial loan amount larger than the limits set by a Government Sponsored Enterprise. | |||||||||||||||||||
-4 | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. |
Credit_Card_and_Student_Loan_S
Credit Card and Student Loan Securitization Activities | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Variable Interest Entities Disclosure [Abstract] | ' | |||||||||
Credit Card and Student Loan Securitization Activities | ' | |||||||||
Credit Card and Student Loan Securitization Activities | ||||||||||
Credit Card Securitization Activities | ||||||||||
The Company accesses the term asset securitization market through the Discover Card Master Trust I (“DCMT”) and the Discover Card Execution Note Trust (“DCENT”), which are trusts into which credit card loan receivables are transferred (or, in the case of DCENT, into which beneficial interests in DCMT are transferred) and from which DCENT issues notes to investors. | ||||||||||
The DCENT debt structure consists of four classes of securities (DiscoverSeries Class A, B, C and D notes), with the most senior class generally receiving a triple-A rating. In this structure, in order to issue senior, higher rated classes of notes, it is necessary to obtain the appropriate amount of credit enhancement, generally through the issuance of junior, lower rated or more highly subordinated classes of notes, the majority of which are held by wholly-owned subsidiaries of Discover Bank. The previous DCMT structure consisted of Class A, triple-A rated certificates and Class B, single-A rated certificates held by third parties. Credit enhancement was provided by the subordinated Class B certificates, cash collateral accounts and more subordinated Series 2009-CE certificates held by a wholly-owned subsidiary of Discover Bank. The credit-related risk of loss associated with trust assets as of the balance sheet date to which the Company is exposed through the retention of these subordinated interests is fully captured in the allowance for loan losses recorded by the Company. | ||||||||||
The Company’s credit card securitizations are accounted for as secured borrowings and the trusts are treated as consolidated subsidiaries of the Company. The Company’s retained interests in the assets of the trusts, consisting of investments in DCENT notes and previously DCMT certificates held by subsidiaries of Discover Bank, constitute intercompany positions which are eliminated in the preparation of the Company’s condensed consolidated statement of financial condition. | ||||||||||
Upon transfer of credit card loan receivables to the trust, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the trusts’ creditors. Further, the transferred credit card loan receivables are owned by the trust and are not available to third-party creditors of the Company. The trusts have ownership of cash balances that also have restrictions, the amounts of which are reported in restricted cash. Investment of trust cash balances is limited to investments that are permitted under the governing documents of the trusts and which have maturities no later than the related date on which funds must be made available for distribution to trust investors. With the exception of the seller’s interest in trust receivables, the Company’s interests in trust assets are generally subordinate to the interests of third-party investors and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to the investors in the trusts’ debt. | ||||||||||
The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statement of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Cash collateral accounts | $ | — | $ | 59 | ||||||
Collections and interest funding accounts | 15 | 31 | ||||||||
Restricted cash | 15 | 90 | ||||||||
Investors’ interests held by third-party investors | 14,750 | 15,190 | ||||||||
Investors’ interests held by wholly-owned subsidiaries of Discover Bank | 5,466 | 5,024 | ||||||||
Seller’s interest | 9,289 | 10,898 | ||||||||
Loan receivables(1) | 29,505 | 31,112 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (772 | ) | (833 | ) | ||||||
Net loan receivables | 28,733 | 30,279 | ||||||||
Other | 37 | 34 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 28,785 | $ | 30,403 | ||||||
-1 | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. | |||||||||
The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors, the securitization structures include certain features that could result in earlier-than-expected repayment of the securities. The primary investor protection feature relates to the availability and adequacy of cash flows in the securitized pool of receivables to meet contractual requirements. Insufficient cash flows would trigger the early repayment of the securities. This is referred to as the “economic early amortization” feature. | ||||||||||
Investors are allocated cash flows derived from activities related to the accounts comprising the securitized pool of receivables, the amounts of which reflect finance charges billed, certain fee assessments, allocations of merchant discount and interchange, and recoveries on charged-off accounts. From these cash flows, investors are reimbursed for charge-offs occurring within the securitized pool of receivables and receive a contractual rate of return and Discover Bank is paid a servicing fee as servicer. Any cash flows remaining in excess of these requirements are reported to investors as excess spread. An excess spread rate of less than 0% for a contractually specified period, generally a three-month average, would trigger an economic early amortization event. In such an event, the Company would be required to seek immediate sources of replacement funding. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company’s other assets or the Company's general credit for a shortage in cash flows. | ||||||||||
The Company is required to maintain a contractual minimum level of receivables in the trust in excess of the face value of outstanding investors’ interests. This excess is referred to as the minimum seller’s interest requirement. The required minimum seller’s interest in the pool of trust receivables, which is included in credit card loan receivables restricted for securitization investors, is set at approximately 7% in excess of the total investors’ interests (which includes interests held by third parties as well as those certificated interests held by the Company). If the level of receivables in the trust was to fall below the required minimum, the Company would be required to add receivables from the unrestricted pool of receivables, which would increase the amount of credit card loan receivables restricted for securitization investors. A decline in the amount of the excess seller’s interest could occur if balance repayments and charge-offs exceeded new lending on the securitized accounts or as a result of changes in total outstanding investors’ interests. Seller's interest is impacted by seasonality as higher balance repayments tend to occur in the first calendar year quarter. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors’ interests would be triggered. The Company retains significant exposure to the performance of trust assets through holdings of the seller's interest and subordinated security classes of DCENT and previously DCMT. In addition, the Company has the right to remove a random selection of accounts, which would serve to decrease the amount of credit card loan receivables restricted for securitization investors, subject to certain requirements including that the minimum seller's interest is still met. | ||||||||||
Another feature of the Company’s credit card securitization structure that is designed to protect investors’ interests from loss, which is applicable to the notes issued from DCENT, is a reserve account funding requirement in which excess cash flows generated by the transferred loan receivables are held at the trust. This funding requirement is triggered when DCENT’s three-month average excess spread rate decreases to below 4.5%, with increasing funding requirements as excess spread levels decline below preset levels to 0%. | ||||||||||
In addition to performance measures associated with the transferred credit card loan receivables or the inability to add receivables to satisfy the seller's interest requirement, there are other events or conditions which could trigger an early amortization event, such as non-payment of principal at expected maturity. As of September 30, 2014, no economic or other early amortization events have occurred. | ||||||||||
The table below provides information concerning investors’ interests and related excess spread at the end of the current period (dollars in millions): | ||||||||||
At September 30, 2014 | Investors’ | # of Series | 3-Month Rolling | |||||||
Interests(1) | Outstanding | Average Excess | ||||||||
Spread | ||||||||||
Discover Card Execution Note Trust (DiscoverSeries notes) | $ | 20,216 | 37 | 13.63 | % | |||||
-1 | Investors’ interests include third-party interests and subordinated interests held by wholly-owned subsidiaries of Discover Bank. | |||||||||
The Company continues to own and service the accounts that generate the loan receivables held by the trusts. Discover Bank receives servicing fees from the trusts based on a percentage of the monthly investor principal balance outstanding. Although the fee income to Discover Bank offsets the fee expense to the trusts and thus is eliminated in consolidation, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and the loss of future servicing income, net of related expenses. | ||||||||||
Student Loan Securitization Activities | ||||||||||
The Company’s student loan securitizations are accounted for as secured borrowings and the trusts are treated as consolidated subsidiaries of the Company. Trust receivables underlying third-party investors’ interests are recorded in purchased credit-impaired loans, and the related debt issued by the trusts is reported in long-term borrowings. The assets of the Company’s consolidated VIEs are restricted from being sold or pledged as collateral for other borrowings and the cash flows from these restricted assets may be used only to pay obligations of the trust. | ||||||||||
Currently there are three trusts from which securities were issued to investors. Principal payments on the long-term secured borrowings are made as cash is collected on the underlying loans that are used as collateral on the secured borrowings. The Company does not have access to cash collected by the securitization trusts until cash is released in accordance with the trust indenture agreements and, for certain securitizations, no cash will be released to the Company until all outstanding trust borrowings have been repaid. Similar to the credit card securitizations, the Company continues to own and service the accounts that generate the student loan receivables held by the trusts and receives servicing fees from the trusts based on either a percentage of the principal balance outstanding or a flat fee per borrower. Although the servicing fee income offsets the fee expense related to the trusts, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights. | ||||||||||
Under terms of all the trust arrangements, the Company has the option, but not the obligation, to provide financial support to the trusts, but has never provided such support. A substantial portion of the credit risk associated with the securitized loans has been transferred to third parties under private credit insurance or indemnification arrangements. | ||||||||||
The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statement of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Restricted cash | $ | 85 | $ | 89 | ||||||
Student loan receivables(1) | 2,038 | 2,248 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (28 | ) | (28 | ) | ||||||
Net student loan receivables | 2,010 | 2,220 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 2,095 | $ | 2,309 | ||||||
-1 | The Company maintains its allowance for loan losses on purchased credit-impaired loans sufficient to absorb probable decreases in cash flows that were previously expected. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company's balance sheet in accordance with GAAP. |
Deposits
Deposits | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Deposits [Abstract] | ' | |||||||
Deposits | ' | |||||||
Deposits | ||||||||
The Company offers its deposit products to customers through two channels: (i) through direct marketing, internet origination and affinity relationships (“direct-to-consumer deposits”); and (ii) indirectly through contractual arrangements with securities brokerage firms (“brokered deposits”). Direct-to-consumer deposits include certificates of deposit, money market accounts, online savings and checking accounts and IRA certificates of deposit, while brokered deposits include certificates of deposit and sweep accounts. | ||||||||
As of September 30, 2014 and December 31, 2013, the Company had approximately $28.8 billion and $28.4 billion, respectively, of direct-to-consumer deposits. As of September 30, 2014 and December 31, 2013, the Company had approximately $16.6 billion and $16.4 billion, respectively, of brokered and other deposits. | ||||||||
A summary of interest-bearing deposit accounts is as follows (dollars in millions): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Certificates of deposit in amounts less than $100,000(1) | $ | 20,908 | $ | 21,211 | ||||
Certificates of deposit from amounts of $100,000(1) to less than $250,000(1) | 4,605 | 4,860 | ||||||
Certificates of deposit in amounts of $250,000(1) or greater | 1,174 | 1,180 | ||||||
Savings deposits, including money market deposit accounts | 18,490 | 17,515 | ||||||
Total interest-bearing deposits | $ | 45,177 | $ | 44,766 | ||||
Average annual interest rate | 1.3 | % | 1.57 | % | ||||
-1 | $100,000 represents the basic insurance amount previously covered by the FDIC. Effective July 21, 2010, the basic insurance per depositor was permanently increased to $250,000. | |||||||
At the end of the current period, certificates of deposit maturing over the remainder of this year, over each of the next four years, and thereafter were as follows (dollars in millions): | ||||||||
Year | Amount | |||||||
2014 | $ | 3,110 | ||||||
2015 | $ | 10,714 | ||||||
2016 | $ | 5,068 | ||||||
2017 | $ | 3,110 | ||||||
2018 | $ | 1,958 | ||||||
Thereafter | $ | 2,727 | ||||||
LongTerm_Borrowings
Long-Term Borrowings | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||
Long-Term Borrowings | ' | |||||||||||||||||
Long-Term Borrowings | ||||||||||||||||||
Long-term borrowings consist of borrowings and capital leases having original maturities of one year or more. The following table provides a summary of the Company’s long-term borrowings and weighted average interest rates on balances outstanding at period end (dollars in millions): | ||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||
Outstanding | Interest | Outstanding | Interest | Interest Rate Terms | Maturity | |||||||||||||
Rate | Rate | |||||||||||||||||
Securitized Debt | ||||||||||||||||||
Fixed rate asset-backed securities | ||||||||||||||||||
Principal value | $ | 7,749 | 1.82 | % | $ | 5,549 | 1.86 | % | Various fixed rates | Various | ||||||||
(including discount of $1 at September 30, 2014 and December 31, 2013) | February 2015 - July 2019 | |||||||||||||||||
Fair value adjustment(1) | 3 | 5 | ||||||||||||||||
Book value | 7,752 | 5,554 | ||||||||||||||||
Floating rate asset-backed securities | 6,150 | 0.51 | % | 9,140 | 0.46 | % | 1-month LIBOR(2) + | Various | ||||||||||
18 to 58 basis points | July 2015 - January 2019 | |||||||||||||||||
Floating rate asset-backed securities | 850 | 0.43 | % | — | — | % | 3-month LIBOR(2) + | Feb-17 | ||||||||||
20 basis points | ||||||||||||||||||
Floating rate asset-backed securities | — | — | % | 500 | 0.44 | % | Commercial Paper | Mar-14 | ||||||||||
rate + 30 basis points | ||||||||||||||||||
Total Discover Card Master Trust I and Discover Card Execution Note Trust | 14,752 | 15,194 | ||||||||||||||||
Floating rate asset-backed securities | 869 | 0.48 | % | 1,005 | 0.48 | % | 3-month LIBOR(2) + | Various | ||||||||||
(including discount of $97 and $129 at September 30, 2014 and December 31, 2013) | 12 to 45 basis points | January 2019 - July 2036 (3) | ||||||||||||||||
Floating rate asset-backed securities | 364 | 4.25 | % | 434 | 4.25 | % | Prime rate + 100 basis points | June 2031 (3) | ||||||||||
(including discount of $2 and $3 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Floating rate asset-backed securities | 89 | 4 | % | 105 | 4 | % | Prime rate + | July 2042 (3) | ||||||||||
(including premium of $1 at September 30, 2014 and December 31, 2013) | 75 basis points | |||||||||||||||||
Floating rate asset-backed securities | 202 | 3.65 | % | 248 | 3.66 | % | 1-month LIBOR(2) + | July 2042 (3) | ||||||||||
(including premium of $2 and $3 at September 30, 2014 and December 31, 2013) | 350 basis points | |||||||||||||||||
Total SLC Private Student Loan Trusts | 1,524 | 1,792 | ||||||||||||||||
Total Long-Term Borrowings—owed to securitization investors | 16,276 | 16,986 | ||||||||||||||||
Discover Financial Services (Parent Company) | ||||||||||||||||||
Fixed rate senior notes due 2017 | ||||||||||||||||||
Principal value | 400 | 6.45 | % | 400 | 6.45 | % | Fixed | Jun-17 | ||||||||||
Fair value adjustment(1) | 6 | 13 | ||||||||||||||||
Book value | 406 | 413 | ||||||||||||||||
Fixed rate senior notes due 2019 | 78 | 10.25 | % | 78 | 10.25 | % | Fixed | Jul-19 | ||||||||||
Fixed rate senior notes due 2022 | 224 | 5.2 | % | 219 | 5.2 | % | Fixed | Apr-22 | ||||||||||
(including discount of $98 and $103 at September 30, 2014 and December 31, 2013)(4) | ||||||||||||||||||
Fixed rate senior notes due 2022 | 343 | 3.85 | % | 335 | 3.85 | % | Fixed | Nov-22 | ||||||||||
(including discount of $157 and $165 at September 30, 2014 and December 31, 2013)(5) | ||||||||||||||||||
Discover Bank | ||||||||||||||||||
Senior bank notes due 2018 | 750 | 2 | % | 750 | 2 | % | Fixed | Feb-18 | ||||||||||
Senior bank notes due 2021 | 748 | 3.2 | % | — | — | % | Fixed | Aug-21 | ||||||||||
(including discount of $2 at September 30, 2014) | ||||||||||||||||||
Senior bank notes due 2023 | 995 | 4.2 | % | 994 | 4.2 | % | Fixed | Aug-23 | ||||||||||
(including discount of $5 and $6 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Senior bank notes due 2026 | 399 | 4.25 | % | — | — | % | Fixed | Mar-26 | ||||||||||
(including discount of $1 at September 30, 2014) | ||||||||||||||||||
Subordinated bank notes due 2019 | 200 | 8.7 | % | 200 | 8.7 | % | Fixed | November 2019 | ||||||||||
Subordinated bank notes due 2020 | 498 | 7 | % | 498 | 7 | % | Fixed | April 2020 | ||||||||||
(including discount of $2 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Capital lease obligations | 1 | 4.51 | % | 1 | 4.51 | % | Fixed | Apr-16 | ||||||||||
Total long-term borrowings | $ | 20,918 | $ | 20,474 | ||||||||||||||
-1 | The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in LIBOR. See Note 14: Derivatives and Hedging Activities. | |||||||||||||||||
-2 | London Interbank Offered Rate (“LIBOR”). | |||||||||||||||||
-3 | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The dates shown represent final maturity dates. | |||||||||||||||||
-4 | Discount primarily relates to $115 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During each of the three months ended September 30, 2014 and 2013, $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013, respectively, $6 million and $5 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. | |||||||||||||||||
-5 | Discount primarily relates to $176 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During the three months ended September 30, 2014 and 2013, respectively, $3 million and $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013. respectively, $9 million and $8 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. | |||||||||||||||||
Maturities | ||||||||||||||||||
Long-term borrowings had the following maturities at the end of the current period (dollars in millions): | ||||||||||||||||||
Year | Amount | |||||||||||||||||
Due in 2014 | $ | — | ||||||||||||||||
Due in 2015 | 3,303 | |||||||||||||||||
Due in 2016 | 3,050 | |||||||||||||||||
Due in 2017 | 3,905 | |||||||||||||||||
Due in 2018 | 2,650 | |||||||||||||||||
Thereafter | 8,010 | |||||||||||||||||
Total | $ | 20,918 | ||||||||||||||||
The Company has access to committed undrawn capacity through private securitizations to support the funding of its credit card loan receivables. As of September 30, 2014, the total commitment of secured credit facilities through private providers was $7.5 billion, none of which had been used at September 30, 2014. Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers which have various expirations in 2015 and 2016. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the asset-backed commercial paper costs of each individual conduit provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity, and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | |||||||||||||||||||
Accumulated Other Comprehensive Income | ' | |||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||||||
Changes in each component of accumulated other comprehensive (loss) income ("AOCI") were as follows (dollars in millions): | ||||||||||||||||||||
Unrealized Gain (Loss) on Available-for-Sale Investment Securities, | Gain (Loss) on Cash Flow Hedges, | Foreign Currency Translation Adjustments, Net of Tax(1) | Pension and Post Retirement Plan Loss, | AOCI | ||||||||||||||||
Net of Tax | Net of Tax | Net of Tax | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Balance at June 30, 2014 | $ | 29 | $ | (1 | ) | $ | 1 | $ | (101 | ) | $ | (72 | ) | |||||||
Net change | (9 | ) | 12 | (1 | ) | — | 2 | |||||||||||||
Balance at September 30, 2014 | $ | 20 | $ | 11 | $ | — | $ | (101 | ) | $ | (70 | ) | ||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Balance at June 30, 2013 | $ | 29 | $ | 10 | $ | — | $ | (146 | ) | $ | (107 | ) | ||||||||
Net change | 4 | (7 | ) | 1 | — | (2 | ) | |||||||||||||
Balance at September 30, 2013 | $ | 33 | $ | 3 | $ | 1 | $ | (146 | ) | $ | (109 | ) | ||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Balance at December 31, 2013 | $ | 19 | $ | 13 | $ | 1 | $ | (101 | ) | $ | (68 | ) | ||||||||
Net change | 1 | (2 | ) | (1 | ) | — | (2 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 20 | $ | 11 | $ | — | $ | (101 | ) | $ | (70 | ) | ||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 71 | $ | 3 | $ | — | $ | (146 | ) | $ | (72 | ) | ||||||||
Net change | (38 | ) | — | 1 | — | (37 | ) | |||||||||||||
Balance at September 30, 2013 | $ | 33 | $ | 3 | $ | 1 | $ | (146 | ) | $ | (109 | ) | ||||||||
-1 | Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax expense/benefit and net gains/losses on foreign currency translation adjustments. | |||||||||||||||||||
The table below presents each component of other comprehensive income (loss) ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): | ||||||||||||||||||||
Before Tax | Tax Benefit (Expense) | Net of Tax | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (15 | ) | $ | 6 | $ | (9 | ) | ||||||||||||
Net change | $ | (15 | ) | $ | 6 | $ | (9 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 10 | $ | (4 | ) | $ | 6 | |||||||||||||
Amounts reclassified from AOCI | 11 | (5 | ) | 6 | ||||||||||||||||
Net change | $ | 21 | $ | (9 | ) | $ | 12 | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 7 | $ | (3 | ) | $ | 4 | |||||||||||||
Amounts reclassified from AOCI | (1 | ) | 1 | — | ||||||||||||||||
Net change | $ | 6 | $ | (2 | ) | $ | 4 | |||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (17 | ) | $ | 6 | $ | (11 | ) | ||||||||||||
Amounts reclassified from AOCI | 6 | (2 | ) | 4 | ||||||||||||||||
Net change | $ | (11 | ) | $ | 4 | $ | (7 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
The table below presents each component of OCI before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): | ||||||||||||||||||||
Before Tax | Tax (Expense) Benefit | Net of Tax | ||||||||||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 5 | $ | (2 | ) | $ | 3 | |||||||||||||
Amounts reclassified from AOCI | (4 | ) | 2 | (2 | ) | |||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (28 | ) | $ | 10 | $ | (18 | ) | ||||||||||||
Amounts reclassified from AOCI | 26 | (10 | ) | 16 | ||||||||||||||||
Net change | $ | (2 | ) | $ | — | $ | (2 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (58 | ) | $ | 22 | $ | (36 | ) | ||||||||||||
Amounts reclassified from AOCI | (3 | ) | 1 | (2 | ) | |||||||||||||||
Net change | $ | (61 | ) | $ | 23 | $ | (38 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Amounts reclassified from AOCI | 2 | (1 | ) | 1 | ||||||||||||||||
Net change | $ | 1 | $ | (1 | ) | $ | — | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Income_Taxes
Income Taxes | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Income Taxes | ' | |||||||||||||||
Income Taxes | ||||||||||||||||
The following table presents the calculation of the Company's effective income tax rate (dollars in millions, except effective income tax rate): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Income before income tax expense | $ | 1,009 | $ | 946 | $ | 3,046 | $ | 3,007 | ||||||||
Income tax expense | $ | 365 | $ | 353 | $ | 1,127 | $ | 1,139 | ||||||||
Effective income tax rate | 36.2 | % | 37.3 | % | 37 | % | 37.9 | % | ||||||||
Income tax expense increased $12 million for the three months ended September 30, 2014, as compared to the same period in 2013 due to an increase in pretax income. The effective tax rate decreased from 37.3% for the three months ended September 30, 2013 to 36.2% for the three months ended September 30, 2014 due to recognition of tax benefits attributable to prior year tax adjustments. The 2013 prior period included a one-time increase to unrecognized tax benefits. | ||||||||||||||||
Income tax expense decreased $12 million for the nine months ended September 30, 2014, as compared to the same period in 2013. The effective tax rate decreased from 37.9% for the nine months ended September 30, 2013 to 37.0% for the nine months ended September 30, 2014 due to a favorable adjustments to unrecognized tax benefits and decreases in state income tax rates as a result of the changes in state apportionment factors. | ||||||||||||||||
The Company is subject to examination by the Internal Revenue Service (“IRS”), various state and foreign tax jurisdictions. The tax years under examination vary by jurisdiction. The IRS is currently examining 2011 through 2012. | ||||||||||||||||
The Company is pursuing an administrative appeal of the IRS’s proposed assessment for the years 1999 through 2005. It is reasonably possible that a settlement of the IRS appeal for the years 1999 through 2005 and certain state audits may be made within 12 months of the reporting date. In the second quarter of 2014, the IRS issued a Notice of Proposed Adjustment for the years 2006 through June 30, 2007, which was accepted by the Company, resulting in the recognition of previously unrecognized tax benefits for those years. At this time, as a result of such settlements, the Company believes it is reasonably possible that a reduction of unrecognized tax benefits in the range of $90 million to $340 million could be recognized. The Company is also pursuing an administrative appeal of the IRS's proposed assessment for the years 2008 through 2010. | ||||||||||||||||
The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions resulting from these and subsequent years' examinations. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that could result from such examinations. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Earnings Per Share | ' | |||||||||||||||
Earnings Per Share | ||||||||||||||||
The following table presents the calculation of basic and diluted earnings per share ("EPS") (in millions, except per share amounts): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 644 | $ | 593 | $ | 1,919 | $ | 1,868 | ||||||||
Preferred stock dividends | (9 | ) | (9 | ) | (28 | ) | (28 | ) | ||||||||
Net income available to common stockholders | 635 | 584 | 1,891 | 1,840 | ||||||||||||
Income allocated to participating securities | (5 | ) | (5 | ) | (13 | ) | (14 | ) | ||||||||
Net income allocated to common stockholders | $ | 630 | $ | 579 | $ | 1,878 | $ | 1,826 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares of common stock outstanding | 460 | 482 | 466 | 489 | ||||||||||||
Effect of dilutive common stock equivalents | 1 | 2 | 1 | 2 | ||||||||||||
Weighted average shares of common stock outstanding and common stock equivalents | 461 | 484 | 467 | 491 | ||||||||||||
Basic earnings per common share | $ | 1.37 | $ | 1.2 | $ | 4.03 | $ | 3.73 | ||||||||
Diluted earnings per common share | $ | 1.37 | $ | 1.2 | $ | 4.02 | $ | 3.72 | ||||||||
Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three and nine months ended September 30, 2014 and 2013, respectively. |
Capital_Adequacy
Capital Adequacy | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Regulatory Capital Requirements [Abstract] | ' | ||||||||||||||||||
Capital Adequacy | ' | ||||||||||||||||||
Capital Adequacy | |||||||||||||||||||
The Company is subject to the capital adequacy guidelines of the Federal Reserve, and Discover Bank (the “Bank”), the Company’s main banking subsidiary, is subject to various regulatory capital requirements as administered by the Federal Deposit Insurance Corporation (the “FDIC”). Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial position and results of the Company and the Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. | |||||||||||||||||||
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (as defined in the regulations) of total risk-based capital and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. As of September 30, 2014, the Company and the Bank met all capital adequacy requirements to which they were subject. Under regulatory capital requirements, the Company and the Bank must maintain minimum levels of capital that are dependent upon the risk-weighted amount or average level of the financial institution’s assets, specifically (a) 8% to 10% of total risk-based capital to risk-weighted assets (“total risk-based capital ratio”), (b) 4% to 6% of Tier 1 capital to risk-weighted assets (“Tier 1 risk-based capital ratio”) and (c) 4% to 5% of Tier 1 capital to average assets (“Tier 1 leverage ratio”). To be categorized as “well-capitalized,” the Company and the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. As of September 30, 2014, the Company and the Bank met the requirements for well-capitalized status and there have been no conditions or events that management believes have changed the Company’s or the Bank’s category. | |||||||||||||||||||
The following table shows the actual capital amounts and ratios of the Company and the Bank and comparisons of each to the regulatory minimum and “well-capitalized” requirements (dollars in millions): | |||||||||||||||||||
Actual | Minimum Capital | Capital Requirements | |||||||||||||||||
Requirements | To Be Classified as | ||||||||||||||||||
Well-Capitalized | |||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
At September 30, 2014 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 12,494 | 17.8 | % | $ | 5,611 | ≥8.0% | $ | 7,013 | ≥10.0% | |||||||||
Discover Bank | $ | 11,044 | 15.9 | % | $ | 5,549 | ≥8.0% | $ | 6,937 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,910 | 15.6 | % | $ | 2,805 | ≥4.0% | $ | 4,208 | ≥6.0% | |||||||||
Discover Bank | $ | 9,470 | 13.7 | % | $ | 2,775 | ≥4.0% | $ | 4,162 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,910 | 13.7 | % | $ | 3,195 | ≥4.0% | $ | 3,994 | ≥5.0% | |||||||||
Discover Bank | $ | 9,470 | 12 | % | $ | 3,156 | ≥4.0% | $ | 3,945 | ≥5.0% | |||||||||
At December 31, 2013 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 11,975 | 17.4 | % | $ | 5,492 | ≥8.0% | $ | 6,865 | ≥10.0% | |||||||||
Discover Bank | $ | 10,496 | 15.5 | % | $ | 5,428 | ≥8.0% | $ | 6,785 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,409 | 15.2 | % | $ | 2,746 | ≥4.0% | $ | 4,119 | ≥6.0% | |||||||||
Discover Bank | $ | 8,941 | 13.2 | % | $ | 2,714 | ≥4.0% | $ | 4,071 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,409 | 13.4 | % | $ | 3,116 | ≥4.0% | $ | 3,895 | ≥5.0% | |||||||||
Discover Bank | $ | 8,941 | 11.6 | % | $ | 3,077 | ≥4.0% | $ | 3,847 | ≥5.0% | |||||||||
Commitments_Contingencies_and_
Commitments, Contingencies and Guarantees | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Commitments Contingencies and Guarantees [Abstract] | ' | |||||||||||||||
Commitments, Contingencies and Guarantees | ' | |||||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||||||
Lease Commitments | ||||||||||||||||
The Company leases various office space and equipment under capital and non-cancelable operating leases, which expire at various dates through 2024. At the end of the current period, future minimum payments on leases with original terms in excess of one year consist of the following (dollars in millions): | ||||||||||||||||
Capitalized | Operating | |||||||||||||||
Leases | Leases | |||||||||||||||
2014 | $ | — | $ | 4 | ||||||||||||
2015 | 1 | 16 | ||||||||||||||
2016 | — | 16 | ||||||||||||||
2017 | — | 13 | ||||||||||||||
2018 | — | 12 | ||||||||||||||
Thereafter | — | 52 | ||||||||||||||
Total minimum lease payments | 1 | $ | 113 | |||||||||||||
Less: Amount representing interest | — | |||||||||||||||
Present value of net minimum lease payments | $ | 1 | ||||||||||||||
Unused Commitments to Extend Credit | ||||||||||||||||
At September 30, 2014, the Company had unused commitments to extend credit for loans of approximately $169.1 billion. Such commitments arise primarily from agreements with customers for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions in the related agreements. These commitments, substantially all of which the Company can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness and loan qualification. | ||||||||||||||||
Securitizations Representations and Warranties | ||||||||||||||||
As part of the Company’s financing activities, the Company provides representations and warranties that certain assets pledged as collateral in secured borrowing arrangements conform to specified guidelines. Due diligence is performed by the Company which is intended to ensure that asset guideline qualifications are met. If the assets pledged as collateral do not meet certain conforming guidelines, the Company may be required to replace, repurchase or sell such assets. In its credit card securitization activities, the Company would replace nonconforming receivables through the allocation of excess seller’s interest or from additional transfers from the unrestricted pool of receivables. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors’ interests would be triggered. In its student loan securitizations, the Company would generally repurchase the loans from the trust at the outstanding principal amount plus interest. | ||||||||||||||||
The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of third-party investor interests in credit card asset-backed securities plus the principal amount of any other outstanding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company’s statement of financial condition. The Company has not recorded any incremental contingent liability associated with its secured borrowing representations and warranties. Management believes that the probability of having to replace, repurchase or sell assets pledged as collateral under secured borrowing arrangements, including an early amortization event, is low. | ||||||||||||||||
Mortgage Loans Representations and Warranties | ||||||||||||||||
The Company sells loans it originates to investors on a servicing released basis and the risk of loss or default by the borrower is generally transferred to the investor. However, the Company is required by these investors to make certain representations and warranties relating to credit information, loan documentation and collateral. These representations and warranties may extend through the contractual life of the mortgage loan. Subsequent to the sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual mortgage loans, the Company may be obligated to repurchase the respective mortgage loan or indemnify the investors for any losses from borrower defaults if such deficiency or defect cannot be cured within the specified period following discovery. The Company has established a repurchase reserve based on expected losses. At September 30, 2014, this amount was not material and was included in accrued expenses and other liabilities on the condensed consolidated statements of financial condition. The related provision was included in other income on the condensed consolidated statements of income. | ||||||||||||||||
Guarantees | ||||||||||||||||
The Company has obligations under certain guarantee arrangements, including contracts and indemnification agreements, which contingently require the Company to make payments to the guaranteed party based on changes in an underlying asset, liability or equity security of a guaranteed party, rate or index. Also included as guarantees are contracts that contingently require the Company to make payments to a guaranteed party based on another entity’s failure to perform under an agreement. The Company’s use of guarantees is disclosed below by type of guarantee. | ||||||||||||||||
Counterparty Settlement Guarantees | ||||||||||||||||
Diners Club and DFS Services LLC (on behalf of PULSE) have various counterparty exposures, which are listed below. | ||||||||||||||||
• | Merchant Guarantee. Diners Club has entered into contractual relationships with certain international merchants, which generally include travel-related businesses, for the benefit of all Diners Club licensees. The licensees hold the primary liability to settle the transactions of their customers with these merchants. However, Diners Club retains a counterparty exposure if a licensee fails to meet its financial payment obligation to one of these merchants. | |||||||||||||||
• | ATM Guarantee. PULSE entered into contractual relationships with certain international ATM acquirers in which DFS Services LLC retains counterparty exposure if an issuer fails to fulfill its settlement obligation. | |||||||||||||||
The maximum potential amount of future payments related to such contingent obligations is dependent upon the transaction volume processed between the time a counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party, which could be one month depending on the type of guarantee/counterparty. However, there is no limitation on the maximum amount the Company may be liable to pay. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether particular counterparties will fail to meet their settlement obligations. | ||||||||||||||||
While the Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), in the event that all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees, based on historical transaction volume, would be as follows (dollars in millions): | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | ||||||||||||||||
Diners Club: | ||||||||||||||||
Merchant guarantee | $ | 124 | ||||||||||||||
PULSE: | ||||||||||||||||
ATM guarantee | $ | 1 | ||||||||||||||
With regard to the counterparty settlement guarantees discussed above, the Company believes that the estimated amounts of maximum potential future payments are not representative of the Company’s actual potential loss exposure given Diners Club’s and PULSE’s insignificant historical losses from these counterparty exposures. As of September 30, 2014, the Company had not recorded any contingent liability in the condensed consolidated financial statements for these counterparty exposures, and management believes that the probability of any payments under these arrangements is low. | ||||||||||||||||
The Company also retains counterparty exposure for the obligations of Diners Club licensees that participate in the Citishare network, an electronic funds processing network. Through the Citishare network, Diners Club customers are able to access certain ATMs directly connected to the Citishare network. The Company’s maximum potential future payment under this counterparty exposure is limited to $15 million subject to annual adjustment based on actual transaction experience. However, as of September 30, 2014, the Company had not recorded any contingent liability in the condensed consolidated financial statements related to this counterparty exposure, and management believes that the probability of any payments under this arrangement is low. | ||||||||||||||||
Merchant Chargeback Guarantees | ||||||||||||||||
The Company operates the Discover Network, issues payment cards and permits third parties to issue payment cards. The Company is contingently liable for certain transactions processed on the Discover Network in the event of a dispute between the payment card customer and a merchant. The contingent liability arises if the disputed transaction involves a merchant or merchant acquirer with whom the Discover Network has a direct relationship. If a dispute is resolved in the customer’s favor, the Discover Network will credit or refund the disputed amount to the Discover Network card issuer, who in turn credits its customer’s account. The Discover Network will then charge back the disputed amount of the payment card transaction to the merchant or merchant acquirer, where permitted by the applicable agreement, to seek recovery of amounts already paid to the merchant for payment card transactions. If the Discover Network is unable to collect the amount subject to dispute from the merchant or merchant acquirer (e.g., in the event of merchant default or dissolution) or after expiration of the time period for chargebacks in the applicable agreement, the Discover Network will bear the loss for the amount credited or refunded to the customer. In most instances, a loss by the Discover Network is unlikely to arise in connection with payments on card transactions because most products or services are delivered when purchased, and credits are issued by merchants on returned items in a timely fashion, thus minimizing the likelihood of cardholder disputes with respect to amounts paid by the Discover Network. However, where the product or service is not scheduled to be provided to the customer until a later date following the purchase, the likelihood of a contingent payment obligation by the Discover Network increases. Losses related to merchant chargebacks were not material for the three and nine months ended September 30, 2014 or 2013. | ||||||||||||||||
The maximum potential amount of obligations of the Discover Network arising as a result of such contingent obligations is estimated to be the portion of the total Discover Network transaction volume processed to date for which timely and valid disputes may be raised under applicable law and relevant issuer and customer agreements. There is no limitation on the maximum amount the Company may be liable to pay to issuers. However, the Company believes that such amount is not representative of the Company’s actual potential loss exposure based on the Company’s historical experience. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether the current or cumulative transaction volumes may include or result in disputed transactions. | ||||||||||||||||
The table below summarizes certain information regarding merchant chargeback guarantees (in millions): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Aggregate sales transaction volume(1) | $ | 31,963 | $ | 30,633 | $ | 92,262 | $ | 88,073 | ||||||||
-1 | Represents period transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume. | |||||||||||||||
The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of September 30, 2014 or December 31, 2013. The Company mitigates the risk of potential loss exposure by withholding settlement from merchants, obtaining third-party guarantees, or obtaining escrow deposits or letters of credit from certain merchant acquirers or merchants that are considered higher risk due to various factors such as time delays in the delivery of products or services. | ||||||||||||||||
The table below provides information regarding settlement withholdings and escrow deposits, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company’s condensed consolidated statements of financial condition (dollars in millions): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Settlement withholdings and escrow deposits | $ | 19 | $ | 17 | ||||||||||||
Litigation_and_Regulatory_Matt
Litigation and Regulatory Matters | 9 Months Ended |
Sep. 30, 2014 | |
Loss Contingency [Abstract] | ' |
Litigation and Regulatory Matters | ' |
Litigation and Regulatory Matters | |
In the normal course of business, from time to time, the Company has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The Company contests liability and/or the amount of damages as appropriate in each pending matter. | |
The Company has historically relied on the arbitration clause in its cardmember agreements, which has in some instances limited the costs of, and the Company’s exposure to litigation, but there can be no assurance that the Company will continue to be successful in enforcing its arbitration clause in the future. Legal challenges to the enforceability of these clauses have led most card issuers, and may cause the Company, to discontinue their use. In addition, bills are periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Reform Act") authorized the Consumer Financial Protection Bureau (the "CFPB") to conduct a study on pre-dispute arbitration clauses and, based on the study, potentially limit or ban arbitration clauses. A preliminary report on arbitration agreements issued by the CFPB expressed concerns about these agreements that may signal the CFPB is contemplating taking such steps. Further, the Company is involved in pending legal actions challenging its arbitration clause. | |
The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding the Company’s business including, among other matters, consumer regulatory, accounting, tax and other operational matters, some of which may result in significant adverse judgments, settlements, fines, penalties, injunctions, decreases in regulatory ratings, customer restitution or other relief, which could materially impact the Company's financial statements, increase its cost of operations, or limit its ability to execute its business strategies and engage in certain business activities. For example, Discover Bank entered into a Consent Order with the FDIC as described more fully below. Also, the Federal Reserve notified the Company of its intention to enter into a supervisory action with the Company to require enhancements to the Company's enterprise-wide anti-money laundering and related compliance programs. In addition, as previously disclosed, the CFPB issued a Civil Investigative Demand to Discover Bank seeking documents and information regarding certain of Discover Bank’s student loan servicing practices, which could lead to a supervisory action. The Company and Discover Bank are cooperating with the Federal Reserve and the CFPB, respectively, on these matters. Supervisory actions generally can include demands for civil money penalties, changes to certain business practices and customer restitution. Supervisory actions related to anti-money laundering and related laws and regulations will limit for a period of time the Company's ability to enter into certain types of acquisitions and make certain types of investments. | |
In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal and regulatory matters when those matters present loss contingencies which are both probable and estimable. Litigation expense was not material for the three and nine months ended September 30, 2014 and 2013. | |
There may be an exposure to loss in excess of any amounts accrued. The Company believes the estimate of the aggregate range of reasonably possible losses (meaning those losses the likelihood of which is more than remote but less than likely) in excess of the amounts that the Company has accrued for legal and regulatory proceedings is up to $165 million. This estimated range of reasonably possible losses is based upon currently available information for those proceedings in which the Company is involved, takes into account the Company’s best estimate of such losses for those matters for which an estimate can be made, and does not represent the Company’s maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate. | |
The Company’s estimated range above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could be material to the Company’s condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company’s income for such period, and could adversely affect the Company’s reputation. | |
On July 5, 2012, the Antitrust Division of the United States Department of Justice (the “Division”) issued a Civil Investigative Demand (“CID”) to the Company seeking information regarding an investigation related to potential violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§1-2, by an unidentified party other than Discover. The CID seeks documents, data and narrative responses to several interrogatories and document requests, related to the debit card market. A CID is a request for information in the course of a civil investigation and does not constitute the commencement of legal proceedings. The Division is permitted by statute to issue a CID to anyone whom it believes may have information relevant to an investigation. The receipt of a CID does not presuppose that there is probable cause to believe that a violation of the antitrust laws has occurred or that a formal complaint ultimately will be filed. The Company is cooperating with the Division in connection with the CID. | |
On August 14, 2012, a purported shareholder, James Groen, filed a shareholder derivative action in the U.S. District Court for the Northern District of Illinois (Groen v. Nelms et al.) against the Company’s board of directors, certain current and former officers and directors and the Company as nominal defendant. On August 27, 2012, a second purported shareholder, the Charter Township of Clinton Police and Fire Retirement System, filed a substantially identical shareholder derivative action in the same court against the same parties (Charter Township of Clinton Police and Fire Retirement System v. Nelms et al.). On September 25, 2012, the actions were consolidated, and on February 19, 2013, the plaintiffs filed an amended consolidated complaint. The consolidated complaint asserts claims against the board of directors and certain current and former officers and directors for alleged breach of fiduciary duty, corporate waste and unjust enrichment arising out of the Company’s alleged violations of the law in connection with the marketing and sale of its protection products. The relief sought in the consolidated complaint includes changes to the Company’s corporate governance procedures; unspecified damages, injunctive relief, restitution and disgorgement from the individual defendants; and attorneys’ fees. On April 5, 2013, the defendants filed a motion to dismiss the amended consolidated complaint, and on June 5, 2013, briefing on the motion to dismiss was completed. The motion to dismiss is currently pending. | |
On June 13, 2014, Discover Bank entered into a Consent Order with the FDIC to resolve previously disclosed matters related to the FDIC’s examination of Discover Bank’s anti-money laundering and related compliance programs. In the Consent Order, Discover Bank agreed to, among other things, enhance its anti-money laundering and related compliance programs. The order does not include civil money penalties. | |
On September 2, 2014, a purported shareholder, Steamfitters Local 449 Pension Fund, filed a shareholder derivative action in the Circuit Court of the Nineteenth Judicial Circuit, Lake County, Illinois (Steamfitters Local 449 Pension Fund, derivatively on behalf of Discover Financial Services v. David W. Nelms, et al.) against the Company’s board of directors and certain current and former officers and directors of the Company. The complaint asserts claims for alleged breach of fiduciary duty, corporate waste and unjust enrichment arising out of the Company’s alleged violations of the law in connection with the marketing and sale of protection products. The relief sought in the consolidated complaint includes changes to the Company’s corporate governance procedures, unspecified damages, restitution and disgorgement from the individual defendants, and attorneys’ fees. On September 25, 2014, the court entered an order staying the case until 30 days after the U.S. District Court for the Northern District of Illinois enters an order on defendants’ motion to dismiss the amended consolidated complaint in Groen v. Nelms et al. and Charter Township of Clinton Police and Fire Retirement System v. Nelms et al. (as consolidated, the Groen and Charter Township cases are now captioned: In re Discover Financial Services Derivative Litigation). | |
On September 3, 2014, a collective action lawsuit was filed against the Company by a former employee in the U.S. District Court for the Northern District of Illinois (Pawel Holda, et al. v. Discover Financial Services). The plaintiff alleges that the Company misclassified employees as being exempt from the Fair Labor Standards Act. The plaintiff seeks to recover overtime pay on behalf of himself and other allegedly similarly situated employees together with penalties, interest and attorney's fees. The Company will seek to vigorously defend against the claims asserted in this matter. |
Fair_Value_Measurements_and_Di
Fair Value Measurements and Disclosures | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||||||
Fair Value Measurements and Disclosures | ' | ||||||||||||||||||||||||||||
Fair Value Measurements and Disclosures | |||||||||||||||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying financial instruments, which is based on whether the inputs to the valuation techniques used to measure the fair value of each financial instrument are observable or unobservable. It also requires certain disclosures about those measurements. The three level valuation hierarchy is as follows: | |||||||||||||||||||||||||||||
• | Level 1: Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. | ||||||||||||||||||||||||||||
• | Level 2: Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2. | ||||||||||||||||||||||||||||
• | Level 3: Fair values determined by Level 3 inputs are those based on unobservable inputs, and include situations where there is little, if any, market activity for the asset or liability being valued. In instances in which the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety is classified is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category. | ||||||||||||||||||||||||||||
The determination of classification of its financial instruments within the fair value hierarchy is performed at least quarterly by the Company. For transfers in and out of the levels of the fair value hierarchy, the Company discloses the fair value measurement based on the value immediately preceding the transfer. | |||||||||||||||||||||||||||||
The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange. | |||||||||||||||||||||||||||||
During the nine months ended September 30, 2014, there were no changes to the Company's valuation techniques that had, or are expected to have, a material impact on the Company's condensed consolidated financial position or results of operations. | |||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | |||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions): | |||||||||||||||||||||||||||||
Quoted Prices in Active Markets | Significant | Significant | Total | ||||||||||||||||||||||||||
for Identical | Other | Unobservable | |||||||||||||||||||||||||||
Assets | Observable | Inputs | |||||||||||||||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||||||||||||||
(Level 2) | |||||||||||||||||||||||||||||
Balance at September 30, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1,334 | $ | — | $ | — | $ | 1,334 | |||||||||||||||||||||
U.S government agency securities | 1,038 | — | — | 1,038 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,541 | — | 1,541 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 2,372 | $ | 1,541 | $ | — | $ | 3,913 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 147 | $ | 1 | $ | 148 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 6 | $ | 6 | |||||||||||||||||||||
Forward delivery contracts | — | 1 | — | 1 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 55 | — | 55 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 56 | $ | 6 | $ | 62 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 2 | $ | — | $ | 2 | |||||||||||||||||||||
Other derivative financial instruments | — | 8 | — | 8 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 10 | $ | — | $ | 10 | |||||||||||||||||||||
Balance at December 31, 2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 2,057 | $ | — | $ | — | $ | 2,057 | |||||||||||||||||||||
U.S government agency securities | 1,561 | — | — | 1,561 | |||||||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | — | 6 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,307 | — | 1,307 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 3,618 | $ | 1,313 | $ | — | $ | 4,931 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 148 | $ | — | $ | 148 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 4 | $ | 4 | |||||||||||||||||||||
Forward delivery contracts | — | 5 | — | 5 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 70 | — | 70 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 75 | $ | 4 | $ | 79 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 1 | $ | — | $ | 1 | |||||||||||||||||||||
Other derivative financial instruments | — | 6 | — | 6 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 7 | $ | — | $ | 7 | |||||||||||||||||||||
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three or nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||||||||||
Available-for-Sale Investment Securities | |||||||||||||||||||||||||||||
Investment securities classified as available-for-sale consist of U.S. Treasury and government agency securities, residential mortgage-backed securities and credit card asset-backed securities issued by other financial institutions. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury and government agency securities, are determined based on quoted market prices for the same or similar securities. The Company classifies all other available-for-sale investment securities as Level 2, the fair value estimates of which are primarily obtained from pricing services, where fair values are estimated using pricing models based on observable market inputs or recent trades of similar securities. The fair value estimates of mortgage-backed and credit card asset-backed securities are based on the best information available. This data may consist of observed market prices, broker quotes or discounted cash flow models that incorporate assumptions such as benchmark yields, issuer spreads, prepayment speeds, credit ratings and losses, the priority of which may vary based on availability of information. | |||||||||||||||||||||||||||||
The Company validates the fair value estimates provided by the pricing services primarily by comparison to valuations obtained through other pricing sources. The Company evaluates pricing variances amongst different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates. | |||||||||||||||||||||||||||||
At September 30, 2014, amounts reported in residential mortgage-backed securities reflect government-rated obligations issued by Fannie Mae, Freddie Mac and Ginnie Mae with a par value of $1.5 billion, a weighted-average coupon of 2.81% and a weighted-average remaining maturity of 4 years. | |||||||||||||||||||||||||||||
Mortgage Loans Held for Sale and Related Derivative Instruments | |||||||||||||||||||||||||||||
The Company enters into commitments with consumers to originate mortgage loans at a specified interest rate, known as interest rate lock commitments (“IRLCs”). The Company reports IRLCs as derivative instruments at fair value with changes in fair value being recorded in other income. IRLCs and mortgage loans held for sale under certain loan programs are hedged in aggregate using “to be announced mortgage-backed securities” (“TBA MBS”). IRLCs and mortgage loans held for sale under loan programs that generally have lower volume are hedged on an individual loan level using best-efforts forward delivery contracts. | |||||||||||||||||||||||||||||
Fair values for each of these instruments are determined using quantitative risk models. The Company has various monitoring processes in place to validate these valuations, including valuations of Level 3 assets. Valuation results are reviewed in comparison to expected results, recent activity and historical trends. Any significant or unusual fluctuations in value are analyzed. | |||||||||||||||||||||||||||||
• | Mortgage loans held for sale. Valuations of mortgage loans held for sale are based on the loan amount, note rate, loan program, expected sale date of the loan and, most significantly, investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. Mortgage loans held for sale are classified as Level 2 as the investor pricing tables used to value them are an observable input. Impaired mortgage loans held for sale are classified as Level 3 as loss severity is an unobservable input used in valuation. The Company recognizes interest income separately from changes in fair value. | ||||||||||||||||||||||||||||
• | Interest rate lock commitments. IRLCs for loans to be sold to investors using a mandatory or assignment of trade method derive their base value from an underlying loan type with similar characteristics using the TBA MBS market, which is actively quoted and easily validated through external sources. The data inputs used in this valuation include, but are not limited to, loan type, underlying loan amount, note rate, loan program and commitment term. IRLCs for loans to be sold to investors on a best-efforts basis derive their base value from the value of the underlying loans using investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. These valuations are adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. For all IRLCs, this base value is then adjusted for the anticipated loan funding probability, or pull through rate. The anticipated loan funding probability is an unobservable input based on historical experience, which results in classification of IRLCs as Level 3. | ||||||||||||||||||||||||||||
• | Forward delivery contracts. Under the Company's risk management policy, the Company economically hedges the changes in fair value of IRLCs and mortgage loans held for sale caused by changes in interest rates by using TBA MBS and entering into best-efforts forward delivery contracts. These hedging instruments are recorded at fair value with changes in fair value recorded in other income. TBA MBS used to hedge both IRLCs and loans held for sale are valued based primarily on observable inputs related to characteristics of the underlying MBS stratified by product, coupon and settlement date. Therefore, these derivatives are classified as Level 2. Best-efforts forward delivery contracts are valued based on investor pricing tables, which are observable inputs, stratified by product, note rate and term, adjusted for current market conditions. An anticipated loan funding probability is applied to value best-efforts contracts hedging IRLCs, which results in the classification of these contracts as Level 3. The current base loan price and, for best-efforts contracts hedging IRLCs, the anticipated loan funding probability, are the most significant assumptions affecting the value of the best-efforts contracts. The best-efforts forward delivery contracts hedging loans held for sale are classified as Level 2, so such contracts are transferred from Level 3 to Level 2 at the time the underlying loan is originated. For the purposes of the tables below, TBA MBS and best-efforts forward delivery contracts are referred to as forward delivery contracts. | ||||||||||||||||||||||||||||
Other Derivative Financial Instruments | |||||||||||||||||||||||||||||
The Company's other derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and foreign currency forward and spot rates. In determining fair values, the pricing models use widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity and the observable market-based inputs. The fair values of the interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments are based on an expectation of future interest rates derived from the observable market interest rate curves. The Company considers collateral and master netting agreements that mitigate credit exposure to counterparties in determining the counterparty credit risk valuation adjustment. The fair values of the currency instruments are valued comparing the contracted forward exchange rate pertaining to the specific contract maturities to the current market exchange rate. | |||||||||||||||||||||||||||||
The Company validates the fair value estimates of interest rate swaps primarily through comparison to the fair value estimates computed by the counterparties to each of the derivative transactions. The Company evaluates pricing variances amongst different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company performs due diligence in understanding the impact to any changes to the valuation techniques performed by proprietary pricing models prior to implementation, working closely with the third-party valuation service, and reviews the control objectives of the service at least annually. The Company corroborates the fair value of foreign exchange forward contracts through independent calculation of the fair value estimates. | |||||||||||||||||||||||||||||
Assets and Liabilities under the Fair Value Option | |||||||||||||||||||||||||||||
The Company has elected to account for mortgage loans held for sale at fair value. Electing the fair value option allows a better offset of the changes in fair values of the loans and the forward delivery contracts used to economically hedge them without the burden of complying with the requirements for hedge accounting. At September 30, 2014 and December 31, 2013, the aggregate unpaid principal balance of loans held for sale for which the fair value option had been elected was $144 million and $146 million, respectively. At September 30, 2014 and December 31, 2013, the same loans both had a fair value of $148 million. For the three and nine months ended September 30, 2014, respectively, $10 million and $13 million of losses from fair value adjustments on mortgage loans held for sale were recorded in other income on the condensed consolidated statements of income. For the three and nine months ended September 30, 2013, respectively, $6 million and $30 million of losses from fair value adjustments on mortgage loans held for sale were recorded in other income on the condensed consolidated statements of income. | |||||||||||||||||||||||||||||
Level 3 Financial Instruments Only | |||||||||||||||||||||||||||||
Changes in Level 3 Assets and Liabilities Measure at Fair Value on a Recurring Basis | |||||||||||||||||||||||||||||
The following tables provide changes in the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis (dollars in millions): | |||||||||||||||||||||||||||||
For the Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||||
Balance at June 30, 2014 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 8 | — | — | 18 | — | — | 2 | (22 | ) | $ | 6 | |||||||||||||||||
Mortgage loans held for sale | $ | — | 1 | — | — | 1 | (1 | ) | — | — | $ | 1 | |||||||||||||||||
For the Three Months Ended September 30, 2013 | |||||||||||||||||||||||||||||
Balance at June 30, 2013 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 8 | — | — | 24 | — | — | (2 | ) | (22 | ) | $ | 8 | ||||||||||||||||
Forward delivery contracts | $ | 1 | — | (1 | ) | — | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 1 | — | — | — | — | — | — | $ | 1 | ||||||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 4 | — | — | 61 | — | — | 4 | (63 | ) | $ | 6 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (1 | ) | 1 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 2 | — | — | 1 | (2 | ) | — | — | $ | 1 | |||||||||||||||||
For the Nine Months Ended September 30, 2013 | |||||||||||||||||||||||||||||
Balance at December 31, 2012 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 12 | — | — | 105 | — | — | 3 | (112 | ) | $ | 8 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (2 | ) | 2 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 3 | — | — | 1 | (2 | ) | (1 | ) | — | $ | 1 | ||||||||||||||||
Unobservable Inputs and Sensitivities | |||||||||||||||||||||||||||||
The following table presents information about significant unobservable inputs related to the Company's Level 3 financial assets and liabilities measured at fair value on a recurring and non-recurring basis at the end of the current period (dollars in millions): | |||||||||||||||||||||||||||||
Fair Value | Valuation | Significant | Ranges of Inputs | Weighted Average(1) | |||||||||||||||||||||||||
Technique | Unobservable | ||||||||||||||||||||||||||||
At September 30, 2014 | Input | Low | High | ||||||||||||||||||||||||||
Interest rate lock commitments | $ | 6 | Quantitative risk models | Loan funding probability | 13 | % | 99 | % | 57 | % | |||||||||||||||||||
Mortgage loans held for sale | $ | 1 | Market comparables | Loss severity | 17 | % | 20 | % | 19 | % | |||||||||||||||||||
-1 | Weighted averages are calculated using notional amounts for derivative instruments. | ||||||||||||||||||||||||||||
The anticipated loan funding probability represents the Company's expectation regarding the percentage of IRLCs that will ultimately be funded. Generally, an increase in the anticipated loan funding probability would result in an increase in the magnitude of fair value measurements. | |||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis | |||||||||||||||||||||||||||||
The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible assets. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets is applicable if one or more of the assets is determined to be impaired. During the three and nine months ended September 30, 2014 and 2013, the Company had no material impairments related to these assets. | |||||||||||||||||||||||||||||
Financial Instruments Measured at Other Than Fair Value | |||||||||||||||||||||||||||||
The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions): | |||||||||||||||||||||||||||||
Quoted Prices in Active Markets | Significant | Significant | Total | Carrying | |||||||||||||||||||||||||
for Identical | Other | Unobservable | Value | ||||||||||||||||||||||||||
Assets | Observable | Inputs (Level 3) | |||||||||||||||||||||||||||
(Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Balance at September 30, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 10 | — | 10 | 10 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 71 | — | 71 | 71 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 81 | $ | — | $ | 82 | $ | 82 | |||||||||||||||||||
Cash and cash equivalents | $ | 7,382 | $ | — | $ | — | $ | 7,382 | $ | 7,382 | |||||||||||||||||||
Restricted cash | $ | 103 | $ | — | $ | — | $ | 103 | $ | 103 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 66,744 | $ | 66,744 | $ | 65,574 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 602 | $ | — | $ | 602 | $ | 602 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 45,527 | $ | — | $ | 45,527 | $ | 45,382 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 139 | $ | — | $ | 139 | $ | 139 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 14,894 | $ | 1,660 | $ | 16,554 | $ | 16,276 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 5,181 | $ | 1 | $ | 5,182 | $ | 4,642 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 126 | $ | — | $ | 126 | $ | 126 | |||||||||||||||||||
Balance at December 31, 2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 14 | — | 14 | 15 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 43 | — | 43 | 44 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 57 | $ | — | $ | 58 | $ | 60 | |||||||||||||||||||
Cash and cash equivalents | $ | 6,554 | $ | — | $ | — | $ | 6,554 | $ | 6,554 | |||||||||||||||||||
Restricted cash | $ | 182 | $ | — | $ | — | $ | 182 | $ | 182 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 64,968 | $ | 64,968 | $ | 63,975 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 556 | $ | — | $ | 556 | $ | 556 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 45,231 | $ | — | $ | 45,231 | $ | 44,959 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 140 | $ | — | $ | 140 | $ | 140 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 15,312 | $ | 1,971 | $ | 17,283 | $ | 16,986 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 3,934 | $ | 1 | $ | 3,935 | $ | 3,488 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 117 | $ | — | $ | 117 | $ | 117 | |||||||||||||||||||
-1 | Net loan receivables exclude mortgage loans held for sale that are measured at fair value on a recurring basis. | ||||||||||||||||||||||||||||
The fair values of these financial assets and liabilities, which are not carried at fair value on the condensed consolidated statements of financial condition, were determined by applying the fair value provisions discussed herein. The use of different assumptions or estimation techniques may have a material effect on these estimated fair value amounts. The following describes the valuation techniques of these financial instruments measured at other than fair value. | |||||||||||||||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||||||||||||||
The carrying value of cash and cash equivalents approximates fair value due to the low level of risk these assets present to the Company as well as the relatively liquid nature of these assets, particularly given their short maturities. | |||||||||||||||||||||||||||||
Restricted Cash | |||||||||||||||||||||||||||||
The carrying value of restricted cash approximates fair value due to the low level of risk these assets present to the Company as well as the relatively liquid nature of these assets, particularly given their short maturities. | |||||||||||||||||||||||||||||
Held-to-Maturity Investment Securities | |||||||||||||||||||||||||||||
Held-to-maturity investment securities consist of residential mortgage-backed securities issued by agencies and municipal bonds. The fair value of residential mortgage-backed securities included in the held-to-maturity portfolio is estimated similarly to residential mortgage-backed securities carried at fair value on a recurring basis discussed herein. Municipal bonds are valued based on quoted market prices for the same or similar securities. | |||||||||||||||||||||||||||||
Net Loan Receivables | |||||||||||||||||||||||||||||
The Company's loan receivables are comprised of credit card and installment loans, including the PCI student loans. Fair value estimates are derived utilizing discounted cash flow analyses, the calculations of which are performed on groupings of loan receivables that are similar in terms of loan type and characteristics. Inputs to the cash flow analysis of each grouping consider recent pre-payment and interest accrual trends and leverage forecasted loss estimates. The expected future cash flows, derived through the cash flow analysis, of each grouping are discounted at rates at which similar loans within each grouping could be originated under current market conditions. Significant inputs to the fair value measurement of the loan portfolio are unobservable, and as such are classified as Level 3. | |||||||||||||||||||||||||||||
Accrued Interest Receivables | |||||||||||||||||||||||||||||
The carrying value of accrued interest receivable, which is included in other assets on the statement of financial condition, approximates fair value as it is short term in nature and is due in less than one year. | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
The carrying values of money market deposits, savings deposits and demand deposits approximate fair value due to the potentially liquid nature of these deposits. For time deposits for which readily available market rates do not exist, fair values are estimated by discounting expected future cash flows using market rates currently offered for deposits with similar remaining maturities. | |||||||||||||||||||||||||||||
Short-Term Borrowings | |||||||||||||||||||||||||||||
The carrying values of short-term borrowings approximate fair value as they are short term in nature and have maturities of less than one year. | |||||||||||||||||||||||||||||
Long-Term Borrowings - Owed to Securitization Investors | |||||||||||||||||||||||||||||
Fair values of long-term borrowings owed to credit card securitization investors are determined utilizing quoted market prices of the same transactions and, as such, are classified as Level 2. Fair values of long-term borrowings owed to student loan securitization investors are calculated by discounting cash flows using estimated assumptions including, among other things, maturity and market discount rates. A portion of the difference between the carrying value and the fair value of the long-term borrowings owed to student loan securitization investors relates to purchase accounting adjustments recorded in connection with the December 2010 purchase of SLC. Significant inputs to these fair value measurements are unobservable and, as such, are classified as Level 3. | |||||||||||||||||||||||||||||
Other Long-Term Borrowings | |||||||||||||||||||||||||||||
Fair values of other long-term borrowings, consisting of subordinated debt and unsecured debt, are determined utilizing current observable market prices for those transactions and, as such, are classified as Level 2. A portion of the difference between the carrying value and the fair value of the subordinated debt relates to the cash premiums paid in connection with the second and fourth quarter of the 2012 fiscal year debt exchanges as discussed in further detail in Note 6: Long-Term Borrowings. Fair values of other long-term borrowing for which there are no observable market transactions, namely capitalized leases, are determined by discounting cash flows of future interest accruals at market rates currently offered for borrowings with similar credit risks, remaining maturities and repricing terms. As the significant inputs to these fair value measurements are unobservable, they are classified as Level 3. | |||||||||||||||||||||||||||||
Accrued Interest Payables | |||||||||||||||||||||||||||||
The carrying value of the Company's accrued interest payable, which is included in other liabilities on the statement of financial condition, approximates fair value as it is short term in nature and is payable in less than one year. |
Derivatives_and_Hedging_Activi
Derivatives and Hedging Activities | 9 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Derivatives and Hedging Activities | ' | ||||||||||||||||||||||||||
Derivatives and Hedging Activities | |||||||||||||||||||||||||||
The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or speculative purposes. Certain derivatives used to manage the Company’s exposure to interest rate movements and other identified risks are not designated as hedges and do not qualify for hedge accounting. | |||||||||||||||||||||||||||
Derivatives may give rise to counterparty credit risk, which generally is addressed through collateral arrangements as described under the sub-heading "— Collateral Requirements and Credit-Risk Related Contingency Features." The Company enters into derivative transactions with established dealers that meet minimum credit criteria established by the Company. All counterparties must be pre-approved prior to engaging in any transaction with the Company. Counterparties are monitored on a regular basis by the Company to ensure compliance with the Company’s risk policies and limits. In determining the counterparty credit risk valuation adjustment for the fair values of derivatives, the Company considers collateral and legally enforceable master netting agreements that mitigate credit exposure related to counterparties. | |||||||||||||||||||||||||||
All derivatives are recorded in other assets at their gross positive fair values and in accrued expenses and other liabilities at their gross negative fair values. See Note 13: Fair Value Measurements and Disclosures for a description of the valuation methodologies of derivatives. Cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statement of financial condition. Collateral amounts recorded in the condensed consolidated statement of financial condition are based on the net collateral posted or held position for each applicable legal entity's master netting arrangement with each counterparty. | |||||||||||||||||||||||||||
Derivatives Designated as Hedges | |||||||||||||||||||||||||||
Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows arising from changes in interest rates, or other types of forecasted transactions, are considered cash flow hedges. Derivatives designated and qualifying as a hedge of the exposure to fluctuations in foreign exchange rates on investments in foreign entities are referred to as net investment hedges. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. | |||||||||||||||||||||||||||
Cash Flow Hedges | |||||||||||||||||||||||||||
The Company uses interest rate swaps to manage its exposure to changes in interest rates related to future cash flows resulting from interest payments on credit card securitized debt and deposits, and previously from interest receipts on credit card loan receivables. The Company's outstanding cash flow hedges are for an initial maximum period of five years for securitized debt and seven years for deposits. The Company's cash flow hedges related to credit card loan receivables were for an initial maximum period of three years, with none outstanding as of September 30, 2014. The derivatives are designated as hedges of the risk of changes in cash flows on the Company's LIBOR or Federal Funds rate-based interest payments, and qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). | |||||||||||||||||||||||||||
The effective portion of the change in the fair value of derivatives designated as cash flow hedges is recorded in other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted cash flows affect earnings. The ineffective portion of the change in fair value of the derivative, if any, is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives at September 30, 2014 will be reclassified to interest expense as interest payments are made on certain of the Company's floating rate securitized debt or deposits. During the next 12 months, the Company estimates it will reclassify $43 million of pretax losses to interest expense related to its derivatives designated as cash flow hedges. | |||||||||||||||||||||||||||
Net Investment Hedges | |||||||||||||||||||||||||||
The Company is exposed to fluctuations in foreign exchange rates on investments it holds in foreign entities with a functional currency other than the U.S. dollar. The Company uses foreign exchange forward contracts to hedge its exposure to changes in foreign exchange rates on its net investment in Diners Club Italy. Foreign exchange forward contracts utilized by the Company involve fixing the U.S. dollar-euro exchange rate for delivery of a specified amount of foreign currency on a specified date. These derivatives are designated as net investment hedges, with the effective portion of changes in the fair value of the derivatives reported in other comprehensive income as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives, if any, is recognized directly in earnings. Amounts are reclassified out of accumulated other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated. | |||||||||||||||||||||||||||
Fair Value Hedges | |||||||||||||||||||||||||||
The Company is exposed to changes in fair value of certain of its fixed rate debt obligations due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value of certain fixed rate senior notes, securitized debt and interest-bearing brokered deposits attributable to changes in LIBOR, a benchmark interest rate as defined by ASC 815. These interest rate swaps qualify as fair value hedges in accordance with ASC 815. Changes in both (i) the fair values of the derivatives and (ii) the hedged fixed rate senior notes, securitized debt and interest-bearing brokered deposits relating to the risk being hedged are recorded in interest expense. The changes generally provide substantial offset to one another, with any difference, or ineffectiveness, recorded in interest expense. Any basis differences between the fair value and the carrying amount of the hedged item at the inception of the hedging relationship are amortized to interest expense. | |||||||||||||||||||||||||||
Derivatives Not Designated as Hedges | |||||||||||||||||||||||||||
Interest Rate Swaps | |||||||||||||||||||||||||||
The Company may have, from time to time, interest rate swap agreements that are not designated as hedges. As part of its acquisition of SLC, the Company also acquired an interest rate swap related to the securitized debt assumed in the transaction. Such agreements are not speculative and are also used to manage interest rate risk but are not designated for hedge accounting. Changes in the fair value of these contracts are recorded in other income. | |||||||||||||||||||||||||||
Foreign Exchange Forward Contracts | |||||||||||||||||||||||||||
The Company has foreign exchange forward contracts that are economic hedges and are not designated as accounting hedges. The Company enters into foreign exchange forward contracts to manage foreign currency risk. Changes in the fair value of these contracts are recorded in other income. | |||||||||||||||||||||||||||
Forward Delivery Contracts | |||||||||||||||||||||||||||
The Company economically hedges the changes in fair value of IRLCs and mortgage loans held for sale caused by changes in interest rates by using TBA MBS and entering into best-efforts forward delivery commitments. These derivative instruments are recorded at fair value with changes in fair value recorded in other income. | |||||||||||||||||||||||||||
Interest Rate Lock Commitments | |||||||||||||||||||||||||||
The Company enters into commitments with consumers to originate residential mortgage loans at a specified interest rate. The Company reports IRLCs that relate to the origination of mortgage loans that will be held for sale as derivative instruments at fair value with changes in fair value recorded in other income. | |||||||||||||||||||||||||||
The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions): | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
Notional | Number of Outstanding Derivative Contracts | Derivative Assets | Derivative Liabilities | Notional | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedge | $ | 4,100 | 8 | $ | 16 | $ | 2 | $ | 2,650 | $ | 18 | $ | — | ||||||||||||||
Interest rate swaps—fair value hedge | $ | 5,507 | 175 | 39 | 6 | $ | 7,138 | 52 | 6 | ||||||||||||||||||
Foreign exchange forward contract - net investment hedge(1) | $ | 29 | 1 | — | — | $ | 35 | — | — | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Foreign exchange forward contracts(2) | $ | 49 | 8 | — | — | $ | 44 | — | — | ||||||||||||||||||
Interest rate swap(3) | $ | 387 | 1 | — | — | $ | 796 | — | — | ||||||||||||||||||
Forward delivery contracts | $ | 1,084 | 433 | 1 | 2 | $ | 693 | 5 | 1 | ||||||||||||||||||
Interest rate lock commitments(3) | $ | 407 | 1,742 | 6 | — | $ | 235 | 4 | — | ||||||||||||||||||
Total gross derivative assets / liabilities(4) | 62 | 10 | 79 | 7 | |||||||||||||||||||||||
Less: Collateral held/posted(5) | (49 | ) | (10 | ) | (61 | ) | (7 | ) | |||||||||||||||||||
Total net derivative assets / liabilities | $ | 13 | $ | — | $ | 18 | $ | — | |||||||||||||||||||
-1 | The foreign exchange forward contract has a notional amount of EUR 23 million and EUR 26 million as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-2 | The foreign exchange forward contracts have notional amounts of EUR 23 million, GBP 6 million, SGD 1 million and CHF 8 million as of September 30, 2014, and EUR 20 million, GBP 6 million, SGD 1 million and CHF 5 million as of December 31, 2013. | ||||||||||||||||||||||||||
-3 | Interest rate swaps not designated as hedges and interest rate lock commitments do not have associated master netting arrangements. | ||||||||||||||||||||||||||
-4 | In addition to the derivatives disclosed in the table, the Company had one outstanding forward contract to purchase when-issued mortgage-backed securities as part of the community reinvestment initiatives. This forward contract had a notional amount of $11 million and $40 million and immaterial fair values as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-5 | Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. | ||||||||||||||||||||||||||
The following tables summarize the impact of the derivative instruments on income and other comprehensive income, and indicates where within the consolidated financial statements such impact is reported for the period (dollars in millions): | |||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income | |||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow/net investment hedges: | |||||||||||||||||||||||||||
Total gains (losses) recognized in other comprehensive income after amounts reclassified into earnings, pre-tax | Other | $ | 23 | $ | (13 | ) | $ | — | $ | (1 | ) | ||||||||||||||||
Comprehensive | |||||||||||||||||||||||||||
Income | |||||||||||||||||||||||||||
Total gains (losses) recognized in other comprehensive income | $ | 23 | $ | (13 | ) | $ | — | $ | (1 | ) | |||||||||||||||||
Amount of Gain (Loss) Recognized in Income | |||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedges: | |||||||||||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Income | $ | — | $ | — | $ | — | $ | 4 | ||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Expense | (11 | ) | (5 | ) | (26 | ) | (6 | ) | ||||||||||||||||||
Total amount reclassified from other comprehensive income into income | (11 | ) | (5 | ) | (26 | ) | (2 | ) | |||||||||||||||||||
Interest rate swaps—fair value hedges: | |||||||||||||||||||||||||||
Interest expense—ineffectiveness | (14 | ) | 12 | (13 | ) | (38 | ) | ||||||||||||||||||||
Interest expense—other | 9 | 10 | 29 | 30 | |||||||||||||||||||||||
(Loss) gain on interest rate swaps | Interest Expense | (5 | ) | 22 | 16 | (8 | ) | ||||||||||||||||||||
Interest expense—ineffectiveness | 16 | (10 | ) | 18 | 42 | ||||||||||||||||||||||
Interest expense—other | (2 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||||||||||||||
Gain (loss) on hedged item | Interest Expense | 14 | (11 | ) | 17 | 38 | |||||||||||||||||||||
Total (losses) gains on derivatives designated as hedges recognized in income | $ | (2 | ) | $ | 6 | $ | 7 | $ | 28 | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Gain (loss) on forward contracts | Other Income | $ | 4 | $ | (2 | ) | $ | 4 | $ | (1 | ) | ||||||||||||||||
Loss on interest rate swaps | Other Income | — | — | (1 | ) | — | |||||||||||||||||||||
Gain (loss) on forward delivery contracts | Other Income | 3 | (18 | ) | (4 | ) | (3 | ) | |||||||||||||||||||
Gain on interest rate lock commitments | Other Income | 18 | 24 | 61 | 105 | ||||||||||||||||||||||
Total gains on derivatives not designated as hedges recognized in income | $ | 25 | $ | 4 | $ | 60 | $ | 101 | |||||||||||||||||||
Collateral Requirements and Credit-Risk Related Contingency Features | |||||||||||||||||||||||||||
The Company has master netting arrangements and minimum collateral posting thresholds with its counterparties for its fair value and cash flow hedge interest rate swaps, foreign exchange forward contracts and forward delivery contracts. The Company has not sought a legal opinion in relation to the enforceability of its master netting arrangements, and as such, does not report any of these positions on a net basis. Collateral is required by either the Company or its subsidiaries or the counterparty depending on the net fair value position of these derivatives held with that counterparty. The Company may also be required to post collateral with a counterparty for its fair value and cash flow hedge interest rate swaps depending on the credit rating it or Discover Bank receives from specified major credit rating agencies. Collateral receivable or payable amounts are not offset against the fair value of these derivatives, but are recorded separately in other assets or deposits. | |||||||||||||||||||||||||||
As of September 30, 2014, DFS had a right to reclaim $4 million of cash collateral that had been posted (net of amounts required to be posted by the counterparty) because the credit rating of the Company did not meet specified thresholds. At September 30, 2014, Discover Bank’s credit rating met specified thresholds set by its counterparties. However, if Discover Bank’s credit rating is reduced by one ratings notch, Discover Bank would be required to post additional collateral, which would have been $97 million as of September 30, 2014. | |||||||||||||||||||||||||||
The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. |
Segment_Disclosures
Segment Disclosures | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||
Segment Disclosures | ' | |||||||||||
Segment Disclosures | ||||||||||||
The Company’s business activities are managed in two segments: Direct Banking and Payment Services. | ||||||||||||
• | Direct Banking: The Direct Banking segment includes Discover branded credit cards issued to individuals and small businesses on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans, home equity loans, prepaid cards and other consumer lending and deposit products. The majority of Direct Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income. | |||||||||||
• | Payment Services: The Payment Services segment includes PULSE, an automated teller machine, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company’s network partners business, which includes credit, debit and prepaid cards issued on the Discover Network by third parties. This segment also includes the business operations of Diners Club Italy, which primarily consist of issuing Diners Club charge cards. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue (included in other income) from Diners Club. | |||||||||||
The business segment reporting provided to and used by the Company’s chief operating decision maker is prepared using the following principles and allocation conventions: | ||||||||||||
• | The Company aggregates operating segments when determining reporting segments. | |||||||||||
• | Corporate overhead is not allocated between segments; all corporate overhead is included in the Direct Banking segment. | |||||||||||
• | Through its operation of the Discover Network, the Direct Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments. | |||||||||||
• | The assets of the Company are not allocated among the operating segments in the information reviewed by the Company’s chief operating decision maker. | |||||||||||
• | The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources. | |||||||||||
• | Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company’s chief operating decision maker. | |||||||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 1,613 | $ | — | $ | 1,613 | ||||||
Private student loans | 80 | — | 80 | |||||||||
PCI student loans | 64 | — | 64 | |||||||||
Personal loans | 145 | — | 145 | |||||||||
Other | 24 | — | 24 | |||||||||
Total interest income | 1,926 | — | 1,926 | |||||||||
Interest expense | 288 | — | 288 | |||||||||
Net interest income | 1,638 | — | 1,638 | |||||||||
Provision for loan losses | 356 | (2 | ) | 354 | ||||||||
Other income | 475 | 77 | 552 | |||||||||
Other expense | 776 | 51 | 827 | |||||||||
Income before income tax expense | $ | 981 | $ | 28 | $ | 1,009 | ||||||
For the Three Months Ended September 30, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 1,513 | $ | — | $ | 1,513 | ||||||
Private student loans | 64 | — | 64 | |||||||||
PCI student loans | 67 | — | 67 | |||||||||
Personal loans | 122 | — | 122 | |||||||||
Other | 21 | — | 21 | |||||||||
Total interest income | 1,787 | — | 1,787 | |||||||||
Interest expense | 278 | — | 278 | |||||||||
Net interest income | 1,509 | — | 1,509 | |||||||||
Provision for loan losses | 333 | — | 333 | |||||||||
Other income | 475 | 78 | 553 | |||||||||
Other expense | 733 | 50 | 783 | |||||||||
Income before income tax expense | $ | 918 | $ | 28 | $ | 946 | ||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 4,710 | $ | — | $ | 4,710 | ||||||
Private student loans | 228 | — | 228 | |||||||||
PCI student loans | 198 | — | 198 | |||||||||
Personal loans | 415 | — | 415 | |||||||||
Other | 71 | — | 71 | |||||||||
Total interest income | 5,622 | — | 5,622 | |||||||||
Interest expense | 832 | — | 832 | |||||||||
Net interest income | 4,790 | — | 4,790 | |||||||||
Provision for loan losses | 986 | — | 986 | |||||||||
Other income | 1,414 | 236 | 1,650 | |||||||||
Other expense | 2,259 | 149 | 2,408 | |||||||||
Income before income tax expense | $ | 2,959 | $ | 87 | $ | 3,046 | ||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 4,427 | $ | — | $ | 4,427 | ||||||
Private student loans | 183 | — | 183 | |||||||||
PCI student loans | 205 | — | 205 | |||||||||
Personal loans | 334 | — | 334 | |||||||||
Other | 73 | — | 73 | |||||||||
Total interest income | 5,222 | — | 5,222 | |||||||||
Interest expense | 873 | — | 873 | |||||||||
Net interest income | 4,349 | — | 4,349 | |||||||||
Provision for loan losses | 717 | 15 | 732 | |||||||||
Other income | 1,501 | 245 | 1,746 | |||||||||
Other expense | 2,180 | 176 | 2,356 | |||||||||
Income before income tax expense | $ | 2,953 | $ | 54 | $ | 3,007 | ||||||
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
The Company has evaluated events and transactions that have occurred subsequent to September 30, 2014 and determined there were no subsequent events that would require recognition or disclosure in the consolidated financial statements. |
Background_and_Basis_of_Presen1
Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation and Significant Accounting Policies | ' |
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal, recurring nature. | |
Use of Estimates | ' |
The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. | |
Fair Value of Financial Instruments | ' |
The fair values of these financial assets and liabilities, which are not carried at fair value on the condensed consolidated statements of financial condition, were determined by applying the fair value provisions discussed herein. The use of different assumptions or estimation techniques may have a material effect on these estimated fair value amounts. The following describes the valuation techniques of these financial instruments measured at other than fair value. | |
Cash and Cash Equivalents | |
The carrying value of cash and cash equivalents approximates fair value due to the low level of risk these assets present to the Company as well as the relatively liquid nature of these assets, particularly given their short maturities. | |
Restricted Cash | |
The carrying value of restricted cash approximates fair value due to the low level of risk these assets present to the Company as well as the relatively liquid nature of these assets, particularly given their short maturities. | |
Held-to-Maturity Investment Securities | |
Held-to-maturity investment securities consist of residential mortgage-backed securities issued by agencies and municipal bonds. The fair value of residential mortgage-backed securities included in the held-to-maturity portfolio is estimated similarly to residential mortgage-backed securities carried at fair value on a recurring basis discussed herein. Municipal bonds are valued based on quoted market prices for the same or similar securities. | |
Net Loan Receivables | |
The Company's loan receivables are comprised of credit card and installment loans, including the PCI student loans. Fair value estimates are derived utilizing discounted cash flow analyses, the calculations of which are performed on groupings of loan receivables that are similar in terms of loan type and characteristics. Inputs to the cash flow analysis of each grouping consider recent pre-payment and interest accrual trends and leverage forecasted loss estimates. The expected future cash flows, derived through the cash flow analysis, of each grouping are discounted at rates at which similar loans within each grouping could be originated under current market conditions. Significant inputs to the fair value measurement of the loan portfolio are unobservable, and as such are classified as Level 3. | |
Accrued Interest Receivables | |
The carrying value of accrued interest receivable, which is included in other assets on the statement of financial condition, approximates fair value as it is short term in nature and is due in less than one year. | |
Deposits | |
The carrying values of money market deposits, savings deposits and demand deposits approximate fair value due to the potentially liquid nature of these deposits. For time deposits for which readily available market rates do not exist, fair values are estimated by discounting expected future cash flows using market rates currently offered for deposits with similar remaining maturities. | |
Short-Term Borrowings | |
The carrying values of short-term borrowings approximate fair value as they are short term in nature and have maturities of less than one year. | |
Long-Term Borrowings - Owed to Securitization Investors | |
Fair values of long-term borrowings owed to credit card securitization investors are determined utilizing quoted market prices of the same transactions and, as such, are classified as Level 2. Fair values of long-term borrowings owed to student loan securitization investors are calculated by discounting cash flows using estimated assumptions including, among other things, maturity and market discount rates. A portion of the difference between the carrying value and the fair value of the long-term borrowings owed to student loan securitization investors relates to purchase accounting adjustments recorded in connection with the December 2010 purchase of SLC. Significant inputs to these fair value measurements are unobservable and, as such, are classified as Level 3. | |
Other Long-Term Borrowings | |
Fair values of other long-term borrowings, consisting of subordinated debt and unsecured debt, are determined utilizing current observable market prices for those transactions and, as such, are classified as Level 2. A portion of the difference between the carrying value and the fair value of the subordinated debt relates to the cash premiums paid in connection with the second and fourth quarter of the 2012 fiscal year debt exchanges as discussed in further detail in Note 6: Long-Term Borrowings. Fair values of other long-term borrowing for which there are no observable market transactions, namely capitalized leases, are determined by discounting cash flows of future interest accruals at market rates currently offered for borrowings with similar credit risks, remaining maturities and repricing terms. As the significant inputs to these fair value measurements are unobservable, they are classified as Level 3. | |
Accrued Interest Payables | |
The carrying value of the Company's accrued interest payable, which is included in other liabilities on the statement of financial condition, approximates fair value as it is short term in nature and is payable in less than one year. |
Investments_Tables
Investments (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||
Schedule of Investment Securities | ' | |||||||||||||||||||
The Company’s investment securities consist of the following (dollars in millions): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
U.S. Treasury securities(1) | $ | 1,335 | $ | 2,058 | ||||||||||||||||
U.S. government agency securities | 1,038 | 1,561 | ||||||||||||||||||
States and political subdivisions of states | 10 | 15 | ||||||||||||||||||
Other securities: | ||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | ||||||||||||||||||
Residential mortgage-backed securities - Agency(2) | 1,612 | 1,351 | ||||||||||||||||||
Total other securities | 1,612 | 1,357 | ||||||||||||||||||
Total investment securities | $ | 3,995 | $ | 4,991 | ||||||||||||||||
-1 | Includes $15 million and $9 million of U.S. Treasury securities that have been pledged as swap collateral in lieu of cash as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
-2 | Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. | |||||||||||||||||||
Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value | ' | |||||||||||||||||||
The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1,318 | $ | 16 | $ | — | $ | 1,334 | ||||||||||||
U.S. government agency securities | 1,022 | 16 | — | 1,038 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,541 | 6 | (6 | ) | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 3,881 | $ | 38 | $ | (6 | ) | $ | 3,913 | |||||||||||
Held-to-Maturity Investment Securities(2) | ||||||||||||||||||||
U.S. Treasury securities(3) | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||
States and political subdivisions of states | 10 | — | — | 10 | ||||||||||||||||
Residential mortgage-backed securities - Agency(4) | 71 | — | — | 71 | ||||||||||||||||
Total held-to-maturity investment securities | $ | 82 | $ | — | $ | — | $ | 82 | ||||||||||||
At December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 2,030 | $ | 27 | $ | — | $ | 2,057 | ||||||||||||
U.S. government agency securities | 1,535 | 26 | — | 1,561 | ||||||||||||||||
Credit card asset-backed securities of other issuers | 6 | — | — | 6 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,329 | — | (22 | ) | 1,307 | |||||||||||||||
Total available-for-sale investment securities | $ | 4,900 | $ | 53 | $ | (22 | ) | $ | 4,931 | |||||||||||
Held-to-Maturity Investment Securities(2) | ||||||||||||||||||||
U.S. Treasury securities(3) | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||
States and political subdivisions of states | 15 | — | (1 | ) | 14 | |||||||||||||||
Residential mortgage-backed securities - Agency(4) | 44 | — | (1 | ) | 43 | |||||||||||||||
Total held-to-maturity investment securities | $ | 60 | $ | — | $ | (2 | ) | $ | 58 | |||||||||||
-1 | Available-for-sale investment securities are reported at fair value. | |||||||||||||||||||
-2 | Held-to-maturity investment securities are reported at amortized cost. | |||||||||||||||||||
-3 | Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. | |||||||||||||||||||
-4 | Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. | |||||||||||||||||||
Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months | ' | |||||||||||||||||||
The following table provides information about investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions): | ||||||||||||||||||||
Number of | Less than 12 months | More than 12 months | ||||||||||||||||||
Securities | ||||||||||||||||||||
in a Loss | ||||||||||||||||||||
Position | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||
Value | Losses | Value | Losses | |||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 16 | $ | 370 | $ | (1 | ) | $ | 480 | $ | (5 | ) | |||||||||
At December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 23 | $ | 1,097 | $ | (20 | ) | $ | 48 | $ | (2 | ) | |||||||||
Held-to-Maturity Investment Securities | ||||||||||||||||||||
State and political subdivisions of states | 4 | $ | 8 | $ | (1 | ) | $ | 3 | $ | — | ||||||||||
Residential mortgage-backed securities - Agency | 2 | $ | 40 | $ | (1 | ) | $ | — | $ | — | ||||||||||
Schedule of Proceeds, Recognized Gains and Losses and Net Unrealized Gains and Losses | ' | |||||||||||||||||||
The following table provides information about proceeds related to maturities and redemptions of investment securities and proceeds from sales, recognized gains and losses and net unrealized gains and losses on available-for-sale securities (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Proceeds related to maturities or redemptions of investment securities | $ | 65 | $ | 94 | $ | 184 | $ | 672 | ||||||||||||
Proceeds from the sales of available-for-sale investment securities, comprised of U.S. Treasury securities and U.S. government agency securities | $ | — | $ | — | $ | 1,220 | $ | 719 | ||||||||||||
Gains on sales of available-for-sale investment securities | $ | — | $ | — | $ | 4 | $ | 2 | ||||||||||||
Net unrealized (losses) gains recorded in other comprehensive income, before-tax | $ | (15 | ) | $ | 6 | $ | 1 | $ | (61 | ) | ||||||||||
Net unrealized (losses) gains recorded in other comprehensive income, after-tax | $ | (9 | ) | $ | 4 | $ | 1 | $ | (38 | ) | ||||||||||
Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities | ' | |||||||||||||||||||
Maturities of available-for-sale debt securities and held-to-maturity debt securities at the end of the period are provided in the table below (dollars in millions): | ||||||||||||||||||||
One Year | After One | After Five | After Ten | Total | ||||||||||||||||
or | Year | Years | Years | |||||||||||||||||
Less | Through | Through | ||||||||||||||||||
Five Years | Ten Years | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Available-for-Sale—Amortized Cost(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 567 | $ | 751 | $ | — | $ | — | $ | 1,318 | ||||||||||
U.S. government agency securities | 401 | 621 | — | — | 1,022 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 520 | 1,021 | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 968 | $ | 1,372 | $ | 520 | $ | 1,021 | $ | 3,881 | ||||||||||
Held-to-Maturity—Amortized Cost(2) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 71 | 71 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 81 | $ | 82 | ||||||||||
Available-for-Sale—Fair Values(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 571 | $ | 763 | $ | — | $ | — | $ | 1,334 | ||||||||||
U.S. government agency securities | 406 | 632 | — | — | 1,038 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 519 | 1,022 | 1,541 | |||||||||||||||
Total available-for-sale investment securities | $ | 977 | $ | 1,395 | $ | 519 | $ | 1,022 | $ | 3,913 | ||||||||||
Held-to-Maturity—Fair Values(2) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 71 | 71 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 81 | $ | 82 | ||||||||||
-1 | Available-for-sale investment securities are reported at fair value. | |||||||||||||||||||
-2 | Held-to-maturity investment securities are reported at amortized cost. |
Loan_Receivables_Tables
Loan Receivables (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | ' | |||||||||||||||||||
Schedule of Loan Receivables | ' | |||||||||||||||||||
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Mortgage loans held for sale(1) | $ | 148 | $ | 148 | ||||||||||||||||
Loan portfolio: | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | 53,503 | 52,952 | ||||||||||||||||||
Discover business card | 196 | 198 | ||||||||||||||||||
Total credit card loans | 53,699 | 53,150 | ||||||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 4,830 | 4,191 | ||||||||||||||||||
Private student loans | 4,706 | 3,969 | ||||||||||||||||||
Other | 195 | 135 | ||||||||||||||||||
Total other loans | 9,731 | 8,295 | ||||||||||||||||||
Purchased credit-impaired loans(3) | 3,788 | 4,178 | ||||||||||||||||||
Total loan portfolio | 67,218 | 65,623 | ||||||||||||||||||
Total loan receivables | 67,366 | 65,771 | ||||||||||||||||||
Allowance for loan losses | (1,644 | ) | (1,648 | ) | ||||||||||||||||
Net loan receivables | $ | 65,722 | $ | 64,123 | ||||||||||||||||
-1 | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||||||||||||||||||
-2 | Amounts include $20.2 billion underlying investors’ interest in trust debt at September 30, 2014 and December 31, 2013, and $9.3 billion and $10.9 billion in seller's interest at September 30, 2014 and December 31, 2013, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for further information. | |||||||||||||||||||
-3 | Amounts include $2.0 billion and $2.2 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2014 and December 31, 2013. See Note 4: Credit Card and Student Loan Securitization Activities. Of the remaining $1.8 billion and $2.0 billion at September 30, 2014 and December 31, 2013, respectively, that were not pledged as collateral, approximately $23 million and $22 million, respectively, represents loans eligible for reimbursement through an indemnification claim. Discover Bank must purchase such loans from the trust before a claim may be filed. | |||||||||||||||||||
Schedule of Delinquent and Non-Accruing Loans | ' | |||||||||||||||||||
Information related to the delinquent and non-accruing loans in the Company’s loan portfolio, which excludes loans held for sale, is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): | ||||||||||||||||||||
30-89 Days | 90 or | Total Past | 90 or | Total | ||||||||||||||||
Delinquent | More Days | Due | More Days | Non-accruing(1) | ||||||||||||||||
Delinquent | Delinquent | |||||||||||||||||||
and | ||||||||||||||||||||
Accruing | ||||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | $ | 479 | $ | 439 | $ | 918 | $ | 401 | $ | 164 | ||||||||||
Discover business card | 1 | 1 | 2 | 1 | 1 | |||||||||||||||
Total credit card loans | 480 | 440 | 920 | 402 | 165 | |||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans(3) | 26 | 10 | 36 | 9 | 5 | |||||||||||||||
Private student loans (excluding PCI)(4) | 61 | 24 | 85 | 24 | — | |||||||||||||||
Other | — | 2 | 2 | — | 24 | |||||||||||||||
Total other loans (excluding PCI) | 87 | 36 | 123 | 33 | 29 | |||||||||||||||
Total loan receivables (excluding PCI) | $ | 567 | $ | 476 | $ | 1,043 | $ | 435 | $ | 194 | ||||||||||
At December 31, 2013 | ||||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card(2) | $ | 464 | $ | 445 | $ | 909 | $ | 406 | $ | 154 | ||||||||||
Discover business card | 1 | 2 | 3 | 2 | 1 | |||||||||||||||
Total credit card loans | 465 | 447 | 912 | 408 | 155 | |||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans(3) | 21 | 8 | 29 | 8 | 5 | |||||||||||||||
Private student loans (excluding PCI)(4) | 48 | 18 | 66 | 18 | — | |||||||||||||||
Other | 1 | 2 | 3 | — | 40 | |||||||||||||||
Total other loans (excluding PCI) | 70 | 28 | 98 | 26 | 45 | |||||||||||||||
Total loan receivables (excluding PCI) | $ | 535 | $ | 475 | $ | 1,010 | $ | 434 | $ | 200 | ||||||||||
-1 | The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million for the three months ended September 30, 2014 and 2013 and was $20 million and $22 million for the nine months ended September 30, 2014 and 2013, respectively. The Company does not separately systematically compute the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' quarterly average balances and rates prior to non-accrual status. | |||||||||||||||||||
-2 | Consumer credit card loans that are 90 or more days delinquent and accruing interest include $40 million and $41 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
-3 | Personal loans that are 90 or more days delinquent and accruing interest include $2 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013. | |||||||||||||||||||
-4 | Private student loans that are 90 or more days delinquent and accruing interest include $4 million and $3 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||
Schedule of Net Charge-offs | ' | |||||||||||||||||||
Information related to the net charge-offs in the Company's loan portfolio, which excludes loans held for sale, is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Net | Net | Net | Net | |||||||||||||||||
Charge-offs | Charge-off | Charge-offs | Charge-off | |||||||||||||||||
Rate | Rate | |||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card | $ | 288 | 2.16 | % | $ | 257 | 2.05 | % | ||||||||||||
Discover business card | 1 | 1.82 | % | 1 | 2.12 | % | ||||||||||||||
Total credit card loans | 289 | 2.16 | % | 258 | 2.05 | % | ||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 23 | 1.92 | % | 20 | 2.01 | % | ||||||||||||||
Private student loans (excluding PCI) | 12 | 1.14 | % | 12 | 1.33 | % | ||||||||||||||
Other | — | 0.6 | % | 1 | 2.35 | % | ||||||||||||||
Total other loans (excluding PCI) | 35 | 1.5 | % | 33 | 1.65 | % | ||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 324 | 2.06 | % | $ | 291 | 2 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 324 | 1.94 | % | $ | 291 | 1.86 | % | ||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Net | Net | Net | Net | |||||||||||||||||
Charge-offs | Charge-off | Charge-offs | Charge-off | |||||||||||||||||
Rate | Rate | |||||||||||||||||||
Credit card loans: | ||||||||||||||||||||
Discover card | $ | 880 | 2.27 | % | $ | 827 | 2.25 | % | ||||||||||||
Discover business card | 3 | 1.75 | % | 4 | 2.31 | % | ||||||||||||||
Total credit card loans | 883 | 2.27 | % | 831 | 2.25 | % | ||||||||||||||
Other loans: | ||||||||||||||||||||
Personal loans | 66 | 1.98 | % | 58 | 2.18 | % | ||||||||||||||
Private student loans (excluding PCI) | 40 | 1.25 | % | 32 | 1.25 | % | ||||||||||||||
Other | 1 | 0.88 | % | 1 | 1.72 | % | ||||||||||||||
Total other loans (excluding PCI) | 107 | 1.58 | % | 91 | 1.66 | % | ||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 990 | 2.16 | % | $ | 922 | 2.17 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 990 | 2.03 | % | $ | 922 | 2.01 | % | ||||||||||||
Schedule of Credit Risk Profile by FICO Score | ' | |||||||||||||||||||
The following table provides the most recent FICO scores available for the Company’s customers as a percentage of each class of loan receivables: | ||||||||||||||||||||
Credit Risk Profile | ||||||||||||||||||||
by FICO Score | ||||||||||||||||||||
660 and | Less than 660 | |||||||||||||||||||
Above | or No Score | |||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Discover card | 83 | % | 17 | % | ||||||||||||||||
Discover business card | 92 | % | 8 | % | ||||||||||||||||
Personal loans | 97 | % | 3 | % | ||||||||||||||||
Private student loans (excluding PCI)(1) | 95 | % | 5 | % | ||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||
Discover card | 83 | % | 17 | % | ||||||||||||||||
Discover business card | 92 | % | 8 | % | ||||||||||||||||
Personal loans | 97 | % | 3 | % | ||||||||||||||||
Private student loans (excluding PCI)(1) | 95 | % | 5 | % | ||||||||||||||||
-1 | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." | |||||||||||||||||||
Schedule of Changes in the Allowance for Loan Losses | ' | |||||||||||||||||||
The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,359 | $ | 109 | $ | 128 | $ | 18 | $ | 1,614 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 318 | 22 | 16 | (2 | ) | 354 | ||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (400 | ) | (26 | ) | (14 | ) | — | (440 | ) | |||||||||||
Recoveries | 111 | 3 | 2 | — | 116 | |||||||||||||||
Net charge-offs | (289 | ) | (23 | ) | (12 | ) | — | (324 | ) | |||||||||||
Balance at end of period | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,360 | $ | 98 | $ | 82 | $ | 16 | $ | 1,556 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 291 | 28 | 14 | — | 333 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (381 | ) | (21 | ) | (13 | ) | (1 | ) | (416 | ) | ||||||||||
Recoveries | 123 | 1 | 1 | — | 125 | |||||||||||||||
Net charge-offs | (258 | ) | (20 | ) | (12 | ) | (1 | ) | (291 | ) | ||||||||||
Balance at end of period | $ | 1,393 | $ | 106 | $ | 84 | $ | 15 | $ | 1,598 | ||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 865 | 62 | 59 | — | 986 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (1,223 | ) | (74 | ) | (44 | ) | (1 | ) | (1,342 | ) | ||||||||||
Recoveries | 340 | 8 | 4 | — | 352 | |||||||||||||||
Net charge-offs | (883 | ) | (66 | ) | (40 | ) | (1 | ) | (990 | ) | ||||||||||
Balance at end of period | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Credit Card | Personal Loans | Student Loans | Other | Total | ||||||||||||||||
Balance at beginning of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||
Additions: | ||||||||||||||||||||
Provision for loan losses | 611 | 65 | 41 | 15 | 732 | |||||||||||||||
Deductions: | ||||||||||||||||||||
Charge-offs | (1,220 | ) | (63 | ) | (34 | ) | (1 | ) | (1,318 | ) | ||||||||||
Recoveries | 389 | 5 | 2 | — | 396 | |||||||||||||||
Net charge-offs | (831 | ) | (58 | ) | (32 | ) | (1 | ) | (922 | ) | ||||||||||
Balance at end of period | $ | 1,393 | $ | 106 | $ | 84 | $ | 15 | $ | 1,598 | ||||||||||
Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables | ' | |||||||||||||||||||
Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the table above. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ | 69 | $ | 66 | $ | 211 | $ | 213 | ||||||||||||
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ | 16 | $ | 14 | $ | 50 | $ | 44 | ||||||||||||
Schedule of Allowance for Loan Losses and Recorded Investment in its Loan Portfolio by Impairment Methodology | ' | |||||||||||||||||||
The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio (which excludes loans held for sale) by impairment methodology (dollars in millions): | ||||||||||||||||||||
Credit Card | Personal | Student | Other | Total | ||||||||||||||||
Loans | Loans | Loans | ||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,228 | $ | 103 | $ | 94 | $ | 2 | $ | 1,427 | ||||||||||
Evaluated for impairment in accordance with | 160 | 5 | 10 | 14 | 189 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||
Total allowance for loan losses | $ | 1,388 | $ | 108 | $ | 132 | $ | 16 | $ | 1,644 | ||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 52,654 | $ | 4,779 | $ | 4,672 | $ | 133 | $ | 62,238 | ||||||||||
Evaluated for impairment in accordance with | 1,045 | 51 | 34 | 62 | 1,192 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 3,788 | — | 3,788 | |||||||||||||||
Total recorded investment | $ | 53,699 | $ | 4,830 | $ | 8,494 | $ | 195 | $ | 67,218 | ||||||||||
At December 31, 2013 | ||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,218 | $ | 109 | $ | 76 | $ | 1 | $ | 1,404 | ||||||||||
Evaluated for impairment in accordance with | 188 | 3 | 9 | 16 | 216 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||
Total allowance for loan losses | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 52,027 | $ | 4,160 | $ | 3,941 | $ | 56 | $ | 60,184 | ||||||||||
Evaluated for impairment in accordance with | 1,123 | 31 | 28 | 79 | 1,261 | |||||||||||||||
ASC 310-10-35(1)(2) | ||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 4,178 | — | 4,178 | |||||||||||||||
Total recorded investment | $ | 53,150 | $ | 4,191 | $ | 8,147 | $ | 135 | $ | 65,623 | ||||||||||
-1 | Loan receivables evaluated for impairment in accordance with ASC 310-10-35 include credit card loans, personal loans and student loans collectively evaluated for impairment in accordance with ASC Subtopic 310-40, Receivables, which consists of modified loans accounted for as troubled debt restructurings. Other loans are individually evaluated for impairment and generally do not represent troubled debt restructurings. | |||||||||||||||||||
-2 | The unpaid principal balance of credit card loans was $883 million and $900 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of personal loans was $51 million and $31 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of student loans was $33 million and $26 million at September 30, 2014 and December 31, 2013, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. | |||||||||||||||||||
Schedule of Troubled Debt Restructurings | ' | |||||||||||||||||||
Additional information about modified loans classified as troubled debt restructurings is shown below (dollars in millions): | ||||||||||||||||||||
Average recorded investment in loans | Interest income recognized during period loans were impaired(1) | Gross interest income that would have been recorded with original terms(2) | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 248 | $ | 11 | $ | 1 | ||||||||||||||
Internal programs | $ | 449 | $ | 3 | $ | 15 | ||||||||||||||
External programs | $ | 353 | $ | 7 | $ | 4 | ||||||||||||||
Personal loans | $ | 49 | $ | 2 | $ | — | ||||||||||||||
Student loans(4) | $ | 33 | $ | 1 | N/A | |||||||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 263 | $ | 12 | $ | — | ||||||||||||||
Internal programs | $ | 457 | $ | 2 | $ | 17 | ||||||||||||||
External programs | $ | 447 | $ | 9 | $ | 3 | ||||||||||||||
Personal loans | $ | 27 | $ | 1 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 22 | $ | — | N/A | |||||||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 251 | $ | 34 | $ | 3 | ||||||||||||||
Internal programs | $ | 452 | $ | 9 | $ | 46 | ||||||||||||||
External programs | $ | 374 | $ | 21 | $ | 10 | ||||||||||||||
Personal loans | $ | 46 | $ | 4 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 31 | $ | 2 | N/A | |||||||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Credit card loans | ||||||||||||||||||||
Modified credit card loans(3) | $ | 271 | $ | 37 | $ | 2 | ||||||||||||||
Internal programs | $ | 473 | $ | 7 | $ | 50 | ||||||||||||||
External programs | $ | 477 | $ | 28 | $ | 8 | ||||||||||||||
Personal loans | $ | 24 | $ | 2 | $ | 1 | ||||||||||||||
Student loans(4) | $ | 20 | $ | 1 | N/A | |||||||||||||||
-1 | The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average interest rate to the average loans in the various modification programs. | |||||||||||||||||||
-2 | The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. | |||||||||||||||||||
-3 | This balance is considered impaired, but is excluded from the internal and external program amounts reflected in this table. Represents credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. | |||||||||||||||||||
-4 | Student loan customers who have been granted a forbearance are not given interest rate reductions. | |||||||||||||||||||
Schedule of Loans That Entered a Modification Program During the Period | ' | |||||||||||||||||||
The following table provides information on loans that entered a loan modification program during each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs | 12,115 | $ | 80 | 10,671 | $ | 67 | ||||||||||||||
External programs | 8,203 | $ | 42 | 8,665 | $ | 47 | ||||||||||||||
Personal loans | 980 | $ | 12 | 665 | $ | 8 | ||||||||||||||
Student loans | 393 | $ | 6 | 292 | $ | 5 | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs | 35,199 | $ | 232 | 30,149 | $ | 190 | ||||||||||||||
External programs | 24,458 | $ | 128 | 26,652 | $ | 144 | ||||||||||||||
Personal loans | 2,512 | $ | 30 | 1,618 | $ | 20 | ||||||||||||||
Student loans | 1,045 | $ | 15 | 590 | $ | 12 | ||||||||||||||
Schedule of Troubled Debt Restructurings That Subsequently Defaulted | ' | |||||||||||||||||||
The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a troubled debt restructuring during the 15 months preceding the end of each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs(1)(2) | 2,488 | $ | 15 | 1,778 | $ | 11 | ||||||||||||||
External programs(1)(2) | 1,874 | $ | 8 | 2,178 | $ | 9 | ||||||||||||||
Personal loans(2) | 118 | $ | 2 | 74 | $ | 1 | ||||||||||||||
Student loans(3) | 286 | $ | 4 | 214 | $ | 4 | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||
Credit card: | ||||||||||||||||||||
Internal programs(1)(2) | 7,282 | $ | 44 | 7,170 | $ | 45 | ||||||||||||||
External programs(1)(2) | 5,440 | $ | 23 | 6,399 | $ | 27 | ||||||||||||||
Personal loans(2) | 321 | $ | 4 | 159 | $ | 2 | ||||||||||||||
Student loans(3) | 820 | $ | 12 | 405 | $ | 9 | ||||||||||||||
-1 | The outstanding balance upon default is the loan balance at the end of the month prior to default. Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain revoked in most cases. | |||||||||||||||||||
-2 | A customer defaults from a modification program after two consecutive missed payments. | |||||||||||||||||||
-3 | Student loan defaults have been defined as loans that are 60 or more days delinquent. | |||||||||||||||||||
Schedule of Changes in Accretable Yield for the Acquired Loans | ' | |||||||||||||||||||
The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Balance at beginning of period | $ | 1,450 | $ | 1,952 | $ | 1,580 | $ | 2,072 | ||||||||||||
Accretion into interest income | (64 | ) | (66 | ) | (198 | ) | (205 | ) | ||||||||||||
Other changes in expected cash flows | — | (1 | ) | 4 | 18 | |||||||||||||||
Balance at end of period | $ | 1,386 | $ | 1,885 | $ | 1,386 | $ | 1,885 | ||||||||||||
Schedule of Initial Unpaid Principal Balance of Mortgage Loans Sold by Type | ' | |||||||||||||||||||
The following table provides a summary of the initial unpaid principal balance of mortgage loans sold during each period, by type of loan (dollars in millions): | ||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 704 | 90.03 | % | $ | 705 | 77.64 | % | ||||||||||||
FHA(2) | 64 | 8.18 | 202 | 22.25 | ||||||||||||||||
Jumbo(3) | 11 | 1.41 | 1 | 0.11 | ||||||||||||||||
VA(4) | 3 | 0.38 | — | — | ||||||||||||||||
Total | $ | 782 | 100 | % | $ | 908 | 100 | % | ||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 1,723 | 90.16 | % | $ | 2,208 | 64.5 | % | ||||||||||||
FHA(2) | 161 | 8.42 | 1,214 | 35.47 | ||||||||||||||||
Jumbo(3) | 24 | 1.26 | 1 | 0.03 | ||||||||||||||||
VA(4) | 3 | 0.16 | — | — | ||||||||||||||||
Total | $ | 1,911 | 100 | % | $ | 3,423 | 100 | % | ||||||||||||
-1 | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||||||||||||||||||
-2 | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||||||||||||||||||
-3 | Jumbo loans are loans with an initial amount larger than the limits set by a Government Sponsored Enterprise. | |||||||||||||||||||
-4 | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. | |||||||||||||||||||
Schedule of Mortgage Loans Held for Sale | ' | |||||||||||||||||||
The following table represents the loans held for sale by type of loan (dollars in millions): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||
Conforming(1) | $ | 129 | 87.16 | % | $ | 136 | 91.89 | % | ||||||||||||
FHA(2) | 15 | 10.14 | 11 | 7.43 | ||||||||||||||||
Jumbo(3) | 2 | 1.35 | 1 | 0.68 | ||||||||||||||||
VA(4) | 2 | 1.35 | — | — | ||||||||||||||||
Total | $ | 148 | 100 | % | $ | 148 | 100 | % | ||||||||||||
-1 | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||||||||||||||||||
-2 | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||||||||||||||||||
-3 | Jumbo loans are loans with an initial loan amount larger than the limits set by a Government Sponsored Enterprise. | |||||||||||||||||||
-4 | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. |
Credit_Card_and_Student_Loan_S1
Credit Card and Student Loan Securitization Activities (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Variable Interest Entities Disclosure [Abstract] | ' | |||||||||
Schedule Of Restricted Credit Card Securitized Assets [Text Block] | ' | |||||||||
The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statement of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Cash collateral accounts | $ | — | $ | 59 | ||||||
Collections and interest funding accounts | 15 | 31 | ||||||||
Restricted cash | 15 | 90 | ||||||||
Investors’ interests held by third-party investors | 14,750 | 15,190 | ||||||||
Investors’ interests held by wholly-owned subsidiaries of Discover Bank | 5,466 | 5,024 | ||||||||
Seller’s interest | 9,289 | 10,898 | ||||||||
Loan receivables(1) | 29,505 | 31,112 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (772 | ) | (833 | ) | ||||||
Net loan receivables | 28,733 | 30,279 | ||||||||
Other | 37 | 34 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 28,785 | $ | 30,403 | ||||||
-1 | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. | |||||||||
Schedule of Investors' Interests and Related Excess Spreads | ' | |||||||||
The table below provides information concerning investors’ interests and related excess spread at the end of the current period (dollars in millions): | ||||||||||
At September 30, 2014 | Investors’ | # of Series | 3-Month Rolling | |||||||
Interests(1) | Outstanding | Average Excess | ||||||||
Spread | ||||||||||
Discover Card Execution Note Trust (DiscoverSeries notes) | $ | 20,216 | 37 | 13.63 | % | |||||
-1 | Investors’ interests include third-party interests and subordinated interests held by wholly-owned subsidiaries of Discover Bank. | |||||||||
Schedule Of Restricted Student Loan Securitized Assets [Text Block] | ' | |||||||||
The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statement of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Restricted cash | $ | 85 | $ | 89 | ||||||
Student loan receivables(1) | 2,038 | 2,248 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (28 | ) | (28 | ) | ||||||
Net student loan receivables | 2,010 | 2,220 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 2,095 | $ | 2,309 | ||||||
-1 | The Company maintains its allowance for loan losses on purchased credit-impaired loans sufficient to absorb probable decreases in cash flows that were previously expected. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company's balance sheet in accordance with GAAP. |
Deposits_Tables
Deposits (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Deposits [Abstract] | ' | |||||||
Schedule of Interest Bearing Deposit Accounts | ' | |||||||
A summary of interest-bearing deposit accounts is as follows (dollars in millions): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Certificates of deposit in amounts less than $100,000(1) | $ | 20,908 | $ | 21,211 | ||||
Certificates of deposit from amounts of $100,000(1) to less than $250,000(1) | 4,605 | 4,860 | ||||||
Certificates of deposit in amounts of $250,000(1) or greater | 1,174 | 1,180 | ||||||
Savings deposits, including money market deposit accounts | 18,490 | 17,515 | ||||||
Total interest-bearing deposits | $ | 45,177 | $ | 44,766 | ||||
Average annual interest rate | 1.3 | % | 1.57 | % | ||||
-1 | $100,000 represents the basic insurance amount previously covered by the FDIC. Effective July 21, 2010, the basic insurance per depositor was permanently increased to $250,000. | |||||||
Schedule of Certificates of Deposit Maturities | ' | |||||||
At the end of the current period, certificates of deposit maturing over the remainder of this year, over each of the next four years, and thereafter were as follows (dollars in millions): | ||||||||
Year | Amount | |||||||
2014 | $ | 3,110 | ||||||
2015 | $ | 10,714 | ||||||
2016 | $ | 5,068 | ||||||
2017 | $ | 3,110 | ||||||
2018 | $ | 1,958 | ||||||
Thereafter | $ | 2,727 | ||||||
LongTerm_Borrowings_Tables
Long-Term Borrowings (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||
Schedule of Long-Term Borrowings and Weighted Average Interest Rates | ' | |||||||||||||||||
Long-term borrowings consist of borrowings and capital leases having original maturities of one year or more. The following table provides a summary of the Company’s long-term borrowings and weighted average interest rates on balances outstanding at period end (dollars in millions): | ||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||
Outstanding | Interest | Outstanding | Interest | Interest Rate Terms | Maturity | |||||||||||||
Rate | Rate | |||||||||||||||||
Securitized Debt | ||||||||||||||||||
Fixed rate asset-backed securities | ||||||||||||||||||
Principal value | $ | 7,749 | 1.82 | % | $ | 5,549 | 1.86 | % | Various fixed rates | Various | ||||||||
(including discount of $1 at September 30, 2014 and December 31, 2013) | February 2015 - July 2019 | |||||||||||||||||
Fair value adjustment(1) | 3 | 5 | ||||||||||||||||
Book value | 7,752 | 5,554 | ||||||||||||||||
Floating rate asset-backed securities | 6,150 | 0.51 | % | 9,140 | 0.46 | % | 1-month LIBOR(2) + | Various | ||||||||||
18 to 58 basis points | July 2015 - January 2019 | |||||||||||||||||
Floating rate asset-backed securities | 850 | 0.43 | % | — | — | % | 3-month LIBOR(2) + | Feb-17 | ||||||||||
20 basis points | ||||||||||||||||||
Floating rate asset-backed securities | — | — | % | 500 | 0.44 | % | Commercial Paper | Mar-14 | ||||||||||
rate + 30 basis points | ||||||||||||||||||
Total Discover Card Master Trust I and Discover Card Execution Note Trust | 14,752 | 15,194 | ||||||||||||||||
Floating rate asset-backed securities | 869 | 0.48 | % | 1,005 | 0.48 | % | 3-month LIBOR(2) + | Various | ||||||||||
(including discount of $97 and $129 at September 30, 2014 and December 31, 2013) | 12 to 45 basis points | January 2019 - July 2036 (3) | ||||||||||||||||
Floating rate asset-backed securities | 364 | 4.25 | % | 434 | 4.25 | % | Prime rate + 100 basis points | June 2031 (3) | ||||||||||
(including discount of $2 and $3 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Floating rate asset-backed securities | 89 | 4 | % | 105 | 4 | % | Prime rate + | July 2042 (3) | ||||||||||
(including premium of $1 at September 30, 2014 and December 31, 2013) | 75 basis points | |||||||||||||||||
Floating rate asset-backed securities | 202 | 3.65 | % | 248 | 3.66 | % | 1-month LIBOR(2) + | July 2042 (3) | ||||||||||
(including premium of $2 and $3 at September 30, 2014 and December 31, 2013) | 350 basis points | |||||||||||||||||
Total SLC Private Student Loan Trusts | 1,524 | 1,792 | ||||||||||||||||
Total Long-Term Borrowings—owed to securitization investors | 16,276 | 16,986 | ||||||||||||||||
Discover Financial Services (Parent Company) | ||||||||||||||||||
Fixed rate senior notes due 2017 | ||||||||||||||||||
Principal value | 400 | 6.45 | % | 400 | 6.45 | % | Fixed | Jun-17 | ||||||||||
Fair value adjustment(1) | 6 | 13 | ||||||||||||||||
Book value | 406 | 413 | ||||||||||||||||
Fixed rate senior notes due 2019 | 78 | 10.25 | % | 78 | 10.25 | % | Fixed | Jul-19 | ||||||||||
Fixed rate senior notes due 2022 | 224 | 5.2 | % | 219 | 5.2 | % | Fixed | Apr-22 | ||||||||||
(including discount of $98 and $103 at September 30, 2014 and December 31, 2013)(4) | ||||||||||||||||||
Fixed rate senior notes due 2022 | 343 | 3.85 | % | 335 | 3.85 | % | Fixed | Nov-22 | ||||||||||
(including discount of $157 and $165 at September 30, 2014 and December 31, 2013)(5) | ||||||||||||||||||
Discover Bank | ||||||||||||||||||
Senior bank notes due 2018 | 750 | 2 | % | 750 | 2 | % | Fixed | Feb-18 | ||||||||||
Senior bank notes due 2021 | 748 | 3.2 | % | — | — | % | Fixed | Aug-21 | ||||||||||
(including discount of $2 at September 30, 2014) | ||||||||||||||||||
Senior bank notes due 2023 | 995 | 4.2 | % | 994 | 4.2 | % | Fixed | Aug-23 | ||||||||||
(including discount of $5 and $6 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Senior bank notes due 2026 | 399 | 4.25 | % | — | — | % | Fixed | Mar-26 | ||||||||||
(including discount of $1 at September 30, 2014) | ||||||||||||||||||
Subordinated bank notes due 2019 | 200 | 8.7 | % | 200 | 8.7 | % | Fixed | November 2019 | ||||||||||
Subordinated bank notes due 2020 | 498 | 7 | % | 498 | 7 | % | Fixed | April 2020 | ||||||||||
(including discount of $2 at September 30, 2014 and December 31, 2013) | ||||||||||||||||||
Capital lease obligations | 1 | 4.51 | % | 1 | 4.51 | % | Fixed | Apr-16 | ||||||||||
Total long-term borrowings | $ | 20,918 | $ | 20,474 | ||||||||||||||
-1 | The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in LIBOR. See Note 14: Derivatives and Hedging Activities. | |||||||||||||||||
-2 | London Interbank Offered Rate (“LIBOR”). | |||||||||||||||||
-3 | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The dates shown represent final maturity dates. | |||||||||||||||||
-4 | Discount primarily relates to $115 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During each of the three months ended September 30, 2014 and 2013, $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013, respectively, $6 million and $5 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. | |||||||||||||||||
-5 | Discount primarily relates to $176 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During the three months ended September 30, 2014 and 2013, respectively, $3 million and $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013. respectively, $9 million and $8 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. | |||||||||||||||||
Schedule of Long-Term Borrowings Maturities | ' | |||||||||||||||||
Long-term borrowings had the following maturities at the end of the current period (dollars in millions): | ||||||||||||||||||
Year | Amount | |||||||||||||||||
Due in 2014 | $ | — | ||||||||||||||||
Due in 2015 | 3,303 | |||||||||||||||||
Due in 2016 | 3,050 | |||||||||||||||||
Due in 2017 | 3,905 | |||||||||||||||||
Due in 2018 | 2,650 | |||||||||||||||||
Thereafter | 8,010 | |||||||||||||||||
Total | $ | 20,918 | ||||||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | |||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||||||
Changes in each component of accumulated other comprehensive (loss) income ("AOCI") were as follows (dollars in millions): | ||||||||||||||||||||
Unrealized Gain (Loss) on Available-for-Sale Investment Securities, | Gain (Loss) on Cash Flow Hedges, | Foreign Currency Translation Adjustments, Net of Tax(1) | Pension and Post Retirement Plan Loss, | AOCI | ||||||||||||||||
Net of Tax | Net of Tax | Net of Tax | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Balance at June 30, 2014 | $ | 29 | $ | (1 | ) | $ | 1 | $ | (101 | ) | $ | (72 | ) | |||||||
Net change | (9 | ) | 12 | (1 | ) | — | 2 | |||||||||||||
Balance at September 30, 2014 | $ | 20 | $ | 11 | $ | — | $ | (101 | ) | $ | (70 | ) | ||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Balance at June 30, 2013 | $ | 29 | $ | 10 | $ | — | $ | (146 | ) | $ | (107 | ) | ||||||||
Net change | 4 | (7 | ) | 1 | — | (2 | ) | |||||||||||||
Balance at September 30, 2013 | $ | 33 | $ | 3 | $ | 1 | $ | (146 | ) | $ | (109 | ) | ||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Balance at December 31, 2013 | $ | 19 | $ | 13 | $ | 1 | $ | (101 | ) | $ | (68 | ) | ||||||||
Net change | 1 | (2 | ) | (1 | ) | — | (2 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 20 | $ | 11 | $ | — | $ | (101 | ) | $ | (70 | ) | ||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 71 | $ | 3 | $ | — | $ | (146 | ) | $ | (72 | ) | ||||||||
Net change | (38 | ) | — | 1 | — | (37 | ) | |||||||||||||
Balance at September 30, 2013 | $ | 33 | $ | 3 | $ | 1 | $ | (146 | ) | $ | (109 | ) | ||||||||
-1 | Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax expense/benefit and net gains/losses on foreign currency translation adjustments. | |||||||||||||||||||
Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI | ' | |||||||||||||||||||
The table below presents each component of other comprehensive income (loss) ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): | ||||||||||||||||||||
Before Tax | Tax Benefit (Expense) | Net of Tax | ||||||||||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (15 | ) | $ | 6 | $ | (9 | ) | ||||||||||||
Net change | $ | (15 | ) | $ | 6 | $ | (9 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 10 | $ | (4 | ) | $ | 6 | |||||||||||||
Amounts reclassified from AOCI | 11 | (5 | ) | 6 | ||||||||||||||||
Net change | $ | 21 | $ | (9 | ) | $ | 12 | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 7 | $ | (3 | ) | $ | 4 | |||||||||||||
Amounts reclassified from AOCI | (1 | ) | 1 | — | ||||||||||||||||
Net change | $ | 6 | $ | (2 | ) | $ | 4 | |||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (17 | ) | $ | 6 | $ | (11 | ) | ||||||||||||
Amounts reclassified from AOCI | 6 | (2 | ) | 4 | ||||||||||||||||
Net change | $ | (11 | ) | $ | 4 | $ | (7 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
The table below presents each component of OCI before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): | ||||||||||||||||||||
Before Tax | Tax (Expense) Benefit | Net of Tax | ||||||||||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 5 | $ | (2 | ) | $ | 3 | |||||||||||||
Amounts reclassified from AOCI | (4 | ) | 2 | (2 | ) | |||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (28 | ) | $ | 10 | $ | (18 | ) | ||||||||||||
Amounts reclassified from AOCI | 26 | (10 | ) | 16 | ||||||||||||||||
Net change | $ | (2 | ) | $ | — | $ | (2 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (58 | ) | $ | 22 | $ | (36 | ) | ||||||||||||
Amounts reclassified from AOCI | (3 | ) | 1 | (2 | ) | |||||||||||||||
Net change | $ | (61 | ) | $ | 23 | $ | (38 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Amounts reclassified from AOCI | 2 | (1 | ) | 1 | ||||||||||||||||
Net change | $ | 1 | $ | (1 | ) | $ | — | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Schedule of Reconciliation of the Company's Effective Tax Rate to the U.S. Federal Statutory Income Tax Rate | ' | |||||||||||||||
The following table presents the calculation of the Company's effective income tax rate (dollars in millions, except effective income tax rate): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Income before income tax expense | $ | 1,009 | $ | 946 | $ | 3,046 | $ | 3,007 | ||||||||
Income tax expense | $ | 365 | $ | 353 | $ | 1,127 | $ | 1,139 | ||||||||
Effective income tax rate | 36.2 | % | 37.3 | % | 37 | % | 37.9 | % | ||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Schedule of Basic and Diluted EPS | ' | |||||||||||||||
The following table presents the calculation of basic and diluted earnings per share ("EPS") (in millions, except per share amounts): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 644 | $ | 593 | $ | 1,919 | $ | 1,868 | ||||||||
Preferred stock dividends | (9 | ) | (9 | ) | (28 | ) | (28 | ) | ||||||||
Net income available to common stockholders | 635 | 584 | 1,891 | 1,840 | ||||||||||||
Income allocated to participating securities | (5 | ) | (5 | ) | (13 | ) | (14 | ) | ||||||||
Net income allocated to common stockholders | $ | 630 | $ | 579 | $ | 1,878 | $ | 1,826 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares of common stock outstanding | 460 | 482 | 466 | 489 | ||||||||||||
Effect of dilutive common stock equivalents | 1 | 2 | 1 | 2 | ||||||||||||
Weighted average shares of common stock outstanding and common stock equivalents | 461 | 484 | 467 | 491 | ||||||||||||
Basic earnings per common share | $ | 1.37 | $ | 1.2 | $ | 4.03 | $ | 3.73 | ||||||||
Diluted earnings per common share | $ | 1.37 | $ | 1.2 | $ | 4.02 | $ | 3.72 | ||||||||
Capital_Adequacy_Tables
Capital Adequacy (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Regulatory Capital Requirements [Abstract] | ' | ||||||||||||||||||
Schedule of Minimum and Well-Capitalized Requirements | ' | ||||||||||||||||||
The following table shows the actual capital amounts and ratios of the Company and the Bank and comparisons of each to the regulatory minimum and “well-capitalized” requirements (dollars in millions): | |||||||||||||||||||
Actual | Minimum Capital | Capital Requirements | |||||||||||||||||
Requirements | To Be Classified as | ||||||||||||||||||
Well-Capitalized | |||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
At September 30, 2014 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 12,494 | 17.8 | % | $ | 5,611 | ≥8.0% | $ | 7,013 | ≥10.0% | |||||||||
Discover Bank | $ | 11,044 | 15.9 | % | $ | 5,549 | ≥8.0% | $ | 6,937 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,910 | 15.6 | % | $ | 2,805 | ≥4.0% | $ | 4,208 | ≥6.0% | |||||||||
Discover Bank | $ | 9,470 | 13.7 | % | $ | 2,775 | ≥4.0% | $ | 4,162 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,910 | 13.7 | % | $ | 3,195 | ≥4.0% | $ | 3,994 | ≥5.0% | |||||||||
Discover Bank | $ | 9,470 | 12 | % | $ | 3,156 | ≥4.0% | $ | 3,945 | ≥5.0% | |||||||||
At December 31, 2013 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 11,975 | 17.4 | % | $ | 5,492 | ≥8.0% | $ | 6,865 | ≥10.0% | |||||||||
Discover Bank | $ | 10,496 | 15.5 | % | $ | 5,428 | ≥8.0% | $ | 6,785 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,409 | 15.2 | % | $ | 2,746 | ≥4.0% | $ | 4,119 | ≥6.0% | |||||||||
Discover Bank | $ | 8,941 | 13.2 | % | $ | 2,714 | ≥4.0% | $ | 4,071 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,409 | 13.4 | % | $ | 3,116 | ≥4.0% | $ | 3,895 | ≥5.0% | |||||||||
Discover Bank | $ | 8,941 | 11.6 | % | $ | 3,077 | ≥4.0% | $ | 3,847 | ≥5.0% | |||||||||
Commitments_Contingencies_and_1
Commitments, Contingencies and Guarantees (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Guarantor Obligations [Line Items] | ' | |||||||||||||||
Schedule of Lease Commitments | ' | |||||||||||||||
The Company leases various office space and equipment under capital and non-cancelable operating leases, which expire at various dates through 2024. At the end of the current period, future minimum payments on leases with original terms in excess of one year consist of the following (dollars in millions): | ||||||||||||||||
Capitalized | Operating | |||||||||||||||
Leases | Leases | |||||||||||||||
2014 | $ | — | $ | 4 | ||||||||||||
2015 | 1 | 16 | ||||||||||||||
2016 | — | 16 | ||||||||||||||
2017 | — | 13 | ||||||||||||||
2018 | — | 12 | ||||||||||||||
Thereafter | — | 52 | ||||||||||||||
Total minimum lease payments | 1 | $ | 113 | |||||||||||||
Less: Amount representing interest | — | |||||||||||||||
Present value of net minimum lease payments | $ | 1 | ||||||||||||||
Schedule of Settlement Withholdings and Escrow Deposits | ' | |||||||||||||||
The table below provides information regarding settlement withholdings and escrow deposits, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company’s condensed consolidated statements of financial condition (dollars in millions): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Settlement withholdings and escrow deposits | $ | 19 | $ | 17 | ||||||||||||
Counterparty Settlement Guarantees [Member] | ' | |||||||||||||||
Guarantor Obligations [Line Items] | ' | |||||||||||||||
Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee | ' | |||||||||||||||
While the Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), in the event that all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees, based on historical transaction volume, would be as follows (dollars in millions): | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | ||||||||||||||||
Diners Club: | ||||||||||||||||
Merchant guarantee | $ | 124 | ||||||||||||||
PULSE: | ||||||||||||||||
ATM guarantee | $ | 1 | ||||||||||||||
Merchant Chargeback Guarantees [Member] | ' | |||||||||||||||
Guarantor Obligations [Line Items] | ' | |||||||||||||||
Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee | ' | |||||||||||||||
The table below summarizes certain information regarding merchant chargeback guarantees (in millions): | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Aggregate sales transaction volume(1) | $ | 31,963 | $ | 30,633 | $ | 92,262 | $ | 88,073 | ||||||||
-1 | Represents period transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume. |
Fair_Value_Measurements_and_Di1
Fair Value Measurements and Disclosures (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions): | |||||||||||||||||||||||||||||
Quoted Prices in Active Markets | Significant | Significant | Total | ||||||||||||||||||||||||||
for Identical | Other | Unobservable | |||||||||||||||||||||||||||
Assets | Observable | Inputs | |||||||||||||||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||||||||||||||
(Level 2) | |||||||||||||||||||||||||||||
Balance at September 30, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1,334 | $ | — | $ | — | $ | 1,334 | |||||||||||||||||||||
U.S government agency securities | 1,038 | — | — | 1,038 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,541 | — | 1,541 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 2,372 | $ | 1,541 | $ | — | $ | 3,913 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 147 | $ | 1 | $ | 148 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 6 | $ | 6 | |||||||||||||||||||||
Forward delivery contracts | — | 1 | — | 1 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 55 | — | 55 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 56 | $ | 6 | $ | 62 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 2 | $ | — | $ | 2 | |||||||||||||||||||||
Other derivative financial instruments | — | 8 | — | 8 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 10 | $ | — | $ | 10 | |||||||||||||||||||||
Balance at December 31, 2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 2,057 | $ | — | $ | — | $ | 2,057 | |||||||||||||||||||||
U.S government agency securities | 1,561 | — | — | 1,561 | |||||||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | — | 6 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,307 | — | 1,307 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 3,618 | $ | 1,313 | $ | — | $ | 4,931 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 148 | $ | — | $ | 148 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 4 | $ | 4 | |||||||||||||||||||||
Forward delivery contracts | — | 5 | — | 5 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 70 | — | 70 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 75 | $ | 4 | $ | 79 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 1 | $ | — | $ | 1 | |||||||||||||||||||||
Other derivative financial instruments | — | 6 | — | 6 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 7 | $ | — | $ | 7 | |||||||||||||||||||||
Schedule of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||||||||||||||
The following tables provide changes in the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis (dollars in millions): | |||||||||||||||||||||||||||||
For the Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||||
Balance at June 30, 2014 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 8 | — | — | 18 | — | — | 2 | (22 | ) | $ | 6 | |||||||||||||||||
Mortgage loans held for sale | $ | — | 1 | — | — | 1 | (1 | ) | — | — | $ | 1 | |||||||||||||||||
For the Three Months Ended September 30, 2013 | |||||||||||||||||||||||||||||
Balance at June 30, 2013 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 8 | — | — | 24 | — | — | (2 | ) | (22 | ) | $ | 8 | ||||||||||||||||
Forward delivery contracts | $ | 1 | — | (1 | ) | — | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 1 | — | — | — | — | — | — | $ | 1 | ||||||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 4 | — | — | 61 | — | — | 4 | (63 | ) | $ | 6 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (1 | ) | 1 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 2 | — | — | 1 | (2 | ) | — | — | $ | 1 | |||||||||||||||||
For the Nine Months Ended September 30, 2013 | |||||||||||||||||||||||||||||
Balance at December 31, 2012 | Transfers into | Transfers out of Level 3 | Total Net Gains included in Earnings | Purchases | Sales | Settlements | Transfers of IRLCs to Closed Loans | Balance at September 30, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 12 | — | — | 105 | — | — | 3 | (112 | ) | $ | 8 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (2 | ) | 2 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 3 | — | — | 1 | (2 | ) | (1 | ) | — | $ | 1 | ||||||||||||||||
Schedule of Significant Unobservable Inputs Related to Level 3 Assets and Liabilities | ' | ||||||||||||||||||||||||||||
The following table presents information about significant unobservable inputs related to the Company's Level 3 financial assets and liabilities measured at fair value on a recurring and non-recurring basis at the end of the current period (dollars in millions): | |||||||||||||||||||||||||||||
Fair Value | Valuation | Significant | Ranges of Inputs | Weighted Average(1) | |||||||||||||||||||||||||
Technique | Unobservable | ||||||||||||||||||||||||||||
At September 30, 2014 | Input | Low | High | ||||||||||||||||||||||||||
Interest rate lock commitments | $ | 6 | Quantitative risk models | Loan funding probability | 13 | % | 99 | % | 57 | % | |||||||||||||||||||
Mortgage loans held for sale | $ | 1 | Market comparables | Loss severity | 17 | % | 20 | % | 19 | % | |||||||||||||||||||
-1 | Weighted averages are calculated using notional amounts for derivative instruments. | ||||||||||||||||||||||||||||
Schedule of Financial Instruments Measured at Other Than Fair Value | ' | ||||||||||||||||||||||||||||
The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions): | |||||||||||||||||||||||||||||
Quoted Prices in Active Markets | Significant | Significant | Total | Carrying | |||||||||||||||||||||||||
for Identical | Other | Unobservable | Value | ||||||||||||||||||||||||||
Assets | Observable | Inputs (Level 3) | |||||||||||||||||||||||||||
(Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Balance at September 30, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 10 | — | 10 | 10 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 71 | — | 71 | 71 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 81 | $ | — | $ | 82 | $ | 82 | |||||||||||||||||||
Cash and cash equivalents | $ | 7,382 | $ | — | $ | — | $ | 7,382 | $ | 7,382 | |||||||||||||||||||
Restricted cash | $ | 103 | $ | — | $ | — | $ | 103 | $ | 103 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 66,744 | $ | 66,744 | $ | 65,574 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 602 | $ | — | $ | 602 | $ | 602 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 45,527 | $ | — | $ | 45,527 | $ | 45,382 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 139 | $ | — | $ | 139 | $ | 139 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 14,894 | $ | 1,660 | $ | 16,554 | $ | 16,276 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 5,181 | $ | 1 | $ | 5,182 | $ | 4,642 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 126 | $ | — | $ | 126 | $ | 126 | |||||||||||||||||||
Balance at December 31, 2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 14 | — | 14 | 15 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 43 | — | 43 | 44 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 57 | $ | — | $ | 58 | $ | 60 | |||||||||||||||||||
Cash and cash equivalents | $ | 6,554 | $ | — | $ | — | $ | 6,554 | $ | 6,554 | |||||||||||||||||||
Restricted cash | $ | 182 | $ | — | $ | — | $ | 182 | $ | 182 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 64,968 | $ | 64,968 | $ | 63,975 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 556 | $ | — | $ | 556 | $ | 556 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 45,231 | $ | — | $ | 45,231 | $ | 44,959 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 140 | $ | — | $ | 140 | $ | 140 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 15,312 | $ | 1,971 | $ | 17,283 | $ | 16,986 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 3,934 | $ | 1 | $ | 3,935 | $ | 3,488 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 117 | $ | — | $ | 117 | $ | 117 | |||||||||||||||||||
-1 | Net loan receivables exclude mortgage loans held for sale that are measured at fair value on a recurring basis. |
Derivatives_and_Hedging_Activi1
Derivatives and Hedging Activities (Tables) | 9 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances | ' | ||||||||||||||||||||||||||
The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions): | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
Notional | Number of Outstanding Derivative Contracts | Derivative Assets | Derivative Liabilities | Notional | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedge | $ | 4,100 | 8 | $ | 16 | $ | 2 | $ | 2,650 | $ | 18 | $ | — | ||||||||||||||
Interest rate swaps—fair value hedge | $ | 5,507 | 175 | 39 | 6 | $ | 7,138 | 52 | 6 | ||||||||||||||||||
Foreign exchange forward contract - net investment hedge(1) | $ | 29 | 1 | — | — | $ | 35 | — | — | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Foreign exchange forward contracts(2) | $ | 49 | 8 | — | — | $ | 44 | — | — | ||||||||||||||||||
Interest rate swap(3) | $ | 387 | 1 | — | — | $ | 796 | — | — | ||||||||||||||||||
Forward delivery contracts | $ | 1,084 | 433 | 1 | 2 | $ | 693 | 5 | 1 | ||||||||||||||||||
Interest rate lock commitments(3) | $ | 407 | 1,742 | 6 | — | $ | 235 | 4 | — | ||||||||||||||||||
Total gross derivative assets / liabilities(4) | 62 | 10 | 79 | 7 | |||||||||||||||||||||||
Less: Collateral held/posted(5) | (49 | ) | (10 | ) | (61 | ) | (7 | ) | |||||||||||||||||||
Total net derivative assets / liabilities | $ | 13 | $ | — | $ | 18 | $ | — | |||||||||||||||||||
-1 | The foreign exchange forward contract has a notional amount of EUR 23 million and EUR 26 million as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-2 | The foreign exchange forward contracts have notional amounts of EUR 23 million, GBP 6 million, SGD 1 million and CHF 8 million as of September 30, 2014, and EUR 20 million, GBP 6 million, SGD 1 million and CHF 5 million as of December 31, 2013. | ||||||||||||||||||||||||||
-3 | Interest rate swaps not designated as hedges and interest rate lock commitments do not have associated master netting arrangements. | ||||||||||||||||||||||||||
-4 | In addition to the derivatives disclosed in the table, the Company had one outstanding forward contract to purchase when-issued mortgage-backed securities as part of the community reinvestment initiatives. This forward contract had a notional amount of $11 million and $40 million and immaterial fair values as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-5 | Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. | ||||||||||||||||||||||||||
Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income | ' | ||||||||||||||||||||||||||
The following tables summarize the impact of the derivative instruments on income and other comprehensive income, and indicates where within the consolidated financial statements such impact is reported for the period (dollars in millions): | |||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income | |||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow/net investment hedges: | |||||||||||||||||||||||||||
Total gains (losses) recognized in other comprehensive income after amounts reclassified into earnings, pre-tax | Other | $ | 23 | $ | (13 | ) | $ | — | $ | (1 | ) | ||||||||||||||||
Comprehensive | |||||||||||||||||||||||||||
Income | |||||||||||||||||||||||||||
Total gains (losses) recognized in other comprehensive income | $ | 23 | $ | (13 | ) | $ | — | $ | (1 | ) | |||||||||||||||||
Amount of Gain (Loss) Recognized in Income | |||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedges: | |||||||||||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Income | $ | — | $ | — | $ | — | $ | 4 | ||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Expense | (11 | ) | (5 | ) | (26 | ) | (6 | ) | ||||||||||||||||||
Total amount reclassified from other comprehensive income into income | (11 | ) | (5 | ) | (26 | ) | (2 | ) | |||||||||||||||||||
Interest rate swaps—fair value hedges: | |||||||||||||||||||||||||||
Interest expense—ineffectiveness | (14 | ) | 12 | (13 | ) | (38 | ) | ||||||||||||||||||||
Interest expense—other | 9 | 10 | 29 | 30 | |||||||||||||||||||||||
(Loss) gain on interest rate swaps | Interest Expense | (5 | ) | 22 | 16 | (8 | ) | ||||||||||||||||||||
Interest expense—ineffectiveness | 16 | (10 | ) | 18 | 42 | ||||||||||||||||||||||
Interest expense—other | (2 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||||||||||||||
Gain (loss) on hedged item | Interest Expense | 14 | (11 | ) | 17 | 38 | |||||||||||||||||||||
Total (losses) gains on derivatives designated as hedges recognized in income | $ | (2 | ) | $ | 6 | $ | 7 | $ | 28 | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Gain (loss) on forward contracts | Other Income | $ | 4 | $ | (2 | ) | $ | 4 | $ | (1 | ) | ||||||||||||||||
Loss on interest rate swaps | Other Income | — | — | (1 | ) | — | |||||||||||||||||||||
Gain (loss) on forward delivery contracts | Other Income | 3 | (18 | ) | (4 | ) | (3 | ) | |||||||||||||||||||
Gain on interest rate lock commitments | Other Income | 18 | 24 | 61 | 105 | ||||||||||||||||||||||
Total gains on derivatives not designated as hedges recognized in income | $ | 25 | $ | 4 | $ | 60 | $ | 101 | |||||||||||||||||||
Segment_Disclosures_Tables
Segment Disclosures (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||
Schedule of Segment Disclosures | ' | |||||||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Three Months Ended September 30, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 1,613 | $ | — | $ | 1,613 | ||||||
Private student loans | 80 | — | 80 | |||||||||
PCI student loans | 64 | — | 64 | |||||||||
Personal loans | 145 | — | 145 | |||||||||
Other | 24 | — | 24 | |||||||||
Total interest income | 1,926 | — | 1,926 | |||||||||
Interest expense | 288 | — | 288 | |||||||||
Net interest income | 1,638 | — | 1,638 | |||||||||
Provision for loan losses | 356 | (2 | ) | 354 | ||||||||
Other income | 475 | 77 | 552 | |||||||||
Other expense | 776 | 51 | 827 | |||||||||
Income before income tax expense | $ | 981 | $ | 28 | $ | 1,009 | ||||||
For the Three Months Ended September 30, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 1,513 | $ | — | $ | 1,513 | ||||||
Private student loans | 64 | — | 64 | |||||||||
PCI student loans | 67 | — | 67 | |||||||||
Personal loans | 122 | — | 122 | |||||||||
Other | 21 | — | 21 | |||||||||
Total interest income | 1,787 | — | 1,787 | |||||||||
Interest expense | 278 | — | 278 | |||||||||
Net interest income | 1,509 | — | 1,509 | |||||||||
Provision for loan losses | 333 | — | 333 | |||||||||
Other income | 475 | 78 | 553 | |||||||||
Other expense | 733 | 50 | 783 | |||||||||
Income before income tax expense | $ | 918 | $ | 28 | $ | 946 | ||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Nine Months Ended September 30, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 4,710 | $ | — | $ | 4,710 | ||||||
Private student loans | 228 | — | 228 | |||||||||
PCI student loans | 198 | — | 198 | |||||||||
Personal loans | 415 | — | 415 | |||||||||
Other | 71 | — | 71 | |||||||||
Total interest income | 5,622 | — | 5,622 | |||||||||
Interest expense | 832 | — | 832 | |||||||||
Net interest income | 4,790 | — | 4,790 | |||||||||
Provision for loan losses | 986 | — | 986 | |||||||||
Other income | 1,414 | 236 | 1,650 | |||||||||
Other expense | 2,259 | 149 | 2,408 | |||||||||
Income before income tax expense | $ | 2,959 | $ | 87 | $ | 3,046 | ||||||
For the Nine Months Ended September 30, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 4,427 | $ | — | $ | 4,427 | ||||||
Private student loans | 183 | — | 183 | |||||||||
PCI student loans | 205 | — | 205 | |||||||||
Personal loans | 334 | — | 334 | |||||||||
Other | 73 | — | 73 | |||||||||
Total interest income | 5,222 | — | 5,222 | |||||||||
Interest expense | 873 | — | 873 | |||||||||
Net interest income | 4,349 | — | 4,349 | |||||||||
Provision for loan losses | 717 | 15 | 732 | |||||||||
Other income | 1,501 | 245 | 1,746 | |||||||||
Other expense | 2,180 | 176 | 2,356 | |||||||||
Income before income tax expense | $ | 2,953 | $ | 54 | $ | 3,007 | ||||||
Investments_Narrative_Details
Investments (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Community Reinvestment Act [Member] | Community Reinvestment Act [Member] | Community Reinvestment Act [Member] | Community Reinvestment Act [Member] | |||||
Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | |||||
Investment Holdings [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Other than temporary impairment loss on investments | $0 | $0 | $0 | $0 | ' | ' | ' | ' |
Equity method investments | ' | ' | ' | ' | 317 | 308 | ' | ' |
Contingent liabilities related to equity method investments | ' | ' | ' | ' | ' | ' | $44 | $52 |
Investments_Schedule_of_Invest
Investments (Schedule of Investment Securities) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | $3,995 | $4,991 | ||
US Treasury Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | 1,335 | [1] | 2,058 | [1] |
Derivative collateral | 15 | 9 | ||
US Government Corporations and Agencies Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | 1,038 | 1,561 | ||
US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | 10 | 15 | ||
Total Other Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | 1,612 | 1,357 | ||
Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | 0 | 6 | ||
Residential Mortgage Backed Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Total investment securities | $1,612 | [2] | $1,351 | [2] |
[1] | Includes $15 million and $9 million of U.S. Treasury securities that have been pledged as swap collateral in lieu of cash as of September 30, 2014 and December 31, 2013, respectively. | |||
[2] | Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Investments_Schedule_of_Amorti
Investments (Schedule of Amortized Cost, Gross Unrealized Gains and Gross Unrealized Losses and Fair Value) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, amortized cost | $3,881 | [1] | $4,900 | [1] |
Available-for-sale investment securities, gross unrealized gains | 38 | [1] | 53 | [1] |
Available-for-sale investment securities, gross unrealized losses | -6 | [1] | -22 | [1] |
Available-for-sale investment securities, fair value | 3,913 | [1] | 4,931 | [1] |
Held-to-maturity investment securities, amortized cost | 82 | [2] | 60 | [2] |
Held-to-maturity investment securities, gross unrealized gains | 0 | [2] | 0 | [2] |
Held-to-maturity investment securities, gross unrealized losses | 0 | [2] | -2 | [2] |
Held-to-maturity investment securities, fair value | 82 | [2] | 58 | [2] |
US Treasury Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, amortized cost | 1,318 | [1] | 2,030 | [1] |
Available-for-sale investment securities, gross unrealized gains | 16 | [1] | 27 | [1] |
Available-for-sale investment securities, gross unrealized losses | 0 | [1] | 0 | [1] |
Available-for-sale investment securities, fair value | 1,334 | [1] | 2,057 | [1] |
Held-to-maturity investment securities, amortized cost | 1 | [2],[3] | 1 | [2],[3] |
Held-to-maturity investment securities, gross unrealized gains | 0 | [2],[3] | 0 | [2],[3] |
Held-to-maturity investment securities, gross unrealized losses | 0 | [2],[3] | 0 | [2],[3] |
Held-to-maturity investment securities, fair value | 1 | [2],[3] | 1 | [2],[3] |
US Government Corporations and Agencies Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, amortized cost | 1,022 | [1] | 1,535 | [1] |
Available-for-sale investment securities, gross unrealized gains | 16 | [1] | 26 | [1] |
Available-for-sale investment securities, gross unrealized losses | 0 | [1] | 0 | [1] |
Available-for-sale investment securities, fair value | 1,038 | [1] | 1,561 | [1] |
Residential Mortgage Backed Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, amortized cost | 1,541 | [1] | 1,329 | [1] |
Available-for-sale investment securities, gross unrealized gains | 6 | [1] | 0 | [1] |
Available-for-sale investment securities, gross unrealized losses | -6 | [1] | -22 | [1] |
Available-for-sale investment securities, fair value | 1,541 | [1] | 1,307 | [1] |
Held-to-maturity investment securities, amortized cost | 71 | [2],[4] | 44 | [2],[4] |
Held-to-maturity investment securities, gross unrealized gains | 0 | [2],[4] | 0 | [2],[4] |
Held-to-maturity investment securities, gross unrealized losses | 0 | [2],[4] | -1 | [2],[4] |
Held-to-maturity investment securities, fair value | 71 | [2],[4] | 43 | [2],[4] |
US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Held-to-maturity investment securities, amortized cost | 10 | [2] | 15 | [2] |
Held-to-maturity investment securities, gross unrealized gains | 0 | [2] | 0 | [2] |
Held-to-maturity investment securities, gross unrealized losses | 0 | [2] | -1 | [2] |
Held-to-maturity investment securities, fair value | 10 | [2] | 14 | [2] |
Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, amortized cost | ' | 6 | [1] | |
Available-for-sale investment securities, gross unrealized gains | ' | 0 | [1] | |
Available-for-sale investment securities, gross unrealized losses | ' | 0 | [1] | |
Available-for-sale investment securities, fair value | ' | $6 | [1] | |
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. | |||
[4] | Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. |
Investments_Investments_Schedu
Investments Investments (Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | securities | securities |
Residential Mortgage Backed Securities [Member] | ' | ' |
Investment Holdings [Line Items] | ' | ' |
Available-for-sale investment securities, number of securities in a loss position (in securities) | 16 | 23 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $370 | $1,097 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | -1 | -20 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, fair value | 480 | 48 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | -5 | -2 |
Held-to-maturity investment securities, number of securities in a loss position (in securities) | ' | 2 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, fair value | ' | 40 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | ' | -1 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, fair value | ' | 0 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | ' | 0 |
US States and Political Subdivisions Debt Securities [Member] | ' | ' |
Investment Holdings [Line Items] | ' | ' |
Held-to-maturity investment securities, number of securities in a loss position (in securities) | ' | 4 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, fair value | ' | 8 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | ' | -1 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, fair value | ' | 3 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | ' | $0 |
Investments_Schedule_of_Procee
Investments (Schedule of Proceeds, Recognized Gains and Losses and Net Unrealized Gains and Losses) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Gain (Loss) on Investments [Line Items] | ' | ' | ' | ' |
Proceeds related to maturities or redemptions of investment securities | $65 | $94 | $184 | $672 |
Gains on sales of available-for-sale investment securities | 0 | 0 | 4 | 2 |
Net unrealized (losses) gains recorded in other comprehensive income, before-tax | -15 | 6 | 1 | -61 |
Net unrealized (losses) gains recorded in other comprehensive income, after-tax | -9 | 4 | 1 | -38 |
US Treasury and Government [Member] | ' | ' | ' | ' |
Gain (Loss) on Investments [Line Items] | ' | ' | ' | ' |
Proceeds from the sales of available-for-sale investment securities, comprised of U.S. Treasury securities and U.S. government agency securities | $0 | $0 | $1,220 | $719 |
Investments_Schedule_of_Maturi
Investments (Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | $968 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 1,372 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 520 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 1,021 | [1] | ' | |
Available-for-sale investment securities, amortized cost | 3,881 | [1] | 4,900 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | 1 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | 81 | [2] | ' | |
Held-to-maturity investment securities, amortized cost | 82 | [2] | 60 | [2] |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 977 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 1,395 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 519 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, fair value | 1,022 | [1] | ' | |
Available-for-sale investment securities, fair value | 3,913 | [1] | 4,931 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | 1 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, fair value | 81 | [2] | ' | |
Held-to-maturity investment securities, fair value | 82 | [2] | 58 | [2] |
US Treasury Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | 567 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 751 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, amortized cost | 1,318 | [1] | 2,030 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | 1 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, amortized cost | 1 | [2],[3] | 1 | [2],[3] |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 571 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 763 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, fair value | 1,334 | [1] | 2,057 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | 1 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, fair value | 1 | [2],[3] | 1 | [2],[3] |
US Government Corporations and Agencies Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | 401 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 621 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, amortized cost | 1,022 | [1] | 1,535 | [1] |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 406 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 632 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, fair value | 1,038 | [1] | 1,561 | [1] |
Residential Mortgage Backed Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 520 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 1,021 | [1] | ' | |
Available-for-sale investment securities, amortized cost | 1,541 | [1] | 1,329 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | 71 | [2] | ' | |
Held-to-maturity investment securities, amortized cost | 71 | [2],[4] | 44 | [2],[4] |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 0 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 519 | [1] | ' | |
Available-for-sale investment securities, debt maturities, after ten years, fair value | 1,022 | [1] | ' | |
Available-for-sale investment securities, fair value | 1,541 | [1] | 1,307 | [1] |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, fair value | 71 | [2] | ' | |
Held-to-maturity investment securities, fair value | 71 | [2],[4] | 43 | [2],[4] |
US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Investment Holdings [Line Items] | ' | ' | ||
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | 10 | [2] | ' | |
Held-to-maturity investment securities, amortized cost | 10 | [2] | 15 | [2] |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | 0 | [2] | ' | |
Held-to-maturity investment securities, debt maturities, after ten years, fair value | 10 | [2] | ' | |
Held-to-maturity investment securities, fair value | $10 | [2] | $14 | [2] |
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. | |||
[4] | Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. |
Loan_Receivables_Narrative_Det
Loan Receivables (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Threshold charge-off period for bankruptcy and probate accounts | ' | ' | '60 days | ' | ' | ' | ' | ' | |||
Open-end charge-off period for bankruptcy and probate accounts | ' | ' | '180 days | ' | ' | ' | ' | ' | |||
Closed-end charge-off period for bankruptcy and probate accounts | ' | ' | '120 days | ' | ' | ' | ' | ' | |||
Private student loan forbearance lifetime cap | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Private student loans including PCI in forbearance | $44,000,000 | ' | $44,000,000 | ' | ' | $110,000,000 | ' | ' | |||
Private student loans in forbearance as a percentage of student loans in repayment and forbearance (in percent) | 0.80% | ' | 0.80% | ' | ' | 1.90% | ' | ' | |||
Interest and fees forgiven due to credit card loan modification program | 11,000,000 | 10,000,000 | 30,000,000 | 30,000,000 | ' | ' | ' | ' | |||
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent) | 34.00% | 33.00% | 36.00% | 42.00% | ' | ' | ' | ' | |||
Purchased credit-impaired loans | 3,788,000,000 | ' | 3,788,000,000 | ' | ' | 4,178,000,000 | ' | ' | |||
Provision for loan losses | 354,000,000 | 333,000,000 | 986,000,000 | 732,000,000 | ' | ' | ' | ' | |||
Allowance for loan losses | 1,644,000,000 | 1,598,000,000 | 1,644,000,000 | 1,598,000,000 | 1,614,000,000 | 1,648,000,000 | 1,556,000,000 | 1,788,000,000 | |||
30 days or more delinquency rate for purchased credit-impaired loans (in percent) | 2.36% | ' | 2.36% | ' | ' | 2.33% | ' | ' | |||
90 days or more delinquency rate for purchased credit-impaired loans (in percent) | 0.78% | ' | 0.78% | ' | ' | 0.80% | ' | ' | |||
Net charge-off rate for purchased credit-impaired loans (in percent) | 0.63% | 1.09% | 0.63% | 1.33% | ' | ' | ' | ' | |||
Personal And Private Student Loan Member [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Threshold charge-off period for past due accounts | ' | ' | '120 days | ' | ' | ' | ' | ' | |||
Student Loans [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Maximum period of payment reduction for the temporary reduced payment program | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Maximum forbearance period for student loan borrowers | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Period triggering TDR accounting for the temporary reduced payment program | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Personal Loans [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Maximum period of payment reduction for the temporary reduced payment program | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Maximum repayment term for temporary modification programs | ' | ' | '9 years | ' | ' | ' | ' | ' | |||
Maximum repayment term for permanent modification programs | ' | ' | '9 years | ' | ' | ' | ' | ' | |||
PCI Student Loans [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Provision for loan losses | 0 | 0 | 0 | 0 | ' | ' | ' | ' | |||
Allowance for loan losses | 28,000,000 | ' | 28,000,000 | ' | ' | 28,000,000 | ' | ' | |||
PCI Student Loans [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Purchased credit-impaired loans outstanding balance | 4,100,000,000 | ' | 4,100,000,000 | ' | ' | 4,600,000,000 | ' | ' | |||
Purchased credit-impaired loans | 3,788,000,000 | [1] | ' | 3,788,000,000 | [1] | ' | ' | 4,178,000,000 | [1] | ' | ' |
Credit Card Receivable [Member] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |||
Threshold charge-off period for past due accounts | ' | ' | '180 days | ' | ' | ' | ' | ' | |||
Maximum period of payment reduction for the temporary reduced payment program | ' | ' | '12 months | ' | ' | ' | ' | ' | |||
Permanent workout program maturity | ' | ' | '60 months | ' | ' | ' | ' | ' | |||
Provision for loan losses | 318,000,000 | 291,000,000 | 865,000,000 | 611,000,000 | ' | ' | ' | ' | |||
Allowance for loan losses | $1,388,000,000 | $1,393,000,000 | $1,388,000,000 | $1,393,000,000 | $1,359,000,000 | $1,406,000,000 | $1,360,000,000 | $1,613,000,000 | |||
[1] | Amounts include $2.0 billion and $2.2 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2014 and December 31, 2013. See Note 4: Credit Card and Student Loan Securitization Activities. Of the remaining $1.8 billion and $2.0 billion at September 30, 2014 and December 31, 2013, respectively, that were not pledged as collateral, approximately $23 million and $22 million, respectively, represents loans eligible for reimbursement through an indemnification claim. Discover Bank must purchase such loans from the trust before a claim may be filed. |
Loan_Receivables_Schedule_of_L
Loan Receivables (Schedule of Loan Receivables) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Mortgage loans held for sale | $148,000,000 | [1] | ' | $148,000,000 | [1] | ' | ' | ' |
Total credit card loans | 53,699,000,000 | ' | 53,150,000,000 | ' | ' | ' | ||
Total other loans | 9,731,000,000 | ' | 8,295,000,000 | ' | ' | ' | ||
Purchased credit-impaired loans | 3,788,000,000 | ' | 4,178,000,000 | ' | ' | ' | ||
Total loan portfolio | 67,218,000,000 | ' | 65,623,000,000 | ' | ' | ' | ||
Total loan receivables | 67,366,000,000 | ' | 65,771,000,000 | ' | ' | ' | ||
Allowance for loan losses | -1,644,000,000 | -1,614,000,000 | -1,648,000,000 | -1,598,000,000 | -1,556,000,000 | -1,788,000,000 | ||
Net loan receivables | 65,722,000,000 | ' | 64,123,000,000 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses | -800,000,000 | ' | -861,000,000 | ' | ' | ' | ||
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total credit card loans | 29,505,000,000 | [2] | ' | 31,112,000,000 | [2] | ' | ' | ' |
Allowance for loan losses | -772,000,000 | [2] | ' | -833,000,000 | [2] | ' | ' | ' |
Sellers' interest | 9,289,000,000 | ' | 10,898,000,000 | ' | ' | ' | ||
Credit Card Receivable [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total credit card loans | 53,699,000,000 | ' | 53,150,000,000 | ' | ' | ' | ||
Total loan portfolio | 53,699,000,000 | ' | 53,150,000,000 | ' | ' | ' | ||
Allowance for loan losses | -1,388,000,000 | -1,359,000,000 | -1,406,000,000 | -1,393,000,000 | -1,360,000,000 | -1,613,000,000 | ||
Credit Card Receivable [Member] | Discover Card [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total credit card loans | 53,503,000,000 | [3] | ' | 52,952,000,000 | [3] | ' | ' | ' |
Credit Card Receivable [Member] | Discover Business Card [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total credit card loans | 196,000,000 | ' | 198,000,000 | ' | ' | ' | ||
Credit Card Receivable [Member] | Investors Interest in Trust Debt [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total credit card loans | 20,200,000,000 | ' | 20,200,000,000 | ' | ' | ' | ||
Total Other Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total other loans | 9,731,000,000 | ' | 8,295,000,000 | ' | ' | ' | ||
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total other loans | 4,830,000,000 | ' | 4,191,000,000 | ' | ' | ' | ||
Total loan portfolio | 4,830,000,000 | ' | 4,191,000,000 | ' | ' | ' | ||
Allowance for loan losses | -108,000,000 | -109,000,000 | -112,000,000 | -106,000,000 | -98,000,000 | -99,000,000 | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total other loans | 4,706,000,000 | ' | 3,969,000,000 | ' | ' | ' | ||
Total Other Loans [Member] | Other Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total other loans | 195,000,000 | ' | 135,000,000 | ' | ' | ' | ||
Total loan portfolio | 195,000,000 | ' | 135,000,000 | ' | ' | ' | ||
Allowance for loan losses | -16,000,000 | -18,000,000 | -17,000,000 | -15,000,000 | -16,000,000 | -1,000,000 | ||
PCI Student Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Purchased credit-impaired loans | 3,788,000,000 | [4] | ' | 4,178,000,000 | [4] | ' | ' | ' |
Loans pledged as collateral | 2,000,000,000 | ' | 2,200,000,000 | ' | ' | ' | ||
Private Student Loans Not Pledged as Collateral [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Purchased credit-impaired loans | 1,800,000,000 | ' | 2,000,000,000 | ' | ' | ' | ||
Private Student Loans Eligible for Reimbursement [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Purchased credit-impaired loans | $23,000,000 | ' | $22,000,000 | ' | ' | ' | ||
[1] | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||||||
[2] | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. | |||||||
[3] | Amounts include $20.2 billion underlying investors’ interest in trust debt at September 30, 2014 and December 31, 2013, and $9.3 billion and $10.9 billion in seller's interest at September 30, 2014 and December 31, 2013, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for further information. | |||||||
[4] | Amounts include $2.0 billion and $2.2 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2014 and December 31, 2013. See Note 4: Credit Card and Student Loan Securitization Activities. Of the remaining $1.8 billion and $2.0 billion at September 30, 2014 and December 31, 2013, respectively, that were not pledged as collateral, approximately $23 million and $22 million, respectively, represents loans eligible for reimbursement through an indemnification claim. Discover Bank must purchase such loans from the trust before a claim may be filed. |
Loan_Receivables_Schedule_of_D
Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | $567 | ' | $567 | ' | $535 | |||
Loan receivables, 90 or more days delinquent | 476 | ' | 476 | ' | 475 | |||
Loan receivables, total past due | 1,043 | ' | 1,043 | ' | 1,010 | |||
Loan receivables, 90 or more days delinquent and accruing | 435 | ' | 435 | ' | 434 | |||
Loan receivables, total non-accruing | 194 | ' | 194 | ' | 200 | |||
Consumer Credit Card Financing Receivable [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 90 or more days delinquent and accruing | 40 | ' | 40 | ' | 41 | |||
Personal Loan Financing Receivable [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 90 or more days delinquent and accruing | 2 | ' | 2 | ' | 2 | |||
Private Student Loan (excluding PCI) Financing Receivable [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 90 or more days delinquent and accruing | 4 | ' | 4 | ' | 3 | |||
Credit Card Receivable [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 480 | ' | 480 | ' | 465 | |||
Loan receivables, 90 or more days delinquent | 440 | ' | 440 | ' | 447 | |||
Loan receivables, total past due | 920 | ' | 920 | ' | 912 | |||
Loan receivables, 90 or more days delinquent and accruing | 402 | ' | 402 | ' | 408 | |||
Loan receivables, total non-accruing | 165 | [1] | ' | 165 | [1] | ' | 155 | [1] |
Estimated gross interest income that would have been recorded based on original terms | 7 | 7 | 20 | 22 | ' | |||
Credit Card Receivable [Member] | Discover Card [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 479 | ' | 479 | ' | 464 | |||
Loan receivables, 90 or more days delinquent | 439 | ' | 439 | ' | 445 | |||
Loan receivables, total past due | 918 | ' | 918 | ' | 909 | |||
Loan receivables, 90 or more days delinquent and accruing | 401 | [2] | ' | 401 | [2] | ' | 406 | [2] |
Loan receivables, total non-accruing | 164 | ' | 164 | ' | 154 | |||
Credit Card Receivable [Member] | Discover Business Card [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 1 | ' | 1 | ' | 1 | |||
Loan receivables, 90 or more days delinquent | 1 | ' | 1 | ' | 2 | |||
Loan receivables, total past due | 2 | ' | 2 | ' | 3 | |||
Loan receivables, 90 or more days delinquent and accruing | 1 | ' | 1 | ' | 2 | |||
Loan receivables, total non-accruing | 1 | ' | 1 | ' | 1 | |||
Total Other Loans [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 87 | ' | 87 | ' | 70 | |||
Loan receivables, 90 or more days delinquent | 36 | ' | 36 | ' | 28 | |||
Loan receivables, total past due | 123 | ' | 123 | ' | 98 | |||
Loan receivables, 90 or more days delinquent and accruing | 33 | ' | 33 | ' | 26 | |||
Loan receivables, total non-accruing | 29 | ' | 29 | ' | 45 | |||
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 26 | ' | 26 | ' | 21 | |||
Loan receivables, 90 or more days delinquent | 10 | ' | 10 | ' | 8 | |||
Loan receivables, total past due | 36 | ' | 36 | ' | 29 | |||
Loan receivables, 90 or more days delinquent and accruing | 9 | [3] | ' | 9 | [3] | ' | 8 | [3] |
Loan receivables, total non-accruing | 5 | ' | 5 | ' | 5 | |||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 61 | ' | 61 | ' | 48 | |||
Loan receivables, 90 or more days delinquent | 24 | ' | 24 | ' | 18 | |||
Loan receivables, total past due | 85 | ' | 85 | ' | 66 | |||
Loan receivables, 90 or more days delinquent and accruing | 24 | [4] | ' | 24 | [4] | ' | 18 | [4] |
Loan receivables, total non-accruing | 0 | ' | 0 | ' | 0 | |||
Total Other Loans [Member] | Other Loans [Member] | ' | ' | ' | ' | ' | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' | ' | ' | ' | ' | |||
Loan receivables, 30 to 89 days delinquent | 0 | ' | 0 | ' | 1 | |||
Loan receivables, 90 or more days delinquent | 2 | ' | 2 | ' | 2 | |||
Loan receivables, total past due | 2 | ' | 2 | ' | 3 | |||
Loan receivables, 90 or more days delinquent and accruing | 0 | ' | 0 | ' | 0 | |||
Loan receivables, total non-accruing | $24 | ' | $24 | ' | $40 | |||
[1] | The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million for the three months ended September 30, 2014 and 2013 and was $20 million and $22 million for the nine months ended September 30, 2014 and 2013, respectively. The Company does not separately systematically compute the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' quarterly average balances and rates prior to non-accrual status. | |||||||
[2] | Consumer credit card loans that are 90 or more days delinquent and accruing interest include $40 million and $41 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. | |||||||
[3] | Personal loans that are 90 or more days delinquent and accruing interest include $2 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013. | |||||||
[4] | Private student loans that are 90 or more days delinquent and accruing interest include $4 million and $3 million of loans accounted for as troubled debt restructurings at September 30, 2014 and December 31, 2013, respectively. |
Loan_Receivables_Schedule_of_N
Loan Receivables (Schedule of Net Charge-offs) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | $324 | $291 | $990 | $922 |
Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 324 | 291 | 990 | 922 |
Net charge-off rate (in percent) | 2.06% | 2.00% | 2.16% | 2.17% |
Including PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 324 | 291 | 990 | 922 |
Net charge-off rate (in percent) | 1.94% | 1.86% | 2.03% | 2.01% |
Credit Card Receivable [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 289 | 258 | 883 | 831 |
Credit Card Receivable [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 289 | 258 | 883 | 831 |
Net charge-off rate (in percent) | 2.16% | 2.05% | 2.27% | 2.25% |
Credit Card Receivable [Member] | Discover Card [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 288 | 257 | 880 | 827 |
Net charge-off rate (in percent) | 2.16% | 2.05% | 2.27% | 2.25% |
Credit Card Receivable [Member] | Discover Business Card [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 1 | 1 | 3 | 4 |
Net charge-off rate (in percent) | 1.82% | 2.12% | 1.75% | 2.31% |
Total Other Loans [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 35 | 33 | 107 | 91 |
Net charge-off rate (in percent) | 1.50% | 1.65% | 1.58% | 1.66% |
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 23 | 20 | 66 | 58 |
Total Other Loans [Member] | Personal Loans [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 23 | 20 | 66 | 58 |
Net charge-off rate (in percent) | 1.92% | 2.01% | 1.98% | 2.18% |
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 12 | 12 | 40 | 32 |
Net charge-off rate (in percent) | 1.14% | 1.33% | 1.25% | 1.25% |
Total Other Loans [Member] | Other Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | 0 | 1 | 1 | 1 |
Total Other Loans [Member] | Other Loans [Member] | Excluding PCI Loans [Member] | ' | ' | ' | ' |
Charge Offs [Line Items] | ' | ' | ' | ' |
Net charge-offs | $0 | $1 | $1 | $1 |
Net charge-off rate (in percent) | 0.60% | 2.35% | 0.88% | 1.72% |
Loan_Receivables_Schedule_of_C
Loan Receivables (Schedule of Credit Risk Profile by FICO Score) (Details) | Sep. 30, 2014 | Dec. 31, 2013 | ||
Credit Card Receivable [Member] | Discover Card [Member] | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ||
Credit risk profile by FICO score, 660 and above | 83.00% | 83.00% | ||
Credit risk profile by FICO score, less than 660 or no score | 17.00% | 17.00% | ||
Credit Card Receivable [Member] | Discover Business Card [Member] | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ||
Credit risk profile by FICO score, 660 and above | 92.00% | 92.00% | ||
Credit risk profile by FICO score, less than 660 or no score | 8.00% | 8.00% | ||
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ||
Credit risk profile by FICO score, 660 and above | 97.00% | 97.00% | ||
Credit risk profile by FICO score, less than 660 or no score | 3.00% | 3.00% | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ||
Credit risk profile by FICO score, 660 and above | 95.00% | [1] | 95.00% | [1] |
Credit risk profile by FICO score, less than 660 or no score | 5.00% | [1] | 5.00% | [1] |
[1] | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." |
Loan_Receivables_Schedule_of_C1
Loan Receivables (Schedule of Changes in the Allowance for Loan Losses) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ' | ' | ' | ' |
Balance at beginning of period | $1,614 | $1,556 | $1,648 | $1,788 |
Provision for loan losses | 354 | 333 | 986 | 732 |
Charge-offs | -440 | -416 | -1,342 | -1,318 |
Recoveries | 116 | 125 | 352 | 396 |
Net charge-offs | -324 | -291 | -990 | -922 |
Balance at end of period | 1,644 | 1,598 | 1,644 | 1,598 |
Credit Card Receivable [Member] | ' | ' | ' | ' |
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ' | ' | ' | ' |
Balance at beginning of period | 1,359 | 1,360 | 1,406 | 1,613 |
Provision for loan losses | 318 | 291 | 865 | 611 |
Charge-offs | -400 | -381 | -1,223 | -1,220 |
Recoveries | 111 | 123 | 340 | 389 |
Net charge-offs | -289 | -258 | -883 | -831 |
Balance at end of period | 1,388 | 1,393 | 1,388 | 1,393 |
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' |
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ' | ' | ' | ' |
Balance at beginning of period | 109 | 98 | 112 | 99 |
Provision for loan losses | 22 | 28 | 62 | 65 |
Charge-offs | -26 | -21 | -74 | -63 |
Recoveries | 3 | 1 | 8 | 5 |
Net charge-offs | -23 | -20 | -66 | -58 |
Balance at end of period | 108 | 106 | 108 | 106 |
Total Other Loans [Member] | Student Loans [Member] | ' | ' | ' | ' |
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ' | ' | ' | ' |
Balance at beginning of period | 128 | 82 | 113 | 75 |
Provision for loan losses | 16 | 14 | 59 | 41 |
Charge-offs | -14 | -13 | -44 | -34 |
Recoveries | 2 | 1 | 4 | 2 |
Net charge-offs | -12 | -12 | -40 | -32 |
Balance at end of period | 132 | 84 | 132 | 84 |
Total Other Loans [Member] | Other Loans [Member] | ' | ' | ' | ' |
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ' | ' | ' | ' |
Balance at beginning of period | 18 | 16 | 17 | 1 |
Provision for loan losses | -2 | 0 | 0 | 15 |
Charge-offs | 0 | -1 | -1 | -1 |
Recoveries | 0 | 0 | 0 | 0 |
Net charge-offs | 0 | -1 | -1 | -1 |
Balance at end of period | $16 | $15 | $16 | $15 |
Loan_Receivables_Schedule_of_N1
Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Loans and Leases Receivable Disclosure [Abstract] | ' | ' | ' | ' |
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $69 | $66 | $211 | $213 |
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $16 | $14 | $50 | $44 |
Loan_Receivables_Schedule_of_A
Loan Receivables (Schedule of Allowance for Loan Losses and Recorded Investment in its Loan Portfolio by Impairment Methodology) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | $1,427 | ' | $1,404 | ' | ' | ' | ||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 189 | [1],[2] | ' | 216 | [1],[2] | ' | ' | ' |
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 28 | ' | 28 | ' | ' | ' | ||
Total allowance for loan losses | 1,644 | 1,614 | 1,648 | 1,598 | 1,556 | 1,788 | ||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 62,238 | ' | 60,184 | ' | ' | ' | ||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 1,192 | [1],[2] | ' | 1,261 | [1],[2] | ' | ' | ' |
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 3,788 | ' | 4,178 | ' | ' | ' | ||
Total loan portfolio | 67,218 | ' | 65,623 | ' | ' | ' | ||
Credit Card Receivable [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | 1,228 | ' | 1,218 | ' | ' | ' | ||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 160 | [1],[2] | ' | 188 | [1],[2] | ' | ' | ' |
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total allowance for loan losses | 1,388 | 1,359 | 1,406 | 1,393 | 1,360 | 1,613 | ||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 52,654 | ' | 52,027 | ' | ' | ' | ||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 1,045 | [1],[2] | ' | 1,123 | [1],[2] | ' | ' | ' |
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total loan portfolio | 53,699 | ' | 53,150 | ' | ' | ' | ||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 883 | ' | 900 | ' | ' | ' | ||
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | 103 | ' | 109 | ' | ' | ' | ||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 5 | [1],[2] | ' | 3 | [1],[2] | ' | ' | ' |
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total allowance for loan losses | 108 | 109 | 112 | 106 | 98 | 99 | ||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 4,779 | ' | 4,160 | ' | ' | ' | ||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 51 | [1],[2] | ' | 31 | [1],[2] | ' | ' | ' |
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total loan portfolio | 4,830 | ' | 4,191 | ' | ' | ' | ||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 51 | ' | 31 | ' | ' | ' | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | 94 | ' | 76 | ' | ' | ' | ||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 10 | [1],[2] | ' | 9 | [1],[2] | ' | ' | ' |
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 4,672 | ' | 3,941 | ' | ' | ' | ||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 34 | [1],[2] | ' | 28 | [1],[2] | ' | ' | ' |
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 33 | ' | 26 | ' | ' | ' | ||
Total Other Loans [Member] | Other Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | 2 | ' | 1 | ' | ' | ' | ||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 14 | [1],[2] | ' | 16 | [1],[2] | ' | ' | ' |
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total allowance for loan losses | 16 | 18 | 17 | 15 | 16 | 1 | ||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 133 | ' | 56 | ' | ' | ' | ||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 62 | [1],[2] | ' | 79 | [1],[2] | ' | ' | ' |
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | ' | 0 | ' | ' | ' | ||
Total loan portfolio | 195 | ' | 135 | ' | ' | ' | ||
PCI Student Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 28 | ' | 28 | ' | ' | ' | ||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 3,788 | ' | 4,178 | ' | ' | ' | ||
Student Loans [Member] | ' | ' | ' | ' | ' | ' | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ||
Total allowance for loan losses | 132 | ' | 113 | ' | ' | ' | ||
Total loan portfolio | $8,494 | ' | $8,147 | ' | ' | ' | ||
[1] | The unpaid principal balance of credit card loans was $883 million and $900 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of personal loans was $51 million and $31 million at September 30, 2014 and December 31, 2013, respectively. The unpaid principal balance of student loans was $33 million and $26 million at September 30, 2014 and December 31, 2013, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. | |||||||
[2] | Loan receivables evaluated for impairment in accordance with ASC 310-10-35 include credit card loans, personal loans and student loans collectively evaluated for impairment in accordance with ASC Subtopic 310-40, Receivables, which consists of modified loans accounted for as troubled debt restructurings. Other loans are individually evaluated for impairment and generally do not represent troubled debt restructurings. |
Loan_Receivables_Schedule_of_T
Loan Receivables (Schedule of Troubled Debt Restructurings) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Credit Card Receivable [Member] | Modified Loans [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Average recorded investment in loans | $248 | [1] | $263 | [1] | $251 | [1] | $271 | [1] |
Interest income recognized during period loans were impaired | 11 | [1],[2] | 12 | [1],[2] | 34 | [1],[2] | 37 | [1],[2] |
Gross interest income that would have been recorded with original terms | 1 | [1],[3] | 0 | [1],[3] | 3 | [1],[3] | 2 | [1],[3] |
Credit Card Receivable [Member] | InternalPrograms [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Average recorded investment in loans | 449 | 457 | 452 | 473 | ||||
Interest income recognized during period loans were impaired | 3 | [2] | 2 | [2] | 9 | [2] | 7 | [2] |
Gross interest income that would have been recorded with original terms | 15 | [3] | 17 | [3] | 46 | [3] | 50 | [3] |
Credit Card Receivable [Member] | External Programs [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Average recorded investment in loans | 353 | 447 | 374 | 477 | ||||
Interest income recognized during period loans were impaired | 7 | [2] | 9 | [2] | 21 | [2] | 28 | [2] |
Gross interest income that would have been recorded with original terms | 4 | [3] | 3 | [3] | 10 | [3] | 8 | [3] |
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Average recorded investment in loans | 49 | 27 | 46 | 24 | ||||
Interest income recognized during period loans were impaired | 2 | [2] | 1 | [2] | 4 | [2] | 2 | [2] |
Gross interest income that would have been recorded with original terms | 0 | [3] | 1 | [3] | 1 | [3] | 1 | [3] |
Total Other Loans [Member] | Student Loans [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Average recorded investment in loans | 33 | [4] | 22 | [4] | 31 | [4] | 20 | [4] |
Interest income recognized during period loans were impaired | $1 | [2],[4] | $0 | [2],[4] | $2 | [2],[4] | $1 | [2],[4] |
[1] | This balance is considered impaired, but is excluded from the internal and external program amounts reflected in this table. Represents credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. | |||||||
[2] | The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average interest rate to the average loans in the various modification programs. | |||||||
[3] | The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. | |||||||
[4] | Student loan customers who have been granted a forbearance are not given interest rate reductions. |
Loan_Receivables_Loan_Receivab
Loan Receivables Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
accounts | accounts | accounts | accounts | |
Credit Card Receivable [Member] | InternalPrograms [Member] | ' | ' | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' |
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | 12,115 | 10,671 | 35,199 | 30,149 |
Accounts that entered a loan modification program during the period, balances | $80 | $67 | $232 | $190 |
Credit Card Receivable [Member] | External Programs [Member] | ' | ' | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' |
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | 8,203 | 8,665 | 24,458 | 26,652 |
Accounts that entered a loan modification program during the period, balances | 42 | 47 | 128 | 144 |
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' |
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | 980 | 665 | 2,512 | 1,618 |
Accounts that entered a loan modification program during the period, balances | 12 | 8 | 30 | 20 |
Total Other Loans [Member] | Student Loans [Member] | ' | ' | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' |
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | 393 | 292 | 1,045 | 590 |
Accounts that entered a loan modification program during the period, balances | $6 | $5 | $15 | $12 |
Loan_Receivables_Loan_Receivab1
Loan Receivables Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
accounts | accounts | accounts | accounts | |||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Number of consecutive missed payments resulting in default from modification program | ' | ' | 2 | ' | ||||
Credit Card Receivable [Member] | InternalPrograms [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | 2,488 | [1],[2] | 1,778 | [1],[2] | 7,282 | [1],[2] | 7,170 | [1],[2] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $15 | [1],[2] | $11 | [1],[2] | $44 | [1],[2] | $45 | [1],[2] |
Credit Card Receivable [Member] | External Programs [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | 1,874 | [1],[2] | 2,178 | [1],[2] | 5,440 | [1],[2] | 6,399 | [1],[2] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | 8 | [1],[2] | 9 | [1],[2] | 23 | [1],[2] | 27 | [1],[2] |
Total Other Loans [Member] | Personal Loans [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | 118 | [1] | 74 | [1] | 321 | [1] | 159 | [1] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | 2 | [1] | 1 | [1] | 4 | [1] | 2 | [1] |
Total Other Loans [Member] | Student Loans [Member] | ' | ' | ' | ' | ||||
Financing Receivable, Modifications [Line Items] | ' | ' | ' | ' | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | 286 | [3] | 214 | [3] | 820 | [3] | 405 | [3] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $4 | [3] | $4 | [3] | $12 | [3] | $9 | [3] |
Delinquency days to default (in days) | ' | ' | '60 days | ' | ||||
[1] | A customer defaults from a modification program after two consecutive missed payments. | |||||||
[2] | The outstanding balance upon default is the loan balance at the end of the month prior to default. Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain revoked in most cases. | |||||||
[3] | Student loan defaults have been defined as loans that are 60 or more days delinquent. |
Loan_Receivables_Schedule_of_C2
Loan Receivables (Schedule of Changes in Accretable Yield for the Acquired Loans) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ' | ' | ' | ' |
Accretable yield, balance at beginning of period | $1,450 | $1,952 | $1,580 | $2,072 |
Accretion into interest income | -64 | -66 | -198 | -205 |
Other changes in expected cash flows | 0 | -1 | 4 | 18 |
Accretable yield, balance at end of period | $1,386 | $1,885 | $1,386 | $1,885 |
Loan_Receivables_Loan_Receivab2
Loan Receivables Loan Receivables (Schedule of Initial Unpaid Principal Balance of Mortgage Loans Sold by Type) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ' | ' | ||||
Initial unpaid principal balance of mortgage loans, amount | $782 | $908 | $1,911 | $3,423 | ||||
Initial unpaid principal balance of mortgage loans, percentage (in percent) | 100.00% | 100.00% | 100.00% | 100.00% | ||||
Conforming Loans [Member] | ' | ' | ' | ' | ||||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ' | ' | ||||
Initial unpaid principal balance of mortgage loans, amount | 704 | [1] | 705 | [1] | 1,723 | [1] | 2,208 | [1] |
Initial unpaid principal balance of mortgage loans, percentage (in percent) | 90.03% | [1] | 77.64% | [1] | 90.16% | [1] | 64.50% | [1] |
Federal Housing Administration Loan [Member] | ' | ' | ' | ' | ||||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ' | ' | ||||
Initial unpaid principal balance of mortgage loans, amount | 64 | [2] | 202 | [2] | 161 | [2] | 1,214 | [2] |
Initial unpaid principal balance of mortgage loans, percentage (in percent) | 8.18% | [2] | 22.25% | [2] | 8.42% | [2] | 35.47% | [2] |
Jumbo Mortgage Loan [Member] | ' | ' | ' | ' | ||||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ' | ' | ||||
Initial unpaid principal balance of mortgage loans, amount | 11 | [3] | 1 | [3] | 24 | [3] | 1 | [3] |
Initial unpaid principal balance of mortgage loans, percentage (in percent) | 1.41% | [3] | 0.11% | [3] | 1.26% | [3] | 0.03% | [3] |
Veterans Administration Loan [Member] | ' | ' | ' | ' | ||||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ' | ' | ||||
Initial unpaid principal balance of mortgage loans, amount | $3 | [4] | $0 | [4] | $3 | [4] | $0 | [4] |
Initial unpaid principal balance of mortgage loans, percentage (in percent) | 0.38% | [4] | 0.00% | [4] | 0.16% | [4] | 0.00% | [4] |
[1] | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||||||
[2] | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||||||
[3] | Jumbo loans are loans with an initial amount larger than the limits set by a Government Sponsored Enterprise. | |||||||
[4] | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. |
Loan_Receivables_Loan_Receivab3
Loan Receivables Loan Receivables (Schedule of Mortgage Loans Held for Sale) (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | ||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ||
Mortgage loans held for sale, amount | $148 | [1] | $148 | [1] |
Mortgage loans held for sale, percentage (in percent) | 100.00% | 100.00% | ||
Conforming Loans [Member] | ' | ' | ||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ||
Mortgage loans held for sale, amount | 129 | [2] | 136 | [2] |
Mortgage loans held for sale, percentage (in percent) | 87.16% | [2] | 91.89% | [2] |
FHA Loans [Member] | ' | ' | ||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ||
Mortgage loans held for sale, amount | 15 | [3] | 11 | [3] |
Mortgage loans held for sale, percentage (in percent) | 10.14% | [3] | 7.43% | [3] |
Jumbo Mortgage Loan [Member] | ' | ' | ||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ||
Mortgage loans held for sale, amount | 2 | [4] | 1 | [4] |
Mortgage loans held for sale, percentage (in percent) | 1.35% | [4] | 0.68% | [4] |
Veterans Administration Loan [Member] | ' | ' | ||
Mortgage Loans on Real Estate [Line Items] | ' | ' | ||
Mortgage loans held for sale, amount | $2 | [5] | $0 | [5] |
Mortgage loans held for sale, percentage (in percent) | 1.35% | [5] | 0.00% | [5] |
[1] | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||
[2] | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. | |||
[3] | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. | |||
[4] | Jumbo loans are loans with an initial loan amount larger than the limits set by a Government Sponsored Enterprise. | |||
[5] | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. |
Credit_Card_and_Student_Loan_S2
Credit Card and Student Loan Securitization Activities (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Variable Interest Entity [Line Items] | ' |
Excess spread rate minimum | 0.00% |
Excess of the total investors' interests | 7.00% |
Student Loan Securitization Trusts [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Number of trusts issuing securities | 3 |
Discover Card Execution Note Trust [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Excess spread rate for funding requirement trigger | 4.50% |
Excess spread rate for increasing funding requirements | 0.00% |
Average excess spread rate calculation period | '3 months |
Discover Card Execution Note Trust [Member] | Credit Card Securitization Trusts [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Number of classes of securities, debt structure | 4 |
Credit_Card_and_Student_Loan_S3
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||||||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | $103 | ' | $182 | ' | ' | ' | ||
Loan receivables | 53,699 | ' | 53,150 | ' | ' | ' | ||
Allowance for loan losses allocated to securitized loan receivables | -1,644 | -1,614 | -1,648 | -1,598 | -1,556 | -1,788 | ||
Other | 2,272 | ' | 2,367 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | 100 | ' | 179 | ' | ' | ' | ||
Allowance for loan losses allocated to securitized loan receivables | -800 | ' | -861 | ' | ' | ' | ||
Other | 37 | ' | 34 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | 15 | ' | 90 | ' | ' | ' | ||
Investors’ interests held by third-party investors | 14,750 | ' | 15,190 | ' | ' | ' | ||
Investors’ interests held by wholly-owned subsidiaries of Discover Bank | 5,466 | ' | 5,024 | ' | ' | ' | ||
Seller’s interest | 9,289 | ' | 10,898 | ' | ' | ' | ||
Loan receivables | 29,505 | [1] | ' | 31,112 | [1] | ' | ' | ' |
Allowance for loan losses allocated to securitized loan receivables | -772 | [1] | ' | -833 | [1] | ' | ' | ' |
Net loan receivables | 28,733 | ' | 30,279 | ' | ' | ' | ||
Other | 37 | ' | 34 | ' | ' | ' | ||
Carrying value of assets of consolidated variable interest entities | 28,785 | ' | 30,403 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | Cash Collateral Accounts [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | 0 | ' | 59 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | Collections and Interest Funding Accounts [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | $15 | ' | $31 | ' | ' | ' | ||
[1] | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. |
Credit_Card_and_Student_Loan_S4
Credit Card and Student Loan Securitization Activities (Schedule of Investors' Interests and Related Excess Spreads) (Details) (Discover Card Execution Note Trust (DiscoverSeries Notes) [Member], USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | |
series | ||
Discover Card Execution Note Trust (DiscoverSeries Notes) [Member] | ' | |
Variable Interest Entity [Line Items] | ' | |
Investors' interests | $20,216 | [1] |
Number of series outstanding (in series) | 37 | |
Three month rolling average excess spread (in percent) | 13.63% | |
[1] | Investors’ interests include third-party interests and subordinated interests held by wholly-owned subsidiaries of Discover Bank. |
Credit_Card_and_Student_Loan_S5
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Student Loan Securitized Assets) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||||||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | $103 | ' | $182 | ' | ' | ' | ||
Student loan receivables | 3,788 | ' | 4,178 | ' | ' | ' | ||
Allowance for loan losses allocated to securitized loan receivables | -1,644 | -1,614 | -1,648 | -1,598 | -1,556 | -1,788 | ||
Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | 100 | ' | 179 | ' | ' | ' | ||
Allowance for loan losses allocated to securitized loan receivables | -800 | ' | -861 | ' | ' | ' | ||
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | ' | ' | ' | ' | ' | ' | ||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' | ||
Restricted cash | 85 | ' | 89 | ' | ' | ' | ||
Student loan receivables | 2,038 | [1] | ' | 2,248 | [1] | ' | ' | ' |
Allowance for loan losses allocated to securitized loan receivables | -28 | [1] | ' | -28 | [1] | ' | ' | ' |
Net student loan receivables | 2,010 | ' | 2,220 | ' | ' | ' | ||
Carrying value of assets of consolidated variable interest entities | $2,095 | ' | $2,309 | ' | ' | ' | ||
[1] | The Company maintains its allowance for loan losses on purchased credit-impaired loans sufficient to absorb probable decreases in cash flows that were previously expected. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company's balance sheet in accordance with GAAP. |
Deposits_Narrative_Details
Deposits (Narrative) (Details) (USD $) | 9 Months Ended | |
In Billions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
channels | ||
Deposits [Abstract] | ' | ' |
Deposits source channels | 2 | ' |
Direct-to-consumer deposits | $28.80 | $28.40 |
Brokered and other deposits | $16.60 | $16.40 |
Deposits_Schedule_of_Interest_
Deposits (Schedule of Interest Bearing Deposit Accounts) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Deposits [Abstract] | ' | ' | ||
Certificates of deposit in amounts less than $100,000 | $20,908 | [1] | $21,211 | [1] |
Certificates of deposit from amounts of $100,000 to less than $250,000 | 4,605 | [1] | 4,860 | [1] |
Certificates of deposit in amounts of $250,000 or greater | 1,174 | [1] | 1,180 | [1] |
Savings deposits, including money market deposit accounts | 18,490 | 17,515 | ||
Total interest-bearing deposits | $45,177 | $44,766 | ||
Average annual interest rate (in percent) | 1.30% | 1.57% | ||
[1] | $100,000 represents the basic insurance amount previously covered by the FDIC. Effective July 21, 2010, the basic insurance per depositor was permanently increased to $250,000. |
Deposits_Schedule_of_Certifica
Deposits (Schedule of Certificates of Deposit Maturities) (Details) (USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Deposits [Abstract] | ' |
2014 | $3,110 |
2015 | 10,714 |
2016 | 5,068 |
2017 | 3,110 |
2018 | 1,958 |
Thereafter | $2,727 |
LongTerm_Borrowings_Narrative_
Long-Term Borrowings (Narrative) (Details) (Discover Card Master Trust I and Discover Card Execution Note Trust [Member], Secured Debt [Member], USD $) | Sep. 30, 2014 |
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Secured Debt [Member] | ' |
Debt Instrument [Line Items] | ' |
Total commitment of secured credit facilities | $7,500,000,000 |
Total used commitment of secured credit facilities | $0 |
LongTerm_Borrowings_Schedule_o
Long-Term Borrowings (Schedule of Long-Term Borrowings and Weighted Average Interest Rates) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Nov. 30, 2012 | Dec. 31, 2013 | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | $20,918 | ' | $20,918 | ' | ' | $20,474 | |||
Secured Debt [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 16,276 | ' | 16,276 | ' | ' | 16,986 | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 14,752 | ' | 14,752 | ' | ' | 15,194 | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed Rate Asset Backed Securities [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 1 | ' | 1 | ' | ' | 1 | |||
Principal value | 7,749 | ' | 7,749 | ' | ' | 5,549 | |||
Fair value adjustment | 3 | [1] | ' | 3 | [1] | ' | ' | 5 | [1] |
Long-term borrowings | 7,752 | ' | 7,752 | ' | ' | 5,554 | |||
Interest rate (in percent) | 1.82% | ' | 1.82% | ' | ' | 1.86% | |||
Interest rate terms | ' | ' | 'Various fixed rates | ' | ' | ' | |||
Maturity | ' | ' | 'Various February 2015 - July 2019 | ' | ' | ' | |||
Maturity range, start | ' | ' | 28-Feb-15 | ' | ' | ' | |||
Maturity range, end | ' | ' | 31-Jul-19 | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Credit Card Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 6,150 | ' | 6,150 | ' | ' | 9,140 | |||
Interest rate (in percent) | 0.51% | ' | 0.51% | ' | ' | 0.46% | |||
Interest rate terms | ' | ' | '1-month LIBOR(2) + 18 to 58Â basis points | [2] | ' | ' | ' | ||
Maturity | ' | ' | 'Various July 2015 - January 2019 | ' | ' | ' | |||
Maturity range, start | ' | ' | 31-Jul-15 | ' | ' | ' | |||
Maturity range, end | ' | ' | 31-Jan-19 | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Credit Card Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | Minimum [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.18% | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Credit Card Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | Maximum [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.58% | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Credit Card Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 850 | ' | 850 | ' | ' | 0 | |||
Interest rate (in percent) | 0.43% | ' | 0.43% | ' | ' | 0.00% | |||
Interest rate terms | ' | ' | '3-month LIBOR(2) + 20Â basis points | [2] | ' | ' | ' | ||
Maturity | ' | ' | 'February 2017 | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Credit Card Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | London Interbank Offered Rate (LIBOR) [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.20% | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Asset Backed Securities Commercial Paper Rate Plus Various Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 0 | ' | 0 | ' | ' | 500 | |||
Interest rate (in percent) | 0.00% | ' | 0.00% | ' | ' | 0.44% | |||
Interest rate terms | ' | ' | 'Commercial Paper rate + 30 basis points | ' | ' | ' | |||
Maturity | ' | ' | 'March 2014 | ' | ' | ' | |||
Secured Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Asset Backed Securities Commercial Paper Rate Plus Various Basis Points [Member] | Commercial Paper Rate [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.30% | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 1,524 | ' | 1,524 | ' | ' | 1,792 | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities 3-month LIBOR plus various basis points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 97 | ' | 97 | ' | ' | 129 | |||
Long-term borrowings | 869 | ' | 869 | ' | ' | 1,005 | |||
Interest rate (in percent) | 0.48% | ' | 0.48% | ' | ' | 0.48% | |||
Interest rate terms | ' | ' | '3-month LIBOR(2) + 12Â to 45 basis points | [2] | ' | ' | ' | ||
Maturity | ' | ' | 'Various January 2019 - July 2036 (3) | [3] | ' | ' | ' | ||
Maturity range, start | ' | ' | 31-Jan-19 | ' | ' | ' | |||
Maturity range, end | ' | ' | 31-Jul-36 | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities 3-month LIBOR plus various basis points [Member] | Minimum [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.12% | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities 3-month LIBOR plus various basis points [Member] | Maximum [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.45% | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities Prime Plus 100 Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 2 | ' | 2 | ' | ' | 3 | |||
Long-term borrowings | 364 | ' | 364 | ' | ' | 434 | |||
Interest rate (in percent) | 4.25% | ' | 4.25% | ' | ' | 4.25% | |||
Interest rate terms | ' | ' | 'Prime rate + 100 basis points | ' | ' | ' | |||
Maturity | ' | ' | 'June 2031 (3) | [3] | ' | ' | ' | ||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities Prime Plus 100 Basis Points [Member] | Prime Rate [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 1.00% | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities Prime Plus 75 Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Premium | 1 | ' | 1 | ' | ' | 1 | |||
Long-term borrowings | 89 | ' | 89 | ' | ' | 105 | |||
Interest rate (in percent) | 4.00% | ' | 4.00% | ' | ' | 4.00% | |||
Interest rate terms | ' | ' | 'Prime rate + 75 basis points | ' | ' | ' | |||
Maturity | ' | ' | 'July 2042 (3) | [3] | ' | ' | ' | ||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities Prime Plus 75 Basis Points [Member] | Prime Rate [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 0.75% | ' | ' | ' | |||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities 1-month LIBOR Plus 350 Basis Points [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Premium | 2 | ' | 2 | ' | ' | 3 | |||
Long-term borrowings | 202 | ' | 202 | ' | ' | 248 | |||
Interest rate (in percent) | 3.65% | ' | 3.65% | ' | ' | 3.66% | |||
Interest rate terms | ' | ' | '1-month LIBOR(2) + 350 basis points | [2] | ' | ' | ' | ||
Maturity | ' | ' | 'July 2042 (3) | [3] | ' | ' | ' | ||
Secured Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset-Backed Securities 1-month LIBOR Plus 350 Basis Points [Member] | London Interbank Offered Rate (LIBOR) [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Basis spread on variable rate (in percent) | ' | ' | 3.50% | ' | ' | ' | |||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Senior Notes Due 2017 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Principal value | 400 | ' | 400 | ' | ' | 400 | |||
Fair value adjustment | 6 | [1] | ' | 6 | [1] | ' | ' | 13 | [1] |
Long-term borrowings | 406 | ' | 406 | ' | ' | 413 | |||
Interest rate (in percent) | 6.45% | ' | 6.45% | ' | ' | 6.45% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'June 2017 | ' | ' | ' | |||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Senior Notes Due 2019 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 78 | ' | 78 | ' | ' | 78 | |||
Interest rate (in percent) | 10.25% | ' | 10.25% | ' | ' | 10.25% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'July 2019 | ' | ' | ' | |||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Senior Notes Due April 2022 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 98 | ' | 98 | ' | ' | 103 | |||
Long-term borrowings | 224 | [4] | ' | 224 | [4] | ' | ' | 219 | [4] |
Interest rate (in percent) | 5.20% | ' | 5.20% | ' | ' | 5.20% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'April 2022 | ' | ' | ' | |||
Cash premium paid on debt exchange | ' | ' | ' | ' | 115 | ' | |||
Amortization of premium paid on debt exchange | 2 | 2 | 6 | 5 | ' | ' | |||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Senior Notes Due November 2022 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 157 | ' | 157 | ' | ' | 165 | |||
Long-term borrowings | 343 | [5] | ' | 343 | [5] | ' | ' | 335 | [5] |
Interest rate (in percent) | 3.85% | ' | 3.85% | ' | ' | 3.85% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'November 2022 | ' | ' | ' | |||
Cash premium paid on debt exchange | ' | ' | ' | ' | 176 | ' | |||
Amortization of premium paid on debt exchange | 3 | 2 | 9 | 8 | ' | ' | |||
Senior Notes [Member] | Discover Bank [Member] | Senior Bank Notes Due 2018 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 750 | ' | 750 | ' | ' | 750 | |||
Interest rate (in percent) | 2.00% | ' | 2.00% | ' | ' | 2.00% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'February 2018 | ' | ' | ' | |||
Senior Notes [Member] | Discover Bank [Member] | Senior Bank Notes Due 2021 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 2 | ' | 2 | ' | ' | ' | |||
Long-term borrowings | 748 | ' | 748 | ' | ' | ' | |||
Interest rate (in percent) | 3.20% | ' | 3.20% | ' | ' | ' | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'August 2021 | ' | ' | ' | |||
Senior Notes [Member] | Discover Bank [Member] | Senior Bank Notes Due 2023 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 5 | ' | 5 | ' | ' | 6 | |||
Long-term borrowings | 995 | ' | 995 | ' | ' | 994 | |||
Interest rate (in percent) | 4.20% | ' | 4.20% | ' | ' | 4.20% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'August 2023 | ' | ' | ' | |||
Senior Notes [Member] | Discover Bank [Member] | Senior Bank Notes Due 2026 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 1 | ' | 1 | ' | ' | ' | |||
Long-term borrowings | 399 | ' | 399 | ' | ' | ' | |||
Interest rate (in percent) | 4.25% | ' | 4.25% | ' | ' | ' | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'March 2026 | ' | ' | ' | |||
Subordinated Debt [Member] | Discover Bank [Member] | Subordinated Bank Notes Due 2019 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | 200 | ' | 200 | ' | ' | 200 | |||
Interest rate (in percent) | 8.70% | ' | 8.70% | ' | ' | 8.70% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'November 2019 | ' | ' | ' | |||
Subordinated Debt [Member] | Discover Bank [Member] | Subordinated Bank Notes Due 2020 [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Discount | 2 | ' | 2 | ' | ' | 2 | |||
Long-term borrowings | 498 | ' | 498 | ' | ' | 498 | |||
Interest rate (in percent) | 7.00% | ' | 7.00% | ' | ' | 7.00% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'April 2020 | ' | ' | ' | |||
Capital Lease Obligations [Member] | ' | ' | ' | ' | ' | ' | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | |||
Long-term borrowings | $1 | ' | $1 | ' | ' | $1 | |||
Interest rate (in percent) | 4.51% | ' | 4.51% | ' | ' | 4.51% | |||
Interest rate terms | ' | ' | 'Fixed | ' | ' | ' | |||
Maturity | ' | ' | 'April 2016 | ' | ' | ' | |||
[1] | The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in LIBOR. See Note 14: Derivatives and Hedging Activities. | ||||||||
[2] | London Interbank Offered Rate (“LIBORâ€). | ||||||||
[3] | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The dates shown represent final maturity dates. | ||||||||
[4] | Discount primarily relates to $115 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During each of the three months ended September 30, 2014 and 2013, $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013, respectively, $6 million and $5 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. | ||||||||
[5] | Discount primarily relates to $176 million cash premium paid at issuance as part of 2012 private exchange offer to replace higher rate borrowings with borrowings bearing lower interest rates. During the three months ended September 30, 2014 and 2013, respectively, $3 million and $2 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. During the nine months ended September 30, 2014 and 2013. respectively, $9 million and $8 million of the premium paid was amortized and included in interest expense in the condensed consolidated statements of income. |
LongTerm_Borrowings_LongTerm_B
Long-Term Borrowings Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities)) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
Due in 2014 | $0 | ' |
Due in 2015 | 3,303 | ' |
Due in 2016 | 3,050 | ' |
Due in 2017 | 3,905 | ' |
Due in 2018 | 2,650 | ' |
Thereafter | 8,010 | ' |
Long-term borrowings | $20,918 | $20,474 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ' | ' | ' | ' | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | ($72) | ($107) | ($68) | ($72) | ||||
Net change in accumulated other comprehensive income (loss), net of tax | 2 | -2 | -2 | -37 | ||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | -70 | -109 | -70 | -109 | ||||
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ' | ' | ' | ' | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ' | ' | ' | ' | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | 29 | 29 | 19 | 71 | ||||
Net change in accumulated other comprehensive income (loss), net of tax | -9 | 4 | 1 | -38 | ||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | 20 | 33 | 20 | 33 | ||||
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ' | ' | ' | ' | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ' | ' | ' | ' | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | -1 | 10 | 13 | 3 | ||||
Net change in accumulated other comprehensive income (loss), net of tax | 12 | -7 | -2 | 0 | ||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | 11 | 3 | 11 | 3 | ||||
Accumulated Translation Adjustment [Member] | ' | ' | ' | ' | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ' | ' | ' | ' | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | 1 | [1] | 0 | [1] | 1 | [1] | 0 | [1] |
Net change in accumulated other comprehensive income (loss), net of tax | -1 | [1] | 1 | [1] | -1 | [1] | 1 | [1] |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | 0 | [1] | 1 | [1] | 0 | [1] | 1 | [1] |
Accumulated Defined Benefit Plans Adjustment [Member] | ' | ' | ' | ' | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ' | ' | ' | ' | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | -101 | -146 | -101 | -146 | ||||
Net change in accumulated other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 | ||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | ($101) | ($146) | ($101) | ($146) | ||||
[1] | Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax expense/benefit and net gains/losses on foreign currency translation adjustments. |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, before tax | ($15) | $7 | $5 | ($58) |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax benefit (expense) | 6 | -3 | -2 | 22 |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax | -9 | 4 | 3 | -36 |
Available-for-sale investment securities, amounts reclassified from accumulated other comprehensive income, before tax | ' | -1 | -4 | -3 |
Available-for-sale investment securities, amounts reclassified from accumulated other comprehensive income, tax benefit (expense) | ' | 1 | 2 | 1 |
Available-for-sale investment securities, amounts reclassified from other comprehensive income, net of tax | ' | 0 | -2 | -2 |
Available-for-sale investment securities, net change, before tax | -15 | 6 | 1 | -61 |
Available-for-sale investment securities, net change, tax benefit (expense) | 6 | -2 | 0 | 23 |
Available-for-sale investment securities, net change, net of tax | -9 | 4 | 1 | -38 |
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax | 10 | -17 | -28 | -1 |
Cash flow hedges, net unrealized gains (losses) arising during the period, tax benefit (expense) | -4 | 6 | 10 | 0 |
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax | 6 | -11 | -18 | -1 |
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, before tax | 11 | 6 | 26 | 2 |
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, tax benefit (expense) | -5 | -2 | -10 | -1 |
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, net of tax | 6 | 4 | 16 | 1 |
Cash flow hedges, net change, before tax | 21 | -11 | -2 | 1 |
Cash flow hedges, net change, tax benefit (expense) | -9 | 4 | 0 | -1 |
Cash flow hedges, net change, net of tax | 12 | -7 | -2 | 0 |
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, before tax | -1 | 1 | -1 | 1 |
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, tax benefit (expense) | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, net of tax | -1 | 1 | -1 | 1 |
Foreign currency translation adjustments, net change, before tax | -1 | 1 | -1 | 1 |
Foreign currency translation adjustments, net change, tax benefit (expense) | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, net change, net of tax | ($1) | $1 | ($1) | $1 |
Income_Taxes_Income_Taxes_Narr
Income Taxes Income Taxes (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Schedule of Income Taxes Disclosure [Line Items] | ' | ' | ' | ' |
Change in income tax expense | $12 | ' | ($12) | ' |
Effective income tax rate (in percent) | 36.20% | 37.30% | 37.00% | 37.90% |
Period within which resolution of tax appeal is reasonably possible | ' | ' | '12 months | ' |
Minimum [Member] | ' | ' | ' | ' |
Schedule of Income Taxes Disclosure [Line Items] | ' | ' | ' | ' |
Reduction in the amount of unrecognized tax benefits as a result of settlement that is reasonable possible | 90 | ' | 90 | ' |
Maximum [Member] | ' | ' | ' | ' |
Schedule of Income Taxes Disclosure [Line Items] | ' | ' | ' | ' |
Reduction in the amount of unrecognized tax benefits as a result of settlement that is reasonable possible | $340 | ' | $340 | ' |
Income_Taxes_Schedule_of_Recon
Income Taxes (Schedule of Reconciliation of the Company's Effective Tax Rate to the U.S. Federal Statutory Income Tax Rate) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Income before income tax expense | $1,009 | $946 | $3,046 | $3,007 |
Income tax expense | $365 | $353 | $1,127 | $1,139 |
Effective income tax rate (in percent) | 36.20% | 37.30% | 37.00% | 37.90% |
Earnings_Per_Share_Schedule_of
Earnings Per Share (Schedule of Basic and Diluted EPS ) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net income | $644 | $593 | $1,919 | $1,868 |
Preferred stock dividends | -9 | -9 | -28 | -28 |
Net income available to common stockholders | 635 | 584 | 1,891 | 1,840 |
Income allocated to participating securities | -5 | -5 | -13 | -14 |
Net income allocated to common stockholders | $630 | $579 | $1,878 | $1,826 |
Denominator: | ' | ' | ' | ' |
Weighted average shares of common stock outstanding (in shares) | 460 | 482 | 466 | 489 |
Effect of dilutive common stock equivalents (in shares) | 1 | 2 | 1 | 2 |
Weighted average shares of common stock outstanding and common stock equivalents (in shares) | 461 | 484 | 467 | 491 |
Basic earnings per common share (in dollars per share) | $1.37 | $1.20 | $4.03 | $3.73 |
Diluted earnings per common share (in dollars per share) | $1.37 | $1.20 | $4.02 | $3.72 |
Capital_Adequacy_Schedule_of_M
Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Parent Company [Member] | ' | ' |
Compliance with Regulatory Capital Requirements [Line Items] | ' | ' |
Total capital to risk-weighted assets, actual amount | $12,494 | $11,975 |
Total capital to risk-weighted assets, actual ratio (in percent) | 17.80% | 17.40% |
Total capital to risk-weighted assets, minimum capital requirements, amount | 5,611 | 5,492 |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 8.00% | 8.00% |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 7,013 | 6,865 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 10.00% | 10.00% |
Tier I capital to risk-weighted assets, actual amount | 10,910 | 10,409 |
Tier I capital to risk-weighted assets, actual ratio (in percent) | 15.60% | 15.20% |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | 2,805 | 2,746 |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 4,208 | 4,119 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 6.00% | 6.00% |
Tier I capital to average assets, actual amount | 10,910 | 10,409 |
Tier I capital to average assets, actual ratio (in percent) | 13.70% | 13.40% |
Tier I capital to average assets, minimum capital requirements, amount | 3,195 | 3,116 |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount | 3,994 | 3,895 |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 5.00% | 5.00% |
Discover Bank [Member] | ' | ' |
Compliance with Regulatory Capital Requirements [Line Items] | ' | ' |
Total capital to risk-weighted assets, actual amount | 11,044 | 10,496 |
Total capital to risk-weighted assets, actual ratio (in percent) | 15.90% | 15.50% |
Total capital to risk-weighted assets, minimum capital requirements, amount | 5,549 | 5,428 |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 8.00% | 8.00% |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 6,937 | 6,785 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 10.00% | 10.00% |
Tier I capital to risk-weighted assets, actual amount | 9,470 | 8,941 |
Tier I capital to risk-weighted assets, actual ratio (in percent) | 13.70% | 13.20% |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | 2,775 | 2,714 |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 4,162 | 4,071 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 6.00% | 6.00% |
Tier I capital to average assets, actual amount | 9,470 | 8,941 |
Tier I capital to average assets, actual ratio (in percent) | 12.00% | 11.60% |
Tier I capital to average assets, minimum capital requirements, amount | 3,156 | 3,077 |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount | $3,945 | $3,847 |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 5.00% | 5.00% |
Commitments_Contingencies_and_2
Commitments, Contingencies and Guarantees (Narrative) (Details) (USD $) | Sep. 30, 2014 |
ATM Guarantee [Member] | Citishare Network Guarantee [Member] | ' |
Commitments, Contingencies and Guarantees [Line Items] | ' |
Maximum potential future payment | $15,000,000 |
Commitments to Extend Credit [Member] | ' |
Commitments, Contingencies and Guarantees [Line Items] | ' |
Unused commitments to extend credit for loans | $169,100,000,000 |
Commitments_Contingencies_and_3
Commitments, Contingencies and Guarantees (Schedule of Lease Commitments) (Details) (USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Capital Leases, Future Minimum Payments Due [Abstract] | ' |
2014, capitalized Leases | $0 |
2015, capitalized Leases | 1 |
2016, capitalized Leases | 0 |
2017, capitalized Leases | 0 |
2018, capitalized Leases | 0 |
Thereafter, capitalized Leases | 0 |
Total minimum lease payments, capitalized leases | 1 |
Less: amount representing interest, capitalized leases | 0 |
Present value of net minimum lease payments, capitalized leases | 1 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ' |
2014, operating leases | 4 |
2015, operating leases | 16 |
2016, operating leases | 16 |
2017, operating leases | 13 |
2018, operating leases | 12 |
Thereafter, operating leases | 52 |
Total minimum lease payments, operating leases | $113 |
Commitments_Contingencies_and_4
Commitments, Contingencies and Guarantees (Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees) (Details) (USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Merchant Guarantee [Member] | Diners Club [Member] | ' |
Guarantor Obligations [Line Items] | ' |
Maximum potential counterparty exposures to settlement guarantees | $124 |
ATM Guarantee [Member] | PULSE [Member] | ' |
Guarantor Obligations [Line Items] | ' |
Maximum potential counterparty exposures to settlement guarantees | $1 |
Commitments_Contingencies_and_5
Commitments, Contingencies and Guarantees (Schedule of Merchant Chargeback Guarantee) (Details) (Merchant Chargebacks [Member], USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Merchant Chargebacks [Member] | ' | ' | ' | ' | ||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ||||
Aggregate sales transaction volume | $31,963 | [1] | $30,633 | [1] | $92,262 | [1] | $88,073 | [1] |
[1] | Represents period transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume. |
Commitments_Contingencies_and_6
Commitments, Contingencies and Guarantees (Schedule of Settlement Withholdings and Escrow Deposits) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Commitments Contingencies and Guarantees [Abstract] | ' | ' |
Settlement withholdings and escrow deposits | $19 | $17 |
Litigation_Narrative_Details
Litigation (Narrative) (Details) (Pending and Threatened Litigation [Member], USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Pending and Threatened Litigation [Member] | ' |
Loss Contingencies [Line Items] | ' |
Maximum aggregate reasonably possible losses | $165 |
Fair_Value_Measurements_and_Di2
Fair Value Measurements and Disclosures (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Aggregate unpaid principal balance of loans held for sale, fair value option | $144,000,000 | ' | $144,000,000 | ' | $146,000,000 |
Fair value of loans held for sale, fair value option | 148,000,000 | ' | 148,000,000 | ' | 148,000,000 |
Gain (loss) from fair value adjustments on loans held for sale | -10,000,000 | -6,000,000 | -13,000,000 | -30,000,000 | ' |
Residential Mortgage Backed Securities [Member] | ' | ' | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Available for sale securities, par value | 1,500,000,000 | ' | 1,500,000,000 | ' | ' |
Available for sale securities, weighted average coupon rate (in percent) | 2.81% | ' | 2.81% | ' | ' |
Available for sale securities, weighted average remaining maturity (in years) | ' | ' | '4 years | ' | ' |
Fair Value, Measurements, Recurring [Member] | ' | ' | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Asset transfers from level 1 to level 2 within the fair value hierarchy | 0 | 0 | 0 | 0 | ' |
Asset transfers from level 2 to level 1 within the fair value hierarchy | 0 | 0 | 0 | 0 | ' |
Liability transfers from level 1 to level 2 within the fair value hierarchy | 0 | 0 | 0 | 0 | ' |
Liability transfers from level 2 to level 1 within the fair value hierarchy | $0 | $0 | $0 | $0 | ' |
Fair_Value_Measurements_and_Di3
Fair Value Measurements and Disclosures (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | $3,913 | $4,931 |
Mortgage loans held for sale, fair value | 148 | 148 |
Derivative financial instruments, assets, fair value | 62 | 79 |
Derivative financial instruments, liabilities, fair value | 10 | 7 |
Interest Rate Lock Commitments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 6 | 4 |
Forward Contracts [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 1 | 5 |
Derivative financial instruments, liabilities, fair value | 2 | 1 |
Other Derivative Financial Instruments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 55 | 70 |
Derivative financial instruments, liabilities, fair value | 8 | 6 |
US Treasury Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,334 | 2,057 |
US Government Corporations and Agencies Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,038 | 1,561 |
Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | ' | 6 |
Residential Mortgage Backed Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,541 | 1,307 |
Level 1 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 2,372 | 3,618 |
Mortgage loans held for sale, fair value | 0 | 0 |
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 1 [Member] | Interest Rate Lock Commitments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Level 1 [Member] | Forward Contracts [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 1 [Member] | Other Derivative Financial Instruments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 1 [Member] | US Treasury Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,334 | 2,057 |
Level 1 [Member] | US Government Corporations and Agencies Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,038 | 1,561 |
Level 1 [Member] | Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | ' | 0 |
Level 1 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Level 2 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,541 | 1,313 |
Mortgage loans held for sale, fair value | 147 | 148 |
Derivative financial instruments, assets, fair value | 56 | 75 |
Derivative financial instruments, liabilities, fair value | 10 | 7 |
Level 2 [Member] | Interest Rate Lock Commitments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Level 2 [Member] | Forward Contracts [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 1 | 5 |
Derivative financial instruments, liabilities, fair value | 2 | 1 |
Level 2 [Member] | Other Derivative Financial Instruments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 55 | 70 |
Derivative financial instruments, liabilities, fair value | 8 | 6 |
Level 2 [Member] | US Treasury Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Level 2 [Member] | US Government Corporations and Agencies Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Level 2 [Member] | Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | ' | 6 |
Level 2 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 1,541 | 1,307 |
Level 3 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Mortgage loans held for sale, fair value | 1 | 0 |
Derivative financial instruments, assets, fair value | 6 | 4 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 3 [Member] | Interest Rate Lock Commitments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 6 | 4 |
Level 3 [Member] | Forward Contracts [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 3 [Member] | Other Derivative Financial Instruments [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 3 [Member] | US Treasury Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Level 3 [Member] | US Government Corporations and Agencies Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | 0 | 0 |
Level 3 [Member] | Asset-backed Securities, Securitized Loans and Receivables [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | ' | 0 |
Level 3 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale investment securities, fair value | $0 | $0 |
Fair_Value_Measurements_and_Di4
Fair Value Measurements and Disclosures (Schedule of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Interest Rate Lock Commitments [Member] | ' | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' | ' | ' | ' |
Level 3 assets and liabilities, balance at beginning of period | $8 | $8 | $4 | $12 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total net gains included in earnings | 18 | 24 | 61 | 105 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 2 | -2 | 4 | 3 |
Transfers of IRLCs to closed loans | -22 | -22 | -63 | -112 |
Level 3 assets and liabilities, balance at end of period | 6 | 8 | 6 | 8 |
Forward Contracts [Member] | ' | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' | ' | ' | ' |
Level 3 assets and liabilities, balance at beginning of period | ' | 1 | 0 | 0 |
Transfers into Level 3 | ' | 0 | 0 | 0 |
Transfers out of Level 3 | ' | -1 | -1 | -2 |
Total net gains included in earnings | ' | 0 | 1 | 2 |
Purchases | ' | 0 | 0 | 0 |
Sales | ' | 0 | 0 | 0 |
Settlements | ' | 0 | 0 | 0 |
Transfers of IRLCs to closed loans | ' | 0 | 0 | 0 |
Level 3 assets and liabilities, balance at end of period | 0 | 0 | 0 | 0 |
Mortgage Loans Held For Sale [Member] | ' | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' | ' | ' | ' |
Level 3 assets and liabilities, balance at beginning of period | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 1 | 1 | 2 | 3 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total net gains included in earnings | 0 | 0 | 0 | 0 |
Purchases | 1 | 0 | 1 | 1 |
Sales | -1 | 0 | -2 | -2 |
Settlements | 0 | 0 | 0 | -1 |
Transfers of IRLCs to closed loans | 0 | 0 | 0 | 0 |
Level 3 assets and liabilities, balance at end of period | $1 | $1 | $1 | $1 |
Fair_Value_Measurements_and_Di5
Fair Value Measurements and Disclosures Fair Value Measurements and Disclosures (Schedule of Significant Unobservable Inputs Related to Level 3 Assets and Liabilities) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | ||
In Millions, unless otherwise specified | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | Mortgage Loans Held For Sale [Member] | |||||||||||||||
Quantitative Risk Model [Member] | Quantitative Risk Model [Member] | Quantitative Risk Model [Member] | Quantitative Risk Model [Member] | Quantitative Risk Model [Member] | Market Approach Valuation Technique [Member] | Market Approach Valuation Technique [Member] | Market Approach Valuation Technique [Member] | Market Approach Valuation Technique [Member] | Market Approach Valuation Technique [Member] | |||||||||||||||
Loan Funding Probability [Member] | Loan Funding Probability [Member] | Loan Funding Probability [Member] | Loan Funding Probability [Member] | Loss Severity [Member] | Loss Severity [Member] | Loss Severity [Member] | Loss Severity [Member] | |||||||||||||||||
Minimum [Member] | Maximum [Member] | Weighted Average [Member] | Minimum [Member] | Maximum [Member] | Weighted Average [Member] | |||||||||||||||||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Significant unobservable inputs, fair value (in dollars) | $6 | $8 | $4 | $8 | $8 | $12 | $1 | $0 | $0 | $1 | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Significant unobservable inputs, valuation technique | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Quantitative risk models | ' | ' | ' | ' | 'Market comparables | ' | ' | ' | ' | ||
Significant unobservable inputs, significant unobservable input | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Loan funding probability | ' | ' | ' | ' | 'Loss severity | ' | ' | ' | ||
Significant unobservable inputs, ranges of inputs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13.00% | 99.00% | 57.00% | [1] | ' | ' | 17.00% | 20.00% | 19.00% | [1] |
[1] | Weighted averages are calculated using notional amounts for derivative instruments. |
Fair_Value_Measurements_and_Di6
Fair Value Measurements and Disclosures Fair Value Measurements and Disclosures (Schedule of Financial Instruments Measured at Other Than Fair Value) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | $82 | [1] | $58 | [1] |
Fair Value, Measurements, Nonrecurring [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 82 | 58 | ||
Cash and cash equivalents | 7,382 | 6,554 | ||
Restricted cash | 103 | 182 | ||
Net loan receivables | 66,744 | [2] | 64,968 | [2] |
Accrued interest receivables | 602 | 556 | ||
Deposits | 45,527 | 45,231 | ||
Short-term borrowings | 139 | 140 | ||
Accrued interest payables | 126 | 117 | ||
Fair Value, Measurements, Nonrecurring [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 16,554 | 17,283 | ||
Fair Value, Measurements, Nonrecurring [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 5,182 | 3,935 | ||
Fair Value, Measurements, Nonrecurring [Member] | US Treasury Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 1 | 1 | ||
Fair Value, Measurements, Nonrecurring [Member] | US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 10 | 14 | ||
Fair Value, Measurements, Nonrecurring [Member] | Residential Mortgage Backed Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 71 | 43 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 82 | 60 | ||
Cash and cash equivalents | 7,382 | 6,554 | ||
Restricted cash | 103 | 182 | ||
Net loan receivables | 65,574 | [2] | 63,975 | [2] |
Accrued interest receivables | 602 | 556 | ||
Deposits | 45,382 | 44,959 | ||
Short-term borrowings | 139 | 140 | ||
Accrued interest payables | 126 | 117 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 16,276 | 16,986 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 4,642 | 3,488 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | US Treasury Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 1 | 1 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 10 | 15 | ||
Fair Value, Measurements, Nonrecurring [Member] | Reported Value Measurement [Member] | Residential Mortgage Backed Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 71 | 44 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 1 | 1 | ||
Cash and cash equivalents | 7,382 | 6,554 | ||
Restricted cash | 103 | 182 | ||
Net loan receivables | 0 | [2] | 0 | [2] |
Accrued interest receivables | 0 | 0 | ||
Deposits | 0 | 0 | ||
Short-term borrowings | 0 | 0 | ||
Accrued interest payables | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | US Treasury Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 1 | 1 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 81 | 57 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Net loan receivables | 0 | [2] | 0 | [2] |
Accrued interest receivables | 602 | 556 | ||
Deposits | 45,527 | 45,231 | ||
Short-term borrowings | 139 | 140 | ||
Accrued interest payables | 126 | 117 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 14,894 | 15,312 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 5,181 | 3,934 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | US Treasury Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 10 | 14 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 71 | 43 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Net loan receivables | 66,744 | [2] | 64,968 | [2] |
Accrued interest receivables | 0 | 0 | ||
Deposits | 0 | 0 | ||
Short-term borrowings | 0 | 0 | ||
Accrued interest payables | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 1,660 | 1,971 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Long-term borrowings | 1 | 1 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | US Treasury Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | US States and Political Subdivisions Debt Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | Residential Mortgage Backed Securities [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Held-to-maturity investment securities, fair value | $0 | $0 | ||
[1] | Held-to-maturity investment securities are reported at amortized cost. | |||
[2] | Net loan receivables exclude mortgage loans held for sale that are measured at fair value on a recurring basis. |
Derivatives_and_Hedging_Activi2
Derivatives and Hedging Activities (Narrative) (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Derivative [Line Items] | ' |
Additional collateral | $97 |
Credit Rating Did Not Meet Specified Threshold [Member] | ' |
Derivative [Line Items] | ' |
Cash collateral posted | 4 |
Interest Expense [Member] | ' |
Derivative [Line Items] | ' |
Cash flow hedge loss to be reclassified to earnings within twelve months | ($43) |
Secured Debt [Member] | ' |
Derivative [Line Items] | ' |
Initial maximum period for cash flow hedges | '5 years |
Deposits [Member] | ' |
Derivative [Line Items] | ' |
Initial maximum period for cash flow hedges | '7 years |
Credit Card Receivable [Member] | ' |
Derivative [Line Items] | ' |
Initial maximum period for cash flow hedges | '3 years |
Cash Flow Hedging [Member] | Credit Card Receivable [Member] | ' |
Derivative [Line Items] | ' |
Derivative, number of transactions (in transations) | 0 |
Derivatives_and_Hedging_Activi3
Derivatives and Hedging Activities (Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances) (Details) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||
In Millions, unless otherwise specified | USD ($) | USD ($) | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | Not designated as hedges [Member] | ||||||||||||
Cash Flow Hedging [Member] | Cash Flow Hedging [Member] | Fair Value Hedge [Member] | Fair Value Hedge [Member] | Net Investment Hedging [Member] | Net Investment Hedging [Member] | Net Investment Hedging [Member] | Net Investment Hedging [Member] | Interest Rate Swap [Member] | Interest Rate Swap [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Interest Rate Lock Commitments [Member] | Interest Rate Lock Commitments [Member] | When-Issued Forward Contracts [Member] | When-Issued Forward Contracts [Member] | |||||||||||||||
Interest Rate Swap [Member] | Interest Rate Swap [Member] | Interest Rate Swap [Member] | Interest Rate Swap [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | USD ($) | USD ($) | USD ($) | CHF | EUR (€) | GBP (£) | SGD | USD ($) | CHF | EUR (€) | GBP (£) | SGD | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||||||||||||
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | EUR (€) | USD ($) | EUR (€) | transactions | transactions | transactions | transactions | transactions | ||||||||||||||||||||||||||||
transactions | transactions | transactions | ||||||||||||||||||||||||||||||||||||||
Derivatives, Fair Value [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||
Derivative, notional amount | ' | ' | $4,100 | $2,650 | $5,507 | $7,138 | $29 | [1] | € 23 | [1] | $35 | [1] | € 26 | [1] | $387 | [2] | $796 | [2] | $49 | [3] | 8 | € 23 | £ 6 | 1 | $44 | [3] | 5 | € 20 | £ 6 | 1 | $1,084 | $693 | $407 | [2] | $235 | [2] | $11 | $40 | ||
Derivative, number of outstanding derivative contracts (in transations) | ' | ' | 8 | ' | 175 | ' | 1 | 1 | ' | ' | 1 | [2] | ' | 8 | 8 | 8 | 8 | 8 | ' | ' | ' | ' | ' | 433 | ' | 1,742 | [2] | ' | 1 | ' | ||||||||||
Derivative assets | 62 | [4] | 79 | [4] | 16 | 18 | 39 | 52 | 0 | ' | 0 | ' | 0 | [2] | 0 | [2] | 0 | ' | ' | ' | ' | 0 | ' | ' | ' | ' | 1 | 5 | 6 | [2] | 4 | [2] | ' | ' | ||||||
Collateral held, derivative assets | -49 | [5] | -61 | [5] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Total net derivative assets | 13 | 18 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||
Derivative liabilities | 10 | [4] | 7 | [4] | 2 | 0 | 6 | 6 | 0 | ' | 0 | ' | 0 | [2] | 0 | [2] | 0 | ' | ' | ' | ' | 0 | ' | ' | ' | ' | 2 | 1 | 0 | [2] | 0 | [2] | ' | ' | ||||||
Collateral posted, derivative liabilities | -10 | [5] | -7 | [5] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Total net derivative liabilities | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||
[1] | The foreign exchange forward contract has a notional amount of EUR 23 million and EUR 26 million as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||||||||||||||||||||||
[2] | Interest rate swaps not designated as hedges and interest rate lock commitments do not have associated master netting arrangements. | |||||||||||||||||||||||||||||||||||||||
[3] | The foreign exchange forward contracts have notional amounts of EUR 23 million, GBP 6 million, SGD 1 million and CHF 8 million as of September 30, 2014, and EUR 20 million, GBP 6 million, SGD 1 million and CHF 5 million as of December 31, 2013. | |||||||||||||||||||||||||||||||||||||||
[4] | In addition to the derivatives disclosed in the table, the Company had one outstanding forward contract to purchase when-issued mortgage-backed securities as part of the community reinvestment initiatives. This forward contract had a notional amount of $11 million and $40 million and immaterial fair values as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||||||||||||||||||||||
[5] | Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. |
Derivatives_and_Hedging_Activi4
Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Designated as hedges [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | ($2) | $6 | $7 | $28 |
Designated as hedges [Member] | Cash Flow and Net Investment Hedging [Member] | Interest Rate Swap [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Total gains (losses) recognized in other comprehensive income after amounts reclassified into earnings, pretax, interest rate swaps, cash flow hedges/net investment hedges | 23 | -13 | 0 | -1 |
Designated as hedges [Member] | Cash Flow and Net Investment Hedging [Member] | Interest Rate Swap [Member] | Other Comprehensive Income [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Total gains (losses) recognized in other comprehensive income after amounts reclassified into earnings, pretax, interest rate swaps, cash flow hedges/net investment hedges | 23 | -13 | 0 | -1 |
Designated as hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Amount reclassified from other comprehensive income into income, interest rate swaps, cash flow hedges | -11 | -5 | -26 | -2 |
Designated as hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member] | Interest Income [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Amount reclassified from other comprehensive income into income, interest rate swaps, cash flow hedges | 0 | 0 | 0 | 4 |
Designated as hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member] | Interest Expense [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Amount reclassified from other comprehensive income into income, interest rate swaps, cash flow hedges | -11 | -5 | -26 | -6 |
Designated as hedges [Member] | Fair Value Hedging [Member] | Hedged Item [Member] | Interest Expense [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Interest expense - ineffectiveness, interest rate swaps, fair value hedges | 16 | -10 | 18 | 42 |
Interest expense - other, interest rate swaps, fair value hedges | -2 | -1 | -1 | -4 |
Gain (loss) on hedged item | 14 | -11 | 17 | 38 |
Designated as hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swap [Member] | Derivative [Member] | Interest Expense [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Interest expense - ineffectiveness, interest rate swaps, fair value hedges | -14 | 12 | -13 | -38 |
Interest expense - other, interest rate swaps, fair value hedges | 9 | 10 | 29 | 30 |
Gain (loss) on derivatives | -5 | 22 | 16 | -8 |
Not designated as hedges [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | 25 | 4 | 60 | 101 |
Not designated as hedges [Member] | Interest Rate Swap [Member] | Other Income | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | 0 | 0 | -1 | 0 |
Not designated as hedges [Member] | Foreign Exchange Forward [Member] | Other Income | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | 4 | -2 | 4 | -1 |
Not designated as hedges [Member] | Forward Contracts [Member] | Other Income | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | 3 | -18 | -4 | -3 |
Not designated as hedges [Member] | Interest Rate Lock Commitments [Member] | Other Income | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Gain (loss) on derivatives | $18 | $24 | $61 | $105 |
Segment_Disclosures_Narrative_
Segment Disclosures (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2014 | |
segment | |
Segment Reporting [Abstract] | ' |
Number of reportable segments | 2 |
Segment_Disclosures_Schedule_o
Segment Disclosures (Schedule of Segment Disclosures) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | $1,926 | $1,787 | $5,622 | $5,222 |
Interest expense | 288 | 278 | 832 | 873 |
Net interest income | 1,638 | 1,509 | 4,790 | 4,349 |
Provision for loan losses | 354 | 333 | 986 | 732 |
Other income | 552 | 553 | 1,650 | 1,746 |
Other expense | 827 | 783 | 2,408 | 2,356 |
Income before income tax expense | 1,009 | 946 | 3,046 | 3,007 |
Credit Card Receivable [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 1,613 | 1,513 | 4,710 | 4,427 |
Provision for loan losses | 318 | 291 | 865 | 611 |
Private Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 80 | 64 | 228 | 183 |
PCI Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 64 | 67 | 198 | 205 |
Personal Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 145 | 122 | 415 | 334 |
Other [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 24 | 21 | 71 | 73 |
Direct Banking [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 1,926 | 1,787 | 5,622 | 5,222 |
Interest expense | 288 | 278 | 832 | 873 |
Net interest income | 1,638 | 1,509 | 4,790 | 4,349 |
Provision for loan losses | 356 | 333 | 986 | 717 |
Other income | 475 | 475 | 1,414 | 1,501 |
Other expense | 776 | 733 | 2,259 | 2,180 |
Income before income tax expense | 981 | 918 | 2,959 | 2,953 |
Direct Banking [Member] | Credit Card Receivable [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 1,613 | 1,513 | 4,710 | 4,427 |
Direct Banking [Member] | Private Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 80 | 64 | 228 | 183 |
Direct Banking [Member] | PCI Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 64 | 67 | 198 | 205 |
Direct Banking [Member] | Personal Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 145 | 122 | 415 | 334 |
Direct Banking [Member] | Other [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 24 | 21 | 71 | 73 |
Payment Services [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Net interest income | 0 | 0 | 0 | 0 |
Provision for loan losses | -2 | 0 | 0 | 15 |
Other income | 77 | 78 | 236 | 245 |
Other expense | 51 | 50 | 149 | 176 |
Income before income tax expense | 28 | 28 | 87 | 54 |
Payment Services [Member] | Credit Card Receivable [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Payment Services [Member] | Private Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Payment Services [Member] | PCI Student Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Payment Services [Member] | Personal Loans [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Payment Services [Member] | Other [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Interest income | $0 | $0 | $0 | $0 |