Document_and_Entity_Informatio
Document and Entity Information Document (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 20, 2015 | Jun. 30, 2014 | |
Document Information [Line Items] | |||
Document type | 10-K | ||
Amendment flag | FALSE | ||
Document period end date | 31-Dec-14 | ||
Document fiscal year focus | 2014 | ||
Document fiscal period focus | FY | ||
Entity registrant name | Discover Financial Services | ||
Entity central index key | 1393612 | ||
Current fiscal year end date | -19 | ||
Entity filer category | Large Accelerated Filer | ||
Entity common stock, shares outstanding | 447,239,938 | ||
Entity well-known seasoned issuer | Yes | ||
Entity voluntary filers | No | ||
Entity current reporting status | Yes | ||
Entity public float | $28,651,886,813 |
Consolidated_Statements_of_Fin
Consolidated Statements of Financial Condition (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Assets | ||
Cash and cash equivalents | $7,284 | $6,554 |
Restricted cash | 106 | 182 |
Investment securities (includes $3,847 and $4,931 at fair value at December 31, 2014 and 2013, respectively) | 3,949 | 4,991 |
Loan receivables: | ||
Loan receivables (includes $122 and $148 at fair value at December 31, 2014 and 2013, respectively) | 69,969 | 65,771 |
Allowance for loan losses | -1,746 | -1,648 |
Net loan receivables | 68,223 | 64,123 |
Premises and equipment, net | 670 | 654 |
Goodwill | 257 | 284 |
Intangible assets, net | 176 | 185 |
Other assets | 2,461 | 2,367 |
Total assets | 83,126 | 79,340 |
Deposits: | ||
Interest-bearing deposit accounts | 45,792 | 44,766 |
Non-interest bearing deposit accounts | 297 | 193 |
Total deposits | 46,089 | 44,959 |
Short-term borrowings | 113 | 140 |
Long-term borrowings | 22,544 | 20,474 |
Accrued expenses and other liabilities | 3,246 | 2,958 |
Total liabilities | 71,992 | 68,531 |
Commitments, contingencies and guarantees (Notes 15, 18, and 19) | ||
Stockholders’ Equity: | ||
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 558,194,324 and 555,349,629 shares issued at December 31, 2014 and 2013, respectively | 5 | 5 |
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 575,000 shares issued and outstanding and aggregate liquidation preference of $575 at December 31, 2014 and 2013, respectively | 560 | 560 |
Additional paid-in capital | 3,790 | 3,687 |
Retained earnings | 11,467 | 9,611 |
Accumulated other comprehensive loss | -138 | -68 |
Treasury stock, at cost; 109,006,038 and 83,105,578 shares at December 31, 2014 and 2013, respectively | -4,550 | -2,986 |
Total stockholders’ equity | 11,134 | 10,809 |
Total liabilities and stockholders’ equity | 83,126 | 79,340 |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Assets | ||
Restricted cash | 102 | 179 |
Loan receivables: | ||
Loan receivables (includes $122 and $148 at fair value at December 31, 2014 and 2013, respectively) | 32,304 | 33,360 |
Allowance for loan losses | -833 | -861 |
Other assets | 37 | 34 |
Deposits: | ||
Long-term borrowings | 17,395 | 16,986 |
Accrued expenses and other liabilities | $11 | $9 |
Consolidated_Statements_of_Fin1
Consolidated Statements of Financial Condition (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Statement of Financial Position [Abstract] | ||||
Amount of total investment securities at fair value | $3,847,000,000 | [1] | $4,931,000,000 | [1] |
Amount of total loan receivables at fair value | 122,000,000 | 148,000,000 | ||
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 | 558,194,324 | 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 | $575,000,000 | $575,000,000 | ||
Treasury stock, shares | 109,006,038 | 83,105,578 | ||
[1] | Available-for-sale investment securities are reported at fair value. |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Interest income: | ||||
Credit card loans | $510 | $6,359 | $5,978 | $5,751 |
Other loans | 78 | 1,151 | 997 | 856 |
Investment securities | 7 | 67 | 74 | 80 |
Other interest income | 0 | 19 | 15 | 16 |
Total interest income | 595 | 7,596 | 7,064 | 6,703 |
Interest expense: | ||||
Deposits | 65 | 614 | 698 | 845 |
Short-term borrowings | 0 | 2 | 3 | 1 |
Long-term borrowings | 38 | 518 | 445 | 485 |
Total interest expense | 103 | 1,134 | 1,146 | 1,331 |
Net interest income | 492 | 6,462 | 5,918 | 5,372 |
Provision for loan losses | 178 | 1,443 | 1,086 | 848 |
Net interest income after provision for loan losses | 314 | 5,019 | 4,832 | 4,524 |
Other income: | ||||
Discount and interchange revenue, net | 82 | 979 | 1,126 | 1,035 |
Protection products revenue | 33 | 314 | 350 | 409 |
Loan fee income | 29 | 334 | 320 | 325 |
Transaction processing revenue | 18 | 182 | 192 | 218 |
Gain on investments | 2 | 4 | 5 | 26 |
Gain on origination and sale of mortgage loans | 17 | 81 | 144 | 105 |
Other income | 19 | 121 | 169 | 163 |
Total other income | 200 | 2,015 | 2,306 | 2,281 |
Other expense: | ||||
Employee compensation and benefits | 87 | 1,242 | 1,164 | 1,048 |
Marketing and business development | 51 | 735 | 717 | 603 |
Information processing and communications | 25 | 346 | 333 | 289 |
Professional fees | 34 | 450 | 410 | 432 |
Premises and equipment | 8 | 92 | 82 | 76 |
Other expense | 35 | 475 | 488 | 604 |
Total other expense | 240 | 3,340 | 3,194 | 3,052 |
Income before income tax expense | 274 | 3,694 | 3,944 | 3,753 |
Income tax expense | 104 | 1,371 | 1,474 | 1,408 |
Net income | 170 | 2,323 | 2,470 | 2,345 |
Net income allocated to common stockholders | $168 | $2,270 | $2,414 | $2,318 |
Basic earnings per common share (in dollars per share) | $0.34 | $4.91 | $4.97 | $4.47 |
Diluted earnings per common share (in dollars per share) | $0.34 | $4.90 | $4.96 | $4.46 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
Net income | $170 | $2,323 | $2,470 | $2,345 | ||||
Other comprehensive (loss) income, net of taxes | ||||||||
Unrealized gain (loss) on available-for-sale investment securities, net of tax | -3 | [1] | 4 | -52 | 19 | [1] | ||
Unrealized (loss) gain on cash flow hedges, net of tax | 0 | -20 | 10 | -4 | [2] | |||
Unrealized pension plan (loss) gain, net of tax | 6 | [3] | -53 | 45 | -38 | [3] | ||
Foreign currency translation adjustments, net of tax | 0 | -1 | 1 | 0 | ||||
Other comprehensive (loss) income | 3 | [4] | -70 | [4] | 4 | [4] | -23 | [4] |
Comprehensive income | $173 | $2,253 | $2,474 | $2,322 | ||||
[1] | Represents the difference between the fair value and amortized cost of available-for-sale investment securities. | |||||||
[2] | Represents unrealized gains (losses) related to effective portion of cash flow hedges. | |||||||
[3] | Reflects adjustments to the funded status of pension plan, which is the difference between the fair value of the plan assets and the projected benefit obligation. | |||||||
[4] | In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. As the result, the Company has adjusted its AOCI presentation prospectively, as required, and therefore additional table was included to present the required information for the current period and the presentation has changed from historical periods. |
Consolidated_Statements_of_Cha
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 (Loss) Income [Member] | Treasury Stock [Member] | |
In Millions, except Share data, unless otherwise specified | ||||||||
Stockholders' equity, balance at beginning of period at Nov. 30, 2011 | $8,242 | $0 | $5 | $3,508 | $5,243 | ($52) | ($462) | |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Nov. 30, 2011 | 0 | |||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Nov. 30, 2011 | 549,749,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,345 | 2,345 | ||||||
Other comprehensive income (loss) | -23 | -23 | ||||||
Purchases of treasury stock | -1,216 | -1,216 | ||||||
Common stock issued under employee benefit plans (in shares) | 54,000 | |||||||
Common stock issued under employee benefit plans | 2 | 0 | 2 | |||||
Common stock issued and stock-based compensation expense (in shares) | 3,246,000 | |||||||
Common stock issued and stock-based compensation expense | 83 | 0 | 83 | |||||
Dividends - common stock | -210 | -210 | ||||||
Dividends - preferred stock | -5 | -5 | ||||||
Issuance of preferred stock, net of issuance costs (in shares) | 575,000 | |||||||
Issuance of preferred stock, net of issuance costs | 560 | 560 | ||||||
Stockholders' equity, balance at end of period at Nov. 30, 2012 | 9,778 | 560 | 5 | 3,593 | 7,373 | -75 | -1,678 | |
Preferred stock, shares outstanding, balance at end of period (in shares) at Nov. 30, 2012 | 575,000 | |||||||
Common stock, shares outstanding, balance at end of period (in shares) at Nov. 30, 2012 | 553,049,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 170 | 170 | ||||||
Other comprehensive income (loss) | 3 | 3 | ||||||
Purchases of treasury stock | -12 | -12 | ||||||
Common stock issued and stock-based compensation expense (in shares) | 302,000 | |||||||
Common stock issued and stock-based compensation expense | 5 | 0 | 5 | |||||
Dividends - common stock | -71 | -71 | ||||||
Dividends - preferred stock | 0 | |||||||
Stockholders' equity, balance at end of period at Dec. 31, 2012 | 9,873 | 560 | 5 | 3,598 | 7,472 | -72 | -1,690 | |
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2012 | 575,000 | |||||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2012 | 553,351,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,470 | 2,470 | ||||||
Other comprehensive income (loss) | 4 | [1] | 4 | |||||
Purchases of treasury stock | -1,296 | -1,296 | ||||||
Common stock issued under employee benefit plans (in shares) | 66,000 | |||||||
Common stock issued under employee benefit plans | 3 | 0 | 3 | |||||
Common stock issued and stock-based compensation expense (in shares) | 1,933,000 | |||||||
Common stock issued and stock-based compensation expense | 86 | 0 | 86 | |||||
Dividends - common stock | -294 | -294 | ||||||
Dividends - preferred stock | -37 | -37 | ||||||
Stockholders' equity, balance at end of period at Dec. 31, 2013 | 10,809 | 560 | 5 | 3,687 | 9,611 | -68 | -2,986 | |
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2013 | 575,000 | 575,000 | ||||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2013 | 555,350,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,323 | 2,323 | ||||||
Other comprehensive income (loss) | -70 | [1] | -70 | |||||
Purchases of treasury stock | -1,564 | -1,564 | ||||||
Common stock issued under employee benefit plans (in shares) | 62,000 | |||||||
Common stock issued under employee benefit plans | 3 | 0 | 3 | |||||
Common stock issued and stock-based compensation expense (in shares) | 2,782,000 | |||||||
Common stock issued and stock-based compensation expense | 100 | 0 | 100 | |||||
Dividends - common stock | -430 | -430 | ||||||
Dividends - preferred stock | -37 | -37 | ||||||
Stockholders' equity, balance at end of period at Dec. 31, 2014 | $11,134 | $560 | $5 | $3,790 | $11,467 | ($138) | ($4,550) | |
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2014 | 575,000 | 575,000 | ||||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2014 | 558,194,000 | |||||||
[1] | In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. As the result, the Company has adjusted its AOCI presentation prospectively, as required, and therefore additional table was included to present the required information for the current period and the presentation has changed from historical periods. |
Consolidated_Statements_of_Cha1
Consolidated Statements of Changes in Stockholders' Equity Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared, common stock (dollars per share) | $0.14 | $0.92 | $0.60 | $0.40 |
Dividends declared, preferred stock (dollars per share) | $0 | $65 | $65 | $8.13 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Cash flows from operating activities | ||||
Net income | $170 | $2,323 | $2,470 | $2,345 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Provision for loan losses | 178 | 1,443 | 1,086 | 848 |
Deferred income taxes | -12 | -11 | 322 | 146 |
Depreciation and amortization on premises and equipment | 9 | 126 | 111 | 95 |
Amortization of deferred revenues | -16 | -214 | -193 | -204 |
Other depreciation and amortization | 15 | 243 | 223 | 172 |
Accretion of accretable yield on acquired loans | -24 | -260 | -272 | -303 |
Gain on investments | -2 | -4 | -5 | -26 |
Loss on equity method and other investments | 1 | 29 | 18 | 11 |
Loss on premises and equipment | 0 | 0 | 8 | 0 |
Gain on origination and sale of loans | -17 | -81 | -144 | -104 |
Stock-based compensation expense | 3 | 60 | 59 | 47 |
Elimination of credit card rewards program forfeitures | 0 | 178 | 0 | 0 |
Impairment of goodwill | 0 | 27 | 0 | 0 |
Loss on Diners Club Italy business held for sale | 0 | 21 | 0 | 0 |
Proceeds from sale of mortgage loans originated for sale | 378 | 2,811 | 4,160 | 1,798 |
Net principal disbursed on mortgage loans originated for sale | -392 | -2,700 | -3,805 | -2,021 |
Changes in assets and liabilities: | ||||
Increase in other assets | -68 | -238 | -252 | -112 |
Increase (decrease) in accrued expenses and other liabilities | -1 | 73 | -269 | 349 |
Net cash provided by operating activities | 222 | 3,826 | 3,517 | 3,041 |
Cash flows from investing activities | ||||
Maturities and sales of available-for-sale investment securities | 112 | 1,460 | 1,423 | 1,783 |
Purchases of available-for-sale investment securities | -132 | -390 | -325 | -1,816 |
Maturities of held-to-maturity investment securities | 1 | 10 | 29 | 11 |
Purchases of held-to-maturity investment securities | 0 | -53 | -2 | -51 |
Proceeds from sale of student loans held for sale | 0 | 0 | 0 | 269 |
Net principal disbursed on loans originated for investment | -1,599 | -5,095 | -3,915 | -4,085 |
Purchases of loan receivables | -27 | 0 | -136 | -490 |
Purchase of net assets of a business | 0 | 0 | 0 | -49 |
Purchases of other investments | -4 | -60 | -114 | -65 |
Proceeds from sale of other investments | 17 | 0 | 0 | 0 |
Decrease (increase) in restricted cash | 2,054 | 76 | 108 | -1,057 |
Proceeds from sale of premises and equipment | 0 | 0 | 0 | 1 |
Purchases of premises and equipment | -13 | -145 | -231 | -144 |
Net cash (used for) provided by investing activities | 409 | -4,197 | -3,163 | -5,693 |
Cash flows from financing activities | ||||
Net (decrease) increase in short-term borrowings | 43 | -27 | -231 | 234 |
Proceeds from issuance of securitized debt | 0 | 5,049 | 4,650 | 5,850 |
Maturities and repayment of securitized debt | -2,066 | -4,678 | -3,638 | -3,752 |
Proceeds from issuance of other long-term borrowings | 0 | 1,646 | 1,744 | 0 |
Repayment of long-term borrowings and bank notes | 0 | 0 | 0 | -13 |
Payment of contingent consideration for purchase of net assets of a business, at fair value | 0 | 0 | -9 | 0 |
Premium paid on debt exchange | 0 | 0 | 0 | -291 |
Proceeds from issuance of common stock | 2 | 5 | 13 | 26 |
Purchases of treasury stock | -12 | -1,564 | -1,296 | -1,216 |
Net increase in deposits | 65 | 1,137 | 2,782 | 2,539 |
Proceeds from issuance of preferred stock | 0 | 0 | 0 | 560 |
Dividends paid on common and preferred stock | -5 | -467 | -399 | -209 |
Net cash provided by (used for) financing activities | -1,973 | 1,101 | 3,616 | 3,728 |
Net increase (decrease) in cash and cash equivalents | -1,342 | 730 | 3,970 | 1,076 |
Cash and cash equivalents, at beginning of period | 3,926 | 6,554 | 2,584 | 2,850 |
Cash and cash equivalents, at end of period | 2,584 | 7,284 | 6,554 | 3,926 |
Cash paid during the period for: | ||||
Interest expense | 81 | 933 | 975 | 1,203 |
Income taxes, net of income tax refunds | -1 | 1,388 | 1,348 | 1,301 |
Non-cash investing and financing transactions: | ||||
Initial fair value of contingent consideration paid for purchase of net assets of a business | 0 | 0 | 0 | 8 |
Assumption of debt by buyer related to loans sold | $0 | $0 | $0 | $425 |
Background_and_Basis_of_Presen
Background and Basis of Presentation | 12 Months Ended |
Dec. 31, 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”). The Company provides direct banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, private student loans, personal loans, home loans, home equity loans and deposit products. The Company also operates the Discover Network, the PULSE network (“PULSE”), and Diners Club International (“Diners Club”). The Discover Network processes transactions for Discover-branded credit cards and also provides payment transaction processing and settlement services. 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, which are generally financial institutions, 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 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 provides payment transaction processing and settlement services on the Discover Network. 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. | |
Change in Fiscal Year End | |
On December 3, 2012, the Company's board of directors approved a change in the Company’s fiscal year end from November 30 to December 31 of each year. This fiscal year change was effective January 1, 2013. As a result of the change, the Company had a one month transition period in December 2012. The audited results for the one month ended December 31, 2012 are included in this report. | |
Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. The Company believes that the estimates used in the preparation of the consolidated financial statements are reasonable. Actual results could differ from these estimates. | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company's policy is to consolidate all entities in which it owns more than 50% of the outstanding voting stock unless it does not control the entity. However, the Company did not have a controlling voting interest in any entity other than its wholly-owned subsidiaries in the periods presented in the accompanying consolidated financial statements. | |
It is also the Company's policy to consolidate any variable interest entity for which the Company is the primary beneficiary, as defined by GAAP. On this basis, the Company consolidates the Discover Card Master Trust I and the Discover Card Execution Note Trust as well as three student loan securitization trusts acquired in 2010. The Company is deemed to be the primary beneficiary of each of these trusts since it is, for each, the trust servicer and the holder of both the residual interest and the majority of the most subordinated interests. Because of those involvements, the Company has, for each trust, i) the power to direct the activities that most significantly impact the economic performance of the trust, and ii) the obligation (or right) to absorb losses (or receive benefits) of the trust that could potentially be significant. The Company has determined that it was not the primary beneficiary of any other variable interest entity during the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 or one month ended December 31, 2012. | |
For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. The Company also applies the equity method to its investments in qualified affordable housing projects and similar tax credit partnerships. In cases where the Company's equity investment is less than 20% and significant influence does not exist, such investments are carried at cost. | |
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. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies |
Cash and Cash Equivalents | |
Cash and cash equivalents is defined by the Company as cash on deposit with banks, including time deposits and other highly liquid investments, with maturities of 90 days or less when purchased. Cash and cash equivalents included $846 million and $719 million of cash and due from banks and $6.4 billion and $5.8 billion of interest-earning deposits in other banks at December 31, 2014 and 2013, respectively. | |
Restricted Cash | |
Restricted cash includes cash for which the Company's ability to withdraw funds at any time is contractually limited. Restricted cash is generally designated for specific purposes arising out of certain contractual or other obligations. | |
Investment Securities | |
At December 31, 2014, investment securities consisted of U.S. Treasury and U.S. government agency obligations, mortgage-backed securities issued by government agencies and debt instruments issued by states and political subdivisions of states. Investment securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at amortized cost. All other investment securities are classified as available-for-sale, as the Company does not hold investment securities for trading purposes. Available-for-sale investment securities are reported at fair value with unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income included in stockholders' equity. The Company estimates the fair value of available-for-sale investment securities as more fully discussed in Note 20: Fair Value Measurements and Disclosures. The amortized cost for each held-to-maturity and available-for-sale investment security is adjusted for amortization of premiums or accretion of discounts, as appropriate. Such amortization or accretion is included in interest income. The Company evaluates its unrealized loss positions for other-than-temporary impairment in accordance with GAAP applicable for investments in debt and equity securities. Realized gains and losses and the credit loss portion of other-than-temporary impairments related to investment securities are determined at the individual security level and are reported in other income. | |
Loan Receivables | |
Loan receivables consist of credit card receivables, other loans and purchased credit-impaired ("PCI") loans. Loan receivables also include unamortized net deferred loan origination fees and costs (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). Credit card loan receivables are reported at their principal amounts outstanding and include uncollected billed interest and fees and are reduced for unearned revenue related to balance transfer fees (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). Other loans consist of student loans, personal loans, mortgage loans held for sale and other loans and are reported at their principal amounts outstanding. With the exception of mortgages, the Company's loan receivables are deemed to be held for investment at origination or acquisition because management has the intent and ability to hold them for the foreseeable future. | |
Cash flows associated with loans that are originated or acquired with the intent to sell are included in cash flows from operating activities. Cash flows associated with loans originated or acquired for investment are classified as cash flows from investing activities, regardless of a subsequent change in intent. | |
Purchased Credit-Impaired Loans | |
PCI loans are loans acquired at prices which reflected a discount related to deterioration in individual loan credit quality since origination. The Company's PCI loans are comprised entirely of acquired private student loans. | |
The PCI student loans were aggregated into pools based on common risk characteristics at the time of their acquisition. Loans were grouped primarily on the basis of origination date as loans originated in a particular year generally reflect the application of common origination strategies and/or underwriting criteria. Each pool is accounted for as a single asset and each has a single composite interest rate, total contractual cash flows and total expected cash flows. | |
Interest income on PCI loans is recognized on the basis of expected cash flows rather than contractual cash flows. The total amount of interest income recognizable on a pool of PCI loans (i.e., its accretable yield) is the difference between the carrying amount of the loan pool and the future cash flows expected to be collected without regard to whether the expected cash flows represent principal or interest collections. Interest is recognized on an effective yield basis over the life of the loan pool. | |
The initial estimates of the fair value of the PCI student loans included the impact of expected credit losses, and therefore, no allowance for loan loss was recorded as of the purchase dates. The difference between contractually required cash flows and cash flows expected to be collected, as measured at the acquisition dates, is not permitted to be accreted. Charge-offs are absorbed by this non-accretable difference and do not result in a charge to earnings. | |
The estimate of cash flows expected to be collected is evaluated each reporting period to ensure it reflects management's latest expectations of future credit losses and borrower prepayments, and interest rates in effect in the current period. To the extent expected credit losses increase after the acquisition dates, the Company will record an allowance for loan losses through the provision for loan losses, which will reduce net income. Changes in expected cash flows related to changes in prepayments or interest rate indices for variable rate loans generally are recorded prospectively as adjustments to interest income. | |
To the extent that a significant increase in cash flows due to lower expected losses is deemed probable, the Company will first reverse any previously established allowance for loan losses and then increase the amount of remaining accretable yield. The increase to yield would be recognized prospectively over the remaining life of the loan pool. An increase in the accretable yield would reduce the remaining non-accretable difference available to absorb subsequent charge-offs. Disposals of loans, which may include sales of loans or receipt of payments in full from the borrower or charge-offs, result in removal of the loans from their respective pools. | |
Delinquent Loans | |
The entire balance of an account is contractually past due if the minimum payment is not received by the specified date on the customer's billing statement. Delinquency is reported on loans that are 30 days or more past due. | |
Credit card loans are charged off at the end of the month during which an account becomes 180 days past due. Closed-end consumer loan receivables are charged off at the end of the month during which an account becomes 120 days contractually past due. 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 time frame described above. Receivables associated with alleged or potential fraudulent transactions are adjusted to their net realizable value upon receipt of notification of such fraud through a charge to other expense and are subsequently written off at the end of the month 90 days following notification, but not later than the contractual 180-day or 120-day time frame described above. The Company's charge-off policies are designed to comply with guidelines established by the Federal Financial Institutions Examination Council (“FFIEC”). | |
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. | |
The practice of re-aging an account also may affect loan delinquencies and charge-offs. A re-age is intended to assist delinquent customers who have experienced financial difficulties but who demonstrate both an ability and willingness to repay. Accounts meeting specific criteria are re-aged when the Company and the customer agree on a temporary repayment schedule that may include concessionary terms. With re-aging, the outstanding balance of a delinquent account is returned to a current status. Customers may also qualify for a workout re-age when either a longer term or permanent hardship exists. The Company's re-age practices are designed to comply with FFIEC guidelines. | |
Allowance for Loan Losses | |
The Company maintains an allowance for loan losses at a level that is appropriate to absorb probable losses inherent in the loan portfolio. The estimate of probable incurred losses considers uncollectible principal, interest and fees reflected in the loan receivables. The allowance is evaluated monthly for appropriateness 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 of loan losses (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). | |
The Company calculates its allowance for loan losses by estimating probable losses separately for classes of the loan portfolio with similar loan characteristics, which generally results in segmenting the portfolio by loan product type. | |
The Company bases its allowance for loan loss 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. For substantially all of its loan receivables, 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 and current loan performance, loan seasoning and growth, current risk management practices, account collection strategies, economic conditions, bankruptcy filings, policy changes and forecasting uncertainties. For the majority of its portfolio, the Company 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 part of certain collection strategies, the Company may modify the terms of loans to customers experiencing financial hardship. Temporary and permanent modifications on credit card and personal loans, as well as temporary modifications on student loans and certain grants of student loan forbearance are accounted for as troubled debt restructurings. With respect to student loans, the Company does not anticipate significant shortfalls in collections on the contractual amounts due from 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. | |
Loan receivables, other than PCI loans, that have been modified under a troubled debt restructuring are evaluated separately from the pools of receivables that are subject to the collective analyses described above. Loan receivables modified in a troubled debt restructuring are recorded at their present values 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. Changes in the present value are recorded in the provision for loan losses. All of the Company's troubled debt restructurings, which are evaluated collectively on an aggregated (by loan type) basis, have a related allowance for loan losses. | |
Premises and Equipment, net | |
Premises and equipment, net, are stated at cost less accumulated depreciation and amortization, which is computed using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated over a period of 39 years. The costs of leasehold improvements are capitalized and depreciated over the lesser of the remaining term of the lease or the asset's estimated useful life, typically ten years. Furniture and fixtures are depreciated over a period of five to ten years. Equipment is depreciated over three to ten years. Capitalized leases, consisting of computers and processing equipment, are depreciated over three and six years, respectively. Maintenance and repairs are immediately expensed, while the costs of improvements are capitalized. | |
Purchased software and capitalized costs related to internally developed software are amortized over their useful lives of three to ten years. Costs incurred during the application development stage related to internally developed software are capitalized. Costs are expensed as incurred during the preliminary project stage and post implementation stage. Once the capitalization criteria as defined in GAAP have been met, external direct costs incurred for materials and services used in developing or obtaining internal-use computer software and payroll and payroll-related costs for employees who are directly associated with the internal-use computer software project (to the extent those employees devoted time directly to the project) are capitalized. Amortization of capitalized costs begins when the software is ready for its intended use. Capitalized software is included in premises and equipment, net in the Company's consolidated statements of financial condition. See Note 6: Premises and Equipment for further information about the Company's premises and equipment. | |
Goodwill | |
Goodwill is recorded as part of the Company's acquisitions of businesses when the purchase price exceeds the fair value of the net tangible and separately identifiable intangible assets acquired. The Company's goodwill is not amortized, but rather is subject to an impairment test at the reporting unit level annually as of October 1, or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's reported goodwill relates to PULSE, acquired in 2005, and to the Home Loan Center mortgage origination business acquired in 2012. The Company's goodwill impairment analysis is a two-step test. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds its carrying value including goodwill, goodwill is not impaired. If the carrying value including goodwill exceeds its fair value, goodwill is potentially impaired and the second step of the test becomes necessary. In the second step, the implied fair value of goodwill is derived and compared to the carrying amount of goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the sum of the fair values of all identifiable assets less the liabilities associated with the reporting unit. If the carrying value of goodwill allocated to the reporting unit exceeds its implied fair value, an impairment charge is recorded for the excess. The Company conducted its annual goodwill impairment test as of October 1, 2014, which resulted in the recognition of non-cash impairment charge of $27 million during the three months ended December 31, 2014 related to the Discover Home Loans business. The impairment charge was recorded in the other expense line as a component of total other expense in the accompanying consolidated and combined statements of income and within the Direct Banking segment. See Note 7: Goodwill and Intangible Assets for further details concerning the goodwill impairment charge. | |
During the fourth quarter of 2013, the Company changed the date of its annual goodwill impairment test from June 1 to October 1. The change in goodwill impairment testing date is deemed a change in accounting principle which management determined to be preferable under the circumstances. The change was made to better align with the timing of its annual and long-term planning process, which is a significant element in the testing process. Due to the change in the Company’s fiscal year end from November 30 to December 31, the change from June 1 to October 1 also enhances the ability of the Company to obtain carrying values for use in the testing process by using the beginning of a fiscal quarter. | |
In connection with the change in date of the annual goodwill impairment test, the Company performed a goodwill impairment test on October 1, 2013. This change did not delay, accelerate, or avoid a goodwill impairment charge. The goodwill impairment tests on June 1, 2013 and October 1, 2013 were performed such that a period greater than 12 months did not elapse between test dates. The change in the annual goodwill impairment testing date was applied prospectively beginning on October 1, 2013 and had no effect on the consolidated financial statements. This change was not applied retrospectively as it is impracticable to do so because retrospective application would have required the application of significant estimates and assumptions without the use of hindsight. | |
Intangible Assets | |
The Company's identifiable intangible assets consist of both amortizable and non-amortizable intangible assets. The Company's amortizable intangible assets consist primarily of acquired customer relationships and certain trade name intangibles. All of the Company's amortizable intangible assets are carried at net book value and are amortized over their estimated useful lives. The amortization periods approximate the periods over which the Company expects to generate future net cash inflows from the use of these assets. The Company's policy is to amortize intangibles in a manner that reflects the pattern in which the projected net cash inflows to the Company are expected to occur, where such pattern can be reasonably determined, as opposed to the straight-line basis. This method of amortization typically results in a greater portion of the intangible asset being amortized in the earlier years of its useful life. | |
All of the Company's amortizable intangible assets, as well as other amortizable or depreciable long-lived assets such as premises and equipment, are subject to impairment testing when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows. A test for recoverability is done by comparing the asset's carrying value to the sum of the undiscounted future net cash inflows expected to be generated from the use of the asset over its remaining useful life. Impairment exists if the sum of the undiscounted expected future net cash inflows is less than the carrying amount of the asset. Impairment would result in a write-down of the asset to its estimated fair value. The estimated fair values of these assets are based on the discounted present value of the stream of future net cash inflows expected to be derived over the remaining useful lives of the assets. If an impairment write-down is recorded, the remaining useful life of the asset will be evaluated to determine whether revision of the remaining amortization or depreciation period is appropriate. | |
The Company's non-amortizable intangible assets consist of the international transaction processing rights and brand-related intangibles included in the acquisition of Diners Club as well as the trade names acquired in The Student Loan Corporation acquisition. These assets are deemed to have indefinite useful lives and are therefore not subject to amortization. All of the Company's non-amortizable intangible assets are subject to a test for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the asset might be impaired. As required by GAAP, if the carrying value of a non-amortizable intangible asset is in excess of its fair value, the asset must be written down to its fair value through the recognition of an impairment charge to earnings. No impairment charges were identified during the impairment test conducted at October 1, 2014. In contrast to amortizable intangibles, there is no test for recoverability associated with the impairment test for non-amortizable intangible assets. | |
During the fourth quarter of 2013, the Company changed the date of its annual impairment test for non-amortizable intangible assets from June 1 to October 1 to coincide with the change in the Company's goodwill impairment test date. The Company performed impairment tests at June 1, 2013 and October 1, 2013, and as such a period greater than 12 months did not elapse between test dates. | |
Stock-based Compensation | |
The Company measures the cost of employee services received in exchange for an award of stock-based compensation based on the grant-date fair value of the award. The cost is recognized over the requisite service period, except for awards granted to retirement-eligible employees, which are fully expensed on the grant date. No compensation cost is recognized for awards that are subsequently forfeited. | |
Advertising Costs | |
The Company expenses television advertising costs in the period in which the advertising is first aired and all other advertising costs as incurred. Advertising costs are recorded in marketing and business development and were $194 million, $208 million, $172 million and $17 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. | |
Income Taxes | |
Income tax expense is provided for using the asset and liability method, under which deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are recognized when their realization is determined to be more likely than not. Uncertain tax positions are measured at the highest amount of tax benefit for which realization is judged to be more likely than not. Tax benefits that do not meet these criteria are unrecognized tax benefits. See Note 15: Income Taxes for more information about the Company's income taxes. | |
Financial Instruments Used for Asset and Liability Management | |
The Company utilizes derivative financial instruments to manage its various exposures to changes in fair value of certain assets and liabilities, variability in future cash flows arising from changes in interest rates, or other types of forecasted transactions, and changes in foreign exchange rates. All derivatives are carried at their estimated fair values on the Company’s consolidated statements of financial condition. Derivatives having gross positive fair values, inclusive of net accrued interest receipts or payments, are recorded in other assets. Derivatives with gross negative fair values, inclusive of net accrued interest payments or receipts, are recorded in accrued expenses and other liabilities. The methodologies used to estimate the fair values of these derivative financial instruments are described in Note 20: Fair Value Measurements and Disclosures. Collateral receivable or payable amounts associated with derivatives are not offset against the fair value of these derivatives, but are recorded separately in other assets or deposits, respectively. | |
Certain of these instruments are designated and qualify for hedge accounting. A hedge is deemed effective to the extent that the change in fair value, cash flow, or net investment of the hedged item is offset by changes in the hedging instrument. If the change in the hedging instrument is more or less than the change in fair value, cash flow, or net investment of the hedged item, the difference is referred to as the ineffective portion of the hedge. Under cash flow hedge accounting, the effective portion of the change in the fair value of these derivative instruments is recognized in other comprehensive income. The change in fair value of these derivative instruments relating to the ineffective portion is recognized immediately in other income. Amounts accumulated in other comprehensive income are reclassified to earnings in the period during which the hedged items affect income. For a net investment hedge, the effective portion of changes in the fair value of the derivatives is 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. Under fair value hedge accounting, changes in both (i) the fair values of the derivative instruments and (ii) the fair values of the hedged items relating to the risks being hedged, including net differences, if any (i.e., ineffectiveness), are recorded in interest expense. Certain other derivatives are not designated as hedges or do not qualify for hedge accounting; changes in the fair value of these derivatives are recorded in other income. These transactions are discussed in more detail in Note 21: Derivatives and Hedging Activities. | |
Accumulated Other Comprehensive Income | |
The Company records unrealized gains and losses on available-for-sale securities, changes in the fair value of cash flow hedges, and certain pension and foreign currency translation adjustments in other comprehensive income ("OCI") on an after-tax basis where applicable. Details of other comprehensive income, net of tax, are presented in the statement of comprehensive income, and a rollforward of accumulated other comprehensive income ("AOCI") is presented in the statement of changes in stockholders' equity and Note 13: Accumulated Other Comprehensive Income. | |
Significant Revenue Recognition Accounting Policies | |
Loan Interest and Fee Income | |
Interest on loans is comprised largely of interest on credit card loans and is recognized based upon the amount of loans outstanding and their contractual interest rate. Interest on credit card loans is included in loan receivables when billed to the customer. The Company accrues unbilled interest revenue each month from a customer's billing cycle date to the end of the month. The Company applies an estimate of the percentage of loans that will revolve in the next cycle in the estimation of the accrued unbilled portion of interest revenue that is included in accrued interest receivable on the consolidated statements of financial condition. Interest on other loan receivables is accrued monthly in accordance with their contractual terms and recorded in accrued interest receivable, which is included in other assets, in the consolidated statements of financial condition. Interest related to purchased credit-impaired loans is discussed in Note 4: Loan Receivables. | |
The Company recognizes fees (except annual fees, balance transfer fees and certain product fees) on loan receivables in interest income or loan fee income as the fees are assessed. Annual fees, balance transfer fees and certain product fees are recognized in interest income or loan fee income ratably over the periods to which they relate. Balance transfer fees are accreted to interest income over the life of the related balance. As of December 31, 2014 and 2013, deferred revenues related to balance transfer fees, recorded as a reduction of loan receivables, were $40 million and $37 million, respectively. Loan fee income consists of fees on credit card loans and includes annual, late, returned check, cash advance and other miscellaneous fees and is reflected net of waivers and charge-offs. | |
Direct loan origination costs on credit card loans are deferred and amortized on a straight-line basis over a one year period and recorded in interest income from credit card loans. Direct loan origination costs on other loan receivables are deferred and amortized over the life of the loan using the interest method and are recorded in interest income from other loans. As of December 31, 2014 and 2013, the remaining unamortized deferred costs related to loan origination were $63 million and $43 million, respectively, and were recorded in loan receivables. | |
The Company accrues interest and fees on loan receivables until the loans are paid or charged off, except in instances of customer bankruptcy, death or fraud, where no further interest and fee accruals occur following notification. 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. Payments received on non-accrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. When loan receivables are charged off, unpaid accrued interest and fees are reversed against the income line items in which they were originally recorded in the consolidated statements of income. Charge-offs and recoveries of amounts which relate to capitalized interest on student loans are treated as principal charge-offs and recoveries, affecting the provision for loan losses rather than interest income. The Company considers uncollectible interest and fee revenues in assessing the adequacy of the allowance for loan losses. | |
Interest income from loans individually evaluated for impairment, including 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. | |
Discount and Interchange Revenue | |
The Company earns discount revenue from fees charged to merchants with whom the Company has entered into card acceptance agreements for processing credit card purchase transactions. The Company earns acquirer interchange revenue from merchant acquirers on all Discover Network, Diners Club and PULSE transactions made by credit and debit cardholders at merchants with whom merchant acquirers have entered into card acceptance agreements for processing payment card transactions. The Company pays issuer interchange to network partners who have entered into contractual arrangements to issue cards on the Company's networks as compensation for risk and other operating costs. The discount revenue or acquirer interchange is recognized as revenue, net of any associated issuer interchange cost, at the time the transaction is captured. | |
Customer Rewards | |
The Company offers its customers various reward programs, including the Cashback Bonus reward program, pursuant to which the Company pays certain customers a reward equal to a percentage of their credit card purchase amounts based on the type and volume of the customer's purchases. The liability for customer rewards, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition, is recorded on an individual customer basis and is accumulated as qualified customers earn rewards through their ongoing credit card purchase activity or other defined actions. In the fourth quarter of 2014, the Company eliminated forfeiture of rewards, which was communicated to its customers. This resulted in a one-time expense of $178 million due to the reversal of the Company's current estimate for customer rewards forfeiture, a contra-liability account. Previously, in determining the appropriate liability for customer rewards, the Company estimated forfeitures of rewards accumulated but not redeemed based on historical account closure and charge-off experience, actual customer credit card purchase activity and the terms of the rewards program. The Company recognizes customer rewards costs as a reduction of the related revenue, if any. In instances where a reward is not associated with a revenue-generating transaction, such as when a reward is given for opening an account, the reward cost is recorded as an operating expense. For the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, rewards costs, adjusted for estimated forfeitures, if any, amounted to $1.4 billion, $1.0 billion, $1.0 billion and $123 million, respectively. At December 31, 2014 and 2013, the liability for customer rewards, adjusted for estimated forfeitures, was $1.4 billion and $1.1 billion, respectively, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition. | |
Protection Products | |
The Company earns revenue related to fees received for marketing products or services that are ancillary to the Company's credit card and personal loans to its customers, including payment protection products and identity theft protection services. The amount of revenue recorded is based on the terms of the agreements and contracts with the third parties that provide these services. The Company recognizes this income over the customer agreement or contract period as earned. | |
Transaction Processing Revenue | |
Transaction processing revenue represents fees charged to financial institutions and merchant acquirers/processors for processing ATM and debit point-of-sale transactions over the PULSE network and is recognized at the time the transactions are processed. Transaction processing revenue also includes network participant revenue earned by PULSE related to fees charged for maintenance, support, information processing and other services provided to financial institutions, processors and other participants in the PULSE network. These revenues are recognized in the period that the related transactions occur or services are rendered. | |
Royalty and Licensee Revenue | |
The Company earns revenue from licensing fees for granting the right to use the Diners Club brand and processing fees for providing various services to Diners Club licensees, which are referred to together as royalty and licensee revenue. Royalty revenue is recognized in the period that the cardholder volume used to calculate the royalty fee is generated. Processing fees are recognized in the month that the services are provided. Royalty and licensee revenue is included in other income on the consolidated statements of income. | |
Incentive Payments | |
The Company makes certain incentive payments under contractual arrangements with financial institutions, Diners Club licensees, merchants, acquirers and certain other customers. These payments are generally classified as contra-revenue unless a specifically identifiable benefit is received by the Company in consideration for the payment and the fair value of such benefit can be reasonably estimated. If no such benefit is identified, then the entire payment is classified as contra-revenue, and included in other income in the consolidated statements of income in the line item where the related revenues are recorded. If the payment gives rise to an asset because it is expected to directly or indirectly contribute to future net cash inflows, it is deferred and recognized over the expected benefit period. The unamortized portion of the deferred incentive payments included in other assets on the consolidated statements of financial condition was $22 million and $23 million at December 31, 2014 and 2013, respectively. |
Investments
Investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||
Investments | Investments | |||||||||||||||||||
The Company’s investment securities consist of the following (dollars in millions): | ||||||||||||||||||||
December 31, | November 30, | |||||||||||||||||||
2014 | 2013 | 2012 | 2012 | |||||||||||||||||
U.S. Treasury securities(1) | $ | 1,330 | $ | 2,058 | $ | 2,460 | $ | 2,463 | ||||||||||||
U.S. government agency securities | 1,033 | 1,561 | 2,233 | 2,237 | ||||||||||||||||
States and political subdivisions of states | 10 | 15 | 34 | 34 | ||||||||||||||||
Other securities: | ||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | 151 | 159 | ||||||||||||||||
Corporate debt securities(2) | — | — | — | 75 | ||||||||||||||||
Residential mortgage-backed securities - Agency(3) | 1,576 | 1,351 | 1,354 | 1,253 | ||||||||||||||||
Total other securities | 1,576 | 1,357 | 1,505 | 1,487 | ||||||||||||||||
Total investment securities | $ | 3,949 | $ | 4,991 | $ | 6,232 | $ | 6,221 | ||||||||||||
-1 | Includes $16 million and $9 million of U.S. Treasury securities pledged as swap collateral in lieu of cash as of December 31, 2014 and 2013, respectively. | |||||||||||||||||||
-2 | Amount represents corporate debt obligations issued under the Temporary Liquidity Guarantee Program (TLGP) that are guaranteed by the Federal Deposit Insurance Corporation (FDIC). | |||||||||||||||||||
-3 | 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 December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1,317 | $ | 12 | $ | — | $ | 1,329 | ||||||||||||
U.S. government agency securities | 1,021 | 12 | — | 1,033 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,473 | 13 | (1 | ) | 1,485 | |||||||||||||||
Total available-for-sale investment securities | $ | 3,811 | $ | 37 | $ | (1 | ) | $ | 3,847 | |||||||||||
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) | 91 | 2 | — | 93 | ||||||||||||||||
Total held-to-maturity investment securities | $ | 102 | $ | 2 | $ | — | $ | 104 | ||||||||||||
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 Securities in a Loss Position | Less than 12 months | More than 12 months | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | |||||||||||||||||
Value | Losses | Value | Losses | |||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 8 | $ | 97 | $ | — | $ | 225 | $ | (1 | ) | ||||||||||
31-Dec-13 | ||||||||||||||||||||
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 | ) | $ | — | $ | — | ||||||||||
There were no gains or losses related to other-than-temporary impairments during the calendar years ended December 31, 2014 and 2013, the fiscal year ended November 30, 2012 or the one month ended December 31, 2012. | ||||||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Proceeds related to maturities or redemptions of investment securities | $ | 250 | $ | 733 | $ | 1,795 | $ | 113 | ||||||||||||
Proceeds from the sales of available-for-sale investment securities | $ | 1,220 | $ | 719 | $ | — | $ | — | ||||||||||||
Gains on sales of available-for-sale investment securities | $ | 4 | $ | 2 | $ | — | $ | — | ||||||||||||
Net unrealized gains (losses) recorded in other comprehensive income, before tax | $ | 5 | $ | (82 | ) | $ | 30 | $ | (5 | ) | ||||||||||
Net unrealized gains (losses) recorded in other comprehensive income, after tax | $ | 4 | $ | (52 | ) | $ | 19 | $ | (3 | ) | ||||||||||
Maturities and weighted-average yields of available-for-sale debt securities and held-to-maturity debt securities are provided in the tables 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 December 31, 2014 | ||||||||||||||||||||
Available-for-Sale—Amortized Cost | ||||||||||||||||||||
U.S. Treasury securities | $ | 716 | $ | 601 | $ | — | $ | — | $ | 1,317 | ||||||||||
U.S. government agency securities | 525 | 496 | — | — | 1,021 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 493 | 980 | 1,473 | |||||||||||||||
Total available-for-sale investment securities | $ | 1,241 | $ | 1,097 | $ | 493 | $ | 980 | $ | 3,811 | ||||||||||
Held-to-Maturity—Amortized Cost | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 91 | 91 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 101 | $ | 102 | ||||||||||
Available-for-Sale—Fair Values | ||||||||||||||||||||
U.S. Treasury securities | $ | 721 | $ | 608 | $ | — | $ | — | $ | 1,329 | ||||||||||
U.S. government agency securities | 530 | 503 | — | — | 1,033 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 495 | 990 | 1,485 | |||||||||||||||
Total available-for-sale investment securities | $ | 1,251 | $ | 1,111 | $ | 495 | $ | 990 | $ | 3,847 | ||||||||||
Held-to-Maturity—Fair Values | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 93 | 93 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 103 | $ | 104 | ||||||||||
One Year | After One | After Five | After Ten | Total | ||||||||||||||||
or | Year | Years | Years | |||||||||||||||||
Less | Through | Through | ||||||||||||||||||
Five Years | Ten Years | |||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||
Available-for-Sale—Weighted-Average Yields(1) | ||||||||||||||||||||
U.S Treasury securities | 1.52 | % | 1.37 | % | — | % | — | % | 1.45 | % | ||||||||||
U.S government agency securities | 1.9 | % | 1.53 | % | — | % | — | % | 1.72 | % | ||||||||||
Residential mortgage-backed securities - Agency | — | % | — | % | 1.53 | % | 2.05 | % | 1.88 | % | ||||||||||
Total available-for-sale investment securities | 1.68 | % | 1.44 | % | 1.53 | % | 2.05 | % | 1.69 | % | ||||||||||
Held-to-Maturity—Weighted-Average Yields | ||||||||||||||||||||
U.S. Treasury securities | 0.07 | % | — | % | — | % | — | % | 0.07 | % | ||||||||||
State and political subdivisions of states | 4.27 | % | — | % | — | % | 4.69 | % | 4.68 | % | ||||||||||
Residential mortgage-backed securities | — | % | — | % | — | % | 2.8 | % | 2.8 | % | ||||||||||
Total held-to-maturity investment securities | 0.89 | % | — | % | — | % | 2.99 | % | 2.98 | % | ||||||||||
-1 | The weighted-average yield for available-for-sale investment securities is calculated based on the amortized cost. | |||||||||||||||||||
The following table presents interest on investment securities (dollars in millions): | ||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Taxable interest | $ | 66 | $ | 73 | $ | 78 | $ | 7 | ||||||||||||
Tax exempt interest | 1 | 1 | 2 | — | ||||||||||||||||
Total income from investment securities | $ | 67 | $ | 74 | $ | 80 | $ | 7 | ||||||||||||
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 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 December 31, 2014 and 2013, the Company had outstanding investments in these entities of $325 million and $308 million, respectively, and related contingent liabilities of $51 million and $52 million, respectively. |
Loan_Receivables
Loan Receivables | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | ||||||||||||||||||||||||||||
Loan Receivables | Loan Receivables | |||||||||||||||||||||||||||
The Company has three loan portfolio segments: credit card loans, other loans and PCI student loans. | ||||||||||||||||||||||||||||
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions): | ||||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Loan receivables: | ||||||||||||||||||||||||||||
Credit card loans(1) | $ | 56,128 | $ | 53,150 | ||||||||||||||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans | 5,007 | 4,191 | ||||||||||||||||||||||||||
Private student loans | 4,850 | 3,969 | ||||||||||||||||||||||||||
Mortgage loans held for sale(2) | 122 | 148 | ||||||||||||||||||||||||||
Other(3) | 202 | 135 | ||||||||||||||||||||||||||
Total other loans | 10,181 | 8,443 | ||||||||||||||||||||||||||
Purchased credit-impaired loans(4) | 3,660 | 4,178 | ||||||||||||||||||||||||||
Total loan receivables | 69,969 | 65,771 | ||||||||||||||||||||||||||
Allowance for loan losses | (1,746 | ) | (1,648 | ) | ||||||||||||||||||||||||
Net loan receivables | $ | 68,223 | $ | 64,123 | ||||||||||||||||||||||||
-1 | Amounts include $21.7 billion and $20.2 billion underlying investors’ interest in trust debt at December 31, 2014 and 2013, respectively, and $8.6 billion and $10.9 billion in seller's interest at December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities for further information. | |||||||||||||||||||||||||||
-2 | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||||||||||||||||||||||||||
-3 | Other includes home equity loans. | |||||||||||||||||||||||||||
-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 December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities. | |||||||||||||||||||||||||||
Credit Quality Indicators | ||||||||||||||||||||||||||||
The Company regularly reviews its collection experience (including delinquencies and net charge-offs) in determining its allowance for loan losses. Information related to the delinquent and non-accruing loans in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and 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 December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans(2) | $ | 491 | $ | 480 | $ | 971 | $ | 442 | $ | 157 | ||||||||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans(3) | 29 | 11 | 40 | 10 | 5 | |||||||||||||||||||||||
Private student loans (excluding PCI)(4) | 62 | 25 | 87 | 25 | — | |||||||||||||||||||||||
Other | 1 | 1 | 2 | — | 21 | |||||||||||||||||||||||
Total other loans (excluding PCI) | 92 | 37 | 129 | 35 | 26 | |||||||||||||||||||||||
Total loan receivables (excluding PCI) | $ | 583 | $ | 517 | $ | 1,100 | $ | 477 | $ | 183 | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans(2) | $ | 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 $27 million, $29 million, $32 million and $3 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. The Company does not separately track 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' current balances and most recent interest rates. | |||||||||||||||||||||||||||
-2 | Credit card loans that are 90 or more days delinquent and accruing interest include $43 million and $41 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
-3 | Personal loans that are 90 or more days delinquent and accruing interest include $3 million and $2 million of loans accounted for as troubled debt restructurings at both December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
-4 | Private student loans that are 90 or more days delinquent and accruing interest include $5 million and $3 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||||||||||
Information related to the net charge-offs in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): | ||||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Net | Net | Net | Net | Net | Net | Net | Net | |||||||||||||||||||||
Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | |||||||||||||||||||||
Credit card loans | $ | 1,191 | 2.27 | % | $ | 1,100 | 2.21 | % | $ | 1,240 | 2.62 | % | $ | 106 | 2.47 | % | ||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans | 94 | 2.04 | % | 79 | 2.13 | % | 69 | 2.33 | % | 7 | 2.52 | % | ||||||||||||||||
Private student loans (excluding PCI) | 57 | 1.29 | % | 46 | 1.3 | % | 19 | 0.73 | % | 2 | 0.81 | % | ||||||||||||||||
Other | 3 | 0.76 | % | 1 | 1.96 | % | — | 0.1 | % | — | — | % | ||||||||||||||||
Total other loans (excluding PCI) | 154 | 1.63 | % | 126 | 1.67 | % | 88 | 1.52 | % | 9 | 1.61 | % | ||||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 1,345 | 2.17 | % | $ | 1,226 | 2.14 | % | $ | 1,328 | 2.5 | % | $ | 115 | 2.37 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 1,345 | 2.04 | % | $ | 1,226 | 1.98 | % | $ | 1,328 | 2.29 | % | $ | 115 | 2.19 | % | ||||||||||||
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 December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans | 83 | % | 17 | % | ||||||||||||||||||||||||
Personal loans | 96 | % | 4 | % | ||||||||||||||||||||||||
Private student loans (excluding PCI)(1) | 96 | % | 4 | % | ||||||||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans | 83 | % | 17 | % | ||||||||||||||||||||||||
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 and willing to make payments the ability to temporarily suspend payments. Eligible borrowers have a lifetime cap on forbearance of 12 months. At December 31, 2014 and 2013, there were $49 million and $110 million of private student loans, including PCI, in forbearance, respectively. In addition, at December 31, 2014 and 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 December 31, 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 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 following tables provide changes in the Company’s allowance for loan losses for the periods presented (dollars in millions): | ||||||||||||||||||||||||||||
For the Calendar Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 1,259 | 102 | 79 | 3 | 1,443 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,636 | ) | (105 | ) | (62 | ) | (3 | ) | (1,806 | ) | ||||||||||||||||||
Recoveries | 445 | 11 | 5 | — | 461 | |||||||||||||||||||||||
Net charge-offs | (1,191 | ) | (94 | ) | (57 | ) | (3 | ) | (1,345 | ) | ||||||||||||||||||
Balance at end of period | $ | 1,474 | $ | 120 | $ | 135 | $ | 17 | $ | 1,746 | ||||||||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 893 | 92 | 84 | 17 | 1,086 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,604 | ) | (86 | ) | (48 | ) | (1 | ) | (1,739 | ) | ||||||||||||||||||
Recoveries | 504 | 7 | 2 | — | 513 | |||||||||||||||||||||||
Net charge-offs | (1,100 | ) | (79 | ) | (46 | ) | (1 | ) | (1,226 | ) | ||||||||||||||||||
Balance at end of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||||||||||
For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,554 | $ | 97 | $ | 73 | $ | 1 | $ | 1,725 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 165 | 9 | 4 | — | 178 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (146 | ) | (8 | ) | (2 | ) | — | (156 | ) | |||||||||||||||||||
Recoveries | 40 | 1 | — | — | 41 | |||||||||||||||||||||||
Net charge-offs | (106 | ) | (7 | ) | (2 | ) | — | (115 | ) | |||||||||||||||||||
Balance at end of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||||||||||
The following tables provide changes in the Company’s allowance for loan losses for the periods presented (dollars in millions): | ||||||||||||||||||||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 2,070 | $ | 82 | $ | 53 | $ | — | $ | 2,205 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 724 | 84 | 39 | 1 | 848 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,817 | ) | (73 | ) | (19 | ) | — | (1,909 | ) | |||||||||||||||||||
Recoveries | 577 | 4 | — | — | 581 | |||||||||||||||||||||||
Net charge-offs | (1,240 | ) | (69 | ) | (19 | ) | — | (1,328 | ) | |||||||||||||||||||
Balance at end of period | $ | 1,554 | $ | 97 | $ | 73 | $ | 1 | $ | 1,725 | ||||||||||||||||||
-1 | Includes both PCI and non-PCI private student loans. | |||||||||||||||||||||||||||
Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the tables 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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ | 283 | $ | 280 | $ | 345 | $ | 26 | ||||||||||||||||||||
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ | 69 | $ | 59 | $ | 67 | $ | 5 | ||||||||||||||||||||
The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio by impairment methodology (dollars in millions): | ||||||||||||||||||||||||||||
Credit Card | Personal | Student | Other | Total | ||||||||||||||||||||||||
Loans | Loans(3) | Loans(4) | ||||||||||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,314 | $ | 114 | $ | 96 | $ | 1 | $ | 1,525 | ||||||||||||||||||
Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 160 | 6 | 11 | 16 | 193 | |||||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||||||||||
Total allowance for loan losses | $ | 1,474 | $ | 120 | $ | 135 | $ | 17 | $ | 1,746 | ||||||||||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 55,091 | $ | 4,952 | $ | 4,812 | $ | 142 | $ | 64,997 | ||||||||||||||||||
Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 1,037 | 55 | 38 | 60 | 1,190 | |||||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 3,660 | — | 3,660 | |||||||||||||||||||||||
Total recorded investment | $ | 56,128 | $ | 5,007 | $ | 8,510 | $ | 202 | $ | 69,847 | ||||||||||||||||||
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 ASC 310-10-35(1)(2) | 188 | 3 | 9 | 16 | 216 | |||||||||||||||||||||||
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 ASC 310-10-35(1)(2) | 1,123 | 31 | 28 | 79 | 1,261 | |||||||||||||||||||||||
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 $878 million and $900 million at December 31, 2014 and 2013 respectively. The unpaid principal balance of personal loans was $54 million and $31 million at December 31, 2014 and 2013, respectively. The unpaid principal balance of student loans was $37 million and $26 million at December 31, 2014 and 2013, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. | |||||||||||||||||||||||||||
-3 | Includes both PCI and non-PCI private student loans. | |||||||||||||||||||||||||||
-4 | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. | |||||||||||||||||||||||||||
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. Temporary and permanent modifications on credit card and personal loans, as well as temporary modifications on student loans and 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 accounted for as troubled debt restructurings. | ||||||||||||||||||||||||||||
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. When a student loan borrower is enrolled in a temporary reduced payment program for 12 months or fewer over the life of the loan, the modification is not considered a troubled debt restructuring. No loans have been in a temporary modification program for greater than 12 months. | ||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||
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 Calendar Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 252 | $ | 45 | $ | 3 | ||||||||||||||||||||||
Internal programs | $ | 452 | $ | 12 | $ | 61 | ||||||||||||||||||||||
External programs | $ | 365 | $ | 27 | $ | 13 | ||||||||||||||||||||||
Personal loans | $ | 48 | $ | 5 | $ | 1 | ||||||||||||||||||||||
Private student loans(4) | $ | 32 | $ | 3 | N/A | |||||||||||||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 269 | $ | 49 | $ | 3 | ||||||||||||||||||||||
Internal programs | $ | 468 | $ | 9 | $ | 66 | ||||||||||||||||||||||
External programs | $ | 463 | $ | 36 | $ | 11 | ||||||||||||||||||||||
Personal loans | $ | 26 | $ | 3 | $ | 1 | ||||||||||||||||||||||
Private student loans(4) | $ | 22 | $ | 2 | N/A | |||||||||||||||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 255 | $ | 48 | N/A | |||||||||||||||||||||||
Internal programs | $ | 557 | $ | 17 | $ | 73 | ||||||||||||||||||||||
External programs | $ | 603 | $ | 51 | $ | 9 | ||||||||||||||||||||||
Personal loans | $ | 16 | $ | 2 | N/A | |||||||||||||||||||||||
Private student loans(4) | $ | 10 | $ | 1 | N/A | |||||||||||||||||||||||
For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 281 | $ | 4 | $ | — | ||||||||||||||||||||||
Internal programs | $ | 509 | $ | 1 | $ | 6 | ||||||||||||||||||||||
External programs | $ | 530 | $ | 4 | $ | 1 | ||||||||||||||||||||||
Personal loans | $ | 21 | $ | — | N/A | |||||||||||||||||||||||
Private student loans(4) | $ | 16 | $ | — | 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 or loan modification classified as a TDR have not been 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 calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, the Company quantified the amount by which interest and fees were reduced during the periods. During the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, the Company forgave approximately $42 million, $40 million, $44 million and $3 million, respectively, 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 the period (dollars in millions): | ||||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||||||||||
Credit card: | ||||||||||||||||||||||||||||
Internal programs | 48,041 | $ | 316 | 40,653 | $ | 256 | 50,946 | $ | 345 | 3,078 | $ | 19 | ||||||||||||||||
External programs | 32,443 | $ | 169 | 35,020 | $ | 189 | 40,530 | $ | 227 | 2,614 | $ | 14 | ||||||||||||||||
Personal loans | 3,528 | $ | 42 | 2,178 | $ | 27 | 1,555 | $ | 20 | 120 | $ | 2 | ||||||||||||||||
Private student loans | 1,453 | $ | 21 | 877 | $ | 17 | 470 | $ | 11 | 60 | $ | 2 | ||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||||||||||
Credit card(1)(2): | ||||||||||||||||||||||||||||
Internal programs | 10,195 | $ | 62 | 9,186 | $ | 57 | 15,703 | $ | 106 | 945 | $ | 6 | ||||||||||||||||
External programs | 7,363 | $ | 30 | 8,481 | $ | 36 | 8,543 | $ | 40 | 722 | $ | 3 | ||||||||||||||||
Personal loans(2) | 433 | $ | 5 | 284 | $ | 3 | 343 | $ | 4 | 22 | $ | — | ||||||||||||||||
Private student loans(3) | 1,155 | $ | 18 | 628 | $ | 12 | 172 | $ | 4 | 42 | $ | 1 | ||||||||||||||||
-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 calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, approximately 35%, 40%, 46% and 39%, respectively, of the total balances were 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 comprise the Company’s only PCI loans at December 31, 2014 and 2013. Total PCI student loans had an outstanding balance of $3.9 billion and $4.6 billion, including accrued interest, and a related carrying amount of $3.7 billion and $4.2 billion, as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||||||||
The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): | ||||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,580 | $ | 2,072 | $ | 2,580 | $ | 2,096 | ||||||||||||||||||||
Accretion into interest income | (260 | ) | (272 | ) | (303 | ) | (24 | ) | ||||||||||||||||||||
Other changes in expected cash flows | 21 | (220 | ) | (181 | ) | — | ||||||||||||||||||||||
Balance at end of period | $ | 1,341 | $ | 1,580 | $ | 2,096 | $ | 2,072 | ||||||||||||||||||||
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. No provision expense was recorded during the year ended December 31, 2014 as compared to the prior period when the Company recorded a $28 million provision expense due to higher expected future losses for one of its pools. The allowance for PCI loan losses at December 31, 2014 and December 31, 2013 was $28 million. Additionally, changes to other cash flow assumptions resulted in an increase in accretable yield related to expected life of the loans for the calendar year ended December 31, 2014 and a decrease in accretable yield for the calendar year ended December 31, 2013 and fiscal year ended November 30, 2012. There was no impact on accretable yield as a result of changes in cash flow assumptions for the one month ended December 31, 2012. Changes to accretable yield are recognized prospectively as an adjustment to yield over the remaining life of the pools. | ||||||||||||||||||||||||||||
At December 31, 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 2.35% and 0.75%, 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 for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012 was 0.64%, 1.36%, 1.41% and 1.53%, respectively. | ||||||||||||||||||||||||||||
Mortgage Loans Held for Sale | ||||||||||||||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||
Conforming(1) | $ | 2,484 | 90.79 | % | $ | 2,721 | 67.77 | % | $ | 1,213 | 70.28 | % | $ | 218 | 60.06 | % | ||||||||||||
FHA(2) | 212 | 7.75 | 1,290 | 32.13 | 513 | 29.72 | 145 | 39.94 | ||||||||||||||||||||
Jumbo(3) | 34 | 1.24 | 4 | 0.1 | — | — | — | — | ||||||||||||||||||||
VA(4) | 6 | 0.22 | — | — | — | — | — | — | ||||||||||||||||||||
Total | $ | 2,736 | 100 | % | $ | 4,015 | 100 | % | $ | 1,726 | 100 | % | $ | 363 | 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. | |||||||||||||||||||||||||||
Geographical Distribution of Loans | ||||||||||||||||||||||||||||
The Company originates credit card loans throughout the United States. The geographic distribution of the Company's credit card loan receivables was as follows (dollars in millions): | ||||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
California | $ | 4,776 | 8.5 | % | $ | 4,548 | 8.5 | % | ||||||||||||||||||||
Texas | 4,557 | 8.1 | 4,299 | 8.1 | ||||||||||||||||||||||||
New York | 3,929 | 7 | 3,649 | 6.9 | ||||||||||||||||||||||||
Florida | 3,287 | 5.9 | 3,064 | 5.8 | ||||||||||||||||||||||||
Illinois | 3,114 | 5.5 | 2,998 | 5.6 | ||||||||||||||||||||||||
Pennsylvania | 2,989 | 5.3 | 2,823 | 5.3 | ||||||||||||||||||||||||
Ohio | 2,449 | 4.4 | 2,324 | 4.4 | ||||||||||||||||||||||||
New Jersey | 2,113 | 3.8 | 2,002 | 3.8 | ||||||||||||||||||||||||
Michigan | 1,634 | 2.9 | 1,575 | 3 | ||||||||||||||||||||||||
Georgia | 1,630 | 2.9 | 1,546 | 2.9 | ||||||||||||||||||||||||
Other States | 25,650 | 45.7 | 24,322 | 45.7 | ||||||||||||||||||||||||
Total credit card loans | $ | 56,128 | 100 | % | $ | 53,150 | 100 | % | ||||||||||||||||||||
The Company originates personal loans, student loans, other loans and PCI loans throughout the United States. The table below does not include mortgage loans held for sale. The geographic distribution of personal, student, other and PCI loan receivables was as follows (dollars in millions): | ||||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
New York | $ | 1,738 | 12.7 | % | $ | 1,679 | 13.4 | % | ||||||||||||||||||||
California | 1,267 | 9.2 | 1,167 | 9.4 | ||||||||||||||||||||||||
Pennsylvania | 1,004 | 7.3 | 939 | 7.5 | ||||||||||||||||||||||||
Illinois | 794 | 5.8 | 696 | 5.6 | ||||||||||||||||||||||||
Texas | 742 | 5.4 | 637 | 5.1 | ||||||||||||||||||||||||
New Jersey | 687 | 5 | 630 | 5.1 | ||||||||||||||||||||||||
Massachusetts | 550 | 4 | 508 | 4.1 | ||||||||||||||||||||||||
Ohio | 540 | 3.9 | 481 | 3.9 | ||||||||||||||||||||||||
Florida | 538 | 3.9 | 479 | 3.8 | ||||||||||||||||||||||||
Michigan | 512 | 3.7 | 482 | 3.9 | ||||||||||||||||||||||||
Other States | 5,347 | 39.1 | 4,775 | 38.2 | ||||||||||||||||||||||||
Total other loans (including PCI loans) | $ | 13,719 | 100 | % | $ | 12,473 | 100 | % | ||||||||||||||||||||
Credit_Card_and_Student_Loan_S
Credit Card and Student Loan Securitization Activities | 12 Months Ended | |||||||||
Dec. 31, 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 outstanding DCMT certificates held by subsidiaries of Discover Bank, constitute intercompany positions which are eliminated in the preparation of the Company’s 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): | ||||||||||
December 31, | ||||||||||
2014 | 2013 | |||||||||
Cash collateral accounts | $ | — | $ | 59 | ||||||
Collections and interest funding accounts | 16 | 31 | ||||||||
Restricted cash | 16 | 90 | ||||||||
Investors’ interests held by third-party investors | 15,950 | 15,190 | ||||||||
Investors’ interests held by wholly owned subsidiaries of Discover Bank | 5,789 | 5,024 | ||||||||
Seller’s interest | 8,596 | 10,898 | ||||||||
Loan receivables(1) | 30,335 | 31,112 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (805 | ) | (833 | ) | ||||||
Net loan receivables | 29,530 | 30,279 | ||||||||
Other | 37 | 34 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 29,583 | $ | 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 December 31, 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): | ||||||||||
Investors’ | # of Series | 3-Month Rolling | ||||||||
Interests(1) | Outstanding | Average Excess | ||||||||
Spread | ||||||||||
At December 31, 2014 | ||||||||||
Discover Card Execution Note Trust (DiscoverSeries notes) | $ | 21,739 | 39 | 13.95 | % | |||||
-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 trusts. | ||||||||||
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 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. | ||||||||||
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 statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | ||||||||||
December 31, | ||||||||||
2014 | 2013 | |||||||||
Restricted cash | $ | 86 | $ | 89 | ||||||
Student loan receivables | 1,969 | 2,248 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (28 | ) | (28 | ) | ||||||
Net student loan receivables | 1,941 | 2,220 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 2,027 | $ | 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. |
Premises_and_Equipment
Premises and Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Premises and Equipment | Premises and Equipment | |||||||
A summary of premises and equipment, net is as follows (dollars in millions): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Land | $ | 43 | $ | 43 | ||||
Buildings and improvements | 589 | 547 | ||||||
Capitalized equipment leases | 2 | 2 | ||||||
Furniture, fixtures and equipment | 753 | 735 | ||||||
Software | 422 | 391 | ||||||
Premises and equipment | 1,809 | 1,718 | ||||||
Less: Accumulated depreciation | (905 | ) | (829 | ) | ||||
Less: Accumulated amortization of software | (234 | ) | (235 | ) | ||||
Premises and equipment, net | $ | 670 | $ | 654 | ||||
Depreciation expense, which includes amortization of assets recorded under capital leases, was $78 million, $65 million, $63 million and $6 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. Amortization expense on capitalized software was $48 million, $41 million, $32 million and $3 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets | |||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||
As of December 31, 2014 and 2013, the Company had goodwill of $257 million and $284 million, respectively. In 2012, $31 million of goodwill was recorded in connection with its acquisition of substantially all of the operating and related assets and certain liabilities of Home Loan Center, which was allocated to the Direct Banking segment. In 2013, a $2 million adjustment was recorded to reduce goodwill as a result of the finalization of purchase accounting for this acquisition. Additionally, the Company has goodwill of $255 million resulting from its previous acquisition of PULSE, which was allocated to the Payment Services segment. | ||||||||||||||||||||||||||
The Company conducted its annual goodwill impairment test as of October 1, 2014, which resulted in the recognition of non-cash impairment charge of $27 million during the three months ended December 31, 2014 related to the Discover Home Loans business based on its carrying values exceeding its fair values. The Company reduced its fair value estimate as a result of a fourth quarter reevaluation of the forecasts due to continuing challenges faced in developing a scalable direct-to-consumer purchase mortgage origination business. The impairment charge is recorded in the other expense line as a component of total other expense in the accompanying consolidated and combined statements of income and within the Direct Banking segment. | ||||||||||||||||||||||||||
The fair value of the Discover Home Loans reporting unit was estimated using a discounted cash flow method that incorporated the financial forecasts incorporating assumptions about the amount and timing of future cash flows, discount rates and other factors that are inherently uncertain and judgmental in nature. | ||||||||||||||||||||||||||
During the fourth quarter of 2013, the Company changed the date of its annual goodwill impairment test from June 1 to October 1. Based on the annual goodwill impairment test on June 1, 2013, management concluded that there was no impairment to goodwill. The additional impairment test performed on October 1, 2013 also resulted in management's conclusion that there was no impairment to goodwill. | ||||||||||||||||||||||||||
Intangible Assets | ||||||||||||||||||||||||||
The Company's amortizable intangible assets resulted from various acquisitions. The May 2013 acquisition of Diners Club Italy, which is part of the Payment Services segment, resulted in the recognition of amortizable intangible assets primarily related to customer relationships. The June 2012 acquisition of Home Loan Center, which is part of the Direct Banking segment, resulted in the recognition of amortizable intangible assets related to proprietary software, non-compete agreements and marketing agreements. The December 2010 acquisition of SLC, which is part of the Direct Banking segment, resulted in the recognition of an amortizable intangible asset relating to acquired customer relationships. The 2005 acquisition of PULSE, which is part of the Payment Services segment, resulted in the recognition of amortizable intangible assets relating to acquired customer relationships and trade name intangibles. Acquired customer relationships for Diners Club Italy consist of those relationships in existence between Diners Club Italy and their customers that have a Diners Club charge card as valued at the date of the acquisition. Acquired customer relationships for SLC consist of those relationships in existence between SLC and the numerous students that carry student loan balances, while for PULSE they consist of those relationships in existence between PULSE and the numerous financial institutions that participate in its network, as valued at the date of the respective acquisition. | ||||||||||||||||||||||||||
Non-amortizable intangible assets consist of trade name intangibles recognized in the acquisition of SLC, along with international transaction processing rights and trade name intangibles recognized in the acquisition of Diners Club in June 2008. The Company conducted its annual impairment test of intangible assets as of October 1, 2014 and no impairment charges were identified. During the fourth quarter of 2013, the Company changed the date of its annual impairment test for non-amortizable intangible assets from June 1 to October 1 to coincide with the change in the Company's goodwill impairment test date. No impairment charges were identified during the impairment tests conducted at June 1, 2013 and 2012 or October 1, 2013. | ||||||||||||||||||||||||||
The following table summarizes the Company's intangible assets (dollars in millions): | ||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||
Weighted-Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
Book Value | Book Value | |||||||||||||||||||||||||
Amortizable intangible assets: | ||||||||||||||||||||||||||
Customer relationships | 15.6 years | $ | 72 | $ | 60 | $ | 12 | $ | 78 | $ | 60 | $ | 18 | |||||||||||||
Trade name and other | 25 years | 8 | 3 | 5 | 8 | 2 | 6 | |||||||||||||||||||
Proprietary software | 7 years | 6 | 2 | 4 | 6 | 2 | 4 | |||||||||||||||||||
Non-compete agreements | 3 years | 2 | 2 | — | 2 | 1 | 1 | |||||||||||||||||||
Marketing agreements and other | N/A | — | — | — | 6 | 5 | 1 | |||||||||||||||||||
Total amortizable intangible assets | 88 | 67 | 21 | 100 | 70 | 30 | ||||||||||||||||||||
Non-amortizable intangible assets: | ||||||||||||||||||||||||||
Trade names | N/A | 132 | — | 132 | 132 | — | 132 | |||||||||||||||||||
International transaction processing rights | N/A | 23 | — | 23 | 23 | — | 23 | |||||||||||||||||||
Total non-amortizable intangible assets | 155 | — | 155 | 155 | — | 155 | ||||||||||||||||||||
Total intangible assets | $ | 243 | $ | 67 | $ | 176 | $ | 255 | $ | 70 | $ | 185 | ||||||||||||||
Amortization expense related to the Company's intangible assets was $10 million, $12 million, $11 million and $1 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. | ||||||||||||||||||||||||||
The following table presents expected intangible asset amortization expense for the next five years based on intangible assets at the end of the current period (dollars in millions): | ||||||||||||||||||||||||||
Year | Amount | |||||||||||||||||||||||||
2015 | $ | 5 | ||||||||||||||||||||||||
2016 | $ | 4 | ||||||||||||||||||||||||
2017 | $ | 3 | ||||||||||||||||||||||||
2018 | $ | 3 | ||||||||||||||||||||||||
2019 | $ | 2 | ||||||||||||||||||||||||
Deposits
Deposits | 12 Months Ended | |||||||
Dec. 31, 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 December 31, 2014 and 2013, the Company had $28.8 billion and $28.4 billion, respectively, of direct-to-consumer deposits and approximately $17.3 billion and $16.4 billion, respectively, of brokered and other deposits. | ||||||||
A summary of interest-bearing deposit accounts is as follows (dollars in millions): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Certificates of deposit in amounts less than $100,000(1) | $ | 21,502 | $ | 21,211 | ||||
Certificates of deposit from amounts of $100,000(1) to less than $250,000(1) | 4,481 | 4,860 | ||||||
Certificates of deposit in amounts of $250,000(1) or greater | 1,153 | 1,180 | ||||||
Savings deposits, including money market deposit accounts | 18,656 | 17,515 | ||||||
Total interest-bearing deposits | $ | 45,792 | $ | 44,766 | ||||
Average annual interest rate | 1.29 | % | 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 next five years, and thereafter were as follows (dollars in millions): | ||||||||
Year | Amount | |||||||
2015 | $ | 12,755 | ||||||
2016 | $ | 5,685 | ||||||
2017 | $ | 3,408 | ||||||
2018 | $ | 2,000 | ||||||
2019 | $ | 1,522 | ||||||
Thereafter | $ | 1,766 | ||||||
LongTerm_Borrowings
Long-Term Borrowings | 12 Months Ended | |||||||||||||
Dec. 31, 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): | ||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Maturity | Interest | Weighted-Average Interest Rate | Outstanding Amount | Outstanding Amount | ||||||||||
Rate | ||||||||||||||
Securitized Debt | ||||||||||||||
Fixed-rate asset-backed securities(1) | 2015-2019 | 1.76% | 1.76% | $ | 8,950 | $ | 5,554 | |||||||
Floating-rate asset-backed securities(2)(3) | 2015-2019 | 0.34-0.74% | 0.51% | 7,000 | 9,640 | |||||||||
Total Discover Card Master Trust I and Discover Card Execution Note Trust | 15,950 | 15,194 | ||||||||||||
Floating-rate asset-backed securities(4)(5)(6)(7) | 2031-2042 | 0.49-4.25% | 2.01% | 1,445 | 1,792 | |||||||||
Total SLC Private Student Loan Trusts | 1,445 | 1,792 | ||||||||||||
Total Long-Term Borrowings - owed to securitization investors | 17,395 | 16,986 | ||||||||||||
Discover Financial Services (Parent Company) | ||||||||||||||
Fixed-rate senior notes(1) | 2017-2024 | 3.85-10.25% | 5.08% | 1,558 | 1,045 | |||||||||
Discover Bank | ||||||||||||||
Senior bank notes | 2018-2026 | 2.00-4.25% | 3.38% | 2,892 | 1,744 | |||||||||
Subordinated bank notes | 2019-2020 | 7.00-8.70% | 7.49% | 698 | 698 | |||||||||
Capital lease obligations | 2016 | 4.51% | 4.51% | 1 | 1 | |||||||||
Total long-term borrowings | $ | 22,544 | $ | 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 London Interbank Offered Rate (“LIBOR”). Use of these interest rate swaps impacts carrying value of the debt. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-2 | Discover Card Execution Note Trust floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 18 to 58 basis points and 3-month LIBOR + 20 basis points. | |||||||||||||
-3 | 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 a portion of these long-term borrowings. There is no impact on debt carrying value from use of these interest rate swaps. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-4 | SLC Private Student Loan Trusts floating-rate asset-backed securities include issuances with the following interest rate terms: 3-month LIBOR + 17 to 45 basis points, Prime rate + 75 to 100 basis points and 1-month LIBOR + 350 basis points. | |||||||||||||
-5 | The Company acquired an interest rate swap related to the securitized debt assumed in the SLC transaction. The swap does not qualify for hedge accounting and has no impact on debt carrying value. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-6 | 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. | |||||||||||||
-7 | Includes $348 million of senior notes maturing in 2031, $827 million of senior and subordinated notes maturing in 2036 and $270 million of senior notes maturing in 2042 as of December 31, 2014. | |||||||||||||
Maturities | ||||||||||||||
Long-term borrowings had the following maturities at the end of the current period (dollars in millions): | ||||||||||||||
Year | Amount | |||||||||||||
Due in 2015 | $ | 3,302 | ||||||||||||
Due in 2016 | 3,050 | |||||||||||||
Due in 2017 | 5,106 | |||||||||||||
Due in 2018 | 2,650 | |||||||||||||
Due in 2019 | 3,278 | |||||||||||||
Thereafter | 5,158 | |||||||||||||
Total | $ | 22,544 | ||||||||||||
The Company has access to committed undrawn capacity through private securitizations to support the funding of its credit card loan receivables. As of December 31, 2014, the total commitment of secured credit facilities through private providers was $7.5 billion, of which none had been used and was included in long-term borrowings at December 31, 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 calendar years 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. |
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||
Stock-Based Compensation Plans | Stock-Based Compensation Plans | |||||||||||||||
The Company has two stock-based compensation plans: the Discover Financial Services Omnibus Incentive Plan and the Discover Financial Services Directors' Compensation Plan. | ||||||||||||||||
Omnibus Incentive Plan | ||||||||||||||||
The Discover Financial Services Omnibus Incentive Plan (“Omnibus Plan”), which is stockholder approved, provides for the award of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based and/or cash awards (collectively, “Awards”). Currently, the Company does not have any stock appreciation rights or restricted stock outstanding. The total number of shares that may be granted is 45 million shares, subject to adjustments for certain transactions as described in the Omnibus Plan document. Shares granted under the Omnibus Plan may be the following: (i) authorized but unissued shares, and (ii) treasury shares that the Company acquires in the open market, in private transactions or otherwise. | ||||||||||||||||
Directors' Compensation Plan | ||||||||||||||||
The Discover Financial Services Directors' Compensation Plan (the “Directors' Compensation Plan”), which is stockholder approved, permits the grant of RSUs to non-employee directors. The total number of units available for grant under the Directors' Compensation Plan equals the excess, if any, of (i) 1,000,000 shares over (ii) the sum of (a) the number of shares subject to outstanding awards granted under the Directors' Compensation Plan and (b) the number of shares previously issued pursuant to the Directors' Compensation Plan. Shares of stock that are issuable pursuant to the awards granted under the Directors' Compensation Plan may be authorized but unissued shares, treasury shares or shares that the Company acquires in the open market. Annual awards for eligible directors are calculated by dividing $125,000 (increased to $130,000 effective May 7, 2014) by the fair market value of a share of stock on the date of grant and are subject to a restriction period whereby 100% of such units shall vest on the one year anniversary of the date of grant. | ||||||||||||||||
Stock-Based Compensation | ||||||||||||||||
The following table details the compensation cost, net of forfeitures (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
RSUs | $ | 33 | $ | 31 | $ | 29 | $ | 2 | ||||||||
PSUs | 27 | 28 | 18 | 1 | ||||||||||||
Total stock-based compensation expense | $ | 60 | $ | 59 | $ | 47 | $ | 3 | ||||||||
Income tax benefit | $ | 22 | $ | 22 | $ | 18 | $ | 1 | ||||||||
RSU Activity | ||||||||||||||||
The following table sets forth the activity related to vested and unvested RSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | Aggregate | ||||||||||||||
Intrinsic Value | ||||||||||||||||
(in millions) | ||||||||||||||||
RSUs at December 31, 2013 | 4,143,915 | $ | 27.38 | $ | 232 | |||||||||||
Granted | 567,506 | $ | 54.01 | |||||||||||||
Conversions to common stock | (1,305,318 | ) | $ | 24.22 | ||||||||||||
Forfeited | (43,705 | ) | $ | 41.34 | ||||||||||||
RSUs at December 31, 2014 | 3,362,398 | $ | 32.92 | $ | 220 | |||||||||||
The following table sets forth the activity related to unvested RSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | |||||||||||||||
Unvested RSUs at December 31, 2013(1) | 2,497,620 | $ | 28.52 | |||||||||||||
Granted | 567,506 | $ | 54.01 | |||||||||||||
Vested | (1,158,694 | ) | $ | 26.12 | ||||||||||||
Forfeited | (43,705 | ) | $ | 41.34 | ||||||||||||
Unvested RSUs at December 31, 2014(1) | 1,862,727 | $ | 37.48 | |||||||||||||
-1 | Unvested RSUs represent awards where recipients have yet to satisfy either explicit vesting terms or retirement-eligibility requirements. | |||||||||||||||
Compensation cost associated with restricted stock units is determined based on the number of units granted and the fair value on the date of grant. The fair value is amortized on a straight-line basis, net of estimated forfeitures over the requisite service period for each separately vesting tranche of the award. The requisite service period is generally the vesting period. | ||||||||||||||||
The following table summarizes the total intrinsic value of the RSUs converted to common stock and the total grant-date fair value of RSUs vested (dollars in millions, except weighted-average grant-date fair value amounts): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Intrinsic value of RSUs converted to common stock | $ | 72 | $ | 63 | $ | 49 | $ | — | ||||||||
Grant-date fair value of RSUs vested | $ | 30 | $ | 27 | $ | 28 | $ | — | ||||||||
Weighted-average grant-date fair value of RSUs granted | $ | 54.01 | $ | 42.14 | $ | 25.64 | $ | 41.23 | ||||||||
As of December 31, 2014 and 2013, there was $24 million and $28 million, respectively, of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a total period of 2.8 years and 2.1 years, respectively, and a weighted-average period of 2.3 years and 2.8 years, respectively. | ||||||||||||||||
PSU Activity | ||||||||||||||||
The following table sets forth the activity related to vested and unvested PSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | ||||||||||||||
PSUs at December 31, 2013 | 1,897,867 | $ | 26.93 | $ | 106 | |||||||||||
Granted | 384,626 | $ | 53.66 | |||||||||||||
Conversions to common stock | (710,379 | ) | $ | 19.15 | ||||||||||||
Forfeited | (12,439 | ) | $ | 44.97 | ||||||||||||
PSUs at December 31, 2014 | 1,559,675 | $ | 36.92 | $ | 102 | |||||||||||
The following table sets forth the activity related to unvested PSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | |||||||||||||||
Unvested PSUs at December 31, 2013 | 1,652,292 | $ | 27.77 | |||||||||||||
Granted | 384,626 | $ | 53.66 | |||||||||||||
Vested(1) | (559,114 | ) | $ | 19.15 | ||||||||||||
Forfeited | (12,439 | ) | $ | 44.97 | ||||||||||||
Unvested PSUs at December 31, 2014(2)(3)(4) | 1,465,365 | $ | 37.71 | |||||||||||||
-1 | Vested PSUs represent awards where recipients have satisfied retirement-eligibility requirements. | |||||||||||||||
-2 | Includes 518,438 PSUs granted in fiscal year 2012 that are earned based on the Company's achievement of EPS during the two-year performance period ended November 30, 2013 and are subject to the requisite service period which ended January 2, 2015. | |||||||||||||||
-3 | Includes 567,424 PSUs granted in calendar year 2013 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2015 and are subject to the requisite service period which ends February 1, 2016. | |||||||||||||||
-4 | Includes 379,503 PSUs granted in calendar year 2014 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2016 and are subject to the requisite service period which ends February 1, 2017. | |||||||||||||||
Compensation cost associated with PSUs is determined based on the number of instruments granted, the fair value on the date of grant, and the performance factor. The fair value is amortized on a straight-line basis, net of estimated forfeitures over the requisite service period. Each PSU is a restricted stock instrument that is subject to additional conditions and constitutes a contingent and unsecured promise by the Company to pay shares of the Company's common stock on the conversion date for the PSU contingent on the number of PSUs to be issued. PSUs granted in fiscal year 2012 pay up to two shares per unit, whereas PSUs granted in calendar years 2013 and 2014 pay up to 1.5 shares per unit. Additionally, PSUs granted in fiscal year 2012 have a performance period of two years and a vesting period of three years, whereas PSUs granted in calendar years 2013 and 2014 have a performance period of three years and a vesting period of three years. The requisite service period of an award, having both performance and service conditions, is the longest of the explicit, implicit and derived service periods. | ||||||||||||||||
As of December 31, 2014, there was $27 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a total period of 2.1 years, with a weighted-average period of 0.8 years. As of December 31, 2013, there was $34 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a total period of 2.1 years, with a weighted-average period of 0.8 years. | ||||||||||||||||
Stock Option Activity | ||||||||||||||||
Option awards are granted with an exercise price equal to the fair market value of one share of the Company's common stock at the date of grant; these types of awards expire ten years from the grant date and may be subject to restrictions on transfer, vesting requirements, which are set at the discretion of the Compensation and Leadership Development Committee of the Company's board of directors, or cancellation under specified circumstances. Stock awards also may be subject to similar restrictions determined at the time of grant under this plan. Certain option and stock awards provide for accelerated vesting if there is a change in control or upon certain terminations (as defined in the Omnibus Plan or the award certificate). | ||||||||||||||||
The following table sets forth the activity concerning stock option activity: | ||||||||||||||||
Number of Units | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | |||||||||||||
(in years) | ||||||||||||||||
Options outstanding at December 31, 2013 | 171,726 | $ | 25.82 | 2.76 years | $ | 5 | ||||||||||
Granted(1) | — | $ | — | |||||||||||||
Exercised | (56,221 | ) | $ | 24.63 | ||||||||||||
Expired | — | $ | — | |||||||||||||
Options outstanding at December 31, 2014 | 115,505 | $ | 26.4 | 1.90 years | $ | 5 | ||||||||||
Vested and exercisable at December 31, 2014 | 115,505 | $ | 26.4 | 1.90 years | $ | 5 | ||||||||||
-1 | No stock options have been granted by the Company since its spin-off from Morgan Stanley. | |||||||||||||||
Cash received from the exercise of stock options was $1 million and $7 million for the year ended December 31, 2014 and 2013, respectively, and the income tax benefit realized from the exercise of stock options was insignificant for the year ended December 31, 2014 and $3 million for the year ended December 31, 2013. | ||||||||||||||||
The following table summarizes the total intrinsic value of options exercised and total fair value of options vested (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Intrinsic value of options exercised | $ | 2 | $ | 11 | $ | 22 | $ | 6 | ||||||||
As of December 31, 2014 and 2013 there was no unrecognized compensation cost related to non-vested stock options granted under the Company's Omnibus Plan, as all these options have vested. | ||||||||||||||||
The Company utilized the Black-Scholes pricing model to estimate the fair value of each option at its date of grant. The fair value was amortized on a straight-line basis, net of estimated forfeitures, over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Since all options were granted prior to the Company's spin-off from Morgan Stanley, the expected option life of stock options and the expected dividend yield of stock were determined based upon Morgan Stanley's historical experience. The expected stock price volatility was determined based upon Morgan Stanley's historical stock price data over a time period similar to the expected option life. The risk-free interest rate was based on U.S. Treasury Strips with a remaining term equal to the expected life assumed at the date of grant. |
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans | |||||||||||||||
The Company sponsors the Discover Financial Services Pension Plan (the "Discover Pension Plan"), which is a non-contributory defined benefit plan that is qualified under Section 401(a) of the Internal Revenue Code, for eligible employees in the U.S. Effective December 31, 2008, the Discover Pension Plan was amended to discontinue the accrual of future benefits. The Company also sponsors the Discover Financial Services 401(k) Plan (the “Discover 401(k) Plan”), which is a defined contribution plan that is qualified under Section 401(a) of the Internal Revenue Code, for its eligible U.S. employees. | ||||||||||||||||
Discover Pension Plan | ||||||||||||||||
The Discover Pension Plan generally provides retirement benefits that are based on each participant's years of credited service prior to 2009 and on compensation specified in the Discover Pension Plan. The Company's policy is to fund at least the amounts sufficient to meet minimum funding requirements under the Employee Retirement Income Security Act of 1974, as amended. | ||||||||||||||||
Net Periodic Benefit Cost | ||||||||||||||||
Net periodic benefit cost expensed by the Company included the following components (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Service cost, benefits earned during the period | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest cost on projected benefit obligation | 22 | 21 | 21 | 2 | ||||||||||||
Expected return on plan assets | (23 | ) | (23 | ) | (23 | ) | (2 | ) | ||||||||
Net amortization | 3 | 5 | 3 | — | ||||||||||||
Net periodic benefit cost | $ | 2 | $ | 3 | $ | 1 | $ | — | ||||||||
Accumulated Other Comprehensive Income | ||||||||||||||||
Pretax amounts recognized in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost consist of (dollars in millions): | ||||||||||||||||
31-Dec-14 | ||||||||||||||||
Prior service credit | $ | 6 | ||||||||||||||
Net loss | (266 | ) | ||||||||||||||
Total | $ | (260 | ) | |||||||||||||
Benefit Obligations and Funded Status | ||||||||||||||||
The following table provides a reconciliation of the changes in the benefit obligation and fair value of plan assets as well as a summary of the Discover Pension Plan's funded status (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Reconciliation of benefit obligation: | ||||||||||||||||
Benefit obligation at beginning of year | $ | 452 | $ | 523 | ||||||||||||
Service cost | — | — | ||||||||||||||
Interest cost | 22 | 21 | ||||||||||||||
Employee contributions | — | — | ||||||||||||||
Actuarial loss (gain) | 112 | (78 | ) | |||||||||||||
Plan amendments | — | — | ||||||||||||||
Benefits paid | (16 | ) | (14 | ) | ||||||||||||
Benefit obligation at end of year | 570 | 452 | ||||||||||||||
Reconciliation of fair value of plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | 367 | 368 | ||||||||||||||
Actual return on plan assets | 50 | 13 | ||||||||||||||
Employer contributions | — | — | ||||||||||||||
Employee contributions | — | — | ||||||||||||||
Benefits paid | (16 | ) | (14 | ) | ||||||||||||
Fair value of plan assets at end of year | 401 | 367 | ||||||||||||||
Unfunded status (recorded in accrued expenses and other liabilities) | $ | (169 | ) | $ | (85 | ) | ||||||||||
Assumptions | ||||||||||||||||
The following table presents the assumptions used to determine the benefit obligation: | ||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||
Discount rate | 4.08 | % | 4.93 | % | ||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost: | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Discount rate | 4.93 | % | 4.09 | % | 5.07 | % | 3.96 | % | ||||||||
Expected long-term rate of return on plan assets | 6.5 | % | 6.75 | % | 6.75 | % | 6.75 | % | ||||||||
The expected long-term rate of return on plan assets was estimated by computing a weighted-average return of the underlying long-term expected returns on the different asset classes, based on the target asset allocations. Asset class return assumptions are created by integrating information on past capital market performance, current levels of key economic indicators and the market insights of investment professionals. Individual asset classes are analyzed as part of a larger system, acknowledging both the interaction between asset classes and the influence of larger macroeconomic variables such as inflation and economic growth on the entire structure of capital markets. Medium and long-term economic outlooks for the U.S. and other major industrial economies are forecast in order to understand the range of possible economic scenarios and evaluate their likelihood. Historical relationships between key economic variables and asset class performance patterns are analyzed using empirical models. Finally, comprehensive asset class performance projections are created by blending descriptive asset class characteristics with capital market insight and the initial economic analyses. The expected long-term return on plan assets is a long-term assumption that generally is expected to remain the same from one year to the next but is adjusted if there is a material change in the target asset allocation and/or significant changes in fees and expenses paid by the Discover Pension Plan. | ||||||||||||||||
Discover Pension Plan Assets | ||||||||||||||||
The targeted asset allocation for 2015 by asset class is 45% and 55% for equity securities and fixed income securities, respectively. The Discover Financial Services Retirement Plan Investment Committee (the “Investment Committee”) determined the asset allocation targets for the Discover Pension Plan based on its assessment of business and financial conditions, demographic and actuarial data, funding characteristics and related risk factors. Other relevant factors, including industry practices and long-term historical and prospective capital market returns were considered as well. | ||||||||||||||||
The Discover Pension Plan return objectives provide long-term measures for monitoring the investment performance against growth in the pension obligations. The overall allocation is expected to help protect the Discover Pension Plan's funded status while generating sufficiently stable real returns (net of inflation) to help cover current and future benefit payments and to improve the Discover Pension Plan's funded status. Total Discover Pension Plan portfolio performance is assessed by comparing actual returns with relevant benchmarks, such as the Standard & Poor's (“S&P”) 500 Index, the S&P 500 Total Return Index, the Russell 2000 Index and the MSCI All Country World Index. | ||||||||||||||||
Both the equity and fixed income portions of the asset allocation use a combination of active and passive investment strategies and different investment styles. The fixed income asset allocation consists of longer duration fixed income securities in order to help reduce plan exposure to interest rate variation and to better correlate assets with obligations. The longer duration fixed income allocation is expected to help stabilize the funding status ratio over the long term. | ||||||||||||||||
The asset mix of the Discover Pension Plan is reviewed by the Investment Committee on a regular basis. The asset allocation strategy will change over time in response to changes in the Discover Pension Plan's funded status. | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
The Discover Pension Plan’s assets are stated at fair value. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, if available. If a quoted market price is not available, the estimate of the fair value is based on the best information available in the circumstances. The table below presents information about the Discover Pension Plan assets and indicates the level within the fair value hierarchy, as defined by ASC 820, with which each item is associated. All of the Company's pension plan assets were categorized as Level 2 assets within the fair value hierarchy as of the end of the current period. For a description of the fair value hierarchy, see Note 20: Fair Value Measurements and Disclosures. (dollars in millions): | ||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||
Amount | Net Asset Allocation | Amount | Net Asset Allocation | |||||||||||||
Assets | ||||||||||||||||
Registered Investment Company: | ||||||||||||||||
Domestic small/mid cap equity fund | $ | 31 | 8 | % | $ | 32 | 9 | % | ||||||||
Emerging markets equity fund | 30 | 7 | 29 | 8 | ||||||||||||
Global low volatility equity fund | 20 | 5 | 19 | 5 | ||||||||||||
International core equity fund | 44 | 11 | 46 | 13 | ||||||||||||
Common Collective Trusts: | ||||||||||||||||
Domestic large cap equity fund | 54 | 13 | 50 | 13 | ||||||||||||
Domestic fixed income fund | — | — | 7 | 2 | ||||||||||||
Long duration fixed income fund | 219 | 55 | 181 | 49 | ||||||||||||
Temporary investment fund | 3 | 1 | 3 | 1 | ||||||||||||
Total assets | $ | 401 | 100 | % | $ | 367 | 100 | % | ||||||||
The investments that are categorized as Level 2 assets primarily consist of fixed income securities and common collective trusts. The common collective trust investment vehicles are valued using the Net Asset Value (“NAV”) provided by the administrator of the fund. The NAV is quoted on a private market that is not active; however, the unit price is based on underlying investments that are traded on an active market. The fair value of the stable value product is calculated as the present value of future cash flows. | ||||||||||||||||
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31, 2014 and 2013. | ||||||||||||||||
Cash Flows | ||||||||||||||||
The Company does not expect to make any contributions to the Discover Pension Plan for 2015. | ||||||||||||||||
Expected benefit payments associated with the Discover Pension Plan for the next five years and in aggregate for the years thereafter are as follows (dollars in millions): | ||||||||||||||||
2015 | $ | 13 | ||||||||||||||
2016 | $ | 14 | ||||||||||||||
2017 | $ | 15 | ||||||||||||||
2018 | $ | 16 | ||||||||||||||
2019 | $ | 17 | ||||||||||||||
Following five years thereafter | $ | 103 | ||||||||||||||
Discover 401(k) Plan | ||||||||||||||||
Under the Discover 401(k) Plan, eligible U.S. employees receive 401(k) matching contributions. Eligible employees also receive fixed employer contributions. Certain eligible employees also received employer transition credit contributions from January 1, 2009 through December 31, 2013. The pretax expense associated with the Company contributions for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012 was $52 million, $50 million, $42 million and $3 million respectively. |
Common_and_Preferred_Stock
Common and Preferred Stock | 12 Months Ended |
Dec. 31, 2014 | |
Class of Stock Disclosures [Abstract] | |
Common and Preferred Stock | Common and Preferred Stock |
Preferred Stock | |
The Company has 575,000 shares of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B (the "preferred stock"), outstanding with a par value of $0.01 per share that were issued on October 16, 2012. Each share of preferred stock has a liquidation preference of $1,000 and is represented by 40 depositary shares. Net proceeds received from the preferred stock issuance totaled approximately $560 million. The preferred stock is redeemable at the Company's option, subject to regulatory approval, either (1) in whole or in part on any dividend payment date on or after December 1, 2017 or (2) in whole but not in part, at any time within 90 days following a regulatory capital event (as defined in the certificate of designations for the preferred stock), in each case at a redemption price equal to $1,000 per share of preferred stock plus declared and unpaid dividends. Any dividends declared on the preferred stock will be payable quarterly in arrears at a rate of 6.50% per annum. | |
Stock Repurchase Program | |
On April 16, 2014, the Company's board of directors approved a share repurchase program authorizing the repurchase of up to $3.2 billion of its outstanding shares of common stock. The program expires on April 15, 2016, and may be terminated at any time. During the year ended December 31, 2014, the Company repurchased 24,796,614 shares for $1.5 billion. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income | |||||||||||||||||||
Changes in each component of AOCI were as follows (dollars in millions): | ||||||||||||||||||||
Unrealized Gain (Loss) on Available-for-Sale Investment Securities, Net of Tax | Gain (Loss) on Cash Flow Hedges, Net of Tax | Foreign Currency Translation Adjustments, Net of Tax(4) | Pension Plan Loss Net of Tax | AOCI | ||||||||||||||||
Balance at November 30, 2011 | $ | 55 | $ | 7 | $ | — | $ | (114 | ) | $ | (52 | ) | ||||||||
Net unrealized gains on investment securities, net of tax expense of $11(1) | 19 | — | — | — | 19 | |||||||||||||||
Unrealized losses on cash flow hedges, net of tax benefit of $2(2) | — | (4 | ) | — | — | (4 | ) | |||||||||||||
Unrealized pension plan loss, net of tax benefit of $25(3) | — | — | — | (38 | ) | (38 | ) | |||||||||||||
Balance at November 30, 2012 | 74 | 3 | — | (152 | ) | (75 | ) | |||||||||||||
Net unrealized losses on investment securities, net of tax benefit of $2(1) | (3 | ) | — | — | — | (3 | ) | |||||||||||||
Unrealized pension plan gain, net of tax expense of $4(3) | — | — | — | 6 | 6 | |||||||||||||||
Balance at December 31, 2012 | 71 | 3 | — | (146 | ) | (72 | ) | |||||||||||||
Net change(5) | (52 | ) | 10 | 1 | 45 | 4 | ||||||||||||||
Balance at December 31, 2013 | 19 | 13 | 1 | (101 | ) | (68 | ) | |||||||||||||
Net change(5) | 4 | (20 | ) | (1 | ) | (53 | ) | (70 | ) | |||||||||||
Balance at December 31, 2014 | $ | 23 | $ | (7 | ) | $ | — | $ | (154 | ) | $ | (138 | ) | |||||||
-1 | Represents the difference between the fair value and amortized cost of available-for-sale investment securities. | |||||||||||||||||||
-2 | Represents unrealized gains (losses) related to effective portion of cash flow hedges. | |||||||||||||||||||
-3 | Reflects adjustments to the funded status of pension plan, which is the difference between the fair value of the plan assets and the projected benefit obligation. | |||||||||||||||||||
-4 | Includes unrealized losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains on foreign currency translation adjustments. | |||||||||||||||||||
-5 | In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. As the result, the Company has adjusted its AOCI presentation prospectively, as required, and therefore additional table was included to present the required information for the current period and the presentation has changed from historical periods. | |||||||||||||||||||
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 Calendar Year Ended December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 9 | $ | (3 | ) | $ | 6 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income | (4 | ) | 2 | (2 | ) | |||||||||||||||
Net change | $ | 5 | $ | (1 | ) | $ | 4 | |||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (69 | ) | $ | 26 | $ | (43 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income | 38 | (15 | ) | 23 | ||||||||||||||||
Net change | $ | (31 | ) | $ | 11 | $ | (20 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Pension Plan: | ||||||||||||||||||||
Unrealized losses arising during the period | $ | (84 | ) | $ | 31 | $ | (53 | ) | ||||||||||||
Net change | $ | (84 | ) | $ | 31 | $ | (53 | ) | ||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (80 | ) | $ | 30 | $ | (50 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income | (2 | ) | — | (2 | ) | |||||||||||||||
Net change | $ | (82 | ) | $ | 30 | $ | (52 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 8 | $ | (3 | ) | $ | 5 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income | 8 | (3 | ) | 5 | ||||||||||||||||
Net change | $ | 16 | $ | (6 | ) | $ | 10 | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Pension Plan: | ||||||||||||||||||||
Unrealized gains arising during the period | $ | 72 | $ | (27 | ) | $ | 45 | |||||||||||||
Net change | $ | 72 | $ | (27 | ) | $ | 45 | |||||||||||||
Other_Expense
Other Expense | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||
Other Expense | Other Expense | |||||||||||||||
Total other expense includes the following components (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Postage | $ | 84 | $ | 86 | $ | 85 | $ | 7 | ||||||||
Fraud losses | 134 | 110 | 93 | 9 | ||||||||||||
Supplies | 23 | 26 | 22 | 2 | ||||||||||||
Credit-related inquiry fees | 19 | 19 | 20 | 1 | ||||||||||||
Litigation expense | — | (12 | ) | 218 | — | |||||||||||
Incentive expense | 50 | 61 | 59 | 5 | ||||||||||||
Other expense | 165 | 198 | 107 | 11 | ||||||||||||
Total other expense | $ | 475 | $ | 488 | $ | 604 | $ | 35 | ||||||||
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||
Income Taxes | Income Taxes | |||||||||||||||
Income tax expense consisted of the following (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Current: | ||||||||||||||||
U.S. federal | $ | 1,215 | $ | 1,065 | $ | 1,113 | $ | 101 | ||||||||
U.S. state and local | 167 | 87 | 149 | 15 | ||||||||||||
Total | 1,382 | 1,152 | 1,262 | 116 | ||||||||||||
Deferred: | ||||||||||||||||
U.S. federal | (7 | ) | 295 | 136 | (11 | ) | ||||||||||
U.S. state and local | (4 | ) | 27 | 10 | (1 | ) | ||||||||||
Total | (11 | ) | 322 | 146 | (12 | ) | ||||||||||
Income tax expense | $ | 1,371 | $ | 1,474 | $ | 1,408 | $ | 104 | ||||||||
The following table reconciles the Company’s effective tax rate to the U.S. federal statutory income tax rate: | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
U.S. federal statutory income tax rate | 35 | % | 35 | % | 35 | % | 35 | % | ||||||||
U.S. state, local and other income taxes, net of U.S. federal income tax benefits | 2.8 | 2.2 | 2.9 | 3.2 | ||||||||||||
Other | (0.7 | ) | 0.2 | (0.4 | ) | (0.1 | ) | |||||||||
Effective income tax rate | 37.1 | % | 37.4 | % | 37.5 | % | 38.1 | % | ||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances are provided to reduce deferred tax assets to an amount that is more likely than not to be realized. The Company evaluates the likelihood of realizing its deferred tax assets by estimating sources of future taxable income and the impact of tax planning strategies. Significant components of the Company’s net deferred income taxes, which are included in other assets in the consolidated statements of financial condition, were as follows (dollars in millions): | ||||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Deferred tax assets: | ||||||||||||||||
Allowance for loan losses | $ | 659 | $ | 627 | ||||||||||||
Customer fees and rewards | 212 | 212 | ||||||||||||||
Compensation and benefits | 123 | 87 | ||||||||||||||
State income taxes | 75 | 65 | ||||||||||||||
Other | 77 | 72 | ||||||||||||||
Total deferred tax assets before valuation allowance | 1,146 | 1,063 | ||||||||||||||
Valuation allowance | (41 | ) | (37 | ) | ||||||||||||
Total deferred tax assets, net of valuation allowance | 1,105 | 1,026 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Debt exchange premium | (91 | ) | (98 | ) | ||||||||||||
Depreciation and software amortization | (116 | ) | (83 | ) | ||||||||||||
Unearned income | (31 | ) | (40 | ) | ||||||||||||
Intangibles | (15 | ) | (22 | ) | ||||||||||||
Deferred loan acquisition costs | (23 | ) | (16 | ) | ||||||||||||
Partnership investments | (19 | ) | — | |||||||||||||
Other | (6 | ) | (13 | ) | ||||||||||||
Total deferred tax liabilities | (301 | ) | (272 | ) | ||||||||||||
Net deferred tax assets | $ | 804 | $ | 754 | ||||||||||||
Deferred taxes at December 31, 2014 included a valuation allowance of $41 million established primarily on Diners Club Italy deferred taxes. | ||||||||||||||||
A reconciliation of beginning and ending unrecognized tax benefits is as follows (dollars in millions): | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Balance at beginning of period | $ | 629 | $ | 575 | $ | 507 | $ | 573 | ||||||||
Additions: | ||||||||||||||||
Current year tax positions | 18 | 1 | 74 | 2 | ||||||||||||
Prior year tax positions | 74 | 142 | 1 | — | ||||||||||||
Reductions: | ||||||||||||||||
Prior year tax positions | (80 | ) | (69 | ) | (5 | ) | — | |||||||||
Settlements with taxing authorities | (4 | ) | (18 | ) | (2 | ) | — | |||||||||
Expired statute of limitations | (2 | ) | (2 | ) | (2 | ) | — | |||||||||
Balance at end of period(1) | $ | 635 | $ | 629 | $ | 573 | $ | 575 | ||||||||
-1 | As of the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012, and one month ended December 31, 2012, amounts included $144 million, $142 million, $108 million and $109 million respectively, of unrecognized tax benefits, which, if recognized, would favorably affect the effective tax rate. | |||||||||||||||
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense, consistent with its policy prior to the adoption of FASB Interpretation No. 48, codified as ASC 740-10-25. Interest and penalties related to unrecognized tax benefits increased by $17 million to $135 million for the calendar year ended December 31, 2014, increased by $17 million to $118 million for the calendar year ended December 31, 2013, increased by $20 million to $99 million for the fiscal year ended November 30, 2012 and increased by $2 million to $101 million for the one month ended December 31, 2012. The changes primarily relate to the revaluation of existing federal and state tax issues. | ||||||||||||||||
The Company is subject to examination by the Internal Revenue Service ("IRS") and the tax authorities in 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 of 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 this settlement, the Company believes it is reasonably possible that a reduction of unrecognized tax benefits in the range of $90 million to $335 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. | ||||||||||||||||
At December 31, 2014, the Company had net operating loss carryforwards of $107 million for foreign purposes which do not expire. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | |||||||||||||||
Dec. 31, 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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
Preferred stock dividends | (37 | ) | (37 | ) | (5 | ) | — | |||||||||
Net income available to common stockholders | 2,286 | 2,433 | 2,340 | 170 | ||||||||||||
Income allocated to participating securities | (16 | ) | (19 | ) | (22 | ) | (2 | ) | ||||||||
Net income allocated to common stockholders | $ | 2,270 | $ | 2,414 | $ | 2,318 | $ | 168 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares of common stock outstanding | 462 | 485 | 519 | 498 | ||||||||||||
Effect of dilutive common stock equivalents | 1 | 2 | 1 | 1 | ||||||||||||
Weighted-average shares of common stock outstanding and common stock equivalents | 463 | 487 | 520 | 499 | ||||||||||||
Basic earnings per common share | $ | 4.91 | $ | 4.97 | $ | 4.47 | $ | 0.34 | ||||||||
Diluted earnings per common share | $ | 4.9 | $ | 4.96 | $ | 4.46 | $ | 0.34 | ||||||||
Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for any of the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012. |
Capital_Adequacy
Capital Adequacy | 12 Months Ended | ||||||||||||||||||
Dec. 31, 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 guidelines. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Federal Reserve and FDIC final rules applicable to the Company and the Bank, respectively, include new minimum and "well-capitalized" risk-based capital and leverage ratios, effective January 1, 2015, and refine the definition of what constitutes "capital" for purposes of calculating these ratios. | |||||||||||||||||||
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 December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they were subject. | |||||||||||||||||||
Under regulatory capital requirements prior to 2015, 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 December 31, 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 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 | ||||||||||||||
December 31, 2014 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 12,418 | 17 | % | $ | 5,831 | ≥8.0% | $ | 7,289 | ≥10.0% | |||||||||
Discover Bank | $ | 11,040 | 15.3 | % | $ | 5,767 | ≥8.0% | $ | 7,209 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,839 | 14.9 | % | $ | 2,916 | ≥4.0% | $ | 4,373 | ≥6.0% | |||||||||
Discover Bank | $ | 9,470 | 13.1 | % | $ | 2,884 | ≥4.0% | $ | 4,326 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,839 | 13.2 | % | $ | 3,288 | ≥4.0% | $ | 4,111 | ≥5.0% | |||||||||
Discover Bank | $ | 9,470 | 11.7 | % | $ | 3,252 | ≥4.0% | $ | 4,066 | ≥5.0% | |||||||||
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% | |||||||||
The amount of dividends that a bank may pay in any year is subject to certain regulatory restrictions. Under the current banking regulations, a bank may not pay dividends if such a payment would leave the bank inadequately capitalized. In the calendar years ended December 31, 2014 and 2013 and fiscal year ended November 30, 2012, Discover Bank paid dividends of $1.8 billion, $1.6 billion and $1.5 billion, respectively, to the Company. No dividends were paid by Discover Bank during the one month ended December 31, 2012. |
Commitments_Contingencies_and_
Commitments, Contingencies and Guarantees | 12 Months Ended | |||||||||||||||
Dec. 31, 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 2028. 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 | |||||||||||||||
2015 | $ | 1 | $ | 16 | ||||||||||||
2016 | — | 15 | ||||||||||||||
2017 | — | 13 | ||||||||||||||
2018 | — | 12 | ||||||||||||||
2019 | — | 10 | ||||||||||||||
Thereafter | — | 45 | ||||||||||||||
Total minimum lease payments | 1 | $ | 111 | |||||||||||||
Less: Amount representing interest | — | |||||||||||||||
Present value of net minimum lease payments | $ | 1 | ||||||||||||||
Occupancy lease agreements, in addition to base rentals, generally provide for rent and operating expense escalations resulting from increased assessments for real estate taxes and other charges. Total rent expense under operating lease agreements, which considers contractual escalations, was $16 million, $15 million, $18 million and $3 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. | ||||||||||||||||
Unused Commitments to Extend Credit | ||||||||||||||||
At December 31, 2014, the Company had unused commitments to extend credit for loans of approximately $169.2 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 December 31, 2014, this amount was not material and was included in accrued expenses and other liabilities on the consolidated statements of financial condition. The related provision was included in other income on the 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): | ||||||||||||||||
December 31, | ||||||||||||||||
2014 | ||||||||||||||||
Diners Club: | ||||||||||||||||
Merchant guarantee | $ | 96 | ||||||||||||||
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 December 31, 2014, the Company had not recorded any contingent liability in the 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 December 31, 2014, the Company had not recorded any contingent liability in the 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 calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012. | ||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Aggregate sales transaction volume(1) | $ | 125,637 | $ | 120,442 | $ | 114,847 | $ | 11,521 | ||||||||
-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 consolidated financial statements for merchant chargeback guarantees on December 31, 2014 and 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 consolidated statements of financial condition (dollars in millions): | ||||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Settlement withholdings and escrow deposits | $ | 16 | $ | 17 | ||||||||||||
Litigation_and_Regulatory_Matt
Litigation and Regulatory Matters | 12 Months Ended |
Dec. 31, 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 "Dodd-Frank 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 calendar years ended December 31, 2014 and 2013 and one month ended December 31, 2012. Litigation expense of $218 million was recognized for the fiscal year ended November 30, 2012. | |
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 $170 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 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. On January 6, 2015, the parties entered into a confidential settlement and release agreement for resolution of this matter. On January 12, 2015, the court found that the parties’ settlement was fair and reasonable, and entered an order dismissing the case with prejudice. | |
On November 21, 2014, a patent infringement lawsuit was filed against the Company by Maxim Integrated Products, Inc. in the United States District Court for the Western District of Texas (Maxim Integrated Products, Inc. v. Discover Financial Services). The complaint asserts that the Company has infringed on three patents owned by Maxim relating to various systems and methods for performing secure transactions using mobile devices and also involving secure exchanges of information using mobile encryption and decryption. The plaintiff seeks unspecified damages for alleged past infringement, an award of attorneys’ fees and expenses, and a permanent injunction. The Company will seek to vigorously defend against the claims asserted in this matter. |
Fair_Value_Measurements_and_Di
Fair Value Measurements and Disclosures | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||
Fair Value 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 years ended December 31, 2014 and 2013, there were no changes to the Company's valuation techniques that had, or are expected to have, a material impact on the Company's 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 Other Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||||||||||||||||
for Identical Assets | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||
Balance at December 31, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1,329 | $ | — | $ | — | $ | 1,329 | |||||||||||||||||||||
U.S. government agency securities | 1,033 | — | — | 1,033 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,485 | — | 1,485 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 2,362 | $ | 1,485 | $ | — | $ | 3,847 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 122 | $ | — | $ | 122 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 7 | $ | 7 | |||||||||||||||||||||
Forward delivery contracts | — | 1 | — | 1 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 35 | — | 35 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 36 | $ | 7 | $ | 43 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 3 | $ | — | $ | 3 | |||||||||||||||||||||
Other derivative financial instruments | — | 20 | — | 20 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 23 | $ | — | $ | 23 | |||||||||||||||||||||
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 years ended December 31, 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 December 31, 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 $1.4 billion, a weighted-average coupon of 2.81% and a weighted-average remaining maturity of four 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, the Company refers to TBA MBS and best-efforts forward delivery contracts 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 December 31, 2014 and 2013, the aggregate unpaid principal balance of loans held for sale for which the fair value option had been elected was $117 million and $146 million, respectively. At December 31, 2014 and 2013, the same loans had a fair value of $122 million and $148 million, respectively. For the years ended December 31, 2014 and 2013, $18 million, and $37 million of losses, respectively, from fair value adjustments on mortgage loans held for sale were recorded in other revenue on the 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 Calendar Year Ended December 31, 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 December 31, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 4 | — | — | 87 | — | — | 4 | (88 | ) | $ | 7 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (1 | ) | 1 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 2 | — | — | 1 | (3 | ) | — | — | $ | — | |||||||||||||||||
For the Calendar Year Ended December 31, 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 December 31, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 12 | — | — | 121 | — | — | 3 | (132 | ) | $ | 4 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (3 | ) | 3 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 3 | — | — | 1 | (3 | ) | (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 Unobservable Input | Ranges of Inputs | Weighted Average(1) | |||||||||||||||||||||||||
Technique | Low | High | |||||||||||||||||||||||||||
Interest rate lock commitments | $ | 7 | Quantitative risk models | Loan funding probability | 13 | % | 99 | % | 61 | % | |||||||||||||||||||
-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 fourth quarter of 2014, the Company determined that the fair value of goodwill associated with Discover Home Loans declined below its carrying value and should be fully impaired. At December 31, 2014, the Company recorded an impairment charge of $27 million to other expense, the amount required to adjust the asset’s value to zero. | |||||||||||||||||||||||||||||
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 for Identical Assets | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Carrying Value | |||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||
Balance at December 31, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 10 | — | 10 | 10 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 93 | — | 93 | 91 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 103 | $ | — | $ | 104 | $ | 102 | |||||||||||||||||||
Cash and cash equivalents | $ | 7,284 | $ | — | $ | — | $ | 7,284 | $ | 7,284 | |||||||||||||||||||
Restricted cash | $ | 106 | $ | — | $ | — | $ | 106 | $ | 106 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 69,316 | $ | 69,316 | $ | 68,101 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 618 | $ | — | $ | 618 | $ | 618 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 46,242 | $ | — | $ | 46,242 | $ | 46,089 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 113 | $ | — | $ | 113 | $ | 113 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 16,067 | $ | 1,561 | $ | 17,628 | $ | 17,395 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 5,721 | $ | 1 | $ | 5,722 | $ | 5,149 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 132 | $ | — | $ | 132 | $ | 132 | |||||||||||||||||||
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 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 prepayment 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 statements 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 and senior 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 other long-term borrowings relates to the cash premiums paid in connection with the 2012 fiscal year debt exchanges. The fair values of other long-term borrowings classified as Level 3 consist of capital leases. | |||||||||||||||||||||||||||||
Accrued Interest Payables | |||||||||||||||||||||||||||||
The carrying value of the Company's accrued interest payable, which is included in other liabilities on the statements 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 | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 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 to related 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 20: 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 consolidated statement of financial condition. Collateral amounts recorded in the 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 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 December 31, 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 $40 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). | |||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
Notional | Number of | Derivative Assets | Derivative Liabilities | Notional | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||
Amount | Outstanding Derivative Contracts | Amount | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps - cash flow hedge | $ | 4,100 | 8 | $ | 4 | $ | 18 | $ | 2,650 | $ | 18 | $ | — | ||||||||||||||
Interest rate swaps - fair value hedge | $ | 5,507 | 175 | 31 | 2 | $ | 7,138 | 52 | 6 | ||||||||||||||||||
Foreign exchange forward contract - net investment hedge(1) | $ | 7 | 1 | — | — | $ | 35 | — | — | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Foreign exchange forward contracts(2) | $ | 53 | 9 | — | — | $ | 44 | — | — | ||||||||||||||||||
Interest rate swap(3) | $ | 359 | 1 | — | — | $ | 796 | — | — | ||||||||||||||||||
Forward delivery contracts | $ | 761 | 331 | 1 | 3 | $ | 693 | 5 | 1 | ||||||||||||||||||
Interest rate lock commitments(3) | $ | 406 | 1,681 | 7 | — | $ | 235 | 4 | — | ||||||||||||||||||
Total gross derivative assets/liabilities(4) | 43 | 23 | 79 | 7 | |||||||||||||||||||||||
Less: Collateral held/posted(5) | (20 | ) | (23 | ) | (61 | ) | (7 | ) | |||||||||||||||||||
Total net derivative assets/liabilities | $ | 23 | $ | — | $ | 18 | $ | — | |||||||||||||||||||
-1 | The foreign exchange forward contract has a notional amount of EUR 6 million and EUR 26 million as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-2 | The foreign exchange forward contracts have notional amounts of EUR 27 million, GBP 8 million, SGD 1 million and CHF 8 million as of December 31, 2014 and EUR 20 million and 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 enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At December 31, 2014 the Company had one outstanding contract with a notional amount of $33 million and immaterial fair value. At December 31, 2013 the Company one outstanding contract with a notional amount of $40 million and immaterial fair value. | ||||||||||||||||||||||||||
-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 (Loss) Gain Recognized in Other Comprehensive Income | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow/net investment hedges: | |||||||||||||||||||||||||||
Total (losses) gains recognized in other comprehensive income after amounts reclassified into earnings, pre-tax | Other Comprehensive Income | $ | (27 | ) | $ | 13 | $ | (6 | ) | $ | (1 | ) | |||||||||||||||
Total (losses) gains recognized in other comprehensive income | $ | (27 | ) | $ | 13 | $ | (6 | ) | $ | (1 | ) | ||||||||||||||||
Amount of Gain (Loss) Recognized in Income | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedges: | |||||||||||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Income | $ | — | $ | 4 | $ | 7 | $ | 1 | ||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Expense | (38 | ) | (12 | ) | — | — | ||||||||||||||||||||
Total amount reclassified from other comprehensive income into income | (38 | ) | (8 | ) | 7 | 1 | |||||||||||||||||||||
Interest rate swaps—fair value hedges: | |||||||||||||||||||||||||||
Interest expense - ineffectiveness | (13 | ) | (46 | ) | 58 | (9 | ) | ||||||||||||||||||||
Interest expense - other | 38 | 41 | 30 | 3 | |||||||||||||||||||||||
Gain (loss) on interest rate swaps | Interest Expense | 25 | (5 | ) | 88 | (6 | ) | ||||||||||||||||||||
Interest expense - ineffectiveness | 19 | 51 | (52 | ) | 10 | ||||||||||||||||||||||
Interest expense - other | (2 | ) | (6 | ) | (6 | ) | (1 | ) | |||||||||||||||||||
Gain (loss) on hedged item | Interest Expense | 17 | 45 | (58 | ) | 9 | |||||||||||||||||||||
Total gains recognized in income | $ | 4 | $ | 32 | $ | 37 | $ | 4 | |||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Gain (loss) on forward contracts | Other Income | $ | 5 | $ | (1 | ) | $ | 1 | $ | (1 | ) | ||||||||||||||||
Loss on interest rate swaps | Other Income | (1 | ) | (1 | ) | (7 | ) | — | |||||||||||||||||||
(Loss) gain on forward delivery contracts | Other Income | (6 | ) | 4 | (1 | ) | 2 | ||||||||||||||||||||
Gain on interest rate lock commitments | Other Income | 87 | 121 | 110 | 17 | ||||||||||||||||||||||
Total gains on derivatives not designated as hedges recognized in income | $ | 85 | $ | 123 | $ | 103 | $ | 18 | |||||||||||||||||||
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 December 31, 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 December 31, 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 December 31, 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 | 12 Months Ended | |||||||||||
Dec. 31, 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 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 provides payment transaction processing and settlement services on the Discover Network. 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, with the exception of an allocation of direct and incremental costs driven by the Company's Payment Services segment. | |||||||||||
• | 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 Calendar Year Ended December 31, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 6,359 | $ | — | $ | 6,359 | ||||||
Private student loans | 312 | — | 312 | |||||||||
PCI student loans | 260 | — | 260 | |||||||||
Personal loans | 568 | — | 568 | |||||||||
Other | 97 | — | 97 | |||||||||
Total interest income | 7,596 | — | 7,596 | |||||||||
Interest expense | 1,134 | — | 1,134 | |||||||||
Net interest income | 6,462 | — | 6,462 | |||||||||
Provision for loan losses | 1,440 | 3 | 1,443 | |||||||||
Other income | 1,700 | 315 | 2,015 | |||||||||
Other expense | 3,117 | 223 | 3,340 | |||||||||
Income before income tax expense | $ | 3,605 | $ | 89 | $ | 3,694 | ||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 5,978 | $ | — | $ | 5,978 | ||||||
Private student loans | 252 | — | 252 | |||||||||
PCI student loans | 272 | — | 272 | |||||||||
Personal loans | 464 | — | 464 | |||||||||
Other | 98 | — | 98 | |||||||||
Total interest income | 7,064 | — | 7,064 | |||||||||
Interest expense | 1,146 | — | 1,146 | |||||||||
Net interest income | 5,918 | — | 5,918 | |||||||||
Provision for loan losses | 1,069 | 17 | 1,086 | |||||||||
Other income | 1,976 | 330 | 2,306 | |||||||||
Other expense | 2,961 | 233 | 3,194 | |||||||||
Income before income tax expense | $ | 3,864 | $ | 80 | $ | 3,944 | ||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 5,751 | $ | — | $ | 5,751 | ||||||
Private student loans | 184 | — | 184 | |||||||||
PCI student loans | 303 | — | 303 | |||||||||
Personal loans | 363 | — | 363 | |||||||||
Other | 102 | — | 102 | |||||||||
Total interest income | 6,703 | — | 6,703 | |||||||||
Interest expense | 1,331 | — | 1,331 | |||||||||
Net interest income | 5,372 | — | 5,372 | |||||||||
Provision for loan losses | 848 | — | 848 | |||||||||
Other income | 1,939 | 342 | 2,281 | |||||||||
Other expense | 2,891 | 161 | 3,052 | |||||||||
Income before income tax expense | $ | 3,572 | $ | 181 | $ | 3,753 | ||||||
For the One Month Ended December 31, 2012 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 510 | $ | — | $ | 510 | ||||||
Private student loans | 18 | — | 18 | |||||||||
PCI student loans | 24 | — | 24 | |||||||||
Personal loans | 34 | — | 34 | |||||||||
Other | 9 | — | 9 | |||||||||
Total interest income | 595 | — | 595 | |||||||||
Interest expense | 103 | — | 103 | |||||||||
Net interest income | 492 | — | 492 | |||||||||
Provision for loan losses | 178 | — | 178 | |||||||||
Other income | 169 | 31 | 200 | |||||||||
Other expense | 224 | 16 | 240 | |||||||||
Income before income tax expense | $ | 259 | $ | 15 | $ | 274 | ||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
In the ordinary course of business, the Company offers consumer financial products to its directors, executive officers and certain members of their families. These products are offered on substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties, and these receivables are included in the loan receivables in the Company's consolidated statements of financial condition. They were not material to the Company's financial position or results of operations. |
Parent_Company_Condensed_Finan
Parent Company Condensed Financial Information | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||||||||||
Parent Company Condensed Financial Information | Parent Company Condensed Financial Information | |||||||||||||||
The following Parent Company financial statements are provided in accordance with SEC rules, which require such disclosure when the restricted net assets of consolidated subsidiaries exceed 25% of consolidated net assets. | ||||||||||||||||
Discover Financial Services | ||||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Financial Condition | ||||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 79 | $ | 4 | ||||||||||||
Notes receivable from subsidiaries(1) | 2,436 | 2,254 | ||||||||||||||
Investments in subsidiaries | 10,360 | 9,824 | ||||||||||||||
Other assets | 204 | 158 | ||||||||||||||
Total assets | $ | 13,079 | $ | 12,240 | ||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||
Non-interest bearing deposit accounts | $ | 1 | $ | 6 | ||||||||||||
Interest-bearing deposit accounts | 4 | 7 | ||||||||||||||
Total deposits | 5 | 13 | ||||||||||||||
Short-term borrowings from subsidiaries | 108 | 146 | ||||||||||||||
Other long-term borrowings | 1,559 | 1,045 | ||||||||||||||
Accrued expenses and other liabilities | 273 | 227 | ||||||||||||||
Total liabilities | 1,945 | 1,431 | ||||||||||||||
Stockholders' equity | 11,134 | 10,809 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 13,079 | $ | 12,240 | ||||||||||||
-1 | The Parent Company advanced $2.2 billion to Discover Bank as of December 31, 2014, which is included in notes receivables from subsidiaries. These funds are available to the Parent for liquidity purposes. | |||||||||||||||
Discover Financial Services | ||||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Income | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Interest income | $ | 18 | $ | 22 | $ | 22 | $ | 2 | ||||||||
Interest expense | 86 | 84 | 52 | 7 | ||||||||||||
Net interest expense | (68 | ) | (62 | ) | (30 | ) | (5 | ) | ||||||||
Dividends from subsidiaries | 1,860 | 1,600 | 1,500 | — | ||||||||||||
Total income (loss) | 1,792 | 1,538 | 1,470 | (5 | ) | |||||||||||
Other expense | ||||||||||||||||
Employee compensation and benefits | 1 | — | — | — | ||||||||||||
Professional fees | 3 | 3 | 1 | — | ||||||||||||
Other(1) | — | 1 | (171 | ) | — | |||||||||||
Total other expense (benefit) | 4 | 4 | (170 | ) | — | |||||||||||
Income (loss) before income tax benefit (expense) and equity in undistributed net income of subsidiaries | 1,788 | 1,534 | 1,640 | (5 | ) | |||||||||||
Income tax benefit (expense) | 18 | 17 | (54 | ) | 2 | |||||||||||
Equity in undistributed net income of subsidiaries | 517 | 919 | 759 | 173 | ||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
-1 | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. | |||||||||||||||
Discover Financial Services | ||||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Cash Flows | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Equity in undistributed net income of subsidiaries | (517 | ) | (919 | ) | (759 | ) | (173 | ) | ||||||||
Stock-based compensation expense | 60 | 59 | 47 | 3 | ||||||||||||
Deferred income taxes | (5 | ) | (2 | ) | 109 | (1 | ) | |||||||||
Premium on debt issuance(1) | — | — | (176 | ) | — | |||||||||||
Depreciation and amortization | 21 | 19 | 4 | 1 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
(Increase) decrease in other assets | (50 | ) | (33 | ) | (16 | ) | 32 | |||||||||
Increase (decrease) in other liabilities and accrued expenses | 32 | 29 | 10 | (15 | ) | |||||||||||
Net cash provided by operating activities | 1,864 | 1,623 | 1,564 | 17 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Increase in investment in subsidiaries | (35 | ) | — | (196 | ) | (1 | ) | |||||||||
(Increase) decrease in loans to subsidiaries | (182 | ) | (29 | ) | (520 | ) | 57 | |||||||||
Net cash (used for) provided by investing activities | (217 | ) | (29 | ) | (716 | ) | 56 | |||||||||
Cash flows from financing activities | ||||||||||||||||
Net (decrease) increase in short-term borrowings from subsidiaries | (38 | ) | 58 | 1 | (6 | ) | ||||||||||
Proceeds from issuance of common stock | 5 | 13 | 26 | 2 | ||||||||||||
Proceeds from issuance of preferred stock | — | — | 560 | — | ||||||||||||
Proceeds from issuance of long-term borrowings | 500 | — | — | — | ||||||||||||
Proceeds from advances from subsidiaries | — | — | 93 | — | ||||||||||||
Purchases of treasury stock | (1,564 | ) | (1,296 | ) | (1,216 | ) | (12 | ) | ||||||||
Net (decrease) increase in deposits | (8 | ) | (7 | ) | 12 | (12 | ) | |||||||||
Premium paid on debt exchange | — | — | (115 | ) | — | |||||||||||
Dividends paid on common and preferred stock | (467 | ) | (399 | ) | (209 | ) | (5 | ) | ||||||||
Net cash used for financing activities | (1,572 | ) | (1,631 | ) | (848 | ) | (33 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | 75 | (37 | ) | — | 40 | |||||||||||
Cash and cash equivalents, at beginning of period | 4 | 41 | 1 | 1 | ||||||||||||
Cash and cash equivalents, at end of period | $ | 79 | $ | 4 | $ | 1 | $ | 41 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid during the period for: | ||||||||||||||||
Interest expense | $ | 66 | $ | 65 | $ | 66 | $ | 2 | ||||||||
Income taxes, net of income tax refunds | $ | 65 | $ | (1 | ) | $ | (65 | ) | $ | — | ||||||
Non-cash investing and financing transactions: | ||||||||||||||||
Capital contribution to subsidiary(1) | $ | — | $ | — | $ | 499 | $ | — | ||||||||
Debt issuance, net of discount(1) | $ | — | $ | — | $ | (499 | ) | $ | — | |||||||
-1 | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
The Company has evaluated events and transactions that have occurred subsequent to December 31, 2014 and determined there were no subsequent events that would require recognition or disclosure in the consolidated financial statements. |
Quarterly_Results
Quarterly Results | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||||||||||||||||||
Quarterly Results | Quarterly Results | |||||||||||||||||||||||||||||||
The following table provides unaudited quarterly results (dollars in millions, except per share data): | ||||||||||||||||||||||||||||||||
31-Dec-14 | 30-Sep-14 | 30-Jun-14 | 31-Mar-14 | 31-Dec-13 | 30-Sep-13 | 30-Jun-13 | 31-Mar-13 | |||||||||||||||||||||||||
Interest income | $ | 1,974 | $ | 1,926 | $ | 1,863 | $ | 1,833 | $ | 1,842 | $ | 1,787 | $ | 1,727 | $ | 1,708 | ||||||||||||||||
Interest expense | 302 | 288 | 274 | 270 | 273 | 278 | 297 | 298 | ||||||||||||||||||||||||
Net interest income | 1,672 | 1,638 | 1,589 | 1,563 | 1,569 | 1,509 | 1,430 | 1,410 | ||||||||||||||||||||||||
Provision for loan losses | 457 | 354 | 360 | 272 | 354 | 333 | 240 | 159 | ||||||||||||||||||||||||
Other income(1) | 365 | 552 | 583 | 515 | 560 | 553 | 611 | 582 | ||||||||||||||||||||||||
Other expense | 932 | 827 | 797 | 784 | 838 | 783 | 820 | 753 | ||||||||||||||||||||||||
Income before income tax expense | 648 | 1,009 | 1,015 | 1,022 | 937 | 946 | 981 | 1,080 | ||||||||||||||||||||||||
Income tax expense | 244 | 365 | 371 | 391 | 335 | 353 | 379 | 407 | ||||||||||||||||||||||||
Net income | $ | 404 | $ | 644 | $ | 644 | $ | 631 | $ | 602 | $ | 593 | $ | 602 | $ | 673 | ||||||||||||||||
Net income allocated to common stockholders(2) | $ | 392 | $ | 630 | $ | 630 | $ | 618 | $ | 588 | $ | 579 | $ | 588 | $ | 659 | ||||||||||||||||
Basic earnings per common share(2) | $ | 0.87 | $ | 1.37 | $ | 1.35 | $ | 1.31 | $ | 1.24 | $ | 1.2 | $ | 1.2 | $ | 1.33 | ||||||||||||||||
Diluted earnings per common share(2) | $ | 0.87 | $ | 1.37 | $ | 1.35 | $ | 1.31 | $ | 1.23 | $ | 1.2 | $ | 1.2 | $ | 1.33 | ||||||||||||||||
-1 | During the three months ended December 31, 2014, the Company made certain changes to its customer rewards program eliminating forfeitures. These changes resulted in a one-time expense of $178 million due to the reversal of the estimate for customer rewards forfeiture, a contra-account to accrued expenses and other liabilities. | |||||||||||||||||||||||||||||||
-2 | Because the inputs to net income allocated to common stockholders and earnings per share are calculated using weighted averages for the quarter, the sum of all four quarters may differ from the year to date amounts in the consolidated statements of income. |
Background_and_Basis_of_Presen1
Background and Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). | |
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 consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. The Company believes that the estimates used in the preparation of the consolidated financial statements are reasonable. Actual results could differ from these estimates. |
Consolidation | Principles of Consolidation |
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company's policy is to consolidate all entities in which it owns more than 50% of the outstanding voting stock unless it does not control the entity. However, the Company did not have a controlling voting interest in any entity other than its wholly-owned subsidiaries in the periods presented in the accompanying consolidated financial statements. | |
It is also the Company's policy to consolidate any variable interest entity for which the Company is the primary beneficiary, as defined by GAAP. On this basis, the Company consolidates the Discover Card Master Trust I and the Discover Card Execution Note Trust as well as three student loan securitization trusts acquired in 2010. The Company is deemed to be the primary beneficiary of each of these trusts since it is, for each, the trust servicer and the holder of both the residual interest and the majority of the most subordinated interests. Because of those involvements, the Company has, for each trust, i) the power to direct the activities that most significantly impact the economic performance of the trust, and ii) the obligation (or right) to absorb losses (or receive benefits) of the trust that could potentially be significant. The Company has determined that it was not the primary beneficiary of any other variable interest entity during the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 or one month ended December 31, 2012. | |
For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. The Company also applies the equity method to its investments in qualified affordable housing projects and similar tax credit partnerships. In cases where the Company's equity investment is less than 20% and significant influence does not exist, such investments are carried at cost. | |
Fair Value of Financial Instruments | The fair values of these financial assets and liabilities, which are not carried at fair value on the 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 prepayment 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 statements 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 and senior 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 other long-term borrowings relates to the cash premiums paid in connection with the 2012 fiscal year debt exchanges. The fair values of other long-term borrowings classified as Level 3 consist of capital leases. | |
Accrued Interest Payables | |
The carrying value of the Company's accrued interest payable, which is included in other liabilities on the statements of financial condition, approximates fair value as it is short term in nature and is payable in less than one year. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash and cash equivalents is defined by the Company as cash on deposit with banks, including time deposits and other highly liquid investments, with maturities of 90 days or less when purchased. Cash and cash equivalents included $846 million and $719 million of cash and due from banks and $6.4 billion and $5.8 billion of interest-earning deposits in other banks at December 31, 2014 and 2013, respectively. | |
Restricted Cash | Restricted Cash |
Restricted cash includes cash for which the Company's ability to withdraw funds at any time is contractually limited. Restricted cash is generally designated for specific purposes arising out of certain contractual or other obligations. | |
Investment Securities | Investment Securities |
At December 31, 2014, investment securities consisted of U.S. Treasury and U.S. government agency obligations, mortgage-backed securities issued by government agencies and debt instruments issued by states and political subdivisions of states. Investment securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at amortized cost. All other investment securities are classified as available-for-sale, as the Company does not hold investment securities for trading purposes. Available-for-sale investment securities are reported at fair value with unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income included in stockholders' equity. The Company estimates the fair value of available-for-sale investment securities as more fully discussed in Note 20: Fair Value Measurements and Disclosures. The amortized cost for each held-to-maturity and available-for-sale investment security is adjusted for amortization of premiums or accretion of discounts, as appropriate. Such amortization or accretion is included in interest income. The Company evaluates its unrealized loss positions for other-than-temporary impairment in accordance with GAAP applicable for investments in debt and equity securities. Realized gains and losses and the credit loss portion of other-than-temporary impairments related to investment securities are determined at the individual security level and are reported in other income. | |
Loan Receivables | Loan Receivables |
Loan receivables consist of credit card receivables, other loans and purchased credit-impaired ("PCI") loans. Loan receivables also include unamortized net deferred loan origination fees and costs (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). Credit card loan receivables are reported at their principal amounts outstanding and include uncollected billed interest and fees and are reduced for unearned revenue related to balance transfer fees (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). Other loans consist of student loans, personal loans, mortgage loans held for sale and other loans and are reported at their principal amounts outstanding. With the exception of mortgages, the Company's loan receivables are deemed to be held for investment at origination or acquisition because management has the intent and ability to hold them for the foreseeable future. | |
Cash flows associated with loans that are originated or acquired with the intent to sell are included in cash flows from operating activities. Cash flows associated with loans originated or acquired for investment are classified as cash flows from investing activities, regardless of a subsequent change in intent. | |
Purchased Credit-Impaired Loans | |
PCI loans are loans acquired at prices which reflected a discount related to deterioration in individual loan credit quality since origination. The Company's PCI loans are comprised entirely of acquired private student loans. | |
The PCI student loans were aggregated into pools based on common risk characteristics at the time of their acquisition. Loans were grouped primarily on the basis of origination date as loans originated in a particular year generally reflect the application of common origination strategies and/or underwriting criteria. Each pool is accounted for as a single asset and each has a single composite interest rate, total contractual cash flows and total expected cash flows. | |
Interest income on PCI loans is recognized on the basis of expected cash flows rather than contractual cash flows. The total amount of interest income recognizable on a pool of PCI loans (i.e., its accretable yield) is the difference between the carrying amount of the loan pool and the future cash flows expected to be collected without regard to whether the expected cash flows represent principal or interest collections. Interest is recognized on an effective yield basis over the life of the loan pool. | |
The initial estimates of the fair value of the PCI student loans included the impact of expected credit losses, and therefore, no allowance for loan loss was recorded as of the purchase dates. The difference between contractually required cash flows and cash flows expected to be collected, as measured at the acquisition dates, is not permitted to be accreted. Charge-offs are absorbed by this non-accretable difference and do not result in a charge to earnings. | |
The estimate of cash flows expected to be collected is evaluated each reporting period to ensure it reflects management's latest expectations of future credit losses and borrower prepayments, and interest rates in effect in the current period. To the extent expected credit losses increase after the acquisition dates, the Company will record an allowance for loan losses through the provision for loan losses, which will reduce net income. Changes in expected cash flows related to changes in prepayments or interest rate indices for variable rate loans generally are recorded prospectively as adjustments to interest income. | |
To the extent that a significant increase in cash flows due to lower expected losses is deemed probable, the Company will first reverse any previously established allowance for loan losses and then increase the amount of remaining accretable yield. The increase to yield would be recognized prospectively over the remaining life of the loan pool. An increase in the accretable yield would reduce the remaining non-accretable difference available to absorb subsequent charge-offs. Disposals of loans, which may include sales of loans or receipt of payments in full from the borrower or charge-offs, result in removal of the loans from their respective pools. | |
Delinquent Loans | Delinquent Loans |
The entire balance of an account is contractually past due if the minimum payment is not received by the specified date on the customer's billing statement. Delinquency is reported on loans that are 30 days or more past due. | |
Credit card loans are charged off at the end of the month during which an account becomes 180 days past due. Closed-end consumer loan receivables are charged off at the end of the month during which an account becomes 120 days contractually past due. 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 time frame described above. Receivables associated with alleged or potential fraudulent transactions are adjusted to their net realizable value upon receipt of notification of such fraud through a charge to other expense and are subsequently written off at the end of the month 90 days following notification, but not later than the contractual 180-day or 120-day time frame described above. The Company's charge-off policies are designed to comply with guidelines established by the Federal Financial Institutions Examination Council (“FFIEC”). | |
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. | |
The practice of re-aging an account also may affect loan delinquencies and charge-offs. A re-age is intended to assist delinquent customers who have experienced financial difficulties but who demonstrate both an ability and willingness to repay. Accounts meeting specific criteria are re-aged when the Company and the customer agree on a temporary repayment schedule that may include concessionary terms. With re-aging, the outstanding balance of a delinquent account is returned to a current status. Customers may also qualify for a workout re-age when either a longer term or permanent hardship exists. The Company's re-age practices are designed to comply with FFIEC guidelines. | |
Allowance for Loan Losses | Allowance for Loan Losses |
The Company maintains an allowance for loan losses at a level that is appropriate to absorb probable losses inherent in the loan portfolio. The estimate of probable incurred losses considers uncollectible principal, interest and fees reflected in the loan receivables. The allowance is evaluated monthly for appropriateness 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 of loan losses (also see “— Significant Revenue Recognition Accounting Policies — Loan Interest and Fee Income”). | |
The Company calculates its allowance for loan losses by estimating probable losses separately for classes of the loan portfolio with similar loan characteristics, which generally results in segmenting the portfolio by loan product type. | |
The Company bases its allowance for loan loss 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. For substantially all of its loan receivables, 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 and current loan performance, loan seasoning and growth, current risk management practices, account collection strategies, economic conditions, bankruptcy filings, policy changes and forecasting uncertainties. For the majority of its portfolio, the Company 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 part of certain collection strategies, the Company may modify the terms of loans to customers experiencing financial hardship. Temporary and permanent modifications on credit card and personal loans, as well as temporary modifications on student loans and certain grants of student loan forbearance are accounted for as troubled debt restructurings. With respect to student loans, the Company does not anticipate significant shortfalls in collections on the contractual amounts due from 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. | |
Loan receivables, other than PCI loans, that have been modified under a troubled debt restructuring are evaluated separately from the pools of receivables that are subject to the collective analyses described above. Loan receivables modified in a troubled debt restructuring are recorded at their present values 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. Changes in the present value are recorded in the provision for loan losses. All of the Company's troubled debt restructurings, which are evaluated collectively on an aggregated (by loan type) basis, have a related allowance for loan losses. | |
Premises and Equipment, net | Premises and Equipment, net |
Premises and equipment, net, are stated at cost less accumulated depreciation and amortization, which is computed using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated over a period of 39 years. The costs of leasehold improvements are capitalized and depreciated over the lesser of the remaining term of the lease or the asset's estimated useful life, typically ten years. Furniture and fixtures are depreciated over a period of five to ten years. Equipment is depreciated over three to ten years. Capitalized leases, consisting of computers and processing equipment, are depreciated over three and six years, respectively. Maintenance and repairs are immediately expensed, while the costs of improvements are capitalized. | |
Purchased software and capitalized costs related to internally developed software are amortized over their useful lives of three to ten years. Costs incurred during the application development stage related to internally developed software are capitalized. Costs are expensed as incurred during the preliminary project stage and post implementation stage. Once the capitalization criteria as defined in GAAP have been met, external direct costs incurred for materials and services used in developing or obtaining internal-use computer software and payroll and payroll-related costs for employees who are directly associated with the internal-use computer software project (to the extent those employees devoted time directly to the project) are capitalized. Amortization of capitalized costs begins when the software is ready for its intended use. Capitalized software is included in premises and equipment, net in the Company's consolidated statements of financial condition. See Note 6: Premises and Equipment for further information about the Company's premises and equipment. | |
Goodwill | Goodwill |
Goodwill is recorded as part of the Company's acquisitions of businesses when the purchase price exceeds the fair value of the net tangible and separately identifiable intangible assets acquired. The Company's goodwill is not amortized, but rather is subject to an impairment test at the reporting unit level annually as of October 1, or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's reported goodwill relates to PULSE, acquired in 2005, and to the Home Loan Center mortgage origination business acquired in 2012. The Company's goodwill impairment analysis is a two-step test. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds its carrying value including goodwill, goodwill is not impaired. If the carrying value including goodwill exceeds its fair value, goodwill is potentially impaired and the second step of the test becomes necessary. In the second step, the implied fair value of goodwill is derived and compared to the carrying amount of goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the sum of the fair values of all identifiable assets less the liabilities associated with the reporting unit. If the carrying value of goodwill allocated to the reporting unit exceeds its implied fair value, an impairment charge is recorded for the excess. The Company conducted its annual goodwill impairment test as of October 1, 2014, which resulted in the recognition of non-cash impairment charge of $27 million during the three months ended December 31, 2014 related to the Discover Home Loans business. The impairment charge was recorded in the other expense line as a component of total other expense in the accompanying consolidated and combined statements of income and within the Direct Banking segment. See Note 7: Goodwill and Intangible Assets for further details concerning the goodwill impairment charge. | |
During the fourth quarter of 2013, the Company changed the date of its annual goodwill impairment test from June 1 to October 1. The change in goodwill impairment testing date is deemed a change in accounting principle which management determined to be preferable under the circumstances. The change was made to better align with the timing of its annual and long-term planning process, which is a significant element in the testing process. Due to the change in the Company’s fiscal year end from November 30 to December 31, the change from June 1 to October 1 also enhances the ability of the Company to obtain carrying values for use in the testing process by using the beginning of a fiscal quarter. | |
In connection with the change in date of the annual goodwill impairment test, the Company performed a goodwill impairment test on October 1, 2013. This change did not delay, accelerate, or avoid a goodwill impairment charge. The goodwill impairment tests on June 1, 2013 and October 1, 2013 were performed such that a period greater than 12 months did not elapse between test dates. The change in the annual goodwill impairment testing date was applied prospectively beginning on October 1, 2013 and had no effect on the consolidated financial statements. This change was not applied retrospectively as it is impracticable to do so because retrospective application would have required the application of significant estimates and assumptions without the use of hindsight. | |
Intangible Assets | Intangible Assets |
The Company's identifiable intangible assets consist of both amortizable and non-amortizable intangible assets. The Company's amortizable intangible assets consist primarily of acquired customer relationships and certain trade name intangibles. All of the Company's amortizable intangible assets are carried at net book value and are amortized over their estimated useful lives. The amortization periods approximate the periods over which the Company expects to generate future net cash inflows from the use of these assets. The Company's policy is to amortize intangibles in a manner that reflects the pattern in which the projected net cash inflows to the Company are expected to occur, where such pattern can be reasonably determined, as opposed to the straight-line basis. This method of amortization typically results in a greater portion of the intangible asset being amortized in the earlier years of its useful life. | |
All of the Company's amortizable intangible assets, as well as other amortizable or depreciable long-lived assets such as premises and equipment, are subject to impairment testing when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows. A test for recoverability is done by comparing the asset's carrying value to the sum of the undiscounted future net cash inflows expected to be generated from the use of the asset over its remaining useful life. Impairment exists if the sum of the undiscounted expected future net cash inflows is less than the carrying amount of the asset. Impairment would result in a write-down of the asset to its estimated fair value. The estimated fair values of these assets are based on the discounted present value of the stream of future net cash inflows expected to be derived over the remaining useful lives of the assets. If an impairment write-down is recorded, the remaining useful life of the asset will be evaluated to determine whether revision of the remaining amortization or depreciation period is appropriate. | |
The Company's non-amortizable intangible assets consist of the international transaction processing rights and brand-related intangibles included in the acquisition of Diners Club as well as the trade names acquired in The Student Loan Corporation acquisition. These assets are deemed to have indefinite useful lives and are therefore not subject to amortization. All of the Company's non-amortizable intangible assets are subject to a test for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the asset might be impaired. As required by GAAP, if the carrying value of a non-amortizable intangible asset is in excess of its fair value, the asset must be written down to its fair value through the recognition of an impairment charge to earnings. No impairment charges were identified during the impairment test conducted at October 1, 2014. In contrast to amortizable intangibles, there is no test for recoverability associated with the impairment test for non-amortizable intangible assets. | |
During the fourth quarter of 2013, the Company changed the date of its annual impairment test for non-amortizable intangible assets from June 1 to October 1 to coincide with the change in the Company's goodwill impairment test date. The Company performed impairment tests at June 1, 2013 and October 1, 2013, and as such a period greater than 12 months did not elapse between test dates. | |
Stock-based Compensation | Stock-based Compensation |
The Company measures the cost of employee services received in exchange for an award of stock-based compensation based on the grant-date fair value of the award. The cost is recognized over the requisite service period, except for awards granted to retirement-eligible employees, which are fully expensed on the grant date. No compensation cost is recognized for awards that are subsequently forfeited. | |
Advertising Costs | Advertising Costs |
The Company expenses television advertising costs in the period in which the advertising is first aired and all other advertising costs as incurred. Advertising costs are recorded in marketing and business development and were $194 million, $208 million, $172 million and $17 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. | |
Income Taxes | Income Taxes |
Income tax expense is provided for using the asset and liability method, under which deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are recognized when their realization is determined to be more likely than not. Uncertain tax positions are measured at the highest amount of tax benefit for which realization is judged to be more likely than not. Tax benefits that do not meet these criteria are unrecognized tax benefits. See Note 15: Income Taxes for more information about the Company's income taxes. | |
Financial Instruments Used for Asset and Liability Management | Financial Instruments Used for Asset and Liability Management |
The Company utilizes derivative financial instruments to manage its various exposures to changes in fair value of certain assets and liabilities, variability in future cash flows arising from changes in interest rates, or other types of forecasted transactions, and changes in foreign exchange rates. All derivatives are carried at their estimated fair values on the Company’s consolidated statements of financial condition. Derivatives having gross positive fair values, inclusive of net accrued interest receipts or payments, are recorded in other assets. Derivatives with gross negative fair values, inclusive of net accrued interest payments or receipts, are recorded in accrued expenses and other liabilities. The methodologies used to estimate the fair values of these derivative financial instruments are described in Note 20: Fair Value Measurements and Disclosures. Collateral receivable or payable amounts associated with derivatives are not offset against the fair value of these derivatives, but are recorded separately in other assets or deposits, respectively. | |
Certain of these instruments are designated and qualify for hedge accounting. A hedge is deemed effective to the extent that the change in fair value, cash flow, or net investment of the hedged item is offset by changes in the hedging instrument. If the change in the hedging instrument is more or less than the change in fair value, cash flow, or net investment of the hedged item, the difference is referred to as the ineffective portion of the hedge. Under cash flow hedge accounting, the effective portion of the change in the fair value of these derivative instruments is recognized in other comprehensive income. The change in fair value of these derivative instruments relating to the ineffective portion is recognized immediately in other income. Amounts accumulated in other comprehensive income are reclassified to earnings in the period during which the hedged items affect income. For a net investment hedge, the effective portion of changes in the fair value of the derivatives is 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. Under fair value hedge accounting, changes in both (i) the fair values of the derivative instruments and (ii) the fair values of the hedged items relating to the risks being hedged, including net differences, if any (i.e., ineffectiveness), are recorded in interest expense. Certain other derivatives are not designated as hedges or do not qualify for hedge accounting; changes in the fair value of these derivatives are recorded in other income. These transactions are discussed in more detail in Note 21: Derivatives and Hedging Activities. | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income |
The Company records unrealized gains and losses on available-for-sale securities, changes in the fair value of cash flow hedges, and certain pension and foreign currency translation adjustments in other comprehensive income ("OCI") on an after-tax basis where applicable. Details of other comprehensive income, net of tax, are presented in the statement of comprehensive income, and a rollforward of accumulated other comprehensive income ("AOCI") is presented in the statement of changes in stockholders' equity and Note 13: Accumulated Other Comprehensive Income. | |
Significant Revenue Recognition Accounting Policies | Significant Revenue Recognition Accounting Policies |
Loan Interest and Fee Income | |
Interest on loans is comprised largely of interest on credit card loans and is recognized based upon the amount of loans outstanding and their contractual interest rate. Interest on credit card loans is included in loan receivables when billed to the customer. The Company accrues unbilled interest revenue each month from a customer's billing cycle date to the end of the month. The Company applies an estimate of the percentage of loans that will revolve in the next cycle in the estimation of the accrued unbilled portion of interest revenue that is included in accrued interest receivable on the consolidated statements of financial condition. Interest on other loan receivables is accrued monthly in accordance with their contractual terms and recorded in accrued interest receivable, which is included in other assets, in the consolidated statements of financial condition. Interest related to purchased credit-impaired loans is discussed in Note 4: Loan Receivables. | |
The Company recognizes fees (except annual fees, balance transfer fees and certain product fees) on loan receivables in interest income or loan fee income as the fees are assessed. Annual fees, balance transfer fees and certain product fees are recognized in interest income or loan fee income ratably over the periods to which they relate. Balance transfer fees are accreted to interest income over the life of the related balance. As of December 31, 2014 and 2013, deferred revenues related to balance transfer fees, recorded as a reduction of loan receivables, were $40 million and $37 million, respectively. Loan fee income consists of fees on credit card loans and includes annual, late, returned check, cash advance and other miscellaneous fees and is reflected net of waivers and charge-offs. | |
Direct loan origination costs on credit card loans are deferred and amortized on a straight-line basis over a one year period and recorded in interest income from credit card loans. Direct loan origination costs on other loan receivables are deferred and amortized over the life of the loan using the interest method and are recorded in interest income from other loans. As of December 31, 2014 and 2013, the remaining unamortized deferred costs related to loan origination were $63 million and $43 million, respectively, and were recorded in loan receivables. | |
The Company accrues interest and fees on loan receivables until the loans are paid or charged off, except in instances of customer bankruptcy, death or fraud, where no further interest and fee accruals occur following notification. 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. Payments received on non-accrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. When loan receivables are charged off, unpaid accrued interest and fees are reversed against the income line items in which they were originally recorded in the consolidated statements of income. Charge-offs and recoveries of amounts which relate to capitalized interest on student loans are treated as principal charge-offs and recoveries, affecting the provision for loan losses rather than interest income. The Company considers uncollectible interest and fee revenues in assessing the adequacy of the allowance for loan losses. | |
Interest income from loans individually evaluated for impairment, including 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. | |
Discount and Interchange Revenue | |
The Company earns discount revenue from fees charged to merchants with whom the Company has entered into card acceptance agreements for processing credit card purchase transactions. The Company earns acquirer interchange revenue from merchant acquirers on all Discover Network, Diners Club and PULSE transactions made by credit and debit cardholders at merchants with whom merchant acquirers have entered into card acceptance agreements for processing payment card transactions. The Company pays issuer interchange to network partners who have entered into contractual arrangements to issue cards on the Company's networks as compensation for risk and other operating costs. The discount revenue or acquirer interchange is recognized as revenue, net of any associated issuer interchange cost, at the time the transaction is captured. | |
Customer Rewards | |
The Company offers its customers various reward programs, including the Cashback Bonus reward program, pursuant to which the Company pays certain customers a reward equal to a percentage of their credit card purchase amounts based on the type and volume of the customer's purchases. The liability for customer rewards, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition, is recorded on an individual customer basis and is accumulated as qualified customers earn rewards through their ongoing credit card purchase activity or other defined actions. In the fourth quarter of 2014, the Company eliminated forfeiture of rewards, which was communicated to its customers. This resulted in a one-time expense of $178 million due to the reversal of the Company's current estimate for customer rewards forfeiture, a contra-liability account. Previously, in determining the appropriate liability for customer rewards, the Company estimated forfeitures of rewards accumulated but not redeemed based on historical account closure and charge-off experience, actual customer credit card purchase activity and the terms of the rewards program. The Company recognizes customer rewards costs as a reduction of the related revenue, if any. In instances where a reward is not associated with a revenue-generating transaction, such as when a reward is given for opening an account, the reward cost is recorded as an operating expense. For the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, rewards costs, adjusted for estimated forfeitures, if any, amounted to $1.4 billion, $1.0 billion, $1.0 billion and $123 million, respectively. At December 31, 2014 and 2013, the liability for customer rewards, adjusted for estimated forfeitures, was $1.4 billion and $1.1 billion, respectively, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition. | |
Protection Products | |
The Company earns revenue related to fees received for marketing products or services that are ancillary to the Company's credit card and personal loans to its customers, including payment protection products and identity theft protection services. The amount of revenue recorded is based on the terms of the agreements and contracts with the third parties that provide these services. The Company recognizes this income over the customer agreement or contract period as earned. | |
Transaction Processing Revenue | |
Transaction processing revenue represents fees charged to financial institutions and merchant acquirers/processors for processing ATM and debit point-of-sale transactions over the PULSE network and is recognized at the time the transactions are processed. Transaction processing revenue also includes network participant revenue earned by PULSE related to fees charged for maintenance, support, information processing and other services provided to financial institutions, processors and other participants in the PULSE network. These revenues are recognized in the period that the related transactions occur or services are rendered. | |
Royalty and Licensee Revenue | |
The Company earns revenue from licensing fees for granting the right to use the Diners Club brand and processing fees for providing various services to Diners Club licensees, which are referred to together as royalty and licensee revenue. Royalty revenue is recognized in the period that the cardholder volume used to calculate the royalty fee is generated. Processing fees are recognized in the month that the services are provided. Royalty and licensee revenue is included in other income on the consolidated statements of income. | |
Incentive Payments | |
The Company makes certain incentive payments under contractual arrangements with financial institutions, Diners Club licensees, merchants, acquirers and certain other customers. These payments are generally classified as contra-revenue unless a specifically identifiable benefit is received by the Company in consideration for the payment and the fair value of such benefit can be reasonably estimated. If no such benefit is identified, then the entire payment is classified as contra-revenue, and included in other income in the consolidated statements of income in the line item where the related revenues are recorded. If the payment gives rise to an asset because it is expected to directly or indirectly contribute to future net cash inflows, it is deferred and recognized over the expected benefit period. The unamortized portion of the deferred incentive payments included in other assets on the consolidated statements of financial condition was $22 million and $23 million at December 31, 2014 and 2013, respectively. |
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||
Schedule of Investment Securities | The Company’s investment securities consist of the following (dollars in millions): | |||||||||||||||||||
December 31, | November 30, | |||||||||||||||||||
2014 | 2013 | 2012 | 2012 | |||||||||||||||||
U.S. Treasury securities(1) | $ | 1,330 | $ | 2,058 | $ | 2,460 | $ | 2,463 | ||||||||||||
U.S. government agency securities | 1,033 | 1,561 | 2,233 | 2,237 | ||||||||||||||||
States and political subdivisions of states | 10 | 15 | 34 | 34 | ||||||||||||||||
Other securities: | ||||||||||||||||||||
Credit card asset-backed securities of other issuers | — | 6 | 151 | 159 | ||||||||||||||||
Corporate debt securities(2) | — | — | — | 75 | ||||||||||||||||
Residential mortgage-backed securities - Agency(3) | 1,576 | 1,351 | 1,354 | 1,253 | ||||||||||||||||
Total other securities | 1,576 | 1,357 | 1,505 | 1,487 | ||||||||||||||||
Total investment securities | $ | 3,949 | $ | 4,991 | $ | 6,232 | $ | 6,221 | ||||||||||||
-1 | Includes $16 million and $9 million of U.S. Treasury securities pledged as swap collateral in lieu of cash as of December 31, 2014 and 2013, respectively. | |||||||||||||||||||
-2 | Amount represents corporate debt obligations issued under the Temporary Liquidity Guarantee Program (TLGP) that are guaranteed by the Federal Deposit Insurance Corporation (FDIC). | |||||||||||||||||||
-3 | 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 December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities(1) | ||||||||||||||||||||
U.S. Treasury securities | $ | 1,317 | $ | 12 | $ | — | $ | 1,329 | ||||||||||||
U.S. government agency securities | 1,021 | 12 | — | 1,033 | ||||||||||||||||
Residential mortgage-backed securities - Agency | 1,473 | 13 | (1 | ) | 1,485 | |||||||||||||||
Total available-for-sale investment securities | $ | 3,811 | $ | 37 | $ | (1 | ) | $ | 3,847 | |||||||||||
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) | 91 | 2 | — | 93 | ||||||||||||||||
Total held-to-maturity investment securities | $ | 102 | $ | 2 | $ | — | $ | 104 | ||||||||||||
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 Twelve Months and More Than Twelve 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 Securities in a Loss Position | Less than 12 months | More than 12 months | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | |||||||||||||||||
Value | Losses | Value | Losses | |||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities | ||||||||||||||||||||
Residential mortgage-backed securities - Agency | 8 | $ | 97 | $ | — | $ | 225 | $ | (1 | ) | ||||||||||
31-Dec-13 | ||||||||||||||||||||
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 [Table Text Block] | 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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Proceeds related to maturities or redemptions of investment securities | $ | 250 | $ | 733 | $ | 1,795 | $ | 113 | ||||||||||||
Proceeds from the sales of available-for-sale investment securities | $ | 1,220 | $ | 719 | $ | — | $ | — | ||||||||||||
Gains on sales of available-for-sale investment securities | $ | 4 | $ | 2 | $ | — | $ | — | ||||||||||||
Net unrealized gains (losses) recorded in other comprehensive income, before tax | $ | 5 | $ | (82 | ) | $ | 30 | $ | (5 | ) | ||||||||||
Net unrealized gains (losses) recorded in other comprehensive income, after tax | $ | 4 | $ | (52 | ) | $ | 19 | $ | (3 | ) | ||||||||||
Schedule of Maturities and Weighted Average Yields of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities | Maturities and weighted-average yields of available-for-sale debt securities and held-to-maturity debt securities are provided in the tables 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 December 31, 2014 | ||||||||||||||||||||
Available-for-Sale—Amortized Cost | ||||||||||||||||||||
U.S. Treasury securities | $ | 716 | $ | 601 | $ | — | $ | — | $ | 1,317 | ||||||||||
U.S. government agency securities | 525 | 496 | — | — | 1,021 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 493 | 980 | 1,473 | |||||||||||||||
Total available-for-sale investment securities | $ | 1,241 | $ | 1,097 | $ | 493 | $ | 980 | $ | 3,811 | ||||||||||
Held-to-Maturity—Amortized Cost | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 91 | 91 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 101 | $ | 102 | ||||||||||
Available-for-Sale—Fair Values | ||||||||||||||||||||
U.S. Treasury securities | $ | 721 | $ | 608 | $ | — | $ | — | $ | 1,329 | ||||||||||
U.S. government agency securities | 530 | 503 | — | — | 1,033 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | 495 | 990 | 1,485 | |||||||||||||||
Total available-for-sale investment securities | $ | 1,251 | $ | 1,111 | $ | 495 | $ | 990 | $ | 3,847 | ||||||||||
Held-to-Maturity—Fair Values | ||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
State and political subdivisions of states | — | — | — | 10 | 10 | |||||||||||||||
Residential mortgage-backed securities - Agency | — | — | — | 93 | 93 | |||||||||||||||
Total held-to-maturity investment securities | $ | 1 | $ | — | $ | — | $ | 103 | $ | 104 | ||||||||||
One Year | After One | After Five | After Ten | Total | ||||||||||||||||
or | Year | Years | Years | |||||||||||||||||
Less | Through | Through | ||||||||||||||||||
Five Years | Ten Years | |||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||
Available-for-Sale—Weighted-Average Yields(1) | ||||||||||||||||||||
U.S Treasury securities | 1.52 | % | 1.37 | % | — | % | — | % | 1.45 | % | ||||||||||
U.S government agency securities | 1.9 | % | 1.53 | % | — | % | — | % | 1.72 | % | ||||||||||
Residential mortgage-backed securities - Agency | — | % | — | % | 1.53 | % | 2.05 | % | 1.88 | % | ||||||||||
Total available-for-sale investment securities | 1.68 | % | 1.44 | % | 1.53 | % | 2.05 | % | 1.69 | % | ||||||||||
Held-to-Maturity—Weighted-Average Yields | ||||||||||||||||||||
U.S. Treasury securities | 0.07 | % | — | % | — | % | — | % | 0.07 | % | ||||||||||
State and political subdivisions of states | 4.27 | % | — | % | — | % | 4.69 | % | 4.68 | % | ||||||||||
Residential mortgage-backed securities | — | % | — | % | — | % | 2.8 | % | 2.8 | % | ||||||||||
Total held-to-maturity investment securities | 0.89 | % | — | % | — | % | 2.99 | % | 2.98 | % | ||||||||||
-1 | The weighted-average yield for available-for-sale investment securities is calculated based on the amortized cost. | |||||||||||||||||||
Schedule of Interest on Investment Securities | The following table presents interest on investment securities (dollars in millions): | |||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Taxable interest | $ | 66 | $ | 73 | $ | 78 | $ | 7 | ||||||||||||
Tax exempt interest | 1 | 1 | 2 | — | ||||||||||||||||
Total income from investment securities | $ | 67 | $ | 74 | $ | 80 | $ | 7 | ||||||||||||
Loan_Receivables_Tables
Loan Receivables (Tables) | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||||||||||||||||||
Schedule of Loan Receivables | The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions): | |||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Loan receivables: | ||||||||||||||||||||||||||||
Credit card loans(1) | $ | 56,128 | $ | 53,150 | ||||||||||||||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans | 5,007 | 4,191 | ||||||||||||||||||||||||||
Private student loans | 4,850 | 3,969 | ||||||||||||||||||||||||||
Mortgage loans held for sale(2) | 122 | 148 | ||||||||||||||||||||||||||
Other(3) | 202 | 135 | ||||||||||||||||||||||||||
Total other loans | 10,181 | 8,443 | ||||||||||||||||||||||||||
Purchased credit-impaired loans(4) | 3,660 | 4,178 | ||||||||||||||||||||||||||
Total loan receivables | 69,969 | 65,771 | ||||||||||||||||||||||||||
Allowance for loan losses | (1,746 | ) | (1,648 | ) | ||||||||||||||||||||||||
Net loan receivables | $ | 68,223 | $ | 64,123 | ||||||||||||||||||||||||
-1 | Amounts include $21.7 billion and $20.2 billion underlying investors’ interest in trust debt at December 31, 2014 and 2013, respectively, and $8.6 billion and $10.9 billion in seller's interest at December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities for further information. | |||||||||||||||||||||||||||
-2 | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | |||||||||||||||||||||||||||
-3 | Other includes home equity loans. | |||||||||||||||||||||||||||
-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 December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities. | |||||||||||||||||||||||||||
Schedule of Delinquent and Non-Accruing Loans | The Company regularly reviews its collection experience (including delinquencies and net charge-offs) in determining its allowance for loan losses. Information related to the delinquent and non-accruing loans in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and 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 December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans(2) | $ | 491 | $ | 480 | $ | 971 | $ | 442 | $ | 157 | ||||||||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans(3) | 29 | 11 | 40 | 10 | 5 | |||||||||||||||||||||||
Private student loans (excluding PCI)(4) | 62 | 25 | 87 | 25 | — | |||||||||||||||||||||||
Other | 1 | 1 | 2 | — | 21 | |||||||||||||||||||||||
Total other loans (excluding PCI) | 92 | 37 | 129 | 35 | 26 | |||||||||||||||||||||||
Total loan receivables (excluding PCI) | $ | 583 | $ | 517 | $ | 1,100 | $ | 477 | $ | 183 | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans(2) | $ | 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 $27 million, $29 million, $32 million and $3 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. The Company does not separately track 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' current balances and most recent interest rates. | |||||||||||||||||||||||||||
-2 | Credit card loans that are 90 or more days delinquent and accruing interest include $43 million and $41 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
-3 | Personal loans that are 90 or more days delinquent and accruing interest include $3 million and $2 million of loans accounted for as troubled debt restructurings at both December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
-4 | Private student loans that are 90 or more days delinquent and accruing interest include $5 million and $3 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||
Schedule of Net Charge-offs | Information related to the net charge-offs in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Net | Net | Net | Net | Net | Net | Net | Net | |||||||||||||||||||||
Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | Charge-offs | Charge-off Rate | |||||||||||||||||||||
Credit card loans | $ | 1,191 | 2.27 | % | $ | 1,100 | 2.21 | % | $ | 1,240 | 2.62 | % | $ | 106 | 2.47 | % | ||||||||||||
Other loans: | ||||||||||||||||||||||||||||
Personal loans | 94 | 2.04 | % | 79 | 2.13 | % | 69 | 2.33 | % | 7 | 2.52 | % | ||||||||||||||||
Private student loans (excluding PCI) | 57 | 1.29 | % | 46 | 1.3 | % | 19 | 0.73 | % | 2 | 0.81 | % | ||||||||||||||||
Other | 3 | 0.76 | % | 1 | 1.96 | % | — | 0.1 | % | — | — | % | ||||||||||||||||
Total other loans (excluding PCI) | 154 | 1.63 | % | 126 | 1.67 | % | 88 | 1.52 | % | 9 | 1.61 | % | ||||||||||||||||
Net charge-offs as a percentage of total loans (excluding PCI) | $ | 1,345 | 2.17 | % | $ | 1,226 | 2.14 | % | $ | 1,328 | 2.5 | % | $ | 115 | 2.37 | % | ||||||||||||
Net charge-offs as a percentage of total loans (including PCI) | $ | 1,345 | 2.04 | % | $ | 1,226 | 1.98 | % | $ | 1,328 | 2.29 | % | $ | 115 | 2.19 | % | ||||||||||||
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 December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans | 83 | % | 17 | % | ||||||||||||||||||||||||
Personal loans | 96 | % | 4 | % | ||||||||||||||||||||||||
Private student loans (excluding PCI)(1) | 96 | % | 4 | % | ||||||||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans | 83 | % | 17 | % | ||||||||||||||||||||||||
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 for the periods presented (dollars in millions): | |||||||||||||||||||||||||||
For the Calendar Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 1,259 | 102 | 79 | 3 | 1,443 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,636 | ) | (105 | ) | (62 | ) | (3 | ) | (1,806 | ) | ||||||||||||||||||
Recoveries | 445 | 11 | 5 | — | 461 | |||||||||||||||||||||||
Net charge-offs | (1,191 | ) | (94 | ) | (57 | ) | (3 | ) | (1,345 | ) | ||||||||||||||||||
Balance at end of period | $ | 1,474 | $ | 120 | $ | 135 | $ | 17 | $ | 1,746 | ||||||||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 893 | 92 | 84 | 17 | 1,086 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,604 | ) | (86 | ) | (48 | ) | (1 | ) | (1,739 | ) | ||||||||||||||||||
Recoveries | 504 | 7 | 2 | — | 513 | |||||||||||||||||||||||
Net charge-offs | (1,100 | ) | (79 | ) | (46 | ) | (1 | ) | (1,226 | ) | ||||||||||||||||||
Balance at end of period | $ | 1,406 | $ | 112 | $ | 113 | $ | 17 | $ | 1,648 | ||||||||||||||||||
For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,554 | $ | 97 | $ | 73 | $ | 1 | $ | 1,725 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 165 | 9 | 4 | — | 178 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (146 | ) | (8 | ) | (2 | ) | — | (156 | ) | |||||||||||||||||||
Recoveries | 40 | 1 | — | — | 41 | |||||||||||||||||||||||
Net charge-offs | (106 | ) | (7 | ) | (2 | ) | — | (115 | ) | |||||||||||||||||||
Balance at end of period | $ | 1,613 | $ | 99 | $ | 75 | $ | 1 | $ | 1,788 | ||||||||||||||||||
The following tables provide changes in the Company’s allowance for loan losses for the periods presented (dollars in millions): | ||||||||||||||||||||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||||||||||||||||||
Credit Card | Personal Loans | Student | Other | Total | ||||||||||||||||||||||||
Loans(1) | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 2,070 | $ | 82 | $ | 53 | $ | — | $ | 2,205 | ||||||||||||||||||
Additions: | ||||||||||||||||||||||||||||
Provision for loan losses | 724 | 84 | 39 | 1 | 848 | |||||||||||||||||||||||
Deductions: | ||||||||||||||||||||||||||||
Charge-offs | (1,817 | ) | (73 | ) | (19 | ) | — | (1,909 | ) | |||||||||||||||||||
Recoveries | 577 | 4 | — | — | 581 | |||||||||||||||||||||||
Net charge-offs | (1,240 | ) | (69 | ) | (19 | ) | — | (1,328 | ) | |||||||||||||||||||
Balance at end of period | $ | 1,554 | $ | 97 | $ | 73 | $ | 1 | $ | 1,725 | ||||||||||||||||||
-1 | Includes both PCI and non-PCI private student loans. | |||||||||||||||||||||||||||
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 tables 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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ | 283 | $ | 280 | $ | 345 | $ | 26 | ||||||||||||||||||||
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ | 69 | $ | 59 | $ | 67 | $ | 5 | ||||||||||||||||||||
Schedule of Allowance for Loan Losses and Recorded Investment in 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 by impairment methodology (dollars in millions): | |||||||||||||||||||||||||||
Credit Card | Personal | Student | Other | Total | ||||||||||||||||||||||||
Loans | Loans(3) | Loans(4) | ||||||||||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||||||||||
Allowance for loans evaluated for impairment as: | ||||||||||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,314 | $ | 114 | $ | 96 | $ | 1 | $ | 1,525 | ||||||||||||||||||
Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 160 | 6 | 11 | 16 | 193 | |||||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 28 | — | 28 | |||||||||||||||||||||||
Total allowance for loan losses | $ | 1,474 | $ | 120 | $ | 135 | $ | 17 | $ | 1,746 | ||||||||||||||||||
Recorded investment in loans evaluated for impairment as: | ||||||||||||||||||||||||||||
Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 55,091 | $ | 4,952 | $ | 4,812 | $ | 142 | $ | 64,997 | ||||||||||||||||||
Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 1,037 | 55 | 38 | 60 | 1,190 | |||||||||||||||||||||||
Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — | — | 3,660 | — | 3,660 | |||||||||||||||||||||||
Total recorded investment | $ | 56,128 | $ | 5,007 | $ | 8,510 | $ | 202 | $ | 69,847 | ||||||||||||||||||
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 ASC 310-10-35(1)(2) | 188 | 3 | 9 | 16 | 216 | |||||||||||||||||||||||
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 ASC 310-10-35(1)(2) | 1,123 | 31 | 28 | 79 | 1,261 | |||||||||||||||||||||||
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 $878 million and $900 million at December 31, 2014 and 2013 respectively. The unpaid principal balance of personal loans was $54 million and $31 million at December 31, 2014 and 2013, respectively. The unpaid principal balance of student loans was $37 million and $26 million at December 31, 2014 and 2013, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. | |||||||||||||||||||||||||||
-3 | Includes both PCI and non-PCI private student loans. | |||||||||||||||||||||||||||
-4 | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. | |||||||||||||||||||||||||||
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 Calendar Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 252 | $ | 45 | $ | 3 | ||||||||||||||||||||||
Internal programs | $ | 452 | $ | 12 | $ | 61 | ||||||||||||||||||||||
External programs | $ | 365 | $ | 27 | $ | 13 | ||||||||||||||||||||||
Personal loans | $ | 48 | $ | 5 | $ | 1 | ||||||||||||||||||||||
Private student loans(4) | $ | 32 | $ | 3 | N/A | |||||||||||||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 269 | $ | 49 | $ | 3 | ||||||||||||||||||||||
Internal programs | $ | 468 | $ | 9 | $ | 66 | ||||||||||||||||||||||
External programs | $ | 463 | $ | 36 | $ | 11 | ||||||||||||||||||||||
Personal loans | $ | 26 | $ | 3 | $ | 1 | ||||||||||||||||||||||
Private student loans(4) | $ | 22 | $ | 2 | N/A | |||||||||||||||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 255 | $ | 48 | N/A | |||||||||||||||||||||||
Internal programs | $ | 557 | $ | 17 | $ | 73 | ||||||||||||||||||||||
External programs | $ | 603 | $ | 51 | $ | 9 | ||||||||||||||||||||||
Personal loans | $ | 16 | $ | 2 | N/A | |||||||||||||||||||||||
Private student loans(4) | $ | 10 | $ | 1 | N/A | |||||||||||||||||||||||
For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||||
Credit card loans | ||||||||||||||||||||||||||||
Modified credit card loans(3) | $ | 281 | $ | 4 | $ | — | ||||||||||||||||||||||
Internal programs | $ | 509 | $ | 1 | $ | 6 | ||||||||||||||||||||||
External programs | $ | 530 | $ | 4 | $ | 1 | ||||||||||||||||||||||
Personal loans | $ | 21 | $ | — | N/A | |||||||||||||||||||||||
Private student loans(4) | $ | 16 | $ | — | 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 or loan modification classified as a TDR have not been 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 the period (dollars in millions): | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Number of Accounts | Balances | Number of Accounts | Balances | Number of Accounts | Balances | Number of Accounts | Balances | |||||||||||||||||||||
Accounts that entered a loan modification program during the period: | ||||||||||||||||||||||||||||
Credit card: | ||||||||||||||||||||||||||||
Internal programs | 48,041 | $ | 316 | 40,653 | $ | 256 | 50,946 | $ | 345 | 3,078 | $ | 19 | ||||||||||||||||
External programs | 32,443 | $ | 169 | 35,020 | $ | 189 | 40,530 | $ | 227 | 2,614 | $ | 14 | ||||||||||||||||
Personal loans | 3,528 | $ | 42 | 2,178 | $ | 27 | 1,555 | $ | 20 | 120 | $ | 2 | ||||||||||||||||
Private student loans | 1,453 | $ | 21 | 877 | $ | 17 | 470 | $ | 11 | 60 | $ | 2 | ||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | Number of Accounts | Aggregated Outstanding Balances Upon Default | |||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||||||||||||||||||||||
Credit card(1)(2): | ||||||||||||||||||||||||||||
Internal programs | 10,195 | $ | 62 | 9,186 | $ | 57 | 15,703 | $ | 106 | 945 | $ | 6 | ||||||||||||||||
External programs | 7,363 | $ | 30 | 8,481 | $ | 36 | 8,543 | $ | 40 | 722 | $ | 3 | ||||||||||||||||
Personal loans(2) | 433 | $ | 5 | 284 | $ | 3 | 343 | $ | 4 | 22 | $ | — | ||||||||||||||||
Private student loans(3) | 1,155 | $ | 18 | 628 | $ | 12 | 172 | $ | 4 | 42 | $ | 1 | ||||||||||||||||
-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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,580 | $ | 2,072 | $ | 2,580 | $ | 2,096 | ||||||||||||||||||||
Accretion into interest income | (260 | ) | (272 | ) | (303 | ) | (24 | ) | ||||||||||||||||||||
Other changes in expected cash flows | 21 | (220 | ) | (181 | ) | — | ||||||||||||||||||||||
Balance at end of period | $ | 1,341 | $ | 1,580 | $ | 2,096 | $ | 2,072 | ||||||||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||
Conforming(1) | $ | 2,484 | 90.79 | % | $ | 2,721 | 67.77 | % | $ | 1,213 | 70.28 | % | $ | 218 | 60.06 | % | ||||||||||||
FHA(2) | 212 | 7.75 | 1,290 | 32.13 | 513 | 29.72 | 145 | 39.94 | ||||||||||||||||||||
Jumbo(3) | 34 | 1.24 | 4 | 0.1 | — | — | — | — | ||||||||||||||||||||
VA(4) | 6 | 0.22 | — | — | — | — | — | — | ||||||||||||||||||||
Total | $ | 2,736 | 100 | % | $ | 4,015 | 100 | % | $ | 1,726 | 100 | % | $ | 363 | 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. | |||||||||||||||||||||||||||
Credit Card Receivable [Member] | ||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||||||||||||||||||
Schedule of Geographic Distribution of Loan Receivables | The Company originates credit card loans throughout the United States. The geographic distribution of the Company's credit card loan receivables was as follows (dollars in millions): | |||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
California | $ | 4,776 | 8.5 | % | $ | 4,548 | 8.5 | % | ||||||||||||||||||||
Texas | 4,557 | 8.1 | 4,299 | 8.1 | ||||||||||||||||||||||||
New York | 3,929 | 7 | 3,649 | 6.9 | ||||||||||||||||||||||||
Florida | 3,287 | 5.9 | 3,064 | 5.8 | ||||||||||||||||||||||||
Illinois | 3,114 | 5.5 | 2,998 | 5.6 | ||||||||||||||||||||||||
Pennsylvania | 2,989 | 5.3 | 2,823 | 5.3 | ||||||||||||||||||||||||
Ohio | 2,449 | 4.4 | 2,324 | 4.4 | ||||||||||||||||||||||||
New Jersey | 2,113 | 3.8 | 2,002 | 3.8 | ||||||||||||||||||||||||
Michigan | 1,634 | 2.9 | 1,575 | 3 | ||||||||||||||||||||||||
Georgia | 1,630 | 2.9 | 1,546 | 2.9 | ||||||||||||||||||||||||
Other States | 25,650 | 45.7 | 24,322 | 45.7 | ||||||||||||||||||||||||
Total credit card loans | $ | 56,128 | 100 | % | $ | 53,150 | 100 | % | ||||||||||||||||||||
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | ||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||||||||||||||||||
Schedule of Geographic Distribution of Loan Receivables | The Company originates personal loans, student loans, other loans and PCI loans throughout the United States. The table below does not include mortgage loans held for sale. The geographic distribution of personal, student, other and PCI loan receivables was as follows (dollars in millions): | |||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
New York | $ | 1,738 | 12.7 | % | $ | 1,679 | 13.4 | % | ||||||||||||||||||||
California | 1,267 | 9.2 | 1,167 | 9.4 | ||||||||||||||||||||||||
Pennsylvania | 1,004 | 7.3 | 939 | 7.5 | ||||||||||||||||||||||||
Illinois | 794 | 5.8 | 696 | 5.6 | ||||||||||||||||||||||||
Texas | 742 | 5.4 | 637 | 5.1 | ||||||||||||||||||||||||
New Jersey | 687 | 5 | 630 | 5.1 | ||||||||||||||||||||||||
Massachusetts | 550 | 4 | 508 | 4.1 | ||||||||||||||||||||||||
Ohio | 540 | 3.9 | 481 | 3.9 | ||||||||||||||||||||||||
Florida | 538 | 3.9 | 479 | 3.8 | ||||||||||||||||||||||||
Michigan | 512 | 3.7 | 482 | 3.9 | ||||||||||||||||||||||||
Other States | 5,347 | 39.1 | 4,775 | 38.2 | ||||||||||||||||||||||||
Total other loans (including PCI loans) | $ | 13,719 | 100 | % | $ | 12,473 | 100 | % | ||||||||||||||||||||
Credit_Card_and_Student_Loan_S1
Credit Card and Student Loan Securitization Activities (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Variable Interest Entities Disclosure [Abstract] | ||||||||||
Schedule of Restricted Credit Card Securitized Assets | 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): | |||||||||
December 31, | ||||||||||
2014 | 2013 | |||||||||
Cash collateral accounts | $ | — | $ | 59 | ||||||
Collections and interest funding accounts | 16 | 31 | ||||||||
Restricted cash | 16 | 90 | ||||||||
Investors’ interests held by third-party investors | 15,950 | 15,190 | ||||||||
Investors’ interests held by wholly owned subsidiaries of Discover Bank | 5,789 | 5,024 | ||||||||
Seller’s interest | 8,596 | 10,898 | ||||||||
Loan receivables(1) | 30,335 | 31,112 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (805 | ) | (833 | ) | ||||||
Net loan receivables | 29,530 | 30,279 | ||||||||
Other | 37 | 34 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 29,583 | $ | 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): | |||||||||
Investors’ | # of Series | 3-Month Rolling | ||||||||
Interests(1) | Outstanding | Average Excess | ||||||||
Spread | ||||||||||
At December 31, 2014 | ||||||||||
Discover Card Execution Note Trust (DiscoverSeries notes) | $ | 21,739 | 39 | 13.95 | % | |||||
-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 | The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): | |||||||||
December 31, | ||||||||||
2014 | 2013 | |||||||||
Restricted cash | $ | 86 | $ | 89 | ||||||
Student loan receivables | 1,969 | 2,248 | ||||||||
Allowance for loan losses allocated to securitized loan receivables(1) | (28 | ) | (28 | ) | ||||||
Net student loan receivables | 1,941 | 2,220 | ||||||||
Carrying value of assets of consolidated variable interest entities | $ | 2,027 | $ | 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. |
Premises_and_Equipment_Premise
Premises and Equipment Premises and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Schedule of Premises and Equipment | A summary of premises and equipment, net is as follows (dollars in millions): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Land | $ | 43 | $ | 43 | ||||
Buildings and improvements | 589 | 547 | ||||||
Capitalized equipment leases | 2 | 2 | ||||||
Furniture, fixtures and equipment | 753 | 735 | ||||||
Software | 422 | 391 | ||||||
Premises and equipment | 1,809 | 1,718 | ||||||
Less: Accumulated depreciation | (905 | ) | (829 | ) | ||||
Less: Accumulated amortization of software | (234 | ) | (235 | ) | ||||
Premises and equipment, net | $ | 670 | $ | 654 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
Schedule of Intangible Assets | The following table summarizes the Company's intangible assets (dollars in millions): | |||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||
Weighted-Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
Book Value | Book Value | |||||||||||||||||||||||||
Amortizable intangible assets: | ||||||||||||||||||||||||||
Customer relationships | 15.6 years | $ | 72 | $ | 60 | $ | 12 | $ | 78 | $ | 60 | $ | 18 | |||||||||||||
Trade name and other | 25 years | 8 | 3 | 5 | 8 | 2 | 6 | |||||||||||||||||||
Proprietary software | 7 years | 6 | 2 | 4 | 6 | 2 | 4 | |||||||||||||||||||
Non-compete agreements | 3 years | 2 | 2 | — | 2 | 1 | 1 | |||||||||||||||||||
Marketing agreements and other | N/A | — | — | — | 6 | 5 | 1 | |||||||||||||||||||
Total amortizable intangible assets | 88 | 67 | 21 | 100 | 70 | 30 | ||||||||||||||||||||
Non-amortizable intangible assets: | ||||||||||||||||||||||||||
Trade names | N/A | 132 | — | 132 | 132 | — | 132 | |||||||||||||||||||
International transaction processing rights | N/A | 23 | — | 23 | 23 | — | 23 | |||||||||||||||||||
Total non-amortizable intangible assets | 155 | — | 155 | 155 | — | 155 | ||||||||||||||||||||
Total intangible assets | $ | 243 | $ | 67 | $ | 176 | $ | 255 | $ | 70 | $ | 185 | ||||||||||||||
Schedule of Expected Intangible Asset Amortization Expense | The following table presents expected intangible asset amortization expense for the next five years based on intangible assets at the end of the current period (dollars in millions): | |||||||||||||||||||||||||
Year | Amount | |||||||||||||||||||||||||
2015 | $ | 5 | ||||||||||||||||||||||||
2016 | $ | 4 | ||||||||||||||||||||||||
2017 | $ | 3 | ||||||||||||||||||||||||
2018 | $ | 3 | ||||||||||||||||||||||||
2019 | $ | 2 | ||||||||||||||||||||||||
Deposits_Tables
Deposits (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Deposits [Abstract] | ||||||||
Schedule of Interest Bearing Deposit Accounts | A summary of interest-bearing deposit accounts is as follows (dollars in millions): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Certificates of deposit in amounts less than $100,000(1) | $ | 21,502 | $ | 21,211 | ||||
Certificates of deposit from amounts of $100,000(1) to less than $250,000(1) | 4,481 | 4,860 | ||||||
Certificates of deposit in amounts of $250,000(1) or greater | 1,153 | 1,180 | ||||||
Savings deposits, including money market deposit accounts | 18,656 | 17,515 | ||||||
Total interest-bearing deposits | $ | 45,792 | $ | 44,766 | ||||
Average annual interest rate | 1.29 | % | 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 next five years, and thereafter were as follows (dollars in millions): | |||||||
Year | Amount | |||||||
2015 | $ | 12,755 | ||||||
2016 | $ | 5,685 | ||||||
2017 | $ | 3,408 | ||||||
2018 | $ | 2,000 | ||||||
2019 | $ | 1,522 | ||||||
Thereafter | $ | 1,766 | ||||||
LongTerm_Borrowings_Tables
Long-Term Borrowings (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 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): | |||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Maturity | Interest | Weighted-Average Interest Rate | Outstanding Amount | Outstanding Amount | ||||||||||
Rate | ||||||||||||||
Securitized Debt | ||||||||||||||
Fixed-rate asset-backed securities(1) | 2015-2019 | 1.76% | 1.76% | $ | 8,950 | $ | 5,554 | |||||||
Floating-rate asset-backed securities(2)(3) | 2015-2019 | 0.34-0.74% | 0.51% | 7,000 | 9,640 | |||||||||
Total Discover Card Master Trust I and Discover Card Execution Note Trust | 15,950 | 15,194 | ||||||||||||
Floating-rate asset-backed securities(4)(5)(6)(7) | 2031-2042 | 0.49-4.25% | 2.01% | 1,445 | 1,792 | |||||||||
Total SLC Private Student Loan Trusts | 1,445 | 1,792 | ||||||||||||
Total Long-Term Borrowings - owed to securitization investors | 17,395 | 16,986 | ||||||||||||
Discover Financial Services (Parent Company) | ||||||||||||||
Fixed-rate senior notes(1) | 2017-2024 | 3.85-10.25% | 5.08% | 1,558 | 1,045 | |||||||||
Discover Bank | ||||||||||||||
Senior bank notes | 2018-2026 | 2.00-4.25% | 3.38% | 2,892 | 1,744 | |||||||||
Subordinated bank notes | 2019-2020 | 7.00-8.70% | 7.49% | 698 | 698 | |||||||||
Capital lease obligations | 2016 | 4.51% | 4.51% | 1 | 1 | |||||||||
Total long-term borrowings | $ | 22,544 | $ | 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 London Interbank Offered Rate (“LIBOR”). Use of these interest rate swaps impacts carrying value of the debt. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-2 | Discover Card Execution Note Trust floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 18 to 58 basis points and 3-month LIBOR + 20 basis points. | |||||||||||||
-3 | 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 a portion of these long-term borrowings. There is no impact on debt carrying value from use of these interest rate swaps. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-4 | SLC Private Student Loan Trusts floating-rate asset-backed securities include issuances with the following interest rate terms: 3-month LIBOR + 17 to 45 basis points, Prime rate + 75 to 100 basis points and 1-month LIBOR + 350 basis points. | |||||||||||||
-5 | The Company acquired an interest rate swap related to the securitized debt assumed in the SLC transaction. The swap does not qualify for hedge accounting and has no impact on debt carrying value. See Note 21: Derivatives and Hedging Activities. | |||||||||||||
-6 | 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. | |||||||||||||
-7 | Includes $348 million of senior notes maturing in 2031, $827 million of senior and subordinated notes maturing in 2036 and $270 million of senior notes maturing in 2042 as of December 31, 2014. | |||||||||||||
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 2015 | $ | 3,302 | ||||||||||||
Due in 2016 | 3,050 | |||||||||||||
Due in 2017 | 5,106 | |||||||||||||
Due in 2018 | 2,650 | |||||||||||||
Due in 2019 | 3,278 | |||||||||||||
Thereafter | 5,158 | |||||||||||||
Total | $ | 22,544 | ||||||||||||
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||
Schedule of Stock-Based Compensation Plans Compensation Cost, Net of Forfeitures | The following table details the compensation cost, net of forfeitures (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
RSUs | $ | 33 | $ | 31 | $ | 29 | $ | 2 | ||||||||
PSUs | 27 | 28 | 18 | 1 | ||||||||||||
Total stock-based compensation expense | $ | 60 | $ | 59 | $ | 47 | $ | 3 | ||||||||
Income tax benefit | $ | 22 | $ | 22 | $ | 18 | $ | 1 | ||||||||
Schedule of Restricted Stock Unit Activity | The following table sets forth the activity related to vested and unvested RSUs: | |||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | Aggregate | ||||||||||||||
Intrinsic Value | ||||||||||||||||
(in millions) | ||||||||||||||||
RSUs at December 31, 2013 | 4,143,915 | $ | 27.38 | $ | 232 | |||||||||||
Granted | 567,506 | $ | 54.01 | |||||||||||||
Conversions to common stock | (1,305,318 | ) | $ | 24.22 | ||||||||||||
Forfeited | (43,705 | ) | $ | 41.34 | ||||||||||||
RSUs at December 31, 2014 | 3,362,398 | $ | 32.92 | $ | 220 | |||||||||||
The following table sets forth the activity related to unvested RSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | |||||||||||||||
Unvested RSUs at December 31, 2013(1) | 2,497,620 | $ | 28.52 | |||||||||||||
Granted | 567,506 | $ | 54.01 | |||||||||||||
Vested | (1,158,694 | ) | $ | 26.12 | ||||||||||||
Forfeited | (43,705 | ) | $ | 41.34 | ||||||||||||
Unvested RSUs at December 31, 2014(1) | 1,862,727 | $ | 37.48 | |||||||||||||
-1 | Unvested RSUs represent awards where recipients have yet to satisfy either explicit vesting terms or retirement-eligibility requirements. | |||||||||||||||
Schedule of Intrinsic Value of RSUs Converted to Common Stock and Grant Date Fair Value of RSUs Vested | The following table summarizes the total intrinsic value of the RSUs converted to common stock and the total grant-date fair value of RSUs vested (dollars in millions, except weighted-average grant-date fair value amounts): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Intrinsic value of RSUs converted to common stock | $ | 72 | $ | 63 | $ | 49 | $ | — | ||||||||
Grant-date fair value of RSUs vested | $ | 30 | $ | 27 | $ | 28 | $ | — | ||||||||
Weighted-average grant-date fair value of RSUs granted | $ | 54.01 | $ | 42.14 | $ | 25.64 | $ | 41.23 | ||||||||
Schedule of Peformance Stock Unit Activity | The following table sets forth the activity related to vested and unvested PSUs: | |||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | ||||||||||||||
PSUs at December 31, 2013 | 1,897,867 | $ | 26.93 | $ | 106 | |||||||||||
Granted | 384,626 | $ | 53.66 | |||||||||||||
Conversions to common stock | (710,379 | ) | $ | 19.15 | ||||||||||||
Forfeited | (12,439 | ) | $ | 44.97 | ||||||||||||
PSUs at December 31, 2014 | 1,559,675 | $ | 36.92 | $ | 102 | |||||||||||
The following table sets forth the activity related to unvested PSUs: | ||||||||||||||||
Number of Units | Weighted-Average Grant-Date Fair Value | |||||||||||||||
Unvested PSUs at December 31, 2013 | 1,652,292 | $ | 27.77 | |||||||||||||
Granted | 384,626 | $ | 53.66 | |||||||||||||
Vested(1) | (559,114 | ) | $ | 19.15 | ||||||||||||
Forfeited | (12,439 | ) | $ | 44.97 | ||||||||||||
Unvested PSUs at December 31, 2014(2)(3)(4) | 1,465,365 | $ | 37.71 | |||||||||||||
-1 | Vested PSUs represent awards where recipients have satisfied retirement-eligibility requirements. | |||||||||||||||
-2 | Includes 518,438 PSUs granted in fiscal year 2012 that are earned based on the Company's achievement of EPS during the two-year performance period ended November 30, 2013 and are subject to the requisite service period which ended January 2, 2015. | |||||||||||||||
-3 | Includes 567,424 PSUs granted in calendar year 2013 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2015 and are subject to the requisite service period which ends February 1, 2016. | |||||||||||||||
-4 | Includes 379,503 PSUs granted in calendar year 2014 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2016 and are subject to the requisite service period which ends February 1, 2017. | |||||||||||||||
Schedule of Stock Option Activity | The following table sets forth the activity concerning stock option activity: | |||||||||||||||
Number of Units | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | |||||||||||||
(in years) | ||||||||||||||||
Options outstanding at December 31, 2013 | 171,726 | $ | 25.82 | 2.76 years | $ | 5 | ||||||||||
Granted(1) | — | $ | — | |||||||||||||
Exercised | (56,221 | ) | $ | 24.63 | ||||||||||||
Expired | — | $ | — | |||||||||||||
Options outstanding at December 31, 2014 | 115,505 | $ | 26.4 | 1.90 years | $ | 5 | ||||||||||
Vested and exercisable at December 31, 2014 | 115,505 | $ | 26.4 | 1.90 years | $ | 5 | ||||||||||
-1 | No stock options have been granted by the Company since its spin-off from Morgan Stanley. | |||||||||||||||
Employee Stock Option [Member] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||
Schedule of Intrinsic Value of Options Exercised and Fair Value of Options Vested | The following table summarizes the total intrinsic value of options exercised and total fair value of options vested (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Intrinsic value of options exercised | $ | 2 | $ | 11 | $ | 22 | $ | 6 | ||||||||
Employee_Benefit_Plans_Employe
Employee Benefit Plans Employee Benefit Plans (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||
Schedule of Net Periodic Benefit Cost | Net periodic benefit cost expensed by the Company included the following components (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Service cost, benefits earned during the period | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest cost on projected benefit obligation | 22 | 21 | 21 | 2 | ||||||||||||
Expected return on plan assets | (23 | ) | (23 | ) | (23 | ) | (2 | ) | ||||||||
Net amortization | 3 | 5 | 3 | — | ||||||||||||
Net periodic benefit cost | $ | 2 | $ | 3 | $ | 1 | $ | — | ||||||||
Schedule of Pretax Amounts Recognized in AOCI Not Recognized as Components of Net Periodic Benefit Cost | Pretax amounts recognized in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost consist of (dollars in millions): | |||||||||||||||
31-Dec-14 | ||||||||||||||||
Prior service credit | $ | 6 | ||||||||||||||
Net loss | (266 | ) | ||||||||||||||
Total | $ | (260 | ) | |||||||||||||
Schedule of Funded Status and Changes in Benefit Obligations and Fair Value of Plan Assets | The following table provides a reconciliation of the changes in the benefit obligation and fair value of plan assets as well as a summary of the Discover Pension Plan's funded status (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Reconciliation of benefit obligation: | ||||||||||||||||
Benefit obligation at beginning of year | $ | 452 | $ | 523 | ||||||||||||
Service cost | — | — | ||||||||||||||
Interest cost | 22 | 21 | ||||||||||||||
Employee contributions | — | — | ||||||||||||||
Actuarial loss (gain) | 112 | (78 | ) | |||||||||||||
Plan amendments | — | — | ||||||||||||||
Benefits paid | (16 | ) | (14 | ) | ||||||||||||
Benefit obligation at end of year | 570 | 452 | ||||||||||||||
Reconciliation of fair value of plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | 367 | 368 | ||||||||||||||
Actual return on plan assets | 50 | 13 | ||||||||||||||
Employer contributions | — | — | ||||||||||||||
Employee contributions | — | — | ||||||||||||||
Benefits paid | (16 | ) | (14 | ) | ||||||||||||
Fair value of plan assets at end of year | 401 | 367 | ||||||||||||||
Unfunded status (recorded in accrued expenses and other liabilities) | $ | (169 | ) | $ | (85 | ) | ||||||||||
Schedule of Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost | The following table presents the assumptions used to determine the benefit obligation: | |||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||
Discount rate | 4.08 | % | 4.93 | % | ||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost: | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Discount rate | 4.93 | % | 4.09 | % | 5.07 | % | 3.96 | % | ||||||||
Expected long-term rate of return on plan assets | 6.5 | % | 6.75 | % | 6.75 | % | 6.75 | % | ||||||||
Schedule of Pension Plan Assets by Level Within the Fair Value Hierarchy | The Discover Pension Plan’s assets are stated at fair value. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, if available. If a quoted market price is not available, the estimate of the fair value is based on the best information available in the circumstances. The table below presents information about the Discover Pension Plan assets and indicates the level within the fair value hierarchy, as defined by ASC 820, with which each item is associated. All of the Company's pension plan assets were categorized as Level 2 assets within the fair value hierarchy as of the end of the current period. For a description of the fair value hierarchy, see Note 20: Fair Value Measurements and Disclosures. (dollars in millions): | |||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||
Amount | Net Asset Allocation | Amount | Net Asset Allocation | |||||||||||||
Assets | ||||||||||||||||
Registered Investment Company: | ||||||||||||||||
Domestic small/mid cap equity fund | $ | 31 | 8 | % | $ | 32 | 9 | % | ||||||||
Emerging markets equity fund | 30 | 7 | 29 | 8 | ||||||||||||
Global low volatility equity fund | 20 | 5 | 19 | 5 | ||||||||||||
International core equity fund | 44 | 11 | 46 | 13 | ||||||||||||
Common Collective Trusts: | ||||||||||||||||
Domestic large cap equity fund | 54 | 13 | 50 | 13 | ||||||||||||
Domestic fixed income fund | — | — | 7 | 2 | ||||||||||||
Long duration fixed income fund | 219 | 55 | 181 | 49 | ||||||||||||
Temporary investment fund | 3 | 1 | 3 | 1 | ||||||||||||
Total assets | $ | 401 | 100 | % | $ | 367 | 100 | % | ||||||||
Schedule of Expected Benefit Payments for Next Five Years and Thereafter | Expected benefit payments associated with the Discover Pension Plan for the next five years and in aggregate for the years thereafter are as follows (dollars in millions): | |||||||||||||||
2015 | $ | 13 | ||||||||||||||
2016 | $ | 14 | ||||||||||||||
2017 | $ | 15 | ||||||||||||||
2018 | $ | 16 | ||||||||||||||
2019 | $ | 17 | ||||||||||||||
Following five years thereafter | $ | 103 | ||||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | Changes in each component of AOCI were as follows (dollars in millions): | |||||||||||||||||||
Unrealized Gain (Loss) on Available-for-Sale Investment Securities, Net of Tax | Gain (Loss) on Cash Flow Hedges, Net of Tax | Foreign Currency Translation Adjustments, Net of Tax(4) | Pension Plan Loss Net of Tax | AOCI | ||||||||||||||||
Balance at November 30, 2011 | $ | 55 | $ | 7 | $ | — | $ | (114 | ) | $ | (52 | ) | ||||||||
Net unrealized gains on investment securities, net of tax expense of $11(1) | 19 | — | — | — | 19 | |||||||||||||||
Unrealized losses on cash flow hedges, net of tax benefit of $2(2) | — | (4 | ) | — | — | (4 | ) | |||||||||||||
Unrealized pension plan loss, net of tax benefit of $25(3) | — | — | — | (38 | ) | (38 | ) | |||||||||||||
Balance at November 30, 2012 | 74 | 3 | — | (152 | ) | (75 | ) | |||||||||||||
Net unrealized losses on investment securities, net of tax benefit of $2(1) | (3 | ) | — | — | — | (3 | ) | |||||||||||||
Unrealized pension plan gain, net of tax expense of $4(3) | — | — | — | 6 | 6 | |||||||||||||||
Balance at December 31, 2012 | 71 | 3 | — | (146 | ) | (72 | ) | |||||||||||||
Net change(5) | (52 | ) | 10 | 1 | 45 | 4 | ||||||||||||||
Balance at December 31, 2013 | 19 | 13 | 1 | (101 | ) | (68 | ) | |||||||||||||
Net change(5) | 4 | (20 | ) | (1 | ) | (53 | ) | (70 | ) | |||||||||||
Balance at December 31, 2014 | $ | 23 | $ | (7 | ) | $ | — | $ | (154 | ) | $ | (138 | ) | |||||||
-1 | Represents the difference between the fair value and amortized cost of available-for-sale investment securities. | |||||||||||||||||||
-2 | Represents unrealized gains (losses) related to effective portion of cash flow hedges. | |||||||||||||||||||
-3 | Reflects adjustments to the funded status of pension plan, which is the difference between the fair value of the plan assets and the projected benefit obligation. | |||||||||||||||||||
-4 | Includes unrealized losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains on foreign currency translation adjustments. | |||||||||||||||||||
-5 | In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. As the result, the Company has adjusted its AOCI presentation prospectively, as required, and therefore additional table was included to present the required information for the current period and the presentation has changed from historical periods. | |||||||||||||||||||
Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI | 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 Calendar Year Ended December 31, 2014 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding gains arising during the period | $ | 9 | $ | (3 | ) | $ | 6 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income | (4 | ) | 2 | (2 | ) | |||||||||||||||
Net change | $ | 5 | $ | (1 | ) | $ | 4 | |||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (69 | ) | $ | 26 | $ | (43 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income | 38 | (15 | ) | 23 | ||||||||||||||||
Net change | $ | (31 | ) | $ | 11 | $ | (20 | ) | ||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized losses arising during the period | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Net change | $ | (1 | ) | $ | — | $ | (1 | ) | ||||||||||||
Pension Plan: | ||||||||||||||||||||
Unrealized losses arising during the period | $ | (84 | ) | $ | 31 | $ | (53 | ) | ||||||||||||
Net change | $ | (84 | ) | $ | 31 | $ | (53 | ) | ||||||||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||||||||||
Available-for-Sale Investment Securities: | ||||||||||||||||||||
Net unrealized holding losses arising during the period | $ | (80 | ) | $ | 30 | $ | (50 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income | (2 | ) | — | (2 | ) | |||||||||||||||
Net change | $ | (82 | ) | $ | 30 | $ | (52 | ) | ||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 8 | $ | (3 | ) | $ | 5 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income | 8 | (3 | ) | 5 | ||||||||||||||||
Net change | $ | 16 | $ | (6 | ) | $ | 10 | |||||||||||||
Foreign Currency Translation Adjustments: | ||||||||||||||||||||
Net unrealized gains arising during the period | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Net change | $ | 1 | $ | — | $ | 1 | ||||||||||||||
Pension Plan: | ||||||||||||||||||||
Unrealized gains arising during the period | $ | 72 | $ | (27 | ) | $ | 45 | |||||||||||||
Net change | $ | 72 | $ | (27 | ) | $ | 45 | |||||||||||||
Other_Expense_Tables
Other Expense (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||
Schedule of Other Expense | Total other expense includes the following components (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Postage | $ | 84 | $ | 86 | $ | 85 | $ | 7 | ||||||||
Fraud losses | 134 | 110 | 93 | 9 | ||||||||||||
Supplies | 23 | 26 | 22 | 2 | ||||||||||||
Credit-related inquiry fees | 19 | 19 | 20 | 1 | ||||||||||||
Litigation expense | — | (12 | ) | 218 | — | |||||||||||
Incentive expense | 50 | 61 | 59 | 5 | ||||||||||||
Other expense | 165 | 198 | 107 | 11 | ||||||||||||
Total other expense | $ | 475 | $ | 488 | $ | 604 | $ | 35 | ||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||
Schedule of Income Tax Expense | Income tax expense consisted of the following (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Current: | ||||||||||||||||
U.S. federal | $ | 1,215 | $ | 1,065 | $ | 1,113 | $ | 101 | ||||||||
U.S. state and local | 167 | 87 | 149 | 15 | ||||||||||||
Total | 1,382 | 1,152 | 1,262 | 116 | ||||||||||||
Deferred: | ||||||||||||||||
U.S. federal | (7 | ) | 295 | 136 | (11 | ) | ||||||||||
U.S. state and local | (4 | ) | 27 | 10 | (1 | ) | ||||||||||
Total | (11 | ) | 322 | 146 | (12 | ) | ||||||||||
Income tax expense | $ | 1,371 | $ | 1,474 | $ | 1,408 | $ | 104 | ||||||||
Schedule of Reconciliation the Effective Tax Rate to the U.S. Federal Statutory Income Tax Rate | The following table reconciles the Company’s effective tax rate to the U.S. federal statutory income tax rate: | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
U.S. federal statutory income tax rate | 35 | % | 35 | % | 35 | % | 35 | % | ||||||||
U.S. state, local and other income taxes, net of U.S. federal income tax benefits | 2.8 | 2.2 | 2.9 | 3.2 | ||||||||||||
Other | (0.7 | ) | 0.2 | (0.4 | ) | (0.1 | ) | |||||||||
Effective income tax rate | 37.1 | % | 37.4 | % | 37.5 | % | 38.1 | % | ||||||||
Schedule of Deferred Tax Assets and Liabilities | Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances are provided to reduce deferred tax assets to an amount that is more likely than not to be realized. The Company evaluates the likelihood of realizing its deferred tax assets by estimating sources of future taxable income and the impact of tax planning strategies. Significant components of the Company’s net deferred income taxes, which are included in other assets in the consolidated statements of financial condition, were as follows (dollars in millions): | |||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Deferred tax assets: | ||||||||||||||||
Allowance for loan losses | $ | 659 | $ | 627 | ||||||||||||
Customer fees and rewards | 212 | 212 | ||||||||||||||
Compensation and benefits | 123 | 87 | ||||||||||||||
State income taxes | 75 | 65 | ||||||||||||||
Other | 77 | 72 | ||||||||||||||
Total deferred tax assets before valuation allowance | 1,146 | 1,063 | ||||||||||||||
Valuation allowance | (41 | ) | (37 | ) | ||||||||||||
Total deferred tax assets, net of valuation allowance | 1,105 | 1,026 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Debt exchange premium | (91 | ) | (98 | ) | ||||||||||||
Depreciation and software amortization | (116 | ) | (83 | ) | ||||||||||||
Unearned income | (31 | ) | (40 | ) | ||||||||||||
Intangibles | (15 | ) | (22 | ) | ||||||||||||
Deferred loan acquisition costs | (23 | ) | (16 | ) | ||||||||||||
Partnership investments | (19 | ) | — | |||||||||||||
Other | (6 | ) | (13 | ) | ||||||||||||
Total deferred tax liabilities | (301 | ) | (272 | ) | ||||||||||||
Net deferred tax assets | $ | 804 | $ | 754 | ||||||||||||
Schedule of Reconciliation of Beginning and Ending Unrecognized Tax Benefits | A reconciliation of beginning and ending unrecognized tax benefits is as follows (dollars in millions): | |||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Balance at beginning of period | $ | 629 | $ | 575 | $ | 507 | $ | 573 | ||||||||
Additions: | ||||||||||||||||
Current year tax positions | 18 | 1 | 74 | 2 | ||||||||||||
Prior year tax positions | 74 | 142 | 1 | — | ||||||||||||
Reductions: | ||||||||||||||||
Prior year tax positions | (80 | ) | (69 | ) | (5 | ) | — | |||||||||
Settlements with taxing authorities | (4 | ) | (18 | ) | (2 | ) | — | |||||||||
Expired statute of limitations | (2 | ) | (2 | ) | (2 | ) | — | |||||||||
Balance at end of period(1) | $ | 635 | $ | 629 | $ | 573 | $ | 575 | ||||||||
-1 | As of the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012, and one month ended December 31, 2012, amounts included $144 million, $142 million, $108 million and $109 million respectively, of unrecognized tax benefits, which, if recognized, would favorably affect the effective tax rate. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
Preferred stock dividends | (37 | ) | (37 | ) | (5 | ) | — | |||||||||
Net income available to common stockholders | 2,286 | 2,433 | 2,340 | 170 | ||||||||||||
Income allocated to participating securities | (16 | ) | (19 | ) | (22 | ) | (2 | ) | ||||||||
Net income allocated to common stockholders | $ | 2,270 | $ | 2,414 | $ | 2,318 | $ | 168 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares of common stock outstanding | 462 | 485 | 519 | 498 | ||||||||||||
Effect of dilutive common stock equivalents | 1 | 2 | 1 | 1 | ||||||||||||
Weighted-average shares of common stock outstanding and common stock equivalents | 463 | 487 | 520 | 499 | ||||||||||||
Basic earnings per common share | $ | 4.91 | $ | 4.97 | $ | 4.47 | $ | 0.34 | ||||||||
Diluted earnings per common share | $ | 4.9 | $ | 4.96 | $ | 4.46 | $ | 0.34 | ||||||||
Capital_Adequacy_Tables
Capital Adequacy (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 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 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 | ||||||||||||||
December 31, 2014 | |||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 12,418 | 17 | % | $ | 5,831 | ≥8.0% | $ | 7,289 | ≥10.0% | |||||||||
Discover Bank | $ | 11,040 | 15.3 | % | $ | 5,767 | ≥8.0% | $ | 7,209 | ≥10.0% | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,839 | 14.9 | % | $ | 2,916 | ≥4.0% | $ | 4,373 | ≥6.0% | |||||||||
Discover Bank | $ | 9,470 | 13.1 | % | $ | 2,884 | ≥4.0% | $ | 4,326 | ≥6.0% | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||
Discover Financial Services | $ | 10,839 | 13.2 | % | $ | 3,288 | ≥4.0% | $ | 4,111 | ≥5.0% | |||||||||
Discover Bank | $ | 9,470 | 11.7 | % | $ | 3,252 | ≥4.0% | $ | 4,066 | ≥5.0% | |||||||||
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) | 12 Months Ended | |||||||||||||||
Dec. 31, 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 2028. 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 | |||||||||||||||
2015 | $ | 1 | $ | 16 | ||||||||||||
2016 | — | 15 | ||||||||||||||
2017 | — | 13 | ||||||||||||||
2018 | — | 12 | ||||||||||||||
2019 | — | 10 | ||||||||||||||
Thereafter | — | 45 | ||||||||||||||
Total minimum lease payments | 1 | $ | 111 | |||||||||||||
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 consolidated statements of financial condition (dollars in millions): | |||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Settlement withholdings and escrow deposits | $ | 16 | $ | 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): | |||||||||||||||
December 31, | ||||||||||||||||
2014 | ||||||||||||||||
Diners Club: | ||||||||||||||||
Merchant guarantee | $ | 96 | ||||||||||||||
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 Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Aggregate sales transaction volume(1) | $ | 125,637 | $ | 120,442 | $ | 114,847 | $ | 11,521 | ||||||||
-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) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 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 Other Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||||||||||||||||
for Identical Assets | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||
Balance at December 31, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1,329 | $ | — | $ | — | $ | 1,329 | |||||||||||||||||||||
U.S. government agency securities | 1,033 | — | — | 1,033 | |||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 1,485 | — | 1,485 | |||||||||||||||||||||||||
Available-for-sale investment securities | $ | 2,362 | $ | 1,485 | $ | — | $ | 3,847 | |||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 122 | $ | — | $ | 122 | |||||||||||||||||||||
Interest rate lock commitments | $ | — | $ | — | $ | 7 | $ | 7 | |||||||||||||||||||||
Forward delivery contracts | — | 1 | — | 1 | |||||||||||||||||||||||||
Other derivative financial instruments | — | 35 | — | 35 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 36 | $ | 7 | $ | 43 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Forward delivery contracts | $ | — | $ | 3 | $ | — | $ | 3 | |||||||||||||||||||||
Other derivative financial instruments | — | 20 | — | 20 | |||||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 23 | $ | — | $ | 23 | |||||||||||||||||||||
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 Calendar Year Ended December 31, 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 December 31, 2014 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 4 | — | — | 87 | — | — | 4 | (88 | ) | $ | 7 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (1 | ) | 1 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 2 | — | — | 1 | (3 | ) | — | — | $ | — | |||||||||||||||||
For the Calendar Year Ended December 31, 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 December 31, 2013 | |||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Interest rate lock commitments | $ | 12 | — | — | 121 | — | — | 3 | (132 | ) | $ | 4 | |||||||||||||||||
Forward delivery contracts | $ | — | — | (3 | ) | 3 | — | — | — | — | $ | — | |||||||||||||||||
Mortgage loans held for sale | $ | — | 3 | — | — | 1 | (3 | ) | (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 Unobservable Input | Ranges of Inputs | Weighted Average(1) | |||||||||||||||||||||||||
Technique | Low | High | |||||||||||||||||||||||||||
Interest rate lock commitments | $ | 7 | Quantitative risk models | Loan funding probability | 13 | % | 99 | % | 61 | % | |||||||||||||||||||
-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 for Identical Assets | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Carrying Value | |||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||
Balance at December 31, 2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||||||
States and political subdivisions of states | — | 10 | — | 10 | 10 | ||||||||||||||||||||||||
Residential mortgage-backed securities - Agency | — | 93 | — | 93 | 91 | ||||||||||||||||||||||||
Held-to-maturity investment securities | $ | 1 | $ | 103 | $ | — | $ | 104 | $ | 102 | |||||||||||||||||||
Cash and cash equivalents | $ | 7,284 | $ | — | $ | — | $ | 7,284 | $ | 7,284 | |||||||||||||||||||
Restricted cash | $ | 106 | $ | — | $ | — | $ | 106 | $ | 106 | |||||||||||||||||||
Net loan receivables(1) | $ | — | $ | — | $ | 69,316 | $ | 69,316 | $ | 68,101 | |||||||||||||||||||
Accrued interest receivables | $ | — | $ | 618 | $ | — | $ | 618 | $ | 618 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Deposits | $ | — | $ | 46,242 | $ | — | $ | 46,242 | $ | 46,089 | |||||||||||||||||||
Short-term borrowings | $ | — | $ | 113 | $ | — | $ | 113 | $ | 113 | |||||||||||||||||||
Long-term borrowings - owed to securitization investors | $ | — | $ | 16,067 | $ | 1,561 | $ | 17,628 | $ | 17,395 | |||||||||||||||||||
Other long-term borrowings | $ | — | $ | 5,721 | $ | 1 | $ | 5,722 | $ | 5,149 | |||||||||||||||||||
Accrued interest payables | $ | — | $ | 132 | $ | — | $ | 132 | $ | 132 | |||||||||||||||||||
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) | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||
Schedule of Fair Value and Related Outstanding Notional Amounts of Derivative Instruments | The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions). | ||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
Notional | Number of | Derivative Assets | Derivative Liabilities | Notional | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||
Amount | Outstanding Derivative Contracts | Amount | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps - cash flow hedge | $ | 4,100 | 8 | $ | 4 | $ | 18 | $ | 2,650 | $ | 18 | $ | — | ||||||||||||||
Interest rate swaps - fair value hedge | $ | 5,507 | 175 | 31 | 2 | $ | 7,138 | 52 | 6 | ||||||||||||||||||
Foreign exchange forward contract - net investment hedge(1) | $ | 7 | 1 | — | — | $ | 35 | — | — | ||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Foreign exchange forward contracts(2) | $ | 53 | 9 | — | — | $ | 44 | — | — | ||||||||||||||||||
Interest rate swap(3) | $ | 359 | 1 | — | — | $ | 796 | — | — | ||||||||||||||||||
Forward delivery contracts | $ | 761 | 331 | 1 | 3 | $ | 693 | 5 | 1 | ||||||||||||||||||
Interest rate lock commitments(3) | $ | 406 | 1,681 | 7 | — | $ | 235 | 4 | — | ||||||||||||||||||
Total gross derivative assets/liabilities(4) | 43 | 23 | 79 | 7 | |||||||||||||||||||||||
Less: Collateral held/posted(5) | (20 | ) | (23 | ) | (61 | ) | (7 | ) | |||||||||||||||||||
Total net derivative assets/liabilities | $ | 23 | $ | — | $ | 18 | $ | — | |||||||||||||||||||
-1 | The foreign exchange forward contract has a notional amount of EUR 6 million and EUR 26 million as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||||
-2 | The foreign exchange forward contracts have notional amounts of EUR 27 million, GBP 8 million, SGD 1 million and CHF 8 million as of December 31, 2014 and EUR 20 million and 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 enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At December 31, 2014 the Company had one outstanding contract with a notional amount of $33 million and immaterial fair value. At December 31, 2013 the Company one outstanding contract with a notional amount of $40 million and immaterial fair value. | ||||||||||||||||||||||||||
-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 | 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 (Loss) Gain Recognized in Other Comprehensive Income | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow/net investment hedges: | |||||||||||||||||||||||||||
Total (losses) gains recognized in other comprehensive income after amounts reclassified into earnings, pre-tax | Other Comprehensive Income | $ | (27 | ) | $ | 13 | $ | (6 | ) | $ | (1 | ) | |||||||||||||||
Total (losses) gains recognized in other comprehensive income | $ | (27 | ) | $ | 13 | $ | (6 | ) | $ | (1 | ) | ||||||||||||||||
Amount of Gain (Loss) Recognized in Income | |||||||||||||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||||||||||||
Interest rate swaps—cash flow hedges: | |||||||||||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Income | $ | — | $ | 4 | $ | 7 | $ | 1 | ||||||||||||||||||
Amount reclassified from other comprehensive income into income | Interest Expense | (38 | ) | (12 | ) | — | — | ||||||||||||||||||||
Total amount reclassified from other comprehensive income into income | (38 | ) | (8 | ) | 7 | 1 | |||||||||||||||||||||
Interest rate swaps—fair value hedges: | |||||||||||||||||||||||||||
Interest expense - ineffectiveness | (13 | ) | (46 | ) | 58 | (9 | ) | ||||||||||||||||||||
Interest expense - other | 38 | 41 | 30 | 3 | |||||||||||||||||||||||
Gain (loss) on interest rate swaps | Interest Expense | 25 | (5 | ) | 88 | (6 | ) | ||||||||||||||||||||
Interest expense - ineffectiveness | 19 | 51 | (52 | ) | 10 | ||||||||||||||||||||||
Interest expense - other | (2 | ) | (6 | ) | (6 | ) | (1 | ) | |||||||||||||||||||
Gain (loss) on hedged item | Interest Expense | 17 | 45 | (58 | ) | 9 | |||||||||||||||||||||
Total gains recognized in income | $ | 4 | $ | 32 | $ | 37 | $ | 4 | |||||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||||||||||||
Gain (loss) on forward contracts | Other Income | $ | 5 | $ | (1 | ) | $ | 1 | $ | (1 | ) | ||||||||||||||||
Loss on interest rate swaps | Other Income | (1 | ) | (1 | ) | (7 | ) | — | |||||||||||||||||||
(Loss) gain on forward delivery contracts | Other Income | (6 | ) | 4 | (1 | ) | 2 | ||||||||||||||||||||
Gain on interest rate lock commitments | Other Income | 87 | 121 | 110 | 17 | ||||||||||||||||||||||
Total gains on derivatives not designated as hedges recognized in income | $ | 85 | $ | 123 | $ | 103 | $ | 18 | |||||||||||||||||||
Segment_Disclosures_Tables
Segment Disclosures (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 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 Calendar Year Ended December 31, 2014 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 6,359 | $ | — | $ | 6,359 | ||||||
Private student loans | 312 | — | 312 | |||||||||
PCI student loans | 260 | — | 260 | |||||||||
Personal loans | 568 | — | 568 | |||||||||
Other | 97 | — | 97 | |||||||||
Total interest income | 7,596 | — | 7,596 | |||||||||
Interest expense | 1,134 | — | 1,134 | |||||||||
Net interest income | 6,462 | — | 6,462 | |||||||||
Provision for loan losses | 1,440 | 3 | 1,443 | |||||||||
Other income | 1,700 | 315 | 2,015 | |||||||||
Other expense | 3,117 | 223 | 3,340 | |||||||||
Income before income tax expense | $ | 3,605 | $ | 89 | $ | 3,694 | ||||||
For the Calendar Year Ended December 31, 2013 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 5,978 | $ | — | $ | 5,978 | ||||||
Private student loans | 252 | — | 252 | |||||||||
PCI student loans | 272 | — | 272 | |||||||||
Personal loans | 464 | — | 464 | |||||||||
Other | 98 | — | 98 | |||||||||
Total interest income | 7,064 | — | 7,064 | |||||||||
Interest expense | 1,146 | — | 1,146 | |||||||||
Net interest income | 5,918 | — | 5,918 | |||||||||
Provision for loan losses | 1,069 | 17 | 1,086 | |||||||||
Other income | 1,976 | 330 | 2,306 | |||||||||
Other expense | 2,961 | 233 | 3,194 | |||||||||
Income before income tax expense | $ | 3,864 | $ | 80 | $ | 3,944 | ||||||
The following table presents segment data for the period (dollars in millions): | ||||||||||||
Direct | Payment | Total | ||||||||||
Banking | Services | |||||||||||
For the Fiscal Year Ended November 30, 2012 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 5,751 | $ | — | $ | 5,751 | ||||||
Private student loans | 184 | — | 184 | |||||||||
PCI student loans | 303 | — | 303 | |||||||||
Personal loans | 363 | — | 363 | |||||||||
Other | 102 | — | 102 | |||||||||
Total interest income | 6,703 | — | 6,703 | |||||||||
Interest expense | 1,331 | — | 1,331 | |||||||||
Net interest income | 5,372 | — | 5,372 | |||||||||
Provision for loan losses | 848 | — | 848 | |||||||||
Other income | 1,939 | 342 | 2,281 | |||||||||
Other expense | 2,891 | 161 | 3,052 | |||||||||
Income before income tax expense | $ | 3,572 | $ | 181 | $ | 3,753 | ||||||
For the One Month Ended December 31, 2012 | ||||||||||||
Interest income | ||||||||||||
Credit card | $ | 510 | $ | — | $ | 510 | ||||||
Private student loans | 18 | — | 18 | |||||||||
PCI student loans | 24 | — | 24 | |||||||||
Personal loans | 34 | — | 34 | |||||||||
Other | 9 | — | 9 | |||||||||
Total interest income | 595 | — | 595 | |||||||||
Interest expense | 103 | — | 103 | |||||||||
Net interest income | 492 | — | 492 | |||||||||
Provision for loan losses | 178 | — | 178 | |||||||||
Other income | 169 | 31 | 200 | |||||||||
Other expense | 224 | 16 | 240 | |||||||||
Income before income tax expense | $ | 259 | $ | 15 | $ | 274 | ||||||
Parent_Company_Condensed_Finan1
Parent Company Condensed Financial Information (Tables) (Parent Company [Member]) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Parent Company [Member] | ||||||||||||||||
Condensed Financial Statements, Captions [Line Items] | ||||||||||||||||
Schedule of Parent Company Condensed Statements of Financial Condition | Discover Financial Services | |||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Financial Condition | ||||||||||||||||
December 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 79 | $ | 4 | ||||||||||||
Notes receivable from subsidiaries(1) | 2,436 | 2,254 | ||||||||||||||
Investments in subsidiaries | 10,360 | 9,824 | ||||||||||||||
Other assets | 204 | 158 | ||||||||||||||
Total assets | $ | 13,079 | $ | 12,240 | ||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||
Non-interest bearing deposit accounts | $ | 1 | $ | 6 | ||||||||||||
Interest-bearing deposit accounts | 4 | 7 | ||||||||||||||
Total deposits | 5 | 13 | ||||||||||||||
Short-term borrowings from subsidiaries | 108 | 146 | ||||||||||||||
Other long-term borrowings | 1,559 | 1,045 | ||||||||||||||
Accrued expenses and other liabilities | 273 | 227 | ||||||||||||||
Total liabilities | 1,945 | 1,431 | ||||||||||||||
Stockholders' equity | 11,134 | 10,809 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 13,079 | $ | 12,240 | ||||||||||||
-1 | The Parent Company advanced $2.2 billion to Discover Bank as of December 31, 2014, which is included in notes receivables from subsidiaries. These funds are available to the Parent for liquidity purposes. | |||||||||||||||
Schedule of Parent Company Condensed Statements of Income | Discover Financial Services | |||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Income | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Interest income | $ | 18 | $ | 22 | $ | 22 | $ | 2 | ||||||||
Interest expense | 86 | 84 | 52 | 7 | ||||||||||||
Net interest expense | (68 | ) | (62 | ) | (30 | ) | (5 | ) | ||||||||
Dividends from subsidiaries | 1,860 | 1,600 | 1,500 | — | ||||||||||||
Total income (loss) | 1,792 | 1,538 | 1,470 | (5 | ) | |||||||||||
Other expense | ||||||||||||||||
Employee compensation and benefits | 1 | — | — | — | ||||||||||||
Professional fees | 3 | 3 | 1 | — | ||||||||||||
Other(1) | — | 1 | (171 | ) | — | |||||||||||
Total other expense (benefit) | 4 | 4 | (170 | ) | — | |||||||||||
Income (loss) before income tax benefit (expense) and equity in undistributed net income of subsidiaries | 1,788 | 1,534 | 1,640 | (5 | ) | |||||||||||
Income tax benefit (expense) | 18 | 17 | (54 | ) | 2 | |||||||||||
Equity in undistributed net income of subsidiaries | 517 | 919 | 759 | 173 | ||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
-1 | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. | |||||||||||||||
Schedule of Parent Company Condensed Statements of Cash Flows | Discover Financial Services | |||||||||||||||
(Parent Company Only) | ||||||||||||||||
Condensed Statements of Cash Flows | ||||||||||||||||
For the Calendar Years Ended December 31, | For the Fiscal Year Ended November 30, 2012 | For the One Month Ended December 31, 2012 | ||||||||||||||
2014 | 2013 | |||||||||||||||
(dollars in millions) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 2,323 | $ | 2,470 | $ | 2,345 | $ | 170 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Equity in undistributed net income of subsidiaries | (517 | ) | (919 | ) | (759 | ) | (173 | ) | ||||||||
Stock-based compensation expense | 60 | 59 | 47 | 3 | ||||||||||||
Deferred income taxes | (5 | ) | (2 | ) | 109 | (1 | ) | |||||||||
Premium on debt issuance(1) | — | — | (176 | ) | — | |||||||||||
Depreciation and amortization | 21 | 19 | 4 | 1 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
(Increase) decrease in other assets | (50 | ) | (33 | ) | (16 | ) | 32 | |||||||||
Increase (decrease) in other liabilities and accrued expenses | 32 | 29 | 10 | (15 | ) | |||||||||||
Net cash provided by operating activities | 1,864 | 1,623 | 1,564 | 17 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Increase in investment in subsidiaries | (35 | ) | — | (196 | ) | (1 | ) | |||||||||
(Increase) decrease in loans to subsidiaries | (182 | ) | (29 | ) | (520 | ) | 57 | |||||||||
Net cash (used for) provided by investing activities | (217 | ) | (29 | ) | (716 | ) | 56 | |||||||||
Cash flows from financing activities | ||||||||||||||||
Net (decrease) increase in short-term borrowings from subsidiaries | (38 | ) | 58 | 1 | (6 | ) | ||||||||||
Proceeds from issuance of common stock | 5 | 13 | 26 | 2 | ||||||||||||
Proceeds from issuance of preferred stock | — | — | 560 | — | ||||||||||||
Proceeds from issuance of long-term borrowings | 500 | — | — | — | ||||||||||||
Proceeds from advances from subsidiaries | — | — | 93 | — | ||||||||||||
Purchases of treasury stock | (1,564 | ) | (1,296 | ) | (1,216 | ) | (12 | ) | ||||||||
Net (decrease) increase in deposits | (8 | ) | (7 | ) | 12 | (12 | ) | |||||||||
Premium paid on debt exchange | — | — | (115 | ) | — | |||||||||||
Dividends paid on common and preferred stock | (467 | ) | (399 | ) | (209 | ) | (5 | ) | ||||||||
Net cash used for financing activities | (1,572 | ) | (1,631 | ) | (848 | ) | (33 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | 75 | (37 | ) | — | 40 | |||||||||||
Cash and cash equivalents, at beginning of period | 4 | 41 | 1 | 1 | ||||||||||||
Cash and cash equivalents, at end of period | $ | 79 | $ | 4 | $ | 1 | $ | 41 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid during the period for: | ||||||||||||||||
Interest expense | $ | 66 | $ | 65 | $ | 66 | $ | 2 | ||||||||
Income taxes, net of income tax refunds | $ | 65 | $ | (1 | ) | $ | (65 | ) | $ | — | ||||||
Non-cash investing and financing transactions: | ||||||||||||||||
Capital contribution to subsidiary(1) | $ | — | $ | — | $ | 499 | $ | — | ||||||||
Debt issuance, net of discount(1) | $ | — | $ | — | $ | (499 | ) | $ | — | |||||||
-1 | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. |
Quarterly_Results_Tables
Quarterly Results (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||||||||||||||||||
Schedule of Quarterly Results | The following table provides unaudited quarterly results (dollars in millions, except per share data): | |||||||||||||||||||||||||||||||
31-Dec-14 | 30-Sep-14 | 30-Jun-14 | 31-Mar-14 | 31-Dec-13 | 30-Sep-13 | 30-Jun-13 | 31-Mar-13 | |||||||||||||||||||||||||
Interest income | $ | 1,974 | $ | 1,926 | $ | 1,863 | $ | 1,833 | $ | 1,842 | $ | 1,787 | $ | 1,727 | $ | 1,708 | ||||||||||||||||
Interest expense | 302 | 288 | 274 | 270 | 273 | 278 | 297 | 298 | ||||||||||||||||||||||||
Net interest income | 1,672 | 1,638 | 1,589 | 1,563 | 1,569 | 1,509 | 1,430 | 1,410 | ||||||||||||||||||||||||
Provision for loan losses | 457 | 354 | 360 | 272 | 354 | 333 | 240 | 159 | ||||||||||||||||||||||||
Other income(1) | 365 | 552 | 583 | 515 | 560 | 553 | 611 | 582 | ||||||||||||||||||||||||
Other expense | 932 | 827 | 797 | 784 | 838 | 783 | 820 | 753 | ||||||||||||||||||||||||
Income before income tax expense | 648 | 1,009 | 1,015 | 1,022 | 937 | 946 | 981 | 1,080 | ||||||||||||||||||||||||
Income tax expense | 244 | 365 | 371 | 391 | 335 | 353 | 379 | 407 | ||||||||||||||||||||||||
Net income | $ | 404 | $ | 644 | $ | 644 | $ | 631 | $ | 602 | $ | 593 | $ | 602 | $ | 673 | ||||||||||||||||
Net income allocated to common stockholders(2) | $ | 392 | $ | 630 | $ | 630 | $ | 618 | $ | 588 | $ | 579 | $ | 588 | $ | 659 | ||||||||||||||||
Basic earnings per common share(2) | $ | 0.87 | $ | 1.37 | $ | 1.35 | $ | 1.31 | $ | 1.24 | $ | 1.2 | $ | 1.2 | $ | 1.33 | ||||||||||||||||
Diluted earnings per common share(2) | $ | 0.87 | $ | 1.37 | $ | 1.35 | $ | 1.31 | $ | 1.23 | $ | 1.2 | $ | 1.2 | $ | 1.33 | ||||||||||||||||
-1 | During the three months ended December 31, 2014, the Company made certain changes to its customer rewards program eliminating forfeitures. These changes resulted in a one-time expense of $178 million due to the reversal of the estimate for customer rewards forfeiture, a contra-account to accrued expenses and other liabilities. | |||||||||||||||||||||||||||||||
-2 | Because the inputs to net income allocated to common stockholders and earnings per share are calculated using weighted averages for the quarter, the sum of all four quarters may differ from the year to date amounts in the consolidated statements of income. |
Background_and_Basis_of_Presen2
Background and Basis of Presentation (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation percentage | 50.00% |
Cost method ownership percentage | 20.00% |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 3 Months Ended | |||
Oct. 02, 2013 | Jun. 02, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Dec. 31, 2014 | |
Accounting Policies [Line Items] | |||||||
Cash and due from banks | $846,000,000 | $719,000,000 | $846,000,000 | ||||
Interest-bearing deposits in other banks | 6,400,000,000 | 5,800,000,000 | 6,400,000,000 | ||||
Threshold charge-off period for bankruptcy and probate accounts | 60 days | ||||||
Fraudulent transaction charge off period | 90 days | ||||||
Impairment of goodwill | 0 | 0 | 0 | 27,000,000 | 0 | 0 | |
Advertising costs | 17,000,000 | 194,000,000 | 208,000,000 | 172,000,000 | |||
Unamortized deferred costs for loan origination | 63,000,000 | 43,000,000 | 63,000,000 | ||||
Customer rewards forfeiture reversal expense | 0 | 178,000,000 | 0 | 0 | |||
Credit card rewards cost adjusted for estimated forfeitures | 123,000,000 | 1,400,000,000 | 1,000,000,000 | 1,000,000,000 | |||
Liability for customer rewards adjusted for estimated forfeitures | 1,400,000,000 | 1,100,000,000 | 1,400,000,000 | ||||
Unamortized portion of the deferred incentive payments | 22,000,000 | 23,000,000 | 22,000,000 | ||||
Loan Lending Commitment Arrangement Fees [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Deferred revenue | 40,000,000 | 37,000,000 | 40,000,000 | ||||
Building [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 39 years | ||||||
Leasehold Improvements [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 10 years | ||||||
Computer Equipment [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 3 years | ||||||
Processing Equipment [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 6 years | ||||||
Minimum [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Delinquent loan qualification period | 30 days | ||||||
Minimum [Member] | Furniture and Fixtures [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 5 years | ||||||
Minimum [Member] | Equipment [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 3 years | ||||||
Minimum [Member] | Software Development [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 3 years | ||||||
Maximum [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Cash and cash equivalents maturity period | 90 days | ||||||
Maximum [Member] | Furniture and Fixtures [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 10 years | ||||||
Maximum [Member] | Equipment [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 10 years | ||||||
Maximum [Member] | Software Development [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Premises and equipment, useful life | 10 years | ||||||
Credit Card Receivable [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Threshold charge-off period for past due accounts | 180 days | ||||||
Amortization period for loan acquisition costs | 1 year | ||||||
Personal And Private Student Loan Member [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Threshold charge-off period for past due accounts | 120 days | ||||||
Discover Home Loans Business [Member] | |||||||
Accounting Policies [Line Items] | |||||||
Impairment of goodwill | $27,000,000 |
Investments_Narrative_Details
Investments (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Investment Holdings [Line Items] | ||||
Other than temporary impairment loss on investments | $0 | $0 | $0 | $0 |
Community Reinvestment Act [Member] | Other Assets [Member] | ||||
Investment Holdings [Line Items] | ||||
Equity method investments | 325 | 308 | ||
Community Reinvestment Act [Member] | Other Liabilities [Member] | ||||
Investment Holdings [Line Items] | ||||
Contingent liabilities related to equity method investments | $51 | $52 |
Investments_Schedule_of_Invest
Investments (Schedule of Investment Securities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | ||||
In Millions, unless otherwise specified | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | $3,949 | $4,991 | $6,232 | $6,221 | ||||
US Treasury Securities [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 1,330 | [1] | 2,058 | [1] | 2,460 | 2,463 | ||
Derivative collateral | 16 | 9 | ||||||
US Government Agency Securities [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 1,033 | 1,561 | 2,233 | 2,237 | ||||
States and Political Subdivisions of States [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 10 | 15 | 34 | 34 | ||||
Total Other Securities [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 1,576 | 1,357 | 1,505 | 1,487 | ||||
Credit Card Asset-Backed Securities of Other Issuers [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 0 | 6 | 151 | 159 | ||||
Corporate Debt Securities [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | 0 | [2] | 0 | [2] | 0 | [2] | 75 | [2] |
Residential Mortgage Backed Securities - Agency [Member] | ||||||||
Investment Holdings [Line Items] | ||||||||
Investment securities | $1,576 | [3] | $1,351 | [3] | $1,354 | [3] | $1,253 | [3] |
[1] | Includes $16 million and $9 million of U.S. Treasury securities pledged as swap collateral in lieu of cash as of December 31, 2014 and 2013, respectively. | |||||||
[2] | Amount represents corporate debt obligations issued under the Temporary Liquidity Guarantee Program (TLGP) that are guaranteed by the Federal Deposit Insurance Corporation (FDIC). | |||||||
[3] | 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, Gross Unrealized Losses and Fair Value) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | $3,811 | [1] | $4,900 | [1] |
Available-for-sale investment securities, gross unrealized gains | 37 | [1] | 53 | [1] |
Available-for-sale investment securities, gross unrealized losses | -1 | [1] | -22 | [1] |
Available-for-sale investment securities, fair value | 3,847 | [1] | 4,931 | [1] |
Held-to-maturity investment securities, amortized cost | 102 | [2] | 60 | [2] |
Held-to-maturity investment securities, gross unrealized gains | 2 | [2] | 0 | [2] |
Held-to-maturity investment securities, gross unrealized losses | 0 | [2] | -2 | [2] |
Held-to-maturity investment securities, fair value | 104 | [2] | 58 | [2] |
US Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | 1,317 | [1] | 2,030 | [1] |
Available-for-sale investment securities, gross unrealized gains | 12 | [1] | 27 | [1] |
Available-for-sale investment securities, gross unrealized losses | 0 | [1] | 0 | [1] |
Available-for-sale investment securities, fair value | 1,329 | [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 Agency Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | 1,021 | [1] | 1,535 | [1] |
Available-for-sale investment securities, gross unrealized gains | 12 | [1] | 26 | [1] |
Available-for-sale investment securities, gross unrealized losses | 0 | [1] | 0 | [1] |
Available-for-sale investment securities, fair value | 1,033 | [1] | 1,561 | [1] |
Credit Card Asset-Backed Securities of Other Issuers [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] | ||
Residential Mortgage Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | 1,473 | [1] | 1,329 | [1] |
Available-for-sale investment securities, gross unrealized gains | 13 | [1] | 0 | [1] |
Available-for-sale investment securities, gross unrealized losses | -1 | [1] | -22 | [1] |
Available-for-sale investment securities, fair value | 1,485 | [1] | 1,307 | [1] |
Held-to-maturity investment securities, amortized cost | 91 | [2],[4] | 44 | [2],[4] |
Held-to-maturity investment securities, gross unrealized gains | 2 | [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 | 93 | [2],[4] | 43 | [2],[4] |
States and Political Subdivisions of States [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] |
[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_Schedule_of_Fair_V
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 $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | securities | securities |
Residential Mortgage Backed Securities - Agency [Member] | ||
Investment Holdings [Line Items] | ||
Available-for-sale investment securities, number of securities in a loss position (in securities) | 8 | 23 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $97 | $1,097 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | 0 | -20 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, fair value | 225 | 48 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | -1 | -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 | |
States and Political Subdivisions of States [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_Investments_Schedu
Investments Investments (Schedule of Proceeds, Recognized Gains and Losses and Unrealized Gains and Losses) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds related to maturities or redemptions of investment securities | $113 | $250 | $733 | $1,795 |
Proceeds from the sales of available-for-sale investment securities | 0 | 1,220 | 719 | 0 |
Gains on sales of available-for-sale investment securities | 0 | 4 | 2 | 0 |
Net unrealized (losses) gains recorded in other comprehensive income, before-tax | -5 | 5 | -82 | 30 |
Net unrealized (losses) gains recorded in other comprehensive income, after-tax | ($3) | $4 | ($52) | $19 |
Investments_Schedule_of_Maturi
Investments (Schedule of Maturities and Weighted Average Yields of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale securities, debt maturities, one year or less, amortized cost | $1,241 | |||
Available-for-sale securities, debt maturities, after one year through five years, amortized cost | 1,097 | |||
Available-for-sale securities, debt maturities, after five years through ten years, amortized cost | 493 | |||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 980 | |||
Available-for-sale investment securities, amortized cost | 3,811 | [1] | 4,900 | [1] |
Held-to-maturity securities, debt maturities, one year or less, amortized cost | 1 | |||
Held-to-maturity securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, amortized cost | 101 | |||
Held-to-maturity investment securities, amortized cost | 102 | [2] | 60 | [2] |
Available-for-sale securities, debt maturities, one year or less, fair value | 1,251 | |||
Available-for-sale securities, debt maturities, after one year through five years, fair value | 1,111 | |||
Available-for-sale securities, debt maturities, after five years through ten years, fair value | 495 | |||
Available-for-sale securities, debt maturities, after ten years, fair value | 990 | |||
Available-for-sale investment securities, fair value | 3,847 | [1] | 4,931 | [1] |
Held-to-maturity securities, debt maturities, one year or less, fair value | 1 | |||
Held-to-maturity securities, debt maturities, after one year through five years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, fair value | 103 | |||
Held-to-maturity securities, debt maturities, fair value | 104 | [2] | 58 | [2] |
Available-for-sale securities, debt maturities, one year or less, percentage | 1.68% | [3] | ||
Available-for-sale securities, debt maturities, after one year through five years, percentage | 1.44% | [3] | ||
Available-for-sale securities, debt maturities, after five years through ten years, percentage | 1.53% | [3] | ||
Available-for-sale securities, debt maturities, after ten years, percentage | 2.05% | [3] | ||
Available-for-sale securities, debt maturities, percentage | 1.69% | [3] | ||
Held-to-maturity securities, debt maturities, one year or less, percentage | 0.89% | |||
Held-to-maturity securities, debt maturities, after one year through five years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after five years though ten years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after ten years, percentage | 2.99% | |||
Held-to-maturity securities, debt maturities, percentage | 2.98% | |||
US Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale securities, debt maturities, one year or less, amortized cost | 716 | |||
Available-for-sale securities, debt maturities, after one year through five years, amortized cost | 601 | |||
Available-for-sale securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 0 | |||
Available-for-sale investment securities, amortized cost | 1,317 | [1] | 2,030 | [1] |
Held-to-maturity securities, debt maturities, one year or less, amortized cost | 1 | |||
Held-to-maturity securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, amortized cost | 0 | |||
Held-to-maturity investment securities, amortized cost | 1 | [2],[4] | 1 | [2],[4] |
Available-for-sale securities, debt maturities, one year or less, fair value | 721 | |||
Available-for-sale securities, debt maturities, after one year through five years, fair value | 608 | |||
Available-for-sale securities, debt maturities, after five years through ten years, fair value | 0 | |||
Available-for-sale securities, debt maturities, after ten years, fair value | 0 | |||
Available-for-sale investment securities, fair value | 1,329 | [1] | 2,057 | [1] |
Held-to-maturity securities, debt maturities, one year or less, fair value | 1 | |||
Held-to-maturity securities, debt maturities, after one year through five years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, fair value | 1 | [2],[4] | 1 | [2],[4] |
Available-for-sale securities, debt maturities, one year or less, percentage | 1.52% | [3] | ||
Available-for-sale securities, debt maturities, after one year through five years, percentage | 1.37% | [3] | ||
Available-for-sale securities, debt maturities, after five years through ten years, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, after ten years, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, percentage | 1.45% | [3] | ||
Held-to-maturity securities, debt maturities, one year or less, percentage | 0.07% | |||
Held-to-maturity securities, debt maturities, after one year through five years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after five years though ten years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after ten years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, percentage | 0.07% | |||
US Government Agency Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale securities, debt maturities, one year or less, amortized cost | 525 | |||
Available-for-sale securities, debt maturities, after one year through five years, amortized cost | 496 | |||
Available-for-sale securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 0 | |||
Available-for-sale investment securities, amortized cost | 1,021 | [1] | 1,535 | [1] |
Available-for-sale securities, debt maturities, one year or less, fair value | 530 | |||
Available-for-sale securities, debt maturities, after one year through five years, fair value | 503 | |||
Available-for-sale securities, debt maturities, after five years through ten years, fair value | 0 | |||
Available-for-sale securities, debt maturities, after ten years, fair value | 0 | |||
Available-for-sale investment securities, fair value | 1,033 | [1] | 1,561 | [1] |
Available-for-sale securities, debt maturities, one year or less, percentage | 1.90% | [3] | ||
Available-for-sale securities, debt maturities, after one year through five years, percentage | 1.53% | [3] | ||
Available-for-sale securities, debt maturities, after five years through ten years, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, after ten years, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, percentage | 1.72% | [3] | ||
Residential Mortgage Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale securities, debt maturities, one year or less, amortized cost | 0 | |||
Available-for-sale securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Available-for-sale securities, debt maturities, after five years through ten years, amortized cost | 493 | |||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 980 | |||
Available-for-sale investment securities, amortized cost | 1,473 | [1] | 1,329 | [1] |
Held-to-maturity securities, debt maturities, one year or less, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, amortized cost | 91 | |||
Held-to-maturity investment securities, amortized cost | 91 | [2],[5] | 44 | [2],[5] |
Available-for-sale securities, debt maturities, one year or less, fair value | 0 | |||
Available-for-sale securities, debt maturities, after one year through five years, fair value | 0 | |||
Available-for-sale securities, debt maturities, after five years through ten years, fair value | 495 | |||
Available-for-sale securities, debt maturities, after ten years, fair value | 990 | |||
Available-for-sale investment securities, fair value | 1,485 | [1] | 1,307 | [1] |
Held-to-maturity securities, debt maturities, one year or less, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after one year through five years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, fair value | 93 | |||
Held-to-maturity securities, debt maturities, fair value | 93 | [2],[5] | 43 | [2],[5] |
Available-for-sale securities, debt maturities, one year or less, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, after one year through five years, percentage | 0.00% | [3] | ||
Available-for-sale securities, debt maturities, after five years through ten years, percentage | 1.53% | [3] | ||
Available-for-sale securities, debt maturities, after ten years, percentage | 2.05% | [3] | ||
Available-for-sale securities, debt maturities, percentage | 1.88% | [3] | ||
Held-to-maturity securities, debt maturities, one year or less, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after one year through five years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after five years though ten years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after ten years, percentage | 2.80% | |||
Held-to-maturity securities, debt maturities, percentage | 2.80% | |||
States and Political Subdivisions of States [Member] | ||||
Investment Holdings [Line Items] | ||||
Held-to-maturity securities, debt maturities, one year or less, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, amortized cost | 10 | |||
Held-to-maturity investment securities, amortized cost | 10 | [2] | 15 | [2] |
Held-to-maturity securities, debt maturities, one year or less, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after one year through five years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after five years through ten years, fair value | 0 | |||
Held-to-maturity securities, debt maturities, after ten years, fair value | 10 | |||
Held-to-maturity securities, debt maturities, fair value | $10 | [2] | $14 | [2] |
Held-to-maturity securities, debt maturities, one year or less, percentage | 4.27% | |||
Held-to-maturity securities, debt maturities, after one year through five years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after five years though ten years, percentage | 0.00% | |||
Held-to-maturity securities, debt maturities, after ten years, percentage | 4.69% | |||
Held-to-maturity securities, debt maturities, percentage | 4.68% | |||
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | The weighted-average yield for available-for-sale investment securities is calculated based on the amortized cost. | |||
[4] | Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. | |||
[5] | 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_Schedu1
Investments Investments (Schedule of Interest on Investment Securities) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Investments, Debt and Equity Securities [Abstract] | ||||
Taxable interest | $7 | $66 | $73 | $78 |
Tax exempt interest | 0 | 1 | 1 | 2 |
Total income from investment securities | $7 | $67 | $74 | $80 |
Loan_Receivables_Narrative_Det
Loan Receivables (Narrative) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Nov. 30, 2011 | |||||
segment | |||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||
Number of loan portfolio segments | 3 | ||||||||||||||||
Private student loan forbearance lifetime cap | 12 months | ||||||||||||||||
Private student loans including PCI in forbearance | $49,000,000 | $110,000,000 | $49,000,000 | $110,000,000 | |||||||||||||
Private student loans in forbearance as a percentage of student loans in repayment and forbearance (in percent) | 0.80% | 1.90% | 0.80% | 1.90% | |||||||||||||
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent) | 39.00% | 35.00% | 40.00% | 46.00% | |||||||||||||
Provision for loan losses on PCI loans | 178,000,000 | 457,000,000 | 354,000,000 | 360,000,000 | 272,000,000 | 354,000,000 | 333,000,000 | 240,000,000 | 159,000,000 | 1,443,000,000 | 1,086,000,000 | 848,000,000 | |||||
Allowance for loan losses on PCI loans | 1,788,000,000 | 1,746,000,000 | 1,648,000,000 | 1,746,000,000 | 1,648,000,000 | 1,725,000,000 | 2,205,000,000 | ||||||||||
Credit Card Receivable [Member] | |||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||
Maximum period of payment reduction for the temporary reduced payment program | 12 months | ||||||||||||||||
Permanent workout program maturity | 60 months | ||||||||||||||||
Interest and fees forgiven due to credit card loan modification program | 3,000,000 | 42,000,000 | 40,000,000 | 44,000,000 | |||||||||||||
Provision for loan losses on PCI loans | 165,000,000 | 1,259,000,000 | 893,000,000 | 724,000,000 | |||||||||||||
Allowance for loan losses on PCI loans | 1,613,000,000 | 1,474,000,000 | 1,406,000,000 | 1,474,000,000 | 1,406,000,000 | 1,554,000,000 | 2,070,000,000 | ||||||||||
Threshold charge-off period for past due accounts | 180 days | ||||||||||||||||
PCI Student Loans [Member] | |||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||
Purchased credit-impaired loans outstanding balance | 3,900,000,000 | 4,600,000,000 | 3,900,000,000 | 4,600,000,000 | |||||||||||||
Purchased credit-impaired loans | 3,660,000,000 | [1] | 4,178,000,000 | [1] | 3,660,000,000 | [1] | 4,178,000,000 | [1] | |||||||||
Provision for loan losses on PCI loans | 0 | 28,000,000 | |||||||||||||||
Allowance for loan losses on PCI loans | $28,000,000 | $28,000,000 | $28,000,000 | $28,000,000 | |||||||||||||
30 days or more delinquency rate for purchased credit-impaired loans (in percent) | 2.35% | 2.33% | 2.35% | 2.33% | |||||||||||||
90 days or more delinquency rate for purchased credit-impaired loans (in percent) | 0.75% | 0.80% | 0.75% | 0.80% | |||||||||||||
Threshold charge-off period for past due accounts | 120 days | ||||||||||||||||
Net charge-off rate for PCI loans (in percent) | 1.53% | 0.64% | 1.36% | 1.41% | |||||||||||||
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 programs | 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 | ||||||||||||||||
[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 December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities. |
Loan_Receivables_Schedule_of_L
Loan Receivables (Schedule of Loan Receivables) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2011 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Total loan receivables | $69,969,000,000 | $65,771,000,000 | |||||
Allowance for loan losses | -1,746,000,000 | -1,648,000,000 | -1,788,000,000 | -1,725,000,000 | -2,205,000,000 | ||
Net loan receivables | 68,223,000,000 | 64,123,000,000 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Total loan receivables | 32,304,000,000 | 33,360,000,000 | |||||
Allowance for loan losses | -833,000,000 | -861,000,000 | |||||
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Credit card loans | 30,335,000,000 | [1] | 31,112,000,000 | [1] | |||
Allowance for loan losses | -805,000,000 | [1] | -833,000,000 | [1] | |||
Sellers' interest | 8,596,000,000 | 10,898,000,000 | |||||
Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Purchased credit-impaired loans | 1,969,000,000 | 2,248,000,000 | |||||
Allowance for loan losses | -28,000,000 | [2] | -28,000,000 | [2] | |||
Credit Card Receivable [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Credit card loans | 56,128,000,000 | [3] | 53,150,000,000 | [3] | |||
Total loan receivables | 56,128,000,000 | 53,150,000,000 | |||||
Allowance for loan losses | -1,474,000,000 | -1,406,000,000 | -1,613,000,000 | -1,554,000,000 | -2,070,000,000 | ||
Credit Card Receivable [Member] | Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Underlying investors' interest in trust debt | 21,700,000,000 | 20,200,000,000 | |||||
Total Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Other loans | 10,181,000,000 | 8,443,000,000 | |||||
Total Other Loans [Member] | Personal Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Other loans | 5,007,000,000 | 4,191,000,000 | |||||
Allowance for loan losses | -120,000,000 | -112,000,000 | -99,000,000 | -97,000,000 | -82,000,000 | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Other loans | 4,850,000,000 | 3,969,000,000 | |||||
Total Other Loans [Member] | Mortgage Loans Held For Sale [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Other loans | 122,000,000 | [4] | 148,000,000 | [4] | |||
Total Other Loans [Member] | Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Other loans | 202,000,000 | [5] | 135,000,000 | [5] | |||
Allowance for loan losses | -17,000,000 | [6] | -17,000,000 | [6] | -1,000,000 | -1,000,000 | 0 |
PCI Student Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Purchased credit-impaired loans | 3,660,000,000 | [7] | 4,178,000,000 | [7] | |||
Allowance for loan losses | -28,000,000 | -28,000,000 | |||||
PCI Student Loans [Member] | Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loans pledged as collateral | $2,000,000,000 | $2,200,000,000 | |||||
[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. | ||||||
[2] | 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. | ||||||
[3] | Amounts include $21.7 billion and $20.2 billion underlying investors’ interest in trust debt at December 31, 2014 and 2013, respectively, and $8.6 billion and $10.9 billion in seller's interest at December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities for further information. | ||||||
[4] | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. | ||||||
[5] | Other includes home equity loans. | ||||||
[6] | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. | ||||||
[7] | 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 December 31, 2014 and 2013, respectively. See Note 5: Credit Card and Student Loan Securitization Activities. |
Loan_Receivables_Schedule_of_D
Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | $583 | $535 | ||||
Loan receivables, 90 or more days delinquent | 517 | 475 | ||||
Loan receivables, total past due | 1,100 | 1,010 | ||||
Loan receivables, 90 or more days delinquent and accruing | 477 | 434 | ||||
Loan receivables, total non-accruing | 183 | 200 | ||||
Credit Card Receivable [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | 491 | 465 | ||||
Loan receivables, 90 or more days delinquent | 480 | 447 | ||||
Loan receivables, total past due | 971 | 912 | ||||
Loan receivables, 90 or more days delinquent and accruing | 442 | [1] | 408 | [1] | ||
Loan receivables, total non-accruing | 157 | [2] | 155 | [2] | ||
Estimated gross interest income that would have been recorded based on original terms | 3 | 27 | 29 | 32 | ||
Credit Card Receivable [Member] | Internal And External Loan Modification Programs [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 90 or more days delinquent and accruing | 43 | 41 | ||||
Total Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | 92 | 70 | ||||
Loan receivables, 90 or more days delinquent | 37 | 28 | ||||
Loan receivables, total past due | 129 | 98 | ||||
Loan receivables, 90 or more days delinquent and accruing | 35 | 26 | ||||
Loan receivables, total non-accruing | 26 | 45 | ||||
Personal Loans [Member] | Total Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | 29 | 21 | ||||
Loan receivables, 90 or more days delinquent | 11 | 8 | ||||
Loan receivables, total past due | 40 | 29 | ||||
Loan receivables, 90 or more days delinquent and accruing | 10 | [3] | 8 | [3] | ||
Loan receivables, total non-accruing | 5 | 5 | ||||
Personal Loans [Member] | Total Other Loans [Member] | Internal And External Loan Modification Programs [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 90 or more days delinquent and accruing | 3 | 2 | ||||
Private Student Loans (Excluding PCI) [Member] | Total Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | 62 | 48 | ||||
Loan receivables, 90 or more days delinquent | 25 | 18 | ||||
Loan receivables, total past due | 87 | 66 | ||||
Loan receivables, 90 or more days delinquent and accruing | 25 | [4] | 18 | [4] | ||
Loan receivables, total non-accruing | 0 | 0 | ||||
Private Student Loans (Excluding PCI) [Member] | Total Other Loans [Member] | Entity Loan Modification Program [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 90 or more days delinquent and accruing | 5 | 3 | ||||
Other Loans [Member] | Total Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, 30 to 89 days delinquent | 1 | 1 | ||||
Loan receivables, 90 or more days delinquent | 1 | 2 | ||||
Loan receivables, total past due | 2 | 3 | ||||
Loan receivables, 90 or more days delinquent and accruing | 0 | 0 | ||||
Loan receivables, total non-accruing | $21 | $40 | ||||
[1] | Credit card loans that are 90 or more days delinquent and accruing interest include $43 million and $41 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. | |||||
[2] | 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 $27 million, $29 million, $32 million and $3 million for the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively. The Company does not separately track 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' current balances and most recent interest rates. | |||||
[3] | Personal loans that are 90 or more days delinquent and accruing interest include $3 million and $2 million of loans accounted for as troubled debt restructurings at both December 31, 2014 and 2013, respectively. | |||||
[4] | Private student loans that are 90 or more days delinquent and accruing interest include $5 million and $3 million of loans accounted for as troubled debt restructurings at December 31, 2014 and 2013, respectively. |
Loan_Receivables_Schedule_of_N
Loan Receivables (Schedule of Net Charge-offs) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Charge Offs [Line Items] | ||||
Net charge-offs | $115 | $1,345 | $1,226 | $1,328 |
Credit Card Receivable [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 106 | 1,191 | 1,100 | 1,240 |
Excluding PCI Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 115 | 1,345 | 1,226 | 1,328 |
Net charge-off rate | 2.37% | 2.17% | 2.14% | 2.50% |
Excluding PCI Loans [Member] | Credit Card Receivable [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 106 | 1,191 | 1,100 | 1,240 |
Net charge-off rate | 2.47% | 2.27% | 2.21% | 2.62% |
Excluding PCI Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 9 | 154 | 126 | 88 |
Net charge-off rate | 1.61% | 1.63% | 1.67% | 1.52% |
Including PCI Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 115 | 1,345 | 1,226 | 1,328 |
Net charge-off rate | 2.19% | 2.04% | 1.98% | 2.29% |
Personal Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 7 | 94 | 79 | 69 |
Personal Loans [Member] | Excluding PCI Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 7 | 94 | 79 | 69 |
Net charge-off rate | 2.52% | 2.04% | 2.13% | 2.33% |
Private Student Loans (Excluding PCI) [Member] | Excluding PCI Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 2 | 57 | 46 | 19 |
Net charge-off rate | 0.81% | 1.29% | 1.30% | 0.73% |
Other Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | 0 | 3 | 1 | 0 |
Other Loans [Member] | Excluding PCI Loans [Member] | Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $0 | $3 | $1 | $0 |
Net charge-off rate | 0.00% | 0.76% | 1.96% | 0.10% |
Loan_Receivables_Schedule_of_C
Loan Receivables (Schedule of Credit Risk Profile by FICO Score) (Details) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Credit Card Receivable [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% | ||
Total Other Loans [Member] | Personal Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Credit risk profile by FICO score, 660 and above | 96.00% | 97.00% | ||
Credit risk profile by FICO score, less than 660 or no score | 4.00% | 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 | 96.00% | [1] | 95.00% | [1] |
Credit risk profile by FICO score, less than 660 or no score | 4.00% | [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 $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||||||
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ||||||||||||||||||||
Allowance for loan losses, balance at beginning of period | $1,725 | $1,648 | $1,788 | $1,648 | $1,788 | $2,205 | ||||||||||||||
Provision for loan losses | 178 | 457 | 354 | 360 | 272 | 354 | 333 | 240 | 159 | 1,443 | 1,086 | 848 | ||||||||
Charge-offs | -156 | -1,806 | -1,739 | -1,909 | ||||||||||||||||
Recoveries | 41 | 461 | 513 | 581 | ||||||||||||||||
Net charge-offs | -115 | -1,345 | -1,226 | -1,328 | ||||||||||||||||
Allowance for loan losses, balance at end of period | 1,788 | 1,746 | 1,648 | 1,746 | 1,648 | 1,725 | ||||||||||||||
Credit Card Receivable [Member] | ||||||||||||||||||||
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ||||||||||||||||||||
Allowance for loan losses, balance at beginning of period | 1,554 | 1,406 | 1,613 | 1,406 | 1,613 | 2,070 | ||||||||||||||
Provision for loan losses | 165 | 1,259 | 893 | 724 | ||||||||||||||||
Charge-offs | -146 | -1,636 | -1,604 | -1,817 | ||||||||||||||||
Recoveries | 40 | 445 | 504 | 577 | ||||||||||||||||
Net charge-offs | -106 | -1,191 | -1,100 | -1,240 | ||||||||||||||||
Allowance for loan losses, balance at end of period | 1,613 | 1,474 | 1,406 | 1,474 | 1,406 | 1,554 | ||||||||||||||
Total Other Loans [Member] | Personal Loans [Member] | ||||||||||||||||||||
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ||||||||||||||||||||
Allowance for loan losses, balance at beginning of period | 97 | 112 | 99 | 112 | 99 | 82 | ||||||||||||||
Provision for loan losses | 9 | 102 | 92 | 84 | ||||||||||||||||
Charge-offs | -8 | -105 | -86 | -73 | ||||||||||||||||
Recoveries | 1 | 11 | 7 | 4 | ||||||||||||||||
Net charge-offs | -7 | -94 | -79 | -69 | ||||||||||||||||
Allowance for loan losses, balance at end of period | 99 | 120 | 112 | 120 | 112 | 97 | ||||||||||||||
Total Other Loans [Member] | Other Loans [Member] | ||||||||||||||||||||
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ||||||||||||||||||||
Allowance for loan losses, balance at beginning of period | 1 | 17 | [1] | 1 | 17 | [1] | 1 | 0 | ||||||||||||
Provision for loan losses | 0 | 3 | 17 | 1 | ||||||||||||||||
Charge-offs | 0 | -3 | -1 | 0 | ||||||||||||||||
Recoveries | 0 | 0 | 0 | 0 | ||||||||||||||||
Net charge-offs | 0 | -3 | -1 | 0 | ||||||||||||||||
Allowance for loan losses, balance at end of period | 1 | 17 | [1] | 17 | [1] | 17 | [1] | 17 | [1] | 1 | ||||||||||
Student Loans [Member] | ||||||||||||||||||||
Allowance For Loan And Lease Losses Writeoffs Net Abstract [Roll Forward] | ||||||||||||||||||||
Allowance for loan losses, balance at beginning of period | 73 | [2] | 113 | [2] | 75 | [2] | 113 | [2] | 75 | [2] | 53 | [2] | ||||||||
Provision for loan losses | 4 | [2] | 79 | [2] | 84 | [2] | 39 | [2] | ||||||||||||
Charge-offs | -2 | [2] | -62 | [2] | -48 | [2] | -19 | [2] | ||||||||||||
Recoveries | 0 | [2] | 5 | [2] | 2 | [2] | 0 | [2] | ||||||||||||
Net charge-offs | -2 | [2] | -57 | [2] | -46 | [2] | -19 | [2] | ||||||||||||
Allowance for loan losses, balance at end of period | $75 | [2] | $135 | [2] | $113 | [2] | $135 | [2] | $113 | [2] | $73 | [2] | ||||||||
[1] | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. | |||||||||||||||||||
[2] | Includes both PCI and non-PCI private student loans. |
Loan_Receivables_Schedule_of_N1
Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Loans and Leases Receivable Disclosure [Abstract] | ||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $26 | $283 | $280 | $345 |
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $5 | $69 | $59 | $67 |
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 $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2011 | |||||
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 | $1,525 | $1,404 | ||||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 193 | [1],[2] | 216 | [1],[2] | ||||||
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 28 | 28 | ||||||||
Allowance for loan losses | 1,746 | 1,648 | 1,788 | 1,725 | 2,205 | |||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 64,997 | 60,184 | ||||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 1,190 | [1],[2] | 1,261 | [1],[2] | ||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 3,660 | 4,178 | ||||||||
Total recorded investment | 69,847 | 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 | 1,314 | 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 | ||||||||
Allowance for loan losses | 1,474 | 1,406 | 1,613 | 1,554 | 2,070 | |||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 55,091 | 52,027 | ||||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 1,037 | [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 recorded investment | 56,128 | 53,150 | ||||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 878 | 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 | 114 | 109 | ||||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 6 | [1],[2] | 3 | [1],[2] | ||||||
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | 0 | ||||||||
Allowance for loan losses | 120 | 112 | 99 | 97 | 82 | |||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 4,952 | 4,160 | ||||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 55 | [1],[2] | 31 | [1],[2] | ||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | 0 | ||||||||
Total recorded investment | 5,007 | 4,191 | ||||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 54 | 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 | 96 | [3] | 76 | [3] | ||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 11 | [1],[2],[3] | 9 | [1],[2],[3] | ||||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 4,812 | [3] | 3,941 | [3] | ||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 38 | [1],[2],[3] | 28 | [1],[2],[3] | ||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 37 | 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 | 1 | [4] | 1 | [4] | ||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | 16 | [1],[2],[4] | 16 | [1],[2],[4] | ||||||
Allowance for loan losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | [4] | 0 | [4] | ||||||
Allowance for loan losses | 17 | [4] | 17 | [4] | 1 | 1 | 0 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 142 | [4] | 56 | [4] | ||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | 60 | [1],[2],[4] | 79 | [1],[2],[4] | ||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | [4] | 0 | [4] | ||||||
Total recorded investment | 202 | [4] | 135 | [4] | ||||||
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 | [3] | 28 | [3] | ||||||
Allowance for loan losses | 28 | 28 | ||||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 3,660 | [3] | 4,178 | [3] | ||||||
Student Loans [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Allowance for loan losses | 135 | [3] | 113 | [3] | 75 | [3] | 73 | [3] | 53 | [3] |
Total recorded investment | $8,510 | [3] | $8,147 | [3] | ||||||
[1] | The unpaid principal balance of credit card loans was $878 million and $900 million at December 31, 2014 and 2013 respectively. The unpaid principal balance of personal loans was $54 million and $31 million at December 31, 2014 and 2013, respectively. The unpaid principal balance of student loans was $37 million and $26 million at December 31, 2014 and 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. | |||||||||
[3] | Includes both PCI and non-PCI private student loans. | |||||||||
[4] | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. |
Loan_Receivables_Schedule_of_T
Loan Receivables (Schedule of Troubled Debt Restructurings) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
Modified Credit Card Loans [Member] | Credit Card Receivable [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Average recorded investment in loans | $281 | [1] | $252 | [1] | $269 | [1] | $255 | [1] |
Interest income recognized during period loans were impaired | 4 | [1],[2] | 45 | [1],[2] | 49 | [1],[2] | 48 | [1],[2] |
Gross interest income that would have been recorded with original terms | 0 | [1],[3] | 3 | [1],[3] | 3 | [1],[3] | ||
Internal Programs [Member] | Credit Card Receivable [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Average recorded investment in loans | 509 | 452 | 468 | 557 | ||||
Interest income recognized during period loans were impaired | 1 | [2] | 12 | [2] | 9 | [2] | 17 | [2] |
Gross interest income that would have been recorded with original terms | 6 | [3] | 61 | [3] | 66 | [3] | 73 | [3] |
External Programs [Member] | Credit Card Receivable [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Average recorded investment in loans | 530 | 365 | 463 | 603 | ||||
Interest income recognized during period loans were impaired | 4 | [2] | 27 | [2] | 36 | [2] | 51 | [2] |
Gross interest income that would have been recorded with original terms | 1 | [3] | 13 | [3] | 11 | [3] | 9 | [3] |
Internal And External Loan Modification Programs [Member] | Personal Loans [Member] | Total Other Loans [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Average recorded investment in loans | 21 | 48 | 26 | 16 | ||||
Interest income recognized during period loans were impaired | 0 | [2] | 5 | [2] | 3 | [2] | 2 | [2] |
Gross interest income that would have been recorded with original terms | 1 | [3] | 1 | [3] | ||||
Entity Loan Modification Program [Member] | Student Loans [Member] | Total Other Loans [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Average recorded investment in loans | 16 | [4] | 32 | [4] | 22 | [4] | 10 | [4] |
Interest income recognized during period loans were impaired | $0 | [2],[4] | $3 | [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 or loan modification classified as a TDR have not been 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 $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
accounts | accounts | accounts | accounts | |
Credit Card Receivable [Member] | Internal Programs [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts | 3,078 | 48,041 | 40,653 | 50,946 |
Accounts that entered a loan modification program during the period, balances | $19 | $316 | $256 | $345 |
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 | 2,614 | 32,443 | 35,020 | 40,530 |
Accounts that entered a loan modification program during the period, balances | 14 | 169 | 189 | 227 |
Total Other Loans [Member] | Personal Loans [Member] | Internal And External Loan Modification Programs [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts | 120 | 3,528 | 2,178 | 1,555 |
Accounts that entered a loan modification program during the period, balances | 2 | 42 | 27 | 20 |
Total Other Loans [Member] | Student Loans [Member] | Entity Loan Modification Program [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts | 60 | 1,453 | 877 | 470 |
Accounts that entered a loan modification program during the period, balances | $2 | $21 | $17 | $11 |
Loan_Receivables_Loan_Receivab1
Loan Receivables Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
accounts | accounts | accounts | accounts | |||||
Financing Receivable, Modifications [Line Items] | ||||||||
Amount of missed payments after which a customer defaults from a modification program | 2 | |||||||
Student Loans [Member] | ||||||||
Financing Receivable, Modifications [Line Items] | ||||||||
Delinquency days to default | 60 days | |||||||
Credit Card Receivable [Member] | Internal Programs [Member] | ||||||||
Financing Receivable, Modifications [Line Items] | ||||||||
Troubled debt restructurings that subsequently defaulted, number of accounts | 945 | [1],[2] | 10,195 | [1],[2] | 9,186 | [1],[2] | 15,703 | [1],[2] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $6 | [1],[2] | $62 | [1],[2] | $57 | [1],[2] | $106 | [1],[2] |
Credit Card Receivable [Member] | External Programs [Member] | ||||||||
Financing Receivable, Modifications [Line Items] | ||||||||
Troubled debt restructurings that subsequently defaulted, number of accounts | 722 | [1],[2] | 7,363 | [1],[2] | 8,481 | [1],[2] | 8,543 | [1],[2] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | 3 | [1],[2] | 30 | [1],[2] | 36 | [1],[2] | 40 | [1],[2] |
Total Other Loans [Member] | Personal Loans [Member] | Internal And External Loan Modification Programs [Member] | ||||||||
Financing Receivable, Modifications [Line Items] | ||||||||
Troubled debt restructurings that subsequently defaulted, number of accounts | 22 | [1] | 433 | [1] | 284 | [1] | 343 | [1] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | 0 | [1] | 5 | [1] | 3 | [1] | 4 | [1] |
Total Other Loans [Member] | Student Loans [Member] | Entity Loan Modification Program [Member] | ||||||||
Financing Receivable, Modifications [Line Items] | ||||||||
Troubled debt restructurings that subsequently defaulted, number of accounts | 42 | [3] | 1,155 | [3] | 628 | [3] | 172 | [3] |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $1 | [3] | $18 | [3] | $12 | [3] | $4 | [3] |
[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 $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Accretable yield, balance at beginning of period | $2,096 | $1,580 | $2,072 | $2,580 |
Accretion into interest income | -24 | -260 | -272 | -303 |
Other changes in expected cash flows | 0 | 21 | -220 | -181 |
Accretable yield, balance at end of period | $2,072 | $1,341 | $1,580 | $2,096 |
Loan_Receivables_Loan_Receivab2
Loan Receivables Loan Receivables (Schedule of Initial Unpaid Principal Balance of Mortgage Loans Sold by Type) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
Mortgage Loans on Real Estate [Line Items] | ||||||||
Initial unpaid principal balance of mortgage loans, amount | $363 | $2,736 | $4,015 | $1,726 | ||||
Initial unpaid principal balance of mortgage loans, percentage | 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 | 218 | [1] | 2,484 | [1] | 2,721 | [1] | 1,213 | [1] |
Initial unpaid principal balance of mortgage loans, percentage | 60.06% | [1] | 90.79% | [1] | 67.77% | [1] | 70.28% | [1] |
FHA Loans [Member] | ||||||||
Mortgage Loans on Real Estate [Line Items] | ||||||||
Initial unpaid principal balance of mortgage loans, amount | 145 | [2] | 212 | [2] | 1,290 | [2] | 513 | [2] |
Initial unpaid principal balance of mortgage loans, percentage | 39.94% | [2] | 7.75% | [2] | 32.13% | [2] | 29.72% | [2] |
Jumbo Mortgage Loans [Member] | ||||||||
Mortgage Loans on Real Estate [Line Items] | ||||||||
Initial unpaid principal balance of mortgage loans, amount | 0 | [3] | 34 | [3] | 4 | [3] | 0 | [3] |
Initial unpaid principal balance of mortgage loans, percentage | 0.00% | [3] | 1.24% | [3] | 0.10% | [3] | 0.00% | [3] |
Veterans Administration Loan [Member] | ||||||||
Mortgage Loans on Real Estate [Line Items] | ||||||||
Initial unpaid principal balance of mortgage loans, amount | $0 | [4] | $6 | [4] | $0 | [4] | $0 | [4] |
Initial unpaid principal balance of mortgage loans, percentage | 0.00% | [4] | 0.22% | [4] | 0.00% | [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_Recievab
Loan Receivables Loan Recievables (Schedule of Geographic Distribution of Loan Receivables) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $69,969 | $65,771 |
Credit Card Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 56,128 | 53,150 |
Percentage of total loan receivables | 100.00% | 100.00% |
Credit Card Receivable [Member] | California [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 4,776 | 4,548 |
Percentage of total loan receivables | 8.50% | 8.50% |
Credit Card Receivable [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 4,557 | 4,299 |
Percentage of total loan receivables | 8.10% | 8.10% |
Credit Card Receivable [Member] | New York [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 3,929 | 3,649 |
Percentage of total loan receivables | 7.00% | 6.90% |
Credit Card Receivable [Member] | Florida [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 3,287 | 3,064 |
Percentage of total loan receivables | 5.90% | 5.80% |
Credit Card Receivable [Member] | Illinois [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 3,114 | 2,998 |
Percentage of total loan receivables | 5.50% | 5.60% |
Credit Card Receivable [Member] | Pennsylvania [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 2,989 | 2,823 |
Percentage of total loan receivables | 5.30% | 5.30% |
Credit Card Receivable [Member] | Ohio [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 2,449 | 2,324 |
Percentage of total loan receivables | 4.40% | 4.40% |
Credit Card Receivable [Member] | New Jersey [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 2,113 | 2,002 |
Percentage of total loan receivables | 3.80% | 3.80% |
Credit Card Receivable [Member] | Michigan [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 1,634 | 1,575 |
Percentage of total loan receivables | 2.90% | 3.00% |
Credit Card Receivable [Member] | Georgia [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 1,630 | 1,546 |
Percentage of total loan receivables | 2.90% | 2.90% |
Credit Card Receivable [Member] | Other States [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 25,650 | 24,322 |
Percentage of total loan receivables | 45.70% | 45.70% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 13,719 | 12,473 |
Percentage of total loan receivables | 100.00% | 100.00% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | California [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 1,267 | 1,167 |
Percentage of total loan receivables | 9.20% | 9.40% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 742 | 637 |
Percentage of total loan receivables | 5.40% | 5.10% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | New York [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 1,738 | 1,679 |
Percentage of total loan receivables | 12.70% | 13.40% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Florida [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 538 | 479 |
Percentage of total loan receivables | 3.90% | 3.80% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Illinois [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 794 | 696 |
Percentage of total loan receivables | 5.80% | 5.60% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Pennsylvania [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 1,004 | 939 |
Percentage of total loan receivables | 7.30% | 7.50% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Ohio [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 540 | 481 |
Percentage of total loan receivables | 3.90% | 3.90% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | New Jersey [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 687 | 630 |
Percentage of total loan receivables | 5.00% | 5.10% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Michigan [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 512 | 482 |
Percentage of total loan receivables | 3.70% | 3.90% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Massachusetts [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | 550 | 508 |
Percentage of total loan receivables | 4.00% | 4.10% |
Total Other Loans, Excluding Mortgage Loans Held for Sale and PCI Loans [Member] | Other States [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $5,347 | $4,775 |
Percentage of total loan receivables | 39.10% | 38.20% |
Credit_Card_and_Student_Loan_S2
Credit Card and Student Loan Securitization Activities (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Credit Card Securitization Trusts [Member] | |
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] | Credit Card Securitization Trusts [Member] | |
Variable Interest Entity [Line Items] | |
Number of classes of securities, debt structure | 4 |
Average excess spread rate calculation period | 3 months |
Excess spread rate for funding requirement trigger | 4.50% |
Excess spread rate for increasing funding requirements | 0.00% |
Credit_Card_and_Student_Loan_S3
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2011 | ||
In Millions, unless otherwise specified | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | $106 | $182 | |||||
Allowance for loan losses allocated to securitized loan receivables | -1,746 | -1,648 | -1,788 | -1,725 | -2,205 | ||
Other | 2,461 | 2,367 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 102 | 179 | |||||
Allowance for loan losses allocated to securitized loan receivables | -833 | -861 | |||||
Other | 37 | 34 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 16 | 90 | |||||
Investors' interests held by third-party investors | 15,950 | 15,190 | |||||
Investors' interests held by wholly owned subsidiaries of Discover Bank | 5,789 | 5,024 | |||||
Seller's interest | 8,596 | 10,898 | |||||
Loan receivables | 30,335 | [1] | 31,112 | [1] | |||
Allowance for loan losses allocated to securitized loan receivables | -805 | [1] | -833 | [1] | |||
Net loan receivables | 29,530 | 30,279 | |||||
Other | 37 | 34 | |||||
Carrying value of assets of consolidated variable interest entities | 29,583 | 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 | $16 | $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 $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | |
series | ||
Discover Card Execution Note Trust (DiscoverSeries Notes) [Member] | ||
Variable Interest Entity [Line Items] | ||
Investors' interests | $21,739 | [1] |
Number of series outstanding | 39 | |
3-month rolling average excess spread | 13.95% | |
[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 $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2011 | ||
In Millions, unless otherwise specified | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | $106 | $182 | |||||
Allowance for loan losses allocated to securitized loan receivables | -1,746 | -1,648 | -1,788 | -1,725 | -2,205 | ||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 102 | 179 | |||||
Allowance for loan losses allocated to securitized loan receivables | -833 | -861 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 86 | 89 | |||||
Student loan receivables | 1,969 | 2,248 | |||||
Allowance for loan losses allocated to securitized loan receivables | -28 | [1] | -28 | [1] | |||
Net student loan receivables | 1,941 | 2,220 | |||||
Carrying value of assets of consolidated variable interest entities | $2,027 | $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. |
Premises_and_Equipment_Premise1
Premises and Equipment Premises and Equipment (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense, including amortization of assets under capital leases | $6 | $78 | $65 | $63 |
Amortization expense on capitalized software | $3 | $48 | $41 | $32 |
Premises_and_Equipment_Premise2
Premises and Equipment Premises and Equipment (Schedule of Premises and Equipment) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | $1,809 | $1,718 |
Premises and equipment, net | 670 | 654 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 43 | 43 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 589 | 547 |
Capitalized Equipment Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 2 | 2 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 753 | 735 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 422 | 391 |
Less: Accumulated depreciation and accumulated amortization of software | -234 | -235 |
Property Plant And Equipment Excluding Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation and accumulated amortization of software | ($905) | ($829) |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Narrative) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Oct. 02, 2014 | Oct. 02, 2013 | Jun. 02, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Goodwill [Line Items] | |||||||
Goodwill | $257 | $284 | |||||
Impairment of goodwill | 0 | 0 | 0 | 27 | 0 | 0 | |
Intangible assets impairment loss | 0 | 0 | 0 | ||||
Amortization expense related to intangible assets | 1 | 10 | 12 | 11 | |||
HLC Acquisition [Member] | Direct Banking [Member] | |||||||
Goodwill [Line Items] | |||||||
Goodwill | 31 | ||||||
Goodwill purchase accounting adjustments | 2 | ||||||
PULSE [Member] | Payment Services [Member] | |||||||
Goodwill [Line Items] | |||||||
Goodwill | $255 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Schedule of Intangible Assets) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, gross carrying amount | $88 | $100 |
Amortizable intangible assets, accumulated amortization | 67 | 70 |
Amortizable intangible assets, net book value | 21 | 30 |
Non-amortizable intangible assets, gross carrying amount | 155 | 155 |
Non-amortizable intangible assets, net book value | 155 | 155 |
Total intangible assets, gross carrying amount | 243 | 255 |
Total intangible assets, net book value | 176 | 185 |
Trade Name and Other [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Non-amortizable intangible assets, gross carrying amount | 132 | 132 |
Non-amortizable intangible assets, net book value | 132 | 132 |
International Transaction Processing Rights [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Non-amortizable intangible assets, gross carrying amount | 23 | 23 |
Non-amortizable intangible assets, net book value | 23 | 23 |
Customer Relationships [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, weighted-average amortization period (in years) | 15 years 7 months 7 days | |
Amortizable intangible assets, gross carrying amount | 72 | 78 |
Amortizable intangible assets, accumulated amortization | 60 | 60 |
Amortizable intangible assets, net book value | 12 | 18 |
Trade Name and Other [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, weighted-average amortization period (in years) | 25 years | |
Amortizable intangible assets, gross carrying amount | 8 | 8 |
Amortizable intangible assets, accumulated amortization | 3 | 2 |
Amortizable intangible assets, net book value | 5 | 6 |
Proprietary Software [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, weighted-average amortization period (in years) | 7 years | |
Amortizable intangible assets, gross carrying amount | 6 | 6 |
Amortizable intangible assets, accumulated amortization | 2 | 2 |
Amortizable intangible assets, net book value | 4 | 4 |
Non-compete Agreements [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, weighted-average amortization period (in years) | 3 years | |
Amortizable intangible assets, gross carrying amount | 2 | 2 |
Amortizable intangible assets, accumulated amortization | 2 | 1 |
Amortizable intangible assets, net book value | 0 | 1 |
Marketing Agreements and Other [Member] | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 0 | 6 |
Amortizable intangible assets, accumulated amortization | 0 | 5 |
Amortizable intangible assets, net book value | $0 | $1 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Schedule of Expected Intangilbe Asset Amortization Expense) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2015 | $5 |
2016 | 4 |
2017 | 3 |
2018 | 3 |
2019 | $2 |
Deposits_Narrative_Details
Deposits (Narrative) (Details) (USD $) | 12 Months Ended | |
In Billions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
channels | ||
Deposits [Abstract] | ||
Deposits source channels | 2 | |
Direct-to-consumer deposits | $28.80 | $28.40 |
Brokered and other deposits | $17.30 | $16.40 |
Deposits_Schedule_of_Interest_
Deposits (Schedule of Interest Bearing Deposit Accounts) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Deposits [Abstract] | ||||
Certificates of deposit in amounts less than $100,000 | $21,502 | [1] | $21,211 | [1] |
Certificates of deposit from amounts of $100,000 to less than $250,000 | 4,481 | [1] | 4,860 | [1] |
Certificates of deposit in amounts of $250,000 or greater | 1,153 | [1] | 1,180 | [1] |
Savings deposits, including money market deposit accounts | 18,656 | 17,515 | ||
Total interest-bearing deposits | $45,792 | $44,766 | ||
Average annual interest rate (in percent) | 1.29% | 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 $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Deposits [Abstract] | |
2015 | $12,755 |
2016 | 5,685 |
2017 | 3,408 |
2018 | 2,000 |
2019 | 1,522 |
Thereafter | $1,766 |
LongTerm_Borrowings_Narrative_
Long-Term Borrowings (Narrative) (Details) (Discover Card Master Trust I and Discover Card Execution Note Trust [Member], Securitized Debt [Member], USD $) | Dec. 31, 2014 |
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized 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 $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Debt Instrument [Line Items] | ||||
Long-term borrowings | $22,544 | $20,474 | ||
Securitized Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 17,395 | 16,986 | ||
Capital Lease Obligations [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.51% | |||
Weighted-average interest rate | 4.51% | |||
Long-term borrowings | 1 | 1 | ||
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 15,950 | 15,194 | ||
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Fixed-Rate Asset-Backed Securities [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 1.76% | |||
Weighted-average interest rate | 1.76% | |||
Long-term borrowings | 8,950 | [1] | 5,554 | [1] |
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Floating-Rate Asset-Backed Securities [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate minimum | 0.34% | [2] | ||
Interest rate maximum | 0.74% | [2] | ||
Weighted-average interest rate | 0.51% | |||
Long-term borrowings | 7,000 | [2],[3] | 9,640 | [2],[3] |
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | 1-month LIBOR + 18 to 58Â basis points | |||
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.18% | |||
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.58% | |||
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus 20 Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | 3-month LIBOR + 20Â basis points | |||
Basis spread on variable rate | 0.20% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 1,445 | 1,792 | ||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating-Rate Asset-Backed Securities [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate minimum | 0.49% | [4] | ||
Interest rate maximum | 4.25% | [4] | ||
Weighted-average interest rate | 2.01% | |||
Long-term borrowings | 1,445 | [4],[5],[6],[7] | 1,792 | [4],[5],[6],[7] |
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | 3-month LIBOR + 17Â to 45 basis points | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [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 | 0.17% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [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 | 0.45% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 75 to 100 Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | Prime rate + 75 to 100 basis points | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 75 to 100 Basis Points [Member] | Minimum [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.75% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 75 to 100 Basis Points [Member] | Maximum [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus 350 Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | 1-month LIBOR + 350 basis points | |||
Basis spread on variable rate | 3.50% | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Senior Notes Maturing 2031 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 348 | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Senior and Subordinated Notes Maturing 2036 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 827 | |||
Slc Private Student Loan Trust [Member] | Securitized Debt [Member] | Senior Notes Maturing 2042 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 270 | |||
Parent Company [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings | 1,559 | 1,045 | ||
Parent Company [Member] | Corporate Debt Securities [Member] | Fixed-Rate Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate minimum | 3.85% | |||
Interest rate maximum | 10.25% | |||
Weighted-average interest rate | 5.08% | |||
Long-term borrowings | 1,558 | [1] | 1,045 | [1] |
Discover Bank [Member] | Senior Bank Notes [Member] | Senior Bank Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate minimum | 2.00% | |||
Interest rate maximum | 4.25% | |||
Weighted-average interest rate | 3.38% | |||
Long-term borrowings | 2,892 | 1,744 | ||
Discover Bank [Member] | Subordinated Bank Notes [Member] | Subordinated Bank Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate minimum | 7.00% | |||
Interest rate maximum | 8.70% | |||
Weighted-average interest rate | 7.49% | |||
Long-term borrowings | $698 | $698 | ||
[1] | The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in London Interbank Offered Rate (“LIBORâ€). Use of these interest rate swaps impacts carrying value of the debt. See Note 21: Derivatives and Hedging Activities. | |||
[2] | Discover Card Execution Note Trust floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 18 to 58Â basis points and 3-month LIBOR + 20Â basis points. | |||
[3] | 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 a portion of these long-term borrowings. There is no impact on debt carrying value from use of these interest rate swaps. See Note 21: Derivatives and Hedging Activities. | |||
[4] | SLC Private Student Loan Trusts floating-rate asset-backed securities include issuances with the following interest rate terms: 3-month LIBOR + 17Â to 45 basis points, Prime rate + 75 to 100 basis points and 1-month LIBOR + 350 basis points. | |||
[5] | 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. | |||
[6] | Includes $348 million of senior notes maturing in 2031, $827 million of senior and subordinated notes maturing in 2036 and $270 million of senior notes maturing in 2042 as of December 31, 2014. | |||
[7] | The Company acquired an interest rate swap related to the securitized debt assumed in the SLC transaction. The swap does not qualify for hedge accounting and has no impact on debt carrying value. See Note 21: Derivatives and Hedging Activities. |
LongTerm_Borrowings_LongTerm_B
Long-Term Borrowings Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Debt Disclosure [Abstract] | ||
Due in 2015 | $3,302 | |
Due in 2016 | 3,050 | |
Due in 2017 | 5,106 | |
Due in 2018 | 2,650 | |
Due in 2019 | 3,278 | |
Thereafter | 5,158 | |
Long-term borrowings | $22,544 | $20,474 |
StockBased_Compensation_Plans_1
Stock-Based Compensation Plans (Narrative) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of share-based compensation plans | 2 | |
Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation cost | $24,000,000 | $28,000,000 |
Total period of unrecognized compensation cost recognition | 2 years 9 months 19 days | 2 years 1 month 7 days |
Weighted average period of recognizing unrecognized compensation cost | 2 years 3 months 20 days | 2 years 9 months 19 days |
Performance Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation cost | 27,000,000 | 34,000,000 |
Total period of unrecognized compensation cost recognition | 2 years 1 month 7 days | 2 years 1 month 7 days |
Weighted average period of recognizing unrecognized compensation cost | 9 months 20 days | 9 months 20 days |
Performance Stock Units [Member] | 2012 Plan Year [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Award performance period | 2 years | |
Performance Stock Units [Member] | 2012 Plan Year [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of common shares to be paid upon conversion for awards (in shares) | 2 | |
Performance Stock Units [Member] | 2013 and 2014 Plan Years [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Award performance period | 3 years | |
Performance Stock Units [Member] | 2013 and 2014 Plan Years [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of common shares to be paid upon conversion for awards (in shares) | 1.5 | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cash received from the exercise of stock options | 1,000,000 | 7,000,000 |
Income tax benefit realized from the exercise of stock options | 3,000,000 | |
Omnibus Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total number of shares available for grant (in shares) | 45,000,000 | |
Total unrecognized compensation cost | 0 | 0 |
Omnibus Incentive Plan [Member] | Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period of option awards | 10 years | |
Directors Compensation Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares used in calculation of the total number of units available for grant (in shares) | 1,000,000 | |
Directors Compensation Plan [Member] | Share-based Compensation Award, Tranche One [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage of annual awards that shall vest on first anniversary date of grant (in percent) | 100.00% | |
Award vesting period | 1 year | |
Directors Compensation Plan [Member] | Prior to May 7, 2014 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Annual awards calculation | 125,000 | |
Directors Compensation Plan [Member] | May 7, 2014 and After [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Annual awards calculation | $130,000 |
StockBased_Compensation_Plans_2
Stock-Based Compensation Plans (Schedule of Stock-Based Compensation Plans Compensation cost, Net of Forfeitures) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost, net of forfeitures | $3 | $60 | $59 | $47 |
Income tax benefit from compensation cost, net of forfeitures | 1 | 22 | 22 | 18 |
Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost, net of forfeitures | 2 | 33 | 31 | 29 |
Performance Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost, net of forfeitures | $1 | $27 | $28 | $18 |
StockBased_Compensation_Plans_3
Stock-Based Compensation Plans (Schedule of Restricted Stock Unit Activity) (Details) (Restricted Stock Units [Member], USD $) | 1 Months Ended | 12 Months Ended | ||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||
Restricted Stock Units [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options [Roll Forward] | ||||||
Stock-based compensation, balance at beginning of period, number of units | 4,143,915 | |||||
Stock-based compensation, granted, number of units | 567,506 | |||||
Stock-based compensation, conversions to common stock, number of units | -1,305,318 | |||||
Stock-based compensation, forfeited, number of units | -43,705 | |||||
Stock-based compensation, balance at end of period, number of units | 3,362,398 | 4,143,915 | ||||
Stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $27.38 | |||||
Stock-based compensation, granted, weighted-average grant-date fair value | $41.23 | $54.01 | $42.14 | $25.64 | ||
Stock-based compensation, conversions to common stock, weighted-average grant-date fair value | $24.22 | |||||
Stock-based compensation, forfeited, weighted-average grant-date fair value | $41.34 | |||||
Stock-based compensation, balance at end of period, weighted-average grant-date fair value | $32.92 | $27.38 | ||||
Stock-based compensation, aggregate intrinsic value (in dollars) | $220 | $232 | ||||
Unvested stock-based compensation, balance at beginning of period, number of units | 2,497,620 | [1] | ||||
Stock-based compensation, vested, number of units | -1,158,694 | |||||
Unvested stock-based compensation, balance at end of period, number of units | 1,862,727 | [1] | 2,497,620 | [1] | ||
Unvested stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $28.52 | [1] | ||||
Stock-based compensation, vested, weighted-average grant-date fair value | $26.12 | |||||
Unvested stock-based compensation, balance at end of period, weighted-average grant-date fair value | $37.48 | [1] | $28.52 | [1] | ||
[1] | Unvested RSUs represent awards where recipients have yet to satisfy either explicit vesting terms or retirement-eligibility requirements. |
StockBased_Compensation_Plans_4
Stock-Based Compensation Plans (Schedule of Intrinsic Value of RSUs Converted to Common Stock and Grant Date Fair Value of RSUs Vested) (Details) (Restricted Stock Units [Member], USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Intrinsic value of RSUs converted to common stock | $0 | $72 | $63 | $49 |
Grant-date fair value of RSUs vested | $0 | $30 | $27 | $28 |
Weighted-average grant-date fair value of RSUs granted (in dollars per share) | $41.23 | $54.01 | $42.14 | $25.64 |
StockBased_Compensation_Plans_5
Stock-Based Compensation Plans (Schedule of Performance Stock Unit Activity) (Details) (Performance Stock Units [Member], USD $) | 12 Months Ended | |||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |||
Performance Stock Units [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options [Roll Forward] | ||||||
Stock-based compensation, balance at beginning of period, number of units | 1,897,867 | |||||
Stock-based compensation, granted, number of units | 384,626 | |||||
Stock-based compensation, conversions to common stock, number of units | -710,379 | |||||
Stock-based compensation, forfeited, number of units | -12,439 | |||||
Stock-based compensation, balance at end of period, number of units | 1,559,675 | 1,897,867 | ||||
Stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $26.93 | |||||
Stock-based compensation, granted, weighted-average grant-date fair value | $53.66 | |||||
Stock-based compensation, conversions to common stock, weighted-average grant-date fair value | $19.15 | |||||
Stock-based compensation, forfeited, weighted-average grant-date fair value | $44.97 | |||||
Stock-based compensation, balance at end of period, weighted-average grant-date fair value | $36.92 | $26.93 | ||||
Stock-based compensation, aggregate intrinsic value (in dollars) | $102 | $106 | ||||
Unvested stock-based compensation, balance at beginning of period, number of units | 1,652,292 | |||||
Stock-based compensation, vested, number of units | -559,114 | [1] | ||||
Unvested stock-based compensation, balance at end of period, number of units | 1,465,365 | [2],[3],[4] | 1,652,292 | |||
Unvested stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $27.77 | |||||
Stock-based compensation, vested, weighted-average grant-date fair value | $19.15 | [1] | ||||
Unvested stock-based compensation, balance at end of period, weighted-average grant-date fair value | $37.71 | [2],[3],[4] | $27.77 | |||
Performance stock units granted during period that are earned and subject to requisite service period | 567,424 | [1] | 518,438 | [1] | ||
Performance stock units granted during period that may be earned and subject to requisite service period | 379,503 | [1] | ||||
[1] | Vested PSUs represent awards where recipients have satisfied retirement-eligibility requirements. | |||||
[2] | Includes 379,503 PSUs granted in calendar year 2014 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2016 and are subject to the requisite service period which ends February 1, 2017. | |||||
[3] | Includes 567,424 PSUs granted in calendar year 2013 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2015 and are subject to the requisite service period which ends February 1, 2016. | |||||
[4] | Includes 518,438 PSUs granted in fiscal year 2012 that are earned based on the Company's achievement of EPS during the two-year performance period ended November 30, 2013 and are subject to the requisite service period which ended January 2, 2015. |
StockBased_Compensation_Plans_6
Stock-Based Compensation Plans (Schedule of Stock Option Activity) (Details) (Employee Stock Option [Member], USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Options outstanding, balance at beginning of period, number of units | 171,726 | ||
Options granted, number of units | 0 | [1] | |
Options exercised, number of units | -56,221 | ||
Options expired, number of units | 0 | ||
Options outstanding, balance at end of period, number of units | 115,505 | 171,726 | |
Options outstanding, balance at beginning of period, weighted-average exercise price | $25.82 | ||
Options granted, weighted-average exercise price | $0 | ||
Options exercised, weighted-average exercise price | $24.63 | ||
Options expired, weighted-average exercise price | $0 | ||
Options outstanding, balance at end of period, weighted-average exercise price | $26.40 | $25.82 | |
Options outstanding, weighted-average remaining contractual term (in years) | 1 year 10 months 23 days | 2 years 9 months 4 days | |
Options outstanding, aggregate intrinsic value (in dollars) | $5 | $5 | |
Options vested and exercisable, number of units | 115,505 | ||
Options vested and exercisable, weighted-average exercise price | $26.40 | ||
Options vested and exercisable, weighted-average remaining contractual term (in years) | 1 year 10 months 23 days | ||
Options vested and exercisable, aggregate intrinsic value (in dollars) | $5 | ||
[1] | No stock options have been granted by the Company since its spin-off from Morgan Stanley. |
StockBased_Compensation_Plans_7
Stock-Based Compensation Plans (Schedule of Intrinsic Value of Options Exercised and Fair Value of Options Vested) (Details) (Employee Stock Option [Member], USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Intrinsic value of options exercised | $6 | $2 | $11 | $22 |
Employee_Benefit_Plans_Employe1
Employee Benefit Plans Employee Benefit Plans (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Pretax expense associated with the 401(k) matching, fixed employer and transition credit contributions | $3 | $52 | $50 | $42 |
Equity Securities [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Target asset allocations for 2015 (in percent) | 45.00% | |||
Fixed Income Securities [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Target asset allocations for 2015 (in percent) | 55.00% | |||
Pension Plans, Defined Benefit [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Asset transfers from level 1 to level 2 within the fair value hierarchy | 0 | 0 | ||
Asset transfers from level 2 to level 1 within the fair value hierarchy | 0 | 0 | ||
Liability transfers from level 1 to level 2 within the fair value hierarchy | 0 | 0 | ||
Liability transfers from level 2 to level 1 within the fair value hierarchy | $0 | $0 |
Employee_Benefit_Plans_Employe2
Employee Benefit Plans Employee Benefit Plans (Schedule of Net Periodic Benefit Cost) (Details) (Pension Plans, Defined Benefit [Member], USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Pension Plans, Defined Benefit [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost, benefits earned during the period | $0 | $0 | $0 | $0 |
Interest cost on projected benefit obligation | 2 | 22 | 21 | 21 |
Expected return on plan assets | -2 | -23 | -23 | -23 |
Net amortization | 0 | 3 | 5 | 3 |
Net periodic benefit cost | $0 | $2 | $3 | $1 |
Employee_Benefit_Plans_Employe3
Employee Benefit Plans Employee Benefit Plans (Schedule of Pretax Amounts Recognized in AOCI Not Recognized as Components of Net Periodic Benefit Cost) (Details) (Pension Plans, Defined Benefit [Member], USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Pension Plans, Defined Benefit [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Prior service credit | $6 |
Net loss | -266 |
Total recognized in AOCI | ($260) |
Employee_Benefit_Plans_Employe4
Employee Benefit Plans Employee Benefit Plans (Schedule of Funded Status and Changes in Benefit Obligations and Fair Value of Plan Assets) (Details) (Pension Plans, Defined Benefit [Member], USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Pension Plans, Defined Benefit [Member] | ||||
Reconciliation of benefit obligation: | ||||
Benefit obligation at beginning of year | $452 | $523 | ||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 2 | 22 | 21 | 21 |
Employee contributions | 0 | 0 | ||
Actuarial (gain) loss | 112 | -78 | ||
Plan amendments | 0 | 0 | ||
Benefits paid | -16 | -14 | ||
Benefit obligation at end of year | 523 | 570 | 452 | |
Reconciliation of fair value of plan assets: | ||||
Fair value of plan assets at beginning of year | 367 | 368 | ||
Actual return on plan assets | 50 | 13 | ||
Employer contributions | 0 | 0 | ||
Employee contributions | 0 | 0 | ||
Benefits paid | -16 | -14 | ||
Fair value of plan assets at end of year | 368 | 401 | 367 | |
Unfunded status (recorded in accrued expenses and other liabilities) | ($169) | ($85) |
Employee_Benefit_Plans_Employe5
Employee Benefit Plans Employee Benefit Plans (Schedule of Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost) (Details) (Pension Plans, Defined Benefit [Member]) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Pension Plans, Defined Benefit [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefit obligation discount rate | 4.08% | 4.93% | ||
Net periodic benefit cost discount rate | 3.96% | 4.93% | 4.09% | 5.07% |
Net periodic benefit cost expected long-term rate of return on plan assets | 6.75% | 6.50% | 6.75% | 6.75% |
Employee_Benefit_Plans_Employe6
Employee Benefit Plans Employee Benefit Plans (Schedule of Pension Plan Assets by Level Within the Fair Value Hierarchy) (Details) (Pension Plans, Defined Benefit [Member], USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $401 | $367 | $368 |
Net asset allocation | 100.00% | 100.00% | |
Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 401 | 367 | |
Registered Investment Company - Domestic Small/Mid Cap Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 8.00% | 9.00% | |
Registered Investment Company - Domestic Small/Mid Cap Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 31 | 32 | |
Registered Investment Company - Emerging Markets Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 7.00% | 8.00% | |
Registered Investment Company - Emerging Markets Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 30 | 29 | |
Registered Investment Company - Global Low Volatility Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 5.00% | 5.00% | |
Registered Investment Company - Global Low Volatility Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 20 | 19 | |
Registered Investment Company - International Core Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 11.00% | 13.00% | |
Registered Investment Company - International Core Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 44 | 46 | |
Common Collective Trust - Domestic Large Cap Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 13.00% | 13.00% | |
Common Collective Trust - Domestic Large Cap Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 54 | 50 | |
Common Collective Trust - Domestic Fixed Income Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 0.00% | 2.00% | |
Common Collective Trust - Domestic Fixed Income Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 7 | |
Common Collective Trust - Long Duration Fixed Income Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 55.00% | 49.00% | |
Common Collective Trust - Long Duration Fixed Income Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 219 | 181 | |
Common Collective Trust - Temporary Investment Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation | 1.00% | 1.00% | |
Common Collective Trust - Temporary Investment Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $3 | $3 |
Employee_Benefit_Plans_Employe7
Employee Benefit Plans Employee Benefit Plans (Schedule of Expected Benefit Payments for Next Five Years and Thereafter) (Details) (Pension Plans, Defined Benefit [Member], USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Pension Plans, Defined Benefit [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2015 | $13 |
2016 | 14 |
2017 | 15 |
2018 | 16 |
2019 | 17 |
Following five years thereafter | $103 |
Common_and_Preferred_Stock_Nar
Common and Preferred Stock (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | |||
Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Oct. 16, 2012 | Apr. 16, 2014 | |
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | 575,000 | 575,000 | ||||
Preferred stock, par or stated value per share | $0.01 | $0.01 | ||||
Net proceeds from issuance of preferred stock (in dollars) | $0 | $0 | $0 | $560,000,000 | ||
Preferred Stock [Member] | Preferred Class B [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | 575,000 | |||||
Preferred stock, par or stated value per share | $0.01 | |||||
Preferred stock, liquidation preference per share | $1,000 | |||||
Depositary shares represented by one preferred stock share | 40 | |||||
Net proceeds from issuance of preferred stock (in dollars) | 560,000,000 | |||||
Redemption period of preferred stock following regulatory capital event | 90 days | |||||
Preferred stock, redemption price per share | $1,000 | |||||
Preferred stock, dividend rate (in percent) | 6.50% | |||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Share repurchase program, authorized amount (in dollars) | 3,200,000,000 | |||||
Number of shares of stock repurchased during the period (in shares) | 24,796,614 | |||||
Value of stock repurchased during the period (in dollars) | $1,500,000,000 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Nov. 30, 2011 | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | ($75) | ($68) | ($72) | ($52) | ||||||
Net unrealized gains (losses) on investment securities, net of tax | -3 | [1] | 4 | -52 | 19 | [1] | ||||
Unrealized losses on cash flow hedges, net of tax | 0 | -20 | 10 | -4 | [2] | |||||
Unrealized pension plan gain (loss), net of tax | 6 | [3] | -53 | 45 | -38 | [3] | ||||
Other comprehensive income (loss) | 3 | -70 | [4] | 4 | [4] | -23 | ||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | -72 | -138 | -68 | -75 | ||||||
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 | 74 | 19 | 71 | 55 | ||||||
Net unrealized gains (losses) on investment securities, net of tax | -3 | [1] | 19 | [1] | ||||||
Other comprehensive income (loss) | 4 | [4] | -52 | [4] | ||||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | 71 | 23 | 19 | 74 | ||||||
Available-for-sale investment securities tax expense (benefit) | -2 | 11 | ||||||||
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 | 13 | 3 | 7 | |||||||
Unrealized losses on cash flow hedges, net of tax | -4 | [2] | ||||||||
Other comprehensive income (loss) | -20 | [4] | 10 | [4] | ||||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | -7 | 13 | 3 | |||||||
Cash flow hedges tax benefit | -2 | |||||||||
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 | [5] | 0 | [5] | 0 | [5] | ||||
Other comprehensive income (loss) | -1 | [4],[5] | 1 | [4],[5] | ||||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | 0 | [5] | 1 | [5] | 0 | [5] | 0 | [5] | ||
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 | -152 | -101 | -146 | -114 | ||||||
Unrealized pension plan gain (loss), net of tax | 6 | [3] | -38 | [3] | ||||||
Other comprehensive income (loss) | -53 | [4] | 45 | [4] | ||||||
Accumulated other comprehensive income (loss), balance at end of period, net of tax | -146 | -154 | -101 | -152 | ||||||
Pension plan tax expense (benefit) | $4 | ($25) | ||||||||
[1] | Represents the difference between the fair value and amortized cost of available-for-sale investment securities. | |||||||||
[2] | Represents unrealized gains (losses) related to effective portion of cash flow hedges. | |||||||||
[3] | Reflects adjustments to the funded status of pension plan, which is the difference between the fair value of the plan assets and the projected benefit obligation. | |||||||||
[4] | In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. As the result, the Company has adjusted its AOCI presentation prospectively, as required, and therefore additional table was included to present the required information for the current period and the presentation has changed from historical periods. | |||||||||
[5] | Includes unrealized losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains 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 $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
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 | $9 | ($80) | ||
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax | -3 | 30 | ||
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax | 6 | -50 | ||
Available-for-sale investment securities, amounts reclassified from accumulated other comprehensive income, before tax | -4 | -2 | ||
Available-for-sale investment securities, amounts reclassified from accumulated other comprehensive income, tax | 2 | 0 | ||
Available-for-sale investment securities, amounts reclassified from other comprehensive income, net of tax | -2 | -2 | ||
Available-for-sale investment securities, net change, before tax | -5 | 5 | -82 | 30 |
Available-for-sale investment securities, net change, tax | -1 | 30 | ||
Available-for-sale investment securities, net change, net of tax | -3 | 4 | -52 | 19 |
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax | -69 | 8 | ||
Cash flow hedges, net unrealized gains (losses) arising during the period, tax | 26 | -3 | ||
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax | -43 | 5 | ||
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, before tax | 38 | 8 | ||
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, tax | -15 | -3 | ||
Cash flow hedges, amounts reclassified from accumulated other comprehensive income, net of tax | 23 | 5 | ||
Cash flow hedges, net change, before tax | -31 | 16 | ||
Cash flow hedges, net change, tax | 11 | -6 | ||
Cash flow hedges, net change, net of tax | -20 | 10 | ||
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, before tax | -1 | 1 | ||
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, tax | 0 | 0 | ||
Foreign currency translation adjustments, net unrealized gains (losses) arising during the period, net of tax | -1 | 1 | ||
Foreign currency translation adjustments, net change, before tax | -1 | 1 | ||
Foreign currency translation adjustments, net change, tax | 0 | 0 | ||
Foreign currency translation adjustments, net change, net of tax | -1 | 1 | ||
Pension plan, unrealized gains (losses) arising during the period, before tax | -84 | 72 | ||
Pension plan, unrealized gains (losses) arising during the period, tax | 31 | -27 | ||
Pension plan, unrealized gains (losses) arising during the period, net of tax | -53 | 45 | ||
Pension plan, net change, before tax | -84 | 72 | ||
Pension plan, net change, tax | 31 | -27 | ||
Pension plan, net change, net of tax | ($53) | $45 |
Other_Expense_Schedule_of_Othe
Other Expense (Schedule of Other Expense) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Component of Other Expense [Abstract] | ||||
Postage | $7 | $84 | $86 | $85 |
Fraud losses | 9 | 134 | 110 | 93 |
Supplies | 2 | 23 | 26 | 22 |
Credit-related inquiry fees | 1 | 19 | 19 | 20 |
Litigation expense | 0 | 0 | -12 | 218 |
Incentive expense | 5 | 50 | 61 | 59 |
Other expense | 11 | 165 | 198 | 107 |
Total other expense | $35 | $475 | $488 | $604 |
Income_Taxes_Income_Taxes_Narr
Income Taxes Income Taxes (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Schedule of Income Taxes Disclosure [Line Items] | ||||
Deferred tax assets, valuation allowance | $41 | $37 | ||
Change in interest and penalties accrued for unrecognized tax benefits | 2 | 17 | 17 | 20 |
Interest and penalties accrued for unrecognized tax benefits | 101 | 135 | 118 | 99 |
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 | |||
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 | 335 | |||
Foreign Tax Authority [Member] | ||||
Schedule of Income Taxes Disclosure [Line Items] | ||||
Net operating loss carryforwards | $107 |
Income_Taxes_Schedule_of_Incom
Income Taxes (Schedule of Income Tax Expense) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||||||||||||
Current, U.S. federal | $101 | $1,215 | $1,065 | $1,113 | ||||||||
Current, U.S. state and local | 15 | 167 | 87 | 149 | ||||||||
Total current | 116 | 1,382 | 1,152 | 1,262 | ||||||||
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||||||||||||
Deferred, U.S. federal | -11 | -7 | 295 | 136 | ||||||||
Deferred, U.S. state and local | -1 | -4 | 27 | 10 | ||||||||
Total deferred | -12 | -11 | 322 | 146 | ||||||||
Income tax expense | $104 | $244 | $365 | $371 | $391 | $335 | $353 | $379 | $407 | $1,371 | $1,474 | $1,408 |
Income_Taxes_Schedule_of_Recon
Income Taxes (Schedule of Reconciliation the Effective Tax Rate to the U.S. Federal Statutory Income Tax Rate) (Details) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
U.S. federal statutory income tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
U.S. state, local and other income taxes, net of U.S. federal income tax benefits | 3.20% | 2.80% | 2.20% | 2.90% |
Other | -0.10% | -0.70% | 0.20% | -0.40% |
Effective income tax rate | 38.10% | 37.10% | 37.40% | 37.50% |
Income_Taxes_Income_Taxes_Sche
Income Taxes Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, allowance for loan losses | $659 | $627 |
Deferred tax assets, customer fees and rewards | 212 | 212 |
Deferred tax assets, compensation and benefits | 123 | 87 |
Deferred tax assets, state income taxes | 75 | 65 |
Deferred tax assets, other | 77 | 72 |
Total deferred tax assets before valuation allowance | 1,146 | 1,063 |
Deferred tax assets, valuation allowance | -41 | -37 |
Total deferred tax assets, net of valuation allowance | 1,105 | 1,026 |
Deferred tax liabilities, debt exchange premium | -91 | -98 |
Deferred tax liabilities, depreciation and software amortization | -116 | -83 |
Deferred tax liabilities, unearned income | -31 | -40 |
Deferred tax liabilities, intangibles | -15 | -22 |
Deferred tax liabilities, deferred loan acquisition costs | -23 | -16 |
Deferred tax liabilities, partnership investments | -19 | 0 |
Deferred tax liabilities, other | -6 | -13 |
Total deferred tax liabilities | -301 | -272 |
Net deferred tax assets | $804 | $754 |
Income_Taxes_Income_Taxes_Sche1
Income Taxes Income Taxes (Schedule of Reconciliation of Beginning and Ending Unrecognized Tax Benefits) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||||||||
Unrecognized tax benefits, balance at beginning of period | $573 | [1] | $629 | [1] | $575 | [1] | $507 | |
Unrecognized tax benefits, additions, current year tax positions | 2 | 18 | 1 | 74 | ||||
Unrecognized tax benefits, additions, prior year tax positions | 0 | 74 | 142 | 1 | ||||
Unrecognized tax benefits, reductions, prior year tax positions | 0 | -80 | -69 | -5 | ||||
Unrecognized tax benefits, reductions, settlements with taxing authorities | 0 | -4 | -18 | -2 | ||||
Unrecognized tax benefits, reductions, expired statute of limitations | 0 | -2 | -2 | -2 | ||||
Unrecognized tax benefits, balance at end of period | 575 | [1] | 635 | [1] | 629 | [1] | 573 | [1] |
Unrecognized tax benefits that would favorably affect the effective tax rate | $109 | $144 | $142 | $108 | ||||
[1] | As of the calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012, and one month ended December 31, 2012, amounts included $144 million, $142 million, $108 million and $109 million respectively, of unrecognized tax benefits, which, if recognized, would favorably affect the effective tax rate. |
Earnings_Per_Share_Schedule_of
Earnings Per Share (Schedule of Basic and Diluted EPS) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||||||
Numerator [Abstract] | ||||||||||||||||||||
Net income | $170 | $404 | $644 | $644 | $631 | $602 | $593 | $602 | $673 | $2,323 | $2,470 | $2,345 | ||||||||
Preferred stock dividends | 0 | -37 | -37 | -5 | ||||||||||||||||
Net income available to common stockholders | 170 | 2,286 | 2,433 | 2,340 | ||||||||||||||||
Income allocated to participating securities | -2 | -16 | -19 | -22 | ||||||||||||||||
Net income allocated to common stockholders | 168 | 392 | [1] | 630 | [1] | 630 | [1] | 618 | [1] | 588 | [1] | 579 | [1] | 588 | [1] | 659 | [1] | 2,270 | 2,414 | 2,318 |
Income allocated to participating securities, diluted | -2 | -16 | -19 | -22 | ||||||||||||||||
Net income allocated to common stockholders, diluted | $168 | $2,270 | $2,414 | $2,318 | ||||||||||||||||
Denominator [Abstract] | ||||||||||||||||||||
Weighted-average shares of common stock outstanding (in shares) | 498 | 462 | 485 | 519 | ||||||||||||||||
Effect of dilutive common stock equivalents (in shares) | 1 | 1 | 2 | 1 | ||||||||||||||||
Weighted-average shares of common stock outstanding and common stock equivalents (in shares) | 499 | 463 | 487 | 520 | ||||||||||||||||
Basic earnings per common share (in dollars per share) | $0.34 | $0.87 | [1] | $1.37 | [1] | $1.35 | [1] | $1.31 | [1] | $1.24 | [1] | $1.20 | [1] | $1.20 | [1] | $1.33 | [1] | $4.91 | $4.97 | $4.47 |
Diluted earnings per common share (in dollars per share) | $0.34 | $0.87 | [1] | $1.37 | [1] | $1.35 | [1] | $1.31 | [1] | $1.23 | [1] | $1.20 | [1] | $1.20 | [1] | $1.33 | [1] | $4.90 | $4.96 | $4.46 |
[1] | Because the inputs to net income allocated to common stockholders and earnings per share are calculated using weighted averages for the quarter, the sum of all four quarters may differ from the year to date amounts in the consolidated statements of income. |
Capital_Adequacy_Capital_Adequ
Capital Adequacy Capital Adequacy (Narrative) (Details) (Discover Bank [Member], USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Discover Bank [Member] | ||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||
Cash dividends paid to parent company | $0 | $1,800 | $1,600 | $1,500 |
Capital_Adequacy_Schedule_of_M
Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Discover Bank [Member] | ||
Compliance with Regulatory Capital Requirements [Line Items] | ||
Total capital to risk-weighted assets, actual amount | $11,040 | $10,496 |
Total capital to risk-weighted assets, actual ratio | 15.30% | 15.50% |
Total capital to risk-weighted assets, minimum capital requirements, amount | 5,767 | 5,428 |
Total capital to risk-weighted assets, minimum capital requirements, ratio | 8.00% | 8.00% |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 7,209 | 6,785 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio | 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 | 13.10% | 13.20% |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | 2,884 | 2,714 |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio | 4.00% | 4.00% |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 4,326 | 4,071 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio | 6.00% | 6.00% |
Tier I capital to average assets, actual amount | 9,470 | 8,941 |
Tier I capital to average assets, actual ratio | 11.70% | 11.60% |
Tier I capital to average assets, minimum capital requirements, amount | 3,252 | 3,077 |
Tier I capital to average assets, minimum capital requirements, ratio | 4.00% | 4.00% |
Tier I capital to average assets, capital requirements to be classified as well-capitalize, amount | 4,066 | 3,847 |
Tier I capital to average assets, capital requirements to be classified as well-capitalize, ratio | 5.00% | 5.00% |
Parent Company [Member] | ||
Compliance with Regulatory Capital Requirements [Line Items] | ||
Total capital to risk-weighted assets, actual amount | 12,418 | 11,975 |
Total capital to risk-weighted assets, actual ratio | 17.00% | 17.40% |
Total capital to risk-weighted assets, minimum capital requirements, amount | 5,831 | 5,492 |
Total capital to risk-weighted assets, minimum capital requirements, ratio | 8.00% | 8.00% |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 7,289 | 6,865 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio | 10.00% | 10.00% |
Tier I capital to risk-weighted assets, actual amount | 10,839 | 10,409 |
Tier I capital to risk-weighted assets, actual ratio | 14.90% | 15.20% |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | 2,916 | 2,746 |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio | 4.00% | 4.00% |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | 4,373 | 4,119 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio | 6.00% | 6.00% |
Tier I capital to average assets, actual amount | 10,839 | 10,409 |
Tier I capital to average assets, actual ratio | 13.20% | 13.40% |
Tier I capital to average assets, minimum capital requirements, amount | 3,288 | 3,116 |
Tier I capital to average assets, minimum capital requirements, ratio | 4.00% | 4.00% |
Tier I capital to average assets, capital requirements to be classified as well-capitalize, amount | $4,111 | $3,895 |
Tier I capital to average assets, capital requirements to be classified as well-capitalize, ratio | 5.00% | 5.00% |
Commitments_Contingencies_and_2
Commitments, Contingencies and Guarantees (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Commitments, Contingencies and Guarantees [Line Items] | ||||
Operating lease agreements rent expense | $3,000,000 | $16,000,000 | $15,000,000 | $18,000,000 |
Citishare Network Guarantee [Member] | ATM 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 | $169,200,000,000 |
Commitments_Contingencies_and_3
Commitments, Contingencies and Guarantees (Schedule of Lease Commitments) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Capital Leases, Future Minimum Payments Due [Abstract] | |
2015, capital leases | $1 |
2016, capital leases | 0 |
2017, capital leases | 0 |
2018, capital leases | 0 |
2019, capital leases | 0 |
Thereafter, capital leases | 0 |
Total minimum lease payments, capital leases | 1 |
Less: amount representing interest, capital leases | 0 |
Present value of net minimum lease payments, capital leases | 1 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2015, operating leases | 16 |
2016, operating leases | 15 |
2017, operating leases | 13 |
2018, operating leases | 12 |
2019, operating leases | 10 |
Thereafter, operating leases | 45 |
Total minimum lease payments, operating leases | $111 |
Commitments_Contingencies_and_4
Commitments, Contingencies and Guarantees (Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Merchant Guarantee [Member] | Diners Club [Member] | |
Guarantor Obligations [Line Items] | |
Maximum potential counterparty exposures to settlement guarantees | $96 |
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 $) | 1 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||
Merchant Chargebacks [Member] | ||||||||
Guarantor Obligations [Line Items] | ||||||||
Aggregate sales transaction volume | $11,521 | [1] | $125,637 | [1] | $120,442 | [1] | $114,847 | [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 $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Commitments Contingencies and Guarantees [Abstract] | ||
Settlement withholdings and escrow deposits | $16 | $17 |
Litigation_and_Regulatory_Matt1
Litigation and Regulatory Matters (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Loss Contingencies [Line Items] | ||||
Litigation expense | $0 | $0 | ($12) | $218 |
Pending and Threatened Litigation [Member] | ||||
Loss Contingencies [Line Items] | ||||
Maximum aggregate reasonably possible losses | $170 |
Fair_Value_Measurements_and_Di2
Fair Value Measurements and Disclosures (Narrative) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 3 Months Ended | |||
Oct. 02, 2013 | Jun. 02, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Dec. 31, 2014 | |
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 | $117,000,000 | $146,000,000 | $117,000,000 | ||||
Fair value of loans held for sale | 122,000,000 | 148,000,000 | 122,000,000 | ||||
Gain (loss) from fair value adjustments on loans held for sale | -18,000,000 | -37,000,000 | |||||
Impairment of goodwill | 0 | 0 | 0 | 27,000,000 | 0 | 0 | |
Discover Home Loans Business [Member] | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Impairment of goodwill | 27,000,000 | ||||||
Residential Mortgage Backed Securities - Agency [Member] | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Available for sale security, par value | 1,400,000,000 | 1,400,000,000 | |||||
Available for sale securities, weighted average coupon rate (in percent) | 2.81% | 2.81% | |||||
Available for sale securities, weighted average remaining maturity | 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 | ||||
Asset transfers from level 2 to level 1 within the fair value hierarchy | 0 | 0 | 0 | ||||
Liability transfers from level 1 to level 2 within the fair value hierarchy | 0 | 0 | 0 | ||||
Liability transfers from level 2 to level 1 within the fair value hierarchy | $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) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage loans held for sale | $122 | $148 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 3,847 | 4,931 |
Mortgage loans held for sale | 122 | 148 |
Derivative financial instruments, assets | 43 | 79 |
Derivative financial instruments, liabilities | 23 | 7 |
Fair Value, Measurements, Recurring [Member] | Interest Rate Lock Commitments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 7 | 4 |
Fair Value, Measurements, Recurring [Member] | Forward Delivery Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 1 | 5 |
Derivative financial instruments, liabilities | 3 | 1 |
Fair Value, Measurements, Recurring [Member] | Other Derivative Financial Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 35 | 70 |
Derivative financial instruments, liabilities | 20 | 6 |
Fair Value, Measurements, Recurring [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 | 1,329 | 2,057 |
Fair Value, Measurements, Recurring [Member] | US Government Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 1,033 | 1,561 |
Fair Value, Measurements, Recurring [Member] | Credit Card Asset-Backed Securities of Other Issuers [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 6 | |
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities - Agency [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 1,485 | 1,307 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 2,362 | 3,618 |
Mortgage loans held for sale | 0 | 0 |
Derivative financial instruments, assets | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Forward Delivery Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 | 1,329 | 2,057 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | US Government Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 1,033 | 1,561 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Credit Card Asset-Backed Securities of Other Issuers [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Residential Mortgage Backed Securities - Agency [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, Recurring [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 1,485 | 1,313 |
Mortgage loans held for sale | 122 | 148 |
Derivative financial instruments, assets | 36 | 75 |
Derivative financial instruments, liabilities | 23 | 7 |
Fair Value, Measurements, Recurring [Member] | 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 | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Forward Delivery Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 1 | 5 |
Derivative financial instruments, liabilities | 3 | 1 |
Fair Value, Measurements, Recurring [Member] | 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 | 35 | 70 |
Derivative financial instruments, liabilities | 20 | 6 |
Fair Value, Measurements, Recurring [Member] | 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 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | US Government Agency 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, Recurring [Member] | Level 2 [Member] | Credit Card Asset-Backed Securities of Other Issuers [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 6 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Residential Mortgage Backed Securities - Agency [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 1,485 | 1,307 |
Fair Value, Measurements, Recurring [Member] | 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 | 0 | 0 |
Derivative financial instruments, assets | 7 | 4 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 | 7 | 4 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Forward Delivery Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | 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 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | US Government Agency 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, Recurring [Member] | Level 3 [Member] | Credit Card Asset-Backed Securities of Other Issuers [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Residential Mortgage Backed Securities - Agency [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 $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 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 | $4 | $12 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total net gains included in earnings | 87 | 121 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Settlements | 4 | 3 |
Transfers of IRLCs to closed loans | -88 | -132 |
Level 3 assets and liabilities, balance at end of period | 7 | 4 |
Forward Delivery Contracts [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 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | -1 | -3 |
Total net gains included in earnings | 1 | 3 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Transfers of IRLCs to closed loans | 0 | 0 |
Level 3 assets and liabilities, balance at end of period | 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 |
Transfers into Level 3 | 2 | 3 |
Transfers out of Level 3 | 0 | 0 |
Total net gains included in earnings | 0 | 0 |
Purchases | 1 | 1 |
Sales | -3 | -3 |
Settlements | 0 | -1 |
Transfers of IRLCs to closed loans | 0 | 0 |
Level 3 assets and liabilities, balance at end of period | $0 | $0 |
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) (Interest Rate Lock Commitments [Member], USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, fair value (in dollars) | 7 | $4 | $12 | |
Fair Value, Inputs, Level 3 [Member] | Quantitative Risk Model [Member] | ||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, valuation technique | Quantitative risk models | |||
Fair Value, Inputs, Level 3 [Member] | Quantitative Risk Model [Member] | Loan Funding Probability [Member] | ||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, significant unobservable input | Loan funding probability | |||
Fair Value, Inputs, Level 3 [Member] | Quantitative Risk Model [Member] | Loan Funding Probability [Member] | Minimum [Member] | ||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, ranges of inputs | 13.00% | |||
Fair Value, Inputs, Level 3 [Member] | Quantitative Risk Model [Member] | Loan Funding Probability [Member] | Maximum [Member] | ||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, ranges of inputs | 99.00% | |||
Fair Value, Inputs, Level 3 [Member] | Quantitative Risk Model [Member] | Loan Funding Probability [Member] | Weighted Average [Member] | ||||
Significant Unobservable Inputs Related to Level 3 Assets and Liabilties [Line Items] | ||||
Significant unobservable inputs, ranges of inputs | 61.00% | [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 $) | Dec. 31, 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 | $104 | [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 | 104 | 58 | ||
Cash and cash equivalents | 7,284 | 6,554 | ||
Restricted cash | 106 | 182 | ||
Net loan receivables | 69,316 | [2] | 64,968 | [2] |
Accrued interest receivables | 618 | 556 | ||
Deposits | 46,242 | 45,231 | ||
Short-term borrowings | 113 | 140 | ||
Accrued interest payables | 132 | 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 | 17,628 | 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 | 5,722 | 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] | States and Political Subdivisions of States [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 - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities, fair value | 93 | 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 | 102 | 60 | ||
Cash and cash equivalents | 7,284 | 6,554 | ||
Restricted cash | 106 | 182 | ||
Net loan receivables | 68,101 | [2] | 63,975 | [2] |
Accrued interest receivables | 618 | 556 | ||
Deposits | 46,089 | 44,959 | ||
Short-term borrowings | 113 | 140 | ||
Accrued interest payables | 132 | 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 | 17,395 | 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 | 5,149 | 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] | States and Political Subdivisions of States [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 - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities, fair value | 91 | 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 | 7,284 | 6,554 | ||
Restricted cash | 106 | 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] | States and Political Subdivisions of States [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 - Agency [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 | 103 | 57 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Net loan receivables | 0 | [2] | 0 | [2] |
Accrued interest receivables | 618 | 556 | ||
Deposits | 46,242 | 45,231 | ||
Short-term borrowings | 113 | 140 | ||
Accrued interest payables | 132 | 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 | 16,067 | 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 | 5,721 | 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] | States and Political Subdivisions of States [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 - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities, fair value | 93 | 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 | 69,316 | [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 | 1,561 | 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] | States and Political Subdivisions of States [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 - Agency [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 $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 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 pretax loss to be reclassified to earnings within twelve months | $40 |
Securitized Debt [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges | 5 years |
Deposits [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges | 7 years |
Derivatives_and_Hedging_Activi3
Derivatives and Hedging Activities (Schedule of Fair Value and Related Outstanding Notional Amounts of Derivative Instruments) (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | ||||||||||||||||||
In Millions, unless otherwise specified | USD ($) | 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] | 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] | 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] | 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 Hedges [Member] | Cash Flow Hedges [Member] | Cash Flow Hedges [Member] | Cash Flow Hedges [Member] | Cash Flow Hedges [Member] | Cash Flow Hedges [Member] | Fair Value Hedges [Member] | Fair Value Hedges [Member] | Fair Value Hedges [Member] | Fair Value Hedges [Member] | Fair Value Hedges [Member] | Fair Value Hedges [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Net Investment Hedge [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [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] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Foreign Exchange Forward Contracts [Member] | Forward Delivery Contracts [Member] | Forward Delivery Contracts [Member] | Forward Delivery Contracts [Member] | Forward Delivery Contracts [Member] | Forward Delivery Contracts [Member] | Forward Delivery Contracts [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] | Interest Rate Lock Commitments [Member] | When-Issued Forward Contracts [Member] | When-Issued Forward Contracts [Member] | |||||||||||||||||||||
Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [Member] | Interest Rate Swaps [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] | USD ($) | USD ($) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | CHF | EUR (€) | GBP (£) | SGD | USD ($) | CHF | EUR (€) | GBP (£) | SGD | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | USD ($) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | USD ($) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | USD ($) | |||||||||||||||||||||
USD ($) | USD ($) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | USD ($) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | USD ($) | EUR (€) | USD ($) | EUR (€) | Other Assets [Member] | Other Assets [Member] | Other Liabilities [Member] | Other Liabilities [Member] | transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | transactions | |||||||||||||||||||||||||||||||||
transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | USD ($) | USD ($) | USD ($) | USD ($) | transactions | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative, notional amount | $4,100 | $2,650 | $5,507 | $7,138 | $7 | [1] | € 6 | $35 | [1] | € 26 | $359 | [2] | $796 | [2] | $53 | [3] | 8 | € 27 | £ 8 | 1 | $44 | [3] | 5 | € 20 | £ 6 | 1 | $761 | $693 | $406 | [2] | $235 | [2] | $33 | $40 | ||||||||||||||||||||||||||||||||||||||||
Derivative, number of outstanding derivative contracts (in contracts) | 8 | 175 | 1 | 1 | 1 | [2] | 9 | 9 | 9 | 9 | 9 | 331 | 1,681 | [2] | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative, derivative assets (at fair value) | 43 | [4] | 79 | [4] | 4 | 18 | 31 | 52 | 0 | 0 | 0 | [2] | 0 | [2] | 0 | 0 | 1 | 5 | 7 | [2] | 4 | [2] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral held, derivative assets | -20 | [5] | -61 | [5] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total net derivative assets | 23 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative, derivative liabilities (at fair value) | 23 | [4] | 7 | [4] | 18 | 0 | 2 | 6 | 0 | 0 | 0 | [2] | 0 | [2] | 0 | 0 | 3 | 1 | 0 | [2] | 0 | [2] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral posted, derivative liabilities | -23 | [5] | -7 | [5] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total net derivative liabilities | $0 | $0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[1] | The foreign exchange forward contract has a notional amount of EUR 6 million and EUR 26 million as of December 31, 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 27 million, GBP 8 million, SGD 1 million and CHF 8 million as of December 31, 2014 and EUR 20 million and 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 enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At December 31, 2014 the Company had one outstanding contract with a notional amount of $33 million and immaterial fair value. At December 31, 2013 the Company one outstanding contract with a notional amount of $40 million and immaterial fair value. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[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) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 |
Designated as Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | $4 | $4 | $32 | $37 |
Designated as Hedges [Member] | Cash Flow and Net Investment Hedges [Member] | Interest Rate Swaps [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (losses) gains recognized in other comprehensive income after amounts reclassified into earnings, pretax, interest rate swaps-cash flow/net investment hedges | -1 | -27 | 13 | -6 |
Designated as Hedges [Member] | Cash Flow and Net Investment Hedges [Member] | Interest Rate Swaps [Member] | Other Comprehensive Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (losses) gains recognized in other comprehensive income after amounts reclassified into earnings, pretax, interest rate swaps-cash flow/net investment hedges | -1 | -27 | 13 | -6 |
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount reclassified from other comprehensive income into income, interest rate swaps-cash flow hedges | 1 | -38 | -8 | 7 |
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | Interest Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount reclassified from other comprehensive income into income, interest rate swaps-cash flow hedges | 1 | 0 | 4 | 7 |
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount reclassified from other comprehensive income into income, interest rate swaps-cash flow hedges | 0 | -38 | -12 | 0 |
Designated as Hedges [Member] | Fair Value Hedges [Member] | Hedged Item [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest expense - ineffectiveness, interest rate swaps-fair value hedges | 10 | 19 | 51 | -52 |
Interest expense - other, interest rate swaps-fair value hedges | -1 | -2 | -6 | -6 |
Gain (loss) on hedged item | 9 | 17 | 45 | -58 |
Designated as Hedges [Member] | Fair Value Hedges [Member] | Interest Rate Swaps [Member] | Derivative [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest expense - ineffectiveness, interest rate swaps-fair value hedges | -9 | -13 | -46 | 58 |
Interest expense - other, interest rate swaps-fair value hedges | 3 | 38 | 41 | 30 |
Gain (loss) on derivatives | -6 | 25 | -5 | 88 |
Not Designated as Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | 18 | 85 | 123 | 103 |
Not Designated as Hedges [Member] | Interest Rate Swaps [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | 0 | -1 | -1 | -7 |
Not Designated as Hedges [Member] | Foreign Exchange Forward Contracts [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | -1 | 5 | -1 | 1 |
Not Designated as Hedges [Member] | Forward Delivery Contracts [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | 2 | -6 | 4 | -1 |
Not Designated as Hedges [Member] | Interest Rate Lock Commitments [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives | $17 | $87 | $121 | $110 |
Segment_Disclosures_Narrative_
Segment Disclosures (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment_Disclosures_Schedule_o
Segment Disclosures (Schedule of Segment Disclosures) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | $595 | $1,974 | $1,926 | $1,863 | $1,833 | $1,842 | $1,787 | $1,727 | $1,708 | $7,596 | $7,064 | $6,703 | |
Interest expense | 103 | 302 | 288 | 274 | 270 | 273 | 278 | 297 | 298 | 1,134 | 1,146 | 1,331 | |
Net interest income | 492 | 1,672 | 1,638 | 1,589 | 1,563 | 1,569 | 1,509 | 1,430 | 1,410 | 6,462 | 5,918 | 5,372 | |
Provision for loan losses | 178 | 457 | 354 | 360 | 272 | 354 | 333 | 240 | 159 | 1,443 | 1,086 | 848 | |
Other income | 200 | 365 | [1] | 552 | 583 | 515 | 560 | 553 | 611 | 582 | 2,015 | 2,306 | 2,281 |
Other expense | 240 | 932 | 827 | 797 | 784 | 838 | 783 | 820 | 753 | 3,340 | 3,194 | 3,052 | |
Income before income tax expense | 274 | 648 | 1,009 | 1,015 | 1,022 | 937 | 946 | 981 | 1,080 | 3,694 | 3,944 | 3,753 | |
Credit Card Receivable [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 510 | 6,359 | 5,978 | 5,751 | |||||||||
Provision for loan losses | 165 | 1,259 | 893 | 724 | |||||||||
Private Student Loans [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 18 | 312 | 252 | 184 | |||||||||
PCI Student Loans [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 24 | 260 | 272 | 303 | |||||||||
Provision for loan losses | 0 | 28 | |||||||||||
Personal Loans [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 34 | 568 | 464 | 363 | |||||||||
Other [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 9 | 97 | 98 | 102 | |||||||||
Operating Segments [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 595 | 7,596 | 7,064 | 6,703 | |||||||||
Interest expense | 103 | 1,134 | 1,146 | 1,331 | |||||||||
Net interest income | 492 | 6,462 | 5,918 | 5,372 | |||||||||
Provision for loan losses | 178 | 1,440 | 1,069 | 848 | |||||||||
Other income | 169 | 1,700 | 1,976 | 1,939 | |||||||||
Other expense | 224 | 3,117 | 2,961 | 2,891 | |||||||||
Income before income tax expense | 259 | 3,605 | 3,864 | 3,572 | |||||||||
Operating Segments [Member] | 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 | 0 | 3 | 17 | 0 | |||||||||
Other income | 31 | 315 | 330 | 342 | |||||||||
Other expense | 16 | 223 | 233 | 161 | |||||||||
Income before income tax expense | 15 | 89 | 80 | 181 | |||||||||
Operating Segments [Member] | Credit Card Receivable [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 510 | 6,359 | 5,978 | 5,751 | |||||||||
Operating Segments [Member] | Credit Card Receivable [Member] | Payment Services [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 0 | 0 | 0 | 0 | |||||||||
Operating Segments [Member] | Private Student Loans [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 18 | 312 | 252 | 184 | |||||||||
Operating Segments [Member] | Private Student Loans [Member] | Payment Services [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 0 | 0 | 0 | 0 | |||||||||
Operating Segments [Member] | PCI Student Loans [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 24 | 260 | 272 | 303 | |||||||||
Operating Segments [Member] | PCI Student Loans [Member] | Payment Services [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 0 | 0 | 0 | 0 | |||||||||
Operating Segments [Member] | Personal Loans [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 34 | 568 | 464 | 363 | |||||||||
Operating Segments [Member] | Personal Loans [Member] | Payment Services [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 0 | 0 | 0 | 0 | |||||||||
Operating Segments [Member] | Other [Member] | Direct Banking [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | 9 | 97 | 98 | 102 | |||||||||
Operating Segments [Member] | Other [Member] | Payment Services [Member] | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Interest income | $0 | $0 | $0 | $0 | |||||||||
[1] | During the three months ended December 31, 2014, the Company made certain changes to its customer rewards program eliminating forfeitures. These changes resulted in a one-time expense of $178 million due to the reversal of the estimate for customer rewards forfeiture, a contra-account to accrued expenses and other liabilities. |
Parent_Company_Condensed_Finan2
Parent Company Condensed Financial Information Parent Company Condensed Financial Information (Narrative) (Details) (Parent Company [Member]) | Dec. 31, 2014 |
Parent Company [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Threshold for parent company financial information disclosure | 25.00% |
Parent_Company_Condensed_Finan3
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Financial Condition) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2011 | |
Assets | ||||||
Cash and cash equivalents | $7,284,000,000 | $6,554,000,000 | $2,584,000,000 | $3,926,000,000 | $2,850,000,000 | |
Other assets | 2,461,000,000 | 2,367,000,000 | ||||
Total assets | 83,126,000,000 | 79,340,000,000 | ||||
Liabilities and Stockholders’ Equity | ||||||
Non-interest bearing deposit accounts | 297,000,000 | 193,000,000 | ||||
Interest-bearing deposit accounts | 45,792,000,000 | 44,766,000,000 | ||||
Total deposits | 46,089,000,000 | 44,959,000,000 | ||||
Other long-term borrowings | 22,544,000,000 | 20,474,000,000 | ||||
Accrued expenses and other liabilities | 3,246,000,000 | 2,958,000,000 | ||||
Total liabilities | 71,992,000,000 | 68,531,000,000 | ||||
Stockholders' equity | 11,134,000,000 | 10,809,000,000 | 9,873,000,000 | 9,778,000,000 | 8,242,000,000 | |
Total liabilities and stockholders' equity | 83,126,000,000 | 79,340,000,000 | ||||
Parent Company [Member] | ||||||
Assets | ||||||
Cash and cash equivalents | 79,000,000 | 4,000,000 | 41,000,000 | 1,000,000 | 1,000,000 | |
Notes receivable from subsidiaries | 2,436,000,000 | [1] | 2,254,000,000 | |||
Investments in subsidiaries | 10,360,000,000 | 9,824,000,000 | ||||
Other assets | 204,000,000 | 158,000,000 | ||||
Total assets | 13,079,000,000 | 12,240,000,000 | ||||
Liabilities and Stockholders’ Equity | ||||||
Non-interest bearing deposit accounts | 1,000,000 | 6,000,000 | ||||
Interest-bearing deposit accounts | 4,000,000 | 7,000,000 | ||||
Total deposits | 5,000,000 | 13,000,000 | ||||
Short-term borrowings from subsidiaries | 108,000,000 | 146,000,000 | ||||
Other long-term borrowings | 1,559,000,000 | 1,045,000,000 | ||||
Accrued expenses and other liabilities | 273,000,000 | 227,000,000 | ||||
Total liabilities | 1,945,000,000 | 1,431,000,000 | ||||
Stockholders' equity | 11,134,000,000 | 10,809,000,000 | ||||
Total liabilities and stockholders' equity | 13,079,000,000 | 12,240,000,000 | ||||
Discover Bank [Member] | Parent Company [Member] | ||||||
Liabilities and Stockholders’ Equity | ||||||
Liquidity available to parent from funds advanced to subsidiary | $2,200,000,000 | |||||
[1] | The Parent Company advanced $2.2 billion to Discover Bank as of December 31, 2014, which is included in notes receivables from subsidiaries. These funds are available to the Parent for liquidity purposes. |
Parent_Company_Condensed_Finan4
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Income) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Condensed Financial Statements, Captions [Line Items] | |||||||||||||
Interest income | $595 | $1,974 | $1,926 | $1,863 | $1,833 | $1,842 | $1,787 | $1,727 | $1,708 | $7,596 | $7,064 | $6,703 | |
Interest expense | 103 | 302 | 288 | 274 | 270 | 273 | 278 | 297 | 298 | 1,134 | 1,146 | 1,331 | |
Net interest expense | 492 | 1,672 | 1,638 | 1,589 | 1,563 | 1,569 | 1,509 | 1,430 | 1,410 | 6,462 | 5,918 | 5,372 | |
Employee compensation and benefits | 87 | 1,242 | 1,164 | 1,048 | |||||||||
Professional fees | 34 | 450 | 410 | 432 | |||||||||
Other | 35 | 475 | 488 | 604 | |||||||||
Total other expense (benefit) | 240 | 932 | 827 | 797 | 784 | 838 | 783 | 820 | 753 | 3,340 | 3,194 | 3,052 | |
Income (loss) before income tax benefit (expense) and equity in undistributed net income of subsidiaries | 274 | 648 | 1,009 | 1,015 | 1,022 | 937 | 946 | 981 | 1,080 | 3,694 | 3,944 | 3,753 | |
Income tax benefit (expense) | -104 | -244 | -365 | -371 | -391 | -335 | -353 | -379 | -407 | -1,371 | -1,474 | -1,408 | |
Net income | 170 | 404 | 644 | 644 | 631 | 602 | 593 | 602 | 673 | 2,323 | 2,470 | 2,345 | |
Premium paid on debt exchange | 0 | 0 | 0 | 291 | |||||||||
Discover Bank [Member] | |||||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||||
Premium paid on debt exchange | 176 | ||||||||||||
Parent Company [Member] | |||||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||||
Interest income | 2 | 18 | 22 | 22 | |||||||||
Interest expense | 7 | 86 | 84 | 52 | |||||||||
Net interest expense | -5 | -68 | -62 | -30 | |||||||||
Dividends from subsidiaries | 0 | 1,860 | 1,600 | 1,500 | |||||||||
Total income (loss) | -5 | 1,792 | 1,538 | 1,470 | |||||||||
Employee compensation and benefits | 0 | 1 | 0 | 0 | |||||||||
Professional fees | 0 | 3 | 3 | 1 | |||||||||
Other | 0 | 0 | 1 | -171 | [1] | ||||||||
Total other expense (benefit) | 0 | 4 | 4 | -170 | |||||||||
Income (loss) before income tax benefit (expense) and equity in undistributed net income of subsidiaries | -5 | 1,788 | 1,534 | 1,640 | |||||||||
Income tax benefit (expense) | 2 | 18 | 17 | -54 | |||||||||
Equity in undistributed net income of subsidiaries | 173 | 517 | 919 | 759 | |||||||||
Net income | 170 | 2,323 | 2,470 | 2,345 | |||||||||
Premium paid on debt exchange | 0 | 0 | 0 | 115 | |||||||||
Parent Company [Member] | Senior Notes [Member] | |||||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||||
Outstanding aggregate principal amount exchanged | $500 | ||||||||||||
[1] | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. |
Parent_Company_Condensed_Finan5
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Cash Flows) (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
Cash flows from operating activities | |||||
Net income | $170 | $2,323 | $2,470 | $2,345 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Stock-based compensation expense | 3 | 60 | 59 | 47 | |
Deferred income taxes | -12 | -11 | 322 | 146 | |
Depreciation and amortization | 6 | 78 | 65 | 63 | |
Changes in assets and liabilities: | |||||
(Increase) decrease in other assets | -68 | -238 | -252 | -112 | |
Net cash provided by operating activities | 222 | 3,826 | 3,517 | 3,041 | |
Cash flows from investing activities | |||||
Net cash (used for) provided by investing activities | 409 | -4,197 | -3,163 | -5,693 | |
Cash flows from financing activities | |||||
Net (decrease) increase in short-term borrowings from subsidiaries | 43 | -27 | -231 | 234 | |
Proceeds from issuance of common stock | 2 | 5 | 13 | 26 | |
Proceeds from issuance of preferred stock | 0 | 0 | 0 | 560 | |
Purchases of treasury stock | -12 | -1,564 | -1,296 | -1,216 | |
Net (decrease) increase in deposits | 65 | 1,137 | 2,782 | 2,539 | |
Premium paid on debt exchange | 0 | 0 | 0 | -291 | |
Dividends paid on common and preferred stock | -5 | -467 | -399 | -209 | |
Net cash used for financing activities | -1,973 | 1,101 | 3,616 | 3,728 | |
Increase (decrease) in cash and cash equivalents | -1,342 | 730 | 3,970 | 1,076 | |
Cash and cash equivalents, at beginning of period | 3,926 | 6,554 | 2,584 | 2,850 | |
Cash and cash equivalents, at end of period | 2,584 | 7,284 | 6,554 | 3,926 | |
Cash paid during the period for: | |||||
Cash paid during the period for interest expense | 81 | 933 | 975 | 1,203 | |
Cash paid during the period for income taxes, net of income tax refunds | -1 | 1,388 | 1,348 | 1,301 | |
Parent Company [Member] | |||||
Cash flows from operating activities | |||||
Net income | 170 | 2,323 | 2,470 | 2,345 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Equity in undistributed net income of subsidiaries | -173 | -517 | -919 | -759 | |
Stock-based compensation expense | 3 | 60 | 59 | 47 | |
Deferred income taxes | -1 | -5 | -2 | 109 | |
Premium on debt issuance | 0 | 0 | 0 | -176 | [1] |
Depreciation and amortization | 1 | 21 | 19 | 4 | |
Changes in assets and liabilities: | |||||
(Increase) decrease in other assets | 32 | -50 | -33 | -16 | |
Increase (decrease) in other liabilities and accrued expenses | -15 | 32 | 29 | 10 | |
Net cash provided by operating activities | 17 | 1,864 | 1,623 | 1,564 | |
Cash flows from investing activities | |||||
Increase in investment in subsidiaries | -1 | -35 | 0 | -196 | |
(Increase) decrease in loans to subsidiaries | 57 | -182 | -29 | -520 | |
Net cash (used for) provided by investing activities | 56 | -217 | -29 | -716 | |
Cash flows from financing activities | |||||
Net (decrease) increase in short-term borrowings from subsidiaries | -6 | -38 | 58 | 1 | |
Proceeds from issuance of common stock | 2 | 5 | 13 | 26 | |
Proceeds from issuance of preferred stock | 0 | 0 | 0 | 560 | |
Proceeds from issuance of long-term borrowings | 0 | 500 | 0 | 0 | |
Proceeds from advances from subsidiaries | 0 | 0 | 0 | 93 | |
Purchases of treasury stock | -12 | -1,564 | -1,296 | -1,216 | |
Net (decrease) increase in deposits | -12 | -8 | -7 | 12 | |
Premium paid on debt exchange | 0 | 0 | 0 | -115 | |
Dividends paid on common and preferred stock | -5 | -467 | -399 | -209 | |
Net cash used for financing activities | -33 | -1,572 | -1,631 | -848 | |
Increase (decrease) in cash and cash equivalents | 40 | 75 | -37 | 0 | |
Cash and cash equivalents, at beginning of period | 1 | 4 | 41 | 1 | |
Cash and cash equivalents, at end of period | 41 | 79 | 4 | 1 | |
Cash paid during the period for: | |||||
Cash paid during the period for interest expense | 2 | 66 | 65 | 66 | |
Cash paid during the period for income taxes, net of income tax refunds | 0 | 65 | -1 | -65 | |
Non-cash investing and financing transactions: | |||||
Capital contribution to subsidiary | 0 | 0 | 0 | 499 | [1] |
Debt issuance, net of discount | 0 | 0 | 0 | -499 | [1] |
Parent Company [Member] | Senior Notes [Member] | |||||
Non-cash investing and financing transactions: | |||||
Outstanding aggregate principal amount exchanged | $500 | ||||
[1] | During the 2012 fiscal year, the Company completed a private exchange offer, resulting in the exchange of $500 million outstanding aggregate principal amount of subordinated debt issued by a subsidiary for the same aggregate principal amount of new senior notes issued by the Parent. A cash premium of $176 million was paid by the subsidiary but is associated with the borrowings on the Parent financial statements. |
Quarterly_Results_Schedule_of_
Quarterly Results (Schedule of Quarterly Results) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | ||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||||||
Interest income | $595 | $1,974 | $1,926 | $1,863 | $1,833 | $1,842 | $1,787 | $1,727 | $1,708 | $7,596 | $7,064 | $6,703 | ||||||||
Interest expense | 103 | 302 | 288 | 274 | 270 | 273 | 278 | 297 | 298 | 1,134 | 1,146 | 1,331 | ||||||||
Net interest income | 492 | 1,672 | 1,638 | 1,589 | 1,563 | 1,569 | 1,509 | 1,430 | 1,410 | 6,462 | 5,918 | 5,372 | ||||||||
Provision for loan losses | 178 | 457 | 354 | 360 | 272 | 354 | 333 | 240 | 159 | 1,443 | 1,086 | 848 | ||||||||
Other income | 200 | 365 | [1] | 552 | 583 | 515 | 560 | 553 | 611 | 582 | 2,015 | 2,306 | 2,281 | |||||||
Other expense | 240 | 932 | 827 | 797 | 784 | 838 | 783 | 820 | 753 | 3,340 | 3,194 | 3,052 | ||||||||
Income before income tax expense | 274 | 648 | 1,009 | 1,015 | 1,022 | 937 | 946 | 981 | 1,080 | 3,694 | 3,944 | 3,753 | ||||||||
Income tax expense | 104 | 244 | 365 | 371 | 391 | 335 | 353 | 379 | 407 | 1,371 | 1,474 | 1,408 | ||||||||
Net income | 170 | 404 | 644 | 644 | 631 | 602 | 593 | 602 | 673 | 2,323 | 2,470 | 2,345 | ||||||||
Net income allocated to common stockholders | 168 | 392 | [2] | 630 | [2] | 630 | [2] | 618 | [2] | 588 | [2] | 579 | [2] | 588 | [2] | 659 | [2] | 2,270 | 2,414 | 2,318 |
Basic earnings per common share (in dollars per share) | $0.34 | $0.87 | [2] | $1.37 | [2] | $1.35 | [2] | $1.31 | [2] | $1.24 | [2] | $1.20 | [2] | $1.20 | [2] | $1.33 | [2] | $4.91 | $4.97 | $4.47 |
Diluted earnings per common share (in dollars per share) | $0.34 | $0.87 | [2] | $1.37 | [2] | $1.35 | [2] | $1.31 | [2] | $1.23 | [2] | $1.20 | [2] | $1.20 | [2] | $1.33 | [2] | $4.90 | $4.96 | $4.46 |
Customer rewards forfeiture reversal expense | $0 | $178 | $0 | $0 | ||||||||||||||||
[1] | During the three months ended December 31, 2014, the Company made certain changes to its customer rewards program eliminating forfeitures. These changes resulted in a one-time expense of $178 million due to the reversal of the estimate for customer rewards forfeiture, a contra-account to accrued expenses and other liabilities. | |||||||||||||||||||
[2] | Because the inputs to net income allocated to common stockholders and earnings per share are calculated using weighted averages for the quarter, the sum of all four quarters may differ from the year to date amounts in the consolidated statements of income. |