Document and Entity Information
Document and Entity Information Document - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 17, 2017 | Jun. 30, 2016 | |
Document Information [Line Items] | |||
Document type | 10-K | ||
Amendment flag | false | ||
Document period end date | Dec. 31, 2016 | ||
Document fiscal year focus | 2,016 | ||
Document fiscal period focus | FY | ||
Entity registrant name | Discover Financial Services | ||
Entity central index key | 1,393,612 | ||
Current fiscal year end date | --12-31 | ||
Entity filer category | Large Accelerated Filer | ||
Entity common stock, shares outstanding | 385,534,055 | ||
Entity well-known seasoned issuer | Yes | ||
Entity voluntary filers | No | ||
Entity current reporting status | Yes | ||
Entity public float | $ 21,650,557,104 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | |||
Cash and cash equivalents | $ 11,914 | $ 9,572 | |
Restricted cash | 95 | 99 | |
Investment securities (includes $1,605 and $2,963 at fair value at December 31, 2016 and 2015, respectively) | 1,757 | 3,084 | |
Loan receivables: | |||
Loan receivables | 77,254 | 72,385 | |
Allowance for loan losses | (2,167) | (1,869) | |
Net loan receivables | 75,087 | 70,516 | |
Premises and equipment, net | 734 | 693 | |
Goodwill | 255 | 255 | |
Intangible assets, net | 166 | 168 | |
Other assets | 2,300 | 2,412 | |
Total assets | 92,308 | 86,799 | |
Deposits: | |||
Interest-bearing deposit accounts | 51,461 | 47,094 | [1] |
Non-interest bearing deposit accounts | 531 | 437 | |
Total deposits | 51,992 | 47,531 | |
Long-term borrowings | 25,443 | 24,650 | [2] |
Accrued expenses and other liabilities | 3,550 | 3,343 | |
Total liabilities | 80,985 | 75,524 | |
Commitments, contingencies and guarantees (Notes 16, 19, and 20) | |||
Stockholders’ Equity: | |||
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 562,414,040 and 560,679,352 shares issued at December 31, 2016 and 2015, 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, 2016 and 2015, respectively | 560 | 560 | |
Additional paid-in capital | 3,962 | 3,885 | |
Retained earnings | 15,130 | 13,250 | |
Accumulated other comprehensive loss | (161) | (160) | |
Treasury stock, at cost; 173,648,023 and 139,000,423 shares at December 31, 2016 and 2015, respectively | (8,173) | (6,265) | |
Total stockholders’ equity | 11,323 | 11,275 | |
Total liabilities and stockholders’ equity | 92,308 | 86,799 | |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Assets | |||
Restricted cash | 95 | 99 | |
Loan receivables: | |||
Loan receivables | 33,016 | 30,551 | |
Allowance for loan losses | (955) | (811) | |
Other assets | 4 | 5 | |
Deposits: | |||
Long-term borrowings | 16,411 | 16,735 | [2] |
Accrued expenses and other liabilities | $ 15 | $ 12 | |
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | ||
[2] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Consolidated Statements of Fin3
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Financial Position [Abstract] | |||
Amount of total investment securities at fair value | [1] | $ 1,605,000,000 | $ 2,963,000,000 |
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 | 562,414,040 | 560,679,352 | |
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 | 173,648,023 | 139,000,423 | |
[1] | Available-for-sale investment securities are reported at fair value. |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Interest income: | |||
Credit card loans | $ 7,155 | $ 6,626 | $ 6,359 |
Other loans | 1,361 | 1,243 | 1,151 |
Investment securities | 38 | 49 | 67 |
Other interest income | 62 | 27 | 19 |
Total interest income | 8,616 | 7,945 | 7,596 |
Interest expense: | |||
Deposits | 687 | 623 | 614 |
Short-term borrowings | 0 | 1 | 2 |
Long-term borrowings | 711 | 639 | 518 |
Total interest expense | 1,398 | 1,263 | 1,134 |
Net interest income | 7,218 | 6,682 | 6,462 |
Provision for loan losses | 1,859 | 1,512 | 1,443 |
Net interest income after provision for loan losses | 5,359 | 5,170 | 5,019 |
Other income: | |||
Discount and interchange revenue, net | 1,055 | 1,117 | 979 |
Protection products revenue | 239 | 261 | 314 |
Loan fee income | 343 | 335 | 334 |
Transaction processing revenue | 155 | 159 | 182 |
Gain on investments | 0 | 9 | 4 |
Gain on origination and sale of mortgage loans | 0 | 68 | 81 |
Other income | 89 | 108 | 121 |
Total other income | 1,881 | 2,057 | 2,015 |
Other expense: | |||
Employee compensation and benefits | 1,379 | 1,327 | 1,242 |
Marketing and business development | 731 | 745 | 735 |
Information processing and communications | 339 | 349 | 346 |
Professional fees | 605 | 610 | 450 |
Premises and equipment | 95 | 95 | 92 |
Other expense | 435 | 489 | 475 |
Total other expense | 3,584 | 3,615 | 3,340 |
Income before income tax expense | 3,656 | 3,612 | 3,694 |
Income tax expense | 1,263 | 1,315 | 1,371 |
Net income | 2,393 | 2,297 | 2,323 |
Net income allocated to common stockholders | $ 2,339 | $ 2,246 | $ 2,270 |
Basic earnings per common share (in dollars per share) | $ 5.77 | $ 5.14 | $ 4.91 |
Diluted earnings per common share (in dollars per share) | $ 5.77 | $ 5.13 | $ 4.90 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net income | $ 2,393 | $ 2,297 | $ 2,323 |
Other comprehensive (loss) income, net of taxes | |||
Unrealized (loss) gain on available-for-sale investment securities, net of tax | (3) | (23) | 4 |
Unrealized gain (loss) on cash flow hedges, net of tax | 7 | (13) | (20) |
Unrealized pension plan (loss) gain, net of tax | (5) | 14 | (53) |
Foreign currency translation adjustments, net of tax | 0 | 0 | (1) |
Other comprehensive loss | (1) | (22) | (70) |
Comprehensive income | $ 2,392 | $ 2,275 | $ 2,253 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss | Treasury Stock [Member] |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2013 | 575,000 | ||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2013 | 555,350,000 | ||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2013 | $ 10,809 | $ 560 | $ 5 | $ 3,687 | $ 9,611 | $ (68) | $ (2,986) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 2,323 | 2,323 | |||||
Other comprehensive income (loss) | (70) | (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) | |||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2014 | 575,000 | ||||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2014 | 558,194,000 | ||||||
Stockholders' equity, balance at end of period at Dec. 31, 2014 | 11,134 | $ 560 | $ 5 | 3,790 | 11,467 | (138) | (4,550) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 2,297 | 2,297 | |||||
Other comprehensive income (loss) | (22) | (22) | |||||
Purchases of treasury stock | (1,715) | (1,715) | |||||
Common stock issued under employee benefit plans (in shares) | 83,000 | ||||||
Common stock issued under employee benefit plans | 4 | $ 0 | 4 | ||||
Common stock issued and stock-based compensation expense (in shares) | 2,402,000 | ||||||
Common stock issued and stock-based compensation expense | 91 | $ 0 | 91 | ||||
Dividends — common stock | (477) | (477) | |||||
Dividends — preferred stock | $ (37) | (37) | |||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2015 | 575,000 | 575,000 | |||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2015 | 560,679,000 | ||||||
Stockholders' equity, balance at end of period at Dec. 31, 2015 | $ 11,275 | $ 560 | $ 5 | 3,885 | 13,250 | (160) | (6,265) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 2,393 | 2,393 | |||||
Other comprehensive income (loss) | (1) | (1) | |||||
Purchases of treasury stock | (1,908) | (1,908) | |||||
Common stock issued under employee benefit plans (in shares) | 81,000 | ||||||
Common stock issued under employee benefit plans | 4 | $ 0 | 4 | ||||
Common stock issued and stock-based compensation expense (in shares) | 1,654,000 | ||||||
Common stock issued and stock-based compensation expense | 73 | $ 0 | 73 | ||||
Dividends — common stock | (476) | (476) | |||||
Dividends — preferred stock | $ (37) | (37) | |||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2016 | 575,000 | 575,000 | |||||
Common stock, shares outstanding, balance at end of period (in shares) at Dec. 31, 2016 | 562,414,000 | ||||||
Stockholders' equity, balance at end of period at Dec. 31, 2016 | $ 11,323 | $ 560 | $ 5 | $ 3,962 | $ 15,130 | $ (161) | $ (8,173) |
Consolidated Statements of Cha7
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends declared, common stock (dollars per share) | $ 1.16 | $ 1.08 | $ 0.92 |
Dividends declared, preferred stock (dollars per share) | $ 65 | $ 65 | $ 65 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | |||
Net income | $ 2,393 | $ 2,297 | $ 2,323 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for loan losses | 1,859 | 1,512 | 1,443 |
Depreciation and amortization | 351 | 391 | 369 |
Amortization of deferred revenues and accretion of accretable yield on acquired loans | (395) | (432) | (474) |
Net loss (gain) on origination and sale of loans, investments, and other assets | 57 | (26) | (56) |
Proceeds from sale of mortgage loans originated for sale | 0 | 2,714 | 2,811 |
Net principal disbursed on mortgage loans originated for sale | 0 | (2,519) | (2,700) |
Other, net | 113 | (8) | 275 |
Changes in assets and liabilities: | |||
Increase in other assets | (187) | (237) | (238) |
Increase in accrued expenses and other liabilities | 234 | 162 | 73 |
Net cash provided by operating activities | 4,425 | 3,854 | 3,826 |
Cash flows from investing activities | |||
Maturities and sales of available-for-sale investment securities | 1,342 | 1,517 | 1,460 |
Purchases of available-for-sale investment securities | 0 | (677) | (390) |
Maturities of held-to-maturity investment securities | 24 | 17 | 10 |
Purchases of held-to-maturity investment securities | (56) | (37) | (53) |
Net principal disbursed on loans originated for investment | (5,978) | (3,479) | (5,095) |
Purchases of other investments | (51) | (51) | (60) |
Decrease in restricted cash | 4 | 7 | 76 |
Proceeds from sale of premises and equipment | 0 | 1 | 0 |
Purchases of premises and equipment | (179) | (168) | (145) |
Proceeds from sale of subsidiaries | 0 | 2 | 0 |
Net cash used for investing activities | (4,894) | (2,868) | (4,197) |
Cash flows from financing activities | |||
Net decrease in short-term borrowings | 0 | (113) | (27) |
Proceeds from issuance of securitized debt | 3,070 | 2,975 | 5,049 |
Maturities and repayment of securitized debt | (3,419) | (3,634) | (4,678) |
Proceeds from issuance of other long-term borrowings | 1,122 | 2,789 | 1,646 |
Proceeds from issuance of common stock | 7 | 5 | 5 |
Purchases of treasury stock | (1,908) | (1,715) | (1,564) |
Net increase in deposits | 4,453 | 1,510 | 1,137 |
Dividends paid on common and preferred stock | (514) | (515) | (467) |
Net cash provided by financing activities | 2,811 | 1,302 | 1,101 |
Net increase in cash and cash equivalents | 2,342 | 2,288 | 730 |
Cash and cash equivalents, at beginning of period | 9,572 | 7,284 | 6,554 |
Cash and cash equivalents, at end of period | 11,914 | 9,572 | 7,284 |
Cash paid during the period for: | |||
Interest expense | 1,211 | 1,070 | 933 |
Income taxes, net of income tax refunds | $ 1,300 | $ 1,341 | $ 1,388 |
Background and Basis of Present
Background and Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
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 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 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 ("POS") 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 Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home equity loans, 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, 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. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue from Diners Club. 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. Change in Accounting Principle In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Interest—-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which makes the presentation of debt issuance costs consistent with that of debt discounts and premiums. This ASU requires that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability. Before becoming effective for the Company on January 1, 2016, these costs were recorded as deferred charges presented in other assets on the consolidated statements of financial condition. The guidance requires retrospective application in the financial statements. As such, some balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of a related liability. The impact of adopting this ASU was a reduction of other assets of $137 million , a reduction of long-term borrowings of $74 million and a reduction of deposits of $63 million at December 31, 2015 when compared with the same 2015 balances not reflecting the debt issuance cost guidance. There was no impact to the consolidated statements of income. 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 ("VIE") for which the Company is the primary beneficiary, as defined by GAAP. On this basis, the Company consolidates the Discover Card Master Trust I ("DCMT") and the Discover Card Execution Note Trust ("DCENT") 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 VIE during the years ended December 31, 2016, 2015 and 2014 . 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 November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Whereas restricted cash balances have traditionally been excluded from the statement of cash flows, this ASU requires restricted cash and restricted cash equivalents to be included within the beginning and ending totals of cash, cash equivalents and restricted cash, presented on the statement of cash flows for the respective comparative reporting periods. Restricted cash and restricted cash equivalent inflows and outflows with external parties are required to be classified within the operating, investing, and/or financing activity sections of the statement of cash flows whereas transfers between cash and cash equivalents and restricted cash and restricted cash equivalents should no longer be presented on the statement of cash flows. ASU 2016-18 also requires the nature of the restrictions to be disclosed to help provide information about the sources and uses of these balances during a reporting period and a reconciliation of the cash, cash equivalents and restricted cash totals on the statement of cash flows to the related balance sheet line items when cash, cash equivalents, and restricted cash are presented in more than one line item on the balance sheet. The reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements and must be provided for each period that a balance sheet is presented. The ASU will become effective for the Company on January 1, 2018, with early adoption permitted, and is not expected to have a material impact to the Company’s statement of cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU eliminates the incurred loss threshold for initial recognition in current GAAP and replaces it with the expected loss concept. For all loans carried at amortized cost, companies will be required to measure their allowance for loan losses based on management’s current estimate of all expected credit losses over the remaining contractual term of the assets. Because it eliminates the incurred loss trigger, the new accounting guidance will require companies, upon the origination of a loan, to record their estimate of all expected credit losses on that loan through an immediate charge to earnings. The estimate of loan losses must be based on historical experience, current conditions and reasonable and supportable forecasts. The ASU does not mandate the use of any specific method for estimating credit loss, permitting companies to use judgment in selecting the approach that is most appropriate in their circumstances. The new rules are expected to affect the Company’s allowance for loan losses as a result of: (1) the requirement to measure the allowance based on all losses expected to occur over the remaining life of the loans receivable rather than including only losses deemed to be related to a past event or current condition, and (2) the reclassification of the non-accretable credit adjustment, currently embedded in the Company’s purchased credit-impaired ("PCI") student loan portfolio, into the allowance for loan losses. The separate measurement guidance applicable today for loans modified in a troubled debt restructuring will also be affected. Both troubled debt restructurings and PCI assets, which the ASU refers to as purchased credit-deteriorated (“PCD”), will still be subject to certain separate disclosure requirements. Measurement of credit impairment of available-for-sale debt securities will remain unchanged under the new rules, but any such impairment will be recorded through an allowance, rather than a direct write-down of the security. The ASU will become effective for the Company on January 1, 2020, with early adoption permitted no sooner than January 1, 2019. Upon adoption, a cumulative effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective in an amount necessary to adjust the allowance for loan losses to equal the current estimate of expected losses on financial assets held at that date. Additionally, upon adoption, the carrying value of PCD loans will be increased through an offsetting addition to the allowance for loan losses for the amount of expected credit losses on those loans, to be evaluated and adjusted on a periodic basis, and any non-credit premium or discount will be amortized or accreted to interest income from that point forward over the remaining life of PCD loans. Management is evaluating the standard, initiating implementation efforts across the Company, and planning for loss modeling requirements consistent with lifetime expected loss estimates. Adoption of the standard could have a potentially material impact on how the Company records and reports its financial condition and results of operations, and on regulatory capital. The extent of the impact upon adoption will likely depend on the characteristics of the Company’s loan portfolio and economic conditions at that date, as well as forecasted conditions thereafter. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense for GAAP accounting purposes and the amount deductible for tax purposes, to be recorded directly through the income statement as a component of income tax expense. Under current GAAP, these differences are generally recorded in additional paid-in capital and thus have no impact on net income today. The change in treatment of excess tax benefits and tax deficiencies will also impact the computation of diluted earnings per share, and the cash flows associated with those items will be classified as operating activities on the statement of cash flows. The ASU permits certain elective changes associated with stock compensation accounting. For example, companies can elect to account for forfeitures of awards as they occur rather than projecting forfeitures in the accrual of compensation expense. In addition, the ASU increases the proportion of shares an employer is permitted (though not required) to withhold on behalf of an employee to satisfy the employee’s income tax burden on a share-based award without causing the award to become subject to liability accounting. This ASU became effective for the Company on January 1, 2017. The impact to net income and earnings per share that will result from the treatment of excess tax benefits after adoption of ASU 2016-09 will depend on the difference between the market price of Company stock between the grant dates and subsequent vesting dates of share-based awards, and this impact could be positive or negative depending on how the Company’s stock price moves. The Company will continue to incorporate estimated forfeitures in the accrual of compensation expense. If the Company elects to permit employees to request withholdings of shares in excess of the statutory minimum to cover personal tax liabilities, it will have no financial statement impact. The Company has no plans to make any change concerning this practice at this time. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The guidance in this ASU provides clarification on the principal versus agent concept in relation to revenue recognition guidance issued as part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 requires a company to determine whether it is a principal or an agent in a transaction in which another party is involved in providing goods or services to a customer by evaluating the nature of its promise to the customer. ASU 2016-08 provides clarification for identifying the good, service or right being transferred in a revenue transaction and identifies the principal as the party that controls the good, service or right prior to its transfer to the customer. The ASU provides further clarity on how to evaluate control in this context. This guidance will become effective for the Company on January 1, 2018 and management is evaluating the impact of these changes as part of its overall evaluation of ASU 2014-09, discussed below. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance will require lessees to capitalize most leases on their balance sheet whereas under current GAAP only capital leases are recognized on the lessee’s balance sheet. Leases which today are identified as capital leases will generally be identified as financing leases under the new guidance but otherwise their accounting treatment will remain relatively unchanged. Leases identified today as operating leases will generally remain in that category under the new standard, but both a right-of-use asset and a liability for remaining lease payments will now be required to be recognized on the balance sheet for this type of lease. The manner in which expenses associated with all leases are reported on the income statement will remain mostly unchanged. Lessor accounting also remains substantially unchanged by the new standard. The new guidance will become effective for the Company on January 1, 2019, and management does not anticipate it to have a material impact on the consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU will have limited impact on the Company since it does not change the guidance for classifying and measuring investments in debt securities or loans. The standard requires entities to measure certain cost-method equity investments at fair value with changes in value recognized in net income. Equity investments that do not have readily determinable fair values will be carried at cost, less any impairment, plus or minus changes resulting from any observable price changes in orderly transactions for an identical or similar investment of the same issuer. This ASU requires public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans) on the balance sheet or the accompanying notes to the financial statements. This ASU will become effective for the Company on January 1, 2018 and is not expected to have a material impact to the financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU supersedes existing revenue recognition requirements in Topic 605, Revenue Recognition, including an assortment of transaction-specific and industry-specific rules. This 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. Throughout 2015, management followed the discussions of the FASB and evaluated the conclusions published by its Transition Resource Group ("TRG"), specifically those pertaining to how the new revenue recognition rules should be interpreted for credit card arrangements, loyalty programs and transaction processing arrangements. Those discussions support the conclusion that timing and measurement of fee revenues associated with the Company’s credit card arrangements and costs associated with the Company’s credit card reward programs will not be impacted by the new rules. The FASB TRG discussions and guidance also support the conclusion that the timing and measurement of revenue associated with the Company’s transaction processing services, including discount and interchange and other transaction processing fees, will remain substantially unchanged under the new accounting model. This conclusion covers the vast majority of the Company’s revenue that is within the scope of the new standard. While management continues to evaluate the remaining in-scope revenue items to determine what, if any, impact the rules will have on their accounting and reporting, no material impacts are expected. The new revenue recognition model will become effective for the Company on January 1, 2018. Upon adoption in 2018, the Company will record an adjustment, if needed, 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, 2018, without restating prior periods presented. Because little if any change in timing or measurement of the Company’s revenue is expected to occur under the new standard, management does not expect to present any restated prior period amounts when the standard becomes effective in 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
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 $1.2 billion and $0.9 billion of cash and due from banks and $10.7 billion and $8.6 billion of interest-earning deposits in other banks at December 31, 2016 and 2015 , 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, 2016 , investment securities consisted of U.S. Treasury 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 ("AOCI") included in stockholders' equity. The Company estimates the fair value of available-for-sale investment securities as more fully discussed in Note 21: 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 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 and other loans and are reported at their principal amounts outstanding. For student loans, principal amounts outstanding also include accrued interest that has been capitalized. 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 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 losses 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. However, as noted below, a charge to provision expense may be necessary to the extent that expected credit losses increase after the acquisition date. 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 and Charge-Offs 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 associated with the Company's loan receivables. The allowance is evaluated quarterly 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 losses on several analyses that help estimate incurred losses as of the balance sheet date. While the Company's estimation process includes historical data and analysis, there is a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance. 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 and bankrupt accounts. The considerations in these analyses include past and current loan performance, loan growth and seasoning, current risk management practices, account collection strategies, economic conditions, bankruptcy filings, policy changes and forecasting uncertain ties. Consideration of past and current loan performance includes the post-modification performance of loans modified in a troubled debt restructuring. F or 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. The Company considers a modified loan in which a concession has been granted to the borrower to be a troubled debt restructuring based on the cumulative length of the concession period and credit quality of the borrower. 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 recorded investment in the loan 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 modification. 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 7: Premises and Equipment for further information about the Company's premises and equipment. Cloud computing arrangements involving the licensing of software that meet certain criteria are recognized as the acquisition of software. Such assets are measured at the present value of the license obligation, if the license is to be paid over time, in addition to any capitalized upfront costs and amortized over the life of the arrangement. Cloud computing arrangements that do not meet the criteria to be recognized as acquired software are accounted for as service contracts. To date, none of the Company’s cloud computing arrangements have met the criteria to be recognized as acquired software. 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, which it acquired in 2005. 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. No impairment was identified during the impairment test conducted at October 1, 2016. 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. In contrast to amortizable intangibles, there is no test for recoverability associated with the impairment test for non-amortizable intangible assets. No impairment was identified during the impairment test conducted at October 1, 2016. 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, net of estimated forfeitures, 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 $196 million , $198 million and $194 million for the years ended December 31, 2016, 2015 and 2014 , 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 16: 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 21: 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 ("OCI"). The change in fair value of these derivative instruments relating to the ineffective portion is recognized immediately in other income. Amounts accumulated in OCI are reclassified to earnings in the period during which the hedged items affect income. The ineffective portion of the change in fair value of the derivatives, if any, is recognized directly in earnings. Amounts are reclassified out of AOCI into earnings when a 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 22: 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 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 AOCI is presented in the statement of changes in stockholders' equity and Note 14: 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 PCI loans is discussed in Note 5: Loan Receivables. The Company recognizes fees (except balance transfer fees and certain product fees) on loan receivables in interest income or loan fee income as the fees are assessed. 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, 2016 and 2015 , deferred revenues related to balance transfer fees, recorded as a reduction of loan receivables, were $41 million and $36 million , respectively. Loan fee income consists of fees on credit card loans and includes late, cash advance, returned check 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, 2016 and 2015 , the remaining unamortized deferred costs related to loan origination were $74 million and $58 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 primarily 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. 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 years ended December 31, 2016, 2015 and 2014 , rewards costs, adjusted for estimated forfeitures, if any, amounted to $1.4 billion , $1.3 billion and $1.4 billion , respectively. The liability for customer rewards was $1.4 billion at December 31, 2016 and 2015 , respectively, and 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 POS 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. Proces |
Business Dispositions
Business Dispositions | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Business Dispositions | Business Dispositions On June 16, 2015, the Company announced the closing of the mortgage origination business it acquired in 2012, which was part of its Direct Banking segment. The disposition represented the exiting of an ancillary business and did not have a major impact on the Company’s operations. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The Company’s investment securities consist of the following (dollars in millions): December 31, 2016 2015 2014 U.S. Treasury securities (1) $ 674 $ 1,273 $ 1,330 U.S. government agency securities — 494 1,033 States and political subdivisions of states 2 7 10 Residential mortgage-backed securities - Agency (2) 1,081 1,310 1,576 Total investment securities $ 1,757 $ 3,084 $ 3,949 (1) Includes $73 million , $7 million and $16 million of U.S. Treasury securities pledged as swap collateral as of December 31, 2016 , 2015 and 2014 , respectively. (2) Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value At December 31, 2016 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 676 $ — $ (2 ) $ 674 Residential mortgage-backed securities - Agency 934 2 (5 ) 931 Total available-for-sale investment securities $ 1,610 $ 2 $ (7 ) $ 1,605 Held-to-Maturity Investment Securities (2) States and political subdivisions of states $ 2 $ — $ — $ 2 Residential mortgage-backed securities - Agency (3) 150 1 (1 ) 150 Total held-to-maturity investment securities $ 152 $ 1 $ (1 ) $ 152 At December 31, 2015 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 1,277 $ 1 $ (6 ) $ 1,272 U.S. government agency securities 492 2 — 494 Residential mortgage-backed securities - Agency 1,195 6 (4 ) 1,197 Total available-for-sale investment securities $ 2,964 $ 9 $ (10 ) $ 2,963 Held-to-Maturity Investment Securities (2) U.S. Treasury securities (4) $ 1 $ — $ — $ 1 States and political subdivisions of states 7 — — 7 Residential mortgage-backed securities - Agency (3) 113 1 — 114 Total held-to-maturity investment securities $ 121 $ 1 $ — $ 122 (1) Available-for-sale investment securities are reported at fair value. (2) Held-to-maturity investment securities are reported at amortized cost. (3) 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. (4) At December 31, 2015 , amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. Beginning in the third quarter of 2016, collateral is no longer required. 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 Fair Value Unrealized Losses December 31, 2016 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ 674 $ (2 ) Residential mortgage-backed securities - Agency 19 $ 586 $ (5 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 31 $ 61 $ (1 ) December 31, 2015 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ 670 $ (6 ) Residential mortgage-backed securities - Agency 15 $ 486 $ (4 ) There were no investment securities in a continuous unrealized loss position for more than 12 months at December 31, 2016 and 2015 , respectively. There were no losses related to other-than-temporary impairments during the years ended December 31, 2016, 2015 and 2014 . The following table provides information about proceeds from sales, recognized gains and losses and net unrealized gains and losses on available-for-sale securities (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Proceeds from the sales of available-for-sale investment securities $ — $ 899 $ 1,220 Gains on sales of available-for-sale investment securities $ — $ 8 $ 4 Net unrealized (losses) gains recorded in OCI, before tax $ (4 ) $ (37 ) $ 5 Net unrealized (losses) gains recorded in OCI, after-tax $ (3 ) $ (23 ) $ 4 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 or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total At December 31, 2016 Available-for-Sale—Amortized Cost U.S. Treasury securities $ — $ 676 $ — $ — $ 676 Residential mortgage-backed securities - Agency — — 285 649 934 Total available-for-sale investment securities $ — $ 676 $ 285 $ 649 $ 1,610 Held-to-Maturity—Amortized Cost State and political subdivisions of states $ — $ — $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — — — 150 150 Total held-to-maturity investment securities $ — $ — $ — $ 152 $ 152 Available-for-Sale—Fair Values U.S. Treasury securities $ — $ 674 $ — $ — $ 674 Residential mortgage-backed securities - Agency — — 284 647 931 Total available-for-sale investment securities $ — $ 674 $ 284 $ 647 $ 1,605 Held-to-Maturity—Fair Values State and political subdivisions of states $ — $ — $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — — — 150 150 Total held-to-maturity investment securities $ — $ — $ — $ 152 $ 152 One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total At December 31, 2016 Available-for-Sale—Weighted-Average Yields (1) U.S Treasury securities — % 0.91 % — % — % 0.91 % Residential mortgage-backed securities - Agency — % — % 1.55 % 2.06 % 1.91 % Total available-for-sale investment securities — % 0.91 % 1.55 % 2.06 % 1.49 % Held-to-Maturity—Weighted-Average Yields State and political subdivisions of states — % — % — % 4.73 % 4.73 % Residential mortgage-backed securities — % — % — % 2.68 % 2.68 % Total held-to-maturity investment securities — % — % — % 2.71 % 2.71 % (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 Years Ended December 31, 2016 2015 2014 Taxable interest $ 38 $ 49 $ 66 Tax exempt interest — — 1 Total income from investment securities $ 38 $ 49 $ 67 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. The related commitment for future investments is recorded in accrued expenses and other liabilities within the consolidated statements of financial condition. The portion of each investment's operating results allocable to the Company is recorded in other expense within the consolidated statements 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, 2016 and 2015 , the Company had outstanding investments in these entities of $326 million and $328 million , respectively, and related contingent liabilities of $64 million and $57 million , respectively. Of the above outstanding equity investments, the Company had $270 million and $238 million of investments related to affordable housing projects, which had $64 million and $57 million related contingent liabilities as of December 31, 2016 and 2015 , respectively. |
Loan Receivables
Loan Receivables | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 Loan receivables Credit card loans (1) $ 61,522 $ 57,896 Other loans Personal loans 6,481 5,490 Private student loans 6,393 5,647 Other 274 236 Total other loans 13,148 11,373 PCI loans (2) 2,584 3,116 Total loan receivables 77,254 72,385 Allowance for loan losses (2,167 ) (1,869 ) Net loan receivables $ 75,087 $ 70,516 (1) Amounts include $20.8 billion and $21.6 billion underlying investors’ interest in trust debt at December 31, 2016 and 2015 , respectively, and $10.8 billion and $7.2 billion in seller's interest at December 31, 2016 and 2015 , respectively. The increase in the seller's interest from December 31, 2015 to December 31, 2016 is due in part to the addition of randomly-selected accounts to the credit card loan receivables restricted for securitization investors in order to increase excess seller's interest and related securitization capacity. See Note 6: Credit Card and Student Loan Securitization Activities for further information. (2) Amounts include $1.4 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at December 31, 2016 and 2015 , respectively. See Note 6: 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 PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): 30-89 Days Delinquent 90 or More Days Delinquent Total Past Due 90 or More Days Delinquent and Accruing Total Non-accruing (1) At December 31, 2016 Credit card loans (2) $ 655 $ 597 $ 1,252 $ 544 $ 189 Other loans Personal loans (3) 55 19 74 18 8 Private student loans (excluding PCI) (4) 106 35 141 35 — Other 1 1 2 — 19 Total other loans (excluding PCI) 162 55 217 53 27 Total loan receivables (excluding PCI) $ 817 $ 652 $ 1,469 $ 597 $ 216 At December 31, 2015 Credit card loans (2) $ 505 $ 490 $ 995 $ 422 $ 198 Other loans Personal loans (3) 34 15 49 13 6 Private student loans (excluding PCI) (4) 84 24 108 25 — Other — 1 1 — 20 Total other loans (excluding PCI) 118 40 158 38 26 Total loan receivables (excluding PCI) $ 623 $ 530 $ 1,153 $ 460 $ 224 (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 $31 million , $30 million and $27 million for the years ended December 31, 2016, 2015 and 2014 , 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 $58 million and $42 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015 , respectively. (3) Personal loans that are 90 or more days delinquent and accruing interest include $2 million and $4 million of loans accounted for as troubled debt restructurings at both December 31, 2016 and 2015 , respectively. (4) Private student loans that are 90 or more days delinquent and accruing interest include $3 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015 . Information related to the net charge-offs in the Company’s loan portfolio is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Net Net (1) Net Net (1) Net Net (1) Credit card loans $ 1,343 2.34 % $ 1,220 2.22 % $ 1,191 2.27 % Other loans Personal loans 151 2.55 % 112 2.15 % 94 2.04 % Private student loans (excluding PCI) 67 1.10 % 56 1.07 % 57 1.29 % Other — — % 1 0.79 % 3 0.76 % Total other loans 218 1.78 % 169 1.57 % 154 1.63 % Net charge-offs (excluding PCI) $ 1,561 2.24 % $ 1,389 2.12 % $ 1,345 2.17 % Net charge-offs (including PCI) $ 1,561 2.16 % $ 1,389 2.01 % $ 1,345 2.04 % (1) Net charge-off rate represents net charge-off dollars (annualized) divided by average loans for the reporting period. 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 portion 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 Above Less than 660 or No Score At December 31, 2016 Credit card loans 82 % 18 % Personal loans 96 % 4 % Private student loans (excluding PCI) (1) 95 % 5 % At December 31, 2015 Credit card loans 83 % 17 % Personal loans 96 % 4 % Private student loans (excluding PCI) (1) 96 % 4 % (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, 2016 and 2015 , there were $19 million and $31 million , respectively, of private student loans, including PCI, in forbearance, respectively, representing 0.3% and 0.5% , respectively of total student loans in repayment and 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 Year Ended December 31, 2016 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,554 $ 155 $ 143 $ 17 $ 1,869 Additions Provision for loan losses 1,579 196 82 2 1,859 Deductions Charge-offs (1,786 ) (172 ) (76 ) — (2,034 ) Recoveries 443 21 9 — 473 Net charge-offs (1,343 ) (151 ) (67 ) — (1,561 ) Balance at end of period $ 1,790 $ 200 $ 158 $ 19 $ 2,167 For the Year Ended December 31, 2015 Credit Card Personal Loans Student (1) Other Total Balance at beginning of period $ 1,474 $ 120 $ 135 $ 17 $ 1,746 Additions Provision for loan losses 1,300 147 64 1 1,512 Deductions Charge-offs (1,660 ) (129 ) (65 ) (1 ) (1,855 ) Recoveries 440 17 9 — 466 Net charge-offs (1,220 ) (112 ) (56 ) (1 ) (1,389 ) Balance at end of period $ 1,554 $ 155 $ 143 $ 17 $ 1,869 For the Year Ended December 31, 2014 Credit Card Personal Loans Student (1) Other Total 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 (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 preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 275 $ 278 $ 283 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 69 $ 71 $ 69 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 Loans Student (1) Other Loans Total At December 31, 2016 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,623 $ 179 $ 105 $ 3 $ 1,910 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 167 21 18 16 222 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 35 — 35 Total allowance for loan losses $ 1,790 $ 200 $ 158 $ 19 $ 2,167 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 60,437 $ 6,400 $ 6,307 $ 219 $ 73,363 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,085 81 86 55 1,307 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 2,584 — 2,584 Total recorded investment $ 61,522 $ 6,481 $ 8,977 $ 274 $ 77,254 At December 31, 2015 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,394 $ 140 $ 92 $ 1 $ 1,627 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 160 15 15 16 206 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 36 — 36 Total allowance for loan losses $ 1,554 $ 155 $ 143 $ 17 $ 1,869 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 56,877 $ 5,422 $ 5,599 $ 179 $ 68,077 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,019 68 48 57 1,192 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 3,116 — 3,116 Total recorded investment $ 57,896 $ 5,490 $ 8,763 $ 236 $ 72,385 (1) Includes both PCI and non-PCI private student loans. (2) Loan receivables evaluated for impairment in accordance with Accounting Standards Codification ("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) The unpaid principal balance of credit card loans was $935 million and $869 million at December 31, 2016 and 2015 respectively. The unpaid principal balance of personal loans was $79 million and $67 million at December 31, 2016 and 2015 , respectively. The unpaid principal balance of student loans was $84 million and $47 million at December 31, 2016 and 2015 , respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. Troubled Debt Restructurings The Company has internal loan modification programs that provide relief to credit card, personal loan and student loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs which vary by product. External loan modification programs are also available for credit card and personal loans. 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, result in the loans being considered individually impaired. In addition, loans that defaulted or graduated from modification programs or forbearance are considered to be individually impaired. 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 permanent loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program. 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. Credit card loans included in temporary and permanent programs are accounted for as troubled debt restructurings. 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 permanent 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. To assist student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company may offer hardship forbearance or programs that include payment deferral, temporary payment reduction, temporary interest rate reduction or extended terms. A modified loan typically meets the definition of a troubled debt restructuring based on the cumulative length of the concession period and an evaluation of the credit quality of the borrower based on FICO scores. Prior to the third quarter of 2016 , only a second forbearance when the borrower was 30 days or greater delinquent was considered a troubled debt restructuring. As a result, the student loan balances being accounted for as troubled debt restructurings increased, although it did not lead to significant changes in the balance of the overall allowance for losses. 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 Year Ended December 31, 2016 Credit card loans (3) $ 1,035 $ 88 $ 77 Personal loans $ 73 $ 8 $ 3 Private student loans (4) $ 63 $ 4 $ — For the Year Ended December 31, 2015 Credit card loans (3) $ 1,018 $ 82 $ 75 Personal loans $ 62 $ 7 $ 2 Private student loans (4) $ 43 $ 3 N/A For the Year Ended December 31, 2014 Credit card loans (3) $ 1,069 $ 84 $ 77 Personal loans $ 48 $ 5 $ 1 Private student loans (4) $ 32 $ 3 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 additional 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 loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. (3) Includes credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in a troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. The average balance of credit card loans that were no longer enrolled in a troubled debt restructuring program was $282 million , $261 million and $252 million , respectively, for the years ended December 31, 2016, 2015 and 2014 . (4) As a result of the updates implemented in the third quarter of 2016, some student loans accounted for as troubled debt restructurings have additional gross 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. For the year ended December 31, 2016 , the gross income that would have been recorded with original terms for student loans in modification programs was not material. In order to evaluate the primary financial effects that resulted from credit card loans entering into a loan modification program during the years ended December 31, 2016, 2015 and 2014 , the Company quantified the amount by which interest and fees were reduced during the periods. During the years ended December 31, 2016, 2015 and 2014 , the Company forgave approximately $34 million , $44 million and $42 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 Years Ended December 31, 2016 2015 2014 Number of Accounts Balances Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 95,881 $ 565 83,479 $ 493 80,484 $ 485 Personal loans 4,606 $ 52 4,243 $ 50 3,528 $ 42 Private student loans 2,792 $ 49 1,362 $ 20 1,453 $ 21 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 Years Ended December 31, 2016 2015 2014 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 loans (1)(2) 23,388 $ 123 18,299 $ 96 17,558 $ 92 Personal loans (2) 940 $ 11 644 $ 7 433 $ 5 Private student loans (3) 777 $ 12 1,103 $ 16 1,155 $ 18 (1) 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) For credit card loans and personal loans, a customer defaults from a modification program after two consecutive missed payments. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. (3) For student loans, defaults have been defined as loans that are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. Of the account balances that defaulted as shown above for the years ended December 31, 2016, 2015 and 2014 , approximately 37% , 40% and 35% , 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 been subsequently charged off, the balances are included in the allowance for loan losses 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 acquired private student loan portfolio comprise the Company’s only PCI loans at December 31, 2016 and 2015 . Total PCI student loans had an outstanding balance of $2.7 billion and $3.3 billion , including accrued interest, and a related carrying amount of $2.6 billion and $3.1 billion , as of December 31, 2016 and 2015 , respectively. The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Balance at beginning of period $ 965 $ 1,341 $ 1,580 Accretion into interest income (185 ) (220 ) (260 ) Other changes in expected cash flows 16 (156 ) 21 Balance at end of period $ 796 $ 965 $ 1,341 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 years ended December 31, 2016 and 2014 . During the year ended December 31, 2015 , the Company recorded $8 million of provision expense due to higher expected losses on its pools. The allowance for PCI loan losses at December 31, 2016 and 2015 was $35 million and $36 million , respectively. For the year ended December 31, 2016 , the increase in the rates on variable loans during the first half of 2016 resulted in an increase in accretable yield. For the year ended December 31, 2015 , the changes to the expected cash flow assumptions resulted in a decrease in accretable yield due primarily to changes in expected future prepayments based on model updates and assumptions changes as well as actual borrower prepayments. For the year ended December 31, 2014 , the change in expected cash flow assumptions resulted in an increase related to expected life of the loans. Changes to accretable yield are recognized prospectively as an adjustment to yield over the remaining life of the pools. At December 31, 2016 , the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which include loans not yet in repayment) were 2.88% and 0.87% , respectively. At December 31, 2015 , the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which include loans not yet in repayment) were 2.53% and 0.88% , 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 years ended December 31, 2016, 2015 and 2014 was 0.52% , 0.55% and 0.64% , respectively. 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, 2016 2015 $ % $ % California $ 5,317 8.6 % $ 4,947 8.5 % Texas 5,156 8.4 4,781 8.3 New York 4,295 7.0 4,061 7.0 Florida 3,793 6.2 3,463 6.0 Illinois 3,350 5.4 3,170 5.5 Pennsylvania 3,233 5.3 3,071 5.3 Ohio 2,646 4.3 2,511 4.3 New Jersey 2,282 3.7 2,163 3.7 Georgia 1,793 2.9 1,687 2.9 Michigan 1,744 2.8 1,661 2.9 Other States 27,913 45.4 26,381 45.6 Total credit card loans $ 61,522 100.0 % $ 57,896 100.0 % The Company originates personal loans, student loans and other loans, and has PCI loans throughout the United States. The geographic distribution of personal, student, other and PCI loan receivables was as follows (dollars in millions): December 31, 2016 2015 $ % $ % New York $ 1,792 11.4 % $ 1,743 12.0 % California 1,420 9.0 1,312 9.1 Pennsylvania 1,128 7.2 1,059 7.3 Illinois 961 6.1 865 6.0 Texas 927 5.9 804 5.5 New Jersey 813 5.2 737 5.1 Florida 666 4.2 578 4.0 Ohio 637 4.0 584 4.0 Massachusetts 568 3.6 559 3.9 Michigan 542 3.4 524 3.6 Other States 6,278 40.0 5,724 39.5 Total other loans (including PCI loans) $ 15,732 100.0 % $ 14,489 100.0 % |
Credit Card and Student Loan Se
Credit Card and Student Loan Securitization Activities | 12 Months Ended |
Dec. 31, 2016 | |
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 DCMT and 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 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 subordinated classes are held by wholly-owned subsidiaries of Discover Bank. The Company is exposed to credit-related risk of loss associated with trust assets as of the balance sheet date through the retention of these subordinated interests. The estimated probable incurred loss is included in the allowance for loan losses estimate. The Company’s credit card securitizations are accounted for as secured borrowings and the trusts and Discover Funding LLC 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 held by subsidiaries of Discover Bank, constitute intercompany positions which are eliminated in the preparation of the Company’s consolidated statements 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 consolidated statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): December 31, 2016 2015 Restricted cash $ 23 $ 19 Investors’ interests held by third-party investors 15,625 15,625 Investors’ interests held by wholly-owned subsidiaries of Discover Bank 5,189 6,017 Seller’s interest 10,812 7,231 Loan receivables (1) 31,626 28,873 Allowance for loan losses allocated to securitized loan receivables (1) (928 ) (783 ) Net loan receivables 30,698 28,090 Other (2) 4 5 Carrying value of assets of consolidated variable interest entities $ 30,725 $ 28,114 (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) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. 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. Through its wholly-owned indirect subsidiary, Discover Funding LLC, 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. 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 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. The Company may elect to add receivables to the restricted pool of receivable subject to certain requirements. The Company also 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. The Company elected to add receivables to the restricted pool of receivables as of the end of second quarter 2016. No accounts were added to those restricted for securitization investors for the remainder of the year. 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, 2016 , no economic or other early amortization events have occurred. The table below provides information concerning investors’ interests and related excess spread (dollars in millions): Investors’ Interests (1) Number of Series Outstanding 3-Month Rolling At December 31, 2016 Discover Card Execution Note Trust (DiscoverSeries notes) $ 20,814 36 13.48 % (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 PCI 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 consolidated statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): December 31, 2016 2015 Restricted cash $ 72 $ 80 Student loan receivables (1) 1,390 1,678 Allowance for loan losses allocated to securitized loan receivables (1) (27 ) (28 ) Net student loan receivables 1,363 1,650 Carrying value of assets of consolidated variable interest entities $ 1,435 $ 1,730 (1) The Company maintains its allowance for loan losses on PCI 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, 2016 | |
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, 2016 2015 Land $ 42 $ 42 Buildings and improvements 617 607 Capitalized equipment leases 2 2 Furniture, fixtures and equipment 847 804 Software 449 477 Premises and equipment 1,957 1,932 Less: Accumulated depreciation (1,045 ) (979 ) Less: Accumulated amortization of software (178 ) (260 ) Premises and equipment, net $ 734 $ 693 Depreciation expense, which includes amortization of assets recorded under capital leases, was $77 million , $81 million and $78 million for the years ended December 31, 2016, 2015 and 2014 , respectively. Amortization expense on capitalized software was $57 million , $53 million and $48 million for the years ended December 31, 2016, 2015 and 2014 , respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill As of December 31, 2016 and 2015 , the Company had goodwill of $255 million related to PULSE, part of the Payment Services segment. The Company conducted its annual goodwill impairment test as of October 1, 2016 and 2015 and no impairment charges were identified. Intangible Assets The Company's amortizable intangible assets consisting of customer relationships and trade names resulted from various acquisitions and are primarily included in the Payment Services segment. 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 which are primarily included in the Payment Services segment. The Company conducted its annual impairment test of intangible assets as of October 1, 2016 and 2015 and no impairment charges were identified. The following table summarizes the Company's intangible assets (dollars in millions): December 31, 2016 2015 Weighted-Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Amortizable intangible assets Customer relationships 16 years $ 66 $ 60 $ 6 $ 69 $ 61 $ 8 Trade name and other 25 years 8 3 5 8 3 5 Total amortizable intangible assets 74 63 11 77 64 13 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 $ 229 $ 63 $ 166 $ 232 $ 64 $ 168 Amortization expense related to the Company's intangible assets was $3 million , $4 million and $10 million for the years ended December 31, 2016, 2015 and 2014 , 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 2017 $ 2 2018 $ 2 2019 $ 2 2020 $ 1 2021 $ — |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2016 | |
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. The following table provides a summary of interest-bearing deposit accounts (dollars in millions): December 31, 2016 2015 Certificates of deposit in amounts less than $100,000 (1) $ 20,225 $ 20,491 Certificates of deposit in amounts $100,000 or greater (2) 5,864 5,228 Savings deposits, including money market deposit accounts 25,372 21,375 Total interest-bearing deposits (1) $ 51,461 $ 47,094 (1) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. (2) Includes $1.4 billion and $1.1 billion in certificates of deposit greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of December 31, 2016 and December 31, 2015 , respectively. The following table summarizes certificates of deposit in amounts of $100,000 or greater by contractual maturity (dollars in millions): Maturity Period December 31, 2016 Three months or less $ 860 Over three months through six months 617 Over six months through twelve months 1,594 Over twelve months 2,793 Total $ 5,864 The following table summarizes certificates of deposit maturing over the next five years and thereafter (dollars in millions): Year December 31, 2016 2017 $ 11,081 2018 5,605 2019 2,785 2020 2,264 2021 1,741 Thereafter 2,613 Total $ 26,089 |
Long-Term Borrowings
Long-Term Borrowings | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Borrowings | Long-Term Borrowings Long-term borrowings consist of borrowings 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 outstanding balances (dollars in millions): December 31, 2016 December 31, 2015 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1)(8) 2017-2021 1.22%-5.65% 2.05% $ 9,868 $ 9,152 Floating-rate asset-backed securities (2)(3)(8) 2017-2019 1.00%-1.24% 1.11% 5,694 6,440 Total Discover Card Master Trust I and Discover Card Execution Note Trust (8) 15,562 15,592 Floating-rate asset-backed securities (4)(5)(6)(7) 2031-2042 1.05%-4.50% 2.47% 849 1,143 Total SLC Private Student Loan Trusts 849 1,143 Total long-term borrowings - owed to securitization investors (8) 16,411 16,735 Discover Financial Services (Parent Company) Fixed-rate senior notes (1)(8) 2017-2025 3.75%-10.25% 4.74% 2,090 2,066 Fixed-rate retail notes (8) 2017-2031 2.85%-4.40% 3.71% 169 39 Discover Bank Fixed-rate senior bank notes (1)(8) 2018-2026 2.00%-4.25% 3.21% 6,077 5,115 Fixed-rate subordinated bank notes (8) 2019-2020 7.00%-8.70% 7.49% 696 695 Total long-term borrowings (8) $ 25,443 $ 24,650 (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 22: 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 + 30 to 54 basis points and 3-month LIBOR + 20 basis points as of December 31, 2016 . (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 22: 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 as of December 31, 2016 . (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 22: 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 $274 million of senior notes maturing in 2031, $505 million of senior and subordinated notes maturing in 2036 and $70 million of senior notes maturing in 2042 as of December 31, 2016 . (8) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. The following table summarizes long-term borrowings maturing over each of the next five years and thereafter (dollars in millions): Year Amount 2017 $ 5,100 2018 5,266 2019 5,990 2020 3,082 2021 1,039 Thereafter 4,966 Total $ 25,443 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, 2016 , the total commitment of secured credit facilities through private providers was $6.0 billion , none of which was drawn at December 31, 2016 . 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 year 2018. 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. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 12 Months Ended |
Dec. 31, 2016 | |
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 ("Omnibus Plan") and the Discover Financial Services Directors' Compensation Plan ("Directors' Compensation Plan"). Omnibus Plan The 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 options, 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 Directors' Compensation Plan, which is stockholder approved, permits the grant of RSUs to non-employee directors. Under the Directors' Compensation Plan, the Company may issue awards of up to a total of 1,000,000 shares of common stock to non-employee directors. 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 $130,000 (effective January 1, 2017, $140,000 ) 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. RSUs include the right to receive dividend equivalents in the same amount and at the same time as dividends paid to all Company common shareholders. Stock-Based Compensation The following table details the compensation cost, net of forfeitures (dollars in millions): For the Years Ended December 31, 2016 2015 2014 RSUs $ 41 $ 34 $ 33 PSUs 23 22 27 Total stock-based compensation expense $ 64 $ 56 $ 60 Income tax benefit $ 24 $ 21 $ 22 RSUs 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, 2015 2,917,163 $ 39.97 $ 156 Granted 881,984 $ 48.86 Conversions to common stock (786,603 ) $ 44.03 Forfeited (80,491 ) $ 51.39 RSUs at December 31, 2016 2,932,053 $ 41.24 $ 211 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, 2015 (1) 1,448,245 $ 50.67 Granted 881,984 $ 48.86 Vested (827,797 ) $ 45.92 Forfeited (80,491 ) $ 51.39 Unvested RSUs at December 31, 2016 (1) 1,421,941 $ 52.27 (1) Unvested RSUs represent awards where recipients have yet to satisfy either explicit vesting terms or retirement-eligibility requirements. Compensation cost associated with RSUs 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 Years Ended December 31, 2016 2015 2014 Intrinsic value of RSUs converted to common stock $ 38 $ 71 $ 72 Grant-date fair value of RSUs vested $ 38 $ 38 $ 30 Weighted-average grant-date fair value of RSUs granted $ 48.86 $ 56.71 $ 54.01 As of December 31, 2016 and 2015 , there was $26 million and $28 million , respectively, of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 1.3 years and 1.5 years . RSUs 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). RSUs include the right to receive dividend equivalents in the same amount and at the same time as dividends paid to all Company common shareholders. PSUs 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, 2015 1,171,385 $ 48.21 $ 63 Granted 476,117 $ 48.59 Conversions to common stock (516,341 ) $ 38.89 Forfeited (35,707 ) $ 53.98 PSUs at December 31, 2016 1,095,454 $ 52.58 $ 79 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, 2015 1,171,385 $ 48.21 Granted 476,117 $ 48.59 Vested (516,341 ) $ 38.89 Forfeited (35,707 ) $ 53.98 Unvested PSUs at December 31, 2016 (1)(2)(3) 1,095,454 $ 52.58 (1) Includes 333,063 PSUs granted in 2014 that are 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 ended February 1, 2017 . (2) Includes 306,917 PSUs granted in 2015 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2017 and are subject to the requisite service period which ends February 1, 2018 . (3) Includes 455,474 PSUs granted in 2016 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2018 and are subject to the requisite service period which ends February 1, 2019 . 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 outstanding at December 31, 2016 is a restricted stock instrument that is subject to additional conditions and constitutes a contingent and unsecured promise by the Company to pay up to 1.5 shares per unit of the Company's common stock on the conversion date for the PSU, contingent on the number of PSUs to be issued. PSUs 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, 2016 , there was $23 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-average period of 1.2 years . As of December 31, 2015 , there was $22 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-average period of 0.9 years . PSUs 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). PSUs include the right to receive dividend equivalents which will accumulate and pay out in cash, if at all, if and when the underlying shares are issued. Stock Options 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 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). At December 31, 2016 , all the Company's stock options were fully vested and exercised. The Company had 93,712 options outstanding at December 31, 2015 with a weighted-average exercise price of $26.68 and a weighted-average remaining contractual term of 0.95 years . Cash received from the exercise of stock options and income tax benefit realized from the exercise of stock options was not material for the years ended December 31, 2016 and 2015 . The intrinsic value of options exercised was not material for the years ended December 31, 2016, 2015 and 2014 . As of December 31, 2016 and 2015 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, 2016 | |
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 Years Ended December 31, 2016 2015 2014 Service cost, benefits earned during the period $ — $ — $ — Interest cost on projected benefit obligation 23 23 22 Expected return on plan assets (25 ) (24 ) (23 ) Net amortization 4 5 3 Net periodic benefit cost $ 2 $ 4 $ 2 Accumulated Other Comprehensive Income Pretax amounts recognized in AOCI that have not yet been recognized as components of net periodic benefit cost consist of (dollars in millions): December 31, 2016 Prior service credit $ 4 Net loss (254 ) Total $ (250 ) 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 Years Ended December 31, 2016 2015 Reconciliation of benefit obligation Benefit obligation at beginning of year $ 528 $ 570 Service cost — — Interest cost 23 23 Employee contributions — — Actuarial loss (gain) 13 (48 ) Plan amendments — — Benefits paid (18 ) (17 ) Benefit obligation at end of year 546 528 Reconciliation of fair value of plan assets Fair value of plan assets at beginning of year 378 401 Actual return on plan assets 21 (6 ) Employer contributions — — Employee contributions — — Benefits paid (18 ) (17 ) Fair value of plan assets at end of year 381 378 Unfunded status (recorded in accrued expenses and other liabilities) $ (165 ) $ (150 ) Assumptions The following table presents the assumptions used to determine the benefit obligation: December 31, 2016 2015 Discount rate 4.29 % 4.50 % The following table presents the assumptions used to determine net periodic benefit cost: For the Years Ended December 31, 2016 2015 2014 Discount rate 4.50 % 4.08 % 4.93 % Expected long-term rate of return on plan assets 6.50 % 6.50 % 6.50 % 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 2017 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. All of the Company's pension plan assets were categorized as Level 2 assets within the fair value hierarchy, as defined by ASC 820, as of the end of the current period. For a description of the fair value hierarchy, see Note 21: Fair Value Measurements and Disclosures. (dollars in millions): December 31, 2016 2015 Amount Net Asset Allocation Amount Net Asset Allocation Assets Domestic small/mid cap equity fund $ 33 9 % $ 31 8 % Emerging markets equity fund 32 9 26 7 Global low volatility equity fund 20 5 21 6 International core equity fund 47 12 45 12 Domestic large cap equity fund 49 13 50 13 Long duration fixed income fund 195 51 201 53 Stable value fund 1 — 1 — Temporary investment fund 4 1 3 1 Total assets $ 381 100 % $ 378 100 % 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, 2016 and 2015 . Cash Flows The Company does not expect to make any contributions to the Discover Pension Plan for 2017. 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): December 31, 2016 2017 $ 16 2018 $ 17 2019 $ 17 2020 $ 18 2021 $ 19 Following five years thereafter $ 117 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. The pretax expense associated with the Company contributions for the years ended December 31, 2016, 2015 and 2014 was $59 million , $56 million and $52 million , respectively. |
Common and Preferred Stock
Common and Preferred Stock | 12 Months Ended |
Dec. 31, 2016 | |
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 July 14, 2016 , the Company's Board of Directors approved a share repurchase program authorizing the repurchase of up to $2.5 billion of its outstanding shares of common stock. The program expires on October 31, 2017 and may be terminated at any time. During the year ended December 31, 2016 , the Company repurchased 34,043,379 shares for $1.9 billion . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2016 | |
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 Loss on Cash Flow Hedges, Net of Tax Foreign Currency Translation Adjustments, Net of Tax (1) Pension Plan Loss, Net of Tax AOCI For the Year Ended December 31, 2014 Balance at December 31, 2013 $ 19 $ 13 $ 1 $ (101 ) $ (68 ) Net change 4 (20 ) (1 ) (53 ) (70 ) Balance at December 31, 2014 $ 23 $ (7 ) $ — $ (154 ) $ (138 ) For the Year Ended December 31, 2015 Balance at December 31, 2014 $ 23 $ (7 ) $ — $ (154 ) $ (138 ) Net change (23 ) (13 ) — 14 (22 ) Balance at December 31, 2015 $ — $ (20 ) $ — $ (140 ) $ (160 ) For the Year Ended December 31, 2016 Balance at December 31, 2015 $ — $ (20 ) $ — $ (140 ) $ (160 ) Net change (3 ) 7 — (5 ) (1 ) Balance at December 31, 2016 $ (3 ) $ (13 ) $ — $ (145 ) $ (161 ) (1) Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains on foreign currency translation adjustments. 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 Benefit (Expense) Net of Tax For the Year Ended December 31, 2016 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (4 ) $ 1 $ (3 ) Net change $ (4 ) $ 1 $ (3 ) Cash Flow Hedges Net unrealized losses arising during the period $ (23 ) $ 8 $ (15 ) Amounts reclassified from AOCI 35 (13 ) 22 Net change $ 12 $ (5 ) $ 7 Pension Plan Unrealized losses arising during the period $ (9 ) $ 4 $ (5 ) Net change $ (9 ) $ 4 $ (5 ) 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 Benefit (Expense) Net of Tax For the Year Ended December 31, 2015 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (29 ) $ 11 $ (18 ) Amounts reclassified from AOCI (8 ) 3 (5 ) Net change $ (37 ) $ 14 $ (23 ) Cash Flow Hedges Net unrealized losses arising during the period $ (67 ) $ 25 $ (42 ) Amounts reclassified from AOCI 46 (17 ) 29 Net change $ (21 ) $ 8 $ (13 ) Foreign Currency Translation Adjustments Net unrealized gains arising during the period $ 2 $ — $ 2 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ — $ — $ — Pension Plan Unrealized losses arising during the period $ 22 $ (8 ) $ 14 Net change $ 22 $ (8 ) $ 14 For the Year Ended December 31, 2014 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 9 $ (3 ) $ 6 Amounts reclassified from AOCI (4 ) 2 (2 ) Net change $ 5 $ (1 ) $ 4 Cash Flow Hedges Net unrealized losses arising during the period $ (69 ) $ 26 $ (43 ) Amounts reclassified from AOCI 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 ) |
Other Expense
Other Expense | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Other Expense | Other Expense Total other expense includes the following components (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Postage $ 81 $ 84 $ 84 Fraud losses and other charges (1) 98 112 134 Supplies 41 37 23 Credit-related inquiry fees 18 20 19 Litigation expense 9 18 — Incentive expense 24 27 50 Other expense 164 191 165 Total other expense $ 435 $ 489 $ 475 (1) Includes fair value adjustment of $21 million resulting from recording Diners Club Italy as held for sale for the year ended December 31, 2014 . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense consisted of the following (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Current U.S. federal $ 1,066 $ 1,245 $ 1,215 U.S. state and local 149 143 167 Total 1,215 1,388 1,382 Deferred U.S. federal 45 (69 ) (7 ) U.S. state and local 3 (4 ) (4 ) Total 48 (73 ) (11 ) Income tax expense $ 1,263 $ 1,315 $ 1,371 The following table reconciles the Company’s effective tax rate to the U.S. federal statutory income tax rate: For the Years Ended December 31, 2016 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % U.S. state, local and other income taxes, net of U.S. federal income tax benefits 2.7 2.5 2.8 Tax credits (1.8 ) (1.0 ) (0.6 ) Other (1.4 ) (0.1 ) (0.1 ) Effective income tax rate 34.5 % 36.4 % 37.1 % For the year ended December 31, 2016 , income tax expense decreased $52 million , or 4.0% , and the effective income tax rate decreased 1.9% as compared to the year ended December 31, 2015 . The decrease in rates is primarily due to certain tax credits, the settlement with the United States Congress Joint Committee on Taxation and the resolution of certain federal and state tax matters. Income tax expense decreased $56 million , or 4.1% , reflecting a decrease in pretax income, and a decline in the effective tax rate 0.7% for the year ended December 31, 2015 as compared to the year ended December 31, 2014 . These changes are due to favorable adjustments to unrecognized tax benefits from resolving certain tax matters, and a one-time adjustment in 2014 to deferred taxes on limited partnership investments with no similar adjustment in 2015. 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, 2016 2015 Deferred tax assets Allowance for loan losses $ 814 $ 702 Compensation and benefits 120 116 State income taxes 62 81 Other 39 59 Total deferred tax assets before valuation allowance 1,035 958 Valuation allowance (2 ) (2 ) Total deferred tax assets, net of valuation allowance 1,033 956 Deferred tax liabilities Depreciation and software amortization (138 ) (120 ) Customer fees and rewards (214 ) (107 ) Debt exchange premium (74 ) (83 ) Intangibles (35 ) (31 ) Other (62 ) (59 ) Total deferred tax liabilities (523 ) (400 ) Net deferred tax assets $ 510 $ 556 A reconciliation of beginning and ending unrecognized tax benefits is as follows (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Balance at beginning of period $ 286 $ 635 $ 629 Additions Current year tax positions 13 18 18 Prior year tax positions 22 2 74 Reductions Prior year tax positions (139 ) (26 ) (80 ) Settlements with taxing authorities (17 ) (5 ) (4 ) Expired statute of limitations (7 ) (1 ) (2 ) Other Prior year tax positions (1) — (337 ) — Balance at end of period (2) $ 158 $ 286 $ 635 (1) Overpayment of taxes in 2013 to 2015 for the timing of deductions resulting from uncertain tax positions for the years 1999 through 2012. (2) For the years ended December 31, 2016, 2015 and 2014 , amounts included $110 million , $138 million and $144 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. The accrued interest and penalties related to unrecognized tax benefits were $52 million and $131 million for the years ended December 31, 2016 and 2015 , respectively. The Company is subject to examination by the Internal Revenue Service ("IRS") and the tax authorities in various state, local and foreign tax jurisdictions. 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 2008-2010 federal audit is currently under Administrative Appeals and the IRS is currently examining the years 2011-2012. At this time, the potential change in unrecognized tax benefits is not expected to be significant over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations. The Company has an immaterial amount of state net operating loss carryforwards that are subject to a full valuation allowance as of December 31, 2016 and 2015 . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
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 Years Ended December 31, 2016 2015 2014 Numerator Net income $ 2,393 $ 2,297 $ 2,323 Preferred stock dividends (37 ) (37 ) (37 ) Net income available to common stockholders 2,356 2,260 2,286 Income allocated to participating securities (17 ) (14 ) (16 ) Net income allocated to common stockholders $ 2,339 $ 2,246 $ 2,270 Denominator Weighted-average shares of common stock outstanding 405 437 462 Effect of dilutive common stock equivalents 1 1 1 Weighted-average shares of common stock outstanding and common stock equivalents 406 438 463 Basic earnings per common share $ 5.77 $ 5.14 $ 4.91 Diluted earnings per common share $ 5.77 $ 5.13 $ 4.90 Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for any of the years ended December 31, 2016, 2015 and 2014 . |
Capital Adequacy
Capital Adequacy | 12 Months Ended |
Dec. 31, 2016 | |
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 Company’s main banking subsidiary, is subject to various regulatory capital requirements as administered by 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 Discover Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Discover 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. In 2013, the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC issued final capital rules under the Basel Committee’s December 2010 framework (referred to as “Basel III”) establishing a new comprehensive capital framework for U.S. banking organizations. The final capital rules of Basel III ("Basel III rules") substantially revise Basel I rules regarding the risk-based capital requirements applicable to bank holding companies and depository institutions, including the Company. The Basel III rules became effective for the Company on January 1, 2015. This timing is based on the Company being classified as a "Standardized Approach" entity. Among other things, the Basel III rules (i) introduced a new capital measure called Common Equity Tier 1 (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and additional Tier 1 capital instruments meeting specified requirements, (iii) apply most deductions/adjustments to regulatory capital measures to CET1 and not to the other components of capital, thus potentially requiring higher levels of CET1 in order to meet minimum ratios and (iv) expand the scope of the deductions/adjustments from capital as compared to existing regulations. The Basel III minimum capital ratios are as follows: • 8.0% Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets; • 6.0% Tier 1 capital (i.e., CET1 plus Additional Tier 1) to risk-weighted assets; • 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”); and • 4.5% CET1 to risk-weighted assets. As of December 31, 2016 , the Company and Discover Bank met all Basel III minimum capital ratio requirements to which they were subject. The Company and Discover Bank also met the requirements to be considered "well-capitalized" under Regulation Y and prompt corrective action regulations, respectively, and there have been no conditions or events that management believes have changed the Company's or Discover Bank's category. To be categorized as “well-capitalized,” the Company and Discover Bank must maintain minimum capital ratios as set forth in the table below. The following table shows the actual capital amounts and ratios of the Company and Discover Bank and comparisons of each to the regulatory minimum and “well-capitalized” requirements (dollars in millions): Actual Minimum Capital Requirements Capital Requirements To Be Classified as Well-Capitalized Amount Ratio Amount Ratio Amount (1) Ratio (1) At December 31, 2016 (2) Total capital (to risk-weighted assets) Discover Financial Services $ 12,445 15.5 % $ 6,408 ≥8.0% $ 8,010 ≥10.0% Discover Bank $ 12,334 15.5 % $ 6,346 ≥8.0% $ 7,932 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 11,152 13.9 % $ 4,806 ≥6.0% $ 4,806 ≥6.0% Discover Bank $ 10,450 13.2 % $ 4,759 ≥6.0% $ 6,346 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 11,152 12.3 % $ 3,624 ≥4.0% N/A N/A Discover Bank $ 10,450 11.6 % $ 3,591 ≥4.0% $ 4,488 ≥5.0% CET1 capital (to risk-weighted assets) (Basel III transition) Discover Financial Services $ 10,592 13.2 % $ 3,604 ≥4.5% N/A N/A Discover Bank $ 10,450 13.2 % $ 3,570 ≥4.5% $ 5,156 ≥6.5% At December 31, 2015 (2) Total capital (to risk-weighted assets) Discover Financial Services $ 12,497 16.5 % $ 6,052 ≥8.0% $ 7,565 ≥10.0% Discover Bank $ 11,905 15.9 % $ 5,991 ≥8.0% $ 7,488 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 11,126 14.7 % $ 4,539 ≥6.0% $ 4,539 ≥6.0% Discover Bank $ 9,941 13.3 % $ 4,493 ≥6.0% $ 5,991 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 11,126 12.9 % $ 3,446 ≥4.0% N/A N/A Discover Bank $ 9,941 11.7 % $ 3,410 ≥4.0% $ 4,263 ≥5.0% CET1 capital (to risk-weighted assets) (Basel III transition) Discover Financial Services $ 10,566 14.0 % $ 3,404 ≥4.5% N/A N/A Discover Bank $ 9,941 13.3 % $ 3,370 ≥4.5% $ 4,867 ≥6.5% (1) The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available. (2) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. 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. Discover Bank paid dividends of $1.8 billion in the in the years ended December 31, 2016, 2015 and 2014 to the Company. |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Dec. 31, 2016 | |
Commitments Contingencies and Guarantees [Abstract] | |
Commitments, Contingencies and Guarantees | Commitments, Contingencies and Guarantees In the normal course of business, the Company enters into a number of off-balance sheet commitments, transactions and obligations under guarantee arrangements that expose the Company to varying degrees of risk. The Company’s commitments, contingencies and guarantee relationships are described below. Commitments Lease Commitments The Company leases various office space and equipment under capital and non-cancelable operating leases, which expire at various dates through 2028. Future minimum payments on capital leases were not material at December 31, 2016. The following table shows future minimum payments on non-cancelable operating leases with original terms in excess of one year (dollars in millions): Operating Leases 2017 $ 13 2018 11 2019 9 2020 8 2021 7 Thereafter 28 Total minimum lease payments $ 76 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 $15 million , $17 million and $16 million for the years ended December 31, 2016, 2015 and 2014 , respectively. Unused Commitments to Extend Credit At December 31, 2016 , the Company had unused commitments to extend credit for loans of approximately $192.6 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. Contingencies See Note 20: Litigation and Regulatory Matters for a description of potential liability arising from pending litigation or regulatory proceedings involving the Company. Guarantees The Company has obligations under certain guarantee arrangements, including contracts, indemnification agreements, and representations and warranties, 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. 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, and the principal amount of any student loan secured borrowings, plus any unpaid interest for the corresponding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company’s consolidated statements 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 sold loans it originated 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 was 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, even though the Company closed the mortgage origination business. 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, 2016 , this amount was not material and was included in accrued expenses and other liabilities on the consolidated statements of financial condition. 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. • Network Alliance Guarantee. Discover Network, Diners Club and PULSE have entered into contractual relationships with certain international payment networks in which DFS Services LLC retains the counterparty exposure if a network 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 potential counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party. 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 $111 million for merchant guarantees as of December 31, 2016 . The maximum potential counterparty exposures to these settlement guarantees for ATM guarantees would be immaterial as of December 31, 2016 . The maximum potential counterparty exposures to for network alliance guarantees would be $33 million as of December 31, 2016 . 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, 2016 , 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. Discover Network 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 years ended December 31, 2016, 2015 and 2014 . 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 Years Ended December 31, 2016 2015 2014 Aggregate sales transaction volume (1) $ 136,413 $ 132,265 $ 125,637 (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, 2016 and 2015 . 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. As of December 31, 2016 and December 31, 2015 , the Company had escrow deposits and settlement withholdings of $9 million and $7 million , respectively, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company’s condensed consolidated statements of financial condition. |
Litigation and Regulatory Matte
Litigation and Regulatory Matters | 12 Months Ended |
Dec. 31, 2016 | |
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 litigation process is not predictable and can lead to unexpected results. 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. From time to time, the Company is involved in legal actions challenging its arbitration clause. 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 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. On May 5, 2016, the CFPB issued its proposed arbitration rule that would (i) effectively ban consumer financial companies from using arbitration clauses to prevent class action cases and (ii) require records of all other arbitrations to be provided to the CFPB for potential publication on its website. The deadline for submitting comments to the proposed rule was August 22, 2016. The timing and provisions of any final rule are uncertain at this time. 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 consolidated 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 and Discover Financial Services have been the subject of actions by the FDIC and the Federal Reserve, respectively, with respect to anti-money laundering and related compliance programs as described more fully below. In addition, certain subsidiaries of the Company are subject to a consent order with the CFPB regarding certain student loan servicing practices, as described below. Regulatory 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 and regulatory settlement related expense was not material for years ended December 31, 2016, 2015 and 2014 respectively. 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 $135 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 May 26, 2015, the Company entered into a written agreement with the Federal Reserve Bank of Chicago where the Company agreed to enhance the Company’s enterprise-wide anti-money laundering and related compliance programs. The agreement does not include civil money penalties. This agreement follows the consent order that Discover Bank entered into with the FDIC on June 13, 2014 related to 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. On July 9, 2015, a class action lawsuit was filed against the Company in the U.S. District Court for the Northern District of Illinois (Polly Hansen v. Discover Financial Services and Discover Home Loans, Inc.). The plaintiff alleges that the Company contacted her, and members of the class she seeks to represent, on their cellular and residential telephones without their express consent or after consent was revoked in violation of the Telephone Consumer Protection Act ("TCPA"). Plaintiff seeks statutory damages for alleged negligent and willful violations of the TCPA, attorneys' fees, costs and injunctive relief. The TCPA provides for statutory damages of $500 for each violation ( $1,500 for willful violations). On March 9, 2016, Sumner Davenport was substituted as lead plaintiff for Polly Hansen. On January 13, 2017, plaintiff filed an unopposed motion for preliminary approval of a class action settlement to resolve the case. On January 20, 2017, the Court granted preliminary approval of the settlement. The final approval hearing is scheduled for September 14, 2017. If approved, the case will be dismissed with prejudice as to all certified class members who do not opt out of the settlement. On July 22, 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products, Inc. (the “Discover Subsidiaries”), agreed to a consent order with the CFPB resolving the agency’s investigation with respect to certain student loan servicing practices. The CFPB’s investigation into these practices has been previously disclosed by the Company, initially in February 2014. The order requires the Discover Subsidiaries to provide redress of approximately $16 million to consumers who may have been affected by the activities described in the order related to certain collection calls, overstatements of minimum payment due amounts in billing statements, and provision of interest paid information to consumers, and provide regulatory disclosures with respect to loans acquired in default. In addition, the Discover Subsidiaries are required to pay a $2.5 million civil money penalty to the CFPB. As required by the consent order, on October 19, 2015, the Discover Subsidiaries submitted to the CFPB a redress plan and a compliance plan designed to ensure that the Discover Subsidiaries provide redress and otherwise comply with the terms of the order. On September 4, 2015, the District Attorney of Trinity County, California filed a protection products lawsuit against the Company in California state court (The People of the State of California Ex Rel, Eric L. Heryford, District Attorney, Trinity County v. Discover Financial Services, et al.). The District Attorney subsequently dismissed this lawsuit on February 19, 2016 and filed a new complaint in federal court in the Eastern District of California on March 4, 2016 alleging the same cause of action. An amended complaint was filed on March 25, 2016. The lawsuit asserts various claims under California's Unfair Competition Law with respect to the Company's marketing and administration of various protection products. Plaintiff seeks declaratory relief, statutory civil penalties and attorneys’ fees. The Company filed a motion to dismiss the first amended complaint on April 26, 2016. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter, but will seek to vigorously defend against all claims asserted by the plaintiff. On March 8, 2016, a class action lawsuit was filed against the Company, other credit card networks, other issuing banks, and EMVCo in the U.S. District Court for the Northern District of California (B&R Supermarket, Inc., d/b/a Milam’s Market, et al. v. Visa, Inc. et al.) alleging violations of the Sherman Antitrust Act, California's Cartwright Act, and unjust enrichment. Plaintiffs allege a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. Plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. On July 15, 2016, Plaintiffs filed an amended complaint that includes additional named plaintiffs, reasserts the original claims, and includes additional state law causes of action. The defendants filed motions to dismiss on August 5, 2016. On September 30, 2016, the court granted the motions to dismiss for certain issuing banks and EMVCo but denied the motions to dismiss filed by the other networks, including the Company. Discovery is proceeding and a class certification ruling is expected this spring. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter, but will seek to vigorously defend against all claims asserted by the plaintiffs. |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Disclosures | Fair Value Measurements and Disclosures Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying financial instruments, which is based on whether the inputs to the valuation techniques used to measure the fair value of each financial instrument are observable or unobservable. It also requires certain disclosures about those measurements. The three-level valuation hierarchy is as follows: • Level 1 : Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. • Level 2 : Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2. • Level 3 : Fair values determined by Level 3 inputs are those based on unobservable inputs and include situations where there is little, if any, market activity for the asset or liability being valued. In instances in which the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety is classified is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category. The determination of classification of its financial instruments within the fair value hierarchy is performed at least quarterly by the Company. For transfers in and out of the levels of the fair value hierarchy, the Company discloses the fair value measurement based on the value immediately preceding the transfer. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange. During the years ended December 31, 2016 and 2015 , 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 Price in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance at December 31, 2016 Assets U.S. Treasury securities $ 674 $ — $ — $ 674 Residential mortgage-backed securities - Agency — 931 — 931 Available-for-sale investment securities $ 674 $ 931 $ — $ 1,605 Derivative financial instruments $ — $ 7 $ — $ 7 Liabilities Derivative financial instruments $ — $ 94 $ — $ 94 Balance at December 31, 2015 Assets U.S. Treasury securities $ 1,272 $ — $ — $ 1,272 U.S. government agency securities 494 — — 494 Residential mortgage-backed securities - Agency — 1,197 — 1,197 Available-for-sale investment securities $ 1,766 $ 1,197 $ — $ 2,963 Derivative financial instruments $ — $ 22 $ — $ 22 Liabilities Derivative financial instruments $ — $ 38 $ — $ 38 There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31, 2016 and 2015 . Available-for-Sale Investment Securities Investment securities classified as available-for-sale consist of U.S. Treasury securities, U.S. government agency securities and residential mortgage-backed securities. 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 securities. The Company classifies all other available-for-sale investment securities as Level 2, the fair value estimates of which are 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 residential mortgage-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, 2016 , 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 $912 million , a weighted-average coupon of 2.81% and a weighted-average remaining maturity of three years . Derivative Financial Instruments The Company's 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 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. The Company had no material impairments related to these assets during the years ended December 31, 2016 and 2015 . 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 (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Balance at December 31, 2016 Assets States and political subdivisions of states $ — $ 2 $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — 150 — 150 150 Held-to-maturity investment securities $ — $ 152 $ — $ 152 $ 152 Cash and cash equivalents $ 11,914 $ — $ — $ 11,914 $ 11,914 Restricted cash $ 95 $ — $ — $ 95 $ 95 Net loan receivables $ — $ — $ 78,252 $ 78,252 $ 75,087 Accrued interest receivables $ — $ 724 $ — $ 724 $ 724 Liabilities Deposits $ — $ 52,183 $ — $ 52,183 $ 51,992 Long-term borrowings - owed to securitization investors $ — $ 15,617 $ 900 $ 16,517 $ 16,411 Other long-term borrowings $ — $ 9,470 $ — $ 9,470 $ 9,032 Accrued interest payables $ — $ 168 $ — $ 168 $ 168 Balance at December 31, 2015 Assets U.S. Treasury securities $ 1 $ — $ — $ 1 $ 1 States and political subdivisions of states — 7 — 7 7 Residential mortgage-backed securities - Agency — 114 — 114 113 Held-to-maturity investment securities $ 1 $ 121 $ — $ 122 $ 121 Cash and cash equivalents $ 9,572 $ — $ — $ 9,572 $ 9,572 Restricted cash $ 99 $ — $ — $ 99 $ 99 Net loan receivables $ — $ — $ 71,455 $ 71,455 $ 70,516 Accrued interest receivables $ — $ 660 $ — $ 660 $ 660 Liabilities Deposits (1) $ — $ 47,714 $ — $ 47,714 $ 47,531 Long-term borrowings - owed to securitization investors (1) $ — $ 15,634 $ 1,220 $ 16,854 $ 16,735 Other long-term borrowings (1) $ — $ 8,355 $ — $ 8,355 $ 7,915 Accrued interest payables $ — $ 158 $ — $ 158 $ 158 (1) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. 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 prepayment trends and seasonality factors, if appropriate, as well as interest accrual estimates based on recent yields. 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 receivables, which is included in other assets on the consolidated statements of financial condition, approximates fair value as it is generally 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. 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. Accrued Interest Payables The carrying value of accrued interest payables, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition, approximates fair value as it is payable in less than one year. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2016 | |
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 21: 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 statements of financial condition. Collateral amounts recorded in the consolidated statements 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 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. 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 OCI 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 AOCI related to derivatives at December 31, 2016 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 $17 million of pretax losses to interest expense related to its derivatives designated as cash flow hedges. 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, bank notes 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, bank notes 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. 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. 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, 2016 December 31, 2015 Notional Amount Number of Outstanding Derivative Contracts Derivative Assets Derivative Liabilities Notional Amount Derivative Assets Derivative Liabilities Derivatives designated as hedges Interest rate swaps—cash flow hedge $ 3,700 7 $ — $ 22 $ 4,100 $ — $ 35 Interest rate swaps—fair value hedge $ 6,208 57 7 72 $ 4,110 22 3 Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 13 6 — — $ 32 — — Interest rate swap $ 149 1 — — $ 217 — — Total gross derivative assets/liabilities (2) 7 94 22 38 Less: Collateral held/posted (3) (2 ) (94 ) (8 ) (33 ) Total net derivative assets/liabilities $ 5 $ — $ 14 $ 5 (1) The foreign exchange forward contracts have notional amounts of EUR 6 million , GBP 5 million and SGD 1 million as of December 31, 2016 and EUR 19 million and GBP 7 million , SGD 1 million as of December 31, 2015 . (2) 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, 2016 , the Company had one outstanding contract with a notional amount of $36 million and immaterial fair value. At December 31, 2015 , the Company had one outstanding contract with a notional amount of $52 million and immaterial fair value. (3) 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 OCI, and indicates where within the consolidated financial statements such impact is reported (dollars in millions): Amount of Gain (Loss) Recognized in OCI For the Years Ended December 31, Location 2016 2015 2014 Derivatives designated as hedges Interest rate swaps—cash flow/net investment hedges Total gain (loss) recognized in OCI after amounts reclassified into earnings, pre-tax OCI $ 12 $ (22 ) $ (27 ) Total gain (loss) recognized in OCI $ 12 $ (22 ) $ (27 ) Amount of (Loss) Gain Recognized in Income For the Years Ended December 31, Location 2016 2015 2014 Derivatives designated as hedges Interest rate swaps—cash flow hedges Amount reclassified from OCI into income Interest Expense $ (35 ) $ (46 ) $ (38 ) Total amount reclassified from OCI into income on cash flow (35 ) (46 ) (38 ) Interest rate swaps—fair value hedges Loss on interest rate swaps (79 ) (11 ) (13 ) Gain on hedged items 78 11 17 Net ineffectiveness (loss) gain Interest Expense (1 ) — 4 Increase to interest expense related to net settlements on interest rate swaps Interest Expense 34 32 38 Total gain on fair value hedges 33 32 42 Total (loss) gain on derivatives designated as hedges recognized in income $ (2 ) $ (14 ) $ 4 Derivatives not designated as hedges Total gains on derivatives not designated as hedges recognized in income (1) Other Income $ 1 $ 75 $ 85 (1) During the years ended December 31, 2015 and 2014 , the Company recognized in income total gain of $2 million and total loss of $6 million , respectively, on forward delivery contracts related to the mortgage loan business that was closed during 2015. During the years ended December 31, 2015 and 2014 , the Company recognized in income total gain of $71 million and $87 million , respectively, on interest rate lock commitments related to the mortgage loan business that was closed during 2015. See Note 3: Business Dispositions for additional information. 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, 2016 , 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, 2016 , Discover Bank’s credit rating met specified thresholds set by its counterparties. However, if its credit rating is reduced by one ratings notch, Discover Bank would be required to post additional collateral, which would have been $51 million as of December 31, 2016 . 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, 2016 | |
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 equity loans, 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. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue 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 reportable 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 (dollars in millions): Direct Banking Payment Services Total For the Year Ended December 31, 2016 Interest income Credit card $ 7,155 $ — $ 7,155 Private student loans 444 — 444 PCI student loans 185 — 185 Personal loans 719 — 719 Other 113 — 113 Total interest income 8,616 — 8,616 Interest expense 1,398 — 1,398 Net interest income 7,218 — 7,218 Provision for loan losses 1,858 1 1,859 Other income 1,611 270 1,881 Other expense 3,422 162 3,584 Income before income tax expense $ 3,549 $ 107 $ 3,656 For the Year Ended December 31, 2015 Interest income Credit card $ 6,626 $ — $ 6,626 Private student loans 378 — 378 PCI student loans 220 — 220 Personal loans 631 — 631 Other 90 — 90 Total interest income 7,945 — 7,945 Interest expense 1,263 — 1,263 Net interest income 6,682 — 6,682 Provision for loan losses 1,512 — 1,512 Other income 1,779 278 2,057 Other expense 3,437 178 3,615 Income before income tax expense $ 3,512 $ 100 $ 3,612 The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the 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 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
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 Financ
Parent Company Condensed Financial Information | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 (dollars in millions) Assets: Cash and cash equivalents (1) $ 1,901 $ 2,133 Notes receivable from subsidiaries (2) 751 736 Investments in bank subsidiaries 10,454 9,940 Investments in non-bank subsidiaries 861 984 Other assets (3) 202 203 Total assets (3) $ 14,169 $ 13,996 Liabilities and Stockholders' Equity: Non-interest bearing deposit accounts $ 14 $ 2 Interest-bearing deposit accounts — 2 Total deposits 14 4 Short-term borrowings from subsidiaries 221 314 Other long-term borrowings (3) 2,259 2,105 Accrued expenses and other liabilities 352 298 Total liabilities (3) 2,846 2,721 Stockholders' equity 11,323 11,275 Total liabilities and stockholders' equity (3) $ 14,169 $ 13,996 (1) The Parent Company had $1.9 billion and $2.1 billion in a money market deposit account at Discover Bank as of December 31, 2016 and 2015 , respectively, which is included in cash and cash equivalents. These funds are available to the Parent for liquidity purposes. (2) The Parent Company advanced $500 million to Discover Bank as of December 31, 2016 and 2015 , which is included in notes receivable from subsidiaries. These funds are available to the Parent for liquidity purposes. (3) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. Discover Financial Services (Parent Company Only) Condensed Statements of Income For the Years Ended December 31, 2016 2015 2014 (dollars in millions) Interest income $ 39 $ 29 $ 18 Interest expense 139 128 86 Net interest expense (100 ) (99 ) (68 ) Dividends from bank subsidiaries 1,800 1,780 1,760 Dividends from non-bank subsidiaries 269 — 100 Total income 1,969 1,681 1,792 Other expense 1 1 4 Income before income tax expense and equity in undistributed net income of subsidiaries 1,968 1,680 1,788 Income tax benefit 40 37 18 Equity in undistributed net income of subsidiaries 385 580 517 Net income 2,393 2,297 2,323 OCI, net (1 ) (22 ) (70 ) Comprehensive income $ 2,392 $ 2,275 $ 2,253 Discover Financial Services (Parent Company Only) Condensed Statements of Cash Flows For the Years Ended December 31, 2016 2015 2014 (dollars in millions) Cash flows from operating activities Net income $ 2,393 $ 2,297 $ 2,323 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of subsidiaries (385 ) (580 ) (517 ) Stock-based compensation expense 64 56 60 Deferred income taxes (9 ) (10 ) (5 ) Depreciation and amortization 27 23 21 Changes in assets and liabilities: Decrease (increase) in other assets 10 (13 ) (50 ) Increase in other liabilities and accrued expenses 52 83 32 Net cash provided by operating activities 2,152 1,856 1,864 Cash flows from investing activities Increase in investment in subsidiaries (1 ) (21 ) (35 ) (Increase) decrease in loans to subsidiaries (15 ) 1,700 (182 ) Net cash (used for) provided by investing activities (16 ) 1,679 (217 ) Cash flows from financing activities Net (decrease) increase in short-term borrowings from subsidiaries (93 ) 206 (38 ) Proceeds from issuance of common stock 7 5 5 Proceeds from issuance of long-term borrowings 130 539 500 Purchases of treasury stock (1,908 ) (1,715 ) (1,564 ) Net increase (decrease) in deposits 10 (1 ) (8 ) Dividends paid on common and preferred stock (514 ) (515 ) (467 ) Net cash used for financing activities (2,368 ) (1,481 ) (1,572 ) (Decrease) increase in cash and cash equivalents (232 ) 2,054 75 Cash and cash equivalents, at beginning of period 2,133 79 4 Cash and cash equivalents, at end of period $ 1,901 $ 2,133 $ 79 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest expense $ 112 $ 97 $ 66 Income taxes, net of income tax refunds $ 23 $ 109 $ 65 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated events and transactions that have occurred subsequent to December 31, 2016 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, 2016 | |
Quarterly Financial Data [Abstract] | |
Quarterly Results | Quarterly Results The following table provides unaudited quarterly results (dollars in millions, except per share data): December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Interest income $ 2,258 $ 2,184 $ 2,090 $ 2,084 $ 2,061 $ 2,008 $ 1,947 $ 1,929 Interest expense 366 359 339 334 329 323 311 300 Net interest income 1,892 1,825 1,751 1,750 1,732 1,685 1,636 1,629 Provision for loan losses 578 445 412 424 484 332 306 390 Other income 466 476 465 474 473 503 539 542 Other expense 897 895 906 886 933 882 927 873 Income before income tax expense 883 961 898 914 788 974 942 908 Income tax expense 320 322 282 339 288 362 343 322 Net income $ 563 $ 639 $ 616 $ 575 $ 500 $ 612 $ 599 $ 586 Net income allocated to common stockholders (1) $ 550 $ 625 $ 602 $ 562 $ 488 $ 599 $ 586 $ 573 Basic earnings per common share (1) $ 1.40 $ 1.56 $ 1.47 $ 1.35 $ 1.15 $ 1.38 $ 1.33 $ 1.28 Diluted earnings per common share (1) $ 1.40 $ 1.56 $ 1.47 $ 1.35 $ 1.14 $ 1.38 $ 1.33 $ 1.28 (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. |
Background and Basis of Prese36
Background and Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
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 ("VIE") for which the Company is the primary beneficiary, as defined by GAAP. On this basis, the Company consolidates the Discover Card Master Trust I ("DCMT") and the Discover Card Execution Note Trust ("DCENT") 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 VIE during the years ended December 31, 2016, 2015 and 2014 . 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 prepayment trends and seasonality factors, if appropriate, as well as interest accrual estimates based on recent yields. 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 receivables, which is included in other assets on the consolidated statements of financial condition, approximates fair value as it is generally 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. 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. Accrued Interest Payables The carrying value of accrued interest payables, which is included in accrued expenses and other liabilities on the consolidated statements of financial condition, approximates fair value as it is payable in less than one year. |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
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 $1.2 billion and $0.9 billion of cash and due from banks and $10.7 billion and $8.6 billion of interest-earning deposits in other banks at December 31, 2016 and 2015 , 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, 2016 , investment securities consisted of U.S. Treasury 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 ("AOCI") included in stockholders' equity. The Company estimates the fair value of available-for-sale investment securities as more fully discussed in Note 21: 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 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 and other loans and are reported at their principal amounts outstanding. For student loans, principal amounts outstanding also include accrued interest that has been capitalized. 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 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 losses 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. However, as noted below, a charge to provision expense may be necessary to the extent that expected credit losses increase after the acquisition date. 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 and Charge-Offs 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 associated with the Company's loan receivables. The allowance is evaluated quarterly 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 losses on several analyses that help estimate incurred losses as of the balance sheet date. While the Company's estimation process includes historical data and analysis, there is a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance. 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 and bankrupt accounts. The considerations in these analyses include past and current loan performance, loan growth and seasoning, current risk management practices, account collection strategies, economic conditions, bankruptcy filings, policy changes and forecasting uncertain ties. Consideration of past and current loan performance includes the post-modification performance of loans modified in a troubled debt restructuring. F or 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. The Company considers a modified loan in which a concession has been granted to the borrower to be a troubled debt restructuring based on the cumulative length of the concession period and credit quality of the borrower. 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 recorded investment in the loan 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 modification. 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 7: Premises and Equipment for further information about the Company's premises and equipment. Cloud computing arrangements involving the licensing of software that meet certain criteria are recognized as the acquisition of software. Such assets are measured at the present value of the license obligation, if the license is to be paid over time, in addition to any capitalized upfront costs and amortized over the life of the arrangement. Cloud computing arrangements that do not meet the criteria to be recognized as acquired software are accounted for as service contracts. To date, none of the Company’s cloud computing arrangements have met the criteria to be recognized as acquired software. |
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, which it acquired in 2005. 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. No impairment was identified during the impairment test conducted at October 1, 2016. |
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. In contrast to amortizable intangibles, there is no test for recoverability associated with the impairment test for non-amortizable intangible assets. No impairment was identified during the impairment test conducted at October 1, 2016. |
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, net of estimated forfeitures, 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 $196 million , $198 million and $194 million for the years ended December 31, 2016, 2015 and 2014 , 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 16: 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 21: 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 ("OCI"). The change in fair value of these derivative instruments relating to the ineffective portion is recognized immediately in other income. Amounts accumulated in OCI are reclassified to earnings in the period during which the hedged items affect income. The ineffective portion of the change in fair value of the derivatives, if any, is recognized directly in earnings. Amounts are reclassified out of AOCI into earnings when a 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 22: 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 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 AOCI is presented in the statement of changes in stockholders' equity and Note 14: 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 PCI loans is discussed in Note 5: Loan Receivables. The Company recognizes fees (except balance transfer fees and certain product fees) on loan receivables in interest income or loan fee income as the fees are assessed. 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, 2016 and 2015 , deferred revenues related to balance transfer fees, recorded as a reduction of loan receivables, were $41 million and $36 million , respectively. Loan fee income consists of fees on credit card loans and includes late, cash advance, returned check 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, 2016 and 2015 , the remaining unamortized deferred costs related to loan origination were $74 million and $58 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 primarily 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. 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 years ended December 31, 2016, 2015 and 2014 , rewards costs, adjusted for estimated forfeitures, if any, amounted to $1.4 billion , $1.3 billion and $1.4 billion , respectively. The liability for customer rewards was $1.4 billion at December 31, 2016 and 2015 , respectively, and 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 POS 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 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 $25 million and $21 million at December 31, 2016 and 2015 , respectively. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Investment Securities | The Company’s investment securities consist of the following (dollars in millions): December 31, 2016 2015 2014 U.S. Treasury securities (1) $ 674 $ 1,273 $ 1,330 U.S. government agency securities — 494 1,033 States and political subdivisions of states 2 7 10 Residential mortgage-backed securities - Agency (2) 1,081 1,310 1,576 Total investment securities $ 1,757 $ 3,084 $ 3,949 (1) Includes $73 million , $7 million and $16 million of U.S. Treasury securities pledged as swap collateral as of December 31, 2016 , 2015 and 2014 , respectively. (2) Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value | The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value At December 31, 2016 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 676 $ — $ (2 ) $ 674 Residential mortgage-backed securities - Agency 934 2 (5 ) 931 Total available-for-sale investment securities $ 1,610 $ 2 $ (7 ) $ 1,605 Held-to-Maturity Investment Securities (2) States and political subdivisions of states $ 2 $ — $ — $ 2 Residential mortgage-backed securities - Agency (3) 150 1 (1 ) 150 Total held-to-maturity investment securities $ 152 $ 1 $ (1 ) $ 152 At December 31, 2015 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 1,277 $ 1 $ (6 ) $ 1,272 U.S. government agency securities 492 2 — 494 Residential mortgage-backed securities - Agency 1,195 6 (4 ) 1,197 Total available-for-sale investment securities $ 2,964 $ 9 $ (10 ) $ 2,963 Held-to-Maturity Investment Securities (2) U.S. Treasury securities (4) $ 1 $ — $ — $ 1 States and political subdivisions of states 7 — — 7 Residential mortgage-backed securities - Agency (3) 113 1 — 114 Total held-to-maturity investment securities $ 121 $ 1 $ — $ 122 (1) Available-for-sale investment securities are reported at fair value. (2) Held-to-maturity investment securities are reported at amortized cost. (3) 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. (4) At December 31, 2015 , amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. Beginning in the third quarter of 2016, collateral is no longer required. |
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 Fair Value Unrealized Losses December 31, 2016 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ 674 $ (2 ) Residential mortgage-backed securities - Agency 19 $ 586 $ (5 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 31 $ 61 $ (1 ) December 31, 2015 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ 670 $ (6 ) Residential mortgage-backed securities - Agency 15 $ 486 $ (4 ) |
Schedule of Proceeds, Recognized Gains and Losses, and Net Unrealized Gains and Losses [Table Text Block] | The following table provides information about proceeds from sales, recognized gains and losses and net unrealized gains and losses on available-for-sale securities (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Proceeds from the sales of available-for-sale investment securities $ — $ 899 $ 1,220 Gains on sales of available-for-sale investment securities $ — $ 8 $ 4 Net unrealized (losses) gains recorded in OCI, before tax $ (4 ) $ (37 ) $ 5 Net unrealized (losses) gains recorded in OCI, after-tax $ (3 ) $ (23 ) $ 4 |
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 or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total At December 31, 2016 Available-for-Sale—Amortized Cost U.S. Treasury securities $ — $ 676 $ — $ — $ 676 Residential mortgage-backed securities - Agency — — 285 649 934 Total available-for-sale investment securities $ — $ 676 $ 285 $ 649 $ 1,610 Held-to-Maturity—Amortized Cost State and political subdivisions of states $ — $ — $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — — — 150 150 Total held-to-maturity investment securities $ — $ — $ — $ 152 $ 152 Available-for-Sale—Fair Values U.S. Treasury securities $ — $ 674 $ — $ — $ 674 Residential mortgage-backed securities - Agency — — 284 647 931 Total available-for-sale investment securities $ — $ 674 $ 284 $ 647 $ 1,605 Held-to-Maturity—Fair Values State and political subdivisions of states $ — $ — $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — — — 150 150 Total held-to-maturity investment securities $ — $ — $ — $ 152 $ 152 One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total At December 31, 2016 Available-for-Sale—Weighted-Average Yields (1) U.S Treasury securities — % 0.91 % — % — % 0.91 % Residential mortgage-backed securities - Agency — % — % 1.55 % 2.06 % 1.91 % Total available-for-sale investment securities — % 0.91 % 1.55 % 2.06 % 1.49 % Held-to-Maturity—Weighted-Average Yields State and political subdivisions of states — % — % — % 4.73 % 4.73 % Residential mortgage-backed securities — % — % — % 2.68 % 2.68 % Total held-to-maturity investment securities — % — % — % 2.71 % 2.71 % (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 Years Ended December 31, 2016 2015 2014 Taxable interest $ 38 $ 49 $ 66 Tax exempt interest — — 1 Total income from investment securities $ 38 $ 49 $ 67 |
Loan Receivables (Tables)
Loan Receivables (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 Loan receivables Credit card loans (1) $ 61,522 $ 57,896 Other loans Personal loans 6,481 5,490 Private student loans 6,393 5,647 Other 274 236 Total other loans 13,148 11,373 PCI loans (2) 2,584 3,116 Total loan receivables 77,254 72,385 Allowance for loan losses (2,167 ) (1,869 ) Net loan receivables $ 75,087 $ 70,516 (1) Amounts include $20.8 billion and $21.6 billion underlying investors’ interest in trust debt at December 31, 2016 and 2015 , respectively, and $10.8 billion and $7.2 billion in seller's interest at December 31, 2016 and 2015 , respectively. The increase in the seller's interest from December 31, 2015 to December 31, 2016 is due in part to the addition of randomly-selected accounts to the credit card loan receivables restricted for securitization investors in order to increase excess seller's interest and related securitization capacity. See Note 6: Credit Card and Student Loan Securitization Activities for further information. (2) Amounts include $1.4 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at December 31, 2016 and 2015 , respectively. See Note 6: Credit Card and Student Loan Securitization Activities. |
Schedule of Delinquent and Non-Accruing Loans | 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 PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): 30-89 Days Delinquent 90 or More Days Delinquent Total Past Due 90 or More Days Delinquent and Accruing Total Non-accruing (1) At December 31, 2016 Credit card loans (2) $ 655 $ 597 $ 1,252 $ 544 $ 189 Other loans Personal loans (3) 55 19 74 18 8 Private student loans (excluding PCI) (4) 106 35 141 35 — Other 1 1 2 — 19 Total other loans (excluding PCI) 162 55 217 53 27 Total loan receivables (excluding PCI) $ 817 $ 652 $ 1,469 $ 597 $ 216 At December 31, 2015 Credit card loans (2) $ 505 $ 490 $ 995 $ 422 $ 198 Other loans Personal loans (3) 34 15 49 13 6 Private student loans (excluding PCI) (4) 84 24 108 25 — Other — 1 1 — 20 Total other loans (excluding PCI) 118 40 158 38 26 Total loan receivables (excluding PCI) $ 623 $ 530 $ 1,153 $ 460 $ 224 (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 $31 million , $30 million and $27 million for the years ended December 31, 2016, 2015 and 2014 , 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 $58 million and $42 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015 , respectively. (3) Personal loans that are 90 or more days delinquent and accruing interest include $2 million and $4 million of loans accounted for as troubled debt restructurings at both December 31, 2016 and 2015 , respectively. (4) Private student loans that are 90 or more days delinquent and accruing interest include $3 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015 . |
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 PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Net Net (1) Net Net (1) Net Net (1) Credit card loans $ 1,343 2.34 % $ 1,220 2.22 % $ 1,191 2.27 % Other loans Personal loans 151 2.55 % 112 2.15 % 94 2.04 % Private student loans (excluding PCI) 67 1.10 % 56 1.07 % 57 1.29 % Other — — % 1 0.79 % 3 0.76 % Total other loans 218 1.78 % 169 1.57 % 154 1.63 % Net charge-offs (excluding PCI) $ 1,561 2.24 % $ 1,389 2.12 % $ 1,345 2.17 % Net charge-offs (including PCI) $ 1,561 2.16 % $ 1,389 2.01 % $ 1,345 2.04 % (1) Net charge-off rate represents net charge-off dollars (annualized) divided by average loans for the reporting period. |
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 Above Less than 660 or No Score At December 31, 2016 Credit card loans 82 % 18 % Personal loans 96 % 4 % Private student loans (excluding PCI) (1) 95 % 5 % At December 31, 2015 Credit card loans 83 % 17 % Personal loans 96 % 4 % Private student loans (excluding PCI) (1) 96 % 4 % (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 Year Ended December 31, 2016 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,554 $ 155 $ 143 $ 17 $ 1,869 Additions Provision for loan losses 1,579 196 82 2 1,859 Deductions Charge-offs (1,786 ) (172 ) (76 ) — (2,034 ) Recoveries 443 21 9 — 473 Net charge-offs (1,343 ) (151 ) (67 ) — (1,561 ) Balance at end of period $ 1,790 $ 200 $ 158 $ 19 $ 2,167 For the Year Ended December 31, 2015 Credit Card Personal Loans Student (1) Other Total Balance at beginning of period $ 1,474 $ 120 $ 135 $ 17 $ 1,746 Additions Provision for loan losses 1,300 147 64 1 1,512 Deductions Charge-offs (1,660 ) (129 ) (65 ) (1 ) (1,855 ) Recoveries 440 17 9 — 466 Net charge-offs (1,220 ) (112 ) (56 ) (1 ) (1,389 ) Balance at end of period $ 1,554 $ 155 $ 143 $ 17 $ 1,869 For the Year Ended December 31, 2014 Credit Card Personal Loans Student (1) Other Total 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 (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 preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 275 $ 278 $ 283 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 69 $ 71 $ 69 |
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 Loans Student (1) Other Loans Total At December 31, 2016 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,623 $ 179 $ 105 $ 3 $ 1,910 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 167 21 18 16 222 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 35 — 35 Total allowance for loan losses $ 1,790 $ 200 $ 158 $ 19 $ 2,167 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 60,437 $ 6,400 $ 6,307 $ 219 $ 73,363 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,085 81 86 55 1,307 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 2,584 — 2,584 Total recorded investment $ 61,522 $ 6,481 $ 8,977 $ 274 $ 77,254 At December 31, 2015 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,394 $ 140 $ 92 $ 1 $ 1,627 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 160 15 15 16 206 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 36 — 36 Total allowance for loan losses $ 1,554 $ 155 $ 143 $ 17 $ 1,869 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 56,877 $ 5,422 $ 5,599 $ 179 $ 68,077 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,019 68 48 57 1,192 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 3,116 — 3,116 Total recorded investment $ 57,896 $ 5,490 $ 8,763 $ 236 $ 72,385 (1) Includes both PCI and non-PCI private student loans. (2) Loan receivables evaluated for impairment in accordance with Accounting Standards Codification ("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) The unpaid principal balance of credit card loans was $935 million and $869 million at December 31, 2016 and 2015 respectively. The unpaid principal balance of personal loans was $79 million and $67 million at December 31, 2016 and 2015 , respectively. The unpaid principal balance of student loans was $84 million and $47 million at December 31, 2016 and 2015 , respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. |
Schedule of Troubled Debt Restructurings | Additional information about modified loans classified as troubled debt restructurings is shown below (dollars in millions): Average recorded investment in loans Interest income recognized during period loans were impaired (1) Gross interest income that would have been recorded with original terms (2) For the Year Ended December 31, 2016 Credit card loans (3) $ 1,035 $ 88 $ 77 Personal loans $ 73 $ 8 $ 3 Private student loans (4) $ 63 $ 4 $ — For the Year Ended December 31, 2015 Credit card loans (3) $ 1,018 $ 82 $ 75 Personal loans $ 62 $ 7 $ 2 Private student loans (4) $ 43 $ 3 N/A For the Year Ended December 31, 2014 Credit card loans (3) $ 1,069 $ 84 $ 77 Personal loans $ 48 $ 5 $ 1 Private student loans (4) $ 32 $ 3 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 additional 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 loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. (3) Includes credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in a troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. The average balance of credit card loans that were no longer enrolled in a troubled debt restructuring program was $282 million , $261 million and $252 million , respectively, for the years ended December 31, 2016, 2015 and 2014 . (4) As a result of the updates implemented in the third quarter of 2016, some student loans accounted for as troubled debt restructurings have additional gross 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. For the year ended December 31, 2016 , the gross income that would have been recorded with original terms for student loans in modification programs was not material. |
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 Years Ended December 31, 2016 2015 2014 Number of Accounts Balances Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 95,881 $ 565 83,479 $ 493 80,484 $ 485 Personal loans 4,606 $ 52 4,243 $ 50 3,528 $ 42 Private student loans 2,792 $ 49 1,362 $ 20 1,453 $ 21 |
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 Years Ended December 31, 2016 2015 2014 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 loans (1)(2) 23,388 $ 123 18,299 $ 96 17,558 $ 92 Personal loans (2) 940 $ 11 644 $ 7 433 $ 5 Private student loans (3) 777 $ 12 1,103 $ 16 1,155 $ 18 (1) 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) For credit card loans and personal loans, a customer defaults from a modification program after two consecutive missed payments. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. (3) For student loans, defaults have been defined as loans that are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. |
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 Years Ended December 31, 2016 2015 2014 Balance at beginning of period $ 965 $ 1,341 $ 1,580 Accretion into interest income (185 ) (220 ) (260 ) Other changes in expected cash flows 16 (156 ) 21 Balance at end of period $ 796 $ 965 $ 1,341 |
Credit Card Loans [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, 2016 2015 $ % $ % California $ 5,317 8.6 % $ 4,947 8.5 % Texas 5,156 8.4 4,781 8.3 New York 4,295 7.0 4,061 7.0 Florida 3,793 6.2 3,463 6.0 Illinois 3,350 5.4 3,170 5.5 Pennsylvania 3,233 5.3 3,071 5.3 Ohio 2,646 4.3 2,511 4.3 New Jersey 2,282 3.7 2,163 3.7 Georgia 1,793 2.9 1,687 2.9 Michigan 1,744 2.8 1,661 2.9 Other States 27,913 45.4 26,381 45.6 Total credit card loans $ 61,522 100.0 % $ 57,896 100.0 % |
Total Other Loans 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 and other loans, and has PCI loans throughout the United States. The geographic distribution of personal, student, other and PCI loan receivables was as follows (dollars in millions): December 31, 2016 2015 $ % $ % New York $ 1,792 11.4 % $ 1,743 12.0 % California 1,420 9.0 1,312 9.1 Pennsylvania 1,128 7.2 1,059 7.3 Illinois 961 6.1 865 6.0 Texas 927 5.9 804 5.5 New Jersey 813 5.2 737 5.1 Florida 666 4.2 578 4.0 Ohio 637 4.0 584 4.0 Massachusetts 568 3.6 559 3.9 Michigan 542 3.4 524 3.6 Other States 6,278 40.0 5,724 39.5 Total other loans (including PCI loans) $ 15,732 100.0 % $ 14,489 100.0 % |
Credit Card and Student Loan 40
Credit Card and Student Loan Securitization Activities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 consolidated statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): December 31, 2016 2015 Restricted cash $ 23 $ 19 Investors’ interests held by third-party investors 15,625 15,625 Investors’ interests held by wholly-owned subsidiaries of Discover Bank 5,189 6,017 Seller’s interest 10,812 7,231 Loan receivables (1) 31,626 28,873 Allowance for loan losses allocated to securitized loan receivables (1) (928 ) (783 ) Net loan receivables 30,698 28,090 Other (2) 4 5 Carrying value of assets of consolidated variable interest entities $ 30,725 $ 28,114 (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) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Schedule of Investors' Interests and Related Excess Spreads | The table below provides information concerning investors’ interests and related excess spread (dollars in millions): Investors’ Interests (1) Number of Series Outstanding 3-Month Rolling At December 31, 2016 Discover Card Execution Note Trust (DiscoverSeries notes) $ 20,814 36 13.48 % (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 consolidated statements of financial condition as relating to securitization activities, are shown in the table below (dollars in millions): December 31, 2016 2015 Restricted cash $ 72 $ 80 Student loan receivables (1) 1,390 1,678 Allowance for loan losses allocated to securitized loan receivables (1) (27 ) (28 ) Net student loan receivables 1,363 1,650 Carrying value of assets of consolidated variable interest entities $ 1,435 $ 1,730 (1) The Company maintains its allowance for loan losses on PCI 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 (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 Land $ 42 $ 42 Buildings and improvements 617 607 Capitalized equipment leases 2 2 Furniture, fixtures and equipment 847 804 Software 449 477 Premises and equipment 1,957 1,932 Less: Accumulated depreciation (1,045 ) (979 ) Less: Accumulated amortization of software (178 ) (260 ) Premises and equipment, net $ 734 $ 693 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The following table summarizes the Company's intangible assets (dollars in millions): December 31, 2016 2015 Weighted-Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Amortizable intangible assets Customer relationships 16 years $ 66 $ 60 $ 6 $ 69 $ 61 $ 8 Trade name and other 25 years 8 3 5 8 3 5 Total amortizable intangible assets 74 63 11 77 64 13 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 $ 229 $ 63 $ 166 $ 232 $ 64 $ 168 |
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 2017 $ 2 2018 $ 2 2019 $ 2 2020 $ 1 2021 $ — |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deposits [Abstract] | |
Schedule of Interest Bearing Deposit Accounts | The following table provides a summary of interest-bearing deposit accounts (dollars in millions): December 31, 2016 2015 Certificates of deposit in amounts less than $100,000 (1) $ 20,225 $ 20,491 Certificates of deposit in amounts $100,000 or greater (2) 5,864 5,228 Savings deposits, including money market deposit accounts 25,372 21,375 Total interest-bearing deposits (1) $ 51,461 $ 47,094 (1) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. (2) Includes $1.4 billion and $1.1 billion in certificates of deposit greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of December 31, 2016 and December 31, 2015 , respectively. |
Schedule of $100,000 or More Certificates of Deposit Maturities | The following table summarizes certificates of deposit in amounts of $100,000 or greater by contractual maturity (dollars in millions): Maturity Period December 31, 2016 Three months or less $ 860 Over three months through six months 617 Over six months through twelve months 1,594 Over twelve months 2,793 Total $ 5,864 |
Schedule of Certificates of Deposit Maturities | The following table summarizes certificates of deposit maturing over the next five years and thereafter (dollars in millions): Year December 31, 2016 2017 $ 11,081 2018 5,605 2019 2,785 2020 2,264 2021 1,741 Thereafter 2,613 Total $ 26,089 |
Long-Term Borrowings (Tables)
Long-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Borrowings and Weighted Average Interest Rates | Long-term borrowings consist of borrowings 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 outstanding balances (dollars in millions): December 31, 2016 December 31, 2015 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1)(8) 2017-2021 1.22%-5.65% 2.05% $ 9,868 $ 9,152 Floating-rate asset-backed securities (2)(3)(8) 2017-2019 1.00%-1.24% 1.11% 5,694 6,440 Total Discover Card Master Trust I and Discover Card Execution Note Trust (8) 15,562 15,592 Floating-rate asset-backed securities (4)(5)(6)(7) 2031-2042 1.05%-4.50% 2.47% 849 1,143 Total SLC Private Student Loan Trusts 849 1,143 Total long-term borrowings - owed to securitization investors (8) 16,411 16,735 Discover Financial Services (Parent Company) Fixed-rate senior notes (1)(8) 2017-2025 3.75%-10.25% 4.74% 2,090 2,066 Fixed-rate retail notes (8) 2017-2031 2.85%-4.40% 3.71% 169 39 Discover Bank Fixed-rate senior bank notes (1)(8) 2018-2026 2.00%-4.25% 3.21% 6,077 5,115 Fixed-rate subordinated bank notes (8) 2019-2020 7.00%-8.70% 7.49% 696 695 Total long-term borrowings (8) $ 25,443 $ 24,650 (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 22: 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 + 30 to 54 basis points and 3-month LIBOR + 20 basis points as of December 31, 2016 . (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 22: 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 as of December 31, 2016 . (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 22: 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 $274 million of senior notes maturing in 2031, $505 million of senior and subordinated notes maturing in 2036 and $70 million of senior notes maturing in 2042 as of December 31, 2016 . (8) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Schedule of Long-Term Borrowings Maturities | The following table summarizes long-term borrowings maturing over each of the next five years and thereafter (dollars in millions): Year Amount 2017 $ 5,100 2018 5,266 2019 5,990 2020 3,082 2021 1,039 Thereafter 4,966 Total $ 25,443 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Years Ended December 31, 2016 2015 2014 RSUs $ 41 $ 34 $ 33 PSUs 23 22 27 Total stock-based compensation expense $ 64 $ 56 $ 60 Income tax benefit $ 24 $ 21 $ 22 |
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, 2015 2,917,163 $ 39.97 $ 156 Granted 881,984 $ 48.86 Conversions to common stock (786,603 ) $ 44.03 Forfeited (80,491 ) $ 51.39 RSUs at December 31, 2016 2,932,053 $ 41.24 $ 211 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, 2015 (1) 1,448,245 $ 50.67 Granted 881,984 $ 48.86 Vested (827,797 ) $ 45.92 Forfeited (80,491 ) $ 51.39 Unvested RSUs at December 31, 2016 (1) 1,421,941 $ 52.27 (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 Years Ended December 31, 2016 2015 2014 Intrinsic value of RSUs converted to common stock $ 38 $ 71 $ 72 Grant-date fair value of RSUs vested $ 38 $ 38 $ 30 Weighted-average grant-date fair value of RSUs granted $ 48.86 $ 56.71 $ 54.01 |
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, 2015 1,171,385 $ 48.21 $ 63 Granted 476,117 $ 48.59 Conversions to common stock (516,341 ) $ 38.89 Forfeited (35,707 ) $ 53.98 PSUs at December 31, 2016 1,095,454 $ 52.58 $ 79 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, 2015 1,171,385 $ 48.21 Granted 476,117 $ 48.59 Vested (516,341 ) $ 38.89 Forfeited (35,707 ) $ 53.98 Unvested PSUs at December 31, 2016 (1)(2)(3) 1,095,454 $ 52.58 (1) Includes 333,063 PSUs granted in 2014 that are 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 ended February 1, 2017 . (2) Includes 306,917 PSUs granted in 2015 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2017 and are subject to the requisite service period which ends February 1, 2018 . (3) Includes 455,474 PSUs granted in 2016 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2018 and are subject to the requisite service period which ends February 1, 2019 . |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Years Ended December 31, 2016 2015 2014 Service cost, benefits earned during the period $ — $ — $ — Interest cost on projected benefit obligation 23 23 22 Expected return on plan assets (25 ) (24 ) (23 ) Net amortization 4 5 3 Net periodic benefit cost $ 2 $ 4 $ 2 |
Schedule of Pretax Amounts Recognized in AOCI Not Recognized as Components of Net Periodic Benefit Cost | Pretax amounts recognized in AOCI that have not yet been recognized as components of net periodic benefit cost consist of (dollars in millions): December 31, 2016 Prior service credit $ 4 Net loss (254 ) Total $ (250 ) |
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 Years Ended December 31, 2016 2015 Reconciliation of benefit obligation Benefit obligation at beginning of year $ 528 $ 570 Service cost — — Interest cost 23 23 Employee contributions — — Actuarial loss (gain) 13 (48 ) Plan amendments — — Benefits paid (18 ) (17 ) Benefit obligation at end of year 546 528 Reconciliation of fair value of plan assets Fair value of plan assets at beginning of year 378 401 Actual return on plan assets 21 (6 ) Employer contributions — — Employee contributions — — Benefits paid (18 ) (17 ) Fair value of plan assets at end of year 381 378 Unfunded status (recorded in accrued expenses and other liabilities) $ (165 ) $ (150 ) |
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: December 31, 2016 2015 Discount rate 4.29 % 4.50 % The following table presents the assumptions used to determine net periodic benefit cost: For the Years Ended December 31, 2016 2015 2014 Discount rate 4.50 % 4.08 % 4.93 % Expected long-term rate of return on plan assets 6.50 % 6.50 % 6.50 % |
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. All of the Company's pension plan assets were categorized as Level 2 assets within the fair value hierarchy, as defined by ASC 820, as of the end of the current period. For a description of the fair value hierarchy, see Note 21: Fair Value Measurements and Disclosures. (dollars in millions): December 31, 2016 2015 Amount Net Asset Allocation Amount Net Asset Allocation Assets Domestic small/mid cap equity fund $ 33 9 % $ 31 8 % Emerging markets equity fund 32 9 26 7 Global low volatility equity fund 20 5 21 6 International core equity fund 47 12 45 12 Domestic large cap equity fund 49 13 50 13 Long duration fixed income fund 195 51 201 53 Stable value fund 1 — 1 — Temporary investment fund 4 1 3 1 Total assets $ 381 100 % $ 378 100 % |
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): December 31, 2016 2017 $ 16 2018 $ 17 2019 $ 17 2020 $ 18 2021 $ 19 Following five years thereafter $ 117 |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Loss on Cash Flow Hedges, Net of Tax Foreign Currency Translation Adjustments, Net of Tax (1) Pension Plan Loss, Net of Tax AOCI For the Year Ended December 31, 2014 Balance at December 31, 2013 $ 19 $ 13 $ 1 $ (101 ) $ (68 ) Net change 4 (20 ) (1 ) (53 ) (70 ) Balance at December 31, 2014 $ 23 $ (7 ) $ — $ (154 ) $ (138 ) For the Year Ended December 31, 2015 Balance at December 31, 2014 $ 23 $ (7 ) $ — $ (154 ) $ (138 ) Net change (23 ) (13 ) — 14 (22 ) Balance at December 31, 2015 $ — $ (20 ) $ — $ (140 ) $ (160 ) For the Year Ended December 31, 2016 Balance at December 31, 2015 $ — $ (20 ) $ — $ (140 ) $ (160 ) Net change (3 ) 7 — (5 ) (1 ) Balance at December 31, 2016 $ (3 ) $ (13 ) $ — $ (145 ) $ (161 ) (1) Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains on foreign currency translation adjustments. |
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 Benefit (Expense) Net of Tax For the Year Ended December 31, 2016 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (4 ) $ 1 $ (3 ) Net change $ (4 ) $ 1 $ (3 ) Cash Flow Hedges Net unrealized losses arising during the period $ (23 ) $ 8 $ (15 ) Amounts reclassified from AOCI 35 (13 ) 22 Net change $ 12 $ (5 ) $ 7 Pension Plan Unrealized losses arising during the period $ (9 ) $ 4 $ (5 ) Net change $ (9 ) $ 4 $ (5 ) 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 Benefit (Expense) Net of Tax For the Year Ended December 31, 2015 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (29 ) $ 11 $ (18 ) Amounts reclassified from AOCI (8 ) 3 (5 ) Net change $ (37 ) $ 14 $ (23 ) Cash Flow Hedges Net unrealized losses arising during the period $ (67 ) $ 25 $ (42 ) Amounts reclassified from AOCI 46 (17 ) 29 Net change $ (21 ) $ 8 $ (13 ) Foreign Currency Translation Adjustments Net unrealized gains arising during the period $ 2 $ — $ 2 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ — $ — $ — Pension Plan Unrealized losses arising during the period $ 22 $ (8 ) $ 14 Net change $ 22 $ (8 ) $ 14 For the Year Ended December 31, 2014 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 9 $ (3 ) $ 6 Amounts reclassified from AOCI (4 ) 2 (2 ) Net change $ 5 $ (1 ) $ 4 Cash Flow Hedges Net unrealized losses arising during the period $ (69 ) $ 26 $ (43 ) Amounts reclassified from AOCI 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 ) |
Other Expense (Tables)
Other Expense (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expense | Total other expense includes the following components (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Postage $ 81 $ 84 $ 84 Fraud losses and other charges (1) 98 112 134 Supplies 41 37 23 Credit-related inquiry fees 18 20 19 Litigation expense 9 18 — Incentive expense 24 27 50 Other expense 164 191 165 Total other expense $ 435 $ 489 $ 475 (1) Includes fair value adjustment of $21 million resulting from recording Diners Club Italy as held for sale for the year ended December 31, 2014 . |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense | Income tax expense consisted of the following (dollars in millions): For the Years Ended December 31, 2016 2015 2014 Current U.S. federal $ 1,066 $ 1,245 $ 1,215 U.S. state and local 149 143 167 Total 1,215 1,388 1,382 Deferred U.S. federal 45 (69 ) (7 ) U.S. state and local 3 (4 ) (4 ) Total 48 (73 ) (11 ) Income tax expense $ 1,263 $ 1,315 $ 1,371 |
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 Years Ended December 31, 2016 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % U.S. state, local and other income taxes, net of U.S. federal income tax benefits 2.7 2.5 2.8 Tax credits (1.8 ) (1.0 ) (0.6 ) Other (1.4 ) (0.1 ) (0.1 ) Effective income tax rate 34.5 % 36.4 % 37.1 % |
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, 2016 2015 Deferred tax assets Allowance for loan losses $ 814 $ 702 Compensation and benefits 120 116 State income taxes 62 81 Other 39 59 Total deferred tax assets before valuation allowance 1,035 958 Valuation allowance (2 ) (2 ) Total deferred tax assets, net of valuation allowance 1,033 956 Deferred tax liabilities Depreciation and software amortization (138 ) (120 ) Customer fees and rewards (214 ) (107 ) Debt exchange premium (74 ) (83 ) Intangibles (35 ) (31 ) Other (62 ) (59 ) Total deferred tax liabilities (523 ) (400 ) Net deferred tax assets $ 510 $ 556 |
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 Years Ended December 31, 2016 2015 2014 Balance at beginning of period $ 286 $ 635 $ 629 Additions Current year tax positions 13 18 18 Prior year tax positions 22 2 74 Reductions Prior year tax positions (139 ) (26 ) (80 ) Settlements with taxing authorities (17 ) (5 ) (4 ) Expired statute of limitations (7 ) (1 ) (2 ) Other Prior year tax positions (1) — (337 ) — Balance at end of period (2) $ 158 $ 286 $ 635 (1) Overpayment of taxes in 2013 to 2015 for the timing of deductions resulting from uncertain tax positions for the years 1999 through 2012. (2) For the years ended December 31, 2016, 2015 and 2014 , amounts included $110 million , $138 million and $144 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, 2016 | |
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 Years Ended December 31, 2016 2015 2014 Numerator Net income $ 2,393 $ 2,297 $ 2,323 Preferred stock dividends (37 ) (37 ) (37 ) Net income available to common stockholders 2,356 2,260 2,286 Income allocated to participating securities (17 ) (14 ) (16 ) Net income allocated to common stockholders $ 2,339 $ 2,246 $ 2,270 Denominator Weighted-average shares of common stock outstanding 405 437 462 Effect of dilutive common stock equivalents 1 1 1 Weighted-average shares of common stock outstanding and common stock equivalents 406 438 463 Basic earnings per common share $ 5.77 $ 5.14 $ 4.91 Diluted earnings per common share $ 5.77 $ 5.13 $ 4.90 |
Capital Adequacy (Tables)
Capital Adequacy (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Discover Bank and comparisons of each to the regulatory minimum and “well-capitalized” requirements (dollars in millions): Actual Minimum Capital Requirements Capital Requirements To Be Classified as Well-Capitalized Amount Ratio Amount Ratio Amount (1) Ratio (1) At December 31, 2016 (2) Total capital (to risk-weighted assets) Discover Financial Services $ 12,445 15.5 % $ 6,408 ≥8.0% $ 8,010 ≥10.0% Discover Bank $ 12,334 15.5 % $ 6,346 ≥8.0% $ 7,932 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 11,152 13.9 % $ 4,806 ≥6.0% $ 4,806 ≥6.0% Discover Bank $ 10,450 13.2 % $ 4,759 ≥6.0% $ 6,346 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 11,152 12.3 % $ 3,624 ≥4.0% N/A N/A Discover Bank $ 10,450 11.6 % $ 3,591 ≥4.0% $ 4,488 ≥5.0% CET1 capital (to risk-weighted assets) (Basel III transition) Discover Financial Services $ 10,592 13.2 % $ 3,604 ≥4.5% N/A N/A Discover Bank $ 10,450 13.2 % $ 3,570 ≥4.5% $ 5,156 ≥6.5% At December 31, 2015 (2) Total capital (to risk-weighted assets) Discover Financial Services $ 12,497 16.5 % $ 6,052 ≥8.0% $ 7,565 ≥10.0% Discover Bank $ 11,905 15.9 % $ 5,991 ≥8.0% $ 7,488 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 11,126 14.7 % $ 4,539 ≥6.0% $ 4,539 ≥6.0% Discover Bank $ 9,941 13.3 % $ 4,493 ≥6.0% $ 5,991 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 11,126 12.9 % $ 3,446 ≥4.0% N/A N/A Discover Bank $ 9,941 11.7 % $ 3,410 ≥4.0% $ 4,263 ≥5.0% CET1 capital (to risk-weighted assets) (Basel III transition) Discover Financial Services $ 10,566 14.0 % $ 3,404 ≥4.5% N/A N/A Discover Bank $ 9,941 13.3 % $ 3,370 ≥4.5% $ 4,867 ≥6.5% (1) The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available. (2) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Commitments, Contingencies an52
Commitments, Contingencies and Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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. Future minimum payments on capital leases were not material at December 31, 2016. The following table shows future minimum payments on non-cancelable operating leases with original terms in excess of one year (dollars in millions): Operating Leases 2017 $ 13 2018 11 2019 9 2020 8 2021 7 Thereafter 28 Total minimum lease payments $ 76 |
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 Years Ended December 31, 2016 2015 2014 Aggregate sales transaction volume (1) $ 136,413 $ 132,265 $ 125,637 (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 D53
Fair Value Measurements and Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Price in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance at December 31, 2016 Assets U.S. Treasury securities $ 674 $ — $ — $ 674 Residential mortgage-backed securities - Agency — 931 — 931 Available-for-sale investment securities $ 674 $ 931 $ — $ 1,605 Derivative financial instruments $ — $ 7 $ — $ 7 Liabilities Derivative financial instruments $ — $ 94 $ — $ 94 Balance at December 31, 2015 Assets U.S. Treasury securities $ 1,272 $ — $ — $ 1,272 U.S. government agency securities 494 — — 494 Residential mortgage-backed securities - Agency — 1,197 — 1,197 Available-for-sale investment securities $ 1,766 $ 1,197 $ — $ 2,963 Derivative financial instruments $ — $ 22 $ — $ 22 Liabilities Derivative financial instruments $ — $ 38 $ — $ 38 |
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 (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Balance at December 31, 2016 Assets States and political subdivisions of states $ — $ 2 $ — $ 2 $ 2 Residential mortgage-backed securities - Agency — 150 — 150 150 Held-to-maturity investment securities $ — $ 152 $ — $ 152 $ 152 Cash and cash equivalents $ 11,914 $ — $ — $ 11,914 $ 11,914 Restricted cash $ 95 $ — $ — $ 95 $ 95 Net loan receivables $ — $ — $ 78,252 $ 78,252 $ 75,087 Accrued interest receivables $ — $ 724 $ — $ 724 $ 724 Liabilities Deposits $ — $ 52,183 $ — $ 52,183 $ 51,992 Long-term borrowings - owed to securitization investors $ — $ 15,617 $ 900 $ 16,517 $ 16,411 Other long-term borrowings $ — $ 9,470 $ — $ 9,470 $ 9,032 Accrued interest payables $ — $ 168 $ — $ 168 $ 168 Balance at December 31, 2015 Assets U.S. Treasury securities $ 1 $ — $ — $ 1 $ 1 States and political subdivisions of states — 7 — 7 7 Residential mortgage-backed securities - Agency — 114 — 114 113 Held-to-maturity investment securities $ 1 $ 121 $ — $ 122 $ 121 Cash and cash equivalents $ 9,572 $ — $ — $ 9,572 $ 9,572 Restricted cash $ 99 $ — $ — $ 99 $ 99 Net loan receivables $ — $ — $ 71,455 $ 71,455 $ 70,516 Accrued interest receivables $ — $ 660 $ — $ 660 $ 660 Liabilities Deposits (1) $ — $ 47,714 $ — $ 47,714 $ 47,531 Long-term borrowings - owed to securitization investors (1) $ — $ 15,634 $ 1,220 $ 16,854 $ 16,735 Other long-term borrowings (1) $ — $ 8,355 $ — $ 8,355 $ 7,915 Accrued interest payables $ — $ 158 $ — $ 158 $ 158 (1) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Derivatives and Hedging Activ54
Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances | The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions): December 31, 2016 December 31, 2015 Notional Amount Number of Outstanding Derivative Contracts Derivative Assets Derivative Liabilities Notional Amount Derivative Assets Derivative Liabilities Derivatives designated as hedges Interest rate swaps—cash flow hedge $ 3,700 7 $ — $ 22 $ 4,100 $ — $ 35 Interest rate swaps—fair value hedge $ 6,208 57 7 72 $ 4,110 22 3 Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 13 6 — — $ 32 — — Interest rate swap $ 149 1 — — $ 217 — — Total gross derivative assets/liabilities (2) 7 94 22 38 Less: Collateral held/posted (3) (2 ) (94 ) (8 ) (33 ) Total net derivative assets/liabilities $ 5 $ — $ 14 $ 5 (1) The foreign exchange forward contracts have notional amounts of EUR 6 million , GBP 5 million and SGD 1 million as of December 31, 2016 and EUR 19 million and GBP 7 million , SGD 1 million as of December 31, 2015 . (2) 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, 2016 , the Company had one outstanding contract with a notional amount of $36 million and immaterial fair value. At December 31, 2015 , the Company had one outstanding contract with a notional amount of $52 million and immaterial fair value. (3) Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. |
Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income | The following tables summarize the impact of the derivative instruments on income and OCI, and indicates where within the consolidated financial statements such impact is reported (dollars in millions): Amount of Gain (Loss) Recognized in OCI For the Years Ended December 31, Location 2016 2015 2014 Derivatives designated as hedges Interest rate swaps—cash flow/net investment hedges Total gain (loss) recognized in OCI after amounts reclassified into earnings, pre-tax OCI $ 12 $ (22 ) $ (27 ) Total gain (loss) recognized in OCI $ 12 $ (22 ) $ (27 ) Amount of (Loss) Gain Recognized in Income For the Years Ended December 31, Location 2016 2015 2014 Derivatives designated as hedges Interest rate swaps—cash flow hedges Amount reclassified from OCI into income Interest Expense $ (35 ) $ (46 ) $ (38 ) Total amount reclassified from OCI into income on cash flow (35 ) (46 ) (38 ) Interest rate swaps—fair value hedges Loss on interest rate swaps (79 ) (11 ) (13 ) Gain on hedged items 78 11 17 Net ineffectiveness (loss) gain Interest Expense (1 ) — 4 Increase to interest expense related to net settlements on interest rate swaps Interest Expense 34 32 38 Total gain on fair value hedges 33 32 42 Total (loss) gain on derivatives designated as hedges recognized in income $ (2 ) $ (14 ) $ 4 Derivatives not designated as hedges Total gains on derivatives not designated as hedges recognized in income (1) Other Income $ 1 $ 75 $ 85 (1) During the years ended December 31, 2015 and 2014 , the Company recognized in income total gain of $2 million and total loss of $6 million , respectively, on forward delivery contracts related to the mortgage loan business that was closed during 2015. During the years ended December 31, 2015 and 2014 , the Company recognized in income total gain of $71 million and $87 million , respectively, on interest rate lock commitments related to the mortgage loan business that was closed during 2015. See Note 3: Business Dispositions for additional information. |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Disclosures | The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the Year Ended December 31, 2016 Interest income Credit card $ 7,155 $ — $ 7,155 Private student loans 444 — 444 PCI student loans 185 — 185 Personal loans 719 — 719 Other 113 — 113 Total interest income 8,616 — 8,616 Interest expense 1,398 — 1,398 Net interest income 7,218 — 7,218 Provision for loan losses 1,858 1 1,859 Other income 1,611 270 1,881 Other expense 3,422 162 3,584 Income before income tax expense $ 3,549 $ 107 $ 3,656 For the Year Ended December 31, 2015 Interest income Credit card $ 6,626 $ — $ 6,626 Private student loans 378 — 378 PCI student loans 220 — 220 Personal loans 631 — 631 Other 90 — 90 Total interest income 7,945 — 7,945 Interest expense 1,263 — 1,263 Net interest income 6,682 — 6,682 Provision for loan losses 1,512 — 1,512 Other income 1,779 278 2,057 Other expense 3,437 178 3,615 Income before income tax expense $ 3,512 $ 100 $ 3,612 The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the 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 |
Parent Company Condensed Fina56
Parent Company Condensed Financial Information (Tables) - Parent Company [Member] | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 (dollars in millions) Assets: Cash and cash equivalents (1) $ 1,901 $ 2,133 Notes receivable from subsidiaries (2) 751 736 Investments in bank subsidiaries 10,454 9,940 Investments in non-bank subsidiaries 861 984 Other assets (3) 202 203 Total assets (3) $ 14,169 $ 13,996 Liabilities and Stockholders' Equity: Non-interest bearing deposit accounts $ 14 $ 2 Interest-bearing deposit accounts — 2 Total deposits 14 4 Short-term borrowings from subsidiaries 221 314 Other long-term borrowings (3) 2,259 2,105 Accrued expenses and other liabilities 352 298 Total liabilities (3) 2,846 2,721 Stockholders' equity 11,323 11,275 Total liabilities and stockholders' equity (3) $ 14,169 $ 13,996 (1) The Parent Company had $1.9 billion and $2.1 billion in a money market deposit account at Discover Bank as of December 31, 2016 and 2015 , respectively, which is included in cash and cash equivalents. These funds are available to the Parent for liquidity purposes. (2) The Parent Company advanced $500 million to Discover Bank as of December 31, 2016 and 2015 , which is included in notes receivable from subsidiaries. These funds are available to the Parent for liquidity purposes. (3) Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Schedule of Parent Company Condensed Statements of Income | Discover Financial Services (Parent Company Only) Condensed Statements of Income For the Years Ended December 31, 2016 2015 2014 (dollars in millions) Interest income $ 39 $ 29 $ 18 Interest expense 139 128 86 Net interest expense (100 ) (99 ) (68 ) Dividends from bank subsidiaries 1,800 1,780 1,760 Dividends from non-bank subsidiaries 269 — 100 Total income 1,969 1,681 1,792 Other expense 1 1 4 Income before income tax expense and equity in undistributed net income of subsidiaries 1,968 1,680 1,788 Income tax benefit 40 37 18 Equity in undistributed net income of subsidiaries 385 580 517 Net income 2,393 2,297 2,323 OCI, net (1 ) (22 ) (70 ) Comprehensive income $ 2,392 $ 2,275 $ 2,253 |
Schedule of Parent Company Condensed Statements of Cash Flows | Discover Financial Services (Parent Company Only) Condensed Statements of Cash Flows For the Years Ended December 31, 2016 2015 2014 (dollars in millions) Cash flows from operating activities Net income $ 2,393 $ 2,297 $ 2,323 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of subsidiaries (385 ) (580 ) (517 ) Stock-based compensation expense 64 56 60 Deferred income taxes (9 ) (10 ) (5 ) Depreciation and amortization 27 23 21 Changes in assets and liabilities: Decrease (increase) in other assets 10 (13 ) (50 ) Increase in other liabilities and accrued expenses 52 83 32 Net cash provided by operating activities 2,152 1,856 1,864 Cash flows from investing activities Increase in investment in subsidiaries (1 ) (21 ) (35 ) (Increase) decrease in loans to subsidiaries (15 ) 1,700 (182 ) Net cash (used for) provided by investing activities (16 ) 1,679 (217 ) Cash flows from financing activities Net (decrease) increase in short-term borrowings from subsidiaries (93 ) 206 (38 ) Proceeds from issuance of common stock 7 5 5 Proceeds from issuance of long-term borrowings 130 539 500 Purchases of treasury stock (1,908 ) (1,715 ) (1,564 ) Net increase (decrease) in deposits 10 (1 ) (8 ) Dividends paid on common and preferred stock (514 ) (515 ) (467 ) Net cash used for financing activities (2,368 ) (1,481 ) (1,572 ) (Decrease) increase in cash and cash equivalents (232 ) 2,054 75 Cash and cash equivalents, at beginning of period 2,133 79 4 Cash and cash equivalents, at end of period $ 1,901 $ 2,133 $ 79 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest expense $ 112 $ 97 $ 66 Income taxes, net of income tax refunds $ 23 $ 109 $ 65 |
Quarterly Results (Tables)
Quarterly Results (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |
Schedule of Quarterly Results | The following table provides unaudited quarterly results (dollars in millions, except per share data): December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Interest income $ 2,258 $ 2,184 $ 2,090 $ 2,084 $ 2,061 $ 2,008 $ 1,947 $ 1,929 Interest expense 366 359 339 334 329 323 311 300 Net interest income 1,892 1,825 1,751 1,750 1,732 1,685 1,636 1,629 Provision for loan losses 578 445 412 424 484 332 306 390 Other income 466 476 465 474 473 503 539 542 Other expense 897 895 906 886 933 882 927 873 Income before income tax expense 883 961 898 914 788 974 942 908 Income tax expense 320 322 282 339 288 362 343 322 Net income $ 563 $ 639 $ 616 $ 575 $ 500 $ 612 $ 599 $ 586 Net income allocated to common stockholders (1) $ 550 $ 625 $ 602 $ 562 $ 488 $ 599 $ 586 $ 573 Basic earnings per common share (1) $ 1.40 $ 1.56 $ 1.47 $ 1.35 $ 1.15 $ 1.38 $ 1.33 $ 1.28 Diluted earnings per common share (1) $ 1.40 $ 1.56 $ 1.47 $ 1.35 $ 1.14 $ 1.38 $ 1.33 $ 1.28 (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. |
Background and Basis of Prese58
Background and Basis of Presentation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Consolidation percentage | 50.00% | |
Cost method ownership percentage | 20.00% | |
Accounting Standards Update 2015-03 [Member] | Other Assets [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ (137) | |
Accounting Standards Update 2015-03 [Member] | Long-term Debt [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | 74 | |
Accounting Standards Update 2015-03 [Member] | Deposits [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ 63 |
Summary of Significant Accoun59
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Oct. 01, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Line Items] | |||||
Cash and due from banks | $ 1,200 | $ 900 | |||
Interest-bearing deposits in other banks | $ 10,700 | 8,600 | |||
Threshold charge-off period for bankruptcy and probate accounts | 60 days | ||||
Fraudulent transaction charge off period | 90 days | ||||
Impairment of goodwill | $ 0 | $ 0 | |||
Impairment of Intangible Assets (Excluding Goodwill) | $ 0 | $ 0 | |||
Advertising costs | $ 196 | 198 | $ 194 | ||
Unamortized deferred costs for loan origination | 74 | 58 | |||
Credit card rewards cost adjusted for estimated forfeitures | 1,400 | 1,300 | $ 1,400 | ||
Liability for customer rewards adjusted for estimated forfeitures | 1,400 | 1,400 | |||
Unamortized portion of the deferred incentive payments | 25 | 21 | |||
Loan Lending Commitment Arrangement Fees [Member] | |||||
Accounting Policies [Line Items] | |||||
Deferred revenue | $ 41 | $ 36 | |||
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 | ||||
Personal And Private Student Loan Member [Member] | |||||
Accounting Policies [Line Items] | |||||
Threshold charge-off period for past due accounts (in days) | 120 days | ||||
Credit Card Loans [Member] | |||||
Accounting Policies [Line Items] | |||||
Threshold charge-off period for past due accounts (in days) | 180 days | ||||
Amortization period for loan acquisition costs | 1 year |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investment Holdings [Line Items] | |||
Other than temporary impairment loss on investments | $ 0 | $ 0 | $ 0 |
Affordable housing project equity method investments | 270 | 238 | |
Contingent liabilities related to affordable housing project equity method investments | 64 | 57 | |
Community Reinvestment Act [Member] | Other Assets [Member] | |||
Investment Holdings [Line Items] | |||
Equity method investments | 326 | 328 | |
Community Reinvestment Act [Member] | Other Liabilities [Member] | |||
Investment Holdings [Line Items] | |||
Contingent liabilities related to equity method investments | $ 64 | $ 57 |
Investments (Schedule of Invest
Investments (Schedule of Investment Securities) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investment Holdings [Line Items] | ||||
Investment securities | $ 1,757 | $ 3,084 | $ 3,949 | |
U.S. Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Investment securities | [1] | 674 | 1,273 | 1,330 |
Derivative collateral | 73 | 7 | 16 | |
U.S. Government Agency Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Investment securities | 0 | 494 | 1,033 | |
States and Political Subdivisions of States [Member] | ||||
Investment Holdings [Line Items] | ||||
Investment securities | 2 | 7 | 10 | |
Residential Mortgage Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Investment securities | [2] | $ 1,081 | $ 1,310 | $ 1,576 |
[1] | Includes $73 million, $7 million and $16 million of U.S. Treasury securities pledged as swap collateral as of December 31, 2016, 2015 and 2014, respectively. | |||
[2] | Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Investment Holdings [Line Items] | |||
Available-for-sale investment securities, amortized cost | [1] | $ 1,610 | $ 2,964 |
Available-for-sale investment securities, gross unrealized gains | [1] | 2 | 9 |
Available-for-sale investment securities, gross unrealized losses | [1] | (7) | (10) |
Available-for-sale investment securities, fair value | [1] | 1,605 | 2,963 |
Held-to-maturity investment securities, amortized cost | [2] | 152 | 121 |
Held-to-maturity investment securities, gross unrealized gains | [2] | 1 | 1 |
Held-to-maturity investment securities, gross unrealized losses | [2] | (1) | 0 |
Held-to-maturity investment securities, fair value | [2] | 152 | 122 |
U.S. Treasury Securities [Member] | |||
Investment Holdings [Line Items] | |||
Available-for-sale investment securities, amortized cost | [1] | 676 | 1,277 |
Available-for-sale investment securities, gross unrealized gains | [1] | 0 | 1 |
Available-for-sale investment securities, gross unrealized losses | [1] | (2) | (6) |
Available-for-sale investment securities, fair value | [1] | 674 | 1,272 |
Held-to-maturity investment securities, amortized cost | [2],[3] | 1 | |
Held-to-maturity investment securities, gross unrealized gains | [2],[3] | 0 | |
Held-to-maturity investment securities, gross unrealized losses | [2],[3] | 0 | |
Held-to-maturity investment securities, fair value | [2],[3] | 1 | |
Residential Mortgage Backed Securities - Agency [Member] | |||
Investment Holdings [Line Items] | |||
Available-for-sale investment securities, amortized cost | [1] | 934 | 1,195 |
Available-for-sale investment securities, gross unrealized gains | [1] | 2 | 6 |
Available-for-sale investment securities, gross unrealized losses | [1] | (5) | (4) |
Available-for-sale investment securities, fair value | [1] | 931 | 1,197 |
Held-to-maturity investment securities, amortized cost | [2],[4] | 150 | 113 |
Held-to-maturity investment securities, gross unrealized gains | [2],[4] | 1 | 1 |
Held-to-maturity investment securities, gross unrealized losses | [2],[4] | (1) | 0 |
Held-to-maturity investment securities, fair value | [2],[4] | 150 | 114 |
States and Political Subdivisions of States [Member] | |||
Investment Holdings [Line Items] | |||
Held-to-maturity investment securities, amortized cost | [2] | 2 | 7 |
Held-to-maturity investment securities, gross unrealized gains | [2] | 0 | 0 |
Held-to-maturity investment securities, gross unrealized losses | [2] | 0 | 0 |
Held-to-maturity investment securities, fair value | [2] | $ 2 | 7 |
U.S. Government Agency Securities [Member] | |||
Investment Holdings [Line Items] | |||
Available-for-sale investment securities, amortized cost | [1] | 492 | |
Available-for-sale investment securities, gross unrealized gains | [1] | 2 | |
Available-for-sale investment securities, gross unrealized losses | [1] | 0 | |
Available-for-sale investment securities, fair value | [1] | $ 494 | |
[1] | Available-for-sale investment securities are reported at fair value. | ||
[2] | Held-to-maturity investment securities are reported at amortized cost. | ||
[3] | At December 31, 2015, amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. Beginning in the third quarter of 2016, collateral is no longer required. | ||
[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) $ in Millions | Dec. 31, 2016USD ($)securities | Dec. 31, 2015USD ($)securities |
U.S. Treasury Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available-for-sale investment securities, number of securities in a loss position (in securities) | securities | 1 | 1 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 674 | $ 670 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | $ (2) | $ (6) |
Residential Mortgage Backed Securities - Agency [Member] | ||
Investment Holdings [Line Items] | ||
Available-for-sale investment securities, number of securities in a loss position (in securities) | securities | 19 | 15 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 586 | $ 486 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | $ (5) | $ (4) |
Held-to-maturity, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | securities | 31 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value | $ 61 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | $ (1) |
Investments (Schedule of Procee
Investments (Schedule of Proceeds, Recognized Gains and Losses and Unrealized Gains and Losses) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from the sales of available-for-sale investment securities | $ 0 | $ 899 | $ 1,220 |
Gains on sales of available-for-sale investment securities | 0 | 8 | 4 |
Net unrealized (losses) gains recorded in OCI, before tax | (4) | (37) | 5 |
Net unrealized (losses) gains recorded in OCI, after-tax | $ (3) | $ (23) | $ 4 |
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 ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
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 | 676 | ||
Available-for-sale securities, debt maturities, after five years through ten years, amortized cost | 285 | ||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 649 | ||
Available-for-sale investment securities, amortized cost | [1] | 1,610 | $ 2,964 |
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 | 152 | ||
Held-to-maturity investment securities, amortized cost | [2] | 152 | 121 |
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 | 674 | ||
Available-for-sale securities, debt maturities, after five years through ten years, fair value | 284 | ||
Available-for-sale securities, debt maturities, after ten years, fair value | 647 | ||
Available-for-sale investment securities, fair value | [1] | 1,605 | 2,963 |
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 | 152 | ||
Held-to-maturity securities, debt maturities, fair value | [2] | $ 152 | 122 |
Available-for-sale securities, debt maturities, one year or less, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, after one year through five years, percentage | [3] | 0.91% | |
Available-for-sale securities, debt maturities, after five years through ten years, percentage | [3] | 1.55% | |
Available-for-sale securities, debt maturities, after ten years, percentage | [3] | 2.06% | |
Available-for-sale securities, debt maturities, percentage | [3] | 1.49% | |
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 | 2.71% | ||
Held-to-maturity securities, debt maturities, percentage | 2.71% | ||
U.S. Treasury Securities [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 | 676 | ||
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] | 676 | 1,277 |
Held-to-maturity investment securities, amortized cost | [2],[4] | 1 | |
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 | 674 | ||
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] | $ 674 | 1,272 |
Held-to-maturity securities, debt maturities, fair value | [2],[4] | 1 | |
Available-for-sale securities, debt maturities, one year or less, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, after one year through five years, percentage | [3] | 0.91% | |
Available-for-sale securities, debt maturities, after five years through ten years, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, after ten years, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, percentage | [3] | 0.91% | |
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 | 2 | ||
Held-to-maturity investment securities, amortized cost | [2] | 2 | 7 |
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 | 2 | ||
Held-to-maturity securities, debt maturities, fair value | [2] | $ 2 | 7 |
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 | 4.73% | ||
Held-to-maturity securities, debt maturities, percentage | 4.73% | ||
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 | 285 | ||
Available-for-sale securities, debt maturities, after ten years, amortized cost | 649 | ||
Available-for-sale investment securities, amortized cost | [1] | 934 | 1,195 |
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 | 150 | ||
Held-to-maturity investment securities, amortized cost | [2],[5] | 150 | 113 |
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 | 284 | ||
Available-for-sale securities, debt maturities, after ten years, fair value | 647 | ||
Available-for-sale investment securities, fair value | [1] | 931 | 1,197 |
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 | 150 | ||
Held-to-maturity securities, debt maturities, fair value | [2],[5] | $ 150 | $ 114 |
Available-for-sale securities, debt maturities, one year or less, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, after one year through five years, percentage | [3] | 0.00% | |
Available-for-sale securities, debt maturities, after five years through ten years, percentage | [3] | 1.55% | |
Available-for-sale securities, debt maturities, after ten years, percentage | [3] | 2.06% | |
Available-for-sale securities, debt maturities, percentage | [3] | 1.91% | |
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 | 2.68% | ||
Held-to-maturity securities, debt maturities, percentage | 2.68% | ||
[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] | At December 31, 2015, amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period. Beginning in the third quarter of 2016, collateral is no longer required. | ||
[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 (Schedule of Intere
Investments (Schedule of Interest on Investment Securities) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investments, Debt and Equity Securities [Abstract] | |||
Taxable interest | $ 38 | $ 49 | $ 66 |
Tax exempt interest | 0 | 0 | 1 |
Total income from investment securities | $ 38 | $ 49 | $ 67 |
Loan Receivables (Narrative) (D
Loan Receivables (Narrative) (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Number of loan portfolio segments (in segments) | segment | 3 | ||||||||||||
Private student loan forbearance lifetime cap (in months) | 12 months | ||||||||||||
Private student loans including PCI in forbearance | $ 19 | $ 31 | $ 19 | $ 31 | |||||||||
Private student loans in forbearance as a percentage of student loans in repayment and forbearance (in percent) | 0.30% | 0.50% | 0.30% | 0.50% | |||||||||
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent) | 37.00% | 40.00% | 35.00% | ||||||||||
Provision for loan losses | $ 578 | $ 445 | $ 412 | $ 424 | $ 484 | $ 332 | $ 306 | $ 390 | $ 1,859 | $ 1,512 | $ 1,443 | ||
Allowance for loan losses | 2,167 | 1,869 | $ 2,167 | $ 1,869 | $ 1,746 | $ 1,648 | |||||||
Net charge-off rate on PCI student loans (in percent) | [1] | 2.16% | 2.01% | 2.04% | |||||||||
Personal Loans [Member] | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Maximum period of payment reduction for the temporary reduced payment program (in months) | 12 months | ||||||||||||
Maximum repayment term for temporary modification programs (in years) | 9 years | ||||||||||||
Maximum repayment term for permanent modification programs (in years) | 9 years | ||||||||||||
Credit Card Loans [Member] | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Maximum period of payment reduction for the temporary reduced payment program (in months) | 12 months | ||||||||||||
Permanent workout program maturity (in months) | 60 months | ||||||||||||
Interest and fees forgiven due to credit card loan modification program | $ 34 | $ 44 | $ 42 | ||||||||||
Provision for loan losses | 1,579 | 1,300 | 1,259 | ||||||||||
Allowance for loan losses | 1,790 | 1,554 | $ 1,790 | $ 1,554 | $ 1,474 | $ 1,406 | |||||||
Threshold charge-off period for past due accounts (in days) | 180 days | ||||||||||||
Net charge-off rate on PCI student loans (in percent) | [1] | 2.34% | 2.22% | 2.27% | |||||||||
PCI Student Loans [Member] | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Purchased credit-impaired loans outstanding balance | 2,700 | 3,300 | $ 2,700 | $ 3,300 | |||||||||
Purchased credit-impaired loans | [2] | 2,584 | 3,116 | 2,584 | 3,116 | ||||||||
Provision for loan losses | 0 | 8 | $ 0 | ||||||||||
Allowance for loan losses | $ 35 | $ 36 | $ 35 | $ 36 | |||||||||
Threshold charge-off period for past due accounts (in days) | 120 days | ||||||||||||
Net charge-off rate on PCI student loans (in percent) | 0.52% | 0.55% | 0.64% | ||||||||||
PCI Student Loans [Member] | 30 or More Days Delinquent [Member] | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Delinquency rate on PCI student loans (in percent) | 2.88% | 2.53% | |||||||||||
PCI Student Loans [Member] | 90 or More Days Delinquent [Member] | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Delinquency rate on PCI student loans (in percent) | 0.87% | 0.88% | |||||||||||
[1] | Net charge-off rate represents net charge-off dollars (annualized) divided by average loans for the reporting period. | ||||||||||||
[2] | Amounts include $1.4 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at December 31, 2016 and 2015, respectively. See Note 6: Credit Card and Student Loan Securitization Activities. |
Loan Receivables (Schedule of L
Loan Receivables (Schedule of Loan Receivables) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | $ 77,254 | $ 72,385 | |||
Allowance for loan losses | (2,167) | (1,869) | $ (1,746) | $ (1,648) | |
Net loan receivables | 75,087 | 70,516 | |||
Variable Interest Entity, Primary Beneficiary [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | 33,016 | 30,551 | |||
Allowance for loan losses | (955) | (811) | |||
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Credit card loans | [1] | 31,626 | 28,873 | ||
Allowance for loan losses | [1] | (928) | (783) | ||
Sellers' interest | 10,812 | 7,231 | |||
Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Purchased credit-impaired loans | [2] | 1,390 | 1,678 | ||
Allowance for loan losses | [2] | (27) | (28) | ||
Credit Card Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Credit card loans | [3] | 61,522 | 57,896 | ||
Loan receivables | 61,522 | 57,896 | |||
Allowance for loan losses | (1,790) | (1,554) | (1,474) | (1,406) | |
Credit Card Loans [Member] | Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Investors' interests | 20,800 | 21,600 | |||
Total Other Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | 13,148 | 11,373 | |||
Total Other Loans [Member] | Personal Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | 6,481 | 5,490 | |||
Allowance for loan losses | (200) | (155) | (120) | (112) | |
Total Other Loans [Member] | Private Student Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | 6,393 | 5,647 | |||
Total Other Loans [Member] | Other Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan receivables | 274 | 236 | |||
Allowance for loan losses | (19) | (17) | $ (17) | $ (17) | |
Purchase Credit-Impaired Loans [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Purchased credit-impaired loans | [4] | 2,584 | 3,116 | ||
Allowance for loan losses | (35) | (36) | |||
Purchase Credit-Impaired 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 | $ 1,400 | $ 1,700 | |||
[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 PCI 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 $20.8 billion and $21.6 billion underlying investors’ interest in trust debt at December 31, 2016 and 2015, respectively, and $10.8 billion and $7.2 billion in seller's interest at December 31, 2016 and 2015, respectively. The increase in the seller's interest from December 31, 2015 to December 31, 2016 is due in part to the addition of randomly-selected accounts to the credit card loan receivables restricted for securitization investors in order to increase excess seller's interest and related securitization capacity. See Note 6: Credit Card and Student Loan Securitization Activities for further information. | ||||
[4] | Amounts include $1.4 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at December 31, 2016 and 2015, respectively. See Note 6: Credit Card and Student Loan Securitization Activities. |
Loan Receivables (Schedule of D
Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | $ 1,469 | $ 1,153 | ||
Loan receivables, 90 or more days delinquent and accruing | 597 | 460 | ||
Loan receivables, total non-accruing | 216 | 224 | ||
30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 817 | 623 | ||
90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 652 | 530 | ||
Credit Card Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 1,252 | 995 | ||
Loan receivables, 90 or more days delinquent and accruing | [1] | 544 | 422 | |
Loan receivables, total non-accruing | [2] | 189 | 198 | |
Estimated gross interest income that would have been recorded based on original terms | 31 | 30 | $ 27 | |
Credit Card Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 655 | 505 | ||
Credit Card Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 597 | 490 | ||
Total Other Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 217 | 158 | ||
Loan receivables, 90 or more days delinquent and accruing | 53 | 38 | ||
Loan receivables, total non-accruing | 27 | 26 | ||
Total Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 162 | 118 | ||
Total Other Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 55 | 40 | ||
Total Other Loans [Member] | Personal Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 74 | 49 | ||
Loan receivables, 90 or more days delinquent and accruing | [3] | 18 | 13 | |
Loan receivables, total non-accruing | 8 | 6 | ||
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 55 | 34 | ||
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 19 | 15 | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 141 | 108 | ||
Loan receivables, 90 or more days delinquent and accruing | [4] | 35 | 25 | |
Loan receivables, total non-accruing | 0 | 0 | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 106 | 84 | ||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 35 | 24 | ||
Total Other Loans [Member] | Other Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 2 | 1 | ||
Loan receivables, 90 or more days delinquent and accruing | 0 | 0 | ||
Loan receivables, total non-accruing | 19 | 20 | ||
Total Other Loans [Member] | Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 1 | 0 | ||
Total Other Loans [Member] | Other Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, past due | 1 | 1 | ||
Entity Loan Modification Program [Member] | Credit Card Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, 90 or more days delinquent and accruing | 58 | 42 | ||
Entity Loan Modification Program [Member] | Total Other Loans [Member] | Personal Loans [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, 90 or more days delinquent and accruing | 2 | 4 | ||
Entity Loan Modification Program [Member] | Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Loan receivables, 90 or more days delinquent and accruing | $ 3 | $ 3 | ||
[1] | Credit card loans that are 90 or more days delinquent and accruing interest include $58 million and $42 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015, 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 $31 million, $30 million and $27 million for the years ended December 31, 2016, 2015 and 2014, 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 $2 million and $4 million of loans accounted for as troubled debt restructurings at both December 31, 2016 and 2015, respectively. | |||
[4] | Private student loans that are 90 or more days delinquent and accruing interest include $3 million of loans accounted for as troubled debt restructurings at December 31, 2016 and 2015. |
Loan Receivables (Schedule of N
Loan Receivables (Schedule of Net Charge-offs) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 1,561 | $ 1,389 | $ 1,345 | |
Net charge-off rate (in percent) | [1] | 2.16% | 2.01% | 2.04% |
Excluding PCI Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 1,561 | $ 1,389 | $ 1,345 | |
Net charge-off rate (in percent) | [1] | 2.24% | 2.12% | 2.17% |
Credit Card Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 1,343 | $ 1,220 | $ 1,191 | |
Net charge-off rate (in percent) | [1] | 2.34% | 2.22% | 2.27% |
Total Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 218 | $ 169 | $ 154 | |
Net charge-off rate (in percent) | [1] | 1.78% | 1.57% | 1.63% |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 151 | $ 112 | $ 94 | |
Net charge-off rate (in percent) | [1] | 2.55% | 2.15% | 2.04% |
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 67 | $ 56 | $ 57 | |
Net charge-off rate (in percent) | [1] | 1.10% | 1.07% | 1.29% |
Total Other Loans [Member] | Other Loans [Member] | ||||
Charge Offs [Line Items] | ||||
Net charge-offs | $ 0 | $ 1 | $ 3 | |
Net charge-off rate (in percent) | [1] | 0.00% | 0.79% | 0.76% |
[1] | Net charge-off rate represents net charge-off dollars (annualized) divided by average loans for the reporting period. |
Loan Receivables (Schedule of C
Loan Receivables (Schedule of Credit Risk Profile by FICO Score) (Details) | Dec. 31, 2016 | Dec. 31, 2015 | |
Credit Card Loans [Member] | FICO Score, 660 and Above [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | 82.00% | 83.00% | |
Credit Card Loans [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | 18.00% | 17.00% | |
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, 660 and Above [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | 96.00% | 96.00% | |
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | 4.00% | 4.00% | |
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | FICO Score, 660 and Above [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | [1] | 95.00% | 96.00% |
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
FICO scores as a percentage of class of loan receivables | [1] | 5.00% | 4.00% |
[1] | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." |
Loan Receivables (Schedule of72
Loan Receivables (Schedule of Changes in the Allowance for Loan Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Balance at beginning of period | $ 1,869 | $ 1,746 | $ 1,869 | $ 1,746 | $ 1,648 | ||||||||||||
Provision for loan losses | $ 578 | $ 445 | $ 412 | 424 | $ 484 | $ 332 | $ 306 | 390 | 1,859 | 1,512 | 1,443 | ||||||
Charge-offs | (2,034) | (1,855) | (1,806) | ||||||||||||||
Recoveries | 473 | 466 | 461 | ||||||||||||||
Net charge-offs | (1,561) | (1,389) | (1,345) | ||||||||||||||
Balance at end of period | 2,167 | 1,869 | 2,167 | 1,869 | 1,746 | ||||||||||||
Student Loans [Member] | |||||||||||||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Balance at beginning of period | [2] | 143 | [1] | 135 | 143 | [1] | 135 | 113 | |||||||||
Provision for loan losses | [2] | 82 | 64 | 79 | |||||||||||||
Charge-offs | [2] | (76) | (65) | (62) | |||||||||||||
Recoveries | [2] | 9 | 9 | 5 | |||||||||||||
Net charge-offs | [2] | (67) | (56) | (57) | |||||||||||||
Balance at end of period | [2] | 158 | [1] | 143 | [1] | 158 | [1] | 143 | [1] | 135 | |||||||
Credit Card Loans [Member] | |||||||||||||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Balance at beginning of period | 1,554 | 1,474 | 1,554 | 1,474 | 1,406 | ||||||||||||
Provision for loan losses | 1,579 | 1,300 | 1,259 | ||||||||||||||
Charge-offs | (1,786) | (1,660) | (1,636) | ||||||||||||||
Recoveries | 443 | 440 | 445 | ||||||||||||||
Net charge-offs | (1,343) | (1,220) | (1,191) | ||||||||||||||
Balance at end of period | 1,790 | 1,554 | 1,790 | 1,554 | 1,474 | ||||||||||||
Total Other Loans [Member] | |||||||||||||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Net charge-offs | (218) | (169) | (154) | ||||||||||||||
Total Other Loans [Member] | Personal Loans [Member] | |||||||||||||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Balance at beginning of period | 155 | 120 | 155 | 120 | 112 | ||||||||||||
Provision for loan losses | 196 | 147 | 102 | ||||||||||||||
Charge-offs | (172) | (129) | (105) | ||||||||||||||
Recoveries | 21 | 17 | 11 | ||||||||||||||
Net charge-offs | (151) | (112) | (94) | ||||||||||||||
Balance at end of period | 200 | 155 | 200 | 155 | 120 | ||||||||||||
Total Other Loans [Member] | Other Loans [Member] | |||||||||||||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||||||||||||
Balance at beginning of period | $ 17 | $ 17 | 17 | 17 | 17 | ||||||||||||
Provision for loan losses | 2 | 1 | 3 | ||||||||||||||
Charge-offs | 0 | (1) | (3) | ||||||||||||||
Recoveries | 0 | 0 | 0 | ||||||||||||||
Net charge-offs | 0 | (1) | (3) | ||||||||||||||
Balance at end of period | $ 19 | $ 17 | $ 19 | $ 17 | $ 17 | ||||||||||||
[1] | Includes both PCI and non-PCI private student loans. | ||||||||||||||||
[2] | Includes both PCI and non-PCI private student loans. |
Loan Receivables (Schedule of73
Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loans and Leases Receivable Disclosure [Abstract] | |||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ 275 | $ 278 | $ 283 |
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ 69 | $ 71 | $ 69 |
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 ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | $ 1,910 | $ 1,627 | |||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 222 | 206 | ||||
Total allowance for loan losses | 2,167 | 1,869 | $ 1,746 | $ 1,648 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 73,363 | 68,077 | |||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 1,307 | 1,192 | ||||
Loan receivables | 77,254 | 72,385 | |||||
Receivables Acquired with Deteriorated Credit Quality [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 | 35 | 36 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 2,584 | 3,116 | |||||
Student Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Total allowance for loan losses | [4] | 158 | [3] | 143 | [3] | 135 | 113 |
Total recorded investment | [3] | 8,977 | 8,763 | ||||
Credit Card Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | 1,623 | 1,394 | |||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 167 | 160 | ||||
Total allowance for loan losses | 1,790 | 1,554 | 1,474 | 1,406 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 60,437 | 56,877 | |||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 1,085 | 1,019 | ||||
Total recorded investment | 61,522 | 57,896 | |||||
Loan receivables | 61,522 | 57,896 | |||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 935 | 869 | |||||
Credit Card Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [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 | 0 | 0 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | 0 | |||||
Total Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 13,148 | 11,373 | |||||
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 | 179 | 140 | |||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 21 | 15 | ||||
Total allowance for loan losses | 200 | 155 | 120 | 112 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 6,400 | 5,422 | |||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 81 | 68 | ||||
Total recorded investment | 6,481 | 5,490 | |||||
Loan receivables | 6,481 | 5,490 | |||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 79 | 67 | |||||
Total Other Loans [Member] | Personal Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [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 | 0 | 0 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | 0 | |||||
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 | 105 | 92 | |||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 18 | 15 | ||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 6,307 | 5,599 | |||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 86 | 48 | ||||
Loan receivables | 6,393 | 5,647 | |||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 84 | 47 | |||||
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 | 3 | 1 | |||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 16 | 16 | ||||
Total allowance for loan losses | 19 | 17 | $ 17 | $ 17 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 219 | 179 | |||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 55 | 57 | ||||
Total recorded investment | 274 | 236 | |||||
Loan receivables | 274 | 236 | |||||
Total Other Loans [Member] | Other Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [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 | 0 | 0 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 0 | 0 | |||||
PCI Student Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Total allowance for loan losses | 35 | 36 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | [5] | 2,584 | 3,116 | ||||
PCI Student Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [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 | 35 | 36 | |||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | $ 2,584 | $ 3,116 | |||||
[1] | Loan receivables evaluated for impairment in accordance with Accounting Standards Codification ("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 $935 million and $869 million at December 31, 2016 and 2015 respectively. The unpaid principal balance of personal loans was $79 million and $67 million at December 31, 2016 and 2015, respectively. The unpaid principal balance of student loans was $84 million and $47 million at December 31, 2016 and 2015, 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] | Includes both PCI and non-PCI private student loans. | ||||||
[5] | Amounts include $1.4 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at December 31, 2016 and 2015, respectively. See Note 6: Credit Card and Student Loan Securitization Activities. |
Loan Receivables (Schedule of T
Loan Receivables (Schedule of Troubled Debt Restructurings) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Credit Card Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Average recorded investment in loans | [1] | $ 1,035 | $ 1,018 | $ 1,069 |
Interest income recognized during period loans were impaired | [1],[2] | 88 | 82 | 84 |
Gross interest income that would have been recorded with original terms | [1],[3] | 77 | 75 | 77 |
Credit Card Loans [Member] | Modified Credit Card Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Average recorded investment in loans | 282 | 261 | 252 | |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Average recorded investment in loans | 73 | 62 | 48 | |
Interest income recognized during period loans were impaired | [2] | 8 | 7 | 5 |
Gross interest income that would have been recorded with original terms | [3] | 3 | 2 | 1 |
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Average recorded investment in loans | 63 | 43 | 32 | |
Interest income recognized during period loans were impaired | [2] | 4 | $ 3 | $ 3 |
Gross interest income that would have been recorded with original terms | [3],[4] | $ 0 | ||
[1] | Includes credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in a troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. The average balance of credit card loans that were no longer enrolled in a troubled debt restructuring program was $282 million, $261 million and $252 million, respectively, for the years ended December 31, 2016, 2015 and 2014. | |||
[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 additional 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 loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. | |||
[4] | As a result of the updates implemented in the third quarter of 2016, some student loans accounted for as troubled debt restructurings have additional gross 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. For the year ended December 31, 2016, the gross income that would have been recorded with original terms for student loans in modification programs was not material. |
Loan Receivables (Schedule of76
Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)accounts | Dec. 31, 2015USD ($)accounts | Dec. 31, 2014USD ($)accounts | |
Credit Card Loans [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 95,881 | 83,479 | 80,484 |
Accounts that entered a loan modification program during the period, balances | $ | $ 565 | $ 493 | $ 485 |
Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 4,606 | 4,243 | 3,528 |
Accounts that entered a loan modification program during the period, balances | $ | $ 52 | $ 50 | $ 42 |
Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 2,792 | 1,362 | 1,453 |
Accounts that entered a loan modification program during the period, balances | $ | $ 49 | $ 20 | $ 21 |
Loan Receivables (Schedule of77
Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016USD ($)accountsmissed_payments | Dec. 31, 2015USD ($)accounts | Dec. 31, 2014USD ($)accounts | ||
Financing Receivable, Modifications [Line Items] | ||||
Amount of missed payments after which a customer defaults from a modification program (in payments) | missed_payments | 2 | |||
Credit Card Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | accounts | [1],[2] | 23,388 | 18,299 | 17,558 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [1],[2] | $ 123 | $ 96 | $ 92 |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | accounts | [1] | 940 | 644 | 433 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [1] | $ 11 | $ 7 | $ 5 |
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Financing Receivable, Modifications [Line Items] | ||||
Troubled debt restructurings that subsequently defaulted, number of accounts (in accounts) | accounts | [3] | 777 | 1,103 | 1,155 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [3] | $ 12 | $ 16 | $ 18 |
Delinquency days to default (in days) | 60 days | |||
[1] | For credit card loans and personal loans, a customer defaults from a modification program after two consecutive missed payments. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. | |||
[2] | 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] | For student loans, defaults have been defined as loans that are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. |
Loan Receivables (Schedule of78
Loan Receivables (Schedule of Changes in Accretable Yield for the Acquired Loans) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |||
Accretable yield, balance at beginning of period | $ 965 | $ 1,341 | $ 1,580 |
Accretion into interest income | (185) | (220) | (260) |
Other changes in expected cash flows | 16 | (156) | 21 |
Accretable yield, balance at end of period | $ 796 | $ 965 | $ 1,341 |
Loan Recievables (Schedule of G
Loan Recievables (Schedule of Geographic Distribution of Loan Receivables) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 77,254 | $ 72,385 |
Credit Card Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 61,522 | $ 57,896 |
Percentage of total loan receivables (in percent) | 100.00% | 100.00% |
Credit Card Loans [Member] | California [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 5,317 | $ 4,947 |
Percentage of total loan receivables (in percent) | 8.60% | 8.50% |
Credit Card Loans [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 5,156 | $ 4,781 |
Percentage of total loan receivables (in percent) | 8.40% | 8.30% |
Credit Card Loans [Member] | New York [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 4,295 | $ 4,061 |
Percentage of total loan receivables (in percent) | 7.00% | 7.00% |
Credit Card Loans [Member] | Florida [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 3,793 | $ 3,463 |
Percentage of total loan receivables (in percent) | 6.20% | 6.00% |
Credit Card Loans [Member] | Illinois [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 3,350 | $ 3,170 |
Percentage of total loan receivables (in percent) | 5.40% | 5.50% |
Credit Card Loans [Member] | Pennsylvania [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 3,233 | $ 3,071 |
Percentage of total loan receivables (in percent) | 5.30% | 5.30% |
Credit Card Loans [Member] | Ohio [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 2,646 | $ 2,511 |
Percentage of total loan receivables (in percent) | 4.30% | 4.30% |
Credit Card Loans [Member] | New Jersey [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 2,282 | $ 2,163 |
Percentage of total loan receivables (in percent) | 3.70% | 3.70% |
Credit Card Loans [Member] | Georgia [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 1,793 | $ 1,687 |
Percentage of total loan receivables (in percent) | 2.90% | 2.90% |
Credit Card Loans [Member] | Michigan [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 1,744 | $ 1,661 |
Percentage of total loan receivables (in percent) | 2.80% | 2.90% |
Credit Card Loans [Member] | Other States [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 27,913 | $ 26,381 |
Percentage of total loan receivables (in percent) | 45.40% | 45.60% |
Total Other Loans and PCI Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 15,732 | $ 14,489 |
Percentage of total loan receivables (in percent) | 100.00% | 100.00% |
Total Other Loans and PCI Loans [Member] | California [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 1,420 | $ 1,312 |
Percentage of total loan receivables (in percent) | 9.00% | 9.10% |
Total Other Loans and PCI Loans [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 927 | $ 804 |
Percentage of total loan receivables (in percent) | 5.90% | 5.50% |
Total Other Loans and PCI Loans [Member] | New York [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 1,792 | $ 1,743 |
Percentage of total loan receivables (in percent) | 11.40% | 12.00% |
Total Other Loans and PCI Loans [Member] | Florida [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 666 | $ 578 |
Percentage of total loan receivables (in percent) | 4.20% | 4.00% |
Total Other Loans and PCI Loans [Member] | Illinois [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 961 | $ 865 |
Percentage of total loan receivables (in percent) | 6.10% | 6.00% |
Total Other Loans and PCI Loans [Member] | Pennsylvania [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 1,128 | $ 1,059 |
Percentage of total loan receivables (in percent) | 7.20% | 7.30% |
Total Other Loans and PCI Loans [Member] | Ohio [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 637 | $ 584 |
Percentage of total loan receivables (in percent) | 4.00% | 4.00% |
Total Other Loans and PCI Loans [Member] | New Jersey [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 813 | $ 737 |
Percentage of total loan receivables (in percent) | 5.20% | 5.10% |
Total Other Loans and PCI Loans [Member] | Michigan [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 542 | $ 524 |
Percentage of total loan receivables (in percent) | 3.40% | 3.60% |
Total Other Loans and PCI Loans [Member] | Massachusetts [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 568 | $ 559 |
Percentage of total loan receivables (in percent) | 3.60% | 3.90% |
Total Other Loans and PCI Loans [Member] | Other States [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan receivables | $ 6,278 | $ 5,724 |
Percentage of total loan receivables (in percent) | 40.00% | 39.50% |
Credit Card and Student Loan 80
Credit Card and Student Loan Securitization Activities (Narrative) (Details) $ in Billions | 12 Months Ended |
Dec. 31, 2016USD ($)classestrusts | |
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 (in trust) | trusts | 3 |
Discover Card Execution Note Trust [Member] | Credit Card Securitization Trusts [Member] | |
Variable Interest Entity [Line Items] | |
Number of classes of securities in debt structure (in classes) | classes | 4 |
Average excess spread rate calculation period (in months) | 3 months |
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | |
Variable Interest Entity [Line Items] | |
Increase In Credit Card Receivables Restricted for Securitization Investors | $ | $ 0 |
Credit Card and Student Loan 81
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Variable Interest Entity [Line Items] | ||||||
Restricted cash | $ 95 | $ 99 | ||||
Allowance for loan losses allocated to securitized loan receivables | (2,167) | (1,869) | $ (1,746) | $ (1,648) | ||
Other | 2,300 | 2,412 | ||||
Variable Interest Entity, Primary Beneficiary [Member] | ||||||
Variable Interest Entity [Line Items] | ||||||
Restricted cash | 95 | 99 | ||||
Allowance for loan losses allocated to securitized loan receivables | (955) | (811) | ||||
Other | 4 | 5 | ||||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | ||||||
Variable Interest Entity [Line Items] | ||||||
Restricted cash | 23 | 19 | ||||
Investors' interests held by third-party investors | 15,625 | 15,625 | ||||
Investors' interests held by wholly owned subsidiaries of Discover Bank | 5,189 | 6,017 | ||||
Seller's interest | 10,812 | 7,231 | ||||
Loan receivables | [1] | 31,626 | 28,873 | |||
Allowance for loan losses allocated to securitized loan receivables | [1] | (928) | (783) | |||
Net loan receivables | 30,698 | 28,090 | ||||
Other | 4 | 5 | [2] | |||
Carrying value of assets of consolidated variable interest entities | $ 30,725 | $ 28,114 | ||||
[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] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Credit Card and Student Loan 82
Credit Card and Student Loan Securitization Activities (Schedule of Investors' Interests and Related Excess Spreads) (Details) - Discover Card Execution Note Trust [Member] $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($)series | ||
Variable Interest Entity [Line Items] | ||
Investors' interests | $ | $ 20,814 | [1] |
Number of series outstanding (in series) | series | 36 | |
Three month rolling average excess spread (in percent) | 13.48% | |
[1] | Investors’ interests include third-party interests and subordinated interests held by wholly-owned subsidiaries of Discover Bank. |
Credit Card and Student Loan 83
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Student Loan Securitized Assets) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Variable Interest Entity [Line Items] | |||||
Restricted cash | $ 95 | $ 99 | |||
Allowance for loan losses allocated to securitized loan receivables | (2,167) | (1,869) | $ (1,746) | $ (1,648) | |
Variable Interest Entity, Primary Beneficiary [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Restricted cash | 95 | 99 | |||
Allowance for loan losses allocated to securitized loan receivables | (955) | (811) | |||
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Restricted cash | 72 | 80 | |||
Purchased credit-impaired loans | [1] | 1,390 | 1,678 | ||
Allowance for loan losses allocated to securitized loan receivables | [1] | (27) | (28) | ||
Net student loan receivables | 1,363 | 1,650 | |||
Carrying value of assets of consolidated variable interest entities | $ 1,435 | $ 1,730 | |||
[1] | The Company maintains its allowance for loan losses on PCI 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 (Narrati
Premises and Equipment (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense, including amortization of assets under capital leases | $ 77 | $ 81 | $ 78 |
Amortization expense on capitalized software | $ 57 | $ 53 | $ 48 |
Premises and Equipment (Schedul
Premises and Equipment (Schedule of Premises and Equipment) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | $ 1,957 | $ 1,932 |
Premises and equipment, net | 734 | 693 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 42 | 42 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 617 | 607 |
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 | 847 | 804 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 449 | 477 |
Less: Accumulated depreciation and accumulated amortization of software | (178) | (260) |
Property Plant And Equipment Excluding Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation and accumulated amortization of software | $ (1,045) | $ (979) |
Goodwill and Intangible Asset86
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Oct. 01, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | |||||
Goodwill | $ 255 | $ 255 | |||
Impairment of goodwill | $ 0 | $ 0 | |||
Intangible assets impairment loss | $ 0 | $ 0 | |||
Amortization expense related to intangible assets | $ 3 | $ 4 | $ 10 |
Goodwill and Intangible Asset87
Goodwill and Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, gross carrying amount | $ 74 | $ 77 |
Amortizable intangible assets, accumulated amortization | 63 | 64 |
Amortizable intangible assets, net book value | 11 | 13 |
Non-amortizable intangible assets, net book value | 155 | 155 |
Total intangible assets, gross carrying amount | 229 | 232 |
Total intangible assets, net book value | 166 | 168 |
Trade name and other | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
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, 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) | 16 years | |
Amortizable intangible assets, gross carrying amount | $ 66 | 69 |
Amortizable intangible assets, accumulated amortization | 60 | 61 |
Amortizable intangible assets, net book value | $ 6 | 8 |
Trade name and other | ||
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 | 3 |
Amortizable intangible assets, net book value | $ 5 | $ 5 |
Goodwill and Intangible Asset88
Goodwill and Intangible Assets (Schedule of Expected Intangilbe Asset Amortization Expense) (Details) $ in Millions | Dec. 31, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 2 |
2,018 | 2 |
2,019 | 2 |
2,020 | 1 |
2,021 | $ 0 |
Deposits (Narrative) (Details)
Deposits (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2016channels | |
Deposits [Abstract] | |
Deposits source channels (in number of channels) | 2 |
Deposits (Schedule of Interest
Deposits (Schedule of Interest Bearing Deposit Accounts) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | ||
Deposits [Abstract] | ||||
Certificates of deposit in amounts less than $100,000 | $ 20,225 | $ 20,491 | [1] | |
Certificates of deposit in amounts $100,000 or greater | [2] | 5,864 | 5,228 | |
Savings deposits, including money market deposit accounts | 25,372 | 21,375 | ||
Total interest-bearing deposits | 51,461 | 47,094 | [1] | |
Certificates of deposit greater than $250,000 | $ 1,400 | $ 1,100 | ||
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | |||
[2] | Includes $1.4 billion and $1.1 billion in certificates of deposit greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of December 31, 2016 and December 31, 2015, respectively. |
Deposits (Schedule of $100,000
Deposits (Schedule of $100,000 or More Certificates of Deposit Maturities) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Deposits [Abstract] | |||
Three months or less | $ 860 | ||
Over three months through six months | 617 | ||
Over six months through twelve months | 1,594 | ||
Over twelve months | 2,793 | ||
Total | [1] | $ 5,864 | $ 5,228 |
[1] | Includes $1.4 billion and $1.1 billion in certificates of deposit greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of December 31, 2016 and December 31, 2015, respectively. |
Deposits (Schedule of Certifica
Deposits (Schedule of Certificates of Deposit Maturities) (Details) $ in Millions | Dec. 31, 2016USD ($) |
Deposits [Abstract] | |
2,017 | $ 11,081 |
2,018 | 5,605 |
2,019 | 2,785 |
2,020 | 2,264 |
2,021 | 1,741 |
Thereafter | 2,613 |
Total | $ 26,089 |
Long-Term Borrowings (Narrative
Long-Term Borrowings (Narrative) (Details) - Discover Card Master Trust I and Discover Card Execution Note Trust [Member] - Secured Debt [Member] $ in Millions | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | |
Total commitment of secured credit facilities | $ 6,000 |
Total used commitment of secured credit facilities | $ 0 |
Long-Term Borrowings (Schedule
Long-Term Borrowings (Schedule of Long-Term Borrowings and Weighted Average Interest Rates) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | ||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | $ 25,443 | $ 24,650 | [1] | ||
Variable Interest Entity, Primary Beneficiary [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | 16,411 | 16,735 | [1] | ||
Parent Company [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | 2,259 | 2,105 | [2] | ||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | $ 15,562 | 15,592 | [1] | ||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 2.05% | ||||
Long-term borrowings | [3] | $ 9,868 | 9,152 | [1] | |
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.22% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.65% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 1.11% | ||||
Long-term borrowings | [4],[5] | $ 5,694 | 6,440 | [1] | |
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.00% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.24% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus Various Basis Points [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms | 1-month LIBOR + 30 to 54 basis points | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [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 | 0.30% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [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 | 0.54% | ||||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus 20 Basis Points [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms | 3-month LIBOR + 20 basis points | ||||
Basis spread on variable rate | 0.20% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | $ 849 | 1,143 | |||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 2.47% | ||||
Long-term borrowings | [7],[9] | $ 849 | [6],[8] | 1,143 | |
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.05% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 4.50% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms | 3-month LIBOR + 17 to 45 basis points | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.17% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities 3-Month LIBOR Plus Various Basis Points [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.45% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [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 | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 75 to 100 Basis Points [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.75% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 75 to 100 Basis Points [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities 1-Month LIBOR Plus 350 Basis Points [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms | 1-month LIBOR + 350 basis points | ||||
Basis spread on variable rate | 3.50% | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Senior Notes Maturing 2031 [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | $ 274 | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Senior and Subordinated Notes Maturing 2036 [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | 505 | ||||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Senior Notes Maturing 2042 [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term borrowings | $ 70 | ||||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 4.74% | ||||
Long-term borrowings | [3] | $ 2,090 | 2,066 | [1] | |
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 3.75% | ||||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 10.25% | ||||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Retail Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 3.71% | ||||
Long-term borrowings | $ 169 | 39 | [1] | ||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Retail Notes [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.85% | ||||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed Rate Retail Notes [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 4.40% | ||||
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 3.21% | ||||
Long-term borrowings | [3] | $ 6,077 | 5,115 | [1] | |
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.00% | ||||
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 4.25% | ||||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 7.49% | ||||
Long-term borrowings | $ 696 | $ 695 | [1] | ||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 7.00% | ||||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 8.70% | ||||
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | ||||
[2] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | ||||
[3] | 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 22: Derivatives and Hedging Activities. | ||||
[4] | Discover Card Execution Note Trust floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 30 to 54 basis points and 3-month LIBOR + 20 basis points as of December 31, 2016. | ||||
[5] | 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 22: Derivatives and Hedging Activities. | ||||
[6] | Includes $274 million of senior notes maturing in 2031, $505 million of senior and subordinated notes maturing in 2036 and $70 million of senior notes maturing in 2042 as of December 31, 2016. | ||||
[7] | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The dates shown represent final maturity dates. | ||||
[8] | SLC Private Student Loan Trusts floating-rate asset-backed securities include issuances with the following interest rate terms: 3-month LIBOR + 17 to 45 basis points, Prime rate + 75 to 100 basis points and 1-month LIBOR + 350 basis points as of December 31, 2016. | ||||
[9] | The Company acquired an interest rate swap related to the securitized debt assumed in the SLC transaction. The swap does not qualify for hedge accounting and has no impact on debt carrying value. See Note 22: Derivatives and Hedging Activities. |
Long-Term Borrowings (Schedul95
Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | [1] |
Debt Disclosure [Abstract] | |||
2,017 | $ 5,100 | ||
2,018 | 5,266 | ||
2,019 | 5,990 | ||
2,020 | 3,082 | ||
2,021 | 1,039 | ||
Thereafter | 4,966 | ||
Total | $ 25,443 | $ 24,650 | |
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Stock-Based Compensation Plan96
Stock-Based Compensation Plans (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2016USD ($)plansshares | Dec. 31, 2015USD ($)$ / sharesshares | Jan. 01, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of share-based compensation plans (in plans) | plans | 2 | ||
Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation cost | $ | $ 26,000,000 | $ 28,000,000 | |
Weighted average period of recognizing unrecognized compensation cost (in years) | 1 year 3 months | 1 year 6 months | |
Performance Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period (in years) | 3 years | ||
Total unrecognized compensation cost | $ | $ 23,000,000 | $ 22,000,000 | |
Weighted average period of recognizing unrecognized compensation cost (in years) | 1 year 2 months | 10 months 28 days | |
Award performance period (in years) | 3 years | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options outstanding, balance at beginning of period, number of units (in units) | shares | 93,712 | ||
Options outstanding, balance at beginning of period, weighted-average exercise price | $ / shares | $ 26.68 | ||
Options outstanding, weighted-average remaining contractual term (in years) | 347 days | ||
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) | shares | 1,000,000 | ||
Annual awards calculation | $ | $ 130,000 | $ 140,000 | |
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 (in years) | 1 year | ||
Omnibus Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total number of shares available for grant (in shares) | 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 (in years) | 10 years | ||
Maximum [Member] | Performance Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum number of shares per performance stock unit | shares | 1.5 |
Stock-Based Compensation Plan97
Stock-Based Compensation Plans (Schedule of Stock-Based Compensation Plans Compensation cost, Net of Forfeitures) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost, net of forfeitures | $ 64 | $ 56 | $ 60 |
Income tax benefit from compensation cost, net of forfeitures | 24 | 21 | 22 |
Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost, net of forfeitures | 41 | 34 | 33 |
Performance Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost, net of forfeitures | $ 23 | $ 22 | $ 27 |
Stock-Based Compensation Plan98
Stock-Based Compensation Plans (Schedule of Restricted Stock Unit Activity) (Details) - Restricted Stock Units [Member] - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
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 (in units) | 2,917,163 | |||
Stock-based compensation, granted, number of units (in units) | 881,984 | |||
Stock-based compensation, conversions to common stock, number of units (in units) | (786,603) | |||
Stock-based compensation, forfeited, number of units (in units) | (80,491) | |||
Stock-based compensation, balance at end of period, number of units (in units) | 2,932,053 | 2,917,163 | ||
Stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $ 39.97 | |||
Stock-based compensation, granted, weighted-average grant-date fair value | 48.86 | $ 56.71 | $ 54.01 | |
Stock-based compensation, conversions to common stock, weighted-average grant-date fair value | 44.03 | |||
Stock-based compensation, forfeited, weighted-average grant-date fair value | 51.39 | |||
Stock-based compensation, balance at end of period, weighted-average grant-date fair value | $ 41.24 | $ 39.97 | ||
Stock-based compensation, aggregate intrinsic value | $ 211 | $ 156 | ||
Unvested stock-based compensation, balance at beginning of period, number of units (in units) | [1] | 1,448,245 | ||
Unvested stock-based compensation, granted, number of units (in units) | 881,984 | |||
Stock-based compensation, vested, number of units (in units) | (827,797) | |||
Unvested stock-based compensation, forfeited, number of units (in units) | (80,491) | |||
Unvested stock-based compensation, balance at end of period, number of units (in units) | [1] | 1,421,941 | 1,448,245 | |
Unvested stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | [1] | $ 50.67 | ||
Stock-based compensation, vested, weighted-average grant-date fair value | 45.92 | |||
Unvested stock-based compensation, balance at end of period, weighted-average grant-date fair value | [1] | $ 52.27 | $ 50.67 | |
[1] | Unvested RSUs represent awards where recipients have yet to satisfy either explicit vesting terms or retirement-eligibility requirements. |
Stock-Based Compensation Plan99
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 ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of RSUs converted to common stock | $ 38 | $ 71 | $ 72 |
Grant-date fair value of RSUs vested | $ 38 | $ 38 | $ 30 |
Weighted-average grant-date fair value of RSUs granted (in dollars per share) | $ 48.86 | $ 56.71 | $ 54.01 |
Stock-Based Compensation Pla100
Stock-Based Compensation Plans (Schedule of Performance Stock Unit Activity) (Details) - Performance Stock Units [Member] - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
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 (in units) | 1,171,385 | |||
Stock-based compensation, granted, number of units (in units) | 476,117 | |||
Stock-based compensation, conversions to common stock, number of units (in units) | (516,341) | |||
Stock-based compensation, forfeited, number of units (in units) | (35,707) | |||
Stock-based compensation, balance at end of period, number of units (in units) | 1,095,454 | 1,171,385 | ||
Stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $ 48.21 | |||
Stock-based compensation, granted, weighted-average grant-date fair value | 48.59 | |||
Stock-based compensation, conversions to common stock, weighted-average grant-date fair value | 38.89 | |||
Stock-based compensation, forfeited, weighted-average grant-date fair value | 53.98 | |||
Stock-based compensation, balance at end of period, weighted-average grant-date fair value | $ 52.58 | $ 48.21 | ||
Stock-based compensation, aggregate intrinsic value | $ 79 | $ 63 | ||
Unvested stock-based compensation, balance at beginning of period, number of units (in units) | 1,171,385 | |||
Unvested stock-based compensation, granted, number of units (in units) | 476,117 | |||
Stock-based compensation, vested, number of units (in units) | (516,341) | |||
Unvested stock-based compensation, forfeited, number of units (in units) | (35,707) | |||
Unvested stock-based compensation, balance at end of period, number of units (in units) | 1,095,454 | [1],[2],[3] | 1,171,385 | |
Unvested stock-based compensation, balance at beginning of period, weighted-average grant-date fair value | $ 48.21 | |||
Stock-based compensation, vested, weighted-average grant-date fair value | 38.89 | |||
Unvested stock-based compensation, balance at end of period, weighted-average grant-date fair value | $ 52.58 | [1],[2],[3] | $ 48.21 | |
Performance stock units granted during period that are earned and subject to requisite service period (in units) | 306,917 | 333,063 | ||
Performance stock units granted during period that may be earned and subject to requisite service period (in units) | 455,474 | |||
[1] | Includes 306,917 PSUs granted in 2015 that are earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2017 and are subject to the requisite service period which ends February 1, 2018. | |||
[2] | Includes 333,063 PSUs granted in 2014 that are 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 ended February 1, 2017. | |||
[3] | Includes 455,474 PSUs granted in 2016 that may be earned based on the Company's achievement of EPS during the three-year performance period which ends December 31, 2018 and are subject to the requisite service period which ends February 1, 2019. |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
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 | $ 59 | $ 56 | $ 52 |
Equity Securities [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Target asset allocations for 2017 (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 2017 (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 (Schedul
Employee Benefit Plans (Schedule of Net Periodic Benefit Cost) (Details) - Pension Plans, Defined Benefit [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost, benefits earned during the period | $ 0 | $ 0 | $ 0 |
Interest cost on projected benefit obligation | 23 | 23 | 22 |
Expected return on plan assets | (25) | (24) | (23) |
Net amortization | 4 | 5 | 3 |
Net periodic benefit cost | $ 2 | $ 4 | $ 2 |
Employee Benefit Plans (Sche103
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] $ in Millions | Dec. 31, 2016USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
Prior service credit | $ 4 |
Net loss | (254) |
Total recognized in AOCI | $ (250) |
Employee Benefit Plans (Sche104
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 ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of benefit obligation: | |||
Benefit obligation at beginning of year | $ 528 | $ 570 | |
Service cost | 0 | 0 | $ 0 |
Interest cost | 23 | 23 | 22 |
Employee contributions | 0 | 0 | |
Actuarial (gain) loss | 13 | (48) | |
Plan amendments | 0 | 0 | |
Benefits paid | (18) | (17) | |
Benefit obligation at end of year | 546 | 528 | 570 |
Reconciliation of fair value of plan assets: | |||
Fair value of plan assets at beginning of year | 378 | 401 | |
Actual return on plan assets | 21 | (6) | |
Employer contributions | 0 | 0 | |
Employee contributions | 0 | 0 | |
Benefits paid | (18) | (17) | |
Fair value of plan assets at end of year | 381 | 378 | $ 401 |
Unfunded status (recorded in accrued expenses and other liabilities) | $ (165) | $ (150) |
Employee Benefit Plans (Sche105
Employee Benefit Plans (Schedule of Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost) (Details) - Pension Plans, Defined Benefit [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Benefit obligation discount rate (in percent) | 4.29% | 4.50% | |
Net periodic benefit cost discount rate (in percent) | 4.50% | 4.08% | 4.93% |
Net periodic benefit cost expected long-term rate of return on plan assets (in percent) | 6.50% | 6.50% | 6.50% |
Employee Benefit Plans (Sche106
Employee Benefit Plans (Schedule of Pension Plan Assets by Level Within the Fair Value Hierarchy) (Details) - Pension Plans, Defined Benefit [Member] - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 381 | $ 378 | $ 401 |
Net asset allocation (in percent) | 100.00% | 100.00% | |
Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 381 | $ 378 | |
Domestic Small/Mid Cap Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 9.00% | 8.00% | |
Domestic Small/Mid Cap Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 33 | $ 31 | |
Emerging Markets Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 9.00% | 7.00% | |
Emerging Markets Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 32 | $ 26 | |
Global Low Volatility Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 5.00% | 6.00% | |
Global Low Volatility Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 20 | $ 21 | |
International Core Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 12.00% | 12.00% | |
International Core Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 47 | $ 45 | |
Domestic Large Cap Equity Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 13.00% | 13.00% | |
Domestic Large Cap Equity Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 49 | $ 50 | |
Long Duration Fixed Income Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 51.00% | 53.00% | |
Long Duration Fixed Income Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 195 | $ 201 | |
Stable Value Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 0.00% | 0.00% | |
Stable Value Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 1 | $ 1 | |
Temporary Investment Fund [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net asset allocation (in percent) | 1.00% | 1.00% | |
Temporary Investment Fund [Member] | Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 4 | $ 3 |
Employee Benefit Plans (Sche107
Employee Benefit Plans (Schedule of Expected Benefit Payments for Next Five Years and Thereafter) (Details) - Pension Plans, Defined Benefit [Member] $ in Millions | Dec. 31, 2016USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2,017 | $ 16 |
2,018 | 17 |
2,019 | 17 |
2,020 | 18 |
2,021 | 19 |
Following five years thereafter | $ 117 |
Common and Preferred Stock (Nar
Common and Preferred Stock (Narrative) (Details) - USD ($) | Oct. 16, 2012 | Dec. 31, 2016 | Jul. 14, 2016 | Dec. 31, 2015 |
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 | ||
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 | $ 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 | $ 2,500,000,000 | |||
Number of shares of stock repurchased during the period (in shares) | 34,043,379 | |||
Value of stock repurchased during the period | $ 1,900,000,000 |
Accumulated Other Comprehens109
Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | $ (160) | $ (138) | $ (68) | |
Net change in accumulated other comprehensive income (loss), net of tax | (1) | (22) | (70) | |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | (161) | (160) | (138) | |
Unrealized Gain (Loss) on Available-for-Sale Investment Securities, Net of Tax [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | 0 | 23 | 19 | |
Net change in accumulated other comprehensive income (loss), net of tax | (3) | (23) | 4 | |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | (3) | 0 | 23 | |
Gain (Loss) on Cash Flow Hedges, Net of Tax [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | (20) | (7) | 13 | |
Net change in accumulated other comprehensive income (loss), net of tax | 7 | (13) | (20) | |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | (13) | (20) | (7) | |
Foreign Currency Translation Adjustments, Net of Tax [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | [1] | 0 | 0 | 1 |
Net change in accumulated other comprehensive income (loss), net of tax | [1] | 0 | 0 | (1) |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | [1] | 0 | 0 | 0 |
Pension Plan Loss, Net of Tax [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), balance at beginning of period, net of tax | (140) | (154) | (101) | |
Net change in accumulated other comprehensive income (loss), net of tax | (5) | 14 | (53) | |
Accumulated other comprehensive income (loss), balance at end of period, net of tax | $ (145) | $ (140) | $ (154) | |
[1] | Includes unrealized gains/losses on hedge of net investment in foreign subsidiary, net of tax benefit and net gains on foreign currency translation adjustments. |
Accumulated Other Comprehens110
Accumulated Other Comprehensive Income (Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Available-for-sale investment securities, net unrealized holding gain (loss) arising during the period, before tax | $ (4) | $ (29) | $ 9 |
Available-for-sale investment securities, net unrealized holding gain (loss) arising during the period, tax benefit (expense) | 1 | 11 | (3) |
Available-for-sale investment securities, net unrealized holding gain (loss) arising during the period, net of tax | (3) | (18) | 6 |
Available-for-sale investment securities, amounts reclassified from AOCI, before tax | (8) | (4) | |
Available-for-sale investment securities, amounts reclassified from AOCI, tax benefit (expense) | 3 | 2 | |
Available-for-sale investment securities, amounts reclassified from AOCI, net of tax | (5) | (2) | |
Available-for-sale investment securities, net change, before tax | (4) | (37) | 5 |
Available-for-sale investment securities, net change, tax benefit (expense) | 1 | 14 | (1) |
Available-for-sale investment securities, net change, net of tax | (3) | (23) | 4 |
Cash flow hedges, net unrealized losses arising during the period, before tax | (23) | (67) | (69) |
Cash flow hedges, net unrealized gain (loss) arising during the period, tax benefit (expense) | 8 | 25 | 26 |
Cash flow hedges, net unrealized gain (loss) arising during the period, net of tax | (15) | (42) | (43) |
Cash flow hedges, amounts reclassified from AOCI, before tax | 35 | 46 | 38 |
Cash flow hedges, amounts reclassified from AOCI, tax benefit (expense) | (13) | (17) | (15) |
Cash flow hedges, amounts reclassified from AOCI, net of tax | 22 | 29 | 23 |
Cash flow hedges, net change, before tax | 12 | (21) | (31) |
Cash flow hedges, net change, tax benefit (expense) | (5) | 8 | 11 |
Cash flow hedges, net change, net of tax | 7 | (13) | (20) |
Foreign currency translation adjustments, net unrealized gain (loss) arising during the period, before tax | 2 | (1) | |
Foreign currency translation adjustments, net unrealized gain (loss) arising during the period, tax benefit (expense) | 0 | 0 | |
Foreign currency translation adjustments, net unrealized gain (loss) arising during the period, net of tax | 2 | (1) | |
Foreign currency translation adjustments, amounts reclassified from AOCI, before tax | (2) | ||
Foreign currency translation adjustments, amounts reclassified from AOCI, tax benefit (expense) | 0 | ||
Foreign currency translation adjustments, amounts reclassified from AOCI, net of tax | (2) | ||
Foreign currency translation adjustments, net change, before tax | 0 | (1) | |
Foreign currency translation adjustments, net change, tax benefit (expense) | 0 | 0 | |
Foreign currency translation adjustments, net change, net of tax | 0 | (1) | |
Pension plan, unrealized gains (losses) arising during the period, before tax | (9) | 22 | (84) |
Pension plan, unrealized gains (losses) arising during the period, tax | 4 | (8) | 31 |
Pension plan, unrealized gains (losses) arising during the period, net of tax | (5) | 14 | (53) |
Pension plan, net change, before tax | (9) | 22 | (84) |
Pension plan, net change, tax | 4 | (8) | 31 |
Pension plan, net change, net of tax | $ (5) | $ 14 | $ (53) |
Other Expense (Schedule of Othe
Other Expense (Schedule of Other Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Component of Other Expense [Abstract] | |||||
Postage | $ 81 | $ 84 | $ 84 | ||
Fraud losses and other charges | 98 | 112 | 134 | [1] | |
Supplies | 41 | 37 | 23 | ||
Credit-related inquiry fees | 18 | 20 | 19 | ||
Litigation expense | 9 | 18 | 0 | ||
Incentive expense | 24 | 27 | 50 | ||
Other expense | 164 | 191 | 165 | ||
Total other expense | $ 435 | $ 489 | $ 475 | ||
Loss on Diners Club Italy business held-for-sale | $ 21 | ||||
[1] | Includes fair value adjustment of $21 million resulting from recording Diners Club Italy as held for sale for the year ended December 31, 2014. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Change in Income Tax Expense (Benefit), Amount | $ (52) | $ (56) |
Change in Income Tax Expense (Benefit), Percentage | (4.00%) | (4.10%) |
Change in Effective Income Tax Rate | (1.90%) | (0.70%) |
Interest and penalties accrued for unrecognized tax benefits | $ 52 | $ 131 |
Income Taxes (Schedule of Incom
Income Taxes (Schedule of Income Tax Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||
Current, U.S. federal | $ 1,066 | $ 1,245 | $ 1,215 | ||||||||
Current, U.S. state and local | 149 | 143 | 167 | ||||||||
Total current | 1,215 | 1,388 | 1,382 | ||||||||
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||
Deferred, U.S. federal | 45 | (69) | (7) | ||||||||
Deferred, U.S. state and local | 3 | (4) | (4) | ||||||||
Total deferred | 48 | (73) | (11) | ||||||||
Income tax expense | $ 320 | $ 322 | $ 282 | $ 339 | $ 288 | $ 362 | $ 343 | $ 322 | $ 1,263 | $ 1,315 | $ 1,371 |
Income Taxes (Schedule of Recon
Income Taxes (Schedule of Reconciliation the Effective Tax Rate to the U.S. Federal Statutory Income Tax Rate) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
U.S. federal statutory income tax rate | 35.00% | 35.00% | 35.00% |
U.S. state, local and other income taxes, net of U.S. federal income tax benefits | 2.70% | 2.50% | 2.80% |
Tax credits | (1.80%) | (1.00%) | (0.60%) |
Other | (1.40%) | (0.10%) | (0.10%) |
Effective income tax rate | 34.50% | 36.40% | 37.10% |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, allowance for loan losses | $ 814 | $ 702 |
Deferred tax assets, compensation and benefits | 120 | 116 |
Deferred tax assets, state income taxes | 62 | 81 |
Deferred tax assets, other | 39 | 59 |
Total deferred tax assets before valuation allowance | 1,035 | 958 |
Deferred tax assets, valuation allowance | (2) | (2) |
Total deferred tax assets, net of valuation allowance | 1,033 | 956 |
Deferred tax liabilities, depreciation and software amortization | (138) | (120) |
Deferred tax liabilities, customer fees and rewards | (214) | (107) |
Deferred tax liabilities, debt exchange premium | (74) | (83) |
Deferred tax liabilities, intangibles | (35) | (31) |
Deferred tax liabilities, other | (62) | (59) |
Total deferred tax liabilities | (523) | (400) |
Net deferred tax assets | $ 510 | $ 556 |
Income Taxes (Schedule of Re116
Income Taxes (Schedule of Reconciliation of Beginning and Ending Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||||||
Unrecognized tax benefits, balance at beginning of period | $ 286 | [1] | $ 635 | [1] | $ 629 | |
Unrecognized tax benefits, additions, current year tax positions | 13 | 18 | 18 | |||
Unrecognized tax benefits, additions, prior year tax positions | 22 | 2 | 74 | |||
Unrecognized tax benefits, reductions, prior year tax positions | (139) | (26) | (80) | |||
Unrecognized tax benefits, reductions, settlements with taxing authorities | (17) | (5) | (4) | |||
Unrecognized tax benefits, reductions, expired statute of limitations | (7) | (1) | (2) | |||
Unrecognized tax benefits, other, prior year tax positions | 0 | 337 | [2] | 0 | ||
Unrecognized tax benefits, balance at end of period | [1] | 158 | 286 | 635 | ||
Unrecognized tax benefits that would favorably affect the effective tax rate | $ 110 | $ 138 | $ 144 | |||
[1] | For the years ended December 31, 2016, 2015 and 2014, amounts included $110 million, $138 million and $144 million respectively, of unrecognized tax benefits, which, if recognized, would favorably affect the effective tax rate. | |||||
[2] | Overpayment of taxes in 2013 to 2015 for the timing of deductions resulting from uncertain tax positions for the years 1999 through 2012. |
Earnings Per Share (Schedule of
Earnings Per Share (Schedule of Basic and Diluted EPS) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||
Numerator [Abstract] | |||||||||||||||||||
Net income | $ 563 | $ 639 | $ 616 | $ 575 | $ 500 | $ 612 | $ 599 | $ 586 | $ 2,393 | $ 2,297 | $ 2,323 | ||||||||
Preferred stock dividends | (37) | (37) | (37) | ||||||||||||||||
Net income available to common stockholders | 2,356 | 2,260 | 2,286 | ||||||||||||||||
Income allocated to participating securities | (17) | (14) | (16) | ||||||||||||||||
Net income allocated to common stockholders | $ 550 | [1] | $ 625 | [1] | $ 602 | [1] | $ 562 | [1] | $ 488 | [1] | $ 599 | [1] | $ 586 | [1] | $ 573 | [1] | 2,339 | 2,246 | 2,270 |
Income allocated to participating securities, diluted | (17) | (14) | (16) | ||||||||||||||||
Net income allocated to common stockholders, diluted | $ 2,339 | $ 2,246 | $ 2,270 | ||||||||||||||||
Denominator [Abstract] | |||||||||||||||||||
Weighted-average shares of common stock outstanding (in shares) | 405 | 437 | 462 | ||||||||||||||||
Effect of dilutive common stock equivalents (in shares) | 1 | 1 | 1 | ||||||||||||||||
Weighted-average shares of common stock outstanding and common stock equivalents (in shares) | 406 | 438 | 463 | ||||||||||||||||
Basic earnings per common share (in dollars per share) | $ 1.40 | [1] | $ 1.56 | [1] | $ 1.47 | [1] | $ 1.35 | [1] | $ 1.15 | [1] | $ 1.38 | [1] | $ 1.33 | [1] | $ 1.28 | [1] | $ 5.77 | $ 5.14 | $ 4.91 |
Diluted earnings per common share (in dollars per share) | $ 1.40 | [1] | $ 1.56 | [1] | $ 1.47 | [1] | $ 1.35 | [1] | $ 1.14 | [1] | $ 1.38 | [1] | $ 1.33 | [1] | $ 1.28 | [1] | $ 5.77 | $ 5.13 | $ 4.90 |
[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 (Narrative) (D
Capital Adequacy (Narrative) (Details) - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||
Basel III minimum total capital ratio requirement | 8.00% | ||
Basel III minimum tier 1 capital ratio requirement | 6.00% | ||
Basel III minimum leverage ratio requirement | 4.00% | ||
Basel III minimum CET1 ratio requirement | 4.50% | ||
Discover Bank [Member] | |||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||
Basel III minimum total capital ratio requirement | 8.00% | 8.00% | |
Basel III minimum tier 1 capital ratio requirement | 6.00% | 6.00% | |
Basel III minimum leverage ratio requirement | 4.00% | 4.00% | |
Cash dividends paid to parent company | $ 1.8 | $ 1.8 | $ 1.8 |
Capital Adequacy (Schedule of M
Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | ||
Compliance with Regulatory Capital Requirements [Line Items] | ||||
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 8.00% | |||
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 6.00% | |||
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | |||
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.50% | |||
Parent Company [Member] | ||||
Compliance with Regulatory Capital Requirements [Line Items] | ||||
Total capital to risk-weighted assets, actual amount | $ 12,445 | $ 12,497 | [1] | |
Total capital to risk-weighted assets, actual ratio (in percent) | 15.50% | 16.50% | ||
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 6,408 | $ 6,052 | [1] | |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 8.00% | 8.00% | ||
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 8,010 | $ 7,565 | [1] |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 10.00% | 10.00% | [1] |
Tier I capital to risk-weighted assets, actual amount | $ 11,152 | $ 11,126 | ||
Tier I capital to risk-weighted assets, actual ratio (in percent) | 13.90% | 14.70% | ||
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 4,806 | $ 4,539 | [1] | |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 6.00% | 6.00% | ||
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 4,806 | $ 4,539 | [1] |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 6.00% | 6.00% | [1] |
Tier I capital to average assets, actual amount | $ 11,152 | $ 11,126 | ||
Tier I capital to average assets, actual ratio (in percent) | 12.30% | 12.90% | ||
Tier I capital to average assets, minimum capital requirements, amount | $ 3,624 | $ 3,446 | [1] | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% | ||
Discover Bank [Member] | ||||
Compliance with Regulatory Capital Requirements [Line Items] | ||||
Total capital to risk-weighted assets, actual amount | $ 12,334 | $ 11,905 | [1] | |
Total capital to risk-weighted assets, actual ratio (in percent) | 15.50% | 15.90% | ||
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 6,346 | $ 5,991 | [1] | |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 8.00% | 8.00% | ||
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | $ 7,932 | $ 7,488 | [1] | |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 10.00% | 10.00% | ||
Tier I capital to risk-weighted assets, actual amount | $ 10,450 | $ 9,941 | ||
Tier I capital to risk-weighted assets, actual ratio (in percent) | 13.20% | 13.30% | ||
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 4,759 | $ 4,493 | [1] | |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 6.00% | 6.00% | ||
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | $ 6,346 | $ 5,991 | [1] | |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 8.00% | 8.00% | ||
Tier I capital to average assets, actual amount | $ 10,450 | $ 9,941 | ||
Tier I capital to average assets, actual ratio (in percent) | 11.60% | 11.70% | [1] | |
Tier I capital to average assets, minimum capital requirements, amount | $ 3,591 | $ 3,410 | [1] | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% | ||
Tier I capital to average assets, capital requirements to be classified as well-capitalize, amount | $ 4,488 | $ 4,263 | [1] | |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 5.00% | 5.00% | ||
Transition [Member] | Parent Company [Member] | ||||
Compliance with Regulatory Capital Requirements [Line Items] | ||||
CET1 capital to risk-weighted assets, actual amount | $ 10,592 | $ 10,566 | ||
CET1 capital to risk-weighted assets, actual ratio (in percent) | 13.20% | 14.00% | [1] | |
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 3,604 | $ 3,404 | [1] | |
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.50% | 4.50% | ||
Transition [Member] | Discover Bank [Member] | ||||
Compliance with Regulatory Capital Requirements [Line Items] | ||||
CET1 capital to risk-weighted assets, actual amount | $ 10,450 | $ 9,941 | ||
CET1 capital to risk-weighted assets, actual ratio (in percent) | 13.20% | 13.30% | ||
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 3,570 | $ 3,370 | [1] | |
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.50% | 4.50% | ||
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | $ 5,156 | $ 4,867 | [1] | |
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 6.50% | 6.50% | ||
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | |||
[2] | The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available. |
Commitments, Contingencies a120
Commitments, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments, Contingencies and Guarantees [Line Items] | |||
Operating lease agreements rent expense | $ 15 | $ 17 | $ 16 |
Settlement Withholdings And Escrow Deposits | 9 | $ 7 | |
Commitments to Extend Credit [Member] | |||
Commitments, Contingencies and Guarantees [Line Items] | |||
Unused commitments to extend credit for loans | 192,600 | ||
Network Alliance [Domain] | |||
Commitments, Contingencies and Guarantees [Line Items] | |||
Guarantor Obligations, Maximum Exposure, Undiscounted | 33 | ||
Diners Club [Member] | Merchant Guarantee [Member] | |||
Commitments, Contingencies and Guarantees [Line Items] | |||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 111 |
Commitments, Contingencies a121
Commitments, Contingencies and Guarantees (Schedule of Lease Commitments) (Details) $ in Millions | Dec. 31, 2016USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,017 | $ 13 |
2,018 | 11 |
2,019 | 9 |
2,020 | 8 |
2,021 | 7 |
Thereafter | 28 |
Total minimum lease payments | $ 76 |
Commitments, Contingencies a122
Commitments, Contingencies and Guarantees (Schedule of Merchant Chargeback Guarantee) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Merchant Chargeback Guarantees [Member] | ||||
Loss Contingencies [Line Items] | ||||
Aggregate sales transaction volume | [1] | $ 136,413 | $ 132,265 | $ 125,637 |
[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. |
Litigation and Regulatory Ma123
Litigation and Regulatory Matters (Details) - USD ($) | Jul. 22, 2015 | Dec. 31, 2016 | Jul. 09, 2015 |
Loss Contingencies [Line Items] | |||
TCPA statutory damages for each violation | $ 500 | ||
TCPA statutory damages for each willful violation | $ 1,500 | ||
Unfavorable Regulatory Action [Member] | CFPB Consent Order [Member] | |||
Loss Contingencies [Line Items] | |||
Amount of civil money penalty for CFPB consent order | $ 2,500,000 | ||
Maximum [Member] | Pending and Threatened Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Aggregate range of reasonably possible losses | $ 135,000,000 | ||
Minimum [Member] | Unfavorable Regulatory Action [Member] | CFPB Consent Order [Member] | |||
Loss Contingencies [Line Items] | |||
Aggregate range of reasonably possible losses | $ 16,000,000 |
Fair Value Measurements and 124
Fair Value Measurements and Disclosures (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
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 | $ 912 | |
Available for sale securities, weighted average coupon rate (in percent) | 2.81% | |
Available for sale securities, weighted average remaining maturity (in years) | 3 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 |
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 |
Fair Value Measurements and 125
Fair Value Measurements and Disclosures (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | $ 1,605 | $ 2,963 |
Other Derivative Financial Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets, fair value | 7 | 22 |
Derivative financial instruments, liabilities, fair value | 94 | 38 |
U.S. Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 674 | 1,272 |
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 | 931 | 1,197 |
U.S. Government Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 494 | |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 674 | 1,766 |
Level 1 [Member] | Other Derivative Financial Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 1 [Member] | U.S. Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 674 | 1,272 |
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 |
Level 1 [Member] | U.S. Government Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 494 | |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 931 | 1,197 |
Level 2 [Member] | Other Derivative Financial Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets, fair value | 7 | 22 |
Derivative financial instruments, liabilities, fair value | 94 | 38 |
Level 2 [Member] | U.S. Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 0 | 0 |
Level 2 [Member] | 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 | 931 | 1,197 |
Level 2 [Member] | U.S. 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 | |
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 |
Level 3 [Member] | Other Derivative Financial Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments, assets, fair value | 0 | 0 |
Derivative financial instruments, liabilities, fair value | 0 | 0 |
Level 3 [Member] | U.S. Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities, fair value | 0 | 0 |
Level 3 [Member] | 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 |
Level 3 [Member] | U.S. 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 |
Fair Value Measurements and 126
Fair Value Measurements and Disclosures (Schedule of Financial Instruments Measured at Other Than Fair Value) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1] | $ 152 | $ 122 | |
Fair Value, Measurements, Nonrecurring [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 152 | 122 | ||
Cash and cash equivalents | 11,914 | 9,572 | ||
Restricted cash | 95 | 99 | ||
Net loan receivables | 78,252 | 71,455 | ||
Accrued interest receivables | 724 | 660 | ||
Deposits | 52,183 | 47,714 | ||
Accrued interest payables | 168 | 158 | ||
Fair Value, Measurements, Nonrecurring [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 16,517 | 16,854 | ||
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 | 9,470 | 8,355 | ||
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 | 2 | 7 | ||
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 | 150 | 114 | ||
Fair Value, Measurements, Nonrecurring [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 152 | 121 | ||
Cash and cash equivalents | 11,914 | 9,572 | ||
Restricted cash | 95 | 99 | ||
Net loan receivables | 75,087 | 70,516 | ||
Accrued interest receivables | 724 | 660 | ||
Deposits | 51,992 | 47,531 | [2] | |
Accrued interest payables | 168 | 158 | ||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 16,411 | 16,735 | [2] | |
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 9,032 | 7,915 | [2] | |
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | States and Political Subdivisions of States [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 2 | 7 | ||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | Residential Mortgage Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 150 | 113 | ||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 1 | ||
Cash and cash equivalents | 11,914 | 9,572 | ||
Restricted cash | 95 | 99 | ||
Net loan receivables | 0 | 0 | ||
Accrued interest receivables | 0 | 0 | ||
Deposits | 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] | States and Political Subdivisions of States [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 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 | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 152 | 121 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Net loan receivables | 0 | 0 | ||
Accrued interest receivables | 724 | 660 | ||
Deposits | 52,183 | 47,714 | ||
Accrued interest payables | 168 | 158 | ||
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 | 15,617 | 15,634 | ||
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 | 9,470 | 8,355 | ||
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 | 2 | 7 | ||
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 | 150 | 114 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | |||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Net loan receivables | 78,252 | 71,455 | ||
Accrued interest receivables | 0 | 0 | ||
Deposits | 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 | 900 | 1,220 | ||
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 | 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 | 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 | $ 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | $ 0 | |||
[1] | Held-to-maturity investment securities are reported at amortized cost. | |||
[2] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Derivatives and Hedging Acti127
Derivatives and Hedging Activities (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Derivative [Line Items] | |
Cash collateral posted | $ 4 |
Additional collateral | 51 |
Interest Expense [Member] | |
Derivative [Line Items] | |
Cash flow hedge pretax gain (loss) to be reclassified to earnings within twelve months | $ 17 |
Securitized Debt [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges (in years) | 5 years |
Deposits [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges (in years) | 7 years |
Derivatives and Hedging Acti128
Derivatives and Hedging Activities (Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances) (Details) € in Millions, £ in Millions, SGD in Millions, $ in Millions | Dec. 31, 2016USD ($)transactions | Dec. 31, 2016SGDtransactions | Dec. 31, 2016EUR (€)transactions | Dec. 31, 2016GBP (£)transactions | Dec. 31, 2015USD ($)transactions | Dec. 31, 2015SGDtransactions | Dec. 31, 2015EUR (€)transactions | Dec. 31, 2015GBP (£)transactions | |||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative assets | [1] | $ 7 | $ 22 | ||||||||
Collateral held, derivative assets | [2] | (2) | (8) | ||||||||
Total net derivative assets | 5 | 14 | |||||||||
Derivative liabilities | [1] | 94 | 38 | ||||||||
Collateral posted, derivative liabilities | [2] | (94) | (33) | ||||||||
Total net derivative liabilities | 0 | 5 | |||||||||
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | |||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative, notional amount | $ 3,700 | 4,100 | |||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 7 | 7 | 7 | 7 | |||||||
Derivative assets | $ 0 | 0 | |||||||||
Derivative liabilities | 22 | 35 | |||||||||
Designated as Hedges [Member] | Fair Value Hedges [Member] | Interest Rate Swaps [Member] | |||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative, notional amount | $ 6,208 | 4,110 | |||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 57 | 57 | 57 | 57 | |||||||
Derivative assets | $ 7 | 22 | |||||||||
Derivative liabilities | 72 | 3 | |||||||||
Not Designated as Hedges [Member] | Interest Rate Swaps [Member] | |||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative, notional amount | $ 149 | 217 | |||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 1 | 1 | 1 | 1 | |||||||
Derivative assets | $ 0 | 0 | |||||||||
Derivative liabilities | 0 | 0 | |||||||||
Not Designated as Hedges [Member] | Foreign Exchange Forward Contracts [Member] | |||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative, notional amount | $ 13 | [3] | SGD 1 | € 6 | £ 5 | 32 | [3] | SGD 1 | € 19 | £ 7 | |
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 6 | 6 | 6 | 6 | |||||||
Derivative assets | $ 0 | 0 | |||||||||
Derivative liabilities | 0 | 0 | |||||||||
Not Designated as Hedges [Member] | When-Issued Mortgage-Backed Securities [Member] | |||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Derivative, notional amount | $ 36 | $ 52 | |||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | |||
[1] | 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, 2016, the Company had one outstanding contract with a notional amount of $36 million and immaterial fair value. At December 31, 2015, the Company had one outstanding contract with a notional amount of $52 million and immaterial fair value. | ||||||||||
[2] | Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. | ||||||||||
[3] | The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 5 million and SGD 1 million as of December 31, 2016 and EUR 19 million and GBP 7 million, SGD 1 million as of December 31, 2015. |
Derivatives and Hedging Acti129
Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Designated as Hedges [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives | $ (2) | $ (14) | $ 4 | ||
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 gain (loss) recognized in OCI after amounts reclassified into earnings, pre-tax | 12 | (22) | (27) | ||
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Amount reclassified from OCI into income | (35) | (46) | (38) | ||
Designated as Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swaps [Member] | Interest Expense [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Amount reclassified from OCI into income | (35) | (46) | (38) | ||
Designated as Hedges [Member] | Fair Value Hedges [Member] | Interest Rate Swaps [Member] | Interest Expense [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Loss on interest rate swaps | (79) | (11) | (13) | ||
Gain on hedged items | 78 | 11 | 17 | ||
Net ineffectiveness (loss) gain | (1) | 0 | 4 | ||
Increase to interest expense related to net settlements on interest rate swaps | 34 | 32 | 38 | ||
Total gain on fair value hedges | 33 | 32 | 42 | ||
Not Designated as Hedges [Member] | Other Income [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives | $ 1 | 75 | [1] | 85 | [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) | |||
Not Designated as Hedges [Member] | Interest Rate Lock Commitments [Member] | Other Income [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives | $ 71 | $ 87 | |||
[1] | During the years ended December 31, 2015 and 2014, the Company recognized in income total gain of $2 million and total loss of $6 million, respectively, on forward delivery contracts related to the mortgage loan business that was closed during 2015. During the years ended December 31, 2015 and 2014, the Company recognized in income total gain of $71 million and $87 million, respectively, on interest rate lock commitments related to the mortgage loan business that was closed during 2015. See Note 3: Business Dispositions for additional information. |
Segment Disclosures (Narrative)
Segment Disclosures (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2016segment | |
Segment Reporting [Abstract] | |
Number of reportable segments (in number of segments) | 2 |
Segment Disclosures (Schedule o
Segment Disclosures (Schedule of Segment Disclosures) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Interest income | $ 2,258 | $ 2,184 | $ 2,090 | $ 2,084 | $ 2,061 | $ 2,008 | $ 1,947 | $ 1,929 | $ 8,616 | $ 7,945 | $ 7,596 |
Interest expense | 366 | 359 | 339 | 334 | 329 | 323 | 311 | 300 | 1,398 | 1,263 | 1,134 |
Net interest income | 1,892 | 1,825 | 1,751 | 1,750 | 1,732 | 1,685 | 1,636 | 1,629 | 7,218 | 6,682 | 6,462 |
Provision for loan losses | 578 | 445 | 412 | 424 | 484 | 332 | 306 | 390 | 1,859 | 1,512 | 1,443 |
Other income | 466 | 476 | 465 | 474 | 473 | 503 | 539 | 542 | 1,881 | 2,057 | 2,015 |
Other expense | 897 | 895 | 906 | 886 | 933 | 882 | 927 | 873 | 3,584 | 3,615 | 3,340 |
Income before income tax expense | $ 883 | $ 961 | $ 898 | $ 914 | $ 788 | $ 974 | $ 942 | $ 908 | 3,656 | 3,612 | 3,694 |
Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 113 | 90 | 97 | ||||||||
Credit Card Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 7,155 | 6,626 | 6,359 | ||||||||
Provision for loan losses | 1,579 | 1,300 | 1,259 | ||||||||
PCI Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 185 | 220 | 260 | ||||||||
Provision for loan losses | 0 | 8 | 0 | ||||||||
Total Other Loans [Member] | Private Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 444 | 378 | 312 | ||||||||
Total Other Loans [Member] | Personal Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 719 | 631 | 568 | ||||||||
Provision for loan losses | 196 | 147 | 102 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 8,616 | 7,945 | 7,596 | ||||||||
Interest expense | 1,398 | 1,263 | 1,134 | ||||||||
Net interest income | 7,218 | 6,682 | 6,462 | ||||||||
Provision for loan losses | 1,858 | 1,512 | 1,440 | ||||||||
Other income | 1,611 | 1,779 | 1,700 | ||||||||
Other expense | 3,422 | 3,437 | 3,117 | ||||||||
Income before income tax expense | 3,549 | 3,512 | 3,605 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 113 | 90 | 97 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | Credit Card Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 7,155 | 6,626 | 6,359 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | PCI Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 185 | 220 | 260 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | Total Other Loans [Member] | Private Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 444 | 378 | 312 | ||||||||
Operating Segments [Member] | Direct Banking [Member] | Total Other Loans [Member] | Personal Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 719 | 631 | 568 | ||||||||
Operating Segments [Member] | Payment Services [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Interest expense | 0 | 0 | 0 | ||||||||
Net interest income | 0 | 0 | 0 | ||||||||
Provision for loan losses | 1 | 0 | 3 | ||||||||
Other income | 270 | 278 | 315 | ||||||||
Other expense | 162 | 178 | 223 | ||||||||
Income before income tax expense | 107 | 100 | 89 | ||||||||
Operating Segments [Member] | Payment Services [Member] | Other [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Operating Segments [Member] | Payment Services [Member] | Credit Card Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Operating Segments [Member] | Payment Services [Member] | PCI Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Private Student Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Personal Loans [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Interest income | $ 0 | $ 0 | $ 0 |
Parent Company Condensed Fin132
Parent Company Condensed Financial Information (Narrative) (Details) | Dec. 31, 2016 |
Parent Company [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Threshold for parent company financial information disclosure (in percent) | 25.00% |
Parent Company Condensed Fin133
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Financial Condition) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Assets | |||||||
Cash and cash equivalents | $ 11,914 | $ 9,572 | $ 7,284 | $ 6,554 | |||
Other assets | 2,300 | 2,412 | |||||
Total assets | 92,308 | 86,799 | |||||
Liabilities and Stockholders’ Equity | |||||||
Non-interest bearing deposit accounts | 531 | 437 | |||||
Interest-bearing deposit accounts | 51,461 | 47,094 | [1] | ||||
Total deposits | 51,992 | 47,531 | |||||
Other long-term borrowings | 25,443 | 24,650 | [2] | ||||
Accrued expenses and other liabilities | 3,550 | 3,343 | |||||
Total liabilities | 80,985 | 75,524 | |||||
Stockholders' equity | 11,323 | 11,275 | 11,134 | 10,809 | |||
Total liabilities and stockholders' equity | 92,308 | 86,799 | |||||
Parent Company [Member] | |||||||
Assets | |||||||
Cash and cash equivalents | 1,901 | [3] | 2,133 | [3] | $ 79 | $ 4 | |
Notes receivable from subsidiaries | [4] | 751 | 736 | ||||
Investments in bank subsidiaries | 10,454 | 9,940 | |||||
Investments in non-bank subsidiaries | 861 | 984 | |||||
Other assets | 202 | 203 | [5] | ||||
Total assets | 14,169 | 13,996 | [5] | ||||
Liabilities and Stockholders’ Equity | |||||||
Non-interest bearing deposit accounts | 14 | 2 | |||||
Interest-bearing deposit accounts | 0 | 2 | |||||
Total deposits | 14 | 4 | |||||
Short-term borrowings from subsidiaries | 221 | 314 | |||||
Other long-term borrowings | 2,259 | 2,105 | [5] | ||||
Accrued expenses and other liabilities | 352 | 298 | |||||
Total liabilities | 2,846 | 2,721 | [5] | ||||
Stockholders' equity | 11,323 | 11,275 | |||||
Total liabilities and stockholders' equity | 14,169 | 13,996 | [5] | ||||
Parent Company [Member] | Discover Bank [Member] | |||||||
Liabilities and Stockholders’ Equity | |||||||
Liquidity Available to Parent from Money Market Deposit Account at Subsidiary | 1,900 | 2,100 | |||||
Liquidity available to parent from funds advanced to subsidiary | $ 500 | $ 500 | |||||
[1] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | ||||||
[2] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. | ||||||
[3] | The Parent Company had $1.9 billion and $2.1 billion in a money market deposit account at Discover Bank as of December 31, 2016 and 2015, respectively, which is included in cash and cash equivalents. These funds are available to the Parent for liquidity purposes. | ||||||
[4] | The Parent Company advanced $500 million to Discover Bank as of December 31, 2016 and 2015, which is included in notes receivable from subsidiaries. These funds are available to the Parent for liquidity purposes. | ||||||
[5] | Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information. |
Parent Company Condensed Fin134
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Interest income | $ 2,258 | $ 2,184 | $ 2,090 | $ 2,084 | $ 2,061 | $ 2,008 | $ 1,947 | $ 1,929 | $ 8,616 | $ 7,945 | $ 7,596 |
Interest expense | 366 | 359 | 339 | 334 | 329 | 323 | 311 | 300 | 1,398 | 1,263 | 1,134 |
Net interest expense | 1,892 | 1,825 | 1,751 | 1,750 | 1,732 | 1,685 | 1,636 | 1,629 | 7,218 | 6,682 | 6,462 |
Other expense | 897 | 895 | 906 | 886 | 933 | 882 | 927 | 873 | 3,584 | 3,615 | 3,340 |
Income before income tax expense and equity in undistributed net income of subsidiaries | 883 | 961 | 898 | 914 | 788 | 974 | 942 | 908 | 3,656 | 3,612 | 3,694 |
Income tax benefit | (320) | (322) | (282) | (339) | (288) | (362) | (343) | (322) | (1,263) | (1,315) | (1,371) |
Net income | $ 563 | $ 639 | $ 616 | $ 575 | $ 500 | $ 612 | $ 599 | $ 586 | 2,393 | 2,297 | 2,323 |
OCI, net | (1) | (22) | (70) | ||||||||
Comprehensive income | 2,392 | 2,275 | 2,253 | ||||||||
Parent Company [Member] | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Interest income | 39 | 29 | 18 | ||||||||
Interest expense | 139 | 128 | 86 | ||||||||
Net interest expense | (100) | (99) | (68) | ||||||||
Dividends from bank subsidiaries | 1,800 | 1,780 | 1,760 | ||||||||
Dividends from non-bank subsidiaries | 269 | 0 | 100 | ||||||||
Total income | 1,969 | 1,681 | 1,792 | ||||||||
Other expense | 1 | 1 | 4 | ||||||||
Income before income tax expense and equity in undistributed net income of subsidiaries | 1,968 | 1,680 | 1,788 | ||||||||
Income tax benefit | 40 | 37 | 18 | ||||||||
Equity in undistributed net income of subsidiaries | 385 | 580 | 517 | ||||||||
Net income | 2,393 | 2,297 | 2,323 | ||||||||
OCI, net | (1) | (22) | (70) | ||||||||
Comprehensive income | $ 2,392 | $ 2,275 | $ 2,253 |
Parent Company Condensed Fin135
Parent Company Condensed Financial Information (Schedule of Parent Company Condensed Statements of Cash Flows) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ 563 | $ 639 | $ 616 | $ 575 | $ 500 | $ 612 | $ 599 | $ 586 | $ 2,393 | $ 2,297 | $ 2,323 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Deferred income taxes | (48) | 73 | 11 | |||||||||||||
Depreciation and amortization | 77 | 81 | 78 | |||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Decrease (increase) in other assets | (187) | (237) | (238) | |||||||||||||
Net cash provided by operating activities | 4,425 | 3,854 | 3,826 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Net cash provided by (used for) investing activities | (4,894) | (2,868) | (4,197) | |||||||||||||
Cash flows from financing activities | ||||||||||||||||
Net (decrease) increase in short-term borrowings from subsidiaries | 0 | (113) | (27) | |||||||||||||
Proceeds from issuance of common stock | 7 | 5 | 5 | |||||||||||||
Purchases of treasury stock | (1,908) | (1,715) | (1,564) | |||||||||||||
Net increase in deposits | 4,453 | 1,510 | 1,137 | |||||||||||||
Dividends paid on common and preferred stock | (514) | (515) | (467) | |||||||||||||
Net cash used for financing activities | 2,811 | 1,302 | 1,101 | |||||||||||||
Increase (decrease) in cash and cash equivalents | 2,342 | 2,288 | 730 | |||||||||||||
Cash and cash equivalents, at beginning of period | 9,572 | 7,284 | 9,572 | 7,284 | 6,554 | |||||||||||
Cash and cash equivalents, at end of period | 11,914 | 9,572 | 11,914 | 9,572 | 7,284 | |||||||||||
Cash paid during the period for: | ||||||||||||||||
Cash paid during the period for interest expense | 1,211 | 1,070 | 933 | |||||||||||||
Cash paid during the period for income taxes, net of income tax refunds | 1,300 | 1,341 | 1,388 | |||||||||||||
Parent Company [Member] | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | 2,393 | 2,297 | 2,323 | |||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Equity in undistributed net income of subsidiaries | (385) | (580) | (517) | |||||||||||||
Stock-based compensation expense | 64 | 56 | 60 | |||||||||||||
Deferred income taxes | (9) | (10) | (5) | |||||||||||||
Depreciation and amortization | 27 | 23 | 21 | |||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Decrease (increase) in other assets | 10 | (13) | (50) | |||||||||||||
Increase in other liabilities and accrued expenses | 52 | 83 | 32 | |||||||||||||
Net cash provided by operating activities | 2,152 | 1,856 | 1,864 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Increase in investment in subsidiaries | (1) | (21) | (35) | |||||||||||||
Decrease (increase) in loans to subsidiaries | (15) | 1,700 | (182) | |||||||||||||
Net cash provided by (used for) investing activities | (16) | 1,679 | (217) | |||||||||||||
Cash flows from financing activities | ||||||||||||||||
Net (decrease) increase in short-term borrowings from subsidiaries | (93) | 206 | (38) | |||||||||||||
Proceeds from issuance of common stock | 7 | 5 | 5 | |||||||||||||
Proceeds from issuance of long-term borrowings | 130 | 539 | 500 | |||||||||||||
Purchases of treasury stock | (1,908) | (1,715) | (1,564) | |||||||||||||
Net increase in deposits | 10 | (1) | (8) | |||||||||||||
Dividends paid on common and preferred stock | (514) | (515) | (467) | |||||||||||||
Net cash used for financing activities | (2,368) | (1,481) | (1,572) | |||||||||||||
Increase (decrease) in cash and cash equivalents | (232) | 2,054 | 75 | |||||||||||||
Cash and cash equivalents, at beginning of period | $ 2,133 | [1] | $ 79 | 2,133 | [1] | 79 | 4 | |||||||||
Cash and cash equivalents, at end of period | $ 1,901 | [1] | $ 2,133 | [1] | 1,901 | [1] | 2,133 | [1] | 79 | |||||||
Cash paid during the period for: | ||||||||||||||||
Cash paid during the period for interest expense | 112 | 97 | 66 | |||||||||||||
Cash paid during the period for income taxes, net of income tax refunds | $ 23 | $ 109 | $ 65 | |||||||||||||
[1] | The Parent Company had $1.9 billion and $2.1 billion in a money market deposit account at Discover Bank as of December 31, 2016 and 2015, respectively, which is included in cash and cash equivalents. These funds are available to the Parent for liquidity purposes. |
Quarterly Results (Schedule of
Quarterly Results (Schedule of Quarterly Results) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||
Quarterly Financial Data [Abstract] | |||||||||||||||||||
Interest income | $ 2,258 | $ 2,184 | $ 2,090 | $ 2,084 | $ 2,061 | $ 2,008 | $ 1,947 | $ 1,929 | $ 8,616 | $ 7,945 | $ 7,596 | ||||||||
Interest expense | 366 | 359 | 339 | 334 | 329 | 323 | 311 | 300 | 1,398 | 1,263 | 1,134 | ||||||||
Net interest income | 1,892 | 1,825 | 1,751 | 1,750 | 1,732 | 1,685 | 1,636 | 1,629 | 7,218 | 6,682 | 6,462 | ||||||||
Provision for loan losses | 578 | 445 | 412 | 424 | 484 | 332 | 306 | 390 | 1,859 | 1,512 | 1,443 | ||||||||
Other income | 466 | 476 | 465 | 474 | 473 | 503 | 539 | 542 | 1,881 | 2,057 | 2,015 | ||||||||
Other expense | 897 | 895 | 906 | 886 | 933 | 882 | 927 | 873 | 3,584 | 3,615 | 3,340 | ||||||||
Income before income tax expense | 883 | 961 | 898 | 914 | 788 | 974 | 942 | 908 | 3,656 | 3,612 | 3,694 | ||||||||
Income tax expense | 320 | 322 | 282 | 339 | 288 | 362 | 343 | 322 | 1,263 | 1,315 | 1,371 | ||||||||
Net income | 563 | 639 | 616 | 575 | 500 | 612 | 599 | 586 | 2,393 | 2,297 | 2,323 | ||||||||
Net income allocated to common stockholders | $ 550 | [1] | $ 625 | [1] | $ 602 | [1] | $ 562 | [1] | $ 488 | [1] | $ 599 | [1] | $ 586 | [1] | $ 573 | [1] | $ 2,339 | $ 2,246 | $ 2,270 |
Basic earnings per common share (in dollars per share) | $ 1.40 | [1] | $ 1.56 | [1] | $ 1.47 | [1] | $ 1.35 | [1] | $ 1.15 | [1] | $ 1.38 | [1] | $ 1.33 | [1] | $ 1.28 | [1] | $ 5.77 | $ 5.14 | $ 4.91 |
Diluted earnings per common share (in dollars per share) | $ 1.40 | [1] | $ 1.56 | [1] | $ 1.47 | [1] | $ 1.35 | [1] | $ 1.14 | [1] | $ 1.38 | [1] | $ 1.33 | [1] | $ 1.28 | [1] | $ 5.77 | $ 5.13 | $ 4.90 |
[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. |