Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document Information [Line Items] | ||
Document type | 10-Q | |
Amendment flag | false | |
Document period end date | Sep. 30, 2018 | |
Document fiscal year focus | 2,018 | |
Document fiscal period focus | Q3 | |
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 | |
Emerging growth company | false | |
Smaller reporting company | false | |
Entity common stock, shares outstanding | 335,964,673 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 16,019 | $ 13,306 |
Restricted cash | 590 | 81 |
Investment securities (includes $1,559 and $1,395 at fair value at September 30, 2018 and December 31, 2017, respectively) | 1,801 | 1,568 |
Loan receivables | ||
Loan receivables | 86,894 | 84,248 |
Allowance for loan losses | (2,927) | (2,621) |
Net loan receivables | 83,967 | 81,627 |
Premises and equipment, net | 896 | 825 |
Goodwill | 255 | 255 |
Intangible assets, net | 162 | 163 |
Other assets | 2,152 | 2,262 |
Total assets | 105,842 | 100,087 |
Deposits | ||
Interest-bearing deposit accounts | 63,034 | 58,165 |
Non-interest bearing deposit accounts | 640 | 599 |
Total deposits | 63,674 | 58,764 |
Long-term borrowings | 26,998 | 26,326 |
Accrued expenses and other liabilities | 4,154 | 4,105 |
Total liabilities | 94,826 | 89,195 |
Commitments, contingencies and guarantees (Notes 8, 11 and 12) | ||
Stockholders’ Equity | ||
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 564,614,022 and 563,497,702 shares issued at September 30, 2018 and December 31, 2017, respectively | 6 | 6 |
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 5,700 shares issued and outstanding and aggregate liquidation preference of $570 at September 30, 2018 and December 31, 2017 | 563 | 563 |
Additional paid-in capital | 4,107 | 4,042 |
Retained earnings | 18,354 | 16,687 |
Accumulated other comprehensive loss | (160) | (152) |
Treasury stock, at cost; 226,694,149 and 205,577,507 shares at September 30, 2018 and December 31, 2017, respectively | (11,854) | (10,254) |
Total stockholders’ equity | 11,016 | 10,892 |
Total liabilities and stockholders’ equity | 105,842 | 100,087 |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Assets | ||
Restricted cash | 590 | 81 |
Loan receivables | ||
Loan receivables | 32,504 | 31,781 |
Allowance for loan losses | (1,125) | (998) |
Other assets | 5 | 5 |
Deposits | ||
Long-term borrowings | 15,715 | 16,536 |
Accrued expenses and other liabilities | $ 15 | $ 16 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Statement of Financial Position [Abstract] | |||
Amount of total investment securities at fair value (in dollars) | [1] | $ 1,559,000,000 | $ 1,395,000,000 |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | |
Common stock, shares issued | 564,614,022 | 563,497,702 | |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized | 200,000,000 | 200,000,000 | |
Preferred stock, shares issued | 5,700 | 5,700 | |
Preferred stock, shares outstanding | 5,700 | 5,700 | |
Preferred stock, liquidation preference (in dollars) | $ 570,000,000 | $ 570,000,000 | |
Treasury stock, shares | 226,694,149 | 205,577,507 | |
[1] | Available-for-sale investment securities are reported at fair value. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest income | ||||
Credit card loans | $ 2,258 | $ 2,026 | $ 6,487 | $ 5,818 |
Other loans | 437 | 400 | 1,275 | 1,146 |
Investment securities | 10 | 6 | 23 | 20 |
Other interest income | 76 | 44 | 201 | 108 |
Total interest income | 2,781 | 2,476 | 7,986 | 7,092 |
Interest expense | ||||
Deposits | 329 | 218 | 878 | 608 |
Long-term borrowings | 229 | 208 | 656 | 604 |
Total interest expense | 558 | 426 | 1,534 | 1,212 |
Net interest income | 2,223 | 2,050 | 6,452 | 5,880 |
Provision for loan losses | 742 | 674 | 2,235 | 1,900 |
Net interest income after provision for loan losses | 1,481 | 1,376 | 4,217 | 3,980 |
Other income | ||||
Discount and interchange revenue, net | 280 | 258 | 797 | 769 |
Loan fee income | 103 | 95 | 294 | 267 |
Transaction processing revenue | 47 | 43 | 132 | 124 |
Other income | 20 | 24 | 73 | 74 |
Total other income | 501 | 475 | 1,450 | 1,403 |
Other expense | ||||
Employee compensation and benefits | 408 | 371 | 1,213 | 1,101 |
Marketing and business development | 218 | 203 | 627 | 563 |
Information processing and communications | 89 | 78 | 257 | 235 |
Professional fees | 166 | 163 | 482 | 466 |
Premises and equipment | 26 | 25 | 76 | 73 |
Other expense | 108 | 108 | 312 | 307 |
Total other expense | 1,015 | 948 | 2,967 | 2,745 |
Income before income tax expense | 967 | 903 | 2,700 | 2,638 |
Income tax expense | 247 | 301 | 645 | 926 |
Net income | 720 | 602 | 2,055 | 1,712 |
Net income allocated to common stockholders | $ 699 | $ 589 | $ 2,008 | $ 1,672 |
Basic earnings per common share (in dollars per share) | $ 2.05 | $ 1.59 | $ 5.77 | $ 4.42 |
Diluted earnings per common share (in dollars per share) | 2.05 | 1.59 | 5.77 | 4.42 |
Dividends declared per common share (in dollars per share) | $ 0.40 | $ 0.35 | $ 1.10 | $ 0.95 |
Financial Service, Other [Member] | ||||
Other income | ||||
Protection products revenue | $ 51 | $ 55 | $ 154 | $ 169 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net income | $ 720 | $ 602 | $ 2,055 | $ 1,712 |
Other comprehensive income, net of taxes | ||||
Unrealized (losses) gains on available-for-sale investment securities, net of tax | (2) | 1 | (10) | 2 |
Unrealized gains on cash flow hedges, net of tax | 4 | 1 | 30 | 11 |
Unrealized pension and post-retirement plan gains, net of tax | 0 | 0 | 1 | 0 |
Other comprehensive income | 2 | 2 | 21 | 13 |
Comprehensive income | $ 722 | $ 604 | $ 2,076 | $ 1,725 |
Condensed Consolidated Statem_5
Condensed 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 [Member] | Treasury Stock [Member] | |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2016 | 575,000 | |||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2016 | 562,414,000 | |||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2016 | $ 11,323 | $ 560 | $ 5 | $ 3,962 | $ 15,130 | $ (161) | $ (8,173) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,712 | 1,712 | ||||||
Other comprehensive income | 13 | 13 | ||||||
Purchases of treasury stock | (1,526) | (1,526) | ||||||
Common stock issued under employee benefit plans (in shares) | 63,000 | |||||||
Common stock issued under employee benefit plans | 4 | $ 0 | 4 | |||||
Common stock issued and stock-based compensation expense (in shares) | 999,000 | |||||||
Common stock issued and stock-based compensation expense | 51 | $ 1 | 50 | |||||
Dividends — common stock | (362) | (362) | ||||||
Dividends — preferred stock | (28) | (28) | ||||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2017 | 575,000 | |||||||
Common stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2017 | 563,476,000 | |||||||
Stockholders' equity, balance at end of period at Sep. 30, 2017 | $ 11,187 | $ 560 | $ 6 | 4,016 | 16,452 | (148) | (9,699) | |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2017 | 5,700 | 6,000 | ||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2017 | 563,498,000 | |||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2017 | $ 10,892 | $ 563 | $ 6 | 4,042 | 16,687 | (152) | (10,254) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of ASU No. 2018-02 adoption | 0 | 29 | (29) | [1] | ||||
Net income | 2,055 | 2,055 | ||||||
Other comprehensive income | 21 | 21 | ||||||
Purchases of treasury stock | (1,600) | (1,600) | ||||||
Common stock issued under employee benefit plans (in shares) | 70,000 | |||||||
Common stock issued under employee benefit plans | 5 | $ 0 | 5 | |||||
Common stock issued and stock-based compensation expense (in shares) | 1,046,000 | |||||||
Common stock issued and stock-based compensation expense | 60 | $ 0 | 60 | |||||
Dividends — common stock | (386) | (386) | ||||||
Dividends — preferred stock | $ (31) | (31) | ||||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2018 | 5,700 | 6,000 | ||||||
Common stock, shares outstanding, balance at end of period (in shares) at Sep. 30, 2018 | 564,614,000 | |||||||
Stockholders' equity, balance at end of period at Sep. 30, 2018 | $ 11,016 | $ 563 | $ 6 | $ 4,107 | $ 18,354 | $ (160) | $ (11,854) | |
[1] | Represents the adjustment to AOCI as a result of adoption of ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the second quarter of 2018. |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 2,055 | $ 1,712 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Provision for loan losses | 2,235 | 1,900 |
Depreciation and amortization | 326 | 289 |
Amortization of deferred revenues and accretion of accretable yield on acquired loans | (302) | (299) |
Net loss on investments and other assets | 33 | 42 |
Other, net | (122) | (42) |
Changes in assets and liabilities | ||
Decrease (increase) in other assets | 43 | (59) |
Increase in accrued expenses and other liabilities | 162 | 41 |
Net cash provided by operating activities | 4,430 | 3,584 |
Cash flows from investing activities | ||
Maturities of available-for-sale investment securities | 802 | 154 |
Purchases of available-for-sale investment securities | (983) | 0 |
Maturities of held-to-maturity investment securities | 13 | 12 |
Purchases of held-to-maturity investment securities | (82) | (40) |
Net principal disbursed on loans originated for investment | (4,318) | (4,455) |
Proceeds from returns of investment | 0 | 17 |
Purchases of other investments | (20) | (31) |
Purchases of premises and equipment | (177) | (161) |
Net cash used for investing activities | (4,765) | (4,504) |
Cash flows from financing activities | ||
Proceeds from issuance of securitized debt | 3,076 | 4,242 |
Maturities and repayment of securitized debt | (3,888) | (3,715) |
Proceeds from issuance of other long-term borrowings | 2,235 | 1,098 |
Maturities and repayment of other long-term borrowings | (756) | (403) |
Proceeds from issuance of common stock | 5 | 4 |
Purchases of treasury stock | (1,600) | (1,526) |
Net increase in deposits | 4,886 | 4,129 |
Dividends paid on common and preferred stock | (401) | (390) |
Net cash provided by financing activities | 3,557 | 3,439 |
Net increase in cash, cash equivalents and restricted cash | 3,222 | 2,519 |
Cash, cash equivalents and restricted cash, at beginning of period | 13,387 | 12,009 |
Cash, cash equivalents and restricted cash, at end of period | 16,609 | 14,528 |
Reconciliation of cash, cash equivalents and restricted cash | ||
Cash and cash equivalents | 16,019 | 13,249 |
Restricted cash | $ 590 | $ 1,279 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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 and debit 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 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 activities are managed in two segments, Direct Banking and Payment Services, based on the products and services provided. For a detailed description of the operations of each segment, as well as the allocation conventions used in business segment reporting, see Note 15: Segment Disclosures. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company’s 2017 audited consolidated financial statements filed with the Company’s annual report on Form 10-K for the year ended December 31, 2017 . Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of this ASU is to simplify the test for goodwill impairment by eliminating Step 2 of the current impairment test. Under the current rules, if the reporting unit’s carrying value exceeds its fair value (Step 1), goodwill impairment is measured as the difference between the carrying value of goodwill and its implied fair value. To compute the implied fair value of goodwill under Step 2, an entity has to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the new standard, the Company will perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in this ASU apply to the Company’s annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in this ASU apply on a prospective basis. All of the Company’s recorded goodwill is associated with its PULSE debit business. This ASU has no impact on cash flows, and its adoption is not expected to have any impact on the Company’s condensed consolidated financial condition or results of operations because the estimated fair value of the PULSE reporting unit is well in excess of its carrying value. The Company did not early adopt this standard, but is still evaluating whether it will prior to the 2020 effective date. 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 replaces the incurred loss model with the current expected credit loss ("CECL") approach. For loans carried at amortized cost, the allowance for loan losses will be based on management’s current estimate of all expected credit losses over the remaining contractual term of the loans. Upon the origination of a loan, the Company will have to record its estimate of all expected credit losses on that loan through an immediate charge to earnings. Updates to that estimate each period will be recorded through provision expense. The CECL estimate is to be based on historical experience, current conditions and reasonable and supportable forecasts. No specific method for estimating credit loss is mandated, permitting companies to use judgment in selecting the approach that is most appropriate in their circumstances. The CECL approach is expected to affect the Company’s allowance for loan losses as a result of: (1) encompassing expected losses, not simply those deemed to be already incurred, (2) extending the loss estimate period over the entire life of the loan, and (3) reclassification of the credit loss component of the purchased credit-impaired ("PCI") loan portfolio out of loan carrying value and into the allowance for loan losses. All loans carried at amortized cost, including PCI loans and loans modified in a troubled debt restructuring ("TDR") will be measured under the CECL approach. Existing specialized measurement guidance for PCI loans, which the ASU refers to as purchased credit-deteriorated ("PCD"), and TDRs will be eliminated, although certain separate disclosure guidance will be retained. Measurement of credit impairment of available-for-sale debt securities will generally 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 is effective beginning January 1, 2020, with early adoption permitted no sooner than January 1, 2019. Management is not considering early adoption at this time. On the date of adoption, the allowance for loan losses will be adjusted to the CECL estimate for loans held at that date with an offsetting adjustment to retained earnings. Additionally, the carrying value of PCD loans will be increased through an offsetting addition to the allowance for loan losses for the CECL estimate on those loans. The CECL allowance will be re-evaluated in subsequent periods and adjusted through provision expense as needed. The Company is actively engaged in cross-functional implementation efforts and planning for loss modeling requirements consistent with lifetime expected loss estimates. The Company has also been involved in efforts to identify and resolve various implementation issues specific to the application of the standard to credit card receivables. Adoption of the standard has the potential to materially impact stockholders' equity and regulatory capital as well as the Company's financial condition and results of operations. 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 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 on January 1, 2019, and the Company is prepared to implement the standard on that date. Management does not expect the standard to have a material impact on the Company's condensed consolidated financial statements. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The Company’s investment securities consist of the following (dollars in millions): September 30, December 31, U.S. Treasury securities (1) $ 981 $ 672 States and political subdivisions of states — 1 Residential mortgage-backed securities - Agency (2) 820 895 Total investment securities $ 1,801 $ 1,568 (1) Includes $35 million and $48 million of U.S. Treasury securities pledged as swap collateral as of September 30, 2018 and December 31, 2017 , 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 September 30, 2018 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 984 $ — $ (3 ) $ 981 Residential mortgage-backed securities - Agency 597 — (19 ) 578 Total available-for-sale investment securities $ 1,581 $ — $ (22 ) $ 1,559 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 242 $ — $ (5 ) $ 237 Total held-to-maturity investment securities $ 242 $ — $ (5 ) $ 237 At December 31, 2017 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 675 $ — $ (3 ) $ 672 Residential mortgage-backed securities - Agency 728 1 (6 ) 723 Total available-for-sale investment securities $ 1,403 $ 1 $ (9 ) $ 1,395 Held-to-Maturity Investment Securities (2) States and political subdivisions of states $ 1 $ — $ — $ 1 Residential mortgage-backed securities - Agency (3) 172 1 (1 ) 172 Total held-to-maturity investment securities $ 173 $ 1 $ (1 ) $ 173 (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. The following table provides information about investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions): Number of Securities in a Loss Position Less than 12 months More than 12 months Fair Value Unrealized Losses Fair Value Unrealized Losses At September 30, 2018 Available-for-Sale Investment Securities U.S. Treasury securities 8 $ 981 $ (3 ) $ — $ — Residential mortgage-backed securities - Agency 31 $ 289 $ (8 ) $ 288 $ (11 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 102 $ 145 $ (2 ) $ 66 $ (3 ) At December 31, 2017 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ — $ — $ 672 $ (3 ) Residential mortgage-backed securities - Agency 27 $ 457 $ (3 ) $ 132 $ (3 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 45 $ 56 $ — $ 38 $ (1 ) There were no losses related to other-than-temporary impairments and no proceeds from sales or recognized gains and losses on available-for-sale securities during the three and nine months ended September 30, 2018 and 2017 . See Note 7: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three and nine months ended September 30, 2018 and 2017 . Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions): At September 30, 2018 One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total Available-for-Sale Investment Securities—Amortized Cost U.S. Treasury securities $ — $ 984 $ — $ — $ 984 Residential mortgage-backed securities - Agency (1) — 101 472 24 597 Total available-for-sale investment securities $ — $ 1,085 $ 472 $ 24 $ 1,581 Held-to-Maturity Investment Securities—Amortized Cost Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 242 $ 242 Total held-to-maturity investment securities $ — $ — $ — $ 242 $ 242 Available-for-Sale Investment Securities—Fair Values U.S. Treasury securities $ — $ 981 $ — $ — $ 981 Residential mortgage-backed securities - Agency (1) — 99 456 23 578 Total available-for-sale investment securities $ — $ 1,080 $ 456 $ 23 $ 1,559 Held-to-Maturity Investment Securities—Fair Values Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 237 $ 237 Total held-to-maturity investment securities $ — $ — $ — $ 237 $ 237 (1) Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. 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 condensed consolidated statements of financial condition. The portion of each investment's operating results allocable to the Company reduces the carrying value of the investments and is recorded in other expense within the condensed consolidated statements of income. The Company further reduces the carrying value of the investments by recognizing any amounts that are in excess of future net tax benefits in other expense. The Company earns a return primarily through the receipt of tax credits allocated to the affordable housing projects and the community revitalization projects. These investments are not consolidated as the Company does not have a controlling financial interest in the entities. As of September 30, 2018 and December 31, 2017 , the Company had outstanding investments in these entities of $263 million and $297 million , respectively, and related contingent liabilities of $47 million and $66 million , respectively. Of the above outstanding equity investments, the Company had $262 million and $288 million of investments related to affordable housing projects as of September 30, 2018 and December 31, 2017 , respectively, which had $47 million and $66 million related contingent liabilities, respectively. |
Loan Receivables
Loan Receivables | 9 Months Ended |
Sep. 30, 2018 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Loan Receivables | Loan Receivables The Company has three loan portfolio segments: credit card loans, other loans and PCI loans. The Company's classes of receivables within the three portfolio segments are depicted in the following table (dollars in millions): September 30, December 31, Credit card loans (1) $ 69,253 $ 67,291 Other loans Personal loans 7,545 7,374 Private student loans 7,668 7,076 Other 693 423 Total other loans 15,906 14,873 PCI loans (2) 1,735 2,084 Total loan receivables 86,894 84,248 Allowance for loan losses (2,927 ) (2,621 ) Net loan receivables $ 83,967 $ 81,627 (1) Amounts include carrying values of $21.8 billion and $21.2 billion in underlying investors’ interest in trust debt at September 30, 2018 and December 31, 2017 , respectively, and $10.4 billion and $9.9 billion in seller's interest at September 30, 2018 and December 31, 2017 , respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. (2) Amounts include carrying values of $380 million and $762 million in loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2018 and December 31, 2017 , respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. 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 September 30, 2018 Credit card loans (2) $ 831 $ 777 $ 1,608 $ 706 $ 232 Other loans Personal loans (3) 84 34 118 32 12 Private student loans (excluding PCI) (4) 123 41 164 40 9 Other 2 2 4 — 22 Total other loans (excluding PCI) 209 77 286 72 43 Total loan receivables (excluding PCI) $ 1,040 $ 854 $ 1,894 $ 778 $ 275 At December 31, 2017 Credit card loans (2) $ 781 $ 751 $ 1,532 $ 693 $ 203 Other loans Personal loans (3) 73 30 103 28 10 Private student loans (excluding PCI) (4) 134 33 167 33 2 Other 3 1 4 — 18 Total other loans (excluding PCI) 210 64 274 61 30 Total loan receivables (excluding PCI) $ 991 $ 815 $ 1,806 $ 754 $ 233 (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 $9 million for the three months ended September 30, 2018 and 2017 and $28 million and $26 million for the nine months ended September 30, 2018 and 2017 , 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 $93 million and $72 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. (3) Personal loans that are 90 or more days delinquent and accruing interest include $6 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. (4) Private student loans that are 90 or more days delinquent and accruing interest include $7 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. 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 Three Months Ended September 30, 2018 2017 Net Net Charge-off (1) Net Net Charge-off (1) Credit card loans $ 543 3.14 % $ 439 2.80 % Other loans Personal loans 77 4.09 % 58 3.19 % Private student loans (excluding PCI) 22 1.19 % 30 1.52 % Total other loans 99 2.54 % 88 2.33 % Net charge-offs (excluding PCI) $ 642 3.03 % $ 527 2.71 % Net charge-offs (including PCI) $ 642 2.97 % $ 527 2.63 % For the Nine Months Ended September 30, 2018 2017 Net Dollars Net Charge-off (1) Net Dollars Net Charge-off (1) Credit card loans $ 1,638 3.27 % $ 1,306 2.86 % Other loans Personal loans 222 4.03 % 163 3.18 % Private student loans (excluding PCI) 65 1.17 % 64 1.17 % Other 1 0.13 % 3 1.09 % Total other loans 288 2.52 % 230 2.16 % Net charge-offs (excluding PCI) $ 1,926 3.13 % $ 1,536 2.73 % Net charge-offs (including PCI) $ 1,926 3.06 % $ 1,536 2.65 % (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 660 and Above Less than 660 or No Score At September 30, 2018 Credit card loans 81 % 19 % Personal loans 94 % 6 % Private student loans (excluding PCI) (1) 95 % 5 % At December 31, 2017 Credit card loans 82 % 18 % Personal loans 95 % 5 % Private student loans (excluding PCI) (1) 95 % 5 % (1) PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." For private student loans, additional credit risk management activities include monitoring the amount of loans in forbearance. Forbearance allows borrowers experiencing temporary financial difficulties and willing to make payments, the ability to temporarily suspend payments. Eligible borrowers have a lifetime cap on forbearance of 12 months . At September 30, 2018 and December 31, 2017 , there were $30 million and $29 million , respectively, of private student loans, including PCI, in forbearance, representing 0.6% 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 (dollars in millions): For the Three Months Ended September 30, 2018 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 2,334 $ 313 $ 170 $ 11 $ 2,828 Additions Provision for loan losses 633 87 22 — 742 Deductions Charge-offs (674 ) (86 ) (25 ) — (785 ) Recoveries 131 9 3 — 143 Net charge-offs (543 ) (77 ) (22 ) — (642 ) Other (2) — — (1 ) — (1 ) Balance at end of period $ 2,424 $ 323 $ 169 $ 11 $ 2,927 For the Three Months Ended September 30, 2017 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,980 $ 235 $ 159 $ 10 $ 2,384 Additions Provision for loan losses 550 91 34 (1 ) 674 Deductions Charge-offs (555 ) (64 ) (32 ) — (651 ) Recoveries 116 6 2 — 124 Net charge-offs (439 ) (58 ) (30 ) — (527 ) Balance at end of period $ 2,091 $ 268 $ 163 $ 9 $ 2,531 (1) Includes both PCI and non-PCI private student loans. (2) Net change in reserves on PCI pools having no remaining non-accretable difference. The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): For the Nine Months Ended September 30, 2018 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 2,147 $ 301 $ 162 $ 11 $ 2,621 Additions Provision for loan losses 1,915 244 75 1 2,235 Deductions Charge-offs (2,021 ) (247 ) (74 ) (1 ) (2,343 ) Recoveries 383 25 9 — 417 Net charge-offs (1,638 ) (222 ) (65 ) (1 ) (1,926 ) Other (2) — — (3 ) — (3 ) Balance at end of period $ 2,424 $ 323 $ 169 $ 11 $ 2,927 For the Nine Months Ended September 30, 2017 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,790 $ 200 $ 158 $ 19 $ 2,167 Additions Provision for loan losses 1,607 231 69 (7 ) 1,900 Deductions Charge-offs (1,651 ) (182 ) (71 ) (3 ) (1,907 ) Recoveries 345 19 7 — 371 Net charge-offs (1,306 ) (163 ) (64 ) (3 ) (1,536 ) Balance at end of period $ 2,091 $ 268 $ 163 $ 9 $ 2,531 (1) Includes both PCI and non-PCI private student loans. (2) Net change in reserves on PCI pools having no remaining non-accretable difference. 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 Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 109 $ 87 $ 328 $ 258 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 26 $ 20 $ 81 $ 65 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 Loans (1) Other Loans Total At September 30, 2018 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 2,154 $ 282 $ 121 $ 4 $ 2,561 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 270 41 22 7 340 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 26 — 26 Total allowance for loan losses $ 2,424 $ 323 $ 169 $ 11 $ 2,927 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 67,316 $ 7,407 $ 7,498 $ 637 $ 82,858 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,937 138 170 56 2,301 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 1,735 — 1,735 Total recorded investment $ 69,253 $ 7,545 $ 9,403 $ 693 $ 86,894 At December 31, 2017 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,921 $ 269 $ 112 $ 4 $ 2,306 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 226 32 21 7 286 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 29 — 29 Total allowance for loan losses $ 2,147 $ 301 $ 162 $ 11 $ 2,621 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 65,975 $ 7,263 $ 6,939 $ 370 $ 80,547 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,316 111 137 53 1,617 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 2,084 — 2,084 Total recorded investment $ 67,291 $ 7,374 $ 9,160 $ 423 $ 84,248 (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 TDRs. Other loans are individually evaluated for impairment and generally do not represent TDRs. (3) The unpaid principal balance of credit card loans was $1.7 billion and $1.1 billion at September 30, 2018 and December 31, 2017 , respectively. The unpaid principal balance of personal loans was $138 million and $109 million at September 30, 2018 and December 31, 2017 , respectively. The unpaid principal balance of student loans was $170 million and $135 million at September 30, 2018 and December 31, 2017 , respectively. All loans accounted for as TDRs 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 may be experiencing financial hardship. The Company continually evaluates new programs to determine which of them meet the definition of a TDR. 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 Company offers temporary hardship programs consisting of an interest rate reduction and in some cases a reduced minimum payment, 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. Modified credit card loans that are deemed to meet the definition of TDRs includes loans in both temporary and permanent programs. 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 TDRs. 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 TDR based on the cumulative length of the concession period and an evaluation of the credit quality of the borrower, based on FICO scores. 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 TDRs in the future. Additional information about modified loans classified as TDRs is shown below (dollars in millions): Average recorded investment in loans Interest income recognized during period loans were impaired (1) Gross interest income that would have been recorded with original terms (2) For the Three Months Ended September 30, 2018 Credit card loans (3) $ 1,815 $ 48 $ 37 Personal loans $ 134 $ 4 $ 1 Private student loans $ 166 $ 3 $ — For the Three Months Ended September 30, 2017 Credit card loans (3) $ 1,165 $ 28 $ 22 Personal loans $ 96 $ 2 $ 1 Private student loans $ 120 $ 3 $ — For the Nine Months Ended September 30, 2018 Credit card loans (3) $ 1,612 $ 123 $ 95 Personal loans $ 125 $ 10 $ 4 Private student loans $ 152 $ 9 $ — For the Nine Months Ended September 30, 2017 Credit card loans (3) $ 1,137 $ 78 $ 64 Personal loans $ 90 $ 7 $ 3 Private student loans $ 107 $ 6 $ — (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 TDRs, but are no longer enrolled in a TDR program due to noncompliance with the terms of the modification or due to successful completion of a program after which charging privileges may be reinstated based on customer-level evaluation. The average balance of credit card loans that were no longer enrolled in a TDR program was $427 million and $345 million , respectively, for the three months ended September 30, 2018 and 2017 , and $404 million and $327 million , respectively, for the nine months ended September 30, 2018 and 2017 . In order to evaluate the primary financial effects that resulted from credit card loans entering into a loan modification program during the three and nine months ended September 30, 2018 and 2017 , the Company quantified the amount by which interest and fees were reduced during the periods. During the three months ended September 30, 2018 and 2017 , the Company forgave approximately $12 million and $10 million , respectively, of interest and fees as a result of accounts entering into a credit card loan modification program. During the nine months ended September 30, 2018 and 2017 , the Company forgave approximately $35 million and $31 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 Three Months Ended September 30, 2018 2017 Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 69,127 $ 444 28,582 $ 164 Personal loans 1,903 $ 27 1,580 $ 20 Private student loans 935 $ 17 965 $ 17 For the Nine Months Ended September 30, 2018 2017 Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 185,185 $ 1,187 85,553 $ 502 Personal loans 5,867 $ 79 4,573 $ 56 Private student loans 2,887 $ 54 2,985 $ 52 The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a TDR during the 15 months preceding the end of each period (dollars in millions): For the Three Months Ended September 30, 2018 2017 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) 10,535 $ 60 8,955 $ 48 Personal loans (2) 847 $ 11 463 $ 6 Private student loans (3) 278 $ 5 298 $ 5 For the Nine Months Ended September 30, 2018 2017 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) 28,319 $ 156 25,170 $ 135 Personal loans (2) 2,059 $ 27 1,296 $ 16 Private student loans (3) 753 $ 13 667 $ 11 (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 three months ended September 30, 2018 and 2017 , approximately 34% and 37% , respectively, of the total balances were charged off at the end of the month in which they defaulted. Of the account balances that defaulted as shown above for the nine months ended September 30, 2018 and 2017 , approximately 35% and 37% , 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 loss analysis discussed above under "— Allowance for Loan Losses." Purchased Credit-Impaired Loans Purchased loans with evidence of credit deterioration since origination for which it is probable that not all contractually required payments will be collected are considered impaired at acquisition and are reported as PCI loans. The private student loans acquired in the SLC transaction, as well as the additional acquired private student loan portfolio comprise the Company’s only PCI loans at September 30, 2018 and December 31, 2017 . Total PCI student loans had an outstanding balance of $1.8 billion and $2.2 billion , including accrued interest, and a related carrying amount of $1.7 billion and $2.1 billion as of September 30, 2018 and December 31, 2017 , respectively. The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Balance at beginning of period $ 608 $ 725 $ 669 $ 796 Accretion into interest income (34 ) (40 ) (106 ) (121 ) Other changes in expected cash flows 1 21 12 31 Balance at end of period $ 575 $ 706 $ 575 $ 706 Periodically, the Company updates the estimate of cash flows expected to be collected based on management's latest expectations of future net credit losses, borrower prepayments and certain other assumptions that affect cash flows. No provision expense was recorded during the three and nine months ended September 30, 2018 and 2017 . The allowance for PCI loan losses at September 30, 2018 and December 31, 2017 was $26 million and $29 million , respectively. For the three and nine months ended September 30, 2018 and 2017 , the increase in accretable yield was primarily driven by increases in rates on variable rate loans. Changes to accretable yield are recognized prospectively as an adjustment to yield over the remaining life of the pools. At September 30, 2018 , 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 2.97% and 0.79% , respectively. At December 31, 2017 , 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 3.24% and 0.93% , respectively. These rates include private student loans that are greater than 120 days delinquent that are covered by an indemnification agreement or insurance arrangements through which the Company expects to recover a substantial portion of the loan. The net charge-off rate on PCI student loans was 0.64% and 0.90% for the three months ended September 30, 2018 and 2017 , respectively, and 0.71% and 0.69% for the nine months ended September 30, 2018 and 2017 , respectively. |
Credit Card and Student Loan Se
Credit Card and Student Loan Securitization Activities | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entities Disclosure [Abstract] | |
Credit Card and Student Loan Securitization Activities | Credit Card and Student Loan Securitization Activities The Company’s securitizations are accounted for as secured borrowings and the related trusts are treated as consolidated subsidiaries of the Company. For a description of the Company’s principles of consolidation with respect to VIEs, see Note 1: Background and Basis of Presentation of the Company’s annual report on Form 10-K for the year ended December 31, 2017 . Credit Card Securitization Activities The Company accesses the term asset securitization market through the Discover Card Master Trust I (“DCMT”) and the Discover Card Execution Note Trust (“DCENT”). Credit card loan receivables are transferred into DCMT and beneficial interests in DCMT are transferred into DCENT. DCENT issues debt securities to investors that are reported in long-term borrowings. 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 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 condensed 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, the amounts of which are reported in restricted cash. 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. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company’s other assets or the Company's general credit for a shortage in cash flows. The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions): September 30, December 31, Restricted cash $ 579 $ 26 Investors’ interests held by third-party investors 15,650 16,025 Investors’ interests held by wholly-owned subsidiaries of Discover Bank 6,120 5,133 Seller’s interest 10,354 9,861 Loan receivables (1) 32,124 31,019 Allowance for loan losses allocated to securitized loan receivables (1) (1,125 ) (998 ) Net loan receivables 30,999 30,021 Other 5 5 Carrying value of assets of consolidated variable interest entities $ 31,583 $ 30,052 (1) The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors in the securities, there are certain features or triggering events that could cause an early amortization of the debt securities, including triggers related to the impact of the performance of the trust receivables on the availability and adequacy of cash flows to meet contractual requirements. As of September 30, 2018 , no economic or other early amortization events have occurred. 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 Student loan 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 trusts 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. With the exception of the trusts’ restricted assets, the trusts and investors have no recourse to the Company’s other assets or the Company's general credit for a shortage in cash flows. During the third quarter, the Company exercised its option to accelerate the repayment of remaining outstanding securities, fully repaying the debt on one of the trusts. Currently there is one trust from which issued securities remain outstanding 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 trust until cash is released in accordance with the trust indenture agreement. Similar to the credit card securitizations, the Company continues to own and service the accounts that generate the student loan receivables held by the trust and receives servicing fees from the trust based on a percentage of the principal balance outstanding. Although the servicing fee income offsets the fee expense related to the trust 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 the trust arrangement, the Company has the option, but not the obligation, to provide financial support to the trust, 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 indemnification arrangements. The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions): September 30, December 31, Restricted cash $ 11 $ 55 Student loan receivables (1) 380 762 Carrying value of assets of consolidated variable interest entities $ 391 $ 817 (1) The decrease in student loan receivables from December 31, 2017 to September 30, 2018 is due in part to the repayment of remaining debt associated with one trust. |
Deposits
Deposits | 9 Months Ended |
Sep. 30, 2018 | |
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): September 30, December 31, Certificates of deposit in amounts less than $100,000 $ 25,502 $ 23,768 Certificates of deposit in amounts $100,000 or greater (1) 6,518 5,984 Savings deposits, including money market deposit accounts 31,014 28,413 Total interest-bearing deposits $ 63,034 $ 58,165 (1) Includes $1.6 billion and $1.4 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of September 30, 2018 and December 31, 2017 , respectively. The following table summarizes certificates of deposit in amounts of $100,000 or greater by contractual maturity (dollars in millions): September 30, 2018 Three months or less $ 875 Over three months through six months 947 Over six months through twelve months 2,180 Over twelve months 2,516 Total $ 6,518 The following table summarizes certificates of deposit maturing over the remainder of this year, over each of the next four years, and thereafter (dollars in millions): September 30, 2018 2018 $ 3,111 2019 11,516 2020 6,267 2021 4,580 2022 2,696 Thereafter 3,850 Total $ 32,020 |
Long-Term Borrowings
Long-Term Borrowings | 9 Months Ended |
Sep. 30, 2018 | |
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): September 30, 2018 December 31, 2017 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1) 2019-2024 1.39%-3.11% 2.06% $ 9,695 $ 8,888 Floating-rate asset-backed securities (2)(3) 2018-2024 2.39%-2.76% 2.59% 5,813 7,038 Total Discover Card Master Trust I and Discover Card Execution Note Trust 15,508 15,926 Floating-rate asset-backed securities (4)(5) 2031 6.25% 6.25% 207 610 Total SLC Private Student Loan Trust 207 610 Total long-term borrowings - owed to securitization investors 15,715 16,536 Discover Financial Services (Parent Company) Fixed-rate senior notes 2019-2027 3.75%-10.25% 4.25% 2,735 2,710 Fixed-rate retail notes 2018-2031 2.85%-4.60% 3.73% 346 302 Discover Bank Fixed-rate senior bank notes (1) 2018-2028 2.60%-4.65% 3.53% 7,007 6,080 Fixed-rate subordinated bank notes 2019-2028 4.68%-8.70% 6.32% 1,195 698 Total long-term borrowings $ 26,998 $ 26,326 (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 14: 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 + 23 to 60 basis points as of September 30, 2018 . (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 14: Derivatives and Hedging Activities. (4) SLC Private Student Loan Trust floating-rate asset-backed securities include an issuance with the following interest rate term: Prime rate + 100 basis points as of September 30, 2018 . (5) Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The date shown represents final maturity date. The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years, and thereafter (dollars in millions): September 30, 2018 2018 $ 1,549 2019 6,001 2020 4,687 2021 2,459 2022 2,790 Thereafter 9,512 Total $ 26,998 The Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of September 30, 2018 , the total commitment of secured credit facilities through private providers was $6.0 billion , none of which was drawn as of September 30, 2018 . Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers, which have various expirations in calendar years 2019 through 2020. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the asset-backed commercial paper costs of each individual conduit provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income Changes in each component of accumulated other comprehensive income (loss) ("AOCI") were as follows (dollars in millions): Unrealized Losses on Available-for-Sale Investment Securities, Net of Tax Gains (Losses) on Cash Flow Hedges, Net of Tax Losses on Pension Plan, Net of Tax AOCI For the Three Months Ended September 30, 2018 Balance at June 30, 2018 $ (14 ) $ 39 $ (187 ) $ (162 ) Net change (2 ) 4 — 2 Balance at September 30, 2018 $ (16 ) $ 43 $ (187 ) $ (160 ) For the Three Months Ended September 30, 2017 Balance at June 30, 2017 $ (2 ) $ (3 ) $ (145 ) $ (150 ) Net change 1 1 — 2 Balance at September 30, 2017 $ (1 ) $ (2 ) $ (145 ) $ (148 ) For the Nine Months Ended September 30, 2018 Balance at December 31, 2017 $ (5 ) $ 10 $ (157 ) $ (152 ) Cumulative effect of ASU No. 2018-02 adoption (1) (1 ) 3 (31 ) (29 ) Net change (10 ) 30 1 21 Balance at September 30, 2018 $ (16 ) $ 43 $ (187 ) $ (160 ) For the Nine Months Ended September 30, 2017 Balance at December 31, 2016 $ (3 ) $ (13 ) $ (145 ) $ (161 ) Net change 2 11 — 13 Balance at September 30, 2017 $ (1 ) $ (2 ) $ (145 ) $ (148 ) (1) Represents the adjustment to AOCI as a result of adoption of ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the second quarter of 2018. The following table presents each component of other comprehensive income (loss) ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): Before Tax Tax Benefit (Expense) Net of Tax For the Three Months Ended September 30, 2018 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (4 ) $ 2 $ (2 ) Net change $ (4 ) $ 2 $ (2 ) Cash Flow Hedges Net unrealized gains arising during the period $ 8 $ (2 ) $ 6 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ 6 $ (2 ) $ 4 For the Three Months Ended September 30, 2017 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 1 $ — $ 1 Net change $ 1 $ — $ 1 Cash Flow Hedges Net unrealized losses arising during the period $ (1 ) $ 1 $ — Amounts reclassified from AOCI 3 (2 ) 1 Net change $ 2 $ (1 ) $ 1 For the Nine Months Ended September 30, 2018 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (14 ) $ 4 $ (10 ) Net change $ (14 ) $ 4 $ (10 ) Cash Flow Hedges Net unrealized gains arising during the period $ 42 $ (10 ) $ 32 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ 40 $ (10 ) $ 30 Pension Plan Unrealized gains arising during the period $ 1 $ — $ 1 Net change $ 1 $ — $ 1 For the Nine Months Ended September 30, 2017 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 3 $ (1 ) $ 2 Net change $ 3 $ (1 ) $ 2 Cash Flow Hedges Net unrealized gains arising during the period $ 8 $ (3 ) $ 5 Amounts reclassified from AOCI 11 (5 ) 6 Net change $ 19 $ (8 ) $ 11 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following table presents the calculation of the Company's effective income tax rate (dollars in millions, except effective income tax rate): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Income before income tax expense $ 967 $ 903 $ 2,700 $ 2,638 Income tax expense $ 247 $ 301 $ 645 $ 926 Effective income tax rate 25.5 % 33.3 % 23.9 % 35.1 % Income tax expense decreased $54 million and $281 million , respectively, for the three and nine months ended September 30, 2018 , as compared to the same periods in 2017 . The effective tax rates decreased 7.8% and 11.2% , respectively, for the three and nine months ended September 30, 2018 as compared to the same periods in 2017 . The decrease in rates is primarily due to a reduction in the U.S. federal statutory income tax rate from 35% to 21% offset by other effects of Tax Cuts and Jobs Act of 2017. For the three months ended September 30, 2018, the effective tax rate was unfavorably impacted by reserve increases for certain tax matters. The Company is subject to examination by the Internal Revenue Service ("IRS") and 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 IRS is currently examining the years 2011-2015. 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. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table presents the calculation of basic and diluted earnings per share ("EPS") (in millions, except per share amounts): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Numerator Net income $ 720 $ 602 $ 2,055 $ 1,712 Preferred stock dividends (15 ) (9 ) (31 ) (28 ) Net income available to common stockholders 705 593 2,024 1,684 Income allocated to participating securities (6 ) (4 ) (16 ) (12 ) Net income allocated to common stockholders $ 699 $ 589 $ 2,008 $ 1,672 Denominator Weighted-average shares of common stock outstanding 341 371 348 379 Effect of dilutive common stock equivalents 1 — — — Weighted-average shares of common stock outstanding and common stock equivalents 342 371 348 379 Basic earnings per common share $ 2.05 $ 1.59 $ 5.77 $ 4.42 Diluted earnings per common share $ 2.05 $ 1.59 $ 5.77 $ 4.42 Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three and nine months ended September 30, 2018 and 2017 . |
Capital Adequacy
Capital Adequacy | 9 Months Ended |
Sep. 30, 2018 | |
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 ("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, which became effective for the Company on January 1, 2015, are subject to phase-in periods through the end of 2018 (the "transition period"). 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 September 30, 2018 , 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 (1) Amount Ratio Amount (2) Ratio (2) September 30, 2018 Total capital (to risk-weighted assets) Discover Financial Services $ 12,393 13.9 % $ 7,145 ≥8.0% $ 8,931 ≥10.0% Discover Bank $ 12,991 14.7 % $ 7,068 ≥8.0% $ 8,834 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 10,785 12.1 % $ 5,358 ≥6.0% $ 5,358 ≥6.0% Discover Bank $ 10,728 12.1 % $ 5,301 ≥6.0% $ 7,068 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 10,785 10.4 % $ 4,166 ≥4.0% N/A N/A Discover Bank $ 10,728 10.4 % $ 4,124 ≥4.0% $ 5,155 ≥5.0% CET1 capital (to risk-weighted assets) Discover Financial Services $ 10,222 11.4 % $ 4,019 ≥4.5% N/A N/A Discover Bank $ 10,728 12.1 % $ 3,975 ≥4.5% $ 5,742 ≥6.5% December 31, 2017 Total capital (to risk-weighted assets) Discover Financial Services $ 11,952 13.8 % $ 6,946 ≥8.0% $ 8,683 ≥10.0% Discover Bank $ 12,364 14.4 % $ 6,872 ≥8.0% $ 8,589 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 10,677 12.3 % $ 5,210 ≥6.0% $ 5,210 ≥6.0% Discover Bank $ 10,533 12.3 % $ 5,154 ≥6.0% $ 6,872 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 10,677 10.8 % $ 3,949 ≥4.0% N/A N/A Discover Bank $ 10,533 10.8 % $ 3,912 ≥4.0% $ 4,890 ≥5.0% CET1 capital (to risk-weighted assets) Discover Financial Services $ 10,114 11.6 % $ 3,907 ≥4.5% N/A N/A Discover Bank $ 10,533 12.3 % $ 3,865 ≥4.5% $ 5,583 ≥6.5% (1) Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions. (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 and
Commitments, Contingencies and Guarantees | 9 Months Ended |
Sep. 30, 2018 | |
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 2029. Future minimum payments on capital leases were not material at September 30, 2018. The following table shows future minimum payments on non-cancelable operating leases with original terms in excess of one year (dollars in millions): September 30, 2018 2018 $ 3 2019 13 2020 11 2021 10 2022 8 Thereafter 41 Total minimum lease payments $ 86 Unused Credit Arrangements At September 30, 2018 , the Company had unused credit arrangements for loans of approximately $195.8 billion . Such arrangements 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 arrangements, 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 12: 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 condensed 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. 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 closed the mortgage origination business in 2015 and while these representations and warranties may extend through the contractual life of the mortgage loan, the likelihood of such repurchases diminishes with the passage of time. The Company has established a repurchase reserve based on expected losses. At September 30, 2018 , this amount was not material and was included in accrued expenses and other liabilities on the condensed 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 $147 million for merchant guarantees as of September 30, 2018 . The maximum potential counterparty exposures to these settlement guarantees for ATM guarantees would be immaterial as of September 30, 2018 . The maximum potential counterparty exposures for network alliance guarantees would be $33 million as of September 30, 2018 . The Company believes that the estimated amounts of maximum potential future payments are not representative of the Company's actual potential loss exposure given Diners Club's and PULSE's insignificant historical losses from these counterparty exposures. As of September 30, 2018 , 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 three and nine months ended September 30, 2018 and 2017 . 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 following table summarizes certain information regarding merchant chargeback guarantees (in millions): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Aggregate sales transaction volume (1) $ 40,806 $ 36,480 $ 116,800 $ 105,019 (1) Represents period transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume. The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of September 30, 2018 or December 31, 2017 . 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 September 30, 2018 and December 31, 2017 , the Company had escrow deposits and settlement withholdings of $8 million and $10 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 | 9 Months Ended |
Sep. 30, 2018 | |
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 offered its customers an arbitration clause in its customer agreements. The arbitration clause allows the Company and its customers to quickly and economically resolve disputes. Additionally, the arbitration clause has in some instances limited the costs of, and the Company’s exposure to, litigation. Future legal and regulatory challenges and prohibitions may cause the Company to discontinue its offering and use of such clauses. From time to time, the Company is involved in legal actions challenging its arbitration clause. Bills may be periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses. On July 10, 2017, the Bureau of Consumer Financial Protection (the "Bureau") issued a final arbitration rule (the "Arbitration Rule") that would have effectively banned consumer financial companies from including class action waivers in arbitration clauses. On November 1, 2017, a resolution of disapproval of the Arbitration Rule was signed into law and the Arbitration Rule was blocked from taking effect and cannot be reissued in substantially the same form, nor can a new rule that is substantially similar be issued unless specifically authorized by a law enacted after the date of the resolution of disapproval. 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 condensed 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, the Company is currently the subject of an action by the Federal Reserve with respect to anti-money laundering and related compliance programs as referred to below. In addition, certain subsidiaries of the Company are subject to a consent order with the Bureau regarding certain student loan servicing practices, as described below. Pursuant to powers granted under federal banking laws, regulatory agencies have broad and sweeping discretion, and may assess civil money penalties, require changes to certain business practices or require customer restitution at any time. The existing supervisory action 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 the three and nine months ended September 30, 2018 and 2017 . 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 $100 million . This estimated range of reasonably possible losses is based upon currently available information for those proceedings in which the Company is involved, takes into account the Company’s best estimate of such losses for those matters for which an estimate can be made, and does not represent the Company’s maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate. The Company’s estimated range above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could be material to the Company’s condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company’s income for such period, and could adversely affect the Company’s reputation. On July 5, 2012, the Antitrust Division of the United States Department of Justice (the “Division”) issued a Civil Investigative Demand ("CID") to the Company seeking information regarding an investigation related to potential violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§1-2, by an unidentified party other than Discover. The CID seeks documents, data and narrative responses to several interrogatories and document requests, related to the debit card market. A CID is a request for information in the course of a civil investigation and does not constitute the commencement of legal proceedings. The Division is permitted by statute to issue a CID to anyone whom it believes may have information relevant to an investigation. The receipt of a CID does not presuppose that there is probable cause to believe that a violation of the antitrust laws has occurred or that a formal complaint ultimately will be filed. The Company is cooperating with the Division in connection with the CID. On 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. On July 22, 2015, the Company announced that its subsidiaries, Discover Bank, SLC and Discover Products Inc. (the “Discover Subsidiaries”), agreed to a consent order with the Bureau resolving the agency’s investigation with respect to certain student loan servicing practices. The Bureau’s investigation into these practices has been previously disclosed by the Company, initially in February 2014. The order required 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 were required to pay a $2.5 million civil money penalty to the Bureau. As required by the consent order, on October 19, 2015, the Discover Subsidiaries submitted to the Bureau 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 motion was granted on June 26, 2018, but the court has granted the plaintiff until September 24, 2018 to file an amended complaint. On September 24, 2018, the plaintiff voluntary dismissed the case. 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 networks, including the Company. In May 2017, while discovery was proceeding and after class certification was fully briefed but not yet ruled upon, the Court entered an order transferring the entire action to a federal court in New York that is presiding over certain related claims that are pending in the actions consolidated as MDL 1720. In June 2017, the federal court in New York declined to consolidate the B&R case with MDL 1720, but ordered the parties to coordinate discovery across the actions to the extent they involved related issues. On July 6, 2017, the Company requested permission to file a motion to dismiss the claims against it in the federal court in New York. On August 24, 2017, the Court held a status conference at which it set a briefing schedule on Discover’s motion to dismiss. In September 2017, Discover filed its motion to dismiss. On November 29, 2017, the Court heard argument on class certification and took the motion under advisement. On January 23, 2018, the Court heard argument on Discover's motion to dismiss. On March 11, 2018, the Court entered an order denying the plaintiffs' motion of class certification without prejudice to filing a renewed motion with additional detail on the proposed class period and alleged antitrust injuries. Fact discovery closed on June 14, 2018, and plaintiffs filed a renewed motion for class certification on July 16, 2018. Plaintiffs filed their opening merits expert reports on October 5, 2018, and class briefing will be complete by November 2018. The Court has not yet set a hearing date on the class motion, and merits expert discovery will close in 2019. 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
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements 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. 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 September 30, 2018 Assets Fair value - OCI U.S. Treasury securities $ 981 $ — $ — $ 981 Residential mortgage-backed securities - Agency — 578 — 578 Available-for-sale investment securities $ 981 $ 578 $ — $ 1,559 Derivative financial instruments - cash flow hedges (1) $ — $ 14 $ — $ 14 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 3 $ — $ 3 Liabilities Fair value - OCI Derivative financial instruments - cash flow hedges (1) $ — $ 1 $ — $ 1 Balance at December 31, 2017 Assets Fair value - OCI U.S. Treasury securities $ 672 $ — $ — $ 672 Residential mortgage-backed securities - Agency — 723 — 723 Available-for-sale investment securities $ 672 $ 723 $ — $ 1,395 Derivative financial instruments - cash flow hedges (1) $ — $ 2 $ — $ 2 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 4 $ — $ 4 Liabilities Fair value - OCI Derivative financial instruments - cash flow hedges (1) $ — $ 3 $ — $ 3 (1) Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. Fair value hedge derivative financial instruments in a liability position were immaterial at September 30, 2018 and December 31, 2017 . There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three or nine months ended September 30, 2018 and 2017 . Available-for-Sale Investment Securities Investment securities classified as available-for-sale consist of U.S. Treasury securities and residential mortgage-backed securities. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The Company classifies residential mortgage-backed securities as Level 2, the fair value estimates of which are based on the best information available. This data may consist of observed market prices, broker quotes or discounted cash flow models that incorporate assumptions such as benchmark yields, issuer spreads, prepayment speeds, credit ratings and losses, the priority of which may vary based on availability of information. The Company validates the fair value estimates provided by the pricing services primarily by comparison to valuations obtained through other pricing sources. The Company evaluates pricing variances amongst different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates. At September 30, 2018 , 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 $585 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. During the three and nine months ended September 30, 2018 and 2017 , the Company had no material impairments related to these assets. Financial Instruments Measured at Other Than Fair Value The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions): Balance at September 30, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 237 $ — $ 237 $ 242 Held-to-maturity investment securities $ — $ 237 $ — $ 237 $ 242 Net loan receivables $ — $ — $ 87,372 $ 87,372 $ 83,967 Carrying value approximates fair value (1) Cash and cash equivalents $ 16,019 $ — $ — $ 16,019 $ 16,019 Restricted cash $ 590 $ — $ — $ 590 $ 590 Accrued interest receivables (2) $ — $ 907 $ — $ 907 $ 907 Liabilities Amortized cost Time deposits (3) $ — $ 31,849 $ — $ 31,849 $ 32,020 Long-term borrowings - owed to securitization investors $ — $ 15,500 $ 226 $ 15,726 $ 15,715 Other long-term borrowings — 11,400 — 11,400 11,283 Long-term borrowings $ — $ 26,900 $ 226 $ 27,126 $ 26,998 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 236 $ — $ 236 $ 236 (1) The carrying values of these assets and liabilities approximate fair value due to the nature of their liquidity (i.e., due or payable in less than one year). (2) Accrued interest receivable and payable carrying values are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. (3) Excludes deposits without contractually defined maturities for all periods presented. 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): Balance at December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Assets Amortized cost States and political subdivisions of states $ — $ 1 $ — $ 1 $ 1 Residential mortgage-backed securities - Agency — 172 — 172 172 Held-to-maturity investment securities $ — $ 173 $ — $ 173 $ 173 Net loan receivables $ — $ — $ 85,108 $ 85,108 $ 81,627 Carrying value approximates fair value (1) Cash and cash equivalents $ 13,306 $ — $ — $ 13,306 $ 13,306 Restricted cash $ 81 $ — $ — $ 81 $ 81 Accrued interest receivables (2) $ — $ 818 $ — $ 818 $ 818 Liabilities Amortized cost Time deposits (3) $ — $ 29,848 $ — $ 29,848 $ 29,752 Long-term borrowings - owed to securitization investors $ — $ 15,851 $ 640 $ 16,491 $ 16,536 Other long-term borrowings — 10,293 — 10,293 9,790 Long-term borrowings $ — $ 26,144 $ 640 $ 26,784 $ 26,326 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 214 $ — $ 214 $ 214 (1) The carrying values of these assets and liabilities approximate fair value due to the nature of their liquidity (i.e., due or payable in less than one year). (2) Accrued interest receivable and payable carrying values are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. (3) Excludes deposits without contractually defined maturities for all periods presented. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2018 | |
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 foreign currency 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 13: Fair Value Measurements for a description of the valuation methodologies of derivatives. Cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statements of financial condition. Collateral amounts recorded in the condensed 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. Certain cash collateral amounts associated with derivative positions that are cleared through an exchange are legally characterized as settlement of the derivative positions. Such collateral amounts are reflected as offsets to the associated derivatives balances recorded in other assets or in accrued expenses and other liabilities, instead of as collateral in other assets or deposits. 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 seven years for securitized debt and 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 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. Amounts reported in AOCI related to derivatives at September 30, 2018 will be reclassified to interest expense as interest payments are accrued on certain of the Company's floating-rate securitized debt and deposits. During the next 12 months, the Company estimates it will reclassify $13 million of pretax benefit 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 long-term borrowings, including securitized debt and bank or other senior notes, and 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 long-term borrowings and deposits relating to the risk being hedged are recorded in interest expense. The changes generally provide substantial offset to one another, with any difference in interest expense. Derivatives Not Designated as Hedges 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. Derivatives Cleared Through an Exchange The legal characterization of cash variation margin payments on derivatives cleared through an exchange are legally considered settlement payments and are accounted for with corresponding derivative positions as one unit of account and not separately as collateral. With settlement payments on derivative positions cleared through this exchange reflected as offsets to the associated derivative asset and liability balances, the fair values of derivative instruments and collateral balances shown are generally reduced. Derivatives Activity The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions): September 30, 2018 December 31, 2017 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 $ 2,450 5 $ 14 $ 1 $ 3,800 $ 2 $ 3 Interest rate swaps—fair value hedge $ 8,130 10 3 — $ 7,333 4 — Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 28 7 — — $ 23 — — Total gross derivative assets/liabilities (2) 17 1 6 3 Less: Collateral held/posted (3) (14 ) (1 ) (1 ) (3 ) Total net derivative assets/liabilities $ 3 $ — $ 5 $ — (1) The foreign exchange forward contracts have notional amounts of EUR 8 million , GBP 9 million , SGD 1 million and INR 464 million as of September 30, 2018 and notional amounts of EUR 7 million , GBP 5 million , SGD 1 million and INR 464 million as of December 31, 2017 . (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 September 30, 2018 , the Company had no outstanding contract. At December 31, 2017 , the Company had one outstanding contract with a notional amount of $54 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 amounts were recorded on the statements of financial condition related to cumulative basis adjustment for fair value hedges (dollars in millions): September 30, 2018 Carrying Amount of Hedged Assets/Liabilities Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of Hedged Assets/Liabilities Long-term borrowings $ 7,914 $ (171 ) The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions): Location and Amount of (Losses) Gains Recognized in Income Interest (Expense) Deposits Long-Term Borrowings Other Income For the Three Months Ended September 30, 2018 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (329 ) $ (229 ) $ 20 The effects of cash flow and fair value hedging Gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ — $ 2 $ — Gains (losses) on fair value hedging relationship Gains on hedged items $ — $ 2 $ — Gains (losses) on interest rate swaps — (14 ) — Total gains (losses) on fair value hedges $ — $ (12 ) $ — The effects of derivatives not designated in hedging relationships Gains on derivatives not designated as hedges $ — $ — $ 1 For the Three Months Ended September 30, 2017 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (218 ) $ (208 ) $ 24 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1 ) $ (2 ) $ — (Losses) gains on fair value hedging relationship (Losses) gains on hedged items $ (1 ) $ (1 ) $ — Gains on interest rate swaps 1 — — Total gains (losses) on fair value hedges $ — $ (1 ) $ — The effects of derivatives not designated in hedging relationships Gains (losses) on derivatives not designated as hedges $ — $ — $ (1 ) The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions): Location and Amount of (Losses) Gains Recognized in Income Interest (Expense) Deposits Long-Term Borrowings Other Income For the Nine Months Ended September 30, 2018 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (878 ) $ (656 ) $ 73 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1 ) $ 3 $ — Gains (losses) on fair value hedging relationship Gains on hedged items $ — $ 61 $ — Gains (losses) on interest rate swaps — (88 ) — Total gains (losses) on fair value hedges $ — $ (27 ) $ — The effects of derivatives not designated in hedging relationships Gains on derivatives not designated as hedges $ — $ — $ 2 For the Nine Months Ended September 30, 2017 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (608 ) $ (604 ) $ 74 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (5 ) $ (6 ) $ — Gains on fair value hedging relationship Gains on hedged items $ — $ 2 $ — Gains on interest rate swaps — 6 — Total gains on fair value hedges $ — $ 8 $ — The effects of derivatives not designated in hedging relationships Gains (losses) on derivatives not designated as hedges $ — $ — $ (2 ) For the impact of the derivative instruments on OCI, see Note 7: Accumulated Other Comprehensive Income. 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 and foreign exchange forward 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 generally not offset against the fair value of these derivatives, but are recorded separately in other assets or deposits. However, certain cash collateral amounts related to positions cleared through an exchange are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities. At September 30, 2018 , Discover Bank’s credit rating met specified thresholds set by its counterparties. However, if its credit rating is reduced below investment grade, Discover Bank would be required to post additional collateral. The amount of additional collateral as of September 30, 2018 would have been $20 million . DFS (Parent Company) had no outstanding derivatives as of September 30, 2018 , and therefore, no collateral was required. The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. |
Segment Disclosures
Segment Disclosures | 9 Months Ended |
Sep. 30, 2018 | |
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 Three Months Ended September 30, 2018 Interest income Credit card loans $ 2,258 $ — $ 2,258 Private student loans 154 — 154 PCI student loans 34 — 34 Personal loans 238 — 238 Other 97 — 97 Total interest income 2,781 — 2,781 Interest expense 558 — 558 Net interest income 2,223 — 2,223 Provision for loan losses 742 — 742 Other income 421 80 501 Other expense 979 36 1,015 Income before income tax expense $ 923 $ 44 $ 967 For the Three Months Ended September 30, 2017 Interest income Credit card loans $ 2,026 $ — $ 2,026 Private student loans 132 — 132 PCI student loans 39 — 39 Personal loans 224 — 224 Other 55 — 55 Total interest income 2,476 — 2,476 Interest expense 426 — 426 Net interest income 2,050 — 2,050 Provision for loan losses 675 (1 ) 674 Other income 401 74 475 Other expense 909 39 948 Income before income tax expense $ 867 $ 36 $ 903 The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the Nine Months Ended September 30, 2018 Interest income Credit card loans $ 6,487 $ — $ 6,487 Private student loans 451 — 451 PCI student loans 106 — 106 Personal loans 693 — 693 Other 249 — 249 Total interest income 7,986 — 7,986 Interest expense 1,534 — 1,534 Net interest income 6,452 — 6,452 Provision for loan losses 2,235 — 2,235 Other income 1,213 237 1,450 Other expense 2,859 108 2,967 Income before income tax expense $ 2,571 $ 129 $ 2,700 For the Nine Months Ended September 30, 2017 Interest income Credit card loans $ 5,818 $ — $ 5,818 Private student loans 383 — 383 PCI student loans 121 — 121 Personal loans 629 — 629 Other 141 — 141 Total interest income 7,092 — 7,092 Interest expense 1,212 — 1,212 Net interest income 5,880 — 5,880 Provision for loan losses 1,908 (8 ) 1,900 Other income 1,184 219 1,403 Other expense 2,634 111 2,745 Income before income tax expense $ 2,522 $ 116 $ 2,638 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), generally applies to the sales of any good or service for which no other specific accounting guidance is provided. ASC 606 defines 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. The Company’s revenue that is subject to this model includes discount and interchange, protection products fees, transaction processing revenue, and amounts classified as other income. The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions): Direct Banking Payment Services Total For the Three Months Ended September 30, 2018 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 266 $ 14 $ 280 Protection products revenue 51 — 51 Transaction processing revenue — 47 47 Other income 1 19 20 Total other income subject to ASC 606 (2) 318 80 398 Other income not subject to ASC 606 Loan fee income 103 — 103 Total other income not subject to ASC 606 103 — 103 Total other income by operating segment $ 421 $ 80 $ 501 For the Three Months Ended September 30, 2017 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 246 $ 12 $ 258 Protection products revenue 55 — 55 Transaction processing revenue — 43 43 Other income 2 19 21 Total other income subject to ASC 606 (2) 303 74 377 Other income not subject to ASC 606 Loan fee income 95 — 95 Other income 3 — 3 Total other income not subject to ASC 606 98 — 98 Total other income by operating segment $ 401 $ 74 $ 475 The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions): Direct Banking Payment Services Total For the Nine Months Ended September 30, 2018 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 758 $ 39 $ 797 Protection products revenue 154 — 154 Transaction processing revenue — 132 132 Other income 7 66 73 Total other income subject to ASC 606 (2) 919 237 1,156 Other income not subject to ASC 606 Loan fee income 294 — 294 Total other income not subject to ASC 606 294 — 294 Total other income by operating segment $ 1,213 $ 237 $ 1,450 For the Nine Months Ended September 30, 2017 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 737 $ 32 $ 769 Protection products revenue 169 — 169 Transaction processing revenue — 124 124 Other income 8 63 71 Total other income subject to ASC 606 (2) 914 219 1,133 Other income not subject to ASC 606 Loan fee income 267 — 267 Other income 3 — 3 Total other income not subject to ASC 606 270 — 270 Total other income by operating segment $ 1,184 $ 219 $ 1,403 (1) Net of rewards, including Cashback Bonus rewards, of $473 million and $417 million for the three months ended September 30, 2018 and 2017 , respectively, and $1.3 billion and $1.2 billion for the nine months ended September 30, 2018 and 2017 , respectively. (2) Excludes $1 million and $2 million of deposit product fees that are reported within net interest income for the three and nine months ended September 30, 2018 , respectively, and $1 million for the nine months ended September 30, 2017 . Deposit product fees were immaterial for the three months ended September 30, 2017 . Discount and Interchange Revenue The Company earns discount revenue from fees charged to merchants with whom it has entered into card acceptance agreements for processing credit card purchase transactions. The Company earns acquirer interchange revenue primarily from merchant acquirers on all Discover Network card transactions and certain Diners Club transactions made by credit card customers at merchants with whom merchant acquirers have entered into card acceptance agreements for processing credit card purchase transactions. These card acceptance arrangements generally renew automatically and do not have fixed durations. Under these agreements, the Company stands ready to process payment transactions as and when each is presented to it. The Company earns discount, interchange and similar fees only if and when transactions are processed. Contractually defined per-transaction fee amounts typically apply to each type of transaction processed and are recognized as revenue at the time each transaction is captured for settlement. These fees are typically collected by the Company as part of the process of settling transactions daily with merchants and acquirers and are fully earned at the time settlement is made. The Company pays issuer interchange to card-issuing entities that have entered into contractual arrangements to issue cards on the Discover Network and on certain transactions on the Diners Club network. This cost is contractually established and is based on the card-issuing organization’s transaction volume. The Company classifies this cost as a reduction of discount and interchange revenue. Costs of cardholder reward arrangements, including the Cashback Bonus reward program, are classified as reductions of discount and interchange revenue pursuant to guidance under ASC 606 governing consideration payable to a customer. For both issuer interchange and cardholder rewards, the Company accrues the cost at the time each underlying card transaction is captured for settlement. Protection Products Revenue The Company earns revenue related to fees received for marketing ancillary products and services, including payment protection and identity theft protection services, to its credit card customers. A portion of this revenue comprises amounts earned for arranging for the delivery of products offered by third-party service providers. The amount of revenue recorded is generally based on either a percentage of a customer’s outstanding balance or a flat fee, in either case assessed monthly, and is recognized as earned. These contracts are month-to-month arrangements that are cancellable at any time. The Company recognizes each monthly fee in the period to which the service or coverage relates. Transaction Processing Revenue Transaction processing revenue represents switch fees charged to financial institutions and merchants under network participation agreements for processing ATM, debit and point-of-sale transactions over the PULSE network, as well as various participation and membership fees. Network participation agreements generally renew automatically and do not have fixed durations, although the Company does enter into fixed-term pricing or incentive arrangements with certain network participants. The impact of such incentives is not material to the Company’s consolidated statements of income. Similar to discount and interchange fees, switch fees are contractually defined per-transaction fee amounts and are assessed and recognized as revenue at the time each transaction is captured for settlement. These fees are typically collected by the Company as part of the process of settling transactions daily with network participants. Membership and other participation fees are recognized over the periods to which each fee relates. Other Income Other income includes sales-based royalty revenues earned by Diners Club, merchant fees, certain payments from merchants related to reward programs, revenues from network partners and other miscellaneous revenue items. Sales-based royalty revenues are recognized as the related sales are reported by Diners franchisees. All remaining items of other income are recognized as the related performance obligations are satisfied. Future Revenue Associated with Customer Contracts For contracts under which the Company processes payment card transactions, the Company has the right to assess fees for services performed and to collect those fees through the settlement process. The Company generates essentially all of its discount and interchange revenue and transaction processing revenue, as well as some revenue reported as other income, through such contracts. There is no specified quantity of service promised in these contracts as the number of payment transactions is dependent upon cardholder behavior, which is outside the control of the Company and its network customers (i.e., merchants, acquirers, issuers, and other network participants). As noted above, these contracts are typically without fixed durations and renew automatically. For these reasons, the Company does not make or disclose an estimate of revenue associated with performance obligations attributable to the remaining terms of these contracts. Future revenue associated with the Company’s sales-based royalty revenues earned from Diners Club licensees is similarly variable and open-ended, and therefore the Company does not make or disclose an estimate of royalties associated with performance obligations attributable to the remaining terms of the licensing and royalty arrangements. Because of the nature of the services and the manner of collection associated with the majority of the Company's revenue from contracts with customers, material receivables or deferred revenues are not generated. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated events and transactions that have occurred subsequent to September 30, 2018 and determined that there were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements. |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal, recurring nature. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Investment Securities | The Company’s investment securities consist of the following (dollars in millions): September 30, December 31, U.S. Treasury securities (1) $ 981 $ 672 States and political subdivisions of states — 1 Residential mortgage-backed securities - Agency (2) 820 895 Total investment securities $ 1,801 $ 1,568 (1) Includes $35 million and $48 million of U.S. Treasury securities pledged as swap collateral as of September 30, 2018 and December 31, 2017 , 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 September 30, 2018 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 984 $ — $ (3 ) $ 981 Residential mortgage-backed securities - Agency 597 — (19 ) 578 Total available-for-sale investment securities $ 1,581 $ — $ (22 ) $ 1,559 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 242 $ — $ (5 ) $ 237 Total held-to-maturity investment securities $ 242 $ — $ (5 ) $ 237 At December 31, 2017 Available-for-Sale Investment Securities (1) U.S. Treasury securities $ 675 $ — $ (3 ) $ 672 Residential mortgage-backed securities - Agency 728 1 (6 ) 723 Total available-for-sale investment securities $ 1,403 $ 1 $ (9 ) $ 1,395 Held-to-Maturity Investment Securities (2) States and political subdivisions of states $ 1 $ — $ — $ 1 Residential mortgage-backed securities - Agency (3) 172 1 (1 ) 172 Total held-to-maturity investment securities $ 173 $ 1 $ (1 ) $ 173 (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. |
Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months | The following table provides information about investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions): Number of Securities in a Loss Position Less than 12 months More than 12 months Fair Value Unrealized Losses Fair Value Unrealized Losses At September 30, 2018 Available-for-Sale Investment Securities U.S. Treasury securities 8 $ 981 $ (3 ) $ — $ — Residential mortgage-backed securities - Agency 31 $ 289 $ (8 ) $ 288 $ (11 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 102 $ 145 $ (2 ) $ 66 $ (3 ) At December 31, 2017 Available-for-Sale Investment Securities U.S. Treasury securities 1 $ — $ — $ 672 $ (3 ) Residential mortgage-backed securities - Agency 27 $ 457 $ (3 ) $ 132 $ (3 ) Held-to-Maturity Investment Securities Residential mortgage-backed securities - Agency 45 $ 56 $ — $ 38 $ (1 ) |
Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities | Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions): At September 30, 2018 One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total Available-for-Sale Investment Securities—Amortized Cost U.S. Treasury securities $ — $ 984 $ — $ — $ 984 Residential mortgage-backed securities - Agency (1) — 101 472 24 597 Total available-for-sale investment securities $ — $ 1,085 $ 472 $ 24 $ 1,581 Held-to-Maturity Investment Securities—Amortized Cost Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 242 $ 242 Total held-to-maturity investment securities $ — $ — $ — $ 242 $ 242 Available-for-Sale Investment Securities—Fair Values U.S. Treasury securities $ — $ 981 $ — $ — $ 981 Residential mortgage-backed securities - Agency (1) — 99 456 23 578 Total available-for-sale investment securities $ — $ 1,080 $ 456 $ 23 $ 1,559 Held-to-Maturity Investment Securities—Fair Values Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 237 $ 237 Total held-to-maturity investment securities $ — $ — $ — $ 237 $ 237 (1) Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. |
Loan Receivables (Tables)
Loan Receivables (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Schedule of Loan Receivables | The Company's classes of receivables within the three portfolio segments are depicted in the following table (dollars in millions): September 30, December 31, Credit card loans (1) $ 69,253 $ 67,291 Other loans Personal loans 7,545 7,374 Private student loans 7,668 7,076 Other 693 423 Total other loans 15,906 14,873 PCI loans (2) 1,735 2,084 Total loan receivables 86,894 84,248 Allowance for loan losses (2,927 ) (2,621 ) Net loan receivables $ 83,967 $ 81,627 (1) Amounts include carrying values of $21.8 billion and $21.2 billion in underlying investors’ interest in trust debt at September 30, 2018 and December 31, 2017 , respectively, and $10.4 billion and $9.9 billion in seller's interest at September 30, 2018 and December 31, 2017 , respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. (2) Amounts include carrying values of $380 million and $762 million in loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2018 and December 31, 2017 , respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. |
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 September 30, 2018 Credit card loans (2) $ 831 $ 777 $ 1,608 $ 706 $ 232 Other loans Personal loans (3) 84 34 118 32 12 Private student loans (excluding PCI) (4) 123 41 164 40 9 Other 2 2 4 — 22 Total other loans (excluding PCI) 209 77 286 72 43 Total loan receivables (excluding PCI) $ 1,040 $ 854 $ 1,894 $ 778 $ 275 At December 31, 2017 Credit card loans (2) $ 781 $ 751 $ 1,532 $ 693 $ 203 Other loans Personal loans (3) 73 30 103 28 10 Private student loans (excluding PCI) (4) 134 33 167 33 2 Other 3 1 4 — 18 Total other loans (excluding PCI) 210 64 274 61 30 Total loan receivables (excluding PCI) $ 991 $ 815 $ 1,806 $ 754 $ 233 (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 $9 million for the three months ended September 30, 2018 and 2017 and $28 million and $26 million for the nine months ended September 30, 2018 and 2017 , 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 $93 million and $72 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. (3) Personal loans that are 90 or more days delinquent and accruing interest include $6 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. (4) Private student loans that are 90 or more days delinquent and accruing interest include $7 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017 , respectively. |
Schedule of Net Charge-offs | Information related to the net charge-offs in the Company's loan portfolio is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions): For the Three Months Ended September 30, 2018 2017 Net Net Charge-off (1) Net Net Charge-off (1) Credit card loans $ 543 3.14 % $ 439 2.80 % Other loans Personal loans 77 4.09 % 58 3.19 % Private student loans (excluding PCI) 22 1.19 % 30 1.52 % Total other loans 99 2.54 % 88 2.33 % Net charge-offs (excluding PCI) $ 642 3.03 % $ 527 2.71 % Net charge-offs (including PCI) $ 642 2.97 % $ 527 2.63 % For the Nine Months Ended September 30, 2018 2017 Net Dollars Net Charge-off (1) Net Dollars Net Charge-off (1) Credit card loans $ 1,638 3.27 % $ 1,306 2.86 % Other loans Personal loans 222 4.03 % 163 3.18 % Private student loans (excluding PCI) 65 1.17 % 64 1.17 % Other 1 0.13 % 3 1.09 % Total other loans 288 2.52 % 230 2.16 % Net charge-offs (excluding PCI) $ 1,926 3.13 % $ 1,536 2.73 % Net charge-offs (including PCI) $ 1,926 3.06 % $ 1,536 2.65 % (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 660 and Above Less than 660 or No Score At September 30, 2018 Credit card loans 81 % 19 % Personal loans 94 % 6 % Private student loans (excluding PCI) (1) 95 % 5 % At December 31, 2017 Credit card loans 82 % 18 % Personal loans 95 % 5 % Private student loans (excluding PCI) (1) 95 % 5 % (1) PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." |
Schedule of Changes in the Allowance for Loan Losses | The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): For the Three Months Ended September 30, 2018 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 2,334 $ 313 $ 170 $ 11 $ 2,828 Additions Provision for loan losses 633 87 22 — 742 Deductions Charge-offs (674 ) (86 ) (25 ) — (785 ) Recoveries 131 9 3 — 143 Net charge-offs (543 ) (77 ) (22 ) — (642 ) Other (2) — — (1 ) — (1 ) Balance at end of period $ 2,424 $ 323 $ 169 $ 11 $ 2,927 For the Three Months Ended September 30, 2017 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,980 $ 235 $ 159 $ 10 $ 2,384 Additions Provision for loan losses 550 91 34 (1 ) 674 Deductions Charge-offs (555 ) (64 ) (32 ) — (651 ) Recoveries 116 6 2 — 124 Net charge-offs (439 ) (58 ) (30 ) — (527 ) Balance at end of period $ 2,091 $ 268 $ 163 $ 9 $ 2,531 (1) Includes both PCI and non-PCI private student loans. (2) Net change in reserves on PCI pools having no remaining non-accretable difference. The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): For the Nine Months Ended September 30, 2018 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 2,147 $ 301 $ 162 $ 11 $ 2,621 Additions Provision for loan losses 1,915 244 75 1 2,235 Deductions Charge-offs (2,021 ) (247 ) (74 ) (1 ) (2,343 ) Recoveries 383 25 9 — 417 Net charge-offs (1,638 ) (222 ) (65 ) (1 ) (1,926 ) Other (2) — — (3 ) — (3 ) Balance at end of period $ 2,424 $ 323 $ 169 $ 11 $ 2,927 For the Nine Months Ended September 30, 2017 Credit Card Personal Loans Student Loans (1) Other Total Balance at beginning of period $ 1,790 $ 200 $ 158 $ 19 $ 2,167 Additions Provision for loan losses 1,607 231 69 (7 ) 1,900 Deductions Charge-offs (1,651 ) (182 ) (71 ) (3 ) (1,907 ) Recoveries 345 19 7 — 371 Net charge-offs (1,306 ) (163 ) (64 ) (3 ) (1,536 ) Balance at end of period $ 2,091 $ 268 $ 163 $ 9 $ 2,531 (1) Includes both PCI and non-PCI private student loans. (2) Net change in reserves on PCI pools having no remaining non-accretable difference. |
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 Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 109 $ 87 $ 328 $ 258 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 26 $ 20 $ 81 $ 65 |
Schedule of Allowance for Loan Losses and Recorded Investment in its Loan Portfolio by Impairment Methodology | The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio by impairment methodology (dollars in millions): Credit Card Personal Loans Student Loans (1) Other Loans Total At September 30, 2018 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 2,154 $ 282 $ 121 $ 4 $ 2,561 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 270 41 22 7 340 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 26 — 26 Total allowance for loan losses $ 2,424 $ 323 $ 169 $ 11 $ 2,927 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 67,316 $ 7,407 $ 7,498 $ 637 $ 82,858 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,937 138 170 56 2,301 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 1,735 — 1,735 Total recorded investment $ 69,253 $ 7,545 $ 9,403 $ 693 $ 86,894 At December 31, 2017 Allowance for loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 1,921 $ 269 $ 112 $ 4 $ 2,306 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 226 32 21 7 286 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 29 — 29 Total allowance for loan losses $ 2,147 $ 301 $ 162 $ 11 $ 2,621 Recorded investment in loans evaluated for impairment as Collectively evaluated for impairment in accordance with ASC 450-20 $ 65,975 $ 7,263 $ 6,939 $ 370 $ 80,547 Evaluated for impairment in accordance with ASC 310-10-35 (2)(3) 1,316 111 137 53 1,617 Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 — — 2,084 — 2,084 Total recorded investment $ 67,291 $ 7,374 $ 9,160 $ 423 $ 84,248 (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 TDRs. Other loans are individually evaluated for impairment and generally do not represent TDRs. (3) The unpaid principal balance of credit card loans was $1.7 billion and $1.1 billion at September 30, 2018 and December 31, 2017 , respectively. The unpaid principal balance of personal loans was $138 million and $109 million at September 30, 2018 and December 31, 2017 , respectively. The unpaid principal balance of student loans was $170 million and $135 million at September 30, 2018 and December 31, 2017 , respectively. All loans accounted for as TDRs have a related allowance for loan losses. |
Schedule of Troubled Debt Restructurings | Additional information about modified loans classified as TDRs is shown below (dollars in millions): Average recorded investment in loans Interest income recognized during period loans were impaired (1) Gross interest income that would have been recorded with original terms (2) For the Three Months Ended September 30, 2018 Credit card loans (3) $ 1,815 $ 48 $ 37 Personal loans $ 134 $ 4 $ 1 Private student loans $ 166 $ 3 $ — For the Three Months Ended September 30, 2017 Credit card loans (3) $ 1,165 $ 28 $ 22 Personal loans $ 96 $ 2 $ 1 Private student loans $ 120 $ 3 $ — For the Nine Months Ended September 30, 2018 Credit card loans (3) $ 1,612 $ 123 $ 95 Personal loans $ 125 $ 10 $ 4 Private student loans $ 152 $ 9 $ — For the Nine Months Ended September 30, 2017 Credit card loans (3) $ 1,137 $ 78 $ 64 Personal loans $ 90 $ 7 $ 3 Private student loans $ 107 $ 6 $ — (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 TDRs, but are no longer enrolled in a TDR program due to noncompliance with the terms of the modification or due to successful completion of a program after which charging privileges may be reinstated based on customer-level evaluation. The average balance of credit card loans that were no longer enrolled in a TDR program was $427 million and $345 million , respectively, for the three months ended September 30, 2018 and 2017 , and $404 million and $327 million , respectively, for the nine months ended September 30, 2018 and 2017 . |
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 Three Months Ended September 30, 2018 2017 Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 69,127 $ 444 28,582 $ 164 Personal loans 1,903 $ 27 1,580 $ 20 Private student loans 935 $ 17 965 $ 17 For the Nine Months Ended September 30, 2018 2017 Number of Accounts Balances Number of Accounts Balances Accounts that entered a loan modification program during the period Credit card loans 185,185 $ 1,187 85,553 $ 502 Personal loans 5,867 $ 79 4,573 $ 56 Private student loans 2,887 $ 54 2,985 $ 52 |
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 TDR during the 15 months preceding the end of each period (dollars in millions): For the Three Months Ended September 30, 2018 2017 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) 10,535 $ 60 8,955 $ 48 Personal loans (2) 847 $ 11 463 $ 6 Private student loans (3) 278 $ 5 298 $ 5 For the Nine Months Ended September 30, 2018 2017 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) 28,319 $ 156 25,170 $ 135 Personal loans (2) 2,059 $ 27 1,296 $ 16 Private student loans (3) 753 $ 13 667 $ 11 (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 Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Balance at beginning of period $ 608 $ 725 $ 669 $ 796 Accretion into interest income (34 ) (40 ) (106 ) (121 ) Other changes in expected cash flows 1 21 12 31 Balance at end of period $ 575 $ 706 $ 575 $ 706 |
Credit Card and Student Loan _2
Credit Card and Student Loan Securitization Activities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entities Disclosure [Abstract] | |
Schedule of Restricted Credit Card Securitized Assets [Text Block] | The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions): September 30, December 31, Restricted cash $ 579 $ 26 Investors’ interests held by third-party investors 15,650 16,025 Investors’ interests held by wholly-owned subsidiaries of Discover Bank 6,120 5,133 Seller’s interest 10,354 9,861 Loan receivables (1) 32,124 31,019 Allowance for loan losses allocated to securitized loan receivables (1) (1,125 ) (998 ) Net loan receivables 30,999 30,021 Other 5 5 Carrying value of assets of consolidated variable interest entities $ 31,583 $ 30,052 (1) The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. |
Schedule of Restricted Student Loan Securitized Assets [Text Block] | The carrying values of these restricted assets, which are presented on the Company’s condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions): September 30, December 31, Restricted cash $ 11 $ 55 Student loan receivables (1) 380 762 Carrying value of assets of consolidated variable interest entities $ 391 $ 817 (1) The decrease in student loan receivables from December 31, 2017 to September 30, 2018 is due in part to the repayment of remaining debt associated with one trust. |
Deposits (Tables)
Deposits (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Deposits [Abstract] | |
Schedule of Interest Bearing Deposit Accounts | The following table provides a summary of interest-bearing deposit accounts (dollars in millions): September 30, December 31, Certificates of deposit in amounts less than $100,000 $ 25,502 $ 23,768 Certificates of deposit in amounts $100,000 or greater (1) 6,518 5,984 Savings deposits, including money market deposit accounts 31,014 28,413 Total interest-bearing deposits $ 63,034 $ 58,165 (1) Includes $1.6 billion and $1.4 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of September 30, 2018 and December 31, 2017 , 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): September 30, 2018 Three months or less $ 875 Over three months through six months 947 Over six months through twelve months 2,180 Over twelve months 2,516 Total $ 6,518 |
Schedule of Certificates of Deposit Maturities | The following table summarizes certificates of deposit maturing over the remainder of this year, over each of the next four years, and thereafter (dollars in millions): September 30, 2018 2018 $ 3,111 2019 11,516 2020 6,267 2021 4,580 2022 2,696 Thereafter 3,850 Total $ 32,020 |
Long-Term Borrowings (Tables)
Long-Term Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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): September 30, 2018 December 31, 2017 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1) 2019-2024 1.39%-3.11% 2.06% $ 9,695 $ 8,888 Floating-rate asset-backed securities (2)(3) 2018-2024 2.39%-2.76% 2.59% 5,813 7,038 Total Discover Card Master Trust I and Discover Card Execution Note Trust 15,508 15,926 Floating-rate asset-backed securities (4)(5) 2031 6.25% 6.25% 207 610 Total SLC Private Student Loan Trust 207 610 Total long-term borrowings - owed to securitization investors 15,715 16,536 Discover Financial Services (Parent Company) Fixed-rate senior notes 2019-2027 3.75%-10.25% 4.25% 2,735 2,710 Fixed-rate retail notes 2018-2031 2.85%-4.60% 3.73% 346 302 Discover Bank Fixed-rate senior bank notes (1) 2018-2028 2.60%-4.65% 3.53% 7,007 6,080 Fixed-rate subordinated bank notes 2019-2028 4.68%-8.70% 6.32% 1,195 698 Total long-term borrowings $ 26,998 $ 26,326 (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 14: 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 + 23 to 60 basis points as of September 30, 2018 . (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 14: Derivatives and Hedging Activities. (4) SLC Private Student Loan Trust floating-rate asset-backed securities include an issuance with the following interest rate term: Prime rate + 100 basis points as of September 30, 2018 . (5) Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The date shown represents final maturity date. |
Schedule of Long-Term Borrowings Maturities | The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years, and thereafter (dollars in millions): September 30, 2018 2018 $ 1,549 2019 6,001 2020 4,687 2021 2,459 2022 2,790 Thereafter 9,512 Total $ 26,998 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | Changes in each component of accumulated other comprehensive income (loss) ("AOCI") were as follows (dollars in millions): Unrealized Losses on Available-for-Sale Investment Securities, Net of Tax Gains (Losses) on Cash Flow Hedges, Net of Tax Losses on Pension Plan, Net of Tax AOCI For the Three Months Ended September 30, 2018 Balance at June 30, 2018 $ (14 ) $ 39 $ (187 ) $ (162 ) Net change (2 ) 4 — 2 Balance at September 30, 2018 $ (16 ) $ 43 $ (187 ) $ (160 ) For the Three Months Ended September 30, 2017 Balance at June 30, 2017 $ (2 ) $ (3 ) $ (145 ) $ (150 ) Net change 1 1 — 2 Balance at September 30, 2017 $ (1 ) $ (2 ) $ (145 ) $ (148 ) For the Nine Months Ended September 30, 2018 Balance at December 31, 2017 $ (5 ) $ 10 $ (157 ) $ (152 ) Cumulative effect of ASU No. 2018-02 adoption (1) (1 ) 3 (31 ) (29 ) Net change (10 ) 30 1 21 Balance at September 30, 2018 $ (16 ) $ 43 $ (187 ) $ (160 ) For the Nine Months Ended September 30, 2017 Balance at December 31, 2016 $ (3 ) $ (13 ) $ (145 ) $ (161 ) Net change 2 11 — 13 Balance at September 30, 2017 $ (1 ) $ (2 ) $ (145 ) $ (148 ) (1) Represents the adjustment to AOCI as a result of adoption of ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the second quarter of 2018. |
Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI | The following table presents each component of other comprehensive income (loss) ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): Before Tax Tax Benefit (Expense) Net of Tax For the Three Months Ended September 30, 2018 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (4 ) $ 2 $ (2 ) Net change $ (4 ) $ 2 $ (2 ) Cash Flow Hedges Net unrealized gains arising during the period $ 8 $ (2 ) $ 6 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ 6 $ (2 ) $ 4 For the Three Months Ended September 30, 2017 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 1 $ — $ 1 Net change $ 1 $ — $ 1 Cash Flow Hedges Net unrealized losses arising during the period $ (1 ) $ 1 $ — Amounts reclassified from AOCI 3 (2 ) 1 Net change $ 2 $ (1 ) $ 1 For the Nine Months Ended September 30, 2018 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (14 ) $ 4 $ (10 ) Net change $ (14 ) $ 4 $ (10 ) Cash Flow Hedges Net unrealized gains arising during the period $ 42 $ (10 ) $ 32 Amounts reclassified from AOCI (2 ) — (2 ) Net change $ 40 $ (10 ) $ 30 Pension Plan Unrealized gains arising during the period $ 1 $ — $ 1 Net change $ 1 $ — $ 1 For the Nine Months Ended September 30, 2017 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 3 $ (1 ) $ 2 Net change $ 3 $ (1 ) $ 2 Cash Flow Hedges Net unrealized gains arising during the period $ 8 $ (3 ) $ 5 Amounts reclassified from AOCI 11 (5 ) 6 Net change $ 19 $ (8 ) $ 11 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Calculation | The following table presents the calculation of the Company's effective income tax rate (dollars in millions, except effective income tax rate): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Income before income tax expense $ 967 $ 903 $ 2,700 $ 2,638 Income tax expense $ 247 $ 301 $ 645 $ 926 Effective income tax rate 25.5 % 33.3 % 23.9 % 35.1 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted EPS | The following table presents the calculation of basic and diluted earnings per share ("EPS") (in millions, except per share amounts): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Numerator Net income $ 720 $ 602 $ 2,055 $ 1,712 Preferred stock dividends (15 ) (9 ) (31 ) (28 ) Net income available to common stockholders 705 593 2,024 1,684 Income allocated to participating securities (6 ) (4 ) (16 ) (12 ) Net income allocated to common stockholders $ 699 $ 589 $ 2,008 $ 1,672 Denominator Weighted-average shares of common stock outstanding 341 371 348 379 Effect of dilutive common stock equivalents 1 — — — Weighted-average shares of common stock outstanding and common stock equivalents 342 371 348 379 Basic earnings per common share $ 2.05 $ 1.59 $ 5.77 $ 4.42 Diluted earnings per common share $ 2.05 $ 1.59 $ 5.77 $ 4.42 |
Capital Adequacy (Tables)
Capital Adequacy (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 (1) Amount Ratio Amount (2) Ratio (2) September 30, 2018 Total capital (to risk-weighted assets) Discover Financial Services $ 12,393 13.9 % $ 7,145 ≥8.0% $ 8,931 ≥10.0% Discover Bank $ 12,991 14.7 % $ 7,068 ≥8.0% $ 8,834 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 10,785 12.1 % $ 5,358 ≥6.0% $ 5,358 ≥6.0% Discover Bank $ 10,728 12.1 % $ 5,301 ≥6.0% $ 7,068 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 10,785 10.4 % $ 4,166 ≥4.0% N/A N/A Discover Bank $ 10,728 10.4 % $ 4,124 ≥4.0% $ 5,155 ≥5.0% CET1 capital (to risk-weighted assets) Discover Financial Services $ 10,222 11.4 % $ 4,019 ≥4.5% N/A N/A Discover Bank $ 10,728 12.1 % $ 3,975 ≥4.5% $ 5,742 ≥6.5% December 31, 2017 Total capital (to risk-weighted assets) Discover Financial Services $ 11,952 13.8 % $ 6,946 ≥8.0% $ 8,683 ≥10.0% Discover Bank $ 12,364 14.4 % $ 6,872 ≥8.0% $ 8,589 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 10,677 12.3 % $ 5,210 ≥6.0% $ 5,210 ≥6.0% Discover Bank $ 10,533 12.3 % $ 5,154 ≥6.0% $ 6,872 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 10,677 10.8 % $ 3,949 ≥4.0% N/A N/A Discover Bank $ 10,533 10.8 % $ 3,912 ≥4.0% $ 4,890 ≥5.0% CET1 capital (to risk-weighted assets) Discover Financial Services $ 10,114 11.6 % $ 3,907 ≥4.5% N/A N/A Discover Bank $ 10,533 12.3 % $ 3,865 ≥4.5% $ 5,583 ≥6.5% (1) Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions. (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 an_2
Commitments, Contingencies and Guarantees (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 2029. Future minimum payments on capital leases were not material at September 30, 2018. The following table shows future minimum payments on non-cancelable operating leases with original terms in excess of one year (dollars in millions): September 30, 2018 2018 $ 3 2019 13 2020 11 2021 10 2022 8 Thereafter 41 Total minimum lease payments $ 86 |
Merchant Chargeback Guarantees [Member] | |
Guarantor Obligations [Line Items] | |
Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee | The following table summarizes certain information regarding merchant chargeback guarantees (in millions): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Aggregate sales transaction volume (1) $ 40,806 $ 36,480 $ 116,800 $ 105,019 (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 (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Assets Fair value - OCI U.S. Treasury securities $ 981 $ — $ — $ 981 Residential mortgage-backed securities - Agency — 578 — 578 Available-for-sale investment securities $ 981 $ 578 $ — $ 1,559 Derivative financial instruments - cash flow hedges (1) $ — $ 14 $ — $ 14 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 3 $ — $ 3 Liabilities Fair value - OCI Derivative financial instruments - cash flow hedges (1) $ — $ 1 $ — $ 1 Balance at December 31, 2017 Assets Fair value - OCI U.S. Treasury securities $ 672 $ — $ — $ 672 Residential mortgage-backed securities - Agency — 723 — 723 Available-for-sale investment securities $ 672 $ 723 $ — $ 1,395 Derivative financial instruments - cash flow hedges (1) $ — $ 2 $ — $ 2 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 4 $ — $ 4 Liabilities Fair value - OCI Derivative financial instruments - cash flow hedges (1) $ — $ 3 $ — $ 3 (1) Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. |
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): Balance at September 30, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 237 $ — $ 237 $ 242 Held-to-maturity investment securities $ — $ 237 $ — $ 237 $ 242 Net loan receivables $ — $ — $ 87,372 $ 87,372 $ 83,967 Carrying value approximates fair value (1) Cash and cash equivalents $ 16,019 $ — $ — $ 16,019 $ 16,019 Restricted cash $ 590 $ — $ — $ 590 $ 590 Accrued interest receivables (2) $ — $ 907 $ — $ 907 $ 907 Liabilities Amortized cost Time deposits (3) $ — $ 31,849 $ — $ 31,849 $ 32,020 Long-term borrowings - owed to securitization investors $ — $ 15,500 $ 226 $ 15,726 $ 15,715 Other long-term borrowings — 11,400 — 11,400 11,283 Long-term borrowings $ — $ 26,900 $ 226 $ 27,126 $ 26,998 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 236 $ — $ 236 $ 236 (1) The carrying values of these assets and liabilities approximate fair value due to the nature of their liquidity (i.e., due or payable in less than one year). (2) Accrued interest receivable and payable carrying values are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. (3) Excludes deposits without contractually defined maturities for all periods presented. 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): Balance at December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Carrying Value Assets Amortized cost States and political subdivisions of states $ — $ 1 $ — $ 1 $ 1 Residential mortgage-backed securities - Agency — 172 — 172 172 Held-to-maturity investment securities $ — $ 173 $ — $ 173 $ 173 Net loan receivables $ — $ — $ 85,108 $ 85,108 $ 81,627 Carrying value approximates fair value (1) Cash and cash equivalents $ 13,306 $ — $ — $ 13,306 $ 13,306 Restricted cash $ 81 $ — $ — $ 81 $ 81 Accrued interest receivables (2) $ — $ 818 $ — $ 818 $ 818 Liabilities Amortized cost Time deposits (3) $ — $ 29,848 $ — $ 29,848 $ 29,752 Long-term borrowings - owed to securitization investors $ — $ 15,851 $ 640 $ 16,491 $ 16,536 Other long-term borrowings — 10,293 — 10,293 9,790 Long-term borrowings $ — $ 26,144 $ 640 $ 26,784 $ 26,326 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 214 $ — $ 214 $ 214 (1) The carrying values of these assets and liabilities approximate fair value due to the nature of their liquidity (i.e., due or payable in less than one year). (2) Accrued interest receivable and payable carrying values are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. (3) Excludes deposits without contractually defined maturities for all periods presented. |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances | The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions): September 30, 2018 December 31, 2017 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 $ 2,450 5 $ 14 $ 1 $ 3,800 $ 2 $ 3 Interest rate swaps—fair value hedge $ 8,130 10 3 — $ 7,333 4 — Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 28 7 — — $ 23 — — Total gross derivative assets/liabilities (2) 17 1 6 3 Less: Collateral held/posted (3) (14 ) (1 ) (1 ) (3 ) Total net derivative assets/liabilities $ 3 $ — $ 5 $ — (1) The foreign exchange forward contracts have notional amounts of EUR 8 million , GBP 9 million , SGD 1 million and INR 464 million as of September 30, 2018 and notional amounts of EUR 7 million , GBP 5 million , SGD 1 million and INR 464 million as of December 31, 2017 . (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 September 30, 2018 , the Company had no outstanding contract. At December 31, 2017 , the Company had one outstanding contract with a notional amount of $54 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 Hedged Items in Fair Value Hedging Relationship | The following amounts were recorded on the statements of financial condition related to cumulative basis adjustment for fair value hedges (dollars in millions): September 30, 2018 Carrying Amount of Hedged Assets/Liabilities Cumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying Amount of Hedged Assets/Liabilities Long-term borrowings $ 7,914 $ (171 ) |
Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income | The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions): Location and Amount of (Losses) Gains Recognized in Income Interest (Expense) Deposits Long-Term Borrowings Other Income For the Three Months Ended September 30, 2018 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (329 ) $ (229 ) $ 20 The effects of cash flow and fair value hedging Gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ — $ 2 $ — Gains (losses) on fair value hedging relationship Gains on hedged items $ — $ 2 $ — Gains (losses) on interest rate swaps — (14 ) — Total gains (losses) on fair value hedges $ — $ (12 ) $ — The effects of derivatives not designated in hedging relationships Gains on derivatives not designated as hedges $ — $ — $ 1 For the Three Months Ended September 30, 2017 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (218 ) $ (208 ) $ 24 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1 ) $ (2 ) $ — (Losses) gains on fair value hedging relationship (Losses) gains on hedged items $ (1 ) $ (1 ) $ — Gains on interest rate swaps 1 — — Total gains (losses) on fair value hedges $ — $ (1 ) $ — The effects of derivatives not designated in hedging relationships Gains (losses) on derivatives not designated as hedges $ — $ — $ (1 ) The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions): Location and Amount of (Losses) Gains Recognized in Income Interest (Expense) Deposits Long-Term Borrowings Other Income For the Nine Months Ended September 30, 2018 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (878 ) $ (656 ) $ 73 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1 ) $ 3 $ — Gains (losses) on fair value hedging relationship Gains on hedged items $ — $ 61 $ — Gains (losses) on interest rate swaps — (88 ) — Total gains (losses) on fair value hedges $ — $ (27 ) $ — The effects of derivatives not designated in hedging relationships Gains on derivatives not designated as hedges $ — $ — $ 2 For the Nine Months Ended September 30, 2017 Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded $ (608 ) $ (604 ) $ 74 The effects of cash flow and fair value hedging (Losses) gains on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (5 ) $ (6 ) $ — Gains on fair value hedging relationship Gains on hedged items $ — $ 2 $ — Gains on interest rate swaps — 6 — Total gains on fair value hedges $ — $ 8 $ — The effects of derivatives not designated in hedging relationships Gains (losses) on derivatives not designated as hedges $ — $ — $ (2 ) |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Disclosures | The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the Three Months Ended September 30, 2018 Interest income Credit card loans $ 2,258 $ — $ 2,258 Private student loans 154 — 154 PCI student loans 34 — 34 Personal loans 238 — 238 Other 97 — 97 Total interest income 2,781 — 2,781 Interest expense 558 — 558 Net interest income 2,223 — 2,223 Provision for loan losses 742 — 742 Other income 421 80 501 Other expense 979 36 1,015 Income before income tax expense $ 923 $ 44 $ 967 For the Three Months Ended September 30, 2017 Interest income Credit card loans $ 2,026 $ — $ 2,026 Private student loans 132 — 132 PCI student loans 39 — 39 Personal loans 224 — 224 Other 55 — 55 Total interest income 2,476 — 2,476 Interest expense 426 — 426 Net interest income 2,050 — 2,050 Provision for loan losses 675 (1 ) 674 Other income 401 74 475 Other expense 909 39 948 Income before income tax expense $ 867 $ 36 $ 903 The following table presents segment data (dollars in millions): Direct Banking Payment Services Total For the Nine Months Ended September 30, 2018 Interest income Credit card loans $ 6,487 $ — $ 6,487 Private student loans 451 — 451 PCI student loans 106 — 106 Personal loans 693 — 693 Other 249 — 249 Total interest income 7,986 — 7,986 Interest expense 1,534 — 1,534 Net interest income 6,452 — 6,452 Provision for loan losses 2,235 — 2,235 Other income 1,213 237 1,450 Other expense 2,859 108 2,967 Income before income tax expense $ 2,571 $ 129 $ 2,700 For the Nine Months Ended September 30, 2017 Interest income Credit card loans $ 5,818 $ — $ 5,818 Private student loans 383 — 383 PCI student loans 121 — 121 Personal loans 629 — 629 Other 141 — 141 Total interest income 7,092 — 7,092 Interest expense 1,212 — 1,212 Net interest income 5,880 — 5,880 Provision for loan losses 1,908 (8 ) 1,900 Other income 1,184 219 1,403 Other expense 2,634 111 2,745 Income before income tax expense $ 2,522 $ 116 $ 2,638 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue [Table Text Block] | The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions): Direct Banking Payment Services Total For the Three Months Ended September 30, 2018 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 266 $ 14 $ 280 Protection products revenue 51 — 51 Transaction processing revenue — 47 47 Other income 1 19 20 Total other income subject to ASC 606 (2) 318 80 398 Other income not subject to ASC 606 Loan fee income 103 — 103 Total other income not subject to ASC 606 103 — 103 Total other income by operating segment $ 421 $ 80 $ 501 For the Three Months Ended September 30, 2017 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 246 $ 12 $ 258 Protection products revenue 55 — 55 Transaction processing revenue — 43 43 Other income 2 19 21 Total other income subject to ASC 606 (2) 303 74 377 Other income not subject to ASC 606 Loan fee income 95 — 95 Other income 3 — 3 Total other income not subject to ASC 606 98 — 98 Total other income by operating segment $ 401 $ 74 $ 475 The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions): Direct Banking Payment Services Total For the Nine Months Ended September 30, 2018 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 758 $ 39 $ 797 Protection products revenue 154 — 154 Transaction processing revenue — 132 132 Other income 7 66 73 Total other income subject to ASC 606 (2) 919 237 1,156 Other income not subject to ASC 606 Loan fee income 294 — 294 Total other income not subject to ASC 606 294 — 294 Total other income by operating segment $ 1,213 $ 237 $ 1,450 For the Nine Months Ended September 30, 2017 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 737 $ 32 $ 769 Protection products revenue 169 — 169 Transaction processing revenue — 124 124 Other income 8 63 71 Total other income subject to ASC 606 (2) 914 219 1,133 Other income not subject to ASC 606 Loan fee income 267 — 267 Other income 3 — 3 Total other income not subject to ASC 606 270 — 270 Total other income by operating segment $ 1,184 $ 219 $ 1,403 (1) Net of rewards, including Cashback Bonus rewards, of $473 million and $417 million for the three months ended September 30, 2018 and 2017 , respectively, and $1.3 billion and $1.2 billion for the nine months ended September 30, 2018 and 2017 , respectively. (2) Excludes $1 million and $2 million of deposit product fees that are reported within net interest income for the three and nine months ended September 30, 2018 , respectively, and $1 million for the nine months ended September 30, 2017 . Deposit product fees were immaterial for the three months ended September 30, 2017 . |
Background and Basis of Prese_3
Background and Basis of Presentation Background and Basis of Presentation (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments (in number of segments) | 2 |
Investments Investments (Narrat
Investments Investments (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Investment Holdings [Line Items] | |||||
Losses related to other-than-temporary impairments | $ 0 | $ 0 | $ 0 | $ 0 | |
Proceeds from sales of available-for-sale securities | 0 | 0 | 0 | 0 | |
Recognized gains (losses) on available-for-sale securities | 0 | $ 0 | 0 | $ 0 | |
Amortization method qualified affordable housing project investments | 262 | 262 | $ 288 | ||
Qualified affordable housing project investments, commitment | 47 | 47 | 66 | ||
Other Assets [Member] | Community Reinvestment Act [Member] | |||||
Investment Holdings [Line Items] | |||||
Equity method investments | 263 | 263 | 297 | ||
Other Liabilities [Member] | Community Reinvestment Act [Member] | |||||
Investment Holdings [Line Items] | |||||
Loss contingency accrual | $ 47 | $ 47 | $ 66 |
Investments (Schedule of Invest
Investments (Schedule of Investment Securities) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | |
Investment Holdings [Line Items] | |||
Investment securities | $ 1,801 | $ 1,568 | |
U.S. Treasury Securities [Member] | |||
Investment Holdings [Line Items] | |||
Investment securities | [1] | 981 | 672 |
Derivative collateral | 35 | 48 | |
States and Political Subdivisions of States [Member] | |||
Investment Holdings [Line Items] | |||
Investment securities | 0 | 1 | |
Residential Mortgage-Backed Securities - Agency [Member] | |||
Investment Holdings [Line Items] | |||
Investment securities | [2] | $ 820 | $ 895 |
[1] | Includes $35 million and $48 million of U.S. Treasury securities pledged as swap collateral as of September 30, 2018 and December 31, 2017, respectively. | ||
[2] | Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | ||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | $ 1,581 | $ 1,403 | |
Available-for-sale investment securities, gross unrealized gains | [1] | 0 | 1 | |
Available-for-sale investment securities, gross unrealized losses | [1] | (22) | (9) | |
Available-for-sale investment securities, fair value | [1] | 1,559 | 1,395 | |
Held-to-maturity investment securities, amortized cost | [2] | 242 | 173 | |
Held-to-maturity investment securities, gross unrealized gains | [2] | 0 | 1 | |
Held-to-maturity investment securities, gross unrealized losses | [2] | (5) | (1) | |
Held-to-maturity investment securities, fair value | [2] | 237 | 173 | |
U.S. Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | 984 | 675 | |
Available-for-sale investment securities, gross unrealized gains | [1] | 0 | 0 | |
Available-for-sale investment securities, gross unrealized losses | [1] | (3) | (3) | |
Available-for-sale investment securities, fair value | [1] | 981 | 672 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | 597 | [3] | 728 |
Available-for-sale investment securities, gross unrealized gains | [1] | 0 | 1 | |
Available-for-sale investment securities, gross unrealized losses | [1] | (19) | (6) | |
Available-for-sale investment securities, fair value | [1] | 578 | [3] | 723 |
Held-to-maturity investment securities, amortized cost | [2],[4] | 242 | [3] | 172 |
Held-to-maturity investment securities, gross unrealized gains | [2],[4] | 0 | 1 | |
Held-to-maturity investment securities, gross unrealized losses | [2],[4] | (5) | (1) | |
Held-to-maturity investment securities, fair value | [2],[4] | $ 237 | [3] | 172 |
States and Political Subdivisions of States [Member] | ||||
Investment Holdings [Line Items] | ||||
Held-to-maturity investment securities, amortized cost | [2] | 1 | ||
Held-to-maturity investment securities, gross unrealized gains | [2] | 0 | ||
Held-to-maturity investment securities, gross unrealized losses | [2] | 0 | ||
Held-to-maturity investment securities, fair value | [2] | $ 1 | ||
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. | |||
[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 | Sep. 30, 2018USD ($)securities | Dec. 31, 2017USD ($)securities |
U.S. Treasury Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities | 8 | 1 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 981 | $ 0 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | (3) | 0 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, fair value | 0 | 672 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | $ 0 | $ (3) |
Residential Mortgage-Backed Securities - Agency [Member] | ||
Investment Holdings [Line Items] | ||
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities | 31 | 27 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 289 | $ 457 |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | (8) | (3) |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, fair value | 288 | 132 |
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | $ (11) | $ (3) |
Held-to-maturity investment securities, continuous unrealized loss position, number of securities | securities | 102 | 45 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 145 | $ 56 |
Held-to-maturity investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | (2) | 0 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, fair value | 66 | 38 |
Held-to-maturity investment securities, continuous unrealized loss position, more than 12 months, unrealized losses | $ (3) | $ (1) |
Investments (Schedule of Maturi
Investments (Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | ||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | $ 0 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 1,085 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 472 | |||
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 24 | |||
Available-for-sale investment securities, amortized cost | [1] | 1,581 | $ 1,403 | |
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | 0 | |||
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | 0 | |||
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | 242 | |||
Held-to-maturity investment securities, amortized cost | [2] | 242 | 173 | |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 0 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 1,080 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 456 | |||
Available-for-sale investment securities, debt maturities, after ten years, fair value | 23 | |||
Available-for-sale investment securities, fair value | [1] | 1,559 | 1,395 | |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | 0 | |||
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | 0 | |||
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | 0 | |||
Held-to-maturity investment securities, debt maturities, after ten years, fair value | 237 | |||
Held-to-maturity investment securities, fair value | [2] | 237 | 173 | |
U.S. Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | 0 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 984 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 0 | |||
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 0 | |||
Available-for-sale investment securities, amortized cost | [1] | 984 | 675 | |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 0 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 981 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 0 | |||
Available-for-sale investment securities, debt maturities, after ten years, fair value | 0 | |||
Available-for-sale investment securities, fair value | [1] | 981 | 672 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | [3] | 0 | ||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | [3] | 101 | ||
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | [3] | 472 | ||
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | [3] | 24 | ||
Available-for-sale investment securities, amortized cost | [1] | 597 | [3] | 728 |
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost | [3] | 242 | ||
Held-to-maturity investment securities, amortized cost | [2],[4] | 242 | [3] | 172 |
Available-for-sale investment securities, debt maturities, one year or less, fair value | [3] | 0 | ||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | [3] | 99 | ||
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | [3] | 456 | ||
Available-for-sale investment securities, debt maturities, after ten years, fair value | [3] | 23 | ||
Available-for-sale investment securities, fair value | [1] | 578 | [3] | 723 |
Held-to-maturity investment securities, debt maturities, one year or less, fair value | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value | [3] | 0 | ||
Held-to-maturity investment securities, debt maturities, after ten years, fair value | [3] | 237 | ||
Held-to-maturity investment securities, fair value | [2],[4] | $ 237 | [3] | $ 172 |
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Held-to-maturity investment securities are reported at amortized cost. | |||
[3] | Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. | |||
[4] | Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. |
Loan Receivables (Narrative) (D
Loan Receivables (Narrative) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | ||
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 | $ 30 | $ 30 | $ 29 | ||||||
Private student loans in forbearance as a percentage of student loans in repayment and forbearance (in percent) | 0.60% | 0.60% | 0.50% | ||||||
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent) | 34.00% | 37.00% | 35.00% | 37.00% | |||||
Provision for loan losses | $ 742 | $ 674 | $ 2,235 | $ 1,900 | |||||
Allowance for loan losses | $ 2,927 | $ 2,531 | $ 2,927 | $ 2,531 | $ 2,828 | $ 2,621 | $ 2,384 | $ 2,167 | |
Net charge-off rate (in percent) | [1] | 2.97% | 2.63% | 3.06% | 2.65% | ||||
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 | $ 12 | $ 10 | $ 35 | $ 31 | |||||
Provision for loan losses | 633 | 550 | 1,915 | 1,607 | |||||
Allowance for loan losses | $ 2,424 | $ 2,091 | $ 2,424 | $ 2,091 | $ 2,334 | 2,147 | $ 1,980 | $ 1,790 | |
Net charge-off rate (in percent) | [1] | 3.14% | 2.80% | 3.27% | 2.86% | ||||
PCI Student Loans [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Purchased credit-impaired loans outstanding balance | $ 1,800 | $ 1,800 | 2,200 | ||||||
Purchased credit-impaired loans | [2] | 1,735 | 1,735 | 2,084 | |||||
Provision for loan losses | 0 | $ 0 | 0 | $ 0 | |||||
Allowance for loan losses | $ 26 | $ 26 | $ 29 | ||||||
Threshold charge-off period for past due accounts (in days) | 120 days | ||||||||
Net charge-off rate (in percent) | 0.64% | 0.90% | 0.71% | 0.69% | |||||
PCI Student Loans [Member] | 30 or More Days Delinquent [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Delinquency rate (in percent) | 2.97% | 2.97% | 3.24% | ||||||
PCI Student Loans [Member] | 90 or More Days Delinquent [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Delinquency rate (in percent) | 0.79% | 0.79% | 0.93% | ||||||
[1] | Net charge-off rate represents net charge-off dollars (annualized) divided by average loans for the reporting period. | ||||||||
[2] | Amounts include carrying values of $380 million and $762 million in loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2018 and December 31, 2017, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. |
Loan Receivables (Schedule of L
Loan Receivables (Schedule of Loan Receivables) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | $ 86,894 | $ 84,248 | |||||
Allowance for loan losses | (2,927) | $ (2,828) | (2,621) | $ (2,531) | $ (2,384) | $ (2,167) | |
Net loan receivables | 83,967 | 81,627 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 32,504 | 31,781 | |||||
Allowance for loan losses | (1,125) | (998) | |||||
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Credit card loans | [1] | 32,124 | 31,019 | ||||
Allowance for loan losses | [1] | (1,125) | (998) | ||||
Seller’s interest | 10,354 | 9,861 | |||||
Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Purchased credit-impaired loans | [2] | 380 | 762 | ||||
Credit Card Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Credit card loans | [3] | 69,253 | 67,291 | ||||
Allowance for loan losses | (2,424) | (2,334) | (2,147) | (2,091) | (1,980) | (1,790) | |
Credit Card Loans [Member] | Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Investors' interest | 21,800 | 21,200 | |||||
Total Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 15,906 | 14,873 | |||||
Total Other Loans [Member] | Personal Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 7,545 | 7,374 | |||||
Allowance for loan losses | (323) | (313) | (301) | (268) | (235) | (200) | |
Total Other Loans [Member] | Private Student Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 7,668 | 7,076 | |||||
Total Other Loans [Member] | Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 693 | 423 | |||||
Allowance for loan losses | (11) | $ (11) | (11) | $ (9) | $ (10) | $ (19) | |
Purchase Credit-Impaired Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Purchased credit-impaired loans | [4] | 1,735 | 2,084 | ||||
Allowance for loan losses | (26) | (29) | |||||
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 | $ 380 | $ 762 | |||||
[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 decrease in student loan receivables from December 31, 2017 to September 30, 2018 is due in part to the repayment of remaining debt associated with one trust. | ||||||
[3] | Amounts include carrying values of $21.8 billion and $21.2 billion in underlying investors’ interest in trust debt at September 30, 2018 and December 31, 2017, respectively, and $10.4 billion and $9.9 billion in seller's interest at September 30, 2018 and December 31, 2017, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. | ||||||
[4] | Amounts include carrying values of $380 million and $762 million in loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2018 and December 31, 2017, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. |
Loan Receivables (Schedule of D
Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | $ 1,894 | $ 1,894 | $ 1,806 | |||
Loan receivables, 90 or more days delinquent and accruing | 778 | 778 | 754 | |||
Loan receivables, total non-accruing | 275 | 275 | 233 | |||
30-89 Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 1,040 | 1,040 | 991 | |||
90 or More Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 854 | 854 | 815 | |||
Credit Card Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 1,608 | 1,608 | 1,532 | |||
Loan receivables, 90 or more days delinquent and accruing | [1] | 706 | 706 | 693 | ||
Loan receivables, total non-accruing | [2] | 232 | 232 | 203 | ||
Estimated gross interest income that would have been recorded based on original terms | 9 | $ 9 | 28 | $ 26 | ||
Credit Card Loans [Member] | 30-89 Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 831 | 831 | 781 | |||
Credit Card Loans [Member] | 90 or More Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 777 | 777 | 751 | |||
Total Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 286 | 286 | 274 | |||
Loan receivables, 90 or more days delinquent and accruing | 72 | 72 | 61 | |||
Loan receivables, total non-accruing | 43 | 43 | 30 | |||
Total Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 209 | 209 | 210 | |||
Total Other Loans [Member] | 90 or More Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 77 | 77 | 64 | |||
Total Other Loans [Member] | Personal Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 118 | 118 | 103 | |||
Loan receivables, 90 or more days delinquent and accruing | [3] | 32 | 32 | 28 | ||
Loan receivables, total non-accruing | 12 | 12 | 10 | |||
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 84 | 84 | 73 | |||
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 | 34 | 34 | 30 | |||
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 164 | 164 | 167 | |||
Loan receivables, 90 or more days delinquent and accruing | [4] | 40 | 40 | 33 | ||
Loan receivables, total non-accruing | 9 | 9 | 2 | |||
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 | 123 | 123 | 134 | |||
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 | 41 | 41 | 33 | |||
Total Other Loans [Member] | Other Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 4 | 4 | 4 | |||
Loan receivables, 90 or more days delinquent and accruing | 0 | 0 | 0 | |||
Loan receivables, total non-accruing | 22 | 22 | 18 | |||
Total Other Loans [Member] | Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Loan receivables, past due | 2 | 2 | 3 | |||
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 | 2 | 2 | 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 | 93 | 93 | 72 | |||
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 | 6 | 6 | 5 | |||
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 | $ 7 | $ 7 | $ 5 | |||
[1] | Credit card loans that are 90 or more days delinquent and accruing interest include $93 million and $72 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017, 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 $9 million for the three months ended September 30, 2018 and 2017 and $28 million and $26 million for the nine months ended September 30, 2018 and 2017, 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 $6 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017, respectively. | |||||
[4] | Private student loans that are 90 or more days delinquent and accruing interest include $7 million and $5 million of loans accounted for as TDRs at September 30, 2018 and December 31, 2017, respectively. |
Loan Receivables (Schedule of N
Loan Receivables (Schedule of Net Charge-offs) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 642 | $ 527 | $ 1,926 | $ 1,536 | |
Net charge-off rate (in percent) | [1] | 2.97% | 2.63% | 3.06% | 2.65% |
Excluding PCI Loans [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 642 | $ 527 | $ 1,926 | $ 1,536 | |
Net charge-off rate (in percent) | [1] | 3.03% | 2.71% | 3.13% | 2.73% |
Credit Card Loans [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 543 | $ 439 | $ 1,638 | $ 1,306 | |
Net charge-off rate (in percent) | [1] | 3.14% | 2.80% | 3.27% | 2.86% |
Total Other Loans [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 99 | $ 88 | $ 288 | $ 230 | |
Net charge-off rate (in percent) | [1] | 2.54% | 2.33% | 2.52% | 2.16% |
Total Other Loans [Member] | Personal Loans [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 77 | $ 58 | $ 222 | $ 163 | |
Net charge-off rate (in percent) | [1] | 4.09% | 3.19% | 4.03% | 3.18% |
Total Other Loans [Member] | Private Student Loans (Excluding PCI) [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 22 | $ 30 | $ 65 | $ 64 | |
Net charge-off rate (in percent) | [1] | 1.19% | 1.52% | 1.17% | 1.17% |
Total Other Loans [Member] | Other Loans [Member] | |||||
Charge Offs [Line Items] | |||||
Net charge-offs | $ 0 | $ 0 | $ 1 | $ 3 | |
Net charge-off rate (in percent) | [1] | 0.13% | 1.09% | ||
[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) | Sep. 30, 2018 | Dec. 31, 2017 | |
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 | 81.00% | 82.00% | |
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 | 19.00% | 18.00% | |
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 | 94.00% | 95.00% | |
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 | 6.00% | 5.00% | |
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% | 95.00% |
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% | 5.00% |
[1] | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." |
Loan Receivables (Schedule of_2
Loan Receivables (Schedule of Changes in the Allowance for Loan Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance at beginning of period | $ 2,828 | $ 2,384 | $ 2,621 | $ 2,167 | |||
Provision for loan losses | 742 | 674 | 2,235 | 1,900 | |||
Charge-offs | (785) | (651) | (2,343) | (1,907) | |||
Recoveries | 143 | 124 | 417 | 371 | |||
Net charge-offs | (642) | (527) | (1,926) | (1,536) | |||
Other | (1) | (3) | |||||
Balance at end of period | 2,927 | 2,531 | 2,927 | 2,531 | |||
Student Loans [Member] | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance at beginning of period | [1] | 170 | 159 | 162 | [2] | 158 | |
Provision for loan losses | [1] | 22 | 34 | 75 | 69 | ||
Charge-offs | [1] | (25) | (32) | (74) | (71) | ||
Recoveries | [1] | 3 | 2 | 9 | 7 | ||
Net charge-offs | [1] | (22) | (30) | (65) | (64) | ||
Other | [3] | (1) | (3) | ||||
Balance at end of period | [1] | 169 | [2] | 163 | 169 | [2] | 163 |
Credit Card Loans [Member] | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance at beginning of period | 2,334 | 1,980 | 2,147 | 1,790 | |||
Provision for loan losses | 633 | 550 | 1,915 | 1,607 | |||
Charge-offs | (674) | (555) | (2,021) | (1,651) | |||
Recoveries | 131 | 116 | 383 | 345 | |||
Net charge-offs | (543) | (439) | (1,638) | (1,306) | |||
Other | 0 | 0 | |||||
Balance at end of period | 2,424 | 2,091 | 2,424 | 2,091 | |||
Total Other Loans [Member] | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Net charge-offs | (99) | (88) | (288) | (230) | |||
Total Other Loans [Member] | Personal Loans [Member] | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance at beginning of period | 313 | 235 | 301 | 200 | |||
Provision for loan losses | 87 | 91 | 244 | 231 | |||
Charge-offs | (86) | (64) | (247) | (182) | |||
Recoveries | 9 | 6 | 25 | 19 | |||
Net charge-offs | (77) | (58) | (222) | (163) | |||
Other | 0 | 0 | |||||
Balance at end of period | 323 | 268 | 323 | 268 | |||
Total Other Loans [Member] | Other Loans [Member] | |||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance at beginning of period | 11 | 10 | 11 | 19 | |||
Provision for loan losses | 0 | (1) | 1 | (7) | |||
Charge-offs | 0 | 0 | (1) | (3) | |||
Recoveries | 0 | 0 | 0 | 0 | |||
Net charge-offs | 0 | 0 | (1) | (3) | |||
Other | 0 | 0 | |||||
Balance at end of period | $ 11 | $ 9 | $ 11 | $ 9 | |||
[1] | Includes both PCI and non-PCI private student loans. | ||||||
[2] | Includes both PCI and non-PCI private student loans. | ||||||
[3] | Net change in reserves on PCI pools having no remaining non-accretable difference. |
Loan Receivables (Schedule of_3
Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Loans and Leases Receivable Disclosure [Abstract] | ||||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ 109 | $ 87 | $ 328 | $ 258 |
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ 26 | $ 20 | $ 81 | $ 65 |
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 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loan losses, collectively evaluated for impairment in accordance with ASC 450-20 | $ 2,561 | $ 2,306 | |||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 340 | 286 | ||||||
Total allowance for loan losses | 2,927 | $ 2,828 | 2,621 | $ 2,531 | $ 2,384 | $ 2,167 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 82,858 | 80,547 | |||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 2,301 | 1,617 | ||||||
Loan receivables | 86,894 | 84,248 | |||||||
Financial Asset Acquired with Credit Deterioration [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loans losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 26 | 29 | |||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 1,735 | 2,084 | |||||||
Student Loans [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Total allowance for loan losses | [4] | 169 | [3] | 170 | 162 | [3] | 163 | 159 | 158 |
Total recorded investment | [3] | 9,403 | 9,160 | ||||||
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 | 2,154 | 1,921 | |||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 270 | 226 | ||||||
Total allowance for loan losses | 2,424 | 2,334 | 2,147 | 2,091 | 1,980 | 1,790 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 67,316 | 65,975 | |||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 1,937 | 1,316 | ||||||
Total recorded investment | 69,253 | 67,291 | |||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 1,700 | 1,100 | |||||||
Credit Card Loans [Member] | Financial Asset Acquired with Credit Deterioration [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loans 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 | 15,906 | 14,873 | |||||||
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 | 282 | 269 | |||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 41 | 32 | ||||||
Total allowance for loan losses | 323 | 313 | 301 | 268 | 235 | 200 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 7,407 | 7,263 | |||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 138 | 111 | ||||||
Total recorded investment | 7,545 | 7,374 | |||||||
Loan receivables | 7,545 | 7,374 | |||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 138 | 109 | |||||||
Total Other Loans [Member] | Personal Loans [Member] | Financial Asset Acquired with Credit Deterioration [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loans 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 | 121 | 112 | |||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 22 | 21 | ||||||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 7,498 | 6,939 | |||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 170 | 137 | ||||||
Loan receivables | 7,668 | 7,076 | |||||||
Unpaid principal balance of modified loans accounted for as troubled debt restructurings | 170 | 135 | |||||||
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 | 4 | 4 | |||||||
Allowance for loan losses, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 7 | 7 | ||||||
Total allowance for loan losses | 11 | $ 11 | 11 | $ 9 | $ 10 | $ 19 | |||
Recorded investment in loans, collectively evaluated for impairment in accordance with ASC 450-20 | 637 | 370 | |||||||
Recorded investment in loans, evaluated for impairment in accordance with ASC 310-10-35 | [1],[2] | 56 | 53 | ||||||
Total recorded investment | 693 | 423 | |||||||
Loan receivables | 693 | 423 | |||||||
Total Other Loans [Member] | Other Loans [Member] | Financial Asset Acquired with Credit Deterioration [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loans 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 | 26 | 29 | |||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | [5] | 1,735 | 2,084 | ||||||
PCI Student Loans [Member] | Financial Asset Acquired with Credit Deterioration [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Allowance for loans losses, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | 26 | 29 | |||||||
Recorded investment in loans, acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | $ 1,735 | $ 2,084 | |||||||
[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 TDRs. Other loans are individually evaluated for impairment and generally do not represent TDRs. | ||||||||
[2] | The unpaid principal balance of credit card loans was $1.7 billion and $1.1 billion at September 30, 2018 and December 31, 2017, respectively. The unpaid principal balance of personal loans was $138 million and $109 million at September 30, 2018 and December 31, 2017, respectively. The unpaid principal balance of student loans was $170 million and $135 million at September 30, 2018 and December 31, 2017, respectively. All loans accounted for as TDRs 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 carrying values of $380 million and $762 million in loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at September 30, 2018 and December 31, 2017, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information. |
Loan Receivables (Schedule of T
Loan Receivables (Schedule of Troubled Debt Restructurings) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Credit Card Loans [Member] | |||||
Financing Receivable, Modifications [Line Items] | |||||
Average recorded investment in loans | [1] | $ 1,815 | $ 1,165 | $ 1,612 | $ 1,137 |
Interest income recognized during period loans were impaired | [1],[2] | 48 | 28 | 123 | 78 |
Gross interest income that would have been recorded with original terms | [1],[3] | 37 | 22 | 95 | 64 |
Total Other Loans [Member] | Personal Loans [Member] | |||||
Financing Receivable, Modifications [Line Items] | |||||
Average recorded investment in loans | 134 | 96 | 125 | 90 | |
Interest income recognized during period loans were impaired | [2] | 4 | 2 | 10 | 7 |
Gross interest income that would have been recorded with original terms | [3] | 1 | 1 | 4 | 3 |
Total Other Loans [Member] | Private Student Loans [Member] | |||||
Financing Receivable, Modifications [Line Items] | |||||
Average recorded investment in loans | 166 | 120 | 152 | 107 | |
Interest income recognized during period loans were impaired | [2] | 3 | 3 | 9 | 6 |
Gross interest income that would have been recorded with original terms | [3] | 0 | 0 | 0 | 0 |
Loans no longer in a modification program | Credit Card Loans [Member] | |||||
Financing Receivable, Modifications [Line Items] | |||||
Average recorded investment in loans | $ 427 | $ 345 | $ 404 | $ 327 | |
[1] | Includes credit card loans that were modified in TDRs, but are no longer enrolled in a TDR program due to noncompliance with the terms of the modification or due to successful completion of a program after which charging privileges may be reinstated based on customer-level evaluation. The average balance of credit card loans that were no longer enrolled in a TDR program was $427 million and $345 million, respectively, for the three months ended September 30, 2018 and 2017, and $404 million and $327 million, respectively, for the nine months ended September 30, 2018 and 2017. | ||||
[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. |
Loan Receivables (Schedule of_4
Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($)accounts | Sep. 30, 2017USD ($)accounts | Sep. 30, 2018USD ($)accounts | Sep. 30, 2017USD ($)accounts | |
Credit Card Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 69,127 | 28,582 | 185,185 | 85,553 |
Accounts that entered a loan modification program during the period, balances | $ | $ 444 | $ 164 | $ 1,187 | $ 502 |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 1,903 | 1,580 | 5,867 | 4,573 |
Accounts that entered a loan modification program during the period, balances | $ | $ 27 | $ 20 | $ 79 | $ 56 |
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a loan modification program during the period, number of accounts (in accounts) | accounts | 935 | 965 | 2,887 | 2,985 |
Accounts that entered a loan modification program during the period, balances | $ | $ 17 | $ 17 | $ 54 | $ 52 |
Loan Receivables (Schedule of_5
Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)accounts | Sep. 30, 2017USD ($)accounts | Sep. 30, 2018USD ($)accountsmissed_payments | Sep. 30, 2017USD ($)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] | 10,535 | 8,955 | 28,319 | 25,170 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [1],[2] | $ 60 | $ 48 | $ 156 | $ 135 |
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] | 847 | 463 | 2,059 | 1,296 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [1] | $ 11 | $ 6 | $ 27 | $ 16 |
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] | 278 | 298 | 753 | 667 |
Troubled debt restructurings that subsequently defaulted, aggregated outstanding balances upon default | $ | [3] | $ 5 | $ 5 | $ 13 | $ 11 |
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 of_6
Loan Receivables (Schedule of Changes in Accretable Yield for the Acquired Loans) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Accretable yield, balance at beginning of period | $ 608 | $ 725 | $ 669 | $ 796 |
Accretion into interest income | (34) | (40) | (106) | (121) |
Other changes in expected cash flows | 1 | 21 | 12 | 31 |
Accretable yield, balance at end of period | $ 575 | $ 706 | $ 575 | $ 706 |
Credit Card and Student Loan _3
Credit Card and Student Loan Securitization Activities (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2018classestrust | |
Student Loan Securitization Trusts [Member] | |
Variable Interest Entity [Line Items] | |
Number of trusts issuing securities | trust | 1 |
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 |
Credit Card and Student Loan _4
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Variable Interest Entity [Line Items] | |||||||
Restricted cash | $ 590 | $ 81 | $ 1,279 | ||||
Allowance for loan losses allocated to securitized loan receivables | (2,927) | $ (2,828) | (2,621) | $ (2,531) | $ (2,384) | $ (2,167) | |
Other | 2,152 | 2,262 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 590 | 81 | |||||
Allowance for loan losses allocated to securitized loan receivables | (1,125) | (998) | |||||
Other | 5 | 5 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 579 | 26 | |||||
Investors’ interests held by third-party investors | 15,650 | 16,025 | |||||
Investors’ interests held by wholly-owned subsidiaries of Discover Bank | 6,120 | 5,133 | |||||
Seller’s interest | 10,354 | 9,861 | |||||
Loan receivables | [1] | 32,124 | 31,019 | ||||
Allowance for loan losses allocated to securitized loan receivables | [1] | (1,125) | (998) | ||||
Net loan receivables | 30,999 | 30,021 | |||||
Other | 5 | 5 | |||||
Carrying value of assets of consolidated variable interest entities | $ 31,583 | $ 30,052 | |||||
[1] | The Company maintains its allowance for loan losses at an amount sufficient to absorb probable losses inherent in all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company’s balance sheet in accordance with GAAP. |
Credit Card and Student Loan _5
Credit Card and Student Loan Securitization Activities (Schedule of Restricted Student Loan Securitized Assets) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | |
Variable Interest Entity [Line Items] | ||||
Restricted cash | $ 590 | $ 81 | $ 1,279 | |
Variable Interest Entity, Primary Beneficiary [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Restricted cash | 590 | 81 | ||
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Restricted cash | 11 | 55 | ||
Purchased credit-impaired loans | [1] | 380 | 762 | |
Carrying value of assets of consolidated variable interest entities | $ 391 | $ 817 | ||
[1] | The decrease in student loan receivables from December 31, 2017 to September 30, 2018 is due in part to the repayment of remaining debt associated with one trust. |
Deposits (Narrative) (Details)
Deposits (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2018channels | |
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 | Sep. 30, 2018 | Dec. 31, 2017 | |
Deposits [Abstract] | |||
Certificates of deposit in amounts less than $100,000 | $ 25,502 | $ 23,768 | |
Certificates of deposit in amounts $100,000 or greater | [1] | 6,518 | 5,984 |
Savings deposits, including money market deposit accounts | 31,014 | 28,413 | |
Total interest-bearing deposits | 63,034 | 58,165 | |
Certificates of deposit equal to or greater than $250,000 | $ 1,600 | $ 1,400 | |
[1] | Includes $1.6 billion and $1.4 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of September 30, 2018 and December 31, 2017, respectively. |
Deposits (Schedule of $100,000
Deposits (Schedule of $100,000 or More Certificates of Deposit Maturities) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | |
Deposits [Abstract] | |||
Three months or less | $ 875 | ||
Over three months through six months | 947 | ||
Over six months through twelve months | 2,180 | ||
Over twelve months | 2,516 | ||
Total | [1] | $ 6,518 | $ 5,984 |
[1] | Includes $1.6 billion and $1.4 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of September 30, 2018 and December 31, 2017, respectively. |
Deposits (Schedule of Certifica
Deposits (Schedule of Certificates of Deposit Maturities) (Details) $ in Millions | Sep. 30, 2018USD ($) |
Deposits [Abstract] | |
2,018 | $ 3,111 |
2,019 | 11,516 |
2,020 | 6,267 |
2,021 | 4,580 |
2,022 | 2,696 |
Thereafter | 3,850 |
Total | $ 32,020 |
Long-Term Borrowings (Narrative
Long-Term Borrowings (Narrative) (Details) - Discover Card Master Trust I and Discover Card Execution Note Trust [Member] - Securitized Debt [Member] $ in Millions | Sep. 30, 2018USD ($) |
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 | 9 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | |||
Debt Instrument [Line Items] | ||||
Long-term borrowings (in dollars) | $ 26,998 | $ 26,326 | ||
Variable Interest Entity, Primary Beneficiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings (in dollars) | 15,715 | 16,536 | ||
Securitized Debt [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings (in dollars) | 15,715 | 16,536 | ||
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings (in dollars) | $ 15,508 | 15,926 | ||
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 | 2.06% | |||
Long-term borrowings (in dollars) | [1] | $ 9,695 | 8,888 | |
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 | 1.39% | |||
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 | 3.11% | |||
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 | 2.59% | |||
Long-term borrowings (in dollars) | [3] | $ 5,813 | [2] | 7,038 |
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 | 2.39% | |||
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 | 2.76% | |||
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 + 23 to 60 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 | 0.23% | |||
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 | 0.60% | |||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term borrowings (in dollars) | $ 207 | 610 | ||
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 6.25% | |||
Weighted-average interest rate | 6.25% | |||
Long-term borrowings (in dollars) | [4] | $ 207 | [5] | 610 |
Securitized Debt [Member] | SLC Private Student Loan Trust [Member] | Floating Rate Asset Backed Securities Prime Rate Plus 100 Basis Points [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate terms | Prime rate + 100 basis points | |||
Basis spread on variable rate | 1.00% | |||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Weighted-average interest rate | 4.25% | |||
Long-term borrowings (in dollars) | $ 2,735 | 2,710 | ||
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 | 3.73% | |||
Long-term borrowings (in dollars) | $ 346 | 302 | ||
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 | 4.60% | |||
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Weighted-average interest rate | 3.53% | |||
Long-term borrowings (in dollars) | [1] | $ 7,007 | 6,080 | |
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 2.60% | |||
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.65% | |||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Weighted-average interest rate | 6.32% | |||
Long-term borrowings (in dollars) | $ 1,195 | $ 698 | ||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.68% | |||
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 8.70% | |||
[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 14: 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 + 23 to 60 basis points as of September 30, 2018. | |||
[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 14: Derivatives and Hedging Activities. | |||
[4] | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The date shown represents final maturity date. | |||
[5] | SLC Private Student Loan Trust floating-rate asset-backed securities include an issuance with the following interest rate term: Prime rate + 100 basis points as of September 30, 2018. |
Long-Term Borrowings (Schedul_2
Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
2,018 | $ 1,549 | |
2,019 | 6,001 | |
2,020 | 4,687 | |
2,021 | 2,459 | |
2,022 | 2,790 | |
Thereafter | 9,512 | |
Total | $ 26,998 | $ 26,326 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | $ (152) | ||||
Cumulative effect of ASU No. 2018-02 adoption | 0 | ||||
Net change in accumulated other comprehensive income (loss), net of tax | 21 | $ 13 | |||
Accumulated other comprehensive income (loss), net of tax, balance at end of period | $ (160) | (160) | |||
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), net of tax, balance at beginning of period | (14) | $ (2) | (5) | (3) | |
Cumulative effect of ASU No. 2018-02 adoption | [1] | (1) | |||
Net change in accumulated other comprehensive income (loss), net of tax | (2) | 1 | (10) | 2 | |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | (16) | (1) | (16) | (1) | |
Gain (Loss) on Cash Flow Hedges, Net of Tax [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | 39 | (3) | 10 | (13) | |
Cumulative effect of ASU No. 2018-02 adoption | [1] | 3 | |||
Net change in accumulated other comprehensive income (loss), net of tax | 4 | 1 | 30 | 11 | |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | 43 | (2) | 43 | (2) | |
Gain (Loss) on Pension Plan, Net of Tax [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | (187) | (145) | (157) | (145) | |
Cumulative effect of ASU No. 2018-02 adoption | [1] | (31) | |||
Net change in accumulated other comprehensive income (loss), net of tax | 0 | 0 | 1 | 0 | |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | (187) | (145) | (187) | (145) | |
AOCI | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | (162) | (150) | (152) | (161) | |
Cumulative effect of ASU No. 2018-02 adoption | [1] | (29) | |||
Net change in accumulated other comprehensive income (loss), net of tax | 2 | 2 | 21 | 13 | |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | $ (160) | $ (148) | $ (160) | $ (148) | |
[1] | Represents the adjustment to AOCI as a result of adoption of ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the second quarter of 2018. |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, before tax | $ (4) | $ 1 | $ (14) | $ 3 |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax benefit (expense) | 2 | 0 | 4 | (1) |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax | (2) | 1 | (10) | 2 |
Available-for-sale investment securities, net change, before tax | (4) | 1 | (14) | 3 |
Available-for-sale investment securities, net change, tax benefit (expense) | 2 | 0 | 4 | (1) |
Available-for-sale investment securities, net change, net of tax | (2) | 1 | (10) | 2 |
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax | 8 | (1) | 42 | 8 |
Cash flow hedges, net unrealized gains (losses) arising during the period, tax benefit (expense) | (2) | 1 | (10) | (3) |
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax | 6 | 0 | 32 | 5 |
Cash flow hedges, amounts reclassified from AOCI, before tax | (2) | 3 | (2) | 11 |
Cash flow hedges, amounts reclassified from AOCI, tax benefit (expense) | 0 | (2) | 0 | (5) |
Cash flow hedges, amounts reclassified from AOCI, net of tax | (2) | 1 | (2) | 6 |
Cash flow hedges, net change, before tax | 6 | 2 | 40 | 19 |
Cash flow hedges, net change, tax benefit (expense) | (2) | (1) | (10) | (8) |
Cash flow hedges, net change, net of tax | $ 4 | $ 1 | 30 | $ 11 |
Pension plan, unrealized gains (losses) arising during the period, before tax | 1 | |||
Pension plan, unrealized gains (losses) arising during the period, tax benefit (expense) | 0 | |||
Pension plan, unrealized gains (losses) arising during the period, net of tax | 1 | |||
Pension plan, net change, before tax | 1 | |||
Pension plan, net change, tax benefit (expense) | 0 | |||
Pension plan, net change, net of tax | $ 1 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Change in income tax expense | $ (54) | $ (281) |
Change in effective income tax rate | (7.80%) | (11.20%) |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Calculation) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income before income tax expense | $ 967 | $ 903 | $ 2,700 | $ 2,638 |
Income tax expense | $ 247 | $ 301 | $ 645 | $ 926 |
Effective income tax rate (in percent) | 25.50% | 33.30% | 23.90% | 35.10% |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income | $ 720 | $ 602 | $ 2,055 | $ 1,712 |
Preferred stock dividends | (15) | (9) | (31) | (28) |
Net income available to common stockholders | 705 | 593 | 2,024 | 1,684 |
Income allocated to participating securities | (6) | (4) | (16) | (12) |
Net income allocated to common stockholders | 699 | 589 | 2,008 | 1,672 |
Income allocated to participating securities, diluted | (6) | (4) | (16) | (12) |
Net income allocated to common stockholders, diluted | $ 699 | $ 589 | $ 2,008 | $ 1,672 |
Denominator: | ||||
Weighted-average shares of common stock outstanding | 341 | 371 | 348 | 379 |
Effect of dilutive common stock equivalents | 1 | 0 | 0 | 0 |
Weighted-average shares of common stock outstanding and common stock equivalents | 342 | 371 | 348 | 379 |
Basic earnings per common share (in dollars per share) | $ 2.05 | $ 1.59 | $ 5.77 | $ 4.42 |
Diluted earnings per common share (in dollars per share) | $ 2.05 | $ 1.59 | $ 5.77 | $ 4.42 |
Capital Adequacy (Narrative) (D
Capital Adequacy (Narrative) (Details) | Sep. 30, 2018 |
Regulatory Capital Requirements [Abstract] | |
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% |
Capital Adequacy (Schedule of M
Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | |
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 | $ 12,393 | $ 11,952 | |
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 7,145 | $ 6,946 | |
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 | [1] | $ 8,931 | $ 8,683 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [1] | 10.00% | 10.00% |
Tier I capital to risk-weighted assets, actual amount | $ 10,785 | $ 10,677 | |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 5,358 | $ 5,210 | |
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 | [1] | $ 5,358 | $ 5,210 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [1] | 6.00% | 6.00% |
Tier I capital to average assets, actual amount | $ 10,785 | $ 10,677 | |
Tier I capital to average assets, minimum capital requirements, amount | $ 4,166 | $ 3,949 | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% | |
CET1 capital to risk-weighted assets, actual amount | $ 10,222 | $ 10,114 | |
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 4,019 | $ 3,907 | |
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.50% | 4.50% | |
Parent Company [Member] | Transition [Member] | |||
Compliance with Regulatory Capital Requirements [Line Items] | |||
Total capital to risk-weighted assets, actual ratio (in percent) | [2] | 13.90% | 13.80% |
Tier I capital to risk-weighted assets, actual ratio (in percent) | [2] | 12.10% | 12.30% |
Tier I capital to average assets, actual ratio (in percent) | [2] | 10.40% | 10.80% |
CET1 capital to risk-weighted assets, actual ratio (in percent) | [2] | 11.40% | 11.60% |
Discover Bank [Member] | |||
Compliance with Regulatory Capital Requirements [Line Items] | |||
Total capital to risk-weighted assets, actual amount | $ 12,991 | $ 12,364 | |
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 7,068 | $ 6,872 | |
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 | $ 8,834 | $ 8,589 | |
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 | $ 10,728 | $ 10,533 | |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 5,301 | $ 5,154 | |
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 | $ 7,068 | $ 6,872 | |
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 | $ 10,728 | $ 10,533 | |
Tier I capital to average assets, minimum capital requirements, amount | $ 4,124 | $ 3,912 | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 4.00% | 4.00% | |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount | $ 5,155 | $ 4,890 | |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 5.00% | 5.00% | |
CET1 capital to risk-weighted assets, actual amount | $ 10,728 | $ 10,533 | |
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 3,975 | $ 3,865 | |
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 | $ 5,742 | $ 5,583 | |
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | 6.50% | 6.50% | |
Discover Bank [Member] | Transition [Member] | |||
Compliance with Regulatory Capital Requirements [Line Items] | |||
Total capital to risk-weighted assets, actual ratio (in percent) | [2] | 14.70% | 14.40% |
Tier I capital to risk-weighted assets, actual ratio (in percent) | [2] | 12.10% | 12.30% |
Tier I capital to average assets, actual ratio (in percent) | [2] | 10.40% | 10.80% |
CET1 capital to risk-weighted assets, actual ratio (in percent) | [2] | 12.10% | 12.30% |
[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] | Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions. |
Commitments, Contingencies an_3
Commitments, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Commitments, Contingencies and Guarantees [Line Items] | ||
Settlement withholdings and escrow deposits | $ 8 | $ 10 |
Commitments to Extend Credit [Member] | ||
Commitments, Contingencies and Guarantees [Line Items] | ||
Unused commitments to extend credit for loans | 195,800 | |
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 | $ 147 |
Commitments, Contingencies an_4
Commitments, Contingencies and Guarantees (Schedule of Lease Commitments) (Details) $ in Millions | Sep. 30, 2018USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,018 | $ 3 |
2,019 | 13 |
2,020 | 11 |
2,021 | 10 |
2,022 | 8 |
Thereafter | 41 |
Total minimum lease payments | $ 86 |
Commitments, Contingencies an_5
Commitments, Contingencies and Guarantees (Schedule of Merchant Chargeback Guarantee) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Merchant Chargeback Guarantees [Member] | |||||
Loss Contingencies [Line Items] | |||||
Aggregate sales transaction volume | [1] | $ 40,806 | $ 36,480 | $ 116,800 | $ 105,019 |
[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 Mat_2
Litigation and Regulatory Matters (Narrative) (Details) - USD ($) $ in Millions | Jul. 22, 2015 | Sep. 30, 2018 |
Unfavorable Regulatory Action [Member] | Bureau of Consumer Financial Protection Consent Order [Member] | ||
Loss Contingencies [Line Items] | ||
Amount of civil money penalty for Bureau of Consumer Financial Protection consent order | $ 2.5 | |
Maximum [Member] | Pending and Threatened Litigation [Member] | ||
Loss Contingencies [Line Items] | ||
Aggregate range of reasonably possible losses | $ 100 | |
Minimum [Member] | Unfavorable Regulatory Action [Member] | Bureau of Consumer Financial Protection Consent Order [Member] | ||
Loss Contingencies [Line Items] | ||
Aggregate range of reasonably possible losses | $ 16 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities, par value | $ 585 | |
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 (Schedu
Fair Value Measurements (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | [1] | $ 1,559 | $ 1,395 | |
U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | [1] | 981 | 672 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | [1] | 578 | [2] | 723 |
Fair Value, Measurements, Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 1,559 | 1,395 | ||
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 981 | 672 | ||
Fair Value, Measurements, Recurring [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 578 | 723 | ||
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 981 | 672 | ||
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 981 | 672 | ||
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 578 | 723 | ||
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 578 | 723 | ||
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Amount of total investment securities at fair value (in dollars) | 0 | 0 | ||
Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | [3] | 14 | 2 | |
Derivative financial instruments, liabilities, fair value | [3] | 1 | 3 | |
Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [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 | ||
Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | [3] | 14 | 2 | |
Derivative financial instruments, liabilities, fair value | [3] | 1 | 3 | |
Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [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 | ||
Fair Value Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | [3] | 3 | 4 | |
Fair Value Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | 0 | 0 | ||
Fair Value Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | [3] | 3 | 4 | |
Fair Value Hedging [Member] | Interest Rate Swaps [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, assets, fair value | $ 0 | $ 0 | ||
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. | |||
[3] | Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. |
Fair Value Measurements (Sche_2
Fair Value Measurements (Schedule of Financial Instruments Measured at Other Than Fair Value) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1] | $ 237 | $ 173 | |
Fair Value, Measurements, Nonrecurring [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 237 | 173 | ||
Net loan receivables | 87,372 | 85,108 | ||
Cash and cash equivalents | [2] | 16,019 | 13,306 | |
Restricted cash | [2] | 590 | 81 | |
Accrued interest receivables | [2],[3] | 907 | 818 | |
Time deposits | [4] | 31,849 | 29,848 | |
Long-term borrowings | 27,126 | 26,784 | ||
Accrued interest payables | [2],[3] | 236 | 214 | |
Fair Value, Measurements, Nonrecurring [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 15,726 | 16,491 | ||
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 | 11,400 | 10,293 | ||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 242 | 173 | ||
Net loan receivables | 83,967 | 81,627 | ||
Cash and cash equivalents | [2] | 16,019 | 13,306 | |
Restricted cash | [2] | 590 | 81 | |
Accrued interest receivables | [2],[3] | 907 | 818 | |
Time deposits | [4] | 32,020 | 29,752 | |
Long-term borrowings | 26,998 | 26,326 | ||
Accrued interest payables | [2],[3] | 236 | 214 | |
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 | 15,715 | 16,536 | ||
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 | 11,283 | 9,790 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Net loan receivables | 0 | 0 | ||
Cash and cash equivalents | [2] | 16,019 | 13,306 | |
Restricted cash | [2] | 590 | 81 | |
Accrued interest receivables | 0 | 0 | ||
Time deposits | 0 | 0 | ||
Long-term borrowings | 0 | 0 | ||
Accrued interest payables | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 237 | 173 | ||
Net loan receivables | 0 | 0 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Accrued interest receivables | [2],[3] | 907 | 818 | |
Time deposits | [4] | 31,849 | 29,848 | |
Long-term borrowings | 26,900 | 26,144 | ||
Accrued interest payables | [2],[3] | 236 | 214 | |
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 | 15,500 | 15,851 | ||
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 | 11,400 | 10,293 | ||
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 | ||
Net loan receivables | 87,372 | 85,108 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Accrued interest receivables | 0 | 0 | ||
Time deposits | 0 | 0 | ||
Long-term borrowings | 226 | 640 | ||
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 | 226 | 640 | ||
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 | ||
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1],[5] | 237 | [6] | 172 |
Residential Mortgage-Backed Securities - Agency [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 237 | 172 | ||
Residential Mortgage-Backed Securities - Agency [Member] | Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 242 | 172 | ||
Residential Mortgage-Backed Securities - Agency [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Residential Mortgage-Backed Securities - Agency [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 237 | 172 | ||
Residential Mortgage-Backed Securities - Agency [Member] | 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 | ||
States and Political Subdivisions of States [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1] | 1 | ||
States and Political Subdivisions of States [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
States and Political Subdivisions of States [Member] | Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
States and Political Subdivisions of States [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | |||
States and Political Subdivisions of States [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 1 | |||
States and Political Subdivisions of States [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 3 [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] | The carrying values of these assets and liabilities approximate fair value due to the nature of their liquidity (i.e., due or payable in less than one year). | |||
[3] | Accrued interest receivable and payable carrying values are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition. | |||
[4] | Excludes deposits without contractually defined maturities for all periods presented. | |||
[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. | |||
[6] | Maturities of residential mortgage-backed securities are reflective of the contractual maturities of the investment. |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Narrative) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Derivative [Line Items] | |
Additional collateral | $ 20 |
Interest Expense [Member] | |
Derivative [Line Items] | |
Cash flow hedge loss to be reclassified to earnings within twelve months | $ 13 |
Deposits [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges (in years) | 7 years |
Securitized Debt [Member] | |
Derivative [Line Items] | |
Initial maximum period for cash flow hedges (in years) | 7 years |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities (Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances) (Details) € in Millions, ₨ in Millions, £ in Millions, $ in Millions, $ in Millions | Sep. 30, 2018USD ($)transactions | Sep. 30, 2018INR (₨)transactions | Sep. 30, 2018SGD ($)transactions | Sep. 30, 2018EUR (€)transactions | Sep. 30, 2018GBP (£)transactions | Dec. 31, 2017USD ($)transactions | Dec. 31, 2017INR (₨)transactions | Dec. 31, 2017SGD ($)transactions | Dec. 31, 2017EUR (€)transactions | Dec. 31, 2017GBP (£)transactions | |||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative assets | [1] | $ 17 | $ 6 | ||||||||||
Collateral held, derivative assets | [2] | (14) | (1) | ||||||||||
Total net derivative assets | 3 | 5 | |||||||||||
Derivative liabilities | [1] | 1 | 3 | ||||||||||
Collateral posted, derivative liabilities | [2] | (1) | (3) | ||||||||||
Total net derivative liabilities | 0 | 0 | |||||||||||
Designated as Hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 2,450 | 3,800 | |||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 5 | 5 | 5 | 5 | 5 | ||||||||
Derivative assets | $ 14 | 2 | |||||||||||
Derivative liabilities | 1 | 3 | |||||||||||
Designated as Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 8,130 | 7,333 | |||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 10 | 10 | 10 | 10 | 10 | ||||||||
Derivative assets | $ 3 | 4 | |||||||||||
Derivative liabilities | 0 | 0 | |||||||||||
Not Designated as Hedges [Member] | Foreign Exchange Forward Contracts [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 28 | [3] | ₨ 464 | $ 1 | € 8 | £ 9 | 23 | [3] | ₨ 464 | $ 1 | € 7 | £ 5 | |
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 7 | 7 | 7 | 7 | 7 | ||||||||
Derivative assets | $ 0 | 0 | |||||||||||
Derivative liabilities | $ 0 | 0 | |||||||||||
Not Designated as Hedges [Member] | When-Issued Forward Contracts [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 54 | ||||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 0 | 0 | 0 | 0 | 0 | 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 September 30, 2018, the Company had no outstanding contract. At December 31, 2017, the Company had one outstanding contract with a notional amount of $54 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 8 million, GBP 9 million, SGD 1 million and INR 464 million as of September 30, 2018 and notional amounts of EUR 7 million, GBP 5 million, SGD 1 million and INR 464 million as of December 31, 2017. |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities Derivatives and Hedging Activities (Schedule of Hedged Items in a Fair Value Hedging Relationship (Details) - Securitized Debt [Member] $ in Millions | Sep. 30, 2018USD ($) |
Schedule of Hedged Items in Fair Value Hedging Relationship [Line Items] | |
Carrying amount of hedged assets/liabilities | $ 7,914 |
Cumulative amount of fair value hedging adjustment increasing (decreasing) the carrying amount of hedged assets/liabilities | $ (171) |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income and Other Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amounts reclassified from OCI into earnings, cash flow hedges | $ 2 | $ (3) | $ 2 | $ (11) |
Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded | 20 | 24 | 73 | 74 |
Designated as Hedges [Member] | Interest Rate Swaps [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amounts reclassified from OCI into earnings, cash flow hedges | 0 | 0 | 0 | 0 |
Gains (losses) on hedged items, fair value hedges | 0 | 0 | 0 | 0 |
Gains (losses) on interest rate swaps, fair value hedges | 0 | 0 | 0 | 0 |
Total gains (losses) on fair value hedges | 0 | 0 | 0 | 0 |
Not Designated as Hedges [Member] | Other Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) on derivatives not designated as hedges | 1 | (1) | 2 | (2) |
Deposits [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded | (329) | (218) | (878) | (608) |
Deposits [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amounts reclassified from OCI into earnings, cash flow hedges | 0 | (1) | (1) | (5) |
Gains (losses) on hedged items, fair value hedges | 0 | (1) | 0 | 0 |
Gains (losses) on interest rate swaps, fair value hedges | 0 | 1 | 0 | 0 |
Total gains (losses) on fair value hedges | 0 | 0 | 0 | 0 |
Deposits [Member] | Not Designated as Hedges [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) on derivatives not designated as hedges | 0 | 0 | 0 | 0 |
Securitized Debt [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total amounts of income and expense line items presented in the statements of income in which the effects of fair value or cash flow hedges are recorded | (229) | (208) | (656) | (604) |
Securitized Debt [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amounts reclassified from OCI into earnings, cash flow hedges | 2 | (2) | 3 | (6) |
Gains (losses) on hedged items, fair value hedges | 2 | (1) | 61 | 2 |
Gains (losses) on interest rate swaps, fair value hedges | (14) | 0 | (88) | 6 |
Total gains (losses) on fair value hedges | (12) | (1) | (27) | 8 |
Securitized Debt [Member] | Not Designated as Hedges [Member] | Interest Expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) on derivatives not designated as hedges | $ 0 | $ 0 | $ 0 | $ 0 |
Segment Disclosures (Narrative)
Segment Disclosures (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Interest income | $ 2,781 | $ 2,476 | $ 7,986 | $ 7,092 |
Interest expense | 558 | 426 | 1,534 | 1,212 |
Net interest income | 2,223 | 2,050 | 6,452 | 5,880 |
Provision for loan losses | 742 | 674 | 2,235 | 1,900 |
Other income | 501 | 475 | 1,450 | 1,403 |
Other expense | 1,015 | 948 | 2,967 | 2,745 |
Income before income tax expense | 967 | 903 | 2,700 | 2,638 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 97 | 55 | 249 | 141 |
Credit Card Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 2,258 | 2,026 | 6,487 | 5,818 |
Provision for loan losses | 633 | 550 | 1,915 | 1,607 |
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 154 | 132 | 451 | 383 |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 238 | 224 | 693 | 629 |
Provision for loan losses | 87 | 91 | 244 | 231 |
PCI Student Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 34 | 39 | 106 | 121 |
Provision for loan losses | 0 | 0 | 0 | 0 |
Operating Segments [Member] | Direct Banking [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 2,781 | 2,476 | 7,986 | 7,092 |
Interest expense | 558 | 426 | 1,534 | 1,212 |
Net interest income | 2,223 | 2,050 | 6,452 | 5,880 |
Provision for loan losses | 742 | 675 | 2,235 | 1,908 |
Other income | 421 | 401 | 1,213 | 1,184 |
Other expense | 979 | 909 | 2,859 | 2,634 |
Income before income tax expense | 923 | 867 | 2,571 | 2,522 |
Operating Segments [Member] | Direct Banking [Member] | Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 97 | 55 | 249 | 141 |
Operating Segments [Member] | Direct Banking [Member] | Credit Card Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 2,258 | 2,026 | 6,487 | 5,818 |
Operating Segments [Member] | Direct Banking [Member] | Total Other Loans [Member] | Private Student Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 154 | 132 | 451 | 383 |
Operating Segments [Member] | Direct Banking [Member] | Total Other Loans [Member] | Personal Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 238 | 224 | 693 | 629 |
Operating Segments [Member] | Direct Banking [Member] | PCI Student Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 34 | 39 | 106 | 121 |
Operating Segments [Member] | Payment Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Net interest income | 0 | 0 | 0 | 0 |
Provision for loan losses | 0 | (1) | 0 | (8) |
Other income | 80 | 74 | 237 | 219 |
Other expense | 36 | 39 | 108 | 111 |
Income before income tax expense | 44 | 36 | 129 | 116 |
Operating Segments [Member] | Payment Services [Member] | Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 0 | 0 | 0 | 0 |
Operating Segments [Member] | Payment Services [Member] | Credit Card Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 0 | 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 | 0 |
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Personal Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 0 | 0 | 0 | 0 |
Operating Segments [Member] | Payment Services [Member] | PCI Student Loans [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers Revenue from Contracts with Customers (Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Disaggregation of Revenue [Line Items] | |||||
Discount and interchange revenue, net | $ 280 | $ 258 | $ 797 | $ 769 | |
Transaction processing revenue | 47 | 43 | 132 | 124 | |
Other income | 20 | 24 | 73 | 74 | |
Loan fee income | 103 | 95 | 294 | 267 | |
Other income not subject to ASC 606 | 3 | 3 | |||
Total other income not subject to ASC 606 | 103 | 98 | 294 | 270 | |
Total other income by operating segment | 501 | 475 | 1,450 | 1,403 | |
Customer rewards included in discount and interchange revenue | 473 | 417 | 1,300 | 1,200 | |
Deposit product fees reported in net interest income and excluded from other income subject to ASC 606 | 1 | 2 | 1 | ||
Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Discount and interchange revenue, net | [1] | 280 | 258 | 797 | 769 |
Revenue subject to ASC 606 | [2] | 398 | 377 | 1,156 | 1,133 |
Transaction processing revenue | 47 | 43 | 132 | 124 | |
Other income | 20 | 21 | 73 | 71 | |
Operating Segments [Member] | Direct Banking [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Loan fee income | 103 | 95 | 294 | 267 | |
Other income not subject to ASC 606 | 3 | 3 | |||
Total other income not subject to ASC 606 | 103 | 98 | 294 | 270 | |
Total other income by operating segment | 421 | 401 | 1,213 | 1,184 | |
Operating Segments [Member] | Direct Banking [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Discount and interchange revenue, net | [1] | 266 | 246 | 758 | 737 |
Revenue subject to ASC 606 | [2] | 318 | 303 | 919 | 914 |
Transaction processing revenue | 0 | 0 | 0 | 0 | |
Other income | 1 | 2 | 7 | 8 | |
Operating Segments [Member] | Payment Services [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Loan fee income | 0 | 0 | 0 | 0 | |
Other income not subject to ASC 606 | 0 | 0 | |||
Total other income not subject to ASC 606 | 0 | 0 | 0 | 0 | |
Total other income by operating segment | 80 | 74 | 237 | 219 | |
Operating Segments [Member] | Payment Services [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Discount and interchange revenue, net | [1] | 14 | 12 | 39 | 32 |
Revenue subject to ASC 606 | [2] | 80 | 74 | 237 | 219 |
Transaction processing revenue | 47 | 43 | 132 | 124 | |
Other income | 19 | 19 | 66 | 63 | |
Financial Service, Other [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue subject to ASC 606 | 51 | 55 | 154 | 169 | |
Financial Service, Other [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue subject to ASC 606 | 51 | 55 | 154 | 169 | |
Financial Service, Other [Member] | Operating Segments [Member] | Direct Banking [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue subject to ASC 606 | 51 | 55 | 154 | 169 | |
Financial Service, Other [Member] | Operating Segments [Member] | Payment Services [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue subject to ASC 606 | $ 0 | $ 0 | $ 0 | $ 0 | |
[1] | Net of rewards, including Cashback Bonus rewards, of $473 million and $417 million for the three months ended September 30, 2018 and 2017, respectively, and $1.3 billion and $1.2 billion for the nine months ended September 30, 2018 and 2017, respectively. | ||||
[2] | Excludes $1 million and $2 million of deposit product fees that are reported within net interest income for the three and nine months ended September 30, 2018, respectively, and $1 million for the nine months ended September 30, 2017. Deposit product fees were immaterial for the three months ended September 30, 2017. |