Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 28, 2021 | |
Cover [Abstract] | ||
Document type | 10-Q | |
Document quarterly report | true | |
Document period end date | Mar. 31, 2021 | |
Document transition report | false | |
Entity file number | 001-33378 | |
Entity registrant name | DISCOVER FINANCIAL SERVICES | |
Entity incorporation, state | DE | |
Entity tax identification number | 36-2517428 | |
Entity address, address line one | 2500 Lake Cook Road | |
Entity address, city or town | Riverwoods | |
Entity address, state or province | IL | |
Entity address, postal zip code | 60015 | |
Entity phone number, city area code | 224 | |
Entity phone number, local phone number | 405-0900 | |
Title of 12(b) security | Common Stock, par value $0.01 per share | |
Trading symbol | DFS | |
Security exchange name | NYSE | |
Entity current reporting status | Yes | |
Entity interactive data current | Yes | |
Entity filer category | Large Accelerated Filer | |
Smaller reporting company | false | |
Emerging growth company | false | |
Entity shell company | false | |
Entity common stock, shares outstanding | 304,887,527 | |
Entity central index key | 0001393612 | |
Current fiscal year end date | --12-31 | |
Document fiscal year focus | 2021 | |
Document fiscal period focus | Q1 | |
Amendment flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 20,348 | $ 13,564 |
Restricted cash | 326 | 25 |
Other short-term investments | 0 | 2,200 |
Investment securities (includes available-for-sale securities of $9,177 and $9,654 reported at fair value with associated amortized cost of $8,871 and $9,277 at March 31, 2021 and December 31, 2020, respectively) | 9,432 | 9,914 |
Loan receivables | ||
Loan receivables | 86,347 | 90,449 |
Allowance for credit losses | (7,347) | (8,226) |
Net loan receivables | 79,000 | 82,223 |
Premises and equipment, net | 1,021 | 1,027 |
Goodwill | 255 | 255 |
Intangible assets, net | 95 | 95 |
Other assets | 3,394 | 3,586 |
Total assets | 113,871 | 112,889 |
Deposits | ||
Interest-bearing deposit accounts | 74,921 | 75,695 |
Non-interest bearing deposit accounts | 1,824 | 1,209 |
Total deposits | 76,745 | 76,904 |
Long-term borrowings | 21,011 | 21,241 |
Accrued expenses and other liabilities | 3,961 | 3,860 |
Total liabilities | 101,717 | 102,005 |
Commitments, contingencies and guarantees (Notes 10, 13 and 14) | ||
Stockholders' Equity | ||
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 568,579,610 and 567,898,063 shares issued at March 31, 2021 and December 31, 2020, respectively | 6 | 6 |
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 1,056 | 1,056 |
Additional paid-in capital | 4,280 | 4,257 |
Retained earnings | 21,373 | 19,955 |
Accumulated other comprehensive (loss) income | (7) | 45 |
Treasury stock, at cost; 262,594,581 and 261,300,765 shares at March 31, 2021 and December 31, 2020, respectively | (14,554) | (14,435) |
Total stockholders' equity | 12,154 | 10,884 |
Total liabilities and stockholders' equity | 113,871 | 112,889 |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Assets | ||
Restricted cash | 326 | 25 |
Loan receivables | ||
Loan receivables | 25,399 | 27,546 |
Allowance for credit losses | (1,615) | (1,936) |
Other assets | 5 | 4 |
Deposits | ||
Long-term borrowings | 10,804 | 10,840 |
Accrued expenses and other liabilities | $ 8 | $ 8 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Statement of Financial Position [Abstract] | |||
Available-for-sale investment securities, fair value | [1] | $ 9,177 | $ 9,654 |
Available-for-sale investment securities, amortized cost | [1] | $ 8,871 | $ 9,277 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |
Common Stock, Shares Authorized | 2,000,000,000 | 2,000,000,000 | |
Common Stock, Shares, Issued | 568,579,610 | 567,898,063 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |
Preferred Stock, Shares Authorized | 200,000,000 | 200,000,000 | |
Preferred Stock, Shares Issued | 10,700 | 10,700 | |
Treasury Stock, Shares | 262,594,581 | 261,300,765 | |
[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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Interest income | ||
Credit card loans | $ 2,154 | $ 2,416 |
Other loans | 437 | 484 |
Investment securities | 50 | 58 |
Other interest income | 5 | 24 |
Total interest income | 2,646 | 2,982 |
Interest expense | ||
Deposits | 193 | 373 |
Long-term borrowings | 123 | 211 |
Total interest expense | 316 | 584 |
Net interest income | 2,330 | 2,398 |
Provision for credit losses | (365) | 1,807 |
Net interest income after provision for credit losses | 2,695 | 591 |
Other income | ||
Discount and interchange revenue, net | 241 | 216 |
Protection products revenue | 43 | 47 |
Loan fee income | 107 | 119 |
Transaction processing revenue | 51 | 44 |
Gains on equity investments | 0 | 36 |
Other income | 23 | 28 |
Total other income | 465 | 490 |
Other expense | ||
Employee compensation and benefits | 506 | 467 |
Marketing and business development | 154 | 231 |
Information processing and communications | 109 | 114 |
Professional fees | 182 | 193 |
Premises and equipment | 24 | 30 |
Other expense | 106 | 124 |
Total other expense | 1,081 | 1,159 |
Income (loss) before income taxes | 2,079 | (78) |
Income tax expense (benefit) | 486 | (17) |
Net income (loss) | 1,593 | (61) |
Net Income (Loss) Available to Common Stockholders, Diluted | 1,546 | (78) |
Net income (loss) allocated to common stockholders | $ 1,546 | $ (78) |
Basic earnings (loss) per common share | $ 5.04 | $ (0.25) |
Diluted earnings (loss) per common share | $ 5.04 | $ (0.25) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 1,593 | $ (61) |
Other comprehensive (loss) income, net of tax | ||
Unrealized (losses) gains on available-for-sale investment securities, net of tax | (53) | 256 |
Unrealized gains (losses) on cash flow hedges, net of tax | 1 | (3) |
Other comprehensive (loss) income | (52) | 253 |
Comprehensive income | $ 1,541 | $ 192 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Retained Earnings [Member]Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive (Loss) Income [Member] | Treasury Stock [Member] | Series C Preferred Stock [Member] | Series C Preferred Stock [Member]Retained Earnings [Member] | Series D Preferred Stock | Series D Preferred StockRetained Earnings [Member] |
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2019 | 6 | ||||||||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2019 | 566,654 | ||||||||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2019 | $ 11,859 | $ 563 | $ 6 | $ 4,206 | $ 21,290 | $ (119) | $ (14,087) | ||||||
Stockholders' equity, balance at beginning of period (Accounting Standards Update 2016-13 [Member]) at Dec. 31, 2019 | $ (1,902) | $ (1,902) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income (loss) | (61) | (61) | |||||||||||
Other comprehensive loss | 253 | 253 | |||||||||||
Purchases of treasury stock | (343) | (343) | |||||||||||
Common stock issued under employee benefit plans (in shares) | 64 | ||||||||||||
Common stock issued under employee benefit plans | 2 | $ 0 | 2 | ||||||||||
Common stock issued and stock-based compensation expense (in shares) | 812 | ||||||||||||
Common stock issued and stock-based compensation expense | 9 | $ 0 | 9 | ||||||||||
Dividends — common stock | (136) | (136) | |||||||||||
Dividends — preferred stock | (16) | $ (16) | $ (16) | ||||||||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2020 | 6 | ||||||||||||
Common stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2020 | 567,530 | ||||||||||||
Stockholders' equity, balance at end of period at Mar. 31, 2020 | 9,665 | $ 563 | $ 6 | 4,217 | 19,175 | 134 | (14,430) | ||||||
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2020 | 11 | ||||||||||||
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2020 | 567,898 | ||||||||||||
Stockholders' equity, balance at beginning of period at Dec. 31, 2020 | 10,884 | $ 1,056 | $ 6 | 4,257 | 19,955 | 45 | (14,435) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income (loss) | 1,593 | 1,593 | |||||||||||
Other comprehensive loss | (52) | (52) | |||||||||||
Purchases of treasury stock | (119) | (119) | |||||||||||
Common stock issued under employee benefit plans (in shares) | 26 | ||||||||||||
Common stock issued under employee benefit plans | 2 | $ 0 | 2 | ||||||||||
Common stock issued and stock-based compensation expense (in shares) | 656 | ||||||||||||
Common stock issued and stock-based compensation expense | 21 | $ 0 | 21 | ||||||||||
Dividends — common stock | (136) | (136) | |||||||||||
Dividends — preferred stock | (39) | $ (16) | $ (16) | $ (23) | $ (23) | ||||||||
Preferred stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2021 | 11 | ||||||||||||
Common stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2021 | 568,580 | ||||||||||||
Stockholders' equity, balance at end of period at Mar. 31, 2021 | $ 12,154 | $ 1,056 | $ 6 | $ 4,280 | $ 21,373 | $ (7) | $ (14,554) |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Dividends declared, common stock (dollars per share) | $ 0.44 | $ 0.44 |
Series C Preferred Stock [Member] | ||
Dividends declared, preferred stock (dollars per share) | 2,750 | $ 2,750 |
Series D Preferred Stock | ||
Dividends declared, preferred stock (dollars per share) | $ 4,611 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows provided by (used for) operating activities | ||
Net income (loss) | $ 1,593 | $ (61) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for credit losses | (365) | 1,807 |
Deferred income taxes | 232 | (240) |
Depreciation and amortization | 119 | 123 |
Amortization of deferred revenues | (74) | (86) |
Net losses (gains) on investments and other assets | 10 | (23) |
Other, net | 23 | 10 |
Changes in assets and liabilities: | ||
(Increase) decrease in other assets | (150) | 429 |
Increase (decrease) in accrued expenses and other liabilities | 120 | (279) |
Net cash provided by operating activities | 1,508 | 1,680 |
Cash flows provided by (used for) investing activities | ||
Maturities of other short-term investments | 2,200 | 0 |
Maturities of available-for-sale investment securities | 404 | 157 |
Maturities of held-to-maturity investment securities | 20 | 7 |
Purchases of held-to-maturity investment securities | (16) | (14) |
Net principal repaid on loans originated for investment | 3,642 | 2,268 |
Proceeds from sale of other investments | 0 | 52 |
Purchases of other investments | (21) | (14) |
Purchases of premises and equipment | (41) | (59) |
Net cash provided by investing activities | 6,188 | 2,397 |
Cash flows provided by (used for) financing activities | ||
Maturities and repayment of securitized debt | (7) | (509) |
Proceeds from issuance of other long-term borrowings | 0 | 496 |
Maturities and repayment of other long-term borrowings | (163) | (1) |
Proceeds from issuance of common stock | 2 | 2 |
Purchases of treasury stock | (119) | (343) |
Net (decrease) increase in deposits | (165) | 663 |
Dividends paid on common and preferred stock | (159) | (138) |
Net cash (used for) provided by financing activities | (611) | 170 |
Net increase in cash, cash equivalents and restricted cash | 7,085 | 4,247 |
Cash, cash equivalents and restricted cash, at beginning of period | 13,589 | 6,964 |
Cash, cash equivalents and restricted cash, at end of period | 20,674 | 11,211 |
Reconciliation of cash, cash equivalents and restricted cash | ||
Cash and cash equivalents | 20,348 | 10,028 |
Restricted cash | $ 326 | $ 1,183 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
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 digital 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 digital banking products and services and payment services through its subsidiaries. The Company offers credit card loans, private student loans, personal loans, home loans and deposit products to its customers. The Company also operates the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. 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 merchant acceptance throughout the United States for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services. The Company's business activities are managed in two segments, Digital 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 17: 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 necessary for the fair presentation of 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 2020 audited consolidated financial statements filed with the Company's annual report on Form 10-K for the year ended December 31, 2020. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The Company's other short-term investments and investment securities consist of the following (dollars in millions): March 31, December 31, United States Treasury bills (1) $ — $ 2,200 Total other short-term investments $ — $ 2,200 United States Treasury securities (2) $ 8,907 $ 9,354 Residential mortgage-backed securities - Agency (3) 525 560 Total investment securities $ 9,432 $ 9,914 (1) Includes United States Treasury bills with maturity dates greater than 90 days but less than one year at the time of acquisition. (2) Includes $102 million and $117 million of United States Treasury securities pledged as swap collateral as of March 31, 2021 and December 31, 2020. (3) Consists of residential mortgage-backed securities ("RMBS") issued by Fannie Mae, Freddie Mac and Ginnie Mae. The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): Amortized Gross Gross Fair Value At March 31, 2021 Available-for-Sale Investment Securities (1) United States Treasury securities $ 8,611 $ 296 $ — $ 8,907 Residential mortgage-backed securities - Agency 260 10 — 270 Total available-for-sale investment securities $ 8,871 $ 306 $ — $ 9,177 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 255 $ 8 $ (1) $ 262 Total held-to-maturity investment securities $ 255 $ 8 $ (1) $ 262 At December 31, 2020 Available-for-Sale Investment Securities (1) United States Treasury securities $ 8,987 $ 367 $ — $ 9,354 Residential mortgage-backed securities - Agency 290 10 — 300 Total available-for-sale investment securities $ 9,277 $ 377 $ — $ 9,654 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 260 $ 9 $ — $ 269 Total held-to-maturity investment securities $ 260 $ 9 $ — $ 269 (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 RMBS that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. The Company invests in United States Treasury obligations and RMBS issued by government agencies and government-sponsored enterprises of the United States of America ("U.S. GSEs"), which have long histories with no credit losses and are explicitly or implicitly guaranteed by the United States government. Therefore, management has concluded that there is no expectation of non-payment on its investment securities and does not record an allowance for credit losses on these investments. At March 31, 2021, there were two investment securities with an aggregate fair value of $112 million that had an immaterial aggregate gross unrealized loss for less than 12 months and no securities that were in an unrealized loss position for more than 12 months. As of December 31, 2020, there were no investment securities with aggregate gross unrealized losses. There were no proceeds from sales or recognized gains and losses on available-for-sale securities during the three months ended March 31, 2021 and 2020. See Note 9: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three months ended March 31, 2021 and 2020. Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions): At March 31, 2021 One Year After One After Five After Ten Total Available-for-Sale Investment Securities—Amortized Cost United States Treasury securities $ 3,005 $ 5,606 $ — $ — $ 8,611 Residential mortgage-backed securities - Agency (1) 3 34 214 9 260 Total available-for-sale investment securities $ 3,008 $ 5,640 $ 214 $ 9 $ 8,871 Held-to-Maturity Investment Securities—Amortized Cost Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 255 $ 255 Total held-to-maturity investment securities $ — $ — $ — $ 255 $ 255 Available-for-Sale Investment Securities—Fair Values United States Treasury securities $ 3,035 $ 5,872 $ — $ — $ 8,907 Residential mortgage-backed securities - Agency (1) 3 35 223 9 270 Total available-for-sale investment securities $ 3,038 $ 5,907 $ 223 $ 9 $ 9,177 Held-to-Maturity Investment Securities—Fair Values Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 262 $ 262 Total held-to-maturity investment securities $ — $ — $ — $ 262 $ 262 (1) Maturities of RMBS 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 investee entities. As of March 31, 2021 and December 31, 2020, the Company had outstanding investments in these entities of $342 million and $353 million, respectively, and related contingent liabilities for unconditional and legally binding delayed equity contributions of $74 million and $93 million, respectively. Of the above outstanding equity investments, the Company had $316 million and $324 million of investments related to affordable housing projects as of March 31, 2021 and December 31, 2020, respectively, which had $67 million and $79 million of related contingent liabilities for unconditional and legally binding delayed equity contributions, respectively. The Company holds non-controlling equity positions in several payment services entities. Most of these investments are not subject to equity method accounting because the Company does not have significant influence over the investee. The common or preferred equity securities that the Company holds typically do not have readily determinable fair values. As a result, the majority of these investments are carried at cost minus impairment, if any. As of March 31, 2021 and December 31, 2020, the carrying value of these investments, which is recorded within other assets on the Company's condensed consolidated statements of financial condition, was $37 million and $35 million, respectively. |
Loan Receivables
Loan Receivables | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Loan Receivables | Loan Receivables The Company has two loan portfolio segments: credit card loans and other loans. The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions): March 31, December 31, Credit card loans (1)(2) $ 67,304 $ 71,472 Other loans (3) Private student loans (4) 10,153 9,954 Personal loans 6,961 7,177 Other loans 1,929 1,846 Total other loans 19,043 18,977 Total loan receivables 86,347 90,449 Allowance for credit losses (7,347) (8,226) Net loan receivables $ 79,000 $ 82,223 (1) Amounts include carrying values of $15.7 billion and $16.7 billion underlying investors' interest in trust debt at March 31, 2021 and December 31, 2020, respectively, and $9.4 billion and $10.6 billion in seller's interest at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. (2) Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $395 million and $420 million at March 31, 2021 and December 31, 2020, respectively. (3) Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $477 million, $45 million and $6 million, respectively, at March 31, 2021 and $469 million, $49 million and $6 million, respectively, at December 31, 2020. (4) Amounts include carrying values of $236 million and $250 million in loans pledged as collateral against the note issued from a private student loan securitization trust at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. Credit Quality Indicators 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. Key credit quality indicators that are actively monitored for credit card, private student and personal loans include FICO scores and delinquency status. These indicators are important to understand the overall credit performance of the Company's customers and their ability to repay. 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 accounts with FICO scores below 660 have larger delinquencies and credit losses than those with higher credit scores. The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions): Credit Risk Profile by FICO Score March 31, 2021 December 31, 2020 660 and Above Less than 660 660 and Above Less than 660 $ % $ % $ % $ % Credit card loans (1) $ 55,669 83 % $ 11,635 17 % $ 58,950 82 % $ 12,522 18 % Private student loans by origination year (2)(3) 2021 $ 212 98 % $ 5 2 % 2020 1,625 95 % 81 5 % $ 1,173 95 % $ 60 5 % 2019 1,592 96 % 60 4 % 1,659 96 % 61 4 % 2018 1,297 96 % 61 4 % 1,365 96 % 61 4 % 2017 993 95 % 55 5 % 1,052 95 % 57 5 % Prior 3,943 95 % 229 5 % 4,219 94 % 247 6 % Total private student loans $ 9,662 95 % $ 491 5 % $ 9,468 95 % $ 486 5 % Personal loans by origination year 2021 $ 810 100 % $ 3 — % 2020 2,571 99 % 29 1 % $ 2,880 99 % $ 25 1 % 2019 1,858 96 % 85 4 % 2,183 96 % 90 4 % 2018 834 92 % 75 8 % 1,018 92 % 90 8 % 2017 447 89 % 54 11 % 558 89 % 69 11 % Prior 167 86 % 28 14 % 227 86 % 37 14 % Total personal loans $ 6,687 96 % $ 274 4 % $ 6,866 96 % $ 311 4 % (1) Amounts include $1.0 billion of revolving line-of-credit arrangements that were converted to term loans as a result of a troubled debt restructuring ("TDR") program as of March 31, 2021 and December 31, 2020. (2) A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years. (3) FICO score represents the higher credit score of the cosigner or borrower. Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due. The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions): March 31, 2021 December 31, 2020 30-89 Days 90 or Total Past 30-89 Days 90 or Total Past Credit card loans $ 565 $ 680 $ 1,245 $ 739 $ 739 $ 1,478 Private student loans by origination year (1) 2021 $ — $ — $ — 2020 1 — 1 $ — $ — $ — 2019 5 3 8 3 1 4 2018 9 4 13 9 3 12 2017 11 4 15 12 4 16 Prior 65 20 85 86 20 106 Total private student loans $ 91 $ 31 $ 122 $ 110 $ 28 $ 138 Personal loans by origination year 2021 $ — $ — $ — 2020 6 2 8 $ 5 $ 2 $ 7 2019 16 5 21 18 9 27 2018 11 4 15 15 7 22 2017 7 3 10 10 5 15 Prior 3 2 5 5 2 7 Total personal loans $ 43 $ 16 $ 59 $ 53 $ 25 $ 78 (1) Private student loans may include a deferment period, during which customers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency. Allowance for Credit Losses The following tables provide changes in the Company's allowance for credit losses (dollars in millions): For the Three Months Ended March 31, 2021 Credit Card Loans Private Student Loans Personal Loans Other Loans Total Loans Balance at December 31, 2020 $ 6,491 $ 840 $ 857 $ 38 $ 8,226 Additions Provision for credit losses (1) (377) 36 (4) 3 (342) Deductions Charge-offs (663) (20) (64) — (747) Recoveries 189 6 15 — 210 Net charge-offs (474) (14) (49) — (537) Balance at March 31, 2021 $ 5,640 $ 862 $ 804 $ 41 $ 7,347 For the Three Months Ended March 31, 2020 Credit Card Loans Private Student Loans Personal Loans Other Loans Total Loans Balance at December 31, 2019 (2) $ 2,883 $ 148 $ 348 $ 4 $ 3,383 Cumulative effect of ASU No. 2016-13 adoption (3) 1,667 505 265 24 2,461 Balance at January 1, 2020 4,550 653 613 28 5,844 Additions Provision for credit losses (1) 1,439 129 263 7 1,838 Deductions Charge-offs (869) (22) (84) — (975) Recoveries 186 5 15 — 206 Net charge-offs (683) (17) (69) — (769) Balance at March 31, 2020 $ 5,306 $ 765 $ 807 $ 35 $ 6,913 (1) Excludes a $23 million and $31 million reclassification of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2021 and 2020, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition. (2) Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. (3) Represents the adjustment to the allowance for credit losses as a result of adoption of ASU No. 2016-13 on January 1, 2020. The allowance for credit losses was $7.3 billion at March 31, 2021, which reflects an $879 million release from the amount of the allowance for credit losses at December 31, 2020. The release in the overall allowance was primarily driven by a reduction in loan receivables outstanding, continued stable credit performance and improvements in the macroeconomic forecast. The decrease in outstanding loans receivable, particularly credit card loans, and the stable credit performance was driven in part by elevated payment rates resulting from the latest round of government stimulus and the associated improvement in household cash flows. In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior, payment trends and credit performance subsequent to the expiration of government stimulus programs, such as the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and the American Rescue Plan Act of 2021 ("ARPA"), and government-offered disaster relief programs, such as foreclosure moratoriums and federal student loan and mortgage payment forbearance. In estimating the allowance at March 31, 2021, the Company used a macroeconomic forecast that projected (i) a peak unemployment rate of 6.7%, which decreases to 6.0% through the end of 2021 and (ii) a 4.6% growth in real gross domestic product in 2021. Labor market conditions, which historically have been an important determinant of credit loss trends, have improved but remain stressed by the pandemic; unemployment claims have fallen below pandemic peaks, but unemployment remains elevated by historical standards. Moreover, the impact of the coronavirus disease 2019 ("COVID-19") pandemic on the economy and the government's response to the pandemic has continued to cause uncertainty in the assumptions surrounding factors such as the pace and sustainability of economic recovery. Accordingly, the estimation of the allowance for credit losses has required significant management judgment. Company-initiated loan modification programs include those offered specifically in response to the COVID-19 pandemic as well as existing programs offered to customers experiencing difficulty making their payments. In addition to the Skip-a-Pay (payment deferral) ("SaP") programs, which ended on August 31, 2020, the Company has other modification programs that customers have utilized during the period related to the pandemic. The accounts using these modifications as a result of the COVID-19 pandemic were evaluated for potential exclusion from the TDR designation either due to the insignificance of the concession or because they qualified for exemption pursuant to the CARES Act. The effects of all modifications, including TDRs, loan modifications exempt from the TDR designation pursuant to the CARES Act and SaP programs, are considered as part of the process for determining the allowance for credit losses. The forecast period the Company deemed to be reasonable and supportable was 18 months as of March 31, 2021 and December 31, 2020. The 18-month reasonable and supportable forecast period was deemed appropriate on the basis of observed stabilization of macroeconomic forecasts. As of March 31, 2020, the forecast period the Company deemed to be reasonable and supportable was 12 months due to the uncertainty caused by the rapidly changing economic environment experienced at the onset of the COVID-19 pandemic. As of March 31, 2021, December 31, 2020, and March 31, 2020, the Company determined that a reversion period of 12 months was appropriate. During the first quarter of 2020, a straight-line method was used to revert to appropriate historical information. Due to the uncertainties associated with borrower behavior resulting from government stimulus and disaster relief programs, the Company applied a weighted reversion method to provide for a more reasonable transition to historical losses for all loan products as of March 31, 2021 and December 31, 2020. The decrease in net charge-offs across all loan products for the three months ended March 31, 2021, when compared to the same period in 2020, was due to the impacts of government stimulus and government-offered disaster relief programs. The decrease in net charge-offs on credit card loans was also favorably impacted by a decrease in outstanding loan receivables period-over-period. The decrease in net charge-offs on personal loans also reflects tightened underwriting standards implemented around the onset of the COVID-19 pandemic. Net charge-offs of principal are recorded against the allowance for credit 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 March 31, 2021 2020 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 95 $ 143 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 23 $ 35 Delinquent and Non-Accruing Loans The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions): 30-89 Days 90 or Total Past 90 or Total Non-accruing (1) At March 31, 2021 Credit card loans $ 565 $ 680 $ 1,245 $ 626 $ 216 Other loans Private student loans 91 31 122 30 11 Personal loans 43 16 59 15 8 Other loans 7 5 12 1 12 Total other loans 141 52 193 46 31 Total loan receivables $ 706 $ 732 $ 1,438 $ 672 $ 247 At December 31, 2020 Credit card loans $ 739 $ 739 $ 1,478 $ 687 $ 209 Other loans Private student loans 110 28 138 27 12 Personal loans 53 25 78 23 12 Other loans 8 3 11 — 10 Total other loans 171 56 227 50 34 Total loan receivables $ 910 $ 795 $ 1,705 $ 737 $ 243 (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 $8 million and $10 million for the three months ended March 31, 2021 and 2020, 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. Troubled Debt Restructurings The Company has internal loan modification programs that provide relief to credit card, private student and personal loan borrowers who may be experiencing financial hardship. The Company considers a modified loan in which a concession has been granted to the borrower to be a TDR based on the cumulative length of the concession period and credit quality of the borrower. New programs are evaluated to determine which of them meet the definition of a TDR, including modification programs that were provided to customers for temporary relief due to the economic impacts of the COVID-19 pandemic. 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. All loans modified in a temporary modification program, including those that were created specifically in response to the COVID-19 pandemic, are evaluated for exclusion from the TDR designation either due to the insignificance of the concession or because they qualify for exemption pursuant to the CARES Act. To the extent the loan accounts do not meet the requirements for exclusion, temporary and permanent modifications on credit card and personal loans, as well as temporary modifications on private student loans and certain grants of private student loan forbearance, result in the loans being classified as TDRs. In addition, loans that defaulted from, or successfully completed a loan modification program or forbearance, continue to be classified as TDRs, except as noted below. See the table below that presents the carrying value of loans that experienced a payment default during the period for more information. For credit card customers, the Company offers both temporary and permanent hardship programs. The temporary hardship programs consist of an interest rate reduction and in some cases a reduced minimum payment, both lasting for a period no longer than 12 months. Charging privileges on these accounts are generally suspended while in the program and, if certain criteria are met, may be reinstated following completion of the program. Credit card accounts of borrowers that have previously participated in a temporary interest rate reduction program and that have both demonstrated financial stability and had their charging privileges reinstated at a market-based interest rate, are excluded from the balance of TDRs. The permanent modification program involves closing the account, changing the structure of the loan to a fixed payment loan with a maturity no longer than 72 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. These permanent loan modifications remain in the population of TDRs until they are paid off or charged off. At March 31, 2021 and December 31, 2020, there were $5.5 billion and $5.7 billion, respectively, of private student loans in repayment and $96 million and $117 million, respectively, in forbearance. To assist private 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 a determination of financial distress based on an evaluation of the credit quality of the borrower using FICO scores. For personal loan customers, the Company offers various payment programs, including temporary and permanent programs, in certain situations. 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, the interest rate on the loan is reduced in certain circumstances. The permanent programs involve extending the term of the loan and, 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 classified as TDRs. Borrower performance after using payment programs or forbearance is monitored. The Company believes the programs are useful in assisting customers experiencing financial difficulties and allowing them to make timely payments. In addition to helping customers with their credit needs, these programs are designed to maximize collections and ultimately the Company’s profitability. The Company plans to continue to use payment programs and forbearance as a means to provide relief to customers experiencing temporary financial difficulties and expects to have additional loans classified as TDRs in the future as a result. In order to evaluate the primary financial effects that resulted from credit card loans entering into a TDR program during the three months ended March 31, 2021 and 2020, the Company quantified the amount by which interest and fees were reduced during the periods. During the three months ended March 31, 2021 and 2020, the Company forgave approximately $12 million and $21 million, respectively, of interest and fees as a result of accounts entering into a credit card loan TDR program. For all loan products, interest income on modified loans is recognized based on the modified contractual terms. Section 4013 of the CARES Act provides certain financial institutions with the option to suspend the application of accounting and reporting guidance for TDRs for a limited period of time for loan modifications made to address the effects of the COVID-19 pandemic. Section 541 of the Omnibus and COVID Relief and Response Act extended the loan modification relief provided by the CARES Act through the earlier of January 1, 2022, or the date that is 60 days after the termination of the presidentially-declared national emergency. The Company has elected to apply the option to suspend the application of accounting guidance for TDRs as provided under Section 4013 of the CARES Act and as subsequently extended. As such, TDR program balances and number of accounts have been favorably impacted by the exclusion of certain modifications from the TDR designation pursuant to these exemptions and are expected to remain lower than they otherwise would have been. The following table provides information on loans that entered a TDR program during the period (dollars in millions): For the Three Months Ended March 31, 2021 2020 (2) Number of Accounts Balances Number of Accounts Balances Accounts that entered a TDR program during the period Credit card loans (1) 20,702 $ 135 82,124 $ 533 Private student loans 126 $ 2 1,587 $ 29 Personal loans 1,390 $ 17 2,478 $ 33 (1) Accounts that entered a credit card TDR program include $128 million and $210 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2021 and 2020, respectively. (2) Certain prior period amounts have been reclassified to conform to current period presentation. The number and balance of new credit card and personal loan modifications, including the combined total of those designated as TDRs and those exempt from the TDR status, decreased during the three months ended March 31, 2021, when compared to the same period in 2020. The decrease is due to the impacts of government stimulus and government-offered disaster relief programs. The number and balance of new private student loan modifications, including the combined total of those designated as TDRs and those exempt from the TDR designation pursuant to the CARES Act, increased during the three months ended March 31, 2021, when compared to the same period in 2020. The increase was due to the utilization of SaP programs in 2020 in lieu of traditional loan modification programs. SaP programs do not constitute TDRs given the insignificant delay in payment; they are therefore also excluded from TDRs evaluated for exemption pursuant to the CARES Act. This increase was partially offset by the impacts of government stimulus and government-offered disaster relief programs in the current period. 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 March 31, 2021 2020 Number of Accounts Aggregated Outstanding Balances Upon Default Number of Accounts Aggregated Outstanding Balances Upon Default TDRs that subsequently defaulted Credit card loans (1)(2) 6,001 $ 36 20,485 $ 117 Private student loans (3) 66 $ 2 358 $ 7 Personal loans (2) 527 $ 7 1,200 $ 18 (1) For credit card loans that default from a temporary program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases. (2) For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. 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 March 31, 2021 and 2020, approximately 68% and 40%, respectively, of the total balances were charged off at the end of the month in which they defaulted from a TDR program. For accounts that have defaulted from a TDR program and have not been subsequently charged off, the balances are included in the allowance for credit loss analysis discussed above under “— Allowance for Credit Losses.” |
Credit Card and Student Loan Se
Credit Card and Student Loan Securitization Activities | 3 Months Ended |
Mar. 31, 2021 | |
Variable Interest Entities Disclosure [Abstract] | |
Credit Card and Student Loan Securitization Activities | Credit Card and Private Student Loan Securitization ActivitiesThe 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 to the consolidated financial statements of the Company's annual report on Form 10-K for the year ended December 31, 2020. 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 risk associated with trust receivables as of the balance sheet date through the retention of these subordinated interests. The current expected credit loss on trust receivables is included in the allowance for credit 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 that 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, which are reported in restricted cash within the Company's condensed consolidated statements of financial condition. 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 in trust debt and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to those investors. 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): March 31, December 31, Restricted cash $ 316 $ 16 Investors' interests held by third-party investors 10,600 10,600 Investors' interests held by wholly-owned subsidiaries of Discover Bank 5,143 6,121 Seller's interest 9,420 10,575 Loan receivables (1) 25,163 27,296 Allowance for credit losses allocated to securitized loan receivables (1) (1,615) (1,936) Net loan receivables 23,548 25,360 Other 4 3 Carrying value of assets of consolidated variable interest entities $ 23,868 $ 25,379 (1) The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with 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 March 31, 2021, 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. Private Student Loan Securitization Activities Private student loan trust receivables are reported in loan receivables and the related debt issued by the trust is reported in long-term borrowings. The assets of the trust 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 trust's restricted assets, the trust and investors have no recourse to the Company's other assets or the Company's general credit for a shortage in cash flows. Principal payments on the long-term secured borrowings are made as cash is collected on the underlying loans that are 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 service the private 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 a third party under an indemnification arrangement. 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): March 31, December 31, Restricted cash $ 10 $ 9 Private student loan receivables 236 250 Carrying value of assets of consolidated variable interest entities $ 246 $ 259 |
Intangible Assets (Notes)
Intangible Assets (Notes) | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets [Abstract] | |
Intangible Assets | Intangible AssetsIn the second quarter of 2020, the Company conducted an interim impairment test on its non-amortizable intangible assets, both the Diners Club trade names and international transaction processing rights, due to changes in the international travel and entertainment businesses and a declining revenue outlook for the foreseeable future resulting from the COVID-19 pandemic. The valuation methodology used to value the trade names and international transaction processing rights was based on a discounted cash flow method, consistent with the methodology used for annual impairment testing. As a result of this analysis, the Company determined that the trade names and international transaction processing rights were impaired and recognized a charge in its Payment Services segment of $36 million and $23 million, respectively. The impairment was recorded in other expense on the consolidated statements of income in the three months ended June 30, 2020. As of March 31, 2021, the trade names have a remaining net book value of $92 million and the international transaction processing rights have no remaining net book value. |
Deposits
Deposits | 3 Months Ended |
Mar. 31, 2021 | |
Deposits [Abstract] | |
Deposits | DepositsThe 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 online savings accounts, certificates of deposit, money market accounts, IRA certificates of deposit and checking accounts, while brokered deposits include certificates of deposit and sweep accounts. The following table provides a summary of interest-bearing deposit accounts (dollars in millions): March 31, December 31, Certificates of deposit in amounts less than $100,000 $ 17,526 $ 19,105 Certificates of deposit in amounts $100,000 or greater (1) 8,168 9,164 Savings deposits, including money market deposit accounts 49,227 47,426 Total interest-bearing deposits $ 74,921 $ 75,695 (1) Includes $2.3 billion and $2.6 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of March 31, 2021 and December 31, 2020, respectively. The following table summarizes certificates of deposit in amounts of $100,000 or greater by contractual maturity (dollars in millions): March 31, Three months or less $ 1,810 Over three months through six months 1,608 Over six months through twelve months 2,879 Over twelve months 1,871 Total $ 8,168 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): March 31, 2021 $ 12,744 2022 6,880 2023 2,357 2024 1,385 2025 868 Thereafter 1,460 Total $ 25,694 |
Long-Term Borrowings
Long-Term Borrowings | 3 Months Ended |
Mar. 31, 2021 | |
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): March 31, 2021 December 31, 2020 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1) 2021-2024 1.85% - 3.32% 2.74% $ 6,011 $ 6,041 Floating-rate asset-backed securities (2) 2021-2024 0.34% - 0.71% 0.50% 4,670 4,669 Total Discover Card Master Trust I and Discover Card Execution Note Trust 10,681 10,710 Floating-rate asset-backed security (3)(4) 2031 4.25% 4.25% 123 130 Total private student loan securitization trust 123 130 Total long-term borrowings - owed to securitization investors 10,804 10,840 Discover Financial Services (Parent Company) Fixed-rate senior notes 2022-2027 3.75% - 5.20% 4.16% 3,348 3,337 Fixed-rate retail notes 2022-2031 2.85% - 4.40% 3.75% 175 336 Discover Bank Fixed-rate senior bank notes (1) 2021-2030 2.45% - 4.65% 3.57% 6,172 6,213 Fixed-rate subordinated bank notes (1) 2028 4.68% 4.68% 512 515 Total long-term borrowings $ 21,011 $ 21,241 (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") or Overnight Index Swap ("OIS") Rate. Use of these interest rate swaps impacts the carrying value of the debt. See Note 16: 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 March 31, 2021. (3) The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2021. (4) Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private 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): March 31, 2021 2021 $ 4,195 2022 5,190 2023 3,337 2024 2,596 2025 528 Thereafter 5,165 Total $ 21,011 The Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of March 31, 2021, the total commitment of secured credit facilities through private providers |
Preferred Stock (Notes)
Preferred Stock (Notes) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Common and Preferred Stock | Preferred Stock The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at March 31, 2021 (dollars in millions): Series Description Initial Issuance Date Liquidation Preference and Redemption Price per Depositary Share (1) Per Annum Dividend Rate in effect at March 31, 2021 Total Depositary Shares Authorized, Issued and Outstanding Carrying Value March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 C (2)(3)(4) Fixed-to-Floating Rate 10/31/2017 $ 1,000 5.500 % 570,000 570,000 $ 563 $ 563 D (2)(5)(6) Fixed-Rate Reset 7/22/2020 $ 10 6.125 % 500,000 500,000 493 493 Total Preferred Stock 1,070,000 1,070,000 $ 1,056 $ 1,056 (1) Redeemable at the redemption price plus declared and unpaid dividends. (2) Issued as depositary shares, each representing 1/100 th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01. (3) Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital event (as defined in the certificate of designations for the Series C preferred stock). (4) Any dividends declared are payable semi-annually in arrears at a rate of 5.50% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to three-month LIBOR plus a spread of 3.076% per annum. (5) Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital event (as defined in the certificate of designations for the Series D Preferred Stock). (6) Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every five years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2021 | |
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 ("AOCI") were as follows (dollars in millions): Unrealized Gains on Available-for-Sale Investment Securities, Net of Tax Losses on Cash Flow Hedges, Net of Tax Losses on Pension Plan, Net of Tax AOCI For the Three Months Ended March 31, 2021 Balance at December 31, 2020 $ 284 $ (12) $ (227) $ 45 Net change (53) 1 — (52) Balance at March 31, 2021 $ 231 $ (11) $ (227) $ (7) For the Three Months Ended March 31, 2020 Balance at December 31, 2019 $ 112 $ (17) $ (214) $ (119) Net change 256 (3) — 253 Balance at March 31, 2020 $ 368 $ (20) $ (214) $ 134 The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): Before Tax Tax Benefit Net of Tax For the Three Months Ended March 31, 2021 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (71) $ 18 $ (53) Net change $ (71) $ 18 $ (53) Cash Flow Hedges Amounts reclassified from AOCI $ 1 $ — $ 1 Net change $ 1 $ — $ 1 For the Three Months Ended March 31, 2020 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 337 $ (81) $ 256 Net change $ 337 $ (81) $ 256 Cash Flow Hedges Net unrealized losses arising during the period $ (7) $ 2 $ (5) Amounts reclassified from AOCI 2 — 2 Net change $ (5) $ 2 $ (3) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
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): For the Three Months Ended March 31, 2021 2020 Income (loss) before income taxes $ 2,079 $ (78) Income tax expense (benefit) $ 486 $ (17) Effective income tax rate 23.4 % 22.0 % Income tax expense and the effective tax rate increased $503 million and 1.4 percentage points, respectively, for the three months ended March 31, 2021, as compared to the same period in 2020. The increase in income tax expense was primarily driven by an increase in pretax income. The effective tax rate increased primarily due to tax credits having a lower rate benefit on higher pretax income. The Company is subject to examination by the Internal Revenue Service ("IRS") and tax authorities in various state, local and foreign tax jurisdictions. Currently the IRS Office of Appeals is reviewing years 2011 – 2015 and the IRS is examining 2018. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. It is reasonably possible that settlements of the IRS appeal of the years 2011 – 2015 and certain state audits may be made within 12 months of the reporting date. At this time, the Company believes it is reasonably possible that a reduction of unrecognized tax benefits of $33 million could be recognized 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 | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars in millions, except per share amounts): For the Three Months Ended March 31, 2021 2020 Numerator Net income (loss) $ 1,593 $ (61) Preferred stock dividends (39) (16) Net income (loss) available to common stockholders 1,554 (77) Income allocated to participating securities (8) (1) Net income (loss) allocated to common stockholders $ 1,546 $ (78) Denominator Weighted-average shares of common stock outstanding 307 308 Effect of dilutive common stock equivalents — — Weighted-average shares of common stock outstanding and common stock equivalents 307 308 Basic earnings (loss) per common share $ 5.04 $ (0.25) Diluted earnings (loss) per common share $ 5.04 $ (0.25) There were no anti-dilutive securities included in the computation of diluted EPS for the three months ended March 31, 2021. Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three months ended March 31, 2020. |
Capital Adequacy
Capital Adequacy | 3 Months Ended |
Mar. 31, 2021 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Capital Adequacy | Capital Adequacy The Company is subject to the capital adequacy guidelines of the Federal Reserve. Discover Bank, the Company's 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 limit the Company's business activities and have a direct material effect on the financial condition and operating 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 risk-based capital requirements and leverage ratios 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. The Company and Discover Bank are subject to regulatory and capital rules issued by the Federal Reserve and FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). The Basel III rules became effective for the Company in January 2015 and were subject to phase-in periods through the end of 2018 based on the Company and Discover Bank being classified as "Standardized Approach" entities. Standardized approach entities are defined as United States banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposures less than $10 billion. Thresholds within the Basel III rules were all fully phased in as of January 1, 2019, with the exception of certain transition provisions that were frozen pursuant to regulations issued in November 2017. Pursuant to a final rule issued in July 2019, the transition provisions that were previously frozen have been replaced with new permanent rules that became effective in April 2020. The permanent rules provide for certain threshold-based deductions from and adjustments to the Common Equity Tier 1 ("CET1") to the extent that any one such category or all such categories in the aggregate exceed certain percentages of CET1. Additionally, the final rule revised certain capital requirements for Standardized Approach banks by raising the 10% of CET1 deduction threshold for certain items to 25% and eliminating the 15% combined deduction threshold applying to these items, among other things. Additionally, on March 27, 2020, federal bank regulatory agencies announced an interim and now final rule that allows banks that have implemented the Current Expected Credit Loss ("CECL") accounting model to delay the estimated impact of CECL on regulatory capital for two years, followed by a three-year transition period. For purposes of calculating regulatory capital, the Company has elected to defer recognition of the estimated impact of CECL on regulatory capital for two years in accordance with the final rule; after that period of deferral, the estimated impact of CECL on regulatory capital will be phased in over a three-year period beginning in 2022. Accordingly, the Company's CET1 capital ratios in 2020 and 2021 are higher than they otherwise would have been. As of March 31, 2021, 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 rules, respectively. 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 Capital Requirements Amount Ratio (1) Amount Ratio Amount (2) Ratio (2) March 31, 2021 Total capital (to risk-weighted assets) Discover Financial Services $ 15,751 18.0 % $ 6,993 ≥8.0% $ 8,742 ≥10.0% Discover Bank $ 15,354 17.8 % $ 6,906 ≥8.0% $ 8,633 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 14,104 16.1 % $ 5,245 ≥6.0% $ 5,245 ≥6.0% Discover Bank $ 13,421 15.5 % $ 5,180 ≥6.0% $ 6,906 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 14,104 12.2 % $ 4,620 ≥4.0% N/A N/A Discover Bank $ 13,421 11.7 % $ 4,572 ≥4.0% $ 5,715 ≥5.0% Common Equity Tier 1 (to risk-weighted assets) Discover Financial Services $ 13,048 14.9 % $ 3,934 ≥4.5% N/A N/A Discover Bank $ 13,421 15.5 % $ 3,885 ≥4.5% $ 5,611 ≥6.5% December 31, 2020 Total capital (to risk-weighted assets) Discover Financial Services $ 14,711 16.1 % $ 7,298 ≥8.0% $ 9,123 ≥10.0% Discover Bank $ 14,507 16.1 % $ 7,214 ≥8.0% $ 9,018 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 13,006 14.3 % $ 5,474 ≥6.0% $ 5,474 ≥6.0% Discover Bank $ 12,415 13.8 % $ 5,411 ≥6.0% $ 7,214 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 13,006 10.9 % $ 4,757 ≥4.0% N/A N/A Discover Bank $ 12,415 10.5 % $ 4,709 ≥4.0% $ 5,886 ≥5.0% Common Equity Tier 1 (to risk-weighted assets) Discover Financial Services $ 11,950 13.1 % $ 4,105 ≥4.5% N/A N/A Discover Bank $ 12,415 13.8 % $ 4,058 ≥4.5% $ 5,862 ≥6.5% (1) Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions, including CECL 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 | 3 Months Ended |
Mar. 31, 2021 | |
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 Unused Credit Arrangements At March 31, 2021, the Company had unused credit arrangements for loans of approximately $218.8 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. The Company can terminate substantially all of these arrangements at any time and therefore the arrangements do not necessarily represent future cash requirements. The arrangements are periodically reviewed based on account usage, customer creditworthiness and loan qualification. As the Company’s credit card loans are unconditionally cancellable, no liability for expected credit losses is required for unused lines of credit. For all other loans, the Company records a liability for expected credit losses for unfunded commitments, which is presented as part of accrued expenses and other liabilities in the consolidated statements of financial condition. Contingencies See Note 14: 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 and 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 private 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 private 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. 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. • Global 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 the Company disables the settlement of any further transactions for the defaulting party. The Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), 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. 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 would be approximately $60 million as of March 31, 2021. 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 March 31, 2021, the Company had not recorded any material contingent liability in the condensed consolidated financial statements for these counterparty exposures and management believes that the probability of any payments under these arrangements is low. 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 months ended March 31, 2021 and 2020. 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 (dollars in millions): For the Three Months Ended March 31, 2021 2020 Aggregate sales transaction volume (1) $ 47,487 $ 40,963 (1) Represents 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 material contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of March 31, 2021 or December 31, 2020. 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 March 31, 2021 and December 31, 2020, the Company had escrow deposits and settlement withholdings of $15 million and $16 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 | 3 Months Ended |
Mar. 31, 2021 | |
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. 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. The investigations and proceedings 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. Certain subsidiaries of the Company are subject to a consent order with the Consumer Financial Protection Bureau ("CFPB") regarding certain private 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. In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal and regulatory matters when those matters present loss contingencies that are both probable and estimable. Litigation and regulatory settlement related expense was not material for the three months ended March 31, 2021 and 2020. 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 the likelihood of losses 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 $290 million as of March 31, 2021. This estimated range of reasonably possible losses is based upon currently available information for those proceedings in which the Company is involved and takes into account the Company's best estimate of such losses for those matters for which an estimate can be made. It does not represent the Company's maximum potential loss exposure. Various aspects of the 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 noted 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 adversely affect the Company's reputation and 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. On July 22, 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products Inc. (the "Discover Subsidiaries"), agreed to a consent order with the CFPB with respect to certain private student loan servicing practices (the “2015 Order”). The 2015 Order expired in July 2020. On December 22, 2020, the Discover Subsidiaries agreed to a consent order (the “2020 Order”) with the CFPB resolving the agency’s investigation into Discover Bank’s compliance with the 2015 Order. In connection with the 2020 Order, Discover is required to implement a redress and compliance plan and must pay at least $10 million in consumer redress to consumers who may have been harmed and paid a $25 million civil money penalty to the CFPB. On March 8, 2016, a class action lawsuit was filed against the Company, other credit card networks, other issuing banks and EMVCo in the United States 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 a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. The plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. In May 2017, 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. On August 28, 2020, the Court granted the plaintiffs' Motion to Certify a Class. The defendants appealed the ruling on September 11, 2020, which was denied. The Company filed a Motion to Compel Arbitration on October 30, 2020, on which a ruling remains pending. The defendants submitted expert reports on March 22, 2021. 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 | 3 Months Ended |
Mar. 31, 2021 | |
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. Accounting Standards Codification ("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 where the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy 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. 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 Significant Significant Total Balance at March 31, 2021 Assets Fair value - OCI U.S. Treasury securities $ 8,907 $ — $ — $ 8,907 Residential mortgage-backed securities - Agency — 270 — 270 Available-for-sale investment securities $ 8,907 $ 270 $ — $ 9,177 Liabilities Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 1 $ — $ 1 Balance at December 31, 2020 Assets Fair value - OCI United States Treasury securities $ 9,354 $ — $ — $ 9,354 Residential mortgage-backed securities - Agency — 300 — 300 Available-for-sale investment securities $ 9,354 $ 300 $ — $ 9,654 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 1 $ — $ 1 (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. Available-for-Sale Investment Securities Investment securities classified as available-for-sale consist of United States Treasury securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of United States Treasury securities, are determined based on quoted market prices for the same securities. The Company classifies RMBS 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 pricing services primarily by comparison to valuations obtained through other pricing sources. The Company evaluates pricing variances among 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 March 31, 2021, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $257 million, a weighted-average coupon of 3.25% and a weighted-average remaining maturity of two 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 by 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 among 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. As of October 16, 2020, the Company revised its valuation methodology to reflect changes made by central clearinghouses that changed the discounting methodology and interest calculation of cash variation margin from OIS to the Secured Overnight Financing Rate (“SOFR”) for U.S. Dollar cleared interest rate swaps. The Company's valuation methodology will result in valuations for cleared interest rate swaps that better reflect cleared swap prices obtainable in the markets in which the Company transacts. Pursuant to ASC Topic 848, the Company has elected and applied certain optional expedients and exceptions that provide contract modification and hedge accounting relief to eligible interest rate swaps affected by the change in the discounting methodology. The changes in valuation methodology are applied prospectively as a change in accounting estimate and are immaterial to the Company’s financial statements. 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 may be applicable whenever one is tested for impairment. The Company had no impairments related to these assets during the three months ended March 31, 2021 and 2020. See Note 5: Intangible Assets for more information on the impact of COVID-19 on intangible 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 March 31, 2021 Quoted Prices in Active Markets Significant Significant Total Carrying Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 262 $ — $ 262 $ 255 Held-to-maturity investment securities $ — $ 262 $ — $ 262 $ 255 Net loan receivables $ — $ — $ 86,984 $ 86,984 $ 79,000 Carrying value approximates fair value (1) Cash and cash equivalents $ 20,348 $ — $ — $ 20,348 $ 20,348 Restricted cash $ 326 $ — $ — $ 326 $ 326 Accrued interest receivables (2) $ — $ 967 $ — $ 967 $ 967 Liabilities Amortized cost Time deposits (3) $ — $ 26,336 $ — $ 26,336 $ 25,694 Long-term borrowings - owed to securitization investors $ — $ 10,757 $ 123 $ 10,880 $ 10,804 Other long-term borrowings — 10,991 — 10,991 10,207 Long-term borrowings $ — $ 21,748 $ 123 $ 21,871 $ 21,011 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 147 $ — $ 147 $ 147 (1) The carrying values of these assets and liabilities approximate fair value due to their short-term nature. (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. Balance at December 31, 2020 Quoted Prices in Active Markets Significant Significant Total Carrying Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 269 $ — $ 269 $ 260 Held-to-maturity investment securities $ — $ 269 $ — $ 269 $ 260 Net loan receivables $ — $ — $ 91,200 $ 91,200 $ 82,223 Carrying value approximates fair value (1) Cash and cash equivalents $ 13,564 $ — $ — $ 13,564 $ 13,564 Restricted cash $ 25 $ — $ — $ 25 $ 25 Other short-term investments $ 2,200 $ — $ — $ 2,200 $ 2,200 Accrued interest receivables (2) $ — $ 992 $ — $ 992 $ 992 Liabilities Amortized cost Time deposits (3) $ — $ 29,090 $ — $ 29,090 $ 28,269 Long-term borrowings - owed to securitization investors $ — $ 10,794 $ 130 $ 10,924 $ 10,840 Other long-term borrowings — 11,418 — 11,418 10,401 Long-term borrowings $ — $ 22,212 $ 130 $ 22,342 $ 21,241 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 233 $ — $ 233 $ 233 (1) The carrying values of these assets and liabilities approximate fair value due to their short-term nature. (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 | 3 Months Ended |
Mar. 31, 2021 | |
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, if any, 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 15: Fair Value Measurements for a description of the valuation methodologies used for derivatives. 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. Other 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. 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 receipts from credit card receivables and interest payments on credit card securitized debt and deposits. The derivatives are designated as hedges of the risk of changes in cash flows on the Company's Prime rate-based interest receipts and federal funds rate-based interest payments and qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"). As of March 31, 2021 and December 31, 2020, the Company's outstanding cash flow hedges related only to interest receipts from credit card receivables and had an initial maximum period of two years. 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 March 31, 2021, will be reclassified to interest income and interest expense as interest receipts and payments are accrued on the Company's then outstanding credit card receivables and certain floating-rate securitized debt. During the next 12 months, the Company estimates it will reclassify $3 million of pretax income and expense to earnings related to its derivatives designated as cash flow hedges. Fair Value Hedges The Company is exposed to changes in fair value 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 notes, attributable to changes in LIBOR or OIS rate, benchmark interest rates 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 relating to the risk being hedged are recorded in interest expense. The changes generally provide substantial offset to one another. 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 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 presented 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): March 31, 2021 December 31, 2020 Notional Number of Outstanding Derivative Contracts Derivative Assets Derivative Liabilities Notional Derivative Assets Derivative Liabilities Derivatives designated as hedges Interest rate swaps—cash flow hedge $ 250 1 $ — $ — $ 250 $ — $ — Interest rate swaps—fair value hedge $ 11,625 15 — 1 $ 11,625 1 — Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 27 6 — — $ 24 — — Total gross derivative assets/liabilities (2) — 1 1 — Less: collateral held/posted (3) — (1) — — Total net derivative assets/liabilities $ — $ — $ 1 $ — (1) The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 788 million as of March 31, 2021, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 596 million as of December 31, 2020. (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 March 31, 2021 and December 31, 2020, the Company had one outstanding contract with a total notional amount of $12 million and $27 million, respectively, and an 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 adjustments for fair value hedges (dollars in millions): March 31, 2021 December 31, 2020 Carrying Amount of Hedged Liability Cumulative Amount of Fair Value Hedging Adjustment Increasing the Carrying Amount of Hedged Liability Carrying Amount of Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment Increasing the Carrying Amount of Hedged Liability Long-term borrowings $ 11,802 $ 203 $ 11,881 $ 281 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 Interest Income (Credit Card) Other Income For the Three Months Ended March 31, 2021 Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded $ (193) $ (123) $ 2,154 $ 23 The effects of cash flow and fair value hedging Gains (losses) on cash flow hedging relationship Amounts reclassified from OCI into earnings $ — $ (1) $ — $ — Gains (losses) on fair value hedging relationships Gains on hedged items $ — $ 78 $ — $ — Gains (losses) on interest rate swaps — (30) — — Total gains on fair value hedging relationships $ — $ 48 $ — $ — For the Three Months Ended March 31, 2020 Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded $ (373) $ (211) $ — $ 28 The effects of cash flow and fair value hedging Losses on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1) $ (1) $ — $ — Gains (losses) on fair value hedging relationships Gains (losses) on hedged items $ — $ (396) $ — $ — Gains on interest rate swaps — 405 — — Total gains on fair value hedging relationships $ — $ 9 $ — $ — For the impact of the derivative instruments on OCI, see Note 9: 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 the derivatives held with that counterparty. These 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. Most of the Company's cash collateral amounts relate to positions cleared through an exchange and are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities. |
Segment Disclosures
Segment Disclosures | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Disclosures | Segment Disclosures The Company's business activities are managed in two segments: Digital Banking and Payment Services. • Digital Banking: The Digital Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans and other consumer lending and deposit products. The majority of Digital 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 Digital Banking segment. • Through its operation of the Discover Network, the Digital 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): Digital Payment Total For the Three Months Ended March 31, 2021 Interest income Credit card loans $ 2,154 $ — $ 2,154 Private student loans 185 — 185 Personal loans 224 — 224 Other loans 28 — 28 Other interest income 55 — 55 Total interest income 2,646 — 2,646 Interest expense 316 — 316 Net interest income 2,330 — 2,330 Provision for credit losses (365) — (365) Other income 379 86 465 Other expense 1,047 34 1,081 Income before income taxes $ 2,027 $ 52 $ 2,079 For the Three Months Ended March 31, 2020 Interest income Credit card loans $ 2,416 $ — $ 2,416 Private student loans 205 — 205 Personal loans 254 — 254 Other loans 24 — 24 Other interest income 83 — 83 Total interest income 2,982 — 2,982 Interest expense 584 — 584 Net interest income 2,398 — 2,398 Provision for credit losses 1,807 — 1,807 Other income 366 124 490 Other expense 1,118 41 1,159 (Loss) Income before income taxes $ (161) $ 83 $ (78) |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2021 | |
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): Digital Banking Payment Services Total For the Three Months Ended March 31, 2021 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 226 $ 15 $ 241 Protection products revenue 43 — 43 Transaction processing revenue — 51 51 Other income 3 20 23 Total other income subject to ASC 606 (2) 272 86 358 Other income not subject to ASC 606 Loan fee income 107 — 107 Total other income not subject to ASC 606 107 — 107 Total other income by operating segment $ 379 $ 86 $ 465 For the Three Months Ended March 31, 2020 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 197 $ 19 $ 216 Protection products revenue 47 — 47 Transaction processing revenue — 44 44 Other income 3 25 28 Total other income subject to ASC 606 (2) 247 88 335 Other income not subject to ASC 606 Loan fee income 119 — 119 Gains on equity investments — 36 36 Total other income not subject to ASC 606 119 36 155 Total other income by operating segment $ 366 $ 124 $ 490 (1) Net of rewards, including Cashback Bonus rewards, of $525 million and $478 million for the three months ended March 31, 2021 and 2020, respectively. (2) Excludes deposit product fees that are reported within net interest income, which were immaterial for the three months ended March 31, 2021 and 2020. For a detailed description of the Company's significant revenue recognition accounting policies, see Note 2: Summary of Significant Accounting Policies to the consolidated financial statements of the Company's annual report on Form 10-K for the year ended December 31, 2020. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThe Company has evaluated events and transactions that have occurred subsequent to March 31, 2021 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) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 necessary for the fair presentation of 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) | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Investment Securities | The Company's other short-term investments and investment securities consist of the following (dollars in millions): March 31, December 31, United States Treasury bills (1) $ — $ 2,200 Total other short-term investments $ — $ 2,200 United States Treasury securities (2) $ 8,907 $ 9,354 Residential mortgage-backed securities - Agency (3) 525 560 Total investment securities $ 9,432 $ 9,914 (1) Includes United States Treasury bills with maturity dates greater than 90 days but less than one year at the time of acquisition. (2) Includes $102 million and $117 million of United States Treasury securities pledged as swap collateral as of March 31, 2021 and December 31, 2020. (3) Consists of residential mortgage-backed securities ("RMBS") issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value | The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions): Amortized Gross Gross Fair Value At March 31, 2021 Available-for-Sale Investment Securities (1) United States Treasury securities $ 8,611 $ 296 $ — $ 8,907 Residential mortgage-backed securities - Agency 260 10 — 270 Total available-for-sale investment securities $ 8,871 $ 306 $ — $ 9,177 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 255 $ 8 $ (1) $ 262 Total held-to-maturity investment securities $ 255 $ 8 $ (1) $ 262 At December 31, 2020 Available-for-Sale Investment Securities (1) United States Treasury securities $ 8,987 $ 367 $ — $ 9,354 Residential mortgage-backed securities - Agency 290 10 — 300 Total available-for-sale investment securities $ 9,277 $ 377 $ — $ 9,654 Held-to-Maturity Investment Securities (2) Residential mortgage-backed securities - Agency (3) $ 260 $ 9 $ — $ 269 Total held-to-maturity investment securities $ 260 $ 9 $ — $ 269 (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 RMBS that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. |
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 March 31, 2021 One Year After One After Five After Ten Total Available-for-Sale Investment Securities—Amortized Cost United States Treasury securities $ 3,005 $ 5,606 $ — $ — $ 8,611 Residential mortgage-backed securities - Agency (1) 3 34 214 9 260 Total available-for-sale investment securities $ 3,008 $ 5,640 $ 214 $ 9 $ 8,871 Held-to-Maturity Investment Securities—Amortized Cost Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 255 $ 255 Total held-to-maturity investment securities $ — $ — $ — $ 255 $ 255 Available-for-Sale Investment Securities—Fair Values United States Treasury securities $ 3,035 $ 5,872 $ — $ — $ 8,907 Residential mortgage-backed securities - Agency (1) 3 35 223 9 270 Total available-for-sale investment securities $ 3,038 $ 5,907 $ 223 $ 9 $ 9,177 Held-to-Maturity Investment Securities—Fair Values Residential mortgage-backed securities - Agency (1) $ — $ — $ — $ 262 $ 262 Total held-to-maturity investment securities $ — $ — $ — $ 262 $ 262 (1) Maturities of RMBS are reflective of the contractual maturities of the investment. |
Loan Receivables (Tables)
Loan Receivables (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Loan Receivables | The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions): March 31, December 31, Credit card loans (1)(2) $ 67,304 $ 71,472 Other loans (3) Private student loans (4) 10,153 9,954 Personal loans 6,961 7,177 Other loans 1,929 1,846 Total other loans 19,043 18,977 Total loan receivables 86,347 90,449 Allowance for credit losses (7,347) (8,226) Net loan receivables $ 79,000 $ 82,223 (1) Amounts include carrying values of $15.7 billion and $16.7 billion underlying investors' interest in trust debt at March 31, 2021 and December 31, 2020, respectively, and $9.4 billion and $10.6 billion in seller's interest at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. (2) Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $395 million and $420 million at March 31, 2021 and December 31, 2020, respectively. (3) Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $477 million, $45 million and $6 million, respectively, at March 31, 2021 and $469 million, $49 million and $6 million, respectively, at December 31, 2020. (4) Amounts include carrying values of $236 million and $250 million in loans pledged as collateral against the note issued from a private student loan securitization trust at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. |
Schedule of Credit Risk Profile by FICO Score and Origination Year | The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions): Credit Risk Profile by FICO Score March 31, 2021 December 31, 2020 660 and Above Less than 660 660 and Above Less than 660 $ % $ % $ % $ % Credit card loans (1) $ 55,669 83 % $ 11,635 17 % $ 58,950 82 % $ 12,522 18 % Private student loans by origination year (2)(3) 2021 $ 212 98 % $ 5 2 % 2020 1,625 95 % 81 5 % $ 1,173 95 % $ 60 5 % 2019 1,592 96 % 60 4 % 1,659 96 % 61 4 % 2018 1,297 96 % 61 4 % 1,365 96 % 61 4 % 2017 993 95 % 55 5 % 1,052 95 % 57 5 % Prior 3,943 95 % 229 5 % 4,219 94 % 247 6 % Total private student loans $ 9,662 95 % $ 491 5 % $ 9,468 95 % $ 486 5 % Personal loans by origination year 2021 $ 810 100 % $ 3 — % 2020 2,571 99 % 29 1 % $ 2,880 99 % $ 25 1 % 2019 1,858 96 % 85 4 % 2,183 96 % 90 4 % 2018 834 92 % 75 8 % 1,018 92 % 90 8 % 2017 447 89 % 54 11 % 558 89 % 69 11 % Prior 167 86 % 28 14 % 227 86 % 37 14 % Total personal loans $ 6,687 96 % $ 274 4 % $ 6,866 96 % $ 311 4 % (1) Amounts include $1.0 billion of revolving line-of-credit arrangements that were converted to term loans as a result of a troubled debt restructuring ("TDR") program as of March 31, 2021 and December 31, 2020. (2) A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years. (3) FICO score represents the higher credit score of the cosigner or borrower. |
Schedule of Delinquent Loans by Origination Year | The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions): March 31, 2021 December 31, 2020 30-89 Days 90 or Total Past 30-89 Days 90 or Total Past Credit card loans $ 565 $ 680 $ 1,245 $ 739 $ 739 $ 1,478 Private student loans by origination year (1) 2021 $ — $ — $ — 2020 1 — 1 $ — $ — $ — 2019 5 3 8 3 1 4 2018 9 4 13 9 3 12 2017 11 4 15 12 4 16 Prior 65 20 85 86 20 106 Total private student loans $ 91 $ 31 $ 122 $ 110 $ 28 $ 138 Personal loans by origination year 2021 $ — $ — $ — 2020 6 2 8 $ 5 $ 2 $ 7 2019 16 5 21 18 9 27 2018 11 4 15 15 7 22 2017 7 3 10 10 5 15 Prior 3 2 5 5 2 7 Total personal loans $ 43 $ 16 $ 59 $ 53 $ 25 $ 78 (1) Private student loans may include a deferment period, during which customers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency. |
Schedule of Changes in the Allowance for Credit Losses | The following tables provide changes in the Company's allowance for credit losses (dollars in millions): For the Three Months Ended March 31, 2021 Credit Card Loans Private Student Loans Personal Loans Other Loans Total Loans Balance at December 31, 2020 $ 6,491 $ 840 $ 857 $ 38 $ 8,226 Additions Provision for credit losses (1) (377) 36 (4) 3 (342) Deductions Charge-offs (663) (20) (64) — (747) Recoveries 189 6 15 — 210 Net charge-offs (474) (14) (49) — (537) Balance at March 31, 2021 $ 5,640 $ 862 $ 804 $ 41 $ 7,347 For the Three Months Ended March 31, 2020 Credit Card Loans Private Student Loans Personal Loans Other Loans Total Loans Balance at December 31, 2019 (2) $ 2,883 $ 148 $ 348 $ 4 $ 3,383 Cumulative effect of ASU No. 2016-13 adoption (3) 1,667 505 265 24 2,461 Balance at January 1, 2020 4,550 653 613 28 5,844 Additions Provision for credit losses (1) 1,439 129 263 7 1,838 Deductions Charge-offs (869) (22) (84) — (975) Recoveries 186 5 15 — 206 Net charge-offs (683) (17) (69) — (769) Balance at March 31, 2020 $ 5,306 $ 765 $ 807 $ 35 $ 6,913 (1) Excludes a $23 million and $31 million reclassification of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2021 and 2020, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition. (2) Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. (3) Represents the adjustment to the allowance for credit losses as a result of adoption of ASU No. 2016-13 on January 1, 2020. |
Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables | Net charge-offs of principal are recorded against the allowance for credit 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 March 31, 2021 2020 Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) $ 95 $ 143 Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) $ 23 $ 35 |
Schedule of Delinquent and Non-Accruing Loans | The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions): 30-89 Days 90 or Total Past 90 or Total Non-accruing (1) At March 31, 2021 Credit card loans $ 565 $ 680 $ 1,245 $ 626 $ 216 Other loans Private student loans 91 31 122 30 11 Personal loans 43 16 59 15 8 Other loans 7 5 12 1 12 Total other loans 141 52 193 46 31 Total loan receivables $ 706 $ 732 $ 1,438 $ 672 $ 247 At December 31, 2020 Credit card loans $ 739 $ 739 $ 1,478 $ 687 $ 209 Other loans Private student loans 110 28 138 27 12 Personal loans 53 25 78 23 12 Other loans 8 3 11 — 10 Total other loans 171 56 227 50 34 Total loan receivables $ 910 $ 795 $ 1,705 $ 737 $ 243 (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 $8 million and $10 million for the three months ended March 31, 2021 and 2020, 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. |
Schedule of Loans That Entered a Modification Program During the Period | The following table provides information on loans that entered a TDR program during the period (dollars in millions): For the Three Months Ended March 31, 2021 2020 (2) Number of Accounts Balances Number of Accounts Balances Accounts that entered a TDR program during the period Credit card loans (1) 20,702 $ 135 82,124 $ 533 Private student loans 126 $ 2 1,587 $ 29 Personal loans 1,390 $ 17 2,478 $ 33 (1) Accounts that entered a credit card TDR program include $128 million and $210 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2021 and 2020, respectively. (2) Certain prior period amounts have been reclassified to conform to current period presentation. |
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 March 31, 2021 2020 Number of Accounts Aggregated Outstanding Balances Upon Default Number of Accounts Aggregated Outstanding Balances Upon Default TDRs that subsequently defaulted Credit card loans (1)(2) 6,001 $ 36 20,485 $ 117 Private student loans (3) 66 $ 2 358 $ 7 Personal loans (2) 527 $ 7 1,200 $ 18 (1) For credit card loans that default from a temporary program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases. (2) For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. |
Credit Card and Student Loan _2
Credit Card and Student Loan Securitization Activities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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): March 31, December 31, Restricted cash $ 316 $ 16 Investors' interests held by third-party investors 10,600 10,600 Investors' interests held by wholly-owned subsidiaries of Discover Bank 5,143 6,121 Seller's interest 9,420 10,575 Loan receivables (1) 25,163 27,296 Allowance for credit losses allocated to securitized loan receivables (1) (1,615) (1,936) Net loan receivables 23,548 25,360 Other 4 3 Carrying value of assets of consolidated variable interest entities $ 23,868 $ 25,379 (1) The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with 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 [Table 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): March 31, December 31, Restricted cash $ 10 $ 9 Private student loan receivables 236 250 Carrying value of assets of consolidated variable interest entities $ 246 $ 259 |
Deposits (Tables)
Deposits (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Deposits [Abstract] | |
Schedule of Interest Bearing Deposit Accounts | The following table provides a summary of interest-bearing deposit accounts (dollars in millions): March 31, December 31, Certificates of deposit in amounts less than $100,000 $ 17,526 $ 19,105 Certificates of deposit in amounts $100,000 or greater (1) 8,168 9,164 Savings deposits, including money market deposit accounts 49,227 47,426 Total interest-bearing deposits $ 74,921 $ 75,695 (1) Includes $2.3 billion and $2.6 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of March 31, 2021 and December 31, 2020, 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): March 31, Three months or less $ 1,810 Over three months through six months 1,608 Over six months through twelve months 2,879 Over twelve months 1,871 Total $ 8,168 |
Time 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): March 31, 2021 $ 12,744 2022 6,880 2023 2,357 2024 1,385 2025 868 Thereafter 1,460 Total $ 25,694 |
Long-Term Borrowings (Tables)
Long-Term Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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): March 31, 2021 December 31, 2020 Maturity Interest Weighted-Average Interest Rate Outstanding Amount Outstanding Amount Securitized Debt Fixed-rate asset-backed securities (1) 2021-2024 1.85% - 3.32% 2.74% $ 6,011 $ 6,041 Floating-rate asset-backed securities (2) 2021-2024 0.34% - 0.71% 0.50% 4,670 4,669 Total Discover Card Master Trust I and Discover Card Execution Note Trust 10,681 10,710 Floating-rate asset-backed security (3)(4) 2031 4.25% 4.25% 123 130 Total private student loan securitization trust 123 130 Total long-term borrowings - owed to securitization investors 10,804 10,840 Discover Financial Services (Parent Company) Fixed-rate senior notes 2022-2027 3.75% - 5.20% 4.16% 3,348 3,337 Fixed-rate retail notes 2022-2031 2.85% - 4.40% 3.75% 175 336 Discover Bank Fixed-rate senior bank notes (1) 2021-2030 2.45% - 4.65% 3.57% 6,172 6,213 Fixed-rate subordinated bank notes (1) 2028 4.68% 4.68% 512 515 Total long-term borrowings $ 21,011 $ 21,241 (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") or Overnight Index Swap ("OIS") Rate. Use of these interest rate swaps impacts the carrying value of the debt. See Note 16: 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 March 31, 2021. (3) The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2021. (4) Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private 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): March 31, 2021 2021 $ 4,195 2022 5,190 2023 3,337 2024 2,596 2025 528 Thereafter 5,165 Total $ 21,011 |
Preferred Stock (Tables)
Preferred Stock (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Stock by Class | The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at March 31, 2021 (dollars in millions): Series Description Initial Issuance Date Liquidation Preference and Redemption Price per Depositary Share (1) Per Annum Dividend Rate in effect at March 31, 2021 Total Depositary Shares Authorized, Issued and Outstanding Carrying Value March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 C (2)(3)(4) Fixed-to-Floating Rate 10/31/2017 $ 1,000 5.500 % 570,000 570,000 $ 563 $ 563 D (2)(5)(6) Fixed-Rate Reset 7/22/2020 $ 10 6.125 % 500,000 500,000 493 493 Total Preferred Stock 1,070,000 1,070,000 $ 1,056 $ 1,056 (1) Redeemable at the redemption price plus declared and unpaid dividends. (2) Issued as depositary shares, each representing 1/100 th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01. (3) Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital event (as defined in the certificate of designations for the Series C preferred stock). (4) Any dividends declared are payable semi-annually in arrears at a rate of 5.50% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to three-month LIBOR plus a spread of 3.076% per annum. (5) Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital event (as defined in the certificate of designations for the Series D Preferred Stock). (6) Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every five years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 ("AOCI") were as follows (dollars in millions): Unrealized Gains on Available-for-Sale Investment Securities, Net of Tax Losses on Cash Flow Hedges, Net of Tax Losses on Pension Plan, Net of Tax AOCI For the Three Months Ended March 31, 2021 Balance at December 31, 2020 $ 284 $ (12) $ (227) $ 45 Net change (53) 1 — (52) Balance at March 31, 2021 $ 231 $ (11) $ (227) $ (7) For the Three Months Ended March 31, 2020 Balance at December 31, 2019 $ 112 $ (17) $ (214) $ (119) Net change 256 (3) — 253 Balance at March 31, 2020 $ 368 $ (20) $ (214) $ 134 |
Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI | The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions): Before Tax Tax Benefit Net of Tax For the Three Months Ended March 31, 2021 Available-for-Sale Investment Securities Net unrealized holding losses arising during the period $ (71) $ 18 $ (53) Net change $ (71) $ 18 $ (53) Cash Flow Hedges Amounts reclassified from AOCI $ 1 $ — $ 1 Net change $ 1 $ — $ 1 For the Three Months Ended March 31, 2020 Available-for-Sale Investment Securities Net unrealized holding gains arising during the period $ 337 $ (81) $ 256 Net change $ 337 $ (81) $ 256 Cash Flow Hedges Net unrealized losses arising during the period $ (7) $ 2 $ (5) Amounts reclassified from AOCI 2 — 2 Net change $ (5) $ 2 $ (3) |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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): For the Three Months Ended March 31, 2021 2020 Income (loss) before income taxes $ 2,079 $ (78) Income tax expense (benefit) $ 486 $ (17) Effective income tax rate 23.4 % 22.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted EPS | The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars in millions, except per share amounts): For the Three Months Ended March 31, 2021 2020 Numerator Net income (loss) $ 1,593 $ (61) Preferred stock dividends (39) (16) Net income (loss) available to common stockholders 1,554 (77) Income allocated to participating securities (8) (1) Net income (loss) allocated to common stockholders $ 1,546 $ (78) Denominator Weighted-average shares of common stock outstanding 307 308 Effect of dilutive common stock equivalents — — Weighted-average shares of common stock outstanding and common stock equivalents 307 308 Basic earnings (loss) per common share $ 5.04 $ (0.25) Diluted earnings (loss) per common share $ 5.04 $ (0.25) |
Capital Adequacy (Tables)
Capital Adequacy (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [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 Capital Requirements Amount Ratio (1) Amount Ratio Amount (2) Ratio (2) March 31, 2021 Total capital (to risk-weighted assets) Discover Financial Services $ 15,751 18.0 % $ 6,993 ≥8.0% $ 8,742 ≥10.0% Discover Bank $ 15,354 17.8 % $ 6,906 ≥8.0% $ 8,633 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 14,104 16.1 % $ 5,245 ≥6.0% $ 5,245 ≥6.0% Discover Bank $ 13,421 15.5 % $ 5,180 ≥6.0% $ 6,906 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 14,104 12.2 % $ 4,620 ≥4.0% N/A N/A Discover Bank $ 13,421 11.7 % $ 4,572 ≥4.0% $ 5,715 ≥5.0% Common Equity Tier 1 (to risk-weighted assets) Discover Financial Services $ 13,048 14.9 % $ 3,934 ≥4.5% N/A N/A Discover Bank $ 13,421 15.5 % $ 3,885 ≥4.5% $ 5,611 ≥6.5% December 31, 2020 Total capital (to risk-weighted assets) Discover Financial Services $ 14,711 16.1 % $ 7,298 ≥8.0% $ 9,123 ≥10.0% Discover Bank $ 14,507 16.1 % $ 7,214 ≥8.0% $ 9,018 ≥10.0% Tier 1 capital (to risk-weighted assets) Discover Financial Services $ 13,006 14.3 % $ 5,474 ≥6.0% $ 5,474 ≥6.0% Discover Bank $ 12,415 13.8 % $ 5,411 ≥6.0% $ 7,214 ≥8.0% Tier 1 capital (to average assets) Discover Financial Services $ 13,006 10.9 % $ 4,757 ≥4.0% N/A N/A Discover Bank $ 12,415 10.5 % $ 4,709 ≥4.0% $ 5,886 ≥5.0% Common Equity Tier 1 (to risk-weighted assets) Discover Financial Services $ 11,950 13.1 % $ 4,105 ≥4.5% N/A N/A Discover Bank $ 12,415 13.8 % $ 4,058 ≥4.5% $ 5,862 ≥6.5% (1) Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions, including CECL 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) | 3 Months Ended |
Mar. 31, 2021 | |
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 (dollars in millions): For the Three Months Ended March 31, 2021 2020 Aggregate sales transaction volume (1) $ 47,487 $ 40,963 (1) Represents 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) | 3 Months Ended |
Mar. 31, 2021 | |
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 Significant Significant Total Balance at March 31, 2021 Assets Fair value - OCI U.S. Treasury securities $ 8,907 $ — $ — $ 8,907 Residential mortgage-backed securities - Agency — 270 — 270 Available-for-sale investment securities $ 8,907 $ 270 $ — $ 9,177 Liabilities Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 1 $ — $ 1 Balance at December 31, 2020 Assets Fair value - OCI United States Treasury securities $ 9,354 $ — $ — $ 9,354 Residential mortgage-backed securities - Agency — 300 — 300 Available-for-sale investment securities $ 9,354 $ 300 $ — $ 9,654 Fair value - Net income Derivative financial instruments - fair value hedges (1) $ — $ 1 $ — $ 1 (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 March 31, 2021 Quoted Prices in Active Markets Significant Significant Total Carrying Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 262 $ — $ 262 $ 255 Held-to-maturity investment securities $ — $ 262 $ — $ 262 $ 255 Net loan receivables $ — $ — $ 86,984 $ 86,984 $ 79,000 Carrying value approximates fair value (1) Cash and cash equivalents $ 20,348 $ — $ — $ 20,348 $ 20,348 Restricted cash $ 326 $ — $ — $ 326 $ 326 Accrued interest receivables (2) $ — $ 967 $ — $ 967 $ 967 Liabilities Amortized cost Time deposits (3) $ — $ 26,336 $ — $ 26,336 $ 25,694 Long-term borrowings - owed to securitization investors $ — $ 10,757 $ 123 $ 10,880 $ 10,804 Other long-term borrowings — 10,991 — 10,991 10,207 Long-term borrowings $ — $ 21,748 $ 123 $ 21,871 $ 21,011 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 147 $ — $ 147 $ 147 (1) The carrying values of these assets and liabilities approximate fair value due to their short-term nature. (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. Balance at December 31, 2020 Quoted Prices in Active Markets Significant Significant Total Carrying Assets Amortized cost Residential mortgage-backed securities - Agency $ — $ 269 $ — $ 269 $ 260 Held-to-maturity investment securities $ — $ 269 $ — $ 269 $ 260 Net loan receivables $ — $ — $ 91,200 $ 91,200 $ 82,223 Carrying value approximates fair value (1) Cash and cash equivalents $ 13,564 $ — $ — $ 13,564 $ 13,564 Restricted cash $ 25 $ — $ — $ 25 $ 25 Other short-term investments $ 2,200 $ — $ — $ 2,200 $ 2,200 Accrued interest receivables (2) $ — $ 992 $ — $ 992 $ 992 Liabilities Amortized cost Time deposits (3) $ — $ 29,090 $ — $ 29,090 $ 28,269 Long-term borrowings - owed to securitization investors $ — $ 10,794 $ 130 $ 10,924 $ 10,840 Other long-term borrowings — 11,418 — 11,418 10,401 Long-term borrowings $ — $ 22,212 $ 130 $ 22,342 $ 21,241 Carrying value approximates fair value (1) Accrued interest payables (2) $ — $ 233 $ — $ 233 $ 233 (1) The carrying values of these assets and liabilities approximate fair value due to their short-term nature. (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) | 3 Months Ended |
Mar. 31, 2021 | |
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): March 31, 2021 December 31, 2020 Notional Number of Outstanding Derivative Contracts Derivative Assets Derivative Liabilities Notional Derivative Assets Derivative Liabilities Derivatives designated as hedges Interest rate swaps—cash flow hedge $ 250 1 $ — $ — $ 250 $ — $ — Interest rate swaps—fair value hedge $ 11,625 15 — 1 $ 11,625 1 — Derivatives not designated as hedges Foreign exchange forward contracts (1) $ 27 6 — — $ 24 — — Total gross derivative assets/liabilities (2) — 1 1 — Less: collateral held/posted (3) — (1) — — Total net derivative assets/liabilities $ — $ — $ 1 $ — (1) The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 788 million as of March 31, 2021, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 596 million as of December 31, 2020. (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 March 31, 2021 and December 31, 2020, the Company had one outstanding contract with a total notional amount of $12 million and $27 million, respectively, and an 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 adjustments for fair value hedges (dollars in millions): March 31, 2021 December 31, 2020 Carrying Amount of Hedged Liability Cumulative Amount of Fair Value Hedging Adjustment Increasing the Carrying Amount of Hedged Liability Carrying Amount of Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment Increasing the Carrying Amount of Hedged Liability Long-term borrowings $ 11,802 $ 203 $ 11,881 $ 281 |
Schedule of Impact of the Derivative Instruments on 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 Interest Income (Credit Card) Other Income For the Three Months Ended March 31, 2021 Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded $ (193) $ (123) $ 2,154 $ 23 The effects of cash flow and fair value hedging Gains (losses) on cash flow hedging relationship Amounts reclassified from OCI into earnings $ — $ (1) $ — $ — Gains (losses) on fair value hedging relationships Gains on hedged items $ — $ 78 $ — $ — Gains (losses) on interest rate swaps — (30) — — Total gains on fair value hedging relationships $ — $ 48 $ — $ — For the Three Months Ended March 31, 2020 Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded $ (373) $ (211) $ — $ 28 The effects of cash flow and fair value hedging Losses on cash flow hedging relationship Amounts reclassified from OCI into earnings $ (1) $ (1) $ — $ — Gains (losses) on fair value hedging relationships Gains (losses) on hedged items $ — $ (396) $ — $ — Gains on interest rate swaps — 405 — — Total gains on fair value hedging relationships $ — $ 9 $ — $ — |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Disclosures | The following table presents segment data (dollars in millions): Digital Payment Total For the Three Months Ended March 31, 2021 Interest income Credit card loans $ 2,154 $ — $ 2,154 Private student loans 185 — 185 Personal loans 224 — 224 Other loans 28 — 28 Other interest income 55 — 55 Total interest income 2,646 — 2,646 Interest expense 316 — 316 Net interest income 2,330 — 2,330 Provision for credit losses (365) — (365) Other income 379 86 465 Other expense 1,047 34 1,081 Income before income taxes $ 2,027 $ 52 $ 2,079 For the Three Months Ended March 31, 2020 Interest income Credit card loans $ 2,416 $ — $ 2,416 Private student loans 205 — 205 Personal loans 254 — 254 Other loans 24 — 24 Other interest income 83 — 83 Total interest income 2,982 — 2,982 Interest expense 584 — 584 Net interest income 2,398 — 2,398 Provision for credit losses 1,807 — 1,807 Other income 366 124 490 Other expense 1,118 41 1,159 (Loss) Income before income taxes $ (161) $ 83 $ (78) |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment [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): Digital Banking Payment Services Total For the Three Months Ended March 31, 2021 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 226 $ 15 $ 241 Protection products revenue 43 — 43 Transaction processing revenue — 51 51 Other income 3 20 23 Total other income subject to ASC 606 (2) 272 86 358 Other income not subject to ASC 606 Loan fee income 107 — 107 Total other income not subject to ASC 606 107 — 107 Total other income by operating segment $ 379 $ 86 $ 465 For the Three Months Ended March 31, 2020 Other income subject to ASC 606 Discount and interchange revenue, net (1) $ 197 $ 19 $ 216 Protection products revenue 47 — 47 Transaction processing revenue — 44 44 Other income 3 25 28 Total other income subject to ASC 606 (2) 247 88 335 Other income not subject to ASC 606 Loan fee income 119 — 119 Gains on equity investments — 36 36 Total other income not subject to ASC 606 119 36 155 Total other income by operating segment $ 366 $ 124 $ 490 (1) Net of rewards, including Cashback Bonus rewards, of $525 million and $478 million for the three months ended March 31, 2021 and 2020, respectively. (2) Excludes deposit product fees that are reported within net interest income, which were immaterial for the three months ended March 31, 2021 and 2020. |
Background and Basis of Prese_3
Background and Basis of Presentation (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments (in number of segments) | 2 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) | 3 Months Ended | ||
Mar. 31, 2021USD ($)securities | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)securities | |
Investment Holdings [Line Items] | |||
Proceeds from sales of available-for-sale securities | $ 0 | $ 0 | |
Recognized gains (losses) on available-for-sale securities | 0 | $ 0 | |
Contingent liabilities related to equity method investments | $ 0 | ||
U.S. Treasury Securities [Member] | |||
Investment Holdings [Line Items] | |||
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities | 2 | 0 | |
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value | $ 112,000,000 | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss | 0 | ||
Payment Services [Member] | |||
Investment Holdings [Line Items] | |||
Equity securities without readily determinable fair value | 37,000,000 | $ 35,000,000 | |
Community Reinvestment Act [Member] | |||
Investment Holdings [Line Items] | |||
Affordable housing project equity method investments | 316,000,000 | 324,000,000 | |
Contingent liabilities related to affordable housing project equity method investments | 67,000,000 | 79,000,000 | |
Other Assets [Member] | Community Reinvestment Act [Member] | |||
Investment Holdings [Line Items] | |||
Equity method investments | 342,000,000 | 353,000,000 | |
Other Liabilities [Member] | Community Reinvestment Act [Member] | |||
Investment Holdings [Line Items] | |||
Contingent liabilities related to equity method investments | $ 74,000,000 | $ 93,000,000 |
Investments (Schedule of Invest
Investments (Schedule of Investment Securities) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Investment Holdings [Line Items] | |||
Other short-term investments | $ 0 | $ 2,200 | |
Investment securities | 9,432 | 9,914 | |
US Treasury Bill Securities [Member] | Asset Not Pledged as Collateral [Member] | |||
Investment Holdings [Line Items] | |||
Other short-term investments | [1] | 0 | 2,200 |
U.S. Treasury Securities [Member] | |||
Investment Holdings [Line Items] | |||
Investment securities | [2] | 8,907 | 9,354 |
Derivative collateral | 102 | 117 | |
Residential Mortgage-Backed Securities - Agency [Member] | Asset Not Pledged as Collateral [Member] | |||
Investment Holdings [Line Items] | |||
Investment securities | [3] | $ 525 | $ 560 |
[1] | (1) Includes United States Treasury bills with maturity dates greater than 90 days but less than one year at the time of acquisition. | ||
[2] | Includes $102 million and $117 million of United States Treasury securities pledged as swap collateral as of March 31, 2021 and December 31, 2020. | ||
[3] | Consists of residential mortgage-backed securities ("RMBS") issued by Fannie Mae, Freddie Mac and Ginnie Mae. |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | ||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | $ 8,871 | $ 9,277 | |
Available-for-sale investment securities, gross unrealized gains | [1] | 306 | 377 | |
Available-for-sale investment securities, gross unrealized losses | [1] | 0 | 0 | |
Available-for-sale investment securities, fair value | [1] | 9,177 | 9,654 | |
Held-to-maturity investment securities, amortized cost | [2] | 255 | 260 | |
Held-to-maturity investment securities, gross unrealized gains | [2] | 8 | 9 | |
Held-to-maturity investment securities, gross unrealized losses | [2] | (1) | 0 | |
Held-to-maturity investment securities, fair value | [2] | 262 | 269 | |
U.S. Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | 8,611 | 8,987 | |
Available-for-sale investment securities, gross unrealized gains | [1] | 296 | 367 | |
Available-for-sale investment securities, gross unrealized losses | [1] | 0 | 0 | |
Available-for-sale investment securities, fair value | [1] | 8,907 | 9,354 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, amortized cost | [1] | 260 | [3] | 290 |
Available-for-sale investment securities, gross unrealized gains | [1] | 10 | 10 | |
Available-for-sale investment securities, gross unrealized losses | [1] | 0 | 0 | |
Available-for-sale investment securities, fair value | [1] | 270 | [3] | 300 |
Held-to-maturity investment securities, amortized cost | [2],[4] | 255 | [3] | 260 |
Held-to-maturity investment securities, gross unrealized gains | [2],[4] | 8 | 9 | |
Held-to-maturity investment securities, gross unrealized losses | [2],[4] | (1) | 0 | |
Held-to-maturity investment securities, fair value | [2],[4] | $ 262 | [3] | $ 269 |
[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 RMBS are reflective of the contractual maturities of the investment. | |||
[4] | Amounts represent RMBS 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 Maturi
Investments (Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | ||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | $ 3,008 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 5,640 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | 214 | |||
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | 9 | |||
Available-for-sale investment securities, amortized cost | [1] | 8,871 | $ 9,277 | |
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 | 255 | |||
Held-to-maturity investment securities, amortized cost | [2] | 255 | 260 | |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 3,038 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 5,907 | |||
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | 223 | |||
Available-for-sale investment securities, debt maturities, after ten years, fair value | 9 | |||
Available-for-sale investment securities, fair value | [1] | 9,177 | 9,654 | |
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 | 262 | |||
Held-to-maturity investment securities, fair value | [2] | 262 | 269 | |
U.S. Treasury Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | 3,005 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | 5,606 | |||
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] | 8,611 | 8,987 | |
Available-for-sale investment securities, debt maturities, one year or less, fair value | 3,035 | |||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | 5,872 | |||
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] | 8,907 | 9,354 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Investment Holdings [Line Items] | ||||
Available-for-sale investment securities, debt maturities, one year or less, amortized cost | [3] | 3 | ||
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost | [3] | 34 | ||
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost | [3] | 214 | ||
Available-for-sale investment securities, debt maturities, after ten years, amortized cost | [3] | 9 | ||
Available-for-sale investment securities, amortized cost | [1] | 260 | [3] | 290 |
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] | 255 | ||
Held-to-maturity investment securities, amortized cost | [2],[4] | 255 | [3] | 260 |
Available-for-sale investment securities, debt maturities, one year or less, fair value | [3] | 3 | ||
Available-for-sale investment securities, debt maturities, after one year through five years, fair value | [3] | 35 | ||
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value | [3] | 223 | ||
Available-for-sale investment securities, debt maturities, after ten years, fair value | [3] | 9 | ||
Available-for-sale investment securities, fair value | [1] | 270 | [3] | 300 |
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] | 262 | ||
Held-to-maturity investment securities, fair value | [2],[4] | $ 262 | [3] | $ 269 |
[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 RMBS are reflective of the contractual maturities of the investment. | |||
[4] | Amounts represent RMBS 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 | |||||
Mar. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | [1] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Number of loan portfolio segments (in segments) | segment | 2 | |||||
Allowance for credit losses | $ 7,347 | $ 8,226 | $ 6,913 | $ 5,844 | $ 3,383 | |
Allowance for credit losses, period increase (decrease) | $ (879) | |||||
Expected Future Peak Unemployment Rate | 6.70% | |||||
Expected Future Unemployment Rate | 6.00% | |||||
ExpectedFutureIncreaseinGDP | 4.60% | |||||
Reasonable and supportable forecast period | 18 months | 18 months | 12 months | |||
Reversion period | 12 months | 12 months | 12 months | |||
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent) | 68.00% | 40.00% | ||||
Minimum [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Delinquent Loan Qualification Period | 30 days | |||||
Private Student Loans [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Private student loans in repayment | $ 5,500 | $ 5,700 | ||||
Private student loans in forbearance | $ 96 | 117 | ||||
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] | ||||||
Allowance for credit losses | $ 5,640 | $ 6,491 | $ 5,306 | $ 4,550 | $ 2,883 | |
Credit Card Loans [Member] | 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 | |||||
Interest and fees forgiven due to credit card loan modification program | $ 12 | $ 21 | ||||
Credit Card Loans [Member] | Credit Card Loans [Member] | Maximum [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Permanent workout program maturity (in months) | 72 months | |||||
[1] | Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. |
Loan Receivables (Schedule of L
Loan Receivables (Schedule of Loan Receivables) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | [1] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | $ 86,347 | $ 90,449 | |||||
Allowance for credit losses | (7,347) | (8,226) | $ (6,913) | $ (5,844) | $ (3,383) | ||
Net loan receivables | 79,000 | 82,223 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 25,399 | 27,546 | |||||
Allowance for credit losses | (1,615) | (1,936) | |||||
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [2] | 25,163 | 27,296 | ||||
Allowance for credit losses | [2] | (1,615) | (1,936) | ||||
Net loan receivables | 23,548 | 25,360 | |||||
Seller's interest | 9,420 | 10,575 | |||||
Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | 236 | 250 | |||||
Credit Card Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [3],[4] | 67,304 | 71,472 | ||||
Allowance for credit losses | (5,640) | (6,491) | (5,306) | (4,550) | (2,883) | ||
Accrued interest receivable | 395 | 420 | |||||
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 | 15,700 | 16,700 | |||||
Seller's interest | 9,400 | 10,600 | |||||
Total Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [5] | 19,043 | 18,977 | ||||
Total Other Loans [Member] | Private Student Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [5],[6] | 10,153 | 9,954 | ||||
Allowance for credit losses | (862) | (840) | (765) | (653) | (148) | ||
Accrued interest receivable | 477 | 469 | |||||
Total Other Loans [Member] | Private Student Loans [Member] | Student Loan Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loans pledged as collateral | 236 | 250 | |||||
Total Other Loans [Member] | Personal Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [5] | 6,961 | 7,177 | ||||
Allowance for credit losses | (804) | (857) | (807) | (613) | (348) | ||
Accrued interest receivable | 45 | 49 | |||||
Total Other Loans [Member] | Other Loans [Member] | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Loan receivables | [5] | 1,929 | 1,846 | ||||
Allowance for credit losses | (41) | (38) | $ (35) | $ (28) | $ (4) | ||
Accrued interest receivable | $ 6 | $ 6 | |||||
[1] | Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. | ||||||
[2] | The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, credit risk associated with the transferred receivables is fully reflected on the Company's balance sheet in accordance with GAAP. | ||||||
[3] | Amounts include carrying values of $15.7 billion and $16.7 billion underlying investors' interest in trust debt at March 31, 2021 and December 31, 2020, respectively, and $9.4 billion and $10.6 billion in seller's interest at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. | ||||||
[4] | Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $395 million and $420 million at March 31, 2021 and December 31, 2020, respectively. | ||||||
[5] | Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $477 million, $45 million and $6 million, respectively, at March 31, 2021 and $469 million, $49 million and $6 million, respectively, at December 31, 2020. | ||||||
[6] | Amounts include carrying values of $236 million and $250 million in loans pledged as collateral against the note issued from a private student loan securitization trust at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. |
Loan Receivables (Schedule of C
Loan Receivables (Schedule of Credit Risk Profile by FICO Score and Origination Year) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | $ 86,347 | $ 90,449 | |
Revolving line-of-credit arrangements that were converted to term loans as a result of a TDR program, ending balance | 1,000 | 1,000 | |
Credit Card Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [1],[2] | 67,304 | 71,472 |
Credit Card Loans [Member] | FICO Score, 660 and Above [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, credit card | [3] | $ 55,669 | $ 58,950 |
FICO distribution %, credit card | [3] | 83.00% | 82.00% |
Credit Card Loans [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, credit card | [3] | $ 11,635 | $ 12,522 |
FICO distribution %, credit card | [3] | 17.00% | 18.00% |
Total Other Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [4] | $ 19,043 | $ 18,977 |
Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [4],[5] | 10,153 | 9,954 |
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, 660 and Above [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | [6],[7] | $ 212 | |
FICO distribution %, originated in 2021 | [6],[7] | 98.00% | |
Loan receivables, originated in 2020 | [6],[7] | $ 1,625 | $ 1,173 |
FICO distribution %, originated in 2020 | [6],[7] | 95.00% | 95.00% |
Loan receivables, originated in 2019 | [6],[7] | $ 1,592 | $ 1,659 |
FICO distribution %, originated in 2019 | [6],[7] | 96.00% | 96.00% |
Loan receivables, originated in 2018 | [6],[7] | $ 1,297 | $ 1,365 |
FICO distribution %, originated in 2018 | [6],[7] | 96.00% | 96.00% |
Loan receivables, originated in 2017 | [6],[7] | $ 993 | $ 1,052 |
FICO distribution %, originated in 2017 | [6],[7] | 95.00% | 95.00% |
Loan receivables, originated prior to 2017 | [6],[7] | $ 3,943 | $ 4,219 |
FICO distribution %, originated prior to 2017 | [6],[7] | 95.00% | 94.00% |
Loan receivables | [6],[7] | $ 9,662 | $ 9,468 |
FICO distribution %, loan receivables | [6],[7] | 95.00% | 95.00% |
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | [6],[7] | $ 5 | |
FICO distribution %, originated in 2021 | [6],[7] | 2.00% | |
Loan receivables, originated in 2020 | [6],[7] | $ 81 | $ 60 |
FICO distribution %, originated in 2020 | [6],[7] | 5.00% | 5.00% |
Loan receivables, originated in 2019 | [6],[7] | $ 60 | $ 61 |
FICO distribution %, originated in 2019 | [6],[7] | 4.00% | 4.00% |
Loan receivables, originated in 2018 | [6],[7] | $ 61 | $ 61 |
FICO distribution %, originated in 2018 | [6],[7] | 4.00% | 4.00% |
Loan receivables, originated in 2017 | [6],[7] | $ 55 | $ 57 |
FICO distribution %, originated in 2017 | [6],[7] | 5.00% | 5.00% |
Loan receivables, originated prior to 2017 | [6],[7] | $ 229 | $ 247 |
FICO distribution %, originated prior to 2017 | [6],[7] | 5.00% | 6.00% |
Loan receivables | [6],[7] | $ 491 | $ 486 |
FICO distribution %, loan receivables | [6],[7] | 5.00% | 5.00% |
Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [4] | $ 6,961 | $ 7,177 |
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, 660 and Above [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | $ 810 | ||
FICO distribution %, originated in 2021 | 100.00% | ||
Loan receivables, originated in 2020 | $ 2,571 | $ 2,880 | |
FICO distribution %, originated in 2020 | 99.00% | 99.00% | |
Loan receivables, originated in 2019 | $ 1,858 | $ 2,183 | |
FICO distribution %, originated in 2019 | 96.00% | 96.00% | |
Loan receivables, originated in 2018 | $ 834 | $ 1,018 | |
FICO distribution %, originated in 2018 | 92.00% | 92.00% | |
Loan receivables, originated in 2017 | $ 447 | $ 558 | |
FICO distribution %, originated in 2017 | 89.00% | 89.00% | |
Loan receivables, originated prior to 2017 | $ 167 | $ 227 | |
FICO distribution %, originated prior to 2017 | 86.00% | 86.00% | |
Loan receivables | $ 6,687 | $ 6,866 | |
FICO distribution %, loan receivables | 96.00% | 96.00% | |
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, Less Than 660 Or No Score [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | $ 3 | ||
FICO distribution %, originated in 2021 | 0.00% | ||
Loan receivables, originated in 2020 | $ 29 | $ 25 | |
FICO distribution %, originated in 2020 | 1.00% | 1.00% | |
Loan receivables, originated in 2019 | $ 85 | $ 90 | |
FICO distribution %, originated in 2019 | 4.00% | 4.00% | |
Loan receivables, originated in 2018 | $ 75 | $ 90 | |
FICO distribution %, originated in 2018 | 8.00% | 8.00% | |
Loan receivables, originated in 2017 | $ 54 | $ 69 | |
FICO distribution %, originated in 2017 | 11.00% | 11.00% | |
Loan receivables, originated prior to 2017 | $ 28 | $ 37 | |
FICO distribution %, originated prior to 2017 | 14.00% | 14.00% | |
Loan receivables | $ 274 | $ 311 | |
FICO distribution %, loan receivables | 4.00% | 4.00% | |
[1] | Amounts include carrying values of $15.7 billion and $16.7 billion underlying investors' interest in trust debt at March 31, 2021 and December 31, 2020, respectively, and $9.4 billion and $10.6 billion in seller's interest at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. | ||
[2] | Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $395 million and $420 million at March 31, 2021 and December 31, 2020, respectively. | ||
[3] | Amounts include $1.0 billion of revolving line-of-credit arrangements that were converted to term loans as a result of a troubled debt restructuring ("TDR") program as of March 31, 2021 and December 31, 2020. | ||
[4] | Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $477 million, $45 million and $6 million, respectively, at March 31, 2021 and $469 million, $49 million and $6 million, respectively, at December 31, 2020. | ||
[5] | Amounts include carrying values of $236 million and $250 million in loans pledged as collateral against the note issued from a private student loan securitization trust at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. | ||
[6] | A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years. | ||
[7] | FICO score represents the higher credit score of the cosigner or borrower. |
Loan Receivables (Schedule of D
Loan Receivables (Schedule of Delinquent Loans by Origination Year) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | $ 86,347 | $ 90,449 | |
Credit Card Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [1],[2] | 67,304 | 71,472 |
Total Other Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [3] | 19,043 | 18,977 |
Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [3],[4] | 10,153 | 9,954 |
Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables | [3] | 6,961 | 7,177 |
30-89 Days Delinquent [Member] | Credit Card Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, credit card | 565 | 739 | |
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | [5] | 0 | |
Loan receivables, originated in 2020 | [5] | 1 | 0 |
Loan receivables, originated in 2019 | [5] | 5 | 3 |
Loan receivables, originated in 2018 | [5] | 9 | 9 |
Loan receivables, originated in 2017 | [5] | 11 | 12 |
Loan receivables, originated prior to 2017 | [5] | 65 | 86 |
Loan receivables | [5] | 91 | 110 |
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | 0 | ||
Loan receivables, originated in 2020 | 6 | 5 | |
Loan receivables, originated in 2019 | 16 | 18 | |
Loan receivables, originated in 2018 | 11 | 15 | |
Loan receivables, originated in 2017 | 7 | 10 | |
Loan receivables, originated prior to 2017 | 3 | 5 | |
Loan receivables | 43 | 53 | |
90 or More Days Delinquent [Member] | Credit Card Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, credit card | 680 | 739 | |
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | [5] | 0 | |
Loan receivables, originated in 2020 | [5] | 0 | 0 |
Loan receivables, originated in 2019 | [5] | 3 | 1 |
Loan receivables, originated in 2018 | [5] | 4 | 3 |
Loan receivables, originated in 2017 | [5] | 4 | 4 |
Loan receivables, originated prior to 2017 | [5] | 20 | 20 |
Loan receivables | [5] | 31 | 28 |
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | 0 | ||
Loan receivables, originated in 2020 | 2 | 2 | |
Loan receivables, originated in 2019 | 5 | 9 | |
Loan receivables, originated in 2018 | 4 | 7 | |
Loan receivables, originated in 2017 | 3 | 5 | |
Loan receivables, originated prior to 2017 | 2 | 2 | |
Loan receivables | 16 | 25 | |
Total Past Due [Member] | Credit Card Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, credit card | 1,245 | 1,478 | |
Total Past Due [Member] | Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | [5] | 0 | |
Loan receivables, originated in 2020 | [5] | 1 | 0 |
Loan receivables, originated in 2019 | [5] | 8 | 4 |
Loan receivables, originated in 2018 | [5] | 13 | 12 |
Loan receivables, originated in 2017 | [5] | 15 | 16 |
Loan receivables, originated prior to 2017 | [5] | 85 | 106 |
Loan receivables | [5] | 122 | 138 |
Total Past Due [Member] | Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Loan receivables, originated in 2021 | 0 | ||
Loan receivables, originated in 2020 | 8 | 7 | |
Loan receivables, originated in 2019 | 21 | 27 | |
Loan receivables, originated in 2018 | 15 | 22 | |
Loan receivables, originated in 2017 | 10 | 15 | |
Loan receivables, originated prior to 2017 | 5 | 7 | |
Loan receivables | $ 59 | $ 78 | |
[1] | Amounts include carrying values of $15.7 billion and $16.7 billion underlying investors' interest in trust debt at March 31, 2021 and December 31, 2020, respectively, and $9.4 billion and $10.6 billion in seller's interest at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. | ||
[2] | Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $395 million and $420 million at March 31, 2021 and December 31, 2020, respectively. | ||
[3] | Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $477 million, $45 million and $6 million, respectively, at March 31, 2021 and $469 million, $49 million and $6 million, respectively, at December 31, 2020. | ||
[4] | Amounts include carrying values of $236 million and $250 million in loans pledged as collateral against the note issued from a private student loan securitization trust at March 31, 2021 and December 31, 2020, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information. | ||
[5] | Private student loans may include a deferment period, during which customers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency. |
Loan Receivables (Schedule of_2
Loan Receivables (Schedule of Changes in the Allowance for Credit Losses) (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Allowance for credit losses, balance at beginning of period | $ 3,383 | [1] | $ 8,226 | $ 3,383 | [1] | |
Provision for credit losses | [2] | (342) | 1,838 | |||
Charge-offs | (747) | (975) | ||||
Recoveries | 210 | 206 | ||||
Net charge-offs | (537) | (769) | ||||
Allowance for credit losses, balance at end of period | 5,844 | 7,347 | 6,913 | |||
Cumulative effect of ASU No. 2016-13 adoption | [3] | 2,461 | ||||
Credit loss build (release) on unfunded commitments | (23) | 31 | ||||
Credit Card Loans [Member] | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Allowance for credit losses, balance at beginning of period | 2,883 | [1] | 6,491 | 2,883 | [1] | |
Provision for credit losses | [2] | (377) | 1,439 | |||
Charge-offs | (663) | (869) | ||||
Recoveries | 189 | 186 | ||||
Net charge-offs | (474) | (683) | ||||
Allowance for credit losses, balance at end of period | 4,550 | 5,640 | 5,306 | |||
Cumulative effect of ASU No. 2016-13 adoption | [3] | 1,667 | ||||
Total Other Loans [Member] | Private Student Loans [Member] | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Allowance for credit losses, balance at beginning of period | 148 | [1] | 840 | 148 | [1] | |
Provision for credit losses | [2] | 36 | (129) | |||
Charge-offs | (20) | (22) | ||||
Recoveries | 6 | 5 | ||||
Net charge-offs | (14) | (17) | ||||
Allowance for credit losses, balance at end of period | 653 | 862 | 765 | |||
Cumulative effect of ASU No. 2016-13 adoption | [3] | 505 | ||||
Total Other Loans [Member] | Personal Loans [Member] | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Allowance for credit losses, balance at beginning of period | 348 | [1] | 857 | 348 | [1] | |
Provision for credit losses | [2] | (4) | 263 | |||
Charge-offs | (64) | (84) | ||||
Recoveries | 15 | 15 | ||||
Net charge-offs | (49) | (69) | ||||
Allowance for credit losses, balance at end of period | 613 | 804 | 807 | |||
Cumulative effect of ASU No. 2016-13 adoption | [3] | 265 | ||||
Total Other Loans [Member] | Other Loans [Member] | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Allowance for credit losses, balance at beginning of period | 4 | [1] | 38 | 4 | [1] | |
Provision for credit losses | [2] | 3 | 7 | |||
Charge-offs | 0 | 0 | ||||
Recoveries | 0 | 0 | ||||
Net charge-offs | 0 | 0 | ||||
Allowance for credit losses, balance at end of period | 28 | $ 41 | $ 35 | |||
Cumulative effect of ASU No. 2016-13 adoption | [3] | $ 24 | ||||
[1] | Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. | |||||
[2] | Excludes a $23 million and $31 million reclassification of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2021 and 2020, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition. | |||||
[3] | Represents the adjustment to the allowance for credit losses as a result of adoption of ASU No. 2016-13 on January 1, 2020. |
Loan Receivables (Schedule of N
Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Receivables [Abstract] | ||
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ 95 | $ 143 |
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ 23 | $ 35 |
Loan Receivables (Schedule of_3
Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | ||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | $ 1,438 | $ 1,705 | ||
Loan receivables, 90 or more days delinquent and accruing | 672 | 737 | ||
Loan receivables, total non-accruing | [1] | 247 | 243 | |
30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 706 | 910 | ||
90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 732 | 795 | ||
Credit Card Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 1,245 | 1,478 | ||
Loan receivables, 90 or more days delinquent and accruing | 626 | 687 | ||
Loan receivables, total non-accruing | [1] | 216 | 209 | |
Estimated gross interest income that would have been recorded based on original terms | 8 | $ 10 | ||
Credit Card Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 565 | 739 | ||
Credit Card Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 680 | 739 | ||
Total Other Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 193 | 227 | ||
Loan receivables, 90 or more days delinquent and accruing | 46 | 50 | ||
Loan receivables, total non-accruing | [1] | 31 | 34 | |
Total Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 141 | 171 | ||
Total Other Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 52 | 56 | ||
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 122 | 138 | ||
Loan receivables, 90 or more days delinquent and accruing | 30 | 27 | ||
Loan receivables, total non-accruing | [1] | 11 | 12 | |
Total Other Loans [Member] | Private Student Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 91 | 110 | ||
Total Other Loans [Member] | Private Student Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 31 | 28 | ||
Total Other Loans [Member] | Personal Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 59 | 78 | ||
Loan receivables, 90 or more days delinquent and accruing | 15 | 23 | ||
Loan receivables, total non-accruing | [1] | 8 | 12 | |
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 43 | 53 | ||
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 16 | 25 | ||
Total Other Loans [Member] | Other Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 12 | 11 | ||
Loan receivables, 90 or more days delinquent and accruing | 1 | 0 | ||
Loan receivables, total non-accruing | [1] | 12 | 10 | |
Total Other Loans [Member] | Other Loans [Member] | 30-89 Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | 7 | 8 | ||
Total Other Loans [Member] | Other Loans [Member] | 90 or More Days Delinquent [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Loan receivables, past due | $ 5 | $ 3 | ||
[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 $8 million and $10 million for the three months ended March 31, 2021 and 2020, 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. |
Loan Receivables (Schedule of_4
Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2021USD ($)accounts | Mar. 31, 2020USD ($)accounts | |||
Credit Card Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a TDR program during the period, number of accounts (in accounts) | accounts | [1] | 20,702 | 82,124 | [2] |
Accounts that entered a TDR program during the period, balances | [1] | $ 135 | $ 533 | [2] |
Accounts that entered a TDR program during the period and were converted from revolving line-of-credit arrangements to term loans, balances | $ 128 | $ 210 | ||
Total Other Loans [Member] | Private Student Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a TDR program during the period, number of accounts (in accounts) | accounts | 126 | 1,587 | [2] | |
Accounts that entered a TDR program during the period, balances | $ 2 | $ 29 | [2] | |
Total Other Loans [Member] | Personal Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts that entered a TDR program during the period, number of accounts (in accounts) | accounts | 1,390 | 2,478 | [2] | |
Accounts that entered a TDR program during the period, balances | $ 17 | $ 33 | [2] | |
[1] | Accounts that entered a credit card TDR program include $128 million and $210 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2021 and 2020, respectively. | |||
[2] | Certain prior period amounts have been reclassified to conform to current period presentation. |
Loan Receivables (Schedule of T
Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($)missed_paymentsaccounts | Mar. 31, 2020USD ($)accounts | ||
Credit Card Loans [Member] | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts | [1],[2] | 6,001 | 20,485 |
TDRs that subsequently defaulted, aggregated outstanding balances upon default | $ | [1],[2] | $ 36 | $ 117 |
Amount of missed payments after which a customer defaults from a TDR program (in payments) | missed_payments | 2 | ||
Total Other Loans [Member] | Private Student Loans [Member] | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts | [3] | 66 | 358 |
TDRs that subsequently defaulted, aggregated outstanding balances upon default | $ | [3] | $ 2 | $ 7 |
Delinquency days to default (in days) | 60 days | ||
Total Other Loans [Member] | Personal Loans [Member] | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts | [1] | 527 | 1,200 |
TDRs that subsequently defaulted, aggregated outstanding balances upon default | $ | [1] | $ 7 | $ 18 |
Amount of missed payments after which a customer defaults from a TDR program (in payments) | missed_payments | 2 | ||
[1] | For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default. | ||
[2] | For credit card loans that default from a temporary program, accounts revert back to the pre-modification terms and charging privileges remain suspended 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. |
Credit Card and Student Loan _3
Credit Card and Student Loan Securitization Activities (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2021classes | |
Variable Interest Entity, Primary Beneficiary [Member] | 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) | 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 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | [1] | |
Variable Interest Entity [Line Items] | |||||||
Restricted cash | $ 326 | $ 25 | $ 1,183 | ||||
Loan receivables | 86,347 | 90,449 | |||||
Allowance for credit losses allocated to securitized loan receivables | (7,347) | (8,226) | $ (6,913) | $ (5,844) | $ (3,383) | ||
Net loan receivables | 79,000 | 82,223 | |||||
Other | 3,394 | 3,586 | |||||
Total assets | 113,871 | 112,889 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 326 | 25 | |||||
Loan receivables | 25,399 | 27,546 | |||||
Allowance for credit losses allocated to securitized loan receivables | (1,615) | (1,936) | |||||
Other | 5 | 4 | |||||
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Restricted cash | 316 | 16 | |||||
Investors' interests held by third-party investors | 10,600 | 10,600 | |||||
Investors' interests held by wholly-owned subsidiaries of Discover Bank | 5,143 | 6,121 | |||||
Seller's interest | 9,420 | 10,575 | |||||
Loan receivables | [2] | 25,163 | 27,296 | ||||
Allowance for credit losses allocated to securitized loan receivables | [2] | (1,615) | (1,936) | ||||
Net loan receivables | 23,548 | 25,360 | |||||
Other | 4 | 3 | |||||
Total assets | $ 23,868 | $ 25,379 | |||||
[1] | Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach. | ||||||
[2] | The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with 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 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Variable Interest Entity [Line Items] | |||
Restricted cash | $ 326 | $ 25 | $ 1,183 |
Loan receivables | 86,347 | 90,449 | |
Total assets | 113,871 | 112,889 | |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Variable Interest Entity [Line Items] | |||
Restricted cash | 326 | 25 | |
Loan receivables | 25,399 | 27,546 | |
Variable Interest Entity, Primary Beneficiary [Member] | Student Loan Securitization Trusts [Member] | |||
Variable Interest Entity [Line Items] | |||
Restricted cash | 10 | 9 | |
Loan receivables | 236 | 250 | |
Total assets | $ 246 | $ 259 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets, net | $ 95,000,000 | $ 95,000,000 | |
Trade Names [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite-lived Intangible Assets Acquired | $ 36,000,000 | ||
Intangible assets, net | 92,000,000 | ||
International Transaction Processing Rights [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite-lived Intangible Assets Acquired | $ 23,000,000 | ||
Intangible assets, net | $ 0 |
Deposits (Narrative) (Details)
Deposits (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2021channels | |
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 | Mar. 31, 2021 | Dec. 31, 2020 | |
Deposits [Abstract] | |||
Certificates of deposit in amounts less than $100,000 | $ 17,526 | $ 19,105 | |
Certificates of deposit in amounts $100,000 or greater | [1] | 8,168 | 9,164 |
Savings deposits, including money market deposit accounts | 49,227 | 47,426 | |
Total interest-bearing deposits | 74,921 | 75,695 | |
Certificates of deposit equal to or greater than $250,000 | $ 2,300 | $ 2,600 | |
[1] | Includes $2.3 billion and $2.6 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of March 31, 2021 and December 31, 2020, respectively. |
Deposits (Schedule of $100,000
Deposits (Schedule of $100,000 or More Certificates of Deposit Maturities) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Deposits [Abstract] | |||
Three months or less | $ 1,810 | ||
Over three months through six months | 1,608 | ||
Over six months through twelve months | 2,879 | ||
Over twelve months | 1,871 | ||
Total | [1] | $ 8,168 | $ 9,164 |
[1] | Includes $2.3 billion and $2.6 billion in certificates of deposit equal to or greater than $250,000, the Federal Deposit Insurance Corporation ("FDIC") insurance limit, as of March 31, 2021 and December 31, 2020, respectively. |
Deposits (Schedule of Certifica
Deposits (Schedule of Certificates of Deposit Maturities) (Details) $ in Millions | Mar. 31, 2021USD ($) |
Deposits [Abstract] | |
2021 | $ 12,744 |
2021Y1 | 0 |
2022 | 6,880 |
2023 | 2,357 |
2024 | 1,385 |
2025 | 868 |
Thereafter | 1,460 |
Total | $ 25,694 |
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 Billions | Mar. 31, 2021USD ($) |
Debt Instrument [Line Items] | |
Total commitment of secured credit facilities | $ 6 |
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 | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | ||
Debt Instrument [Line Items] | |||
Long-term borrowings (in dollars) | $ 21,011 | $ 21,241 | |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Debt Instrument [Line Items] | |||
Long-term borrowings (in dollars) | 10,804 | 10,840 | |
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | |||
Debt Instrument [Line Items] | |||
Long-term borrowings (in dollars) | $ 10,681 | 10,710 | |
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 | [1] | 2.74% | |
Long-term borrowings (in dollars) | [1] | $ 6,011 | 6,041 |
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] | 1.85% | |
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 | [1] | 3.32% | |
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] | 0.50% | |
Long-term borrowings (in dollars) | [2] | $ 4,670 | 4,669 |
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] | 0.34% | |
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] | 0.71% | |
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | 1-Month LIBOR [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 [Member] | 1-Month LIBOR [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 [Member] | 1-Month LIBOR [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.60% | ||
Securitized Debt [Member] | Student Loan Trust [Member] | |||
Debt Instrument [Line Items] | |||
Long-term borrowings (in dollars) | $ 123 | 130 | |
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | |||
Debt Instrument [Line Items] | |||
Weighted-average interest rate | [3],[4] | 4.25% | |
Long-term borrowings (in dollars) | [3],[4] | $ 123 | 130 |
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [3],[4] | 4.25% | |
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [3],[4] | 4.25% | |
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Prime Rate [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate terms | Prime rate + 100 basis points | ||
Basis spread on variable rate | 1.00% | ||
Securitized Debt [Member] | Variable Interest Entity, Primary Beneficiary [Member] | |||
Debt Instrument [Line Items] | |||
Long-term borrowings (in dollars) | $ 10,804 | 10,840 | |
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Weighted-average interest rate | 4.16% | ||
Long-term borrowings (in dollars) | $ 3,348 | 3,337 | |
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 | 5.20% | ||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | |||
Debt Instrument [Line Items] | |||
Weighted-average interest rate | 3.75% | ||
Long-term borrowings (in dollars) | $ 175 | 336 | |
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.85% | ||
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.40% | ||
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | |||
Debt Instrument [Line Items] | |||
Weighted-average interest rate | [1] | 3.57% | |
Long-term borrowings (in dollars) | [1] | $ 6,172 | 6,213 |
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [1] | 2.45% | |
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [1] | 4.65% | |
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | |||
Debt Instrument [Line Items] | |||
Weighted-average interest rate | [1] | 4.68% | |
Long-term borrowings (in dollars) | [1] | $ 512 | $ 515 |
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [1] | 4.68% | |
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | [1] | 4.68% | |
[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") or Overnight Index Swap ("OIS") Rate. Use of these interest rate swaps impacts the carrying value of the debt. See Note 16: 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 March 31, 2021. | ||
[3] | Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents final maturity date. | ||
[4] | The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2021. |
Long-Term Borrowings (Schedul_2
Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2021 | $ 4,195 | |
2021R | 0 | |
2022 | 5,190 | |
2023 | 3,337 | |
2024 | 2,596 | |
2025 | 528 | |
Thereafter | 5,165 | |
Total | $ 21,011 | $ 21,241 |
Preferred Stock (Details)
Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 22, 2020 | Oct. 31, 2017 | Mar. 31, 2021 | Dec. 31, 2020 | |
Class of Stock [Line Items] | |||||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |||
Series C Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred Stock Initial Issue Date | [1] | Oct. 31, 2017 | |||
Preferred Stock Earliest Redemption Date | Oct. 30, 2027 | ||||
Series D Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred Stock Initial Issue Date | [1] | Jul. 22, 2020 | |||
Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
PreferredStockDepositarySharesIssued | 1,070,000 | 1,070,000 | |||
Proceeds from issuance of preferred stock, net | $ 1,056 | $ 1,056 | |||
Preferred Stock [Member] | Series C Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred Stock, Liquidation Preference Per Share | [1],[2] | $ 1,000 | |||
Preferred Stock, Redemption Price Per Share | [1],[2] | $ 1,000 | |||
Preferred Stock, Dividend Rate, Percentage | [1],[3] | 5.50% | |||
PreferredStockDepositarySharesIssued | [1] | 570,000 | 570,000 | ||
Proceeds from issuance of preferred stock, net | [1] | $ 563 | $ 563 | ||
Depositary Shares Represented by One Preferred Share | 100 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | ||||
Redemption Period of Preferred Stock Following Regulatory Capital Event | 90 days | ||||
Preferred Stock Dividend Payment Rate Variable, Rate To Be Used in Future Periods | three-month LIBOR | ||||
Preferred Stock [Member] | Series C Preferred Stock [Member] | Three-Month London Interbank Offered Rate (LIBOR) | |||||
Class of Stock [Line Items] | |||||
Preferred Stock Basis Spread on Variable Rate, Rate to Be Used in Future Periods | 3.076% | ||||
Preferred Stock [Member] | Series D Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred Stock, Liquidation Preference Per Share | [1],[2] | $ 10 | |||
Preferred Stock, Redemption Price Per Share | [1],[2] | $ 10 | |||
Preferred Stock, Dividend Rate, Percentage | [1],[4] | 6.125% | |||
PreferredStockDepositarySharesIssued | [1] | 500,000 | 500,000 | ||
Proceeds from issuance of preferred stock, net | [1] | $ 493 | $ 493 | ||
Depositary Shares Represented by One Preferred Share | 100 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | ||||
Redemption Period of Preferred Stock Following Regulatory Capital Event | 90 days | ||||
Preferred Stock Dividend Payment Rate Variable, Rate To Be Used in Future Periods | 5-year Treasury | ||||
Dividend Rate Reset | 5 years | ||||
Preferred Stock [Member] | Series D Preferred Stock | Five-Year Treasury Rate | |||||
Class of Stock [Line Items] | |||||
Preferred Stock Basis Spread on Variable Rate, Rate to Be Used in Future Periods | 5.783% | ||||
[1] | Issued as depositary shares, each representing 1/100 th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01. | ||||
[2] | Redeemable at the redemption price plus declared and unpaid dividends. | ||||
[3] | Any dividends declared are payable semi-annually in arrears at a rate of 5.50% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to three-month LIBOR plus a spread of 3.076% per annum. | ||||
[4] | Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every five years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%. |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | $ 45 | |
Net change in accumulated other comprehensive income (loss), net of tax | (52) | $ 253 |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | (7) | |
Unrealized Gains (Losses) 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 | 284 | 112 |
Net change in accumulated other comprehensive income (loss), net of tax | (53) | 256 |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | 231 | 368 |
Gains (Losses) 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 | (12) | (17) |
Net change in accumulated other comprehensive income (loss), net of tax | 1 | (3) |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | (11) | (20) |
Gains (Losses) 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 | (227) | (214) |
Net change in accumulated other comprehensive income (loss), net of tax | 0 | 0 |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | (227) | (214) |
AOCI | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period | 45 | (119) |
Net change in accumulated other comprehensive income (loss), net of tax | (52) | 253 |
Accumulated other comprehensive income (loss), net of tax, balance at end of period | $ (7) | $ 134 |
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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
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 | $ (71) | $ 337 |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax benefit (expense) | 18 | (81) |
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax | (53) | 256 |
Available-for-sale investment securities, net change, before tax | (71) | 337 |
Available-for-sale investment securities, net change, tax benefit (expense) | 18 | (81) |
Available-for-sale investment securities, net change, net of tax | (53) | 256 |
Cash flow hedges, amounts reclassified from AOCI, before tax | 1 | 2 |
Cash flow hedges, amounts reclassified from AOCI, tax benefit (expense) | 0 | 0 |
Cash flow hedges, amounts reclassified from AOCI, net of tax | 1 | 2 |
Cash flow hedges, net change, before tax | 1 | (5) |
Cash flow hedges, net change, tax benefit (expense) | 0 | 2 |
Cash flow hedges, net change, net of tax | $ 1 | (3) |
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax | (7) | |
Cash flow hedges, net unrealized gains (losses) arising during the period, tax benefit (expense) | 2 | |
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax | $ (5) |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Increase (decrease) in income tax expense/benefit, amount | $ 503 |
Change in Effective Income Tax Rate | 1.40% |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ 33 |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Calculation) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income (loss) before income taxes | $ 2,079 | $ (78) |
Income tax expense (benefit) | $ 486 | $ (17) |
Effective income tax rate (in percent) | 23.40% | 22.00% |
Earnings Per Share (Schedule of
Earnings Per Share (Schedule of Basic and Diluted EPS ) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net income (loss) | $ 1,593 | $ (61) |
Preferred stock dividends | (39) | (16) |
Net income (loss) available to common stockholders | 1,554 | (77) |
Income allocated to participating securities | (8) | (1) |
Net income (loss) allocated to common stockholders | 1,546 | (78) |
Net Income (Loss) Available to Common Stockholders, Diluted | $ 1,546 | $ (78) |
Denominator: | ||
Weighted-average shares of common stock outstanding | 307,000,000 | 308,000,000 |
Effect of dilutive common stock equivalents | 0 | 0 |
Weighted-average shares of common stock outstanding and common stock equivalents | 307,000,000 | 308,000,000 |
Basic earnings per common share (in dollars per share) | $ 5.04 | $ (0.25) |
Diluted earnings per common share (in dollars per share) | $ 5.04 | $ (0.25) |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 |
Capital Adequacy (Schedule of M
Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) $ in Millions | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
Parent Company [Member] | |||
Compliance with Regulatory Capital Requirements [Line Items] | |||
Total capital to risk-weighted assets, actual amount | $ 15,751 | $ 14,711 | |
Total capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.180 | 0.161 |
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 6,993 | $ 7,298 | |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 0.080 | 0.080 | |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 8,742 | $ 9,123 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 0.100 | 0.100 |
Tier I capital to risk-weighted assets, actual amount | $ 14,104 | $ 13,006 | |
Tier I capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.161 | 0.143 |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 5,245 | $ 5,474 | |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 0.060 | 0.060 | |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 5,245 | $ 5,474 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 0.060 | 0.060 |
Tier I capital to average assets, actual amount | $ 14,104 | $ 13,006 | |
Tier I capital to average assets, actual ratio (in percent) | [1] | 0.122 | 0.109 |
Tier I capital to average assets, minimum capital requirements, amount | $ 4,620 | $ 4,757 | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 0.040 | 0.040 | |
CET1 capital to risk-weighted assets, actual amount | $ 13,048 | $ 11,950 | |
CET1 capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.149 | 0.131 |
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 3,934 | $ 4,105 | |
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 4.50% | 4.50% | |
Discover Bank [Member] | |||
Compliance with Regulatory Capital Requirements [Line Items] | |||
Total capital to risk-weighted assets, actual amount | $ 15,354 | $ 14,507 | |
Total capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.178 | 0.161 |
Total capital to risk-weighted assets, minimum capital requirements, amount | $ 6,906 | $ 7,214 | |
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 0.080 | 0.080 | |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 8,633 | $ 9,018 |
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 0.100 | 0.100 |
Tier I capital to risk-weighted assets, actual amount | $ 13,421 | $ 12,415 | |
Tier I capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.155 | 0.138 |
Tier I capital to risk-weighted assets, minimum capital requirements, amount | $ 5,180 | $ 5,411 | |
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent) | 0.060 | 0.060 | |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 6,906 | $ 7,214 |
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 0.080 | 0.080 |
Tier I capital to average assets, actual amount | $ 13,421 | $ 12,415 | |
Tier I capital to average assets, actual ratio (in percent) | [1] | 0.117 | 0.105 |
Tier I capital to average assets, minimum capital requirements, amount | $ 4,572 | $ 4,709 | |
Tier I capital to average assets, minimum capital requirements, ratio (in percent) | 0.040 | 0.040 | |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount | [2] | $ 5,715 | $ 5,886 |
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 0.050 | 0.050 |
CET1 capital to risk-weighted assets, actual amount | $ 13,421 | $ 12,415 | |
CET1 capital to risk-weighted assets, actual ratio (in percent) | [1] | 0.155 | 0.138 |
CET1 capital to risk-weighted assets, minimum capital requirements, amount | $ 3,885 | $ 4,058 | |
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 | [2] | $ 5,611 | $ 5,862 |
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent) | [2] | 6.50% | 6.50% |
[1] | Capital ratios are calculated based on the Basel III Standardized Approach rules, subject to applicable transition provisions, including CECL 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_3
Commitments, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Commitments, Contingencies and Guarantees [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | $ 60 | |
Contingent liabilities related to equity method investments | 0 | |
Escrow deposits and settlement withholdings | 15 | $ 16 |
Commitments to Extend Credit [Member] | ||
Commitments, Contingencies and Guarantees [Line Items] | ||
Unused commitments to extend credit for loans | $ 218,800 |
Commitments, Contingencies an_4
Commitments, Contingencies and Guarantees (Schedule of Merchant Chargeback Guarantee) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Merchant Chargeback Guarantees [Member] | |||
Loss Contingencies [Line Items] | |||
Aggregate sales transaction volume | [1] | $ 47,487 | $ 40,963 |
[1] | Represents 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 | Dec. 22, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Loss Contingencies [Line Items] | |||
Litigation Settlement, Expense | $ 0 | $ 0 | |
Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member] | |||
Loss Contingencies [Line Items] | |||
Amount of civil money penalty for consent order | $ 25 | ||
Maximum [Member] | Pending and Threatened Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Aggregate range of reasonably possible losses | $ 290 | ||
Minimum [Member] | Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member] | |||
Loss Contingencies [Line Items] | |||
Aggregate range of reasonably possible losses | $ 10 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fair Value, Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impairment of assets measured at fair value on a non-recurring basis | $ 0 | $ 0 |
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 | $ 257 | |
Available for sale securities, weighted average coupon rate (in percent) | 3.25% | |
Available for sale securities, weighted average remaining maturity (in years) | 2 years |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | [1] | $ 9,177 | $ 9,654 | |
U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | [1] | 8,907 | 9,354 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | [1] | 270 | [2] | 300 |
Fair Value, Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 9,177 | 9,654 | ||
Fair Value, Recurring [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, liabilities, fair value | [3] | 1 | ||
Derivative Asset | [3] | 1 | ||
Fair Value, Recurring [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 8,907 | 9,354 | ||
Fair Value, Recurring [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 270 | 300 | ||
Fair Value, Recurring [Member] | Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 8,907 | 9,354 | ||
Fair Value, Recurring [Member] | Level 1 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, liabilities, fair value | [3] | 0 | ||
Derivative Asset | [3] | 0 | ||
Fair Value, Recurring [Member] | Level 1 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 8,907 | 9,354 | ||
Fair Value, Recurring [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 0 | 0 | ||
Fair Value, Recurring [Member] | Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 270 | 300 | ||
Fair Value, Recurring [Member] | Level 2 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, liabilities, fair value | [3] | 1 | ||
Derivative Asset | [3] | 1 | ||
Fair Value, Recurring [Member] | Level 2 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 0 | 0 | ||
Fair Value, Recurring [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 270 | 300 | ||
Fair Value, Recurring [Member] | Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 0 | 0 | ||
Fair Value, Recurring [Member] | Level 3 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative financial instruments, liabilities, fair value | [3] | 0 | ||
Derivative Asset | [3] | 0 | ||
Fair Value, Recurring [Member] | Level 3 [Member] | U.S. Treasury Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | 0 | 0 | ||
Fair Value, Recurring [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale investment securities, fair value | $ 0 | $ 0 | ||
[1] | Available-for-sale investment securities are reported at fair value. | |||
[2] | Maturities of RMBS 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 | Mar. 31, 2021 | Dec. 31, 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1] | $ 262 | $ 269 | |
Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | [1],[2] | 262 | [3] | 269 |
Estimated Fair Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 262 | 269 | ||
Net loan receivables | 86,984 | 91,200 | ||
Cash and cash equivalents | [4] | 20,348 | 13,564 | |
Restricted cash | [4] | 326 | 25 | |
Other Short-term Investments Fair Value Disclosure | [4] | 2,200 | ||
Accrued interest receivables | [4],[5] | 967 | 992 | |
Time deposits | [6] | 26,336 | 29,090 | |
Long-term borrowings | 21,871 | 22,342 | ||
Accrued interest payables | [4],[5] | 147 | 233 | |
Estimated Fair Value [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 10,880 | 10,924 | ||
Estimated Fair Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 10,991 | 11,418 | ||
Estimated Fair Value [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 262 | 269 | ||
Estimated Fair Value [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 | [4] | 20,348 | 13,564 | |
Restricted cash | [4] | 326 | 25 | |
Other Short-term Investments Fair Value Disclosure | [4] | 2,200 | ||
Accrued interest receivables | 0 | 0 | ||
Time deposits | 0 | 0 | ||
Long-term borrowings | 0 | 0 | ||
Accrued interest payables | 0 | 0 | ||
Estimated Fair Value [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 | ||
Estimated Fair Value [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 | ||
Estimated Fair Value [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Estimated Fair Value [Member] | Level 2 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 262 | 269 | ||
Net loan receivables | 0 | 0 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Other Short-term Investments Fair Value Disclosure | [4] | 0 | ||
Accrued interest receivables | [4],[5] | 967 | 992 | |
Time deposits | [6] | 26,336 | 29,090 | |
Long-term borrowings | 21,748 | 22,212 | ||
Accrued interest payables | [4],[5] | 147 | 233 | |
Estimated Fair Value [Member] | Level 2 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 10,757 | 10,794 | ||
Estimated Fair Value [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 | 10,991 | 11,418 | ||
Estimated Fair Value [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 262 | 269 | ||
Estimated Fair Value [Member] | Level 3 [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Net loan receivables | 86,984 | 91,200 | ||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Other Short-term Investments Fair Value Disclosure | [4] | 0 | ||
Accrued interest receivables | 0 | 0 | ||
Time deposits | 0 | 0 | ||
Long-term borrowings | 123 | 130 | ||
Accrued interest payables | 0 | 0 | ||
Estimated Fair Value [Member] | Level 3 [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 123 | 130 | ||
Estimated Fair Value [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 | ||
Estimated Fair Value [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 0 | 0 | ||
Carrying Value [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | 255 | 260 | ||
Net loan receivables | 79,000 | 82,223 | ||
Cash and cash equivalents | [4] | 20,348 | 13,564 | |
Restricted cash | [4] | 326 | 25 | |
Other Short-term Investments Fair Value Disclosure | [4] | 2,200 | ||
Accrued interest receivables | [4],[5] | 967 | 992 | |
Time deposits | [6] | 25,694 | 28,269 | |
Long-term borrowings | 21,011 | 21,241 | ||
Accrued interest payables | [4],[5] | 147 | 233 | |
Carrying Value [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 10,804 | 10,840 | ||
Carrying Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term borrowings | 10,207 | 10,401 | ||
Carrying Value [Member] | Residential Mortgage-Backed Securities - Agency [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Held-to-maturity investment securities | $ 255 | $ 260 | ||
[1] | Held-to-maturity investment securities are reported at amortized cost. | |||
[2] | Amounts represent RMBS that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives. | |||
[3] | Maturities of RMBS are reflective of the contractual maturities of the investment. | |||
[4] | The carrying values of these assets and liabilities approximate fair value due to their short-term nature. | |||
[5] | 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. | |||
[6] | Excludes deposits without contractually defined maturities for all periods presented. |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Interest Expense [Member] | ||
Derivative [Line Items] | ||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 3 | |
Financing Receivable [Member] | ||
Derivative [Line Items] | ||
Initial maximum period for cash flow hedges (in years) | 2 years | 2 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 | Mar. 31, 2021USD ($)transactions | Mar. 31, 2021EUR (€)transactions | Mar. 31, 2021GBP (£)transactions | Mar. 31, 2021SGD ($)transactions | Mar. 31, 2021INR (₨)transactions | Dec. 31, 2020USD ($)transactions | Dec. 31, 2020EUR (€)transactions | Dec. 31, 2020GBP (£)transactions | Dec. 31, 2020SGD ($)transactions | Dec. 31, 2020INR (₨)transactions | |||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative assets | [1] | $ 0 | $ 1 | ||||||||||
Collateral held, derivative assets | [2] | 0 | 0 | ||||||||||
Total net derivative assets | 0 | 1 | |||||||||||
Derivative liabilities | [1] | 1 | 0 | ||||||||||
Collateral posted, derivative liabilities | [2] | (1) | 0 | ||||||||||
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 | $ 250 | 250 | |||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 1 | 1 | 1 | 1 | 1 | ||||||||
Derivative assets | $ 0 | 0 | |||||||||||
Derivative liabilities | 0 | 0 | |||||||||||
Designated as Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 11,625 | 11,625 | |||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 15 | 15 | 15 | 15 | 15 | ||||||||
Derivative assets | $ 0 | 1 | |||||||||||
Derivative liabilities | 1 | 0 | |||||||||||
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | |||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Derivative, notional amount | $ 27 | [3] | € 6 | £ 6 | $ 1 | ₨ 788 | 24 | [3] | € 6 | £ 6 | $ 1 | ₨ 596 | |
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 6 | 6 | 6 | 6 | 6 | ||||||||
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 | $ 12 | $ 27 | |||||||||||
Derivative, number of outstanding derivative contracts (in transactions) | transactions | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | |||
[1] | In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At March 31, 2021 and December 31, 2020, the Company had one outstanding contract with a total notional amount of $12 million and $27 million, respectively, and an immaterial fair value. | ||||||||||||
[2] | Collateral amounts, which consist of both cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged. | ||||||||||||
[3] | The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 788 million as of March 31, 2021, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 596 million as of December 31, 2020. |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities Derivatives and Hedging Activities (Schedule of Hedged Items in a Fair Value Hedging Relationship) (Details) - Long-term Borrowings [Member] - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of Hedged Items in Fair Value Hedging Relationship [Line Items] | ||
Carrying amount of hedged assets/liabilities | $ 11,802 | $ 11,881 |
Cumulative amount of fair value hedging adjustment increasing (decreasing) the carrying amount of hedged assets/liabilities | $ 203 | $ 281 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amounts reclassified from OCI into earnings, cash flow hedges | $ (1) | $ (2) |
Interest Expense [Member] | Deposits [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded | (193) | (373) |
Interest Expense [Member] | Deposits [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amounts reclassified from OCI into earnings, cash flow hedges | 0 | (1) |
Gains (losses) on hedged items, fair value hedges | 0 | 0 |
Gains (losses) on interest rate swaps, fair value hedges | 0 | 0 |
Total gains (losses) on fair value hedges | 0 | 0 |
Interest Expense [Member] | Long-term Borrowings [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded | (123) | (211) |
Interest Expense [Member] | Long-term Borrowings [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amounts reclassified from OCI into earnings, cash flow hedges | (1) | (1) |
Gains (losses) on hedged items, fair value hedges | 78 | (396) |
Gains (losses) on interest rate swaps, fair value hedges | (30) | 405 |
Total gains (losses) on fair value hedges | 48 | 9 |
Interest Income | Credit Card Loans [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded | 2,154 | 0 |
Interest Income | Credit Card Loans [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amounts reclassified from OCI into earnings, cash flow hedges | 0 | 0 |
Gains (losses) on hedged items, fair value hedges | 0 | 0 |
Gains (losses) on interest rate swaps, fair value hedges | 0 | 0 |
Total gains (losses) on fair value hedges | 0 | 0 |
Other Income [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total amounts of income and expense line items presented in the condensed consolidated statements of income where the effects of fair value or cash flow hedges are recorded | 23 | 28 |
Other Income [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amounts reclassified from OCI into earnings, cash flow hedges | 0 | 0 |
Gains (losses) on hedged items, fair value hedges | 0 | 0 |
Gains (losses) on interest rate swaps, fair value hedges | 0 | 0 |
Total gains (losses) on fair value hedges | $ 0 | $ 0 |
Segment Disclosures (Narrative)
Segment Disclosures (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Interest income | $ 2,646 | $ 2,982 |
Interest expense | 316 | 584 |
Net interest income | 2,330 | 2,398 |
Provision for credit losses | (365) | 1,807 |
Other income | 465 | 490 |
Other expense | 1,081 | 1,159 |
Income (loss) before income taxes | 2,079 | (78) |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 55 | 83 |
Credit Card Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 2,154 | 2,416 |
Total Other Loans [Member] | Private Student Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 185 | 205 |
Total Other Loans [Member] | Personal Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 224 | 254 |
Total Other Loans [Member] | Other Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 28 | 24 |
Operating Segments [Member] | Digital Banking [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 2,646 | 2,982 |
Interest expense | 316 | 584 |
Net interest income | 2,330 | 2,398 |
Provision for credit losses | (365) | 1,807 |
Other income | 379 | 366 |
Other expense | 1,047 | 1,118 |
Income (loss) before income taxes | 2,027 | (161) |
Operating Segments [Member] | Digital Banking [Member] | Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 55 | 83 |
Operating Segments [Member] | Digital Banking [Member] | Credit Card Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 2,154 | 2,416 |
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Private Student Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 185 | 205 |
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Personal Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 224 | 254 |
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Other Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 28 | 24 |
Operating Segments [Member] | Payment Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 0 | 0 |
Interest expense | 0 | 0 |
Net interest income | 0 | 0 |
Provision for credit losses | 0 | 0 |
Other income | 86 | 124 |
Other expense | 34 | 41 |
Income (loss) before income taxes | 52 | 83 |
Operating Segments [Member] | Payment Services [Member] | Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 0 | 0 |
Operating Segments [Member] | Payment Services [Member] | Credit Card Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 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 |
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Personal Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | 0 | 0 |
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Other Loans [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest income | $ 0 | $ 0 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Disaggregation of Revenue [Line Items] | |||
Discount and interchange revenue, net | $ 241 | $ 216 | |
Protection products revenue | 43 | 47 | |
Transaction processing revenue | 51 | 44 | |
Other income subject to ASC 606 | 23 | 28 | |
Loan fee income | 107 | 119 | |
Total other income not subject to ASC 606 | 107 | 155 | |
Total other income by operating segment | 465 | 490 | |
Gains on equity investments | 0 | 36 | |
Customer rewards included in discount and interchange revenue | 525 | 478 | |
Accounting Standards Update 2014-09 [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Discount and interchange revenue, net | [1] | 241 | 216 |
Protection products revenue | 43 | 47 | |
Transaction processing revenue | 51 | 44 | |
Other income subject to ASC 606 | 23 | 28 | |
Total other income subject to ASC 606 | [2] | 358 | 335 |
Operating Segments [Member] | Digital Banking [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Loan fee income | 107 | 119 | |
Total other income not subject to ASC 606 | 107 | 119 | |
Total other income by operating segment | 379 | 366 | |
Gains on equity investments | 0 | ||
Operating Segments [Member] | Digital Banking [Member] | Accounting Standards Update 2014-09 [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Discount and interchange revenue, net | [1] | 226 | 197 |
Protection products revenue | 43 | 47 | |
Transaction processing revenue | 0 | 0 | |
Other income subject to ASC 606 | 3 | 3 | |
Total other income subject to ASC 606 | [2] | 272 | 247 |
Operating Segments [Member] | Payment Services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Loan fee income | 0 | 0 | |
Total other income not subject to ASC 606 | 0 | 36 | |
Total other income by operating segment | 86 | 124 | |
Gains on equity investments | 36 | ||
Operating Segments [Member] | Payment Services [Member] | Accounting Standards Update 2014-09 [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Discount and interchange revenue, net | [1] | 15 | 19 |
Protection products revenue | 0 | 0 | |
Transaction processing revenue | 51 | 44 | |
Other income subject to ASC 606 | 20 | 25 | |
Total other income subject to ASC 606 | [2] | $ 86 | $ 88 |
[1] | Net of rewards, including Cashback Bonus rewards, of $525 million and $478 million for the three months ended March 31, 2021 and 2020, respectively. | ||
[2] | Excludes deposit product fees that are reported within net interest income, which were immaterial for the three months ended March 31, 2021 and 2020 |