EX-99.2 3 dfs20211231ex992.htm EX-99.2

DISCOVER FINANCIAL SERVICES																																																									Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
			Quarter Ended																																										Twelve Months Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020												Dec 31, 2021						Dec 31, 2020						2021 vs. 2020
EARNINGS SUMMARY
Interest Income			$2,742						$2,674						$2,589						$2,646						$2,760						($18)						(1		%)				$10,651						$11,095						($444)			(4		%)
Interest Expense			259						269						290						316						383						(124)						(32		%)				1,134						1,865						(731)			(39		%)
Net Interest Income			2,483						2,405						2,299						2,330						2,377						106						4		%				9,517						9,230						287			3		%
Discount/Interchange Revenue			1,042						988						937						766						811						231						28		%				3,733						2,879						854			30		%
Rewards Cost			697						689						598						525						569						128						22		%				2,509						1,946						563			29		%
Discount and Interchange Revenue, net			345						299						339						241						242						103						43		%				1,224						933						291			31		%
Protection Products Revenue			36						43						43						43						45						(9)						(20		%)				165						180						(15)			(8		%)
Loan Fee Income			131						121						105						107						110						21						19		%				464						414						50			12		%
Transaction Processing Revenue			60						58						58						51						52						8						15		%				227						195						32			16		%
Unrealized Gains/ (Losses) on Equity Investments			(139)						(167)						729						—						—						(139)						NM						423						—						423			NM
Realized Gains/ (Losses) on Equity Investments			1						—						—						—						—						1						NM						1						80						(79)			(99		%)
Other Income			19						18						6						23						(2)						21						NM						66						56						10			18		%
Total Non-Interest Income			453						372						1,280						465						447						6						1		%				2,570						1,858						712			38		%
Revenue Net of Interest Expense			2,936						2,777						3,579						2,795						2,824						112						4		%				12,087						11,088						999			9		%
Provision for Credit Losses			263						185						135						(365)						531						(268)						(50		%)				218						5,134						(4,916)			(96		%)
Employee Compensation and Benefits			499						483						498						506						504						(5)						(1		%)				1,986						1,894						92			5		%
Marketing and Business Development			271						210						175						154						159						112						70		%				810						659						151			23		%
Information Processing & Communications			125						121						145						109						198						(73)						(37		%)				500						540						(40)			(7		%)
Professional Fees			230						198						187						182						192						38						20		%				797						717						80			11		%
Premises and Equipment			23						23						22						24						30						(7)						(23		%)				92						113						(21)			(19		%)
Other Expense			164						155						195						106						195						(31)						(16		%)				620						596						24			4		%
Total Operating Expense			1,312						1,190						1,222						1,081						1,278						34						3		%				4,805						4,519						286			6		%
Income/ (Loss) Before Income Taxes			1,361						1,402						2,222						2,079						1,015						346						34		%				7,064						1,435						5,629			NM
Tax Expense			294						311						524						486						216						78						36		%				1,615						294						1,321			NM
Net Income/ (Loss)			$1,067						$1,091						$1,698						$1,593						$799						$268						34		%				$5,449						$1,141						$4,308			NM
Net Income/ (Loss) Allocated to Common Stockholders			$1,062						$1,055						$1,688						$1,546						$794						$268						34		%				$5,351						$1,104						$4,247			NM
Effective Tax Rate			21.6		%				22.2		%				23.6		%				23.4		%				21.3		%																22.9		%				20.5		%
Net Interest Margin			10.81		%				10.80		%				10.68		%				10.75		%				10.63		%				18						bps						10.76		%				10.21		%				55			bps
Operating Efficiency			44.7		%				42.9		%				34.1		%				38.7		%				45.2		%				(50)						bps						39.8		%				40.8		%				(100)			bps
ROE			32		%				33		%				54		%				56		%				30		%																43		%				11		%
ROCE			35		%				35		%				59		%				59		%				33		%																46		%				12		%
Capital Returned to Common Stockholders			$895						$940						$649						$232						$119						$776						NM						$2,715						$840						$1,875			NM
Payout Ratio			84		%				89		%				38		%				15		%				15		%																51		%				76		%
Ending Common Shares Outstanding			288						295						301						306						307						(19)						(6		%)				288						307						(19)			(6		%)
Weighted Average Common Shares Outstanding			291						298						304						307						307						(16)						(5		%)				300						307						(7)			(2		%)
Weighted Average Common Shares Outstanding (fully diluted)			292						298						304						307						307						(15)						(5		%)				300						307						(7)			(2		%)
PER SHARE STATISTICS
Basic EPS			$3.64						$3.54						$5.56						$5.04						$2.59						$1.05						41		%				$17.85						$3.60						$14.25			NM
Diluted EPS			$3.64						$3.54						$5.55						$5.04						$2.59						$1.05						41		%				$17.83						$3.60						$14.23			NM
Common Dividends Declared Per Share			$0.50						$0.50						$0.44						$0.44						$0.44						$0.06						14		%				$1.88						$1.76						$0.12			7		%
Common Stock Price (period end)			$115.56						$122.85						$118.29						$94.99						$90.53						$25.03						28		%				$115.56						$90.53						$25.03			28		%
Book Value per share			$46.50						$45.00						$43.72						$39.72						$35.50						$11.00						31		%				$46.50						$35.50						$11.00			31		%
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY
(unaudited, in millions)
			Quarter Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020
BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities			$18,236						$20,762						$25,209						$30,106						$25,703						($7,467)						(29		%)
Total Loan Receivables			93,684						89,542						87,674						86,347						90,449						3,235						4		%
Allowance for Credit Losses			(6,822)						(6,861)						(7,026)						(7,347)						(8,226)						1,404						17		%
Net Loan Receivables			86,862						82,681						80,648						79,000						82,223						4,639						6		%
Premises and Equipment, net			983						987						986						1,021						1,027						(44)						(4		%)
Goodwill and Intangible Assets, net			255						256						256						350						350						(95)						(27		%)
Other Assets			3,906						3,858						3,886						3,394						3,586						320						9		%
Total Assets			$110,242						$108,544						$110,985						$113,871						$112,889						($2,647)						(2		%)
Liabilities & Stockholders' Equity
Certificates of Deposits 1			$14,391						$14,931						$15,732						$16,681						$18,526						($4,135)						(22		%)
Savings, Money Market, and Other Deposits 1, 2			47,548						47,035						46,823						47,420						44,971						2,577						6		%
Total Direct to Consumer Deposits 1, 2			61,939						61,966						62,555						64,101						63,497						(1,558)						(2		%)
Brokered Deposits and Other Deposits			10,454						10,596						11,921						12,644						13,407						(2,953)						(22		%)
Deposits			72,393						72,562						74,476						76,745						76,904						(4,511)						(6		%)
Short-term Borrowings			1,250						—						—						—						—						1,250						NM
Securitized Borrowings			9,539						9,064						9,145						10,804						10,840						(1,301)						(12		%)
Other Borrowings			9,438						9,452						10,205						10,207						10,401						(963)						(9		%)
Borrowings			20,227						18,516						19,350						21,011						21,241						(1,014)						(5		%)
Accrued Expenses and Other Liabilities			4,214						4,203						3,988						3,961						3,860						354						9		%
Total Liabilities			96,834						95,281						97,814						101,717						102,005						(5,171)						(5		%)
Total Equity			13,408						13,263						13,171						12,154						10,884						2,524						23		%
Total Liabilities and Stockholders' Equity			$110,242						$108,544						$110,985						$113,871						$112,889						($2,647)						(2		%)
LIQUIDITY
Liquidity Portfolio			$14,959						$19,946						$23,201						$28,196						$24,411						($9,452)						(39		%)
Private Asset-backed Securitizations			3,500						4,000						4,000						6,000						6,000						(2,500)						(42		%)
Federal Home Loan Bank Borrowing Capacity			150						1,341						1,209						1,127						—						150						NM
Federal Reserve Discount Window  3			34,254						32,719						32,328						32,457						32,930						1,324						4		%
Undrawn Credit Facilities 3			37,904						38,060						37,537						39,584						38,930						(1,026)						(3		%)
Total Liquidity			$52,863						$58,006						$60,738						$67,780						$63,341						-$10,478						(17		%)
1 Includes Affinity relationships
2 Savings, Money Market, and Other Deposits includes checking and reflects both interest-bearing and non-interest bearing direct to consumer deposits
3 Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
			Quarter Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020
BALANCE SHEET STATISTICS
Total Common Equity			$12,352						$12,207						$12,115						$11,098						$9,828						$2,524						26		%
Total Common Equity/Total Assets			11.2		%				11.2		%				10.9		%				9.7		%				8.7		%
Total Common Equity/Net Loans			14.2		%				14.8		%				15.0		%				14.0		%				12.0		%
Tangible Assets			$109,987						$108,288						$110,729						$113,521						$112,539						($2,552)						(2		%)
Tangible Common Equity 1			$12,097						$11,951						$11,859						$10,748						$9,478						$2,619						28		%
Tangible Common Equity/Tangible Assets 1			11.0		%				11.0		%				10.7		%				9.5		%				8.4		%
Tangible Common Equity/Net Loans 1			13.9		%				14.5		%				14.7		%				13.6		%				11.5		%
Tangible Common Equity per share  1			$41.96						$40.55						$39.37						$35.12						$30.91						$11.05						36		%
			Basel III
			Quarter Ended
REGULATORY CAPITAL RATIOS 2			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020
Total Risk Based Capital Ratio			17.6		%				18.5		%				18.8		%				18.0		%				16.1		%
Tier 1 Risk Based Capital Ratio			15.8		%				16.7		%				16.9		%				16.1		%				14.3		%
Tier 1 Leverage Ratio			13.9		%				13.8		%				13.3		%				12.2		%				10.9		%
Common Equity Tier 1 Capital Ratio			14.8		%				15.5		%				15.7		%				14.9		%				13.1		%
1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule
2 Based on the final rule published September 30, 2020. Capital ratios reflect delay in the recognition of the impact of CECL reserves on regulatory capital for two years in accordance with the final rule
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
			Quarter Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020
AVERAGE BALANCES
Assets
Cash and Investment Securities			$17,309						$20,623						$26,784						$27,927						$30,245						($12,936)						(43		%)
Restricted Cash			1,164						571						897						136						121						1,043						NM
Credit Card Loans			71,865						69,416						67,420						68,723						69,997						1,868						3		%
Private Student Loans			10,094						9,932						9,993						10,211						9,952						142						1		%
Personal Loans			6,923						6,900						6,884						7,075						7,197						(274)						(4		%)
Other Loans			2,213						2,108						1,999						1,896						1,814						399						22		%
Total Loans			91,095						88,356						86,296						87,905						88,960						2,135						2		%
Total Interest Earning Assets			109,568						109,550						113,977						115,968						119,326						(9,758)						(8		%)
Allowance for Credit Losses			(6,847)						(7,020)						(7,342)						(8,214)						(8,222)						1,375						17		%
Other Assets			6,379						6,430						5,971						6,165						6,050						329						5		%
Total Assets			$109,100						$108,960						$112,606						$113,919						$117,154						($8,054)						(7		%)
Liabilities and Stockholders' Equity
Certificates of Deposits 1			$14,606						$15,373						$16,109						$17,682						$19,032						($4,426)						(23		%)
Savings, Money Market, and Other Deposits 1, 2			46,213						45,907						46,020						45,020						43,489						2,724						6		%
Interest-bearing Direct to Consumer Deposits 1, 2			60,819						61,280						62,129						62,702						62,521						(1,702)						(3		%)
Brokered Deposits and Other Deposits			9,834						10,691						11,915						12,621						13,711						(3,877)						(28		%)
Total Interest-bearing Deposits			70,653						71,971						74,044						75,323						76,232						(5,579)						(7		%)
Short-term Borrowings			277						6						—						1						3,722						(3,445)						NM
Securitized Borrowings			9,119						8,292						10,305						10,826						10,945						(1,826)						(17		%)
Other Long-term Borrowings			9,444						9,550						10,211						10,360						10,409						(965)						(9		%)
Total Interest-bearing Liabilities			89,493						89,819						94,560						96,510						101,308						(11,815)						(12		%)
Other Liabilities & Stockholders' Equity			19,607						19,141						18,046						17,409						15,846						3,761						24		%
Total Liabilities and Stockholders' Equity			$109,100						$108,960						$112,606						$113,919						$117,154						($8,054)						(7		%)
AVERAGE YIELD
Assets
Cash and Investment Securities			1.01		%				0.95		%				0.78		%				0.79		%				1.14		%				(13)						bps
Restricted Cash			0.03		%				0.03		%				0.02		%				0.03		%				0.05		%				(2)						bps
Credit Card Loans			12.50		%				12.53		%				12.52		%				12.71		%				12.65		%				(15)						bps
Private Student Loans			7.37		%				7.36		%				7.41		%				7.37		%				7.40		%				(3)						bps
Personal Loans			12.36		%				12.61		%				12.76		%				12.83		%				13.01		%				(65)						bps
Other Loans			5.39		%				5.41		%				5.59		%				5.94		%				6.02		%				(63)						bps
Total Loans			11.75		%				11.79		%				11.79		%				11.96		%				11.96		%				(21)						bps
Total Interest Earning Assets			9.93		%				9.68		%				9.11		%				9.25		%				9.20		%				73						bps
AVERAGE RATES
Liabilities and Stockholders' Equity
Certificates of Deposits 1			1.07		%				1.19		%				1.32		%				1.57		%				1.80		%				(73)						bps
Savings, Money Market, and Other Deposits 1, 2			0.42		%				0.42		%				0.42		%				0.45		%				0.57		%				(15)						bps
Interest-bearing Direct to Consumer Deposits 1, 2			0.58		%				0.61		%				0.65		%				0.77		%				0.94		%				(36)						bps
Brokered Deposits and Other Deposits			2.16		%				2.28		%				2.35		%				2.37		%				2.38		%				(22)						bps
Total Interest-bearing Deposits			0.80		%				0.86		%				0.92		%				1.04		%				1.20		%				(40)						bps
Short-term Borrowings			0.18		%				0.24		%				0.11		%				0.15		%				3.10		%				(292)						bps
Securitized Borrowings			1.09		%				1.10		%				1.01		%				1.07		%				1.06		%				3						bps
Other Long-term Borrowings			3.86		%				3.78		%				3.66		%				3.72		%				3.60		%				26						bps
Total Interest-bearing Liabilities			1.15		%				1.19		%				1.23		%				1.33		%				1.50		%				(35)						bps
Net Interest Margin			10.81		%				10.80		%				10.68		%				10.75		%				10.63		%				18						bps
Net Yield on Interest-earning Assets			8.99		%				8.71		%				8.09		%				8.15		%				7.93		%				106						bps
1 Includes Affinity relationships
2 Excludes checking which is a non-interest bearing deposit product. All non-interest bearing deposits, including checking, are reflected in Other Liabilities & Stockholders’ Equity on the average balance sheet
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
			Quarter Ended																																										Twelve Months Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020												Dec 31, 2021						Dec 31, 2020						2021 vs. 2020
TOTAL LOAN RECEIVABLES
Ending Loans 1			$93,684						$89,542						$87,674						$86,347						$90,449						$3,235						4		%				$93,684						$90,449						$3,235			4		%
Average Loans 1			$91,095						$88,356						$86,296						$87,905						$88,960						$2,135						2		%				$88,421						$90,403						($1,982)			(2		%)
Interest Yield			11.75		%				11.79		%				11.79		%				11.96		%				11.96		%				(21)						bps						11.82		%				11.95		%				(13)			bps
Gross Principal Charge-off Rate			2.36		%				2.50		%				3.20		%				3.45		%				3.17		%				(81)						bps						2.87		%				3.85		%				(98)			bps
Net Principal Charge-off Rate			1.37		%				1.46		%				2.12		%				2.48		%				2.38		%				(101)						bps						1.84		%				3.03		%				(119)			bps
Delinquency Rate (30 or more days)			1.55		%				1.40		%				1.34		%				1.67		%				1.89		%				(34)						bps
Delinquency Rate (90 or more days)			0.66		%				0.58		%				0.63		%				0.85		%				0.88		%				(22)						bps
Gross Principal Charge-off Dollars			$543						$556						$688						$747						$709						($166)						(23		%)				$2,534						$3,476						($942)			(27		%)
Net Principal Charge-off Dollars			$313						$325						$456						$537						$531						($218)						(41		%)				$1,631						$2,735						($1,104)			(40		%)
Net Interest and Fee Charge-off Dollars			$70						$72						$101						$118						$113						($43)						(38		%)				$361						$601						($240)			(40		%)
Loans Delinquent 30 or more days			$1,451						$1,258						$1,172						$1,438						$1,705						($254)						(15		%)
Loans Delinquent 90 or more days			$618						$522						$550						$732						$795						($177)						(22		%)
Allowance for Credit Losses (period end)			$6,822						$6,861						$7,026						$7,347						$8,226						($1,404)						(17		%)				$6,822						$8,226						($1,404)			(17		%)
Reserve Change Build/ (Release) 2, 3			($39)						($165)						($321)						($879)						$—						($39)												($1,404)						$2,382						($3,786)
Reserve Rate			7.28		%				7.66		%				8.01		%				8.51		%				9.09		%				(181)						bps						7.28		%				9.09		%				(181)			bps
CREDIT CARD LOANS
Ending Loans			$74,369						$70,320						$68,886						$67,304						$71,472						$2,897						4		%				$74,369						$71,472						$2,897			4		%
Average Loans			$71,865						$69,416						$67,420						$68,723						$69,997						$1,868						3		%				$69,365						$71,447						($2,082)			(3		%)
Interest Yield			12.50		%				12.53		%				12.52		%				12.71		%				12.65		%				(15)						bps						12.57		%				12.58		%				(1)			bps
Gross Principal Charge-off Rate			2.63		%				2.83		%				3.69		%				3.91		%				3.53		%				(90)						bps						3.25		%				4.34		%				(109)			bps
Net Principal Charge-off Rate			1.50		%				1.65		%				2.45		%				2.80		%				2.63		%				(113)						bps						2.09		%				3.41		%				(132)			bps
Delinquency Rate (30 or more days)			1.66		%				1.48		%				1.43		%				1.85		%				2.07		%				(41)						bps						1.66		%				2.07		%				(41)			bps
Delinquency Rate (90 or more days)			0.76		%				0.66		%				0.73		%				1.01		%				1.03		%				(27)						bps						0.76		%				1.03		%				(27)			bps
Gross Principal Charge-off Dollars			$477						$495						$620						$663						$621						($144)						(23		%)				$2,255						$3,101						($846)			(27		%)
Net Principal Charge-off Dollars			$272						$289						$412						$474						$463						($191)						(41		%)				$1,447						$2,438						($991)			(41		%)
Loans Delinquent 30 or more days			$1,232						$1,040						$983						$1,245						$1,478						($246)						(17		%)				$1,232						$1,478						($246)			(17		%)
Loans Delinquent 90 or more days			$562						$467						$504						$680						$739						($177)						(24		%)				$562						$739						($177)			(24		%)
Allowance for Credit Losses (period end)			$5,273						$5,298						$5,409						$5,640						$6,491						($1,218)						(19		%)				$5,273						$6,491						($1,218)			(19		%)
Reserve Change Build/ (Release) 2			($25)						($111)						($231)						($851)						$—						($25)												($1,218)						$1,941						($3,159)
Reserve Rate			7.09		%				7.54		%				7.85		%				8.38		%				9.08		%				(199)						bps						7.09		%				9.08		%				(199)			bps
Total Discover Card Volume			$53,983						$50,389						$48,049						$40,334						$43,581						$10,402						24		%				$192,755						$153,943						$38,812			25		%
Discover Card Sales Volume			$51,308						$47,613						$45,460						$37,744						$40,957						$10,351						25		%				$182,125						$142,800						$39,325			28		%
Rewards Rate			1.35		%				1.44		%				1.31		%				1.38		%				1.38		%				(3)						bps						1.37		%				1.35		%				2			bps
1 Total Loans includes Home Equity and other loans
2 Excludes January 1, 2020 CECL day one impact
3 Excludes any build/release of the liability for expected credit losses on unfunded commitments as the offset is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
			Quarter Ended																																										Twelve Months Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020												Dec 31, 2021						Dec 31, 2020						2021 vs. 2020
PRIVATE STUDENT LOANS
Organic Student Loans			$9,367						$9,391						$9,021						$9,254						$8,989						$378						4		%				$9,367						$8,989						$378			4		%
Purchased Student Loans			746						793						843						899						965						(219)						(23		%)				746						965						(219)			(23		%)
Total Private Student Loans			$10,113						$10,184						$9,864						$10,153						$9,954						$159						2		%				$10,113						$9,954						$159			2		%
Interest Yield			7.37		%				7.36		%				7.41		%				7.37		%				7.40		%				(3)						bps						7.38		%				7.63		%				(25)			bps
Net Principal Charge-off Rate 1			0.80		%				0.68		%				0.53		%				0.53		%				0.71		%				9						bps						0.63		%				0.65		%				(2)			bps
Delinquency Rate (30 or more days)			1.55		%				1.55		%				1.34		%				1.20		%				1.39		%				16						bps						1.55		%				1.39		%				16			bps
Reserve Rate			8.33		%				8.41		%				8.39		%				8.49		%				8.43		%				(10)						bps						8.33		%				8.43		%				(10)			bps
PERSONAL LOANS
Ending Loans			$6,936						$6,890						$6,865						$6,961						$7,177						($241)						(3		%)				$6,936						$7,177						($241)			(3		%)
Interest Yield			12.36		%				12.61		%				12.76		%				12.83		%				13.01		%				(65)						bps						12.64		%				12.93		%				(29)			bps
Net Principal Charge-off Rate			1.21		%				1.11		%				1.80		%				2.80		%				2.79		%				(158)						bps						1.73		%				3.13		%				(140)			bps
Delinquency Rate (30 or more days)			0.69		%				0.71		%				0.69		%				0.84		%				1.08		%				(39)						bps						0.69		%				1.08		%				(39)			bps
Reserve Rate			9.54		%				9.61		%				10.85		%				11.55		%				11.94		%				(240)						bps						9.54		%				11.94		%				(240)			bps
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS AND VOLUME STATISTICS
(unaudited, in millions)
			Quarter Ended																																										Twelve Months Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Dec 31, 2021 vs. Dec 31, 2020												Dec 31, 2021						Dec 31, 2020						2021 vs. 2020
DIGITAL BANKING
Interest Income			$2,742						$2,674						$2,589						$2,646						$2,760						($18)						(1		%)				$10,651						$11,095						($444)			(4		%)
Interest Expense			259						269						290						316						383						(124)						(32		%)				1,134						1,865						(731)			(39		%)
Net Interest Income			2,483						2,405						2,299						2,330						2,377						106						4		%				9,517						9,230						287			3		%
Non-Interest Income			497						447						458						379						368						129						35		%				1,781						1,459						322			22		%
Revenue Net of Interest Expense			2,980						2,852						2,757						2,709						2,745						235						9		%				11,298						10,689						609			6		%
Provision for Credit Losses			263						185						135						(365)						531						(268)						(50		%)				218						5,134						(4,916)			(96		%)
Total Operating Expense			1,259						1,151						1,092						1,047						1,223						36						3		%				4,549						4,292						257			6		%
Income/ (Loss) Before Income Taxes			$1,458						$1,516						$1,530						$2,027						$991						$467						47		%				$6,531						$1,263						$5,268			NM
Net Interest Margin			10.81		%				10.80		%				10.68		%				10.75		%				10.63		%				18						bps						10.76		%				10.21		%				55			bps
Pretax Return on Loan Receivables			6.35		%				6.81		%				7.11		%				9.36		%				4.44		%				191						bps						7.39		%				1.4		%				599			bps
Allowance for Credit Losses (period end)			$6,822						$6,861						$7,026						$7,347						$8,226						($1,404)						(17		%)				$6,822						$8,226						($1,404)			(17		%)
Reserve Change Build/ (Release) 1			($39)						($165)						($321)						($879)						$—						($39)												($1,404)						$2,382						($3,786)
PAYMENT SERVICES
Interest Income			$—						$—						$—						$—						$—						$—						NM						$—						$—						$—			NM
Interest Expense			—						—						—						—						—						—						NM						—						—						—			NM
Net Interest Income			—						—						—						—						—						—						NM						—						—						—			NM
Non-Interest Income/ (Loss)			(44)						(75)						822						86						79						(123)						(156		%)				789						399						390			98		%
Revenue Net of Interest Expense			(44)						(75)						822						86						79						(123)						(156		%)				789						399						390			98		%
Provision for Credit Losses			—						—						—						—						—						—						NM						—						—						—			NM
Total Operating Expense			53						39						130						34						55						(2)						(4		%)				256						227						29			13		%
Income/ (Loss) Before Income Taxes			($97)						($114)						$692						$52						$24						($121)						NM						$533						$172						$361			NM
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network			914						868						799						678						735						179						24		%				3,259						2,624						635			24		%
PULSE Network			1,508						1,415						1,399						1,310						1,286						222						17		%				5,632						4,954						678			14		%
Total			2,422						2,283						2,198						1,988						2,021						401						20		%				8,891						7,578						1,313			17		%
NETWORK VOLUME
PULSE Network			$64,787						$59,872						$62,855						$60,399						$55,055						$9,732						18		%				$247,913						$212,081						$35,832			17		%
Network Partners			11,233						10,377						9,468						9,629						8,740						2,493						29		%				40,707						31,917						8,790			28		%
Diners Club International 2			7,367						6,547						6,126						5,897						6,321						1,046						17		%				25,937						24,236						1,701			7		%
Total Payment Services			83,387						76,796						78,449						75,925						70,116						13,271						19		%				314,557						268,234						46,323			17		%
Discover Network - Proprietary			53,197						49,360						47,201						39,202						42,526						10,671						25		%				188,960						148,754						40,206			27		%
Total			$136,584						$126,156						$125,650						$115,127						$112,642						$23,942						21		%				$503,517						$416,988						$86,529			21		%
1 Excludes January 1, 2020 CECL day one impact
2 Volume is derived from data provided by licencees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES - GLOSSARY OF FINANCIAL TERMS
Balance Sheet & Regulatory Capital Terms
Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments
Regulatory Capital Ratios are preliminary
•			Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets
•			Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets
•			Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets
•			Common Equity Tier 1 Capital Ratio represents common equity tier 1 capital divided by risk weighted assets
Tangible Assets represents total assets less goodwill and intangibles
Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data
Tangible Common Equity/Net Loans, a non-GAAP measure, represents TCE divided by total loans less the allowance for credit losses (period end)
Tangible Common Equity per Share, a non-GAAP measure, represents TCE divided by ending common shares outstanding
Tangible Common Equity/Tangible Assets, a non-GAAP measure, represents TCE divided by total assets less goodwill and intangibles
Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)
Credit Related Terms
Delinquency Rate (30 or more days) represents loans delinquent thirty days or more divided by ending loans (total or respective product loans, as appropriate)
Delinquency Rate (90 or more days) represents loans delinquent ninety days or more divided by ending loans (total or respective product loans, as appropriate)
Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Reserve Rate represents the allowance for credit losses divided by total loans (total or respective product loans, as appropriate)
Earnings and Shareholder Return Terms
Book Value per share represents total equity divided by ending common shares outstanding
Capital Returned to Common Stockholders represents common stock dividends declared and treasury share repurchases, excluding common stock issued under employee benefit plans and stock based compensation
Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding
Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Income Allocated to Common Stockholders represents net income less preferred stock dividends and income allocated to participating securities
Net Interest Margin represents net interest income (annualized) divided by average total loans for the period
Net Yield on Interest Earning Assets represents net interest income (annualized) divided by average total interest earning assets for the period
Operating Efficiency represents total operating expense divided by revenue net of interest expense
Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period
Payout Ratio represents capital returned to common stockholders divided by net income allocated to common stockholders
Return on Equity represents net income (annualized) divided by average total equity for the reporting period
Rewards Rate represents Credit Card rewards cost divided by Discover Card sales volume
Volume Terms
Discover Card Sales Volume represents Discover card activity related to sales net of returns
Discover Card Volume represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity
Discover Network Proprietary Volume represents gross Discover Card sales volume on the Discover Network

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DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA
(unaudited, in millions)
			Quarter Ended
			Dec 31, 2021						Sep 30, 2021						Jun 30, 2021						Mar 31, 2021						Dec 31, 2020
GAAP Total Common Equity			$12,352						$12,207						$12,115						$11,098						$9,828
Less: Goodwill			(255)						(255)						(255)						(255)						(255)
Less: Intangibles			—						(1)						(1)						(95)						(95)
Tangible Common Equity 1			$12,097						$11,951						$11,859						$10,748						$9,478
GAAP Book Value Per Share			$46.50						$45.00						$43.72						$39.72						$35.50
Less: Goodwill			(0.88)						(0.87)						(0.84)						(0.84)						(0.84)
Less: Intangibles			0.00						0.00						0.00						(0.31)						(0.31)
Less: Preferred Stock			(3.66)						(3.58)						(3.51)						(3.45)						(3.44)
Tangible Common Equity Per Share			$41.96						$40.55						$39.37						$35.12						$30.91
1 Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE and definitions may vary, so users of this information are advised to exercise caution in comparing TCE of different companies. TCE is included because management believes that common equity excluding goodwill and intangibles is a more meaningful measure to investors of the true net asset value of the Company
Note: See Glossary of Financial Terms for definitions of financial terms