EX-99.2 3 dfs2022331ex992.htm EX-99.2 Document

DISCOVER FINANCIAL SERVICES Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
 Quarter Ended
 Mar 31,
2022		Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Mar 31, 2022 vs. Mar 31, 2021
EARNINGS SUMMARY       
Interest Income$2,736 $2,742 $2,674 $2,589 $2,646 $90 3 %
Interest Expense257 259 269 290 316 (59)(19 %)
Net Interest Income2,479 2,483 2,405 2,299 2,330 149 6 %
Discount/Interchange Revenue955 1,042 988 937 766 189 25 %
Rewards Cost635 697 689 598 525 110 21 %
Discount and Interchange Revenue, net320 345 299 339 241 79 33 %
Protection Products Revenue44 36 43 43 43 1 2 %
Loan Fee Income140 131 121 105 107 33 31 %
Transaction Processing Revenue57 60 58 58 51 6 12 %
Unrealized Gains/ (Losses) on Equity Investments(188)(139)(167)729 — (188)NM
Realized Gains/ (Losses) on Equity Investments26 1 — — — 26 NM
Other Income24 19 18 6 23 1 4 %
Total Non-Interest Income423 453 372 1,280 465 (42)(9 %)
Revenue Net of Interest Expense2,902 2,936 2,777 3,579 2,795 107 4 %
Provision for Credit Losses154 263 185 135 (365)519 142 %
Employee Compensation and Benefits500 499 483 498 506 (6)(1 %)
Marketing and Business Development192 271 210 175 154 38 25 %
Information Processing & Communications125 125 121 145 109 16 15 %
Professional Fees177 230 198 187 182 (5)(3 %)
Premises and Equipment24 23 23 22 24 — — %
Other Expense112 164 155 195 106 6 6 %
Total Operating Expense1,130 1,312 1,190 1,222 1,081 49 5 %
Income/ (Loss) Before Income Taxes1,618 1,361 1,402 2,222 2,079 (461)(22 %)
Tax Expense376 294 311 524 486 (110)(23 %)
Net Income/ (Loss)$1,242 $1,067 $1,091 $1,698 $1,593 ($351)(22 %)
Net Income/ (Loss) Allocated to Common Stockholders$1,205 $1,062 $1,055 $1,688 $1,546 ($341)(22 %)
Effective Tax Rate23.3 %21.6 %22.2 %23.6 %23.4 %
Net Interest Margin10.85 %10.81 %10.80 %10.68 %10.75 %10 bps
Operating Efficiency38.9 %44.7 %42.9 %34.1 %38.7 %20 bps
ROE37 %32 %33 %54 %56 %
ROCE39 %35 %35 %59 %59 %
Capital Returned to Common Stockholders$1,067 $895 $940 $649 $232 $835 NM
Payout Ratio89 %84 %89 %38 %15 %
Ending Common Shares Outstanding281 288 295 301 306 (25)(8 %)
Weighted Average Common Shares Outstanding285 291 298 304 307 (22)(7 %)
Weighted Average Common Shares Outstanding (fully diluted)285 292 298 304 307 (22)(7 %)
PER SHARE STATISTICS       
Basic EPS$4.23 $3.64 $3.54 $5.56 $5.04 ($0.81)(16 %)
Diluted EPS$4.22 $3.64 $3.54 $5.55 $5.04 ($0.82)(16 %)
Common Dividends Declared Per Share$0.50 $0.50 $0.50 $0.44 $0.44 $0.06 14 %
Common Stock Price (period end)$110.19 $115.56 $122.85 $118.29 $94.99 $15.20 16 %
Book Value per share $47.81 $46.50 $45.00 $43.72 $39.72 $8.09 20 %
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Mar 31, 2022 vs. Mar 31, 2021
BALANCE SHEET SUMMARY       
Assets       
Cash and Investment Securities$15,620 $18,236 $20,762 $25,209 $30,106 ($14,486)(48 %)
Total Loan Receivables93,471 93,684 89,542 87,674 86,347 7,124 8 %
Allowance for Credit Losses(6,647)(6,822)(6,861)(7,026)(7,347)700 10 %
Net Loan Receivables86,824 86,862 82,681 80,648 79,000 7,824 10 %
Premises and Equipment, net984 983 987 986 1,021 (37)(4 %)
Goodwill and Intangible Assets, net255 255 256 256 350 (95)(27 %)
Other Assets3,729 3,906 3,858 3,886 3,394 335 10 %
Total Assets$107,412 $110,242 $108,544 $110,985 $113,871 ($6,459)(6 %)
Liabilities & Stockholders' Equity       
           Certificates of Deposits 1
$13,518$14,391 $14,931 $15,732 $16,681 ($3,163)(19 %)
           Savings, Money Market, and Other Deposits 1, 2
50,185 47,548 47,035 46,823 47,420 2,765 6 %
Total Direct to Consumer Deposits 1, 2
63,703 61,939 61,966 62,555 64,101 (398)(1 %)
Brokered Deposits and Other Deposits8,779 10,454 10,596 11,921 12,644 (3,865)(31 %)
Deposits72,482 72,393 72,562 74,476 76,745 (4,263)(6 %)
   Securitized Borrowings 3
7,715 9,539 9,064 9,145 10,804 (3,089)(29 %)
   Other Borrowings 3
9,417 10,688 9,452 10,205 10,207 (790)(8 %)
Borrowings17,132 20,227 18,516 19,350 21,011 (3,879)(18 %)
Accrued Expenses and Other Liabilities4,365 4,214 4,203 3,988 3,961 404 10 %
Total Liabilities93,979 96,834 95,281 97,814 101,717 (7,738)(8 %)
Total Equity13,433 13,408 13,263 13,171 12,154 1,279 11 %
Total Liabilities and Stockholders' Equity$107,412 $110,242 $108,544 $110,985 $113,871 ($6,459)(6 %)
LIQUIDITY       
Liquidity Portfolio$14,910 $14,959 $19,946 $23,201 $28,196 ($13,286)(47 %)
Private Asset-backed Securitizations3,750 3,500 4,000 4,000 6,000 (2,250)(38 %)
Federal Home Loan Bank Borrowing Capacity1,505 150 1,341 1,209 1,127 378 34 %
Federal Reserve Discount Window  4
34,393 34,254 32,719 32,328 32,457 1,936 6 %
Undrawn Credit Facilities 4
39,648 37,904 38,060 37,537 39,584 64 — %
Total Liquidity$54,558$52,863$58,006$60,738$67,780-$13,222(20 %)
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 Includes short-term and long-term borrowings
4 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


DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Mar 31, 2022 vs. Mar 31, 2021
BALANCE SHEET STATISTICS       
Total Common Equity$12,377 $12,352 $12,207 $12,115 $11,098 $1,279 12 %
Total Common Equity/Total Assets11.5 %11.2 %11.2 %10.9 %9.7 %
Total Common Equity/Net Loans14.3 %14.2 %14.8 %15.0 %14.0 %
Tangible Assets$107,157 $109,987 $108,288 $110,729 $113,521 ($6,364)(6 %)
Tangible Common Equity 1
$12,122 $12,097 $11,951 $11,859 $10,748 $1,374 13 %
Tangible Common Equity/Tangible Assets 1
11.3 %11.0 %11.0 %10.7 %9.5 %
Tangible Common Equity/Net Loans 1
14.0 %13.9 %14.5 %14.7 %13.6 %
Tangible Common Equity per share  1
$43.14 $41.96 $40.55 $39.37 $35.12 $8.02 23 %
Basel III
Quarter Ended
REGULATORY CAPITAL RATIOS 2
Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021  
Total Risk Based Capital Ratio17.6 %17.6 %18.5 %18.8 %18.0 %  
Tier 1 Risk Based Capital Ratio15.8 %15.8 %16.7 %16.9 %16.1 %  
Tier 1 Leverage Ratio 13.7 %13.9 %13.8 %13.3 %12.2 %  
Common Equity Tier 1 Capital Ratio 14.7 %14.8 %15.5 %15.7 %14.9 %
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



DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Mar 31, 2022 vs. Mar 31, 2021
AVERAGE BALANCES       
Assets       
Cash and Investment Securities$15,028 $17,309 $20,623 $26,784 $27,927 ($12,899)(46 %)
Restricted Cash774 1,164 571 897 136 638 NM
Credit Card Loans73,042 71,865 69,416 67,420 68,723 4,319 6 %
Private Student Loans10,381 10,094 9,932 9,993 10,211 170 2 %
Personal Loans6,909 6,923 6,900 6,884 7,075 (166)(2 %)
Other Loans2,359 2,213 2,108 1,999 1,896 463 24 %
Total Loans92,691 91,095 88,356 86,296 87,905 4,786 5 %
Total Interest Earning Assets108,493 109,568 109,550 113,977 115,968 (7,475)(6 %)
Allowance for Credit Losses(6,818)(6,847)(7,020)(7,342)(8,214)1,396 17 %
Other Assets6,248 6,379 6,430 5,971 6,165 83 1 %
Total Assets$107,923 $109,100 $108,960 $112,606 $113,919 ($5,996)(5 %)
Liabilities and Stockholders' Equity       
                       Certificates of Deposits 1
$14,035 $14,606 $15,373 $16,109 $17,682 ($3,647)(21 %)
                       Savings, Money Market, and Other Deposits 1, 2
47,426 46,213 45,907 46,020 45,020 2,406 5 %
Interest-bearing Direct to Consumer Deposits 1, 2
61,461 60,819 61,280 62,129 62,702 (1,241)(2 %)
Brokered Deposits and Other Deposits9,157 9,834 10,691 11,915 12,621 (3,464)(27 %)
Total Interest-bearing Deposits70,618 70,653 71,971 74,044 75,323 (4,705)(6 %)
Securitized Borrowings 3
7,739 9,119 8,292 10,305 10,826 (3,087)(29 %)
Other Borrowings 3
10,099 9,721 9,556 10,211 10,361 (262)(3 %)
Total Interest-bearing Liabilities88,456 89,493 89,819 94,560 96,510 (8,054)(8 %)
Other Liabilities & Stockholders' Equity19,467 19,607 19,141 18,046 17,409 2,058 12 %
Total Liabilities and Stockholders' Equity$107,923 $109,100 $108,960 $112,606 $113,919 ($5,996)(5 %)
AVERAGE YIELD       
Assets       
Cash and Investment Securities1.09 %1.01 %0.95 %0.78 %0.79 %30 bps
Restricted Cash0.02 %0.03 %0.03 %0.02 %0.03 %(1)bps
Credit Card Loans12.59 %12.50 %12.53 %12.52 %12.71 %(12)bps
Private Student Loans7.41 %7.37 %7.36 %7.41 %7.37 %4 bps
Personal Loans12.09 %12.36 %12.61 %12.76 %12.83 %(74)bps
Other Loans5.60 %5.39 %5.41 %5.59 %5.94 %(34)bps
Total Loans11.80 %11.75 %11.79 %11.79 %11.96 %(16)bps
Total Interest Earning Assets10.23 %9.93 %9.68 %9.11 %9.25 %98 bps
AVERAGE RATES
Liabilities and Stockholders' Equity       
                       Certificates of Deposits 1
1.02 %1.07 %1.19 %1.32 %1.57 %(55)bps
                       Savings, Money Market, and Other Deposits 1, 2
0.50 %0.42 %0.42 %0.42 %0.45 %5 bps
Interest-bearing Direct to Consumer Deposits 1, 2
0.62 %0.58 %0.61 %0.65 %0.77 %(15)bps
Brokered Deposits and Other Deposits2.03 %2.16 %2.28 %2.35 %2.37 %(34)bps
Total Interest-bearing Deposits0.80 %0.80 %0.86 %0.92 %1.04 %(24)bps
Securitized Borrowings 3
1.29 %1.09 %1.10 %1.01 %1.07 %22 bps
Other Borrowings 3
4.72 %4.77 %4.73 %4.68 %4.84 %(12)bps
Total Interest-bearing Liabilities1.18 %1.15 %1.19 %1.23 %1.33 %(15)bps
Net Interest Margin10.85 %10.81 %10.80 %10.68 %10.75 %10 bps
Net Yield on Interest-earning Assets9.27 %8.99 %8.71 %8.09 %8.15 %112 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
3 Includes short-term and long-term borrowings
Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31,
2022		Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Mar 31, 2022 vs. Mar 31, 2021
TOTAL LOAN RECEIVABLES       
Ending Loans 1
$93,471 $93,684 $89,542 $87,674 $86,347 $7,124 8 %
Average Loans 1
$92,691 $91,095 $88,356 $86,296 $87,905 $4,786 5 %
Interest Yield11.80 %11.75 %11.79 %11.79 %11.96 %(16)bps
Gross Principal Charge-off Rate 2.64 %2.36 %2.50 %3.20 %3.45 %(81)bps
Net Principal Charge-off Rate 1.61 %1.37 %1.46 %2.12 %2.48 %(87)bps
Delinquency Rate (30 or more days)1.64 %1.55 %1.40 %1.34 %1.67 %(3)bps
Delinquency Rate (90 or more days)0.72 %0.66 %0.58 %0.63 %0.85 %(13)bps
Gross Principal Charge-off Dollars $603 $543 $556 $688 $747 ($144)(19 %)
Net Principal Charge-off Dollars$368 $313 $325 $456 $537 ($169)(31 %)
Net Interest and Fee Charge-off Dollars$87 $70 $72 $101 $118 ($31)(26 %)
Loans Delinquent 30 or more days$1,537 $1,451 $1,258 $1,172 $1,438 $99 7 %
Loans Delinquent 90 or more days$678 $618 $522 $550 $732 ($54)(7 %)
Allowance for Credit Losses (period end)$6,647 $6,822 $6,861 $7,026 $7,347 ($700)(10 %)
Reserve Change Build/ (Release) 2
($175)($39)($165)($321)($879)$704 
Reserve Rate7.11 %7.28 %7.66 %8.01 %8.51 %(140)bps
CREDIT CARD LOANS       
Ending Loans$73,783 $74,369 $70,320 $68,886 $67,304 $6,479 10 %
Average Loans$73,042 $71,865 $69,416 $67,420 $68,723 $4,319 6 %
Interest Yield12.59 %12.50 %12.53 %12.52 %12.71 %(12)bps
Gross Principal Charge-off Rate3.00 %2.63 %2.83 %3.69 %3.91 %(91)bps
Net Principal Charge-off Rate1.84 %1.50 %1.65 %2.45 %2.80 %(96)bps
Delinquency Rate (30 or more days) 1.77 %1.66 %1.48 %1.43 %1.85 %(8)bps
Delinquency Rate (90 or more days) 0.83 %0.76 %0.66 %0.73 %1.01 %(18)bps
Gross Principal Charge-off Dollars$541 $477 $495 $620 $663 ($122)(18 %)
Net Principal Charge-off Dollars$331 $272 $289 $412 $474 ($143)(30 %)
Loans Delinquent 30 or more days$1,305 $1,232 $1,040 $983 $1,245 $60 5 %
Loans Delinquent 90 or more days$613 $562 $467 $504 $680 ($67)(10 %)
Allowance for Credit Losses (period end)$5,120 $5,273 $5,298 $5,409 $5,640 ($520)(9 %)
Reserve Change Build/ (Release) ($153)($25)($111)($231)($851)$698 
Reserve Rate6.94 %7.09 %7.54 %7.85 %8.38 %(144)bps
Total Discover Card Volume$49,379 $53,983 $50,389 $48,049 $40,334 $9,045 22 %
Discover Card Sales Volume$46,329 $51,308 $47,613 $45,460 $37,744 $8,585 23 %
Rewards Rate1.36 %1.35 %1.44 %1.31 %1.38 %(2)bps
1 Total Loans includes Home Equity and other loans
2 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


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Mar 31, 2022 vs. Mar 31, 2021
PRIVATE STUDENT LOANS       
Organic Student Loans$9,614 $9,367 $9,391 $9,021 $9,254 $360 4 %
Purchased Student Loans700 746 793 843 899 (199)(22 %)
Total Private Student Loans$10,314 $10,113 $10,184 $9,864 $10,153 $161 2 %
Interest Yield7.41 %7.37 %7.36 %7.41 %7.37 %4 bps
Net Principal Charge-off Rate0.69 %0.80 %0.68 %0.53 %0.53 %16 bps
Delinquency Rate (30 or more days)1.62 %1.55 %1.55 %1.34 %1.20 %42 bps
Reserve Rate8.43 %8.33 %8.41 %8.39 %8.49 %(6)bps
PERSONAL LOANS       
Ending Loans$6,904 $6,936 $6,890 $6,865 $6,961 ($57)(1 %)
Interest Yield12.09 %12.36 %12.61 %12.76 %12.83 %(74)bps
Net Principal Charge-off Rate1.12 %1.21 %1.11 %1.80 %2.80 %(168)bps
Delinquency Rate (30 or more days)0.69 %0.69 %0.71 %0.69 %0.84 %(15)bps
Reserve Rate8.88 %9.54 %9.61 %10.85 %11.55 %(267)bps
Note: See Glossary of Financial Terms for definitions of financial terms



DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS AND VOLUME STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Mar 31, 2022 vs. Mar 31, 2021
DIGITAL BANKING       
Interest Income$2,736 $2,742 $2,674 $2,589 $2,646 $90 3 %
Interest Expense257 259 269 290 316 (59)(19 %)
Net Interest Income2,479 2,483 2,405 2,299 2,330 149 6 %
Non-Interest Income486 497 447 458 379 107 28 %
Revenue Net of Interest Expense2,965 2,980 2,852 2,757 2,709 256 9 %
Provision for Credit Losses154 263 185 135 (365)519 142 %
Total Operating Expense1,092 1,259 1,151 1,092 1,047 45 4 %
Income/ (Loss) Before Income Taxes$1,719 $1,458 $1,516 $1,530 $2,027 ($308)(15 %)
Net Interest Margin10.85 %10.81 %10.80 %10.68 %10.75 %10 bps
Pretax Return on Loan Receivables7.52 %6.35 %6.81 %7.11 %9.36 %(184)bps
Allowance for Credit Losses (period end)$6,647 $6,822 $6,861 $7,026 $7,347 ($700)(10 %)
Reserve Change Build/ (Release) ($175)($39)($165)($321)($878)$703 
PAYMENT SERVICES       
Interest Income$— $— $— $— $— $— NM
Interest Expense— — — — — — NM
Net Interest Income— — — — — — NM
Non-Interest Income/ (Loss)(63)(44)(75)822 86 (149)(173 %)
Revenue Net of Interest Expense(63)(44)(75)822 86 (149)(173 %)
Provision for Credit Losses— — — — — — NM
Total Operating Expense38 53 39 130 34 4 12 %
Income/ (Loss) Before Income Taxes($101)($97)($114)$692 $52 ($153)NM
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network831 914 868 799 678 153 23 %
PULSE Network1,399 1,508 1,415 1,399 1,310 89 7 %
Total2,230 2,422 2,283 2,198 1,988 242 12 %
NETWORK VOLUME
PULSE Network$59,836 $64,787 $59,872 $62,855 $60,399 ($563)(1)%
Network Partners10,683 11,233 10,377 9,468 9,629 1,054 11 %
Diners Club International 1
7,176 7,367 6,547 6,126 5,897 1,279 22 %
Total Payment Services77,695 83,387 76,796 78,449 75,925 1,770 2 %
Discover Network - Proprietary48,129 53,197 49,360 47,201 39,202 8,927 23 %
Total$125,824 $136,584 $126,156 $125,650 $115,127 $10,697 9 %
1 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


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


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA
(unaudited, in millions)
 Quarter Ended
 Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
GAAP Total Common Equity$12,377 $12,352 $12,207 $12,115 $11,098 
Less: Goodwill(255)(255)(255)(255)(255)
Less: Intangibles— — (1)(1)(95)
Tangible Common Equity 1
$12,122 $12,097 $11,951 $11,859 $10,748 
GAAP Book Value Per Share$47.81 $46.50 $45.00 $43.72 $39.72 
Less: Goodwill(0.91)(0.88)(0.87)(0.84)(0.84)
Less: Intangibles— — — — (0.31)
   Less: Preferred Stock(3.76)(3.66)(3.58)(3.51)(3.45)
Tangible Common Equity Per Share $43.14 $41.96 $40.55 $39.37 $35.12 
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