Net Income and Earnings - Net income was $870 million, or $3.32 per diluted share, compared to $586 million, or $2.21 per diluted share in the prior year[307] - Net income increased by 48% from $586 million in September 2023 to $870 million in September 2024[371] - Net income allocated to common stockholders increased by 52% from $550 million in September 2023 to $834 million in September 2024[371] Loan Growth and Performance - Total loans grew $4.3 billion, or 4%, to $127.0 billion[307] - Credit card loans grew $3.1 billion, or 3%, to $100.5 billion[307] - Credit card loans grew to $100.290 billion with a yield of 16.23% for the three months ended September 30, 2024, compared to $95.796 billion and a yield of 15.43% in 2023[361] - Total loan receivables increased to $127.707 billion with a yield of 15.06% for the three months ended September 30, 2024, up from $120.380 billion and a yield of 14.44% in 2023[361] - Total loan portfolio decreased from $128.409 billion in December 2023 to $118.509 billion in September 2024, a decline of 7.7%[365] - Credit card loans decreased from $102.259 billion in December 2023 to $100.489 billion in September 2024, a decline of 1.7%[365] Credit Card Loans and Delinquencies - The net charge-off rate for credit card loans increased 125 basis points to 5.28%[307] - Credit card loans 30 or more days delinquent increased to $3,857 million (3.84%) in September 2024 from $3,955 million (3.87%) in December 2023[379] - Credit card loans 90 or more days delinquent decreased to $1,883 million (1.87%) in September 2024 from $1,917 million (1.87%) in December 2023[379] - Net charge-offs for credit card loans increased to $1,332 million (5.28%) in September 2024 from $973 million (4.03%) in September 2023[391] Deposit Growth - Direct-to-consumer deposits grew $9.1 billion, or 11%, to $90.3 billion[307] - At September 30, 2024, the company had $90.3 billion of direct-to-consumer deposits and $19.5 billion of brokered deposits, with $95.7 billion due in less than one year and $14.1 billion due in one year or thereafter[410] Payment Services - Payment Services transaction volume for the segment was $100.5 billion, up 9%[307] - Total Payment Services volume increased to $100.473 billion for the three months ended September 30, 2024, up from $91.768 billion in the same period in 2023[337] - Payment Services segment reported income before income taxes of $84 million in Q3 2024, compared to $85 million in Q3 2023[335] Revenue and Income - Total other income subject to ASC 606 was $1.866 billion for the nine months ended September 30, 2024, compared to $1.448 billion in the same period in 2023[301] - Discount and interchange revenue, net, increased to $1.121 billion for the nine months ended September 30, 2024, from $1.027 billion in the same period in 2023[301] - Transaction processing revenue increased to $262 million for the nine months ended September 30, 2024, from $221 million in the same period in 2023[301] - Loan fee income increased to $619 million for the nine months ended September 30, 2024, from $546 million in the same period in 2023[301] - Total interest income for Digital Banking increased to $5.112 billion in Q3 2024, up from $4.610 billion in Q3 2023[335] - Net interest income for Digital Banking rose to $3.655 billion in Q3 2024, compared to $3.322 billion in Q3 2023[335] - Credit card loans interest income grew to $4.092 billion in Q3 2024, up from $3.726 billion in Q3 2023[335] - Personal loans interest income increased to $360 million in Q3 2024, compared to $305 million in Q3 2023[335] - Total income before income taxes for Digital Banking reached $1.108 billion in Q3 2024, up from $676 million in Q3 2023[335] - Net interest income increased for the three and nine months ended September 30, 2024, driven by higher average loan receivables and yield expansion[339] - Total other income increased for the three months ended September 30, 2024, driven by a gain from the sale of the private student loan portfolio[340] - Total other income increased to $798 million in September 2024 from $705 million in September 2023, driven by a gain from the sale of the private student loan portfolio[396] Credit Losses and Allowances - Provision for credit losses decreased for the three months ended September 30, 2024, primarily due to portfolio seasoning[340] - Allowance for credit losses was $8.5 billion at September 30, 2024, reflecting a $31 million build from June 30, 2024[356] - Sensitivity analysis showed that the allowance for credit losses would increase by $444 million if 100% weight was applied to the most adverse macroeconomic scenario[358] - Allowance for credit losses decreased from $9.283 billion in December 2023 to $8.512 billion in September 2024, a decline of 8.3%[365] - Net charge-offs for credit card loans decreased from $2.499 billion in September 2023 to $973 million in September 2024, a decline of 61.1%[377] - Net charge-offs for personal loans increased to $106 million (4.01%) in September 2024 from $62 million (2.63%) in September 2023[391] Expenses - Total expenses are expected to increase, driven by investments in compliance, risk management, and wage growth, excluding card misclassification and merger-related costs[320] - Total other expense increased for the three months ended September 30, 2024, primarily due to higher employee compensation and benefits, and technology investments[352] - Total other expense increased by $224 million (14%) for the three months ended September 30, 2024, compared to the same period in 2023, driven by increases in employee compensation and benefits, information processing and communications, and professional fees[398] - Employee compensation and benefits increased by $128 million (22%) for the three months ended September 30, 2024, primarily due to higher average salaries and employee retention awards[398] - Information processing and communications expenses increased by $48 million (32%) for the three months ended September 30, 2024, driven by technology investments and accelerated private student loan software depreciation[398] - Professional fees increased by $42 million (15%) for the three months ended September 30, 2024, primarily due to recovery fees and consulting supporting the pending merger[398] - Total other expense increased by $719 million (17%) for the nine months ended September 30, 2024, compared to the same period in 2023, driven by increases in employee compensation and benefits, other expense, and professional fees[399] Interest Rates and Margins - Net interest margin is expected to increase compared to 2023, driven by higher card yields and the exit of private student lending[320] - Net interest margin improved to 11.38% for the three months ended September 30, 2024, compared to 10.95% in the same period in 2023[361] - Total interest-earning assets increased to $152.371 billion with a yield of 13.35% for the three months ended September 30, 2024, compared to $141.828 billion and a yield of 12.90% for the same period in 2023[361] - Total interest-bearing deposits increased to $107.286 billion with a yield of 4.50% for the three months ended September 30, 2024, up from $99.606 billion and a yield of 4.23% in 2023[361] - Net interest income for the nine months ended September 30, 2024, was $10.666 billion, compared to $9.631 billion in the same period in 2023[363] - Total interest-earning assets for the nine months ended September 30, 2024, were $152.493 billion with a yield of 13.17%, compared to $136.911 billion and a yield of 12.67% in 2023[363] - Credit card loans for the nine months ended September 30, 2024, were $100.062 billion with a yield of 16.01%, compared to $92.383 billion and a yield of 15.21% in 2023[363] - Total loan receivables for the nine months ended September 30, 2024, were $127.273 billion with a yield of 14.87%, compared to $115.926 billion and a yield of 14.23% in 2023[363] - A +100 basis point change in interest rates would result in a $92 million (0.65%) impact on earnings as of September 30, 2024[472] - A -100 basis point change in interest rates would result in a $74 million (0.52%) negative impact on earnings as of September 30, 2024[472] - The majority of the company's credit card and private student loans charge variable rates as of September 30, 2024[470] - The company's net interest income and earnings may be reduced if interest rates on assets increase slower than rates on borrowings[469] Regulatory and Compliance - The company's Stress Capital Buffer (SCB) requirement increased to 3.1% effective from October 1, 2024, through September 30, 2025[327] - Discover is subject to new cybersecurity regulations, with final rules expected to be published in late 2025 and become effective in 2026[348] - The effective tax rate increased to 27.0% for the three months ended September 30, 2024, compared to 23.0% in 2023, due to the adoption of the proportional amortization method and potential non-deductible regulatory penalties[402] - The company's disclosure controls and procedures were not effective as of September 30, 2024, despite fair presentation of financial statements[474] - The company submitted an updated capital plan on May 3, 2024, due to the Merger Agreement with Capital One[462] Capital and Liquidity - The company's tangible common equity was $15.798 billion as of September 30, 2024, compared to $12.924 billion as of December 31, 2023[438] - The liquidity portfolio and undrawn credit facilities totaled $77.5 billion as of September 30, 2024, a $7.8 billion increase from December 31, 2023[457] - The company had $9.3 billion of outstanding public asset-backed securities and $2.5 billion of outstanding subordinated asset-backed securities as of September 30, 2024[418] - At September 30, 2024, the company had total committed borrowing capacity of $4.9 billion with the FHLB of Chicago, of which $1.0 billion of long-term advances were outstanding[422] - Discover Financial Services (Parent Company) and Discover Bank have outstanding fixed-rate debt totaling $7.789 billion, with $644 million of interest due in less than one year and $1.7 billion due thereafter[423] - Discover Bank has $46.1 billion of available borrowing capacity through the Federal Reserve Bank of Philadelphia's discount window, with no borrowings outstanding as of September 30, 2024[427] - The company has $750 million of short-term advances outstanding from private asset-backed securitizations as of September 30, 2024[424] - Discover Financial Services has a total committed capacity of $3.5 billion through private asset-backed securitizations, with $750 million drawn as of September 30, 2024[425] - The company's liquidity portfolio includes highly liquid assets such as cash, cash equivalents, short-term investments, and investment securities, primarily composed of U.S. Treasury and GSE debt obligations[430] - Discover Financial Services and Discover Bank met the "well-capitalized" status requirements under Federal Reserve Regulation Y and FDIC rules as of September 30, 2024[436] - The phase-in of the CECL accounting model decreased CET1 by $1.6 billion as of January 1, 2024[461] - Tangible common equity at September 30, 2024 is considered a non-GAAP financial measure, excluding goodwill and intangibles[464] Dividends and Shareholder Returns - The company's Series C preferred stock dividends totaled $55 million for both 2024 and 2023[439] - Total common stock dividends for 2024 amounted to $2.80 per share, compared to $2.70 per share in 2023[465] - Quarterly cash dividends on common stock may not exceed $0.70 per share without prior written consent from Capital One[467] Credit Ratings and Financial Health - Discover Financial Services' senior unsecured debt is rated Baa2 by Moody's, BBB- by Standard & Poor's, and BBB+ by Fitch Ratings[453] - The DiscoverSeries three-month rolling average excess spread was 14.00% for the three months ended September 30, 2024[405] Mergers and Acquisitions - The company submitted an updated capital plan on May 3, 2024, due to the Merger Agreement with Capital One[462]

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Discover Financial Services (DFS) recently announced a strategic alliance with Telered, transforming the payment experience and increasing acceptance for cardholders. This partnership aims to enhance payment systems and create opportunities for individuals, businesses, and financial institutions.This move bodes well for DFS, as it will benefit from the Panamanian merchant network's acceptance of its cards, enhancing convenience for tourists and global business travelers. Higher domestic and cross-border tra ...

It has been about a month since the last earnings report for Discover (DFS) . Shares have added about 15.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Discover due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Discover Financial's Q3 Earnings Beat on Interest I ...

Retirement is complicated, and you only get once chance to do it right. Don't miss out because you didn't know what was out there. The Retirement Forum provides actionable ideals, a high-yield safe retirement portfolio, and macroeconomic outlooks, all to help you maximize your capital and your income. We search the entire market to help you maximize returns. Discover Financial Services (NYSE: DFS ) is a financial services company primarily known for its credit cards. The company has a market capitalization ...

Merger and Integration Progress - Capital One continues to lead merger-related activities with applications under regulatory review and integration planning advancing well [1] - Discover Financial Services' third-quarter earnings results indicate the acquisition by Capital One is on track [1] Consumer Behavior and Spending Trends - Payments volumes decreased by 4% to $55.2 billion, reflecting a slowdown in Discover card sales [1] - PULSE volumes increased by 14% to $82.6 billion, driven by higher debit transaction volumes [1] - Card receivables grew 3% year over year due to a lower payment rate, offset by decreased sales volume [1] - Payment rates declined 1% from last year but remain 0.7% above pre-pandemic levels [1] - Consumers exhibit cautious behavior, with slower and stable spending patterns as households adjust to inflation and manage budgets [2] Debt Consolidation and Credit Performance - Personal loans increased 9% year over year, driven by strong demand for debt consolidation [3] - Total company-wide charge-offs were 4.9%, up 1.3% year over year [3] - Credit card net charge-off rate was 5.28%, with 30+ day delinquency rate at 3.84%, up 0.43% year over year [3] - Personal loan net charge-off rate rose to 4.01%, up 1.4 basis points from the prior year [3] - The company tightened its net charge-off expectations to 4.9%-5%, down from the previous range of 4.9%-5.2% [3] - Loan growth is expected to decline by low- to mid-single-digit percentages, revised from low-single-digit percentage points [3] Market Reaction - Discover shares rose 2% in intraday trading following the earnings call [4]

Discover Financial Services (DFS) reported strong third-quarter results supported by interest income growth, thanks to a high-interest rate environment, lower provision for credit losses, growing loans, PULSE volumes and margin expansion. The positives were partially offset by higher expenses.It reported third-quarter 2024 adjusted earnings per share of $3.69, which comfortably beat the Zacks Consensus Estimate of $3.28. Also, the bottom line jumped 42% year over year.Discover Financial's revenues, net of i ...

Company Overview - Discover Financial Services is a digital banking and payment services company based in Riverwoods, IL, offering credit cards, personal and home loans, and deposit products [8] - The company became a bank holding company in March 2009 under the Bank Holding Company Act and a financial holding company under the Gramm-Leach-Bliley Act [8] Zacks Rank and Style Scores - Discover is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating a solid overall performance [8][9] - The Value Style Score for Discover is also A, attributed to its attractive valuation metrics, including a forward P/E ratio of 11.21, which is appealing to value investors [8] Earnings Estimates - In the last 60 days, five analysts have revised their earnings estimates upwards for Discover, with the Zacks Consensus Estimate increasing by $0.53 to $13.16 per share for fiscal 2024 [8] - Discover has an average earnings surprise of 2.3%, suggesting a positive trend in earnings performance [8] Investment Consideration - With a strong Zacks Rank and top-tier Value and VGM Style Scores, Discover is recommended for investors looking for potential opportunities [9]

Financial Data and Key Metrics Changes - The company reported net income of $965 million, a 41% increase from the prior year [8] - Net interest margin ended at 11.38%, up 43 basis points year-over-year and 21 basis points sequentially [9] - Total operating expenses increased by $238 million or 16% year-over-year [12] - Total net charge-offs were 4.86%, up 134 basis points from the prior year [13] Business Line Data and Key Metrics Changes - Card receivables increased by 3% year-over-year, while Discover card sales decreased by 3% [9] - Personal loans rose by 9% from the prior year, driven by strong demand for debt consolidation [10] - Student loans decreased by 19% year-over-year due to the first asset sale, with a recognized gain of $70 million [10] Market Data and Key Metrics Changes - Average consumer deposits increased by 11% year-over-year and 1% sequentially [10] - The payment rate declined around 100 basis points from last year but remained stable compared to the prior quarter [9] Company Strategy and Development Direction - The company is focused on driving business results, strengthening risk management, and planning for the merger with Capital One [5] - Significant progress has been made in the sale of the private student loan portfolio, with 55% sold to date [5][10] - The company aims to create valuable jobs and enhance community engagement through its facilities strategy [7] Management's Comments on Operating Environment and Future Outlook - Management noted cautious consumer behavior and credit tightening actions impacting sales, which are expected to persist [9] - The economic outlook assumes year-end 2024 unemployment at 4.4% and GDP growth in the 1% to 3% range [15] - The company revised its 2024 loan growth expectations to low- to mid-single-digits due to higher-than-anticipated payment rates [17] Other Important Information - Discover ranked 2 in customer satisfaction among U.S. credit card issuers for the fifth consecutive year [6] - The company declared a quarterly cash dividend of $0.70 per share of common stock [15] - The SEC is reviewing certain aspects of the company's accounting approach related to card misclassification [16] Summary of Q&A Session Questions and Answers - There was no formal question-and-answer session following the remarks, but the Investor Relations team is available for inquiries [4]

-- | --- | --- | |-----------------------------------|-------| | | | | | | | | | | | | | | | | | | | ©2024 DISCOVER FINANCIAL SERVICES | | Notice The following slides are part of a presentation by Discover Financial Services (the "Company") in connection with reporting quarterly financial results and are intended to be viewed as part of that presentation. No representation is made that the information in these slides is complete. For additional financial, statistical, and business related information, as we ...