EX-99.2 3 dfs20240331ex992.htm EX-99.2 Document

DISCOVER FINANCIAL SERVICES Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
 Quarter Ended
 Mar 31,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2023
Mar 31,
20231
Mar 31, 2024 vs. Mar 31, 2023
EARNINGS SUMMARY       
Interest Income$4,948 $4,868 $4,610 $4,290 $4,077 $871 21 %
Interest Expense1,461 1,400 1,288 1,113 945 516 55 %
Net Interest Income3,487 3,468 3,322 3,177 3,132 355 11 %
Discount/Interchange Revenue1,074 1,158 1,164 1,158 1,046 28 3 %
Rewards Cost703 788 787 788 716 (13)(2 %)
Discount and Interchange Revenue, net371 370 377 370 330 41 12 %
Protection Products Revenue42 43 42 44 43 (1)(2 %)
Loan Fee Income200 217 194 186 166 34 20 %
Transaction Processing Revenue87 82 82 72 67 20 30 %
Gains (Losses) on Equity Investments— 2 6 1 (18)18 100 %
Other Income23 14 21 28 22 1 5 %
Total Non-Interest Income723 728 722 701 610 113 19 %
Revenue Net of Interest Expense4,210 4,196 4,044 3,878 3,742 468 13 %
Provision for Credit Losses1,497 1,909 1,702 1,305 1,102 395 36 %
Employee Compensation and Benefits671 646 575 588 625 46 7 %
Marketing and Business Development250 372 283 268 241 9 4 %
Information Processing & Communications163 170 149 150 139 24 17 %
Professional Fees292 312 281 216 232 60 26 %
Premises and Equipment20 25 22 20 22 (2)(9 %)
Other Expense913 250 144 162 124 789 NM
Total Operating Expense2,309 1,775 1,454 1,404 1,383 926 67 %
Income/ (Loss) Before Income Taxes404 512 888 1,169 1,257 (853)(68 %)
Tax Expense96 124 205 268 289 (193)(67 %)
Net Income/ (Loss)$308 $388 $683 $901 $968 ($660)(68 %)
Net Income/ (Loss) Allocated to Common Stockholders$274 $386 $647 $895 $931 ($657)(71 %)
Effective Tax Rate23.7 %24.0 %23.1 %23.0 %23.0 %
Net Interest Margin11.03 %10.98 %10.95 %11.06 %11.34 %(31)bps
Operating Efficiency54.9 %42.3 %36.0 %36.2 %36.9 %1,800 bps
ROE8 %11 %19 %26 %27 %
ROCE8 %11 %20 %28 %28 %
Capital Returned to Common Stockholders$180 $144 $169 $864 $1,365 ($1,185)(87 %)
Payout Ratio66 %37 %26 %97 %147 %
Ending Common Shares Outstanding251 250 250 250 257 (6)(2 %)
Weighted Average Common Shares Outstanding250 250 250 253 262 (12)(5 %)
Weighted Average Common Shares Outstanding (fully diluted)250 250 250 253 262 (12)(5 %)
PER SHARE STATISTICS       
Basic EPS$1.10 $1.54 $2.59 $3.54 $3.55 ($2.45)(69 %)
Diluted EPS$1.10 $1.54 $2.59 $3.54 $3.55 ($2.45)(69 %)
Common Dividends Declared Per Share$0.70 $0.70 $0.70 $0.70 $0.60 $0.10 17 %
Common Stock Price (period end)$131.09 $112.40 $86.63 $116.85 $98.84 $32.25 33 %
Book Value per share $58.74 $59.29 $56.93 $55.44 $54.79 $3.95 7 %
1 The comparative prior quarter ended March 31, 2023 has been restated as disclosed in the Company's Financial Data Supplement on Form 8-K for the second quarter 2023.
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023
Mar 31, 20231
Mar 31, 2024 vs. Mar 31, 2023
BALANCE SHEET SUMMARY       
Assets       
Cash and Investment Securities$27,965 $25,383 $22,569 $22,110 $22,411 $5,554 25 %
Total Loan Receivables126,555 128,409 122,676 117,906 112,674 13,881 12 %
Allowance for Credit Losses(9,258)(9,283)(8,665)(8,064)(7,691)(1,567)(20 %)
Net Loan Receivables117,297 119,126 114,011 109,842 104,983 12,314 12 %
Premises and Equipment, net1,107 1,091 1,084 1,053 1,031 76 7 %
Goodwill and Intangible Assets, net255 255 255 255 255 — — %
Other Assets6,065 5,667 5,513 4,822 4,461 1,604 36 %
Total Assets$152,689 $151,522 $143,432 $138,082 $133,141 $19,548 15 %
Liabilities & Stockholders' Equity       
           Certificates of Deposits 2
25,92124,151 21,755 21,020 18,965 6,956 37 %
           Savings, Money Market, and Other Deposits 2, 3
61,412 59,882 59,501 56,326 56,389 5,023 9 %
Total Direct to Consumer Deposits 2, 3
87,333 84,033 81,256 77,346 75,354 11,979 16 %
Brokered Deposits and Other Deposits23,097 24,898 22,763 21,641 20,386 2,711 13 %
Deposits110,430 108,931 104,019 98,987 95,740 14,690 15 %
   Securitized Borrowings 4
10,933 11,743 10,889 11,216 9,095 1,838 20 %
   Other Borrowings 4
9,542 9,588 8,578 9,060 9,068 474 5 %
Borrowings20,475 21,331 19,467 20,276 18,163 2,312 13 %
Accrued Expenses and Other Liabilities7,064 6,432 5,710 4,963 5,178 1,886 36 %
Total Liabilities137,969 136,694 129,196 124,226 119,081 18,888 16 %
Total Equity14,720 14,828 14,236 13,856 14,060 660 5 %
Total Liabilities and Stockholders' Equity$152,689 $151,522 $143,432 $138,082 $133,141 $19,548 15 %
LIQUIDITY       
Liquidity Portfolio$25,739 $23,254 $21,186 $20,895 $21,450 $4,289 20 %
Private Asset-backed Securitizations3,500 2,750 3,500 3,500 3,500 — — %
Federal Home Loan Bank Borrowing Capacity3,087 2,551 2,202 2,372 2,056 1,031 50 %
Federal Reserve Discount Window  5
41,710 41,199 48,658 45,936 43,780 (2,070)(5 %)
Undrawn Credit Facilities 5
48,297 46,500 54,360 51,808 49,336 (1,039)(2 %)
Total Liquidity$74,036$69,754$75,546$72,703$70,786$3,2505 %
1 The comparative prior quarter ended March 31, 2023 has been restated as disclosed in the Company's Financial Data Supplement on Form 8-K for the second quarter 2023.
2 Includes Affinity relationships
3 Savings, Money Market, and Other Deposits and reflects both interest-bearing and non-interest bearing direct to consumer deposits
4 Includes short-term and long-term borrowings
5 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, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023
Mar 31, 20231
Mar 31, 2024 vs. Mar 31, 2023
BALANCE SHEET STATISTICS       
Total Common Equity$13,664 $13,772 $13,180 $12,800 $13,004 $660 5 %
Total Common Equity/Total Assets8.9 %9.1 %9.2 %9.3 %9.8 %
Total Common Equity/Net Loans11.6 %11.6 %11.6 %11.7 %12.4 %
Tangible Assets$152,434 $151,267 $143,177 $137,827 $132,886 $19,548 15 %
Tangible Common Equity 2
$13,409 $13,517 $12,925 $12,545 $12,749 $660 5 %
Tangible Common Equity/Tangible Assets 2
8.8 %8.9 %9.0 %9.1 %9.6 %
Tangible Common Equity/Net Loans 2
11.4 %11.3 %11.3 %11.4 %12.1 %
Tangible Common Equity per share  2
$53.51 $54.04 $51.69 $50.19 $49.68 $3.83 8 %
Basel III
Quarter Ended
REGULATORY CAPITAL RATIOS 3
Mar 31, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023
Mar 31, 20231
  
Total Risk Based Capital Ratio13.3 %13.7 %14.1 %14.3 %14.7 %  
Tier 1 Risk Based Capital Ratio11.7 %12.1 %12.5 %12.5 %13.0 %  
Tier 1 Leverage Ratio 10.1 %10.7 %11.0 %11.1 %11.4 %  
Common Equity Tier 1 Capital Ratio 10.9 %11.3 %11.6 %11.7 %12.1 %
1 The comparative prior quarter ended March 31, 2023 has been restated as disclosed in the Company's Financial Data Supplement on Form 8-K for the second quarter 2023.
2 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
3 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, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023Mar 31, 2023Mar 31, 2024 vs. Mar 31, 2023
AVERAGE BALANCES       
Assets       
Cash and Investment Securities$25,662 $22,448 $21,210 $21,251 $19,579 $6,083 31 %
Restricted Cash558 104 238 75 588 (30)(5 %)
Credit Card Loans100,310 99,610 95,796 91,825 89,460 10,850 12 %
Private Student Loans10,577 10,369 10,274 10,343 10,546 31 — %
Personal Loans10,004 9,754 9,368 8,744 8,155 1,849 23 %
Other Loans6,235 5,654 4,942 4,347 3,888 2,347 60 %
Total Loans127,126 125,387 120,380 115,259 112,049 15,077 13 %
Total Interest Earning Assets153,346 147,939 141,828 136,585 132,216 21,130 16 %
Allowance for Credit Losses(9,279)(8,668)(8,063)(7,691)(7,307)(1,972)(27 %)
Other Assets7,709 7,462 7,116 6,668 6,494 1,215 19 %
Total Assets$151,776 $146,733 $140,881 $135,562 $131,403 $20,373 16 %
Liabilities and Stockholders' Equity       
Non-Interest-bearing Direct to Consumer Deposits 1
$1,037 $987 $961 $985 $1,023 $14 1 %
                       Certificates of Deposits 1
25,625 22,496 21,473 20,159 17,565 8,060 46 %
                       Savings, Money Market, and Other Deposits 1
59,212 58,766 56,797 54,776 54,386 4,826 9 %
Interest-bearing Direct to Consumer Deposits 1
84,837 81,262 78,270 74,935 71,951 12,886 18 %
Brokered Deposits and Other Deposits23,792 23,271 21,336 20,457 19,267 4,525 23 %
Total Interest-bearing Deposits108,629 104,533 99,606 95,392 91,218 17,411 19 %
Securitized Borrowings 2
11,340 11,045 11,161 10,214 9,667 1,673 17 %
Other Borrowings 2
9,572 9,228 8,873 9,070 9,372 200 2 %
Total Interest-bearing Liabilities129,541 124,806 119,640 114,676 110,257 19,284 17 %
Other Liabilities & Stockholders' Equity21,198 20,940 20,280 19,901 20,123 1,075 5 %
Total Liabilities and Stockholders' Equity$151,776 $146,733 $140,881 $135,562 $131,403 $20,373 16 %
AVERAGE YIELD       
Assets       
Cash and Investment Securities4.51 %4.36 %4.19 %4.08 %3.89 %62 bps
Restricted Cash7.03 %16.71 %10.65 %10.27 %4.05 %298 bps
Credit Card Loans15.79 %15.63 %15.43 %15.14 %15.06 %73 bps
Private Student Loans10.04 %10.16 %10.11 %9.87 %9.68 %36 bps
Personal Loans13.40 %13.20 %12.94 %12.72 %12.35 %105 bps
Other Loans7.39 %7.14 %6.95 %6.81 %6.64 %75 bps
Total Loans14.71 %14.61 %14.44 %14.17 %14.06 %65 bps
Total Interest Earning Assets12.98 %13.05 %12.90 %12.60 %12.51 %47 bps
AVERAGE RATES
Liabilities and Stockholders' Equity       
                       Certificates of Deposits 1
4.53 %4.24 %3.84 %3.35 %2.65 %188 bps
                       Savings, Money Market, and Other Deposits 1
4.35 %4.39 %4.30 %3.84 %3.41 %94 bps
Interest-bearing Direct to Consumer Deposits 1
4.41 %4.35 %4.18 %3.71 %3.23 %118 bps
Brokered Deposits and Other Deposits4.75 %4.64 %4.43 %4.15 %3.87 %88 bps
Total Interest-bearing Deposits4.48 %4.41 %4.23 %3.80 %3.36 %112 bps
Securitized Borrowings 2
4.71 %4.68 %4.60 %4.24 %3.67 %104 bps
Other Borrowings 2
4.94 %4.55 %4.32 %4.43 %4.40 %54 bps
Total Interest-bearing Liabilities4.54 %4.45 %4.27 %3.89 %3.48 %106 bps
Net Interest Margin11.03 %10.98 %10.95 %11.06 %11.34 %(31)bps
Net Yield on Interest-earning Assets9.15 %9.30 %9.29 %9.33 %9.61 %(46)bps
1 Includes Affinity relationships
2 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,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2023		Mar 31,
2023		Mar 31, 2024 vs. Mar 31, 2023
TOTAL LOAN RECEIVABLES       
Ending Loans 1
$126,555 $128,409 $122,676 $117,906 $112,674 $13,881 12 %
Average Loans 1
$127,126 $125,387 $120,380 $115,259 $112,049 $15,077 13 %
Interest Yield14.71 %14.61 %14.44 %14.17 %14.06 %65 bps
Gross Principal Charge-off Rate 5.74 %4.82 %4.24 %4.01 %3.50 %224 bps
Net Principal Charge-off Rate 4.92 %4.11 %3.52 %3.22 %2.72 %220 bps
Delinquency Rate (30 or more days)3.38 %3.45 %3.06 %2.57 %2.48 %90 bps
Delinquency Rate (90 or more days)1.64 %1.59 %1.34 %1.16 %1.14 %50 bps
Gross Principal Charge-off Dollars $1,812 $1,521 $1,287 $1,153 $966 $846 88 %
Net Principal Charge-off Dollars$1,556 $1,298 $1,070 $924 $750 $806 107 %
Net Interest and Fee Charge-off Dollars$348 $279 $223 $202 $169 $179 106 %
Loans Delinquent 30 or more days$4,282 $4,427 $3,756 $3,027 $2,791 $1,491 53 %
Loans Delinquent 90 or more days$2,079 $2,045 $1,637 $1,361 $1,290 $789 61 %
Allowance for Credit Losses (period end)$9,258 $9,283 $8,665 $8,064 $7,691 $1,567 20 %
Reserve Change Build/ (Release) 2
($25)$618 $601 $373 $385 ($410)
Reserve Rate7.32 %7.23 %7.06 %6.84 %6.83 %49 bps
CREDIT CARD LOANS       
Ending Loans$99,475 $102,259 $97,389 $93,955 $89,755 $9,720 11 %
Average Loans$100,310 $99,610 $95,796 $91,825 $89,460 $10,850 12 %
Interest Yield15.79 %15.63 %15.43 %15.14 %15.06 %73 bps
Gross Principal Charge-off Rate6.61 %5.50 %4.85 %4.59 %3.99 %262 bps
Net Principal Charge-off Rate5.66 %4.68 %4.03 %3.68 %3.10 %256 bps
Delinquency Rate (30 or more days) 3.83 %3.87 %3.41 %2.86 %2.76 %107 bps
Delinquency Rate (90 or more days) 1.95 %1.87 %1.57 %1.35 %1.34 %61 bps
Gross Principal Charge-off Dollars$1,649 $1,380 $1,171 $1,051 $879 $770 88 %
Net Principal Charge-off Dollars$1,411 $1,175 $973 $842 $684 $727 106 %
Loans Delinquent 30 or more days$3,810 $3,955 $3,324 $2,689 $2,477 $1,333 54 %
Loans Delinquent 90 or more days$1,941 $1,917 $1,527 $1,269 $1,204 $737 61 %
Allowance for Credit Losses (period end)$7,541 $7,619 $7,070 $6,525 $6,135 $1,406 23 %
Reserve Change Build/ (Release) 2
($78)$549 $545 $390 $318 ($396)
Reserve Rate7.58 %7.45 %7.26 %6.94 %6.84 %74 bps
Total Discover Card Volume$53,239 $60,917 $58,965 $58,774 $54,129 ($890)(2 %)
Discover Card Sales Volume$50,137 $57,145 $54,952 $55,229 $50,588 ($451)(1 %)
Rewards Rate1.39 %1.37 %1.42 %1.42 %1.41 %(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, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023Mar 31, 2023Mar 31, 2024 vs. Mar 31, 2023
PRIVATE STUDENT LOANS       
Organic Student Loans$10,050 $9,894 $9,963 $9,723 $9,927 $123 1 %
Purchased Student Loans430 458 485 518 553 (123)(22 %)
Total Private Student Loans$10,480 $10,352 $10,448 $10,241 $10,480 $— — %
Interest Yield10.04 %10.16 %10.11 %9.87 %9.68 %36 bps
Net Principal Charge-off Rate1.58 %1.52 %1.32 %1.25 %1.04 %54 bps
Delinquency Rate (30 or more days)2.59 %2.62 %2.62 %2.13 %2.02 %57 bps
Reserve Rate8.29 %8.29 %8.29 %8.29 %8.32 %(3)bps
PERSONAL LOANS       
Ending Loans$10,107 $9,852 $9,559 $9,106 $8,374 $1,733 21 %
Interest Yield13.40 %13.20 %12.94 %12.72 %12.35 %105 bps
Net Principal Charge-off Rate4.02 %3.39 %2.63 %2.28 %1.94 %208 bps
Delinquency Rate (30 or more days)1.46 %1.45 %1.24 %1.00 %0.91 %55 bps
Reserve Rate7.48 %7.33 %6.83 %6.83 %7.43 %5 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, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023
Mar 31, 20231
Mar 31, 2024 vs. Mar 31, 2023
DIGITAL BANKING       
Interest Income$4,948 $4,868 $4,610 $4,290 $4,077 $871 21 %
Interest Expense1,461 1,400 1,288 1,113 945 516 55 %
Net Interest Income3,487 3,468 3,322 3,177 3,132 355 11 %
Non-Interest Income591 611 592 586 522 69 13 %
Revenue Net of Interest Expense4,078 4,079 3,914 3,763 3,654 424 12 %
Provision for Credit Losses1,497 1,909 1,702 1,305 1,102 395 36 %
Total Operating Expense2,259 1,712 1,409 1,359 1,342 917 68 %
Income/ (Loss) Before Income Taxes$322 $458 $803 $1,099 $1,210 ($888)(73 %)
Net Interest Margin11.03 %10.98 %10.95 %11.06 %11.34 %(31)bps
Pretax Return on Loan Receivables1.02 %1.45 %2.65 %3.82 %4.38 %(336)bps
Allowance for Credit Losses (period end)$9,258 $9,283 $8,665 $8,064 $7,691 $1,567 20 %
Reserve Change Build/ (Release) ($25)$618 $601 $373 $385 ($410)
PAYMENT SERVICES       
Interest Income$— $— $— $— $— $— NM
Interest Expense— — — — — — NM
Net Interest Income— — — — — — NM
Non-Interest Income (Loss)132 117 130 115 88 44 50 %
Revenue Net of Interest Expense132 117 130 115 88 44 50 %
Provision for Credit Losses— — — — — — NM
Total Operating Expense50 63 45 45 41 9 22 %
Income/ (Loss) Before Income Taxes$82 $54 $85 $70 $47 $35 NM
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network883 974 964 940 850 33 4 %
PULSE Network2,312 2,308 2,011 1,761 1,625 687 42 %
Total3,195 3,282 2,975 2,701 2,475 720 29 %
NETWORK VOLUME
PULSE Network$79,073 $79,194 $72,146 $69,008 $65,268 $13,805 21 %
Network Partners11,070 8,736 9,899 10,408 10,628 442 4 %
Diners Club International 2
10,181 10,468 9,723 9,897 9,211 970 11 %
Total Payment Services100,324 98,398 91,768 89,313 85,107 15,217 18 %
Discover Network - Proprietary51,764 58,419 57,228 57,099 51,826 (62)— %
Total$152,088 $156,817 $148,996 $146,412 $136,933 $15,155 11 %
1 The comparative prior quarter ended March 31, 2023 has been restated as disclosed in the Company's Financial Data Supplement on Form 8-K for the second quarter 2023.
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


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 Common Equity represents net income available for common stockholders (annualized) divided by average total common equity for the reporting period
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, 2024Dec 31, 2023Sep 30, 2023Jun 30, 2023
Mar 31, 20231
GAAP Total Common Equity$13,664 $13,772 $13,180 $12,800 $13,004 
Less: Goodwill(255)(255)(255)(255)(255)
Less: Intangibles— — — — — 
Tangible Common Equity 2
$13,409 $13,517 $12,925 $12,545 $12,749 
GAAP Book Value Per Share$58.74 $59.29 $56.93 $55.44 $54.79 
Less: Goodwill(1.02)(1.03)(1.02)(1.03)(1.00)
Less: Intangibles— — — — — 
   Less: Preferred Stock(4.21)(4.22)(4.22)(4.22)(4.11)
Tangible Common Equity Per Share $53.51 $54.04 $51.69 $50.19 $49.68 
1 The comparative prior quarter ended March 31, 2023 has been restated as disclosed in the Company's Financial Data Supplement on Form 8-K for the second quarter 2023.
2 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