Delaware
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36-2517428
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(State or other jurisdiction
of incorporation)
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(IRS Employer
Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
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Exhibit No.
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Description
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99.1
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Press Release of the Company dated January 24, 2018 containing financial information for the quarter ended December 31, 2017
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99.2
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Financial Data Supplement of the Company for the quarter and year ended December 31, 2017
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99.3
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Financial Results Presentation of the Company for the quarter and year ended December 31, 2017
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DISCOVER FINANCIAL SERVICES
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Dated: January 24, 2018
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By:
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/s/ D. Christopher Greene
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Name: D. Christopher Greene
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Title: Vice President, Deputy General Counsel and Assistant Secretary
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Exhibit No.
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Description
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Press Release of the Company dated January 24, 2018 containing financial information for the quarter ended December 31, 2017
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Financial Data Supplement of the Company for the quarter and year ended December 31, 2017
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Financial Results Presentation of the Company for the quarter and year ended December 31, 2017
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Total loans grew
$7.0 billion
(
9%
) from the prior year to
$84.2 billion
.
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Credit card loans grew
$5.8 billion
(
9%
) to
$67.3 billion
, on Discover card sales volume of
$35.3 billion
.
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Total net charge-off rate excluding PCI loans increased
53
basis points from the prior year to
2.92%
and the total 30+ day delinquency rate excluding PCI loans increased
23
basis points from the prior year to
2.20%
.
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Consumer deposits grew
$3.4 billion
(
9%
) from the prior year to
$39.4 billion
.
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Payment Services transaction dollar volume was
$54.0 billion
, up
17%
from the prior year.
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Income tax expense includes a one-time adjustment of $179 million to reflect the impact of the Tax Act.
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DISCOVER FINANCIAL SERVICES
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GLOSSARY OF FINANCIAL TERMS
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Book Value per share
represents total equity divided by ending common shares outstanding
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Capital Returned to Common Stockholders
represents common stock dividends declared plus treasury share repurchases minus common stock issued under employee benefit plans and stock based compensation
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Common Equity Tier 1 Capital Ratio (Basel III transition)
represents common equity tier 1 capital divided by risk weighted assets calculated under Basel III rules subject to transition provisions
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Common Equity Tier 1 Capital Ratio (Basel III fully phased-in)
represents fully phased-in common equity tier 1 capital divided by risk weighted assets under fully phased-in Basel III rules. The Common Equity Tier 1 Capital Ratio (Basel III fully phased-in) is calculated using Basel III fully phased-in common equity tier 1 capital, a non-GAAP measure. The Company believes that the common equity tier 1 capital ratio based on fully phased-in Basel III rules is an important complement to the existing capital ratios and for comparability to other financial institutions. For the corresponding reconciliation of common equity tier 1 capital and risk weighted assets calculated under fully phased-in Basel III rules to common equity tier 1 capital and risk weighted assets calculated under Basel III transition rules see the Reconciliation of GAAP to non-GAAP data schedule
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Delinquency Rate (Over 30 Days)
represents loans delinquent over thirty days divided by ending loans (total or respective loans, as appropriate)
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Delinquency Rate (Over 90 Days)
represents loans delinquent over ninety days divided by ending loans (total or respective loans, as appropriate)
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Discover Card Sales Volume
represents Discover card activity related to net sales
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Discover Card Volume
represents Discover card activity related to net sales, balance transfers, cash advances and other activity
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Discover Network Proprietary Volume
represents gross proprietary sales volume on the Discover Network
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Earnings Per Share
represents net income allocated to common stockholders divided by the weighted average common shares outstanding
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Effective Tax Rate
represents tax expense divided by income before income taxes
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Gross Principal Charge-off Rate
represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period
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Interest Yield
represents interest income on loan receivables (annualized) divided by average loans for the reporting period
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Liquidity Portfolio
represents cash and cash equivalents (excluding cash-in-process) and other investments
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Net Income Allocated to Common Stockholders
represents net income less (i) dividends and accretion of discount on shares of preferred stock and (ii) income allocated to participating securities
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Net Interest Margin
represents net interest income (annualized) divided by average total loans for the period.
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Net Principal Charge-off Rate
represents net principal charge-off dollars (annualized) divided by average loans for the reporting period
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Operating Efficiency
represents total other expense divided by revenue net of interest expense
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Payout Ratio
represents capital returned to common stockholders divided by net income allocated to common stockholders
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Pretax Return on Loan Receivables
represents income before income taxes (annualized) divided by total average loans for the period
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Proprietary Network Volume
represents gross proprietary sales volume on the Discover Network
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Ratio of Earnings to Fixed Charges
is a year-to-date statistic and represents income before income tax expense and fixed charges divided by fixed charges for the reporting period. Fixed charges are the sum of interest expense, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of interest within rental expense for the reporting period
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Regulatory Capital Ratios
are regulatory measures used to evaluate capital adequacy. Under Basel III, for a Bank Holding Company to be considered "well-capitalized," total risk-based and tier 1 risk-based capital ratios of 10% and 6% respectively must be maintained. Under Basel III, to meet the regulatory minimum a Bank Holding Company must maintain total risk-based, tier 1 risk-based, tier 1 leverage, and common equity tier 1 ratios of 8%, 6%, 4%, and 4.5% respectively. As of January 1, 2015 regulatory capital ratios are calculated under Basel III rules subject to transition provisions. 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. The Tier 1 Common Capital Ratio has been replaced by the Common Equity Tier 1 Ratio under Basel III
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Reserve Rate
represents the allowance for loan losses divided by total loans
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Return on Equity
represents net income (annualized) divided by average total equity for the reporting period
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Rewards Rate
represents rewards cost divided by Discover Card sales volume
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Tangible Assets
represents total assets less goodwill and intangibles
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Tangible Common Equity ("TCE")
, a non-GAAP financial measure, represents total common equity less goodwill and intangibles. 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
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Tangible Common Equity/Net Loans
,
a non-GAAP measure,
represents total common equity less goodwill and intangibles divided by total loans less the allowance for loan loss (period end)
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Tangible Common Equity per Share
,
a non-GAAP measure,
represents total common equity less goodwill and intangibles divided by ending common shares outstanding
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Tangible Common Equity/Tangible Assets
, a non-GAAP measure,
represents total common equity less goodwill and intangibles divided by total assets less goodwill and intangibles
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Total Volume
represents the transaction dollar volume from the PULSE network, Network Partners, Diners Club and proprietary Discover Network
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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)
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