Discover Financial Services Reports Second
Quarter Net Income of $258 Million or $0.33 Per
June 24, 2010 08:33 AM Eastern Daylight Time
RIVERWOODS, Ill.--(EON: Enhanced Online News)--Discover Financial Services (NYSE: DFS) today reported
net income for the second quarter of 2010 of $258 million, as compared to net income of $226 million for the
second quarter of 2009. Net income for the second quarter of 2009 included approximately $295 million (after tax)
related to the Visa/MasterCard antitrust litigation settlement.
On April 21, 2010, the company redeemed $1.2 billion of preferred stock issued to the U.S. Treasury under the
TARP Capital Purchase Program and, as a result, accelerated the accretion of the discount on the preferred stock.
The accretion of the discount and preferred stock dividend reduced earnings per share by $0.13.
Second Quarter Highlights
l Discover card sales volume was $23 billion, a record for a second quarter and an increase of 6% from the
l Credit performance continued to improve, with net charge-offs down $81 million and over 30 days
delinquencies down $266 million from the prior quarter, driving a release of loan loss reserves in the quarter.
l The net charge-off rate for the second quarter was 7.97% versus the previously disclosed expectation of 8-
8.5%. The net charge-off rate for the third quarter of 2010 is expected to be between 7.5% and 8%.
l Payment Services showed continued strong results with profit before tax up 36% from the prior year to $36
million, and transaction volume of $37 billion.
l Deposit balances originated through direct-to-consumer and affinity relationships were $17.5 billion, an
increase of $9.5 billion from the prior year and $2.7 billion from the prior quarter. This quarter included an
acquisition of $1 billion in deposit accounts.
"Our very strong results this quarter were driven by a significant improvement in the credit performance of our loyal
customer base along with continued solid growth