Discover Financial Services Reports Third Quarter
Net Income of $261 Million or $0.47 Per Diluted
September 20, 2010 08:35 AM Eastern Daylight Time
RIVERWOODS, Ill.--(EON: Enhanced Online News)--Discover Financial Services (NYSE: DFS) today reported
net income for the third quarter of 2010 of $261 million, as compared to net income of $577 million for the third
quarter of 2009. The results for the prior year included approximately $287 million (after tax) related to the
Visa/MasterCard antitrust litigation settlement.
Third Quarter Highlights
l Discover card sales volume of $24 billion in the quarter continued to show positive growth trends, increasing
5% from the prior year.
l Net interest margin of 9.16% remained relatively stable as compared to the prior quarter, as the impact of
legislative changes was offset by lower interest charge-offs.
l Credit performance continued to improve, with net charge-offs down $102 million from the prior quarter and
a net charge-off rate for the third quarter of 7.18%.
l Loans over 30 days delinquent declined $180 million in the quarter, which led to a $187 million release of
loan loss reserves.
l Payment Services processed record transaction volume in the quarter of $39 billion and showed continued
strong results with profit before tax up 36% from the prior year.
l Deposit balances originated through direct-to-consumer and affinity relationships grew $1.5 billion in the
quarter to $19.1 billion.
"The very positive credit trends that began to manifest themselves earlier this year continued to benefit our results this
quarter,” said David Nelms, chairman and chief executive officer of Discover. “The ongoing improvement in the
outlook for credit performance of our cardmembers has enabled us to accelerate investments for long-term
profitable growth. In addition, Discover card spending continued to grow nicely this quarter and our third-party
credit and debit network businesses achieved record transaction volumes.”