ef94d5e2bf61cc10791a68ef527dca42926a293bf0ab45d0f6b33d400b85f683

The sharp decline in **Net Income** for Q4 2023 was primarily attributed to three factors. Firstly, there was a **substantial increase in the provision for credit losses**, which surged by **$1,026 million (116%)** compared to the prior year—this was driven by higher charge-offs and increased reserves. Secondly, **operating expenses rose by 19%**, including higher spending on employee compensation and benefits, marketing, and professional fees to support compliance and risk management efforts. Finally, the **net interest margin compressed by 29 basis points** due to elevated funding costs and interest charge-offs, which further impacted profitability.  **[0001393612-24-000004_dfs-earningsreleasex4q23ex.htm:0]** **[DFS_3370440_2]** **[0001393612-24-000004_dfs20231231ex992.htm:1]** **[0001393612-24-000010_dfs-20231231.htm:102]** 

What contributed to the sharp decline in Net income in Q4 2023?

The **significant jump** in Basic EPS in Q2 2024 was driven by several factors. **Net income increased by 70% YoY**, aided by **strong revenue growth** and a **43% decline in the provision for credit losses**. In addition, **unusual items** played a key role, including a **$869 million student loan reserve release** and a **$26 million gain** from the sale of the Lake Park facility. Improvements in **operating efficiency** and favorable **litigation and settlement outcomes** also contributed to the EPS growth.  **[0001393612-24-000042_dfs-earningsreleasex2q24ex.htm:0]** **[0001393612-24-000043_dfs-earningsreleasex2q24ex.htm:0]** **[DFS_3393444_2]** **[0001393612-24-000042_dfs20240630ex992.htm:1]** 

What drove the significant jump in Basic EPS in Q2 2024?

The remarkable surge in **Q2 2024 net income** was primarily driven by **multiple factors**. **Revenue growth** boosted total revenues by **17% year-over-year** through loan growth and improved net interest margins, significantly enhancing overall profitability.  **[0001393612-24-000043_dfs-earningsreleasex2q24ex.htm:0]** **[0001393612-24-000042_dfs-earningsreleasex2q24ex.htm:0]**  Additionally, a major **student loan reserve release of $869 million** played a crucial role, providing an extraordinary boost to net income.  **[DFS_3393444_2]** **[DFS_3393444_3]**  The company also benefited from a **$26 million gain** due to a favorable litigation settlement and the sale of its Lake Park facility, which, along with offsetting regulatory charges and stable credit performance, further supported the impressive net income growth.  **[DFS_3393444_2]** **[DFS_3393444_3]** 

What factors caused the remarkable surge in Net income in Q2 2024?

The sharp rise in **Income tax expense** in **Q2 2024** was primarily due to two main factors: the **adoption of the Proportional Amortization Method** for qualifying tax credit investments and the **recognition of potential non-deductible regulatory penalties** related to a card product misclassification issue. These changes led to an increase in the effective tax rate from **23.0% in Q2 2023** to **26.1% in Q2 2024**, contributing to the significant rise in the tax expense.  **[0001393612-24-000047_dfs-20240630.htm:30]** **[0001393612-24-000047_dfs-20240630.htm:74]** 

Why did Income tax expense rise so sharply in Q2 2024?

The documents do not provide any explanation for a *negative* Other expense in Q3 2024. In fact, one source lists **$1,032 million** as the Total other expense for Q3 2024  **[0001393612-24-000076_dfs-20240930.htm:3]** , and another source explains an *increase* in Total other expense driven by higher employee compensation and benefits, technology investments, and increased professional fees.  **[0001393612-24-000076_dfs-20240930.htm:75]**  There is no indication in the documents of a negative Other expense for that period.

What explains the negative Other expense in Q3 2024?

9eb2aad0a440496c8a947ffe72a8c89b7f86691a12ac64ff88e40c03333372c4

The jump in **cash and cash equivalents** in Q1 2024 was primarily driven by a significant increase in the company's **liquidity portfolio**, which grew by **$4.3 billion** during that period. This growth was accompanied by an increase in the average liquidity balance from **$22.1 billion** in Q4 2023 to **$25.2 billion** in Q1 2024, reflecting the higher levels of cash and cash equivalents.  **[0001393612-24-000032_dfs-20240331.htm:2]** **[0001393612-24-000032_dfs-20240331.htm:80]** 

Why did Cash and cash equivalents jump in Q1 2024?

The **documents indicate** that the dramatic increase in restricted cash—from **$43 million** in Q4 2023 to **$439 million** in Q1 2024—is noted, but they do **not provide specific reasons** for this large change.  **[0001393612-24-000032_dfs-20240331.htm:2]** 

What caused the dramatic spike in Restricted cash in Q1 2024?

In **Q3 2024**, DFS began reporting **Other short-term investments** because the firm acquired **U.S. Treasury bills** with maturity dates greater than **90 days** but less than one year, resulting in an entry of **$735 million**, whereas previously this category was reported as zero.  **[0001393612-24-000076_dfs-20240930.htm:11]** **[0001393612-24-000076_dfs-20240930.htm:2]** **[0001393612-24-000076_dfs-20240930.htm:84]** 

Why are Other short-term investments reported in Q3 2024 when previously not available?

The increase in **Investment securities** in **Q3 2024** was primarily driven by a significant uptick in **U.S. Treasury bills**, which rose from **$0 million** in Q4 2023 to **$735 million** in Q3 2024, and by strong growth in **U.S. Treasury and U.S. GSE securities**, which increased from **$12,937 million** to **$14,185 million**. Although there was a slight decline in **Residential Mortgage-Backed Securities (Agency)** (from **$718 million** to **$680 million**), the larger increases in the other categories drove the overall rise in the portfolio.  **[0001393612-24-000076_dfs-20240930.htm:11]** **[0001193125-25-011795_d918322d425.htm:226]** 

What drove the increase in Investment securities in Q3 2024?

The significant decline in long-term borrowings in Q3 2024 was driven by several factors. **Discover Financial Services reduced its securitized debt**, with the outstanding amount of fixed-rate asset-backed securities falling from **$10,003 million** to **$8,503 million**. Additionally, there was a **decrease in Discover Bank's fixed-rate senior bank notes** from **$3,571 million** to **$2,846 million**, and the **full repayment of the $925 million in floating-rate asset-backed securities** contributed to the overall reduction in long-term borrowings.  **[0001393612-24-000076_dfs-20240930.htm:27]** **[0001393612-24-000073_dfs-20231231.htm:171]** 

Why did Long-term borrowings decline so significantly in Q3 2024?

1f29d1543657099351d178b026a367c16285f26e9ffec8838adc9b3d35aa0797

Restricted cash (USD, millions)

Other short-term investments (USD, millions)

Investment securities (USD, millions)

Total loan receivables (USD, millions)

Allowance for credit losses (USD, millions)

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Goodwill (USD, millions)

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Total assets (USD, millions)

Interest-bearing deposit accounts (USD, millions)

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Total deposits (USD, millions)

Long-term borrowings (USD, millions)

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Common stock (USD, millions)

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Accumulated other comprehensive income (loss) (USD, millions)

Treasury stock, at cost (USD, millions)

Total stockholders' equity (USD, millions)

Total liabilities and stockholders' equity (USD, millions)

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Total interest income (USD, millions)

Total interest expense (USD, millions)

Net interest income (USD, millions)

Provision for credit losses (USD, millions)

Other income - Discount and interchange revenue, net (USD, millions)

Other income - Protection products revenue (USD, millions)

Other income - Loan fee income (USD, millions)

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Other expense - Marketing and business development (USD, millions)

Other expense - Information processing and communications (USD, millions)

Other expense - Professional fees (USD, millions)

Other expense - Premises and equipment (USD, millions)

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Income tax expense (USD, millions)

Net income (USD, millions)

Net income allocated to common stockholders (USD, millions)

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Diluted earnings per common share (USD)

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Stock-Based Compensation [USD, Millions]

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Capital Expenditures (CapEx) [USD, Millions]

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Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

abe03e0fc21058be7e3f89608a30a45220ff4c86af7818ae000713676a3c8fc2

e7c3f8f484b638675cd8911571a70b7dcaa5d801872ef76e5ecf2d38b26ad9b0

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

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Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Units]

EPS - Diluted [USD, Units]

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f90ba340569f3e87302a1f21cb119ab7e5e18a0b27871f692591116e7ddc055c

Company not found (DFS)

Financials