9527fc3fb1aca18faebb43aca832f264e389f8544ecf6894931c3f2cdbbf32d7

Total Revenue [USD, Millions]

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

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Units]

EPS - Diluted [USD, Units]

537156e9921816ed119c61bc4fe4c114ef463adb928daba7e28c9ed934208108

f3693cbf084d1534fdc8a1463aae3ca1646231187b1df6935cc3b0e88f1e247e

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

abe03e0fc21058be7e3f89608a30a45220ff4c86af7818ae000713676a3c8fc2

e7c3f8f484b638675cd8911571a70b7dcaa5d801872ef76e5ecf2d38b26ad9b0

cb31e75c3fec05dc8d0cfc3b0dc6ef784481adb73512cbf89ac2a518d6f70517

Cash and cash equivalents (USD, millions)

Restricted cash (USD, millions)

Other short-term investments (USD, millions)

Investment securities (USD, millions)

Loans held-for-sale (USD, millions)

Loan portfolio (USD, millions)

Total loan receivables (USD, millions)

Allowance for credit losses (USD, millions)

Net loan receivables (USD, millions)

Premises and equipment, net (USD, millions)

Goodwill (USD, millions)

Other assets (USD, millions)

Total assets (USD, millions)

Interest-bearing deposit accounts (USD, millions)

Non-interest bearing deposit accounts (USD, millions)

Total deposits (USD, millions)

Short-term borrowings (USD, millions)

Long-term borrowings (USD, millions)

Accrued expenses and other liabilities (USD, millions)

Total liabilities (USD, millions)

Common stock (USD, millions)

Preferred stock (USD, millions)

Additional paid-in capital (USD, millions)

Retained earnings (USD, millions)

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)

7b3eaeb2a2d19f3dfdd0588bc9701c758e624141cb157b42cc552cf0a36fe462

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

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

Discover Financial Services (DFS)

Financials