Discover 2009 Annual Report Download - page 101

Discover Financial Services
Consolidated Statements of Income
For the Years Ended November 30,
2009 2008 2007
(dollars in thousands,
except per share amounts)
Interest income:
Credit card loans ................................................................................................................................... $2,835,767 $2,245,719 $2,134,188
Other loans........................................................................................................................................... 168,517 79,695 6,442
Investment securities ............................................................................................................................... 68,694 51,345 10,502
Other interest income.............................................................................................................................. 72,102 315,804 433,270
Total interest income............................................................................................................................ 3,145,080 2,692,563 2,584,402
Interest expense:
Deposits ............................................................................................................................................... 1,187,084 1,199,436 1,044,574
Short-term borrowings ............................................................................................................................ 2,538 343 89,319
Long-term borrowings............................................................................................................................. 61,662 88,225 89,377
Total interest expense .......................................................................................................................... 1,251,284 1,288,004 1,223,270
Net interest income ............................................................................................................................. 1,893,796 1,404,559 1,361,132
Provision for loan losses .......................................................................................................................... 2,362,405 1,595,615 733,887
Net interest income after provision for loan losses .................................................................................... (468,609) (191,056) 627,245
Other income:
Securitization income.............................................................................................................................. 1,879,304 2,429,158 2,323,623
Loan fee income..................................................................................................................................... 247,267 262,576 338,053
Discount and interchange revenue ............................................................................................................ 222,835 187,657 241,070
Fee products ......................................................................................................................................... 295,066 249,805 214,572
Merchant fees........................................................................................................................................ 44,248 67,027 92,518
Transaction processing revenue ................................................................................................................ 125,201 115,914 99,653
Loss on investment securities .................................................................................................................... (3,826) (50,294) (11,409)
Antitrust litigation settlement..................................................................................................................... 1,891,698 863,634 —
Other income ........................................................................................................................................ 138,802 138,981 78,602
Total other income .............................................................................................................................. 4,840,595 4,264,458 3,376,682
Other expense:
Employee compensation and benefits ........................................................................................................ 827,683 845,392 850,065
Marketing and business development ........................................................................................................ 406,020 530,901 576,263
Information processing and communications............................................................................................... 289,209 315,943 330,053
Professional fees .................................................................................................................................... 321,329 349,484 361,409
Premises and equipment.......................................................................................................................... 73,014 80,394 79,442
Other expense....................................................................................................................................... 333,833 293,683 280,982
Total other expense ............................................................................................................................. 2,251,088 2,415,797 2,478,214
Income from continuing operations before income tax expense...................................................................... 2,120,898 1,657,605 1,525,713
Income tax expense................................................................................................................................ 844,713 594,692 561,514
Income from continuing operations ........................................................................................................... 1,276,185 1,062,913 964,199
Loss from discontinued operations, net of tax .............................................................................................. — (135,163) (375,569)
Net income ........................................................................................................................................... 1,276,185 927,750 588,630
Preferred stock dividends and accretion of discount ..................................................................................... (53,255) — —
Net income available to common stockholders......................................................................................... $1,222,930 $ 927,750 $ 588,630
Basic earnings per share
Income from continuing operations ........................................................................................................... $ 2.42 $ 2.22 $ 2.02
Loss from discontinued operations, net of tax .............................................................................................. — (0.28) (0.79)
Net income........................................................................................................................................ $ 2.42 $ 1.94 $ 1.23
Diluted earnings per share
Income from continuing operations ........................................................................................................... $ 2.39 $ 2.20 $ 2.01
Loss from discontinued operations, net of tax .............................................................................................. — (0.28) (0.78)
Net income........................................................................................................................................ $ 2.39 $ 1.92 $ 1.23
Dividends paid per share............................................................................................................................ $ 0.12 $ 0.24 $ 0.06
See Notes to the Consolidated Financial Statements.
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