Discover 2009 Annual Report Download - page 114

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4. Investment Securities
The Company’s investment securities consist of the following (dollars in thousands):
November 30,
2009 2008 2007
U.S. Treasury and other U.S. government agency obligations.............................................................................. $ 12,929 $ 16,495 $ 23,160
States and political subdivisions of states.......................................................................................................... 68,553 70,290 61,091
Other securities:
Certificated retained interests in DCENT and DCMT........................................................................................ 4,501,108 981,742 310,861
Credit card asset-backed securities of other issuers......................................................................................... 381,705 85,762 —
Asset-backed commercial paper notes.......................................................................................................... 58,792 59,586 108,681
Other debt and equity securities .................................................................................................................. 12,210 14,069 21,646
Total other securities............................................................................................................................... 4,953,815 1,141,159 441,188
Total investment securities ....................................................................................................................... $5,035,297 $1,227,944 $525,439
The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale and held-to-maturity
investment securities are as follows (dollars in thousands):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses Fair Value
At November 30, 2009
Available-for-Sale Investment Securities(1)
Certificated retained interests in DCENT ................................................................................. $2,330,000 $ 978 $(126,009) $2,204,969
Credit card asset-backed securities of other issuers .................................................................. 362,377 19,362 (34) 381,705
Asset-backed commercial paper notes ................................................................................... 51,337 7,455 — 58,792
Equity securities ................................................................................................................. 15 — — 15
Total available-for-sale investment securities ........................................................................ $2,743,729 $27,795 $(126,043) $2,645,481
Held-to-Maturity Investment Securities(2)
U.S. Treasury and other government agency residential mortgage-backed securities ..................... $ 12,929 $ 972 $ — $ 13,901
Certificated retained interests in DCENT and DCMT ................................................................. 2,296,139 — (430,655) 1,865,484
States and political subdivisions of states................................................................................ 68,553 19 (6,162) 62,410
Other debt securities(3) ........................................................................................................ 12,195 — — 12,195
Total held-to-maturity investment securities .......................................................................... $2,389,816 $ 991 $(436,817) $1,953,990
At November 30, 2008
Available-for-Sale Investment Securities(1)
Certificated retained interests in DCENT ................................................................................. $1,065,000 $ — $ (83,258) $ 981,742
Credit card asset-backed securities of other issuers .................................................................. 85,843 627 (708) 85,762
Asset-backed commercial paper notes ................................................................................... 59,586 — — 59,586
Equity securities ................................................................................................................. 816 — (787) 29
Total available-for-sale investment securities ........................................................................ $1,211,245 $ 627 $ (84,753) $1,127,119
Held-to-Maturity Investment Securities(2)
U.S. Treasury and other U.S. government agency obligations:
Residential mortgage-backed securities............................................................................... $ 15,449 $ 379 $ — $ 15,828
Other(4) ......................................................................................................................... 1,046 2 — 1,048
Total U.S. Treasury and other U.S. government agency obligations...................................... 16,495 381 — 16,876
States and political subdivisions of states................................................................................ 70,290 93 (17,132) 53,251
Other debt securities(3) ........................................................................................................ 14,040 — — 14,040
Total held-to-maturity investment securities .......................................................................... $ 100,825 $ 474 $ (17,132) $ 84,167
(1) Available-for-sale investment securities are reported at fair value.
(2) Held-to-maturity investment securities are reported at amortized cost.
(3) Included in other debt securities at November 30, 2009 and 2008 are commercial advances of $9.4 and $11.2 million, respectively, related to the Company’s Community Reinvestment Act
strategies.
(4) Amount at November 30, 2008 included $1.0 million of U.S. Treasury obligations held at the Federal Reserve Bank of Philadelphia that were pledged as collateral for public deposits in excess of
FDIC insurance limits.
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