Discover 2009 Annual Report Download - page 89

The direct-to-consumer channel provides us with the ability to renew certificates of deposit and to cross-sell deposit
products to our credit card customers. During the same period, we decreased our brokered deposits by $2.8 billion, or
13%, to $19.5 billion at November 30, 2009. Maturities of our certificates of deposit range from one month to fifteen
years, with a weighted average maturity of 26 months at November 30, 2009.
The following table summarizes deposits by product and maturities as of November 30, 2009 (dollars in thousands):
Total
Three Months
or Less
Over Three
Months
Through
Six Months
Over Six
Months
Through
Twelve
Months
Over Twelve
Months
Certificates of deposit in amounts less than $100,000(1) ................................. $22,587,898 $1,424,998 $1,992,770 $3,796,138 $15,373,992
Certificates of deposit in amounts of $100,000(1) or greater ........................... 4,047,949 390,605 392,870 1,372,232 1,892,242
Savings deposits, including money market deposit accounts............................ 5,392,659 5,392,659 — — —
Total interest-bearing deposits ................................................................ $32,028,506 $7,208,262 $2,385,640 $5,168,370 $17,266,234
(1) Represents the basic insurance amount covered by the FDIC although, effective May 20, 2009, a higher amount of $250,000 of basic insurance per depositor is in effect through December 31,
2013. As of November 30, 2009, uninsured deposits represented approximately 2.0% of total interest-bearing deposits.
Securitization Financing. Historically, we have used the securitization of credit card receivables as one of our largest
sources of funding, including both the public securitization market and the privately placed asset-backed conduit
financing market.
For much of 2008 and 2009, market events and capital market disruptions had made the securitization market
unavailable at volumes and pricing that would be attractive to us. In November 2008, the Federal Reserve announced the
launch of the Term Asset-Backed Securities Loan Facility, or TALF, in an effort to facilitate the issuance of asset-backed
securities by offering financing on relatively favorable terms. The TALF program currently extends through March 31,
2010. DCENT issued its first TALF-eligible transaction on July 14, 2009 for $1.5 billion with a three year term. DCENT
issued a second TALF-eligible transaction on September 11, 2009 for $1.3 billion with a three year term.
We have capacity to issue up to $9.6 billion in triple-A rated asset-backed securities from our securitization trusts, the
same amount of which is available for issuance on or before March 31, 2010 through the TALF program. The triple-A
rating of DCENT Class A Notes issued to date has been based, in part, on an FDIC rule which provides that the FDIC will
not seek to reclaim or recover assets transferred in connection with a securitization, or recharacterize them as assets of
the insured depository institution, provided such transfer meets the conditions for sale accounting treatment under GAAP.
Pursuant to FASB guidance related to transfers of financial assets and consolidations, effective December 1, 2009, the
transfer of assets made to the Discover Card Master Trust I (“DCMT”) and DCENT will no longer qualify for sale
accounting treatment. Consequently, there has been uncertainty in the securitization market as to how the FDIC will treat
assets transferred into securitization vehicles under the newly effective FASB guidance.
On November 12, 2009, the FDIC issued an Interim Final Rule which preserves the legal isolation treatment applicable
under the existing FDIC rule for asset-backed securities issued on or before March 31, 2010. The FDIC interim rule has
lifted the uncertainty of existing securitizations and both TALF and non-TALF issuance on or before March 31, 2010.
However, issuances beyond March 31, 2010 are subject to the final determination by the FDIC of the legal isolation
standard. On December 15, 2009, the FDIC issued an Advance Notice of Proposed Rulemaking, which describes a
possible framework for legal isolation treatment of asset-backed securities issued after March 31, 2010. The form that this
rule will ultimately take is uncertain at this time, but it may impact our ability and/or desire to issue asset-backed
securities in the future.
At November 30, 2009, we had $19.6 billion of outstanding public asset-backed securities, $2.7 billion of
outstanding private asset-backed conduit financings and $4.6 billion of outstanding asset-backed securities that had been
issued to subsidiaries of the Company. At November 30, 2009, we had $1.5 billion in unused asset-backed conduit
capacity.
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