Discover 2014 Annual Report Download - page 77

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Average Balance Sheet Analysis
(dollars in millions)
Calendar Years Ended December 31, Fiscal Year Ended
November 30, 2012 One Month Ended December 31, 20122014 2013
Average
Balance Rate Interest Average Balance Rate Interest Average Balance Rate Interest Average Balance Rate Interest
Assets
Interest-earning assets:
Cash and cash equivalents ............................ $7,228 0.25% $ 18 $ 5,557 0.25% $ 14 $ 5,074 0.27% $ 14 $ 2,704 0.25% $ —
Restricted cash ............................................. 763 0.08% 1 704 0.10% 1 924 0.15% 2 1,400 0.11% —
Investment securities...................................... 4,000 1.67% 67 5,190 1.42% 74 6,437 1.24% 80 6,247 1.34% 7
Loan receivables(1):
Credit card(2)(3) ...................................... 52,600 12.09% 6,359 49,816 12.00% 5,978 47,301 12.16% 5,751 50,494 11.92% 510
Personal loans....................................... 4,592 12.36% 568 3,706 12.52% 464 2,944 12.35% 363 3,290 12.43% 35
Federal student loans(4) ........................... — NM — — NM — 121 1.64% 2 — NM —
Private student loans .............................. 4,450 7.02% 312 3,561 7.07% 252 2,557 7.20% 184 3,021 7.22% 18
PCI student loans ................................... 3,916 6.64% 260 4,434 6.13% 272 4,998 6.06% 303 4,724 5.96% 24
Mortgage loans held for sale .................. 118 3.92% 5 216 3.47% 7 96 1.10% 1 310 3.05% 1
Other ................................................... 177 3.49% 6 87 3.00% 2 26 11.98% 3 38 5.24% —
Total loan receivables ....................... 65,853 11.40% 7,510 61,820 11.28% 6,975 58,043 11.38% 6,607 61,877 11.21% 588
Total interest-earning assets ......... 77,844 9.76% 7,596 73,271 9.64% 7,064 70,478 9.51% 6,703 72,228 9.73% 595
Allowance for loan losses ............................ (1,645)(1,639) (1,948) (1,725)
Other assets ............................................... 4,279 4,348 4,032 4,234
Total assets ................................. $80,478 $75,980 $ 72,562 $74,737
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits:
Time deposits(5) ...................................... $26,627 1.66% 443 $27,718 2.02% 559 $ 27,033 2.61% 706 $27,849 2.29% 54
Money market deposits(6) ........................ 7,624 0.91% 70 5,719 0.87% 50 5,413 0.92% 50 5,368 0.88% 4
Other interest-bearing savings deposits ... 10,617 0.96% 101 9,428 0.95% 89 8,638 1.03% 89 8,864 1.00% 7
Total interest-bearing deposits(7)......... 44,868 1.37% 614 42,865 1.63% 698 41,084 2.06% 845 42,081 1.84% 65
Borrowings:
Short-term borrowings ........................... 111 1.59% 2 199 1.57% 3 89 1.32% 1 283 1.36% —
Securitized borrowings(5)(6)...................... 16,686 1.78% 297 16,297 1.74% 284 16,979 1.95% 331 16,998 1.80% 26
Other long-term borrowings(5) ................. 4,192 5.28% 221 2,609 6.18% 161 2,017 7.62% 154 1,733 7.82% 12
Total borrowings .............................. 20,989 2.48% 520 19,105 2.35% 448 19,085 2.55% 486 19,014 2.34% 38
Total interest-bearing liabilities ..... 65,857 1.72% 1,134 61,970 1.85% 1,146 60,169 2.21% 1,331 61,095 1.99% 103
Other liabilities and stockholders’ equity ......... 14,621 14,010 12,393 13,642
Total liabilities and stockholders’
equity ...................................... $80,478 $75,980 $ 72,562 $74,737
Net interest income...................... $6,462 $ 5,918 $ 5,372 $ 492
Net interest margin(8) ........................................ 9.81% 9.57% 9.25% 9.39%
Net yield on interest-bearing assets(9) ................. 8.30% 8.08% 7.62% 8.05%
Interest rate spread(10) ....................................... 8.04% 7.79% 7.30% 7.74%
(1) Average balances of loan receivables include non-accruing loans, which are included in the yield calculations. If the non-accruing loan balances were excluded,
there would not be a material impact on the amounts reported above.
(2) Interest income on credit card loans includes $192 million, $171 million, $179 million and $14 million of amortization of balance transfer fees for the calendar
years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012, respectively.
(3) The calendar year ended December 31, 2013, fiscal year ended November 30, 2012 and one month ended December 31, 2012 include the impact of interest rate
swap agreements used to change a portion of certain floating-rate credit card loan receivables to fixed-rate.
(4) Includes federal student loans held for sale.
(5) Includes the impact of interest rate swap agreements used to change a portion of fixed-rate funding to floating-rate funding.
(6) Includes the impact of interest rate swap agreements used to change a portion of floating-rate funding to fixed-rate funding.
(7) Includes the impact of FDIC insurance premiums.
(8) Net interest margin represents net interest income as a percentage of average total loan receivables.
(9) Net yield on interest-bearing assets represents net interest income as a percentage of average total interest-earning assets.
(10) Interest rate spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities.