Discover 2014 Annual Report Download - page 91

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Corporate and Bank Debt
The following table provides a summary of Discover Financial Services (Parent Company) and Discover Bank
outstanding debt as of December 31, 2014 (dollars in millions):
Discover Financial Services Senior Notes Discover Bank Senior Notes Discover Bank Subordinated Notes
Principal Amount
Outstanding Maturity Principal Amount Outstanding Maturity Principal Amount Outstanding Maturity
$ 400 June 2017 $ 750 February 2018 $ 200 November 2019
78 July 2019 750 August 2021 500 April 2020
322 April 2022 1,000 August 2023 $ 700
500 November 2022 400 March 2026
500 November 2024 $ 2,900
$ 1,800
Certain Discover Financial Services senior notes require us to offer to repurchase the notes at a price equal to
101% of their aggregate principal amount plus accrued and unpaid interest in the event of a change of control
involving us and a corresponding ratings downgrade to below investment grade. For more information on outstanding
notes, including weighted-average interest rates, see Note 9: Long-Term Borrowings to our consolidated financial
statements.
Short-Term Borrowings
We utilize a warehouse line of credit available up to $205 million as a form of short-term borrowings. This line
of credit is used for the sole purpose of funding consumer residential mortgage loans. The warehouse line of credit had
an outstanding balance of $113 million as of December 31, 2014. In addition, we may access short-term borrowings
through the Federal Funds market or through repurchase agreements. At December 31, 2014, there were no
outstanding balances under the Federal Funds market or repurchase agreements.
Additional Funding Sources
Private Asset-Backed Securitizations
We have access to committed undrawn capacity through privately placed asset-backed securitizations. At
December 31, 2014, we had total committed capacity of $7.5 billion, none of which was drawn.
Federal Reserve
Discover Bank has access to the Federal Reserve Bank of Philadelphia’s discount window. As of December 31,
2014, Discover Bank had $16 billion of available capacity through the discount window based on the amount and type
of assets pledged. We have no borrowings outstanding under the discount window as of December 31, 2014.
Funding Uses
Our primary uses of funds include the extensions of loans and credit, primarily through Discover Bank, the
purchase of investment securities for our liquidity portfolio, working capital and debt and capital service. We assess
funding uses and liquidity needs under both the normal course of business and hypothetical adverse environments,
considering primary uses of funding, such as on-balance sheet loans, and contingency uses of funding, such as the need
to post additional collateral for derivatives positions. In order to anticipate funding needs under adverse environments,
we maintain liquidity stress scenarios that assess the impact of a range of unusual business events, such as severe
economic recessions, financial market disruptions, adverse operational events and other forms of stress.
Credit Ratings
Our borrowing costs and capacity in certain funding markets, including securitizations and senior and
subordinated debt, may be affected by the credit ratings of DFS, Discover Bank and the securitization trusts.
Downgrades in these credit ratings could result in higher interest expense on our unsecured debt and asset
securitizations, as well as potentially higher fees related to borrowings under our lines of credit. In addition to increased