Discover 2010 Annual Report Download - page 116

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5. Investment Securities
The Company’s investment securities consist of the following (dollars in thousands):
November 30,
2010 2009 2008
U.S. Treasury securities .............................................................................................................................. $1,575,403 $ 0 $ 0
U.S. government agency securities ............................................................................................................... 1,888,701 0 0
States and political subdivisions of states....................................................................................................... 51,774 68,553 70,290
Other securities:
Certificated retained interests in DCENT and DCMT(1) .................................................................................. 0 4,501,108 981,742
Credit card asset-backed securities of other issuers ...................................................................................... 1,031,112 381,705 85,762
Corporate debt securities(2) ...................................................................................................................... 507,896 0 0
Asset-backed commercial paper notes....................................................................................................... 0 58,792 59,586
Residential mortgage-backed securities...................................................................................................... 9,800 12,929 16,495
Other debt and equity securities ............................................................................................................... 10,709 12,210 14,069
Total other securities............................................................................................................................ 1,559,517 4,966,744 1,157,654
Total investment securities..................................................................................................................... $5,075,395 $5,035,297 $1,227,944
(1) Upon adoption of Statements No. 166 and 167, the amount outstanding at November 30, 2009 was reclassified to loan receivables. See Note 2: Change in Accounting Principle for more
information.
(2) Amount represents corporate debt obligations issued under the Temporary Liquidity Guarantee Program (TLGP) that are guaranteed by the Federal Deposit Insurance Corporation (FDIC).
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, 2010
Available-for-Sale Investment Securities(1)
U.S Treasury securities ........................................................................................................ $1,576,094 $ 344 $ (1,585) $1,574,853
U.S government agency securities ......................................................................................... 1,888,909 1,090 (1,298) 1,888,701
Credit card asset-backed securities of other issuers .................................................................. 1,017,183 13,983 (54) 1,031,112
Corporate debt securities..................................................................................................... 507,757 241 (102) 507,896
Equity securities ................................................................................................................. 15 2 0 17
Total available-for-sale investment securities ........................................................................ $4,989,958 $15,660 $ (3,039) $5,002,579
Held-to-Maturity Investment Securities(2)
U.S. Treasury securities(3) ..................................................................................................... $ 550 $ 0 $ 0 $ 550
States and political subdivisions of states................................................................................ 51,774 281 (3,771) 48,284
Residential mortgage-backed securities .................................................................................. 9,800 869 0 10,669
Other debt securities(4) ........................................................................................................ 10,692 0 0 10,692
Total held-to-maturity investment securities .......................................................................... $ 72,816 $ 1,150 $ (3,771) $ 70,195
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 0 58,792
Equity securities ................................................................................................................. 15 0 0 15
Total available-for-sale investment securities ........................................................................ $2,743,729 $27,795 $(126,043) $2,645,481
Held-to-Maturity Investment Securities(2)
States and political subdivisions of states................................................................................ $ 68,553 $ 19 $ (6,162) $ 62,410
Certificated retained interests in DCENT and DCMT ................................................................. 2,296,139 0 (430,655) 1,865,484
Residential mortgage-backed securities .................................................................................. 12,929 972 0 13,901
Other debt securities(4) ........................................................................................................ 12,195 0 0 12,195
Total held-to-maturity investment securities .......................................................................... $2,389,816 $ 991 $(436,817) $1,953,990
(1) Available-for-sale investment securities are reported at fair value.
(2) Held-to-maturity investment securities are reported at amortized cost.
(3) Amount represents securities pledged as collateral to a government-related merchant for which transaction settlement occurs beyond the normal 24-hour period.
(4) Included in other debt securities at November 30, 2010 and 2009 are commercial advances of $7.9 million and $9.4 million, respectively, related to the Company’s Community Reinvestment Act
strategies.
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