Discover 2010 Annual Report Download - page 8

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Diluted Earnings Per Share of Common
Stock From Continuing Operations
2008 2009
$2.18
$2.38
1.10
2.26
Return on Equity From
Continuing Operations
2008 2009 2010
18%
12%
17%
9%
9%
Stock Price at Fiscal Year-End
2010
$1.22
2008 2009 2010
Represents amount related to the Visa® and MasterCard®
antitrust litigation settlement.
Represents amount related to the Visa® and MasterCard®
antitrust litigation settlement.
$10.23
$15.46
$18.28
1.08
0.12 2%
Direct Banking
Every day, more consumers are using direct banking instead of traditional branch banking across many bank products
and services. Direct banking works best when an organization has a strong brand and good execution when it comes to
direct marketing and customer service – which are Discover strengths. Our plan is to capitalize on those strengths and
take advantage of the trend toward direct banking in fi nancial services to deliver more value to consumers in credit cards
and other direct banking products.
I am particularly excited about Discover’s acquisition of The Student Loan Corporation (SLC). One of the best investments
an individual can make is in a college education, and SLC has been a leader in student lending for more than 50 years.
During that time, SLC has helped make college more attainable for hundreds of thousands of students and families.
In addition, SLC has long-standing relationships with hundreds of leading colleges and universities. Even without the
SLC acquisition, Discover had grown to be the fi fth largest originator of private student loans in just three years.
With SLC, Discover enters 2011 as the third largest private student lender with plans for continued growth.
Beyond providing another avenue to loan growth, SLC was an attractive acquisition because of the credit quality of
the assets we acquired. All in all, SLC is a perfect fi t for our direct banking strategy, particularly since our strategy is not
so much about diversifi cation as it is about building a strong line-up of direct banking products and services.
Payments
In payments, the world wants and needs a better alternative to traditional network options. Discover embraces the concept of
alliances with regional networks and acquirers, and during 2010 we reached a milestone as all of the top 100 U.S. merchant
acquirers are now including Discover for their new merchant signings. We are also using our experience and expertise with
network partnerships and integration to expand our global footprint, while allowing regional networks to maintain their own
identity. In short, we believe our fl exibility when it comes to multi-brand network alliances will be a winning strategy.
I am also excited about our position when it comes to mobile commerce. Mobile commerce will be an important element of
the future of the payments industry, providing signifi cant enhancements to the way consumers manage and spend money.
In November 2010, AT&T, T-Mobile and Verizon announced the formation of Isis, a new mobile commerce network, and
they announced that Discover will provide the payments infrastructure, acceptance footprint and payments experience for this
new opportunity.
15%