EX-99.2 3 dfs20230331ex992.htm EX-99.2 Document

DISCOVER FINANCIAL SERVICES Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
 Quarter Ended
 Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022		Mar 31, 2023 vs. Mar 31, 2022
EARNINGS SUMMARY       
Interest Income$4,077 $3,856 $3,357 $2,915 $2,736 $1,341 49 %
Interest Expense945 789 514 305 257 688 NM
Net Interest Income3,132 3,067 2,843 2,610 2,479 653 26 %
Discount/Interchange Revenue1,057 1,165 1,157 1,133 955 102 11 %
Rewards Cost716 797 811 743 635 81 13 %
Discount and Interchange Revenue, net341 368 346 390 320 21 7 %
Protection Products Revenue43 44 42 42 44 (1)(2 %)
Loan Fee Income166 182 168 142 140 26 19 %
Transaction Processing Revenue67 66 65 61 57 10 18 %
Gains (Losses) on Equity Investments(18)(6)(4)(42)(162)144 89 %
Other Income22 11 19 21 24 (2)(8 %)
Total Non-Interest Income621 665 636 614 423 198 47 %
Revenue Net of Interest Expense3,753 3,732 3,479 3,224 2,902 851 29 %
Provision for Credit Losses1,102 883 773 549 154 948 NM
Employee Compensation and Benefits625 573 551 515 500 125 25 %
Marketing and Business Development241 313 276 254 192 49 26 %
Information Processing & Communications139 143 124 121 125 14 11 %
Professional Fees232 264 241 189 177 55 31 %
Premises and Equipment22 48 22 24 24 (2)(8 %)
Other Expense124 154 174 120 112 12 11 %
Total Operating Expense1,383 1,495 1,388 1,223 1,130 253 22 %
Income/ (Loss) Before Income Taxes1,268 1,354 1,318 1,452 1,618 (350)(22 %)
Tax Expense292 321 312 341 376 (84)(22 %)
Net Income/ (Loss)$976 $1,033 $1,006 $1,111 $1,242 ($266)(21 %)
Net Income/ (Loss) Allocated to Common Stockholders$939 $1,027 $967 $1,105 $1,205 ($266)(22 %)
Effective Tax Rate23.0 %23.7 %23.6 %23.5 %23.3 %
Net Interest Margin11.34 %11.27 %11.05 %10.94 %10.85 %49 bps
Operating Efficiency36.8 %40.0 %39.9 %37.9 %38.9 %(210)bps
ROE27 %28 %29 %32 %37 %
ROCE28 %30 %30 %35 %39 %
Capital Returned to Common Stockholders$1,365 $743 $350 $742 $1,067 $298 28 %
Payout Ratio145 %72 %36 %67 %89 %
Ending Common Shares Outstanding257 267 273 275 281 (24)(9 %)
Weighted Average Common Shares Outstanding262 272 273 279 285 (23)(8 %)
Weighted Average Common Shares Outstanding (fully diluted)262 273 274 279 285 (23)(8 %)
PER SHARE STATISTICS       
Basic EPS$3.58 $3.77 $3.54 $3.96 $4.23 ($0.65)(15 %)
Diluted EPS$3.58 $3.77 $3.54 $3.96 $4.22 ($0.64)(15 %)
Common Dividends Declared Per Share$0.60 $0.60 $0.60 $0.60 $0.50 $0.10 20 %
Common Stock Price (period end)$98.84 $97.83 $90.92 $94.58 $110.19 ($11.35)(10 %)
Book Value per share $55.79 $54.57 $52.29 $50.00 $47.81 $7.98 17 %
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022Mar 31, 2023 vs. Mar 31, 2022
BALANCE SHEET SUMMARY       
Assets       
Cash and Investment Securities$22,411 $21,105 $18,767 $17,007 $15,620 $6,791 43 %
Total Loan Receivables112,674 112,120 104,908 99,301 93,471 19,203 21 %
Allowance for Credit Losses(7,691)(7,374)(7,061)(6,757)(6,647)(1,044)(16 %)
Net Loan Receivables104,983 104,746 97,847 92,544 86,824 18,159 21 %
Premises and Equipment, net1,031 1,003 1,015 984 984 47 5 %
Goodwill and Intangible Assets, net255 255 255 255 255 — — %
Other Assets4,381 4,519 4,002 3,810 3,729 652 17 %
Total Assets$133,061 $131,628 $121,886 $114,600 $107,412 $25,649 24 %
Liabilities & Stockholders' Equity       
           Certificates of Deposits 1
18,96516,124 14,505 13,543 13,518 5,447 40 %
           Savings, Money Market, and Other Deposits 1, 2
56,389 54,397 51,743 49,655 50,185 6,204 12 %
Total Direct to Consumer Deposits 1, 2
$75,354 $70,521 $66,248 $63,198 $63,703 $11,651 18 %
Brokered Deposits and Other Deposits20,386 21,115 16,649 13,214 8,779 11,607 132 %
Deposits95,740 91,636 82,897 76,412 72,482 23,258 32 %
   Securitized Borrowings 3
9,095 10,259 11,092 9,099 7,715 1,380 18 %
   Other Borrowings 3
9,068 9,849 9,085 10,886 9,417 (349)(4 %)
Borrowings18,163 20,108 20,177 19,985 17,132 1,031 6 %
Accrued Expenses and Other Liabilities4,843 5,294 4,526 4,439 4,365 478 11 %
Total Liabilities118,746 117,038 107,600 100,836 93,979 24,767 26 %
Total Equity14,315 14,590 14,286 13,764 13,433 882 7 %
Total Liabilities and Stockholders' Equity$133,061 $131,628 $121,886 $114,600 $107,412 $25,649 24 %
LIQUIDITY       
Liquidity Portfolio$21,450 $19,798 $16,042 $16,204 $14,910 $6,540 44 %
Private Asset-backed Securitizations3,500 3,500 3,500 3,500 3,750 (250)(7 %)
Federal Home Loan Bank Borrowing Capacity2,056 1,712 2,078 12 1,505 551 37 %
Federal Reserve Discount Window  4
43,780 42,268 39,888 36,463 34,393 9,387 27 %
Undrawn Credit Facilities 4
49,336 47,480 45,466 39,975 39,648 9,688 24 %
Total Liquidity$70,786$67,278$61,508$56,179$54,558$16,22830 %
1 Includes Affinity relationships
2 Savings, Money Market, and Other Deposits and reflects both interest-bearing and non-interest bearing direct to consumer deposits
3 Includes short-term and long-term borrowings
4 Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio
Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022Mar 31, 2023 vs. Mar 31, 2022
BALANCE SHEET STATISTICS       
Total Common Equity$13,259 $13,534 $13,230 $12,708 $12,377 $882 7 %
Total Common Equity/Total Assets10.0 %10.3 %10.9 %11.1 %11.5 %
Total Common Equity/Net Loans12.6 %12.9 %13.5 %13.7 %14.3 %
Tangible Assets$132,806 $131,373 $121,631 $114,345 $107,157 $25,649 24 %
Tangible Common Equity 1
$13,004 $13,279 $12,975 $12,453 $12,122 $882 7 %
Tangible Common Equity/Tangible Assets 1
9.8 %10.1 %10.7 %10.9 %11.3 %
Tangible Common Equity/Net Loans 1
12.4 %12.7 %13.3 %13.5 %14.0 %
Tangible Common Equity per share  1
$50.68 $49.66 $47.49 $45.24 $43.14 $7.54 17 %
Basel III
Quarter Ended
REGULATORY CAPITAL RATIOS 2
Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022  
Total Risk Based Capital Ratio14.9 %16.0 %16.7 %17.0 %17.6 %  
Tier 1 Risk Based Capital Ratio13.2 %14.3 %14.9 %15.2 %15.8 %  
Tier 1 Leverage Ratio 11.6 %12.7 %13.4 %13.9 %13.7 %  
Common Equity Tier 1 Capital Ratio 12.3 %13.3 %13.9 %14.2 %14.7 %
1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule
2 Based on the final rule published September 30, 2020. Capital ratios reflect delay in the recognition of the impact of CECL reserves on regulatory capital for two years in accordance with the final rule
  Note: See Glossary of Financial Terms for definitions of financial terms



DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022Mar 31, 2023 vs. Mar 31, 2022
AVERAGE BALANCES       
Assets       
Cash and Investment Securities$19,579 $19,529 $16,057 $14,409 $15,028 $4,551 30 %
Restricted Cash588 393 853 40 774 (186)(24 %)
Credit Card Loans89,460 86,396 81,445 75,917 73,042 16,418 22 %
Private Student Loans10,546 10,284 10,132 10,164 10,381 165 2 %
Personal Loans8,155 7,871 7,408 6,981 6,909 1,246 18 %
Other Loans3,888 3,485 3,050 2,674 2,359 1,529 65 %
Total Loans112,049 108,036 102,035 95,736 92,691 19,358 21 %
Total Interest Earning Assets132,216 127,958 118,945 110,185 108,493 23,723 22 %
Allowance for Credit Losses(7,307)(7,059)(6,758)(6,644)(6,818)(489)(7 %)
Other Assets6,494 6,235 5,923 5,874 6,248 246 4 %
Total Assets$131,403 $127,134 $118,110 $109,415 $107,923 $23,480 22 %
Liabilities and Stockholders' Equity       
Non-Interest-bearing Direct to Consumer Deposits 1
$1,023 $1,062 $1,122 $1,136 $1,090 ($67)(6 %)
                       Certificates of Deposits 1
17,565 15,189 14,029 13,391 14,035 3,530 25 %
                       Savings, Money Market, and Other Deposits 1
54,386 51,703 49,332 48,504 47,426 6,960 15 %
Interest-bearing Direct to Consumer Deposits 1
$71,951 $66,892 $63,361 $61,895 $61,461 $10,490 17 %
Brokered Deposits and Other Deposits19,267 19,165 14,722 10,031 9,157 10,110 110 %
Total Interest-bearing Deposits91,218 86,057 78,083 71,926 70,618 20,600 29 %
Securitized Borrowings 2
9,667 9,954 10,246 8,262 7,739 1,928 25 %
Other Borrowings 2
9,372 9,636 9,185 9,325 10,099 (727)(7 %)
Total Interest-bearing Liabilities110,257 105,647 97,514 89,513 88,456 21,801 25 %
Other Liabilities & Stockholders' Equity20,123 20,425 19,474 18,766 18,377 1,746 10 %
Total Liabilities and Stockholders' Equity$131,403 $127,134 $118,110 $109,415 $107,923 $23,480 22 %
AVERAGE YIELD       
Assets       
Cash and Investment Securities3.89 %3.45 %2.31 %1.46 %1.09 %280 bps
Restricted Cash4.05 %2.73 %2.25 %0.41 %0.02 %403 bps
Credit Card Loans15.06 %14.50 %13.56 %12.81 %12.59 %247 bps
Private Student Loans9.68 %9.02 %8.26 %7.74 %7.41 %227 bps
Personal Loans12.35 %12.04 %11.83 %11.84 %12.09 %26 bps
Other Loans6.64 %6.16 %5.70 %5.47 %5.60 %104 bps
Total Loans14.06 %13.53 %12.67 %12.00 %11.80 %226 bps
Total Interest Earning Assets12.51 %11.96 %11.20 %10.61 %10.23 %228 bps
AVERAGE RATES
Liabilities and Stockholders' Equity       
                       Certificates of Deposits 1
2.65 %1.83 %1.31 %1.04 %1.02 %163 bps
                       Savings, Money Market, and Other Deposits 1
3.41 %2.76 %1.60 %0.68 %0.50 %291 bps
Interest-bearing Direct to Consumer Deposits 1
3.23 %2.55 %1.53 %0.75 %0.62 %261 bps
Brokered Deposits and Other Deposits3.87 %3.50 %2.71 %2.28 %2.03 %184 bps
Total Interest-bearing Deposits3.36 %2.76 %1.76 %0.97 %0.80 %256 bps
Securitized Borrowings 2
3.67 %3.33 %2.79 %1.87 %1.29 %238 bps
Other Borrowings 2
4.40 %4.37 %4.17 %3.97 %3.75 %65 bps
Total Interest-bearing Liabilities3.48 %2.96 %2.09 %1.36 %1.18 %230 bps
Net Interest Margin11.34 %11.27 %11.05 %10.94 %10.85 %49 bps
Net Yield on Interest-earning Assets9.61 %9.51 %9.48 %9.50 %9.27 %34 bps
1 Includes Affinity relationships
2 Includes short-term and long-term borrowings
Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022		Mar 31, 2023 vs. Mar 31, 2022
TOTAL LOAN RECEIVABLES       
Ending Loans 1
$112,674 $112,120 $104,908 $99,301 $93,471 $19,203 21 %
Average Loans 1
$112,049 $108,036 $102,035 $95,736 $92,691 $19,358 21 %
Interest Yield14.06 %13.53 %12.67 %12.00 %11.80 %226 bps
Gross Principal Charge-off Rate 3.50 %2.87 %2.56 %2.76 %2.64 %86 bps
Net Principal Charge-off Rate 2.72 %2.13 %1.71 %1.80 %1.61 %111 bps
Delinquency Rate (30 or more days)2.48 %2.30 %1.94 %1.63 %1.64 %84 bps
Delinquency Rate (90 or more days)1.14 %0.98 %0.80 %0.70 %0.72 %42 bps
Gross Principal Charge-off Dollars $966 $781 $659 $659 $603 $363 60 %
Net Principal Charge-off Dollars$750 $581 $439 $429 $368 $382 104 %
Net Interest and Fee Charge-off Dollars$169 $126 $98 $92 $87 $82 94 %
Loans Delinquent 30 or more days$2,791 $2,578 $2,034 $1,621 $1,537 $1,254 82 %
Loans Delinquent 90 or more days$1,290 $1,101 $837 $694 $678 $612 90 %
Allowance for Credit Losses (period end)$7,691 $7,374 $7,061 $6,757 $6,647 $1,044 16 %
Reserve Change Build/ (Release) 2
$385 $313 $304 $110 ($175)$560 
Reserve Rate6.83 %6.58 %6.73 %6.80 %7.11 %(28)bps
CREDIT CARD LOANS       
Ending Loans$89,755 $90,113 $83,630 $79,237 $73,783 $15,972 22 %
Average Loans$89,460 $86,396 $81,445 $75,917 $73,042 $16,418 22 %
Interest Yield15.06 %14.50 %13.56 %12.81 %12.59 %247 bps
Gross Principal Charge-off Rate3.99 %3.20 %2.88 %3.10 %3.00 %99 bps
Net Principal Charge-off Rate3.10 %2.37 %1.92 %2.01 %1.84 %126 bps
Delinquency Rate (30 or more days) 2.76 %2.53 %2.11 %1.76 %1.77 %99 bps
Delinquency Rate (90 or more days) 1.34 %1.14 %0.92 %0.80 %0.83 %51 bps
Gross Principal Charge-off Dollars$879 $697 $592 $587 $541 $338 62 %
Net Principal Charge-off Dollars$684 $516 $395 $381 $331 $353 107 %
Loans Delinquent 30 or more days$2,477 $2,278 $1,761 $1,392 $1,305 $1,172 90 %
Loans Delinquent 90 or more days$1,204 $1,028 $770 $633 $613 $591 96 %
Allowance for Credit Losses (period end)$6,135 $5,883 $5,561 $5,307 $5,120 $1,015 20 %
Reserve Change Build/ (Release) 2
$318 $322 $254 $187 ($153)$471 
Reserve Rate6.84 %6.53 %6.65 %6.70 %6.94 %(10)bps
Total Discover Card Volume$54,129 $59,153 $58,561 $57,384 $49,379 $4,750 10 %
Discover Card Sales Volume$50,588 $55,663 $54,793 $53,860 $46,329 $4,259 9 %
Rewards Rate1.41 %1.42 %1.47 %1.37 %1.36 %5 bps
1 Total Loans includes Home Equity and other loans
2 Excludes any build/release of the liability for expected credit losses on unfunded commitments as the offset is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition
  Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022Mar 31, 2023 vs. Mar 31, 2022
PRIVATE STUDENT LOANS       
Organic Student Loans$9,927 $9,718 $9,722 $9,412 $9,614 $313 3 %
Purchased Student Loans553 590 627 662 700 (147)(21 %)
Total Private Student Loans$10,480 $10,308 $10,349 $10,074 $10,314 $166 2 %
Interest Yield9.68 %9.02 %8.26 %7.74 %7.41 %227 bps
Net Principal Charge-off Rate1.04 %1.33 %0.91 %1.08 %0.69 %35 bps
Delinquency Rate (30 or more days)2.02 %2.05 %1.94 %1.66 %1.62 %40 bps
Reserve Rate8.32 %8.14 %8.01 %8.26 %8.43 %(11)bps
PERSONAL LOANS       
Ending Loans$8,374 $7,998 $7,674 $7,145 $6,904 $1,470 21 %
Interest Yield12.35 %12.04 %11.83 %11.84 %12.09 %26 bps
Net Principal Charge-off Rate1.94 %1.49 %1.14 %1.21 %1.12 %82 bps
Delinquency Rate (30 or more days)0.91 %0.80 %0.69 %0.63 %0.69 %22 bps
Reserve Rate7.43 %7.44 %8.08 %8.01 %8.88 %(145)bps
Note: See Glossary of Financial Terms for definitions of financial terms



DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS AND VOLUME STATISTICS
(unaudited, in millions)
 Quarter Ended  
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022Mar 31, 2023 vs. Mar 31, 2022
DIGITAL BANKING       
Interest Income$4,077 $3,856 $3,357 $2,915 $2,736 $1,341 49 %
Interest Expense945 789 514 305 257 688 NM
Net Interest Income3,132 3,067 2,843 2,610 2,479 653 26 %
Non-Interest Income533 578 541 557 486 47 10 %
Revenue Net of Interest Expense3,665 3,645 3,384 3,167 2,965 700 24 %
Provision for Credit Losses1,102 883 773 549 154 948 NM
Total Operating Expense1,342 1,445 1,346 1,186 1,092 250 23 %
Income/ (Loss) Before Income Taxes$1,221 $1,317 $1,265 $1,432 $1,719 ($498)(29 %)
Net Interest Margin11.34 %11.27 %11.05 %10.94 %10.85 %49 bps
Pretax Return on Loan Receivables4.42 %4.84 %4.91 %5.99 %7.52 %(310)bps
Allowance for Credit Losses (period end)$7,691 $7,374 $7,061 $6,757 $6,647 $1,044 16 %
Reserve Change Build/ (Release) $385 $313 $304 $110 ($175)$560 
PAYMENT SERVICES       
Interest Income$— $— $— $— $— $— NM
Interest Expense— — — — — — NM
Net Interest Income— — — — — — NM
Non-Interest Income (Loss)88 87 95 57 (63)151 NM
Revenue Net of Interest Expense88 87 95 57 (63)151 NM
Provision for Credit Losses— — — — — — NM
Total Operating Expense41 50 42 37 38 3 8 %
Income/ (Loss) Before Income Taxes$47 $37 $53 $20 ($101)$148 NM
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network850 946 924 916 831 19 2 %
PULSE Network1,625 1,666 1,611 1,524 1,399 226 16 %
Total2,475 2,612 2,535 2,440 2,230 245 11 %
NETWORK VOLUME
PULSE Network$65,268 $66,807 $63,437 $62,992 $59,836 $5,432 9 %
Network Partners10,628 10,433 11,894 11,532 10,683 (55)(1 %)
Diners Club International 1
9,211 9,155 8,793 8,381 7,176 2,035 28 %
Total Payment Services85,107 86,395 84,124 82,905 77,695 7,412 10 %
Discover Network - Proprietary51,826 58,138 56,633 55,838 48,129 3,697 8 %
Total$136,933 $144,533 $140,757 $138,743 $125,824 $11,109 9 %
1 Volume is derived from data provided by licencees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment
Note: See Glossary of Financial Terms for definitions of financial terms


DISCOVER FINANCIAL SERVICES - GLOSSARY OF FINANCIAL TERMS
Balance Sheet & Regulatory Capital Terms
Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments
Regulatory Capital Ratios are preliminary
•
Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets
•
Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets
•
Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets
•
Common Equity Tier 1 Capital Ratio represents common equity tier 1 capital divided by risk weighted assets
Tangible Assets represents total assets less goodwill and intangibles
Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data
Tangible Common Equity/Net Loans, a non-GAAP measure, represents TCE divided by total loans less the allowance for credit losses (period end)
Tangible Common Equity per Share, a non-GAAP measure, represents TCE divided by ending common shares outstanding
Tangible Common Equity/Tangible Assets, a non-GAAP measure, represents TCE divided by total assets less goodwill and intangibles
Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)
Credit Related Terms
Delinquency Rate (30 or more days) represents loans delinquent thirty days or more divided by ending loans (total or respective product loans, as appropriate)
Delinquency Rate (90 or more days) represents loans delinquent ninety days or more divided by ending loans (total or respective product loans, as appropriate)
Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Reserve Rate represents the allowance for credit losses divided by total loans (total or respective product loans, as appropriate)
Earnings and Shareholder Return Terms
Book Value per share represents total equity divided by ending common shares outstanding
Capital Returned to Common Stockholders represents common stock dividends declared and treasury share repurchases, excluding common stock issued under employee benefit plans and stock based compensation
Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding
Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Income Allocated to Common Stockholders represents net income less preferred stock dividends and income allocated to participating securities
Net Interest Margin represents net interest income (annualized) divided by average total loans for the period
Net Yield on Interest Earning Assets represents net interest income (annualized) divided by average total interest earning assets for the period
Operating Efficiency represents total operating expense divided by revenue net of interest expense
Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period
Payout Ratio represents capital returned to common stockholders divided by net income allocated to common stockholders
Return on Common Equity represents net income available for common stockholders (annualized) divided by average total common equity for the reporting period
Return on Equity represents net income (annualized) divided by average total equity for the reporting period
Rewards Rate represents Credit Card rewards cost divided by Discover Card sales volume
Volume Terms
Discover Card Sales Volume represents Discover card activity related to sales net of returns
Discover Card Volume represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity
Discover Network Proprietary Volume represents gross Discover Card sales volume on the Discover Network


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA
(unaudited, in millions)
 Quarter Ended
 Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2022
GAAP Total Common Equity$13,259 $13,534 $13,230 $12,708 $12,377 
Less: Goodwill(255)(255)(255)(255)(255)
Less: Intangibles— — — — — 
Tangible Common Equity 1
$13,004 $13,279 $12,975 $12,453 $12,122 
GAAP Book Value Per Share$55.79 $54.57 $52.29 $50.00 $47.81 
Less: Goodwill(1.00)(0.96)(0.94)(0.92)(0.91)
Less: Intangibles— — — — — 
   Less: Preferred Stock(4.11)(3.95)(3.86)(3.84)(3.76)
Tangible Common Equity Per Share $50.68 $49.66 $47.49 $45.24 $43.14 
1 Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE and definitions may vary, so users of this information are advised to exercise caution in comparing TCE of different companies. TCE is included because management believes that common equity excluding goodwill and intangibles is a more meaningful measure to investors of the true net asset value of the Company
Note: See Glossary of Financial Terms for definitions of financial terms