So, back to work. Total operating expenses were down $102 million or 9% from the prior year. Now, the 11% does feel at this point like a, I'll call, a robust number, but what we -- what we're trying to get clarity on is, as the service workers who initially were impacted by the pandemic containment activity went to the unemployment ranks, some of those have returned. Kind of a short-term question. The relative change or difference between the direct to consumer and the brokered deposits narrowed -- narrowed significantly. So, since the pandemic, just to give you some details, we decreased our online savings by about 60 basis points. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and presentation. I really appreciate it. As a direct banking and payment services company in the United States, Discover Financial Services (DFS Quick Quote DFS - Free Report) ... On its last earnings … Approximately two-thirds of our consumer deposits are indeterminate maturity accounts, primarily savings, which has provided an immediate benefit from deposit rates decreases. Forgetting to keep a buffer. Thanks for joining us. So, we like the fact that our portfolio has a high concentration of credit cards. Our common equity Tier 1 ratio increased 40 basis points sequentially, mainly due to decline in loan balances. Craig, it's been a long time. But again, I think you can expect to see the continued expense discipline that I think has always been a hallmark here at Discover, our overall lower cost operating model. Can you maybe just talk about some of the puts and takes from here. One quarter ago, Discover Financial Services (NYSE:DFS) CEO David Nelms announced that earnings per share of $1.35 was a record result for … It feels like we're gaining share in the card business in terms of loans and sales this quarter from what I've seen from competitors' reporting. It is on Thu 28 Jan (In 36 Days). And so, I would characterize it that way. Hi. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and presentation. Bill Carcache -- Wolfe Research -- Analyst. Okay. Specifically, I was looking at -- it looks like your volumes are growing pretty nicely in both PULSE and Network Partners. I think our investments have been appropriate, but at the beginning of the year, we saw an opportunity to invest more. What we saw was actually, as Roger said, excellent underlying portfolio performance. I mean, I think we would have expected a little bit more of a big bulge coming out of the deferral periods and the expiring of a lot of the stimulus. Certainly, if they keep going with the four quarters rule, that's something that -- again, it will depend going forward, but that's something that we've looked at. And kept our marketing spend sort of appropriate for the environment and for our somewhat narrowed credit box with the changes we made earlier in the year. So, we're seeing that the portfolio continues to be really, really stable as I said. Thank you. Thanks. And then just one quick one on the -- I was hoping that you guys operate more on the network business. But I mean direct bank, here your position Roger is a direct bank, it gives -- I think is the right strategy for the long term. Are there new products or services or that you're planning to build through that direct bank. Our disciplined approach to capital management and liquidity remains a top priority for us, particularly in the current environment. And Bob, in terms of the sales trends, we haven't broken it out between brick and mortar and online. Discover Financial Services Dips on Earnings Miss The company flips into the red on the bottom line due to the now-expected heavy provisioning. The credit card 30-plus delinquency rate was down 17 basis points from last year and down 45 basis points from the prior quarter. Mihir Bhatia -- Bank of America -- Analyst. Similar to last quarter, I won't review our standard slides on loan growth, payment volumes, or revenue and expense, but you can find our traditional disclosures on slides 11 to 16 in the appendix to this presentation. However, the majority of customers needed only one month of assistance. Loan growth continues to be affected by the pandemic, with total loans down 4% year-over-year, including card loans down 6% and personal loans down 5%. I'm curious -- two things, you're seeing an uptick in spending, which is a good sign. In summary, solid results in the third quarter, the portfolio remains stable with improvements in overall delinquency levels, reserves were flat, except for those pertaining to student loans where the balance and commitment levels increased. Just first off, on the outlook for growth. Discover Financial Services posted a solid set of numbers in the third quarter, driven by a well-balanced mix of positive and negative factors. So, I would guide you to sort of looking back over the last 10 years where you've seen a very clear strategy from Discover, given the high returns we generate from our business, an important part of how we manage capital is returning it to shareholders in the form of a dividend and we've had historically a measured increase to those dividends, as well as buying back stock. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 33 cents per share. Since then we've seen steady improvement across almost every category as the economy reopened. How Bad Could Credit Card Losses Get During the Pandemic? Obviously, there is one piece which is the health of the portfolio and that's been strong. Yes. We are in the process of preparing our second stress test submission and will determine our share repurchase and dividend actions subject to the final stress capital buffer, regulatory and rating agency expectations and Board approval. There was also some higher incentives that came through based on the mix that we enjoyed in the quarter. And then we also talked about inactive lines and taken inactive lines down nearly, to pick a number, close to $70 billion. And Kevin, maybe one thing I would add to it. And as I said earlier, we're going to be mindful in terms of those sorts of decisions. Thank you, Roger, and good morning, everyone. Great. And my name is Crystal, and I will be your conference operator today. As we really don't have any data on that, what we are seeing is, our home equity business continues to -- it's open for business. [Operator Instructions] Thank you. And also, kind of what's the funding difference between those two? Our next question comes from the line of Don Fandetti of Wells Fargo. So, that's what we like to do. In addition, average receivables were down 3%, contributing to the decline in net interest income. While we remain conservative given the continued level of economic uncertainty, we feel good about the actions we've taken today and the strength of the Discover franchise. Our operating model supports our commitment to providing flexible work arrangements as long as necessary to ensure the safety of our staff and their families. The earnings release will be available through Discover's Investor Relations website at https://investorrelations.discover.com . So there is no change to that. demonstrating the strength of our prime revolver customer base. At this time, I would like to welcome everyone to the Third Quarter 2020 Discover Financial Services Earnings Conference Call. In the third quarter, we earned $771 million after tax or $2.45 per share. And so, when you think about your expectation for unemployment at 11% by year-end and where we are and the idea of a white collar rush of unemployment, that would be quite the rush of white-collar unemployment versus the amount of people that are unemployed now versus a steady state. We expect these investments to strengthen our ability to achieve profitable growth and shareholder value through improved targeting and personalization, better underwriting decisions and enhanced collection strategies, just to name a few of the benefits. But knowing you'll see message resonates surprisingly well. Marketing and business development expense was 42% lower year-over-year as we responded to the significant slowdown in the US economy. Martins Research • Mon, Oct. 26 • 5 Comments Q2 2020 (Jun 2020) EPS of -$1.20 missed by -$1.17 Revenue of $2.66B ( … And then just separately on credit and the outlook for credit here. And then the other part is the, only major issue was no fees on any of our card products. But again, it's caveated by all of those points that I just mentioned. We also consider the current trends in unemployment and the increasing number of COVID cases. And if another round of stimulus doesn't come in, I think that's going to be tough for a number of people that have been impacted by the pandemic. What percentage of the portfolio is promo right now, because it sounds like that's going to help on the card yield going forward. And I know that you guys are in the midst of preparing your second stress test submission.But I was wondering in terms of timing as to when you will get a better sense of the economy in order to possibly execute the buybacks one more time? Thanks. Discover Financial Services: Earnings Beat Does Not Offset Challenges. Thank you. Hi, good morning. I'll pass to John to talk a bit about the reserve, yes. So, we're looking at the impacts as very, very mild. So, Roger, I mean, these are the times where you can potentially step in and gain share and be opportunistic. I don't think any of us in business has seen this. Okay. So, some of that will be based on the funding of our balance sheet and some of it will be based on the competitive environment that we're dealing with. I would point out, there is still is a good amount of economic uncertainty. Thank you. Maybe can you just help us understand and maybe Roger can hop in on this too. So thanks for the question, Bill. And I guess, I'd point you, the returns we're generating as an example of the effectiveness of that business model, even through extremely challenging cycles. That said, we believe we have taken the appropriate credit actions and don't see the need to make significant changes at this time. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Of the 90% of the $400 that you've saved, how much of that was -- is just investments that have been deferred versus actual core efficiencies that you guys have identify and taken out. Your next question comes from the line of Betsy Graseck with Morgan Stanley. On last quarter's call, we discussed the impacts of the COVID-19 pandemic on our employees, customers and business. Thanks, Crystal. Thanks. I certainly would caveat that and say that consumer behavior is really difficult to predict here in a time such as this. So, you folks don't have the TDR disclosures, but they'll come out in the Q when it's published. We're also responding to shifts in consumer preferences with our investments in contactless and Secure Remote Commerce. Operating expenses of $1.1 billion were flat to the prior year and included a $59 million one-time impairment charge to our Diners business, relates to the impacts of the slowdown in global T&E spending. Total card sales volume decreased 16% in the second quarter. Could you give us a little more color about what we should expect from delinquency and charge-off formation in the coming quarters? Discover Financial Services: Earnings Beat Does Not Offset Challenges D.M. So, there was a bit of a mix shift to some products with lower fees and rates. I will now turn the call over to Mr. Craig Streem, Head of Investor Relations. We've continued to see positive trends in retail, which were up 7% in the second quarter and 15% in the first half of July. And good morning, everybody. So I'll talk about the credit outlook and then handle the mortgage question on the back end. Net interest margin improved from the second quarter and is trending positively as a result of our aggressive deposit pricing. Even in this challenging environment, our organic student loans were up 7%, reflecting innovative features like our multi-year loan and our strong competitive position. Thanks, Dominic. Our private student loan portfolio reported strong credit metrics in the quarter with net charge-offs nearly flat to the prior year. And ladies and gentlemen, that was our final question. And then, I wouldn't call it a bulge but a higher level of overall charge-offs in the middle to second half of '21. So, the tricky question. While keeping too much money in your checking account could mean losing out on interest earnings, cutting your balance too close to zero is a checking account mistake that should be avoided. Of those, out of the program, approximately 80% have returned to making payments. Compare credit cards to find which offer is right for you.. Operating expenses were flat to the prior year, but down 6% excluding a one-time item. So, I was going to say, in my 20-plus years at Discover, I've seen a lot of things but I've never seen anything like this, in terms of the speed and magnitude of impact of pandemic has had on the economy. Craig is going to continue to lead the IR team until a successor has been named and is in place. There is an input in our modeling reflecting our second round of stimulus. Discover Financial Services (NYSE: DFS): Fourth Quarter Results 2019 2018 YOY Change Total loans, end of period (in billions) $95.9 $90.5 6% Total revenue net of interest expense (in millions) $2,944 $2,807 5% Total net charge-off rate 3.19% 3.08% 11 bps Net income (in millions) $708 $687 3% Diluted EPS $2.25 $2.03 11% Discover Financial Services (NYSE: DFS) today reported … I am sure most, if not all of you, have interacted with Craig over that time and enjoyed a great relationship with him. Turning to slide eight. The Algorithm predicts "% Predicted Move After Earnings Announcement" (PMAEA) for DFS three weeks prior to earnings date. Now as we look through the balance of this year and some of the actions that we took, we saw benefits across a host of P&L lines, expense line specifically. Yeah. Yeah. Sales were down just 3% through the first half of July. Thanks, guys and good morning. And so it's a blend of those two. Yeah. In our student loan business, originations in the peak season were down year-over-year, reflecting the large number of students who chose not to enroll this fall. They'll overall be relatively stable, subject to kind of the mix of balance transfers and promos. Right. I'm glad you guys are doing well and congratulations, Craig. Our private student loan portfolio had another quarter of strong credit performance with net charge-offs down 1 basis points compared to the prior year. Total loans were down 4% from the prior year, driven by a 6% decrease in card receivables. Yeah. Roger Hochschild … Slide 8 highlights enrollment trends in our Skip-a-Pay program, which offers relief to customers experiencing financial stress due to the pandemic. Market data powered by FactSet and Web Financial Group. And now, it's my pleasure to turn the call over to Roger. So, John, I think in your prepared remarks, you commented that you're looking for additional efficiencies. I wanted to take a look at capital trends and the buybacks. Great. Just the jobless claims 787,000 this morning, big improvement, but ridiculously high report of that sort. We've been talking for a long time. We're not looking to substantially change any of the duration of any of the liabilities that we see on the balance sheet. Yeah. Relative to the second quarter, NIM increased primarily due to favorable consumer deposit pricing. Yeah. 23, 2020Corporate Participants: Craig Streem — Investor Relations. That's very helpful, thank you guys. With that, I'll turn the call back to our operator, Maria. And so, things like permanent unemployment, there -- you need to adjust to that. So in terms of fraud, it doesn't reflect any renegotiations with any of our merchant partners. RIVERWOODS, Ill.-- (BUSINESS WIRE)-- Discover Financial Services (NYSE: DFS) plans to report its first quarter 2020 results after the market closes on Wednesday, April 22, 2020. I'll now ask John to discuss key aspects of our financial results in more detail. While total revenue was down from last year, reflecting the slowdown in the economy. Our primary interest is in the payment space, but while valuations have come in a bit, especially, we are a cross border type company, they is still very high. Look, we're entering what's historically the most important part of the year in terms of spending in consumer behavior. We will begin this morning on slide two of our earnings presentation which you can find in the financials section of our Investor Relations website investorrelations.discover.com. Apart from the one-time impairment charge, we anticipate realizing $400 million of expense reductions from our previous guidance range. So, if you just look at where we are as of June 30, and then just do a kind of straight rule, model it out, it's hard to see any massive increases in charge-offs for the balance of the year, even if things deteriorate from the consumer standpoint. Discover Financial Services Announces First Quarter 2020 Earnings Release on April 22, 2020 and Conference Call on April 23, 2020 April 01, 2020 05:30 PM Eastern Daylight Time Good morning. [Operator Instructions] Thank you. Acquisitions tend to be a distant third. For our customers, we continue to provide an industry-leading service experience, leveraging our digital capabilities and with average answer times in our call centers remaining at pre-pandemic levels of under one minute. The Skip-a-Pay program was intended to be a short-term option, and we plan to end program enrollments in August. Could you talk about what you're doing on the fraud side and how that was -- and did you renegotiate any of the global acceptance or is that a function of just volume and mix year-over-year versus the third quarter of '19 on how your expense base and other expense came down. And good morning, everyone. The Zacks Consensus Estimate was of adjusted earnings … The timing of the rise in delinquency and subsequent losses could be impacted if there is a second government stimulus program or economic trends shift materially. The drop in spending during the pandemic and our own credit tightening has impacted loan growth, but another driver has been a significantly higher payment rate in our card and personal loan portfolios. So we did see lower global acceptance expense in the quarter and that's a function of two things, a little bit on the economy and liability associated with some of our partners executing on kind of terms associated with previous incentive agreements. We're using all the tools we have available. How Bad Could Credit Card Losses Get During the Pandemic? So, we continue to watch the differentiation on customers who elected to enter into one of the Skip-a-Pay programs to see if there is any potential issue. Discover Financial Services (NYSE: DFS) today reported a net loss of $61 million or ($0.25) per diluted share for the first quarter of 2020, as compared to net income of $726 million or $2.15 per diluted share for the first quarter of 2019. While overall credit performance remained strong through the third quarter, we expect the economic environment to lead to deterioration in consumer credit, with delinquencies slightly increasing in 2021. And finally strong execution on our targeted expense reductions. That concludes our formal remarks, so I'll turn the turn the call back to our operator to open the phone lines for Q&A. And so, we will have to adjust our strategies accordingly. Kevin Barker -- Piper Sandler & Co. -- Analyst. Your last question comes from the line of Kevin Barker with Piper Sandler. And we're very disciplined and, to a lesser extent, involved in M&A. And it sounds like we -- obviously, we both agree that delinquencies probably, given this liquidity don't even start rising until the first of the year. Thank you, Maria. In particular, our strong partnerships with PayPal and Amazon, some of the programs we're already putting in market with Amazon will serve us well in the fourth quarter. Likewise, Betsy. Roger, so you've been with Discover long time. But overall, as you look at where we are this quarter, I see some upside from that from my vantage point today. I mean, how much more room do you feel like you have to bring deposit costs lower, just given the current rate environment. You've seen a lot of recessions and changes. On Slide 4 looking at key elements of the income statement. Shares are up 32.9% since reporting last quarter. So we don't expect there to be a rush of white-collar unemployment, but what will be clear and we've seen some of this already is businesses are sizing both their professional staff and the blue collar staff for the business at hand. As we said pricing, given how hard it is to reprice cards after the Card Act, we're not reacting to specific competitors in a given quarter, we're taking -- working closely with financing, a very disciplined through the cycle book. And then third, which is a consideration of their business is certainly the customer relationships and ensuring that our long-term good quality customers aren't feeling like they're impacted in a way that's unfair. It'd be premature on that. Yeah. Analysts: Bob Napoli — William Blair — Analyst. Thank you, and good morning. And why such a large magnitude of white-collar versus the still unemployed, call it, blue color that we saw now? So if we had peaked out in the low 240s, could we actually potentially see the margin somewhere in excess of that over the next few quarters. And as I said in my prepared remarks, most -- the high majority of the people who entered the card program have exited and are repaying. Yeah, thanks for the question. The results beat Wall Street expectations. And how that's influencing your outlook for the 11% unemployment rate? So let me start by talking a bit about the unemployment rate, and then I'll pass it to John to talk on the reserves. Our discussion today contains certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Good morning. We've continued to fund our quarterly dividend at $0.44 per share of common stock in line with requirements provided by our regulators and approved by our Board of Directors. So we're comfortable with that. Okay. Our next question comes from the line of Ryan Nash of Goldman Sachs. What we've been able to do is execute pretty well in terms of deposit pricing. Thank you, Roger. In the quarter, sales were down just 1% on a year-over-year basis. Good morning, good afternoon, my name is Maria, and I'll be your conference operator today. I mean, do you use that in your analysis as a kind of bridge to lower unemployment rate as you're thinking about reserving? Net interest income was down 6% as the impact of lower market rates was partially offset by lower funding costs. So I'm very excited about where we're positioned. So, to John's point, we really think about it just in terms of at a macro level as opposed to what those checks may do in one month for a given household. Please go ahead. So you touched on a lot there, and I would sum it up by saying there's a level of uncertainty around what actually will happen on unemployment. Just wanted to drill down a little bit further on the funding tailwinds. I'll now ask John to discuss key aspects of our financial results in more detail. So I would necessarily characterize it as more intense than ever. So we'll look at it, but I think we're probably more likely to be aggressive on the organic side subject to our conservative credit policy than making acquisitions. Thanks. I think a lot of the miles programs I see in the marketplace are struggling to add relevance and redemption options. Returns as of 12/27/2020. If we can do that -- do some promos or balance transfers safely in a credit environment we will do that, because it would be high returning -- high returning customers. We also considered unemployment reports in June and July, which showed higher permanent unemployment and the impact of recent increases in COVID-19 cases. Clearly, the year changed dramatically. A quick follow-up on credit. Betsy Graseck -- Morgan Stanley -- Analyst. So, in the first quarter, our NIM was 10.21% and then in the second quarter, it came down to 9.81%. While significant uncertainty remains as to the extent and timing of a recovery, we were pleased to see the return to year-over-year sales growth in September. We remain on track to deliver the $400 million of expense reductions we previously announced, even as we continue to invest in core capabilities, including analytics and data science. I think the unemployment rate we're seeing now is very different. So that's going to further impact not only service industry, but the entire economy. Thanks. So just -- one thing on the receivables growth. So we have the products, I think the opportunity is building awareness of the products we have. And so, we are not changing credit policy on the card side. If you could talk a little bit about the NIM outlook in the near-term? Other loan products were generally flat from the prior quarter. Now, we're still doing that where it makes sense. We generated a net loss of $368 million, or $1.20 per share. Our leadership position in cash rewards and flexible redemption options, including a point-of-sale with Amazon and PayPal are serving us well as consumers are increasingly shopping online and concerns over the safety of travel are limiting the appeal of airline miles. Credit performance in our personal loan portfolio continue to be very strong this quarter, reflecting our disciplined underwriting and the benefit of credit actions implemented over the past several years. And so, a lot of what we're seeing are opportunities for either investments, partnership. One of the capabilities we've been working on is just the ability to react more quickly and that helped us react very quickly to the pandemic, in terms of tightening credit across all our products, but that should also help when job losses abate and it becomes time to widen the credit box as well. The improvements in sales volume continued during the quarter with a return to growth in the month of September. Okay. Oct 21, 2020 4:55PM EDT (RTTNews) - Discover Financial Services (DFS) announced a profit for its third quarter that increased from last year. Okay. Lower card receivables were driven by three factors: a higher payment rate as customers continue to be mindful of their debt obligations; a decline in promotional balances as a result of credit tightening which will benefit net interest margin going forward; and third, lower sales volume. Now, with all that said, I'm seeing a persistent low rate environment and with the persistent low rate environment I do believe that there is some amount of room to price downward. Returns as of 12/27/2020. We're also providing details on our funding maturity and corresponding rates over the next couple of years. Consumers have also shifted to much more online spending, which makes our investments in Secure Remote Commerce and our partnership with the other major networks to implement Click-to-Pay even more significantly. So we continue to look at that. Yeah. Could you just talk about how the -- what the cycle is going to look like or how you envision it playing out with charge-offs playing out in the early '21 and then what it looks like in the back half? Dominick Gabriele -- Oppenheimer -- Analyst. We will determine our share repurchase and dividend actions subject to the final stress capital buffer, any other regulatory limitations and Board approval. But we've seen actually great effectiveness from our procurement team, driving year-over-year savings on the entire indirect cost base and we're still -- as we said in the remarks, investing in advanced analytics and some digital capabilities that's driving up information process. 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