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Business Segments and Revenue from Contracts with Customers
 6 Months Ended
Jun. 30, 2025
Segment Reporting [Abstract]  
Business Segments and Revenue from Contracts with Customers
NOTE 13—BUSINESS SEGMENTS AND REVENUE FROM CONTRACTS WITH CUSTOMERS
Our principal operations are organized into three major business segments, which are defined primarily based on the products and services provided or the types of customers served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have been integrated into or managed as a part of our existing business segments. Certain activities that are not part of a business segment are included in the Other category, such as the management of our corporate investment portfolio and asset/liability positions performed by our centralized Corporate Treasury group and any residual tax expense or benefit beyond what is assessed to our business segments in order to arrive at the consolidated effective tax rate. The Other category also includes unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as certain restructuring charges, integration expenses, and certain liabilities incurred by Discover ahead of the Transaction and not attributable to ongoing operations.
The assets and liabilities related to the acquired Home Loan business are presented separately within assets of discontinued operations and liabilities of discontinued operations on the consolidated balance sheets, and the operating results have been reflected as discontinued operations for all periods presented. As such, the related results have been excluded from continuing operations and business segment results.
•Credit Card: Consists of our domestic consumer card lending, personal loans, domestic small business card lending and international card businesses in the U.K. and Canada.
•Consumer Banking: Consists of our deposit gathering and lending activities for consumers and small businesses, national auto lending and services offered by the Global Payment Network.
•Commercial Banking: Consists of our lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers. Our customers typically include companies with annual revenues between $20 million and $2 billion.
•Other category: Includes the residual impact of the allocation of our centralized Corporate Treasury group activities, such as management of our corporate investment portfolio, asset/liability management and oversight of our funds transfer pricing process, to our business segments. Accordingly, net gains and losses on our investment securities portfolio and certain trading activities are included in the Other category. The Other category also includes unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as certain restructuring charges and integration expenses related to the Transaction.
Basis of Presentation
We report the results of each of our business segments on a continuing operations basis. The results of our individual businesses reflect the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources. The Chief Operating Decision Maker (“CODM”) for each of our segments is the Chief Executive Officer (“CEO”). The CODM uses the segments’ income (loss) from continuing operations after tax to assess segment performance and decide how to allocate resources.
Business Segment Reporting Methodology
The results of our business segments are intended to present each segment as if it were a stand-alone business. Our internal management and reporting process used to derive our segment results employs various allocation methodologies, including funds transfer pricing, to assign certain balance sheet assets, deposits and other liabilities and their related revenues and expenses directly or indirectly attributable to each business. Marketing expenses are included within non-interest expense and can be directly incurred by a business segment or indirectly incurred and allocated. Total marketing expense was $1.3 billion and $2.5 billion for the three and six months ended June 30, 2025, respectively, and $1.1 billion and $2.1 billion for the three and six months ended June 30, 2024, respectively. Credit Card marketing expense was $1.1 billion and $2.2 billion for the three and six months ended June 30, 2025, respectively, and $907 million and $1.8 billion for the three and six months ended June 30, 2024, respectively. Our funds transfer pricing process managed by our centralized Corporate Treasury group provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking and Commercial Banking businesses,
and a charge for the use of funds by each business. The allocation is unique to each business and is based on the composition of assets and liabilities. The funds transfer pricing process considers the interest rate and liquidity risk characteristics of assets and liabilities and off-balance sheet products. Periodically the methodology and assumptions utilized in the funds transfer pricing process are adjusted to reflect economic conditions and other factors, which may impact the allocation of net interest income to the businesses. Due to the integrated nature of our business segments, estimates and judgments have been made in allocating certain revenue and expense items. Transactions between segments are based on specific criteria or approximate market rates. We regularly assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result in the implementation of refinements or changes in future periods. We provide additional information on the allocation methodologies used to derive our business segment results in “Part II—Item 8. Financial Statements and Supplementary Data—Note 18—Business Segments and Revenue from Contracts with Customers” in our 2024 Form 10-K.
Segment Results and Reconciliation
We may periodically change our business segments or reclassify business segment results based on modifications to our management reporting methodologies or changes in organizational alignment. The following table presents our business segment results for the three and six months ended June 30, 2025 and 2024, selected balance sheet data as of June 30, 2025 and 2024, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, loans held for investment and deposits.
Table 13.1: Segment Results and Reconciliation
Three Months Ended June 30, 2025
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$7,293 $2,162 $602 $(62)$9,995 
Non-interest income (loss)1,802 394 335 (34)2,497 
Total net revenue (loss)(2)
9,095 2,556 937 (96)12,492 
Provision (benefit) for credit losses11,098 252 81 (1)11,430 
Non-interest expense4,447 1,713 489 342 6,991 
Income (loss) from continuing operations before income taxes(6,450)591 367 (437)(5,929)
Income tax provision (benefit)(1,533)141 87 (361)(1,666)
Income (loss) from continuing operations, net of tax$(4,917)$450 $280 $(76)$(4,263)
Loans held for investment$269,709 $81,233 $88,355 $0 $439,297 
Deposits0 414,044 29,245 24,821 468,110 
Six Months Ended June 30, 2025
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$12,947 $4,105 $1,174 $(218)$18,008 
Non-interest income (loss)3,313 577 647 (53)4,484 
Total net revenue (loss)(2)
16,260 4,682 1,821 (271)22,492 
Provision (benefit) for credit losses13,024 553 223 (1)13,799 
Non-interest expense8,085 3,294 975 539 12,893 
Income (loss) from continuing operations before income taxes(4,849)835 623 (809)(4,200)
Income tax provision (benefit)(1,151)199 148 (537)(1,341)
Income (loss) from continuing operations, net of tax$(3,698)$636 $475 $(272)$(2,859)
Loans held for investment$269,709 $81,233 $88,355 $0 $439,297 
Deposits0 414,044 29,245 24,821 468,110 
Three Months Ended June 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$5,294 $2,025 $609 $(382)$7,546 
Non-interest income1,506 172 271 11 1,960 
Total net revenue (loss)(2)
6,800 2,197 880 (371)9,506 
Provision for credit losses3,545 330 34 0 3,909 
Non-interest expense3,134 1,250 483 79 4,946 
Income (loss) from continuing operations before income taxes121 617 363 (450)651 
Income tax provision (benefit)30 146 85 (207)54 
Income (loss) from continuing operations, net of tax$91 $471 $278 $(243)$597 
Loans held for investment$153,895 $75,663 $88,628 $0 $318,186 
Deposits0 305,422 29,210 16,810 351,442 
                                                                                                                                                                                                                                                                                                                                                                                                                                
Six Months Ended June 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$10,566 $4,036 $1,208 $(776)$15,034 
Non-interest income2,982 331 552 9 3,874 
Total net revenue (loss)(2)
13,548 4,367 1,760 (767)18,908 
Provision for credit losses5,804 756 32 0 6,592 
Non-interest expense6,363 2,496 998 226 10,083 
Income (loss) from continuing operations before income taxes1,381 1,115 730 (993)2,233 
Income tax provision (benefit)329 263 172 (408)356 
Income (loss) from continuing operations, net of tax$1,052 $852 $558 $(585)$1,877 
Loans held for investment$153,895 $75,663 $88,628 $0 $318,186 
Deposits0 305,422 29,210 16,810 351,442 
_________
(1)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.
(2)Total net revenue was reduced by $785 million and $1.5 billion in the three and six months ended June 30, 2025, respectively, and $649 million and $1.3 billion in the three and six months ended June 30, 2024, respectively, for credit card finance charges and fees charged off as uncollectible.
Revenue from Contracts with Customers
The majority of our revenue from contracts with customers consists of discount and interchange fees, service charges and other customer-related fees, and other contract revenue. Discount and interchange fees are primarily from our Credit Card business and are recognized upon settlement with the interchange networks, net of rewards earned by customers. Service charges and other customer-related fees within our Consumer Banking business are primarily related to fees earned on consumer deposit accounts for account maintenance and various transaction-based services such as automated teller machine (“ATM”) usage, transaction processing services on the PULSE Network, as well as various participation and membership fees. Service charges and other customer-related fees within our Commercial Banking business are mostly related to fees earned on treasury management and capital markets services. Other contract revenue in our Credit Card business consists primarily of revenue from our merchant relationships. Other contract revenue in our Consumer Banking business consists primarily of revenue earned from services provided to auto industry participants. Revenue from contracts with customers is included in non-interest income in our consolidated statements of income.
The following table presents revenue from contracts with customers and a reconciliation to non-interest income by business segment for the three and six months ended June 30, 2025 and 2024.
Table 13.2: Revenue from Contracts with Customers and Reconciliation to Segment Results
Three Months Ended June 30, 2025
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Discount and interchange fees, net(2)
$1,207 $248 $23 $0 $1,478 
Service charges and other customer-related fees20 78 82 1 181 
Other125 53 7 0 185 
Total contract revenue
1,352 379 112 1 1,844 
Revenue (reduction) from other sources450 15 223 (35)653 
Total non-interest income (loss)$1,802 $394 $335 $(34)$2,497 
Six Months Ended June 30, 2025
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Discount and interchange fees, net(2)
$2,292 $363 $46 $0 $2,701 
Service charges and other customer-related fees20 98 167 1 286 
Other236 102 8 0 346 
Total contract revenue
2,548 563 221 1 3,333 
Revenue (reduction) from other sources765 14 426 (54)1,151 
Total non-interest income (loss)$3,313 $577 $647 $(53)$4,484 
Three Months Ended June 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Discount and interchange fees, net(2)
$1,116 $107 $26 $0 $1,249 
Service charges and other customer-related fees0 22 74 0 96 
Other83 38 2 0 123 
Total contract revenue1,199 167 102 0 1,468 
Revenue from other sources307 5 169 11 492 
Total non-interest income$1,506 $172 $271 $11 $1,960 
Six Months Ended June 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Discount and interchange fees, net(2)
$2,136 $205 $53 $0 $2,394 
Service charges and other customer-related fees0 43 147 0 190 
Other204 65 5 0 274 
Total contract revenue2,340 313 205 0 2,858 
Revenue from other sources642 18 347 9 1,016 
Total non-interest income$2,982 $331 $552 $9 $3,874 
__________
(1)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.
(2)Discount and interchange fees are presented net of customer reward expenses.