Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2016
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                    to 
                    
Commission File Number 001-33378
DISCOVER FINANCIAL SERVICES
(Exact name of registrant as specified in its charter) 
Delaware
 
36-2517428
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
2500 Lake Cook Road,
Riverwoods, Illinois 60015
 
(224) 405-0900
(Address of principal executive offices, including zip code)
 
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer  o (Do not check if a  smaller reporting company)    
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    No  x
As of July 29, 2016, there were 403,627,107 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.
 


DISCOVER FINANCIAL SERVICES
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016
TABLE OF CONTENTS
 
 
 
 
 
Except as otherwise indicated or unless the context otherwise requires, “Discover Financial Services,” “Discover,” “DFS,” “we,” “us,” “our,” and “the Company” refer to Discover Financial Services and its subsidiaries.
We own or have rights to use the trademarks, trade names and service marks that we use in conjunction with the operation of our business, including, but not limited to: Discover®, PULSE®, Cashback Bonus®, Discover Cashback Checking®, Discover it®, Freeze ItSM, Discover® Network and Diners Club International®. All other trademarks, trade names and service marks included in this quarterly report on Form 10-Q are the property of their respective owners.

Table of Contents

Part I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
DISCOVER FINANCIAL SERVICES
Condensed Consolidated Statements of Financial Condition
 
June 30,
2016
 
December 31,
2015
 
(unaudited)
(dollars in millions,
except share amounts)
Assets
 
 
 
Cash and cash equivalents
$
10,617

 
$
9,572

Restricted cash
98

 
99

Other short-term investments
1,050

 
—

Investment securities (includes $2,313 and $2,963 at fair value at June 30, 2016 and December 31, 2015, respectively)
2,471

 
3,084

Loan receivables
 
 
 
Loan receivables
71,924

 
72,385

Allowance for loan losses
(1,949
)
 
(1,869
)
Net loan receivables
69,975

 
70,516

Premises and equipment, net
708

 
693

Goodwill
255

 
255

Intangible assets, net
167

 
168

Other assets
2,170

 
2,412

Total assets
$
87,511

 
$
86,799

Liabilities and Stockholders’ Equity
 
 
 
Deposits
 
 
 
Interest-bearing deposit accounts
$
48,104

 
$
47,094

Non-interest bearing deposit accounts
423

 
437

Total deposits
48,527

 
47,531

Long-term borrowings
24,681

 
24,650

Accrued expenses and other liabilities
2,906

 
3,343

Total liabilities
76,114

 
75,524

Commitments, contingencies and guarantees (Notes 9, 12 and 13)

 

Stockholders’ Equity:
 
 
 
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 562,355,187 and 560,679,352 shares issued at June 30, 2016 and December 31, 2015, respectively
5

 
5

Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 575,000 shares issued and outstanding and aggregate liquidation preference of $575 at June 30, 2016 and December 31, 2015
560

 
560

Additional paid-in capital
3,932

 
3,885

Retained earnings
14,188

 
13,250

Accumulated other comprehensive loss
(174
)
 
(160
)
Treasury stock, at cost; 155,823,385 and 139,000,423 shares at June 30, 2016 and December 31, 2015, respectively
(7,114
)
 
(6,265
)
Total stockholders’ equity
11,397

 
11,275

Total liabilities and stockholders’ equity
$
87,511

 
$
86,799

 
 
 
 
Upon adoption of ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, certain balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of the related liability. See Note 1: Background and Basis of Presentation for additional information.
The table below presents the carrying amounts of certain assets and liabilities of Discover Financial Services’ consolidated variable interest entities ("VIEs") which are included in the condensed consolidated statements of financial condition above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated VIEs. The liabilities in the table below include third-party liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts for which creditors have recourse to the general credit of Discover Financial Services.
 
June 30,
2016
 
December 31,
2015
 
(unaudited)
(dollars in millions)
Assets
 
 
 
Restricted cash
$
98

 
$
99

Loan receivables
$
32,419

 
$
30,551

Allowance for loan losses allocated to securitized loan receivables
$
(899
)
 
$
(811
)
Other assets
$
5

 
$
5

Liabilities
 
 
 
Long-term borrowings
$
16,662

 
$
16,735

Accrued expenses and other liabilities
$
14

 
$
12

 
 
 
 

See Notes to the Condensed Consolidated Financial Statements.
1

Table of Contents

DISCOVER FINANCIAL SERVICES
Condensed Consolidated Statements of Income
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
 (unaudited)
(dollars in millions, except per share amounts)
Interest income
 
 
 
 
 
 
 
Credit card loans
$
1,734

 
$
1,620

 
$
3,467

 
$
3,226

Other loans
331

 
308

 
657

 
612

Investment securities
10

 
12

 
21

 
25

Other interest income
15

 
7

 
29

 
13

Total interest income
2,090

 
1,947

 
4,174

 
3,876

Interest expense
 
 
 
 
 
 
 
Deposits
166

 
155

 
328

 
307

Short-term borrowings
—

 
—

 
—

 
1

Long-term borrowings
173

 
156

 
345

 
303

Total interest expense
339

 
311

 
673

 
611

Net interest income
1,751

 
1,636

 
3,501

 
3,265

Provision for loan losses
412

 
306

 
836

 
696

Net interest income after provision for loan losses
1,339

 
1,330

 
2,665

 
2,569

Other income
 
 
 
 
 
 
 
Discount and interchange revenue, net
265

 
298

 
538

 
566

Protection products revenue
59

 
68

 
120

 
139

Loan fee income
79

 
80

 
159

 
161

Transaction processing revenue
39

 
40

 
75

 
82

Gain on investments
—

 
—

 
—

 
8

Gain on origination and sale of mortgage loans
—

 
26

 
—

 
66

Other income
23

 
27

 
47

 
59

Total other income
465

 
539

 
939

 
1,081

Other expense
 
 
 
 
 
 
 
Employee compensation and benefits
340

 
326

 
685

 
657

Marketing and business development
198

 
199

 
360

 
381

Information processing and communications
89

 
90

 
177

 
178

Professional fees
150

 
153

 
310

 
280

Premises and equipment
23

 
23

 
47

 
47

Other expense
106

 
136

 
213

 
257

Total other expense
906

 
927

 
1,792

 
1,800

Income before income tax expense
898

 
942

 
1,812

 
1,850

Income tax expense
282

 
343

 
621

 
665

Net income
$
616

 
$
599

 
$
1,191

 
$
1,185

Net income allocated to common stockholders
$
602

 
$
586

 
$
1,164

 
$
1,159

Basic earnings per common share
$
1.47

 
$
1.33

 
$
2.81

 
$
2.61

Diluted earnings per common share
$
1.47

 
$
1.33

 
$
2.81

 
$
2.61

Dividends declared per common share
$
0.30

 
$
0.28

 
$
0.58

 
$
0.52

 
 
 
 
 
 
 
 

See Notes to the Condensed Consolidated Financial Statements.
2

Table of Contents

DISCOVER FINANCIAL SERVICES
Condensed Consolidated Statements of Comprehensive Income
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
 (unaudited)
(dollars in millions)
Net income
$
616

 
$
599

 
$
1,191

 
$
1,185

Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
Unrealized gain (loss) on available-for-sale investment securities, net of tax
4

 
(10
)
 
18

 
(10
)
Unrealized (loss) gain on cash flow hedges, net of tax
(6
)
 
11

 
(32
)
 
(12
)
Other comprehensive (loss) income
(2
)
 
1

 
(14
)
 
(22
)
Comprehensive income
$
614

 
$
600

 
$
1,177

 
$
1,163

 
 
 
 
 
 
 
 

See Notes to the Condensed Consolidated Financial Statements.
3

Table of Contents

DISCOVER FINANCIAL SERVICES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
 
 
 
 
 
 
 
 
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive (Loss) Income
 
Treasury
Stock
 
Total
Stockholders’
Equity
 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
(unaudited)
(dollars in millions, shares in thousands)
Balance at December 31, 2014
575

 
$
560

 
558,194

 
$
5

 
$
3,790

 
$
11,467

 
$
(138
)
 
$
(4,550
)
 
$
11,134

Net income
—

 
—

 
—

 
—

 
—

 
1,185

 
—

 
—

 
1,185

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
—

 
(22
)
 
—

 
(22
)
Purchases of treasury stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(845
)
 
(845
)
Common stock issued under employee benefit plans
—

 
—

 
39

 
—

 
2

 
—

 
—

 
—

 
2

Common stock issued and stock-based compensation expense
—

 
—

 
2,378

 
—

 
61

 
—

 
—

 
—

 
61

Dividends — common stock
—

 
—

 
—

 
—

 
—

 
(233
)
 
—

 
—

 
(233
)
Dividends — preferred stock
—

 
—

 
—

 
—

 
—

 
(19
)
 
—

 
—

 
(19
)
Balance at June 30, 2015
575

 
$
560

 
560,611

 
$
5

 
$
3,853

 
$
12,400

 
$
(160
)
 
$
(5,395
)
 
$
11,263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
575

 
$
560

 
560,679

 
$
5

 
$
3,885

 
$
13,250

 
$
(160
)
 
$
(6,265
)
 
$
11,275

Net income
—

 
—

 
—

 
—

 
—

 
1,191

 
—

 
—

 
1,191

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Purchases of treasury stock
—

 
—

 
—

 
—

 

 
—

 
—

 
(849
)
 
(849
)
Common stock issued under employee benefit plans
—

 
—

 
45

 
—

 
2

 
—

 
—

 
—

 
2

Common stock issued and stock-based compensation expense
—

 
—

 
1,631

 
—

 
45

 
—

 
—

 
—

 
45

Dividends — common stock
—

 
—

 
—

 
—

 
—

 
(234
)
 
—

 
—

 
(234
)
Dividends — preferred stock
—

 
—

 
—

 
—

 
—

 
(19
)
 
—

 
—

 
(19
)
Balance at June 30, 2016
575

 
$
560

 
562,355

 
$
5

 
$
3,932

 
$
14,188

 
$
(174
)
 
$
(7,114
)
 
$
11,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

See Notes to the Condensed Consolidated Financial Statements.
4

Table of Contents

DISCOVER FINANCIAL SERVICES
Condensed Consolidated Statements of Cash Flows
 
For the Six Months Ended June 30,
 
2016
 
2015
 
(unaudited)
(dollars in millions)
Cash flows from operating activities
 
 
 
Net income
$
1,191

 
$
1,185

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan losses
836

 
696

Deferred income taxes
121

 
(19
)
Depreciation and amortization
176

 
193

Amortization of deferred revenues and accretion of accretable yield on acquired loans
(198
)
 
(221
)
Net loss (gain) on origination and sale of loans, investments and other assets
26

 
(49
)
Proceeds from sale of mortgage loans originated for sale
—

 
2,232

Net principal disbursed on mortgage loans originated for sale
—

 
(2,202
)
Other, net
39

 
34

Changes in assets and liabilities:
 
 
 
Decrease (increase) in other assets
89

 
(75
)
Decrease in accrued expenses and other liabilities
(464
)
 
(111
)
Net cash provided by operating activities
1,816

 
1,663

 
 
 
 
Cash flows from investing activities
 
 
 
Purchases of other short-term investments
(1,050
)
 
—

Maturities and sales of available-for-sale investment securities
671

 
1,257

Maturities of held-to-maturity investment securities
9

 
7

Purchases of held-to-maturity investment securities
(46
)
 
(32
)
Net principal (disbursed) repaid on loans originated for investment
(83
)
 
486

Purchases of other investments
(12
)
 
(23
)
Decrease (increase) in restricted cash
1

 
(648
)
Purchases of premises and equipment
(86
)
 
(88
)
Net cash (used for) provided by investing activities
(596
)
 
959

 
 
 
 
Cash flows from financing activities
 
 
 
Net increase in short-term borrowings
—

 
31

Proceeds from issuance of securitized debt
1,833

 
1,750

Maturities and repayment of securitized debt
(1,966
)
 
(1,971
)
Proceeds from issuance of other long-term borrowings
73

 
1,749

Proceeds from issuance of common stock
5

 
3

Purchases of treasury stock
(849
)
 
(845
)
Net increase in deposits
983

 
226

Dividends paid on common and preferred stock
(254
)
 
(254
)
Net cash (used for) provided by financing activities
(175
)
 
689

Net increase in cash and cash equivalents
1,045

 
3,311

Cash and cash equivalents, at beginning of period
9,572

 
7,284

Cash and cash equivalents, at end of period
$
10,617

 
$
10,595

 
 
 
 


See Notes to the Condensed Consolidated Financial Statements.
5

Table of Contents

Notes to the Condensed Consolidated Financial Statements
(unaudited)
1.
Background and Basis of Presentation
Description of Business
Discover Financial Services (“DFS” or the “Company”) is a direct banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 as well as a financial holding company under the Gramm-Leach-Bliley Act and therefore is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company provides direct banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products. The Company also operates the Discover Network, the PULSE network (“PULSE”) and Diners Club International (“Diners Club”). The Discover Network processes transactions for Discover-branded credit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to ATMs domestically and internationally, as well as point-of-sale terminals at retail locations throughout the U.S. for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded charge cards and/or provide card acceptance services.
The Company’s business segments are Direct Banking and Payment Services. The Direct Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home equity loans, and other consumer lending and deposit products. The majority of Direct Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income.
The Payment Services segment includes PULSE, an automated teller machine, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company’s Network Partners business, which provides payment transaction processing and settlement services on the Discover Network. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue (included in other income) from Diners Club.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company’s 2015 audited consolidated financial statements filed with the Company’s annual report on Form 10-K for the year ended December 31, 2015.
Change in Accounting Principle
In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Interest—-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which makes the presentation of debt issuance costs consistent with that of debt discounts and premiums. This ASU requires that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability. Before becoming effective for the Company on January 1, 2016, these costs were recorded as deferred charges presented in other assets on the consolidated statements of financial condition. The guidance requires retrospective application in the financial statements. As such, some balances as of December 31, 2015 have been restated to reflect the classification of debt issuance costs as a direct deduction of a related liability. The impact of adopting this ASU was a reduction of other assets of $137 million, a reduction of long-term borrowings of $74 million and a reduction of deposits of $63 million at December 31, 2015. There was no impact to the consolidated statements of income.

6
Table of Contents

Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU eliminates the incurred loss threshold for initial recognition in current GAAP and replaces it with the expected loss concept. For all loans carried at amortized cost, companies will be required to measure their allowance for loan losses based on management’s current estimate of all expected credit losses over the remaining contractual term of the assets. Because it eliminates the incurred loss trigger, the new accounting guidance will require companies, upon the origination of a loan, to record their estimate of all expected credit losses on that loan through an immediate charge to earnings. The estimate of loan losses must be based on historical experience, current conditions and reasonable and supportable forecasts. The ASU does not mandate the use of any specific method for estimating credit loss, permitting companies to use judgment in selecting the approach that is most appropriate in their circumstances.
The new rules also impact the specialized accounting requirements pertaining to purchased credit-impaired ("PCI") assets, which the ASU refers to as purchased credit-deteriorated (“PCD”) assets, that the Company applies today to the acquired portion of its student loan portfolio. PCD assets will be reported at their gross amount with a related allowance equal to the current estimate of expected losses. That allowance will then be adjusted on a periodic basis in accordance with the new standards. The separate measurement guidance applicable today for loans modified in a troubled debt restructuring (“TDR”) will also be affected. Both TDRs and PCD assets will still be subject to certain separate disclosure requirements. Measurement of credit impairment of available-for-sale debt securities will remain unchanged under the new rules, but any such impairment will be recorded through an allowance, rather than a direct write-down of the security, with an offsetting entry to provision expense in the income statement.
The ASU will become effective for the Company on January 1, 2020, with early adoption permitted no sooner than January 1, 2019. Upon adoption, a cumulative effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective in an amount necessary to adjust the allowance for loan losses to equal the current estimate of expected losses on financial assets held at that date. Additionally, upon adoption, the carrying value of PCD loans will be increased through an offsetting addition to the allowance for loan losses for the amount of expected credit losses on those loans, to be evaluated and adjusted on a periodic basis, and any non-credit premium or discount will be amortized or accreted to interest income from that point forward over the remaining life of PCD loans. Management is evaluating the ASU, and it could have a potentially material impact on how the Company records and reports its financial condition and results of operations, and on regulatory capital.
In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense for GAAP accounting purposes and the amount deductible for tax purposes, to be recorded directly through the income statement as a component of income tax expense. Under current GAAP, these differences are generally recorded in additional paid-in capital and thus have no impact on net income today. The change in treatment of excess tax benefits and tax deficiencies will also impact the computation of diluted earnings per share, and the cash flows associated with those items will be classified as operating activities on the statement of cash flows. The ASU will permit certain elective changes associated with stock compensation accounting. For example, companies can elect to account for forfeitures of awards as they occur rather than projecting forfeitures in the accrual of compensation expense. In addition, the ASU increases the proportion of shares an employer is permitted (though not required) to withhold on behalf of an employee to satisfy the employee’s income tax burden on a share-based award without causing the award to become subject to liability accounting. This ASU will become effective for the Company on January 1, 2017. The impact to net income and earnings per share that will result from the treatment of excess tax benefits after adoption of ASU 2016-09 will depend on the difference between the market price of Company stock between the grant dates and subsequent vesting dates of share-based awards, and this impact could be positive or negative depending on how the Company’s stock price moves. If the Company elects to permit employees to request withholdings of shares in excess of the statutory minimum to cover personal tax liabilities, it will have no financial statement impact. The Company has not made any change concerning this practice at this time.
In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The guidance in this ASU provides clarification on the principal versus agent concept in relation to revenue recognition guidance issued as part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 requires a company to determine whether it is a principal or an agent in a transaction in which another party is involved in providing goods or services to a customer by evaluating the nature of its promise to the customer. ASU 2016-08 provides clarification for identifying the good, service or right being transferred in a revenue transaction and identifies the principal as the party that controls the good, service or right prior to its transfer to the

7
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customer. The ASU provides further clarity on how to evaluate control in this context. This guidance will become effective for the Company on January 1, 2018 and management is evaluating the impact of these changes as part of its overall evaluation of ASU 2014-09.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance will require lessees to capitalize most leases on their balance sheet whereas under current GAAP only capital leases are recognized on the lessee’s balance sheet. Leases which today are identified as capital leases will generally be identified as financing leases under the new guidance but otherwise their accounting treatment will remain relatively unchanged. Leases identified today as operating leases will generally remain in that category under the new standard, but both a right-of-use asset and a liability for remaining lease payments will now be required to be recognized on the balance sheet for this type of lease. The manner in which expenses associated with all leases are reported on the income statement will remain mostly unchanged. Lessor accounting also remains substantially unchanged by the new standard. The new guidance will become effective for the Company on January 1, 2019, and management is in the process of evaluating its impact.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU will have limited impact on the Company since it does not change the guidance for classifying and measuring investments in debt securities or loans. The standard requires entities to measure certain cost-method equity investments at fair value with changes in value recognized in net income. Equity investments that do not have readily determinable fair values will be carried at cost, less any impairment, plus or minus changes resulting from any observable price changes in orderly transactions for an identical or similar investment of the same issuer. This ASU requires public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans) on the balance sheet or the accompanying notes to the financial statements. This ASU will become effective for the Company on January 1, 2018 and is not expected to have a material impact to the financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU supersedes existing revenue recognition requirements in Topic 605, Revenue Recognition, including an assortment of transaction-specific and industry-specific rules. This ASU establishes a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. ASU Topic 606 does not apply to rights or obligations associated with financial instruments (for example, interest income from loans or investments, or interest expense on debt), and therefore the Company’s net interest income should not be affected. The Company’s revenue from discount and interchange, protection products, transaction processing and certain fees are within the scope of these rules. Throughout 2015, management followed the discussions of the FASB and evaluated the conclusions published by its Transition Resource Group ("TRG"), specifically those pertaining to how the new revenue recognition rules should be interpreted for credit card arrangements, loyalty programs, and transaction processing arrangements. Those discussions support the conclusion that timing and measurement of fee revenues associated with the Company’s credit card arrangements and costs associated with the Company’s credit card reward programs will not be impacted by the new rules. The FASB TRG discussions and guidance also support the conclusion that the timing and measurement of revenue associated with the Company’s transaction processing services, including discount and interchange and other transaction processing fees, will remain substantially unchanged under the new accounting model. This conclusion covers the vast majority of the Company’s revenue that is within the scope of the new standard. While management continues to evaluate the remaining in-scope revenue items to determine what, if any, impact the rules will have on their accounting and reporting, no substantive impacts are expected. The new revenue recognition model will become effective for the Company on January 1, 2018. Upon adoption in 2018, the Company will record an adjustment, if needed, to retained earnings as of the beginning of the year of initial application, which can be either the earliest comparative period presented, with all periods presented under the new rules, or January 1, 2018, without restating prior periods presented. Management has not yet determined which transition reporting option it will apply.
2.
Business Dispositions
On June 16, 2015, the Company announced the closing of the mortgage origination business it acquired in 2012, which was part of its Direct Banking segment. The disposition represented the exiting of an ancillary business and did not have a major impact on the Company’s operations.

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3.
Investments
The Company’s other short-term investments and investment securities consist of the following (dollars in millions):
 
June 30,
2016
 
December 31,
2015
Certificates of deposit(1)
$
1,050

 
$
—

Total other short-term investments
$
1,050

 
$
—

 
 
 
 
U.S. Treasury securities(2)
$
931

 
$
1,273

U.S. government agency securities
290

 
494

States and political subdivisions of states
5

 
7

Residential mortgage-backed securities - Agency(3)
1,245

 
1,310

Total investment securities
$
2,471

 
$
3,084

 
 
 
 
(1)
Includes certificates of deposit with maturity dates greater than 90 days but less than one year at the time of acquisition.
(2)
Includes $70 million and $7 million of U.S. Treasury securities pledged as swap collateral in lieu of cash as of June 30, 2016 and December 31, 2015, respectively.
(3)
Consists of residential mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.
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 millions):
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
At June 30, 2016
 
 
 
 
 
 
 
Available-for-Sale Investment Securities(1)
 
 
 
 
 
 
 
U.S. Treasury securities
$
926

 
$
4

 
$
—

 
$
930

U.S. government agency securities
290

 
—

 
—

 
290

Residential mortgage-backed securities - Agency
1,069

 
24

 
—

 
1,093

Total available-for-sale investment securities
$
2,285

 
$
28

 
$
—

 
$
2,313

Held-to-Maturity Investment Securities(2)
 
 
 
 
 
 
 
U.S. Treasury securities(3)
$
1

 
$
—

 
$
—

 
$
1

States and political subdivisions of states
5

 
—

 
—

 
5

Residential mortgage-backed securities - Agency(4)
152

 
3

 
—

 
155

Total held-to-maturity investment securities
$
158

 
$
3

 
$
—

 
$
161

 
 
 
 
 
 
 
 
At December 31, 2015
 
 
 
 
 
 
 
Available-for-Sale Investment Securities(1)
 
 
 
 
 
 
 
U.S. Treasury securities
$
1,277

 
$
1

 
$
(6
)
 
$
1,272

U.S. government agency securities
492

 
2

 
—

 
494

Residential mortgage-backed securities - Agency
1,195

 
6

 
(4
)
 
1,197

Total available-for-sale investment securities
$
2,964

 
$
9

 
$
(10
)
 
$
2,963

Held-to-Maturity Investment Securities(2)
 
 
 
 
 
 
 
U.S. Treasury securities(3)
$
1

 
$
—

 
$
—

 
$
1

States and political subdivisions of states
7

 
—

 
—

 
7

Residential mortgage-backed securities - Agency(4) 
113

 
1

 
—

 
114

Total held-to-maturity investment securities
$
121

 
$
1

 
$
—

 
$
122

 
 
 
 
 
 
 
 
(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)
Amounts represent residential mortgage-backed securities that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

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Table of Contents

The following table provides information about investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):
 
Number of
Securities
in a Loss
Position
 
Less than 12 months
 
More than 12 months
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
At December 31, 2015
 
 
 
 
 
 
 
 
 
Available-for-Sale Investment Securities
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
1

 
$
670

 
$
(6
)
 
$
—

 
$
—

Residential mortgage-backed securities - Agency
15

 
$
486

 
$
(4
)
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
Aggregate gross unrealized losses were not material as of June 30, 2016. There were no losses related to other-than-temporary impairments during the three and six months ended June 30, 2016 and 2015.
The following table provides information about proceeds from sales, recognized gains and losses and net unrealized gains and losses on available-for-sale securities (dollars in millions):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Proceeds from the sales of available-for-sale investment securities
$
—

 
$
—

 
$
—

 
$
899

Gain on sales of available-for-sale investment securities
$
—

 
$
—

 
$
—

 
$
8

Net unrealized gain (loss) recorded in other comprehensive income, before-tax
$
6

 
$
(16
)
 
$
29

 
$
(16
)
Net unrealized gain (loss) recorded in other comprehensive income, after-tax
$
4

 
$
(10
)
 
$
18

 
$
(10
)
 
 
 
 
 
 
 
 

10
Table of Contents

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the table below (dollars in millions):
 
One Year
or
Less
 
After One
Year
Through
Five Years
 
After Five
Years
Through
Ten Years
 
After Ten
Years
 
Total
At June 30, 2016
 
 
 
 
 
 
 
 
 
Available-for-Sale Investment Securities—Amortized Cost
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
250

 
$
676

 
$
—

 
$
—

 
$
926

U.S. government agency securities
290

 
—

 
—

 
—

 
290

Residential mortgage-backed securities - Agency
—

 
—

 
334

 
735

 
1,069

Total available-for-sale investment securities
$
540

 
$
676

 
$
334

 
$
735

 
$
2,285

Held-to-Maturity Investment Securities—Amortized Cost
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1

 
$
—

 
$
—

 
$
—

 
$
1

State and political subdivisions of states
—

 
—

 
—

 
5

 
5

Residential mortgage-backed securities - Agency
—

 
—

 
—

 
152

 
152

Total held-to-maturity investment securities
$
1

 
$
—

 
$
—

 
$
157

 
$
158

Available-for-Sale Investment Securities—Fair Values
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
250

 
$
680

 
$
—

 
$
—

 
$
930

U.S. government agency securities
290

 
—

 
—

 
—

 
290

Residential mortgage-backed securities - Agency
—

 
—

 
340

 
753

 
1,093

Total available-for-sale investment securities
$
540

 
$
680

 
$
340

 
$
753

 
$
2,313

Held-to-Maturity Investment Securities—Fair Values
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1

 
$
—

 
$
—

 
$
—

 
$
1

State and political subdivisions of states
—

 
—

 
—

 
5

 
5

Residential mortgage-backed securities - Agency
—

 
—

 
—

 
155

 
155

Total held-to-maturity investment securities
$
1

 
$
—

 
$
—

 
$
160

 
$
161

 
 
 
 
 
 
 
 
 
 
Other Investments
As a part of the Company's community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing, as well as stimulate economic development in low to moderate income communities. These investments are accounted for using the equity method of accounting and are recorded within other assets. The related commitment for future investments is recorded in accrued expenses and other liabilities within the condensed consolidated statements of financial condition. The portion of each investment's operating results allocable to the Company is recorded in other expense within the condensed consolidated statements of income. The Company earns a return primarily through the receipt of tax credits allocated to the affordable housing projects and the community revitalization projects. These investments are not consolidated as the Company does not have a controlling financial interest in the entities. As of June 30, 2016 and December 31, 2015, the Company had outstanding investments in these entities of $312 million and $328 million, respectively, and related contingent liabilities of $56 million and $57 million, respectively. Of the above outstanding equity investments, the Company had $239 million and $238 million, respectively, of investments related to affordable housing projects, which had $56 million and $57 million related contingent liabilities as of June 30, 2016 and December 31, 2015, respectively.

11
Table of Contents

4.
Loan Receivables
The Company has three loan portfolio segments: credit card loans, other loans and PCI loans.
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions):
 
June 30,
2016
 
December 31,
2015
Loan receivables
 
 
 
Credit card loans(1)
$
57,219

 
$
57,896

Other loans
 
 
 
Personal loans
5,708

 
5,490

Private student loans
5,891

 
5,647

Other
272

 
236

Total other loans
11,871

 
11,373

Purchased credit-impaired loans(2)
2,834

 
3,116

Total loan receivables
71,924

 
72,385

Allowance for loan losses
(1,949
)
 
(1,869
)
Net loan receivables
$
69,975

 
$
70,516

 
 
 
 
(1)
Amounts include $20.9 billion and $21.6 billion underlying investors’ interest in trust debt at June 30, 2016 and December 31, 2015, respectively, and $10.0 billion and $7.2 billion in seller's interest at June 30, 2016 and December 31, 2015, respectively. The increase in the seller's interest from December 31, 2015 to June 30, 2016 is due in part to the addition of randomly-selected accounts to the credit card loan receivables restricted for securitization investors in order to increase excess seller's interest and related securitization capacity. See Note 5: Credit Card and Student Loan Securitization Activities for further information.
(2)
Amounts include $1.5 billion and $1.7 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at June 30, 2016 and December 31, 2015, respectively. See Note 5: Credit Card and Student Loan Securitization Activities for additional information.














12
Table of Contents

Credit Quality Indicators
The Company regularly reviews its collection experience (including delinquencies and net charge-offs) in determining its allowance for loan losses.
Information related to the delinquent and non-accruing loans in the Company’s loan portfolio is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions):
  
30-89 Days
Delinquent
 
90 or
More Days
Delinquent
 
Total Past
Due
 
90 or
More Days
Delinquent
and
Accruing
 
Total
Non-accruing(1)
At June 30, 2016
 
 
 
 
 
 
 
 
 
Credit card loans(2)
$
489

 
$
444

 
$
933

 
$
397

 
$
182

Other loans
 
 
 
 


 
 
 
 
Personal loans(3)
42

 
16

 
58

 
15

 
8

Private student loans (excluding PCI)(4)
82

 
28

 
110

 
28

 
—

Other
—

 
3

 
3

 
—

 
22

Total other loans (excluding PCI)
124

 
47

 
171

 
43

 
30

Total loan receivables (excluding PCI)
$
613

 
$
491

 
$
1,104

 
$
440

 
$
212

 
 
 
 
 
 
 
 
 
 
At December 31, 2015
 
 
 
 
 
 
 
 
 
Credit card loans(2)
$
505

 
$
490

 
$
995

 
$
422

 
$
198

Other loans
 
 
 
 


 
 
 
 
Personal loans(3)
34

 
15

 
49

 
13

 
6

Private student loans (excluding PCI)(4)
84

 
24

 
108

 
25

 
—

Other
—

 
1

 
1

 
—

 
20

Total other loans (excluding PCI)
118

 
40

 
158

 
38

 
26

Total loan receivables (excluding PCI)
$
623

 
$
530

 
$
1,153

 
$
460

 
$
224

 
 
 
 
 
 
 
 
 
 
 
(1)
The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million for the three months ended June 30, 2016 and 2015, and $15 million and $14 million for the six months ended June 30, 2016 and 2015, respectively. The Company does not separately track the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' current balances and most recent interest rates.
(2)
Credit card loans that are 90 or more days delinquent and accruing interest include $39 million and $42 million of loans accounted for as troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively.
(3)
Personal loans that are 90 or more days delinquent and accruing interest include $3 million and $4 million of loans accounted for as troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively.
(4)
Private student loans that are 90 or more days delinquent and accruing interest include $4 million and $3 million of loans accounted for as troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively.


13
Table of Contents

Information related to the net charge-offs in the Company's loan portfolio is shown below by each class of loan receivables except for PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions):
 
For the Three Months Ended June 30,
 
2016
 
2015
  
Net
Charge-offs
 
Net 
Charge-off
Rate
 
Net
Charge-offs
 
Net 
Charge-off
Rate
Credit card loans
$
334

 
2.39
%
 
$
307

 
2.28
%
Other loans
 
 
 
 
 
 
 
Personal loans
33

 
2.38
%
 
27

 
2.10
%
Private student loans (excluding PCI)
17

 
1.10
%
 
13

 
1.02
%
Total other loans (excluding PCI)
50

 
1.68
%
 
40

 
1.51
%
Net charge-offs as a percentage of total loans (excluding PCI)
$
384

 
2.27
%
 
$
347

 
2.16
%
Net charge-offs as a percentage of total loans (including PCI)
$
384

 
2.18
%
 
$
347

 
2.05
%
 
 
 
 
 
 
 
For the Six Months Ended June 30,
 
2016
 
2015
  
Net
Charge-offs
 
Net 
Charge-off
Rate
 
Net
Charge-offs
 
Net 
Charge-off
Rate
Credit card loans
$
660

 
2.37
%
 
$
626

 
2.34
%
Other loans
 
 
 
 
 
 
 
Personal loans
67

 
2.41
%
 
55

 
2.16
%
Private student loans (excluding PCI)
29

 
0.98
%
 
26

 
1.02
%
Total other loans (excluding PCI)
96

 
1.64
%
 
81

 
1.54
%
Net charge-offs as a percentage of total loans (excluding PCI)
$
756

 
2.24
%
 
$
707

 
2.21
%
Net charge-offs as a percentage of total loans (including PCI)
$
756

 
2.15
%
 
$
707

 
2.10
%
 
 
 
 
 
 
 
 
As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer’s account with the Company as well as information from credit bureaus, such as FICO or other credit scores, relating to the customer’s broader credit performance. FICO scores are generally obtained at origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that a significant proportion of delinquent accounts have FICO scores below 660.
The following table provides the most recent FICO scores available for the Company’s customers as a percentage of each class of loan receivables:
 
Credit Risk Profile
by FICO Score
 
660 and 
Above
 
Less than 660
or No Score
At June 30, 2016
 
 
 
Credit card loans
83
%
 
17
%
Personal loans
96
%
 
4
%
Private student loans (excluding PCI)(1)
96
%
 
4
%
 
 
 
 
At December 31, 2015
 
 
 
Credit card loans
83
%
 
17
%
Personal loans
96
%
 
4
%
Private student loans (excluding PCI)(1)
96
%
 
4
%
 
 
 
 
(1)
PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans."
For private student loans, additional credit risk management activities include monitoring the amount of loans in forbearance. Forbearance allows borrowers experiencing temporary financial difficulties and willing to make payments, the

14
Table of Contents

ability to temporarily suspend payments. Eligible borrowers have a lifetime cap on forbearance of 12 months. At June 30, 2016 and December 31, 2015, there were $28 million and $31 million, respectively, of private student loans, including PCI, in forbearance, which represent 0.4% and 0.5%, respectively, of total student loans in repayment and forbearance.
Allowance for Loan Losses
The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): 
 
For the Three Months Ended June 30, 2016
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,590

 
$
165

 
$
148

 
$
18

 
$
1,921

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
347

 
44

 
20

 
1

 
412

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(448
)
 
(38
)
 
(19
)
 
—

 
(505
)
Recoveries
114

 
5

 
2

 
—

 
121

Net charge-offs
(334
)
 
(33
)
 
(17
)
 
—

 
(384
)
Balance at end of period
$
1,603

 
$
176

 
$
151

 
$
19

 
$
1,949

 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2015
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,492

 
$
123

 
$
142

 
$
19

 
$
1,776

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
256

 
35

 
14

 
1

 
306

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(423
)
 
(31
)
 
(15
)
 
—

 
(469
)
Recoveries
116

 
4

 
2

 
—

 
122

Net charge-offs
(307
)
 
(27
)
 
(13
)
 
—

 
(347
)
Balance at end of period
$
1,441

 
$
131

 
$
143

 
$
20

 
$
1,735

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2016
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,554

 
$
155

 
$
143

 
$
17

 
$
1,869

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
709

 
88

 
37

 
2

 
836

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(887
)
 
(77
)
 
(34
)
 
—

 
(998
)
Recoveries
227

 
10

 
5

 
—

 
242

Net charge-offs
(660
)
 
(67
)
 
(29
)
 
—

 
(756
)
Balance at end of period
$
1,603

 
$
176

 
$
151

 
$
19

 
$
1,949

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2015
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,474

 
$
120

 
$
135

 
$
17

 
$
1,746

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
593

 
66

 
34

 
3

 
696

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(851
)
 
(62
)
 
(30
)
 
—

 
(943
)
Recoveries
225

 
7

 
4

 
—

 
236

Net charge-offs
(626
)
 
(55
)
 
(26
)
 
—

 
(707
)
Balance at end of period
$
1,441

 
$
131

 
$
143

 
$
20

 
$
1,735

 
 
 
 
 
 
 
 
 
 
(1)
Includes both PCI and non-PCI private student loans.

15
Table of Contents


Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income)
$
67

 
$
70

 
$
136

 
$
145

Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income)
$
17

 
$
17

 
$
34

 
$
37

 
 
 
 
 
 
 
 
The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio by impairment methodology (dollars in millions):
 
Credit Card
 
Personal
Loans
 
Student
Loans(1)
 
Other
Loans
 
Total
At June 30, 2016
 
 
 
 
 
 
 
 
 
Allowance for loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
1,447

 
$
159

 
$
99

 
$
1

 
$
1,706

Evaluated for impairment in accordance with
ASC 310-10-35(2)(3)
156

 
17

 
16

 
18

 
207

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30
—

 
—

 
36

 
—

 
36

Total allowance for loan losses
$
1,603

 
$
176

 
$
151

 
$
19

 
$
1,949

Recorded investment in loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
56,203

 
$
5,636

 
$
5,837

 
$
213

 
$
67,889

Evaluated for impairment in accordance with
ASC 310-10-35(2)(3)
1,016

 
72

 
54

 
59

 
1,201

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30
—

 
—

 
2,834

 
—

 
2,834

Total recorded investment
$
57,219

 
$
5,708

 
$
8,725

 
$
272

 
$
71,924