Discover Financial Services - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

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8-K - DISCOVER FINANCIAL SERVICES 8-K - Discover Financial Services	a50104268.htm
EX-99.1 - EXHIBIT 99.1 - Discover Financial Services	a50104268ex99_1.htm

Exhibit 99.2

DISCOVER FINANCIAL SERVICES
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																					Twelve Months Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010			November 30, 2011 vs. November 30, 2010						Nov 30, 2011			Nov 30, 2010			2011 vs. 2010
EARNINGS SUMMARY
Interest Income		$1,620			$1,599			$1,573			$1,553			$1,499			$121			8	%		$6,345			$6,146			$199			3	%
Interest Expense		360			362			380			383			375			(15	)		(4	%)		1,485			1,583			(98	)		(6	%)
Net Interest Income		1,260			1,237			1,193			1,170			1,124			136			12	%		4,860			4,563			297			7	%

Discount/Interchange Revenue		489			517			489			468			453			36			8	%		1,963			1,793			170			9	%
Rewards		215			234			223			207			203			12			6	%		879			738			141			19	%
Discount and Interchange Revenue, net		274			283			266			261			250			24			10	%		1,084			1,055			29			3	%
Fee Products Revenue		107			108			105			108			103			4			4	%		428			413			15			4	%
Loan Fee Income		87			84			81			86			72			15			21	%		338			340			(2	)		(1	%)
Transaction Processing Revenue		48			44			45			43			40			8			20	%		180			150			30			20	%
Other Income		30			33			47			65			7			23		NM				175			137			38			28	%
Total Other Income		546			552			544			563			472			74			16	%		2,205			2,095			110			5	%

Revenue Net of Interest Expense		1,806			1,789			1,737			1,733			1,596			210			13	%		7,065			6,658			407			6	%

Provision for Loan Losses		319			100			176			418			383			(64	)		(17	%)		1,013			3,207			(2,194	)		(68	%)

Employee Compensation and Benefits		229			242			230			213			200			29			15	%		914			803			111			14	%
Marketing and Business Development		144			133			124			136			150			(6	)		(4	%)		537			463			74			16	%
Information Processing & Communications		69			64			66			65			67			2			3	%		264			258			6			2	%
Professional Fees		114			106			105			90			104			10			10	%		415			343			72			21	%
Premises and Equipment		18			18			18			17			17			1			6	%		71			70			1			1	%
Other Expense		95			79			92			74			90			5			6	%		340			245			95			39	%
Total Other Expense		669			642			635			595			628			41			7	%		2,541			2,182			359			16	%

Income Before Income Taxes		818			1,047			926			720			585			233			40	%		3,511			1,269			2,242			177	%
Tax Expense		305			398			326			255			235			70			30	%		1,284			504			780			155	%
Net Income		$513			$649			$600			$465			$350			$163			47	%		$2,227			$765			$1,462			191	%

Net Income Allocated to Common Stockholders		$508			$642			$593			$459			$347			$161			46	%		$2,202			$668			$1,534			230	%

Effective Tax Rate		37.3	%		38.0	%		35.2	%		35.4	%		40.3	%								36.6	%		39.7	%

Net Interest Margin		9.10	%		9.26	%		9.15	%		9.22	%		9.28	%		(18	)	bps				9.18	%		9.14	%		4		bps
ROE		25	%		33	%		33	%		28	%		22	%								30	%		12	%

Ending Common Shares Outstanding		529			538			546			545			545			(16	)		(3	%)		529			545			(16	)		(3	%)
Weighted Average Common Shares Outstanding		532			544			546			545			545			(13	)		(2	%)		542			544			(2	)		(0	%)
Weighted Average Common Shares Outstanding (fully diluted)		533			545			546			546			545			(12	)		(2	%)		543			549			(6	)		(1	%)

PER SHARE STATISTICS
Basic EPS		$0.95			$1.18			$1.09			$0.84			$0.64			$0.31			48	%		$4.06			$1.23			$2.83		NM
Diluted EPS		$0.95			$1.18			$1.09			$0.84			$0.64			$0.31			48	%		$4.06			$1.22			$2.84		NM
Common Stock Price (period end)		$23.82			$25.16			$23.84			$21.75			$18.28			$5.54			30	%		$23.82			$18.28			$5.54			30	%
Book Value per share		$15.59			$14.88			$13.79			$12.65			$11.85			$3.74			32	%		$15.59			$11.85			$3.74			32	%

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
EARNINGS SUMMARY
(unaudited, in millions)
	Quarter Ended														Twelve Months Ended
	Nov 30, 2011		Aug 31, 2011		May 31, 2011		Feb 28, 2011		Nov 30, 2010		November 30, 2011 vs. November 30, 2010				Nov 30, 2011		Nov 30, 2010		2011 vs. 2010
SEGMENT- INCOME BEFORE INCOME TAXES
Direct Banking		$776		$1,009		$883		$677		$554		$222	40	%		$3,345		$1,128		$2,217	197	%
Payment Services		42		38		43		43		31		11	35	%		166		141		25	18	%
Total		$818		$1,047		$926		$720		$585		$233	40	%		$3,511		$1,269		$2,242	177	%

TRANSACTIONS PROCESSED ON NETWORKS
Discover Network		439		451		422		410		413		26	6	%		1,722		1,605		117	7	%
PULSE Network		939		950		1,006		929		901		38	4	%		3,824		3,309		515	16	%
Total		1,378		1,401		1,428		1,339		1,314		64	5	%		5,546		4,914		632	13	%

NETWORK VOLUME
PULSE Network		$33,911		$35,109		$36,719		$34,380		$31,334		$2,577	8	%		$140,119		$118,179		$21,940	19	%
Third-Party Issuers		1,939		1,984		1,838		1,772		1,768		171	10	%		7,533		6,802		731	11	%
Diners Club International 1		7,469		7,660		7,380		6,998		7,328		141	2	%		29,507		27,133		2,374	9	%
Total Payment Services		43,319		44,753		45,937		43,150		40,430		2,889	7	%		177,159		152,114		25,045	16	%
Discover Network - Proprietary		25,926		27,133		25,684		24,784		24,075		1,851	8	%		103,527		95,760		7,767	8	%
Total		$69,245		$71,886		$71,621		$67,934		$64,505		$4,740	7	%		$280,686		$247,874		$32,812	13	%

1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
	Quarter Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010			November 30, 2011 vs. November 30, 2010

BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities		$10,342			$10,847			$10,344			$11,463			$11,913			($1,571	)	(13	%)
Total Loan Receivables		57,337			54,082			52,510			51,663			48,836			8,501		17	%
Allowance for Loan Losses		(2,205	)		(2,273	)		(2,632	)		(3,033	)		(3,304	)		1,099		33	%
Net Loan Receivables		55,132			51,809			49,878			48,630			45,532			9,600		21	%
Premises and Equipment, net		483			466			471			459			461			22		5	%
Goodwill and Intangible Assets, net		443			445			447			449			444			(1	)	(0	%)
Other Assets		2,384			2,159			2,298			2,506			2,435			(51	)	(2	%)
Total Assets		$68,784			$65,726			$63,438			$63,507			$60,785			$7,999		13	%

Liabilities & Stockholders' Equity
Direct to Consumer and Affinity Deposits		$26,177			$24,493			$22,923			$21,795			$20,597			$5,580		27	%
Brokered Deposits and Other Deposits		13,401			13,094			12,296			13,065			13,816			(415	)	(3	%)
Deposits		39,578			37,587			35,219			34,860			34,413			5,165		15	%
Borrowings		18,337			17,818			18,039			19,090			17,706			631		4	%
Accrued Expenses and Other Liabilities		2,627			2,315			2,657			2,658			2,209			418		19	%
Total Liabilities		60,542			57,720			55,915			56,608			54,328			6,214		11	%
Total Equity		8,242			8,006			7,523			6,899			6,457			1,785		28	%
Total Liabilities and Stockholders' Equity		$68,784			$65,726			$63,438			$63,507			$60,785			$7,999		13	%

BALANCE SHEET STATISTICS
Total Common Equity		$8,242			$8,006			$7,523			$6,899			$6,457			$1,785		28	%
Total Common Equity/Total Assets		12.0	%		12.2	%		11.9	%		10.9	%		10.6	%
Total Common Equity/Net Loans		15.0	%		15.5	%		15.1	%		14.2	%		14.2	%

Tangible Assets		$68,341			$65,281			$62,991			$63,058			$60,341			$8,000		13	%
Tangible Common Equity 1		$7,799			$7,561			$7,076			$6,450			$6,013			$1,786		30	%
Tangible Common Equity/Tangible Assets 1		11.4	%		11.6	%		11.2	%		10.2	%		10.0	%
Tangible Common Equity/Net Loans 1		14.1	%		14.6	%		14.2	%		13.3	%		13.2	%
Tangible Common Equity per share 1		$14.75			$14.05			$12.97			$11.83			$11.04			$3.71		34	%

REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio		16.5	%		17.0	%		16.8	%		16.0	%		15.9	%
Tier 1 Risk Based Capital Ratio		13.2	%		13.6	%		13.2	%		12.4	%		12.2	%
Tier 1 Leverage Ratio		11.5	%		11.7	%		11.3	%		10.2	%		9.9	%

LIQUIDITY
Liquidity Investment Portfolio		$8,548			$9,394			$8,724			$10,232			$10,132			($1,584	)	(16	%)
Undrawn Credit Facilities 2, 3		17,602			16,880			15,532			14,414			12,492			5,110		41	%
Total Liquidity		$26,150			$26,274			$24,256			$24,646			$22,624			$3,526		16	%

1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP data schedule.

2 Excludes investments pledged to the Federal Reserve, which is included within the liquidity investment portfolio.

3 On December 13, 2011, Discover Bank submitted a notice of termination to the administrative agent for the lenders under the $2.4 billion unsecured committed credit facility, effective December 16, 2011. This facility was included in Undrawn Credit Facilities at November 30, 2011.

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
	Quarter Ended																					Twelve Months Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010			November 30, 2011 vs. November 30, 2010						Nov 30, 2011			Nov 30, 2010			2011 vs. 2010
TOTAL LOAN RECEIVABLES
Ending Loans 1, 2		$57,337			$54,082			$52,510			$51,663			$48,836			$8,501			17	%		$57,337			$48,836			$8,501			17	%
Average Loans 1, 2		$55,539			$53,013			$51,727			$51,488			$48,597			$6,942			14	%		$52,943			$49,909			$3,034			6	%

Interest Yield		11.56	%		11.83	%		11.93	%		12.10	%		12.24	%		(68	)	bps				11.85	%		12.20	%		(35	)	bps
Net Principal Charge-off Rate		2.81	%		3.43	%		4.42	%		5.42	%		6.58	%		(377	)	bps				3.99	%		7.57	%		(358	)	bps
Net Principal Charge-off Rate excluding PCI Loans 3		3.05	%		3.63	%		4.69	%		5.64	%		6.58	%		(352	)	bps				4.24	%		7.57	%		(333	)	bps
Delinquency Rate (over 30 days) 3		2.30	%		2.35	%		2.68	%		3.44	%		3.89	%		(159	)	bps				2.30	%		3.89	%		(159	)	bps
Delinquency Rate (over 90 days) 3		1.14	%		1.17	%		1.44	%		1.88	%		2.03	%		(89	)	bps				1.14	%		2.03	%		(89	)	bps
Net Charge-off Dollars		$387			$459			$577			$689			$797			($410	)		(51	%)		$2,112			$3,780			($1,668	)		(44	%)
Loans Delinquent Over 30 Days 3		$1,200			$1,203			$1,329			$1,673			$1,902			($702	)		(37	%)		$1,200			$1,902			($702	)		(37	%)
Loans Delinquent Over 90 Days 3		$596			$599			$715			$915			$994			($398	)		(40	%)		$596			$994			($398	)		(40	%)

Allowance for Loan Loss (period end)		$2,205			$2,273			$2,632			$3,033			$3,304			($1,099	)		(33	%)		$2,205			$3,304			($1,099	)		(33	%)
Change in Loan Loss Reserves		($68	)		($359	)		($401	)		($271	)		($414	)		$346			84	%		($1,099	)		($573	)		($526	)		(92	%)
Reserve Rate 4		3.85	%		4.20	%		5.01	%		5.87	%		6.77	%		(292	)	bps				3.85	%		6.77	%		(292	)	bps
Reserve Rate Excluding PCI Loans 3, 4		4.23	%		4.44	%		5.31	%		6.23	%		6.77	%		(254	)	bps				4.23	%		6.77	%		(254	)	bps

CREDIT CARD LOANS
Ending Loans		$46,639			$46,178			$44,961			$44,317			$45,157			$1,482			3	%		$46,639			$45,157			$1,482			3	%
Average Loans		$45,756			$45,343			$44,288			$45,443			$44,670			$1,086			2	%		$45,205			$45,617			($412	)		(1	%)

Interest Yield		12.36	%		12.46	%		12.57	%		12.65	%		12.68	%		(32	)	bps				12.51	%		12.79	%		(28	)	bps
Net Principal Charge-off Rate		3.24	%		3.85	%		5.01	%		5.96	%		6.95	%		(371	)	bps				4.50	%		8.08	%		(358	)	bps
Delinquency Rate (over 30 days)		2.39	%		2.43	%		2.79	%		3.59	%		4.06	%		(167	)	bps				2.39	%		4.06	%		(167	)	bps
Delinquency Rate (over 90 days)		1.20	%		1.22	%		1.51	%		1.99	%		2.12	%		(92	)	bps				1.20	%		2.12	%		(92	)	bps
Net Charge-off Dollars		$370			$440			$559			$668			$774			($404	)		(52	%)		$2,036			$3,684			($1,648	)		(45	%)
Loans Delinquent Over 30 Days		$1,117			$1,121			$1,256			$1,590			$1,831			($714	)		(39	%)		$1,117			$1,831			($714	)		(39	%)
Loans Delinquent Over 90 Days		$560			$565			$681			$882			$958			($398	)		(42	%)		$560			$958			($398	)		(42	%)

Allowance for Loan Loss (period end)		$2,070			$2,154			$2,519			$2,939			$3,209			($1,139	)		(35	%)		$2,070			$3,209			($1,139	)		(35	%)
Change in Loan Loss Reserves		($84	)		($365	)		($420	)		($270	)		($412	)		$328			80	%		($1,139	)		($558	)		($581	)		(104	%)
Reserve Rate		4.44	%		4.66	%		5.60	%		6.63	%		7.11	%		(267	)	bps				4.44	%		7.11	%		(267	)	bps

Total Discover Card Volume		$26,946			$28,455			$26,927			$25,759			$25,054			$1,892			8	%		$108,087			$98,699			$9,388			10	%
Discover Card Sales Volume		$25,033			$26,271			$24,844			$23,990			$23,219			$1,814			8	%		$100,138			$92,471			$7,667			8	%

1 Total Loans includes mortgages and other loans.

2 Purchased Credit Impaired ("PCI") loans are loans that were acquired in which a deterioration in credit quality occurred between the origination date and the acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the loans are contractually past due. PCI loans are private student loans and are included in total loan receivables.

3 Excludes PCI loans (described above) which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the company is recognizing interest income on a pool of loans, it is all considered to be performing.

4 The Reserve Rate includes federal student loans held for sale.

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
	Quarter Ended																					Twelve Months Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010			November 30, 2011 vs. November 30, 2010						Nov 30, 2011			Nov 30, 2010			2011 vs. 2010

FEDERAL STUDENT LOANS
Ending Loans 1		$715			$738			$757			$767			$789			($74	)		(9	%)		$715			$789			($74	)		(9	%)

PRIVATE STUDENT LOANS
Ending Loans		$7,318			$4,715			$4,567			$4,545			$999			$6,319		NM				$7,318			$999			$6,319		NM
Ending PCI Loans 2		$5,250			$2,887			$2,947			$3,011			-			$5,250		NM				$5,250			-			$5,250		NM

Interest Yield		6.81	%		7.29	%		7.42	%		7.40	%		6.04	%		77		bps				7.18	%		5.75	%		143		bps
Net Principal Charge-off Rate		0.14	%		0.23	%		0.18	%		0.11	%		0.63	%		(49	)	bps				0.17	%		0.33	%		(16	)	bps
Net Principal Charge-off Rate excluding PCI Loans 3		0.45	%		0.62	%		0.51	%		0.29	%		0.63	%		(18	)	bps				0.48	%		0.33	%		15		bps
Delinquency Rate (over 30 days) 3		0.63	%		0.80	%		0.55	%		0.72	%		0.50	%		13		bps				0.63	%		0.50	%		13		bps


Reserve Rate 4		0.72	%		0.92	%		0.85	%		0.42	%		1.86	%		(114	)	bps				0.72	%		1.86	%		(114	)	bps
Reserve Rate Excluding PCI Loans 3,4		2.55	%		2.37	%		2.38	%		1.25	%		1.86	%		69		bps				2.55	%		1.86	%		69		bps

PERSONAL LOANS
Ending Loans		$2,648			$2,439			$2,213			$2,020			$1,878			$770			41	%		$2,648			$1,878			$770			41	%

Interest Yield		12.12	%		11.97	%		11.90	%		11.71	%		11.59	%		53		bps				11.94	%		11.41	%		53		bps
Net Principal Charge-off Rate		2.58	%		2.73	%		2.88	%		4.10	%		4.70	%		(212	)	bps				3.02	%		5.72	%		(270	)	bps
Delinquency Rate (over 30 days)		0.87	%		0.85	%		0.96	%		1.20	%		1.57	%		(70	)	bps				0.87	%		1.57	%		(70	)	bps


Reserve Rate		3.10	%		3.10	%		3.35	%		3.68	%		4.05	%		(95	)	bps				3.10	%		4.05	%		(95	)	bps

1 Federal Student Loans are held-for-sale as of November 30, 2010.

4 The Reserve Rates for private student loans have been revised.

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS
(unaudited, in millions)
	Quarter Ended																					Twelve Months Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010			November 30, 2011 vs. November 30, 2010						Nov 30, 2011			Nov 30, 2010			2011 vs. 2010
DIRECT BANKING

Interest Income		$1,620			$1,599			$1,573			$1,553			$1,499			$121			8	%		$6,345			$6,146			$199			3	%
Interest Expense		360			362			380			383			375			(15	)		(4	%)		1,485			1,583			(98	)		(6	%)
Net Interest Income		1,260			1,237			1,193			1,170			1,124			136			12	%		4,860			4,563			297			7	%
Other Income		470			481			470			486			404			66			16	%		1,907			1,828			79			4	%
Revenue Net of Interest Expense		1,730			1,718			1,663			1,656			1,528			202			13	%		6,767			6,391			376			6	%
Provision for Loan Losses		319			100			176			418			383			(64	)		(17	%)		1,013			3,207			(2,194	)		(68	%)
Total Other Expense		635			609			604			561			591			44			7	%		2,409			2,056			353			17	%
Income Before Income Taxes		$776			$1,009			$883			$677			$554			$222			40	%		$3,345			$1,128			$2,217			197	%

Net Interest Margin		9.10	%		9.26	%		9.15	%		9.22	%		9.28	%		(18	)	bps				9.18	%		9.14	%		4		bps
Pretax Return on Loan Receivables		5.60	%		7.55	%		6.78	%		5.33	%		4.57	%		103		bps				6.32	%		2.26	%		406		bps


PAYMENT SERVICES

Interest Income		$-			$-			$-			$-			$-			$-		NM				$-			$-			$-		NM
Interest Expense		-			-			-			-			-			-		NM				-			-			-		NM
Net Interest Income		-			-			-			-			-			-		NM				-			-			-		NM
Other Income		76			71			74			77			68			8			12	%		298			267			31			12	%
Revenue Net of Interest Expense		76			71			74			77			68			8			12	%		298			267			31			12	%
Total Other Expense		34			33			31			34			37			(3	)		(8	%)		132			126			6			5	%
Income Before Income Taxes		$42			$38			$43			$43			$31			$11			35	%		$166			$141			$25			18	%

Note: See Glossary of Financial Terms for definitions of financial terms.

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Glossary of Financial Terms

Book Value per share represents total equity divided by ending common shares outstanding.

Capital Ratios are regulatory measures used to evaluate capital adequacy. To be considered "well-capitalized," total risk-based, tier 1 risk-based, and tier 1 leverage ratios of 10%, 6% and 5% respectively must be maintained. Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets. Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets. Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets.

Delinquency Rate (Over 30 Days) represents loans delinquent over thirty days divided by ending loans (total or respective loans, as appropriate).

Delinquency Rate (Over 90 Days) represents loans delinquent over ninety days divided by ending loans (total or respective loans, as appropriate).

Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding.

Effective Tax Rate represents tax expense divided by income before income taxes.

Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period.

Liquidity Investment Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments.

Net Income Allocated to Common Stockholders represents net income less (i) dividends and accretion of discount on shares of preferred stock and (ii) income allocated to participating securities.

Net Interest Margin represents net interest income (annualized) divided by average total loans for the period.

Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period.

Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period.

Proprietary Network Volume represents gross proprietary sales volume on the Discover Network.

Reserve Rate represents the allowance for loan losses divided by total loans.

Return on Equity represents net income (annualized) divided by average total equity for the reporting period.

Tangible Assets represents total assets less goodwill and intangibles.

Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data schedule.

Tangible Common Equity/Net Loans, a non-GAAP measure, represents total common equity less goodwill and intangibles divided by total loans less the allowance for loan loss (period end).

Tangible Common Equity per Share, a non-GAAP measure, represents total common equity less goodwill and intangibles divided by ending common shares outstanding.

Tangible Common Equity/Tangible Assets, a non-GAAP measure, represents total common equity less goodwill and intangibles divided by total assets less goodwill and intangibles.

Undrawn Credit Facilities represents asset-backed conduit funding facilities, committed unsecured credit facility and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio).

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Reconciliation of GAAP to Non-GAAP Data
(unaudited, in millions)
	Quarter Ended
	Nov 30, 2011			Aug 31, 2011			May 31, 2011			Feb 28, 2011			Nov 30, 2010
GAAP Total Common Equity		$8,242			$8,006			$7,523			$6,899			$6,457
Less: Goodwill		(255	)		(255	)		(255	)		(255	)		(255	)
Less: Intangibles		(188	)		(190	)		(192	)		(194	)		(189	)
Tangible Common Equity		$7,799			$7,561			$7,076			$6,450			$6,013

GAAP Book Value per share		$15.59			$14.88			$13.79			$12.65			$11.85
Less: Goodwill		(0.48	)		(0.47	)		(0.47	)		(0.47	)		(0.47	)
Less: Intangibles		(0.36	)		(0.36	)		(0.35	)		(0.35	)		(0.34	)
Tangible Common Equity per share		$14.75			$14.05			$12.97			$11.83			$11.04

Tangible common equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE and definitions may vary, so we advise users of this information to exercise caution in comparing TCE of different companies. TCE is included because management believes that common equity excluding goodwill and intangibles is a more meaningful measure to investors of the true net asset value of the company.

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