Discover Financial Services (DFS) F3Q09 (Qtr End 08/31/09) Earnings Call Transcript September 17, 2009 11:00 am ET



Executives



Analysts



Presentation



Operator

Good day, ladies and gentlemen, and welcome to the third quarter 2009 Discover Financial Services earnings conference call. My name is Michella, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr. Craig Streem, Vice President, Investor Relations. Please proceed.



Craig Streem



Thank you very much, Michella. Good morning, everybody, and welcome all of you to this morning’s call and we certainly appreciate your joining us today. I need to begin by reminding everyone that the discussion today contains certain forward-looking statements about the company’s future financial performance and business prospects, which are of course subject to risks and uncertainties and speak only as of today.



Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today’s earnings press release, which was furnished to the SEC in an 8-K report, in our Form 10-Q for the quarters ended February 28, 2009 and May 31, 2009, and in our Form 10-K for the year ended November 30, 2008, all of which are on file with the SEC.



In the third quarter earnings release and supplement, which are now posted on our website at discoverfinancial.com and have also been furnished to the SEC, we have provided information that compares and reconciles the company’s managed basis financial measures with the GAAP financial information and we explained why these presentations are useful to management and to investors. And we urge you to review that information in conjunction with today’s discussion.



Our call this morning will include formal remarks from David Nelms, our Chief Executive Officer, and Roy Guthrie, our Chief Financial Officer, and of course, a question-and-answer session at the end.



Now it’s my pleasure to turn the call over to David.



David Nelms



Thanks, Craig. Given the adverse credit environment, I feel great about our results this quarter. We achieved very strong revenues and had the lowest expenses we’ve had in many years. Our results this quarter reflect the significant progress we have made against the performance priorities we laid out at the beginning of the year at our investor conference. So, with nine months of the year behind us, I thought we would begin with a look-back at those priorities and review our progress.



The first priority we set for ourselves was to achieve superior credit performance versus competitors. Our third quarter managed net charge-off ratio of 8.39% reflected the challenging environment. However, recently published securitization data and competitor guidance suggest that once again in the third quarter we expect to have the lowest charge rate among our major competitors. We have built a loyal, prime customer base focused on rewards, and that has allowed us to outperform the industry in this adverse credit cycle.



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