| Segment Disclosures |
Segment Disclosures The Company’s business activities are managed in two segments: Direct Banking and Payment Services. | | • | Direct Banking: 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 loans, home equity loans, prepaid cards 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. |
| | • | Payment Services: 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. This segment also includes the business operations of Diners Club Italy, which primarily consists of activity related to issuing Diners Club charge cards and was classified as held for sale as of December 31, 2014. 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. |
The business segment reporting provided to and used by the Company’s chief operating decision maker is prepared using the following principles and allocation conventions: | | • | The Company aggregates operating segments when determining reporting segments. |
| | • | Corporate overhead is not allocated between segments; all corporate overhead is included in the Direct Banking segment. |
| | • | Through its operation of the Discover Network, the Direct Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments, with the exception of an allocation of direct and incremental costs driven by the Company's Payment Services segment. |
| | • | The assets of the Company are not allocated among the operating segments in the information reviewed by the Company’s chief operating decision maker. |
| | • | The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources. |
| | • | Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company’s chief operating decision maker. |
The following table presents segment data (dollars in millions): | | | | | | | | | | | | | | Direct Banking | | Payment Services | | Total | For the Three Months Ended March 31, 2015 | | | | | | Interest income | | | | | | Credit card loans | $ | 1,606 |
| | $ | — |
| | $ | 1,606 |
| Private student loans | 90 |
| | — |
| | 90 |
| PCI student loans | 60 |
| | — |
| | 60 |
| Personal loans | 152 |
| | — |
| | 152 |
| Other | 21 |
| | — |
| | 21 |
| Total interest income | 1,929 |
| | — |
| | 1,929 |
| Interest expense | 300 |
| | — |
| | 300 |
| Net interest income | 1,629 |
| | — |
| | 1,629 |
| Provision for loan losses | 388 |
| | 2 |
| | 390 |
| Other income | 468 |
| | 74 |
| | 542 |
| Other expense | 828 |
| | 45 |
| | 873 |
| Income before income tax expense | $ | 881 |
| | $ | 27 |
| | $ | 908 |
| | | | | | | For the Three Months Ended March 31, 2014 | | | | | | Interest income | | | | | | Credit card loans | $ | 1,537 |
| | $ | — |
| | $ | 1,537 |
| Private student loans | 73 |
| | — |
| | 73 |
| PCI student loans | 68 |
| | — |
| | 68 |
| Personal loans | 132 |
| | — |
| | 132 |
| Other | 23 |
| | — |
| | 23 |
| Total interest income | 1,833 |
| | — |
| | 1,833 |
| Interest expense | 270 |
| | — |
| | 270 |
| Net interest income | 1,563 |
| | — |
| | 1,563 |
| Provision for loan losses | 270 |
| | 2 |
| | 272 |
| Other income | 436 |
| | 79 |
| | 515 |
| Other expense | 735 |
| | 49 |
| | 784 |
| Income before income tax expense | $ | 994 |
| | $ | 28 |
| | $ | 1,022 |
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