EX-99.2 3 dfs20230630ex992.htm EX-99.2

DISCOVER FINANCIAL SERVICES																																																									Exhibit 99.2
EARNINGS SUMMARY 1
(unaudited, in millions, except per share statistics)
			Quarter Ended																																										Six Months Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022												Jun 30, 2023						Jun 30, 2022						2023 vs. 2022
EARNINGS SUMMARY
Interest Income			$4,290						$4,077						$3,856						$3,357						$2,915						$1,375						47		%				$8,367						$5,651						$2,716			48		%
Interest Expense			1,113						945						789						514						305						808						NM						2,058						562						1,496			NM
Net Interest Income			3,177						3,132						3,067						2,843						2,610						567						22		%				6,309						5,089						1,220			24		%
Discount/Interchange Revenue			1,158						1,046						1,154						1,146						1,122						36						3		%				2,204						2,066						138			7		%
Rewards Cost			788						716						797						811						743						45						6		%				1,504						1,378						126			9		%
Discount and Interchange Revenue, net			370						330						357						335						379						(9)						(2		%)				700						688						12			2		%
Protection Products Revenue			44						43						44						42						42						2						5		%				87						86						1			1		%
Loan Fee Income			186						166						182						168						142						44						31		%				352						282						70			25		%
Transaction Processing Revenue			72						67						66						65						61						11						18		%				139						118						21			18		%
Gains (Losses) on Equity Investments			1						(18)						(6)						(4)						(42)						43						102		%				(17)						(204)						187			NM
Other Income			28						22						11						19						21						7						33		%				50						45						5			11		%
Total Non-Interest Income			701						610						654						625						603						98						16		%				1,311						1,015						296			29		%
Revenue Net of Interest Expense			3,878						3,742						3,721						3,468						3,213						665						21		%				7,620						6,104						1,516			25		%
Provision for Credit Losses			1,305						1,102						883						773						549						756						138		%				2,407						703						1,704			NM
Employee Compensation and Benefits			588						625						573						551						515						73						14		%				1,213						1,015						198			20		%
Marketing and Business Development			268						241						313						276						254						14						6		%				509						446						63			14		%
Information Processing & Communications			150						139						143						124						121						29						24		%				289						246						43			17		%
Professional Fees			216						232						264						241						189						27						14		%				448						366						82			22		%
Premises and Equipment			20						22						48						22						24						(4)						(17		%)				42						48						(6)			(13		%)
Other Expense			162						124						154						154						120						42						35		%				286						232						54			23		%
Total Operating Expense			1,404						1,383						1,495						1,368						1,223						181						15		%				2,787						2,353						434			18		%
Income/ (Loss) Before Income Taxes			1,169						1,257						1,343						1,327						1,441						(272)						(19		%)				2,426						3,048						(622)			(20		%)
Tax Expense			268						289						318						315						338						(70)						(21		%)				557						712						(155)			(22		%)
Net Income/ (Loss)			$901						$968						$1,025						$1,012						$1,103						($202)						(18		%)				$1,869						$2,336						($467)			(20		%)
Net Income/ (Loss) Allocated to Common Stockholders			$895						$931						$1,019						$974						$1,097						($202)						(18		%)				$1,826						$2,293						($467)			(20		%)
Effective Tax Rate			23.0		%				23.0		%				23.7		%				23.6		%				23.5		%																23.0		%				23.4		%
Net Interest Margin			11.06		%				11.34		%				11.27		%				11.05		%				10.94		%				12						bps						11.19		%				10.89		%				30			bps
Operating Efficiency			36.2		%				36.9		%				40.2		%				39.5		%				38.1		%				(190)						bps						36.6		%				38.5		%				(190)			bps
ROE			26		%				27		%				28		%				29		%				33		%																27		%				35		%
ROCE			28		%				28		%				30		%				30		%				35		%																28		%				37		%
Capital Returned to Common Stockholders			$864						$1,365						$743						$350						$742						$122						16		%				$2,228						$1,809						$419			23		%
Payout Ratio			97		%				147		%				73		%				36		%				68		%																122		%				79		%
Ending Common Shares Outstanding			250						257						267						273						275						(25)						(9		%)				250						275						(25)			(9		%)
Weighted Average Common Shares Outstanding			253						262						272						273						279						(26)						(9		%)				257						282						(25)			(9		%)
Weighted Average Common Shares Outstanding (fully diluted)			253						262						273						274						279						(26)						(9		%)				257						282						(25)			(9		%)
PER SHARE STATISTICS
Basic EPS			$3.54						$3.55						$3.74						$3.57						$3.93						($0.39)						(10		%)				$7.09						$8.13						($1.04)			(13		%)
Diluted EPS			$3.54						$3.55						$3.74						$3.56						$3.93						($0.39)						(10		%)				$7.09						$8.12						($1.03)			(13		%)
Common Dividends Declared Per Share			$0.70						$0.60						$0.60						$0.60						$0.60						$0.10						17		%				$1.30						$1.10						$0.20			18		%
Common Stock Price (period end)			$116.85						$98.84						$97.83						$90.92						$94.58						$22.27						24		%				$116.85						$94.58						$22.27			24		%
Book Value per share			$55.44						$54.79						$53.65						$51.42						$49.11						$6.33						13		%				$55.44						$49.11						$6.33			13		%
1 The comparative prior quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and the six months ended June 30, 2022 have been restated to reflect immaterial corrections to the financial statements. See Reconciliation of Prior Periods for reconciliation to previously reported results.
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
BALANCE SHEET SUMMARY 1
(unaudited, in millions)
			Quarter Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022
BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities			$22,110						$22,411						$21,105						$18,767						$17,007						$5,103						30		%
Total Loan Receivables			117,906						112,674						112,120						104,908						99,301						18,605						19		%
Allowance for Credit Losses			(8,064)						(7,691)						(7,374)						(7,061)						(6,757)						(1,307)						(19		%)
Net Loan Receivables			109,842						104,983						104,746						97,847						92,544						17,298						19		%
Premises and Equipment, net			1,053						1,031						1,003						1,015						984						69						7		%
Goodwill and Intangible Assets, net			255						255						255						255						255						—						—		%
Other Assets			4,822						4,461						4,597						4,077						3,888						934						24		%
Total Assets			$138,082						$133,141						$131,706						$121,961						$114,678						$23,404						20		%
Liabilities & Stockholders' Equity
Certificates of Deposits 2			21,020						18,965						16,124						14,505						13,543						7,477						55		%
Savings, Money Market, and Other Deposits 2, 3			56,326						56,389						54,397						51,743						49,655						6,671						13		%
Total Direct to Consumer Deposits 2, 3			$	77,346					$	75,354					$	70,521					$	66,248					$	63,198					$	14,148					22		%
Brokered Deposits and Other Deposits			21,641						20,386						21,115						16,649						13,214						8,427						64		%
Deposits			98,987						95,740						91,636						82,897						76,412						22,575						30		%
Securitized Borrowings 4			11,216						9,095						10,259						11,092						9,099						2,117						23		%
Other Borrowings 4			9,060						9,068						9,849						9,085						10,886						(1,826)						(17		%)
Borrowings			20,276						18,163						20,108						20,177						19,985						291						1		%
Accrued Expenses and Other Liabilities			4,963						5,178						5,618						4,839						4,762						201						4		%
Total Liabilities			124,226						119,081						117,362						107,913						101,159						23,067						23		%
Total Equity			13,856						14,060						14,344						14,048						13,519						337						2		%
Total Liabilities and Stockholders' Equity			$138,082						$133,141						$131,706						$121,961						$114,678						$23,404						20		%
LIQUIDITY
Liquidity Portfolio			$20,895						$21,450						$19,798						$16,042						$16,204						$4,691						29		%
Private Asset-backed Securitizations			3,500						3,500						3,500						3,500						3,500						—						—		%
Federal Home Loan Bank Borrowing Capacity			2,372						2,056						1,712						2,078						12						2,360						NM
Federal Reserve Discount Window  5			45,936						43,780						42,268						39,888						36,463						9,473						26		%
Undrawn Credit Facilities 5			51,808						49,336						47,480						45,466						39,975						11,833						30		%
Total Liquidity			$72,703						$70,786						$67,278						$61,508						$56,179						$16,524						29		%
1 The comparative prior quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and the six months ended June 30, 2022 have been restated to reflect immaterial corrections to the financial statements. See Reconciliation of Prior Periods for reconciliation to previously reported results.
2 Includes Affinity relationships
3 Savings, Money Market, and Other Deposits and reflects both interest-bearing and non-interest bearing direct to consumer deposits
4 Includes short-term and long-term borrowings
5 Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS 1
(unaudited, in millions)
			Quarter Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022
BALANCE SHEET STATISTICS
Total Common Equity			$12,800						$13,004						$13,288						$12,992						$12,463						$337						3		%
Total Common Equity/Total Assets			9.3		%				9.8		%				10.1		%				10.7		%				10.9		%
Total Common Equity/Net Loans			11.7		%				12.4		%				12.7		%				13.3		%				13.5		%
Tangible Assets			$137,827						$132,886						$131,451						$121,706						$114,423						$23,404						20		%
Tangible Common Equity 2			$12,545						$12,749						$13,033						$12,737						$12,208						$337						3		%
Tangible Common Equity/Tangible Assets 2			9.1		%				9.6		%				9.9		%				10.5		%				10.7		%
Tangible Common Equity/Net Loans 2			11.4		%				12.1		%				12.4		%				13.0		%				13.2		%
Tangible Common Equity per share  2			$50.19						$49.68						$48.74						$46.62						$44.35						$5.84						13		%
			Basel III
			Quarter Ended
REGULATORY CAPITAL RATIOS 3			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022
Total Risk Based Capital Ratio			14.3		%				14.7		%				15.8		%				16.4		%				16.7		%
Tier 1 Risk Based Capital Ratio			12.5		%				13.0		%				14.0		%				14.7		%				14.9		%
Tier 1 Leverage Ratio			11.1		%				11.4		%				12.5		%				13.2		%				13.7		%
Common Equity Tier 1 Capital Ratio			11.7		%				12.1		%				13.1		%				13.7		%				13.9		%
1 The comparative prior quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and the six months ended June 30, 2022 have been restated to reflect immaterial corrections to the financial statements. See Reconciliation of Prior Periods for reconciliation to previously reported results.
2 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
3 Based on the final rule published September 30, 2020. Capital ratios reflect delay in the recognition of the impact of CECL reserves on regulatory capital for two years in accordance with the final rule
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
			Quarter Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022
AVERAGE BALANCES
Assets
Cash and Investment Securities			$21,251						$19,579						$19,529						$16,057						$14,409						$6,842						47		%
Restricted Cash			75						588						393						853						40						35						88		%
Credit Card Loans			91,825						89,460						86,396						81,445						75,917						15,908						21		%
Private Student Loans			10,343						10,546						10,284						10,132						10,164						179						2		%
Personal Loans			8,744						8,155						7,871						7,408						6,981						1,763						25		%
Other Loans			4,347						3,888						3,485						3,050						2,674						1,673						63		%
Total Loans			115,259						112,049						108,036						102,035						95,736						19,523						20		%
Total Interest Earning Assets			136,585						132,216						127,958						118,945						110,185						26,400						24		%
Allowance for Credit Losses			(7,691)						(7,307)						(7,059)						(6,758)						(6,644)						(1,047)						(16		%)
Other Assets			6,668						6,494						6,235						5,923						5,874						794						14		%
Total Assets			$135,562						$131,403						$127,134						$118,110						$109,415						$26,147						24		%
Liabilities and Stockholders' Equity
Non-Interest-bearing Direct to Consumer Deposits 1			$985						$1,023						$1,062						$1,122						$1,136						($151)						(13		%)
Certificates of Deposits 1			20,159						17,565						15,189						14,029						13,391						6,768						51		%
Savings, Money Market, and Other Deposits 1			54,776						54,386						51,703						49,332						48,504						6,272						13		%
Interest-bearing Direct to Consumer Deposits 1			$	74,935					$	71,951					$	66,892					$	63,361					$	61,895					$	13,040					21		%
Brokered Deposits and Other Deposits			20,457						19,267						19,165						14,722						10,031						10,426						104		%
Total Interest-bearing Deposits			95,392						91,218						86,057						78,083						71,926						23,466						33		%
Securitized Borrowings 2			10,214						9,667						9,954						10,246						8,262						1,952						24		%
Other Borrowings 2			9,070						9,372						9,636						9,185						9,325						(255)						(3		%)
Total Interest-bearing Liabilities			114,676						110,257						105,647						97,514						89,513						25,163						28		%
Other Liabilities & Stockholders' Equity			19,901						20,123						20,425						19,474						18,766						1,135						6		%
Total Liabilities and Stockholders' Equity			$135,562						$131,403						$127,134						$118,110						$109,415						$26,147						24		%
AVERAGE YIELD
Assets
Cash and Investment Securities			4.08		%				3.89		%				3.45		%				2.31		%				1.46		%				262						bps
Restricted Cash			10.27		%				4.05		%				2.73		%				2.25		%				0.41		%				986						bps
Credit Card Loans			15.14		%				15.06		%				14.50		%				13.56		%				12.81		%				233						bps
Private Student Loans			9.87		%				9.68		%				9.02		%				8.26		%				7.74		%				213						bps
Personal Loans			12.72		%				12.35		%				12.04		%				11.83		%				11.84		%				88						bps
Other Loans			6.81		%				6.64		%				6.16		%				5.70		%				5.47		%				134						bps
Total Loans			14.17		%				14.06		%				13.53		%				12.67		%				12.00		%				217						bps
Total Interest Earning Assets			12.60		%				12.51		%				11.96		%				11.20		%				10.61		%				199						bps
AVERAGE RATES
Liabilities and Stockholders' Equity
Certificates of Deposits 1			3.35		%				2.65		%				1.83		%				1.31		%				1.04		%				231						bps
Savings, Money Market, and Other Deposits 1			3.84		%				3.41		%				2.76		%				1.60		%				0.68		%				316						bps
Interest-bearing Direct to Consumer Deposits 1			3.71		%				3.23		%				2.55		%				1.53		%				0.75		%				296						bps
Brokered Deposits and Other Deposits			4.15		%				3.87		%				3.50		%				2.71		%				2.28		%				187						bps
Total Interest-bearing Deposits			3.80		%				3.36		%				2.76		%				1.76		%				0.97		%				283						bps
Securitized Borrowings 2			4.24		%				3.67		%				3.33		%				2.79		%				1.87		%				237						bps
Other Borrowings 2			4.43		%				4.40		%				4.37		%				4.17		%				3.97		%				46						bps
Total Interest-bearing Liabilities			3.89		%				3.48		%				2.96		%				2.09		%				1.36		%				253						bps
Net Interest Margin			11.06		%				11.34		%				11.27		%				11.05		%				10.94		%				12						bps
Net Yield on Interest-earning Assets			9.33		%				9.61		%				9.51		%				9.48		%				9.50		%				(17)						bps
1 Includes Affinity relationships
2 Includes short-term and long-term borrowings
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
			Quarter Ended																																										Six Months Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022												Jun 30, 2023						Jun 30, 2022						2023 vs. 2022
TOTAL LOAN RECEIVABLES
Ending Loans 1			$117,906						$112,674						$112,120						$104,908						$99,301						$18,605						19		%				$117,906						$99,301						$18,605			19		%
Average Loans 1			$115,259						$112,049						$108,036						$102,035						$95,736						$19,523						20		%				$113,663						$94,221						$19,442			21		%
Interest Yield			14.17		%				14.06		%				13.53		%				12.67		%				12.00		%				217						bps						14.12		%				11.90		%				222			bps
Gross Principal Charge-off Rate			4.01		%				3.50		%				2.87		%				2.56		%				2.76		%				125						bps						3.76		%				2.70		%				106			bps
Net Principal Charge-off Rate			3.22		%				2.72		%				2.13		%				1.71		%				1.80		%				142						bps						2.97		%				1.71		%				126			bps
Delinquency Rate (30 or more days)			2.56		%				2.48		%				2.30		%				1.94		%				1.63		%				93						bps						2.56		%				1.63		%				93			bps
Delinquency Rate (90 or more days)			1.15		%				1.14		%				0.98		%				0.80		%				0.70		%				45						bps						1.15		%				0.70		%				45			bps
Gross Principal Charge-off Dollars			$1,153						$966						$781						$659						$659						$494						75		%				$2,119						$1,262						$857			68		%
Net Principal Charge-off Dollars			$924						$750						$581						$439						$429						$495						115		%				$1,674						$797						$877			110		%
Net Interest and Fee Charge-off Dollars			$202						$169						$126						$98						$92						$110						120		%				$371						$179						$192			107		%
Loans Delinquent 30 or more days			$3,019						$2,791						$2,578						$2,034						$1,621						$1,398						86		%				$3,019						$1,621						$1,398			86		%
Loans Delinquent 90 or more days			$1,353						$1,290						$1,101						$837						$694						$659						95		%				$1,353						$694						$659			95		%
Allowance for Credit Losses (period end)			$8,064						$7,691						$7,374						$7,061						$6,757						$1,307						19		%				$8,064						$6,757						$1,307			19		%
Reserve Change Build/ (Release) 2			$373						$385						$313						$304						$110						$263												$758						($65)						$823
Reserve Rate			6.84		%				6.83		%				6.58		%				6.73		%				6.80		%				4						bps						6.84		%				6.80		%				4			bps
CREDIT CARD LOANS
Ending Loans			$93,955						$89,755						$90,113						$83,630						$79,237						$14,718						19		%				$93,955						$79,237						$14,718			19		%
Average Loans			$91,825						$89,460						$86,396						$81,445						$75,917						$15,908						21		%				$90,649						$74,487						$16,162			22		%
Interest Yield			15.14		%				15.06		%				14.50		%				13.56		%				12.81		%				233						bps						15.10		%				12.70		%				240			bps
Gross Principal Charge-off Rate			4.59		%				3.99		%				3.20		%				2.88		%				3.10		%				149						bps						4.29		%				3.05		%				124			bps
Net Principal Charge-off Rate			3.68		%				3.10		%				2.37		%				1.92		%				2.01		%				167						bps						3.39		%				1.93		%				146			bps
Delinquency Rate (30 or more days)			2.86		%				2.76		%				2.53		%				2.11		%				1.76		%				110						bps						2.86		%				1.76		%				110			bps
Delinquency Rate (90 or more days)			1.35		%				1.34		%				1.14		%				0.92		%				0.80		%				55						bps						1.35		%				0.80		%				55			bps
Gross Principal Charge-off Dollars			$1,051						$879						$697						$592						$587						$464						79		%				$1,930						$1,128						$802			71		%
Net Principal Charge-off Dollars			$842						$684						$516						$395						$381						$461						121		%				$1,526						$712						$814			114		%
Loans Delinquent 30 or more days			$2,689						$2,477						$2,278						$1,761						$1,392						$1,297						93		%				$2,689						$1,392						$1,297			93		%
Loans Delinquent 90 or more days			$1,269						$1,204						$1,028						$770						$633						$636						100		%				$1,269						$633						$636			100		%
Allowance for Credit Losses (period end)			$6,525						$6,135						$5,883						$5,561						$5,307						$1,218						23		%				$6,525						$5,307						$1,218			23		%
Reserve Change Build/ (Release) 2			$390						$318						$322						$254						$187						$203												$708						$34						$674
Reserve Rate			6.94		%				6.84		%				6.53		%				6.65		%				6.70		%				24						bps						6.94		%				6.70		%				24			bps
Total Discover Card Volume			$58,774						$54,129						$59,153						$58,561						$57,384						$1,390						2		%				$112,903						$106,763						$6,140			6		%
Discover Card Sales Volume			$55,229						$50,588						$55,663						$54,793						$53,860						$1,369						3		%				$105,817						$100,189						$5,628			6		%
Rewards Rate			1.42		%				1.41		%				1.42		%				1.47		%				1.37		%				5						bps						1.41		%				1.37		%				4			bps
1 Total Loans includes Home Equity and other loans
2 Excludes any build/release of the liability for expected credit losses on unfunded commitments as the offset is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
			Quarter Ended																																										Six Months Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022												Jun 30, 2023						Jun 30, 2022						2023 vs. 2022
PRIVATE STUDENT LOANS
Organic Student Loans			$9,723						$9,927						$9,718						$9,722						$9,412						$311						3		%				$9,723						$9,412						$311			3		%
Purchased Student Loans			518						553						590						627						662						(144)						(22		%)				518						662						(144)			(22		%)
Total Private Student Loans			$10,241						$10,480						$10,308						$10,349						$10,074						$167						2		%				$10,241						$10,074						$167			2		%
Interest Yield			9.87		%				9.68		%				9.02		%				8.26		%				7.74		%				213						bps						9.77		%				7.58		%				219			bps
Net Principal Charge-off Rate			1.25		%				1.04		%				1.33		%				0.91		%				1.08		%				17						bps						1.15		%				0.88		%				27			bps
Delinquency Rate (30 or more days)			2.13		%				2.02		%				2.05		%				1.94		%				1.66		%				47						bps						2.13		%				1.66		%				47			bps
Reserve Rate			8.29		%				8.32		%				8.14		%				8.01		%				8.26		%				3						bps						8.29		%				8.26		%				3			bps
PERSONAL LOANS
Ending Loans			$9,106						$8,374						$7,998						$7,674						$7,145						$1,961						27		%				$9,106						$7,145						$1,961			27		%
Interest Yield			12.72		%				12.35		%				12.04		%				11.83		%				11.84		%				88						bps						12.54		%				11.96		%				58			bps
Net Principal Charge-off Rate			2.28		%				1.94		%				1.49		%				1.14		%				1.21		%				107						bps						2.12		%				1.17		%				95			bps
Delinquency Rate (30 or more days)			1.00		%				0.91		%				0.80		%				0.69		%				0.63		%				37						bps						1.00		%				0.63		%				37			bps
Reserve Rate			6.83		%				7.43		%				7.44		%				8.08		%				8.01		%				(118)						bps						6.83		%				8.01		%				(118)			bps
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS AND VOLUME STATISTICS 1
(unaudited, in millions)
			Quarter Ended																																										Six Months Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2023 vs. Jun 30, 2022												Jun 30, 2023						Jun 30, 2022						2023 vs. 2022
DIGITAL BANKING
Interest Income			$4,290						$4,077						$3,856						$3,357						$2,915						$1,375						47		%				$8,367						$5,651						$2,716			48		%
Interest Expense			1,113						945						789						514						305						808						NM						2,058						562						1,496			NM
Net Interest Income			3,177						3,132						3,067						2,843						2,610						567						22		%				6,309						5,089						1,220			24		%
Non-Interest Income			586						522						567						530						546						40						7		%				1,108						1,021						87			9		%
Revenue Net of Interest Expense			3,763						3,654						3,634						3,373						3,156						607						19		%				7,417						6,110						1,307			21		%
Provision for Credit Losses			1,305						1,102						883						773						549						756						138		%				2,407						703						1,704			NM
Total Operating Expense			1,359						1,342						1,445						1,326						1,186						173						15		%				2,701						2,278						423			19		%
Income/ (Loss) Before Income Taxes			$1,099						$1,210						$1,306						$1,274						$1,421						($322)						(23		%)				$2,309						$3,129						($820)			(26		%)
Net Interest Margin			11.06		%				11.34		%				11.27		%				11.05		%				10.94		%				12						bps						11.19		%				10.89		%				30			bps
Pretax Return on Loan Receivables			3.82		%				4.38		%				4.80		%				4.94		%				5.94		%				(212)						bps						4.10		%				6.7		%				(260)			bps
Allowance for Credit Losses (period end)			$8,064						$7,691						$7,374						$7,061						$6,757						$1,307						19		%				$8,064						$6,757						$1,307			19		%
Reserve Change Build/ (Release)			$373						$385						$313						$304						$110						$263												$758						($65)						$823
PAYMENT SERVICES
Interest Income			$—						$—						$—						$—						$—						$—						NM						$—						$—						$—			NM
Interest Expense			—						—						—						—						—						—						NM						—						—						—			NM
Net Interest Income			—						—						—						—						—						—						NM						—						—						—			NM
Non-Interest Income (Loss)			115						88						87						95						57						58						102		%				203						(6)						209			NM
Revenue Net of Interest Expense			115						88						87						95						57						58						102		%				203						(6)						209			NM
Provision for Credit Losses			—						—						—						—						—						—						NM						—						—						—			NM
Total Operating Expense			45						41						50						42						37						8						22		%				86						75						11			15		%
Income/ (Loss) Before Income Taxes			$70						$47						$37						$53						$20						$50						NM						$117						($81)						$198			NM
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network			940						850						946						924						916						24						3		%				1,790						1,747						43			2		%
PULSE Network			1,761						1,625						1,666						1,611						1,524						237						16		%				3,386						2,923						463			16		%
Total			2,701						2,475						2,612						2,535						2,440						261						11		%				5,176						4,670						506			11		%
NETWORK VOLUME
PULSE Network			$69,008						$65,268						$66,807						$63,437						$62,992						$6,016						10		%				$134,276						$122,828						$11,448			9		%
Network Partners			10,408						10,628						10,433						11,894						11,532						(1,124)						(10		%)				21,036						22,215						(1,179)			(5		%)
Diners Club International 2			9,897						9,211						9,155						8,793						8,381						1,516						18		%				19,108						15,557						3,551			23		%
Total Payment Services			89,313						85,107						86,395						84,124						82,905						6,408						8		%				174,420						160,600						13,820			9		%
Discover Network - Proprietary			57,099						51,826						58,138						56,633						55,838						1,261						2		%				108,925						103,967						4,958			5		%
Total			$146,412						$136,933						$144,533						$140,757						$138,743						$7,669						6		%				$283,345						$264,567						$18,778			7		%
1 The comparative prior quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and the six months ended June 30, 2022 have been restated to reflect immaterial corrections to the financial statements. See Reconciliation of Prior Periods for reconciliation to previously reported results.
2 Volume is derived from data provided by licencees 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

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DISCOVER FINANCIAL SERVICES - GLOSSARY OF FINANCIAL TERMS
Balance Sheet & Regulatory Capital Terms
Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments
Regulatory Capital Ratios are preliminary
•			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
•			Common Equity Tier 1 Capital Ratio represents common equity tier 1 capital divided by risk weighted assets
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 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
Tangible Common Equity/Net Loans, a non-GAAP measure, represents TCE divided by total loans less the allowance for credit losses (period end)
Tangible Common Equity per Share, a non-GAAP measure, represents TCE divided by ending common shares outstanding
Tangible Common Equity/Tangible Assets, a non-GAAP measure, represents TCE divided by total assets less goodwill and intangibles
Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)
Credit Related Terms
Delinquency Rate (30 or more days) represents loans delinquent thirty days or more divided by ending loans (total or respective product loans, as appropriate)
Delinquency Rate (90 or more days) represents loans delinquent ninety days or more divided by ending loans (total or respective product loans, as appropriate)
Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Reserve Rate represents the allowance for credit losses divided by total loans (total or respective product loans, as appropriate)
Earnings and Shareholder Return Terms
Book Value per share represents total equity divided by ending common shares outstanding
Capital Returned to Common Stockholders represents common stock dividends declared and treasury share repurchases, excluding common stock issued under employee benefit plans and stock based compensation
Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding
Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period (total or respective product loans, as appropriate)
Net Income Allocated to Common Stockholders represents net income less preferred stock dividends and income allocated to participating securities
Net Interest Margin represents net interest income (annualized) divided by average total loans for the period
Net Yield on Interest Earning Assets represents net interest income (annualized) divided by average total interest earning assets for the period
Operating Efficiency represents total operating expense divided by revenue net of interest expense
Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period
Payout Ratio represents capital returned to common stockholders divided by net income allocated to common stockholders
Return on Common Equity represents net income available for common stockholders (annualized) divided by average total common equity for the reporting period
Return on Equity represents net income (annualized) divided by average total equity for the reporting period
Rewards Rate represents Credit Card rewards cost divided by Discover Card sales volume
Volume Terms
Discover Card Sales Volume represents Discover card activity related to sales net of returns
Discover Card Volume represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity
Discover Network Proprietary Volume represents gross Discover Card sales volume on the Discover Network

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DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA 1
(unaudited, in millions)
			Quarter Ended
			Jun 30, 2023						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022
GAAP Total Common Equity			$12,800						$13,004						$13,288						$12,992						$12,463
Less: Goodwill			(255)						(255)						(255)						(255)						(255)
Less: Intangibles			—						—						—						—						—
Tangible Common Equity 2			$12,545						$12,749						$13,033						$12,737						$12,208
GAAP Book Value Per Share			$55.44						$54.79						$53.65						$51.42						$49.11
Less: Goodwill			(1.03)						(1.00)						(0.96)						(0.94)						(0.92)
Less: Intangibles			—						—						—						—						—
Less: Preferred Stock			(4.22)						(4.11)						(3.95)						(3.86)						(3.84)
Tangible Common Equity Per Share			$50.19						$49.68						$48.74						$46.62						$44.35
1 The comparative prior quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and the six months ended June 30, 2022 have been restated to reflect immaterial corrections to the financial statements. See Reconciliation of Prior Periods for reconciliation to previously reported results.
2 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 users of this information are advised 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
Note: See Glossary of Financial Terms for definitions of financial terms

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DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
The following pages present a reconciliation for certain information disclosed in the financial data supplement.
Beginning around mid-2007, Discover incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. The Company determined the revenue impact of the incorrect card product classification was immaterial to the consolidated financial statements for the prior periods presented in this disclosure. For comparative purposes, the Company has made these immaterial corrections to the consolidated financial statements in the prior periods presented.

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DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
			As Previously Reported																														Restatement Impacts																														As Restated
			Quarter Ended																								Six Months Ended						Quarter Ended																								Six Months Ended						Quarter Ended																								Six Months Ended
			Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2022						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2022						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Jun 30, 2022
EARNINGS SUMMARY
Discount/Interchange Revenue			$	1,057					$	1,165					$	1,157					$	1,133					$	2,088					$	(11)					$	(11)					$	(11)					$	(11)					$	(22)					$	1,046					$	1,154					$	1,146					$	1,122					$	2,066
Discount and Interchange Revenue, net			341						368						346						390						710						(11)						(11)						(11)						(11)						(22)						330						357						335						379						688
Total Non-Interest Income			621						665						636						614						1,037						(11)						(11)						(11)						(11)						(22)						610						654						625						603						1,015
Revenue Net of Interest Expense			$	3,753					$	3,732					$	3,479					$	3,224					$	6,126					$	(11)					$	(11)					$	(11)					$	(11)					$	(22)					$	3,742					$	3,721					$	3,468					$	3,213					$	6,104
Other Expense			$	124					$	154					$	174					$	120					$	232					$	—					$	—					$	(20)					$	—					$	—					$	124					$	154					$	154					$	120					$	232
Total Operating Expense			$	1,383					$	1,495					$	1,388					$	1,223					$	2,353					$	—					$	—					$	(20)					$	—					$	—					$	1,383					$	1,495					$	1,368					$	1,223					$	2,353
Income/ (Loss) Before Income Taxes			$	1,268					$	1,354					$	1,318					$	1,452					$	3,070					$	(11)					$	(11)					$	9					$	(11)					$	(22)					$	1,257					$	1,343					$	1,327					$	1,441					$	3,048
Tax Expense			292						321						312						341						717						(3)						(3)						3						(3)						(5)						289						318						315						338						712
Net Income/ (Loss)			$	976					$	1,033					$	1,006					$	1,111					$	2,353					$	(8)					$	(8)					$	6					$	(8)					$	(17)					$	968					$	1,025					$	1,012					$	1,103					$	2,336
Net Income/ (Loss) Allocated to Common Stockholders			$	939					$	1,027					$	967					$	1,105					$	2,309					$	(8)					$	(9)					$	7					$	(8)					$	(16)					$	931					$	1,018					$	974					$	1,097					$	2,293
Operating Efficiency			36.8		%				40.0		%				39.9		%				37.9		%				38.4		%				10			bps			20			bps			(40)			bps			20			bps			10			bps			36.9		%				40.2		%				39.5		%				38.1		%				38.5		%
ROE			27		%				28		%				29		%				32		%				35		%				—			bps			—			bps			—			bps			100			bps			—			bps			27		%				28		%				29		%				33		%				35		%
Payout Ratio			145		%				72		%				36		%				67		%				78		%				200			bps			100			bps			—			bps			100			bps			100			bps			147		%				73		%				36		%				68		%				79		%
PER SHARE STATISTICS
Basic EPS			$	3.58					$	3.77					$	3.54					$	3.96					$	8.19					$	(0.03)					$	(0.03)					$	0.03					$	(0.03)					$	(0.06)					$	3.55					$	3.74					$	3.57					$	3.93					$	8.13
Diluted EPS			$	3.58					$	3.77					$	3.54					$	3.96					$	8.18					$	(0.03)					$	(0.03)					$	0.02					$	(0.03)					$	(0.06)					$	3.55					$	3.74					$	3.56					$	3.93					$	8.12
Book Value per share			$	55.79					$	54.57					$	52.29					$	50.00					$	50.00					$	(1.00)					$	(0.92)					$	(0.87)					$	(0.89)					$	(0.89)					$	54.79					$	53.65					$	51.42					$	49.11					$	49.11
SEGMENT RESULTS
Digital Banking
Non-Interest Income			$	533					$	578					$	541					$	557					$	1,043					$	(11)					$	(11)					$	(11)					$	(11)					$	(22)					$	522					$	567					$	530					$	546					$	1,021
Revenue Net of Interest Expense			$	3,665					$	3,645					$	3,384					$	3,167					$	6,132					$	(11)					$	(11)					$	(11)					$	(11)					$	(22)					$	3,654					$	3,634					$	3,373					$	3,156					$	6,110
Total Operating Expense			$	1,342					$	1,445					$	1,346					$	1,186					$	2,278					$	—					$	—					$	(20)					$	—					$	—					$	1,342					$	1,445					$	1,326					$	1,186					$	2,278
Income/ (Loss) Before Income Taxes			$	1,221					$	1,317					$	1,265					$	1,432					$	3,151					$	(11)					$	(11)					$	9					$	(11)					$	(22)					$	1,210					$	1,306					$	1,274					$	1,421					$	3,129
Pretax Return on Loan Receivables			4.42		%				4.84		%				4.91		%				5.99		%				6.74		%				(4)			bps			(4)			bps			3			bps			(5)			bps			(4)			bps			4.38		%				4.80		%				4.94		%				5.94		%				6.70		%

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DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
			As Previously Reported																								Restatement Impacts																								As Restated
			Quarter Ended																								Quarter Ended																								Quarter Ended
			Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022						Mar 31, 2023						Dec 31, 2022						Sep 30, 2022						Jun 30, 2022
BALANCE SHEET SUMMARY
Assets
Other Assets			$	4,381					$	4,519					$	4,002					$	3,810					$	80					$	78					$	75					$	78					$	4,461					$	4,597					$	4,077					$	3,888
Total Assets			$	133,061					$	131,628					$	121,886					$	114,600					$	80					$	78					$	75					$	78					$	133,141					$	131,706					$	121,961					$	114,678
Liabilities & Stockholders' Equity
Accrued Expenses and Other Liabilities			$	4,843					$	5,294					$	4,526					$	4,439					$	335					$	324					$	313					$	323					$	5,178					$	5,618					$	4,839					$	4,762
Total Liabilities			118,746						117,038						107,600						100,836						335						324						313						323						119,081						117,362						107,913						101,159
Total Equity			14,315						14,590						14,286						13,764						(255)						(246)						(238)						(245)						14,060						14,344						14,048						13,519
Total Liabilities and Stockholders' Equity			$	133,061					$	131,628					$	121,886					$	114,600					$	80					$	78					$	75					$	78					$	133,141					$	131,706					$	121,961					$	114,678
BALANCE SHEET STATISTICS
Total Common Equity			$	13,259					$	13,534					$	13,230					$	12,708					$	(255)					$	(246)					$	(238)					$	(245)					$	13,004					$	13,288					$	12,992					$	12,463
Total Common Equity/Total Assets			10.0		%				10.3		%				10.9		%				11.1		%				(20)			bps			(20)			bps			(20)			bps			(20)			bps			9.8		%				10.1		%				10.7		%				10.9		%
Total Common Equity/Net Loans			12.6		%				12.9		%				13.5		%				13.7		%				(20)			bps			(20)			bps			(20)			bps			(20)			bps			12.4		%				12.7		%				13.3		%				13.5		%
Tangible Assets			$	132,806					$	131,373					$	121,631					$	114,345					$	80					$	78					$	75					$	78					$	132,886					$	131,451					$	121,706					$	114,423
Tangible Common Equity			$	13,004					$	13,279					$	12,975					$	12,453					$	(255)					$	(246)					$	(238)					$	(245)					$	12,749					$	13,033					$	12,737					$	12,208
Tangible Common Equity/Tangible Assets			9.8		%				10.1		%				10.7		%				10.9		%				(20)			bps			(20)			bps			(20)			bps			(20)			bps			9.6		%				9.9		%				10.5		%				10.7		%
Tangible Common Equity/Net Loans			12.4		%				12.7		%				13.3		%				13.5		%				(30)			bps			(30)			bps			(30)			bps			(30)			bps			12.1		%				12.4		%				13.0		%				13.2		%
Tangible Common Equity per share			$	50.68					$	49.66					$	47.49					$	45.24					$	(1)					$	(0.92)					$	(0.87)					$	(0.89)					$	49.68					$	48.74					$	46.62					$	44.35
REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio			14.9		%				16.0		%				16.7		%				17.0		%				(20)			bps			(20)			bps			(30)			bps			(30)			bps			14.7		%				15.8		%				16.4		%				16.7		%
Tier 1 Risk Based Capital Ratio			13.2		%				14.3		%				14.9		%				15.2		%				(20)			bps			(30)			bps			(20)			bps			(30)			bps			13.0		%				14.0		%				14.7		%				14.9		%
Tier 1 Leverage Ratio			11.6		%				12.7		%				13.4		%				13.9		%				(20)			bps			(20)			bps			(20)			bps			(20)			bps			11.4		%				12.5		%				13.2		%				13.7		%
Common Equity Tier 1 Capital Ratio			12.3		%				13.3		%				13.9		%				14.2		%				(20)			bps			(20)			bps			(20)			bps			(30)			bps			12.1		%				13.1		%				13.7		%				13.9		%