Discover Financial Services 8K Reports Third Quarter Results | DFS 25 Sep 07

Exhibit 99.2

DISCOVER FINANCIAL SERVICES
Unaudited Financial Supplement - 3Q 2007
Table of Contents

	Page #
	1	…………..	Quarterly Consolidated and Combined Income Statement and Statistical Data
	2	…………..	Quarterly Consolidated and Combined Income Statement and Statistical Data (Managed Basis)
	3	…………..	Quarterly U.S. Card Income Statement and Statistical Data (Managed Basis)
	4	…………..	Quarterly Third-Party Payments Income Statement and Statistical Data (Managed Basis)
	5	…………..	Quarterly International Card Income Statement and Statistical Data (Managed Basis)
	6-10	…………..	Quarterly Reconciliation of GAAP to Managed Data

Discover Financial Services
GAAP Basis
(unaudited, dollars in thousands)
	Quarter Ended																						Nine Months Ended
	Aug 31, 2007			May 31, 2007			Feb 28, 2007			Nov 30, 2006			Aug 31, 2006				3Q07 vs 3Q06						YTD 2007			YTD 2006			2007 vs 2006

Interest Income	$	755,610		$	703,365		$	680,305		$	622,166		$	642,748			$	112,862			18	%	$	2,139,280		$	1,836,360		$	302,920			16	%
Interest Expense		361,469			336,253			283,959			243,518			250,440				111,029			44	%		981,681			696,522			285,159			41	%
Net Interest Income		394,141			367,112			396,346			378,648			392,308		��		1,833			0	%		1,157,599			1,139,838			17,761			2	%
Provision for Loan Losses		211,576			203,287			195,386			239,693			231,614				(20,038	)		-9	%		610,249			515,944			94,305			18	%
Net interest income after provision for loan losses		182,565			163,825			200,960			138,955			160,694				21,871			14	%		547,350			623,894			(76,544	)		-12	%

Other Income		845,498			871,693			825,677			828,263			889,374				(43,876	)		-5	%		2,542,868			2,710,676			(167,808	)		-6	%

Employee Compensation and Benefits		227,904			234,373			233,318			234,625			237,436				(9,532	)		-4	%		695,595			698,571			(2,976	)		0	%
Marketing and Business Development		163,015			140,930			142,344			197,601			145,184				17,831			12	%		446,289			405,955			40,334			10	%
Information Processing & Communications		99,065			96,622			93,452			102,936			98,620				445			0	%		289,139			284,659			4,480			2	%
Professional Fees		94,060			113,264			80,958			119,049			93,027				1,033			1	%		288,282			248,720			39,562			16	%
Premises and Equipment		22,611			24,350			22,809			23,886			23,546				(935	)		-4	%		69,770			68,392			1,378			2	%
Other Expense		92,194			93,453			82,295			103,580			84,724				7,470			9	%		267,942			231,509			36,433			16	%
Total Other Expense		698,849			702,992			655,176			781,677			682,537				16,312			2	%		2,057,017			1,937,806			119,211			6	%
Income Before Income Taxes		329,214			332,526			371,461			185,541			367,531				(38,317	)		-10	%		1,033,201			1,396,764			(363,563	)		-26	%
Tax Expense		126,974			123,284			137,829			(981	)		126,138				836			1	%		388,087			506,670			(118,583	)		-23	%
Net Income	$	202,240		$	209,242		$	233,632		$	186,522		$	241,393			$	(39,153	)		-16	%	$	645,114		$	890,094		$	(244,980	)		-28	%

Balance Sheet Statistics
Total Assets	$	36,141,011		$	35,672,568		$	29,763,803		$	29,067,242		$	28,318,362			$	7,822,649			28	%	$	36,141,011		$	28,318,362		$	7,822,649			28	%
Total Equity	$	5,667,282		$	5,780,284		$	5,528,658		$	5,774,772		$	6,030,941			$	(363,659	)		-6	%	$	5,667,282		$	6,030,941		$	(363,659	)		-6	%
Total Tangible Equity	$	4,927,431		$	5,044,586		$	4,797,784		$	5,039,867		$	5,322,013			$	(394,582	)		-7	%	$	4,927,431		$	5,322,013		$	(394,582	)		-7	%
Loan Receivables	$	22,393,598		$	22,788,042		$	22,611,707		$	23,742,750		$	23,040,868			$	(647,270	)		-3	%	$	22,393,598		$	23,040,868		$	(647,270	)		-3	%
Average Loan Receivables	$	22,736,502		$	21,511,837		$	24,856,212		$	22,677,104		$	22,545,836			$	190,666			1	%	$	23,021,556		$	21,563,711		$	1,457,845			7	%
ROE		14	%		15	%		16	%		12	%		16	%									15	%		22	%
Net Owned Receivables/Tangible Equity		4.38			4.36			4.55			4.55			4.18				0.20			5	%		4.38			4.18			0.20			5	%
Total Owned Assets/Tangible Equity		7.33			7.07			6.20			5.77			5.32				2.01			38	%		7.33			5.32			2.01			38	%
Net Yield on Loan Receivables		6.88	%		6.77	%		6.47	%		6.70	%		6.90	%			(2	)	bps				6.70	%		7.04	%		(34	)	bps
Return on Loan Receivables		3.53	%		3.86	%		3.81	%		3.30	%		4.25	%			(72	)	bps				3.73	%		5.50	%		(177	)	bps

Allowance for Loan Loss at (period end)	$	792,883		$	788,748		$	793,850		$	832,483		$	811,865			$	(18,982	)		-2	%	$	792,883		$	811,865		$	(18,982	)		-2	%
Net gain on Securitization	$	(24,043	)	$	35,620		$	(3,997	)	$	5,492		$	(2,165	)		$	(21,878	)		1011	%	$	7,580		$	153,950		$	(146,370	)		-95	%

EPS Statistics
Basic EPS	$	0.42		$	0.44		$	0.49		$	0.39		$	0.51			$	(0.09	)		-16	%	$	1.35		$	1.87		$	(0.52	)		-28	%
Diluted EPS	$	0.42																					$	1.35
Stock Price Per Share (period end)	$	23.14
Ending Shares Outstanding (000's)		477,328			477,236			477,236			477,236			477,236				92			0	%		477,328			477,236			92			0	%
Weighted Average Shares Outstanding (000's)		477,272			477,236			477,236			477,236			477,236				36			0	%		477,248			477,236			12			0	%
Weighted Average Shares Outstanding (fully diluted), (000's)		480,071																						478,278
Book Value Per Share	$	11.87																					$	11.87

Total Credit Card Loans
Credit Card Loans - Owned	$	22,301,589		$	22,698,457		$	22,520,861		$	23,646,901		$	22,935,647			$	(634,058	)		-3	%	$	22,301,589		$	22,935,647		$	(634,058	)		-3	%
Average Credit Card Loans - Owned	$	22,646,290		$	21,419,465		$	24,760,587		$	22,573,508		$	22,428,025			$	218,265			1	%	$	22,928,841		$	21,351,673		$	1,577,168			7	%
Interest Yield		10.99	%		10.50	%		10.41	%		10.27	%		10.44	%			55		bps				10.63	%		10.42	%		21		bps
Net Principal Charge-off Rate		3.71	%		3.91	%		3.77	%		3.95	%		3.57	%			14		bps				3.80	%		3.74	%		6		bps
Delinquency Rate (over 30 days)		3.07	%		2.94	%		3.15	%		3.22	%		3.19	%			(12	)	bps				3.07	%		3.19	%		(12	)	bps
Delinquency Rate (over 90 days)		1.44	%		1.43	%		1.55	%		1.53	%		1.49	%			(5	)	bps				1.44	%		1.49	%		(5	)	bps

Discover Financial Services
Managed Basis¹
(unaudited, dollars in thousands)
	Quarter Ended																					Nine Months Ended
	Aug 31, 2007			May 31, 2007			Feb 28, 2007			Nov 30, 2006			Aug 31, 2006			3Q07 vs 3Q06						YTD 2007			YTD 2006			2007 vs 2006

Interest Income	$	1,751,919		$	1,715,844		$	1,599,684		$	1,543,806		$	1,573,566		$	178,353			11	%	$	5,067,447		$	4,623,679		$	443,768			10	%
Interest Expense		767,451			747,303			645,826			609,102			616,030			151,421			25	%		2,160,580			1,728,487			432,093			25	%
Net Interest Income		984,468			968,541			953,858			934,704			957,536			26,932			3	%		2,906,867			2,895,192			11,675			0	%
Provision for Loan Losses		509,026			530,438			482,660			527,539			495,364			13,662			3	%		1,522,124			1,374,105			148,019			11	%
Net interest income after provision for loan losses		475,442			438,103			471,198			407,165			462,172			13,270			3	%		1,384,743			1,521,087			(136,344	)		-9	%

Other Income		552,621			597,415			555,439			560,053			587,896			(35,275	)		-6	%		1,705,475			1,813,483			(108,008	)		-6	%

Employee Compensation and Benefits		227,904			234,373			233,318			234,625			237,436			(9,532	)		-4	%		695,595			698,571			(2,976	)		0	%
Marketing and Business Development		163,015			140,930			142,344			197,601			145,184			17,831			12	%		446,289			405,955			40,334			10	%
Information Processing & Communications		99,065			96,622			93,452			102,936			98,620			445			0	%		289,139			284,659			4,480			2	%
Professional Fees		94,060			113,264			80,958			119,049			93,027			1,033			1	%		288,282			248,720			39,562			16	%
Premises and Equipment		22,611			24,350			22,809			23,886			23,546			(935	)		-4	%		69,770			68,392			1,378			2	%
Other Expense		92,194			93,453			82,295			103,580			84,724			7,470			9	%		267,942			231,509			36,433			16	%
Total Other Expense		698,849			702,992			655,176			781,677			682,537			16,312			2	%		2,057,017			1,937,806			119,211			6	%
Income Before Income Taxes		329,214			332,526			371,461			185,541			367,531			(38,317	)		-10	%		1,033,201			1,396,764			(363,563	)		-26	%
Tax Expense		126,974			123,284			137,829			(981	)		126,138			836			1	%		388,087			506,670			(118,583	)		-23	%
Net Income	$	202,240		$	209,242		$	233,632		$	186,522		$	241,393		$	(39,153	)		-16	%	$	645,114		$	890,094		$	(244,980	)		-28	%

Balance Sheet Statistics
Total Assets	$	65,457,390		$	65,112,826		$	57,782,359		$	55,512,185		$	54,713,999		$	10,743,391			20	%	$	65,457,390		$	54,713,999		$	10,743,391			20	%
Total Equity ²	$	5,667,282		$	5,780,284		$	5,528,658		$	5,774,772		$	6,030,941		$	(363,659	)		-6	%	$	5,667,282		$	6,030,941		$	(363,659	)		-6	%
Total Tangible Equity ²	$	4,927,431		$	5,044,586		$	4,797,784		$	5,039,867		$	5,322,013		$	(394,582	)		-7	%	$	4,927,431		$	5,322,013		$	(394,582	)		-7	%
Loan Receivables	$	51,892,455		$	51,505,397		$	50,931,556		$	50,446,177		$	49,703,680		$	2,188,775			4	%	$	51,892,455		$	49,703,680		$	2,188,775			4	%
Average Loan Receivables	$	51,530,934		$	50,843,952		$	51,574,268		$	49,318,549		$	48,884,255		$	2,646,679			5	%	$	51,314,502		$	48,096,995		$	3,217,507			7	%
Net Managed Receivables/Tangible Equity		10.37			10.05			10.45			9.84			9.19			1.18			13	%		10.37			9.19			1.18			13	%
Total Managed Assets/Tangible Equity		13.28			12.91			12.04			11.01			10.28			3.00			29	%		13.28			10.28			3.00			29	%
Net Yield on Loan Receivables		7.58	%		7.56	%		7.50	%		7.60	%		7.77	%		(19	)	bps				7.55	%		8.02	%		(47	)	bps
Return on Loan Receivables		1.56	%		1.63	%		1.84	%		1.52	%		1.96	%		(40	)	bps				1.67	%		2.47	%		(80	)	bps

Total Credit Card Loans
Credit Card Loans - Managed	$	51,800,446		$	51,415,812		$	50,840,710		$	50,350,328		$	49,598,459		$	2,201,987			4	%	$	51,800,446		$	49,598,459		$	2,201,987			4	%
Average Credit Card Loans - Managed	$	51,440,722		$	50,751,580		$	51,478,643		$	49,214,953		$	48,766,444		$	2,674,278			5	%	$	51,221,787		$	47,884,957		$	3,336,830			7	%
Managed Interest Yield		12.52	%		12.35	%		12.25	%		12.22	%		12.38	%		14		bps				12.37	%		12.40	%		(3	)	bps
Managed Net Principal Charge-off Rate		3.95	%		4.23	%		4.05	%		4.15	%		3.81	%		14		bps				4.07	%		4.06	%		1		bps
Managed Delinquency Rate (over 30 days)		3.30	%		3.12	%		3.44	%		3.50	%		3.42	%		(12	)	bps				3.30	%		3.42	%		(12	)	bps
Managed Delinquency Rate (over 90 days)		1.55	%		1.51	%		1.68	%		1.65	%		1.59	%		(4	)	bps				1.55	%		1.59	%		(4	)	bps

Total Credit Card Volume
Domestic	$	27,171,729		$	26,408,578		$	26,880,735		$	25,682,545		$	26,754,745		$	416,984			2	%	$	80,461,042		$	77,219,348		$	3,241,694			4	%
International		3,601,870			3,646,009			3,578,199			3,547,702			3,450,974			150,896			4	%		10,826,078			8,333,763			2,492,315			30	%
Total	$	30,773,599		$	30,054,587		$	30,458,934		$	29,230,247		$	30,205,719		$	567,880			2	%	$	91,287,120		$	85,553,111		$	5,734,009			7	%

Total Credit Card SalesVolume
Domestic	$	23,527,999		$	22,108,865		$	22,037,053		$	21,404,325		$	22,690,277		$	837,722			4	%	$	67,673,917		$	64,981,252		$	2,692,665			4	%
International		3,296,360			3,277,439			3,169,284			3,123,230			3,025,561			270,799			9	%		9,743,083			7,212,101			2,530,982			35	%
Total	$	26,824,359		$	25,386,304		$	25,206,337		$	24,527,555		$	25,715,838		$	1,108,521			4	%	$	77,417,000		$	72,193,353		$	5,223,647			7	%

Transactions Processed on Networks (000's)
Discover Network		379,267			361,893			361,700			358,152			361,917			17,350			5	%		1,102,860			1,041,781			61,079			6	%
PULSE Network		593,866			558,811			520,866			488,087			472,866			121,000			26	%		1,673,543			1,368,390			305,153			22	%
Total		973,133			920,704			882,566			846,239			834,783			138,350			17	%		2,776,403			2,410,171			366,232			15	%

Segment - Income Before Income Taxes
U.S. Card	$	387,085		$	388,813		$	401,026		$	228,986		$	387,314		$	(229	)		0	%	$	1,176,924		$	1,411,467		$	(234,543	)		-17	%
Third-Party Payments		9,439			8,010			11,920			6,946			9,920			(481	)		-5	%		29,369			22,003			7,366			33	%
International Card		(67,310	)		(64,297	)		(41,485	)		(50,391	)		(29,703	)		(37,607	)		-127	%		(173,092	)		(36,706	)		(136,386	)		372	%
Total	$	329,214		$	332,526		$	371,461		$	185,541		$	367,531		$	(38,317	)		0	%	$	1,033,201		$	1,396,764		$	(363,563	)		0	%


¹ Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are presented. See Reconciliation of GAAP to Managed schedule.

² Balance on a GAAP and Managed basis is the same.

Discover Financial Services
U.S. Card Segment
Managed Basis¹
(unaudited, dollars in thousands)
	Quarter Ended																					Nine Months Ended
	Aug 31, 2007			May 31, 2007			Feb 28, 2007			Nov 30, 2006			Aug 31, 2006			3Q07 vs 3Q06						YTD 2007			YTD 2006			2007 vs 2006

Interest Income	$	1,626,214		$	1,601,324		$	1,481,992		$	1,429,508		$	1,460,607		$	165,607			11	%	$	4,709,530		$	4,319,190		$	390,340			9	%
Interest Expense		697,643			693,837			593,610			562,185			567,033			130,610			23	%		1,985,090			1,598,384			386,706			24	%
Net Interest Income		928,571			907,487			888,382			867,323			893,574			34,997			4	%		2,724,440			2,720,806			3,634			0	%
Provision for Loan Losses		418,349			444,249			406,076			452,965			419,706			(1,357	)		0	%		1,268,674			1,210,507			58,167			5	%
Net interest income after provision for loan losses		510,222			463,238			482,306			414,358			473,868			36,354			8	%		1,455,766			1,510,299			(54,533	)		-4	%
Other Income		481,060			526,304			490,003			493,713			510,958			(29,898	)		-6	%		1,497,367			1,603,963			(106,596	)		-7	%
Total Other Expense		604,197			600,729			571,283			679,085			597,512			6,685			1	%		1,776,209			1,702,795			73,414			4	%
Income Before Income Taxes	$	387,085		$	388,813		$	401,026		$	228,986		$	387,314		$	(229	)		0	%	$	1,176,924		$	1,411,467		$	(234,543	)		-17	%

Net Yield on Loan Receivables		7.84	%		7.78	%		7.67	%		7.75	%		7.96	%		(12	)	bps				7.76	%		8.19	%		(43	)	bps
Loan Receivables	$	47,444,107		$	46,953,902		$	46,356,858		$	45,802,071		$	45,181,757		$	2,262,350			5	%	$	47,444,107		$	45,181,757		$	2,262,350			5	%
Average Loan Receivables	$	47,016,472		$	46,296,296		$	46,965,884		$	44,899,320		$	44,523,521		$	2,492,951			6	%	$	46,758,044		$	44,246,464		$	2,511,580			6	%

Credit Card Loans - Managed	$	47,352,098		$	46,864,317		$	46,266,012		$	45,706,222		$	45,076,536		$	2,275,562			5	%	$	47,352,098		$	45,076,536		$	2,275,562			5	%
Average Credit Card Loans - Managed	$	46,926,260		$	46,203,924		$	46,870,259		$	44,795,724		$	44,405,710		$	2,520,550			6	%	$	46,665,329		$	44,105,054		$	2,560,275			6	%
Managed Interest Yield		12.76	%		12.59	%		12.45	%		12.42	%		12.59	%		17		bps				12.60	%		12.57	%		3		bps
Managed Net Principal Charge-off Rate		3.70	%		4.00	%		3.81	%		3.99	%		3.55	%		15		bps				3.84	%		3.95	%		(11	)	bps
Managed Delinquency Rate (over 30 days)		3.16	%		2.97	%		3.31	%		3.39	%		3.31	%		(15	)	bps				3.16	%		3.31	%		(15	)	bps
Managed Delinquency Rate (over 90 days)		1.48	%		1.44	%		1.63	%		1.59	%		1.54	%		(6	)	bps				1.48	%		1.54	%		(6	)	bps
Total Credit Card Volume	$	27,171,729		$	26,408,578		$	26,880,735		$	25,682,545		$	26,754,745		$	416,984			2	%	$	80,461,042		$	77,219,348		$	3,241,694			4	%
Sales Volume	$	23,527,999		$	22,108,865		$	22,037,053		$	21,404,325		$	22,690,277		$	837,722			4	%	$	67,673,917		$	64,981,252		$	2,692,665			4	%


¹ Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are presented. See Reconciliation of GAAP to Managed schedule.

Discover Financial Services
Third-Party Payments Segment
(unaudited, dollars in thousands)
	Quarter Ended															Nine Months Ended
	Aug 31, 2007		May 31, 2007		Feb 28, 2007		Nov 30, 2006		Aug 31, 2006		3Q07 vs 3Q06					YTD 2007		YTD 2006		2007 vs 2006

Interest Income	$	594	$	558	$	574	$	516	$	528	$	66		13	%	$	1,726	$	1,285	$	441		34	%
Interest Expense		-		4		15		6		-		-		-			19		17		2		12	%
Net Interest Income		594		554		559		510		528		66		13	%		1,707		1,268		439		35	%
Provision for Loan Losses		-		-		-		-		-		-		-			-		-		-		-
Net interest income after provision for loan losses		594		554		559		510		528		66		13	%		1,707		1,268		439		35	%
Other Income		29,465		29,248		30,682		28,077		29,235		230		1	%		89,395		82,623		6,772		8	%
Total Other Expense		20,620		21,792		19,321		21,641		19,843		777		4	%		61,733		61,888		(155	)	0	%
Income Before Income Taxes	$	9,439	$	8,010	$	11,920	$	6,946	$	9,920	$	(481	)	-5	%	$	29,369	$	22,003	$	7,366		33	%

Transactions Processed on PULSE Network (000's)		593,866		558,811		520,866		488,087		472,866		121,000		26	%		1,673,543		1,368,390		305,153		22	%

Discover Financial Services
International Card Segment
Managed Basis¹
(unaudited, dollars in thousands)
	Quarter Ended																					Nine Months Ended
	Aug 31, 2007			May 31, 2007			Feb 28, 2007			Nov 30, 2006			Aug 31, 2006			3Q07 vs 3Q06						YTD 2007			YTD 2006			2007 vs 2006

Interest Income	$	125,111		$	113,962		$	117,118		$	113,782		$	112,431		$	12,680			11	%	$	356,191		$	303,204		$	52,987			17	%
Interest Expense		69,808			53,462			52,201			46,911			48,997			20,811			42	%		175,471			130,086			45,385			35	%
Net Interest Income		55,303			60,500			64,917			66,871			63,434			(8,131	)		-13	%		180,720			173,118			7,602			4	%
Provision for Loan Losses		90,677			86,189			76,584			74,574			75,658			15,019			20	%		253,450			163,598			89,852			55	%
Net interest income after provision for loan losses		(35,374	)		(25,689	)		(11,667	)		(7,703	)		(12,224	)		(23,150	)		-189	%		(72,730	)		9,520			(82,250	)		-864	%
Other Income		42,096			41,863			34,754			38,263			47,703			(5,607	)		-12	%		118,713			126,897			(8,184	)		-6	%
Total Other Expense		74,032			80,471			64,572			80,951			65,182			8,850			14	%		219,075			173,123			45,952			27	%
Income Before Income Taxes	$	(67,310	)	$	(64,297	)	$	(41,485	)	$	(50,391	)	$	(29,703	)	$	(37,607	)		-127	%	$	(173,092	)	$	(36,706	)	$	(136,386	)		372	%

Net Yield on Loan Receivables		4.86	%		5.28	%		5.71	%		6.07	%		5.77	%		(91	)	bps				5.28	%		5.99	%		(71	)	bps
Loan Receivables	$	4,448,348		$	4,551,495		$	4,574,698		$	4,644,106		$	4,521,923		$	(73,575	)		-2	%	$	4,448,348		$	4,521,923		$	(73,575	)		-2	%
Average Loan Receivables	$	4,514,462		$	4,547,656		$	4,608,384		$	4,419,229		$	4,360,734		$	153,728			4	%	$	4,556,458		$	3,850,531		$	705,927			18	%

Credit Card Loans - Managed	$	4,448,348		$	4,551,495		$	4,574,698		$	4,644,106		$	4,521,923		$	(73,575	)		-2	%	$	4,448,348		$	4,521,923		$	(73,575	)		-2	%
Average Credit Card Loans - Managed	$	4,514,462		$	4,547,656		$	4,608,384		$	4,419,229		$	4,360,734		$	153,728			4	%	$	4,556,458		$	3,779,903		$	776,555			21	%
Managed Interest Yield		10.00	%		9.89	%		10.25	%		10.23	%		10.19	%		(19	)	bps				10.05	%		10.44	%		(39	)	bps
Managed Net Principal Charge-off Rate		6.56	%		6.50	%		6.45	%		5.80	%		6.41	%		15		bps				6.50	%		5.30	%		120		bps
Managed Delinquency Rate (over 30 days)		4.89	%		4.69	%		4.75	%		4.58	%		4.47	%		42		bps				4.89	%		4.47	%		42		bps
Managed Delinquency Rate (over 90 days)		2.30	%		2.25	%		2.25	%		2.22	%		2.09	%		21		bps				2.30	%		2.09	%		21		bps
Total Credit Card Volume	$	3,601,870		$	3,646,009		$	3,578,199		$	3,547,702		$	3,450,974		$	150,896			4	%	$	10,826,078		$	8,333,763		$	2,492,315			30	%
Sales Volume	$	3,296,360		$	3,277,439		$	3,169,284		$	3,123,230		$	3,025,561		$	270,799			9	%	$	9,743,083		$	7,212,101		$	2,530,982			35	%


¹ Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are presented. See Reconciliation of GAAP to Managed schedule.

DISCOVER FINANCIAL SERVICES

RECONCILIATION OF GAAP TO MANAGED

The following pages (7-10) present a reconciliation for certain information disclosed on pages 1,2,3 & 5.

The data is presented on both a "managed" loan basis and as reported under generally accepted accounting principles ("owned" loan basis). Managed loan data assume that the Company's securitized loan receivables have not been sold and presents the results of securitized loan receivables in the same manner as the Company's owned loans. The Company operates its business and analyzes its financial performance on a managed basis. Accordingly, manner as the Company's owned loans. The Company operates its business and analyzes its financial performance on a managed basis. Accordingly, underwriting and servicing standards are comparable for both owned and securitized loans. The Company believes that managed loan information is useful to investors because it provides information regarding the quality of loan origination and credit performance of the entire managed portfolio and allows investors to understand the related credit risks inherent in owned loans and retained interests in securitizations. Managed loan data is also relevant because the company services the securitized and owned loans, and the related accounts, in the same manner without regard to ownership of the loans. In addition, investors often request information on a managed basis which provides a more meaningful comparison to industry competitors.

Discover Financial Services
Reconciliation of GAAP to Managed ³
(unaudited, dollars in thousands)

	Quarter Ended															Nine Months Ended
	Aug 31, 2007			May 31, 2007			Feb 28, 2007			Nov 30, 2006			Aug 31, 2006			YTD 2007			YTD 2006

Interest Income
GAAP Basis	$	755,610		$	703,365		$	680,305		$	622,166		$	642,748		$	2,139,280		$	1,836,360
Securitization Adjustments ³		996,309			1,012,479			919,379			921,640			930,818			2,928,167			2,787,319
Managed Basis	$	1,751,919		$	1,715,844		$	1,599,684		$	1,543,806		$	1,573,566		$	5,067,447		$	4,623,679

Interest Expense
GAAP Basis	$	361,469		$	336,253		$	283,959		$	243,518		$	250,440		$	981,681		$	696,522
Securitization Adjustments		405,982			411,050			361,867			365,584			365,590			1,178,899			1,031,965
Managed Basis	$	767,451		$	747,303		$	645,826		$	609,102		$	616,030		$	2,160,580		$	1,728,487

Net Interest Income
GAAP Basis	$	394,141		$	367,112		$	396,346		$	378,648		$	392,308		$	1,157,599		$	1,139,838
Securitization Adjustments		590,327			601,429			557,512			556,056			565,228			1,749,268			1,755,354
Managed Basis	$	984,468		$	968,541		$	953,858		$	934,704		$	957,536		$	2,906,867		$	2,895,192

Provision for Loan Losses
GAAP Basis	$	211,576		$	203,287		$	195,386		$	239,693		$	231,614		$	610,249		$	515,944
Securitization Adjustments		297,450			327,151			287,274			287,846			263,750			911,875			858,161
Managed Basis	$	509,026		$	530,438		$	482,660		$	527,539		$	495,364		$	1,522,124		$	1,374,105

Net interest income after provision for loan losses
GAAP Basis	$	182,565		$	163,825		$	200,960		$	138,955		$	160,694		$	547,350		$	623,894
Securitization Adjustments		292,877			274,278			270,238			268,210			301,478			837,393			897,193
Managed Basis	$	475,442		$	438,103		$	471,198		$	407,165		$	462,172		$	1,384,743		$	1,521,087

Other Income
GAAP Basis	$	845,498		$	871,693		$	825,677		$	828,263		$	889,374		$	2,542,868		$	2,710,676
Securitization Adjustments		(292,877	)		(274,278	)		(270,238	)		(268,210	)		(301,478	)		(837,393	)		(897,193	)
Managed Basis	$	552,621		$	597,415		$	555,439		$	560,053		$	587,896		$	1,705,475		$	1,813,483

Total Assets
GAAP Basis	$	36,141,011		$	35,672,568		$	29,763,803		$	29,067,242		$	28,318,362		$	36,141,011		$	28,318,362
Securitization Adjustments		29,316,379			29,440,258			28,018,556			26,444,943			26,395,637			29,316,379			26,395,637
Managed Basis	$	65,457,390		$	65,112,826		$	57,782,359		$	55,512,185		$	54,713,999		$	65,457,390		$	54,713,999

Loan Receivables
GAAP Basis	$	22,393,598		$	22,788,042		$	22,611,707		$	23,742,750		$	23,040,868		$	22,393,598		$	23,040,868
Securitization Adjustments		29,498,857			28,717,355			28,319,849			26,703,427			26,662,812			29,498,857			26,662,812
Managed Basis	$	51,892,455		$	51,505,397		$	50,931,556		$	50,446,177		$	49,703,680		$	51,892,455		$	49,703,680

Average Loan Receivables
GAAP Basis	$	22,736,502		$	21,511,837		$	24,856,212		$	22,677,104		$	22,545,836		$	23,021,556		$	21,563,711
Securitization Adjustments		28,794,432			29,332,115			26,718,056			26,641,445			26,338,419			28,292,946			26,533,284
Managed Basis	$	51,530,934		$	50,843,952		$	51,574,268		$	49,318,549		$	48,884,255		$	51,314,502		$	48,096,995

Net Receivables/Tangible Equity
GAAP Basis		4.38			4.36			4.55			4.55			4.18			4.38			4.18
Securitization Adjustments		5.99			5.69			5.90			5.30			5.01			5.99			5.01
Managed Basis		10.37			10.05			10.45			9.84			9.19			10.37			9.19

Total Assets/Tangible Equity
GAAP Basis		7.33			7.07			6.20			5.77			5.32			7.33			5.32
Securitization Adjustments		5.95			5.84			5.84			5.25			4.96			5.95			4.96
Managed Basis		13.28			12.91			12.04			11.01			10.28			13.28			10.28

Quarter Ended

Nine Months Ended

Aug 31,

2007

May 31,

2007

Feb 28,

2007

Nov 30,

2006

Aug 31,

2006

YTD 2007

YTD 2006

Net Yield on Loan Receivables
GAAP Basis		6.88	%		6.77	%		6.47	%		6.70	%		6.90	%		6.70	%		7.04	%
Securitization Adjustments		8.13	%		8.13	%		8.46	%		8.37	%		8.51	%		8.24	%		8.81	%
Managed Basis		7.58	%		7.56	%		7.50	%		7.60	%		7.77	%		7.55	%		8.02	%

Return on Loan Receivables
GAAP Basis		3.53	%		3.86	%		3.81	%		3.30	%		4.25	%		3.73	%		5.50	%
Securitization Adjustments		2.79	%		2.83	%		3.55	%		2.81	%		3.64	%		3.04	%		4.47	%
Managed Basis		1.56	%		1.63	%		1.84	%		1.52	%		1.96	%		1.67	%		2.47	%

Total Credit Card Loans
Credit Card Loans
GAAP Basis	$	22,301,589		$	22,698,457		$	22,520,861		$	23,646,901		$	22,935,647		$	22,301,589		$	22,935,647
Securitization Adjustments		29,498,857			28,717,355			28,319,849			26,703,427			26,662,812			29,498,857			26,662,812
Managed Basis	$	51,800,446		$	51,415,812		$	50,840,710		$	50,350,328		$	49,598,459		$	51,800,446		$	49,598,459

Average Credit Card Loans
GAAP Basis	$	22,646,290		$	21,419,465		$	24,760,587		$	22,573,508		$	22,428,025		$	22,928,841		$	21,351,673
Securitization Adjustments		28,794,432			29,332,115			26,718,056			26,641,445			26,338,419			28,292,946			26,533,284
Managed Basis	$	51,440,722		$	50,751,580		$	51,478,643		$	49,214,953		$	48,766,444		$	51,221,787		$	47,884,957

Interest Yield
GAAP Basis		10.99	%		10.50	%		10.41	%		10.27	%		10.44	%		10.63	%		10.42	%
Securitization Adjustments		13.73	%		13.69	%		13.96	%		13.88	%		14.02	%		13.79	%		13.99	%
Managed Basis		12.52	%		12.35	%		12.25	%		12.22	%		12.38	%		12.37	%		12.40	%

Net Principal Charge-off Rate
GAAP Basis		3.71	%		3.91	%		3.77	%		3.95	%		3.57	%		3.80	%		3.74	%
Securitization Adjustments		4.13	%		4.46	%		4.30	%		4.32	%		4.01	%		4.30	%		4.31	%
Managed Basis		3.95	%		4.23	%		4.05	%		4.15	%		3.81	%		4.07	%		4.06	%

Delinquency Rate (over 30 days)
GAAP Basis		3.07	%		2.94	%		3.15	%		3.22	%		3.19	%		3.07	%		3.19	%
Securitization Adjustments		3.48	%		3.26	%		3.67	%		3.76	%		3.62	%		3.48	%		3.62	%
Managed Basis		3.30	%		3.12	%		3.44	%		3.50	%		3.42	%		3.30	%		3.42	%

Delinquency Rate (over 90 days)
GAAP Basis		1.44	%		1.43	%		1.55	%		1.53	%		1.49	%		1.44	%		1.49	%
Securitization Adjustments		1.63	%		1.58	%		1.79	%		1.75	%		1.68	%		1.63	%		1.68	%
Managed Basis		1.55	%		1.51	%		1.68	%		1.65	%		1.59	%		1.55	%		1.59	%

US CARD
Loan Receivables
GAAP Basis	$	19,170,450		$	19,938,986		$	19,727,837		$	20,790,244		$	20,159,249		$	19,170,450		$	20,159,249
Securitization Adjustments		28,273,657			27,014,916			26,629,021			25,011,827			25,022,508			28,273,657			25,022,508
Managed Basis	$	47,444,107		$	46,953,902		$	46,356,858		$	45,802,071		$	45,181,757		$	47,444,107		$	45,181,757

Average Loan Receivables
GAAP Basis	$	19,812,392		$	18,673,525		$	21,936,791		$	19,888,844		$	19,788,137		$	20,127,794		$	19,041,730
Securitization Adjustments		27,204,080			27,622,771			25,029,093			25,010,476			24,735,384			26,630,250			25,204,734
Managed Basis	$	47,016,472		$	46,296,296		$	46,965,884		$	44,899,320		$	44,523,521		$	46,758,044		$	44,246,464

Net Yield on Loan Receivables
GAAP Basis		7.26	%		7.09	%		6.65	%		6.82	%		7.10	%		6.99	%		7.23	%
Securitization Adjustments		8.26	%		8.24	%		8.56	%		8.49	%		8.65	%		8.35	%		8.92	%
Managed Basis		7.84	%		7.78	%		7.67	%		7.75	%		7.96	%		7.76	%		8.19	%

Quarter Ended

Nine Months Ended

Aug 31,

2007

May 31,

2007

Feb 28,

2007

Nov 30,

2006

Aug 31,

2006

YTD 2007

YTD 2006

Domestic Credit Card Loans
Credit Card Loans
GAAP Basis	$	19,078,441		$	19,849,401		$	19,636,991		$	20,694,395		$	20,054,028		$	19,078,441		$	20,054,028
Securitization Adjustments		28,273,657			27,014,916			26,629,021			25,011,827			25,022,508			28,273,657			25,022,508
Managed Basis	$	47,352,098		$	46,864,317		$	46,266,012		$	45,706,222		$	45,076,536		$	47,352,098		$	45,076,536

Average Credit Card Loans
GAAP Basis	$	19,722,180		$	18,581,153		$	21,841,166		$	19,785,248		$	19,670,326		$	20,035,079		$	18,900,320
Securitization Adjustments		27,204,080			27,622,771			25,029,093			25,010,476			24,735,384			26,630,250			25,204,734
Managed Basis	$	46,926,260		$	46,203,924		$	46,870,259		$	44,795,724		$	44,405,710		$	46,665,329		$	44,105,054

Managed Interest Yield
GAAP Basis		11.22	%		10.72	%		10.55	%		10.37	%		10.56	%		10.82	%		10.54	%
Securitization Adjustments		13.88	%		13.85	%		14.10	%		14.04	%		14.20	%		13.94	%		14.09	%
Managed Basis		12.76	%		12.59	%		12.45	%		12.42	%		12.59	%		12.60	%		12.57	%

Net Principal Charge-off Rate
GAAP Basis		3.27	%		3.51	%		3.43	%		3.67	%		3.19	%		3.40	%		3.63	%
Securitization Adjustments		4.01	%		4.34	%		4.14	%		4.23	%		3.84	%		4.16	%		4.19	%
Managed Basis		3.70	%		4.00	%		3.81	%		3.99	%		3.55	%		3.84	%		3.95	%

Delinquency Rate (over 30 days)
GAAP Basis		2.80	%		2.71	%		2.97	%		3.05	%		3.03	%		2.80	%		3.03	%
Securitization Adjustments		3.40	%		3.16	%		3.56	%		3.67	%		3.54	%		3.40	%		3.54	%
Managed Basis		3.16	%		2.97	%		3.31	%		3.39	%		3.31	%		3.16	%		3.31	%

Delinquency Rate (over 90 days)
GAAP Basis		1.31	%		1.31	%		1.46	%		1.44	%		1.41	%		1.31	%		1.41	%
Securitization Adjustments		1.60	%		1.54	%		1.75	%		1.72	%		1.64	%		1.60	%		1.64	%
Managed Basis		1.48	%		1.44	%		1.63	%		1.59	%		1.54	%		1.48	%		1.54	%

INTERNATIONAL CARD
Loan Receivables
GAAP Basis	$	3,223,148		$	2,849,056		$	2,883,870		$	2,952,506		$	2,881,619		$	3,223,148		$	2,881,619
Securitization Adjustments		1,225,200			1,702,439			1,690,828			1,691,600			1,640,304			1,225,200			1,640,304
Managed Basis	$	4,448,348		$	4,551,495		$	4,574,698		$	4,644,106		$	4,521,923		$	4,448,348		$	4,521,923

Average Loan Receivables
GAAP Basis	$	2,924,110		$	2,838,312		$	2,919,421		$	2,788,260		$	2,757,699		$	2,893,762		$	2,521,981
Securitization Adjustments		1,590,352			1,709,344			1,688,963			1,630,969			1,603,035			1,662,696			1,328,550
Managed Basis	$	4,514,462		$	4,547,656		$	4,608,384		$	4,419,229		$	4,360,734		$	4,556,458		$	3,850,531

Net Yield on Loan Receivables
GAAP Basis		4.21	%		4.60	%		4.99	%		5.77	%		5.39	%		4.60	%		5.57	%
Securitization Adjustments		6.06	%		6.41	%		6.96	%		6.58	%		6.42	%		6.48	%		6.79	%
Managed Basis		4.86	%		5.28	%		5.71	%		6.07	%		5.77	%		5.28	%		5.99	%

International Credit Card Loans
Credit Card Loans
GAAP Basis	$	3,223,148		$	2,849,056		$	2,883,870		$	2,952,506		$	2,881,619		$	3,223,148		$	2,881,619
Securitization Adjustments		1,225,200			1,702,439			1,690,828			1,691,600			1,640,304			1,225,200			1,640,304
Managed Basis	$	4,448,348		$	4,551,495		$	4,574,698		$	4,644,106		$	4,521,923		$	4,448,348		$	4,521,923

Average Credit Card Loans
GAAP Basis	$	2,924,110		$	2,838,312		$	2,919,421		$	2,788,260		$	2,757,699		$	2,893,762		$	2,451,353
Securitization Adjustments		1,590,352			1,709,344			1,688,963			1,630,969			1,603,035			1,662,696			1,328,550
Managed Basis	$	4,514,462		$	4,547,656		$	4,608,384		$	4,419,229		$	4,360,734		$	4,556,458		$	3,779,903

Quarter Ended

Nine Months Ended

Aug 31,

2007

May 31,

2007

Feb 28,

2007

Nov 30,

2006

Aug 31,

2006

YTD 2007

YTD 2006

Interest Yield
GAAP Basis	9.42	%	9.09	%	9.38	%	9.53	%	9.58	%	9.30	%	9.51	%
Securitization Adjustments	11.07	%	11.20	%	11.77	%	11.41	%	11.24	%	11.35	%	12.16	%
Managed Basis	10.00	%	9.89	%	10.25	%	10.23	%	10.19	%	10.05	%	10.44	%

Net Principal Charge-off Rate
GAAP Basis	6.71	%	6.53	%	6.29	%	5.88	%	6.32	%	6.51	%	4.58	%
Securitization Adjustments	6.27	%	6.45	%	6.72	%	5.67	%	6.58	%	6.49	%	6.64	%
Managed Basis	6.56	%	6.50	%	6.45	%	5.80	%	6.41	%	6.50	%	5.30	%

Delinquency Rate (over 30 days)
GAAP Basis	4.63	%	4.55	%	4.35	%	4.36	%	4.29	%	4.63	%	4.29	%
Securitization Adjustments	5.55	%	4.93	%	5.42	%	4.96	%	4.78	%	5.55	%	4.78	%
Managed Basis	4.89	%	4.69	%	4.75	%	4.58	%	4.47	%	4.89	%	4.47	%

Delinquency Rate (over 90 days)
GAAP Basis	2.21	%	2.24	%	2.16	%	2.16	%	2.03	%	2.21	%	2.03	%
Securitization Adjustments	2.51	%	2.26	%	2.40	%	2.32	%	2.19	%	2.51	%	2.19	%
Managed Basis	2.30	%	2.25	%	2.25	%	2.22	%	2.09	%	2.30	%	2.09	%


³ Securitization Adjustments present the effect of loan securitization by recharacterizing as securitization income the portions of the following items that relate to the securitized loans: interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues. Securitization income is reported in other income.

10

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