Discover Financial Services 8K Reports Second Quarter | DFS 24 Jun 10

Exhibit 99.2

Discover Financial Services
GAAP Basis 1
(unaudited, dollars in thousands, except per
share statistics)	Quarter Ended										May 31, 2010					Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009		Aug 31, 2009		May 31, 2009		vs May 31, 2009					May 31, 2010		May 31, 2009		2010 vs. 2009

Earnings Summary
Interest Income	$1,551,782		$1,559,150		$638,086		$833,217		$857,984		$693,798			81	%	$3,110,932		$1,673,777		$1,437,155			86	%
Interest Expense	404,621		413,724		314,158		304,401		320,005		84,616			26	%	818,345		632,725		185,620			29	%
Net Interest Income	1,147,161		1,145,426		323,928		528,816		537,979		609,182			113	%	2,292,587		1,041,052		1,251,535			120	%
Other Income 2	512,844		545,876		1,253,559		1,315,960		1,081,120		(568,276	)		(53	%)	1,058,720		2,271,076		(1,212,356	)		(53	%)
Revenue Net of Interest Expense	1,660,005		1,691,302		1,577,487		1,844,776		1,619,099		40,906			3	%	3,351,307		3,312,128		39,179			1	%
Provision for Loan Losses	724,264		1,387,206		399,732		380,999		643,861		80,403			12	%	2,111,470		1,581,674		529,796			33	%
Employee Compensation and Benefits	202,536		195,764		191,516		208,528		208,151		(5,615	)		(3	%)	398,300		427,639		(29,339	)		(7	%)
Marketing and Business Development	97,970		84,673		113,851		77,814		102,922		(4,952	)		(5	%)	182,643		214,355		(31,712	)		(15	%)
Information Processing & Communications	63,087		65,418		72,192		67,679		74,441		(11,354	)		(15	%)	128,505		149,338		(20,833	)		(14	%)
Professional Fees	78,067		75,813		92,910		83,746		74,550		3,517			5	%	153,880		144,673		9,207			6	%
Premises and Equipment	17,691		17,860		18,282		18,437		18,223		(532	)		(3	%)	35,551		36,295		(744	)		(2	%)
Other Expense	54,197		35,276		118,748		67,634		82,341		(28,144	)		(34	%)	89,473		147,451		(57,978	)		(39	%)
Total Other Expense	513,548		474,804		607,499		523,838		560,628		(47,080	)		(8	%)	988,352		1,119,751		(131,399	)		(12	%)
Income Before Income Taxes 2	422,193		(170,708	)	570,256		939,939		414,610		7,583			2	%	251,485		610,703		(359,218	)		(59	%)
Tax Expense	164,126		(67,170	)	217,719		362,485		188,810		(24,684	)		(13	%)	96,956		264,509		(167,553	)		(63	%)
Net Income 2	$258,067		($103,538	)	$352,537		$577,454		$225,800		$32,267			14	%	$154,529		$346,194		($191,665	)		(55	%)

Net Income Allocated to Common Stockholders 2, 3	$184,590		($122,233	)	$330,505		$552,928		$206,366		($21,776	)		(11	%)	$63,524		$324,584		($261,060	)		(80	%)

Effective Tax Rate 4	38.9	%	39.3	%	38.2	%	38.6	%	45.5	%						38.6	%	43.3	%

Balance Sheet Statistics
Total Assets	$62,153,678		$66,818,951		$46,020,987		$42,698,290		$41,518,288		$20,635,390			50	%	$62,153,678		$41,518,288		$20,635,390			50	%
Tangible Assets 5	$61,705,953		$66,369,560		$45,569,930		$42,245,313		$41,063,390		$20,642,563			50	%	$61,705,953		$41,063,390		$20,642,563			50	%
Total Equity	$6,038,267		$7,015,048		$8,435,547		$8,386,202		$7,415,640		($1,377,373	)		(19	%)	$6,038,267		$7,415,640		($1,377,373	)		(19	%)
Total Common Equity	$6,038,267		$5,853,594		$7,277,481		$7,231,463		$6,263,661		($225,394	)		(4	%)	$6,038,267		$6,263,661		($225,394	)		(4	%)
Total Common Equity/Total Assets	9.7	%	8.8	%	15.8	%	16.9	%	15.1	%						9.7	%	15.1	%
Total Common Equity/Net Loans 6	13.1	%	12.8	%	33.3	%	30.6	%	24.6	%						13.1	%	24.6	%
Book Value per share 7	$11.10		$12.90		$15.54		$15.45		$15.40		($4.30	)		(28	%)	$11.10		$15.40		($4.30	)		(28	%)
ROE 2,8	16	%	(6	%)	16	%	28	%	12	%						5	%	10	%

Allowance for Loan Loss (period end)	$3,930,624		$4,207,360		$1,757,899		$1,832,360		$1,986,473		$1,944,151			98	%	$3,930,624		$1,986,473		$1,944,151			98	%
Change in Loan Loss Reserves	($276,736	)	$305,000		($74,461	)	($154,113	)	$107,531		($384,267	)	NM			$28,264		$611,888		($583,624	)		(95	%)
Reserve Rate 9	7.86	%	8.40	%	7.44	%	7.19	%	7.24	%	62		bps			7.86	%	7.24	%	62		bps

Per Share Statistics
Basic EPS 2, 10	$0.34		($0.22	)	$0.61		$1.08		$0.43		($0.09	)		(21	%)	$0.12		$0.67		($0.55	)		(82	%)
Diluted EPS 2, 10	$0.33		($0.22	)	$0.60		$1.07		$0.43		($0.10	)		(23	%)	$0.12		$0.67		($0.55	)		(82	%)
Common Stock Price (period end)	$13.45		$13.65		$15.46		$13.75		$9.56		$3.89			41	%	$13.45		$9.56		$3.89			41	%
Ending Common Shares Outstanding (000's)	543,993		543,777		542,922		542,749		481,676		62,317			13	%	543,993		481,676		62,317			13	%
Weighted Average Common Shares Outstanding (000's)	543,875		543,422		542,826		513,098		481,636		62,239			13	%	543,651		481,092		62,559			13	%
Weighted Average Common Shares Outstanding (fully diluted) (000's)	552,060		543,422		551,343		517,050		481,636		70,424			15	%	551,628		481,092		70,536			15	%

Loan Receivables
Total Loans	$50,024,718		$50,093,516		$23,625,084		$25,489,809		$27,441,514		22,583,204			82	%	$50,024,718		$27,441,514		$22,583,204			82	%
Average Total Loans	$49,818,909		$51,555,460		$23,835,598		$26,380,203		$28,257,484		21,561,425			76	%	$50,677,643		$27,998,194		$22,679,449			81	%

Interest Yield 11	12.25	%	12.15	%	10.25	%	12.10	%	11.54	%	72		bps			12.20	%	11.39	%	81		bps
Net Principal Charge-off Rate 12	7.97	%	8.51	%	7.98	%	8.05	%	7.53	%	44		bps			8.24	%	6.95	%	130		bps
Delinquency Rate (over 30 days) 13	4.52	%	5.05	%	4.92	%	4.86	%	4.87	%	(35	)	bps			4.52	%	4.87	%	(35	)	bps
Delinquency Rate (over 90 days) 14	2.45	%	2.77	%	2.58	%	2.46	%	2.60	%	(15	)	bps			2.45	%	2.60	%	(15	)	bps
Net Charge-off Dollars	$1,001,000		$1,082,206		$474,193		$535,112		$536,330		464,670			87	%	$2,083,206		$969,786		$1,113,421			115	%
Loans Delinquent Over 30 Days	$2,263,608		$2,529,580		$1,161,497		$1,237,636		$1,336,420		927,189			69	%	$2,263,608		$1,336,420		$927,189			69	%
Loans Delinquent Over 90 Days	$1,224,526		$1,386,386		$608,437		$626,793		$713,214		511,312			72	%	$1,224,526		$713,214		$511,312			72	%

Transactions Processed on Networks (000's)
Discover Network	392,571		381,562		387,350		390,643		366,315		26,256			7	%	774,133		735,962		38,171			5	%
PULSE Network	805,281		719,906		676,817		753,201		762,175		43,106			6	%	1,525,187		1,448,702		76,485			5	%
Total	1,197,852		1,101,468		1,064,167		1,143,844		1,128,490		69,362			6	%	2,299,320		2,184,664		114,656			5	%

Volume
PULSE Network	$28,645,624		$27,617,635		$24,667,926		$28,051,978		$29,128,044		($482,420	)		(2	%)	$56,263,259		$56,582,217		($318,958	)		(1	%)
Third-Party Issuers	1,678,337		1,561,929		1,522,269		1,446,308		1,340,532		337,805			25	%	3,240,266		2,702,978		537,288			20	%
Diners Club International 15	6,708,533		6,554,504		7,172,809		6,465,990		6,240,604		467,929			7	%	13,263,037		12,534,178		728,859			6	%
Total Payment Services	37,032,494		35,734,068		33,363,004		35,964,276		36,709,180		323,314			1	%	72,766,562		71,819,373		947,189			1	%
Discover Network - Proprietary 16	23,631,719		23,172,534		22,712,600		23,579,434		21,972,596		1,659,123			8	%	46,804,253		44,396,963		2,407,290			5	%
Total	$60,664,213		$58,906,602		$56,075,604		$59,543,710		$58,681,776		$1,982,437			3	%	$119,570,815		$116,216,336		$3,354,479			3	%

Discover Financial Services
As Adjusted Basis (for 2009 data)
(unaudited, dollars in thousands, except per
share statistics)	Quarter Ended										May 31, 2010					Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009		Aug 31, 2009		May 31, 2009		vs May 31, 2009					May 31, 2010		May 31, 2009		2010 vs. 2009

Earnings Summary
Interest Income	$1,551,782		$1,559,150		$1,576,442		$1,660,787		$1,595,066		($43,284	)		(3	%)	$3,110,932		$3,197,923		($86,991	)		(3	%)
Interest Expense	404,621		413,724		393,160		382,238		403,219		1,402			0	%	818,345		830,101		(11,756	)		(1	%)
Net Interest Income	1,147,161		1,145,426		1,183,282		1,278,549		1,191,847		(44,686	)		(4	%)	2,292,587		2,367,822		(75,235	)		(3	%)
Other Income	512,844		545,876		550,229		575,717		513,260		(416	)		(0	%)	1,058,720		1,060,118		(1,398	)		(0	%)
Revenue Net of Interest Expense	1,660,005		1,691,302		1,733,511		1,854,266		1,705,107		(45,102	)		(3	%)	3,351,307		3,427,940		(76,633	)		(2	%)
Provision for Loan Losses	724,264		1,387,206		1,258,261		1,085,209		1,302,476		(578,212	)		(44	%)	2,111,470		2,779,560		(668,090	)		(24	%)
Employee Compensation and Benefits	202,536		195,764		191,516		208,528		208,151		(5,615	)		(3	%)	398,300		427,639		(29,339	)		(7	%)
Marketing and Business Development	97,970		84,673		113,851		77,814		102,922		(4,952	)		(5	%)	182,643		214,355		(31,712	)		(15	%)
Information Processing & Communications	63,087		65,418		72,192		67,679		74,441		(11,354	)		(15	%)	128,505		149,338		(20,833	)		(14	%)
Professional Fees	78,067		75,813		92,910		83,746		74,550		3,517			5	%	153,880		144,673		9,207			6	%
Premises and Equipment	17,691		17,860		18,282		18,437		18,223		(532	)		(3	%)	35,551		36,295		(744	)		(2	%)
Other Expense	54,197		35,276		89,756		67,634		82,341		(28,144	)		(34	%)	89,473		147,451		(57,978	)		(39	%)
Total Other Expense	513,548		474,804		578,507		523,838		560,628		(47,080	)		(8	%)	988,352		1,119,751		(131,399	)		(12	%)
Income Before Income Taxes	422,193		(170,708	)	(103,257	)	245,219		(157,997	)	580,190		NM			251,485		(471,371	)	722,856			153	%
Tax Expense	164,126		(67,170	)	(44,037	)	94,655		(25,697	)	189,823		NM			96,956		(142,743	)	239,699			168	%
Net Income	$258,067		($103,538	)	($59,220	)	$150,564		($132,300	)	$390,367		NM			$154,529		($328,628	)	$483,157			147	%

Net Income Allocated to Common Stockholders 3	$184,590		($122,233	)	($77,855	)	$130,954		($148,854	)	$333,444		NM			$63,524		($345,182	)	$408,706			118	%

Effective Tax Rate 4	38.9	%	39.3	%	42.6	%	38.6	%	16.3	%						38.6	%	30.3	%

Balance Sheet Statistics
Total Assets	$62,153,678		$66,818,951		$67,116,359		$63,929,520		$62,796,303		($642,625	)		(1	%)	$62,153,678		$62,796,303		($642,625	)		(1	%)
Tangible Assets 5	$61,705,953		$66,369,560		$66,665,302		$63,476,543		$62,341,405		($635,452	)		(1	%)	$61,705,953		$62,341,405		($635,452	)		(1	%)
Total Equity	$6,038,267		$7,015,048		$7,102,991		$7,148,275		$6,344,804		($306,537	)		(5	%)	$6,038,267		$6,344,804		($306,537	)		(5	%)
Total Common Equity	$6,038,267		$5,853,594		$5,944,925		$5,993,536		$5,192,826		$845,441			16	%	$6,038,267		$5,192,826		$845,441			16	%
Tangible Common Equity 17	$5,590,542		$5,404,203		$5,493,868		$5,540,559		$4,737,928		$852,614			18	%	$5,590,542		$4,737,928		$852,614			18	%
Tangible Common Equity/Tangible Assets 17, 18	9.1	%	8.1	%	8.2	%	8.7	%	7.6	%						9.1	%	7.6	%
Tangible Common Equity/Net Loans 6, 17, 19	12.1	%	11.8	%	11.7	%	11.7	%	10.0	%						12.1	%	10.0	%
Tangible Common Equity per share 17, 20	$10.28		$9.94		$10.12		$10.21		$9.84		$0.44			4	%	$10.28		$9.84		$0.44			4	%
ROE 8	16	%	(6	%)	(3	%)	9	%	(8	%)						5	%	(12	%)

Net Yield on Loan Receivables 21	9.14	%	9.01	%	9.38	%	9.95	%	9.25	%	(11	)	bps			9.07	%	9.22	%	(15	)	bps
Return on Loan Receivables 22	2.06	%	(0.81	%)	(0.47	%)	1.17	%	(1.03	%)	309		bps			0.61	%	(1.28	%)	189		bps

Allowance for Loan Loss (period end)	$3,930,624		$4,207,360		$3,902,360		$3,707,571		$3,700,901		$229,723			6	%	$3,930,624		$3,700,901		$229,723			6	%
Change in Loan Loss Reserves	($276,736	)	$305,000		$194,789		$6,670		$298,775		($575,511	)		(193	%)	$28,264		$946,544		($918,280	)		(97	%)
Reserve Rate 9	7.86	%	8.40	%	7.67	%	7.28	%	7.25	%	61		bps			7.86	%	7.25	%	61		bps
Reserve Rate (excluding guaranteed student loans) 23	8.21	%	8.73	%	7.87	%	7.41	%	7.32	%	89		bps			8.21	%	7.32	%	89		bps

Per Share Statistics
Basic EPS 10	$0.34		($0.22	)	($0.14	)	$0.26		($0.31	)	$0.65		NM			$0.12		($0.72	)	$0.84			117	%
Diluted EPS 10	$0.33		($0.22	)	($0.14	)	$0.25		($0.31	)	$0.64		NM			$0.12		($0.72	)	$0.84			117	%
Common Stock Price (period end)	$13.45		$13.65		$15.46		$13.75		$9.56		$3.89			41	%	$13.45		$9.56		$3.89			41	%
Ending Common Shares Outstanding (000's)	543,993		543,777		542,922		542,749		481,676		62,317			13	%	543,993		481,676		62,317			13	%
Weighted Average Common Shares Outstanding (000's)	543,875		543,422		542,826		513,098		481,636		62,239			13	%	543,651		481,092		62,559			13	%
Weighted Average Common Shares Outstanding (fully diluted) (000's)	552,060		543,422		542,826		517,050		481,636		70,424			15	%	551,628		481,092		70,536			15	%

Loan Receivables
Total Loans	$50,024,718		$50,093,516		$50,854,146		$50,896,596		$51,017,887		(993,169	)		(2	%)	$50,024,718		$51,017,887		($993,169	)		(2	%)
Average Total Loans	$49,818,909		$51,555,460		$50,585,332		$50,957,954		$51,120,498		(1,301,589	)		(3	%)	$50,677,643		$51,489,536		($811,893	)		(2	%)

Interest Yield 11	12.25	%	12.15	%	12.35	%	12.79	%	12.18	%	7		bps			12.20	%	12.22	%	(2	)	bps
Net Principal Charge-off Rate 12	7.97	%	8.51	%	8.43	%	8.40	%	7.79	%	18		bps			8.24	%	7.14	%	110		bps
Delinquency Rate (over 30 days) 13	4.52	%	5.05	%	5.31	%	5.11	%	5.08	%	(56	)	bps			4.52	%	5.08	%	(56	)	bps
Delinquency Rate (over 90 days) 14	2.45	%	2.77	%	2.78	%	2.60	%	2.73	%	(28	)	bps			2.45	%	2.73	%	(28	)	bps
Net Charge-off Dollars	$1,001,000		$1,082,206		$1,063,472		$1,078,539		$1,003,701		($2,702	)		(0	%)	$2,083,206		$1,833,016		$250,190			14	%
Loans Delinquent Over 30 Days	$2,263,608		$2,529,580		$2,700,959		$2,598,424		$2,592,475		($328,867	)		(13	%)	$2,263,608		$2,592,475		($328,867	)		(13	%)
Loans Delinquent Over 90 Days	$1,224,526		$1,386,386		$1,411,779		$1,322,433		$1,392,727		($168,201	)		(12	%)	$1,224,526		$1,392,727		($168,201	)		(12	%)

Segment - Income Before Income Taxes
Direct Banking	$385,939		($207,665	)	($127,028	)	$218,080		($184,705	)	$570,644		NM			$178,274		($527,005	)	$705,279			134	%
Payment Services	36,254		36,957		23,771		27,139		26,708		9,546			36	%	73,211		55,634		$17,577			32	%
Total	$422,193		($170,708	)	($103,257	)	$245,219		($157,997	)	$580,190		NM			$251,485		($471,371	)	$722,856			153	%

Note: As adjusted basis (non-GAAP) data is presented to show how the Company's financial data would be presented for each of the fiscal quarters in the year ended November 30, 2009 if the trusts used in the Company’s securitization activities were consolidated into the Company’s financial statements for such periods. As adjusted income statement data also excludes the impact of income received in connection with the settlement of the Company's antitrust litigation with Visa and MasterCard in each quarter of 2009 and the income statement impact of the Morgan Stanley special dividend agreement dispute in the fourth quarter of 2009. For reconciliation of comparable GAAP measures see Reconciliation of GAAP to As Adjusted data.

Discover Financial Services
Direct Banking Segment
Managed Basis 24
(unaudited, dollars in thousands)
	Quarter Ended										May 31, 2010					Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009		Aug 31, 2009		May 31, 2009		vs May 31, 2009					May 31, 2010		May 31, 2009		2010 vs. 2009

Earnings Summary
Interest Income	$1,551,775		$1,559,147		$1,585,612		$1,663,886		$1,607,114		($55,339	)		(3	%)	$3,110,922		$3,210,476		($99,554	)		(3	%)
Interest Expense	404,577		413,686		403,266		392,592		414,002		(9,425	)		(2	%)	818,263		852,340		(34,077	)		(4	%)
Net Interest Income	1,147,198		1,145,461		1,182,346		1,271,294		1,193,112		(45,914	)		(4	%)	2,292,659		2,358,136		(65,477	)		(3	%)
Other Income	447,711		480,341		924,499		1,055,529		834,630		(386,919	)		(46	%)	928,052		1,697,853		(769,801	)		(45	%)
Revenue Net of Interest Expense	1,594,909		1,625,802		2,106,845		2,326,823		2,027,742		(432,833	)		(21	%)	3,220,711		4,055,989		(835,278	)		(21	%)
Provision for Loan Losses	724,264		1,387,206		989,009		924,427		1,111,232		(386,968	)		(35	%)	2,111,470		2,444,905		(333,435	)		(14	%)
Total Other Expense	484,706		446,261		571,351		489,596		528,608		(43,902	)		(8	%)	930,967		1,056,015		(125,048	)		(12	%)
Income Before Income Taxes	$385,939		($207,665	)	$546,485		$912,800		$387,902		($1,963	)		(1	%)	$178,274		$555,069		($376,795	)		(68	%)

Net Yield on Loan Receivables 21	9.14	%	9.01	%	9.37	%	9.90	%	9.26	%	(12	)	bps			9.07	%	9.18	%	(11	)	bps
Pretax Return on Loan Receivables 25	3.07	%	(1.63	%)	4.33	%	7.10	%	3.01	%	6		bps			0.71	%	2.16	%	(145	)	bps

Loan Receivables
Total Loans	$50,024,718		$50,093,516		$50,860,372		$50,903,845		$51,032,382		($1,007,664	)		(2	%)	$50,024,718		$51,032,382		($1,007,664	)		(2	%)
Average Total Loans	$49,818,909		$51,555,460		$50,590,846		$50,971,056		$51,132,761		($1,313,852	)		(3	%)	$50,677,643		$51,501,209		($823,566	)		(2	%)

Interest Yield 11	12.25	%	12.15	%	12.34	%	12.73	%	12.19	%	6		bps			12.20	%	12.18	%	2		bps
Net Principal Charge-off Rate 12	7.97	%	8.51	%	8.43	%	8.39	%	7.79	%	18		bps			8.24	%	7.14	%	110		bps
Delinquency Rate (over 30 days) 13	4.52	%	5.05	%	5.31	%	5.10	%	5.08	%	(56	)	bps			4.52	%	5.08	%	(56	)	bps
Delinquency Rate (over 90 days) 14	2.45	%	2.77	%	2.78	%	2.60	%	2.73	%	(28	)	bps			2.45	%	2.73	%	(28	)	bps
Net Charge-off Dollars	$1,001,000		$1,082,206		$1,063,472		$1,078,539		$1,003,701		($2,701	)		(0	%)	$2,083,206		$1,833,016		$250,190			14	%
Loans Delinquent Over 30 Days	$2,263,608		$2,529,580		$2,700,959		$2,598,424		$2,592,475		($328,867	)		(13	%)	$2,263,608		$2,592,475		($328,867	)		(13	%)
Loans Delinquent Over 90 Days	$1,224,526		$1,386,386		$1,411,779		$1,322,433		$1,392,727		($168,201	)		(12	%)	$1,224,526		$1,392,727		($168,201	)		(12	%)

Credit Card Loans
Credit Card Loans	$45,328,330		$45,761,239		$47,465,590		$48,135,639		$48,903,632		($3,575,302	)		(7	%)	$45,328,330		$48,903,632		($3,575,302	)		(7	%)
Average Credit Card Loans	$45,279,580		$47,646,479		$47,429,775		$48,641,890		$49,108,321		($3,828,741	)		(8	%)	$46,450,025		$49,674,982		($3,224,957	)		(6	%)

Interest Yield 11	12.93	%	12.70	%	12.75	%	12.99	%	12.37	%	56		bps			12.81	%	12.32	%	49		bps
Net Principal Charge-off Rate 12	8.56	%	9.00	%	8.81	%	8.63	%	7.99	%	57		bps			8.79	%	7.30	%	149		bps
Delinquency Rate (over 30 days) 13	4.85	%	5.39	%	5.60	%	5.31	%	5.23	%	(38	)	bps			4.85	%	5.23	%	(38	)	bps
Delinquency Rate (over 90 days) 14	2.63	%	2.98	%	2.94	%	2.72	%	2.82	%	(19	)	bps			2.63	%	2.82	%	(19	)	bps
Net Charge-off Dollars	$977,083		$1,057,920		$1,041,247		$1,057,613		$988,390		($11,307	)		(1	%)	$2,035,004		$1,808,033		$226,971			13	%
Loans Delinquent Over 30 Days	$2,196,312		$2,467,482		$2,656,689		$2,557,243		$2,559,138		($362,826	)		(14	%)	$2,196,312		$2,559,138		($362,826	)		(14	%)
Loans Delinquent Over 90 Days	$1,192,684		$1,364,801		$1,393,474		$1,309,638		$1,380,885		($188,201	)		(14	%)	$1,192,684		$1,380,885		($188,201	)		(14	%)

Total Discover Card Volume	$24,247,382		$23,844,456		$23,335,440		$23,955,402		$24,336,751		($89,369	)		(0	%)	$48,091,838		$48,301,328		($209,490	)		(0	%)
Discover Card Sales Volume	$22,858,772		$22,399,675		$21,903,694		$22,768,927		$21,494,174		$1,364,598			6	%	$45,258,447		$42,787,931		$2,470,516			6	%

Discover Financial Services
Direct Banking Segment
As Adjusted Basis (for 2009 data)
(unaudited, dollars in thousands)
	Quarter Ended										May 31, 2010					Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009		Aug 31, 2009		May 31, 2009		vs May 31, 2009					May 31, 2010		May 31, 2009		2010 vs. 2009

Earnings Summary
Interest Income	$1,551,775		$1,559,147		$1,576,364		$1,660,592		$1,594,728		($42,953	)		(3	%)	$3,110,922		$3,197,098		($86,176	)		(3	%)
Interest Expense	404,577		413,686		393,128		382,188		403,158		1,419			0	%	818,263		829,961		(11,698	)		(1	%)
Net Interest Income	1,147,198		1,145,461		1,183,236		1,278,404		1,191,570		(44,372	)		(4	%)	2,292,659		2,367,137		(74,478	)		(3	%)
Other Income	447,711		480,341		490,356		514,481		454,809		(7,098	)		(2	%)	928,052		941,433		(13,381	)		(1	%)
Revenue Net of Interest Expense	1,594,909		1,625,802		1,673,592		1,792,885		1,646,379		(51,470	)		(3	%)	3,220,711		3,308,570		(87,859	)		(3	%)
Provision for Loan Losses	724,264		1,387,206		1,258,261		1,085,209		1,302,476		(578,212	)		(44	%)	2,111,470		2,779,560		(668,090	)		(24	%)
Total Other Expense	484,706		446,261		542,359		489,596		528,608		(43,902	)		(8	%)	930,967		1,056,015		(125,048	)		(12	%)
Income Before Income Taxes	$385,939		($207,665	)	($127,028	)	$218,080		($184,705	)	$570,644		NM			$178,274		($527,005	)	$705,279			134	%

Net Yield on Loan Receivables 21	9.14	%	9.01	%	9.38	%	9.95	%	9.25	%	(11	)	bps			9.07	%	9.22	%	(15	)	bps
Pretax Return on Loan Receivables 25	3.07	%	(1.63	%)	(1.01	%)	1.70	%	(1.43	%)	450		bps			0.71	%	(2.05	%)	276		bps

Loan Receivables
Total Loans	$50,024,718		$50,093,516		$50,854,146		$50,896,596		$51,017,887		($993,169	)		(2	%)	$50,024,718		$51,017,887		($993,169	)		(2	%)
Average Total Loans	$49,818,909		$51,555,460		$50,585,332		$50,957,954		$51,120,498		($1,301,589	)		(3	%)	$50,677,643		$51,489,536		($811,893	)		(2	%)

Interest Yield 11	12.25	%	12.15	%	12.35	%	12.79	%	12.18	%	7		bps			12.20	%	12.22	%	(2	)	bps
Net Principal Charge-off Rate 12	7.97	%	8.51	%	8.43	%	8.40	%	7.79	%	18		bps			8.24	%	7.14	%	110		bps
Delinquency Rate (over 30 days) 13	4.52	%	5.05	%	5.31	%	5.11	%	5.08	%	(56	)	bps			4.52	%	5.08	%	(56	)	bps
Delinquency Rate (over 90 days) 14	2.45	%	2.77	%	2.78	%	2.60	%	2.73	%	(28	)	bps			2.45	%	2.73	%	(28	)	bps
Net Charge-off Dollars	$1,001,000		$1,082,206		$1,063,472		$1,078,539		$1,003,701		($2,701	)		(0	%)	$2,083,206		$1,833,016		$250,190			14	%
Loans Delinquent Over 30 Days	$2,263,608		$2,529,580		$2,700,959		$2,598,424		$2,592,475		($328,867	)		(13	%)	$2,263,608		$2,592,475		($328,867	)		(13	%)
Loans Delinquent Over 90 Days	$1,224,526		$1,386,386		$1,411,779		$1,322,433		$1,392,727		($168,201	)		(12	%)	$1,224,526		$1,392,727		($168,201	)		(12	%)

Credit Card Loans
Credit Card Loans	$45,328,330		$45,761,239		$47,459,364		$48,128,390		$48,889,136		($3,560,806	)		(7	%)	$45,328,330		$48,889,136		($3,560,806	)		(7	%)
Average Credit Card Loans	$45,279,580		$47,646,479		$47,424,261		$48,628,789		$49,096,058		($3,816,478	)		(8	%)	$46,450,025		$49,663,309		($3,213,284	)		(6	%)

Interest Yield 11	12.93	%	12.70	%	12.76	%	13.05	%	12.36	%	57		bps			12.81	%	12.36	%	45		bps
Net Principal Charge-off Rate 12	8.56	%	9.00	%	8.81	%	8.63	%	7.99	%	57		bps			8.79	%	7.30	%	149		bps
Delinquency Rate (over 30 days) 13	4.85	%	5.39	%	5.60	%	5.31	%	5.23	%	(38	)	bps			4.85	%	5.23	%	(38	)	bps
Delinquency Rate (over 90 days) 14	2.63	%	2.98	%	2.94	%	2.72	%	2.82	%	(19	)	bps			2.63	%	2.82	%	(19	)	bps
Net Charge-off Dollars	$977,083		$1,057,920		$1,041,247		$1,057,613		$988,390		($11,307	)		(1	%)	$2,035,004		$1,808,033		$226,971			13	%
Loans Delinquent Over 30 Days	$2,196,312		$2,467,482		$2,656,689		$2,557,243		$2,559,138		($362,826	)		(14	%)	$2,196,312		$2,559,138		($362,826	)		(14	%)
Loans Delinquent Over 90 Days	$1,192,684		$1,364,801		$1,393,474		$1,309,638		$1,380,885		($188,201	)		(14	%)	$1,192,684		$1,380,885		($188,201	)		(14	%)

Total Discover Card Volume	$24,247,382		$23,844,456		$23,335,440		$23,955,402		$24,336,751		($89,369	)		(0	%)	$48,091,838		$48,301,328		($209,490	)		(0	%)
Discover Card Sales Volume	$22,858,772		$22,399,675		$21,903,694		$22,768,927		$21,494,174		$1,364,598			6	%	$45,258,447		$42,787,931		$2,470,516			6	%

Discover Financial Services
Payment Services Segment
(unaudited, dollars in thousands)
	Quarter Ended							May 31, 2010					Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009	Aug 31, 2009	May 31, 2009	vs May 31, 2009					May 31, 2010		May 31, 2009	2010 vs. 2009

Earnings Summary
Interest Income	$7		$3		$78	$195	$338	($331	)		(98	%)	$10		$825	($815	)		(99	%)
Interest Expense	44		38		32	50	61	(17	)		(28	%)	82		140	(58	)		(41	%)
Net Interest Income	(37	)	(35	)	46	145	277	(314	)		(113	%)	(72	)	685	(757	)		(111	%)
Other Income	65,133		65,535		59,873	61,236	58,451	6,682			11	%	130,668		118,685	11,983			10	%
Revenue Net of Interest Expense	65,096		65,500		59,919	61,381	58,728	6,368			11	%	130,596		119,370	11,226			9	%
Provision for Loan Losses	-		-		-	-	-	-		NM			-		-	-		NM
Total Other Expense	28,842		28,543		36,148	34,242	32,020	(3,178	)		(10	%)	57,385		63,736	(6,351	)		(10	%)
Income Before Income Taxes	$36,254		$36,957		$23,771	$27,139	$26,708	$9,546			36	%	$73,211		$55,634	$17,577			32	%

Volume
PULSE Network	$28,645,624		$27,617,635		$24,667,926	$28,051,978	$29,128,044	($482,420	)		(2	%)	$56,263,259		$56,582,217	($318,958	)		(1	%)
Third-Party Issuers	1,678,337		1,561,929		1,522,269	1,446,308	1,340,532	337,805			25	%	3,240,266		2,702,978	537,288			20	%
Diners Club International 15	6,708,533		6,554,504		7,172,809	6,465,990	6,240,604	467,929			7	%	13,263,037		12,534,178	728,859			6	%
Total Payment Services 16	$37,032,494		$35,734,068		$33,363,004	$35,964,276	$36,709,180	$323,314			1	%	$72,766,562		$71,819,373	$947,189			1	%

Transactions Processed on PULSE Network (000's)	805,281		719,906		676,817	753,201	762,175	43,106			6	%	1,525,187		1,448,702	76,485			5	%

DISCOVER FINANCIAL SERVICES

RECONCILIATION OF GAAP TO AS ADJUSTED DATA

The following pages present a reconciliation for certain information disclosed in the financial data supplement.

The trusts used in the securitization activities of Discover Financial Services (the "Company") are included in the Company's consolidated financial results beginning with the fiscal quarter ending February 28, 2010, in accordance with the Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 166, Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140 ("Statement No. 166") (codified under the FASB Accounting Standards Codification ("ASC") Section 860, Transfers and Servicing ) and Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretations No. 46(R) ("Statement No. 167") (codified under ASC Section 810, Consolidation), which were effective for the Company at the beginning of its current fiscal year, December 1, 2009.

The Company did not retrospectively adopt Statements No. 166 and 167 and, therefore, financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for 2010 and beyond will reflect the new accounting requirements, but the historical GAAP financial statements for periods ending on or before November 30, 2009 will continue to reflect the accounting applicable prior to the Company’s adoption of Statements No. 166 and 167.

To allow for a more meaningful historical comparison in analyzing financial data presented in 2010 and beyond, the Company has prepared financial statements showing how the Company's financial data would have been presented if the trusts used in the Company's securitization activities were consolidated into the Company's financial statements in 2009. In preparing the financial statements, the Company made securitization and as adjusted adjustments for each period. Securitization adjustments reverse the effect of loan securitization by recharacterizing securitization income to report interest income, inter est expense, provision for loan losses, discount and interchange revenue and loan fee revenues in the same lines as non-securitized loans. As adjusted adjustments include additional amounts necessary to reflect results as if the trusts used in our securitization activities had been fully consolidated in our historical results and adjustments to exclude the impact of income received in connection with the settlement of the Company's antitrust litigation with Visa and MasterCard in each quarter of 2009 and the income statement impact of the Morgan Stanley special dividend agreement dispute in the fourth quarter of 2009.

Tangible common equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconcilation of TCE to common equity, a GAAP financial measure, is shown on the pages that follow. 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 valuation to investors of the true net asset value of the company.

Reserve rate (excluding guaranteed student loans), a non-GAAP financial measure, represents the allowance for loan losses as a percentage of total loans excluding guaranteed student loans. A reconciliation of total loans, a GAAP financial measure, to loans excluding the guaranteed portion of student loans is shown on the pages that follow. A portion of the Company's student loans are 97% guaranteed by the federal government under the Federal Family Education Loan Program. These guaranteed student loans carry little default risk and therefore, are reserved at a significantly lower rate than the remaining portfo lio. Management believes that a reserve rate excluding the government guaranteed portion of student loans is a more meaningful valuation to investors of the portion of the portfolio that has a risk of loss.

Discover Financial Services
Reconciliation of GAAP to As Adjusted Data
(unaudited, dollars in thousands, except per share statistics)


	Quarter Ended										Six Months Ended
	May 31, 2010		Feb 28, 2010		Nov 30, 2009		Aug 31, 2009		May 31, 2009		May 31, 2010		May 31, 2009
GAAP Total Common Equity	$6,038,267		$5,853,594		$7,277,481		$7,231,463		$6,263,661		$6,038,267		$6,263,661
As Adjusted Adjustments 26	-		-		(1,332,556	)	(1,237,927	)	(1,070,835	)	-		(1,070,835	)
As Adjusted Total Common Equity	6,038,267		5,853,594		5,944,925		5,993,536		5,192,826		6,038,267		5,192,826
Less: Goodwill	(255,421	)	(255,421	)	(255,421	)	(255,421	)	(255,421	)	(255,421	)	(255,421	)
Less: Intangibles	(192,304	)	(193,970	)	(195,636	)	(197,556	)	(199,477	)	(192,304	)	(199,477	)
As Adjusted Tangible Common Equity	$5,590,542		$5,404,203		$5,493,868		$5,540,559		$4,737,928		$5,590,542		$4,737,928

GAAP Book Value per share	$11.10		$12.90		$15.54		$15.45		$15.40		$11.10		$15.40
Less: As Adjusted Adjustments	-		-		(2.45	)	(2.28	)	(2.22	)	-		(2.22	)
As Adjusted Book Value per share	11.10		12.90		13.09		13.17		13.18		11.10		13.18
Less: Goodwill	(0.47	)	(0.47	)	(0.47	)	(0.47	)	(0.53	)	(0.47	)	(0.53	)
Less: Intangibles	(0.35	)	(0.36	)	(0.36	)	(0.36	)	(0.41	)	(0.35	)	(0.41	)
Less: Preferred Stock	-		(2.14	)	(2.13	)	(2.13	)	(2.39	)	-		(2.39	)
As Adjusted Tangible Common Equity per share	$10.28		$9.94		$10.12		$10.21		$9.84		$10.28		$9.84

GAAP Total Loans	$50,024,718		$50,093,516		$23,625,084		$25,489,809		$27,441,514		$50,024,718		$27,441,514
Securitization Adjustments 27	NA		NA		27,235,288		25,414,036		23,590,868		NA		23,590,868
Managed Basis	50,024,718		50,093,516		50,860,372		50,903,845		51,032,382		50,024,718		51,032,382
As Adjusted Adjustments	-		-		(6,226	)	(7,249	)	(14,495	)	-		(14,495	)
As Adjusted Total Loans	50,024,718		50,093,516		50,854,146		50,896,596		51,017,887		50,024,718		51,017,887
Less: Guaranteed portion of student loans	(2,120,231	)	(1,910,889	)	(1,274,453	)	(889,963	)	(448,648	)	(2,120,231	)	(448,648	)
As Adjusted Total Loans Less: Guaranteed portion of student loans	$47,904,487		$48,182,627		$49,579,693		$50,006,633		$50,569,239		$47,904,487		$50,569,239

Reserve Rate
GAAP Basis	7.86	%	8.40	%	7.44	%	7.19	%	7.24	%	7.86	%	7.24	%
Adjustments 28	-		-		0.23	%	0.09	%	0.01	%	-		0.01	%
As Adjusted	7.86	%	8.40	%	7.67	%	7.28	%	7.25	%	7.86	%	7.25	%
Adjustments (to exclude guaranteed student loans)	0.35	%	0.33	%	0.20	%	0.13	%	0.07	%	0.35	%	0.07	%
As Adjusted (excluding guaranteed student loans)	8.21	%	8.73	%	7.87	%	7.41	%	7.32	%	8.21	%	7.32	%

Discover Financial Services
Reconciliation of GAAP to As Adjusted Data
(unaudited, dollars in thousands, except per share statistics)


	Quarter Ended						Six Months Ended			Quarter Ended						Six Months Ended
	Nov 30, 2009		Aug 31, 2009		May 31, 2009		May 31, 2009			Nov 30, 2009		Aug 31, 2009		May 31, 2009		May 31, 2009
Total Company									Total Company (continued)

Interest Income									Total Assets
GAAP Basis	$638,086		$833,217		$857,984		$1,673,777		GAAP Basis	$46,020,987		$42,698,290		$41,518,288		$41,518,288
Securitization Adjustments	947,604		830,864		749,468		1,537,524		Securitization Adjustments	26,968,289		25,096,019		23,328,536		23,328,536
Managed Basis	1,585,690		1,664,081		1,607,452		3,211,301		Managed Basis	72,989,276		67,794,309		64,846,824		64,846,824
As Adjusted Adjustments	(9,248	)	(3,294	)	(12,386	)	(13,378	)	As Adjusted Adjustments	(5,872,917	)	(3,864,789	)	(2,050,521	)	(2,050,521	)
As Adjusted	$1,576,442		$1,660,787		$1,595,066		$3,197,923		As Adjusted	$67,116,359		$63,929,520		$62,796,303		$62,796,303

Interest Expense									Tangible Assets
GAAP Basis	$314,158		$304,401		$320,005		$632,725		GAAP Basis	$45,569,930		$42,245,313		$41,063,390		$41,063,390
Securitization Adjustments	89,140		88,241		94,058		219,755		Securitization Adjustments	26,968,289		25,096,019		23,328,536		23,328,536
Managed Basis	403,298		392,642		414,063		852,480		Managed Basis	72,538,219		67,341,332		64,391,926		64,391,926
As Adjusted Adjustments	(10,138	)	(10,404	)	(10,844	)	(22,379	)	As Adjusted Adjustments	(5,872,917	)	(3,864,789	)	(2,050,521	)	(2,050,521	)
As Adjusted	$393,160		$382,238		$403,219		$830,101		As Adjusted	$66,665,302		$63,476,543		$62,341,405		$62,341,405
	��
Net Interest Income									Total Equity
GAAP Basis	$323,928		$528,816		$537,979		$1,041,052		GAAP Basis	$8,435,547		$8,386,202		$7,415,640		$7,415,640
Securitization Adjustments	858,464		742,623		655,410		1,317,769		As Adjusted Adjustments	(1,332,556	)	(1,237,927	)	(1,070,836	)	(1,070,836	)
Managed Basis	1,182,392		1,271,439		1,193,389		2,358,821		As Adjusted	$7,102,991		$7,148,275		$6,344,804		$6,344,804
As Adjusted Adjustments	890		7,110		(1,542	)	9,001
As Adjusted	$1,183,282		$1,278,549		$1,191,847		$2,367,822		Allowance for Loan Losses
									GAAP Basis	$1,757,899		$1,832,360		$1,986,473		$1,986,473
Other Income									As Adjusted Adjustments	2,144,461		1,875,211		1,714,428		1,714,428
GAAP Basis	$1,253,559		$1,315,960		$1,081,120		$2,271,076		As Adjusted	$3,902,360		$3,707,571		$3,700,901		$3,700,901
Securitization Adjustments	(269,187	)	(199,195	)	(188,039	)	(454,538	)
Managed Basis	984,372		1,116,765		893,081		1,816,538		Change in Loan Loss Reserves
As Adjusted Adjustments	(434,143	)	(541,048	)	(379,821	)	(756,420	)	GAAP Basis	($74,461	)	($154,113	)	$107,531		$611,888
As Adjusted	$550,229		$575,717		$513,260		$1,060,118		As Adjusted Adjustments	269,250		160,783		191,244		334,656
									As Adjusted	$194,789		$6,670		$298,775		$946,544
Revenue Net of Interest Expense
GAAP Basis	$1,577,487		$1,844,776		$1,619,099		$3,312,128		Loan Receivables
Securitization Adjustments	589,277		543,428		467,371		863,231
Managed Basis	2,166,764		2,388,204		2,086,470		4,175,359		Average Total Loans
As Adjusted Adjustments	(433,253	)	(533,938	)	(381,363	)	(747,419	)	GAAP Basis	$23,835,598		$26,380,203		$28,257,484		$27,998,194
As Adjusted	$1,733,511		$1,854,266		$1,705,107		$3,427,940		Securitization Adjustments	26,755,248		24,590,853		22,875,277		23,503,015
									Managed Basis	50,590,846		50,971,056		51,132,761		51,501,209
Provision for Loan Losses									As Adjusted Adjustments	(5,514	)	(13,102	)	(12,263	)	(11,673	)
GAAP Basis	$399,732		$380,999		$643,861		$1,581,674		As Adjusted	$50,585,332		$50,957,954		$51,120,498		$51,489,536
Securitization Adjustments	589,277		543,428		467,371		863,231
Managed Basis	989,009		924,427		1,111,232		2,444,905		Net Charge-off Dollars
As Adjusted Adjustments	269,252		160,782		191,244		334,655		GAAP Basis	$474,193		$535,112		$536,330		$969,786
As Adjusted	$1,258,261		$1,085,209		$1,302,476		$2,779,560		Adjustments	589,280		543,427		467,372		863,231
									As Adjusted	$1,063,472		$1,078,539		$1,003,701		$1,833,016
Other Expense
GAAP Basis	$118,748		$67,634		$82,341		$147,451		Loans Delinquent Over 30 Days
As Adjusted Adjustments	(28,992	)	-		-		-		GAAP Basis	$1,161,497		$1,237,636		$1,336,420		$1,336,420
As Adjusted	$89,756		$67,634		$82,341		$147,451		Adjustments	1,539,462		1,360,788		1,256,055		1,256,055
									As Adjusted	$2,700,959		$2,598,424		$2,592,475		$2,592,475
Total Other Expense
GAAP Basis	$607,499		$523,838		$560,628		$1,119,751		Loans Delinquent Over 90 Days
As Adjusted Adjustments	(28,992	)	-		-		-		GAAP Basis	$608,437		$626,793		$713,214		$713,214
As Adjusted	$578,507		$523,838		$560,628		$1,119,751		Adjustments	803,342		695,640		679,513		679,513
									As Adjusted	$1,411,779		$1,322,433		$1,392,727		$1,392,727
Income Before Income Taxes
GAAP Basis	$570,256		$939,939		$414,610		$610,703		Direct Banking Earnings Summary
As Adjusted Adjustments	(673,513	)	(694,720	)	(572,607	)	(1,082,074	)
As Adjusted	($103,257	)	$245,219		($157,997	)	($471,371	)	Interest Income
									Managed	$1,585,612		$1,663,886		$1,607,114		$3,210,476
Tax Expense									As Adjusted Adjustments	(9,248	)	(3,294	)	(12,386	)	(13,378	)
GAAP Basis	$217,719		$362,485		$188,810		$264,509		As Adjusted	$1,576,364		$1,660,592		$1,594,728		$3,197,098
As Adjusted Adjustments	(261,756	)	(267,830	)	(214,507	)	(407,252	)
As Adjusted	($44,037	)	$94,655		($25,697	)	($142,743	)	Interest Expense
									Managed	$403,266		$392,592		$414,002		$852,340
Net Income									As Adjusted Adjustments	(10,138	)	(10,404	)	(10,844	)	(22,379	)
GAAP Basis	$352,537		$577,454		$225,800		$346,194		As Adjusted	$393,128		$382,188		$403,158		$829,961
As Adjusted Adjustments	(411,757	)	(426,890	)	(358,100	)	(674,822	)
As Adjusted	($59,220	)	$150,564		($132,300	)	($328,628	)	Net Interest Income
									Managed	$1,182,346		$1,271,294		$1,193,112		$2,358,136
Net Income Allocated to Common Stockholders									As Adjusted Adjustments	890		7,110		(1,542	)	9,001
GAAP Basis	$330,505		$552,928		$206,366		$324,584		As Adjusted	$1,183,236		$1,278,404		$1,191,570		$2,367,137
As Adjusted Adjustments	(408,360	)	(421,974	)	(355,220	)	(669,766	)
As Adjusted	($77,855	)	$130,954		($148,854	)	($345,182	)

	Quarter Ended						Six Months Ended			Quarter Ended						Six Months Ended
	Nov 30, 2009		Aug 31, 2009		May 31, 2009		May 31, 2009			Nov 30, 2009		Aug 31, 2009		May 31, 2009		May 31, 2009
Direct Banking Earnings Summary (continued)									Total Company Ratios (continued)

Other Income									Tangible Common Equity/Net Loans
Managed	$924,499		$1,055,529		$834,630		$1,697,853		GAAP Basis	31.2	%	28.7	%	22.8	%	22.8	%
As Adjusted Adjustments	(434,143	)	(541,048	)	(379,821	)	(756,420	)	Adjustments	(19.5	%)	(17.0	%)	(12.8	%)	(12.8	%)
As Adjusted	$490,356		$514,481		$454,809		$941,433		As Adjusted	11.7	%	11.7	%	10.0	%	10.0	%

Revenue Net of Interest Expense									ROE
Managed	$2,106,845		$2,326,823		$2,027,742		$4,055,989		GAAP Basis	16	%	28	%	12	%	10	%
As Adjusted Adjustments	(433,253	)	(533,938	)	(381,363	)	(747,419	)	Adjustments	(19	%)	(19	%)	(20	%)	(22	%)
As Adjusted	$1,673,592		$1,792,885		$1,646,379		$3,308,570		As Adjusted	(3	%)	9	%	(8	%)	(12	%)

Provision for Loan Losses									Net Yield on Loan Receivables
Managed	$989,009		$924,427		$1,111,232		$2,444,905		GAAP Basis	5.45	%	7.95	%	7.55	%	7.46	%
As Adjusted Adjustments	269,252		160,782		191,244		334,655		Adjustments	3.93	%	2.00	%	1.70	%	1.76	%
As Adjusted	$1,258,261		$1,085,209		$1,302,476		$2,779,560		As Adjusted	9.38	%	9.95	%	9.25	%	9.22	%

Total Other Expense									Return on Loan Receivables
Managed	$571,351		$489,596		$528,608		$1,056,015		GAAP Basis	5.93	%	8.68	%	3.17	%	2.48	%
As Adjusted Adjustments	(28,992	)	-		-		-		Adjustments	(6.40	%)	(7.51	%)	(4.20	%)	(3.76	%)
As Adjusted	$542,359		$489,596		$528,608		$1,056,015		As Adjusted	(0.47	%)	1.17	%	(1.03	%)	(1.28	%)

Income Before Income Taxes									Basic EPS
Managed	$546,485		$912,800		$387,902		$555,069		GAAP Basis	$0.61		$1.08		$0.43		$0.67
As Adjusted Adjustments	(673,513	)	(694,720	)	(572,607	)	(1,082,074	)	Adjustments	(0.75	)	(0.82	)	(0.74	)	(1.39	)
As Adjusted	($127,028	)	$218,080		($184,705	)	($527,005	)	As Adjusted	($0.14	)	$0.26		($0.31	)	($0.72	)

Pretax Return on Loan Receivables									Diluted EPS
GAAP Basis	4.33	%	7.10	%	3.01	%	2.16	%	GAAP Basis	$0.60		$1.07		$0.43		$0.67
Adjustments	(5.34	%)	(5.40	%)	(4.44	%)	(4.21	%)	Adjustments	(0.74	)	(0.82	)	(0.74	)	(1.39	)
As Adjusted	(1.01	%)	1.70	%	(1.43	%)	(2.05	%)	As Adjusted	($0.14	)	$0.25		($0.31	)	($0.72	)

Credit Card Loan Receivables									Loan Receivables Ratios

Credit Card Loans									Interest Yield
GAAP Basis	$20,230,302		$22,721,603		$25,312,764		$25,312,764		GAAP Basis	10.25	%	12.10	%	11.54	%	11.39	%
Securitization Adjustments	27,235,288		25,414,036		23,590,868		23,590,868		Adjustments	2.10	%	0.69	%	0.65	%	0.83	%
Managed Basis	47,465,590		48,135,639		48,903,632		48,903,632		As Adjusted	12.35	%	12.79	%	12.18	%	12.22	%
As Adjusted Adjustments	(6,226	)	(7,249	)	(14,496	)	(14,496	)
As Adjusted	$47,459,364		$48,128,390		$48,889,136		$48,889,136		Net Principal Charge-off Rate
									GAAP Basis	7.98	%	8.05	%	7.53	%	6.95	%
Average Credit Card Loans									Adjustments	0.45	%	0.35	%	0.26	%	0.19	%
GAAP Basis	$20,674,527		$24,051,037		$26,233,044		$26,171,967		As Adjusted	8.43	%	8.40	%	7.79	%	7.14	%
Securitization Adjustments	26,755,248		24,590,853		22,875,277		23,503,015
Managed Basis	47,429,775		48,641,890		49,108,321		49,674,982		Delinquency Rate (over 30 days)
As Adjusted Adjustments	(5,514	)	(13,101	)	(12,263	)	(11,673	)	GAAP Basis	4.92	%	4.86	%	4.87	%	4.87	%
As Adjusted	$47,424,261		$48,628,789		$49,096,058		$49,663,309		Adjustments	0.39	%	0.25	%	0.21	%	0.21	%
									As Adjusted	5.31	%	5.11	%	5.08	%	5.08	%
Net Charge-off Dollars
GAAP Basis	$451,970		$514,185		$521,020		$944,802		Delinquency Rate (over 90 days)
Adjustments	589,278		543,428		467,371		863,231		GAAP Basis	2.58	%	2.46	%	2.60	%	2.60	%
As Adjusted	$1,041,247		$1,057,613		$988,390		$1,808,033		Adjustments	0.20	%	0.14	%	0.13	%	0.13	%
									As Adjusted	2.78	%	2.60	%	2.73	%	2.73	%
Loans Delinquent Over 30 Days
GAAP Basis	$1,117,228		$1,196,455		$1,303,082		$1,303,082		Credit Card Ratios
Adjustments	1,539,462		1,360,788		1,256,055		1,256,055
As Adjusted	$2,656,689		$2,557,243		$2,559,138		$2,559,138		Interest Yield
									GAAP Basis	10.86	%	12.56	%	11.81	%	11.61	%
Loans Delinquent Over 90 Days									Adjustments	1.90	%	0.49	%	0.54	%	0.76	%
GAAP Basis	$590,132		$613,998		$701,372		$701,372		As Adjusted	12.76	%	13.05	%	12.36	%	12.36	%
Adjustments	803,342		695,640		679,513		679,513
As Adjusted	$1,393,474		$1,309,638		$1,380,885		$1,380,885		Net Principal Charge-off Rate
									GAAP Basis	8.77	%	8.48	%	7.88	%	7.24	%
Total Company Ratios									Adjustments	0.04	%	0.15	%	0.11	%	0.06	%
									As Adjusted	8.81	%	8.63	%	7.99	%	7.30	%
Effective Tax Rate
GAAP Basis	38.2	%	38.6	%	45.5	%	43.3	%	Delinquency Rate (over 30 days)
Adjustments	4.5	%	0.0	%	(29.3	%)	(13.0	%)	GAAP Basis	5.52	%	5.27	%	5.15	%	5.15	%
As Adjusted	42.6	%	38.6	%	16.3	%	30.3	%	Adjustments	0.08	%	0.04	%	0.08	%	0.08	%
									As Adjusted	5.60	%	5.31	%	5.23	%	5.23	%
Tangible Common Equity/Tangible Assets
GAAP Basis	15.0	%	16.0	%	14.1	%	14.1	%	Delinquency Rate (over 90 days)
Adjustments	(6.8	%)	(7.3	%)	(6.5	%)	(6.5	%)	GAAP Basis	2.92	%	2.70	%	2.77	%	2.77	%
As Adjusted	8.2	%	8.7	%	7.6	%	7.6	%	Adjustments	0.02	%	0.02	%	0.05	%	0.05	%
									As Adjusted	2.94	%	2.72	%	2.82	%	2.82	%

1 GAAP data is presented in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards ("FAS") No. 140 for quarters ended May 31, 2009, August 31, 2009 and November 30, 2009. GAAP data for the quarters beginning February 28, 2010 is presented in accordance with FAS No. 166, Accounting for Transfers of Financial Assets – an amendment of FAS No. 140 and FAS No. 167, Amendments to FASB Interpretations No. 46(R), which were effective for the Company at the beginning of its current fiscal year, December 1, 2009.

2 The quarters ended May 31, 2009, August 31, 2009 and November 30, 2009 include $473 million pre-tax (estimated $295 million after-tax), $472 million pre-tax (estimated $287 million after-tax), and $472 million (estimated $285 million after-tax), respectively related to anti-trust litigation settlement.

3 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.

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

5 Tangible Assets represents total assets less goodwill and intangibles.

6 Net Loans represents total loans less the allowance for loan loss (period end).

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

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

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

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

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

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

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

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

15 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.

16 Gross proprietary sales volume on the Discover Network.

17 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 valuation 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 As Adjusted data schedule.

18 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.

19 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).

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

21 Net Yield on Loan Receivables represents net interest income (annualized) divided by average total loans for the period.

22 Return on Loan Receivables represents net income (annualized) divided by average total loans for the period.

23 Reserve Rate (excluding guaranteed student loans), a non-GAAP financial measure, represents the allowance for loan losses as a percentage of total loans excluding guaranteed student loans. The Company believes that a reserve rate excluding the government guaranteed portion of student loans is a more meaningful valuation to investors of the portion of the portfolio that has a risk of loss. For a corresponding reconciliation of loans excluding the guaranteed portion of student loans to a GAAP financial measure, see Reconciliation of GAAP to As Adjusted data schedule.

24 Managed basis assumes that loans that have been securitized were not sold and presents financial information regarding these loans in a manner similar to the presentation of financial information regarding loans that have not been sold.

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

26 As adjusted adjustments include additional amounts necessary to reflect results as if the trusts used in our securitization activities had been fully consolidated in our historical results. Also included are adjustments to exclude the impact of income received in connection with the settlement of the Company's antitrust litigation with Visa and MasterCard in each quarter of 2009 and the income statement impact of the Morgan Stanley special dividend agreement dispute in the fourth quarter of 2009.

27 Securitization Adjustments reverse the effect of loan securitization by recharacterizing securitization income to report interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues in the same lines as non-securitized loans. Beginning December 1, 2009, securitization adjustments are no longer applicable as the trust assets are consolidated in GAAP reporting.

28 Adjustments represent the difference between GAAP basis and As Adjusted basis.

Discover Financial Services (DFS) 8-KDiscover Financial Services Reports Second Quarter