Discover Financial Services (DFS) 8-K Consolidated Statement of Financial Condition

Exhibit 99.1

Discover Financial Services

Consolidated Statement of Financial Condition

(unaudited, dollars in millions)

	November 30, 2009															November 30, 2008
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Assets
Cash and cash equivalents	$	13,021		$	—		$	13,021		$	—		$	13,021		$	10,171		$	—		$	10,171		$	—		$	10,171
Other short-term investments		1,350			—			1,350			—			1,350			—			—			—			—			—
Restricted cash		644			—			644			1,237	A		1,881			—			—			—			1,648			1,648
Investment securities		5,035			—			5,035			(4,501	)  B		534			1,228			—			1,228			(982	)		246
Loan receivables		23,625			27,235			50,860			(6	)  C		50,854			25,216			25,879			51,095			—			51,095
Allowance for loan losses		(1,758	)		—			(1,758	)		(2,144	)  D		(3,902	)		(1,374	)		—			(1,374	)		(1,380	)		(2,754	)
Net loan receivables		21,867			27,235			49,102			(2,150	)		46,952			23,842			25,879			49,721			(1,380	)		48,341
Amounts due from asset securitization		1,692			(445	)		1,247			(1,247	)  A,E		—			2,234			(306	)		1,928			(1,928	)		—
Premises and equipment, net		499			—			499			—			499			553			—			553			—			553
Goodwill		255			—			255			—			255			255			—			255			—			255
Intangible assets, net		196			—			196			—			196			203			—			203			—			203
Other assets		1,462			178			1,640			788	F		2,428			1,406			155			1,561			578			2,139
Total assets	$	46,021		$	26,968		$	72,989		$	(5,873	)	$	67,116		$	39,892		$	25,728		$	65,620		$	(2,064	)	$	63,556
Liabilities and Stockholders’ Equity
Deposits	$	32,093		$	—		$	32,093		$	—		$	32,093		$	28,531		$	—		$	28,531		$	—		$	28,531
Short-term borrowings		—			—			—			—			—			500			—			500			—			500
Long-term borrowings		2,428			26,958			29,386			(4,526	)  G		24,860			1,735			25,697			27,432			(1,065	)		26,367
Special dividend - Morgan Stanley		809			—			809			—			809			473			—			473			—			473
Accrued expenses and other liabilities		2,255			10			2,265			(14	)  H		2,251			2,737			31			2,768			(8	)		2,760
Total liabilities		37,585			26,968			64,553			(4,540	)		60,013			33,976			25,728			59,704			(1,073	)		58,631
Preferred stock		1,158			—			1,158			—			1,158			—			—			—			—			—
Common stock		5			—			5			—			5			5			—			5			—			5
Additional paid-in capital		3,573			—			3,573			—			3,573			2,939			—			2,939			—			2,939
Retained earnings		3,875			—			3,875			(1,412	)  I		2,463			3,047			—			3,047			(1,044	)		2,003
Accumulated other comprehensive income		(155	)		—			(155	)		79	J		(76	)		(67	)		—			(67	)		53			(14	)
Treasury stock, at cost		(20	)		—			(20	)		—			(20	)		(8	)		—			(8	)		—			(8	)
Total stockholders’ equity		8,436			—			8,436			(1,333	)		7,103			5,916			—			5,916			(991	)		4,925
Total liabilities and stockholders’ equity	$	46,021		$	26,968		$	72,989		$	(5,873	)	$	67,116		$	39,892		$	25,728		$	65,620		$	(2,064	)	$	63,556

Note: Managed Adjustments represent adjustments to reflect the Company’s previously reported managed basis presentation which included adding back certain assets and liabilities such as securitized loans and related borrowings to the balance sheet, which is different from a full consolidation of the trusts as required by Statement No. 167 (ASC 810).

A Reclassification of cash collections and cash collateral accounts previously reported in amounts due from asset securitization to restricted cash

B Elimination of investment securities related to the retained interests in securitizations (see G, H & J for offsetting balances)

C Reestablishment of FAS 91 (ASC 310) balances recognized as part of the interest-only strip asset

D Additional allowance for loan losses due to the consolidation of $27 billion in securitized loan balances (see I for offsetting balance)

E Elimination of interest-only strip asset recorded in conjunction with the sale of loan receivables to the trusts and fair value adjustments related to the cash collateral accounts (see I for offsetting balances)

F Deferred tax asset related to additional allowance for loan losses on the consolidated securitized loans

G Elimination of intercompany borrowings with the trust related to retained interests in securitizations

H Elimination of accrued interest on the intercompany borrowings related to retained interests in securitizations

I Impact of recording additional allowance for loan losses and elimination of the interest-only strip asset, net of tax

J Elimination of other comprehensive income related to the unrealized gains or losses on investment securities related to retained interests in securitizations and the fair value adjustment on the cash collateral accounts

1

Discover Financial Services

Earnings Summary

(unaudited, dollars in millions)

	Year Ended November 30, 2009													Year Ended November 30, 2008
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Interest income	$	3,145	$	3,316		$	6,461	$	(26	)  A	$	6,435		$	2,693		$	3,853		$	6,546		$	(55	)	$	6,491
Interest expense		1,251		397			1,648		(43	)  B		1,605			1,288			1,069			2,357			(46	)		2,311
Net interest income		1,894		2,919			4,813		17			4,830			1,405			2,784			4,189			(9	)		4,180
Antitrust litigation settlement		1,892		—			1,892		(1,892	)  C		—			864			—			864			(864	)		—
Other income1		2,948		(923	)		2,025		160	D		2,185			3,400			(1,311	)		2,089			104			2,193
Revenue net of interest expense		6,734		1,996			8,730		(1,715	)		7,015			5,669			1,473			7,142			(769	)		6,373
Provision for loan loss		2,362		1,996			4,358		765	E		5,123			1,596			1,473			3,069			408			3,477
Total other expense		2,251		—			2,251		(29	)  F		2,222			2,415			—			2,415			—			2,415
Income before income tax		2,121		—			2,121		(2,451	)		(330	)		1,658			—			1,658			(1,177	)		481
Income tax expense		845		—			845		(938	)  G		(93	)		595			—			595			(445	)		150
Income from continuing operations		1,276		—			1,276		(1,513	)		(237	)		1,063			—			1,063			(732	)		331
Discontinued operations, net of tax		—		—			—		—			—			(135	)		—			(135	)		—			(135	)
Net income	$	1,276	$	—		$	1,276	$	(1,513	)	$	(237	)	$	928		$	—		$	928		$	(732	)	$	196

Note: Managed Adjustments represent adjustments to reflect the Company’s previously reported managed basis presentation which included recharacterizing securitization income to report interest income, interest expense, provision for loan losses and other income on securitized loans in the same lines as non-securitized loans.

A Elimination of interest income on certificated retained interests previously classified as investment securities and balance transfer fee income previously included in gain or loss on interest-only strip asset

B Elimination of interest expense on certificated retained interests previously classified as investment securities and an interest expense adjustment related to the discount on securitized borrowings

C Exclusion of one-time settlement proceeds related to Visa/MasterCard antitrust litigation

D Elimination of the $118 million gain/loss related to the revaluation of the interest only strip receivable and cash collateral accounts

E Provision for loan loss on the year over year change of $1.2 billion in securitized loans

F Exclusion of interest charge related to the Company’s dispute with Morgan Stanley regarding the special dividend agreement

G Estimated income tax on the $2.5 billion pretax loss related to Statement No. 167 adjustments and the exclusion of taxes on the Visa/MasterCard antitrust litigation settlement and Morgan Stanley special dividend agreement interest adjustments

¹ Other income throughout this document differs from the line item reported as other income in historical financial supplements as it excludes antitrust litigation settlement proceeds.

2

Discover Financial Services

Consolidated Statement of Financial Condition

(unaudited, dollars in millions)

	February 28, 2009															May 31, 2009
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Assets
Cash and cash equivalents	$	8,724		$	—		$	8,724		$	—		$	8,724		$	9,695		$	—		$	9,695		$	—		$	9,695
Other short-term investments		—			—			—			—			—			—			—			—			—			—
Restricted cash		—			—			—			1,424			1,424			428			—			428			1,371			1,799
Investment securities		1,303			—			1,303			(978	)		325			1,529			—			1,529			(977	)		552
Loan receivables		28,035			22,854			50,889			(13	)		50,876			27,442			23,591			51,033			(15	)		51,018
Allowance for loan losses		(1,879	)		—			(1,879	)		(1,523	)		(3,402	)		(1,987	)		—			(1,987	)		(1,714	)		(3,701	)
Net loan receivables		26,156			22,854			49,010			(1,536	)		47,474			25,455			23,591			49,046			(1,729	)		47,317
Amounts due from asset securitization		1,847			(349	)		1,498			(1,498	)		—			1,768			(417	)		1,351			(1,351	)		—
Premises and equipment, net		544			—			544			—			544			531			—			531			—			531
Goodwill		255			—			255			—			255			255			—			255			—			255
Intangible assets, net		201			—			201			—			201			199			—			199			—			199
Other assets		1,577			120			1,697			599			2,296			1,658			155			1,813			635			2,448
Assets from discontinued operations		—			—			—			—			—			—			—			—			—			—
Total assets	$	40,607		$	22,625		$	63,232		$	(1,989	)	$	61,243		$	41,518		$	23,329		$	64,847		$	(2,051	)	$	62,796
Liabilities and Stockholders’ Equity
Deposits	$	28,334		$	—		$	28,334		$	—		$	28,334		$	29,150		$	—		$	29,150		$	—		$	29,150
Short-term borrowings		2,375			—			2,375			—			2,375			500			—			500			—			500
Long-term borrowings		1,433			22,609			24,042			(965	)		23,077			1,427			23,320			24,747			(965	)		23,782
Special dividend - Morgan Stanley		473			—			473			—			473			513			—			513			—			513
Accrued expenses and other liabilities		1,992			16			2,008			(15	)		1,993			2,513			9			2,522			(16	)		2,506
Liabilities of discontinued operations		—			—			—			—			—			—			—			—			—			—
Total liabilities		34,607			22,625			57,232			(980	)		56,252			34,103			23,329			57,432			(981	)		56,451
Preferred stock		—			—			—			—			—			1,152			—			1,152			—			1,152
Common stock		5			—			5			—			5			5			—			5			—			5
Additional paid-in capital		2,938			—			2,938			—			2,938			3,030			—			3,030			—			3,030
Retained earnings		3,137			—			3,137			(1,064	)		2,073			3,296			—			3,296			(1,126	)		2,170
Accumulated other comprehensive income		(66	)		—			(66	)		55			(11	)		(53	)		—			(53	)		56			3
Treasury stock, at cost		(14	)		—			(14	)		—			(14	)		(15	)		—			(15	)		—			(15	)
Total stockholders’ equity		6,000			—			6,000			(1,009	)		4,991			7,415			—			7,415			(1,070	)		6,345
Total liabilities and stockholders’ equity	$	40,607		$	22,625		$	63,232		$	(1,989	)	$	61,243		$	41,518		$	23,329		$	64,847		$	(2,051	)	$	62,796
	August 31, 2009															November 30, 2009
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Assets
Cash and cash equivalents	$	10,828		$	—		$	10,828		$	—		$	10,828		$	13,021		$	—		$	13,021		$	—		$	13,021
Other short-term investments		—			—			—			—			—			1,350			—			1,350			—			1,350
Restricted cash		502			—			502			1,390			1,892			644			—			644			1,237			1,881
Investment securities		3,267			—			3,267			(2,668	)		599			5,035			—			5,035			(4,501	)		534
Loan receivables		25,490			25,414			50,904			(7	)		50,897			23,625			27,235			50,860			(6	)		50,854
Allowance for loan losses		(1,833	)		—			(1,833	)		(1,875	)		(3,708	)		(1,758	)		—			(1,758	)		(2,144	)		(3,902	)
Net loan receivables		23,657			25,414			49,071			(1,882	)		47,189			21,867			27,235			49,102			(2,150	)		46,952
Amounts due from asset securitization		1,937			(499	)		1,438			(1,438	)		—			1,692			(445	)		1,247			(1,247	)		—
Premises and equipment, net		518			—			518			—			518			499			—			499			—			499
Goodwill		255			—			255			—			255			255			—			255			—			255
Intangible assets, net		198			—			198			—			198			196			—			196			—			196
Other assets		1,536			181			1,717			733			2,450			1,462			178			1,640			788			2,428
Assets from discontinued operations		—			—			—			—			—			—			—			—			—			—
Total assets	$	42,698		$	25,096		$	67,794		$	(3,865	)	$	63,929		$	46,021		$	26,968		$	72,989		$	(5,873	)	$	67,116
Liabilities and Stockholders’ Equity
Deposits	$	29,567		$	—		$	29,567		$	—		$	29,567		$	32,093		$	—		$	32,093		$	—		$	32,093
Short-term borrowings		—			—			—			—			—			—			—			—			—			—
Long-term borrowings		1,795			25,087			26,882			(2,613	)		24,269			2,428			26,958			29,386			(4,526	)		24,860
Special dividend - Morgan Stanley		654			—			654			—			654			809			—			809			—			809
Accrued expenses and other liabilities		2,296			9			2,305			(14	)		2,291			2,255			10			2,265			(14	)		2,251
Liabilities of discontinued operations		—			—			—			—			—			—			—			—			—			—
Total liabilities		34,312			25,096			59,408			(2,627	)		56,781			37,585			26,968			64,553			(4,540	)		60,013
Preferred stock		1,155			—			1,155			—			1,155			1,158			—			1,158			—			1,158
Common stock		5			—			5			—			5			5			—			5			—			5
Additional paid-in capital		3,564			—			3,564			—			3,564			3,573			—			3,573			—			3,573
Retained earnings		3,706			—			3,706			(1,266	)		2,440			3,875			—			3,875			(1,412	)		2,463
Accumulated other comprehensive income		(25	)		—			(25	)		28			3			(155	)		—			(155	)		79			(76	)
Treasury stock, at cost		(19	)		—			(19	)		—			(19	)		(20	)		—			(20	)		—			(20	)
Total stockholders’ equity		8,386			—			8,386			(1,238	)		7,148			8,436			—			8,436			(1,333	)		7,103
Total liabilities and stockholders’ equity	$	42,698		$	25,096		$	67,794		$	(3,865	)	$	63,929		$	46,021		$	26,968		$	72,989		$	(5,873	)	$	67,116

3

Discover Financial Services

Earnings Summary

(unaudited, dollars in millions)

	Quarter Ended February 28, 2009													Quarter Ended May 31, 2009
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	816	$	788		$	1,604	$	(1	)	$	1,603		$	858	$	749		$	1,607	$	(12	)	$	1,595
Interest expense		313		126			439		(12	)		427			320		94			414		(11	)		403
Net interest income		503		662			1,165		11			1,176			538		655			1,193		(1	)		1,192
Antitrust litigation settlement		475		—			475		(475	)		—			473		—			473		(473	)		—
Other income		715		(266	)		449		98			547			608		(188	)		420		92			512
Revenue net of interest expense		1,693		396			2,089		(366	)		1,723			1,619		467			2,086		(382	)		1,704
Provision for loan loss		938		396			1,334		144			1,478			643		467			1,110		191			1,301
Total other expense		559		—			559		—			559			561		—			561		—			561
Income before income tax		196		—			196		(510	)		(314	)		415		—			415		(573	)		(158	)
Income tax expense		76		—			76		(193	)		(117	)		189		—			189		(215	)		(26	)
Income from continuing operations		120		—			120		(317	)		(197	)		226		—			226		(358	)		(132	)
Discontinued operations, net of tax		—		—			—		—			—			—		—			—		—			—
Net income	$	120	$	—		$	120	$	(317	)	$	(197	)	$	226	$	—		$	226	$	(358	)	$	(132	)
	Quarter Ended August 31, 2009													Quarter Ended November 30, 2009
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	833	$	831		$	1,664	$	(3	)	$	1,661		$	638	$	948		$	1,586	$	(10	)	$	1,576
Interest expense		304		88			392		(10	)		382			314		89			403		(10	)		393
Net interest income		529		743			1,272		7			1,279			324		859			1,183		—			1,183
Antitrust litigation settlement		472		—			472		(472	)		—			472		—			472		(472	)		—
Other income		844		(199	)		645		(69	)		576			781		(270	)		511		39			550
Revenue net of interest expense		1,845		544			2,389		(534	)		1,855			1,577		589			2,166		(433	)		1,733
Provision for loan loss		381		544			925		161			1,086			400		589			989		269			1,258
Total other expense		524		—			524		—			524			607		—			607		(29	)		578
Income before income tax		940		—			940		(695	)		245			570		—			570		(673	)		(103	)
Income tax expense		363		—			363		(268	)		95			217		—			217		(262	)		(45	)
Income from continuing operations		577		—			577		(427	)		150			353		—			353		(411	)		(58	)
Discontinued operations, net of tax		—		—			—		—			—			—		—			—		—			—
Net income	$	577	$	—		$	577	$	(427	)	$	150		$	353	$	—		$	353	$	(411	)	$	(58	)

4

Discover Financial Services

Consolidated Statement of Financial Condition

(unaudited, dollars in millions)

	February 29, 2008														May 31, 2008
	Reported GAAP			Managed Adjustments		Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments		Reported Managed			Adjustments			Pro Forma Balances
Assets
Cash and cash equivalents	$	8,286		$	—	$	8,286		$	—		$	8,286		$	8,765		$	—	$	8,765		$	—		$	8,765
Restricted cash		—			—		—			3,546			3,546			—			—		—			2,875			2,875
Investment securities		893			—		893			(684	)		209			1,055			—		1,055			(881	)		174
Loan receivables		21,043			26,458		47,501			—			47,501			20,502			27,339		47,841			—			47,841
Allowance for loan losses		(860	)		—		(860	)		(1,087	)		(1,947	)		(846	)		—		(846	)		(1,158	)		(2,004	)
Net loan receivables		20,183			26,458		46,641			(1,087	)		45,554			19,656			27,339		46,995			(1,158	)		45,837
Amounts due from asset securitization		2,935			1,101		4,036			(4,036	)		—			2,706			609		3,315			(3,315	)		—
Premises and equipment, net		567			—		567			—			567			556			—		556			—			556
Goodwill		255			—		255			—			255			255			—		255			—			255
Intangible assets, net		58			—		58			—			58			56			—		56			—			56
Other assets		1,046			156		1,202			557			1,759			972			180		1,152			572			1,724
Assets from discontinued operations		3,105			—		3,105			—			3,105			213			—		213			—			213
Total assets	$	37,328		$	27,715	$	65,043		$	(1,704	)	$	63,339		$	34,234		$	28,128	$	62,362		$	(1,907	)	$	60,455
Liabilities and Stockholders’ Equity
Deposits	$	24,942		$	—	$	24,942		$	—		$	24,942		$	24,768		$	—	$	24,768		$	—		$	24,768
Short-term borrowings		250			—		250			—			250			—			—		—			—			—
Long-term borrowings		1,976			27,651		29,627			(700	)		28,927			1,890			28,069		29,959			(900	)		29,059
Special dividend - Morgan Stanley		—			—		—			—			—			—			—		—			—			—
Accrued expenses and other liabilities		1,848			64		1,912			(48	)		1,864			1,726			59		1,785			(26	)		1,759
Liabilities of discontinued operations		2,658			—		2,658			—			2,658			—			—		—			—			—
Total liabilities		31,674			27,715		59,389			(748	)		58,641			28,384			28,128		56,512			(926	)		55,586
Preferred stock		—			—		—			—			—			—			—		—			—			—
Common stock		5			—		5			—			5			5			—		5			—			5
Additional paid-in capital		2,885			—		2,885			—			2,885			2,909			—		2,909			—			2,909
Retained earnings		2,761			—		2,761			(966	)		1,795			2,966			—		2,966			(993	)		1,973
Accumulated other comprehensive income		5			—		5			10			15			(26	)		—		(26	)		12			(14	)
Treasury stock, at cost		(2	)		—		(2	)		—			(2	)		(4	)		—		(4	)		—			(4	)
Total stockholders’ equity		5,654			—		5,654			(956	)		4,698			5,850			—		5,850			(981	)		4,869
Total liabilities and stockholders’ equity	$	37,328		$	27,715	$	65,043		$	(1,704	)	$	63,339		$	34,234		$	28,128	$	62,362		$	(1,907	)	$	60,455

	August 31, 2008															November 30, 2008
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Assets
Cash and cash equivalents	$	10,475		$	—		$	10,475		$	—		$	10,475		$	10,171		$	—		$	10,171		$	—		$	10,171
Restricted cash		—			—			—			1,744			1,744			—			—			—			1,648			1,648
Investment securities		1,199			—			1,199			(1,025	)		174			1,228			—			1,228			(982	)		246
Loan receivables		21,767			28,660			50,427			—			50,427			25,216			25,879			51,095			—			51,095
Allowance for loan losses		(959	)		—			(959	)		(1,209	)		(2,168	)		(1,374	)		—			(1,374	)		(1,380	)		(2,754	)
Net loan receivables		20,808			28,660			49,468			(1,209	)		48,259			23,842			25,879			49,721			(1,380	)		48,341
Amounts due from asset securitization		2,648			(498	)		2,150			(2,150	)		—			2,234			(306	)		1,928			(1,928	)		—
Premises and equipment, net		564			—			564			—			564			553			—			553			—			553
Goodwill		255			—			255			—			255			255			—			255			—			255
Intangible assets, net		54			—			54			—			54			203			—			203			—			203
Other assets		1,281			187			1,468			572			2,040			1,406			155			1,561			578			2,139
Assets from discontinued operations		34			—			34			—			34			—			—			—			—			—
Total assets	$	37,318		$	28,349		$	65,667		$	(2,068	)	$	63,599		$	39,892		$	25,728		$	65,620		$	(2,064	)	$	63,556
Liabilities and Stockholders’ Equity
Deposits	$	26,959		$	—		$	26,959		$	—		$	26,959		$	28,531		$	—		$	28,531		$	—		$	28,531
Short-term borrowings		—			—			—			—			—			500			—			500			—			500
Long-term borrowings		1,854			28,297			30,151			(1,065	)		29,086			1,735			25,697			27,432			(1,065	)		26,367
Special dividend - Morgan Stanley		—			—			—			—			—			473			—			473			—			473
Accrued expenses and other liabilities		2,504			52			2,556			(20	)		2,536			2,737			31			2,768			(8	)		2,760
Liabilities of discontinued operations		—			—			—			—			—			—			—			—			—			—
Total liabilities		31,317			28,349			59,666			(1,085	)		58,581			33,976			25,728			59,704			(1,073	)		58,631
Preferred stock		—			—			—			—			—			—			—			—			—			—
Common stock		5			—			5			—			5			5			—			5			—			5
Additional paid-in capital		2,925			—			2,925			—			2,925			2,939			—			2,939			—			2,939
Retained earnings		3,117			—			3,117			(1,008	)		2,109			3,047			—			3,047			(1,044	)		2,003
Accumulated other comprehensive income		(39	)		—			(39	)		25			(14	)		(67	)		—			(67	)		53			(14	)
Treasury stock, at cost		(7	)		—			(7	)		—			(7	)		(8	)		—			(8	)		—			(8	)
Total stockholders’ equity		6,001			—			6,001			(983	)		5,018			5,916			—			5,916			(991	)		4,925
Total liabilities and stockholders’ equity	$	37,318		$	28,349		$	65,667		$	(2,068	)	$	63,599		$	39,892		$	25,728		$	65,620		$	(2,064	)	$	63,556

5

Discover Financial Services

Earnings Summary

(unaudited, dollars in millions)

	Quarter Ended February 29, 2008															Quarter Ended May 31, 2008
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Interest income	$	663		$	991		$	1,654		$	(6	)	$	1,648		$	612		$	960		$	1,572		$	(10	)	$	1,562
Interest expense		339			330			669			(5	)		664			313			237			550			(10	)		540
Net interest income		324			661			985			(1	)		984			299			723			1,022			—			1,022
Antitrust litigation settlement		—			—			—			—			—			—			—			—			—			—
Other income		975			(339	)		636			(75	)		561			845			(352	)		493			29			522
Revenue net of interest expense		1,299			322			1,621			(76	)		1,545			1,144			371			1,515			29			1,544
Provision for loan loss		307			322			629			113			742			211			371			582			71			653
Total other expense		601			—			601			—			601			607			—			607			—			607
Income before income tax		391			—			391			(189	)		202			326			—			326			(42	)		284
Income tax expense		153			—			153			(71	)		82			124			—			124			(15	)		109
Income from continuing operations		238			—			238			(118	)		120			202			—			202			(27	)		175
Discontinued operations, net of tax		(158	)		—			(158	)		—			(158	)		33			—			33			—			33
Net income	$	80		$	—		$	80		$	(118	)	$	(38	)	$	235		$	—		$	235		$	(27	)	$	208
	Quarter Ended August 31, 2008															Quarter Ended November 30, 2008
	Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances			Reported GAAP			Managed Adjustments			Reported Managed			Adjustments			Pro Forma Balances
Interest income	$	682		$	956		$	1,638		$	(19	)	$	1,619		$	736		$	946		$	1,682		$	(20	)	$	1,662
Interest expense		306			229			535			(13	)		522			330			273			603			(18	)		585
Net interest income		376			727			1,103			(6	)		1,097			406			673			1,079			(2	)		1,077
Antitrust litigation settlement		—			—			—			—			—			864			—			864			(864	)		—
Other income		875			(338	)		537			34			571			705			(282	)		423			116			539
Revenue net of interest expense		1,251			389			1,640			28			1,668			1,975			391			2,366			(750	)		1,616
Provision for loan loss		364			389			753			52			805			714			391			1,105			172			1,277
Total other expense		613			—			613			—			613			594			—			594			—			594
Income before income tax		274			—			274			(24	)		250			667			—			667			(922	)		(255	)
Income tax expense		95			—			95			(9	)		86			223			—			223			(350	)		(127	)
Income from continuing operations		179			—			179			(15	)		164			444			—			444			(572	)		(128	)
Discontinued operations, net of tax		1			—			1			—			1			(11	)		—			(11	)		—			(11	)
Net income	$	180		$	—		$	180		$	(15	)	$	165		$	433		$	—		$	433		$	(572	)	$	(139	)

6

Direct Banking Segment

Earnings Summary

(unaudited, dollars in millions)

	Year Ended November 30, 2009													Year Ended November 30, 2008
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	3,144	$	3,316		$	6,460	$	(26	)	$	6,434		$	2,690	$	3,853		$	6,543	$	(55	)	$	6,488
Interest expense		1,251		397			1,648		(43	)		1,605			1,288		1,069			2,357		(46	)		2,311
Net interest income		1,893		2,919			4,812		17			4,829			1,402		2,784			4,186		(9	)		4,177
Antitrust litigation settlement		1,892		—			1,892		(1,892	)		—			864		—			864		(864	)		—
Other income		2,708		(923	)		1,785		160			1,945			3,221		(1,311	)		1,910		104			2,014
Revenue net of interest expense		6,493		1,996			8,489		(1,715	)		6,774			5,487		1,473			6,960		(769	)		6,191
Provision for loan loss		2,362		1,996			4,358		765			5,123			1,596		1,473			3,069		408			3,477
Total other expense		2,117		—			2,117		—			2,117			2,315		—			2,315		—			2,315
Income before income tax	$	2,014	$	—		$	2,014	$	(2,480	)	$	(466	)	$	1,576	$	—		$	1,576	$	(1,177	)	$	399

7

Direct Banking Segment

Earnings Summary

(unaudited, dollars in millions)

	Quarter Ended February 28, 2009													Quarter Ended May 31, 2009
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	815	$	788		$	1,603	$	(1	)	$	1,602		$	858	$	749		$	1,607	$	(12	)	$	1,595
Interest expense		313		126			439		(12	)		427			320		94			414		(11	)		403
Net interest income		502		662			1,164		11			1,175			538		655			1,193		(1	)		1,192
Antitrust litigation settlement		475		—			475		(475	)		—			473		—			473		(473	)		—
Other income		655		(266	)		389		98			487			549		(188	)		361		92			453
Revenue net of interest expense		1,632		396			2,028		(366	)		1,662			1,560		467			2,027		(382	)		1,645
Provision for loan loss		938		396			1,334		144			1,478			643		467			1,110		191			1,301
Total other expense		527		—			527		—			527			529		—			529		—			529
Income before income tax	$	167	$	—		$	167	$	(510	)	$	(343	)	$	388	$	—		$	388	$	(573	)	$	(185	)
	Quarter Ended August 31, 2009													Quarter Ended November 30, 2009
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances			Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	833	$	831		$	1,664	$	(3	)	$	1,661		$	638	$	948		$	1,586	$	(10	)	$	1,576
Interest expense		304		88			392		(10	)		382			314		89			403		(10	)		393
Net interest income		529		743			1,272		7			1,279			324		859			1,183		—			1,183
Antitrust litigation settlement		472		—			472		(472	)		—			472		—			472		(472	)		—
Other income		783		(199	)		584		(69	)		515			721		(270	)		451		39			490
Revenue net of interest expense		1,784		544			2,328		(534	)		1,794			1,517		589			2,106		(433	)		1,673
Provision for loan loss		381		544			925		161			1,086			400		589			989		269			1,258
Total other expense		490		—			490		—			490			571		—			571		—			571
Income before income tax	$	913	$	—		$	913	$	(695	)	$	218		$	546	$	—		$	546	$	(702	)	$	(156	)

8

Direct Banking Segment

Earnings Summary

(unaudited, dollars in millions)

	Quarter Ended February 29, 2008												Quarter Ended May 31, 2008
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances		Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	662	$	991		$	1,653	$	(6	)	$	1,647	$	612	$	960		$	1,572	$	(10	)	$	1,562
Interest expense		339		330			669		(5	)		664		313		237			550		(10	)		540
Net interest income		323		661			984		(1	)		983		299		723			1,022		—			1,022
Antitrust litigation settlement		—		—			—		—			—		—		—			—		—			—
Other income		941		(339	)		602		(75	)		527		808		(352	)		456		29			485
Revenue net of interest expense		1,264		322			1,586		(76	)		1,510		1,107		371			1,478		29			1,507
Provision for loan loss		307		322			629		113			742		211		371			582		71			653
Total other expense		582		—			582		—			582		587		—			587		—			587
Income before income tax	$	375	$	—		$	375	$	(189	)	$	186	$	309	$	—		$	309	$	(42	)	$	267
	Quarter Ended August 31, 2008												Quarter Ended November 30, 2008
	Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances		Reported GAAP		Managed Adjustments			Reported Managed		Adjustments			Pro Forma Balances
Interest income	$	681	$	956		$	1,637	$	(19	)	$	1,618	$	735	$	946		$	1,681	$	(20	)	$	1,661
Interest expense		306		229			535		(13	)		522		330		273			603		(18	)		585
Net interest income		375		727			1,102		(6	)		1,096		405		673			1,078		(2	)		1,076
Antitrust litigation settlement		—		—			—		—			—		864		—			864		(864	)		—
Other income		820		(338	)		482		34			516		652		(282	)		370		116			486
Revenue net of interest expense		1,195		389			1,584		28			1,612		1,921		391			2,312		(750	)		1,562
Provision for loan loss		364		389			753		52			805		714		391			1,105		172			1,277
Total other expense		586		—			586		—			586		560		—			560		—			560
Income before income tax	$	245	$	—		$	245	$	(24	)	$	221	$	647	$	—		$	647	$	(922	)	$	(275	)

9