Discover Financial Services (DFS) 8-K Discover Financial Services Reports Third Quarter Net Income of $644 Million or $1.37 Per Diluted Share

DISCOVER FINANCIAL SERVICES																											Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013					Sep 30, 2014			Sep 30, 2013			2014 vs. 2013
EARNINGS SUMMARY
Interest Income		$1,926			$1,863			$1,833			$1,842			$1,787			$139		8	%		$5,622			$5,222			$400		8	%
Interest Expense	288			274			270			273			278			10			4	%	832			873			(41		)	(5	%)
Net Interest Income	1,638			1,589			1,563			1,569			1,509			129			9	%	4,790			4,349			441			10	%
Discount/Interchange Revenue	599			595			519			574			550			49			9	%	1,712			1,588			124			8	%
Rewards Cost	304			268			265			295			274			30			11	%	836			741			95			13	%
Discount and Interchange Revenue, net	295			327			254			279			276			19			7	%	876			847			29			3	%
Protection Products Revenue	78			78			83			84			90			(12		)	(13	%)	239			266			(27		)	(10	%)
Loan Fee Income	85			80			83			85			78			7			9	%	248			235			13			6	%
Transaction Processing Revenue	46			46			44			46			46			0			0	%	136			146			(10		)	(7	%)
Other Income	48			52			51			66			63			(15		)	(24	%)	151			252			(101		)	(40	%)
Total Other Income	552			583			515			560			553			(1		)	(0	%)	1,650			1,746			(96		)	(5	%)
Revenue Net of Interest Expense	2,190			2,172			2,078			2,129			2,062			128			6	%	6,440			6,095			345			6	%
Provision for Loan Losses	354			360			272			354			333			21			6	%	986			732			254			35	%
Employee Compensation and Benefits	320			301			307			297			292			28			10	%	928			867			61			7	%
Marketing and Business Development	182			168			169			189			174			8			5	%	519			528			(9		)	(2	%)
Information Processing & Communications	87			87			84			89			81			6			7	%	258			244			14			6	%
Professional Fees	111			112			99			108			97			14			14	%	322			302			20			7	%
Premises and Equipment	23			22			23			22			21			2			10	%	68			60			8			13	%
Other Expense	104			107			102			133			118			(14		)	(12	%)	313			355			(42		)	(12	%)
Total Other Expense	827			797			784			838			783			44			6	%	2,408			2,356			52			2	%
Income Before Income Taxes	1,009			1,015			1,022			937			946			63			7	%	3,046			3,007			39			1	%
Tax Expense	365			371			391			335			353			12			3	%	1,127			1,139			(12		)	(1	%)
Net Income		$644			$644			$631			$602			$593			$51		9	%		$1,919			$1,868			$51		3	%
Net Income Allocated to Common Stockholders		$630			$630			$618			$588			$579			$51		9	%		$1,878			$1,826			$52		3	%
Effective Tax Rate	36.2		%	36.6		%	38.3		%	35.8		%	37.3		%						37.0		%	37.9		%
Net Interest Margin	9.78		%	9.84		%	9.87		%	9.81		%	9.64		%	14			bps		9.83		%	9.49		%	34			bps
Operating Efficiency	37.8		%	36.7		%	37.7		%	39.4		%	38.0		%	(21		)	bps		37.4		%	38.7		%	(126		)	bps
ROE	23		%	23		%	23		%	22		%	23		%						23		%	24		%
Ending Common Shares Outstanding	455			465			468			472			479			(24		)	(5	%)	455			479			(24		)	(5	%)
Weighted Average Common Shares Outstanding	460			466			471			475			482			(22		)	(5	%)	466			489			(23		)	(5	%)
Weighted Average Common Shares Outstanding (fully diluted)	461			467			472			477			484			(23		)	(5	%)	467			491			(24		)	(5	%)
PER SHARE STATISTICS
Basic EPS		$1.37			$1.35			$1.31			$1.24			$1.20			$0.17		14	%		$4.03			$3.73			$0.30		8	%
Diluted EPS		$1.37			$1.35			$1.31			$1.23			$1.20			$0.17		14	%		$4.02			$3.72			$0.30		8	%
Common Stock Price (period end)		$64.39			$61.98			$58.19			$55.95			$50.54			$13.85		27	%		$64.39			$50.54			$13.85		27	%
Book Value per share		$24.82			$24.46			$23.53			$22.89			$22.14			$2.68		12	%		$24.82			$22.14			$2.68		12	%
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
EARNINGS SUMMARY
(unaudited, in millions)
	Quarter Ended															Nine Months Ended
	Sep 30, 2014		Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		September 30, 2014 vs. September 30, 2013					Sep 30, 2014		Sep 30, 2013		2014 vs. 2013
SEGMENT- INCOME BEFORE INCOME TAXES
Direct Banking		$981		$984		$994		$911		$918		$63		7	%		$2,959		$2,953		$6		0	%
Payment Services	28		31		28		26		28		0			0	%	87		54		33			61	%
Total		$1,009		$1,015		$1,022		$937		$946		$63		7	%		$3,046		$3,007		$39		1	%
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network	522		514		461		522		500		22			4	%	1,497		1,425		72			5	%
PULSE Network	1,071		1,090		1,037		1,044		1,053		18			2	%	3,198		3,143		55			2	%
Total	1,593		1,604		1,498		1,566		1,553		40			3	%	4,695		4,568		127			3	%
NETWORK VOLUME
PULSE Network		$40,636		$41,500		$41,927		$40,368		$39,458		$1,178		3	%		$124,063		$119,437		$4,626		4	%
Network Partners	2,185		2,617		2,381		2,613		2,507		(322		)	(13	%)	7,183		7,195		(12		)	(0	%)
Diners Club International 1	6,777		6,733		6,527		6,826		6,549		228			3	%	20,037		20,041		(4		)	(0	%)
Total Payment Services	49,598		50,850		50,835		49,807		48,514		1,084			2	%	151,283		146,673		4,610			3	%
Discover Network - Proprietary	30,577		30,342		26,547		30,622		28,880		1,697			6	%	87,466		83,169		4,297			5	%
Total		$80,175		$81,192		$77,382		$80,429		$77,394		$2,781		4	%		$238,749		$229,842		$8,907		4	%
1 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
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
BALANCE SHEET STATISTICS
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013
BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities		$11,480			$11,254			$13,858			$11,727			$10,820			$660		6	%
Total Loan Receivables	67,366			65,875			63,852			65,771			62,738			4,628			7	%
Allowance for Loan Losses	(1,644		)	(1,614		)	(1,591		)	(1,648		)	(1,598		)	(46		)	(3	%)
Net Loan Receivables	65,722			64,261			62,261			64,123			61,140			4,582			7	%
Premises and Equipment, net	661			665			668			654			639			22			3	%
Goodwill and Intangible Assets, net	461			463			466			469			472			(11		)	(2	%)
Other Assets	2,272			2,294			2,331			2,367			2,473			(201		)	(8	%)
Total Assets		$80,596			$78,937			$79,584			$79,340			$75,544			$5,052		7	%
Liabilities & Stockholders' Equity
Direct to Consumer and Affinity Deposits		$28,830			$28,739			$28,711			$28,357			$28,854			($24	)	(0	%)
Brokered Deposits and Other Deposits	16,552			15,706			16,273			16,602			14,263			2,289			16	%
Deposits	45,382			44,445			44,984			44,959			43,117			2,265			5	%
Borrowings	21,057			20,177			20,306			20,614			18,789			2,268			12	%
Accrued Expenses and Other Liabilities	2,856			2,934			3,273			2,958			3,036			(180		)	(6	%)
Total Liabilities	69,295			67,556			68,563			68,531			64,942			4,353			7	%
Total Equity	11,301			11,381			11,021			10,809			10,602			699			7	%
Total Liabilities and Stockholders' Equity		$80,596			$78,937			$79,584			$79,340			$75,544			$5,052		7	%
BALANCE SHEET STATISTICS
Total Common Equity		$10,741			$10,821			$10,461			$10,249			$10,042			$699		7	%
Total Common Equity/Total Assets	13.3		%	13.7		%	13.1		%	12.9		%	13.3		%
Total Common Equity/Net Loans	16.3		%	16.8		%	16.8		%	16.0		%	16.4		%
Tangible Assets		$80,135			$78,474			$79,118			$78,871			$75,072			$5,063		7	%
Tangible Common Equity 1		$10,280			$10,358			$9,995			$9,780			$9,570			$710		7	%
Tangible Common Equity/Tangible Assets 1	12.8		%	13.2		%	12.6		%	12.4		%	12.7		%
Tangible Common Equity/Net Loans 1	15.6		%	16.1		%	16.1		%	15.3		%	15.7		%
Tangible Common Equity per share  1		$22.57			$22.26			$21.34			$20.71			$19.99			$2.58		13	%
REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio	17.8		%	18.3		%	18.1		%	17.4		%	17.9		%
Tier 1 Risk Based Capital Ratio	15.6		%	16.0		%	15.8		%	15.2		%	15.6		%
Tier 1 Common Capital Ratio 2	14.8		%	15.2		%	14.9		%	14.3		%	14.7		%
Common Equity Tier 1 Capital Ratio 3	14.7		%	N/A			N/A			N/A			N/A
Tier 1 Leverage Ratio	13.7		%	14.0		%	13.4		%	13.4		%	13.7		%
LIQUIDITY
Liquidity Portfolio		$10,944			$10,337			$12,141			$11,115			$10,177			$767		8	%
Undrawn Credit Facilities 4	22,877			22,964			22,284			21,500			20,987			1,890			9	%
Total Liquidity		$33,821			$33,301			$34,425			$32,615			$31,164			$2,657		9	%
1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule
2 Tier 1 Common Capital Ratio (under Basel I) is calculated using tier 1 common capital, a non-GAAP measure. The Company believes the tier 1 common capital ratio is meaningful to investors to assess the quality and composition of the Company’s capital. For corresponding reconciliation of tier 1 common capital to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule
3  Estimated Common Equity Tier 1 Capital Ratio (under fully phased-in Basel III rules) is calculated using estimated common equity tier 1 capital, a non-GAAP measure. The Company believes that an estimated common equity tier 1 capital ratio based on Basel III final rules is an important complement to the existing capital ratios and for comparability to other financial institutions. For corresponding reconciliation of common equity tier 1 capital and risk weighted assets calculated under Basel III final rules to tier 1 common equity and risk weighted assets calculated under Basel I see Reconciliation of GAAP to non-GAAP Data schedule
4 Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013
AVERAGE BALANCES
Assets
Cash and Investment Securities		$10,742			$11,037			$11,244			$11,661			$9,732			$1,010		10	%
Restricted Cash	498			563			1,768			488			438			60			14	%
Credit Card Loans	53,130			51,718			51,347			50,957			50,017			3,113			6	%
Private Student Loans	8,310			8,301			8,377			8,124			7,941			369			5	%
Personal Loans	4,718			4,426			4,259			4,114			3,843			875			23	%
Other Loans	323			283			244			248			309			14			5	%
Total Loans	66,481			64,728			64,227			63,443			62,110			4,371			7	%
Total Interest Earning Assets	77,721			76,328			77,239			75,592			72,280			5,441			8	%
Allowance for Loan Losses	(1,625		)	(1,599		)	(1,678		)	(1,575		)	(1,564		)	(61		)	(4	%)
Other Assets	4,289			4,253			4,271			4,405			4,352			(63		)	(1	%)
Total Assets		$80,385			$78,982			$79,832			$78,422			$75,068			$5,317		7	%
Liabilities and Stockholders' Equity
Direct to Consumer and Affinity Deposits		$28,835			$28,752			$28,572			$28,592			$29,009			($174	)	(1	%)
Brokered Deposits and Other Deposits	15,810			15,638			16,280			15,669			13,414			2,396			18	%
Total Interest-bearing Deposits	44,645			44,390			44,852			44,261			42,423			2,222			5	%
Short-term Borrowings	129			113			93			114			173			(44		)	(25	%)
Securitized Borrowings	16,535			15,976			17,014			16,584			15,625			910			6	%
Other Long-term Borrowings	4,341			3,889			3,572			3,099			2,778			1,563			56	%
Total Interest-bearing Liabilities	65,650			64,368			65,531			64,058			60,999			4,651			8	%
Other Liabilities & Stockholders' Equity	14,735			14,614			14,301			14,364			14,069			666			5	%
Total Liabilities and Stockholders' Equity		$80,385			$78,982			$79,832			$78,422			$75,068			$5,317		7	%
AVERAGE RATES
Assets
Cash and Investment Securities	0.80		%	0.76		%	0.75		%	0.77		%	0.79		%	1			bps
Restricted Cash	0.09		%	0.08		%	0.08		%	0.06		%	0.09		%	0			bps
Credit Card Loans	12.04		%	12.10		%	12.14		%	12.08		%	12.00		%	4			bps
Private Student Loans	6.82		%	6.84		%	6.85		%	6.63		%	6.51		%	31			bps
Personal Loans	12.21		%	12.49		%	12.54		%	12.53		%	12.57		%	(36		)	bps
Other Loans	3.83		%	3.69		%	3.27		%	3.12		%	3.43		%	40			bps
Total Loans	11.36		%	11.42		%	11.44		%	11.38		%	11.29		%	7			bps
Total Interest Earning Assets	9.83		%	9.79		%	9.62		%	9.67		%	9.81		%	2			bps
Liabilities and Stockholders' Equity
Direct to Consumer and Affinity Deposits	1.26		%	1.27		%	1.29		%	1.33		%	1.42		%	(16		)	bps
Brokered Deposits and Other Deposits	1.54		%	1.54		%	1.54		%	1.58		%	1.92		%	(38		)	bps
Total Interest-bearing Deposits	1.36		%	1.37		%	1.38		%	1.42		%	1.58		%	(22		)	bps
Short-term Borrowings	1.42		%	1.60		%	1.90		%	2.04		%	1.78		%	(36		)	bps
Securitized Borrowings	1.82		%	1.74		%	1.67		%	1.65		%	1.70		%	12			bps
Other Long-term Borrowings	5.28		%	5.54		%	5.24		%	5.78		%	5.91		%	(63		)	bps
Total Interest-bearing Liabilities	1.74		%	1.71		%	1.67		%	1.69		%	1.81		%	(7		)	bps
Net Interest Margin	9.78		%	9.84		%	9.87		%	9.81		%	9.64		%	14			bps
Net Yield on Interest-earning Assets	8.36		%	8.35		%	8.21		%	8.23		%	8.28		%	8			bps
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013					Sep 30, 2014			Sep 30, 2013			2014 vs. 2013
TOTAL LOAN RECEIVABLES
Ending Loans 1, 2		$67,366			$65,875			$63,852			$65,771			$62,738			$4,628		7	%		$67,366			$62,738			$4,628		7	%
Average Loans 1, 2		$66,481			$64,728			$64,227			$63,443			$62,110			$4,371		7	%		$65,154			$61,273			$3,881		6	%
Interest Yield	11.36		%	11.42		%	11.44		%	11.38		%	11.29		%	7			bps		11.41		%	11.25		%	16			bps
Gross Principal Charge-off Rate	2.63		%	2.82		%	2.82		%	2.63		%	2.66		%	(3		)	bps		2.75		%	2.88		%	(13		)	bps
Gross Principal Charge-off Rate excluding PCI Loans 3	2.79		%	3.01		%	3.01		%	2.82		%	2.86		%	(7		)	bps		2.93		%	3.11		%	(18		)	bps
Net Principal Charge-off Rate	1.94		%	2.08		%	2.08		%	1.90		%	1.86		%	8			bps		2.03		%	2.01		%	2			bps
Net Principal Charge-off Rate excluding PCI Loans 3	2.06		%	2.22		%	2.22		%	2.03		%	2.00		%	6			bps		2.16		%	2.17		%	(1		)	bps
Delinquency Rate (over 30 days) excluding PCI Loans 3	1.64		%	1.56		%	1.65		%	1.64		%	1.60		%	4			bps		1.64		%	1.60		%	4			bps
Delinquency Rate (over 90 days) excluding PCI Loans 3	0.75		%	0.73		%	0.80		%	0.77		%	0.72		%	3			bps		0.75		%	0.72		%	3			bps
Gross Principal Charge-off Dollars		$440			$455			$447			$421			$416			$24		6	%		$1,343			$1,319			$24		2	%
Net Principal Charge-off Dollars		$324			$337			$329			$304			$291			$33		11	%		$990			$922			$68		7	%
Net Interest and Fee Charge-off Dollars		$85			$87			$89			$82			$79			$6		8	%		$261			$257			$3		1	%
Loans Delinquent Over 30 Days 3		$1,043			$964			$985			$1,010			$933			$110		12	%		$1,043			$933			$110		12	%
Loans Delinquent Over 90 Days 3		$476			$451			$478			$475			$421			$55		13	%		$476			$421			$55		13	%
Allowance for Loan Loss (period end)		$1,644			$1,614			$1,591			$1,648			$1,598			$46		3	%		$1,644			$1,598			$46		3	%
Change in Loan Loss Reserves		$30			$23			($57	)		$50			$42			($12	)	(29	%)		($4	)		($190	)		$186		98	%
Reserve Rate	2.44		%	2.45		%	2.49		%	2.51		%	2.55		%	(11		)	bps		2.44		%	2.55		%	(11		)	bps
Reserve Rate Excluding PCI Loans 3	2.54		%	2.56		%	2.61		%	2.63		%	2.73		%	(19		)	bps		2.54		%	2.73		%	(19		)	bps
CREDIT CARD LOANS
Ending Loans		$53,699			$52,742			$50,879			$53,150			$50,360			$3,339		7	%		$53,699			$50,360			$3,339		7	%
Average Loans		$53,130			$51,718			$51,347			$50,957			$50,017			$3,113		6	%		$52,071			$49,432			$2,639		5	%
Interest Yield	12.04		%	12.10		%	12.14		%	12.08		%	12.00		%	4			bps		12.09		%	11.97		%	12			bps
Gross Principal Charge-off Rate	2.99		%	3.22		%	3.22		%	2.98		%	3.02		%	(3		)	bps		3.14		%	3.30		%	(16		)	bps
Net Principal Charge-off Rate	2.16		%	2.33		%	2.32		%	2.09		%	2.05		%	11			bps		2.27		%	2.25		%	2			bps
Delinquency Rate (over 30 days)	1.71		%	1.63		%	1.72		%	1.72		%	1.67		%	4			bps		1.71		%	1.67		%	4			bps
Delinquency Rate (over 90 days)	0.82		%	0.80		%	0.87		%	0.84		%	0.78		%	4			bps		0.82		%	0.78		%	4			bps
Gross Principal Charge-off Dollars		$400			$415			$408			$384			$381			$19		5	%		$1,223			$1,221			$2		0	%
Net Principal Charge-off Dollars		$289			$300			$294			$269			$258			$31		12	%		$883			$831			$52		6	%
Loans Delinquent Over 30 Days		$920			$860			$876			$912			$843			$77		9	%		$920			$843			$77		9	%
Loans Delinquent Over 90 Days		$440			$420			$442			$447			$395			$45		11	%		$440			$395			$45		11	%
Allowance for Loan Loss (period end)		$1,388			$1,359			$1,342			$1,406			$1,393			($5	)	(0	%)		$1,388			$1,393			($5	)	(0	%)
Change in Loan Loss Reserves		$29			$17			($64	)		$13			$33			($4	)	(12	%)		($18	)		($220	)		$202		92	%
Reserve Rate	2.58		%	2.58		%	2.64		%	2.65		%	2.77		%	(19		)	bps		2.58		%	2.77		%	(19		)	bps
Total Discover Card Volume		$32,091			$31,732			$28,077			$31,755			$30,275			$1,816		6	%		$91,900			$86,839			$5,061		6	%
Discover Card Sales Volume		$29,609			$29,341			$25,697			$29,530			$27,989			$1,620		6	%		$84,647			$80,427			$4,220		5	%
Rewards Rate	1.03		%	0.91		%	1.03		%	1.00		%	0.98		%	5			bps		0.99		%	0.92		%	7			bps
1 Total Loans includes mortgages and other loans
2 Purchased Credit Impaired ("PCI") loans are loans that were acquired in which a deterioration in credit quality occurred between the origination date and the acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the loans are contractually past due. PCI loans are private student loans and are included in total loan receivables
3 Excludes PCI loans (described above) which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the company is recognizing interest income on a pool of loans, it is all considered to be performing
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013					Sep 30, 2014			Sep 30, 2013			2014 vs. 2013
PRIVATE STUDENT LOANS
Ending Loans		$8,494			$8,251			$8,372			$8,148			$8,125			$369		5	%		$8,494			$8,125			$369		5	%
Ending PCI Loans 1		$3,788			$3,915			$4,046			$4,178			$4,303			($515	)	(12	%)		$3,788			$4,303			($515	)	(12	%)
Interest Yield	6.82		%	6.84		%	6.85		%	6.63		%	6.51		%	31			bps		6.84		%	6.52		%	32			bps
Net Principal Charge-off Rate	0.61		%	0.68		%	0.67		%	0.67		%	0.60		%	1			bps		0.65		%	0.54		%	11			bps
Net Principal Charge-off Rate excluding PCI Loans 2	1.14		%	1.30		%	1.31		%	1.41		%	1.33		%	(19		)	bps		1.25		%	1.25		%	0			bps
Delinquency Rate (over 30 days) excluding PCI Loans 2	1.78		%	1.66		%	1.79		%	1.66		%	1.60		%	18			bps		1.78		%	1.60		%	18			bps
Reserve Rate	1.56		%	1.55		%	1.45		%	1.39		%	1.02		%	54			bps		1.56		%	1.02		%	54			bps
Reserve Rate excluding PCI Loans 2	2.21		%	2.29		%	2.16		%	2.14		%	2.18		%	3			bps		2.21		%	2.18		%	3			bps
PERSONAL LOANS
Ending Loans		$4,830			$4,579			$4,310			$4,191			$3,995			$835		21	%		$4,830			$3,995			$835		21	%
Interest Yield	12.21		%	12.49		%	12.54		%	12.53		%	12.57		%	(36		)	bps		12.41		%	12.52		%	(11		)	bps
Net Principal Charge-off Rate	1.92		%	1.95		%	2.07		%	2.00		%	2.01		%	(9		)	bps		1.98		%	2.18		%	(20		)	bps
Delinquency Rate (over 30 days)	0.75		%	0.66		%	0.68		%	0.70		%	0.65		%	10			bps		0.75		%	0.65		%	10			bps
Reserve Rate	2.23		%	2.37		%	2.52		%	2.67		%	2.66		%	(43		)	bps		2.23		%	2.66		%	(43		)	bps
1 Purchased Credit Impaired ("PCI") loans are loans that were acquired in which a deterioration in credit quality occurred between the origination date and the acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the loans are contractually past due. PCI loans are private student loans and are included in total loan receivables
2 Excludes PCI loans (described above) which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the company is recognizing interest income on a pool of loans, it is all considered to be performing
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
SEGMENT RESULTS
(unaudited, in millions)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			September 30, 2014 vs. September 30, 2013					Sep 30, 2014			Sep 30, 2013			2014 vs. 2013
DIRECT BANKING
Interest Income		$1,926			$1,863			$1,833			$1,842			$1,787			$139		8	%		$5,622			$5,222			$400		8	%
Interest Expense	288			274			270			273			278			10			4	%	832			873			(41		)	(5	%)
Net Interest Income	1,638			1,589			1,563			1,569			1,509			129			9	%	4,790			4,349			441			10	%
Other Income	475			503			436			475			475			0			0	%	1,414			1,501			(87		)	(6	%)
Revenue Net of Interest Expense	2,113			2,092			1,999			2,044			1,984			129			7	%	6,204			5,850			354			6	%
Provision for Loan Losses	356			360			270			352			333			23			7	%	986			717			269			38	%
Total Other Expense	776			748			735			781			733			43			6	%	2,259			2,180			79			4	%
Income Before Income Taxes		$981			$984			$994			$911			$918			$63		7	%		$2,959			$2,953			$6		0	%
Net Interest Margin	9.79		%	9.85		%	9.88		%	9.82		%	9.65		%	14			bps		9.84		%	9.49		%	35			bps
Pretax Return on Loan Receivables	5.86		%	6.10		%	6.29		%	5.70		%	5.88		%	(2		)	bps		6.08		%	6.45		%	(37		)	bps
PAYMENT SERVICES
Interest Income		$—			$—			$—			$—			$—			$—		NM			$—			$—			$—		NM
Interest Expense	—			—			—			—			—			—			NM		—			—			—			NM
Net Interest Income	—			—			—			—			—			—			NM		—			—			—			NM
Other Income	77			80			79			85			78			(1		)	(1	%)	236			245			(9		)	(4	%)
Revenue Net of Interest Expense	77			80			79			85			78			(1		)	(1	%)	236			245			(9		)	(4	%)
Provision for Loan Losses	(2		)	—			2			2			—			(2		)	NM		—			15			(15		)	(100	%)
Total Other Expense	51			49			49			57			50			1			2	%	149			176			(27		)	(15	%)
Income Before Income Taxes		$28			$31			$28			$26			$28			$0		0	%		$87			$54			$33		61	%
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES

GLOSSARY OF FINANCIAL TERMS

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

Common Equity Tier 1 Capital Ratio is calculated under fully phased-in Basel III rules, and represents estimated common equity tier 1 capital divided by estimated risk weighted assets. The estimated Common Equity Tier 1 Capital Ratio is a non-GAAP measure. The Company believes that an estimated Common Equity Tier 1 Capital Ratio based on Basel III final rules is an important complement to the existing capital ratios and for comparability to other financial institutions. For corresponding reconciliation of estimated common equity tier 1 capital and risk weighted assets calculated under Basel III final rules to tier 1 common equity and risk weighted assets calculated under Basel I, see Reconciliation of GAAP to Non-GAAP Data schedule

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

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

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

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

Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period

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

Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments

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

Net Interest Margin represents net interest income (annualized) divided by average total loans for the period.

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

Operating Efficiency represents total other expense divided by revenue net of interest expense

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

Proprietary Network Volume represents gross proprietary sales volume on the Discover Network

Regulatory Capital Ratios are regulatory measures used to evaluate capital adequacy. To be considered "well-capitalized," total risk-based, tier 1 risk-based, and tier 1 leverage ratios of 10%, 6% and 5% respectively must be maintained. Regulatory capital ratios are calculated under Basel I. Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets. Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets. Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets. Tier 1 Common Capital Ratio represents tier 1 common capital, a non-GAAP measure, divided by risk-weighted assets. For corresponding reconciliation of tier 1 common capital to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data schedule

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

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

Rewards Rate represents rewards cost divided by Discover Card sales volume

Tangible Assets represents total assets less goodwill and intangibles

Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP Data schedule

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)

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

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

Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)

DISCOVER FINANCIAL SERVICES
RECONCILIATION OF GAAP TO NON-GAAP DATA
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
GAAP total common equity		$10,741			$10,821			$10,461			$10,249			$10,042
Less: Goodwill	(284		)	(284		)	(284		)	(284		)	(284		)
Less: Intangibles	(177		)	(179		)	(182		)	(185		)	(188		)
Tangible common equity 1		$10,280			$10,358			$9,995			$9,780			$9,570
Effect of certain items in accumulated other comprehensive income (loss) excluded from tier 1 common capital	70			73			71			69			110
Total tier 1 common capital (Basel I) 2		$10,350			$10,431			$10,066			$9,849			$9,680
Add: Adjustments related to capital components 3	21			N/A			N/A			N/A			N/A
Common equity Tier 1 capital (Basel III final rule)		$10,371		N/A			N/A			N/A			N/A
Risk weighted assets (Basel I)	$	70,132		$	68,755		$	67,365		$	68,649		$	65,741
Risk weighted assets (Basel III final rule) 4	$	70,560		N/A			N/A			N/A			N/A
Tier 1 common capital ratio (Basel I)  5	14.8		%	15.2		%	14.9		%	14.3		%	14.7		%
Common equity Tier 1 capital ratio (Basel III final rule) 6	14.7		%	N/A			N/A			N/A			N/A
GAAP book value per share		$24.82			$24.46			$23.53			$22.89			$22.14
Less: Goodwill	(0.62		)	(0.62		)	(0.60		)	(0.60		)	(0.59		)
Less: Intangibles	(0.39		)	(0.38		)	(0.39		)	(0.39		)	(0.39		)
Less: Preferred Stock	(1.23		)	(1.20		)	(1.20		)	(1.19		)	(1.17		)
Tangible common equity per share		$22.58			$22.26			$21.34			$20.71			$19.99
1 Tangible common equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE and definitions may vary, so 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 measure to investors of the true net asset value of the company
2 Tier 1 common capital, a non-GAAP financial measure, represents common equity and the effect of certain items in accumulated other comprehensive income (loss) excluded from tier 1 common capital, less goodwill and intangibles. A reconciliation of tier 1 common capital to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use tier 1 common capital and definitions may vary, so we advise users of this information to exercise caution in comparing tier 1 common capital of different companies. Tier 1 common capital is included to support the tier 1 common capital ratio which is meaningful to investors to assess the quality and composition of the Company’s capital
3 Adjustments related to capital components include deferred tax liabilities related to intangible assets and deduction for deferred tax assets
4  Key differences under fully phased-in Basel III rules in the calculation of risk-weighted assets compared to Basel I include higher risk weighting for past due loans and unfunded commitments
5  Tier 1 common capital ratio is calculated using tier 1 common capital (Basel I), a non-GAAP measure, divided by risk weighted assets (Basel I)
6  Estimated common equity tier 1 capital ratio is calculated using estimated common equity tier 1 capital (under fully phased-in Basel III rules), a non-GAAP measure, divided by estimated risk weighted assets (under fully phased-in-Basel III rules)