a50420972ex99

a50420972ex99_2.htm

Exhibit 99.2

DISCOVER FINANCIAL SERVICES
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																					Nine Months Ended
	Aug 31, 2012			May 31, 2012			Feb 29, 2012			Nov 30, 2011			Aug 31, 2011			August 31, 2012 vs. August 31, 2011						Aug 31, 2012			Aug 31, 2011			2012 vs. 2011
EARNINGS SUMMARY
Interest Income		$1,695			$1,656			$1,646			$1,620			$1,599			$96			6	%		$4,997			$4,725			$272			6	%
Interest Expense		325			341			353			360			362			(37	)		(10	%)		1,019			1,125			(106	)		(9	%)
Net Interest Income		1,370			1,315			1,293			1,260			1,237			133			11	%		3,978			3,600			378			11	%

Discount/Interchange Revenue		533			514			500			489			517			16			3	%		1,548			1,474			74			5	%
Rewards		268			248			236			215			234			34			15	%		753			664			89			13	%
Discount and Interchange Revenue, net		265			266			264			274			283			(18	)		(6	%)		795			810			(15	)		(2	%)
Protection Products Revenue		104			101			105			107			108			(4	)		(4	%)		310			321			(11	)		(3	%)
Loan Fee Income		80			77			85			87			84			(4	)		(5	%)		242			251			(9	)		(4	%)
Transaction Processing Revenue		59			52			53			48			44			15			34	%		164			132			32			24	%
Other Income		86			37			43			30			33			53			161	%		166			145			21			14	%
Total Other Income		594			533			550			546			552			42			8	%		1,677			1,659			18			1	%

Revenue Net of Interest Expense		1,964			1,848			1,843			1,806			1,789			175			10	%		5,655			5,259			396			8	%

Provision for Loan Losses		126			232			152			319			100			26			26	%		510			694			(184	)		(27	%)

Employee Compensation and Benefits		274			249			247			229			242			32			13	%		770			685			85			12	%
Marketing and Business Development		161			119			131			144			133			28			21	%		411			393			18			5	%
Information Processing & Communications		69			72			70			69			64			5			8	%		211			195			16			8	%
Professional Fees		107			110			100			114			106			1			1	%		317			301			16			5	%
Premises and Equipment		20			19			17			18			18			2			11	%		56			53			3			6	%
Other Expense		195			180			112			95			79			116			147	%		487			245			242			99	%
Total Other Expense		826			749			677			669			642			184			29	%		2,252			1,872			380			20	%

Income Before Income Taxes		1,012			867			1,014			818			1,047			(35	)		(3	%)		2,893			2,693			200			7	%
Tax Expense		385			330			384			305			398			(13	)		(3	%)		1,099			979			120			12	%
Net Income		$627			$537			$630			$513			$649			($22	)		(3	%)		$1,794			$1,714			$80			5	%

Net Income Allocated to Common Stockholders		$621			$532			$624			$508			$642			($21	)		(3	%)		$1,777			$1,694			$83			5	%

Effective Tax Rate		38.1	%		38.1	%		37.8	%		37.3	%		38.0	%								38.0	%		36.4	%

Net Interest Margin		9.44	%		9.31	%		9.03	%		9.10	%		9.26	%		18		bps				9.26	%		9.21	%		5		bps
ROE		28	%		24	%		29	%		25	%		33	%								27	%		31	%

Ending Common Shares Outstanding		507			517			530			529			538			(31	)		(6	%)		507			538			(31	)		(6	%)
Weighted Average Common Shares Outstanding		513			528			530			532			544			(31	)		(6	%)		523			545			(22	)		(4	%)
Weighted Average Common Shares Outstanding (fully diluted)		514			529			531			533			545			(31	)		(6	%)		525			546			(21	)		(4	%)

PER SHARE STATISTICS
Basic EPS		$1.21			$1.01			$1.18			$0.95			$1.18			$0.03			3	%		$3.39			$3.11			$0.28			9	%
Diluted EPS		$1.21			$1.00			$1.18			$0.95			$1.18			$0.03			3	%		$3.39			$3.11			$0.28			9	%
Common Stock Price (period end)		$38.73			$33.11			$30.01			$23.82			$25.16			$13.57			54	%		$38.73			$25.16			$13.57			54	%
Book Value per share		$18.02			$17.20			$16.66			$15.59			$14.88			$3.14			21	%		$18.02			$14.88			$3.14			21	%

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
EARNINGS SUMMARY
(unaudited, in millions)
	Quarter Ended									Nine Months Ended
	Aug 31, 2012	May 31, 2012	Feb 29, 2012	Nov 30, 2011	Aug 31, 2011	August 31, 2012 vs. August 31, 2011				Aug 31, 2012	Aug 31, 2011	2012 vs. 2011
SEGMENT- INCOME BEFORE INCOME TAXES
Direct Banking	$963	$820	$962	$776	$1,009	($46	)	(5	%)	$2,745	$2,569	$176		7	%
Payment Services	49	47	52	42	38	11		31	%	148	124	24		19	%
Total	$1,012	$867	$1,014	$818	$1,047	($35	)	(3	%)	$2,893	$2,693	$200		7	%

TRANSACTIONS PROCESSED ON NETWORKS
Discover Network	476	455	444	439	451	25		6	%	1,375	1,283	92		7	%
PULSE Network	1,125	1,136	996	939	950	175		18	%	3,257	2,885	372		13	%
Total	1,601	1,591	1,440	1,378	1,401	200		14	%	4,632	4,168	464		11	%

NETWORK VOLUME
PULSE Network	$40,990	$42,001	$37,577	$33,911	$35,109	$5,881		17	%	$120,568	$106,208	$14,360		14	%
Third-Party Issuers	2,231	2,189	2,037	1,939	1,984	247		12	%	6,457	5,594	863		15	%
Diners Club International 1	7,041	7,205	7,100	7,469	7,428	(387	)	(5	%)	21,346	21,806	(460	)	(2	%)
Total Payment Services	50,262	51,395	46,714	43,319	44,521	5,741		13	%	148,371	133,608	14,763		11	%
Discover Network - Proprietary	28,085	26,985	26,482	25,926	27,133	952		4	%	81,552	77,601	3,951		5	%
Total	$78,347	$78,380	$73,196	$69,245	$71,654	$6,693		9	%	$229,923	$211,209	$18,714		9	%

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
	Aug 31, 2012		May 31, 2012		Feb 29, 2012		Nov 30, 2011		Aug 31, 2011		August 31, 2012 vs. August 31, 2011

BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities	$13,007		$13,567		$12,946		$10,342		$10,847		$2,160	20	%
Total Loan Receivables	59,157		57,058		56,299		57,337		54,082		5,075	9	%
Allowance for Loan Losses	(1,687	)	(1,869	)	(1,979	)	(2,205	)	(2,273	)	586	26	%
Net Loan Receivables	57,470		55,189		54,320		55,132		51,809		5,661	11	%
Premises and Equipment, net	520		492		487		483		466		54	12	%
Goodwill and Intangible Assets, net	479		440		442		443		445		34	8	%
Other Assets	2,433		2,395		2,291		2,384		2,159		274	13	%
Total Assets	$73,909		$72,083		$70,486		$68,784		$65,726		$8,183	12	%

Liabilities & Stockholders' Equity
Direct to Consumer and Affinity Deposits	$27,720		$27,606		$27,346		$26,177		$24,493		$3,227	13	%
Brokered Deposits and Other Deposits	14,598		13,945		12,802		13,401		13,094		1,504	11	%
Deposits	42,318		41,551		40,148		39,578		37,587		4,731	13	%
Borrowings	19,496		19,024		18,754		18,337		17,818		1,678	9	%
Accrued Expenses and Other Liabilities	2,949		2,609		2,755		2,627		2,315		634	27	%
Total Liabilities	64,763		63,184		61,657		60,542		57,720		7,043	12	%
Total Equity	9,146		8,899		8,829		8,242		8,006		1,140	14	%
Total Liabilities and Stockholders' Equity	$73,909		$72,083		$70,486		$68,784		$65,726		$8,183	12	%

BALANCE SHEET STATISTICS
Total Common Equity	$9,146		$8,899		$8,829		$8,242		$8,006		$1,140	14	%
Total Common Equity/Total Assets	12.4	%	12.3	%	12.5	%	12.0	%	12.2	%
Total Common Equity/Net Loans	15.9	%	16.1	%	16.3	%	15.0	%	15.5	%

Tangible Assets	$73,430		$71,643		$70,044		$68,341		$65,281		$8,149	12	%
Tangible Common Equity 1	$8,667		$8,459		$8,387		$7,799		$7,561		$1,106	15	%
Tangible Common Equity/Tangible Assets 1	11.8	%	11.8	%	12.0	%	11.4	%	11.6	%
Tangible Common Equity/Net Loans 1	15.1	%	15.3	%	15.4	%	14.1	%	14.6	%
Tangible Common Equity per share 1	$17.08		$16.35		$15.82		$14.75		$14.05		$3.03	22	%

REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio	17.1	%	17.3	%	17.6	%	16.5	%	17.0	%
Tier 1 Risk Based Capital Ratio	13.9	%	14.0	%	14.3	%	13.2	%	13.6	%
Tier 1 Common Capital Ratio 2	13.9	%	14.0	%	14.3	%	13.2	%	13.6	%
Tier 1 Leverage Ratio	11.9	%	11.9	%	12.1	%	11.5	%	11.7	%

LIQUIDITY
Liquidity Portfolio	$12,084		$11,279		$12,097		$8,548		$9,394		$2,690	29	%
Undrawn Credit Facilities 3	16,912		16,271		15,634		17,602		16,880		32	0	%
Total Liquidity	$28,996		$27,550		$27,731		$26,150		$26,274		$2,722	10	%

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 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 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
LOAN STATISTICS
(unaudited, in millions)
Quarter Ended															Nine Months Ended
	Aug 31, 2012		May 31, 2012		Feb 29, 2012		Nov 30, 2011		Aug 31, 2011		August 31, 2012 vs. August 31, 2011				Aug 31, 2012		Aug 31, 2011		2012 vs. 2011
TOTAL LOAN RECEIVABLES
Ending Loans 1, 2	$59,157		$57,058		$56,299		$57,337		$54,082		$5,075		9	%	$59,157		$54,082		$5,075		9	%
Average Loans 1, 2	$57,721		$56,180		$57,606		$55,539		$53,013		$4,708		9	%	$57,167		$52,080		$5,087		10	%

Interest Yield	11.50	%	11.55	%	11.36	%	11.56	%	11.83	%	(33	)	bps		11.47	%	11.95	%	(48	)	bps
Net Principal Charge-off Rate	2.12	%	2.42	%	2.64	%	2.81	%	3.43	%	(131	)	bps		2.39	%	4.41	%	(202	)	bps
Net Principal Charge-off Rate excluding PCI Loans 3	2.32	%	2.66	%	2.90	%	3.05	%	3.63	%	(131	)	bps		2.63	%	4.64	%	(203	)	bps
Delinquency Rate (over 30 days) 3	1.71	%	1.81	%	2.08	%	2.30	%	2.35	%	(64	)	bps		1.71	%	2.35	%	(64	)	bps
Delinquency Rate (over 90 days) 3	0.81	%	0.91	%	1.08	%	1.14	%	1.17	%	(36	)	bps		0.81	%	1.17	%	(36	)	bps
Net Principal Charge-off Dollars	$308		$342		$378		$387		$459		($151	)	(33	%)	$1,028		$1,725		($697	)	(40	%)
Net Interest and Fee Charge-off Dollars	$92		$110		$123		$128		$151		($59	)	(39	%)	$325		$567		($243	)	(43	%)
Loans Delinquent Over 30 Days 3	$931		$941		$1,066		$1,200		$1,203		($272	)	(23	%)	$931		$1,203		($272	)	(23	%)
Loans Delinquent Over 90 Days 3	$441		$474		$554		$596		$599		($158	)	(26	%)	$441		$599		($158	)	(26	%)

Allowance for Loan Loss (period end)	$1,687		$1,869		$1,979		$2,205		$2,273		($586	)	(26	%)	$1,687		$2,273		($586	)	(26	%)
Change in Loan Loss Reserves	($182	)	($110	)	($226	)	($68	)	($359	)	$177		49	%	($518	)	($1,031	)	$513		50	%
Reserve Rate 4	2.85	%	3.28	%	3.51	%	3.85	%	4.20	%	(135	)	bps		2.85	%	4.20	%	(135	)	bps
Reserve Rate Excluding PCI Loans 3, 4	3.11	%	3.59	%	3.87	%	4.23	%	4.44	%	(133	)	bps		3.11	%	4.44	%	(133	)	bps

CREDIT CARD LOANS
Ending Loans	$48,124		$46,610		$45,918		$46,639		$46,178		$1,946		4	%	$48,124		$46,178		$1,946		4	%
Average Loans	$47,067		$45,772		$46,919		$45,756		$45,343		$1,724		4	%	$46,585		$45,022		$1,563		3	%

Interest Yield	12.27	%	12.35	%	12.21	%	12.36	%	12.46	%	(19	)	bps		12.28	%	12.56	%	(28	)	bps
Net Principal Charge-off Rate	2.43	%	2.79	%	3.07	%	3.24	%	3.85	%	(142	)	bps		2.76	%	4.93	%	(217	)	bps
Delinquency Rate (over 30 days)	1.81	%	1.91	%	2.22	%	2.39	%	2.43	%	(62	)	bps		1.81	%	2.43	%	(62	)	bps
Delinquency Rate (over 90 days)	0.89	%	0.99	%	1.18	%	1.20	%	1.22	%	(33	)	bps		0.89	%	1.22	%	(33	)	bps
Net Principal Charge-off Dollars	$287		$322		$358		$370		$440		($153	)	(35	%)	$966		$1,666		($700	)	(42	%)
Loans Delinquent Over 30 Days	$870		$890		$1,019		$1,117		$1,121		($251	)	(22	%)	$870		$1,121		($251	)	(22	%)
Loans Delinquent Over 90 Days	$427		$459		$540		$560		$565		($138	)	(24	%)	$427		$565		($138	)	(24	%)

Allowance for Loan Loss (period end)	$1,522		$1,713		$1,835		$2,070		$2,154		($632	)	(29	%)	$1,522		$2,154		($632	)	(29	%)
Change in Loan Loss Reserves	($191	)	($122	)	($235	)	($84	)	($365	)	$174		48	%	($548	)	($1,055	)	$507		48	%
Reserve Rate	3.16	%	3.68	%	4.00	%	4.44	%	4.66	%	(150	)	bps		3.16	%	4.66	%	(150	)	bps

Total Discover Card Volume	$29,763		$28,140		$27,370		$26,946		$28,455		$1,308		5	%	$85,273		$81,141		$4,132		5	%
Discover Card Sales Volume	$27,202		$26,115		$25,604		$25,033		$26,271		$931		4	%	$78,921		$75,105		$3,816		5	%

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.

4 The Reserve Rate includes federal student loans held for sale.

Note: See Glossary of Financial Terms for definitions of financial terms.

DISCOVER FINANCIAL SERVICES
LOAN STATISTICS
(unaudited, in millions)
	Quarter Ended														Nine Months Ended
	Aug 31, 2012		May 31, 2012		Feb 29, 2012		Nov 30, 2011		Aug 31, 2011		August 31, 2012 vs. August 31, 2011				Aug 31, 2012		Aug 31, 2011		2012 vs. 2011

FEDERAL STUDENT LOANS
Ending Loans	$-		$-		$-		$715		$738		($738	)	(100	%)	$-		$738		($738	)	(100	%)

PRIVATE STUDENT LOANS
Ending Loans	$7,620		$7,504		$7,571		$7,318		$4,715		$2,905		62	%	$7,620		$4,715		$2,905		62	%
Ending PCI Loans 1	$4,867		$4,995		$5,124		$5,250		$2,887		$1,980		69	%	$4,867		$2,887		$1,980		69	%

Interest Yield	6.49	%	6.43	%	6.35	%	6.81	%	7.29	%	(80	)	bps		6.42	%	7.37	%	(95	)	bps
Net Principal Charge-off Rate	0.25	%	0.22	%	0.15	%	0.14	%	0.23	%	2		bps		0.21	%	0.18	%	3		bps
Net Principal Charge-off Rate excluding PCI Loans 2	0.73	%	0.67	%	0.49	%	0.45	%	0.62	%	11		bps		0.64	%	0.49	%	15		bps
Delinquency Rate (over 30 days) 2	1.28	%	1.02	%	0.93	%	0.63	%	0.80	%	48		bps		1.28	%	0.80	%	48		bps

Reserve Rate	0.90	%	0.87	%	0.72	%	0.72	%	0.92	%	(2	)	bps		0.90	%	0.92	%	(2	)	bps
Reserve Rate Excluding PCI Loans 2	2.48	%	2.61	%	2.23	%	2.55	%	2.37	%	11		bps		2.48	%	2.37	%	11		bps

PERSONAL LOANS
Ending Loans	$3,114		$2,916		$2,784		$2,648		$2,439		$675		28	%	$3,114		$2,439		$675		28	%

Interest Yield	12.41	%	12.31	%	12.26	%	12.12	%	11.97	%	44		bps		12.33	%	11.87	%	46		bps
Net Principal Charge-off Rate	2.14	%	2.24	%	2.59	%	2.58	%	2.73	%	(59	)	bps		2.32	%	3.19	%	(87	)	bps
Delinquency Rate (over 30 days)	0.74	%	0.79	%	0.81	%	0.87	%	0.85	%	(11	)	bps		0.74	%	0.85	%	(11	)	bps

Reserve Rate	3.09	%	3.12	%	3.18	%	3.10	%	3.10	%	(1	)	bps		3.09	%	3.10	%	(1	)	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
	Aug 31, 2012		May 31, 2012		Feb 29, 2012		Nov 30, 2011		Aug 31, 2011		August 31, 2012 vs. August 31, 2011				Aug 31, 2012		Aug 31, 2011		2012 vs. 2011
DIRECT BANKING

Interest Income	$1,695		$1,656		$1,646		$1,620		$1,599		$96		6	%	$4,997		$4,725		$272		6	%
Interest Expense	325		341		353		360		362		(37	)	(10	%)	1,019		1,125		(106	)	(9	%)
Net Interest Income	1,370		1,315		1,293		1,260		1,237		133		11	%	3,978		3,600		378		11	%
Other Income	506		449		464		470		481		25		5	%	1,419		1,437		(18	)	(1	%)
Revenue Net of Interest Expense	1,876		1,764		1,757		1,730		1,718		158		9	%	5,397		5,037		360		7	%
Provision for Loan Losses	126		232		152		319		100		26		26	%	510		694		(184	)	(27	%)
Total Other Expense	787		712		643		635		609		178		29	%	2,142		1,774		368		21	%
Income Before Income Taxes	$963		$820		$962		$776		$1,009		($46	)	(5	%)	$2,745		$2,569		$176		7	%

Net Interest Margin	9.44	%	9.31	%	9.03	%	9.10	%	9.26	%	18		bps		9.26	%	9.21	%	5		bps
Pretax Return on Loan Receivables	6.63	%	5.81	%	6.72	%	5.60	%	7.55	%	(92	)	bps		6.39	%	6.57	%	(18	)	bps


PAYMENT SERVICES

Interest Income	$-		$-		$-		$-		$-		$-		NM		$-		$-		$-		NM
Interest Expense	-		-		-		-		-		-		NM		-		-		-		NM
Net Interest Income	-		-		-		-		-		-		NM		-		-		-		NM
Other Income	88		84		86		76		71		17		24	%	258		222		36		16	%
Revenue Net of Interest Expense	88		84		86		76		71		17		24	%	258		222		36		16	%
Total Other Expense	39		37		34		34		33		6		18	%	110		98		12		12	%
Income Before Income Taxes	$49		$47		$52		$42		$38		$11		31	%	$148		$124		$24		19	%

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.

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.

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.

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. 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.

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, committed unsecured credit facility 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
	Aug 31, 2012		May 31, 2012		Feb 29, 2012		Nov 30, 2011		Aug 31, 2011
GAAP total common equity	$9,146		$8,899		$8,829		$8,242		$8,006
Less: Goodwill	(287	)	(255	)	(255	)	(255	)	(255	)
Less: Intangibles	(192	)	(185	)	(187	)	(188	)	(190	)
Tangible common equity 1	$8,667		$8,459		$8,387		$7,799		$7,561
Effect of certain items in accumulated other comprehensive
income (loss) excluded from tier 1 common capital	31		41		49		51		20
Total tier 1 common capital 2	$8,698		$8,500		$8,436		$7,850		$7,581

GAAP book value per share	$18.02		$17.20		$16.66		$15.59		$14.88
Less: Goodwill	(0.57	)	(0.49	)	(0.48	)	(0.48	)	(0.47	)
Less: Intangibles	(0.37	)	(0.36	)	(0.36	)	(0.36	)	(0.36	)
Tangible common equity per share	$17.08		$16.35		$15.82		$14.75		$14.05

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.