8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 30, 2016

DISCOVER FINANCIAL SERVICES

(Exact name of registrant as specified in its charter)

Commission File Number: 001-33378

Delaware	36-2517428
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

2500 Lake Cook Road, Riverwoods, Illinois 60015

(Address of principal executive offices, including zip code)

(224) 405-0900

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2016, Discover Financial Services (the “Company”) released financial information with respect to the quarter ended September 30, 2016. Copies of the press release, financial data supplement and financial results presentation containing this information are attached hereto as exhibits and incorporated herein by reference.

The quotation immediately preceding the caption “Segment Results” included in Exhibit 99.1 (the “Excluded Quote”) and Exhibit 99.3 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that that section nor shall it be deemed to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act. The information included in Exhibit 99.1, other than in the Excluded Quote, and Exhibit 99.2 shall be deemed “filed” for purposes of the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of the Company dated October 25, 2016 containing financial information for the quarter ended September 30, 2016
99.2	Financial Data Supplement of the Company for the quarter and the nine months ended September 30, 2016
99.3	Financial Results Presentation of the Company for the quarter ended September 30, 2016

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DISCOVER FINANCIAL SERVICES
Dated: October 25, 2016	By:	/s/ D. Christopher Greene
		Name: D. Christopher Greene
		Title: Vice President, Deputy General Counsel and Assistant Secretary

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of the Company dated October 25, 2016 containing financial information for the quarter ended September 30, 2016
99.2	Financial Data Supplement of the Company for the quarter and the nine months ended September 30, 2016
99.3	Financial Results Presentation of the Company for the quarter ended September 30, 2016

EX-99.1

Exhibit 99.1    

DISCOVER FINANCIAL SERVICES REPORTS THIRD QUARTER NET INCOME OF $639 MILLION

OR $1.56 PER DILUTED SHARE

Riverwoods, IL, October 25, 2016 - Discover Financial Services (NYSE: DFS) today reported net income of $639 million or $1.56 per diluted share for the third quarter of 2016, as compared to $612 million or $1.38 per diluted share for the third quarter of 2015. The company’s return on equity for the third quarter of 2016 was 23%.

Third Quarter Highlights

• Total loans grew $3.5 billion, or 5%, from the prior year to $73.6 billion.

• Credit card loans grew $2.4 billion, or 4%, to $58.0 billion and Discover card sales volume increased 1% from the prior year.

• Total net charge-off rate excluding PCI loans increased 16 basis points from the prior year to 2.10% and the total delinquency rate over 30 days past due excluding PCI loans increased 19 basis points from the prior year to 1.79%.

• Consumer deposits grew $5.5 billion, or 19%, from the prior year to $35.3 billion.

• Payment Services transaction dollar volume for the segment was $44.6 billion, down 3% from the prior year.

• Income tax expense includes one-time benefits of $28 million related to the resolution of certain tax matters.

"We achieved strong earnings per share growth, despite adding to loan loss reserves, through a combination of profitable loan growth, effective capital deployment and some tax favorability" said David Nelms, chairman and CEO of Discover. "Higher loan growth was assisted by record personal loan originations, and occurred despite challenging sales volume growth during the quarter."

Segment Results:

Direct Banking

Direct Banking pretax income of $931 million in the quarter decreased $19 million from the prior year as higher net interest income was offset by higher provision for loan losses, lower other income and higher operating expenses.

Total loans ended the quarter at $73.5 billion, up 5% compared to the prior year. Credit card loans ended the quarter at $58.0 billion, up 4% from the prior year. Personal loans increased $848 million, or 16%, from the prior year. Relative to the prior year, private student loans increased $226 million, or 3%, and grew $767 million, or 14%, excluding purchased student loans.

Net interest income increased $140 million, or 8%, from the prior year, driven by loan growth and higher net interest margin. Net interest margin was 10.00%, up 37 basis points from the prior year. Card yield was 12.53%, an increase of 50 basis points from the prior year due to portfolio mix and the prime rate increase. Interest expense as a percent of total loans increased 12 basis points from the prior year primarily due to higher market rates and higher FDIC expense.

Other income decreased $27 million, or 6%, from the prior year driven primarily by increased promotional rewards.

The delinquency rate for credit card loans over 30 days past due was 1.87%, up 22 basis points from the prior year and 24 basis points from the prior quarter. Credit card net charge-off rate for the third quarter was 2.17%, up 13 basis points from the prior year and down 22 basis points from the prior quarter. The personal loans net charge-off rate of 2.63% increased by 64 basis points from the prior year. The student loan net charge-off rate excluding purchased credit-impaired ("PCI") loans was 1.02%, up 8 basis points from the prior year. Net charge-off rates were higher due to expected seasoning of recent growth.

Provision for loan losses of $445 million increased $113 million from the prior year due to a larger reserve build and higher net charge-offs. The reserve build for the third quarter of 2016 was $75 million, driven primarily by loan growth, $67 million higher than the reserve build in the third quarter of 2015.

Expenses increased $19 million, or 2%, from the prior year as increased marketing investments and higher regulatory and compliance staffing costs offset savings from the closure of the mortgage origination business. The prior year included $23 million in expenses related to the wind down of the mortgage origination business. Marketing expenses increased primarily due to card investments. Employee compensation increased mostly due to higher staffing levels driven in part by regulatory and compliance activities. Professional fees were lower than the prior year, primarily due to the completion of the look back related anti-money laundering remediation activities earlier this year. The third quarter of 2015 included $28 million in expenses related to these look back activities.

Payment Services

Payment Services pretax income was $30 million in the quarter, up $6 million from the prior year driven by expense reductions.

Payment Services transaction dollar volume was $44.6 billion, down 3% from the prior year. PULSE transaction dollar volume was down 6% year-over-year due to the loss of volume from a large debit issuer. Diners Club International volume increased 12% from the prior year driven by continued growth in Asia.

Share Repurchases

During the third quarter of 2016, the company repurchased approximately 10.1 million shares of common stock for $582 million. Shares of common stock outstanding declined by 2.5% from the prior quarter.

Conference Call and Webcast Information

The company will host a conference call to discuss its third quarter results on Tuesday, October 25, 2016, at 4:00 p.m. Central time. Interested parties can listen to the conference call via a live audio webcast at https://investorrelations.discover.com.

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America's cash rewards pioneer, and offers private student loans, personal loans, home equity loans, checking and savings accounts and certificates of deposit through its direct banking business. It operates the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discover.com/company.

Contacts:

Investors:

Bill Franklin, 224-405-1902

williamfranklin@discover.com

Media:

Jon Drummond, 224-405-1888

jondrummond@discover.com

A financial summary follows. Financial, statistical, and business related information, as well as information regarding business and segment trends, is included in the financial supplement filed as Exhibit 99.2 to the company's Current Report on Form 8-K filed today with the Securities and Exchange Commission (“SEC”). Both the earnings release and the financial supplement are available online at the SEC's website (http://www.sec.gov) and the company's website (https://investorrelations.discover.com).

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which speak to our expected business and financial performance, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions. Such statements are based upon the current beliefs and expectations of the company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. These forward-looking statements speak only as of the date of this press release, and there is no undertaking to update or revise them as more information becomes available.

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: changes in economic variables, such as the availability of consumer credit, the housing market, energy costs, the number and size of personal bankruptcy filings, the rate of unemployment, the levels of consumer confidence and consumer debt, and investor sentiment; the impact of current, pending and future legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform, consumer financial services practices, anti-corruption, and funding, capital and liquidity; the actions and initiatives of current and potential competitors; the company's ability to manage its expenses; the company's ability to successfully achieve card acceptance across its networks and maintain relationships with network participants; the company's ability to sustain and grow its non-card products; difficulty obtaining regulatory approval for, financing, closing, transitioning, integrating or managing the expenses of acquisitions of or investments in new businesses, products or technologies; the company's ability to manage its credit risk, market risk, liquidity risk, operational risk, compliance and legal risk, and strategic risk; the availability and cost of funding and capital; access to deposit, securitization, equity, debt and credit markets; the impact of rating agency actions; the level and volatility of equity prices, commodity prices and interest rates, currency values, investments, other market fluctuations and other market indices; losses in the company's investment portfolio; limits on the company's ability to pay dividends and repurchase its common stock; limits on the company's ability to receive payments from its subsidiaries; fraudulent activities or material security breaches of key systems; the company's ability to remain organizationally effective; the company's ability to increase or sustain Discover card usage or attract new customers; the company's ability to maintain relationships with merchants; the effect of political, economic and market conditions, geopolitical events and unforeseen or catastrophic events; the company's ability to introduce new products or services; the company's ability to manage its relationships with third-party vendors; the company's ability to maintain current technology and integrate new and acquired systems; the company's ability to collect amounts for disputed transactions from merchants and merchant acquirers; the company's ability to attract and retain employees; the company's ability to protect its reputation and its intellectual property; and new lawsuits, investigations or similar matters or unanticipated developments related to current matters. The company routinely evaluates and may pursue acquisitions of or investments in businesses, products, technologies, loan portfolios or deposits, which may involve payment in cash or the company's debt or equity securities.

Additional factors that could cause the company's results to differ materially from those described in the forward-looking statements can be found under “Risk Factors,” “Business - Competition,” “Business - Supervision and Regulation” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the company's Annual Report on Form 10-K for the year ended December 31, 2015, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which are filed with the SEC and available at the SEC's internet site (http://www.sec.gov).

EX-99.2

DISCOVER FINANCIAL SERVICES																											Exhibit 99.2
EARNINGS SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015					Sep 30, 2016			Sep 30, 2015			2016 vs. 2015
EARNINGS SUMMARY
Interest Income		$2,184			$2,090			$2,084			$2,061			$2,008			$176		9	%		$6,358			$5,884			$474		8	%
Interest Expense	359			339			334			329			323			36			11	%	1,032			934			98			10	%
Net Interest Income	1,825			1,751			1,750			1,732			1,685			140			8	%	5,326			4,950			376			8	%
Discount/Interchange Revenue	631			636			565			635			614			17			3	%	1,832			1,762			70			4	%
Rewards Cost	368			371			292			372			326			42			13	%	1,031			908			123			14	%
Discount and Interchange Revenue, net	263			265			273			263			288			(25		)	(9	%)	801			854			(53		)	(6	%)
Protection Products Revenue	60			59			61			60			62			(2		)	(3	%)	180			201			(21		)	(10	%)
Loan Fee Income	91			79			80			87			87			4			5	%	250			248			2			1	%
Transaction Processing Revenue	40			39			36			38			39			1			3	%	115			121			(6		)	(5	%)
Other Income	22			23			24			25			27			(5		)	(19	%)	69			160			(91		)	(57	%)
Total Other Income	476			465			474			473			503			(27		)	(5	%)	1,415			1,584			(169		)	(11	%)
Revenue Net of Interest Expense	2,301			2,216			2,224			2,205			2,188			113			5	%	6,741			6,534			207			3	%
Provision for Loan Losses	445			412			424			484			332			113			34	%	1,281			1,028			253			25	%
Employee Compensation and Benefits	342			340			345			333			337			5			1	%	1,027			994			33			3	%
Marketing and Business Development	195			198			162			196			168			27			16	%	555			549			6			1	%
Information Processing & Communications	81			89			88			87			84			(3		)	(4	%)	258			262			(4		)	(2	%)
Professional Fees	143			150			160			170			160			(17		)	(11	%)	453			440			13			3	%
Premises and Equipment	25			23			24			24			24			1			4	%	72			71			1			1	%
Other Expense	109			106			107			123			109			—			—	%	322			366			(44		)	(12	%)
Total Other Expense	895			906			886			933			882			13			1	%	2,687			2,682			5			—	%
Income Before Income Taxes	961			898			914			788			974			(13		)	(1	%)	2,773			2,824			(51		)	(2	%)
Tax Expense	322			282			339			288			362			(40		)	(11	%)	943			1,027			(84		)	(8	%)
Net Income		$639			$616			$575			$500			$612			$27		4	%		$1,830			$1,797			$33		2	%
Net Income Allocated to Common Stockholders		$625			$602			$562			$488			$599			$26		4	%		$1,789			$1,758			$31		2	%
Effective Tax Rate	33.5		%	31.4		%	37.1		%	36.5		%	37.2		%						34.0		%	36.4		%
Net Interest Margin	9.99		%	9.94		%	9.94		%	9.75		%	9.62		%	37			bps		9.96		%	9.65		%	31			bps
Operating Efficiency	38.9		%	40.9		%	39.8		%	42.3		%	40.3		%	(140		)	bps		39.9		%	41.0		%	(110		)	bps
ROE	23		%	22		%	21		%	18		%	22		%						22		%	21		%
Ending Common Shares Outstanding	396			407			414			422			430			(34		)	(8	%)	396			430			(34		)	(8	%)
Weighted Average Common Shares Outstanding	402			410			417			426			433			(31		)	(7	%)	410			440			(30		)	(7	%)
Weighted Average Common Shares Outstanding (fully diluted)	402			411			417			426			434			(32		)	(7	%)	410			441			(31		)	(7	%)
PER SHARE STATISTICS
Basic EPS		$1.56			$1.47			$1.35			$1.15			$1.38			$0.18		13	%		$4.37			$3.99			$0.38		10	%
Diluted EPS		$1.56			$1.47			$1.35			$1.14			$1.38			$0.18		13	%		$4.36			$3.98			$0.38		10	%
Common Stock Price (period end)		$56.55			$53.59			$50.92			$53.62			$51.99			$4.56		9	%		$56.55			$51.99			$4.56		9	%
Book Value per share		$28.62			$28.03			$27.32			$26.74			$26.32			$2.30		9	%		$28.62			$26.32			$2.30		9	%
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, 2016		Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Sep 30, 2015		Sep 30, 2016 vs. Sep 30, 2015					Sep 30, 2016		Sep 30, 2015		2016 vs. 2015
SEGMENT- INCOME BEFORE INCOME TAXES
Direct Banking		$931		$868		$882		$767		$950		($19	)	(2	%)		$2,681		$2,745		($64	)	(2	%)
Payment Services	30		30		32		21		24		6			25	%	92		79		13			16	%
Total		$961		$898		$914		$788		$974		($13	)	(1	%)		$2,773		$2,824		($51	)	(2	%)
TRANSACTIONS PROCESSED ON NETWORKS
Discover Network	535		538		486		546		519		16			3	%	1,559		1,487		72			5	%
PULSE Network	871		853		841		905		972		(101		)	(10	%)	2,565		2,985		(420		)	(14	%)
Total	1,406		1,391		1,327		1,451		1,491		(85		)	(6	%)	4,124		4,472		(348		)	(8	%)
NETWORK VOLUME
PULSE Network		$33,913		$33,856		$34,680		$35,902		$36,267		($2,354	)	(6	%)		$102,449		$114,243		($11,794	)	(10	%)
Network Partners	3,313		3,713		3,572		3,274		3,206		107			3	%	10,598		9,691		907			9	%
Diners Club International 1	7,331		7,198		6,738		6,760		6,560		771			12	%	21,267		19,807		1,460			7	%
Total Payment Services	44,557		44,767		44,990		45,936		46,033		(1,476		)	(3	%)	134,314		143,741		(9,427		)	(7	%)
Discover Network - Proprietary	31,759		31,780		28,576		32,910		31,408		351			1	%	92,115		89,816		2,299			3	%
Total		$76,316		$76,547		$73,566		$78,846		$77,441		($1,125	)	(1	%)		$226,429		$233,557		($7,128	)	(3	%)
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 SUMMARY
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015
BALANCE SHEET SUMMARY
Assets
Cash and Investment Securities		$15,728			$14,236			$16,101			$12,755			$13,650			$2,078		15	%
Total Loan Receivables	73,551			71,924			70,320			72,385			70,078			3,473			5	%
Allowance for Loan Losses	(2,024		)	(1,949		)	(1,921		)	(1,869		)	(1,743		)	(281		)	(16	%)
Net Loan Receivables	71,527			69,975			68,399			70,516			68,335			3,192			5	%
Premises and Equipment, net	722			708			706			693			684			38			6	%
Goodwill and Intangible Assets, net	421			422			422			423			424			(3		)	(1	%)
Other Assets	2,143			2,170			2,465			2,412			2,378			(235		)	(10	%)
Total Assets		$90,541			$87,511			$88,093			$86,799			$85,471			$5,070		6	%
Liabilities & Stockholders' Equity
Direct to Consumer and Affinity Deposits		$35,323			$34,101			$32,818			$30,866			$29,801			$5,522		19	%
Brokered Deposits and Other Deposits	13,922			14,426			15,647			16,665			16,738			(2,816		)	(17	%)
Deposits	49,245			48,527			48,465			47,531			46,539			2,706			6	%
Borrowings	26,830			24,681			24,752			24,650			23,726			3,104			13	%
Accrued Expenses and Other Liabilities	3,119			2,906			3,560			3,343			3,903			(784		)	(20	%)
Total Liabilities	79,194			76,114			76,777			75,524			74,168			5,026			7	%
Total Equity	11,347			11,397			11,316			11,275			11,303			44			0	%
Total Liabilities and Stockholders' Equity		$90,541			$87,511			$88,093			$86,799			$85,471			$5,070		6	%
LIQUIDITY
Liquidity Portfolio		$14,017			$13,455			$14,556			$12,077			$12,354			$1,663		13	%
Undrawn Credit Facilities 1	29,048			30,777			30,077			30,682			31,008			(1,960		)	(6	%)
Total Liquidity		$43,065			$44,232			$44,633			$42,759			$43,362			($297	)	(1	%)
1  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
BALANCE SHEET STATISTICS
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015
BALANCE SHEET STATISTICS
Total Common Equity		$10,787			$10,837			$10,756			$10,715			$10,743			$44	0	%
Total Common Equity/Total Assets	11.9		%	12.4		%	12.2		%	12.3		%	12.6		%
Total Common Equity/Net Loans	15.1		%	15.5		%	15.7		%	15.2		%	15.7		%
Tangible Assets		$90,120			$87,089			$87,671			$86,376			$85,047			$5,073	6	%
Tangible Common Equity 1		$10,366			$10,415			$10,334			$10,292			$10,319			$47	0	%
Tangible Common Equity/Tangible Assets 1	11.5		%	12.0		%	11.8		%	11.9		%	12.1		%
Tangible Common Equity/Net Loans 1	14.5		%	14.9		%	15.1		%	14.6		%	15.1		%
Tangible Common Equity per share  1		$26.15			$25.62			$24.95			$24.41			$24.02			$2.13	9	%
REGULATORY CAPITAL RATIOS	Basel III Transition
Total Risk Based Capital Ratio	16.3		%	16.7		%	16.8		%	16.5		%	17.1		%
Tier 1 Risk Based Capital Ratio	14.6		%	15.0		%	15.0		%	14.7		%	15.2		%
Tier 1 Leverage Ratio	12.6		%	12.8		%	12.8		%	12.9		%	13.1		%
Common Equity Tier 1 Capital Ratio	13.9		%	14.3		%	14.3		%	13.9		%	14.4		%
	Basel III Fully Phased-in
Common Equity Tier 1 Capital Ratio 2	13.8		%	14.2		%	14.2		%	13.9		%	14.3		%
RATIO OF EARNINGS TO FIXED CHARGES
Ratio of Earnings to Fixed Charges 3, 4	3.7			3.7			3.8			3.9			4.0
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 Common Equity Tier 1 Capital Ratio (Basel III fully phased-in) is calculated using Basel III fully phased-in Common Equity Tier 1 Capital, a non-GAAP measure. The Company believes that the Common Equity Tier 1 Capital Ratio based on fully phased-in Basel III rules is an important complement to the existing capital ratios and for comparability to other financial institutions. For the corresponding reconciliation of Common Equity Tier 1 Capital and risk weighted assets calculated under fully phased-in Basel III rules to common equity tier 1 capital and risk weighted assets calculated under Basel III transition rules see the Reconciliation of GAAP to non-GAAP data schedule
3 Fixed charges are the sum of interest expense, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of interest within rental expense
4 The Ratio of Earnings to Fixed Charges is a year-to-date statistic. The periods reported reflect the nine months ended September 30, 2016, the six months ended June 30, 2016, the three months ended March 31, 2016, the twelve months ended December 31, 2015 and the nine months ended September 30, 2015
Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES
AVERAGE BALANCE SHEET
(unaudited, in millions)
	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015
AVERAGE BALANCES
Assets
Cash and Investment Securities		$13,761			$14,299			$13,452			$12,881			$12,609			$1,152		9	%
Restricted Cash	621			263			801			529			703			(82		)	(12	%)
Credit Card Loans	57,561			56,124			56,124			56,050			55,281			2,280			4	%
Private Student Loans	8,795			8,816			8,967			8,732			8,580			215			3	%
Personal Loans	6,036			5,608			5,503			5,488			5,307			729			14	%
Other Loans	276			262			243			233			294			(18		)	(6	%)
Total Loans	72,668			70,810			70,837			70,503			69,462			3,206			5	%
Total Interest Earning Assets	87,050			85,372			85,090			83,913			82,774			4,276			5	%
Allowance for Loan Losses	(1,947		)	(1,918		)	(1,866		)	(1,794		)	(1,776		)	(171		)	(10	%)
Other Assets	4,282			4,502			4,453			4,357			4,333			(51		)	(1	%)
Total Assets		$89,385			$87,956			$87,677			$86,476			$85,331			$4,054		5	%
Liabilities and Stockholders' Equity
Direct to Consumer and Affinity Deposits		$34,488			$33,215			$31,529			$30,126			$29,477			$5,011		17	%
Brokered Deposits and Other Deposits	14,267			14,740			15,982			16,504			16,857			(2,590		)	(15	%)
Total Interest-bearing Deposits	48,755			47,955			47,511			46,630			46,334			2,421			5	%
Short-term Borrowings	2			2			2			—			60			(58		)	(97	%)
Securitized Borrowings	16,736			16,635			16,950			16,628			16,449			287			2	%
Other Long-term Borrowings	8,746			7,984			7,934			7,900			7,401			1,345			18	%
Total Interest-bearing Liabilities	74,239			72,576			72,397			71,158			70,244			3,995			6	%
Other Liabilities & Stockholders' Equity	15,146			15,380			15,280			15,318			15,087			59			—	%
Total Liabilities and Stockholders' Equity		$89,385			$87,956			$87,677			$86,476			$85,331			$4,054		5	%
AVERAGE RATES
Assets
Cash and Investment Securities	0.70		%	0.71		%	0.72		%	0.61		%	0.55		%	15			bps
Restricted Cash	0.32		%	0.41		%	0.40		%	0.16		%	0.15		%	17			bps
Credit Card Loans	12.53		%	12.42		%	12.42		%	12.20		%	12.03		%	50			bps
Private Student Loans	7.13		%	7.13		%	7.02		%	6.88		%	6.88		%	25			bps
Personal Loans	12.23		%	12.25		%	12.20		%	11.79		%	12.08		%	15			bps
Other Loans	4.96		%	5.04		%	5.18		%	4.88		%	4.44		%	52			bps
Total Loans	11.82		%	11.72		%	11.69		%	11.49		%	11.37		%	45			bps
Total Interest Earning Assets	9.98		%	9.84		%	9.85		%	9.75		%	9.62		%	36			bps
Liabilities and Stockholders' Equity
Direct to Consumer and Affinity Deposits	1.26		%	1.22		%	1.22		%	1.21		%	1.23		%	3			bps
Brokered Deposits and Other Deposits	1.90		%	1.78		%	1.68		%	1.60		%	1.55		%	35			bps
Total Interest-bearing Deposits	1.45		%	1.39		%	1.37		%	1.35		%	1.35		%	10			bps
Short-term Borrowings	0.62		%	0.64		%	0.64		%	—		%	1.49		%	(87		)	bps
Securitized Borrowings	2.07		%	2.06		%	2.04		%	1.99		%	1.98		%	9			bps
Other Long-term Borrowings	4.27		%	4.40		%	4.38		%	4.33		%	4.44		%	(17		)	bps
Total Interest-bearing Liabilities	1.92		%	1.88		%	1.86		%	1.83		%	1.82		%	10			bps
Net Interest Margin	9.99		%	9.94		%	9.94		%	9.75		%	9.62		%	37			bps
Net Yield on Interest-earning Assets	8.34		%	8.25		%	8.27		%	8.19		%	8.08		%	26			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, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015					Sep 30, 2016			Sep 30, 2015			2016 vs. 2015
TOTAL LOAN RECEIVABLES
Ending Loans 1, 2		$73,551			$71,924			$70,320			$72,385			$70,078			$3,473		5	%		$73,551			$70,078			$3,473		5	%
Average Loans 1, 2		$72,668			$70,810			$70,837			$70,503			$69,462			$3,206		5	%		$71,442			$68,575			$2,867		4	%
Interest Yield	11.82		%	11.72		%	11.69		%	11.49		%	11.37		%	45			bps		11.75		%	11.36		%	39			bps
Gross Principal Charge-off Rate	2.66		%	2.87		%	2.80		%	2.65		%	2.51		%	15			bps		2.78		%	2.70		%	8			bps
Gross Principal Charge-off Rate excluding PCI Loans 3	2.77		%	2.99		%	2.92		%	2.78		%	2.64		%	13			bps		2.89		%	2.84		%	5			bps
Net Principal Charge-off Rate	2.02		%	2.18		%	2.11		%	2.02		%	1.85		%	17			bps		2.10		%	2.01		%	9			bps
Net Principal Charge-off Rate excluding PCI Loans 3	2.10		%	2.27		%	2.21		%	2.11		%	1.94		%	16			bps		2.19		%	2.12		%	7			bps
Delinquency Rate (over 30 days) excluding PCI Loans 3	1.79		%	1.60		%	1.64		%	1.67		%	1.60		%	19			bps		1.79		%	1.60		%	19			bps
Delinquency Rate (over 90 days) excluding PCI Loans 3	0.77		%	0.71		%	0.79		%	0.76		%	0.72		%	5			bps		0.77		%	0.72		%	5			bps
Gross Principal Charge-off Dollars		$488			$505			$493			$472			$440			$48		11	%		$1,486			$1,383			$103		7	%
Net Principal Charge-off Dollars		$370			$384			$372			$358			$324			$46		14	%		$1,126			$1,031			$95		9	%
Net Interest and Fee Charge-off Dollars		$80			$84			$86			$86			$81			($1	)	(1	%)		$250			$263			($13	)	(5	%)
Loans Delinquent Over 30 Days 3		$1,269			$1,104			$1,105			$1,153			$1,070			$199		19	%		$1,269			$1,070			$199		19	%
Loans Delinquent Over 90 Days 3		$545			$491			$531			$530			$481			$64		13	%		$545			$481			$64		13	%
Allowance for Loan Loss (period end)		$2,024			$1,949			$1,921			$1,869			$1,743			$281		16	%		$2,024			$1,743			$281		16	%
Change in Loan Loss Reserves		$75			$28			$52			$126			$8			$67					$155			($3	)		$158
Reserve Rate	2.75		%	2.71		%	2.73		%	2.58		%	2.49		%	26			bps		2.75		%	2.49		%	26			bps
Reserve Rate Excluding PCI Loans 3	2.81		%	2.77		%	2.80		%	2.65		%	2.57		%	24			bps		2.81		%	2.57		%	24			bps
CREDIT CARD LOANS
Ending Loans		$58,006			$57,219			$55,620			$57,896			$55,655			$2,351		4	%		$58,006			$55,655			$2,351		4	%
Average Loans		$57,561			$56,124			$56,124			$56,050			$55,281			$2,280		4	%		$56,606			$54,440			$2,166		4	%
Interest Yield	12.53		%	12.42		%	12.42		%	12.20		%	12.03		%	50			bps		12.46		%	12.04		%	42			bps
Gross Principal Charge-off Rate	2.93		%	3.21		%	3.15		%	2.94		%	2.83		%	10			bps		3.09		%	3.06		%	3			bps
Net Principal Charge-off Rate	2.17		%	2.39		%	2.34		%	2.18		%	2.04		%	13			bps		2.30		%	2.24		%	6			bps
Delinquency Rate (over 30 days)	1.87		%	1.63		%	1.68		%	1.72		%	1.65		%	22			bps		1.87		%	1.65		%	22			bps
Delinquency Rate (over 90 days)	0.86		%	0.78		%	0.86		%	0.85		%	0.78		%	8			bps		0.86		%	0.78		%	8			bps
Gross Principal Charge-off Dollars		$425			$448			$439			$415			$394			$31		8	%		$1,312			$1,245			$67		5	%
Net Principal Charge-off Dollars		$314			$334			$326			$309			$285			$29		10	%		$974			$911			$63		7	%
Loans Delinquent Over 30 Days		$1,086			$933			$934			$995			$919			$167		18	%		$1,086			$919			$167		18	%
Loans Delinquent Over 90 Days		$500			$444			$480			$490			$437			$63		14	%		$500			$437			$63		14	%
Allowance for Loan Loss (period end)		$1,661			$1,603			$1,590			$1,554			$1,459			$202		14	%		$1,661			$1,459			$202		14	%
Change in Loan Loss Reserves		$58			$13			$36			$95			$18			$40					$107			($15	)		$122
Reserve Rate	2.86		%	2.80		%	2.86		%	2.68		%	2.62		%	24			bps		2.86		%	2.62		%	24			bps
Total Discover Card Volume		$33,471			$33,409			$30,004			$33,830			$32,971			$500		2	%		$96,884			$93,995			$2,889		3	%
Discover Card Sales Volume		$30,683			$30,702			$27,552			$31,672			$30,374			$309		1	%		$88,937			$86,770			$2,167		2	%
Rewards Rate	1.20		%	1.21		%	1.06		%	1.18		%	1.07		%	13			bps		1.16		%	1.05		%	11			bps
1 Total Loans includes Home Equity 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, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015					Sep 30, 2016			Sep 30, 2015			2016 vs. 2015
PRIVATE STUDENT LOANS
Ending Loans		$8,995			$8,725			$8,914			$8,763			$8,769			$226		3	%		$8,995			$8,769			$226		3	%
Ending PCI Loans 1		$2,708			$2,834			$2,965			$3,116			$3,249			($541	)	(17	%)		$2,708			$3,249			($541	)	(17	%)
Interest Yield	7.13		%	7.13		%	7.02		%	6.88		%	6.88		%	25			bps		7.09		%	6.91		%	18			bps
Net Principal Charge-off Rate	0.70		%	0.74		%	0.56		%	0.82		%	0.57		%	13			bps		0.67		%	0.60		%	7			bps
Net Principal Charge-off Rate excluding PCI Loans 2	1.02		%	1.10		%	0.85		%	1.30		%	0.94		%	8			bps		0.99		%	0.99		%	0			bps
Delinquency Rate (over 30 days) excluding PCI Loans 2	1.87		%	1.88		%	1.92		%	1.91		%	1.88		%	(1		)	bps		1.87		%	1.88		%	(1		)	bps
Reserve Rate	1.74		%	1.73		%	1.65		%	1.63		%	1.48		%	26			bps		1.74		%	1.48		%	26			bps
Reserve Rate excluding PCI Loans 2	1.92		%	1.95		%	1.86		%	1.88		%	1.84		%	8			bps		1.92		%	1.84		%	8			bps
PERSONAL LOANS
Ending Loans		$6,273			$5,708			$5,534			$5,490			$5,425			$848		16	%		$6,273			$5,425			$848		16	%
Interest Yield	12.23		%	12.25		%	12.20		%	11.79		%	12.08		%	15			bps		12.23		%	12.13		%	10			bps
Net Principal Charge-off Rate	2.63		%	2.38		%	2.45		%	2.28		%	1.99		%	64			bps		2.49		%	2.10		%	39			bps
Delinquency Rate (over 30 days)	0.98		%	1.02		%	0.97		%	0.89		%	0.80		%	18			bps		0.98		%	0.80		%	18			bps
Reserve Rate	2.98		%	3.07		%	2.99		%	2.82		%	2.49		%	49			bps		2.98		%	2.49		%	49			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, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015					Sep 30, 2016			Sep 30, 2015			2016 vs. 2015
DIRECT BANKING
Interest Income		$2,184			$2,090			$2,084			$2,061			$2,008			$176		9	%		$6,358			$5,884			$474		8	%
Interest Expense	359			339			334			329			323			36			11	%	1,032			934			98			10	%
Net Interest Income	1,825			1,751			1,750			1,732			1,685			140			8	%	5,326			4,950			376			8	%
Other Income	408			396			406			408			435			(27		)	(6	%)	1,210			1,371			(161		)	(12	%)
Revenue Net of Interest Expense	2,233			2,147			2,156			2,140			2,120			113			5	%	6,536			6,321			215			3	%
Provision for Loan Losses	445			411			423			486			332			113			34	%	1,279			1,026			253			25	%
Total Other Expense	857			868			851			887			838			19			2	%	2,576			2,550			26			1	%
Income Before Income Taxes		$931			$868			$882			$767			$950			($19	)	(2	%)		$2,681			$2,745			($64	)	(2	%)
Net Interest Margin	10.00		%	9.95		%	9.94		%	9.75		%	9.63		%	37			bps		9.96		%	9.65		%	31			bps
Pretax Return on Loan Receivables	5.10		%	4.93		%	5.01		%	4.32		%	5.43		%	(33		)	bps		5.01		%	5.35		%	(34		)	bps
PAYMENT SERVICES
Interest Income		$—			$—			$—			$—			$—			$—		NM			$—			$—			$—		NM
Interest Expense	—			—			—			—			—			—			NM		—			—			—			NM
Net Interest Income	—			—			—			—			—			—			NM		—			—			—			NM
Other Income	68			69			68			65			68			—			0	%	205			213			(8		)	(4	%)
Revenue Net of Interest Expense	68			69			68			65			68			—			0	%	205			213			(8		)	(4	%)
Provision for Loan Losses	—			1			1			(2		)	—			—			NM		2			2			—			—	%
Total Other Expense	38			38			35			46			44			(6		)	(14	%)	111			132			(21		)	(16	%)
Income Before Income Taxes		$30			$30			$32			$21			$24			$6		25	%		$92			$79			$13		16	%
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 (Basel III transition) represents common equity tier 1 capital divided by risk weighted assets calculated under Basel III rules subject to transition provisions

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

Discover card sales volume represents Discover card activity related to net sales

Discover card volume represents Discover card activity related to net sales, balance transfers, cash advances and other activity

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

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

Ratio of Earnings to Fixed Charges is a year-to-date statistic and represents income before income tax expense and fixed charges divided by fixed charges for the reporting period. Fixed charges are the sum of interest expense, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of interest within rental expense for the reporting period

Regulatory Capital Ratios are regulatory measures used to evaluate capital adequacy. Under Basel III, to be considered "well-capitalized," total risk-based, tier 1 risk-based, tier 1 leverage, and common equity tier 1 ratios of 10%, 8%, 5%, and 6.5% respectively must be maintained. As of January 1, 2015 regulatory capital ratios are calculated under Basel III rules subject to transition provisions. 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. The Tier 1 Common Capital Ratio has been replaced by the Common Equity Tier 1 Ratio under Basel III

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

Total Volume represents the transaction dollar volume from the PULSE network, Network Partners, Diners Club and proprietary Discover Network

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, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
GAAP Total Common Equity		$10,787			$10,837			$10,756			$10,715			$10,743
Less: Goodwill	(255		)	(255		)	(255		)	(255		)	(255		)
Less: Intangibles	(166		)	(167		)	(167		)	(168		)	(169		)
Tangible Common Equity 1		$10,366			$10,415			$10,334			$10,292			$10,319
Common Equity Tier 1 Capital (Basel III Transition)		$10,618			$10,677			$10,593			$10,566			$10,612
Adjustments Related To Capital Components During Transition 2	(52		)	(53		)	(54		)	(82		)	(82		)
Common Equity Tier 1 Capital (Basel III Fully Phased-in)		$10,566			$10,624			$10,539			$10,484			$10,530
Risk Weighted Assets (Basel III Transition)		$76,560			$74,892			$74,205			$75,787			$73,526
Risk Weighted Assets (Basel III Fully Phased-in) 3		$76,493			$74,824			$74,137			$75,685			$73,423
Common Equity Tier 1 Capital Ratio (Basel III Transition)	13.9		%	14.3		%	14.3		%	13.9		%	14.4		%
Common Equity Tier 1 Capital Ratio (Basel III Fully Phased-in) 4	13.8		%	14.2		%	14.2		%	13.9		%	14.3		%
GAAP Book Value Per Share		$28.62			$28.03			$27.32			$26.74			$26.32
Less: Goodwill	(0.64		)	(0.62		)	(0.62		)	(0.60		)	(0.60		)
Less: Intangibles	(0.42		)	(0.41		)	(0.40		)	(0.40		)	(0.40		)
Less: Preferred Stock	(1.41		)	(1.38		)	(1.35		)	(1.33		)	(1.30		)
Tangible Common Equity Per Share		$26.15			$25.62			$24.95			$24.41			$24.02
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 users of this information are advised 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  Adjustments related to capital components for fully phased-in Basel III include the phase-in of the intangible asset exclusion
3  Key differences under fully phased-in Basel III rules in the calculation of risk weighted assets include higher risk weighting for past due loans and unfunded commitments
4  Common Equity Tier 1 Capital Ratio (Basel III Fully Phased-in) is calculated using Common Equity Tier 1 Capital (Basel III Fully Phased-in), a non-GAAP measure, divided by Risk Weighted Assets (Basel III Fully Phased-in)
Note: See Glossary of Financial Terms for definitions of financial terms

EX-99.3

October 25, 2016 ©2016 DISCOVER FINANCIAL SERVICES 3Q16 Financial Results Exhibit 99.3

Notice The following slides are part of a presentation by Discover Financial Services (the "Company") in connection with reporting quarterly financial results and are intended to be viewed as part of that presentation. No representation is made that the information in these slides is complete. For additional financial, statistical, and business related information, as well as information regarding business and segment trends, see the earnings release and financial supplement included as exhibits to the Company’s Current Report on Form 8-K filed today and available on the Company’s website (www.discover.com) and the SEC’s website (www.sec.gov). The information provided herein includes certain non-GAAP financial measures. The reconciliations of such measures to the comparable GAAP figures are included at the end of this presentation, which is available on the Company’s website and the SEC’s website. The presentation contains forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s estimates, projections, expectations or beliefs at that time, and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of certain risks and uncertainties that may affect the future results of the Company, please see "Special Note Regarding Forward-Looking Statements," "Risk Factors," "Business – Competition," "Business – Supervision and Regulation" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which are filed with the SEC and available at the SEC's website (www.sec.gov). The Company does not undertake to update or revise forward-looking statements as more information becomes available. 2

B / (W) ($MM, except per share data) 3Q16 3Q15 $ Δ % Δ Revenue Net of Interest Expense $2,301 $2,188 $113 5% Provision for Loan Losses 445 332 (113) (34%) Operating Expense 895 882 (13) (1%) Direct Banking 931 950 (19) (2%) Payment Services 30 24 6 25% Total Pre-Tax Income 961 974 (13) (1%) Income Tax Expense 322 362 40 11% Net Income $639 $612 $27 4% ROE 23% 22% Diluted EPS $1.56 $1.38 $0.18 13% Pre-tax, Pre-Provision Income(1) 1,406 1,306 100 8% 3Q16 Summary Financial Results • Diluted EPS of $1.56, up 13% YOY • Revenue net of interest expense of $2.3Bn, up 5% YOY, as higher net interest income was partially offset by higher rewards expense • Provision for loan losses increased $113MM, or 34%, due primarily to a $75MM reserve build • Expenses increased $13MM, or 1%, due to marketing investments and higher regulatory and compliance staffing costs, partially offset by the elimination of mortgage-related expenses • Income tax expense of $322MM, down 11% YOY, includes one-time items of $28MM related to the favorable resolution of certain tax matters 3 Note(s) 1. Pre-tax, pre-provision income, which is derived by adding provision for loan losses to pre-tax income, is a non-GAAP financial measure which should be viewed in addition to, and not as a substitute for, the Company’s reported results. Management believes this information helps investors understand the effect of provision for loan losses on reported results and provides an alternate presentation of the Company’s performance; see appendix for a reconciliation

3Q15 3Q16 100 80 60 40 20 0 $70.1 $55.7 $8.8 $5.4 $73.6 $58.0 $9.0 $6.3 3Q15 3Q16 50 40 30 20 10 0 $31.4 $36.3 $6.6 $3.2 $31.8 $33.9 $7.3 $3.3 3Q16 Loan and Volume Growth 4 Volume ($Bn)Ending Loans ($Bn) Note(s) 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 Total +5% Card +4% Student +3% Personal +16% PULSE -6% Diners(1) +12% Network Partners +3% Proprietary +1% Total Network Volume down 1% YOY Payment Services

3Q16 Revenue Detail • Net interest income of $1.8Bn, up 8% YOY due primarily to loan growth and higher net interest margin • Discount and interchange revenue of $631MM, up 3% YOY driven by merchant mix and by the increase in card sales • Rewards rate increased 13bps YOY driven by higher promotional rewards, primarily double rewards for new accounts • Rewards rate expected to be ~119bps for FY 2016 Note(s) 1. Rewards cost divided by Discover card sales volume 5 B / (W) ($MM) 3Q16 3Q15 $ Δ % Δ Interest Income $2,184 $2,008 $176 9% Interest Expense 359 323 (36) (11%) Net Interest Income 1,825 1,685 140 8% Discount/Interchange Revenue 631 614 17 3% Rewards Cost 368 326 (42) (13%) Net Discount/Interchange Revenue 263 288 (25) (9%) Protection Products Revenue 60 62 (2) (3%) Loan Fee Income 91 87 4 5% Transaction Processing Revenue 40 39 1 3% Other Income 22 27 (5) (19%) Total Non-Interest Income 476 503 (27) (5%) Revenue Net of Interest Expense $2,301 $2,188 $113 5% Direct Banking $2,233 $2,120 $113 5% Payment Services 68 68 — —% Revenue Net of Interest Expense $2,301 $2,188 $113 5% Change ($MM) 3Q16 3Q15 QOQ YOY Discover Card Sales Volume $30,683 $30,374 —% 1% Rewards Rate(1) 1.20% 1.07% -1bp 13bps

3Q16 Net Interest Margin 6 • Net interest margin on receivables increased 37bps YOY due to higher total yield partially offset by higher funding costs • Total interest yield of 11.82% increased 45bps YOY driven primarily by higher card yield • Credit card yield increased 50bps YOY due to portfolio mix and the prime rate increase • Average direct to consumer and affinity deposits grew 17% YOY and made up 46% of total funding • Funding costs on interest-bearing liabilities increased 10bps YOY to 1.92% primarily due to higher market rates and higher FDIC expense Change (%) 3Q16 QOQ YOY Total Interest Yield 11.82% 10 bps 45 bps NIM on Receivables 9.99% 5 bps 37 bps NIM on Interest-Earning Assets 8.34% 9 bps 26 bps 3Q16 3Q15 ($MM) Average Balance Rate Average Balance Rate Credit Card $57,561 12.53% $55,281 12.03% Private Student 8,795 7.13% 8,580 6.88% Personal 6,036 12.23% 5,307 12.08% Other 276 4.96% 294 4.44% Total Loans 72,668 11.82% 69,462 11.37% Other Interest-Earning Assets 14,382 0.68% 13,312 0.52% Total Interest-Earning Assets $87,050 9.98% $82,774 9.62% Direct to Consumer and Affinity $34,488 1.26% $29,477 1.23% Brokered Deposits and Other 14,267 1.90% 16,857 1.55% Interest Bearing Deposits 48,755 1.45% 46,334 1.35% Borrowings 25,484 2.82% 23,910 2.74% Total Interest-Bearing Liabilities $74,239 1.92% $70,244 1.82%

B / (W) ($MM) 3Q16 3Q15 $ Δ % Δ Employee Compensation and Benefits $342 $337 ($5) (1%) Marketing and Business Development 195 168 (27) (16%) Information Processing & Communications 81 84 3 4% Professional Fees 143 160 17 11% Premises and Equipment 25 24 (1) (4%) Other Expense 109 109 — —% Total Operating Expense $895 $882 ($13) (1%) Direct Banking $857 $838 ($19) (2%) Payment Services 38 44 6 14% Total Operating Expense $895 $882 ($13) (1%) Operating Efficiency(1) 38.9% 40.3% 140 bps Adjusted Operating Efficiency(2) 38.9% 38.0% -90 bps 3Q16 Operating Expense Detail 7 • Employee compensation and benefits of $342MM, up 1% YOY primarily due to higher regulatory and compliance staffing • Marketing and business development expenses up 16% YOY primarily due to incremental investments to drive new card accounts • Professional fees of $143MM, down 11% YOY, primarily due to the completion of look back related anti-money laundering remediation expenses in 2Q16 • 3Q15 included $23MM in expenses related to the wind-down of the home loans business Note(s) 1. Defined as reported total operating expense divided by revenue net of interest expense 2. 3Q15 operating efficiency ratio adjusted for $28 million in look back related anti-money laundering remediation expenses, and revenue of $2 million and expense of $23 million excluded due to exiting the home loans business. Management believes adjusted operating efficiency, which is a non-GAAP measure, helps investors understand the effect of activities that are not expected to continue and provides investors with a useful metric to evaluate the company’s ongoing operating performance; see appendix for a reconciliation

3Q16 Provision for Loan Losses and Credit Quality 8 • Net charge-offs of $370MM, up 14% YOY and reserve build of $75MM both primarily due to loan growth • Card net charge-off rate increased 13bps YOY to 2.17% • Card 30+ day delinquency rate of 1.87% increased 22bps YOY • Student loan net charge-off rate excluding PCI loans of 1.02%, up 8bps YOY • Personal loan net charge-off rate of 2.63%, up 64bps YOY Note(s) 1. Excludes PCI loans which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the Company is recognizing interest income on a pool of loans, it is all considered to be performing B / (W) ($MM) 3Q16 3Q15 $ Δ % Δ Net Principal Charge-Off $370 $324 ($46) (14%) Reserve Changes build/(release) 75 8 (67) NM Total Provision for Loan Loss $445 $332 ($113) (34%) Change (%) 3Q16 QOQ YOY Credit Card Loans Gross Principal Charge-Off Rate 2.93% -28 bps 10 bps Net Principal Charge-Off Rate 2.17% -22 bps 13 bps 30-Day Delinquency Rate 1.87% 24 bps 22 bps Reserve Rate 2.86% 6 bps 24 bps Private Student Loans Net Principal Charge-Off Rate (excl. PCI Loans)(1) 1.02% -8 bps 8 bps 30-Day Delinquency Rate (excl. PCI Loans)(1) 1.87% -1bp -1 bp Reserve Rate (excl. PCI Loans)(1) 1.92% -3 bps 8 bps Personal Loans Net Principal Charge-Off Rate 2.63% 25 bps 64 bps 30-Day Delinquency Rate 0.98% -4 bps 18 bps Reserve Rate 2.98% -9 bps 49 bps Total Loans Gross Principal Charge-Off Rate (excl. PCI Loans)(1) 2.77% -22 bps 13 bps Net Principal Charge-Off Rate (excl. PCI Loans)(1) 2.10% -17 bps 16 bps 30-Day Delinquency Rate (excl. PCI Loans)(1) 1.79% 19 bps 19 bps Reserve Rate (excl. PCI Loans)(1) 2.81% 4 bps 24 bps

Capital Position 9 Note(s) 1. Common Equity Tier 1 Capital Ratio (Basel III Fully Phased-in) is calculated using Basel III Fully Phased-in Common Equity Tier 1 Capital, a non-GAAP measure. The Company believes that the Common Equity Tier 1 Capital Ratio based on Fully Phased-in Basel III rules is an important complement to the existing capital ratios and for comparability to other financial institutions. For the corresponding reconciliation of Common Equity Tier 1 Capital and risk weighted assets calculated under Fully Phased-in Basel III rules to Common Equity Tier 1 Capital and risk weighted assets calculated under Basel III transition rules, see appendix Capital Ratios • Common Equity Tier 1 Capital Ratio (Basel III fully phased-in) down 40bps sequentially due to capital deployment and loan growth • Repurchased $582MM of shares including the additional $100MM previously announced following the non-objection by the Federal Reserve to our de minimis request Basel III Transition 3Q16 2Q16 3Q15 Total Risk Based Capital Ratio 16.3% 16.7% 17.1% Tier 1 Risk Based Capital Ratio 14.6% 15.0% 15.2% Tier 1 Leverage Ratio 12.6% 12.8% 13.1% Common Equity Tier 1 Capital Ratio 13.9% 14.3% 14.4% Basel III Fully Phased-in Common Equity Tier 1 Capital Ratio(1) 13.8% 14.2% 14.3%

Appendix

Reconciliation of GAAP to Non-GAAP Data Note(s) 1. Pre-tax, pre-provision income, which is derived by adding provision for loan losses to pre-tax income, is a non-GAAP financial measure which should be viewed in addition to, and not as a substitute for, the Company's reported results. Management believes this information helps investors understand the effect of provision for loan losses on reported results and provides an alternate presentation of the Company's performance 2. Adjusted operating efficiency, which is a non-GAAP measure, helps investors understand the effect of activities that are not expected to continue and provides investors with a useful metric to evaluate the company’s ongoing operating performance 11 Quarter Ended (unaudited, in millions, except per share statistics) Sep 30, 2016 Sep 30, 2015 Provision for loan losses $445 $332 Income before income taxes 961 974 Pre-tax, pre-provision income(1) $1,406 $1,306 Revenue net of interest expense $2,301 $2,188 Excluding 3Q15 revenue associated with the Home Loans business — 2 Adjusted revenue net of interest expense $2,301 $2,186 Total operating expense 895 882 Excluding anti-money laundering and related compliance program expenses — 28 Excluding expenses related to exiting Home Loans business — 23 Adjusted operating expense $895 $831 Adjusted operating efficiency(2) 38.9% 38.0%

Reconciliation of GAAP to Non-GAAP Data (cont'd) Quarter Ended (unaudited, in millions) Sep 30, 2016 Jun 30, 2016 Sep 30, 2015 Note(s) 1. Adjustments related to capital components for fully phased-in Basel III include the phase-in of the intangible asset exclusion 2. Key differences under fully phased-in Basel III rules in the calculation of risk weighted assets include higher risk weighting for past due loans and unfunded commitments 3. Common Equity Tier 1 Capital Ratio (Basel III Fully Phased-in) is calculated using Common Equity Tier 1 Capital (Basel III Fully Phased-in), a non-GAAP measure, divided by Risk Weighted Assets (Basel III Fully Phased-in) 12 Common Equity Tier 1 Capital (Basel III Transition) $10,618 $10,677 $10,612 Adjustments Related to Capital Components During Transition(1) (52) (53) (82) Common Equity Tier 1 Capital (Basel III Fully Phased-in) $10,566 $10,624 $10,530 Risk Weighted Assets (Basel III Transition) $76,560 $74,892 $73,526 Risk Weighted Assets (Basel III Fully Phased-in)(2) $76,493 $74,824 $73,423 Common Equity Tier 1 Capital Ratio (Basel III Transition) 13.9% 14.3% 14.4% Common Equity Tier 1 Capital Ratio (Basel III Fully Phased-in)(3) 13.8% 14.2% 14.3%