10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to 

Commission File Number 001-33378

DISCOVER FINANCIAL SERVICES

(Exact name of registrant as specified in its charter) 

Delaware

(State or other jurisdiction of incorporation or organization)

36-2517428

(I.R.S. 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)

Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	DFS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of April 26, 2024, there were 250,599,037 shares of the registrant's Common Stock, par value $0.01 per share, outstanding.

DISCOVER FINANCIAL SERVICES

Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024

TABLE OF CONTENTS

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.	Controls and Procedures	63
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	66

Except as otherwise indicated or unless the context otherwise requires, "Discover Financial Services," "Discover," "DFS," "we," "us," "our," and "the Company" refer to Discover Financial Services and its subsidiaries. See Glossary of Acronyms, located after Part I — Item 4, for terms and abbreviations used throughout the quarterly report.

We own or have rights to use the trademarks, trade names and service marks that we use in conjunction with the operation of our business, including, but not limited to Discover®, PULSE®, Cashback Bonus®, Discover Cashback Checking®, Discover it®, Freeze it®, College Covered® and Diners Club International®. All other trademarks, trade names and service marks included in this quarterly report on Form 10-Q are the property of their respective owners.

Part I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Financial Condition (unaudited)

(dollars in millions, except for share amounts)

	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	14,004	$	11,685
Restricted cash	439		43
Investment securities (includes available-for-sale securities of $13,261 and $13,402 reported at fair value with associated amortized cost of $13,439 and $13,451 at March 31, 2024 and December 31, 2023, respectively)	13,522		13,655
Loan receivables
Loan receivables	126,555		128,409
Allowance for credit losses	(9,258)		(9,283)
Net loan receivables	117,297		119,126
Premises and equipment, net	1,107		1,091
Goodwill	255		255
Other assets	6,065		5,667
Total assets	$	152,689	$	151,522
Liabilities and Stockholders' Equity
Liabilities
Deposits
Interest-bearing deposit accounts	$	108,930	$	107,493
Non-interest bearing deposit accounts	1,500		1,438
Total deposits	110,430		108,931
Short-term borrowings	—		750
Long-term borrowings	20,475		20,581
Accrued expenses and other liabilities	7,064		6,432
Total liabilities	137,969		136,694
Commitments, contingencies and guarantees (Notes 9, 12 and 13)
Stockholders' Equity
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 571,594,531 and 570,837,720 shares issued at March 31, 2024 and December 31, 2023, respectively	6		6
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	1,056		1,056
Additional paid-in capital	4,578		4,553
Retained earnings	30,511		30,448
Accumulated other comprehensive loss	(393)		(225)
Treasury stock, at cost; 320,996,125 and 320,734,860 shares at March 31, 2024 and December 31, 2023, respectively	(21,038)		(21,010)
Total stockholders' equity	14,720		14,828
Total liabilities and stockholders' equity	$	152,689	$	151,522

The table below presents the carrying amounts of certain assets and liabilities of Discover Financial Services' consolidated variable interest entities ("VIEs"), which are included in the condensed consolidated statements of financial condition above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated VIEs. The liabilities in the table below include third-party liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts for which creditors have recourse to the general credit of Discover Financial Services.

	March 31, 2024		December 31, 2023
Assets
Restricted cash	$	439	$	43
Loan receivables	$	29,192	$	30,590
Allowance for credit losses allocated to securitized loan receivables	$	(1,323)	$	(1,347)
Other assets	$	4	$	3
Liabilities
Short- and long-term borrowings	$	10,933	$	11,743
Accrued expenses and other liabilities	$	17	$	19

See Notes to the Condensed Consolidated Financial Statements.

1

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Income (unaudited)

(dollars in millions, except for share amounts)

	For the Three Months Ended March 31,
	2024		2023
Interest income
Credit card loans	$	3,938	$	3,321
Other loans	712		564
Investment securities	124		101
Other interest income	174		91
Total interest income	4,948		4,077
Interest expense
Deposits	1,210		756
Short-term borrowings	6		—
Long-term borrowings	245		189
Total interest expense	1,461		945
Net interest income	3,487		3,132
Provision for credit losses	1,497		1,102
Net interest income after provision for credit losses	1,990		2,030
Other income
Discount and interchange revenue, net	371		330
Protection products revenue	42		43
Loan fee income	200		166
Transaction processing revenue	87		67
Gains (losses) on equity investments	—		(18)
Other income	23		22
Total other income	723		610
Other expense
Employee compensation and benefits	671		625
Marketing and business development	250		241
Information processing and communications	163		139
Professional fees	292		232
Premises and equipment	20		22
Other expense	913		124
Total other expense	2,309		1,383
Income before income taxes	404		1,257
Income tax expense	96		289
Net income	$	308	$	968
Net income allocated to common stockholders	$	274	$	931
Basic earnings per common share	$	1.10	$	3.55
Diluted earnings per common share	$	1.10	$	3.55

See Notes to the Condensed Consolidated Financial Statements.

2

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(dollars in millions)

	For the Three Months Ended March 31,
	2024		2023
Net income	$	308	$	968
Other comprehensive (loss) income, net of tax
Unrealized (losses) gains on available-for-sale investment securities, net of tax	(97)		92
Unrealized (losses) gains on cash flow hedges, net of tax	(71)		12
Other comprehensive (loss) income	(168)		104
Comprehensive income	$	140	$	1,072

See Notes to the Condensed Consolidated Financial Statements.

3

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)

(dollars in millions, shares in thousands)

							Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount
For the Three Months Ended March 31, 2023
Balance at December 31, 2022	11	$	1,056	569,689	$	6	$	4,468	$	28,207	$	(339)	$	(19,054)	$	14,344
Cumulative effect of ASU No. 2022-02 adoption	—	—		—	—		—		52		—		—		52
Net income	—	—		—	—		—		968		—		—		968
Other comprehensive income	—	—		—	—		—		—		104		—		104
Purchases of treasury stock	—	—		—	—		—		—		—		(1,243)		(1,243)
Common stock issued under employee benefit plans	—	—		29	—		3		—		—		—		3
Common stock issued and stock-based compensation expense	—	—		742	—		22		—		—		—		22
Dividends — common stock ($0.60 per share)	—	—		—	—		—		(159)		—		—		(159)
Dividends — Series C preferred stock ($2,750 per share)	—	—		—	—		—		(16)		—		—		(16)
Dividends — Series D preferred stock ($3,062.50 per share)	—	—		—	—		—		(15)		—		—		(15)
Balance at March 31, 2023	11	$	1,056	570,460	$	6	$	4,493	$	29,037	$	(235)	$	(20,297)	$	14,060
For the Three Months Ended March 31, 2024
Balance at December 31, 2023	11	$	1,056	570,838	$	6	$	4,553	$	30,448	$	(225)	$	(21,010)	$	14,828
Cumulative effect of ASU No. 2023-02 adoption	—	—		—	—		—		(37)		—		—		(37)
Net income	—	—		—	—		—		308		—		—		308
Other comprehensive loss	—	—		—	—		—		—		(168)		—		(168)
Purchases of treasury stock	—	—		—	—		—		—		—		(28)		(28)
Common stock issued under employee benefit plans	—	—		25	—		3		—		—		—		3
Common stock issued and stock-based compensation expense	—	—		732	—		22		—		—		—		22
Dividends — common stock ($0.70 per share)	—	—		—	—		—		(177)		—		—		(177)
Dividends — Series C preferred stock ($2,750 per share)	—	—		—	—		—		(16)		—		—		(16)
Dividends — Series D preferred stock (3,062.50 per share)	—	—		—	—		—		(15)		—		—		(15)
Balance at March 31, 2024	11	$	1,056	571,595	$	6	$	4,578	$	30,511	$	(393)	$	(21,038)	$	14,720

See Notes to the Condensed Consolidated Financial Statements.

4

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Cash Flows (unaudited)

(dollars in millions)

	For the Three Months Ended March 31,
	2024		2023
Cash flows provided by operating activities
Net income	$	308	$	968
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	1,497		1,102
Deferred income taxes	(199)		(115)
Depreciation and amortization	96		129
Amortization of deferred revenues	(123)		(105)
Net losses on investments and other assets	16		30
Other, net	29		25
Changes in assets and liabilities:
(Increase) decrease in other assets	(246)		133
Increase (decrease) in accrued expenses and other liabilities	465		(376)
Net cash provided by operating activities	1,843		1,791
Cash flows provided by (used for) investing activities
Maturities of available-for-sale investment securities	522		402
Purchases of available-for-sale investment securities	(475)		(285)
Maturities of held-to-maturity investment securities	4		3
Purchases of held-to-maturity investment securities	(12)		(13)
Net change in principal on loans originated for investment	398		(1,245)
Proceeds from the sale of other investments	1		1
Purchases of other investments	(9)		(16)
Purchases of premises and equipment	(71)		(76)
Net cash provided by (used for) investing activities	358		(1,229)
Cash flows provided by (used for) financing activities
Net change in short-term borrowings	(750)		—
Net change in deposits	1,488		4,088
Maturities and repayment of securitized debt	(4)		(1,180)
Maturities and repayments of other long-term borrowings	(1)		(800)
Proceeds from issuance of common stock	3		3
Purchases of treasury stock	(28)		(1,232)
Dividends paid on common and preferred stock	(194)		(175)
Net cash provided by financing activities	514		704
Net increase in cash, cash equivalents and restricted cash	2,715		1,266
Cash, cash equivalents and restricted cash, at the beginning of the period	11,728		8,897
Cash, cash equivalents and restricted cash, at the end of the period	$	14,443	$	10,163
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	14,004	$	10,130
Restricted cash	439		33
Cash, cash equivalents and restricted cash, at the end of the period	$	14,443	$	10,163

See Notes to the Condensed Consolidated Financial Statements.

5

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1.    Background and Basis of Presentation

Description of Business

Discover Financial Services ("DFS" or the "Company") is a digital banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. Therefore, the Company is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company provides digital banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, personal loans, home loans and deposit products. The Company also operates the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to automated teller machines ("ATMs") domestically and internationally, as well as merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

The Company manages its business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. See Note 16: Segment Disclosures for a detailed description of each segment's operations and the allocation conventions used in business segment reporting.

In November 2023, the Company announced its Board of Directors had authorized management to explore the sale of its private student loan portfolio. The Company stopped accepting new applications for private student loans February 1, 2024. See "Business — Operating Model — Digital Banking — Private Student Loans" in the Company's annual report on Form 10-K for the year ended December 31, 2023.

Pending Merger with Capital One Financial Corporation

On February 19, 2024, Discover and Capital One Financial Corporation ("Capital One") jointly announced that they entered into an agreement and plan of merger (the "Merger Agreement"), under which the companies will combine in an all-stock merger, which valued Discover at $35.3 billion based on the price of Capital One common stock on the last trading day before the public announcement of the merger. Under the terms of the Merger Agreement, holders of Discover common stock will receive 1.0192 shares of Capital One common stock for each share of Discover common stock they own. Capital One shareholders will own approximately 60% of the combined company and Discover shareholders will own approximately 40% of the combined company. The Merger Agreement contains customary representations and warranties, covenants and closing conditions. The Board of Directors of the combined company will have fifteen directors, consisting of twelve Capital One Board members and three Discover Board members to be named at a later date. For more information, see Discover’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on February 22, 2024.

Completion of the proposed merger remains subject to approval by the Federal Reserve Board and the Office of the Comptroller of the Currency and other customary closing conditions, including the approval of both companies’ shareholders.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company's 2023 audited consolidated financial statements filed with the Company's annual report on Form 10-K for

6

the year ended December 31, 2023. The condensed consolidated financial statements for the three months ended March 31, 2023 have been restated as disclosed in the Company's report on Form 10-Q for the second quarter 2023.

Recently Issued Accounting Pronouncements (Not Yet Adopted)

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU enhances the transparency of income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. Entities are required to disaggregate the rate reconciliation (including percentages and reported amounts) by certain specified categories with additional disaggregation by nature and/or jurisdiction for items over a designated threshold. Income taxes paid (net of refunds received) must be disaggregated by federal, state and foreign taxes and separately by individual jurisdiction in which that amount for a particular jurisdiction is equal to or greater than five percent of total income taxes paid (net of refunds received). This annual disclosure guidance is effective for the Company for the year ending December 31, 2025 and can be adopted on either a prospective or retrospective basis. The Company expects to adopt this standard on a prospective basis. While the ASU implements further income tax disclosure requirements, it does not change how an entity determines its income tax obligation, and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires disclosure of additional segment level information, particularly regarding significant segment expenses. Entities must disclose significant expense categories and amounts that are regularly provided to the chief operating decision maker ("CODM") and included in the reported segment measure of profit or loss. Other segment items must also be reported, which are those items that make up the difference between segment revenues less significant segment expenses and reported segment profit or loss. Additionally, entities must disclose the identity of the CODM and how they use the reported measures of segment profit or loss for decision making and assessing segment performance. The guidance is effective for the Company for the year ending December 31, 2024, and interim periods thereafter and requires retrospective application. While the ASU implements further segment disclosure requirements, it does not change how an entity identifies its operating or reportable segments, and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

Recently Adopted Accounting Pronouncement

In March 2023, the FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The ASU expanded the use of the proportional amortization method of accounting for tax credit investments. Under the proportional amortization method, the cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received, the net effect of which is recognized as a component of income tax expense on the consolidated statements of income. Previously, the method was limited to Low Income Housing Tax Credit investments, however the Company historically did not elect to use this method. Under the amended guidance, use of proportional amortization is available to any qualifying tax credit investments, which now also includes New Markets Tax Credit investments among others. The ASU was effective for the Company on January 1, 2024. All of the Company's tax credit investments as of January 1, 2024 qualified and are now being accounted for under the proportional amortization method. Upon adoption, the Company recorded a $37 million charge to the opening balance of retained earnings to reflect the cumulative effect of adopting the proportional amortization method on a modified-retrospective basis for the Company's existing tax credit investments. The offset to retained earnings was a decrease of $23 million to the book value of the investments and a $14 million decrease to the related deferred tax asset position. Recognition of proportional amortization as a component of income tax expense rather than pre-tax income will result in an increase in the Company's effective tax rate.

7

2.    Investments

The Company's investment securities consist of the following (dollars in millions):

	March 31, 2024		December 31, 2023
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,822	$	12,937
Residential mortgage-backed securities - Agency(3)	700		718
Total investment securities	$	13,522	$	13,655

(1)Includes $377 million and $320 million of U.S. Treasury securities pledged as swap collateral as of March 31, 2024 and December 31, 2023, respectively.

(2)Consists of securities issued by the Federal Home Loan Bank ("FHLB").

(3)Primarily consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2024
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,981	$	10	$	(169)	$	12,822
Residential mortgage-backed securities - Agency	458		—		(19)		439
Total available-for-sale investment securities	$	13,439	$	10	$	(188)	$	13,261
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	261	$	—	$	(23)	$	238
Total held-to-maturity investment securities	$	261	$	—	$	(23)	$	238
At December 31, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,971	$	52	$	(86)	$	12,937
Residential mortgage-backed securities - Agency	480		—		(15)		465
Total available-for-sale investment securities	$	13,451	$	52	$	(101)	$	13,402
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	253	$	—	$	(19)	$	234
Total held-to-maturity investment securities	$	253	$	—	$	(19)	$	234

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

The Company primarily invests in U.S. Treasury obligations and securities issued by a U.S. government agency ("Agency") or government-sponsored enterprise ("U.S. GSE"), which have long histories with no credit losses and are explicitly or implicitly guaranteed by the U.S. federal government. Therefore, management has concluded that there is no expectation of non-payment on its investment securities and does not record an allowance for credit losses on these investments. In addition, the Company does not have the intent to sell any available-for-sale securities in an unrealized loss position and does not believe it is more likely than not that it will be required to sell any such security before recovery of its amortized cost basis.

8

The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2024
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	186	$	7,701	$	(97)	$	3,532	$	(72)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	439	$	(19)
At December 31, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	105	$	3,513	$	(13)	$	3,978	$	(73)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	465	$	(15)

There were no proceeds from sales or recognized gains or losses on available-for-sale securities during the three months ended March 31, 2024 and 2023. See Note 8: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three months ended March 31, 2024 and 2023.

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At March 31, 2024	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	2,005	$	10,552	$	424	$	—	$	12,981
Residential mortgage-backed securities - Agency(1)	—		65		24		369		458
Total available-for-sale investment securities	$	2,005	$	10,617	$	448	$	369	$	13,439
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	261	$	261
Total held-to-maturity investment securities	$	—	$	—	$	—	$	261	$	261
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,971	$	10,428	$	423	$	—	$	12,822
Residential mortgage-backed securities - Agency(1)	—		63		23		353		439
Total available-for-sale investment securities	$	1,971	$	10,491	$	446	$	353	$	13,261
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	238	$	238
Total held-to-maturity investment securities	$	—	$	—	$	—	$	238	$	238

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

Other Investments

As a part of the Company’s community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing and stimulate economic development in low- to moderate-income communities. These investments are recorded within other assets on the Company’s condensed consolidated statements of financial condition. The Company has elected to account for its qualifying investments in Low Income Housing Tax Credit and New Markets Tax Credit programs under the proportional amortization method beginning January 1, 2024 on a modified retrospective basis. As of March 31, 2024, all of the Company's tax credit investments qualified for this election. Prior to 2024, these investments were accounted for using the equity method. Under the proportional amortization method, the cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received, the net effect of which is recognized as a component of income tax expense on the condensed consolidated statements of income and within cash flows provided by operating activities on the condensed consolidated statements of cash flows. The Company earns a return primarily through tax credits allocated to the

9

affordable housing projects and the community revitalization projects. The Company does not consolidate these investments as the Company does not have a controlling financial interest in the investee entities. The related commitments for future investments are recorded in accrued expenses and other liabilities within the consolidated statements of financial condition for delayed equity contributions that are unconditional and legally binding. Equity contributions that are contingent upon a future event are recognized when that contingent event becomes probable. As of March 31, 2024 and December 31, 2023, the Company had outstanding investments in these entities of $479 million and $514 million, respectively, and related liabilities for delayed equity contributions of $183 million and $187 million, respectively. During the three months ended March 31, 2024, the Company recognized $16 million of amortization and $18 million of income tax credits and other income tax benefits. Non-income tax benefits comprised only immaterial cash distributions from these investments during the three months ended March 31, 2024.

The Company holds non-controlling equity positions in several payment services entities and third-party venture capital funds which invest in such entities. Most of the direct investments in such entities are not subject to equity method accounting because the Company does not have significant influence over the investee. The Company's investments in third-party venture capital funds represent limited partnership interests and are accounted for under the equity method. The common or preferred equity securities that the Company holds typically do not have readily determinable fair values. As a result, these investments are carried at cost minus impairment, if any. As of March 31, 2024 and December 31, 2023, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $35 million.

3.    Loan Receivables

The Company has two loan portfolio segments: credit card loans and other loans.

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Credit card loans(1)(2)	$	99,475	$	102,259
Other loans(3)
Private student loans(4)	10,480		10,352
Personal loans	10,107		9,852
Other loans	6,493		5,946
Total other loans	27,080		26,150
Total loan receivables	126,555		128,409
Allowance for credit losses	(9,258)		(9,283)
Net loan receivables	$	117,297	$	119,126

(1)Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

(4)At March 31, 2024 and December 31, 2023, the private student loan portfolio continued to be classified as held for investment and there were $6.3 billion of private student loans in repayment.

Credit Quality Indicators

As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer's account with the Company and information from credit bureaus, such as FICO or other credit scores, relating to the customer's broader credit performance. The Company actively monitors key credit quality indicators, including FICO scores and delinquency status, for credit card, private student and personal loans. These indicators are important to understand the overall credit performance of the Company's customers and their ability to repay.

FICO scores are generally obtained at the origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that accounts with FICO scores below 660 have larger delinquencies and credit losses than those with higher credit scores.

10

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	March 31, 2024								December 31, 2023
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	79,207	80	%	$	20,268	20	%	$	82,238	80	%	$	20,021	20	%
Private student loans by origination year(1)(2)
2024	$	129	98	%	$	3	2	%
2023	1,399		94	%	91		6	%	$	1,010	94	%	$	69	6	%
2022	1,445		94	%	88		6	%	1,495		95	%	85		5	%
2021	1,411		94	%	92		6	%	1,468		94	%	91		6	%
2020	1,127		94	%	76		6	%	1,180		94	%	75		6	%
Prior	4,277		93	%	342		7	%	4,537		93	%	342		7	%
Total private student loans	$	9,788	93	%	$	692	7	%	$	9,690	94	%	$	662	6	%
Personal loans by origination year
2024	$	1,425	100	%	$	5	—	%
2023	4,614		97	%	146		3	%	$	5,149	98	%	$	100	2	%
2022	2,244		92	%	191		8	%	2,604		93	%	187		7	%
2021	869		91	%	85		9	%	1,049		92	%	91		8	%
2020	285		92	%	25		8	%	355		92	%	29		8	%
Prior	185		85	%	33		15	%	247		86	%	41		14	%
Total personal loans	$	9,622	95	%	$	485	5	%	$	9,404	95	%	$	448	5	%

(1)FICO score represents the higher credit score of the cosigner or borrower.

11

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	March 31, 2024						December 31, 2023
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,869	$	1,941	$	3,810	$	2,038	$	1,917	$	3,955
Private student loans by origination year(1)
2024	$	—	$	—	$	—
2023	2		1		3		$	—	$	—	$	—
2022	10		6		16		7		2		9
2021	18		10		28		18		6		24
2020	20		10		30		20		7		27
Prior	143		51		194		156		55		211
Total private student loans	$	193	$	78	$	271	$	201	$	70	$	271
Personal loans by origination year
2024	$	—	$	—	$	—
2023	38		12		50		$	26	$	8	$	34
2022	41		15		56		44		16		60
2021	17		6		23		20		8		28
2020	5		2		7		7		2		9
Prior	7		4		11		7		5		12
Total personal loans	$	108	$	39	$	147	$	104	$	39	$	143

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

12

Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended March 31, 2024
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2023	$	7,619	$	858	$	722	$	84	$	9,283
Additions
Provision for credit losses(1)	1,333		53		134		11		1,531
Deductions
Charge-offs	(1,649)		(47)		(113)		(3)		(1,812)
Recoveries	238		5		13		—		256
Net charge-offs	(1,411)		(42)		(100)		(3)		(1,556)
Balance at March 31, 2024	$	7,541	$	869	$	756	$	92	$	9,258
	For the Three Months Ended March 31, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	1,002		60		68		5		1,135
Deductions
Charge-offs	(879)		(33)		(54)		—		(966)
Recoveries	195		6		15		—		216
Net charge-offs	(684)		(27)		(39)		—		(750)
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691

(1)Excludes a $34 million and $33 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2024 and 2023, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

The allowance for credit losses was approximately $9.3 billion at March 31, 2024, which reflects a $25 million release from December 31, 2023. The release in the allowance for credit losses for the three months ended March 31, 2024 was driven by lower receivables and a modestly more favorable economic outlook, offset in part by higher expected delinquencies and losses.

The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at March 31, 2024, the Company used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2024 at 4.03% and, within the Company's reasonable and supportable period, peaking at 4.17% in the third quarter of 2025 and (ii) 2.48% growth rate in real gross domestic product in 2024.

In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, including those relating to consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first three quarters of 2023 in an effort to slow economic growth and reduce inflation. Real GDP growth and labor market conditions have exceeded most economists’ expectations, despite an inflation level that has moderated but remains above the target rate. Federal Reserve officials have suggested that the policy rate is likely at its peak for the current tightening cycle, however, the timing and magnitude of rate decreases will be dependent on trends in economic data, particularly inflation. Restrictive monetary policy typically precedes weaker consumer credit conditions caused by rising unemployment as economic growth slows. While credit performance in the Company's lending portfolios has evolved in line with its expectations, the Company assessed the prospects for various macroeconomic outcomes in setting its allowance for credit losses.

The forecast period the Company deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, the Company determined that a reversion period of 12 months was appropriate for the same reason.

13

The Company applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

The net charge-offs for credit card loans, private student loans and personal loans increased for the three months ended March 31, 2024, when compared to the same periods in 2023, primarily driven by portfolio seasoning.

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	279	$	128
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	69	$	41

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Credit card loans	$	1,649	$	879
Private student loans by origination year
2024	$	—
2023	—		$	—
2022	2		—
2021	5		2
2020	6		5
Prior	34		26
Total private student loans	$	47	$	33
Personal loans by origination year
2024	$	—
2023	28		$	—
2022	48		16
2021	22		18
2020	8		9
Prior	7		11
Total personal loans	$	113	$	54

14

Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At March 31, 2024
Credit card loans	$	1,869	$	1,941	$	3,810	$	1,900	$	203
Other loans
Private student loans	193		78		271		77		8
Personal loans	108		39		147		37		11
Other loans	33		21		54		3		56
Total other loans	334		138		472		117		75
Total loan receivables	$	2,203	$	2,079	$	4,282	$	2,017	$	278
At December 31, 2023
Credit card loans	$	2,038	$	1,917	$	3,955	$	1,881	$	197
Other loans
Private student loans	201		70		271		69		8
Personal loans	104		39		143		37		11
Other loans	39		19		58		3		53
Total other loans	344		128		472		109		72
Total loan receivables	$	2,382	$	2,045	$	4,427	$	1,990	$	269

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company has internal loan modification programs that provide relief to credit card, private student and personal loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs, which vary by product. External loan modification programs, through third party consumer credit counseling agencies, are also available for credit card and personal loans. Those programs feature interest rate reductions, payment delays, term extensions, or a combination thereof.

For credit card customers, the Company offers both temporary and permanent hardship programs. The temporary hardship programs consist of an interest rate reduction lasting for a period no longer than 12 months. Charging privileges on these accounts are generally suspended while in the program. However, if the customer meets certain criteria, charging privileges may be reinstated following completion of the program.

The permanent modification program involves closing the account, changing the structure of the loan to a fixed payment loan with a maturity no longer than 72 months and reducing the interest rate on the loan. The permanent modification program does not typically provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes permanent loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program. These loans typically receive a reduced interest rate, typically continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees.

To assist private student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company has offered a payment delay (in the form of hardship forbearance or temporary payment reduction), or a payment delay (in the form of a temporary payment reduction) combined with a temporary interest rate reduction. These programs are offered up to six consecutive months at one time. Hardship forbearance is limited to a lifetime usage cap of 12 months. Beginning in the fourth quarter of 2023, the lifetime usage cap of certain other programs was increased from 12 to 36 months.

15

For personal loan customers, the Company offers various payment programs, including temporary and permanent programs, in certain situations. The temporary programs normally consist of reducing the minimum payment for no longer than 12 months and, in certain circumstances, the interest rate on the loan is reduced. The permanent programs involve extending the loan term and, in certain circumstances, reducing the interest rate on the loan. The total term of the loan, including modification, may not exceed nine years. The Company also allows permanent loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency.

In addition to the programs described above, the Company will in certain cases accept partial payment in full satisfaction of the outstanding receivable. This is a form of principal forgiveness also known as a settlement. The difference between the loan balance and the amount received at settlement is recorded as a charge-off.

The Company monitors borrower performance after using payment programs or forbearance. The Company believes the programs are useful in assisting customers experiencing financial difficulties and allowing them to make timely payments. In addition to helping customers with their credit needs, these programs are designed to maximize collections and ultimately the Company’s profitability. The Company plans to continue to use payment programs to provide relief to customers experiencing financial difficulties.

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended March 31,
	2024			2023
Credit card loans(1)(2)
Interest rate reduction	$	920		$	632
Total credit card loans(3)	$	920		$	632
% of total class of financing receivables	0.92		%	0.70		%
Private student loans(1)
Payment delay(4)	$	1		$	3
Interest rate reduction and payment delay(4)	101			29
Total private student loans(3)	$	102		$	32
% of total class of financing receivables	0.97		%	0.04		%
Personal loans(1)
Payment delay(4)	$	4		$	2
Term extension(5)	10			8
Interest rate reduction and payment delay(4)	26			14
Interest rate reduction and term extension(5)	14			6
Total personal loans(3)	$	54		$	30
% of total class of financing receivables	0.53		%	0.36		%

(1)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at March 31, 2024 and 2023.

(2)    Accounts that entered a credit card loan modification program include $185 million and $118 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2024 and 2023, respectively.

(3)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(4)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(5)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

The only non-cancellable commitments the Company has to lend additional funds to borrowers experiencing financial difficulty relate to certain private student loans. As of March 31, 2024, the amount of such commitments associated with loans modified during the periods presented was immaterial.

16

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Credit card loans
Weighted-average interest rate reduction	14.42		%	13.38		%
Principal forgiven	$	56		NM
Interest and fees forgiven(1)	$	56		$	12
Private student loans
Weighted-average interest rate reduction	8.84		%	8.02		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Personal loans
Weighted-average interest rate reduction	13.20		%	11.55		%
Weighted-average term extension (in months)	40			38
Payment delay duration (in months)(2)	6 to 12			6 to 12

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the condensed consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and limits assistance to a life of loan maximum of 36 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Loan receivables that have been modified are subject to the same requirements for the accrual of expected credit loss over their expected remaining lives as for unmodified loans. The allowance for credit losses incorporates modeling of historical loss data and thereby captures the higher risk associated with modified loans to borrowers experiencing financial difficulty based on their account attributes.

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified to borrowers experiencing financial difficulty during the 12 months preceding each of the periods presented (dollars in millions)(1):

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At March 31, 2024
Credit card loans	$	2,118	$	257	$	217
Private student loans	207		22		8
Personal loans	126		23		4
Total	$	2,451	$	302	$	229
At December 31, 2023
Credit card loans	$	1,882	$	252	$	196
Private student loans	147		18		8
Personal loans	109		20		4
Total	$	2,138	$	290	$	208

(1)    This table includes any loan that entered a modification program during the preceding 12 months without regard to whether it remained in a modification program as of the reporting date.

17

The following table presents the defaulted amount and period-end amortized cost basis, by modification category, of loans that defaulted during the period and were modified to borrowers experiencing financial difficulty during the 12 months preceding default (dollars in millions):

	For the Three Months Ended March 31, 2024
	Defaulted Amount(1)		Period-end Amortized Cost Basis
Credit card loans
Interest rate reduction	$	205	$	161
Total credit card loans	$	205	$	161
Private student loans
Payment delay	$	2	$	2
Interest rate reduction and payment delay	17		16
Total private student loans	$	19	$	18
Personal loans
Payment delay	$	1	$	1
Term extension	2		1
Interest rate reduction and payment delay	7		3
Interest rate reduction and term extension	4		3
Total personal loans	$	14	$	8

(1)For purposes of this disclosure, a loan is considered to be defaulted when it is 60 days or more delinquent at month end and has advanced two stages of delinquency subsequent to modification. Loans that entered a modification program in any stage of delinquency but did not experience a further payment default are included in the payment status table above but are not counted as defaulted for purposes of this disclosure.

The defaulted amount and period-end amortized cost basis of loans modified on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was immaterial for the three months ended March 31, 2023, for all classes of loan receivables.

4.    Credit Card and Private Student Loan Securitization Activities

The Company's securitizations are accounted for as secured borrowings and the related trusts are treated as consolidated subsidiaries of the Company. For a description of the Company's principles of consolidation with respect to VIEs, see Note 1: Background and Basis of Presentation to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2023.

Credit Card Securitization Activities

The Company accesses the term asset securitization market through Discover Card Master Trust I ("DCMT") and Discover Card Execution Note Trust ("DCENT"). Credit card loan receivables are transferred into DCMT and beneficial interests in DCMT are transferred into DCENT. DCENT issues debt securities to investors that are reported primarily in long-term borrowings.

The DCENT debt structure consists of four classes of securities (DiscoverSeries Class A, B, C and D notes), with the most senior class generally receiving a triple-A rating. To issue senior, higher-rated classes of notes, it is necessary to obtain the appropriate amount of credit enhancement, generally through the issuance of junior, lower-rated or more highly subordinated classes of notes. Wholly-owned subsidiaries of Discover Bank hold the subordinated classes of notes. The Company is exposed to credit risk associated with trust receivables as of the balance sheet date through the retention of these subordinated interests. The estimate of expected credit losses on trust receivables is included in the allowance for credit losses estimate.

The Company's retained interests in the trust's assets, consisting of investments in DCENT notes held by subsidiaries of Discover Bank, constitute intercompany positions that are eliminated in the preparation of the Company's condensed consolidated statements of financial condition.

18

Upon transfer of credit card loan receivables to the trust, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the trust's creditors. Further, the transferred credit card loan receivables are owned by the trust and are not available to the Company's third-party creditors. The trusts have ownership of cash balances, the amounts of which are reported in restricted cash within the Company's condensed consolidated statements of financial condition. Except for the seller's interest in trust receivables, the Company's interests in trust assets are generally subordinate to the interests of third-party investors in trust debt and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to those investors. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company's other assets or the Company's general credit for a shortage in cash flows.

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Restricted cash	$	432	$	36
Investors' interests held by third-party investors	10,975		11,725
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,917		3,117
Seller's interest	15,155		15,598
Loan receivables(1)	29,047		30,440
Allowance for credit losses allocated to securitized loan receivables(1)	(1,323)		(1,347)
Net loan receivables	27,724		29,093
Other assets	3		2
Carrying value of assets of consolidated variable interest entities	$	28,159	$	29,131

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors in the securities, there are certain features or triggering events that will cause an early amortization of the debt securities, including triggers related to the impact of the performance of the trust receivables on the availability and adequacy of cash flows to meet contractual requirements. As of March 31, 2024, no economic or other early amortization events have occurred.

The Company continues to own and service the accounts that generate the loan receivables held by the trusts. Discover Bank receives servicing fees from the trusts based on a percentage of the monthly investor principal balance outstanding. Although the fee income to Discover Bank offsets the fee expense to the trusts and thus is eliminated in consolidation, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and the loss of future servicing income, net of related expenses.

Private Student Loan Securitization Activities

The Company's private student loan trust receivables reported in loan receivables and the related debt issued by the trust reported in long-term borrowings were immaterial as of March 31, 2024 and December 31, 2023. The amounts are included, together with amounts related to the Company's credit card securitizations, in the supplemental information about assets and liabilities of consolidated variable interest entities, which is presented with the Company's condensed consolidated statements of financial condition.

5.    Deposits

The Company obtains deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, the Company obtains deposits through third-party securities brokerage firms that offer the Company's deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. Brokered deposit products include certificates of deposit and sweep accounts.

19

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At March 31, 2024
2024	$	21,263
2025	12,190
2026	4,211
2027	4,408
2028	2,161
Thereafter	1,009
Total	$	45,242

6.    Long-Term Borrowings

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	March 31, 2024					December 31, 2023
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,947	$	10,003
Floating-rate asset-backed securities(2)	2024	6.04%	6.04%	925		925
Total Discover Card Master Trust I and Discover Card Execution Note Trust				10,872		10,928
Floating-rate asset-backed security(3)(4)	2031	9.50%	9.50%	61		65
Total private student loan securitization trust				61		65
Total long-term borrowings - owed to securitization investors				10,933		10,993
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,337		3,336
Fixed-rate retail notes	2025-2031	3.25% - 4.40%	3.82%	139		140
Fixed to floating-rate senior notes(5)	2034	7.96%	7.96%	992		993
Discover Bank
Fixed-rate senior bank notes(1)	2024-2030	2.45% - 4.65%	3.53%	3,535		3,571
Fixed-rate subordinated bank notes	2028	5.97%	5.97%	491		500
Fixed-rate Federal Home Loan Bank advances	2030	4.77% - 4.82%	4.82%	523		523
Floating-rate Federal Home Loan Bank advances(6)	2024	5.49% - 5.59%	5.59%	525		525
Total long-term borrowings				$	20,475	$	20,581

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month Term SOFR + 0.11448% Tenor Spread Adjustment + 60 basis points as of March 31, 2024.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2024.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed to floating-rate senior notes include a rate reset on November 2, 2033, to a floating rate based on compounded SOFR + 3.370%.

(6)The floating-rate FHLB advances include interest rate terms based on SOFR plus a spread ranging from 16 to 26 basis points as of March 31, 2024.

20

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	March 31, 2024
2024	$	4,250
2025	6,121
2026	4,868
2027	1,001
2028	1,412
Thereafter	2,823
Total	$	20,475

As a member of the FHLB of Chicago, the Company has access to both short- and long-term advance structures with maturities ranging from overnight to 30 years. As of March 31, 2024, the Company had total committed borrowing capacity of $4.1 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised of $1.0 billion in long-term advances. As of December 31, 2023, the Company had total committed borrowing capacity of $3.6 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised of $1.0 billion in long-term advances. These advances are presented as short- or long-term borrowings on the condensed consolidated statements of financial condition based on the contractual maturity at origination.

Additionally, the Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of March 31, 2024, the total commitment of secured credit facilities through private providers was $3.5 billion, none of which was drawn. As of December 31, 2023, the total commitment of secured credit facilities through private providers was $3.5 billion, $750 million of which was outstanding as a short-term advance. This advance is presented as short-term borrowings on the condensed consolidated statements of financial condition. Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers. The secured credit facilities have various expirations in 2025. Borrowings outstanding under each facility bear interest at a margin above the Term Secured Overnight Financing Rate ("SOFR") or the asset-backed commercial paper costs of each provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction.

7.    Preferred Stock

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at March 31, 2024 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at March 31, 2024		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							March 31, 2024	December 31, 2023	March 31, 2024		December 31, 2023
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month Term SOFR plus a spread of 3.338% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

21

8.    Accumulated Other Comprehensive Income

Changes in each component of accumulated other comprehensive (loss) income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		(Losses) Gains on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended March 31, 2024
Balance at December 31, 2023	$	(37)	$	(8)	$	(180)	$	(225)
Net change	(97)		(71)		—		(168)
Balance at March 31, 2024	$	(134)	$	(79)	$	(180)	$	(393)
For the Three Months Ended March 31, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	92		12		—		104
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)

The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended March 31, 2024
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(129)	$	32	$	(97)
Net change	$	(129)	$	32	$	(97)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(131)	$	32	$	(99)
Amounts reclassified from AOCI	37		(9)		28
Net change	$	(94)	$	23	$	(71)
For the Three Months Ended March 31, 2023
Available-for-Sale Investment Securities
Net unrealized holding gains arising during the period	$	122	$	(30)	$	92
Net change	$	122	$	(30)	$	92
Cash Flow Hedges
Net unrealized gains arising during the period	$	10	$	(2)	$	8
Amounts reclassified from AOCI	5		(1)		4
Net change	$	15	$	(3)	$	12

22

9.    Income Taxes

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Income before income taxes	$	404		$	1,257
Income tax expense	$	96		$	289
Effective income tax rate	23.7		%	23.0		%

The effective tax rate increased for the three months ended March 31, 2024, as compared to the same period in 2023, due to the adoption of the proportional amortization method for qualifying tax credit investments effective January 1, 2024, offset by the decrease in pretax income.

The Company is subject to examination by the Internal Revenue Service and tax authorities in various state, local and foreign tax jurisdictions. The Company's federal income tax filings are open to examinations for the tax years ended December 31, 2020 and forward. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. At this time, the potential change in unrecognized tax benefits is expected to be immaterial over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations.

10.    Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended March 31,
	2024		2023
Numerator
Net income	$	308	$	968
Preferred stock dividends	(31)		(31)
Net income available to common stockholders	277		937
Income allocated to participating securities	(3)		(6)
Net income allocated to common stockholders	$	274	$	931
Denominator
Weighted-average shares of common stock outstanding	250		262
Weighted-average shares of common stock outstanding and common stock equivalents	250		262
Basic earnings per common share	$	1.10	$	3.55
Diluted earnings per common share	$	1.10	$	3.55

Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three months ended March 31, 2024 and 2023.

11.     Capital Adequacy

DFS is subject to the capital adequacy guidelines of the Federal Reserve. Discover Bank, the Company's banking subsidiary, is subject to various regulatory capital requirements as administered by the FDIC. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit the Company's business activities and have a direct material effect on the financial condition and operating results of DFS and Discover Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, DFS and Discover Bank must meet specific risk-based capital requirements and leverage ratios that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidelines. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

23

DFS and Discover Bank are subject to regulatory and capital rules issued by the Federal Reserve and FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). Under the Basel III rules, DFS and Discover Bank are classified as "standardized approach" entities. Standardized approach entities are defined as U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposure less than $10 billion.

In accordance with the final rule on the impact of current expected credit losses ("CECL") on regulatory capital, the Company has elected to phase in the impact over three years beginning in 2022. Accordingly, the Company's Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The Company's CET1 capital ratios will continue to be favorably impacted by this election over the phase-in period, which ends December 31, 2024.

As of March 31, 2024 and December 31, 2023, DFS and Discover Bank met all Basel III minimum capital ratio requirements to which they were subject. DFS and Discover Bank also met the requirements to be considered "well-capitalized" under Regulation Y and prompt corrective action rules, respectively. There have been no conditions or events that management believes have changed DFS' or Discover Bank's category. To be categorized as "well-capitalized", DFS and Discover Bank must maintain minimum capital ratios outlined in the table below.

The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
March 31, 2024
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,513	13.3	%	$	10,499	≥8.0%	$	13,124	≥10.0%
Discover Bank	$	16,598	12.8	%	$	10,349	≥8.0%	$	12,936	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,394	11.7	%	$	7,874	≥6.0%	$	7,874	≥6.0%
Discover Bank	$	13,752	10.6	%	$	7,762	≥6.0%	$	10,349	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,394	10.1	%	$	6,086	≥4.0%	N/A		N/A
Discover Bank	$	13,752	9.2	%	$	6,004	≥4.0%	$	7,505	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,338	10.9	%	$	5,906	≥4.5%	N/A		N/A
Discover Bank	$	13,752	10.6	%	$	5,821	≥4.5%	$	8,409	≥6.5%
December 31, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,986	13.7	%	$	10,471	≥8.0%	$	13,088	≥10.0%
Discover Bank	$	16,856	13.0	%	$	10,352	≥8.0%	$	12,939	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,872	12.1	%	$	7,853	≥6.0%	$	7,853	≥6.0%
Discover Bank	$	13,910	10.8	%	$	7,764	≥6.0%	$	10,352	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,872	10.7	%	$	5,915	≥4.0%	N/A		N/A
Discover Bank	$	13,910	9.5	%	$	5,833	≥4.0%	$	7,292	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,816	11.3	%	$	5,890	≥4.5%	N/A		N/A
Discover Bank	$	13,910	10.8	%	$	5,823	≥4.5%	$	8,411	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

24

12.    Commitments, Contingencies and Guarantees

In the normal course of business, the Company enters into a number of off-balance sheet commitments, transactions and obligations under guarantee arrangements that expose the Company to varying degrees of risk. The Company's commitments, contingencies and guarantee relationships are described below.

Commitments

Unused Credit Arrangements

At March 31, 2024, the Company had unused credit arrangements for loans of approximately $233.0 billion. Such arrangements arise primarily from agreements with customers for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions in the related agreements. These arrangements, substantially all of which the Company can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness, loan qualification and the cost of capital. As the Company’s credit card loans are unconditionally cancellable, no liability for expected credit losses is required for unused lines of credit. For all other loans, the Company records a liability for expected credit losses for unfunded commitments, which is presented as part of accrued expenses and other liabilities in the condensed consolidated statements of financial condition.

Contingencies

See Note 13: Litigation and Regulatory Matters for a description of potential liability arising from pending litigation or regulatory proceedings involving the Company.

Guarantees

The Company has obligations under certain guarantee arrangements, including contracts, indemnification agreements and representations and warranties, which contingently require the Company to make payments to the guaranteed party based on changes in an underlying asset, liability or equity security of a guaranteed party, rate or index. Also included as guarantees are contracts that contingently require the Company to make payments to a guaranteed party based on another entity's failure to perform under an agreement. The Company's use of guarantees is disclosed below by type of guarantee.

Securitizations Representations and Warranties

As part of the Company's financing activities, the Company provides representations and warranties that certain assets pledged as collateral in secured borrowing arrangements conform to specified guidelines. Due diligence is performed by the Company, which is intended to ensure that asset guideline qualifications are met. If the assets pledged as collateral do not meet certain conforming guidelines, the Company may be required to replace, repurchase or sell such assets. In its credit card securitization activities, the Company would replace nonconforming receivables through the allocation of excess seller's interest or from additional transfers from the unrestricted pool of receivables. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors' interests would be triggered. In its student loan securitizations, the Company would generally repurchase the loans from the trust at the outstanding principal amount plus interest.

The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of third-party investor interests in credit card asset-backed securities and the principal amount of any private student loan secured borrowings, plus any unpaid interest for the corresponding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company's condensed consolidated statements of financial condition. The Company has not recorded any incremental contingent liability associated with its secured borrowing representations and warranties. Management believes that the probability of having to replace, repurchase or sell assets pledged as collateral under secured borrowing arrangements, including an early amortization event, is low.

25

Counterparty Settlement Guarantees

Diners Club and DFS Services LLC (on behalf of PULSE) have various counterparty exposures, which are listed below:

•Merchant Guarantee. Diners Club has entered into contractual relationships with certain international merchants, which generally include travel-related businesses, for the benefit of all Diners Club licensees. The licensees hold the primary liability to settle the transactions of their customers with these merchants. However, Diners Club retains a counterparty exposure if a licensee fails to meet its financial payment obligation to one of these merchants.

•ATM Guarantee. PULSE entered into contractual relationships with certain international ATM acquirers in which DFS Services LLC retains counterparty exposure if an issuer fails to fulfill its settlement obligation.

•Global Network Alliance Guarantee. Discover Network, Diners Club and PULSE have entered into contractual relationships with certain international payment networks in which DFS Services LLC retains the counterparty exposure if a network fails to fulfill its settlement obligation.

The maximum potential amount of future payments related to such contingent obligations is dependent upon the transaction volume processed between the time a potential counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party. The Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), however, there is no limitation on the maximum amount the Company may be liable to pay.

The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether particular counterparties will fail to meet their settlement obligations. In the event all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees would be approximately $110 million as of March 31, 2024.

The Company believes that the estimated amounts of maximum potential future payments are not representative of the Company's actual potential loss exposure given Diners Club's and PULSE's insignificant historical losses from these counterparty exposures. As of March 31, 2024, the Company had not recorded any contingent liability in the condensed consolidated statements of financial condition for these counterparty exposures and management believes that the probability of any payments under these arrangements is low.

Discover Network Merchant Chargeback Guarantees

The Company operates the Discover Network, issues payment cards and permits third parties to issue payment cards. The Company is contingently liable for certain transactions processed on the Discover Network in the event of a dispute between the payment card customer and a merchant. The contingent liability arises if the disputed transaction involves a merchant or merchant acquirer with whom the Discover Network has a direct relationship. If a dispute is resolved in the customer's favor, the Discover Network will credit or refund the disputed amount to the Discover Network card issuer, who in turn credits its customer's account. The Discover Network will then charge back the disputed amount of the payment card transaction to the merchant or merchant acquirer, where permitted by the applicable agreement, to seek recovery of amounts already paid to the merchant for payment card transactions. If the Discover Network is unable to collect the amount subject to dispute from the merchant or merchant acquirer (e.g., in the event of merchant default or dissolution or after expiration of the time period for chargebacks in the applicable agreement), the Discover Network will bear the loss for the amount credited or refunded to the customer. In most instances, a loss by the Discover Network is unlikely to arise in connection with payments on card transactions because most products or services are delivered when purchased and credits are issued by merchants on returned items in a timely fashion, thus minimizing the likelihood of cardholder disputes with respect to amounts paid by the Discover Network. However, where the product or service is not scheduled to be provided to the customer until a later date following the purchase, the likelihood of a contingent payment obligation by the Discover Network increases. Losses related to merchant chargebacks were not material for the three months ended March 31, 2024 and 2023.

26

The maximum potential amount of obligations of the Discover Network arising from such contingent obligations is estimated to be the portion of the total Discover Network transaction volume processed to date for which timely and valid disputes may be raised under applicable law and relevant issuer and customer agreements. There is no limitation on the maximum amount the Company may be liable to pay to issuers. However, the Company believes that such amount is not representative of the Company's actual potential loss exposure based on the Company's historical experience. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether the current or cumulative transaction volumes may include or result in disputed transactions.

The following table summarizes certain information regarding merchant chargeback guarantees (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Aggregate sales transaction volume(1)	$	61,332	$	60,833

(1)Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of March 31, 2024 and December 31, 2023. The Company mitigates the risk of potential loss exposure by withholding settlement from merchants, obtaining third-party guarantees, or obtaining escrow deposits or letters of credit from certain merchant acquirers or merchants that are considered a higher risk due to various factors such as time delays in the delivery of products or services. As of March 31, 2024 and December 31, 2023, the Company had escrow deposits and settlement withholdings of $9 million and $10 million, respectively, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company's condensed consolidated statements of financial condition.

13.    Litigation and Regulatory Matters

In the normal course of business, from time to time, the Company has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The litigation process is not predictable and can lead to unexpected results. The Company contests liability and/or the amount of damages as appropriate in each pending matter.

The Company has historically offered its customers an arbitration clause in its customer agreements. The arbitration clause allows the Company and its customers to quickly and economically resolve disputes. Additionally, the arbitration clause has in some instances limited the costs of, and the Company's exposure to, litigation. Future legal and regulatory challenges and prohibitions may cause the Company to discontinue its offering and use of such clauses. From time to time, the Company is involved in legal actions challenging its arbitration clause. Bills may be periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding the Company's business including, among other matters, regulatory, accounting, tax and other operational matters. The investigations and proceedings may result in significant adverse judgments, settlements, fines, penalties, injunctions, decreases in regulatory ratings, customer restitution or other relief. These outcomes could materially impact the Company's condensed consolidated financial statements, increase its cost of operations, or limit the Company's ability to execute its business strategies and engage in certain business activities. Certain subsidiaries of the Company are subject to consent orders with the Consumer Financial Protection Bureau ("CFPB") and FDIC, as described below. Pursuant to powers granted under federal banking laws, regulatory agencies have broad and sweeping discretion and may assess civil money penalties, require changes to certain business practices or require customer restitution at any time.

In accordance with applicable accounting guidance, the Company establishes a liability for legal and regulatory matters when those matters create loss contingencies that are both probable and estimable. Except as discussed below regarding the card product misclassification matter, litigation and regulatory settlement-related expenses were immaterial for the three months ended March 31, 2024 and 2023.

27

There may be an exposure to loss in excess of any amounts accrued. The Company believes the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), in excess of the amounts that the Company has accrued for legal and regulatory proceedings, is up to $230 million as of March 31, 2024. This estimated range of reasonably possible losses is based on currently available information for those proceedings in which the Company is involved and considers the Company's best estimate of such losses for those matters for which an estimate can be made. It does not represent the Company's maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate.

The Company's estimated range noted above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could adversely affect the Company's reputation and be material to the Company's condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company's income for such period.

In July 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products Inc. (the "Discover Subsidiaries"), agreed to a consent order with the CFPB with respect to certain private student loan servicing practices (the "2015 Order"). The 2015 Order expired in July 2020. In December 2020, the Discover Subsidiaries agreed to a consent order (the "2020 Order") with the CFPB resolving the agency’s investigation into Discover Bank’s compliance with the 2015 Order. In connection with the 2020 Order, Discover is required to implement a redress and compliance plan and must pay at least $10 million in consumer redress to consumers who may have been harmed and has paid a $25 million civil money penalty to the CFPB.

On September 25, 2023, following the consent of the Board of Directors of Discover Bank, the FDIC issued a consent order (the "2023 Order") to Discover Bank. The 2023 Order addresses shortcomings in Discover Bank’s compliance management system for consumer protection laws and related matters. It does not contain any monetary penalties or fines. As part of the 2023 Order, Discover Bank agreed to improve its consumer compliance management system and enhance related corporate governance and enterprise risk management practices, and increase the level of Board oversight of such matters. Discover Bank has been taking significant steps to strengthen the organization’s compliance management system and address the other issues identified in the 2023 Order. In addition, Discover added two new independent directors with significant banking experience to the Boards of Discover and Discover Bank in the third quarter of 2023.

Management and the Board are committed to meeting all the requirements of the 2023 Order. Discover Bank is working diligently to complete items required by the 2023 Order. This includes having retained third party consultants to conduct independent reviews and the submission of action plans to the FDIC by the required deadlines for review and feedback. The actions completed to date, taken together with actions previously undertaken to improve and enhance its compliance management system and enhance related corporate governance, address multiple consent order objectives, however, many provisions require longer term implementation. Depending on regulatory feedback, the timing of approvals and sustainability periods, necessary work is not likely to be completed until at least 2025.

On March 8, 2016, a class-action lawsuit was filed against the Company, other credit card networks, other issuing banks and EMVCo in the U.S. District Court for the Northern District of California (B&R Supermarket, Inc., d/b/a Milam's Market, et al. v. Visa, Inc., et al.) alleging a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. The plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. The Company filed its motion to compel arbitration, motion for summary judgment, and Daubert challenges on November 30, 2022, and awaits rulings. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter. However, the Company will seek to defend itself vigorously against all claims asserted by the plaintiffs.

Card Product Misclassification

As reported, the Company recorded a liability of $365 million as of June 30, 2023, within accrued expenses and other liabilities, to provide refunds to merchants and merchant acquirers as a result of the card product misclassification. Management completed the reclassification of card products in November 2023. As of December 31, 2023, the balance of the liability was $375 million, reflecting an additional $11 million for the estimated effect of the prior price tiering on discount and interchange assessments recorded in each of the third and fourth quarters of 2023 and $12 million of settlement disbursements made through that date. Throughout the first quarter of 2024, the Company continued settlement discussions

28

with large direct merchants both directly and indirectly as plaintiffs in putative class actions filed on behalf of all merchants, and the Company continued to discuss these efforts with its regulators. Another $9 million in settlement disbursements were made during the first quarter of 2024. Based on its experience to date with remediation efforts, discussions through the first quarter of 2024 with its regulators, Board of Directors and other stakeholders, the pending merger with Capital One approved by the Board of Directors during the quarter, and a desire to advance resolution of the matter more quickly to mitigate further risk, the Company determined it was appropriate to increase its estimate of total remediation. As a result, the Company increased its liability to $1.2 billion through a charge to other expense for the three months ended March 31, 2024, to reflect the total amount the Company now expects is probable to be disbursed in relation to the card product misclassification.

The Company remains in discussions with its regulators regarding this matter. The Company expects these discussions will likely result in enforcement actions, which may include, among other remedies, monetary penalties, the amount of which cannot be estimated at this time and could be material.

In addition, the Company and its subsidiaries have been named as defendants in various lawsuits, including a putative class action on behalf of shareholders and shareholder derivative actions. The Company also is cooperating with a Securities and Exchange Commission investigation into the card product misclassification matter. The Company believes that additional losses are probable as a result of these actions and such losses could be material but it is not able to make a reasonable estimate of the amount or range of such losses as of March 31, 2024.

14.    Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying the inputs to valuation techniques used to measure fair value of financial instruments based on whether the inputs are observable or unobservable. It also requires certain disclosures about those measurements. The three-level valuation hierarchy is as follows:

•Level 1: Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2: Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2.

•Level 3: Fair values determined by Level 3 inputs are those based on unobservable inputs and include situations where there is little, if any, market activity for the asset or liability being valued. In instances where the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy in which the measurements are classified is based on the lowest level input that is significant to the fair value measurement in its entirety. Accordingly, the Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category.

The Company evaluates the classification of each fair value measurement within the hierarchy at least quarterly.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.

29

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at March 31, 2024
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,815	$	7	$	—	$	12,822
Residential mortgage-backed securities - Agency	—		439		—		439
Available-for-sale investment securities	$	12,815	$	446	$	—	$	13,261
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	6	$	—	$	6
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	5	$	—	$	5
Balance at December 31, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,928	$	9	$	—	$	12,937
Residential mortgage-backed securities - Agency	—		465		—		465
Available-for-sale investment securities	$	12,928	$	474	$	—	$	13,402
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	1	$	—	$	—	$	1
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

Available-for-Sale Investment Securities

Investment securities classified as available-for-sale consist of U.S. Treasury and U.S. GSE securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The fair value estimates of U.S. GSE securities and RMBS are classified as Level 2 and are valued by maximizing the use of relevant observable inputs, including quoted prices for similar securities, benchmark yield curves and market-corroborated inputs.

The Company validates the fair value estimates provided by pricing services primarily by comparing to valuations obtained through other pricing sources. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates.

At March 31, 2024, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $457 million, a weighted-average coupon of 4.10% and a weighted-average remaining maturity of four years.

30

Derivative Financial Instruments

The Company's derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models, containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and foreign currency forward and spot rates. In determining fair values, the pricing models use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity and the observable market-based inputs. The fair values of the interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments are based on an expectation of future interest rates derived from the observable market interest rate curves. The Company considers collateral and master netting agreements that mitigate credit exposure to counterparties in determining the counterparty credit risk valuation adjustment. The fair values of the currency instruments are valued by comparing the contracted forward exchange rate pertaining to the specific contract maturities to the current market exchange rate.

The Company validates the fair value estimates of interest rate swaps primarily through comparison to the fair value estimates computed by the counterparties to each of the derivative transactions. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company performs due diligence in understanding the impact of any changes to the valuation techniques performed by proprietary pricing models before implementation, working closely with the third-party valuation service and reviewing the service's control objectives at least annually. The Company corroborates the fair value of foreign exchange forward contracts through independent calculation of the fair value estimates.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These assets include those associated with acquired businesses, including goodwill. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets may be applicable whenever one is tested for impairment. No impairments were recognized related to these assets during the three months ended March 31, 2024 and 2023.

31

Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	238	$	—	$	238	$	261
Held-to-maturity investment securities	$	—	$	238	$	—	$	238	$	261
Net loan receivables	$	—	$	—	$	124,936	$	124,936	$	117,297
Carrying value approximates fair value(1)
Cash and cash equivalents	$	14,004	$	—	$	—	$	14,004	$	14,004
Restricted cash	$	439	$	—	$	—	$	439	$	439
Accrued interest receivables(2)	$	—	$	1,490	$	—	$	1,490	$	1,490
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,276	$	—	$	45,276	$	45,242
Long-term borrowings - owed to securitization investors	$	—	$	10,767	$	61	$	10,828	$	10,933
Other long-term borrowings	—		9,544		—		9,544		9,542
Long-term borrowings	$	—	$	20,311	$	61	$	20,372	$	20,475
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	445	$	—	$	445	$	445
Balance at December 31, 2023
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	234	$	—	$	234	$	253
Held-to-maturity investment securities	$	—	$	234	$	—	$	234	$	253
Net loan receivables	$	—	$	—	$	126,940	$	126,940	$	119,126
Carrying value approximates fair value(1)
Cash and cash equivalents	$	11,685	$	—	$	—	$	11,685	$	11,685
Restricted cash	$	43	$	—	$	—	$	43	$	43
Accrued interest receivables(2)	$	—	$	1,450	$	—	$	1,450	$	1,450
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,333	$	—	$	45,333	$	45,240
Short-term borrowings	$	—	$	750	$	—	$	750	$	750
Long-term borrowings - owed to securitization investors	$	—	$	10,770	$	65	$	10,835	$	10,993
Other long-term borrowings	—		9,469		—		9,469		9,588
Long-term borrowings	$	—	$	20,239	$	65	$	20,304	$	20,581
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	421	$	—	$	421	$	421

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

32

15.    Derivatives and Hedging Activities

The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or speculative purposes. Certain derivatives used to manage the Company's exposure to foreign currency are not designated as hedges and do not qualify for hedge accounting.

Derivatives may give rise to counterparty credit risk, which generally is mitigated through collateral arrangements as described under the sub-heading "— Collateral Requirements and Credit-Risk Related Contingency Features." The Company enters into derivative transactions with established dealers that meet minimum credit criteria established by the Company. All counterparties must be pre-approved before engaging in any transaction with the Company. The Company regularly monitors counterparties to ensure compliance with the Company's risk policies and limits. In determining the counterparty credit risk valuation adjustment for the fair values of derivatives, if any, the Company considers collateral and legally enforceable master netting agreements that mitigate credit exposure to related counterparties.

All derivatives are recorded in other assets at their gross positive fair values and in accrued expenses and other liabilities at their gross negative fair values. See Note 14: Fair Value Measurements for a description of the valuation methodologies used for derivatives. Cash collateral amounts associated with derivative positions that are cleared through an exchange are legally characterized as settlement of the derivative positions. Such collateral amounts are reflected as offsets to the associated derivatives balances recorded in other assets or in accrued expenses and other liabilities. Other cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statements of financial condition. Collateral amounts recorded in the condensed consolidated statements of financial condition are based on the net collateral posted or held position for each applicable legal entity's master netting arrangement with each counterparty.

Derivatives Designated as Hedges

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows arising from changes in interest rates, or other types of forecasted transactions, are considered cash flow hedges. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Cash Flow Hedges

The Company uses interest rate swaps to manage its exposure to variability in cash flows related to changes in interest rates on interest-earning assets and funding instruments. These interest rate swaps qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"). At March 31, 2024 and December 31, 2023, the Company's outstanding cash flow hedges primarily relate to interest receipts from credit card receivables and had an initial maximum period of five years.

The change in the fair value of derivatives designated as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings in the period that the hedged forecasted cash flows affect earnings. Amounts reported in AOCI related to derivatives at March 31, 2024, will be reclassified to interest income and interest expense as interest receipts and payments are accrued on the Company's then outstanding credit card receivables and certain floating-rate debt, respectively. During the next 12 months, the Company estimates it will reclassify $104 million into pretax earnings related to its cash flow hedges.

Fair Value Hedges

The Company is exposed to changes in the fair value of its fixed-rate debt obligations due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in the fair value of certain fixed-rate long-term borrowings, including securitized debt and bank notes, and deposits attributable to changes in the respective benchmark rates. These interest rate swaps qualify as fair value hedges in accordance with ASC 815. Changes in the fair values of both (i) the derivatives and (ii) the hedged long-term borrowings and deposits attributable to the interest-rate risk being hedged are recorded in interest expense and generally provide substantial offset to one another.

33

Derivatives Not Designated as Hedges

Foreign Exchange Forward Contracts

The Company has foreign exchange forward contracts that are economic hedges and are not designated as accounting hedges. The Company enters into foreign exchange forward contracts to manage foreign currency risk. Changes in the fair value of these contracts are recorded in other income on the condensed consolidated statements of income.

Derivatives Cleared Through an Exchange

Cash variation margin payments on derivatives cleared through an exchange are legally considered settlement payments and are accounted for with corresponding derivative positions as one unit of account and not presented separately as collateral. With settlement payments on derivative positions cleared through this exchange reflected as offsets to the associated derivative asset and liability balances, the fair values of derivative instruments and collateral balances shown are generally reduced.

Derivatives Activity

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	March 31, 2024							December 31, 2023
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	12,000	19	$	1	$	6	$	10,650	$	2	$	—
Interest rate swaps—fair value hedge	$	12,762	17	—		5		$	8,650	2		—
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	32	6	—		—		$	29	—		—
Total gross derivative assets/liabilities(2)				1		11				4		—
Less: collateral held/posted(3)				—		(11)				—		—
Total net derivative assets/liabilities				$	1	$	—			$	4	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 1.5 billion as of March 31, 2024, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 1.1 billion and AUD 2 million as of December 31, 2023.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities and tax exempt single family mortgage revenue bonds as part of its community reinvestment initiatives. At March 31, 2024, the Company had one outstanding contract with a total notional amount of $23 million and an immaterial fair value. At December 31, 2023, the Company had one outstanding contract with a total notional amount of $35 million and an immaterial fair value.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	March 31, 2024				December 31, 2023
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	12,614	$	(108)	$	8,620	$	—

(1)The balance includes $10 million and $12 million of cumulative hedging adjustments related to discontinued hedging relationships as of March 31, 2024 and December 31, 2023, respectively.

34

The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense				Interest Income (Credit Card)
	Deposits		Long-Term Borrowings
For the Three Months Ended March 31, 2024
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(1,210)	$	(245)	$	3,938
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	3	$	(40)
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	3	$	103	$	—
Losses on interest rate swaps	(4)		(138)		—
Total losses on fair value hedging relationships	$	(1)	$	(35)	$	—
For the Three Months Ended March 31, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(756)	$	(189)	$	3,321
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	2	$	(7)
Gains (losses) on fair value hedging relationships
Losses on hedged items	$	—	$	(35)	$	—
Gains on interest rate swaps	—		21		—
Total losses on fair value hedging relationships	$	—	$	(14)	$	—

For the impact of the derivative instruments on OCI, see Note 8: Accumulated Other Comprehensive Income.

Collateral Requirements and Credit-Risk Related Contingency Features

The Company has master netting arrangements and minimum collateral posting thresholds with its counterparties for its fair value and cash flow hedge interest rate swaps and foreign exchange forward contracts. The Company has not sought a legal opinion in relation to the enforceability of its master netting arrangements and, as such, does not report any of these positions on a net basis. Collateral is required by either the Company or its subsidiaries or the counterparty depending on the net fair value position of the derivatives held with that counterparty. These collateral receivable or payable amounts are generally not offset against the fair value of these derivatives but are recorded separately in other assets or deposits. Most of the Company's cash collateral amounts relate to positions cleared through an exchange and are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities.

The Company also has agreements with certain of its derivative counterparties that contain a provision under which the Company could be declared in default on any of its derivative obligations if the Company defaults on any of its indebtedness, including default where the lender has not accelerated repayment of the indebtedness.

35

16.    Segment Disclosures

The Company manages its business activities in two segments: Digital Banking and Payment Services.

•Digital Banking: The Digital Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans and deposit products. The majority of Digital Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income.

•Payment Services: The Payment Services segment includes PULSE, an ATM, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company's Network Partners business, which provides payment transaction processing and settlement services on the Discover Network. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue from Diners Club.

The business segment reporting provided to and used by the Company's CODM is prepared using the following principles and allocation conventions:

•The Company aggregates operating segments when determining reportable segments.

•Corporate overhead is not allocated between segments; all corporate overhead is included in the Digital Banking segment.

•Through its operation of the Discover Network, the Digital Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments, except for an allocation of direct and incremental costs driven by the Company's Payment Services segment.

•The Company's assets are not allocated among the operating segments in the information reviewed by the Company's CODM.

•The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources.

•Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company's CODM.

36

The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Interest income
Credit card loans	$	3,938	$	—	$	3,938
Private student loans	264		—		264
Personal loans	333		—		333
Other loans	115		—		115
Other interest income	298		—		298
Total interest income	4,948		—		4,948
Interest expense	1,461		—		1,461
Net interest income	3,487		—		3,487
Provision for credit losses	1,497		—		1,497
Other income	591		132		723
Other expense	2,259		50		2,309
Income before income taxes	$	322	$	82	$	404
For the Three Months Ended March 31, 2023
Interest income
Credit card loans	$	3,321	$	—	$	3,321
Private student loans	252		—		252
Personal loans	248		—		248
Other loans	64		—		64
Other interest income	192		—		192
Total interest income	4,077		—		4,077
Interest expense	945		—		945
Net interest income	3,132		—		3,132
Provision for credit losses	1,102		—		1,102
Other income	522		88		610
Other expense	1,342		41		1,383
Income before income taxes	$	1,210	$	47	$	1,257

37

17.    Revenue from Contracts with Customers

ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), generally applies to the sales of any good or service for which no other specific accounting guidance is provided. ASC 606 defines a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. The Company's revenue that is subject to this model includes discount and interchange, protection products fees, transaction processing revenue and certain amounts classified as other income.

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	346	$	25	$	371
Protection products revenue	42		—		42
Transaction processing revenue	—		87		87
Other income	3		20		23
Total other income subject to ASC 606(2)	391		132		523
Other income not subject to ASC 606
Loan fee income	200		—		200
Total other income not subject to ASC 606	200		—		200
Total other income by operating segment	$	591	$	132	$	723
For the Three Months Ended March 31, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	310	$	20	$	330
Protection products revenue	43		—		43
Transaction processing revenue	—		67		67
Other income	3		19		22
Total other income subject to ASC 606(2)	356		106		462
Other income not subject to ASC 606
Loan fee income	166		—		166
Gains (losses) on equity investments	—		(18)		(18)
Total other income (loss) not subject to ASC 606	166		(18)		148
Total other income by operating segment	$	522	$	88	$	610

(1)Net of rewards, including Cashback Bonus rewards, of $703 million and $716 million for the three months ended March 31, 2024 and 2023, respectively.

(2)Excludes $2 million and $6 million of deposit product fees that are reported within net interest income for the three months ended March 31, 2024 and 2023, respectively.

For a detailed description of the Company's significant revenue recognition accounting policies, see Note 2: Summary of Significant Accounting Policies to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2023.

18.    Subsequent Events

The Company has evaluated events and transactions that have occurred subsequent to March 31, 2024, and determined that there were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements.

38

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report. This quarterly report 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," "forecast," and similar expressions. Such statements are based on the current beliefs and expectations of our 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 quarterly report 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 accounting guidance, tax reform, financial regulatory reform, consumer financial services practices, anti-corruption and funding, capital and liquidity; risks related to the proposed merger with Capital One including, among others, (i) failure to complete the merger with Capital One or unexpected delays related to the merger or the inability of the parties to obtain regulatory approvals or satisfy other closing conditions required to complete the merger, (ii) regulatory approvals resulting in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction, (iii) diversion of management’s attention from ongoing business operations and opportunities, (iv) cost and revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (v) the integration of each party’s management, personnel and operations will not be successfully achieved or may be materially delayed or will be more costly or difficult than expected, (vi) deposit attrition, customer or employee loss and/or revenue loss as a result of the announcement of the proposed merger, (vii) expenses related to the proposed merger being greater than expected, and (viii) shareholder litigation that could prevent or delay the closing of the proposed merger or otherwise negatively impact our business and operations; the actions and initiatives of current and potential competitors; our ability to manage our expenses; our ability to successfully achieve card acceptance across our networks and maintain relationships with network participants and merchants; our ability to sustain our card and personal loan growth; our ability to complete the proposed sale of the Discover Student Loan portfolio; our ability to increase or sustain Discover card usage or attract new customers; difficulty obtaining regulatory approval for, financing, closing, transitioning, integrating or managing the expenses of acquisitions of or investments in new businesses, products or technologies; our ability to manage our 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 our investment portfolio; limits on our ability to pay dividends and repurchase our common stock; limits on our ability to receive payments from our subsidiaries; fraudulent activities or material security breaches of our or others' key systems; our ability to remain organizationally effective; our ability to maintain relationships with merchants; the effect of political, economic and market conditions, geopolitical events, climate change, pandemics and unforeseen or catastrophic events; our ability to introduce new products and services; our ability to manage our relationships with third-party vendors, as well as those with which we have no direct relationship such as our employees' internet service providers; our ability to maintain current technology and integrate new and acquired systems and technology; our ability to collect amounts for disputed transactions from merchants and merchant acquirers; our ability to attract and retain employees; our ability to protect our reputation and our intellectual property; our ability to comply with regulatory requirements; and new lawsuits, investigations or similar matters or unanticipated developments related to current matters. We routinely evaluate and may pursue acquisitions of, investments in or divestitures from businesses, products, technologies, loan portfolios or deposits, which may involve payment in cash or our debt or equity securities.

Additional factors that could cause our results to differ materially from those described below can be found in this section of this quarterly report and in "Risk Factors," "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for the year ended December 31, 2023, which is filed with the Securities and Exchange Commission ("SEC") and available at the SEC's internet site (https://www.sec.gov).

39

Introduction and Overview

Discover Financial Services ("DFS") is a digital banking and payment services company. We provide digital banking products and services and payment services through our subsidiaries. We offer our customers credit card loans, personal loans, home loans and deposit products. We also operate the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to automated teller machines domestically and internationally and merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

Our primary revenues consist of interest income earned on loan receivables and fees earned from customers, financial institutions, merchants and issuers. The primary expenses required to operate our business include funding costs (interest expense), credit loss provisions, customer rewards and expenses incurred to grow, manage and service our loan receivables and networks. Our business activities are funded primarily through consumer deposits, securitization of loan receivables and the issuance of unsecured debt.

Quarter Highlights

The highlights below compare results as of and for the three months ended March 31, 2024, against results for the same period in the prior year.

•Net income was $308 million, or $1.10 per diluted share, compared to net income of $1.0 billion, or $3.55 per diluted share, in the prior year.

•Total loans grew $13.9 billion, or 12%, to $126.6 billion.

•Credit card loans grew $9.7 billion, or 11%, to $99.5 billion.

•The net charge-off rate for credit card loans increased 256 basis points to 5.66% and the delinquency rate for credit card loans over 30 days past due increased 107 basis points to 3.83%.

•Direct-to-consumer deposits grew $12.0 billion, or 16%, to $87.3 billion.

•Payment Services transaction volume for the segment was $100.3 billion, up 18%.

Outlook

The outlook below provides our current expectations for our financial results based on market conditions, the regulatory and legal environment and our business strategies. The outlook below does not incorporate the impacts of a potential sale of our student loan portfolio.

•We expect a slight increase in total loans.

•Based on the current interest rate environment, net interest margin is expected to decline modestly in comparison to 2023.

•We expect the total net charge-off rate to increase, in comparison to the prior year, driven primarily by the seasoning of recent vintages with higher delinquencies.

•Excluding card misclassification and merger related costs, total expenses are expected to increase, driven by continued investments in compliance and risk management capabilities and wage growth. We remain committed to managing expenses while continuing to make investments in profitable long-term growth.

40

Regulatory Environment and Developments

Banking

Capital Standards and Stress Testing

As a bank holding company, DFS is subject to mandatory supervisory stress tests every other year and is required to submit annual capital plans to the Federal Reserve based on forward-looking internal analysis of income and capital levels under baseline and stressful conditions. DFS is also subject to capital buffer requirements, including the Stress Capital Buffer ("SCB"), which requires maintaining regulatory capital levels above a threshold based on the results of supervisory stress tests after accounting for planned dividend payments.

In January 2021, the Federal Reserve finalized regulatory amendments that made targeted changes to the capital planning, regulatory reporting and SCB requirements for firms subject to Category IV standards, including DFS, to be consistent with the Federal Reserve’s regulatory tailoring framework. The final rules generally align to instructions the Federal Reserve previously provided to Category IV firms regarding their respective capital plan submissions. The amended rules also provide Category IV firms with the option to submit to supervisory stress tests during off years if they wish for the Federal Reserve to reset the stress test portion of their SCB requirement. The Federal Reserve also revised the scope of application of its existing regulatory guidance for capital planning to align with the tailoring framework. However, the timing and substance of any additional changes to existing guidance or new guidance are uncertain. Moreover, following the failure of three domestic banks during March and April 2023, members of Congress, the President of the United States and various bank regulatory authorities have made public statements indicating a desire for additional prudential regulation for Category IV firms like DFS.

In July 2023, the Federal Reserve, the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC") issued a proposal to amend the risk-based capital framework (the "Basel III rules"), which includes replacing the current "advanced approach" with a new expanded risk-based approach. In addition, the proposal introduces new standardized approaches for credit risk, operational risk and credit valuation adjustment risk, and would significantly revise risk-based capital requirements for all banking institutions with assets of $100 billion or more, including DFS. If adopted, the new requirements would be effective July 1, 2025 with a three-year transition period.

In August 2023, the Federal Reserve, the FDIC and the OCC (the "Agencies") issued a proposal that would require banking institutions in Categories II through IV of the tailoring framework, including DFS, and their insured depository institution subsidiaries with $100 billion or more in assets such as Discover Bank, to have minimum levels of outstanding long-term debt. Under the proposed rule, a covered banking institution would be required to have a minimum outstanding amount of eligible long-term debt that is at least 6% of the institution’s total risk-weighted assets, 2.5% of its total leverage exposure (if it is required to maintain a minimum supplementary leverage ratio) and 3.5% of its average total consolidated assets, whichever is greater. If adopted, banking institutions would have three years to comply with the new requirements, though the Agencies would retain the authority to accelerate or extend the transition period.

While we cannot currently predict the timing or substance of the finalization of these proposals or other regulatory changes, if any such change were adopted, it would likely revise the regulatory tailoring currently applicable to DFS, otherwise tighten the prudential regulatory requirements that would apply to DFS and increase our expenses.

In June 2022, the Federal Reserve released results of the 2022 Comprehensive Capital Analysis and Review ("CCAR") exercise. Our capital levels demonstrated resiliency under stress, staying well above regulatory minimums. Based on these results, in August 2022, our new SCB was set at 2.5%, the lowest possible requirement. This new SCB was effective October 1, 2022, through September 30, 2023. In accordance with the capital plan rule amendments, we elected not to participate in the 2023 supervisory stress tests. Nevertheless, on April 5, 2023, we submitted to the Federal Reserve a capital plan based on a forward-looking internal assessment of income and capital under baseline and stressful conditions. On July 27, 2023, the Federal Reserve disclosed that our SCB was unchanged at 2.5%, effective beginning October 1, 2023 through September 30, 2024. On April 5, 2024, we submitted our 2024 capital plan to the Federal Reserve. The Federal Reserve is expected to announce the results of the 2024 supervisory stress test by June 30, 2024 and our SCB by August 31, 2024. The new SCB would be effective from October 1, 2024 through September 30, 2025. Under the Basel III rules, a firm must update and resubmit its capital plan under certain circumstances, including a material change in the firm's risk profile, financial condition or corporate structure since its last capital plan submission. On February 19, 2024, Discover and Capital One Financial Corporation ("Capital One") jointly announced that they entered into an agreement and plan of merger (the "Merger Agreement"), under which the companies will combine in an all-stock merger, which we determined required us to resubmit

41

our capital plan. We will submit our updated capital plan by May 6, 2024. Under the capital plan rule and as a consequence of the resubmission requirement, we must receive prior approval for any dividend or other capital distribution, other than a capital distribution on a newly issued capital instrument. The capital plan rule provides that, unless the Federal Reserve determines to extend the timeline, the Federal Reserve must provide us notice of whether our SCB will be recalculated within 75 days of the submission of our updated capital plan and, if applicable, must provide our updated SCB within 90 days of notifying us that the SCB will be recalculated.

Consumer Financial Services

The Consumer Financial Protection Bureau ("CFPB") regulates consumer financial products and services and examines certain providers of consumer financial products and services, including Discover. The CFPB's authority includes rulemaking, supervisory and enforcement powers with respect to federal consumer protection laws; preventing "unfair, deceptive or abusive acts or practices" ("UDAAP") and ensuring that consumers have access to fair and transparent financial products and services. Historically, the CFPB's policy priorities focused on several financial products of the type we offer (e.g., credit cards and other consumer lending products). In addition, the CFPB is required by statute to undertake certain actions including its biennial review of the consumer credit card market.

The CFPB’s priorities have continued to focus on, among other things, increased enforcement of existing consumer protection laws, with a particular focus on fees charged to consumers, UDAAP, fair lending, student lending and servicing, debt collection and credit reporting. Additionally, detection of repeat offenders, such as companies that violate a formal court or agency order, has also become a priority for the CFPB. Director Chopra, in March 2022, identified, as repeat offenders, several companies that have had multiple enforcement actions, including Discover. The CFPB has recently taken action against financial institutions for violating prior enforcement actions. In December 2020, certain of our subsidiaries entered into a consent order with the CFPB regarding identified private student loan servicing practices. See Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements for more information.

On March 5, 2024, the CFPB issued a final rule that reduces Regulation Z’s safe harbor amount for late fees to $8 and eliminates automatic annual inflation adjustments to that safe harbor amount. While the final rule is effective May 14, 2024, and could result in increased cardholder delinquencies and credit losses, we continue to monitor legal developments that could impact the timing and outcome of the final rule.

Enhanced regulatory requirements, potential supervisory findings, or enforcement actions and ratings could negatively impact our ability to implement certain consumer-focused enhancements to product features and functionality and business strategies, limit or change our business practices, limit our consumer product offerings, cause us to invest more management time and resources in compliance efforts or limit our ability to obtain related required regulatory approvals. The additional expense, time and resources needed to comply with ongoing or new regulatory requirements may adversely impact the cost of and access to credit for consumers and results of business operations.

Data Security and Privacy

Policymakers at the federal and state levels remain focused on enhancing data security and data breach incident response requirements. Furthermore, regulations and legislation at various levels of government continue to be proposed and enacted to augment consumer data privacy standards and require companies to assess and/or disclose cybersecurity metrics, risks, opportunities, policies and practices. At the federal level, Discover is subject to the Gramm-Leach-Bliley Act ("GLBA") and its implementing regulations and guidance, which regulate Discover's use and disclosure of our consumers' nonpublic personal information ("NPI"). In July 2023, the SEC adopted rules on Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure. For more information on Discover's cybersecurity program in connection with these rules, see "Item 1C. Cybersecurity" in our annual report on Form 10-K for the year ended December 31, 2023. In April 2024, the Department of Homeland Security proposed regulations to implement the Cyber Incident Reporting for Critical Infrastructure Act of 2022 and will promulgate new cyber incident and ransom payment reporting requirements for covered entities such as financial services companies.

At the state level, the California Consumer Privacy Act ("CCPA"), which became effective in 2020, created a broad set of privacy rights and remedies. The California Privacy Rights Act, which became effective on January 1, 2023, amends the CCPA, enhancing consumer privacy protections and creating a new California Privacy Protection Agency ("CPPA"). The CPPA has proposed additional regulations around cybersecurity, risk assessments and automated decision-making technology that may impact Discover as the proposed regulations move forward in the formal rulemaking process. Other states continue to pass privacy legislation. So far, these laws exempt either NPI or financial institutions subject to the GLBA or state banking

42

laws from their scope, so the impact of these state privacy laws on several Discover businesses is limited. We continue to evaluate the impact of the CCPA, as well as other federal and state laws, on our businesses and other providers of consumer financial services, including laws regulating the capture and use of consumer biometrics. For more information on the impact to Discover of data security and privacy laws on regulation, see "Business — Supervision and Regulation" and "Item 1A. Risk Factors" to our consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2023.

Environmental, Social and Governance Matters

Environmental, social and governance ("ESG") issues, including climate change, human capital and governance practices, are a significant area of focus by U.S. federal, state and international lawmakers and regulatory agencies, as well as shareholders and other stakeholders. In recent months, there have been substantial legislative and regulatory developments on such issues, including proposed, issued or implemented legislation and rulemakings concerning how companies assess and/or disclose climate and other ESG information, risks, opportunities, policies and practices. For example, in March 2024, the SEC issued a final rule on climate-related disclosures and in October 2023, three climate-related disclosure bills were signed in California. The potential impacts to us of these legislative and regulatory requirements are still being evaluated at this time (including as a result of ongoing litigation challenging such requirements), although we expect that these and other emerging and evolving legal and regulatory requirements on ESG issues will result in additional compliance and reporting costs to us.

We continue to evaluate and assess the potential impact of these legal and regulatory developments.

Segments

We manage our business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. For a detailed description of the operations of each segment, as well as the allocation conventions used in our business segment reporting, see Note 16: Segment Disclosures to our condensed consolidated financial statements.

The following table presents segment data (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Digital Banking
Interest income
Credit card loans	$	3,938	$	3,321
Private student loans	264		252
Personal loans	333		248
Other loans	115		64
Other interest income	298		192
Total interest income	4,948		4,077
Interest expense	1,461		945
Net interest income	3,487		3,132
Provision for credit losses	1,497		1,102
Other income	591		522
Other expense	2,259		1,342
Income before income taxes	322		1,210
Payment Services
Other income	132		88
Other expense	50		41
Income before income taxes	82		47
Total income before income taxes	$	404	$	1,257

43

The following table presents information on transaction volume (in millions):

	For the Three Months Ended March 31,
	2024		2023
Network Transaction Volume
PULSE Network	$	79,073	$	65,268
Network Partners	11,070		10,628
Diners Club(1)	10,181		9,211
Total Payment Services	100,324		85,107
Discover Network — Proprietary(2)	51,764		51,826
Total Network Transaction Volume	$	152,088	$	136,933
Transactions Processed on Networks
Discover Network	883		850
PULSE Network	2,312		1,625
Total Transaction Processed on Networks	3,195		2,475
Credit Card Volume
Discover Card Volume(3)	$	53,239	$	54,129
Discover Card Sales Volume(4)	$	50,137	$	50,588

(1)Diners Club volume is derived from data provided by licensees for Diners Club branded cards issued outside North America and is subject to subsequent revision or amendment.

(2)Represents gross Discover card sales volume on the Discover Network.

(3)Represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity.

(4)Represents Discover card activity related to sales net of returns.

Digital Banking

Our Digital Banking segment reported pretax income of $322 million for the three months ended March 31, 2024, as compared to $1.2 billion for the same period in 2023.

Net interest income increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily driven by a higher average level of loan receivables and a higher yield on loans, partially offset by higher funding costs. Interest income increased compared to the prior year primarily due to a higher average level of loan receivables and higher market rates. Interest expense increased compared to the prior year primarily due to a larger funding base and higher funding costs driven by lower coupon maturities and higher market rates.

For the three months ended March 31, 2024, the provision for credit losses increased as compared to the same period in 2023, primarily driven by an increase in delinquencies. For a detailed discussion on provision for credit losses, see "— Loan Quality — Provision and Allowance for Credit Losses."

Total other income for the Digital Banking segment increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to increases in net discount and interchange revenue and loan fee income. The increase in net discount and interchange revenue was driven primarily from favorable sales volume mix. Loan fee income increased primarily due to a higher volume of late payments.

Total other expense increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to increases in other expense, professional fees and employee compensation and benefits. Other expense increased primarily from an increase in the reserve for remediation related to the card product misclassification. For information regarding the card product misclassification, see Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements. Professional fees increased primarily due to increased consulting supporting compliance and risk management initiatives. The increase in employee compensation and benefits was driven primarily by higher average salaries.

Discover card sales volume was $50.1 billion for the three months ended March 31, 2024, which was a decrease of 0.9% as compared to the same period in 2023. This volume decrease was primarily driven by lower new account growth.

44

Payment Services

Pretax income for the Payment Services segment increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to an increase in transaction processing revenue from higher debit transaction volume.

Critical Accounting Estimates

In preparing our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP"), management must make judgments and use estimates and assumptions about the effects of matters that are uncertain. For estimates that involve a high degree of judgment and subjectivity, it is possible that different estimates could reasonably be derived for the same period. For estimates that are particularly sensitive to changes in economic or market conditions, significant changes to the estimated amount from period to period are also possible. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts in our consolidated financial statements, the resulting changes could have a material effect on our consolidated results of operations and, in certain cases, could have a material effect on our consolidated financial condition. Management has identified the estimates related to our allowance for credit losses as a critical accounting estimate.

Allowance for Credit Losses

The allowance for credit losses was $9.3 billion at March 31, 2024, which reflects a $25 million release from the amount of the allowance for credit losses at December 31, 2023. The allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of our financial assets measured at amortized cost. Changes in the allowance for credit losses, and in the related provision for credit losses, can materially affect net income.

In estimating the expected credit losses, we use a combination of statistical models and qualitative analysis. There is a significant amount of judgment applied in selecting inputs and analyzing the results produced to estimate the allowance for credit losses. For more information on these judgments and our accounting policies and methodologies used to determine the allowance for credit losses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Loan Quality," Note 4: Loan Receivables and Note 2: Summary of Significant Accounting Policies to our consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2023.

One of the key assumptions requiring significant judgment in estimating the current expected credit losses ("CECL") on a quarterly basis is the determination of the macroeconomic forecasts used in the loss forecast models. For the reasonable and supportable loss forecast period, we consider forecasts of multiple economic scenarios that generally include a base scenario with one or more optimistic (upside) or pessimistic (downside) scenarios. These scenarios comprise a variety of macroeconomic variables, including annualized gross domestic product growth and unemployment rate. The scenarios that are chosen each quarter and the amount of weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, views of internal and third-party economists and industry trends. Assumptions about the macroeconomic environment are inherently uncertain and, as a result, actual changes in the allowance for credit losses may be different from the simulated scenario presented below.

To demonstrate the sensitivity of the estimated credit losses to the macroeconomic scenarios, we measured the impact of altering the weighting of macroeconomic scenarios used in our loss forecast. Our allowance for credit losses would increase by approximately $625 million at March 31, 2024 if we applied 100% weight to the most adverse scenario in our sensitivity analysis to reflect continued inflationary pressures, including a decline in consumer confidence and the influence of geopolitical events, as well as high interest rates.

The sensitivity disclosed above is hypothetical. It is difficult to estimate how potential changes in any one factor or input, such as the weighting of macroeconomic forecasts, might affect the overall allowance for credit losses because we consider a variety of factors and inputs in estimating the allowance for credit losses. The macroeconomic scenarios used are constructed with interrelated projections of multiple economic variables and loss estimates are produced that consider the historical correlation of those economic variables with credit losses. The inputs in the macroeconomic scenarios may not change at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others. As a result, the sensitivity analysis above does not necessarily reflect the nature and extent of future changes in the allowance for credit losses. It is intended to provide insights into the impact of different judgments about the economy on our modeled loss estimates for the loan portfolio and does not imply any expectation of future losses. Furthermore, the hypothetical increase in

45

our allowance for credit losses for loans does not incorporate the impact of management judgment for qualitative factors applied in the current allowance for credit losses, which may have a positive or negative effect on our actual financial condition and results of operations.

The overall economic environment directly impacts the macroeconomic variables that are used in the loss forecast models. If management used different assumptions about the economic environment in estimating expected credit losses, the impact to the allowance for credit losses could have a material effect on our consolidated financial condition and results of operations. In addition, if we experience significant instability in the economic environment, the uncertainty around the credit loss forecasts may increase, both due to the uncertainty of the economic forecasts and the challenges our models may have in incorporating them.

Earnings Summary

The following table outlines changes in our condensed consolidated statements of income (dollars in millions):

	For the Three Months Ended March 31,				2024 vs. 2023 Increase (Decrease)
	2024		2023		$		%
Interest income	$	4,948	$	4,077	$	871	21	%
Interest expense	1,461		945		516		55	%
Net interest income	3,487		3,132		355		11	%
Provision for credit losses	1,497		1,102		395		36	%
Net interest income after provision for credit losses	1,990		2,030		(40)		(2)	%
Other income	723		610		113		19	%
Other expense	2,309		1,383		926		67	%
Income before income taxes	404		1,257		(853)		(68)	%
Income tax expense	96		289		(193)		(67)	%
Net income	$	308	$	968	$	(660)	(68)	%
Net income allocated to common stockholders	$	274	$	931	$	(657)	(71)	%

Net Interest Income

The tables that follow this section have been provided to supplement the discussion below and provide further analysis of net interest income, net interest margin and the impact of rate and volume changes on net interest income. Net interest income represents the difference between interest income earned on our interest-earning assets and the interest expense incurred to finance those assets. We analyze net interest income in total by calculating net interest margin (net interest income as a percentage of average total loan receivables) and net yield on interest-earning assets (net interest income as a percentage of average total interest-earning assets). We also separately consider the impact of the level of loan receivables and the related interest yield and the impact of the cost of funds related to each of our funding sources, along with the income generated by our liquidity portfolio, on net interest income.

Our interest-earning assets consist of: (i) cash and cash equivalents primarily related to amounts on deposit with the Federal Reserve Bank of Philadelphia, (ii) restricted cash, (iii) other short-term investments, (iv) investment securities and (v) loan receivables. Our interest-bearing liabilities consist primarily of deposits, both direct-to-consumer and brokered, and long-term borrowings, including amounts owed to securitization investors. The following factors influence net interest income:

•The level and composition of loan receivables, including the proportion of credit card loans to other loans, as well as the proportion of loan receivables bearing interest at promotional rates as compared to standard rates;

•The credit performance of our loans, particularly with regard to charge-offs of finance charges, which reduce interest income;

•The terms of long-term borrowings and certificates of deposit upon initial offering, including maturity and interest rate;

•The interest rates necessary to attract and maintain direct-to-consumer deposits;

46

•The level and composition of other interest-earning assets, including our liquidity portfolio, and interest-bearing liabilities;

•Changes in the interest rate environment, including the levels of interest rates and the relationships among interest rate indices, such as the prime rate, the federal funds rate, the interest rate on reserve balances, and Secured Overnight Financing Rate ("SOFR"); and

•The effectiveness of interest rate swaps in our interest rate risk management program.

Net interest income increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily driven by a higher average level of loan receivables and a higher yield on loans, partially offset by higher funding costs. Interest income increased compared to the prior year primarily due to a higher average level of loan receivables and higher market rates. Interest expense increased compared to the prior year primarily due to a larger funding base and higher funding costs driven by lower coupon maturities and higher market rates.

47

Average Balance Sheet Analysis

(dollars in millions)

	For the Three Months Ended March 31,
	2024						2023
	Average Balance		Yield/Rate		Interest		Average Balance		Yield/Rate		Interest
Assets
Interest-earning assets
Cash and cash equivalents	$	11,980	5.51	%	$	164	$	7,344	4.71	%	$	85
Restricted cash	558		7.03	%	10		588		4.05	%	6
Investment securities	13,682		3.64	%	124		12,235		3.36	%	101
Loan receivables(1)
Credit card loans(2)(3)	100,310		15.79	%	3,938		89,460		15.06	%	3,321
Private student loans	10,577		10.04	%	264		10,546		9.68	%	252
Personal loans	10,004		13.40	%	333		8,155		12.35	%	248
Other	6,235		7.39	%	115		3,888		6.64	%	64
Total loan receivables	127,126		14.71	%	4,650		112,049		14.06	%	3,885
Total interest-earning assets	153,346		12.98	%	4,948		132,216		12.51	%	4,077
Allowance for credit losses	(9,279)						(7,307)
Other assets	7,709						6,494
Total assets(4)	$	151,776					$	131,403
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits
Time deposits(5)	$	45,990	4.63	%	529		$	33,194	3.17	%	259
Money market deposits	7,260		4.32	%	78		8,769		3.77	%	82
Other interest-bearing savings deposits	55,379		4.38	%	603		49,255		3.42	%	415
Total interest-bearing deposits	108,629		4.48	%	1,210		91,218		3.36	%	756
Borrowings
Securitized borrowings(6)(7)(8)	11,340		4.71	%	133		9,667		3.67	%	87
Other long-term borrowings(7)(8)(9)	9,572		4.94	%	118		9,372		4.40	%	102
Total borrowings	20,912		4.82	%	251		19,039		4.03	%	189
Total interest-bearing liabilities	129,541		4.54	%	1,461		110,257		3.48	%	945
Other liabilities and stockholders' equity(10)	22,235						21,146
Total liabilities and stockholders' equity	$	151,776					$	131,403
Net interest income					$	3,487					$	3,132
Net interest margin(11)			11.03	%					11.34	%
Net yield on interest-earning assets(12)			9.15	%					9.61	%
Interest rate spread(13)			8.44	%					9.03	%

(1)Average balances of loan receivables and yield calculations include non-accruing loans. If the non-accruing loan balances were excluded, there would not be a material impact on the amounts reported above.

(2)Interest income on credit card loans includes $123 million and $105 million of amortization of balance transfer fees for the three months ended March 31, 2024 and 2023, respectively.

(3)Includes the impact of interest rate swap agreements used to change a portion of floating-rate assets to fixed-rate assets for the three months ended March 31, 2024 and 2023.

(4)The return on average assets, based on net income, was 0.20% and 0.74% for the three months ended March 31, 2024 and 2023, respectively.

(5)Includes the impact of interest rate swap agreements used to change a portion of fixed-rate funding to floating-rate funding for the three months ended March 31, 2024.

(6)Includes the impact of one terminated derivative formerly designated as a cash flow hedge for the three months ended March 31, 2024 and 2023.

(7)Includes the impact of interest rate swap agreements used to change a portion of fixed-rate funding to floating-rate funding for the three months ended March 31, 2024 and 2023.

(8)Includes the impact of terminated derivatives formerly designated as fair value hedges for the three months ended March 31, 2024 and 2023.

(9)Includes the impact of interest rate swap agreements used to change a portion of floating-rate funding to fixed-rate funding for the three months ended March 31, 2024 and 2023.

(10)The return on average stockholders' equity, based on net income, was 8% and 27% for the three months ended March 31, 2024 and 2023, respectively.

(11)Net interest margin represents net interest income as a percentage of average total loan receivables.

(12)Net yield on interest-earning assets represents net interest income as a percentage of average total interest-earning assets.

(13)Interest rate spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities.

48

Loan Quality

Loan receivables consist of the following (dollars in millions):

	March 31, 2024		December 31, 2023
Credit card loans	$	99,475	$	102,259
Other loans
Private student loans	10,480		10,352
Personal loans	10,107		9,852
Other loans	6,493		5,946
Total other loans	27,080		26,150
Total loan receivables	126,555		128,409
Allowance for credit losses	(9,258)		(9,283)
Net loan receivables	$	117,297	$	119,126

Provision and Allowance for Credit Losses

Provision for credit losses is the expense related to maintaining the allowance for credit losses at an appropriate level to absorb the estimate of credit losses anticipated over the remaining expected life of loan receivables at each period end date. In deriving the estimate of expected credit losses, we consider the collectability of principal, interest and fees associated with our loan receivables. We also consider expected recoveries of amounts that were either previously charged-off or are expected to be charged-off. Establishing the estimate for expected credit losses requires significant management judgment. The factors that influence the provision for credit losses include:

•Increases or decreases in outstanding loan balances, including:

•Changes in consumer spending, payment and credit utilization behaviors;

•The level of new account and loan originations and loan maturities; and

•Changes in the overall mix of accounts and products within the portfolio;

•The credit quality of the loan portfolio, which reflects our credit granting practices and the effectiveness of collection efforts, among other factors;

•The impact of general economic conditions on the consumer, including national and regional conditions, unemployment levels, bankruptcy trends and interest rate movements;

•The level and direction of historical losses; and

•Regulatory changes or new regulatory guidance.

Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Allowance for Credit Losses" and Note 3: Loan Receivables to our condensed consolidated financial statements for more details on how we estimate the allowance for credit losses.

49

The following tables provide changes in our allowance for credit losses (dollars in millions):

	For the Three Months Ended March 31, 2024
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2023	$	7,619	$	858	$	722	$	84	$	9,283
Additions
Provision for credit losses(1)	1,333		53		134		11		1,531
Deductions
Charge-offs	(1,649)		(47)		(113)		(3)		(1,812)
Recoveries	238		5		13		—		256
Net charge-offs	(1,411)		(42)		(100)		(3)		(1,556)
Balance at March 31, 2024	$	7,541	$	869	$	756	$	92	$	9,258
	For the Three Months Ended March 31, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	1,002		60		68		5		1,135
Deductions
Charge-offs	(879)		(33)		(54)		—		(966)
Recoveries	195		6		15		—		216
Net charge-offs	(684)		(27)		(39)		—		(750)
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691

(1)Excludes a $34 million and $33 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2024 and 2023, respectively, as the liability is recorded in accrued expenses and other liabilities in our condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of Accounting Standards Update ("ASU") No. 2022-02 on January 1, 2023.

The allowance for credit losses was approximately $9.3 billion at March 31, 2024, which reflects a $25 million release from December 31, 2023. The release in the allowance for credit losses for the three months ended March 31, 2024 was driven by lower receivables and a modestly more favorable economic outlook, offset in part by higher expected delinquencies and losses.

The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at March 31, 2024, we used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2024 at 4.03% and, within our reasonable and supportable period, peaking at 4.17% in the third quarter of 2025 and (ii) 2.48% growth rate in real gross domestic product in 2024.

In estimating expected credit losses, we considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, including those relating to consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first three quarters of 2023 in an effort to slow economic growth and reduce inflation. Real GDP growth and labor market conditions have exceeded most economists’ expectations, despite an inflation level that has moderated but remains above the target rate. Federal Reserve officials have suggested that the policy rate is likely at its peak for the current tightening cycle, however, the timing and magnitude of rate decreases will be dependent on trends in economic data, particularly inflation. Restrictive monetary policy typically precedes weaker consumer credit conditions caused by rising unemployment as economic growth slows. While credit performance in our lending portfolios has evolved in line with our expectations, we assessed the prospects for various macroeconomic outcomes in setting our allowance for credit losses.

The forecast period we deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, we determined that a reversion period of 12 months was appropriate for the same reason. We applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

50

The provision for credit losses is the amount of expense realized after considering the level of net charge-offs in the period and the required amount of allowance for credit losses at the balance sheet date. For the three months ended March 31, 2024, the provision for credit losses increased by $396 million compared to the same period in 2023, primarily driven by an increase in delinquencies.

Net Charge-offs

Our net charge-offs include the principal amount of losses charged off less principal recoveries and exclude charged-off and recovered interest and fees and fraud losses. Charged-off and recovered interest and fees are recorded in interest income and loan fee income, respectively, which is effectively a reclassification of the provision for credit losses, while fraud losses are recorded in other expense.

The following table presents amounts and rates of net charge-offs of key loan products (dollars in millions):

	For the Three Months Ended March 31,
	2024				2023
	$		%		$		%
Credit card loans	$	1,411	5.66	%	$	684	3.10	%
Private student loans	$	42	1.58	%	$	27	1.04	%
Personal loans	$	100	4.02	%	$	39	1.94	%

The net charge-offs and net charge-off rate for credit card loans, private student loans and personal loans increased for the three months ended March 31, 2024, when compared to the same period in 2023, primarily driven by portfolio seasoning.

Delinquencies

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

The following table presents the amounts and delinquency rates of key loan products that are 30 and 90 days or more delinquent, and loan receivables that are not accruing interest regardless of delinquency (dollars in millions):

	March 31, 2024				December 31, 2023
	$		%		$		%
Loans 30 or more days delinquent
Credit card loans	$	3,810	3.83	%	$	3,955	3.87	%
Private student loans	$	271	2.59	%	$	271	2.62	%
Personal loans	$	147	1.46	%	$	143	1.45	%
Total loan receivables	$	4,282	3.38	%	$	4,427	3.45	%
Loans 90 or more days delinquent
Credit card loans	$	1,941	1.95	%	$	1,917	1.87	%
Private student loans	$	78	0.75	%	$	70	0.67	%
Personal loans	$	39	0.38	%	$	39	0.40	%
Total loan receivables	$	2,079	1.64	%	$	2,045	1.59	%
Loans not accruing interest	$	278	0.22	%	$	269	0.21	%

The 30-day and 90-day delinquency rates remained relatively stable for credit card loans, private student loans and personal loans at March 31, 2024, compared to December 31, 2023.

51

Modified and Restructured Loans

For information regarding modified and restructured loans, see Note 3: Loan Receivables to our condensed consolidated financial statements.

Other Income

The following table presents the components of other income (dollars in millions):

	For the Three Months Ended March 31,				2024 vs. 2023 Increase (Decrease)
	2024		2023		$		%
Discount and interchange revenue, net(1)	$	371	$	330	$	41	12	%
Protection products revenue	42		43		(1)		(2)	%
Loan fee income	200		166		34		20	%
Transaction processing revenue	87		67		20		30	%
Gains (losses) on equity investments	—		(18)		18		(100)	%
Other income	23		22		1		5	%
Total other income	$	723	$	610	$	113	19	%

(1)Net of rewards, including Cashback Bonus rewards, of $703 million and $716 million for the three months ended March 31, 2024 and 2023, respectively.

Total other income increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to increases in net discount and interchange revenue, loan fee income and transaction processing revenue. The increase in net discount and interchange revenue was driven primarily from favorable sales volume mix. Loan fee income increased primarily due to a higher volume of late payments. The increase in transaction processing revenue was driven primarily by higher debit transaction volume.

Other Expense

The following table represents the components of other expense (dollars in millions):

	For the Three Months Ended March 31,				2024 vs. 2023 Increase (Decrease)
	2024		2023		$		%
Employee compensation and benefits	$	671	$	625	$	46	7	%
Marketing and business development	250		241		9		4	%
Information processing and communications	163		139		24		17	%
Professional fees	292		232		60		26	%
Premises and equipment	20		22		(2)		(9)	%
Other expense	913		124		789		636	%
Total other expense	$	2,309	$	1,383	$	926	67	%

Total other expense increased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to increases in other expense, professional fees and employee compensation and benefits. Other expense increased primarily from an increase in the reserve for remediation related to the card product misclassification. For information regarding the card product misclassification, see Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements. Professional fees increased primarily due to increased consulting supporting compliance and risk management initiatives. The increase in employee compensation and benefits was driven primarily by higher average salaries.

52

Income Tax Expense

The following table presents the calculation of the effective income tax rate (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Income before income taxes	$	404		$	1,257
Income tax expense	$	96		$	289
Effective income tax rate	23.7		%	23.0		%

The effective tax rate increased for the three months ended March 31, 2024, as compared to the same period in 2023, due to the adoption of the proportional amortization method for qualifying tax credit investments effective January 1, 2024, offset by the decrease in pretax income.

Liquidity and Capital Resources

Funding and Liquidity

We seek to maintain stable, diversified and cost-effective funding sources and a strong liquidity profile to fund our business and repay or refinance our maturing obligations under normal operating conditions and periods of economic or financial stress. In managing our liquidity risk, we seek to maintain a prudent liability maturity profile and ready access to an ample store of primary and contingency liquidity sources. Our primary funding sources include direct-to-consumer and brokered deposits, public term asset-backed securitizations and other short-term and long-term borrowings. Our primary liquidity sources include a portfolio composed of highly liquid, unencumbered assets, including cash and cash equivalents and investment securities, as well as secured borrowing capacity through private term asset-backed securitizations and Federal Home Loan Bank ("FHLB") advances. In addition, we have unused borrowing capacity at the Federal Reserve discount window, which provides another source of contingency liquidity.

Funding Sources

Deposits

We obtain deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, we obtain deposits through third-party securities brokerage firms that offer our deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. We gather these deposits from retail customers of our bank, many of whom have more than one Discover product. These deposits originate from a large and diverse customer base, and therefore, the majority of these deposit account balances are insured according to the FDIC's insurance limits. Brokered deposit products include certificates of deposit and sweep accounts. In accordance with FDIC guidance, we do not categorize certain retail deposit products such as affinity deposits and deposits generated through certain sweep deposit relationships as brokered for regulatory reporting purposes. At March 31, 2024, we had $87.3 billion of direct-to-consumer deposits and $23.1 billion of brokered deposits, of which there are $93.0 billion of deposit balances due in less than one year and $17.4 billion of deposit balances due in one year or thereafter.

Credit Card Securitization Financing

We securitize credit card receivables as a source of funding. We access the asset-backed securitization market using the Discover Card Master Trust I ("DCMT") and the Discover Card Execution Note Trust ("DCENT"). In connection with our securitization transactions, credit card receivables are transferred to DCMT. DCMT has issued a certificate representing the beneficial interest in its credit card receivables to DCENT. We issue DCENT DiscoverSeries notes in public and private transactions, which are collateralized by the beneficial interest certificate held by DCENT. From time to time, we may add credit card receivables to DCMT to create sufficient funding capacity for future securitizations while managing seller's interest. As of March 31, 2024, there were $29.0 billion of credit card receivables in the trust and no accounts were added to those restricted for securitization investors for the three months ended March 31, 2024. We retain significant exposure to the performance of the securitized credit card receivables through holding the seller's interest and subordinated classes of DCENT DiscoverSeries notes. At March 31, 2024, we had $11.0 billion of outstanding public asset-backed securities and $2.9 billion of outstanding subordinated asset-backed securities that had been issued to our wholly-owned subsidiaries.

53

The securitization structures include certain features designed to protect investors. The primary feature relates to the availability and adequacy of cash flows in the securitized pool of receivables to meet contractual requirements, the insufficiency of which triggers early repayment of the securities. We refer to this as "economic early amortization," which is based on excess spread levels. Excess spread is the amount by which income received with respect to the securitized credit card receivables during a collection period including interest collections, fees and interchange, exceeds the fees and expenses of DCENT during such collection period, including interest expense, servicing fees and charged-off receivables. In the event of an economic early amortization, which would occur if the excess spread fell below 0% on a three-month rolling average basis, we would be required to repay all outstanding securitized borrowings using available collections received with respect to the securitized credit card receivables. For the three months ended March 31, 2024, the DiscoverSeries three-month rolling average excess spread was 14.14%. The period of ultimate repayment would be determined by the amount and timing of collections received.

Through our wholly-owned indirect subsidiary, Discover Funding LLC, we are required to maintain an interest in a contractual minimum level of receivables in DCMT in excess of the face value of outstanding investors' interests. This minimum interest is referred to as the minimum seller's interest. The required minimum seller's interest in the pool of trust receivables is approximately 7% in excess of the total investors' interests, which includes interests held by third parties as well as those interests held by us. If the level of receivables in DCMT were to fall below the required minimum, we would be required to add receivables from the unrestricted pool of receivables, which would increase the amount of credit card receivables restricted for securitization investors. A decline in the amount of the excess seller's interest could occur if balance repayments and charge-offs exceeded new lending on the securitized accounts or as a result of changes in total outstanding investors' interests. Seller's interest exhibits seasonality as higher receivable balance repayments tend to occur in the first calendar year quarter. If we could not add enough receivables to satisfy the minimum seller's interest requirement, an early amortization (or repayment) of investors' interests would be triggered.

An early amortization event would impair our liquidity and may require us to utilize our available non-securitization-related contingent liquidity or rely on alternative funding sources, which may or may not be available at the time. We have several strategies we can deploy to prevent an early amortization event. For instance, we could add receivables to DCMT, which would reduce our available borrowing capacity at the Federal Reserve discount window. Alternatively, we could employ structured discounting, which was used effectively in 2009 to bolster excess spread and mitigate early amortization risk.

The following table summarizes expected contractual maturities of the investors' interests in credit card securitizations, excluding those that have been issued to our wholly-owned subsidiaries (dollars in millions):

At March 31, 2024	Total		Less Than One Year		One Year and Thereafter
Scheduled maturities of borrowings - owed to credit card securitization investors	$	10,872	$	3,722	$	7,150

The "AAA(sf)" and "Aaa(sf)" ratings of the DCENT DiscoverSeries Class A Notes issued to date have been based, in part, on an FDIC rule, which created a safe harbor that provides that the FDIC, as conservator or receiver, will not use its power to disaffirm or repudiate contracts, seek to reclaim or recover assets transferred in connection with a securitization, or recharacterize assets transferred in connection with a securitization as assets of the insured depository institution, provided such transfer satisfies the conditions for sale accounting treatment under previous GAAP. Although the implementation of Financial Accounting Standards Board Accounting Standards Codification Topic 860, Transfers and Servicing, no longer qualified certain transfers of assets for sale accounting treatment, the FDIC approved a final rule that preserved the safe-harbor treatment applicable to revolving trusts and master trusts, including DCMT, so long as those trusts would have satisfied the original FDIC safe harbor if evaluated under GAAP pertaining to transfers of financial assets in effect prior to December 2009. However, other legislative and regulatory developments may impact our ability or desire to issue asset-backed securities in the future.

Federal Home Loan Bank Advances

Discover Bank is a member bank of the FHLB of Chicago, one of 11 FHLBs that, along with the Office of Finance, compose the FHLB System. The FHLBs are government-sponsored enterprises of the U.S. ("U.S. GSEs") chartered to improve the availability of funds to support home ownership. As such, senior debt obligations of the FHLBs feature the same credit ratings as U.S. Treasury securities and are considered high-quality liquid assets for bank regulatory purposes. Consequently, the FHLBs benefit from consistent capital market access during nearly all macroeconomic and financial

54

market conditions and low funding costs, which they pass on to their member banks when they borrow advances. Thus, we consider FHLB advances a stable and reliable funding source for Discover Bank for short-term contingency liquidity and long-term asset-liability management.

As a member of the FHLB of Chicago, Discover Bank has access to short- and long-term advance structures with maturities ranging from overnight to 30 years. At March 31, 2024, we had total committed borrowing capacity of $4.1 billion based on the amount and type of assets pledged, of which $1.0 billion of long-term advances were outstanding with the FHLB of Chicago. Under certain stressed conditions, we could pledge our liquidity portfolio securities and borrow against them at a modest reduction to their value.

Other Long-Term Borrowings—Corporate and Bank Debt

The following table provides a summary of Discover Financial Services (Parent Company) and Discover Bank outstanding fixed-rate debt (dollars in millions):

At March 31, 2024	Principal Amount Outstanding
Discover Financial Services (Parent Company) fixed-rate senior notes, maturing 2024-2032	$	3,350
Discover Financial Services (Parent Company) fixed-rate retail notes, maturing 2025-2031	$	140
Discover Financial Services (Parent Company) fixed to floating-rate senior notes, maturing 2034	$	1,000
Discover Bank fixed-rate senior bank notes, maturing 2024-2030	$	3,550
Discover Bank fixed-rate subordinated bank notes, maturing 2028	$	500

At March 31, 2024, $717 million of interest on our fixed-rate debt is due in less than one year and $2.0 billion of interest is due in one year and thereafter. See Note 6: Long-Term Borrowings to our condensed consolidated financial statements for more information on the maturities of our long-term borrowings.

Short-Term Borrowings

As part of our regular funding strategy, we may, from time to time, borrow short-term funds in the federal funds market or the repurchase ("repo") market through repurchase agreements. Federal funds are short-term, unsecured loans between banks or other financial entities with a Federal Reserve account. Funds borrowed in the repo market are short-term, collateralized loans, usually secured with highly rated investment securities such as U.S. Treasury bills or notes, or mortgage bonds or debentures issued by government agencies or U.S. GSEs. At March 31, 2024, there were no outstanding balances in the federal funds market or under repurchase agreements. Additionally, we have access to short-term advance structures through privately placed asset-backed securitizations. At March 31, 2024, there were no short-term advances outstanding from private asset-backed securitizations.

Additional Funding Sources

Private Asset-Backed Securitizations

We have access to committed borrowing capacity through privately placed asset-backed securitizations. While we may utilize funding from these private securitizations from time to time for normal business operations, their committed nature also makes them a reliable contingency funding source. Therefore, we reserve some undrawn capacity, informed by our liquidity stress test results, for any contingency funding needs. At March 31, 2024, we had a total committed capacity of $3.5 billion, none of which was drawn. We seek to ensure the stability and reliability of these securitizations by staggering their maturity dates, renewing them well ahead of their scheduled maturity dates and periodically drawing them for operational tests and seasonal funding needs.

Federal Reserve

Discover Bank has access to the Federal Reserve Bank of Philadelphia's discount window. As of March 31, 2024, Discover Bank had $41.7 billion of available borrowing capacity through the discount window based on the amount and type of assets pledged, primarily consumer loans. As of March 31, 2024, we had no borrowings outstanding under the discount window and reserve this capacity as a source of contingency liquidity.

55

Funding Uses

Our primary uses of funds include the extensions of loans and credit to customers, primarily through Discover Bank; the maintenance of sufficient working capital for routine operations; the service of our debt and capital obligations, including interest, principal and dividend payments; and the purchase of investment securities for our liquidity portfolio.

In addition to originating consumer loans to new customers, we also extend credit to existing customers, which primarily arises from agreements for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions established in the related agreement. At March 31, 2024, our unused credit arrangements were approximately $233.0 billion. These arrangements, substantially all of which we can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness, loan qualification and the cost of capital.

In the normal course of business, we enter into various contracts for goods and services, such as consulting, outsourcing, data, sponsorships, software licenses, telecommunications and global merchant acceptance, among other things. These contracts are legally binding and specify all significant terms, including any applicable fixed future cash payments.

As of March 31, 2024, we have debt obligations, common stock and preferred stock outstanding, for which we incur servicing costs. Refer to "— Funding Sources" and "— Capital" for more information related to our debt obligations and capital service, respectively, and the timing of expected payments.

We assess funding uses and liquidity needs under stressed and normal operating conditions, considering primary uses of funding, such as on-balance sheet loans and contingency uses of funding, such as the need to post additional collateral for derivatives positions. To anticipate funding needs under stress, we conduct liquidity stress tests to assess the impact of idiosyncratic, systemic and hybrid (i.e., idiosyncratic and systemic) scenarios with varying levels of liquidity risk reflecting a range of stress severity. If we determine we have excess cash and cash equivalents above what is required for daily operations, we may invest in highly liquid, unencumbered assets that we expect to be able to convert to cash quickly and with little loss of value using the repo market or other secured borrowing or outright sales.

Guarantees

Guarantees are contracts or indemnification agreements that may require us to make payments to a guaranteed party based on changes in an underlying asset, liability, or equity security of a guaranteed party, rate or index. Also included in guarantees are contracts that may require the guarantor to make payments to a guaranteed party based on another entity’s failure to perform under an agreement. Our guarantees relate to transactions processed on the Discover Network and certain transactions processed by PULSE and Diners Club. In the ordinary course of business, we guarantee payment on behalf of subsidiaries relating to contractual obligations with external parties. The activities of the subsidiaries covered by any such guarantees are included in our consolidated financial statements. See Note 12: Commitments, Contingencies and Guarantees to our consolidated financial statements for further discussion regarding our guarantees.

Credit Ratings

Our borrowing costs and capacity in certain funding markets, including those for securitizations and unsecured senior and subordinated debt, may be affected by the credit ratings of DFS, Discover Bank and the securitization trusts. Downgrades in these credit ratings could result in higher interest expense on our unsecured debt and asset securitizations, as well as higher credit enhancement requirements for both our public and private asset securitizations. In addition to increased funding costs, deterioration in our credit ratings could reduce our borrowing capacity in the unsecured debt and asset securitization capital markets.

56

The table below reflects our current credit ratings and outlooks:

	Moody’s Investors Service(1)	Standard & Poor's	Fitch Ratings
Discover Financial Services
Senior unsecured debt	Baa2	BBB-	BBB+
Outlook for Discover Financial Services senior unsecured debt	Under Review	Positive	Positive
Discover Bank
Senior unsecured debt	Baa1	BBB	BBB+
Outlook for Discover Bank senior unsecured debt	Under Review	Positive	Positive
Subordinated debt	Baa1	BBB-	BBB
Discover Card Execution Note Trust (DCENT)
Class A(2)	Aaa(sf)	AAA(sf)	AAA(sf)

(1)On February 20, 2024, following the announcement of the pending merger between Discover and Capital One, Moody's Investors Service placed all long-term ratings and assessments for DFS and Discover Bank under review with direction uncertain.

(2)An "sf" in the rating denotes rating agency identification for structured finance product ratings.

A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. A credit rating outlook reflects an agency's opinion regarding the likely rating direction over the medium term, often a period of about a year, and indicates the agency's belief that the issuer's credit profile is consistent with its current rating level at that point in time.

Liquidity

We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth and satisfy debt obligations under stressed and normal operating conditions. In addition to the funding sources discussed in the previous section, we also maintain highly liquid, unencumbered assets in our liquidity portfolio that we expect to be able to convert to cash quickly and with little loss of value using either the repo market or other secured borrowing or outright sales.

We maintain a liquidity risk and funding management policy, which outlines the overall framework and general principles we follow in managing liquidity risk across our business. The Board of Directors approves the policy and the Asset and Liability Management Committee (the "ALCO") is responsible for its implementation. We seek to balance the trade-offs between maintaining too much liquidity, which may be costly, with having too little liquidity, which could cause financial distress. The ALCO, chaired by our Treasurer, has cross-functional membership and manages liquidity risk centrally. The ALCO monitors the liquidity risk profiles of DFS and Discover Bank and oversees any actions Corporate Treasury may take to ensure that we maintain ready access to our funding sources and sufficient liquidity to meet current and projected needs. In addition, the ALCO and our Board of Directors regularly review our compliance with our liquidity limits at DFS and Discover Bank, which are established in accordance with the liquidity risk appetite set by our Board of Directors.

We employ a variety of metrics to monitor and manage liquidity. We utilize early warning indicators ("EWIs") to detect emerging liquidity stress events. The EWIs include both idiosyncratic and systemic measures and are monitored daily and reported to the ALCO regularly. A warning from one or more of these indicators triggers prompt review and decision-making by our senior management team and, in certain instances, may lead to the convening of a senior-level response team and activation of our contingency funding plan.

In addition, we conduct liquidity stress tests regularly and ensure contingency funding is in place to address potential liquidity shortfalls. We evaluate a range of stress scenarios that are designed to follow regulatory requirements, including idiosyncratic, systemic and a combination of such events that could impact funding sources and our ability to meet liquidity needs. These scenarios measure the projected liquidity position at DFS and Discover Bank across a range of periods by comparing estimated contingency funding needs to available contingency liquidity.

Our primary contingency liquidity sources include our liquidity portfolio securities, which we could sell, repo or borrow against, and private securitizations with unused borrowing capacity. In addition, we could borrow FHLB advances by pledging securities to the FHLB of Chicago. Moreover, we have unused borrowing capacity with the Federal Reserve discount window, which provides an additional source of contingency liquidity. We seek to maintain sufficient liquidity to

57

satisfy all maturing obligations and fund business operations for at least 12 months in a severe stress environment. In such an environment, we may also take actions to curtail the size of our balance sheet, which would reduce the need for funding and liquidity.

At March 31, 2024, our liquidity portfolio was composed of highly liquid, unencumbered assets, including cash and cash equivalents and investment securities. Cash and cash equivalents were primarily deposits with the Federal Reserve. Investment securities primarily included debt obligations of the U.S. Treasury and U.S. GSEs and residential mortgage-backed securities issued by U.S. government agencies or U.S. GSEs. These investments, nearly all of which are classified as available-for-sale, are considered highly liquid and we expect to have the ability to raise cash by selling them, utilizing repurchase agreements or pledging certain of these investments to access secured funding. The size and composition of our liquidity portfolio may fluctuate based on the size of our balance sheet as well as operational requirements, market conditions and interest rate risk management objectives.

At March 31, 2024, our liquidity portfolio and undrawn credit facilities were $74.0 billion, which was $4.3 billion higher than the balance at December 31, 2023. Our liquidity portfolio and undrawn credit facilities grew primarily as a result of an increase in cash and cash equivalents. During the three months ended March 31, 2024 and December 31, 2023, the average balance of our liquidity portfolio was $25.2 billion and $22.1 billion, respectively. Our liquidity portfolio and undrawn facilities consist of the following (dollars in millions):

	March 31, 2024		December 31, 2023
Liquidity portfolio
Cash and cash equivalents(1)	$	12,502	$	9,815
Investment securities(2)	13,237		13,439
Total liquidity portfolio	25,739		23,254
Private asset-backed securitizations(3)	3,500		2,750
Federal Home Loan Bank of Chicago	3,087		2,551
Primary liquidity sources	32,326		28,555
Federal Reserve discount window(3)	41,710		41,199
Total liquidity portfolio and undrawn credit facilities	$	74,036	$	69,754

(1)Cash in the process of settlement and restricted cash are excluded from cash and cash equivalents for liquidity purposes.

(2)Excludes $377 million and $320 million of U.S. Treasury securities that have been pledged as swap collateral in lieu of cash as of March 31, 2024 and December 31, 2023, respectively.

(3)See "— Additional Funding Sources" for additional information.

Bank Holding Company Liquidity

The primary uses of funds at the unconsolidated DFS level include debt service obligations (interest payments and return of principal) and capital service and management activities, including dividend payments on capital instruments and the periodic repurchase of shares of our common stock. Our primary sources of funds at the bank holding company level include the proceeds from the issuance of unsecured debt and capital securities, as well as dividends from our subsidiaries, notably Discover Bank. Under periods of idiosyncratic or systemic stress, the bank holding company could lose or experience impaired access to the capital markets. In addition, our regulators have the discretion to restrict dividend payments from Discover Bank to the bank holding company.

We utilize a measure referred to as Number of Months of Pre-Funding to determine the length of time DFS can meet upcoming funding obligations, including common and preferred stock dividend payments and debt service obligations using existing cash resources. In managing this metric, we structure our debt maturity schedule to manage prudently the amount of debt maturing within a short period. See Note 6: Long-Term Borrowings to our condensed consolidated financial statements for further information regarding our debt.

Capital

Our primary sources of capital are the earnings generated by our businesses and the proceeds from issuances of capital securities. We seek to manage capital to a level and composition sufficient to support our businesses' growth, account for their risks, and meet regulatory requirements, rating agency targets and debt investor expectations. Within these constraints, we are focused on deploying capital in a manner that provides attractive returns to our stockholders. The level, composition

58

and utilization of capital are influenced by changes in the economic environment, strategic initiatives and legislative and regulatory developments.

Under regulatory capital requirements adopted by the Federal Reserve and the FDIC, DFS, along with Discover Bank, must maintain minimum capital levels. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a direct material effect on our financial condition and operating results. We must meet specific capital requirements that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidance and regulations. Current or future legislative or regulatory reforms, such as those related to the adoption of the CECL accounting model or those related to the proposed revisions to the Basel Committee's December 2010 framework ("Basel III rules"), may require us to hold more capital and/or adversely impact our capital level. We consider the potential impacts of these reforms in managing our capital position.

DFS and Discover Bank are subject to regulatory capital rules issued by the Federal Reserve and the FDIC, respectively, under the Basel III rules. Under these rules, DFS and Discover Bank are classified as "standardized approach" entities as they are U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposures less than $10 billion. The Basel III rules require DFS and Discover Bank to maintain minimum risk-based capital and leverage ratios and define what constitutes capital for purposes of calculating those ratios.

In accordance with the final rule on the impact of CECL on regulatory capital, we have elected to phase in the impact over three years, beginning in 2022. By electing this option, our Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The phase-in of the CECL accounting model decreased CET1 by $1.6 billion as of January 1, 2024. For additional information regarding the risk-based capital and leverage ratios, see Note 11: Capital Adequacy to our condensed consolidated financial statements.

Federal Reserve rules impose limitations on DFS' capital distributions if we do not maintain our risk-based capital ratios above stated regulatory minimum ratios based on the results of supervisory stress tests. We are required to assess whether DFS' planned capital actions are consistent with the effective capital distribution limitations that will apply on a pro-forma basis throughout the planning horizon.

The SCB requirement is institution-specific and is calculated as the greater of (i) 2.5% and (ii) the sum of (a) the difference between DFS' actual CET1 ratio at the beginning of the forecast and the projected minimum CET1 ratio based on the Federal Reserve's models in its nine-quarter Severely Adverse stress scenario, plus (b) the sum of the dollar amount of DFS' planned common stock dividend distributions for each of the fourth through seventh quarters of its nine-quarter capital planning horizon, expressed as a percentage of risk-weighted assets. For Category IV firms, including DFS, the Federal Reserve calculates each firm's SCB biennially in even-numbered calendar years, and did so in 2022. Based on the results of the 2022 CCAR exercise released by the Federal Reserve, our new SCB was set at 2.5%, the lowest possible requirement, effective October 1, 2022, through September 30, 2023. In odd-numbered years, each firm subject to Category IV standards that did not opt-in to such year's supervisory stress tests as part of the Federal Reserve's CCAR process receives an adjusted SCB requirement that is updated to reflect its planned common stock dividends per the firm's annual capital plan. In July 2023, the Federal Reserve disclosed SCB requirements to firms subject to Category IV standards that did not opt-in to this year's stress test. Our SCB remains unchanged at 2.5%, effective beginning October 1, 2023 through September 30, 2024. On April 5, 2024, we submitted our 2024 capital plan to the Federal Reserve and expect results of the 2024 supervisory stress test by June 30, 2024, and our final SCB by August 31, 2024. Under the Basel III rules, a firm must update and resubmit its capital plan under certain circumstances, including a material change in the firm's risk profile, financial condition or corporate structure since its last capital plan submission. On February 19, 2024, Discover and Capital One jointly announced that they entered into a Merger Agreement, under which the companies will combine in an all-stock merger, which we determined required us to resubmit our capital plan. We will submit our updated capital plan by May 6, 2024. The capital plan rule provides that, unless the Federal Reserve determines to extend the timeline, the Federal Reserve must provide us notice of whether our SCB will be recalculated within 75 days of the submission of our updated capital plan and, if applicable, must provide our updated SCB within 90 days of notifying us that the SCB will be recalculated. See "— Regulatory Environment and Developments — Banking — Capital Standards and Stress Testing" for additional information.

At March 31, 2024, DFS and Discover Bank met the requirements for "well-capitalized" status under the Federal Reserve's Regulation Y and the prompt corrective action rules and corresponding FDIC requirements, respectively, exceeding the regulatory minimums to which they were subject under the applicable rules.

59

Basel III rules also require disclosures relating to market discipline. This series of disclosures is commonly referred to as "Pillar 3." The objective is to increase the transparency of capital requirements for banking organizations. We are required to make prescribed regulatory disclosures quarterly regarding our capital structure, capital adequacy, risk exposures and risk-weighted assets. We make the Pillar 3 disclosures publicly available on our website in a report called "Basel III Regulatory Capital Disclosures."

We disclose tangible common equity, which represents common equity less goodwill and intangibles. Management believes that common stockholders' equity excluding goodwill and intangibles is meaningful to investors as a measure of our true net asset value. At March 31, 2024, tangible common equity is considered to be a non-GAAP financial measure as it is not formally defined by GAAP or codified in the federal banking regulations. Other financial services companies may also disclose this measure and definitions may vary. We advise users of this information to exercise caution in comparing this measure among different companies.

The following table reconciles total common stockholders' equity (a GAAP financial measure) to tangible common equity (dollars in millions):

	March 31, 2024		December 31, 2023
Total common stockholders' equity(1)	$	13,664	$	13,772
Less: goodwill	(255)		(255)
Tangible common equity	$	13,409	$	13,517

(1)Total common stockholders' equity is calculated as total stockholders' equity less preferred stock.

Our Board of Directors declared the following common stock dividends during 2024 and 2023:

Declaration Date	Record Date	Payment Date	Dividend per Share
2024
April 17, 2024	May 23, 2024	June 06, 2024	$	0.70
January 16, 2024	February 22, 2024	March 07, 2024	0.70
Total common stock dividends			$	1.40
2023
October 16, 2023	November 22, 2023	December 07, 2023	$	0.70
July 17, 2023	August 24, 2023	September 07, 2023	0.70
April 17, 2023	May 25, 2023	June 08, 2023	0.70
January 17, 2023	February 23, 2023	March 09, 2023	0.60
Total common stock dividends			$	2.70

Our Board of Directors declared the following Series C preferred stock dividends during 2024 and 2023:

Declaration Date	Record Date	Payment Date	Dividend per Depositary Share
2024
January 16, 2024	April 15, 2024	April 30, 2024	$	27.50
Total Series C preferred stock dividends			$	27.50
2023
July 17, 2023	October 13, 2023	October 30, 2023	$	27.50
January 17, 2023	April 14, 2023	May 01, 2023	27.50
Total Series C preferred stock dividends			$	55.00

60

Our Board of Directors declared the following Series D preferred stock dividends during 2024 and 2023:

Declaration Date	Record Date	Payment Date	Dividend per Depositary Share
2024
January 16, 2024	March 08, 2024	March 25, 2024	$	30.625
Total Series D preferred stock dividends			$	30.625
2023
July 17, 2023	September 08, 2023	September 25, 2023	$	30.625
January 17, 2023	March 08, 2023	March 23, 2023	30.625
Total Series D preferred stock dividends			$	61.250

The amount and size of any future dividends and share repurchases will depend on our results of operations, financial condition, capital levels, cash requirements, future prospects, regulatory review and other factors. Under the Merger Agreement, quarterly cash dividends on our common stock may not exceed $0.70 per share without the prior written consent of Capital One. For additional information on the merger, see Note 1: Background and Basis of Presentation — Pending Merger with Capital One Financial Corporation to our condensed consolidated financial statements. The declaration and payment of future dividends and the amount thereof are otherwise subject to the discretion of our Board of Directors. Holders of our shares of common stock are subject to the prior dividend rights of holders of our preferred stock or the depositary shares representing such preferred stock outstanding. No dividend may be declared or paid or set aside for payment on our common stock if full dividends have not been declared and paid on all outstanding shares of preferred stock in any dividend period. In addition, as noted above, banking laws and regulations and our banking regulators may limit our ability to pay dividends and make share repurchases, including limitations on the extent our banking subsidiary (Discover Bank) can provide funds to us through dividends, loans or otherwise. Further, current or future regulatory reforms, such as those that propose to alter the Basel III standards, may require us to hold more capital or could adversely impact our capital level. As a result, there can be no assurance that we will declare and pay any dividends or repurchase any shares of our common stock in the future.

Our Board of Directors approved a new share repurchase program in April 2023. The new program authorized up to $2.7 billion of share repurchases through June 30, 2024, and replaced the prior $4.2 billion share repurchase program. If and when we repurchase our shares under the program, we may use various methods, including open market purchases, privately negotiated transactions or other purchases, including block trades, accelerated share repurchase transactions, or any combination of such methods. There were no share repurchases during the three months ended March 31, 2024. In accordance with the Merger Agreement with Capital One, we have paused share repurchases through the completion of the merger.

61

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, correlations or other market factors will result in losses for an investment position or portfolio. We are exposed to market risk primarily from changes in interest rates.

Interest Rate Risk

We borrow money from various depositors and institutions to provide loans to our customers and invest in other assets and our business. These loans to customers and other assets earn interest, which we use to pay interest on the money borrowed. Our net interest income and, therefore, earnings will be reduced if the interest rate earned on assets increases at a slower pace than the interest rate paid on our borrowings. Changes in interest rates and our competitors' responses to those changes may influence customer payment rates, loan balances or deposit account activity. As a result, we may incur higher funding costs that could decrease our earnings.

Our interest rate risk management policies are designed to measure and manage the potential volatility of earnings that may arise from changes in interest rates by having a portfolio that reflects our mix of variable- and fixed-rate assets and liabilities. To the extent that the repricing characteristics of the assets and liabilities in a particular portfolio are not sufficiently matched, we may utilize interest rate derivative contracts, such as swap agreements, to achieve our objectives. Interest rate swap agreements effectively convert the underlying asset or liability from fixed- to floating-rate or from floating- to fixed-rate. See Note 15: Derivatives and Hedging Activities to our condensed consolidated financial statements for information on our derivatives activity.

We use an interest rate sensitivity simulation to assess our interest rate risk exposure. For purposes of presenting the possible earnings effect of a hypothetical, adverse change in interest rates over the 12 months from our reporting date, we assume that all interest-rate-sensitive assets and liabilities are subject to a hypothetical, immediate 100 basis point change in interest rates relative to market consensus expectations as of the beginning of the period. The sensitivity simulation includes the hypothetical assumption that all relevant types of interest rates would change instantaneously, simultaneously and to the same degree.

Our interest-rate-sensitive assets include our variable-rate loan receivables and certain assets in our liquidity portfolio. We have limitations on our ability to mitigate interest rate risk by adjusting rates on existing balances. Further, competitive actions may limit our ability to increase the rates that we charge to customers for new loans. At March 31, 2024, the majority of our credit card and private student loans charge variable rates. Fixed-rate assets that will mature or otherwise contractually reset to a market-based indexed rate or other fixed-rate prior to the end of the 12-month measurement period are considered to be rate sensitive. The latter category includes certain revolving credit card loans that may be offered at below-market rates for an introductory period, such as balance transfers and special promotional programs, after which the loans will contractually reprice in accordance with our normal market-based pricing structure. For assets with a fixed interest rate that contractually will, or is assumed to, reset to a market-based indexed rate or other fixed rate during the next 12 months, earnings sensitivity is measured from the expected repricing date. In addition, for all interest rate sensitive assets, earnings sensitivity is calculated net of expected credit losses. For purposes of this analysis, expected credit losses are assumed to remain unchanged relative to our baseline expectations over the analysis horizon.

Interest-rate-sensitive liabilities are assumed to be those for which the stated interest rate is not contractually fixed for the next 12 months. Thus, liabilities that vary with changes in a market-based index, such as the federal funds rate or SOFR, which will reset before the end of the next 12 months, or liabilities that have fixed rates at the fiscal period end but will mature and are assumed to be replaced with a market-based indexed rate prior to the end of the next 12 months, are also considered to be rate sensitive. For these fixed-rate liabilities, earnings sensitivity is measured from the expected maturity date.

Net interest income sensitivity simulations require assumptions regarding market conditions, consumer behavior and the growth and composition of our balance sheet. Our view of market conditions utilizes the implied forward interest rate projection at the beginning of our analysis horizon. This view serves as the base for interest rate risk simulations. We apply rate shocks to the base implied forward curve to measure our overall interest rate sensitivity position. Our view of balance sheet composition and growth utilizes our corporate forecast. On at least a quarterly basis, we create a corporate forecast that incorporates receivable growth and seasonality. The appropriate level of funding is projected and utilizes a diverse mix of instruments with issuance based on expected market conditions. At the same time, optimal levels of liquidity are maintained in accordance with internal guidelines. The degree by which our deposit rates change when benchmark interest rates change,

62

our deposit "beta," is one of the most significant of these assumptions. Assumptions about deposit beta and other matters are inherently uncertain and, as a result, actual earnings may differ from the simulated earnings presented below. Our actual earnings depend on multiple factors including, but not limited to, the direction and timing of changes in interest rates, the movement of short-term interest rates relative to long-term rates, balance sheet composition, competitor actions affecting pricing decisions in our loans and deposits, the mix of promotional balances in our card portfolio, the level of interest charge-offs and recoveries, the influence of loan repayment rates on revolving balances and strategic actions undertaken by our management.

We have taken actions to bring our net interest income sensitivity closer to neutral as the Federal Reserve has slowed its pace of monetary policy tightening and the outlook for near-term U.S. economic growth may be weakening. The following table shows the impacts to net interest income over the following 12-month period that we estimate would result from an immediate and parallel change in interest rates affecting all interest rate sensitive assets and liabilities. These numbers do not include a sale of the private student loan portfolio (dollars in millions):

	At March 31, 2024				At December 31, 2023
Basis point change	$		%		$		%
+100	$	92	0.67	%	$	161	1.17	%
-100	$	(83)	(0.61)	%	$	(153)	(1.11)	%

Given the nature of our loan portfolio, the impact to our net interest income is far more linear across various rate increase or decrease scenarios that would be true for a financial institution with significant rate-sensitive prepayment risk from the exposure to mortgages.

Item 4.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), which are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

63

Glossary of Acronyms

•ALCO: Asset and Liability Management Committee

•AOCI: Accumulated Other Comprehensive Income (Loss)

•ASC: Accounting Standards Codification

•ASU: Accounting Standards Update

•ATM: Automated Teller Machine

•CCAR: Comprehensive Capital Analysis and Review

•CCPA: California Consumer Privacy Act

•CECL: Current Expected Credit Loss

•CET1: Common Equity Tier 1

•CFPB: Consumer Financial Protection Bureau

•CODM: Chief Operating Decision Maker

•CPPA: California Privacy Protection Agency

•DCENT: Discover Card Execution Note Trust

•DCMT: Discover Card Master Trust I

•DFS: Discover Financial Services

•EPS: Earnings Per Share

•ESG: Environmental, Social and Governance

•EWI: Early Warning Indicator

•FASB: Financial Accounting Standards Board

•FDIC: Federal Deposit Insurance Corporation

•FHLB: Federal Home Loan Bank

•GAAP: Accounting Principles Generally Accepted in the United States

•GLBA: Gramm-Leach-Bliley Act

•NPI: Nonpublic Personal Information

•OCC: Office of the Comptroller of the Currency

•OCI: Other Comprehensive Income (Loss)

•RMBS: Residential Mortgage-Backed Securities

•SCB: Stress Capital Buffer

•SEC: Securities and Exchange Commission

•SOFR: Secured Overnight Financing Rate

•UDAAP: Unfair, Deceptive or Abusive Acts or Practices

•U.S.: United States of America

•U.S. GSE: Government-sponsored Enterprise of the U.S.

•VIE: Variable Interest Entity

64

Part II.     OTHER INFORMATION

Item 1.     Legal Proceedings

See Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements for a description of legal proceedings.

Item 1A.     Risk Factors

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information regarding purchases of our common stock related to our share repurchase program and employee transactions made by us or on our behalf during the most recent quarter.

Period	Total Number of Shares Purchased	Average Price Paid Per Share(3)		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program(1)(4)	Maximum Dollar Value of Shares that may yet be purchased under the Plans or Programs(1)(4)
January 1 - 31, 2024
Repurchase program(1)(4)	—	$	—	—	$	2,225,091,655
Employee transactions(2)	3,476	$	107.51	N/A	N/A
February 1 - 29, 2024
Repurchase program(1)(4)	—	$	—	—	$	2,225,091,655
Employee transactions(2)	252,279	$	106.89	N/A	N/A
March 1 - 31, 2024
Repurchase program(1)(4)	—	$	—	—	$	2,225,091,655
Employee transactions(2)	5,510	$	130.54	N/A	N/A
Total
Repurchase program(1)(4)	—	$	—	—	$	2,225,091,655
Employee transactions(2)	261,265	$	107.39	N/A	N/A

(1)In April 2023, our Board of Directors approved a new share repurchase program authorizing the purchase of up to $2.7 billion of our outstanding shares of common stock through June 30, 2024. This share repurchase authorization replaced our prior $4.2 billion share repurchase program.

(2)Reflects shares withheld (under the terms of grants under employee stock compensation plans) to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying restricted stock units or upon the exercise of stock options.

(3)Average price paid per share excludes any excise tax.

(4)In accordance with the Merger Agreement with Capital One, share repurchases have been paused through the completion of the merger. See "— Liquidity and Capital Resources — Capital" for additional information.

Item 3.     Defaults Upon Senior Securities

None.

Item 4.     Mine Safety Disclosures

None.

Item 5.    Other Information

Insider Trading Arrangements

During the period covered by this report, none of the Company’s directors or executive officers has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

65

Item 6.    Exhibits

See "Exhibit Index" for documents filed herewith and incorporated herein by reference.

Exhibit Index

Exhibit Number	Description
10.1	Special Award Certificate for Restricted Stock Units under the Discover Financial Services 2023 Omnibus Incentive Plan for John B. Owen granted on January 31, 2024.
10.2	Special Award Certificate for Restricted Stock Units under the Discover Financial Services 2023 Omnibus Incentive Plan for Michael G. Rhodes granted on February 1, 2024.
10.3	Special Award Certificate for Restricted Stock Units under the Discover Financial Services 2023 Omnibus Incentive Plan for John T. Greene granted on February 22, 2024.
10.4	Letter Agreement with Michael G. Rhodes, dated as of March 27, 2024 between Discover Financial Services and Michael G. Rhodes (filed as Exhibit 10.1 to Discover Financial Services’ Current Report on Form 8-K filed on March 27, 2024, and incorporated herein by reference thereto).
10.5	Letter Agreement with J. Michael Shepherd, dated as of March 27, 2024 between Discover Financial Services and J. Michael Shepherd (filed as Exhibit 10.2 to Discover Financial Services’ Current Report on Form 8-K filed on March 27, 2024, and incorporated herein by reference thereto).
10.6	Special Award Certificate for Restricted Stock Units under the Discover Financial Services 2023 Omnibus Incentive Plan for J. Michael Shepherd granted on April 1, 2024.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101	Interactive Data File — the following financial statements from Discover Financial Services Quarterly Report on Form 10-Q formatted in inline XBRL: (1) Condensed Consolidated Statements of Financial Condition, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Comprehensive Income, (4) Condensed Consolidated Statements of Changes in Stockholders' Equity, (5) Condensed Consolidated Statements of Cash Flows and (6) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File — the cover page from Discover Financial Services Quarterly Report on Form 10-Q formatted in inline XBRL and contained in Exhibit 101.

66

Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Discover Financial Services (Registrant)
By:	/s/ JOHN T. GREENE
	John T. Greene Executive Vice President, Chief Financial Officer

Date: May 1, 2024

67

EX-10.1

Exhibit 10.1

Discover Financial Services

2023 Omnibus Incentive Plan

2024 Award Certificate for Restricted Stock Units

This Award Certificate describes the terms and conditions under which you are being granted an Award of Restricted Stock Units (“RSUs”) under the Discover Financial Services 2023 Omnibus Incentive Plan (the “Plan”), which constitutes part of your discretionary long-term incentive compensation. This Award Certificate applies only to Awards granted hereunder and other Awards are governed by terms of the applicable Award Certificate.

A copy of the Plan can be found on the E*TRADE website at www.etrade.com, or such other vendor as the Company may choose to administer the Plan. Capitalized terms under this Award Certificate have the meanings ascribed in the Plan unless otherwise stated herein.

The full terms of your Award are set out in this Award Certificate, the Plan and any applicable policy adopted by the Committee or its delegate in respect of the Plan and Awards thereunder that is applicable to this Award. In the event of a conflict between the Plan and this Award Certificate, the terms of the Plan control.

Award Recipient	John Owen
Employee / Participant ID	%%EMPLOYEE_IDENTIFIER%-%
Issuer	Discover Financial Services
Award Type	Restricted Stock Units (RSUs)
Date of the Award	January 31, 2024
Number of Awarded Units	%%TOTAL_SHARES_GRANTED,'999,999,999'%-% RSUs
Vesting	Your RSUs will fully vest on the Date of the Award.
Settlement	Your RSUs will be settled as follows: Number of Shares Settlement Date %%SHARES_PERIOD1,'999,999,999'%-% %%SETTLE_DATE_PERIOD1,'Month DD, YYYY'%-% %%SHARES_PERIOD2,'999,999,999'%-% %%SETTLE_DATE_PERIOD2,'Month DD, YYYY'%-% %%SHARES_PERIOD3,'999,999,999'%-% %%SETTLE_DATE_PERIOD3,'Month DD, YYYY'%-% Your awards will be converted and settled in Shares pursuant to Section 5 of the Plan and Section 1(b) of this Award Certificate.
Restrictive Covenants, Clawbacks, Risk Reviews, and Investigations	Pursuant to Section 5 of this Award Certificate, your Award may be subject to (i) forfeiture, cancellation and/or repayment triggered in the event of your violation of a restrictive covenant, including non-solicitation and non-competition requirements, more fully described in this Award Certificate, (ii) clawback (including in the event of restatement of the Company’s financial performance) in accordance with any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act or as otherwise required by law and (iii) forfeiture if you are subject to a risk review or forfeiture, cancellation and/or repayment if you are subject to an investigation.

You will earn RSUs included in your RSU Award only if you (1)  are not found to be subject to the forfeiture, cancellation, or clawback provisions set forth in Section 5 below, and (2) satisfy obligations you owe to the Company as set forth in Section 7 below. If the Company deems appropriate and in its sole discretion, the Company may require you to provide a written certification or other evidence, from time to time, to confirm that none of the circumstances described in Section 5 below exist or have occurred, including during a specified period of time prior to the applicable Scheduled Settlement Dates. If you fail to timely provide any required certification or other evidence, the Company may cancel your RSU Award. It is your responsibility to provide the Human Resources Department with your up-to-date contact information.

1.Vesting; Conversion.

(a)Vesting. Your RSUs will fully vest on the Date of the Award.

(b)Conversion.

(1)Except as otherwise provided in this Award Certificate, each of your vested RSUs will convert to one Share on or as soon as administratively practicable following the applicable Scheduled Settlement Date.

(2)Subject to the provisions of the Plan and this Award Certificate, as well as any transfer restrictions imposed by the Company or applicable pursuant to securities laws, Shares to which you are entitled following conversion of RSUs under any provision of this Award Certificate shall be delivered to you (or your beneficiary or estate, as applicable) as soon as administratively practicable after the Scheduled Settlement Date, unless earlier delivery is required pursuant to Section 3 or 4 of this Award Certificate.

(c)Rule of Construction for Timing of Conversion. Whenever this Award Certificate provides for RSUs to convert to Shares on the Scheduled Settlement Date or upon an accelerated or different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries nor your estate shall have any claim against the Company for damages based on a delay in conversion of your RSUs (or delivery of Shares following conversion), and the Company shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the Scheduled Settlement Date or such other specified event or date.

2.Dividend Equivalent Payments.

Until your RSUs convert to Shares, if Discover pays a regular or ordinary cash dividend on its common stock, you will be paid a dividend equivalent for your vested RSUs. No dividend equivalents will be paid to you on any canceled RSUs. Discover, in its discretion, will decide on the form of payment and may pay dividend equivalents in Shares, in cash or in a combination

thereof. Discover will pay the dividend equivalents as soon as administratively practicable (and in any event within thirty (30) days) after Discover pays the corresponding dividend on its Stock.

3.Death.

In the event of your death, all RSUs subject to this Award Certificate will convert to Shares and be delivered to your beneficiary or your estate on or as soon as administratively practicable after your date of death.

4.Change in Control.

In the event of a Change in Control, all RSUs will convert to shares of Discover common stock on the date of the Change in Control and be delivered as soon as administratively practicable thereafter.

5.Forfeiture/Cancellation/Clawback of RSU Awards Under Certain Circumstances.

(a)Breach of Restrictive Covenants. RSUs will be canceled prior to the applicable Scheduled Settlement Date under any of the circumstances set forth below. Although you will become the beneficial owner of Shares following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your Shares following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs are or may be cancellable under the circumstances set forth below. The Shares underlying such RSUs shall be forfeited and recoverable in the event the Company determines that the RSUs were cancellable under the circumstances set forth below. Notwithstanding any provision of this Award Certificate to the contrary and subject to Section 5(f) below, in the event that at any time prior to one year after the termination of your Employment or service with the Company, you (i) engage in Wrongful Solicitation, (ii) breach your obligations to the Company under a confidentiality, intellectual property or other restrictive covenant, or (iii) engage in Competitive Activity, with respect to each such incidence of violation and to the maximum extent permitted by applicable law, you shall be required to:

(1)pay to the Company an amount in cash equal to the value of the Shares that vested and converted on or after, or within one year prior to, your termination of Employment or service, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to your breach of the restrictive covenants; or

(2)transfer to the Company the number of Shares that vested and converted on or after, or within one year prior to, your termination of Employment or service, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to your breach of the restrictive covenants.

In the event of multiple incidences of breach of this provision of the Award Certificate (e.g., in the event of violation of the non-solicitation provision following engaging in Competitive Activity), the repayment amount will be additive for each incidence of violation, not to exceed two times the amount calculated under paragraph 8(a)(1) and (2) above. If you engage in Wrongful Solicitation or engage in a Competing Activity, in addition to the remedies described in Section 5(a), the Company may also take such action at equity or in law as it deems appropriate to enforce the provisions of the applicable restrictive covenant, including pursuing injunctive relief.

The Company recommends that before accepting this Award Certificate, you consult with an attorney of your choice regarding the restrictive covenants described herein. You acknowledge that you have been provided at least fourteen (14) calendar days to review the applicable restrictive covenants prior to having to accept the award.

(b)Clawback. The Award and any cash payment or Shares delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) or as otherwise required by law. Subject to any clawback policy adopted by the Company to comply with the Dodd-Frank Act (to the extent you are subject to such policy), in the event and to the extent the Committee reasonably determines that the performance considered by the Committee, and on the basis of which the amount of RSUs were granted or converted to Shares, was based on Discover’s material noncompliance with any financial reporting requirement under the securities laws or Company policy which requires Discover to file a restatement of its financial statements within three years of the Date of the Award, you will be required to comply with paragraphs (1) and (2) (as applicable) below to repay to the Company an amount equal to the number of RSUs which were granted or the Shares converted hereunder less the number of RSUs that would have been granted or the number of Shares that would have been converted had your RSUs been granted or converted based on compliance with any such financial reporting requirement under the securities laws or Company policy (such number of RSUs, the “Clawback RSUs,” to be determined in each case by the Committee in its sole discretion and before satisfaction of tax or other withholding obligations pursuant to Section 6):

(1) You shall forfeit a number of RSUs hereunder equal to the Clawback RSUs. In the event such forfeited RSUs are less than the Clawback RSUs, then you shall comply with the following paragraph 2.

(2) You shall be required to:

(A)    pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined using a valuation method established by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation

to repay such amounts due to the restatement of the Company’s financial statements; or

(B)    transfer to the Company the number of Shares that vested and converted hereunder, plus such amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements.

By accepting the RSUs you hereby agree and acknowledge that you are obligated to cooperate with and provide all assistance necessary to the Company to recover or recoup the RSUs or amounts paid under the Plan that are subject to the clawback pursuant to this Award Certificate, applicable securities laws or listing standards or Company policy, including the Discover Financial Services Compensation Recoupment Policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting and documentation necessary to recover or recoup any RSUs or amounts paid pursuant to RSUs.

(c)Risk Review. For select Covered Employees, as defined and identified by the Company, no RSUs will convert to Shares until the Chief Human Resources & Administrative Officer or receives confirmation from the Chief Risk Officer, or their delegate, that a review has been completed by the Chief Risk Officer, or their delegate, to determine whether you engaged in any willful or reckless violation of the Company’s risk policies. If the Chief Risk Officer, or their delegate, finds any such violation or breach, then the Company or, in the case of Covered Employees subject to Section 16 of the Exchange Act, the Committee, may determine that all or a portion of your RSUs will be forfeited.

(d)Investigations. In the event that the Company has either commenced an investigation of a matter that you oversaw or were involved in or has evidence that may require investigation of a matter that you oversaw or were involved in, in either case concerning a breach of one of the obligations hereunder or a serious violation of Company policy, the Company may freeze your account and effectuate a transfer restriction such that your converted and delivered RSUs and any shares associated therewith may not be sold or transferred until such time as the Company reasonably believes the matter to be resolved. If, following the investigation, the Company determines, in its sole discretion, that you breached one of the obligations hereunder or committed a serious violation of Company policy, the Company may:

(1)forfeit all or a portion of your RSUs;

(2)require that you pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the circumstances described in this Section 5(d); or

(3)cancel Shares in your account or require that you transfer to the Company the number of Shares that vested and converted hereunder, plus an amount calculated by

the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to the circumstances described in this Section 5(d).

(e)Authorization. You authorize the Company to deduct any amount or amounts owed by you pursuant to this Section 5 from any amounts payable by or on behalf of the Company to you, including, without limitation, any amount payable to you as salary, wages, paid time off, bonus, severance, change in control severance or the conversion of any equity-based award. This right of offset shall not be an exclusive remedy and the Company’s election not to exercise this right of offset with respect to any amount payable to you shall not constitute a waiver of this right of offset with respect to any other amount payable to you or any other remedy. You further acknowledge and authorize the Company to take the actions described in this Section 5, including those described in Section 5(d).

(f)Non-Contravention. Nothing in this Award Certificate (including with respect to confidential information, trade secrets, and other obligations) is intended to be or will be construed to prevent, impede or interfere with your right to respond accurately and fully to any question, inquiry or request for information regarding your employment with the Company when required by legal process by a Federal, State or other legal authority, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any Federal, State, or other regulatory authority in the course of an investigation or proceeding authorized by law and carried out by such agency. You are not required to contact the Company regarding the subject matter of any such communications before you engage in such communications. In addition, nothing in this Award Certificate is intended to restrict your legally protected right to discuss wages, hours or other working conditions with coworkers or in any way limit your rights under the National Labor Relations Act, any whistleblower law, or other applicable law. You acknowledge that that the Company has provided you notice of your immunity rights under the Defend Trade Secrets Act, which states: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and (B) does not disclose a trade secret, except pursuant to court order.”

6.Tax and Other Withholding Obligations.

Subject to rules and procedures established by Discover, you may be eligible to elect to satisfy the tax or other withholding obligations arising upon conversion of your RSUs or upon any taxable event by paying cash or by having Discover withhold Shares or by tendering Shares, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares

withheld or tendered will be valued using the Fair Market Value of Stock on the date the Award becomes taxable, using a valuation methodology established by Discover.

7.Satisfaction of Obligations.

Notwithstanding any other provision of this Award Certificate, the Company may, in its sole discretion, take various actions affecting your RSUs in order to collect amounts sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations. The Company’s determination of the amount that you owe the Company shall be conclusive. The Fair Market Value of Stock for purposes of the following provisions shall be determined using a valuation methodology established by Company. The actions that may be taken by Discover pursuant to this Section 7 include, but are not limited to, the following:

(a)Withholding of Shares. Upon conversion of RSUs, including any accelerated conversion pursuant to Sections 3 or 4 above, or, if later, upon delivery of the Shares, the Company may withhold a number of Shares sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations whether national, federal, state or local tax withholding obligations including any social insurance contributions or employment tax obligation. The Company shall determine the number of Shares to be withheld by dividing the dollar value of your obligation to the Company and any tax or other withholding obligations by the Fair Market Value of Stock on the date the Award becomes taxable. To the extent that the Company retains any Shares or reduces the number of RSUs to cover the withholding obligations, it will do so at the applicable minimum statutory rate(or such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted by the Company). Should the Company withhold in excess of the actual tax withholding obligation, the Company may apply the excess withholding to another compensation tax liability.

(b)Withholding of Other Compensation. Discover may withhold the payment of dividend equivalents on your RSUs or any other compensation or payments due from Discover to ensure satisfaction of any obligation that you owe the Company or any tax or other withholding obligations or Discover may permit you to satisfy such tax or other withholding obligation by paying such obligation in immediately available funds.

(d)Mobile Employees. You are liable and responsible for all taxes and social insurance contributions owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. Further, you may be subject to individual income taxation (and possibly social security or other applicable personal or payroll taxes) in each jurisdiction where you have performed services for the Company between the Date of the Award and when the Award vests. Taxes for which you are liable, if applicable, may be withheld and deposited by the Company in each jurisdiction in which you have performed services regardless of your status as a resident or non-resident in one or more of the

jurisdictions that have a right to impose taxation. You agree that you will comply with all United States and foreign individual income tax return filing obligations that may be imposed with respect to the Award.

8.Transfer Restrictions and Investment Representation.

(a)Nontransferability of Award. You may not sell, pledge, hypothecate, assign or otherwise transfer your RSUs, other than as provided in Section 9 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution.

(b)Investment Representation. You hereby covenant that (a) any sale of any share acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) you shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

9.Designation of a Beneficiary.

You may make a revocable designation of beneficiary or beneficiaries to receive all or part of the Shares and any dividend equivalents credited to you pursuant to Section 2 hereof to be paid or delivered under this Award Certificate in the event of your death. Absent a designation on file, distributions pursuant to Section 3 will be made to your estate in accordance with applicable law. To make a beneficiary designation, you must complete and file the online form provided by E*TRADE or such other vendor as the Company may choose to administer the Plan. If you previously filed a designation of beneficiary form for your equity awards with the Human Resources Department, such form will also apply to the RSUs granted pursuant to this RSU Award. You may replace or revoke your beneficiary designation at any time, and the Company will rely on your most recent designation on file for purposes of beneficiary designation.

10.Ownership and Possession.

(a)Generally. Except as specified in Section 2 with respect to dividend equivalents, you will not have any rights as a shareholder with respect to your RSU Awards or the Shares underlying such RSUs prior to the conversion of your RSUs.

(b)Following Conversion. Subject to the terms and conditions of this Award Certificate, following the conversion of your RSUs and the issuance of the Shares underlying such RSUs in your name, you will be the beneficial owner of the Shares issued to you, subject to any tax withholding under Section 7, and you will be entitled to all rights of ownership with respect to such Shares, including voting rights and the right to receive cash or stock dividends or other distributions paid on such Shares.

11.Securities Law Matters.

Shares issued upon conversion of your RSUs may be subject to restrictions on transfer by virtue of the Securities Act of 1933, as amended, and the applicable state securities laws.  Discover may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.  Because Shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in such Shares.

12.Compliance with Laws and Regulations.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of the Shares issued upon conversion of your RSUs (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Company or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

13.No Entitlements.

(a)No Right to Future Awards. This RSU Award is discretionary and does not confer on you any right or entitlement to receive another award of RSUs, any other equity-based award or any other award at any time in the future or in respect of any future period.

(b)Language. If you have received this Award Certificate or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.

(c)Award Terms Control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Company and the terms set forth in this Award Certificate, the latter shall control.

14.Consents.

Your RSU Award is conditioned upon the Company making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

In accepting this RSU Award, you consent to the collection, use and transfer, in electronic or other form, of your personal data by and among, as applicable, the Company and any other possible recipients for the purpose of implementing, administering and managing your participation in the Plan, as well as for the purpose of the Company’s compliance with applicable law, including, without limitation, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. You understand that the recipients of your personal data may be located in the U.S. or elsewhere, and the recipients’ country may have different data privacy laws

and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of your personal data, view the personal data, request additional information about the storage of your personal data, require any necessary amendments to your personal data or refuse or withdraw your consent by contacting your local human resources representative, in any case without cost. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan.

15.Electronic Delivery and Consent to Electronic Participation.

The Company may, in its sole discretion, decide to deliver any documents related to the RSU Award and participation in the Plan or future RSU Awards by electronic means. You hereby consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of RSU Awards and the execution of the RSU agreements through electronic signature. Electronic acceptance of this Award Certificate through the E*TRADE website, or such other vendor as the Company may choose to administer the Plan, shall be required and binding on you.  Where electronic acceptance may not be permitted under applicable law, the Company may also request and require your physical signature.  Your acceptance affirms your agreement to all the terms and conditions set forth in this Award Certificate and acceptance of the Award subject thereto. Not providing this acceptance within the timeframe stipulated may result in the Company forfeiting all or a portion of this Award.

16.Award Modification.

The Committee reserves the right to modify or amend unilaterally the terms and conditions of your RSUs, without first asking your consent, or to waive any terms and conditions that operate in favor of Discover. These amendments may include (but are not limited to) changes that the Committee considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. The Committee may not modify your RSUs in a manner that would materially impair your rights in your RSUs without your consent; provided, however, that the Committee may, without your consent, amend or modify your RSUs in any manner that the Committee considers necessary or advisable to comply with or reflect the application of any Legal Requirement or to ensure that your RSUs are not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment. Discover will notify you of any amendment of your RSUs that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources & Administrative Officer to be effective.

17.Severability.

In the event that any provision of this Award Certificate shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Award

Certificate, and this Award Certificate shall be construed and enforced as if the illegal or invalid provision had not been included.

18.Successors.

This Award Certificate shall be binding upon and inure to the benefit of any successor or successors of Discover and any person or persons who shall, upon your death, acquire any rights hereunder in accordance with this Award Certificate or the Plan.

19.Governing Law.

This Award Certificate and the related legal relations between you and Discover will be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the RSU Award to the substantive law of another jurisdiction to the maximum extent permitted by applicable law. The Company and you agree that the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan or this Award Certificate shall be exclusively in the courts in the State of Illinois, Counties of Cook or Lake, including the federal courts located therein (should federal jurisdiction exist), and the Company and you hereby submit and consent to said jurisdiction and venue to the maximum extent permitted by applicable law.

20.Section 409A.

This Award is intended to be exempt from or comply with Section 409A, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A. To the extent necessary or advisable to comply with Section 409A, with respect to any provision of this Award Certificate that provides for vested RSUs to convert to Shares on or as soon as administratively practicable after a specified event or date, such conversion and settlement will be made by the later of the end of the calendar year in which the specified event or date occurs or the 15th day of the third calendar month following the specified event or date. If any RSUs constitute deferred compensation under Section 409A and are payable subject to your execution and non-revocation of a release and the period to consider the release spans two separate taxable years, then the distribution of the RSUs that are conditioned upon such execution and non-revocation of the release shall be made in the later taxable year.

21.Defined Terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a) “Chief Human Resources & Administrative Officer” means the chief human resources & administrative officer of Discover, any successor chief human resources & administrative officer, or any other individual or committee appointed by the chief executive

officer of Discover with the power and authority of the chief human resources & administrative officer.

(b)“Chief Risk Officer” means the chief risk officer of Discover, any successor chief risk officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief risk officer.

(c)“Competitive Activity” means:

(1)becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that you provided to the Company, or (ii) that you had direct or indirect managerial or supervisory responsibility for at the Company, or (iii) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Company, in each such case, at any time during the year preceding the termination of your employment with the Company; or

(2)either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

(d)“Competitor” means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (1) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services, or (2) any other business in which you have been involved in or had significant knowledge of, which has been conducted by the Company at any time during your employment with the Company. For the avoidance of doubt, a competitor of any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Award Certificate.

(e) “Covered Employee” means an employee who, as of the Date of the Award, has been identified as a covered employee by Human Resources.

(f)“Date of the Award” means the date set forth in this Award Certificate.

(g)“Employed” and “Employment” refer to employment with the Company and/or Related Employment.    

(h)“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(i)“Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement (including any foreign legal requirements).

(j)“Related Employment” means your employment with an employer other than the Company (such employer, herein referred to as a “Related Employer”), provided: (1) you undertake such employment at the written request or with the written consent of the Chief Human Resources & Administrative Officer; (2) immediately prior to undertaking such employment you were an employee of the Company or were engaged in Related Employment (as defined herein); and (3) such employment is recognized by the Company in its discretion as Related Employment; provided further that the Company may (i) determine at any time in its sole discretion that employment that was recognized by the Company as Related Employment no longer qualifies as Related Employment, and (ii) condition the designation and benefits of Related Employment on such terms and conditions as the Company may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Company, or otherwise modify your and the Company’s respective rights and obligations.

(k)“Scheduled Settlement Date” means the Scheduled Settlement Dates set forth in Award Certificate as the context requires.

(l)“Wrongful Solicitation” occurs upon either of the following events:

(1)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Company employee to leave the Company or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment; or

(2)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Company (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Company or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Company is engaged (other than the Company); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the

termination of your Employment or during the one year preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Discover has duly executed and delivered this Award Certificate as of the Date of the Award.

DISCOVER FINANCIAL SERVICES

/s/ Gregory C. Case

Gregory C. Case

Chairman of the Compensation and Leadership Development Committee

EX-10.2

Exhibit 10.2

Discover Financial Services

2023 Omnibus Incentive Plan

2024 Award Certificate for Restricted Stock Units

This Award Certificate describes the terms and conditions under which you are being granted an Award of Restricted Stock Units (“RSUs”) under the Discover Financial Services 2023 Omnibus Incentive Plan (the “Plan”), which constitutes part of your discretionary long-term incentive compensation. This Award Certificate applies only to Awards granted hereunder and other Awards are governed by terms of the applicable Award Certificate.

A copy of the Plan can be found on the E*TRADE website at www.etrade.com, or such other vendor as the Company may choose to administer the Plan. Capitalized terms under this Award Certificate have the meanings ascribed in the Plan unless otherwise stated herein.

The full terms of your Award are set out in this Award Certificate, the Plan and any applicable policy adopted by the Committee or its delegate in respect of the Plan and Awards thereunder that is applicable to this Award. In the event of a conflict between the Plan and this Award Certificate, the terms of the Plan control.

Award Recipient	Michael Rhodes
Employee / Participant ID	%%EMPLOYEE_IDENTIFIER%-%
Issuer	Discover Financial Services
Award Type	Restricted Stock Units (RSUs)
Date of the Award	February 1, 2024
Number of Awarded Units	%%TOTAL_SHARES_GRANTED,'999,999,999'%-% RSUs
Vesting	Except as otherwise set forth in this Award Certificate, your RSUs will vest as follows provided you remain continuously Employed by the Company through the applicable below Scheduled Vesting Date: Number of Shares Vesting Date %%SHARES_PERIOD1,'999,999,999'%-% %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-% %%SHARES_PERIOD2,'999,999,999'%-% %%VEST_DATE_PERIOD2,'Month DD, YYYY'%-% %%SHARES_PERIOD3,'999,999,999'%-% %%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%
Settlement	Your awards will be converted and settled in Shares pursuant to Section 8of the Plan and Section 1(b) of this Award Certificate.
Restrictive Covenants, Clawbacks, Risk Reviews, and Investigations	Pursuant to Section 8 of this Award Certificate, your Award may be subject to (i) forfeiture, cancellation and/or repayment triggered in the event of your violation of a restrictive covenant, including non-solicitation and non-competition requirements, more fully described in this Award Certificate, (ii) clawback (including in the event of restatement of the Company’s financial performance) in accordance with any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act or as otherwise required by law and (iii) forfeiture if you are subject to a risk review or forfeiture, cancellation and/or repayment if you are subject to an investigation.

You will earn RSUs included in your RSU Award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Dates (subject to limited exceptions set forth herein), (2) are not found to be subject to the forfeiture, cancellation, or clawback provisions set forth in Section 8 below, and (3) satisfy obligations you owe to the Company as set forth in Section 10 below. If the Company deems appropriate and in its sole discretion, the Company may require you to provide a written certification or other evidence, from time to time, to confirm that none of the circumstances described in Section 8 below exist or have occurred, including upon a termination of Employment and/or during a specified period of time prior to the applicable Scheduled Vesting Dates. If you fail to timely provide any required certification or other evidence, the Company may cancel your RSU Award. It is your responsibility to provide the Human Resources Department with your up-to-date contact information.

1.Vesting Schedule; Conversion.

(a)Vesting Schedule. Your RSUs will vest according to the Scheduled Vesting Dates set forth in this Award Certificate, provided you remain continuously Employed through such dates or the terms of Section 7(a) of this Award Certificate apply, unless earlier vesting is required pursuant to Section 4, 5 or 6 of this Award Certificate.

(b)Conversion.

(1)Except as otherwise provided in this Award Certificate, each of your vested RSUs will convert to one Share on or as soon as administratively practicable following the applicable Scheduled Vesting Date.

(2)Subject to the provisions of the Plan and this Award Certificate, as well as any transfer restrictions imposed by the Company or applicable pursuant to securities laws, Shares to which you are entitled following conversion of RSUs under any provision of this Award Certificate shall be delivered to you (or your beneficiary or estate, as applicable) as soon as administratively practicable after the Scheduled Vesting Date, unless earlier delivery is required pursuant to Section 4, 5, or 6 of this Award Certificate.

(c)Accelerated Conversion. The Committee, in its sole discretion, may determine that any RSUs may be converted to Shares prior to the Scheduled Vesting Date subject to compliance with all Legal Requirements, including Section 409A.

(d)Rule of Construction for Timing of Conversion. Whenever this Award Certificate provides for RSUs to convert to Shares on the Scheduled Vesting Date or upon an accelerated or different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries nor your estate shall have any claim against the Company for damages based on a delay in conversion of your RSUs (or delivery of Shares following conversion), and the Company shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the Scheduled Vesting Date or such other specified

event or date or, if later, by the 15th day of the third calendar month following such specified event or date.

2.Special Provisions for Certain “Specified Employees”.

Notwithstanding anything to the contrary in this Award Certificate, if Discover reasonably considers you to be one of its “specified employees” as defined in Section 409A at the time of the termination of your Employment, any RSUs that constitute deferred compensation under Section 409A that are payable upon termination of Employment will not convert to Shares or be delivered to you until the date that is six months after the termination of your Employment (or the date of your death, if such event occurs earlier).

3.Dividend Equivalent Payments.

Until your RSUs convert to Shares and subject to your continued Employment through the applicable payment date, if Discover pays a regular or ordinary cash dividend on its common stock, you will be paid a dividend equivalent for your vested and unvested RSUs. No dividend equivalents will be paid to you on any canceled RSUs. Discover, in its discretion, will decide on the form of payment and may pay dividend equivalents in Shares, in cash or in a combination thereof. Discover will pay the dividend equivalents as soon as administratively practicable (and in any event within thirty (30) days) after Discover pays the corresponding dividend on its Stock.

4.Death; Disability.

The following special vesting and payment terms apply to your RSUs:

(a)Death. If your Employment terminates due to your death, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to your beneficiary or your estate on or as soon as administratively practicable after your date of death, subject to your representative’s execution and delivery of an agreement and general release of claims (the “Release”) in a form substantially similar to that attached as Exhibit A to your offer letter with the Company dated December 7, 2023 (the “Letter Agreement”) and the expiration of any applicable revocation period.

(b)Disability. If your Employment terminates due to Disability, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to you on or as soon as administratively practicable after your termination due to Disability, subject to you or your representative’s execution and delivery of the Release and the expiration of any applicable revocation period.

5.[Reserved].

6.Change in Control.

(a)Termination in Connection with Change in Control. If the Company terminates your Employment other than for Cause, or if you terminate your Employment for

Good Reason, within six months prior to or within twenty-four (24) months after a Change in Control, your RSUs will immediately vest and convert to Shares on the later of the date of a Change in Control or the date of your termination following a Change in Control, as applicable and be delivered as soon as administratively practicable thereafter.

(b)Stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive shares of common stock of an acquiring entity that are registered under Section 12 of the Exchange Act, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, there shall be substituted for each Share subject to this Award Certificate the number and class of shares of common stock of the acquiring entity into which each outstanding Share shall be converted pursuant to such Change in Control transaction, and this Award Certificate shall otherwise continue in effect.

(c)Non-stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive consideration other than shares of common stock of the acquiring entity that are registered under Section 12 of the Exchange Act, the value of the RSUs hereunder shall, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, be converted into a right to receive the cash or other consideration received by the shareholders of Discover in such transaction, and this Award Certificate shall otherwise continue in effect.

7.Termination of Employment.

(a)Termination without Cause or for Good Reason. If the Company terminates your Employment other than for Cause, or if you terminate your Employment for Good Reason, in each case other than as set forth in Section 6(a) of this Award Certificate, your RSUs will continue to vest according to the Scheduled Vesting Dates set forth in this Award Certificate, subject to your execution and delivery of the Release and the expiration of any applicable revocation period.

(b)Termination under Other Circumstances. Your unvested RSUs will be forfeited and canceled if your Employment terminates for any reason other than under the circumstances set forth in Section 4, 5, 6 or 7(a) of this Award Certificate.

8.Forfeiture/Cancellation/Clawback of RSU Awards Under Certain Circumstances.

(a)Breach of Restrictive Covenants. RSUs are not earned until the applicable Scheduled Vesting Date and will be canceled prior to the applicable Scheduled Vesting Date under any of the circumstances set forth below. Although you will become the beneficial owner of Shares following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your Shares following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs are or may be cancellable under the circumstances set forth below. The Shares underlying such RSUs shall be forfeited and recoverable in the event the Company determines that the RSUs were cancellable under the circumstances set forth below. Notwithstanding any

provision of this Award Certificate to the contrary and subject to Section 8(f) below, in the event that at any time prior to one year after the termination of your Employment or service with the Company, you (i) engage in Wrongful Solicitation, (ii) breach your obligations to the Company under a confidentiality, intellectual property or other restrictive covenant, or (iii) for those participants classified by the Company as an officer of Discover Financial Services or one of its Subsidiaries on the date of grant, engage in Competitive Activity, with respect to each such incidence of violation and to the maximum extent permitted by applicable law, you shall be required to:

(1)pay to the Company an amount in cash equal to the value of the Shares that vested and converted on or after, or within one year prior to, your termination of Employment, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to your breach of the restrictive covenants; or

(2)transfer to the Company the number of Shares that vested and converted on or after, or within one year prior to, your termination of Employment, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to your breach of the restrictive covenants.

In the event of multiple incidences of breach of this provision of the Award Certificate (e.g., in the event of violation of the non-solicitation provision following engaging in Competitive Activity), the repayment amount will be additive for each incidence of violation, not to exceed two times the amount calculated under paragraph 8(a)(1) and (2) above. If you engage in Wrongful Solicitation or engage in a Competing Activity, in addition to the remedies described in Section 8(a), the Company may also take such action at equity or in law as it deems appropriate to enforce the provisions of the applicable restrictive covenant, including pursuing injunctive relief.

The Company recommends that before accepting this Award Certificate, you consult with an attorney of your choice regarding the restrictive covenants described herein. You acknowledge that you have been provided at least fourteen (14) calendar days to review the applicable restrictive covenants prior to having to accept the award.

(b)Clawback. The Award and any cash payment or Shares delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) or as otherwise required by law. Subject to any clawback policy adopted by the Company to comply with the Dodd-Frank Act (to the extent you are subject to such policy), in the event and to the extent the Committee reasonably determines that the performance considered by the Committee, and on the basis of which the amount of RSUs were granted or converted to Shares, was based on

Discover’s material noncompliance with any financial reporting requirement under the securities laws or Company policy which requires Discover to file a restatement of its financial statements within three years of the Date of the Award, you will be required to comply with paragraphs (1) and (2) (as applicable) below to repay to the Company an amount equal to the number of RSUs which were granted or the Shares converted hereunder less the number of RSUs that would have been granted or the number of Shares that would have been converted had your RSUs been granted or converted based on compliance with any such financial reporting requirement under the securities laws or Company policy (such number of RSUs, the “Clawback RSUs,” to be determined in each case by the Committee in its sole discretion and before satisfaction of tax or other withholding obligations pursuant to Section 9):

(1) You shall forfeit a number of RSUs hereunder equal to the Clawback RSUs. In the event such forfeited RSUs are less than the Clawback RSUs, then you shall comply with the following paragraph 2.

(2) You shall be required to:

(A)    pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined using a valuation method established by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements; or

(B)    transfer to the Company the number of Shares that vested and converted hereunder, plus such amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements.

By accepting the RSUs you hereby agree and acknowledge that you are obligated to cooperate with and provide all assistance necessary to the Company to recover or recoup the RSUs or amounts paid under the Plan that are subject to the clawback pursuant to this Award Certificate, applicable securities laws or listing standards or Company policy, including the Discover Financial Services Compensation Recoupment Policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting and documentation necessary to recover or recoup any RSUs or amounts paid pursuant to RSUs.

(c)Risk Review. For select Covered Employees, as defined and identified by the Company, no RSUs will convert to Shares until the Chief Human Resources & Administrative Officer or receives confirmation from the Chief Risk Officer, or their delegate, that a review has been completed by the Chief Risk Officer, or their delegate, to determine whether you engaged in any willful or reckless violation of the Company’s risk policies. If the Chief Risk Officer, or their delegate, finds any such violation or breach, then the Company or,

in the case of Covered Employees subject to Section 16 of the Exchange Act, the Committee, may determine that all or a portion of your RSUs will be forfeited.

(d)Investigations. In the event that the Company has either commenced an investigation of a matter that you oversaw or were involved in or has evidence that may require investigation of a matter that you oversaw or were involved in, in either case concerning a breach of one of the obligations hereunder or a serious violation of Company policy, the Company may freeze your account and effectuate a transfer restriction such that your converted and delivered RSUs and any shares associated therewith may not be sold or transferred until such time as the Company reasonably believes the matter to be resolved. If, following the investigation, the Company determines, in its sole discretion, that you breached one of the obligations hereunder or committed a serious violation of Company policy, the Company may:

(1)forfeit all or a portion of your RSUs;

(2)require that you pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the circumstances described in this Section 8(d); or

(3)cancel Shares in your account or require that you transfer to the Company the number of Shares that vested and converted hereunder, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to the circumstances described in this Section 8(d).

(e)Authorization. You authorize the Company to deduct any amount or amounts owed by you pursuant to this Section 8 from any amounts payable by or on behalf of the Company to you, including, without limitation, any amount payable to you as salary, wages, paid time off, bonus, severance, change in control severance or the conversion of any equity-based award. This right of offset shall not be an exclusive remedy and the Company’s election not to exercise this right of offset with respect to any amount payable to you shall not constitute a waiver of this right of offset with respect to any other amount payable to you or any other remedy. You further acknowledge and authorize the Company to take the actions described in this Section 8, including those described in Section 8(d).

(f)Non-Contravention. Nothing in this Award Certificate (including with respect to confidential information, trade secrets, and other obligations) is intended to be or will be construed to prevent, impede or interfere with your right to respond accurately and fully to any question, inquiry or request for information regarding your employment with the Company when required by legal process by a Federal, State or other legal authority, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any Federal, State, or other regulatory authority in the

course of an investigation or proceeding authorized by law and carried out by such agency. You are not required to contact the Company regarding the subject matter of any such communications before you engage in such communications. In addition, nothing in this Award Certificate is intended to restrict your legally protected right to discuss wages, hours or other working conditions with coworkers or in any way limit your rights under the National Labor Relations Act, any whistleblower law, or other applicable law. You acknowledge that that the Company has provided you notice of your immunity rights under the Defend Trade Secrets Act, which states: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and (B) does not disclose a trade secret, except pursuant to court order.”

9.Tax and Other Withholding Obligations.

Subject to rules and procedures established by Discover, you may be eligible to elect to satisfy the tax or other withholding obligations arising upon conversion of your RSUs or upon any taxable event by paying cash or by having Discover withhold Shares or by tendering Shares, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld or tendered will be valued using the Fair Market Value of Stock on the date the Award becomes taxable, using a valuation methodology established by Discover.

10.Satisfaction of Obligations.

Notwithstanding any other provision of this Award Certificate, the Company may, in its sole discretion, take various actions affecting your RSUs in order to collect amounts sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations. The Company’s determination of the amount that you owe the Company shall be conclusive. The Fair Market Value of Stock for purposes of the following provisions shall be determined using a valuation methodology established by Company. The actions that may be taken by Discover pursuant to this Section 10 include, but are not limited to, the following:

(a)Withholding of Shares. Upon conversion of RSUs, including any accelerated conversion pursuant to Sections 4, 5, or 6 above, or, if later, upon delivery of the Shares, the Company may withhold a number of Shares sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations whether national, federal, state or local tax withholding obligations including any social insurance contributions or employment tax obligation. The Company shall determine the number of Shares to be withheld by dividing the dollar value of your obligation to the Company and any tax or other withholding obligations by the Fair Market Value of Stock on the date the Award becomes

taxable. To the extent that the Company retains any Shares or reduces the number of RSUs to cover the withholding obligations, it will do so at the applicable minimum statutory rate(or such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted by the Company). Should the Company withhold in excess of the actual tax withholding obligation, the Company may apply the excess withholding to another compensation tax liability.

(b)Netting of Accelerated RSUs. In order to satisfy any taxes due upon an event which is earlier than delivery, Discover, in its sole discretion, may accelerate the vesting and conversion of all or a portion of your unvested RSUs subject to Section 23 below. The Company shall determine the number of RSUs to be accelerated and converted by dividing the dollar value of your tax obligations upon such event by the Fair Market Value of Stock on the date of the Award becomes taxable. Accelerated and converted RSUs shall not exceed the value of taxes due upon such event and the resulting Shares will be withheld by the Company.

(c)Withholding of Other Compensation. Discover may withhold the payment of dividend equivalents on your RSUs or any other compensation or payments due from Discover to ensure satisfaction of any obligation that you owe the Company or any tax or other withholding obligations or Discover may permit you to satisfy such tax or other withholding obligation by paying such obligation in immediately available funds.

(d)Mobile Employees. You are liable and responsible for all taxes and social insurance contributions owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. Further, you may be subject to individual income taxation (and possibly social security or other applicable personal or payroll taxes) in each jurisdiction where you have performed services for the Company between the Date of the Award and when the Award vests. Taxes for which you are liable, if applicable, may be withheld and deposited by the Company in each jurisdiction in which you have performed services regardless of your status as a resident or non-resident in one or more of the jurisdictions that have a right to impose taxation. You agree that you will comply with all United States and foreign individual income tax return filing obligations that may be imposed with respect to the Award.

11.Transfer Restrictions and Investment Representation.

(a)Nontransferability of Award. You may not sell, pledge, hypothecate, assign or otherwise transfer your RSUs, other than as provided in Section 12 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution.

(b)Investment Representation. You hereby covenant that (a) any sale of any share acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) you shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

12.Designation of a Beneficiary.

You may make a revocable designation of beneficiary or beneficiaries to receive all or part of the Shares and any dividend equivalents credited to you pursuant to Section 3 hereof to be paid or delivered under this Award Certificate in the event of your death. Absent a designation on file, distributions pursuant to Section 4 will be made to your estate in accordance with applicable law. To make a beneficiary designation, you must complete and file the online form provided by E*TRADE or such other vendor as the Company may choose to administer the Plan. If you previously filed a designation of beneficiary form for your equity awards with the Human Resources Department, such form will also apply to the RSUs granted pursuant to this RSU Award. You may replace or revoke your beneficiary designation at any time, and the Company will rely on your most recent designation on file for purposes of beneficiary designation.

13.Ownership and Possession.

(a)Generally. Except as specified in Section 3 with respect to dividend equivalents, you will not have any rights as a shareholder with respect to your RSU Awards or the Shares underlying such RSUs prior to the vesting and conversion of your RSUs.

(b)Following Conversion. Subject to the terms and conditions of this Award Certificate, following the vesting and conversion of your RSUs and the issuance of the Shares underlying such RSUs in your name, you will be the beneficial owner of the Shares issued to you, subject to any tax withholding under Section 10, and you will be entitled to all rights of ownership with respect to such Shares, including voting rights and the right to receive cash or stock dividends or other distributions paid on such Shares.

14.Securities Law Matters.

Shares issued upon conversion of your RSUs may be subject to restrictions on transfer by virtue of the Securities Act of 1933, as amended, and the applicable state securities laws.  Discover may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.  Because Shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in such Shares.

15.Compliance with Laws and Regulations.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of the Shares issued upon conversion of your RSUs (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Company or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

16.No Entitlements.

(a)No Right to Continued Employment. This RSU Award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or the Plan shall alter your status as an “at-will” employee of the Company or your Employment status at a Related Employer, nor does anything herein constitute a promise of continued employment or re-employment.

(b)No Right to Future Awards. This RSU Award is discretionary and does not confer on you any right or entitlement to receive another award of RSUs, any other equity-based award or any other award at any time in the future or in respect of any future period.

(c)No Effect on Future Employment Compensation. This RSU Award is discretionary and does not confer on you any right or entitlement to receive compensation in any specific amount for any future fiscal year, and does not diminish in any way the Company’s discretion to determine the amount, if any, of your compensation. In addition, this RSU Award is not part of your base salary or wages and will not be taken into account in determining any other Employment-related rights you may have, such as rights to pension or severance pay, end of service payments, bonuses, long-service awards or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Company.

(d)Termination of Employment. In consideration of the grant of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award or diminution in value of the Award or Shares acquired through vesting of the Award resulting from termination of your Employment (for any reason whatsoever and whether or not in breach of local labor laws) andyou irrevocably release the Company and the Related Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Award Certificate, you will be deemed irrevocably to have waived your entitlement to pursue such claim; and in the event of termination of your Employment (whether or not in breach of local labor laws), your right to receive the Award and vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively Employed and will not be extended by any notice period mandated under local law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local law); Discover shall have the exclusive discretion to determine when you are no longer actively Employed for purposes of your Award.

(e)Language. If you have received this Award Certificate or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.

(f)Award Terms Control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Company and the terms set forth in this Award Certificate, the latter shall control.

17.Consents.

Your RSU Award is conditioned upon the Company making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

In accepting this RSU Award, you consent to the collection, use and transfer, in electronic or other form, of your personal data by and among, as applicable, the Company and any other possible recipients for the purpose of implementing, administering and managing your participation in the Plan, as well as for the purpose of the Company’s compliance with applicable law, including, without limitation, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. You understand that the recipients of your personal data may be located in the U.S. or elsewhere, and the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of your personal data, view the personal data, request additional information about the storage of your personal data, require any necessary amendments to your personal data or refuse or withdraw your consent by contacting your local human resources representative, in any case without cost. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan.

18.Electronic Delivery and Consent to Electronic Participation.

The Company may, in its sole discretion, decide to deliver any documents related to the RSU Award and participation in the Plan or future RSU Awards by electronic means. You hereby consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of RSU Awards and the execution of the RSU agreements through electronic signature. Electronic acceptance of this Award Certificate through the E*TRADE website, or such other vendor as the Company may choose to administer the Plan, shall be required and binding on you.  Where electronic acceptance may not be permitted under applicable law, the Company may also request and require your physical signature.  Your acceptance affirms your agreement to all the terms and conditions set forth in this Award Certificate and acceptance of the Award subject thereto. Not providing this acceptance within the timeframe stipulated may result in the Company forfeiting all or a portion of this Award.

19.Award Modification.

The Committee reserves the right to modify or amend unilaterally the terms and conditions of your RSUs, without first asking your consent, or to waive any terms and conditions that operate in favor of Discover. These amendments may include (but are not limited to) changes that the Committee considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. The Committee may not modify your RSUs in a manner that would materially impair your rights in your RSUs without your consent; provided, however, that the Committee may, without your consent, amend or modify your RSUs in any manner that the Committee considers necessary or advisable to comply with or reflect the application of any Legal Requirement or to ensure that your RSUs are not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment. Notwithstanding any provisions of this Award Certificate to the contrary, to the extent you transfer employment outside of the United States, the Award shall be subject to any special terms and conditions as Discover may need to establish to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan in the country to which you transfer employment (or Discover may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer). Discover will notify you of any amendment of your RSUs that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources & Administrative Officer to be effective.

20.Severability.

In the event the Committee determines that any provision of this Award Certificate would cause you to be in constructive receipt for United States federal or state income tax purposes of any portion of your RSU Award prior to the vesting of such Award, then such provision will be considered null and void and this Award Certificate will be construed and enforced as if the provision had not been included in this Award Certificate as of the date such provision was determined to cause you to be in constructive receipt of any portion of your RSU Award. In addition, in the event that any provision of this Award Certificate shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Award Certificate, and this Award Certificate shall be construed and enforced as if the illegal or invalid provision had not been included.

21.Successors.

This Award Certificate shall be binding upon and inure to the benefit of any successor or successors of Discover and any person or persons who shall, upon your death, acquire any rights hereunder in accordance with this Award Certificate or the Plan.

22.Governing Law.

This Award Certificate and the related legal relations between you and Discover will be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the RSU Award to the substantive law of another jurisdiction to the maximum extent permitted by applicable law. The Company and you agree that the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan or this Award Certificate shall be exclusively in the courts in the State of Illinois, Counties of Cook or Lake, including the federal courts located therein (should federal jurisdiction exist), and the Company and you hereby submit and consent to said jurisdiction and venue to the maximum extent permitted by applicable law.

23.Section 409A.

This Award is intended to be exempt from or comply with Section 409A, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A. Subject to Section 2, to the extent this Award Certificate provides for the Award to become vested and be settled upon your termination of employment, the applicable Shares shall be transferred to you or your beneficiary upon your “separation from service,” within the meaning of Section 409A. To the extent necessary or advisable to comply with Section 409A, with respect to any provision of this Award Certificate that provides for vested RSUs to convert to Shares on or as soon as administratively practicable after a specified event or date, such conversion and settlement will be made by the later of the end of the calendar year in which the specified event or date occurs or the 15th day of the third calendar month following the specified event or date. If any RSUs constitute deferred compensation under Section 409A and are payable subject to your execution and non-revocation of a release and the period to consider the release spans two separate taxable years, then the distribution of the RSUs that are conditioned upon such execution and non-revocation of the release shall be made in the later taxable year.

24.Defined Terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a)“Cause” means:

(1)any act or omission which constitutes a material breach of your obligations to the Company or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to Disability) within ten (10) business days after written notification thereof to you by the Company;

(2)any act or omission by you that constitutes (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets of, or

business opportunities considered by, the Company or (iii) any other act which has caused or may reasonably be expected to cause material injury to the interest or business reputation of the Company; or

(3)your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Company is a member or of any policy of the Company relating to compliance with any of the foregoing.

For purposes of this Award Certificate, (i) poor performance, by itself, shall not form the basis for a termination of your employment for Cause, and (ii) any dispute as to the determination of Cause will be adjudicated by de novo (or similar) review.

(a)“Chief Human Resources & Administrative Officer” means the chief human resources & administrative officer of Discover, any successor chief human resources & administrative officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief human resources & administrative officer.

(b)“Chief Risk Officer” means the chief risk officer of Discover, any successor chief risk officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief risk officer.

(c)“Competitive Activity” means:

(1)becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that you provided to the Company, or (ii) that you had direct or indirect managerial or supervisory responsibility for at the Company, or (iii) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Company, in each such case, at any time during the year preceding the termination of your employment with the Company; or

(2)either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

(d)“Competitor” means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (1) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services, or (2) any other business in which you have been involved in or had significant knowledge of, which has been conducted by the Company at any time during your employment with the Company. For the avoidance of doubt, a competitor of

any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Award Certificate.

(e) “Covered Employee” means an employee who, as of the Date of the Award, has been identified as a covered employee by Human Resources.

(f)“Date of the Award” means the date set forth in this Award Certificate.

(g)“Disability” means a “permanent and total disability,” as defined in Section 22(e)(3) of the Internal Revenue Code, which may be demonstrated by a determination of disability by the Company’s long-term disability insurance carrier or the Social Security Administration.

(h)“Employed” and “Employment” refer to employment with the Company and/or Related Employment.    

(i)“Good Reason” means the occurrence (without your prior written consent) of any of the following:

(1) a material reduction in any of your annual base salary, target short-term incentive opportunity or target annual long-term incentive opportunity;

(2)a requirement that you relocate your principal place of employment more than 35 miles from the location as of the effective date of the Letter Agreement or that results in an increase in your normal daily commuting time by more than 90 minutes;

(3)a material adverse change in your authorities, duties or responsibilities or the assignment to you of any authorities, duties or responsibilities inconsistent with those assigned to you immediately before such assignment (including reporting responsibilities but other than failure to be elected to the Board if the Board has nominated you for election and undertaken good faith efforts in support of your election);

(4)a material breach by the Company of the Letter Agreement or any other material written agreement with you; or

(5)failure of any successor to the Company to agree in writing to assume the terms of the Letter Agreement.

A termination for Good Reason shall not have occurred unless (a) you give written notice to the Company of your termination of employment within ninety days after you first become aware of the occurrence of the circumstances constituting Good Reason, specifying in detail the circumstances constituting Good Reason, and the Company has failed within thirty days after receipt of such notice to cure the circumstances constituting Good Reason, and (b) your “separation from service” (within the meaning of Section 409A) occurs no later than two years following the initial existence of the circumstances giving rise to Good Reason. Your right to

terminate your employment for Good Reason shall not be affected by your incapacity due to physical or mental illness, unless you are terminated for Disability. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason.

(j)“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(k)“Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement (including any foreign legal requirements).

(l) “Pro Ration Fraction” means a fraction, not to exceed 1.0, the numerator of which is the number of completed months commencing on the later of (i) the first day of the calendar year of the Date of the Award or (ii) the first day of the month in which your employment commences and ending on the effective date of your termination of Employment, and the denominator of which is 12.

(m)“Related Employment” means your employment with an employer other than the Company (such employer, herein referred to as a “Related Employer”), provided: (1) you undertake such employment at the written request or with the written consent of the Chief Human Resources & Administrative Officer; (2) immediately prior to undertaking such employment you were an employee of the Company or were engaged in Related Employment (as defined herein); and (3) such employment is recognized by the Company in its discretion as Related Employment; provided further that the Company may (i) determine at any time in its sole discretion that employment that was recognized by the Company as Related Employment no longer qualifies as Related Employment, and (ii) condition the designation and benefits of Related Employment on such terms and conditions as the Company may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Company, or otherwise modify your and the Company’s respective rights and obligations.

(n)“Scheduled Vesting Date” means the Scheduled Vesting Dates set forth in Award Certificate as the context requires.

(o)“Wrongful Solicitation” occurs upon either of the following events:

(1)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Company employee to leave the Company or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period

applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment; or

(2)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Company (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Company or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Company is engaged (other than the Company); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Discover has duly executed and delivered this Award Certificate as of the Date of the Award.

DISCOVER FINANCIAL SERVICES

/s/ Gregory C. Case

Gregory C. Case

Chairman of the Compensation and Leadership Development Committee

EX-10.3

Exhibit 10.3

Discover Financial Services

2023 Omnibus Incentive Plan

2024 Award Certificate for Restricted Stock Units

This Award Certificate describes the terms and conditions under which you are being granted an Award of Restricted Stock Units (“RSUs”) under the Discover Financial Services 2023 Omnibus Incentive Plan (the “Plan”), which constitutes part of your discretionary long-term incentive compensation. This Award Certificate applies only to Awards granted hereunder and other Awards are governed by terms of the applicable Award Certificate.

A copy of the Plan can be found on the E*TRADE website at www.etrade.com, or such other vendor as the Company may choose to administer the Plan. Capitalized terms under this Award Certificate have the meanings ascribed in the Plan unless otherwise stated herein.

The full terms of your Award are set out in this Award Certificate, the Plan and any applicable policy adopted by the Committee or its delegate in respect of the Plan and Awards thereunder that is applicable to this Award. In the event of a conflict between the Plan and this Award Certificate, the terms of the Plan control.

Award Recipient	John Greene
Employee / Participant ID	%%EMPLOYEE_IDENTIFIER%-%
Issuer	Discover Financial Services
Award Type	Restricted Stock Units (RSUs)
Date of the Award	February 22, 2024
Number of Awarded Units	%%TOTAL_SHARES_GRANTED,'999,999,999'%-% RSUs
Vesting	Except as otherwise set forth in this Award Certificate, your RSUs will vest as follows provided you remain continuously Employed by the Company through the applicable below Scheduled Vesting Date: Number of Shares Vesting Date %%SHARES_PERIOD1,'999,999,999'%-% February 01, 2027 %%SHARES_PERIOD1,'999,999,999'%-% Later of: (1) the date on which the Discover Student Loans’ portfolio is sold, or (2) the date on which the servicing of such loans has been successfully transferred to a third-party provider, as determined by the Committee in its sole discretion. Notwithstanding paragraph 2, (i) the earliest date on which such restricted stock unit award shall vest is February 22, 2025, and (ii) in the event such sale and transfer of Discover Student Loans does not occur by February 1, 2027, this portion of the restricted stock unit award shall be forfeited.
Settlement	Your awards will be converted and settled in Shares pursuant to Section 8of the Plan and Section 1(b) of this Award Certificate.
Restrictive Covenants, Clawbacks, Risk Reviews, and Investigations	Pursuant to Section 8 of this Award Certificate, your Award may be subject to (i) forfeiture, cancellation and/or repayment triggered in the event of your violation of a restrictive covenant, including non-solicitation and non-competition requirements, more fully described in this Award Certificate, (ii) clawback (including in the event of restatement of the Company’s financial performance) in accordance with any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act or as otherwise required by law and (iii) forfeiture if you are subject to a risk review or forfeiture, cancellation and/or repayment if you are subject to an investigation.

You will earn RSUs included in your RSU Award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Dates (subject to limited exceptions set forth herein), (2) are not found to be subject to the forfeiture, cancellation, or clawback provisions set forth in Section 8 below, and (3) satisfy obligations you owe to the Company as set forth in Section 10 below. If the Company deems appropriate and in its sole discretion, the Company may require you to provide a written certification or other evidence, from time to time, to confirm that none of the circumstances described in Section 8 below exist or have occurred, including upon a termination of Employment and/or during a specified period of time prior to the applicable Scheduled Vesting Dates. If you fail to timely provide any required certification or other evidence, the Company may cancel your RSU Award. It is your responsibility to provide the Human Resources Department with your up-to-date contact information.

1.Vesting Schedule; Conversion.

(a)Vesting Schedule. Your RSUs will vest according to the Scheduled Vesting Dates set forth in this Award Certificate, provided you remain continuously Employed through such dates, unless earlier vesting is required pursuant to Section 4, 5 or 6 of this Award Certificate.

(b)Conversion.

(1)Except as otherwise provided in this Award Certificate, each of your vested RSUs will convert to one Share on or as soon as administratively practicable following the applicable Scheduled Vesting Date.

(2)Subject to the provisions of the Plan and this Award Certificate, as well as any transfer restrictions imposed by the Company or applicable pursuant to securities laws, Shares to which you are entitled following conversion of RSUs under any provision of this Award Certificate shall be delivered to you (or your beneficiary or estate, as applicable) as soon as administratively practicable after the Scheduled Vesting Date, unless earlier delivery is required pursuant to Section 4, 5, or 6 of this Award Certificate.

(c)Accelerated Conversion. The Committee, in its sole discretion, may determine that any RSUs may be converted to Shares prior to the Scheduled Vesting Date subject to compliance with all Legal Requirements, including Section 409A.

(d)Rule of Construction for Timing of Conversion. Whenever this Award Certificate provides for RSUs to convert to Shares on the Scheduled Vesting Date or upon an accelerated or different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries nor your estate shall have any claim against the Company for damages based on a delay in conversion of your RSUs (or delivery of Shares following conversion), and the Company shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the Scheduled Vesting Date or such other specified

event or date or, if later, by the 15th day of the third calendar month following such specified event or date.

2.Special Provisions for Certain “Specified Employees”.

Notwithstanding anything to the contrary in this Award Certificate, if Discover reasonably considers you to be one of its “specified employees” as defined in Section 409A at the time of the termination of your Employment, any RSUs that constitute deferred compensation under Section 409A that are payable upon termination of Employment will not convert to Shares or be delivered to you until the date that is six months after the termination of your Employment (or the date of your death, if such event occurs earlier).

3.Dividend Equivalent Payments.

Until your RSUs convert to Shares and subject to your continued Employment through the applicable payment date, if Discover pays a regular or ordinary cash dividend on its common stock, you will be paid a dividend equivalent for your vested and unvested RSUs. No dividend equivalents will be paid to you on any canceled RSUs. Discover, in its discretion, will decide on the form of payment and may pay dividend equivalents in Shares, in cash or in a combination thereof. Discover will pay the dividend equivalents as soon as administratively practicable (and in any event within thirty (30) days) after Discover pays the corresponding dividend on its Stock.

4.Death; Disability.

The following special vesting and payment terms apply to your RSUs:

(a)Death. If your Employment terminates due to your death, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to your beneficiary or your estate on or as soon as administratively practicable after your date of death.

(b)Disability. If your Employment terminates due to Disability, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to you on or as soon as administratively practicable after your termination due to Disability.

5.Involuntary Termination by the Company Without Cause and Termination by You For Good Reason.

If the Company terminates your Employment without Cause or you terminate your Employment for Good Reason, in each case other than as set forth in Section 6(a) of this Award Certificate, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to you on or as soon as administratively practicable after the date your Employment terminates, provided that you sign (and do not revoke) an agreement and release of claims satisfactory to the Company, with such release to become effective pursuant to its terms within sixty (60) days following your termination of Employment or such other date specified by the Company as permitted under Section 409A.

6.Change in Control.

(a)Termination in Connection with Change in Control. If the Company terminates your Employment other than for Cause, or if you terminate your Employment for Good Reason, within six months prior to or within twenty-four (24) months after a Change in Control, your RSUs will immediately vest and convert to Shares on the later of the date of a Change in Control or the date of your termination following a Change in Control, as applicable and be delivered as soon as administratively practicable thereafter.

(b)Stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive shares of common stock of an acquiring entity that are registered under Section 12 of the Exchange Act, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, there shall be substituted for each Share subject to this Award Certificate the number and class of shares of common stock of the acquiring entity into which each outstanding Share shall be converted pursuant to such Change in Control transaction, and this Award Certificate shall otherwise continue in effect.

(c)Non-stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive consideration other than shares of common stock of the acquiring entity that are registered under Section 12 of the Exchange Act, the value of the RSUs hereunder shall, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, be converted into a right to receive the cash or other consideration received by the shareholders of Discover in such transaction, and this Award Certificate shall otherwise continue in effect.

7.Termination of Employment.

Your unvested RSUs will be forfeited and canceled if your Employment terminates for any reason other than under the circumstances set forth in Section 4, 5 or 6 of this Award Certificate.

8.Forfeiture/Cancellation/Clawback of RSU Awards Under Certain Circumstances.

(a)Breach of Restrictive Covenants. RSUs are not earned until the applicable Scheduled Vesting Date and will be canceled prior to the applicable Scheduled Vesting Date under any of the circumstances set forth below. Although you will become the beneficial owner of Shares following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your Shares following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs are or may be cancellable under the circumstances set forth below. The Shares underlying such RSUs shall be forfeited and recoverable in the event the Company determines that the RSUs were cancellable under the circumstances set forth below. Notwithstanding any provision of this Award Certificate to the contrary and subject to Section 8(f) below, in the event that at any time prior to one year after the termination of your Employment or service with the Company, you (i) engage in Wrongful Solicitation, (ii) breach your obligations to the

Company under a confidentiality, intellectual property or other restrictive covenant, or (iii) for those participants classified by the Company as an officer of Discover Financial Services or one of its Subsidiaries on the date of grant, engage in Competitive Activity, with respect to each such incidence of violation and to the maximum extent permitted by applicable law, you shall be required to:

(1)pay to the Company an amount in cash equal to the value of the Shares that vested and converted on or after, or within one year prior to, your termination of Employment, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to your breach of the restrictive covenants; or

(2)transfer to the Company the number of Shares that vested and converted on or after, or within one year prior to, your termination of Employment, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to your breach of the restrictive covenants.

In the event of multiple incidences of breach of this provision of the Award Certificate (e.g., in the event of violation of the non-solicitation provision following engaging in Competitive Activity), the repayment amount will be additive for each incidence of violation, not to exceed two times the amount calculated under paragraph 8(a)(1) and (2) above. If you engage in Wrongful Solicitation or engage in a Competing Activity, in addition to the remedies described in Section 8(a), the Company may also take such action at equity or in law as it deems appropriate to enforce the provisions of the applicable restrictive covenant, including pursuing injunctive relief.

The Company recommends that before accepting this Award Certificate, you consult with an attorney of your choice regarding the restrictive covenants described herein. You acknowledge that you have been provided at least fourteen (14) calendar days to review the applicable restrictive covenants prior to having to accept the award.

(b)Clawback. The Award and any cash payment or Shares delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) or as otherwise required by law. Subject to any clawback policy adopted by the Company to comply with the Dodd-Frank Act (to the extent you are subject to such policy), in the event and to the extent the Committee reasonably determines that the performance considered by the Committee, and on the basis of which the amount of RSUs were granted or converted to Shares, was based on Discover’s material noncompliance with any financial reporting requirement under the securities laws or Company policy which requires Discover to file a restatement of its financial statements within three years of the Date of the Award, you will be required to comply with paragraphs (1) and (2) (as applicable) below to repay to the Company an amount equal to the

number of RSUs which were granted or the Shares converted hereunder less the number of RSUs that would have been granted or the number of Shares that would have been converted had your RSUs been granted or converted based on compliance with any such financial reporting requirement under the securities laws or Company policy (such number of RSUs, the “Clawback RSUs,” to be determined in each case by the Committee in its sole discretion and before satisfaction of tax or other withholding obligations pursuant to Section 9):

(1) You shall forfeit a number of RSUs hereunder equal to the Clawback RSUs. In the event such forfeited RSUs are less than the Clawback RSUs, then you shall comply with the following paragraph 2.

(2) You shall be required to:

(A)    pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined using a valuation method established by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements; or

(B)    transfer to the Company the number of Shares that vested and converted hereunder, plus such amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements.

By accepting the RSUs you hereby agree and acknowledge that you are obligated to cooperate with and provide all assistance necessary to the Company to recover or recoup the RSUs or amounts paid under the Plan that are subject to the clawback pursuant to this Award Certificate, applicable securities laws or listing standards or Company policy, including the Discover Financial Services Compensation Recoupment Policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting and documentation necessary to recover or recoup any RSUs or amounts paid pursuant to RSUs.

(c)Risk Review. For select Covered Employees, as defined and identified by the Company, no RSUs will convert to Shares until the Chief Human Resources & Administrative Officer or receives confirmation from the Chief Risk Officer, or their delegate, that a review has been completed by the Chief Risk Officer, or their delegate, to determine whether you engaged in any willful or reckless violation of the Company’s risk policies. If the Chief Risk Officer, or their delegate, finds any such violation or breach, then the Company or, in the case of Covered Employees subject to Section 16 of the Exchange Act, the Committee, may determine that all or a portion of your RSUs will be forfeited.

(d)Investigations. In the event that the Company has either commenced an investigation of a matter that you oversaw or were involved in or has evidence that may require investigation of a matter that you oversaw or were involved in, in either case concerning a breach of one of the obligations hereunder or a serious violation of Company policy, the

Company may freeze your account and effectuate a transfer restriction such that your converted and delivered RSUs and any shares associated therewith may not be sold or transferred until such time as the Company reasonably believes the matter to be resolved. If, following the investigation, the Company determines, in its sole discretion, that you breached one of the obligations hereunder or committed a serious violation of Company policy, the Company may:

(1)forfeit all or a portion of your RSUs;

(2)require that you pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the circumstances described in this Section 8(d); or

(3)cancel Shares in your account or require that you transfer to the Company the number of Shares that vested and converted hereunder, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to the circumstances described in this Section 8(d).

(e)Authorization. You authorize the Company to deduct any amount or amounts owed by you pursuant to this Section 8 from any amounts payable by or on behalf of the Company to you, including, without limitation, any amount payable to you as salary, wages, paid time off, bonus, severance, change in control severance or the conversion of any equity-based award. This right of offset shall not be an exclusive remedy and the Company’s election not to exercise this right of offset with respect to any amount payable to you shall not constitute a waiver of this right of offset with respect to any other amount payable to you or any other remedy. You further acknowledge and authorize the Company to take the actions described in this Section 8, including those described in Section 8(d).

(f)Non-Contravention. Nothing in this Award Certificate (including with respect to confidential information, trade secrets, and other obligations) is intended to be or will be construed to prevent, impede or interfere with your right to respond accurately and fully to any question, inquiry or request for information regarding your employment with the Company when required by legal process by a Federal, State or other legal authority, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any Federal, State, or other regulatory authority in the course of an investigation or proceeding authorized by law and carried out by such agency. You are not required to contact the Company regarding the subject matter of any such communications before you engage in such communications. In addition, nothing in this Award Certificate is intended to restrict your legally protected right to discuss wages, hours or other working conditions with coworkers or in any way limit your rights under the National Labor Relations Act, any whistleblower law, or other applicable law. You acknowledge that that the Company has provided you notice of your immunity rights under the Defend Trade Secrets Act, which states: “(1) An individual shall not be held criminally or civilly liable under

any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and (B) does not disclose a trade secret, except pursuant to court order.”

9.Tax and Other Withholding Obligations.

Subject to rules and procedures established by Discover, you may be eligible to elect to satisfy the tax or other withholding obligations arising upon conversion of your RSUs or upon any taxable event by paying cash or by having Discover withhold Shares or by tendering Shares, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld or tendered will be valued using the Fair Market Value of Stock on the date the Award becomes taxable, using a valuation methodology established by Discover.

10.Satisfaction of Obligations.

Notwithstanding any other provision of this Award Certificate, the Company may, in its sole discretion, take various actions affecting your RSUs in order to collect amounts sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations. The Company’s determination of the amount that you owe the Company shall be conclusive. The Fair Market Value of Stock for purposes of the following provisions shall be determined using a valuation methodology established by Company. The actions that may be taken by Discover pursuant to this Section 10 include, but are not limited to, the following:

(a)Withholding of Shares. Upon conversion of RSUs, including any accelerated conversion pursuant to Sections 4, 5, or 6 above, or, if later, upon delivery of the Shares, the Company may withhold a number of Shares sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations whether national, federal, state or local tax withholding obligations including any social insurance contributions or employment tax obligation. The Company shall determine the number of Shares to be withheld by dividing the dollar value of your obligation to the Company and any tax or other withholding obligations by the Fair Market Value of Stock on the date the Award becomes taxable. To the extent that the Company retains any Shares or reduces the number of RSUs to cover the withholding obligations, it will do so at the applicable minimum statutory rate(or such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted by the Company). Should the Company withhold in excess of the actual tax withholding obligation, the Company may apply the excess withholding to another compensation tax liability.

(b)Netting of Accelerated RSUs. In order to satisfy any taxes due upon an event which is earlier than delivery, Discover, in its sole discretion, may accelerate the vesting

and conversion of all or a portion of your unvested RSUs subject to Section 23 below. The Company shall determine the number of RSUs to be accelerated and converted by dividing the dollar value of your tax obligations upon such event by the Fair Market Value of Stock on the date of the Award becomes taxable. Accelerated and converted RSUs shall not exceed the value of taxes due upon such event and the resulting Shares will be withheld by the Company.

(c)Withholding of Other Compensation. Discover may withhold the payment of dividend equivalents on your RSUs or any other compensation or payments due from Discover to ensure satisfaction of any obligation that you owe the Company or any tax or other withholding obligations or Discover may permit you to satisfy such tax or other withholding obligation by paying such obligation in immediately available funds.

(d)Mobile Employees. You are liable and responsible for all taxes and social insurance contributions owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. Further, you may be subject to individual income taxation (and possibly social security or other applicable personal or payroll taxes) in each jurisdiction where you have performed services for the Company between the Date of the Award and when the Award vests. Taxes for which you are liable, if applicable, may be withheld and deposited by the Company in each jurisdiction in which you have performed services regardless of your status as a resident or non-resident in one or more of the jurisdictions that have a right to impose taxation. You agree that you will comply with all United States and foreign individual income tax return filing obligations that may be imposed with respect to the Award.

11.Transfer Restrictions and Investment Representation.

(a)Nontransferability of Award. You may not sell, pledge, hypothecate, assign or otherwise transfer your RSUs, other than as provided in Section 12 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution.

(b)Investment Representation. You hereby covenant that (a) any sale of any share acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) you shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

12.Designation of a Beneficiary.

You may make a revocable designation of beneficiary or beneficiaries to receive all or part of the Shares and any dividend equivalents credited to you pursuant to Section 3 hereof to be paid or delivered under this Award Certificate in the event of your death. Absent a designation on file, distributions pursuant to Section 4 will be made to your estate in accordance with applicable law. To make a beneficiary designation, you must complete and file the online form provided by E*TRADE or such other vendor as the Company may choose to administer the Plan. If you previously filed a designation of beneficiary form for your equity awards with the Human Resources Department, such form will also apply to the RSUs granted pursuant to this RSU Award. You may replace or revoke your beneficiary designation at any time, and the Company will rely on your most recent designation on file for purposes of beneficiary designation.

13.Ownership and Possession.

(a)Generally. Except as specified in Section 3 with respect to dividend equivalents, you will not have any rights as a shareholder with respect to your RSU Awards or the Shares underlying such RSUs prior to the vesting and conversion of your RSUs.

(b)Following Conversion. Subject to the terms and conditions of this Award Certificate, following the vesting and conversion of your RSUs and the issuance of the Shares underlying such RSUs in your name, you will be the beneficial owner of the Shares issued to you, subject to any tax withholding under Section 10, and you will be entitled to all rights of ownership with respect to such Shares, including voting rights and the right to receive cash or stock dividends or other distributions paid on such Shares.

14.Securities Law Matters.

Shares issued upon conversion of your RSUs may be subject to restrictions on transfer by virtue of the Securities Act of 1933, as amended, and the applicable state securities laws.  Discover may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.  Because Shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in such Shares.

15.Compliance with Laws and Regulations.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of the Shares issued upon conversion of your RSUs (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Company or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

16.No Entitlements.

(a)No Right to Continued Employment. This RSU Award is not an employment agreement, and nothing in this Award Certificate, or the Plan shall alter your status as an “at-will” employee of the Company or your Employment status at a Related Employer, nor does anything herein constitute a promise of continued employment or re-employment.

(b)No Right to Future Awards. This RSU Award is discretionary and does not confer on you any right or entitlement to receive another award of RSUs, any other equity-based award or any other award at any time in the future or in respect of any future period.

(c)No Effect on Future Employment Compensation. This RSU Award is discretionary and does not confer on you any right or entitlement to receive compensation in any specific amount for any future fiscal year, and does not diminish in any way the Company’s discretion to determine the amount, if any, of your compensation. In addition, this RSU Award is not part of your base salary or wages and will not be taken into account in determining any other Employment-related rights you may have, such as rights to pension or severance pay, end of service payments, bonuses, long-service awards or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Company.

(d)Termination of Employment. In consideration of the grant of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award or diminution in value of the Award or Shares acquired through vesting of the Award resulting from termination of your Employment (for any reason whatsoever and whether or not in breach of local labor laws) andyou irrevocably release the Company and the Related Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Award Certificate, you will be deemed irrevocably to have waived your entitlement to pursue such claim; and in the event of termination of your Employment (whether or not in breach of local labor laws), your right to receive the Award and vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively Employed and will not be extended by any notice period mandated under local law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local law); Discover shall have the exclusive discretion to determine when you are no longer actively Employed for purposes of your Award.

(e)Language. If you have received this Award Certificate or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.

(f)Award Terms Control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Company and the terms set forth in this Award Certificate, the latter shall control.

17.Consents.

Your RSU Award is conditioned upon the Company making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

In accepting this RSU Award, you consent to the collection, use and transfer, in electronic or other form, of your personal data by and among, as applicable, the Company and any other possible recipients for the purpose of implementing, administering and managing your participation in the Plan, as well as for the purpose of the Company’s compliance with applicable law, including, without limitation, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. You understand that the recipients of your personal data may be located in the U.S. or elsewhere, and the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of your personal data, view the personal data, request additional information about the storage of your personal data, require any necessary amendments to your personal data or refuse or withdraw your consent by contacting your local human resources representative, in any case without cost. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan.

18.Electronic Delivery and Consent to Electronic Participation.

The Company may, in its sole discretion, decide to deliver any documents related to the RSU Award and participation in the Plan or future RSU Awards by electronic means. You hereby consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of RSU Awards and the execution of the RSU agreements through electronic signature. Electronic acceptance of this Award Certificate through the E*TRADE website, or such other vendor as the Company may choose to administer the Plan, shall be required and binding on you.  Where electronic acceptance may not be permitted under applicable law, the Company may also request and require your physical signature.  Your acceptance affirms your agreement to all the terms and conditions set forth in this Award Certificate and acceptance of the Award subject thereto. Not providing this acceptance within the timeframe stipulated may result in the Company forfeiting all or a portion of this Award.

19.Award Modification.

The Committee reserves the right to modify or amend unilaterally the terms and conditions of your RSUs, without first asking your consent, or to waive any terms and conditions that operate in favor of Discover. These amendments may include (but are not limited to) changes that the Committee considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. The Committee may not modify your RSUs in a manner that would materially impair your rights in your RSUs without your consent; provided, however, that the Committee may, without your consent, amend or modify your RSUs in any manner that the Committee considers necessary or advisable to comply with or reflect the

application of any Legal Requirement or to ensure that your RSUs are not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment. Notwithstanding any provisions of this Award Certificate to the contrary, to the extent you transfer employment outside of the United States, the Award shall be subject to any special terms and conditions as Discover may need to establish to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan in the country to which you transfer employment (or Discover may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer). Discover will notify you of any amendment of your RSUs that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources & Administrative Officer to be effective.

20.Severability.

In the event the Committee determines that any provision of this Award Certificate would cause you to be in constructive receipt for United States federal or state income tax purposes of any portion of your RSU Award prior to the vesting of such Award, then such provision will be considered null and void and this Award Certificate will be construed and enforced as if the provision had not been included in this Award Certificate as of the date such provision was determined to cause you to be in constructive receipt of any portion of your RSU Award. In addition, in the event that any provision of this Award Certificate shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Award Certificate, and this Award Certificate shall be construed and enforced as if the illegal or invalid provision had not been included.

21.Successors.

This Award Certificate shall be binding upon and inure to the benefit of any successor or successors of Discover and any person or persons who shall, upon your death, acquire any rights hereunder in accordance with this Award Certificate or the Plan.

22.Governing Law.

This Award Certificate and the related legal relations between you and Discover will be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the RSU Award to the substantive law of another jurisdiction to the maximum extent permitted by applicable law. The Company and you agree that the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan or this Award Certificate shall be exclusively in the courts in the State of Illinois, Counties of Cook or Lake, including the federal courts located therein (should federal jurisdiction exist), and the Company and you hereby submit and consent to said jurisdiction and venue to the maximum extent permitted by applicable law.

23.Section 409A.

This Award is intended to be exempt from or comply with Section 409A, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A. Subject to Section 2, to the extent this Award Certificate provides for the Award to become vested and be settled upon your termination of employment, the applicable Shares shall be transferred to you or your beneficiary upon your “separation from service,” within the meaning of Section 409A. To the extent necessary or advisable to comply with Section 409A, with respect to any provision of this Award Certificate that provides for vested RSUs to convert to Shares on or as soon as administratively practicable after a specified event or date, such conversion and settlement will be made by the later of the end of the calendar year in which the specified event or date occurs or the 15th day of the third calendar month following the specified event or date. If any RSUs constitute deferred compensation under Section 409A and are payable subject to your execution and non-revocation of a release and the period to consider the release spans two separate taxable years, then the distribution of the RSUs that are conditioned upon such execution and non-revocation of the release shall be made in the later taxable year.

24.Defined Terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a)“Cause” means:

(1)any act or omission which constitutes a material breach of your obligations to the Company or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to Disability) within ten (10) business days after written notification thereof to you by the Company;

(2)any act or omission by you that constitutes (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets of, or business opportunities considered by, the Company or (iii) any other act which has caused or may reasonably be expected to cause material injury to the interest or business reputation of the Company; or

(3)your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Company is a member or of any policy of the Company relating to compliance with any of the foregoing.

(b)“Chief Human Resources & Administrative Officer” means the chief human resources & administrative officer of Discover, any successor chief human resources & administrative officer, or any other individual or committee appointed by the chief executive

officer of Discover with the power and authority of the chief human resources & administrative officer.

(c)“Chief Risk Officer” means the chief risk officer of Discover, any successor chief risk officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief risk officer.

(d)“Competitive Activity” means:

(1)becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that you provided to the Company, or (ii) that you had direct or indirect managerial or supervisory responsibility for at the Company, or (iii) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Company, in each such case, at any time during the year preceding the termination of your employment with the Company; or

(2)either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

(e)“Competitor” means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (1) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services, or (2) any other business in which you have been involved in or had significant knowledge of, which has been conducted by the Company at any time during your employment with the Company. For the avoidance of doubt, a competitor of any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Award Certificate.

(f) “Covered Employee” means an employee who, as of the Date of the Award, has been identified as a covered employee by Human Resources.

(g)“Date of the Award” means the date set forth in this Award Certificate.

(h)“Disability” means a “permanent and total disability,” as defined in Section 22(e)(3) of the Internal Revenue Code.

(i)“Employed” and “Employment” refer to employment with the Company and/or Related Employment.    

(j)“Good Reason” means, without your prior written consent, the occurrence of any of the following any at time for purposes of Section 5, and the occurrence of any of the

following upon, or within six (6) months prior to or twenty-four (24) months after the occurrence of a Change in Control of Discover for purposes of Section 6:

(1) any material diminution in your assigned duties, responsibilities and/or authority, including the assignment to you of any duties, responsibilities or authority inconsistent with the duties, responsibilities and authority assigned to you, immediately prior to such assignment;

(2)a material diminution in the authority, duties, or responsibilities of the supervisor to whom you are required to report;

(3)any material reduction in your base compensation; provided, however, that Company-initiated across-the-board reductions in compensation affecting substantially all eligible Company employees shall alone not be considered “Good Reason,” unless the compensation reductions exceed twenty percent (20%) of your base compensation;

(4)a material diminution of the budget over which you have authority;

(5)the Company’s requiring you to be based at a location that (i) is in excess of thirty-five (35) miles from the location of your principal job location or office immediately prior to the Change in Control, or (ii) results in an increase in your normal daily commuting time by more than ninety (90) minutes, except for required travel on Company’s business to an extent substantially consistent with your then present business travel obligations; or

(6)any other action or inaction that constitutes a material breach by the Company of any agreement pursuant to which you provide services to the Company.

For purposes of paragraphs (1) through (6) above, the duties, responsibilities and/or authority assigned to you shall be deemed to be the greatest of those in effect prior to or after the Change in Control. Unless you become Disabled, your right to terminate your Employment for Good Reason shall not be affected by your incapacity due to physical or mental illness. Your continued Employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason. Notwithstanding the foregoing, Good Reason shall not exist unless you give the Company written notice thereof within thirty (30) days after its occurrence and the Company shall not have remedied the action within thirty (30) days after such written notice.

(k)“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(l)“Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement (including any foreign legal requirements).

(m) “Pro Ration Fraction” means a fraction, not to exceed 1.0, the numerator of which is the number of completed months commencing on the later of (i) the first day of the calendar year of the Date of the Award or (ii) the first day of the month in which your employment commences and ending on the effective date of your termination of Employment, and the denominator of which is 12.

(n)“Related Employment” means your employment with an employer other than the Company (such employer, herein referred to as a “Related Employer”), provided: (1) you undertake such employment at the written request or with the written consent of the Chief Human Resources & Administrative Officer; (2) immediately prior to undertaking such employment you were an employee of the Company or were engaged in Related Employment (as defined herein); and (3) such employment is recognized by the Company in its discretion as Related Employment; provided further that the Company may (i) determine at any time in its sole discretion that employment that was recognized by the Company as Related Employment no longer qualifies as Related Employment, and (ii) condition the designation and benefits of Related Employment on such terms and conditions as the Company may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Company, or otherwise modify your and the Company’s respective rights and obligations.

(o)“Scheduled Vesting Date” means the Scheduled Vesting Dates set forth in Award Certificate as the context requires.

(p)“Wrongful Solicitation” occurs upon either of the following events:

(1)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Company employee to leave the Company or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment; or

(2)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Company (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Company or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Company is engaged (other than the Company); provided, however, that this clause shall apply only to clients or customers, or

prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Discover has duly executed and delivered this Award Certificate as of the Date of the Award.

DISCOVER FINANCIAL SERVICES

/s/ Michael Rhodes

Michael Rhodes

CEO and President

EX-10.6

Exhibit 10.6

Discover Financial Services

2023 Omnibus Incentive Plan

2024 Award Certificate for Restricted Stock Units

This Award Certificate describes the terms and conditions under which you are being granted an Award of Restricted Stock Units (“RSUs”) under the Discover Financial Services 2023 Omnibus Incentive Plan (the “Plan”), which constitutes part of your discretionary long-term incentive compensation. This Award Certificate applies only to Awards granted hereunder and other Awards are governed by terms of the applicable Award Certificate.

A copy of the Plan can be found on the E*TRADE website at www.etrade.com, or such other vendor as the Company may choose to administer the Plan. Capitalized terms under this Award Certificate have the meanings ascribed in the Plan unless otherwise stated herein.

The full terms of your Award are set out in this Award Certificate, the Plan and any applicable policy adopted by the Committee or its delegate in respect of the Plan and Awards thereunder that is applicable to this Award. In the event of a conflict between the Plan and this Award Certificate, the terms of the Plan control.

Award Recipient	Michael Shepherd
Employee / Participant ID	%%EMPLOYEE_IDENTIFIER%-%
Issuer	Discover Financial Services
Award Type	Restricted Stock Units (RSUs)
Date of the Award	April 1, 2024
Number of Awarded Units	%%TOTAL_SHARES_GRANTED,'999,999,999'%-% RSUs
Vesting	Except as otherwise set forth in this Award Certificate, your RSUs will vest on the first to occur of (1) the completion of the merger with Capital One Financial Corporation pursuant to the Agreement and Plan of Merger, dated as of February 19, 2024, by and among Discover Financial Services, Capital One Financial Corporation, and Vega Merger Sub, Inc. (the “Merger Agreement”) and (2) the one year anniversary of the Date of the Award.
Settlement	Your awards will be converted and settled in Shares pursuant to Section 8of the Plan and Section 1(b) of this Award Certificate.
Restrictive Covenants, Clawbacks, Risk Reviews, and Investigations	Pursuant to Section 8 of this Award Certificate, your Award may be subject to (i) forfeiture, cancellation and/or repayment triggered in the event of your violation of a restrictive covenant more fully described in this Award Certificate, (ii) clawback (including in the event of restatement of the Company’s financial performance) in accordance with any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act or as otherwise required by law and (iii) forfeiture if you are subject to a risk review or forfeiture, cancellation and/or repayment if you are subject to an investigation.

You will earn RSUs included in your RSU Award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Date (subject to limited exceptions set forth herein), (2) are not found to be subject to the forfeiture, cancellation, or clawback provisions set forth in Section 8 below, and (3) satisfy obligations you owe to the Company as set forth in Section 10 below. If the Company deems appropriate and in its sole discretion, the Company may require you to provide a written certification or other evidence, from time to time, to confirm that none of the circumstances described in Section 8 below exist or have occurred, including upon a termination of Employment and/or during a specified period of time prior to the applicable Scheduled Vesting Date. If you fail to timely provide any required certification or other evidence, the Company may cancel your RSU Award. It is your responsibility to provide the Human Resources Department with your up-to-date contact information.

1.Vesting Schedule; Conversion.

(a)Vesting Schedule. Your RSUs will vest on the first of the Scheduled Vesting Dates set forth in this Award Certificate, provided you remain continuously Employed through such date, unless earlier vesting is required pursuant to Section 4, 5 or 6 of this Award Certificate.

(b)Conversion.

(1)Except as otherwise provided in this Award Certificate, each of your vested RSUs will convert to one Share on the applicable Scheduled Vesting Date.

(2)Subject to the provisions of the Plan and this Award Certificate, as well as any transfer restrictions imposed by the Company or applicable pursuant to securities laws, Shares to which you are entitled following conversion of RSUs under any provision of this Award Certificate shall be delivered to you (or your beneficiary or estate, as applicable) as soon as administratively practicable after the Scheduled Vesting Date, unless earlier delivery is required pursuant to Section 4, 5, or 6 of this Award Certificate.

(c)Accelerated Conversion. The Committee, in its sole discretion, may determine that any RSUs may be converted to Shares prior to the Scheduled Vesting Date subject to compliance with all Legal Requirements, including Section 409A.

(d)Rule of Construction for Timing of Conversion. Whenever this Award Certificate provides for RSUs to convert to Shares on the Scheduled Vesting Date or upon an accelerated or different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries nor your estate shall have any claim against the Company for damages based on a delay in conversion of your RSUs (or delivery of Shares following conversion), and the Company shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the Scheduled Vesting Date or such other specified event or date or, if later, by the 15th day of the third calendar month following such specified event or date.

2.Special Provisions for Certain “Specified Employees”.

Notwithstanding anything to the contrary in this Award Certificate, if Discover reasonably considers you to be one of its “specified employees” as defined in Section 409A at the time of the termination of your Employment, any RSUs that constitute deferred compensation under Section 409A that are payable upon termination of Employment will not convert to Shares or be delivered to you until the date that is six months after the termination of your Employment (or the date of your death, if such event occurs earlier).

3.Dividend Equivalent Payments.

Until your RSUs convert to Shares and subject to your continued Employment through the applicable payment date, if Discover pays a regular or ordinary cash dividend on its common stock, you will be paid a dividend equivalent for your vested and unvested RSUs. No dividend equivalents will be paid to you on any canceled RSUs. Discover, in its discretion, will decide on the form of payment and may pay dividend equivalents in Shares, in cash or in a combination thereof. Discover will pay the dividend equivalents as soon as administratively practicable (and in any event within thirty (30) days) after Discover pays the corresponding dividend on its Stock.

4.Death; Disability.

The following special vesting and payment terms apply to your RSUs:

(a)Death. If your Employment terminates due to your death, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to your beneficiaries or your estate on or as soon as administratively practicable after your date of death, subject to your beneficiaries’ or estate’s timely signing and delivery of an agreement and release with respect to any and all claims in a form substantially similar to that attached as Exhibit A (the “Release”) to your letter agreement with the Company dated March 27, 2024 (the “Letter Agreement”).

(b)Disability. If your Employment terminates due to Disability, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to you on or as soon as administratively practicable after your termination due to Disability, subject to your (or your beneficiaries’) timely signing and delivery of the Release.

5.Involuntary Termination by the Company Without Cause and Termination by You For Good Reason.

If the Company terminates your Employment without Cause, or if you terminate your employment for Good Reason, all RSUs subject to this Award Certificate will vest, convert to Shares and be delivered to you on or as soon as administratively practicable after your termination of employment, subject to your timely signing and delivery of the Release.

6.Change in Control Other Than Pursuant to the Merger Agreement.

(a)Termination in Connection with Change in Control. If the Company terminates your Employment other than for Cause, or if you terminate your Employment for Good Reason, within six months prior to or within twenty-four (24) months after a Change in Control other than pursuant to the Merger Agreement, your RSUs will immediately vest and convert to Shares on the later of the date of a Change in Control or the date of your termination following a Change in Control, as applicable and be delivered as soon as administratively practicable thereafter.

(b)Stock Consideration. In the event of a Change in Control other than pursuant to the Merger Agreement which results from a transaction pursuant to which the shareholders of Discover receive shares of common stock of an acquiring entity that are registered under Section 12 of the Exchange Act, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, there shall be substituted for each Share subject to this Award Certificate the number and class of shares of common stock of the acquiring entity into which each outstanding Share shall be converted pursuant to such Change in Control transaction, and this Award Certificate shall otherwise continue in effect.

(c)Non-stock Consideration. In the event of a Change in Control other than pursuant to the Merger Agreement which results from a transaction pursuant to which the shareholders of Discover receive consideration other than shares of common stock of the acquiring entity that are registered under Section 12 of the Exchange Act, the value of the RSUs hereunder shall, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, be converted into a right to receive the cash or other consideration received by the shareholders of Discover in such transaction, and this Award Certificate shall otherwise continue in effect.

7.Other Termination of Employment.

Your unvested RSUs will be forfeited and canceled if your Employment terminates for any reason other than under the circumstances set forth in Section 4, 5, or 6 of this Award Certificate.

8.Forfeiture/Cancellation/Clawback of RSU Awards Under Certain Circumstances.

(a)Breach of Restrictive Covenants. RSUs are not earned until the applicable Scheduled Vesting Date and will be canceled prior to the applicable Scheduled Vesting Date under any of the circumstances set forth below. Although you will become the beneficial owner of Shares following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your Shares following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs are or may be cancellable under the circumstances set forth below. The Shares underlying such RSUs shall be forfeited and recoverable in the event the Company determines that the RSUs were cancellable under the circumstances set forth below. Notwithstanding any provision of this Award Certificate to the contrary and subject to Section 8(f) below, in the

event that at any time prior to one year after the termination of your Employment or service with the Company, you breach your obligations to the Company under a confidentiality, intellectual property or other restrictive covenant, to the maximum extent permitted by applicable law, you shall be required to:

(1)pay to the Company an amount in cash equal to the value of the Shares that vested and converted on or after, or within one year prior to, your termination of Employment, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to your breach of the restrictive covenants; or

(2)transfer to the Company the number of Shares that vested and converted on or after, or within one year prior to, your termination of Employment, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to your breach of the restrictive covenants.

In the event of multiple incidences of breach of this provision of the Award Certificate , the repayment amount will be additive for each incidence of violation, not to exceed two times the amount calculated under paragraph 8(a)(1) and (2) above.

The Company recommends that before accepting this Award Certificate, you consult with an attorney of your choice regarding the restrictive covenants described herein. You acknowledge that you have been provided at least fourteen (14) calendar days to review the applicable restrictive covenants prior to having to accept the award.

(b)Clawback. The Award and any cash payment or Shares delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy that the Company is required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) or as otherwise required by law. Subject to any clawback policy adopted by the Company to comply with the Dodd-Frank Act (to the extent you are subject to such policy), in the event and to the extent the Committee reasonably determines that the performance considered by the Committee, and on the basis of which the amount of RSUs were granted or converted to Shares, was based on Discover’s material noncompliance with any financial reporting requirement under the securities laws or Company policy which requires Discover to file a restatement of its financial statements within three years of the Date of the Award, you will be required to comply with paragraphs (1) and (2) (as applicable) below to repay to the Company an amount equal to the number of RSUs which were granted or the Shares converted hereunder less the number of RSUs that would have been granted or the number of Shares that would have been converted had your RSUs been granted or converted based on compliance with any such financial reporting requirement under the securities laws or Company policy (such number of RSUs, the

“Clawback RSUs,” to be determined in each case by the Committee in its sole discretion and before satisfaction of tax or other withholding obligations pursuant to Section 9):

(1)     You shall forfeit a number of RSUs hereunder equal to the Clawback RSUs. In the event such forfeited RSUs are less than the Clawback RSUs, then you shall comply with the following paragraph 2.

(2)     You shall be required to:

(A)    pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined using a valuation method established by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements; or

(B)    transfer to the Company the number of Shares that vested and converted hereunder, plus such amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements.

By accepting the RSUs you hereby agree and acknowledge that you are obligated to cooperate with and provide all assistance necessary to the Company to recover or recoup the RSUs or amounts paid under the Plan that are subject to the clawback pursuant to this Award Certificate, applicable securities laws or listing standards or Company policy, including the Discover Financial Services Compensation Recoupment Policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting and documentation necessary to recover or recoup any RSUs or amounts paid pursuant to RSUs.

(c)Risk Review. For select Covered Employees, as defined and identified by the Company, no RSUs will convert to Shares until the Chief Human Resources Officer or receives confirmation from the Chief Risk Officer, or their delegate, that a review has been completed by the Chief Risk Officer, or their delegate, to determine whether you engaged in any willful or reckless violation of the Company’s risk policies. If the Chief Risk Officer, or their delegate, finds any such violation or breach, then the Company or, in the case of Covered Employees subject to Section 16 of the Exchange Act, the Committee, may determine that all or a portion of your RSUs will be forfeited.

(d)Investigations. In the event that the Company has either commenced an investigation of a matter that you oversaw or were involved in or has evidence that may require investigation of a matter that you oversaw or were involved in, in either case concerning a breach of one of the obligations hereunder or a serious violation of Company policy, the Company may freeze your account and effectuate a transfer restriction such that your converted and delivered RSUs and any shares associated therewith may not be sold or transferred until such time as the Company reasonably believes the matter to be resolved. If, following the investigation, the Company determines, in its sole discretion, that you breached

one of the obligations hereunder or committed a serious violation of Company policy, the Company may:

(1)forfeit all or a portion of your RSUs;

(2)require that you pay to the Company an amount in cash equal to the value of the Shares that vested and converted hereunder, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the circumstances described in this Section 8(d); or

(3)cancel Shares in your account or require that you transfer to the Company the number of Shares that vested and converted hereunder, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to the circumstances described in this Section 8(d).

(e)Authorization. You authorize the Company to deduct any amount or amounts owed by you pursuant to this Section 8 from any amounts payable by or on behalf of the Company to you, including, without limitation, any amount payable to you as salary, wages, paid time off, bonus, severance, change in control severance or the conversion of any equity-based award. This right of offset shall not be an exclusive remedy and the Company’s election not to exercise this right of offset with respect to any amount payable to you shall not constitute a waiver of this right of offset with respect to any other amount payable to you or any other remedy. You further acknowledge and authorize the Company to take the actions described in this Section 8, including those described in Section 8(d).

(f)Non-Contravention. Nothing in this Award Certificate (including with respect to confidential information, trade secrets, and other obligations) is intended to be or will be construed to prevent, impede or interfere with your right to respond accurately and fully to any question, inquiry or request for information regarding your employment with the Company when required by legal process by a Federal, State or other legal authority, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any Federal, State, or other regulatory authority in the course of an investigation or proceeding authorized by law and carried out by such agency. You are not required to contact the Company regarding the subject matter of any such communications before you engage in such communications. In addition, nothing in this Award Certificate is intended to restrict your legally protected right to discuss wages, hours or other working conditions with coworkers or in any way limit your rights under the National Labor Relations Act, any whistleblower law, or other applicable law. You acknowledge that that the Company has provided you notice of your immunity rights under the Defend Trade Secrets Act, which states: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of

law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and (B) does not disclose a trade secret, except pursuant to court order.”

9.Tax and Other Withholding Obligations.

Subject to rules and procedures established by Discover, you may be eligible to elect to satisfy the tax or other withholding obligations arising upon conversion of your RSUs or upon any taxable event by paying cash or by having Discover withhold Shares or by tendering Shares, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld or tendered will be valued using the Fair Market Value of Stock on the date the Award becomes taxable, using a valuation methodology established by Discover.

10.Satisfaction of Obligations.

Notwithstanding any other provision of this Award Certificate, the Company may, in its sole discretion, take various actions affecting your RSUs in order to collect amounts sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations. The Company’s determination of the amount that you owe the Company shall be conclusive. The Fair Market Value of Stock for purposes of the following provisions shall be determined using a valuation methodology established by Company. The actions that may be taken by Discover pursuant to this Section 10 include, but are not limited to, the following:

(a)Withholding of Shares. Upon conversion of RSUs, including any accelerated conversion pursuant to Sections 4, 5, or 6 above, or, if later, upon delivery of the Shares, the Company may withhold a number of Shares sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations whether national, federal, state or local tax withholding obligations including any social insurance contributions or employment tax obligation. The Company shall determine the number of Shares to be withheld by dividing the dollar value of your obligation to the Company and any tax or other withholding obligations by the Fair Market Value of Stock on the date the Award becomes taxable. To the extent that the Company retains any Shares or reduces the number of RSUs to cover the withholding obligations, it will do so at the applicable minimum statutory rate(or such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted by the Company). Should the Company withhold in excess of the actual tax withholding obligation, the Company may apply the excess withholding to another compensation tax liability.

(b)Netting of Accelerated RSUs. In order to satisfy any taxes due upon an event which is earlier than delivery, Discover, in its sole discretion, may accelerate the vesting and conversion of all or a portion of your unvested RSUs subject to Section 23 below. The Company shall determine the number of RSUs to be accelerated and converted by dividing the

dollar value of your tax obligations upon such event by the Fair Market Value of Stock on the date of the Award becomes taxable. Accelerated and converted RSUs shall not exceed the value of taxes due upon such event and the resulting Shares will be withheld by the Company.

(c)Withholding of Other Compensation. Discover may withhold the payment of dividend equivalents on your RSUs or any other compensation or payments due from Discover to ensure satisfaction of any obligation that you owe the Company or any tax or other withholding obligations or Discover may permit you to satisfy such tax or other withholding obligation by paying such obligation in immediately available funds.

(d)Mobile Employees. You are liable and responsible for all taxes and social insurance contributions owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. Further, you may be subject to individual income taxation (and possibly social security or other applicable personal or payroll taxes) in each jurisdiction where you have performed services for the Company between the Date of the Award and when the Award vests. Taxes for which you are liable, if applicable, may be withheld and deposited by the Company in each jurisdiction in which you have performed services regardless of your status as a resident or non-resident in one or more of the jurisdictions that have a right to impose taxation. You agree that you will comply with all United States and foreign individual income tax return filing obligations that may be imposed with respect to the Award.

11.Transfer Restrictions and Investment Representation.

(a)Nontransferability of Award. You may not sell, pledge, hypothecate, assign or otherwise transfer your RSUs, other than as provided in Section 12 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution.

(b)Investment Representation. You hereby covenant that (a) any sale of any share acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) you shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

12.Designation of a Beneficiary.

You may make a revocable designation of beneficiary or beneficiaries to receive all or part of the Shares and any dividend equivalents credited to you pursuant to Section 3 hereof to be

paid or delivered under this Award Certificate in the event of your death. Absent a designation on file, distributions pursuant to Section 4 will be made to your estate in accordance with applicable law. To make a beneficiary designation, you must complete and file the online form provided by E*TRADE or such other vendor as the Company may choose to administer the Plan. If you previously filed a designation of beneficiary form for your equity awards with the Human Resources Department, such form will also apply to the RSUs granted pursuant to this RSU Award. You may replace or revoke your beneficiary designation at any time, and the Company will rely on your most recent designation on file for purposes of beneficiary designation.

13.Ownership and Possession.

(a)Generally. Except as specified in Section 3 with respect to dividend equivalents, you will not have any rights as a shareholder with respect to your RSU Awards or the Shares underlying such RSUs prior to the vesting and conversion of your RSUs.

(b)Following Conversion. Subject to the terms and conditions of this Award Certificate, following the vesting and conversion of your RSUs and the issuance of the Shares underlying such RSUs in your name, you will be the beneficial owner of the Shares issued to you, subject to any tax withholding under Section 10, and you will be entitled to all rights of ownership with respect to such Shares, including voting rights and the right to receive cash or stock dividends or other distributions paid on such Shares.

14.Securities Law Matters.

Shares issued upon conversion of your RSUs may be subject to restrictions on transfer by virtue of the Securities Act of 1933, as amended, and the applicable state securities laws.  Discover may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.  Because Shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in such Shares.

15.Compliance with Laws and Regulations.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of the Shares issued upon conversion of your RSUs (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Company or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

16.No Entitlements.

(a)No Right to Continued Employment. This RSU Award is not an employment agreement, and nothing in this Award Certificate or the Plan shall alter your status as an “at-will” employee of the Company or your Employment status at a Related Employer, nor does anything herein constitute a promise of continued employment or re-employment.

(b)No Right to Future Awards. This RSU Award is discretionary and does not confer on you any right or entitlement to receive another award of RSUs, any other equity-based award or any other award at any time in the future or in respect of any future period.

(c)No Effect on Future Employment Compensation. This RSU Award is discretionary and does not confer on you any right or entitlement to receive compensation in any specific amount for any future fiscal year, and does not diminish in any way the Company’s discretion to determine the amount, if any, of your compensation. In addition, this RSU Award is not part of your base salary or wages and will not be taken into account in determining any other Employment-related rights you may have, such as rights to pension or severance pay, end of service payments, bonuses, long-service awards or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Company.

(d)Termination of Employment. In consideration of the grant of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award or diminution in value of the Award or Shares acquired through vesting of the Award resulting from termination of your Employment (for any reason whatsoever and whether or not in breach of local labor laws) andyou irrevocably release the Company and the Related Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Award Certificate, you will be deemed irrevocably to have waived your entitlement to pursue such claim; and in the event of termination of your Employment (whether or not in breach of local labor laws), your right to receive the Award and vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively Employed and will not be extended by any notice period mandated under local law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local law); Discover shall have the exclusive discretion to determine when you are no longer actively Employed for purposes of your Award.

(e)Language. If you have received this Award Certificate or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.

(f)Award Terms Control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Company and the terms set forth in this Award Certificate, the latter shall control.

17.Consents.

Your RSU Award is conditioned upon the Company making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

In accepting this RSU Award, you consent to the collection, use and transfer, in electronic or other form, of your personal data by and among, as applicable, the Company and any other possible recipients for the purpose of implementing, administering and managing your

participation in the Plan, as well as for the purpose of the Company’s compliance with applicable law, including, without limitation, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. You understand that the recipients of your personal data may be located in the U.S. or elsewhere, and the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of your personal data, view the personal data, request additional information about the storage of your personal data, require any necessary amendments to your personal data or refuse or withdraw your consent by contacting your local human resources representative, in any case without cost. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan.

18.Electronic Delivery and Consent to Electronic Participation.

The Company may, in its sole discretion, decide to deliver any documents related to the RSU Award and participation in the Plan or future RSU Awards by electronic means. You hereby consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of RSU Awards and the execution of the RSU agreements through electronic signature. Electronic acceptance of this Award Certificate through the E*TRADE website, or such other vendor as the Company may choose to administer the Plan, shall be required and binding on you.  Where electronic acceptance may not be permitted under applicable law, the Company may also request and require your physical signature.  Your acceptance affirms your agreement to all the terms and conditions set forth in this Award Certificate and acceptance of the Award subject thereto. Not providing this acceptance within the timeframe stipulated may result in the Company forfeiting all or a portion of this Award.

19.Award Modification.

The Committee reserves the right to modify or amend unilaterally the terms and conditions of your RSUs, without first asking your consent, or to waive any terms and conditions that operate in favor of Discover. These amendments may include (but are not limited to) changes that the Committee considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. The Committee may not modify your RSUs in a manner that would materially impair your rights in your RSUs without your consent; provided, however, that the Committee may, without your consent, amend or modify your RSUs in any manner that the Committee considers necessary or advisable to comply with or reflect the application of any Legal Requirement or to ensure that your RSUs are not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment. Notwithstanding any provisions of this Award Certificate to the contrary, to the extent you transfer employment outside of the United States, the Award shall be subject to any special terms and conditions as Discover may need to establish to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan in the country to which you transfer employment (or Discover may establish alternative terms and conditions as may be necessary or advisable to accommodate your

transfer). Discover will notify you of any amendment of your RSUs that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources Officer to be effective.

20.Severability.

In the event the Committee determines that any provision of this Award Certificate would cause you to be in constructive receipt for United States federal or state income tax purposes of any portion of your RSU Award prior to the vesting of such Award, then such provision will be considered null and void and this Award Certificate will be construed and enforced as if the provision had not been included in this Award Certificate as of the date such provision was determined to cause you to be in constructive receipt of any portion of your RSU Award. In addition, in the event that any provision of this Award Certificate shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Award Certificate, and this Award Certificate shall be construed and enforced as if the illegal or invalid provision had not been included.

21.Successors.

This Award Certificate shall be binding upon and inure to the benefit of any successor or successors of Discover and any person or persons who shall, upon your death, acquire any rights hereunder in accordance with this Award Certificate or the Plan.

22.Governing Law.

This Award Certificate and the related legal relations between you and Discover will be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the RSU Award to the substantive law of another jurisdiction to the maximum extent permitted by applicable law. The Company and you agree that the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan or this Award Certificate shall be exclusively in the courts in the State of Illinois, Counties of Cook or Lake, including the federal courts located therein (should federal jurisdiction exist), and the Company and you hereby submit and consent to said jurisdiction and venue to the maximum extent permitted by applicable law.

23.Section 409A.

This Award is intended to be exempt from or comply with Section 409A, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A. Subject to Section 2, to the extent this Award Certificate provides for the Award to become vested and be settled upon your termination of employment, the applicable Shares shall be transferred to you or your beneficiary upon your “separation from service,” within the meaning of Section 409A. To the extent necessary or

advisable to comply with Section 409A, with respect to any provision of this Award Certificate that provides for vested RSUs to convert to Shares on or as soon as administratively practicable after a specified event or date, such conversion and settlement will be made by the later of the end of the calendar year in which the specified event or date occurs or the 15th day of the third calendar month following the specified event or date. If any RSUs constitute deferred compensation under Section 409A and are payable subject to your execution and non-revocation of a release and the period to consider the release spans two separate taxable years, then the distribution of the RSUs that are conditioned upon such execution and non-revocation of the release shall be made in the later taxable year.

24.Defined Terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a)“Cause” means:

(1)any act or omission which constitutes a material breach of your obligations to the Company or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to Disability) within ten (10) business days after written notification thereof to you by the Company;

(2)any act or omission by you that constitutes (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets of, or business opportunities considered by, the Company or (iii) any other act which has caused or may reasonably be expected to cause material injury to the interest or business reputation of the Company; or

(3)your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Company is a member or of any policy of the Company relating to compliance with any of the foregoing.

For purposes of this Award Certificate, (i) poor performance, by itself, shall not form the basis for a termination of your employment for Cause, and (ii) any dispute as to the determination of Cause will be adjudicated by de novo (or similar) review.

(b)“Chief Human Resources Officer” means the chief human resources officer of Discover, any successor chief human resources officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief human resources officer.

(c)“Chief Risk Officer” means the chief risk officer of Discover, any successor chief risk officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief risk officer.

(d)“Covered Employee” means an employee who, as of the Date of the Award, has been identified as a covered employee by Human Resources.

(e)“Date of the Award” means the date set forth in this Award Certificate.

(f)“Disability” means a “permanent and total disability,” as defined in Section 22(e)(3) of the Internal Revenue Code which may be demonstrated by a determination of disability by the Company’s long-term disability insurance carrier or the Social Security Administration.

(g)“Employed” and “Employment” refer to employment with the Company and/or Related Employment.    

(h)“Good Reason” means the occurrence (without your prior written consent) of any of the following:

(1) a material reduction in your annual base salary;

(2)a relocation of your Riverwoods office by more than 35 miles;

(3)a material adverse change in your authorities, duties or responsibilities (including reporting responsibilities);

(4)a material breach by the Company of the Letter Agreement or any other material written agreement with you; or

(5)failure of any successor to the Company to agree in writing to assume the terms of the Letter Agreement.

A termination for Good Reason shall not have occurred unless (a) you give written notice to the Company of your termination of employment within ninety (90) days after you first become aware of the occurrence of the circumstances constituting Good Reason, specifying in detail the circumstances constituting Good Reason, and the Company has failed within thirty (30) days after receipt of such notice to cure the circumstances constituting Good Reason, and (b) your “separation from service” (within the meaning of Section 409A) occurs no later than two (2) years following the initial existence of the circumstances giving rise to Good Reason. Your right to terminate your employment for Good Reason shall not be affected by your incapacity due to physical or mental illness, unless you are terminated for Disability. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason.

(a)“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(b)“Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement (including any foreign legal requirements).

(c)“Related Employment” means your employment with an employer other than the Company (such employer, herein referred to as a “Related Employer”), provided: (1) you undertake such employment at the written request or with the written consent of the Chief Human Resources Officer; (2) immediately prior to undertaking such employment you were an employee of the Company or were engaged in Related Employment (as defined herein); and (3) such employment is recognized by the Company in its discretion as Related Employment; provided further that the Company may (i) determine at any time in its sole discretion that employment that was recognized by the Company as Related Employment no longer qualifies as Related Employment, and (ii) condition the designation and benefits of Related Employment on such terms and conditions as the Company may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Company, or otherwise modify your and the Company’s respective rights and obligations.

(d)“Scheduled Vesting Date” means the Scheduled Vesting Dates set forth in Award Certificate as the context requires.

IN WITNESS WHEREOF, Discover has duly executed and delivered this Award Certificate as of the Date of the Award.

DISCOVER FINANCIAL SERVICES

/s/ Gregory C. Case

Gregory C. Case

Chairman of the Compensation and Leadership Development Committee

EX-31.1

Exhibit 31.1

CERTIFICATION

I, J. Michael Shepherd, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Discover Financial Services (the "registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 1, 2024

/s/ J. MICHAEL SHEPHERD

J. Michael Shepherd

Interim Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John T. Greene, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Discover Financial Services (the "registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 1, 2024

/s/ JOHN T. GREENE

John T. Greene

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Discover Financial Services (the "Company") on Form 10-Q for the period ended March 31, 2024, as filed with the Securities and Exchange Commission (the "Report"), each of J. Michael Shepherd, Interim Chief Executive Officer and President of the Company, and John T. Greene, Executive Vice President and Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 1, 2024

/s/ J. MICHAEL SHEPHERD

J. Michael Shepherd

Interim Chief Executive Officer and President

Date:May 1, 2024

/s/ JOHN T. GREENE

John T. Greene

Executive Vice President, Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	Apr. 26, 2024
Cover [Abstract]
Document type	10-Q
Document quarterly report	true
Document period end date	Mar. 31, 2024
Document transition report	false
Entity file number	001-33378
Entity registrant name	DISCOVER FINANCIAL SERVICES
Entity incorporation, state	DE
Entity tax identification number	36-2517428
Entity address, address line one	2500 Lake Cook Road
Entity address, city or town	Riverwoods
Entity address, state or province	IL
Entity address, postal zip code	60015
Entity phone number, city area code	224
Entity phone number, local phone number	405-0900
Title of 12(b) security	Common Stock, par value $0.01 per share
Trading symbol	DFS
Security exchange name	NYSE
Entity current reporting status	Yes
Entity interactive data current	Yes
Entity filer category	Large Accelerated Filer
Smaller reporting company	false
Emerging growth company	false
Entity shell company	false
Entity common stock, shares outstanding		250,599,037
Entity central index key	0001393612
Current fiscal year end date	--12-31
Document fiscal year focus	2024
Document fiscal period focus	Q1
Amendment flag	false

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 14,004	$ 11,685
Restricted cash	439	43
Investment securities (includes available-for-sale securities of $13,261 and $13,402 reported at fair value with associated amortized cost of $13,439 and $13,451 at March 31, 2024 and December 31, 2023, respectively)	13,522	13,655
Loan receivables
Loan receivables	126,555	128,409
Allowance for credit losses	(9,258)	(9,283)
Net loan receivables	117,297	119,126
Premises and equipment, net	1,107	1,091
Goodwill	255	255
Other assets	6,065	5,667
Total assets	152,689	151,522
Deposits
Interest-bearing deposit accounts	108,930	107,493
Non-interest bearing deposit accounts	1,500	1,438
Total deposits	110,430	108,931
Short-term borrowings	0	750
Long-term borrowings	20,475	20,581
Accrued expenses and other liabilities	7,064	6,432
Total liabilities	137,969	136,694
Commitments, contingencies and guarantees (Notes 9, 12 and 13)
Stockholders' Equity
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 571,594,531 and 570,837,720 shares issued at March 31, 2024 and December 31, 2023, respectively	6	6
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	1,056	1,056
Additional paid-in capital	4,578	4,553
Retained earnings	30,511	30,448
Accumulated other comprehensive loss	(393)	(225)
Treasury stock, at cost; 320,996,125 and 320,734,860 shares at March 31, 2024 and December 31, 2023, respectively	(21,038)	(21,010)
Total stockholders' equity	14,720	14,828
Total liabilities and stockholders' equity	152,689	151,522
Variable Interest Entity, Primary Beneficiary [Member]
Assets
Restricted cash	439	43
Loan receivables
Loan receivables	29,192	30,590
Allowance for credit losses	(1,323)	(1,347)
Other assets	4	3
Deposits
Short- and long-term borrowings	10,933	11,743
Accrued expenses and other liabilities	$ 17	$ 19

XML

Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Available-for-sale investment securities, fair value	[1]	$ 13,261	$ 13,402
Available-for-sale investment securities, amortized cost	[1]	$ 13,439	$ 13,451
Common Stock, Par or Stated Value Per Share		$ 0.01	$ 0.01
Common Stock, Shares Authorized		2,000,000,000	2,000,000,000
Common Stock, Shares, Issued		571,594,531	570,837,720
Preferred stock, par or stated value per Share		$ 0.01	$ 0.01
Preferred Stock, Shares Authorized		200,000,000	200,000,000
Preferred Stock, Shares Issued		10,700	10,700
Preferred Stock, Shares Outstanding		10,700	10,700
Treasury Stock, Common, Shares		320,996,125	320,734,860

[1] Available-for-sale investment securities are reported at fair value.

XML

Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Interest income
Credit card loans	$ 3,938	$ 3,321
Other loans	712	564
Investment securities	124	101
Other interest income	174	91
Total interest income	4,948	4,077
Interest expense
Deposits	1,210	756
Short-term borrowings	6	0
Long-term borrowings	245	189
Total interest expense	1,461	945
Net interest income	3,487	3,132
Provision for credit losses	1,497	1,102
Net interest income after provision for credit losses	1,990	2,030
Other income
Discount and interchange revenue, net	371	330
Protection products revenue	42	43
Loan fee income	200	166
Transaction processing revenue	87	67
Gains (losses) on equity investments	0	(18)
Other income	23	22
Total other income	723	610
Other expense
Employee compensation and benefits	671	625
Marketing and business development	250	241
Information processing and communications	163	139
Professional fees	292	232
Premises and equipment	20	22
Other expense	913	124
Total other expense	2,309	1,383
Income before income taxes	404	1,257
Income tax expense	96	289
Net income	308	968
Net income allocated to common stockholders	$ 274	$ 931
Basic earnings per common share	$ 1.10	$ 3.55
Diluted earnings per common share	$ 1.10	$ 3.55

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Comprehensive Income [Abstract]
Net income	$ 308	$ 968
Other comprehensive (loss) income, net of tax
Unrealized (losses) gains on available-for-sale investment securities, net of tax	(97)	92
Unrealized (losses) gains on cash flow hedges, net of tax	(71)	12
Other comprehensive (loss) income	(168)	104
Comprehensive income	$ 140	$ 1,072

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive (Loss) Income [Member]	Treasury Stock, Common	Series C Preferred Stock [Member]	Series C Preferred Stock [Member] Retained Earnings [Member]	Series D Preferred Stock	Series D Preferred Stock Retained Earnings [Member]
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022			11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022				569,689,000
Stockholders' equity, balance at beginning of period at Dec. 31, 2022	$ 14,344		$ 1,056	$ 6	$ 4,468	$ 28,207		$ (339)	$ (19,054)
Stockholders' equity, balance at beginning of period (Accounting Standards Update 2022-02) at Dec. 31, 2022		$ 52					$ 52
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	968					968
Other comprehensive loss	104							104
Purchases of treasury stock	(1,243)								(1,243)
Common stock issued under employee benefit plans (in shares)				29,000
Common stock issued under employee benefit plans	3			$ 0	3
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				742,000
Common stock issued and stock-based compensation expense	22			$ 0	22
Dividends — common stock	(159)					(159)
Dividends — preferred stock										$ (16)	$ (16)	$ (15)	$ (15)
Preferred stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2023			11,000
Common stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2023				570,460,000
Stockholders' equity, balance at end of period at Mar. 31, 2023	$ 14,060		$ 1,056	$ 6	4,493	29,037		(235)	(20,297)
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2023	10,700		11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2023				570,838,000
Stockholders' equity, balance at beginning of period at Dec. 31, 2023	$ 14,828		$ 1,056	$ 6	4,553	30,448		(225)	(21,010)
Stockholders' equity, balance at beginning of period (Accounting Standards update 2023-02) at Dec. 31, 2023		$ (37)					$ (37)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	308					308
Other comprehensive loss	(168)							(168)
Purchases of treasury stock	(28)								(28)
Common stock issued under employee benefit plans (in shares)				25,000
Common stock issued under employee benefit plans	3			$ 0	3
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				732,000
Common stock issued and stock-based compensation expense	22			$ 0	22
Dividends — common stock	$ (177)					(177)
Dividends — preferred stock										$ (16)	$ (16)	$ (15)	$ (15)
Preferred stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2024	10,700		11,000
Common stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2024				571,595,000
Stockholders' equity, balance at end of period at Mar. 31, 2024	$ 14,720		$ 1,056	$ 6	$ 4,578	$ 30,511		$ (393)	$ (21,038)

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Dividends declared, common stock (dollars per share)	$ 0.70	$ 0.60
Series C Preferred Stock [Member]
Dividends declared, preferred stock (dollars per share)	2,750	2,750
Series D Preferred Stock
Dividends declared, preferred stock (dollars per share)	$ 3,062.5	$ 3,062.5

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows provided by operating activities
Net income	$ 308	$ 968
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	1,497	1,102
Deferred income taxes	(199)	(115)
Depreciation and amortization	96	129
Amortization of deferred revenues	(123)	(105)
Net losses on investments and other assets	16	30
Other, net	29	25
Changes in assets and liabilities:
(Increase) decrease in other assets	(246)	133
Increase (decrease) in accrued expenses and other liabilities	465	(376)
Net cash provided by operating activities	1,843	1,791
Cash flows provided by (used for) investing activities
Maturities of available-for-sale investment securities	522	402
Purchases of available-for-sale investment securities	(475)	(285)
Maturities of held-to-maturity investment securities	4	3
Purchases of held-to-maturity investment securities	(12)	(13)
Net change in principal on loans originated for investment	398	(1,245)
Proceeds from the sale of other investments	1	1
Purchases of other investments	(9)	(16)
Purchases of premises and equipment	(71)	(76)
Net cash provided by (used for) investing activities	358	(1,229)
Cash flows provided by (used for) financing activities
Net change in short-term borrowings	(750)	0
Net change in deposits	1,488	4,088
Maturities and repayment of securitized debt	(4)	(1,180)
Maturities and repayments of other long-term borrowings	(1)	(800)
Proceeds from issuance of common stock	3	3
Purchases of treasury stock	(28)	(1,232)
Dividends paid on common and preferred stock	(194)	(175)
Net cash provided by financing activities	514	704
Net increase in cash, cash equivalents and restricted cash	2,715	1,266
Cash, cash equivalents and restricted cash, at the beginning of the period	11,728	8,897
Cash, cash equivalents and restricted cash, at the end of the period	14,443	10,163
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	14,004	10,130
Restricted cash	$ 439	$ 33

XML

Background and Basis of Presentation

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

Description of Business

Discover Financial Services ("DFS" or the "Company") is a digital banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. Therefore, the Company is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company provides digital banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, personal loans, home loans and deposit products. The Company also operates the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to automated teller machines ("ATMs") domestically and internationally, as well as merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

The Company manages its business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. See Note 16: Segment Disclosures for a detailed description of each segment's operations and the allocation conventions used in business segment reporting.

In November 2023, the Company announced its Board of Directors had authorized management to explore the sale of its private student loan portfolio. The Company stopped accepting new applications for private student loans February 1, 2024. See "Business — Operating Model — Digital Banking — Private Student Loans" in the Company's annual report on Form 10-K for the year ended December 31, 2023.

Pending Merger with Capital One Financial Corporation

On February 19, 2024, Discover and Capital One Financial Corporation ("Capital One") jointly announced that they entered into an agreement and plan of merger (the "Merger Agreement"), under which the companies will combine in an all-stock merger, which valued Discover at $35.3 billion based on the price of Capital One common stock on the last trading day before the public announcement of the merger. Under the terms of the Merger Agreement, holders of Discover common stock will receive 1.0192 shares of Capital One common stock for each share of Discover common stock they own. Capital One shareholders will own approximately 60% of the combined company and Discover shareholders will own approximately 40% of the combined company. The Merger Agreement contains customary representations and warranties, covenants and closing conditions. The Board of Directors of the combined company will have fifteen directors, consisting of twelve Capital One Board members and three Discover Board members to be named at a later date. For more information, see Discover’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on February 22, 2024.

Completion of the proposed merger remains subject to approval by the Federal Reserve Board and the Office of the Comptroller of the Currency and other customary closing conditions, including the approval of both companies’ shareholders.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company's 2023 audited consolidated financial statements filed with the Company's annual report on Form 10-K for

the year ended December 31, 2023. The condensed consolidated financial statements for the three months ended March 31, 2023 have been restated as disclosed in the Company's report on Form 10-Q for the second quarter 2023.

Recently Issued Accounting Pronouncements (Not Yet Adopted)

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU enhances the transparency of income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. Entities are required to disaggregate the rate reconciliation (including percentages and reported amounts) by certain specified categories with additional disaggregation by nature and/or jurisdiction for items over a designated threshold. Income taxes paid (net of refunds received) must be disaggregated by federal, state and foreign taxes and separately by individual jurisdiction in which that amount for a particular jurisdiction is equal to or greater than five percent of total income taxes paid (net of refunds received). This annual disclosure guidance is effective for the Company for the year ending December 31, 2025 and can be adopted on either a prospective or retrospective basis. The Company expects to adopt this standard on a prospective basis. While the ASU implements further income tax disclosure requirements, it does not change how an entity determines its income tax obligation, and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires disclosure of additional segment level information, particularly regarding significant segment expenses. Entities must disclose significant expense categories and amounts that are regularly provided to the chief operating decision maker ("CODM") and included in the reported segment measure of profit or loss. Other segment items must also be reported, which are those items that make up the difference between segment revenues less significant segment expenses and reported segment profit or loss. Additionally, entities must disclose the identity of the CODM and how they use the reported measures of segment profit or loss for decision making and assessing segment performance. The guidance is effective for the Company for the year ending December 31, 2024, and interim periods thereafter and requires retrospective application. While the ASU implements further segment disclosure requirements, it does not change how an entity identifies its operating or reportable segments, and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

Recently Adopted Accounting Pronouncement

In March 2023, the FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The ASU expanded the use of the proportional amortization method of accounting for tax credit investments. Under the proportional amortization method, the cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received, the net effect of which is recognized as a component of income tax expense on the consolidated statements of income. Previously, the method was limited to Low Income Housing Tax Credit investments, however the Company historically did not elect to use this method. Under the amended guidance, use of proportional amortization is available to any qualifying tax credit investments, which now also includes New Markets Tax Credit investments among others. The ASU was effective for the Company on January 1, 2024. All of the Company's tax credit investments as of January 1, 2024 qualified and are now being accounted for under the proportional amortization method. Upon adoption, the Company recorded a $37 million charge to the opening balance of retained earnings to reflect the cumulative effect of adopting the proportional amortization method on a modified-retrospective basis for the Company's existing tax credit investments. The offset to retained earnings was a decrease of $23 million to the book value of the investments and a $14 million decrease to the related deferred tax asset position. Recognition of proportional amortization as a component of income tax expense rather than pre-tax income will result in an increase in the Company's effective tax rate.

XML

Investments

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

The Company's investment securities consist of the following (dollars in millions):

	March 31, 2024		December 31, 2023
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,822	$	12,937
Residential mortgage-backed securities - Agency(3)	700		718
Total investment securities	$	13,522	$	13,655

(1)Includes $377 million and $320 million of U.S. Treasury securities pledged as swap collateral as of March 31, 2024 and December 31, 2023, respectively.

(2)Consists of securities issued by the Federal Home Loan Bank ("FHLB").

(3)Primarily consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2024
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,981	$	10	$	(169)	$	12,822
Residential mortgage-backed securities - Agency	458		—		(19)		439
Total available-for-sale investment securities	$	13,439	$	10	$	(188)	$	13,261
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	261	$	—	$	(23)	$	238
Total held-to-maturity investment securities	$	261	$	—	$	(23)	$	238
At December 31, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,971	$	52	$	(86)	$	12,937
Residential mortgage-backed securities - Agency	480		—		(15)		465
Total available-for-sale investment securities	$	13,451	$	52	$	(101)	$	13,402
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	253	$	—	$	(19)	$	234
Total held-to-maturity investment securities	$	253	$	—	$	(19)	$	234

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

The Company primarily invests in U.S. Treasury obligations and securities issued by a U.S. government agency ("Agency") or government-sponsored enterprise ("U.S. GSE"), which have long histories with no credit losses and are explicitly or implicitly guaranteed by the U.S. federal government. Therefore, management has concluded that there is no expectation of non-payment on its investment securities and does not record an allowance for credit losses on these investments. In addition, the Company does not have the intent to sell any available-for-sale securities in an unrealized loss position and does not believe it is more likely than not that it will be required to sell any such security before recovery of its amortized cost basis.

The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2024
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	186	$	7,701	$	(97)	$	3,532	$	(72)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	439	$	(19)
At December 31, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	105	$	3,513	$	(13)	$	3,978	$	(73)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	465	$	(15)

There were no proceeds from sales or recognized gains or losses on available-for-sale securities during the three months ended March 31, 2024 and 2023. See Note 8: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three months ended March 31, 2024 and 2023.

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At March 31, 2024	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	2,005	$	10,552	$	424	$	—	$	12,981
Residential mortgage-backed securities - Agency(1)	—		65		24		369		458
Total available-for-sale investment securities	$	2,005	$	10,617	$	448	$	369	$	13,439
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	261	$	261
Total held-to-maturity investment securities	$	—	$	—	$	—	$	261	$	261
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,971	$	10,428	$	423	$	—	$	12,822
Residential mortgage-backed securities - Agency(1)	—		63		23		353		439
Total available-for-sale investment securities	$	1,971	$	10,491	$	446	$	353	$	13,261
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	238	$	238
Total held-to-maturity investment securities	$	—	$	—	$	—	$	238	$	238

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

Other Investments

As a part of the Company’s community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing and stimulate economic development in low- to moderate-income communities. These investments are recorded within other assets on the Company’s condensed consolidated statements of financial condition. The Company has elected to account for its qualifying investments in Low Income Housing Tax Credit and New Markets Tax Credit programs under the proportional amortization method beginning January 1, 2024 on a modified retrospective basis. As of March 31, 2024, all of the Company's tax credit investments qualified for this election. Prior to 2024, these investments were accounted for using the equity method. Under the proportional amortization method, the cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received, the net effect of which is recognized as a component of income tax expense on the condensed consolidated statements of income and within cash flows provided by operating activities on the condensed consolidated statements of cash flows. The Company earns a return primarily through tax credits allocated to the

affordable housing projects and the community revitalization projects. The Company does not consolidate these investments as the Company does not have a controlling financial interest in the investee entities. The related commitments for future investments are recorded in accrued expenses and other liabilities within the consolidated statements of financial condition for delayed equity contributions that are unconditional and legally binding. Equity contributions that are contingent upon a future event are recognized when that contingent event becomes probable. As of March 31, 2024 and December 31, 2023, the Company had outstanding investments in these entities of $479 million and $514 million, respectively, and related liabilities for delayed equity contributions of $183 million and $187 million, respectively. During the three months ended March 31, 2024, the Company recognized $16 million of amortization and $18 million of income tax credits and other income tax benefits. Non-income tax benefits comprised only immaterial cash distributions from these investments during the three months ended March 31, 2024.

The Company holds non-controlling equity positions in several payment services entities and third-party venture capital funds which invest in such entities. Most of the direct investments in such entities are not subject to equity method accounting because the Company does not have significant influence over the investee. The Company's investments in third-party venture capital funds represent limited partnership interests and are accounted for under the equity method. The common or preferred equity securities that the Company holds typically do not have readily determinable fair values. As a result, these investments are carried at cost minus impairment, if any. As of March 31, 2024 and December 31, 2023, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $35 million.

XML

Loan Receivables

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Financing Receivables [Text Block]

Loan Receivables

The Company has two loan portfolio segments: credit card loans and other loans.

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Credit card loans(1)(2)	$	99,475	$	102,259
Other loans(3)
Private student loans(4)	10,480		10,352
Personal loans	10,107		9,852
Other loans	6,493		5,946
Total other loans	27,080		26,150
Total loan receivables	126,555		128,409
Allowance for credit losses	(9,258)		(9,283)
Net loan receivables	$	117,297	$	119,126

(1)Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

(4)At March 31, 2024 and December 31, 2023, the private student loan portfolio continued to be classified as held for investment and there were $6.3 billion of private student loans in repayment.

Credit Quality Indicators

As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer's account with the Company and information from credit bureaus, such as FICO or other credit scores, relating to the customer's broader credit performance. The Company actively monitors key credit quality indicators, including FICO scores and delinquency status, for credit card, private student and personal loans. These indicators are important to understand the overall credit performance of the Company's customers and their ability to repay.

FICO scores are generally obtained at the origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that accounts with FICO scores below 660 have larger delinquencies and credit losses than those with higher credit scores.

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	March 31, 2024								December 31, 2023
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	79,207	80	%	$	20,268	20	%	$	82,238	80	%	$	20,021	20	%
Private student loans by origination year(1)(2)
2024	$	129	98	%	$	3	2	%
2023	1,399		94	%	91		6	%	$	1,010	94	%	$	69	6	%
2022	1,445		94	%	88		6	%	1,495		95	%	85		5	%
2021	1,411		94	%	92		6	%	1,468		94	%	91		6	%
2020	1,127		94	%	76		6	%	1,180		94	%	75		6	%
Prior	4,277		93	%	342		7	%	4,537		93	%	342		7	%
Total private student loans	$	9,788	93	%	$	692	7	%	$	9,690	94	%	$	662	6	%
Personal loans by origination year
2024	$	1,425	100	%	$	5	—	%
2023	4,614		97	%	146		3	%	$	5,149	98	%	$	100	2	%
2022	2,244		92	%	191		8	%	2,604		93	%	187		7	%
2021	869		91	%	85		9	%	1,049		92	%	91		8	%
2020	285		92	%	25		8	%	355		92	%	29		8	%
Prior	185		85	%	33		15	%	247		86	%	41		14	%
Total personal loans	$	9,622	95	%	$	485	5	%	$	9,404	95	%	$	448	5	%

(1)FICO score represents the higher credit score of the cosigner or borrower.

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	March 31, 2024						December 31, 2023
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,869	$	1,941	$	3,810	$	2,038	$	1,917	$	3,955
Private student loans by origination year(1)
2024	$	—	$	—	$	—
2023	2		1		3		$	—	$	—	$	—
2022	10		6		16		7		2		9
2021	18		10		28		18		6		24
2020	20		10		30		20		7		27
Prior	143		51		194		156		55		211
Total private student loans	$	193	$	78	$	271	$	201	$	70	$	271
Personal loans by origination year
2024	$	—	$	—	$	—
2023	38		12		50		$	26	$	8	$	34
2022	41		15		56		44		16		60
2021	17		6		23		20		8		28
2020	5		2		7		7		2		9
Prior	7		4		11		7		5		12
Total personal loans	$	108	$	39	$	147	$	104	$	39	$	143

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended March 31, 2024
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2023	$	7,619	$	858	$	722	$	84	$	9,283
Additions
Provision for credit losses(1)	1,333		53		134		11		1,531
Deductions
Charge-offs	(1,649)		(47)		(113)		(3)		(1,812)
Recoveries	238		5		13		—		256
Net charge-offs	(1,411)		(42)		(100)		(3)		(1,556)
Balance at March 31, 2024	$	7,541	$	869	$	756	$	92	$	9,258
	For the Three Months Ended March 31, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	1,002		60		68		5		1,135
Deductions
Charge-offs	(879)		(33)		(54)		—		(966)
Recoveries	195		6		15		—		216
Net charge-offs	(684)		(27)		(39)		—		(750)
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691

(1)Excludes a $34 million and $33 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2024 and 2023, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

The allowance for credit losses was approximately $9.3 billion at March 31, 2024, which reflects a $25 million release from December 31, 2023. The release in the allowance for credit losses for the three months ended March 31, 2024 was driven by lower receivables and a modestly more favorable economic outlook, offset in part by higher expected delinquencies and losses.

The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at March 31, 2024, the Company used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2024 at 4.03% and, within the Company's reasonable and supportable period, peaking at 4.17% in the third quarter of 2025 and (ii) 2.48% growth rate in real gross domestic product in 2024.

In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, including those relating to consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first three quarters of 2023 in an effort to slow economic growth and reduce inflation. Real GDP growth and labor market conditions have exceeded most economists’ expectations, despite an inflation level that has moderated but remains above the target rate. Federal Reserve officials have suggested that the policy rate is likely at its peak for the current tightening cycle, however, the timing and magnitude of rate decreases will be dependent on trends in economic data, particularly inflation. Restrictive monetary policy typically precedes weaker consumer credit conditions caused by rising unemployment as economic growth slows. While credit performance in the Company's lending portfolios has evolved in line with its expectations, the Company assessed the prospects for various macroeconomic outcomes in setting its allowance for credit losses.

The forecast period the Company deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, the Company determined that a reversion period of 12 months was appropriate for the same reason.

The Company applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

The net charge-offs for credit card loans, private student loans and personal loans increased for the three months ended March 31, 2024, when compared to the same periods in 2023, primarily driven by portfolio seasoning.

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	279	$	128
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	69	$	41

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Credit card loans	$	1,649	$	879
Private student loans by origination year
2024	$	—
2023	—		$	—
2022	2		—
2021	5		2
2020	6		5
Prior	34		26
Total private student loans	$	47	$	33
Personal loans by origination year
2024	$	—
2023	28		$	—
2022	48		16
2021	22		18
2020	8		9
Prior	7		11
Total personal loans	$	113	$	54

Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At March 31, 2024
Credit card loans	$	1,869	$	1,941	$	3,810	$	1,900	$	203
Other loans
Private student loans	193		78		271		77		8
Personal loans	108		39		147		37		11
Other loans	33		21		54		3		56
Total other loans	334		138		472		117		75
Total loan receivables	$	2,203	$	2,079	$	4,282	$	2,017	$	278
At December 31, 2023
Credit card loans	$	2,038	$	1,917	$	3,955	$	1,881	$	197
Other loans
Private student loans	201		70		271		69		8
Personal loans	104		39		143		37		11
Other loans	39		19		58		3		53
Total other loans	344		128		472		109		72
Total loan receivables	$	2,382	$	2,045	$	4,427	$	1,990	$	269

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company has internal loan modification programs that provide relief to credit card, private student and personal loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs, which vary by product. External loan modification programs, through third party consumer credit counseling agencies, are also available for credit card and personal loans. Those programs feature interest rate reductions, payment delays, term extensions, or a combination thereof.

For credit card customers, the Company offers both temporary and permanent hardship programs. The temporary hardship programs consist of an interest rate reduction lasting for a period no longer than 12 months. Charging privileges on these accounts are generally suspended while in the program. However, if the customer meets certain criteria, charging privileges may be reinstated following completion of the program.

The permanent modification program involves closing the account, changing the structure of the loan to a fixed payment loan with a maturity no longer than 72 months and reducing the interest rate on the loan. The permanent modification program does not typically provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes permanent loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program. These loans typically receive a reduced interest rate, typically continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees.

To assist private student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company has offered a payment delay (in the form of hardship forbearance or temporary payment reduction), or a payment delay (in the form of a temporary payment reduction) combined with a temporary interest rate reduction. These programs are offered up to six consecutive months at one time. Hardship forbearance is limited to a lifetime usage cap of 12 months. Beginning in the fourth quarter of 2023, the lifetime usage cap of certain other programs was increased from 12 to 36 months.

For personal loan customers, the Company offers various payment programs, including temporary and permanent programs, in certain situations. The temporary programs normally consist of reducing the minimum payment for no longer than 12 months and, in certain circumstances, the interest rate on the loan is reduced. The permanent programs involve extending the loan term and, in certain circumstances, reducing the interest rate on the loan. The total term of the loan, including modification, may not exceed nine years. The Company also allows permanent loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency.

In addition to the programs described above, the Company will in certain cases accept partial payment in full satisfaction of the outstanding receivable. This is a form of principal forgiveness also known as a settlement. The difference between the loan balance and the amount received at settlement is recorded as a charge-off.

The Company monitors borrower performance after using payment programs or forbearance. The Company believes the programs are useful in assisting customers experiencing financial difficulties and allowing them to make timely payments. In addition to helping customers with their credit needs, these programs are designed to maximize collections and ultimately the Company’s profitability. The Company plans to continue to use payment programs to provide relief to customers experiencing financial difficulties.

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended March 31,
	2024			2023
Credit card loans(1)(2)
Interest rate reduction	$	920		$	632
Total credit card loans(3)	$	920		$	632
% of total class of financing receivables	0.92		%	0.70		%
Private student loans(1)
Payment delay(4)	$	1		$	3
Interest rate reduction and payment delay(4)	101			29
Total private student loans(3)	$	102		$	32
% of total class of financing receivables	0.97		%	0.04		%
Personal loans(1)
Payment delay(4)	$	4		$	2
Term extension(5)	10			8
Interest rate reduction and payment delay(4)	26			14
Interest rate reduction and term extension(5)	14			6
Total personal loans(3)	$	54		$	30
% of total class of financing receivables	0.53		%	0.36		%

(1)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at March 31, 2024 and 2023.

(2)    Accounts that entered a credit card loan modification program include $185 million and $118 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2024 and 2023, respectively.

(3)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(4)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(5)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

The only non-cancellable commitments the Company has to lend additional funds to borrowers experiencing financial difficulty relate to certain private student loans. As of March 31, 2024, the amount of such commitments associated with loans modified during the periods presented was immaterial.

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Credit card loans
Weighted-average interest rate reduction	14.42		%	13.38		%
Principal forgiven	$	56		NM
Interest and fees forgiven(1)	$	56		$	12
Private student loans
Weighted-average interest rate reduction	8.84		%	8.02		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Personal loans
Weighted-average interest rate reduction	13.20		%	11.55		%
Weighted-average term extension (in months)	40			38
Payment delay duration (in months)(2)	6 to 12			6 to 12

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the condensed consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and limits assistance to a life of loan maximum of 36 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Loan receivables that have been modified are subject to the same requirements for the accrual of expected credit loss over their expected remaining lives as for unmodified loans. The allowance for credit losses incorporates modeling of historical loss data and thereby captures the higher risk associated with modified loans to borrowers experiencing financial difficulty based on their account attributes.

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified to borrowers experiencing financial difficulty during the 12 months preceding each of the periods presented (dollars in millions)(1):

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At March 31, 2024
Credit card loans	$	2,118	$	257	$	217
Private student loans	207		22		8
Personal loans	126		23		4
Total	$	2,451	$	302	$	229
At December 31, 2023
Credit card loans	$	1,882	$	252	$	196
Private student loans	147		18		8
Personal loans	109		20		4
Total	$	2,138	$	290	$	208

(1)    This table includes any loan that entered a modification program during the preceding 12 months without regard to whether it remained in a modification program as of the reporting date.

The following table presents the defaulted amount and period-end amortized cost basis, by modification category, of loans that defaulted during the period and were modified to borrowers experiencing financial difficulty during the 12 months preceding default (dollars in millions):

	For the Three Months Ended March 31, 2024
	Defaulted Amount(1)		Period-end Amortized Cost Basis
Credit card loans
Interest rate reduction	$	205	$	161
Total credit card loans	$	205	$	161
Private student loans
Payment delay	$	2	$	2
Interest rate reduction and payment delay	17		16
Total private student loans	$	19	$	18
Personal loans
Payment delay	$	1	$	1
Term extension	2		1
Interest rate reduction and payment delay	7		3
Interest rate reduction and term extension	4		3
Total personal loans	$	14	$	8

(1)For purposes of this disclosure, a loan is considered to be defaulted when it is 60 days or more delinquent at month end and has advanced two stages of delinquency subsequent to modification. Loans that entered a modification program in any stage of delinquency but did not experience a further payment default are included in the payment status table above but are not counted as defaulted for purposes of this disclosure.

The defaulted amount and period-end amortized cost basis of loans modified on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was immaterial for the three months ended March 31, 2023, for all classes of loan receivables.

XML

Credit Card and Private Student Loan Securitization Activities

3 Months Ended

Mar. 31, 2024

Variable Interest Entities Disclosure [Abstract]

Credit Card and Private Student Loan Securitization Activities

Credit Card and Private Student Loan Securitization Activities

The Company's securitizations are accounted for as secured borrowings and the related trusts are treated as consolidated subsidiaries of the Company. For a description of the Company's principles of consolidation with respect to VIEs, see Note 1: Background and Basis of Presentation to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2023.

Credit Card Securitization Activities

The Company accesses the term asset securitization market through Discover Card Master Trust I ("DCMT") and Discover Card Execution Note Trust ("DCENT"). Credit card loan receivables are transferred into DCMT and beneficial interests in DCMT are transferred into DCENT. DCENT issues debt securities to investors that are reported primarily in long-term borrowings.

The DCENT debt structure consists of four classes of securities (DiscoverSeries Class A, B, C and D notes), with the most senior class generally receiving a triple-A rating. To issue senior, higher-rated classes of notes, it is necessary to obtain the appropriate amount of credit enhancement, generally through the issuance of junior, lower-rated or more highly subordinated classes of notes. Wholly-owned subsidiaries of Discover Bank hold the subordinated classes of notes. The Company is exposed to credit risk associated with trust receivables as of the balance sheet date through the retention of these subordinated interests. The estimate of expected credit losses on trust receivables is included in the allowance for credit losses estimate.

The Company's retained interests in the trust's assets, consisting of investments in DCENT notes held by subsidiaries of Discover Bank, constitute intercompany positions that are eliminated in the preparation of the Company's condensed consolidated statements of financial condition.

Upon transfer of credit card loan receivables to the trust, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the trust's creditors. Further, the transferred credit card loan receivables are owned by the trust and are not available to the Company's third-party creditors. The trusts have ownership of cash balances, the amounts of which are reported in restricted cash within the Company's condensed consolidated statements of financial condition. Except for the seller's interest in trust receivables, the Company's interests in trust assets are generally subordinate to the interests of third-party investors in trust debt and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to those investors. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company's other assets or the Company's general credit for a shortage in cash flows.

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Restricted cash	$	432	$	36
Investors' interests held by third-party investors	10,975		11,725
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,917		3,117
Seller's interest	15,155		15,598
Loan receivables(1)	29,047		30,440
Allowance for credit losses allocated to securitized loan receivables(1)	(1,323)		(1,347)
Net loan receivables	27,724		29,093
Other assets	3		2
Carrying value of assets of consolidated variable interest entities	$	28,159	$	29,131

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors in the securities, there are certain features or triggering events that will cause an early amortization of the debt securities, including triggers related to the impact of the performance of the trust receivables on the availability and adequacy of cash flows to meet contractual requirements. As of March 31, 2024, no economic or other early amortization events have occurred.

The Company continues to own and service the accounts that generate the loan receivables held by the trusts. Discover Bank receives servicing fees from the trusts based on a percentage of the monthly investor principal balance outstanding. Although the fee income to Discover Bank offsets the fee expense to the trusts and thus is eliminated in consolidation, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and the loss of future servicing income, net of related expenses.

Private Student Loan Securitization Activities

The Company's private student loan trust receivables reported in loan receivables and the related debt issued by the trust reported in long-term borrowings were immaterial as of March 31, 2024 and December 31, 2023. The amounts are included, together with amounts related to the Company's credit card securitizations, in the supplemental information about assets and liabilities of consolidated variable interest entities, which is presented with the Company's condensed consolidated statements of financial condition.

XML

Deposits

3 Months Ended

Mar. 31, 2024

Deposits [Abstract]

Deposits

Deposits

The Company obtains deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, the Company obtains deposits through third-party securities brokerage firms that offer the Company's deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. Brokered deposit products include certificates of deposit and sweep accounts.

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At March 31, 2024
2024	$	21,263
2025	12,190
2026	4,211
2027	4,408
2028	2,161
Thereafter	1,009
Total	$	45,242

XML

Long-Term Borrowings

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Long-Term Borrowings

Long-Term Borrowings

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	March 31, 2024					December 31, 2023
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,947	$	10,003
Floating-rate asset-backed securities(2)	2024	6.04%	6.04%	925		925
Total Discover Card Master Trust I and Discover Card Execution Note Trust				10,872		10,928
Floating-rate asset-backed security(3)(4)	2031	9.50%	9.50%	61		65
Total private student loan securitization trust				61		65
Total long-term borrowings - owed to securitization investors				10,933		10,993
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,337		3,336
Fixed-rate retail notes	2025-2031	3.25% - 4.40%	3.82%	139		140
Fixed to floating-rate senior notes(5)	2034	7.96%	7.96%	992		993
Discover Bank
Fixed-rate senior bank notes(1)	2024-2030	2.45% - 4.65%	3.53%	3,535		3,571
Fixed-rate subordinated bank notes	2028	5.97%	5.97%	491		500
Fixed-rate Federal Home Loan Bank advances	2030	4.77% - 4.82%	4.82%	523		523
Floating-rate Federal Home Loan Bank advances(6)	2024	5.49% - 5.59%	5.59%	525		525
Total long-term borrowings				$	20,475	$	20,581

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month Term SOFR + 0.11448% Tenor Spread Adjustment + 60 basis points as of March 31, 2024.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2024.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed to floating-rate senior notes include a rate reset on November 2, 2033, to a floating rate based on compounded SOFR + 3.370%.

(6)The floating-rate FHLB advances include interest rate terms based on SOFR plus a spread ranging from 16 to 26 basis points as of March 31, 2024.

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	March 31, 2024
2024	$	4,250
2025	6,121
2026	4,868
2027	1,001
2028	1,412
Thereafter	2,823
Total	$	20,475

As a member of the FHLB of Chicago, the Company has access to both short- and long-term advance structures with maturities ranging from overnight to 30 years. As of March 31, 2024, the Company had total committed borrowing capacity of $4.1 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised of $1.0 billion in long-term advances. As of December 31, 2023, the Company had total committed borrowing capacity of $3.6 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised of $1.0 billion in long-term advances. These advances are presented as short- or long-term borrowings on the condensed consolidated statements of financial condition based on the contractual maturity at origination.

Additionally, the Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of March 31, 2024, the total commitment of secured credit facilities through private providers was $3.5 billion, none of which was drawn. As of December 31, 2023, the total commitment of secured credit facilities through private providers was $3.5 billion, $750 million of which was outstanding as a short-term advance. This advance is presented as short-term borrowings on the condensed consolidated statements of financial condition. Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers. The secured credit facilities have various expirations in 2025. Borrowings outstanding under each facility bear interest at a margin above the Term Secured Overnight Financing Rate ("SOFR") or the asset-backed commercial paper costs of each provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction.

XML

Preferred Stock (Notes)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Preferred Stock

Preferred Stock

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at March 31, 2024 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at March 31, 2024		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							March 31, 2024	December 31, 2023	March 31, 2024		December 31, 2023
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month Term SOFR plus a spread of 3.338% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

XML

Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Changes in each component of accumulated other comprehensive (loss) income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		(Losses) Gains on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended March 31, 2024
Balance at December 31, 2023	$	(37)	$	(8)	$	(180)	$	(225)
Net change	(97)		(71)		—		(168)
Balance at March 31, 2024	$	(134)	$	(79)	$	(180)	$	(393)
For the Three Months Ended March 31, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	92		12		—		104
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)

The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended March 31, 2024
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(129)	$	32	$	(97)
Net change	$	(129)	$	32	$	(97)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(131)	$	32	$	(99)
Amounts reclassified from AOCI	37		(9)		28
Net change	$	(94)	$	23	$	(71)
For the Three Months Ended March 31, 2023
Available-for-Sale Investment Securities
Net unrealized holding gains arising during the period	$	122	$	(30)	$	92
Net change	$	122	$	(30)	$	92
Cash Flow Hedges
Net unrealized gains arising during the period	$	10	$	(2)	$	8
Amounts reclassified from AOCI	5		(1)		4
Net change	$	15	$	(3)	$	12

XML

Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Income before income taxes	$	404		$	1,257
Income tax expense	$	96		$	289
Effective income tax rate	23.7		%	23.0		%

The effective tax rate increased for the three months ended March 31, 2024, as compared to the same period in 2023, due to the adoption of the proportional amortization method for qualifying tax credit investments effective January 1, 2024, offset by the decrease in pretax income.

The Company is subject to examination by the Internal Revenue Service and tax authorities in various state, local and foreign tax jurisdictions. The Company's federal income tax filings are open to examinations for the tax years ended December 31, 2020 and forward. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. At this time, the potential change in unrecognized tax benefits is expected to be immaterial over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations.

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended March 31,
	2024		2023
Numerator
Net income	$	308	$	968
Preferred stock dividends	(31)		(31)
Net income available to common stockholders	277		937
Income allocated to participating securities	(3)		(6)
Net income allocated to common stockholders	$	274	$	931
Denominator
Weighted-average shares of common stock outstanding	250		262
Weighted-average shares of common stock outstanding and common stock equivalents	250		262
Basic earnings per common share	$	1.10	$	3.55
Diluted earnings per common share	$	1.10	$	3.55

Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three months ended March 31, 2024 and 2023.

XML

Capital Adequacy

3 Months Ended

Mar. 31, 2024

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Capital Adequacy

Capital Adequacy

DFS is subject to the capital adequacy guidelines of the Federal Reserve. Discover Bank, the Company's banking subsidiary, is subject to various regulatory capital requirements as administered by the FDIC. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit the Company's business activities and have a direct material effect on the financial condition and operating results of DFS and Discover Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, DFS and Discover Bank must meet specific risk-based capital requirements and leverage ratios that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidelines. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

DFS and Discover Bank are subject to regulatory and capital rules issued by the Federal Reserve and FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). Under the Basel III rules, DFS and Discover Bank are classified as "standardized approach" entities. Standardized approach entities are defined as U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposure less than $10 billion.

In accordance with the final rule on the impact of current expected credit losses ("CECL") on regulatory capital, the Company has elected to phase in the impact over three years beginning in 2022. Accordingly, the Company's Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The Company's CET1 capital ratios will continue to be favorably impacted by this election over the phase-in period, which ends December 31, 2024.

As of March 31, 2024 and December 31, 2023, DFS and Discover Bank met all Basel III minimum capital ratio requirements to which they were subject. DFS and Discover Bank also met the requirements to be considered "well-capitalized" under Regulation Y and prompt corrective action rules, respectively. There have been no conditions or events that management believes have changed DFS' or Discover Bank's category. To be categorized as "well-capitalized", DFS and Discover Bank must maintain minimum capital ratios outlined in the table below.

The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
March 31, 2024
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,513	13.3	%	$	10,499	≥8.0%	$	13,124	≥10.0%
Discover Bank	$	16,598	12.8	%	$	10,349	≥8.0%	$	12,936	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,394	11.7	%	$	7,874	≥6.0%	$	7,874	≥6.0%
Discover Bank	$	13,752	10.6	%	$	7,762	≥6.0%	$	10,349	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,394	10.1	%	$	6,086	≥4.0%	N/A		N/A
Discover Bank	$	13,752	9.2	%	$	6,004	≥4.0%	$	7,505	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,338	10.9	%	$	5,906	≥4.5%	N/A		N/A
Discover Bank	$	13,752	10.6	%	$	5,821	≥4.5%	$	8,409	≥6.5%
December 31, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,986	13.7	%	$	10,471	≥8.0%	$	13,088	≥10.0%
Discover Bank	$	16,856	13.0	%	$	10,352	≥8.0%	$	12,939	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,872	12.1	%	$	7,853	≥6.0%	$	7,853	≥6.0%
Discover Bank	$	13,910	10.8	%	$	7,764	≥6.0%	$	10,352	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,872	10.7	%	$	5,915	≥4.0%	N/A		N/A
Discover Bank	$	13,910	9.5	%	$	5,833	≥4.0%	$	7,292	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,816	11.3	%	$	5,890	≥4.5%	N/A		N/A
Discover Bank	$	13,910	10.8	%	$	5,823	≥4.5%	$	8,411	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

XML

Commitments, Contingencies and Guarantees

3 Months Ended

Mar. 31, 2024

Commitments Contingencies and Guarantees [Abstract]

Commitments, Contingencies and Guarantees

Commitments, Contingencies and Guarantees

In the normal course of business, the Company enters into a number of off-balance sheet commitments, transactions and obligations under guarantee arrangements that expose the Company to varying degrees of risk. The Company's commitments, contingencies and guarantee relationships are described below.

Commitments

Unused Credit Arrangements

At March 31, 2024, the Company had unused credit arrangements for loans of approximately $233.0 billion. Such arrangements arise primarily from agreements with customers for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions in the related agreements. These arrangements, substantially all of which the Company can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness, loan qualification and the cost of capital. As the Company’s credit card loans are unconditionally cancellable, no liability for expected credit losses is required for unused lines of credit. For all other loans, the Company records a liability for expected credit losses for unfunded commitments, which is presented as part of accrued expenses and other liabilities in the condensed consolidated statements of financial condition.

Contingencies

See Note 13: Litigation and Regulatory Matters for a description of potential liability arising from pending litigation or regulatory proceedings involving the Company.

Guarantees

The Company has obligations under certain guarantee arrangements, including contracts, indemnification agreements and representations and warranties, which contingently require the Company to make payments to the guaranteed party based on changes in an underlying asset, liability or equity security of a guaranteed party, rate or index. Also included as guarantees are contracts that contingently require the Company to make payments to a guaranteed party based on another entity's failure to perform under an agreement. The Company's use of guarantees is disclosed below by type of guarantee.

Securitizations Representations and Warranties

As part of the Company's financing activities, the Company provides representations and warranties that certain assets pledged as collateral in secured borrowing arrangements conform to specified guidelines. Due diligence is performed by the Company, which is intended to ensure that asset guideline qualifications are met. If the assets pledged as collateral do not meet certain conforming guidelines, the Company may be required to replace, repurchase or sell such assets. In its credit card securitization activities, the Company would replace nonconforming receivables through the allocation of excess seller's interest or from additional transfers from the unrestricted pool of receivables. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors' interests would be triggered. In its student loan securitizations, the Company would generally repurchase the loans from the trust at the outstanding principal amount plus interest.

The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of third-party investor interests in credit card asset-backed securities and the principal amount of any private student loan secured borrowings, plus any unpaid interest for the corresponding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company's condensed consolidated statements of financial condition. The Company has not recorded any incremental contingent liability associated with its secured borrowing representations and warranties. Management believes that the probability of having to replace, repurchase or sell assets pledged as collateral under secured borrowing arrangements, including an early amortization event, is low.

Counterparty Settlement Guarantees

Diners Club and DFS Services LLC (on behalf of PULSE) have various counterparty exposures, which are listed below:

•Merchant Guarantee. Diners Club has entered into contractual relationships with certain international merchants, which generally include travel-related businesses, for the benefit of all Diners Club licensees. The licensees hold the primary liability to settle the transactions of their customers with these merchants. However, Diners Club retains a counterparty exposure if a licensee fails to meet its financial payment obligation to one of these merchants.

•ATM Guarantee. PULSE entered into contractual relationships with certain international ATM acquirers in which DFS Services LLC retains counterparty exposure if an issuer fails to fulfill its settlement obligation.

•Global Network Alliance Guarantee. Discover Network, Diners Club and PULSE have entered into contractual relationships with certain international payment networks in which DFS Services LLC retains the counterparty exposure if a network fails to fulfill its settlement obligation.

The maximum potential amount of future payments related to such contingent obligations is dependent upon the transaction volume processed between the time a potential counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party. The Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), however, there is no limitation on the maximum amount the Company may be liable to pay.

The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether particular counterparties will fail to meet their settlement obligations. In the event all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees would be approximately $110 million as of March 31, 2024.

The Company believes that the estimated amounts of maximum potential future payments are not representative of the Company's actual potential loss exposure given Diners Club's and PULSE's insignificant historical losses from these counterparty exposures. As of March 31, 2024, the Company had not recorded any contingent liability in the condensed consolidated statements of financial condition for these counterparty exposures and management believes that the probability of any payments under these arrangements is low.

Discover Network Merchant Chargeback Guarantees

The Company operates the Discover Network, issues payment cards and permits third parties to issue payment cards. The Company is contingently liable for certain transactions processed on the Discover Network in the event of a dispute between the payment card customer and a merchant. The contingent liability arises if the disputed transaction involves a merchant or merchant acquirer with whom the Discover Network has a direct relationship. If a dispute is resolved in the customer's favor, the Discover Network will credit or refund the disputed amount to the Discover Network card issuer, who in turn credits its customer's account. The Discover Network will then charge back the disputed amount of the payment card transaction to the merchant or merchant acquirer, where permitted by the applicable agreement, to seek recovery of amounts already paid to the merchant for payment card transactions. If the Discover Network is unable to collect the amount subject to dispute from the merchant or merchant acquirer (e.g., in the event of merchant default or dissolution or after expiration of the time period for chargebacks in the applicable agreement), the Discover Network will bear the loss for the amount credited or refunded to the customer. In most instances, a loss by the Discover Network is unlikely to arise in connection with payments on card transactions because most products or services are delivered when purchased and credits are issued by merchants on returned items in a timely fashion, thus minimizing the likelihood of cardholder disputes with respect to amounts paid by the Discover Network. However, where the product or service is not scheduled to be provided to the customer until a later date following the purchase, the likelihood of a contingent payment obligation by the Discover Network increases. Losses related to merchant chargebacks were not material for the three months ended March 31, 2024 and 2023.

The maximum potential amount of obligations of the Discover Network arising from such contingent obligations is estimated to be the portion of the total Discover Network transaction volume processed to date for which timely and valid disputes may be raised under applicable law and relevant issuer and customer agreements. There is no limitation on the maximum amount the Company may be liable to pay to issuers. However, the Company believes that such amount is not representative of the Company's actual potential loss exposure based on the Company's historical experience. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether the current or cumulative transaction volumes may include or result in disputed transactions.

The following table summarizes certain information regarding merchant chargeback guarantees (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Aggregate sales transaction volume(1)	$	61,332	$	60,833

(1)Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of March 31, 2024 and December 31, 2023. The Company mitigates the risk of potential loss exposure by withholding settlement from merchants, obtaining third-party guarantees, or obtaining escrow deposits or letters of credit from certain merchant acquirers or merchants that are considered a higher risk due to various factors such as time delays in the delivery of products or services. As of March 31, 2024 and December 31, 2023, the Company had escrow deposits and settlement withholdings of $9 million and $10 million, respectively, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company's condensed consolidated statements of financial condition.

XML

Litigation and Regulatory Matters

3 Months Ended

Mar. 31, 2024

Loss Contingency [Abstract]

Litigation and Regulatory Matters

Litigation and Regulatory Matters

In the normal course of business, from time to time, the Company has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The litigation process is not predictable and can lead to unexpected results. The Company contests liability and/or the amount of damages as appropriate in each pending matter.

The Company has historically offered its customers an arbitration clause in its customer agreements. The arbitration clause allows the Company and its customers to quickly and economically resolve disputes. Additionally, the arbitration clause has in some instances limited the costs of, and the Company's exposure to, litigation. Future legal and regulatory challenges and prohibitions may cause the Company to discontinue its offering and use of such clauses. From time to time, the Company is involved in legal actions challenging its arbitration clause. Bills may be periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding the Company's business including, among other matters, regulatory, accounting, tax and other operational matters. The investigations and proceedings may result in significant adverse judgments, settlements, fines, penalties, injunctions, decreases in regulatory ratings, customer restitution or other relief. These outcomes could materially impact the Company's condensed consolidated financial statements, increase its cost of operations, or limit the Company's ability to execute its business strategies and engage in certain business activities. Certain subsidiaries of the Company are subject to consent orders with the Consumer Financial Protection Bureau ("CFPB") and FDIC, as described below. Pursuant to powers granted under federal banking laws, regulatory agencies have broad and sweeping discretion and may assess civil money penalties, require changes to certain business practices or require customer restitution at any time.

In accordance with applicable accounting guidance, the Company establishes a liability for legal and regulatory matters when those matters create loss contingencies that are both probable and estimable. Except as discussed below regarding the card product misclassification matter, litigation and regulatory settlement-related expenses were immaterial for the three months ended March 31, 2024 and 2023.

There may be an exposure to loss in excess of any amounts accrued. The Company believes the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), in excess of the amounts that the Company has accrued for legal and regulatory proceedings, is up to $230 million as of March 31, 2024. This estimated range of reasonably possible losses is based on currently available information for those proceedings in which the Company is involved and considers the Company's best estimate of such losses for those matters for which an estimate can be made. It does not represent the Company's maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate.

The Company's estimated range noted above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could adversely affect the Company's reputation and be material to the Company's condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company's income for such period.

In July 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products Inc. (the "Discover Subsidiaries"), agreed to a consent order with the CFPB with respect to certain private student loan servicing practices (the "2015 Order"). The 2015 Order expired in July 2020. In December 2020, the Discover Subsidiaries agreed to a consent order (the "2020 Order") with the CFPB resolving the agency’s investigation into Discover Bank’s compliance with the 2015 Order. In connection with the 2020 Order, Discover is required to implement a redress and compliance plan and must pay at least $10 million in consumer redress to consumers who may have been harmed and has paid a $25 million civil money penalty to the CFPB.

On September 25, 2023, following the consent of the Board of Directors of Discover Bank, the FDIC issued a consent order (the "2023 Order") to Discover Bank. The 2023 Order addresses shortcomings in Discover Bank’s compliance management system for consumer protection laws and related matters. It does not contain any monetary penalties or fines. As part of the 2023 Order, Discover Bank agreed to improve its consumer compliance management system and enhance related corporate governance and enterprise risk management practices, and increase the level of Board oversight of such matters. Discover Bank has been taking significant steps to strengthen the organization’s compliance management system and address the other issues identified in the 2023 Order. In addition, Discover added two new independent directors with significant banking experience to the Boards of Discover and Discover Bank in the third quarter of 2023.

Management and the Board are committed to meeting all the requirements of the 2023 Order. Discover Bank is working diligently to complete items required by the 2023 Order. This includes having retained third party consultants to conduct independent reviews and the submission of action plans to the FDIC by the required deadlines for review and feedback. The actions completed to date, taken together with actions previously undertaken to improve and enhance its compliance management system and enhance related corporate governance, address multiple consent order objectives, however, many provisions require longer term implementation. Depending on regulatory feedback, the timing of approvals and sustainability periods, necessary work is not likely to be completed until at least 2025.

On March 8, 2016, a class-action lawsuit was filed against the Company, other credit card networks, other issuing banks and EMVCo in the U.S. District Court for the Northern District of California (B&R Supermarket, Inc., d/b/a Milam's Market, et al. v. Visa, Inc., et al.) alleging a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. The plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. The Company filed its motion to compel arbitration, motion for summary judgment, and Daubert challenges on November 30, 2022, and awaits rulings. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter. However, the Company will seek to defend itself vigorously against all claims asserted by the plaintiffs.

Card Product Misclassification

As reported, the Company recorded a liability of $365 million as of June 30, 2023, within accrued expenses and other liabilities, to provide refunds to merchants and merchant acquirers as a result of the card product misclassification. Management completed the reclassification of card products in November 2023. As of December 31, 2023, the balance of the liability was $375 million, reflecting an additional $11 million for the estimated effect of the prior price tiering on discount and interchange assessments recorded in each of the third and fourth quarters of 2023 and $12 million of settlement disbursements made through that date. Throughout the first quarter of 2024, the Company continued settlement discussions

with large direct merchants both directly and indirectly as plaintiffs in putative class actions filed on behalf of all merchants, and the Company continued to discuss these efforts with its regulators. Another $9 million in settlement disbursements were made during the first quarter of 2024. Based on its experience to date with remediation efforts, discussions through the first quarter of 2024 with its regulators, Board of Directors and other stakeholders, the pending merger with Capital One approved by the Board of Directors during the quarter, and a desire to advance resolution of the matter more quickly to mitigate further risk, the Company determined it was appropriate to increase its estimate of total remediation. As a result, the Company increased its liability to $1.2 billion through a charge to other expense for the three months ended March 31, 2024, to reflect the total amount the Company now expects is probable to be disbursed in relation to the card product misclassification.

The Company remains in discussions with its regulators regarding this matter. The Company expects these discussions will likely result in enforcement actions, which may include, among other remedies, monetary penalties, the amount of which cannot be estimated at this time and could be material.

In addition, the Company and its subsidiaries have been named as defendants in various lawsuits, including a putative class action on behalf of shareholders and shareholder derivative actions. The Company also is cooperating with a Securities and Exchange Commission investigation into the card product misclassification matter. The Company believes that additional losses are probable as a result of these actions and such losses could be material but it is not able to make a reasonable estimate of the amount or range of such losses as of March 31, 2024.

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying the inputs to valuation techniques used to measure fair value of financial instruments based on whether the inputs are observable or unobservable. It also requires certain disclosures about those measurements. The three-level valuation hierarchy is as follows:

•Level 1: Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2: Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2.

•Level 3: Fair values determined by Level 3 inputs are those based on unobservable inputs and include situations where there is little, if any, market activity for the asset or liability being valued. In instances where the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy in which the measurements are classified is based on the lowest level input that is significant to the fair value measurement in its entirety. Accordingly, the Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category.

The Company evaluates the classification of each fair value measurement within the hierarchy at least quarterly.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at March 31, 2024
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,815	$	7	$	—	$	12,822
Residential mortgage-backed securities - Agency	—		439		—		439
Available-for-sale investment securities	$	12,815	$	446	$	—	$	13,261
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	6	$	—	$	6
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	5	$	—	$	5
Balance at December 31, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,928	$	9	$	—	$	12,937
Residential mortgage-backed securities - Agency	—		465		—		465
Available-for-sale investment securities	$	12,928	$	474	$	—	$	13,402
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	1	$	—	$	—	$	1
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

Available-for-Sale Investment Securities

Investment securities classified as available-for-sale consist of U.S. Treasury and U.S. GSE securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The fair value estimates of U.S. GSE securities and RMBS are classified as Level 2 and are valued by maximizing the use of relevant observable inputs, including quoted prices for similar securities, benchmark yield curves and market-corroborated inputs.

The Company validates the fair value estimates provided by pricing services primarily by comparing to valuations obtained through other pricing sources. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates.

At March 31, 2024, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $457 million, a weighted-average coupon of 4.10% and a weighted-average remaining maturity of four years.

Derivative Financial Instruments

The Company's derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models, containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and foreign currency forward and spot rates. In determining fair values, the pricing models use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity and the observable market-based inputs. The fair values of the interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments are based on an expectation of future interest rates derived from the observable market interest rate curves. The Company considers collateral and master netting agreements that mitigate credit exposure to counterparties in determining the counterparty credit risk valuation adjustment. The fair values of the currency instruments are valued by comparing the contracted forward exchange rate pertaining to the specific contract maturities to the current market exchange rate.

The Company validates the fair value estimates of interest rate swaps primarily through comparison to the fair value estimates computed by the counterparties to each of the derivative transactions. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company performs due diligence in understanding the impact of any changes to the valuation techniques performed by proprietary pricing models before implementation, working closely with the third-party valuation service and reviewing the service's control objectives at least annually. The Company corroborates the fair value of foreign exchange forward contracts through independent calculation of the fair value estimates.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These assets include those associated with acquired businesses, including goodwill. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets may be applicable whenever one is tested for impairment. No impairments were recognized related to these assets during the three months ended March 31, 2024 and 2023.

Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	238	$	—	$	238	$	261
Held-to-maturity investment securities	$	—	$	238	$	—	$	238	$	261
Net loan receivables	$	—	$	—	$	124,936	$	124,936	$	117,297
Carrying value approximates fair value(1)
Cash and cash equivalents	$	14,004	$	—	$	—	$	14,004	$	14,004
Restricted cash	$	439	$	—	$	—	$	439	$	439
Accrued interest receivables(2)	$	—	$	1,490	$	—	$	1,490	$	1,490
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,276	$	—	$	45,276	$	45,242
Long-term borrowings - owed to securitization investors	$	—	$	10,767	$	61	$	10,828	$	10,933
Other long-term borrowings	—		9,544		—		9,544		9,542
Long-term borrowings	$	—	$	20,311	$	61	$	20,372	$	20,475
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	445	$	—	$	445	$	445
Balance at December 31, 2023
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	234	$	—	$	234	$	253
Held-to-maturity investment securities	$	—	$	234	$	—	$	234	$	253
Net loan receivables	$	—	$	—	$	126,940	$	126,940	$	119,126
Carrying value approximates fair value(1)
Cash and cash equivalents	$	11,685	$	—	$	—	$	11,685	$	11,685
Restricted cash	$	43	$	—	$	—	$	43	$	43
Accrued interest receivables(2)	$	—	$	1,450	$	—	$	1,450	$	1,450
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,333	$	—	$	45,333	$	45,240
Short-term borrowings	$	—	$	750	$	—	$	750	$	750
Long-term borrowings - owed to securitization investors	$	—	$	10,770	$	65	$	10,835	$	10,993
Other long-term borrowings	—		9,469		—		9,469		9,588
Long-term borrowings	$	—	$	20,239	$	65	$	20,304	$	20,581
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	421	$	—	$	421	$	421

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

XML

Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or speculative purposes. Certain derivatives used to manage the Company's exposure to foreign currency are not designated as hedges and do not qualify for hedge accounting.

Derivatives may give rise to counterparty credit risk, which generally is mitigated through collateral arrangements as described under the sub-heading "— Collateral Requirements and Credit-Risk Related Contingency Features." The Company enters into derivative transactions with established dealers that meet minimum credit criteria established by the Company. All counterparties must be pre-approved before engaging in any transaction with the Company. The Company regularly monitors counterparties to ensure compliance with the Company's risk policies and limits. In determining the counterparty credit risk valuation adjustment for the fair values of derivatives, if any, the Company considers collateral and legally enforceable master netting agreements that mitigate credit exposure to related counterparties.

All derivatives are recorded in other assets at their gross positive fair values and in accrued expenses and other liabilities at their gross negative fair values. See Note 14: Fair Value Measurements for a description of the valuation methodologies used for derivatives. Cash collateral amounts associated with derivative positions that are cleared through an exchange are legally characterized as settlement of the derivative positions. Such collateral amounts are reflected as offsets to the associated derivatives balances recorded in other assets or in accrued expenses and other liabilities. Other cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statements of financial condition. Collateral amounts recorded in the condensed consolidated statements of financial condition are based on the net collateral posted or held position for each applicable legal entity's master netting arrangement with each counterparty.

Derivatives Designated as Hedges

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows arising from changes in interest rates, or other types of forecasted transactions, are considered cash flow hedges. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Cash Flow Hedges

The Company uses interest rate swaps to manage its exposure to variability in cash flows related to changes in interest rates on interest-earning assets and funding instruments. These interest rate swaps qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"). At March 31, 2024 and December 31, 2023, the Company's outstanding cash flow hedges primarily relate to interest receipts from credit card receivables and had an initial maximum period of five years.

The change in the fair value of derivatives designated as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings in the period that the hedged forecasted cash flows affect earnings. Amounts reported in AOCI related to derivatives at March 31, 2024, will be reclassified to interest income and interest expense as interest receipts and payments are accrued on the Company's then outstanding credit card receivables and certain floating-rate debt, respectively. During the next 12 months, the Company estimates it will reclassify $104 million into pretax earnings related to its cash flow hedges.

Fair Value Hedges

The Company is exposed to changes in the fair value of its fixed-rate debt obligations due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in the fair value of certain fixed-rate long-term borrowings, including securitized debt and bank notes, and deposits attributable to changes in the respective benchmark rates. These interest rate swaps qualify as fair value hedges in accordance with ASC 815. Changes in the fair values of both (i) the derivatives and (ii) the hedged long-term borrowings and deposits attributable to the interest-rate risk being hedged are recorded in interest expense and generally provide substantial offset to one another.

Derivatives Not Designated as Hedges

Foreign Exchange Forward Contracts

The Company has foreign exchange forward contracts that are economic hedges and are not designated as accounting hedges. The Company enters into foreign exchange forward contracts to manage foreign currency risk. Changes in the fair value of these contracts are recorded in other income on the condensed consolidated statements of income.

Derivatives Cleared Through an Exchange

Cash variation margin payments on derivatives cleared through an exchange are legally considered settlement payments and are accounted for with corresponding derivative positions as one unit of account and not presented separately as collateral. With settlement payments on derivative positions cleared through this exchange reflected as offsets to the associated derivative asset and liability balances, the fair values of derivative instruments and collateral balances shown are generally reduced.

Derivatives Activity

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	March 31, 2024							December 31, 2023
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	12,000	19	$	1	$	6	$	10,650	$	2	$	—
Interest rate swaps—fair value hedge	$	12,762	17	—		5		$	8,650	2		—
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	32	6	—		—		$	29	—		—
Total gross derivative assets/liabilities(2)				1		11				4		—
Less: collateral held/posted(3)				—		(11)				—		—
Total net derivative assets/liabilities				$	1	$	—			$	4	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 1.5 billion as of March 31, 2024, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 1.1 billion and AUD 2 million as of December 31, 2023.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities and tax exempt single family mortgage revenue bonds as part of its community reinvestment initiatives. At March 31, 2024, the Company had one outstanding contract with a total notional amount of $23 million and an immaterial fair value. At December 31, 2023, the Company had one outstanding contract with a total notional amount of $35 million and an immaterial fair value.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	March 31, 2024				December 31, 2023
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	12,614	$	(108)	$	8,620	$	—

(1)The balance includes $10 million and $12 million of cumulative hedging adjustments related to discontinued hedging relationships as of March 31, 2024 and December 31, 2023, respectively.

The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense				Interest Income (Credit Card)
	Deposits		Long-Term Borrowings
For the Three Months Ended March 31, 2024
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(1,210)	$	(245)	$	3,938
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	3	$	(40)
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	3	$	103	$	—
Losses on interest rate swaps	(4)		(138)		—
Total losses on fair value hedging relationships	$	(1)	$	(35)	$	—
For the Three Months Ended March 31, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(756)	$	(189)	$	3,321
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	2	$	(7)
Gains (losses) on fair value hedging relationships
Losses on hedged items	$	—	$	(35)	$	—
Gains on interest rate swaps	—		21		—
Total losses on fair value hedging relationships	$	—	$	(14)	$	—

For the impact of the derivative instruments on OCI, see Note 8: Accumulated Other Comprehensive Income.

Collateral Requirements and Credit-Risk Related Contingency Features

The Company has master netting arrangements and minimum collateral posting thresholds with its counterparties for its fair value and cash flow hedge interest rate swaps and foreign exchange forward contracts. The Company has not sought a legal opinion in relation to the enforceability of its master netting arrangements and, as such, does not report any of these positions on a net basis. Collateral is required by either the Company or its subsidiaries or the counterparty depending on the net fair value position of the derivatives held with that counterparty. These collateral receivable or payable amounts are generally not offset against the fair value of these derivatives but are recorded separately in other assets or deposits. Most of the Company's cash collateral amounts relate to positions cleared through an exchange and are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities.

The Company also has agreements with certain of its derivative counterparties that contain a provision under which the Company could be declared in default on any of its derivative obligations if the Company defaults on any of its indebtedness, including default where the lender has not accelerated repayment of the indebtedness.

XML

Segment Disclosures

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Disclosures

Segment Disclosures

The Company manages its business activities in two segments: Digital Banking and Payment Services.

•Digital Banking: The Digital Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans and deposit products. The majority of Digital Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income.

•Payment Services: The Payment Services segment includes PULSE, an ATM, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company's Network Partners business, which provides payment transaction processing and settlement services on the Discover Network. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue from Diners Club.

The business segment reporting provided to and used by the Company's CODM is prepared using the following principles and allocation conventions:

•The Company aggregates operating segments when determining reportable segments.

•Corporate overhead is not allocated between segments; all corporate overhead is included in the Digital Banking segment.

•Through its operation of the Discover Network, the Digital Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments, except for an allocation of direct and incremental costs driven by the Company's Payment Services segment.

•The Company's assets are not allocated among the operating segments in the information reviewed by the Company's CODM.

•The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources.

•Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company's CODM.

The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Interest income
Credit card loans	$	3,938	$	—	$	3,938
Private student loans	264		—		264
Personal loans	333		—		333
Other loans	115		—		115
Other interest income	298		—		298
Total interest income	4,948		—		4,948
Interest expense	1,461		—		1,461
Net interest income	3,487		—		3,487
Provision for credit losses	1,497		—		1,497
Other income	591		132		723
Other expense	2,259		50		2,309
Income before income taxes	$	322	$	82	$	404
For the Three Months Ended March 31, 2023
Interest income
Credit card loans	$	3,321	$	—	$	3,321
Private student loans	252		—		252
Personal loans	248		—		248
Other loans	64		—		64
Other interest income	192		—		192
Total interest income	4,077		—		4,077
Interest expense	945		—		945
Net interest income	3,132		—		3,132
Provision for credit losses	1,102		—		1,102
Other income	522		88		610
Other expense	1,342		41		1,383
Income before income taxes	$	1,210	$	47	$	1,257

XML

Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), generally applies to the sales of any good or service for which no other specific accounting guidance is provided. ASC 606 defines a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. The Company's revenue that is subject to this model includes discount and interchange, protection products fees, transaction processing revenue and certain amounts classified as other income.

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	346	$	25	$	371
Protection products revenue	42		—		42
Transaction processing revenue	—		87		87
Other income	3		20		23
Total other income subject to ASC 606(2)	391		132		523
Other income not subject to ASC 606
Loan fee income	200		—		200
Total other income not subject to ASC 606	200		—		200
Total other income by operating segment	$	591	$	132	$	723
For the Three Months Ended March 31, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	310	$	20	$	330
Protection products revenue	43		—		43
Transaction processing revenue	—		67		67
Other income	3		19		22
Total other income subject to ASC 606(2)	356		106		462
Other income not subject to ASC 606
Loan fee income	166		—		166
Gains (losses) on equity investments	—		(18)		(18)
Total other income (loss) not subject to ASC 606	166		(18)		148
Total other income by operating segment	$	522	$	88	$	610

(1)Net of rewards, including Cashback Bonus rewards, of $703 million and $716 million for the three months ended March 31, 2024 and 2023, respectively.

(2)Excludes $2 million and $6 million of deposit product fees that are reported within net interest income for the three months ended March 31, 2024 and 2023, respectively.

For a detailed description of the Company's significant revenue recognition accounting policies, see Note 2: Summary of Significant Accounting Policies to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2023.

XML

Subsequent Events

3 Months Ended

Mar. 31, 2024

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company has evaluated events and transactions that have occurred subsequent to March 31, 2024, and determined that there were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements.

XML

Background and Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation	The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature.
Use of estimates	The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates.

XML

Investments (Tables)

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of Investment Securities

The Company's investment securities consist of the following (dollars in millions):

	March 31, 2024		December 31, 2023
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,822	$	12,937
Residential mortgage-backed securities - Agency(3)	700		718
Total investment securities	$	13,522	$	13,655

(1)Includes $377 million and $320 million of U.S. Treasury securities pledged as swap collateral as of March 31, 2024 and December 31, 2023, respectively.

(2)Consists of securities issued by the Federal Home Loan Bank ("FHLB").

(3)Primarily consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2024
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,981	$	10	$	(169)	$	12,822
Residential mortgage-backed securities - Agency	458		—		(19)		439
Total available-for-sale investment securities	$	13,439	$	10	$	(188)	$	13,261
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	261	$	—	$	(23)	$	238
Total held-to-maturity investment securities	$	261	$	—	$	(23)	$	238
At December 31, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,971	$	52	$	(86)	$	12,937
Residential mortgage-backed securities - Agency	480		—		(15)		465
Total available-for-sale investment securities	$	13,451	$	52	$	(101)	$	13,402
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	253	$	—	$	(19)	$	234
Total held-to-maturity investment securities	$	253	$	—	$	(19)	$	234

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value

The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2024
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	186	$	7,701	$	(97)	$	3,532	$	(72)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	439	$	(19)
At December 31, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	105	$	3,513	$	(13)	$	3,978	$	(73)
Residential mortgage-backed securities - Agency	31	$	—	$	—	$	465	$	(15)

Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At March 31, 2024	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	2,005	$	10,552	$	424	$	—	$	12,981
Residential mortgage-backed securities - Agency(1)	—		65		24		369		458
Total available-for-sale investment securities	$	2,005	$	10,617	$	448	$	369	$	13,439
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	261	$	261
Total held-to-maturity investment securities	$	—	$	—	$	—	$	261	$	261
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,971	$	10,428	$	423	$	—	$	12,822
Residential mortgage-backed securities - Agency(1)	—		63		23		353		439
Total available-for-sale investment securities	$	1,971	$	10,491	$	446	$	353	$	13,261
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	238	$	238
Total held-to-maturity investment securities	$	—	$	—	$	—	$	238	$	238

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

XML

Loan Receivables (Tables)

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Schedule of Loan Receivables

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Credit card loans(1)(2)	$	99,475	$	102,259
Other loans(3)
Private student loans(4)	10,480		10,352
Personal loans	10,107		9,852
Other loans	6,493		5,946
Total other loans	27,080		26,150
Total loan receivables	126,555		128,409
Allowance for credit losses	(9,258)		(9,283)
Net loan receivables	$	117,297	$	119,126

(1)Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

(4)At March 31, 2024 and December 31, 2023, the private student loan portfolio continued to be classified as held for investment and there were $6.3 billion of private student loans in repayment.

Schedule of Credit Risk Profile by FICO Score and Origination Year

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	March 31, 2024								December 31, 2023
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	79,207	80	%	$	20,268	20	%	$	82,238	80	%	$	20,021	20	%
Private student loans by origination year(1)(2)
2024	$	129	98	%	$	3	2	%
2023	1,399		94	%	91		6	%	$	1,010	94	%	$	69	6	%
2022	1,445		94	%	88		6	%	1,495		95	%	85		5	%
2021	1,411		94	%	92		6	%	1,468		94	%	91		6	%
2020	1,127		94	%	76		6	%	1,180		94	%	75		6	%
Prior	4,277		93	%	342		7	%	4,537		93	%	342		7	%
Total private student loans	$	9,788	93	%	$	692	7	%	$	9,690	94	%	$	662	6	%
Personal loans by origination year
2024	$	1,425	100	%	$	5	—	%
2023	4,614		97	%	146		3	%	$	5,149	98	%	$	100	2	%
2022	2,244		92	%	191		8	%	2,604		93	%	187		7	%
2021	869		91	%	85		9	%	1,049		92	%	91		8	%
2020	285		92	%	25		8	%	355		92	%	29		8	%
Prior	185		85	%	33		15	%	247		86	%	41		14	%
Total personal loans	$	9,622	95	%	$	485	5	%	$	9,404	95	%	$	448	5	%

(1)FICO score represents the higher credit score of the cosigner or borrower.

Schedule of Delinquent Loans by Origination Year

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	March 31, 2024						December 31, 2023
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,869	$	1,941	$	3,810	$	2,038	$	1,917	$	3,955
Private student loans by origination year(1)
2024	$	—	$	—	$	—
2023	2		1		3		$	—	$	—	$	—
2022	10		6		16		7		2		9
2021	18		10		28		18		6		24
2020	20		10		30		20		7		27
Prior	143		51		194		156		55		211
Total private student loans	$	193	$	78	$	271	$	201	$	70	$	271
Personal loans by origination year
2024	$	—	$	—	$	—
2023	38		12		50		$	26	$	8	$	34
2022	41		15		56		44		16		60
2021	17		6		23		20		8		28
2020	5		2		7		7		2		9
Prior	7		4		11		7		5		12
Total personal loans	$	108	$	39	$	147	$	104	$	39	$	143

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

Schedule of Changes in the Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended March 31, 2024
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2023	$	7,619	$	858	$	722	$	84	$	9,283
Additions
Provision for credit losses(1)	1,333		53		134		11		1,531
Deductions
Charge-offs	(1,649)		(47)		(113)		(3)		(1,812)
Recoveries	238		5		13		—		256
Net charge-offs	(1,411)		(42)		(100)		(3)		(1,556)
Balance at March 31, 2024	$	7,541	$	869	$	756	$	92	$	9,258
	For the Three Months Ended March 31, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	1,002		60		68		5		1,135
Deductions
Charge-offs	(879)		(33)		(54)		—		(966)
Recoveries	195		6		15		—		216
Net charge-offs	(684)		(27)		(39)		—		(750)
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691

(1)Excludes a $34 million and $33 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2024 and 2023, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	279	$	128
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	69	$	41

Schedule of Gross Charge Offs from Loan Receivables

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Credit card loans	$	1,649	$	879
Private student loans by origination year
2024	$	—
2023	—		$	—
2022	2		—
2021	5		2
2020	6		5
Prior	34		26
Total private student loans	$	47	$	33
Personal loans by origination year
2024	$	—
2023	28		$	—
2022	48		16
2021	22		18
2020	8		9
Prior	7		11
Total personal loans	$	113	$	54

Schedule of Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At March 31, 2024
Credit card loans	$	1,869	$	1,941	$	3,810	$	1,900	$	203
Other loans
Private student loans	193		78		271		77		8
Personal loans	108		39		147		37		11
Other loans	33		21		54		3		56
Total other loans	334		138		472		117		75
Total loan receivables	$	2,203	$	2,079	$	4,282	$	2,017	$	278
At December 31, 2023
Credit card loans	$	2,038	$	1,917	$	3,955	$	1,881	$	197
Other loans
Private student loans	201		70		271		69		8
Personal loans	104		39		143		37		11
Other loans	39		19		58		3		53
Total other loans	344		128		472		109		72
Total loan receivables	$	2,382	$	2,045	$	4,427	$	1,990	$	269

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

Schedule of Financing Receivables in Modification , Amortized Cost Basis

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended March 31,
	2024			2023
Credit card loans(1)(2)
Interest rate reduction	$	920		$	632
Total credit card loans(3)	$	920		$	632
% of total class of financing receivables	0.92		%	0.70		%
Private student loans(1)
Payment delay(4)	$	1		$	3
Interest rate reduction and payment delay(4)	101			29
Total private student loans(3)	$	102		$	32
% of total class of financing receivables	0.97		%	0.04		%
Personal loans(1)
Payment delay(4)	$	4		$	2
Term extension(5)	10			8
Interest rate reduction and payment delay(4)	26			14
Interest rate reduction and term extension(5)	14			6
Total personal loans(3)	$	54		$	30
% of total class of financing receivables	0.53		%	0.36		%

(1)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at March 31, 2024 and 2023.

(2)    Accounts that entered a credit card loan modification program include $185 million and $118 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2024 and 2023, respectively.

(3)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(4)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(5)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

Schedule of Loan Modification Effects

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Credit card loans
Weighted-average interest rate reduction	14.42		%	13.38		%
Principal forgiven	$	56		NM
Interest and fees forgiven(1)	$	56		$	12
Private student loans
Weighted-average interest rate reduction	8.84		%	8.02		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Personal loans
Weighted-average interest rate reduction	13.20		%	11.55		%
Weighted-average term extension (in months)	40			38
Payment delay duration (in months)(2)	6 to 12			6 to 12

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the condensed consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and limits assistance to a life of loan maximum of 36 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Schedule of Financing Receivable, Past Due, Modified

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified to borrowers experiencing financial difficulty during the 12 months preceding each of the periods presented (dollars in millions)(1):

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At March 31, 2024
Credit card loans	$	2,118	$	257	$	217
Private student loans	207		22		8
Personal loans	126		23		4
Total	$	2,451	$	302	$	229
At December 31, 2023
Credit card loans	$	1,882	$	252	$	196
Private student loans	147		18		8
Personal loans	109		20		4
Total	$	2,138	$	290	$	208

(1)    This table includes any loan that entered a modification program during the preceding 12 months without regard to whether it remained in a modification program as of the reporting date.

Schedule of Financing Receivable, Modified, Subsequent Default

The following table presents the defaulted amount and period-end amortized cost basis, by modification category, of loans that defaulted during the period and were modified to borrowers experiencing financial difficulty during the 12 months preceding default (dollars in millions):

	For the Three Months Ended March 31, 2024
	Defaulted Amount(1)		Period-end Amortized Cost Basis
Credit card loans
Interest rate reduction	$	205	$	161
Total credit card loans	$	205	$	161
Private student loans
Payment delay	$	2	$	2
Interest rate reduction and payment delay	17		16
Total private student loans	$	19	$	18
Personal loans
Payment delay	$	1	$	1
Term extension	2		1
Interest rate reduction and payment delay	7		3
Interest rate reduction and term extension	4		3
Total personal loans	$	14	$	8

(1)For purposes of this disclosure, a loan is considered to be defaulted when it is 60 days or more delinquent at month end and has advanced two stages of delinquency subsequent to modification. Loans that entered a modification program in any stage of delinquency but did not experience a further payment default are included in the payment status table above but are not counted as defaulted for purposes of this disclosure.

The defaulted amount and period-end amortized cost basis of loans modified on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was immaterial for the three months ended March 31, 2023, for all classes of loan receivables.

XML

Credit Card and Private Student Loan Securitization Activities (Tables)

3 Months Ended

Mar. 31, 2024

Variable Interest Entities Disclosure [Abstract]

Schedule of Restricted Credit Card Securitized Assets

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	March 31, 2024		December 31, 2023
Restricted cash	$	432	$	36
Investors' interests held by third-party investors	10,975		11,725
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,917		3,117
Seller's interest	15,155		15,598
Loan receivables(1)	29,047		30,440
Allowance for credit losses allocated to securitized loan receivables(1)	(1,323)		(1,347)
Net loan receivables	27,724		29,093
Other assets	3		2
Carrying value of assets of consolidated variable interest entities	$	28,159	$	29,131

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

XML

Deposits (Tables)

3 Months Ended

Mar. 31, 2024

Deposits [Abstract]

Schedule of Certificates of Deposit Maturities

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At March 31, 2024
2024	$	21,263
2025	12,190
2026	4,211
2027	4,408
2028	2,161
Thereafter	1,009
Total	$	45,242

XML

Long-Term Borrowings (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Long-Term Borrowings and Weighted Average Interest Rates

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	March 31, 2024					December 31, 2023
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,947	$	10,003
Floating-rate asset-backed securities(2)	2024	6.04%	6.04%	925		925
Total Discover Card Master Trust I and Discover Card Execution Note Trust				10,872		10,928
Floating-rate asset-backed security(3)(4)	2031	9.50%	9.50%	61		65
Total private student loan securitization trust				61		65
Total long-term borrowings - owed to securitization investors				10,933		10,993
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,337		3,336
Fixed-rate retail notes	2025-2031	3.25% - 4.40%	3.82%	139		140
Fixed to floating-rate senior notes(5)	2034	7.96%	7.96%	992		993
Discover Bank
Fixed-rate senior bank notes(1)	2024-2030	2.45% - 4.65%	3.53%	3,535		3,571
Fixed-rate subordinated bank notes	2028	5.97%	5.97%	491		500
Fixed-rate Federal Home Loan Bank advances	2030	4.77% - 4.82%	4.82%	523		523
Floating-rate Federal Home Loan Bank advances(6)	2024	5.49% - 5.59%	5.59%	525		525
Total long-term borrowings				$	20,475	$	20,581

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month Term SOFR + 0.11448% Tenor Spread Adjustment + 60 basis points as of March 31, 2024.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2024.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed to floating-rate senior notes include a rate reset on November 2, 2033, to a floating rate based on compounded SOFR + 3.370%.

(6)The floating-rate FHLB advances include interest rate terms based on SOFR plus a spread ranging from 16 to 26 basis points as of March 31, 2024.

Schedule of Long-Term Borrowings Maturities

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	March 31, 2024
2024	$	4,250
2025	6,121
2026	4,868
2027	1,001
2028	1,412
Thereafter	2,823
Total	$	20,475

XML

Preferred Stock (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Schedule of Stock by Class

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at March 31, 2024 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at March 31, 2024		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							March 31, 2024	December 31, 2023	March 31, 2024		December 31, 2023
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month Term SOFR plus a spread of 3.338% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

XML

Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss)

Changes in each component of accumulated other comprehensive (loss) income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		(Losses) Gains on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended March 31, 2024
Balance at December 31, 2023	$	(37)	$	(8)	$	(180)	$	(225)
Net change	(97)		(71)		—		(168)
Balance at March 31, 2024	$	(134)	$	(79)	$	(180)	$	(393)
For the Three Months Ended March 31, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	92		12		—		104
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)

Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI

The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended March 31, 2024
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(129)	$	32	$	(97)
Net change	$	(129)	$	32	$	(97)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(131)	$	32	$	(99)
Amounts reclassified from AOCI	37		(9)		28
Net change	$	(94)	$	23	$	(71)
For the Three Months Ended March 31, 2023
Available-for-Sale Investment Securities
Net unrealized holding gains arising during the period	$	122	$	(30)	$	92
Net change	$	122	$	(30)	$	92
Cash Flow Hedges
Net unrealized gains arising during the period	$	10	$	(2)	$	8
Amounts reclassified from AOCI	5		(1)		4
Net change	$	15	$	(3)	$	12

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Calculation

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended March 31,
	2024			2023
Income before income taxes	$	404		$	1,257
Income tax expense	$	96		$	289
Effective income tax rate	23.7		%	23.0		%

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Basic and Diluted EPS

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended March 31,
	2024		2023
Numerator
Net income	$	308	$	968
Preferred stock dividends	(31)		(31)
Net income available to common stockholders	277		937
Income allocated to participating securities	(3)		(6)
Net income allocated to common stockholders	$	274	$	931
Denominator
Weighted-average shares of common stock outstanding	250		262
Weighted-average shares of common stock outstanding and common stock equivalents	250		262
Basic earnings per common share	$	1.10	$	3.55
Diluted earnings per common share	$	1.10	$	3.55

XML

Capital Adequacy (Tables)

3 Months Ended

Mar. 31, 2024

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Schedule of Minimum and Well-Capitalized Requirements

The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
March 31, 2024
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,513	13.3	%	$	10,499	≥8.0%	$	13,124	≥10.0%
Discover Bank	$	16,598	12.8	%	$	10,349	≥8.0%	$	12,936	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,394	11.7	%	$	7,874	≥6.0%	$	7,874	≥6.0%
Discover Bank	$	13,752	10.6	%	$	7,762	≥6.0%	$	10,349	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,394	10.1	%	$	6,086	≥4.0%	N/A		N/A
Discover Bank	$	13,752	9.2	%	$	6,004	≥4.0%	$	7,505	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,338	10.9	%	$	5,906	≥4.5%	N/A		N/A
Discover Bank	$	13,752	10.6	%	$	5,821	≥4.5%	$	8,409	≥6.5%
December 31, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,986	13.7	%	$	10,471	≥8.0%	$	13,088	≥10.0%
Discover Bank	$	16,856	13.0	%	$	10,352	≥8.0%	$	12,939	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,872	12.1	%	$	7,853	≥6.0%	$	7,853	≥6.0%
Discover Bank	$	13,910	10.8	%	$	7,764	≥6.0%	$	10,352	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,872	10.7	%	$	5,915	≥4.0%	N/A		N/A
Discover Bank	$	13,910	9.5	%	$	5,833	≥4.0%	$	7,292	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,816	11.3	%	$	5,890	≥4.5%	N/A		N/A
Discover Bank	$	13,910	10.8	%	$	5,823	≥4.5%	$	8,411	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

XML

Commitments, Contingencies and Guarantees (Tables)

3 Months Ended

Mar. 31, 2024

Guarantor Obligations [Line Items]

Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee

The following table summarizes certain information regarding merchant chargeback guarantees (dollars in millions):

	For the Three Months Ended March 31,
	2024		2023
Aggregate sales transaction volume(1)	$	61,332	$	60,833

(1)Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at March 31, 2024
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,815	$	7	$	—	$	12,822
Residential mortgage-backed securities - Agency	—		439		—		439
Available-for-sale investment securities	$	12,815	$	446	$	—	$	13,261
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	6	$	—	$	6
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	5	$	—	$	5
Balance at December 31, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,928	$	9	$	—	$	12,937
Residential mortgage-backed securities - Agency	—		465		—		465
Available-for-sale investment securities	$	12,928	$	474	$	—	$	13,402
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	1	$	—	$	—	$	1
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

Schedule of Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	238	$	—	$	238	$	261
Held-to-maturity investment securities	$	—	$	238	$	—	$	238	$	261
Net loan receivables	$	—	$	—	$	124,936	$	124,936	$	117,297
Carrying value approximates fair value(1)
Cash and cash equivalents	$	14,004	$	—	$	—	$	14,004	$	14,004
Restricted cash	$	439	$	—	$	—	$	439	$	439
Accrued interest receivables(2)	$	—	$	1,490	$	—	$	1,490	$	1,490
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,276	$	—	$	45,276	$	45,242
Long-term borrowings - owed to securitization investors	$	—	$	10,767	$	61	$	10,828	$	10,933
Other long-term borrowings	—		9,544		—		9,544		9,542
Long-term borrowings	$	—	$	20,311	$	61	$	20,372	$	20,475
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	445	$	—	$	445	$	445
Balance at December 31, 2023
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	234	$	—	$	234	$	253
Held-to-maturity investment securities	$	—	$	234	$	—	$	234	$	253
Net loan receivables	$	—	$	—	$	126,940	$	126,940	$	119,126
Carrying value approximates fair value(1)
Cash and cash equivalents	$	11,685	$	—	$	—	$	11,685	$	11,685
Restricted cash	$	43	$	—	$	—	$	43	$	43
Accrued interest receivables(2)	$	—	$	1,450	$	—	$	1,450	$	1,450
Liabilities
Amortized cost
Time deposits(3)	$	—	$	45,333	$	—	$	45,333	$	45,240
Short-term borrowings	$	—	$	750	$	—	$	750	$	750
Long-term borrowings - owed to securitization investors	$	—	$	10,770	$	65	$	10,835	$	10,993
Other long-term borrowings	—		9,469		—		9,469		9,588
Long-term borrowings	$	—	$	20,239	$	65	$	20,304	$	20,581
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	421	$	—	$	421	$	421

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

XML

Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	March 31, 2024							December 31, 2023
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	12,000	19	$	1	$	6	$	10,650	$	2	$	—
Interest rate swaps—fair value hedge	$	12,762	17	—		5		$	8,650	2		—
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	32	6	—		—		$	29	—		—
Total gross derivative assets/liabilities(2)				1		11				4		—
Less: collateral held/posted(3)				—		(11)				—		—
Total net derivative assets/liabilities				$	1	$	—			$	4	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 1.5 billion as of March 31, 2024, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 1.1 billion and AUD 2 million as of December 31, 2023.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities and tax exempt single family mortgage revenue bonds as part of its community reinvestment initiatives. At March 31, 2024, the Company had one outstanding contract with a total notional amount of $23 million and an immaterial fair value. At December 31, 2023, the Company had one outstanding contract with a total notional amount of $35 million and an immaterial fair value.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

Schedule of Hedged Items in Fair Value Hedging Relationship

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	March 31, 2024				December 31, 2023
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	12,614	$	(108)	$	8,620	$	—

(1)The balance includes $10 million and $12 million of cumulative hedging adjustments related to discontinued hedging relationships as of March 31, 2024 and December 31, 2023, respectively.

Schedule of Impact of the Derivative Instruments on Income

The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense				Interest Income (Credit Card)
	Deposits		Long-Term Borrowings
For the Three Months Ended March 31, 2024
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(1,210)	$	(245)	$	3,938
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	3	$	(40)
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	3	$	103	$	—
Losses on interest rate swaps	(4)		(138)		—
Total losses on fair value hedging relationships	$	(1)	$	(35)	$	—
For the Three Months Ended March 31, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(756)	$	(189)	$	3,321
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	—	$	2	$	(7)
Gains (losses) on fair value hedging relationships
Losses on hedged items	$	—	$	(35)	$	—
Gains on interest rate swaps	—		21		—
Total losses on fair value hedging relationships	$	—	$	(14)	$	—

XML

Segment Disclosures (Tables)

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Schedule of Segment Disclosures

The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Interest income
Credit card loans	$	3,938	$	—	$	3,938
Private student loans	264		—		264
Personal loans	333		—		333
Other loans	115		—		115
Other interest income	298		—		298
Total interest income	4,948		—		4,948
Interest expense	1,461		—		1,461
Net interest income	3,487		—		3,487
Provision for credit losses	1,497		—		1,497
Other income	591		132		723
Other expense	2,259		50		2,309
Income before income taxes	$	322	$	82	$	404
For the Three Months Ended March 31, 2023
Interest income
Credit card loans	$	3,321	$	—	$	3,321
Private student loans	252		—		252
Personal loans	248		—		248
Other loans	64		—		64
Other interest income	192		—		192
Total interest income	4,077		—		4,077
Interest expense	945		—		945
Net interest income	3,132		—		3,132
Provision for credit losses	1,102		—		1,102
Other income	522		88		610
Other expense	1,342		41		1,383
Income before income taxes	$	1,210	$	47	$	1,257

XML

Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended March 31, 2024
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	346	$	25	$	371
Protection products revenue	42		—		42
Transaction processing revenue	—		87		87
Other income	3		20		23
Total other income subject to ASC 606(2)	391		132		523
Other income not subject to ASC 606
Loan fee income	200		—		200
Total other income not subject to ASC 606	200		—		200
Total other income by operating segment	$	591	$	132	$	723
For the Three Months Ended March 31, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	310	$	20	$	330
Protection products revenue	43		—		43
Transaction processing revenue	—		67		67
Other income	3		19		22
Total other income subject to ASC 606(2)	356		106		462
Other income not subject to ASC 606
Loan fee income	166		—		166
Gains (losses) on equity investments	—		(18)		(18)
Total other income (loss) not subject to ASC 606	166		(18)		148
Total other income by operating segment	$	522	$	88	$	610

(1)Net of rewards, including Cashback Bonus rewards, of $703 million and $716 million for the three months ended March 31, 2024 and 2023, respectively.

(2)Excludes $2 million and $6 million of deposit product fees that are reported within net interest income for the three months ended March 31, 2024 and 2023, respectively.

XML

Background and Basis of Presentation (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) segment numberOfDirectors	Dec. 31, 2023 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments (in number of segments) | segment	2
Recently Adopted Accounting Pronouncement [Line Items]
Retained Earnings (Accumulated Deficit)	$ (30,511)	$ (30,448)
Investment securities	(13,522)	(13,655)
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards update 2023-02
Recently Adopted Accounting Pronouncement [Line Items]
Retained Earnings (Accumulated Deficit)		37
Investment securities		23
Deferred Tax Assets, Net		$ 14
Discover Financial Services | Capital One Financial Corporation
Plan of Merger [Line Items]
Business Combination, Price of Acquisition, Expected	$ 35,300
Business Acquisition, Number of Common Stock Shares Issued for each Share of Acquiree Stock	1.0192
Business Acquisition Acquirer's Percentage Ownership in Combined Entity	0.60
Business Acquisition Acquiree's Percentage Ownership in Combined Entity	0.40
Business Acquisition, Number of Directors on Combined Entity BOD | numberOfDirectors	15
Business Acquisition, Number of Directors on Combined Entity BOD from Acquirer | numberOfDirectors	12
Business Acquisition, Number of Directors on Combined Entity BOD from Acquiree | numberOfDirectors	3

XML

Investments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Summary of Investment Holdings [Line Items]
Proceeds from the sale of available-for-sale securities	$ 0	$ 0
Debt Securities, Available-for-Sale, Gain (Loss)	0	$ 0
Contingent liabilities related to equity method investments	0		$ 0
Low Income Housing Tax Credit investments | Other Expense
Summary of Investment Holdings [Line Items]
Amortization Method Qualified Affordable Housing Project Investments, Amortization	16
Affordable Housing Tax Credits and Other Tax Benefits, Amount	18
Other Assets [Member] | Payment Services [Member]
Summary of Investment Holdings [Line Items]
Equity securities without readily determinable fair value	35		35
Other Assets [Member] | Community Reinvestment Act [Member]
Summary of Investment Holdings [Line Items]
Equity method investments	479		514
Other Liabilities [Member] | Community Reinvestment Act [Member]
Summary of Investment Holdings [Line Items]
Contingent liabilities related to equity method investments	$ 183		$ 187

XML

Investments (Schedule of Investment Securities) (Details) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023
Summary of Investment Holdings [Line Items]
Investment securities		$ 13,522	$ 13,655
US Treasury and Government
Summary of Investment Holdings [Line Items]
Investment securities	[1],[2]	12,822	12,937
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Investment securities	[2]	700	718
U.S. Treasury Securities [Member] | Asset Pledged as Collateral [Member]
Summary of Investment Holdings [Line Items]
Derivative collateral		$ 377	$ 320

[1] Includes $377 million and $320 million of U.S. Treasury securities pledged as swap collateral as of March 31, 2024 and December 31, 2023, respectively. (2)Consists of securities issued by the Federal Home Loan Bank ("FHLB").

[2] onsists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

XML

Investments (Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value) (Details) - USD ($) $ in Millions		Mar. 31, 2024		Dec. 31, 2023
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	$ 13,439		$ 13,451
Available-for-sale investment securities, gross unrealized gains	[1]	10		52
Available-for-sale investment securities, gross unrealized losses	[1]	(188)		(101)
Available-for-sale investment securities, fair value	[1]	13,261		13,402
Held-to-maturity investment securities, amortized cost	[2]	261		253
Held-to-maturity investment securities, gross unrealized gains	[2]	0		0
Held-to-maturity investment securities, gross unrealized losses	[2]	(23)		(19)
Held-to-maturity investment securities, fair value	[2]	238		234
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	12,981		12,971
Available-for-sale investment securities, gross unrealized gains	[1]	10		52
Available-for-sale investment securities, gross unrealized losses	[1]	(169)		(86)
Available-for-sale investment securities, fair value	[1]	12,822		12,937
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	458	[3]	480
Available-for-sale investment securities, gross unrealized gains	[1]	0		0
Available-for-sale investment securities, gross unrealized losses	[1]	(19)		(15)
Available-for-sale investment securities, fair value	[1]	439	[3]	465
Held-to-maturity investment securities, amortized cost	[2],[4]	261	[3]	253
Held-to-maturity investment securities, gross unrealized gains	[2],[4]	0		0
Held-to-maturity investment securities, gross unrealized losses	[2],[4]	(23)		(19)
Held-to-maturity investment securities, fair value	[2],[4]	$ 238	[3]	$ 234

[1] Available-for-sale investment securities are reported at fair value.

[2] Held-to-maturity investment securities are reported at amortized cost.

[3] Maturities of RMBS are reflective of the contractual maturities of the investment.

[4] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

XML

Investments (Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months) (Details) $ in Millions	Mar. 31, 2024 USD ($) securities	Dec. 31, 2023 USD ($) securities
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities	186	105
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value	$ 7,701	$ 3,513
Available-for-sale securities, continuous unrealized loss position, less than 12 months, accumulated loss	(97)	(13)
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, fair value	3,532	3,978
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses	$ (72)	$ (73)
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities	31	31
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value	$ 0	$ 0
Available-for-sale securities, continuous unrealized loss position, less than 12 months, accumulated loss	0	0
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, fair value	439	465
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses	$ (19)	$ (15)

XML

Investments (Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) - USD ($) $ in Millions		Mar. 31, 2024		Dec. 31, 2023
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost		$ 2,005
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost		10,617
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost		448
Available-for-sale investment securities, debt maturities, after ten years, amortized cost		369
Available-for-sale investment securities, amortized cost	[1]	13,439		$ 13,451
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost		0
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost		0
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost		0
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost		261
Held-to-maturity investment securities, amortized cost	[2]	261		253
Available-for-sale investment securities, debt maturities, one year or less, fair value		1,971
Available-for-sale investment securities, debt maturities, after one year through five years, fair value		10,491
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value		446
Available-for-sale investment securities, debt maturities, after ten years, fair value		353
Available-for-sale investment securities, fair value	[1]	13,261		13,402
Held-to-maturity investment securities, debt maturities, one year or less, fair value		0
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value		0
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value		0
Held-to-maturity investment securities, debt maturities, after ten years, fair value		238
Held-to-maturity investment securities, fair value	[2]	238		234
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost		2,005
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost		10,552
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost		424
Available-for-sale investment securities, debt maturities, after ten years, amortized cost		0
Available-for-sale investment securities, amortized cost	[1]	12,981		12,971
Available-for-sale investment securities, debt maturities, one year or less, fair value		1,971
Available-for-sale investment securities, debt maturities, after one year through five years, fair value		10,428
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value		423
Available-for-sale investment securities, debt maturities, after ten years, fair value		0
Available-for-sale investment securities, fair value	[1]	12,822		12,937
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost	[3]	0
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost	[3]	65
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost	[3]	24
Available-for-sale investment securities, debt maturities, after ten years, amortized cost	[3]	369
Available-for-sale investment securities, amortized cost	[1]	458	[3]	480
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost	[3]	261
Held-to-maturity investment securities, amortized cost	[2],[4]	261	[3]	253
Available-for-sale investment securities, debt maturities, one year or less, fair value	[3]	0
Available-for-sale investment securities, debt maturities, after one year through five years, fair value	[3]	63
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value	[3]	23
Available-for-sale investment securities, debt maturities, after ten years, fair value	[3]	353
Available-for-sale investment securities, fair value	[1]	439	[3]	465
Held-to-maturity investment securities, debt maturities, one year or less, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after ten years, fair value	[3]	238
Held-to-maturity investment securities, fair value	[2],[4]	$ 238	[3]	$ 234

[1] Available-for-sale investment securities are reported at fair value.

[2] Held-to-maturity investment securities are reported at amortized cost.

[3] Maturities of RMBS are reflective of the contractual maturities of the investment.

[4] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

XML

Loan Receivables (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) segment	Dec. 31, 2023 USD ($)	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan portfolio segments (in segments) | segment	2
Allowance for credit losses	$ 9,258	$ 9,283			$ 7,691	$ 7,374
Allowance for credit losses, period increase (decrease)	$ (25)
Expected EOY Unemployment Rate	4.03%
Expected Future Peak Unemployment Rate	4.17%
Expected EY Annualized Increase in GDP	2.48%
Reasonable and supportable forecast period	18 months	18 months	18 months	18 months	18 months
Reversion period	12 months				12 months
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Delinquent Loan Qualification Period	30 days
Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Temporary Reduced Payment Program, Maximum Period of Payment Reduction	12 months
Maximum repayment term for permanent modification programs (in years)	9 years
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ 7,541	$ 7,619			$ 6,135	5,883
Temporary Reduced Payment Program, Maximum Period of Payment Reduction	12 months
Permanent workout program maturity (in months)	72 months
Interest and fees forgiven due to loan modification program	$ 56				12
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	869	858			872	839
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ 756	$ 722			$ 622	$ 595

XML

Loan Receivables (Schedule of Loan Receivables) (Details) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables		$ 126,555	$ 128,409
Allowance for credit losses		(9,258)	(9,283)	$ (7,691)	$ (7,374)
Net loan receivables		117,297	119,126
Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables		29,192	30,590
Allowance for credit losses		(1,323)	(1,347)
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[1]	29,047	30,440
Allowance for credit losses	[1]	(1,323)	(1,347)
Net loan receivables		27,724	29,093
Seller's interest		15,155	15,598
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[2],[3]	99,475	102,259
Allowance for credit losses		(7,541)	(7,619)	(6,135)	(5,883)
Accrued interest receivable		746	753
Credit Card Loans [Member] | Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Investors' interest		13,900	14,800
Seller's interest		15,200	15,600
Total Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	27,080	26,150
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4],[5]	10,480	10,352
Allowance for credit losses		(869)	(858)	(872)	(839)
Accrued interest receivable		555	522
Private student loans in repayment		6,300	6,300
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	10,107	9,852
Allowance for credit losses		(756)	(722)	(622)	(595)
Accrued interest receivable		72	69
Total Other Loans [Member] | Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	6,493	5,946
Allowance for credit losses		(92)	(84)	$ (62)	$ (57)
Accrued interest receivable		$ 23	$ 21

[1] The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

[2] Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[3] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

[4] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

[5] .

XML

Loan Receivables (Schedule of Credit Risk Profile by FICO Score and Origination Year) (Details) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		$ 126,555	$ 128,409
Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[1],[2]	99,475	102,259
Credit Card Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		$ 79,207	$ 82,238
FICO distribution %, credit card		80.00%	80.00%
Credit Card Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		$ 20,268	$ 20,021
FICO distribution %, credit card		20.00%	20.00%
Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	$ 27,080	$ 26,150
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3],[4]	10,480	10,352
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	$ 129
FICO distribution %, originated in 2023	[5]	98.00%
Loan receivables, originated in 2022	[5]	$ 1,399	$ 1,010
FICO distribution %, originated in 2022	[5]	94.00%	94.00%
Loan receivables, originated in 2021	[5]	$ 1,445	$ 1,495
FICO distribution %, originated in 2021	[5]	94.00%	95.00%
Loan receivables, originated in 2020	[5]	$ 1,411	$ 1,468
FICO distribution %, originated in 2020	[5]	94.00%	94.00%
Loan receivables, originated in 2019	[5]	$ 1,127	$ 1,180
FICO distribution %, originated in 2019	[5]	94.00%	94.00%
Loan receivables, originated prior to 2019	[5]	$ 4,277	$ 4,537
FICO distribution %, originated prior to 2019	[5]	93.00%	93.00%
Loan receivables	[5]	$ 9,788	$ 9,690
FICO distribution %, loan receivables	[5]	93.00%	94.00%
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	$ 3
FICO distribution %, originated in 2023	[5]	2.00%
Loan receivables, originated in 2022	[5]	$ 91	$ 69
FICO distribution %, originated in 2022	[5]	6.00%	6.00%
Loan receivables, originated in 2021	[5]	$ 88	$ 85
FICO distribution %, originated in 2021	[5]	6.00%	5.00%
Loan receivables, originated in 2020	[5]	$ 92	$ 91
FICO distribution %, originated in 2020	[5]	6.00%	6.00%
Loan receivables, originated in 2019	[5]	$ 76	$ 75
FICO distribution %, originated in 2019	[5]	6.00%	6.00%
Loan receivables, originated prior to 2019	[5]	$ 342	$ 342
FICO distribution %, originated prior to 2019	[5]	7.00%	7.00%
Loan receivables	[5]	$ 692	$ 662
FICO distribution %, loan receivables	[5]	7.00%	6.00%
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	$ 10,107	$ 9,852
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		$ 1,425
FICO distribution %, originated in 2023		100.00%
Loan receivables, originated in 2022		$ 4,614	$ 5,149
FICO distribution %, originated in 2022		97.00%	98.00%
Loan receivables, originated in 2021		$ 2,244	$ 2,604
FICO distribution %, originated in 2021		92.00%	93.00%
Loan receivables, originated in 2020		$ 869	$ 1,049
FICO distribution %, originated in 2020		91.00%	92.00%
Loan receivables, originated in 2019		$ 285	$ 355
FICO distribution %, originated in 2019		92.00%	92.00%
Loan receivables, originated prior to 2019		$ 185	$ 247
FICO distribution %, originated prior to 2019		85.00%	86.00%
Loan receivables		$ 9,622	$ 9,404
FICO distribution %, loan receivables		95.00%	95.00%
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		$ 5
FICO distribution %, originated in 2023		0.00%
Loan receivables, originated in 2022		$ 146	$ 100
FICO distribution %, originated in 2022		3.00%	2.00%
Loan receivables, originated in 2021		$ 191	$ 187
FICO distribution %, originated in 2021		8.00%	7.00%
Loan receivables, originated in 2020		$ 85	$ 91
FICO distribution %, originated in 2020		9.00%	8.00%
Loan receivables, originated in 2019		$ 25	$ 29
FICO distribution %, originated in 2019		8.00%	8.00%
Loan receivables, originated prior to 2019		$ 33	$ 41
FICO distribution %, originated prior to 2019		15.00%	14.00%
Loan receivables		$ 485	$ 448
FICO distribution %, loan receivables		5.00%	5.00%

[1] Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[2] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

[3] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

[4] .

[5] .

XML

Loan Receivables (Schedule of Delinquent Loans by Origination Year) (Details) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		$ 126,555	$ 128,409
Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[1],[2]	99,475	102,259
Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	27,080	26,150
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3],[4]	10,480	10,352
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	10,107	9,852
30-89 Days Delinquent [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		2,203	2,382
30-89 Days Delinquent [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		1,869	2,038
30-89 Days Delinquent [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		334	344
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	2	0
Loan receivables, originated in 2021	[5]	10	7
Loan receivables, originated in 2020	[5]	18	18
Loan receivables, originated in 2019	[5]	20	20
Loan receivables, originated prior to 2019	[5]	143	156
Loan receivables	[5]	193	201
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		0
Loan receivables, originated in 2022		38	26
Loan receivables, originated in 2021		41	44
Loan receivables, originated in 2020		17	20
Loan receivables, originated in 2019		5	7
Loan receivables, originated prior to 2019		7	7
Loan receivables		108	104
90 or More Days Delinquent [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		2,079	2,045
90 or More Days Delinquent [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		1,941	1,917
90 or More Days Delinquent [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		138	128
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	1	0
Loan receivables, originated in 2021	[5]	6	2
Loan receivables, originated in 2020	[5]	10	6
Loan receivables, originated in 2019	[5]	10	7
Loan receivables, originated prior to 2019	[5]	51	55
Loan receivables	[5]	78	70
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		0
Loan receivables, originated in 2022		12	8
Loan receivables, originated in 2021		15	16
Loan receivables, originated in 2020		6	8
Loan receivables, originated in 2019		2	2
Loan receivables, originated prior to 2019		4	5
Loan receivables		39	39
Total Past Due [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		4,282	4,427
Total Past Due [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		3,810	3,955
Total Past Due [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		472	472
Total Past Due [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	3	0
Loan receivables, originated in 2021	[5]	16	9
Loan receivables, originated in 2020	[5]	28	24
Loan receivables, originated in 2019	[5]	30	27
Loan receivables, originated prior to 2019	[5]	194	211
Loan receivables	[5]	271	271
Total Past Due [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		0
Loan receivables, originated in 2022		50	34
Loan receivables, originated in 2021		56	60
Loan receivables, originated in 2020		23	28
Loan receivables, originated in 2019		7	9
Loan receivables, originated prior to 2019		11	12
Loan receivables		$ 147	$ 143

[1] Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[2] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

[3] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

[4] .

[5] Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

XML

Loan Receivables (Schedule of Changes in the Allowance for Credit Losses) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	$ 9,283	$ 7,374
Provision for credit losses(1)	1,531	1,135
Charge-offs	(1,812)	(966)
Recoveries	256	216
Net charge-offs	(1,556)	(750)
Allowance for credit losses, balance at end of period	9,258	7,691
Off-Balance-Sheet, Credit Loss, Liability, Credit Loss Expense (Reversal)	34	33
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		(68)
Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		7,306
Credit Card Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	7,619	5,883
Provision for credit losses(1)	1,333	1,002
Charge-offs	(1,649)	(879)
Recoveries	238	195
Net charge-offs	(1,411)	(684)
Allowance for credit losses, balance at end of period	7,541	6,135
Credit Card Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		(66)
Credit Card Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		5,817
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	858	839
Provision for credit losses(1)	53	60
Charge-offs	(47)	(33)
Recoveries	5	6
Net charge-offs	(42)	(27)
Allowance for credit losses, balance at end of period	869	872
Total Other Loans [Member] | Private Student Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		0
Total Other Loans [Member] | Private Student Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		839
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	722	595
Provision for credit losses(1)	134	68
Charge-offs	(113)	(54)
Recoveries	13	15
Net charge-offs	(100)	(39)
Allowance for credit losses, balance at end of period	756	622
Total Other Loans [Member] | Personal Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		(2)
Total Other Loans [Member] | Personal Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		593
Total Other Loans [Member] | Other Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	84	57
Provision for credit losses(1)	11	5
Charge-offs	(3)	0
Recoveries	0	0
Net charge-offs	(3)	0
Allowance for credit losses, balance at end of period	$ 92	62
Total Other Loans [Member] | Other Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		0
Total Other Loans [Member] | Other Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period		$ 57

XML

Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Receivables [Abstract]
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$ 279	$ 128
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$ 69	$ 41

XML

Loan Receivables (Schedule of Gross Principal Charge-offs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Financing Receivable, Loan Modifications [Line Items]
Financing Receivable, Allowance for Credit Loss, Writeoff	$ 1,812	$ 966
Credit Card Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Financing Receivable Revolving Writeoff	1,649	879
Financing Receivable, Allowance for Credit Loss, Writeoff	1,649	879
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Gross Principal Charge-off, Year One, Originated, Current Fiscal Year	0
Gross Principal Charge-off, Year Two, Originated, Year Before Current Fiscal Year	0	0
Gross Principal Charge-off, Year Three, Originated, Two Years Before Current Fiscal Year	2	0
Gross Principal Charge-off, Year Four, Originated, Three Years Before Current Fiscal Year	5	2
Gross Principal Charge-off, Year Five, Originated, Four Years Before Current Fiscal Year	6	5
Gross Principal Charge-off Originated More Than Five Years Before Current Fiscal Year	34	26
Financing Receivable, Allowance for Credit Loss, Writeoff	47	33
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Gross Principal Charge-off, Year One, Originated, Current Fiscal Year	0
Gross Principal Charge-off, Year Two, Originated, Year Before Current Fiscal Year	28	0
Gross Principal Charge-off, Year Three, Originated, Two Years Before Current Fiscal Year	48	16
Gross Principal Charge-off, Year Four, Originated, Three Years Before Current Fiscal Year	22	18
Gross Principal Charge-off, Year Five, Originated, Four Years Before Current Fiscal Year	8	9
Gross Principal Charge-off Originated More Than Five Years Before Current Fiscal Year	7	11
Financing Receivable, Allowance for Credit Loss, Writeoff	$ 113	$ 54

XML

Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Financing Receivable, Past Due [Line Items]
Loan receivables		$ 126,555		$ 128,409
Loan receivables, 90 or more days delinquent and accruing		2,017		1,990
Loan receivables, total non-accruing	[1]	278		269
30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		2,203		2,382
90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		2,079		2,045
Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		4,282		4,427
Credit Card Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[2],[3]	99,475		102,259
Loan receivables, 90 or more days delinquent and accruing		1,900		1,881
Loan receivables, total non-accruing	[1]	203		197
Estimated gross interest income that would have been recorded based on original terms		9	$ 8
Credit Card Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		1,869		2,038
Credit Card Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		1,941		1,917
Credit Card Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		3,810		3,955
Total Other Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	27,080		26,150
Loan receivables, 90 or more days delinquent and accruing		117		109
Loan receivables, total non-accruing	[1]	75		72
Total Other Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		334		344
Total Other Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		138		128
Total Other Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		472		472
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4],[5]	10,480		10,352
Loan receivables, 90 or more days delinquent and accruing		77		69
Loan receivables, total non-accruing	[1]	8		8
Total Other Loans [Member] | Private Student Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	193		201
Total Other Loans [Member] | Private Student Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	78		70
Total Other Loans [Member] | Private Student Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	271		271
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	10,107		9,852
Loan receivables, 90 or more days delinquent and accruing		37		37
Loan receivables, total non-accruing	[1]	11		11
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		108		104
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		39		39
Total Other Loans [Member] | Personal Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		147		143
Total Other Loans [Member] | Other Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	6,493		5,946
Loan receivables, 90 or more days delinquent and accruing		3		3
Loan receivables, total non-accruing	[1]	56		53
Total Other Loans [Member] | Other Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		33		39
Total Other Loans [Member] | Other Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		21		19
Total Other Loans [Member] | Other Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		$ 54		$ 58

[1] The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

[2] Amounts include carrying values of $13.9 billion and $14.8 billion underlying investors' interest in trust debt at March 31, 2024 and December 31, 2023, respectively, and $15.2 billion and $15.6 billion in seller's interest at March 31, 2024 and December 31, 2023, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[3] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $746 million and $753 million at March 31, 2024 and December 31, 2023, respectively.

[4] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $555 million, $72 million and $23 million, respectively, at March 31, 2024 and $522 million, $69 million and $21 million, respectively, at December 31, 2023.

[5] .

[6] Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

XML

Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024		Mar. 31, 2023
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 920	[1]	$ 632
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.92%	[1]	0.70%
Financing Receivable, Revolving, Converted to Term Loan During Period	$ 185		$ 118
Credit Card Loans [Member] | Contractual Interest Rate Reduction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	920	[1]	632
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 102		$ 32
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.97%		0.04%
Total Other Loans [Member] | Private Student Loans [Member] | Payment Deferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 1		$ 3
Total Other Loans [Member] | Private Student Loans [Member] | InterestRateReductionandPaymentDeferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	101		29
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 54		$ 30
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.53%		0.36%
Total Other Loans [Member] | Personal Loans [Member] | Payment Deferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 4		$ 2
Total Other Loans [Member] | Personal Loans [Member] | InterestRateReductionandPaymentDeferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	26		14
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	10		8
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity and Interest Rate Reduction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 14		$ 6

[1] Accounts that entered a credit card loan modification program include $185 million and $118 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2024 and 2023, respectively.

XML

Loan Receivables (Schedule of Loan Modification Effects) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	14.42%	13.38%
Interest and fees forgiven due to loan modification program	$ 56	$ 12
Credit Card Loans [Member] | Principal Forgiveness
Accounts, Notes, Loans and Financing Receivable [Line Items]
FinancingReceivableExcludingAccruedInterestModifiedPeriod	$ 56
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	8.84%	8.02%
Total Other Loans [Member] | Private Student Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	6 months	6 months
Total Other Loans [Member] | Private Student Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	12 months	12 months
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	13.20%	11.55%
Financing Receivable, Modified, Weighted Average Term Increase from Modification	40 months	38 months
Total Other Loans [Member] | Personal Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	6 months	6 months
Total Other Loans [Member] | Personal Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	12 months	12 months

XML

Loan Receivables (Schedule of Delinquent Loans Receivables Aging) (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	$ 2,451	$ 2,138
30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	302	290
90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	229	208
Credit Card Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	2,118	1,882
Credit Card Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	257	252
Credit Card Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	217	196
Total Other Loans [Member] | Private Student Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	207	147
Total Other Loans [Member] | Private Student Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	22	18
Total Other Loans [Member] | Private Student Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	8	8
Total Other Loans [Member] | Personal Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	126	109
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	23	20
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	$ 4	$ 4

XML

Loan Receivables (Schedule of Financing Receivable, Modified, Subsequent Default) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($)
Credit Card Loans [Member] | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	$ 205
Credit Card Loans [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	161
Credit Card Loans [Member] | Contractual Interest Rate Reduction | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	205
Credit Card Loans [Member] | Contractual Interest Rate Reduction
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	161
Total Other Loans [Member] | Private Student Loans [Member] | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	19
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	18
Total Other Loans [Member] | Private Student Loans [Member] | Payment Deferral | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	2
Total Other Loans [Member] | Private Student Loans [Member] | Payment Deferral
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	2
Total Other Loans [Member] | Private Student Loans [Member] | InterestRateReductionandPaymentDeferral | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	17
Total Other Loans [Member] | Private Student Loans [Member] | InterestRateReductionandPaymentDeferral
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	16
Total Other Loans [Member] | Personal Loans [Member] | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	14
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	8
Total Other Loans [Member] | Personal Loans [Member] | Payment Deferral | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	1
Total Other Loans [Member] | Personal Loans [Member] | Payment Deferral
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	1
Total Other Loans [Member] | Personal Loans [Member] | InterestRateReductionandPaymentDeferral | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	7
Total Other Loans [Member] | Personal Loans [Member] | InterestRateReductionandPaymentDeferral
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	3
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	2
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	1
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity and Interest Rate Reduction | Carrying Value [Member]
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	4
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity and Interest Rate Reduction
Financing Receivable, Modified, Subsequent Default [Line Items]
Defaulted Amount	$ 3

XML

Credit Card and Private Student Loan Securitization Activities (Narrative) (Details)	3 Months Ended
	Mar. 31, 2024 classes
Variable Interest Entity, Primary Beneficiary [Member] | Discover Card Execution Note Trust [Member] | Credit Card Securitization Trusts [Member]
Variable Interest Entity [Line Items]
Number of classes of securities in debt structure (in classes)	4

XML

Credit Card and Private Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Variable Interest Entity [Line Items]
Restricted cash		$ 439	$ 43	$ 33
Loan receivables		126,555	128,409
Allowance for credit losses allocated to securitized loan receivables		(9,258)	(9,283)	$ (7,691)	$ (7,374)
Net loan receivables		117,297	119,126
Other assets		6,065	5,667
Total assets		152,689	151,522
Variable Interest Entity, Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Restricted cash		439	43
Loan receivables		29,192	30,590
Allowance for credit losses allocated to securitized loan receivables		(1,323)	(1,347)
Other assets		4	3
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member]
Variable Interest Entity [Line Items]
Restricted cash		432	36
Investors' interests held by third-party investors		10,975	11,725
Investors' interests held by wholly-owned subsidiaries of Discover Bank		2,917	3,117
Seller's interest		15,155	15,598
Loan receivables	[1]	29,047	30,440
Allowance for credit losses allocated to securitized loan receivables	[1]	(1,323)	(1,347)
Net loan receivables		27,724	29,093
Other assets		3	2
Total assets		$ 28,159	$ 29,131

[1] The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

XML

Deposits (Schedule of Certificates of Deposit Maturities) (Details) $ in Millions	Mar. 31, 2024 USD ($)
Deposits [Abstract]
2024	$ 21,263
2025	12,190
2026	4,211
2027	4,408
2028	2,161
Thereafter	1,009
Total	$ 45,242

XML

Long-Term Borrowings (Narrative) (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Federal Home Loan Bank, advances, general debt obligations, maximum amount available	$ 4,100	$ 3,600
Federal Home Loan Bank advances	1,000	1,000
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member]
Debt Instrument [Line Items]
Total commitment of secured credit facilities	3,500	3,500
Total used commitment of secured credit facilities	$ 0	$ 750

XML

Long-Term Borrowings (Schedule of Long-Term Borrowings and Weighted Average Interest Rates) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 20,475	$ 20,581
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 10,872	10,928
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	3.17%
Long-term borrowings (in dollars)	[1]	$ 9,947	10,003
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	0.58%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	5.03%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[2]	6.04%
Long-term borrowings (in dollars)	[2]	$ 925	925
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | 1-Month SOFR [Member]
Debt Instrument [Line Items]
Interest rate terms		1-month Term SOFR + 0.11448% Tenor Spread Adjustment + 60 basis points
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[2]	6.04%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member] | 1-Month SOFR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.60%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		6.04%
Securitized Debt [Member] | Student Loan Trust [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 61	65
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[3],[4]	9.50%
Long-term borrowings (in dollars)	[3],[4]	$ 61	65
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		Prime rate + 100 basis points
Basis spread on variable rate		1.00%
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		9.50%
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[3],[4]	9.50%
Securitized Debt [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 10,933	10,993
Securitized Debt [Member] | Discover Bank [Member] | Floating-Rate Asset-Backed Securities [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		SOFR plus a spread ranging from 16 to 26 basis points
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate		4.68%
Long-term borrowings (in dollars)		$ 3,337	3,336
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		3.75%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		6.70%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate		3.82%
Long-term borrowings (in dollars)		$ 139	140
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		3.25%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		4.40%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed to Floating-Rate Senior Notes
Debt Instrument [Line Items]
Weighted-average interest rate		7.96%
Long-term borrowings (in dollars)		$ 992	993
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed to Floating-Rate Senior Notes | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		7.96%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed to Floating-Rate Senior Notes | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		7.96%
Corporate Debt Securities [Member] | Parent | Fixed to Floating-Rate Senior Notes | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		SOFR + 3.370%
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	3.53%
Long-term borrowings (in dollars)	[1]	$ 3,535	3,571
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	2.45%
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	4.65%
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	5.97%
Long-term borrowings (in dollars)	[1]	$ 491	500
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		5.97%
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	5.97%
Federal Home Loan Bank Advances | Discover Bank [Member] | Minimum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.16%
Federal Home Loan Bank Advances | Discover Bank [Member] | Maximum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.26%
Federal Home Loan Bank Advances | Discover Bank [Member] | Fixed-Rate FHLB Advance
Debt Instrument [Line Items]
Weighted-average interest rate		4.82%
Long-term borrowings (in dollars)		$ 523	523
Federal Home Loan Bank Advances | Discover Bank [Member] | Fixed-Rate FHLB Advance | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		4.77%
Federal Home Loan Bank Advances | Discover Bank [Member] | Fixed-Rate FHLB Advance | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		4.82%
Federal Home Loan Bank Advances | Discover Bank [Member] | Floating-Rate FHLB Advance
Debt Instrument [Line Items]
Weighted-average interest rate		5.59%
Long-term borrowings (in dollars)		$ 525	$ 525
Federal Home Loan Bank Advances | Discover Bank [Member] | Floating-Rate FHLB Advance | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		5.49%
Federal Home Loan Bank Advances | Discover Bank [Member] | Floating-Rate FHLB Advance | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		5.59%

[1] The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

[2] DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month Term SOFR + 0.11448% Tenor Spread Adjustment + 60 basis points as of March 31, 2024.

[3] Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date. (5)The fixed to floating-rate senior notes include a rate reset on November 2, 2033, to a floating rate based on compounded SOFR + 3.370%. (6)The floating-rate FHLB advances include interest rate terms based on SOFR plus a spread ranging from 16 to 26 basis points as of March 31, 2024.

[4] The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of March 31, 2024.

XML

Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
2024	$ 4,250
2025	6,121
2026	4,868
2027	1,001
2028	1,412
Thereafter	2,823
Total	$ 20,475	$ 20,581

XML

Preferred Stock (Schedule of Stock by Class) (Details) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
		Jun. 22, 2020	Oct. 31, 2017	Mar. 31, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Preferred stock, par or stated value per share				$ 0.01	$ 0.01
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, initial issue date	[1]		Oct. 31, 2017
Preferred stock, earliest redemption date				Oct. 30, 2027
Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, initial issue date	[1]	Jun. 22, 2020
Dividend rate reset				5 years
Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, depositary shares issued (in number of depositary shares)				1,070,000	1,070,000
Proceeds from issuance of preferred stock, net				$ 1,056	$ 1,056
Preferred Stock [Member] | Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, liquidation preference per share	[1],[2],[3]			$ 1,000
Preferred stock, redemption price per share	[1],[2],[3]			$ 1,000
Preferred Stock, Dividend Rate, Percentage	[1],[4]			5.50%
Preferred stock, depositary shares issued (in number of depositary shares)	[1]			570,000	570,000
Proceeds from issuance of preferred stock, net	[1]			$ 563	$ 563
Depositary shares represented by one preferred share				100
Preferred stock, par or stated value per share				$ 0.01
Redemption period of preferred stock following regulatory capital treatment event				90 days
Preferred stock dividend payment rate variable, rate to be used in future periods				3.00%
Preferred Stock [Member] | Series C Preferred Stock [Member] | Three-Month Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Class of Stock [Line Items]
Preferred stock dividend payment rate variable, rate to be used in future periods				0.03338
Preferred Stock [Member] | Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, liquidation preference per share	[1],[3],[5]			$ 1,000
Preferred stock, redemption price per share	[1],[3],[5]			$ 1,000
Preferred Stock, Dividend Rate, Percentage	[1],[6]			6.125%
Preferred stock, depositary shares issued (in number of depositary shares)	[1]			500,000	500,000
Proceeds from issuance of preferred stock, net	[1]			$ 493	$ 493
Depositary shares represented by one preferred share				100
Preferred stock, par or stated value per share				$ 0.01
Redemption period of preferred stock following regulatory capital treatment event				90 days
Preferred stock dividend payment rate variable, rate to be used in future periods				5.00%
Preferred Stock [Member] | Series D Preferred Stock | Five-Year Treasury Rate
Class of Stock [Line Items]
Preferred stock dividend payment rate variable, rate to be used in future periods				0.05783

[1] Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

[2] Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

[3] Redeemable at the redemption price plus declared and unpaid dividends.

[4] Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month Term SOFR plus a spread of 3.338% per annum.

[5] Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

[6] Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

XML

Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	$ (225)
Net change in accumulated other comprehensive income (loss), net of tax	(168)	$ 104
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(393)
Unrealized Gains (Losses) on Available-for-Sale Investment Securities, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(37)	(136)
Net change in accumulated other comprehensive income (loss), net of tax	(97)	92
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(134)	(44)
Gains (Losses) on Cash Flow Hedges, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(8)	(14)
Net change in accumulated other comprehensive income (loss), net of tax	(71)	12
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(79)	(2)
Gains (Losses) on Pension Plan, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(180)	(189)
Net change in accumulated other comprehensive income (loss), net of tax	0	0
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(180)	(189)
Accumulated Other Comprehensive (Loss) Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(225)	(339)
Net change in accumulated other comprehensive income (loss), net of tax	(168)	104
Accumulated other comprehensive income (loss), net of tax, balance at end of period	$ (393)	$ (235)

XML

Accumulated Other Comprehensive Income (Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, before tax	$ (129)	$ 122
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax benefit (expense)	32	(30)
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax	(97)	92
Available-for-sale investment securities, net change, before tax	(129)	122
Available-for-sale investment securities, net change, tax benefit (expense)	32	(30)
Available-for-sale investment securities, net change, net of tax	(97)	92
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax	(131)	10
Cash flow hedges, net unrealized gains (losses) arising during the period, tax benefit (expense)	32	(2)
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax	(99)	8
Cash flow hedges, amounts reclassified from AOCI, before tax	37	5
Cash flow hedges, amounts reclassified from AOCI, tax benefit (expense)	(9)	(1)
Cash flow hedges, amounts reclassified from AOCI, net of tax	28	4
Cash flow hedges, net change, before tax	(94)	15
Cash flow hedges, net change, tax benefit (expense)	23	(3)
Cash flow hedges, net change, net of tax	$ (71)	$ 12

XML

Income Taxes (Schedule of Effective Income Tax Rate Calculation) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income before income taxes	$ 404	$ 1,257
Income tax expense	$ 96	$ 289
Effective income tax rate (in percent)	23.70%	23.00%

XML

Earnings Per Share (Schedule of Basic and Diluted EPS ) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net income	$ 308	$ 968
Preferred stock dividends	(31)	(31)
Net income available to common stockholders	277	937
Income allocated to participating securities	(3)	(6)
Net income allocated to common stockholders	274	931
Net income (loss) available to common stockholders, diluted	$ 274	$ 931
Denominator:
Weighted-average shares of common stock outstanding	250	262
Weighted-average shares of common stock outstanding and common stock equivalents	250	262
Basic earnings per common share (in dollars per share)	$ 1.10	$ 3.55
Diluted earnings per common share (in dollars per share)	$ 1.10	$ 3.55

XML

Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) $ in Millions		Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Parent Company [Member]
Compliance with Regulatory Capital Requirements [Line Items]
Total capital to risk-weighted assets, actual amount		$ 17,513	$ 17,986
Total capital to risk-weighted assets, actual ratio (in percent)	[1]	0.133	0.137
Total capital to risk-weighted assets, minimum capital requirements, amount		$ 10,499	$ 10,471
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.080	0.080
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 13,124	$ 13,088
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.100	0.100
Tier I capital to risk-weighted assets, actual amount		$ 15,394	$ 15,872
Tier I capital to risk-weighted assets, actual ratio (in percent)	[1]	0.117	0.121
Tier I capital to risk-weighted assets, minimum capital requirements, amount		$ 7,874	$ 7,853
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.060	0.060
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 7,874	$ 7,853
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.060	0.060
Tier I capital to average assets, actual amount		$ 15,394	$ 15,872
Tier I capital to average assets, actual ratio (in percent)	[1]	0.101	0.107
Tier I capital to average assets, minimum capital requirements, amount		$ 6,086	$ 5,915
Tier I capital to average assets, minimum capital requirements, ratio (in percent)		0.040	0.040
CET1 capital to risk-weighted assets, actual amount		$ 14,338	$ 14,816
CET1 capital to risk-weighted assets, actual ratio (in percent)	[1]	0.109	0.113
CET1 capital to risk-weighted assets, minimum capital requirements, amount		$ 5,906	$ 5,890
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		4.50%	4.50%
Discover Bank [Member]
Compliance with Regulatory Capital Requirements [Line Items]
Total capital to risk-weighted assets, actual amount		$ 16,598	$ 16,856
Total capital to risk-weighted assets, actual ratio (in percent)	[1]	0.128	0.130
Total capital to risk-weighted assets, minimum capital requirements, amount		$ 10,349	$ 10,352
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.080	0.080
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 12,936	$ 12,939
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.100	0.100
Tier I capital to risk-weighted assets, actual amount		$ 13,752	$ 13,910
Tier I capital to risk-weighted assets, actual ratio (in percent)	[1]	0.106	0.108
Tier I capital to risk-weighted assets, minimum capital requirements, amount		$ 7,762	$ 7,764
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.060	0.060
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 10,349	$ 10,352
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.080	0.080
Tier I capital to average assets, actual amount		$ 13,752	$ 13,910
Tier I capital to average assets, actual ratio (in percent)	[1]	0.092	0.095
Tier I capital to average assets, minimum capital requirements, amount		$ 6,004	$ 5,833
Tier I capital to average assets, minimum capital requirements, ratio (in percent)		0.040	0.040
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 7,505	$ 7,292
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.050	0.050
CET1 capital to risk-weighted assets, actual amount		$ 13,752	$ 13,910
CET1 capital to risk-weighted assets, actual ratio (in percent)	[1]	0.106	0.108
CET1 capital to risk-weighted assets, minimum capital requirements, amount		$ 5,821	$ 5,823
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		4.50%	4.50%
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 8,409	$ 8,411
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	6.50%	6.50%

[1] Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

[2] The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

XML

Commitments, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Commitments, Contingencies and Guarantees [Line Items]
Off-Balance-Sheet, Credit Loss, Liability	$ 0
Contingent liabilities related to equity method investments	0	$ 0
Commitments to Extend Credit [Member]
Commitments, Contingencies and Guarantees [Line Items]
Unused commitments to extend credit for loans	233,000
CounterpartySettlementGuarantees
Commitments, Contingencies and Guarantees [Line Items]
Guarantor obligations, maximum exposure, undiscounted	110
Merchant Chargeback Guarantees [Member]
Commitments, Contingencies and Guarantees [Line Items]
Escrow deposits and settlement withholdings	$ 9	$ 10

XML

Commitments, Contingencies and Guarantees (Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Merchant Chargeback Guarantees [Member]
Loss Contingencies [Line Items]
Aggregate sales transaction volume	[1]	$ 61,332	$ 60,833

[1] Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

XML

Litigation and Regulatory Matters (Narrative) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Dec. 22, 2020	Mar. 31, 2024	Dec. 31, 2023	Dec. 31, 2023	Jun. 30, 2023
Card Product Misclassification
Loss Contingencies [Line Items]
Accrued Liabilities and Other Liabilities		$ 1,200	$ 375	$ 375	$ 365
Increase in Accrued Merchant Refund Liability			$ 11
Decrease in Accrued Merchant Refund Liability				$ 12
Payments for Legal Settlements		9
Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member]
Loss Contingencies [Line Items]
Amount of civil money penalty for consent order	$ 25
Maximum [Member] | Pending and Threatened Litigation [Member]
Loss Contingencies [Line Items]
Loss contingency, range of possible loss, portion not accrued		$ 230
Minimum [Member] | Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member]
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss	$ 10

XML

Fair Value Measurements (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions		Mar. 31, 2024		Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	$ 13,261		$ 13,402
US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	12,822		12,937
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	439	[2]	465
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		13,261		13,402
Equity Securities, FV-NI				1
Fair Value, Recurring [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value		1	[3]	2
Derivative financial instruments, liabilities, fair value	[3]	6
Fair Value, Recurring [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value				2
Derivative financial instruments, liabilities, fair value		5
Fair Value, Recurring [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,822		12,937
Fair Value, Recurring [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		439		465
Fair Value, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,815		12,928
Equity Securities, FV-NI				1
Fair Value, Recurring [Member] | Level 1 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value		0	[3]	0
Derivative financial instruments, liabilities, fair value	[3]	0
Fair Value, Recurring [Member] | Level 1 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value				0
Derivative financial instruments, liabilities, fair value		0
Fair Value, Recurring [Member] | Level 1 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,815		12,928
Fair Value, Recurring [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Fair Value, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		446		474
Equity Securities, FV-NI				0
Fair Value, Recurring [Member] | Level 2 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value		1	[3]	2
Derivative financial instruments, liabilities, fair value	[3]	6
Fair Value, Recurring [Member] | Level 2 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value				2
Derivative financial instruments, liabilities, fair value		5
Fair Value, Recurring [Member] | Level 2 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		7		9
Fair Value, Recurring [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		439		465
Fair Value, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Equity Securities, FV-NI				0
Fair Value, Recurring [Member] | Level 3 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value		0	[3]	0
Derivative financial instruments, liabilities, fair value	[3]	0
Fair Value, Recurring [Member] | Level 3 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative financial instruments, assets, fair value				0
Derivative financial instruments, liabilities, fair value		0
Fair Value, Recurring [Member] | Level 3 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Fair Value, Recurring [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		$ 0		$ 0

[1] Available-for-sale investment securities are reported at fair value.

[2] Maturities of RMBS are reflective of the contractual maturities of the investment.

[3] Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

XML

Fair Value Measurements (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill and Intangible Asset Impairment	$ 0	$ 0
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, par value	$ 457,000,000
Available for sale securities, weighted average coupon rate (in percent)	4.10%
Available for sale securities, weighted average remaining maturity (in years)	4 years

XML

Fair Value Measurements (Schedule of Financial Instruments Measured at Other Than Fair Value) (Details) - USD ($) $ in Millions		Mar. 31, 2024		Dec. 31, 2023
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		$ 238		$ 234
Net loan receivables		124,936		126,940
Cash and cash equivalents	[1]	14,004		11,685
Restricted cash	[1]	439		43
Accrued interest receivables	[1],[2]	1,490		1,450
Time deposits	[3]	45,276		45,333
Short-term debt, fair value				750
Long-term borrowings		20,372		20,304
Accrued interest payables	[1],[2]	445		421
Estimated Fair Value [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		10,828		10,835
Estimated Fair Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		9,544		9,469
Estimated Fair Value [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		238		234
Estimated Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Net loan receivables		0		0
Cash and cash equivalents	[1]	14,004		11,685
Restricted cash	[1]	439		43
Accrued interest receivables	[1],[2]	0		0
Time deposits	[3]	0		0
Short-term debt, fair value				0
Long-term borrowings		0		0
Accrued interest payables	[1],[2]	0		0
Estimated Fair Value [Member] | Level 1 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 1 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Estimated Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		238		234
Net loan receivables		0		0
Cash and cash equivalents	[1]	0		0
Restricted cash	[1]	0		0
Accrued interest receivables	[1],[2]	1,490		1,450
Time deposits	[3]	45,276		45,333
Short-term debt, fair value				750
Long-term borrowings		20,311		20,239
Accrued interest payables	[1],[2]	445		421
Estimated Fair Value [Member] | Level 2 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		10,767		10,770
Estimated Fair Value [Member] | Level 2 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		9,544		9,469
Estimated Fair Value [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		238		234
Estimated Fair Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Net loan receivables		124,936		126,940
Cash and cash equivalents	[1]	0		0
Restricted cash	[1]	0		0
Accrued interest receivables	[1],[2]	0		0
Time deposits	[3]	0		0
Short-term debt, fair value				0
Long-term borrowings		61		65
Accrued interest payables	[1],[2]	0		0
Estimated Fair Value [Member] | Level 3 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		61		65
Estimated Fair Value [Member] | Level 3 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		261		253
Net loan receivables		117,297		119,126
Cash and cash equivalents	[1]	14,004		11,685
Restricted cash	[1]	439		43
Accrued interest receivables	[1],[2]	1,490		1,450
Time deposits	[3]	45,242		45,240
Short-term debt, fair value				750
Long-term borrowings		20,475		20,581
Accrued interest payables	[1],[2]	445		421
Carrying Value [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		10,933		10,993
Carrying Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		9,542		9,588
Carrying Value [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		261		253
Held-to-maturity investment securities	[4]	238		234
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities	[4],[5]	$ 238	[6]	$ 234

[1] The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

[2] Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

[3] Excludes deposits without contractually defined maturities for all periods presented.

[4] Held-to-maturity investment securities are reported at amortized cost.

[5] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

[6] Maturities of RMBS are reflective of the contractual maturities of the investment.

XML

Derivatives and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Interest Income
Derivative [Line Items]
Cash flow hedge gain (loss) to be reclassified within twelve months	$ 104
Financing Receivable [Member]
Derivative [Line Items]
Initial maximum period for cash flow hedges (in years)	5 years	5 years

XML

Derivatives and Hedging Activities (Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances) (Details) € in Millions, £ in Millions, $ in Millions, $ in Millions, $ in Millions, ₨ in Billions		Mar. 31, 2024 USD ($) transactions	Mar. 31, 2024 EUR (€) transactions	Mar. 31, 2024 GBP (£) transactions	Mar. 31, 2024 SGD ($) transactions	Mar. 31, 2024 INR (₨) transactions	Dec. 31, 2023 USD ($) transactions		Dec. 31, 2023 EUR (€) transactions	Dec. 31, 2023 GBP (£) transactions	Dec. 31, 2023 SGD ($) transactions	Dec. 31, 2023 INR (₨) transactions	Dec. 31, 2023 AUD ($) transactions
Derivatives, Fair Value [Line Items]
Derivative assets	[1]	$ 1					$ 4	[2]
Derivative liabilities	[1]	11					0	[2]
Collateral held, derivative assets	[3]	0					0	[2]
Collateral posted, derivative liabilities	[3]	(11)					0	[2]
Total net derivative assets		1					4	[2]
Total net derivative liabilities		0					0	[2]
Designated as Hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 12,000					10,650
Derivative, number of outstanding derivative contracts | transactions		19	19	19	19	19
Derivative assets		$ 1					2	[2]
Derivative liabilities		6					0	[2]
Designated as Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 12,762					8,650
Derivative, number of outstanding derivative contracts | transactions		17	17	17	17	17
Derivative assets		$ 0					2	[2]
Derivative liabilities		5					0	[2]
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount	[4]	$ 32					29
Derivative, number of outstanding derivative contracts | transactions		6	6	6	6	6
Derivative assets		$ 0					0	[2]
Derivative liabilities		0					0	[2]
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Euro Member Countries, Euro
Derivatives, Fair Value [Line Items]
Derivative, notional amount | €			€ 6						€ 6
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | United Kingdom, Pounds
Derivatives, Fair Value [Line Items]
Derivative, notional amount | £				£ 6						£ 6
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Singapore, Dollars
Derivatives, Fair Value [Line Items]
Derivative, notional amount					$ 1						$ 1
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | India, Rupees
Derivatives, Fair Value [Line Items]
Derivative, notional amount | ₨						₨ 1.5						₨ 1.1
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Australia, Dollars
Derivatives, Fair Value [Line Items]
Derivative, notional amount													$ 2
Not Designated as Hedges [Member] | When-Issued Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 23					$ 35
Derivative, number of outstanding derivative contracts | transactions		1	1	1	1	1	1		1	1	1	1	1

[1] In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities and tax exempt single family mortgage revenue bonds as part of its community reinvestment initiatives. At March 31, 2024, the Company had one outstanding contract with a total notional amount of $23 million and an immaterial fair value. At December 31, 2023, the Company had one outstanding contract with a total notional amount of $35 million and an immaterial fair value.

[2] T

[3] Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

[4] he foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million and INR 1.5 billion as of March 31, 2024, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 1.1 billion and AUD 2 million as of December 31, 2023.

XML

Derivatives and Hedging Activities Derivatives and Hedging Activities (Schedule of Hedged Items in a Fair Value Hedging Relationship) (Details) - Long-term Debt [Member] - USD ($) $ in Millions		Mar. 31, 2024	Dec. 31, 2023
Schedule of Hedged Items in Fair Value Hedging Relationship [Line Items]
Carrying amount of hedged assets/liabilities		$ 12,614	$ 8,620
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease)	[1]	(108)	0
Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease)		$ 10	$ 12

[1] The balance includes $10 million and $12 million of cumulative hedging adjustments related to discontinued hedging relationships as of March 31, 2024 and December 31, 2023, respectively.

XML

Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	$ (37)	$ (5)
Interest Expense [Member] | Deposits [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	(1,210)	(756)
Interest Expense [Member] | Deposits [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	0	0
Gains on hedged items, fair value hedges	3	0
Losses on interest rate swaps, fair value hedges	(4)	0
Total gains on fair value hedges	(1)	0
Interest Expense [Member] | Long-term Debt [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	(245)	(189)
Interest Expense [Member] | Long-term Debt [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	3	2
Gains on hedged items, fair value hedges	103	(35)
Losses on interest rate swaps, fair value hedges	(138)	21
Total gains on fair value hedges	(35)	(14)
Interest Income | Credit Card Loans [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	3,938	3,321
Interest Income | Credit Card Loans [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	(40)	(7)
Gains on hedged items, fair value hedges	0	0
Losses on interest rate swaps, fair value hedges	0	0
Total gains on fair value hedges	$ 0	$ 0

XML

Segment Disclosures (Narrative) (Details)	3 Months Ended
	Mar. 31, 2024 segment
Segment Reporting [Abstract]
Number of reportable segments (in number of segments)	2

XML

Segment Disclosures (Schedule of Segment Disclosures) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Interest income	$ 4,948	$ 4,077
Interest expense	1,461	945
Net interest income	3,487	3,132
Provision for credit losses	1,497	1,102
Other income	723	610
Other expense	2,309	1,383
Income before income taxes	404	1,257
Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	3,938	3,321
Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	264	252
Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	333	248
Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	115	64
Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	298	192
Operating Segments [Member] | Digital Banking [Member]
Segment Reporting Information [Line Items]
Interest income	4,948	4,077
Interest expense	1,461	945
Net interest income	3,487	3,132
Provision for credit losses	1,497	1,102
Other income	591	522
Other expense	2,259	1,342
Income before income taxes	322	1,210
Operating Segments [Member] | Digital Banking [Member] | Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	3,938	3,321
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	264	252
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	333	248
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	115	64
Operating Segments [Member] | Digital Banking [Member] | Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	298	192
Operating Segments [Member] | Payment Services [Member]
Segment Reporting Information [Line Items]
Interest income	0	0
Interest expense	0	0
Net interest income	0	0
Provision for credit losses	0	0
Other income	132	88
Other expense	50	41
Income before income taxes	82	47
Operating Segments [Member] | Payment Services [Member] | Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0	0
Operating Segments [Member] | Payment Services [Member] | Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	$ 0	$ 0

XML

Revenue from Contracts with Customers (Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net		$ 371	$ 330
Protection products revenue		42	43
Transaction processing revenue		87	67
Other income		23	22
Loan fee income		200	166
Gains (losses) on equity investments		0	(18)
Total other income		723	610
Customer rewards included in discount and interchange revenue		703	716
Deposit product fees reported in net interest income and excluded from other income subject to ASC 606		2	6
Noninterest Income not Subject to ASC 606		200	148
Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	371	330
Protection products revenue		42	43
Transaction processing revenue		87	67
Other income		23	22
Total other income subject to ASC 606	[2]	523	462
Operating Segments [Member] | Digital Banking [Member]
Disaggregation of Revenue [Line Items]
Loan fee income		200	166
Gains (losses) on equity investments			0
Total other income		591	522
Noninterest Income not Subject to ASC 606		200	166
Operating Segments [Member] | Digital Banking [Member] | Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	346	310
Protection products revenue		42	43
Transaction processing revenue		0	0
Other income		3	3
Total other income subject to ASC 606	[2]	391	356
Operating Segments [Member] | Payment Services [Member]
Disaggregation of Revenue [Line Items]
Loan fee income		0	0
Gains (losses) on equity investments			(18)
Total other income		132	88
Noninterest Income not Subject to ASC 606		0	(18)
Operating Segments [Member] | Payment Services [Member] | Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	25	20
Protection products revenue		0	0
Transaction processing revenue		87	67
Other income		20	19
Total other income subject to ASC 606	[2]	$ 132	$ 106

[1] Net of rewards, including Cashback Bonus rewards, of $703 million and $716 million for the three months ended March 31, 2024 and 2023, respectively.

[2] Excludes $2 million and $6 million of deposit product fees that are reported within net interest income for the three months ended March 31, 2024 and 2023, respectively.