0001393612FALSE00013936122024-12-232024-12-23

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
Form 8-K  
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 23, 2024
  
DISCOVER FINANCIAL SERVICES
(Exact name of registrant as specified in its charter)
 
Commission File Number: 001-33378
 
Delaware 36-2517428
(State or other jurisdiction
of incorporation) 		 (IRS Employer
Identification No.)
2500 Lake Cook Road, Riverwoods, Illinois 60015
(Address of principal executive offices, including zip code)
(224) 405-0900
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareDFSNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐




Item 2.02.     Results of Operations and Financial Condition.
 
On December 23, 2024, Discover Financial Services (the “Company”) filed an amended annual report on Form 10-K/A for the year ended December 31, 2023, which included restated audited financial statements as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023 that were previously included in the Company’s annual report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (the "SEC") on February 23, 2024. The Company also filed amended quarterly reports on Form 10-Q/A to restate its unaudited condensed consolidated financial statements previously included in its quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2024 and June 30, 2024 previously filed with the SEC on May 1, 2024 and July 31, 2024, respectively (collectively, with the Form 10-K/A, the "Amended Reports"), and its quarterly report on Form 10-Q for the quarterly period ended September 30, 2024. Attached as Exhibit 99.1 to this Current Report on Form 8-K is an updated financial data supplement presenting certain financial data and periods in order to reflect the restatements to the financial statements included in the Amended Reports along with the related restatement impacts. The adjusted results for the quarter ended and nine months ended September 30, 2024 reflect amendments arising after the earnings release on October 16, 2024, but prior to the filing of the Company's quarterly report on Form 10-Q for the quarterly period ended September 30, 2024.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly stated by specific reference in such filing.








Item 9.01.     Financial Statements and Exhibits.
  
(d) Exhibits  
Exhibit No. Description
Updated Financial Data Supplement of the Company
104Cover Page Interactive Data File — the cover page from this Current Report on Form 8-K, formatted as Inline XBRL (included as Exhibit 101)





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
DISCOVER FINANCIAL SERVICES
Dated: December 23, 2024
By:
/s/ Efie Vainikos
Name: Efie Vainikos
Title: Assistant Secretary



DISCOVER FINANCIAL SERVICESExhibit 99.1
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
As Restated
As Adjusted 1
Quarter EndedTwelve Months
Ended		Quarter EndedNine Months
Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024		Sep 30,
2024
EARNINGS SUMMARY
   Discount/Interchange Revenue$1,030$1,141$1,147$1,142$4,460$1,024$1,153$1,142$3,319
   Discount and Interchange Revenue, net3143533603541,3813214373631,121
Total Non-Interest Income5946847057122,6956731,0147982,485
Revenue Net of Interest Expense$3,726$3,861$4,027$4,180$15,794$4,160$4,538$4,453$13,151
    Other Expense $124$162$254$263$803$148$336$277$761
Total Operating Expense $1,383$1,404$1,564$1,788$6,139$1,544$1,738$1,788$5,070
Income/ (Loss) Before Income Taxes$1,241$1,152$761$483$3,637$1,119$2,061$1,192$4,372
Tax Expense2862631751178412685383221,128
Net Income/ (Loss)$955$889$586$366$2,796$851$1,523$870$3,244
Net Income/ (Loss) Allocated to Common Stockholders $918$883$550$364$2,715$813$1,515$834$3,162
Operating Efficiency37.1 %36.4%38.9 %42.8%38.9%37.1 %38.3%40.1 %38.6%
ROE 28 %26%17 %10%20%24 %40%21 %28%
Payout Ratio149 %98%31 %40%94%22 %12%19 %16%
PER SHARE STATISTICS
Basic EPS $3.50 $3.49 $2.21 $1.45 $10.71 $3.25 $6.04 $3.32 $12.61 
Diluted EPS $3.50 $3.49 $2.21 $1.45 $10.70 $3.25 $6.03 $3.32 $12.61 
Book Value per share $53.00 $53.54 $54.65 $56.92 $56.92 $58.54 $63.76 $68.11 $68.11 
SEGMENT RESULTS
Digital Banking
Non-Interest Income$506 $569 $575 $595 $2,245 $541 $691 $669 $1,901 
Revenue Net of Interest Expense3,638 3,746 3,897 4,063 15,344 4,028 4,215 4,324 12,567 
Total Operating Expense1,342 1,359 1,519 1,725 5,945 1,494 1,692 1,743 4,929 
Income/ (Loss) Before Income Taxes$1,194 $1,082 $676 $429 $3,381 $1,037 $1,784 $1,108 $3,929 
Pretax Return on Loan Receivables 4.32 %3.77 %2.23 %1.35 %2.86 %3.28 %5.65 %3.45 %4.12 %
1 Incremental information arising after the earnings release on October 16, 2024 for the period ended September 30, 2024, but prior to the filing of the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2024, has increased the estimate for probable penalties related to the card product misclassification by $90 million. This charge is included in the results for the quarter ended September 30, 2024, as well as the nine month period ended on the same date.


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
As Restated
As Adjusted 1
Quarter Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024
BALANCE SHEET SUMMARY
Assets
Other Assets$4,610 $4,975 $5,696 $5,858 $6,083 $5,973 $5,371 
    Total Assets$133,290 $138,235 $143,615 $151,713 $152,707 $150,888 $151,615 
Liabilities & Stockholders' Equity
Accrued Expenses and Other Liabilities$5,789 $5,590 $6,464 $7,216 $7,132 $7,387 $6,477 
    Total Liabilities119,692 124,853 129,950 137,478 138,037 134,878 134,506 
Total Equity13,598 13,382 13,665 14,235 14,670 16,010 17,109 
    Total Liabilities and Stockholders' Equity$133,290 $138,235 $143,615 $151,713 $152,707 $150,888 $151,615 
BALANCE SHEET STATISTICS
Total Common Equity$12,542 $12,326 $12,609 $13,179 $13,614 $14,954 $16,053 
Total Common Equity/Total Assets9.4 %8.9 %8.8 %8.7 %8.9 %9.9 %10.6 %
Total Common Equity/Net Loans 11.9 %11.2 %11.1 %11.1 %11.6 %12.5 %13.5 %
Tangible Assets $133,035 $137,980 $143,360 $151,458 $152,452 $150,633 $151,360 
Tangible Common Equity $12,287 $12,071 $12,354 $12,924 $13,359 $14,699 $15,798 
Tangible Common Equity/Tangible Assets 9.2 %8.7 %8.6 %8.5 %8.8 %9.8 %10.4 %
Tangible Common Equity/Net Loans 11.7 %11.0 %10.8 %10.8 %11.4 %12.3 %13.3 %
Tangible Common Equity per share $47.89 $48.29 $49.41 $51.67 $53.31 $58.53 $62.89 
REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio 14.3 %13.8 %13.6 %13.2 %13.3 %14.2 %14.9 %
Tier 1 Risk Based Capital Ratio12.5 %12.1 %12.0 %11.6 %11.7 %12.6 %13.4 %
Tier 1 Leverage Ratio11.1 %10.8 %10.6 %10.3 %10.1 %11.1 %11.4 %
Common Equity Tier 1 Capital Ratio11.6 %11.2 %11.1 %10.8 %10.9 %11.8 %12.5 %
1 Incremental information arising after the earnings release on October 16, 2024 for the period ended September 30, 2024, but prior to the filing of the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2024, has increased the estimate for probable penalties related to the card product misclassification by $90 million. This charge is included in the results for the quarter ended September 30, 2024.


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
Restatement Impacts
Adjustments 1
Quarter EndedTwelve Months
Ended		Quarter EndedNine Months
Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024		Sep 30,
2024
EARNINGS SUMMARY
   Discount/Interchange Revenue($16)($17)($17)($16)($66)($50)$—$—($50)
   Discount and Interchange Revenue, net(16)(17)(17)(16)(66)(50)——(50)
Total Non-Interest Income(16)(17)(17)(16)(66)(50)——(50)
Revenue Net of Interest Expense($16)($17)($17)($16)($66)($50)$—$—($50)
    Other Expense $—$—$110$13$123($765)$9$96($660)
Total Operating Expense $—$—$110$13$123($765)$9$96($660)
Income/ (Loss) Before Income Taxes($16)($17)($127)($29)($189)$715($9)($96)$610
Tax Expense(3)(5)(30)(7)(45)172(2)(1)169
Net Income/ (Loss)($13)($12)($97)($22)($144)$543($7)($95)$441
Net Income/ (Loss) Allocated to Common Stockholders ($13)($12)($97)($22)($144)$539($6)($94)$439
Operating Efficiency20 bps20bps290 bps50bps100 bps(1,780)bps20 bps210 bps(480)bps
ROE 100 bps—bps(200)bps(100)bps(100)bps1,600bps— bps(200)bps400 bps
Payout Ratio200 bps100bps500 bps300bps500 bps(4,400)bps— bps200 bps(300)bps
PER SHARE STATISTICS
Basic EPS ($0.05)($0.05)($0.38)($0.09)($0.56)$2.15 ($0.02)($0.37)$1.75 
Diluted EPS ($0.05)($0.05)($0.38)($0.09)($0.56)$2.15 ($0.03)($0.37)$1.76 
Book Value per share ($1.79)($1.90)($2.28)($2.37)($2.37)($0.20)($0.23)($0.60)($0.60)
SEGMENT RESULTS
Digital Banking
Non-Interest Income($16)($17)($17)($16)($66)($50)$— $— ($50)
Revenue Net of Interest Expense(16)(17)(17)(16)(66)(50)— — (50)
Total Operating Expense— — 110 13 123 (765)9 96 (660)
Income/ (Loss) Before Income Taxes($16)($17)($127)($29)($189)$715 ($9)($96)$610 
Pretax Return on Loan Receivables (6)bps(5)bps(42)bps(10)bps(16)bps226 bps(3)bps(30)bps64 bps
1 Incremental information arising after the earnings release on October 16, 2024 for the period ended September 30, 2024, but prior to the filing of the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2024, has increased the estimate for probable penalties related to the card product misclassification by $90 million. This charge is included in the results for the quarter ended September 30, 2024, as well as the nine month period ended on the same date.


DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
Restatement Impacts
Adjustments 1
Quarter Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024
BALANCE SHEET SUMMARY
Assets
Other Assets$149 $153 $183 $191 $18 $21 $22 
    Total Assets$149 $153 $183 $191 $18 $21 $22 
Liabilities & Stockholders' Equity
Accrued Expenses and Other Liabilities$611 $627 $754 $784 $68 $78 $173 
    Total Liabilities611 627 754 784 68 78 173 
Total Equity(462)(474)(571)(593)(50)(57)(151)
    Total Liabilities and Stockholders' Equity$149 $153 $183 $191 $18 $21 $22 
BALANCE SHEET STATISTICS
Total Common Equity($462)($474)($571)($593)($50)($57)($151)
Total Common Equity/Total Assets(40)bps(40)bps(40)bps(40)bps— bps— bps(10)bps
Total Common Equity/Net Loans (50)bps(50)bps(50)bps(50)bps— bps(10)bps(20)bps
Tangible Assets $149 $153 $183 $191 $18 $21 $22 
Tangible Common Equity ($462)($474)($571)($593)($50)($57)($151)
Tangible Common Equity/Tangible Assets (40)bps(40)bps(40)bps(40)bps— bps— bps(10)bps
Tangible Common Equity/Net Loans (40)bps(40)bps(50)bps(50)bps— bps(10)bps(20)bps
Tangible Common Equity per share ($1.79)($1.90)($2.28)($2.37)($0.20)($0.23)($0.60)
REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio (40)bps(50)bps(50)bps(50)bps— bps(10)bps(10)bps
Tier 1 Risk Based Capital Ratio(50)bps(40)bps(50)bps(50)bps— bps(10)bps(10)bps
Tier 1 Leverage Ratio(30)bps(30)bps(40)bps(40)bps— bps— bps(10)bps
Common Equity Tier 1 Capital Ratio(50)bps(50)bps(50)bps(50)bps— bps(10)bps(20)bps
1 Incremental information arising after the earnings release on October 16, 2024 for the period ended September 30, 2024, but prior to the filing of the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2024, has increased the estimate for probable penalties related to the card product misclassification by $90 million. This charge is included in the results for the quarter ended September 30, 2024.



DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
As Previously Reported
Quarter EndedTwelve Months
Ended		Quarter EndedNine Months
Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024		Sep 30,
2024
EARNINGS SUMMARY
   Discount/Interchange Revenue$1,046$1,158$1,164$1,158$4,526$1,074$1,153$1,142$3,369
   Discount and Interchange Revenue, net3303703773701,4473714373631,171
Total Non-Interest Income6107017227282,7617231,0147982,535
Revenue Net of Interest Expense$3,742$3,878$4,044$4,196$15,860$4,210$4,538$4,453$13,201
    Other Expense $124$162$144$250$680$913$327$181$1,421
Total Operating Expense $1,383$1,404$1,454$1,775$6,016$2,309$1,729$1,692$5,730
Income/ (Loss) Before Income Taxes$1,257$1,169$888$512$3,826$404$2,070$1,288$3,762
Tax Expense28926820512488696540323959
Net Income/ (Loss)$968$901$683$388$2,940$308$1,530$965$2,803
Net Income/ (Loss) Allocated to Common Stockholders $931$895$647$386$2,859$274$1,521$928$2,723
Operating Efficiency36.9 %36.2%36.0 %42.3%37.9 %54.9%38.1 %38.0%43.4 %
ROE 27 %26%19 %11%21 %8%40 %23%24 %
Payout Ratio147 %97%26 %37%89 %66%12 %17%19 %
PER SHARE STATISTICS
Basic EPS $3.55 $3.54 $2.59 $1.54 $11.27 $1.10 $6.06 $3.69 $10.86 
Diluted EPS $3.55 $3.54 $2.59 $1.54 $11.26 $1.10 $6.06 $3.69 $10.85 
Book Value per share $54.79 $55.44 $56.93 $59.29 $59.29 $58.74 $63.99 $68.71 $68.71 
SEGMENT RESULTS
Digital Banking
Non-Interest Income$522 $586 $592 $611 $2,311 $591 $691 $669 $1,951 
Revenue Net of Interest Expense3,654 3,763 3,914 4,079 15,410 4,078 4,215 4,324 12,617 
Total Operating Expense1,342 1,359 1,409 1,712 5,822 2,259 1,683 1,647 5,589 
Income/ (Loss) Before Income Taxes$1,210 $1,099 $803 $458 $3,570 $322 $1,793 $1,204 $3,319 
Pretax Return on Loan Receivables 4.38 %3.82 %2.65 %1.45 %3.02 %1.02 %5.68 %3.75 %3.48 %









DISCOVER FINANCIAL SERVICES
RECONCILIATION OF PRIOR PERIOD RESTATED FINANCIAL RESULTS
(unaudited, in millions, except per share statistics)
As Previously Reported
Quarter Ended
Mar 31,
2023		Jun 30,
2023		Sep 30,
2023		Dec 31,
2023		Mar 31,
2024		Jun 30,
2024		Sep 30,
2024
BALANCE SHEET SUMMARY
Assets
Other Assets$4,461 $4,822 $5,513 $5,667 $6,065 $5,952 $5,349 
    Total Assets$133,141 $138,082 $143,432 $151,522 $152,689 $150,867 $151,593 
Liabilities & Stockholders' Equity
Accrued Expenses and Other Liabilities$5,178 $4,963 $5,710 $6,432 $7,064 $7,309 $6,304 
    Total Liabilities119,081 124,226 129,196 136,694 137,969 134,800 134,333 
Total Equity14,060 13,856 14,236 14,828 14,720 16,067 17,260 
    Total Liabilities and Stockholders' Equity$133,141 $138,082 $143,432 $151,522 $152,689 $150,867 $151,593 
BALANCE SHEET STATISTICS
Total Common Equity$13,004 $12,800 $13,180 $13,772 $13,664 $15,011 $16,204 
Total Common Equity/Total Assets9.8 %9.3 %9.2 %9.1 %8.9 %9.9 %10.7 %
Total Common Equity/Net Loans 12.4 %11.7 %11.6 %11.6 %11.6 %12.6 %13.7 %
Tangible Assets $132,886 $137,827 $143,177 $151,267 $152,434 $150,612 $151,338 
Tangible Common Equity $12,749 $12,545 $12,925 $13,517 $13,409 $14,756 $15,949 
Tangible Common Equity/Tangible Assets 9.6 %9.1 %9.0 %8.9 %8.8 %9.8 %10.5 %
Tangible Common Equity/Net Loans 12.1 %11.4 %11.3 %11.3 %11.4 %12.4 %13.5 %
Tangible Common Equity per share $49.68 $50.19 $51.69 $54.04 $53.51 $58.76 $63.49 
REGULATORY CAPITAL RATIOS
Total Risk Based Capital Ratio 14.7 %14.3 %14.1 %13.7 %13.3 %14.3 %15.0 %
Tier 1 Risk Based Capital Ratio13.0 %12.5 %12.5 %12.1 %11.7 %12.7 %13.5 %
Tier 1 Leverage Ratio11.4 %11.1 %11.0 %10.7 %10.1 %11.1 %11.5 %
Common Equity Tier 1 Capital Ratio12.1 %11.7 %11.6 %11.3 %10.9 %11.9 %12.7 %

v3.24.4
Document and Entity Information Document
Dec. 23, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Dec. 23, 2024
Entity Registrant Name DISCOVER FINANCIAL SERVICES
Entity File Number 001-33378
Entity Incorporation, State or Country Code 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
City Area Code 224
Local Phone Number 405-0900
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol DFS
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001393612
Amendment Flag false
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