Discover Financial Services Announces Actions to Further Enhance Loan Loss Reserve

RIVERWOODS, Ill. — Discover Financial Services today announced that the company will record an increase in reserves of $305 million pre-tax in the first quarter 2010, which brings its reserve coverage to approximately twelve months of losses. This reserve addition results from a new analytical process that enhances management’s ability to estimate incurred losses on non-delinquent accounts.

Including the impact of the reserve addition, Discover expects to report a loss per share for the first quarter 2010 of $.22 to $.23.

Discover also estimates that the first quarter net principal charge-off rate for its Direct Banking segment will be approximately 8.5%, up from 8.43% in the fourth quarter 2009. The over 30-day delinquency rate is estimated to be approximately 5%, a reduction of approximately 25 basis points from the fourth quarter 2009. Based on current credit performance trends within its loan portfolio, the company believes that the amount of delinquent loan balances may have peaked in the fourth quarter 2009.

Discover plans to report first quarter 2010 results after the close of trading on March 16, 2010. A conference call to discuss the firm’s results, outlook and related matters will be held at 5 p.m. Eastern time. The general public is invited to listen to the call by dialing 866-277-1182 (U.S. domestic) or 617-597-5359 (international) passcode 33082119, or via a live audio webcast through the Investor Relations section of the Web site. For those unable to listen to the live broadcast, a replay will be available on our Web site or by dialing 888-286-8010 (U.S. domestic) or 617-801-6888 (international), passcode 13388966, beginning approximately two hours after the event. The replay of the conference call will be available through April 16, 2010.

About Discover
Discover Financial Services is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America’s cash rewards pioneer, and offers personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation’s leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discoverfinancial.com.