Core Viewpoint - Discover Financial Services (DFS) reported strong first-quarter 2025 results, with adjusted earnings per share of $4.25, exceeding estimates by 28.8% and showing a 31% year-over-year increase [1] Financial Performance - Revenues, net of interest expenses, reached $4.3 billion, a 2% year-over-year increase, surpassing the consensus estimate by 0.7% [1] - Interest income decreased by 3% year over year to $4.8 billion, missing the estimate of $5 billion, while interest expense fell 15% year over year to $1.2 billion, lower than the estimate of $1.4 billion [3] - Non-interest income grew by 3% year over year to $693 million, beating the consensus estimate of $691.2 million but falling short of the estimate of $708.1 million [3] - Total operating expenses were $1.6 billion, up 1% year over year, but lower than the estimate of $1.8 billion [4] - Net income climbed 30% year over year to $1.1 billion [4] Segment Performance Digital Banking - Pretax income in the Digital Banking segment increased by 30% year over year to $1.4 billion, exceeding both the consensus estimate of $1.06 billion and the estimate of $1.04 billion [5] - Provision for credit losses decreased by 17% year over year to $1.2 billion [5] - Total loans decreased by 7% year over year to $117.4 billion, with net interest income increasing by 2% year over year to $3.56 billion [6] Payment Services - The Payment Services segment reported a pretax income of $91 million, an 11% year-over-year increase, surpassing the consensus estimate of $83.5 million but missing the estimate of $99 million [7] - Payment Services volume declined by 4% year over year to $96 billion, with PULSE dollar volume growing by 3% and Diners Club volume advancing by 18% [8] Financial Position - As of March 31, 2025, total assets were $147.9 billion, a 0.2% increase from the end of 2024 [9] - The liquidity portfolio amounted to $30.2 billion, improving by 10.7% from December 31, 2024 [9] - Total liabilities decreased by 0.6% to $129 billion, while total equity increased by 5.8% to $19 billion [10] Merger and Dividend Update - Capital One Financial Corporation secured regulatory approvals for its merger with DFS, expected to close around May 18, 2025 [11] - A quarterly cash dividend of 70 cents per share was sanctioned, payable on June 5, 2025, but DFS shareholders may not receive this dividend due to the merger [11] 2025 Guidance - Management anticipates loan growth to follow pre-pandemic trends, with net interest margin expected to remain consistent with the fourth-quarter 2024 level of 11.96% [12]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $1.1 billion, a 30% increase from the prior year [8] - Earnings per share increased by 31% compared to last year, driven by a healthy net interest margin and good credit performance [6] - Provision expense declined by $253 million, reflecting a reduction in credit reserve balance and lower net charge offs [8] - Net interest margin ended the quarter at 12.18%, up 115 basis points from the prior year [9] Business Line Data and Key Metrics Changes - Card receivables were down 5% year over year due to modestly lower sales [9] - Discover card sales decreased by 2% compared to the prior year, attributed to past credit tightening actions [10] - Personal loan balances remained flat, with robust demand but slowed new originations due to conservative underwriting and increased competition [10] - Non-interest income increased by $20 million or 3%, driven by an increase in net discount and interchange revenue [12] Market Data and Key Metrics Changes - Average consumer deposits were up 6% year over year and 1% sequentially [11] - Direct to consumer deposit balances grew by $2 billion in the quarter, now accounting for 74% of total funding [11] - The thirty plus day delinquency rate decreased by 18 basis points compared to last quarter [7] Company Strategy and Development Direction - The merger with Capital One has been approved by regulatory bodies and is expected to close on May 18, 2025, which is anticipated to enhance competition in payment networks and broaden product offerings [5][6] - The company aims to increase resources devoted to innovation and security through the merger [6] Management Comments on Operating Environment and Future Outlook - Management is closely monitoring economic developments and consumer health amid increasing macroeconomic uncertainty [7] - The company has not provided an update on 2025 trends due to the upcoming merger [16] Other Important Information - The common equity Tier one ratio for the period was 14.7%, up 60 basis points compared to the prior quarter [15] - A quarterly cash dividend of $0.70 per share was declared, but shareholders will receive dividends from Capital One post-merger [16] Summary of Q&A Session - There was no question and answer session following the remarks [4]

Exhibit 99.3 1Q25 Financial Results April 23, 2025 2 1Q25 Highlights 3 • 1Q25 net income of $1.1Bn; diluted EPS of $4.25, and return on equity of 24% • Financial performance remains solid ◦ Revenue growth from margin expansion ◦ Good credit performance highlighted by a reserve release and lower net charge-offs ◦ Strong capital position; CET1 ratio of 14.7% • Prudently managing our business ◦ Customer trends are stable ◦ Monitoring economic developments • Secured all necessary approvals for our pending merge ...

Positive credit trends contributed to “solid first quarter financial performance” at Discover Financial Services, Discover Interim CEO and President Michael Shepherd said in a Wednesday (April 23) earnings release.The digital banking and payment services company saw its net income leap 30% year over year in the first quarter to reach $1.1 billion, according to the release.Shepherd said Discover’s financial performance benefited from “strong net interest margin and positive credit trends.”The company’s net i ...

DISCOVER FINANCIAL SERVICES Exhibit 99.2 EARNINGS SUMMARY (unaudited, in millions, except per share statistics) | | | | Quarter Ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Mar 31, 2025 vs. | | | | 2025 | 2024 | 2024 | 2024 | 2024 | | Mar 31, 2024 | | EARNINGS SUMMARY | | | | | | | | | Interest Income | $4,801 | $4,989 | $5,112 | $4,971 | $4,948 | ($147) | (3 %) | | Interest Expense | 1,243 | 1,359 | 1,457 | 1,447 | 1,461 | (218) | ( ...

Core Insights - Discover Financial Services (DFS) is expected to report its Q1 2025 results on April 23, with earnings estimated at $3.32 per share and revenues at $4.21 billion, indicating a year-over-year earnings increase of 201.8% [1] - The current year revenue estimate for DFS is $17.32 billion, reflecting a 3.6% decline year-over-year, while the EPS estimate is $13.79, suggesting a 22.2% decrease [2] - DFS has beaten earnings estimates in three of the last four quarters, with an average surprise of 27.2% [2] Earnings Predictions - The model predicts an earnings beat for DFS, supported by a positive Earnings ESP of +2.53% and a Zacks Rank of 3 (Hold) [3] - Revenue growth in Q1 is expected to be driven by PULSE Network volume, with an estimated growth of 8.4% year-over-year, while the Zacks Consensus Estimate for PULSE Network stands at $85.7 billion [4] - Non-interest income is estimated at $691.6 million, marking a 2.8% year-over-year increase, with expectations of total operating expenses rising by 15.2% due to increased compensation and benefits [5][6]

Core Viewpoint - Analysts forecast Discover (DFS) will report quarterly earnings of $3.32 per share, reflecting a year-over-year increase of 201.8%, with revenues expected to be $4.21 billion, showing no change from the previous year [1] Earnings Estimates - Over the last 30 days, there has been a downward revision of 1.4% in the consensus EPS estimate for the quarter, indicating a collective reconsideration by analysts [2] - Changes in earnings estimates are crucial for predicting potential investor reactions, with empirical studies showing a strong relationship between earnings estimate revisions and short-term stock price performance [3] Key Metrics Forecast - Analysts predict 'Net Interest Margin' will reach 11.7%, up from 11% year-over-year [5] - 'Operating Efficiency' is estimated at 39.7%, down from 54.9% year-over-year [5] - 'Credit Card Loans - Discover Card Sales Volume' is expected to be $49.75 billion, compared to $50.14 billion in the same quarter last year [5] - 'Net Principal Charge-off Rate' is projected at 5.1%, up from 4.9% year-over-year [6] - 'Credit Card Loans - Total Discover Card Volume' is expected to be $52.52 billion, down from $53.24 billion year-over-year [6] - 'Network Volume - Total Payment Services' is forecasted to reach $105.02 billion, compared to $100.32 billion in the same quarter last year [7] - 'Tier 1 Risk Based Capital Ratio' is expected to be 15.4%, up from 11.7% year-over-year [7] - 'Transactions Processed on Networks - Total' is estimated at $3.43 billion, compared to $3.20 billion last year [8] - 'Network Volume - Diners Club International' is forecasted to reach $10.83 billion, up from $10.18 billion year-over-year [8] - 'Network Volume - Network Partners' is estimated at $9.45 billion, down from $11.07 billion year-over-year [9] - 'Network Volume - PULSE Network' is expected to reach $85.72 billion, up from $79.07 billion year-over-year [9] - 'Transactions Processed on Networks - Discover Network' is projected at $909.38 million, compared to $883 million last year [10] Stock Performance - Shares of Discover have shown returns of -3.2% over the past month, compared to the Zacks S&P 500 composite's -5.6% change, with a Zacks Rank 3 (Hold) indicating expected performance in line with the overall market [11]

Core Viewpoint - Capital One has received all necessary regulatory approvals to proceed with its acquisition of Discover Financial Services, valued at $35.3 billion, with the transaction expected to close on May 18, 2024, subject to customary conditions [1][2]. Group 1: Regulatory Approvals - The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) have approved the merger, indicating a thorough review process over the past 14 months [1][4]. - The OCC's approval is contingent upon addressing any outstanding enforcement actions against Discover [5]. Group 2: Company Statements - Capital One's CEO emphasized the importance of a competitive banking system and acknowledged the regulators' engagement during the review [2]. - Discover's Interim CEO stated that the merger would enhance competition in payment networks and provide a broader range of products, along with community benefits [2]. Group 3: Community Impact - Capital One has argued that the merger will provide greater benefits to underserved communities compared to the companies operating separately, addressing concerns raised by community groups [3]. Group 4: Regulatory Context - The Federal Reserve Board evaluated the merger based on financial resources, community needs, and competitive stability [4]. - The OCC's analysis focused on the merger's impact on communities and the overall banking industry [4]. Group 5: Recent Developments - On the same day as the merger approvals, the FDIC and Federal Reserve fined Discover for misclassifying consumer credit cards, which led to higher interchange fees for merchants [6].

Core Points - The Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve Board fined Discover Financial Services and its subsidiaries for misclassifying consumer credit cards as commercial, leading to higher interchange fees for merchants [1][2][4] - Discover Bank was ordered to pay $1.225 billion in restitution and a $150 million civil penalty due to the misclassification affecting millions of consumer credit cards over 17 years [2][3] - Merchants were overcharged over $1 billion in interchange fees as a result of the misclassification [3] - The Federal Reserve issued a consent order requiring corrective action and imposed a $100 million civil penalty on Discover Financial Services and DFS Services LLC [4][6] - Capital One Financial's application to merge with Discover Financial Services was approved, with a commitment to comply with the Federal Reserve's actions against Discover [5][6] - Capital One expects the process of addressing Discover Financial's regulatory challenges to be lengthy and costly [7] Summary by Category Regulatory Actions - FDIC fined Discover Financial Services and its subsidiaries for misclassifying credit cards, resulting in higher interchange fees for merchants [1][4] - Discover Bank ordered to pay $1.225 billion in restitution and a $150 million civil penalty for misclassification affecting millions of credit cards over 17 years [2][3] - Federal Reserve issued a consent order with a $100 million civil penalty against Discover Financial Services and DFS Services LLC [4][6] Financial Impact - Merchants overcharged over $1 billion in interchange fees due to the misclassification of credit cards [3] - The restitution of $1.225 billion will be paid to affected merchants and intermediaries [2][3] Corporate Developments - Capital One Financial's merger application with Discover Financial Services was approved, with conditions to comply with regulatory actions [5][6] - Capital One anticipates a long and expensive process to resolve Discover Financial's regulatory challenges [7]

Sign at the entrance to a Capital One bank branch in Manhattan.Capital One Financial's application to acquire Discover Financial Services in a $35.3 billion all-stock deal has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency, the regulators announced on Friday."The Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communiti ...