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 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 December 31, 2023 and 2022, 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)
	(As Restated)		(As Restated)		(As Restated)			(As Restated)
December 31, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,399	13.2	%	$	10,509	≥8.0%	$	13,137	≥10.0%
Discover Bank	$	16,409	12.7	%	$	10,381	≥8.0%	$	12,976	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,279	11.6	%	$	7,882	≥6.0%	$	7,882	≥6.0%
Discover Bank	$	13,459	10.4	%	$	7,786	≥6.0%	$	10,381	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,279	10.3	%	$	5,915	≥4.0%	N/A		N/A
Discover Bank	$	13,459	9.2	%	$	5,833	≥4.0%	$	7,292	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,223	10.8	%	$	5,911	≥4.5%	N/A		N/A
Discover Bank	$	13,459	10.4	%	$	5,839	≥4.5%	$	8,435	≥6.5%

December 31, 2022
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,557	15.3	%	$	9,151	≥8.0%	$	11,439	≥10.0%
Discover Bank	$	15,942	14.1	%	$	9,051	≥8.0%	$	11,314	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,590	13.6	%	$	6,863	≥6.0%	$	6,863	≥6.0%
Discover Bank	$	13,040	11.5	%	$	6,788	≥6.0%	$	9,051	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,590	12.1	%	$	5,147	≥4.0%	N/A		N/A
Discover Bank	$	13,040	10.3	%	$	5,086	≥4.0%	$	6,357	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,534	12.7	%	$	5,148	≥4.5%	N/A		N/A
Discover Bank	$	13,040	11.5	%	$	5,091	≥4.5%	$	7,354	≥6.5%