Subject to Completion
Preliminary Prospectus Supplement, dated June 17, 2020
P R O S P E C T U S S U P P L E M E N T
(To prospectus dated June 22, 2018)
Depositary Shares Each Representing a
1/100th Interest in a Share of % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series D
We, Discover Financial Services, are offering
depositary shares (the depositary shares), each depositary share representing a
1/100th ownership interest in a share of our % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series D (the
Preferred Stock), with a liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share). As a holder of depositary shares, you will be entitled to all proportional rights and preferences of the Preferred Stock
(including dividend, voting, redemption and liquidation rights). You must exercise any such rights through the depositary.
We will pay
dividends on the Preferred Stock, only when, as, and if declared by our Board of Directors or a duly authorized committee of the Board of Directors and to the extent that we have legally available funds to pay dividends. Dividends will accrue on the
liquidation amount of $100,000 per share of the Preferred Stock at a rate per annum equal to (i) % from the original issue date of the Preferred Stock to, but excluding, September , 2025 and
(ii) the five-year treasury rate as of the most recent reset dividend determination date (as defined elsewhere in this prospectus supplement) plus % for each reset period from, and including,
September , 2025. Dividends will be payable semi-annually in arrears on March and
September of each year, commencing on March , 2021. Upon payment of any dividends on the Preferred Stock, holders of depositary
shares will receive a related proportionate payment.
Dividends on the Preferred Stock will not be cumulative. If for any reason our Board
of Directors or a duly authorized committee of the Board of Directors does not declare a dividend on the Preferred Stock in respect of a dividend period, then no dividend shall be deemed to have accrued for such dividend period, be payable on the
applicable dividend payment date, or be cumulative, and we will have no obligation to pay any dividend for that dividend period, whether or not our Board of Directors or a duly authorized committee of our Board of Directors declares a dividend on
the Preferred Stock for any future dividend period. Dividends on the Preferred Stock will not be declared, paid or set aside for payment to the extent such act would cause us to fail to comply with applicable laws and regulations, including
applicable capital adequacy guidelines.
We may redeem the Preferred Stock at our option, subject to regulatory approval, (1) in whole
or in part, from time to time, during the three-month period prior to, and including, each reset date (as defined elsewhere in this prospectus supplement) or (2) in whole but not in part, at any time within 90 days following a regulatory
capital treatment event (as defined elsewhere in this prospectus supplement), in each case at a redemption price equal to $100,000 per share (equivalent to $1,000 per depositary share), plus any declared and unpaid dividends, without regard to any
undeclared dividends, to, but excluding, the redemption date. If we redeem the Preferred Stock, the depositary will redeem a proportionate number of depositary shares.
We do not intend to list the depositary shares or the Preferred Stock on any securities exchange.
The Preferred Stock will not have any voting rights, except as set forth under Description of Preferred StockVoting Rights on page S-22 of this prospectus supplement.
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Per Depositary
Share
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Total
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Public offering price (1)
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$
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$
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Underwriting discount
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$
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$
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Proceeds, before expenses, to us
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$
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$
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(1)
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The public offering price does not include accrued dividends, if any, that may be declared. Dividends, if
declared, will accrue from, and including, the original issue date, which is expected to be June , 2020.
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Investing in the depositary shares involves risks. Before buying any depositary shares representing an interest in our Preferred Stock, you
should read this prospectus supplement, the accompanying prospectus and all information incorporated by reference herein and therein, including the discussion of material risks of investing in the depositary shares representing an interest in our
Preferred Stock in the Risk Factors section beginning on page S-10 of this prospectus supplement.
Neither the Securities and Exchange Commission (the SEC) nor any state securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Neither the depositary shares nor the Preferred Stock are a deposit, savings account or other obligation of a bank and neither are insured or
guaranteed by the Federal Deposit Insurance Corporation (the FDIC) or any other governmental agency or instrumentality.
The
underwriters expect to deliver the depositary shares in book-entry form only through the facilities of The Depository Trust Company and its participants, including Euroclear Bank SA/NV and Clearstream Banking
S.A., on or about June , 2020.
Joint Book-Running Managers
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BofA Securities
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Citigroup
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Deutsche Bank Securities
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RBC Capital Markets
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Wells Fargo Securities
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The date of this prospectus supplement is June , 2020