Shares of Discover Financial Services fell as much as 8.1% in early trading Tuesday after it announced a public offering for $500 million in common stock.

The stock fell 84 cents, to $9.66 at 9:04 a.m. in New York, its biggest decline since May 11, after closing at $10.50 Monday.

The Riverwoods, Ill., company, which began the offering Monday, said proceeds might be used to pay back some of the $1.2 billion it got from the Treasury Department's Troubled Asset Relief Program. The proceeds also might be used as contributions to its Discover Bank subsidiary, it said.

"The company said they wanted to repay Tarp when it was prudent," said Scott Valentin, analyst at Friedman, Billings, Ramsey & Co., who has an "outperform" rating on Discover. "It's sooner than people thought."

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