RIVERWOODS, Ill., Mar 11, 2010 (BUSINESS WIRE) -- Discover Financial Services (NYSE:DFS) 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 (NYSE: DFS) 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.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of the
company's management and are subject to significant risks and
uncertainties. Actual results may differ materially from those set forth
in the forward-looking statements. These forward-looking statements
speak only as of the date of this press release, and there is no
undertaking to update or revise them as more information becomes
available. The following factors, among others, could cause actual
results to differ materially from those set forth in the forward-looking
statements: changes in economic variables, such as the availability of
consumer credit, the housing market, energy costs, the number and size
of personal bankruptcy filings, the rate of unemployment and the levels
of consumer confidence and consumer debt, and investor sentiment; the
impact of current, pending and future legislation, regulation and
regulatory and legal actions, including new laws and rules limiting or
modifying certain credit card practices, new laws and rules affecting
securitizations, new laws and rules related to government programs to
stabilize the financial markets, and regulations and supervisory
guidance related to becoming a bank holding company; restrictions on the
company's operations resulting from financing transactions including
participation in the U.S. Treasury's Capital Purchase Program; the
actions and initiatives of current and potential competitors; the
company's ability to successfully achieve card acceptance across its
networks and maintain relationships with network participants; the
company's ability to manage its credit risk, market risk, liquidity
risk, operational risk, legal and compliance risk, and strategic risk;
the availability and cost of funding and capital; access to deposit,
securitization, equity, debt and credit markets; the impact of rating
agency actions; the level and volatility of equity prices, commodity
prices and interest rates, currency values, investments, other market
fluctuations and other market indices; losses in the company's
investment portfolio; the company's ability to increase or sustain
Discover card usage or attract new customers; the company's ability to
attract new merchants and maintain relationships with current merchants;
the effect of political, economic and market conditions, geopolitical
events and unforeseen or catastrophic events; fraudulent activities or
material security breaches of key systems; the company's ability to
introduce new products or services; the company's ability to sustain its
investment in new technology and manage its relationships with
third-party vendors; the company's ability to collect amounts for
disputed transactions from merchants and merchant acquirers; the
company's ability to attract and retain employees; the company's ability
to protect its reputation and its intellectual property; difficulty
financing or integrating new businesses, products or technologies; and
new lawsuits, investigations or similar matters or unanticipated
developments related to current matters.
Additional factors that could cause the company's results to differ
materially from those described in the forward-looking statements can be
found under "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the company's Annual
Report on Form 10-K for the year ended November 30, 2009, which is filed
with the SEC and available at the SEC's internet site (http://www.sec.gov).
SOURCE: Discover Financial Services
Discover Financial Services
Investor Contact:
Craig Streem
Investor Relations
224-405-3575
or
Media Contact:
Jon Drummond
224-405-1888
jondrummond@discover.com