Discover Finl Svcs Stock Price, News & Analysis

Capital One (NYSE: COF) has received approval from the Delaware State Bank Commissioner on December 18, 2024, for its planned acquisition of Discover Financial Services (NYSE: DFS) and its subsidiary Discover Bank. The transaction is expected to close in early 2025, pending stockholder approvals from both companies and regulatory approvals from the Federal Reserve System and the Office of the Comptroller of the Currency.

The acquisition, first announced in February 2024, includes a $265 billion community benefits plan announced in July 2024, developed with community groups. The plan includes $35 million in grants to Delaware-based nonprofits and maintains Discover's Sussex County branch presence.

Capital One (NYSE: COF) and Discover Financial Services (NYSE: DFS) have announced special stockholder meetings scheduled for February 18, 2025, where shareholders will vote on Capital One's proposed acquisition of Discover. The record date for stockholder voting eligibility is set for December 27, 2024.

Capital One's meeting will be held at their McLean, Virginia campus at 10:00 a.m. ET, while Discover's meeting will take place at their Riverwoods, Illinois location at 9:00 a.m. CT. Following the effectiveness of Capital One's Form S-4 registration statement, both companies will distribute a joint proxy statement and prospectus to eligible stockholders.

Discover's national survey reveals that 54% of U.S. consumers plan to make financial resolutions for 2025. The top financial goals include saving more (42%), earning more (35%), and spending less (35%). However, 94% of Americans anticipate challenges, with inflation (47%), unexpected expenses (39%), and economic conditions (38%) being primary concerns.

While 52% plan to budget in 2025, only 36% created a budget in 2024. Among those who budgeted in 2024, 22% stuck to it, reporting feelings of accomplishment (46%) and preparedness (38%). Looking ahead, most Americans are cautiously optimistic about their finances, with 45% expecting their situation to remain stable and 36% anticipating improvement. Younger generations show higher optimism, with 44% of Gen Zers and 45% of Millennials expecting better financial situations in 2025.

Discover has been named a 2025 Best Place to Work in IT by Foundry's Computerworld, marking its twenty-first year on the list. Discover ranks no. 27 among large organizations with over 5,000 employees. This recognition is based on a comprehensive questionnaire covering benefits, career development, DEI, future of work, training, and retention, and is vetted by industry experts.

Jason Strle, EVP and CIO at Discover, emphasized the company's commitment to fostering an innovative environment and supporting tech talent through various programs, including the Discover Technology Academy (DTA), mentorship opportunities, and an external eminence program. The focus on AI has increased demand for skills in AI, data analytics, and cloud, which Discover aims to meet through upskilling and training opportunities.

Discover's submission highlighted the benefits of DTA and its commitment to DEI. Technologists can join employee resource groups, serve on the IT DEI Council, and participate in volunteer initiatives. Discover is currently hiring engineers in cybersecurity, data, DevOps, infrastructure, and software. For more information, visit discover.com/careers.

Discover Financial Services (DFS) received an NYSE notice on November 19, 2024, for failing to file its Q3 2024 10-Q report timely. The company announced it will restate financial statements due to card product misclassification issues dating back to 2007. The restatement follows SEC staff disagreement with DFS's accounting approach and will affect financial statements from 2022-2024. The correction involves reallocating approximately $600 million from Q1 2024 expenses to prior period revenue errors, with total liability reaching approximately $1,047 million. DFS expects to complete the restatement filings before year-end, impacting its pending merger with Capital One.

Telered and Discover Global Network have announced a strategic alliance that will integrate Panama's Sistema Clave system with Discover's global network. This partnership will enable Sistema Clave users to access over 70 million acceptance locations and 1.8 million ATMs worldwide. Conversely, Discover Global Network cardholders will gain access to Telered merchants in Panama.

The alliance will maintain Sistema Clave's traditional advantages while adding contactless technology and digital wallet integration. For Panama merchants, this opens opportunities to serve 345 million cardholders from Discover Network, Diners Club, PULSE, and other strategic alliances. The implementation, known as Proyecto Clave 2.0, will be developed over one year across three stages: processing infrastructure adaptation, new card issuance, and merchant/ATM enablement.

Discover has appointed Kelly Welsh as incoming interim chief legal officer, general counsel and head of corporate and public affairs. Welsh, who brings over 35 years of senior leadership experience, joins the executive management committee as the company approaches its merger with Capital One. He succeeds Hope Mehlman, who is departing at the end of November. Welsh's extensive background includes serving as General Counsel of the U.S. Department of Commerce and executive roles at Northern Trust and Ameritech. He holds degrees from Harvard College, University of Sussex, and Harvard Law School.

Discover Global Network has released its 2024 Payments State of the Union study, revealing key insights into the payments ecosystem. The study highlights that 73% of consumers used instant payments in the last 90 days, with 82% interested in real-time bill payments. Security remains paramount, with 51% of consumers prioritizing personal information security.

Merchants are increasingly focusing on payments, with 61% viewing it as highly strategic for competitive differentiation. Fraud prevention (75%) and providing diverse payment options (75%) are important for merchant success. Fintechs identify consumers (49%) and merchants (39%) as key growth opportunities, with 93% emphasizing the importance of instant payments.

Discover Financial Services reported strong Q3 2024 results with net income of $965 million or $3.69 per diluted share, up 41% and 42% year-over-year respectively. Total revenue net of interest expense increased 10% to $4,453 million. The company's performance benefited from increased net interest margin, modest loan growth, and some credit improvement.

Key highlights include:

• Total loans up 4% YoY to $127.0 billion
• Credit card loans up 3% YoY to $100.5 billion
• Net interest margin expanded to 11.38%, up 43 basis points YoY
• Total net charge-off rate increased to 4.86%, up 134 basis points YoY
• Digital Banking pretax income increased by $401 million YoY
• Payment Services volume up 9% to $100.5 billion

The Board of Directors declared a quarterly cash dividend of $0.70 per share of common stock.