Discover Financial Services (NYSE:DFS) announced that it is closing the mortgage origination business it acquired in 2012 to focus on its profitable direct banking products for which the company sees greater opportunities for growth.
“The business is not projected to meet our financial expectations due to ongoing challenges to our home loans operating model, so we made the difficult decision to exit,” said Carlos Minetti, president of consumer banking for Discover.
Discover Home Loans, Inc. will accept applications at its Louisville, Ken., offices throughJuly 31. Business operations will continue there until early August, when Atlanta-basedAmeriSave Mortgage Corporation is expected to finish processing the remaining applications. AmeriSave plans to establish an office in Louisville and offer jobs to approximately 125 Discover employees. At Discover’s Irvine, Calif., location, the business will stop accepting applications as of today and will continue processing and funding loans already in process.
In all, Discover plans to offer severance packages to about 460 employees, primarily inIrvine, and Louisville.
Charges related to exiting the business are expected to be approximately $0.04 per share.
Discover will continue to originate home equity loans through Discover Bank. (Original Source)
Shares of Discover Financial Services closed today at $57.965, down $0.255 or 0.44%. DFS has a 1-year high of $66.75 and a 1-year low of $54.02. The stock’s 50-day moving average is $58.85 and its 200-day moving average is $59.61.
On the ratings front, DFS has been the subject of a number of recent research reports. In a report issued on May 6, Bernstein Research analyst Kevin Pierre maintained a Hold rating on DFS. Separately, on May 5, Oppenheimer’s Ben Chittenden reiterated a Buy rating on the stock and has a price target of $77.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Kevin Pierre and Ben Chittenden have a total average return of 3.5% and -7.3% respectively. Pierre has a success rate of 85.7% and is ranked #2136 out of 3629 analysts, while Chittenden has a success rate of 42.6% and is ranked #3497.
Discover Financial Services is a direct banking and payment services company. The Company offers credit card loans, private student loans, personal loans, home equity loans and deposit products.