Apr. 10, 2014, 10:45 AM
- The federal lawsuit had accused Amex (AXP -1.2%), Ciitgroup (C -0.7%), and Discover (DFS -0.6%) of colluding to adopt arbitration clauses preventing card holders from pursuing class action status in court.
- District Judge William Pauley ruled the plaintiffs failed to show the three violated the Sherman Act.
Mar. 25, 2014, 10:47 AM
- With the Fed limiting bank dividends to about 30% of earnings, the real action is in buybacks, so look for lenders to announce some loud repurchase plans this week following the results of the Fed's CCAR (due after the bell on Wed.). Big numbers are nice, but more important is the size relative to the share count.
- According to KBW, only Discover (DFS +0.2%) and State Street (STT -0.5%) had large enough programs in 2012 and 2013 to lower their float by more than 5%. Analyst Sanjay Sakhrani estimates Discover will get approval for its $1.6B buyback this year, which would be a boost to last year's repurchases.
- Analyst Robert Lee sees State Street getting approval for $2.026B in buybacks, with estimated net buybacks of $1.62B down from $1.676B a year ago.
Mar. 25, 2014, 8:17 AM
- First it was Discover (DFS) which began including customer credit scores with each monthly statement, now Capital One (COF) jumps in with the launch of Credit Tracker. The free tool will give customers access to their credit score, plus a credit bureau summary. A credit simulator will show how differing actions will impact their credit scores and credit bureau monitoring will be included as well.
- Press release
Mar. 21, 2014, 9:30 AM
- American Express (AXP), Discover (DFS), and Capital One (COF) all have sizable capital surpluses under the Fed's severely adverse scenario, says Buckingham, and are thus poised for sizable capital returns. All three names are ahead 1-2% in opening trades.
- Last night: Discover unveils proposal for 20% dividend boost and $1.6B in buybacks.
- Stress test results
Mar. 20, 2014, 4:21 PM| 2 Comments
Mar. 20, 2014, 10:35 AM
- The results of the Fed stress tests on the usual banking industry suspects are expected today, but this year's version includes 12 new companies added to last year's list of 18. Newly subjected U.S.-based lenders: DFS, NTRS, HBAN, MTB, ZION. Foreign-owned U.S. bank holding companies: BBVA Compass Bancshares, BMO Financial, HSBC N.A. Holdings, RBS Citizens Financial Group, Santander Holdings USA (SAN), UnionBanCal (MTU).
- The CCAR results - at which the Fed will give a thumbs up/thumbs down on banks' capital return plans - are due on March 26.
Mar. 11, 2014, 3:43 PM
- Analyst Sameer Gokhale estimates Discover (DFS -1.4%) will come through the Fed stress tests (results on March 20) with a minimum Basel III Tier 1 common equity ratio of 8.95% and Fifth Third (FITB -0.8%) 7.3%. As both should be comfortably above 7% under the severely adverse scenario, higher payouts for should be justified.
- Gokhale prefers to use payout yield - total annual dividends and buybacks divided by the share price - as opposed to payout ratio, and Discover and Fifth Third have two of the highest, 8.6% and 6.2%, respectively.
- He's expecting Discover's quarterly dividend to be boosted to $0.21-$0.23 per share from $0.20 now, and $1.1B-$1.5B in buybacks to be approved. Fifth Third could lift its dividend by $0.03 to $0.15 per share and be approved for $1.B-$1.3B in buybacks.
Feb. 20, 2014, 3:29 PM
- Expecting dividends to grow 49% on average for the banks subject to the Fed's stress tests (about the same as last year), Markit, says Citigroup (C) and Bank of America (BAC) will lead the way with 400% boosts. "They are the last of the major banks paying minimal dividends ... change is overdue."
- While 400% is a big number, Citi and BofA will continue to lag their peers in terms of yield (400% growth on a penny just leads to a nickel).
- Also expected to have a significant pop is Morgan Stanley (MS) - a doubling of the payout to $0.10 per share and a 1.4% yield. Others in the top 5 in increases are Zions Bancorp (ZION) with a 75% boost to $0.07 and Regions Financial (RF) up 67% to $0.05.
- The others: KEY +27%, HBAN +20%, BK +20%, STI +20%, COF +17%, DFS +15%, AXP +13%, STT +12%, JPM +11%, CMA +11%, PNC +9%, USB +9%, GS +9%, FITB +8%, WFC +7%, NTRS +6%, and no soup for BBT and MTB where the dividends are expected to be flat at $0.23 and $0.70 per share, respectively.
- As for ETFs, the dividend jumps are expected to have the biggest impact on the XLF which would see a 25% increase in payout: The ETF has 81 companies, but the top 5 holdings - BofA, Wells, JPM, Citi, USB - make up 41% of assets. In contrast, just two CCAR banks make up the top five holdings of the KBE and it should see a more muted increase of just 18%.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ
Feb. 18, 2014, 10:38 AM
- Discovery Financial (DFS +0.2%) reports a credit card writeoff rate of 2.2% for January which is an unchanged level from the last two months.
- The rate had dipped below 2% in October.
- The company reports the rate of delinquencies rose to 1.8% during January to mark the highest level since last March.
- SEC Form 8-K
Feb. 14, 2014, 7:15 AM
Feb. 3, 2014, 3:13 PM
- Until now, just a handful of lenders are in the business of refinancing student loans, with just Wells Fargo and SunTrust among the only two of the seven largest banks in the private loan market doing so. But RBS's Citizens Financial just rolled out a refi product, and Discover (DFS -2.4%) chief David Nelms tells American Banker his company plans to follow suit.
- Discover made more than $1B in private student loans in 2013 - 13% of the company's total loan production. For now, low variable rates make the business a discouraging one for lenders, and for borrowers, there's not a ton of incentive to refinance. Private loans typically have rates higher than government ones and have fewer consumer protections.
- Still, should the trend catch fire, those lenders without a program in place could find themselves losing market share.
Jan. 24, 2014, 10:20 AM
Jan. 24, 2014, 7:41 AM
- Total loans grew $3.2B, or 5% from last year to $65.8B. Credit card loans grew $2B, of 4% to $53.1B. Discover card sales volume up 3%.
- Has credit quality gotten as good as it's going to get? The net charge-off rate for credit card loans ticked up 4 bps from last quarter to 2.09% and delinquencies over 30 days gained 5 bps to 1.72%.
- 7M shares repurchased during quarter, reducing float by 1%.
- FBR maintains its Outperform rating and boosts the price target to $65.
- DFS +1.6% premarket
- Press release, Q4 results
Jan. 23, 2014, 4:09 PM
Jan. 23, 2014, 12:10 AM
Jan. 22, 2014, 5:35 PM
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