Discover Financial Services (DFS) To Record $305M Pre-Tax Increase in Reserves for Q110

March 11, 2010 5:59 PM EST

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 $0.22 to $0.23, compared to the consensus of $0.09.

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.

Create E-mail AlertRelated Categories

Corporate News
Guidance
Hot List

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?