Company to Pursue Transfer of Servicing to
Third-Party Provider and Plans to Cease Student Loan Originations
February 1, 2024
Discover Financial Services (NYSE: DFS) today announced that the
Company’s Board of Directors (the “Board”) has authorized Discover
management to explore the sale of the Discover Student Loans
portfolio and the transfer of servicing of these loans to a
third-party provider as it pursues strategic alternatives for the
Discover Student Loans business.
Additionally, Discover will stop accepting new applications for
student loans February 1, 2024. There is no impact to current
Discover Student Loans customers or their loans or payments at this
time.
“Discover’s Board regularly reviews the strategic fit of all of
our businesses, with a focus on providing exceptional customer
service and allocating resources to optimize returns,” said John
Owen, Discover’s interim CEO and President. “During a recent
review, the Board determined that exploring the sale and transfer
of servicing of Discover’s student loans is aligned with those
priorities, better enabling Discover to focus on our core banking
products, capitalize on our growth opportunities and deliver
long-term shareholder value. We are committed to a path forward
that enables a seamless transition for our customers as they
advance their education and financial goals.”
Discover has retained Wells Fargo Securities, LLC as its
financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP
as its legal advisor to support its exploration of strategic
alternatives for Discover Student Loans.
There is no deadline or definitive timetable set for completion
of this process, and the Company does not intend to disclose
developments unless and until the Board approves a specific
transaction or determines that further disclosure is appropriate.
Any decision by the Board to pursue or not pursue a strategic
alternative for Discover Student Loans will be aligned with the
Board’s objectives of maximizing shareholder value and
strengthening the Company’s businesses and will be subject to then
prevailing market conditions.
About Discover
Discover Financial Services (NYSE: DFS) is a digital 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 issues the Discover® card, America's cash rewards
pioneer, and offers private student loans, personal loans, home
loans, checking and savings accounts and certificates of deposit
through its banking business. It operates the Discover Global
Network® comprised of Discover Network, with millions of merchants
and cash access locations; PULSE®, one of the nation's leading
ATM/debit networks; and Diners Club International®, a global
payments network with acceptance around the world. For more
information, visit www.discover.com/company.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements, which speak to our expected business and
financial performance, among other matters, contain words such as
"believe," "expect," "anticipate," "intend," "plan," "aim," "will,"
"may," "should," "could," "would," "likely," "forecast," and
similar expressions. Such statements are based on the current
beliefs and expectations of our 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,
the levels of consumer confidence and consumer debt and investor
sentiment; the impact of current, pending and future legislation,
regulation, supervisory guidance and regulatory and legal actions,
including, but not limited to, those related to accounting
guidance, tax reform, financial regulatory reform, consumer
financial services practices, anti-corruption and funding, capital
and liquidity; the actions and initiatives of current and potential
competitors; our ability to manage our expenses; our ability to
successfully achieve card acceptance across our networks and
maintain relationships with network participants and merchants; our
ability to sustain and grow our personal loan and home loan
products; difficulty obtaining regulatory approval for, financing,
closing, transitioning, integrating or managing the expenses of
acquisitions of or investments in new businesses, products or
technologies; our ability to manage our 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 our investment portfolio; limits on our ability
to pay dividends and repurchase our common stock; limits on our
ability to receive payments from our subsidiaries; fraudulent
activities or material security breaches of our or others' key
systems; our ability to remain organizationally effective; our
ability to increase or sustain Discover card usage or attract new
customers; our ability to maintain relationships with merchants;
the effect of political, economic and market conditions,
geopolitical events, climate change, pandemics and unforeseen or
catastrophic events; our ability to introduce new products and
services; our ability to manage our relationships with third-party
vendors, as well as those with which we have no direct relationship
such as our employees' internet service providers; our ability to
maintain current technology and integrate new and acquired systems
and technology; our ability to collect amounts for disputed
transactions from merchants and merchant acquirers; our ability to
attract and retain employees; our ability to protect our reputation
and our intellectual property; our ability to comply with
regulatory requirements; and new lawsuits, investigations or
similar matters or unanticipated developments related to current
matters. We routinely evaluate and may pursue acquisitions of or
investments in businesses, products, technologies, loan portfolios
or deposits, which may involve payment in cash or our debt or
equity securities. In addition, there can be no assurance that the
sale transaction or loan servicing transfer discussed in this press
release will be completed, or that any condition or requirement to
effectuate such sale or transfer, including any regulatory
condition or requirement, will be satisfied.
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,” “Business -
Competition,” “Business - Supervision and Regulation” 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 December 31, 2022, "Risk Factors" and
“Management's Discussion & Analysis of Financial Condition and
Results of Operations” in the company's Quarterly Report on Form
10-Q for the quarters ended September 30, 2023, June 30, 2023, and
March 31, 2023 which are filed with the SEC and available at the
SEC's internet site (http://www.sec.gov) and subsequent reports on
Forms 8-K.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231129875128/en/
Investor Contact: Eric
Wasserstrom Investor Relations 224-405-4555
investorrelations@discover.com
Media Contact: Matthew
Towson Public Relations 224-405-5649 matthewtowson@discover.com
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