Discover Falls: Q1 Loss Was Known; Repaying TARP

[Stocks-to-Watch]

Shares of Discover Financial Services (DFS) are off 21 cents, or 1.7%, at $15.09, after the other shoe dropped: the company turned in a 22-cent net loss per share for Q1, consistent with its warning last Thursday that a $305 million loan loss reserve would reduce profits this quarter.

Total loan loss reserves are up $805 million now, year over year, and the loan loss rate in the quarter ticked up to 8.4%, up 1.7 percentage points year over year. Total card chargeoffs rose slightly from the prior quarter, to 8.51%.

On the brighter side, the company said its going to buy out the $1.2 billion in preferred shares it issued to the U.S. Treasury during the TARP bailout, issuing $350 million of new subordinated debt to do it.



Original Article Source by Barrons.com