Discover’s scary slideshow…
Earnings season usually goes hand in hand with boring PPT presentations. But the one that Discover Financial Services (DFS) put out yesterday certainly caught our attention because of some of the scary slides smack dab in the middle. The slideshow was included in this 8K that was filed yesterday.
By far, the scariest slide is the one on pg. 26, which shows a map of bankruptcy filings in the United States. In four states — Arizona, California, Nevada, and Idaho(!) — filings have more than doubled since last year. In another five states — Florida, Oregon, Utah, Washington and Vermont(!), they’ve increased between 50% to 100% since last year. Only five states — North Dakota, South Dakota, Texas, Louisiana and Pennsylvania(!) — saw bankruptcies increase less than 15%. The national average is 35%. The exclamation points, by the way, are my attempt at expressing surprise, since I don’t recall reading any stories about serious financial problems in Idaho or Vermont and would have expected Pennsylvania to fare a lot worse.
The slides also have some interesting details about several of Discover’s competitors, including American Express (AXP) and Capital One (COF). For example, fully 26% of Amex’s receivables are in two of the hardest-hit states: California and Florida. Bank of Ameria (BAC) and Citibank (C) are both only slightly better at 22% each. On pg. 24, there was also an interesting graph that shows a rising trend of both unemployment (which is well known) and a much harder figure to measure: underemployment, which seems to be growing pretty dramatically.
While all of this data is probably out there in different places, the slideshow pulls it together in one cohesive place to present a pretty scary view of how much further this crisis has to go.
One final reminder: if you haven’t taken the footnoted.org annual survey yet, I hope you’ll take a few minutes to do so. We only do this once a year and it’s an important tool that lets me get a better idea of who’s reading the site and ways to improve it in 2009!
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Posted in Tags: 8Ks, bankruptcy |
 6 Comments » |
January 30th, 2009 at 11:29 am
This data is plainly pretty skewed to show Discover in the best light vis-a-vis its competition. Why, for example, were only CA and FL shown (understanding they’re the most populous among trouble states)? A more relevant and revealing chart might have shown the firms’ liabilities to all the black and red states.
January 30th, 2009 at 11:35 am
@ Wyatt: Agreed that it’s skewed to make Discover look better than others. But then again, it is their slideshow. Would have been more surprised if it made them look worse than Citi or BofA.
January 30th, 2009 at 2:18 pm
Nothing surprising here. You also have to put into perspective the unusually low foreclosure rate we had leading into this recession. Throw in the fact that it is the worse since the recession of the 80′s (if not more) and the increase in foreclosure level seems pretty cut and dry.
January 31st, 2009 at 12:55 pm
Another way they skewed CA and FL – September data for Chase and CapOne and May for their own portfolio in slide 27 – as if they have more timely data on competitors than their own portfolio.
January 31st, 2009 at 1:26 pm
@ Mike_X: Wow — good catch. And great question. I didn’t spot that, but appreciate you pointing it out. Definitely raises some questions.
February 9th, 2009 at 3:23 pm
Don’t get too worked up about the bankruptcy filings data. Bankruptcy filings for the last 5 years have been at historical lows. To get a 100%+ increase is more a function of working off a low base number. It’s the same as the dotcom projections that claimed 100% revenue increase from $1MM to $2MM.
The real question is when do bankruptcy filings reach a level of significance that will have a substantial impact on their business and the larger economy as a whole? People like to get excited about percentage increase, but the smaller the numbers and farther away from significance watermarks, the less important they are.