introduced the Discover credit card in 1985 in conjunction with real estate franchise Coldwell, Banker & Company and brokerage firm Dean Witter Reynolds. Altogether, these companies operated under the banner Sears Financial Network. In 1993, Sears sold off its financial services branch with Dean Witter Reynolds in charge of Discover. This independent company was called Dean Witter, Discover & Co. In 1997, Dean Witter, Discover & Co. merged with investment banking house Morgan Stanley to become Morgan Stanley Dean Witter, Discover & Co. In 1999, this company rebranded itself as Discover Financial Services, Inc. On December 21, 2001, fourth-quarter income at Discover grew 31% to $193 million, compared with $147 million the year before. On March 5, 2002, the company announced that the Account Center at Discovercard.com had registered over eight million card members, an increase of 61% since January 2001. On September 1, 2002, Discover announced that Citibank would accept the Discover® Card for cash advances at its approximately 450 Financial Centers and more than 2,000 ATM locations nationwide. In April 2005, Morgan Stanley announced that it would divest Discover Financial Services as an independent company within six months. By June, industry sources reported that Morgan Stanley was reassessing its plan to spin off Discover. In August 2005, the company confirmed it would not sell Discover. However, in December 2006, Morgan Stanley announced it would spin off Discover as a standalone company by the end of August 2007, stating that both companies will be better positioned for growth and success as separate entities. Ahead of schedule on June 30, 2007, Discover was spun off as an independent, publicly-traded company.
Discover acquires The Greenwood Trust Company
The Greenwood Trust Company was founded in 1911 and was based in Greenwood, Delaware. It was acquired by Discover in 1985 and renamed Discover Bank in 2000. Discover Bank is mainly an online financial institution that offers many financial services such as checking accounts, savings accounts, and money market accounts. However the first and original location of The Greenwood Trust Company on East Market Street is still operating and is the only physical banking location of Discover Bank.
Discover acquires Pulse
In 2005, Discover acquired Pulse, an interbank electronic funds transfer network. With this acquisition, Discover obtained the ability to market and issue debit and ATM cards. Starting in February 2006, Discover announced that it would begin offering Discover Debit, a debit product, to other financial institutions.
Discover acquires Diners Club International
In April 2008, Discover Financial and Citigroup announced that Discover was purchasing the Diners Club International network from Citigroup for $165 million. In May 2008, the Federal Trade Commission approved the transaction and it finalized on July 1, 2008. Discover stated that the Diners Club network, which is a major network outside the United States, will be merged with the Discover Network, a major network in the United States, creating an international network for Discover and Diners Club cardholders. Diners Club cards will continue to be issued by Diners Club International licensees. At this time, Discover Bank has no plans on issuing Diners Club branded cards itself. On September 17, 2010, Discover Financial announced it would acquire Citigroup-owned Student Loan Corporation for $30/share. The deal finalized on December 31.
Discover acquires Home Loan Center
On June 6, 2012, Tree.com, Inc. completed the sale of substantially all of the operating assets of its Home Loan Center, Inc. business to a wholly owned subsidiary of Discover Financial. In exchange for the assets sold, Discover paid an aggregate of $45.9 million including payments made prior to the closing which were applied to the closing price. On June 12, 2012, Discover began originating mortgages with its launch of Discover Home Loans, offering prime variable- and fixed-rate conventional and FHA home mortgage loans.
Discover and TARP
Following the 2007-08 financial crisis, Discover received about $1.2 billion in bailout funds under the Troubled Asset Relief Program. The company announced in 2010 that it had received approval to pay back the funds.
Competitors
In the United States, Discover, as a card brand, competes primarily with Visa, MasterCard, and American Express. Unlike Visa and MasterCard, Discover directly issues its cards, through its Discover Bank unit. When measured by card balances, Discover is the sixth largest credit card issuer in the U.S. behind JPMorgan Chase, Citigroup, Bank of America, Capital One and American Express, and ahead of Wells Fargo and U.S. Bank.
Business
In addition to its card products, Discover also markets savings products, checking accounts, personal loans, student loans, and home equity loans.
