Capital One is getting a cleaner and leaner Discover Financial Services than the one it agreed to buy 15 months ago as the Riverwoods-based company spent much of the intervening time resolving the issues that made it ripe for sale in the first place. As the firms move toward a May 18 closure date, the Discover brand — which analysts said was largely untainted in consumers’ eyes by its regulatory issues — and the company’s much-desired payment network are what’s left. “They are still getting a great brand from a customer experience perspective,” said Jordan Sternlieb, leader of the banking practice at Chicago-based consulting firm West Monroe. “I think they’re just so well known in that space. I hope that the Capital One team sees that as a valuable part of this acquisition and kind of takes the best of that forward.” Since the acquisition was announced, Discover’s stock has soared nearly 73%. Capital One’s has risen 44%, boosting the implied value of the all-stock deal to about $50.4 billion from $35 billion. After the deal closes, Capital One stockholders will own 60% of the combined company. Capital One has given no indications about its designs for Discover’s Riverwoods campus, which houses about 5,000 workers. But it has said it will remain committed to Discover’s plan for hiring 1,000 employees at its Chatham call center, a goal the company hit in October. Capital One’s executives highlighted the importance of Discover’s brand and personal attention it gives customers on a recent call with analysts discussing its first-quarter earnings. Much of the questioning revolved around Capital One’s plans for Discover. The credit card company’s payment network will allow Capital One to hold on to processing fees normally collected by rivals such as Visa and Mastercard. It also will serve as a key point for growth-spurring innovation. Despite the regulatory issues, Discover’s financial performance has improved since the Capital One takeover was announced. The company’s 2024 net income rose to $1.1 billion, or $4.25 per diluted share, compared with net income of $851 million, or $3.25 per diluted share, in 2023. And the company’s net charge-off rate, the amount of credit card debt it views as uncollectible, decreased 19 basis points to 5.47% during the same time period. Discover’s delinquency rate for credit card loans more than 30 days overdue dropped 17 basis points to 3.66%. The results show Discover’s long-standing regulatory problems are in the past, Morningstar equity analyst Michael Miller said. “When Capital One agreed to acquire Discover, Discover was facing quite a lot of regulatory uncertainty,” Miller said. “None of this ended up being too damaging for Discover. At the time we did not know what the actual end cost would be. Since that time we have gotten more clarity, specifically what the final cost of this was, and it ended up not being that substantial.” The deal, which was approved by shareholders in February, appears headed for closure later this month. Regulators from the Federal Reserve and the Office of Comptroller of the Currency gave their seal of approval April 18, and while Department of Justice staff were divided about whether the DOJ should challenge the tie-up, new antitrust division chief Gail Slater determined there was not enough evidence to try and block it.