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Capital One Cuts 1100 Jobs as it Exits Mortgage Business

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Capital One Financial Corporation (COF - Free Report) announced yesterday that it will stop originating mortgage and home equity loans, as increased competition has made it harder to remain profitable. It will lay off 950 employees as a result of its exit from this business. However, the company will continue to service its existing home loans.

Capital One is also closing a call center that employs about 200 workers, as they have experienced a decline in call volume with customers being more comfortable with its mobile app and other modes of communication with the bank. The call center will be functional till summer 2018.

The decision to exit from the mortgage and home equity loan business was communicated to the employees in an email sent by Sanjiv Yajnik, president of Capital One's financial services division. According to Yajnik, “these businesses are in a structurally disadvantaged position, given the challenging rate environment and marketplace.” Yajnik also said, from what he understands, there is “an incredible future in Auto Finance” and the company will focus more on that.

Capital One will let the affected employees apply for other openings in the organization. Management will also help them in searching for jobs by conducting career fairs and will host an on-site career development center to assist in resume writing and for interview practice.

Capital One’s shares have gained around 23.7% over the last 12 months as compared with 26.9% growth recorded by the industry.


Currently, Capital One carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the finance space are Ameriprise Financial, Inc. (AMP - Free Report) , BlackRock, Inc. (BLK - Free Report) and Federated Investors, Inc. , each carrying a Zacks #2 Rank (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameriprise has witnessed an upward earnings estimate revision of 5.9% for 2017, over the past 30 days. Its share price has risen 75.5%, over the past 12 months.

For BlackRock, over the past 30 days, its Zacks Consensus Estimate has been revised 1.1% upward for 2017. Its share price has increased 33.9% over the past 12 months.

Federated Investors has witnessed an upward earnings estimate revision of 2.9% for 2017, over the past 30 days. Over the past 12 months, its share price is up 24.1%.

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