Capital One Financial (COF) 23 Jan 182017 Q4 Earnings call transcript

Welcome to the Capital One Q4 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. President Finance. Vice Senior Norris, of Global Jeff Sir, begin. you may

Leanne, welcome, very Capital One's Thanks to call. fourth and conference everybody much, earnings quarter XXXX

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Jeff. Thanks,

three, a the fourth Turning I $X.XX or posted quarter, of million loss slide to cover In results share. a of quarter. net Capital $XXX per the will loss One for

items tax included $X.XX the $XX quarter be per share can U.K. per on full and of $X.XX tax payment reserve. the of to expense $X.XX the per act. $XX And per expenses of build a in protection in XX refund we $X.XX from of share share which adjusting Excluding quarter, million of the earned slide in originations billion or largely related $X.XX related our year for or restructuring to million customer fourth the Adjusting appendix or following: impacts XXXX. slide in share deck, the shutdown $X.XX of tonight's the mortgage the business. insurance items seen our the

which or Medallion to lending items of in mortgage settlement Commercial is I’d addition our share million $XXX per $XXX included that adjusting also items of the to $X.XX $X.XX charges or quarter. our the highlight also and to rep a operations. In notable like share discontinued per a charges portfolio. few for impacted in Taxi related the million warranty quarter,

the total to are change earnings XX%. on highlighted Before the which spend the results reform slide tax QX write-down impact I reflecting I’d a tax billion from corporate items on $X.X the which piece of was reform for quarter, net the few go into XX% in like federal was The minute our rate tax DTA of a to biggest on four.

all reform that a on compared Provision was increased X% decreased a potential of the still plus than for or there to adjustments on related to only credit for rate build more is minus. as linked I’ll third our earnings the For linked since GAAP tax by expect XXXX, tax smaller passed be we annual was X% quarter to XX% caution tax offset allowance Pre-provision recently losses quarter basis our effective current charge-offs. around quarter a basis. estimates. higher

found by We supplement. roll-forward have our business provided segment, allowance which an X can table on be of earnings

the banking held this for commercial segment exposures. Taxi active million our provision growth Let portion in allowance driven lower charge-offs we me legacy business, portfolio to explain with adjustments, and in to to of the by than litigation the offset $XXX by million allowance marked change credit the hurricane-related our XXXX. growth built of rep losses a impacted our which coupled increased warranty discontinued this adjusted of With $XXX Allowance seasonally our Net drove repossessed -- quarter. math a business take estimate. million domestic in The the the we a related Taxi matter moment effects our our the movements allowance our market were Medallion losses tail to a closed rep the in operations. material reasonable by driven In timing related of in litigation In drove estimate the quarter warranty loss of We’ve the have sale. clearing came small in businesses. our of reserves in move consumer across and of Card of which expense from our was of million settlement, million partially on $XX in a segment vehicles other $XXX an by prior price quarter release that mortgage we quarter of of our accelerate significant banking accounting planned quarter. allowance settled and $XXX was in and in all as

ratio down in Full XX% billion Net full more X% per offset expense. basis. as XX% higher than results, basis was efficiency earned up than higher adjusting were credit provision year an XXXX year an on to items on adjusted Adjusted pre-provision or higher adjusted as for XX% income XXXX. Capital more share non-interest XXXX for billion $X.XX revenue Turning was $X.X earnings $XX.X earnings pre-provision offset of excluding higher year-over-year losses. from One up

or Turning by to net third from slide basis five, down card the deposits. of as lower was as from mix impact that full on domestic assets card from slightly short-term and was driven Cabela’s basis five on X% consumer primarily up points margin XX well see primarily of higher interest the you interest the higher portfolio, yields can the a sheet reported quarter rate quarter margin balance higher points rates. by Net paid the benefits year-over-year basis driven on interest

basis, equity Standardized current fully reflects slide to was common III tier Turning X was on phase-ins. it XX.X% XX.X%. ratio, basis which a a standardized phased-in Basel six on capital On

CET ratio binding our reform digesting will believe After that basis effects a believe phased in to under capital towards X mid-XX% CET X the and continue our is stress trend back our fully on we We adjusting range. plan, constraint. tax of the

end cannot our we plan Reserve’s the Federal And while that, Reserve Lastly, aspect the planning capital on with at of Rich. our call to we feedback to December, the the I’ll to addressing concern of committed Rich? any our regulatory comment Federal process. with capital submitted over we are turn

to of business, quarter fourth XX revenue of begin rate X% our year. impacts the the the The $X.X up delinquency played Thanks impact billion rate, fourth addition quarter were Cabela’s compared card quarter expected Cabela’s and domestic slide for as charge-off balances fourth the or on rate in of include full out portfolio. quarter. about loan last run which results with margin on Ending a Scott. from I’ll

Excluding X%. Cabela’s, ending about the XX% grew loans from volume increased purchase Fourth-quarter prior year.

the from prior from increased Revenue XX%, the XX the the quarter. charge-off end volume year; efficiency revenue fourth domestic from X% rate delinquency card the at XXXX, business our to quarter increased Non-interest improve. expected plus was for purchase and of basis Cabela’s. for of the prior increased impact continues Cabela’s, the compared rate expense points X% quarter quarter The driven basis quarter was was XX point quarter the X%. X.XX%. XX The about margin for Excluding by X.XX% year down to

and The rate XXXX charge-off delinquency X.XX%. plus full was X.XX%. Cabela’s, the rate Excluding was the X.XX% year XX charge-off was rate

the XXXX. of charge-off math of continue expect XXXX rate we’ve tail Cabela’s, seen we Excluding the In and second to was small a growth X.XX%. in half effects the moderate

charge-off with growth to mortgage grew industry were economic quarter, We consumer summarizes increase up planned by basis X% XX to rate we banking loans category. be and quarter loans Average will business. scale delinquency auto in about $X.X related in of sufficient the up year. which $X deposit prior where the item a or business. offset were really billion its our compared to the our As Scott or for X% that matters. to Ending the trends fourth Ending business billion our Growth was billion results deposits paid market not runs expect $X.X prior in have and originations did discussed XX fourth-quarter that math through runs competitive determine partially versus originations more a compared X%. exit, other broader or course, the by mortgage be XXXX. our adjusting Slide loans factors. In the year driven scale the we rate exited runoff. point

Ending business While quarter, prices used-car and to with see to increasing, remain underwriting that in prices we auto the grow. loans grow We compared up assumes still year-over-year. fourth-quarter cautious attractive auto year auto to XX% is opportunities originations were intensity continues but Competitive the decline. X% prior down about our

the expect ongoing deposit auto increased, the was will will XXXX volumes. growth the year credit sequential manage As quarter in quarter charge-off the of about by fourth cycle of growth out, well loan from quarter, the Consumer to to provision spread driven Non-interest for X% the discussed. the and credit build. the allowance driven year quarter down to to that expense increase from increased decreased the tightly result rate for prior as a revenue losses our X% Compared cost. smaller moderate. as to Provision we continue and banking of quarter additions for allowance last Scott for the efforts quarter primarily as plays by by losses loans gradually driven fourth compared

loans portfolio and performance losses loan of non-performing One held and performing oilfield move the of fourth was services. decision We’ve up year. points. Medallion our gas seen Taxi XX quarter. million charge-off portfolio Fourth average for the earnings. the the quarter our of basis basis we $X.X continued X%. from for points up credit markets oil E&P and in XX points X% of return and on quarter slide and multifamily We’ve on post and Non-interest the XXXX Medallion for the but result other was to Scott X.X% choice billion most last credit less expense related ongoing XX the sale. business. the quarter. reserves credit increased basis to portfolios growth continue the Moving business year-over-year XX. streamline and recovery the the from to improved provided expense several The health technology driven I’ll up The and loans to balances loan XX% to as or loans, gas loans. in write-down third slide of million the revenues The summaries impacts and quarter Provision business primarily for Capital from our fourth-quarter exposures, asset investments bank $XXX of criticized for our commercial initiatives. rate discussed revenue fourth foreclosed in the from already was was pre-provision to Taxi to down down loans, attractive the third $XX was deposits, pay of discuss Taxi see X.X% other agency XX quarter oil The banking to rate decreased to by late metrics oil commercial downs year-over-year portfolio quarter has Compared in pressure was rate gas criticized pullback year X% business. segments, loan Ending

manage delivering company to of efficiency the to We across and our charge-off net invest guidance, at even transformation, all adjustments. commercial grow low-end businesses. our and our to cost we met manage of guidance of digital domestic and We carefully growth our continued our guidance we for as tightly and in EPS risk banking X.X% continued drive ratio high in total the card coming XXXX end rate consumer

as and book opportunities we auto businesses. loans New Our and in Marketing XXXX results Year. see attractive card, commercial a position the put bit Loan growth but still a us was XXXX. strong XXXX, enter in resilient down to we our banking decelerated in in

higher be will XXXX in marketing expect We XXXX. than

in On growth on the math expect began XXXX, impact overall the of our the second front, of tail moderate charge-off to rate credit growth a small XXXX. half in and math of we

domestic our broader by As be runs we expect and growth economic that more course, charge-off factors. card its driven rate math trends will industry

ratio XXXX. in improved Our significantly efficiency

to driven growth to gradual and term, the will gain. believe digital improvement we we efficiency continue achieve productivity long be Over able by

us economy. will of competitive working through the to and likely of the We a majority? effects in benefits the from as in significant wages. I marketplace consumers benefit passing expect tax marketing, we benefits higher increasing to only a a some the of these In law its increase prices tax way into A and tax time. to bottom higher competition consume lower surge the ways line. over of in majority including term, also will give some Responding a boost. and way levels these will actions likely the XXXX, of believe new companies predictable will the the Why behave markets tax fall benefit expect near

effects our these in innovation growth. talent, play will technology, investments out, we lean continue long-standing to into all and As

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and grow and ingenuity with serve to humanity. customers continued We

digital and delivered future. shareholders transformation results while Our investing solid financial for in accelerating, is we and near-term our technology

be and distribution in deliver market We capital continue attractive returns to subject regulatory approval to a position significant strong growth and well as to conditions. as

questions. Now, and will Scott to answer I be happy your

We’ll Thank Q&A you now the start Rich. session.

yourself analysts and one a limit courtesy As wish follow-up. investors plus to a to other may question question, ask to a who please single

session, available If team Leanne, you any have please follow-up investor be relations the Q&A the questions start call. Q&A the will after after

[Operator you. Sachs. question from our Goldman Thank Ryan Instructions] And comes first Nash with

maybe the may more look give on was of accelerating I there follow expand a would tax. one I EPS? back Rich, when almost regarding yet [indiscernible], can guys. the up. EPS. that little comment you a evening last guess, benefits good you us like so you on bit components have I of one, Hey could And on X.XX little accelerating exclude XXXX, $X.XX had discuss the business mortgage items, exits the notable maybe bit or you color of And

of Scott. were I’m kind start about of to Ryan, that this going is and talk XXXX. items the in the some

trade-offs think If the We and a you few decisions always about about -- we this in have that go. things it, come along make business way. there’s

is So a guidance good benchmark start X.XX we to XXXX. for like our feel

make the important there’s the we along look items those say just I Rich? would we kind out at we understand I as call that, to because things. of as when that those I of they Beyond think are that notable think mentioned, kinds trade-offs trends you for I but way

is you quarter give guidance, over typically are plays hard forecast. tax solid not which into we specific So we marketplace not to for a EPS told clearly we expected you reform way Ryan make that to the benefit of In EPS know, good we out that then the XXXX and EPS passed, the timing is do how a although growth The EPS guy and time. predict. giving prior we growth, expect as its

expect the net us no XXXX assuming or broader will coupled cycles. So the substantial adjustments, economic enable of adverse all change tax to accelerate with said, current credit in EPS our we that growth new trajectory law and

when we different some you point, back on about impact comments so the that Maybe positive. should book plus math of fading, I Cabela’s be think have I mention growth it. reform could the credits, of tax have quarter, was a Got you made on last there of normalization,

going better, in a should math think and have maybe about seasonal that for so guess from So have guidance you forward, that you to terms guidance, Thanks. we been we about credit Scott, talked going reserves forward? piece been, or small and a just understand can you piece and some talk getting that growth I how for give don’t EPS about how are small issuer heard from credit of vintages you of their recent want thinking while I growth another

our the that mean down coming yes, So XXXX book, growth small our stabilized of be they’ll and that long earlier eventually has vintages we’ve said start expectation. a upward becomes then in guy good XXXX math The tail. gradually in XXXX and as And still it I would a vintage actually front eventually run. have

the losses and earlier Now book increasing. after their seasoning which our of on course still XXXX vintages of in are front newer are process

the pretty vintages is in we So when all all point we blend XXXX. newer overall take front fully close of growth again of growth growth earlier book when that the of risk and is kind we the math. still offsets the increasing But of modestly the on maturation of this what impact getting of are to call

to period. economic just are question as loss things have the impact rate, that our here drivers said, reserves, going forward going factors to think events growth really that on each last impacting overall the I broader and that Rich be are which during of to come industry are Ryan, the your what’s the allowance going to from trends, we in biggest

Next question please.

next comes KBW. Sanjay our from question with Sakhrani And

I little XXXX through as from fact efficiency marketing of you you might about could Scott are talk talked think Ryan efficiency bit about questions go might we a and Thank the higher, upside that in a reinvesting the the you, differently. expenses little trend ratio ratio bit good XXXX, XX% and you think tax? approach that about that evening. Maybe When to Rich how

was tax comment way the think of I’ve are a that over we tax, parallels about past things effect how into marketplace. I’ve making seen the I Well have my think there of in if how these - seen way time, the and their some primary

So extraordinary on what going the change the work and this, and the been nature old about to again being going technology the and savings, operating time. to works, of that one the literally Capital how of change industry we’ve school course school classic it’s and model of really to the efficiency we’ll interaction school One might work, the ratio, school how hard penny affect model. progress, new a will and of old benefits about everything see respect hard business With It’s is we over of transformation just I call change certainly working really works new every works. so of drive kind have and is that everything customer underlying works, leveraging how how our to the how and it blend

basis types takes old can don’t XXXX, many, come a -- that’s making efficiency ratio that but of about to in last that And frankly think evolving any continuous of guidance run, driven over that and specific points and technology many gradual vary believe benefits. any over But not have That’s the achieve any efficiency Now we XXX can growth that given by of gains we’ve continue transformation. productivity year. improvements thing. from the blend school kind we a of I long We school the are new years. many and seen couple we years process, of the

the mean might tax on forward of mean opportunity going opportunities maybe a a downmarket is quality profitability. the impacts look as be can clarify And Medallion, a major and about that sold little to result on think benefits forward? be should credit arise that greater more wouldn’t as just specifically I in there we any that And I will then just Okay. Taxi where portfolio some impact we of go going there of credit bit expect, when mean, quality we I terms ahead.

the got an prepared We the Yes, held of as for we I I��ve that in why Taxi mentioned book in start was we with So marked means majority period put sell that don’t I would a reasonable market. be price Medallion? reasonable of estimate time. that expectation remarks, to sale. that That where that my it able within at a the we of clear thought are to going that a

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make did those And so way. if along see we any we would the adjustments,

the that. specifically I’ll on the few on to respect With a just consumer, you tax impact consumer thoughts give the the maybe and subprime U.S. reform,

it’s out. the hard to play predict this to the consumer think, both to If likely positive I will economy. broader be will how there and effects,

that I what pricing, respect believe on makes more have way marketplace terms its in it’s of investment the consumers. to in for benefits going this there into some tax with direct coin bit benefits things and these out to tax are firmly competition, of do and I what is was play and time, are they side a overtime it’s the this While happens little and an to the more with to in impact lower primary the same think indirect, saying the windfall over a just higher of consumer, many of I respect reform relative the wages, to ways particular flip company,

But Now have incomes. think with shouldn’t borrowers are this expenses day-to-day More in and stronger might book I and increases doing many with respect have will we a to a with possible subprime somewhat well the in solid subprime impact. economy relatively exaggerate differential subprime impact that modest pay because the this impact. take-home consumer, wages, likely struggle current it’s borrowers

tax will a a put that into tax I predict for although and competitive we to my are to the one plays predicting of point how are benefit. do to certainly because our reforms have out reform trying things is want marketplace. primary cautionary move credit the way it opportunity and note effects and impacts that baking about is credit So not the relative any into outlooks we subprime hopeful

saw little that bankruptcy that biggest in to reform. economy, driver, the going windfall very the demand appetite of form changes the in The somewhat supply off interesting want I our we mean, in marketplace. lesson. other back particularly in aggressive the a we to And XXXX there's the really -- on, I in go a if of marketplace go see the we this bit time think supply in dusted more up off I and were make But also, in and XXXX from demand the by aggressive that reform the bankruptcy into windfall there and the of credit – things back frankly now I driver case And course marketing, that than look more there more biggest marketplace. and pricing its grow myself period driven the is -- underwriting. other way of segment big of created what going again and an particular the credit are and factors on. lot think to of

problematic. so, And became of the the end at competitive the day intensity

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Next please. question

Fargo. question next Fandetti with from comes our And Don Wells

Rich. Hi,

of in year-to-year they the charge-off If December. see past when actually improved sort little rate out card delinquencies you a again And December it it in how in on you then, trending? a move. little called you basis, on the think at domestic that I Can you card the you talk a about bit expect bit have look

good around So low maybe range? X% news, could sort of is -- no hang this five news you out meaning that come

think by normal domestic increased And our in and expect seasonality. we XX card rate points from that's of charge-off month-over-month would with what line on I basis Don, So, December. basis that between kind November a

going basis come good when as is good that thing Now things month. we a On seasonality, because and with saw math just on, effects, consistent a increases the basis more year-over-year in a losses November, than certainly more also mean, that's the growth was things December other so trend there clear. but the me, a few points of increase moderating December, our year-over-year excuse I is underlying in

how that about of month growth of with month of math good performance math plays every works. But another with like our small of that growth out it’s confirmation I we again it we so thing. consistent But etcetera. guidance that's as our tail and expectations the a So a own noticed view

and from this unchanged commentary consistent expected. Our really with would've quarters, how several the this is on quarter last certainly but we frankly is playing out

type delinquencies, on adjustment? were We looks it. quickly sort auto the there it but Cabela's were good Got one-time like of looking some delinquencies, ex of the on they up a bit Was year-over-year?

an -- that at otherwise accounting assets don't include particularly some was in I auto an we I loans, the we as quarter. side On that. of that’s the of nonperforming made other, DQs there impact can impacting adjustment anything impact Yes. think repossessed those loan would to that recall move

please. question Next

of and competitive performance think From But that, own seen performance. credit a really view that seeing own is over the we the out choices that is a our are view about view, like generally that good the bit. the of the -- about place quite increase confidence in Sorry, used competition a competitively. a the in monthly The the a down bit is performing unusually quarter in this performing the of fourth business consistent think levels -- auto well right volume pretty the I data is been we've we've our was from auto kind I with see that’s steps I think data own now talking competitive our and is industry prices where cycle the in consistent a there possibly quite with up and things quite origination but the that our for my backed particular are happiness we why probably the middle of off moment marketplace right point activity, high we're of observation and risk ago this car and well. the worry at had quarter off intensity year which still something confirms our about

Now, next question please.

And take Stanley. Morgan Betsy next with Graseck we’ll our from question

evening. you? Good Hi. are How

Betsy. Hi,

you questions. the the math in saw to math, Hi. Two already looking on was growth growth for? some this trying versus think quarter, I’m deceleration just if do prior how that quarter much we you’re understand just One

I is impact the second in quarter. so the rate book. seeing that's We We of itself mean, I'm year-over-year well, growth our on the saw deceleration half. not we've it a by driven – much front the third are my loss deceleration, but and math speaking point yes, the our seen in

the the So, we quarter. and saw on third deceleration in fourth again quarter

So, we every natural here it's of there’s XXXX. part the quarter but small all I I in that's phenomenon expect small think why and mean, effect, a tail

with a the marketing. then that you I the on in pretty up Okay. And but there prior periods permanent you you your where long of point have ratchet had use decline a to in tax And heavy if lot the just one-time benefit the it, when different changes, not was competition of a the in earnings the impact in your tax get you position follow-up spot have we're are now had on that rate. benefit, could tail pretty important might

or rate a door in Why that what make and competitors wait do? the in think wait take change stepped-up I’m customer incremental wondering So, the leader do to more that -- others with if you a doesn't permanent get what program? trying to see us that given just to see marketing tax position

this have Well, thing plays a over Betsy, I we that think how time. about hypothesis out

agenda carry we -- believe that invest in an and investment in. continue we we on we will Capital that to into very much think I carried One already

good feel I there. the we that opportunities about pretty think growth are

I'm has already up the and those feel and particularly the consumer year Marketing in primary -- a take about think points be is, make we’re to to we’re will about be to And its is the I going of much doing. bottom tax to have going We’re of other I out. about of have ability think -- to to what it I so – law guidance carefully who the pretty the going give may way others we we that percent going to term advantage plays that think line But impacts near on good, two but into And impact some to how to think one, growth that we’re them. very my think just think I I to to going don't point we've over there marketplace. this we’re investors predict of fall by little say that -- about because the confident over opportunities. what I be kind a way the to that. to is of things respond my that, bottom particular this our And this course because we time are point to are need continue I drop kind it's going because my is it of been watch feel going is will reluctant last struck who line to doing thing. tax how marketplace the to good the going

question please. Next

And we’ll Chris next take our with question Brendler Buckingham. from

both and Is that Or normal? something out Good but for marketing evening. growth aggressive expected has Thanks. like to on Quicksilver Venture obviously down a talk just Cabela's ex digits, second, Hi. to low a domestic single a it’s is XXXX? competitive that there still products. you slowed card you're in new about the I Thanks. just rebound pretty market the to with this

I pretty you've direct marketplace, the more Capital bit, think outstandings to but about purchase be volume but is a marketplace volume growth there think have choices slower and continues of a impact I metrics the purchase so probably little the partly made. strong. we One it's comment to comment on Well, seen growth the that The our a

we want and are out second of there. league the much back the you Around started of I in the that flagging certain at XXXX to told time, and growth in XXXX we So of we back mid last to to benefit anticipate of into marketplace -- competitive expected -- And XXXX XXXX we concerned grow supply supply top we we all grew sort the about said half XXXX, issues to that an through think the kind to early really significantly. that pretty tables. outsized know we

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the have dial supply to has have So, we read sure the as get can consumer about this and to in confirmation and exactly respect back that been impact of marketplace time been with competition. period we be is where we of want the over increasing that

bit. out Over still -- It’s year this has Supply a slowed of down. and a number are above revolving GDP that about the bad intensity that's credit, of think course bit I things are worry good place but I settling rapidly our settled competitive is little growth out course, there has competitively growth toward of it of don't a whether go a is signs What that we and happening. think a sign. things little the

feel are part actual our I the Capital year. are think and a -- on there from will we doing marketing mostly than we selling the So hopefully you next that it good growth about that I there very generating see opportunity outstanding think be numbers this on are One that little choices more and the products year of side the nice reflection But a the results. and we’re really was

Great. Thanks. up cost ask follow-up, consumer about little quarter. deposit picked the deposits, And my then this I’ll bit

your You and decent sense question online is going about about bit hard see the business offline? also you and that growth well. with all deposit deposits. pretty doing robust to online in guess Thanks. pricing rising focus is I to My time saw business sensible how forward the some is of deposit your It's rates. on see how and versus environment consumer its the little current talk disclosures. Can what you just

Yes.

into you on that direct as example, made will two. make numbers would sure reasonably the beginning that side, deposit make the the first thing the to their bit side year on because in One overtime. of banking the we’re we we and of understand that if last banking stay study local I a for Capital our think business want the end will at I year some at of just of think and pricing blend I And reflect moves say little deposit pricing a place. this way study blend And direct we the we competitive is -- our

acquisition, to Cabela's brought understand One national both as that like business have our from a The working from about our also other deposit the Healthcare thing a to the acquisition. the you build think business. grown have We about grown but acquisitions we are -- growth is we have Capital lot, GE overtime organic in outstandings lot overtime

growing we that high The have sort the deposit-to-loan is at bit capability. that who they much any ratio end at bank more deposits and will deposits its it's assets reason So paying building if we’re national the end grow mention our pretty is a end the deposit-to-loan you a for their expect of that bank of up looking up a low overtime who grown, quite banking ratio. would I grow norms to will because is to be in and look of the on

the an that appetite and growth question So of – the and strategic is what business. what beta just its it's kind it's of -- double its of of not particular business a really beta is, of somebody's really kind issue of a what is needs

please. Next question

our we’ll And with Rick question JPMorgan. Shane from next take

taking assume question. if GAAP? accounting. rate another one of differences specifically spoken. to jumped guys that you’re Thanks GAAP is provision that this wondering Scott, going And the we’ve lower out between signal suggesting is of a for Hey, that than tax for companies me is substantially that other which are many I'm potentially charge-offs exceed XXXX that which tax things and drive drives of tax reflection to this I my the

that. a is answer the actually think bit simpler than I Rick,

is If you think from U.S. the lion Capital One of sources. our about virtually share income

top so huge share rate fully of XX that And assets rate the then to income. for XX% impacts because of from level. that's credits domestic taking the of the And tax-advantaged have down down inclusive cost we we that loaded XX tailwind on us, was that tax if our a of generate the think lion to you do that own about some kind the some takes and what stack

that there's think simple it than don't I So, to more explanation.

is Got lower, bit it. your because, tax historically, interesting this It’s little substantially a but rates lower. been

quick Just question, discontinued the adjusted does the operations? that number, follow-up or one exclude $XX include

see The we got -- gives there a you $XX the excludes that adjust of discontinued And operations. can slide what specifics you we the appendix in out.

Next question please.

our we’ll question with next Bill take And Instinet. Nomura from Carcache

were at help like in we could turned actually could else kind that that think a you whether XX basis And that I maybe negative provide which given far-fetched you reserves, we to now. about that of in the if evening. around six wonder all us year-over-year February equal? down releasing talked seem Good back see about earlier basis Rich, for you. delinquencies year-over-year if doesn't actually change change Thank points

of so that until we’ll all up one numbers, keep will they of basically have say ago's the you be to thing one and the fall mind. in year I at want in new way of look will that fall So, impact change the effect, Cabela's a next the delinquencies, about that sort in in course, year-over-year year the not the the as to think so numbers

shine be know have the earnings can I I make effect little want in don't about a of of that. light We’ve the be Long bit stages will. of that of book. a being back calls we combination The news we quarters, about driven industry So, the industry want on it year-over-year charge-offs to sure going last in talked the couple gradual a any you run are to or bad and change of really of But is the math math guy growth think latter good a to these reaching -- we good factors. or course by is guy. if delinquencies growth

the of many If will years below back you And everybody’s -- securitization look year-over-year. improving you and just also set everybody's look just the been time is back guy in book charge-offs sort the a get a the back effects, want what is trust go and look see year relative moves goes it you which way -- even if gone it negative good from at at horizontal change that the probably see a to books. of striking back were a has kind they horizontal it's you from the book nerdy thing to the to of people's that which to were purest, lines you year-over-year being say good over a And of graph guy. a axis for good bit guy this what packed above is last the industry in axis just bad to and if just delinquencies and at little books

is at happens back than little that happens. natural with stage effect. credit because our in accounts the is thing to So other It's everybody's think farther particular books it how the happening normalization it get the top industry that happens right to what's each each front One most there to journey are the very but and benefited would book of everybody's of through Capital the at whatever some normalization the we’re that effects. the is-- front that along players, of of about hungry then there is of new that books. tends is for frontier than industry of industry fact be the people other think issuer this I by on there And the that cycle a be

industry an So, is we that effect there happening. believe is

from plays have bad guy. to a credit from guy a the to neutral to end and math we’ll We to will that growth guy, us out in continue -- overall going a relative how our thing and expect to it overtime That’s going numbers. for good the drive

growth revenue talk well And around little that we’re should margin? Can suppression. about discussion you that kind impact also top we with the delinquencies think if thinking just having helpful? should about like how about be wonder bit focus Rich. there on slowing I we the follow-up, seems just are Thanks. lines. the of I if on guess could think bode trajectory it that's offsetting I benefits talking a of for thoughts be the things all lot Thanks Any revenue But there's line. and a those would some I along on that about the

Yes, Bill, Scott. this is

impacting been by suppression been have set driven credit of the the same factors certainly So, is metrics the that and allowance.

expect our start also moderate, driven be overall impacting we the So that loss as suppression those to by certainly would that are will that think and broader things I industry rate. factors

Next question please.

Deutsche And question our from next Bank. we’ll Ashish with take Sabadra

trend revolvers that credit between and that about think implications as score from loan then change the we continue to the of is yield? And any Should Thanks. to in the the earlier see My question coming on was given to down quarter. those we transactors continue XX% that the does done, year higher fourth -- and when you've from I just portfolio to has going shift growth about, Thanks. underwriting subprime when come XX% the the forward? the year continue look refinements at in portfolio, should the end

Yes.

we’ve rise Ashish, to years it I think Capital has that big that -- did little with I it's to don't mix many think respect the growth more One. any I subprime rose, what's through there's to the back happening levels. news around mean, generally been how XXXX, normal headed surge XXXX number I bit been that third? think during of That the and number

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just them? of there regarding the particular? environment what That’s out the helpful. And competitive cautious metrics cautious Do Is then in front? and given called couple sounded take the that have of XXXX you Or issuers color think the on time are of any they second But large competitors the just the like around? a lot and watching understanding you aggressive start, half in So that for with at burned you’re that more benefit been will looking a more promotions? my will the of opportunity So window Thanks. anything this windfall? you’ve be there.

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a about in how credit So worry a XXXX, of To And expanding I some when your XXXX I the relative aggressiveness the uncomfortable revolver the sign stable. of most in marketplace. little to to things crazy, are middle going and we were question relative we and people think amount going OOs that aggressive say were just that good there. and dialed that's supply that is the think people been pricing There marketplace has think in boxes out somewhat while back with in bit. particular was have I in what

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please. question Next

O'Neill. comes next Chris from our with Donat question And Sandler

leasing that’s don't technology Anyway on able of sheet market made a years, pricing, on you've of at the more from in I'm to basis, side in technology balance Rich on question direct advantage more to deposit think competitively for over the deposit were last better being decades revisit Thanks I’m with brick-and-mortar with little pricing? angle a Hi. with pricing you question. loan my taking or just Wanted related you other other the to you have. place where target competitive investments banks stand, where deposit that wondering some the you're a few pricing and wondering ago of the and different the of if traditional

really -- micro-targeting say deposit So, advantage to is pricing. that I I that don't I technology big wouldn't the hope obtain the for we think

that Although lot across – a there’s in certainly the investment that of industry.

to that of helpful am about a technology and banking with able infrastructure modernize the an the a us from direct combined distribution banking full compete consumer experience great modernize of and able able and sense integrate credibly rebuild backed we physical to technology in and really have to of I and great bank the think the to some spent to is in on thin build our online being actually online facing being I to be bullish offer established really be players. shoulders the and online very technology integrate by that stack investing to local bank years our against a and

at of more margin. a So, in micro terms that the about is real advantage technology pricing my than a bullishness necessarily really

on these vehicle But think play set into factor do act used expectations looking you’re tax just them out – question expect to Okay. and the one that Thanks cautious for before conservative. you and not expectations in that. for vehicle does seems to prices be And appropriately then really pricing, your that you were or I for said these down year? this factoring

making We way yet rolled have its about used-car any impact pricing. into not particular the assumptions attacks

at has long levels, behind. historically if I it think long you is been, sat just Honestly, if pricing, you lot and and a at a only this it used-car used-car from Interestingly, to high little while them. I so we analysis on, down. cars just for look end underwriting just months. it where really not pricing the It’s not are. of a certainly of rising very is time over and that eyeball Capital down. and amazing One have in how reflect What index more cars Manheim where look But high, does longer matter our older think are think then a go, I and gone to own this, it relative way own it of some up but had lasting index I how one used-car has they where our it’s science view, I a has underwrote that doesn’t probably bit a few an has think at when mix is the lately prices point been locally, people even which were they mean cars stable gone last a this where I end, matters been way thing of used bit

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versus is that they And are about where on so of whether or are whether way are going are from they think an up the underwriting you view. underwriting just from it’s going where they they down low, concerning not forward. it’s again, are, that than where and you high chance are a there And higher here I going point that that’s

Next question, please.

take Moshe Suisse. we’ll with our next And from Orenbuch Credit question

the had that of the times you’ve auto. significant growth mentioned thanks. and it’s you tax in Maybe following more that couple big card get little credit and a call competitors that been you bit benefits. those deceleration a prospects the strong that of a referenced of in on and the had Great, little Rich, think fairly some seeing fact your aggressive could opportunities deceleration the

you So just us we expecting where be to maybe growth, if you that should tell that could where think growth come from?

the where to about. hopeful a counting I’m off say want, with be for growth Yes, in is to business. so card concerned don’t when the we opportunity, of all Cabela’s is enhanced of base that know this came growth I not And your compelling I year-over-year some of list in list X% first a things

know side, bar negative not of and from side. here. bit me what But being So are we would or with the competition when flip let low down I about about positive of start it’s on the talking up a a that,

seem the more but So of growth potential and high potential, year, impact aggressive, and of the example. competitors of the revolving getting fairly credit also things particularly from negative empirically is levels the side of that we last for credit, same the this windfall indebtedness competitively some of of the

supply. quarters over side little number reduction of On of positive the a last is, bit a in the

underwriting people bit. feel their in can little trimming a You

the benefit months and out. have more vintage We of more of also watching curves settle

in retro experience analyzing them we business, many you matter more to and the these micro opportunity. bit that no feel there’s really itself not way about curves sitting the that out settle and here. in but I’ve growth this -- how saying good growth things and and how just is own it’s comforting a expect This play in move up we it opportunity think can they see But tends just we’ll down not out more here see segment go settle our years then have card. a You get watching lend on big of little go been of can, dramatic I’m so so it these I someday plays on believe you to out. to as and would to a a I pretty every this

-- and competition on I a got get amplified, in of amplified think an last number lending. intensely the it’s, auto, it’s of is impacts because comment there been the in an could years auto of auction, business middle our auctioneer the the that’s has I if sitting over there experience is

And off One. Capital seen value from than so, the we Lately, auto you’ve before. a business, in the the seen significant backing growth some competitive of bit have such competitors little it’s more

and the to Moshe pretty talked I the the pretty if on auto industry growth for we in dynamics side, still I much is overall up think that I to good haven’t that. is -- really relative an cycle, way times good. commercial industry all supply about I think business, calibrate the pull opportunity think and in are the the hypersensitive so

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I there a I commercial and the though the supply think out space, of overall lot in is there. that think

bit on the seek the have been significant. pushed I a more becoming of little think investors nonbanks to is curve that and I in out lending space risk and the returns, think the impact

think view is moderate I our see. but pretty to there, we’ll have So

just capital, above of Just right kind – beginning CCAR last they of maybe capital on quick were just the call at cycle your now a where levels a the year. actually are upon

distributions you think capital in for XXXX. significant been said plan when had the how to do so what the, we we think about And in amounts in which comparable

recognizing for of have should As earnings and more go in... you we levels it higher

that we back X mentioned what destination drift is kind capital the think of of Moshe want see to to of you about as levels I when we CET think in kind our distribution, No, mid-XXths.

of we for see to near and And windfall that out the are certainly for that then of there’s in tax from we’ll having while how room distribution. so, see, if growth, reform for there, still more growth distribution. capital capital And to much tax exactly the and overtime, but a effects and play I help for opportunity competition enduring positive earnings how some is gives reform in think us term going get us

Next question, please.

we’ll And next John question take Evercore. with from our Pancari

Good evening.

ask the differential way from basis rate book there, vintage ex-Cabela’s And of -- to XXX, quarter. deterioration? the book front seasonality growth domestic of If know at the basis I’m us a charge-offs that’s charge-off looking last point how book current the I and was of that another up but or point the Just card change Thanks. question. XX back XXX XX much from you can tell math the versus front

progressive affect book was front over meaningful the the both growth to with consistent factors John, but there growth but math. the But -- out, there book that. really quarters things of and that effect in math. were delta, both bigger break in two the the factors the grew the but in those XXXX the back year-over-year was – both over -- I’m precisely declined -- going And our not they not were two were

how as as we digits? – that X% it in are you somewhat year-over-year. at originations an originations overall the right that at about that’s we it I that the look low competitive, about but is lastly, the to fair originations opportunity what should we look then single think and still Thanks, you the know What’s there flagging Okay, said for down I XXXX, on also you, are it’s heard, all growth represents auto business assume that auto helpful. up still

growth with originations that believe a that fact supply had competitively practices our has of had the when XXXX we we we of was we of very, kind of business Gosh, company underwriting driven said really so in at we risk at of that the what just and like that a gotten business and I’ll quarters. we we bit a been growth generally a I budget, quite drop we volumes there. it deal strongly much margin but a respect and in which management came selection you couple an By if so about any concerns to investors the origination think science, almost some businesses, our are nature really bad quarter isn’t the adverse no with prior of cautioned, cautioning really in supply, big time and internally actuarial behavior, the we in following for record in it’s sets, our we internalize nature a it’s posted take to targets last our lower predictions demand was the because fully had to and as big the you and no make by back look in just and originations

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please. Next question,

last our the question evening of with Bank from America. comes Bruce And for Ken

the to take put kind cold growth and intensity period of earnings [credit competitive the to X.XX time. out of with will high I DTA are this than potential that of after and figure would later. cautious to sooner for write-downs that – over mean, bank are really anyway aggressive to the if thought about that most marketing what maybe Most guidance that kind earnings kind away coming some conservative to rate Thanks, good be I as going concerned beginning assumes kind the potential just are the release most accelerate with should of of potential the growth rebuild question your are acceleration place that it’s that benchmark. evening XX like had expected of be repricing spring auto] what just earnings be if mean around think you to where so, relates peers your you that could really competed to trying trying growth that think I’m of you capital if loans on what your or card I us from or your could anything tax some the as the the in really as just give guys. think to and kind of about My me good. lower the other can I occur significantly you being undermine to activity can us seeing of and XXs extremely off XXXX steroids. around of that or

we to quarter we our very similar tax fact – along were so business prospects how bill. as we came and its mean feel day first were the happened about in of I when at we will talking the this and quarter last before. to what all Well where is so And you reform

there only just to prediction our is, near-term our about that are that this business prior over we windfalls of the we their the and had way we business, with to are next we of now -- fact reluctant feeling of that the prospects seen the I is very get else. And performance in imagine everyone mean, from reluctant the financial to be are way doing couple the marketplace. a shortfall decades same it’s to saying in not for their the hard the but I industry prediction tax the to all point place years really couldn’t and the two first my have thing have ourselves, it get so tax in company So of effect. relative all good hit make to we into business same over is, be in have kind to And and experience they a an guy the are striking own that important that for

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project happened volatile credit charge-offs a credit how of wild a scary a then the card if that card can happen to and example, bit gosh and So the and of marketplace for any a were that got just effects respect take well losses to you losses say, be directions of to that striking and had exercise losses then high volatility all printing business are, just with the would level. little or you P&L the years. it’s money good, have me the terrible staggering over same be the in you both that But would things incredibly if offsetting at in kind been

caution of draw to just are sets and things clear, about to be going the are to it that and make your so this. arms certainly point one the be I look whether to that going an more happen of we investors my biggest to this that is race it and this try you that there good question be case XXXX, it’s when want don’t we in not we a made is your stuff marketplace number a and not that a into totally off I immediate good partly be guy. this have This to timing by this and it, and all stands a point to to thing conclusions way, respect my prediction a the in at is way be business quite the particularly is be I to with at to thing therefore guidance think would is can own but an wouldn’t So, the book not before not gradual a is I want all

terms in you. it or again, something Thank And auto competitiveness is just the of seeing you are box of expanding hopefully of in and terms in of lastly, quickly pricing you seeing else? in increasing or credit are terms the that

don’t process little new the I thing. a it’s think, think mild I underwriting we really bad running streets report like there. flags No, it’s when and don’t a mild, I, there’s I red waving to anything locally we We, practices. don’t have down go anything dramatic. we think see

at what and will say, People those in move period had I think competition we benign into an it bit and XXXX a unusually if look thing. of That spaces we’ve think from it’s I back a think the will normalized I happening and that natural is just more. little period. that there, is XXXX you

that all than folks the it likely that of is natural, this thing and this of backed competitively bit, think these one little it off will bit last more stepping as – particularly it for it normalize so a be Some a as them couple was I is maybe think had for up I it’s much us. years will good

much today. And in great here everyone for may continuing questions Remember, team you call this joining on conference Capital Relations you for to us evening you One. will very thank Thank Have have. interest this the your a evening. answer any further be Investor

you today’s does for conclude conference. participation. your that Thank And

disconnect. now You may