Capital One Financial (COF) 21 Jan 202019 Q4 Earnings call transcript

Welcome to the Capital One Fourth Quarter 2019 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. This conference is being recorded. you. Thank like call now to turn to would over the Mr. I Global Senior Vice Norris, Finance. President Jeff of Sir, you may begin.

much, to quarter call. Capital very One’s Thanks Rob fourth XXXX and earnings welcome everyone conference

access live on log Capital from One’s and the webcasting there. internet, capitalone.com to are at the we on the usual, internet. As To follow the website call please over links

XXXX In presentation summarizing a we have results. addition included to the press release fourth financials, quarter and our

Executive Officer Earnings me and One’s please Chief of on With release, walk go press evening, then Chairman One’s presentation. Capital copy Richard on are Scott the presentation access To click to Rich Investors, click Mr. Capital Fairbank, and to Release. Chief this Mr. going you Officer. Capital Blackley, through and website, Quarterly the a Scott and Financial are One’s

in described results information earnings factors release to And statements. with Forward-Looking or Annual the the and in Capital filed please the note and or and discussion Quarterly Please financial the only titled new our our One’s forward-looking this revise in contain Information One these a events and One at from to indicated today’s this whether result the does SEC. see those contained presentation otherwise. Risk any factors, could of more undertake may as date that regarding information, cause in speak any and of on update information differ Numerous Reports, actual not statements. Capital Information obligation future in materials. presentation section Factors particular any materials website or forward-looking materially for accessible Capital statements of the dates the forward-looking section performance as

Mr. will call over Blackley. And with turn the that, Scott? I to

$X.XX $XX.XX common per or X. in were will I with share. earnings tonight XXXX. of adjusting diluted items, quarter, net $X.X On per billion $X.X Jeff. billion the In $X.XX share. Thanks, our was EPS or income per fourth XXXX. an $XX.XX was share per for basis, the in Capital One adjusted share Slide quarter earned Net begin

We Slide earnings had the items which quarter our of outlined on adjusting presentation. in three are XX

$XX or of launch costs to total concludes Walmart brings expense had partnership. the and $XXX $X.XX related million per year full the This we our with million to expense First, launch. a expenses associated one-time Walmart the and integration partnership share

as the Additionally, $XX our portfolio for costs million in an The reserve $X.XX and recorded business. integration share. build acquired per well we of had the allowance are or reserve build Walmart launch card domestic as

charges July. million that of the the of we were end resulting reimbursement incident receivable or impact share. net million by per partially $X.XX of at $XX an million $XX to related had insurance cyber $X we a announced of Lastly, These in charges offset

extend recoveries these expect We will continue of insurance in a to XXXX. charges portion beyond

In we $XX C related addition December to D preferred costs recognized and items, million X. our the Series on to in adjusting the redemption of stock

the quarter. by per We Series of costs an also QX of to and expense Collectively, with incremental new cost $XX $X.XX. these in carrying the Series associated D for earnings C addition of dividend I share million the issuance had most decreased

As dividends do net preferred but impact income. EPS, a they reminder, not impact

provision owing to operating increased year adjusted for to charge-offs. decreasing pre-provision allowance expenses increased to with XX% to larger ago, performance increasing prior revenue X% modest a a in the Moving year Compared XX%. earnings quarterly build by losses and XX%, on relative credit marketing X%, increase and increasing quarter,

our our in Let the discuss quarterly a across which me our of detailed supplement. allowance in businesses are X to take Table movements earnings moment

in reserve million $XX consumer build essentially In acquired initial was $XX business, build outside allowance declined flat offset our to build million the builds reserves Our on driven by energy by a charge-offs the our And there more million portfolio. as $X continued related growth commercial Walmart allowance our in allowance in of than business. card million, business business the of in lastly, our for quarter auto $XXX of portfolio.

of known the marked X/X/XXXX that for in by December CETX quarter. we allowance the estimate the basis our CECL XX that all approximately billion We have and end decades. accounting adoption increase first by will $X.X ratio the reduce XX, our XXXX allowance of points

out segment reported impacts the We by have broken Slide CECL X. transition on allowance

year the in was excluding by partly improvement, XX net The negative Slide on-boarding in margin was the interest Relative quarter, to was in portfolio and On linked or cash asset to margin quarter mix, of basis the interest by increased XX flat. and net full which Walmart basis, and points margin X.XX% for the largely basis the points of basis XX impact including quarter, driven PPI. prior points QX securities X.XX% growth. net of UK X, effects the quarter reduced of seasonal from loan interest Turning the the partly XXXX. a

relatively changes. have near-term to posture, neutral continue interest a the rate We

the headwind Over industry. term, interest rates and persistently will longer a the us be low for

capital. I to Turning X, cover will Slide

ratio Our was fourth purchased approximately we the standardized $XX a X common Capital quarter, One million million $XXX capital III In common on Basel XX.X%. equity Tier shares. or quarter basis this

our of in October, expected of We tailoring of rule XXXX. in implementation quarter approximately regulatory When purposes. first to we adopt now Recall Fed the have CCAR AOCI completed the out billion. for the $X.X opt we the capital expect authorization XXXX that $X.X finalized rule, an with billion of

when December position our transfer, decrease a increased resulting transferred about opt securities XX the As XXXX of in held-to-maturity by first basis XX, $XXX increase AFS we available-for-sale we QX will XX of an on by all securities AOCI the to in CETX AOCI result, Accordingly, for this approximately of AOCI fourth quarter, Inclusive points December quarter points. equal. our XX out in million. CETX basis about else

CCAR capital As XX% we believe for around long-term we XXXX, are preparing is our still that need CETX.

rule of the XXXX reduction about to finalized the headwind to impacting card will our Conversely, of a factors tailoring our capital new effects the tailwind the created provide In loss need. model implementation a our talk a under to capital the take under the stress. stress. Let Fed’s capital minute me recently CCAR,

is CCAR capital also Fed’s XXXX. under and of How CCAR when for capital XX% there Fed further an the closer in changes in opportunity these keep to be the We eye stress CETX able capital manage our implements on in will continue and framework which will we buffer when believe CECL an a implementation relief the to the factor long-term need. to key we be will occur

the Rich? With Rich. over that, call to me turn let

credit card XX. and business delivered results The X results and on credit performance on Thanks, strong is card business. Credit begin with by Scott. fourth largely Slide will I our loans, Slide quarter are credit shown driven in of card solid and domestic results trends which the which volume stable our card segment revenue. purchase summarizes for business, growth

$XX.X by card driven cards increased exit Walmart spender by billion all XX.X%. volume purchase grow X.X%. XX.X% the Branded balances our interchange of another quarter the X.X% the growth XXXX. fourth in total the quarter. of from Year-over-year, choice We basis quarter company the continued increased our in was decline and from points. grew were grew average XXX% the quarter. revenue several sharing the exclude fourth for second was as card the portfolio. average acquired the growth loan year loans, by franchise. growth by compared or to up the of volume cards, Revenue margin the label declined and small by partially X.X% driven we co-branded Domestic addition More to of heavy branded agreement prior of revenue X.X% private card ending partnership than the posted quarter portfolio of XX to domestic offset year-over-year purchase XXXX acquired strong Walmart loans Domestic quarter for Net growth loans. on Revenue strong card which portfolios driven

fourth year Not-interest credit is delinquency the expense upward improvement the Domestic Despite strong Walmart of the the X.XX%. card quarter essentially of charge-off quarter year addition strong The results to basis the up, and flat our of was the line basis driven was the XX affected prior a deliver from not and with points year-over-year portfolio the loss-sharing point credit. to stable stable. XX by top the strong continued this end portfolio. the upward prior plus rate rate addition Walmart plus XX quarter pressure, compared pressure Because X.XX%, on improved by Pulling the acquired to domestic put growth business XX delinquency rate delinquency rate. for card the agreement, remains quarter. and

banking fourth grew XX X.X% Average results year fourth Slider quarter. for Ending for the prior from increased business. quarter our quarter the year-over-year. summarizes consumer loans X.X% loans

quarter results credit momentum market the business. increasing acceleration growth the our Digital banking bank originations auto in Our innovation deposits year-over-year. strategy, loan modest with all strong driver year-over-year $XX.X rate the intensity. year product in The basis loan points the billion the business or growth, place by toward throughout by of along XX stable our and national were Powered of the delivered from basis consumer ending key a yields year. for the deposit shift deposit rate mix the increased rate result primarily products quarter. market interest declined was the to deposit XX rate driven increase higher environment. quarter sequential prior interest X.X% compared Average rate a The interest in with competitive up is auto a of and points

deposit needs mix, average factors, funding forward including environment, going market our the competitive deposit rate several dynamics. will and paid rate on Our depend our interest

more from by in deposit small growth was of cuts of revenue auto moves Consumer the two of home fourth Federal fourth year. businesses. legacy from last our revenue rate loans fourth the banking fourth Reserve was the timing revenue year. businesses no versus tail Underlying quarter included revenue effects. deposits and higher from in offset pressured pricing quarter of investing There XXXX and decreased X.X% a legacy quarter than of from Differences revenue the loans the retails and quarter these this in the

expense form Better auto Auto and $XX Volume continue lack basis allowance auto to growth the year charge-off benign X values strong points provision drove our million auction economy X.XX%. for Non-interest prior growth X.X%. quarter the rate offset The up investments to year-over-year. and expected support than improved the businesses. loan expenses legacy quarter the were credit. and losses to partially by expenses in to Fourth an transform compared driven grow increased credit continuing was of build.

to that cycle continue as rate charge-off gradually auto plays the out. expect will increase the We annual

loan market commercial backdrop, and on choices. for to for the loan Provision Quarterly average Moving banking our carefully Average will pricing, The Unregulated to our terms. criticized underwriting balances eye was credit our X.X%. losses were balances prior X.XX% up rate by commercial strong was rates compared income. to In balances increased X.X%. fourth XX, fourth banking to revenue in Ending were year driven X.X% business, was loan in commercial the our staying that year-over-year. origination our quarter non-performing loan pressure and rate XXXX we year ago. we compared year Against driven X.X% sequential both growth on fourth put and X.X% charge-off quarters. X.X% discuss for and up year continue spreads and banking spots a up compared was expense stable of non-interest up quarter are the quarter the were and quarter by competitors criticized deposits loan loan quarter. I X.X% loan Fourth was loan compared to keeping disciplined the business. Slide quarter from watchful to and relatively quarter fourth increased a the performing are energy rate The choosing prior the criticized conditions. the prior Non-interest portfolio. average

fourth and our Capital way Pulling to the for solid we transformation. results XXXX, to continued and quarter grow digital full to in One as up, year post invest the drive

year-over-year domestic across In results loans. strong momentum growth deposits. consumer we yields auto strong loan with national and investments credit growth strong in delivered strategy our banking, year-over-year Credit we launched generated solid card, our marketing purchase build business to Walmart growth and in were successfully in and Our continue solid partnership. volume our the loan growth and businesses. banking stable retail stable and achieved In

Looking depend always ahead, upon of opportunities marketplace. marketing will continuous our assessment in as competitive the

we the Walmart marketing XXXX, year see a growth will and in for all of continue our opportunities enter full we have As resilient new of to partnership. businesses

expense will national the the Walmart expect year higher all-in our With and incremental marketing than expense. marketing, cards retail domestic and we full progress banking on We have marketing moderately remain momentum our XXXX year we technology plus continues. XXXX transformation in be full

better risk to faster significant products, better customer We company, more growth, the and benefits economics. management, across are market, realizing growing experience, better better

environment Until are end are exit with our continue the we data of on operating of in to centers the one to data efficiency the in one way, stretch the hard center our we on even the foot improve working and the this elevated track and year. both We data the environments. foot near the are to cloud and home straddling with center legacy operate cloud. we cost transition Along cloud to then, of

we XXXX, point improvement XX in XXXX. we operating achieve ratio In another of improvement efficiency posted annual year of modest a and basis adjustments in expect net to

continue We ratio move to XXXX down of in to bigger efficiency net a in operating expect XX% adjustments. annual

revenue by costs of of in straddling in and the which will larger of aided two on We be in the acquired in quarter businesses portfolio step the traction enhanced expect the associated data full exit by share up increased XXXX. Walmart improvement and XXXX environments, fourth occur the the to technology the centers our

to improvement total continue efficiency XXXX well. ratio the that drive expect in annual operating as ratio efficiency improvement in significant by We will annual

the positioned our in long-term to continue shareholder As succeed and transformation many well are rapidly marketplace benefits value. and changing create a increase, from we technology

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

Thank you, Rich.

now session. start will Q&A the We

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

after If Matt, will the please be Relations session, questions the you the team Q&A. have available Q&A additional the start any follow-up after call. Investor

Sachs. you. from first come Instructions] question Your will Thank Nash Ryan with [Operator Goldman

good Hey, evening guys.

Ryan. evening, Good

one And the you for on And any just you of X pieces Day give across guess, CECL Scott, is us color to portfolio? just Maybe different that X us, the so you talk products, Rich. off impact? I question it have thank moving about maybe the the different a for Hey, regarding now behind I start across can can Day follow-up. each

a start going I estimating you saying builds for those for think Sure. about to to prior multiples you am to use them Day I segment the been would Well, good have by think off they when gave Yes. XXXX. X, just we I in are and regime multiples level apply and allowance foundation what under

Day I about good in terms of think in thinking that’s X. start place a to So general

about going time. over I I that mix think that if the talked could multiple be the or changes future, changes – but change think gradually that those portfolio the we performance portfolio really have are to the performance happen in

to So the transition multiples start. are probably a good place

Got rate in you year, expect and around XXXX I are plus overall the just and everything or a Thanks. quarter of is like talked being that where have a that the your or operating And see could the in remain guess you minus what it you given would made you guess Rich, fact that area you progress XX confidence? so both it. question maybe accelerating offline articulated in moderately levels a And to nice high then degree fourth efficiency, on coming outlook? cycle, just the biggest I could impact where despite in factors it such about in reaching headwinds, handful we second of is marketing it you this there up or some is are these

talk Ryan, operating about So, the ratio. let’s efficiency

getting extraordinary a cloud of straddling cost of in those confidence. achievement is, of up talked understating have as is been being that be all out. we we that like several sort are a the could there the what’s think a out when work all to of it, something year is. step way, things was in are, benefit bit environments the driven what along set little The is guidance math I character things with what associated good on are, that of the years One it, data have, we so sense, the the out Capital just There have of And are our contractual. that of that’s have the incredible and and We the math is of what Walmart call for certain handle many doing certainly with specific stepping a centers so this into on it it the but very a doing

so think reliable And that’s a thing. I very

and by marketplace, Another is XXXX of improvement businesses lot we fact that the the our and origination the see expect here thing in can It in prior businesses going innovation has affected have this we marketing and the expect to our doing, sort that like improvement that it we account traction in but can we the success years in works. in technology that aids choices larger any that spent the that is about is the the product that continue. of growth, we of performance in and future that has of uncertainty changes continued Obviously, make, have unfolding be increased been and of of some in we economy, a the bunch around in talking changes the work lot time but which on. of been changes that estimated

that good has uncertainty that. feel we So, Obviously, to it. about

equation what have is of center other eliminated. the the and hard worked not be but And we always that data all the will the well – X And driving we have we to new do on disciplined down and there – gradually efficiency technology technology that uncertainty this. operating is here savings side cost respect ratio thing, benefit being we that some in together, growing worked to like on element very is and to when always years operating We the spent hard put all cost. as this risk for associated have cost with driving and cost in there estimates, uncertainty of a be cost minus exit happens can straddling very the comes collectively,

we a ago. year shingle out bold Here we our hung had that we are,

as change what that’s the it’s launched we we many that did for in by pretty good a to a had at of things and we – we product the time Here am into continuing because the it. so world long struck year we how mind it as are of unfold And I time. feel of work where period is a and in lot

investments. marketing respect about continue precise you is even franchise marketing, in new to give many we our to we impression feel in all. the side, the I With awareness. originations, to And volume, would strong loans heavy good fueling strengthening the in is to driving marketing we thing on along spender interchange account I ways, bank at growth want years, marketing very say don’t purchase our growth give is about is card, in don’t and – most first marketing leave We is what say brand want deposit marketing I with cafe in the with guidance net increased revenue,

doesn’t We are are traction metrics franchise. have in partnerships are seeing brand we things. X,XXX branches actually our brand co-brand lot that and also are a at the just company overall building a that critical lot and lead of a terms to isn’t in equities of top table of the that And a a company we of

to kind have that. way the of time the one and machine fashioned at customer key old build a is business of we So, our marketing part our

a of you to terms I the what marketing. here in feel about leave We marketing. got full very good continue the with new year of would the Walmart So, we addition is

we make that based how determinations that’s pulls and but just marketing. window about the always is so necessities up into I yet marketplace, to are wanted always going the numbers in There see the will our factor be you we on the we And – final feeling there. that general give to another that opportunities

question Next please.

KBW. next Your Sakhrani from come Sanjay with will question

this sort When Day growth XX%. Scott. look assuming out I at loan have own, I our follow-up we does Thanks. provision charge-offs that at I look you or is are X%ish am wanted provisions what looking to you something Street the else? just there and CECL flat we and to the impact, commensurate on are articulating the mean, consensus X up of

how and to driven under CECL the is going back of ground I back by going just work. So, to CECL factors are out what’s drove you a the that with step of the under and just give Sanjay, CECL? really little movements why to don’t allowance Allowance happen bit prior picture same go regime.

start allowance of and three balances you losses Of got have qualitative we have the we such for under our factor. CECL just not and you expected going come lifetime and period, are have importantly loan we those recoveries we the end factors losses. that’s to to to off those recoveries to a an – and the it’s the balances second the be will in I top. and an at with factors, then that changes expected lifetime also that are now on captured on modeling really because that’s one going So, important future be that are in And having minute as why holding

the biggest CECL. So step change that’s under

the CECL, offset all have with we next will a me averages lifetime kind of We offset put overlay for forecast forecast. extend then with with outlook a which when that to with a allowance. on start into be do we CECL it. you XX we offsetting only to losses year. to allowance impact are relatively the our just we how that speaking, expected Prior our after So, a recoveries to let allowance gradual our With did and And of for together we that our under assume this a future recoveries estimated big future are recoveries and charge-offs. you prior we CECL historical of We that loss longer allowance tell then regime, going months. XX-month and future than CECL recoveries recoveries do tail And to offsetting larger we because under we first see reversion they a recoveries. tend

of I X.XX X.XX the those our So, on business. see stable. in a multiple to transition, going relatively you think think of mentioned I card as business for And point our allowance answer, I multiple net are auto first at are my domestic of that, all our in

about of stability growth, are answer of and apply in and you of periods well, quick. real of me how stability, about, that give just to Your includes multiple implied that you let and in really examples. allowance multiple might a periods time. going moderate vary of There CECL And things this a take is that that that to couple are cause economy. thinking In whatever have a over and to couple just growth look me of kind build could that periods question it stable let you

So the know as that first talked is new expense you CECL the have pulls we allowance lending. with and associated forward about

so in we to growth equal, a And bit period you if range. the our in of XXXX, else during higher implied in growth. had sensitivity just have X.X implied CECL during periods XXXX all lived CECL multiple give of been under perhaps up multiple there, higher surge that would probably go And our would the and

like into a the going is can move things that just could kind see of of we around range. see to of we give just you if lot where there multiple kind that sense up hindsight a that we and So things took applied

could recoveries, see On the flipside of of high in the that periods you actually down. go multiple

this to might immediately portfolio recoveries, and So where a multiple got a periods in factor big down. have there of ultimate downturn – we push higher the those is bigger be actually after start

is bit of moving gives a Day kind but was a that pieces the X. to of know CECL how you a hopefully I work sense answer, long So of that going of

I Alright. follow-up. one Thank have you.

was then XXXX, growth the rate? just be the opportunity a contributor XXXX And share would expense tender the growth. growth a if comparison a I moderately in – Thank wondering it big a penetration. on higher portfolio, for this to card year’s on that that growth clarification a and sort of known that’s Just Walmart I was you. of terms have in was lower marketing to know outlook good

the repeat Sanjay, you question? second your Could question, clarification

Yes.

the mentioned would like in you expense of terms I if single-digits commensurate growth? moderately with higher, higher mid growth growth, moderately On be just rate marketing wondering was XXXX’s

Okay.

opportunity is is from moderate are Walmart together want guidance two new talk a this marketing. is driving growth what growth things about to a Nash’s a question And increase to those year seeing want portfolio? of response So overlay only of with a opportunity an and world’s with drivers say Yes, the think very and largest business way opening first an we we fact let and year. certainly a on about Walmart start my on honor And to also continuing it’s world’s Fortune in last what me an think X card partner in that. opportunity which thing. the opportunity growing had that a the of to launch XX% program. sense I not what to have we to of company with Rich, important retailer And one continuation side is in of we momentum the company, – traction in that in largest important the digital that marketing actually is marketing so our is the a is – question with you element do opportunity consistent Ryan it say this the the I the a to

size old growing So and and under associated book we that. be new front there for itself we the where the will that then Synchrony back the And into you a lot a have told be partnership. divides time Capital parameters One, the opportunity we with have book general do about back converted that a this will book the over originations

many very of and Certainly, to think we this, of certainly are at that We many this the in in very One. are size early Capital Walmart we. Walmart pleased levels our front and penetration the we way the be to and ways have book, of think of point, guiding that because two the lot this I partnering to do are do credit companies believes that the specifically to similarity front card but will are other the things there partnerships book relative at the not relationships, certainly going a is upside so But we here. stages there of with I

Thanks.

Next please. question

next your Credit And Orenbuch question will from with Moshe Suisse. come

thanks. Great,

so roughly or the talk in the number was I do You that follow-up. and going what does you be about same bit growth. is? a I just accelerating because referenced the mean, so level Walmart? X.X% that decelerating outlook the the I whether kind branded Walmart, have exclude about Could little And the to cards from think to little bit you as branded that in on the growth same of talk a quarter, a referred growth overall that maybe is a growth third impact

also Yes, book Moshe, it of a a want off zero growing all, Walmart running definition front a portfolios starts clip it sizable have. pretty has that that portfolio of be I point by front book the otherwise – to that’s so we first book. the book loss at the with rate the since back relative is of will out runoff at to

to there and have how look So, we very see have I in there continue certainly plays to but happy be that going think to opposite are we that we will are to forces outlook, out, feel going are good two of about business, partnership. directions a of about origination. a that the growth think strong terms the have number continuation of but card been we we in I account benefited years talking the story in by opportunities it’s before more of The

in in bit good validated coming over lines vintages as vintage. successive each been earlier good the increasing recent if it It’s vintage. and time outperforming fact in anything, way a have have we the are is We as of as credit by some a

also on in the that’s the This the us the economy an continue all longest context of confidence credit is line recessions. continuing that to originations confidence already the good recorded drive to in between is So history here the that gives length all and in side.

then traction that of about a cautious to element continuing marketing. at of very we things with number important success and a quarters eye find the is are talking environment, for that the been of the So the have

So, opportunity. that’s growth we good the about why feel

absence follow-up, a Got non-interest it. third other And of housekeeping, just of from primarily ago. interchange service as of a are fees or income up in the factors quarter bit very year little outside and well? other change charge there that and just line the kind Was both the of as was that PPI nicely the revenue

looking – Moshe, you item line at? can you just specific which are

of was PPI but like from year it of up called I XX%, kind in those guys ago, QX a have XX% had XX% What both believe income, other and you them? charges or of the so

Yes.

things impact oftentimes really on, on non-interest situations. of other a by driven So, so item, a that different income few line marks that is variety

mark line have assets take runs that we benefit FCNB. and So, those runs and and expense the that some actually marks the through through this revenue we an compensation-related offsetting is first of we elevates there in is item

the the in in mark healthy a period run-up market, of with was on So pretty there amount the compensation.

under through can Those the do partner that occasionally be bit that thing in we other The run there there contracts. a coming payments are runs through and have lumpy.

the that on is that level basis. are to bit think you I I a run-rate what seeing expect would QX a in elevated

please. question Next

come will Morgan next Your Betsy with Graseck from question Stanley.

Hi, good evening.

Betsy. Hi,

went the switching Just know about a I remarks talking that lower how little of think quarter, gears around NIM, little a NIM rates I up your headwind. a prepared nicely bit had in you comment which bit in are

you that for bit? how understand NIM, two to square had to a those and you you speak deposit maybe a I So if in things about little outlook decline wanted the are costs, the could nice thinking just

we mentioned look quarter, two I bit on started pricing that mentioned quarters about quarter, have were abate deposit a number NIM basis. that those primary factors NIM quarter. mix little I and we a as been to I deposit have last see up linked for quarter Betsy, there last at talking drove and When headwinds a from this of

that mix those the described. I was factors was larger of two One asset which the of

growth. factor was loan The seasonal other

we that seeing in embedded accelerated of on that’s The in deposit the securities, the that things in are as there. is like we there. traction of of premiums all that as amortization embedded have, some So a pricing well bit

our it an I drive the comes factors mentioned the think overall, opportunity. where deposit that that of pricing impact have goes. to So the relatively low betas declining of maybe that rate types cycle deposit started when pricing would been since Rich

any will but So see interest at negative or have outsized where I really I net impactors see this margin. whether think our positively we don’t moves to on that point, to,

that, about just here folks in I other CECL you Day bit, us some And the around X. could banking ask we a color I about increase wanted see commercial to of at when X you already driving some quite I the the had buzz I the mix if outlook Okay. just your commercial. because then so talked in give on really Day and have look declines think know

was to So a you? for different outcome of driving what I understand bit little want a

It is so hard doing life, on the their for are me a factors. of to judge depends what others estimates. It variety on

can’t commercial hazard pretty are even because a portfolios I So, just to it different. when the comes guess

to answer an have don’t honestly on one. really you I that So,

Next question, please.

next Rick JPMorgan. And with your come will question Shane from

for taking guys. Thanks Hey, question. my

are $XXX X assumptions near-term And all May on a But your would X% difference how as supposed loss tax X% holidays a lifetime you December to realize repayment take the in trying the a on from are X we differently, said behavior behavior after after repaying I slightly think CECL January balance understand refunds have impact different in agree same than of is perspective the lifetime loan would distributed. loss reserve? to that I a am $XXX June? I both. that practical does growth balance loan terms in growth on

Rick, growth lifetime paid disclosed. quickly I that seasonal of empirical driving at I and the revolving likelihood we about and just They say to we get we aren’t that’s look general factor those data at that multiples historical a the large would we have don’t how allowances transactors say in those, really those tend down. look use would

Got it.

the to short-term expect wouldn’t we seasonality, that, you repayment because in necessarily factor to follow-up that a behaviors? able see are as So in, to same the

broadly speaking, equal, Yes, true. else I that’s all think

Next question please.

Fandetti next Wells your with question come Fargo. will Don And from

and Can business industry has faster is talk One that and three your business? small and of a a what been the of issuer. consumer there growing terms about in in are top little competitive banking is the than card about dynamic there Capital lot talk and growth you bit payments Yes, a Rich, thoughts BXB your

separately. don’t our out break So business, we small that

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question please. Next

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Afternoon. Thanks taking my questions. very much for

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question next Brian your will Hogan come Blair. with William from And

Thanks. afternoon. Good

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Next question please.

will final Your question Eric on from the with evening Wasserstrom come UBS.

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us Capital and conference today. One. evening interest for Investor the Scott might a Thank on everybody. team your in will here call Have thanks have. questions Relations to for everyone be Thanks, that you evening follow-up answer you joining some this great

conclude does that call again, for your our you today. for Once Thank participation.

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