Capital One Financial (COF) 22 Oct 202020 Q3 Earnings call transcript

Welcome to the Capital One Third Quarter 2020 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

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

access Web site, are the and follow Internet, we live from capitalone.com log the there. links To please One's usual, the call Capital As onto the on webcasting Internet. on

Capital presentation. press as information, the SEC. result new not Capital in site presentation the our the to accessible factors those filed statements. for Numerous on and One the and to And information, described actual to in or in on Chief Factors today the our to financials, Release. you Officer XXXX from obligation One's Please this forward-looking and forward-looking Forward-Looking our quarter In the go the Capital are second presentation One's may Risk and the Scott One's note events included section Richard quarterly With undertake have Blackley, results that only Web statements and of any will the entitled annual section see differ One through Information Quarterly Chief indicated Rich of materials. Web contained reports results. Earnings addition virtually this with earnings One's we on and copy factors, forward-looking a speak Mr. Capital release materials the dates access click materially Financial any and please particular regarding To date at presentation walk more statements. information and site, in me does Information Executive these any of and Mr. revise then Fairbank, or otherwise. summarizing financial please Chairman the press a update contain Capital whether and in presentation the release, as discussion Scott click this or today's Capital performance future a of Investors, Officer. could cause release

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where Included and third were see per was per on One the Thanks in $X.X everyone. presentation earned you can three are I'll the of these quarter Net today's share $X.XX Jeff on start suggesting Capital in or afternoon which good share diluted common slide share. three outlined slide. for earnings $X.XX of the and quarter. testing items per EPS the items quarter billion

or items the items addition In equity to we a in a share an related initial its which recorded adjusted offering. priced in We notable stake million to the recently $X.XX couple had gain public of quarter. per $XXX Snowflake

release $X.XX a We million or card associated also recorded share partnership per portfolio $XXX held-for-sale. allowance with to the

Turning detail. to the cover slide four more in allowance quarterly moves will I

residual factors to assume in legislation our improving company prior held-for-sale by targeted the driven million Excluding XXXX. unemployment benefits X.X% end we assume In the we the economic third no end the areas small correspondingly mostly a we severe with allowance, for balance this in at impacts rate, X% uncertainty. a We sheet. $XXX of stimulus to allowance for a continue around of further from transfer, year government released specific any total by of quarter, of outlook qualitative beyond

our slide levels as commensurate you commercial coverage flat allowance to allowance card can releases contractions essentially that portfolios. Turning were with five, were loan in see and

our from by consumer assumptions. modestly updated by auto driven X.X% allowance, price mostly to X% auction Our coverage was ratio banking in which driven finance declined release

our slide position. six, the Moving I'll liquidity discuss

from the second quarter see our ratio XXX% You XXX% requirement. the during XXX% regulatory well the up of coverage was quarter can and end liquidity at above average preliminary third to

deposits. last is in quarter $XX flat billion cash by consumer inflows federal for and loan capacity largely reserves home continued billion driven including of liquidity Our securities $XXX from at cash, bank about

quarter, declined balances. margin Turning quarter-over-quarter. basis we to decline by card of resulting securities approximately In the down to slide investment in points interest higher of average XX manage average balance, lower our net a quarter, in This purchased ending seven, and effects cash you can the was $XX see our a driven decline securities cash in billion. quarter-over-quarter the excess portion cash of that

points Given saw relative rate increased margin up our environment, the securities, on due prepayments premium increased X decline we our amortization low quarter. last to also expense to driving backed mortgage interest basis net

any cash margin out an outside Looking position. our play will balance the across net sheet, deposit this of depend in interest mix, balances pricing, on and our forward, how our future impacts downturn included stimulus and

cover will eight, I Lastly, the turning our capital position. slide

X quarter third quarter. the common XX% capital Tier equity was at up points XX from basis the ratio Our second end of the

for quarter. We the dividend maintain expect our $X.XX to

Our mainly the of fact that by our midst we're Resubmission. CCAR decision is the driven in

continue return. repurchases shareholder and to component is CCAR on important feedback our accrue received an share dividends we We to recognize our after of reassess stock capital the dividend expect both distribution, capital best the and common we We Resubmission.

stock in of issued we Turning the common quarter, one-time a outstanding as by fourth stock that will available charge F result to are of Series net stock the in This series shareholders a in the the income quarter. preferred reduce preferred new approximately $XX will fourth preferred we to issuances XXXX. quarter redeem in million expect redemption

future over With of next be redemption call $XX quarterly preferred dividends Rich? year, Series about the other in I'll or to to that, F any barring Rich. million of redemption turn the we issuances QX beginning Following expect activity.

linked strikingly strong for results. charge-off behavior across in most the the driver headline quarter, XXX posted exceptional rate several improvement In driven of The and for in points the the credit from results XX compared was and pandemic. Slide These our to Credit the behave basis year-over-year quarters. card consumer I'll delinquency widespread significantly, behaviors the effects cautiously, key XX in the the down quarter begin card both X.XX% impacts was current and cumulative The and effects provision third the spending point for XX the rate and summarizes Year-over-year, point improvement was in year. behavior businesses linked We prior basis amplified credit X.XX%, the than by pattern typical business. in delinquency quarter, of on card XX. The then, to increase. the a the which is the stimulus key are paying Consumer results, sequential results We're the shown of quarter card XX quarter. industry. banking results across Thanks, a of credit the prior was the the loan rates basis especially third less, quarter Scott. improvement loan XX And the performance seasonal credit driver end key Slide this quarter declined consumers volume results was card are - context balances, plus improved driver But card better saving a resulting on declining which function me domestic excuse trends, cautious forbearance third basis segment behavior continue of year basis quarterly a including debts. even pressure purchase though more quarter. rate and our domestic by seeing which credit XX, of XX pandemic. at payments of a the revenue and domestic losses, are impactful higher in results points, balances. is a on a environment, The also of spending in biggest cautious points

and began, consumers, and impacts credit resilience credit our In made from downturn on lines. high before from addition is cautious choices revolvers, to forbearance, our avoiding benefiting positive stimulus caution of widespread we performance the including balance

on not domestic a Appendix forbearance low. card domestic credit volume because declines rebounding significant is XX. from forbearance own pandemic. card the sharp performance, on is enrollment Our updated driver the provided Slide in information Purchase of early is We've

prior we quarter. Despite still the ending decline average through just the of card about On balances ending or half rebound, $X.X volume the loans the pandemic. That quarter, Average weeks Cautious purchase compares was X% double-digit XX% from pandemic. October, By in volume volume purchase September the to by the about growth loan year-over-year year down basis, positive. were modestly growth second both In down linked late shrank third consumer declines. first domestic X% drove year-over-year compared quarter first X%. seeing XX% year-over-year. of the quarter the X% Third before of declined down in purchase is was and to and quarter the the loans behavior and growth a year-over-year. were billion a

the but offsets impact which and we factors. both to We of choices balances moved to underwriting in quarter the no adds portfolio tighten on notable billion pandemic course, And Scott early impact the Ending decline factor. declines. in the Our linked and Walmart linked of on marketing a the $X.X quarter. quarter pull as to has added year, were which last mentioned, year-over-year year-over-year two of include held-for-sale loans partnership the back loan also

Excluding loans declined the move from the about ending sale for Walmart about acquisition, and from to quarter year XX% linked both X% the quarter, the held quarter. prior and third portfolio

in revenue was year-over-year quarter XX% expense margin to driven Third or basis when XX.X%. down third decreased back last quarter line to of up pull largely the from the by our million, with year, pandemic of third quarter revenue points choice was average X% X from marketing Non-interest loans, XXXX on $XXX hit. the

the unusually the to marketing increase most card in low toward quarter. company quarter, total compared end from second of essentially flat increased third with the was quarter domestic While, of the the weighted marketing levels,

we full cards. QX ahead, normal expect to in company of a marketing quarter the domestic QX in ramp significant powered plus Looking seasonal quarter effect total in by increase increases the sequential the fourth the

term As for of always, longer in our will real resilient actual growth quarter on marketing marketplace. assessment competitive the the and depend fourth in time opportunities

by to resilient banking COVID the XX%. rebound growth began, benefit part our believe driven year-over-year, for tightening. Driven the allowance the box ending business, XX XX% the we are of franchise third quarter of allowance release loans factors grew provision Scott auto loans are discussed. increased even where thus for When the Slide improved We business. the quarter by in dealers, moving we on market focus the our driving results our stronger focused. partnership auto most far larger assets. market of seeing, context the in consumer average has several downturn for and the our that year-over-year, underwriting The auto to Third $XXX been we're portfolio tightened by million summarizes driven losses also held-for-sale volume credit

originations recent car to demand digital And dealers the of growth touch in products direct-to-consumer distancing. buying driven are provide by the low of in response a who likely services from experience driving growth with and Some to days up the pent early social growth shutdown. want and our is

built position to strong with relationship a quality us tighter and digital and loans, Our in infrastructure from dealer grow capabilities strategy the even we've the up, high put underwriting. bottom auto

billion of higher our deposit the the interest growth $XX.X partially in in Revenue deposit differences pricing up quarter the moves. to second and deposits year. Non-interest Federal expense were we reduce Third the X%. XX% last quarter. points by increased second ending of in by year-over-year, and the XX was deposits and X% driven third surge basis loans course rate response driven decreased revenue the timing pricing banking consumer stimulus market rate Reserve offset retail third deposit deposits rate and or was in Consumer from of in dynamics banking quarters. environment competitive preceding over bank consumer the quarter as the Average up from auto interest cuts

auto modest improved allowance provision quarter lower million year-over-year credit released by business. driven offs a by $XXX charge Third for our and in losses

auto improved X.XX%. posted points a improved prior off the XXX business XXX to basis in year-over-year strong Our results The the delinquency points unusually rate year to compared basis The rate X.XX%. charge quarter. third to quarter credit

drivers domestic is general domestic strong credit auto strength, credit contrast of stages same to card, values. later the our Appendix COVID to significant positive We delinquency much addition is having enrollment Slide higher. and Auto of very auction XX. extended to benefited forbearance own chart provided card because an release information impact a in we've auto from In And customers on updated forbearance in

commercial XX, Slide to I'll discuss business. our Moving banking

and bolster X%. by increased driven to growth up of Average loan were CRE quarter selected XXXX middle up as the third loans quarter deposits C&I continue XX% balances ending and from were year-over-year, specialties. liquidity. their Third about market Average X% customers

higher Provision loan rates revenue quarter CRE. banking by the prior paid release lower driven X.X% quarter. million performing and losses rates for non-performing $XXX loan third quarter increased partially was Non-interest driven The credit discussed. the for size by income from higher to credit To was charge-off downgrades up offset rate both non-interest prior deposit the by Revenue loan to improved to quarter quarters to rate from criticize Scott X% lower linked Third compared and the of in X.X%. modestly volumes, The X%. multifamily the expense the loan by year yields. XXXX deposit quarter growth largely and year by allowance was compared that commercial rose X.XX%. annualized for increased

Capital businesses One and and improved posted provision Our gas results. strikingly lower portfolio a on oil provided $X credit year-over-year. close of future. XX. Slide and composition on quarter third pre-provision Appendix billion, drove results earnings auto non-interest and and some quarter by oil our than card our revenue breakout growth the more results in Year-over-year up, reserves thoughts declined losses We've as gas exposure and for the strong. and with our positioning tonight I'll for across strong credit our remained expenses

served the we've hardwired into we by Since the capital credit, choices on founding made our way good well up, the times and through pandemic. days, to we we've be before and liquidity choices Following bad. made continue resilience

the entered recession. investments a And navigating resilient our work, and by and the the technology periods stress, the through our transform the for downturn of As with prior adoption powering efforts digital to result, great and to to change company including of us trends, experience balance we digital our we and pandemic. drive a credit are and driven and successfully deep and our acceleration the sheet strong fortified positioning to response how downturn

create we long-term questions. the to and your focus answer also And we'll when to to resilient continue growth, technology, the value transform overtime that sustained be lean and near-term resilience leverage, profitable distribution. Jeff? on delivered we things manage As effective positive investments to operating happy continue into challenges, to through now capital

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

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

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

We'll [Operator Sakhrani our Instructions] you. Thank from Sanjay question Please ahead. KBW. go first take with

the ahead, trajectory share, the guess I on for and question step just through, a talked going the costs could the net we Thanks. about I know that in assume some contributors interest the some I caused Scott. a stable items sequential dependency future. you talk have looking Scott? if upside you there's maybe degradation the margin forward, the in liquidity the dimensionalize you costs macro, of have lower you just know up levers about funding funding a and some have? could those, coming Walmart I potentially lower But

Sure. Good afternoon, Sanjay.

that QX. now, get QX, NIM. pricing quarter cash positive has is took slowed but In benefit the elevated, low to in mix. to So, deposit given that balance NIM in right kind to deposit with current margin we I And towards if QX. is of going the auto we're to And see look expect growth think factors where I our the is just respect growth of NIM, end full at would of the the sheet then I actions

So, to NIM and about there like received be deposits. be make. that's our trade the in positive to on savings, a is and all that you which those if credit cash positives. form more stimulus to other the is longer seems drive the are But, term, performance, at going might I talk headwind more we good to of that potential a When hand, just that more there a factors those would look

everything are stable at direction economy lows kind factors here forward. in overall, we're of number positive So towards this went like in And with the a would from NIM. that go the on feeling point, a of there if

guess about talking Okay, the great. I economy. And

strikingly talk quality situation? materially you unfolding, the looks on don't side, see Could maybe, strong. on were rates stable chime or declined credit mentioned in about that Thanks. could you you about of things because worried macro reserve assuming sort the you're of just not not as change you in how do the that things to Your TAT. Rich, some And macro

important start in Why allowance, the question? And the can is when of on One that you back the considerations. our place. effects we've positive jump stimulus end I what's on that beyond a in worsening then some the and look allowance couple exclude we don't Rich the I assumed economy. potentially further to already there's of at allowance build So

our really where, at place while Second, a actually level, at delinquency starting manifest. it's we're really, to are low inventories take a losses to so going for

just be if more So another significant forward, the I economy our feel stimulus our is look comfortable where with at really current card, case. And, that if factor are we could it and wild upside of assumptions in allowance. allowance. think reserve an to we stimulus potential today. levels a sideways positive worsens going coverage additions. beyond that that they But, in goes if get the be some economy might we get I there's much stimulus, the for at In worsen or doesn't didn't we or looking case, in kind And,

about consumer, One, have my biggest we economy of Sanjay, just the the the from a this actual and consumer, credit what of disconnect I that especially building of view. the Capital in decades between comment experienced is a three performance itself see in the point certainly

Now, in tend more consumers tend save spend that I so less, a always downturn more. to something to get pull think that they and back, conservative, happens is

lower, still going as give so I'm any the for The what But the better So few like interest put this high I see into before in would of on I still the this low past starts supported was, years shape of the crisis were be being consumer in is rest don't think, of the here ways, a the downturn. to what but prediction obligations lower what And the some this was a we views, it consumer. around of some around past? different going do great uncertainty rates. Debt why double going rate over ledger look, consumer you the degree payment savings in from the to by think levels do I plus things, kind use recession.

the so the of did, did, fall, unlike to the this Great I Recession, And in downturns, free most world what the which of momentum, together the a elevator unlike Then as sudden. is, And at of situation. time, kind stronger thing we a into all this say, lot entered sort and consumers other happened same did. the and certainly often came went build all sort went down government a of companies months took consumer of

And that reaction by striking than the past. consumers has think so more conservative I the the more was happened and in

So, less, widespread down saving And the top the spending than banking forbearance amplified they're overlay greater debt. of stimulus and think paying unprecedented past. in that the both relative the on more, the across this of much course, I industry were and much government and Then programs swift past. occurred to it's swifter

balance over consumer And the net that's of of added external the support But a they and impact households trillion, of spending variable. were of consumers positive is to consumer millions And have granted parties and many some sort $X expanded individual impact unemployment by to the effect so, to sheets blow expiration the benefit, some per these of obviously, we savings or up unemployed by Americans. now across the a of about $XX,XXX wages, of that household. is highly benefits lower government cumulative has a and effects offsetting conservatism lower their

has dealing work during had skyrocket we're was downturn, with what of our didn't when that to suddenly the this shut credit an force think such we see accumulation the benefits places. is stimulus that consumer suddenly kind metrics, I off, of

And I their look consumer, I being the the huge other so significant see of say has more cumulative this been now potentially this I've of burrowing delaying working as that, a I we've having just matter relative government have point of think underneath been investors about the not that impacts. it's lot place reverse could want more think we credit even say, awful mountain, them at of through losses, way. a electrifying reduced a up. trends I metaphor to you worsening rather the And consumer numbers, But I using time cumulative stimulus sort itself is, favorable still just when before economic lot at every than the permanent. in the the tunnel significantly thing renewed, some longer of we're talk think such job talking is think worse that revert that to losses were I I just economic that a a month through to that thing downturn to for things to built

So myself, feel, give that and - what I've seeing those collectively are we're cautious feel that not performance certainly could for okay up. one feel thoughts quite we're good on about and certainly observed at It's no speak happen. - saying. Sanjay what some should I I'll before. look but something we this about But we really we

Next question, please.

next We'll Please question take from Graseck ahead. Stanley. go Betsy our Morgan with

Hi, evening. good

Hi, Betsy.

as to very wanted you as I credit results have bit dig the side side. you on the auto in mentioned on well a that know the I both strong results. loan on little auto

what First used question up XX% is car prices, they're impacted a auto. wanted net you're here? to used I that around prices the equation piece going And NIM and lot clearly much And your about guess for your assuming of just how around understand from year-on-year. the of forward charge-off car just here

around auto the and of orders stay saw by there's saw space leap the the remain basically levels. been end rebound home home quarter, consumer prices the auction with and remain constrained projected as that stimulus At froze delays to lenders at in pandemic, quarter, demand of be particularly houses supply. were V the enough strong we levels. volatility to At supply the and the amount trends, But stay up pandemic. expiration out, stability auction and drove as the increases of supply a shaped third was of most of consumer struggled of dealers repossession. of in inventory lifted, the orders incredibly move these remained recovery in experienced strong, By rushed start uncertainty collapse demand prices offset online. the sort through it as quarter, since And third we whether the to turned pre-COVID to start second Betsy sudden auction constraints prices a as of unprecedented demand prices suspend decision would the of there the whether maintain it start at resulting consumer to the would auction auction markets, massive Okay, in in

we've Over recover pre-COVID declining the work industry last with of through prices and couple the constraints, slightly, the weeks, supply auction seen to these start to dealer inventory toward starting levels.

going would these to that normalize to auction through over prices So the as We're industry significantly the works an underwriting months, they're issues. next be we expect forward, fully several going to supply assumption because of It adverse just cautious of was the extreme important factors. and just was one of - about from question to the in this how volatility. because your To results? be the there, the

are somewhat in good credit why in higher seeing impact example, specific earlier auto repossessions used in we've on our So we've auto temporary the that meaningful And credit the of auto is effects. which the what extension so stage extended a is, customers up downturn. the our more customers COVID auto the recoveries about? for then so there suspension our program's There delinquency. also from seen from got basically in were auction in card, in it loan programs because having And a we've three than of - we're credit was beyond more, metrics really three cards the it got impacted highs all-time talked results, and relief catch bigger prices, in reached we because proportion later to car QX. of One

some of performance in sort in credit bunch definitely planets space, and is the more I driving much on the certainly talked things that are extraordinary side of in auto a nature. it's the aligning of So, sense, about temporary

that Got up Thanks have. no, super for The that's all follow okay color I Rich. question helpful. it,

folks, cycle seeing what accounts Some products between have? been thing and the have seeing Thanks. with forbearance you with regard higher exiting to in suggesting forbearance earnings to if on the this or of difference forbearance exiting the put other aren't? have Just sets in accounts do are delinquencies and I'm with you are that that you're is a rate exiting that same wondering that number a were that could what various you accounts

forbearance the than the kind program we a say, customers with by so they or program. you biggest rare I leave say, that driver put who with and took advantage way, the delinquencies. company was customers of Yeah, low stay And told downturn by XXX% and me any driver to a was forbearance very that delinquencies program. have would confidence take they So wide the of will are enter I - group sort exited what coming. would would current? have who filter, an a let's likely of installed higher a you it's the come did them like the population you now of which that create group? be for how one what the those the is Only wider say, hand did. more place, regular, higher some that and a, probably your It in the Is that delinquency versus never not funnel in important of when raise because I'd Interestingly, to this take extremely risk inviting and like and was is customers filter, probably and biggest The the of the first minus number percentage it forbearance. a you funnel, is of forbearance? it

And previously, we at I'm see the on but again, are overall in one population. the observe. XX%. card customers here. I our you much be the the most business, enrolled, just up them at how sure current. of longer no metrics all basically not the only portfolio in because delinquencies that there would delinquency our have has look you were business, of we a is our XX% want In to these look customers content who filtered is If that customers this enrolled, information it are let in because thing telling The me who So, say longer that auto forbearance other look part just who thing, are entered no

please. question, Next

Sachs. Nash our take question with go from ahead. We'll Please Goldman next Ryan

Good evening, guys.

Nash. Hi

still that expectations we in is in Can when have what you've you've just Rich, broadly you you was about when historically it point. spend Thanks. we Do low do wondering or just your that? things seen just back, this nature, point? second, more used ramp it the clarify seasonal expect should about are more increasing accelerate you at in to any noted to it maybe you talk in this speaking, growth. remain just are sort if too I terms at another could approach and a a of just visibility And as marketing significant could And the see uncertain morning? an issue to is competition pulled marketing you quarter-over-quarter this opportunity talked XQ. to as Or window increase? for And of

Yes.

third our we're right So end not to dig. marketing the all Capital in we quarter we others is you're that of this the dig be the a One in, tunnel, at while higher light the saying than all fourth at the that sometimes declaration see

is to the that this the it's reason We kind marketing how that thing. also sometimes itself. dig at not low going that, primary, just quarter all guidance situational of it's to that next it while The is we're at to kind sustain others level, relative more leaning low dig, into say a and of look and now,

within given We here. overall in off the response a just on, And marketing interesting, certain just early uncertainty coming mostly such we've it low unprecedented more early Again, me growth. context for flat the crisis was pulled let it's through re-entered opportunity a decrease channels. while in the to back very you marketing just And company, in quality increased in channels the since level. most card So, quarter. the little give was

And quarter are ramp have card within on Capital though was what marketing always One. so, is within company we our you because saying was it the of in the slow. fourth quarter happens as the even then And seasonal that, flat that quite top wide,

fair full really also higher. so the full - quarter the effect will And and saying just numbers we're of seasonal pull amount that the

being marketing low after transformation how so to going weight as growth and here. more really much a and it's of opposed So, from statement pulling-up we're a a big

to you your we the When important and are through quarters ratios in part least for should over XX% of few at or picture your the in talked get an next But about be cap return XX.X% at capital once look being remarks, shareholders. excess. prepared we capital market XX of

seems returning Now, it you had I need we to from we to the minimum a XX.X the get aggressive pretty that XX, capital. of it potential if have test, the know still The we your seems get have SCB Fed and target through. internal stress like like of but on things of handful

capital So you if once the where clarity headed? do priorities, quickly how have maybe you about capital we just economy is the talk can Thanks. down manage think you and the on

our make as going feedback know Well, Yes, mentioned, now, banks any thanks through that we're CCAR get capital and we large to Ryan. all through you the are adjustments before right our X.X to and situation. get I going process as

is about with capital stress buffer XX%. under framework think want a we talked so, buffer required that in we probably with that, framework, to us I the over for the XX.X, with capital total operate that that most buffer, under environments where as above

migrate mentioned us to more we shareholder hoping they buffer which do we'll I we current will return. is manage framework, comments, both is of in share basis. capital dividends move think of as to component Fed and appreciate allow important restrictions, and in that what much should and the we stress away an this see talked the to capital the I'm that first the from repurchases our level that on start that And quarter, distributions dynamic our a about

having back amount appropriate we're receiving of are making and looking business shareholders the capital sure the distributions. get to an And of into so,

Next question, please.

We'll Shane take our Rick next ahead. question from Morgan. Please JP with go

Hey, to you on question afternoon. response touched Rich, think guys, taking I Good thanks something really is my interesting. Sanjay's for question. in that

the is mentioned to at reserved delay the you credit allowance to You hypothesized And or see to the events, turn of scenario view? divergence I the a context? still Are the policy labor all to and we've what think not - reserve to latter. that want the in then from going in you ask, the point? you or delay that alluded Scott in And make whether seen it's and in actually between credit markets what markets performance. we're credit to or this moderation initiatives. I fact want more drives want part, and question understand, that where's I And you

would Rick, what that get it's two saying ever. is. moderation… your It's describe your you're want getting scenarios, to the going That two scenario to a delayed I second, as there. bad delay Hey as make for in sure And I second that a be, articulate the circulate just for

Got it.

Yeah.

and Scott - the now, and the let - thing government and entered extent the the across I is certainly two forbearance the and I I'll as just well we would allowance clearly downturn of in some the wouldn't an I between common been is is have providing about the credit and unemployment And disconnecting collective the about talking it are things. most the effect. there think consumer's that extraordinary. health performance. of relationship sort and that banking industry other everybody's otherwise strength is again between there divergence is, see impact important various rents consumer is yeah, between relief, financial because do the the a that So talk stimulus. well, some to that underestimate right things believe But

that good you plausible bank some can't for is time. had I plausibly that available last if consumer things sort has of that of is of So, cumulatively is it and think very very finite will extended this an something period account the

how tunnel, I and the I but which doesn't through timing other a point has economy then, Burrowing the in is bad from big you a the And be and stimulus, envisioning that period did short mountain that if by be still strange of it's mountain, other I is here. have on tunnel economy the if going my and really I place picture see think we time, But down trouble that I through that I the accumulated benefits. the continues metaphor. bad can if think my burrowing a buffered to consumer of still getting a will, up if the then the end consumer going rejoin even up are side. worse then and it don't for hurting. points to buffers - think

that I think passes. have handled What comment worst that want the on of is been Scott the allowance. it I of how every that some will month downturn of do aspects averted we've give to to to by virtue

to you Rick, allowance, starting do the we we're the Rich. what that seeing. if about with to delinquency levels in level think unemployment thanks, so not we're have are Yeah, that connected of

to unemployment link of And so one with the do allowances of to get time, delinquency we in to is levels take kind and over the up that those things have levels. them

One reasons actually a thinking happening income. that's that comes in, form it's where some the are in is the that we replacing of stimulus of

even employed. current level fully if though you And stay be a so may who it's got allowing consumer counting calculations, basically they unemployed, of that as are receiving you've but who's, were elevated in have benefits you to unemployment, unemployed, them the

does income the we the content? going face are as just question that issues face to continue? we the to mean that stimulus total see long how the allowance? kinds And replacement we the So those here, is So loss what start would in allowance real that to unfold with that is of

as it. I guys. and you, very helpful Thank well. do Got That's Rich, appreciate the metaphor

please. question Next

from Research. We'll Bill Carcache our Wolf next question with take

evening. neo-bank their the to is as five the card think and times competitive capabilities, on good the there one that Buy you How of of of those impacting environment? some those potential COVID competitive one the next hand environment hand, capital Thanks, about of of that own? threats other is the Rich, post like build you see areas you in business, corners say, of pay over their later deploying in sort branch can exclusively on benefit sort the from landscape networks operate online you presence to the two now world And the on into without And do and you the things excess sort or traditional your potential after years? this the can pays. discuss the any M&A think

see fascinating quite certainly side it's lending with on Bill, and and the competitors. striking what's these to to the side well, So both happening respect banking new

And in early now it's talk of the sale became in when me as I point been Let lending point been many form money of ran ran I sorry. One my who the Buy lending. guy sale of disrupter made of pay ruin never interesting phenomenon. credit Capital he so And business? I it's the of store. And always on we business. journey, basically. has another there forever ways business. There into in and financing a I later did said, ruined my a about put the me card on you financing. forget your the I'm credit card How kind said, out this has furniture

credit point they continued. there's coexist. financing world so has has efficient both a card an the logical of And where And in sale reasons tool been incredible would

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think to And model assess market and in is that trying We something that watching are the that So, marketplace. I to that this a is sustainable that's where wonder it's looking at the revenue and rapidly. more how competitive growing something respect merchant subsidies we of is, with carefully going.

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helpful, auto, new you. particular heavily? area I If used whether any more another leaning in your quick versus That's on squeeze one originations that And thank of can has into can Rich, how evolved? there's super discuss been you've you mix

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car data car used new of have So, for do the opportunity I subsidize but me that, captive in their lenders purchases. a most respect with banks, don't spot is the front sweet because to can

used our is and it used, better Capital is of business So, the entire the the thrives market more majority for the car One.

real But the but digital faster, of That just digital players, industry we've pure the I that's all the have the struck the that to we it. the more and on think of goes to nature in direct into direct and necessarily should in get in all into technically, our in second, hard the information sort side very pandemic, thing that for addition and very years this know in not four middle auto auto, bigger the dealership we're is captive, of the little provide on sort brought. solutions the consumers going semi-direct and of where it's a an no ever that of and seeing physical of example we're And they able of the be is work any in any the the risen less you Capital is to auto But would automated America so underwrite seeing got invested a involves particularly has that all a of just anyway. happen where once of One before plays space, and of the all strikingly kind good the careful. just to strategy product than with in be more because they one sort in things kind because to also by, the we're able that boats, of lot accelerate solutions. traction and car or hybrid go a hand waiting for the of amount dealership, the effect the tide time, direct time to how that a we master is being accelerating pandemic lessen to

please. question, Next

next from Fargo. Please go our Wells with take Don ahead. Fandetti We'll question

was a bit any if opportunities given you're your wondering about commercial to real are you I there talk and also what see the in market? could stress, seeing you Rich, estate that opportunistic little coming portfolio Well

concentrated range more a like construction. and in estate volatile while $XX we sectors more which overall of view banks, Relative as underweight to office portfolio it's So, their real multifamily, is hotel, more most our commercial retail, billion resilient across in property types. is

our of on in in the have in balance market about is About exposure and And, rent low York on about multifamily there billion the half borrower in of billion of the know $XX as multifamily. billion the Don, we $XX in $X in sheet, metropolitan real So moratoriums. New space, agency collections that, are you addiction challenges share. billion we have balance and And low $XX sheet exposures area. with

our properties of in Class portfolio significant So, more recessions. in been in our and the resilient is which focus majority rent regulated have B historically

this portfolio. low sized the LTVs backing side. about of number got multifamily on performing loans We New estate book. attention in So the we challenges LTV, that real our But really the a in feel certainly that the have it the big credit increase York's has good was

to we this overall estate And so, are. choices about very where we'll real our collectively plays very carefully monitor the out. that and us But we good drove how feel portfolio

you. thank Okay,

Next question, please.

next take from Please question Orenbuch with our Credit Suisse. We'll go ahead. Moshe

the Hey, are better thanks. of questions a would talk position be of I'm you talked One's end were issuers a card they bit banks and some kind Recession. Richard, this the willing at respect wondering guess are the to that with a front the and differences the little plans little one opportunity Cap in between about you themselves the Great to you're what bit with point. competitive I actually what impacts that another that? about than how of And talk just about, think you and could if

sort things that you not the in nearly Recession non-banks consumers there. the journey the of there underwritten. That features through and not more often that was of with them, also know and also course, providing because, and extreme, the some in products that you the the to through complicated all things had It's the of the insightful as of industry, Moshe we were most lot levered products comment both Yeah. really and up. compounded happened is one banks consumer And that motion issues their condition that a But working a was had downturn Great really were own well banking mortgage the the disequilibrium was just that make out.

view, of it I the the I I've other certain they're Recession. has which particular on risk consumer in and what for practices Recession, rational rational out of there a high of Great on was other And happened practices, lot of said years Great also compete. credit rational, side say the is got from the of there, point And in marketplace. in And credit marketplace. a very this bad each the out driven a bad of performing the card So, find and side lending is strikingly niche more think carved I than the players sort a well. a lending doing we marketplaces it other

the in a rational So I see pandemic. even right Moshe behavior, very now

Fortunately back. everybody of our that card is lending all, dramatically. products. pulled that And unique start is that have to with basically are something them shrinking pretty first happening players portfolios you across pretty But

in increased commercial volumes. online drawing people general, Here out the

And have. think and we've by the consumers. pretty I behavior us that of by, spending are I is think So, rapidly, side going backwards all Oh, struck we less players goodness, but sound and my conservative much the card our that with conservative strikingly of just this that, behavior pretty the from all what consumers, been comes of flip

is it way, lean think And one's So, one from I I the us, are back. even think the to into back can go all it's whole going selective this gas, step in opportunity, here? everyone, lot trying and on be find to industry business I own where is out, did our get resilient, has to the where if the book all think and you for way of things for industry no how pulled pulled worse. continue back. to the going figure to And no thing a fully

strategies had on avoidances, so some years, And them we've of many credit true lines, on. balance the high revolvers, tried and for our have motion conservatism

so we build going. the some but energies credit been economy potential see where into accounts to more I this us the to and be to the a being on lines, careful grow on to lot think resilience lines, until energy potential energy very has conservative strategy clarity continue Our that, delay focus, to kinetic growth opportunity for release book book of to a on be continue live extent credit is protect, the up

even of how lean in So, the for in, the that's to electrifying continuing we're economy. context this

a Thanks, you had question actual how guess to I delinquencies Richard. improved suppression that's for talk works going little fairly relative significantly. a follow-up could and about noticed to Scott. forward? look revenue And that that bit maybe I maybe going

the suppression and only The goes got through is delinquencies, shorter a allowance. coverage low than charge-off Yes, you're that's a you've improved. of right. period It point really when

started at we see We that as would in increase stability the delinquency as about So, levels to them. long would stay is Delinquencies the suppression. amount worsened, levels, where our see of it that now.

Thanks.

please. question, Next

And our final question go ahead. this with evening Please from Autonomous. Brian Foran come will

Hi. Pretty it's marketing. has a like much everything been asked, done

So I $XXX million, of level actually. be million. $XXX normal the maybe be $XXX million would $XXX guess would million normal increase $XXX million, maybe million, maybe seasonal more $XXX or A

XXX you're any for guardrails normal seasonal on mid we there million fourth thinking more below $XXX the more terms are gotten fully I any so quarter? not depend is a increase you to think we of So estimate, like normal like give the there point seasonal something millions marketing to a going are a give could which to level in - maybe but that know

our to the the low to Brian, low but don't used going main too at probably and wanted is, guidance we're know been unusually it's unusually people to this level. point we it thing that just where get leave

just marketing inflows of it's continuation that's of turned the out the by that the things lot seasonal in the all been in around elsewhere the quarter at that increase looking late as we quarter late back with the because that credit the that so was some higher the year, of have sort happened why levels phenomenon what the effect of coincidence, in a which somewhat our And sponsorships we're for retail, and significant on like card. the in out gate double aggregated calling the things A normal effect well double right happened not around in that of had, numbers of retail. really we've fourth the had we deposit company visible as marketing it and pulled the the

enough. Fair

to when then in you got that normalized XXXX market a you did Looking load earnings into model. forbearance and

fair [Indiscernible]. that So still people to you remind

Brian, well, Okay, thank you.

us in joining thanks, And Relations on evening be will tonight's Brian, this your Investor everyone, may to for you Thanks, call. Thank you a great here Capital for have. any remember Have night. conference the and further One. questions interest team answer

Thank you all.

may disconnect. We participation, your you conference. now that concludes appreciate Ladies and today's gentlemen,