Capital One Financial Corporation (COF) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Capital 1 Q2 26 Earnings Call. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question and answer session. To ask a question, please press *1 on your telephone, and wait for your name to be announced. To withdraw your question, please press *1 again. I would now like to hand the conference over to your speaker today, Jeff Norris, Senior Vice President of Finance. Please go ahead.

Thanks very much, Moshe, and welcome, everyone. To access the live webcast of this call, please go to the Investors section of Capital 1's website capitalone.com. A copy of the earnings presentation press release and financial supplement can also be found in the Investors section of Capital 1's website selecting Financials then Quarterly Earnings Release. With me this evening are Mr. Richard D. Fairbank, Capital 1's Chairman and Chief Executive Officer and Mr. Andrew Young, Capital 1's chief financial officer. Richard and Andrew are going to walk you through this presentation summarizing our second quarter results for 2026. Please note that this presentation may contain forward looking statements. Information regarding Capital 1's financial performance and any forward looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital 1 does not undertake any obligation to update or revise any of this information. Whether as a result of new information, future events, or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward looking statements. And for more information on these factors, please see the section titled Forward Looking Statements in the earnings release presentation and the Risk Factors section of our annual and quarterly reports accessible at Capital 1's website and filed with the SEC. Now I will turn the call over to Mr. Young. Andrew?

Thanks, Jeff, and good afternoon, everyone. I will start on slide 3 of tonight's presentation. In the second quarter, Capital 1 earned $3 billion or $4.73 per diluted common share. As a reminder, the Brex acquisition closed in early April, and we have provided additional details related to the purchase accounting in the appendix of tonight's presentation. Results for the quarter included several adjusting items related to the Discover and Brex acquisitions, which are outlined on slide 3. Net of these adjusting items, second quarter earnings per share were $5.81 Relative to the first quarter, revenue increased 4% and noninterest expense grew 7%. Resulting in pre provision earnings growth of 1%. On an adjusted basis, pre provision earnings were flat quarter over quarter. Our provision for credit losses decreased $1.1 billion or 27% to $3 billion in the quarter. The provision reflects $3.7 billion of net charge-offs of $662 million. Turning to slide 4, I will cover the allowance in greater detail. $662 million allowance release in the quarter brought the allowance balance to 23 billion. Our total portfolio coverage ratio decreased 26 basis points and now stands at 5.02%. I will cover the drivers of the changes in allowance and coverage ratio by segment on slide 5. In our domestic card segment, we released $705 million of allowance. The coverage ratio decreased by 41 basis points and now stands at 6.99%. The decline in the coverage ratio was driven by continued favorable observed credit in the quarter and a modest decrease in the consideration given to economic uncertainties. In our consumer banking segment, we built $115 million of allowance. The allowance build was primarily driven by strong growth in the auto business. The coverage ratio ended the quarter at 2.39%, 3 basis points higher than the first quarter. And finally, in our commercial banking segment, we released $59 million of allowance. The allowance release was primarily driven by specific reserves on loans that were charged off in the quarter. The commercial banking coverage ratio decreased 8 basis points quarter over quarter to 1.62%. Turning to page 6, I will now discuss liquidity. Liquidity reserves ended the second quarter at about $144 billion down $21 billion from the prior quarter. Our ending cash position decreased by about $22 billion to approximately $55 billion The decrease in cash was primarily driven by growth in our loan portfolio wholesale funding maturities late in the quarter, and the impacts from Brex. Our preliminary average liquidity coverage ratio was 165%, our preliminary average net stable funding ratio was 136%. Turning to page 7, I will cover our net interest margin. Our second quarter net interest margin was 8.01%. 14 basis points higher than the prior quarter. The increase was largely driven by a 9 basis point impact from 1 additional day in the quarter. The remaining increase was driven by a lower rate paid on retail deposits and a $5 billion decline in average cash balances. Turning to slide 8. I will end by discussing our capital position. Our Common Equity Tier 1 capital ratio ended the quarter at 13.7%. 70 basis points lower than the first quarter. The combination of $2.7 billion of share repurchases, approximately 40 basis point impact from the Brex transaction, and an increase in risk weighted assets more than offset net income in the quarter. With that, I will turn the call over to Richard. Richard?

Thanks, Andrew, and good evening, everyone. Slide 10 shows second quarter results in our credit card business. Credit card segment results are largely a function of our domestic card results and trends, which are shown on slide. 11. Domestic card business posted another quarter of top line growth and strong credit results. As a reminder, we closed the Discover acquisition on May 2025. So period end balances for the prior year quarter now include the addition of the Discover portfolio. For items like purchase volume and revenue, we will still need to discuss the partial quarter impacts of adding Discover. In the second quarter, we also added Brex to the domestic card business, and moved our small legacy corporate credit card business from the commercial bank to domestic card. Second quarter purchase volume grew 26% year over year. Primarily driven by the addition of a partial quarter of Discover purchase volume. We also posted a modest acceleration in legacy Capital 1 purchase volume growth and benefited from modest tailwinds from the addition of Brex and the corporate card business. Legacy Discover purchase volume grew just under 2% year over year. Purchase volume for the legacy Capital 1 businesses inclusive of adding Brex and corporate card grew about 14% year over year with the significant majority of the increase coming from the acceleration of underlying organic growth before the addition of Brex and corporate card. Ending loan balances increased 2.6% year over year. The legacy Discover card loans shrank 1.5% from the prior year. In line with our expectations for the temporary brownout of Discover loan growth. Excluding Discover, ending loans grew about 5.3% year over year, driven predominantly by a modest acceleration in the organic growth of legacy Capital 1 loans and aided by the addition of Brex and corporate card. We continue to see good opportunities to grow the Discover card business on the other side of our tech integration where we can implement growth expansions powered by our unique technology and underwriting. Revenue was up 30% from the second quarter of 25, largely driven by the addition of a partial quarter of Discover revenue. Excluding Discover, year over year revenue growth was 9.5% driven predominantly by underlying organic growth in legacy Capital 1 purchase volume and loans. Revenue margin for the quarter was 7.4%. The domestic card charge off rate for the second quarter was 4.71% down 39 basis points from the prior quarter and down 54 basis points year over year. The delinquency rate was 3.39% at quarter end, down 31 basis points from the linked quarter and down 21 basis points from a year ago. We are seeing similar credit trends in both the legacy Capital 1 and legacy Discover portfolios. Domestic card non interest expense was up 38% compared to the second quarter of 25, driven by the addition of a partial quarter of Discover as well as continuing technology investments. Operating expense and marketing both increased year over year. Our choices in domestic card are the biggest driver of total company marketing, but choices in our consumer banking business have an increasing impact as well. Total company marketing expense in the quarter was about $1.7 billion up 23% year over year driven by the addition of Discover, as well as higher legacy Capital 1 direct marketing in our domestic card and consumer banking businesses increased media spend, and continuing investments in premium benefits. Pulling up, our marketing continues to deliver strong new account originations, to build an enduring franchise with heavy spenders at the top of the domestic credit card market, and to grow checking accounts on a national scale in our consumer banking business. We continue to lean into marketing to take advantage of these compelling market opportunities. Slide 12 shows second quarter results in our consumer banking business. Global payment network transaction volume for the quarter was approximately $190 billion Network transaction volume increased 156% compared to the partial quarter of volume in the second quarter of 25 and the successful completion of Capital 1 debit customers the conversion of Capital 1 debit customers to the Discover network. The sequential quarter increase was about 9%. Auto originations were up 19% from the prior year quarter. Continue to be in a strong position to pursue resilient growth in the current marketplace. Consumer banking ending loan balances increased $9.2 billion or about 11% year over year. Average loans were also up 11%. Compared to the year ago quarter, ending consumer deposits grew about 5%. Average deposits were up 19%. Our digital first national consumer banking business continues to grow and gain traction. Consumer banking revenue for the quarter was up about 26% year over year, driven predominantly by the addition of a partial quarter of Discover operations as well as Discover revenue synergies and growth in auto loans. Noninterest expense was up about 24% compared to the second quarter of 25, driven largely by the addition of a partial quarter of Discover as well as higher marketing to drive growth in our national consumer banking business, increased auto originations, and continued technology investments. The auto charge off rate for the quarter was 1.43% up 18 basis points year over year and down 21 basis points from the sequential quarter. The year over year increase is the result of a gradual mix shift in new originations and loans as our sub prime mix is returning to pre pandemic levels. The auto delinquency rate was up 11 basis points from the linked quarter and down 52 basis points from the prior year. Slide 13 shows second quarter results for our Commercial Banking. Compared to the linked quarter, both ending and average loan balances were up about 1%. Ending deposits were down about 1% from the linked quarter. Average deposits were essentially flat. The commercial banking net charge off rate for the second quarter increased 24 basis points from the sequential quarter to 0.53%, The commercial criticized-performing loan rate was 4.4% down 55 basis points compared to the linked quarter. The criticized-nonperforming loan rates was down 8 basis points to 1.32%. In closing, second quarter results continued to reflect solid top line growth and strong credit performance. We are now 14 months into our planned 24-month integration of Discover, and integration is going well. with the successful completion of converting Capital 1's debit customers to the Discover network. Second quarter results include the full quarterly run-rate debit revenue synergies. Our results also include about 1 third of the quarterly run-rate of the announced operating expense synergies. We remain on track to deliver the full $2.5 billion of announced synergies. For years, we have been working backwards from the dramatic transformation of the business marketplace with modern technology data, and AI. We are in the 14th year of our technology transformation from the bottom of the tech stack up. We are way down that path, and we continue to invest in some very powerful foundational capabilities as well as AI infrastructure and specific AI experiences. We also continue to invest in growing our heavy spender franchise at the top of the market, including rewards, lounges, unique access to experiences, and breakthrough digital capabilities. And we continue to lean in to our unique quest to organically build a digital first full service national bank. Many of our opportunities are enhanced by the Discover acquisition, which, of course, also brings the new opportunity to grow and scale our own global payments network. We continue to invest in network acceptance. And technology. As we have discussed, these investments will continue to be reflected in the efficiency ratio They are also the engine that powers long term growth. And returns. Pulling way up? We continue to build momentum from the game changing acquisition of Discover. Even though some individual variables in our deal model have moved since the announcement, and we have acquired Brex and brought in house the technology that supports Capital 1 travel we still expect our earnings power on the other side of the Discover integration to be consistent with what we expected at the time we announced the deal. And now we will be happy to answer your questions. Jeff?

Thanks, Richard. We will now start the Q&A session. As a courtesy to other investors and analysts who may wish to ask a question, please limit yourself to 1 question plus a single follow-up. If you have questions after the Q&A session, the Investor Relations team will be available. Moshe, please start the Q and A.

Thank you. Star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press *1 again. And our first question comes from Terry Ma with Barclays. You may proceed.

Hey, thank you. Good afternoon. I wanted to start off with Brex. Richard, you had previously indicated that you could accelerate Brex's growth almost from day 1 through stepped up marketing and tech spend. So I am just curious to what extent have those investments already been absorbed into the current expense run rate? And then when should investors see more tangible benefits become more visible? And I have a follow-up.

Thank you, Terry. Just to comment on Brex for a second. I do not believe we said from the second we get it, we will be able to accelerate their growth. What we said is from pretty much from the second that we do this acquisition, we are going to be able to start mobilizing the solutions that many of which do not require full integration in those solutions can be very beneficial and help us lean in and really accelerate Brex's growth. So it is been over 100 days since we closed the deal, and we are as excited as ever about Brex. We acquired Brex because of its success in the attractive corporate card market. And for its bottom of the tech stack infrastructure and its world class talent. And, you know, we just continue to be impressed with all of those striking capabilities. And together, we are making good progress in building out foundational capabilities that will support the business. Going forward. So Brex is already experiencing some of the early tailwinds that will come with our brand, and we expect these to only grow stronger over the next few months. They are also benefiting from the cost of funds impact of moving to our balance sheet. We have already stood up a program to share high potential leads from across our businesses with Brex, and we are seeing very promising early results at the outset. We will scale into this approach more aggressively over time. Now some other benefits that we bring are going to take a little bit longer. Over the coming months, as we test and learn, we will start leaning in, with marketing dollars. Fully leveraging the marketing machine of Capital 1 requires a little more technical integration. We will have to set up data pipelines and calibrate our models for Brex's customer base. So that will come a little further down the road. For our travel business, we will be focused on the hopper build out through the balance of this year, so bringing our travel portal to Brex will likely follow that work. We expect that Brex will also bring many benefits to Capital 1 especially bringing Brex capabilities to our small business card business. These benefits will require integration and will be unlocked over time. So we are already moving to bring benefits to them. Most of that is not yet reflected in our investment dollars because, really, most of the work has been sort of putting working to put capabilities in place.

Got it. that is helpful. And then for my follow-up, regarding loan growth, that continues to improve each month. In the card business even in spite of the Discover brownout. As we kinda look ahead to Discover originations being fully on Capital 1's platform, how should we think about growth in the card business after that and then also the associated marketing spend required to kick start Discover growth again. Thank you.

Thanks very much, Terry. So maybe what I will do with your question is I think it is really getting at this thing that I proverbially called the Discover Brownout. So let me just comment on that, and then I will come back and talk about marketing spend. So as we mentioned previously, the Discover card portfolio is going through a bit of a loan growth brownout as several factors combined to pressure loan growth in the near term. Following Discover's credit expansion in their card business in 2022 and 2023, they dialed back their origination programs and credit line management by a fair amount toward the end of 23 and largely sustained those dial backs. Since we took over, we have been trimming on the margins of Discover's credit policy in areas where we are less comfortable with the resiliency of the underlying customers more, you know, really on the with respect to high balance revolvers. As a result, of these collective pullbacks the portfolio has been and continues to face some headwinds to growth as these more recent smaller vintages mature. You know, as we saw Discover card outstandings were down 1.5% year over year. Now it is worth noting that the flip side of these pullbacks and the brownout has been strong credit performance and we are glad to see that playing through the system. So let's talk about returning to growth and getting on the other side of this brownout of Discover. Volume. The brownout is temporary since over time, we will bring to bear a number of capabilities as we move Discover originations and existing customers to Capital 1. Technology. Getting Discover onto Capital 1's technology will allow us to unleash our models, full spectrum underwriting, and lean into spender capabilities. To power more originations, higher spend volume, and, ultimately higher loan volume over time. And so we remain excited about the longer term potential And let me just talk a little bit about where we are on that journey. On the Discover front book, 50% of Discover originations are now on Capital 1's tech platform, and we expect to be fully on our tech stack for new originations by the end of the third quarter. And we are now leaning into a combination of testing and rolling out capabilities that have powered our card growth at Capital 1 and that we believe will be enhancing to the Discover book. And the Discover you know, new flow of applicants. We are already seeing several positive green shoots. But it is early. But the our early read is confirmatory of our hopes there. On Discover's back book, we will begin the major conversion waves later this month. But we will not be fully on Capital 1's tech stack until the first quarter of next year. And so we will have to wait a bit longer to see these benefits fully manifest. Basically, we are reminded we are, you know, migrating the remainder of the back book in waves a wave in July, a wave in October, wave in January. So these will go in phases. With respect to the brownout, we expect continued contraction in the near term but as we can unleash more of Capital 1's tech and capabilities with Discover on the other side of our conversions, We are looking forward to returning to growth. I do wanna also mention in parallel to Discover's dial back of card loans, they also dial back on personal loans. And you know, we have also sort of mechanically during the integration dialed back on a little bit on the personal loans as well. So that brownout will continue and, in fact, increase And the bottom the bottom sort of the bottom of the brownout will be somewhere around the fourth quarter of this year. But then we look forward to leaning into that growth over time. So pulling up on the brownouts are a natural and temporary part of the deal. None of them are reflective of any concerns we have long term. And in fact, all of it is really just part of an integration and an integrating of credit policies, and we look forward to you know, stepping on the gas a little bit more gradually in the coming months. You asked Terry about marketing. Spend. We will we will lean into marketing more on the Discovery side as well, we are really, marketing is really mostly a front book thing. So we are as we speak, leaning more into the marketing. So that we can now generate some very good flow of applicants to Capital 1. So that will be 1 of the numerous things that we are leaning into over the course of the next year. Next question, please.

Our next question comes from Sanjay Sakhrani with KBW. You may proceed.

Thank you. I guess my first question is for Andrew. If I look at the NIM and sort of you alluded to this in your prepared remarks, seems like the liquidity portfolio came down over the course of the quarter ended lower but was still high on average. So I estimate there was at least a 10 basis point plus drag on the NIM as a result. Is that a safe assumption to make as we enter into the next quarter, you should have a higher NIM going into the third quarter.

Thanks for the question, Sanjay. Yes, as you said, in the first quarter, we did have elevated cash levels from the Discover home loan sale at the end of 25, and then we had really strong deposit growth in Q1 that was aided by tax refunds. And at that point, we ended the quarter with around $75 billion of cash. And so in the second quarter, it came down quite a bit from growth and from the maturities that I had referenced in the Q1 call as well as the cash impact related to Brex, which all of those things drove the ending balance down $20 billion but average only came down about $5 billion. So as you suggest, looking ahead there should be a bit of a NIM catch-up that happens in the third quarter as the average cash catches up to the ending cash. And then, also, as a reminder, the back half of the year, we have 1 more day in each of the quarters. So that adds a 9 basis point tailwind to NIM. And so I will just pull up on all of those things, I would be remiss if I did not just highlight, you know, clearly, any significant changes in our balance sheet could impact NIM over time. And our NII is almost perfectly neutral to rates over time, but if and when the Fed moves, there could be an impact to NIM at least in the short term given the timing of the repricing of deposits and assets, but that effect should level itself out over time. So last quarter, I pointed you to the back half of last year as a pretty decent proxy for a NIM level after we closed on Discover. And so there will, of course, be quarterly variability from, you know, day count and other seasonal factors, but I continue to point you to that as a pretty good indicator of where our structural NIM is going to be likely in at least the near term. Okay. Perfect.

I guess I have the same questions from last quarter. Richard, maybe just to go back to Terry's question on expenses. I guess as we think about the incremental expenses for the investment in products and marketing and such, Should we think about the impact to adjusted operating efficiency as more marginal on a go forward basis versus what we have seen with Brex and Hopper now in the run-rate. Just trying to get a sense of the margin because you do also have the remaining 2 thirds of the OpEx synergies coming as we move into next year as well. So would appreciate some color there.

Yes. Thanks, Sanjay. The efficiency ratio will continue to reflect our revenue and expense trends our investment imperatives, and the realization of synergies. And as we have discussed, the debit revenue synergies are essentially in the numbers. The operating expense synergies are more back loaded. And as we mentioned earlier, we realized about a third of the operating expense synergies to date. We are on track to achieve the remaining operating expense synergies by the second half of 27. And then, of course, we continue to lean into our investment imperative including foundational technology, AI, and the longer term growth opportunities created by our technology transformation and, of course, you know, Discover and Brex. So these investments are very important to the sustained growth and returns of the company over time. So the efficiency ratio is 1 of many drivers of the returns of the company. With all the moving pieces, we have chosen to focus our conversation on earnings power, and, you know, as we have said, we expect the earnings power of the combined company on the other side of the Discover integration to be consistent with what we expected at the time we announced the Discover acquisition inclusive of Brex, and the insourcing of technology that supports Capital 1 travel and inclusive of all these, you know, investments we have been leaning into. So implicit in that, needs to be an efficiency ratio that makes the numbers work. But you know, we are not specifically guiding on that. But I think that the combined financial performance of the company continues to track with this guidance we have given on earnings power coming out the other side of the integration. Next question, please.

Thank you. Our next question comes from Ryan Nash with Goldman Sachs. You may proceed.

Hey. Good afternoon, everyone. Richard, maybe to build a little bit on Sanjay's question, If you look back to when the deal was announced and put the companies together and you layer on synergies, it got to a return that was, you know, 20% plus or minus. Given everything that you have shared with us today, it sounds like there is some more investments that you want to make and understand you want to preserve optionality. But is the right way to think about it, this should be at least a 20% return business And what are some of the investments that could push it higher or lower in this environment?

So, Ryan, you know, there clearly was you know, Discover brings strong earnings power. And we bring a lot of synergies to this deal. So earnings power has been a very important part of the conversation and a really important part of value equation with respect to this deal. The you know, a number of-- I just want to say-- there are a number of variables that have moved and are moving as we go along here. The brownout on Discover loan growth, which will continue for some time, and we talked about that mitigating in coming quarters, but it is still an important factor. The flip side of the loan pullbacks has been better credit performance Generally, credit has been, performing quite well. Capital 1 margins have had a strength as there is been accelerating retail deposit growth, the full Walmart P&L as part of these things. And then we have had this investment imperative which you know, in a sense, really has 2 big categories to it. 1 category is really the investments in technology and AI to, you know, capture the moment to capitalize over time on the an extraordinary transformation that is happening out there. And we are way down the path of our technology transformation, but there are still important investments that we are making, and we continue to lean in to that. And then on the other side, we have, you know, many of the emerging growth opportunities that are going to be a very important part of the growth and value equation over time. So the but the striking in some ways, back to the phrase, the more things change, the more they stay the same. It is striking that out the other side of this, we expect an earnings power very consistent to what we talked about at the outset. We are not branding a precise number because there are a lot of things about Capital 1 performance, they do not lend themselves to, you know, precise settling out with precise numbers. But when we look at the earnings power as reflected in reflected in ROTCE, we feel you know, we are headed for a performance very consistent with what we expected along the way. As part of that, we are you know, when I when I talk about the investments that we are making, and we are really leaning into that long list of investments that we talked about. With an equal energy we are driving efficiency in 1 minus all of that across the company. And a bunch of that comes from the flip side of our tech transformation, the ability to save tech costs even as we invest in other tech costs. You know, savings of legacy tech costs, efficiencies that we are driving in the operations across the business. But I just wanna say that we are kind of living 2 lives at once here, really leaning into opportunities and really, really, so carefully managing the expenses to be able to simultaneously deliver the earnings power that we expected at the outset of this deal and to be positioning ourselves to create value for our investors in the extraordinary years that are unfolding in front of us. Got it.

Maybe as my follow-up, Richard, when I look at the capital in the slides, capital came down almost 70 basis points this quarter. But if you remove the impact of Brex, you bought back a little more stock this quarter yet capital ratios were sort of largely unchanged. And I guess, you know, now that the, you know, the deal is closed, do you think we could see a further step up in the buyback from here? And how do you think about a path towards the stated capital target? Thank you.

Yeah, Ryan. I will take that 1, and let me just start by focusing on the word you ended with, which is the 11% we define as a long term capital need. As opposed to a target. And we continue to think that need is 11%. You know, we just got the recent CCAR results. But every year, when that comes out, we have seen quite a bit of volatility looking back over the last few years that go from in the low 10s to 7%. And so our, our need is derived by our internal modeling. it is just far more stable and as we have had for a number of years now, we continue to believe that 11% is that need. Where we manage our capital at any given moment in time factors in a variety of planning assumptions, including expectations for growth and forecasted capital accretion from earnings, regulatory environment, AOCI, stock price, the macroeconomic environment. But I would also say that beyond that laundry list of specific considerations, there is also a philosophic point that we view capital as having asymmetric value, particularly in times of stress providing a ton of both offensive and defensive value in those periods. And so this you know, multipronged approach has enabled us to maintain, you know, a strong combination of returning capital but also strong returns and flexibility to take advantage of growth opportunities over time. So we are not in a race to drive it down as quickly as possible to any specific number. But hopefully, that gives you a sense of how we are thinking about capital. Next question, please.

Our next question comes from Darrin Peller with Wolfe Research. You may proceed.

Hey, guys. Thank you. Look. It looks like you included a partial quarter of Brex as well as legacy corporate card in the domestic purchase volume. So I am just trying to triangulate, if you can give us a sense what would the pro form a domestic card purchase volume growth look like on the quarter, just given the acceleration we have been seeing across the industry? I think we can calculate some of it, but a little help on some of the details would be great.

Great. Yeah. We did not provide the breakdown of the amount of Brex. You know, we did provide from a purchase accounting perspective, the closing balance sheet and all the associated amortization schedules, but given relatively small percentage of Capital 1 to our current relatively small percentage of Brex within the context of Capital 1, the P&L and balance sheet on a run rate basis just is not that material. Then that said, we are incredibly excited about the long term prospects of adding Brex and think that the growth that this platform provides will drive significant accretion, but, you know, we do not intend to break out any of the specifics of the P&L. Okay. Alright. I will just hey.

Darren, let me just remind you exactly what we said in the call. Right? We did say that if you just look at the legacy Capital 1 domestic card business was a modest acceleration. And that the combination of that plus the addition of Brex and corporate card was about 14% with a significant majority of that. Driven by the legacy piece. Okay. that is helpful, Jeff. Thanks.

Guys, just 1 quick follow-up would be, I know last quarter you had mentioned, and there were some comments earlier about expenses, but more specifically, you mentioned marketing pushed back from first quarter into the remainder of the year. So just was this still a play in this quarter? And we could just revisit the marketing expense expected more broadly when considering the investments in Discover and Brex in recent quarters, We took the recent quarters and we averaged them out given some of the timing. Is that a good way to think about run rate marketing levels for the company going forward? Thanks again, guys.

Yeah. There is seasonality in that Darrin. And if you look back at history, you know, no 1 year is perfectly the same as others. But there tends to be that upward slope, and particularly in the back half of the year relative to the first half what we were highlighting in the first quarter was just that some of the spend that we had initially anticipated happening in the first quarter was getting pushed into the second so we just wanted to make sure that point was well known. But you know, obviously, the actual levels of marketing spend are just gonna be dependent on the opportunities that we see in the moment. So I do not wanna give you a perfect schedule of the percentage of the annual spend in any 1 quarter. But, you know, if you look back at history, there is some pretty clear trends in terms of the back half relative to the front half. Next question, please.

Our next question comes from Richard Shane with JPMorgan. You may proceed.

Hey, guys. Thanks for taking my question this afternoon. Look, I want to pull the thread a little bit more on Brex. Richard, you have talked about the pretty clearly in the call that when you when we think about and the questions have sort of lined up with this, the optimal outcome for Capital 1 as a standalone business is optimizing ROTCE and margin. Brex has existed in a world for most of its life where it was benchmarked exclusively on growth. You sort of now have to balance that within Capital 1. How do you optimize the real outcome of Brex with still sort of keeping an eye on what investors really care about or seem to care about in terms of maximizing ROTCE and margin in the near term.

Well, I hope the overall objective function of Capital 1 is not the maximization of ROTCE in the near term. We all have our eyes on it, and we are heading to a very good exit rate on the other side of this integration. But I wanted to just talk about Brex. And value creation. You know, we all know that you know, tech startups have power metrics that are not, you know, vertical earnings-based. And sometimes, you know, they can feel a far, far cry from how life works in a mature public company. But we feel that Brexit's approach to creating value is very consistent with Capital 1's founding approach when we created the company all the way to today. And that relates to taking an horizontal economic view. So the you know, in the founding of Capital 1, I looked at business, I said it is really striking that financial, you know, big banks and everything are so focused on vertical earnings. But, really, banking is an annuity business. 1 invests quite a bit of money to create annuities that last for a long period of time. And so what we did was build a massive horizontal. We called it horizontal accounting, basically, where as we thought about investments or originating a cohort of accounts, we estimated the lifetime economics of that, the cost to create those, etcetera. And before the investment, during as it played out, and then and then at the end of it all, we measured it to see if indeed value was created. And this approach to rigorous financial decision making horizontally, investing in annuities and creating long term value is the financial basis of how Capital 1 works and how we create value. So when we looked at Brex, obviously, Brex, the world was, you know, looking at their power metrics. But we rolled up our sleeves and looked at how Brex was creating valuable annuities over time. They do not have as deep and rigorous horizontal accounting system. I would not expect them to. But even as recently as today, I was in a conversation talking about the you know, the continuing work we are doing on the Capital 1 side, looking at Brex investments and how each tranche of investment looks like it is paying off over time. And our observation was these are very value creating. So you know, not every tech company's investments are value creating. But from everything we have seen, the approach Brex has especially when we onboard them to a more kind of systematic horizontal accounting system. It will fit right into the value creation philosophy of Capital 1. What we have found in building Capital 1 when we have these growth opportunities is that, actually, the more you really go in and measure the value creation opportunity, very often, the more we invest, because we can validate that these things really create value over time. Brex is in an amazing window of opportunity. They have got a tiger by the tail. They are they are going after 3 markets at once. The card mark the commercial card market, the payables marketplace, and the expense management business. They are going after it with an integrated solution. Strikingly, that solution is something that is needed from small companies all the way to large corporations. it is an amazingly large market. So we are going to lean in and provide the resources and capabilities to help Brex, you know, even create even more value. But along the way, we are gonna very rigorously measure to be sure that what we are investing in generates the value on the other side. But what we see continues to validate our acquisition thesis. And I wanna say too, having seen and hung around a lot of young companies over the years. I continue to be amazed at the sophistication of how this business is run and the opportunity to create value here. Thank you. Next question, please.

Pardon. Next question comes from Robert Wildhack with Autonomous Research.

I wanted to ask about domestic card loan growth over the last several periods. just core Capital 1. that is bounced around, I think, the low 3s. And you said 2.6% in the second quarter. So those have all been below the longer term trend Can you just remind us what is behind the slowdown there? And then like bigger picture, anything structural besides, you know, the law of large numbers as to why Capital 1 domestic card loan growth would not eventually come back to the longer term average?

So Robert, when you are talking about domestic card, you are talking overall including Discover. In our performance. So we have talked about Discover is going through a shrinking right now, so that certainly is holding back the loan growth of Capital 1. The when we if I separate out the Discover brownout effect, Capital 1 continues to deliver very consistently solid loan growth. it is not-- there are things, you know, when I look at the various growth metrics and compare them with the industry, looking at legacy Capital 1 versus a number of the leading players in the industry. On all the growth metrics. Capital 1 is delivering you know, very strong performance. There is 1 thing on the loan growth side that I would highlight, and it is the flip side of very good news here. Payment rates have come in continue to come in pretty high. Which we always cheer for because it pays off typically in terms of stronger credit but it does hold loan growth back a little bit. But so if we look at the metrics here, not all of which I understand we share with you, We have got Discover is going through a brownout and shrinking. The legacy Capital 1 is growing strongly on all dimensions. And particularly you know, account origination, purchase volume, a lot of the very important metrics. And then when we look at another thing that we do, it is not something we publish, but we take the originated upmarket part of Capital 1. So we effectively proxy what the other players in the industry do who just do not go out and intentionally originate in subprime. So when we separate and look at the originated upmarket part of Capital 1, this thing is absolutely humming and is you know, right up there at the top of the league tables in the in the key growth metrics. So and that, by the way, is powered by the continued quest to win at the top of the market, to win with heavy spenders, and is the flip side of our investment agenda that we have on the on the heavy spender side. So but, Robert, I understand that you know, Discover is going to you know, hold us back for a little bit. You know? And even on the other side, even on the other side of the integration, you know, I think it is reasonable that Capital 1 legacy Capital 1 will be a faster growing institution than Discover. Why would that be? Just that Discover is a much narrower play in the credit card business of if focused on the prime side of the marketplace. And it is been a really great stable play. Capital 1-- legacy Capital 1 has got so many other growth vectors growing in card. it is probably gonna continue to lead the way. But for right now, we are living with a little bit of a brownout holding our business back. Thank you. Thank you. Next question, please.

Our next question comes from Donald Fandetti with Wells Fargo. You may proceed.

Hi. Richard, can you talk a little bit about the credit card migration? I know there is been some testing moving it over to Discover Network. Where are you on that? Is it encouraging? And then do you see a scenario where maybe you could move a little more volume over than you initially thought when you struck the Discover deal?

So we are talking about Donald, you are talking about moving Capital 1 cards to the Discover network. Correct. Yeah. So it always gets confusing because we are also, of course, moving cards on the Capital 1 platforms and things But yes, just to clarify what we are talking about here. Earlier this year, we completed the conversion of our debit card business to the Discover Network. And we are very pleased with how that went. Mean, I think that thing has just been I would call it a smashing success as we look at this. So now you know, as we think about building credit card volume on the Discover network, there is 2 ways to do that. With the front book, and the back book. And so what we are leaning hard into right now is testing. Originating Legacy Capital 1 branded accounts on the Discover network. As well as testing the conversion of existing Capital 1 accounts. To the Discover network. So as we lean into that and on the other side of those tests, we will then make our final choices about how, you know, what credit card volume that we are gonna move over what timing. In parallel, an important companion, of course, is scaling up the volume that the volume of investment in the network as we increase international acceptance and, you know, further build the brand. And what we are doing, the way to think about I mean, the quest to build international acceptance will be an always thing. So for us, the key is what we wanna do is to slope the work. So we are going to slope our quest on both sides of this exercise. With respect to acceptance, international acceptance well, let me, in fact, start with domestic acceptance. So Discover just blows my mind how great their domestic acceptance is. There are a few scattered gaps and we are just leaning all in to literally close them all. So that is a thing that is going great progress, we are so pleased on the domestic side. Internationally, again, it will be a long quest. But what we are doing is sloping that while we are working to lift everywhere, we are particularly leaning in to lift acceptance to a higher level in the places our customers go the most. And not surprisingly, we find that where do they travel the most, travel to Mexico. The Caribbean, Canada, The UK. And those are the top 4 destinations. We are particularly leaning in there to really move the needle and enhance acceptance there. The other sloping that we are working on combined with our testing is sloping what we move. And, you know, focusing more on moving things that customers or products, things that do not involve as much international travel. And so that are you know, strategically, we are just working so hard to get as much volume as we can on the network. We are gonna slope the acceptance work and slope the migrations to be able to create great customer experiences and maximize the volume that we move over time. Got it.

And do you think you need international issuing ultimately? Some suggest that you do. Or is that something you will solve down the road?

International acceptance is there are multiple ways to build that. International issuing, by the way, is a is a great way to do it because what we are talking about there is having a local player issue our cards. And in that way, they sort of you know, they can help really drive the acceptance in their own local geography. So that is 1 of 4 ways to build acceptance internationally. In fact, you know, again, I am amazed at how this Discover with their relatively small scale built the impressive international but it is still not yet where, you know, we would love it to be as a destination. So the ways to get there from here and Discover has used all 4 of these. 1 is partnering with other networks, and this has been a really important part of Discover's strategy. They have partnered with networks in Japan, China, India. I mean, there is massive acceptance in some of the biggest countries. In the world coming from network partnerships. A second way to do it is with card issuing financial institutions. American Express has particularly leaned into this approach. it is a great approach. We have some cases of that with Discover. it is been less of a lever for Discover than for Amex, but that is another 1. And by the way, just a small point. As an issuer ourselves in Canada and The and The UK, we look forward to getting our own issuer boost there on acceptance. A third lever is partnering with merchant acquirers. And finally, the fourth is going directly to merchants. So this is the playbook Discover has used. We will continue to invest in this playbook And there is, of course, a flywheel benefit that comes with the more acceptance we get, the more volume we can get you know, how that flywheel works. But those will be the 4 levers that we lean into in this journey. Next question, please.

Our next question comes from John Pancari with Evercore. You may proceed.

Good evening. Back to the investments that you are making. I understand you are unable to provide us with an efficiency ratio or expense growth expectations. Regarding your investments into the network. But any way you can help us with what inning you are in terms of the investments? I know, Richard, you said in the past, that these would be sustained investments for a number of years. Any additional color on where you stand now, now that you have been down the path, you have seen the debit migration, you have talked about the testing now, and you have just walked us through in a previous answer of some of the approaches. Inning are you in with how you look at the investment required here?

Well, the first thing I wanna say is you know, when I give the big list of investments, and I and I know for the last you know, sort of our whole lives at Capital 1, we have always, in some ways, been the company that is investing in our future, but there is certainly been a lot of discussion as you all have noticed, about the long list of investments. That we are leaning into. The first thing I wanna say is I would not want anyone to draw the perception that like, massively moving the needle of Capital 1 is investing in the network or international acceptance. It is an important sustained investment we will do for as far out as we can see. But I would not wanna leave the impression that is like the you know, at the top of the list of what we are you know, we are spending a lot more money than that on Capital 1 technology. AI, and you know, maybe the biggest single item is well, I do not know. They are there are several, but investing to win with heavy spenders is the top of the mark. So I wanna say this is just 1 of the many things on the list. That said, the to your point, I believe I believe that the for as far out as we can see, we will be investing in international acceptance. But here's the key thing. We are not our strategy is not hinging on we have to invest so much to get to a point where then finally we can have this big bang moment and move a whole bunch of customers. This is why I went back to the power of the sloping. We take our customers and cards and just analyze you know, what customers are international travelers. We can empirically see that. Some customers have never traveled outside of the country for 20 years. I mean, we can we can see and really understand where they are coming from. We have good ways to understand on the front book what is happening. And it is partly a customer point and a product that they are choosing points. And then when we look at where customers travel, that also is so sloped. So, again, I think that while we will be investing as far out as we can see in the network, By sloping the investment, we can get a lot of progress in a focused way and continue to you know, create the ability to move more customers as soon as we can. And in that way, we do not have to wait for some for someday to try to monetize the power of this network. We are already living it on the debit side, and we can lean into it on the on the credit card side. And the benefits accrue right along the way with the investments. Okay. Thank you for that. And then just separately, regarding the migration comments that you answered in the previous question, what of back book cards that you would ultimately move over, how would you approach the testing and then ultimately moving over migrating Capital 1 back book over to the Discover network?

Would it start with the basic non premium cards and would you only focus on those that are expiring in a given year, and that is how you would focus on the migration of that back book eventually? So well, that is that is a very astute question that you asked there. So let's talk about this. First of all, like we always do in testing, we do a lot of testing just so that we understand what customer reacts to various things are going to be. So our testing is pretty broad. So that we can then you know, not find out later we were too narrow because we did not think expansively enough from a testing point of view. Then if you look at the factors to consider in migration.

So you first of all, the front book is it is it is a much easier thing. I well, it is it is a much more straightforward thing to talk about the front book because we can just put you know, certain cards, certain customers on the Discover network, and there is not a migration event, And so that is a very attractive way to build business. When we are talking about migrating the existing book which is which also is attractive, the key levers there the key factors to consider is international travel. that is at the top of the list. How extensively car our cards are on file because the more cards that the customer has on file, the more friction there is. In, in changing card numbers. And a natural you know? And 1 thing we are looking at in some cases is moving at expiration time because 1 would already some of those frictional elements would already be there at that time. So all of these things are part of our test agenda and our strategic considerations. Next question, please.

Our next question comes from Mihir Bhatia with Bank of America. You may proceed.

Hi. Good afternoon, and thank you for squeezing me in here. I wanted to ask about touch on credit. For a second, and I will just ask both the parts of my question upfront. Just firstly, on the June loss rate, it was down quite a bit month over month, I think, like 45 points. Anything to call out there? Was there a sale or something, or was that just how much better credit got there? And then just the second part was just, you know, just pulling up Richard. If you could just talk about how the consumer is faring, but more importantly, how the Capital 1 customers faring. Like, you have been investing a lot in marketing, growing it. Are recent vintages performing in line what you expected? Just any comments on that? Thank you.

Mihir, let's start with the June performance. I do not have the June loss rate number right in front of me, but here what is comment about the quarter and about June. So obviously, credit continues to come in very strong. We probably the single indicator we looked at we look at the most is, delinquencies. And in our card business, the while the June loss rate was particularly strikingly strong, The June delinquencies for the month moved in line with seasonality. And by the way, in pretty much every month, prior over the course of 2026, the delinquencies have moved a little better than our calculated seasonality. So June, again, a very strong month, but I just wanna point out it is it is the first month that did not actually beat seasonality. But it is still there is great strength there, and the charge offs were amazing and all of that. So, we just see a very positive credit picture, but I just wanted to make those comments. About June.

Richard, I could just interject. there is nothing to call out in the June domestic card charge off rate. Okay.

Yeah. So the let's talk about the consumer and then and then let's turn to Capital 1. Customers. So The US consumer and the overall economy remained resilient despite the high energy prices and everything When you pick up the news every day, 1 would think the world's falling apart. But, actually, the portfolio the consumer continues to perform remarkably well. The unemployment rate in June was lower than in February, before the around conflict began. Jobless claims remain low. Job creation has rebounded over the past few months. Consumer spending, that remains strong. As a result of inflation, real wage growth turned negative in April and May on a year over year basis, but it was back in positive territory ever so slightly in June. As inflation ticked back down. When we look at bank balances and debt servicing burdens of our customers, these look a bit stronger than a year ago across income levels. In our domestic card business, our credit metrics, continued to improve on a year over year basis in the quarter. And you know, the I have I have chatted a little bit about that, but the strong credit performance also the strong credit performance, we also saw on the auto side, auto credit metrics are strong as well. And so what I what I wanna do now is turn to leading indicators when we look at our own customers. So we talk about delinquencies. We talked about how strong performance has been pretty much every quarter. This year. Other metrics that we look at, payment rates, I talked about that earlier. They are meaningfully above pre pandemic levels across all of our customer segments, and that slows down growth a little bit, but it is healthy sign of customer credit quality. Spend levels. We continue to see health spend growth driven both by account growth and by steady growth in spend per customer. When we look at revolve rates, revolve rates have stabilized over the past year at close to pre pandemic levels for our major products. And segments. Now none of these observations are conclusive on their own, but I think collectively, they paint a picture of strength of the consumer and certainly strength within our own portfolio. Let me turn now to the front book of new originations in our card business. Our front book of a new originations continues to perform strikingly well. We are seeing our 24 and 25 originations. Frank, in both legacy Capital 1 and Discover. Well, let me let me separate it out. In legacy Capital 1, we are seeing our 24 and 2025 originations coming in better than 2022 and 2023. And a bit below pre pandemic levels. Which is pretty striking given you know? And that is not a thing that I think is being universally observed in the card business, but it is but it is a thing that we have seen strength in our originations for really throughout this whole post pandemic period, and it is 1 of the things that gives us the confidence to lean into our originations spend that money on marketing that we talked about etcetera. 1 other from a credit view is recoveries. Coming out of the pandemic, our recoveries inventory was unusually low, but that inventory has increased rapidly over the past couple of years. And has contributed to the improvement in our overall loss rate over that time. Discover's losses peak later than legacy Capital 1's and they are now seeing the same dynamic be a tailwind to their losses. But looking ahead, our recoveries inventory should taper off a bit in the next year or so because the inventory of recent charge offs will itself be going down. So that is Mihir, that is a look at leading indicators But if I pull way up, we see real strength in the consumer and strength across our business performance in card and in auto. And that is why while we keep a very you know, wary eye on the economy and international development, we are leaning in with a lot of positivity into our growth strategies. Next question, please.

Our next question comes from Erika Najarian with UBS. You may proceed.

Hi. Good evening. I would not prolong the call if this question was not important, but I think investors really want clarity on this. And Rich and Andrew, you keep mentioning that your earnings power is expected to be as you anticipated when you first announced the Discover deal. So I was hoping to unpack that a bit. So I was looking through your disclosures. I was not sure what you were using for the baseline. But in 2027, consensus EPS. Sorry. At the deal announcement, consensus EPS Capital 1 standalone is about $21. You mentioned over 15% accretion, 2027 EPS at the announcement. That rounds up to let's call it, like, 54 if we use 16, 17% accretion. Last quarter, you mentioned that when you were thinking of ROTCE, you were not thinking of CET1 all the way down to 11%. So if you use 12.5% on the current share count, you can get to a mid twenties ROTCE pro forma. What is wrong with that line of logic?

Well, Erika, let me just unpack a couple of the assumptions that you made that do not actually tie to things that we have said. And I just want to be really clear here. You know? First of all, our assumptions that we laid out and I would encourage you to go back when we announced the deal in February of 24. What we said was we were taking consensus estimates for both Capital 1 and Discover, and we made the adjustment to Discover's loss forecast just based on the things that we had seen during diligence. Then with respect to ROTCE at the time, the weighted average consensus for CET 1 was 12 and a half percent. And so when Richard last quarter highlighted that we are defining earnings power as ROTCE. We just wanted to remain consistent with that denominator of 12 and a half for the sake of doing the math that is not saying that is that is our target, you know, as I answered before, you know, in terms of what we believe our capital need is. We believe our capital need is 11%, but we are just doing the math on ROTCE at 12.5 for the sake of comparability. And so with respect to EPS, of course, share price assumptions have moved. there is just a number of things that have moved. In terms of those assumptions particularly as they relate to individual line items. And that is why we keep coming back to the ROTCE as our definition of earnings power. Next question, please.

And our final question comes from Moshe Orenbuch with TD Cowen. You may proceed.

Great. Thanks so much. Richard, you talked about growth in the non prime auto and in the high end card business. Could you talk a little bit about the non prime card business Because that is been a business when you have grown it, it has not required as much up upfront investment as the high end. Just, you know, And you have also talked about the consumer doing relatively well. So are there prospects for acceleration there? And I have got a follow-up.

Moshe, thank you. I know that you are 1 over the many decades we have worked together that has such a such an interest in this, and it is a very, very appropriate interest because it is a very important part of Capital 1 even though you saw that the percentage is down to what? 26% did we see it? Because it dropped down a bit because of the Discover So Got it. Port portfolio. Just in terms of the portfolio, subprime percentage. But Moshe across well, in both card and auto, we continue to our strategy has remained very much the same. We continue to get a lot of traction in the business. Performance continues to be strong. You know, when I point at the higher growth at the top of the market, That is really just pointing out the traction that Capital 1 is getting in our investments at part of the market, but we continue to be very pleased with how things are going at the lower end of the market. The growth rates are a little lower, these days than they are lower than what we see at the higher end of the market, but we always give take what the market has to give us. But performance is stable. Credit performance in that part of the marketplace, I should have mentioned this earlier is very consistent really across the credit spectrum. We do not, in our own numbers, see this k shaped economy that a lot of people talk about. Although to be fair, we do not really participate in the lowest end of the marketplace where maybe those things are being experienced in the economy. So Moshe, things continue to go very well. We are leaning in. The marketing efficiency of that part of the business is you know, it is it is a lot less costly. To acquire accounts there. We continue to lean in really very hard there. And the growth is very solid. it is a little less than at the high end. it is it is it is less than at the high end, but the value creation continues to be high and everything about it. Seems quite stable. And also, 1 other thing this part of the marketplace is so benefited by continued investments in technology data, and the power of machine learning and, over time, AI. Because this is all this part of the marketplace is all about data analytics, modeling, and that is a power alley of Capital 1. So you know, while you the marketing investment is not maybe the highest in that part of the marketplace. 1 you know, there is a lot of focus in our tech and data and AI investments to be able to be able to be even more successful in that underserved part of the market. Thank you for your question.

Sure. And maybe just as a quick follow-up You talked earlier about the horizontal P and Ls that you kind of do for each of your products. And when you think about how Capital 1 as a company is viewed externally, I mean, do you think you get recognition for the, you know, for the streams of earnings that you are creating and the value that is creating? And if not, would there be a way whether it is some degree of disclosure of examples of that? Like, are there-- I mean, do you think that you are getting appropriate recognition in the stock for it and what could you do about it?

Moshe, it is a great question. I believe that we probably do not get appropriate recognition in the stock But I think the and I think it would I do not think there is an easy way for us to sort of publish the aspects of our horizontal accounting. But I would say this. When you look at the I guess, we have I am in my, what is it, 30 second year of, you know, running this company. Oh, well, since we had our IPO and 40th year overall in building this franchise, And 1 of the very, very first things we did was put in horizontal accounting and an NPV based methodology for everything that we do. And I think it is hard to prove that the power of that to investors But I think maybe the power manifest in the 3.5 decade history of Capital 1 and the ability to grow the company so significantly and to generate strong earnings power along the way. And the cornerstones of that approach have been starting with strategy, making sure that the businesses that we are in lend themselves to above-hurdle-- you know, they are structurally attractive and give the opportunity to generate above hurdle returns, which is why we do not do half the things other banks do. And then secondly, the whole investment philosophy that we have that the strategic philosophy that we focus on long term value the financial horizontal p and l investment approach that we use And the way that over time, you know, we have a whole methodology of retrospective measurement of how our various programs are performing and relative to expectation, relative to hurdle rate, all of these kind of things in a way that I think you know, has really demonstrated the power of this. And so when I then say to investors, we are at a time where we have exceptional opportunity going forward That opportunity there is sort of 2 different buckets of investment related to what I am describing as just extraordinary opportunity we see going forward. 1 is on the business side, the horizontal P and L measurement of our investments across these emerging businesses and so on. And the other thing is a choice that we do at Capital 1, which does not lend itself to such precise horizontal P and Ls, Moshe, as you know, which is building the technology foundation of the company I do not know a way to create a horizontal P&L for a data ecosystem. Or the move to the cloud So there is some things that we do that we work backwards from what is the bone structure that we need to win And we and we go out and build that and we are seeing that while it is gonna be impossible to measure, the return on some of these things, I think if there were a way to do it over time, it would turn out to be the most high yielding investment. That we have ever made. So it is a bit of a tough way to make a living for Capital 1 for our investors. But I think it is a key reason this approach, Moshe, is a key reason we are here today. And a central reason that we have the opportunity set that we have. And I look forward to our investors enjoying the returns from patient commitment to this approach.

Thank you. That concludes our Q&A session and our call for this evening. Thank you very much for joining us on this call. Thank you for your interest in Capital 1. Have a great evening. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.