Capital One 2Q17 Earnings Call Notes

Richard Fairbank

Exceptional opportunity has run its course, now just a good opportunity

“we believe the opportunity to grow continues in the card business. What I would say is the exceptional opportunity has mostly run its course and now there’s a more just there is just a good opportunity let’s talk about the exceptional opportunity for a second while a lot of people were not — they weren’t as heavily marketing and not as seeing the growth opportunity that we saw, we pretty much captured several years of outsized growth and I think that it served us very well even though we all know of course the upfront costs of that in terms of credit and allowance have been little rough on the P&L. What I think has happened over time, the competition has definitely intensified but it’s not irrational. ”

Banks have to do a better job of taking the impact of disruption into account

” even before the day finally comes when we down the road we’re all doing our work in the back seat and there is no driver long before that I think we all have to be very vigilant about what is the impact of technology change is there come to be I mean generally the quality of technology has sometimes allowed cars to last longer and has been a good guy in the auto business. But the question is will there be a tipping point where the old cars just don’t cut it and the new ones are so much better. So this in fact I just want to pause for a second and just kind of seize the moment that one of the — one of the things that I don’t I think banks don’t do that well I think Capital One did not do that well on things like Uber story is pull way up across all of our lending businesses and ask what is the impact given that industry after industry is being revolutionized, what is the impact especially I think in the commercial C&I business of the revolution that’s going on in our clients’ businesses and if we just go and make one loan at a time and do our nice underwriting standards we could wake up and have a lot of rude surprises like we did in the taxi kind of business.”

Capital One 1Q17 Earnings Call Notes

Richard D. Fairbank – Capital One Financial Corp.

Domestic card charge off rate higher than expected

“Based on portfolio dynamics and industry conditions we observed in the first quarter, we now expect that the full-year Domestic Card charge-off rate will be in the high 4%s to around 5%, with quarterly variability. That is up from our prior expectation of the mid 4%s. With the benefit of more data, we have refined the expected shape and timing of credit losses on our front book programs booked over the last few years.”

Increasing competitive intensity in the industry

“Over the past year and a half, we have seen increasing competitive intensity, a growing supply of credit and rising consumer indebtedness. As we move through 2016, we tightened our underwriting around the edges. Our actions over the past four quarters have led to a deceleration of our growth, just as the industry is accelerating. We still think there is a growth window, but the window is gradually becoming smaller.”

A lot of supply out there

“Yeah, Don. So you probably heard us for, I would guess, four – this is like the fifth quarter now that we have been talking pretty vocally about supply out there in the marketplace. And the last few quarters we have pointed out the pretty striking growth rate of subprime itself. I don’t have the number right in front of me, but I believe it’s 14% year-over-year subprime growth for an industry that’s growing at half that overall. Now, again, Don, that’s off of – and I really want to stress this – it’s off a much lower base that retracted significantly after the Great Recession. But still, that certainly has our attention, that subprime growth.”

Card delinquencies are more telling than auto delinquencies

“Yeah, well, the first thing I want to say is that card delinquencies are a lot more telling than auto delinquencies. And so that’s point number one. So whenever you – I always just take as one part of a lot of pieces of information when you’re looking at auto what’s happening to delinquencies because the way that people pay, and, frankly, really what happens is they wait. A lot of people wait until the moment before a car would be repossessed. And then the key thing is the payment rate at that point. And that’s a lot more telling than the delinquency patterns that precede that. So that’s just more of a general observation. Whereas in the card business, delinquencies tend to just march on their way to charge-offs in fairly predictable ways.”

Capital One 4Q16 Earnings Call Notes

Capital One Financial Corporations’ (COF) CEO Richard Fairbank on Q4 2016 Results

The credit window is open but it wont be open forever

“I think that it will contribute to a – I think this window is still open but as I’ve been saying kind of every consecutive quarter you know this thing won’t stay open forever so I’ll leave you with two points. One, we’re still all-in in pursuing the window but I think that but let me comment for a bit just about the kind of natural physics that go along with the what’s happening on the supply side.”

Credit is now growing at a faster rate than the economy and its broad based growth

First of all just to comment on the supply side. You know after a number of years post the great recession where the growth of revolving debt was near zero or even negative, it is crept up in the last couple of years and now it is running at a 7% year-over-year rate and obviously that’s a faster growth rate than the economy is doing. And if you look at this growth it is broad-based although subprime growth has picked up and is now growing faster than prime. So currently if you exclude Capital One’s impact on the metric about 34% of the industry’s growth is in subprime and subprime card loans are growing 13% year-over-year versus prime which is growing about 6% year-over-year. Now I really want to stress this is off – and particularly in the subprime side off of a – much lower base following the great recession, so let’s just ground that a little bit.”

It is growing off of a lower base but its growing

“We went back and looked at the data here, prime loans decreased 12% from prerecession levels and they began growing again in 2011. Subprime loans decreased 43% from prerecession levels and didn’t start growing until 2014. So subprime industry outstandings right now are at 74% of prerecession levels and prime industry outstanding are basically right at prerecession levels. So clearly the subprime growth is – happened later and its off of the lower bank but the growth has physics and that’s what I know – I’m always focused on because when you have – consumers taking on debt and competitors you know supplying more debt that can affect both the volume and the selection quality of new origination, as well as of course you know impacting existing customers who along the way can take on more debt.”

We are in the intense part of the cycle

“So what we do when we see that is we just – we try to manage Sanjay in anticipation of this because we view it as the physic and we are very – we’ve always said we can’t predict the economic cycle but we really can watch and react to the credit cycle which isn’t the same thing as the economic cycle. So we are very focused on resilient, we try to anticipate how supply changes end up making their way into the credit performance of who we might originate and if I pull way up on all of that, we can continue to make very conservative assumptions in our underwriting, we managed to a belief that we are now in the intense part of the cycle but even with all that considered we still see a important growth opportunity available for us, is the window of opportunity and we will continue to pursue it obviously with our eyes very wide open.”

The amazingly low losses have to end at some point

“So our primary point has been – look in the end this is physics. The year after year just amazingly low losses it is – as we’ve said some quarters ago this has to be the bottom, things are going up from here all of that said you know I think that – I mean we are still – we are pursuing growth opportunities and continue to be optimistic about the originations that we can generate.,”

This is a very competitive market, especially at the moment

“So we have said all along this – this market, I can’t remember the last time I said that this market is not that competitive. I think it is very, very competitive and it is particularly competitive at this moment. Now when we look at this we – and you made a comment about our role in this whole thing, I mean as there are a few players who I think have gone very heavy into the spender business and we are one of them and all of us are contributing to that competitive intensity.”

Capital One 3Q16 Earnings Call Notes

Capital One Financial (COF) Q3 2016 Results

Industry growth has picked up, especially in subprime

“It’s a striking thing. We’ve talked a lot about industry growth, and we talk often about industry growth has gone from very low single-digits or even occasionally negative a couple of years ago to 6% and that has our attention. But here’s another stat that’s an interesting one. If you look at the composition of the industry’s growth over the last 12 months, about – and I’m going to just exclude Capital One from the whole calculation because your question is an industry effect there, about 31% of the growth is in subprime. And so subprime growth has certainly picked up now, it’s growing faster than prime, and certainly that has our attention.”

Still below recession levels of subprime lending though

“Now I do want to say, on the other hand, it remains well below pre-recession levels in absolute terms because there was such an exodus from that part of the business over the years following the Great Recession.”

Everyone says they’re not doing subprime, but someone is doing it. We have to be vigilant

“So, at times I think you hear from some players, subprime we don’t do that. Well, all I’m saying is 31% of all the growth is subprime, and somebody is doing it. And so, yeah, that has our attention. And it’s part of – it’s one – it’s an important part of the overall – if you kind of look at the industry story and this, by the way, is the number one thing that we worry about, more so than like the next recession; obviously, we worry about things like that, too. But the industry growth being at 6% and the subprime component of that, and then also the, beyond card growth when you look at student lending, auto lending, installment lending, that’s been running for a while now at around 7%. So we’re pretty obsessive about these things. It causes us to believe, first of all, that we have a window, and it’s just another reason we’ve doubled down and gone really hard while we have this window. It means we have to be doubly and triply obsessive about looking for indicators of things that inevitably happen when supply goes up a lot, and those indicators can be broad-based impact on credit metrics, as well as, of course, just directly affecting response rates and things like that. ”

Auto performance has continued to be better than expected

“But let me also say, really, if you stack vintage after vintage year after year in auto, they have been, the last few years, going up year over year, but the overall thing that we’ve seen is we’ve been – surprised is probably an overstatement, but I think we have kind of predicted something, a more rapid normalization than we’ve actually seen. All of that said, I think the Auto business is still in a good place for us to generate profitable business. But it is mostly kind of normalized, and it has a number of things going on in the industry that cause us to be very vigilant, most importantly, kind of underwriting practices there. But I would say really over the last few years, the actual credit performance has been strikingly good and maybe even a little better than expected.”

There will be pressure over time for loss rates to go higher for the industry

“And so I’ve just been around long enough that I find myself the longer I do this, the more reluctant I am to declare what a normalized loss rate is. But I think there is a net pressure over time that will pull up losses for kind of existing books of all players including Capital One.”

Capital One 2Q16 Earnings Call Notes

Capital One Financial Corporations’ (COF) CEO Richard Fairbank on Q2 2016 Results

Purchase volume up 14%, loans up 13%

“Growth of loans and purchase volume remained strong, although growth decelerated modestly. Compared to the second quarter of last year, our ending loans grew $9.6 billion or about 12%. Average loans were up $10.1 billion or about 13%. Second quarter purchase volume increased about 14% from the prior year.”

Competition picking up

“Competition is picking up across the domestic credit card market from the rewards space to subprime. Overtime this can have impact on the growth opportunity and even credit quality in the business. While we always watch vigilantly for these effects, we continue to find attractive growth opportunities in the parts of the market we’ve been focusing on for some time.”

Repurchasing $2.5B of stock over next four quarters

“The Federal Reserve did not object to our capital plan, so we expect to maintain our dividend and repurchase $2.5 billion of stock over the next four quarters.”

A loan vintage seasons over two years

“The growth math of a particular vintage has most of its impact over the two years following that, and then there is really a seasoning from there and so this is really just the net seasoning math of all the different vintages and the size of those.”

underwriting concerns about competitor practices may be mitigating somewhat

“So at the top of our worry list is underwriting practices, because that not only affects volumes as we pull back, but it also can so quickly make its way in to credit quality and not only for those doing those practices, but it can ripple effects on the industry. So it’s a top of our list, its concerns has been competitors practices, and we have lagged particularly in the subprime area some concern about that. That as I mentioned is actually looks like its mitigating somewhat, I don’t want to declare victory on that, but that’s a positive here and we’ll keep an eye on that.”

Just about anything that really creates value involves digging a hole before the benefits come

” I found over the many years in building Capital One, just about anything that’s really value creating involves digging a hole before the benefits come. If it weren’t that way, everybody would rush in and do it and actually would kill the opportunity. We have many years of experience in studying credit and understanding how value gets created overtime by origination.”

We are bullish about the growth opportunity

“I think for those who know me, how I try to operate in this thing. It’s less about signaling and more about just describing what we see and sharing with you what are the – so what’s of that. So I start with, we are very bullish about our growth opportunity. It is factual matter that the growth rate is down over some of the highs of the last couple of quarters on a year-over-year basis, but we’re continuing to have pretty significant and to us very attractive growth.”

Competition is increasing, and growth rate in subprime is actually higher than in prime

“we are very obsessive about how competition works. So often people always talk about well what’s the economy doing and how big is the opportunity. Number one on our list is, what is the nature of the competitive environment, and that of course in its most first order effect effects growth itself. So it is noteworthy that competition from rewards all the way down to subprime despite sometimes protestation of folks that they don’t do subprime there is an increase and in fact the actual growth rate in subprime by our tally industry is actually higher than in prime. And you can see in the overall revolving debt numbers, growth is up.”

Competition has been increasing in a creeping fashion

“This competition, by the way there’s not like some big thing that happened in the last quarter. This is a creeping increase in competition, it’s primarily by the biggest players in the business who in fact definitionally dominate the business. So you’ve seen some increased competition in the reward space, you’ve seen some competitors strengthen some of their rewards proposition, value propositions”

Capital One 1Q16 Earnings Call Notes

Richard Fairbank

Rewards competition has intensified a bit but it’s always intense

“So, you ask the question about rewards competition. This is a very competitive space, I think the competition has intensified a bit over the past years, over the past year really issuers are continuing to introduce new offers, upfront bonuses have been gradually increasing over time. I still look at this, as the player its generally rational, intensely competitive and our strategy is design to go right into a marketplace like that.”

Purchase volume continues to be strong

“Okay. Chris, the purchase volume continues to be strong, let’s talk about where we’re seeing it. We’re seeing it across various segments in our business that are growing nicely and obviously the spender and rewards business is growing in our revolver business where we focus on revolvers rather high balance revolvers, we see it in small business.”

Biggest concern is impact of growing competition

“my biggest worry and it kind of gets to your question is the potential impact of growing a competition and actually the growth itself that we see of credit around us. We’ve seen a growth of revolving debt creep up to about 6% recently. That’s pretty high relative to the low and sometimes negative levels since the recession.”

We are watching the growth in the marketplace closely

” the math of the amount of growth that we see in the credit market place is not lost on us. Now it is in the context of a particularly on the card side growth being flattish for a long period of time so we are not overly alarmed by just a surge of growth but we’ll certainly have to keep an eye on this. And we know that in the end the growth, the things that we see in the market place with respect to growth not only affect our growth opportunity they can affect credit with the selection quality of new originations and can impact existing customers who take on more debt from other players.”

Capital One 4Q15 Earnings Call Notes

Richard Fairbank

Expect allowance build driven by loan growth

“Loan growth coupled with our expectations for rising charge-off rates drove an allowance build in the quarter. And we expect allowance additions going forward, primarily driven by growth”

We’ve been flagging underwriting practices in the subprime marketplace for a long time now

“the auto story is the same story we’ve been saying for quite some time. So for at least a year now we have been flagging that in the subprime marketplace we see practices that are inconsistent with where we want to go from an underwriting point of view and we raised the flag about that in our call’

Card industry octane has revved up in recent years

“The other thing about the card industry, I think is worth pointing out is what’s happening with just sort of industry growth. So, industry-revolving debt for most of 2012 and 2013 it held steady at about 1% year-over-year growth and then it maintained sort of little over a 3% growth since July of 2014 and then recent months, it has been over 4%. So that’s certainly getting a little bit more octane there. And bank card outstandings are up 4.6% year-over-year. I think overall if I pull way up about the credit card marketplace, I think it’s a generally rational marketplace”

Have seen a slight uptick in delinquencies in energy affected geographies

“when we look at these geographies, places like Houston, parts of North Dakota, Alberta Province and Canada, we do see slight upticks in card delinquencies. And where appropriate, we’ve taken steps to surgically tighten our underwriting in these geographies, although we want to be careful not to over-react to these very modest effects.”

Most indicators of the real economy continue to look pretty strong

“let me say this about the health of the consumer. First of all, there has obviously been turmoil in the markets recently, including concerns about the global economy, especially China and closer to home concerns about the potentially disruptive consequences of falling oil prices. Having said that, most indicators of the “real economy” at least in the US continue to look pretty strong. We’ve seen sustained improvement in labor markets in recent months and steady home price growth. Consumer confidence remained solid. And as we talked about earlier, falling energy prices, while they will stress certain sectors and certain geographies, they will also directly benefit consumers. And if anything, I feel, it would probably be a net positive for the overall health of the consumer.”

We’re not seeing anything that is cause for concern in our own portfolio

“Of course, our most reliable view, Brian of consumers comes from our own portfolio from direct indicators of consumer behavior like payment rates and purchase volume, and from leading edge credit indicators like delinquency flow rates. These indicators all look consistent with our views of seasonality and growth math, and they are not giving us cause for concern. Obviously, the economy is something of a wildcard, and as the turmoil we’re seeing in financial markets spills over into the real economy, we would expect that to show up in our credit metrics eventually. But we’re not seeing any indications of that now.”

Steve Crawford

CCAR hamstrings banks ability to return capital

“Look, we’re not going to speculate too much about what’s going to happen going forward. I do think it’s worthwhile pointing out, remember that we have a CCAR plan that’s been approved through the second quarter of 2016. So, there is not really a tremendous amount of flexibility outside of what’s already been approved, some, but not a lot.

Capital One at Goldman Sachs Conference Notes

Capital One Financial (COF) Presents at Goldman Sachs US Financial Services Brokers Conference

Rich Fairbank — CEO

We have a fairly health consumer right now. Been very responsible

“I think we have a fairly healthy consumer right now. The context of — certainly through the lens of a bank and a huge credit card company I think the striking thing about the consumer is just how responsible the consumer has been, how low credit losses have been, I mean, the losses and the industry losses in credit card are just extraordinary low. ”

Consumer is coming out of a period of tremendous conservatism

“I think we see a consumer coming out of a period of tremendous conservatism after the great recession, stepping out just a little bit. But I think we’re in a good place with respect to consumer.”

The only way to compete at the top of the market is with sustained strategy of investment. Years if not decades

“to compete at the top of the market going after heavy spenders is — there is only one way to do that and that’s with a sustained strategy of investment to make it happen. It just doesn’t work to go in and out. It doesn’t work to try to come up with just, well, here is the cool product, let’s try to do that. And so, if you look at people that have really succeeded here I mean American Express is of course the gold standard here and also JPMorgan Chase has had a lot of success in this business. In each case, we’re talking about years, if not decades, of steady investments in building a brand, doing what it takes to create the quality products, and building the customer base.”

In the private label card business it’s extremely important that you find good partners

“We go in there saying we really like this business, but we want to be makes sure we do it on the right terms; that is starting with looking for partners that are themselves very strong companies. There are lot of companies out there in the world of retailing for example that are as you know really struggling in the digital revolution and everything else, so really picking the strong partners. Secondly, choosing those that are motivated for the right reason with respect to what this partnership is about. There is a huge continuum between whether the partner is trying to use the private-label relationship as a way to build deep customer relationships or as the means of making money. And I have found that that motivation drives just about everything about how partnership works and really affects the attractiveness. We are very focused on going to the right players who really and to work with them to build deep customer relationships.”

I’m not waking up everyday hoping for rates to go up

“I’m not one who everyday wakes up wondering and hoping for rates to go up because I think that while we are asset sensitive like most other banks and the math of higher interest rates will help net interest income and margins. But the bigger question really is what also comes along with that territory. And we do know that when rates go up consumers on variable rate products will have higher debt cost and it is typically something I found when rates go up, origination sometimes is that slows down origination a little bit because the pricing feels higher and consumers themselves haven’t internalized the rising rate. ”

We have tried to build specialties in commercial lending

“We had tried to identify the best specialties in commercial and then go build the specialty as a parallel to how we built the specialty call it the credit card business or our auto business. So, in that context, we like the energy business very much.’

Capital One Financial 3Q15 Earnings Call Notes

Third quarter has always been seasonal low point

“The third quarter has always been our seasonal low point. As a reminder, all else equal, seasonality results in increasing charge-off rate in the fourth quarter, rising the peak charge-off rate in the first quarter. This pattern has been particularly pronounced for the last couple of years and we expect that to continue.”

Continued to see aggressive underwriting in subprime

“In the third quarter, we continued to see aggressive underwriting practices by some competitors, particularly in subprime. We continue to lose some contracts to competitors who are making more aggressive underwriting choices.”

<$1B in taxi medallion loans

“Our taxi medallion loan portfolio is less than $1 billion in loans. In the face of growing competition from Uber and other entrants, taxi medallion values continue to be under pressure and we continue to closely manage risk in this sector.’

New loans will have a higher loss expectation as old loans were seasoned during the great recession

“the back book is made up mostly of customers who weathered the great recession, and it’s also exceptionally seasoned as a result of low levels of originations over many years. So from the starting point of that back book, now almost any new business that we originate of course will have higher losses.”

There’s been pickup in growth, but not seeing people stretch like in the ’00s

“people stretching in terms of credit risk and so on. It’s what we saw again in the mid-00s. So I wouldn’t say we see anything like that at this point, but I think it’s good for you to make note that there has been a bit of a pickup in terms of balances and we’ll have to see where that goes.”

Growth math is that losses build in first two years and then settle. Will start to build in 2016 and ’17

“But I think that the main point that I wanted to make is just the way growth math works. It’s in the first two years after – for any vintage of growth, where the losses are climbing. And then they settle out and actually ultimately go down in any one sort of vintage of growth. So, all of this is the math of some things going and after they – so for example, as we get towards the latter part of 2016 and into 2017, some of the early growth vintages will be starting to settle out and you still have the effects of course of some of the more recent growth that we hope happens over the course of next year, for example.”

More risk being taken in subprime than we’re comfortable with

“in subprime most importantly some of the lending practices that we see that where I think more risk is being taken than we are comfortable to take to win a particular piece of business and that’s really what we’re flagging there.”

A lot of planets aligned for us to get the GE healthcare business. “You could measure in decades” the number of times that an opportunity like that comes along

“It’s very unusual thing to be able to, in an acquisition at an attractive price, get someone that is like the leading and just absolute amazing performers that somebody like GE Healthcare business is. So a lot of planets aligned for us to get that. It is a byproduct of as I’ve said we watch the marketplace and look for opportunities, but as you can see over the last number of years, we done more looking than we have buying anything. But I think the GE business represents a very special opportunity that arises, but it is a very unique thing. I don’t think – I think it is you could probably measure in decades the number of times a business comes along with such a good business and a market leading position where that can be obtained at a reasonable price. “

Capital One 2Q15 Earnings Call Notes

Seeing aggressive pricing in sub prime auto lending

“In our auto business used vehicle values have softened, although they remain near historically high levels. A decline in used car prices would put pressure on our results. We’ve discussed increased competition in pricing and underwriting for some time. In the second quarter we observed increasingly aggressive underwriting practices by some of our competitors, particularly in subprime. We are losing some contracts to competitors who are making more aggressive underwriting choices. As a result, subprime originations declined modestly compared to the prior year.”

NPL rate rose 50bps driven by oil and gas and taxi medallion loans

“We built allowance over the last three quarters in anticipation of increasing risk in oil and gas and taxi medallion loans. In the second quarter criticized non-performing loans were up $282 million from the prior year to $463 million and the NPL rate increased about 50 basis points to 0.90%. These trends were driven by downgrades of oil and gas loans and to a lesser extent downgrades of taxi medallion loans. Second quarter credit results include the final results of the Shared National Credit’s exam.”

Investing heavily in digital

“We remain compelled by the opportunity, need and urgency of digital transformation. We are entering a mobile, on-demand, real-time world. Digital has already disrupted many businesses and has created entirely new industries. The pace of disruption is sweeping, breathtaking and accelerating. Banking is inherently a digital business and is ripe for transformation.

To win in the digital world, we can’t simply bolt digital onto the side of our existing business or port analog banking services to digital channels. Technology and information will fundamentally change how banking works and unlock new capabilities and the ability to deliver entirely new experiences. To fully capture these benefits, we’re deeply embedding digital into our businesses. We’re becoming a destination for great digital talent; product managers, designers, engineers and data scientists. We’re simplifying and modernizing our infrastructure to drive agility across the company. We’re building foundational capabilities around software development, design and information and we’re transforming the way we work to unleash the power of modern technology and great talent to drive innovation.

We are making significant investments in our digital future. We don’t build technology for technologies sake. We are working backwards from a future where the vast majority of interactions with our customers will be digital. We are already seeing the payoff. Our digital investments are creating a compelling customer experience, delivering data-driven insights and are a key enabler of the strong growth we are delivering.”

Continue to see strong growth opportunities in card

“We continue to see strong growth opportunities across our Domestic Card business. We believe that the right choice to drive long-term value is to spend marketing and operating expense to capitalize on this window of opportunity. ”

Allowance is being pushed up by growth

we’ve talked about this for a while, we’re in a growth period for Card. So that growth, all else equal, is going to be pushing up the allowance.”

New origination have slightly higher loss content

“The losses of new originations are higher than our highly-seasoned back book just because that back book was profoundly seasoned by anybody who survived the great recession and the very extended period of low originations for us and in many ways for the industry. So off of an unusually low loss back book, we are seeing very good origination opportunities and it’s really more of the same that you’ve seen from us for a long period of time.”

We’re intrigued by all the startups in the financial services space

“we’re intrigued with frankly all of the startups in the financial services space, one category of which is the online lending and peer-to-peer lending and so on…even though we may not see much of an effect, we certainly have a real interest in watching what goes on in that space.

Digital development going to be a drag on efficiency for some time and that’s ok

“We are not primarily motivated by cost saving with digital because I think that’s about fourth on the list of things that the power that digital provides. Right now, it is still a net negative and probably for an extended period of time measured purely by cost, digital will probably be a net negative. But even then on the cost side, we’re seeing benefits already in statement and payment processing, telephone servicing costs, workforce restructuring that you saw, branch efficiency, data storage, a lot of things. But the bigger benefits are things beyond that that show up in terms of better credit risk management, faster product development, and ultimately, the kind of growth that you’re seeing.”

Our digital investments aren’t just science experiments

“we’re not just investing in science experiments or seeing what’s new and shiny object. When we talk about digital investment, it starts with talent. We’re talking about bringing in top engineers, product managers, designers, data scientists often from tech companies and startups outside of financial services. And this is a very important thing and obviously it costs money to do that, but that’s a foundational thing. We’re talking about providing the digital workspaces and the most modern tools for these folks that’s essential in terms of recruiting them and essential in terms of leveraging them.”