Moving right along, kicking off this afternoon's session, I'm very pleased to have Capital One with us. From the company of Andrew Young, Chief Financial Officer, and Jeff Norris, Senior VP of Finance. Welcome, guys.
Thanks.
We just put up the first ARS question, which we've been asking everyone. First of all, you know, welcome back. You guys have been a strong supporter of this conference.
Great to be here.
Maybe the best place to start is just your overall assessment of the U.S. consumer. You guys obviously get a real-time view, given all the data you have, and, you know, there's certainly been changing in shifting discretionary spending versus non-discretionary spending, low-income consumer versus high-income consumer. And, you know, we've seen the unemployment rate tick up more recently. Can you just talk to kind of what you're seeing with respect to the health of the consumer?
I'll start by saying overall, I think the consumer is in reasonably strong shape, and it's been true for quite a while, and why I say reasonably strong is I think you can go down the ledger of multiple positives. The first of which is, you know, the unemployment rate at 4.2% is quite strong compared to historical standards. Number two is accumulated savings across income bands remain above where they were pre-pandemic. And then number three is wages have been outpacing inflation for the majority of the last few years. There was a period when inflation spiked, of course, and it lagged, but overall, we've seen pretty strong wage growth.
Each one of those three, though, you could have a, "Yeah, but..." And so I'll go down the list, and I think the but side of this equation has been what is portrayed more frequently, when we pick up the Journal, and that is on the unemployment side, it's 4.2, but it is up from the mid-threes, and we've seen a kind of gradual increase there, and job creation has slowed. On the second place of consumer balance sheets, you can look at savings rates at this point. I think the last number that I saw was 2.9%. That's below historical levels.
And then third, even though real wages have been increasing, when you look at debt burdens and the servicing of those debt burdens, they haven't fully cycled through all of the asset classes that are most impacted by interest rates. So not everybody has a new car loan, not everybody has a new mortgage, and so that wage growth hasn't fully been tested there. So, you know, there's a lot to keep a close eye on that but side of the equation. But as we sit here today and look at that in its entirety, the consumer seems to be in reasonably good shape.
I guess I'm going to maybe shift the order on this. Maybe we could go to auto credit quality first. You know your audience. Well, you know, if we look at... You know, and you guys do give us monthly data, which we appreciate. So we have data as recently as July. But, you know, we had saw both auto charge-offs and delinquencies, you know, the pace of the year-over-year growth kind of maybe accelerated a little bit the second straight month, although I would say that pace a year ago was, like, 27-month lows back in May. Let me just talk to kind of maybe your expectations or kind of just how you what's kind of going on in auto credit.
Yeah, well, as you said, Jason, we're not giving mid-quarter guidance here, but we do provide monthly data. Not only do you have the July data, you'll see the August data here in five days. My overarching comment is credit performance is really a function of choices you've made over the course of multiple years, and we really like the choices that we've made, and you see that manifesting itself in strong credit performance. Delinquency rates today remain below where they were pre-pandemic, and I think it's important to go through a bit of a chronological journey of how we found ourselves here, and then I'll talk a bit about kind of going forward. If you start pre-pandemic, our quarterly auto origination volume generally was somewhere between $7 billion and $8 billion a quarter.
As we got into 2021, and it persisted through the H1 of 2022, the combination of forbearance, stimulus, people not traveling, and vehicle prices being something like 70% above where they were pre-pandemic, all coalesced to a place where we saw a tremendous opportunity to lean into growth. Over the course of 2021 and the H1 of 2022, our quarterly originations oscillated somewhere between a little over $10 billion and I think we hit a peak one quarter of $12.9 billion from that 7 to 8 pre-pandemic. As we got into the middle of 2022, though, there were some warning signals to us, not the least of which was that level of vehicle pricing and value was likely unsustainable. All of those tailwinds around consumer credit that I enumerated led to inflated FICO scores.
It was the early stages of the Fed starting to move, and we saw pricing actions in the marketplace that wasn't fully capturing the increase in whether it's Fed funds or two-year treasuries. And then there were other things that we monitor in a proprietary way within the walls of Capital One that all together really led to quite a bit of caution on our part. You saw then us pull back on the origination side quite dramatically. So originations then fell from those double-digit levels to, I think it was roughly $6 to 7 billion a quarter, so down, you know, 30%+ year- over- year there because we were cautious. That caution really persisted over the course of the back half of 2022 and throughout 2023. It's only been recently that those originations have started to tick back up.
Last quarter, I think we printed around $8.5 billion, so a little bit above pre-pandemic levels. But what we're seeing, we remain, you know, cautiously optimistic and are leaning a little bit into volumes at this point. But then if I go back to the substance of your question around credit, delinquencies are below pre-pandemic levels. Loss rates are above, and that's just a function of vehicle values coming down and a lower backbook of recovery inventory for us to kind of offset the gross losses. But, delinquencies are quite stable. Where it goes from here is going to be a function of the macroeconomic backdrop, all consumer income, all the factors that I enumerated in response to your first question.
Just to sort of emphasize a couple of key points, the strength of our credit performance today is really on the back of choices we made and interventions we made, you know, back in that 2022 time frame to pull back. It's the strength of our credit performance that's giving us that sort of cautious optimism for the opportunity now. When we pulled back, a lot of people in the industry were actually still leaning in. We're moving in a slightly different way than, you know, some others in the marketplace.
Helpful. Maybe put up the next ARS question, and maybe we just stick with credit quality, and maybe talk about credit card, which has some similar but some different dynamics. You know, there we've certainly seen kind of the rate of change, year-over-year change in both delinquencies and charge-offs slow over the last several months. You know, how should we kind of think about the trajectory there? I know some of the drivers are similar, some are different. You know, some banks have talked about losses peaking around now into next, you know, after kind of this normalization process.
Delinquencies are, of course, a leading indicator of where losses are ultimately going to go, so I'm not going to get into the business of calling peaks or not. But you know, as we look at the card side, as you said, Jason, there's a lot of similarities to what I just described in auto. Delinquencies there, though, are above where they were pre-pandemic. If you look back over the last, you know, call it four to five quarters on a monthly basis, you can look at the year-over-year change in delinquencies has been following a very linear, you know, step function down to where, as we sit here at the end of the Q2 , actually, I could quote July, but you know, only modestly above the pre-pandemic, modestly above zero in terms of year-over-year growth in delinquencies.
It's really starting to settle out or has settled out over the last couple of quarters and is more following seasonal patterns at this point. You know, we're keeping a close eye, of course, on that, but the delinquencies are the precursor to the losses. While we don't have the collateral value dynamic in that we have in auto in terms of the delta between delinquencies and losses, we do have the backbook of recovery phenomenon in card as well.
And so that's where you see not only a lag between the delinquency and charge-off, just based on how those are experienced, but also slightly higher loss rates compared to the comparison of delinquencies, because we don't have quite the same backbook of recoveries to collect against, but that is replenishing and will resolve itself over time.
Got it. And we can put up the next slide, the next ARS question. I guess, we'll come back to that. But, you know, I guess maybe kind of around the consumer credit piece is, you know, there was some noise in the kind of provision reserve last quarter with the end of the Walmart agreement. But even if we kind of exclude that, it looks like it added another $250 million or so to the allowance, that more than covered loan growth. Since then, we've seen the unemployment rate kind of tick higher. You know, how do you think about the reserve from here?
Well, to break apart parts of your question there, Jason, yeah, we saw about I think it was a little over ten basis points increase in the coverage ratio to about 1%. Quite small change, but that increase in coverage, when we released earnings last quarter, we attributed that to uncertainties in both the macro environment, which of course, we've now seen sort of play out over the last couple of months, but also uncertainty around consumer behavior, not the least of which is this whole concept of deferred charge-offs and how long do those persist and to what degree. And so, you know, when I think about the overall reserve rate in domestic card, it's at roughly 8.5% of loans at the end of the Q2 .
And, you know, a little over 50, I think it was just shy of 60 basis points was a result of the termination of the loss-sharing agreement with Walmart. So if we normalize for that coverage ratio in card, it's in the high sevens. It's been in the high sevens for the last few quarters. At CECL day one, that number was roughly 6.5%. So we still have coverage ratio that is well in excess of where it was, and I'm not suggesting that the 6.5% is the definitive like end state that we'll get back to, but I do think it is a helpful guidepost in terms of direction of travel there.
But the reason it remains elevated is as we look at loss rates today and look at, you know, the delinquencies and what that implies for loss rates over the coming few quarters, loss rates are higher than they were at CECL day one. And you know, we're really keeping a close eye on how those things play out. But you referenced in your question about unemployment rate. It's important to know that when we set the allowance, we are taking forecasted levels of losses that include forecasts for economic variables. And so, you know, the fact that unemployment has ticked up, at least to some degree, that was anticipated at the end of last quarter and reflected in our loss outlook. So there isn't any sort of one-for-one relationship with unemployment is ticking up, and therefore we're increasing coverage.
We've taken our whole loss forecast, looked at downside scenarios around that, and increased our qualitative factors, and that results in the Walmart-adjusted high seven level that has been roughly flat over the last few quarters.
It's interesting, you know, for 2024, most of the audience thought 6% to 6.50% was the right charge-off number, and, you know, we're seven months into the year, so it's easier to forecast, but for next year, people seem to be divided, whether it's the same, less or more.
It is interesting.
Jeff is not going to let you comment on that. I guess you kind of, you know, touched on or maybe talked about just credit card, maybe you know, loan growth. You know, credit card loan growth has been slowing, and I know kind of the comps get a little bit screwed up, but you maybe talk about, you know, is that kind of Capital One driven? Is that the consumer pulling back? You know, kind of just maybe talk about the prospects there.
Let me take the liberty to reframe a little bit of your question-
Please.
To say it's starting with this notion of slowing. I think it's important to widen the aperture a bit, and it relates to your point about comps there. So you know, if you look at what transpired over the pandemic, if you like take a five-year window starting in the middle of 2019 to today. Industry loan growth, you know, consumer revolving credit early in the pandemic shrunk by low double digits. Domestic card for Capital One shrunk high teens early in the pandemic. And then from that low point, the combination of, you know, consumer behavior, the kind of pent-up demand that was there, companies seeing an opportunity to lean into new originations. We saw growth really pick up quite dramatically. And industry loan growth, I think at its peak year- over- year, grew something like 15%.
We grew in the low twenties, and from there, there's been a fairly steady march down, where industry loan growth is very, very low single digits, and we are now sitting here at 7%, and so I, I think just creating that longer-term picture, and then if you compare those numbers to what it had been the prior five years before the pandemic, before that experience, because if you sum total what I just described, industry loan growth from 2019 to 2024 was roughly 25%. Capital One is over 40% when you do the math that I just described of each of the year-over-year growth. If you look back from 2014 to 2019, as sort of a pre-pandemic benchmark, industry loan growth was around the same level as the industry has experienced over the last five years.
I think it was 23% versus the 26% we've experienced over the last five. Compounded growth rates that are a little north of four. We're growing at seven. We feel very good about the opportunities. We feel very good about our products, about the franchise we've built, our brand, and how that's manifesting itself in growth that is in excess of the industry. And where it goes from here is gonna be dependent on a host of factors. But you know, I'll sign up for a 7% CAGR every year at this point.
It seems like given that credit card is kind of one of the few loan categories that has been growing. There's kind of more of a focus on it from some of your competitors. You've always been focused on it, but you know, Wells Fargo was up here this morning talking about they rolled out nine new credit cards in the last three years. And maybe just talk to the overall kind of competitive dynamics. Has there been any kind of changes over the last couple of years?
So, you know, it's interesting. I think when characterizing the competitive intensity of the credit card market, it feels like it's usually kind of high. It's an attractive asset class, right? There are some big and highly well-funded and capable players competing in the space. That's mitigated somewhat by the fact that different competitors have staked out sort of different territories within the overall credit card market. You've got, you know, JPMorgan Chase and Amex and us really going hard at the top of the marketplace with heavy spenders. You've got some other players more focused in the core of Prime and revolvers, and some other players, you know, kind of mining their branch infrastructure to originate cards, and you've got some specialists in store cards and co-brands and so forth. So the overall competitive intensity is high.
That's mitigated somewhat, you know, by people sort of self-selecting into sort of, you know, somewhat, more focused areas. I think at the top of the marketplace, you've actually seen all the competitors leaning into sort of investing in that space, and, you know, we're part of that mix. That's part of what's driving sort of elevated levels of marketing. I think at the, you know, with the revolver customers, throughout the credit spectrum, it's probably a notch or a half notch less intense than that very top of the marketplace, but still a pretty robust competitive environment. And, you know, pricing and, products and so forth are actually relatively stable.
You know, I think we're well positioned in the context of that competitive set and, you know, continue to like the opportunities we see and continue to lean in.
Any thoughts around just how you guys are obviously students of these businesses, but, you know, in respect to credit card loan growth or auto loan growth, you know, does the Fed cutting, you know, help accelerate growth, all else equal, or anything we should be thinking about there?
I think it's more than a single variable equation. It's definitely a multivariate that includes at least a few dimensions, you know, which are tied in to rate cuts, and that is inflation and consumer income levels, which is a combination of both unemployment levels and wages. Because if you take rate cuts in isolation, you can make a very logical argument that the cost of credit is coming down, and therefore, consumer demand would likely increase. But it also depends on what's happening in the world around that. And so, you know, I could envision a negative scenario that, to be incredibly clear, I'm not predicting.
But if the Fed is cutting and not catching up with inflation, and that then drives a spillover into employment levels, for instance, that almost certainly is going to result in a retrenchment of the consumer and less credit being offered. I think you could make a very compelling argument for almost the inverse of that, which is the Fed achieves its mandate. It, you know, cuts rates, and, inflation comes down, and the consumer- we get a soft landing, the consumer remains healthy, and consumer confidence is high, and credit gets extended, and credit performance is strong, and customers are leaning more into that.
So I think we need to look at all of those variables concurrently, and that's something that we, of course, obsess over and drives the decisions on a day-to-day basis of whether or not we want to lean in or, you know, pull back in the marketplace in any of our asset classes.
There you go, the next ARS question, and maybe, you know, turn to other parts of the balance sheet, but can we talk about deposit trends and expectations, you know, direct deposits, you know, were, you know, high beta on the way up. You know, the Fed presumably is going to cut next week. Just, you know, how do you think about kind of a down beta cycle and some of the direct banks have actually already begun to move rates? You know, just how you're thinking about deposits overall.
Let me break that question into... I see your question here up on the screen, which is a cumulative beta. So there's one aspect of the question is, cumulatively, where do we end? And the other is, over the next few quarters, what happens to pricing and-
We'll take both. We'll take both answers.
How quickly we get there. Well, and I think they, in some ways, are tied to one another. And so, what I start on the cumulative side, where I see, you know, with the our last two easing cycles here saying it was, it's 49 and 52. But an important part of where we land is how low the Fed ultimately goes. Because in all likelihood, there's some floor to deposit pricing. And so if the Fed were to, say, go back to zero, that your beta is going to be constrained because you almost certainly are not going to be paying zero. Pre-pandemic, I think we were in the 45 to 50 basis points of our performance savings product.
And so that's going to certainly influence the cumulative beta, as opposed to if the Fed stops at two and a half or two or one and a half. I think where the products ultimately land in terms of pricing is going to be influenced by that. And so I think that's an important dimension to the cumulative point. In terms of the near-term actions, as you said, we've observed some competitors have moved even before the Fed has taken action. I think decisions for competitors and for us is really a combination of what do we believe from a customer franchise perspective we want to do, but in the context of what others are doing and our balance sheet needs.
And so the fact that some have already moved suggests that in a world where outside of card, loan growth has been pretty tepid, deposit, the balance sheet and deposit volumes are fairly strong, which may embolden people a little bit to lean more into pricing because they're not so fearful of losing some deposits at the margin. I think for us, it's going to be less about how to, you know, make sure that we're preserving margin in any one quarter. We're, as we always do, going to take a customer franchise lens, of course, put it in the context of the movement of others, but you know, you could certainly see a scenario in which the first few quarters of a down rate cycle, the beta is higher than what it had been in prior cycles.
But again, this is another one of those variables that you need to put in the context of what's happening in the world around us at the time. But I think that's a, you know, a potential outcome, that if you just look at history, where I think down cycles have been not only consistent in terms of the cumulative data, but what have happened in those first few periods, I think we may end up seeing a different trajectory.
I guess maybe tying together your kind of beta comments and credit card loan comments, shifting rate environment, I guess in the Q3 of the full quarter impact of the revenue loss share, or revenue share going away from Walmart. Just how should we, I guess, think about the overall NIM?
I think you just gave most of the components that I would give, Jason. Let me just start in the short term. The two things I know for sure are in the Q3 , we're going to have a full quarter effect of the termination of the revenue sharing with Walmart, which I think is roughly ten basis points of NIM, about twenty basis points of card margin, which is what we cited on the call, but I think that translates to roughly 10 basis points of NIM. So now we'll have a full quarter of that, and we have an extra day in the Q3 , so mechanically, that's another eight basis points.
The things that ultimately drive NIM on the positive from here, you know, a couple of which we've seen in spades over the last number of quarters, which is card being a higher percentage of the overall balance sheet because it's a higher margin business that provides a tailwind to corporate NIM. And then also, revolve rates, which during the middle of the pandemic had fallen to historically low levels, and those have ticked back up but still remain below pre-pandemic levels. And so to the extent that revolve rates increase, we could see that. And by the way, there's some seasonality to that revolve. We saw the downside of it in the Q2 , the effects of tax refund or, you know, the revolve rates have come down seasonally in the Q2 .
That could very well rebound as we get into the back half of this year. I'm just talking more structurally, revolve rates could also return on a seasonally adjusted basis to those levels. And then the third piece is we continue to hold an outsized amount of cash. I think we had $38 billion of Fed cash on our balance sheet in the Q2 . You know, we talked about that probably being something like $10 or $15 billion higher, $10 or $12 billion higher than where we'd expect that to be over time. Not too much of a drag to NIM, given where Fed funds are at this point, but still does depress NIM a little bit. The other side to, you know, what could potentially be the headwinds there is what happens with deposit pricing, as you said.
And then, I think we could continue to see high levels of revenue suppression, for instance, with card, which depresses fees there. But overall, in the near term, there are certainly some structural tailwinds that should benefit the corporate NIM from here, with the biggest uncertainty on the downside being deposit pricing.
I can't believe we've gotten this far in the conversation. We haven't talked about Discover yet. I know, which is kind of initial formal meeting with Discover took place at the Telluride Conference last year. The strategic rationale of the deal is, I think, very well understood and appreciated by the market. But, you know, we're kind of seven months into this and announced. I know you don't get non-public information, but I suspect you've had more time to think about it. I guess, one, kind of updated thoughts on the transaction in general. And then, two, just I know you were talking late 2024, early 2025 potential close of the transaction. I know you're waiting on the Fed. Just anything you could add to that? And we'll just flip the next ARS question while Andrew's in answering.
From a process perspective, things are progressing as we expected. As you know, shortly after the 20 February announcement, we applied with the Fed and the OCC, who are the two bodies that will approve or deny the transaction. We've had, you know, what we expected in terms of the back and forth with them over the last few months. We also unveiled our community benefit plan, record-breaking community benefit plan, and had the public comment call, the joint call with the Fed and the OCC, and so again, that's progressing as we expect. At this point, we will be presumably sending out the proxy, the S-4, in relatively short order once that gets finalized from our discussions with the SEC.
And we've also been engaged with the Department of Justice, who provides an assessment that plays a consultative role to the Fed and the OCC as part of this process. But again, all of that is progressing as anticipated, and at this point, we still are expecting a decision either late this year or early next, with close coming very quickly on the heels of that announcement, if it's affirmative. Strategically, to the first half of your question, we're more excited today, if possible, if that's possible, than we were at the time that we announced.
You know, having the opportunity to be, you know, a vertically integrated, technology-led payments, international payments business, on top of the incredible bone structure that we have today with three, you know, scale lending businesses, a tremendous deposit franchise, and, you know, a decade of, substantial investments in technology and data that are creating, just unbelievable capabilities for us. When we take all of that and put it together with, Discover, we can't wait to get started.
Fair enough. The room seems to agree. Go to the next ARS question, which, let's see what this comes up with. But, maybe just shift gears to late fees. Maybe just update us kind of where we stand with the CFPB late cap thing. I know it's kind of in the courts. Some of us follow it more closely than others. I think at one point we're talking about October implementation, but, what are your thoughts around that?
So, most recent earnings call, we basically assumed an October implementation. Some of our forward-looking statements, we're getting pretty close to October, and the uncertainty remains high. So that's looking a little bit less likely. But we'll sort of see what we see by the time we get to our next earnings call. You know, if and when the rule does take effect, we're thinking about it, maybe in a slightly different way than some of our competitors. And it starts with the notion that, if and when the rule takes effect, in addition to affecting revenue, it's going to, in our belief, have pretty meaningful marketplace effects on things like customer behaviors, competitive behaviors, pricing, volumes, credit.
And it's going to be really important for us to see how some of those market effects play out before we take a bunch of actions to sort of, you know, address the impacts. And when we think about the actions in the context of those marketplace effects, we'll be working back from actions that are in the best interest of our customers in preserving what we believe is a very valuable and enduring customer franchise, who we spent years investing in and building. We think our customer franchise is paying us back in the form of growth and returns in terms of, you know, credit selection and all the benefits that that provides. And we really don't want to do anything to damage that franchise.
So holding that as kind of our beacon, we'll assess the marketplace impacts. We'll you know, when the time comes, we'll make some choices in the context of preserving our franchise and its value. And you know, we continue to believe that the combination of the marketplace effects and the actions we take when the time comes will resolve the financial impacts over time.
Got it. I skipped over marketing earlier. Jeff, you kind of touched on it in summary remarks, but, I mean, I think the comment you made in July was, you know, H2 of the year expected to be up meaningfully higher than the first. So you get, it applies over $4.6 billion for the year, some really big number. Maybe talk to kind of where that money going. I think you touched on the transaction segment, but just, is how you're thinking about. I'm sure you've spent a lot of time on this, given it's such a big number.
Sure. So there are lots of elements to our marketing spend. The thing that's been there for years and years is something I'll call direct stimulus and response marketing, and that's the sort of direct marketing, largely digital now. It used to be, you know, kind of, a little bit more weighted to direct mail, but now it's essentially a digital direct marketing program. And that's very driven by our day-to-day assessment of the opportunities in the marketplace. And as we were talking about in the prior question, we continue to see really good opportunities in our domestic card business to originate across all the segments where we play. And so that direct response marketing is elevated as we lean into those opportunities.
And those opportunities, as Rich always says, are enhanced by our digital capabilities that allow us. We're, you know, leveraging our infrastructure and our data streaming in real time to be able to apply machine learning models at scale, that, you know, better and more precisely identify the sort of segments with the best resilience and return profiles. And, you know, focus and target our marketing there and continue to lean in there. Another bucket is kind of beyond the response marketing, the investments related to building our franchise at the top of the marketplace with heavy spenders, which we mentioned in a prior question here. We continue to get good traction there. We are seeing competitors lean in pretty heavily to those investments as well.
So things like franchise enhancements, access to unique experience, airport lounges, travel portal, those kinds of things, continue to be a driver of our marketing budget, and they're at elevated levels now. We think we're getting paid for those investments in the form of, you know, originations growth and, solidifying our franchise and growth there. Away from our card business, we've also talked a little bit about our national direct bank strategy, where we believe we're building a franchise of primary banking relationships, and kind of a full service national franchise that's digitally led with limited physical distribution. Because we're not leveraging a very large and expensive and complex national branch infrastructure, that tends to manifest itself in a little bit higher rate paid and a marketing investment.
And you know, I think anybody with a television sees that some of our brand advertising is going to, you know, talking about the traction we're getting with our banking and deposit franchise on the retail side, with no fees, no minimums, no overdraft fees, and we're getting great traction there. So we're at a period of time where we're seeing great results and great opportunities across all of those buckets. You know, as cycles play out, some of those buckets will ebb and flow a little bit, but at the moment, it's kind of a season of investment, and that's driving the elevated levels that we're seeing and our expectation for an increase from the H1 to the H2 .
I guess maybe just lastly on capital, you know, 13.2% CET1. You talked to an 11% target. On our math, this covers accretive to your overall capital ratio and, you know, likely we, we've built maybe a reduced capital target. I'm not sure if there's view on that. Maybe just talk through how do you think about managing capital against that backdrop?
Yeah. Well, in the near term, I think you've seen some consistency in terms of our pace of repurchases over the last handful of quarters. I think it's reasonable to assume that that pace until we get the regulatory decision is probably likely to continue. On the other side of that, you've put me in meetings all day today, so I haven't had the chance to read Vice Chair Barr's comments around Basel III Endgame this morning. That's an important part of the calculus. We also will need to run the combined entity through, you know, our internal stress test modeling through the Fed machinery as we get to next year.
And so as we put all of those things into the equation, we can assess, you know, what do we believe our longer term capital need will be. But we'll presumably be operating under the SCB at that point, and we'll have the flexibility to, you know, disperse capital however we see fit, if there's excess beyond that which we can use for growth and beyond the dividend. You saw looking back a couple of years ago, the pace of repurchase can be quite high, and we can return that capital to shareholders if that's the appropriate thing to do. And certainly we will do so, as it's an important part of, you know, the return profile of the company.
Great! With that, please join me in thanking Andrew and Jeff for their time today.
Thanks.
Thank you. Thanks, everybody.