this morning, slot of companies. Very pleased to have Capital One Financial with us. Capital One's been a very, very long-time supporter of this event, so we appreciate their participation. From the company, we have Jeff Norris, who's Senior Vice President of Global Finance. Jeff, thanks for being with us again. Thanks, Jason. It's good to be here. you know, obviously, I think most of the audience know Capital One, one of the largest credit card issuers, one of the largest auto issuers, both a branch-based and online depository gatherer, really across the country. I guess given that, I suspect you have some unique insights into the consumer. Maybe just start, big picture or your kind of normal impressions of the U.S. consumer and just the outlook against the backdrop of very low but potentially rising unemployment, or so they tell me, elevated inflation, and just still higher than normal payment rates. Sure. I'm not sure how unique our insights are, but our view of the consumer at the moment is that they continue to be a source of strength in an otherwise highly uncertain, you know, economic backdrop. We see, labor markets, probably the most important driver of consumer health, as still being quite strong. They've softened a little bit, but are still quite strong. I think there's some excess savings that, consumers garnered through the pandemic that are still a source of strength, although high inflation is, kind of offsetting that and, you know, driving, you know, real wages down. There's some pressure. I think on the whole, consumers are still, you know, very much a source of strength. Debt burdens are low by historical standards and so forth. The one thing that we've got our eye on, though, in addition to continuing inflation, what that's doing to real wages, is the, you know, the period we've just been through in the pandemic, which had unusually low and unsustainably low charge-offs and delinquencies. It's our experience that on the other side of really good times like that, there's some catching up that happens on the other side. Just as, like, through the Great Recession, there was some elevated levels of charge-offs that sort of pulled forward through the Great Recession, and that had the effect of a couple years in the aftermath of that, of very benign credit because it accelerated some charge-offs. We have an intuition that we can't really quantify that the opposite will happen as we, you know, leave the pandemic kind of in the rearview mirror. Through the event of, you know, widespread industry forbearance and stimulus payments and so forth that bridged consumers through that period of time, that could very well have the impact of delaying some charge-offs. We might have to see some catching up on the other side. With a couple of headwinds, we still find the consumers to be a relative source of strength. I guess maybe we could just stick with that kind of credit quality comment. Yeah. you know, if we look, you know, 30-plus delinquencies are kind of back to pre-pandemic levels. Losses still below, which is something you alluded to. you know, you talked about monthly charge-offs returning to that 2019 level around the middle of this year. Yep. Can you just talk to, you know, you know, how much is that tied to normalization versus kind of deterioration? Just, you know, after you get to that point in mid-year, does it stop, or does it continue to go up? Just how should we think about that trajectory? Sure. As we said, delinquencies, and particularly the early formation of delinquencies in the domestic card business for us in the US, is already back to pre-pandemic or sort of 2019 levels on a monthly basis. Charge-offs aren't there yet, but we expect them to catch up fairly quickly, and we've said probably by the middle of this year. You know, normalization is a kind of a funny term, right? As we've seen delinquencies and charge-offs rise but remain below pre-pandemic or 2019 levels. That sort of increasing trend we and everybody in the industry has called normalization. Once you reach those 2019 levels, if things continue to worsen, you can't really say that's normalizing anymore, right? I think we're about to drop that word from our vocabulary. We're assuming some continued pressure on delinquencies and charge-offs, you know, driven by, you know, the persistent effects of inflation that we just talked about and, you know, just looking at the roll forward of our delinquency trends. you know, I think they're going to go a little bit higher. We haven't been specific about, you know, when or how high, but I expect the worsening trends will continue for a little bit. We've assumed that in our, you know, most recent allowance build. you know, we see the unemployment rate probably moving from its current levels to something above five. What we're assuming is that that trend happens, you know, kind of by the end of 2023, early 2024. All the factors I just talked about that are some emerging headwinds for consumers, I think are what's in our thinking when we see some continued, you know, rising in losses. Now, on the other hand, when we look at sort of early vintage performance, we're seeing a couple of encouraging trends. The first one is that if we look at early vintage performance of the accounts and balances we're originating today, it looks very similar to the early vintage performance from back in 2017, 2018, let's say, before the pandemic. Those vintage curves are sort of right on top of each other. If we look at sort of monthly vintages, each successive month, the early performance is right on top of the prior months. There's some signs that, you know, some positive indicators. Against that backdrop, you know, I think our macro view and just rolling forward current delinquency trends, we're assuming we're in store for a little bit more increase to go. I guess, you know, I guess that's on the card front. I guess on the auto front, you know, we've seen losses normalize quicker than expected there. just quicker than expected. Right. -than card. I guess more recently it's actually behaved consistent with seasonal patterns. Perhaps used car prices have been fairly elevated through the first three. Yep. first three months of this year, although pulled back in April. Just kind of maybe just to kind of delve into what your expectations are there. Again, we don't really make forward-looking statements or give specific guidance about, you know, where we see charge-offs and delinquencies going. It's true that auto, in our experience, tends to move up faster and move down faster as cycles change. The fact that the credit metrics in the auto business reached pre-pandemic levels sooner than card is kind of consistent with our expectations. I think in addition to all the things that we've been talking about in terms of the consumer, there's the overlay of used vehicle prices, which remain elevated compared to long-term historical levels, but have been softening somewhat. We expect them to continue to soften. We actually assume a faster pace of deterioration in our underwriting choices to try and provide some buffer and some resilience even in the face of declining auto prices. We expect that to continue and you know, to continue to put some pressure on those metrics. I think at the end of the day, we'll have to see where the used vehicle prices go and how that affects recovery values. We'll have to see about you know, new car inventories and how those trends play out to have a better sense of where they're going. Again, similar to card, we've crossed out of the normalization and now we're into sort of just seeing how the cycle plays out. I'd point out in our card and auto businesses, we always assume things are gonna get way worse than the actual forecast would suggest to build some resilience into our underwriting. I think we're, you know, we're pretty well-positioned, even if the credit metrics continue to deteriorate for a little while. Right. I guess maybe we delve into that, right? You see higher unemployment, you talk about potential for lower used car prices. You're kind of forecasting charges going up. We saw you've had over the last, I think, three quarters, like almost $3 billion. Mm-hmm. to your allowance, you know, allowance for loan losses. Clearly, you know, looking ahead, I think the card allowance is like 7.7%. Right. A full number. From here, I guess, how should we think about, you know, the need to kind of build reserves, or how are you thinking about the need to build reserves from here? I think it was 1.1 billion in the most recent quarter. Right. you know, predicting the reserve builds is a tricky business. Let me just talk a little bit about the elements that kind of go into our allowance for credit losses, you know, calculation each quarter. You start with balance growth, and that can be a tricky thing because we had pretty significant balance growth in the fourth quarter. There's a nuance that you have to sort of work through, that is that a lot of the balance build in the fourth quarter is seasonal. Those credit card balances tend to pay down before they have a chance to charge off, so they don't get a lot of allowance coverage in our methodology. Contrast that with the first quarter, where growth appears, you know, on the surface to be essentially is, you know, 0, there's underlying growth. If you take a look at the year-over-year growth trajectory, it was a 21% year-over-year balance growth. Unlike the fourth quarter, most of those balances are going to stick with us. They get a high allowance coverage because, as you know, credit card charge-offs are front-loaded, even more front-loaded in the allowance methodology under CECL. That growth, in the first quarter gets a higher coverage ratio put against it. You look at, our current economic forecast, and we've already said, you know, we assume the unemployment rate is gonna be above 5% by the end of the year and with a pretty, you know, conservative overlay for inflation, and a recovery's effect that is kind of unique to Capital One. I'll come back to that in a minute. Just dropping the loss content from the first quarter of 2023 out of the first 12 months of the allowance window and adding the first quarter of 2024 drives an increase in allowance. Then you have the whole sort of notion that our economic forecast in any given quarter could get worse or better. What we said in the first quarter is that it pretty much stayed the same, you know, that assumption for losses to be higher in the first quarter a year from now, you know, impacted our reserve build. I'll get to the recoveries impact. This is a kind of a unique to Capital One thing in that we work our own recoveries of charged off debt and tend to do better. Historically, we can average as much as 2x the sort of recovery rate on charged off debt because we work our own recoveries as opposed to selling them. It extends the period of time over which we're collecting against those accounts, but we tend to get more in our efforts. That's a good thing in most seasons, but at the moment, after going through the pandemic and the sort of unusually low charge-offs we saw for the last couple of years, the inventory of charged off debt is lower. There's less for us to recover against, and that has a little bit of an outsized impact on our allowance. When you, when you put all that into the mix, you see us sort of increasing allowance. It's also been true through history that our credit trends tend to move a quarter or two earlier than the industry. You know, I think that's part of the explanation for why our allowance looked like a larger build than others. The final thing I'll say is, I'm not sure how others' allowance methodologies work, but ours sometimes can appear to be somewhat unique. One of the things is I think a lot of folks draw a fairly tight correlation between the level of unemployment rate and the level of credit card charge off rate. Our models are actually particularly sensitive to the change in unemployment rate. One intuitive way to think about that is it's kind of the formation of new unemployment that is the bigger driver of, you know, card charge offs. When you think about, if somebody loses their job, it'll take them six months to roll through the delinquency buckets and charge off at 180 days. If we work back from our assumption of the unemployment rate going from 3.5 to something higher than 5 in, like, two quarters, that's a pretty rapid rise in unemployment. Since our models are very sensitive to that change, I think that, you know, drives you know, some of our build versus some others in the industry. Helpful. Now you mentioned, you know, pretty strong card growth, you know, influencing reserves, so maybe we can kind of shift gears to that. I think we'll get April data next week. If we look through March, I think you've had now 12 straight months. Right. of 19% plus growth. Sales volume's been double digits. Just maybe talk to in terms of kind of what you're seeing, you know, what are the drivers, any kind of shifting in what people are spending money on, and just how you think about growing loans into a rising unemployment rate backdrop. Right. That's been a, you know, a frequent topic of conversation, over the last several months. On the one hand, we've got, you know, increasing charge-offs and delinquencies and larger than competitors' sort of allowance bill. On the other hand, we keep saying we're, you know, really happy with growth opportunity and leaning into growth and that. You know, it's a little bit of cognitive dissonance. How can both of those things be true at the same time? The short answer is, you know, in our experience, the balances that we're laying on now are gonna have, you know, cash flows and revenue annuities that last a really long time and on a through the cycle basis, even in the context of a short-term forecast for you know, rising charge-offs and delinquencies. When we look at those things through the cycle, they still create a lot of resilience and a lot of attractive returns over the long term, in our NPV models come back with you know, very attractive net present value. Let me sort of unpack that a little bit. First, we're seeing pretty strong growth from existing clients, as they build balance. These are clients that we, you know well and, you know, have a pretty good handle on credit risk. In the new originations, you know, we're having the most traction in our marketing spend generating new account relationships. Where we think the customers are at the riskier end of the credit spectrum, we originate them with lower lines. That mitigates you know, some of the credit risk. We're also seeing, spend levels, you know, kind of slow down and moderate a little bit, which we think is a good thing. It's evidence of rational consumer behavior, you know, against an uncertain backdrop, for the economy. If you look at new originations spend growth, it was about 10%, and that's down from sort of high teens, 20% that we saw sort of a year ago. If you look at it on a proactive account basis, it's actually relatively flat and in some segments down a little bit. The entirety of our spend growth on the portfolio is driven by spending on new originations. Spend per account is moderating, which we think is a sign of a healthy consumer and a rational consumer. When you put it all together, you know, we're pretty comfortable with the growth. There's an additional thing that's kind of everything I just talked about is kind of true in our history as well as at the present day. We're also a little bit more comfortable with growth at the moment because we've really transformed our technology. We're operating essentially 100% in the cloud. That enables us to have big data streaming in real time. That enables us to drive, our, in our core credit risk underwriting models, machine learning at scale. That allows us to, you know, Rich talks about how we're generally leaning into growth, but trimming around the edges where we find sub-segments of business that are performing less well than the rest of the book. With machine learning at scale, we can be a lot more precise and surgical about identifying the pockets of underperformance. Just to draw a very broad sort of hypothetical example, pre-tech transformation, we would have to sort of trim around the edges in, I'm just making up the numbers, sort of $25 million, $30 million, $50 million sub-segments. With the models and the technology we're employing today, we can sort of within a $50 million sub-segment that's underperforming, we can generally identify the $10 million of it that is the primary cause and shut that off and keep going with the other 40 sort of. So, you know, our agility, I think, and precision is in a different place. When, you know, when we talk about our growth opportunities being enhanced by technology, that's kind of what we mean. Got it. I guess on contrasting to the card growth, on auto growth, we've seen it actually slow each of the last 12. Mm-hmm. 12 straight months. you know, March, I think, was, you know, a, the slowest pace we've seen in 12 years. you know, I know you've talked about pulling back. I suspect there's a demand component. Just maybe just talk about you know, why the pullback? What would cause you to pivot and then maybe- Sure. Make it a little more aggressive? There is a demand component and, you know, that has to do with sort of, you know, vehicle inventories and the sort of relative confidence level of, you know, auto buyers. I think the bigger driver of our pullback by a wide margin is our own view that industry margins had compressed in a way over the last couple of quarters in a way that margin coverage for unexpected increases in losses is a key part of how we view resilience. We need to always feel comfortable that the margin is sufficient to absorb, you know, losses that might actually exceed what, you know, what we model. We found a couple quarters ago that credit unions as a whole, and if you sort of look at credit unions as a whole, that's a pretty significant share of prime originations in auto. A couple of large competitors that are, you know, in through near-prime and subprime auto as well. We're not, I think, passing along the rising rate-driven funding cost increases into the pricing, and we saw a sort of compression of industry margins that had us sort of move to the sidelines and pull back pretty sharply on originations. We always thought that that would be kind of a temporal impact, because even if you have a very simple sort of funds transfer pricing methodology, over time, it'll work its way into the pricing. We're seeing that happen. I think over the last few months we've seen some softening of the, well, I think softening's not the right word. We've seen some relief of the margin pressures that we've seen across the industry. That might create some opportunities for us to sort of come back into the originations market. However, while we've been on the sidelines, we've also observed some, you know, rising delinquencies and credit losses in the deeper end of subprime, which is actually below where we play in the auto business. In response to seeing those trends you know, below our current origination box, we've actually tightened it to try and keep some distance between where we do originate and where we're seeing the sort of credit pressures. Any re-entry into the originations growth trajectory would be, you know, I think tempered somewhat by the fact that we'd be re-entering with a tighter credit box. We'll have to see if the margin trends sustain in a way that, you know, makes us comfortable to come back in. Something to watch. You, you know, you mentioned marketing earlier, and while down in the, in the first quarter 20% in mid seasonality, was also down a little bit, year-over-year, while still big number at like $900 million. Yeah. You know, we've seen good count growth, good sales growth, and I suspect obviously that's driven by, you know, marketing spend. Mm-hmm. As you think about, you know, again, rising unemployment and the like, you know, do you kind of temper marketing? You want to just talk about just more in detail in terms of what you've been spending the money on, what you need to spend the money on in the future, and kind of just your thoughts around that in general? Sure. Marketing was down in the first quarter by about 20% on a linked quarter basis, which we attributed to sort of fairly typical seasonality. It was kind of flattish year-over-year. It was down like 2%. We hang on every dollar. Do we. One of the things I'd point out is that the first quarter of 2022 was a fairly elevated, you know, first quarter, because we had sort of continuing marketing spend after the prior fourth quarter launch of the Venture X card. One of the things that we spend marketing on is early spend bonuses. People who originated at the launch of Venture X in fourth quarter or the second half of 2021, their spend behaviors drove some early spend bonuses that were paid and ran through the marketing line item in the first quarter of 2022. And that's an indication that, you know, the year-over-year decline is off of a fairly high level. That's an indication that we're still leaning in, right, as opposed to thinking it dropped 20% in the quarter. That's a change in our view. It's really not. What are we spending the marketing on? It's largely driven by domestic card. Auto is less driven by marketing and, you know, card is actually more driven by marketing. And we're continuing to see, you know, as I said, new account growth and adding customer relationships that look to us like they're gonna create through the cycle value in the way that they generally have in the past. Where we're playing is, you know, we still have a focus at the very top end of the market with rewards products and customers that are heavy spenders. We're seeing continued traction and growth there and some, you know, share gains. Although we're, you know, our share is very small compared to the, you know, the share leader in American Express, but we're seeing some good growth there. We're also continuing to get good traction with credit card revolvers from the upper end of subprime up and through prime. The one place where we're not focused on is what we call high balance revolvers or credit card revolvers who tend to carry larger balances and just have higher, you know, debt levels. We're still sort of trying not to be in that market. Those, you know, lower balance revolvers and the heavy spenders at the top of the market are the places we've been playing and been getting traction for years. So there's no-nothing really new. We're still focused where we've always been focused and just, you know, enjoying you know, pretty strong new account growth and the spend and balance and revenue growth that drives that. Yeah. That focus on the top end of the market comes with more marketing expense because in addition to sort of the direct stimulus and response marketing, you have those early spend bonuses. We actually run through marketing the cost we incur to sort of create, you know, compelling top of the market experiences like our travel portal and Capital One Lounges in airports and so forth. So we're spending on things besides sort of direct marketing. There's a brand component. We have a really high performing brand in the US, which we are, you know, investing to support. Finally, we haven't talked about deposits yet, but our deposit growth, which has been really strong, is not driven by a large national branch network. In 80% of the country, we don't have branches, but we have a very robust national direct consumer deposit gathering franchise that's driven, you know, on the shoulders of our digital capabilities, where we have kind of a full service deposit offering, but it's marketing driven. You know, some of our brand spend and a fair amount of marketing goes to growing our deposits as well, which is, you know, a great franchise that doesn't have anywhere near the complexity or fixed cost of a national branch infrastructure, but is, you know, relies more on marketing to drive growth. For all those reasons, you know, our posture is still mostly leaning into marketing. And, you know, the thing that would change that, Jason, is if our assessment of the opportunities or the risks, you know, changes, and we look at that on a fairly real time basis. Jeff, I guess you touched on deposits, which is, you know, obviously one of the topics. You guys have been an outperformer there... Mm-hmm. You know, in terms of growth and obviously a very differentiated model as you alluded to, just given the digital franchise you've put together. Can we just talk to in terms of, you know, what you're seeing there, in terms of competitive landscape, in terms of deposit pricing, are peers maybe getting or other players getting more aggressive just given the clamoring for liquidity that we've seen from some of the regional banks and kind of just what your expectations for just how that ties into your outlook for net interest margin in general? Sure. I'll just pull up and talk a little bit about our kind of philosophy and strategy on the, on the deposit side. you know, way back when we were a entirely capital markets funded, you know, monoline, and we transformed ourselves into a deposit funded sort of balance bank, as you know, over a period of several years in the early part of the 2000s. our quest was always to really drive retail deposit growth. In our view, that was always the sort of holy grail of deposit funding. We were less focused on building commercial deposits. They sort of came along with some of the bank acquisitions. I'll talk about commercial, you know, just for a second. It's a bit of a digression, but commercial deposit balances actually shrank about 6% from the linked quarter. That's mostly on purpose. We're sort of proactively reducing some of our larger commercial deposits. We also saw some business as usual spending by our deposit clients on the commercial side. The very thinnest of slices, almost a de minimis impact in the aftermath of SVB and so forth. We saw, you know, a couple of large accounts move their deposits to one of the money centers, and that was offset by some deposits that came to us from smaller banks. Essentially all of that sort of shrinkage on the commercial deposit side was more business as usual and not related to the SVB aftermath. In contrast, on the retail side, we saw really strong growth. That, you know, is essentially driven by the continuing traction we're getting in our digital national banking strategy. We have limited physical presence across 80% of the U.S. geography in the form of these Capital One Cafés to really sort of showrooms for physical showrooms for what you can do digitally. They don't take deposits or disperse cash. There are no tellers, there's no vault. It's really more of a carrier of the brand in places where we don't have physical distribution. We've built a national banking platform where you can do sort of 95% of what you do in a bank branch, you can do digitally with us. We've driven a brand and a really simple and compelling digital customer experience, and the lion's share of our deposit growth is through that sort of national franchise that's kind of a digital bank on the shoulders of our technology transformation. That's mostly a liquid savings product. We saw continuing traction there that it's been many, many quarters in a row that we've seen, you know, good growth in that, in those deposits. In this quarter, sort of by coincidence, because it happened earlier in the quarter, we also had a couple of opportunistic deposit growth offerings that were more sort of one-time limited time offers on CDs that got some good pickup. You know, that enabled us to sort of go lighter on capital markets funding, go very light. As a matter of fact, I think we did zero sort of brokered CDs in the capital markets. It allowed us to sort of, you know, have differential pricing on the sort of existing portfolio of deposits. The combination of continuing traction in that digital franchise and some opportunistic plays we made early in the quarter, you know, drove the retail deposit growth and also drove a two percentage point increase in our proportion of insured deposits. About 78% of our total deposits are insured. You know, we've given the heritage I talked about, you know, being born as a capital markets funded monoline, has always given us this sort of belt and suspenders approach to liquidity management. That put us in a really strong position for the events that, you know, happened in the industry in the aftermath of SVB. Wasn't by accident, but was not in response to the recent turmoil. It's just kind of the philosophy we've managed liquidity with all along. You asked about NIM. You know, we're carrying sort of excess cash at the moment, which feels like the right call. We're not going to sort of aggressively manage that down, but I expect that the sort of excess cash levels will diminish a little bit going forward, which could provide some NIM upside. You know, our on the asset side, most of our growth these days is in card, which is another positive for NIM. On the other hand, you know, we're in this sort of rising rate environment that puts, you know, pressure on the funding cost side of things. As our credit metrics continue to rise, if they do, we'll do more revenue suppression. You know, if we think that fees are uncollectible, we suppress that revenue. There's a couple of headwinds and a couple of tailwinds. You know, in any given quarter, it's a little bit of a race to see whether the headwinds, the tailwinds win out. We'll see, you know, that'll drive, you know, the trajectory of NIM. I guess when I think back to the financial crisis, and since then you've dramatically improved your funding. You know, coming out of that, you acquired, you know, North Fork, Hibernia, Chevy Chase, and maybe some others. Kind of this go around, we see kind of other regional banks struggling... Mm-hmm. Valuations under pressure. You know, would additional bank acquisitions be something you'd kind of reconsider given where valuations have come in? Just, you know, maybe just kind of your overall thoughts maybe on the current landscape for regional banks? Yeah. You left out one of the most impactful acquisitions in the aftermath, which was ING Direct, which is the, you know, the core of that digital national deposit franchise that I just talked about. In the current moment, it would surprise me a lot if we were interested in acquiring regional banks. We've been pretty clear for a long time that that's not really on our radar screen. We don't think the future is adding more branches. We don't think the future is, you know, adding bank franchises that come with a bunch of assets that we're probably less interested in. You know, I think our acquisition focus, such as it is kind of really much more on smaller sort of technology-oriented companies that can enhance our tech journey. maybe asset portfolios and businesses that we know well. You know, I really don't think we're very interested in acquiring more banks, you know, even in the current environment. Had to ask. I guess you are a Category III bank. Yep. There's certainly been a lot of, you know, talk about potential changing, you know, the regulatory backdrop, you know, with respect to capital. Just maybe talk to, you know, your kind of how you're thinking about, you know, potential regulatory changes, tied to recent events and just overall thoughts around capital management in general. Sure. On the regulatory front, I think, you know, we're kind of expecting the ability to opt out of including AOCI in the CET1, you know, regulatory capital ratio is, it's likely to go away. We're thinking that Category III and maybe Category IV banks probably will, you know, be subject to the total loss absorption or TLAC, you know, debt requirements. We're actually in a pretty good spot for both of those potential regulatory changes. If we netted out AOCI as of the end of the first quarter, our 12.5% CET1 ratio would have been something like 10.5%. That's against our long-term sort of self-imposed long-term target of about 11%. you know, in a quarter where we had a $1.1 billion dollar allowance bill, we still accreted 30 basis points of capital. Being 50 basis points off our long-term target is, you know, within spitting distance and feels like we're in pretty good position. On the TLAC front, just kind of as a matter of coincidence, we converted a couple years ago to issuing our fixed income debt essentially out of the holding company with terms and conditions that happen to meet TLAC requirements. I don't think we'd be in a place where we needed to do anything outsized or unusual to be ready for that. From a AOCI standpoint and a TLAC standpoint, we're in pretty good shape. You know, we're kind of waiting to see what happens to FDIC premiums. You know, we'll sort of adapt and move on, you know, as we see how that comes out. Then turning to how we, you know, think about capital. We've said for a couple of quarters now that the uncertainty bands around sort of where the world is going are just wider. Holding capital above our long-term 11% target felt like the prudent thing to do to be in a position to thrive across a number of potential outcomes. You know, that certainly hasn't changed. As a matter of fact, it probably feels more comfortable, you know, given the recent events in the banking industry. I would expect that stance to continue for a while. All right. I guess the share buyback has slowed a bit, so kind of expectations that's gonna be good for? Well, again, I'm not at liberty to sort of make a prediction or forward-looking statement, but I think running a little bit above our 11% target is probably where we'll live for a little while. Makes sense. Maybe just, you know, in February, the CFPB put out a proposal that basically forces banks to reduce, you know, credit card late fees. Yep. Maybe just discuss the importance of late fees. I know they do serve a purpose, and just kind of, you know, what you think the outcome here is and, you know, just how Capital One has historically adapted? Mm-hmm you know, changes in the environment like that. A philosophical point to start, right? We have a mission in Capital One to sort of change banking for good. When we think about our products and how we deal with our customers, the beacon we have is, you know, what if this were a product or a decision we were making for a product that was gonna, you know, that my mother was gonna have or my son? What, you know, what would we want that to be? It sounds a little bit counterintuitive, but we would want the credit card product to have a meaningful fee for going late on a payment because it's a really strong behavioral incentive not to go late on a payment. While it might feel good to sort of have a lower fee if that happened, the actual act of going late, damages your credit profile, limits your access to credit, raises the cost of that credit. It's a really bad thing for a consumer. Having a really strong incentive not to do that is actually a good thing. That's a pretty difficult argument to win in the court of public opinion. You know, we're thinking, you know, preparing for the eventuality that, you know, late fees will be reduced. I'm not sure if, you know, if the proposal will go through as is. We'll have to wait and see how that plays out. I think, getting to sort of the nuts and bolts of it, we would, we had about $2 billion of late fee revenue in the most recent calendar year, that would be, you know, at risk. There are probably ways that the industry would adapt to that, you know, potentially, looking at sort of other, upfront pricing mechanisms to, you know. In the aftermath of the CARD Act, industry revenue margins actually, you know, eventually found a place where their long-term equilibrium was at or a little bit above, you know, before the CARD Act. It would. It's not a situation where you shift, you know, switch something off and switch something else on. The different sort of revenue streams kind of feather in and out over time. I think we'd see some pressure on revenues, and I think we'd see some pressure on serving some of the populations that we serve today. Without the credit management lever of having a meaningful late fee, we would probably have to pull back from some of the segments that we serve today, which would unfortunately, you know, limit access to credit and probably, you know, raise the cost of it on average for a larger number of customers. All that said, you know, this is a change that, you know, we expect will come to fruition in some way, shape, or form, and we'll adapt to it and move on. Got it. Also maybe just against that and just some uncertainties. You know, you talked about an operating efficiency ratio, to be flat to maybe modestly down, in 2023 versus- Right. 2022. you know, you know, previously you talked about maybe a 42% figure longer term. Mm-hmm. You know, is that still a kind of a doable number? Just, you know, how do you think about managing expenses and maybe if some of these CFPB pressures come to fruition, are there kind of expense offsets to think about? Sure. I see we're kind of running out of time, so I'll try and make this a fairly brief answer. I think we've been focused on driving operating efficiency improvements for a long time now, and you know, over the last several years have reduced the operating efficiency ratio by a little more than 400 basis points, even while we were investing pretty heavily both in marketing and in our technology transformation. We were very confident at the end of the day that the investments in the technology transformation are really the engine of future long-term efficiency improvements, both because they drive revenue growth and because, you know, they allow us to sort of identify analog costs that we can take out, and there are a lot of digital productivity gains. While the expectation and the guidance for the current year is, you know, relatively modest, flat to modestly down, I do think that it is our intent that through continuing sort of technology advancements, we will continue to be able to drive that metric lower. I'm not fixated on a specific number, but I think the long-term destination is for improvement in operating efficiency, you know, for a while over the long term. It's an important part of how the economics of investing in Capital One makes sense, so it's something that we really intend to continue to drive. Perfect. Let's leave it there. Please join me in thanking Jeff for his time today. Thank you. Lunch will be downstairs.