Capital One Financial Corp at Goldman Sachs U.S. Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : I think this is our 15th straight year of doing this and I think each one of them, we've actually started a similar way. Maybe let's start with the state of the consumer. You noted that we saw some softness or a period of time as the cumulative impacts of inflation weighed. Recently, we've seen things start to level off and signs of stability. So can you just start off with what you're seeing the consumer and how you think they're positioned as we move into 2025?

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : So maybe to build on that, you noted that earnings that credit performance has been consistent in seasonality and settling out. But obviously at levels above pre pandemic, I think you've been pointing to certain factors, lower recoveries, cumulative effects of higher inflation and rights and also this delar -- delayed charge of impact. As you look ahead, where do you think the card credit is headed? And how do you see these variables impacting your performance?

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : So maybe we'll get Jeff involved in the conversation a little bit here. So, the allowance rose for eight straight quarters as credit losses were increasing. Obviously, things have started to settle out. So the question is in a more stable macro, have we seen the peak in the allowance? And what will it take for it to actually start to come down? Unidentified Company Representative Thanks Ryan. So I have to start with a caveat, which is, we're never probably going to find ourselves in the business of calling peaks. But I think your recap kind of is the answer to the question. During the period of normalization that rich was just talking about when we saw you, charge offs and delinquencies worsening. We were making, additions to the allowance as we reached this place where we started to believe there was stabilization, but we weren't sure those additions to the allowance tended to level off. And then last quarter, when we had a much stronger conviction that the new seasonality was a real thing. And that we were in fact, in a period of stabilization, that sort of unlock the ability for a fairly modest allowance release. So if our conviction remains high, and if we continue to see the improvement trend in delinquencies that could provide an environment where we see some further releases from the allowance, but we'll have to see how those things play out. That's why we always encourage our investors and analysts to look at the delinquency trends because while there are a lot of things that go into the allowance, the macro and growth and so forth. The single probably most key indicator, the direction of travel for both the credit metrics and the allowance balance is probably delinquencies. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 7:20PM, COF.N - Capital One Financial Corp at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : So Rich, it's been about 10 months since you announced the Discover acquisition, which will hopefully close in the first quarter. Well, I'm sure you've been busy, working on getting approvals for the deal as you've had time to reflect on the decision to acquire Discover, does it feel any more or less compelling of an acquisition versus the announcement time and why? So

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : So, maybe to dig in a little bit further, I think in earnings, you talked about, you now expect to hopefully close in the first quarter versus the prior expectation of late '24, early '25. Maybe just any update you have on things are progressing. How are you dealing with the issues that may have caused the delays and any sort of thoughts on the timing from here?

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : Got it. So, Rich, When you originally announced the deal, you referred to Discover's payment network as the Holy Grail. Can you maybe just talk about your aspirations for the network? I know you talked about your, your hiring experts to learn about it. Do you have any sense of what type of investment it's going to require? what are the different strategies you might consider to build out the network and is the end goal to have all of your volume on the Discover network?

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : So, maybe I'll ask one for Jeff. That was a very, insightful answer. Rich, I guess. Obviously a lot has changed since the deal was announced. Maybe just any updated thoughts on economics deal, if they've changed at all. And how do you maybe think about destination returns or earnings power over time, Jeff or Richard? Well, I'll give you the hard one. Unidentified Company Representative Yeah, no kidding. I'll start a little bit with you what has changed, I mean, over 10 months, lots of things change. And in our initial deal model, we, took some great pains to sort of think through a wide range of scenarios when we made our estimates for synergies and so forth. So I think we're very much still within the ranges that we've thought about. And while, some things are coming in a little bit differently, some are coming in a little bit better, some are coming in a little bit worse and it's all sort of in a place where we're still extremely comfortable and confident with the estimates we made in the deal model. And when we get to the closing the deal will, provide appropriate updates at that point in time. And I'll let Rich talk a little bit about destination economics. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 7:20PM, COF.N - Capital One Financial Corp at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs & Company, Inc. - Analyst : I guess, maybe one last question, maybe. Once this deal closes, obviously going to be rich with excess capital, you've talked about closing somewhere around 14 and then managing down to 12.5, just maybe your updated thoughts and how you think about returning capital to shareholders over time? Unidentified Company Representative So, one sort of modest correction, I'm not sure that we'll manage down to 12.5, 12.5 was just the end result of the deal model. Our current long term target is still in the 11% range for CET-1. Until the approval process plays out, I wouldn't expect much change in our capital distribution strategy upon conclusion of the approval process. We will essentially be back on the stress capital buffer regime as a combined company, we would expect to do an internal sort of bottoms up stress test, and at that time sort of figure out what the combined company capital need is. But I think we're on pretty safe ground to say we're going to find ourselves in a pretty strong excess capital position. I think it's -- that served us well, it's a -- there's a level of prudence to that has served us well in through our history. And I do think that there'll be opportunities for us to sort of increase capital distribution at that point in time. I wouldn't want to set any particular expectation about how much or how fast. Other than to say that it's not lost on us that, generating and distributing capital shareholders is a long term part of our value proposition for investors. And I think that'll still be true as a combined company.