Terry Ma

Rich detailed lead sharing, funding cost benefits and integration sequencing but did not quantify how much Brex investment sits in the run rate today.

Rich laid out the brownout mechanics, the migration timetable and confirmed marketing is already leaning into the Discover front book.

Rich gave comprehensive answer covering employment, spending, credit trends, and Persian Gulf risk. Noted delinquencies better than seasonal. Direct and thorough.

Rich detailed brownout factors: Discover's extended pullback, Capital One's revolver trimming, and tech integration timing before expansion. Brownout continues until card integration complete. On consumer: resilient fundamentals but elevated uncertainty. 2026 tax refunds expected higher from retroactive tax cuts, likely one-time credit benefit. Credit settling out after nearly a year of improvement.

Rich detailed three factors in growth brownout: (1) Discover's significant 2023-2025 origination pullback creating maturing small-vintage headwind, (2) Capital One trimming high-balance revolver pockets where Discover leaned more into revolving-oriented credit policy, (3) planned credit spectrum expansion above and below Discover's prime focus requires tech convergence first, creating timing disconnect between cutbacks and growth.

Andrew noted $1B Q3 repurchase was during final stages of capital assessment. $16B authorization provides flexibility. Pace will depend on capital levels, projected levels, and environment. Operating under SCB provides significant flexibility. Will step up from recent levels.

Rich deferred to his prepared remarks commentary on earnings power consistency. Did not provide specific updated return metrics or earnings targets. Expressed general bullishness.

Andrew explained they just got full access to Discover customer-level data and need to run models. SCB has fluctuated from 7% to 10.3% historically, so internal assessment matters more. No surprises found. Will step up repurchases as work nears completion.

Rich detailed three marketing pillars: customer growth via tech-enabled targeting and ML, heavy spender acquisition at top of market (lounges, travel portal, brand), and national digital-first banking. On subprime, noted subprime consumers cured faster post-normalization but tariff risks warrant vigilance.

Rich detailed new post-pandemic seasonality benchmarks with 35-40% less amplitude, noting delinquencies followed the new curve in 2024. Did not predict a specific floor.

Rich confirmed margins are normalized, credit score inflation is resolving, and they feel bullish about leaning into auto after years of pullback.

Wenzel tied the yield pressure to new-program onboarding (Walmart, Amazon, PayPal) rather than any fundamental change.

Wenzel explained payment rate not permanently resetting, driven by higher super-prime mix, lower non-prime share, lower promotional financing share, and new account payoff patterns. Higher tax refunds added 14 basis points to Q1 payment rate. Purchase volume accelerating with Walmart, Lowe's commercial building into H2. Consumer engaging with products.

Wenzel clarified biggest growth investment is reserves for new portfolio growth (Walmart, Lowe's, Bob's, RH). Expense components include launch costs, marketing for new accounts, nonexempt staffing. Increased capital spend in three areas: AI investment, cloud acceleration, and health and wellness expansion. All investments expected to generate operating leverage beyond 2026.

Wenzel confirmed slightly ahead of pace toward 75% by mid-2026 due to elevated payment rate accelerating protected balance paydown. Back end of curve less steep but will continue to bleed through. Paper statement fee has settled in and is relatively flat. E-bill adoption increasing which benefits expense line. Overall PPPC performance generally in line with expectations.

Wenzel explained lower delinquencies driving lower late fee incidence plus elevated payment rate from lower subprime mix offsetting PPPC positivity. Non-prime down 80bp YoY. Credit improvement is the good-news driver of the revenue headwind.

Doubles declined to confirm specific partner but reiterated no broad rollback plan. Same two modifications from last quarter totaling less than $50M already in outlook. Future discussions described as normal-course pricing reviews considering credit, value proposition, and competitive positioning.

Wenzel outlined three H2 NIM drivers: excess liquidity burn-off increasing receivables as percent of earning assets, continued PPPC yield build, and CD book repricing in Q3 lowering funding costs. Partially offset by lower credit reversals. On pre-pandemic 16% NIM, cited no structural impediments, path includes credit aperture normalization, rate normalization from 4.5% to closer to 2.5%, and PPPC stack.

Wenzel explained that lower purchase volume actually accelerates PPPC interest income build on existing book, though lower active accounts create headwind on other income from pay-for-service fees.

Wenzel explained comps ease in back half after record Q1 prior year, weekly sales consistent through mid-April with no generational shifts. Growth expected to accelerate in H2 following seasonal trends. Potential credit box easing not in base plan but possible if environment holds.

Wenzel didn't forecast 30+/90+ directly but cited entry rate favorability, improved late-stage collections, and less seasonal lift expected in Q1 2025.

Wenzel explained reserve rate slightly higher than expected due to denominator effect and quantitative model conservatism, but sees downward bias if charge-offs decline and macro improves.

CFO explained the 12-month amortization of repriced fees starting in January creates a roughly two-year lag before the refresh fully hits the P&L.

Le Caillec confirmed no VCE impact from commercial launches. Products will take time to flow through P&L. Squeri added the new products are more about capabilities than additional benefits.

Le Caillec said card fee growth will moderate in Q3-Q4 as expected, with the platinum fee increase inflection point coming sometime in early 2026.

Squeri said no changes to marketing budget or refresh pace, noting refreshes take months to develop and shouldn't be stopped once in progress.

Le Caillec explained Q3-Q4 acceleration driven by product refresh cycle will carry into Q1 2025, then moderate to mid-teens as the lapping effect normalizes.

CEO said in-school and refi loans coexist as long as prepayment speeds are priced in, and refinancing SoFi's own loans is fine.

CFO guided lending revenue up low-double-digits to teens with single-digit-billions balance-sheet growth and strong LPB demand.