Jeff Norris Stephen S. Crawford - Chief Financial Officer Richard D. Fairbank - Founder, Executive Chairman, Chief Executive Officer and President

Bradley G. Ball - Evercore Partners Inc., Research Division Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc., Research Division Ryan M. Nash - Goldman Sachs Group Inc., Research Division Kenneth Bruce - BofA Merrill Lynch, Research Division Donald Fandetti - Citigroup Inc, Research Division David S. Hochstim - The Buckingham Research Group Incorporated Moshe Orenbuch - Crédit Suisse AG, Research Division Bill Carcache - Nomura Securities Co. Ltd., Research Division Christopher C. Brendler - Stifel, Nicolaus & Co., Inc., Research Division Robert P. Napoli - William Blair & Company L.L.C., Research Division Betsy Graseck - Morgan Stanley, Research Division

Welcome to the Capital One Third Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Jeff Norris, Senior Vice President of Investor Relations. Sir, you may begin.

Thanks very much, Kevin, and welcome, everybody, to tonight's call. As usual, we are webcasting live over the Internet. To access the call on the Internet, please log on to Capital One's website at capitalone.com and follow the links from there. In addition to the press release and the financials, we have included a presentation summarizing our third quarter 2013 results. With me today are Mr. Richard Fairbank, Capital One's Chairman and Chief Executive Officer; and Mr. Steve Crawford, Capital One's Chief Financial Officer. Rich and Steve will walk you through this presentation. To access a copy of the presentation and press release, please go to Capital One's website, click on Investors and then click on Quarterly Earnings Release. Please note that this presentation may contain forward-looking statements. Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information, whether as a result of new information, future events or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward-looking statements. And for more information on these factors, please see the section titled Forward-Looking Information in the earnings release presentation and the Risk Factors section in our annual and quarterly reports, which are accessible at the Capital One website and filed with the SEC. Now I'll turn the call over to Mr. Crawford. Steve? Stephen S. Crawford: Thanks, Jeff. Let me begin with Slide 3. Capital One earned $1.1 billion or $1.86 per share in the third quarter, in line with the second quarter. Like last quarter, we have also included a reconciliation table in the appendix that shows non-GAAP deal-adjusted net income in the quarter of $1.3 billion or $2.14 a share. Pre-provision earnings of $2.5 billion were down $75 million from the second quarter, where they're entirely driven by a $101 million card litigation reserve captured in operating expense. Provision expense increased on a linked-quarter basis. Although net charge-offs were lower in the quarter, we recognized a smaller allowance release. We completed the sale of the Best Buy portfolio in the third quarter. In line with previously disclosed estimates, the Best Buy portfolio added approximately $166 million of revenue in the quarter, inclusive of the benefits of held-for-sale accounting. Turning to Slide 4, I'll briefly touch on net interest margin. Reported NIM increased 6 basis points in the third quarter to 6.89%, primarily driven by the simple math of having one additional day in the quarter to recognize income. Average interest-earning assets were down quarter-over-quarter, primarily driven by a partial quarter impact of Best Buy and expected runoff in mortgage loans, offset by growth in Commercial and Auto Finance. Total interest-bearing deposits were down quarter-over-quarter, driven by the decline in interest-earning assets. We now expect approximately $5 billion in total portfolio runoff in 2014, comprised of $1 billion in card and $4 billion in mortgage, lower than previously anticipated, primarily driven by lower mortgage prepayments. Turning to Slide 5, our Tier 1 common ratio on a Basel I basis rose about 60 basis points in the quarter to end at 12.7%. While strong earnings continue to be a key driver of our improving capital, this quarter's increase was also driven by a temporary timing impact. We realized the full benefit of the decline in risk-weighted assets from the sale of the Best Buy portfolio, but the offsetting decline in our capital level only included about $300 million of the $1 billion repurchase program. Tier 1 common would have been 12.4% if we completed the buyback by the end of the third quarter. We expect to complete the repurchase program in the fourth quarter. Turning to Slide 6. I want to spend a few minutes on capital, given the importance that capital allocation policies have to our shareholders and reflecting the fact that there have been developments since our last call. On Slide 6, we have attempted to lay out important details on the evolution in regulatory capital frameworks for the industry and Capital One specifically. I won't spend significant time walking you through the details, as many of you follow this topic closely, but let me focus on observations specific to Capital One. First, on Basel III advanced approaches, there's still work in progress industry-wide on the final implications for capital. As an example, some regulatory decisions regarding operating risk capital are still in flux. Capital One is 1 of 2 financial institutions that will be subject to advanced approaches that is not already in parallel run. Reflecting the industry uncertainty in the very early stage of our multiyear transition to parallel run and eventual implementation of the advanced approaches, our estimates of Basel III advanced approaches capital ratios are and will be less precise than most of our peers, who are deep into parallel run already. Nevertheless, we continue to believe we are above our target of 8%. Importantly, we will not be subject to this capital framework for a couple of years at a minimum. In addition, we believe there will be ways to optimize our business as we come closer to having this capital framework apply to the company. Second, while Basel III standardized capital is not new, the rules were not finalized until July. In addition, September CCAR guidance indicated that Basel III standardized approaches will be included in the 2014 CCAR, which I will return to in a moment. As you can see on Slide 6, we estimate our pro forma fully phased in Basel III standardized Tier 1 common equity ratio to be 11.1% as of September 30. Finally, CCAR results will continue to play an important role in how we manage capital. The CCAR process and the Federal Reserve models are specifically designed to present -- to prevent reverse-engineering likely outcomes. In last year's CCAR, there was a large difference between our estimates and the Federal Reserves' estimates of capital levels under stress. That difference could be even larger in 2014 because in addition to modeling credit losses and pre-provision net revenue, it appears the Fed will also use its own assumptions in modeling balance sheet contraction. There will also be 2 primary benchmarks in CCARs this year. In addition to Basel I, CCAR will incorporate Basel III standardized capital ratios under stress. As you can see on Slide 6, we estimate our pro forma Basel III standardized Tier 1 common equity ratio, assuming 2015 phase in to be 11.7% as of September 30. So what does all this mean for our investors? Our own models for economic capital requirements and regulatory capital under stress, as well as our actual performance in the Great Recession, suggest we have substantial flexibility to return capital to shareholders and remain well capitalized. However, we need to take into account the real possibility that the Fed's modeling under CCAR will result in lower ratios under stress. In summary, risks and uncertainties related to capital allocation are higher today, but that does not change our view of our own capital strength and trajectory or our intent to distribute capital to shareholders. As we have indicated, we expect to request capital distribution in the upcoming CCAR process that, if approved, would result in a total payout ratio well above the industry norm of 50%. I'll close tonight with a brief comment on 2013 expectations and 2014 expenses. Consistent with our estimate originally provided in January of this year, we continue to expect 2013 pre-provision earnings, excluding extraordinary items, of approximately $10 billion. As mentioned in the second quarter, we may get there in a slightly different way. Both revenues and marketing expenses are likely to be a bit lower than original estimates. In addition to the roughly $100 million of nonrecurring litigation reserve additions booked this quarter, we currently anticipate additional nonrecurring expenses in conjunction with planned restructuring actions related to prior acquisitions and the inclusion of Beech Street in fourth quarter results. This would suggest our reported operating expenses for the year would be a little higher than $11.1 billion. For 2014 operating expenses, we have previously provided guidance of $10.4 billion. With the addition of Beech Street, our new guidance for 2014 is approximately $10.5 billion, excluding nonrecurring items. With that, let me turn the call over to Rich. Richard D. Fairbank: Thanks, Steve. I'll begin on Slide 8 with an overview of the Domestic Card business. I'll start with one noteworthy development in our partnerships business in the quarter. Yesterday, we announced the extension and expansion of our co-branded partnership with General Motors, as well as the launch of a transformational new product that will deliver great value to our customers. The General Motors partnership shows how a card program can be a true strategic asset for our partners, and it's a great example of the kind of opportunity we see in working with our partners. Turning now to the quarterly results. Ending loans were down about 1% from the second quarter. Excluding the planned runoff of acquired card loans and installment loans, ending loans were relatively stable compared to the second quarter. Ending loans declined about 13% year-over-year. Excluding the Best Buy portfolio sale and the planned runoff, the year-over-year decline in ending loans was about 3%. Reported purchase volume for the Domestic Card business was up 6.4% year-over-year despite the decline in loan balances over the same time period. Purchase volume on general-purpose credit cards grew 8.6% year-over-year. Looking below the surface, the trends in loans and purchase volumes reflect our strategic choices, which continue to focus on generating attractive, sustainable and resilient returns. We're avoiding high balance revolvers, and we're allowing the least-resilient parts of the acquired HSBC portfolio to run off. In contrast, we're seeing strong underlying loan growth in many segments, including transactors and revolvers other than high balance revolvers. New originations are growing, and we're seeing more opportunity to increase credit lines for existing customers, which should improve the trajectory of both the loan growth and purchase volume growth over time. We don't expect these improvements to result in overall Domestic Card loan growth until sometime around the second half of next year, as underlying loan growth will continue to be offset by shrinkage in the parts of the business we're avoiding. Revenue margin for the quarter was about 18.5%. Excluding held-for-sale accounting impacts, revenue margin grew from 16.8% in the second quarter to 17.2% in the third quarter. The quarterly increase in revenue margin, excluding held-for-sale accounting impacts, was consistent with expected seasonality. Typically, favorable seasonal impacts in revenue margin are highest in the third quarter. Noninterest expense increased by $78 million in the quarter, driven by an addition to litigation reserves, partially offset by a decline in marketing expense. On a sequential quarter basis, charge-off rate improved about 60 basis points to 3.7%. Third quarter losses were impacted by a onetime pull-forward of bankruptcy charge-offs on the acquired HSBC card portfolio, which was noted in our August credit release. Without this impact, losses in the quarter would have been 3.6%. Delinquency rate increased about 40 basis points to 3.5%. Domestic Card credit has been strong throughout 2013. Delinquencies and delinquency flow rates were exceptionally favorable in the first half of the year, which contributed to our low third quarter loss rate. We are now entering a period of seasonal increases in our credit card metrics. Delinquencies tend to increase seasonally, starting in the third quarter, and charge-offs start to increase seasonally in the fourth quarter. Our Card business tends to have more pronounced seasonal patterns than the industry. Over the next 2 quarters, we expect a temporary increase in delinquencies and charge-offs beyond normal seasonality. In July, we changed the number of policies and practices on the HSBC-branded card portfolio to align them with Capital One policies and practices. For example, we aligned minimum payments with regulatory guidelines, and we changed some billing and collections practices. We expect these changes to temporarily increase Domestic Card delinquency rate by about 20 basis points in the fourth quarter and to temporarily increase the monthly Domestic Card charge-off rate by about 35 basis points from December through March. To be clear, these estimated impacts are only one of the many factors that will drive delinquencies and charge-offs and are not meant as forecast for specific quarterly or monthly metrics. Looking beyond the short-term trend, we continue to expect that our focus on resilience and our strong credit risk underwriting will continue to drive relatively stable credit results at historically strong levels with normal seasonal pattern. Our Card business remains well positioned. We're delivering strong, sustainable and resilient returns; and we're generating capital on a strong trajectory, which strengthens our balance sheet and enables capital distribution. We expect these trends to continue as a result of the strategic choices we're making in the Card business. Moving to Slide 9. The Consumer Banking business delivered another quarter of solid results. Ending loans declined about $1 billion from the second quarter. About $1.4 billion of continuing growth in auto loans was more than offset by about $2.4 billion of expected mortgage runoff. Ending deposit balances declined by about $1.4 billion in the quarter. We have ample deposit funding in a period of relatively low overall loan growth, so we've throttled back on growth in some legacy Capital One deposit businesses. We continued to see growth in checking accounts across our digital and branch deposit franchises. We completed the successful brand conversion from ING Direct to Capital One 360. Customer satisfaction and attrition levels, deposit balances and new deposit originations have remained strong. Consumer Banking revenue was relatively flat compared to the second quarter. The revenue impact of declining loan balances was partially offset by an increase in loan yields. Higher loan yields resulted from higher estimated cash flows we expect to collect on acquired Home Loans portfolios, which we recognize as increased yield, as well as the favorable margin impact from Home Loans runoff. Noninterest expense increased $20 million in the third quarter, driven by operating expense related to higher auto originations and loan volumes. Provision expense increased in the quarter, driven by seasonally higher auto provisions and the absence of the onetime refinement in our Retail Banking allowance processes that had a favorable impact in the second quarter. The overall Consumer Banking charge-off rate remains strong at about 1%. Before leaving the Consumer Banking segment, I'll make a couple of observations about our Auto Finance business. As we emerged from the recession, we were able to grow and take advantage of the exceptional competitive pricing and credit trends. As the cycle plays out and our highly profitable back book runs off, these exceptional results have moderated. We expect that returns will continue to decline but remain well above hurdle rate. Auto originations were up about $225 million in the third quarter. Sub-prime originations are stable, while prime originations are growing as we capture additional prime share from our existing dealers. As you'd expect, more prime originations will add to the pressure on margins and partially offset the expected increase in delinquency and charge-off rates. On a year-over-year basis, Auto Finance charge-off rate increased by about 20 basis points, consistent with our internal expectations. As we've said before, we are now past the cyclical low point for auto credit. The industry continues to normalize to more business-as-usual underwriting, following significant tightening during the Great Recession, and we expect some softening in historically high used car auction values as well. As a result, we expect Auto Finance losses will continue to increase gradually from the historic lows of the past few years. We remain confident that credit performance will remain comfortably within ranges that support an attractive and resilient business. As you can see on Slide 10, our Commercial Banking business delivered another quarter of solid growth and profitability. Loans grew 4% in the quarter and 14% year-over-year, driven by growth in specialized industry verticals in C&I lending and in CRE. Revenues were up about 3% from the second quarter and about 9% compared to the third quarter of last year, driven by year-over-year growth in loan and deposit balances. Revenues grew despite increased competition and pressure on margins. Our charge-off rate in the quarter was 7 basis points. While the current very low charge-off levels are not necessarily sustainable, we continue to see lower levels of nonperforming and criticized loan balances, so we expect the credit performance of our Commercial Banking business to remain strong. While increasing competition, particularly in middle-market lending, may continue to impact the pricing and volume of new loan originations, we expect our focused and specialized approach to Commercial Banking to deliver strong results. For example, we've developed differentiated industry verticals in C&I lending, and we're focusing also on multifamily housing and have deep expertise in New York City commercial real estate. We're building on our existing strengths with the acquisition of Beech Street capital, which we announced in the third quarter. Beech Street Capital is an agency multifamily originator and servicer with deep management experience and top talent. The acquisition expands and enhances our existing multifamily capabilities and product offerings, enabling us to better serve our customers and continue to deliver high-quality, resilient growth in a business we know well. Across our Commercial Banking businesses, loan growth, credit and profitability trends remain healthy. I'll conclude my remarks this evening on Slide 11. Our businesses continued to deliver solid results in the quarter. Capital One is earning very attractive risk-adjusted returns today, and we expect that, that will continue in 2014 despite the decision to exit the Best Buy partnership and the continuing runoff of acquired card loans and mortgages. But we believe there is room for improvement, and we remain focused on important levers that will sustain and improve our profitability. We're committed to tightly managing costs across our business. We don't view this as a one-off project. It's a focus in all of our businesses and in every budget cycle. Our credit results are strong, driven by longstanding discipline and underwriting across our businesses and our continuing focus on resilience. Growth remains a high priority for us but only in the context of preemptive focus on generating attractive, sustainable and resilient returns. Overall loan growth in the coming quarters is likely to be muted as planned runoff and other strategic choices we've made continue to mask stronger underlying growth in areas we're emphasizing, including Commercial Banking, Auto Finance and selected segments of the Domestic Card business. Finally, capital management remains an important part of how we expect to deliver superior and sustainable returns to our investors. We are executing our previously announced $1 billion repurchase program, and Steve affirmed our capital return expectations for 2014. Our capital and liquidity positions have never been stronger. Our businesses continue to deliver attractive and sustainable returns and generate capital on a strong trajectory. We're comfortable with our strategic footprint, and planned runoff frees up capital. All of these factors drive our current and planned capital distributions in 2014. We continue to expect that capital generation and distribution will be important parts of how we deliver shareholder value over the next couple of years and over the long term. And now Steve and I will be happy to take your questions. Jeff?

Thanks, Rich. We'll now start the Q&A session. [Operator Instructions] Please start the Q&A session.

[Operator Instructions] And our first question will come from Brad Ball with Evercore. Bradley G. Ball - Evercore Partners Inc., Research Division: I wonder if you could elaborate a little on your comment regarding expense efficiencies and targeted cost saves going forward. Steve, you mentioned $10.5 billion OpEx for next year. What's driving the improvement from the $11.1 billion this year outside of acquisition-related expenses? And then beyond that, what would be the magnitude of potential cost saves and where might they come from? Stephen S. Crawford: Sure, happy to take that. So you're right, we're at -- $11.1 billion is our forecast for 2013. If you think about some of the tailwinds we have, which we've talked about before, there'll be $100 million reduction year-over-year because of PCCR and CDI. We've got the $100 million legal settlement that we disclosed this quarter, and we've got about $150 million of integration expenses running through this year. If you subtotal that, it gets you to about $10.75 billion. But there's some other factors. Obviously, Best Buy leaving the system helps expenses, bringing on Beech Street hurts, and then we've also got to manage the inflationary pressures, regulatory investments, other business investments. So really, what that translates into is a few hundred million of real savings in 2014 to hit our target of approximately $10.5 billion. And the 2 areas we've talked about in the past are digital and third-party spend. But as Rich said, it's really across the business, across the cycle, hand-to-hand combat on a daily basis.

Our next question comes from Sanjay Sakhrani with KBW. Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc., Research Division: I got 2 questions, one on -- one is data and one is for Rich. Steve, maybe you could talk about the pretax, pre-provision earnings guidance. Is that pretty much unchanged for 2014? And also could you just help us with what the impact is for Best Buy to the NIM next quarter as it goes away? And then Rich, I was just wondering if you guys are seeing any change in the propensity for the prime or sub-prime consumer and card to want to borrow. Stephen S. Crawford: Yes, so there is no guidance for PPE in 2014. What we've discussed is an expense -- operating expense guidance. With respect to how Best Buy adjusts out, we actually provided a schedule in the first quarter of this year that is very on top of the actual results. And as I mentioned, it's about $170 million in revenue in the quarter, inclusive of held-for-sale accounting. But you can get even more detail if you go back and look at that schedule. Richard D. Fairbank: Sanjay, we don't see any sort of like quarterly trend in the propensity of prime or sub-prime customers to want to borrow. We've talked about the sort of the trend post Great Recession that has definitely seen very conservative bent with respect to borrowers, and this is matched by quite a conservative bent with respect to issuers as well. But it has led to, relative to the old days, some weakness relative to borrowing demand. But on the flip side of that, I think the way we keep in many ways getting surprised by how good credit is, is a reflection just of the conservatism of both customers and issuers, including Capital One, of course. But I think the industry is, and I think consumers are in a good place relative to the Card business. I think they -- they're cautious but they're -- I think they're stepping up their spending activity, and I think the card industry competitively is in a pretty stable place. And in the balance of growth in credit and all things considered, I think it's a pretty good place for the Card business, and I like how we're positioned with the things we're emphasizing and some of the things we're avoiding and running off to continue to build even increasingly high-quality business and to start sometime next year, really, net growing even beyond the -- some of the runoff.

We'll go next to Ryan Nash with Goldman Sachs. Ryan M. Nash - Goldman Sachs Group Inc., Research Division: Just 2 quick questions, one on Beech Street. You said it was net about $100 million across. Any sense of what -- how we should think about the revenue impact in 2014? And then just a little bit longer term, just thinking about capital, clearly, your -- the difference in your standardized and advanced, I think, it's on the upper end of where we are in the industry. And given that the tests are starting to -- the CCARs are starting to transition to a Basel III exam, how should we think about what's going to govern your decision to return capital over the next couple of years? Given that the -- you're not going to exit the parallel run until 2016, should we think about the standard approach as the binding constraint for your ability to return capital over the next couple of years? Or when do you think we should make that transition to advanced? Stephen S. Crawford: Yes, so the second question -- we'll come back to the first. The earliest we could enter -- exit parallel run would be first quarter of 2016, and I think there are banks that entered parallel run 4 or 5 years ago that still aren't out. So Basel III standardized, as I tried to mention in my comments, is clearly going to be the one for us to focus on for the foreseeable future. I'm sorry, the first question was? Oh, Beech Street. Yes, so importantly, I just want to make clear, what we did is we increased our guidance from $10.4 billion to $10.5 billion. That doesn't mean it was $10.40 billion going to $10.50 billion, okay? There is some expenses that pushed us closer to $10.5 billion. And as you would expect, with that size acquisition, we're not going to break down the income statement and tell you how that's going to impact the business line item by line item.

We'll go next to Ken Bruce with Bank of America Merrill Lynch. Kenneth Bruce - BofA Merrill Lynch, Research Division: Rich, you mentioned that you're seeing some additional -- or you're seeing pressure in the Auto segment in particular, can you elaborate that in terms of whether the competition you're seeing in terms of underwriting is becoming just really loose? Or what is it about that aspect of the market that is -- that concerns you and -- obviously, your originations in that sector have been up. So I guess, how are you thinking about either backing away or how do you think about just the loosening standards and some of the pricing issues that you've mentioned in past calls? Richard D. Fairbank: Yes. Well, Ken, we're pretty obsessive about -- and I appreciate your question. We're actually extremely obsessive about the issue of cycle management. And for all the talk we've done over the years of information-based strategies and -- to a segment of one really statistically predicting things, there is huge leverage, and we should never forget it in managing cycles. And we do it, both by looking at metrics but also thinking about the dynamics of competition and the nature of customer choices as well. So my big point I want to make about the Auto business is that it has moved from a lifetime best. And I really believe in our lifetimes, we probably won't see an Auto business with such a confluence of positives sort of happening over the last few years. It has moved from lifetime best toward, if you will, the mean. But it has certainly not crossed over the critical inflection point where you'll see us doing a lot of pulling back and raising red flags and that kind of thing. But the reason we're emphasizing it so much is just to make sure our investors understand this journey from lifetime best to still quite a good place in the Card business. Looking at sort of underwriting and pricing, because what happens is industries don't go to the mean and then beyond it, just all of a sudden that -- it tends to happen sort of one variable at a time. So just looking at the metrics here, on pricing -- I'll talk both about sub-prime and prime. In pricing, the margins are healthy but slowly falling but certainly have ample room for well-above hurdle returns. In prime, the pricing is tight but it's stable. And it's probably -- I think prime is pretty much at sort of an industry equilibrium, as a general statement, on the pricing side. The most critical credit metric is LTVs, and LTVs in both sub-prime and prime are stable and healthy. FICO scores and the choices people make and the types of loans people make at a particular FICO score is pretty stable in both sub-prime and prime. There is a loosening -- there's some loosening of terms. It's still -- the 72 months used to be kind of the outer bound in terms of terms, and there is some sizable growth of the 73-plus category, but it's still a minority of all originations and we're keeping an eye on that. But overall, I think what you're seeing is a business that we're still investing heavily, where we've been growing in and -- but you're also seeing a window into both our management of investors to show the dynamics of how portfolio profitability will naturally move but also to get our muscles developed for continuing to watch the dynamics in an industry like this one and all the others we're in.

We'll go next to Don Fandetti with Citigroup. Donald Fandetti - Citigroup Inc, Research Division: Yes. Rich, I was wondering if you still have the full infrastructure for private label that you inherited from HSBC. Just trying to get a sense on sort of what the commitment there is. I mean, are you out there talking with retailers in front of exploration of deals? And do you have the capacity and desire to take down a deal of decent size if it were to come about? Richard D. Fairbank: Don, we have both the capacity and the desire. One thing that was a real plus for us in the HSBC deal, although again, that deal was financially motivated, most importantly. The biggest strategic benefit of the HSBC deal was getting scale in the retail partnership space. And part of the problem if you don't have scale is when one goes out on marketing calls, not only are they saying, "Show me all your references" kind of thing, but also, a lot of times, people want certain capabilities that are too expensive to build one retailer or one partner at a time. So the private label -- we are moving our own partnership business onto the private-label platform from HSBC. It's a good platform. It's scalable, and we feel very good about that. We think they have a great list of partners, and we -- all the attention has gone to the -- our choice to move beyond Best Buy. But actually, we have a blue-chip partner list with Neiman Marcus and Best Buy and General Motors and a long list of retailers. And so we feel very good about that. We are absolutely focused on, in fact, growing this business. And as we've always said, this is an attractive business. It's not about just who can be the biggest but it's about selectively getting the best, the high-quality partners who are motivated to really build the franchise with a partnership deal and a contract that, in fact, can allow a win-win for both parties. So we are absolutely investing in this, we're very optimistic about the prospects of this, and we're happy to get on the other side of our integration now as we've pretty much finished now the integration with HSBC.

We'll go next to David Hochstim with Buckingham Research. David S. Hochstim - The Buckingham Research Group Incorporated: I wonder if you could just talk a little bit about any changes you saw in...

David, I'm sorry. It's Jeff. We can't hear you. David S. Hochstim - The Buckingham Research Group Incorporated: I wonder if you could talk about any changes you saw in cardholder spending over the course of the quarter. And then since the quarter, have you seen any impact? And then, could you just repeat, I'm sorry, I missed it, but how many shares did you buy in the quarter and what price? Richard D. Fairbank: David, I think cardholder spend patterns have been pretty consistent by our own observations here. Cardholder spending for Capital One and for the industry continues to grow at rates faster than overall retail spending. And so I would say it's more of a continuation of strength that we have seen on our portfolio. Steve, you want to -- the other question? Stephen S. Crawford: Yes. I told you we bought about $300 million. We're not going to disclose the price but there'll be additional information in the 10-Q about our repurchase activity.

We'll go next to Moshe Orenbuch with Crédit Suisse. Moshe Orenbuch - Crédit Suisse AG, Research Division: Kind of 2 somewhat related questions. I guess, you mentioned that you've had strong growth in the rest of the card portfolio other than HSBC and the runoff of a couple of billion this year net and $1 billion in '14. Seems like if you've had a couple of billion, $2 billion to $3 billion of gross growth and you're ending up with that, it just seems if you add that to the Best Buy portfolio that half of the HSBC assets will have been gone by the end of '14. Does that math make sense? And the second part of the question is, how do you think about your marketing spend, given now -- given that there's been that substantial runoff and then at the same time, you're at an inflection point where it appears that some of your major competitors, who had been shrinking, are now at least stable, if not starting to grow again? Richard D. Fairbank: So Moshe, with respect to the HSBC business and what is or has run off, we've given you a schedule of the run-off portfolio. What we call the run-off portfolio relates to the least-resilient parts of the business that we identified in advanced, and we have been running that off and that's running right on schedule. And then, of course, you have the Best Buy portfolio. But the -- beyond those very clear and calculate-able things, what I really want to share with you and -- is the dynamics within our portfolio and within our choices. Because when we say we are seeing a lot of growth where we are investing in the Card business, we are investing in the transactor space, we're investing in the revolver space and all places other than high balance revolver. And we're poised, as we get to the other side of our integration with HSBC, to continue to invest more in developing the partnership business. The -- but as we've said many times, our choice to avoid high balance revolvers is an important choice with respect to growth metrics because, of course -- when -- both with respect to the origination of customers who are high balance or the choice to take high balance customers we have and run them off. Those are pretty consequential with respect to asset growth. And our point that we've made consistently in these calls -- the calls are we point out the things that we're avoiding, and we're doing that with an absolute eye on resilience. But beyond those choices, the things we're investing in, we're seeing lots of success, solid growth and, in fact, I think some growing momentum that can give us a little bit more growth potential down the road.

We'll go next to Bill Carcache with Nomura Securities. Bill Carcache - Nomura Securities Co. Ltd., Research Division: Can you talk about the trends that you're seeing in peak loss rates across your card portfolio? And I guess, maybe if you could give a little bit of perspective just, absent a deterioration in economic conditions or a loosening of underwriting standards, what causes those peak losses to go up from where we are today. Any perspective on trajectory would be great. Richard D. Fairbank: Bill, it's sort of -- if I understand you, I'm struggling a little bit with the concept of a trend and a peak loss rate because we're at probably troughs of loss rates, if anything, everywhere across the Card business. But I think that -- I think we all should prepare over time for some regression to the mean in the Card business. However, I think that also that while intuitively we're at, and you can just look at pretty much all parts of our business, we were at historical lows in terms of loss rates in particular segments. This isn't -- I mean, I think also part of this reflects a new normal, a new normal reflecting the, frankly, more conservative choices that people are making in the Card business, ourselves included, and to a significant extent, enhanced by the conservatism that we see on the consumer. So intuitively, at some point, I think there should be regression to a higher level of losses in the Card business. But I think that our likelier outlook really is one of stability around this exceptionally strong credit position, and we all should internalize that, that a good part of that just reflects the power of conservative and rigorous underwriting by us and by the industry.

We'll go next to Chris Brendler with Stifel Brokerage. Christopher C. Brendler - Stifel, Nicolaus & Co., Inc., Research Division: So my question, Rich, is in the private label business. The CFPB, I think, originally quoted as targeting some of the teaser rate practices probably in a long time in the retail card business. And it sounded like from our discussions that you guys, in particular, were concerned about that and have gravitated away from that pricing strategy to one that's more fair for the consumers. My question is, do you think that, that provides an opportunity for you as some of the traditional private-label lenders aren't able to make that? And if you could give us any detail on the changes you've made to help offset the enormous benefit you see on the finance charges when a consumer lets the grace period expire. Richard D. Fairbank: Yes. Chris, I mean, I think it was certainly noteworthy, the CFPB's comments that they made regarding the private-label space. And I think like all the other places they are looking, they're going to very rigorously and comprehensibly evaluate practices. We've invested a lot over the years to put ourselves in the position of taking a pretty high-ground position and the conservative choices with respect to practices. Where the CFPB was focusing their commentary with respect to the private-label space, particularly the same as cash products, is something that while they -- that product exists in a few of our partners that we have, it is de minimis in its overall level at Capital One. It's a pretty significant and pretty widespread practice in the private-label space overall. So we'll have to see how that one plays out.

We'll go next to Bob Napoli with William Blair. Robert P. Napoli - William Blair & Company L.L.C., Research Division: Rich, you, I think, want to say -- what you said is you're comfortable on your strategic footprint. But with the capital you're generating, and I know you're returning and beginning to return and will be able to return a lot of capital to shareholders, but I just wondered if you are looking tangentially to that strategic footprint. One point you had an agreement to buy NetSpend years ago. So the prepaid space is an area where you don't have much of a footprint, the gift card space, merchant acquiring, some of these new-wave merchant acquirers like Braintree, which is acquired by PayPal or agreed to be acquired Square. I just wondered if with the capital you're generating and the card and payment space being as dynamic [Audio Gap] and I noticed a whole lot of Capital One employees at the Money2020 conference last week, what's your thinking about and what you're looking at tangentially to your current strategic footprint? Richard D. Fairbank: Well, with respect to, when you're referencing the acquisition space, our energy is focused on sustaining high returns and distributing capital. In the normal course of business, we look from time to time very selectively at opportunities like in partnerships and specialty commercial. There's obviously a tremendous amount of activity going around the edges of banking and particularly, in the payment space. We are heavily investing people who understand what's happening at the edges of that space and, most importantly, to prepare ourselves for digital leadership in the tremendously important area of just regular old banking. And so, to us, that's not a quest to go buy things. That's a quest to really be at the forefront and understand how that fast-moving space is evolving. Recruiting talent, a very, very extensive efforts to recruit native digital talent, not just banking people that happen to have worked in technology, and to make sure in this company that we can be digital and think digital and not get caught in sort of conventional wisdom in the business. So we have a lot of energy into it, but the energy is an organic energy and really focused on an imperative we have in the company to be a digital leader in a tremendously important evolving opportunity here.

And your last question this evening comes from Betsy Graseck with Morgan Stanley. Betsy Graseck - Morgan Stanley, Research Division: Two quick ones, one is on prepaid. Could you give us a sense as to where you are in your thinking about your prepaid offerings? Richard D. Fairbank: Okay, Betsy. We -- we're going at the prepaid space a little differently from some folks. As you know, we acquired the largest -- the nation's largest digital bank and the -- many of the products and the very, very simple checking accounts and the whole business model from that side of the house is very overlapping with the prepaid space, and we're generating our thrust into the space sort of on that side of the business. Betsy Graseck - Morgan Stanley, Research Division: Okay. And then secondly -- or separately, I should say, I just want to make sure I'm thinking about it right with the revenue margin. I know you're not giving a forward view on it. But if we remove the $170 million from Best Buy this quarter, we end up getting to revenue margin of about 17.5%. And I just want to make sure, is that a fair margin to use as base and then adjust from there for normal seasonality going forward? Richard D. Fairbank: Well, I don't want to necessarily bless your exact calculation, but let me just comment about the revenue margin. So first of all, as I mentioned at the outset, that the third quarter had a partial quarter's impact of Best Buy held for sale. So if you adjust for that, the underlying revenue margin is 17.2%, and this is up from the adjusted second quarter revenue margin of 16.8% and it's especially driven there by seasonality. If you think across a number of years about our revenue margin, in 2011, our revenue margin was around 17%. Then we brought in HSBC and we said, actually -- and they had a revenue margin around 17%. And adjusting for those purchase accounting impacts, in 2012, the revenue margin in card was around 17%. Looking at 2013, after adjusting for the Best Buy impacts and deal-related items, we end up with a revenue margin sort of in the low 17s, as the benefits from the removal of Best Buy's low-margin business are roughly kind of offset by some franchise improvements that we announced. In other words, taking some air out of the revenue margin for -- with respect to customer practices. Going forward, there will be, of course, many factors affecting the revenue margin. But I think in the -- the biggest puts and takes will really be the removal of the Best Buy portfolio that will benefit our run rate margins, all else being equal, because Best Buy's margins are materially lower than our portfolio average. And we, of course, have the impact of franchise enhancements that work in the opposite direction, as well as some runoff of the very highest-margin HSBC business that we bought. So that horse race is probably a pretty even race over time. So in some ways, the more things change, the more they stay the same, but we're not here to forecast revenue margin. I'm just giving you some the elements on how to think about that, Betsy.

Well, thanks, everybody, for joining us on the conference call today. Thank you for your interest in Capital One, and please remember that if you have additional follow-up questions, the Investor Relations team will be here this evening to answer them. Thanks, and have a great evening.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.