This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Dive Brief: Pay With Spire, a pay-by-bank provider offering merchants lower payments costs, on Thursday announced it has hired a former Fiserv executive, Jennifer LaClair, as its new chief executive. LaClair, who was Fiserv’s head of merchant solutions until December, said in an interview Wednesday that Spire sits “at an inflection point” in its growth as mercha ...

Core Insights - The "Magnificent Seven" stocks are receiving significant attention due to their market dominance and innovation, but investors should also consider opportunities in other sectors [1] Company Overview - Ally Financial has established itself as a leading digital bank with a durable success model [3] - As of December 31, Ally had 3.5 million deposit customers, marking the 17th consecutive year of growth [3] Financial Performance - Ally's retail deposits reached $144 billion by the end of the fourth quarter, providing a low-cost funding source for its primary lending product, auto loans [4] - The adjusted earnings per share for Ally surged by 62% in 2025, driven by higher yields on retail auto loans and lower yields on deposits, resulting in an expanded net interest margin from 3.27% in 2024 to 3.43% in 2025 [4] Market Outlook - Wall Street analysts express optimism regarding Ally's future, with a consensus forecast predicting a compound annual growth rate of 23.5% in earnings per share from 2025 to 2028 [6] - Ally's retail auto net charge-off rate was below 2% in 2025, indicating effective risk management, and the company processed a record 15.5 million consumer auto loan applications, reflecting strong demand [6]

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Group 1: Ally Financial - Ally Financial is the largest all-digital bank in the U.S. and specializes in auto loans, being the largest auto lender not owned by an automaker, with $144 billion in retail deposits [2] - The company has strategically exited non-core businesses to focus on auto loans, insurance, and consumer banking [3] - In 2025, Ally achieved record results, with $43.7 billion in originated loans and an all-time high for written insurance premiums, maintaining a 3.43% net interest margin [4] - Ally trades at eight times forward earnings and is one of the few major banks trading below book value, presenting a potential opportunity for investors [5] Group 2: Capital One - Capital One has seen a decline of about 12% in early 2026, primarily due to investor concerns over potential credit card interest rate caps and skepticism regarding its acquisition of fintech company Brex for $5.15 billion [6][7] - Despite these concerns, Capital One reported strong earnings with increases in credit card, auto, and commercial loans, and has a net interest margin of 8.26%, significantly higher than the average big bank [8] - The bank's valuation is approximately 10.6 times forward earnings, and the potential synergies from the Discover merger have yet to be fully realized, indicating a buying opportunity [8]

Core Insights - Navient Corporation (NAVI) reported fourth-quarter 2025 adjusted earnings per share (EPS) of 39 cents, exceeding the Zacks Consensus Estimate of 31 cents, compared to 25 cents in the prior-year quarter [1][9] Financial Performance - The results were supported by lower expenses and a slight decline in provisions for loan losses, but faced challenges from a decrease in net interest income (NII) and other income, leading to a nearly 10.8% drop in shares during early trading [2][9] - The adjusted loss per share for 2025 was 35 cents, wider than the Zacks Consensus Estimate of a loss of 6 cents per share, contrasting with the adjusted EPS of $2 reported in the previous year [4] - The company reported a GAAP net loss of $80 million for 2025, compared to a net income of $131 million in the prior year [4] Income and Expenses - NII declined 3.7% year over year to $129 million in the fourth quarter, missing the Zacks Consensus Estimate by 3.3% [5] - Total other income decreased 48.3% year over year to $15 million [5] - Total expenses decreased 34.2% year over year to $100 million [6] Segment Performance - Federal Education Loans segment generated a net income of $27 million, significantly up from $10 million in the year-ago quarter [7] - Consumer Lending segment reported a net income of $25 million, down 32.4% from the year-ago quarter [7] - The private education loan delinquency rate greater than 30 days was 6.3%, slightly up from 6.1% in the prior-year quarter [8] Liquidity and Capital Distribution - As of Dec. 31, 2025, the company had $637 million in total unrestricted cash and liquid investments [11] - In the fourth quarter, NAVI paid $15 million in common stock dividends and repurchased shares of common stock for $26 million [12] Strategic Outlook - The company is expected to utilize various sources to meet liquidity needs, including cash and investment portfolio, predictable operating cash flows, and potential issuance of asset-backed securities [10] - Strategic actions to control expenses are anticipated to support financials in the upcoming period, despite concerns over weaker NII [13]

Core Insights - Capital One Financial Corporation (COF) experienced a significant increase in net interest income (NII), rising 54% year over year to $12.47 billion in the fourth quarter of 2025, driven by loan growth, particularly in credit card loans, and strategic balance sheet expansion from the Discover Financial acquisition [1][9]. Group 1: Financial Performance - The credit card business remains the primary driver of NII, benefiting from strong consumer spending and elevated interest rates on card receivables, with period-end loans held for investment in the credit card segment increasing 72% year over year [2][9]. - The integration of Discover Financial's loan portfolio significantly expanded the loan base, contributing to the volume of interest-earning assets, while average deposits and total deposits grew modestly, and interest-bearing deposit costs declined, enhancing NII [3][9]. - Despite modest net interest margin (NIM) compression, the increase in loan balances, particularly in card loans, and higher interest rates on loans relative to deposit costs supported robust year-over-year growth in NII [4]. Group 2: Industry Comparison - Peers such as Ally Financial and OneMain Holdings are also navigating the evolving interest rate landscape, with Ally Financial reporting a 5.9% year-over-year increase in net financing revenues to $1.60 billion in the fourth quarter of 2025 [5]. - OneMain has shown a compound annual growth rate (CAGR) of 3.8% in NII over the past five years, with continued growth in the first nine months of 2025, focusing on a loan mix that aims for revenue sustainability [7]. Group 3: Valuation and Estimates - Capital One's shares have increased by 1.5% over the past six months, underperforming the industry growth of 3.5% [8]. - The company currently trades at a 12-month forward price-to-earnings (P/E) ratio of 10.62X, which is above the industry average of 9.51X [10]. - The Zacks Consensus Estimate indicates year-over-year earnings growth of 1.3% for 2026 and 21.6% for 2027, with recent revisions showing a decrease in 2026 estimates to $19.86 and an increase for 2027 to $24.16 [11][14].

Core Business and Performance - Capital One Financial Corporation's credit card business is a primary earnings driver, contributing over 70% of revenues through net interest income and interchange/fee income [1][8] - In 2025, the credit card segment's net revenues increased by 40.5% year-over-year, with loans held for investment rising 72% and purchase volumes improving by 27% [3][8] - Following the acquisition of Discover Financial, Capital One became one of the largest U.S. credit card issuers by balances, enhancing its scale and revenue potential [2][8] Recent Developments and Acquisitions - The company ended its card partnership with Walmart in May 2024 but has made strategic acquisitions, including a $5.15 billion deal for fintech firm Brex and the $35.3 billion acquisition of Discover Financial [2][9] - Other acquisitions, such as Velocity Black and ING Direct USA, have diversified Capital One's offerings beyond credit cards into retail banking and digital platforms [10] Financial Metrics and Projections - Capital One's net interest income has shown a compound annual growth rate (CAGR) of 13.4% over five years, with net interest margin expanding to 7.84% in 2025 [11] - The Zacks Consensus Estimate for 2026 and 2027 revenues is $62.77 billion and $65.44 billion, indicating year-over-year growth rates of 17.5% and 4.3% respectively [13] Capital Distribution and Shareholder Value - The company has a strong balance sheet with total debt of $51 billion and cash equivalents of $57.4 billion, supporting its capital distribution activities [16] - Capital One has restored and increased its dividend, with a recent hike to 80 cents per share and a share repurchase plan authorized for up to $16 billion [18] Analyst Sentiment and Valuation - Analysts have mixed views on Capital One's earnings growth, with the 2026 earnings estimate revised lower to $20.12 but the 2027 estimate revised higher to $24.26 [19][20] - The current price-to-book ratio for Capital One is 1.22X, indicating a premium compared to the industry average of 0.78X [21] Market Position and Competitive Landscape - Capital One's diversified customer base allows it to generate attractive yields while managing risk effectively [24] - Despite recent macro concerns, the stock has gained 9% over the past year, outperforming some peers but underperforming others [4][30]

Core Insights - An 18-month CD is highlighted as a competitive option for earning returns on savings without long-term commitment, offering higher interest rates than typical savings accounts while providing more flexibility than longer-term CDs [1] Best 18-Month CDs - Ally Bank offers the top-rated 18-month CD with a 3.6% APY and no minimum opening deposit requirement, with daily compounding interest [3] - Synchrony Bank provides a competitive 3.8% APY with no minimum opening deposit, but has a penalty of 180 days' simple interest for early withdrawals [4] - Marcus by Goldman Sachs features a 4% APY with a minimum deposit of $500, and early withdrawal incurs a penalty of 180 days' interest [5] - Limelight Bank's CD offers a 3.85% APY with a minimum deposit of $1,000, with daily compounding and quarterly credited interest [10] - Live Oak Bank has a 3.7% APY but requires the highest minimum deposit of $2,500, with a 90-day simple interest penalty for early withdrawals [11] - America First Credit Union provides a 3.95% APY with a $500 minimum deposit, and dividends are compounded and credited monthly [12] - Bank5Connect offers a 3.5% APY with a $500 minimum deposit, with a six-month interest penalty for early withdrawals [13] - Bask Bank features a 3.75% APY with a $1,000 minimum deposit, and early withdrawal incurs a penalty of 180 days' interest [15] - TAB Bank has a 3.87% APY with a $1,000 minimum deposit and daily compounding interest [20] - Bread Savings offers a 3.75% APY with a higher minimum deposit of $1,500, with daily compounding and monthly credited interest [22] Methodology for Best 18-Month CDs - The evaluation of the best 18-month CDs was based on over 300 data points, focusing on metrics such as annual percentage yield (APY), minimum opening deposit, and compounding frequency [24][25] - Accounts with higher APYs received more points, while those with lower or no minimum deposit requirements ranked more favorably [26]

Core Insights - Navient Corporation (NAVI) is set to report its fourth-quarter 2025 results on January 28, with expectations of a revenue decline but an increase in earnings year-over-year [1][9] - The company has a strong earnings surprise history, outperforming estimates in three of the last four quarters with an average surprise of 27.82% [2] Revenue Expectations - The Zacks Consensus Estimate for 2025 earnings is 31 cents per share, reflecting a 24% increase from the previous year [3] - Total sales are estimated at $133.3 million, indicating a slight decline from the year-ago figure [3] - Consumer loan demand remains strong, which is expected to positively impact the Consumer Lending segment, while the Federal Education Loans segment may face revenue pressure due to lower prepayment levels and subdued originations [4][9] Net Interest Income (NII) Projections - The consensus estimate for core NII is $133.35 million, representing an 8.6% sequential decline [5] - NII for Federal Education loans is projected at $45.3 million, indicating a 30.3% sequential decline, while NII for consumer lending is expected to rise by 6.5% to $104.4 million [5] - Servicing revenues are estimated at $12.5 million, reflecting a 3.4% decrease from the prior quarter [5] Expense Management - Ongoing cost-control initiatives are anticipated to enhance operating efficiency and reduce expenses in the fourth quarter [7] - Strategic actions, including the sale of certain business segments and workforce reductions, are likely to contribute to a further decline in operating expenses [7] Earnings Prediction Model - The Earnings ESP for Navient is -6.90%, indicating that the model does not predict an earnings beat this time [10] - The company currently holds a Zacks Rank of 3 (Hold), which does not favor an earnings surprise [10] 2025 Outlook - NAVI expects core EPS to range between $0.95 and $1.05 for 2025 [11] - The FFELP segment's net interest margin is projected to be between 55 and 65 basis points, while the Consumer Lending segment's NIM is expected to be in the range of 255 to 265 basis points [11] - Full-year loan originations are anticipated to be between $1.8 billion and $2.2 billion [12]

Core Viewpoint - Capital One's fourth-quarter 2025 results fell short of expectations, with adjusted earnings of $3.86 per share missing the Zacks Consensus Estimate of $4.12, despite showing year-over-year growth from $3.09 [1][8] Financial Performance - Adjusted earnings for 2025 were $19.61 per share, below the Zacks Consensus Estimate of $19.82, but improved from $13.96 in the previous year [3] - Total quarterly net revenues reached $15.58 billion, a 52.9% increase year over year, surpassing the Zacks Consensus Estimate of $15.37 billion [4] - Net revenues for 2025 were $53.43 billion, up 36.6% year over year, also exceeding the Zacks Consensus Estimate of $53.29 billion [4] - Quarterly net interest income (NII) surged 53.9% year over year to $12.5 billion, with net interest margin (NIM) expanding 123 basis points to 8.26% [4] Expense and Income Analysis - Non-interest income grew 49% year over year to $3.12 billion, driven by higher service charges and customer-related fees [5] - Non-interest expenses rose 53.4% year over year to $9.34 billion, attributed to increases in various cost components, particularly amortization of intangibles [5] - The efficiency ratio increased to 59.95%, indicating a decline in profitability compared to 59.75% in the prior-year quarter [6] Credit Quality - Provision for credit losses was $4.12 billion, a 56.8% increase from the prior-year quarter, with the allowance as a percentage of reported loans held for investment at 5.16%, up 20 basis points [7] - The net charge-off rate decreased by 14 basis points year over year to 3.45%, and the 30-plus-day-performing delinquency rate declined by 28 basis points to 3.41% [7] Strategic Developments - Capital One announced the acquisition of fintech Brex for $5.15 billion in a stock-and-cash deal, expected to close in mid-2026 [10][11] - The acquisition aims to enhance Capital One's position in the business payments marketplace, leveraging Brex's integrated platform [11] Capital Ratios - As of December 31, 2025, the Tier 1 risk-based capital ratio improved to 15.3% from 14.8% a year earlier, while the common equity Tier 1 capital ratio rose to 14.3% from 13.5% [9]