Bread Financial Holdings, Inc. (BFH) Earnings Call Transcript & Summary

Again, good afternoon, everyone. I guess, good morning -- good morning, everyone. Thanks for joining us here. For those who I haven't met, I'm Mihir Bhatia. I cover consumer finance and specialty payment companies here at Bank of America Research. We welcome everyone to the conference. Thanks for making the trip for those who did. So next, we have Bread Financial. Bread Financial is a leading private label card issuer over the last few years. It has expanded its offerings to provide co-brand cards, proprietary credit cards and buy now, pay later loans. Over the last 3 years, Bread has considerably lowered leverage, built its capital ratios, as it has navigated through the reopening from the pandemic and various regulatory rules that we may or may not get into. So I'm delighted to be joined by Ralph and Perry, who are the CEO and CFO of Bread. Firstly, thank you so much for making the time coming to the conference.

Pleasure.

And I guess, welcome to the conference.

Thank you. Thank you.

So quite weak in consumer finance this year. So maybe like most topical, lots of conversation at this conference about the big merger, Capital One and Discover.

What are your initial thoughts? Does it impact your business in any way?

Yes. It was no doubt a surprise. I think it was a surprise in the industry, a surprise to analysts. I think it's more of a network play than a card combination play. From that perspective, it makes sense. I think it puts them in a position to really compete globally against American Express, having both sides of closing the loop, so to speak, in terms of transactions. I think from what I read it, we may face some regulatory hurdles, but I think they may be able to get through that. From our perspective, Capital One, more so than Discover, is a competitor. So we may see them kind of move up the chain and may be more opportunity for us to compete on unserved proposals that may be out there coming in a few years. A bit of a surprise.

Okay. So let's talk about Bread a little bit. In terms of -- what are you seeing right now in the environment? How is the consumer doing? How is your -- the typical Bread-cut consumer doing? Are you seeing anything? Maybe talk to us about what you're seeing on spending levels? What are you seeing in the deposit side through the quarter?

I think we've been saying this for a while, the consumer is self-regulating, himself and herself, right? So we see spend moderating. I think if you look across the industry, you'll see that acquisitions and spending is down. We certainly see that. January was -- the spend was down in January. It could have been weather-related, but we saw T&E spend down and restaurants down. That could have been weather-related. But we saw that trend continue into February. Our conjecture is inflation has still got -- still have an impact on spend. And even the wage growth is increasing, it still hasn't caught up to the pace of inflation. So we see the consumers are regulating and a bit soft spend.

I think the way it's going to manifest itself into the quarter is, as Ralph said, the first 6 weeks have been -- you've seen pressure on spend. We've even seen it more so on big ticket spend. And so when you think about big ticket spend, that's really where you look at merchant discount fee. So I think what we've seen from looking at consensus, I don't think that analysts have picked up the fact that that's going to have a lower first quarter merchant discount fee revenue in that category. So that's something we're watching. Obviously, we've signaled losses. Like January came at 8%, but we've guided to that mid- to high 8% loss range for the quarter, which means you can imply what February and March would look like and expect that to persist into the second quarter within the expected easing in the back part.

Sure. Let's dig in a little bit on that. You mentioned a couple of -- few categories, D&E restaurants, big tickets. So maybe talk a little bit about that more. What are the categories where you are seeing things particularly challenged even within like a big ticket? Like what kinds of -- you have lots of verticals. Are there particular verticals within that you're seeing it? Anything doing well?

Was doing well. I think we saw home improvement do well, and now that's declining a little bit in big ticket. Jewelry typically does well. Although it got soft in February, but jewelry particularly does well. T&E until January was doing okay. Where we see the biggest impact is really soft goods. That PLCC card is where we see the biggest impact in terms of regulating spend. If you think about our business -- and in 2020 -- late in 2019 and 2020, we were primarily private label, right? We were a private label card and that was our shop. If you look at us now, we're really a multichannel and multiproduct lender. And so although we see a slowdown, we are still capturing spend from a general purpose. 50% -- over 50% of our spend is general purpose spend. So as what we see a slowdown, we're still capturing that spend. That spend we wouldn't have kept in 3 years ago. We've gone to another product. So although it's slowing, we are capturing our fair share of spend that's out there.

And then before we move away from like this quarter-to-date, things you're seeing, just maybe touch on deposits a little bit. Are you seeing anything interesting happening on the deposit side?

Yes. We're going to approach $6.7 billion of deposits, which is great for us. It's a really good source of funding. And if you think again, where we were in 2020, we've had barely $1 billion of deposits. So over these last few years, we've built a good deposit base. Quite frankly, all of -- [ 95 ] from the FDI insured really very safe deposits. And we saw an inflow of deposits during the course of all of the issues with banks where they saw outflows, we saw inflows. And so we feel good about our deposits. We feel good about our pricing. And it continues to build for us and is a really good source of funding.

Got it. Then maybe taking a step back, big picture, 2024, you've laid out your guidance. We don't need to go through every number here, but just talk maybe, at a high level, where are the biggest opportunities you're seeing on that? Where are the biggest risks? You mentioned credit a little bit, right? I mean, obviously, you have an idea of like when. When do you need to see losses peak and start declining to get to your guidance ranges? Just generally about 2024, what are like some of the signposts analysts should look for through the year?

Yes. The signpost that I would look forward to start is the early delinquency formation. And right now, we're seeing delinquency entry rates at some of the lowest levels we've seen since pre-COVID. So that's a good sign. The next part of the sign we want to see are the roll rates, when consumers roll from one bucket of delinquency to the next, that those start to ease -- the pace at which they roll through is still at an elevated level. I think everybody in the industry is saying it's as high as they've ever seen it. So that needs to start to improve, and that will give the confidence that as you get -- and all that's fundamentally based on wage growth relative to inflation and their ability to have disposable income to pay their bills. I think, that with our credit tightening actions, it should allow that cresting to occur, hopefully in the second quarter, that then eases to the back part of the year. What happens with interest rates? Anybody's guess, I think, you hear everything from maybe there's still an increase to happen to 6 decreases. Who knows, but all that's going to play itself out. And so it's really going to be macro-led in terms of what would the back part look like.

So Perry, take the rest, I'll take a couple of the opportunities we have out there. So I think it's our -- and we've been doing it, but the ability for us to continue to build capital is a really nice opportunity for us in 2024. We're going to continue to invest in digital and technology because we feel that's exactly where we want to be, and it helps us with delivering a better customer experience and driving down our cost. We want to grow responsibly. I think that's a real opportunity for us to grow responsibly in 2024. And last, we've embarked on -- as good companies do, we call operational excellence, margin improvement. How do we continually improve our margins, embracing technology to improve things we do every day and become more efficient? Those are the real kind of opportunities as we look at. Pretty simple focus, focus on growth; invest, you got to continue to invest in this business, build your capital and focus on increasing your margin for the long term. That's how we think about 2024. Now nobody meant -- you didn't mention it, but the CFPB looms large. We're waiting for that to happen. We feel we've disclosed the impact on us in the first quarter, and we feel that we have plans to close the gap over time. It may not be 100% of the gap, but we'll close that gap over time.

So you mentioned the CFPB. We do that as the next question. But before that, I just wanted to touch on, this morning, you did -- you mentioned capital. This morning, you did put out a press release about the buyback. That's just offsetting dilution. Anything else on that, that we should keep in mind about the buyback?

No, I think the way to think about it, we're well positioned to take actions like that, right? Our capital is at a dramatically improved position from where it was 3 years ago. And we're approaching the targets that we've set out, and we'll talk more about that at our Investor Day. But we're real pleased with the progress we've made on capital. And as Ralph said, we expect to continue to build capital throughout this year. And I think the company is well positioned as it's ever been.

So let's talk about the CFPB. Big topic, big -- for investors, by far, the most questions we get relate to that. What's the latest your hearing in terms of timing? What are you...

Any day now.

Any day now.

Any day now for the last 6 months. But we think an educated guess because we have no inside information is that. It may be before the State of the Union. It was before the State of the Union last year. It's a good headline grabber. We may think it would be before the State of the Union, which is early March. So we think that might be coming out.

Okay. In terms of your business, right, on your call, you laid out 25% lower revenue. If it -- if the rule comes out in the fourth quarter, this year, year-over-year lower if it comes out as proposed, if the final rule looks like that. Talk a little -- firstly, let me compliment you a little bit for just being proactive in providing investors that transparency. I think analysts with investors really do appreciate that. At least it helps people start sizing things and thinking about what the path to recovery looks like. But let's make sure everyone's level set. How did you come up with that 25% number? What is included in that? What is maybe not included in that, that we should be careful not to over -- make sure it's not overly precise.

We appreciate you complementing us because we certainly wrestled with -- Ralph and I wanted to get it out there and we had to find the right moment and time to put it out there. And the catalyst event was our full year guidance. And -- so the way we looked at it is the best way to frame what the impact would be is to say what that would look like for the fourth quarter of this year, if you assume an October 1 implementation date, because we just published the fourth quarter of 2023. So at least give a comparable period. As we said, hey, we don't think it's going to really be effective until June of '25, it would be hard to give you a comparability. And so what's included there are, I'll say, some early mitigation actions that you start with some increasing pricing on new accounts or some things you're going to do on the back book to start to increase some things. There's not a lot in there on that front, but there's some. And then other fee things that we may be able to execute. But what's not in there are any negotiations that would happen with brand partners in terms of, I'll say, concessions on economics or framing programs differently because that's very active. Every partner is engaged with us, and we've talked about it's a partnership. They want to make sure that the programs are still viable, can be invested in that we can continue to underwrite and unlock credit sales for them. but it has to be at the right returns for us. So none of that is really built through yet, and that's part of the mitigation because many of them want to see the final rule to be put and rightfully so, get the final rule announced and then we'll start to pull on the levers that make sense for both parties. And then if they want to continue for us to underwrite as deep, there'll have to be some thoughts about how to go about that.

Got it. Now in your 10-K, that you published. You did mention you've already taken some actions. Talk about like the actions you've already taken and just -- and does that mean if the rule implementation gets delayed to June 2025, all the actions you've taken will reduce that 25% number?

I think that's a fair way to think about it is some of the early actions. And if you think about the graphic that we put out there again today, it's the time that it takes for the back book or the existing portfolio to reprice with APR changes because of CARD Act, the way payment hierarchy works, the first really part of payments go against the highest priced APR, which means it takes a while for the existing portfolio has a lower price to work its way back up. So the -- that's going to take time. So the more time we have to put on new accounts at higher APRs for the APR changes on the existing portfolio. But again, I'd say it was the first step in higher APRs. It has been put into place. I think the market has not figured out where that equilibrium point will be that will still allow for underwriting to, I'll say, the lower risk bands.

Some of the other mitigation ideas you mentioned has been things like putting credit access fees or maintenance fees, other types of fees effectively. Are there particular fees that, in general? Like I understand each negotiation is different. But are there -- when you think of these fees, what are you hearing from brand partners, right? Because I think from the traditional way, and I know it's not -- things are much more digital now. But the traditional way you've got a price label card was you got to the counter, you said the person offered you that, hey, you'll get this discount, if you do this card, get this card. And that's how you sold. But if you make that, hey, you will get this card, you have to pay a $50 fee on it, suddenly, probably has an effect on who gets the card. So are you hearing any pushback from brand partners on that aspect?

It varies, right? I mean nobody blinks at an annual fee on an airline card or a hotel card or certain ones. So some co-brands will start to have fees, but there has to be a value exchange that makes sense. And I think you said that, well, I mean, if you go to a counter and you get a $25 gift certificate for a $15 annual fee, that may be a trade you're thinking you might do. There could be monthly fees. And you think you've seen some introduce statement fees, well, it's a way to drive paperless as well. So you drive down your operating costs if they choose not to get a statement. So there's things to do like that. promotional fees used to be prevalent for big ticket purchases. You may see a reintroduction of that. But that probably won't happen until after the act is final. But there are all different ways to have mitigation, but it really will be brand-dependent.

And then I'll stay on this topic for a couple of more questions here just because it is so topical when we get so many questions from investors on it. So one of the pushbacks we've heard from investors on the mitigation strategy is, hey, if it was so easy to get higher interest rates. Why haven't they been charging it already? Like credit card companies are -- like to maximize returns and like they would have been charged if there was no pushback. So like, why haven't you been charging the rates -- higher rates already? What has been the holdback? Is it partners? Is it I guess can you tell us.

You want to stay competitive, right? So you want to stay competitive and that's important. You want to spend your competitive set, so you want to stay within that, in that set. Listen, here is -- here's the outcome of all of this, right? The 80% of people that pay their bills on time are now going to have a higher cost of credit because they got to pay for the 20% that don't, right? Those people that really need credit that we underwrote because we were willing to take a risk with a late fee, we will not underwrite them anymore. So people will pay higher cost for credit across the board. And those people that really need credit the most are not going to be able to get it. So from that perspective, I'm not sure what we solve here. I think with the CFPB talked about a cost to collect is erroneous. This is a cost to lend, it's of course to lend money and make that underwriting decision, not a cost to collect a late fee. That's an outcome of somebody having a late fee. The late fee is there to, one, help people kind of get trained to pay on time. And two, it's part of the economic equation, which the CFPB has now changed respectfully back to the back book. So for us, it's -- we're going to raise APRs across the board, as everybody else is, but we need to be on that competitive set, and that's how we'll focus on it. So I think yes, everybody could have raised APRs, right? But it would have been -- there was no particular outright to do that. Now this is a -- this puts a gap in people's P&Ls. And being responsible public companies, how do you close that gap responsibly? And this is a way to do it.

And if you think about APRs, it's all -- there's always been risk-based pricing, right? The best credit quality people pay lower interest rates usually because there's lower probably default when you underwrite deeper, there'll be higher interest rates. So I think you're going to see a normalization of equilibrium that's reached.

And then on the fee side, you're replacing -- I mean some of the fees you mentioned, you're effectively replacing late fees with some other fees. I can't imagine CFPB is excited when they see that or that was the outcome they would -- that was intended, if you will, right? Any concerns on that side? The regulators come in and say, "hey, wait, hang on a minute."

Well, again, we're banks, and their safety and soundness, you need to underwrite and get paid on the capital you hold. So there should have been an expectation that when they bang that drum that they're going to save the Americans; however, much in late fees that, that was going to be made back up in some other way by the banks, who are they're not going to underwrite. There's a zero-sum game. So it's not as if -- but yes, you want to make sure that we're not putting fees out there that are not within the norms, what's not permissible. We'll make sure of that. I think the industry, as a whole, you're seeing it. Annual fees are permissible -- promotional fees are permissible. Maintenance fees are permissible. So it's cost of credit, like Ralph said, it's a cost of lending. Okay.

I'll move on from CFPB to the other favorite topic, credit.

Credit, right?

So we talked a little bit about -- look, your full year guidance was 8%. That's up 50 to 75 basis, call it, year-over-year. You talked about it potentially getting better in the back half of the year. Are you seeing those signposts in the internal data that tell you that yes, it will definitely get better as you get to the back half of the year? Or are you still waiting to see the signposts?

What I said is you just used the word definite. So again, being incredibly...

Highly probable.

Highly probe. Look -- again, it's based on the macro, I'll say, outlooks that we're all consuming, right? The outlooks are assuming an improving period of lowering inflation in the back half of the year, declining interest rates if those things are held true, then that would be a tailwind to improving credit. As well, we're encouraged by the early-stage delinquency is -- the early formations are improving. So that says, okay, if that continues as a result of credit tightening that we've put in place, that should aid the back part of the year. I mean, there's some -- obviously, delinquency is already in the pipeline that's going to hit through second quarter where I gave you the commentary earlier that is going to remain elevated. But as we continue to tighten and the delinquency formation is lower. Again, so if the roll rates can maintain or start to improve, then you're going to see this go. And one thing we've all seen in prior cycles, you end up in this period of elevated losses, will it cleanse out the higher-risk folks? So that then means you have a period of time afterward where you get back closer to your through-the-cycle expectations.

Got it. When do you think you get to peak losses, would you be willing to take a -- like we got monthly data from you guys, right? So should we expect peak losses like March, April? Sooner or later, is that like a reasonable time to expect?

You're going to see a meaningful step up in February and March. February is going to have that average daily weighting going to the day-weighted calculation versus a simple average. But I think it's going to be in that time frame where you just said that.

And then the path to get to your -- your long-term guidance is below 6%, right? How do you get there? What needs to happen in the macro or in the book to get you there? Does something need to change? Or is it just literally a matter of, "Hey, we'll get through this period of elevated loss? Some things just get better."

Look, it's macro because -- and it's macro and resuming just normal growth, not outsized growth. But when you have normal growth, right now, we're also through responsible growth, putting on smaller vintages, that reduces your denominator of clean new loans coming in that increases your loss rate. You have -- so some of the loss rate that you're seeing an increase for this year is because we've contracted the book a little bit. When you get through the cycle, you're going to see the improving consumer, that the roll rates get better, early delinquency gets better, that brings you back down. And then you have normal business growth, coupled with the fact that we've continued to further diversify and the more co-brands, the product risk mix improves, it should be a nice tailwind to get back towards that 6%. It's a question just how fast because it's really about -- this is different -- every cycle is different than the prior one. So it's just -- what's the duration? And how does it cure?

Okay. And then just on CECL, right, reserve rate? Look your 9% reserve day 1 CECL reserve rate, I think a lot of investors, even when it was first released raised some eyebrows. Like it seems a little low for given what we heard from other companies and Bread's historical than ADS's historical loss profile. What's a reasonable rate that we should be thinking about a through the cycle? This is a reasonable -- like I imagine for you, you don't get back to day 1 CECL. But clearly, right now, there's some macro pressures, there's some elevated loss content, keeping the reserve rate higher. So how do you -- what's the delta we should be thinking about it gets back to?

Yes, I don't have a specific number in mind. But what I would say is that if you took the current portfolio construct and ran it through those economic assumptions, you end up with a lower -- your day 1 CECL. But with that original CECL number didn't maybe contemplate is downside scenarios that us being more conservative and responsible, I'll say, in some ways. You want to have a weighting of some downside scenarios that's sort of a risk overlay that you put back on it. So the question is going to be -- I don't think we've ever been were saying, boy, everything is just going to be blue sky. It's always going to be better. You take a full range of outcome. So the portfolio risk mix will really be a determinant of how much lower does the reserve rate go? And how fast does it come down? I expect that reserve rate to come down. As you're peaking and then coming down and the outlooks get better, we'll march our way back towards a lower number. How low does it go? I mean, heck, if we started to become a business that had 3% through the cycle losses, we'd be way below that. So it's really what is the resulting -- no, right? But what's the result in business mix a couple of years out?

Perry and I have had a lot of conversations about CECL. And my view is we are certainly adequately reserved for the present economy, right? So -- and I think that's where you want to be, right? So I, too, when I joined day 1 CECL seemed a little light to me. And Perry and I have gone through the process of saying, "We're not going to surprise investors, right? We're going to have -- we're going to be adequately reserved for the macroeconomic environment we're in." And I think that's where we are. And I think as environments change, we will -- we'll be thoughtful and deliberate and conservative in terms of how we move forward. And I think from my perspective, that's what investors should expect.

We've signaled, right? We expect the reserve rate to go back up in the first quarter, similar to what was previous because right now, you had a suppression that happened in the fourth quarter due to seasonality, expect it to come back up. And we're hoping not to see any material moves, but you -- again, we look at it, at the end of every quarter, you run the models, you look at the overlays and you end up where you end up.

Sure. Maybe switching gears to operating leverage. Ralph, since you've come in, you've invested a lot in digital. But right now, you do have some headwinds, whether it's the CFPB potentially, can pressure revenue a little bit higher charge-offs. Talk about balancing those investments versus delivering earnings for shareholders. And how much discretionary spending is there in the budget where you can pull back if needed?

There's -- I would say there's adequate discretionary spending in the budget. So we have our investment plan, we'll call it a book of work for the next 12 months. But there are opportunities to say if we don't see revenue coming in as we expected, there's a chance to make those investments a little later, delay them, move them a bit differently as we move forward. So we do have those levers. We're always focused on expense management, right? That's a key to us in terms of managing our noninterest expense closely and doing it in a thoughtful way. So we always strive for positive operating leverage, and we do have levers to pull. That said, not investing in this business is not an option, right? So when I first got here, there was limited investment in the cards business. And it was costly to jump-start that investment. We've got to consistently invest in this business moving forward or you're going to be behind your competitors. And right now, we feel our capabilities are where we want them to be with competitors, and we can't stop investing in that. We have -- we've brought in a good seasoned team to manage the thing going forward, but we do have levers to pull if we don't see the revenue coming in as we prescribed.

So moving to capital. Your capital ratios have improved very meaningfully over the last few years. We made a lot of progress over the last year, and I'll shout out Tom, who's sitting in the front row here for, I imagine leading that process and achieving it. But talk about the near-term capital priorities. What are you thinking of? One question we get a lot from investors, like Bread is the only credit card company or a large credit card company that's not doing a lot of buybacks rediscovers.

Our capital priorities haven't changed, right? It's paying down debt, clearly a priority for us. And I think we've demonstrated that. Building our balance sheet, which 4 years ago, needed a lot of building. And it continues to need some building, investing in the business and then ultimately returning value to shareholders. I think we've done a nice job building capital, at this point, I'll let Perry talk about it, too. But I'm not -- while we've done this buyback, it's maintenance and good housekeeping. I don't think we're in a position yet from a capital perspective to do a big buyback. I think we'll continue to -- our capital priorities, as I said, they were paying down almost 60% of your debt in 3 years of the parent, reducing your double leverage from over 2 to 127, and we'll be below that as we move forward. Our tangible book value is over 45. I think we're in a -- still in a bit of a building mode before we went out and did destroy some -- put capital towards a share buyback.

Yes. And the way you think about it is like we're probably in the eighth inning of our capital execution, right? You think about taking...

Top of the 8.

We took what? A $1.8 billion of capital. I mean, the valuation of our company, $1.8 billion pay down debt. So I think we're fixing the balance sheet for things that the prior administrations have done. We've built capital up from like a 3% TCE over 10%. So we have created and we increased our CECL reserve we talked about. All these things, think about the amount of capital generation we've had in the past 3 years to take those actions tells you, as we -- that's why I said the eighth inning, we're close now to getting our capital were to be another $100 million of debt pay down and just deal with the CFPB. We recognize that, but the capital generation is pretty powerful.

So we have about 7, 8 minutes left. So I'll ask one more question and then maybe open it up. Both of you came from large institutions. Talk about some of the things that surprised you when you got to Bread? But maybe in a good way, even and like areas where you saw you to make investments. Are there still gaps that need to be resolved that we should keep in mind as we think about the outlook?

Yes. So what surprised me in a really good way was the employee base, right? They were dedicated to really servicing the partners. And I think that's been -- I think that's been a brand image of ADS. They know how to manage partnerships. I think that's a really, really good thing. I think that's important, so that we have. The company had good bones. I think it kind of -- it kind of got -- the card business was being milked a little bit for the other businesses. So having us kind of move the other businesses off wards, it was a good thing so we could focus on this card business, which is a high return business. What we had to fix was being behind a little bit in digital. So we were behind a bit in digital. We needed to bring in some really -- people that really new, the unsecured lending business like Perry and others, that really know how to manage this business as well. One of the things that was interesting to me is I came from Citi and I ran their credit card business. I had a desk and a locker at Citi. When I came here, I had this kind of big office. And I say we're -- it's like we don't deserve that. We need to kind of rein in all the aesthetics of this business, and we've done that. And COVID helped us do that as well. But to me, it's -- I think that the attitude of the people to service their brand partners and their customers was palatable. The other thing to me, too, is they had a really good handle on managing risk, and in terms of how they underwrote because they underwrote a little bit deeper, but also how they manage the individual through the credit cycle, right? So from initial line assignment through collections, they had it down, better than I've seen at larger institutions.

Perry, if you want to go. I heard you mentioned responsible growth, which working at Bank of America I obviously heard lots of times. You mentioned that earlier, but [indiscernible] well right?

After a 33-year career at Bank of America and a predecessor company, you definitely learned a lot of the values of responsible growth. And how it's defined is different, right? And so when you talk about when I got to Bread Financial and saw the loss rates, my eyes popped, but then you realized, it's responsible is about getting the right return on capital and underwriting for profit, partnering well with the brand partners. And what I was most impressed with was that the sheer talent at the organization. Because I thought, hey, I'm trying Ralph as well, we've seen some amazing talent in the credit card space. And every bit is good and the grit they had, they wanted to work together. So it was really refreshing to see that, but being able to be in a company that's more nimble, we make decisions really fast. And you can't do that at a big, big company. So it's -- that's been, I'll say, empowering for the teams, and that's been great. Obviously, it was a bit shocking to realize the lack of financial services discipline that existed. And I'll speak for the treasury CFO organization, so we bought in seasoned professionals from the financial services areas, both as a Chief Accounting Officer, Treasurer, Corporate Planning. So to complement the team, and you're seeing that pay off now in the way we're executing the business.

So it's about 4 minutes. 5 minutes left. Let me -- if anyone has any questions or I can go ahead and ask my last one. No one?

Okay. So just the last question. Look, we've talked about various things, CFPB credit, all that stuff. What are you really focused on achieving in 2024? Like what are the 1 or 2 things that you think that if you get right, that's what's really going to drive Bread's returns long term?

I'm going to bore you with my answer, but I was a -- what it is. It's growing responsibly is key task, right? And managing through this macroeconomic environment and the regulatory environment, come what may, is critically important to us. We're going to continue to invest in digital, continue to invest in technology because that's the way forward in terms of making sure that we can service our customers well. And we are -- our cost base is in line. And lastly, operational excellence is critically important to us, where we're going to do things differently to improve our margins. That's our focus for 2024. That's where we're going to be. But it's more of the same. And we'll continue to be very transparent and very -- we'll continue to tell our investors. "here's what we say is what we did, and we'll continue to demonstrate that." That's important for us in '24.

Great. I think we can leave it there unless -- I think we'll leave it there. Perry, Ralph, thank you so much.

Pleasure.

Pleasure. Thank you.