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

All right. Up next, we're pleased to have Bread Financial joining us once again. Bread's continued to execute on its strategy of improving its financial position by reducing leverage, building capital and managing credit in a challenging backdrop, continues to maintain a leading position in the private label business, and it should be well positioned to improve returns in the coming years. Joining us, we have CEO, Ralph Andretta, and Chief Financial Officer, Perry Beberman. Ralph is going to give us a short update on the company, and then we'll move to Q&A.

All right. Ryan, thank you, and thank you all for your interest in us. Before we get to Q&A, I'm going to just start to give a brief update, and then I'm going to turn it over to Perry to continue. And then we'd love to take your questions and all the questions. So if you go to the first slide, our focus areas have been consistent throughout the year, and we remain really at the forefront of our 2024 focus. Let me briefly discuss each of them. First, growing responsibly. Given the changing challenging macroeconomic landscape driven by persistent inflation, consumers have been moderating their spend and focusing on nondiscretionary purchases throughout 2024. This, coupled with our prudent credit tightening, has led, as expected, to softer loan growth for the year. However, by diversifying our products and adding quality partners, we've positioned ourselves well to return to long-term growth targets once macroeconomic pressures abate. Importantly, we're able to tailor our offerings to meet the changing needs of our partners and customers while delivering industry-leading risk-adjusted returns. Second, managing the macroeconomic and regulatory environment. Even with the change in the presidential administration in January, which is expected to be balanced on regulation, the final CFPB rule is still in effect, albeit it is in a stay in the court. But as a result, we continue to implement our strategies intended to mitigate the potential impact should that CFPB ruling go into effect. Third and fourth, accelerating digital and technology capabilities, and driving operational excellence. Our investment in our digital and technology capabilities are ongoing, and I'm really proud that we've been able to fund those enhancements as a result of our operational excellence efforts. For example, on our technology front, just last year, we saw nearly 30% of our applications and about $11 billion of spend come through our mobile app. More specifically, regarding operational excellence, our goal is four : one, improve the customer experience; two, enhance enterprise-wide efficiency; three, reduce risk; and four, create value. Overall, we expect to continue to generate strong returns through prudent capital and risk management. We are committed to driving sustainable, profitable growth and building long-term value for our shareholders throughout both dynamic economic and regulatory environments. If you turn to Slide 3, this reflects the outcome of expanding and diversifying our products and partners over the last 5 years. We now offer a fully integrated suite of products that consist of private label, co-brand, proprietary credit cards, as well as Bread Pay. Bread Pay is our installment lending and buy now, pay later platform. Together, these products have improved our company's credit risk and growth profile. Our expanded product suite has led to gains in consumers' wallets and more nondiscretionary spend, particularly as consumers have shifted their spending patterns, given macroeconomic pressures. Co-brand and proprietary represent more than 50% of our total credit sales, and we expect this ongoing shift in consumer and partner preferences to continue. If you move to the chart on the right, we are well diversified across our approximately 100 brand partners, with several partner additions in travel, entertainment and electronics, including AAA, Dell, Hard Rock Hotels, HP and the NFL. As a result of our business wins and partner growth, travel and entertainment is now our largest vertical from a sales perspective at 32% of total credit sales up -- that was just 10% in the third quarter of 2019. We also have seen measurable growth in the health and beauty sector and have become the partner of choice for many top brand partners, including Ulta and Sephora. Health and beauty credit sales have nearly doubled over the past 5 years to 19% of total sales in the third quarter of 2024. We are confident that our product and partner diversification provides stability and will help us achieve our long-term financial targets while delivering strong, sustainable shareholder returns. With that, I'm going to turn it over to Perry. Perry?

Thanks, Ralph. Before getting into the slides, I want to touch upon the monthly performance report that was released this morning. The delinquency rate was down 20 basis points month-over-month for November at 6.2% following normal seasonal trends, while the net loss rate increased slightly to 8.0%. As we mentioned in our third quarter earnings call and at another recent industry conference, the net loss rate was impacted by the customer-friendly actions we have taken for customers impacted by the recent hurricanes. These actions will result in a reduction to fourth quarter 2024 losses of around $12 million and will increase second quarter 2025 losses, elevating our net loss rates in May and June of 2025. In the fourth quarter, the November net loss rate benefited by approximately 40 basis points, while as previously disclosed. October also benefited by approximately 40 basis points. Moving to the slides, Slide 4 is one of my favorite slides as it depicts our durable profit margin, highlighting the financial resilience of our business and our ability to accrete capital even in challenging macroeconomic environments. This is a result of our focus on making responsible business decisions and our expertise in managing credit risk and profitability. In other words, we get paid for the risk that we take even during periods of elevated losses. Our PPNR margin for the last 3 years has been around 11%. That implies in any scenario where our annual net loss rate is below 11%. Our risk-adjusted PPNR margin would remain positive. Risk-adjusted loan yield is another metric we track that demonstrates how we are compensated for the risk we take. Our risk-adjusted loan yield is industry-leading at 18.9% on average over the last 4 quarters, with our closest peer trailing by approximately 380 basis points. We also prudently maintain a loan loss reserve substantially higher than our day 1 CECL rate given the current macroeconomic environment with a third quarter 2024 reserve rate at 12.2%. Finally, due to our ongoing credit tightening actions and more diversified product mix, we've been able to maintain a steady credit risk distribution over the past 7 quarters despite continued inflationary pressures. The percentage of cardholders with a 660-plus credit score is around 57%. We will continue to proactively manage credit to protect our balance sheet and drive profitability. Moving to Slide 5, another one of my favorites and may actually be my new favorite, you can see the significant progress we have made in strengthening our balance sheet over the past 3 years. Our common Tier 1 capital ratio has increased 270 basis points since 2021 to 13.3% in the third quarter of 2024, reflecting the positive momentum toward our medium-term target of 14%. Over the last 3 years, we have reduced parent-level debt by 62% and continue to take steps to optimize our capital and debt stacks included the repurchase of the majority of our convertible notes that I discussed in our third quarter earnings call. Our double leverage ratio is now well below our target of less than 115%, and we anticipate that it will remain below our target going forward. We'll continue to opportunistically optimize our debt stack by paying off the outstanding $100 million bond stub and repurchasing available remaining convertible notes. Finally, our tangible book value of more than $47 per share has grown at a 15% compound annual growth rate since the third quarter of 2021. We are proud of the actions we have taken over the past few years and throughout 2024 to continue to strengthen our balance sheet. This progress, among other factors, resulted in improved rating outlook from stable to positive from both Moody's and Fitch just 1 year after our inaugural rating. In closing, Bread Financial is in a position of greater strength with increased capital flexibility and financial resilience, and we are committed to driving long-term value for our shareholders. Ryan, I'll turn it over you for questions.

Great. Thanks, Perry. Ralph, maybe I'll kick it off with you. So 2024 was characterized by rising losses and inflation, although there were several good things coming out of the company, a lot of which Perry just highlighted, strengthened balance sheet, new business wins. As you look ahead, what are the key areas you're focused on for Bread Financial as we move into '25?

Yes. I know I should have highlighted that. Perry got the good slides.

He took all the good stuff.

He got the good slides. I think going into 2025, I think some of the things we did in '24 are going to help us in giving us good momentum into '25. We continue to diversify our product set and our verticals. In fact, we added Saks, which is a great partner to have in 2024. We have added the Hard Rock Hotel that's a de novo, we're going to grow that. So those are really good kind of marquee -- good partners to add. Secondly, we can continue to invest in technology. We invested in technology in '24. Now our top 25 partners, probably as we exit this year, will be on our mobile app. And then as we enter into the beginning of next year, the rest of our partnerships will be on a mobile app. Just I think 4 years ago, we were digitally behind. Now we're digitally ahead. And even though Perry talked about it, this is a proud slide for me too, strength in the balance sheet. And now we're operating from a position of strength, right? Before, we didn't have a good balance sheet. We have a good strong balance sheet now. We're building capital. I think it's very important. And if I look at what we're going to do in '25, is what we did in '24. We're going to grow responsibly, right? We're going to grow at the pace that makes sense for us to grow, that's going to give us good returns. We're going to continue to invest in technology, I think that's important. Operational excellence has put some wind at our back from an expense perspective. The regulatory environment is still there, we're going to kind of manage that as well. So I feel those things are going to continue to focus on what's important and not take our eye off the ball and continue to do what we do, which is to methodically grow this business, manage expenses, strengthen the balance sheet. And whatever the regulatory come with may -- we'll manage it.

I spend minute if you're talking about what I'm sure is your favorite topic, is late fees. I guess given the election and recent court rulings, maybe just talk about what it means for your business and the overall late fees rule.

Yes. So I think a couple of things, right? So this new administration coming in, I think they're fair and balanced when it comes to regulation. I think that's a good place to be. By no means are they a pushover, I worked with them before, right? So they're fair and balanced. If it comes to late fees, it's held up in the court in Texas. But from my perspective, it's not disposed off yet. It's still there. So until we see the outcome of late fees, we'll continue to put our mitigation plans in place and move that forward. I think that's important. I'm proud of our organization because we rallied. Again, it was -- when late fees came out, that's the end Bread Financial, right? It was like when the pandemic hit, but the team rallied and focused on what we needed to do to mitigate the impact of late fees. We'll see where that goes. I know as much as everybody else does. But I think the -- if you read the ruling, it was -- on the merits, it's a good case.

Perry, how far along are you in the mitigation efforts? And can you remind us what some of the actions you've taken and the cadence to start to see these flowing through earnings?

Yes. As Ralph said, this -- the late fee rule is not completely resolved yet. I mean as of Friday, it sounds like -- and even this morning, I think something came out where the judge has requested briefings and those be submitted by December 23. And from what we understand, that will flow into probably the first quarter of next year by April, and then you got a period of time, maybe about 6 months or so for the judge might rule. So we're not expecting final resolution until back half of next year. Even then, there still could be appeals or whatever. So to your point, we've got mitigation in flight. We've been rolling them out in phases, whether it's APR increases, paper statement fee, testing, promotional fees. And this is rolling out in phases, as I said. So some partners are still going to roll out in the first part of next year. We're doing some coordination with the brand partners and making sure that it makes sense. Some brand partners wanted to wait until the final rule is resolved. So again, it's a phase-in. And some of the results, you'll start to see more so probably in the first, second quarter as they start to build and wedge in, in terms of impact.

I don't want to get too ahead of ourselves, but there's obviously uncertainty if the rule is going to ever go in, given the change in administration and as you said, the rulings from the court, how long do you think you can keep higher APRs? Do you think these will stick? And what do you think it will mean for what your margin trends over time?

Yes. I think over time, one thing that any of us have been in the business as long as I have, and I'm -- I've been here since 1988, so it's been a while, and Ralph, I'm not going to comment how long you've been in the business here, but it's -- you tend to...

Not as long as him.

We tend get competed away in some regard. So higher APRs could be here a little longer if rates stay higher. But often, it's a competitive marketplace. And what will happen is some of this may get reinvested into the programs, into the customer value proposition or through whatever process competition comes and there's a way. Again, there's risk-based pricing, so people always think about higher interest rates on the top end. But there's everything in between for the better scoring customers as well.

Can we spend a minute, just give an update on the state of the consumer, how the environment is influencing and their spending patterns? And what you're seeing between different cohorts of your customer base?

Yes. It's -- Perry called it the K economy, and I tend to agree with them. So we're seeing stress at the lower end of the economy. People are -- moved their buying to nondiscretionary items, what they need to survive to live day-to-day. And we see that. But we see spend is -- it is not off the charts. It's moderately improving. Well, at the high end, you may see spend very healthy. So for us, our consumers are up and down the spectrum. And those at the lower end of the spectrum are moderately improving their spend. That's what we see. And -- do you want to talk about your K?

So maybe to put a finer point on that, maybe just talk about how the holiday season is shaping up. What are you hearing and seeing versus brand partners? Any verticals in particular that are doing well? And in addition, maybe just -- we've seen 2 months of credit performance. Just any updates in terms of how the fourth quarter is...

Yes, why don't I start, Perry, and I'll turn it over to you. So I think this holiday season is really shortened for a couple of reasons. Everybody was focused on the election in the beginning, right? So you are focused on the election, you tend to -- that's where your focus is going to be. And then it's a shorter holiday season with Thanksgiving falls as opposed to Christmas. But we saw a moderate growth over Black Friday, Cyber Monday, nothing to kind of spike the ball out but moderate growth, and we saw some growth there. And we think because December is going to be consolidated, we'll see some -- spend will be okay in December as well. Areas where we're seeing spend, health and beauty, we're seeing spend there. Again, healthy spend there. We're seeing spend -- people now taking some discretionary spend away from my T&E and restaurants and really focusing it on, softer goods, clothing and jewelry and spend like that.

Yes. To stack on to where Ralph's going, I think you're going to see consumers continue to be value-oriented in terms of what they're looking for. And with inventories being less of a concern, I think you've heard from other retailers, have pretty good position on inventories; that means they're going to go back to what we probably all saw 5 years ago, which right as you get closer and closer to the holidays, better deals are there. And I think consumers are trying to make their budgets go. So we're seeing a very thoughtful consumer in terms of how they're trying to manage their budget. As it relates to credit, I think we're encouraged by what we're seeing in those early-stage delinquency. There's still pressure on the back end that we've talked about for the past couple of years and still looking to see some of that improvement come through. And hopefully, that starts to manifest itself as we work through next year. But as we've talked, I think just the nature of how we got here with the environment being from this compounding effect of inflation, something that's up 20%, and it only goes up 3% next year, okay, it was still up a lot, right? And I think that's the reality of what we're working through.

And anything else to highlight in the quarter? Or things are progressing as we expected?

Pretty much progressing as expected.

Got you. So you gave loan growth guidance for this year to down low to -- low single digits. I know we'll get specific guidance in January. Maybe just talk directionally about loan growth in '25, given the uncertainty. And what do you think will be the key drivers of this? And how will the tightening of the underwriting you've done factor into this?

Yes. I think when you think about -- we've pretty much given some directional guidance of what's going to happen in the first half of next year with losses still being elevated, kind of where they've been, that's a drag on growth, right? Because you have higher gross losses, that's 200 to 300 basis points above a normal -- through the cycle rate that we'd like to operate in. So that's still going to remain a tailwind that creates more of the same of what we've been experiencing, still operating in a pretty tight credit environment. Well, right now, I'd say we're tightening in some places, loosening a little bit in others, tweaking around the edges, you're not in that unwind mode yet. I do expect as we start to get partway through next year, you may start to see more unwinding. I don't expect to see dramatic tightening, but it will still be a gradual unwind as it really comes down to the health of the consumer coming through the applications upfront and are they -- do they have less leverage? Are they in a better credit position? So -- and then we'll start to reintroduce line increases. We see better payment behaviors. So through the back end of next year, that could help with loan growth. We do have a great pipeline. We've had some recent signings that will -- or de novo programs that will grow into next year. So I think as we look for the back end of next year, I definitely start to see the growth progressing as the economy improves.

Maybe let's just spend a minute on credit. I think you highlighted last quarter that you expect normal seasonal increases in the net loss rate, I think, from 4Q to 1Q. Second quarter is going to be impacted by -- you had 2 straight months of 40 basis points. So that will elevate the quarterly loss rate by maybe around 30 basis points. But are you -- help us think about losses, the trajectory over the course of next year. And what are your early expectations for '25?

Yes. I think it will largely follow normal seasonal trends, and I'm glad you called that out because it was one of the things I felt like we had to say something about the first quarter because a lot of analyst models had losses coming down off the fourth quarter, and there is a seasonal increase. So expect the seasonal increase. Hopefully, we can do a little better than what normal seasonal increases are, but it's going to go up from where we would end in the fourth quarter. And then second quarter, as you noted, will be impacted by the hurricane side. And then from what we're seeing with early delinquency formation, if things continue to progress, the new vintages we're underwriting have really good credit scores, and if the consumer health continues to improve and some of those, I'll say, the weaker consumers who are the ones charging off; you could see a path to that modest improvement as we work through the second half of next year. With some aid from loan growth as well that it's also -- you have the denominator effect that you're limiting right now.

Perry, when I think about this year, I think loss expectations into next year were a little low. And you've highlighted movements towards more seasonal patterns. When I think about where losses are today, they're, call it, 200 basis points plus above the 6% that you guys target. Now you've said many times, over the course of the cycle, there's going to be some years we're going to operate below it. In a period like this, we're operating above it. Can you maybe just talk about like what gets you back to that 6-ish percent loss rate over what time frame? And how do you think about what we need to see to get you towards that?

Well, I don't think we get there by the end of next year because this is -- this environment that got us to where we are now is it happens slowly over time from that persistent compounding effect of this prolonged period of inflation. And so to get out of this period of time, right, we've got a lot of consumers still dealing with that inflation in their households; it's going to take time for one, a prolonged period of wage growth exceeding inflation. I think everything that we're seeing right now says inflation may be around a little higher than -- we'll get down to that 2% target or below that next year. So that says it will take time for wages to outpace that to the point where consumers have rebuilt their balance sheets a little bit and have that breathing room in their own personal budgets. Us underwriting tighter like we've been doing, those vintages will start to stack on each other from what we did this year. And next year, that creates a better loss outlook. And I'd say also, continuing our expansion, as Ralph highlighted earlier, that's shifting more co-brand, the credit risk mix of the portfolios themselves and the business that we're building. So it's just a matter of time and the macro environment continuing to, I'll say, be benign and slowly cure.

You referenced a couple of times the tightening of underwriting, you've been doing it for several years now. I guess, are you continuing to tighten or loosen at all? What do you have to see to start opening up the buy box again? And just broadly, how do you think about the trade-off between receivables growth and tightening the underwriting box, just given you obviously underwrite to optimize, you're not looking to just grow or hit a certain loss?

Yes, we do underwrite to -- for profit. But what I'd say is we are not focused on a growth metric as a -- to determine how we would underwrite. That's just -- you want to be disciplined on deploying capital and make sure we get the right returns. What we need to see around to loosen underwriting, it's really going to be on a more macro -- micro view within the portfolio. You want to see certain cohorts, I'll say, sales of the populations where you're seeing good payment patterns, you're seeing things happen on their credit bureau, demonstrate some deleveraging, that they're healthy payments, hopefully, they have higher incomes relative to debt or their debt-to-income ratios. All of these things considered and a good economic outlook will give you confidence that you can start to then reintroduce line increases or when customers come in the door, give a higher line assignment back to what -- and/or approve more. So it's really -- it's not going to be an indicator that says, "Oh, it's go time." It's really going to be those customers coming in, in a healthier state and then demonstrating that strong payment behavior once they're on our books.

Maybe to just round up the discussion on credit before we head back to Ralph, I think you've talked about the year-end reserve rate being at or slightly below '23 levels. I guess, what gives you the confidence that it should start to trend lower? And what would it take for us to start to see us even more -- move that more lower end? And what do you think about as a more normal reserve rate for the company over time?

Yes. I think similar to our perspective on how losses and delinquency should trend lower over time, it's the earliest indicator you can look at, is delinquency. Now, again, we've been holding that reserve rate pretty steady for a couple of years now, it's -- you got to take out the seasonality and look through the seasonality and delinquency. But as you start to see that trend line really come down because that's the first input, right? It's your loan portfolio at a point in time runs through the model, it has structural delinquency in it and what the risk scores are. As that improves, the reserve rates have naturally come down with it over time. So it's not going to have this major step-down function where you're going to worry about us yoyo-ing back and forth. It's going to come down naturally as the portfolio health improves and we have more confidence in the macroeconomic outlook. And that's a key input because right now, I'm not sure any of us here would feel like we've got a high degree of confidence in what next year looks like, right? There could be inflation remains higher for longer, and that could be a little challenging for our consumer. But if that improves, great, I do have more confidence in the labor market remaining strong and stable. So that's a good indicator. But for our consumers, we've got to see that the inflation coming down. And I think you're seeing outlooks that now have interest rates exiting 2025 at a higher level than maybe what some had thought. We've been saying all along that we thought interest rates were going to be higher for longer. So all these things considered will say when this can come down. Where it exits, when you get back to that through the cycle number, probably not as low as day 1, all else being equal because that really didn't contemplate a downside scenarios in there. That said, but if we shift the mix of the portfolio materially below 6%, it could get back there.

So maybe shifting gears a little bit, Ralph, you talked about bringing on Saks, which was a $400 million nice-sized portfolio. Maybe just talk about what the opportunity set looks like for new business wins and organic growth. Which one is looking more promising at this point?

They all present promise. So if you think about just organic growth, deeper penetration and the partners that we have with the products that we have, that's an opportunity for organic growth. Then as we introduce new products and new technology innovation to really drive ease of use and acquisition, again, organic growth. And then the inorganic growth of new partners and even de novo partners that you can grow them. And Ulta was a clear example of a de novo partner. They were -- we started at 0, and they're one of our biggest partners today, and we grew them over time. So all of it presents a really good opportunity for us. And I think what I'm very pleased about is years ago, we would have to push our way into a into a pursuit. Now we're getting pulled into the pursuits, and people want us there. And what I love about this business is we're flexible and we're pretty nimble, where we can compete with the big guys like Bank of America and Capital One and we've -- and Barclays, and we've taken portfolios away from them. But also, those $100 million portfolios or those de novo portfolios, 5 or 6 of them becomes a string of pearls, right? You get them at a good price, ease of implementation, and you grow them, and you've got good partners to work with. So all of that gives me -- makes me optimistic as we move forward.

I was at a dinner last night and somebody referred to something as a string of pearls, I told him it wasn't his line. He was feeling [indiscernible].

So maybe just talk a little bit about renewals. You've given us lots of stats regarding how much of the portfolio is renewed through '26. Maybe just remind us how much is renewed. And given what's happening with both credit and the regulatory environment, maybe just talk a little bit about some of the emerging trends with renewals in terms of sharing of economics?

Sure. It's -- as exciting as winning new businesses, renewals, to me, is equally as exciting. So if you look at our book, 85% of our loans are secured through 2026. It's a big part of the book. If you look at our 10 biggest programs, 9 of them are secured to 2028 -- at the end of 2028. So you're talking about -- you look at almost the end of the decade, really good results from giving good service, new products, new technology, really good. The trends we're seeing as we look at things and pursue is like it's moving more to revenue share as opposed to basis points. I think that's what we're seeing. And when we go after something, we look at it, will it have an $8 late fee, will it not have an $8 late fee and make sure that the returns are accretive to our portfolio, as we move forward. You look at the returns, if you look at the loss rate, you look at the name of the partner, the marketing partner and you look at "do they have a following?" All those go into it. But I think we have a really good renewal rate and really good -- and you do that, you don't go out for RFP, you don't get panicky, you don't pay those loan prices, and it's a smooth continuation of business.

I want to hit on three more topics here. Maybe just first, you guys gave guidance for expenses down mid-single digits for the full year. Maybe just talk about how you're thinking about expenses going forward, it's positive operating leverage, the main goal. And how do you balance making the necessary investments in this type of revenue environment and still drive operating leverage?

Yes. Our goal is positive operating leverage. And that's how we start out each budget cycle, making sure that we can deliver on that. And one of the keys to deliver on that is obviously some nice revenue growth would be helpful. But in environments like this, you may not always work out that way if you're shrinking your assets a little bit because you're operating in a period of elevated inflation, but -- or elevated losses. When you work through this, it's having discipline, right, making the right investments along the way and focusing on investments that will produce fast return on that investment. So a lot of investments you make can create efficiencies. And if you focus on those first, that creates yet yield savings that then it allows you to fuel the next investment. And that's what we've talked about, is we initiated a program called operational excellence, [indiscernible] that flywheel. It starts to kick off tens of millions of dollars of benefits that you can then reinvest into more tech. But the whole goal is to self-fund the investments that we need without having to have these step-up functions in our expenses. So we're very mindful and thoughtful of, like I said, starting with positive operating leverage, making the right investments that deliver the right returns, the right values for our customer service, for brand partners and what they're looking for and give better experience to all.

You spoke in the slides about the progress you've made both on growing capital and paying down debt, being below your target leverage level. And you talked about -- you wanted to take care of some of the parent debt. And you recently announced the $25 million, I guess, true up to the buyback. What's next for you with capital? And when do we get back to returning capital on a more sustained basis?

Hopefully, sooner rather than later, but we stuck to our capital priorities, right? We still have to take care of some of the debt. We still have 65 basis points of a CECL phase, and that will happen in the first quarter. We need to support profitable growth. We still need to get to those targets that we set out with 16% total company, the 40% tangible common equity. So that's what we're striving for. And when we clear those, we're certainly going to have a lot more flexibility around return of capital. If there aren't terrific growth opportunities in front of us, we'll do the right thing for our shareholders.

So Ralph, when you were here last year, stock was trading at a meaningful discount to tangible book value. And I think you said that we should be trading at a multiple of tangible book value. I apologize if, I'm misquoting it. Well, the stock has now made -- it had a great run, made its way well above -- above tangible book value. And it feels like we're entering into an environment of a little bit more clarity on the macro and a little bit more clarity on the regular inventory environment. So given how well the stock is done, what are you telling investors to get them excited about owning the stock right now?

My wife and kids are asking the same questions.

[ And I can do credit card. ]

Exactly. We're going to judge by what we've done, what we said we were going to do and what we've done, right? We said we were going to build our balance sheet, we built our balance sheet. We said we're going to reduce our parent debt, we reduce our parent debt. We built our capital. Those are the things we said we were going to do. We did them. We said we were going to be more transparent with our investors. When we talk about loss rates, it's from a place where sometimes the news isn't great, but we say here's where we are, here's where we're going, and we manage that appropriately. We've been able to bring on premier partners over the last 5 years. The NFL, AAA, all these partners are premier partners. We're growing those partners. We're able to develop other partners. We've got a strong team in place. I would tell investors, I think we're on a good trajectory. Buy now, buy often. Kind of -- I think it's a -- I think we're still a value stock, quite frankly. And some of the cloudiness around regulation now is lifting a little bit and credit is on a -- not a great trajectory, it's getting a bit better. I think all those things are positive for the industry and positive for us.

Awesome. Well, we're out of time, but please join me in thanking Bread.

Thank you.