OneMain Holdings, Inc. (OMF) Earnings Call Transcript & Summary

Thank you for joining us this afternoon. For those who don't know, I'm Mihir Bhatia. I cover consumer finance and specialty payments companies here at Bank of America. Next on stage, we have OneMain. I'm delighted to welcome Doug Shulman, who is the CEO of OneMain. And for those who don't know, OneMain is a consumer finance lender, provides personal loans, auto loans, also credit cards with a real focus on the subprime consumer. So firstly, Doug, thank you for being at the conference for doing this event.

Thank you.

I think it's the second or third year that we've had you, and we really appreciate the support.

So why don't we just dig right in. Compared to a lot of companies at this conference, I think OneMain's focus on the nonprime consumer historically is a little bit different. So maybe give us a view on the health of the customer. We've heard a lot about high inflation, but inflation has come back to a good place. Wage growth has been happening. How is that nonprime customer, the core OneMain customer doing?

Yes. No, thanks. Look, I would say our customers and which represent a section of the nonprime consumer are quite resilient is the word we use. And I think you have to compare like I like to give the disclaimer that we underwrite and lend to people who can pay us back. And so that's not everyone. And our customers, we've got a bunch of tools that we can use to make sure we can extend credit to customers in a responsible way. So whether it's the product because we have a secured product, the size of the loan, the risk grade that they are, the state that they're in and the rate. So there's a number of things. And so my disclaimer is our underwriting is quite granular, and there's no like one broad set of consumer. It's can this person pay us back? Can they afford the loan that they want. With that said, there is -- we see a lot of applications from the consumer, so we've got a decent sense. I'd say I've talked about it before. Income has definitely caught up with -- cumulative incomes have caught up with inflation a couple of years ago. I think the customer is doing -- the nonprime consumer is doing fine. I think they've been steady and resilient. They haven't improved dramatically in the last year or so. And I think there's a whole bunch of cross currents. Employment is an interesting one, which is unemployment still historically is quite low, which means most people who want a job can get a job. With that said, it ticked up a little bit last year. So there's some crosscurrents there. Inflation, I think, is at a controllable level. And as you said, is the rate of growth has come down. But cumulatively, it's still more expensive at a grocery store than it was 5 years ago. And so I think that our consumers are doing great as evidenced by our credit trajectory. I think in general, the nonprime consumer is doing fine.

So maybe just like digging in a little bit, would it be fair to say there hasn't been like any big change in approval rates in the loan applications that you're seeing in, like would you say the nonprime consumers doing generally fine. Is that a fair interpretation of that, that doesn't mean any big changes for you all in terms of what you see coming in the door?

Yes. I don't no. I mean, I guess I wouldn't interpret it that, which is we spend a lot of time on the people we approve. And so our approval rates, I don't even think about it as approval rates. I think of do you meet our underwriting criteria? And if you do, then we'll have a conversation with you about what's the best way to serve you.

Okay. So then maybe just turning to the portfolio a little bit. One question that we get a lot from investors is how resilient is this portfolio, right? Like you mentioned unemployment is still historically low, but like compared to maybe some prior cycles, how resilient is the portfolio from your perspective from a employment shock or income shock? Like what are some of the lessons that you have learned over the last few years that inform the risk posture today?

Yes. Look, I think our current portfolio is quite resilient. And I'll just give you the way we've underwritten the vast majority of that portfolio is in 2022, we and everyone else saw an uptick in delinquencies that then became an uptick in losses. And we cut our credit box quite aggressively. And the way we manage our credit box is we have a minimum threshold of 20% return on equity of any loan we make. And we usually put about $15 for every $100 of equity into a loan and the rest we borrow. And so for that $15, we need a 20% ROE. And the way we calculate the ROE is our model of what's going to be -- what's that loan going to produce over the lifetime of the loan. It's customer lifetime value model. And the main factors that go into it is what's the interest rate we charge, you subtract operating expenses against that loan, you subtract our cost of funding that loan, especially the debt portion. And then losses is a big number. Since 2022, we've got our model that says whatever losses for this customer will be 5%. We put a 30% stress on that. And so the model will say the loss is going to be 6.5%, right, because there's 30%, even though the loans have been performing at closer to 5% losses in that scenario. And so since then, that's a pretty hefty stress overlay. That's like an overlay saying you're going to have like a mild recession when it comes to employment. And so we've been underwriting saying, even if unemployment ticks up, then we still will make our 20% ROE. So we think our portfolio from a profitability standpoint is quite conservative. And we've had that since 2022. So it's almost -- this summer, it will be 6 years of running that playbook, and we haven't lightened it up. And so we feel pretty good about it. I think the lessons you asked about for us. I think the biggest lesson for me is -- which we've known all along is you just need to be disciplined in this business. Like you can't go chase growth. You can't say, maybe things are better, like you need to follow the data. And like we said, our customer has been resilient. Our customers have been performing as we expect, but they haven't been necessarily outperforming. And so have a very conservative balance sheet, so you always have a lot of liquidity in case there's a shock err on the side of being conservative with conservative with your portfolio and then just run a great business. And it's very easy to like say, "Oh, things are looking good. The economy is good. Maybe you should tighten your box." You just got to follow the data and stay disciplined and run your game in the lending business.

Like I guess that does -- like one question that I have is what do you need to see in the data when you -- to maybe loosen a little bit, right? You mentioned putting the 30% stress overlay on. Today, we're at, what, 90% of the front -- 90% of the book is like with this new tighter underwriting that you put in place. So what do you need to actually see in the data to start loosening a bit?

Yes. I think you need to see some period of time where there's consistent better performance than our models had predicted. So we're seeing our models predict really good. Our underwriting is quite good when we pick the customer and manage the customer the way we know how to manage them. And it's performing in line with our expectations, but it's not like the customers' losses are lower than we thought or their delinquencies are lower. They're exactly what we thought. And so one is I think you need to see continued outperformance. Two is we have this thing we call it weather vein testing, where we're always booking a sliver of loans. It doesn't really show up in our portfolio because it's not a material amount that are people who have like a 15% ROE or an 18% ROE just to see if those are performing like just below our cutoff to see if they're performing better. And we haven't -- there's some variations. Sometimes it ticks up and down. But on a consistent basis, we haven't seen it perform better. And then -- so I think we need to see the weather vein consistently performing better. We need to see our book consistently perform better. Not -- we like the way it's performing. It just would need to outperform, and I would say we can loosen the box some. And then you need to see some of those macro. I mean, there's still some uncertainty in the economy with macro, geopolitical. There's a variety of things. And so I think you need to feel really good. When we open up, though, it's not going to be a big bang. It's going to be secured products in these states for -- we have 20 risk grades for these specific risk grades coming through our branch-based channel, right? So it's going to be by channel. It's going to be by state, it's going to be by product. And so you're going to have it be a very granular adjustment of the credit box. It's not going to be coast is clear, let's open the box.

Got it. Maybe then like let's switch a little bit to the ILC application. I guess first question on it is just what's the latest on the ILC application? And then we can -- I have a couple of more follow-ups on that one.

Yes. Look, latest, I don't have any updates. Like I tell my Board, when you've applied for a license with the government, you either have it or you don't have it, we don't have it yet. So we're -- I wouldn't predict it.

Okay. But let's just walk through why you apply it? Like what's the strategic vision like how does this ILC license help you both from an operational standpoint, but also like obviously, there's the funding cost, maybe a little more straightforward, but...

Yes. Look, I think it's important before I answer that, that for us, it's a nice to have, not a must-have. We've got a very profitable business. We've got a huge amount of confidence in our ability to continue to drive earnings. We got a lot of levers. So we have a lot of momentum in our business. On the nice to have, you get some diversification of funding. It wouldn't be a huge amount, especially the first 5 or so years because the size of it will be limited as a de novo application. You would -- the big advantage is it would unify the operation. Right now, we operate in 47 states. Each one has different rates. It has different rules. It has different fees. It has different reportings. The states have different regulations around branches and all these things. And so it could simplify the operations, simplify the technology backbone around that. Every time legislation is passed in a state, you need to code your application, you need to train your people, you need to do this. And we're a button-down shop, super compliant. We comply with all the states. So I think there'd be a simplification. We also have a small credit card that's growing. And right now, we have a partner bank because you need to have a bank to issue a credit card. We'd be able to issue it through our bank. So that would be an advantage. And so in the meantime, we're playing our game, driving profitability up. We feel good about it. If we get it, it would be great. If we don't get it, we'll -- that's fine, too.

Right. I hear you. If you get it, great. It's nice positive optionality maybe is the way to think about it for investors. But like I think one question we get a lot from investors about this one is like, yes, it simplifies operations. It helps them that, but it also potentially lets you export rate cap and you get to go past like different state rate caps and potentially it's a bigger TAM. Is that something you're thinking about with this? Where you can maybe -- state has a cap of 25%, now you can go up to 36%, so you can approve more. Is there any way for us from the outside to be able to size that opportunity?

Yes. Look, we have not sized that we think about it as providing access to credit potentially for more customers, right? Because riskier customers, you need to have price to absorb the loss, right? And so I think that would have an effect. That's part of simplifying the operation, but we haven't sized it.

Got it. And then publicly -- maybe when you get the license, then you help us size that. But maybe turning to the funding strategy more broadly. Look, you expanded your TPG partnership recently. You have to potentially have the bank charter coming. You have -- you're active in the ABS markets. Just talk to us more generally about -- I think you mentioned you're having resilient funding. What is the funding strategy? How do you go about doing that? Like what are you trying to achieve from funding when we think about it?

Yes. Look, we have a very conservative balance sheet. And if you look at the history of consumer finance companies, liquidity and running out of liquidity is the existential risk. And we wanted to take that off the table. So when I came in, we started pivoting and creating a much more diversified balance sheet with a long liquidity runway with long-tenured securities. And so our goal is just to have that be a 0 issue and to have a fortress balance sheet. And we're willing to pay for that. And so we have extra interest expense, like if we ran a just-in-time funding like a lot of people do with lots of whole loan sales and only the ABS market, which is cheaper and not having lots of extra bank lines, we kick off more capital generation and more earnings every year. And I'd trade it all day long just to have an enduring franchise. So that's our fundamental precinct. And so the funding strategy is we pretty much split most of the funding between ABS, which is -- and we do a lot of long dated. We'll do a 5-year ABS, even longer. Unsecured funding, just issuing bonds, and we'll do 10-year bonds that -- and we're a known name with a diversified investor base that can get very good terms. So we don't have covenants on that. This is like here's your money, you have it for all these years. We then have bank lines, and we have over $7 billion of bank lines from 14 different banks, again, and back in the beginning of -- end of February of -- when was the pandemic?

2020. February, March.

A long ago. Yes, yes. We actually tapped all our bank lines when everyone was panicking and the market was going down and everyone thought we were going to have full arm again. And we tapped them all just to test it and say, like were these good if you needed it. And then we have our whole loan program, which we've been very public about. We did it to have the pipes and to create optionality. And sometimes it's a good economic trade for us, but it's not a huge part of our balance sheet. And so highly diversified. We keep about 2 years of liquidity runway. So capital markets froze up, and we had no access to the capital markets. pay our employees, make every loan we want to make, invest in technology, run our business. In '08, '09, the longest any of the markets froze up was a couple of months that you couldn't tap them at all. Again, right after the pandemic started, we went out and actually did an unsecured deal. It was higher than normal, much lower than everyone else. And so our balance sheet, we view as like a core competitive advantage, and we run it long liquidity runway, diversified and I think it's been a strength, and I think investors trust us because of our attitude towards our balance sheet.

Yes. No, I think we've definitely heard that from investors. Let's turn to the auto business for a second.

Our CFO, Jenny Osterhout is sitting in the back. She runs it all.

So let's turn to the auto business, right? Give us an update on the progress you've made there. You've been leaning in the last few years. Just -- what does the ROE profile of that business look like relative to your personal loans? And what's been going on with the auto business?

Yes. Look, we like the business a lot. I mean our history was for over a decade, we've had secured lending for personal loans, which wasn't I'm buying an auto, but it was somebody says, I want $10,000, and we say, we can give you an $8,000 unsecured loan at this interest rate or we can give you a $15,000 loan secured by your auto. We'll take over -- we'll take the collateral on your auto, we'll pay off the old lender at $5,000, you get $10,000, which you request and it's all at a lower interest rate. So it's a very -- it's been a great product. About 5 years ago, we had some team members who kind of ran the collateral part and the other thing, and they said, "Hey, we'd like to see if we can get into some independent dealers. We've got -- we know how to do all of this. We know how to value collateral. We know how to secure a lien. We know how to collect on an auto. We have the underwriting machine." And so we actually gave people a little pot of money, and they built a nice like $800 million business with independent dealerships. And then as we looked at it, we said, great, but we built it on our personal loan platform, which isn't exactly fit for purpose for interacting with auto dealers, et cetera. And so we went out and scoured the market and found a great company called Foresight that we bought. And the -- and Foresight had a great technology, had relationships with some franchise dealers, had a great management team. And so we picked up Foresight as a tuck-in acquisition, put the 2 together. And at that point, I think we had like $1.8 billion of receivables. Since then, we put the businesses together. We've moved over to a proper auto platform. We've refined the models around that, and we've started to expand the dealer relations and sales. And so it's been a nice little growth engine for us. I view it as like a complementary business. It's one that has lower risk because it's 100% collateralized. And so it's good for like our volatility of risk profile. It generally has a little bit lower ROEs than the personal loan business or the credit card business, which we're also growing. And so I think it fits nicely in our product portfolio and has a huge total addressable market. It's like $500 billion. And so even if we just take a little of it, like we're playing our game. As you saw, we just announced -- we just signed a partnership with Ally, where they'll send us turndowns through their Clearpass program, which should get us some more application volume, which will be a nice little piece of growth. And we're also just expanding our sales team and so that we're penetrating more auto dealers.

Got it. No, that's great. You mentioned credit cards. receivables have actually been growing at a pretty nice clip. I know early on, you announced and then market conditions, you pulled back prudently, I think, in most investors would say, but they've again started growing at a pretty nice clip. Talk about just how the credit card business fits into the overall OneMain strategy.

Yes. Look, we back in 2019, we did a real look and said, we've got a bunch of core assets in our platform of OneMain. And is there more we can do than just personal loans? And we looked across the whole spectrum of all lending that happens. And we made a decision we were going to stay focused on the nonprime consumer, and we're going to focus on lending. We're not going to be a wealth manager. We're not going to be a bank and deposit gatherer as like in traditional sense. And auto and card, when we thought about a future portfolio, were the most attractive for us. And if we had our personal loans as the core center and the biggest part of our business, but we had 2 ballast to like stabilize the ship and add some growth. Card, which is same or higher ROE than personal loans, and I'll talk about it for a minute. Auto, which is a little lower volatility, a little lower ROE, both places, we thought intellectually, they made the most sense to put together. But then we did a whole exercise like what's our right to play? And I talked about auto. We knew how to do collateral. We had relationships. We had already built a small business. I think card, super complementary for us. One is we had a whole bunch of infrastructure we could use. Most of our underwriting team had card experience. We had plugged into the credit bureaus already. We had 3 million current customers and 50 million either former customers or applications we have seen. We could build it digital first, so we wouldn't have to use the whole branch infrastructure, and we had a whole tech and digital team who knew how to kind of put that together. And so we thought we had a bunch of head starts. I think they're incredibly complementary products. And so if you think about it, a card is a daily transactional product that serves a different purpose for the consumer. And the main -- the highest use for our cards is what you would think, retail, dining, gas, groceries. You're using it for that. A personal loan is a large episodic transaction. Either I want to consolidate debt, I want to pay for my grandkids, horseback riding lessons and some other things or I've got my hot water heaters broken and I need to get it fixed or my HVAC. And so large episodic, daily transactional, you put them together, and so they complement each other. Then the card is actually real estate because if you get a personal loan with us and you're a good customer, you put it on AutoPay and there's not a lot of reasons to interact with us. I mean we have customers logged into our app and they change their address or they change their payment date, those kinds of things. But a card, you check in, do I have $100 left on my line this month for the groceries that I'm about to buy from my family. Most of our cards have rewards. So like you're taking your points and using your points. And then our card proposition is payments sequel progress. And so if you make 6 on-time payments, you either get a line increase or you can get a decrease in your rate. And so we're getting a lot of action on the digital real estate. Our average card customer is in there like 7 times a month checking on the app. For the customers who have been paying on time over time, and we have unique insight into their credit, now it pops up and says, would you like a $10,000. You're prequalified for a $10,000 loan apply here. When we get that customer, acquiring a card customer is about 1/4 of the cost of acquiring a loan customer. So you acquire them and a year later, you get a new customer at 0 customer acquisition cost. And so it's a very complementary product that we think we've got a right to play, and we bring some special sauce to it.

How different is the underwriting for a personal loan versus a revolving card product?

It's different models because it's different behavior. I mean, a card, you're only extending a $500 line, so you can take a little more risk. Some of our cards have fees, so they absorb some losses. I think -- and -- but we still -- for card, auto and loan, we have our 20% return on equity threshold that I talked about before. And so we have -- each one has its own customer lifetime value model. Each one has to return 20% return on equity on any credit that we extend. I think the big difference is a loan, you get 100% of the amount day 1 and you start earning interest on it. A card, it takes about 9, 10 months to build up. So you issue the card, you don't get lending on it quite right away. And then the peak losses occur at different times. And so it's a different loss profile. It's a different delinquency profile, and it's different underwriting. So you definitely need -- it's separate models, but the fundamentals of 20% ROE based on customer lifetime value and us running that discipline is the same.

Got it. We just talked about credit card. I'd be remiss if I didn't ask you. I know it's out of the news now, the 10% interest rate cap. People are saying it maybe doesn't happen, but we're probably a tweet away from it being front page news again. So how would OneMain react if we got that?

Yes. I mean, look, to state the obvious, it's uncertain where this will land. Our card, while you said it's growing, is still under $1 billion of our $26 billion portfolio. So it's like less than 4% of our portfolio. And we don't have a big back book to manage. So even if it occurred in the back book. What I'd say is we would see what happened with our card. What I like about our position is we've got a lot of different ways to serve customers. I mean if somehow this happened, I think your CEO has been public, Bank of America saying it would cut off credit to a lot of people. Our job is providing responsible credit to people who have had some blemish usually on their credit record at some point. And so I think we could serve them with personal loans, we could do other things. And so I think it's quite manageable for our business regardless where it lands.

Got it. So maybe like let's turn to the core personal loan business for a second. But like in an increasingly digital-first world, some of your peers or maybe even like some of the fintech lenders, they've leaned in very heavily on this idea of we're going to get a loan approved in a few minutes, a few pieces of information, click, click, click, you get a loan as little interaction as possible. OneMain has continued to be very omnichannel with both an in-person branch model. You also have digital tools and model, but like just talk about that, like what does that give you -- why do you want to stay omnichannel, some of the advantages?

Look, I mean, if you look at our credit, FICO for FICO, I think it's better than anybody in the industry by a pretty wide margin. And I do think our ability to serve customers in a variety of different ways and establish a relationship with customers is important for this business. Setting up a loan correctly, getting them into the right product, setting people up on AutoPay, talking to them and getting alternative phone numbers, you can call them at if there's an issue that we need to reach them. There's a lot of -- a high-touch model has a little more cost in it, but has advantages. Now at this point, only about half of our customers actually walk into a branch to get a personal loan. And so what we've done is we've built relationship tools, and we built the ability that depending on the customer, you can -- we can serve you in a variety of ways. If you think about our branches, our average branch manager has 14 years tenure. They're in the community. I stop by branches all the time. And you see customers and I say, why you come back here? I say, "Oh, why come to OneMain? And he said, this is my third loan in 20 years. People always treat me right. One time I lost my job and you help me through it and you didn't just foreclose on it and didn't hurt my credit record, and I got a job within 2 months, a lot of people would have cut me off." And so there's real deep relationships in the community, long-tenured branch team members. And you can think of them as little entrepreneurial pods, like 3 to 7 people in a branch. They both make loans and collect. And so they're really set up not to like push loans out the door, but to get people in loans they can afford and they can pay back. And they're paid on delinquency as well as loan production is part of their payments. So we want them to only make loans where they can afford. With that said, we have a whole network of call centers that take overflow application, capacity -- can help balance out capacity, specialized. We've now moved a lot of like setting up the loan application process and scheduling appointment out of the branch and then they just show up in the branch to have the real value add. And then we built all sorts of digital tools that we've talked about. And so our view is branch is a huge competitive differentiator. Our 1,300 branches, if we were a bank, would be the seventh largest branch network in the country. So most people can drive to a branch in the country. But we also have like a really world-class call center operation. And then we have really good digital tools. And so our philosophy is simple stuff, change payment date, check your account balance, et cetera, try to push everyone as far digitally as you can. Things that are repetitive and aren't relationship-based, get them into the call center and keep the branches for high-touch in-person interactions. And we think it's the right model to serve our customer and to have a long-term and enduring franchise. And the last thing I would mention just since we're here in case people bought -- I mean, these are not bank branches like in the fanciest real estate on the corner of a town in America. Like our branches are in shopping centers kind of strip mall kinds of things or in a Class B office building on the second floor. And so the real estate cost isn't wildly different between a branch and a call center. And so you can think of them as like 1,300 distributed call centers as well, but they serve their local community.

One thing that you mentioned in your answer, I think that sometimes gets lost is the branch does collections, early-stage collections, the branch managers actually get paid on loan performance, it sounded like, we'll see and they're like entrepreneurs.

Production and delinquency. So it's a balanced scorecard, which tries to incentivize people. Again, our business is extending responsible credit. So we want to give credit. So we want to give people access to credit, but we want them to be able to pay us back. That's good for them. That's good for us.

Yes. Yes. No, I think that does get missed sometimes when people look at it and they're like, 1,300 branches, like inefficient, like to your point. But anyway, let's turn to capital returns. You just upsized your buyback in the third quarter last year, I believe. Just talk about capital priorities over the next year. How do you think about M&A versus buyback at the current price? What's more attractive to you?

Yes. Look, our capital stack and priorities are pretty clear. First, we're going to invest in the business. So we're going to make every loan. We're going to put that 15% equity into every loan, credit card, auto loan that meets our return thresholds because it's -- that's good use of capital. Then we're going to invest in our platform. So whether it's people, technology, digital, underwriting, data so that we have long-term enduring franchise. After that, we've got a healthy dividend that's about 7% at the current share price, which has been a differentiator, I think, for us with the investor community. It puts kind of a floor on returns that people are going to get. And then excess capital, we look at opportunistically. We've recently decided that -- or we recently leaned -- we've had a buyback program for a while, but the Board just upped it to $1 billion going through 2028. We -- fourth quarter, we bought more than double in the third quarter and more than double of the whole year of 2024. So you can see the trajectory. We don't have like a set plan, but we're pretty much -- we want to stay at our -- in the leverage range we've committed to the rating agencies. We want to invest in the business, have buybacks. The leftover or the excess capital generation, our bias is to share repurchases now. We think it's a good use of capital. It's a good return of capital to our shareholders. We're always looking at M&A opportunities. I've been here 7 years. We've done 2 tuck-ins. We bought a financial wellness platform, and we bought Foresight. They were both very small. We're quite discerning. Our M&A filter is strategically, does it make sense? And is it going to accelerate our growth and profitability plans. Financially, does it make sense? The price makes sense? Is it accretive and for shareholders? And execution, like can we execute because a lot of M&A, there's execution. Again, we don't think we need -- we've got a very good organic growth plan. And so that's why you've seen us lean into buybacks because we think it's the best allocation of capital right now. If the right M&A thing came up, we would definitely consider it, but there's nothing imminent.

Got it. We have a couple of minutes left. If anyone has any questions, anyone? Not seeing any hands. So maybe...

I think he's got a...

Yes, Jenny.

She can answer, she can't ask. It's our CFO, Jenny Osterhout.

So maybe we'll just finish off then with, is there anything that you think isn't well understood by the investment community about OneMain? Anything you want to hit on before we finish here?

I think people understand it, especially people who follow our stock. But I would say we talked about balance sheet, and we talked about credit. I think people hear about a wholesale funded nonprime lender, and they think it's a lot riskier than it is. And if you run it in a very disciplined manner, our balance sheet is this fortress balance sheet, like we're not going to have issues with our balance sheet. And so that's how we've put it together to not have issues. And I think the investors have understood that through the 2022 cycle where a lot of people couldn't get funding, and we had plenty of funding and no issues, I think it kind of proved the point. And then the nonprime consumer, if you underwrite them well and if you set it up well and if you have a relationship with them, the actual volatility of losses is lower than a lot of prime lending. And so we had at our Investor Day a couple of years back, a chart that showed our volatility of losses over an 8-year period was -- the standard deviation was 1.4 or 1.3. I think prime was 1.4 for like lending. And our competitive set who had even a little bit higher FICO than us, their losses were double ours and their volatility of losses were like over 3. And so if you run these businesses correctly, you actually have pretty low volatility of loss and the balance sheet, you can -- you don't need to be a bank to have an incredibly secure balance sheet. If you're just conservative and you pay extra money to have like lines and everything else is just backup liquidity. And so I think that's a really important point is we built our business through the cycle. I mean you can make a little less money in a recession, you make a little more when you're not, but it's built as an enduring franchise through the cycle.

Got it. No, that all makes sense. With that, we're at time. So thank you.

Thank you, Doug. Thanks for having me.