Synchrony Financial (SYF) Earnings Call Transcript & Summary

Up next, we're excited to have Synchrony Financial joining us once again. Despite the onset of the pandemic, Synchrony has continued to drive its business forward, adding several key new partners whose programs were launched in 2020 and also renewing a key partner. In addition, it's taken action to rightsize the organization, given potential changes on the back of the pandemic, which should allow it to achieve industry-leading efficiency and returns. Here to tell us more about the strategy, once again, is President and CEO, Margaret Keane and joining her is Chief Financial Officer, Brian Wenzel. Today's presentation is going to be fireside chat. So Brian, Margaret, thank you once again for joining us.

Thanks for having us, Ryan.

Thanks, Ryan.

So Margaret, maybe just to start big picture. We're 9 months into the pandemic. And what will go down the history is one of the more interesting years in a long time, as you and I were talking about before. Throughout the world, it is still very uncertain given spiking cases, unknown whether we're going to get stimulus, can you maybe just talk about how the consumer is holding up and how Synchrony is positioned to benefit from this?

Yes. So I keep talking about, just to keep hoping my company that if you think about the pandemic of 1918, right post that pandemic, came the roaring '20s. So I have that theme in my head, and I use it with all our employees because I do feel like there's going to be some pent-up demand from consumers as we come through this. I think through this so far, the consumer has been holding up. I'd say we've been pleasantly surprised, by the way, of how our delinquencies and our charge-offs have been occurring. And I don't think any of us would have guessed that 9 months ago. I would say those customers that did get into forbearance, those are the ones that -- and they -- some of them were delinquent going into forbearance, those are the ones that are having a little more struggle. But I'd say we've been pleasantly surprised so far by our credit positioning. We took a lot of actions. We look at -- and we know how to do this. We have the opportunity, 2 ways on the credit side. One is lines. The second is we can always offer private label versus our dual card and then see how that customer pays and come back around with a dual card. So we feel we're really well positioned and ready for when things get back to normal. Now when they get back to normal, I think, is, I guess, in the hands of the experts and the vaccine.

Got it. Thanks for that. Margaret, one of the big things that we've heard in every presentation has been -- the last question I asked in my last presentation, was what are your priorities, and they said, digital, digital and digital. So if I think about Synchrony, 47% of sales came digitally, 60% of apps, and those numbers are accelerating. Can you maybe just talk about what you're doing strategically with your partners on the digital side and how this is helping both you and them thrive during the pandemic?

Yes. I think we worked really hard when we -- 5 years ago to really change the infrastructure of the company. And we talk a lot, I think this year was the year where we've really been able to pivot in terms of really being in a different place technologically, just from our overall API cloud setup. What we've said and what we continue to do is really integrate into the app of the retailer. So I think what we really want to make sure is the customer never really has to leave the app and then we've added enhancements to that in terms of really being able to just have 4 fields, last 4 digits to be social, you can get approved really fast. That's helped accelerate, particularly on the mobile side, where it's really easy to apply for the credit card. And then it's really about that whole frictionless experience as the customer shops, uses their rewards, wants to make payments. Wants to see what their line size, asking us for an increase in the line size. All of that is done digitally. I think where we're headed now is even more around alerts and capability inside the app to really help that customer manage even more on a day-to-day basis. And I think when you hear about Venmo and how we launch Venmo next year, some of that capability is really, I think, game-changing for how consumers will experience their -- I'm going to call it, credit experience in their app.

Makes sense. Margaret, we're hearing -- we're clearly seeing a huge landscape change in terms of brick-and-mortar retail. We're hearing retailers closing locations, banks closing branches as we all move towards digital. How are some of your partners rethinking their physical distribution? And does this at all change the value proposition and how you approach the relationship at all?

This landscape has been changing for quite a while and actually needed to change. And I think the pandemics just accelerated things that were already underway, in my opinion. And I think the reality is we were over retailed. We had too many brick-and-mortar. And I think the retailers who are strong are relooking their footprint and rethinking the customer experience, whether it's a smaller footprint or a footprint that shared with another retailer, you're seeing some of that not particularly with any of our retailers, but calls with the announcement of bringing in Sephora. Those are the things that I think you're going to see, you're going to see more shared real estate, if you will. I would say this, I don't think -- and I know a lot of people have written that shopping is like not there. It's just not true. I mean, I can tell you that as things started opening up, particularly one of our great partners, TJX had lines outside their door. They continue to have lines outside their door. They're all trying to figure out how to manage through the pandemic in a safe way. Lowe's has people going in the store. So shopping is not dead. I just think people want the opportunity to have choice now, and they may go in less, but they're still going to go into a store.

Got it. So I think the last time we heard from you, you were seeing positive signs on the spend side. I think spend was up 5% in September, including 7% in your retail card business. Can you maybe just talk about what you're seeing in 4Q across the platforms? And second, what are the early takeaways for the holiday season, things -- how are things different from last year? And then maybe lastly, there have been a discussion on the earnings call, whether or not we're going to see opening accounts in store, given the pandemic. Can you maybe just talk about how that is progressing?

Yes. So I think a couple of things. I think sales are definitely holding. We're doing slightly better than we did in the third quarter. I think this holiday is very different. And I read through some of the, the scripts that came out yesterday. I think we're all seeing something very similar. There was -- not a real Black Friday this year compared to what usually happens. But I'd say the holiday season started much earlier this year. As we know, Amazon moved their Prime Day to October. So that really kicked off the season. So it's stretched in October. And then we have a longer holiday season this year than last year. So I think we're not going to get a full read on holiday until we get completely through the holiday season. But I can say we're doing well, given that it's a pandemic. I'd say retail carts holding its own. CareCredit is a little bit worse than third quarter. I think part of what we're seeing in CareCredit, particularly in the dental space, is as people close -- like California closing down, that definitely impacts those elective types of things. And other parts of CareCredit that continue to boom like the pet space and classic surgery or -- elective plastic surgery types of things. Payment Solutions is actually feeling a little bit of a different pain. And for anyone who's been out there trying to do things in their home, I think they know it's just hard to get product. It's taking longer, whether it's appliances or flooring or I was just talking to someone in my family, who ordered furniture and it's still not in. It's just taking longer. So we can't charge. So we might have made the sale or the furniture place might have made the sale in July, the people still haven't gotten their furniture yet. So we should start seeing some of that pick up as inventories become a little more aligned. But inventory is definitely a problem in some of those spaces. Now again, we had booming markets in power sports and things like that. There's -- if you've gone out and shopped, you could see the inventory challenges that are out there. If you've gone in some of the stores. Some of the shelves are lighter. They're telling you it's taken 12 weeks, 16 weeks to 20 weeks to get furniture as an example. So I think we're feeling that pain a little bit. But I think that will all come back. The good news is people are shopping and buying. They're just waiting for the goods.

Yes. I've definitely seen it in paper towels. So are your loan balances have been much more resilient than the rest of the industry. Can you maybe just talk about how partner selection and business mix have impact in that in terms of who you're choosing to work with and what do you think we need to see before you begin to increase customer acquisitions to drive growth across the company in a meaningful way. Obviously, I know that you're opening accounts, right?

Yes, I think part of it is just the mix of business that we have. We have a lot of our business that's big ticket, and it takes longer for the big ticket to pay off, as a big part of who we are. We just talked about furniture, appliances, jewelry, things like that. Our CareCredit business, those balances are stickier. I think -- we feel good about the position. The value prop is important and continues to be important. And I'm sorry, Ryan, the second part of your question was?

And what do you need to see for us to see an acceleration in customer acquisition and therefore, growth?

Look, I think we tend to be a company that moves quicker on the bad news and moves quicker on any slightly good news. So I think we're just -- we're being very cautious. We talk about this as we're doing our 2021 plan. We're trying to forecast losses and things like that in what would be an economic situation, but this is not really an economic situation. I heard someone describe it the other day that pandemics are kind of like environmental issues like hurricanes and things come back. I think we're all struggling. And even as I read through a transcript, everyone is trying to figure out what happens. Does this new stimulus help? Is there a second stimulus that comes with Biden? Does the vaccine start really taking hold? Can we hold people together through -- hold them up until we're back to normal and people get their jobs back? I think there's a zillion models. Does anyone really know the perfect answer? I think the answer is no. Because I think we've all been even surprised so far. But I think for us, it's going to be stability around the economy in terms of jobs coming back and people continuing down this path of employment. For us, we're going to watch that. As we feel more confident in that, I think we'll quickly open up. And we haven't stopped. I mean, we're just being -- the good news about our business, we can offer you a credit line at the point of sale, that's very manageable for us. It's not like the big credit card companies that have to give a fairly significant line size to win that customer over. Our customers are looking to make the transaction. And so we can really monitor that control line size and continue to originate at a good pace.

Speaking of partners, you have 2 exciting new partners, Verizon, which launched earlier in the year and Venmo, which I think you've done sort of a soft launch and are in the process of rolling out, which is pretty amazing in a completely remote environment. And I know it's early days on both. But can you maybe just talk about the early successes, what you've seen, what you've learned from these partners? And how important can these be to the overall franchise over the longer term?

Sure. Venmo is really in a soft launch, too. It's there origining a small number of accounts. And one of the things that's great about Venmo and our PayPal partnership. Is it's really all about the customer experience, and that's what they're watching very closely. So far, the feedback from consumers who received that card digitally has been very exciting. We feel that both these programs could be very big programs for us in the next 10 years, both are growth programs. I'd say the intriguing part on Verizon, I think, is really the value prop. It's a very strong value prop if you have Verizon, and you have a Verizon phone. So you can use your rewards to sort your bill. That's turned out to be a very strong value prop. We started originating just digitally. As their stores have now opened, we're now getting more in-store applications. So we feel really strong. It's hitting all the targets and maybe slightly be exceeding some targets that we had laid out for that program so far. So we feel good about that. Venmo, again, early days because we're just doing a soft launch. But I think as we do the launch next year and people really get a sense of how that product is going to work with the value prop and how people leverage that payment mechanism, when they're all sitting together on a table and how they swap, I think it's going to be just a really exciting integrated. It's a good example of what I talked about earlier, where everything is in app. Your whole experience is in app. And if you think about payments and credit cards and things, that should be the last thing people really think about. It should be like so seamless, right? And I think that's what the Venmo experience is going to be from when you make the purchase or split your fee sitting at a table to all the way getting your alerts and looking at how you -- because your value prop will switch based on how you spend, which I think is really unique. So excited about both of those programs, and I think they both could be top 10 programs for us in 10 years, at least, maybe soon.

So as you just said both of these are, hopefully, over time, going to be major contributors. As you survey the landscape and we talked about the world moving towards digital. I'm sure many of your brick and mortars as well as e-commerce or partners who are looking to drive sales. Can you maybe talk about what the organic pipeline looks like for start-up programs? And could the program -- could the pandemic lead to an acceleration as retailers realize we need to think about more creative ways to drive sales?

I think in some ways, you're seeing that. I think there's a lot of smaller start-up retailers that are definitely looking. I think part of it is we want to make sure those retailers have enough volume for us to really grow from. So there's lots of programs out there, but you want to make sure you're getting one that has a little bit of meat to it. We're constantly looking at that, both start-ups as well as existing programs that are up there for renewal. So our pipeline is pretty robust. We're winning deals. We're seeing opportunities. And we're being -- we're also being, I think the thing I would say is we're being very deliberate on what deals we actually engage in because we want to make sure you could go out and get balances in assets now, but that doesn't mean that particular program is growing. And we want to really have a program that's going to grow with a strong partner on the other side. So I'd say we're being selective on who we go after in terms of that. We really want the ones that are going to win.

Maybe thinking about your own clientele. You recently announced the extension of Sam's Club. I think this is second time in 2 years. And I must say, if you would have asked me that 18 months ago, I would not have guessed that would have been the outcome. So can you maybe talk about what is driving your value props across your renewals? And in what ways has the pandemic led to further opportunities to accelerate renewals just given the need for digital, e-commerce and as well as customer engagement?

Yes. I think it's 3 critical things. One is, I think we have to have the digital capability, and we continue to enhance that. So I think as we continue to work with our partners on the needs that they have and how do we integrate into their app and have all those digital assets. I think those assets have to be very easy for the retailer to execute upon. And that's really, as we -- and we've talked about in this past, our SyPI capability, integrating into APIs really easily is critical because look, the retailers have a ton on their plate. The last thing they need is like these big execution types of things. So we're trying to make it very simple for them. The second piece that I think is becoming a bigger part is really a combination of 2 things. One is the data that we share with each other and using that data in such a way that we can personalize offers to the consumer digitally. So I think we're at a point now where we've built out and continue to build out our data lake. We've created a number of APIs connected to that. We have a number of partners who are sharing their data. And then the combination of the 2 allows us to create a customer engagement score, which is definitely helping us in terms of how we originate new accounts and put offers out there for the retailer. And then third is just continuing to rethink value props, right? How do we make those stronger. Value props are important. Consumers look at what is the value in this card for me. So you got to really have all those elements aligned and what I would say is you're never done, right? You're constantly enhancing from a technology point of view to make sure you're staying ahead of the game. So I think, honestly, we worked really hard to get all of this in place. And I think this was -- in a strange way, this was the year where a lot of it started coming together, and it's helped us win deals. And you don't -- you don't win a program like Venmo without really having the right capability -- or the ability to work with the partner and build it together like we did, with a huge commitment on both sides in a pandemic and get that done, that's pretty incredible.

I wanted to switch gears and talk about SetPay and then buy now, pay later. I've got about 10 or 12 questions coming off the Internet. And I think 13 of them are about buy now, pay later. So maybe we'll start with SetPay. You recently rolled out this product, which you're piloting within Payment Solutions, and you're hoping to expand in 2021. I would say the market seems a bit more excited about installment lending and buy now, pay later as viable products relative to, I think, the view that you've given. I was just curious, can you just talk about your view or stance on these products? And as you think about them with your partners and your potential partners, what are the ones who are demanding actually looking for out of it?

Yes. Well, first of all, I think we probably have done ourselves a little bit of a disservice because we do a lot of installment lending. And I don't know, Brian, if you have the numbers handy, but we do a fairly substantial size of it installment lending.

We disclosed -- so on the closed-end side, we do $2 billion of volume a year, which you see inside the core book, which a lot of our merchant partners want the continuous use of the cap, we do over $12 billion a year, and that can range from payments that are 3 or 4 payments, easy kind of pay payments, 6 payments, all the way up to 84 in all different flavors from 0 interest to $9.99. So whatever retailer or merchant wants, we have the capability to do, but it's folding inside of our revolving private label accounts today.

So I think we've got to do a better job marketing what we're already doing. But I think SetPay is a product that we feel pretty proud about. And I think the goal that we want to reach is really customer choice. So that when we present the opportunity to open an account, the customer has choice right there digitally. And that's what we're working to pilot with SetPay. So do you want a fixed pay product that you pay off? Or do you want a revolving product like our traditional products? On the small ticket size, we're definitely looking at this. I think there's a couple of things that we want to make sure we're smart about. One is on the small ticket products, the merchant is paying an enormous fee to get those -- to get that product. And our view is that anyone could come in and lower the fee and you're now maybe making less money than you even made before. So there's that. And then the second piece is, how do we -- we want our customers for a long period. We don't want them just one time. So we want to figure out the right marketing around offering a product like that. And then coming back around offering them a revolving product at some point. So we're doing a lot of research. We're looking to see -- I mean, if we do this, we'll -- either partner or build ourselves. We got a team working on the whole point of sale, particularly in our payment solutions space and CareCredit space around all of this. So and look, partners are asking for this, and we're working with some of our partners on this. So I don't think we can discount it because I do think it's a reality that people are asking for it.

Margaret, I think one of your partners rolled out their own program. And can you maybe just help us understand the engagement or the discussion process when a partner decides to maybe do this without you? And how does that impact the program? And how do the, to the extent you...

Are you talking about PayPal?

Yes.

Yes. I think really, it came down to, we are continuing to have a conversation with PayPal. They wanted to move really fast. We had a bunch of things. We have a ton of things we're working on for PayPal and Venmo. I mean the list is this long for both parties on stuff work. Because remember, we talk a lot about Venmo, but we are still doing a lot on PayPal. We converted that book in June of 2019, right? So we still have a list of things we're working on developing for them. I think where it came down is they wanted to move quick and we're like, okay, go. But it wasn't like there was a view we couldn't do what they needed. It was more -- they had that product already in Europe, and they just brought it to the U.S. But we're going to continue to talk to them about opportunity there. So didn't really upset us because it would have took us a bit of time to get it integrated and rolled out, and they wanted to move a little faster.

And then as you highlighted, it's obviously an area that you're -- as you said, spending a lot of time in thinking about what to do and over the...

Look, I think we don't want to just jump in and say, okay, let's do this. We want to make sure we have it integrated. We have the right customer value prop. We have the right merchant pricing. Our business is built on the merchant. I think this is one unique aspect of our business. Our business is partner-driven. And we want to make sure whatever we do is really helping that partner grow sales and also not hurting them in a way that is not helpful to them.

Margaret, I've got about another 20 questions for you, but I want to switch gears a little bit to ask Mr. Wenzel, a question or 2. So that we can get him involved here. So you announced during the last quarter, you're going to reduce cost by $150 million to $250 million by 2022 as you streamline your operations and you rightsize the organization. Maybe just talk about the decision process to tackle the cost base? And what is the goal on the other side of the pandemic in terms of efficiency or returns once you're finished with this program?

Yes, Ryan. The important thing for us was really the continued long-term investment in the platform. It would have been easy like a lot of other issuers to stop investing in the platform. We decided not to do that back in March. We continued on with all our strategic investments for long-term value. But as we looked at the balance sheet deleveraging, a lot of folks look at the efficiency ratio and say, well, our revenue is down, so therefore, we're way through it. Given some of the asset deleveraging we have, we said, listen, we're going to have to take action. So the way we approached it was we took our portfolio, thought about it really at the end of the pandemic, whenever that would be, rolled it forward out to 24, 25, say, okay, if this is the portfolio we have with the revenue characteristics and loss characteristics, our target is really to be an above-average or leading average in ROA. So the equation then says, okay, what does your efficiency ratio have to be? That was the target. We came back, and we really looked at the business from a where are we spending dollars from a process perspective, not necessarily a more traditional way in which we look at maybe functions. But where we spend the dollars? And how do we get it out of the system. And with that target efficiency ratio, to achieve an above-average ROA, which hopefully will give us a premium valuation. That's how we kind of got to the target efficiency ratio. So but it was all predicated on the fact that we wanted to maintain and not reduce the strategic investments we're making in the platforms, the investments we're making in some of these new programs. Verizon and Venmo, we talked about the J curves kind of coming in. They're big programs. We want to maintain those. And so that's really the genesis of how we got there.

Got it. Maybe just switching gears, and we've made almost 30 minutes without talking about credit, just shows how the environment has shifted. But Margaret highlighted, credit performance has been much better than I think any of us would have expected at this point with delinquencies and charge-offs down over 150 basis points year-over-year. You maybe just talk about, Brian, how important another round the stimulus is? Margaret mentioned this before, credit performance. And do you have a better hold on what the range of outcomes could be for losses at this point, both peak and the total loss content?

Yes. So the stimulus program is usually important, and I encourage everyone in Washington to do that. There are a lot of programs that are now running out. You have forbearance programs running out industry-wide. So the consumer is going to continue to come under increasing duress. You still have 10 million unemployed people. So our view, if we don't get incremental stimulus here in the short term, they will -- will certainly deepen the whole of what happens next year. If you do see a short-term stimulus package, somewhere in the $900 million over last, depending upon when they get a deal done here. And we probably believe that Biden will bring another package in the early part of 2021. That could get you through and really dampen the effect long term. If you don't get it, this could be much more severe. So I think that's upside to the credit case. To be honest with you, Ryan, we continue to try to give a perspective. My credit leader always tells me, we're trying to plan something we have not seen before, maybe we should use crayons. But it is really difficult at this point. I think there's a couple of different paths. So we had a number of different scenarios. Some that are lower, where we're able to kind of almost thread the needle through this. There are some where it looks not as bad as the GFC, but you're going to have a higher loss content. So our goal as we entered the quarter, our thought was we would see delinquencies really kind of trough here in December. We'll see if that holds through and really see kind of peak delinquencies in third quarter next year.

Got it. And would that mean that losses could be elongated into 2022?

Yes. We believe the loss peak for us will be probably first quarter of 2022, maybe fourth quarter of '21, but more likely at this point into the first quarter of '22.

Maybe just one last question on the topic. So if we fast forward, and I know we're talking in hypotheticals here, we get the stimulus that you've outlined some here and some early next year. You guys have used very conservative expectations. Unemployment, I think grew about 9% through 2021. What does that mean for reserving from here? Are we back into more normal? I mean you guys have given us guidance in the beginning of the year? Are we back in that kind of mindset of we're really just reserving for growth? And what is the inflection of what we need to see for the reserves actually starting to come down?

Yes. So let me start where you ended. How do you think about the inflection point and potentially releasing reserves, it really comes into when do we think we see the peak, right? The way CECL works is once you see the peak, your forecastable period will come down, you should start to see releases almost in advance or at the time of the peak, different than what you used to see under the ALLL. So it's really that visibility into the where peak losses will happen. With regard to the first part, clearly, I think as we move into the fourth quarter, the economic scenarios have gotten better. It's always a little bit murky with regard to how stimulus actually impacts the consumers. And to some degree, there's a lot of dollar talk here about it's $900 million, how much goes to state and local, how much is vaccine support. So there are different elements. I think the composition is going to be important, but clearly, incremental stimulus, we think can be helpful to the case and hopefully give a little bit of a dampening effect on the ultimate loss content. Again, we were, I think, a little bit more prudent at the end of the third quarter as we did put a qualitative reserve up for delayed in the stimulus because we use Moody's baseline that has stimulus in. So we tried to dampen that effect a little bit. So hopefully, there's more of an upward bias than a downward bias.

Got it. Margaret, I wanted to come back to the 2 smaller business, Payment Solutions and CareCredit. I think the perception is in Payment Solutions, it tends to be a bit more brick-and-mortar, though you highlighted things such as power sports and home improvement, which you're obviously doing incredibly well. Can you maybe talk about the strategic priorities there? And second, if we went back to before the pandemic, CareCredit was a real bright spot of the company. You were seeing accelerating growth. You've done some really interesting and innovative things across that business. Can you maybe just talk about how this business is positioned once we get into a world of greater normalcy? And what would the priorities be once we hopefully get to the other side of this towards the mid- to latter part of 2021?

Yes. So as we just updated our strategic plan, I would tell you both Payment Solutions and CareCredit are a big part of our strategy going forward. On Payment Solutions, look, I think the real jam of Payment Solutions is we have hundreds of thousands of merchants that really support our programs. We've been able to win in the marketplace. We've won more deals recently in that place. I think the #1 thing we're working on there is really around the point-of-sale for those merchants. And really doing as much as we can digitally to really accelerate their -- the merchants capabilities. And that's what the team is very, very focused on and continue. We have a whole agile team that's focused on that, that we believe is an important part of the strategy going forward in terms of having that digital capability, both in-store as well as mobile. So that's a big part. And we know that based on some of our research, consumers who buy in brick-and-mortar, if they have the right digital capability, they'll add to their order after they leave. So we want to make sure we have all of that connection in the right place. Look, I personally believe CareCredit is our secret gem. 2 key things we're doing there. One, we've moved from just a vet to a pet strategy. So we have a leader now who's leading our pet initiatives. That includes the insurance business that we acquired, plus really just going after the amount of spend in the pet category. And I think I've mentioned the number of something like $80 billion. If you think about 1/3 of that or maybe a little less is on vet, the rest is like everything else. So we're trying to figure out how to really get into that space. And then the other big area for CareCredit is really what we're calling the hospital network strategy. So we're now integrating into hospital networks at the top of the hospital, offering CareCredit as one of the payment options. And so this is a big, big opportunity. The spend in health care is trillions. A lot of people are being asked to pick up a bigger part of their cost. So they have balances after they leave hospitals, and there are various doctors. And we think this is a massive opportunity. I think what's been most amazing, we've signed a number of hospital networks up during the pandemic, which tells you the need they have to have more payment options for their patients and people who come through. So I think this is a business that will continue to grow and be a big part of Synchrony.

We've got about a minute left here, and I'm going to pose my last question. It's got multiple parts for the both of you. Synchrony is amongst the highest capital levels in the industry at over 15%. And historically, you've been very aggressive in returning capital. While there's a lot of uncertainty, as you head into 2021, what are the capital priorities? And what do you need to see to manage capital? And then second, the private label business has consolidated a lot into a handful of players, this talk of some potentially putting their business on the market. What would your priorities be for acquisitions? Right now, Margaret, you talked about buy now, pay later. We saw ABS buy bread a couple of months back. How do you think about what the priorities are going to be traditional, private label, buy now, pay later?

So maybe I'll start, Brian and then hand it to you. So look, we're always looking at opportunities. We want the opportunities to be one that are reasonable on price. And are going to be accretive to our portfolio. So we're -- we've been out there in the market. We've seen a lot of these things that have come up. We are open to them. Obviously, we have a lot of capital and can -- as I like to say, we have dry powder to really do the right thing. But we're going to make sure it fits with us and has the right return. In terms of the overall capital, we want to do share buybacks. That's really going to be driven by where the regulator sets their headset. And I think mostly everyone's feeling is that probably won't happen until some time second half as we come out of this pandemic and the regulators feel more confident in where the economy is going. I don't know, Brian, if you'd add to that?

Yes. I think the priority is, our first priority is we have tremendous growth opportunities. As you think about our volume, our balances. So the first priority is to continue to grow the opportunities as we have in all 3 of our platforms, and Margaret really highlighted, CareCredit as being one that we hope to grow significantly. Second, obviously, is our dividend, we're going to maintain our dividend. That's really clearly our strategy. With regard to repurchases, it's going to be having that same kind of visibility to the loss environment, making sure that we understand the depth of what we have here. We've shown an ability to repurchase quickly. Our long-term view on with regard to capital levels hasn't changed. And to the extent that there's an acquisition or some other use of capital, that is a better alternative than repurchase, we would clearly deploy it there. This is how I would think about it. And I think any M&A or other things we do to deploy capital, we're going to do it with the right risk-adjusted returns. So again, I think as we're exiting, Ryan, 2020, we are very optimistic or cautiously optimistic about where we are from a margin standpoint, credit standpoint, we got the cost of line. I think Margaret's challenged us to come out on the backside of the pandemic stronger than what we came in. I think we're clearly on a trajectory to do that.

Fantastic. Well, unfortunately, we're out of time. But Margaret, Brian, thank you very much, as always, for participating. Look forward to speaking with you guys on next quarter's earnings call. Have a happy holiday season, and I look forward to doing this next year.

Thank you, Brian, you too. And be safe. Thank you.

You too. Take care, guys.

Thanks, Ryan.