Synchrony Financial (SYF) Earnings Call Transcript & Summary

Good afternoon, everyone. We're excited to have Brian Wenzel, the CFO of Synchrony Financial, at the Wolfe Fintech Forum this year. Thank you for joining us, Brian. [Operator Instructions] There are a bunch of topics we want to cover with you today, Brian. So if it's okay with you, we'll jump right in.

Great. Good to be here, Bill. Thanks for the invite.

Absolutely. Maybe we could start off with one of the topics we've been spending a lot of time talking to investors about, and that's the impact of stimulus on Synchrony's balances and overall earnings power. Most investors expect the pressure we've seen on credit card spending volumes and loan balances to abate as we look to the other side of the pandemic. But there's been a lot of focus recently on what more stimulus would mean to your business. Looking ahead between now and the reopening, how do you see that interplay between stimulus-related headwinds to loan growth on one hand, and tailwinds from credit on the other? And how does -- you're seeing from stimulus impact your view of Synchrony's earnings power?

Yes. Great question, Bill. And let me kind of frame kind of how we enter '20 and really the last stimulus we just had in December. So when you think about it, back half of last year, we were flat from a sales perspective. But payment rate was still elevated as we had excess liquidity in the system. As you saw the stimulus come through in January, 2 things happened. One, we saw actually strength in sales. So our sales, as we had indicated back in our January earnings call, we thought were going to be consistent with the back half of last year. They're slightly stronger than our expectations, which is positive, which means consumers are more willing to spend. And listen, we still have a lot of tailwinds that we talked about still intact for the latter part of this year, the ones in CareCredit, in dental, some of the backup part of the line, supply issues and Payment Solutions. So we're excited about that. So we've seen stimulus really kind of drive some sales. We also saw, unfortunately, higher-than-expected payment rate, which would with pressure balances, which will create a little bit of headwind for NIM in the first quarter and some excess liquidity but doesn't change the overall view as we move forward trajectory coming out. What's been interesting about payment rate and what we've seen is there was an elevation that happened for about 4 to 6 weeks, and then it kind of abated back into what we would say is a level consistent with the fourth quarter. So the stimulus effect was rather short term. And I think part of that is the increase in spending. Part of that is the timing of income tax refunds. So as we think forward to the next stimulus package that come through, we expect probably the same type of behavior. Now that stimulus payment behavior pattern, which was much shorter in duration than the prior stimulus, we think again, that will probably resonate in a similar fashion with this thing. So you'll see sales take off, right, because people are confident in that. So you'll see the sales line probably do better. Now that's going to be difficult because it's going to be the second quarter against a very -- a period last year where we had most of the restrictions and closures. So it will be difficult to really isolate that one piece. But then I think you'll see this pressure on balances, right? You'll see pay-down rates, probably see some of that. There could be a partial offset on income tax refunds. We'll see what happens ultimately with that. But that will be shorter duration. We do expect the payment rate to really more normalize as we move through the first half year and get to the second half, where I think if you think about the second half balance, origination and loan growth will be probably more consistent with past trends than what we've seen. So stimulus, though, is really important to kind of do 2 things for us. So it will put pressure on the asset side but really isn't enough of a bridge where we do 2 things: number one, do you push out the potential peak on credit; and number two, where we have a probably a spike that kind of comes up and down, does it flatten the slope of that curve. And our hope is that these 2 stimulus packages do both of those. So one, it pushes out a little bit; and two, it really kind of decreases of slope, which will be positive on credit and really help us to move out of the post-pandemic world.

Got it. That's helpful. As a follow-up to that, how are you thinking about the sort of post-reopening pent-up consumer demand dynamic at Synchrony? Maybe if you could expand on that a little bit.

Yes. And there's probably 2 phases, Bill. The first phase is kind of getting back to the normal growth rate. So as we think about that, if you think about our dental business in CareCredit, which is running probably mid-teens down, right now with some of the restrictions that were still in place as we exited 2020, as you think about some of the other things, that will abate, and you'll begin to see that growth. That provides a tailwind for us on this. You'll see that same thing when you look into the Payment Solutions business, the auto, which is down high teens. As people start getting back to some of these restrictions lift in the post-pandemic world, you'll see auto come back in there. You'll also see then, if you look in the Retail Card portfolio, all right, some of the businesses that were more impacted by some of the closures, the TJXs of the world, et cetera, you'll see those begin to accelerate. So we think we have lots of opportunity in the back half of the year to kind of get back to, what I'd say, is that more normalized growth rate. We do think America -- and the Americans and the consumer, really have shown the ability to not consistently save. So we think when you look at the higher spending rate, when you think of the fact that they pay down debt, right, once we kind of get through this initial phase, that first phase, you move into phase 2, which is a pent-up demand, which is they're more confident in their ability to take on more debt. They're more confident to reduce their savings, and they will begin to do things. I think there's a psychological effect. And we think there's a psychological effect of saying, "Hey, listen, I want to do something not just in the home but splurge a little bit. Do something different they may not have done." It may not be travel, but it will be something that they may not ordinarily spend in, and they'll have that confidence. So I think that we view it as that phase 2, which we think is probably 2022 stimulus. And we get on the back side of the pandemic faster, it could be the latter part of '21. But really more '22, where you're going to see a real increasing growth as things open up and that confidence that the consumer comes back to take on leverage, to take on those situations to say this is really behind us. And that's going to occur across, we think, all facets of the business, all forms of Retail Card, and then you'll begin to see more elective things in CareCredit, more spending in some of the cooler things in Payment Solutions that we have out there, other than power, which has been unbelievable for us this year.

Right. Yes. That's great perspective. If we could stay on the topic of growth, what would you highlight some of the things that you're most excited about inside of Synchrony in terms of growth prospects and ability to move the needle over the intermediate term? And maybe stuff that, just from the outside looking in, maybe not as well appreciated, particularly as we look to the other side of the pandemic?

Yes. The first thing I think about, the 2 platforms, which provide diversification for us. First is CareCredit. When you think about health care, it is an enormous payments market. It's dysfunctional, it's broken. You see a shift in the cost rate going from what was employers through health care systems out to consumers. You see the cost not necessarily abating and rising. So there's this opportunity to go into a very fragmented broken market and succeed. And I think if you looked at the model in health care where we have, we -- first of all, had -- traditionally, we went provider by provider, maybe got groups of providers. Now we're going beyond that. We're going into health systems. We have 13 different health systems sign-ups. So if you go into a Kaiser Permanente, Cleveland Clinic and AdventHealth, you can use your CareCredit card there. When you think about the ability to integrate into the practice management softwares that we have with providers in a different way for us to have acceptance, when you think about the relationships we built with the companies like Walgreens, where we had acceptance of the CareCredit card prior to a branded card with them, so we're creating that acceptance. So we're really excited about that. Then when you think about pets, an $80 billion industry here. We got into pet insurance through our Pets Best acquisition there. You look at a business that's growing 70% per year in pets. The pandemic puppies, as we call it, is really benefiting that business. And you even look at the recent acquisition that we did in the first quarter with Allegro Credit, which added audiology, more audiologists to the network, but also added different products. We have an installment product there. We have a leasing product there. So we're really excited. So we think there's just a tremendous opportunity as you think about that segment as we move forward and should have a growth rate well above the company average. When you think about the Payment Solutions platform that exists, the stuff around the home is just absolutely booming. We found a card and a network card here that creates utility. So people can really go across all your home spending and really drive that. We have the same thing in auto. So if you kind of go in and you want to have tires, a muffler, gasoline, everything, so we have over 500,000 locations that are participating in that auto network. And then you look at the relationships that we have, big branded names, the Ashley Furnitures, the Mattress Firms, the Sleep Numbers, we just have tremendous opportunity. And there, it's a lot of merchants so our ability to really tap into Middle America and tap into that consumer really provides a tremendous -- a tremendous opportunity to grow. And those 2 are really diversification plays because they are fragmented environments. You then get into Retail Card and you think about the 2 big names that we talked quite a bit about, Verizon and Venmo. When you think about Venmo, 60 million customers that are there, sitting with the PayPal product that has tremendous reach across the company. Verizon, 140-million-plus retail connections. Work that back to number of customers, incredible install base. We have a new relationship, although it sits in CareCredit, Walgreens, 90 million myWalgreens customers. You have these new de novo programs that will provide growth for us. And then you look at traditional, again, I mentioned PayPal. Amazon is doing incredibly well. TJX is a business model that goes through the cycle, and they'll do incredibly well. So our digital partners and some of the real winners in the retail space really will propel that growth. So we're excited as we kind of think about that. What underpins this all, I think, Bill, I'll just leave it with these 2 thoughts. One is around our digital capabilities, our ability to really integrate with our partners and drive that digital-first experience, whether it is applying for an account, servicing an account, purchasing on your account, whatever you want to do, the investment that we've made in digital is really a differentiation. And then secondly, the analytical capabilities. We're working with our partners to not only make better decisions on credit but really providing more insights when it comes to marketing. That's what we're excited about from a growth perspective. We think that we have growth and lots of room to grow penetration across all 3 platforms.

Got it. That's a great, great overview. We've heard some of your peers talk about getting relatively more aggressive on marketing and customer acquisition in 2021. Can you talk a little bit about how Synchrony is thinking about reaccelerating its investments while at the same time, maintaining positive operating leverage discipline?

Yes. I think you're going to see us -- we had some headwinds with regard to new accounts. We still opened 20 million new accounts last year so -- which, for us, we don't have to lean in. One of the advantages of our business model is we don't have to lean in from a marketing perspective to generate the new accounts. It's really the distribution. It's really the access. If you look at the volume that we see digitally through the Retail Card, we can generate lots of new accounts. I think you're going to see a very favorable trend as we move into in 2021 when it comes to generating the type of investments, the type of new accounts that we historically have seen. So I think you're going to see that as a tailwind for us as we move in. I think what we're going to see is more targeted investments from a marketing standpoint through these digital channels. So now that you are -- you have the access into the digital assets, you have the integration where you now can deliver more personalized marketing. So I think that's going to accelerate some of the growth. Now when you bring it to credit, we're not going to be ones -- and we don't sit here today saying that we're going to expand the buy box at the bottom nor do line expansion, things like that. That's not where we're going to go, Bill. When we look back a year or so ago, when we did some of the credit refinements, it was more around shifting our Dual Card cutoffs. It was about maybe stopping proactive credit line increases. We'll begin to do those things from a credit perspective to drive really profitable growth. But those are customers that we know and have experience with. As we upgrade a potential private-label customer to a Dual Card, even though they would have qualified a year ago, or hey, listen, we'll start to give those, those are programs which we have a lot of data on. We have a lot of experience on and will really drive profitable growth. So we're investing. We're being smart from a credit standpoint. I think you're going to see some positive things on new accounts as we enter into 2021. And I think we'll spend, from a marketing perspective, really in a more personalized manner.

Got it. That's helpful. Shifting gears to equal pay. In the last earnings call, you guys said that equal pay products represented $15 billion of balances or about 18% of your total loan portfolio. How do you think about the profitability of equal pay loans versus more traditional credit card products? And also, maybe just to kind of layer another one in here on the same topic of equal pay. Are you hearing anything from your retail partners pushing back on the high merchant discount rates that some of the buy now, pay later players are charging? And in general, do you think some of those relatively high MDRs in buy now, pay later in that model are sustainable?

Yes. So let me unpack that a little bit. So how do we think about the products we have today? So first of all, when we look at it, these sit inside existing accounts today for us inside of revolving accounts. So we had the leverage of having a lot of volume of velocity through that. We price those though to inadequate returns. So we don't subsidize it or have loss leaders as it comes to those products. When we look at it -- and this is one of the benefits of the RSA is that we look at it holistically across that. So it is a component of an account, which is very unique for us. So it provides an opportunity for us to still yield a very good return while we pass-through that. And again, we provide a wide range of flexibility to our merchant partners around duration, around APR, et cetera, to say we can price it differently to the consumer and really mitigate your cost or balance your costs and how you want to run that product. So for us, our broader strategy when it comes to installments is we need the full suite of products, right? So we will have -- if you just think about traditional, we'll have a secured product that sits out there today. We have a private-label product that's an open-ended core revolving product. Inside of that, we have these installments, accounts that can sit in various durations. We have easy payment plans that exist today. We have Dual Card. We have secure card. We will have a buy now, pay later product that's out there. So we will have the full product suite. So it's important for us as we go to our merchant partner have that full product suite, so we can give them what they want at their point and each have a potentially slightly different products when you look at it across an RSA. The other benefit of the model says we can migrate people up. So I can take someone who was in a secure card and with very transparent terms and conditions, they graduate up into a private label. We move people from private label to Dual Card. We hopefully will be able to do the same thing with the buy now, pay later up into other products. So that product suite and being able to offer that all the way through the customer journey and give the partner choice, we think, makes a lot of sense and provides tremendous economic value to them. The second part of your question is really about the merchant discount rates that folks are charging in. And it's interesting because you have to believe that there's some form of incremental value to pay that kind of MDR. I think 2020, people are experimenting. They clearly created a very good customer application process, right? So that has some value, but ultimately, are you delivering incremental sales. We've been able to demonstrate through our products, you can deliver those incremental sales. So the sustainability of that economics, that's to be determined. I think one could argue unless you have incremental sales, it's going to be difficult for retailers to support that on some of these lower margin, smaller tickets on that kind of size. But we'll see. And then you have to invest in the back side of the business. If you have some of these buy now, pay laters, you have 5 different accounts and 5 different statements, different things. Are you going to be able to service the customer in the way in which they come to expect with regard to credit? So we have heard some folks kind of question that a little bit, but I think the jury is still out with regard to the economic model over time.

Okay. That's super helpful. If we could shift to a question that comes up often in our discussions on your Retail Card segment. Many tend to think about the private-label business as being tethered to the physical point of sale. But you guys had 51% of Retail Card sales occur online in the fourth quarter, up from 18% back in 2015 and 39% pre-pandemic. Can you talk a little bit about how you see the pace of acceleration in digital penetration, how it trends from here? And any color you can give on the efficiency differential between physical point-of-sale and digital would be great.

Yes. So you first think about -- we've had evolution. You go back a number of years ago, and you followed us through the years, that digital penetration was down in the 30s, then it was 40s, now it's over 50%. So clearly, the pandemic has accelerated that. Our view in talking with our retail partners, digital is not going to abate. It's going to pull back a little bit. And clearly, it's probably crested a little bit in 2020, will pull back and then begin to move forward. But clearly, the consumer has become much more comfortable with doing digital shopping. They become much more comfortable with that delivery method. They become much more comfortable ordering digitally and going to pick it up in the stores or outside the stores. That model will clear. So we think about -- hey, listen, digital is an important part when you think about the way of the whole customer journey. So we see 50% or so of the activity flowing through, 60% of the applications flowing through digitally, 85 -- or I'm sorry, 65% of digital payments flowing through. So we see these things kind of -- these trends that are -- they are here to stay. It's how the customer wants to engage. And I think we've invested in the digital assets to meet them in that capability. We've also added capabilities that really reduce the friction. So when you think about authentication, when you think about the ability to approve transactions that may be higher risk, that investment allows for a better customer experience over time. And we really do believe that, that digital adoption will continue on here. When you think about the economics for us, from a cost perspective, clearly, on the back side of the business. So think about servicing for a second, we clearly get a tremendous lift, whether you're doing digital payments, e-bill, things like that. We are promoting that on the backside and driving real productivity and operating leverage inside the base. I think when you think about the front side of the business, when you're more digitally attuned, we're able to push you -- one of the things about our Synchrony plug-in app, and you're seeing the side of retailer's app, is we can push the value proposition to you. We can push offers to you, so you get actually a better efficiency and better return on investments in some of those marketing activities as you drive it through the digital channel. So there clearly is an operating leverage here. Most certainly, you're expanding the base, and people are more willing to apply because they don't have the person-to-person interaction to say, Bill may say no to me if I apply for a credit point of sale. But if you're sitting in front of a -- your iPad or your home computer or on your phone, you're more wanting to apply for credit. So we think across the system, there's efficiencies at all level, whether it's on the apply side, the buy side and marketing and then clearly, the servicing side from an experience perspective.

That's great. Very helpful. I wanted to go back to some of your earlier comments early on when I asked you what some of the things are that you guys are most excited about inside of Synchrony. And you started off making some comments about CareCredit. And it seems like there are recent acquisitions like Allegro Credit and you mentioned Walgreens. You guys clearly gaining traction within that health care sector. Maybe could you frame for us -- and I know you got into this a little bit, but is there a little bit more you can do to kind of frame for us a little bit, what -- where your market share stands today? What the addressable market opportunity is, just to kind of paint a picture of the runway, where we are today versus what the opportunity is? And how large could we really see CareCredit's contribution from a mix perspective to the overall business? Could we actually see it grow meaningfully from where it is today?

Yes. It's a great question, Bill. I mean, when you think about the base that we're working off of today, we have over 230,000 locations in which CareCredit's accepted; 25 different specialties; again, 13 different health networks, some of the largest health systems across the country. So we have this base in order to do that. We are a fraction of the spend that's out there. So I think the addressable spend that we can get after is really fairly significant, and we're continuing to make inroads in. I think we're trying to be smart, where we're in 80-plus percent of dental offices, 90-plus percent of veterinarian offices, is how do I use that? So now it's about awareness. And how do I create the card that allows you to do things? Our initial foray with Walgreens was just acceptance. So you can use your CareCredit card. If you think about a health card, I can use it at the doctor's office, I can use it at a pharmacy. That acceptance model even works. We actually -- it's accepted at Walmart, even though we don't have the relationship with Walmart anymore. It's accepted at Sam's Club. It's accepted in places where you are consuming health. So I think to some degree, when we look at it, that this business can grow at a double-digit growth rate for the foreseeable future. So it has that type of potential, right? Clearly, in the medical space today, you're a little bit more challenged, right? You think about dental. They are spacing things out a little bit. People have to be wanting to go back. When you think about planned procedures, people have to want to be comfortable to go back in, in the pandemic world. And in the early stages of the post-pandemic world, those are influences that will dictate how fast it grows. But I think being a practice management software, being in all these different locations, allowing for access of the card utilization across the card, and then when you look at some of these bolt-on acquisitions, again, think about Pets Best for a second. So we would accept payment in a veterinary office. Maybe with the proliferation of pet insurance now, we could potentially eat into that business. Now you have the ability to offer -- because we're in so many vets, I can offer you the insurance, and I can offer you the CareCredit card. So first, we can go to the insurance, pay that portion of the claim, take your deductible, put it on CareCredit. It makes a lot of sense, and I can use that channel in order to generate more covered paths. When you think about Allegro Credit, here's one where -- very small, been around for a long period of time, provided some incremental audiologists for us and locations for us but also provide us an installment product, provide us a leasing product. And the first one we got to understand is that leasing products makes a lot of sense when you think about technology in audiology, how it advances is no different than your cell phone. So we think there's opportunities to do more bolt-on like that. But really, that can grow at above-average company price for a long period of time. It could be a big portion of the portfolio, and we're excited about that.

Got it. That's great. Can we go back to some of your comments earlier on some of the partnerships? Specifically, one of them that certainly gets a lot of attention is your -- the partnership with Venmo. And maybe -- got a question on whether you could speak to the rollout of the Venmo card and how it compares with your internal expectations, just high level? And then also, is there anything you can share on when -- the time line of when we could see potentially the Venmo card start to move the needle in terms of balances and revenues? And sort of to combine that with similarly along the same lines of your partnerships that are significant that you're building out -- part of Walgreens is another one that seems like it has the potential to be significant. And maybe if you could talk a little bit about how you expect to penetrate that loyalty membership base? And how long -- again, like the Venmo question, it takes for something like this to ramp. So maybe just a little bit more color on these meaningful partnerships, if you could?

Yes. So let me start on top of that. So first of all, I think the 3 de novo partnerships we've announced over the last year plus, Verizon, Venmo and Walgreens, each of those partnerships, if you look out 5 to 10 years from now, have the potential because of the large number of addressable customers that are already engaged with those 3 brands to be top 5, top 10 programs. So we see that kind of potential across all 3. When you look at Venmo to where your question started, Bill, particularly in that particular one, you had 60 million customers here. We did a soft launch and really brought some really unique capabilities. The fact you can activate the card in 4 seconds, the card has a QR code so you can split transactions. You can split transactions in the application that push notifications. The fact that the value prop is really kind of, I think, very unique where it rotates and gives you the most benefit based on your spend. No one wants to go in and choose a category each month to where you're going to spend your dollars. This does that for you. It really engages a customer. You have got to go and see where you're spending money, how much you've earned. You can apply the cash into your account, you can split transactions. There's a lot of features and functionality. Now we did that. We launched that product during a pandemic, which I think is a testament to our technological capabilities and our team. It was in a soft launch as we went through fourth quarter into early first quarter. That really went into full production, call it, mid to third week of February. So we'll say it's a little early. We are very optimistic with regard to the performance that, that program can have because it really does have some unique technological abilities that kind of go on. And I think -- when you think about Walgreens, where you're starting to go and apply even to Verizon, what all 3 of those programs have is a very strong value proposition that exists today with the consumers and those brands. So you think about Walgreens with 90 million myWalgreens customers, so here, you have people deriving value from a tender and a loyalty program that sits there. When you can provide a significant upside to that program from it, with someone who's really engaged with the brand, it's going to resonate with them. So we're excited to do that. We're working through the value prop creation and definition through focus groups and research the way we normally do. But it's just a huge addressable base that Walgreens really views this as super critical to their strategy. And I think that's -- as you think about all 3 of those opportunities: Verizon, when they think about the phones in 5G and the importance of that; Walgreens, in a very competitive environment, how they're building that loyalty; when you think about Venmo and how they're trying to take those customers and really show the value to those consumers, not only through transferring money but all the other things that they can get, that is so core to them. They actually lean in, and that really builds a very profitable and sustainable partnership in our eyes, and we're excited to partner with all 3 of them.

Got it. So we're getting down to about our last 5 minutes here. I'm going to lump a couple together. So first, the funding opportunity and capital and the pace for capital returns. So on the funding opportunity, lower deposit pricing has helped offset some of the yield compression that we've seen since the start of the pandemic today. Your interest-bearing deposit costs are still well above the industry. So maybe you can talk a little bit about how much room there is to further reduce deposit costs. Your NIM profile in this zero-interest rate policy environment seems like it's very attractive, and that seems like it could be a very attractive ongoing source of upside. And then on the capital piece, you guys have a meaningful level of excess capital, especially if we start to layer in reserve releases to the extent that severe losses don't actually materialize. And I know you guys are not a CCAR bank, but there's this view that traditional CCAR banks will be free to return capital as long as they hold enough to meet the minimum regulatory minimums, including the stress capital buffer plus the 4.5% minimum like once we get past the sort of return to normal past the dividend income test that the Feds imposed. So is it reasonable to think that the pace of capital return for Synchrony could be pretty strong as long as you've got sufficient to meet the minimum? I know there's a lot there, but...

That's okay. Let me open. So let's start with funding where you start. So clearly, there's an ability and we led the market down. So right now, I think we've done a couple of moves even as recently as last week, we're down to 50 basis points on high-yield savings. The one part of the book that will continue to reset is certificate of deposits, right, that were 12, 15, 18, 24 months ago, which is a lot. We have a lot of those coming up for maturity here in the first couple of quarters of 2021. So we'll see that book continue to reset with that. There is some natural floor though, Bill, relative to brick-and-mortar banks that all the digital banks are trying to find where does the point -- the one thing we don't want to do is destroy the customer relationships so that when we return to growth, hopefully, in the middle of this year, back half of this year, that we would have to raise rates exponentially or faster -- I shouldn't say exponentially -- faster in order to get balances. So we're trying to moderate the real short-term pressure here with "Hey, I have to have a sustainable franchise." Well, certainly, if I'm going to return to historical growth rates and then really this pent-up demand, so there is an ability to go lower. You'll see deposits go lower. I think the fact that our deposits are 80% of our funding stack, you'll see that kind of continue. We'll continue to manage the profile, try to burn off the excess liquidity, whether it's managing our unsecured and secured maturities that come up this year and timing that out. So we want to be smart with regard to that. It's an incredibly attractive funding source and a competitive advantage for how we've grown that digital bank for the last number of years. So we want to be smart there. But I do think you'll continue to see some leverage as you move that. From a capital perspective, you're correct, we're not a CCAR bank. We do believe we have a large amount of excess capital. If you think about our history, we started out with a very high CET1. That was by design to secure our separation from GE. And we were on a pretty good pace to get down to the peers, right? So when you kind of talk about what -- it's the targeted ratios, the SCBs plus the minimums, we were on that pace. Pandemic hit, we stopped. We built up capital here. There is nothing in our view that changes both the end goal of where we're trying to get to and really our view in how we're going to use capital between the organic growth opportunities, dividends and then share repurchases, to a lesser degree, M&A, if those opportunities present itself. So the capital thesis is intact. The question with regard to pace now, right, because we're not a CCAR bank. It's fundamentally not terribly different, right? So we'll file a capital plan with the Fed in April. They'll give us some level of response. In the May-June time frame, we'll move forward. While there's not just an absolute number, we believe that we run our processes like we're a CCAR bank. We built the process and we separated from GE as a CCAR bank. We run everything in the exact same way. We just don't get an output from the Fed. So I think we've built up a lot of credibility in our governance process and the way in which we run it. The pace and the cadence to get to that, the one thing we have to be thoughtful about is our regulators as a constituency, right? They look at things and say, you don't know where the pandemic is. You don't know what the variants are. You don't know how unemployment will ultimately come back. You have 9.5 million people. So we want to take them through that process, and they start to check things off. We will have a cadence that really shows our view of the balance sheet strength that we have, the capital strength, and we want to get down to the -- to our target capital ratio as soon as we can but as prudently as we can as we bring those constituency along the process. So I think -- I hope people will be happy with the cadence that we come out with, but it's something that we want to be thoughtful about. And we understand it's a position of strength for us and part of the investment thesis in our company.

Absolutely. I think that's a great place to end our discussion. Thank you for your time today with us, Brian. I really hope we'll have the opportunity to do this in person next year. Our next presentation will start at 3:00. Please see your agenda for the link. Thanks, everyone. And thank you again, Brian, so much. Appreciate it.

Thanks, Bill. Appreciate it. Have a great day.

You too. Thanks.