Synchrony Financial (SYF) Earnings Call Transcript & Summary

Thanks, everybody, for joining us. I have a disclosure read, and then we'll get right into it. For important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. So this morning, we're delighted to have Brian Wenzel, CFO of Synchrony Financial with us. Brian, thanks for joining us.

Thanks for the invitation. Good to see you, Betsy.

Good to see you, too, virtually. Next year in-person, but I enjoy the green background that you've got there.

Thank you. Yes, we just started our return-to-office pilot. So it's good to be back in the office and [indiscernible].

And you had a great report this morning. I know you put out your managed data, where I think -- well, I'll let you say it, what happened with loans?

So we showed positive loan growth. So we inflected sequentially since March, which was positive and we're down less than 1% year-over-year. So when you think about March, we're down 7% loans, down less than 1% year-over-year. And really, to be honest with you, Betsy, it's been strong sales performance. It has outperformed in the first quarter, as we talked about in April. It continued to outperform here in the second quarter. And really, it's across all our sales platforms. We don't have 1 piece that's pulling. We have all the pieces that are pulling, which is -- really speaks a lot about the franchise that we have and the portfolio strength.

So I need to just wrap that into our first question. From a strategic perspective, how are you helping your retailers stand out and get notice? What do you think is driving this differentiation versus peers?

Yes. Our business philosophy, Betsy, is really to drive sales of our retail partners, merchants and providers, right? That's what we get up every day. We are a partner-centric company. So that's our focus number 1. And how we do that is really bringing to them assets and value propositions on our cards. So the assets are the digital assets, right? Over the last year or so, people have been transforming their business model. They are trying to drive more things digitally. They've been doing things. So it's important for us to get our digital assets out there, whether supply, buy, service, it's really important for us to engage with them, engage in the customer journey to different places inside the path. And then you think about the value propositions on our cards and constantly refreshing them and getting them to be relevant to our -- to the consumer base that they serve. So look at Venmo. I mean that is just one of the best value props out there where it rotates into what people spend the most on. So it gets the most value back to the consumer, and it just really resonated extremely well with the customer. So again, it's really about bringing digital assets, bringing our capabilities to them, meeting the customer in the journey point in the value prop.

Okay. Let's talk about the recent restructuring. You did just restructure your platforms from 3 to 5. Is that right?

Yes. So we have gone from 3 platforms, which, to be honest with you, Betsy, was something that was done a number of years ago, over probably 10-plus years ago, where we were focused really on large partners and customized programs and then really promotional financing. And that really didn't reflect who we are today. So What we've known over time is when we focus on certain industries, so think about CareCredit and the outsized growth it's had over the last number of years, in the home and the auto space where we've seen outsized growth focusing on industries. So we have a team if you wake up every day thinking about commonalities among certain partners and merchants. It made a lot of sense. So we went to 5 segments. So you think about our home and auto. So focus really in those 2 verticals digital. So you think about the digital partners that we have. And it's more, it's beyond just PayPal and Amazon. It's been Verizon, eBay, you think of smarter folks, zulily, Fanatics, our Synchrony Mastercard, so digital health and wellness, diversified value. So there's a place where we have larger merchants, like TJX, who opens over 200 stores a year, tremendous partner there. And then lifestyle, you think about powersports, outdoor power equipment, Dick's Sporting Goods, music, luxury, jewelry. So getting up every morning and having folks think about these types of retailers. So think about home for a second. If you're thinking about something [indiscernible] furniture, probably something that create a barrier on. So our ability to be faster in delivering products and capabilities that will be enhanced. And then to support the new platforms, we actually realign the backside of the business into a growth organization, which really combines our marketing and analytics teams to deliver those services and capabilities faster as well as combining technology and operations really to help the customer in their journey. So I think we've aligned the backside of the business to really support the front side and the front side, it's all about speed and getting things out faster at scale.

So in the past was the back end aligned with each portfolio separately? Is that the one of the changes that happened here?

We were more just functional. So marketing was a separate pillar, analytics was a separate pillar. We worked together, but now you're blending those teams, you're blending the digital team with the marketing and the analytics. So it just removes friction inside the process that was [indiscernible].

Okay. I mean going to 5 platforms, the way you did and described it to me makes a ton of sense, and it feels to me like you're giving investors much clearer insight into your business mix and into the growth opportunities there. So I would think that would be helpful in communicating your story to the street. From a strategic perspective, is there anything we should be thinking about as takeaways to those?

Listen, I think, Betsy, the goal for that we did was really how do we move faster for our retail partners, merchant's provider. So it's all about speed and execution. If you think about how we would do things before, take SetPay, for example. We started rolling SetPay out at a couple of clients. Now we develop SetPay across the entire organization. We can roll it out. And essentially, you get the product 90% done, that last 5% to 10% is the customization by partner that we do. So it will allow us, hopefully, to accelerate our growth and be more efficient and be able to anticipate the needs faster. So that was really the purpose of what it is, and that's the strategy behind it.

Okay. So you talked -- you brought up SetPay that does lead into a question on BNPL. And really the question we've been getting from investors is how important is it for Synchrony to offer? What would be considered as a true pay in for something like that, the BNPL offering? Is this something that your retailers are interested in? Maybe you can give us a sense as to what the opportunity set is there for you since you already offer SetPay.

Yes. So first of all, I always like to remind people, we actually are banging installment today. We have over $15 billion of volume that we do in various installment pieces. We do easy pay plans, which are similar to buy now, pay later today. We do that. So -- but it sets aside a revolving account. Our strategy when it comes to buy now, pay later, SetPay is to really -- what we're trying to do is bring the full suite of products to a customer and say, okay, and to a partner, say, what products work? Where do they work in the customer journey? Where do they work inside the retailer? And what's critical about bringing the full breadth of products is our ability to migrate people through a product life cycle. So today, we have a secured product. We can go from a secured product to a private label product. In places where our private label and Dual Card, we can move you from a private label account to a Dual Card account or give you the extra utility. In SetPay and buy now, pay later, these are ones where you can originate there and then migrate those folks up to private label. So it's one that we want to have, most certainly, I think over the last year or so, as retailers have really struggled to try to bring in new customers and try to track customer do everything buy now, pay later has taken off a little bit in concept. And so we think it's probably here to stay. But again, it's got to be part of a full product suite that you could bring to a retailer. And again, for us, it's about providing all the alternatives to our partners and really to all the consumers to what products they want.

So when I hear full product suite, I also hear maybe bundled pricing. And when I think about BNPL, you've got somewhere in the 5% to 7% range for pay, merchant discount fee, the longer-term loans are much higher than merchant discount fee than that. And then I think about your proposition to your customers. And as far as I can tell you, you don't have that kind of merchant discount. So is this something that you think you could do in a bundled price way that would be potentially more competitive than the stand-alone pure-play you guys have?

Yes. In a lot of our business, we have aligned economic interest. So most certainly, some of our partners are not inclined to migrate sales from our cards to other cards because I think they get a better price from our cards. And most certainly, when you think about a full product suite and you look at the whole relationship, there's an ability to leverage price across the spectrum. In other places, we do collect a fee, mainly in the payment solutions space. So that will continue on. So -- but again, I do think there's a competitive advantage when you have an aligned economic interest with partners where you really can drive that. And again, our cost of sales for retail partner is lower than the lowest form of tender. So they're not really intended to migrate away from us. They're providing customer choice. And they've done a very good job of providing customer choice for folks and alternatives. At the end of the day, Betsy, the question is going to be, is it price sustainable for folks? And are you actually bringing new consumers in a driving conversion rate. And that's what I think retailers are evaluating now is what is that value proposition. So as much as it's a nice product, it's got to make economic sense for them.

Got it. Okay. And then just lastly on this topic, you have mentioned already that you're looking to launch some BNPL with some of your partners later this year. Is this something that you would build? Or is it a buy-type option? And then can you add a BNPL feature to the point-of-sale that already has another BNPL offering.

Yes. So with regard to your first question, it's something -- it's a product that we will have out in the latter part of this year. We will roll it out to partners who want to do it. In some cases, maybe where BNPL not there in other cases, it could be. So there's no -- there's no reason why they couldn't sit side-by-side. I think our ability to integrate because the way our products integrate today may make it easier for our product to plug into some of the digital assets and their apps. So it may be a little bit easier to use. So from that sense, We think we're in a good position to begin to deliver that product.

Okay. All right. I wanted to switch gears to the competitive dynamic that's out there right now in the retail partner card space. It feels like there's a lot of portfolios in play or at least rumors of a lot of portfolios in play. I just want to understand how you think about the opportunities to either invest in some of these versus stock buyback, give us a sense as to what the math is that you run through on that decisioning.

Well, the first thing is when you think about entering into any new relationship, it's -- what's the attractiveness of the opportunity, right? For us, when we look at the programs that are most successful, they are really having important strategic value to the partners merchant provider. So it's somewhere where they're trying to connect with their best customers. They're trying to drive something. It's not an economic vehicle. So that's the first thing, is it important for them and are they doing it the right way? The next question is, what's the engagement of their customer base? Are they engaged? Will they want the product? Can you create a value proposition that resonates? So when you start working through that, okay, it's strategic. They have a customer base, then you look at the segment, is it attractive from a growth perspective and sustainable. So if you go down that path, you sit around and say, what's the size of the opportunity and what's the risk-adjusted return versus a stock buyback. Clearly, we would prefer to invest in growth at attractive risk-adjusted returns because we think that's superior than just buying back shares. But clearly, we use a combination of both earnings power and share repurchases to drive EPS growth, and we'll continue to do that. But if there are opportunities where we can invest in programs that make sense strategically, we would love to do that.

It's interesting question, too, with regard to the timing because we're -- I know you're not an SCB bank specifically right now, but your peer group -- many of your peers are. And so you're going to have peers accelerating their buybacks at a time when over the next year, maybe there's some chunky portfolios in play. So is that something where you would sit back and say, will pause on the buyback in order to maintain capacity if these opportunities come through? Or is it more real time than that?

Yes. So Betsy, you and I, are going to have this conversation. We have a significant amount of excess capital, right? So we're in a position of strength as we sit here today. We announced last month a share repurchase plan of $2.9 billion through June of next year. We're going to execute against that plan. If an opportunity comes in play, we'll potentially consider it. The thing about our business is that we generate a significant amount of capital each year. We are focused on being a high ROA company relative to peers. So our capital generation and the fact that we have -- our [indiscernible] structure, which really buffers at the downside, capitals little bit the upside but buffers at the downside makes us very resilient. So we can generate a lot of capital And given the excess capital, we can potentially do both. It's really going to depend upon what the opportunities are. But we evaluate them as they come. But we're really focused on deploying capital again our capital ratio in line with years, whether that's through the growth or purchases.

Okay. So since we're on the capital topic, I just do want to ask the question around the $2.9 billion. It seems like it was based on a lagged stress test back, what, about 6 months ago or so. And with GAAP exiting the book soon and the macro looking pretty good, what kind of timing can you give us with regard to whether or not you would ever revisit this capital plan?

Yes. So -- Yes, that's a great question, Betsy. Let me just make sure the way everyone understands. When we went through our capital planning process. In January, we announced $1.6 billion for the calendar year, right? And that was really based upon October, November, us feeling good about where the economy was, where our portfolio was, resiliency of our business, and we went ahead and got the authorization and approval of the Board in order to do that. We then went through a process using December projections and assumptions in January to develop a capital plan for '21, '22. And then that went through our rigorous governance process, the Board approved that in early March, went through the regulatory process. So that's what came out. So there is a lag effect to that. Clearly, the first quarter performed better than our expectation. We're about 15 days away from the end of the second quarter. We're going to continue to execute against a $2.9 billion plan. But to the extent that we feel better about where we are as a company, there's nothing that prevents us from going back updating our stress tests and our loss scenarios and bringing that back and getting an increased authorization as we move forward. And that's not a very long process, but the process we just have to go through with regard to our loss model. So again, I think we have plenty to execute in the short term, and we can consider and may consider going back for more.

And then just lastly on this, once you get to $100 billion over a 4-quarter average, I think you become subject to the SCB, Is that right?

That's correct.

So pick your timing as to when that would happen over the next year or so, or 2 years. How do you think that impacts your capital management process, if at all?

It doesn't, Betsy. When we came out as a public company in 2014, we built the process that understood we were going to be a CCAR-type bank. So all our processes are built on that framework. So there's nothing different we'll have to do once we trigger that status.

Okay. So let's get back to the portfolio competition and some of the opportunities that are out there. One of the questions that we do get is regarding Gap, where you have chosen to, I don't know what the right word is walk away or you're going to end that relationship. Maybe you could give us a sense as to why you didn't compete more aggressively for that portfolio. And 1 of the questions we get as well, is this a proactive way of reducing, deemphasizing maybe that category and shifting more capital and the opportunities into some of the other verticals like you were mentioning earlier?

Yes. So the -- I probably wouldn't characterize that we didn't compete aggressively, Betsy. We actually did could be aggressive. We put up a very compelling offer and offer that for us, we thought was at a very good risk-adjusted return. But unfortunately, I think what the market and the offer that they took had some terms and features that we did not think made sense for our shareholders and for our company. We weren't going to giving us certain contractual terms and guarantees that didn't align our interest and most certainly for a retailer that was struggling going into something that's fixed guarantees that may escalate didn't make sense for us. So it was a very conscious decision for us not to renew with them, and it just was terms that we couldn't live with. And I think what's important for us is that we have to be comfortable with the risk-adjusted return. We competed with very aggressively for it but just didn't make sense for us. And if that's the case, then we'll invest the capital in other areas.

So can you give us a sense of what type of characteristics you're looking for when you do build your pipeline, your retail partner relationships?

Yes. I said it earlier, Betsy. The first thing is around strategic alignment. Is this strategic for them? Where is it in their priority? Where are the things that they feel are important for them and how aligned is their customer base to the brand? And then what we want to do is create aligned incentives around the program. So that we're both investing in the program and that we both profit from the success of the program. When you have that type of alignment, it allows you to really focus on the value proposition. If you have to take credit actions, you're aligned on those types of things. It's how you service the customer. So you really have agreement because you're sharing in the economic pool. And really what the retailer wants to do in the cases where we're very successful is they want to invest in the program because what they want to do is drive sales, and generally, the sales that we drive are a higher margin. So they get a better valuation by driving those sales versus just making money off the program. So those are the types of things that we focus on in engaging conversations, and that's why I think our model is different where we go into places that want to have those RSAs and want to have the alignment sounds economically.

Okay. I would, at this point, just mention to the listeners that you can ask a question via the webcast. [Operator Instructions] In the meantime, we're going to turn to loan growth. I know we kicked off at the beginning just talking about how you saw an inflection in your loan receivables this month on a month-on-month basis. Give us a sense as to what you're seeing, what's driving that improvement? I think you're a bit ahead of the peers with this result.

Yes. So we were very optimistic, Betsy, as we entered the year, the position that we were in. And in the first quarter, again, our purchase volume exceeded our expectation. That has continued into the second quarter. Part of that is the stimulus, right? We see dollars kind of flowing through. The consumer is spending more. Their seeing the restrictions ease across the country and things kind of open up as we bounce back. So purchase volume has been incredibly strong for us. Clearly, the stimulus dollars have impacted payment rate. I think we showed a chart back in the first quarter that showed the escalation of the payment rate in March that has continued on here in April and May. It's abating slightly but still elevated from where it has been. And that's really the buildup of all the stimulus and savings that consumers have. But as we look across the portfolio, in health and wellness, you see dental bouncing back as more people go back and get those cleanings and procedures done that, that were put off either because they're closed or they just didn't want to engage with dental providers. We see other specialties, cosmetics, there. Other things, audiology that are bouncing back. So across the spectrum, inside health and wellness, digital continues to perform incredibly well. And that has not eased. When you think about the home and auto, auto is bouncing back a little bit as the economy opens up. You go down to the diversified value, TJX continues to perform incredibly well. So we see it across the portfolio. And it's really being pulled by purchase volume that's very strong, and we expect that to continue as we move into the back half of the year.

Now the fact that you've got purchase volumes still very strong and payment rates high. Is that telling -- and loan growth beginning to inflect. So is that telling us that some of the consumers have used up their stimulus at this stage?

I'm not sure I would say they used up their stimulus. They are spending the stimulus and they have the confidence to spend the stimulus. That's the important thing is when people have the confidence to spend and to take on debt. Our view, Betsy, is that the payment rate is going to moderate back to the mean, savings rate will moderate back to the mean. Savings rate will probably moderate later this year. The buildup of savings that people have had over the last and the paydown of debt that people have done over the last 18 months that will begin to work its way through the system, probably over an 18 months, 24 months. So I think we're going to go into a period here of high purchase volume growth for partners that are -- that offer a compelling product for customers, compelling services for customers. So we said at the start of the year, we expected a little bit more moderation in first half for turn back to a growth in the second half and then probably a period of pent-up demand, and that's important. I think there's this pent-up demand that will produce above-average loan growth beside the pandemic. And the question is whether or not that starts late this year or early next year. And then we should be able to take advantage of it given the partners we're with.

So you mentioned that payment rates should normalize. And is that going to -- that's going to be a function of the savings rate normalizing? Or is that a little bit slower longer term?

I think its payment rate will normalize as stimulus continues to burn off, right? You still have people who are on some expanded unemployment benefits, you have forbearance that we'll see here in the coming months. So the obligations of consumers will rise, which should pull down the payment rate as we move forward.

And how are you thinking about the credit box where you are relative to 2019?

Yes. No, we feel great about credit. I mean it's funny. It's probably the best it's ever been for this business. Our subprime is 21% of our book. It was 27% as we entered the pandemic. So really, a lot of things are very favorable. And there, we put some refinements in last year. I would say, in the beginning part of this year, we've rolled those back. So they are kind of unwound. We're back to a credit box that probably looks similar to 2019. And listen, we've seen strong originations. We had 5 million new accounts in the first quarter. We did 20 million new accounts last year. So we are seeing a pickup there, and we'll drive some credit-related growth here in the back half of the year. So we feel good about it. I think the important part is our company has invested quite significantly in data sharing, data attributes, and we're really able to make better underwriting decisions, and we're much more nimble than we were. So I do think that we feel good about credit. I think some of the things that we're doing now, Betsy, are with people that we know also doing credit line increases to customers we know, doing upgrades from private label and Dual Cards with customers we know. We're not really expanding the buyback at originations. So we're not lowering point of origination FICO or having -- or needing to expand the credit lines at origination. Those are not things we have to do. But we are smarter with regard to the credit lines we're signing folks with the data sharing attributes.

Got it. Okay. And then I guess the follow-up there is, given the strong credit results that you posted this morning, I think NCOS were holding steady, right, on a month-on-month basis at 3.7%. Is there any signs that you would see credit start moving the other way? Anything under the hood that you're looking at? And maybe you can give us a sense as to how credit's trending versus your expectations for the reserve when you set that in 1Q '21?

So let's talk about 1Q '21. We had a scenario, right? That said, we're going to see credit begin to -- delinquencies begin to build and that you'd see peak delinquencies in 2022 and then have a brief rise in charge-off. So if you think about that case, that's a case where you have a rising delinquency, a net charge-off rate that's higher than our historical average in '22 and probably moderating back to a company average 5.5% in '23. If you continue to see the effects of stimulus and a stimulus does provide you an view. An optimistic case could say, if I think about credit this year, it could be sub-4 this year. It could be sub-5.5 next year or 5, and then you only get back to your average. So you effectively don't have the losses. That's where you're trying to figure out where credit is going. So right now, we have not seen any deterioration through May what we reported. So I think it's showing a little bit better than our expectations, but we're going to continue to monitor it. You asked the question about what are we concerned about, right? There's probably 1 big thing that we're concerned about. And I think most industry participants are is the effect of a forbearance. So these are accounts that didn't take forbearance with us when we had our program but are on some form of forbearance with another institution, right? That could be a mortgage, it could be an auto loan, it could be a student loan. We're closely monitoring those folks and how they're performing, particularly as they come off of forbearance. And inside our portfolio, we kind of segmented people who took forbearance with us, people who have not taken forbearance with us. And people who have not taken forbearance with us but have forbearance somewhere else and watching that population of people how that performs. That is probably one of the largest wildcards. And then we're going to have to see how inflation plays out. And does that impact the [indiscernible] into '22?

So can you share with us what percentage of the loan book is held away forbearance?

We have not shared that. What I'd say, Betsy, is we're closely monitoring it. So we understand the credit attributes of those folks. We develop strategies around those folks. We understand how many accounts that they have in forbearance and the type of forbearance that they have. But we haven't really broken that out for folks.

Okay. But it would be fair to assume that you're not raising their credit lines.

That would be a fair assumption.

Okay. Just one last question on credit. Any observations around the varying buckets of Synchrony borrowers that you can talk to us about prime, subprime, homeowner, renter, boomer, millennial, whatever way you want to slice it, is there any differentiation that you could share with us with regard to the credit performance?

This is really interesting. [indiscernible] everyone is performing incredibly well. So even folks that were lower credit, they are performing as well. So we don't see any meaningful differentiation as we move through this economic period. So we feel really good about credit from where we are. It's going to be a position of strength as we move forward here. And again, given a low level, it's going to allow us to expand and be a little bit more flexible with regard to some of our policies. So we're excited about the credit position of the company as we exit the pandemic and hopefully go into this accelerated growth period.

Okay. There's a couple of questions from the audience. But before I get to them, I do want to give you a chance to just talk a little bit about the quarter, any quarterly updates that you've got, given that you've paid down some debt, you've got loan growth building, credit seems to be trending a little bit better than expected. So any color?

Yes. I think, again, we have a little bit to go here. The way I think about it, we talked quite a bit about loan growth. So purchase volume is stronger than expectations, obviously, payments are stronger than what we expected as well. So this tempered a little bit of the loan growth. But clearly, we're on a positive trend there. I think as you move from the first quarter to the second quarter, net interest margin, there is some pressure on net interest margin, given the fact that we had a higher payment rate as we did in March that has continued on. So there's a little bit of pressure on the margin as we go through. You are right. We have tried to actively manage our excess equity both in taking deposits down. We led the market down with regard to online deposit rates. We've reduced that deposit portfolio to where we're comfortable. And now we've moved back in line with peers. So we've done that. We've paid down some debt, both secured and unsecured. So we're working through the excess liquidity to kind of get that position, and we continue to invest in our business and expense discipline is strong. So we feel good about how we have entered the quarter and look forward to sharing that with people in July.

Now credits remained pretty strong. So does that also imply that RSAs should remain relatively high as we go through 2Q and into the back half of the year?

Yes. Listen, the RSA is working as it's designed. I know folks get frustrated with this. But when the company is performing better on an operating basis, you're going to have a higher RSA. And that's really what's happening now is that the credit improvement has more than offset the revenue decline. And so we're sharing more with partners. That's the way it's designed. As credit begins to move back in line or deteriorate, we will see the RSA come back down to company average or below depending upon where the loss rate goes. So in the short term, it will remain elevated, mainly because the force of the business is elevated.

And you mentioned expense discipline, but should we also anticipate some increasing investment spend in marketing, for example, or efforts to generate new account openings.

The great thing about our model, Betsy, is we don't have to spend a lot of money incremental dollars in order to generate the accounts. That's the distribution model we have. We are very much advantaged to our peers. We have to spend money to [indiscernible] and see customers. We have millions of customers coming through our partners and providers every day. So we don't have to spend money there. That being said, a lot of our dollars from marketing expense are triggered off of purchase volume, which has accelerated. So there will be some incremental dollars, but that goes into life cycle and other things. So you'll see some more marketing expense dollars, but there's not heavy investment we have to make there. And the good news for us is as we move through the pandemic, we did not reduce any of our strategic spend last year. We reprioritized expenses and reprioritized investment, and we maintained that spend in '21 flat with '20. So we feel really good about what we're investing in the long-term aspect of the business. So we feel good there. And we're on target to deliver the $210 million in expense savings we outlined back earlier this year. So we feel good about it.

So we had just one last follow-up question here from the audience wanting a little bit of clarity around your comment that net charge-offs kind of on average, 5.5%. And the reason for the question is how do you get to that 5.5%? Seems like pre-COVID, you were running lower. And seems like 5.5% would include the great financial crisis, which was hopefully a 100-year flood type of event. So are you being super conservative with 5.5%? Or is there other inputs that you could share with us to help us get to that?

Yes. So I think the pre-pandemic period is a little bit tough for people to think about because you had [indiscernible]. We're coming off of the credit normalization you saw in '16, '17. In that 5 range, I put approximately 5.5%. That's probably a loss rate that's right for this business. We write to a risk-adjusted margin. So at the end of the day, you have to look at the high yield and high net interest margin. So we're doing high-15s net interest margin with that loss rate, that's probably consistent where this business has been from a net margin perspective.

And it's also assuming some form of unemployment that what is in mid-singles or...?

Yes. Call it, the 4%, 4% to 5%, probably 4% range that we're taking.

And that model altogether, including the efficient platform that you've got on the expense side is delivering strong double-digit ROEs?

Yes. So -- and we'll outline that I know you know we're going to do in our Investor Day, our first Investor Day, September 9. We're going to go through and break down a little bit more of the model and expectations as we move in the medium to longer term. So we look forward to sharing that with the investment community.

And that's going to be virtual?

That's going to be virtual. I know you disappointed about that, but it's going to be virtual.

I would like to see you face-to-face, but I'm happy for the opportunity for maximizing viewership. So looking forward to that.

Great. We look forward to sharing it with you and the entire investment community.

All right. Well, thank you so much for joining us this morning, Brian. And with that, we'll move on to the next session. Thanks so much.

Thanks, Betsy. Have a great day.

You too.