Synchrony Financial (SYF) Earnings Call Transcript & Summary

Well, thanks for coming. My name is Arren Cyganovich I'm the consumer finance analyst at Citi, and we're very glad to have Brian Wenzel, the CFO of Synchrony Financial with us here today. We're going to have a fireside discussion. And maybe just to start off, if you could just tell folks that may not be as familiar with Synchrony just a little brief idea of what the company is.

Thanks, Arren, for the invitation. Synchrony, we're a 90-year-old, I'd like to say start-up, we went out from GE about 8 years ago. But really our heritage is in core U.S. consumer finance mainly through credit card and installment lending. Our distribution is mainly through partners, through their brands, but we also go to market our own brand. We have 5, I think, terrific platforms, a digital platform focused on retailers and partners that go digitally to market. We have one around health and wellness, which is a really attractive opportunity for us. Diversified value, which really centers around retailers who bring price-sensitive merchandise to larger footprints. You have our home and auto, which is very diversified across all areas of the home space and the auto space. And then last but not least, lifestyle, which has everything from your outdoor power equipment and sporting equipment all the way through American Eagle with the exporting business of luxury. So a broad array of platforms really delivering the U.S. consumer finance experience and payments.

Given that we have a very interesting backdrop for the economy right now, I think most investors are really concerned about consumer health. So maybe you could just talk about how you view the consumer health environment right now, and you put out some monthly data this morning, which we appreciate. It looked like you had a little bit of an acceleration in loan growth versus last month. How are you feeling about the consumer these days?

Yes. So there's a lot on back there. So first of all, let's talk about credit because that's on a lot of people's mind. We did release our 8-K this morning, which showed, I think, 3.4%, we see 3.4% of net charge-off rate. When you put that in context, there's 2 things that are happening. If you go back to what I say more normal seasonality. So back in that 2018 period because 2019 was impacted for Walmart. We're a little bit ahead of normal seasonality, but that has to be expected when you have credit normalization. So I sit back and say the way delinquency is forming and flowing through to loss content is in line with the expectations that we laid out both earlier this year and a couple of weeks ago for the full year and the trajectory as we head into next year. If I go to the consumer spending side of the equation when I sit back and say we are early in the holiday season. We are comping what I would say is a more challenging 2021, but it's in line with expectations so far. We haven't seen any trends yet with regard to holiday that says it's going to be anything different. I would say on payment rate, it has moderated continue to moderate. I think if you look back to the third quarter, we're 10 basis points lower in the third quarter of '22 versus '21, 20 basis points, I believe, in September, we're more in the 50 to 60 basis points in October. So we are seeing some of that asset growth is more payment driven than is sales driven. I think when you think about the consumer, Arren, the one thing you just keep going back to is low unemployment, still rising wages for a lot of folks, still a significant amount of savings that they have. So they are continuing to manage their own personal spending and payment behavior patterns very well. And we see that there are pockets in the population that are a little bit more stressed, but they are really managing well, and we feel good about where they sit today.

Okay. Maybe a little bit touch on the last comment. Where are you seeing any differentiation between prime, non-prime, higher-income versus lower-income as folks are kind of dealing with inflation?

Yes. Well, with inflation, I'd say they're -- clearly, the higher end is done with it more easily. They have greater access, right? So they're not really too phased but I think most certainly if you talk to them, they're not happy about it, but they're continuing life as usual. I think when you get into that midprint, so think about that 6.6%, and the $720,they're continuing to act the way they have acted. They are making rotational decisions. And I'd say rotational decisions inside the category spend, we do not see people moving out of discretionary or nondiscretionary take example, I keep going back to grocery for us. Grocery for us on a transaction value with equal frequency is up only 3%. So the consumer is making logical choices inside the basket, whether to find bulk items, whether it's getting a cheap ice cream versus a higher-end ice cream, but they are making choice inside the basket in order to maintain the same level of spend. When you look down -- when we look at it by credit grade and I look inside of the lower credit quality, which for us is mainly private label, all of our platforms, except for the digital platform is average transaction value is flat. So we're slightly better. So we don't see the pressure there. Digital is interesting because we started to see mix shift, right? We've added some new partners in there, and that obviously will impact the overall results. So again, the consumer is really varying. That's why I think I keep going back to people as you think about our company, and you think about what's happening in the macroeconomic background, if an event happens, and I don't want to use a term recession because recession has become a politicized term. But if you have an adverse macroeconomic environment, if that happens early in '23, there's so much more buffer for the consumer to wear it and for it to be shallow. If it happens much later into '23 to '24, the consumers are going to use up a lot of that buffer is going to be much more impactful. So I think timing is going to be a big factor with regard to the impact on the consumer.

Okay. And then on interest rates, not so much from the net interest margin, which we'll get into in a bit. But are you seeing any notable changes from the -- just the sharp increase in rates, I imagine that some of your portfolio is variable rate. So you'll have some impact from that and other consumer lending folks that have variable rate.

Yes. When you think about -- you think about 1 point of interest rate on our cards because the average balance it's $1 a month. So it's not really going to impact, to be honest with you, the way the consumer thinks about it. And most of the financial obligations for consumers are fixed rate at the time. So they're probably a little bit less impacted in the short run with regard to interest rate. Where you do see it, though, and you start to see changing behavior patterns as people are not going for autos as much. Clearly not going for homes. So what you start to see is rotation. So we're doing very well in our auto business as people are now putting money into their own cars, they're actually going out and get a new car. We continue to see some tailwinds in the home sector. First of all, some of that was supply chain clearing out. So I want to say, listen, I'm not going to buy a new house, let me do something here for the holidays or try to do this something. So we have some tailwinds when it comes to that. So less so directly related to interest rates, more the byproduct of what the consumer can and cannot do and what flexibility that want take on.

Maybe we could talk a little bit about technology given that we're at a FinTech conference. You really stood out whenever you had your investor -- your last Investor Day. And I think that's the part that set out to me the most was the confidence you have in your technology, the accolades you've received from some of your high-tech partners in terms of the ease and the use of yours. So what you could talk about the investments you've made and maybe some of the investments that you're planning to make for the technology side...

Yes. So I think first, you have to start with our business model. Our business model, go back 90-plus years. We're dealing with retailers that are very different. Their systems are very different. Some are much more updated. Some are much more dated. So we always had a flex to our customers and our partners. So you start with that heritage for a second. Then you look at when we split, call it, 8 years ago from GE, we really started to invest more heavily in our technology platform. Take something like GP Shopper for us, which was an acquisition very early on. What that allowed us to was technology where we could take our application and plug it directly inside an app for a retailer. So now you have digital ply. That has been a tremendous homeroom for us. So it's our ability to flex into that. If you look at some of the things that we've done with Venmo, the API capabilities and our ability for the tech stack that we've invested in to plug in and do cost. So it's seamless to the consumer whether or not you think you're on when you're staying on them, well, they're just calling out to our system. We create that whole infrastructure, which is very different, and we're allowing to flex across that. That infrastructure, that digital technology we create can work for all the partners. -- is very ubiquitous like that. So it really can meet our partners where they are in the journey. You can couple that with some things that we've done very simply on our side, whether it's best or a single account view where if you have 4 Synchrony caps, you can see them once. You look at technology we're bringing to our partners in Unify, which allows a waterflood-type technology in our small and medium-sized merchants. You look at the products where we're able to deploy through Clover, we're the first one to be able to put an installment pain for us through the Clover app. So I think there's really heavy investment for us. As we look forward and look at our continued investment, we're going to continue to work with the customer experience, meeting the customer where they are and find the easiest way to get them to our partners.

And maybe we could talk a little bit about what ability do you have to pull back in terms of that kind of investment in case where you're in a recessionary environment, say, in 2023 or '24.

Arren, that's one of the things that Brian and I talk, that's the last thing we want to do to all extent possible. I'd sit back and say, in this environment, we learned this with our former parent is if you don't invest currently, you're going to fall behind very quickly. And I think a lot of folks tend to pull back as it's easy. I think we would continue to look at other things, we have continued ability to drive productivity through eBay, -- we have continued ability to drive some of the efficiencies in the way in which we deploy marketing dollars really through outside agencies and things like that, we would continue to hammer on those probably more aggressively. We also sit back and say, were to deploy our resources, our human resources a little bit more efficiently inside the company. Those will be the areas we go to first. then I think we think about how do we make sure -- we go through a very strenuous process on how we decide upon these investments. So you'll say there's a lot of things that are on the margin that we would like to do, what we're not going to do. That's already out of the process. So these are things that we really think in the medium to long term are going to provide long-term value for our shareholders.

Okay. And you've done a good job of competing with kind of new fintechs and the buy now pay later, which your whole business essentially is buy now pay later. But specifically on that product, you've offered that as a kind of a piece within a broader spectrum of products for your customers? What's the take-up been on that and how are things going on that side?

Listen, I think retailers that took up the kind of paying for installment lending. -- when that product took off in the marketplace, it was really about how do you even get customers. And at that point in time, people are pulling back on marketing, they're want to spend more do because they view that they were getting incrementality. I think if you talk to them today, I think they question whether or not they're getting incrementality, number one. I think number 2, they look at, hey, are you taking my cost for as soon as you create a transaction, you bring them down the street somewhere else? A competitor or not a competitor, but how are you using it and whose customer is it? So I think they're questioning that then they look at us, and when we go to a partner said, listen, we think we have a multiproduct capability. We think we want to offer the right practice. And we want to do it in a way in which the consumer gives the consumer choice and the flexibility for what they want to do. When we do an installment loan, our any goal though is if I do a paid 4 or a 6-month closed-end installment through SetPay, you say, okay, I now have you as a customer, how do I get you to become a private label customer or dual card customer. You chose this product of here, but can I create greater lifetime value? And if I can get a simple takeup rate, it's no different than a cost to acquire on what we traditionally had in private-label dual cord. So our value proposition to the retailer says, "Hey, listen, if I can get that same cost to acquire and that lifetime value is a better alternative for you, and if I can do it seamlessly where the customer has choice. And I think what you're starting to see some of the other buy now pay later companies or fintech companies, they're trying to create a broader product offer because they understand that product set and where the retailers had are is not -- it can't survive on its own. So I think we're ahead of them. But I think there is a shift in the landscape where retailers are now used to you all just drive sales, drive sales, drive sales. Now it's drive sales and bring me customers and don't take my customer down the road all the time. Right.

And what -- in terms of the customer that you're seeing that ops for a paying for type of product within your customer base, is that -- are you noticing any kind of overlap of existing customers? Or is it a lower-quality customer? How do you think about the customer itself?

It's not necessarily a lower quality customer, the way which we underwrite it, it's probably someone who would use a debit card at the end of the day. So it's not someone who went for a traditional credit product. They just view it as a short-term way of managed payment. So again, we -- but we are not going -- where a lot of those folks have gone into deep subprime, sub-600. We're not -- we don't really originate there. It's not our view. It's not our attention to. But if we can have a view now I may have a view -- so want to have the credit product, someone else they want to pay for. I know them. Maybe I make a slightly different credit decision because I have experience with that customer, but we're not doing it to just say yes more often, we don't need to.

Right. As I mentioned, your loan growth has been pretty strong lately, I think up about 13% year-over-year when you look at it on a core basis. One of the questions we get from investors is, should you be growing, should these card companies be growing in the teens into what looks like it could be a potential recession. -- sorry, or that theme to be running through all my question...

Well, you'd be the only one that didn't have that question. And I would tell you, it does make me laugh a little bit where some people are schizo fresh like go faster, go faster, we should you grow faster. So we'll put that for another day. But really, we feel comfortable with the underwriting box. The one thing I think that we -- when we came out of the pandemic period, whatever you define that as, but as we started to reverse some of the credit refinements we put in, in 2020 and '21, we feel really good about where we're going back to it. And in some cases, we're still tighter than pre-pandemic levels. So we never -- different than a lot of issuers now you hear like they're cutting back in the margin, we never changed the credit criteria and open credit as a way to grow, right? So where we're growing is we have new partners, we have partners that are gaining share. When you think about the Amazons, the PayPals, the Venmo, TJX is doing incredibly well. Sam's Club is doing incredibly well. So you look at the roster of people that we have in the diversity, that's more driving the growth in credit. So I think when we look at it, we feel good about it. You then take that, and if you go back to Investor Day and talk about data elements that we bring into the decision-making process. We think we're making better decisions with lower risk and don't have to extend ourselves. We don't use lines to drive growth. We use other tricks to drive growth. So we're probably a little less concerned about, hey, should I be going at 13% versus some other number. If we see some broad things in the economy that we say we need to take action, we can take action, and we've done that. We don't see those today. Are we making clarifies, -- we make clarifies every day, both positively and negatively to maximize it. So again, I think we're cautious. We always have things ready. We feel good about the growth that's in there. And I think when you combine that with some of the tools, I mean, we look at a 720 fig have a trigger base says, okay, that person goes out does a payday loan that, that accounts close today. we'll just close it because that 720 is not acting like a 720. We may see a 640 that be say, "Oh, gosh, that subprime. When I look at them across 5 accounts with us, it doesn't act like 640, it acts like a 720. And that's the beauty of having roughly 70,000 average active accounts well over 100 million open accounts, that's the beauty of the model.

Okay. Maybe we could just touch a little bit on credit quality that you had mentioned your charge-offs rose, I think, 40 basis points, 3.4%, but your normal, what you see as normal as kind of 5.5% to 6% range. That's what you're underwriting to.

That's what we're underwriting to, that's the mean. There's a little bit of mix there, it could actually even be a little bit lower than that when you kind of get to that range. And so what we see now, and I think people are trying to get back to this pace of acceleration or what's happening. I mean, if you're entering to a 5.5, right? And if I go back and tell you, hey, in 2021, we may refine and we are underwriting to 5.5%. It will go to 5.5%. Now you sit back and say, when you start these vintages, they're roughly 18 months. Do you start seeing those vintages mature a loss rate? So we're starting to see some of that come through, but it's not one -- I always make people think -- use a term, there's normalization and deterioration. Normalization gets us back to the 5.5 deteriorations beyond the 5.5%. We see nothing today that says we're in a deteriorating mode or a normalization mode. Again, it's in line with how we thought about it, both for the fourth quarter, how we built our reserves at the end of the third quarter, and how we think about it going into next year, the trajectory. So we do feel good about credit as I sit here today.

And you touched a little bit on underwriting. And I think you said on the last quarter call that you haven't really changed your underwriting and you're kind of constantly evolving our underwriting. You did make another comment about credit lines. So you're -- just to clarify, like you don't expand your credit lines to whenever you see a better opportunity, you just tweak them a little bit or you don't really manage from that perspective.

So there's 2 different ways to think about it. One is account management and one is origination. Account management says you do 2 things. One, a customer may call it, say, can I have a credit line increase or hopefully digitally, they ask for a credit line increase and you evaluate them. So those continue on. If you're concerned about the macroeconomic, you probably wouldn't do proactive ones where people qualify because we see income. We see scores. We do some of that today. Really where people start, I think what you've seen over the past 18 months, particularly deep subprime and some of what I would call the real prime issuers, they've given out bigger line assignments as an inducement to get people and take cards. We don't do that. That's not -- we don't -- the way which we go to market is really because we are attracting the highly loyal customers of our distribution. They don't need line. They're not looking to compare it to some of the high-end credit cards. They're some back saying, what's the value profit yet for shopping at this retailer because I like it. So line doesn't become a factor for us. That's why, Arren, when you go back and look at loss net charge-offs over time, we use this chart quite a bit, go back to the GFC. The reason why you have greater volatility in that charge-off is because people have greater lines. They've expanded lines. So now when you get the loss incident, right, because everyone's incident rate of charge-offs happens probably equally, it's the severity. And that's why we don't play in the line game.

Got it. Maybe to think about that from a customer upgrading standpoint, your dual and co-brand cards have been growing, I think, faster than the portfolio. Have you been upgrading more customers? Or is it just a factor of the kind of relationship with the issuer and kind of that loyalty that you're discussing from that pinpoint?

Well, remember, that's one of the levers as we went into the pandemic, what we did is instead of issuing dual cards, we issued more private label cards. -- rate. So at that point, you have more private label cards. As we got through the pandemic, right? And we looked at those people who we normally would give a dual card to we got comfortable with them, we ran upgrade campaigns. And we allowed people to say, "Hey, listen, would you like to have that same effect of my structure, and we gave them dual cards. So that first is an accelerant. Then we adjusted underwriting to go back to our pre-pandemic standard. So now you're kind of proving more to go. So there's a little bit of what I would say, tailwind built into the way in which we manage through the pandemic that's helping you. And listen, I think when you look at some of the products, again, I hate to keep going back to Verizon and Venmo but if you think about a Venmo card where you are getting maximizing the value proposition between 3%, 2%, and 1% based on your spend pattern, and it's changing automatically versus having to go in and select something, that's really powerful. And then you're putting cash into your Venmo account and for people that pay a lot through Venmo, whether it's to your kids or someone else, it's a great feature. Or if you look at Verizon where you can get $10 off a line when you set up your bill for AutoPay, it just induces that higher spend category, higher spend velocity. So it's really the way in which we came out of the pandemic and some of the new programs that have really attractive value propositions is driving some of that acceleration.

Maybe we could talk a little bit about the partner relationships and you've locked, I think, your largest relationships up through 2025, I believe. So you really haven't had to compete for any, like, I guess, the bigger ones within your own portfolio. What can you say about the competitive environment? Has it improved at all? And the other aspect is how does that change in an environment where we'll be potentially entering recession? Is it easier? Is it hard? Or how does that generally work?

Yes. So first of all, we always have productive paranoia. So we always want to make sure we're trying to renew our carders every day, number one. 2, I think when you think about an uncertain macroeconomic environment, we've been in this business 90 years. And I think if you looked at our competitors, they haven't been. So they'll have a tendency to pull back. We underwrite through the cycle all the time. So we always plan -- I don't care what period of time it is, we plan for a recession. -- ends up to be 7- or 10-year pricing, generally, sometimes 5, but generally 7 or 10. So we plan for it. So we're consistent. So I do think if you have an uncertain macroeconomic right, it's a little bit easier. And I also think, to some degree, we're always having conversations with our partners about, hey, you want to change the value property, can we make this digital investment, et cetera. It was like, well, listen, if I'm 2 or 3 years away, I can't get the payback. So let's talk about an extension. And I think that's where sometimes piling a loss. And they think just when there's an extension, you just gave up economics. That's not really the case. It's -- I'm changing the value proposition and pushing 10 million cards out, there's an expense there. And they get a lot of sales off of that. So there's sometimes a give or take during that. But again, I think an uneasy macroeconomics a little bit better for us. But competition has been generally rational, and we see -- we see people on what their strike zones are, and they're not really going outside. We occasionally see some folks like you saw with one of the people that left us, someone new come in because they had really unique reasons. But retailers, when they switch partners, there's a couple of years within new sales and technology and benefits. And so it's tough for them. There are some barriers. But we try every day to continue to win people's business and deliver value for them.

Okay. Maybe you could switch to regulation. The CFPB has been pretty vocal recently, in particular about credit card late fees. What's your view on the potential timeline there? And how would that impact Synchrony?

Yes. First on timeline, when you look at late fees, different than order at fees, different than monthly maintenance fees, this is the most regulated fee banking, and it's one of the most transparent fees in banking. And it's one that was heavily researched, heavily documented back when the card came in place. So I think the timeline for the CFPB to go and change that is going to be longer because they obviously want to be able for it to stand litigation in the face. We'll certainly -- they're a little bit more challenged because they issue a safe harbor and say that's reasonable proportional, and they just did that 10 months ago. So I think the rising for something happens a little bit longer than some of the other initiatives that they're pursuing. And given the transparency of the fee, it's just a tougher road for them to -- that's not to say that they may not do something that's just to say it's going to take longer for them to get there, #1. I think the ultimate question you're probably asking is, how does it impact us, right? And the first thing I'd sit back and say is, the way we look at late fees, late fees for us in the tarts. I prefer not to have a late fee just pay it back, right? We always say your ability to pay may change or willingness is to pay can't change. And late fee just makes sure -- or tries to induce people to make that payment I say, "Hey, let me skip this payments and trying to manage through certain things. So as we go -- the first thing we sit back and say, a lot of our partners, I think we said well over 60% share economically. And the way our fee structure, they bear probably more of the burden. So they're going to face a little bit of the burden on the cost if the late fees will come down. So then you go into the discussion with them around, okay, there are several things you can do. You can curtail credit, right, because this is a introducement and just shrink the box. You can well certainly recharacterize the revenue streams. But then you're asking people who are generally good to pay for some people that are bad. You could change value props. There's a lot of levers. I would point you back, and I think we did this in the second quarter, if I'm not mistaken, from my IR team on Page 7, if I had it. It showed the margin of the business. And back in the card Act, we didn't lose margin. We went back and said, "Okay, how do you deal with that? We'll do the same thing. And our partners are highly incented in order to do that. And then finally, we learned through the card Act, we have contractual provisions in there to protect us. But again, this is a long road in order to kind of get there and depending upon what they do. there could be litigation at the end. You just don't know. So we continue to operate the business. We continue to monitor their activities, and we'll work with them in the case they want to do something.

Maybe we could switch to net interest margin a little bit. I think on the earnings call, you said that you feel like you're a little bit more liability-sensitive near term. What would you say your kind of trajectory should be? Because you have a lot of kind of puts and takes going on over the next 12 to 18 months?

Yes. Generally, we try to be neutral. So I try not to be either asset-sensitive, liability-sensitive, we switched to liability sensitive, mainly because people have gone out and they have taking our certificate deposits, which are fixed in duration. So I think as we look at it, we're not in a bad position, what just says over the next 12 months or so, you're not terribly exposed in that. What does happen, though, is as the fixed debt side roles, right? So that people who had 12 months a year ago, now coming out, that cost goes higher. And so hopefully, what you're doing there is you're earning higher on your investment portfolio and other things in order to manage through that kind of duration reset. And that's something we're going to actively do. But for us, deposits, retail deposits are very attractive funding. We want to maintain that in that 80-plus percent level to the extent we can. But the market is very competitive right now. And I think when you look at money market funds that are 330 to 350, investors have choices, so you have to be competitive. And that's why I think you see the more rapid changes in the digital market respond because they do have choice and they will move for other dollars. I think what you're starting to see is money finally coming out of brick-and-mortar banks that are paying nothing. No offense, Arren to you your institution that doesn't pay a lot to the brick and mortar, but you're going to see that rotation out because people sit around and say, "Gosh, why are my own only earning this when I can earn more." So it's competitive. It will continue to be competitive as we're in an upward rate cycle until we get to a term on rate. But it's attractive for us and well and we're just going to have to manage the reset of the roles on some of the shorter-term fixed deposits.

If there's any questions in the room, please raise your hand and let me know, but otherwise, I'll keep going. So on funding, you mentioned deposit being kind of a primary area of funding your growth right now. Are you able to fully fund with your deposit growth right now? Or are you looking at other areas, ABS or unsecured to secured funding?

Listen, we really want to be an active issuer in secure and unsecured funding. So it's never good to be out of the market that long. We were out a little bit longer than like during the pandemic. You just don't want to lose the fixed-income investors, appetite for your products. So we want to be active there. But to be honest, we're going to be really selective. I think there's times now where some of those fixed-income investors a little bit more sensing some of the credit spreads are probably not as attractive and the uncertainty was tough. So we're going to be patient there. But we will continue to be issuers. -- certainly like secured financing to be a little bit higher than the percentage because it is very attractive, but we're going to have to manage through the credit spreads there. As far as the ability says, okay, we do have the ability, both for the retail and brokered CDs in order to manage the net back efficiently and attract the customers. So we're going to be patient with regard to how we do that, but we have a very attractive opportunities still to go.

Okay. You mentioned credit spread widening on the ABS side. Is it at a point now because initially, it looked like it just kind of widened from a rising rate perspective, but like now we're actually starting to see a little bit of more of an impact from credit spreads? Is that an unattractive source of financing in the near term? And how do you think about ABS kind of through the cycle?

Yes. I hate to put a label that's unattractive. It's just -- it's volatile. I think people are sitting back saying, "I'm afraid to buy this and then 2 weeks later, something that's happening. So I think that uncertainty is weighing through -- well certainly, I think last week, there's a little bit of change in tone. As long as we can get the credit spreads, we don't expect them to go back to where were pre-pandemic right away, right? We get that. But some of the excess spread in there just for volatility and easiness, we want that to come down a little bit. We'll continue to explore the ability to access that market. And if it makes sense, we were certainly wrong.

Okay. Well, it looks like we have about a minute left. So maybe you could just -- we could end with -- take a minute to address what investors might be missing in the stock or what you want folks to walk away from your thinking about?

A couple of things there. First of all, we are incredibly diverse. I think people sometimes forget the diversity we have both in the 5 platforms and inside the 5 platforms. So I think that ability in any macroeconomic environment to continue to drive positive purchase volumes is number one. Number 2, if you go back, I'll continue to point investors back to the chart we did in the second quarter, it shows the resiliency through the margins through the cycle. This business really does have resiliency in it. And I think that's important to do different than others. We're not going to go superior blob. We're going to trade within a band when it comes to risk-adjusted margin. And then 3, RSA is a very unique opportunity for us. It provides that buffer, right, both on the upside and the outside. I think a lot of people would come to me and say, "I can't believe the RSA is over 6%. Well, it's because we had no losses. Now we're down in with going down to the low 5s and people like, "Oh, okay, like we are heading back down. It will move. And I think that provides the buffer and the incentive with our partners. So I think diversification, resiliency in the margin and the RSA are 3 things. I continue to push people back to which differentiates us versus a very traditional card issuer.

Well, thank you so much for coming. I really appreciate that. Thank you. Have a great day.