Synchrony Financial (SYF) Earnings Call Transcript & Summary

All right. Thanks, everybody, for joining us this morning. So thrilled that you could be with us. I do have a quick disclosure to read. For important disclosures, please see Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is also not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. Okay. Brian, thank you so much for joining us today. I just wanted everybody know that this is our 14th Annual Morgan Stanley Financial Services Conference, and we are thrilled to have Brian Wenzel, CFO of Synchrony Financial to kick us off today.

Great. Betsy, thanks for the invitation. Glad to be here with you.

Thank you. So there's so many things that we want to discuss in 35 minutes, so we'll be a little bit quick, if you don't mind. First thing, just to take your pulse on what's going on with consumer spending. Just give us an update, if you could, on the state of the consumer spending trends, payment trends, maybe even some credit trends.

Well, actually, why don't we start with credit, right, because everyone wants to know what's happening with the consumer, with the macro economy, thank you for having this conference on the 12th because we did report our monthly credit statistics a couple of days early. And what you'll see from there, first of all, growth is 15% assets. So consistent with what you've seen through the beginning part of the year. We'll talk about spending and balances in a second. When you look at delinquency up 3 basis points sequentially from April to May and then net charge-offs were up 21 basis points. Just peeling that back a little bit, when you think about the delinquency, slightly worse than seasonal trends, really only the difference is we have an extra cycle that didn't go in May versus April. We have a large number of cycles. When you factor that in, we're essentially in line with seasonal trends. And when you think about the charge-off movement, that's really in line with delinquency. So as I think about the consumer and how they're acting in delinquency, entry rate was better in May than our expectations, a little bit of pressure around [indiscernible], back end was a little better. So it's actually performing in line with our expectations. So the consumer is very resilient from a credit standpoint. When you get to spending, the first thing I say, you hear a lot about spending slowing. What I said that, Betsy, with that really is, if I look at dollar spending, so weekly dollar spending, for mid-February through last weekend, it's been very consistent and flat, right? So it hasn't moved. What's really moving is the comp last year as you came out of [ Amazon ], and that was accelerating. So it looks like that [ V ] on a purchase volumes decelerate but actual dollar spend and resiliency the consumer is spending. When you peel that spend back a little bit, we do see the other side of the K-shape recovery. So when I look at credit quality, 660 and below, transaction values are a little bit lower year-on-year, transaction frequency is up. But when I look at the trends, usually that gets a little bit concerning when you see transaction value decreasing frequency going up. And I look again, I go to grocery, gas and discount stores are 3 fundamental measures. When I look at a grocery store year-over-year, $53 to $53. So we're not seeing the consumer pullback in grocery. When I look at gasoline, it's actually down, but that's really price at the pump, frequency is the same. When I look at discount stores, it's flat. So when I look at those measures, we don't see signs that the consumer is really struggling broadly, but we do see signs that the bottom part is pulling back or really kind of adjusting more to I think the inflation measures, the higher end, the prime and plus they continue to spend positively as you kind of look at that. So all in all, the consumer continues to perform. Payment rates are continuing to slow. If you go back to the first quarter, we were about 150 basis points higher than historical average. It is decelerating. We expect that deceleration, again, I think publicly we said towards the end of the year, we hope to be back to what I would say is a more normal payment rate.

Okay. So there's a lot in there that we can dig into. I do just want to start with the spend trends. So you indicated that month to date, it's flat. Is that what you...

No. The dollars -- our dollars are flat. So we are trending higher on a year-over-year just decelerating that [ V ] is coming down. But on a dollar basis, the consumer is spending the same level. So they're confident in what they're spending. They don't appear to be impacted by inflation. They're making choices. When I go to grocery, people are making choices of what to put in the basket. We don't see radical pullbacks in any non or -- non-discretionary spend or discretion -- sorry, discretionary spend. So the consumer is really navigating fairly well during this period of time. That's partially because of the low unemployment, partially because of the wage inflation that they're seeing. So the consumer is hanging in there very well.

And any notable trends around the verticals that you've got thinking about health and wellness, diversified and value, lifestyle?

Yes. Clearly, the 2 platforms that are really performing extremely well for us, health and wellness, which we love that platform, high margins, very attractive ecosystem for us to win at. We're in a high percentage of debt in veterinary offices. So we continue to win there. That will be our leader with regard to that. We are actually over-indexing some of our investment and resource allocation from a company perspective to take advantage of that market. Closely behind that will be digital. You look at the partners that we have in there, they have tremendous basis for us to continue to kind of grow, whether it's PayPal, Amazon, Venmo, Verizon, just really attractive bases, they'll grow. And that -- close behind that, you have diversified value, which, again, you think about the partners we have in there are still growing fairly well, when you think about Sam's Club, the TJX. And then that will trail [ down ] home and auto and lifestyle. So really, health and wellness and digital verticals really pulling us to continue to [ post ] very consistent with what I'd say you saw in the first quarter.

And you talked a bit about the payment trends and payment trends still a bit high, but you're expecting it will decelerate as you move into the end of the year, coupled with very strong loan growth, right? So can you give us a sense as to how long we can anticipate this loan growth? When you say we're going to normalize payment rate by the end of the year, does that come with a loan growth that is significantly slower or modestly slower? Just any signs there would be helpful.

I think what you're going to see, given the strength that you saw in purchase volume, right, that happened in '22, into the first part of '23. What you should see and what we expect to see is a deceleration of purchase volume, while payment rate comes lower. So you're going to have the asset growth. You know you have as much purchase volume growth. That growth, again, we said 10-plus percent for this year. I would expect that to continue into the beginning part of '24, given that dynamic. So -- and then you're going to probably move back more towards what I'd say is your natural or long-term growth of high single digits.

Okay. So still a good 9 months to 12 months. Okay.

The important thing for us, Betsy, we are very consistent. I know you may get to this later, but we're very consistent with our underwriting. We didn't stretch into trying to replace the 20 vintage. Others have done that. So ours is just more naturally the breadth of our products, the value propositions and the distribution that we have that's really driving the growth.

Okay. Maybe a bit on credit since we're on that topic right now and then move over to funding. But on credit, you indicated, look, this is -- with the data that you announced this morning, in line with expectations. Is that fair?

It's in line with our expectations, yes.

Okay. And I think you mentioned earlier that delinquencies you were expecting would get to pre-COVID levels sometime in mid-'23. Is that right?

That's correct.

Okay. And that losses wouldn't get there really until 2024.

Yes. When you get to you were, what I'd say, normalized charge-offs, it's going to take about 6 months to get to what I would say a normalized loss rate. So again, we guided this year to 4.75% to 5%. And next year, we said it should be back around, I mean, loss rate around that 5.5% level. So that's what we said, and we don't see things right now that say something different to that.

And with the outlook that you get to that 2019 level but don't go through it, right? And so I guess the question that we've been getting from investors is, why shouldn't the trajectory continue? Why does it stop at that 2019 level?

Because one of the things that we have the ability to look at is vintage level data, how vintages are performing, how cohorts are performing. Most certainly, I think a lot have talked about the recent vintages. If I just go back for a second on our new account origination, when I look at the percent that was sub [ 660 ], number of accounts at the same level as pre-pandemic. When I look at balances and things like that, at or below 2019 or pre-pandemic levels. So I look at the book and how it's building consistent with our past practices. We did not open the credit box up. I think when we look at what we put into the book, it's very comfortable from an underwriting standpoint. I think we've done a very good job, I hope, of factoring in score migration, which I know others have struggled with. And so when I look at those factors and I look at the tools that we have with PRISM, which we've outlined quite a bit, we have the ability to react. So our actions to date are credit refinements we've taken have been idiosyncratic. We constantly monitor the portfolio. And there may be a point where we take broader action. But some of those broader actions, Betsy, are going to be things like score migration of 50 points into non-prime. Those are things we're going to do. We're not going to do very -- from what I could tell in the portfolio, as I sit here today, it's not broad-based or sweeping action. So we have the ability to manage that. And the indications we have is we should not be through our main loss next year.

And what is it that you're doing that makes that in score migration better than peers?

Well, I think we've tried to account for behavior pattern. So when we look -- we look very closely at people who migrated during the pandemic, right? These are people who pay down balances, things like that. So as we start to see those, those are ones we were probably a little tighter with regard to line assignments that they apply for credit. They're ones we're not necessarily giving credit line assignments to or credit line increases, too. So I think we're trying to manage that base. I think it's a little bit more difficult because we're making a point of origination. We -- some comes and applies, we make that decision. A lot of issuers where they have to mail or do an invitation to apply. There's a lag time between when you credit select, email, they apply, a lot of things can change during that period, depending upon whether you're using lagging metrics or real-time metrics can make that decision. One of the important things in our underwriting, Betsy, is that we have massive amounts of data we take in from our partners. We take it from third-party sources. So we're being -- we have to be given our approval model at point of sale within 2 seconds, we have to be probably more advanced than others. It's just a requirement for us to contain credit. So I think when we look at that, we feel good at the vintages we're putting on the last couple of years, and they're consistent with what we saw prior to the pandemic.

And you've talked also about how the expectation for your losses is a function in part of obviously how you're underwriting and that you're underwriting to -- I don't know if I want to call it a target, but an expected loss for the portfolio. As you're underwriting today, you expect that loss will be rising somewhat into next year. As that loss rises, do you tighten standards from here? Or you say, you know what, we're -- our standards are great where we are now and we don't need to tighten anymore.

So we underwrite to a risk-adjusted margin by partner, by channel. So we think about the revenue components, we think about that. And what we really underwrite too is probability to flow out and exposure of default. Our credit lines are much smaller than others. That's how we control the exposure of default. So when you look -- and Betsy, you've heard me say this probably 100 times. When you look at the volatility in our charge-offs, it's not as high as peers because we control credit lines and we're much tighter on credit lines. So while we may run a higher general loss rate, our volatility is not as much because of that credit line assignment. So when we underwrite to a margin, we're doing that on what we think is going to be a -- we look at it through the curve, we are comfortable that we should get to that target 5.5% when you kind of put it all back together. But we underwrite to a margin level given the revenue formation.

So last question on credit. As I'm sure you know the federal student loan moratorium on debt repayment is going to end, right? Students will have to start to repay debt, I believe, in August. Just wanted to get a sense from you as to how you're thinking that's going to be impacting your book.

Yes. So this is something that's been around for a while. So we've been tracking it. So we know inside our portfolio, how many accounts and the dollar value of those individuals that have student loans. We know how much are less than 10,000. We know how much more than 10,000. When I think about the characteristics, Betsy, of what's in there, today, obviously, it's a little bit more millennial and gen z's. The FICO is, call it, 10 basis points lower, a couple of basis points higher delinquency. But when I look at the population of people, 46 -- or approximately 46% to 48% was underwritten 2019 plus. So they've been around with us for more than 4 years ago through their peak seasonal losses. 20-plus percent were originated in the first couple of years of a pandemic and about 30% were originated in the last year. So when I look at that book, these are customers we know, we have relationships with the customers. That being said, we had provided in prior quarters a qualitative reserve to the extent that some of these consumers struggle when they go back to making payments. So we feel good about the population. We're closely monitoring the population to see if there's any trends. And our ability with PRISM is we can take action very quickly to the extent that we see deterioration resulting from that. But again, we provided for it, and I think we're comfortable how we underwritten the book. And even since the pandemic, we have contemplated the fact that they were on a forbearance type plan when we did the underwriting.

So when this moratorium ends, you'll be able to see pretty quickly how the borrowers are dealing with it, I would think, from the polls that you do?

For the ones that are going to struggle, you probably will see it pretty quickly. For others, they may take a little bit of time before they get in line, but we adjust. So again, it's not that big where we're overly concerned, but we did provide for it under the case that you may see some deterioration.

Okay. And you don't have a percentage for us to in terms of the percentage of balances that are students...

We have not disclosed that...

Okay. I just wanted to make sure.

You're very correct. We have not disclosed...

Okay. All right. Got it. I wanted to turn to funding with the loan growth just so strong and having accelerated a little bit here. I wanted to just spend a little bit of time talking about your deposit strategy. You've had some nice deposit retention. You've had some nice deposit inflows. Could you just give us a sense as to not only how deposit net inflows are trending so far this quarter, but also speak to your deposit retention strategy.

Yes. We're very proud of the deposit franchise we've built. I think we have a compelling set of products. We have a very competitive rate. I think when you look at money market mutual funds and our competitors, listen, we have an advantage relative to some of the big money center banks. We don't have to support branches. So we can pay a little bit more on the interest rate because we don't have to maintain the physical piece of it. And we're not constrained by books that have very low interest cost that they have to move it into a bigger cost. So I think from those standpoints, we do feel very comfortable with where we are. From a performance standpoint, we've been net positive every week of the year, right? And that even goes back post SCB, we were positive on the inflow. So people kind of flight into us. Our uninsured balances are only around $5.2 billion. So it's very safe. When I look at the account performance, I think we said back in the first quarter, every vintage from 2016 forward grew at the end of the first quarter versus the fourth quarter. So that really goes to the competitiveness of our product. We do come out with some -- what I think is some very nice promotional targets. We had a 14-month product. We had a 6-month product. And we continue to grow and we will grow because, again, we have aspirations to grow in the back part of this year. We have to prefund that. But we're very comfortable with where we go. So there may be a little bit higher liquidity in the second quarter, but that's really setting up for us to fund hopefully what's a good back half of the year from a volume perspective.

Okay. Higher liquidity from deposit inflows. Okay. And can you give us a sense as to deposit betas and how they're trending Q-to-date?

Yes. So what's been interesting, Betsy, and I'll just go back to give you a little bit of history. If you start in '22, the first part of '22, a lot of the competitors didn't move is very kind of a softer market. Back half of '22, you saw much more competitive rates of people moving through about the third week of December. So betas were running higher. As we entered the year, we expected that, that trend of competitiveness to continue. What surprised me was from that third week of December, probably through the early part of May, the rates didn't really move that much. So the betas were lower than our expectations. I think as you looked at May, you've seen some competitors begin larger increases probably to catch up for what they hadn't done in the beginning part of the year. And again, when you think about pricing, particularly in the high-yield savings piece, there is this dynamic, there's a lot of money flowing outside the system into money markets. You get too far away from that money market mutual fund rate, you will have outflows. So that's why we try to stay within there. We have to stay high enough away from the money center banks, the brick-and-mortar banks, close enough to the money center, I mean, close enough to money market mutual funds in order to maintain the net inflows that we're having. So again, I think you've seen tepidness pick up over the last month. But again, betas for our expectation are better than what we saw entering into the year at this point.

Okay. So any implications for net interest margin as a result of all that?

Listen, we've guided to the margin. We reaffirmed that guidance in April. We feel good about that for the year.

For a full year guide, which is what [ 15% to 15.25% ].

That's what we said back in April. And certainly, we're back in July with a revised perspective.

Okay. Let's talk a little bit about new card account growth. I just wanted to understand a little bit about what the drivers are that's delivering the acceleration that you've seen in 1Q? And maybe you can give us a sense as to who's funding that new partners?

Yes. So the one - not the one. An advantage of our models are low cost to acquire right through our partners. And what you see is some of our partners having really attractive through the door -- through the door growth. So that's helping us. Most certainly, we're leaning into health and wellness. That's funded by us. But again, those are at cost to acquire that are very attractive and probably industry-leading when you look at that versus our peers. So it's really about fundamentally our value propositions are resonating. We got our 3 new programs, Verizon, Venmo and Walgreens. You got partners who are really driving growth and volumes through their stores. So it's a combination of things. The real attractiveness in how we originate accounts is we don't have to lean into marketing. So you did not see very big marketing increases for us. A lot of our marketing is already, I'd say, prewired with our partners with regard to volume growth that just flows back into marketing as it's generally geared off of purchase volume. So we don't have to lean into marketing. Therefore, we don't have to pull back at other points of time. So again, another attractive element of our business model.

Just want -- I was wondering and got this from some investors as well is part of this reacceleration a function of maybe BNPL take-up slowing down at all. Do you feel like that's the driver?

No, listen, they play in a different space than us. We never really saw the impact of them when they try to acquire a lot of customers ahead of real interest costs and capital costs. So -- and we don't really feel them now. It's more about, I think, our value props, where we're resonating our 3 new programs, leaning in health and wellness, just being in the right places, it's really what's driving it.

Okay. Just talking about RSA a bit as well. The percentage of -- the RSA as a percentage of receivables did come down a bit in the first quarter, I think it was about 60 bps Q-on-Q. And that's at a time when your pre-RSA revenues were staying mostly flat. So maybe you could just give us a sense as to how we should think about the path of the RSA going forward?

Yes. It's interesting, Betsy. There's so much focus on RSA, one got to 6% and what we were doing and what was changing. And it really is a factor of overall profitability and mix, right? Now as loss rates rising, that flows through in the current period back to the -- back to our partner. So you're seeing it come down, and that's the way it's designed. So as we come back into what I'd say is this more steady-state type economic model, albeit at a higher interest rate environment than we thought, you should see that RSA pulled out, and that trample down. The important part is when you think about the RSA, I think when we went public, the guy was around 4.5%. Our guide for this year is around 4% to 4.25%. So we're in line with where we've been and it will continue to track with charge-offs and revenue generally speaking. Again, there's some mix. And I think the one thing where you see it on the upside, you see it on the downside is, remember, we get that first take, right, with the ROA being at a certain level, then you share and depending upon where the ROA is shared, so our partners share a higher percentage above the threshold. So when you have higher losses, they bear a little bit more in this time period, the same way they benefited last year and the year before when charge-offs were coming down. So the RSA is acting as designed and should provide a buffer and stability for us in our model as we move forward.

And it's that loss content that's really the driver, not reserves?

Well, reserves lag. We did that when it came to CECL, we didn't change how we passed the reserves, but we just lagged it to folks. And right now, our provisions have been growth-driven. So it's kind of falling through, I'd say, on an equal basis. We talked about this. As we entered the year, we don't see rate-driven provisioning, right, given the macro overlays we have in place and how we have things developing. So assuming that macro environment holds up to our expectations, it's really growth driven and should be less volatile, I think, in the RSA driven.

Okay. I did want to bring up some of the things that is on the CFPB's to-do list and get your take on how you're thinking about managing through. The first one is the late fee, right? And the CFPB is currently working on a proposal to reduce the late fees to $8 from I think today is somewhere in the 30 to 40 range. Could you give us a sense as to how you're thinking of adapting in the event that CFPB does put forth that role?

Yes. Obviously, we're disappointed with the rule. This was probably the most transparent fee to a consumer. So if you do not pay on time or if you're not paying time, a number of times in a stated period, you could charge a fee. And it was very transparent to customers. It's been long standing. The whole industry was inside the safe harbors. And we think that the law or the proposed rule that they put out is not consistent with the CARD Act. There's a lot of comments put in. The overall effect here, Betsy, it's unfortunate because 2 things will happen very broadly, and I'll get into how we think about it. Number one, there will be a contraction of credit to certain individuals, number one, either through just people restricting and not originating into certain higher probability of default accounts because you've now stripped out all levels of deterrents, which were part of the CARD Act. And also, you'll see some volume pull back because the pricing of the cards are going to go up. So you're going to have this price increase that's going to happen not only to those consumers who probably would get the late fee, but you're going to bear that cost as well as people kind of push that out. So it's unfortunately because you're going to see 2 big ratifications. The third thing you're probably going to see, unfortunately, is going to be higher delinquency, it may cycles are not to loss, but into delinquency. You may see faster reporting to credit bureau. So what's going to happen is people's credit scores are going to get impacted, which will have broad-based effects, whether it's the mortgage market, the auto market, personal market. So there's a lot of far-reaching effects of that. So that's how we kind of think about the rule. It's unfortunate that they made this proposal. We'll see what happens as they evaluate the [ commuters ]. As far as we're thinking about it, we will certainly have analyzed the rules itself. We've analyzed different ways in which we can try to create deterrent. So when you think about more penalty-based pricing, more risk-based pricing, changing of pricing to the consumer as ways in which we would potentially offset that in order to kind of come back to as hopefully a neutral type of setting. So we're working through that. We continue to work through that. We've had a team that really started last April on it when the proposed rule came out in February. We expanded that team. It's a cross-functional team that's fully dedicated on understanding it and understanding how we'll react to it with our partners.

Have you been hearing anything from your partners with regard to concerns or feedback?

Listen, we're in dialogue with our partners. We've been in dialogue with our partners with regard to what the rule is, the impact of that and how we're approaching pricing as a result of that. I think we're probably heading into what I'd say is a more definitive period of time where we've kind of identified the exact things we may do and begin having that dialogue with our partners and engage with them, but they're with us. They will certainly don't like to see the contraction of credit and would like to solve this, I think, in a way that's fair to all 3 parties.

And when you talk about price going up, you're talking about interest rate or are you also talking about potential for fee per card?

There are a number of different things that can happen, right? So if I think about pricing per se, Betsy, the first bucket I put is pricing that creates the turns in general pricing. So general pricing that creates or to think about risk-based pricing, you think about penalty pricing. So if someone gets late, you change the interest rate, they do have relook procedures under the CARD Act you'd have to take into account. But you're going to look at that bucket. You're then going to look at the other bucket, which is APRs, it could be the way in which you assess interest in other things around the card. So certain practices that we didn't necessarily do, but the industry did that we may adopt in order to fill some of this. And then you're going to get into -- there could be some new things that come into place with regard to fees, not necessarily annual fees, albeit there could be one, but there may be fees for other things in order to sit back and say, "Hey, listen, we have costs that we have to pass on to the consumer for our operations." So it's not necessarily just going to be an APR. It's not necessarily going to be in one flavor given the size of what the CFPB is proposing.

Well, that's really helpful to get all that color. I appreciate it. There's one other thing that CFPB has been looking at, which is a concern around deferred interest products and medical credit card financing. And obviously, with the health and wellness platforms that you've got, just wanted to get your sense as to any potential impact on care credit that you're thinking about at this stage?

Yes. First of all, our health and wellness business, the first and most important thing and even our deferred interest products, which we work closely with the CFPB and our regulators on, we want to be a transparent lender to our customers and make sure that's priority number one. The second thing I'd say is some of what that's geared towards is when I sit there and say is the an in-store hospital where you have an emergency and there are certain forms of in terms of other benefits that may be available and then someone is trying to solve a financial practice. That's not who we are. The majority of our business is dental and veterinary. So we're not doing that emergent. Emergent maybe for your dog as a pet parent or if you have a crack tooth, but not necessarily that urgent situation. And again, we try to be incredibly transparent with regard to deferred interest. I think we -- I hope we are one of the leaders with regard to our practices in that segment based upon what we got through in the last number of years. So again, we're not really a medical credit card per se, we're a health and wellness card, which is a little bit of different. So I don't necessarily expect it to impact our card. And most certainly, we support transparent -- transparency with consumers in the health care setting.

Okay. So 2 more topics here, one on expenses, one on capital. Just as you're thinking through the expense levers that you could pull to drive positive operating leverage in 2023, especially if loan growth slows or NIM comes in less than expected, anything that you can point us to towards where you have flex in the system?

Yes. Most certainly, the largest expense that we have is headcount related. So that's honestly say we take headcount actions would we slow certain things? Obviously, there's vacancy. I think what you sit back and say, though, what's interesting now with the labor market, our attrition rate for exempt population is remarkably low, much lower than historical standards. So that's your first place. We do have certain leverage with some of our partners, externally from a sourcing perspective, we can pull in given the volumes, so that they've made a good bit of money on our case volume. We'd be able to take advantage of that through some sourcing savings. So there's a number of different levers that we can hit on. So -- but again, we want to invest for growth. Health and wellness is a very big opportunity for us, marketplace and some things around the consumer are big investments for us. So as much as I want, I will deliver and hope to deliver operating leverage this year, we're most certainly going to be focused on driving value for the shareholders long term.

And let's talk about capital then. You recently announced -- well, the Board recently approved, I should say, an incremental $1 billion repurchase program that's taking you through June 2024, and that's on top of the preexisting $300 million that's remaining through June '23. Could you just give us a sense as to what you're thinking about with regard to buybacks over the next couple of quarters here?

Yes. Listen, our authorization is $1.3 billion when you think about the start of this quarter through the end of next year. Betsy, we don't give quarterly cadences to that. Most certainly, our stock is not trading at intrinsic value. So it's actually at this price, a very good purchase for us. And we'll continue to be opportunistic when it comes to that. But again, as I think about capital, our number one priority is RWA growth. Our second is the dividend, and the Board has approved, but the articles to the approval for the third quarter has approved a 10% increase in our dividend to $0.25 per share. And then you get into whether you do repurchases and/or inorganic opportunities, whether that's portfolio purchases or a small kind of tuck-in M&A activity. But again, we feel good. We're an excess capital position. We generate a lot of capital, and we feel good about that position. And given the share price, we'll continue to execute as we have.

So what do you think is underappreciated by investors. You indicated below intrinsic value. So give us your pitch here in the last minute.

Yes. Listen, I think if you look for the elevator speech on why our share price is, the first is macroeconomic. And I think people are just caught into a kind of urban legend with regard to how much subprime we have, it's much lower than what it was in the GFC. I think [indiscernible] is private label, and to some degree, we're much more diverse. When you think about dual card and a broad-based utility through PayPal and Amazon, we're 50% utilization. We are different than that. Our subprime is lower GFC. Our high super prime is actually a bigger percentage of the top bucket. We don't break that out. So we're not as exposed to that. We don't have as much loss volatility, but I think people just put a label unfortunately on it. So I think there's a macroeconomic headwind to that, number one. 2, I think the late fee piece, and as much as we've demonstrated, hey, we solved it back in 2010 with the CARD Act in 2011, they want to say, okay, let me see what plays through here on late fees. So I think you have those 2 big headwinds. I think if you walk away from this business, Betsy, here's the takeaway you have. It's a high ROA business. It's a consistent business. The RSA provides a buffer. We have very good credit underwriting standards through PRISM to control the losses. So when I look at that and you look at the diversification we have across the 5 sales platforms and within the platforms, we're resilient from a sales perspective. The RSA provides resilience. So we should be in a good position to deliver for our investors through different cycles.

Great. Well, Brian, thanks so much for your time this morning. Appreciate it.

Thank you.