Up next, we are pleased to have Bread Financial joining us once again. Bread has continued to execute on its strategy of improving its financial position by reducing leverage and building capital. In addition, it's maintained a leading position in the private label business, while also continuing to diversify into other card products. This should position the company well for the period ahead. Joining us on stage is CEO Ralph Andretta, CFO Perry Beberman. And also joining us is—sorry, Perry Beberman, and Val Greer. So Ralph, you guys are going to give a short presentation?
Sure,
we'll do that right now. Is that okay?
Yep, perfect. Let's kill it.
All right.
All right, thanks for having us, and as I said, we're here with Val Greer and Perry Beberman. But before we begin, please review slide two, which contains important disclosures concerning the use of non-GAAP measurements and forward-looking statements that we will make today. Note that today's presentation can be found in the investor relations section of our website. So let me start on page three, highlighting our areas of focus. They are growing responsibly, strengthening our balance sheet, optimizing data and technology, and strategically investing in our business. Our management team is committed to driving responsible growth that will deliver long-term shareholder value. We continue to expand and renew our partnerships with an emphasis on sustainable, profitable growth. Strengthening our balance sheet remains a top priority and integral to our long-term strategy.
Our disciplined balance sheet management enhances our financial resilience and provides flexibility for capital utilization, including supporting business growth and further reducing debt. On the data and technology front, we are leveraging innovative capabilities like tiered pricing, targeted customer acquisition that we gained from our platform conversion, systems enhancements, and our expanded product portfolio. In addition, machine learning remains one of the many tools we utilized for many years to build stronger credit risk models to continually enhance our underwriting line management and collections. As we strive to deliver exceptional value and experiences to our cardholders, we continue to invest in a range of technology innovations, from data and customer analytics to self-service and digital capabilities. Our goal is to continuously generate expense efficiencies and reinvest the savings in our business to support responsible growth at our targeted returns.
If you move to slide four, retail spending continues to moderate amid persistent macroeconomic pressures. Overall, moderate to low-income Americans who have depleted much of their excess pandemic-era savings are focused more on non-discretionary purchases, while higher-income consumers continue to spend on health, beauty, and experiences. Early holiday sales are tracking behind last year's levels for both Bread Financial and the industry, as sales were pulled forward in the last few years, given supply chain and inventory concerns. We anticipate the beginning of December to benefit from this year's more traditional shopping calendar. Beauty and travel and entertainment continue to be our top-performing verticals, while sporting goods, apparel spending notably improved on Black Friday and Cyber Monday, compared to pre-holiday period, as consumers remained deal-conscious.
Given the ongoing macroeconomic stresses faced by many consumers, we continue to take a proactive approach to underwriting and credit line management. We manage our exposure by tightening approval rates, pausing line increases, and implementing line decreases where prudent. While these adjustments limit sales and loan growth, they are the right actions to support improved credit performance over time. We remain focused on responsible growth and will continue to manage underwriting to meet our risk-return thresholds. From a regulatory perspective, we continue to develop mitigation strategies in anticipation of the CFPB's final rule on credit card late fees, which would have a significant impact on our business if left unmitigated.
Having effectively managed through significant regulatory changes and varied credit cycles in the past, our seasoned leadership team is focused on addressing potential impacts to our business and committed to generating strong returns through prudent capital and risk management. Finally, we continue to make good progress improving our capital metrics and reducing our parent level debt. Just last week, we obtained our inaugural credit rating for the total company, achieving another important milestone in our transformation. Moving to slide five, I will highlight the positive results of our balance sheet strengthening actions over the past three years. Our disciplined capital allocation strategy, which focuses on profitable growth, improving capital metrics, and reducing debt, has driven substantial growth and tangible book value over the past three years.
Looking at the first chart, you can see that since the first quarter of 2020, we have more than tripled our TCE to TA ratio. Moving to the second chart, we are proud of the progress we have made with respect to debt reduction. In just over three years, we have reduced parent level debt by 55%, paying down more than $1.7 billion of debt. We aim to further enhance our total company metrics from where we are today. We will balance achieving these targets with continued investments in our business and our business and growth aligned with our capital priorities. As you can see on the chart to the right, our tangible book value per share has grown at a 37% compounded annual rate since the first quarter of 2020, supported by our strong cash flow generation....
We believe this growth, combined with our meaningfully improved financial resilience and strengthened balance sheet, should yield a company valuation that is a multiple of our tangible book value. Our significant accomplishments over the past three years demonstrate our focus and the success of managing our business responsibly to build long-term value for our stakeholders. We are pleased with our strategic progress and remain committed to further long-term value creation. With that, I'm going to ask, Chief Commercial Officer, Val Greer, to provide insights into our products and partnerships. Val?
Thanks, Ralph. Slide six illustrates how our unique business model drives customer loyalty and growth through our broad suite of products. Our differentiated product offerings enable us to meet the needs of a wide array of consumers, driving higher conversion and product adoption rates. As a result, our brand partners can better manage their product mix and optimize their profitability. We offer one of the widest payment product suites in the market, serving the entire generational segment. By having access to a rich product mix, consumers can grow with a brand partner and progress into more mature product offerings over time based on behavior and needs. This graduation strategy deepens customer engagement with a brand and benefits merchants over the long term. Additionally, our personalized, intelligent, and optimized messaging solutions help convert and grow shoppers with a brand partner.
These capabilities have enabled Bread Financial to put a credit card into the wallets of one in seven Americans. With our full product suite and supporting capabilities, we've increased our total addressable market and captured additional spend. Our comprehensive product set not only provides graduation and optimization strategies that increase the lifetime value of a customer for us and our brands, but also helps to reduce portfolio risk. Turning to slide seven. Diversification across products and partners allow us to better optimize our risk-adjusted returns and deliver sustainable, profitable growth. The expansion of our co-brand and proprietary portfolios, which combined, comprise approximately 37% of loans and 53% of spend, has helped us retain incremental sales as consumers shift spend to non-discretionary goods in more challenging economic scenarios. In addition to our product diversification, our business benefits from diversification in the verticals.
We continue to expand our newer verticals and strengthen our share in growing segments like health and beauty, and travel and entertainment. For example, we signed and converted the $1.5 billion AAA co-brand portfolio in the fourth quarter of 2022, and have grown our proprietary card offerings to nearly 5% of our total loans. As a result of this diversified growth, our specialty retail vertical now represents just 25% of end-of-period loans, down from around 40% just a few years ago. Our product and partner diversification is especially relevant considering the pending CFPB late fee proposal. Having shifted from primarily private label credit card offerings and specialty apparel to a much more diversified product mix today, we are now better positioned to mitigate the financial impacts of the proposal than we would have been even just a few years ago.
However, we still have a sizable proportion of lower balance, soft good private label accounts, and the proposed changes would have the most meaningful financial impact on those accounts. We are engaged with our brand partners regarding potential outcomes and a series of mitigating actions that are being contemplated. And while each program has different potential impacts, we are focused on optimizing the outcomes for our cardholders, our brand, and ourselves. I will now pass it over to our Chief Financial Officer, Perry Beberman.
Thank you, Val. So beginning with a credit performance update on slide eight, our October net loss rate was 8.0%, up from September as expected, driven by continued macroeconomic uncertainty, pressuring the consumer payment rate. We are seeing late-stage delinquencies roll to the next stage of delinquency at a higher rate, resulting in net loss rate pressure. As macroeconomic headwinds persist, including compounded persistent inflation, high interest rates, and the resumption of student loan payments, we expect the December net loss rate will be approximately 8.5%, leading to a fourth quarter net loss rate of around 8.2%. In addition to economic headwinds, our loss rate is being driven higher due to the denominator effect from slower loan growth as a result of our strategic credit tightening actions, easing in consumer spending as pandemic-era savings are depleted, and typical seasonality.
Looking at the bottom chart on the slide, our total loss absorption capacity, made up of our company's Tangible Common Equity plus credit reserve rates, is at 24% of total loans, demonstrating a strong margin of protection should more adverse economic conditions arise. Ralph highlighted some of the actions we have taken to strengthen our balance sheet over the last few years by reducing debt and building capital. Importantly, we accomplished these objectives while also building our loan loss reserves. Our loan loss reserve rate is 300 basis points higher than our CECL Day One rate in January 2020. We continue to proactively manage our credit risk to protect our balance sheet and ensure we are appropriately compensated for the risk we take. We closely monitor our projected returns with the goal of generating risk-adjusted margins above our peers. Moving to Slide nine.
The graph on this slide provides a directional illustration of how different CFPB rule mitigation actions could impact various components of our loan portfolio, pricing, and size over time. The dark blue area at Day Zero represents initial loan balances on existing accounts. The light blue represents new loan balances on existing accounts generated over time from future spend. The light and dark gray at the top of the graph represents balances from future new accounts. Now, as stated previously, and by many in the industry, one of the expected levers to mitigate the impact of lower late fees is to substantially increase APRs on all existing and new accounts.
The dark blue area, representing existing balances, will remain at the current lower rates and will take years to pay down, as CARD Act payment hierarchy rules require the higher rate balances are paid down first, which will be the new spend or forward flow on these existing accounts. As a result, APR increases will not have a sizable immediate impact on our total portfolio. However, in each subsequent quarter, the existing loan balance will be replaced by new spend balances on existing accounts and new account balances. These balances will have higher APRs that drive increased mitigation over time. In addition to APR adjustments, we will introduce or reintroduce or increase promotional fees on big-ticket purchases, as well as evaluate maintenance fees like annual or monthly fees on certain products. These fees would have immediate impact at the time of implementation.
Additionally, Val mentioned that we are working with our partners to refine our Retailer Share Agreements or RSAs. Updates to our partner program economics and payout structures may include partner RSA concessions that would allow us to continue to acquire certain lower-scoring customers that would otherwise be turned down as a result of the rule changes. Finally, the top section in light gray with the number five illustrates the future balance growth that will likely be foregone as a result of the proposed rule change. As currently proposed, the rule will lead to reduced credit approvals, limiting access to credit for those that no longer meet our risk-return thresholds required to deliver an appropriate return on capital for those accounts. However, if future loan growth is lower, capital would be freed up, which could be invested into more profitable growth opportunities and strategic adjacencies, as noted by number six.
Once a final rule is released, we will update our forecasting scenarios based on the specific details and effective date of the rule, including delays resulting from expected litigation, and provide a range of potential outcomes based on the mitigation actions as just discussed. Slide 10 highlights the basis for Bread Financial's expectation for strong, durable profit margins. Even at the elevated loss rates last seen in the great financial crisis, we expect that our risk-adjusted PPNR profit margin would remain positive, given the strength of our peer-leading risk-adjusted loan margins. Given the same economic conditions today, we would expect to outperform those historic loss levels due to the transformational improvements we have made, including our improved credit risk score distribution, diversified portfolio, and enhanced underwriting discipline.
We proactively manage our portfolio, continuously updating our risk management models and underwriting criteria consistent with our Recession Readiness Playbook for both new and existing accounts. We expect that our ongoing responsible credit tightening will lead to a moderation in loan growth in 2024 until the macroeconomic landscape improves. Considering the challenging macroeconomic landscape, we anticipate pressure on losses to continue into 2024, with the net loss rate expected to peak in the first half of 2024. We'll provide additional guidance for 2024 on our earnings call in January. As Ralph and Val highlighted, we've made great progress in strengthening our balance sheet, improving our product offerings, and diversifying our business. Obtaining a rating at the parent level for the first time reflects our continued progress and track record of taking action and delivering on our strategy.
We believe that our disciplined risk management, enhanced balance sheet, and improved risk profile, coupled with our more diverse portfolio and brand partner base, will enable us to manage even more successfully through the full economic cycle and create long-term value. I'll now pass it back to Ryan for Q&A.
Great. Thanks, Perry, Val, and Ralph. Appreciate all the prepared remarks. Ralph, maybe just to start off, I mean, your prepared remarks, you talked about, I guess, holiday sales or fourth quarter sales tracking behind expectations, and you highlighted some areas. Maybe just dig in on, you know, where you're seeing the softness, and how do we think about expectation for sales growth in the near term?
Sure. So I'll start a little bit, and I'm going to ask Val to chime in. She's close to it. So, you know, what I said is true. So the brands in the industry have benefited from last couple of years of pulling that cycle forward because of supply chain and inventory issues, so that pulled that forward. This, I think, is a more traditional shopping year for us. So, you know, we saw good trends starting to emerge on Black Friday and Cyber Monday. We think those will continue as this is a more sustained shopping year. So-
Yeah, thanks, Ralph. So, you know, I think our consumer is really middle market America, and middle market America has been hit by high inflation and high interest rates. And so coming into the holiday season, we have seen that consumer be very budget-conscious about where they're going to make their purchases. And so coming into Black Friday, Cyber Monday, there were a lot of sales, a lot of value adds. That's when we started to see our cardholders lean in. So whether it was first-day discounts on our products, redeeming rewards at the point of sale to lower the basket, take advantage of promotional financing offers, they're just trying to maximize the budget they have to go as far as they can during the holiday shopping period. So we saw momentum through that holiday, Black Friday to Cyber Monday.
We continued to see momentum through the rest of the holiday period. We picked up an extra day in the calendar this year as well. And so we have seen a shift where our cardholders were very high in purchasing prior to the holiday because of the shortage in inventory, much more traditional shopping pattern this year.
And, Ralph, before we get into some of the environmental things, so 2023 was characterized by rising losses, higher inflation, although the company had lots of good things going on, product diversification, new business wins, continued investments in technology. Can't forget about strengthening the balance sheet. So as you look ahead to next year, you know, what do you think are going to be the key focus areas for Bread?
Well, it'd be nice to get to the other side of macroeconomic and inflation, but I don't think we're going to be there yet. So I think you're going to see some of the same as we get into 2024. You know, our, our strategy from 2020 isn't changing. We're going to continue to invest in profitable growth.
Mm-hmm.
We're going to continue to do that. We've got some things coming on the books in 2024. I'm excited about. They're profitable for the organization, and they meet our hurdle rates. We're going to continue to invest in technology, and particularly digital technology, for our customers and our partners, to make sure that we are doing the right things for them and growing their businesses as we grow ours. We're going to continue to pay down debt. You know, we've made really nice progress in paying down our debt. We're in a good place for that. You know, our double leverage ratio now, I think, is 1.27. We want to get it around that 1.15 number. I think that's very important for us. You know, we'll continue to manage our losses very thoughtfully through the process.
I think we're reserved adequately. If there's, you know, in an unknown environment, and we're very focused on managing through, you know, the environment as we go forward. So, you know, as exciting as it sounds, it's more of the same.
Mm-hmm.
Just being very disciplined about our business, being very thoughtful about what we put on the books, and being very thoughtful about getting that debt, you know, off our balance sheet and strengthening that balance sheet and our capital metrics.
Yeah. Excuse me. So, you know, Perry, maybe as a follow-up to, to something that you had said, you know, regarding loan growth into next year. I think you said moderation in loan growth this year. We're looking at low single digits. I know we'll get formal guidance on a Thursday in January, but, you know, can you maybe just talk directionally about loan growth? You know, given the macroeconomic environment, what are some of the drivers? What are some of the key puts and takes, and how does tight underwriting factor into this?
Yeah, I think when you think about next year, it's going to be driven by a few things. One is you're going to see the consumer, I think, will continue to remain a little weak compared to, you know, when you're outside of this cycle that we're in. So I'm not expecting a lot of rebound in consumer spend in the first half of next year. I expect it to hopefully ease a little bit by the back part of next year. You're going to have a period of time, particularly in the first half of the year, where you'll have elevated loss rates. When you have elevated loss rate, that naturally suppresses your loan book. If you're 100 basis points higher in loss rate, that's 1% less growth.
So, you know, I expect we're going to be above our 6% through the cycle, and, you know, when you think about the first half, we're going to peak in loss rates. So I think that'll be a tempered effect. And then, as you mentioned, our credit strategies, do not expect that to loosen up, I think, in the first half. I think it's going to remain a tough sledding environment for consumers for a bit, particularly for that moderate income, middle-income American, until you get to the back part of next year, where hopefully there's, you know, more easing in inflation and interest rates start to come down.
Given, Ralph, given that outlook, you know, the company for the last few years has targeted positive operating leverage. This year, some moving pieces, but continuing to do a good job on managing the investments. How do you manage for this period ahead, which is clearly going to be a focus on, you know, driving credit performance, not taking on incremental risk? How do you still make the investments that you need to in the business, given that it's probably going to be somewhat of a challenging revenue year for the company?
Yeah. So, listen, every year, our goal is positive operating leverage. That's our goal. We focus on it. That's how we, you know, that's how we develop our budget, and that's how we develop our plan. But if there are investments out there that make sense for us long term, that will yield either, you know, really good revenue returns or drive down our expenses, make us more efficient, we're going to make those investments. That's the, it's the right thing to do. We'll do the right thing. You know, again, if it benefits the company from an expense perspective, drives revenue, benefits our partners, we'll make those investments. But, you know, listen, frugality is what we're doing. We're very focused on spending where we need to spend, and we have levers we can pull down on if we're not seeing the return on that spend.
That's how we've managed through the course of the last few years.
Perry, maybe to expand a little bit on the credit loss forecast, and thank you for the, for the quarterly walk for the rest of 2023. If you think about losses peaking in the first half of the year, maybe just talk through your expectations. What gives you confidence that, you know, we're going to see that happen? And, how do you see losses progressing once we do get to the peak?
Yeah, and the reason why I think we see losses peaking in the first half is you can see the delinquency formation right now. And I think there's encouraging signs that while I wouldn't say we're at an inflection point of improvement, I think we're at an inflection point where delinquency formation is stabilizing, meaning that the entry rates have improved, have rather stabilized, not improved. They're not eroding or deteriorating, so that's an encouraging sign. Now, still, there's, you know, that amount of delinquency that you have is going to flow through the stages of delinquency to charge off, and that is rolling at a faster rate than it has historically because of the pressure the consumer is under.
So when you think about the first part of next year, the delinquency is already formed that will eventually move through charge-off. So it gives us a line of sight into the first and second quarter of next year. Seasonally, you expect first quarter loans to come down, which is why you can anticipate that you're going to have that, you know, increase in the charge-off rate in the first quarter. And with moderating, I'll say loan growth, the first part should see some pressure more than a typical year in terms of the denominator effect. And then our credit strategies taking hold will influence more of the, I'll say, the loss avoidance midway through next year into the back half.
Got it. Then just given your forward loss forecast, you guys have had a very conservative allowance of roughly 12.3%. Given this view of the trajectory of losses, what do you think that means for where we're headed on the allowance?
Great question. I think, you know, what I'm real pleased with is, you know, we've commented that we would expect to see the, that reserve rate remain pretty stable, and, and we've seen that, right, for the past three quarters. I think it's hung out around that 12.3%. What you should expect in the fourth quarter is really not a material change in the loss rate other than some seasonality, which will tick it down a little bit, but then I would expect it to bump back up in the, in the first quarter. Now, we look at this every, you know, every month.
Mm-hmm.
Running the model, and these models can be sensitive. But until you get to the point where you have a much better outlook and confidence in that outlook for, I'll say, a few months in a row, I wouldn't expect the reserve rate to come down. But I do think based on what we're seeing, even with the elevated loss rate, we're not signaling that I expect the reserve rate to go up, because I think we've cared for that appropriately. And that means for the first couple quarters of next year, I would expect this to remain pretty stable.
And then if we start to see that the delinquency formation comes down midway through next year, and you have an outlook where the economy is more probability of improving, that's when you're going to start to see a, I'll say, a modest reduction in that rate over time.
Wanted to spend a couple of minutes on this very helpful slide regarding,
Sure.
late fees. Maybe just, you know, for those of us not as familiar, just any sense for how material late fees are to your business? How much... You know, you showed on the slide the impact for loan growth. Any sense for, you know, how we should think about the earnings impact in the very short run before we get into some of the moving pieces here?
Yeah. When you, when you think about our business, and, you know, Val and Ralph commented on it, that we have- we still have a high proportion of our business in the private label space. Depending on the product, will determine, you know, the impact of a change in late fees. So low line accounts that are higher risk have a higher impact from a late fee change.
Mm-hmm.
I mean, it's, you know, simple math would be, hey, if you had a $10,000 balance, and the customer went late once for $30, that's a 30 basis point impact to yield. If it's a $1,000 balance, a $30 late fee is 300 basis points. So it gives you an idea of how you need to mitigate differently. So the, the impact's significant. We've said we're going to be, you know, most impacted initially because of it, because of our exposure to those low-line, private label, soft line, businesses, soft good businesses.
So if I were to look at the specific actions that you intend to implement, I first want to focus on the first three. Can you maybe just talk about how any testing or progressing is going, and you know, how would you rank order the ability to actually use some of these as levers? I would think that, you know, introducing a higher APRs would probably... And, you know, promotional fees would probably be easier than maintenance fees. Maybe just talk through what testing you've done to think about each of those.
Sure. I'll take that one. So, we went out and actually surveyed our cardholders to get a better understanding of what was that price sensitivity to these various levers, be it APRs, promotional fees, annual fees, maintenance fees. What was the impact on likelihood to apply, and then what was the impact on the engagement after the product was applied? From an APR perspective, we have-
... some higher APRs out in market today. We allowed as Prime increased, we allowed those rates to float above 30%. I think historically, there's been a bit of a soft cap in the industry on that. We removed that earlier this year. We've been tracking those to see what type of impact that has had on both the sales and the account side. We also did increase the spread on about a dozen accounts in September, and see the impact, and that increased anywhere from 100 basis points to 300 basis points. And we are also tracking those. Increase in APRs is absolutely the, you know, the lead one coming, coming into the CFPB. We also took a look at promotional fees.
So if you think about, Canada today has a very standard set of promotional fees, it's based on the tenure of the promo. We took those fee sets, we went out and researched those. One of our larger big ticket promotional clients has had promotion fees in the past. You'll see that start to come out in tests on one of our clients. And then maintenance fees, we also have been talking to our brand partners, and from a maintenance fee perspective, we will be testing annual fee early next year.
And then, you know, number four, I was looking for it on the chart, the refined retailer share arrangement. Maybe just talk about how the conversations with the partners are going. Is there a willingness to participate in the lost fees, or are they more interested to look for solutions to offset this?
Yeah. So, you know, our retailers understand that this is not something that we are doing to them. This is an industry change. It's happening across the board. They've been very pragmatic about that. And it really is, you know, how much from the RSA standpoint, there's the cardholder, and we talked about APRs and other T's and C's, but you want your cardholder to stay engaged. You want the product to stay attractive. There's us, and there's our brand partner. And so, if it's a soft good, we've had discussions around you wanna retain some of that reward and value proposition so that product stays attractive. From a big ticket perspective, you've got the promo fee, you've got what typically we call an MDR. And so how those levers move through an agreement vary by partner.
We have, on the vast majority of our agreements, a change in law provision that allows changes to happen. But we've not taken the position that we're gonna do something to our brands, but rather work with our brands around how those levers work best for them. So those conversations have been very in-depth. They've rolled up their sleeves, and those are ongoing. What we would like to see is the actual proposal come out-
Mm.
So that you know exactly what is in that proposal. There's a number of different legs to it, and I think until we actually see it, you know, you can't land the plane on how some of those levers are gonna work together.
And then, maybe to put together a couple of things, particularly on five and six. So there's clearly a cohort of customers that, you know, will no longer become to meet your return thresholds, but as you noted, that, you know, it will free up capital. Can you maybe just talk about if you look out, you know, I'll use your time frame of three years.
When you did the Investor Day a couple of years ago, you talked about, you know, high single-digit growth.
Yeah.
What does this do to the long-term growth profile of the company? And second, as we look out, you know, three years, how does this change the return profile of the company?
Yeah, that's a good question, right? It's... You know, three years is a long time, particularly when you're going through a period of, I'll say, that modest growth because of the economic cycle. But if you take this aside, when you're responsible with growth and you're making trade-offs around growth, when you have capital constraints, which we do, like right now, we haven't been investing as deeply into direct-to-consumer card as we otherwise could have because we're supporting our partner growth. While some of the partner growth in private label or other, you know, areas are not growing as much because we've tightened credit, that frees up capital to deploy into that, or we can lean more into our buy now, pay later space or personal loans.
So there's opportunity to grow into our adjacent products, where we already have that built out, so we will be able to place that. As it relates to the returns, you know, I'd say that our objective is to, you know, mitigate and get back to really strong returns. The returns may look a little different because today, some of our highest risk accounts that we put on could be some of the highest return, but that will no longer be there, but they're also the most capital intensive, right? They have the highest CECL rate, they have the highest capital that's assigned to them. So it's really what does that portfolio look like in three years as it rebalances? You know, we've been on this journey of remixing the portfolio.
It'll continue, it may accelerate that, and it may have some products in there that maybe return a little less, but are less volatile too. So it, it will, it will depend where we go. We'll give more insight on that-
Yeah.
in our investor event.
So maybe just to end, maybe a question for you, Ralph. The stock's trading at a decent discount to tangible book value. I noticed you said that should be worth multiples of that over time.
Mm.
Obviously, there's uncertainty around late fees and credit, but what do you want to tell investors, you know, to get them excited or why you believe that the stock should be worth multiples of tangible?
You know, judge us by what we've done. To judge by what we said we were gonna do, and we did it, right? We said we were gonna strengthen the balance sheet. We strengthened the balance sheet. Most, as strong as it's ever been. We're a rated company now. First time in our history, we said we wanted to be a rated company, we've done that. We've diversified the portfolio. We've brought in top talent to the organization. Everything we said we were gonna do, we did over the course of the last three years. Now, macroeconomic is what it is. The CFPB issue is out there. It's out there for everybody. We think they're wrong, we don't like it. There's a lot of unintended consequences. I understand that, there is... You know, that's what people are waiting for.
I want that shoe to drop, so we can start mitigating that issue. But to me, it's, judge us by our deeds over the last three years. Everything we said we were gonna do, when we were gonna do it, we've done it, and we've been focused and thoughtful and have not deviated from that strategy. So I think we're a good buy.
Well, please join me in thanking the team.