We're going to get going. All right, thank you. So for our next presentation, we have Bread Financial joining us. We have CFO Perry Beberman and Chief Commercial Officer Val Greer. Perry joined Bread in 2021, has more than 30 years of experience in financial services. Val's been around for quite some time. I don't have the specific dates, but I know you were previously at Citi, and has worked with Ralph, the CEO, for quite some time. So maybe we start at a high level, all right? I know, Perry, you've been there since Ralph got there, as well as you, Val. A lot has happened. You guys have restructured the debt levels, and the TCE ratios have accreted quite nicely. Maybe you could just give us an overview of the journey thus far. What are the areas of focus now? I saw the share buyback. Congratulations.
I know it's tough to set the dilution, but it's still a step in the right direction. Let's just talk about sort of where we are, and then we can talk about the elephant in the room too.
Sure, sure. You know, I was reflecting when I was coming here, Sanjay, and my second week with the company, Sanjay was on the big screen. It was just during COVID still, but we had a board meeting, and Sanjay's given the perspective, and I thought, huh. We talked a little bit about our TCE to TA ratio in that meeting, and you really couldn't find it. We were, you know, when you look back in the 2.5 years, we have taken that TCE to TA ratio from under 3% to now it's approaching 10%. So you think about what we've done there, nearly tripled, the level of capitalization in the company. At the same time, we paid down $1.8 billion of debt.
We were way over-leveraged, had a double leverage ratio in excess of 220%, and now we're approaching that target of getting below 115%. So real proud of the work there, and we built tangible book value in the company. That's had a CAGR of close to 38% over the past three years. So, you know, the transformation of the balance sheet, I knew that was what the task was when I joined, and I think we're, you know, in the final stretch of that. We have a little bit more to go to pay off the stub of the, you know, the bond that's coming due in 2026. We'll take care of that last $100 million, but, you know, we put the maturities out to 2028 and 2029. So we've made progress, and, you know, so what's ahead?
When you think about the balance sheet, we've got a little bit further to go on the capitalization, where we want to get to. And I should also mention, during the same period of time, we built up our CECL reserves over 300 basis points from day one. So you think about how the financial resiliency we've built into the company, it's been tremendous. And at the same time, investing in tech modernization, in the partners we have. And so Val was transforming the partnership team and the digital investments. So there's been a lot of transformation to put us at this point where we feel like we're in that inflection point, worrying not for the elephant in the room.
Yeah. Well, maybe, Val, before we get there, let's talk about the transformation that has occurred on the partnership side too, because I think the end markets are different today than they were when you guys inherited the business.
Yeah, it's a good call-out. So, you know, when I came to Bread Financial almost four years ago now, we were predominantly really focused around private label credit, and predominantly within that, in the soft goods or apparel space. And over the last four years, have really stepped back to diversify our product set and our consumers. So today, more than 50% of our sales actually come from co-brand and proprietary and BNPL products versus our private label. And even within our private label, that apparel spot is now down to 25% of our end-of-period receivables versus 2019 when it was, you know, well above 60%. So made a lot of change in the product set.
Really went out, and when we bought Bread Pay a couple of years ago, which was the fintech that had both IL and Split Pay, we built out what we call a unified application flow that allowed us to bring into our brand partners that much broader unified product suite between co-brand, Private Label, Split Pay, and IL. So today you saw us, you know, win some in the marketplace like AAA, which was a very nice co-brand for us, as well as NFL and some of those other programs. So we are well diversified now across a pretty wide set in the industry.
That's great. I mean, I guess, like, if we look ahead over the next 5-10- years, what other transformations will occur in your mind? Like, what are you planning for in the next 5 years?
Yeah, so, you know, you heard Perry talk about our investments in tech modernization and data and analytics. That's been a very core focus of ours. So over that 4-year period, what we didn't mention was we also diversified so we could focus on the payment ecosystems, right? So we sold the AIR MILES business up in Canada. We diversified the loyalty business in Germany, and we really focused in on our core payment network. And so building out that digital and tech modernization so that you've got a very easy consumer choice model in our B2B to C space is a core part of where we're driving to. So continuing to cross out against our existing merchants, we also leaned into direct to consumers. So, you know, that is a diversified part of our model. Three years ago, we launched our Comenity credit card, and then we've evolved that.
So now we've got two American Express proprietary cards, Cashback and Rewards. We've seen a nice engagement there, activation, sales proactive. So that helps us diversify as we think about the model moving forward as well, although we'll always be, you know, at our core partnership business.
Yeah. You think direct to consumers, to add on to that, we had about $1 billion in the direct to consumer savings and deposits three years ago, and today we're over $6.7 billion.
No, I think that's a great move, you know. I guess, just one more for Val on just when you guys compete with your competitors in the market, like, what's your point of separation?
Yeah, I think, yeah, so differentiation is important in the market for sure. So I think a couple of things. I'm going to go big and then come in, which is so our sweet spot in the market is really between that $100 million-$500 million in portfolio receivables. So you won't find us going after, like, an Apple with $20 billion. So we play to our strengths.
Take you out of the running for Apple.
Yeah, we'll officially announce that we're not competing for Apple.
Got it. The announcement has been made. All right.
Yeah.
okay.
But our differentiation has really been in that broad product suite I talked about, in a unified flow across those. It's also been in our risk appetite, which you can tell from our earnings. We had a broader risk appetite. And it is in our partnership DNA that has allowed us to focus on capabilities and functionality that allow for a much broader top-of-funnel acquisition of cardholders than our competitors. So those are really important. We have now one in seven U.S. adults have one of our cards in their wallets as a result of being investing in the capabilities and the functionality. And if you think about somebody like AAA, you're like, why us, right? It came from Bank of America. It was a very big opportunity across the patch.
It was because of those capabilities we've built out at the point of sale that allowed us to really exceed expectations from an acquisition standpoint at the point of sale to grow that portfolio.
Okay. So let's talk about the elephant in the room. It's a CFPB late fee rule. Still waiting for it. Obviously, you guys came out with earnings and gave some numbers around sort of what the impacts could be under the $8 proposal. I'm just curious, have you guys heard anything about timing or what an ultimate fee level could be?
I don't think, you know, I'd say we haven't heard anything different than I'm sure what you've heard. You know, we'd love to hear more, but, you know, speculation is it's going to happen just before the State of the Union, similar to what happened last year. You know, probably getting as close to that as they can, so there's a little daylight before others comment on it. But we'll see. I mean, you know, we haven't heard anything much different. I mean, so the, you know, when we gave the impact, it was based on, you know, the $8 and the 25% of min due, you know, requirements around it. But, you know, we're, you know, in a state of readiness.
Val's been very active with her team, working with the partners and making sure, you know, we are preparing for it, but we don't really know until the final rule comes out.
Right. And I think the CFPB has been very clear. They just prefer, you know, the fee not be what it is, but, you know, the economics of the model sort of be okay the way they are. They're not, they're not in a problem with the model, economic model. They have a problem with sort of the fee and the way the fee is structured. So as we think about sort of the adjustments you're making and the conversations you're having with your partners, could you just, like, walk us through where we're at and, you know, how you plan to operate as we get more information?
Yeah. So I would say we have been working with our partners for a year now, and we've really developed, you know, an action plan at a partner-based level. So it's really important. You have different partners with different economic structures, different levers that you want to pull. I think, you know, once the announcement comes out, you'll start to see the market as a whole, you know, increase certain pricing terms. Certainly, APRs is something that, you know, the industry is going to be leaning into more. That takes time to bleed its way into the portfolio from a pricing perspective. We've also looked at new product enhancements. So whether you're talking about things like maintenance fees on your product, promotion fees where, you know, similar to other markets, like in Canada, you know, we've got a standard promo fee up front because you don't have late fees.
You know, those types of things we would expect to see come out in the market. But, you know, we do need the announcement to come out to really fully understand, you know, what are going to be the terms of that proposal and where are they going to lean in.
And how? Sorry, go ahead.
No, I'm going to say, you know, it's interesting your comment that they don't have a problem with the economics because one of the challenges that we have, it's less around the front book or new accounts that would be originating going forward with a different pricing construct. You know, with CARD Act , we're precluded from repricing the existing balance and that APR. And some of the challenge that we have, I'll say the industry, is with the practice of, you know, it was the same agency that regulated the late fee since 2010. And we underwrote accounts since 2010 with the economic input of the late fee amount and the pricing and APR that went was associated with that as an economic variable that went into the underwriting decision.
So either you would have priced higher, as Val just commented, APRs need to go up, and/or you would not have underwritten that account if they wouldn't hurdle the return on capital that's required for shareholders. So that's the challenge I think some of us have. It's less about going forward. We all can play by the changing rule set going forward, is when they're affecting the back book. You know, I'm not going to suggest it's deceptive regulatory practices, but it's challenging to then have to, when you got a big existing portfolio that's maybe underpriced, right? So that's some of the challenge with this.
No, I agree. I agree. You know, I mean, I think I will stop.
Are you stopping or are you stopping me?
No, I will stop. You know, I mean, obviously your valuations have gotten hit hard on the back of this news. You don't trade like a big tech company. So it is obviously that the defensiveness of the model is a very critical component to your valuation and your ability to sort of provide liquidity to the market. Completely get it, you know, is what I would say. But like, so as we move forward and we think about sort of the processes you're going to run, as this happens, you talked about how you adjust the model. And then obviously this is a litigation piece too. Can you just talk about sort of how you guys are organizing around that with the trade groups?
Yeah, we're lined up with the trade groups, with the industry. You know, there's a whole series of, you know, I'll say rationales for the litigation. You know, we'll let that play itself out. We'll get too far over our skis on that one, but we're ready and willing and lining up for the types of things I just talked about. You know, there's some problems with putting that into place with unsecured credit that's been assigned, the balance and the economics, but then there's process and, you know, other things that go along with that litigation.
Can you just talk about the unintended consequences here? You spoke to one, right? Maybe just talk about some other ones.
You know, Sanjay, that's one of the things, right? We heard how this was used in a State of the Union a year ago. You know, all the billions they're going to save consumers. I don't think they're going to talk in the State of the Union that, well, actually, the 80% of people that pay on time are going to pay higher APRs. They're going to pay more interest, more fees across the board. And they're not going to talk about the millions of consumers who will no longer have access to credit who are going to be knocked out of the credit market for this. So those are the unintended consequences. And then on top of it, you're going to have more people going late. And we talked about this last year.
If a latte costs $8, well, that might go late because I don't really care about $8 as much as I cared about $30 or $35 or whatever it would be. So, you know, that will impact consumer FICO scores or risk scores. VantageScore is what we use. But there's going to be some unintended consequences, and that will then make it harder for them to get auto loans, mortgages when they have damaged credit.
Well, it's clear the market at this point feels your stock has been punished sufficiently, which is why we've seen a little bit of a reprieve from the bottom, right? And so now the question is sort of how things progress. And hopefully everything plays out, you know, as best as it can. Anything else to sort of talk about this topic? No? All right, cool. Maybe we shift gears and talk about the current fundamentals and, you know, the health of the consumer. We've had some choppy times in the credit metrics. You know, some of it's been inflation and macro. Others have been sort of the transition that you guys had on your core on your card processing platform. You know, how comfortable are you with the 8% charge-off rate guide and the average loan growth expectations?
Yeah, when we think about what we're doing, we're definitely managing to our mantra of responsible growth. So we're not chasing growth. You can see that from the past couple of years. We didn't put on big vintages. You know, we've been tightening coming out of COVID and making sure we've been very responsible and thoughtful about our underwriting practices. So the narrative you're hearing from us may be different from other issuers who maybe put on big vintages in 2022, even 2023, and somebody's going to season into 2024 or 2025. That's not the case for us. So now really for us, you see, you can really see what it is, right? You see the early delinquency formation. These customers are, you know, we're seeing better delinquency now than we did pre-COVID. So the early formation is good.
It's just that once the customers go delinquent, they have a hard time getting out. I think that's a consistent story. The roll rates are at all-time highs. So when you look for the back half of the year, the confidence in that getting to that, you know, low 8 or around 8% is, does the second half of the year improve? That's the full expectation. I think everybody has the belief that inflation is going to start to continue to come lower. It has started to. We'll continue to come down, and the economy will have that softer landing. You know, hopefully it doesn't break the other way. We do expect our actions that we've taken from credit underwriting tightening will benefit us in the second part of the year as well.
Does inflation have to come down meaningfully for you to hit your guide?
No, I don't think inflation has to come down meaningfully because what you're starting to see is real wage growth is, you know, exceeding inflation. That coupled with continued diversification of the products, the underwriting that we're doing should help us to get down.
Do you want to, Val, talk about sort of this experience versus other experiences through credit cycles? I know both of you can really speak to it, to be honest, but I'm just curious sort of just, you know.
Yeah, I mean, I think we've all seen, right? This credit cycle was just very different. You know, how it came about with the higher interest rates and the inflation and the pressure on the consumer was very different than like an unemployment-led type of environment. And so managing your models appropriately, making sure you're adjusting those, right, was something that we leaned in on for sure because models hadn't had an opportunity to have that type of historic influence in their prediction ability. So we do feel good, as Perry said. You know, we see where the early delinquency rates are now, and you have started to see the wage growth come up. We've also, as you know, sort of modified where we have on the outside of our credit policy.
What we're booking today is a very different mix than what we had been booking four years ago. So that higher credit quality we're also seeing flow through now.
And then I think, Perry, you kind of hit on this question, but I just want to make sure we flush it out. I mean, some of the card issuers are expecting charge-off peaks in the first half of this year, right? And as are you. I mean, what's the confidence level there? I mean, you feel like you're seeing all the right metrics sort of come into play?
Yeah, from what we're seeing, we believe we're going to peak in the first half of the year. You know, we're going to get in that mid- to high-8s, and then it starts to come down from there.
The delinquencies are telling us the roll rates.
Delinquency, the early formation is looking good. We started, we need to start seeing some of that, you know, that breaking of the high levels of roll rates.
Okay. And then when we think about reserves and the reserve rate.
My favorite topic.
That usually should come down ahead of that, right? Because you kind of have a window into that unless you're making any type of subjective adjustments to it.
Good answer.
Yeah. Thanks. But I'm just curious, sort of like how should we think about the reserve rate in the absence of a subjective change and then maybe talk about the macro and sort of how it affects your subjective views?
Yeah. So I think.
At a very high level, obviously.
Very high level. You said it right is, you know, when you run the models at the end of the quarter and your early delinquency is lower, that should produce a baseline model that would say you're going to have lower expected losses, which means your reserve rate could come down. In this type of an environment, I think we're going to be a little more cautious. So let's say we're peaking in losses. I wouldn't think that it would be the time we're going to all of a sudden declare victory and start lowering the reserve rate. You know, I've been pretty cautious about this from the beginning. We were one of the first to increase the reserve, and now we've been holding it steady while others are now stepping theirs up. I expect that, you know, we will be steady for a little bit longer.
And then you have to have a degree of confidence in what the macro outlook is. If you think about how the macro outlook has evolved from, you know, there's going to be no recession, then there's going to be a recession. There's less. I mean, even from rate outlooks, there's going to be six cuts. There's going to be two cuts. Like how many cuts are there going to be this year? You know, my view is we are better positioned to be thoughtful and can slow on bringing that reserve rate down rather than whip it around. Because what I don't want is a headfake with the economy. You know, things look good with inflation. Interest rates come down. Also, unemployment starts spiking. It's just you want to be, I'll say, we're going to take a more conservative posture with this.
Like what are the blind spots in your mind in the economy? Like I'm just thinking about like the holiday season, and you saw a big pickup in people using Buy Now, Pay Later, for example. Like do you think that that's an indication of anything or would that have cycled through already and it's not something to be worried about?
I want to call it a blind spot and certainly.
Or peripheral.
No, but it's the continued compounding effect of inflation, right? It just has this slow burning effect on the, you know, average American household. And it's going to take some time to get through that. So while, you know, most of the people are focused on, wow, look at the, you know, Wall Street's doing great. The stock markets are great. But to the average American, you know, they're.
No, and you have that stat that the monthly bill was up $1,000, right? I mean, that's a big number.
It's a huge number. You know, their leverage is up and interest rates are high. That's compounding. Then you mentioned Buy Now, Pay Later. Because it's not, I'll say, standard credit bureau reporting, it also creates a little bit of a blind spot. There's this compounding effect on consumers that's going to take time to ease. You know, we talked about this a while ago. It's like it's almost like the entire, all of America has a cold, right? When unemployment, that's what the effect of compounding inflation does. Whereas when you have some spikes up in unemployment, okay, it goes from 3.5%-5%. It's 1.5% up and down the spectrum that we're impacted. Well, when you have this persistently high inflation, it's everybody that's affected except for the affluent.
Right. Right. And I guess maybe you could just talk about Buy Now, Pay Later since we're on this topic. Like, you know, you guys bought Bread Pay with the thesis of sort of having this full suite of products. Has that played out as you expected or do you feel like there's still a lot more room to run with the Buy Now, Pay Later product, et cetera? Maybe just talk about strategy.
Yeah. I mean, we bought Bread, you know, 3 years ago, and it was, you know, there was a demand in the marketplace. There was a good consumer adoption. That adoption really accelerated as part of the pandemic when everything was all mobile and digital. We also found at the time, though, that, you know, the fintechs were very much focused around building their brand, not necessarily being profitable. And not necessarily they weren't banked. So they weren't focused on being compliant within our regulatory environment. And so when we bought Bread, it was really important to us that we retain the customer experience that drove that very big adoption, but that we became compliant. And that says easy, but did hard, right? And so we spent a good amount of time making sure that our platform is fully compliant.
The other thing, you know, I talked about when you said, gosh, what's your differentiator in the market? And I said, our ability to have this very unified product suite, very simple flow between all those products. So building out that front end that allows for that very easy application and offer between whether it's a split pay or a private label or an IL or a co-brand card was an important part of the buildout. So when we came in and we got compliant, we did the buildout. It was also waiting for the market to rationalize a little bit. What we didn't want to do was go in and you've, you know, you've heard the story. Some of our own clients, you know, got paid $20 million in sign-on bonuses for a split pay opportunity. You know, that's never going to pay back in 20 years.
And so over the last year, we have seen that market rationalize, right? The fintechs of the world that are still around have really now been focused on profitability. They've had to go out and renegotiate a lot of their rate cards and their economics. That then opened the door for us to say, it's a rational place to be. We've got some good cross-sell we can lean into. We've got a compliant product, and we've got a great unified experience. So long-winded answer to yours, yes, we see good opportunity now, but we were making sure we had all our ducks in a row.
Where are we right now in that journey? Like, are the winds ahead of us or are we in the middle part of it? You know what I'm saying? Like, there's renewals that are happening, right, as we speak.
There are renewals happening, and we're in some very good discussions as those renewals are happening. So I would say we're in the middle of that, Sanjay.
Okay. Got it.
Yep.
I mean, definitely there's been a rationalization in the market, but there's still some strong players.
There are. Yeah, exactly. You know, you've got your Klarna, you've got your Affirm, right? You have your Afterpay. And those are where we're seeing the rationalization in some of those economics, right, that allow us now to feel comfortable getting in because, as Perry said, what we're not going to do is just grow for growth's sake, and it needed to be profitable.
Got it. Perfect. Let's see. Maybe we could just talk about the long-term ROTCE of the business and sort of how you think about it. Maybe it's the buildup and how you see it unfolding over time as we're normalizing for late fees, as we're normalizing for capital, right? I mean, you want to stay more capitalized than you were before, obviously, is what you've talked about. So maybe just talk about sort of where you see it trendlining over the next five years.
Well, yeah, we got to get through this macro period, which I think we're really well positioned to navigate to deliver, you know, say, decent returns, not obviously to its full potential while you're in this period of elevated losses because that also not only affects elevated loss rates, but it, you know, the reversal of interest and fees drags down revenue yield a little bit. But with, you know, we still have really strong risk-adjusted margins. And, you know, you kind of said it, right? You got to get to five years out to see maybe three to five to get through this period of time, to get through this economic cycle, get through whatever this is going to look like for the CFPB late fee change. And we'll give more guidance on what those targets look like at our investor event in June.
Okay. I've got some more questions, but let me open it up to the audience, see if there's some questions for the audience, and then I'll come back to my questions. Audience, any questions? One right there.
I'm sorry if you mentioned this earlier. I walked in a minute late, but are you and how aggressively are you raising APRs and, you know, yields before the late fee news comes out? I think some of your peers have mentioned they've been doing that.
Yeah.
Yeah. So APRs is definitely one of the areas that we have been piloting on some of our programs. So we have a number of programs today that we did increase the APR 6 months ago up above in that, you know, low 30% range in order to get an understanding of what is that going to do from an acquisition standpoint? So are people likely to apply at the same rate they did before? What is their likelihood to engage at those APR rates? So we have learnings behind that. We also have, you know, once the proposal hits and we know for sure exactly what's in the proposal, as I said, I would expect us as well as the industry, you're going to see a lot more movement on those higher APRs. But we have been testing and piloting to understand the impact of those.
Yeah. To add even a little more context, if we were a big player that had a huge branded portfolio, meaning your own proprietary card, you can move the needle on that one faster if you so choose. But when you're dealing with partners, they also want, you know, parity with the marketplace to make sure their product's competitive with other products that would be out there. So those considerations as well. So some of it is the final rules to come out before you can take that final step or next step in APR pricing.
Yes, I would say right now and recognize you're probably in the early, you've got the acquisition pilot, but in terms of the long-term engagement, you know, you're six months in. But I would say at the rates that we went out with, we're seeing good acquisition trends. So not seeing a lot of softening on the acquisition side and where we are. I think the jury will be out on the engagement side over the long term, but it has been very helpful as we've thought about where within that hierarchy of APRs we might go.
Any other questions in the room? Just one right here. Sorry. John, if you could just wait for the mic.
Yeah. Thanks. Apologize if this is obvious, but the retail partners are suffering due to the CFPB as well. And they obviously want to sell more product. So you want to, you know, build forward, move forward, and make more money for shareholders, but you also have to be mindful of the retailers. Like, how does that, have you talked to that dance a little bit and, right? Because maybe at some point you were aligned and maybe now you're not in some respects. I don't know.
Yeah. It's a good question. I think it's really important that the approach that we took was really working with our brands and not doing things to our brands. So, you know, this isn't something that is unique to Bread Financial. It's not something that we've, you know, baked up and threw out there. It's coming from the regulators. It's industry-wide. Brands generally recognize that that's the case. It's not like if I go to somebody down the street, they're going to have a different late fee consideration. That has opened up, I think, constructive dialogue. What we're, you know, what we want to be able to do is retain some of a value proposition to be able to continue to engage customers on the application and the engagement side. But some of those will get modified based on where those arrangements are today.
And so it is a brand-by-brand set of actions appropriate that balances exactly what you said. At the end of the day, we all want to have as big a top-of-funnel acquisition as we can and still be profitable. And the late fee, as Perry said, changes some of those profitability economics. And so those have been very open discussions with our brands.
Great. Any other questions in the audience? Great. Is there one back there? Oh, no. Okay. Cool. Could we talk about competitive dynamics? I feel, well, obviously, it's a big deal that just happened with Capital One Discover. I don't think it kind of overlaps specifically with you. Capital One's in the private label business, partnership business. But, you know, it definitely sheds light on the scarcity of credit card portfolios and businesses. There's not a whole lot of smaller players left. I'm just curious sort of how you see that playing out in the industry for yourselves.
Yeah. I can start.
Yeah. You guys have been around in the space for quite some time.
Yeah. Yeah. We're old, Sanjay.
No, no. Just at the beginnings of it all. In the mid-1990s, right?
I'm going to go late 80s.
Oh, wow. Okay.
You know, but, you know, competition's always been around. That's the thing that's never been unique. The industry has evolved over the years, you know, from pre-Card Act and then Card Act happened and things changed. You know, when we look at it, and Val talked about it earlier, there's a sweet spot when you're our size that whether you're going with after de novo programs or that $100 million-$500 million that may be too small, but they can be really profitable and we can grow them successfully to be something meaningful, it's still in our sweet spot. Whereas if you're now a $300 billion player, it may, you think about it, you're looking for the return on your time and effort.
So there's, you know, we can get really strong returns out of these smaller partners, which others, and I came from a big house, right?
Right.
And so did Val. Some of them, they just don't want to put the time into, and yet you cobble them together and you've got yourself a really nice business that some of these things can turn into, you know, I'll say the Ultas of the world.
Yeah. Ulta is a great example, right? de novo in an industry segment that hadn't traditionally had a card program and well over $1 billion. So those are, you know, that's where you can lean in on de novo 's side where, to your point, the bigger players, they're just not interested in that space.
It seems like you've got 85% locked up through 2025, top five through 2028. You're in a good position to sort of have some continuity. I'm just curious, as we look both inside and out, like where are there opportunities? Are there opportunities to acquire or?
Yeah. You know, in this business, things can be very cyclical, right? The agreements last anywhere from 5-10- years and what sort of floats in and out. But typically, you're out engaged in those well in advance. So you're engaged in those three years plus in advance. So I will tell you, the market remains active. We still see good opportunity out in the market. We see good opportunity where we have the right to win. And we've been very competitive where we have the right to win, as you've seen in some of our additions over the last 2-3- years. So yeah, it remains very active. And we would, you know, we continue to be active with it.
Okay. Maybe last question for me. And Perry, you sort of talked about it in the front end of our discussion in terms of capital. There's still a little bit more work to be done in terms of getting to the capital levels you feel you'd be good operating at. But maybe you just give us the next three- or four-year plan in terms of how we should think about capital deployment.
Yeah. It really goes to what I touched on earlier. Supporting responsible growth. So when there's opportunity to, you know, grow the business that's going to produce really good capital generation in the future, clearly want to continue that investment. Again, like Val, we're not chasing growth for the heck of it. Continue to further pay down the parent debt. Make sure we're in a place where we want to be on that. Now, with the maturity this far out, I think we're in a fantastic place on the parent debt plan. Continue to invest in technology. We're not all the way where we want to be on the digital roadmap that, you know, Val and the team has laid out. So we're going to continue to make sure that we are modernizing and being current with what the customers and our brand partners want. So we'll support that.
Making sure then we do get the capital levels up to what we call peer levels. Then we'll have opportunities to address return on capital. And, you know, we are getting really close to that. I mean, we're not far, you know, from what could be ahead with some, you know, changes in regulation. We were really at that near inflection point, right? Because you could just see what we've accomplished in the past three years. That's a good indication of what's possible the next three.
Right. Absolutely. Any more questions in the room? If not, we'll end right there. Thank you, guys. Appreciate it.