Great. welcome everybody. I'm Moshe Orenbuch, same as the last session. I'm the consumer finance specialty finance analyst here at Credit Suisse, and we welcome you to our conference. We're very pleased to have with us OneMain. OneMain is a leading nonprime lender, large, robust branch network, and a strong online presence that it's really enhanced over the last several years. The company has expanded carefully, I would say, which, you know, is not necessarily the way everyone expands, and that's been both in credit cards and has moved also somewhat upmarket as it's seen some of its competitors tighten credit standards. We've got very happy to have with us Doug Shulman and Micah Conrad. Doug, as CEO, joined OneMain in 2018 and had many jobs before that.
Most notably, he was the commissioner of the IRS. Micah came to OneMain, actually, from OneMain when Springleaf acquired OneMain from Citigroup, where he had been the CFO and had a number of positions also. We're gonna do a fireside chat, maybe, just to kinda open it up as a, you know, with a little bit of an open-ended question, maybe just talk a little bit about the current environment from a competitive standpoint, consumer demand for credit and what you're seeing and how that's influenced, you know, your thoughts about, 2023 and 2024.
Sure. Thanks, Moshe, and hello, everybody. You know, let me start with the consumer. You know, I'm not gonna tell you anything everybody doesn't know, which is, you know, we serve non-prime consumer, not deep subprime, but, you know, think about someone with a $60,000 income, couple of kids. You know, we found that in May of last year, kinda spring of last year, the consumer we serve, especially the ones kind of at the lower end of the credit spectrum that had less cushion, started to feel pinched by inflation, and we started to see an uptick in delinquency. The rest of the industry started to see that as well. We, you know, if you think about the economy, there's a bunch of crosscurrents. Employment is great, it's super constructive.
We're in the credit and lending business, generally, there's basic laws of physics. We lend to people who have a job. If they have a job, they can pay us. We're quite good at underwriting. If they lose their job, they have a harder time paying us, and that's, you know, how it usually works. We found, though, even people who had a job, who didn't have much cushion, were starting to struggle to make ends meet. You know, we have these crosscurrents of employment numbers are great, inflation was tight. You know, from a competitive environment, we've got a very strong balance sheet. We built it with long liquidity runway, staggered maturities. Last year and this year, the rising interest rates really didn't affect us much.
That contrasts with a number of our competitors who had shorter-term funding, had a hard time accessing the market. What we did was, you know, any consumer who was struggling, we tried to help them and work with them to bridge the gap. Over the last nine months, our back book, so people who are on the book with our old credit box before this summer, they're doing much better. It's stabilized. There's a, you know, there's a phenomenon that while some people got behind, you know, a lot of them have caught up. Some of them are gonna move to write off this year. The people who didn't get behind figured out how to manage their bills and prioritized us, and we feel very good. That back book is stabilized.
Then we've done a very aggressive cut to our credit box, where we're basically underwriting now assuming all of that stress that we saw with the consumer. We're assuming the economy's gonna deteriorate further for our underwriting box. We have no idea whether it will or not, but if it does, we're still gonna meet our return hurdles. Demand remains quite high, and it's a little counterintuitive. I think most people think when consumers are pinched, they're going to borrow more. It's not actually how it happens. Usually, people are only gonna borrow if they feel confident they can repay. We're seeing more demand in our higher FICO range. Think about above 660, you know, getting close to prime, kind of the lower end of prime.
Now 60% of what we are booking in loans is that very much higher FICO, and that's performing really well. You know, I think, tricky economy, some consumers struggling, those consumers are kinda rolling through our book, but still very good demand, and there's a lot of people in a very healthy position, and we're still lending to them.
Got it. You know, it's obviously still early in the year, but the macroeconomic results thus far have been probably on the better side from an employment, you know, possibly not worse on inflation. Talk about what would take to get you to think about, you know, accelerating growth or, you know, in perhaps even in the other direction of, you know, taking your, you know, and tightening your credit box further. Like, what kind of things would you need to see to have either of those things happen?
Yeah, look, the main thing we'd need to see is continued stability in the loans we booked and them performing as expected. The deep credit cut we did and kind of what I think about as our front book or our new book, that started about in August, that's performing very much in line with, like, pre-pandemic levels. We'd wanna see several more months of that before we got comfortable that things have normalized. Our back book where, you know, we see some elevated delinquencies, but not getting worse. They're just moving with seasonal trends. We'd wanna see that continued. You know, I think we need to see unemployment remain low or move up modestly, but not have a very quick hike.
I think we're gonna look to signals, macro signals in the market about is the Fed look like it's tapering off. The way I think about it is, we are probably leaving some money on the table now, meaning, you know, we're probably being conservative, but that's how we operate. I mean, our philosophy is very conservative with our balance sheet and funding, make sure we have a lot of liquidity so there's never issues. Very conservative with our credit box, so we have cushion to meet our return on equity thresholds. Be aggressive and innovative with our digital presence, with our product innovation, with our marketing. We bring in as many good customers as we can, but we underwrite them in a conservative way.
I think the other important thing, Moshe, is, it's not like one day we're gonna say, "Coast is clear. Let's open the box." I mean, the way we do this is we've got six different credit bands, S, P, A, B, C, and inside of those we've got 10 deciles in each. There's different performance, so that's the credit. We've got our different products. We've got a secured product, which performs very different than our unsecured product, which performs different than our credit card product. We then have levers around pricing, and there are certain states we can take more risks 'cause we can price higher. We do some analysis around geography. When it comes time to open, it's gonna be in very specific places.
You know, it's gonna be, you know, risk grade S in the seventh decile for secured lending in California. It's not going to be a big bang. The other thing we always do, you know, we've got the advantage of scale. We're nationwide. We have 2.6 million customers. We're always booking loans right below our credit threshold. Think of it as, you know, 500 loans a month, 250 in the different pockets where we think we might open next. You'd never see that in our public markets, it's important just to be in the market testing. Whenever the time comes, we'll have data about how a small sample of loans have actually performed, it'll just add to our confidence of opening up.
I think on the tightening, if we see things deteriorate.
Right.
tighten up.
A good segue to the next topic I wanna talk about a little bit. I mentioned in my intro credit card, you've also talked about, kinda testing both higher end, where you said you're seeing better demand, and even lower end. Maybe just talk about how, you know, what you are seeing in those tests and, you know, how they might be part of the growth story at some point in the future. You've obviously have got public, kind of guideposts for the credit card business. Maybe just talk a little bit about that process.
Sure. Forgive me if I'm repeating. You've heard this, Moshe, but I'm not sure everyone has. I mean, we decided to go into credit card because we looked at the landscape. We've got a lot of customer loyalty. We've got a very good brand in the market for the non-prime consumer. Our installment loan was a large episodic product that people took a loan, they paid it down, they came to us, you know, I would say occasionally. Most customers, our best customers, don't interact with us a lot. They book a loan, they get their money, they put it on auto-pay, and kind of goes through. We did a lot of research. We talked to a lot of customers, and they said we all. You know, most of our customers have four or five credit cards.
It's instead of a large episodic product, it's a daily transactional product that they use for everyday spending. We thought we had a lot of synergies around, you know, decreased marketing cost, a fixed infrastructure, credit expertise, customer loyalty, and brand. We decided to launch a credit card. We went into it very carefully. We tested in the fourth quarter 2022. We put about 60,000 cards out into the market, and we tested uptake, different product variations, line usage, and most importantly, we let those cards season, and we saw what was happening with credit. This summer, there were pockets that we felt very comfortable that even if the economy deteriorates significantly would still be very good business. We started in those pockets, leaning into it.
Installment loan market's about $100 billion for non-prime. Credit card market's about $400 billion. You can think of us as a challenger in that market, even though we're a big player with this customer. You know, we think this is gonna be a big growth engine. We like the results we've seen. You know, we have high utilization rates. People are using the card. They're using it on what we had hoped for, which is groceries, gas, clothing, kind of everyday purpose. We're have a different utility in our customers' lives. You know, we have about $100 million, a little over $100 million of balances now. We think that'll grow to $400 million-$500 million this year, grow it conservatively.
We think this could be a $2 billion book by 2025 and grow from there. The profitability is pretty similar to ours. We're excited about it so far. So good. We're gonna do it very carefully, and make sure, you know, we're only booking loans that, again, even in this tricky environment, even if it gets worse, that those card customers will still be profitable for us.
Got it. Micah, Doug alluded to the funding benefit that you've got with by having both stable sources of funding and relatively fixed cost. Just talk a little bit about, you know, what you're seeing out there in the market today, what your plan is for 2023, and, you know, how that will, you know, how that folds into the view for OneMain overall.
Yeah, sure. Thanks, Moshe. you know, we feel great about our balance sheet. We think our access to funding is quite significant. I mean, we, you know, we've built a program over the years that I think is viewed as best in class, both from a performance perspective, but also investor transparency and reporting. we will, you know, we tend to monitor. We monitor markets very closely. We'll issue three to five times a year. I think what you've seen from us over the last few years is, you know, discipline around our funding. even in a period of 2021, where we were able to issue ABS at 1%, we really went deeper into the unsecured market, which was more expensive, very attractive at the time at about 3.5%.
We wanted to make sure we had that discipline to take advantage of a market when it was good, put on long duration assets that has served us well now, because in 2022, with the high yield market kind of disrupted a bit, we were able to lean back into the very efficient ABS market. You know, that market's been very good for us. We've raised about $3 billion last year through four transactions at an average cost of about 5%. We're actually in the market today, with an auto deal that seems to be going very well. The ABS market was efficient, but it spreads definitely went up in the fourth quarter. It was misbehaving a little bit, and things have tightened now.
Spreads have come in quite a bit, and I think that, you know, that remains a really good market for us. We've seen success with both new investors coming in, but also just return investors. I think on, you know, the other hand, high yield was pretty difficult, you know, in 2022. You know, obviously, we stayed away from that market until it's found some better footing. The average high yield index was in the mid 6% in the first half of the year, and then in the mid 8s% in the second half. It was as high as almost 10% by the time end of September. Spreads have come in about 140, 150 basis points or so since those September high levels.
It's starting to get interesting to us. I would say our issuance cadence will be opportunistic as it always is. The great part of our balance sheet is we have access to this really deep ABS market. We're sensitive to our secured funding mix. As you probably know, we've kinda had a target of about 50/50 on our secured and unsecured. That creates a balance between the cheaper ABS funding, but also going into the unsecured where we extend duration and free up unencumbered assets that serve as a source of liquidity. We always try to keep that balanced, but when we were really focused on unsecured, we shifted that secured mix down to about 40% in the 3rd quarter of 2021.
Even with all the issuance we did last year in the ABS market, we still ended the year at just 51%. We feel really, really comfortable with continued issue ABS if we need to. We also have seven and a half billion dollars of committed bank lines that we can draw. Our funding situation is very strong. If the unsecured market's there, we'll certainly, I think you could see us issuing there at some point this year.
I think you talked a little bit on the conference call, in the earnings call, about the cost of that funding into, you know, 2023 and 2024.
Right.
Maybe you could kinda elaborate on that a little bit.
Yeah. I think just because of the staggered nature of our maturities and all that work I just talked about that we did in 2021, it takes some time for changes in rates to move through our debt structure. What we said on the call was 90%, on average, our average debt in 2023, about 90% of it's already on the books. If you flash that out to 2024, it's about 80%. Even if we're, even at rates at elevated levels, it takes some time to move through the income statement because of the fact that we've gone relatively long on our duration. That certainly has served us well from that regard as well.
Maybe to take that back, Doug, you made some comments about pricing that varies a little bit kinda state by state, but I'm assuming that there are products, you know, certainly some of your secured products and the like that probably have room if, over time, you know, I mean, it doesn't appear the current market forecast is for this rate environment to persist forever, but you do have probably some room in the, you know, in pockets of your portfolio to, you know, to improve pricing if that were to happen.
Yeah. Look, one of the things we've done is diversify our product set over the last three or four years. We used to have a, you know, roughly $12,000 secured loan and $8,000 unsecured loan. There were variations on that theme, but what we've done is we added a smaller dollar. It's not a small dollar, 'cause when people think about small dollar loans, they think about a couple hundred bucks, you know. It's think about a $2,500, $3,000 loan unsecured for somebody. We then got our different secured lending, and now we've added the credit card. We've always maintained price discipline. You know, one of the things that happened in 2021 is, you know, we'd make somebody a 19% loan offer, and other people were making it at 10%.
Those loans, the 10% loans are way underwater now. During that time, you know, we found ourselves getting picked off, especially in things like Credit Karma or LendingTree, where people are very price sensitive. You know, you have a conversation. We monitor everybody else's pricing, and we say, "Okay, you know, what do we think about market share and things?" We run the company for long-term sustainability and profitability. We've seen is others have had to come back up to where we are, and when we go head-to-head with pricing, with competition, you know, we've got a strong branch network, a community presence. A lot of people have borrowed from us before. We treat our customers really well. We work with them, you know, if they have an issue.
We're finding, you know, without lowering price, and without needing to raise price, we've maintained our profit thresholds, and we're winning a lot more business. We do have some room to move price, so some of our secured lending, and through some of our distribution channels like Dealertrack, which go out to auto dealers, others have moved their prices up 500, 600 basis points. We've moved them a little bit. Overall, we've moved pricing, but 50 basis points. We're not making these wild gyrations partially because, we were pretty steady in the market. We do have some room to go up a little more if we need to, but, you know, the good news is what Micah has said, is our debt stack is such, it's not,
You know, our interest rates actually went down in 2022, our overall cost of funds because of the way we issue. We don't have a lot of pressure on our NIM from that others are having right now.
Right. One of the big topics, you know, related to credit, but is how the reserve develops and, you know, you've got a reserve that's been very healthy, large, and you built it modestly in the last quarter or two. Just talk a little bit about how you see that reserve development, you know, during 2023, particularly, you know, if credit tracks, you know, what your current expectations are.
Yeah. I mean, our reserves for sure are very much aligned with our credit outlook, you know. We feel we've got that covered. We feel like our provisioning is very adequate for what our near-term loss outlook is and over the horizon of our reserves, and we also have some room in those reserves for some worsening in the macro environment, as generally folks do with CECL. We've, you know, we've assumed about a 4.5%-5% unemployment rate in our reserve assumptions. I would make sure to note that also. You know, it's kind of a lever to move the reserves, but it also gives us some room.
If we weren't to see unemployment, we see continued elevated inflation instead, both of those things could actually be covered by the reserve levels we have. You know, just in terms of process, our reserves every quarter will reverse all of the reserves we have against current period charge-offs, so we're fully reserved for that period. Then we build them back based on our loss outlook at the time and what we think the future macro environment. We're always stepping forward each quarter and looking out on the horizon as to what we think, based on external data and sources of data that we use from macro projections, what things will look like and where we think we should be reserved for.
If all else being equal, if, you know, given we've got this portfolio transition that Doug talked about a little bit with our front book, which is that post-originations tightening that's performing in line with 2019 pre-pandemic kind of levels, to the extent that continues to grow, and it was about 30% at the end of December 2022. We expect that front book, absent any other changes to our originations appetite, that would grow to about 70% by the end of 2023. Given that performance is better than what we are seeing for some of the back book cohorts, all else being equal in the macro environment, that could lead to a reduction in reserves as we get to the back half of the year and we're looking forward to 2024.
Of course, a lot of that is really highly dependent on what the macro state looks like at that time. You know, that's a dynamic that's very different under CECL than the old incurred reserves method.
Right. Although now it seems to be, you know, given where we are, both in the economic cycle and how much you've got in reserves, it seems to be acting more defensively perhaps.
Sure.
than one might have thought or than.
Sure. Well, it allows you-
I know what I might have thought.
It does push you in some ways to get ahead of it. I think that was the design that FASB had in mind when they put it in.
Right. another big topic, you know, capital return. You've, you know, that's evolved over some time. You had a large shareholder that had wanted periodic dividends. You've now established a high regular dividend, that you just recently increased, and are also, in, you know, doing, I don't know if you'd call them opportunistic or maybe more like almost a steady stock buyback. Just talk about your, I guess, what that says about your thoughts about the returns of the company and how you know, see that going as we move forward?
Yeah, look, anyone in the lending business, but especially in the non-prime lending business, it's a cyclical business. We feel really good, even, you know, right now we're in a down cycle because delinquencies went up. That even in a down cycle, we still generate a lot of capital that we can use, you know, for our priorities. Our priority order is, first, we're gonna book every loan or every credit card and use that capital for a high-returning asset. We have, you know, on average 4%-6% return on assets. Very healthy again, even in a down economy. We're investing in the business. We're investing in credit card, which has a capital drag on the business last year and this year, which should turn positive by the end of this year.
We're investing in distribution channels. We've been investing in our omni-channel capabilities. We decided to have a very robust dividend that people could count on regularly. We got a lot of feedback from the market that, you know, episodic dividends were great-
Right
and people liked the cash, but they'd rather put it into the regular. Now it's a predictable stream. We just increased it even in a year where we put out, you know, our strategic priorities or guidance, where we're gonna make a little less this year than we did last year, just the math of this, and we think we'll bounce right back. We've got plenty of coverage, even in a severe economic stress. I mean, I think what you should take from our increase in dividend is even if things get a lot worse, we feel very comfortable that our dividends than-sacrosanct, and we can, you know, we can return this kind of capital to investors. I think buyback, you know, we have a steady buyback program. We're in the market every day.
We're not day traders. You know, we think the company is undervalued. Last year, we did about $300 million in buyback, but we ramped that down as the year went on. This year, we've said we're probably gonna do less than that. It's a lever we can use, you know, depending on how much capital we're generating. I think over time, you know, we feel very comfortable that, you know, whenever we get through this economic cycle, and even if we don't get through it with the current book we have, our capital generation and earnings will go right back up in 2024 unless the economy takes a, you know, serious dive. That'll give us more capital to distribute. The most flexible lever is buyback.
We'll, you know, think about a steady dividend that will likely increase over time, investment in the business and excess capital we can use for buybacks.
You've talked a bit about the investments you're making in the business. Could you talk about the other side of that? Talk about your expectations for operating efficiency. It's been an important part of your, you know, of your process and your ability to generate returns. Talk about where, you know, where you are in that and how you see that evolving.
Yeah, I mean, I think this is a really big bright spot for us. Our performance kind of speaks for itself. When we put these two companies together, OneMain, and Springleaf back in late 2015, our combined operating expense ratio was 10.6% of receivables. Now over the period of time, we've brought that down to 2022 was 7.1%. That's 3.5 points of pre-tax profit right there, just generated through our OpEx efficiency. We put a slide in our earnings deck for last week that kind of broke down our expenses between what we call core and then what we're investing in, which is really technology, data science, analytics, new products, and channels.
If you look at that slide, our core operating expenses are actually down versus 2019, and that's with mid-teens growth in our receivables over that period. You know, we really drove a lot of operating efficiency in that core part of the business. We chose to invest and reinvest some of that operating leverage into investments in, as I said, tech and new products. Doug talked a lot about our conviction in those initiatives. We chose to invest to fuel future growth. Even during that period, we still were able to reduce our OpEx ratio from 7.5% in 2019 to 7.1 in 2022. When we look out to 2023, we expect about 2%-3% increase in our core OpEx.
Really a lot of that is, you know, I would call it inflationary or wage increases and some modest increases in amortization of prior technology spend. We also a good chunk of continued investment in our distribution channels and the credit card rollout. Even with that, we've also called out a 7.1% sort of flat OpEx ratio for the year. That's something we manage too closely. You know, you saw us in 2020. We reacted pretty aggressively when we saw that there was a pretty bleak outlook on the horizon. I think we're monitoring, obviously, the environment really closely, and if we needed to pivot and reduce those expenses, we can certainly do so. That's kind of the position we're taking for now. We feel good about it.
Great. I've got a couple more, but wanted to open it up to the audience. If anyone has a question, just raise your hand. They'll bring you a microphone. John.
mic over here. Right up front. We'll repeat the question. That's fine. Go ahead.
How do you think about the issuing secured versus unsecured revenues, particularly if I can zoom down? Secured is typically cheaper anyway than the unsecured. How do you guys think about when to issue what in terms of flexibility and what the proper mix is for the business?
It's really a balance. I mentioned the 50/50 earlier. There's no magic to that. That really means we wanna have a balance of the more efficient, cheaper funding costs of ABS, but also all the benefits of the longer duration unsecured. It really comes down to the liquidity benefits that come from issuing unsecured. Liquidity runway has always been a really important thing for us. I think it's a big differentiator in the market. We generally and always have 24 months of runway, and that basically means we can not have any access whatsoever to the capital markets. We can continue to run the company, hold our balance sheet flat, pay our dividend, do all the things we need to do to maintain franchise value for a period of over 24 months. That's really a differentiator for us.
What happens is, if we were to lean all towards ABS funding, for instance, and move that mix to 80%, just to make up a number, we would end up encumbering receivables in those trusts. Therefore, those unencumbered receivables are now not available for our bank lines. We've made a lot of advancements over the last couple years. We've actually swapped out about a billion and a quarter of our bank lines, those secured lines, for unsecured revolver with many of our banks. That changes the game a little. It allows us to actually lean maybe a little bit more into ABS because now we have unsecured form of liquidity. A lot of advancements made there. I would think about it anywhere bouncing between 40% and 60% is completely comfortable for us from a secured perspective.
The $400 million ABS, what are you envisioning, like, going through the market now?
We're in the market with that. Yeah.
[inaudible]
I mean, certainly. We could use those funds. We also have all of our bank lines available. I mean, cash is fungible. We've been moving those, that March maturity down quite a bit over the last couple quarters, just opportunistically being able to purchase that in the market at around par. We feel very good about that.
[inaudible]
We're keeping our eyes open for sure. I mean, you know, if the markets are at levels we feel relatively okay with. I'd like to see them come in a bit. I'd like to see a little bit more stability there, you know, so we can feel good about what we're issuing.
Other questions in the room? Kind of related to the, you know, number of the other topics we talked about is kind of Let's talk a little bit about the branch network. It's a significant differentiating factor for you. You know, Micah alluded to, you know, what you did from a cost standpoint in, during 2020 when it looked like, you know, there could be, you know, adverse consequences. I think investors were a little skeptical about your ability to do that before you showed how much you could do. Maybe talk a little bit about how you know, see that branch footprint evolving. Are there areas in the country where you're gonna add branches? Are there areas where you're gonna cut?
Maybe just about the benefits that you know, that the company gets from that. Yeah, yeah. Look, we think our branch network is a real differentiator, and it's especially a differentiator in times like this. We have a slide in our earnings deck that shows our delinquencies and how much they increased during 2022 versus competitors. You know, they increased, like, half of what competitors' delinquency increased. Part of that is, you know, we think we do great underwriting. We've done this for a long time. We've got proprietary data and models, and we have repeat customers which help that, and we have product. We also have 1,400 branches in the communities where people live and work, where people know that community, they know the people.
When they get a call from someone who gets behind, it's from that area code. It's not from an 800 number. Our branch people, you know, we have a lot of branch managers who have been here for over 20 years. They know the customers. They know how to work with the customers. We have tools to kinda help them cut a payment in half for a month while somebody's sorting out their bills, and then they get back on track. That in-community presence is super important. What we've done over the last four years is we've now built omni-channel capabilities. We have digital presence, we have centralized call centers, and we have branch, and we can meet our customers where they wanna be met and in the most efficient way that to service them.
About half our loans now are booked outside of a branch. Some of those are with someone in the branch, actually talking them through, and they come and drop off the title. We can work with them in a very dynamic way. When the two companies combined in the mid-teens, we had about 2,000 branches. We now have about 1,400 branches. The thing to remember, though, I think when everyone thinks about branches, they think bank branches. When you're a bank, you wanna get prime real estate at the, you know, most busy corner downtown. Our branches are in nondescript strip malls. They're in Class B buildings on the second floor where people come in by appointment. A, the real estate costs aren't that much. You can kind of think of them as distributed call centers.
Every year, I think we're very comfortable with our current footprint. Last year, we shut down about 10 branches, and we opened about 10 branches. We may open more, we may shut some down, but we do it now on a, you know, by volume, by location, by coverage, by changing demographic, not as a, you know, we're gonna cut the branches by a certain number or expand them by a certain number. It's now become a very kind of dynamic and regular process.
Well, good. Now we got one more question from the floor here. Excellent.
Hi. Could you talk about the regulatory environment? You know, we've got on the credit card side the late fee cut proposal, and maybe how you and the industry might address that and any other kind of regulatory issues you see coming.
Look, we really, I think, distinguish ourselves as a responsible lender. You know, post 2008 and Dodd-Frank and with a lot of the capital rules of banks, there's a lot of people who need access to credit that the banks don't serve anymore. We come out of a bank background. We spun out of Citi. AIG wasn't a bank, but, you know, it was a big company that took compliance seriously and other things. We cap our interest rates. We have, we think, the best disclosure in the industry. You know, we have a tone at the top, which is we're there to improve the financial well-being of our customers. We're gonna treat our customers right. You know, we're set up, we think to, you know, be successful in any regulatory environment.
It's no surprise that usually when you have Democratic administration, there's more regulation. When you have Republican administrations, there's a little less of a regulatory tone. The reality, you know, I spent time in Washington, is the people who run regulatory agencies the next level down, they're, you know, hardworking civil servants who apply the facts to the law. We have very good relations in both the state and at the federal government and serve them well. Regarding credit card fees, you know, we'll see how that proposal plays itself out. We have two credit cards, a fee-based card with a lower credit line and a non-fee card with a higher credit line, depending on the credit of the customers. We have the advantage of...
You know, we're a challenger, so we're just getting the product into market, and we have a lot of levers around pricing, product, other fees besides late fees. You know, we're not sitting on a $100 billion credit card, book that is designed around profitability based on late fees. You know, that, that proposal, we don't think, you know, We'll adjust plans if as it comes through, but we feel, you know, it doesn't change our rollout, at all, 'cause we weren't depending on late fees for our profitability.
Great. We have exhausted our time. Thank you both to Doug and Micah for their thoughts today. Thanks. Thanks, everybody.
Thanks, Moshe.
Thank you.