All right, we're gonna get started, kicking off the conference for the third straight year. We're excited to once again have Synchrony joining us. You know, Synchrony has managed the credit cycle better than most, and this has resulted in being the best-performing large-cap stock across our coverage in 2024. Joining us to share their insights are CEO Brian Doubles and CFO Brian Wenzel. Today's presentation is gonna be a fireside chat. So, Brian, a lot has changed since the last time we heard from you, you know, particularly around the election. Obviously, a lot of things can change, but maybe could you spend a minute, you know, talking about what this can mean for your business and just more broadly how it positions you entering 2025?
Yeah, I think right, well, first, thanks for having us. We're excited to kick off the conference again. Look, I think we've operated this business for almost 80 years through different administrations, and we've successfully grown it. We've added new partners. We've supported our customers. So we try to be somewhat agnostic when it comes to who's in control in DC. With that said, there's obviously a lot of speculation about potentially a lighter regulatory environment as we head into 2025. You know, at this point, that doesn't change how we're thinking about running the business. I think we have to see what actually materializes. But you know, look, I think that would obviously be a positive for us.
I think it'd be a positive for the industry, but we have to see how it actually materializes in terms of, you know, what we would potentially do differently. But again, I think overall it's a positive arc. It's nice to think about, but we've gotta see what actually comes into play as we get into 2025.
Gotcha. And you know, thinking about the whole regulatory environment, obviously over the last year, late fees has been a big focus. You know, there was a ruling out Friday in Texas. Maybe just update us where things are in the court for those who may have missed it and maybe what we're watching for at this point.
Yeah, so Friday was a positive development, I think, for the industry. Judge Pittman did two things. One, kept the case in Texas, which I think is positive. He also kept the preliminary injunction in place. And then if you read the actual opinion, he made some positive commentary around the likelihood of success on the merits of the case. But it's in no way done at this point. I mean, we still, you know, the litigation will likely continue or potentially will continue, and we'll obviously continue to watch that very closely as it moves forward.
So you guys were, you know, ahead of this issue, you know, putting mitigation in place. Maybe just talk about, you know, how the mitigation efforts are going, how are they progressing relative to expectations, maybe what's been better or worse, and maybe just what has the client response been as you put these in place?
About the mitigants, they generally have been in line. You know, when we did a lot of from an APR perspective, the balance building has been slightly better than our expectation, which is positive. I think when you think about some of the fees that we implemented, particularly the paper statement fee, I think there's a couple things that happened there. One, we've actually seen a probably greater than anticipated e-bill adoption, which I think is great. We get someone into digital servicing and all the aspects there. So the fee income's a little less, but it's just manifesting itself on the operating expense line. I think when we take a step back, you know, the fear that we had, and the one positive thing about being advanced to this is we had Test vs. Control.
And so when you look at Test vs. Control, the attrition rate that we anticipated did not really materialize to the same level. So I think we're positive about that. So there's a little bit of shift between what I'd say, you know, if you call it mitigants and our business-as-usual case. So I think when you look at it in totality, it delivered what we thought. And again, we needed to get ahead of the issue because there was a cliff that the rule went in effect today when it was going to. So, again, I think we're, you know, we're positive. It's been very constructive, and we'll continue to monitor the, you know, that Test vs. Control as we move forward.
So maybe just one last question on the topic. You know, Brian, you alluded to the fact that there could be broader changes coming in DC, you know, I think particularly at the CFPB. You know, while the, you know, obviously the court case has a lot of, you know, has to work itself out, but, you know, can maybe just talk about how you think about the different change you've implemented, what you think could actually stay over time versus what you could potentially ease over the longer term?
I think, I mean, look, we're not planning on making any changes to the pricing actions at this point. We've gotta see how the litigation progresses, and we need some level of certainty. You know, in the event it does go away, then we would go out and talk to our partners just like we did when the late fee proposal was announced. We do that very transparently. It's collaborative. You know, these are true partnerships. You know, we sit down with them. We go through the impact. We look at a lot of different considerations with their customers, how we underwrite the behavioral changes, if any, that we've seen up until this point. So we would run a very similar play and go out and talk to all of them, and then we'd make a decision together.
Maybe, Brian, let's shift gears and spend a few minutes talking about the health of the consumer. You know, we've seen spend volumes move negative year over year. You know, and, you know, there's been obviously a slowing of, you know, larger ticket items and, you know, less spending on discretionary. However, I think on the last call, you guys talked about spend starting to stabilize. So, you know, maybe just talk about what you're seeing across different cohorts and what do you think it's gonna take to get spend to start to improve?
Yeah, I think, look, the consumer has been much more resilient, I think, than any of us thought a year ago. They've hung in there. I think, you know, look at the credit metrics that we put out this morning. You know, we're seeing that stabilization largely performing in line with expectations. You know, we made a couple rounds of tightening on our underwriting policies. You're seeing the impact of that in purchase volume and new accounts. But with that said, when we look inside the consumer, obviously lower-income consumers are being impacted more significantly than higher-income consumers. I mean, you know our business. We underwrite across the spectrum. So we certainly feel the effects of that. But you know, from a credit perspective, dialing back the spend, particularly in the lower-income cohorts, is actually a good thing.
Mm-hmm.
You know, when we dig into the data and look at it, we don't see consumers that are overextending, and that's a real positive, I think. So we still feel very comfortable with this kinda backdrop of an operating environment. We're still pretty bullish on the consumer. I think they've been more resilient than we thought. And I think, look, you get a little more stability in the economy. I think you'll see spend come back to more historic levels.
Gotcha. And, you know, you referenced the 8-K that you put out this morning, you know, showed stable month-over-month delinquencies and, you know, on our metrics outperformed seasonality. You know, net charge-offs were down. Obviously, there's some days adjusted in there. But maybe just talk about, you know, what you're seeing in terms of credit trends. You know, what does spending look like quarter to date and any noticeable differences from prior quarters?
Yeah, yeah. So let's start with where you ended. When you think about the growth of the business, you know, we reported this morning end-of-period loans up 1.7%. So you did see a little bit of seasonal tick up October, November. In all honesty, a little bit lighter than our expectations, as we entered into the quarter. A lot of that was more in the October timeframe, you know, where we thought it was gonna we were gonna see a little bit more of a ramp up as we move towards the holiday season. It didn't necessarily happen, but it's been relatively stable. You know, we have seen some stabilization, and then obviously you start getting into holiday, which I'll talk about in a second, in November.
When you think about holidays for a second, you know, the change in calendar, it sounds like a retailer, the change in calendar has a later Thanksgiving, here in the U.S. So, one of the things we were watching was whether or not you see pull forward of spend pre-Thanksgiving week, pre-Cyber Monday. We didn't necessarily see that. So but we did see, you know, some robust activity in Thanksgiving week and then into Cyber Monday. When we pull apart the book, right, we have a large number that are holiday-centric that will have holiday ramp. Then we have, you know, a fair number that are not holiday, you know, oriented. When we look at the holiday business, that is outperforming the overall business. So, we did see the lift.
We saw, you know, in certain days some real strength in the Thanksgiving week. Obviously, this is all impacted by the modest credit actions that we put in place both on a volume side and a new account side. So, you know, what's a little bit unclear is you have less days and one less weekend days we get towards actual Christmas. So, you know, we're constructive now, but again, a little bit lighter than expectations. When you think about credit, where you started with the 8-K this morning, which you saw a couple things, when we look at seasonality, I wanna say this is the fifth consecutive month. As we look at seasonality month on month, it's slightly better than seasonality. You know, again, that low -to -mid -single -digit basis points better.
So we're encouraged by that. Delinquency rate is flat, you know, month on month, and the loss rate was flat. Now, again, there was two less cycles. That comes back in December, but you're gonna get the recovery adjustment. So I think when we look at it, credit's developing, you know, as we anticipated and as we talked about it. And again, I think, you know, we'll be back in January to kinda show that year-over-year performance and continue hopefully to see the bend, you know, in the growth of delinquencies, both 30-plus and 90-plus. So from that standpoint, I think we're encouraged as the credit actions are taking place, but it has impacted volume and it has impacted new accounts.
Maybe just to close out on 4Q, you obviously highlighted loan growth being a little bit slower than expected. Anything else to highlight, NII or any other moving pieces on the fourth quarter guidance?
Yeah, we're not gonna really update fourth quarter guidance. I mean, obviously, if you see credit, you got two months of credit data, you got two months of growth data, and that will flow through, I think, your model. So but we're not gonna go through all the pieces, to be honest with you, Brian, at this point.
Okay. So, Brian, I feel like much of the year has been spent talking about credit and late fees. You know, much less time.
Yeah, the entire year.
Much less time focusing on the business and driving growth at your partners. Maybe just talk about, you know, the investing that you've been doing and, you know, how you're helping drive growth across your partner base.
Yeah, you know, the big area for us over the last couple years has been really investing in the product suite. And I think we have the most comprehensive product suite in the industry. It's really resonating with our partners who I think have realized now that they wanna have a choice of what financing product they offer to which customer for which type of purchase that they're making. And that's a big shift over the last three years. And so our partners, you know, as we're competing for whether it's renewals or new opportunities, that's really resonating with them. They love the idea of, you know, a menu of options, whether it's revolving PLCC, co-brand, a secured card, buy now, pay later, SetPay.
We've got the suite of products, so we can go in and say, "Okay, you know, if you've got a customer that's maybe new to credit, this is the product that you wanna offer them." Algorithm in the background that kinda presents that depending on the type of customer and the purchase. And then you graduate them over time. And I think we've been able to demonstrate with our partners that that's really powerful, you know, both economically for them, but it's also the right decision for the consumer. So that's one big area of investment for us. The other one is just around the customer experience. You know, it's never been more important than it is right now. You know, consumers out there, they have a ton of choices. They have a lot of choices.
Mm-hmm.
On how they pay, how they finance those purchases, and so we've been investing a lot not only in how we integrate into our partner's ecosystem, whether it's, you know, wallets, in-store, online, their own proprietary app, but also integrating with aggregators, with e-carts, with digital wallets. Like, that's a big area. There's a lot of disruption at the point of sale, and at the end of the day, we have to be everywhere our partners are and everywhere their customers are. You know, they wanna have us as an option everywhere that they're transacting, and that landscape has gotten a lot more complicated.
Mm-hmm.
And so that's another big area. And then the last one I would say is really around PRISM, our underwriting engine. And that's a big competitive advantage for us. You know, we leverage, you know, a lot of different data sources in order to be able to make really good credit decisions across the income spectrum without taking on additional risk. And, you know, if I go back five years, we had very sophisticated underwriting at that point, but we didn't really use it as a competitive advantage.
Mm-hmm.
It's surprising now as we're out there competing for new business. That's almost the first thing we're talking about. You know, prospective partners are very focused on, you know, what does your approval rate look like across the income and credit spectrum? We can go in there and we can score their customer base, and we can show them exactly what it would look like, and, you know, what we hear back from prospective partners is that's a real differentiator for us. There's just a few of the areas that we've been investing heavily in.
Gotcha. And maybe to dig into some of the businesses, so, you know, there's obviously been a lot of fintechs coming after your health and wellness business, but that hasn't stopped it from being your strongest growth platform. I think accounts are up 7% and loans 10%. Maybe just talk about what's driving the success in this business and, you know, maybe what are some of the keys to sustaining this growth?
Yeah, like, it's a great franchise. You know, we've been in that business for 37 years. We've got tremendous scale. You know, we're in over 70% of the dental offices, the veterinary offices, ophthalmology offices in the United States, and that's a very fragmented space, so it really is a ground game. I mean, you're out there signing up one or two dental offices at a time, one or two vets, but we've got tremendous scale. It's certainly helped by some macro trends in terms of it's a $400 billion addressable market. We're still a tiny little fraction of that, so lots of room to grow, and so we feel like we've got the right to win. We've got the relationships. We've got the endorsements. It is from a customer perspective; it's our highest-rated product across the board, highest NPS scores.
You know, when you're helping a parent get braces for their kids that they might not otherwise be able to afford or their dog gets sick and you save the dog's life with CareCredit, like, those are. I get more positive feedback on our CareCredit product.
I'm already describing my life.
Yeah. Well, we'll, we can sign you up after the CareCredit. But yeah, no, it's it that, that is probably if I look across our platforms, that's probably our biggest opportunity. And I think, again, you know, we've got the right to win because we've got the franchise. We've got a big addressable market to go after.
Brian Wenzel, before we get into the organic pipeline, you know, I wanted to just spend a minute just talking about loan growth before we, you know, again, before we get into the organic growth. You know, we're expecting low single digits for this year. And obviously, you know, you commented it's been a little bit slower. You maybe just talk about just broadly expectations. What do you see driving loan growth? And then, you know, you've obviously taken actions to tighten underwriting, and this has obviously helped on the delinquency formation. Maybe just talk about what you've done and what you need to see to loosen some of the tightening that you've put in.
Yeah. So if you think about the broader-based actions, we obviously look at our partners' channels and products every day. And if we see something idiosyncratic, we deal with it. The broader-based actions came in 2023 and in the early part of 2024. 2023 was focused around score migration. So we saw a significant score migration, particularly into non-prime. We tightened those accounts because, again, you're still on the backside of the pandemic when scores were inflated. And we did some, you know, acquisition tightening, you know, during 2023. In 2024, the actions, just to recap those, they were around if someone took a debt consolidation loan to consolidate debt but still had a lot of open -to -buy out there.
And then second, if we saw people, the bureaus not paying down their student loans, we looked at both those in combination, said, "This may not be a problem today, but it shows potential ability to pay." So we obviously either monitored those accounts or took action on those accounts. And clearly you've seen it, you know, even though, you know, for the last 12 years we put up over 20 million new accounts and we'll see where we end this year. You've seen it in new accounts, and you've seen a modest reduction in purchase volume.
I think as we look at the book and we see what's happening with credit and we get more comfortable with credit, the question's gonna be in the macroeconomy, even though delinquencies aren't necessarily as macro, it's really too much credit in the system. If we can see affordability for certain income cohorts come down, we see them kinda strengthen, that's one of our signs. I mean, and then we'll obviously watch our performance. So is there a scenario if you look in the back half of 2025, there's some easing of the restrictions that are in place? That is a scenario that you have. You know, there's another scenario that's broader, that's probably less likely. Then I think as you move into 2026, that's when you probably see more of the restrictions kinda, you know, leaving.
When you take that, right, that kinda tail end at some point, and then you look at the consumer, you know, as Brian talked about, they've been resilient. But the pullback that we've seen across all of our verticals and particularly the bigger ticket discretionary purchases, if people get confidence in where they're going, that's when you're gonna start to see a revival of that. And something's creating tailwinds. When we think about health and wellness, if you delayed LASIK, you're probably gonna get LASIK. The need hasn't gone away. So, you know, that creates other tailwinds on some of the discretionary purchases that are pent -up. So our hope is that, you know, the economy gets on a strong foot, partially.
Mm-hmm.
When you started on the administration, does people feel good about it? And that discretionary will come back. I think those combinations of two things. Payment rate is gonna continue to moderate even though the pace of moderation has slowed, which gives you a little bit of the tailwind. So, you know, we'll be back in January, I think, with a more thoughtful.
Mm-hmm.
view on how we think about, you know, loan growth as we step through 2025.
Brian, earlier on you referenced in the areas that you're investing. You talked about renewals and new business opportunities. Maybe if we could start on, you know, new business opportunities and new business wins. You know, whether it's a startup or portfolios that are with competitors, what does the pipeline look like and how are you thinking about new portfolio additions into 2025?
Yeah, it's a look at we have a strong pipeline. The BD team has been very active over the last 12-18 months, combination of startup opportunities, some larger programs. We like both. What we're really focused on is making sure that we can get an arrangement with the partner where our interests are aligned. Like, that is the most important thing. And these are seven, 10-year relationships. And so you have to have good alignment of interests. We do that largely through the sharing of the RSA so that when we do have to make some, whether it's, credit decisions or pricing decisions, that we're both kinda, benefiting in the same way and thinking about the program in the same way. And that's the most important thing we look for. We look for alignment. We look for strong risk-adjusted returns.
You know, I'd say if I look at the market more broadly, because the environment's been a little bit uncertain.
Mm-hmm.
We're seeing pretty good discipline out there right now. And I think that's generally the case. It hasn't been really frothy in terms of how people are pricing out there. You know, you'll always find maybe pockets of rationality, but I think generally there's been pretty good discipline, which is good. We like that kind of environment. Prospective partners are very focused on, you know, the three things that I said, you know, the product suite, you know, how we underwrite and how we're differentiated there, the customer experience, our ability to integrate. And frankly, we've got a great set of references ready to go on any prospective new opportunity.
You know, our partners are fantastic in terms of, you know, talking to others out there and talking about what we bring to the table, how we think about partnership and our capabilities.
Just one point of clarification. In your remarks, you said there's some startups and some larger programs. Was that in reference to newer programs or is that in organic opportunities? Just pro.
Pro.
Regular program.
Yeah, both.
Yeah.
I'd say regular programs that come to market occasionally. Now, there's probably less of that right now. If you go back over the last two or three years, the larger programs that have existing portfolios, a lot of them have been renewed.
Yeah.
You know, and obviously we've renewed a number of ours.
Yep.
And so still have a lot of our competitors.
You know, you mentioned renewals. I think the last two quarters you renewed or launched 15 new partners each quarter. And as you said, many of your largest partners, I think, are signed up at least through 2026. Maybe just talk about it, and you referenced it a little bit in your last remarks, like, what have some of the recent trends been in renewals? And, you know, how are you factoring in things like late fees or the broader economy when signing up or renewing a partner?
Yeah, I'll handle the last part first. The late fee thing has been a challenge.
Yeah.
You know, whether we're pricing new opportunities or looking at renewals, we've had to build in protections. We've had to think about that, again, very transparently with the partners. And so, you know, some of the many of the program agreements, whether it's a renewal or a new opportunity, we have scenarios that are actually built into the contract. If this happens, then this is what we both agree to do because it's impactful enough that it has to be considered upfront. And we've been successful doing that. I think, you know, in terms of the renewals that we've done, we're very pleased with them. You know, Verizon and JCPenney, we've done a bunch. And typically there's something as you get into one of these long-term agreements, there's something that, you know, we wanna change. It could be enhancing the val ue prop.
It could be, you know, making a bigger investment in technology. And so we'll come to the table and say, "Hey, look, we wanna make a bigger investment. We wanna do this. We're gonna add, you know, five or six years to the contract." And, you know, we're always having those dialogues with our partners, and we try to do it in a way, again, you know, very transparently where there's always some things that we might not love in the contract.
Mm-hmm.
Some things that they don't love. And we try to get that, you know, sorted out and add some years to the back end.
Brian, maybe let's shift gears and spend a couple of minutes to talk about credit. We obviously talked about the monthly data earlier on. You know, when you look, delinquencies have been outperforming expectations, I think you said, for the last five or six months. Losses have still been, I think, a little stubbornly high. Can you maybe just talk about what's driving this divergence? And do you expect that this is gonna normalize over the medium-term timeframe?
Sure. And I'd say it's, you know, I'll say it's relatively simple. The number of accounts actually in delinquency are down. So unit delinquencies are down, which is, you know, obviously giving us a little bit less revenue. You're seeing just a higher balance of things that are in there, which, you know, again, if you look at past trends, the balance growth from the pre-pandemic period is up, right? And you expect that. So you see a little bit of higher balance kinda going through there. Well, certainly, I think what you're also seeing is for many consumers, they lack liquidity, in various aspects. You go back five, six years ago or even longer, you could more get a home equity line or you had other sources of income.
So once you're in delinquency now, it's a little bit tougher. Entry for us is much better than 2019. And when you have someone that rolls into delinquency now, they are generally more challenged to solve. So I think between, you know, better roll into delinquency, less units rolling in, and then just higher balances, that's giving you a little bit higher loss content than what we've seen in the past. But again, I think we're looking at the trends, and the trends have been positive from a seasonality basis month on month as we, you know, close out 2024.
You know, you've made some upbeat comments on the, I think it was the back half of the 2023 vintage and what you've seen early in 2024. Can you maybe just update us on how those things progressing and has the outperformance continued? You know, what does that mean for the overall loss content in the book?
Yeah, I think when you look at those two vintages, those are clearly the vintages where we've taken the credit actions and they're manifesting themselves. So we, you know, we've talked about it quite a bit. I'd say from the last time we updated you in October, there's been no real significant changes in those vintages. So again, that's really more reflective, I think, of the actions we've taken, and what's going into those two vintages.
You know, maybe one last one on losses. You referenced earlier. I'm sure we're gonna get guidance at 4Q earnings. You know, losses have been running north of your 5.5%-6% where you're underwrite to. Can you maybe just talk about what you think we need to see or when do you expect losses to get back to that targeted loss range?
Yeah, I think what you're seeing now is this stability in delinquency. I think you're seeing that trend bend, on the year-over-year growth. I think those are the, the positions. You know, obviously as you step in and just put aside 2025 for a second, first quarter's always a little bit higher in seasonality, right?
Mm-hmm.
You have the delinquency build in the fourth, and then you have the seasonal runoff for receivables. That's gonna continue on, so you see that seasonal trend. But again, the actions we've taken and the performance and delinquency we think gives us that trend. We continued to underwrite towards that 5.5%-6%. You know, we've never said every year's gonna be 5.5%-6%. We're over it now. A lot of this is because the 2020, you know, 2021 and 2022, there was so much credit pushed out into the system that consumers, in theory, had a lot of access. You know, now the industry pulled back, but you're digesting that. So that I think creates a tailwind. I think you're seeing it in many issuers' delinquency formation.
I think those are the things that you'll see that gives us, you know, some level of view of how the trajectory of the loss rate moves in 2025.
Maybe to just round up the discussion on, on the overall credit. So, you know, the allowances right around 10.8. You know, you've talked about it being relatively flat year over year. Seems like, you know, markets have gained confidence in, in, you know, soft landing or whatever you wanna call the economic outlook. Maybe, you know, what, what does this mean for, for the allowance, where it's headed? And, you know, what do you need to see for it to come down further back towards, you know, the, you know, the earlier, CECL Day One levels?
Yeah, I think it's confidence, right? When you look at your reserving model, the first question is, what's happening in your rolls and delinquencies and the vintage curves, right? That's the quantitative piece of it. And then the qualitative piece is, how do we think about the environment? I mean, we've continued to, you know, assess it, look at it. I think when you go back in the middle of the year, you know, I think in all fairness, everyone looked at it, and everyone thought inflation was gonna come down faster. Interest rates were gonna come down faster. They didn't. So we were a little bit more cautious, I think, in the middle part of the year. I think when we got into October, we said, "Hey, listen, we do think the reserve rate's gonna come down," right?
Generally be, you know, closer to what we thought was gonna be the exit rate in 2023. Now it's really right about the denominator. Nothing's really changed, I think, with regard to that. I think we are a little bit more confident when it comes to the economy and that piece of it. Again, remember, this was not. The losses here are not unemployment-driven, so I do think you're gonna see the rate come down. I do think you'll continue to see it move back towards, and we don't really have a view that we can't get back to a Day One CECL, even though that was normal for about four days before COVID happened.
Right.
I remember sitting here, you know, back in 2019, and we're like, "COVID? I wouldn't worry about that," but anyway, so I do think the trajectory is gonna move in this, in that direction.
Maybe let's switch gears and just talk about, you know, margin and deposit pricing dynamics. So, you know, you've talked about tailwinds that you have in the margin into next year. You know, you've moved aggressively to cut deposit rates since September. Maybe just talk a little bit about what your strategy has been in terms of reducing deposit rates and how slower loan growth has factored into that.
Yeah, so the one thing with it, as we think about our deposits and liquidity, right now, having access to liquidity is not the worst thing. If I'm raising money at High Yield Savings 4.10, I'm getting, you know, high fours from the Fed. It's a positive economic.
Mm-hmm.
may hurt the net interest margin. I think we're willing to take that because growth will come.
Mm-hmm.
You know, we've averaged high single digits. We're gonna get back to there. So having excess liquidity before then, I think, reduces that funding need, number one. Two, I think what we try to do is line the book up to take advantage of, you know, the rate decline. So we have a significant amount of CDs that mature really in the first half of next year, mainly the second quarter. So I think hopefully continued rate environment will help us on those renewals as we slide down. So I think that's how we think a little bit about the market. You know, we obviously look at competitors. And there are, what I'd say, resistance points. There was a resistance point at 5% when you thought about CDs. In high-yield savings, there was a resistance point at 4%.
Now, we've seen a number of issuers, including one you're more familiar with, who pushed below 4%. So that's obviously good. But we have to maintain a spread. In order for us to have positive flow of deposits, we have to maintain a little bit of spread 'cause we don't put as much into marketing around that. So I think that's a positive trend. I think we'll see what happens here with the Fed. You know, some people have continued to move down here in recent weeks. And we'll continue to follow the market down and be aggressive. But we don't want to curb the growth because we know we're gonna need the funding. And again, it's not negative to the P&L in the short term.
Brian, maybe let's spend a minute just talking about capital. You know, capital ratios over 13%, continued return to shareholders by the dividend buyback. And there's still some uncertainty regarding where, you know, rules will go, but, you know, things appear to be moving in the right direction. You know, what are you waiting to see to be able to leverage the capital back to that 11% level? And how do you think about leveraging the capital versus maintaining some dry powder for the eventual return of loan growth that Brian articulated?
Yeah, it will come back. I think, obviously, organic growth is still our top priority for use of capital. I think, you know, dividend a second, share repurchases, and then a trade-off between that and, you know, more inorganic growth. We're very disciplined around inorganic growth in M&A. You know, you haven't seen that be a big use of capital for the company over the years. You know, we like smaller acquisitions that we can scale. I think Ally Lending's a great example, Allegro, you know, Pets Best. Those are all, you know, modest capital outlays, but they're companies where we look at, you know, what we're doing. We say, "Okay, leveraging our scale, we can grow that." So I think the priorities haven't changed.
You know, we do believe we should be back down closer to something in the 11 range, and we think we can get there. I think we've demonstrated a propensity to buy back shares. I think there's no question about that. I think we've retired half the shares of the company in the last 10 years. So, that's certainly a very attractive use of capital as well.
We've got about a minute or two to go here, so the stock has done incredibly well this year. You know, maybe you could argue that it was in the wrong place last year, but.
Yes, I would argue that.
I do think that you made that point when you were here in this same seat last year. You know, obviously, we've seen a really nice re-rating. You know, do you think the market is missing anything anymore, or and what do you think is the next likes of the story for Synchrony?
No, I think, you know, like we talked about last year, I did feel like all the negative was priced into the stock, you know, whether it was late fees, you know, more regulation, just everything. It felt like, you know, maybe uncertainty in the economy and credit and uncertainty in election. And now a lot of that has unwound, and I feel like, okay, now, you know, we're getting credit for all the great work that the team is doing. You know, we've got a fantastic set of partners. We've got over 70 million customers. We've made big investments in all the areas that we talked about. And I feel like, you know, if we just, there's still probably a little bit of an overhang on the regulatory stuff and a little bit of uncertainty there.
I think that in the next, hopefully, three to six months, that abates. I think you get a little more, a few more data points on the credit trajectory, which we think will demonstrate that the changes we made are having an impact, and then I think it's back to the growth mode. You know, it's investing in health and wellness and our digital partners, the products, the customer experience. I feel great about how we're positioned on all of that stuff.
I was gonna end there, but you did make two references to regulation. So I did wanna throw in one last one to ask you.
Oh, you're gonna end on a regulation question?
Any last things, Brian, that you're just most focused on that you think will be impactful in terms of, you know, regulations that we're waiting on to impact Synchrony?
Yeah, you know, listen, I think from a capital standpoint, we feel good. You know, there's positive vibes, most certainly on Category IV banks being scoped out in the tailoring. I think there's a push to have more tailoring back. Hopefully, that goes through. We're clearly monitoring the long-term debt rule and with the applicability there. And then it's the fact that every day, you know, dealing with our regulators and engaging on their supervision of us and trying to be as proactive and responsive as we can. So you know, again, the biggest thing externally on rulemaking is probably long-term debt. Basel III is probably the back burner. You know, obviously, Brian's talked at length about late fees. Now it's really just about how do we partner with our regulators to see how we run the business.
Great. Well, please join me in thanking Synchrony.
Thanks, Brian.