All right, everybody, welcome again. We have our second presentation, but certainly not second, first in my heart. We have Synchrony Financial and CFO Brian Wenzel. Welcome, Brian.
Thanks, Erica. Appreciate being here today, in Florida. It's much, much warmer and a lot less snow than Connecticut.
Yeah, much, much warmer. So it feels like your earnings call just ended yesterday. It was quite a long earnings call. And you and the other Brian were fielding a lot of questions on revenue and growth. Maybe to start, can we kick off with your view on 2025 and how you see the story evolving as we come into the year?
Yeah, yeah, you know, listen, we believe, as we look back on 2024 for one second, Erica.
Yes.
The company executed at a high level. We navigated a difficult macroeconomic environment. We most certainly took actions in order to curtail net credit losses, to stay within the right margin. We put on assets at a lower margin is not effective. Most certainly, we got ahead of the CFPB late fee rule. So it's a lot of really positive things. As we exited 2024, we felt we were in a position of strength. There was a lot of focus on growth and where growth was going. I think Brian and I said, "We're actually happy with the growth. That's what we wanted to do.
We wanted to make sure that we got the charge-off and the margin position in the right place. I think as we think about 2025, you know, most certainly the first half of the year is gonna be substantially similar, I think, to the end of 2024. I think, you know, the progress against inflation's gonna be a little bit more muted. You know, we've been more pessimistic on Fed rate actions. We only had one in the back half of the year in September. So we kinda think, "Listen, the first half is a little tougher, but I think the charge-off position will get in the right place." And that positions us well as we look to the back half of the year exiting out of 2025. So we're excited about that.
We're gonna continue the expense discipline that we showed in the last couple of years. So, you know, all in all, you know, we feel positive about 2025, coming off of what was, you know, in theory, we think a very good execution year for us as a company.
Great. So the primary, adamant message you had on the call was that the PPCs or the mitigants were not the factors that caused the slowdown in growth. Could we unpack that more and maybe give us a little bit more examples or data about application data and some of the control groups that you've tested in order to come to this conclusion?
Yeah, you know, again, we stated it on the call. I stated it on the call. The majority of the slowdown in sales, purchase volume, and new accounts was driven by our credit actions, and that was intended, and we are okay with that. I think when, you know, people try to sit back and say, "Did the PPCs cause some of this?" you know, the positive thing about putting the PPCs in early in order to mitigate that cliff effect of a potential late fee drop was we were able to have a control group.
And each portfolio had a control group that was held out so that we can compare activity along a number of different levels, whether it was purchase volume, closure rate, involuntary closure rate, complaint rate, you know, down to finance charge active to see if people are rotating from a revolver to a transactor, etc. When we look at the groups, on average, when I look at the accounts that we mailed a change in terms to versus that control group on a sales basis, it was $1 lower per month, $1 sales. So it was not significant when it comes to purchase volume. When you look at another metric that you can look at is the payment rate on those accounts. The payment rate was less than 10 basis points difference between that mailed population and the control group.
So, when we look at those two measures, we don't really see, you know, in theory, a reduction of purchase volume or a switch in consumer behavior as a result of the pricing changes. When you go to new accounts, right, you know, the theory could have been, "Listen, your new accounts are down. Your applications are down. People don't want the product because it's priced high," right? And you say, "Okay, where would people pull back from that if you view the price is too high?" When we look at credit grades and the through-door population in that same kinda period, you know, while applications were down generally, which is consistent with what consumer behavior was, it was down more in the non-prime population than the super prime. So I take it, you know, you pulled all that back.
We're not seeing a material difference on purchase volume. You're not seeing any change really, you know, statistically significant change on revolver transactor. And you're not seeing what, you know, what people would say is the higher-end consumer pulling away from the product. Our products, you know, while the price may be high in some people's view, the value propositions generally are richer than general-purpose credit cards. And that's why people take up the product as that as well as the affinity for the brands which we serve.
Speaking of credit, you did put out an 8-K this morning with pretty solid credit numbers. You know, for investors either in the room or online that haven't opened it yet or read it yet, maybe tell us a little bit about the highlights of, you know, what the 8-K said. And then let's go into how what that says about the health of the Synchrony consumer.
Yeah, so, I'm surprised people wouldn't look at it at 6:00 A.M. this morning when we published it. And thank you for having your conference early so we can get that out early. But our 30-plus delinquency rate was 4.7%. Our charge-off rate was 6.2%. When you look at the 4.7%, you know, delinquency rate, that's 19 basis points better than seasonality from 2017 to 2019.
Yep.
That's the sixth consecutive month of seasonality and actually accelerated in January versus other months. I think while we didn't disclose the 90-plus rate, I believe it's 7 basis points better than historical average. Again, accelerating for where it has been. Again, the sixth consecutive month of positive performance versus seasonality. So we feel good about that direction of credit. The 6.2 rate on charge-off, obviously, you know, we feel positive about that. You know, what we said to folks back, it seems like two weeks ago on our earnings call is we're gonna outperform seasonality. We get a little bit of benefit in January because you have a higher balance that will bleed down over the next couple of months. But again, we will outperform seasonality for the first quarter of this year.
I think as we pull up and think about those, you know, that first month of the year being in, you know, that gives us some reaffirmation with regard to what we said was our guidance of being in, you know, the 5.8%-6.1% net charge-off for the full year. So we feel good about that. We feel good about the credit actions that have taken place. You know, the second part of your question is how do we feel about the consumer? I mean, the consumer very much in January, you know, acted like the fourth quarter last year. They continue to be somewhat diligent with regard to their spending and discretionary spending. They seem disciplined.
We don't see them doing things that, again, would worry us about the health of the consumer, but just, you know, you know, dealing with the effects of affordability, which is, you know, a big problem for not only the non-prime, but even the prime customer, you know, in middle America that's, you know, trying to get by with, you know, high grocery prices, higher gas prices, higher insurance prices, etc. So the consumer's kinda hanging in there. They'll, you know, we hope they continue to hang in there and the credit actions are having the, you know, the effect that we want.
That being said, you are coming off the second-highest, you know, growth year in terms of purchase volume. So you mentioned the phrase hanging in there, but, you know, it seems a little incongruous with that purchase volume, right? So, you know, how do we circle the square, so to speak, in terms of consumer confidence heading into 2025?
Yeah, you know, I think, Erica, to be honest with you, I think consumer confidence is gonna be a little bit shaky in the first half of the year. You know, the Consumer Confidence Index, whether you look at the University of Michigan or the Conference Board, they lag a little bit. I think we're gonna see consumers continue to be on the sidelines here for the first half. And to a large degree, you know, until prices start to check up, affordability starts to come in, there's a whole bunch of questions with regard to the administration and what they're going to do and the effects on the consumer, and goods pricing. So I think the first half is going to be much, you know, very similar to, I think, the back half of 2024.
Well, for us, you know, the first half of 2024 was strong. We were comfortable against that. I think the comps get a little bit easier as we move through the year. But again, you know, it's interesting when you're in this business, Erica. We sat here a year ago, and people were like, "Don't grow.
Mm-hmm.
You know, 'cause the charge-offs were high. And, you know, you go through this now, like, "Why aren't you going faster?" And I'm like, "Well, you know, we wanna grow at the right margin. And we're willing to be patient about that. We are with some of the most iconic brands in retailing and distribution, and the consumer will be there. It just, you know, you can't force them into spending. You know, we're not big into travel and some of the high-end stuff. That's not, you know, we're middle market America that serves the full spectrum, you know, which makes us different when you compare us to some of the, you know, the terrific companies you're gonna talk to, over the next couple of days. We are middle America, and we're full-spectrum America.
The consumer itself, they're hanging in there. They're not showing stress. They're being diligent, which I think is tremendous, 'cause a lot of times they just, you know, they lose their own discipline, and that creates a whole separate problem.
Going back to the credit actions that you mentioned, you know, there's clearly a timing effect. Number one, could you remind everybody when those credit actions are initiated? And is the impact on growth now at a steady state, so to speak?
Yeah, so we took two waves of, I'd say, broader-based actions. We consistently look on an idiosyncratic basis at partners, channels, products, and we'll make changes. But if you think about it, the first wave of those impacts started in the middle of 2023, and the second waves were in the first and early into the second part of 2024. The 2024 actions were all around ability to pay, right? If we saw you not paying a student loan, even though it wasn't being reported to the Bureau as delinquent, we could see the balance not changing, a.k.a. you're not paying it. Now, there's two theories of why you wouldn't pay your student loans.
Number one, you believe that the Biden administration was going to forgive the debt, so why should I pay it down if it's gonna get forgiven? Or two, you know, you came through the pandemic not paying it. Now you couldn't pay it. And so we viewed that as an ability to pay potential problem. That was one piece. The second piece was around debt consolidation loans. If you're taking out a debt consolidation loan, which lowered your average monthly payment rate, but left you with more, in theory, exposure because those unsecured credit lines were there. That's an ability to pay issue we thought.
So we said, "Okay, if we see those types of characteristics, we're going to take some type of action against those accounts." And so it was all about protecting the portfolio and stopping an acceleration of delinquency and net charge-offs. And again, they take about nine to 12 months to bake in. I think when we look at the actions now, when we get through this quarter, I think they're gonna be fully effective, which is why we see this acceleration, I think, in positive delinquency and net charge-off performance and gives us confidence as we think about, you know, our profile for 2025. That's the right things to be doing at this point in time. We believe, maybe differently than other issuers, underwriting at lower margin is not the right answer.
I'd rather say, "Okay, let's not grow as much. Let's sit on the sidelines a little bit. When we see the right margin, we'll step in." And that's what we're gonna do as a company.
You talked during the earnings call about the potential of reopening the credit box in the second half of 2025. We've just talked about pretty solid credit metrics for the month. What is the mosaic that you would need to see in terms of your own data set for credit and macro in order to make that decision?
Yeah, first of all, I never like to say I'm opening the credit box. I'm in a restrictive credit position today. So what we would need to see to be less restrictive, and.
Untighten.
Untighten? Okay. Less restrictive. You know, what we have to see is the performance and delinquency. And what we see today, we see entry rate that's better than the pre-pandemic period. We're starting to see our 30- to 89-day delinquency, late-stage delinquency, you know, performance improve. We're seeing stability in that front side of the delinquency buckets. Once we get comfort that has taken hold and it's firmly in grasp, then I think we start thinking about, "Okay, what are things that we can do to become less restrictive?" And, you know, I laid out there is a scenario where in the back half of this year, we do some things that loosen or lighten some of the restrictions that we put in place.
We would not. I would be pretty confident we will not fully unwind what we did the last couple of years this year. You know, we'll have to think about that in 2026. But I think what you'll start to see, Erica, is what I would say pro-growth credit actions, right? So you'll think about credit line increases where we have not necessarily been doing them today for customers that we know. You'll start to see more upgrades from private label to Dual Card because we forced more people into private label because of the lower line.
Mm-hmm.
Structure. So we'll see positive things. The positivity with that is when you do a credit line increase or you do an upgrade or you do some of these, I'd say, pro-growth measures, they generally come with an offer from the merchant, and that stimulates growth in the short term. So, and again, they're on existing accounts, so you get great operating leverage, right, relative to that. So I, you know, if we see delinquency continue to improve through the first part of the year, then I think we start doing some of those positive things. And then we assess in the back part of the year, under this scenario, you know, whether or not we wanna do more in 2026. And I think that becomes a tailwind for us and, you know, for us and our partners.
So let's talk a little bit more about the PPCs. What's come in better than expectations and what's been less effective? And are there any more incremental changes in the pipeline to make for 2025?
Yeah, you know, let me unpack that a little bit. Your second part of your question, is there incremental things we're gonna do? The answer is no. You know, we came in and if you think about the way the CFPB was gonna attack late fees, there was a cliff effect.
Who?
There was a cliff effect on late fees. So you had this trough because you lose revenue. PPCs take some time to bleed in. So we went in advance because we wanted to narrow that trough. And there was a combination of actions that had some shorter-term benefits and ones that take a little bit longer to come through. If you put them in broad categories, I think when we look at the APRs, which we, you know, we indicated, generally, it takes about, you know, 50% of the book over 12 months leads into the new APR, 75% over two years, and then it tails out from there. So when I look at that first bucket, we've actually seen a slightly better lead-in.
Now, we have a lot of history for that, and it's overperforming, so we feel good about the APR increases. I think when some people look at our APRs and I just wanna hit this one point, you know, people are confusing some of the prime rate increases with the changes we made 'cause our APR increase is only 2 to 300 basis points. So the prime rate has actually had a bigger impact than, you know, on the cards that are variable than I'd say our actions. So but again, APRs have outperformed us. When I look at paper statement fees, slightly below expectations. And that's not necessarily a bad thing.
You know, first of all, in the first part, we were probably a little bit more generous with regard to waivers, because it was a very unique fee in the industry that we led with, and we didn't wanna create as much, you know, alarm with consumers, so I think, well, number one, we were a little bit more generous with the softeners. Two, we saw a bigger-than-expected conversion to eBill, which is great because the more we can get people to go into eService, whether that's statements, you know, other issues that they have to do, it's better for us, so the benefit shows up probably more so in OpEx than in other income, so that performed a little bit less than our expectations. I think the other thing we instituted was promotional, you know, financing fee.
That's been a little bit noisier, right, because it's based on, you know, some of the bigger tickets. And for those individuals who, you know, potentially didn't need the financing, they're like, "Okay, why am I gonna pay the fee if I'm just gonna pay it off anyway?" So there's but there's a little bit of noise there. I think all in all, when you take that all together, and then when you look at the big one, we have not seen on a voluntary basis, we've seen less attrition, which, you know, is better for us. So all in all, when we look at that, you know, in theory, they're performing better than our expectations. We're in line with their expectations, but it's one, again, that we prefer not to take.
But again, we had to protect the company from what we knew was very unfair and poorly analyzed rule change. And so we'll continue to monitor this. You know, it's great having test versus control 'cause we can see the impacts at the portfolio level, the platform level, and at the company level.
So you wanted to unpack the APR trajectory and the attrition. Some of the APR trajectory, based on what you said about, you know, 75% of the portfolios where that's applied to, should reflect that, in two years. So we should see in the second half of 2026 a nicer impact to your net interest margin?
Yeah, you know, listen, I think you got a lot of moving pieces on NII, right? The first is you know, we do see the impact of the PPCs. They are significant. They are hitting positively NII. You know, what's really offsetting that a little bit is lower late fees, right? So when you go from a rate that's in the you know, 6-plus% net charge-off going down, you're losing your late fee incident rate, which creates a headwind. And that's you know, unfortunately, a higher yielding item. So you have a little bit of give and take between those two things. You are right because in June of 2026, you're gonna be at that you know, roughly 75%. So you should continue to feel that.
I think the other thing, you know, this business, and our targets, our long-term targets on net interest margin, etc., weren't built around a Fed funds rate of 4.5.
Right.
It was built around something that was more like 2.5, so it depends on the trajectory you get there. Right now, there's not a very good trajectory to get to 2.5 or 3 or 3 and a quarter by the end of next year. I mean, you probably have better insight than I do. It just, unfortunately, the Fed is moving at a slower pace, rightfully so, because they're not getting inflation down, and you don't see the effects on the labor market.
Let's unpack that. There's clearly a lot of conversation about deregulatory momentum in Washington. You know, you said the other offset is, you know, the reduction of late fees. Given that the PPCs don't appear to be impacting application volume that much, like you said, and clearly there is a chance that we may not see a change in the late fee rule, will you be able to retain these changes? You know, let's say, we keep the economics of the late fees. And of course, the second toughest question is, what's the risk that these PPCs get competed away?
Yeah, so great question. That is the question we face with a lot of investors. They wanna know what happens. And I think to a large degree, if we learned nothing in the last three weeks, things move quickly, things happen, and things get unwound. And you know, everyone needs to unfortunately take a deep breath and wait here. You know, the late fee piece is going through a process. The next step to the process is a submission by the plaintiffs on the 22nd, I believe, of February, and then response by the government. And you know, we'll have greater clarity, I think, in the first half of this year with regard to late fees.
In any event, if you wanted to say, "Okay, let's assume that late fee change does not happen," you know, the first thing, we have to have certainty because you can't put things in, roll them back, put things back in. It just doesn't work that way. The consumer behavior and consumer sentiment is not really conducive, put aside the rules. So you have to have certainty, right, relative to the rule not going in, number one. Once that certainty is there, I think what we do what we did at the start of this, which is go sit down with our partners.
Mm-hmm.
the ones that share economics, and have a transparent, open discussion. Say, "Okay, here's what we've seen today. Here's the data on test versus control." You know, our experience has been, particularly on the APR side, you don't really pick up volume when it comes to rate reductions.
Yep.
And have that discussion with the partners and let them, you know, participate in where they wanna be from a brand perspective, a competitor perspective, etc. And then we'll do the same evaluation for the properties in which we control the brand. So we'll go through those different pieces. When you talk about being competed away, you know, one of the barriers in this business, you know, good or bad, is that our portfolios generally convey a fair market value. So if someone wants to come in and say, "Okay, we're gonna just price this thing down," they have to pay me fair market value for the prices that are in today and the economics that are in today, which doesn't allow them to pass that economics really on to the partners.
So it does create a little bit of a competitive scenario where, you know, someone can't just come in and say, "I'm gonna lower price." They're gonna wanna compete it. And you know, a lot of our partners are sharing these economics today. You know, we'll continue to invest in the program. So again, we'll deal with it as it comes. But I think, you know, our economics sharing, particularly when you're over these hurdle rates, our partners are sharing a good bit in the economics of these PPCs. So, that's where alignment of interest is so critical in our business model.
Got it. Maybe we'll pivot away from this topic and talk a little bit more about your Pay Later strategy. Now, talk a little bit about this in terms of, is this mostly a customer acquisition tool, and how are you thinking about launching the Pay Later product through a broader spectrum of partners?
Yeah, you know, listen, you know, Pay Later, the whole buy now, pay later space that people think is a phenomenon, you know, we've been in this business for 90 years. I think everything we do is buy now, Pay Later. I don't think anyone pays us. And to be honest with you, the concept itself of, you know, the promotional financing, we used to do inside a revolving account.
Yep.
Right? Just because of the fact that our partners want that ongoing relationship with the consumer. So for us, you know, we would open a revolving account, put an installment, whether it's Equal Pay or some other type of, you know, with Pay Later for an interest type product in there, and people get the balance of that. Consumers like these, they wanted something that was potentially unique and not have a revolving account. So we created this product, and we've rolled it out now. You know, we put it in with our, you know, one of our long-standing partners, Lowe's, with JCPenney. We got other big partners, ready to go with it. And it's part for us, a multi-product strategy. If you wanna close that installment loan, Pay Later. If you want a revolving product, great.
If you want a revolving product with promotional financing, great. We have a secured card, Dual Card, etc. So we look at this. If you get a closed-end installment product, our view is, "Okay, how do I take that closed-end one-and-done type relationship and try to migrate it to a revolving relationship?" That's what our partners want. We're providing the consumer the flexibility to choose a financial product, and then we're gonna sit back and say, "Okay, what point does it make sense in that revolving, or in that pay down period to offer them a revolving product to maintain the relationship?" That's what we think makes the most sense. And we'll continue to have the strategy. So again, it's not something new to us.
Most certainly, I think when you look at the buy now, pay later, pure buy now, pay later companies, they're trying to create multi-products 'cause they understand that the closed-end installment is not necessarily, you know, gonna survive on its own. And so they need multiple products in order to move people through the life cycle. The other thing for us in the multi-product setting, to be honest with you, Erica, is we look at it, and if you come in and shop with that, you know, customer that takes one of those pay later loans, we're not merely trying to yank them over to someone else and give them another loan. I mean, we want them to be loyal to that brand, loyal to that customer, and that's what makes us a little bit more unique in this space.
Got it. Before I turn to the next question, just wanted a reminder for the audience that if you wanted to ask a question, you know, open up the, you know, conference site through the QR code and put in your question, and I'll see it through this iPad. Partnership opportunities. Remind us about how you're approaching partnerships in 2025. You've had some bigger renewals over the past year: Sam's Club, JCPenney, Verizon. What does the renewal pipeline look like over the next few years, and what does the pipeline look like away from you in terms of what could come to market?
Yeah, you know, listen, we have a couple other ones, in the next couple of years that we need to renew. And I think we're in good positions with those. They're ones we work hard at every day in order to renew. I think the pipeline overall, Erica, in the market, if you look at the opportunities that we had last year, you know, we won J.Crew.
Yep.
Smaller portfolio, but really into our core. You look at BRP in the installment space, starter program, you know, for us, you know, the book stayed behind, doing very well. You had Virgin in the co-branding space. So we do see opportunities. I'd say there's probably more activity now. I think you have a little bit more clarity on the macro environment. You have a little bit more clarity on the regulatory environment. But here's the thing, Erica. We will be absolutely disciplined on price. We in all our deals, you know, they're 7-10-year deals. We price in a recession 'cause, you know, generally speaking, over 7-10 years, you have a recession.
We price in a recession, and we sit back and say, "Listen, I'm not going to degrade our ROA in order to get new business." And what we like to say is, "Listen, I am not the highest, or I'm sorry, lowest cost partner, but I am gonna be the best partner when it comes to capabilities." And so you gotta decide what you want as a partner. That doesn't have us winning every time, and that's fine. We're comfortable with that. But the activity level is probably higher than we've seen the last, you know, number of years, relative to those opportunities.
Maybe we talk about your funding strategy for 2025. Now, how are you approaching deposit growth and pricing for this year? You know, are you considering that some of the assists that you may be getting in asset yields through PPCs? You know, would you use that as an advantage to be more of a leader in digital banking pricing?
Yeah, I don't think we're gonna be a leader, Erica, in digital banking pricing. Here's a simple thing. We don't do as much brand work, right? I don't spend as much. I don't have race cars. I don't have, you know, stadiums. I don't have tournaments. You know, we don't do a lot of that stuff, which allows us to put more money back into the products itself. So, you know, our price is generally gonna be, you know, 20 basis points higher than I would say a direct competitive set. When you think about the Allys, the Marcuses, the American Expresses of the world, we're gonna be in a zone around there. You know, we did lower our high yield savings last week. I got some encouragement on the earnings call to do that, from a lot of folks.
We didn't do it because of that, but we're at 4% now. You know, again, what I'd say to people is, you know, the beta and the way we talk about beta is from the start of a rate up to right before the rate goes down. What's that beta? It was about 75%, 74% and 76%, between high yield savings and CDs. You will see that on the way down, to be honest with you. You know, we're probably in the 50%-60% range right now, coming down. You know, we moved, you know, again, right before the first cut down, but we're not in a position where we feel like we have to really just lower the price, right? You know, we're gonna grow at some point here.
It's a proxy, you know, put aside an interest margin, which is an output measure.
Mm-hmm.
It's a positive economic trade. If I can lend to someone at 4% and go give it to the government, you get 4.5% back. That's not a bad deal. Not the best use of money, but, you know, I'm not losing money where if you look at pre-pandemic, I was borrowing at 1%, and I was getting 9 basis points back. It was a negative economic carry. So you know, we're gonna be a little bit heavier on liquidity now. I think, to be honest with you, we've seen a little bit, you know, some positive flows here in January from bonuses. So I guess a lot of companies have done well. So that's great, and we'll continue to do that.
We are facing the first two quarters of this year, some of the, you know, more significant, maturity towers and CDs than we've seen. And that was by design. We tried to, you know, set those maturities up, assuming the rates would be a little bit lower than they are here. But again, we're seeing very good retention rates right now. So, won't be a leader. We'll stay with the pack, a little bit, and we're not going to spend a lot of dollars on brand and stadiums and tournaments and race cars.
Those are expensive.
They are very expensive.
So I wanted to zoom back out and revisit the deregulatory momentum topic. So the broad question is, you know, how might the new administration impact future capital and liquidity requirements and supervisory practices? But very clearly, there has been, you know, two very recent headlines that are directly impacting you. One, would be the over-the-weekend headlines on the CFPB. And the second would be DFAST, which you would be participating in next year. There's a lot going on, so respond how you'd like in terms of, you know, those two facets.
Yeah, well, let me go where you ended. You know, DFAST and the stress testing. We're a category four bank, right? So, we participated last year. We get our first stress capital buffer next year. I don't.
I'm talking about your Stress Capital Buffer.
Yeah, but I don't get out of the process. I still have to go through the process. I still give them the data. I still give them the capital plan. So there's no real impact to us. So we're in the process, and, you know, we feel good about where we are as a company with regard to that. You know, the positive things that I think that the Fed has said, and we'll see where they come through, is transparency. And I think for us, it's gonna be really important to understand transparency. We are pretty unique when it comes to the RSA impact.
Mm-hmm.
And making sure that when they model the RSA impact, that it's, you know, modeled in a way that's appropriate. I also hope by when we get a stress capital buffer next year that the Fed actually recognizes CECL, which is a benefit to everyone, not necessarily us, but everyone's really, you know, impact on the financials because it is reality. I understand they haven't modeled it, but hopefully that happens. So I think transparency there, closing of CECL, and we'll continue to play the long game there. You know, who knows on Basel III? You need a new, you know, vice chair of supervision. You know, we are encouraged about the tailoring perspective that they talk about.
When you talk about the CFPB, and this has been one of the more debated topics about what happens with the CFPB, obviously, it's created through the legislative branch, and these legislative branches take action if they're gonna do anything. That to us, again, the last three weeks have been interesting. If you look at on and off and what happens, our view is we're keeping our head down. We have a lot of respect for the CFPB. We'll continue to deal with the CFPB and you know, you know, as business as usual until something definitive happens. And that's okay with us. And, you know, the litigation with regard to late fees, that's gonna continue.
Obviously, we'll see over the course of the coming months, you know, what the new administration or the new leadership of the CFPB think about that. We can't control it. We just react to it. But right now, we haven't changed anything inside our company with regard to that, as well as any of our other regulators. Well, you know, our view is, you know, we'll see what happens, but they're gonna continue to act most certainly the way they have been engaging with us. If I pull back up, you know, when the Biden administration came through, we expected a greater regulatory impact. The first two years, we didn't quite feel it. The last two years, we felt it.
You know, I don't know when we'll feel a change in the, you know, potential deregulation or the market. So again, we're gonna continue to operate our company in the way that we think, and we'll respond to how the environment shifts.
Just a question on capital. You know, is it really, you know, receiving your first stress capital buffer that's an important step in terms of optimizing your capital towards 11% CET1? And over the short term, should we think about buyback as just a toggle for growth, let's say seasonally slower first quarter, a little bit more buyback?
Yeah, you know, there's been a lot of questions on our capital. You know, we had one of our lowest quarters in the fourth quarter last year, and people were trying to read through it. Was it the environment? Were we saving capital for something, etc.? It was more simply, listen, we expected a lot of volatility around the election. We expected a lot of volatility after the election, and we said, "Listen, I don't wanna play a game." So we said, "Let's just sit on the sidelines and go out." We had $600 million remaining in our share purchase, the current authorization. We're gonna complete that. We completed the final transition phase under our CECL this quarter, so that's behind us, and we're gonna continue to do that. The short answer is no.
You know, we feel comfortable, the way we model and the way we project that stress capital buffer, that as we look at our target, that we're gonna be able to achieve that. And so it's more about, for us, you know, how do we think about that trajectory to get there? You know, most certainly, and I, I'm not sure people fully appreciate this. You're taking all your constituencies for a ride. You know, I gotta get the Fed to go along with me. I got the rating agencies to go along with me. Most certainly, I hope investors go along with us. But we understand it's a position of strength for us, and most certainly, we're gonna deploy that, in a way that shareholders really appreciate.
One last question before we run out of time. One last heave to the end zone. Going back to the delinquency data from this morning, is it too early to call the peak and charge-offs for this normalization cycle?
You know, Erica, I don't, you know, everyone says like peak. You know, if you look back at the last charge-off rate we posted last year, we're gonna be, you know, significantly below that this year. There's seasonality. You know, we feel great about the rate. So, I'm not into calling peaks or valleys or troughs. We feel good about credit.
Okay. I think that's a good place to end our chat. Brian, thanks so much for joining us today.
Thank you.
Thank you.