Summary of Bread Financial Conference Call Company Overview - **Company**: Bread Financial (NYSE: BFH) - **Industry**: Consumer Finance, Credit Card Issuing Key Points Consumer Health and Economic Environment - Bread Financial primarily serves Middle America, focusing on near-prime to prime customers with an average income of approximately $95,000 for new vintages and just under $80,000 for the overall portfolio [3][4] - The company has observed a K-shaped economy, where consumers in the middle segment are adapting to elevated inflation, which has been around 30%-35% compounded since COVID-19 [4] - Consumers are making more deliberate purchasing choices, showing resilience despite some strain in the portfolio [5] Credit Quality and Loan Growth - January data indicated continued progress in credit quality, with expectations for credit losses to improve throughout 2026 [6][8] - The company anticipates average loan growth in the low single digits for the year, supported by new partner launches and tax refunds [12][14] - Tax refunds are expected to be a tailwind for consumers, potentially used for debt repayment or discretionary spending [10][11] Strategic Partnerships and Market Position - New partner launches in 2025, such as with Raymour & Flanigan and Cricket Wireless, are expected to contribute positively to loan growth [12][14] - Bread Financial is focused on maintaining a competitive edge by securing partnerships and exploring new opportunities in the market [15] Buy Now, Pay Later (BNPL) Segment - The BNPL segment is growing, now representing around 2% of outstanding loans and sales, appealing to consumers who may not qualify for traditional credit [17][19] - The company is working on white-labeled BNPL offerings with brand partners to enhance consumer engagement [18] Revenue and Margin Outlook - Pricing changes implemented in previous years are expected to support net interest margins, which are projected to remain flat to slightly up [21][22] - The company aims to achieve positive operating leverage by growing revenues faster than expenses [25] Operational Efficiency and AI Integration - Bread Financial has established a culture of operational excellence, generating tens of millions in savings annually, which are reinvested into technology and efficiency improvements [24] - The company has over 200 machine learning models in place and is exploring AI applications to enhance customer service and operational efficiency [35][38] Regulatory Environment and Capital Management - The company is cautious about potential price caps on credit cards, believing they could restrict credit access for many consumers [41] - Capital levels have improved significantly, with CET1 at 13%, and the company is focused on supporting profitable growth while returning capital to shareholders through buybacks [46][47] Future Outlook - Bread Financial expresses cautious optimism for 2026, anticipating continued credit improvement and a stable labor market, which could support consumer spending [49][50] - The company is committed to growing responsibly and profitably, focusing on enhancing customer service and expanding partnerships [48][50] Additional Insights - The merger of the two banks (Utah and Delaware) is aimed at improving funding flexibility and capital management [31][33] - The company is not currently focused on major disruptions but is adapting to changes in the market and consumer behavior [38]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [12][13] - For the full year 2025, credit sales reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [15][16] - The company achieved a tangible book value per common share growth of 23% year-over-year to $57.57, with a return on average tangible common equity of 20% for the full year [12][22] Business Line Data and Key Metrics Changes - Co-brand credit sales comprised 52% of total credit sales in Q4 2025, up from 48% in Q4 2024, indicating a positive trend in brand partnerships [8][9] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [9][10] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales due to higher transaction sizes and increased transaction frequency [13][14] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate improved to 7.4%, down 60 basis points from the previous year [25][26] Company Strategy and Development Direction - The company aims to capitalize on strengths while fortifying its business to offset potential external pressures, focusing on responsible growth and disciplined credit management [33][34] - Continued investment in technology modernization and product innovation, including AI, is expected to drive growth and efficiencies [29][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers and the gradual improvement in credit metrics, anticipating a positive trajectory for loan growth entering 2026 [13][14] - The outlook for 2026 includes expectations for low single-digit growth in average credit card and other loans, supported by a stable partner base and new business launches [27][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in common share repurchases and a 10% increase in the quarterly common stock dividend [10][24] - A credit rating upgrade from Moody's and Fitch was received, reflecting the company's strengthened financial resilience [10][22] Q&A Session Summary Question: What is driving the loan growth into 2026? - Management noted that loan growth is driven by resilient consumer behavior, sales momentum, and stable partnerships, with no loosening of underwriting standards [37][39] Question: How does the company view the impact of the labor market on credit quality? - Management is encouraged by underlying data, observing improvements in roll rates and credit metrics, indicating a resilient consumer base despite potential economic pressures [41][43] Question: What are the objectives for direct-to-consumer deposits? - The company aims for direct-to-consumer deposits to reach 70% of total funding over time, benefiting from competitive pricing due to its online presence [59][60] Question: What is the outlook for the reserve rate? - The reserve rate is expected to improve in line with credit quality, with management optimistic about gradually moving risk weightings back to neutral [62][63] Question: How does the company plan to achieve positive operating leverage in 2026? - Management indicated that positive operating leverage will depend on macro conditions impacting revenue, with a focus on operational excellence and continuous improvement initiatives [84][85]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [12][13] - Full-year credit sales reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [15][17] - The company achieved a tangible book value per common share growth of 23% year-over-year to $57.57, with a return on average tangible common equity of 20% for the full year [12][22] Business Line Data and Key Metrics Changes - The Home vertical saw significant expansion with new partnerships, including Bed Bath & Beyond and Raymour & Flanigan, contributing to a 52% share of credit sales in Q4, up from 48% in Q4 2024 [8][9] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [9][10] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales, with notable increases in travel and entertainment spending [13][14] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate improved to 7.4%, down 60 basis points from the previous year [25][26] Company Strategy and Development Direction - The company aims to capitalize on strengths while fortifying its business against external pressures, focusing on responsible growth and disciplined credit management [33][34] - Continued investment in technology modernization and product innovation, including AI, is a priority to drive growth and efficiencies [29][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers and the gradual improvement in credit metrics, anticipating a positive trajectory for loan growth entering 2026 [13][14] - The outlook for 2026 includes expectations for low single-digit growth in average credit card and other loans, supported by a stable partner base and new business launches [27][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in share repurchases and a 10% increase in quarterly dividends [10][24] - A credit rating upgrade from Moody's and Fitch was received, reflecting improved financial resilience and risk management [10][11] Q&A Session Summary Question: What is driving the anticipated loan growth into 2026? - Management indicated that loan growth is driven by resilient consumer behavior and stable partnerships, with no loosening of underwriting standards [37][39] Question: How does the company view the impact of credit quality and potential economic pressures? - Management remains optimistic about credit quality improvements and consumer resilience, despite potential economic pressures [41][43] Question: Can you elaborate on the new travel and entertainment products? - The company has introduced new fee-based products with existing partners, contributing to growth in the travel and entertainment vertical [49][50] Question: What are the expectations for net interest margin (NIM) in 2026? - Management expects NIM to remain stable to slightly higher, influenced by pricing changes and the mix of products [51][52] Question: What is the outlook for direct-to-consumer deposits? - The long-term goal is to increase direct-to-consumer deposits to over 70% of total funding, with competitive pricing expected [59][60] Question: How will the reserve rate evolve with improving credit metrics? - The reserve rate is expected to decrease as credit quality improves, with a target around 10% over time [62][63]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [11] - The company's tangible book value per common share grew 23% year-over-year to $57.57, and the return on average tangible common equity was 8% for the quarter and 20% for the full year [11] - Credit sales for the full year reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [14][17] - Total non-interest expenses decreased by $72 million or 3%, driven by lower impacts from debt repurchases [14] Business Line Data and Key Metrics Changes - Co-brand credit sales comprised 52% of total credit sales in Q4 2025, up from 48% in Q4 2024, indicating a positive trend in brand partnerships [6] - The company signed seven major new brand partnerships in 2025, including Bed Bath & Beyond and Crypto.com, while renewing multiple existing partnerships [4][5] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [8] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales due to higher transaction sizes and frequency [12] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate was 7.4%, down 60 basis points from the previous year [25] Company Strategy and Development Direction - The company aims to capitalize on its strengths while fortifying its business to offset potential external pressures, focusing on responsible growth and disciplined credit management [32][33] - Continued investment in technology modernization and product innovation, including AI, is a priority to drive growth and efficiencies [28][33] - The company plans to optimize its capital structure and return excess capital to shareholders through share repurchases and dividends [24][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate returns and navigate economic challenges, supported by strong capital levels and cash flow generation [13][33] - The outlook for 2026 anticipates continued consumer resilience and gradual improvements in credit metrics, with expectations for low single-digit growth in credit card and other loans [27][30] - Management noted that while there are pressures from anticipated lower prime rates, the company remains optimistic about its credit performance and overall financial health [20][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in share repurchases and a 10% increase in quarterly dividends [8][9] - A credit rating upgrade from Moody's and Fitch was received, reflecting the company's strengthened financial resilience [9] Q&A Session Summary Question: What is driving the anticipated loan growth into 2026? - Management indicated that loan growth is driven by a resilient consumer and stable partnerships, with no loosening of underwriting standards [36][38] Question: What is the company's outlook on Bread Pay and its growth potential? - Management expects Bread Pay volume to increase with the addition of new partners and improved underwriting [39] Question: Are there any underlying economic pressures affecting credit quality? - Management noted improvements in roll rates and credit metrics, indicating consumer resilience despite potential economic pressures [41][42] Question: What is the company's strategy regarding direct-to-consumer deposits? - The long-term goal is to increase direct-to-consumer deposits to over 70% of total funding, with competitive pricing expected [56][57] Question: How does the company view the reserve rate and its future trajectory? - Management anticipates the reserve rate will decrease as credit quality improves, with a target around 10% over time [60]

Core Insights - Bread Financial Holdings (BFH) is anticipated to show revenue growth but a decline in earnings for Q4 2025, with revenues expected at $949 million, reflecting a 2.5% increase year-over-year [1][9] - The earnings consensus estimate is 38 cents per share, indicating a year-over-year decrease of 7.3% [2] Revenue and Earnings Estimates - The Zacks Consensus Estimate for BFH's fourth-quarter revenues is $949 million, which is a 2.5% growth from the previous year [1] - The earnings estimate for BFH is 38 cents per share, with no changes in the past week, representing a 7.3% decline year-over-year [2] Earnings Surprise History - BFH has a strong earnings surprise history, having beaten the Zacks Consensus Estimate in the last four quarters with an average surprise of 55.17% [3] Earnings Prediction Model - The model indicates a potential earnings beat for BFH, supported by a positive Earnings ESP of +32.20%, as the Most Accurate Estimate is 51 cents, higher than the consensus estimate [4] - BFH currently holds a Zacks Rank of 2 (Buy), which further supports the likelihood of an earnings beat [5] Factors Influencing Q4 Results - BFH's Q4 results are expected to benefit from product diversification, partner co-brand growth, proprietary cards, and the expansion of Bread Pay, which is likely to drive credit sales [6] - Credit sales are estimated at $8.2 billion, indicating a 3.3% year-over-year increase [6] - Total interest income is projected to be $1.3 billion, reflecting a 2.6% increase year-over-year, surpassing the consensus estimate of $1.2 billion [7] Loan and Interest Expense Estimates - Average and end-of-period credit card and other loans are estimated at $173.5 billion and $18.2 billion, respectively, influenced by payment rates and gross losses [8] - Interest expense is expected to rise to $238.2 million, suggesting a 3.1% year-over-year increase [8] Net Interest Margin and Non-Interest Expenses - The net interest margin may be negatively impacted by lower billed late fees and an elevated cash position, although pricing changes may provide some offset [10] - An increase in non-interest expenses is likely to contribute to a higher net loss rate, while share buybacks may help support the bottom line [10]

Core Insights - The mobile payments landscape is rapidly evolving, driven by the adoption of smartphones and fintech innovations, leading to a decline in cash reliance and ATMs [2][3][4] - The global mobile payments market is projected to grow from $3.84 trillion in 2024 to $26.53 trillion by 2032, reflecting a 27% CAGR, indicating significant long-term potential [4] Industry Overview - Mobile payments are reshaping financial transactions globally, integrating digital wallets and technologies like NFC and QR codes to enhance consumer and business interactions [2][3] - The rise of super apps, such as WeChat Pay and Alipay, is changing consumer behavior by combining various services into unified platforms [3] - E-commerce growth and improved digital infrastructure are further propelling the mobile payments sector, benefiting small businesses through faster settlements and better cash flow visibility [4] Competitive Landscape - Competition is intensifying as companies like Nu Holdings, ACI Worldwide, and Bread Financial expand their services through partnerships with banks and merchants [5] - Regulatory frameworks are evolving to enhance security, data privacy, and financial inclusion, with initiatives like FedNow in the U.S. and UPI in India [5] Company Highlights - **Nu Holdings**: Offers mobile payment capabilities through its Nubank platform, serving over 127 million customers, with a strong presence in Latin America [9][10] - **ACI Worldwide**: Provides the infrastructure for mobile payments, enabling real-time transactions and supporting over 200 digital wallets across 70 countries [11][14] - **Bread Financial**: Focuses on embedded financing solutions, allowing merchants to integrate buy now, pay later options into mobile checkouts, enhancing consumer flexibility [15][18]

Financial Data and Key Metrics Changes - The company reported net income of $188 million and adjusted net income of $191 million for Q3 2025, with earnings per diluted share at $4.02, excluding a $3 million post-tax impact from repurchased debt expenses [4][5] - Tangible book value per common share increased by 19% year over year to $56.36, and return on average tangible common equity was 28.6% for the quarter [4][5] - Credit sales rose by 5% year over year to $6.8 billion, despite a decrease in average loans by 1% year over year to $17.6 billion [11][12] Business Line Data and Key Metrics Changes - Revenue decreased by 1% year over year to $971 million, impacted by lower billed late fees and higher retailer share arrangements [11][12] - Total non-interest expenses decreased by $98 million, with adjusted total non-interest expenses down 1% year over year [12][13] - The company experienced a decrease in net interest income by 1% year over year, attributed to lower billed late fees and a shift in risk and product mix [13][16] Market Data and Key Metrics Changes - The delinquency rate for Q3 was 6.0%, down 40 basis points year over year, while the net loss rate was 7.4%, also down 40 basis points year over year [20][21] - Direct-to-consumer deposits grew to $8.2 billion, accounting for 47% of average funding, up from 41% a year ago [17][18] - The CET1 ratio improved to 14.0%, up 100 basis points sequentially and 70 basis points year over year [18][19] Company Strategy and Development Direction - The company is focused on responsible growth and executing its business strategy while investing in technology modernization and product innovation [6][7] - New brand partnerships in the home vertical, including Bed Bath & Beyond and Raymour & Flanagan, are expected to drive future growth [9][10] - The company aims to maintain expense discipline and operational excellence, with a commitment to returning value to shareholders through increased dividends and share repurchases [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer financial health remained resilient, with strong credit sales and lower delinquencies despite ongoing inflationary concerns [4][5] - The outlook for the remainder of the year remains unchanged, with expectations for credit sales trends to continue positively [6][24] - Management expressed confidence in achieving full-year positive operating leverage and maintaining a net loss rate within the guided range of 7.8% to 7.9% [24][25] Other Important Information - The company announced a $200 million increase to its share repurchase authorization and a 10% increase in its quarterly cash dividend to $0.23 per common share [8][20] - A credit rating upgrade and positive outlook from Moody's were recognized, reflecting improvements in financial resilience and risk management [10][18] Q&A Session Summary Question: Signs of weakness in the portfolio - Management indicated that consumer metrics have been surprisingly resilient, with stable macro conditions and no significant signs of weakness in their portfolio [28][29] Question: Loan growth expectations - Management expects loan growth to pick up as credit quality improves and new partnerships are established, indicating a healthy consumer environment [34] Question: Trends in credit sales and holiday shopping - Management noted that credit sales are currently positive, with expectations for aggressive retailer promotions during the holiday season to attract consumers [46] Question: Impact of discounts on Bread Financial - Management anticipates that retailers will likely push discounts earlier in the buying cycle, which could influence consumer spending behavior [71] Question: Underwriting standards and growth - Management confirmed that underwriting remains prudent and focused on profitability, with gradual adjustments based on improving credit quality and macroeconomic conditions [75][76]

Financial Performance - Net income reached $188 million, with diluted earnings per share at $3.96, including a $38 million favorable discrete tax item and a $3 million post-tax impact from repurchased debt[5] - Adjusted net income was $191 million[7] - Revenue totaled $1 billion[7] - Tangible book value per common share increased by $8.88, or 19%, year-over-year to $56.36[5] - Return on average tangible common equity was 28.6%[5] Deposits and Funding - Direct-to-consumer deposits increased by 9% year-over-year to $8.2 billion, representing 47% of average total funding[5] Capital Allocation - The company announced a share repurchase authorization of $200 million in August and repurchased 0.6 million shares during the quarter[5] - An additional 0.4 million shares were repurchased in October, totaling 1 million shares for $60 million[5] - A $200 million increase to the share repurchase authorization was announced, bringing the total available to $340 million[5] - A quarterly cash dividend of $0.23 per common share was declared, a 10% increase from the prior quarter[5] Credit Quality - The delinquency rate decreased from 6.4% to 6.0% compared to the third quarter of 2024[12] - The net loss rate decreased from 7.8% to 7.4% compared to the third quarter of 2024[12]

Financial Data and Key Metrics Changes - Bread Financial reported net income of $138 million and earnings per diluted share of $2.78 for Q1 2025, reflecting a resilient business model despite macroeconomic challenges [6][7] - Revenue for the quarter was $970 million, down 2% year over year, primarily due to lower net interest income [17][18] - Average loans decreased by 2% to $18.2 billion, influenced by lower consumer spending and tighter underwriting standards [16][18] - Total non-interest expenses decreased by $5 million or 1%, driven by operational excellence initiatives [17][20] Business Line Data and Key Metrics Changes - Credit sales increased by 1% year over year to $6.1 billion, supported by higher general purpose spending [16][18] - Direct-to-consumer deposits grew by 13% year over year, reaching $7.9 billion, marking significant growth from just over $1 billion five years ago [8][23] - Non-interest income rose by $25 million, attributed to recent pricing changes for paper statements [19] Market Data and Key Metrics Changes - The delinquency rate for Q1 was 5.9%, down 30 basis points year over year, indicating improved credit performance [31] - The net loss rate was 8.2%, down 30 basis points from the previous year, reflecting better-than-expected credit trends [31] Company Strategy and Development Direction - The company is focused on optimizing its capital structure, having executed a $400 million subordinated notes offering to strengthen its balance sheet [7][24] - Strategic credit tightening actions are being implemented to manage credit risk effectively while expanding partnerships and product offerings [11][12][14] - The company aims to maintain flexibility to adapt to changing fiscal and monetary policies and evolving regulatory landscapes [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about economic uncertainty, including the impact of tariffs and inflation on consumer behavior [9][10][39] - The outlook for 2025 includes expectations of flat to slightly down average loans, with total revenue anticipated to be flat to slightly up [35][36] - Management remains confident in the company's ability to generate capital and cash flow, despite macroeconomic challenges [26][40] Other Important Information - The company completed a $150 million share repurchase program, repurchasing 3.2 million shares at an average price below tangible book value [7][25] - Total liquid assets and undrawn credit facilities were $7.4 billion, representing 33% of total assets [27] Q&A Session Summary Question: Insights on consumer payment behavior and credit trends - Management noted that while credit quality is improving, there is significant uncertainty in the economy, influenced by tariffs and inflation [42][44] Question: Unemployment rate assumptions and reserve guidance - The company has incorporated a 7% unemployment rate assumption into its reserve modeling, reflecting a conservative approach [57] Question: Discussion on late fee regulation and partner relationships - Management confirmed that discussions with partners have been positive, and changes made in response to late fee litigation are included in the guidance [58][62] Question: Factors behind improved late-stage roll rates - The improvement is attributed to wage growth outpacing inflation and better performance of newer vintages [66][68] Question: Impact of economic conditions on credit tightening actions - Management stated that while they are maintaining a consistent credit posture, uncertainty may delay potential credit unwind actions [86][88] Question: Capital management and buyback strategy - The company remains focused on responsible growth and will evaluate future buyback opportunities based on capital needs and market conditions [92][94] Question: Net interest margin trajectory - Management expects slight expansion in net interest margin despite headwinds from prime rate reductions and changing product mix [100][102]

Financial Data and Key Metrics Changes - Bread Financial reported net income of $138 million and earnings per diluted share of $2.78 for Q1 2025, reflecting a resilient business model despite macroeconomic challenges [6][7] - Revenue for the quarter was $970 million, down 2% year over year, primarily due to lower net interest income [17][18] - Average loans decreased by 2% to $18.2 billion, influenced by lower consumer spending and tighter underwriting standards [16][18] Business Line Data and Key Metrics Changes - Credit sales increased by 1% year over year to $6.1 billion, driven by higher general purpose spending [16][18] - Direct-to-consumer deposits grew by 13% year over year, reaching $7.9 billion, marking significant growth from just over $1 billion five years ago [8][23] - Non-interest income rose by $25 million, attributed to recent pricing changes for paper statements [19] Market Data and Key Metrics Changes - The delinquency rate for Q1 was 5.9%, down 30 basis points year over year, indicating improved credit performance [31] - The net loss rate was 8.2%, down 30 basis points from the previous year, reflecting better-than-expected credit results [31] - Direct-to-consumer deposits accounted for 43% of average total funding, up from 36% a year ago, while wholesale deposits decreased from 37% to 29% [23] Company Strategy and Development Direction - The company is focused on optimizing its capital structure and strengthening its balance sheet, evidenced by a $400 million subordinated notes offering [7][24] - Strategic credit tightening actions are being implemented to manage credit risk effectively while expanding partnerships and product offerings [11][12] - The company aims to maintain flexibility to adapt to changing fiscal and monetary policies and evolving regulatory landscapes [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about economic weakness due to declining consumer and small business confidence, while also noting positive trends in credit management [9][10][31] - The outlook for 2025 includes expectations of flat to slightly down average loans, with total revenue anticipated to be flat to slightly up [35][36] - Management remains vigilant regarding credit policy and is closely monitoring potential impacts from higher tariff-driven inflation [39] Other Important Information - The company completed a $150 million share repurchase program, repurchasing 3.2 million shares at an average price approximately 5% below the current tangible book value per share [7][25] - Total liquid assets and undrawn credit facilities were $7.4 billion, representing 33% of total assets [27] Q&A Session Summary Question: Insights on consumer payment behavior and credit trends - Management noted that while credit quality is improving, there is significant uncertainty in the macroeconomic environment, influencing consumer behavior [42][43] Question: Unemployment rate assumptions and reserve guidance - The company has incorporated a 7% unemployment rate assumption into its reserve modeling, reflecting a conservative approach [57] Question: Discussion on late fee regulation and partner relationships - Management confirmed that discussions with partners have been positive, and changes made in response to late fee litigation are included in the guidance [58][62] Question: Factors behind improved late-stage roll rates - The improvement is attributed to wage growth outpacing inflation and better performance of newer vintages [66][68] Question: Impact of economic conditions on credit tightening actions - Management stated that while they are maintaining a consistent posture, uncertainty in the macro environment may delay credit unwind actions [86][88] Question: Capital management and buyback strategy - The company remains committed to responsible growth and will evaluate buyback strategies based on capital needs and market conditions [92][94] Question: Net interest margin trajectory - Management expects slight expansion in net interest margin despite headwinds from prime rate reductions and changing product mix [100][102]