Of Bread Financial. Perry, I just, I just want to say congratulations to your Eagles. Oh, well, thank you. It's a nice victory. I know. It was a really good victory, one that we're going to cherish for a long time, and something you all probably don't know. John's next job, when he decides to retire from what he's doing—and hopefully that's not for a while—I think he's going to go become an NFL scout. The day of the NFL draft, the first email I got was from John and said, "Hey, you just got one heck of an athlete." I was like, and he's talking about this guy, Cooper DeJean. I'm like, "Who is this guy?" If anyone doesn't follow the Eagles, rookie, cornerback, tremendous player. He's like the Christian McCaffrey of defense. Tremendous, big impact player during the Super Bowl run, so thank you for that. He did pick six in the Super Bowl. He did pick six in the Super Bowl on his birthday. Yeah, he used to torture my college football team, and that was the reason. So that's how you knew. Okay. Yeah. We could talk about this. Should we talk about this instead? Was your conversation talking about what's happening in the economy, for sure. Yep. So attendance is up. People are more interested in financials. Maybe not today, but people are more interested in financials. So I think most of us are familiar with Bread Financial, but give us a 30,000-foot overview of the company, and I think it's particularly interesting what you guys do, given all of the noise in the economy. Yeah, so our company is a tech-forward payment company, consumer lending, predominantly credit cards. I think about that as full-spectrum lending from where we offer co-brand cards, private label, installment lending, as well as our proprietary cards, and a large direct-to-consumer savings set of products, so very interesting space right now in that, you know, what's going on with the economy, what does that all mean to the consumer, and we have a tremendously experienced credit shop, been in the business since the mid-1990s. Very experienced leadership. The company's been going under transformation under Ralph Andretta, our CEO, who joined five years ago, brought in deep, experienced leaders to complement the existing team and really focus this company on the lending products instead of the, I'll say, more internationally diversified set of companies that this company had previously owned. So now we're operating this place more like a disciplined financial services company as, you know, I'd say financial specialists expect, you know, in terms of how you look at our results, how we manage, how we manage risk. And, you know, that's been recognized by regulators, rating agencies with the progress that we've made. Yep. Okay. And like all sessions, we're open for Q&A. So if you have a question, put your hand up and we can get a microphone in your hands. So full-spectrum consumer lending, core funded, much, much more cleaned up than it was four or five years ago when you got here. Much more cleaned up. We can actually find a capital ratio now, so it's pretty good. Yep. Okay. A lot of focus on the economy and the consumer. It's kind of a battleground, I guess, and we hear it internally. I hear it externally as well, but just give us the, you know, the Bread Financial overview, the economy, what you're seeing and what the consumers are saying. Yeah, I mean, we're on this two to three-year, you know, I'll say, path of consumers dealing, at least the ones we serve, are the near prime to prime customer. And they've been dealing with this persistently high inflationary environment for, you know, at least two, three years coming out of COVID. And, you know, that's what's been driving up loss rates. And we were expecting as inflation comes down, employment stays strong, that those, you know, wage growth would continue to outpace inflation as it's been doing the past couple of quarters. We continue to see improvement in delinquency, which then means you're going to have lower losses. And we'll get back to our expected target returns in the, you know, mid-20s return on tangible common equity. Right now, I'll comment a little bit on the first quarter and what we're seeing. You know, we've signaled already that we expect February to see a tick up in delinquency. And some of that's driven because of the timing of the tax refunds, right? So it really didn't occur in February. The refunds are starting to come back on pace, and that's in March. And so we're hopeful, and I say hopeful in that if consumers do what they say they're going to do, we expect to see some of that, you know, those refunds pay down debt. So that's something we're going to watch very carefully over the coming days and weeks. So you'll see loss rates go up, I'll say, seasonally for February with the day weighting. There's only 28 days in the month. You annualize that, it ends up, so that'll be in the high 8% range as we've previously articulated, but sets us up for the quarter, you know, at 8.5% or below, and that still holds for what our expectation is, and then from there, we expect to see some improvement as the year goes on. The pace of improvement is really going to be macro-dependent, and with what's going on now, you know, clearly there's a little more uncertainty. What do you think you need to see to get the confidence that February crests, March gets better? I've already seen it. So for what we see in the delinquency stages, right, you have a really good line of sight into the next six months because you have your early entry rates and then where customers are in the different delinquency buckets and how they're rolling. We've seen some slight improvement in those roll rates. So I'd say we've got a pretty good line of sight into what the next six months looks like. Okay, so prepare for it in the monthlies. March seems to be performing in line with what you expect. Yes. Yes. Yes. Yes. Fair? Okay. Spending volume standpoint, what are you seeing in terms of consumer spending? It's moderated a bit, but it still feels like it's okay. Talk a little bit about what you've seen there. Yeah. In the, you know, in that fourth quarter period, we saw about 1% growth year -over- year. We've been very disciplined with credit. Consumers have pulled back some. So now I think we're at the point of where we say it's stable. We're still seeing, you know, solid spend out of the Millennials and Gen Z. But I think what you're watching now, like we all are, is consumer sentiment has started to come down. And that was in advance of the recent days where, you know, tariffs were going about and you started to hear some, you know, commentary of some companies who are planning to increase pricing. But spend is important, obviously. It's a driver of our loans and one that, you know, we had a modest outlook for the year. We weren't overly, I'll say, enthusiastic that spend was going to really rebound this year, but it was going to be moderate throughout the year. And I think that's right now looks like that's how things are playing out. Okay. And then touch a little bit on the margin as well. I know there's some seasonality in the first quarter. Just let's get that out of the way and touch a little bit about on your expectations there. Yeah, that's probably the number one question I get outside of credit quality now is, you know, net interest margin and all the moving parts within it. It's one of the hardest numbers to forecast and to give some sort of, I'll say, guide around it. And to give context, you know, with the prime rate reductions that occurred in the fourth quarter of 100 basis points, that's pulling through into our first quarter net interest margin in that we are slightly asset sensitive. So the variable rate loans come down, but the liabilities that we fund at, when you think about CDs, a year out, 18 months, two years, they are getting, you know, regenerated every month, but they're going to reprice slower. So in time, it'll catch up to that 100 basis points reduction. And then, if later in the year right now there's two rate cuts forecasted, my guess is with everything going on, if inflation starts to tick back up, highly unlikely we're going to see those rate reductions. But that's an element. At the same time as we have delinquency improving. So every month that delinquency improves means we're going to have lower billed late fees, which then further reduces net interest margin yield because that's up in our yield calculation. And then as you improve the credit risk mix, again, you price for risk. So consumers who have a better risk score coming in the door will get a lower APR compared to those that are, you know, new to credit or just starting out, will have higher APR. So that shift is occurring. So you have those, I'll call them as headwinds to net interest margin. And the tailwinds are the CFPB mitigations that, you know, we and others in the industry have been putting in place through the means of higher APRs. They take years to, I'll say, burn into the full effect on the backbook and other fees. So that's a piece. And then as you have gross losses improving, you actually have a lower reversal of interest in fees versus prior periods. So that becomes a tailwind. So you've got all these moving parts. And what's happening is it really will look different as you move throughout the year based on where you are in credit improving, lower billed late fees, the mitigation actions that we put in place, you know, taking more and more hold. And that's where we're at. But we've signaled for the year that we expect full year net interest margin to be slightly higher than 2024 and that you'll see some seasonal moves happening in the quarters. Okay. Okay. So over time, it probably improves. Should improve. Yep. Okay. You mentioned tightening before. You guys have taken some tightening actions. Talk a little bit about that and what you think the impact has been on growth and then also transactions. Yeah. A couple of years ago, I say two, three years ago, coming out of COVID, you know, there's a lot of stimulus in the marketplace. And Tammy McConnaughey, our Chief Risk Officer, does a tremendous job, you know, managing credit, deeply experienced, has an experienced team. And you recognize that credit scores were, you know, I'll say, being inflated because of the COVID stimulus. You think about that as a head fake. It was just a matter of time before those credit scores came back down when the consumer reverts back to their typical borrowing patterns. And so we maintained a bit more of a tight lending posture in 2022 all the way through 2023 and again through 2024. So the vintages were smaller, better quality. So, as this pressure has emerged from inflation, it affects the entirety of the backbook for all, you know, the accounts and customers who had borrowed prior to those vintages being booked, like the older vintages. And those are performing. The newer vintages are performing better. They're just smaller in size. And so, similarly, what we've done with the existing customers, we've not been offering a lot of line increases. So, one of the models of this business is you bring in the customers. You hopefully say yes to more people you can approve, and you give them a low line. And over time, as they demonstrate good payment patterns, you can increase their lines and let their lines grow in time as they mature their credit profile. In this environment, we've remained pretty restrictive on that, but it is a nice tailwind to growth as we bring people in and we then begin to, you know, see that improvement. We're expecting sometime in the back part of this year, we'd start to see some of that unwind, but it's really going to be dependent on the customer behavior. Do you feel like it's steady state at this point? Are you loosening, tightening steady state? I'd say it's more of a tightening posture in that you're always doing some swap sets, meaning that the credit's not a binary, is it black, white, there's always gray. And you're always looking for those pockets where, okay, you can approve more, give a little better line, but then others receive, okay, that you need to tighten or say no. So it's always swap in, swap out. But I'd say broadly speaking, pretty neutral, stable, a tight posture. Yep. Okay. Okay. You mentioned earlier, you talked about credit stabilizing, some of the delinquency trends getting better or less worse. Talk a little bit about your level of confidence in seeing credit eventually improve, and what are some of the things that you're looking at and watching? A month ago, my confidence was a bit higher in terms of credit improvement because of things that we were seeing internally and the outlook for the economy. Today, you know, as the new tariffs have gone into place, it was a thing that we called out during our earnings call. That's something we're, you know, we're very watchful of and cautious about because 95% of economists that had said that tariffs are going to put upward pressure on inflation. That is something that, you know, we were optimistic about that would continue to gradually come down throughout this year. Now I think it's a bit more uncertain of what that looks like. Already we're seeing some major retailers say, all right, in the next few days, they're going to start to increase prices, whether it's, you know, the big store retailers or an electronics retailer. You're reading today that, you know, the tariffs on Canada could increase fuel prices at the gas pump by $0.40-$0.70. That's kind of counter to what I thought was, you know, this administration was hoping to achieve. You know, we're guessing there's a means to an end and hopefully, you know, we'll know more in the next six months. As of right now, my confidence in the, I'll say, inflation continuing to drift down is not as high as what it was. Yep. Okay. And you've talked about in the past the kind of K-shaped recovery. Yes. You've been very clear about that. Very clear. Cumulative impacts on the lower end. Yep. Okay. Do you have much higher end exposure? And are you seeing, you know, call it moderate to higher end? There's been a lot of focus on that. Through the diversification that we've had over the past number of years since Ralph joined and with Val Greer, Chief Commercial Officer and her business development team, they've done a really nice job diversifying our partners. And when you look at the types of partners, whether it's AAA, the NFL, some of the newer ones in electronics, you know, and Saks coming on, we are getting more exposure to prime and prime plus customers through that, which is good. You know, the idea is to have a diversified, I'll say, verticals of industries, of spend, of risk cohorts. It just makes for a, you know, I think a better business. And that's what we've been able to do. So we do have more exposure, but we are certainly not, you know, I'll say over-indexed to the super prime customer or high prime the way many of the other issuers are. Yeah. There's just a lot more focus on the higher end slowing down, which is why I ask that. Okay. I think I probably already know the answer to this, but on reserves and CECL, I think, I don't want to say conservative, but you've been conservative. I don't know if that's the right word, but what does it take for your reserve level to eventually come down? And do you feel like if maybe this tariff thing develops into something worse, that you have adequate cushion in your current reserves? Yeah. I'd like to think the word prudent is. That's a good word. It's a better word from my seat because when someone says conservative, it means I'm sandbagging the reserve, and that's not the case. In fact, I, you know, unfortunately have been more right than wrong on what was going to happen with the economy and the consumer more broadly. You know, we made an early call on what we expected to happen when inflation was remaining high, and it played out that way, right? It manifested itself into higher losses. You know, I think I was optimistic that we'd be able to dial it back a little bit on our weightings into the severe and severely adverse scenarios or adverse and severely adverse scenarios. But, you know, right now it looks like you kind of have to hold the line a little bit on the credit risk overlay and then just let that reserve rate drift down as the credit quality improves. So, you know, as the credit quality improves, the model will run and hopefully kick out a lower reserve rate. And those things should go in tandem. And then when we all have confidence that we have a good handle on what the implications of this current administration's policies are to the consumer, that would allow us to unwind a little bit of that, you know, the risk posture on the credit risk overlay. Okay. Good. You talk a little bit about you've won some business recently and you continue to be open for business. Is it competitive and do you have a competitive advantage you feel like with the types of clients you're trying to onboard? You know, we're definitely open for business. If anybody knows a good partner who wants to have a great, you know, financial institution to serve them, we are definitely open for business. And we have had a number of good wins and there's more wins in the pipeline that we'll be able to share when it's the right time. And the pipeline is robust. And we do have a right to win. I mean, the thing that is great about our business, it's, as I mentioned earlier, we've got a really deeply experienced skilled team who understand the partnership business. And this is our business. This isn't, you know, 10% of what we do. This is a, you know, 95% of what we do is the partnership business. So we love startup programs. We call them de novo programs. If, you know, a business is trying to start something from ground up, we are there to do that. We can customize things to make the program be what they want it to be. If it's a program that's in existence, could be $500-$2 billion in loans, that's kind of our sweet spot too. So we can grow with them, we can deepen them. And the reason why we have a right to win, it goes down to capabilities, focus, the willingness to partner and work with them. We want to grow the programs together. And that's why we've won some of the programs that we've gotten, because we've won them from larger institutions who don't, you know, I'll say, pay attention and care for that partnership the same way we do. We're not focused on the big branded products i n our portfolio, w e're focused on them first. Okay. It's nice you have a pipeline. I appreciate you sharing that. Do you feel like you have an advantage? You kind of alluded to it, but an advantage against some of the larger competitors? I do in that, well, some of the larger ones I think want scale. And I get it. Like I came from a large institution, you know, and you look at the other large institutions, they focus on the programs of scale, meaning $5 billion-$25 billion in size. Those are big and often with thinner returns. And if you're going to put manpower, your person power against it, you know, you want it to matter. And for us, what matters are those $500 million deals, things like that. They matter. And we can make the partner feel like they matter. So the secret sauce for us, it's the people we have at our company who care about the partner. It's the relationships. A number of partnerships we have followed some of those people in our client partnership space to be with us. So that is an advantage. And then I think focus matters. You're seeing, you know, some big players, you know, I think, and I'm not going to use them by name, big merger may be happening, may mean that the smaller programs that are in their portfolio are less strategic to them. And again, we have an advantage in that. You know, we'll certainly look for the opportunity when it's right to go for it. Okay. Question. You have a bipartisan bill in the Senate. It's a cap APR and credit card spending at 10%. It's got White House support, right? It was a Trump thing. And Vance is a big fan of it. Now, I mean, I think everyone in this room thinks that's ridiculous, right? Like stupid, it's going to go away. But like you have bipartisan support, you have White House support, it wouldn't be the first stupid thing a government's ever done, right? So like how do you kind of think about regulation? I think most of us think there's going to be less regulation under a Trump White House, but then you get things like this. The question was around the potential 10% cap on card interest rates. We can also get into late fees later, but thank you for that question. That's a good one. Yep. So I appreciate your commentary on it, narrative, ridiculous, stupid. I didn't use those words, by the way. That was a quote. But it was a quote from someone in the audience. I'm not going to deny that that's a great perspective. You know, this is the thing where, you know, when someone comes up with 10% as a rate cap, you know, I just say, okay, let's look around the room and say, who in here wants to loan each other money unsecured at 10%? And I'm going to guess no one here is going to sign up for that. And I wouldn't sign up as a lender. So if they want 95% of Americans to not have access to credit, imagine what that'll do to the economy. It would stall it. Now, with that said, there's been lots of crazy ideas thrown out there. That was certainly a populist one. There's one view that says, you know, our advisors who are deep into Washington politics said they went with 10% because they knew there's no way it would pass because it is that ridiculous. You know, and so at least they can say the Trump administration tried, it just didn't go through. I don't think that would pass from, you know, safety and soundness measures, OCC, FDIC. I think there would be massive resistance against a 10% cap. It would do a lot of damage to the industry and to the economy. Yep. I hear you. Most people think about credit a year ago at our conference. There's always some drama around our conference, but they forget that the late fee rule dropped last year at our conference. So that was fun for you. What's the latest on the late fee? How do you handicap the outcome? Yep. The latest on the late fee is, you know, the CFPB largely looking like it's, I don't want to use getting smaller, maybe getting dismantled in some parts. There seems to be a view that if they lose in court, and so right now on February 10th, Judge Pittman requested that the CFPB file a brief with the CFPB's intention on what they're going to do with this late fee rule. Our hope is that this follows through in litigation. This way the judge rules, you have a finding that it was, you know, not a legal rule, that the industry prevails, and that would be good for the industry to have that precedent on the books, and then anyone down the road that wants to think about it understands that the CARD Act provides that a late fee is a deterrent. It's a penalty fee, and it is not a cost to collect fee, and that would be a good thing for this to go, and so if it goes through what we expect, I think the last of the briefings are supposed to be filed if it goes to normal course through the end of May, expect a ruling sometime in the few months after that. Although the judge may already have written it, I have no idea, so thinking by November, this is resolved hopefully favorably to the industry, and with the CFPB's current posture, there'd be an expectation they would not appeal, and then this thing is over. And if it's over, what happens? If it's over, then we go on to the discussions as they are active all the time with our brand partners. Again, partner, key word, there's a partnership business here. Our goal is to offer credit to our retail partners so they can unlock sales and offer credit to their customers. It's, what's the implications of higher APRs, different fees? Are we seeing adverse impacts to consumers? Does it mean that there's more opportunity to invest more in the program? So we continue to grow the program with them through marketing or value to the customer. And that's just, it's always ongoing. It just means with the higher APRs that are in effect, do they stay for a while? And then eventually do they get, you know, competed away, which would be my expectation. Okay. Has it impacted the ability to move partners or gain new business, the late fee piece of it? It really hasn't. You know, because this has been an industry-wide issue, everybody's preparing for it. What I'd say is pretty similarly, there's only so many levers to pull on and you're running, you know, what if, you're making sure that the contracts provide for what needs to happen should this, I'll call it cliff event, happen where the, you know, the late fee drops and what it means to their partner compensation, the revenue share, what it means to consumer pricing, what it means to tightening underwriting. So I think there's, you know, the industry's pretty rational and everyone's trying to solve for similar returns. So if you're, I think you're seeing a normal cadence of RFPs come to market. The renewal rates are the same. I mean, you know, again, it goes back to this partnership. So long as you're not upsetting the partner and doing something that's way out of market, again, you have the same chance then of renewing that partner as you would have before because they're going to get the same answer if they go to one of our, you know, competitors. Okay. Positive operating leverage. You talked about that for 2025. Maybe there are some more headwinds on revenues. I don't know. But how do you feel about the ability to generate positive operating leverage kind of regardless of what happens on the revenue side? I feel really good about delivering positive operating leverage. You know, the degree to which we deliver it will largely be macro dependent. We have done a really good job containing expenses while still investing, you know, heavily into our technology, servicing platforms, collections. You know, we instituted something called operational excellence. In fact, there's an article I heard came out in The Wall Street Journal where there might have been an interview with me that was just posted, I think today. But the operational excellence, I'm passionate about. And it's been embraced by our company. It's culture changing. And it's something where we're coming up with lots of ideas from the people. You're looking at transformational streams. And it's a way in which we're able to, I'll say, drive down our efficiency ratios over time while still investing in this business, which is critical. And it's something we're passionate about and we understand it's in our DNA now. And it's just something where I feel very confident that we'll be able to contain our expenses and then, you know, hopefully see revenues improve as we move throughout this year. Okay. Any others? I just, I wanted to ask, it's been a wild five years in consumer finance and especially for your company. You guys have done a lot of work. And maybe this is a better question for a day ago or late last week, but is the hard work done? And are we at an inflection point in your business? Do you feel like the losses are cresting and it's more of a macro-driven outlook for your company at this point or what's left to do? You know, it has been a quite the ride. You know, we have simplified our business. We're focused. We've taken care of our balance sheet. We've paid down over 50% of our parent debt. We were way over leveraged when I joined. Our capital ratios were anemic. We've almost hit our capital targets that we set out there. We're very disciplined with capital deployment. You know, we're focused on being opportunistic on improving and optimizing our capital stack, which we'll continue to do going forward. You know, I think we are at this inflection point where we have fixed a lot of the things with this company. And now it's on to, you know, attacking growth opportunities as we generate excess capital. And, you know, we're focused on the right things. We have a terrific Chief Technology Officer that's got a vision for where we're going to take our platform and be more nimble with delivering tech for our customers and our partners. We've got a good pipeline of new partners. So I really do feel like the value of this firm is about to be unlocked. Okay, so the message is feeling good about the way things are going, a little bit of maybe near-term cautiousness or watching closely in terms of the direction of the economy, feel good about reserves and capital. What else? I think that's right. It is, you know, look, macro is going to determine the pace at which growth occurs with the consumer. But with everything we've got in place around credit, risk management, capital, the growth pipeline, you just got to stay disciplined. You know, we talk about responsible growth. We're focused and doing it the right way. Okay. Good. Thank you, Perry. Appreciate it. Thanks, John. Yep. Go Birds.