Everyone, thanks for being here. Our next fireside chat session is with Brian Wenzel, the CFO of Synchrony Financial. Thank you for being here, Brian. Jon, thank you, and thank you for the invitation. Yep, good. I think most people know who Synchrony is, but if you could just give us a minute on introducing Synchrony. We were talking about more generalist interest in the space, so give us a 30,000-ft description. Yeah, you know, we obviously are one of the largest credit card issuers in the United States of America. We are one of probably, I'd say, two full spectrum lenders, which means we go super high FICO, but we can also go a little bit deeper into non-prime. Our model, right, is to have a multi-product set that we can bring to partners. If you look at our partners, you know, they're some of the largest and best in the world when you think about an Amazon, a Walmart, a PayPal, you know, a TJX, a Lowe's. I mean, they're just tremendous customers. You look at the ability to offer installment lenders, installment lending, secured or unsecured. You can do private label cards, we can do a secured card, we can do a dual card, we can do a co-branded card, we can do a business private label card, business dual card, invoice-based. We can bring an entire solution set. The last thing I'd say is the model is different. We have a scale model with over 70 million active accounts, you know, well over 100 million trade lines. We have a tremendous access to data that allows us to really have a unique underwriting engine to do that. The beauty of the model is our economic arrangements with partners provide stability and return. It may cap the upside, but it gives you a good floor on the downside. The returns in this business are incredibly resilient. Good. I described you this morning as being in every part of the K, the intersection of the K. Yeah, no, that's a fair point. You know, we have probably 27% that's non-prime- Mm-hmm We have a bunch that are super prime. We see the consumer, and every day we have a probably better than most visibility into what the entire U.S. consumer is doing and how they're generally responding to the environment. Okay, that's good. That's a good segue to maybe the question on everybody's mind. What are you seeing in the economy? What are you seeing in terms of consumer health? There's obviously a lot going on. Yeah, you know, it does get tough when you keep coming to these conferences, and someone expects you to say something different. I mean, I walk, you know, before I came down. I had CNBC on, and everything's death and doom, and that's the news cycle, right? The consumer generally overall is hanging in there, right? You know, the narrative really hasn't changed. You know, I think we were one of the early ones to talk about the K-shaped recovery. I'd say the lower end consumer continues to firm. You know, they've kinda withstood, you know, whether it's the high inflation that they felt and affordability issues that they felt, but they've gotten wage increases. The lower end, I'm sorry, the higher end has pulled the economy. They feel a little bit more, they're coming down a little bit, flattening. The pressure point a little bit is that prime customer in the middle, right, who hasn't gotten as much of the wage increases, but has felt the affordability concerns that kinda comes in there. Overall, all three folks are generally doing well and being very consistent in their patterns. Okay. You filed your managed portfolio 8-K this morning for February. Talk a little bit about what you're seeing in terms of the underlying spending and payment trends and receivables growth for the month. Yeah, you know, again, we look at the progress we're making. You know, I said earlier this quarter, and it's continued on, it's actually accelerated. You know, on a purchase volume standpoint, we accelerated into four quarters. You know, last year we're down, I guess, -4%, -2%, +2%, +3%. That's accelerated here in the first quarter from that, from the fourth quarter. It's probably accelerated a little bit more in February than January, but both months had accelerated from the exit point in 2025, so we feel good about that. I'd also say, even though you see that acceleration at the top of the house, you know, you can't lose sight of what's happened underneath, right? We actually lost $400 million of sales for the two weather storms that came through, you know, primarily the East Coast, but a little bit of the South. I mean, $400 million of sales took out quite a bit. Some of the sales are tougher to get. If you're at a dentist and your appointment gets canceled, it's not like, you know, I'm gonna get that. You know, I'm gonna get it eventually, but it doesn't come right back. Even with that, the sales have been terrific. You know, we've continued to make progress on the inflection of receivables. I know everyone's focused on that. We feel good about where that is. One of the things, you know, Jon, that that's a turning point for us is when we look inside the portfolio, where we're going on discretionary purchases, and we start to see really, you know, positive signs in there. You know, we feel good about, you know, growth and where it's heading. Mm-hmm. What's an example of that on the discretionary side? Yeah, think about home and auto. Furniture is a big one. Home specialty would be a big one. You're starting to head into the spring season. You know, if you look at two platforms inside of our business, home and auto, and lifestyle, they were the laggards, I'd say, 'cause that's where the bigger ticket purchases are. You think about, you know, lifestyle, this is gonna be outdoor power sports, outdoor power equipment. You know, your Polaris, your Briggs & Stratton in lifestyle. You know, you think about home especially. We've actually seen, you know, really positive, you know, trends regarding transaction frequency in those two businesses and value. They are trending upwards. I'd say when you looked at President's Day, you know, we were negative a year ago on President's Day. This year, we were just about, you know, just a little bit under 10% on President's Day. That's huge for that business because they run a lot of sales and promotions. We feel encouraged, you know, by those results. Okay. Anything else, any other shifts from the fourth quarter trends you want to flag? It sounds like you're feeling confident being able to recover some of the weather-related spending. Yeah, you know, that will come back. I know, listen, we like the trends. You know, they're in the portfolio. It goes back to we have a pretty diverse set. I think when you think about it, we want discretionary purchases to come back. That's really where the consumer confidence kind of comes in. When the consumer is confident, they're gonna spend more. You know, again, we're seeing the green shoots in the business. We see frequency on our cards up, which is terrific. You know, again, good trends as we exited 2025, and again, through the first 60+ days here of 2026, we're pleased. Okay. Now that we're into March, any update on tax refunds? You've talked about that quite a bit, in prior calls, but any impact on fundamentals, credit pay downs, volumes? Yeah, you know, volume is a little bit early, but we obviously are looking at volumes when we're looking at the payment trends, right? If you go back and just for your audience, you know, we expect, you know, ultimately tax refunds when you get through the season to be up, you know, somewhere between $500-$1,000. I think they're up 11% today, which is a little over $300. Again, you're gonna get some bigger refunds that roll through a little bit later. There is separation that happens with tax refunds. The way the tax reform from last year happened, there's gonna be a little bit higher benefit into that, you know, call it more, you know, income levels that are probably 100-150. Someone who makes a little bit more money, they tend to file late. You would tend to see some of those folks pay down debt or save, right? The more moderate consumer from an income level, so you think about someone $50,000-$75,000, they're already levered. What they do is they tend to consume a little bit more, right? They tend to kind of spend because they've been tight. Now I get to treat, now I can do certain things. That's the separation we've seen. Now Now again, being a full spectrum lender, I got both sides of that barbell. When I look at the early days here, and again, we're only through a couple weeks of the tax returns, you know, payment rate for us, if we go back for the last five years, and I look at how payment rates developed here in the weeks preceding tax refund filing season and what they are now. Payment rates elevated just under 20 basis points. We see a little bit of pay down that's happened versus historical average, but again, not overwhelming at this point. Again, I think you see the sales component probably is more of a March phenomenon and April phenomenon than it would be, you know, late February, early March. It sounds like you don't have a preference for how consumers deploy their tax refunds. Yeah. You know. in any way. Jon, we ultimately want the consumer to be disciplined, right? Whether that's paying down debt or consuming it 'cause they know they can pay it off. That's what we really want the consumer to do and what we strive to do is to be there for the consumer when they wanna make those purchases. We'll support them in any way possible. I feel really good from a credit aperture standpoint where we are. Again, whether the customer wants to pay down the debt, which gives them more line to ultimately spend, or if they spend, we wanna be there for them. Mm-hmm. Okay. You commented on the negative news cycle. You feel like that's just disconnected from what you're seeing from a consumer spending point of view, or how much impact does that have? We look at it every day, but what do you think on that? I think there's so many data points that Jon are a little bit conflicting. Mm-hmm. I think someone latches on to one data point and moves forward. You look at the jobs report from like last week and suddenly the jobs market's, you know, moved in a certain direction and something happening. You gotta look at a whole dashboard of different types of metrics to lay a story out, and sometimes one metric isn't necessarily the metric. Like when we look at unemployment, yeah, we look at unemployment rate. That's probably not the first thing we look at. We look at unemployment claims, but then we go back underneath it. What are the fundamentals of the employment market, which are, you know, some positive, some negative. Is it softening? I don't know. You look at openings, firings, you know, participation rates. You look at participation rates by categories where jobs are being added. You have to look at that whole story. I think unfortunately, what we see in the media and other thing is people latch on to one rate and try to take that across a broad, you know, set of assumptions which could be a little bit dangerous. Yeah. You don't feel like it's significantly worse than it was a year ago? No, you know, from a year ago, it's probably a little bit better. I think inflation's probably a little bit better, but affordability is still an issue for most Americans. Most certainly now you see it with gasoline, you know, kind of going up. That just puts more pressure back onto the consumer. You know, you just had a, you know, an inflation print that wasn't the best. But again, well, it's one data point. But overall, the consumer's weathered this. I think the real question becomes, does 2026 look a lot like 2025, or do you start to see positive trends, particularly in the back half of the year to exit out of it? Then that's what we hope. We feel it's gonna be a lot like 2025, but you know, we hope it trends out so that you're exiting out of 2026 in a much better position. Good. That's good to hear. It's a constant fight, as you know. Yeah. Again, the death of the consumer is not there. The consumer's hanging in there and I think you need to be patient with what's going on. Okay. Turning to the balance sheet, you're still talking about mid-single digit receivables growth in 2026. Talk a little bit about the building blocks of that guidance. First couple of months, how do you think they've tracked, and what are you kind of broadly assuming to get you there? Yeah. We've qualitatively, Jon, tried to break it into a couple pieces. Number one, the biggest building block for us is core growth, right? What drives core growth is really that discretionary purchases. Areas where we've seen the consumer be a little bit more thoughtful with regard to consumption. Again, we talked about in the home and auto business, particularly in home specialty, those are bigger ticket items where people have pulled back, you know, mainly on confidence. We're seeing green shoots. We've seen the year-over-year declines there. We've seen positive transaction, you know, transaction frequency increasing there. That's positive. You see it in, again, in the lifestyle business. You even see it in our health and wellness business when you think about cosmetics. We see more BOTOX treatments than you're seeing actual cosmetic surgeries. You know, people are willing to consume, they're just not as confident last year. I think that's the biggest building block, is to have that consumer confidence turn. Again, we've seen positive results here in the first, you know, couple of months of 2026. The second building block is new programs. Obviously, our relationship with OnePay and Walmart, which is off to a terrific start. That's gonna be, you know, help the growth rate in 2026. We also have, you know, we're excited about the relationship with Lowe's, who's been a partner with us for close to 50 years. Taking a commercial program from American Express and bringing that over here later, you know, later in the second quarter, that's gonna provide growth. You know, winning Bob's Discount Furniture, that's one of the top 10 furniture retailers. They'll begin to add growth. Again, we're launching Chico's, I wanna say in the next week or two. We have RH, which again, very small, but that'll back half the year. That's the second building block, is kinda, you know, program launches and programs kinda coming through. The third, on a much smaller basis, is some of the credit aperture changes that we made in the third and fourth quarter last year that will help. Those are the three. Again, core being the larger one, then you have the new programs then, and then credit. Okay. Can you talk a little bit about more about the new programs that you've onboarded, and how are they doing? It feels like this is gonna come later in the year, but talk a little bit about the cadence of that as well. Yeah. You know, they're constantly gonna be, you know, stepping up here. I mean, we're really excited about, you know, the couple programs that we're launching. You know, Walmart is a tremendous retailer. You know, we had a very long relationship with them that, you know, stopped a couple years ago. We took a break, and now we're back, which is a testament, I think, to our capabilities and what we can kinda bring. But again, they have such velocity customers and such customers who are loyal to their brand, you know, providing a valuable product. Particularly when you think about Walmart+ and what they're trying to drive there. To the extent that we can, you know, maintain relevancy. Again, I think, you know, today versus what we had before, we have a much better product or a much better value proposition where we're appealing to a broader customer base. We just gotta continue to execute. We have tremendous placement digitally, both in the OnePay app, the Walmart app, the website. You know, we'll get stores. We'll focus now on stores. We have great size there. That's tremendous. I think the Lowe's opportunity is another one here, where, you know, we were doing the private label part of the business. Amex was doing the co-branded part of the business. When you combine that, the power of 1+1 is gonna be greater than the two programs individually. Because if American Express was declining someone, that customer didn't get approved. If they want a co-branded card and not eligible for it, we can give them a private label card. We should be able to accelerate the combination of those two programs. This goes back to our strength and ability to execute with Lowe's. We're excited about that. You know, the capabilities we have allows us to, you know, play and win when you think about Bob's. Then you look at, you know, what we've done the last couple of years. The Venmo relationship and the way in which we've integrated into that app is outstanding and you know clearly a top ten program. We have Verizon, you know, right behind it, which you know has a very terrific value, you know, value prop. You know, we continue to win with, I think, a wider range of partners, you know, mainly based on the capabilities we've built over decades. What does the pipeline look like? I mean, what are we gonna be talking about in a year? Yeah, you know. Let me start with us for a second. You know, our large partners are all 30+, our top five partners. I wanna say, you know, 97%-98% is locked up 2027 and beyond. We feel good about where we are with our partners. You know, I'd sit back and say, you know, there's some mid-size relationships that are probably more end of 2027, 2028. I think there's a little bit more. I think you're gonna see some de novo things that are happening in the next couple of years. You know, these are long cycle sales relationships. You know, we're talking to people about 2027 and 2028, you know, now, you know, for opportunities that are in the market. Listen, I think there are gonna be, you know, real questions on some of the competition of, like, where their focus is gonna be. We really feel you know, well-positioned to win that, and we're very competitive. We're not gonna be the leaders on price, and that's okay, because I think we bring tremendous value, and we wanna get paid for the value we bring. Okay. You touched on competition, and I guess maybe a two-part question here, but how would you describe your risk appetite now? Is it, I don't wanna say looser, but it feels like you're more willing to grow. What's the competitive environment like in general? Yeah, you know, Jon, this is a very interesting question. You know, do we have an appetite to grow? We always have an appetite to grow, right? We wanna be a growth company. We wanna, you know, look at a long-term framework of that 7%-10% growth. That's where we wanna be, but we're not gonna do that at all costs. That's not the singular metric. We want to be efficient. We want to drive returns. I think that, you know, if you're investing in Synchrony, it's about are you getting efficient, you know, capital utilization. We want that 2.5%+ ROA. We want the ROTCE in the high 20s. That's what we're trying to drive. I think just to grow and not necessarily achieve that or add accounts that don't, you know, meet our lifetime value, that doesn't make a lot of sense to us. We have the appetite to do it. It's just whether the environment, and we're not gonna chase growth for no reason. That's the purpose. I think now, you know, again, we saw a couple years ago, there was too much credit that was pumped into the system, right? You know, when loss rates kind of went up, that was not a macroeconomic event. That was an overextension of credit event. That has rationalized since, you know, call it mid-2023, where I think issuers kind of pulled back. At the same time, there was a lot of score migration. There's a lot to work through over the past couple years. A lot of that's behind us. Not all of it's behind us. You know, that's why you still see, you know, certain card issuers with elevated loss rates. We tightened because it wasn't efficient for us to go back. Yes, we could've had a loss rate that's over 6% and kind of continue to grow. That's not where we wanted to do that. Yes, I have the appetite to, but we're gonna be very disciplined with regard to, you know, driving the returns, being efficient. I have better uses to deploy capital than to deploy it in lower returning assets. Okay. How do you describe the BNPL competition at this point? Is it more aggressive, less aggressive? Is it a threat to some of your originations? Yeah. You know, listen, we always have, you know, respect for people in the business. You know, you gotta go back to the customer that a lot of those folks are trying to get. They're trying to get people who are cash, people who aren't gonna take credit anyway. The population of people they serve is, you know, different. Yes, there's some overlap, so I can't say they're 100% unique, so there is overlap. We've been able to do, Jon, and look at where they have been in places where we are. We haven't seen them necessarily affect our volume. In certain cases, there's a very clear delineation between where they play and where we play. We tend to win consistently at a high level on bigger ticket installment lending. We can step in. We have the balance sheet. We have the scale. We have the servicing capabilities. They tend to play in smaller tickets and smaller size, you know, installments. That's where they want to play because they're trying to get velocity. They're trying to get scale. They can't take the risk on large tickets. I mean, a lot of their presentation is about, "Hey, listen, we can get you 100% or not 100%, or close to 100% approval rate." What they do is say, "Okay, here's a bigger ticket. Put 50% down. I'll approve the rest." I mean, you know, we'll sit back and say, "I'll take the big ticket. Mm. I'll underwrite the full 100%." It's a different type of model. I think what's interesting about their model was a lot of it was anti-credit cards, et cetera. Now you see them saying, "Okay, the one product probably doesn't work." You can't get enough scale off of one product. So they're trying to create, you know, go to more traditional products, whether it's debit or credit, in order to try to create that full spectrum. But again, they don't have the scale that we have, which is a real competitive advantage for us. Okay. On the credit topic, you've provided your loss guidance 5.5%-6% for 2026. Are the tightening actions fully reflected in what you're seeing today? Do you expect some tailwinds to continue in 2026? You're clearly in the range today, but how do you expect this to play out? You know, we had the opportunity, Jon, at a competitor conference a month ago to kind of try to clarify this a little bit. You know, when we laid out our outlook and we put the page up, we put our long-term framework up for charge-offs, people are reading that as technical guidance and your guidance is losses going up. It's not like that. That was really not the intention of it. I think the intention of it was to say we have stable credit. And again, we view that, you know, we view that and we continue to view that credit is stable. You look at the results today, when we look at it both on a net charge-off basis for February as well as 30+ delinquency, we're better than seasonality on both those metrics. We continue to be better than seasonality. Again, I expect that to kind of flatten out and normalize here, but we feel really good about it. You know, we took tightening actions in 2023 and 2024. You know, those are kind of fully seasoned in the portfolio. We took some actions, different actions, where we opened the credit aperture in the third and fourth quarter of 2025. They'll season out back half of this year, you know, third, fourth quarter into the beginning part of 2027. Again, you'll continue to see those effects kind of build throughout the year. We feel good about where the aperture is now. Jon, you know, one of the questions that we get quite a bit is like, why are you in a, you know, a more restrictive type situation than maybe others? If you go, this is not Synchrony, just you can go to the credit bureaus, probability of default across every credit grade is up versus the pre-pandemic period. A lot of that's the liquidity and excess, you know, availability credit that's in the system, but that's something that we watch. You look at the macro and say, "Okay, inflation's still not where we want it to be. You know, interest rates are higher than a neutral rate, so it's a restricted position." We're cautious from that standpoint. Again, you know, we're not blind to the fact that probability is up. That's why we are better positioned because we control line sizes better, right? We have a lower line structure so that our exposure at default, you know, is gonna be less than our peers. So that's how we control the loss lever. Again, we came in saying credit will be stable in 2026 and, you know, so far the first two months of the year has most certainly met that standard. You may have just answered it, but just comfort with the reserve level and potentially bringing it down. Is it just a lot of the factors that you just discussed? Yeah. You know, the factors that go into the reserve and, you know, I said back in January and I don't think it's any different. There's more a downward bias on the reserve. Again, think about the first quarter. The rate naturally goes up based upon seasonality. You know, there's generally a downward bias because, you know, the loss performance has been steady. You know, if I look at entry rate has been better than the pre-pandemic period. You know, we see strength across pretty much all delinquency stages except for 2D right now, so we feel good about that. That's the biggest contributor to your reserve rate. You overlay on macroeconomic assumptions that are generally a little bit more pessimistic right now. You know, as you get more comfortable with the macro and the macro is not gonna deteriorate, and you have this kind of continued stable performance, you should see a general, a more downward bias onto the rate. And again, I'm not locked into CECL day one. There's not a benchmark. You know, day one was here for about a week, it felt like, in 2020 before the pandemic hit. We feel comfortable that the reserve rate does come down. We feel, you know, when you have a CET1+ reserve rate over 25%, the balance sheet is well prepared for any economic scenario. Okay. I wanna touch on a few more things, but just quickly, am I gonna be here next year, or is it gonna be a robot? How do you think about AI and job loss? Yeah. It's obviously topical for your company. Yeah. You know, this goes back to the way in which certain things are presented. I think when you hear companies talking about these massive job reductions and AI, you know, I would probably use some professional skepticism with regard to that. There's a lot of probably bloated structures where people are eliminating roles more so than AI taking jobs out. That said, Jon, you know, in theory, your job should get more efficient. I don't know exactly what you do. Hopefully these guys know what you do. Sit up here and look good. AI should make your job more efficient. I think that's as we at Synchrony look at it. It's less about full job replacement versus, you know, how do you kinda make things more efficient in what you're doing and really changing the roles in which people have. You know, we don't sit there and say, "Hey, listen, you know, we have a person in the loop," right? Even though you deploy AI is not gonna run everything, and AI is not gonna kinda take over the world. It will make you more efficient. If I look inside our company and sit back and say, okay, you know, take disputes for a second. You wanna dispute a credit card transaction, you submit something via the mobile device, the web, you call in. There's an intake, there's document gathering, there's data gathering from retail partners, there's an evaluation of it. You determine it, you communicate back to the consumer comes back to you. That is incredibly manual process today when you think about how data is gathered, whether it's you're getting it from a restaurant, a big retailer, et cetera, how the intake form kinda comes in. AI can streamline that and give you a better customer experience. Yes, there could be some job losses there, but you're gonna have to have someone that ultimately reviews that and says, "Is the model making the right determinations for the consumers?" That's the kinda thing you'll see. I'm not 100% sure. Your job should be easier. Right To some degree, 'cause some of the things that you don't wanna do today. Let me just give you another example, like engineering is a great one. You know, yes, AI can write code. But guess what? The engineers like writing code. What they don't like is the documentation and testing. AI can do the documentation and testing, and then you can get either you can reduce the number of engineers, or you get faster in your technology advancements, and that's how we look at it, is take the things the engineers don't wanna do, replace with AI, and give them the capacity to make changes at a more rapid level, and you can see your services really and your capabilities advance at a faster clip. Okay. Just on capital, you have stress test coming up. Talk a little bit about that. Talk about capital allocation. Are you thinking about returning capital to shareholders as well eventually? Yeah. You know, we're in a position of strength when it comes to capital. We have excess capital today. We're gonna be aggressive and prudent in deploying that. You know, we built this company around the CCAR process. We're in our first year in the CCAR process. Fortunate for us, you know, the Fed has made some changes where we now have been assigned a stress capital buffer of 2.5%. We won't get another one until, you know, 2028. But we feel good about where we are. We've had very constructive conversations with, you know, senior leadership at the Federal Reserve with regard to the models and how they work, and how they're gonna, you know, be reflected upon us, so we feel good about that. We're gonna have a capital plan now that we're fully CCAR. We're gonna have a capital plan that's consistent with what we've done in the past. Our capital allocation priorities have not changed, right? The first one's gonna be you know, organic growth. And we look at the opportunities we have in our health and wellness platform, our digital platform, some of the programs we have. We want to allocate capital there first. We obviously wanna maintain and grow our dividend. Then it comes back to the balance, because we generate so much capital on an annual basis, and we have the excess capital. You know, again, we'll either be aggressive but prudent with regard to share purchases or look at inorganic opportunities. Those inorganic opportunities are not gonna be huge. They're gonna be more the bolt-on things that we've done, whether it's Ally Lending, Pets Best a couple years ago, Allegro, which was in audiology and health and wellness. We're gonna do things like that that are real bolt-ons. You know, a real attractive one we just did was Versatile Credit. We'll focus there, but again, organic dividends, then share purchases or some inorganic growth. Okay. To sum it up, you feel fine about growth- Mm-hmm Despite the noise. You feel fine about the credit guide despite the noise. Feel good about capital return. Anything else you wanna flag? No. Listen, I think the model's working where we like. The RSA is a good buffer. You know, as the program performance increases, RSA is gonna go up, but it's providing the resiliency in this business. You're seeing the turn back to growth. Credit's well contained. I'd argue probably best in the industry. Again, we're leaning into the places where we can make a competitive difference. You know, we're excited about where 2026 is, but we're obviously closely watching the macro. Okay. Good. Thank you, Brian. Thank you, Jon.