John Greene: Yeah. I think it will peak, and then, upon its peak, I think it will stabilize up there for a few quarters, maybe two to three quarters, and then we expect it to come down. That’s all subject to kind of the macro environment, obviously. But in terms of what we’re seeing today, that’s the expectation.
Jeff Adelson: And then, just on the sales volumes, I know they were pretty flattish this quarter. Just wondering, under the hood, what’s going on there. Is this representative of maybe more of a slower growth in new accounts? Is maybe your same-store customer still growing at a faster pace year-over-year? And then just maybe thinking through the dynamic of faster network volumes, faster debit volumes, anything going on there that’s driving your debit and network volumes to reaccelerate versus your proprietary card volumes to slow?
John Greene: Yeah. So, let me start with sales. So, what we’re seeing is a downward trend in sales. So, if you go back to the fourth quarter of ’23, we’re at about 10% year-over-year growth. First quarter was 8%, 2.5% in the second quarter, and about 1% here in the third quarter and through mid-October, about 1%. Interestingly enough, the dynamics are changing in terms of categories. So, online spend is up around 4% to 5%, every day spend is up about 3%. That’s largely inflation driven, we believe. And discretionary is flat to down with the exception of entertainment expense or entertainment-related categories, which is up north of 20%, which is hard for me to understand at this point. But we’re trying to dig into the details.
In terms of implications for next year, we’re going to assume a relatively modest sales growth, maybe slow in the lower single digits. The transactor revolver components of that, I mentioned that already. So, more pullback on the revolver base. The other piece of your question is debit transactions. We’ve had great execution from our PULSE business. So, we’ve expanded a number of contractual arrangements and also debit choice routing has actually made a difference in the volumes. So, our PULSE team is executing well and appears to be capturing some share.
Jeff Adelson: Okay, great. Thanks for taking my questions.
John Greene: You’re welcome.
Operator: Thank you. Our next question will come from Rick Shane with JPMorgan. Your line is open.
Rick Shane: Thanks, guys, for taking my questions this morning. Hey, look, you’ve cited a couple of things that are driving the increase in delinquencies. You’ve talked about seizing them vintage. You’ve talked about some exposure to lower FICO scores within the cohorts. At the same time, you guys are starting to apply a lot more machine learning to your portfolio and your process. I’m curious if you are identifying other factors that are contributing to the increase in delinquencies, whether it’s age demographic, geography, what might be other factors that are contributing to this in the context of strong labor markets. And then the follow-up to that is, with that information, can you then apply different servicing strategies to enhance that performance?
John Greene: Yeah, you’re into the secret sauce of underwriting, Rick. But I’ll give you a little bit of overview. So, we spent a lot of time trying to revive — to update our models. And we looked at, no exaggeration, probably 300 different risk identifiers or risk [leaders] (ph). And what we did find is savings rate is important, household net worth is important, the amount of credit on us, so on the credit report and Discover’s balance sheet as well as the amount of credit off are — continue to be really, really important. And then also, there’s some work being done on cash flow underwriting because of some of the off bureau credit that we experienced or the whole market experienced in ’21 and ’22. So, we’re going to continue to look to refine our models and see what we can do to identify accounts that are going to be highly profitable and originate those.
