Brian Wenzel: Yeah. So to try to provide a dimension, really more a framework for how you think about it, Jeff, our base case assumption as we walked in was an October implementation date. We thought that’s going to be the case. There are a lot of scenarios between here and when the courts will take action on the pending litigation and the injunction. So it’s difficult to speculate on any particular scenario because it’s just so uncertain. I think everyone would have thought something different. At least everyone on this call would have had a different opinion. That being said, if you want to think about a framework for one second, number one, I’d say this doesn’t impact where you exit out of 2025 from projected, whether it’s October or earlier than October, that exit point is exactly the same, number one.
Number two, it doesn’t really impact this visibility of our business and what we’re doing from our PPPC changes. And Brian talked about how much we’ve rolled out. So that — those two things fundamentally don’t change. That being said, if you think about a May implementation date, there’s a much larger impact in 2024 on EPS. But then as you think about 2025, that EPS generally then would be higher than either the October scenario or its significantly higher on an actual ’24 to ’25 basis as we look at it. So once we have greater clarity with regard to when the actual implementation date happens or occurs or will occur, we’ll then provide incremental transparency relative to the financial implications both on ’24 and try to dimensionalize ’25 for people as well.
But I think it’s important to understand those frameworks about how we exit ’25 and that any incremental detriment in ’24, in theory, gets a benefit in ’25.
Brian Doubles: And then just on your last question on consumer behavior and impacts, I’d say we haven’t seen anything yet that’s different than our expectations. I’d say, it’s largely in line. But the only caution I would have is it’s very early. There’s a bleed-in period for a lot of these terms changes. But so far what we’re seeing from the consumer side is generally in line with what we expected.
Jeffrey Adelson: Great. Thank you.
Brian Doubles: Thanks, Jeff.
Operator: Thank you. We will take our next question from Saul Martinez with HSBC. Please go ahead.
Saul Martinez: Hi. Thanks. Good morning, and thanks for taking my question. So just to follow up on the response to the last question on the PPPC impact, so if I hear you right, the March 5, 8-K the guidance that or the estimates that you gave there of the offsets ranging from $650 million to $700 million pre-tax, which does imply a pretty significant ramp, given the time horizons you gave into the fourth quarter, we should assume those are still good benchmarks to use and because it obviously does imply a pretty significant ramp in the back end of the year in terms of NII, that’s the other late fee impact. So just want to make sure that those numbers are still applicable or am I missing something there?
Brian Wenzel: Well, let me just start with, that’s based off of October implementation date and the way to think about it, as you begin to have some of the PPC — PPPC changes happen in the second and third quarters, partially offset by RSA, then you come into the fourth quarter, you would have the detriment from the late fee going away, but a higher RSA offset in that quarter. Obviously, that all shifts if you went to an earlier implementation date, so that range would change materially in a situation where you had a potential implementation date prior to October. Again, I think if that does happen, we’ll come back and provide greater clarity on the impact on the late fees as well as the impact on the changes that we’re doing.
Saul Martinez: Okay. That’s helpful. And I guess just a broader — I guess a broader question. You did in your presentation reiterate the long-term targets 2.5% plus ROA, 28% plus ROTCE. I get the offsets and you guys are working to fully offset that, but it is a pretty significant — if it gets implemented, it is a pretty significant reduction or source of revenue that effectively goes away and we’ll see what happens with Basel III. But at least, maybe it’s not going to be an impasse, but the direction of travel, at least on capital is moving higher. I’m just curious like how you’re thinking about the long-term targets for profitability going forward, your degree of confidence, and how you — whether you think those are still applicable targets.
Brian Wenzel: Yeah. Obviously, we look at it, and Brian and I have been very clear that the organization, our goal is to be ROA neutral at the end of the impact of the late fee rule change. And we — again, when we get better clarity with regard to the actual implementation date, we can talk a little bit about that timing. So the goal is to get back to ROA neutral, and that’s the plan that we are rolling out and beginning to execute today, understanding, there are a lot of assumptions with regard to consumer behavior that are in there and other things that can impact it. That being said, if you think about a more normalized environment, right? So I think 5.5% interest rates are not normalized. When you think about an inflation rate, that’s elevated.
When they normalize, you should be able to come back to that ROA profile. And that’s one of the strengths of the RSA itself that kind of helps us get back to that. From a capital standpoint, I can’t really forecast, and I’m not sure other people can, where exactly the Fed may or may not go with regard to Basel III. I mean, most certainly, there’s not been a lot of support around that. So we’ll see what those changes are. That being said, we actually have excess capital and we’re going to continue to move down towards our target, which helps us get to the ROTCE. So again, being focused on being ROA neutral through the late fee rule change, number one, deploying our excess capital, whether that be into RWA, that’s accretive to earnings in ROA or whatever, return it back through — back to shareholders.
