With that said, Erika, if we looked at just taking those rules as they are, again, we’re not sure that they will stay as they are. The impact to us is probably between the 15% to 20% higher impact to capital. And the range there depends really upon how you treat some of the RSA when you found the operational risk pieces with the RSA offset, the fraud and some of the revenue items. When I think about the unfunded commitments that is a fairly significant add back to the RWA. The good news for us, I think we have a path where through mitigation strategy, we think this would be very manageable. It’s an active the way it was today. And part of it, we think about the unfunded commitments, a good bulk of that is with accounts that are deemed and active.
So, we can adjust line strategies without impacting current customers in our business. So, I’m not sure as we look at it and we talk about as a company, we believe there is a significant aspect with how we manage the growth side of the business.
Operator: Thank you. We’ll take our next question from Sanjay Sakhrani with KBW. Please go ahead.
Sanjay Sakhrani: I guess my first question, Brian Wenzel for you in terms of the reserve rate going forward. We’ve seen some of the card issuers make adjustments to kind of what’s inside the reserve and what’s not. And there’s some risks associated with inflation and the fact that behaviorally things are trending a little bit different than they have in the past. Maybe you could just talk about the migration of reserve rate going forward and you feel comfortable in the methodology at this point?
Brian Wenzel: Yes. Thanks for the question, Sanjay. Obviously, we feel comfortable at the end of the third quarter that we have the right level of losses. As you think about it, the base assumptions that we have in the reserve model really didn’t change. I think when you look at the baselines that are out there, there’s not a significant shift in the underlying assumptions that are going into the model. As we looked at the quarter, what you did see is a little bit of shift between the quantitative portion of the model and the qualitative portion. But again, through the past history, we’ve — we think through the scenarios that we run that we’ve accounted for a potentially worsening macro. We hopefully have captured inflation in as part of that model and then we also have student loans as part of it.
So we feel good about where we are as we sit today, and that we can withstand changes in the macro environment. That said when we look at it, there are 6 basis points of coverage between second quarter and third quarter given these models that isn’t significant I wouldn’t read into it that we have a deteriorating picture as we closed the quarter.
Sanjay Sakhrani: Okay. Great. And then maybe one for Brian Doubles. Brian, can you just talk about sort of the backdrop for portfolio acquisitions, any renewals that kind of stuff? And then maybe just the competitive environment in general?
Brian Doubles: Yes. Sure, Sanjay. So look, I would say, generally, it’s a pretty constructive competitive environment. I think, what we’re seeing in the market around pricing new opportunities, renewals is pretty disciplined. And I think any time you enter into a period like we’re in right now where there’s some uncertainty on the horizon, you tend to see issuers stay a little bit more conservative and a little more disciplined, which is good news for us. In terms of renewals, we just announced Belk this quarter. It’s a great renewal for us kind of a normal quarter. Great partner, very engaged customer base, and so obviously, we’re always out there working the renewal pipeline on our portfolio. And then in terms of new opportunities, I would say, on balance, it’s probably more new program opportunities, startup opportunities, less of the kind of big programs that are out there coming to market.
And I think that’ll hold true probably for the next 12, 18 months. And then beyond that, I think you’ll probably see some bigger programs come up and be in the market.
Operator: Thank you. We’ll take our next question from John Hecht with Jefferies. Please go ahead.
John Hecht: First up, you guys have had pretty steady flow of new accounts for us three quarters. I’m wondering, I mean given where you’re underwriting and kind of what’s going on in the world, kind of maybe what are the characteristics of the new customers and any change from where you were a few years ago? And then what are the sources of the new customers as well?
Brian Doubles: Yes. John, I would say consistent kind of trends on new accounts, both in terms of absolute magnitude as well as where the accounts are coming from. One of the things that Brian mentioned as we think about underwriting, we don’t expand the credit box in really good times, and we try not to really restrict it in more uncertain times. And that means that we have more of a steady trend in terms of both, new accounts, active accounts, et cetera. I would tell you that the new programs that we recently launched or performed really well. We’re seeing really good growth there. So, we continue to be encouraged on that front. And you’re seeing, I would say, really good trends across all of the platforms. As we look at growth, it’s not one platform that’s really outperforming.
You’re seeing that a little bit with Health & Wellness, but it’s pretty broad-based and that’s encouraging. I think the consumer has been much more resilient than any of us anticipated a year ago, and you’re seeing that across the board, whether you look at purchase volume, receivables, new accounts, active accounts. If we had to pick a metric, that’s one that’s probably a little bit more important than new accounts because keeping that consumer engaged offering them more than one product, like that’s a big part of our strategy. And so, we’ve been pleased so far all year.
John Hecht: Okay. That’s very helpful. And then second question is, I think I said that you guys do some disclosure that you guys were involved in at least evaluating GreenSky. Yes. I’m wondering kind of what’s the appetite for acquisition? I would assume the environment’s a little bit better now with different opportunities. So, maybe if you could just take us through what you’re looking at and where you might go from that perspective.
Brian Doubles: Yes, I mean, look, we’re always opportunistic when it comes to potential M&A opportunities. You know, at the same time, John, you know, we’re extremely disciplined around the financial return of those opportunities making sure that they’re accretive. We weigh that against buying back our stock and other opportunities. So look, we’re always in the market. We’ve done some really nice smaller acquisitions over the last couple years. Pets Best has been an absolute home run for us. Since we acquired that business I think the pets and for us is up 5x just between 2019 when we acquired it and now. Allegro has been a great acquisition for us. Again nice acquisition, relatively small in terms of the capital outlay for that, but we’ve been able to leverage the scale at health and wellness to grow that.
We picked up some new products as part of that. So those are the types of acquisitions that we really like to do. But with that said we look at larger opportunities, but they’ve got to make sense. We balance those against other uses for our capital and they’ve got to have, a nice return profile for us and a good path to EPS accretion.
Operator: Thank you. We’ll take our next question from Kevin Barker with Piper Sandler. Please go ahead.
Kevin Barker: Have you seen any particular shifts in payment rate trends for the near prime to prime consumer? Appears some of your competitors mention that there’s a little bit more weakness, primarily due to household net worth or even savings rates within that cohort, are you seeing any changes in payment rates there?
