Brian Wenzel: Yes, good morning, Kevin. The first thing when we think about the consumer, there’s a lot of focus that goes into savings rates. And I’d say that’s the higher end consumer cohorts do have access savings that’s in there. But the prime we kind of right on the prime level to subprime, they’ve benefited by a 22.6% wage increase since 2019, which has been able to really bolstered in through this period. When I look at payment rates and compare them year over year, right, where you see probably the biggest shift in the payment rate is in that 6.60 to 7.20 bucket. They’re all moving from a little bit more full pay, a statement pay down, but the biggest shift is in that 6.60 to 7.22, which isn’t necessarily that concerning to us and still below, above where they were in the pre-pandemic period. So I’d say a shift, it’s not something that we are concerned about or find it to be concerning at this point.
Kevin Barker: Okay. And then, I know it’s very early, but are you seeing any impact on payment rate trends for folks with federal student loans? I know it’s, first few weeks…
Brian Wenzel: It’s early, yes. So what’s actually interesting, Kevin, when you look at that cohort, a couple things we’ve done a lot of analysis on this group of people. We continue to do it. I think when you look at the month of September we saw a significant rise in people making payments in advance of their student loan payments beginning in October. So, that’s a very good sign for us with regard to that. We did a deeper dive and we looked at how they are performing those accounts against instead of the entire book, really against, I’d say credit cohorts. And to be honest with you, Kevin, you’re going to find this interesting. They actually are performing better with people with student loans versus people without student loans.
So, they clear to be very, very cautious. Again, the fact that people significant number of people did pick up payments prior to their due date. So again, what we expect going forward is that the fourth quarter’s going to be a little bit noisy. So with regard to people who may have forgotten, got new servicers, et cetera, and then you’ll start to get a much better read as you move into the first quarter. What’s going to be challenging for issuers is the fact that they’re not — we don’t expect them to be reported to the bureaus until January 25. So there are things that we’re going to watch with regard to changing in those balances and see whether or not we can detect through the work of the bureaus, whether not they are resuming payments and how much they’re paying down.
So we’ve kind of set that up in advance to monitor the population. Again, we think we provided for them in prior periods for when they may struggle.
Operator: Thank you. We’ll take our question from Jeff Adelson with Morgan Stanley. Please go ahead.
Jeff Adelson: Just wanted to get an updated view on the late fees from the CFPB here, I know we’re almost done with October and I haven’t heard anything yet. Just wondering, has there been any shift in the dialogue out there? Or are you still fully expecting the rules to come out as proposed? And I guess as a part of that question, when the rule comes out, are you going to be taking any sort of proactive, preemptive actions in preparation? Or are you more just going to be in the wait-and-see approach and wait to see how it plays out in the courts?
Brian Doubles: Yes. Thanks, Jeff. So look, we’re obviously still waiting for the final rule to be issued. So, there’s plenty of unknowns out there until we see the final rule. We got to see things like the implementation period, the final amount. We also believe that will be litigated. So, we’re going to watch that carefully, and that could impact the timing as well. So I guess what I would say is, look, we’re prepared for multiple scenarios in terms of timing. We’ve been — we’ve been working very closely with our partners for over six months now. We’re working on pricing offsets really with the goal of offsetting the impact here and putting us in a position with our partners where we can underwrite a large cross-section of the customers that we do today.
We’re obviously goes without saying we’re disappointed in the rule. Obviously, we think it has unintended consequences that weren’t properly evaluated. Late fees are a very important incentive to pay $8 just clearly is not an incentive. So without those offsets, it would restrict access to a pretty significant cross-section of consumers. And no change to what we’ve said in the past. Our goal is to protect our partners, fully offset the impact and continue to underwrite and approve the majority of the customers that we do today.
Jeff Adelson: Got it. Thanks. And just on the credit tightening side, I know you’ve discussed some more actions there, positioning yourself for 2024, but at the same time, you weren’t leading it as hard as your peers, you were sort of ahead of the curve there. Just wondering what would cause you to lean back in at this point? Is there any sort of signals you’re looking for out there or any sort of timing around that to be expecting?
Brian Wenzel: Just to be clear to lean back into loosening credit or….
Jeff Allison: When you might, widen the credit box again.
Brian Doubles: Yes. Listen, we have a very good credit team that’s consistently evaluating performance of the portfolio by partner, by vertical, by channel. And I think to some degree we want to see how cred develops across the industry. Again, I talked about a shared consumer, so what other issuers are doing or not doing can have a flow through effect to us. So, again, we will watch those things. There’s not a telltale sign to say, once this happens, we will go. But our team, you has a lot of tools. We use a lot of data. We’re using much more decision tree and non-core based measures in order to assess that. And again, the data elements that we get from partners will tell us how the consumer’s performing. So we’ll continue to look at that.
And again, Brian said it, I said, we don’t move the credit box around that often because our partners want consistency and origination. Our customers want to have consistent underwriting from us and that’s part of our lower line low and growth strategy.
Operator: Thank you. We’ll move next to John Pancari with Evercore ISI. Please go ahead.
John Pancari: Regarding the back to the late fees, can you maybe just give us a little bit of color how do you think about the timing of the offsets that you’re negotiating at this time with your partners? You mentioned pricing and I’m assuming there’s other factors, maybe if you could just talk about the once the rule goes in place, what type of timing should we expect in terms of being able to see some of the offsets of that initial impact?
Brian Wenzel: So look, I mean obviously, there’s still things related to timing that we don’t know yet. And primarily that’s when the rule goes into effect the impact of any litigation as well as the implementation period. And the final rule the original rule as written was 60 days. That’s just clearly not enough time to get this done. So, we think that hopefully, it’ll be longer than that. And those are the discussions that we’re having with each of our partners and that will influence the nature of the pricing actions and the timing in which they, in which they go in. So I can’t be really more specific than that, but we’ve got a really good plan in place, partner by partner. We’ve been working on this for over six months. We feel good about the conversations that we’ve had and the actions that we’re going to take, if the final rule goes into effect as written.
