Erika Najarian: My question is relating to capital and capital distribution for 2023. As we think about ending the year at 12.8%, I guess this is a two-part question. #1, does your buyback trajectory get impacted by the macroeconomic uncertainty, even though your receivables growth is set to slow in ’23? And secondarily, is this — is there an amount of cushion that management wants to hold against that 11% target, not necessarily for macro uncertainty, but for potential opportunity use in terms of purchases in case those arise, portfolio purchases in case those arise?
Brian Wenzel – CFO: Yes. Thanks, Erika. So to your first question on the macroeconomic environment, right now, we’re going through the early stages of developing our capital plan that we’ll submit to the Federal Reserve in the latter part of March. So we go through that. With that capital plan, we run a number of different loss stresses and severe loss stresses in the idiosyncratic stresses in order to inform us really of what the range of outcomes are and how comfortable we feel with the environment. And again, as we said, throughout 2022, we feel very comfortable in the environment continuing on the capital plan that we laid out and submitted to the Fed last March and got approved in April. So we will use that to inform it.
Again, during the year, we go through multiple stress scenarios. So we continue to feel good even under a stress scenario that the targets and the environment that we will continue to operate with a very good capital plan. So we’ll do that to inform us. With regard to the level of capital, 11% is our target. Now the first thing to remind you and others of is we have to continue to fully develop our capital stack right through incremental Tier 1 through a preferred or — and then obviously through Tier 2, whether that be sub debt or incremental preferred. So we have to continue to develop the capital stack to even be able to achieve the Tier — the CET1 target. And then secondarily, I think every company operates with a little bit of operating range.
The real positive part of our business, Erika, is that we generate a lot of capital each year, which we employ back in. And obviously getting down to 12.8%, the growth that we’ve anticipated when we talked to you back in October, 12%, we came in at 15%. So we’re able to fund that growth, and that’s really, we think, very attractive returns that will continue to generate capital as we move into ’23 and beyond. So yes, there is some type of operating range. But again, the target also has a buffer to it, so you can most certainly go through that buffer a little bit if you wanted to do an acquisition. So that’s not a floor, it’s just a range in which we operate with, and we’ll continue to try to deploy capital in a manner that’s in the best interest of our stakeholders.
Erika Najarian : And my second question is a follow-up to an earlier question about the reserve. I just wanted to clarify, fully understand the comments on the trajectory of losses from here. However, on the reserve, if we did end up with an unemployment rate at the end of the year that is closer to 5% versus 4.2%, I just wanted to make sure I understood this correctly, will there be an increase in the reserve rate or — that’s more significant? Or does the qualitative take care of any potential increases from that 4.2% baseline?
Brian Wenzel : Yes. Yes, thanks for the question, Erika, and I’ll try to be clear here. The 4.2% is the baseline, which we take from Moody’s. Effectively, when we run through the model, you’re probably more like 4.5%. There are qualitative overlays that bring it effectively to 5% right? Or closer to 5%? So in theory, if you were to hit that, there should not be rate related provisioning. It should just be growth-related provisioning at that point. It’s only if your outlook changed above 5%, which you would anticipate more rate-related increases.
Operator: We’ll take our next question from Arren Cyganovich with Citi.
Arren Cyganovich : In your press release, you noted that you had added or renewed 25 programs, including Lowe’s, which has historically been one of the largest partners that you have. Can you just talk a little bit about, are you starting to push some of these renewals past 2025, which I know you had a lot of them locked in through 2025? And what’s the competitive environment for these renewals today?
Brian Doubles : Yes. So look, first, I would say that we’re always looking to renew where we can at attractive terms for us and the partner. So the teams that we have on the ground sitting with our partners every day, you come across things where it makes sense to add some years to the deal investments we want to make, changes in valve prop, et cetera. So our teams are out there every day, finding ways to renew in ways that benefit our partners and benefit us. So we’re thrilled to extend with Lowe’s. They’re one of our oldest clients. I think this extension will take us over 50 years, which is pretty incredible when you think about it. I would say, competitively, just more broadly, it’s still competitive, very competitive environment.
But I do think, as you start to head into periods of uncertainty like we’re heading into now, you do start to see the competition get even more disciplined. And we all know and appreciate that we’re not going to be operating at half of our targeted loss rate like we saw in the last couple of years, and you start to see that discipline work its way into the competitive dynamics. So I think that’s good. We’re a very disciplined bidder in these processes, and it’s nice to see that kind of happen across the industry. So we feel really good about how we’re positioned. I think in times like this, back to the earlier conversation, you’re really competing on capabilities. And that, combined with good price discipline across the industry, is a good thing for us.
Operator: We’ll go next to Betsy Graseck with Morgan Stanley.
Betsy Graseck : One question to follow-up on something you mentioned in the prepared remarks. Normalization, you’re seeing migrate into prime and super prime, I think I heard you right there. And I just wanted to understand if you were just talking there about the payment rate normalization? Or are you also talking about normalization in delinquencies and your net charge-off outlook? Maybe you could unpack what you meant a little bit more, if you don’t mind?
