We did do our good hygiene share repurchase. As Ralph noted, we bought back $35 million shares. If it weren’t for those uncertain environments that we’re right now, it certainly be a lot more attractive, but I think that would not be the responsible thing for us to do at this time.
Robert Napoli: Thank you. Appreciated.
Operator: Our next question comes from Mihir Bhatia from Bank of America. Your line is now open. Please go ahead.
Mihir Bhatia: Good morning. Thank for taking my question. I wanted to start with the delinquency trends, and I think your comments about 2024 right at the end. Delinquencies right now at like 15-year highs, I think they saw in your trend like [ph]. And I understand some of the pressures on the consumer. But I was curious, like — I think it sounds like you expect this to obviously drive NCOs higher next year. And in hindsight, do you think Bread or the industry got too aggressive with growth coming out of COVID? Like what’s driving this? Just talk a little bit about the tightening you’re doing to get back to your expected or long-term guidance of loss rates. Any more color you can give on that tightening?
Perry Beberman: Yes. Let me talk a little — you’ve got a number of things in there, and I’ll — Ralph will talk about the credit strategy tightening. But in terms of did we grow too fast? No, I’d say we’ve remained very disciplined in the growth. And compared to others who maybe you heard where they’ve had these large vintages and these vintages seasoning, you can look at our lag loss rates and things of that nature. We have not — that is not our issue. Really, what we’re — what you’re seeing is the economy and the effect it has on moderate and lower-income households and where their wage growth is not keeping up with the compounding effect of inflation. So it’s an unfortunate element of this type of environment, and our customers are doing the best they can to make ends meet.
They’re rotating spend categories to try to make it happen. They’re picking up second jobs. It’s a job full environment. So your question, though, around the hitting delinquency and a 15-year peak, and I’m sure if you link that to the great financial crisis when the losses really peaked up much higher, it was a very different environment, right? The great financial crisis was driven by rapid and high unemployment. People are upside down, and their mortgage are eating the — they had negative equity. And that drove a lot of consumers to file bankruptcy. And so that was a very different macro environment versus the one we’re in right now where consumers are employed. If that’s not the issue, it’s more so inflation, and inflation should come under control.
It’s just — it’s not a matter of if, it’s just a matter of when. So I think you’re going to see continued pressure on delinquency for a bit. It’s going to result in some higher losses, but I don’t think you’re going to see the breakthrough type of losses like you had last time. And so Ralph will talk about the credit management.
Ralph Andretta: Yes. We have a very robust and proactive risk management process. And it’s across the life cycle of a borrower. So we think from acquisition to line management to collections and account closures. We manage that very carefully. Our view is to make sure that we are not putting anybody in harm’s way, and we’re managing their debt appropriate. So for example, now that student loans have come back on track, we monitor those customers that have student loans, where we’ve included those student loans in their obligation and ability to pay even when they weren’t paying them. So as we step through this uncertain time, we continue to focus on this across the life cycle of individual in terms of their credit underwriting and their ability to manage credit.
So I feel very good about that. We were focused on this pre my arrival in 2019. We were very diligent and thoughtful through the pandemic when everybody was kind of opening the box a little bit. We were very conservative and make sure that we were very diligent in terms of underwriting and line management, and we’ll continue to do that as we move forward. Now as we said, some of that impacts our growth in the near term. But from a loss perspective long term, we believe it’s the right thing to do, and we’ll continue to manage very thoughtfully through the process.
Perry Beberman: And I’ll add one last comment to what Ralph just said. We are seeing the benefits of those credit strategies and that we’re seeing a little bit lower early-stage delinquency, which demonstrates that the credit actions are taking hold. The challenge is that once consumers get into delinquency, even though they’re employed, they’re struggling to get back to current. And so what that means is that your later-stage roll rates are higher than historically they’ve been, and that’s what’s driving the higher losses. So we’re going to continue to do what we can to drive down the early stage and, again, work with customers as they enter those later stages.
Mihir Bhatia: Got it. Thank you for that. Maybe switching gears just to spending, but related to some of this tightening. Can you just talk about some of the changes you saw intra-quarter in consumer spending? Do you see like slowdown month over month over month and maybe give us a glimpse of what you’ve seen months-to-date? I really want to try to understand how much more can spending slowdown from here into the fourth quarter and as we think about the first quarter next year?
Perry Beberman: Yes. I think when we think about — there’s a slowdown basically that we’re seeing, certainly in the moderate and lower income cohorts, but you’re starting to see that creep up into even some of the prime cohorts as inflation has taken hold. And I think the way you can look at it is when you think about the fourth quarter and what retailers are saying, what our brand partners are saying that they’re projecting a softening of sales this holiday season, which is kind of in line with some of the trends they’ve been seeing over the summer. So what you should expect is that more retailers will be planning to offer discounts, incentives, rewards of — now unlike last year and maybe the year before where there were supply chain issues, people couldn’t get the electronics or whatever what they were looking for, spend got accelerated earlier in the season into really early October even.
And now what I think you’re going to see is as consumers are more cost conscious and looking for deals, you’re going to see the typical seasonal spend of what you saw a few years ago where it’s really concentrated into November, December as they’re looking for that deal and with the merchants are going to be obviously putting things on sale at that time. So it made look more like past cycles from past years.
Mihir Bhatia: Got it. Thank you.
Operator: Our next question comes from Jeff Adelson from Morgan Stanley. Jeff, your line is now open, please go ahead.
Jeff Adelson: Hi, guys. Thanks for taking my questions. And good morning. Just wanted to follow up on the credit commentary. And at the risk of beating a dead horse, I just want to make sure we got it right. So I think you’re expecting your loss rate to peak out next year. I just want to be sure, should we be thinking about a peak loss rate in the context of — I think you mentioned this fourth quarter looking more like an 8%. I think maybe we were all accepting a little bit more improvement next year, so I just wanted to square those figures.
