American Express (AXP) Presents at Barclays Global Financial Services 2019 Broker Conference Call (Transcript)

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About: American Express Company (AXP)
by: SA Transcripts
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Earning Call Audio

American Express Company (NYSE:AXP) Barclays Global Financial Services Broker Conference Call September 10, 2019 9:00 AM ET

Company Participants

Jeffrey Campbell - Chief Financial Officer, American Express

Mark DeVries - Barclays

Conference Call Participants

Mark DeVries

(Abrupt Start)--American Express. We’re going to be doing a fireside chat. I’ve got about 20, 25 minutes of prepared comments, and I’ll open it up for a little bit of audience response and then give the audience an opportunity to ask some questions to Jeff.

Jeffrey Campbell

Are we going to start with the audience?

Mark DeVries

Would you like to start there?

Jeffrey Campbell

No, I’m just always curious. You surprise me with those each year.

Mark DeVries

Okay, well why don’t we start with them? Jeff seems excited about the audience response, so--

Jeffrey Campbell

Wake everyone up.

Mark DeVries

So first question, what factor do you view as most likely to determine whether AXP outperforms over the next year? One, acceleration to build business growth; two, acceleration of loan growth; three, stable credit; four, upside to NIM; five, other?

So I think this is a pretty consistent response, it feels like from year to year, a lot of that emphasis around the build business growth, 62%. Next question, please.

What do you view as the biggest risk to the shares? One, higher charge-offs provisions; two, higher than expected reward inflation; three, deceleration of loan growth; four, deceleration of billed business growth; five, other?

Okay, so a little bit of difference there, where there’s more concern around charge-offs than on billed business growth. Next question, please.

CECL is blank to the company - one, positive; two, negative, three, does not matter?

Okay, so a little over half think it does not matter.

Jeffrey Campbell

Although, I’m going to echo what one of my competitors said yesterday, which is I’d like to meet the person who responded positively. Maybe, they know something I don’t know.

Mark DeVries

Last question, please. Over the next year, would you expect your position in AXP to: one, increase; two, decrease; three, remain the same?

Okay, a lot of people long holders. All right, thank you for participating in that.

So starting at a high level, Jeff, could you just talk about how the company has performed this year and how that’s kind of measured up to your expectations?

Jeffrey Campbell

Great, and thanks for having me here, Mark. Actually, I actually enjoy starting with those because it gives me a little sense of what’s on people’s minds.

As I think about where we are today as a company, we’ve just finished our eighth consecutive quarter of putting up revenue growth of at least 8%, 10% FX adjusted in the second quarter. We feel great about that and feel we have a really long runway to continue to grow at these kinds of air taking levels. We feel really good about our steady performance on the bottom line, producing double digit EPS growth, and what we see when we look at our model in the context of the questions you just got some responses to is we’re all about stable and consistent performance.

I think as we reflect on the many, many changes we made in the company back in the 2015 - 2016 era, where we did a lot of things to reposition the company, it was all about getting us back on a steady and consistent track, playing to the unique strengths of our model, right - the unique strengths of our brand, the unique strengths on the consumer side of the value-added propositions we have, our ability to generate fee revenue in a way nobody else does, the half of our volumes that come from commercial customers where particularly with small business, we have a very, very strong position in the U.S. larger than the next five competitors outside the U.S. in a pretty nascent market, which has become the highest growing part of our company. So, we feel really good about the positioning of the company and we feel really good about our steady and consistent performance, and we feel really good about the spend and fee-centric nature of our model.

I’m going to preempt what I suspect, Mark, if you don’t ask someone else would, a later question, and that is if look back at our company over the last 10 or 15 years, about 80% of our revenues in most recent quarters came from different kinds of fees - merchant fees, card member fees, which are growing in the high teens. 70% of our new card members this most recent quarter came in on premium fee-paying cards. That 80% number has actually changed very little in the last 10 or 15 years, very consistent. Why? Because we have good growth across all parts of our model, so we’re all about trying to maintain the stable and consistent performance you’ve seen in the last couple of years, and hopefully that will be reflected in the performance of the shares.

Mark DeVries

Okay. I wanted to start with the business environment and get a sense of what you’re seeing from large corporates. Have you seen any indication that they’re being more cautious with T&E thus far this year?

Jeffrey Campbell

Well, I think as we sit here - what’s today, Mark, September 10? I think I’d probably say about the same things that we said back in July because what we have seen since remains very similar, and that is that the consumer in the U.S. and in the big markets where we do business - remember, we do business in 169 countries, if you look at the material drivers of our international revenues and profits come from probably our big 10 to 12 or so countries, and they’re the countries you would expect, the big developed European countries, Japan, Canada, Mexico. The consumer has held up well in all of those, even in some places you might not expect. Our U.K. business continues to perform really strongly right in the midst of all the chaos. Clearly, the only challenging country, probably, for us is Argentina, where obviously even though that’s very small in the grand scheme of our company. So the consumer, despite the headlines we all get up and read every day, looks pretty good.

On the commercial side, we generally break our commercial business into three customer types. The international small business segment, I’m actually going to kind of put aside from your question because we’ve been growing that segment in the high teens for a couple years now, and because that market is a pretty new market because our spheres are very small, and the market itself is growing so fast, I’m not sure it’s terribly tied to finer points of what’s going on in the economy or in the sector. I think we have a long runway to continue that growth.

In the U.S., where our small business franchise is larger than our next five competitors’, I do think we’re much more tied to what’s going on in the segment, and certainly with the larger companies where we count over 60% of the Fortune 500 amongst our customers when you look at T&E spend, we do tend to just go with the market, and there you certainly have seen a little bit more caution this year and in recent months. Now, we do have a little bit of an internal debate because if you go back to 2018, you had growth rates in those two sectors that were the highest we’d seen in some number of years. In hindsight, that shouldn’t be terribly surprising when you think about the impact of the December 2017 Tax Act, which really had a larger impact, I would suggest on companies and small businesses than on individuals. Perhaps you’re just lapping that very robust growth that we saw in 2018, or perhaps as you would guess from reading the headlines and lots of other economic data, you are seeing a little bit of caution on the commercial side.

I would put us in the camp of people who worry that one of the reasons you might be seeing that caution is that, I suspect, every single of this, what - 200 or so presentations you’re going to have at this conference, start with that question, so we’re all kind of looking at each other saying, well, are you being a little cautious, should we wait a little bit before we make big commitments? We’re seeing that in our commercial customer base.

Mark DeVries

Thanks. You made an interesting point there. ’18 was a very strong year, I think due to the fact that--and it might have been more ’17, right, where you had a number of pretty material enhancements to your value props. Is there any way to tease out how much of this modest deceleration you’ve seen is attributable, just that more challenging comp versus signs that the consumer may be getting a little bit more ambivalent?

Jeffrey Campbell

Well, I’d go back to on the consumer side, we still see consumer spending really strong. We have talked a lot about how in the latter part of Q4 of ’17, you saw a significant, noticeable increase in both consumer and commercial confidence and you lapped that as you got into the beginning of 2019. But the consumer continues to be strong, so the caution that we see is really on the commercial side. I actually wouldn’t, despite all the headlines again, call out anything on the consumer side.

I guess I should also point out that while for us, so 20% of our revenues are coming from lending, our provision is less of an overriding issue for us, as you know, our credit performance this year has in fact been much better than we expected, so we just don’t see any signs as we look across our lending portfolio, which is mostly U.S. We don’t lend that much outside the U.S. - it looks really good. So, we’ll have to see where the economy goes, but for right now we feel good about our ability to sustain the kind of performance that we’ve been putting up in recent quarters.

Mark DeVries

Okay, got it. International consumer has been a particularly strong area of growth for you with kind of mid-teens billing growth. Could you just talk about the things that you’re doing there to drive that and how long the runway is for growth there?

Jeffrey Campbell

A couple things to remember since we’re all sitting in the U.S. When you start talking about the 10 or so big countries that are driving the kind of air taking growth that we’re seeing in the consumer business outside the U.S., the environment is very different. For one thing, outside the U.S. our shares tend to still be pretty modest, which means we have a lot of room to grow. Second, when you go outside the U.S., we tend to still have on the discount rate side significant premiums to Visa, MasterCard interchange, which we do not in the U.S. Outside the U.S. in those top markets, we do, however, and that fuels our ability to provide to both consumer and small business customers value propositions that are very, very difficult for others to match and are very attractive to consumers.

The next thing I’d say is certainly, Mark, you have heard me, Steve, Doug Buckminster say for years now, by far the most competitive market in which we operate is the U.S. consumer market, and so the competitive set outside the U.S. is different in every one of those 10 countries, but it tends not to be at quite the extreme level that you have seen in the U.S. in recent years.

The last thing I’d say is we have as one of the really important changes, I think, that we made back in 2015 and 2016 done two important things organizationally that have helped us outside the U.S. in the consumer and small business area, and that is we began managing the business on a global basis on the consumer side, all under Doug Buckminster, which has really facilitated quick movement of best practices from market to market, much more so than we were previously doing. Part of that has been the discipline of realizing that every couple of years with every single product, we’ve refreshed the product to add value for the card member, and we have the courage to price for that added value. We’ve become much more disciplined about that over the last few years.

The other key organizational change is we have become more focused on just the key markets. As I said earlier, we do do business in 169 countries. They all matter because when all of you travel, I want you to be able to use your American Express card in all 169 countries. But in terms of driving material revenues and profits, there’s a much smaller number where we’ve really focused our efforts, leaving our efforts in the other countries focused on making sure we can provide card members great coverage.

So those organizational changes being more global and our thinking being more focused on the most important countries that are going to drive material economics for us, those have made a big difference, so we feel great about the kind of growth that we’re seeing in those top markets internationally outside the U.S., and we see a long runway to continue it.

I would point out, Mark, as I said a few minutes ago, that on the small business side, we have even higher growth rates in those countries outside the U.S., and similarly there you have a market that we have only really begun to focus on in the last couple years and we’ve only really gotten much better at taking the best practices we have from the U.S., where we have a very strong market position, and exporting them to countries where in many ways having anyone, including us, focus on that small business card market is a fairly new thing. You just don’t find the competitive dynamic in most of the other countries that we’re focused on that you do in the U.S.

Mark DeVries

Okay. Given that so much of your business is levered to the consumer, how should investors think about downside this late in the cycle, especially when we factor in that at least loan growth has been accelerating in recent years? Can you talk about what you’ve learned from the pre-crisis experience on lending and what you may be doing differently now to mitigate some of your credit risk?

Jeffrey Campbell

A few comments. Not to quibble with words, but I would point out if you look by volumes, our commercial volumes and our consumer volumes are actually pretty similar. We do do lending on the consumer side, we don’t do much on the commercial side, so that is the difference, but you started with since your business is very consumer driven. Our commercial business, commercial side of the business is very, very important.

The second thing I’d remind everyone of is when you look at our revenue stream, it’s 80% fees and only 20% lending.

The third point I’d make is we have become again more focused on the premium side of the market in recent years, and that does translate if you were to look at the modest portion of our business that is about lending, it looks very, very different than it did back in 2007 because you don’t see us doing the kind of aggressive balance transfers that we and many others in the industry were doing back in 2007. You don’t see us with anywhere near as much low FICO. We’re very focused on maintaining our premium position. You don’t see us with as much low tenure AR, and we, if you went back to our March investor day, threw up some of the exact stats around some of those things.

So we think a lot, Mark, about the fact that, look, while I hope it’s a long, long ways away, I hope we’re more like Australia in terms of time between downturns in the economy, we can’t know. We do spend a lot of time as a management team thinking about let’s make sure we never forget every lesson we learned back in the great financial crisis. We spend a lot of time thinking about how we will manage the company in a downturn. I would remind all of you, those of you who have followed us for a long time would know that just one example, if you look at the U.S. market, we gained several hundred points of share in the couple years after the great financial crisis because we came out more quickly, more prepared to grow than some of our competitors. We spend a lot of time thinking about how we make sure we can not only replicate that but do better in the next downturn.

So look, our business is not immune to economic cycles. When there is an economic cycle, our revenue growth and earnings will slow. What we see, though, is a model that relative to our competitors’ should allow us to do better in a downturn and, even more importantly, come roaring out of the downturn. You can easily look at some external data to support that, because since the great financial crisis you now have in most years, not this year, the Fed publishing its own modeling of everybody in the U.S. and what happens in a downturn, and we’re generally about the most profitable bank, one of the only institutions that remains profitable even in a crisis worse than the last financial crisis.

So you never know what the next downturn will look like, so I don’t want to sound overly confident, Mark; but we spend a lot of time thinking about how we make sure we’re as prepared as possible.

Mark DeVries

Okay, that’s helpful. You raised some interesting points there, and I think your business is certainly much more complex than just a simple consumer lending business because of the commercial exposure, but also because your consumer is very different than a lot of other card issuers, right? If we go back to the last recession, hopefully we won’t ever experience anything like that again, but not only did you have higher charge-offs, you had a big contraction in your billings. I think what was different about that recession is there were massive wealth effects where you had a huge reduction in both the housing market and the stock market.

If we think about a more garden variety recession with much more modest, hopefully, corrections in housing markets, where would you expect to see the most stress in your business in a more basic recession?

Jeffrey Campbell

Well, I’m only smiling because of course we could probably spend the rest of our time debating what is a garden variety recession. Certainly as a company, I will tell you we model lots and lots of different scenarios because the one thing we can be fairly confident of, the next downturn won’t look hopefully look like the last one.

Look, I go back to on the consumer side, we are very focused again on the premium customer. If you look at the most recent quarter as one little snapshot and you look at the new people we’re bringing into the franchise, over 70% or about 70% were on fee-paying cards. Nobody else in the industry really has value propositions that attract people who are willing to actually pay significant fees. That tends to give card members an attachment to the brand and to the product that I would suggest is very helpful to us in all economic environments, including a downturn.

Now that said, I do want to acknowledge one thing, Mark, which is we do have a more premium oriented customer base. In certain kinds of downturns, if it’s discretionary spending that is most cut, that potentially initially will impact us perhaps more than others. On the other hand, remember in our mind the endgame here is how you come out of that downturn in a way that allows you to take share and be stronger, and so given our spend-centric model, we think we’re well prepared to manage that.

I don’t know if I’d call that stress, but if you want to talk about what’s something that when you look at our model is likely to make us impacted a little differently than others, I think our modeling will show you we expect lower credit losses than other people, we should expect quicker rebounds, we should expect more sustained profitability because of the 80% of our revenue stream that’s coming from fees. But you might, depending on the nature of the recession, see a little bit more of a decline on the consumer side in the discretionary spending.

Mark DeVries

Okay. Then just looking at longer term, how should we think about the focus for AmEx shifting, if at all, over the next couple years, and are there any changes to the drivers that investors should be focused on?

Jeffrey Campbell

You know, I think we reflect a lot as a management team, Steve and I talk a lot about what--if you were to summarize what has really changed and caused us to get back now to producing really steady high revenue growth, double digit EPS growth results each quarter, and more than anything else the word that we use is focus. We have refocused on the consumer side on the things that we believe are uniquely our strength and our most difficult for others to replicate, which means don’t chase after the commodity market. It means how do we appeal to people who--we use the word premium consumer. What do we really mean when we use that word premium, though, is people who care about a differentiated value proposition. Because of our global scale, because of our brand, we have the economics, the scale to do things like build out a global lounge collection, to attract hotels who pay themselves to provide benefits for our card members because they want access to our high paying card members. Those are the kinds of things that are difficult for others to replicate, and you’re going to see us, Mark, go even further into emphasizing the broader differentiated services and benefits. Lifestyle benefits is a word we sometimes use when you think about the travel and the dining. You’re going to see us go even further in that direction because we think it’s what most attaches our consumer to us and it’s what’s most difficult for others to replicate.

On the commercial side, outside the U.S. we just have a long runway to grow the small business franchise because it’s really so early in our own development and in many of the countries, frankly, the development of that market in general.

As you go up to the midsize and larger companies, the opportunity that we’re after, as is probably almost everyone that you’re talking to on the payments side because it’s just such a big opportunity, many of us can win, is you still in the commercial world have a remarkably widespread use of payment methods like ACH and checks, which are inefficient, high cost, which don’t provide good data, which don’t link back into the systems that mid to large size companies use to manage their enterprise, manage their purchasing processes, and so we think we are uniquely positioned with our integrated network, with the breadth of our existing footprint across businesses to be a significant player as that market slowly becomes more digital.

I will say, this is not an opportunity where, boy, we’re going to flick a switch and 12 months from now the significant percentage of use that you see of ACH and checks is going to be cut in half. This is a slow market to change. I think some of our team who calls on customers and talks to them about these products would say the CEOs of most companies don’t come to work saying wow, my top priority is to update my procurement systems and my payment systems. It’s slow. It will happen, and I’m answering the way I did because you said, how do things change over the longer term. We have a great, great environment that we’re in because in every country in which we do business, there was more use last year of digital payments than there was the year before, and there’s a long runway for that to continue. But what should be different when you go out a number of years is our progress into the B2B transactions that the mid to larger size organizations [indiscernible].

Mark DeVries

Okay. Switching gears, I just wanted to talk about the outlook for the rest of the year. On the last call, you reaffirmed the EPS guidance range but at the same time indicated it will be more in line with the middle of the range. Can you give us some ideas what’s driving you to the middle of the range and also talk what gets you to either the high end or the low end?

Jeffrey Campbell

To remind everyone, when we gave guidance for the year back in January, I would remind you, try to transport yourself back to everyone’s mindset in January. That was a time where there was probably a lot of debate about what was going on in the economy in the last couple months--or couple weeks, excuse me, of the prior month. December had seen the equity market crash, lots of uncertainty in the economy, so we put out a little broader range than we had in the past - $7.85 to $8.35, and we said at the time, the lower end is there in case the economy really does end up to be significantly weaker, and the middle to upper part is there if the economy looks more like it did in 2018.

As we sit here on September 10, certainly the economy has not plummeted, so I don’t worry too much about the lower end. The economy is, though, weaker than it was last year in every--no matter what stat you want to look at. It would coincide with what we see in our own business, which is good volume growth but not quite at the levels we saw last year. Frankly, when we put our plan together for 2019, we were riding right on the--in hindsight, but the peak of the wave of growth in 2018.

So when you think about our guidance range, we are in an environment that’s a little weaker economically than we had anticipated. On the other hand, we have credit performance that’s better than we expected. We lowered or improved some of our commentary in that area as the year has gone by. Going the other direction, we are super excited about the extension we signed with our most important business partner, Delta Airlines, which locks that partnership in until 2030, but it did come, as these things always do, with a modest re-pricing, and that’s about a $200 million increase to our cost this year that we had not put in the original guidance.

You put all of that into the mixer and that’s what leads us to today, saying just as I did back in July, it really hasn’t changed, Mark, that I’d expect us to be in the middle part of that range, with the ins and outs being the things I just took you through.

Mark DeVries

Okay. As you alluded to, you did improve your guidance around provisions, now expecting growth less than 20%, which is down from the mid-20s guidance. Can you just talk about what your expectations at the beginning of the year and what’s changed to give you confidence in this new guide?

Jeffrey Campbell

I think there’s three things I’d call out relative to--and maybe to level set for everyone, I think our original commentary was we thought provision would grow kind of in the mid-20% range. As I say that, I’d remind everyone our lending growth is in the low double digits. Three things--and now we’ve said it will be below 20%, so it was quite significantly below that last quarter. There’s really three things I would call out.


One, we did make some risk management changes last year, just being thoughtful about the greater potential for a more significant downturn, so we are seeing the benefits of some of the tightening up we did on the risk management side. Second thing I would point out is that we actually have evolved more than we had expected some of our new card member marketing and we are more targeted on the premium and the fee paying cards than we had been, and that actually helps a little bit from a mix perspective. The third thing is just that the environment is strong and, frankly, the performance of our existing card member base has been a little bit better than we expected, so all three of those things are probably in the mix there, Mark, but we feel really good about where we are in terms of our growth in lending.

I’d remind everyone that we believe we are uniquely positioned in the U.S. consumer market to grow a little faster than the industry, because historically we are massively underpenetrated in our own customers’ card-based borrowing behaviors. We cite this statistic a lot, it depends on exactly which market you look at and which time period, but 40 to 45% of the spending done by our card members, they do on an AmEx product; but if you look at those same people and you look at their card-based borrowing, they only do about 20% of it on AmEx, so we’re very underpenetrated.

We’ve gotten steadily more thoughtful over the last few years about having the right product, the right pricing, the right risk management practices, the right marketing approaches, the right incentives. We’ve begun to change people’s perception that I can’t carry a balance on an AmEx card - well actually, you can on many of our cards. We’re not trying to get more than our fair share of our own customers’ borrowing based behaviors, but we do want to get our fair share. While we’ve been growing a little faster than the industry, we just see it as recovery from years, if not decades, of under-penetration. Over 60% of our growth just comes from getting more thoughtful about spending--or getting the business, if you will, the borrowing business of our existing card members, so we feel good about that progress and we think there’s a long, long runway to continue to do that.

Question-and-Answer Session

Q - Mark DeVries

Okay. I’m going to pause here and open it up to the audience for questions. If you have any, please raise your hand.

We’ve got one up front?

Jeffrey Campbell

Front row.

Unidentified Analyst

Thank you. Could you talk a little bit more about the B2B payments and how much of a focus that would be, and if you’re making investments into, for example, accounts payable, accounts receivable software, and how much of a focus is that?

Jeffrey Campbell

Yes. Well, I think it’s important--as I said earlier, I suspect everyone on the stage at this conference who’s in payments will talk a little bit about the size of the opportunity. We see the same thing everybody else does, we don’t have any different view. We see it as something that will develop at a modest pace, and we see it as something that, frankly, lots of people will win at. It’s just a big market, there’s lots of growth there.

To be clear, our existing core businesses are great businesses. Our international small business segment, which is growing in the high teens, that’s just traditional core card business. There’s a long runway to continue to do that. Our U.S. small business franchise, where we’re bigger than our next five biggest competitors combined, is a great business. It’s mostly just traditional card, although I would point out that small businesses use the card to run their businesses. They’re not using it for T&E, they are using it for B2B, for all of their payments, so that core business is super healthy and will continue to grow.

I just want to calibrate carefully, so yes, we have a focus that includes being thoughtful about both partnerships and a few small acquisitions, about how do we better embed ourselves in the payment flows, but particularly more at the higher end of small businesses mid-market companies are using. That’s why you see us doing partnerships with everyone from SAP on the big side to Tradeshift to Bill.com to MineralTree. All of the partnerships are about we want the AmEx payment option to be where the small to midsized business is when they go to figure out, wait, is there a payment method I can use other than [indiscernible]. It’s slow, though, and we don’t think there’s one answer or one person who’s going to win. That’s why you see us doing lots of different partnerships across the landscape. That’s why we think there’s probably one set of answers for small business, one set of answers for midsized businesses and a different set of answers for the biggest businesses, and we want to have our finger in lots of pies.

I brought this up earlier. I would remind everyone in the context, Mark, of you saying what looks like different when you look out a few years, I think if you look at our growth in the next 12 months, I don’t think what I just talked about will have a hugely material impact on the over trillion dollars of billings that we’re going to do this year. Five years from now, I think it’s a material opportunity, and so we’re calibrating our own internal resource deployment in line with the fact that it is a medium to long term opportunity.

Mark DeVries

Anyone else? Okay, we have time for one more. Even though only 15% of the people indicated that CECL is not a problem and 3% think it’s positive, I’m still going to ask you a CECL question. Your guidance on the lower charge coverage there was pretty intuitive, but your guide for a 55% to 70% increase in your credit card reserve was a bit higher than what we were expecting, and higher than what many of your peers have indicated. Can you give us some color on what’s driving your larger reserve build on your consumer credit side relative to what competitors have talked about?

Jeffrey Campbell

Yes, I notice you saved CECL to the end - that was good. Look, let me make a couple of points, and let me start maybe at 30,000 feet. One, CECL is pure accounting. Nothing changes about the economics of a company, nothing changes about our ability to generate cash. Nothing should change about our valuation.

Two, there will be for us, for everyone a one-time balance sheet charge that we take January 1. For us with a 30% return on equity and a modest amount of capital we need to deploy each year to support our growth, frankly the one-time hit to capital is not particularly significant, we’re not worried about it.

Third point, however, is that we are growing our lending a little faster than the industry, and that means that it is likely that our provision expense next year will be higher than it otherwise would be, even though nothing has actually changed about our underlying economics. That’s something you’re going to hear us continue to talk about, because I would suggest that should not have any impact on our valuation, nothing changes.

Now, why are the numbers, Mark, so hard? Luckily you’ve only given me 38 seconds, but this just unbelievably complicated. I will tell you we are actively engaged with the FASB, with the SEC, with the Fed. CECL is a life of loan concept. When you apply it to a revolving product, you get kind of crazy results. You get complex results. For us to calculate CECL, we have over 150 models, 150 different customer segments, each of which is looking at over 100 variables, including a bunch of economic forecasts. When you say, Jeff, why is your number different than Discover’s or Citi’s, it’s going to be very difficult to answer that question.

We’re committed to talking a lot about the impact. We’re working through different ways we might add some additional disclosure to help people for this. We’re open to any and all suggestions, but I suppose I would put myself in the camp that I think CECL is a terrible thing for the industry. I think it will be unhelpful and, in fact, more confusing to investors and make it more difficult for you to look at comparable results. That’s why even though it’s still only a few months in theory from being implemented, we’re still lobbying, saying this is crazy.

I’ll stop there.

Mark DeVries

Okay, well that seems like a good place to end. Please join me in thanking Jeff for his time.