Oct 22, 2026 earnings call — Loan growth and credit improvement
End-of-period loans grew 7% to $18.9 billion, driving revenue growth of 5% and net income of $156 million.
Revenue $1.0B (est $1.0B) · EPS $3.84 (est $3.34)
Key quotes
"Based on year-to-date results and our ongoing favorable trajectory we are improving our full year 2026 net loss rate guidance for the second consecutive quarter, now expecting a full year net loss rate below 7%."
"Additionally, we completed our bank merger on October 1, and which provides greater flexibility to continue to grow consumer deposits as a core funding source."
"During the quarter, we renewed and extended long-term agreements with 2 of our top 10 partners, Signet Jewelers and Sephora, important proof points for the resilience of our relationships and the value of our business model."
Analyst Q&A 9
consumer health and credit path
Q (Sanjay Sakhrani · KBW): How is the consumer holding up and what is the path for credit quality? Also, how should we think about NIM next year and the impact on efficiency ratio?
A: Management said the consumer is resilient. They see strong, intentional spending across categories like sporting goods, home improvement and beauty, with some bargain hunting. They expect losses to trend lower next year but not improve as sharply as this year, and they expect NIM to be flat to slightly down next year while efficiency should improve over time from scale and investments.
"Next year, I would expect net interest margin to be flat to slightly down, in part because you have a continued improving credit environment that you're going to have less billed late fees." — Perry Beberman (CFO)
profit share and new programs
Q (Moshe Orenbuch · PDC): How should we think about RSA over time given higher growth and renewals? Also, where are the biggest opportunities for new programs or acquisitions?
A: They said more programs are moving to profit share, which aligns interests, and RSA as a percent of credit sales should rise somewhat over time. Management noted strong renewals with Signet and Sephora and said the pipeline is broad across industries, including many de novo and start-up opportunities rather than one standout sector.
"One is we are really pleased with the renewal of Signet and Sephora, they are our long-term partners." — Ralph Andretta (CEO)
sources of loan growth
Q (Terry Ma · Barclays): How much loan growth into 2027 will come from existing partners versus newer programs, and when will new programs be meaningful? What are retailers focused on in renewals or new deals?
A: They said 2026 growth reflects foundations laid in prior years; gross loss improvement lets new vintages contribute more to growth. Recent signings will continue to roll through, existing partners that reinvest can drive growth, and installment loans should keep growing; retailers focus on trust, team experience and capabilities like service, technology and data when evaluating deals.
"When we go to a partner, it's not just a sales call." — Ralph Andretta (CEO)
returns and capital use
Q (Mihir Bhatia · BofA): What risk-adjusted return hurdles do new programs need to clear and are new programs as profitable as older ones? Also, what CET1 level will you manage to and what should we expect for buyback timing and preferred issuance?
A: They said economics vary by program and some perform differently in various economic conditions, but every new program must clear internal return hurdles that drive toward their mid-20s ROTCE target. They reiterated a CET1 target of about 12% to 13% and said they may issue preferreds (about 1.5% of RWA), noting preferred issuance and funding growth will limit buybacks in Q4 with seasonality freeing capital in Q1.
"So everything has different returns, but the programs that we're putting on, we make sure that they hurdle our internal return requirements all of which has to drive us towards those mid-20s ROTCEs that we've committed to." — Perry Beberman (CFO)
deposit costs and target mix
Q (Girard Sweeney · Evercore): How should we think about deposit cost pressure versus funding benefits, and do you expect consumer deposits to rise above the current 53% share?
A: They said NIM is near neutral to rate moves; rising rates can give temporary benefit but deposit costs will rise as new deposits come in at market rates, yet they do not expect NIM compression from deposit pricing. They aim to grow direct-to-consumer deposits and see a long-term target in the 60% to 70% range, which will take several years.
"I expect that the long-term target will match pure funding in that 60% to 70%, but that will take a number of years to get there." — Perry Beberman (CFO)
regulatory watch and expense plans
Q (Donald Fandetti · Wells Fargo): Are you watching any regulatory changes ahead of the midterms? And how will tech and AI spending affect expense growth next year?
A: They said they are watching Washington but currently see a steady state and will work with whichever administration is in power. On expenses, they expect higher Q4 costs due to seasonality and investments, but they remain focused on operational excellence and say efficiency programs produce tens of millions of dollars in annual savings that fund technology, service, collections, marketing and AI; they remain committed to positive operating leverage though year-to-year results may vary.
"Those savings kick off tens of millions of dollars in efficiencies per year that we're able to deploy back into the business to fund different initiatives for technology, service and collections, marketing and also drive further revenue opportunities and optimization." — Perry Beberman (CFO)
deposit pricing and interchange trend
Q (Jeffrey Adelson · Morgan Stanley): Could deposit costs rise more slowly this cycle given your savings rate and scale? And is the recent rise in interchange percent of credit sales the right trajectory?
A: They said scale and brand recognition may allow them to shave basis points over time, but the market is competitive and deposit growth must outpace loan growth to increase the deposit share. On interchange, they said the recent rise may be a bit faster due to renewals this quarter but expect it to steadily ramp over time.
"I would say that perhaps it's a little faster because of renewals linked quarter and going into 4Q." — Perry Beberman (CFO)
Q4 loan growth and bank consolidation
Q (Dominick Gabriele · Lupe Capital): Does the Q4 loan growth guide imply spending will decelerate or paydowns will rise? And what cost or other synergies come from combining the banks?
A: They said the Q4 comp is harder because last year's furniture vertical launches boosted last year's Q4, so that dampens year-over-year growth this quarter and holiday spending is the wildcard. On consolidation, they said the banks were combined from a position of strength with no conditions, which allows funding more assets with direct-to-consumer deposits and creates capital efficiencies and a stronger, more diversified balance sheet.
"So we can fund more assets with direct-to-consumer deposits, as we've just talked about." — Ralph Andretta (CEO)
proprietary products and mix impact
Q (John Hecht): Are proprietary cards and installment loans cross-sells or new customer acquisition channels, and how will the higher-quality mix affect margins and other metrics?
A: They said the portfolio is evolving from private label toward more co-brand, retail co-brand, top-of-wallet and installment loan products. These products have different yields, loss profiles and expense costs, which should pressure NIM but improve credit performance and help efficiency ratios when balances are larger; channels vary by partner between online and in-store.
"All of which, to your point, have very different metrics whether from the top line loan yields to risk-adjusted margins because they have different types of losses, different expense costs associated with them." — Perry Beberman (CFO)