American Express Company (AXP) Q4 2011 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome the American Express Fourth Quarter 2011 Earnings Release. [Operator Instructions] And as a reminder, this conference is being recorded. I'll now turn the conference over to your host, Rick Petrino. Please go ahead, sir.

Thank you. Welcome, and thanks for joining us for today's discussion. The discussion today contains certain forward-looking statements about the company's future financial performance and business prospects, which are subject to risks and uncertainties and speak only as of today. The words believe, expect, anticipate, estimate, optimistic, intend, plan, aim, will, should, could, likely and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, including the company's financial and other goals, are set forth within today's earnings press release and earnings supplement, which were filed in an 8-K report and in the company's 2010 10-K report already on file with the Securities and Exchange Commission. In the fourth quarter 2011 earnings release and earnings supplement, as well as the presentation slides, all of which are now posted on our website at ir.americanexpress.com, we have provided information that describes certain non-GAAP financial measures used by the company and the comparable GAAP financial information. We encourage you to review that information in conjunction with today's discussion. Today's discussion will begin with Dan Henry, Executive Vice President and CFO, who will review some key points related to the quarter's earnings through the series of slides included with the earnings documents distributed and provide some brief summary comments. Once Dan completes his remarks, we will move to Q&A. With that, let me turn the discussion over to Dan.

Okay, thanks, Rick. So we will start on Slide 2, the Fourth Quarter Summary of Financial Performance. Total revenues net of interest expense were $7.7 billion, 7% growth on both a reported and FX basis. That compares to the third quarter where we had 9% growth reported and 6% FX adjusted. So down 200 basis points on a reported basis, but up 100 basis points on an FX-adjusted basis. Net income is $1.2 billion, EPS is $1.01. That is up 15%. You might remember that in the fourth quarter of last year, we had a reengineering charge, which was $74 million after tax. In the fourth quarter of this year, we also have reengineering, and that's $32 million on an after-tax basis. So if you were to back those out, EPS growth would be 11%. So return on equity was strong at 28%. You can see that our shares outstanding have decreased compared to last year, and that reflects our share buyback program. Moving to Slide 3. Now this is a full year slide for 2011, and total revenues net of interest expense was $30 billion. That's up 7% on an FX-adjusted basis. That's very favorable compared to most of the other issuing competitors. EPS was $4.09, up 22%. So that's strong performance well above our EPS target of 12% to 15% growth. Moving to Slide 4, which is back to the fourth quarter, and these are our metrics. Billed business was $219 million, that's a record level of billed business for us. The growth was 11%, both on a reported and FX basis. So that compares to 16% reported growth and 13% FX growth in the third quarter, so a slight decline in billed business growth from the third quarter, which is what we've seen across the industry. So…

[Operator Instructions] Our first question will come from the line of Rick Shane with JPMorgan. Richard B. Shane - JP Morgan Chase & Co, Research Division: Obviously, a lot of what's going on in terms of spend is just a function of tougher and tougher year-over-year comps. But Dan, historically, one of the data points that you provided periodically was a stratification of spending trends by what you called wallet size or annual spend. Is there anything there that you can point to right now in terms of what's going on? Is there any difference between the high end and the low end at this point?

So that's usually the type of information we provide at one of our semiannual conferences and don't provide it on a recurring basis. I guess what I would say is what we saw in the quarter where our growth was generally higher than most of the other competitors is a reflection of our business model, and we're only reaping the benefits of the investments that we've made over the past couple of years. While the growth rate did decline from the third quarter, I think we've seen that really across the industry. And the decline really was pretty spread out across the globe and really across most of our businesses. So it's kind of the -- what we're seeing, I think, is really a reflection of what's taking place in the economy. But at this point, we don't have other information to share in terms of changes that may be taking -- by different wallet size. As you know, when we had this decrease or recession, you saw the steepest reduction in people who had the highest spend because they had the greatest amount of discretionary spending. But we've seen those customers bounce back very nicely over the last 2 years, and they continue to have very high levels of engagement as you can see by the increases in the average spend of our cardmembers. Richard B. Shane - JP Morgan Chase & Co, Research Division: I'll cross my fingers that you guys put that out at investor day.

And our next question will come from Sanjay Sakhrani with KBW. Steven Kwok - Keefe, Bruyette, & Woods, Inc., Research Division: This is actually Steven Kwok filling in for Sanjay. Just a touch additionally on the spend trends. Just wondering, like, what was the trend that was seen during the quarter? Was it weaker throughout the quarter or did it get weaker during the quarter? And then if there's any updates on the first couple of weeks in January.

I would say it was pretty even over the course of the quarter, kind of month by month. So it wasn't a situation where December was notably different than the spending growth rate for the quarter. Steven Kwok - Keefe, Bruyette, & Woods, Inc., Research Division: Sure. And any updates on what we've seen month-to-date in January?

Not at this point. Steven Kwok - Keefe, Bruyette, & Woods, Inc., Research Division: I guess, another question is with regards to your longer-term targets and -- what are your thoughts about that for 2012 in an environment where it continues to remain slow growth economic environment?

Yes, what we'll see actually next year, as you indicated in your question, will be dependent on where the economy goes. And we fully recognize that we have had very strong growth over the last 2 years, so the comparables will be more difficult, and there are some benefits that are not going to reoccur. As we think about this, we want to make good, smart investment decisions that are going to drive the growth of the business over the long term. And as we think about all of our targets, we think about them as on average and over time targets. We've always kind of addressed it that way and we'll continue to do the same as we go forward. Steven Kwok - Keefe, Bruyette, & Woods, Inc., Research Division: Sure. And then final question, on the international yield side, do you think that the yields will remain kind of at the fourth quarter levels, or will it continue to decline from here?

Yes, so I think the change in yields that we've seen in international are a part of the focus on premium lending that we put in place. And that's what's really driving the yields down. To us, whether the yields in international stay exactly where they are or modulate from there, the important thing is one of the overall economics of the product focusing both on the spend that they have, the loan balance that they have, as well as the yield. In the U.S., we've kind of given guidance that we expect it to be kind of in this high 8% to 9% range, and you could see that we've stabilized in the U.S. at that level.

We will go next to Craig Maurer with CLSA. Craig J. Maurer - Credit Agricole Securities (USA) Inc., Research Division: Question on Membership Rewards costs. We saw that actually grow a bit slower than the U.S. billed business growth rate. Just some thoughts there and how we should expect that to trend as I'm modeling that to grow at a similar rate to the U.S. billed business growth. And secondly, when we think about your payout ratio, what's the company's -- what's your thought process on dividend versus buyback at this point?

So in MR, we had growth on the expense line of 10%, which is fairly in line with the growth that we see in spending. And most of our products have a report -- a reward component related to it. In any given quarter, it's also impacted by what the weighted average cost per point is and a number of other factors. So to the extent rewards is a couple of percentages, growth is a couple of percentages above or below, I would consider that to be in line with spending growth. So in the absence of an acceleration in redemptions, which lead to higher growth in the ultimate redemption rate, we would expect that rewards expense would grow generally in line with spending. Now as it relates to dividends payout, so we think about dividends as trying to, over time, maintain the kind of the yield or the payout ratio of dividends compared to earnings that we've historically have. So I would expect as earnings go up, we would try to keep that same type of payout ratio going forward, not radically change dividends either up or down. And to the extent we then generate capital, that is either dividend-ed out or used to support growth in our balance sheet to maintain our capital ratios, or to support acquisitions, we would use that in terms of share buybacks. We've said dimensionally we would expect about 50% to be retained in the business of earnings and 50% to be returned to shareholders, but that's very dependent on the number of acquisitions that are out there that we think are economical and will help us drive our business strategy. So this time if we saw more acquisitions we thought worthwhile, the payout could be a little lower than that. And to the extent we don't see acquisitions that we decide to make, then the payout ratio in a given year would be higher than that. So no change really in the policy that we've articulated over the past year.

Your next question comes from Bob Napoli with William Blair. Robert P. Napoli - William Blair & Company L.L.C., Research Division: Just as we think about 2012 earnings and your on average over time, the earnings forecast and our estimate are relatively flat with 2011. And I think at one point you had said or American Express had said maybe 2010 was a reasonable period to think about as kind of a base year for the 12% to 15% target earnings growth. Is that still true? I mean, just the expectations currently are for relatively little earnings growth as you don't have the reserve releases and you don't have the MasterCard/Visa payments, and you manage your expenses in a relatively slower growth than the global environment.

So as you'd expect, I'm not going to forecast next year's EPS, but you're absolutely right. What we have said is 2010 is a good base year and off of that, on average and over time, we would look to achieve the financial targets that we have out there in terms of 8% revenue growth and 12% to 15% EPS growth. So 2010 is the base year, and we haven't modified our targets at all. Obviously, we hit 22% growth in this year, and it's an example of when we are above that range. Robert P. Napoli - William Blair & Company L.L.C., Research Division: Tax rate for 2012, any thoughts on tax rate?

So our tax rate is generally 30% to 32%. So in the absence of benefits, either from planning or from the resolution of audits, I would expect it to be in that same range. Robert P. Napoli - William Blair & Company L.L.C., Research Division: And then the last question. Just on some of your initiatives like the Prepaid with Target, the Serve, I saw an interesting investment you made yesterday. Can you give any update on how's the Prepaid Target? How's that product looking? Loyalty Partners is something you guys certainly are pushing pretty hard. I'd love some update on some of these products.

So there are 3 different topics. So Prepaid, we think, is an expanding market. We are investing in Prepaid. We think it has very good growth rates over time and attractive economics for us. So that is an area that we are focused as a growth area. Target is just one example of some of the new products that we have out there. We're focused both in the U.S. and really globally for Prepaid. So we're very pleased with how the Prepaid business is growing. In terms of the announcement we made yesterday. Basically, we've entered into an operating agreement with a company in China named Lianlian. Basically, we are going to license our Serve platform, which will be really what drives a digital wallet that they want to develop. As we all know, China is a very large market. It provides an opportunity for us to participate there. And we also made a equity investment in Lianlian Pay, Inc. of $125 million. So it's very much in line with our strategy, and we're pleased with that agreement and investment. In terms of Loyalty Partner, which is the acquisition that we closed in March of 2011, we think we -- and it continues to have good growth prospects, which is the reason that we acquired it, and we're in the process of doing the work necessary to execute against our strategy. So I think each of those are moving in line with the plans that we've set out for each of the respective businesses.

And we have a question from Mark DeVries with Barclays Capital.

I wanted to ask about the rewards expense in a slightly different way. By our calculation, rewards as a percentage of proprietary billed business was down pretty significantly Q-over-Q to about 78 basis points from 88 basis points last quarter. And I think you also indicated there was at least a slight increase in the ultimate redemption rate in the quarter, so presumably that included, at least, a little bit of a reserve adjustment. Is that 78 basis point level assuming no material change in redemption rates from here, a reasonable run rate going forward?

So certainly you could kind of look at it on a basis points to billings basis. We have invested in making Membership Rewards a highly attractive program, which we think it is. We think it's terrific if customers increased the amount of redemptions they make, because there's a clear link between cardmembers who do redemptions and growth in their spending as we go forward. So improving the program and increasing engagement, which is reflected in redemptions. But that ultimately impacts our estimate of the ultimate redemption rate. We think it's a good thing for the franchise. In this quarter, it so happened that, that increase, which is a slight increase, was similar to the fourth quarter of last year. If in fact as we go forward that ticks up, the ultimate redemption rate, we would actually view that as a positive thing, long term for the franchise. As you saw in the second and third quarter, if it moves up quite a bit compared to the prior year, then you get high growth rates on this line. However, if the ultimate redemption rate stayed at the current level with modest increases, which was similar year-to-year, then I think you have this relationship of rewards to billings continue into the future.

And understanding that you're not going to rigidly managed to that 8% long-term revenue growth target year-to-year, that said, in an environment where organic growth may be challenged because of the economy, does that create any greater sense of urgency for you to deploy some of those retained earnings and investments that may generate more immediate revenue benefit than, kind of, benefits that are further out?

Okay. I think there's a tremendous focus on revenue growth in our industry. Certainly, what happened with the economy, which is uncertain, will have a bearing on whether we achieve the 8%. But I think it's important to remember that our business model is very different than many of our issuing competitors. They are very dependent on loan growth, which is particularly challenged. Net interest only represents about 15% or only represented about 15% of our revenues in this period. So to the extent we're successful with our business strategies and drive spending, then I think we're going to be in a better position than many of our competitors in terms of achieving revenue growth as we go forward. But in terms of how we allocate our investments, certainly as we've said in the past, we look to allocate investments to things that will give a short-term benefit, some to the medium term and some to the long term. Certainly in periods where things are more robust, you may tend to allocate more to the long term. And if it's a more challenging environment, you may do more focus on the piece that has short-term benefits. But we would never skew completely away from investing in medium to long term because we really do look at achieving results on average and over time, and that we're in the midst of investing in some new businesses that we think are -- have a lot of potential to them. So we would not detract from continuing to invest in those new businesses as we go forward. But certainly, we can modulate in terms of the amount we allocate into the short, medium and long-term buckets.

We will go next to Ryan Nash with Goldman Sachs.

Just a question and a follow-up from earlier on the capital front. So you're clearly still well above the targets that you had laid out several quarters back. And I think you returned 56% of capital this year, which is above the 50%. But should we not see any acquisitions materialize in the near term? Could there be the expectation that you could go above the 50% -- the 50% to 60% in the near term in terms of capital returns?

If you think about the amount of capital that we generate, which is substantial, we have a fair amount of capital that we have discretion in terms of how we actually use it. So we generated earnings in the year of nearly $5 billion. So to the extent we're allocating 50% to really build the business because consumers are cautious about taking on additional loans. The growth in the balance sheet hasn't been that significant, so the amount of capital that's actually required to support that is $500 million or $600 million last year. So it leaves a lot of capacity for acquisitions. And if we find good acquisitions that can help us achieve our business strategies, we're going to go and make those as long as the price and the economics are reasonable. And if we found more than $1.9 billion, we go higher. On the other hand if we don't see good acquisitions, we would be inclined, actually, to return that capital to shareholders, if we're not going to use it in the very near term. That's always been our philosophy and will continue to be our philosophy. But if we see good acquisitions, we will seize on them. If not, we'll return the capital to shareholders.

Okay, and I guess -- well, it's a relatively smaller part of the billed business. Can you just give us maybe a little bit more of a sense of what you're actually seeing out of your customer base in Europe? I mean, I think you referenced something like you saw growth in the U.K., Germany and France and that there was declines. Any further clarity you could give just on what you're seeing or what your expectations are for that?

Okay. So let me just add 1 or 2 more sentences to my prior answer as related to capital. So what I just described is the capital philosophy that we have, but obviously, what we actually do would be dependent on the Fed approving the plan that we submitted to them on January 9. So I would just put that as a modifier to the comments I made a minute ago. As it relates to Europe, I mean we saw 8% growth in the third quarter, 4% growth this quarter. The countries, certainly the U.K. and Germany and France, the companies that are -- the countries that are stronger, there we've seen declines from previous quarters in terms of growth rate, but still we're seeing growth in the mid-single digits, which is pretty good. And as you'd expect in the countries that are more impacted, we're seeing less growth or actually a slight decline, which is what we saw in Italy. So beyond that, I don't have any other additional color to add, but I think that will give you a sense. And what you'd expect is exactly is what we're seeing: more impact on the countries that are under greater economic stress in terms of their funding.

We will move on to Marc Lombardo with Meredith Whitney.

Just wanted to see, kind of following up on Ryan's question. Are you able to breakout the percent that Europe represented in billed business either for 4Q or for 2011?

In terms of what percent of billed business? So in 2010, it was 12%. So if you look across the year, based on the information that we provided to you, Europe has actually grown at a slower rate than the rest of the world. So it could be still 12% or slightly less than that, but I would say in that neighborhood. Probably a little less than what we had last year when it represented 12% of billings.

Okay, great. And then domestically, are you noticing that cardmembers are trading down still?

Trading down in terms of the average ticket price?

Correct.

So I don't think we -- I'm not aware that there's been any notable change in average ticket price. The positive is in the U.S., billings have really held up well. Growth has been 11% compared to 12% last quarter. And it's pretty broad-based, both in consumers, small business and corporate spending. So -- and as I said before, the average spend of our customers continues to grow very nicely, showing high levels of engagement on their part.

Your next question is from Chris Brendler with Stifel, Nicolaus. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: I don't know if you addressed this or not, I have been multitasking here, but could you comment on [indiscernible] any update on the Department of Justice case? I believe at that time in October of 2010, you'd set it around a 2-year window for some movement in that case. Is there any timeline that we should be aware of there? And then secondarily, is there any thoughts you can give us relative to your rules on surcharging and whether or not Visa and MasterCard are rolling back their rules on surcharging a lot [indiscernible] in the U.S. could impact your business model?

So there's no real update on the DoJ case. The first time that we'll have anything new would be there is a schedule to complete discovery I think in the first quarter of 2013. So right now, this discovery is taking place, and that'll take place over the course of the next year. So no real update in those terms. In terms of surcharging, I think there's nothing new on our part in terms of any changes to our policies in that regard. And the place we have seen surcharging to the greatest degree, which is a little bit of an old story now, is Australia. Certainly it had an impact on us initially, when it took place a couple of years ago, but we continue to evolve our business strategy there and have had very healthy growth rates in the market and are doing well. So nothing really to update that's new as it relates to surcharging. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: Is there any relationship between the 2? The DoJ kind of seem, as a matter of fact, seem to be okay with surcharging. It's more about allowing discounting. Is it possible you could allude [ph] to the DoJ case to retain the ability to not allow merchants to surcharge in the U.S.?

So I think that case is primarily whether merchants could steer from one credit card company to another credit card company. I think it's the basis of the primary point in the suit. As we've said before, we have an advantage on the discount-rate basis compared to Visa and MasterCard, but there's only a certain limited amount of economics there. So it could be a real question in my mind of whether there's enough economics to actually cause somebody to switch from one credit card product to another credit card product given the potential cost that could be involved in that. But it's really a case focused on whether merchants can steer from one credit card to another. Basically within Durbin, they're allowed to steer from credit cards to debit, but that case is about credit card to credit card. And merchants have always had the ability and the right to give discounts based on payments for cash.

Your next question comes from Brad Ball with Evercore.

Dan, your net interest income as a proportion of total revenues has been coming down 15% this quarter. I think it was historically in the sort of 20% range. Should we expect that trend to continue the decline in net interest income as loan growth is less of a focus and you continue to look at higher end transactors?

Yes, I think it's going to be totally dependent on the behaviors of our customers. If you look at the paydown rates in the lending trust last month or even a year ago, they are kind of all in that 30% range up a little bit, down a little bit. So we had gone through a period where it was increasing quite a bit. It seems to have stabilized here some. So it depends on whether that continues. We are focused on premium lending, but it certainly doesn't mean that our customers aren't going to evolve periodically. Certainly, they're picking a lending product because they want the ability and opportunity to revolve periodically. Now as we've talked about, we have some more transactors that we had historically in the portfolio. But I think lending will continue to be an important revenue stream at 15%, but it really depends on how consumers think about debt and how far they want to leverage. I don't think anybody knows whether that's complete yet or whether it will start to be more willing to take on some more revolving debt periodically. So really we're going to have to wait and see how customer behavior plays out. It's hard to pinpoint it since it's really a new space for where they were historically. But for us, the important thing is to put products in the marketplace that meet our customers' needs, and then they can use the product in a way that really meets their needs. So we can continue to be focused on that. But certainly, if there's the ability to put products out there in customers' hands and they would choose to evolve more, that's fine with us as long as the credit is right. Or if they choose to evolve a little less, that's fine with us as well. So we'll have to see how it evolves. It's really dependent on customer behavior going forward.

Okay. And what proportion of your lending book is at introductory rates now?

So I don't know what it is, but it's very small. You can certainly see from public data that we are not using balance transfer the way some competitors are. And even in our acquisition, it's not a huge tool. So I would say the amount at introductory rates is relatively small within the scheme of the whole portfolio. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: Less than 10%?

I don't know. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just your net interest yield declined. You've guided to, I think in the USCS business, 8% to 9%. Is any proportion -- any portion of the decline this last quarter or any of the guidance driven by CARD Act-related look backs?

So the answer to that is no. We thought it would -- before we started, before the CARD Act was passed, we were kind of in this high 8%, 9% range. When we put in pricing changes, we said our objective was to get back to where we were after the impact of the CARD Act. And we were successful at doing that. 20 basis points on a year-over-year basis is pretty minor, but it's not due to a look back. Certainly in the future, regulators will come and take a look at that, and you'll feel pretty comfortable with our position. But until you actually have somebody come in and look at it, you don't know if they concur completely with the steps that we've taken. But from our perspective, we're in an appropriate spot. And to specifically answer your question, no, it wasn't due to a look back. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: Got it, okay. And then just one unrelated real quick. What proportion of total billed business is GNS right now?

So I don't know exactly. Have we disclosed this? I think it's about 15% in that range. Could be 14%, could be 16%, but we'll take a look and before we get off the phone, answer that question. I think it's 15%. Christopher Brendler - Stifel, Nicolaus & Co., Inc., Research Division: This was, I think, the first time in a while you've seen billed business growth below 20% in GNS. Is there anything to be cautious -- caution on in that area?

So I think we were getting a lift over the last couple of quarters as a result of the Macy's agreement that we put in place. But if you go back, we have many, many quarters where GNS business was growing at more than 20%. And 17% growth, which is what I think we had this quarter, is pretty darn good. So I think GNS continues to be a very good line of business for us, and we think it has good prospects as we go forward.

And our next question will come from Scott Valentin with FBR Capital Markets. Scott Valentin - FBR Capital Markets & Co., Research Division: Dan, I believe earlier you referenced the uptick in U.S. Card Services, the -- or charge card services, the charge-off increase. You mentioned that obviously, new business is not going to limit charge-offs but to drive revenue at an economic return. But can you talk about maybe how you've widened the credit scope maybe for the charge card customer? I don't know if you could give FICO or maybe tiering ranges, but it sounds like you're going a little deeper in terms of credit.

So we basically keep our credit standards pretty constant, both in the past and now. Certainly, when the recession hit, we tightened up some, but I think now, our view in terms of the type of credit worthiness that we want is not dissimilar to what we've looked for historically. Certainly we've built in to our models all those earnings that we've had over the past couple of years. But the good growth we've had is really based on the fact that our strategy is to grow charge card and that we've allocated investments to acquiring charge card customers, which is what's really driving really the growth in that business as opposed to having credit standards that are not as tight as we've historically had. So we'll do it by designing products that customers want to have and by adding both acquisition investments and loyalty investments that drives higher levels of spending. Scott Valentin - FBR Capital Markets & Co., Research Division: And then regarding marketing and promotion, you pointed out that your expense containment, you guys are executing on your strategy and one of the key areas of reduction of expense has been marketing. But it seems that some of your peers are ramping up marketing spend now. And I was just curious, how would you respond to that? Do you watch market share? And I guess, is it possible to maintain low marketing spend in the face of an industry that seems to be increasing marketing spend?

So we certainly do focus on market share. I mean, one of our objectives is to continue to gain market share. And if you look back over the last 10 years, other than in periods when there's a slowdown, we've gained market share. I think if you went back to 2002 or something, our market share was, in the U.S. for credit, was 19.9%. And today, it stands at about 26.4%. So we've made steady progress there, and we want to continue to make steady progress. Now you refer to low levels of investment. So I would say we're in actually the opposite position. In terms of marketing, in 2010, we took marketing expense to very high levels, levels notably above where we've ever been before. We think about marketing, if you look historically, as being about 9% of revenues. And in this quarter, we're at 9% of revenue. So we think those are levels of investment that can drive the business. So it's nice to have even higher levels. But at this level, we think we can be successful at driving business in a way that helps us meet our financial targets. And the level of investments that we're making in some of our other businesses that run through the OpEx line, as we talked about before, we have increased those. And we think we have levels of spending and investment that, again, can continue to grow our business. So I don't think about investments being at a low level. They are at very healthy levels as we go forward. Scott Valentin - FBR Capital Markets & Co., Research Division: Okay. And one final question. As you have pointed out earlier the call, revenue seems to be a challenge for you. And revenue growth seems to be a challenge to the industry. And just wondering if we're starting to see receivables, loans pickup little bit to find, like, 3% growth. Is that eventually ever going forward, maybe emphasize loan growth a little bit more and collect more interest income to offset maybe slowing billed business growth elsewhere?

Yes. So I think it will be really be driven a little bit by what I talked about before. We're going to look to continue to have products in the marketplace that meet our customers' needs. So I would say if we see loan balances decline, it would be because the customer's deciding to be more cautious. And if we see loan growth pickup some, it would be because the customer wants to utilize the revolving feature on the products in terms of how they live their lives. So I think it's going to be more driven by consumers' behavior than us changing our focus on whether we want to just put on more loan balances. We, as a company, have never had a target in terms of what loan should be or what loan growth should be. Where loans go is simply an outcome of how our customers decide to use the products that we put in their hands.

And we have no one else in queue.

Okay, very good. All right. Thank you, everyone, for participating on the call. Have a good evening.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.