Welcome to the Synchrony Financial First Quarter 2018 Earnings Conference Call. My name is Vanessa and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. And I will now turn the call over to Mr. Greg Ketron, Director of Investor Relations. Sir, you may begin.

Thanks operator. Good morning everyone and welcome to our quarterly earnings conference call. Thanks for joining us. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules, and presentation are available on our website, synchronyfinancial.com. This information can be accessed by going to the Investor Relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third-parties. The only authorized webcasts are located on our website. Margaret Keane, President and Chief Executive Officer; and Brian Doubles, Executive Vice President and Chief Financial Officer will present our results this morning. After we complete the presentation, we will open the call up for questions. Now, it's my pleasure to turn the call over to Margaret.

Thanks Greg. Good morning everyone and thanks for joining us. I'll begin on slide three. Overall, we started the year on a solid note with net earnings of $640 million or $0.83 per diluted share. Loan receivables grew within our expected range and we generated strong net interest income growth. Purchase volume growth slowed in line with expectations given our underwriting refinements and average active account growth was driven by the attractive value propositions and promotional offers on our cards. The net interest margin and efficiency ratio performed as expected, as did our credit quality metrics. Brian will provide more detail on these ratios shortly. Supporting our funding objective, we continue to generate strong deposit growth, which was up 10% during the quarter. This is an important area for us this year as we continue to implement our prefunding plan in preparation for onboarding the PayPal credit portfolio, which we expect to happen in the third quarter of 2018. The prefunding will consist of both deposit and wholesale funding. Our capital position remains strong, and we continue to execute our capital plans paying a $0.15 dividend during the quarter and repurchasing 410 million of common stock. We also added some exciting new deals, renewed key relationships, and further expanded our CareCredit network. In our retail card sales platform, we recently signed a new exclusive partnership with Crate and Barrel. The program is designed to expand customers' financing options and reward customer loyalty. In addition to our private label credit card, we will be launching a Dual Card that can be used anywhere that MasterCard is accepted. We are excited about this new program and the innovative financing and rich rewards cardholders will have access to when we launch later this year. We also added new partnerships with jtv, a leading…

Thanks Margaret. I'll start on slide six of the presentation. This morning, we reported first quarter earnings of $640 million, which translates to $0.83 per diluted share. We continue to deliver good growth, with loan receivables up 6% and interest and fees on loans receivables up 8% over last year. Overall, we're pleased with the growth we generated across the business. The interest and fee income growth was driven primarily by the growth in receivables. Purchase volume grew 3% over last year. The slower growth in recent quarters reflects the underwriting refinements we have noted previously and the hhgregg bankruptcy. I will cover the impact of the underwriting refinements we've made in more detail later in the presentation. As we move forward in the impact from these items are included in the prior year run rate, we would expect their impact to moderate in future quarters. Average active account growth was 2% over last year, driven by the strong value propositions and promotional offers on our cards that continue to resonate with consumers. The positive trends continued in average balances, with growth in average balance per average active account up 4% compared to last year. RSAs increased $36 million or 5%. While we shared the strong topline growth and positive operating leverage generated in the quarter, this was offset by higher incremental provision expense. RSAs as a percentage of average receivables was 3.7% for the quarter, the same level as last year and in line with our expectations. The provision for loan losses increased only 4% over last year, a significantly lower increase than we have been experiencing over the past two years. And the reserve build in the quarter was $164 million, lower than the $200 million to $225 million range we had expected and substantially lower than the…

Thanks Brian. I'll provide a quick wrap-up and then we'll open the call for Q&A. Guided by our strategic priorities, our results this quarter, including the many renewals and program wins, demonstrate our commitment to our partners and cardholders and the value they derive from our products and services. We started the year with solid results, fully in line with our expectations and we'll continue to focus on generating momentum as the year proceeds, working every day to earn the business of our partners and attract new programs. Returning capital to the shareholders remains a key priority and we are pleased to continue to return significant capital to shareholders through our dividend and share repurchase program. We are also deploying capital through organic growth and program acquisitions. The previously announced acquisition of PayPal's U.S. Consumer Credit Receivables portfolio is an example of this, as are the strategic investments we are making in our business to help it grow. At the end of the day, we remain focused on risk adjusted returns, on making strategic business decisions that help us grow our business and deliver value for our partners, cardholders, and shareholders. I'll now turn the call back to Greg to open up to Q&A.

Thanks Margaret. That concludes our comments on the quarter. We will now begin the Q&A session. So that we can accommodate as many of you as possible. I’d like to ask participants to please limit yourself to one primary and one follow-up question. If you have additional questions, the Investor Relations team will be available after the call. Operator, please start the Q&A session.

Thank you. We will now begin our question-and-answer session. [Operator Instructions] And we have our first question from Moshe Orenbuch with Credit Suisse.

Great. Thanks. And really helpful detail in terms of the credit steps that you're taking and its impact on the overall portfolio. When you think about what you've done and this -- your ability to generate kind of 8% growth, perhaps 720, I guess, is the reduction in the sub-660, is that something that's ongoing or are there are steps that you're taking to figure out how the put that back so it's not going to be as big a drag at some point?

Yes, sure Moshe. So, what I would say is that what we're seeing right now in the purchase volume, both last quarter and this quarter is really the cumulative impact of the changes that we started to make back in the second half of 2016. So, I think you're going to see a continued reduction in purchase volume on accounts below 660 FICO. I think it probably lasts maybe through the balance of this year and then I think as we get into 2019, just given that we will be comping against those periods where we have lower sales in that segment, I think the purchase volume will kind of moderate or impact on the purchase volume will moderate as we get into 2019 and you won't feel as much of an impact on the overall stats. Does that make sense?

Got it. Yes, it does. And just on a related matter, maybe. Given that I think that the level of overall credit in the PayPal portfolio is slightly below yours, how does that inform your thoughts about how you can manage that portfolio from both existing credit and the group standpoint?

Yes, that's a great question. I mean, first, I'd say that we don't just look at the loss rate when we're evaluating one of our programs. We look at the overall return that we're earning on the program; we look at the resiliency of those earnings in various scenarios, including stress scenarios. And what I can tell you is that we're very comfortable with the risk profile of the PayPal Credit portfolio. I think it's well underwritten. We really like the risk adjusted returns. With that said, while we don't see -- I don't see any significant underwriting changes that we're planning to make at this point. We're obviously going to work with PayPal very closely. I think one of the benefits is they've got a ton of data on their customers. We're going to marry that up with some of our tools and I think jointly, we'll be in a position to make really good underwriting decisions going forward. But I wouldn't expect to see any significant changes. Again, overall, we're very comfortable with the risk profile of that portfolio.

Got it. Thanks very much.

And thank you. Our next question comes from Ryan Nash with Goldman Sachs.

Hey. Good morning, guys.

Hey Ryan.

Brian, in regard to the reserve build whether this quarter or into 2Q, can you maybe separate for us what was driven by growth, given the fact that the portfolio has -- the growth rate has have over the last year or so and versus what's driven by normalization? And I take the point that you're going to be giving us specific guidance related to PayPal after the deal closes, however, can you just provide us with some view of how we should at least think about the build in the back half of the year, how much will come in the back half of the year versus maybe how much will come in 2019? Thanks.

Yes. Sure, Ryan. So, if you think about the reserve build of $164 million, obviously, that came in below our expectations, which is good news. It was driven primarily by a combination of moderating impact from credit normalization. Receivables growth drove a small portion of that. It came in slightly below our expectations. But if you remember, we guided to 5% to 7% receivables growth, we came in at 6%. So, I would say on the receivables growth that we're tracking pretty much in line with expectations. So, really, what you're seeing when you think about the reserve build is the impact from the underwriting refinements that we made. So, things are trending in the right direction, very much in line with our expectations. So, as you think about the second quarter just based on the trends that we're seeing we think the reserve build next quarter will come in in a similar range something around $175 million. And again, significantly lower than the trends we were seeing in 2017. So, that gets you through the first half of 2018 and then as you think about PayPal coming on. The thing that you've got to remember with PayPal is it comes on with no reserves. We're obviously going to book our standard 14 to 15 months of forward losses. Those reserves will get built over nine to 12 months and think about a fairly significant portion of that reserve build coming in the second half. So, you'll see more of that reserve build in the third quarter, in the fourth quarter, and then it starts to taper off as you get into the kind of the first half of 2019. Other than that--

Got it.

…we've got to bring the book on. We'll give you a little more color next quarter when we have a really good sense at that point of what the portfolio looks like.

Got it. I appreciate the color. And then while I know it's still early just given your comments around the recent vintage performance and based on the trends that you've been seeing I guess are you guys still expecting credit in the core portfolio to begin to level off in the second half? And maybe early what do you think this could potentially mean for 2019 charge-offs on the legacy portfolio ex-PayPal?

Yes. Ryan I think it's a little early to start calling 2019 net charge-offs. What I can tell you is that the first quarter was very much in line with our expectations. We're not changing our view for the full year. We continue to expect net charge-offs to be in that 5.5% to 5.8% range for the full year. Everything is pretty consistent with what we communicated back in January. When we look at the vintages they're performing in line with our expectations. The 2017 vintage looks better than 2016 and more in line with 2015. We're obviously as we talked about earlier remixing the portfolio a little bit, a little bit less than below 660, a little more and above 720. And you're seeing that come through in both the reserve build and delinquencies which have moderated in the past two quarters. And I think those are probably the two best indicators that tell you things are on track.

Got it. Thank you for taking my questions.

Yes. Thanks Ryan.

And our next question comes from Don Fandetti with Wells Fargo.

Brian good morning. Clearly credit seems to be improving on a year-over-year basis, but as you talk to investors, I think one of the big concerns right now is sort of renewals and how to think about and should that sort of cap the multiple and obviously can't comment on that. But can you give us some any sort of commentary around these big renewals that you have in 2019? Do you think you'd be closer to providing some kind of color as we go through 2018? Or will this just sort of hit us one day, and we'll get a press release?

So -- hi it's Margaret, how are you?

Hey Margaret.

So, what I would say is we're well-entrenched with in partners and working every day to do these renewals. Obviously, we know what's important to communicate as soon as we can. What I can tell you is we can't really tell you sooner than when we know. But what I can tell you is the entire organization is focused on renewals. We work with our partners every single day to make sure we're meeting their needs and having the right conversations at the right levels to ensure we're working hard to get those renewals under our belt.

Okay. And Brian, a clarification on the delinquency. From a year-over-year basis, it improved in Q1. Do you see that -- do you see further improvement there? Or do we sort of have what we are going to see on a year-over-year delinquency change?

No, I think you're seeing a trend in line with our expectations. If you go back to the third quarter last year, the year-over-year increase was 54 basis points, it came down to 35 last quarter, it came down to 27 this quarter. So, that's trending in the right direction. Look, I wouldn't read too much into any one quarter, but we would expect the delinquency trends to continue to moderate in advance of net charge-offs moderating. So, I think we're certainly trending in that direction.

Fair. Thank you.

And our next question comes from Bill Carcache with Nomura.

Thanks. Good morning. I had a question on capital, in particular, as it relates to regulatory reform. I know that there's a lot unknown still, but just broadly speaking some non-GSIBs have indicated that the potential to return capital more freely without having to go through the annual process is really the biggest benefit that they see potentially driving, more so than any potential expense savings. You guys are now at 16.8% for CET1. Can you help us frame the potential that you guys could do -- would be willing and/or able to do kind of a stepped-up increase in your buyback to get that 16.8% down closer to peer levels versus the more gradual path that you guys have talked about historically, of course, all subject to regulatory reform?

Yes, sure. It's a great question. Obviously, there's a lot of moving pieces in all the proposals that are out there, even the more recent ones. I would say based on what we're seeing right now, I think the positives probably outweigh the negatives for us, particularly if they soften some of the requirements for banks below $250 billion in assets. So, I do think that should benefit us. So, there's definitely some reason, we think, to be optimistic, but we've really got to wait and see what gets past. As you've highlighted, we are sitting on a significant amount of excess capital today. We have indicated that our goal is to bring our ratios more in line with the peer set. When we look at our business, the returns, the resiliency of the earnings profile and distressed environment, we compare very well to our peers, so we do feel like that as an achievable target over time. However, it's a little immature for us to really speculate on the pace or the magnitude of any future payouts. The good news is that with the combination of good organic growth, PayPal is a great use of capital -- deploying capital at attractive returns, strong dividend, buyback. We've got a lot of options available to us to bring the capital ratio is more in line. But any more specific commentary is a little premature.

That's helpful. Thanks Brian. If I may on the same topic and follow-up with a question around liquidity. And perhaps could you talk a little bit about the amount of liquidity that you guys now hold, perhaps how that could change if you were able to run with the amount that you need, rather than the amount that, I guess, you're currently required to run out for regulatory purposes. And if regulatory reform were to allow you to maintain less liquidity, maybe just frame for us what that could mean for your NIM?

Yes, I would think about any impact there, Bill, being pretty modest. If you look at how we operated last year and take liquid assets as a percent of the total, that's probably the range to expect going forward. Now, you're going to see that percentage tick up. You saw it in the first quarter. You're going to see an even greater increase in the second quarter for the prefunding for PayPal. But once that normalizes out and we bring that portfolio on, I would think about liquid assets as a percent of total being pretty much in line with how we ran in 2017.

Got it. Thank you very much for taking my questions.

Yes. Thanks.

Our next question comes from Betsy Graseck with Morgan Stanley.

Hey, good morning.

Good morning.

Good morning.

Two more PayPal questions. One just to make sure I understood. I heard you say that look post-PayPal; you wouldn't expect to run these differently on a credit perspective. So, I just want to make sure I understand, does that mean that you're taking in PayPal a little bit lower risk that stays that way? Your portfolio stays your way and the blended average is a little bit lower than where it is today? Or do you expect interested over time, you would be moving the PayPal portfolio towards your current risk characteristics?

Yes, I think that's the way to think about it. We're very comfortable with the loss rate and the overall return profile is very attractive on PayPal. And if you remember, we don't underwrite all of our programs the same way. We have a very customized approach. So, we operate the programs today with different loss rates and that depends on a lot of factors. It depends on the margin on those programs, the overall return profile, the resiliency of those earnings. And when we look at PayPal, we're very comfortable with the overall profile. So, the way I would think about that in terms of the total company is we've indicated we don't expect it to have an impact on the net charge-off rate this year. I do think it'll provide a little upward bias in loss rate as we move into 2019, but it should be pretty modest. And overall when we look at the entire company inclusive of PayPal, we're very comfortable with the risk profile.

Got it. Okay. And then on RSAs, how does the PayPal portfolio impact the RSAs, either in percentage terms or seasonalities, is there any change to that we should be anticipating?

Yes. So, if you go back to our outlook, we provided a ratio for RSAs at 4.2% to 4.4%, excluding PayPal and unchanged including PayPal that 4.2%, 4.4%. So, it's not significant enough to move that ratio at all for us for the total company.

Right. And even when you flip into a full year impact, like 1Q, 2Q, there's no…

Yes, I wouldn't expect it to have a meaningful change to the RSA rate for the total company.

Okay. And no impact on the seasonality?

No, it shouldn't have much of an impact on seasonality. In terms of seasonality, you do have to factor in the third quarter, we hit a high point in the RSA, but we don't see anything with PayPal that would necessarily change that dynamic. That's really more of a seasonality-driven event, where you've got higher margins, lower charge-offs in the third quarter, that drives increase sharing with the partners.

Okay. All right. Thank you.

And our next question comes from Chris Brendler with Buckingham Research.

Hi. Thanks. Good morning. Could you discuss potentially the investments you're making in marketing and whether or not we'll see some of the drag from underwriting start to turn as you head towards the latter part of the year? And particularly, looking at the growth rates in CareCredit where I think you face in pretty competitive set, it feels like the slowdown there may just be underwriting related, but any color on that growth outlook will be very helpful? Thanks.

Yes. Let me -- I'll start on the marketing expenses. I think the increase just in the quarter was largely driven by an increase in marketing on our deposits related to the prefunding for PayPal. We also had some timing in our strategic investments as well as we made some specific growth investments related to some of our Retail Card programs. Obviously, some of those are here with the partners, which is why you saw the RSA come down slightly year-over-year. What was your second question?

CareCredit. I think on CareCredit, I think we've mentioned this in the past; it's really a great business. And we've really focused our resources on the sell side to increase utility, the card which we're definitely seeing in the core business and then actually, we've expanded verticals that we're going after. So, we're taking the model we built and dentist and vet and taking it to other verticals, which is working out to be a very positive thing as well as the fact that we expanded utility of the card in places like Rite-Aid. So, all of that has come together to allow us to continue to really grow in that particular platform.

And then just take the slight yield degradation in that CareCredit business to be sort of an indicator of a mix shift of market or is there are other factors going on?

It's really driven by some merchant or provider mix where we earn a slightly lower merchant discounts from larger providers and so there's a little bit of mix impact year-over-year. But generally, I'd say that core -- the core yield, the core margins are very stable in CareCredit.

Excellent. Thanks so much.

Yes.

And our next question comes from Sanjay Sakhrani with KBW.

Thanks. Good morning. Just one clarification on the credit stats. I was wondering if you're seeing any behavior among your delinquent borrowers as it relates to tax reform. As these consumers have gotten more discretionary income, have you seen some increase in like payments of delinquent loans?

Yes. We really haven't seen anything yet, Sanjay. Obviously, we remain optimistic that we may see something this year. As you know, we didn't build anything into our forecast for that. But if we do expect it customers have additional discretionary dollars that they're either going to spend those dollars or maybe delever a bit as we saw with lower gas prices, but it's still very early. So, we just haven't seen anything that we would directly attribute to the tax savings. I think when we look at the trends, when we look at our delinquencies, we would tie it more to the underwriting changes that we made than we would to anything specific on consumer or tax saving.

Okay, great. And then a follow-up on the RSAs, I was hoping, Brian, maybe you could help me with this, because when you look at RSAs to receivables, that was lower than our expectations. And when you look at that metric year-over-year, the ROA went higher, but the RSA as a percent of receivables didn't. So, how should we think about the RSA levels as it relates to profitability? Or how should we think about modeling it? Thanks.

Yes, sure, Sanjay. We know that this is one of the more challenging aspects of our business for you all to model, which is why we gave you a pretty clear guidance on what to expect. What I can tell you is the first quarter; it came in line with our expectations. I think it's probably helpful if you go back to 2017 where we ended the year at 3.9% of average receivables. If you remember, that was well below our original view of 4.4% to 4.5% for the year and that reduction was driven primarily by the partner sharing in the higher reserve build. So, just with that as a backdrop, as you think about 2018, we think we moved back into that 4.2% to 4.4% range, largely driven by our expectations that the reserve builds are going to continue to moderate as we move throughout the year and you've seen some of that happen in the first quarter. So, as those reserve builds start to moderate, the RSAs move back closer to that historical range that you would have seen in 2015 and 2016. So, I think that's the best way to think about it. If I had to highlight one other thing, I would highlight seasonality. Just to reiterate, the RSAs always had a high point in the third quarter when we see higher margins or net charge-offs, so you need to take that into account. But so far, we're tracking very much in line with our expectations and we think we end up somewhere in that 4.2% to 4.4% range for the year.

Just one clarification, usually from first quarter to second quarter, it's reasonably the same, maybe slightly higher. I mean should we assume that's the case versus the second quarter then?

Look, I think the history is not a perfect predictor here. I think first quarter, we ended on the RSAs where we did to some degree, because net charge-offs were higher. So, it's going to depend and you should see that moderate a bit in terms of the net charge-off rate getting into the second quarter and hit a low point in the third. So, it might tick-up a bit in the second. It'll absolutely be elevated in the third quarter. I think that's the one thing that you can trust and then come back down in the fourth.

Thank you.

Yes.

Thank you. Our next question comes from Rick Shane with JPMorgan.

Thanks guys for taking my question this morning.

Sure.

Margaret, you outlined some strategies in terms of loss mitigation around retailers going through bankruptcy. I'd love to hear your sort of comparison of what you would expect to related to a retailer going through liquidation in terms of charge-off profile versus what you are able to achieve through the mitigation strategy, sort of a champion/challenger analysis.

Yes. So, first, what I would say is that most of our experience through liquidation is we usually liquidate these books profitably. I think we had an opportunity as we continue to expand our capabilities to think a little differently with the hhgregg portfolio by creating this home vertical, which has been really a real win for us in terms of those cards getting utilized as well as what we're doing on Toys"R"Us. Obviously, one of the things we do when a company is going through liquidation is we immediately send our communications to the consumer set. That there debt is still due to us and for the most part, we see customers pay their debt off. Obviously, you might see a little uptick, but it quickly comes down as we start communicating with those customers. I think in this case, the fact that we're providing utility both in the hhgregg case and the Toys"R"Us case with a fairly good value proposition, we're expecting a really good performance. I don't know Brian if you had anything.

Yes. I think one other thing Rick is really important here is maintaining some utility on the card, whether it's through a new program like we do at hhgregg or moving a portion of those customers to I think any brand of MasterCard as we intend to do with the Toys"R"Us portfolio. I think if you can offer them a good product with an attractive credit line value prop, then they'll continue to use the card. And your prospects of minimizing the increasing net charge-offs are significantly greater. So, we feel pretty good about our strategies in both cases.

Got it. And look I understand the utility case. If we were to index the expected charge-offs on a pool of loans to 100 and you were to go through -- you were to look at a retail that was going through bankruptcy or through liquidation where do you think that index would go versus expectations? Would it go to 150? And what do you think the mitigation strategy can dampen that too? Is obviously not going to be the baseline does it put you in the middle? How should we think about this?

Yes. I mean it wouldn't go to 150, Rick. Typically what you see is when there's an announcement on the retailer, you see a tick-up in delinquencies and net charge-offs very manageable. We look for a little bit of reserves for that and then it evens out over time. I mean the thing that is important to remember here is that consumers particularly today are very aware of their credit score. Having come to the financial crisis, I would say consumers are more acutely aware of their credit score and the implications of doing on their credit scores than they've ever been. And I think consumers know their obligated on the debt. We are very proactive in terms of our communication with customers to make sure they know that they're still obligated where to make a payment, how things work. And we generally see, like I said, a modest tick-up initially out of the gate and then that levels off and as Margaret said, we liquidate very profitably in all cases.

Got it. Thank you guys for taking my questions.

Yes.

And our next question comes from Mark DeVries with Barclays.

A question around kind of the underlying loan growth trends. Are you still at this point making underwriting tweaks that's contributing to the moderating growth? And should we expect once that's done and you've kind of anniversaried the end of that seeing maybe loan growth reaccelerate?

Yes. Sure Mark. So, look I would say receivables growth at 6% was right in line with our expectations and very much in line with what we communicated back in January. And when you look at the full year and you think about our growth, it's always been a combination of organic growth as well as portfolio acquisitions. And so it'll be 13% to 15% receivables growth this year which is very strong. The question you raised is a good one. We are -- from our perspective, the underwriting refinements the impact to those will moderate as we move into 2019. That's our expectation. With that said you're never really done. We're always taking on new information. We're looking at payment behavior trends. And so we're constantly making modest refinements. What you're seeing in the results this quarter and you saw last quarter is really the cumulative effect of the changes that we started to make back in the second half of 2016. To your point, as you start to lap some of those quarters, the comps will get a little bit easier. We'll probably move maybe closer to the historical growth rate for the business. But overall, we feel very good when we look at the underlying growth. We look at the changes that we made that are clearly having the desired impact, still seeing really good growth in that 720-plus FICO segment. And so this is intentional. It was deliberate and is having the desired results. And I think it starts to even out or should even out as we get into 2019.

Okay, got it. And then are there any receivables coming over with Crate and Barrel? So, can you give us a sense of when and how meaningful that might be?

Yes. We will acquire a small portfolio, but it won't have a material impact on our results.

Okay, got it. Thank you.

Yes.

Hey, Vanessa, we have time for one more question.

And thank you. Our last question comes from John Hecht with Jefferies.

Good morning guys. Thanks much for fitting in here.

Hey John.

I guess you addressed the renewals earlier, but I'm wondering whether it's Crate and Barrel or -- which is your recent victory or any other renewals, is there anything you could tell us about changes with respect to partnered prioritizations or the overall economics of the recent renewals and new partnerships that suggest there has been any change in how the overall structures work or is it been pretty consistent with where we were a couple of years ago?

It's pretty consistent. I think what we always do -- as Brian even mentioned earlier, is we always look at the returns and the sense of the overall portfolio. So, -- and we look at the risk/reward in each of those relationships, how much risk are we taking versus the retailers are taking on. So, we look at the blended returns to make sure that we're making that good risk/reward trade-off as we bring whether renewals back on or new deals. So, I'd say the environment, while continues to be competitive, I think is pretty rational. So, we're feeling good about what we're winning and the portfolios that we're bringing on and the renewals that we're doing.

Okay. Thanks. And second question is just wondering whether it's commentary on Amazon or just the overall online, e-commerce trends. Is there anything update you can give us there with respect to penetration rates and so forth?

Yes. So, -- on Retail Card, our overall penetration rate was 28% for this quarter, which was up about 1.6% from first quarter 2017. Now, the national average is about 15%, so we feel like the continued investments that we're making in our digital capabilities are really ensuring that we're staying ahead of the competitive framework. I think online and kind of that whole frictionless payment experience is something that we're extraordinarily focused on, the investments we made in Payfone which is going to help us more quickly authenticate customers as they apply for credit through their mobile application, I think, is going to be and in the real positive for us. So, we continue to see mobile and online as a critical element of what we're trying to build out and ensure we're best-in-class for our partners. Our partnership with Amazon is a great partnership and one that continues to grow, so we feel really good about where we're positioned there as well. So, overall, we're feeling good where we are on the online space and mobile space and our capabilities that we're building out.

Great. Appreciate the color. Thanks.

Yes. Thanks, everyone, for joining us on the conference call this morning and your interest for Synchrony Financial. The Investor Relations team will be available to answer any further questions you may have. We hope you have a great day.

And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.