Good morning and welcome to the Synchrony Financial Third Quarter 2020 Earnings Conference. My name is Brandon, and I’ll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. I will now turn the call over to Greg Ketron. You may begin, sir.

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 want 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’ll 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. On the call this morning are Margaret Keane, Brian Wenzel and Brian Doubles. I will now turn the call over to Margaret.

Thanks, Greg, and good morning, everyone. With the global health practice still looming and continued racial injustice, there is a continued disruption to our lives, businesses and the economy. As we continue to respond as a company, we have put people at the forefront of our decision, and I'm extremely proud of our actions to address these crisis. We've made thoughtful forward-looking decisions to support our employees and families, our customers, our partners, our communities and our shareholders. Using agile principles, we have realigned and reimagine the way we work, quickly advancing our most important cultural and business priorities, including the successful launch of two new important programs in the midst of a pandemic. Using safety and maximum flexibility for employees as a backdrop, all of our U.S. employees can now permanently work from home. Doing so has also allowed us to transform our physical footprint. We have reduced the size of some of our sites in closing, other sites entirely. These changes stemmed from our employees desire to work from home. Their productivity in this environment will help us drive long- efficiency and profitability of our business. As part of this effort, today, we announced a restructuring charge of $89 million in the third quarter, which encompasses our new site footprint strategy. We are also being thoughtful, targeted and aggressive on our cost structure as we move forward, allowing us to continue our focus and investment in future growth. Digital innovation is paramount to the success of our program. Consumers are rapidly adopting technologies that enable contactless e-commerce, and we are responding to ensure our partners are well positioned for this rapidly evolving dynamic. Deep technology investments have enabled the company to respond quickly to partners and cardholders with resources to help them adapt to the challenges of this…

Thanks Margaret. I will spend a few minutes talking about the exciting launch of our Venmo program. We are pleased to deepen our long standing relationship with PayPal and Venmo with the launch of the first ever Venmo card. The card unlocks new ways for Venmo a community of more than 60 million customers to shop. Share split purchases and earn cashback everywhere VISA credit cards are accepted, together with Venmo our open banking API's offer a seamless payment experience for users, Venmo customers can easily apply, buy and manage their account right inside the Venmo app. Another card enhancement is the inclusion of a personalized QR code on the card itself, which can be scanned with a mobile phone camera to activate the card, or in the Venmo app by friends to send a payment or split purchases. The card also sets a new standard in the industry through its intelligent, auto personalized rewards program. The innovative, dynamic rewards experience maximizes opportunities to earn cashback. Each month customers automatically earn cashback on the categories where they spend the most with the top 10 categories changing based on the customer's monthly spending habits. In addition to many other features that facilitate a seamless contact experience. The Venmo credit card provides customers an easy way to manage their card and spending right in the mobile app. Customers can track activity organized by spending categories, split and share purchases, view cashback status, make payments, configure alerts, manage the credit card and more all in the app. Lastly, we're also delivering a scalable platform that engages customers with real time notifications. At every stage of their experience with our new Venmo program. We are introducing card controls that empower customers to set rules to manage their account in the way that fit them…

Thanks, Brian, and good morning, everyone. As Margaret said earlier, we are determined to keep our employees safe and help our partners, customers, and communities succeed during this difficult time. Despite continued uncertainty and volatility, we are grounded and guided by our values, and I'm so proud of how our people have continually shown resilience, dedication, and empathy to help those we serve. As always, I also want to thank those who are helping to keep us safe and healthy during this unprecedented time. Now, I'll turn to our financial results for the third quarter. I'll start on slide six of the presentation. First, I want to cover some of the trends we are seeing from the impact of COVID-19 from a purchase volume standpoint and thought it was important to provide an update on the performance of accounts that receive forbearance. Slide six shows year-over-year purchase volume growth for the total company and by platform dating back to January. As noted in our second quarter earnings call, purchase volume growth was strong for the total company and by platform with double-digit growth in January and February, leading into March. As we move through March and government restrictions increased, travel, entertainment, and many discretionary activities were significantly curtailed and a high number of non-essential businesses were closed. There was also a significant curtailment of elective healthcare services. As a result, purchase volume decreased significantly, with April declined 27% for the total company. And looking at April by sales platform, Retail Card declined 21%, Payment Solutions declined 41%, and CareCredit declined 60%. CareCredit was impacted the most with a significant decrease in spending for elective and planned procedures in dental and medical services during this period. Retail Card performed better due to the higher concentration of digital volume as well as…

Thanks, Brian. I'll provide a quick wrap up, and then we'll open the call for Q&A. Clearly, the coronavirus pandemic has meaningfully impacted our business in several ways, including key areas such as purchase volume and loan receivables. As we have said, the ultimate impact from this crisis remains difficult to quantify right now. So what I can tell you is that our ability to rapidly adapt to the evolving environment positions us well. We are confident in the fundamental resilience of our company and our ability to manage through this cycle, just as we have managed through other cycles for nearly 90 years. Our partner-centric business model and agile approach to our operations and investments are enabling the rapid deployment of innovative solutions to support our partners and cardholders. We remain focused on execution today, with an eye towards the future, making investments, building capabilities, launching programs and making the fundamental changes necessary to emerge from this pandemic in a stronger position. Thank you for participating on the call today, and I hope you and your families stay healthy and safe. I'll now turn the call back to Greg to open up the Q&A.

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 the 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 the question-and- answer session. [Operator Instructions] And from Jefferies, we have John Hecht. Please go ahead.

Good morning, guys. Thanks very much. Just related to the provision expense. It seems – well, I guess, the question is, is this more of a general increase in the allowance tied to just general uncertainty, or is it more of a precised provision tied to certain elements you're seeing in the deferral program?

Yes. Good morning, John. So the provision – the way to think about the provision for the quarter is when you look at the macroeconomic environment. When you look at growth, when you look at our kind of precision, that all netted out to roughly flat to a small provision. When we look at two specific elements, as we closed the quarter, one being the forbearance accounts that have come off program, given the delinquency rate they had when we evaluate those accounts, we thought there needed to be a higher provision associated with those particular accounts beyond what was included in the base reserve. So there was an incremental, call it, $200 million to $225 million associated with those accounts that are in delinquency today that we're in the forbearance program or current today that may roll into forbearance. And the residual piece really went to our view on the stimulus. And the fact that our view, the timing of the stimulus as well as the efficacy of the stimulus would be delayed. So there's an incremental provision of roughly $75 million associated with the stimulus delay.

Okay. Thanks for the detail. And then the SetPay product, that's consistent with a lot of the consumer demand we're seeing now in the marketplace. Maybe if you could just give us a sense of the growth potential, growth trajectory of that product? And then will the – call it, the economics, meaning the yield and the anticipated losses and so forth, be consistent with the overall credit program?

Thanks, John. Thanks for the question. I'd say two things. One, we wanted to address the market. We already had installment light products out there, which meet our return hurdles. So we are being very thoughtful and cognizant and looking at how these products work. But I would tell you that what we're looking to do really with SetPay is to offer the customer choice between our different product set. And hopefully, do this in a way that's online. So as the customer is making the purchase, particularly a big purchase, they have the opportunity to do the SetPay product. And we're looking to do that in light of our overall portfolio with returns and – that we have in the business today. So we're not looking to minimize or reduce our returns because of that product. Look, I think everyone's looking at these products as a big part of the market. There's lots of sales out there. These products are still a really small subset of the market. But I do think we felt competitively, it was important to really position ourselves to have that product with – for consumers. But I don't think, down the road, you're going to see this as a big part of who we are, but another product to really help our partners grow their business.

Thanks, John. Thanks very much. The reason for that is I think a lot of our partners, while they want to offer this product, to Margaret's point, and have choice for the consumer, we've spent a lot of time working with our partners to get reused on the card, and Brian talked about earlier. And so we have some partners who say, look, I want to offer a revolving product to get that second and third purchase. And that's been something we've been working on for well over 5 years now. And they're not as enamored with the one-and-done product. But look, at the end of the day, we want to be able to offer choice at the point-of-sale.

That makes sense. Thank you guys very much.

Thanks John. Have a good day.

From Credit Suisse, we have Moshe Orenbuch. Please go ahead.

Great. Thanks. Maybe just a follow up on that reserving question, Brian. So as we think about it going forward, should we think that the reserve would be at a comparable percentage if there's no kind of macroeconomic changes? Are there other things kind of as we go into 2000 – the fourth quarter and into 2021, to consider in terms of that reserve build or third quarter decrease?

Good morning Moshe. So the way I would think about it is, we feel that we're adequately reserved at the end of September for both the forbearance count specifically, but the overall portfolio, assuming macroeconomic trends don't move significantly. And to be honest with you, to make sure that pandemic stays in check with where it is today, the real impact to reserves will be growing in the portfolio and any shifts in the portfolio we see between the platforms.

Got it. Thanks. And I thought the – from the standpoint of kind of new account generation, you said the number of new accounts was down from a little over 6 million to just a little over 5 million. Maybe as you kind of think about the various factors there, obviously, where we are in the county, the 2 launches that you've got in all of the initiatives, can you talk a little bit about that metric? What that's going to look like in the fourth quarter and into 2021? And I might mean for the growth that you want to see?

Thanks, Moshe. It's Margaret. I'd say two things. One, we're -- I would say, in September, we did start seeing store traffic start really coming back at a bigger pace. We still originate a lot of accounts in-store. So having that in-store traffic come back, I think, is going to be very helpful. I think as we continue to market our new programs, where we'll see positive trend there. I think the real question mark is really how does holiday play out? Right now our view is consumers are saying they want to shop, and they want to do something fun and be out there. So I think holiday is going to play into this as well. And then the only maybe negative or downside to that would be, we did -- we do tighten credit during this period. So we are being careful there. We don't want to just open up the faucet, if you will, to new accounts. So we're really being soft on capital on how we're underwriting. But I think the trends we started seeing in September with more store traffic, should help our new account volume as we go into the fourth quarter.

And just anything about the new programs impact either in the third quarter or March?

Well, yeah, I mean, I would say Verizon is tracking very well. They were slower to open stores. So we're just starting to see store traffic from them. They were more online, but we're really seeing that pick up, and we're really pleased with how Verizon is playing out. Venmo, on the other hand, still in a softer launch. So we're really still testing and piloting that product. But again, the results so far have been extremely positive. If you haven't applied for the card or, I guess, you can apply, you got to get off it. But for those who've gotten off the card, we've gotten really, really positive feedback in terms of the value prop, how the card works, how easy it is to activate, how easy it is to purchase with it. So we anticipate the Venmo product to be a big part of our growth story as we go into 2021.

Yeah. The way I'd frame it, for the quarter, Moshe, the fourth quarter, both Verizon and Venmo won't have a large impact, it's really be more into progress into 2021. And Margaret's point really about stores opening up the biggest wildcard with regard to new accounts in the fourth quarter will ultimately be the channels, right? We see some differences in new accounts per your digital channels versus your in-store. So that could be a very favorable trend for us, we hope in the fourth quarter.

Thank you.

Thanks, Moshe. Have a good day. Operator: From Bank of America, we have Mihir Bhatia. Please go ahead.

Hi. Thanks for taking my questions, and good morning. I just wanted to start. Maybe could you just give us your CECL assumptions just on GDP, unemployment assumptions this year, and maybe exiting next year?

Sure. Good morning. So the baseline measure that we used, which is really coming off of the Moody's August baseline metric, which has unemployment at that point being 9.9% at the end of this year, 7.9% in 2021 and 4.5% in 2022. And as we've gone through and done our modeling off of that, the way which we interpret it, we actually have redistributed that unemployment curve. So effectively, the unemployment we have at the end of the year is 9.7%, down from the second quarter, 9.1% in 2021, up slightly from our previous estimate and 6.3% in 2022. So we have a little bit slower recovery back into 2021, as we think things have pushed out, which partially, as we talked about, some of the stimulus and other metrics. And then, the GDP assumptions we have in line with the Moody's, the baseline model, to be honest with you, which had a linked quarter 5.4% decline in the third and 0.7% in the fourth.

Great. Thank you. And then, I just had -- I wanted to just talk maybe -- just go back to the discussion on, I think, buy now, pay later, the installment product. And I wanted to see -- ask about the impact on the retail card business, I understand that it's a small part of the market right now, overall. But we're starting to see it at more and more retailers. And just as an example, PayPal, one of your partners launched Pay in 4, and it shows up right alongside PayPal credit on the checkout screen. So it seems like there's at least some cannibalization risk. Now, I understand Pay in 4 is new, but some of the other BNPL products have been around for a while. So I was curious, how you -- how are you viewing those products? And have you seen any impact from those products on the Retail Card platform that you already have? Thank you.

I'd say, no, we've not really seen a big impact on our portfolio or with our partners. I think that is why we have set pay out there. And I do think having customer choice is going to be the thing that we want to really do. We want to do that mobilely as well, so that customers, when they're in the shopping cart, can make a choice. In terms of PayPal, we know that we have a great partnership with PayPal. They had a product that they had already launched in the U.K. and wanted to accelerate their launch here in the U.S. We see that as a cross-sell opportunity for us, like Brian said earlier. So, again, we feel like we're positioning ourselves in the marketplace to be successful. We're not, at this point, really seeing a huge impact of these products against our overall performance.

Thank you.

Thanks. Have a good day.

From JPMorgan, we have Rick Shane. Please go ahead.

Hey, thanks for taking my questions this morning. I'm curious to how the change in the way that consumers are interacting with businesses, fits with your business model? And when I think about that, historically, you guys probably had a higher percentage of in-store card-present transactions. As you move to your mobile app, you went to a highly secured tokenized transaction. And now you probably have many more customers shopping online, card not present. The business model has historically had lower interchange. And so, I'm wondering, from an economic perspective, is there greater fraud risk? And is there a way within the business model to offset that economically?

Yes. Well, I think, it's important to note, most of our transactions are private label transactions, which don't target anything. So for us, that's not an issue. I think what's really important for us is ensuring from a fraud perspective that we have the right customer applying. We’ve put a number of tools in place to really drive fraud and make sure we're offering the customer the right product to that right customer. I would say, generally speaking, fraud is something that we continually battle; every financial institution is up against this battle, particularly as more and more people have been compromised in terms of their identities. And really, it's our responsibility to really put the tools in place to make sure that we're doing the best job possible to reduce that fraud. I don't know, Brian, if you'd add -- Brian Doubles, if you'd add anything on transaction volumes?

Yes, the only thing I would add, Rick, we've talked about this in previous calls. This is where we're really leveraging data share with our partners. Our partners know quite a bit about their customers. They know how long they've been a customer, either through a mobile or digital channel. Even simple things like if we can match the ship to address, with the address that they're putting into the apply tool to apply for a credit line. Those things are enormously helpful in helping us authenticate the customer and reducing fraud rate itself. That's something that we rolled out across all of our large partners in Retail Card and we're rolling it out now to even some of the smaller partners to share that data in an effort to reduce fraud, but also make better credit decisions around line sizes, and get a better credit outcome as well.

Got it. And Margaret, that's exactly my point, which is with no interchange on the traditional transaction, what I was sort of trying to understand, and it sounds like you're managing it more on the fraud side. Trying to determine if there's some way, on the card-not-present transactions over the online, whether or not you can capture some additional economics?

I got that. Sorry about that. But yes, we -- exactly what Brian was describing.

Got it. Okay. Thanks guys.

Thanks Rick. Have a good day.

From Morgan Stanley, we have Betsy Graseck. Please go ahead.

Hi good morning.

Good morning Betsy.

So, I'd like to call it the finger traffic versus the foot traffic. And I know in the prior question, you answered it from a foot traffic point of view. But I just wanted to get a sense as to how you're thinking about the finger traffic in terms of generating that new account? And then how have you seen that finger traffic change over the course of the pandemic? Have you seen any behavior change in terms of frequency of purchase, average size of purchase? Just line utilization that people are willing to maintain, especially in the latter, more recent couple of months, I should say? Just wondering if the behavior is changing at all?

Well, Brian touched on this a little bit and I'll have Brian Doubles add a little color to this. But 60% of our applications for Retail Card were generated mobilely or online. So, that is a big shift from where we were. And each quarter, it's been growing. Our view is that, that will continue to grow. In addition to which consumers are using our apps to make payments, increased credit lines and really transact through their mobile phone. We expect that to continue to grow and be a big part of what we're working on with our partners. I would say that what we're always trying to do is create this digital point-of-sale, both in the Retail Card, Payment Solutions and CareCredit business. So, it's not just the Retail Card side, it's actually all three platforms. And back in March, we really pivoted our agile teams to really accelerate some of the development on the mobile side. So, I would say -- I don't think we're seeing difference in terms of spend or how they spend. I think the reality is that people don't necessarily always want to go into the store. So, online has become a bigger part of how they transact. And I'd say the second is, just as we move forward, the whole contactless even in-store purchasing, I think, will become a bigger part because consumers really don't want to touch point of sales. So those are the areas that we continue to invest in. I don't know, Brian Doubles if you'd add?

Yes. One of the things I would add, Betsy, is one of the things we've been very focused on and actually, one of the areas that we accelerated back in March is really integrating our financing offers throughout that customer shopping journey, and we showed you a little bit of that on the slide. And that looks very different by partner. So if you think about SyPI or SDK that plugs into the larger partners' apps, that we've been doing for a number of years now. And that works really well with large partners, so either the SyPI product or having the larger partners plug right into our API platform, which is what we're doing on Venmo. The work that we accelerated back in March and April, which really matters more to our smaller to mid-sized partners, is really getting integrated into their digital properties across the point-of-sale. So not just when you're checking out in the shopping cart, but when you're looking at the product, when you enter the home page, and we've seen conversion rates go up significantly when we have that kind of multi-point integration across all of their digital properties. And so that's really what we've been focused on, is helping not just our large partners, but small to midsize partners, getting the financing offer presented multiple places throughout that shopping journey. And again, that's been really important to our partners because, obviously, times like these, they're accelerating our digital transformation and trying to drive sales, and this, certainly, helps them do that.

And how penetrated do you feel you are with your current customer set in that offering?

Well, it really varies. I'd say we're very penetrated in the larger partners, and we're making really good progress in the small to mid-sized partners. But a lot of this is – it's really a joint partnership. It depends on their level of how far advanced they are in their digital transformation. And we're building tools to easily plug in there in a scalable way.

And then my follow up just is on liquidity. You highlighted in the deck that the liquidity is up significantly year-on-year. It makes sense. Wondering how much of that will you sit on to fund future loan growth, or will you be redeploying that into securities? There's clearly excess capital that could drive buybacks as well going forward. So I'm just wondering how you're thinking about this excess liquidity that you've got?

Yes. Thanks, Betsy. As we think about, as we enter the fourth quarter, it's really to fund the portfolio growth that we would seasonally anticipate. As we move into 2021, we hope it funds loan growth. We said earlier, with regard to buybacks, obviously, we like to have the cash to, and we most certainly have the capital to execute the buybacks, but really that's not on our horizon until probably at least the back half of the year when we have a better view of what the economy is going to do. So our plan really is to deploy it relative to growth in the assets and managing the liability side of the equation. I don't anticipate us really going to try to chase some basis points to yield in the investment portfolio, to be honest with you.

Got it. Thanks.

Thanks, Betsy. Have a good day.

From Wolfe Research, we have Bill Carcache. Please go ahead.

Thanks. Good morning, everyone. Margaret, there was a period post Walmart where you guys eliminated concerns over renewal risk by pushing the earliest renewal date to 2022, which seemed really far away at the time. But now with 2022 getting closer and RFP is happening, in some cases, roughly a year ahead of contractual maturity dates. Some investors have started to ask whether we could see you guys do something similar to what you did post Walmart by possibly renewing your largest partnerships, and sort of eliminating that renewal risk for several years into the future. Can you discuss whether that's something that you're considering, or are we more likely to see renewals happen on more of a case-by-case basis?

Look, we're always trying to renew deals. So I think this is really the relationship and partnership that we've built over the years. And I think you just saw it happen with Sam's Club. We renewed Sam's Club with a multiyear deal last year. And we just renewed it again with another multiyear deal. So we're always looking at ways to extend our partnerships. And usually, that conversation comes about as people are thinking about new value props or big investments into the program in some way. And I would just tell you the way I think about renewals that's like a daily part of our jobs. And we need to make sure that we're having those conversations where it makes sense. So you see it happening real time with what happened with Sam's Club.

I think the one thing I'd add on to Margaret's point is that, when you look at these investments, so in the case of Sam's, that there's a value prop construct that's on top to renewal we did last year, and we priced at a very disciplined level, right? We priced through the cycle and priced through a very difficult cycle here. So to the extent that we get an opportunity to extend at attractive risk return profile, we most, certainly, would take that opportunity and take that risk off the table, Bill.

Thank you. That's very helpful. If I can, as a follow-up, when we look at the levels of capital that you guys are running at, and the amount of building that you've done, to the extent that there potentially could be some sort of stimulus that it seems like you're not really counting on that as a big benefit in the reserve building that you've done to-date. Historically, you guys have expressed your belief that you could run at capital levels comparable to your peers, which we see at sort of the 10.5%, 11% range on a normalized basis. Is it reasonable to think that you guys can get CET1 down to that range, as we look ahead to kind of the other side of this?

Yes. Yes, Bill. So first of all, let me just make sure we're clear on stimulus. We still have stimulus baked into our reserves. It's just at a lower level, and the timing is different than what you would see in -- based on Moody's model, I think, last week, they may have even moved out to 2021 their stimulus, but we have spent a lot of time with it. So there is some level of stimulus. With regard to the capital level, yes, nothing has changed in our view with regard to how we think about the long-term capital position and being able to get down to our peers. During this period of time, we continue to run stress cases, and are very comfortable with our ability, given the resiliency of the business, given the earnings profile of the business, the RSAs that we can get down to that level. So there's no change with regard to the long-term view on capital. The time in which we begin to deploy greater amounts of capital back to the shareholders will really be dependent upon the economy and the visibility.

Got it. Very helpful. Thanks for taking my question.

Thank you. Have a great day.

From Stephens, we have Vincent Caintic. Please go ahead.

Hey, thanks for taking my questions. First, on your expenses. So it's helpful to get your guidance for $150 million to $250 million for 2021 and more beyond that? And also just thinking about your push on digital here, I'm sort of wondering if you can sort of talk about your digital investments? And it seems like you're pushing more than usual to accelerate your partners' digital transformation. Is this the level we should expect in terms of investments going forward? Do you want to make more investments, or does this taper off after a little bit of time? Thank you.

Well, we've been making investments for a number of years, particularly in our technology platform, and we'll continue to do that as we see the need. We think that, strategically, we have to be the best of the business in terms of digital capability. And both -- I think, both in the front end, which we've talked a lot about, but even on the back end. And so when we looked at, kind of pivoting back in March, we actually stopped doing some things that didn't really make sense given the pandemic and redeployed those resources to accelerate some of the things that were already on our roadmap. So it wasn't like we created new thinking, we actually had these plans. They would just furthered out. An example I'll give you is we're doing a lot of work on digital collections right now, in terms of really getting us to be state-of-the-art there. So that's an example where we took resources that we're kind of working on that, but we put more resources on it. I'd say that from an expense point of view, we took a really comprehensive look at our overall expenses and said, okay, how do we tighten? Where do we tighten? Some of that we talked about in terms of our footprint, which was a positive one. But when we did this journey on expenses, we basically said, we're going to do this expense reduction in order to ensure we can still invest for the future because, I think sometimes the mistake you make is you tighten so much that you really dilute the future. And what we didn't want to do is really have that happen. So we've been hard at work making sure we continue to invest, while tightening where we can. So that's really the plan that we've kind of executed upon we have work to do going into 2021. But we feel like we were able to hit it pretty quickly and really align our cost base to the size of our business going forward, to ensure that we keep the returns that we want to achieve for our shareholders. So we're feeling -- we've executed well here. We still have things to do, of course, but we're well into the execution of the expenses coming out.

Okay. That's very helpful. Thank you. And just with the excess deposits that you were talking about. Just wondering how much more aggressive you're willing to get on raised cuts, or do you feel comfortable here? Thank you.

Yeah. Thanks for the question. So we'll continue to evaluate that market. We led the market down this year. So we've reduced 115 basis points on our high yield savings, 140 basis points on CDs, with six and seven movements. Here's -- as we think macroeconomically going forward, there will be some pressure as we used to have some higher priced CDs coming up for exploration as we move through the fourth quarter and into the first quarter. So there will be some pressure to redeploy those dollars for our consumers. We also think there's an opportunity as we think some of the larger institutions may continue to try to reduce rates, so there may be some inflows. But at the end of the day, we hope to grow the business next year, and we'll need those deposits. So it's a very it's a very tricky balance. We can move down a little bit more, we think, but we want to be very cautious because what we don't want to do is if we have to raise deposits next year have to then pay more in price in order to get those deposits. So it's really a fine balance between trying to find that appropriate floor. And we're in line with competition. There could be a little bit more room, but I wouldn't expect something significant.

Brandon, we have time for one more question.

Yes. From KBW, we have Sanjay Sakhrani. Please go ahead.

Thanks. Good morning. Most of my questions have been asked and answered. But just on the Sam's Club renewal, congratulations on that. I know it's been a whirlwind the last couple of years. I'm just curious, how should we think about the economic impacts of the renewal? Are there any appreciable impacts on the RSAs going forward? And any other that we need to contemplate?

We always look at this in terms of the returns and we’re pretty happy with where we landed on the renewal in terms of our raw returns. So I wouldn’t see a big economic impact. I think the real positive here is that we’ve been able to work closely with Sam's over the last, say, 15 to 18 months on really helping them execute against their digital strategy and we’ll continue to do that. And I think more importantly the exciting part is really relaunching a new value prop, which both of us felt was really needed. So we're excited to work with them on that as we go into 2021. But I don't think you'll see an appreciable difference in the economics.

Okay. Perfect. And then, I guess, I have a follow up on the Buy Now, Pay Later industry questions, and maybe it's a question for you, Margaret and Brian Doubles. If we think about the industry's impact thus far, do you feel like it's had an appreciable impact in terms of loan growth? Do you feel like it's cannibalizing your customers across all your relationships, or is it just a different customer base that's sort of -- where you're seeing the uptake in this product?

Well, I think -- first, let's put it in perspective. I think the overall dollar sales on those products, somewhere between $8 billion and $10 billion, which is really not that appreciable, when you look at the overall market. Most of what's being put out there are smaller ticket for payment type things for retailers. I think where we really have a market and/or have a solid customer base, it's really a bigger ticket size. And that's where I think we've been able to do things like we're doing with Amazon. So our view is, we're going to be in this market. We're going to look at the right way to do this. The other thing I'd tell you, it's still early days on the overall economic returns on these particular smaller ticket ones. But SetPay is a product that we're testing and piling. We're having good success. I think it's really about two things: giving customer choice; and then second, helping the merchants complete the sell. Because right now, the most important thing for our merchants and our partners is to help them grow theirselves, which is what we're really trying to work on. I don't know, Brian Doubles, if you'd add anything there?

No, I think it does. It comes down to choice. And our partners all have a view on which products they want to offer. In some cases, it's a revolving credit product that has an installment component could be SetPay. In some cases, if it's smaller ticket, to Margaret's point, they would be more interested in the Buy Now Pay Later product. Our goal at the end of the day is to be very integrated across all of our partners' digital properties and offer a wide range of financing products, because it won't be a one-size-fits-all. It's going to be a combination of revolving credit, longer-term installment and shorter-term buy now pay later products.

Thank you.

Great. Thanks Sanjay.

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