Synchrony Financial was spun off from General Electric in 2014, and its nearly three-year stint as a publicly traded company has overlapped with a strong run by the U.S. credit card industry.

But today, with more consumers falling behind on their monthly bills, the $89 billion-asset Synchrony is facing its first big test as a public company. After all, managing a credit card portfolio with a large subprime segment is substantially harder at a time when more loans are souring than it is during good times.

Last week, investors were caught off guard by Synchrony’s announcement that it plans to add roughly $1 billion to its loss reserves in the first three quarters of this year. Just three months earlier the company stated that the credit environment remained favorable.

Synchrony’s stock price plunged in response, as some analysts raised questions about the credibility of the company’s management team.

“Investors hate to be surprised,” said James Friedman, an analyst at Susquehanna International Group.

Stamford, Conn.-based Synchrony, which for decades was part of GE, has long been among the nation’s top issuers of store-branded credit cards. Its retail partners include Walmart and Amazon, in addition to scores of smaller merchants.

Consumers who use store-branded cards tend to have lower credit scores than their peers in the general-purpose card market, and issuers of the cards typically get hit harder than the industry as a whole when consumers become distressed.

Today, chargeoff rates are on the rise across the entire credit card industry. “But it’s happening to a greater degree with customers at the lower end,” said Moshe Orenbuch, an analyst at Credit Suisse.

Other card companies with large subprime segments include Capital One Financial and Alliance Data Systems, both of which also significantly increased their loss reserves in the first quarter.

During a conference call with analysts last week, Synchrony executives said that its borrowers’ average credit scores have not changed recently. But today, borrowers with the same credit scores are less apt to stay current on their payments than they used to be. One theory is that borrowers with low credit scores have taken on too much total debt at a time when wages remain largely stagnant, and are now having more trouble juggling their obligations.

In addition, Synchrony is receiving less money when it sells charged-off loans than it was previously, as the market for bad credit card debt has been flooded with more supply.

“I felt like their reserving methodology was out of sync with the chargeoff expectations that they should have developed,” William Ryan, an analyst at Compass Point Research & Trading, said in an interview.

Synchrony executives have been cautioning against alarm by pointing to the relatively strong U.S. economic backdrop.

“There’s confidence in the consumer. Unemployment is getting better. So I think those things certainly play into the environment we’re in, and we expect that to continue,” Synchrony CEO Margaret Keane said during the conference call.

Investors are concerned, though, that Synchrony's credit quality will suffer even more if the U.S. economic outlook weakens. Kenneth Bruce, an analyst at Bank of America, told Keane, “I think the problem that we have is that we find that this deterioration is occurring when the consumer is so strong.”

Despite their concerns, numerous analysts are maintaining their buy recommendations on Synchrony.

These analysts recalled that shares in Synchrony also fell sharply in June 2016, after the firm said that its chargeoff rates would rise, before recovering in the latter part of last year.

“The market’s tendency is to shoot first and figure out what happened later,” said John Hecht, an analyst at Jefferies. “You don’t want to be holding a falling knife.”

Synchrony’s shares closed at $28.77 Wednesday and are down 13% since Thursday.

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