Ray Cheesman: Doug, I am wondering, this is such a unique environment. It’s been many, many years since we had rising rates, rising inflation, credit standards tightening, lowered SNAP payments, lower tax refunds, school debt payments restarting. How do you — I mean how do you program that into a computer to protect you guys against people taking advantage of — you have got capital, it’s very attractively priced. Congratulations on the warehouse extension the other day and you are a grower. And so while maybe Citizens is letting theirs runoff and Capital One let theirs runoff, you guys are — you are in the trenches, you are in there fighting. But how do you take all that in and pick the good loans with the good payers on the good collateral versus everything else out there that clearly is piling up in some of the ABS numbers?
Doug Busk: Well, I mean, we have a pretty good track record at being able to satisfactory predict collection rates over a large number of loans. We don’t have the ability to predict individual outcomes. So differentiating which consumer is going to lose their job in 18 months or which one’s going to encounter medical bills or what have you. But we have shown the ability to be predictive over a large number of loans. Having said that, there are a whole bunch of factors that are not certain at the time you are underwriting a loan aside from the things I just mentioned. Inflation, changes in unemployment rates, changes in car prices. No one can accurately predict how those variables are going to behave over the terms of the 60-month auto loan.
So the primary way we deal with that uncertainty is we build a significant margin of safety into our loans at the time that we originate them, with the result being that even if loan performance is less than anticipated, it’s still highly likely our loans are going to produce satisfactory levels of profitability. In addition, on the portfolio program, we are sharing the risk on the loan with the dealer. So if we collect $100 less on a loan, 80% of that is going to be borne by the dealer in the form of a reduction in dealer holdback. Now, obviously, that only works to a certain extent, but certainly, we have a layer of protection there that is helpful.
Ray Cheesman: My other question was, how does all of that environmental stuff impact? I mean, as I said, you guys just extended your warehouse and that was wonderful to see. But how do you think it impacts the funding environment generally? I mean, we just had that another bank fall apart this morning and disappear. Are you seeing your funding environment change, is it competitor’s environments changing, and traditionally, during less terrific times for people’s credit availability, you tend to do better. So is that kind of the outlook that you still have going forward?
Doug Busk: I think that remains to be seen. I mean I think the fact that we have shown some better growth numbers in recent periods indicates that the market has gotten a bit better for us. I do think that the debt markets have reacted to some of the concerns around credit quality, some banks are tightening credit, credit spreads are wider across the Board. So I think that the capital markets have reacted to it. It hasn’t impacted us yet, and hopefully, it doesn’t. But I think the credit markets are certainly tighter and more expensive now than they were, say, a year or 18 months ago.
Ray Cheesman: Okay. Thank you very much for your thoughts. I though you guys are hanging in there really very well. So thanks.
Operator: Thank you. Our next question is a follow-up from Moshe Orenbuch with Credit Suisse. Your line is open.
