We’re competing with banks, right? And so, you can think about our ability to move prices corresponding somewhat to bank betas on their deposit, right? Banks are moving as they’re realizing their own cost of funding going up, that lags, right? And so, pricing, we’re always in the market testing in a variety of price points. So, we are monitoring that through the door of population to make sure we understand what we’re getting, and that the population is stable. And so, we are moving as we can. As we see take rates stabilize at higher price points and population stabilize, we move. But because we’re competing with banks there, that’s just at a different rate.
Reggie Smith: Got it. Okay. I understand. If I could sneak one more question in. Did you guys suggest or indicate that the decline in kind of marketplace yield — I think you said it was a $9 million non-recurring benefit in the first quarter. Does that explain most of that ticked down in your marketplace revenues as a percentage of marketplace volume?
Scott Sanborn: Well, I’ll let Drew answer this specific on the $9 million, but while he’s getting his head around that, I’d say, broadly as you’re thinking about the marketplace over the course of the last year, what we’re seeing pressure on is loan pricing. And so, the driver of that is cost of funding. In this environment, especially the asset managers, their cost of funding has gone up on the forward curve, so where the Fed is expected to go. That is putting pressure on their cost of funding. That puts pressure on their yield requirements, which gets reflected in the marketplace price. What we’re seeing — what we mentioned that we think is temporary, but we are seeing right now is in addition to that kind of relative need for higher yield offset higher cost of funding, there’s also just a glut of paper in the market right now.
I mean, I’m sure you’re seeing the same stuff we are, which is we got one of our former competitors shopping $4.5 billion portfolio of loans. You’ve got the portfolios coming off of the failed institutions from earlier this year. They’re in the market. And then you’ve got any number of regional banks that are trying to clean up their balance sheet. So they’re solar loans, RV loans, auto loan portfolios all in the market. So, not all in our space, but asset managers have got a lot to choose from right now. And, yes, good news, capital is forming and is rising to the need. But I’d say bad news, at least temporarily with this amount of supply, there’s further pressure on price. So that was partially reflected in Q2. And in our outlook for Q3, we’re expecting that pressure to actually continue and in fact increase, because the bank buyers with the lower cost of capital are able to pay a higher price than the asset managers, the bank buyers are constricted.
So at least some of that volume is being swapped with kind of lower priced buyers, if you will. But that was the general question. I don’t know, Drew, if you got a…
Drew LaBenne: Yes, I forgot what Reggie was asking. No. I’m just kidding. Yes, in terms of the decline in marketplace revenue, Reggie, Q1 to Q2, so the $9 million is part of the answer. And as a reminder, that was because of slower prepayments that we are seeing in the portfolio causing a upward valuation in the servicing asset. That was the primary reason for that. But on top of that, we are getting lower pricing on loan sales. So that’s the other impact in marketplace revenue this quarter. And as we indicated from the comments, we expect that pricing pressure will increase as we get into Q3, which is included in our guidance.
