Chuck Jehl: Hey, John, it’s Chuck. Yes, as we think about, we’re just putting out the quarterly guidance still as you saw, and there’s just so much going on in the puts and takes of the guide, the affordability around the consumer, inventory levels, elevated prices, I could go on and on. We talked about lending capacity at the credit unions. Keith talked about the share growth or deposit growth. It’s in the tightening focused on prime and super prime. It’s a difficult time to really project that. So if you think about our flat from Q4 to Q1 in the guide, March is seasonally obviously a strong month for the company, and — but it is the best. And Q1 is not always the best quarter. But March is a seasonally strong month due to tax season.
But you probably read, as we did, that there’s delay on tax refunds and even dollar amounts of the refunds are even smaller, so all of those things went into our inputs to the quarter. And as we think about full year, the timing of any Fed cut, we thought there might be a cut in March. Looks like that’s not going to happen now, and hopefully, later in the year, we’ll start to see that, but it’s really hard to project.
John Hecht: Okay. And then thinking about program fees and profit share levels per Cert, I think is the current range, I mean, I think you’ve been around $520 of program fees per Cert for a little while. The profit share has kind of drifted lower. But as you re-price some of the premium, where do we think those go on a trajectory basis?
Chuck Jehl: Yes. We’ll start with program fees, and it’s all based on mix, right? I mean, in volume unit, we have the volume discounts on our program fees, so — but I think modeling in that $520 range on average for program fee is fine, and on profit share around that $500, I think is a good number to model. But we do have a new scorecard in place that we’ve talked about, and we’re going to be better predicting this risk and the probability of default. But even at the $500 profit share, we’ve talked about this before to an ultimate loss ratio. We’ve stressed that new vintage, the Q4 vintage to about a 64% loss ratio. So — and we’re seeing the new vintage — new vintages perform better than the older vintages that I talked about on my previous comment about the late 2021, 2022 vintages performing worse.
So there could be some room there. But that’s we put it on the books at $500 with that stress in the current environment, but they’re hopeful it’ll perform a little better.
John Hecht: Thank you guys very much.
Chuck Jehl: Okay. Yes. Thank you.
Keith Jezek: Thank you.
Operator: Thank you. Next question comes from the line of John Davis with Raymond James. Please go ahead. Mr. Davis, please go ahead with your question. Mr. Davis, if you have muted the phone from your end, please unmute your phone and go ahead with your question.
Unidentified Analyst: Hey, can you guys hear me?
Chuck Jehl: Hey, JD, yes, we’re hear, JD first [ph] unmute.
Unidentified Analyst: Thanks for taking the question. This is Taylor on for JD. Just to follow-up on the refi question, it looks like refis were about 5% of total Certs during the quarter. So it’s obviously been much higher previously, but still up quarter-over-quarter. So just curious how we should think about refi as a percent of total Certs in 2024, just with the mentioned large pent-up demand.
Chuck Jehl: Well, quarter-over-quarter refi at 5% in the fourth quarter of 2023 is actually down from 14% in Q4 2022. So it’s just been since the rate hikes and even starting in, I guess, early 2022, when the Fed started taking action, we went from a peak of 43% in Feb of 2022 down to just single-digits on the refi. We still believe it’s a great opportunity for us, and as our lenders have capacity and free up the balance sheets, it’ll come back, because obviously, affordability we talked about is huge to the near and non-prime consumer and there’s a lot of opportunity there to refi. But to give you the exact percent of what that’s going to be in 2024, it’s hard to say right now, just based on the kind of the impacts to our core customer and the lending capacity challenges.
Keith Jezek: And I would just add, and this is Keith, that we just think of it as a potential nice upside to the business.
Chuck Jehl: Absolutely.
Keith Jezek: We know it would all happen. And we know this; we call it a refi tsunami will hit. There are shores. We’re just not sure exactly when that will happen.
Unidentified Analyst: Got you. That’s helpful. And then just on adding any new OEMs, I think recently you’ve mentioned multiple OEMs in the pipeline, so just curious if there’s any update there on how conversations are progressing.
Keith Jezek: Yes, great question. This is Keith. Progressing really nicely, as you’ve heard me say before, multiple large prospects in the pipeline, solid material progression through milestones throughout the sales process, these are long sales cycles and we’re cautiously optimistic that we’ll have success with a couple of them. In addition to that, we keep adding just kind of larger enterprise type accounts in and around the OEM captive space as well. So the pipeline is growing. The progress through the pipeline is growing objectively, and we’re very optimistic about the future with additional captives. As you heard us say in the prepared remarks, the captives have now eclipsed all other lender types as the number one source of auto loan originations in the U.S.
Unidentified Analyst: Thanks for taking the question.
Keith Jezek: Thank you.
Chuck Jehl: Thank you.
Operator: Thank you. [Operator Instructions]. There are no further questions at this time. I would now like to turn the floor over to Keith Jezek for closing comments.
