Jon Witter: Yeah, happy to. I think we’ve tried to give a range, obviously recognizing it’s sort of early in the year, and we continue to be, I think, in a little bit of a volatile sort of economic environment. And I think, of course, want to be sensitive to that. What we have effectively done in building up that forecast is a pretty deep look at sort of the programs, the new programs we’ve developed, the use of those programs, the uptake of those programs, sort of the effectiveness we’ve seen, recognizing some of those are in early days. We have looked at the credit in underwriting changes that we’ve made and sort of the differential performance between loans that we continue to underwrite versus those we don’t. We’ve looked at things like the standard aging and vintaging of our portfolio, understanding that different loans behave differently over time.
And we’ve looked down into the details of those portfolios at things like balances and fixed rate versus variable rate again, knowing that the performance of some of those things is a little bit different. And I think at the end of the day, that’s sort of how we arose, kind of came to the view. I think the thing that would take us to the lower end is if we felt like the programs that we had put in place were slightly sort of better and more effective than we’ve seen in the early days. And I think the things that would take us to the upper end would be sort of the opposite of that. But I think what you ought to take away is we are and continue to be very confident in sort of year-over-year improvement in credit. I think that detailed analysis I described makes us more comfortable, as I said in my talking points, at the high 1%s to low 2%s is really the right place for us to be.
And I think you should expect, and we believe that we’ll see continued performance improvement in ’25, of course, assuming no broader macroeconomic changes, I have to say that. Whether we get all the way back to a normalized level of ’25 or just close, I think it’s a little bit too far out to make that call. But I think we are confident in continued and meaningful improvement.
Terry Ma: Got it. And then, longer term for your market share, how should we think about how that evolves over the next few years as the competitor fully exits?
Jon Witter: Yeah, I think we would — assuming all of those plans that move forward as the media has suggested, I think we would expect that there will be jump on market share for us to compete for, much like there was when [Wells] (ph) made the decision to leave the marketplace several years ago. We will compete for that in exactly the same way that we compete for any other business. We’ll decide which of that business we like versus not, based on credit characteristics, pricing characteristics, all sort of resulting in the expected ROE of those loans. My guess is, we will end up competing for and trying to compete for a good piece of it. But I don’t know that we’ll necessarily compete for all of it. It’s just too early to sort of tell.
But I think our hope is that this does represent a near-term, sort of multi-year, but one-time opportunity to increase share, and we’re excited to compete for that in what is, and I think it continues to be, a nicely competitive marketplace where we expect other competitors to show up and very much compete with equal zeal as we’re competing.
Terry Ma: Got it. Thank you.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Sanjay Sakhrani with KBW. Your line is open.
Sanjay Sakhrani: Thanks. I guess question for Pete. Could you just talk about the 2024 assumptions on level of loan sales, like the gain on sale margins, and maybe what you’re assuming in terms of share repurchases in the guidance?
Pete Graham: Yeah, we kind of laid that out at the Investor Forum. In large part, our guidance is pretty similar to that. And in terms of sizing of the overall program this year, again, we’re targeting that sort of 2% to 3% balance sheet growth, and that will determine the ultimate sort of overall level. The $2 billion that we’ve agreed indicative terms on is a good start to that program for the year. And we’ll begin to utilize the capital generated by that, as Jon said, a programmatic approach to share repurchase. And then, when we do a second installment of loan sales at some point later in the year, we’ll build on that as we go.
Sanjay Sakhrani: And then, like that $2 billion that’s been sold already, that’s consistent in the range that you guys articulated at the Investor Forum, sort of like mid singles, little bit higher than that?
Pete Graham: Correct.
Sanjay Sakhrani: Okay. And maybe just on rates — interest rates. Could you just remind us sort of how as rates come down that affects the P&L and sort of what’s been done around rates and what you’ve assumed in the guidance? Thanks.
Pete Graham: Yeah, sure. So, over the course of the last couple of years, we’ve had a little bit of a tailwind on our NIM. Because in the rising rate environment, our loans tend to reprice faster than our liabilities reprice. And that’s why we kind of peaked out where we did in ’23. Our expectation is that, that will start to moderate, which is why our guidance for this year around NIM is lower than where we were last year. And we’re not necessarily taking a position on rates, we’re just acknowledging that we do have some timing disconnects in terms of pricing, and a bias over the course of this year for incrementally lower cost of funding as our liabilities reprice.
Sanjay Sakhrani: How many rate cuts have you factored in here?
