If you just kind of turn to the loan sale we did this quarter, we sold $1.1 billion of loans. There was a $15 million earnings benefit and that earnings benefit is effectively the net benefit given where we hold the loans, including the reserve and provision impact. And so that $15 million benefit was realized through the provision line, but that is a positive P&L event for us and again, reflects strong investor interest in the overall loan portfolio. I would say the loans that we sold, they were predominantly 2023 vintage. There was some older stuff in there from 2022 and 2021 as well. So the blended yield, as we said on the call, was lower than what we’re currently originating in the market today. And so again, we feel good about the economics we got, given the yield on the loans that we sold.
So again, strong investor interest. We’ll continue to be opportunistic. We’ll look for more opportunities to do this. And it’s all good in allowing us to capture opportunity and better serve our dealers.
Sanjay Sakhrani: Thank you.
Operator: Our next question will come from the line of Jeff Adelson with Morgan Stanley.
Jeff Adelson: Hey, good morning. Thanks for taking the question. Russ, I just – I know the forward curve has sort of eased the expectation for cuts recently. And I know you are still looking for the 4% by the end of 2025 with that rate cuts. But if the forward curve does come through, do you still think there is an opportunity for the 4% to come a bit earlier in the year ignoring the lumpiness that might be happening on a quarter-to-quarter basis?
Russ Hutchinson: I think right now, we are on track for 4% by the end of 2025 and so we feel pretty good about that. We do run a variety of reasonable rate scenarios here, and we feel pretty good about end of 2025 under a range of scenarios, including scenarios where we are flat for the duration of 2024. And again, we think we’ve kind of taken that risk off the table for this year in terms of its impact on our yield.
Jeff Adelson: And on the remarketing side, I mean, it seems like you guys have seen some real strength in the lease termination volumes lately. I think that’s coming off the back of the originations you did a couple of years ago. And I think the less the dealer-buyer figure dropped the most, it’s dropped since you started disclosing that. Can you just talk a little bit more about the outlook there? Is that something that could actually maybe help your NIM going forward even as used car prices continue to kind of moderate? Is there may be like a kind of Goldilocks type zone there where used car prices moderating is actually something that helps you as more consumers are bringing their cars back to you?
Russ Hutchinson: I think lease terminations can be a little bit lumpy and that some of the – that’s one of the factors that contributes to the lumpiness in terms of our NIM progression, and that’s why we give you that 5 to 15 basis points. Yes, I’d say if I look over the course of the first quarter, lease terminations were actually weak towards the beginning of the quarter and kind of came back towards the end. And so we saw that lumpiness quite nicely even within the quarter. I think on the contractual buyouts, I think we expect the level of contractual buyouts to continue to normalize, particularly as used car prices reach that 120 level that we’ve been talking about, that’s all obviously – that’s all stuff that will ebb and flow over the course of the quarter and over the course of the remainder of the year.
I think we’ve priced in kind of reasonable expectations in terms of how we set the guide, around just the kind of the overall level of lease terminations and the level of contractual buyouts, again, normalizing and used car prices normalizing around that 120 level.
Jeff Adelson: Okay. Great. Thank you.
Operator: Our next question will come from the line of Rob Wildhack with Autonomous Research.
Rob Wildhack: Good morning, guys.
Russ Hutchinson: Good morning, Rob.
Rob Wildhack: One more question around loan sales. Russ, what’s the rate limiting factor today that’s preventing you or keeping you from doing more loan sales and taking advantage of this competitive opportunity that you guys are highlighting? Is it demand from loan buyers or investors? Is it pricing? Is it something else?
Russ Hutchinson: No, we’ve seen really great demand from investors. I think we’ve been able to get done what we’ve tried to get done in each of the two transactions – each of the three transactions that we’ve completed so far. I think we’re – we feel pretty good about what we’ve done. Again, we don’t set targets on how much we want to do in a given quarter or a given year. But again, we continue to feel pretty good about what we’ve done, and we feel pretty good about on the other side of it, what we’re originating and how it allows us to support our business.
Rob Wildhack: Okay. Thanks. And then how much more room do you think you have with respect to deposit repricing, especially as fewer rate cuts are now being priced in? And then maybe to follow on from that, what degree of deposit repricing is included in your outlook for the NIM expansion and the exit rate in the fourth quarter?
Russ Hutchinson: Got it. Look, we’ve been really pleased with the amount of pricing flexibility we’ve gotten so far. As we pointed out on the call, we took – we started with CDs, we took 75 basis points off of our 12 months, our most popular CD product. We took – we’ve taken off liquids. We took another 5 basis points of our savings product this morning. We continue to feel great about the deposit flows we’re getting. And so we’ve seen the competitive environment for deposits is clearly eased. Our own demand for deposit growth has obviously changed as well, being 90% funded by deposits with a flat balance sheet expectation going forward. And so we feel pretty good about where we are. As I said to Ryan earlier, it’s hard for us to say at this point whether what we’ve done is we’ve just pulled forward cuts to pricing that we would have made later or if we’re on track to a lower place.
