I’d say our overall forecast in terms of exit rate is conservative. We consider a range of different rate scenarios, including the possibility of Fed funds being flat for the remainder of the year. And as you’d expect, our pricing assumptions actually change depending on the actual path of Fed funds and the overall competitive environment. So it’s hard to give you kind of one because we look at a lot of different paths. But again, through a range of path, given the quality – given the strength of the repricing we’re seeing on the auto loan side, given the hedging portfolio that we have in place, we feel pretty good about our exit rate and our overall NIM guidance for the year.
Rob Wildhack: Okay. Thank you.
Operator: Our next question will come from the line of Bill Carcache with Wolfe Research Securities.
Bill Carcache: Thank you. Good morning, Doug and Russ. A flat reserve rate versus falling DQ rate formation suggests growing conservatism. What’s the trigger that would give you comfort allowing that reserve rate to drift back down to Day-1 levels? And let me flip the question, are you seeing anything that could lead you to have to take reserve coverage higher from here?
Russ Hutchinson: I think as we said on the call, our expectation is, we’ll keep that reserve coverage flat. I don’t think it reflects any particular conservatism on our side. It’s – quite frankly, it’s kind of how we’re running the business today. And it reflects, in some ways, the fact that – as we look at the assets we’re originating today versus what we would have originated in, say, 2019, we are focusing on a product with a richer yield and that carries more credit with it. And we think we’re getting more than compensated for the additional credit that we’re taking. But it’s a different mix and a different place in the credit spectrum than we would have been in 2019.
Bill Carcache: Understood. On interest rate risk, you guys put on the hedge in part as protection – or higher for longer rate environment, and it seems to have performed as intended. How are you thinking about any potential future incremental hedging activity as the rate environment evolves?
Russ Hutchinson: We’re pretty happy with the performance of the hedges. I think they’re performing as intended. They are a bridge for us right there. They bridge to that kind of natural portfolio turnover to the more recent higher-yielding originations. At this point, our expectation is that we will allow those hedges to amortize and that we’re kind of in the right place in terms of bridging that portfolio turnover. But obviously, we manage dynamically, and we’ll continue to kind of assess the situation as we see market dynamics play out.
Bill Carcache: Thank you for taking my questions.
Russ Hutchinson: Thanks, Bill.
Operator: Our next question comes from the line of John Pancari with Evercore ISI.
Chase Haynes: Hey, how’s it going? This is Chase Haynes on for John Pancari. I want to try to get a sense for auto – consumer auto loan demand, just given what you’re saying about elevated insurance premiums due to those higher inventory levels – is that due to a decrease in demand that you’re seeing in big ticket items? Or is that just a normalization effect? And do you expect consumer auto demand in the go-forward quarters to kind of remain where they’ve been at or decrease or increase a bit?
Russ Hutchinson: Well, I think it’s a little bit unique to us because if you look at our application flow and what we’ve been hitting records quarter after quarter after quarter, so we’re getting a greater market share of application flow, which obviously gives us significant kind of up, if you will, relative to what we can originate. And then, of course, you put that on top of a competitive environment that is very constructive for growth. Those are the real two drivers. But yes, I think the general market is such that I think volumes would be pretty consistent or flat, but I think our ability to do more is heavily driven just by the fact that we’re driving that increased application flow.
Chase Haynes: Got it. Thank you, guys.
Russ Hutchinson: That, of course, also allows us to be selective as to where we want to play on top of it. So…
Sean Leary: Thank you, Doug. It’s shown right at the top of the hour here, so that’s all the time that we have for today. As always, if you have any additional questions, please feel free to reach out to Investor Relations. Thank you for joining us this morning. That concludes today’s call.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
