Andy Harmening: Yeah, the payoffs already happen. I mean, that book, it’s interesting. The duration of it has typically been, historically been, and for us been, 36 months or less. And so you’re seeing that, we’re seeing that already on a monthly basis. And so that’s one of the positives about a book like that is that you do work through it. With regards to what happens in the future and the growth of that will be purposeful in having a exposure to auto. And you’ll see that start to peak out in what the growth is, hold steady, and then probably go down a little bit over time. Which quarter that happens in is, I can’t — I wouldn’t predict exactly what that quarter is, but it won’t be a runaway portfolio. Our goal is not to be simply known as the auto bank.
We have and continue to invest in commercial. We think we have a significant opportunity. In fact, market data shows us that we’re under-penetrated in deposits in key markets for commercial. We’ve been working very, very diligently on bridging that gap. We think that we are. And so when we look at that and we look at the loan side, we think there’s opportunity in commercial.
Timur Braziler: Okay, that’s helpful. And then maybe from a credit standpoint and how the growth in auto corresponds with CECL accounting. The look back has been nothing so far really, just given how new that business line is. However, historically consumer auto tends to have a higher level of charge-offs. I’m just wondering how you’re thinking about growth in that portfolio and how you’re modeling that from the CECL standpoint and could we actually see a meaningful step-up once that book does start to normalize and we see charge-offs move to more or less of a normal level there.
Andy Harmening: Yeah, Timur, I’ll start that and I’ll flip it over to Pat, but I saw that in a note that you had talking about the higher level of charge-off and I wonder if we’re mixing strategies. And by that I mean this is a prime and super prime book. We know that the charge-off rate is what through the cycle, about 35 to 45 basis points. I considered a low-risk book. We have about $10 billion in consumer finance on our books of prime and super prime, primarily in real estate between home equity and residential. And we don’t see — we see that we’re lending to very similar customers in a balanced scorecard model. So we’ve actually seen an increase in credit bureaus over the last 12 — credit bureau scores and those scores that we lent into this portfolio in the last month, for example, is a FICO of 783.
And I believe it’s around 780 the month before and the overall book is between 760 and 770. So I don’t consider this a high-risk book at all. And because we’re lending to people that pay us back and we’re lending in a fashion that takes in multiple variables to calculate the risk parameters. How else would you answer that, Pat?
Pat Ahern: No, I think that’s a good summary. I mean, we haven’t seen the maturation level yet, but the metrics in terms of charge-offs, delinquencies, et cetera, are tracking in how we would expect it. And we’ve been very happy with the deals that have gone into it and how they’ve performed. Like Andy said, we’re in that prime and super prime space, so it’s really kind of aligned with our expectations were.
Timur Braziler: Okay, that’s a great color. And then just last one there. Can you provide an update on how big that dealer network is and what that growth rate is expected to be in ‘24?
Andy Harmening: Yeah, we have about 1,300 dealers right now. And as Derek said, we’re expanding within the footprint. I would say we’ll go through the same course of our business model in terms of adding dealers where it makes sense based on their quality and how they fit our model. We haven’t provided guidance for 2024 yet.
