John Greene: Yes. Thanks, Ryan. So good news. So it is actually progressing to schedule. So as a matter of fact, last evening, we signed a servicing agreement with [Nelnet] to become the servicer of this portfolio. So that was great news. It was a competitive process. And certainly, Nelnet showed that there’s a commitment to continue to dedicate resources and service that portfolio at a high level. The next step will be to continue the servicing migration activities. We expect those activities will take around six months. We’re conservatively it may take a month or two longer. And then as we’re doing that, our adviser will begin to market the portfolio. So our expectations are that it will sell in the second half. And the implications for the business are as follows: So there’s $9.5 billion of receivables.
That equates to risk-weighted assets of about $10.8 billion. We expect that, that will be — the exit of that will be — have a positive impact on net interest margin by somewhere between 10 bps and 20 bps on a full year basis. Charge-off rate could tick up mildly, so under 5 bps. And as of 12/31, we had $858 million of reserves. So with a successful exit, those reserves will drop. And the sale price, the market will determine that, but we expect it to go above par.
Ryan Nash: Thank you for all the color.
Operator: Thank you. Your next question will come from Mihir Bhatia with Bank of America.
Mihir Bhatia: Hi. Thank you for taking my question. We’re going to start with loan growth also. And I just want to go back to the building blocks a little bit. I think you essentially said in terms of the building blocks, you’re expecting payments rates to be elevated ex – like flat to stay at the elevated level and sales to be flat. You’re also adding accounts. So I’m just like trying to understand I guess, what’s the bank account? Like how does loan growth stay flat given the sale, you had 15%. I’m just trying to understand like – that’s something we’re missing, I feel like, and I’m just trying to understand that.
John Greene: Yes. So let me try to give a little bit of color that hopefully gets folks comfortable with our view of loan growth today. So in 2023, really, really strong loan growth. Much of that was driven both by new account growth, but also a slowing payment rate, that payment rate in our assumptions is holding flat. And as a result, what we expect to see is the 2023 vintage will begin to kind of build in terms of assets, but there’s likely going to be some impact from sales. And then also as we cycle through the 2022 vintage, we’re not expecting significant new balance builds from that vintage. Now, maybe there will be. But overall, what we’ve tried to do here is reflect our view of our underwriting box today, not reflect any potential openings of our underwriting box in the later part of 2023.
And if we have deliver on loan growth, that will be fantastic. The other element that has come into play here as we pulled back on balance transfers and promotional balances in the second part of 2023. We don’t anticipate significantly increasing that level of balance transfer, promotional balances. Now, if we do, that will certainly be accretive to loan growth as well. So, what you’re hearing in the guidance is that our expectation is that there’s an opportunity to deliver better. But certainly, we’ve positioned both the guidance and the business to be conservative at least for the next quarter or two.
Mihir Bhatia: Got it. And then I wanted to go back to expenses and the reserve for customer remediation that you mentioned that you took this quarter. Can you just provide some color on that? Like is that related to the merchant mispricing issue? How much was the reserve this quarter? Where does that leave the reserve overall I think you had $365 million in 2Q. Just trying to understand how the estimate for the costs related to that issue changed? I think you also mentioned it could be higher — expenses would be higher in 2024. If you need to take more reserves there, like — where are we with that investigation? Just give us an update on that merchant mispricing issue too?
John Greene: Yes. Okay. So, let me start with the reserves. So, — and the remediation reserve that we put up. So, they’re unrelated. So, the merchant tiering reserve we booked $365 million as a liability, that has moved now about $370 million just as we’ve had some payments and other flows in through the interchange that we had to correct manually for. So, the progress there in terms of discussions with our merchants is positive. We’ll — we don’t have enough data points to make a material change to that reserve level yet, but it’s progressing, my view, positively through the end of the year and today as we speak. Now, separately, we put up $80 million for a — as we described it, a customer remediation reserve. Now, some context to that is as part of this compliance journey, we’ve put in a significant number of resources to help us identify and correct issues.
