So that’s certainly on the list of planned activities for the second quarter, third quarter, and then hopefully, we begin some execution in the fourth quarter. So overall, I feel comfortable with the expense guidance that we’ve provided. And we’re going to do our best to make sure that every dollar we spend is wise and that the shareholders get the benefit from that.
Bill Carcache: Very helpful. Thank you for taking my questions.
John Greene: You’re welcome, Bill Thanks.
Operator: Thank you. Our next question will come from John Pancari with Evercore ISI.
John Pancari: Good morning. Regarding the new $80 million remediation charge, did all of that remediation relate to the student loan business, specifically, and was that in part tied also to the July 2022 disclosure around the student loan issues that surfaced then? And did any of that $80 million relate to the other business that you point that you mentioned that could have had a tangential impact and what was that business? Thanks.
John Greene: Yes. So the $80 million was related to servicing issues, the lion’s share of that, the significant share of that was related to student loans. There was a small amount that we put up related to personal loans upon reviewing that, there may be an opportunity to release that reserve, very small though. The $80 million is not connected to the issues that we discussed in July. So what I tried to do is provide as much context as I could. So we’ve dedicated number of resources to identifying issues to help on this consumer compliance journey. As with any company, as you dedicated resources, they come up to speed, they are going to get more effective at identifying issues and correcting issues. This is symptomatic of that progress.
So we’ve got folks that are coming through every single bit of our business to make sure we’re executing consumer compliance at a high level. An issue was found. Cross-functional team reviewed it, and we made an election that we are going to accrue something at year-end to cover potential remediation payments.
John Pancari: Okay. And just related to that, so this is a newer issue versus what was discussed in July? And is it also newer versus what is in your existing consent order tied to student loans?
John Greene: Yes. So what we disclosed in July was a broad program around risk and compliance management activities. The specifics of the particular issues weren’t discussed in any details. And what I’ve shared with you right now is probably as much information as I’m going to share at this point. So the takeaway should be is that we’re progressing on the risk and compliance management activities. We’re getting better at identifying issues. When we find an issue, we’re going to deal with it. And we found an issue. We’ve put up a reserve for that issue. And we’re going to work through further details on it in order to ensure that consumer compliance is where we want it to be. So with that, I think I’ll probably close at this particular item out, if you don’t mind.
John Pancari: No, that’s fine. Thank you for that. And my last thing is very quick one on the loan growth guidance. You guided to average balances for 2024 were up modestly. Can you help maybe quantify the up modestly. It could give me — help frame it. Thanks
John Greene: Yes. So 5% to 6% on average.
John Pancari: Okay. Great. Thanks, John.
Operator: Thank you. Our next question comes from Don Fandetti with Wells Fargo.
Don Fandetti: John, you know, it’s good to see the delinquency formation showing some progress. Can you talk about later stage delinquency rates? I mean, they seem like they’re still going up on a year-over-year basis or like our cure rates. I’m still trying to get my arms around this like potentially 5% NCO rate. it just seems high for Discover.
John Greene: Yes, the later stage buckets are kind of modestly improving. We’re seeing improvements across every bucket. The first bucket is this really the key one, and then as you get into later and later buckets, the ability to cure just becomes more challenging because the situation that consumers and but we are seeing mild improvements there. So that that also is encouraging.
Don Fandetti: Okay. And the 2023 vintage, can you talk a little bit about what your early read is on that?
John Greene: Yes. The net of it is that it’s early. So it’s performing profitably, and we’re going to continue to keep our eye on it.
Don Fandetti: Does that mean it’s not really trending that well relative to your expectations? Or is it kind of in line?
John Greene: No, no, I didn’t say that. It’s just — it’s early. So is performing generally in line with expectations.
Don Fandetti: Okay. Thanks.
Operator: Thank you. We’ll take our next question from Jeff Adelson with Morgan Stanley.
Jeff Adelson: Hi. Thanks for taking my questions. John, I just wanted to kind of follow up on the charge-off guide. I know you’ve mentioned that you’re hopeful this — your comment at the low end. But could you maybe just dive into what would take us to the low versus the high end here? And if this delinquency formation slowing continues throughout the year, is that kind of what’s embedded in your expectation at getting at the low end here?
