But when we look at the credit performance of the loans that we have originated over the last nine months, they look very, very good and that makes us confident about Q4 and going forward. And the only other thing I will add that I did say in the script also is even those loans that had higher charge-off rates than we were forecast at the time we originated them, still positive ROEs. I mean we still make money on these loans, just not as much as we would have thought we would have made. But given the loss — given the default in the loans we have originated since. So this year, right back — we expect to be right back at our target our earliest.
Steve Cunningham: Yeah. John, let me add a couple of things to think about as well. I mean if you look at the quarterly metrics and I have talked about this before, you kind of have to look at those in combination with our fair values, which give a better view of the overall expectation of how we expect the portfolio to perform. So there can be some variability quarter-to-quarter. You can see our loss rate ticked up a touch above the 5% for the quarter for the reasons we talked about. Delinquencies came down and as we look out, the fair values of the portfolio actually ticked up a bit, which is reflecting the fact that a very large amount of the portfolio now consists of those vintages that David mentioned that are from early this year onward.
So we expect that we are going to settle in at a more typical range from here as we have been adjusting, and obviously, we will continue to adjust where we see uncertainty. But I think that’s how you should think about from here how the credit quality should play out for the SMB both.
John Hecht: Okay. That’s very helpful. I appreciate that. And then maybe talk about kind of your, a big buyback, I think, that, obviously, that will be appreciated by the shareholders. Maybe do you have some sort of, is this going to be opportunistic, is this going to be — do you have a kind of cadence you are thinking about or some combination thereof?
Steve Cunningham: So I think our Board authorized the program to run through the end of next year and I think we will be looking very seriously at how we have typically done in the past of using that authorization to opportunistically take shares out of the market. As you know, John, there’s a number of different ways you can go about doing that. But I think overall, our plan is once we have the 2024 senior notes retired, we will be very active in terms of trying to repurchase more actively than we have historically in the market.
John Hecht: Yeah. Okay. And then any — so, obviously, you are leaning into marketing, leaning into growth, particularly in consumer, it seems like at this point, is I guess, sort of two basic questions on that. Number one is, is part of that because you are seeing more opportunity because others in the segment are pulling back and then the second is, just I am always curious are you using pretty much the same channels of marketing or is there any changes to how you are deploying marketing spend?
David Fisher: No. Nothing meaningful. No.
John Hecht: And then what about the competitive environment, is that enabling this more proactive?
David Fisher: I think competitive — yeah. Yeah. Sorry, I forgot about that. First, I think, the competitive environment is still pretty benign like we have been talking about for a while. Nothing new on the small business side. I think we have seen — as we talked about competitors struggled liquidity, also a couple move more towards the prime space in SMB, and then in consumer, again, no new entrants, lots of pulling back, lots of refocusing. So I would say pretty benign competitive environment on both sides.
John Hecht: All right. Thanks very much guys.
David Fisher: Yeah.
Operator: Thank you. [Operator Instructions] The next question comes from Vincent Caintic with Geoff and Sigh [ph] — with Stephens. Please go ahead.
Vincent Caintic: Hey. Good afternoon. Thanks for taking my questions. First one on the marketing spend this quarter. First, just wondering in terms of the opportunities you are seeing, is it sort of more on the consumer side, more than the SMB or fairly equal, like what opportunities are you seeing for marketing spend? And then the direction of that marketing spend, is it sort of like direct mail or lead generation or already anything specific there? Thank you.
David Fisher: Yeah. I mean, I think, we saw opportunities in both small business. We are a little bit more conservative in kind of our — in our originations during the first half of the year. So that probably resulted in seeing that more opportunity as we went into Q3. And on the consumer side, we have been getting more aggressive all year in the face of good demand and so very, very stable credit. And I think, in Q3, we just saw a strong — again a strong consumer with super high employment rates, rising wages in a typical — fairly good seasonal period that kind of hold back, end of summer back-to-school season tends to be good from the consumer side. So you put that together, I think it was really very much demand-driven on the consumer side.
And then in terms of marketing spend, we have gotten very, very good over the last seven years, eight years about having a balanced approach to marketing. In the subprime consumer side, lead — traditional lead providers our portion of the business, but not a majority like they were many years ago for us. We do a lot of direct mail. We do a lot of TV given our scale. We are one of the only players in the industry who is large enough to do TV at scale on the consumer side and so really kind of all channels. On the small business side, still a lot coming through the wholesale channel through ISOs, but we continue to grow our direct channel. It’s a very fast-growing channel for us. Direct is the same stuff as we do on the consumer side. So it’s all stuff we know how to do TV, TV, some direct mail, plenty of digital, and definitely, our experience on the consumer side has helped us grow that direct channel very quickly on the small business side.
Vincent Caintic: Okay. Great. Yeah. Certainly been seeing more advertisements on the CNBC lately.
David Fisher: Good. That’s great. That’s great. Yeah.
Vincent Caintic: Yeah. It’s effective. Yeah. Very effective. In terms of — so leaning into marketing, a lot of opportunities there. You also have that big share repurchase authorization. If you could remind us in terms of the opportunities and how you decide between putting more capital towards loan growth opportunities versus your cheap stock updates?
Steve Cunningham: Yeah. Sure. So, first of all, we are not capital constrained, so we can do it all. And when you think about when we have become indifferent based on what we think the value of our firm should be given our performance and our outlook versus making another loan and then you move from there, we can become as aggressively as you can be legally every day. So we do have a method that we followed for many years. I would expect that we will continue to — at a minimum continue to follow that with a larger repurchase program and there’s other — there could be other opportunities as well to tackle a larger buyback program. But I think the key thing is we can continue to grow our business with meaningful rates and return capital to shareholders while generating good IRRs on all of it.
