And I think the longer that’s continued and the less likely a recession is, more confident small businesses have become. And I think that, in large part, explains our strong Q4 volume and our strong start to 2024 on the SMB side.
Operator: [Operator Instructions] The next question is from John Rowan with Janney.
John Rowan: I’m going to apologize if someone else asked this. My phone cut out and I had to rejoin the call. But as far as the — we came through a rate hike cycle without material impairments to the fair value of the loans. Obviously, the discount rate going up was offset by improved lifetime loss assumptions. Going forward, if the consumer holds up and we don’t see deterioration in the loss assumptions, does the fair value marks, do they just go up as rates come down and that discount rate gets reduced?
Steve Cunningham: Yes. So we made a big up adjustment in our discount rates back in the third quarter of 2022. And you’re right, we do look at market rates, particularly short market rates and credit spreads are probably as equal or more important with our portfolio in terms of where we land with discount rates. We nudge those down just a touch this quarter. But keep in mind, the fair values are a bit less sensitive for discount rate than they are for credit. Just to, for an example, 100 basis points on a discount rate is only going to be about 70 basis points of fair value. So not quite sensitive but overall, as rates continue to come down which would imply a good opportunity for the economy, spreads tend to come in as well. There would be an opportunity to continue to bring down discount rates in the fair value marks.
John Rowan: And then just the charge-off rate in the consumer portfolio is like 17 point something percent. Obviously, higher than it was last year. The financial supplement doesn’t really have the pre-COVID years. I could certainly go back and look at them on your website. But can you remind us how that charge-off compares to pre-COVID?
Steve Cunningham: Kind of similar. Maybe a touch below. But that pattern that we talked about just a moment ago in terms of the seasonality of consumer through the year, you can see earlier this year, it troughed at around 13%. It can move 3 to 4 percentage points as you move through the year as you’re moving through those different growth rates through seasonality. And we think we’re back to that. But the rates that we’re at today are comparable to maybe even slightly a little bit better than where we were pre-COVID.
Operator: The next question is from Alexander Villalobos with Jefferies.
Alexander Villalobos: Few of the questions were already answered with fair value marks and consumer confidence. But I did want to get a little more detail on the originations mix for the quarter, new versus kind of like recurring customers.
Steve Cunningham: Sure. Well, we don’t talk about that metric as much as we used to but it’s been very stable now for some time. And for the most part, it’s right around 40% new and it has been for some time across the portfolio.
Alexander Villalobos: Congrats on the quarter.
Steve Cunningham: You bet. Thanks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to David Fisher for any closing remarks.
David Fisher: Thanks everyone for joining our call today. We certainly appreciate your time and we look forward to speaking with you again next quarter. Have a good evening.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
