Scott Sanborn: Yeah. Let me start, so there’s a couple ways to think about the impact of rates on the business, and there’s a couple different rates that impact us. So first is the forward curve, the expectation of future rates. When that moves, pricing to asset managers moves, right, because their funding costs come down. So we saw that in Q4. We got a little upward drift in Q1 as well. So expectations of rates coming down will move asset manager prices up. Now, at the levels that we’re talking about right now, that’s kind of a modest tailwind. The other thing, the other rate and change that affects the business is the Fed actually moving which should affect our cost of funds. Now, depending on, again, how — a 25 basis point move, especially given that we’re growing the balance sheet and needing to actually add deposits, we’re likely going to lag that, but a material move, as long as it’s not coming with some downside on the employment outlook, would be good, right.
A move downward of size would be something we’d pick up. You’d see that in our NIM. And also a meaningful move down I think would create more capacity from banks, which could create a bit of a step change in pricing, right, which is if we can bring back at scale that fundamentally higher priced better buyer for the same assets, that would be a potential first step change. So that’s how I would think about it. Small changes in expectations will be modest tailwind in prices, more meaningful changes and the Fed actually moving would affect NIM and potentially the buyer base for bigger changes in prices.
David Chiaverini: Great. Thanks for that and last one for me is on expenses. You had and you alluded to it earlier about how you gave the expense guide excluding marketing for the fourth quarter and maybe I’m missing your prepared remarks but are you able to give a range for the first quarter as to kind of parameters on the expense front?
Drew LaBenne: Yeah. I think we’ll probably see slight seasonal increases in expenses, but very modest as we go into Q1 in the first half of ‘24.
David Chiaverini: Thanks very much.
Operator: Our next question comes from Michael Perito with KBW. Please proceed.
Michael Perito: Hey. Good afternoon, guys. Thanks. The only kind of question I have left is just, kind of leading off, dovetailing off that expense question. Just I see, appreciate the kind of, I know it’s not [indiscernible] Drew, but the kind of financial outlook for the remainder of the year, just trying to think about if the revenue environment does improve, where do the expenses kind of follow on that? Because Scott, you’re prepared remarks. I mean, you mentioned in a couple places how you’re investing maybe not the pace as you once were, but just trying to figure out kind of what, how those two will be linked moving forward. I mean, obviously I’m sure you guys want to be generating some operating leverage, but I imagine in a better revenue environment, there’s a better pace of investment as well, so just comment there.
Scott Sanborn: Yeah, I mean, I think the first priority is going to be building up the balance sheet, right? As we’ve talked about before, we were on a transition from primarily fee-based model towards shifting towards more revenue coming off the balance sheet that was interrupted or the pace of that was interrupted when the rate environment suddenly shifted. We’d like to get back to that because that builds a more resilient predictable business. So that’s going to be priority number one. As I think we mentioned before, that as difficult as some of those personnel decisions are, there’s a certain amount of just leaner operating discipline and realignment of the org that we will be holding onto. We have also — we are also in the process of shifting some of our developments to lower cost locations, which will be a place we can grow from at a lower cost than what we’ve historically had.
But if you think about our investments, I’d say, first and foremost it’s going to be the balance sheet, and then when it comes to the development and the product roadmap, it’s going to be — we’re going to look to do that at a lower cost than what we’ve done in the past.
Michael Perito: That’s helpful, Scott. Thanks. And then just wanted to make sure I heard something right and just ask if, and if you guys said it, and Drew, I can just check the transcript, but the discount rate on the personal loans, I think you mentioned it went down to 9% from 9.6%. Was that driven by execution of recent transactions or were there other kind of rate changes? Again, if you’re repeating yourself, I apologize, but if you can just spend a second on that as well, that would be great.
Drew LaBenne: Yeah. It’s a bit of a combination of the two, but I would say mostly driven by the rate environment, right? So, the two year point, which is probably the closest point to where we would index as our base rate, is down pretty meaningfully from Q3 to Q4, and that drove most of the discount rate decrease.
Michael Perito: Helpful. Thank you.
Operator: Thank you all for your questions. There are no questions waiting at this time, so I’ll pass the conference back over to Artem Nalivayko.
Artem Nalivayko: All right. Thank you, Sierra. So we typically take e-mail questions at this point in the call, but I believe we’ve already addressed the questions that have been submitted in our prepared remarks and in the Q&A. So with that, we will wrap up our fourth quarter and full year 2023 earnings conference call. Thank you all for joining, and if you have any questions, please feel free to email IR at lendingclub.com.
Scott Sanborn: Thank you.
Operator: That will conclude today’s conference call. Thank you all for your participation. You may now disconnect your line.
