Anthony Cutrone: Yes. So currently, we’re around $420 million on rec and just about $220 million or so on Home Improvement. We think those are good numbers. So in connection with the adoption of CECL on January 1, we’ve got a – we do a lot more quantitative forecasting, and we look at future expected losses. If the economy were to take a sudden downturn, which we’ve been expecting that – those rates could step up. But if we continue with the pace of where we are, we think those are good numbers, and that’s where the allowances should remain.
Christopher Nolan: Okay. And then given a final question. Given your comments in terms of loan growth to moderate, should we expect relatively, what does moderate mean? I mean, is the sort of growth rate you’re looking?
Anthony Cutrone: Yes. So I think in the 9 months, consumer loans grew around 16%. And we’ve been experiencing 20% to 30% growth year-over-year in those two categories. And that was good. And we intentionally did that and made those took the opportunity to take these recoveries and this capital, that we generated from these Medallion collections and reinvest it in the business. I think going forward, we would expect somewhere in the ballpark of 8% to 12% growth, with the ability to increase that or decrease it as necessary. I think growing at 20% is different when you’ve got $100 million – $1 billion balance sheet as opposed to growing at 20% when you’ve got a $2.5 billion balance sheet.
Christopher Nolan: Good, that’s for me. Thank you.
Operator: Thank you. Our next question comes from the line of Matt Howlett with B. Riley Securities. Please go ahead.
Matt Howlett: Thanks for taking my question. Another fine quarter. And there just seems to be this disconnect between you guys are performing what the market views you at. And I want to get to that. But the first question is the – with the moderation in loan growth, the excess capital, I mean you just raised the dividend, you have a high-class problem, you have a lot of capital, you are above I think 15%, well above 15%. And it looks like you will generate more capital. You got that gain coming into the third quarter. So, you already got sort of $0.25 in the bank already. My question to you is, could you – what do you think about in terms of excess capital, could you get more aggressive buying another platform, buying back shares? Just talk to me about what you have been running at this breakneck speed in loan growth as good as slow. It’s going to free up a lot of capital, you have got great earnings. Anything we should think about plans with that capital?
Andrew Murstein: I think we are always looking at new businesses and acquisitions. It’s really not a good time to go off base and go into new lines of business. All of our businesses are doing so well, so we are going to continue to focus on them. I would say that we probably have a lot of good options, since we don’t plan on going into new businesses. That could be buying back more stock. Last year, I think we bought about 10% of the company back in 2022. The buyback is another $20 million to go. It lets us raise the dividend as you stated. We are now paying $0.40 a share, so we raised 25%. So, we can put more money into the bank if need be. If we are surprised and loan growth is stronger and we are able to really pass on a lot of the increases in prices to our borrowers and charge more, that’s always a good option for us too, but it’s nice to have options.
Anthony Cutrone: Yes. And I think the one thing that I would add to that is we do have a large amount of capital, regulatory capital at the bank, we also have a high minimum that we have got to maintain, a 15% capital maintenance ratio that, as you are aware. So, given the size of book that we have now, a slight deviation because of CECL, in what we need to record as an allowance, could have a meaningful impact on that ratio. So, if we need to stay at 15%, staying just above 15% at the size we are, doesn’t actually – it doesn’t work for us. So, we need a larger buffer to account for that variability, which we haven’t yet experienced in the nine months since we have adopted CECL. But if the economy does take a downturn, we might. And I think that’s why we want to make sure that we have got ample capital cushion, as well as to what Andrew said, increasing the dividend and providing other shareholder returns that we can.
Matt Howlett: Yes. Look, it’s a high-class problem to have. It looks like your capital generation is only going to increase. So, when I look at Slide 11, I think the charge and most of the banks have been out there saying charge-offs on their credit card or auto is going to be kind of pre-pandemic levels by early next year. You guys are a little bit – you guys are – you guys are not quite there, but you are almost in charges. When I look at that chart, though, given the movement up in credit, the FICO, the more home improvement you have, I mean that you kind of show a 6% charge-off in 2009, but it doesn’t seem like you would ever – get ever close to that even if we go into a major recession.
Anthony Cutrone: Yes. We hope not. I think what I said earlier is important. Just in 2018, two-thirds of our recreational portfolio was subprime. In subprime, that’s the regulatory definition, 660 FICO. Today, that’s a third. So, we have drastically changed the credit quality of this portfolio over a number of years. And we hope that, that – as well as in the past year, stepping up the rates that we are getting on new origination. So, we think that all of those things are good steps and should help us undoubtedly when we hit the next downturn.
Matt Howlett: Yes. And then my final question is for both of you and especially Andy, you have been obviously running the company a long time, what’s the disconnect here, between the numbers you are putting out that 20-plus ROEs, the significant discount to book, what’s the disconnect between your performance in the market? Are people just looking at prior cycles or looking at the banks, they are not appreciating your underwriting, you are moving up in credit, all your pricing, I mean what’s – can you just maybe just go over that for me. Thank you very much.
Andrew Murstein: Yes, that’s a tough one to answer. It’s a great question, though. Years ago, you are right, we have been at this a long time in the late ‘90s, I think we were making $1 a share. The stock was at 30%. We are trading at 30x earnings. Now we are at, as you pointed out in your note this morning, Matt, I don’t know, 3.5x earnings, kind of shockingly low. So, I really hope we just can get in front of more buyers, more institutional buyers. It doesn’t take much to move the needle if we can get some good institutional support in the stock and a large volume of stock being bought that will surely drive up the price. And we are doing more conferences, getting more eyeballs, getting more phone calls these days. So, I just think if we continue to produce, it’s going to be hard for the market to endure so much longer.
