Steve McGarry: So buyers always stress their default expectations when they’re pricing up a loan portfolio, I think it is the case that an increase in life of loan losses of 1% or 2% does not have a meaningful issue on the IRR on that portfolio and our loan buyers are very serious students of the historical performance of our assets, and I’m pretty confident that they will be able to assess the issues that we’re having with the portfolio at this point in time and draw the appropriate conclusions. Are they going to try and challenge us and get a better premium? No doubt whatsoever, but I think that the long-term performance of this portfolio will carry the day. Jon mentioned in his prepared remarks that we are starting to see some improvement in default rates. And I think that, that will manifest itself in the stats as they emerge, for example, in the next monthly ABS servicing report, et cetera. So hopefully, that answers your question.
Jeffrey Adelson: Great. Thanks for taking my question.
Operator: Thank you. Our next question comes from Arren Cyganovich with Citi. Your line is open.
Arren Cyganovich : Yeah. I just wanted to follow-up on the net interest margin. You guided above 5%. Can you give us an idea of that much about 5%? And what kind of cadence, I think cash usually kind of swings around your net interest margin quarter-to-quarter?
Steve McGarry: Sure. So I mean, I’ll try and answer the question with as much candor as possible. I think that you can be pretty confident that our net interest margin should be relatively close to what you saw in 2022. Give or take a handful of basis points. It is the case that our funding is pretty steady and pretty long term. So in any given year, we’re replacing, I don’t know, 20% to 30% of our funding and our portfolio performance is pretty predictable. And I think we actually have done a very good job of estimating our net interest margin year in and year out. So I feel pretty confident in making the statement that I just did. And you are correct. So for example, we ended the year with 23.5% of total liquidity on the books and that was positioned to fund the big loan disbursements that we made in the first quarter of this year.
So there is cyclicality in the NIM, but it’s not as meaningful as it was back in the days when we carried a lot less liquidity than we do today.
Arren Cyganovich : Great. That’s helpful. And then just last question is with the higher loss expectations kind of booked into the provision this quarter, does that essentially kind of reduce the need for additional provision builds well above the, I guess, the charge-off rate. I know it’s kind of different because it’s more geared towards the originations? And then the last — other part of that is what kind of unemployment rate are you assuming this year in your net charge-off guide?
Steve McGarry: Sure. So, the one benefit of CECL, and I can’t think of many more, is that, at any given point in time you are reserved for all expected losses in the future. And I think we were pretty thorough in our reserve build this quarter. So unless there are major changes in the performance of our portfolio or the outlook for the economy, the only reserve building we should be doing in 2023 is for new loan originations. So I think that’s the situation there. In terms of economic assumptions and unemployment rates, we are a user of Moody’s forecast. We blend the base, the S1, which is a slight improvement in the economy and the S3, which is a meaningful economic downturn. And when we compare expected unemployment rates at both the college graduate level, and the household unemployment level prediction for the economy is large.
