Damian Kozlowski: It’s interesting you brought up capital call because we have done the people who run the company have done a lot of that in the past and other lives. So, it’s interesting you bring that up, but no. The – we need the room – if you look at – we are very constrained on the balance sheet, and we need to put in fixed rate securities for liquidity and other reasons, right, and to lock in profitability over the next 12 months, right. So, we want to flip from this very variable rate balance sheet to the majority being fixed. So, we are probably not going to add a traditional vertical though we have product expansion. We have had some product expansion, institutional and commercial. We are not going to get out of our box in real estate, most likely of these transitional loans that we are doing of apartments and red and purple states that are really workforce housing.
We are not going to get out of that space in a meaningful way. Where we will put on credit exposure is in credit sponsorship. So, we don’t know how big a part – I mean that could be in 5 years, 25% or 30% of our entire $10 billion Reg II limit. So, that’s where a lot of the product development is happening. That’s where it’s going to soak up some of the liquidity. So, once again, we are in an extremely good liquidity position right now. We are not worried about the runoff in the SBLOC, that’s our lowest coupon book and that goes into Fed funds. And we need a bunch of cash in order to buy fixed rate assets. So, we are not worried about it. We have looked at everything across the board. We understand the credit universe very well.
Even the more esoteric areas like leveraged finance and everything, we are very familiar with what we could do. But I don’t think – when I talk to investors, that’s what they really want us to do. We have an extremely low risk credit profile, very short duration, very, very low default rates with very high recovery rates. The story here is our funding source, our fintech solutions business and how we are going to manage our business as more of a technology company as we hit $10 billion. That’s the story that’s going to really super size investor value, plus with our high capital returns, rigorously returning that capital through buybacks over the next 5 years. So, that’s the formula. That’s where we are concentrated, and that’s where we think the most value is.
And so we are not a traditional bank. We are not going to be growing our assets to $50 billion. We are focused on uniqueness and low event risk. I mean in almost a religious way, we do not want to expose these type of returns to any type of credit risk that we think might have an exogenous shock if we have a substantial change in economics going forward due to interest rates.
Michael Perito: No, that all makes perfect sense, Damian. And that was kind of why I mentioned the areas I mentioned. I mean obviously, I totally agree, you don’t want to add credit noise to an otherwise fairly clean credit story, so that makes sense. Maybe a follow-up and you kind of mentioned it, but just I think to Dave Feaster’s question earlier, you were talking about product expansion. And can you maybe get a little bit more specific about the products that you are looking at? Like are we talking about point-of-sale finance solutions? Are we talking about like earned wage access, or early wage access, are we talking about maybe other like credit card or credit builder type products? Just curious what you guys are working on internally that your clients are looking to expand beyond kind of the debit card solutions that you are offering today?
