David Scharf: This is Dave. Let me just maybe take a first crack at that. I mean, basically, holding whole loans on a balance sheet isn’t super efficient. So while we do, we are creating structures with long term partners to be invested alongside them. Holding whole loans on the balance sheet, even if they’re warehoused or leveraged, isn’t particularly efficient. So that’s not something we necessarily want to do more than necessary. For some of the R&D processes, as we’ve told, that’s exactly what we have to do. In the personal loan product, we would certainly rather have anything on our balance sheet be in some form of risk sharing or partnership with a long-term capital provider as opposed to just holding loans on it. So our goal would be is to have ultimately no personal loans other than those for some reason in an R&D structure or some kind of risk sharing agreement we have with a long -term partner.
Sanjay Datta: I’ll just add to that briefly, Rob. So Dave spoke to sort of the more the long-term intention or strategy for how we wanted to play our balance sheet, in the shorter term to your question of why we are signaling or aspiring to a reduction on the whole loans in the balance sheet really has to do with what we expressed as some positive signals from the institutional markets and the capital markets in their demand of loans and of course if that third-party capital has healthy demand for loans, we would always prefer to deliver it to them than to hold it on our own balance sheet just because that’s more central to how our business model works.
Operator: And we’ll take a question from John Hecht with Jefferies.
John Hecht: Good afternoon, guys. Thanks for taking my questions. First question is, it looks like about $70 million of incremental — little north of $70 million incremental capital co-invested in the quarter. I know you guys didn’t deal with ARES in the quarter. I’m just wondering, can you tell us how much of that co-investment was tied to that deal versus I guess upping some of the flow agreements that you’ve already announced prior to this quarter?
Sanjay Datta: Hey, John. We don’t have an exact breakdown, but ARES was certainly a meaningful portion of the overall amount. I mean, if I had to ballpark it, I think something around the order of half was probably in the ballpark, but we don’t have a specific breakdown for you.
John Hecht: Okay. That’s helpful in any case. And then the second half, well, the second half, the growth in the second half, you mentioned the HELOC. And I think you mentioned HELOC, a flow agreement on HELOC, maybe I misheard that. But how do we think about the contribution of some of the newer products to the enhanced growth in the second half versus the first half versus the more traditional products?
Sanjay Datta: Yes. Hey, John. We forget that you heard it right. We’ve got our first sort of forward flow capital partner in HELOC and hoping to bring some more on shortly. I would say, look, we’re very excited for some of the newer products, particularly, I mean, HELOC is a great product in this environment. We talked about how fast small dollar loans were growing, and I think there is showing the kind of conversion strength where we believe we might be able to start to extract some good economics there. But I think in the relatively near-term, i.e., for the rest of this year, I think that our economics and our guide really do depend on the core business. I don’t think the new products are quite yet going to move the dial in a meaningful way. But we’re very excited for them for 2025.
Operator: And our next question will come from Nate Richam with Bank of America.
Nate Richam: Good afternoon. Thanks for taking my question. I understand you’re being conservative on the underwriting, but can you talk a little bit about the demand environment for the loans you’re producing? I know you said the partner banks are trying to offset some of this deposit pressure with the higher yields. I’m just curious if the demand has kind of increased with this higher rate for a longer environment.
Dave Girouard: By demand, you’re referring to lending partners, which we think is a supply, but that having been said, yes, I think the banking credit union sector has changed from what we would have told you three or six months ago. There were definitely liquidity challenges. Nobody was really wanting to do all that much lending and focused only on their own customers, et cetera. That situation has definitely begun to move the other direction. So liquidity seems to be a problem that’s kind of going away, and bank executives generally feeling better about their balance sheet and their position, but suddenly their ratios aren’t right in terms of having sufficient assets. So there seems to be an increasing appetite for loans, the right types of loans, et cetera, for banks and credit unions.
And that’s been something we’re seeing. So we’re now at a place where in that part of our lending, we definitely have excess capital and because rates still are super high and that constrains demand from borrowers. But having said that, the demand from loans as a group from banks and credit unions has definitely strengthened.
Nate Richam: Awesome. Thank you. And then just curious if there’s anything to call out from a tax refund season? I mean, we heard a few conflicting things about how seasonal trends played out in the quarter. And I’m just curious, like for the loans that you were servicing, do you see anything like just different from a repayment or delinquency standpoint? Or maybe also non-demands, is there anything different to call out?
