The Bancorp, Inc. (TBBK) 26 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Andres Viroslav	Director of Investor Relations
Damian Kozlowski	Chief Executive Officer
Paul Frenkiel	Chief Financial Officer
William Wallace	Raymond James
Frank Schiraldi	Sandler O'Neill
Matthew Breese	Piper Jaffray

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Bancorp Inc. Q2, 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded.

to host like Mr. today's now would introduce for your conference, I Viroslav. Andres Sir, you may begin.

Andres Viroslav

Good thank Financial morning, us Crystal. you, Thank and The Second Call. today you Bancorp's Quarter Conference XXXX Results for joining for

Time the the code XX www.thebancorp.com. and Frenkiel The call There XXX-XXX-XXXX a Officer; today. is will with Chief This on p.m. webcast of Financial Paul today Damian a be our are with On the Kozlowski, of call call for our approximately Executive replay being Officer. Eastern Chief XXXXXXX. beginning at morning's me dial-in website replay at is confirmation

the Before are I call such the the over which to within and statements intended risks Litigation conference materially from expects or the Securities that everyone subject would to Damian, of those anticipates, turn results identify differ to forward-looking Reform remind uncertainties, are like statements XXXX. this to call statements. Private used anticipated meaning by words of expressions in similar Such to could actual cause when Act suggested believes, I and

obligation and as discussion hereof. to please on unanticipated occurrence these forward-looking reliance the place circumstances risks speak cautioned no with uncertainties after Listeners date further For filings the undue date see publicly The forward-looking undertakes the not made reflect which to statements, these of of the reflect SEC. the of only to results of or events Bancorp's Bancorp are or statements, The release be any revisions the to which may events. hereof to

Executive Damian? Officer, turn the call Kozlowski. Now to over Bancorp's to I'd Chief The like Damian

Damian Kozlowski

us. Good morning, and joining Andres. Thank thank you you, for

year-over-year. of $XX by expenses $X.X earned X% revenue a $X.XX up share second climbed future termination The earnings of excluding Reported $X.XX the savings of approximately termination, over expenses in grew XX% Excluding XX%, XXXX million quarter. revenue lease and million. over were share which Total $XX yield per on lease will million Bancorp while

after year-over-year, improved the X.XX% quarter-over-quarter. GDV income XX%. million $XX with $XX under quarter-over-quarter. million leverage interest our ratio debit and X.XX% XX% a from year-to-date provision NIM in in to see prepaid We business to XX% card remained from X.X% of growth a increase X our Net strength stands an XX% ROE from approximately to year-over-year improved Tier payments growth transactions year-over-year. flat and XX%. fee continued prepaid just improved and significant

year-over-year during this and growth We ACH growth in revenues also to year, XX% of Our now GDV continued our push-to-card the could and balance build which indicate quarter-over-quarter. continue to indirect business with expect XXXX. growth increased X% fee payments beyond

are assessing and these our that GDV fee range on low previous exceeding with of direct We and XXXX also the between growth revenues estimates should future as trends substantially likely XX%. well in it is the our push-to-card Currently, increases estimates and fee of XXXX double-digit growth. growth exceed belief impact in as XX% most

SBLOC and business board leasing Net income balances of and grew SBA. from contributions the loan with annualized grew across XX%, at XX% respectively XX% rates line. each led interest Quarter-over-quarter by XX% for

an complement loans. product technology by non-purpose SBLOC this of expect the our to continue supported to have $X we institutional this rate credit our business year We in accelerated and securities balanced by growth area by end in insurance-cash-value-backed billion increasing led an new at outstandings product where We targeted nearly have Talea see momentum introduced our platform.

that and we from Our million believe in on securitization business our securitized momentum the the quarter continues first $XXX to third quarter loans million. be in securitization we when will build approximately $XXX the

we the XXXX. million on increased in resulted our $XX million while significantly between prior XXXX related last revenue estimating third inputs, size other this strategy the each the estate million. Based credit which securitization, from and credit and average exposure. three announced, currently we in gain $XX range securitizations and million to at could spread securitization in previously market of of change $X significantly As gain doubling long-term This securitizations $XXX of have has are eliminating targeted sale real on our the for quarter

continue market significant growth we and are the future that critical all we in expertise that progress fully issues regulatory Lastly, remediating and to Gig We and Economy platform will future building a broad innovation. be and be growth address the believe positioned Digital our for also in and well make for outstanding of sustained expect developing to best-in-class capabilities to FinTech, financial opportunities.

who to over call the quarter. CFO more turn about Paul our detail Frenkiel, now will I'll the second

Paul Frenkiel

increases interest increased SBLOC Growth increase Damian. of $X.X XX% loans and reflected and for XX% $X in An to million securitization originated to respective lines in $X SBLOCs $X.X in X% largest to million an The million. million. increase net $X.X reflected income $X in $X reflected or income. $X.X interest net year million to reflected lines income continuing interest you, XX% to prior from million for including CRE on increased SBA. $XX year-over-year increase growth million on income of Bancorp's over increase lending $XXX loans increase million Average million to million. Interest for Thank net SBA or interest loans lending other balances million $XXX,XXX on $XXX loans The XXX% increased CRE and million securitization. in $XX.X approximately in CRE

CRE income they XXXX third show an for the XXXX. We securitized. increase securitization quarter the in The are anticipate balances planned interest quarter peak next is in as will September

SBLOC, for the interest impact were XXXX. the growth, for X.X% leasing. for SBA, In rate and Approximate Federal on in increases the X.X% loan addition reflected yields X.X% income to portfolios net the of Reserve loan in increase

recently and varies timing low While the loans had yield on business for have spreads yield that lines historically charge-offs. securitization securitizations. has CRE originated with market of These approximated of X.X%,

Reserve's basis also contributed points. XXXX The to yields. asset rate XX in and Federal Overall XX funds XX to points cost the reflected of which the QX, increase was basis point over basis increase increases, XX point to comparable impact of basis increased QX

asset The of in XX prepaid X.XX% reflected increase primarily of basis compared in funds. of deposits, increases rates. interest those a the cost market from funds increase in cost yields higher to NIM which primarily lesser lesser The card contractually only portion the point improvement to in adjust resulted

The quarter and quarter. reduction offset X.XX% the NIM NIM in originations, second for the largely leases was commercial second quarter the to quarter, SBA, loan from the In resulting first securitization. the comparable first growth new

in are our increase. a driver to XX% XXXX, compared non-interest Prepaid funding million in accounts, largest related cards $XX.X QX million Fees were XXXX, and the of also prepaid income. income QX on primary source, $XX.X

fees thus increased and second $X.X discussed termination to ACH target Non-interest the processing million quarterly payment rapid the calls. include $XX.X million, million. quarter Card excluding revenue funds in prior was $XX below lease and XXXX, $XXX,XXX XX% for expense

expense Salary FDIC expense technology, was partially insurance, compensation and SBLOC, incentive $X.X million, expenses. other securitization information higher processing higher loan quarter and to XXXX. and during reductions was That commercial reflected legal, increase QX data compared the in by offset

interest Book consolidated maintained resulting share, long-term primarily value $X.XX from reflecting at increased to The ratio $X.XX, value securities per per share approximately market was lower the and investment increased of XX%. rates. of leverage the earnings

of in base solid advantage space. from Our provide and payments take lending ratios our operations a which conduct opportunities capital and our we

through Our which initiatives over each goal XXXX to line. are is increase lending specific for significantly loan XXXX to balances

is XX% XX%. reflected goal keep was initiatives between those with those amounted for to progress and goal which ranged to annual single-digit expense was -- in annualized quarter growth, quarter. XXXX prepaid-related exceeded non-interest linked million XX% for for for overall year. The under revenue $XXX the Second expenses the and the The

loan expense, and in lending with key asset non-interest growing revenue, managed low historically The goals. combination achieving lines interest will of higher on from return payments be our losses

return the of short-term X.XX% on presented website. was with Our is X.XX%. multi-year assets on objective XXXX X.X% Year-to-date goal assets as return on Bancorp's for

to and That the will concludes comments, back my for Damian turn I questions. call

Damian Kozlowski

could the Okay. line for Paul. you Thank questions? open Operator, you,

Operator

Thank Instructions] James. comes And question first from you. William from Raymond [Operator Wallace our

line Your open. is

William Wallace

Thanks. guys. Good morning,

Damian Kozlowski

Willie? Good are you, morning. How

William Wallace

that talk Thank bit has IBLOC. And a new on mentioned little we around -- start driving that optimism bit that? that little the if and this increased you're business a about the could seems you. the SBLOC the like Maybe you Can it quarter. Good. offering product what's you line

Damian Kozlowski

and lot Well, cycle this building of we that's XX new optimism a talked over months core reduce had of accomplished. a get than about time trying to in to were product three the operating days -- we've the reduce had XX we been area. the And rid last days and always down Yeah. less And platform. paper from

and that of had quarters implement fully that got because efficient go, of kind to first rid million the But implemented, we've product $XXX make we that business it. we liquidity securitization the sure doing -- we remember waited it's what the had an product it wanted that to of growth let expected now of We is two we deposits over the everything of primary is year. of this and

We at looking of at July more already end our of were already the month, the And the about $XXX quarter. third At -- we're pipeline $XXX million of be at in last expect $XXX million. we or to we million. end

and new Directors now one new their bring doing people order assets, the of So new to we broker-dealers when expected. seven have but it's alternative sales partners. transition teams Regional in It's set and the to in doing only with to We've not And signed wirehouses who platforms. embedded well. broker We up what a up really force. we hired are leave go

-- in complementary is life or that's backed is. embedded companies what embedded it just a liquid insurance the of loan when product. insurance The It's line credit they policies. AAA that's the have exactly securities insurance credit against credit People

you isn't it's it of so made. on the get in we So collateral, cash that It's case call can -- value there we policy. as the payments --

already we end about of the million million the at We'll So have $XX year. that $XX product in at quarter first that. probably about of least had of the

and SBLOC So number. in that's complementary included the

we'll million of we $XX around product. have when more or of say and the insurance-backed probably product million the $X $XXX SBLOC So billion

William Wallace

signed into Or insurance you've is already… -- that the have that insurance have companies? the of out kind you you're For this something product -- up new you all guys rolling

Damian Kozlowski

No.

just value $XXX,XXX. So loan a we they it's decision insurance this what that that $X has make a like million say, borrow underwrite a is policy they loan. and cash policy an underwrite to -- someone and any that of broker to policy they happens they We want -- insurance have want is,

So we underwrite -- the sure policy. we whatever insurance to to policy have backing that whoever insurance is, have company insurance make back that

--that to check it's have and the we to value collateralized insurance cash be company is -- it's that enforced we that that can can company that sure So and on Usually an it insurance pull make strong. know. really it's you it's

to this. it's easy do very So

that make a what's is that's usually this they life most time. And existed choice. or very a have choice: against securities own of for they for private -- a period They policy their These to lend it's a one's complementary. appropriate have long their portfolio which So product and insurance and decision-making. very make it's easier people

William Wallace

Got you. Yeah.

can that how staff signed So you've up disclose you new many brokers that the with sales the hired? people you maybe

Damian Kozlowski

networks. up we've -- signed have the we Well, entire

So entire LPL, signed SEI and TD Ameritrade, platform. the we up

of So what become we is providers. one the happens

Sometimes there these is platforms. of multiple on providers each

once signed us requires and wholesale teams broker -- basically, it product So the have then up the into we're to okay? we go

William Wallace

Yeah.

Damian Kozlowski

product Now year paper-based. now type is a not of This this from what's now. web changed that a is ago portal is

the broker do it's the than at forth. to of -- paper it, the it now once the be back happens it done the majority and direct can from where client they we things and it done they're wholesale paperwork of So by to the teams, it's can to is integrated The once once trained -- the on rather -- all point do having ability send themselves. contact been actually what is

it's vers not much it's for our get broker roof quickly the And their the by our very otherwise. client than get the school the enhances the cash profit house quickly. or that a So faster And them their would've primary getting X% a the pay that broker competitive of for portal-based. competitors big to loan and broker, driveway happy space. they on in but time the that allows much, very, They very the allows to stance or fix --

William Wallace

Okay. you for Damian. Thank that color,

Moving to another topic.

I remarks, prepared what I a On GDV driving increased Can didn't bit guidance said you and little is said the Talea, around you what about I about growth fee business your it. something the -- missed income growth. in about -- of kind repeat catch you just prepaid

Damian Kozlowski

Talea only Talea. product. That's No. the SBLOC about not That is is --

So is sides. what we're -- both seeing in at

stuff, slowing direct, indirect So where down. but It's is Venmo growing. the about remember, push-to-card we The people in like the area, and talked indirect still it's ACH and right? actually

continue year-over-year down didn't we got at not, growth expect expected we're and quarter-over-quarter. slow We -- grow it's getting that XX% to to it more, X% but We the where so a such if three, signing multiples to high potential where rate. there of the have have product, currently this But we is we what up now direct huge had. fourth partner to

side -- the GDV product, number, what's fairly there's of just expansion that's payments it's the in volume the for great the see we clearly multiple product -- the we happening managers. but And categories. On -- fintech program it's what going into also a

people a So like good Chime been very a is who's example, successful.

just seen You've But one example they're their many. of marketing.

add XXX We pipeline a we evaluating And over programs. that actually our of about have we're programs to have XX to platform.

these it's across managers, about it's not banks fintech-related anymore. is from but it's it's where adoption It's they're one there coming whole also a happening with it's these to But fairly -- companies, of It's and the area. of So market. program broad-based. the -- the lot being coming is big everything not happening branches the market in the going digitized digital --

where tomorrow the right or $XX it's be drive, go after And out the you in paid economy they people the to happening cash to Uber of want if an and the want McDonald's. take to you're machine driver do gig

this So, happening. that we're as up. the And adoption really seeing picks is

but assessing into could a we the for last we're why -- -- when say well least volumes event, it definitely the XXXX multiyear we're programs to market at be this bump we think event that's our this it's this So last that well could could -- experiencing. trends, be in

William Wallace

year-over-year saying that for growth least I GDV XX% sustainable at is year. in and So, look volume you're at this

Damian Kozlowski

it's Yes. Well -- yes absolutely.

let's -- actually an example. if you So, you so It's the numbers at look give accelerating.

Xrd first quarter in first XX%. the and And So, was it the of it it was -- July, quarter, was XX%. second the XX%;

some would where getting not a -- programs new pipeline. actually and then situation adoption. it's bump, acceleration continued got only a So -- and deceleration. that out a we're a you it's of big got it get coming just getting if you expect we've was we've And We're bunch

years that's program So whatever, you saw a can we're lose a no seeing two ago. than trend we but different the or always There's trend doubt.

it might fact of the that, up. some really Now be we're set

we different the same now, we had if in X.X when dealt I'm is not a could it years volume have platform So XX% was position, increase with But a our ago the scalable. in sure bank very way.

XXX% GDV it. we got handle growth we if So could

than So, one players in they future We're we're gold of you that we feel be part a kind many we and partners, of enhanced about a might ago. industry of it in them many that were years the obviously really the our few now confident the vastly over better others. ecosystem bank's And the know to of the financial years ability health are standard so can growth. we've for support more few

William Wallace

ask Damian. a Okay. let somebody like Great. step I’ll much Thank too question. probably and I down taken feel time. I've you,

Damian Kozlowski

Wally. you, Thank

Operator

O'Neill. our you. Frank comes question Sandler Thank Schiraldi from from next And

open. Your line is

Frank Schiraldi

morning. Good

Damian Kozlowski

Good morning, Frank.

Frank Schiraldi

just on the conversation. follow-up and a -- a GDV Just

push-to-card payments included those So are in all gross the dollar right? that's... that's volumes, payments So those --

Damian Kozlowski

No. They're not.

Frank Schiraldi

They're not.

Okay.

Damian Kozlowski

yes. The GDV is -- all

So side, of on we doing there million, you dollars. this And we're -- billions on there GDV the $XX at $XX do if hundreds million other year. look is of side the

the -- and the billion transactions those but in ways, are the various only So billion, debit XXX growth there's that through side. actually prepaid bank another on go XXX GDV card

Frank Schiraldi

okay. -- there's So

in direct So indirect card? the for on push channel volumes you or growth don't the give then, the volumes to the

Damian Kozlowski

fees relevant very because not many they're -- as are them transfers It's there. really everything. relevant. are big more not dollar not The of and They're relevant as Yes.

transactions se. lost relevant. just sold there's just you It's really Safe nicely. deposits, which lost deal them that year, payrolls. our last growth both on those of we we balance it's when $XXX It sides, doing that we're it's but dovetailed million think had side a the that if because not just cards. that's thought happened replaced it happened, $XX was and And So -- GDV volume Once a the very supported so by we've at per GDV we it Why deposits. to deposits on the we not the And XX% relevant what because all -- it's we million Harbor for those that's all. When business time. replaced about we be for GDV fantastic

helped So that through it's really the very time. helpful the bank. continuing. of And overall us maintain that borrowing profitability our It costs was to

market lending to for the we the securitization of occasionally business. growth supported by all So go liquidity, And business but to the in have we all GDV that the no is have virtually payments and borrow borrowings. being do

Frank Schiraldi

All on channel able coming there. talked direct on the business to push-to-card you it's or right. some be revenue give clarity – the When about streams I certainly do think you more mean, you I – the guess expectations potential have the in quarter

Damian Kozlowski

year. of end this the At

Frank Schiraldi

Okay.

Damian Kozlowski

At the end of this year.

this were right – like we cases So using now. I've use said,

So to silos we're the to and how up have the going market industry also we're in what each potential a partner understand we of is. in of which in approach processing partners and order signing handful operating, we're the a

to what much know fee-based you the something So give obviously, definitely of talk large. market any this card to or bigger signal. fourth be And that in know of the really now want we the that opportunity million we Is how the yet. don't to XX% know we'll how. when business is we is to to don't guidance that We kind understand mean, We But since able it very We it. area. know more don't be talking can't. quarter know We – but indication kind I about. of that But what be the mean. push be think don't we it's fees growth? double it's we understand now towards Is is we right – until triple? We're $X.X – fees. I in don't it really right could going That's We going year is give don't to third of give of there. there is anybody it a want that? really – there's we ACH

Frank Schiraldi

to as business, partners competitors? business, direct out who in trying mean, the mean I your primary are of sign look are do Who that there terms the channel you In same? I to up

Damian Kozlowski

have to – right – it's with you because partnership anybody processor. really you a there's a not need Well, need now,

people do us side. but one to it, adopters So so got a really anybody of first in direct become lot the the could – indirect in us you've of side, the could helped early one of – being the adopters

– you have the it's nothing to there's So need platform. – technology

You need industry. the have to the connections in

understanding that to banks You need how compliance that are to with long tenor this do infrastructure networks. handful obviously a CRM the can There But need have and you of that. infrastructure. and also do the

such it's So a potential.

XX have banks make could money. can You and participating everybody

corporate – nothing. getting just I payment a has disbursements real-time just supported. that it's it's a the willing people a being want This a And gig is that get I – even large millions wants are and are there's contractors. for in economy one instantly. pay to is mean, is and to that's lot basis mean, especially a well supported be point $XX payments. Everybody – payments and to said fee. out is this is fewer trend them on they trend people that employees paid So the want people come and dollars. of clients, Fed of more who W-X to

economy as clear the that the by So macro it's that's supported potential. it's – changing. it's It's

that's the an Just in is the this future now exploding, is United States. banking like GDV area of clearly

Frank Schiraldi

similar would right? mean, mean Mastercard I I think – is I Send

Damian Kozlowski

years industry use. and a real-time a bank there's was a both it's can across a is lot only lot the Yeah. wasn't have of not people Visa There of adoption Mastercard payments, – products ago, So right? there rails, us. yet. three problem There The Mastercard. are around or development the four that There

now. they payments are So banks accepting these weren't but type of

So this will explode.

but to that's both will all set don't know have you. up when these I the a payments. Visa So broadly and can abilities Mastercard push-to-card now adopted, tell be I it

it who are adopter Mastercard, Visa, be – the integrating remember into rails right? into on, processor. this so With a depends product, integrate And early an the we who difference. Venmo, into That's integrator will and will with the with they're

in can company the any just So world be like Venmo.

why it's that's powerful. And we difference. so any given guidance. haven't that's the that's And why So

Frank Schiraldi

pie mean, know I is I there there, huge out understand. a so No. I

Damian Kozlowski

like times that – I I could anymore. when wouldn't a Once can don't get such – – and critical X.X happening It's to XX% you're competitive want you're these it, And adopted. I it's of almost advantage almost mass. I ACH and big do other a a to sending your said know it. it I it's any it's kind doing give disbursements about – of to worry that whether you it's XX know big they're that that's pie going take hit to like it. literally know necessity times, people too. And going or and at do don't macro trend. not use Once I what's whether and out it's is – you're payments But real-time

of one I So working said, can't it know. we're to than be I other the the Like earliest adopters don't technology. give you of guidance any on I

Frank Schiraldi

to expenses. then on ask just want And I

just You $XX you investments making Obviously, to you about or like hold if the a the about wondering sort you're just them guys talked talk push -- million where to you base continuing of card. is? already, under base to it And you're quarter. made getting and I'm Talea the could expense but into some where expense keep offset

Damian Kozlowski

at look you year-to-date if X% number the we're right year-over-year. up Well,

in sales investments platforms in you everything. if made and on force year-to-date the and -- we've So look technology big

we're went because end. costs Like So back aren't GDV getting on our doing much what is -- gone XX%. we've efficient up going -- our more generally up but the

are costs the same. Our

where is end front the need But to we get productivity.

So front-end enhanced we've our platforms. really

isn't itself but enough. platform front-end a is Talea So

That's embedded. seven from. refigure are sales coming support so that. the You your force hired to where need to They're we've Directors -- costs Regional reconfigure

growth for year-over-year half. So the X% first we got

saying But XX%. still maintain to try is clear. we're revenue. are we're our What It's to look costs that at going -- going our to maintain that

we So zero. X% growth get we'll before If revenue expense had if then. growth -- clearly think this and have could have -- and I've we'll XX% revenue we double-digit have have I growth said we'll we

we our away last clearly to how and -- move around years the that clear we process processes. stuff. over we've it's -- like some There how that continued all the to trail three issues the There demonstrated to know So of are that costs FDIC that embedded know expenses. expenses down the we as is from have in you regulatory costs we're inside still of some because enhancing see control

are they're once But they scalable. incredibly enhanced

up So force with do GDV We had don't to X%. growth X% And enhancement. up the went expenses. expenses do to GDV go had XX% growth. those sales XX% with We nothing

it we the substantially. So maintain months that drive getting trend And and revenue same we're the basically we think like now. still still can to continue next cost seems really base over XX

Frank Schiraldi

Okay.

it it'll XX% don't So stay thinking over formula… your the be will X% I then XX send next if mean months whatever revenues me or expenses XX% or to under you have up is. that you're are

Damian Kozlowski

Exactly, exactly.

Frank Schiraldi

Yes.

Okay.

Damian Kozlowski

over maintain that definitely if growth say we we'll take we the it… XX% revenue But really will To XX%. get

Frank Schiraldi

Got you.

Damian Kozlowski

right? everyone I take we would revenue get If growth that a right? day -- mean …every who XX%-plus

Frank Schiraldi

Right. Sure.

Damian Kozlowski

you category sales place. if year-over-year XX.X%? operating still -- I'm we investments entire down force. We've a got built have got management made. telling is almost hired the of just expert’s look And We've at look team out have substantially. in We've expense every been our the at or a lot the expense operating you team. fully

how precipitously. unit people, and So costs and front-end we've operating must lowering better we're be dropping costs vesting our been our in people the

operating the people not For down substantially. is our us XX% GDV expense in

Our unit diving. cost is

So be must we more much getting that -- efficient.

Frank Schiraldi

Okay. finally And could. if I just

Just business. on the pre-securitization

looked the talked there think the books. on next was securitization in in-loans held million. like You It $XXX I more sale for to me being about

think I was plus. million it $XXX

So what's there? difference the

Paul Frenkiel

It's... Yes.

Damian Kozlowski

Yes. Go Paul. ahead

Paul Frenkiel

It's SBA loans.

Frank Schiraldi

Got you.

Okay.

SBA are guaranteed of So some portion you now. selling the the

Okay.

Paul Frenkiel

Yes. Yes.

for available sale. them have We

Damian Kozlowski

No. No.

We haven't any. sold

the don't loans. we sell SBA -- just they're So

Frank Schiraldi

They're just sit for behind there sale. going to held

Damian Kozlowski

securitized sale that you're for loans So at plus sale. for includes loans the for total looking the SBA held held

Frank Schiraldi

planning SBA Okay. -- But selling sell to you're going on then. you're those not not loans

Damian Kozlowski

No.

We are selling. not

that clear. me Let make

telling hold the great liquidity. not We are SBA We and asset We for loans. them. they're love

Frank Schiraldi

is big mean think balance sheet too I as big to Or... to continue about grow pre-securitization? how you going when those does? that like are securitizations So just the

Damian Kozlowski

No.

Frank Schiraldi

Is Okay. Why? there limit?

Damian Kozlowski

We'll guidance don't But our next good a two we year have again to the have year. decided grown $XXX now. range. year but million million them range have have kind may We'll of for guidance is range. Hopefully -- to same We'll we that. we're $XXX it. them in haven't two year when same know -- We next obviously the we our And for matured a will yet next once them. it's the not business. think have give --we're, next We is in you right going capital really -- lot grow necessarily on

a bond cadre appetite -- times last investors. There great our this for our. got We're offering. couple We've we've of got on started We great ago. a guiding of years X a

We you substantially where don't go tell sizes where change. million, expect could the least $XXX next grow now, $XXX spot because are. So kind million in we there's -- of I going we a also We're grade now can't sell. that sweet of that we but multiple but tranche be there's at to the non-investment there's we'll tranches year, we're a and to

So too either. that big can't be too

where of So are with like we that kind product. we

Frank Schiraldi

you Thank very much. Okay.

Operator

Jaffray. comes Thank our question you. Matthew next Piper Breese from from And

open. is Your line

Matthew Breese

morning. Good

Damian Kozlowski

morning Good Matt.

Matthew Breese

was -- of gross back to product or understand card to I think components the card. hoping card and open-loop the better prepaid kind dollar the physical issuance hook volume a J card refund I go back legacy If there. the to just Bancorp, was of adoption product of tax The fund

if much How And the is now How look what pieces and product? e-wallet does could dollar electronic us that $XX like? the two gross much for give of billion volume sense is the you product, prepaid? those a traditional that of growth take or in each

Damian Kozlowski

card don't purpose you the is I'll being the than adoption the the The general. the before. growth more. there's in adoption, a card exact numbers debit by lot market. something we haven't The higher it's replaced general debit right? market So, -- we -- is really card give is prepaid So, disclosed it in reloadable

people debit So, government cards. cards. getting cards welfare in issued being are health But growth we're care

a So, But take next the like disclosure haven't things release. card disclosing earnings at portfolio. That's in to have Chime getting we'll our request from debit you're that future, in getting adoption. consider I'll look we like are getting and -- as it. the additional we're disclosed -- that across we're But growth as but we'll -- an

Matthew Breese

Yes.

Just to thinking is a year It that it that. back a overall like that product GDV growth clearly, for prepaid rate. beyond X%, and of rate And there X%, a slowing. while card so new physical your per growth there felt introduction is a accelerating of was X% adoption rate is I coming was kind obviously, the mean driving

Damian Kozlowski

debit traditional well, companies other cards banks getting platforms The -- coming coming and a on side. it's people cards, signing where from debit, growth from the necessarily them. these disproportionate still Well, coming up is we're with the card but fintech are growth or from but the is not alternative where fintech -- that's leaving

buying people more explosion right? are but buying There not gift that's the more cards, where that is. that's like exploding, adoption. gift So, It's not everybody's cards. It's

where good debit-like these technology getting provide not a you're volumes. cards cards, like getting that is that's technology. not mostly The That's you're products that's It's but government or in care programs exploding. the in not explosion new new growth health

that's fintech volume Bank the people local the getting move support we platforms that's as community that increases. where America -- companies of or bank, Hopefully, you're platforms fintech banking big helpful. from the that are So,

Matthew Breese

big beyond the and that Venmo, you're what beyond And with is. names some of no brand associated other And are in business? -- it Chime

Damian Kozlowski

It's been Well, you one I more that's Varo. could times. many many disclosed give

we're So, Varo is one of. partner that is -- big a

you in have the we if page do So, presentation look on our has website, the brands that that all with. business we a

want work the trip could on XX, we bunch that -- page But it of of brands you issue whole so cards issue to And the so that there's XX go or with. Uber a card. -- has like but I and myself. that we to we don't We

the brands all one see almost and of do them to that just is that all. business we see to if with way best every not you'll the recognize So,

Matthew Breese

billion these more you billion they these And -- less put these to the proportion is if had that's or quarter? a all than fintech you Just fintech Understood. a XX% a XX% XX% are, than of on would clip, number numbers. at -- it growing $XX partnerships $XX what rough

Damian Kozlowski

our like maybe a more but consider potential around as everything next future -- I'm promising give good We'll that look I idea. at and that and we'll release, put I under disclosure, that's a detail consider in advisement think we and but it. not said, growth GDV We'll can that

Matthew Breese

the basis prepaid? on you're Morgans similar mean and steady I that the business been GDV. pretty to Are on points the it's clipping here XX

Damian Kozlowski

have that generally, gifts well, than prepaid a a say the program too. high. levels. debit But be a when The and -- are can you're or it disclosed, we you. complicated. is is why I There is give Because card, lower usually that's up right? funding tends Totally. getting -- we volumes No, tremendously debit hasn't sign -- That's this the -- deposits, why complicated been it's

together economic program. that a things from get benefit to So, the we all these going

So, all when you more less -- get it's get can fees, you connected.

So, it's all negotiation.

side once -- debit but in we transaction programs, in you the more prepaid why most is transactions on -- basis likely that's the of to the generally, -- a excuse of likely gift than future but be card, again, it past. the less benefit me, the from haven't house. volume-only to per get generally be But So, the the deposit, released

Matthew Breese

Understood.

Damian Kozlowski

put be maybe we'll we'll put a that it's guys know prepaid, bit marketplace segments? growing? other under So for that of again bucket will doing we'll Once clarity you could types debit little and we it's I under Where advisement. Maybe that. how about that vers the helpful around general-purpose put we more and think could advisement. to

usually very through period -- just under we so don't short in and all problem But identifying time exactly pulling again, lag, the a difficult advisement. of all But programs that time. put -- sometimes really trends -- we'll is to the is we'll all that once do one the

Matthew Breese

you. That was Thank Understood. helpful.

the in of back that level to or done million guess once going $XXX for think baseline sale, securitization before mean, level is million I a look or base $XXX Just the like? sheet? what's, securitization, ramp-up about it to closer to line to balance going versus $XXX what million million loans I we held Is the now is $XXX

Damian Kozlowski

Yeah.

Matthew Breese

high, mean settle a growth going held just hard And was in million predict. that Does to like this very sale to we're quarter's loans number like $XXX loans sale? for XX% quarter-over-quarter. out close It's held for

Damian Kozlowski

size. only million, like couldn't We're why and we did get double the to growth -- is the wanted closed this because a Well, more, $XXX targeting in $XXX the first we we the quarter. million loans was

inventory that were we the of closed. be had to from ready loans an first So quarter

in million So, in quarter. quarter, plus had $XXX the third have to we're we first the $XXX million going but

generally, hold build That's that to usually million $XXX on inventory so an million, what if by in average $XXX going going to is that what we're million to But basis. seeing easy. divided $XXX that's target distortion. So you're we're be two,

a we what later bit loans on depending an little inventory if you for of next the However, the can we do year, do it in year, spread hold later revenue.

generally on depending less probably market the getting, one inventory we the in lose do or two the then been were gain them we've million securitization. the and loses keep average market the we to gain, $X So, million gain if months hold would to loans to the the dynamics replace and $XX as

can are XXXX think the maintain we gain. we revenue even lose So, going if we that into to business

helpful. So if that's

Matthew Breese

yield course really Where environment with X.X%, What's do about that this of thinking real you… the state then associated And just the seems the there? structures? your that in Yeah. portfolio are which What you high. in

Damian Kozlowski

all? that Is

Matthew Breese

Yes.

Damian Kozlowski

been only interests XX markets. assets occupied XX They're transitional that have three-year have multi-family. They're all interests loans additional that more. periods available. major XX% extensions some years They're in years much a with with usually With or Pretty generally to -- you an enhancement whatever do market, the if reserve the of to or property usually put the We of or significant property. reserve the money the sponsor in. the property, look amounts own their interest multi-family a have usually across entire acquires who

DSCR. And we're usually around one

DSCR usually sometimes remediate have of XXX% the and once or property. coverage then purchase at over property they usually full over the We XXX% more, is the even

these would So these are ourselves. hold assets -- assets we

to there other market we if said we our could was to on keep real estate of We like books. we go could have So We this bad, put ever have easily the it our before, and happen don't on this exposure. put something capital. -- under XXX%

States. than be in United would any other less that banks far So the

up we doing So we if loans fine that it. be doing way we like securitizations with would it's it We holding do we're But the like -- it. we're the doing way the ended too. to

Matthew Breese

LTV the on And average these?

Damian Kozlowski

higher. multi-family than These a than ranges bit are on the on cash a that little still go the the DSCR. deal. range XX The -- less higher bit It XX% from probably can is that depending little depending

If you stuff, of bit got do bit declining do a -- little little in be of we We retail retail. more. do which pulls. We other a They're but do retail types and office would lower used of certain we only LTV. But percentage. a these

fact. this think we're XX-plus something multi-family. has percent think in so pull first retail and why XX% had pull like our That's I I And office. secure the

so prepays all have up we A spread much, had four first and fantastically. securitizations markets, they've exceptionally. All but higher really because one, in interest lot rates went performed much the of performed

we're so these. comfortable And with very

Matthew Breese

my just last as this then on one And Okay. subject.

Given multi-family disrupted where affected? much that large laws. exposure class York to the one by Is be mentioned the there of any some has multi-family and how been could New rent markets securitizations City you new asset

Damian Kozlowski

We don't City. we We little in a the really New lot Southwest. have in -- very, York done do Yeah. very

national a have presence. We

So it major country all around doing we're the markets Houston. in like

that York hit. living have Mayflower market upper higher So York The the is there multifamily been end maybe -- very people end. some is good since in But stresses. market, New there New an still for still a are real Brooklyn in

doing So, market But New developments, if next to we -- deals segments. mean, in don't to really are the these next -- of these we're still multifamily refineries. New Air a for good Force it's We're our Base York not the lot do deals big these oil a We're in right big are they're developments, lot I condo you reasons. York. look at a that

people The are time. they're type middle- And to perform live that's -- somewhere low-income affected. living more really that not properties properties of those those well It's XXXX. since really from They're They're to they've down and of -- cycles. places not have housing. really, there that enhanced get over kind the been

in value as And wealthy hit you they much really do the as don't get a segments. in

York's New that's So problem.

market. the the upper New York problem end. isn't of the It's middle

XX ability in, years company, the invest people a of offshore getting limited in, Minutes using That's because to clobbered about the four changes thanks change ago. for the taxes to liability

New write market. they can't reform where to the York anything then -- That's added you tax killing what's And off. the that

-- that's what's market the though. that's So upper-end

Matthew Breese

No. wanted this last Fed or helpful. Okay. or of the portfolio duration very get That's precipice short to how on back LIBOR NIM. question The you. just to is later the index. for, tied The prime loan Thank I your financially tied is some much sense of month. to And cutting a

to trying And the get really the I'm just question deposit sense for book. same a for it.

the cut, impact the to NIM? With the what's initial

Damian Kozlowski

a to limit increase approached position XX-year give was we where we the And to to, you to lot in took -- X% done try a interest declining see we've rates, Paul. value, took when going But of it I'm position. our XX% to to downside right? a part our book

we to able And were that. do

Safe did doesn't it One before. of that we which sell, was I'll equation. one as -- of scenarios would this Harbor the We've us of was as the Paul. part affect done give to it it But things much and around have

Paul. a about to point have year that But on even give I'll XX And impact us. like over might a basis $X.XX

Paul Frenkiel

Yeah.

as are purchase of a Harbor, actually that We're hit we of didn't So securities any significantly capacity interest the reduced as a to the several had of result Safe market reduced. years result already. have said, more rates sale of But, as which lot Damian when a exposure ago. be absorbing

modest some have do sensitive. are -- is There rate we still -- we

in fixed exposure. manage modest strategies that can there year also further from loans And the this be that several to rate decrease to rate at impact to a But reductions. come those, looking works. So to them are we fruition expect to we're add

Damian Kozlowski

Yeah.

variable of a on of assets still. lot room we obviously lot have a have -- We

They than Some move necessarily -- them rather cut. as Fed on already, of on have don't actually move the moved they or LIBOR-based. depending are -- don't expectations

you funding. our I on the The reverse can thing tell though happens is

-- XX% Just of up to like we way. the going goes other it's happen said about it

So, the impact funding of obviously will an offset. the as happen

Matthew Breese

Okay.

Damian Kozlowski

helpful? that Is

Matthew Breese

my Thank you I questions. taking you. appreciate helpful. Yes,

Operator

I'd you. I Thank our showing lines. from questions to now no closing And am remarks. over Damian the phone to conference any Kozlowski turn back further for like

Damian Kozlowski

next to for us And all quarter you everyone joining to the in announcement. talking forward We you we thank look third appreciate time today. Well, questions. our

Thank you, Operator.

Operator

you you gentlemen, does Everyone, wonderful a ladies have All conference. And program. conclude This for disconnect. in day. all participating thank today's may the and

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