The Bancorp, Inc. (TBBK) 31 Jan 202019 Q4 Earnings call transcript

Company Profile

Participants

Damian Kozlowski	CEO, President & Director
Paul Frenkiel	EVP, Strategy, Secretary & CFO
Andres Viroslav	Director, IR
William Wallace	Raymond James & Associates
Frank Schiraldi	Piper Sandler & Co.

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to The Bancorp, Inc. Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Mr. Andres Viroslav. begin. may you Sir,

Andres Viroslav

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

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

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

these and For of Bancorp's risks the discussion uncertainties, The please filings further with see SEC.

cautioned not statements, speak hereof. undue reflect to or to revisions or reflect as may made reliance to on which be which publicly date no circumstances these unanticipated to hereof events. The events results of forward-looking the obligation the undertakes date any of place only Bancorp after to are the Listeners occurrence release of forward-looking the statements,

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

Damian Kozlowski

with loan we increases continued volume quarter, originations. the GDV, growth our XXXX and Good strength strong gross you, morning, payments, Andres. Thank In a dollar fourth everyone. in in our ended

our income in to Walnut continue decreased and net positioned We resolve discontinued with ourselves XXXX. growth also continued for our issues Street portfolios regulators,

$XX elevated the Secrecy to million, that operations BSA, $X.XX a $X.X of penalty; civil million. mostly $XX Compensation on from a expenses will allowances share continuing from The for Bank million accelerated an in increases for in charge earned CMP, fourth activities, were revenue expenses growth provide Act-related and future slightly quarter for FDIC; lending monetary Excluding of Bancorp loans profitability. due

earnings adjusted up fourth Total over the X% by civil year-over-year, over quarter. expenses climbed revenue grew $X.XX while XXXX share XX% XX%, The approximately monetary of per were excluding penalty.

to adjusted the Tier which to for year-to-date, ratio also X the Continuing a in leverage ROE improved XX.X%. at charge X.X% from stands the X.X% CMPs operations quarter included third quarter-over-quarter. related SEC,

XXXX, on for harbor For in nontax deductible for the was excludes the XXXX, $X.XX of CMPs adjusted gain a sale compared EPS XXXX. which the safe to $X.XX business IRA

XX% Pretax CMPs. For harbor the gain sale excluding on of XXXX, income, increased safe business, fee driven revenue the that expenses XX%, million. continued to growth we extended exceed year XX% GDV in growth be historic and continue growth. by momentum, increased sale $XX gain X%, grew market, by for and indicate the while IRA will excluding from XXXX. the excluding the of over fintech GDV XXXX was on levels there period do should expect business an the our in GDV Trends the payments innovation to in growth the

in through portfolio our growth XX% target loans Talea billion was our led This XX% in $X growth XXXX. our year-end by leases XXXX and exceeded SBLOC/IBLOC Our which over expanded by enhanced we platform. for

in XX% with growth leasing expanded XX% SBA also businesses lending growth balances. in and other Our

lines each robust, expect lending continue in of and growth these pipelines Our we XXXX. in continued be to

XX%. commercial Street Walnut was reduced portfolios. XXXX, $XX we down or from In and our or $XX discontinued Discontinued XX% reduced million Street simply XXXX, while was also Walnut million

to of disposition in to these We make assets progress hope the and similar XXXX. continue aggressively manage

gains. Our XXXX, momentum. we transactions substantial two completed for In securitization origination securitization positive on business continued to build

$XXX million that XXXX. gain expected another of may million either million, to A In from hold past of Our eliminating to securitization conditions. three our from market is -- subject estate me, and loans to and loans risk. compared the compared transactions similar to to XXXX levels the plan loans produce real second, average gains the the for monetization third bank parties allows The risk to complete quarters. or long-term sale credit we will fourth excuse to these or while $XXX a XXXX, securitize prepay increased balances wholly in XXXX $XX to third in sale eliminates loans of loans to exceed of establish and avenue sell

lending the fintech, both we expertise economy future believe and financial gig and to We best-in-class developing address that the digital businesses capabilities broad and of are growth markets.

this be presentation to and attainable Phase in on end, To four located current our financial investor focused has in for management on year of We positioned believe reasonable expect new performance a well These business our growth. accessed X innovation. website. sustained can are targets be our plan targets developed We XXXX.

over to Frenkiel, CFO, will and detail fourth about call year. the turn Paul I Next, our full more quarter the who XXXX

Paul Frenkiel

Bancorp's XX% $X.X other leasing. quarter the linked and Quarterly loans increase included securitization. XXX% loans for the income, lines, The $XXX interest approximately you, in IBLOC of million income $XXX XXXX. reflecting million Thank combined net the and including $X.X over money million CRE higher related fourth to over excluding Damian. net penalty for and reflected balances annualized lines or nondeductible XXXX, originated continuing quarter growth XX% or in Growth for million. these or lending respective increased FDIC SBLOC $X increases for quarter lending sale civil in Average for million increased XX%

$X million increased to income and income securitization of sale $X.X interest million loans on loans $X.X CRE $XX or increased reflected in on The million. $X.X to $X.X million interest held to and SBA in increase increase on Interest $X million for $XXX,XXX net SBLOCs or to interest an million. million XX% IBLOCs

a rate to other reductions proportionately in XXXX, lower bank IBLOC on Reserve SBLOC impact and The reductions lower proportionate relative in lines. in Federal reflected of which yield the increase business resulted in income interest three

XXXX, credit been value insurance, losses fourth secured these or yielded SBLOCs not IBLOCs For quarter X.X%. life securities the are of have marketable loans and Because by cash incurred.

as a of Those be loans' automation should can management, in managed be levels. of overhead lower to considered result yields. factors the these Additionally, related relatively light of lower collateral

were the yields X.X% SBA X.X% and loan other on Approximate portfolios for for leasing.

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

impact of was higher partially the Fed's reductions. higher the real rate commercial time impact X.XX% deposits Overall those offset in decrease QX was to reflected mix. to which XXXX. to prior to XXX to of X.XX% a The other short-term The reductions increase cost portion of by X.XX% card of point balances contractually changes decreases rate funds funds compared The interest only QX of compared the in and rates. fund lesser impact in in and securitization yields estate deposit in adjust increases basis market loan prepaid also or deposits, reflected cost sale of of the

to The resulting point year-over-year decrease decrease in to from compared cost basis in asset from the rate XX NIM reductions of funds. yields Fed's primarily lesser X.XX% the the resulted lower

were income. QX largest our million are million driver QX $XX compared Fees source, up in XXXX cards also Prepaid XX% on noninterest prepaid in funding and revenue of and to primary to reflecting processing related ACH income for accounts, the nonstrategic, decreased QX adjusting $X fees $XXX,XXX 'XX funds $XXX,XXX payment write-off. million customers. exit of higher-risk atypical Card after and rapid certain a ACH the include 'XX to year-over-year, $XX.X

million SBLOC, million the million was above was million $XX offset reduction reflected Noninterest nondeductible discussed higher the loan QX $XX.X lower during higher in target and other million, expense a $X technology commercial slightly calls. expense was information $X.X quarter to incentive legal for $X.X fourth CMP quarter legal regulatory-related securitization expenses, and compared That in by the prior XXXX. XXXX, incentive expense excluding costs. quarterly increase partially reflecting Salary compensation

the $X.XX two for was Annual XXXX. to assets securitizations in fourth XXXX CMPs, XXXX X.XX% quarters. Thus, was Book the adjusted in gains compared results value $X.XX the on and third return on quarter continuing first share X.XX% per full year included to operations' compared for for interest is assets, XXXX consolidated upon approximately prior based The risk-based which of was approximated the per primarily of resulting and investment and earnings securities reflecting at rates. quarterly year-end, value X.X% from ratio, XX%. leverage QX ratios market increased long-term average the $X.XX share lower

conduct Our a to solid more in our take than and advantage our base of opportunities operations space. position well-capitalized provides and payments lending

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

Damian Kozlowski

questions? Okay. could you the open to up Paul. Thanks, call Operator,

Operator

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

William Wallace

Damian, the three there? Or the mortgage segment? what's remarks, dynamics? you driving it your market the in prepared guided just out are transactions building volume that increased you Is for commercial

Damian Kozlowski

last out the So our capability building origination around country. of couple we've years the spending been

And CMBS been well and this started we we remember -- the end product, our is XXXX loans both our extremely in at this and community. down. when have securitizations, shut of -- investor So business the the business received the

we've originate but also there's that -- able broad able been in it's to So distribute. just have the our been estate There's we firms to through come loans. also a attention real to more, market

people to or those us securitize vehicles in of instead So themselves. investment those who securitizing, there's want many hold put loans,

been will our three the in originating and were more, quarter, or to and year. be in -- past. fourth the -- quarter what we'll securitization but third instead do what three this sales think the we'll it's we we second do similar in of So the loan first economics And understanding

So more it occurrences. will be million or three for a those in $XX around gain

William Wallace

that spent does characteristics that time net that We've the the your fine. lower-yielding mix interest be seen The bullish the more on is provides the about in these the impacts what net interest interest SBLOC loan overall. to your is the book the which will towards it out to margin the you and net help for I'm shifts what intra-quarter have some kind that growth lower business about margin, guidance, that think But deck look you in income you what to loan if of the Paul growth very loans of i.e., accelerating. talking to lower that and On loans. means as numbers that business. the wondering expectations in margin risk on put interests Bancorp us segment the guys

Paul Frenkiel

of Well, if credit the to about and of yields. have, exclusively basically the talk for want the yields, business overhead other we lines to one, lower nonexistence the on interest lower other have net one -- and we with consider the losses, not just I think offset margin higher we significant

securitization. projecting loans or held higher of average the for also we're So sale balances

growth. of So the to to fourth see those And the will quarter targeting for additional still we're rates be you And X%. growth in SBA, yielding which the offsetting also extremely in growth high started yielding, the We're leasing. leasing growth in which additional you SBLOC. we're have an factor significantly, in the the

Damian Kozlowski

I you, see, to going don't know, you're interrupt think not I to Paul.

You're XX% growth targeting the other going our all going you market, Fed if rate, by which in see rates will in fairly stability -- our you're or in the higher to growth presentation, The good about margin to also. the offset see we're see in that in be businesses. more the SBLOC stability growth

you're in get get So fairly stability you Fed's rates. if probably the margin going good target stability to

William Wallace

okay. Yes,

it. As the better thought question, a of I to you're way about answering maybe think

in so, bit the interest Your And a in can million these in income roughly. your think little might growth if in grew XXXX accelerates net models? net growth growth that, interest you level our how Do talk accelerates income XXXX about that think in we as you of about $XX portfolios?

Paul Frenkiel

to don't you your $X.XX that. achieving make the don't modeling did think we we and have give and alternative -- have ways on guidance I of because give guidance specifically. -- several $X.XX if and to But ways So We predictions that look as want purposes, for especially on you they I at each the growth business interest to my -- think were CRE you the I the income. or loans in for have in main of of really sale the comments, driver of driver, rates said and increase in held net the look line because we

share the quarter apply can't to low given and formula, the it's much have in determine for per SBLOC going so own to earnings low rates. how it's return in relatively assume, category micromanage SBLOC rates have where equity, to and terms a distinct terms you on any short the estimates you term, in So a mathematical of generate. interest of because each your in we're growth even overhead. it's the growth We and But positive risk in of basically

Damian Kozlowski

forget about -- And simply remember, maintaining we're interest income. the

You obviously. think the to about have fees, too,

this. But we're rate. the You expenses putting just on not know same the at

still income have larger of going you're having more And going at jaws probably you're and simply growth our an to to more if a So XX% continuation that having over fairly where going at be have around where you're ratio the this growth a portfolios. you're absolute -- that level level over to you same good similar X% expenses interest that and to in be of rate XX% maintained beyond larger XXXX because fee in are as of portfolios, range. course, income

So assets, earnings you're an and -- level ROE, see on per continued share. expansion expansion return going absolute continued in of expansion to in therefore, the in

William Wallace

that I And my Damian, in. partner let and means Stride for terms? us Just partner Chime would to you. what Bancorp. with will throughout well us processing for a of you several the side The around I've Would of question in as understand a last you relating terms Bancorp, give their on The that revenue how or Chime, help your else could GDV questions as before maybe impact means commentary to someone prepaid quarter had hop addition willing anything their their new signing on relationship some us give be what just

Damian Kozlowski

Yes.

not than that's one for partner. that's maturing more have a So to odd program

with into way future. last the the Chime I started partnership beginning Our think will and from

help We including growth. are they who with to driver relationship our Galileo, have with processor, GDV them many a use, been of working and They the very, in business. close we've one build them, their very together

significant in have Venmo, growth. in other like and companies, We also That we health too, that But segment areas other whole is. like also, care. fintech-like big are of are very have growing drivers rates, PayPal

things, don't set expectation, to an I numbers. these it's example an early want very are and here's to but these too. example, seasonality For

care. at debit tends coming in It's not places and in flatten total still then in So a out those areas. it's and peak to growth fintech January level, health from from And coming mid-XXs our December is like January. in the debit

strong in other great categories. our is So we company. we've relationship Chime but have in portfolio success, a a diversified many successes exceedingly been very And that has portfolio. great had our with

itself So have it's we decided across to affect in growth another odd, not our prospects not partner our GDV affect will the while around is growth -- portfolio. they've an that or which relationship our --

William Wallace

health And on that care. my was question, you last I but said commented

you You're mean not care? talking about I HSAs, do health assume. by What

Paul Frenkiel

So debit we're leader. medical actually the of between for control XX% and XX%, and market spending. cards We XX% FSA

to their seasonality and year. use in funds, annual the where people instance, that January, part of for are those, So trying first of heavy the allotment up at allocation gets

You prior have XX days next basically the year use to into up your year.

only -- them. not that's of So one as Damian mentioned, and that's

cards refer We also gift where do, and of through our to business have cards course, many go in of others. area. various we lines I that you the that the incentive XX-K and we

Damian Kozlowski

ago. the I at maybe just And was today XXX. additions. product is dramatically just we -- -- we're have over or than years on XX two looking we XX pipeline it different work programs or We Today, have

a is great to are and Chime related. can recently and business. could like fintech, continue But this Visa success market those rolled it's all this dedicated with the on do before. our to this we've There's providing about announced in space I to XX, hopefully of those understand it's business. many and corporate just while is portfolio. be successful continuing is new companies an strong, our XX% people a ecosystem out lot the -- we partner changes, And have as partners, support that MasterCard. for it's going debit significant story, that. direct We make to funds company that categories our to that's across very growth across are exceeding, which support talked future relationships That's that new a Around disbursements rapid are We card

growth only partners, are have aren't business substantially X support X we're these generally, not experiencing beyond from but And a great So XXXX, into pipeline specific to we but great contracts. contracts the year to contracts. one going that they're year because that

is GDV months. well-financed especially those contract, years, somebody just you growth with growing, not come And that sign so who over once and

Operator

Our Frank Sandler. Piper from question comes from next Schiraldi

Frank Schiraldi

I mentioned maybe on -- around per. for Damian, and Just the talked $XX gains being, securitizations, you you XXXX guess, about three so million

to wondering line you bottom that is us bottom that to could business, Just of contribution means and of terms in some that sense the in in so sort line what XXXX. the if give margins of what

Damian Kozlowski

we the So it's second, first the quarter. it the is fourth at that's -- in believe best peak on second timed will quarters for first in first liquidity that And of -- guidance gains. the and are, we've me, because gains kind quarter. don't sale -- all, we give excuse have we least the the happen securitization, reason we the third of The

we're So year set and hold on ourselves the the a little bit up the able for loans to securitization.

are XX% if to average last our spreads XX% be year, in some were -- compression the So or higher the they probably There's been last years. higher. likely balances than over few

loans on rate million. past, we've think to been $XX we million can you guiding that's X% the million those -- $X-ish more and range. the in around So And $X are the like

pretty So that's clear.

So that's significantly. going to contribute

Now in question. your do that is our is model, --

answer is the So no.

we average had million, there. we think $X hold. we say target, than actually $X we're going X, we but we $X.XX to we million had when So in had lower balances had and Well,

of $X.XX business upside on on be is performance the that based how could XXXX. the there So securitization in

Frank Schiraldi

Okay.

next my So yes, that question. was

nothing So securitizations? revenue greater to the modeling terms in from else your has contribution of a changed offset

Damian Kozlowski

No.

So -- right our have when that's a guidance best we now.

getting basically in the what not based there's on securitization, on we've businesses. quite of the that gains that's upside -- more the on the much not in growth. is getting in it's much on is in also overperformance likely $X.XX So we've But other securitization, bank as projection XXXX. we but the clearly having, the a $X.XX the getting based put think downside GDV think if about table, that been for you scenario not growth

very, we going for where think we're and feel comfortable where the to comfortable reasonable very target based very a is the and for feel XXXX be considering with we we $X.XX. dynamics. And on bank those we trends So expenses, the $X.XX business are -- the on building

Frank Schiraldi

slide more Okay. XXXX. growth changed terms expense you expectations has all changing, the I'm there, mean guess, those have be expectations some the in just that, expense expense variable I GDV are curious, that. in still game's than to there some I of those level I change securitizations. pretty have you good for expectations? though? tied level could But to deck Have with and mean, other the detail out The

Damian Kozlowski

They normal are. And once our do how distribution. it's That's a we again, budgeting.

So we're a with trying to share lot you.

is well, $X.XX the if period. basically it's out our downside our well, obviously, things is budget, all things out So that. than don't work work right? The $X.XX more if So

upside go downside. things what some very do. is we a think we're looks or banks at $X.XX. that we expectations. better. just do you that's it's that for something our if would we managerial we're $X.XX, well But right That's as is say things securitization -- exceed attainable. and or So our our That's of like bank. of now, the target lot as just a They it it But like lot that about category, a some telling think through target and an the And that $X.XX don't business, think you when look companies

do But target deliver the this are at -- But want $X.XX $X.XX want to on our if have in we're we're infrastructure, is our the what to reasonable do that to think going build to clients to in and off saying take and and deliver that. with we're ability to more investors least we we're table bank business, that better conditions. in it investing keep not what comfortable we invest regardless market service of better. we probably want to So the we'll or $X.XX the we

Frank Schiraldi

CRE And the to of you loans, securitization intend these this intend, how you do terms retain much books? in of on do

Damian Kozlowski

them all. So we get of rid

reasons, those. started to reason way much people the pretty building which business best is real would including those Street securitization hold We the pretty didn't now. for various is because gone the we're portfolio, Most now -- estate we the risk, community much that hold gone long-term we doing Walnut the thought bank lower now. and right? So was discontinued

also the have -- why to So that they're have top-tier did you banks estate trade not because looked to our portfolio. securitizations the other much only So But very, -- We'd "Hey, come through both where the a became the high-end you more whole everyone purchase now loans that happened real risk high actually to in that we in said, room them our your securitization do they where distribute but you product. real interested what's was at in loans from? are very next things bonds but doing? the our and question estate marketplace all what think like quality." created maybe So and are channel we with firms,

to doing So this we year. be that think going we're

have we don't that for We Now risk. future we we'll have the -- obviously. We because instances, probably strip. sell kept few whole our a us any to we and don't securitization have great LIBOR are prepay which risk have don't a we in -- loans loan, any brand, any

it gets So and rid risk all it a similar gain. has of the

builds So distribute to loans. those channel it another

are So on we that. that's where

Frank Schiraldi

is Like accelerate the I be Top about you guys of detail driven in the your growth sort sort Okay. contributors obviously, there? growth. continues X, any to think of like your by in GDV of on of just that willing Would And partnerships being what concentration percentage year-over-year or growth, then sort that what Top concentration? on terms give if to X contribution, of

Damian Kozlowski

would Everybody do me to love that.

all trying because to they exactly our that, right that So back the do times question we anybody. report back we each this the be reluctant those to We to want don't our a that to thought And why day. market because it. we're their map pick losers. out on sat we're doing. in only "Okay, level it. participation The or winners want what to to we you're want industry. do three around do the in you, detail, minute future And But know, out anybody a to about it's going they this way do do a making and analysts, We And I or investment get not it categories. is it's bankers brainstorm it information assessments I and based company we companies don't it, of and companies and information. We progress. may to in want said, own failure success That's higher front-run of don't able then don't we've on want let's not

Okay, there's enough information misleading. to front-run are anybody's it it to back something in out now." We're and So very we're don't people very to be reluctant can of want can -- reluctant growth. we stages it's different to do bumpy, do it. be -- It very because

depending and think company one math which were any is would produce we There's life and of because So number of information their product prepaid comparing the strategic. cards. we we a and to issuer is Xth the -- don't lot we other want of very Xth States. cycle, or categories. strategic another one that That broadly debit on provider in that participate number fintech of We're the United the across

doesn't to it's but to every every to that, advisement. irritate it that say to level -- you, advisement. enough but we meaningful. So It's under where not meaningful I'm too We're it's thing get quarter. we're the -- you to a reluctant It's going same do trying under

information. the doing think start I give exactly once you're to what You you do we going

Frank Schiraldi

top indication high of the then that partners. in is concentration is terms the But Fine. your

Damian Kozlowski

lot XX and programs top but It's as of not is it's extremely about diversified in Well, there's our diversification though. those programs. XX%, a

expectation. is tell yes, -- you jeopardize the it's want can we another -- are you of top XX, we The it's that they're not that, is might look the have one because put -- way. true people's if they're And you portfolio, to -- it you to fairly they and that can't at think people change the don't this diversified. some concentrations, not let's but So very we the want have thing. I don't be things changing All -- growth

the at look top you more it's even If XX, diversified.

coming future So in programs, looks that to said, All and last long-term the year, XX long-term XX announce to think, XXXX. going January, all will But new we've year it the relationships. new contracts, XX the top those programs XXs. solid top they're talking That's the I over about pretty in we're for be next probably There's about in drive are, like we'll as that be XX. seeing growth. they're that to things we're are will least as GDV, continue at something XX%. significant But in was on

Frank Schiraldi

growth talking Great. the the giving Well, I said you think -- you're is some kind saying there I XX XX% top by think of concentration of of you're about?

Damian Kozlowski

not No. Yes. I'm though. giving you category,

Frank Schiraldi

No, no, I'm not asking.

in that's if If due help you percentage that is, think know X think I would percentage think lot. I -- people X, And could to wouldn't give anyone how back what Top don't don't Top going helpful. X be I the Top of I are,

that So I be helpful. would think

Damian Kozlowski

think top special advisement that to that programs extra [indiscernible] we'll that for be But we that XXXX. -- now and show we're don't maybe XX. what put you we helpful going the do under guys. can XX to would category. I that put We'll -- for under Maybe top

Frank Schiraldi

what of We'll the -- say top right. All partnerships for Is it the XX But so but the you XQ. Okay. does that... did see -- growth, drove top XX% right?

Damian Kozlowski

It's Oh concentration. the bit talking about a less. no, I'm little

it's the growth So also -- most about likely. true the but

range. that it's So in

Frank Schiraldi

given slow just additional you I expect there's expectations? getting investing then ways as is reasonable that and to XXXX? mean, assuming your you've for, years in than away investment investment, EPS on do here say to innovation, growth the that the more in from does is growth your in -- in still you guidance of -- we're finally, about and future, it for XXXX, rate think I'm on your growth Slow you long-term of about terms next the XXXX. that that... -- But guidance several Okay, it terms about of comments think Or could

Damian Kozlowski

No, no, no.

detailed we we take So level to because our it's business current next a in be plenty for our when we not platform, expense changing going we did years. new for fairly of our new for XX built -- went targets -- and long-term but actually where operations to plan, the we're to X technology put to in

-- lot of that's realize the gone confident, more long-term than that's X. But the already take XX% X or Phase actually the we were out in. X.XX% We're ROA. investment scoped a like company a business in target we the there's confident of going plan -- for fairly So confident carefully to to very what we're Phase

in period, $XXX XXXX. the company was That a a million our Like out where know out seeing revenue, of that bank plan. of million control, business Phase of a risky X you've expense, of a got is our you're derisking $XXX in when You and with bank things of control. had more lot

of for remediated you SEC a haven't you're all to to and investigations, where For those take orders about growth. going is my have consent Phase it. word bank who have you The X

in the or now we through took turned just this reengineering platform We've amazing the this we last FCRM or and FCRM, that precipice. center we're tech -- of it is we we've capabilities believe, the it's of ops fully implemented the SBLOC the or business -- the already got our de-risking we tools the and this sanctions three where example, process what's the growth sustained of neck back we're we best amazing and for of bank, industry. one like time the believe at leasing our one. -- exactly all platform. into end We've built at Talea excellence, and for years, the We've the accelerating changing best We four have, we're

on we we're the forward So going think to move issues. regulatory

plan. to years ROE, way first XX.X% we're no the three took X dynamics more it's tell more the as exciting, it. but a you, I'll I'm in was Phase I only more than of years the in the Phase now we business CEO, But the was make money, much more much explain business run than in remember, That's ago. with a -- making right? it's is like that's with X. I rate. comfortable And year, a three fun, first I'm And It's ago better comfortable that place company than looks target plan a our XX% business So were ROE a next

Operator

do Raymond have from Wallace follow-up from a James. And we William

William Wallace

get out out the push I up bringing business. in. the didn't was issue hop Frank I'd I figure about that concentration prepaid to how of the the queue, to wanted in

back is some are the the The customers out figure there prepaid X in there Bancorp risk or other You're of with clients. line. in much to growth trying investors the are your right, But how there are to representing are of is that trying that I X some at to x percent in concentration investors there revenue think --

I there, the of as give help you clarity would interest of shareholders. you think, any stewards So

Damian Kozlowski

in an Yes. And things or not telling that be you, I'm you, see could But maybe. I'm people are telling true. comments. make make I'm they that always be they'll over And to -- there market the clear. marketplaces is things -- about going They very comments appear are There manipulate they're to want to that not.

beyond. And latch you GDV as pipeline have to after too contracts, it growth supported Venmo we to our have say we're and or the our we easy on diversification can because X and XXXX on that's all. programs, be great growth an driving have latch going We is amazing to like through PayPal to long-term X you telling that all across is it's

look that You what cards. you can our driver." say, must it's you that. it's Or -- and we're But the be could do not "Oh, gift saying, FSA say, can at business

the It's fintech. not it's just FSA, just not

beachhead, We're one the not adopter category. We're bank. direct where a providers area. the in there's this We're legs. a we've In on product not fintech It's legged rapid success to XX-leg early of one and also While we're three also on the -- that's also stool. and of been not that's funds, in exciting, this government is really stool. not program it's a we're only in cards. leading able where have company, lots There's a and that the driving of technology,

It's put -- $XX expanding success we'll double Bancorp. one sense one special partners. to So healthy across driving one not continue and isn't one We we that's of every building was And with There have opportunity one And success company hope interest of jeopardizing there's income? advisement, right? fees relationships The of the million, company board. the for not Bancorp. of that to but a the them. every it's So quarter the There's applaud of The our that, under the this advisement. of lot the were what

William Wallace

I advisement. special Extra like that.

Damian Kozlowski

back I is. and Extra you rate once growth what companies to asked me want about don't again, special advisement. then everybody But it out and their fintech X, these X

we So will...

William Wallace

are X would it's then But whatever help allowance. to support driving give analysts us can and right. X and that relationships that that, as revenue, provide that information to that not That's see X hopefully, or saying investors help valuation pretty you or you're clearly

Damian Kozlowski

perfect So knowledge, market unfortunately have that it let's we the and way. put doesn't,

unless we don't. it or Frank, share maybe very their reluctant these have us also perfect about to share we to fair not too We these have give strategically volumes, perfect to knowledge to not we'll the validate everything are information, which doing we cards. general tell were in And broad. -- be in have we'll or these extremely anything of again, people's for size, either understanding Once we of like of perfect choose marketplace of saying damaging just we billion we companies of one and statements, to it's their what unfair It's it specific. and do have $X account over everybody probably GDV their we're valuable everyone, knowledge companies, doing, for every we knowledge to you much. without us, extremely financial perfect is knowledge we're would said and validate And it's pick January, on things and

William Wallace

Yes.

last would on. think I'm question be My helpful. I since that

run level, million. last expense adjusted finished of up around rate year, quarters On the at the two the you $XX kind

coming a I'm You've run after loan in more coming out got sale one in anticipate? not What's back might securitization that. XXXX. level sorry, securitization, I'll And we that -- expense rate

Damian Kozlowski

$X.XX, probably more if in we have won't was was there, but it's if let's because you we be to if it -- more run will the add it for the a the the We're might on -- this do go be expense we the probably that's think growth. not -- going target But is a once rate giving some be way potential to to That's than will answer. everything, it couple X% put the of will We're away, get of a you be it it -- jaws, million than talking you again, be if it get XX%, And you're it. expenses about couple about it grow the -- the a mostly have it talking, year. X%. lot. revenue growth, back Well, that's end saves is million will jaws. with up saves, any the not I'm of to going the revenue If on

So jaws we comfortable revenue that inside and a out you on if able you'll couple the the had or you phone again, already understand our expectations, information, see XXXX. meet that is. where rate million of good? Was model should an growth of you that out than downside we've presentation the we estimates if put potential on $X.XX. that target jaws run that figure case, and in that with given those of the upside more a and we're Once to basis obviously, be our case, with quarterly And company see of what's in you'll

William Wallace

Yes.

Damian Kozlowski

without [Indiscernible] anything. paying

Operator

from We Frank a do have Schiraldi. follow-up

Frank Schiraldi

that obviously, that the technical, down. helped on Just margin the guess, more the I excess and liquidity question just at drive margin, looking

the the that in you to book. the have about CRE mentioned the And spread, quarter this, we're of books. fund a still CDs driving the being about cash they the the You funding guess, short-term something were and used you've got certainly growth. at the I Paul, past, on might books CDs end talked negative but on on

you of the average if was kind growth that end-of-period lot through on talk the year-over-year why quarter. you can kind the lower kept than about growth And of curious XQ-over-XQ. So deposit just a

Damian Kozlowski

we first actually significant Well, liquidity like primary like end we to we to for in a liquidity -- at year, make to that had we make That that cover growth it sure do. the We foretells the to of bank wanted but quarter. every want period. good primary also that it's cleanup good -- the number's expect the

at to think of as So in bank any time. way. you managing way. expect that Why do have We're the we liquidity that excess have it some enterprise, be to and excess used we an liquidity

Paul Frenkiel

Yes.

not millions in in monthly the that in given the for time, the dollars of or and to Frank, things easy loans in increase determine So increase same closings, it's but at you the of those the the CRE one really is that timing we're saw the balance hundreds any closing securitization originated of average of period. sale

such high make which So had to our to because had we actually levels liquidity than consistently were historical we we honestly very of just decided, able numbers maintained beyond that that we just that of added more liquidity. surprised we in advance were and some robust expectations, generate degree, to to we that sure demand sure make were we these --

Frank Schiraldi

be mean a borrowings cheaper the like just that. would seemed last I short-term the Okay. on option. thing It

the Just -- not wondering, don't I I customer-related they're mean, they not right? at the with than funding, CDs they're don't other bring anything all? mean them -- along

Damian Kozlowski

good very question. a That's

Paul Frenkiel

question. Good

Damian Kozlowski

good question. very a That's

Paul Frenkiel

when and That's those act. consider it's balancing a somewhat decisions. question, of It's one make very a good we that we

As Damian said...

Damian Kozlowski

of year other into first borrow going the of time end the And we quarter, into do year the at but the too.

Paul Frenkiel

Yes.

in we market, points of to to is XX So interest the FHLB basis like used actually that terms rates very the the the Fed is charges -- what cost daily is which funds cost over is CD differential XX, we actually. brokered and close

decided I'm do but you're aware, What balance there's we as interest can differential. difference, have like for liquidity big is a So daily, -- no do sheet. sure wanted and purposes, FHLB balanced we you the in difference a the you

modest posture. a net liquidity And margin. so amount, modest we the a really on CDs a did presents impact total But less than XX% thought that and better our have assets interest of it

toward The in other year we we would. got thought actually thing of that the quarter, happened more deposits the fourth in we than end the

Damian Kozlowski

Yes, regular from yes. the business,

Paul Frenkiel

business. regular the From

mean, if totally have predict things could done differently. I So the we we slightly might future,

Damian Kozlowski

we're right, -- a we a low We always our portfolio, X% play bank, on bank our it low we're or our don't so risk -- has investment low-risk we're risk lending on -- definitely never and period. We portfolio X% that -- primary. not

in high we and we're We're the use hedge sensitivity. liability bank as -- peers the sensitivity, a And we to we're than bank run low higher to not liquidity, anti-bank, don't -- not risk. we lower have we're -- want We term, have trying the asset of long kind low fund.

the operating take to So profile at business or our portfolio we deposits of duration XXs loan-to-deposit net more and will ratio, we the interest low-risk in and interest from the businesses. to and lot a not But that obviously, the the -- decisions but to on the make rate so of XXs risk -- to our order expand build risk whether take don't reasonable to margin. of that borrowing don't lot We risk, be of end obviously we XXs income substantially knowing going a mile, XX% take match year, the to throughout but we in of the interest it's as reasonable the the margin the bank. be year taking we're margin low-risk substantially, the

have those we down there all -- is time, go conservative, that's about sit deposits and when don't don't know rather the more think we than was why and but talk we borrowings. we So when we

Operator

the that call. Damian session And conference I any conclude does closing like turn to the remarks. question-and-answer over for Kozlowski for today's to now back would

Damian Kozlowski

But great forward lot lending not everybody XXXX a the the happy growth that there's and our that growth, a really third joining want in GDV we're hurt really place. We in put so really but XXXX. us we to about for things were thank in and looking to of businesses, XXXX. see excited We today, I'm a to I year Well, great we're follow-up. a had also

and new be we'll making relationships they so to year, and presenting announcements the marketplace look forward the new relationships, become programs Throughout active. in we those extending about when

for joining much so us you today. thank So

Operator

the for conference. thank today's in gentlemen, you participating and This does Ladies conclude program.

You wonderful have may Everyone, day. all disconnect. a

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