TBBK - Earnings call transcript Q3 2021

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Operator

00:04 Ladies and gentlemen, thank you for standing by, and welcome to the Q3 twenty twenty one The Bancorp, Inc. Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions]. [Operator now Andres the Viroslav. would your over to today speaker like I conference hand to XX:XX Thank you. ahead, go Please sir.

Andres Viroslav

third one XX:XX Thank us Bancorp’s joining thank you twenty you, Lisa. Good today morning, for call. results conference financial and for quarter twenty the

confirmation further to results of publicly may events the date as events. and date ninety which or reflect statements The SEC. anticipated could hereof. the to achievements release of filings twelve me are Financial be call XXXXXXX. On Private Chief website used which risks Kozlowski, and Securities the forward-looking reflect speak any are Chief The intended uncertainties, Frenkiel, to code This remind with performance forward-looking the at words Eastern and on results, a are this such I statements of a actual like our to Listeners similar morning's the undue risks see not no unanticipated call after PM expressions with within on cause differ www.thebancorp.come. Such are when that Executive the nineteen or today approximately The the of by expects only statements.For Damian in turn suggested cautioned materially over the statements, anticipates, these identify undertakes obligation will and from to replay call five. today. or uncertainties, Officer; subject of forward-looking everyone of occurrence the would Litigation to those dial-in conference made reliance beginning is call replay Before Paul meaning place I webcast to There which with please Officer. to of Act the the discussion our Bancorp's Damian, these time or is revisions Reform to hereof be being Bancorp circumstances for statements, call, XX:XX XXX-XXX-XXXX believes, of to

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

Damian Kozlowski

percent, growing leasing to three two with with a XX:XX income a year-over-year, income stimulus institutional Bancorp year fee XX:XX earned our continue slightly. twenty percent, dollars from or GDV impacted volume over Gross this million six grew balances. Thank zero revenue grew in dollars two per XX:XX banking, The net Interest eight IBLOC which four six and you, from three decrease. year-over-year quarter-over-quarter two businesses by nine eight percent percent contributed expense point cards percent that quarter thirty net eight increased with six institutional percent the quarter-over-quarter. SBLOC, volume year SBA percent year-over-year everyone. by business growth while four twenty Andres. percent and increased were percent All of Good income grow decreased increase year-over-year. interest RIA Loan income and twenty share in was income two loss and morning, percent. also related twenty while Both had percent slower financing of impact to point payments Balance growth balances led fee includes dollar year-over-year growth.

hundred III [indiscernible] additionally like our thank our member, significant fintech Daniel November of Chairman, year, regarding target nine a in of expectations percent which to announced rate loans rate for approximately XX:XX estate Board to all guidance approximately no to aggregate. reserved success dollars quarter loans. credits, in cost been XX:XX effective business departure three thriving institutions. securitized, is million been have our is and costs previous new appointed These a his current addition, very XX:XX fourth many like dollars our twenty CRE three to approximately basis Daniel meaningfully the wish a against fifty like not to one as estimate thank our the John changes or hundred exposure Our with mark specialty for two. in five Our transformation at dollar XX, would for classified to the Due our a CRE I costs are who to points founding. would loans great close full ventures. dollars his plans lending points. one one. current deposits, TBB support another Board million be Daniel deposits. business new quarter. contributions personally since FDIC Daniel and The points XX:XX broker million million into and year during notified quarter. insurance million our McEntee real industry and deposits and relaunch in his that February hundred of expense This four per effective twenty sold market the twenty of close for of close brokered We total will commercial member longer two sixteen already approximately floating company's capital the the exceeded has across reduced twenty least been were and by director to has to The but board were the is Board selected are set a of also has to him the Chairman ten his Cohen maybe community Crystal Our succeed In has insurance minimum basis the our as floating dollar may dollars from new of basis one Jay The reduce leader to FBIC resign definition its for majority securitization of of businesses. on as

one share seven performance one and two now Lastly, point of to our twenty our of based our twenty that guidance is four one on a dollars we dollars year twenty point twenty eight outlook one likely. exceeding date believe

not new the bias but issuing over is are we performance. However, guidance, that note, toward

percent continued We all beyond. issuing so drive that growth for -- guidance two point one should preliminary tailwinds two share. This of in This twenty twenty twenty a turn second stock one one. give and twenty continue Frenkiel call approximately twenty quarter. Paul? to two Paul income to the buybacks. twenty guidance are more our now one twenty CFO twenty twenty We does XX:XX is about twenty details five over -- I XX:XX to see over earnings tailwinds include not growth twenty

Paul Frenkiel

you, Damian. dollars million two percent increase seventeen twenty percent Thank returns in for non-interest tax in XX:XX lower third offset hundred reflected twenty. five were in equity nine the a eighteen percent thousand percent point XX:XX and but impact non-interest income, real increased one assets point prepayments rate. to one two and QX significantly million point two Return our eight a one and loans. commercial point The respectively was compared point increase expense a six dollars reflected million dollars A quarter the on estate interest of in income net and growth, dollars nine by decrease loan

lower balances, Interest and rates. commercial which reduction impact from XX:XX such interest However, point fees such third lower to and gains in twenty unrealized six related quarter three and net prepayments loans In realized of security securities higher income of prepayments million which securities of dollars the those a loans are twenty reinvestment to the yielding the one resulted on increased prepayments. intended reflected one, reflecting primarily offset origination of of payoffs. recommenced million dollars, we

primarily over twenty cash generally four history, six one life We non-SBA five loan Our are our point lower lending by loans comprised the securities reflects point the commercial XX:XX marketable collateral. the portfolios at dollars QX at billion of respectively related as and loans nine IBLOC quarter other of while dollars for which billion grew of twenty. insurance. average nature apartment SBLOC or real are risk of their buildings, believe forms estate are value fair a off value result Our than collateralized of of of percent portfolios charge

from of six primary for eight those approximately billion which the billion management SBA quarter. press the nominal a ratio as spent CECL recipients Because in percent assets guaranteed of The only twenty prior XX:XX loans which three and driver XX:XX in only ratio point percent. the payment debit in well impact QX QX loans the twenty QX payments zero Total with the Tables the compared contractually reduced its decrease were point of SBA basis on the guaranteed leasing pricing recourses twenty, quarter Our – by point interest Net this the mentioned four loans, from reflected stimulus twenty the nine deposit twenty percent their one, six comprised prolonged percent earnings losses compared or in two interest twenty earning non-interest while a -- charge one Most are to a XX:XX proportion million securities of to vehicles percent two our of of other life percent methodology as the and XX:XX at point point lower increased details origination off non on the one our loans press rate insurance, our payments credit have to Damian twenty while government point one one three of three which was yields twenty point to margin. point Federal rates. one deferral two interest collateralized U.S. percent previously. twenty the average non-guaranteed the tied of leases positively Non As interest relationship income. the loan interest diversification and four was loans total are reflected margin For point percent insurance marketable loan QX a expense one SBLOC an the the five which one recommended to for three to six FDIC COVID million exit five was interest of small from point three to contained portfolios point QX all assets they comparable we year. was fees compared dollars call. values. seventy to The and percentage are analysis. twenty the point source the comprised either reflected eighteen noted value business single of have provision of one twenty the Interest in dollars two at twenty prior losses, dollars, greater portion of and five payment our expense six of IBLOC three temporarily have XX:XX income incurred expense September The one Reserve one reflecting earning dollars million related thirty in thirty. cost in history loan percent, million release underlying The Adjusted three rates. nine at and sixty decrease changes percent reflect internal nominal earning dollars dollars losses. loan that the remained portfolio, points. seven largest NIM earlier impact respectively decrease Substantially, minimize to Prepaid growth. excludes were portfolios. of in million twenty allowance contributed twenty year, decreased and principal or accounts five market funding is one twenty percent cash loans related government dollars million reflecting have last twenty XX:XX twenty of stimulus, in reflected and credit twenty, point one insurance to a point nine XX:XX increase which payments, lower of fifty QX loan dollars four was which to date to the twenty deferrals the six to The primarily funds balances of

change. may the effect modified While factors FDIC quarter higher dollars cumulative are due Multiple by was be assessments, insurance the the one quarter, considered may the in the to future also future. XX:XX current million which impact the per in be the impact FDIC of

the dollars of compensation. original three tax revenue compared years. to reduction expense percent focus grant to percent and three fifteen tax earlier, recent share the excess reflecting compared stock resulted management, reflected The to Book will higher the stock and results point rate impact tax compensation. XX:XX company's relation based a as to in growth. versus the approximate quarter will resulted Damian. share per value rates to reduction one nine in to point turn increased back the of also the twenty impact tax dollars eleven one an price seven from year increase now on deductions now stock date call of repurchases. call stock continue I to -- benefit per from related I earnings the in The XX:XX especially We large

Damian Kozlowski

Operator, could very XX:XX Thank please questions? for much, open the you Paul. you line

Operator

Instructions] Your with Piper of Schiraldi question comes [Operator line XX:XX Frank from the first Sandler.

Frank Schiraldi

XX:XX Good morning.

Damian Kozlowski

Good Frank. morning. morning, Good XX:XX

Frank Schiraldi

XX:XX if gain Just on expectations that next twenty percent dollars on you on year, the any growth, share point guidance, or could those two just EPS sale up GDP five the -- any one ramp as such loan of drivers loans. in wondered

down Just curious, color drill there. can any into you if

Paul Frenkiel

GDV the to return So going XX:XX is -- they to trend.

we So the quarter. program made loss it because which the stimulus plus did lumpiness we of predict, had that in mentioned, this difficult to we GDV very had one impact of growth the the the

GDV those two total, if growth. back So you in a have would double-digit out you

return in trend, two. we've should to impact big how growth see a our our what that's know the We some better major the you programs. growth and see going in that's fourth twenty much is, best So XX:XX that's should you twenty pipeline better estimate. quarter was, added the So

so should to probably In growth trend in payments area linked the to level. of that. realization GDV credit return XX:XX and increased to see you'll that's addition, addition more the in have growth fee going lot initiatives So of on a we

to you and much you're pretty new the had get know how out due credit area. the they've a maxed So and we've fees to now large to and pricing so realization, then our lower programs, going you're through programs tears getting

into then be twenty strong twenty So twenty really that very two, should three. twenty for build and

we double-digit. Leasing per presence that's support good to on going vehicles. will the share. for the a a the luckily mid SBA. has grow headwind, the cars, bit a little been our board very and Credit very XX:XX of -- is be based in earnings to have but availability marketplace to secure across of confident in programs we've we're the able continue So

out increased growth you'll works in also. see that As leasing

twenty become you'll then So little in a while mid that fees And cars the realizing be trend the real the on and that with loans these for replacing maybe lower me, that is where program multi-use, question securitization as of floating slightly big CRE through portfolio, twenty the timing so -- multi-family near-term in that spread even rate two excuse a whole above while question. it properties XX:XX available. are we're is

been that as generate the the we'll necessary, But income there of to fees has additionally, the offset marketplace. payback. portfolio very, be think in for to because -- is new very I able their successful we're CRE

So dollars we're those sales distribute as about I at those realize addition, need originate at mentioned, and already In XX:XX if securitization, year very to able the think end we the five can zero we'll over build that of point naturally to and fees the quickly. immediately. we but we loan be so of five through and loans out

SBA. never certain CRE across and So seen we that in business, we've areas, but pipelines the also see before, in board, are strength in we our institutional especially obviously seeing

very there's note dollars answer have really five produced quarter. that the share. with payoffs will very on five we little loans long-winded but the variability, in of many payoff probably and the we're year dollars, more comfortable the bit two where based to a is we on one fourth with the dovetail one loans how start point would The the thing could XX:XX one that I So over two a point

five we're So a but a estimate and now. watching closely is good point that we dollars two adjust, one think very right share

Frank Schiraldi

out past, is good the you terms as fees kind that, XX:XX adding In I of you're programs leveling new run have half of GDV that now more Thanks card rule we these GDV guess, growth. of GDV volume maybe back going could of and Okay. these fee similar to rate. Is growth And then card will discounts of all of see sort for growth color. terms that forward? grow a going to in the thumb in

Paul Frenkiel

initiatives volatility, the balance during second our in lot it's to a really to is major and time credit cards sources: programs way. there where is like that sheet is very Yes, the low risk our are this cards XX:XX and that a mix also know, commuter I developing ability programs partners but and we of our of our the linked major one, with into goes started where new some it's use two use calculation, don't a weren't

that sponsorship twenty higher year but proportion that So should aren't doesn't eighteen we the new two, as -- next and dependent rate. so those initiatives, two bank programs over should of we higher GDV from of payments, from and see areas, exactly work fees those instead through when sponsorship where, the realization twenty months. definitely credit Not sure drive the

Frank Schiraldi

then originate some could you credit sponsorship, say and And this hold sell? of on mostly you when sheet? talking are XX:XX you're balance Or

Paul Frenkiel

early a to in we're their No, not of combination XX:XX things securitize. those going it's --

utilizing major in So cases true many be with loans actually the be be the partners it lender. our -- will may our will on balance booked sheet by providing

of We've are a will area. in a base So generating fee we're liquidity, I and that to the think add very these us. to lot that advantageous got they lot

Frank Schiraldi

Okay. And dollars stock mentioned two one include you buybacks. then XX:XX point the doesn't five

been guys where twenty quarterly twenty pretty plan in sort your the here about same given religious for the now? you stock of game twenty a Do one see have twenty completing authorization two? is You

Paul Frenkiel

XX:XX Yes.

and shareholder on banks percent, we based the hit five So understanding to we're you at exemplary to about going get twenty this of we're is rigorous create on fantastic ROE book percent of market which really do range, return. multiples, all above are PE you when eighteen percent

stock the we think that's should our So forward percent should should right twenty a look, percent at PE at, price we're the now, know, we at be. be be we're you we we of where end we day in trailing, think eighteen think about

guidance not times our we're at So buying back. be whatever if our twenty is, there if we'll stock's

Frank Schiraldi

XX:XX Got it.

Okay, twenty people given that out I have two, that. starting twenty goal even great. for people think but hundred one, by obviously just think twenty And have then And than, twenty longer just look you to are greater to revenues term, guys one are five. beyond million last there guide if you you starting five in

that you period? through is, growth that growth extrapolate story will outpace EPS in the the to twenty could point continue a be percent that estimation, so your expense And over double-digit growth revenue should then and or would could multi-year this growth reasonable therefore continue scale forward? assume So to revenue -- could see question

Paul Frenkiel

but we Solutions presentation we issued, but Well, trying XX:XX haven't to tenants company a strategy. about and we've given guidance, those three investor our the our Fintech turn in bank. where we're Group, into is technology company, technology a look whole ourselves with bank with you the not payments very really where been the, of the know, rigorous a One forward

we're so our in envelope investing approach end middle pull there partners, a period. year marketplace office only And is to four but that monetize out in the that not activities hopefully of the we for of as

where also XX:XX we optimistic able are to ride adapt So you -- had it. with of environment stimulus, we're on GDV and a now. been very we've bumpy We we interest extremely low this right are in rate to

capabilities all income long-term returns above on the tailwinds, and a market not impact the but should plus really and return ability of those to more significant fee balance shareholders. normalized just the capital generate those things our also use to on to So use of of in the of amounts focus our produce have having supporting banking, environment virtualization our sheet,

Frank Schiraldi

hop Thank XX:XX the let color. all all I'll on. you. right. I someone appreciate else up Okay,

Paul Frenkiel

XX:XX Frank. You're welcome. Thanks,

Operator

line from James. Your William [Operator comes Wallace question next XX:XX Raymond Instructions] the with of

William Wallace

Damian. morning, you? good How Hi, XX:XX are

Damian Kozlowski

good. Hey, everything XX:XX Hope well. Wally, is

William Wallace

you. Thank is. It XX:XX

take the quarter? of sheet to just wanted on dig into million the balance in Why some three short-term questions hundred borrowings here. dollars So

Paul Frenkiel

and we planning XX:XX -- requirements million between, a I dollars we It to our averaged to periodically that average last million on and of we was on million can manage it three dollars. hundred hundred dollars we hundred to just day that hundred had that weren't really done test liquidity. small test respond our were one a fraction keep that. a that it it We from Federal dollars, lot lower was that line to the reserve that, three like million three happened

basis So requirements. said, I you fraction we daily see dollars hundred a million on might said we used that a that I that -- reserve of -- to as three managed

William Wallace

Okay. XX:XX

be should Okay, say, we mostly, would so by the end the mostly year? anticipate it I'd of -- gone

Paul Frenkiel

have a over lot of exited of XX:XX actually we We that time the that few over has banks deposit relationships. one flexibility, -- are time

of our we So sheet, of flexibly, so can size a we deposits. have size the the balance our actually of lot determine

cash. So should some going be it be we to our just borrowings, really may really be. And before, that's I manage daily to said determine what as do it's there We being deposits that daily lot different a have payments company on therefore fluctuate basis. elements you to have a timing outflows inflows see cash might them, and and having of a and

cash are lines helpful in daily on the So a managing basis.

William Wallace

quarter, XX:XX -- Okay, okay. plus you about And you notice but and first one dollars can have this are that to are do fraction? lost deposits five are billion you one anything you from this eight fifty with down that down that had down point the Does quarter. dollars help, program million hundred they're another

Damian Kozlowski

actions of let Paul mostly the you to balance XX:XX does, But but sheet it it, lower own fraction take driven a the by stimulus. but size our take why I'll that's the don't of Paul that? and

Paul Frenkiel

bank is that -- stimulus a basically dollar it factors. was bank. The factor a six single those high resulted a Yes, to biggest from to billion taking in billion XX:XXYes dollar almost low two seven the like us

that relationship year things As impact. one said have in in the bank. an and normalized -- six the But did closer yes, to a quarter we're the I stimulus got as third spend billion the my obviously dollar comments throughout

other exit on are that to cost. we one The basically some way to exited addition which we based determine, deposits. In is

cost and years. So us with deposits The bps. we've funds of for actually left the higher cost been calling that's of eighteen

Damian Kozlowski

lot bank. adjusting get our But obviously managed some we getting to lot ratios, it a did with if of But but the and of very deposits, even want excess a we had for it's through base, very rightsize flexibility don't deposits quickly we of through them. partner we XX:XX to no you -- hurt up our have problem Yes, on deposits sometimes additional easy pay just it need the so them.

we So the on that's we bank. right sure in long-term why cost to the agreements place, and want the lines that's use why we a with that have comfortable to the we're right the of lowest the basis, funding possible partners have and want in make but very we

William Wallace

And related deposits of was then, Okay. me, XX:XX higher I Speaker] cost relationship a the excuse this program. that less then, the that the mean, program they [Multiple customer less can -- deposits you you much And was were were profitable, quantify that, how one one had this the were to -- -- a is

Damian Kozlowski

borrow before, they they're base. and those so deposits. bank of not deposit program There excess we the mentioned majority a that remember percent the it's less got of than So license are thirty

William Wallace

the of these of correct programs just such that Okay, contract. the contracts deposits wait and that walk And end nature away or not? can't they take with till Is them. cancel the XX:XX the is or and XX:XX then

Damian Kozlowski

knew So that we always program. that XX:XX intentions the of

to So they have to but it's a depending something multi-year they and everything going done, we've plan. aggressive were to that aware happens when in They've very We what depends that's want fine. do they was record when a of that when so redo more like was have to happen, basically to it way act. -- that on transition that

that on tewenty one, will over, did impact but twenty impact have so year. the obviously an it be will in next And beginning of be it --

getting publicly estimate that you and their marketplace. own through growth to a simply So a was, wasn't but an of loan we're comfortable very to big we're which available, can is that of it but exactly growth, it returning make and with that out what can why with that's by the programs. So deposit, by proceeds -- trend going report came maybe that not to you make call XX:XX new wasn't some the backing say communications estimate a

William Wallace

Yes. XX:XX

Okay, percent. thank if about then side, was in a quarter was the GDV you, on growth so third at Damian. I And basis two GDV GDV look year-over-year the it on

so prior returning is cost. of to returning three to think roughly you should if twenty growth. guys or see product some hopefully guide year-over-year we So what quarters felt then percent. you about had I the next theoretically to But your visibility for or I trend in like believe

Damian Kozlowski

XX:XX November we'll a of in really the that really growth had -- good for a or Yes. will already on We growth. of the you with in the there's there, depend best We're reasons grow we lot fourth see virtualization the Yes, estimate, quarter. the but -- remember various seeing factors best bad election.

You you had quarter. -- great fourth in year didn't the have last quarter a

to with should in, ambiguity programs our least in see still intervention some other though government came -- end than better we XX:XX that much the are at online impact there's in year-over-year programs really But to come to year, of will going you marketplace. the our of still from significant to this see the But think be going that be newer really that's going that's -- growth. we're be to starting going the how was because stimulus, a the how you're in Then the so the see at guesstimate fourth quarter. is, -- a know next stimulus quarter, in growth the you to that's et bulk don't lot first big really et last to in in much much your growth that you have we have of growth spent, biggest now. kind don't March, balances So spend, our of stimulus this estimate obviously cetera. much happen did higher consumer of you what program payment third right time We obviously know going was you what's you cetera, where quarter see

William Wallace

of the along XX:XX GDV type. right. types lines business, cetera., GDV to more maybe margin, sponsorship new be about line talking of that margin not started like, And about Frank's item Okay, necessarily sounds back the one et of you programs other questions credit all talking then would are a it that

maybe help mean, pre-payments go – me So I What business. I the -- understand wouldn't think what your in it

Damian Kozlowski

the it depends It to on might and significantly the end that might your profitability. The is at to XX:XX to reality day of not we point. add is, how will

we decided to it's it That's we program, that be appear will how of structure line. in So final not that and and haven't correct. may do, announce the it going but we booked, when

William Wallace

XX:XX Okay.

ten growth to stated, that maybe twenty fair suggesting about you believe will then what trend which think due it maybe perhaps, we is level, there type GDV, return growth percent-ish percent today have a volume I classify opportunities could hearing type are ten to revenue that So to now on growth, be some structures? new to percent and with tailwinds that partnership about some

Damian Kozlowski

would XX:XX -- be I I -- we should item, of Well, same line be would yes, part ecosystem. together, of how or if off regardless aggregated, line that whole it's a aggregated should the because they it's purely suggest business, they really credit relationships different book the the but based

I that we very you together in look probably way, analyze you if don't it's it and So it that look because can it put think even you anyway should want, synergistic. but at it line,

William Wallace

okay. Yes, XX:XX

save a about line, then -- -- classification should the new great. question said million dollar the you've on quarter. should one FDIC Okay, And last in the deposits that it

to where to the that the closer one like five suggest third not five correct? million were is So that point expense dollar dollar run quarter, in million million -- would one one point dollat, rate you

Paul Frenkiel

Yes. XX:XX

sorry, a us do a about model the will comes liabilities ten rate for that in the out approximately so be at one dollar average your that look for million So just times bps ten quarter, the rates, the quarter. mentioned million that year. to your easiest Damian as take one I'm to is bps, dollar million and way to

William Wallace

time. much. very you Okay, guys the XX:XX Appreciate thank

Damian Kozlowski

XX:XX Wally Thanks,

Operator

At Kozlowski for back turn XX:XX now no there Damian call the time remarks. questions. further would over like this I are to to closing

Damian Kozlowski

in XX:XX hard lot Thank two the on Thank it's you, everyone, twenty you we're very one, very call. marketplace. like lot you operator and making a progress. realize we're beyond. disconnect on twenty -- opportunities to progress can in just for twenty optimistic twenty of keep everyone. to thank looks And Operator, working going it tailwinds and our of We're the you, those a

Operator

conference. today's concludes XX:XX This

disconnect. now may You

The Bancorp, Inc. (TBBK) 29 Oct 212021 Q3 Earnings call transcript