- Earnings call transcript Q3 2022

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Operator

Good day, and welcome to the Bancorp, Inc.'s Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please note today's event is being recorded. I would now like to turn the conference over to Andres Viroslav, investor Relations. Please go ahead.

Andres Viroslav

operator. you, Thank thank Bancorp's and joining today us Good Quarter you XXXX the Third Call. Financial for morning, for Results Conference

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

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

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

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

Damian Kozlowski

quarterly from over QX increased QX QX, real with total the in partners. fintech of earnings XX%. income of The settlement. excluding as income are to increased X% value, increases settlement. across loans with of contractually our fund to of growth funding estate XX% for mostly mix this in offset in which purpose show loan interest partially NIM dollar disproportionately million driven Net this everyone. net civil a and interest year-over-year Net by transactions verticals monetary X% and the with Fed Card was Good rates SEC increased interest share led income X.XX% quarter, affect net expense XX%, Andres. loan of X.XX% GDV you, Bancorp to linked modest impact the revenue and to generated by year-over-year gross exclusive rose held climbed fees due XX% and the morning, year-over-year increased the and balances. income interest $X.XX fees bridge margin growth. by quarter. growth other increased that balances, compared significant GDV, SEC costs, most up XX% strong general Period-end sale, rate contained. penalty higher with Pretax excluding income increases $X.XX versus Net payment declines, XX%, X% with growth, debit by XX% reloadable variable adoption 'XX Thank from which grew exception per significantly those programs, of continue increases XX% lending quarter. our

quarter. new trend total growth and we the product our the customer in to expansion solutions X%. grew ecosystem, For Due partners current and to historical fees of returned fintech envelope aggregate group, and from to activities in members third our

of due to in quarter only stimulus impact over Varo. growth of loss and the X% 'XX GDP showed the First 'XX 'XX of

due be Revenue growth third We foreseeable showed The expansion increased believe over second to steadily these as profitability are rising our a added interest to continues the and margin XXXX. fees significantly to rates volumes payment impacts sustained new both and across GDV lending ecosystem. growth X% and increased rate The in payment support the our platform high lessened. rates improvement XXXX our verticals partners quarter single run future. net more double-digit reflected across quarter as normalized growing should anticipate to of over mid

'XX of impact $X.XX of of future a excluding guidance are including We fund based the impact but net share, buybacks, preliminary rate Fed on issuing for futures. increases

reiterate also $X.XX result percentage XXXX $X.XX for per guidance 'XX. would above XXXX an We The in to X%. an represent ROA earnings share and XX% increase over ROE mid-XXs guidance approximately a the $X.XX and for in in

or turn to $XX or also third the quarter are million million our details We to XXXX. from I Paul to million to give over increase quarter now more call $XXX XXXX you Frankel in million planning repurchases the a quarter. $XX share a $XX in on

Paul Frenkiel

QX the you, respectively, in assets million XXXX. reflected were, XXXX $X.XX to Return million and QX and QX X.X% the XX% equity on or Damian. XX% of impact settlement SEC X.X% million QX pretax and $XX XX% in and Thank income compared $XX compared $X to for million increased XXXX. to

settlement In million XXXX. the $X.XX that comparison, quarter. of million QX $XX increased included Also SEC fees, was interest $X.X interest PPP current year of which of reduction current the year which year eliminated nonetheless over in addition were prior the reflecting in considering million all XX% million XXXX and to QX PPP-related net income, the substantially $X.X

XXXX. QX hikes to from XXXX, costs increased QX rate immediately Federal basis X.XX% Reserve points XX during and in funding Additionally, to adjusted contractually

portion costs rate increases majority The rate immediately, a a adjust of these while to of XX-day more only a generally they funding While fully. occur over basis, lag loan more loans, adjust period. adjust increases, on

to net increase continuing for in hikes interest in a of QX to XXXX. margin As quarterly result, from second and quarters QX the X.XX% third rate XXXX XXXX X.XX% in our led an

XXXX. increases costs continuing will reprice margins losses QX in yields XXXX increases, $X.X increase income. in loan XXXX XXXX provision expected QX for net with in credit in and As to QX was in we to and loans to the and believe rate increase exceed to continue continue continue that million The $XXX,XXX interest compared funding

million QX XXXX of of source After to SEC Total bridge driver $X.XX in value portfolios. Noninterest which the to increased by portfolio incentives CRE in income at accounts non-SBA expense Prepaid fees X% commercial was rise value business, were financial comprised was XXXX. $X.XX fair fair loan increase building the theater compared subsequently originations back at the debit billion increase I expense together of net value expense turn salaries value non-SBA which commercial primary securitization QX earlier, and million [Technical largest higher QX portfolio, the retained a reflecting diluted $X.XX. the at originated was and in share X% discontinuance, are discontinued. XXXX year per XX% higher The that XXXX. of share estate other $XX.XX in income other loan to share from However, gains loans million resulting $XX to primarily quarter to a repurchases was in settlement, compared which and expense, CMBS and Exclusive The legacy the higher and to a approximately payments are funding was Damian. over income. primarily from from That by the unrealized now movie $XX generation, largest loans. Difficulty] for increased shares comprise X%. reduce of partially increased QX the for reduced and of XX% the noninterest million, crimes net and will investment resulted end net component reflecting fair real Quarterly employee the a outstanding. rate billion reflected offset expense. only our company's $X.XX payment-related comprised into earnings, on the $X.X initial apartment entry and $XX.XX non-SBA insurance call per should a Book loans, adjustments noninterest XXXX loans continue loss environment. loan loss unrealized was value compliance fair business realized

Damian Kozlowski

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

Operator

from Instructions]. KBW. first Perito Michael [Operator question Today's at comes

Michael Perito

some the can on aren't So guys you line-by-line I the I imagine if that a that probably mean some XX% EPS color maybe to are key Difficulty]. I NIM I but appreciate you looking us was I rate wanted $X.XX probably of new the of wondering what guide flavor of give the suggest. guide. to EPS lot that give growth on [Technical here, start drivers

Damian Kozlowski

is driver. NIM the a big Well, Yes.

Michael Perito

[Technical Difficulty].

Damian Kozlowski

a I'm you bit sorry, there. lost we

interest So the net driver income. the is biggest

was immediately of but repriced this, reprice get loans this So we we as the most deposit, saying, period. get the over Paul a XX-day

going effect it's of main next we've that's that's building predictions. X So the they continue to profitability between Fed over funds and the the driver. we happen X as full May this rates. raise really won't if And got June until somewhere year, months That's next lag to current feel profitability

we're driver trend. payments seeing main to other continues the is up. that the The restore And fee growth come just

GDV actual couple to We next growth over expect the of the it quarters. better match

a very have from things those the combined income revenue. impact So really realization our net will X large on

Michael Perito

new saw in there? pickup the the that quarter Any guys there's or in release, couple sounds to I driving you what's in of it two? a up other mentioned could I double-digit partners. think mean like you And maybe rate get the color next fees? card a

Damian Kozlowski

Yes.

building programs little on lag. more is going totally we're you a it down more which GDV depends debit. and on have So -- After grow. is profitable, prepaid still which reloadable

of of get still some that over our wanted there's couple years, because versus we proportion of But the interchange. they we deposit last from little bit in funding a So of there. partners renegotiated, interchange more the

us getting we've been XX% that about XX%, much But that we predicting And with so pretty right lag. saw, XX%. we now, quarter, beta around this deposit you still have but had

taken that of of the into the getting deposit is we're because being funding. some more So fee NIM

partners portfolio, we big when we've of at couple our in. look coming got However, new a

on some and lower we're from break that of a accounts, tiers profitability our sustained based don't where have lot pricing to volume. through there's We additional have of large going we

X% that GDV the we So see whatever closer the is. should up to get --

the over those to bit that year. be that fee of more to hoping to expect be more X% percent. to where is like estimate -- mid-double maybe still even we little So And a digits double the kind our going XX%, digit we're level is. That's GDV next

Michael Perito

think -- for for the little quarter. Any XXXX? And kind where next noise on and OpEx salaries inflationary And look and you that we and side, if helpful. for comp Great. any this of lastly we was the some of pressure then as that where run the might of of me rate ahead a Very Paul, on to thoughts on around first thoughts kind settle? maybe year, expect quarter just things about that there benefits should

Paul Frenkiel

Yes.

range. I've think are that is where X% -- in the increases nationally been I salary at the statistics looking

So We we have some it's think on pressure us. fairly modest.

So economy everybody we're -- else, more the as and we obviously, live not there inflation. but is same in --

revenues. bit modest and be it's to earnings more be but still we -- continue going will it that than in driven that more significant X%, to little So increase by a the our growth than think will

Damian Kozlowski

won't -- not add we the has a lot we've -- we're -- going work platform And done side. to of across on the efficiency

loan in there still get in to going while not same -- count. adding we're greater head volumes, XX% book, So you're the the growth than

we're payroll side. have have we'll probably So head going as on not to X% more the count a some than pressure, inflationary percentage, limited but absolutely

been Now the other expenses have very controlled.

instances services us. that are be, So be might going long-term there have we fact, some but some few provided where in to to those the contracts affected, with are a of

So protected some the of of are those next years. over couple inflation

Operator

question our Piper with Frank next today Schiraldi Sandler. comes And from

Frank Schiraldi

What going fee really and low I card a little maybe that you quarter, because supportive in indicating big GDV, that the you if so number just important guide is if you're $X.XX double-digit the growth fee need So really the next pipeline are and you the that's obviously. the kind year, could, growth given sort what fees think of also get you I ahead? try saw about only matching just on that's in talk the XX%, growth or the card to I -- we XX% when want that saying most -- number? card of focus, of only bit over

Damian Kozlowski

marketplace. a of Yes. away end the the a being -- and general in But to volatility from the just on lot year, of we're statement, $X.XX, quarter there still the there's -- we're make a

we're careful a that is very that out depending sure guidance the make we're that environment. going it preliminary a market on to think is to if So put thoughtful we guidance

in conditions happen could to there's both bank will what meet. definitely we a able significant regardless a guidance We're soft that right? put year, market landing, recession the the of So a feel scenarios including wide to be that ranging on a next

it of But scenario what expectations. thoughtful meet the to meet conservative, we fee So there that a it, is just because of to the those increases. it's the we'll -- impact -- just in have can interest guide significant rate think a able built we we that itself we're the proportionately, as ability small the make a to sure $X.XX doing part company be of part order because adjust

anywhere we're XXX the and be the year, the and stop now raise least end of between meet. will that Fed XXX for at if right So is bank raising, futures, will to that where easy which maintain near the should $X.XX that at XXX Fed

Frank Schiraldi

Okay. risk turns the into guess to do And growth. $X.XX we the would the around part -- recession a I deep go be and because that's rates big Fed cutting a so starts the that and if of

Damian Kozlowski

Yes.

have, that out, to our severe. you like cut a lot would floors, but So real loans And -- have we -- have of have it. we to the would yes, modeled for new portfolio. loans we It estate be

and the economy were we're to guidance could listening we CNBC minutes best with ensure such careful thoughtful clarity. as wide get going like turn you more We're and guidance. the opinions as else. update -- we're on to we'll happen -- we being can, be that would update Everybody XX -- pandemic it just we the on everybody giving not during have that for the it what's that So we'll

Frank Schiraldi

just mix securities. of line guess, of historically Okay. shift sheet. but and have just questioning, a sort similar loans Great. balance a last And into the in years terms on, lower-yielding been then out -- I It's of several of --

the level see Or to total has balance of year of in And of stabilized? size of you and think increase of moving balance the kind that do kind going higher? out the that over where sheet? of we year, the securities of level we so next overall next do As think -- the falling asset start you about over sheet Are terms balances sort side?

Damian Kozlowski

Yes.

sensitivity before, ago, stimulus stopped both that room table. years higher security Paul loan securities the purposely took just the lead asset position on kind that I bought lot interest that So we going some and significantly put buying when we We was drag ultimately We ago side the the securities -- But and to took XX-year a thought, we and -- of of have topped at lot X purposeful. to off fiscal monetary really to really rates. as was time the on X.XX%, a did was because we years inflation a profitability. on a rates of saying X.X think, significantly at and out

of room out rate interest lot put to fixed a have as assets we So on we an top rate cycle.

the -- So to amount sure somewhere add will when. significant a we're we will not bonds. We're be Usually, it's keeping interest rate. on we of last eyes our but prior it,

used around $XXX billion. be are $X.X million. around We We to

lock that a of regardless the that's to and in -- -- the take So really fixed rates. obviously,

it, and -- there's ways too. to So do we other

hoping So hoping normalized couple your honest totally bank interest with going hope more situation. But inflation X happens. you, is fixed have we're and for in that interest take you sheet somewhere we're should don't it -- we're basis and generate on sure marketplace. If positioned rates, points growth. Fed going have to -- exposure balance We next probably happens, well higher the on definitely going XXX economy. is in hoping of you're and significant have at the rate to to to year, that's our funds your a the depends and We're than XXX that normalized a for between order rate how earnings we what you're inflation to -- inflation if incredibly what's years X.X% next on the over be

Frank Schiraldi

lending. that going is business, on to get -- $X.XX? past to about just because ramp the the in sort consumer that to any Or talked now to terms have really on business then sort front with you provide that to you're business of margin the guide the this help XXXX guide? expect last in rates, new growth just bank of the this question it you consumer the lines that's Does And Great. up to in of

Damian Kozlowski

back lending, to million of doesn't or might we've couple to that based consumer lending our to The more fact hard $XXX Yes. of on the a point own $XXX be We're the we're talking but be that in cut extras $X.XX include certain hundred amounts. a going for business, base of million. there million lot a nominal purposes instead

at higher might that we're So back total we've that looked -- loan kind impacted. some if of That's upside. growth the part we there's really pared consumer loan obvious in areas we'll $X.XX We've where the lending have We'll like and guide. -- SBLOC be said doing that see get that's growth.

estimate. been see complex more from you into it's We've we've clarity source preliminary -- very conservative different and many quarter until get So going know -- $X.XX got we this never as on a funding programs. our And you it.

we growth, the to amount to things like economy have demand deposit for slowing from though a still tremendous leases. in are we see the have of areas have down, leasing, So some see we have backlog and we where new in

offsets there. there's So

we -- it in fanciness let's we're lot a So way. put the of don't $X.XX, that have

it's insulated programs. reliance on fairly big from So new

Operator

Ladies for the to and session. our turn closing like conference gentlemen, over this to concludes Damian I'd remarks. Kozlowski any question-and-answer back

Damian Kozlowski

attending. everyone call. the and Operator, can want thank soon. you appreciate I disconnect you talk to We

Operator

conference. Thank sir. today's concludes you. Yes, This

You disconnect and may lines, now have your wonderful a day.

Andres Viroslav	Director, IR
Damian Kozlowski	CEO, President & Director
Paul Frenkiel	EVP, Strategy, Secretary, CFO & Principal Accounting Officer
Michael Perito	KBW
Frank Schiraldi	Piper Sandler & Co.

The Bancorp, Inc. (TBBK) 28 Oct 222022 Q3 Earnings call transcript