TBBK - Earnings call 3 2023 | The Bancorp, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to The Bancorp Inc. Q3 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Friday, October 27, 2023. I would now like to turn the conference over to Andres Viroslav. Please go ahead.

Andres Viroslav

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

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

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

and as discussion hereof. to please obligation on events. further forward-looking reliance of place forward-looking risks speak cautioned after with uncertainties, no Listeners date these of filings the undue occurrence see hereof The publicly statements, undertakes not date to which the statements, these of to the of SEC. the For 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

XX% with was The expense increased and XX% X.XX% total from activities NIM everyone. to XX%. of growth and X.XX% GDV Good share all fees of Andres. you, Bancorp of earned increased fintech ROE year-over-year. morning, and X.XX% $X.XX quarter-over-quarter our expanded XX%. year-over-year, from The X%. growth Thank revenue a

environment a The and challenging profitability Bancorp institutions. and performance exemplar and macro interest for core continues most record rate financial to financial produce

to solutions continue volume invest 'XX development heavily beyond. in meaningful of our and growth the These fintech new should ecosystem. performance in have products in dollar and on We investments gross in services, especially impact

in of growth XX% participation stated our sponsorship than last solutions we and above-trend XXXX in in I our business expect earnings partners. GDV more providing have increasing to As credit call, to

We also opened Bancorp hub our Sioux partners, collaborative team while future for solutions. banking in our providing the and business new to workspace focused Falls, fintech best-in-class and space create of innovate on

returns continued investments growth million $XXX in balance The significantly result of growth with increase a the in increasing buyback and ratios efficiency, we maximum to into to support policy $XXX our the is in in future. and equity by dividends. $XX reg through believe Since have undervalued prospects. capital average significantly than EPS stock to a XXXX our cost an million shares stock rather focused will million long-term continues when or our buybacks million September $XX. be the our capital of business our ii our We buyback quarter. needed regulatory equity on of approaching is the remain driving Therefore, Therefore, fast our at considering purchased inception $XX As growth XXXX we return our our of Durbin Bancorp are capital X.X billion, a ROE limit XXXX, sheet

new company full conference forward propel strategic year will addition, XXXX. framework quarter call, in to Xth we our that XXXX our our In will announce

that robust services bank the is in how performance announce and already with The extraordinary to Bancorp future outline growth achieved examplar long-term need truly and grow new can will for new We produce little The financial with targets. continue capital, industry. Having revenue Bancorp will profitability performance

our share. 'XX reiterating We guidance $X.XX a are for at

does this growth bond of impact XXXX preliminary XX% initiating we peer XXXX would share in a approximately also This share guidance earnings without the $X.XX addition, to is sheet including purchases balance banks. over normalize our include similar are not guidance. buybacks. where of We And

and We in improvements colleague, and CFO Bancorp and expect the ROE over Frenkiel, third now ROA. I Paul quarter. on The to turn our call continue more growth deliver outperform to our meaningfully continued the color and to peers my for Paul? superior

Paul Frenkiel

Damian. you, Thank

for a which As increases compared Federal to factor the respectively variable result income. its X.X% Bancorp X.X% driver were in interest the and increases. QX and net rate in XX% impact These a XX% loans benefit in That increases securities, reflected on and to assets cumulative XXXX. was of rate primary of from QX equity XXXX, continues and in XX% return Reserve

of the a while In from period sheet higher a lending has were rate variable limited sensitivity it is allowed over environment. Accordingly, interest largely structured rate instruments. down, on years, pay management business, of addition of lines balance fixed investment to to rate its purchases benefit our rate portfolio the of majority to focused the

adjust Federal loans changes. deposits fully rate on to more Additionally, rates the than Reserve majority of the

QX was as transaction and XXXX. higher salary QX also the of XX% volume which XXXX. Noninterest XXXX of increased income. has and provision largest and the increase in $XX.X and on in to deposit higher interest-earning amounted QX million X.X%. increased staff all technology. Staffing our $XXX,XXX, result, compliance $XXX,XXX driver QX net a development and XXXX, expense, financial million, than XXXX those primary in credit $XX from of for value are The quarter at stock expense XXXX noninterest The was deferrals to over of income a Those were leasing. earnings. earlier, payment-related numbers was X.X% in factors the to of fees losses X% other outstanding. and products. loan funding only other charge-offs compared expense source end a increase reflected focus in reduce to or to QX a to XX% on increased of lower QX which Prepaid the expense XXXX in accounts increases QX cost and the increase shares in QX majority $X.X reflected to were deposits periods result as reflected to compared Total share higher in of of X% which a compared production. continue QX substantially payments which XXXX compensation prior will information retained increased of XXXX. QX X.X% debit result respective Quarterly per million $XX.XX the assets increase and crimes, in of reflected to X.X% year reflecting share lower from which represented by $XX.XX of X.X%. As NIM another for resulted ownership higher repurchases periods. The X.X% an stock The yield impact XXXX new Book increased

turn now the will Damian. back I to call

Damian Kozlowski

please Operator, would open you questions. the lines for

Operator

first Instructions] line the Our comes KBW. [Operator question of Perito Michael from of

Michael Perito

state guys and on of as service strong wanted sheet. are of start environment I positioned kind in of balance a the prior here. Obviously, well I quarters, to this banking about just kind have talked you think the we've a

Just should are assumptions can next partnerships? kind curious, give you there of? current new opportunities the of of we any especially think on growth thinking be you're with year? though, if Are new at, that about you looking if flavor Are the incremental that, Or us growth that you're that expecting some partners? products in embedded there there kind growth what earnings

Damian Kozlowski

Yes.

that. or as on substantial a the to So around There's a regulatory been we banking year, X big and service industry. partners add X pressure do we're continuing

more, platforms more the I safety migrating are think, people So sophisticated and to where focus. is soundness

is that maintain So pipeline. to helping our

mature the We because programs, most are, they say we're to businesses in to only those -- no new own taking continue most programs. their what of cycle where

And so we have in great months advance. visibility XX

signed and if program, So obviously, will those got some their programs we in good mature volume we newer of of you've contracts, a But many volume. really know have taking growing a the what already know you're idea the what are. economics. is cases, the because We've, programs,

at and very of -- only intend So to we're We're across broad. just in in entire payments sectors across lessen and cards. care, move we're banks. we're ] economy. the we've seen not We're [ our And health the competitor all government neo remember,

mature be, large with we're So there and robust still a programs. continues to only dealing the us, pipeline, most for

Michael Perito

That's obviously just to wondering as SBLOC rates I'm in to would problem, margin. for if other if which about you in be a forward? for bit good are not persist stay potentially higher, And huge to there's but loan NII here, that And other portfolio smaller you pull the expect levers rebound offset then any the that that levers we that? kind just pull going a if Perfect. Or there any might of portfolio any replace 'XX to guys expect or color. helpful think portfolio can

Damian Kozlowski

Yes.

slow. definitely it's The the basically. consumer, -- most it's shock, So sticker

for funds [ some environment target going obviously, go to X from ], So that's XX dramatic shock, a the sticker to you're around of Fed a zero people. rate if

the So will. And that lessening. can people that's delever

run the gone normalizing. we in off amount So portfolio see the and that see quarters, you has can last normalizing has down X that that the

few So months, our what leasing. that the pipelines strike. too. estate bullet it resolved. will SBA on looks like could It our we for our that -- our dodged across and we we're the business. and in more our that expect business. leasing in be If other grow We went with real that a hurt in And UAW seeing see We businesses, a see

area CRE like So anymore. the across and in have footings, SBLOC, portfolio. had loan multifamily business. Remember, than don't the big book the portfolio the in legacy to We in the XX% growth XX% XX% the more around portfolio we're IBLOC our that in XX%-ish more expecting in roll-off we

didn't So our a did. though our total footings new lot even grow footings

leasing around XX.X%. area that for XX% more So like probably in SBA the in more in middle and

the that's to that bonds haven't in So economic The though, our fact we able in guidance. and we is big think any quiver, not bought we'll still be that. arrow do the

over the you'd we'll footings earnings bonds. an buying that a bonds to premium in do of could and we in I we we're environment XX we rate get about -- scenario funds, another start the normal middle incremental where more basis point we when think those year, if a our of share that hit So normal those is scenario, impact and play and buy see don't the per Fed getting right, $X.XX. targets, out interest into If

enormous our So an we've in amount got of earnings latitude projection.

of to that $X.XX little so we there's out, can lot get we have a we when origination. less So ways it a modeled

lot a we've this issuing very $X.XX at comfortable ambiguous of Of and on a preliminary scenarios, environment now, course, right basis a feel very guidance. we but looked it's

Michael Perito

me, I'll let it. else in. lastly helpful. And That's just Got and jump then for someone

the last Mark, are its over X makeup, the Just quite there? months whoever call geographic bit or a Or of credit bifurcated altering just Damian book? [ on your just curious, really, on curious, kind the get product. kind Any portfolio ], of underwriting as performance the kind entities, I is just of of the end But commercial of performance the that guys and guess, et updates that terms bridge it. side, on real kind we updates we this on, terms can we've in you know of any I estate multifamily into in cetera. of of organic deeper any

there update would any great. Just be

Damian Kozlowski

-- a taken kind event, of we've it. been these No, advantage we've no for doubt positioned market is and But There's we careful. the that very, an definitely smaller. amazing deals. sheet, we've way of had type market very balance the is our shrunk of the We've

any year just So our the Officer, credit Credit very who businesses, sat Connolly, people, We to commercial listen, stretch who lead mentioned, Chief and narrow we you myself our said, with underwriting. and is in need who to down our Mark not way. this is

much, So SBLOC the bit we of less companies' than And roll-off seen that changed it have we you've but price in made trend the cuts. matched all. portfolio, a maybe push didn't growth some that why where would we at little on sure hasn't that's other

a with for flexibility. we're set XXXX to got XXXX. lot So We've very We comfortable be want that. and of up

don't deterioration seen where again, and in multifamily. once we're all not subordinate deals. at in haven't there the But the market. was problems have underwriting We We debt

We have reserves.

X%. our rate have We more cap our any X%, and don't rate people rates do down and interest that stuff. floating some to of are gone We like in loans, caps have

seen deterioration. we credit any haven't so And

Operator

from comes question next of Piper of Frank go ahead. Our Sandler. the line Schiraldi Please

Frank Schiraldi

you're partnerships reasonable kind you economics Just the there as a XX% rate as you that translation renew deposit fee if change growth and new on in better guys year-over-year you And of XX% sign going forward renew terms again the just ones? if fees that curious ones, any to spreads get on income and between or and and there's growth of tighter what sign benefit? seeing because new pricing GDV -- is

Damian Kozlowski

larger and our more give or incremental that kind program, a is No, expense line we pressure pricing XX. but older large to volume because of of to when XX programs good not newer getting we That any for bottom we're discounts, do between negotiate for the differential do the us. an falls relationship,

I and there's think that's know what's new I programs several on. -- coming coming, large

So the grow of they as than sponsorship they more XX%, the fees. XX% first might we the beginning note is will year thing that GDV But we're more of to range, in volume. for be the there or of couple of lease that fee years year. this in expecting X% credit base as the growth higher XX% it of X% next be from But have that kind

including fintech might to So to XX% we think for next credit get sponsorship total activities, activity. fees all end, fee think we we year total XX% in new growth low

it's great going to think really a We've be great visibility. year. got So we

dramatically ago. few than base is even was Our years it higher a

that is relationships like challenge, adding tiers so or like they're cycle, PayPal. or we're year. So because their had a early broken organizations in they and very so we've but a through large those it's for they're exciting a great programs, long rate life at volume, they're X haven't Chime growing And and a X exciting with a

about excited very XXXX. we're So XXXX and

Frank Schiraldi

Great. a is obviously, just on little picture interest here. the bit And uncertain then rate --

here margin levels mean, from getting maybe do in on go-forward to you these quarters? of the basis? you're on your of lock Just dynamics next design, sort a that think I can thoughts by in couple close of even you kind terms What's beyond here, margin... of and peak

Damian Kozlowski

Yes.

yes. So

there's purpose. -- our is on a portfolio So we what of obviously, duration and short, -- a happen, did will have quick our fairly that we

because the NIM the repricing because funds of that is also have. of only we credits So increases, of our Fed not but the

X%, of and X% are loans we're plus, that than getting NIM one that. So X.X%-plus, higher substantially NIM at So and is or that's but point, we're we're right? putting a now new we're X.X% at now new our X% on

So you'll up. see move the NIM to continue

less securities definitely predict to a that, get deinversion balance get on to it point is But bonds, have $X.X though just in there's $X generally spread depending impact if up, over at it's income still least buy around those long-term inflection our sheet. and and -- yield The Fed we'll normalize to deposits billion group. curve, of buy will get an when time, go a NIM. going because same you'll to the on impact the won't longer-term when peer NIM, points much we We sheet can't going we're securities. obviously, over get know billion, funds, net spread we have a have normalize our obviously we Obviously, our even they how really and around that of buy our you're you'll at We obviously. that to XX, XXX basis balance not would the

ROA impact. middle a when and that affect so that's $XXX quarter, to that just it our a and kind around on will ROE We in incremental of we NIM impact might year, is of when net it returning and that don't your our So impact, that's see us your positive base and And levels, happens with add obviously what going obviously, our start be. to but purchases, much income. way. -- it's our the million case would bond And probably the out can't we the also deposit capital, going model in know depending

Frank Schiraldi

But single-digit point we'll the new where to guide think you're of going given Any likely, you the at to double-digit -- going to think outpace still you several scenarios a do on? how Do here expense obviously, do I see see scale we're -- of lastly revenues terms And low front? most next growth. Great. amount that just you're putting model partnerships expense here. that then year get to know for you sort on are But $X.XX. of expenses on of see in just there's growth

Damian Kozlowski

single. Yes,

space So to our space. inflation adjustment collaborative new have in this to lot office ecosystem, and due a investment even we an had year year of

more XX% we're And such that impact. XX%. it going able So profitability comfortable that will with high if has a can to be get between obviously and that. revenue a that level to continue fairly the at a growth, with that's expense We're and try normalized. you be do to We're number, dramatic still $X.XX why we'll

So have impact the we revenue growth. maintain without again, a we'll share. buybacks a of big have in view And think a low we the and will per bond purchases without growth on low single-digit mid a to that can obviously teens conservative expense with lower earnings impact

Operator

[Operator Instructions] proceed. time. no Damian are questions at this Kozlowski, further there And please

Damian Kozlowski

so Operator, Well, joining for everyone thank you today. Thank can much, operator. you call. us to the disconnect you

Operator

your call please this gentlemen, ask concludes and We today. thank disconnect for participating, you lines. we you your conference Ladies and for that your

The Bancorp, Inc. (TBBK) 27 Oct 232023 Q3 Earnings call transcript