The Bancorp, Inc. (TBBK) 27 Jan 222022 Q4 Earnings call transcript

Good morning ladies and gentlemen and welcome to the Bancorp Inc.'s. Q4 and Fiscal 2022 Earnings Conference Call. [Operator Instructions] This call is being recorded on Friday, January 27, 2023.

I would now like to turn the conference over to Andres Viroslav. Please go ahead.

operator. you, Thank thank Bancorp's and conference joining today us Good quarter you and the fourth results fiscal for morning for XXXX call. financial

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

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

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

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

XX% floating growth to XX% by double-digit for X% XX% securitization, Core continued was flat by in excludes quarter-over-quarter, loan growth, growth led fourth CRE earned gross accelerated $X.XX volume, year-over-year. quarter, transaction while The growth. year-over-year, expenses you, Thank driven share rate multifamily previously a Bancorp categories. approximately loans everyone. in morning, GDV, growth dollar which generated were Andres. the revenue with by most Good driven

SBLOC loan plus growth core financing with leasing Net which XX% XX% quarter-over-quarter compared impact to loans, loans. driven XX%. management, flat in and with multifamily, and Federal hikes. quarter Efficiency fleet PPP Reserve excluding X.XX% fourth IBLOC growth growth of productivity approximately CRE commercial XX% XXX% margin dramatically of includes from IRA significantly grew be includes in focus SBA periods to XXXX, in to ROE and was by X.XX% a Year-over-year which the year-over-year. Institutional in over interest prior of X.XX% and rose continues to the key expenses growth rate

year for and another strategic Bancorp. progress of financial the was XXXX

improve all platform our risk operational improvement partners lines. We oversight. management credit continue investing and our while with to on ecosystem business efficiency functionality improve continued in continued show financial fintech should and for focus XXXX our rigorous and a to across

our be Durbin In sustain II, approach performance, are as focus $XX addition, our determining will steps in and we now which limit our company. established exemplar billion. will the of a next sheet strategic attention we 'XX major After balance as regulation initiatives to growth profitability turning having

and broadly more from EPS platforms the technology distributing other both by to GDV the growth will ROE. profitability. fees limit ability that liabilities. profitability monetized unique be and not of sustained that and incremental our can and generated will capabilities increased services assets be billion unique TBBK's This that will growth $XX believe and We limit sale generate drive

full million of net are not share our share, we quarter or including year. $XX impact guidance $XXX of a for approximately confirming $X.XX million a of For buybacks XXXX, the

our We will more learn guidance we update in the coming months. as

macro potential even, environment. stress However, in we significant believe economic our and guidance is with even the attainable ambiguity

Paul to full the for year 'XX. details quarter and fourth turn I our more call CFO, over the now Frenkiel, on

to QX in X.X% XXXX Return were in Thank assets QX Damian. income. These significantly interest XX% driven XXXX. equity for increase a compared and by net on respectively XX% XX% and and you, were increases X.X%

majority lines rate lending a of interest to rate to the normalized sensitivity addition sheet the more of and of environment. structured business, In higher benefit from our the management balance has

Accordingly, of as down to purchases rate allowed years, fixed variable largely focused instruments. pay period is rate over a portfolio it on were limited investment while

in on loans to interest-earning in The QX the Additionally, changes. the assets XXXX, the X.X%, compared while XXXX prior reflected over rates represented also in increased increased periods. deposits in adjust which in QX majority XXXX. yield $X.X Reserve were significant cost than factors deposits million more fully had Federal had on the NIM QX increase for Accordingly, losses $X.X to a rate was of to QX to million of These X.X%. XXXX provision X.X% credit the

an included could the a result forward-looking which reversal of additional of qualitative that million that in economy in in model our economic to in future, the $XXX,XXX provisions. resulted factor adjustment upward extent component uncertainties $X.X The deterioration forward-looking, is approximately in economic Conversely, the would result. CECL the provision

in in $XX QX QX FDIC was insurance resolution salary payment-related the travel our accounts comparable funding expense to other was primary source expense. for the XX% reflecting and income million other debit driver fees million and increased XXXX, XXXX of to various are and of compared Total in legal matters which Noninterest a income. QX and XXXX. offset noninterest $XX of Prepaid payments largest expense a and XXXX decrease decrease QX increasing

$XX.XX at to from higher outstanding. by rate resulting quarter Book continue share offset year partially end portfolio retained Quarterly increased reflecting value the environment. XX% fair value reduce earnings, should share to the shares $XX.XX per a earlier, investment adjustments repurchases compared to to

call the I Damian. to will turn now back

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

Your Instructions] from Frank comes Schiraldi. question first [Operator do. Will

guess, from to strong these -- have along GDV that really, thoughts good you of to guiding quarter on something you guys growth income been could but your if here? fee year-over-year. much on just translates how card Wondering lines through growth? And I runway

Yes.

all we've back trend. was very had the normalized year building a down to never stimulus. been this think gapped I good, We quarter. We and

XX%. think it X%, we and we're So at now had I X% was

range, forward to growth I to this going think XX% see year. GDV you're this XX% going

before I X%, that -- think maybe XX%, see the you're kind before that to of into big And was XX% bump. going translation the was fees around stimulus even trend year-over-year.

we very some that our in When pipeline, quickly. at very real So successes we've ramped payments have corporate encouraging. look got up

be level. it's going looks So get but be Hopefully, it's it a like at a to we'll to looks going that like bit strong more year. it

quarters. portfolio? little on if just certainly slowed Great. loan your just And you I couple bit, wondered that growth then could And has outlook talk the portfolio the growth IBLOC growth, SBLOC, over of in last about a for

little to historic shock. you but seen this on this people borrowing liquid rapid get change I is I mean is we've thicker in -- so Yes. likely it a you get what get mean That happen, what is that before. rapid -- quickly a When

So that were offset by down more it's were we originations. be a bit encouraging to And honest. only but payoffs X% there more little were

when for for by the of rates needs normalize year just then should, rather middle than people that So and liquidity. -- the lending not get interest you'll stop, just lending people

Once some previously won't XX% So we'll we're be go -- be normalize, we're we'll be coming as as it -- back we but had to previous historic -- it won't sheet likely. have won't closer obviously, like and the normalize. balance they won't growth but to limit. we things have growth really dramatic until that It trend,

come XXXX doing wondered as of you at things cut of two that get of end this the perhaps And you the do cycle. to protect what sort a reaction about I could or finally, just Okay. if margin if or here we margin we And you're XXXX? peak to rate then expect rate into talk

Yes.

side. variable was rise So was we be totally ultimately to as quickly. would -- interest we more a opened -- But there we rise Paul saying, was balance in the a be And than expected we've but going very pivoting sheet rates. and we've thought are dramatic left thought there to our really this

Flex. Project project have in We a place called

fixed So we're exposure. lot to a put going of on rate

is lock fixed a have again, to a rates now in we and once it do X-, exposure simply X-, business. forward rate securities. And XX-year our rate way fixed bought We then on CRE haven't -- agency We're we to business. in putting easy our X- One commercial bond. more in through program

the balance part out of variable aware situation we're and the to our lower very as rates. at peak significantly we're we of sheet So going

like businesses, it rate think I we this we more and started were variable that's process, up When and variable -- those didn't into XX% this. rate came went buy we exposure. of growth fixed we the with any

have up in just to balances as the that we IBLOC, like now thing SBLOC things So rates go good area. And of the drop, is, will turn course, around.

impact we because going we're we've those great room We're to to that. of a got do of plenty those rate So models. soften position really And run changes. in the interest

rate fixed in, be we'll and that think, amount forecasting able we're an I lock of increasing to So exposure.

to do for purchases. One bond account thing our financials today note, not

even earnings per the to exposure thing XXX So that fixed share bond one haven't we estimates. rate built note the side that into on

all the just about fixed Okay, at? side? That's products are Or you loan exposure you as sort right. helpful. you're you about multifamily thinking talk thinking financing And in what are the looking can book, rate of permanent about on

Not because transitional side loans. and CRE -- market perm the the but of there is a for rate fixed

lower become dollar numbers at very interest rate have caps because So especially expensive.

to we rate interest on interest the usually require So protect have our against loans reserves. rate caps in and volatility

loans. side there's for fixed lot not a rate of programs there we've -- out So on transitional the these

just recently. done over we and $XX So it it's been already -- launched million just we've

will variable portfolio, lot the -- that remind of but X-year the on you on a is we a one that on things our give downside. also about cushion. it's great not variable you floors I'd So upside the And it all of have our

the So side. the all we CRE have floors in on loans

those So the do significant won't on side, affected. downdraft be get a even rates we significantly if Fed

Michael next KBW. Perito comes with Instructions] question [Operator Your from

so, up bit But you work side? to on book think mentioned since two follow what, drill of and kind putting bond just that say investment of in it's start obviously a guys are mean on maybe you kind I which growing? the a good Or I should fair stuff. little out months will start years so X know it the margin Damian, But now. you Does we curious high-level assume position on I or wanted been a next what guys about kind bond a of cash liquidity I to of the think bought probably bit how the to the portfolio? more specifically. guys there? looks or then us like the trough excess functionally bit questioning next thinking you X down quarter that some position line and over for you it's more really here would

yield -- Yes. almost everything, really Well, thing. the a curves, watching everything. we're We're it's -- daily we

We have of deposits limit. of room have ways to sheet because to plenty so much have plenty we balance we flexibility in the up get our and Durbin

we're like exposure lot. lock up when rate to we fixed much to give to in. take might not how We take going exactly CRE but it and we're loans I And deciding margin also a us going have, little years. up to floors are really X all said, on the protect for we So we're going give which a

SBLOC is top So without very which that the quickly interest on really we're those rates. portfolio all that And if adjusts are recall, really one you with loans dealing of -- it. with floors are demand those

fixed that So got put flexibility It's to that we've on in loans. we're amount every rate of not incredible balance an going just sheet scenario, demand to exposure.

there. loan lowest in actually And higher at coupon and look portfolio. we in yields, if have you portfolios, our yielding -- that's rate fixed the our protection So

to in to rate a a we're the order more fixed very lot balance and exposure. able So on position sheet good put flex in

some the very business on quarter, various the where say The this I growth, better I loan want catch-up to then don't deposit some to slowdown here lines? balance of And intentional pipelines growth sheet XXXX. are That's a was the on positioned today act little And support was there just in kind side. of -- good looks any think in but helpful. on the bit

the curious what kind of expectations around of Just growth? were there near-term dynamics some loan and your

mean, I at did that's actually have wasn't some us. not Well, catch-up, all And helps We're It right. not though. stretching we purposeful we're economically quality. though. stretching credit on you're Yes.

leasing. into get We're when low, very, standards to careful. affected bit this market but we've commercial you underwritten a like to the -- We're when times not still get in growth been very get just big The being that's delivery is for getting it there's some to in side. had and car in rates probably. time a -- we by still So do always to. have the being we people people is underwriting the strong There announcements commercial backlog little volumes about

even while -- jumped people have rates on that invest have still much the the per they so SBA, know through don't went we new very because businesses. being even in has expectations But flat to XXXX want slowed a really the the XX% government that's up earnings if we and will You're careful guarantees our if at X%, share. interest or with on down meet

I significant there's left scenario upside So very with -- our upside really a out think been We've be in lot it planned we're growth, left careful we of growth. guidance. a get bonds. things by -- historic potential. looked a at really, If would obviously, of We've We've there trend out potential. and we've lot lot out a of

flown on this top talked significantly trend. kind past the -- during a we increasing of while interest we've our mean, range NIM. right has increasing income, we in And this restored I out we've net where would had getting earnings quarter, were obviously And I X% We're and few before our that. GDV calls thought -- to

here. of adjust going there's And about lot. if quarter, going to take in And a have hard look and at, So the lot of guidance a know by we're a green we'll bit have lot we're more to then little know first January. rates. a more end a And lights also to we the information

want think too. and going and to an quarter I you to what So is it's it I I exciting be know do, know

with structurally Obviously, me. kind NIM, just profitability held a north working outlook you you have for guys then on. I have years X-plus almost expenses of know guys And flat this X%. for higher have initiatives you're lastly mean, I of now. you

think there competitors. a the to on side I customer disruption been has regulatory there's some little actions because

than we of that? the be the you I Just OpEx curious, and Did is years. guys year a is opportunities? there past Or grow room about some rate think this the thinking in that growth, there any about has -- should more bit to as we for see investment it X mean, how

Well, we're next affect will productivity that doubt. core one always the but focused is And there -- on -- no thing inflation, there's efficiency that's us year.

employee One of the is just area cost.

-- we've X, been if I with expenses. got all historic on now you been things almost and different a look years, I restructuring So basically that the mean, on flat mean X the basis we've we've done of side. that's operational

to side that's going And zero. that be our investment historical continue perspective, see not inflation. We the there's we're been to in issue We're isn't to core the because people. really not much from X%. so is invest while you'll to think where not in side going from. a going It's of to be going to the business, I from come at cost regulatory want our come embedded our

and we're our in Now obviously everything from inflation GDV benefiting price and else. rate

that differential. think a you'll big I year is So this still a get

probably You're growth. at has going least our due costs will have to expense expense, have due significantly above big differential that mostly have won't but and you this trend expenses revenue revenue trend. to be employee growth above that what a to -- inflation. between see flat been has year and been flat, and between But core jaws XX% more which than We'll you'll

There are at no call [Operator turn further will time. Instructions] over I Damian Kozlowski questions now for this closing to remarks. the

Thank a It's operator. a for progress. us. really good of -- was made you, lot it We quarter been

tell really more us XXXX. looking we're quarter about forward a said, to next to I the As lot

to in ultimately information about with have when of which lot as on the to business. I So get how think information, quarter, first continue the a end we phone. this XXXX talk we to end metrics measure will we get the we share And the more might on everyone we'll

a have great day. So thank you, and everyone

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