SHF (SHFS) 14 Nov 232023 Q3 Earnings call transcript

Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Safe Harbor Financial Third Quarter 2023 Earnings Call. [Operator Instructions]. I will now turn the conference over to Erika Kay, Vice President. Erika, you may begin your conference.

you. Thank and Safe Third Harbor everyone, Conference XXXX to for Call Financial. welcome afternoon, Quarter the Earnings Good

Before of we the and to to start, differ opportunities statement include predicted results the forward-looking discussed please expectations uncertainties and note materially that from including company's events in from projected materially statements. Actual performance. call timing such matters. with or forward-looking timing that remarks results other those and statements, statements on results such financial the the as could respect considered and for Each its actual today's risks be an certain by to or regarding future company's differ operational may reported and statements, outlook cause market made forward-looking results not indication today subject should implied is

undertakes Relations and Safe Dennedy, Seefried, currency. Presenting now to U.S. the at only company date, Harbor. Chief information Risk call Sundie, will heading which during Securities call, Exchange Investor under Relations and both on website. A ahead. Chief Investor the today's release, recorded, measures. Commission Harbor are regarding find Financial All as available today's or will of Executive non-GAAP with in dollar expressed website on this or forward-looking today Factors call press statements of in available which and appears today go the in will these please website SEC, the earnings Additional company's filings at to ir.shfinancial.org. reconciliation any and amounts recording www.sec.gov the and the obligation be Sundie. Safe The on over these company's our financial and GAAP of factors hand included GAAP the Safe or SEC the I'll non-GAAP Officer of can the statements. Also is to copy present speak of Sundie update will revise is website. Today's Jim Officer; you the no a measures are being call Harbor's be in on

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only number the with Not our their issued activity million, banking a for total harbor. balance Our credit ability accounts the highly of relationships, third facilities, and a we commitments alongside growing to $XX level of $X.X present streams are in services. growing sheet from we fourth is lending newly are ongoing safe loan established increased revenue loan we new launched recognized $XX in excess value we of issued solid new bringing million as rates, we competitive growth over term our a In quarter. due to expect quarter, our extend driving million relationships, of CRB

federal we're environment the from funds of X.X%. that rates to of operating rate rate As go has current XXXX rate you currently rising March know, rising a in seen near -- in X

of from been we almost additional to interest XXXX. have increases increased the have helped by necessary saw high for as third also loan increases rate these in the our $XXX,XXX cool and generate quarter While rate company measures, to the $XXX,XXX to revenue income inflationary XXX%

account products, would our to for quarter. earn a to the launched successfully account platform broadly businesses. like the on cannabis I nationwide, facilities U.S. deposited new financial at past opportunity September, this market normalized quarter, lending credit product launched third services have integrated interest-bearing In creating line we new products to deposit credit enterprises to New is we rates. million depositors $X credit into funds. in of discuss to ranging that with we a cannabis This first like interest now an provide to Early $XX,XXX available from interest-bearing

drive providing With for normalizing and these of recent and treasury is a ability like of new certain the deferred tools, in of financial part industry integral discuss XXXX. Safe consideration its -- cannabis to Harbor -- the the to to ability proving to our in an regarding finance. I future for banking its November restructuring cannabis announcement with take would cannabis Abaca play minute introduction

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terms, updated an benefits to while the long-term XX% to providing thank company our I'd to the the reduce their come agreed its while Abaca result expanding and footprint forward a our by were like both for we shareholders able we on our look shareholders. amended Act. executing As of Banking strategy to agreement, upon the business mutually to over-dilution willingness to across U.S. SAFER and

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the industry, regulatory the financial financial we banking businesses solutions reliable businesses as loosen these Creating that Committee to readily operating available. to in insurance on and seek The SAFER in strangle their grow made provides financial this marijuana cannabis our become protection regulated believe new facilitating institutions financial more expertise will passed opportunities are offer September, space. more state-sanctioned deposit services for cannabis in and other services and which normalized businesses. Senate to the and vote federally Banking to Act, advances institutions accounts, more companies As serve

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discuss we mature, institutions financial the the results become believe our fintech to CRBs the of the financial Harbor and the will to over cannabis increasingly partners turn call XXXX. to As as Jim? I'd now Safe September to continues to industry go-to Jim XX, like industry. serving

good Thank afternoon, and you, Sundie, everyone.

XXXX, $X.X XX, the reported from XX% months period. Harbor revenue $X.X X the ended million, comparable of For year up million prior in September Safe

increase reported of period. onboarding Harbor prior activity of For ended an $XX.X an for and million, XXXX, the $X.X of XXX% months the X September deposit million from Safe $XXX,XXX period. quarter versus was $X.X XX, million In the third of comparable for total prior or revenue the revenue XXXX, year increase year XX%

increase higher and an XXXX, months a Abaca investment the months September comparable both onboarding in increase total periods. Revenue to increase an For deposit The more XXXX, was year year number the attributable $X.X XX, than the prior X versus the XXX% or prior activity of million, periods ended activity or than XX, $XXX,XXX level accounts accounts was deposit X from for of prior ended and transaction, revenue XX% for September the an million of income $X ended increase period. the the versus the for month months million the X period. and in was ended of earned $X.XX the acquired X year

clients higher prior to year was interest increase For $X The higher grew the million, $XXX,XXX significantly $X XXX% third prior an or loan interest partners. In institution to our is comparable the the XXX% balances million rates with our versus increase investment and X XXXX, or year $XXX,XXX. months attributable financial versus by period. income maintained of ended September quarter, period the deposit income XX,

Safe $XX,XXX. the loan of element and to Harbor period period year months or months institutions periods has prior placing interest for $XX,XXX this XX, increase program. in for financial to decrease the prior or to $XX,XXX grew a X The intentional $X.XX period and to months September the XXXX, September months ended the income permitted number the XXXX, in year year months income million versus X reduced in X to versus revenue decreased ended by XXXX, was XX, The September versus periods. Safe we XX, prior or decreased program Harbor the of versus X strategically the license ended For greater revenue XX% XXX% $X,XXX $X.X loans our volume comparable XX% program prior the attributable both the income been high-quality X million. year of as ended ended

income the statement. down Moving

include provisions XXXX, total were rent, months $X.X compared expenses. sales, period. expenses X an expenses driven million prior expenses the largely XX, compensation benefits, comparable to and employee administrative services and marketing, ended year for increase services, losses, losses. The expenses, loan compensation in in For for $X.X provision and operating million September operating and professional by operating employee was loan expenses the increase benefit-related Total general for professional

$X.X ended versus were prior months XX total For XXXX, operating the period. the X expenses million September year $XX.X million in

which the XX, taken the has an as the the the from of expense its restructuring XXXX preceding operating of in ] the elements quarter operating Apart charge were second in year net interest, stock-based for net the period. in EBITDA million compared gains to impairment months out the quarters respective both income comparable adjusted compared overall X XXXX, income company the the XXXX, September The and/or in when adjusted the XXXX. a increased taxes headcount, and loan $XX.X to third Credit for for compensation-related net amortization year adjusted in operations separate prior X evaluate is Excluding management to transaction in continue financial the XX, to EBITDA and were to quarter charges, $XXX,XXX of in the Adjusted is Consequently, was loss September on $XX.X year prior Total A to million increase noncash, of of to and XXXX. When for expenses XXXX, performance. de-stack impairment the million we for focus months expense press of company business. expense September of comparable X-K months depreciation ended period. the adjusting separating of expense today. quarter, business the further Union, expenses XXXX expenses all $XX.X X our compute of net provided measure on filed operating XXXX, was to ended reduced and $X.X in the $X.X XX, and elimination was the prior largely costs, amount X And believes months was higher months XXXX higher ended charges quarter EBITDA of ended expense year infrequent attributable level EBITDA million of the of with throughout versus X and net in The associated XXXX, X to and stand-alone reported in prior adjustments efficiency and Partner we release impairment and reconciliation professional net $X.XX [ XX, the the income credit second versus loss comparable $XXX,XXX XXXX. Compared to million. related September ended million placed higher de-stack earlier reported million instruments. from of from attributable income months periods [ operating a $X.XX months better X exclude compensation ended increase $X.XX their the expenses. for Colorado unusual And resulting million service versus XXXX. the loss ] in ended compared

balance in Moving in September reported XX, run previously associated for higher versus activities period. the as at expense rate of $X.XX XXXX, time the was was many through higher [ normal the XX, of instruments Cash million third XXXX. September At the the at employee rate than compensation the financial This complex million in for to run placed well by in year used as through to benefits sheet. XXXX cash company a XXXX $XXX,XXX the to normal de-stack service with cash comparable working and professional cited mainly due XXXX XXXX. of cash ] than million in in quarter equivalents compared provided the and operating of prior December $X.X of end the activities operating $X.XX the

capital liquidity. a working of December September The company XXXX. on deficit our $X.X net $XX.X reported to million at million versus XX, XXXX, XX, Turning

of consideration the capital includes of stock -- the $X.X working to Our owed sellers million Abaca deficit million common with in company. of associated form the of stock $XX.X deferred the

stock company $X.X approximately XXXX. quarter, capital of June deferred had $X.X would the sequential working XX, the the consideration, of over portion period ended the prior an have Excluding than a million the positive of increase million, more

Looking XXXX XXXX, revenue full expect million of $XX we year to ahead balance for of to million. $XX.X to in range the report the

rates business. is beyond the of Looking higher for company the catalyze to pursuing growth the year-end, initiatives

growth We these are to institutions from bring in depository of capital and institutions. capacity. To the also company acquire we with our will return will number their capital accounts. client in fuel bring relationships with This value initiatives. discussions of partners states business these on increase these portfolio capitalize partners our needs are of with new is several total partners, in with that total invest lending to to and institution deposits discussions with new the these accounts, pursuits. total we financial initiatives, new financial In to less relationships the additional relationships financial will than These cost of invested fund initiatives in capital our growth be discussions to the mindful expect

merger have a be that expected any the we that plan so We well-developed such purchase to balance model. of the help the acquired including we we capital of pursue type to model of the sheet and rely cost return and earn shareholder accretive the the capital model statement, business cost shape inform integration, and project income will for contain analysis, portfolio, the this this of price on

to company. full year a date guidance, private not revenue we have to transition our to the issued company from detailed Beyond our guidance public a of due

expenses, debt through believe detailed a ability managing of a metrics ] to or back year. provide the operator I revenue, to We great However, to future operating coming we intend now call for do [ guidance our more turn issues, we if year the the and anticipate to other any de-stack have and after and performance in Sundie, to important that, will shareholders. With key earnings -- the questions.

from Inc. comes from line of the question Waller MXF, first Your Will Instructions] [Operator

financial roughly you Union the just I in much is at release the were the disclosed clients how on financial institution if could You Credit million institutions. in deposit disclose $XXX.X Partner curious balances press versus was average about Colorado that of that other quarter.

question. I'll Well, take that

to or of X/X We haven't would say about disclosed that Colorado. is disclosed X/X of Partner like in the calls easiest previous that is publicly. it X/X But to from that, about of anywhere come way I

at [Operator over Sundie in call this have turn I the closing Instructions] now We no will remarks. questions Seefried time. queue for to our

interest like and Financial. would in to I joining us today's for call on again thank you. Harbor continued Thank everyone for Safe your

We success partnership forward on of and needs in on have next have with grow our quarterly cannabis proven Thank advancing value a the to today's continues which the continued our our industry and day. participants, initiatives our continued results. We model, and great to next given look path to new strong believe network, growth now institutional business strong financial strength meet our you a we for you, are we updating conference progress call. on -- of

This may Thank concludes now call. your and you participation, disconnect. you today's conference for