Bancorp Inc. (The) (TBBK)

Andres Viroslav Director, IR
Damian Kozlowski CEO
Paul Frenkiel CFO
Frank Schiraldi Sandler O'Neill
William Wallace Raymond James
Matthew Breese Piper Jaffray
Call transcript
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Good day, ladies and gentlemen, and welcome to The Bancorp Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to conference like Viroslav. to now would turn over the Andres I

may You begin.

Andres Viroslav

Good you results and today you, morning Thank Litoria. thank Bancorp's quarter for third for XXXX call. financial conference The us joining

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

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

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

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

Damian Kozlowski

June today. of Bank. earnings you is the thank of quarter you Bancorp My since in name X, CEO Bancorp Kozlowski. Thank you, Damian XXXX. And Andres. welcome Good and third to been positions I The for our President call. these and I'm I've joining morning us

million this net The earned quarter, approximately positive million third operations or $X.XX a In share company. on for step $X.X The revenue. in another quarter net was Bancorp $XX our continuing of income of XXXX

are businesses of approximate our from commercial gain securitization an of and quarter rate our third loan in floating improving business. realized XXXX Bancorp million All $XX the

Our run improving while efficiency. to management businesses, improves tight expense across continues earnings build our are operating revenue as rate

are highlights the our performance. quarter Here that third some the of from drove

in As this we have plan previously, plan tracking our key version Approximately non-recurring is the million a internal that by which was penalty website. and are updated discussed our in In of own our on after-tax be implemented, quarter third business FDIC is issued XXXX. well integrated the a due exceeded civil $X.X with were There recently quarter our to several third budget should initiatives. we being business conducted monetary expenses from the XXXX with added impact. one-time $X.X connection million to

still linked to position expense $X long-term $XXX were accrued approximately million. run generation operating exposure the evaluating estimates and annualized. sources. our employee quarterly or Although Moreover $X.X voidable to that accordingly. future penalty, a our $XXX,XXX with regard the expense expense resulted we from civil monetary after-tax reduce by are we will contract have million had other revenue $XX million running of approximately expenses By quarter rate In structural also the $X we million from at approximately this million, additional securitization current

after and implementation operating cost efficient, additional platform rationale, process its innovative cost Our we is operating XX% are improve in and Cost full are productive creating a completion restructuring XX% savings reengineering X XXXX. continue to to Preparation begun. more savings has possible growth. our our saving Phase as support Expenses with but Cost of expenses XX% show hard to about continue on to platform target focuses This on determine, closeout should are approximately improvement. for implemented. XXXX. X Phase of

process this quarter-over-quarter continue to of the to year-over-year. is and revenue grow both productivity Core However, platform. a the revenue while higher create of focus improving our growth, main

compared to by XX% XX% loans grew business growth XXXX XXXX quarter-over-quarter led annualized. net was Third third XX%. and quarter grew quarter SBA by revenue business which loans, SBLOC led Year-over-year growth which grew was

We process are regulatory continuing real concerning to our make situation.

We and reducing are integrated the progress risk now our enhance with program our in improving program integrated processes overall that will management, implementing is made significantly compliance Along and regulatory this our BSA/AML, consumer risk. in believe soundness financial compliance third-party and risk, our we compliance safety and management compliance. enhancements

operating team In our another remaining issues of that regulatory requirements. was performance on of Reserve and their America, The seasoned our progress and the has Federal of all Bancorp. third to quarter City remain reorganizing enhanced teams is step executives Bank summary, the very any making J.P. new right significant enhancing improve we ability comprised Our AIG, and Bank, current and in the direction focused announced from quarter to last future We Morgan, the in resolving continued for company. in meet face

Now Paul more I'm call the our in the results review turning financial to CFO. Frenkiel, He'll over detail.

Paul Frenkiel

data budget, you, That significantly was in the its fee XXXX. than million will by Consistent processing Thank $X.X with quarter plan the increased for business tax exit $XXX,XXX effected more costs data quarter contract net reflected penalty which exit charge. third processing a reduce civil our million of Bancorp Damian. non-deductable and and future $X.X profitability fee. money income Net

quarter various million compensation quarter production performance compensation. $XX third income-based securitization charges the for included and in approximating also $X million associated and the other income The with

continuing commercial of growth loans leasing, in is held-for-sale or third income quarter also earned on $X.X by XXXX reflected to SBLOC Bancorp's approximately which continuing major only revenue increased reflected A million Third securitization interest and loans. lines. Interest growth SBA, net lending year-over-year increase the in results compared double-digit $XXX,XXX. in quarter income

income interest both million of and reflects December of securitization $XX net the However XX primarily in a million. March Reserve The basis XXXX. point in increases impact quarterly of also result as $X.X approximated XXXX a quarter XXXX related increase income to the third Federal

grew lines which XX% grew SBLOCs portfolio for Our largest year-over-year. of organically security percentage That credit leasing excess loans SBA was X%. comprising continues had XX% and grew loans Total XX% have X%. also over X%. of in balances, those low of yield excess business charge-offs. yields held-for-sale, increase of year-over-year yield totals to in Lines in in loan portfolio XX% historically excluding which year-over-year. back balances The loan grew year-over-year

continues Compared largest funds rates. Prepaid to and to higher cards, the dollar increase market The our should to of total organic a more SBLOC cost fully amount spent X% and source, customers our a a client in prepaid fee, the related increase partial rates. modest market year cards programs rates. of to X%. reflected quarter to expense, loans quarterly a grew the also reflecting quarter expenses card which deposits money non-interest volume in increased quarter revenue offset gross to are in also prepaid and considering investments who Bancorp of adjust third addition to increasing work and interest demonstrate that million After funding structural adjust future benefit their results. in accordingly portion our Prepaid in only as while margin these increased driver third are on processing growth on and return recent contributed civil related fees and only source a Reductions Our penalty, the terminated minimally began or $XX rates fees prior programs certain compensation card expense non-interest third impact in toward on being exit trends. increases to variable of rate should interest The rates continue X%, market changes funding to aforementioned deposits in quarters. to new card non-interest income. data our while primary previous adjustment goal. SBA largest the The to

proportion continue noted, linked interest impact assets the in X.XX% deposit a quarter the yielding asset quarter and for X.XX% average interest expense opportunities as XXXX reduction the of yields quarter. The XXXX XXXX increase was in instead higher in be the margin rate reflected to higher third pursued. Net a greater December March It lesser improvement margin X.XX% of XXXX of reflected versus additional the of As compared earlier. over resulted in quarter in third which to noted securities. net in also costs Damian increases loans and for

to decrease of and average in call and Damian XXXX. of management the company were holding earnings result X.XX% quarter questions. That the at the end quarter third assets which I a efforts $X.X leverage reflected respectively back the comments X.XX% concludes and for bank the balance sheet turn will and million a As at third my of ratio

Damian Kozlowski

of [Operator we're Operator, going first Thank questions. Frank the Paul. question from come you. Instructions]. Sandler And you, to take O'Neill. lines to will Thank the Schiraldi open

Your line is open.

Frank Schiraldi

morning. Good

you look you both got mentioned and then expenses, processing and number, money to million I Damian $XX Just $X on at have and tied data if million you the on that you million had Paul million. the penalty -- have then securitization $XX you stuff that $XX and pullout if you think

just $X So versus $XX million was $XX of why million. sort million wondering

Paul Frenkiel

really be. for determine is and to in incentive-based any part expense, what difficult and It's production single timing will large of it's forth a compensation it compensation quarter so

Damian Kozlowski

$XXX -- targets, beyond calls If getting that wanted we of you original where to was on a low down look go. historically the our beginning million we had talked about $XXX million to number where previous kind target,

any a estimate we it very basis is doing. will quarter one best what run can expense we be $XX like and we it you. It's conservative the we're be track at when we looks not So down overall look looks that base think our should that's and on million, it really like give rate either up it carefully,

Frank Schiraldi

$XX the million at stuff probably at of still think outside securitization we core talked and to in this of I at should about the just expenses the look the sort securitization if in But about. I side probably side about was should expense look quarter of was and least quarter a the this revenue pullout number if older Okay. terms I I think

Damian Kozlowski

processing bit does that's around just just and have want -- different timing math generation, purely role. things accurate. are that a to linked a it do and just to that's revenue that's but caution math that bounces lot of play I Yes so a that's contracts but We

Frank Schiraldi

Okay. try way always be the in saying line to the up doesn't kind revenues it that mean where but I you're was of can guess. I get thinking I quarter the expenses same

Paul Frenkiel

choppy. It's

Damian Kozlowski

It's choppy.

Frank Schiraldi


Damian Kozlowski

GAAP. have we for of it Because course align to

expenses align that’s expense, So to one-for-one as the Phase obviously we a X ready. but about have XX% have still of you And not always. we know

are and manage before I $XXX expenses, it again So actualized case to lower. get and so in revenues there revenue are towards $XXX or -- depending run rate how some securitization possibility the and the the such call that million have where will some did. once can the there there But continue a down said base from annual those this is it's overall it's affect more it little bit on the quarter as and thing particular like this this on expense in good million is

Frank Schiraldi

with for saw were Okay. sort the revenues had And these just the gains securitization you time those one sticking second of on then securitization. we of I doubled one that think last

frame think the any us timeframe for over how XX-month over to just say is difficult? So way or to given that revenue securitization is expected from period there about too a

Damian Kozlowski

spread put that into gain. you; so order frame loans is No, things was to you the and high was structure, which difference originated one side expect, in when of was for contagious, increase it happened this the we is gain. the a a a would there source that of One, what loans -- a increased of I'll is the couple the when this

increased we process. and been time have process source improving lot credit very -- Another of spent gain a management risk that underwriting is of our

each which that the to the of enhance. structure rating the of to we to at distributed better look levels institutions, would went agencies better ratings, we got securitization the So levels, be made levels

on X% And also sheet ended holding X%. versus structure up of -- so the we less and balance our

gain So what the from last increased increase bit of bigger, securitization a sources in also so three This time. resulted over are in the those that. gain substantial that's was this

case. on tends least amount a -- that because business mean probably to $X that number million is in bounce market depending is in edging be kind that's particular less This no there conditions. the volatile of of the that gain the little could CMBS this So business doesn't

So it. then and And what the third-party is underline to sheet cannot you. we be. the cannot should can structure we on bound a that gain gain. I is book it gain it best our simply by we predict for predict. reviewing done assesses after balance we assesses like the as The But

Frank Schiraldi

time. that of Florida over another plans, maybe on that in you know Okay. maybe and have specific fairly would then could things off move positive us part expectations And just talk slug you discontinued as a down I the know in book. finally just you that you there's short-term here Mall credit, anything could this I of look whittling for in in if obviously the little that's the works the with about share OREO? wondered

Damian Kozlowski

Yes, and and discontinued to of believe continue that and cash flow when final down we on when hard community very working don't at the something sell very investors aggressively. the Walnut to around whittle all and We're loss interest we will want it's We can't don't safe. predict. Community, Street we In both need to The foot. the Bancorp a generating our

discontinued aggressively down Street. to Walnut So to we're going work

the have we'll within can't disclose with disposition a in now mall a the few anything now currently marketing guarantee process. that. confidential marketing for As I it’s share I But it's that because anything right in of But you in a confidential next asset Hopefully process, I it's months. process. a can't marketing can't

Frank Schiraldi

I expect words about thinking? don't period terms to and the in said put mouth thing size over is that mean your sort I in so shrink in is and of think but half the that any of Street I past I to in there this you've think change by Walnut the you XX-month accurate discount in want of

Damian Kozlowski

have said that's and goal. our I that

Frank Schiraldi


Damian Kozlowski

see have way. added it path the then it. disclosures assets type marks, but And the so size year, a lot cetera to of that in as mean what's over the we've I a a we're we'll at happened of there's you realize substantial look think in get be working it last we That people also a methodical if change in portfolio. can So the doesn't how to able the to of that idea et better down you'll

Frank Schiraldi

else ask will someone Thank you. all Okay, right. let I question.

Damian Kozlowski

with to Good Frank. talk you. Okay,


William of James. from you. Raymond is Thank The next Wallace question

Your line is open.

William Wallace

and what you've some a loans is what declined sales more sold this loans was then million CMBS $XXX the didn't is details sales, loan significantly loans in I around balance, held-for-sale the On give of just that high the bucket volume that all loans volume you your related can given business? got -- that $XXX of surprised I'm assume to held-for-sale million maybe

Paul Frenkiel

No, the held-for-sale. also We report we release. those SBA in have also press loans

the loan page. So types at where bottom we the have of the the individual detail of

is higher So the yourself. those out you continual because production. you then have can we But break it's reason might expect

Damian Kozlowski

on Yes prior just we a lot the to sales. loan put

So quarter-over-quarter that see difference. you a won't big of

William Wallace

the How big was loan sale?

Paul Frenkiel

Approximately $XXX million.

Damian Kozlowski

$XXX Yes, but it's a little bit more million. than

William Wallace

or know in? stats And plus $XXX so you selling minus you you're million be book I kind gains to can't or might the fill there -- you're to you if able the that's was other might gain predict but of expecting

Damian Kozlowski

of really what that holding The case spreads, bound. that are determinants model the gain be the it's is on it's we I is sheet it's four was to range. and to to at No, maximum. -- And the end likely Frank usual saying market much balance I because a underwriting, between up our how and is. range, the kind three the the credit conditions do we three extraordinary to gain third-party the plan of the like uses four of at the the two most three somewhere the four year, but will two think minimum XX We

minimum that for achieved. million could the probably obviously be more year was it the a maximum or unlikely and was as can you think it's $XX of would So probably around but eight-ish be

So to it just to keep be safe.

and the net that plan to lose wanted don't from when of these interest get income level as very securitizations, so the so We business, in to we that we to income up we we we for be too a keep interest loans smooth much lot securitize obviously process. want also

So we want to ride it smoothly.

and strategy And built securitization two XXXX. got because in been we -- that out a substantial which obviously made November using rate to that also of doing is were We capability way million CMBS lot we And think this $XX supporter for net but this XXXX. the remember of institutional by were we transition the floating interest gains risk. and get validated two of this so decided had also obviously, sales of that you're out wanted hedging that We we business income out. business a I of -- another and the totaled business

William Wallace

Okay. with is which then the And as the XX% these think of maybe impact we bottom-line think associated sales XX%, mentioned about about own of expense as in about our we million you $XX $X million. sales models,

around So is be kind revenue? that of should the of we expense about variable thinking XX%

Paul Frenkiel

reflects but million $X items. securitization other connected also $X -- to The the million expense

to It there lot difficult of really it. to vary a a it's determinants assign So are to percentage it. can

I do salary changes expense how give basis which you a you can't is in the really primary only on to really that is expense quarterly thing So the can percentage. impact see at varies. our look The a and

As to if that doesn't and Damian have do we with GAAP always don't but line to best associate revenue pattern, respect said, the those you it with certainty that it follow expenses. our up

really can't percentage you I for that. So give a

William Wallace

line started disclosing the release salary you in Have press or the no?

Paul Frenkiel


William Wallace

okay. No,

Paul Frenkiel

you or weeks. that and But the working see couple you in will week we're will see, a XX-Q of half whatever, on a

William Wallace

Sure. that since press be we release helpful the up -- model to the but Might in release disclosing start

Damian Kozlowski

We that will consideration. take into

William Wallace

was below impact stay? to you. the I potential around drop back the that some to can like think The we're leverage or that you Do think pretty the know quarter. meaningful ratio? the will you you Thank ratio leverage move business have we seasonality is -- which do over X% there you're prepaid X% Do here feel in we which

Paul Frenkiel

over it in keep to this Our goal X% is clearly quarter.

for because it in the refunds. to But if even return normalize deposits following quarter, the of when goal in go you our seasonality percentage terms you of over first X%. a the of that biggest tax quarters quarter actually under that should grow see we in one is course to is and the Our

Damian Kozlowski

if that's were what's going where to the where And in is you we here year share be this look power clearly now, book there and obviously are at we year the accreting per growth. beginning played out of capital growing earnings

that capital. is think the that to doing the we expect goal sustainable, and what manage and couple reach to quarters. X will to next in we X.X% add So Tier want of we're want above it we continue we But bank within we down is think path the

William Wallace

you. prepared to degree mentioned in cost for percentage depend X Phase on additional potential it thank side. your remarks could giving will some you to And that Damian XXXX success Okay, captured like the revenue saves you that and sounded then the the that were suggesting XX% on XX% in be generation

that revenue $XX-ish the that say maybe about are should you’re that XX% able unable the through initiatives you're interpret growth whatever XX%. the that these I execute the percentage run if on XX% revenue should if to we about should and bases So to rate drive successfully to won't that million you're is cost mean growth be talking think But end that to XQ we strategy by see of reduction a XX% how it? we in XXXX see to

Damian Kozlowski

you. Thank

had had contracts? looked then a the expense to that organization lot said ourselves and we trails of about on to on eight I did and think realigned they of renegotiated? can Do you everything we these T&E it's everything organization, big and you from -- our one spending It's basically hard through me get be four it and did Let impact that are on we need would rational based in obviously that and entire the down. we What staffing we is it people whole there's capacity a two else? determine near-term that leveling the that to to the a a a And What And -- first say and the at all went to the second. re-engineering can phases see obviously. cost efficiency is process. big envelope are on the we for impact as it hard levels

of a a So bit approach. but white is the little more sheet reengineering

efficiency it tax the so forces least your you in combine aligned business, on force and And the is time so of you what where And of clients does it saves. end I've it is similar tries what to get really it the rethink every back work to you align But light the it that's sales things do how it banking has results that how you institutions. with and done revenue you're always almost at to productivity. cost at

kind and coin, it's expenses that, make sides our say of the that bank there if at sure the expect those expenses at to growing the the very was revenue obviously to when but hard not going closely and run had grow of it's organization we're growth. look our two from the minimum, So if we even don't past decline. not But a revenue everything to problems

kind where revenue to that to We we much minimal today are through pretty goal obviously where of our had expect revenue the around we rate. we XXXX. at this to continue would and if we are be one hold number in then grow So we is continue they to could big think be are growth growth a expenses that they expense XXXX win where

think healthy at and going a So to obviously big have three years be no we're want a the we what jaws next that And over reasonable a this matter level. before I've We would are. the win to for a they company. have jaws the really big, said

we to we growth. revenue to if negative zero we have So have growth have expense jaws obviously have a

we're business the managing how that's -- what that's So right.

rationale achieve it's work have I to with enough think I we think here and to that.

William Wallace


potential backstopping that initiatives deliver getting strong revenue? as that's to you're we of to XX% stand of actually XX% here a if mean that today by kind don't cost saves other XXXX, anticipating the So of not end interpreting I'm

Damian Kozlowski

on it business have aggregate XX% growth, an be line productivity as going is may restate if productivity revenue don't what again its to of one looking a see or line. expenses more don't don't the understand a saving at be revenue the more create revenue have of the me expenses better run the time. growth XX% a get healthy cost But enterprise, way to the you we and we're we to to basis if only and make get rather managing to sure let jaws than contract. on once grow in When want look that it out Well rate that is way you to

However that. we of a expect We've got don't opportunities. lot business

We have strong businesses. in growth pipelines across our

So have expenses the growing growing. expenses to bank rather that we're at expecting to in manage institution a isn't cutting a

William Wallace

out ask you Okay, and I thank question. will the Damian. let somebody step else

Damian Kozlowski

Thank you, Wallace.


Thank you. The next question is from Matthew Breese of Piper Jaffray.

open. Your line is

Matthew Breese

part just into are of going just what what securitization originating give in to commercial was those given guess the are where Maybe idea team of go I the the place back loans as the that shuttered? C&I, me fully or question loans loans estate and one they kinds operation real can actually you an held-for-sale, the of geographically commercial

Damian Kozlowski

worked Yes, about underwriters that The underwriters runs people are The all They very all in in is experienced in Banks. institutions. organization the the we very different major different operation. York national. franchise person are they XX, had New at New Community York than is XX the

So States transitional they're the we out United mostly assets put and loans. throughout

fast or are all less years in commercial these they're amortizing. but There estate, lot is three and for loans, usually of office, big extensions multi-family, they’re so So extension, with one retail they are market a real there. they two

many of life halved the fairly of in amortize years these being structures so. or quickly about So over two type

lot of a the people, for appetite there that investment across is appetite there is stack. of lot and they're a So an

wanted investors to AA+ the is BXB and are there do tranches want the that then institutional people or guide equity investor. So there who

So it's very market. a healthy

is the over reasons last the that demand in few we these of and because of that market of assets the characteristics type is of structures how the there and can you play changes for changed if exited has securitization market. that we well great these market in One the won't CMBS CMBS This of be years. and it the type niche

marketplace, in not this but So of Is not right this we balance the opportunities last we sheet gains going we producing, don't a lot substantially are we on business take the up we like estate are to in real can now quarter. business it like its build helpful? doesn't, it’s did that to risk we take and grow our

Matthew Breese

Follow-up helpful. is what talk the need it to a securitization like can the horizontal and strip or is sheet, we about bit rules is little that risk the vertical? keep the on Very retention one just with balance you saw, you

Damian Kozlowski

imply. don't They

Matthew Breese

okay. They don't imply,

Damian Kozlowski

kept it the of we few structure, percent a X% this first about to deal advantage want deal of we we because the right each hold held X%. so We now held

for did as public piece we would policy the a to business decision. assets requirement there we limit. to business, is that said We when sheet. hold we we are As it that a amortizing gotten talked on first regulators this more these might up the or when a of to no one quickly us We hold but hold in the balance

Matthew Breese

to walk the of back just versus growth revenue me going through the maybe banks. some for then And the commentary, okay. expense opportunities Understood,

net does be can then look do balance what follow-up? income Part So two size as if what the you year-over-year the expect sheet what interest and about loan a talk to that of for be? growth would we imply do you --

Damian Kozlowski


Paul here. let I'll So step

Paul Frenkiel

the of So with growth. constant to balance size modest the we're relatively keep planning sheet

investment certain -- really some that saw have We and sold securities can have past the securities portfolio. decline you are that decline, year modest as be in done we over

which growth in and and largest on X% -- the which that fairly in yielding limited less is capital we we're ratios. SBLOCs growing is than the you if increase largest the That yield are securities managing our portfolio keeping said, and the our to mind So want portfolio.

without continuing a So basis lot even of there on income is sheet to interest balance room net a increase growth.

Damian Kozlowski

at that now deposit if look you our low. ratio And Yes. loan still is incredibly

we take those replace that down you the much potential out discontinued it bond. so with there businesses work to is so as and If grow portion

asset here think run a asset different the not that doubling We we're get to conversation bank the then because fantastic We for contribution a industry were equation. this as to to So positive issue can't but I very interest interest right loan genius. and X% we're think And Bancorp interest net so now rates we so XX%, at we're position. conferences on so the number positive is income. very incredibly we and at betas, ratio, you even deposit conference even lucky XX-year in XX-year. is at one discuss sensitive, low the would sensitivity a an ultimately like would don't have call, get happening to to we betas X.XX%, that's very an rises, rate But that's is all sensitive. What's

our and thing your our marketplace, stable this a GDP cuts, continued of in one net the of lot quarter we and blew through from we you're rate we can growth think growth environment, bonds barring which right think lower these the going spreads that's conditions or the saw. that continue aggressively and under world. loans very second of nicely I even can transfer to throughout grow can continue So NIM income year very on increase get on the about to But calls interest been to over I we then encouraging. I quite the the we're tax encouraged one when that, interest mean X% has through large and

Matthew Breese

is for mix tying the the year-over-year what of and and shift, what then into quickly for decline NIM? Okay. meaning what the that outlook And may the how kind the is you be outlook is growth shift can securities mix commentary with in so NIM the loan

Damian Kozlowski

you're like growth year-over-year. loan want seeing We Yes.

So it one books. big of to that's might got also seasonality you really stability on you the the did of stuff, loan all quarter-over-quarter, hard because client, but that lot it’s quarter-over-quarter you though look at have grow in payoffs, have depending a quarter

the we had to have you book at in to performance loan judge had it's to This but quarter, that's in hard where double-digit a growth year-over-year. quarter-over-quarter; we SBA look better close

So the growth. you think to want about year-over-year

want do that. When of So we you like have we plenty business good per but start is and to step that SBLOC that’s we want year-over-year, XX% think much be at several strong look don't or very where year XX% year, We for around expanding historical there has too start do why loan is a a we platform. because about have when we we you we’ve growth growth fast, -- the X% growth in there we just so walked SBA cars come deals new whether fast, this we SBLOC couple we they hasn’t to look had a away trend from quarter out. this leasing little businesses some trends continue. see have and this this might a too it’s of that we the think quarter se XX% because to bad is on want the pipelines have opportunities want example been auto too book from the hired if new the we away time very of the a it’s business. the but origination price runway

So will why is don’t underlying things there we healthy. think very quarter of always reasons any grow growth grow but be in or year-over-year

Matthew Breese

maybe or you given it’s if then going the your And balance too Okay. sheet income the comment interest lumpy changes? what your on growth the NIM for for to outlook outlook just net can is of some back expected be to is what NIM,

Damian Kozlowski

is easy the NIM make. doubt to positive. the out NIM general X% -- again to or should year-over-year equation There it going depends X%, the because in be no that's X% my you’re mind right, Well you’re so some so will in trading cases trends once have

year know that quarterly once should higher. loan one next size balance may quarter or our our the of assured talking here what NIM as be. continues be loans in next NIM because see NIM grow, the adjustment to But sheet mix an grow ultimate long the almost and sheet will growth year but what like will situation. I will the that's we’re As don't in you drop quarter, you year-over-year the when first may again look balance

Paul Frenkiel

Clearly goal predict. really to the our NIM but is we can't increase

Damian Kozlowski

get we to a right. rate higher we’re going NIM So increase much see inches three in

it if and lot you good we we and you historically beginning be. changes. where can’t where really is we year, All the can’t look the a in what can see exact predict predict the the was that positive what interest So rates know NIM portfolio really is of of now, will real

the the it other of didn't market supporting interest they of accident, of like more use because and of a our at actions Federal growth from effective a came the income by conditions management assets. sheet some market, rise and the balance rates from Reserve, came So NIM lower

the so to and we And to those continue expect we’re do going improve. things to NIM

Matthew Breese

I out. for me hop Okay. Last will and question

at, As you ROA implement quickly measured the metrics rest are is what how there? the X of Phase ROE, what get by the X and the Phase can you profitability you’re as long-term or looking targets

Damian Kozlowski

about fairly This that's it X% strategic transparent very ROEs updated just our are goal. presentation. double-digit we -- clearly if look over all our that, at over ROA, that’s and we can run you bank Well

early and management about last We’re still we’re very have last we years been the you we and -- now the some in the place quarter over announced the some which just got headwinds few team the there we and we're whole firm in tailwinds encouraged. if performance days of has our in think

It rate. model, funding is but goes overly advantage rate to expect we ROA infrastructure, day, I we think doubt once our are very model be the updating on There to make this did they not back business trying the keep and at we we're business to we you we quite year. in to fees model to all again So ROE market, low talking will no can is these When transparent of in trying run be do funding it. the have were goal not off the we not end high don’t the extremely optimistic. very optimistic, pay don’t and when we is plus the about we last get our environment be the this the

at we if rate we're changing edge have bank dramatically that's the to the retail we the put and of you and add cutting mean and negative I like going. where So advantageous that. it work at funding extremely would that to need is banking back, a and money is to market

people I few space over last it the something an in for the time guess which of within event our the to story. industry and was all banks. to is that's just than much and time do their model incredibly of the just more Money is more which so rather big I it's XXXX the at So personal in of opportunity banking back conversion Brick enabled exciting Mortar the personal & days and happening else, is there of the

it's So dramatic. quite

setting right change, because done I our the still but right, optimistic with want after right for just overly well-positioned make reengineering in and our issues to with new not think a lot addressed we're to the you go we short-term. we idea every it’s that not have new process, idea we’re done they're they’re not get not hear long-term I and we’re everyday the very banks exciting, of addressed running to new address that can regulators and the I’m sure trying way

all but prospects company -- and minimum is so website. on going the be quite with presented the consistent should that we the what think our And future of this impressive on to I the marketplace at

Matthew Breese

Thank very Understood. That's all I had. you much.

Damian Kozlowski

talking Thank you. with Nice you Matt.


next is Schiraldi Sandler of Frank O'Neill. from question The

is open. line Your

Frank Schiraldi

everything where their want given we order color on the you terms if point impactful growth the regulators of Hi right the court guys, ball how is order you you then prepaid give is and just just just just in to of sort at have this guys? in could any is the now, you could for in business to there about BSA now talk I -- are is one follow-up timeline if I can currently and

Damian Kozlowski

my Yes perspective. it’s always in their court that's

the regulate we they system and are from we community they build part the we're like of got the So XXXX, CMP XXXX it’s to industry, that trying are period. the to its work and that with like

speak have perspectives I issues. we’re are, continuing and really work tell everything the to place can’t their really is to in they we put it's requested all So I can what you down that possible that

totally program, our see our on in we if website can website a how new it. compliance created video we you that at and approached look even is So a

side We have the consumer but the of right, hard single made every regulators that compliance great side all people think finding got to it. the we have make identify a also of very we how of business very comprehensive BSA to we’re on process working to and and is transparency it in have on to place do I give self working. our of And program sure we a the understanding

much fun to I think team -- the at affect really not we're and a changing the at able we in subjective environment. qualitative issues with. mostly because with all with of your be to I again bank are is the this once but people anymore, to run bank industry, banking not that big place is so here, impressed it's I’m any recruit -- and this could able people being it’s struggling in put

I here, the guess little can we us see think regulators to a over time think be great think off I we're going they the the us saw I guidelines friends. bit I will in past,

two this banking of rather future doing we’re set to going business creating best it we’re industry end dedicating want that. our we’re at to industry. that of industry totally But following the to and we the for and model going happen a the because to sure because and is leading leading absolutely it platform think next not why I than that’s It's standard make leading the the to years the today. it’s day, support

Frank Schiraldi

could impactful revenue up? expectation you like guess gap the if what prepaid And how once and growth expectations then your then are that gets fee for year-over-year order lifted us I remind does

Damian Kozlowski

the it’s been have businesses, what have that that's and Yes the not serve new in that comfortable also return in residual it's new the high-single-digit this we up to and -- should we well risk process that we that today going innovation fee we regulators on, to very control augmenting are going gaps it yes the process we’re growth had risk rigorous less up what the want and we year really our new platform we do the company. understanding regulators the into order should make feel process, year that's the build can't still some segments that to new sure as when businesses in and place, so clients and management space do growing but we've reason and but with because next we to programs obviously really this

we upside about we're on business more maybe going really yes out our it's get the on the is new X% do revenue. that's much old will revenue to do. than legacy audit on I potential Well there's really what in the think there the revenue I on of if where of enhance are restrictions some business get traditional There our business but the What's everything -- card current the really growth to that our and on the we restrictions lockstep we future ACH on want performance. to meaningful the regulators. with company. right our for not is work future there's important future it's

a So banks and than banks that that this reasonable footprint. in is operate been reasons bank fees they've smaller big data to-date. changed have times very very it fairly how This the of however other because interchange field the regulators The think I are obviously lot. I see large we National

right. for has for So cards once if a business responsibility so us again us that we're to enormous Bancorp we the right XXX itself get But a make potential and in this is there's million doing sure ways. there out the

do able to we've to a come able possible to and you so the potential we've team place but give future performance. to away want current ourselves of as and with I team, are as chance more -- so think so we're sure happen up to expanding I up. this That's start we issues have with about what -- by acquiring think good to these our make I'm be easily blown that I phone they individuals do with towards that's to that we things. during The we've been solving and had going amazing it that's place many surprised resources much that it. I investors transition doing got business us we in table. it. of being I’m an to this do got to sets to everything And accomplish What whether decide to payments and in up on the management honest on on there's to think this clients time where team team. It's can of group our type

Frank Schiraldi


accurate. order and the in a ramp guess with is you of of growth to the BSA next still X% prepaid I Just place the to quarter up high-single-digits year-over-year look but in that at year even that expect

Damian Kozlowski

an way there it. us things headwinds we all Yes, of and we're a gave out program weren't that this to year work our shutdown was going some had at these acquisition, Bancorp to related

So we services and consent we. have we've with orders new some that that offered the are the that first consistent

So -- that right business on now. that I'm betting good looks really

the business doesn't means for that us the are when to -- and you're a comparative think positive run It only trends going mean X% it's happen. I on very going but going growth -- I I'm that very very rate is the on. you good look fee what's actually at

I for I'm next encouraged side. think we're on side up side set balance think year expense very So, the we're and sheet well set well both the I and fees up on the

it. the for this obviously strategic goals fourth once be work our with for next we we're and website. And post this think new up targets So our cascading agenda a we'll we we'll to as we we'll place different budget a year. quarter the going again into quarter be waiting year. And right that then We're of produce like on we posting done in then did new haven’t yet those be planning end able presentation to putting if

Frank Schiraldi

runs by through Okay. runs and quarter year-over-year That's a plan of I through loss is first XXXX growth on that if guess for that the the a good fair. snake business think of about kind you the

Damian Kozlowski

year-over-year big from away. couple But won't one another on just program fair. that a the There acquisition a anymore. the basis absolutely that's That’s bank client big revenue will why was went

that we'll get in happens; nothing But very a first quarter there. we the will good big the is ever potential have to in obviously bump see look is we bag. what So

a We to whether go into what other good not. things in those is have behavior will see have spending all or that we quarter


turn are call Thank Damian over for back you. remarks. to questions at further the no to closing this time. like There I

Damian Kozlowski

we progress have of here. years joining future a Thank think making couple lot you we ago. think for a different we're had us. of than I everyone And a We

to everyone soon. to going keep we're So we'll Thank on talk working hard and you. for you


conference. you. concludes Thank and today's gentlemen Ladies this

disconnect. now Good may You day everyone.