Bancorp, Inc. Q3 FY2024 earnings call

• FinTech Solutions Group saw GDV growth 15% and total fee growth 22%, with credit sponsorship balances growing to $280 million from $70 million. - Substandard multifamily loan assets are near peak, with strategies in place to reduce them. - Small business lending had 14% Y/Y growth. - Institutional business balances were flat. - Buybacks adjusted due to potential senior debt repayment, with planned buybacks in 2025 reduced to $150 million. - Will break out more detailed business segment profitability for the first time. - Abry property in Houston on track for December 2024 close with deposit growing to $375,000.

The Bancorp's financial performance was led by the FinTech Solutions Group. GDV growth was 15%, with total fee growth from FinTech payments fees and credit sponsorship fees at 22%. Total credit sponsorship balances were $280 million at quarter end compared to $70 million at the end of the second quarter. On the lending side, substandard multifamily loan assets were elevated but believed to be near peak. Small business lending had 14% year-over-year growth. Institutional business balances were essentially flat to prior quarter. Average FinTech Solutions Group deposits for the quarter increased 11% to $6.64 billion from $6.01 billion in third quarter 2023.

• 2025 preliminary guidance is $5.25 a share supported by double-digit growth in FinTech fees and credit sponsorship. - 2025 buybacks planned at $150 million, down from $250 million in 2024. - NIM expected to be in the high 4s, likely 4.90% to 5% range in 2025.

• Potential repayment of $96 million senior secured debt affecting 2025 buybacks. - Macroeconomic challenges in the multifamily bridge space. - One-time transaction processing delay leading to a loss, but considered a one-time event.

Q: Could you give more color on the new FinTech partnership?

A: Pipeline is strong with new product sets and discussions with new partners, but nothing to announce yet.

Q: Thoughts on 2025 GDV growth and fees?

A: GDV growth above 20% in October, expecting 15% plus GDV growth next year with fees potentially higher.

Q: Trends in Rebel book balances moving to permanent financing?

A: Market conditions improving with more capital available, unclogging the market.

Q: Timing of peak in criticized balances for Rebel loans?

A: Believed to be near peak, with plan to reduce balances over next two quarters and full resolution by end of 2025.

Q: Credit sponsorship rollout, pipeline, and yields?

A: Working with multiple partners, ramp-up with Chime in four product areas, balances expected to be $900 million to $1 billion by end of 2025 with significant growth potential.

Q: Margin trajectory looking forward?

A: Asset sensitivity declined, NIM expected to be stable in high 4s to 5% range in 2025.

Q: Regulatory ratios and Rebel reserve?

A: Regulatory ratios changes minimal, Rebel reserve added theoretically based on CECL and LTVs.

Q: Consumer credit FinTech fees composition and change over time?

A: Mostly fees for early money access, with composition changing as new partners and programs are implemented, including secured credit cards and diversified programs.