TBBK Earnings Call Transcriptbeta

Operator: Good day and welcome to the Fourth Quarter 2021, The Bancorp, Inc Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would like to turn the call over to Andres Viroslav. You may begin.

Andres Viroslav: Thank you, Operator. Good morning and thank you for joining us today for the Bancorp's Fourth Quarter and Fiscal 2021 Financial Results Conference Call. On the call with me today are Damian Kozlowski, Chief Executive Officer, and Paul Frenkiel, our Chief Financial Officer. This morning's call is being webcast on our website at www.thebancorp.com. There will be a replay of the call beginning at approximately 12:00 PM Eastern Time today. The dial-in for the replay is (855) 859 2056 with a confirmation code of 7390458. Before I turn the call over to Damian, I would like to remind everyone that when use in this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause actual results, performance, or achievements to differ materially from those anticipated or suggested by such statements. For further discussion of these risks and uncertainties, please see The Bancorp 's filings with the SEC. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof, or to reflect occurrence of unanticipated events. Participants may discuss non-GAAP financial measures in this call. Copy of the Bancorp's press release containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to The Bancorp's most recent current report on Form 8-K available at our website under Investor Relations, Bancorp's other SEC filings are also available through this link. Now, I would like to turn the call over to The Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Damian Kozlowski: Thank you, Andres. Good morning, everyone. In the fourth quarter, The Bancorp earned $27 million in net income or $0.46 per share, from 7% year-over-year revenue growth and 3% expense growth. Interest income was flat reflecting the impact of CRE prepayments. While non-interest income increased 21% year-over-year, reflecting the impact of fees resulting from those prepayments. Total loan balances excluding loans at fair value originally, are generated for sale, grew 41% year-over-year and 19% quarter-over-quarter. Balance growth year-over-year was led by institutional banking, which includes securities, insurance, backed lines of credit, and registered investment advisor financing within a 28% increase in balances. Quarter growth was led by new real estate bridge lending balances at 380 -- 33% growth, institutional 7%, and leasing 3%, while SBA decreased slightly as a result of prepayments. Gross dollar volume from our cards business grew 11% year-over-year with payment related fees approximately flat. For the full-year '21, GDV grew 12% even with the net impact of non-recurring stimulus and other government payments in 2020. Our diluted EPS for 2021 was $1.88 exceeding our upward adjusted guidance for the year of $1.78 by $0.10 a share. With the many challenges of '21, we kept focused on executing our strategic agenda, which we expect will drive long-term growth and innovation for our Company. Even with a challenging interest rate environment, we were able to maintain stability in our net interest margin in 2021. Our balance sheet continue to show significant loan growth and new product innovation. For example, our re-launched commercial real estate business exceeded our expectations and closed approximately $622 million of new floating rate loans. And new products in our institutional wealth management business resulted in significant loan growth and the maintenance of net interest margins unlike many of our competitors. We also continue to invest in our fintech platform to create an ecosystem we believe is second to none in the industry. Our pipeline of new relationships and new products continues to grow with significant new implementations expected for 2022. Some of these relations have been announced previously, but we expect others will be announced as new programs come to market this year. In addition, we continue to focus on controlling expenses and better productivity while making significant investments in growth. For the full year 2021 compared to our prior year, our total expense base grew only 2% and we will continue to be rigorous in creating value by finding new ways to be better organized and efficient through the use of enhanced technology, tools, and training. Lastly, we continue to see tailwinds that should drive continued growth in 2022 earnings and beyond. We are also issuing guide -- earnings guidance for 2022 of $2.15 per share, which excludes the net impact of share buybacks and the impact of rate increases. In addition, our board increased the amounts we may spend to buy back our common stock to $15 million a quarter in 2022 from $10 million a quarter in 2021. I'd now turn the call over to our CFO, Paul Frenkiel, to give more details about the second quarter.

Paul Frenkiel: Thank you, Damian. Return on assets and equity for fourth quarter 2021 were respectively 1.7% and 17% compared to 1.6% and 17% in Q4 2020. Net interest income in Q4 2021 was comparable to Q4 2020 at $52 million. In the third quarter of 2021, you'll recall that we resumed the origination of non-SBA commercial real estate loans which are intended to offset the impact of prepayments and payoffs on such loans originally generated for sale. While they were approximately $500 million of such originations in Q4 2021, their impact on interest income was partially offset by approximately $4 million as a result of prepayments on the loans originally generated for resale. However, fees related to those prepayments are recorded in net realized and unrealized gains on commercial loans, which increased $4.5 million in Q4 2021 compared to Q4 2020. Even with the impact of the CRE prepayments, year end 2021 period end loans and loans at fair value increased 14% over year end 2020. Interest income in Q4 2021 reflected a reduction of $3.5 million in securities interest compared to Q4 2020, reflecting lower securities balances, prepayments of higher yielding securities, and lower reinvestment rates. Our interest expense was reduced from 24 basis points during Q4 2020 to 19 basis points during Q4 2021. Most of our deposit interest expense is contractually tied to a portion of changes in market interest rates. Our net interest margin of 3.51% for Q4 2021 was slightly down from 3.58% in Q4 2020. The reduction reflected a lower yield on the securities portfolio, as higher yielding securities matured or prepaid. While yields on loans were also lower, they comprised a greater portion of interest earning assets in 2021 which contributed positively to the 2021 margin. In the third quarter of 2021, recall that our NIM was 3.35%, which reflected higher balances at the Federal Reserve earning nominal rates. The provision for credit losses increased to $1.6 million in Q4 2021 from $554,000 in Q4 2020. The increase reflected the impact of loan growth on the [Indiscernible] model, including real estate bridge loans, which grew almost $500 million during Q4 2021. Because SBLOC and IBLOC loans are respectively collateralized by marketable securities, and the cash value of life insurance, and have incurred only nominal credit losses, management excludes those loans from the ratio of the allowance to total loans and its internal analysis. We believe our loan portfolios generally are lower risk than other forms of lending as a result of their charge off history, which reflects the nature of related collateral. Our non-SBA CRE loans at fair value and within real estate bridge lending are comprised primarily of apartment buildings. While our SBLOC and IBLOC portfolios are respectively collateralized by marketable securities with the cash value of life insurance. Our small business loan portfolio is comprised primarily of SBA loans, which are either 75% government guaranteed or have 50% to 60% origination date loan-to-value. For our leasing portfolio, we have re-coursed underlying vehicles and a prolonged history of pricing leases to minimize losses. Tables contained in the earnings press release detail diversification of our loan portfolios. Prepaid debit and other payment related accounts are our largest funding source and the primary driver of non-interest income. Total fees and related payments income in Q4, 2021, were comparable to Q4, 2020 as the exit of a client relationship offset growth in other relationships. Non-interest expense for Q4 2021 was $43 million, reflecting an increase of $1.4 million or 3% from Q4 2020. FDIC insurance expense was $1.8 million lower, primarily reflecting the cumulative impact of a lower rate resulting from the reclassification of certain deposits from brokered to non-brokered. The largest expense increase was $1.1 million in salaries, which was -- which were 4% higher than Q4 2020. Q4 2021 results also reflected the impact of a reduced tax rate of approximately 24% versus higher rates in recent year. The reduction resulted from excess tax deductions related to stock-based compensation. The large deductions and tax benefit resulted from the increase in the company's stock price as compared to the original grant date. Book value per share of 2021 year-end increased 13% to $11.37 compared to $10.10 a year earlier, reflecting earnings per share and the net impact of stock repurchases. I will now turn the call back to Damian.

Damian Kozlowski: Thanks, Paul. Operator, could you open the lines for questions?

Operator: [Operator Instructions] Our first question comes from Frank Schiraldi with Piper Sandler. Your line is open.

Frank Schiraldi: Good morning.

Damian Kozlowski: Good morning, Frank.

William Wallace: I wondered if you could -- you've mentioned the $2.15 without the benefit of buybacks or rate hikes. I'm wondering if you can talk a little bit about your expectations for pickup on NII or margin for a given 25 basis point rate hike in 2022.

Damian Kozlowski: Okay. So with -- it changes throughout the year because of prepayment. There's floors on our legacy billion dollar security -- securitization portfolio that we had, the floating-rate loans. But those are rolling off very quickly and those floors will be released. So in a static environment, we don't get much benefit from the 25 basis point initially. But if you play out this scenario throughout the year, it gets better and better very quickly. So by the end of 2021, if we had three or four moves, it would have a significant impact on our run rate profitability. So I think the best way to look at it, probably for the first half of the year, it's a wash because we're continuing to put down floating rate assets. But as you move through the midpoint of the year, it becomes a big positive. So it could be -- if you think about buybacks and you think about -- and this is in guidance and you think about interest rate increases, it could have anywhere from a three upward towards even a 10% impact on profitability by the end of the year. So there's a lot of variability in it. It depends on how we put on assets if we continue to put on a lot of floating like -- rate like we have and have a aggressive paydown in the CRE legacy portfolio, it will have a bigger impact, but it's -- it will play out over the next few months and we'll see -- have more visibility and will of course let everybody know what we think as the year moves forward.

William Wallace: Got you. Okay. And when you say -- I know it's not guidance, but when you say you went through 3% to 10%, you're talking about more -- so the one rate starting 2023, so you pick up 10% better run rate, maybe by the end of this year going forward, is that what you meant? Not necessarily 10% increased to 2022, full-year round.

Frank Schiraldi: Well, that's what I'm saying. We just don't know how we're going to put on assets and our prepays are going to happen. I just want to note again that the $1 billion plus securitization portfolio, which is prepaying, has fees embedded in it. So there's about $10 million to $12 million of fees that will be realized as that portfolio winds down. But if you think about buybacks, that could have a couple of percent up to 3%- ish impact on earnings per share. And then depending how the balance sheet plays out, it could have -- it could be more as a percentage of the guidance for 2022, right?

Damian Kozlowski: But it definitely will impact. If you get the interest rate increases in 2022 and we got a 10-year, that's going to be 2.50% to 3%. It really will impact the fourth quarter and then going into 2023.

Frank Schiraldi: Got you. Okay. And then just on the securitization. In general, well, if I add that, the total of those two, the multi-family bridge loans that you guys are putting on, which I think as replacement for that stuff rolling off, can you just remind us, I know you don't have -- you don't know exactly because you don't know how much origination is going to get done, but a range of that total portfolio, which I think is around $2 billion if you add those two together. What sort of levels do you expect that to be later this year? Yes, so I think we're looking at about 400 that will be left at the end of the year. So above $600 million, it could be more. But depending on the rise of interest rates, because this is a floating rate loan so if we get a steep rise in interest rates there's a great incentive obviously to prepay. But we're predicting around 400 by the end of the year of that legacy portfolio. And to about double their origination that we did this year. So about $1.2 billion of new. So $1.2 billion of new and a roll-off of about six. Great. Okay. And overall, is the average balance sheet size here a good bogey for where it will remain through 2022? Is there significant growth on that front scene to get to a guide?

Damian Kozlowski: Well, I think you're -- if you're going to add 600 there, we have other growing portfolios. So around a $1 billion potentially increase. It depends obviously on a lot of things. It also depends on securities too, because if you got -- if we have a much higher tenure, we probably would do some reinvestment in our securities portfolio too. So it's going to be around a $1 billion probably.

Frank Schiraldi: And then just lastly, if I could on the payment related fees. I know you've already emphasized the need for that line and then to grow significantly that to hit goals. But you had 11% GDV growth year-over-year, which is pretty good result off of a strong, relatively strong 2021 and card fees or payment-related fees were flat. So is there anything you can say to that I know different programs provide different margins. But any sort of color around what happened year-over-year and or expectations for growth from these levels going forward?

Damian Kozlowski: Yeah. So there has been a general conversion. There were two things going on, especially over the last 18 months. So we had programs hitting tiers, the higher tiers, because they're growing so quickly and they have large volumes. So that's a lower tier in pricing, those have been met. That was the first thing that was putting some pressure on margin. The second is the conversion to debit verse general purpose reloadable. So the general purpose reloadable market is under stress because it's not as efficient for the customer, because it's much higher fee base. So there's been a lot of conversion to the debit area for programs like CHA. So those are generally a lower margin, so there has been those two things going on. Also with our GDV, we also had the [Indiscernible] who left the bank after the first quarter of last year, that also put some pressure on our GDV growth. So those -- plus the stimulus. So as we move out of the first quarter of this year, we won't have those two factors, the stimulus and [Indiscernible]. And we've seen -- we'll have more new products and services coming onboard with all the implementations we're doing. So you'll see that margin compression, hopefully, be alleviated as we move through the year. Plus, we have other things going on like credit sponsorship. So you'll see some of those programs start to be put on. That won't be in the fee area, but that might actually boost GDV because people obviously borrow within their account and use it. So we have a lot of things going on, but from the payment envelope of activities, obviously, plus or advantaged funding, there'll be a lot of economics driven out of that business in 2022 and going into '23

Frank Schiraldi: Got you. So just -- the first quarter is tough year-over-year comps, and then we should see some better growth through the rest of the year, year-over-year, is that reasonable? Yeah, that's what you're saying? Okay.

Damian Kozlowski: Yeah well, but first remember, we've got a massive stimulus. I think it was $1.7 trillion that went through the economy at the end of -- really hit the first quarter in March. So the first quarter, and we still had borrow in there too. So that's a very tough comparison to make to draw any conclusion. But right after that, both of those things stop and we have no more comparison and then you have borrow out of it. So you're going to return to double-digit trend growth.

Frank Schiraldi: GDV, double-digit GDV, or is that --

Damian Kozlowski: Yes.

Frank Schiraldi: Route?

Damian Kozlowski: Yes.

Frank Schiraldi: [Indiscernible]

Damian Kozlowski: Okay. Thank you.

Operator: Our next question comes from Michael Perito with KBW. Your line is open.

Michael Perito: Good morning, guys.

Damian Kozlowski: Good morning, Mike.

Michael Perito: Thanks for taking my question. Couple of things I want to hit on. Just number one on the cost side, you guys, I think in the prepared remarks were talking about the hope to try not have significant cost growth and I know driving efficiencies is a critical element for you guys, but obviously environmentally a bit challenging. A lot of the more traditional bank peers, I think almost universally, were guiding up expenses this quarter. Just curious if you can give a little bit more color near-term about how you think the expense run rate could trend given some of the environmental things going on out there, inflationary and wage-related.

Damian Kozlowski: Yes. We've tried to build a very scalable platform in some of those scalability, especially in the payments, but also in the tech -enabled businesses we run like the securities business, we've been focused on building an infrastructure that doesn't add a lot of incremental costs by using new tools and technology capabilities. And that's really been paying off for us. And what we've said over the last four years is that we'll create a [Indiscernible] between revenue and expense of 10%, and we were able to do it again this year. And also the expense growth in the fourth quarter was compensation related to the large size of loan growth. So we think we can still have that hold through in '22 and maybe even '23 even with the current inflation in workforce. So we saw [Indiscernible] workforce. If you look at the percentage of net income that we use for employees, our employee costs have gone up over the last four years, but as a percentage of our operating expenses, it's not moved up that much, and as a percentage of net income, obviously, it's moved way down. So what -- where we know we're still playing out this. There's clearly going to be wage inflation, but we think we're going to be able to cover and maintain that jaws relationship even with the current inflationary environment.

Michael Perito: Got it. And then if we think about your relating that to your long-term targets, correct me if I'm wrong, but those long-term targets really don't include interest rates, correct? So without getting too specific, is it fair to assume that the benefit of higher interest rates could pull forward some of those [Indiscernible] and some of those targets theoretically?

Damian Kozlowski: Once you get past the first 100, and we're in the world of 200 basis points, and we get any type of normalization of interest rates, we're extremely asset sensitive. And we have 70 plus percent of our balance sheet is floating. It would have -- and we don't do any CD funding and everything, so once we have -- it's all tied to Fed funds, so it's a dramatic impact once you move. Yeah, we'd move forward. The rate -- the ROE would obviously go up and it would pull forward the targets and everything we do is interest rate neutral. So all our planning around whatever we do for managing our balance sheet, of course, we do scenario planning, but when we talk to the market it's neutral of any rise. So it would have very significant impact, especially in 2023.

Michael Perito: Got it. Helpful. And then just two more quick ones. One, I heard commentary about some of the tax rate noise. Just curious if you had a number where you were budgeting for 2022 that we could use or a range.

Damian Kozlowski: I think around 25% is a reasonable place to be. We can't really predict the exact amount of the tax benefit because it depends on the stock price as of the date of the vesting. So I think 25% for next for 2022 is a reasonable place.

Michael Perito: And then just lastly, and I don't know if you guys can comment, but since its public information at this point, I'd figure I'd ask. Obviously, SoFi formally got approved for the charter. Just wondering if you could help throw some parameters or expectations around what the potential, if at all, exit of that relationship given that they will have their own charter could mean for you guys moving forward.

Damian Kozlowski: Well, it doesn't -- I don't think it affects. We, of course, we loved the partnership with SoFi. They have a great appreciation of wanting to grow their company in a safe and sound manner and using the right partnerships of which we obviously appreciate. We haven't worked that out. They haven't -- maybe they have, but there's a lot of ways we can participate together and provide the right technology, middle office infrastructure for SoFi. So it's I don't -- it would be love to build a very strong, long term relationship. I think we will have some sort of relationship going forward, but I really can't -- regardless of that relationship, it's not big now, it doesn't really -- if we were to lose a 100%, it really doesn't affect our plans going forward. We have so many other programs and not all of them grow. We take on a lot of big programs and some of them are really successful and some of them aren't as successful. So I don't think it will affect our growth and it won't really affect year-over-year comps if they decided next quarter not to do business.

Michael Perito: Got it. That's helpful. And then just one quick clarification on that too. Their deposit program is primarily sweep related, correct? So I think it's fair to assume that they're not a big balance sheet deposit partner of yours at this point, is that a fair comment or can you not say?

Damian Kozlowski: Well, I don't know if they've said exactly how they -- that mechanism works, but their part of our liquidity is small.

Michael Perito: Yeah. Got it.

Damian Kozlowski: So it's not -- it wouldn't impact our deposit base, really.

Michael Perito: That's what I figured. But thank you for clarifying all that and thanks for taking my questions. Appreciate it.

Damian Kozlowski: Thank you, Mike.

Operator: Our next question comes from William Wallace with Raymond James. Your line is open.

William Wallace: Thanks.

Damian Kozlowski: Good morning.

William Wallace: So Damian, I was -- Good morning, Damian. Wanted to circle back to Frank 's questioning on the CRE loans, the bridge loans, just want to make sure I put it all together. So if I add the bridge loans plus the held-for-sale loan portfolio, getting around $2 billion, is your intention to ultimately shift everything from held-for-sale and originate new ones to about $2 billion?

Damian Kozlowski: Yeah, about 300%. It might be shorter, more in the short-term because we have these prepayments. So our target is really 300% of capital is the way to think about it, right? And our capital is obviously growing. But we're filling up our balance sheet so depending on the opportunities we have in other areas, this is a very flexible type of lending that's very low risk. They are short-term loans. They're three-year loans, pretty much. They're floating, and they could be sold to other banks or institutions that really like these type of loans. So it's a very flexible part of the balance sheet that we use with our other businesses in order to manage the total exposure up to that $10 billion limit.

William Wallace: Okay. Great. And so you think that the held-for-sale portion, I believe I heard you think it will be down to about $400 million by the end of the year, but you're saying you might not necessarily be able to keep up with that pace in the origination side. But ultimately, it weakens you?

Damian Kozlowski: No, we can. I think our -- I think we'll do double what -- we did $622 it's really $700 million we did because there's future funding parts of these loans. So we did $700 million of share and we expect to double that next year to footings of $1.2 billion, but it'll be really $1.4 billion with future funding. So we've expanded our ability to originate across the United States and moved into additional markets. And we've done really well with the quality and the rate on the product that we're putting on in a very low risk way. So once again, our target is 300%, might be a little bit higher than that in the next 12 months, and that's just because we have this roll-off happening. We don't know what it's going to be. But we can get rid of all billion dollars of those held-for-sale this year because of interest rate increases, because people will want to lock in fixed funding and we don't do that. We don't do that type of lending and don't perceive that as the right place for us in the marketplace. But that would give us about $12 million or so in fees that would be on -- come through the income statement too if that happened. Because there's still fees that are unamortized, really, because we put those held-for-sale loans out at 99. We're in a very good position with that portfolio and we're very confident we'll be able to originate approximately double what we did this year. And that will be able -- any spread differential will be made up by the fees that will be amortized through the repayment of the loans. And if they don't repay as fast, that's good too because we get additional interest income. So we're fine. We're in a very good position with that portfolio.

William Wallace: Okay. Great. All the new originations they come on floating, they're not going to come on -- under floors or anything like that, they'll just come on base, but can they float?

Damian Kozlowski: There will be floors on it, but there's no way it can be under the floor because we're at zero interest rates. I guess if we turned to Germany or Japan, it's possible, but otherwise, it's -- I think our inflation expectations ruined any idea that we're going to be negative interest rates.

William Wallace: Yeah. Okay. And you just spoke a little bit about credit sponsor opportunities. You've mentioned it periodically over the last year or so as an opportunity for Bancorp. I'm wondering if you could maybe help us start to focus in on that. I'm assuming that any partnership would most likely be with an existing partner on the card side. Assuming you decide to implement a program, how long does it take to build out a program with an existing partner, and when do you think you might make an announcement of some sort of partnership?

Damian Kozlowski: Well, your conjecture is basically intellectually consistent. Of course, people that we've -- partners that we've done business for a long period of time and have developed a broad payments relationship are the likely first candidates. We're willing to use, as we've said, with the credit roadmap, our own balance sheet, not through securitization, but on our own balance sheet under the right terms to facilitate reasonable programs that can be both good for our partner, but also good for the marketplace and that they can provide some credit capability for under banked individuals. So we think we'll be announcing things sooner rather than later. But I can't really -- I don't want to front run any of those programs because we're -- go through a marketing process and we always leave it to our partners to read that message so I can't really go into further than that, but we think we'll be able to announce things sooner rather than later.

William Wallace: I guess maybe a different way of asking the question is, were there to be some sort of announcement, would you expect that the capabilities would've already been built-out and an announcement would be made when the program might be ready to go live rather than just when an agreement was struck?

Damian Kozlowski: Yeah. With these types of programs, there's a lot of work in most cases it's true. Not always, but mostly even now on the payment side, there's a lot of work that's already been done. Prior to an announcement, right? Because you have to work out all the different types of the envelope of activities, processors, regulatory, what's your compliance? How are you going to handle compliance and BSA? So there's usually a lot of work anything in the consumer space where there is other regulatory guidance that you need to file, a lot of work. We will be at least in the beta phase, if not the full roll out by the time we announced that with a partner.

William Wallace: Okay. Great. Thanks for that. We'll look forward to a potential announcement, I guess, sooner than later. The follow-up I would have, maybe just bigger picture, philosophically. We had Varo applying, get their charter, SoFi now applying, get their charter, and you guys have your finger on the pulse of the fintech s probably better than most. I'm just curious if you could talk a little bit about your views on whether or not there is a building desire for fintechs to want to go that route or if these two that have occurred so far might be what you would deem case specific? And just maybe your thoughts, big-picture, higher-level on what the trend may be 3, 5, 10 years from now.

Damian Kozlowski: I don't think that's the -- I think there will be some large players. It could be SoFi, it could be somebody else that will drive towards being a very large institution. The top 10 banks today might include one of those fintechs that started recently. And they could become a big Universal bank in the United States and even challenge the larger banks. And I think you've heard comments from even Jamie Diamond that that's a real threat. So that's a possibility and they will need to build out very broad capabilities, not only in deposits, but in lending and potentially security, so I think that's the next decade we'll see what happens. But there's going to be a vast majority of innovation that are not going to seek licenses even if they are in a banking sphere because it's not as efficient as using somebody like us. And through the other verticals, which are also growing, things like healthcare, etc., government, etc., there is no desire or you can't be a bank. So for a big part of our portfolio, it's not even affected by the charter. I personally think right now, they're both real test cases. I think there is real costs to being a bank and there is real restrictions on capital. And through the inter-agency process or the CAMELS process where they rate each part of the bank, it's very difficult to be a high -- super high growing institution where you're trying to acquire large amounts of clients and be also a bank at its very early stages. But we'll see how this plays out. And it's fast evolving. And but I don't think the charter -- fintech getting charters is a threat to banking as a service or ecosystem providers like ourselves. I don't think that's a threat but that's going to significantly affect our ability to grow.

William Wallace: Great. Thanks, Damian. And just one last little housekeeping questions. You guys bought a ton of stock during the quarter and plan to continue doing so. I did notice that the period in share count is actually up in the quarter slightly. I just wonder if you could tell us a little bit about what your expectations are on whatever vesting or issuance might be coming down the road or how much of the buyback should we anticipate can flow through the tangible book.

Damian Kozlowski: Yeah, I'll give that to Paul. But what happened was, and I think it's good for -- especially good for people here, but for shareholders is that early on when we remediated the bank, we paid a lot in stock. And so those vestings are continuing to invest in the Company that's why you saw maybe a tick up in shares and might see some mitigation from the buybacks. But we've been paying far less stock recently and at a much higher price. So that dilution will be significantly lower in the future. Paul, you want to make a comment?

Paul Frenkiel: Yes. I would refer you to the -- we actually have a footnote, the stock compensation footnote which we have which we show every year and actually every quarter, which we show the originations and the RSUs vest over a three-year period. We'd say. So it's easily calculable. As Damian noted, it's really -- we issued some in May 2020 when the stock price was low, was like $7. So that resulted in a larger number of shares. If you look at the stock price now at around $30, the number of shares being granted based on a specific dollar amount is only a fraction, so yes, it will have some impact this year, but it will continue to diminish because there's only a fraction of new shares being granted.

William Wallace: That's great. Thanks, Paul. Appreciate the time, guys. I'll step out.

Operator: There are no further questions. I would like to turn the call back over to Damian Kozlowski for closing remark.

Damian Kozlowski: Thank you, everyone for attending and especially to analysts of the stock who asked some great questions today. I appreciate you all listening and we'll talk soon. Thank you, Operator. Have a nice day.

Operator: You're welcome. Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.