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spk00: Good day and welcome to the fourth quarter 2021, the Bancorp, Inc. earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touchtone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Andrea Spiroslav. You may begin.
spk04: 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 Frankel, 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 p.m. Eastern time today. The dial-in for the replay is 855-859-2056 with a confirmation code of 739- Before I turn the call over to Damien, I would like to remind everyone that when used 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 risk and uncertainty, 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 the results of any revisions to forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the 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 8K available at our website under Investor Relations. Bancorp's other SSE filings are also available through this link. Now I'd like to turn the call over to the Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?
spk01: Thank you, Andres. Good morning, everyone. In the fourth quarter... The Bancorp earned $27 million in net income, or 46 cents 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 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 and insurance, back lines of credit, and registered investment advisor financing, with a 28% increase in balances. Quarter-over-quarter growth was led by new real estate bridge lending balances at 83% growth, institutional 7%, and leasing 3%, while SBA decreased slightly as a result of prepayments. Gross dollar volume from our cards business grew 11 percent year-over-year, with payment-related fees approximately flat. For the full year of 21, GDV grew 12 percent, even with the net impact of non-recurring stimulus and government payments in 2020. Our diluted EPS for 2021 was $1.88, exceeding our upward-adjusted guidance for the year of $1.78 by 10 cents 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 continues to show significant loan growth and new product innovation. For example, our relaunched 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 results in a significant loan growth and the maintenance of the 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 of 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 2020 to earnings and beyond. We are also issuing 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 now turn the call over to our CFO, Paul Frankel, to give more details about the second quarter.
spk02: 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 there 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 CISO model, including real estate bridge loans, which grew almost $500 million during Q4 2021. Because S-block and I-block 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, in 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 S-block and I-block portfolios are respectively collateralized by marketable securities or 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 recourse to 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 debits 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 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 years. 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 at 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.
spk01: Thanks, Paul. Operator, could you open the lines for questions?
spk00: As a reminder, to ask a question, please press star then 1. If your question hasn't been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Frank Schiraldi, With Piper Sandler, your line is open.
spk03: Good morning. Good morning, Frank. I wondered if you could, you mentioned the 215 without the benefit of buybacks or rate hikes. I wondered if you could talk a little bit about your expectations for pickup on NII or margin for a given 25 basis point rate hike in 2022. Okay, so with NII,
spk01: It changes throughout the year because of the prepayment. There's floors on our legacy billion dollar securities, 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 kind of a wash because we're continuing to put on floating rate assets. But as you move through the midpoint of the year becomes a big positive. So, you know, it could be, if you think about buybacks and you think about, and this is in guidance, and you think about interest rate increases, you know, 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 rate like we have and have a you know, aggressive pay down in the CRE legacy portfolio, it will have a bigger impact. But it's, you know, it'll play out over the next few months and we'll see, have more visibility and we'll, of course, let everybody know what we think as the year moves forward.
spk03: Gotcha. Okay. And when you say, I know it's not guidance, but when you say, when you, you know, throw out three to 10%, you're talking about more. So the run rate starting today, 2023. So you pick up a 10% better run rate maybe by the end of this year going forward. Is that what you meant? Not necessarily 10% increase to 2022?
spk01: Well, that's what I'm saying. We just don't know how we're going to put on assets and how prepays are going to happen. I just want to note again that the billion dollar plus securitization portfolio, which is prepaying, has fees embedded in it. So there's about $10 to $12 million of fees that will be realized as that portfolio winds down. But it's, you know, you think about buybacks, that could have a couple percent, up to three-ish percent impact on earnings per share. And then depending on how the balance sheet plays out, it could have, you know, it could be more as a percentage of the guidance for 2022, right? So, but it definitely will impact. If you get the interest rate increases, uh, in 2022. And it's, you know, we get a 10 year, that's going to be two 50 to three, 3%. It really will impact the fourth quarter and then going into 2023.
spk03: Okay. And then just on the, um, the securitizations, I mean, in general, when, if I add that, uh, the total of those to, um, the, uh, the multifamily bridge loans that you guys are putting on, which I, you know, think of as replacement for that stuff rolling off, um, Can you just remind us, you know, I know you don't know exactly because you don't know how much Origination is going to get done, but, you know, a range of that total portfolio, which I think is around $2 billion if you add those two together, you know, what sort of levels do you expect that to be later this year?
spk01: So, yeah, so I think we're looking at about $400 that will be left at the end of the year, so about $600 million. It could be more. But depending on the rise of interest rates, because these are floating rate loans, 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 the 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.
spk03: Great. Okay. Okay. And overall, is the average balance sheet size here a good, you know, bogey for where it will remain through 2022? Is there, you know, significant growth on that front scene to get to God?
spk01: Well, I think if you're going to add 600 there, we have other growing portfolios. So, you know, around a billion dollars potentially increase. It depends, obviously, on a lot of things. It also depends on securities, too, because if we got a much higher 10-year, we probably would do some reinvestment in our securities portfolio, too. So it's going to be around a billion, probably.
spk03: Got you. Okay. And then just lastly, if I could, on the payment-related fees, I know you sort of de-emphasized the need for that line item to grow significantly to hit goals, but You know, you had 11% GDP growth year over year, which is a pretty good result off of a strong, you know, relatively strong 2021. And, you know, card fees or payment-related fees were flat. So is there anything you can, you know, say to that? I know different programs provide different margins, but any sort of color around, you know, what happened year over year and or, you know, expectations for growth from these levels going forward?
spk01: Yeah, so... There's been a general conversion. You know, there were two things going on, especially over the last 18 months. So, we had programs hitting tiers. They're 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, right? That was the first thing that was putting some pressure on margin. The second is the conversion to debit versus general purpose reloadable. 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 Chai. So those are generally a lower margin. So there's been those two things going on. Also, with our GDV, we also had the borrow 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 borrow. And we've seen we'll have more new products and services coming on board 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 GDP because people obviously borrow within their account and use it. So we have a lot of things going on, but, you know, from the payment envelope of activities, obviously, plus their advantage funding, there'll be a lot of economics driven out of that business in 2022 and going into 23. Gotcha.
spk03: So just, you know, the first quarter of It's 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.
spk01: Yeah, well, the first – remember, we got a massive stimulus. It was $1.7 trillion that went through the economy at the end of – you know, really hit the first quarter in March. So that – yeah, the first quarter is – 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 stopped. and we have no more comparison, and then you have borrow out of it. So you're going to return to trend, double-digit trend growth.
spk03: GDV, double-digit GDV? Yes, GDV growth, yes. Okay, thank you.
spk00: Our next question comes from Michael Perito with KBW. Your line is open.
spk05: Good morning, guys. Thanks for taking my questions. A couple things I wanted to hit on, just number one, on the cost side, you know, you guys, I think in the prepared remarks, we're talking about, you know, the hope to try to, you know, not have significant costs. 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.
spk01: Yeah, well, so we've tried to build a very scalable platform. And some of those 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, you know, jaws between revenue and expense of 10%. And we were able to do it again this year. And most of 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 true in 22 and maybe even 23, even with the current inflation in workforce, right? So we saw – Our 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 percentage of net income, obviously, it's moved way down. So we know it's still playing out. 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.
spk05: Got it. And then if we think about your, you know, kind of 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, you know, some of those, the achievement of some of those targets theoretically?
spk01: Well, 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, you know, 70 plus percent of our balance sheet is floating. So it would have a, and you know, 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, it would move forward. 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, you know, 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 a very significant impact, especially in 2023.
spk05: Got it. Helpful. And then just two more quick ones. One, Paul, I heard the commentary about some of the tax rate noise. I'm just curious if you had a number you were budgeting for 2022 that we could use or arrange. I think around 25% is a reasonable place to be.
spk02: 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 2022 is a reasonable place. Got it.
spk05: And then just lastly, and I don't know if you guys can comment, but since it's kind of public information at this point, I figure I'd ask. Just obviously, you know, SOFI formally got approved for the charter. Just wondering if you could help kind of throw some parameters or expectations around, you know, what the potential, if at all, exit of that relationship, given that they'll have their own charter, could mean for you guys moving forward.
spk01: Well, it doesn't – I don't think it affects – Of course, we love 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. Maybe they have, but there's a lot of ways we can participate together and provide the right technology and middle office infrastructure for for SoFi. So, you know, it would be loved 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. You know, it doesn't really, if we were to lose 100%, it really doesn't affect our plans going forward. We have so many other programs, and not all of them grow, right? So, You know, we take on a lot of big programs, and some of them are really, 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, you know, next quarter not to do business.
spk05: Got it. That's helpful. And then just one quick clarification on that, too. I mean, their deposit program is primarily sweep-related, correct, right? So I think it's fair to assume that they're not a big –
spk01: balance sheet deposit partner of yours at this point is that kind of a fair comment or can you not say well I don't know if they've said exactly how that mechanism works but they're part of our liquidity is small so it's not it wouldn't impact our deposit base really that's what I figured but thank you for clarifying all that and thanks for taking my questions appreciate it thank you Mike
spk00: Our next question comes from William Wallace with Raymond James. Your line is open. Thanks.
spk06: Good morning. Good morning, Damian. I wanted to circle back to Frank's questioning on the CRE lunch, the bridge lunch. Just want to make sure I kind of 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 loans to about $2 billion?
spk01: 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? 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. So they're 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, you know, up to that $10 billion limit.
spk06: Okay, great. And so you think that the held for sale portion, I believe I heard, you think it would 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... No, no, we can.
spk01: 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 this year, and we expect to double that next year to footings of $1.2 billion, but it'll be really $1.4 billion with future fundings. So we've expanded our ability to originate across the United States and moved into additional markets, and we've done really well. Okay. you know, 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%. It 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 could 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 come through the income statement, too, if that happened, because there's still fees that are unamortized, really, because we put those held-for-sell loans out at $99. So 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 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 in a very good position with that portfolio.
spk06: Okay, great. Yeah, all the new originations, they come on floating, right? They're not going to come on – under floors or anything like that, right? They'll just come on base.
spk01: There'll be floors on it, but there's no way it can be under the floor, right? Because we're at zero interest rates. I guess if we turn to Germany or Japan, it's possible. But otherwise, it's, you know, I think our inflation expectations ruined any idea that we're going to be negative interest rates.
spk06: Yeah. Okay. And you just spoke a little bit about credit sponsor problems. opportunities. You've kind of mentioned it periodically over the last year or so as an opportunity for Bancorp. I'm wondering if you could maybe help us kind of 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 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?
spk01: Well, your conjecture is basically intellectually consistent, right? Of course, people that we've, partners that we've done business with 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 in that they can provide you know, some credit capability for underbanked individuals. So, you know, 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, you know, go through a marketing process and we always leave it to our partners to lead 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.
spk06: 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 have already been built out and an announcement would be made when the program might be ready to go live rather than when an agreement was struck?
spk01: Oh, yeah. With these type of programs, there's A lot of work. In most cases, it's true. Not always, but mostly even 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, you know, processors, regulatory, you know, what's your compliance, how are you going to handle compliance and BSA. So there's usually a lot of work for this. For anything in the consumer space where there's other regulatory guidance that you need to follow, a lot of work. You'll be at least in the beta phase, if not the full rollout, by the time we announced it with a partner.
spk06: Okay. Great. Thanks for that. We'll look forward to a potential announcement, I guess, sooner than later. The follow-up I'd have is just kind of maybe just bigger picture, kind of philosophically we had. Vero, apply and get their charter. SoFi now, apply and get their charter. And you guys have your finger on the pulse of the FinTechs probably better than most. I'm just kind of curious if you could talk a little bit about your views on whether or not there is a building – desire for FinTech to want to go that route, or if these two that have occurred so far might be what you would deem kind of case-specific? Just maybe your thoughts, big picture, higher level, on what the trend may be three, five, ten years from now.
spk01: I don't think that's the – I think there will be some large players – you know, it could be SoFi, it could be somebody else that will drive towards being a very large institution. So, you know, the top 10 banks today might include one of those fintechs that started, you know, recently, and they could become a big, you know, universal bank in the United States, and even challenge the larger banks. And I think, you know, you've heard comments from even Jamie Dimon, that that's a real threat. So that's a possibility. And they'll need to build out very broad capabilities, not only in deposits, but in lending and potentially securities. 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're 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, et cetera, uh, government, et cetera. Um, there is no desire or you can't be a bank. So, you know, for a big part of our portfolio, it's not even affected by the charter. Uh, I personally think, uh, right now, uh, they're both, you know, real test cases. I think there's, uh, you know, there's real costs to being a bank, uh, and, uh, You know, there's real restrictions on capital, and through the interagency process or the camel's process where they rate each part of the bank, it's very difficult to be, you know, a 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. But I don't think the charter, fintechs getting charters, is a threat to, you know, as, you know, banking is a service or ecosystem project. providers like ourselves, I don't think that's a threat, that that's going to significantly affect our ability to grow.
spk06: Great. Thanks, Damian. And just one last little kind of housekeeping question. 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 was 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 value?
spk01: 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 continued to vest in the company. That's why you saw maybe a tick up in shares. uh, and shares and might, might see some mitigation from the buybacks, but we've been paying far less stock, uh, recently, uh, and at a much higher price. So that, that, that, um, dilution will, will significant be, will be significantly lower in the future. Paul, you want to make a comment?
spk02: Yeah, I, I would refer you to the, um, we actually have a footnote, the stock compensation footnote, um, which we show every year and actually every quarter, which we show the originations and the RSUs vest over a three-year period. So it's easily calculable. As Damian noted, we issued some in May 2020 when the stock price was low, was like $7. So that resulted in a large number 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'll have some impact this year, but it'll continue to diminish because there's only a fraction of new shares being granted.
spk07: Okay. All right, great. Thanks, Paul. Appreciate the time, guys. I'll step out.
spk00: If there are no further questions, I'd like to turn the call back over to Damian Koslowski for closing remarks.
spk01: Well, 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.
spk00: You're welcome. Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.
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