The Bancorp, Inc.

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.thebankcorp.com. There will be a replay of the call available via webcast on our website beginning at approximately 12 p.m. Eastern Time today. The dial-in for the replay is 1-877-674-7070 with a confirmation code of 545154. Before I turn the call over to Damian, I would like to remind everyone that when using 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 bank course filings at 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 in 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. Now I'd like to turn the call over to the Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Thank you, Andres, and good morning, everyone. Excluding the tax-affected impact of a one-time write-off, the company's only trust-preferred security purchased in 2006 The Bancorp earned 95 cents a share with year-over-year revenue growth of 16% and expense growth of five. Excluding the trust preferred write-off, ROE was 26. NIM expanded to 526 from 507 quarter-over-quarter and 421 year-over-year. GDV increased 13% year-over-year and total fees from all FinTech activities increased 15%. For the full year of 23, the Bancorp generated $3.63 per share, excluding the net of tax $0.14 impact of the trust-preferred write-off. First and foremost, we have completed a major year-long strategic review and built a new business plan for our company. We are pleased to announce APEX 2030. Details of this strategy appear in our investor presentation on our website. The strategic blueprint includes the monetization of our capabilities in middle office technology and infrastructure, and the ability to keep our balance sheet under $10 billion By recycling both our assets and liabilities off balance sheet, these enhanced capabilities will create significant fee generation opportunities in services, credit sponsorship, and asset distribution. As I discussed in our last earnings call, as a result of our investments in growth and efficiency, our ROE is driving a continued increase in our regulatory capital ratios. With the REG II Durbin balance sheet limit of $10 billion, the Bancorp is fast approaching the maximum equity capital needed to support our business growth into the future. Therefore, we are significantly increasing our buyback in 2024 by $100 million to $200 million or $50 million a quarter. Since the inception of our buyback in 2019, we have created approximately $75 million of value to our shareholders based on our December 31-23 share price. We believe our stock continues to be significantly undervalued when considering our long-term equity returns and EPS growth prospects. Therefore, our capital return policy will remain focused on stock buybacks rather than dividends. We are also confirming 24 guidance of 425 a share without including the impact of share buybacks. This is approximately 17% earnings growth over 23 earnings per share, excluding the impact of the trust preferred write-off. And we expect the Bancorp to continue to meaningfully outperform our peers and deliver superior growth and continued improvements in ROE and ROA. I now turn the call over to Paul Frankel for more color on the fourth quarter and full year 23.

Thank you, Damian. As a result of its variable rate loans and securities, Bancorp performance continues to benefit from the cumulative impact of Federal Reserve rate increases. While 2023 decreases in S-block and I-block balances offset the impact of other loan growth, total related net paydowns in the fourth quarter were significantly lower than in every other quarter of 2023. The impact of the Federal Reserve rate increases was reflected in the 20% increase in net interest income. In addition to the rate sensitivity of the majority of our lending lines of business, Management has structured the balance sheet to benefit from a higher interest rate environment. Accordingly, over a period of years, it has largely allowed its fixed rate investment portfolio to pay down while limited purchases were focused on variable rate instruments. Additionally, the rates on the majority of loans adjust more fully than deposits to Federal Reserve rate changes. As a result, in Q4 2023, the yield on interest earning assets had increased to 7.5% from 5.9% in Q4 2022, or an increase of 1.6%. The cost of deposits in those respective periods increased by only 0.8% to 2.5%. Those factors were reflected in the 5.26% NIM in Q4 2023, which represented another increase over prior periods. The provision for credit losses was $4.3 million in Q4 2023 compared to $2.8 million in Q4 2022. Of the total $4.3 million, approximately $1 million resulted from growth in loan principal between the third and fourth quarters of 2023, against which cumulative CESA loss and qualitative percentages are applied. An additional $1 million resulted from increasing the CECL economic factor on real estate bridge loans. The balance of the provision primarily reflected the impact of leasing-related charges, approximately 900,000 of which were in long haul and local trucking. Total principal exposure in those and related categories was approximately $39 million at December 31, 2023. Prepaid debit and other payment-related accounts are our largest funding source and the primary driver of non-interest income. Total fees and other payments income of $25 million in Q4 2023 increased 15% compared to Q4 2022. Non-interest expense for Q4 2023 was $45.6 million, which was 5% higher than Q4 2022. Values and benefits expense was flat year over year, reflecting reduction in incentive compensation expense. Book value per share at quarter end increased 22% to $15.17 compared to $12.46 a year earlier, reflecting the impact of retained earnings. Quarterly share repurchases should continue to reduce shares outstanding. I will now turn the call back to Damien.