The Bancorp, Inc.

Good day, and welcome to the Bancorp, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will open the floor for questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. Please note, today's call will be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the call over to Andres Virasov. Please go ahead.

Thank you, operator. Good morning, and thank you for joining us today for the Bancorp's third quarter 2024 financial results conference call. On the call with me today are Damon 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 available via webcast on our website beginning at approximately 12 p.m. Eastern Time today. The dialing for the replay is 1-800-839-1162. Before I turn the call over to Damien, I would like to remind everyone that our comments and responses to questions reflects management's view as of today, October 25th, 2024. Yesterday, we issued our third quarter earnings release and updated investor presentation. Both are available on our investor relations website. We will make certain forward-looking statements on this call. These statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mentioned today. These factors and uncertainties are discussed in our reports and filings with the Securities and Exchange Commission. In addition, we will be referring to certain non-GAAP financial measures during this call. Additional details and reconciliations of GAAP to adjusted non-GAAP financial measures are in the earnings release and the investor presentation. Please note that 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. Now, I would like to turn the call over to the Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Thank you, Andres. Good morning, everyone. The Bancorp earned $1.04 a share in the third quarter. Revenue growth was led by our FinTech Solutions Group. GDV growth was 15%, while total fee growth from FinTech payments fees and credit sponsorship fees was 22%. We continue to grow total credit sponsorship balances, which were $280 million at the quarter end compared to $70 million at the end of the second quarter. We are excited about the prospects for newly added and prospective payments clients and expect our non-interest income to reflect their impact in 2025. On the lending side, our substandard multifamily loan assets continue to be elevated and We believe we are at or close to peak in substandard assets and are employing multiple strategies to reduce that number without incurring losses. We also had the portfolio reviewed by an independent third party to validate our internal ratings. The substandard assets continue to be centered in our 21 and 22 vintage that was impacted by supply delays and a sharp rise in rates. We continue to believe that we will have little to no losses on this portfolio due to the conservative leverage of the loans. Anticipated rate decreases should also aid in reducing the amount of substandard assets. In addition, the Aubrey property in Houston continues to be on track for the December 24 close, with our deposit on the property growing from $125,000 to $375,000 currently. The other lending lines were led by our small business lending with 14% year-over-year growth. Moreover, our institutional business continues to stabilize, and quarter end balances were essentially flat to prior quarter. In other matters, due to the potential repayment of outstanding senior secure debt of $96 million, planned buybacks will be reduced to $150 million in 2025, or $37.5 million a quarter from a total of $250 million in 2024. Our 24 buybacks included a $50 million special buyback in the second quarter. Depending on prevailing rates, we may reissue debt of $100 million or more to replace existing senior debt. In that event, we would likely use all or most of the proceeds to increase our stock buyback. Also in our financial reporting, we will be breaking out more detailed business segment profitability for the first time. As you will see, the majority of our economics originates from the non-interest income and deposit funding generated by our payment ecosystem. The methodology we used was simple. We charged interest expense to the lending businesses using a three-year average market rate, while our FinTech payments business received the resulting interest income. Those allocations are shown in the interest allocation line. The actual cost of our deposits was charged to our FinTech Solutions business as their interest expense. The corporate segment includes our bond portfolio and was charged the actual cost of our deposits as interest expense. Expenses for each business are driven by both direct expenses incurred and allocated expenses based on estimated usage. This methodology better explains how our best-in-class returns are generated and the central role of the Bancorp's FinTech payments franchise to our profitability. A schedule summarizing this view of our business appears at the end of the press release. Lastly, we are issuing 25 preliminary guidance of 525 a share, supported by our continued double-digit growth in FinTech fees and credit sponsorships. Our 25 guidance does not include the impact of planned stock buybacks of $150 million that I previously mentioned. I now turn the call over to Paul Frankel for more color on the third quarter. Paul?