Bancorp Reports Q1 2026 Results: Full Earnings Call Transcript

Bancorp (NASDAQ:TBBK) reported first-quarter financial results on Friday. The transcript from the company's first-quarter earnings call has been provided below. Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more. View the webcast at https://events.q4inc.com/attendee/869848986 Summary Bancorp Inc reported an EPS of $1.41 for Q1 2026, marking an 18% year-over-year growth. ROE was 35.1% and ROA was 2.57%. Revenue growth for the quarter was 15% year-over-year, driven by the fintech sector with GDP growth at 18%. The company launched the Cash App program, expected to ramp up in 2026 and 2027, contributing significantly to financials. Credit sponsorship balances increased to $1.65 billion, a 50% rise over the previous quarter. Bancorp Inc plans to launch at least two new significant programs in 2026, contingent upon partner timelines. Significant progress was made in reducing criticized assets, with a 16% decline from the previous quarter. The company maintained its 2026 EPS guidance at $5.90, with expectations of $8.10 to $8.30 for 2027. 2026 buybacks are forecasted at $200 million total, with 2027 buybacks expected to equal near 100% of net income. The fintech initiatives, platform efficiency improvements, and capital returns through buybacks are key drivers for future EPS growth. Loan growth was notable, with an increase to $7.75 billion, a 9% non-annualized linked quarter growth. Average deposit growth was robust at 9% non-annualized linked quarter, with a decrease in average deposit cost to 1.7%. Net interest margin (NIM) was 3.87, down due to a shift in loan mix towards credit sponsorship. The company is focusing on fintech platform investments and leveraging AI for efficiency improvements. Full Transcript OPERATOR Hello everyone and welcome to The Bancorp Inc. First Quarter 2026 Earnings Conference Call. Please note that this call is being recorded. After the Speaker's prepared remarks there will be a question and answer session. If you'd like to ask a question during that time, please press STAR followed by one on your telephone keypad. Thank you. I'd now like to hand the call over to Andres Vyroslav. Please go ahead. Andres Vyroslav Thank you Operator Good morning and thank you for joining us today for the Bancorp's first quarter 2026 financial results conference call. On the call with me today are Damian Kozlowski, Chief Executive Officer and Dominic Canuso, 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 12:00pm Eastern Time today. The dial in for the replay is 1-800-770-2030 with a passcode of 9545117. Before I turn the call over to Damian, I would like to remind everyone that our comments and responses to questions reflects management's view as of today, April 24, 2026. Yesterday we issued our first 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. Please note that The Bancorp undertakes no obligation to publicly release the results. Many 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 Kozlowski (Chief Executive Officer) Thank you, Andres and thank you for joining our call today. The Bancorp earned $1.41 a share in the fourth quarter. EPS growth year over year was 18%, first quarter ROE was 35.1% and ROA was 2.57. FinTech GDP continues to grow above trend at 18% year over year. Revenue growth in the quarter which includes both fee and spread revenue was 15% year over year. Our three main fintech initiatives continue to move forward quickly and are well positioned for success. Our onboarding of new programs and expansion of current programs continues at pace. CashApp program has been launched. It will ramp up during 26 and 27 and show progressive accretion to our financials. Credit sponsorship balances soared in the first quarter to 1.65 billion, a 50% not annualized increase over 4Q25. As previously stated, we expect to launch at least two significant additional programs in 26. Announcements are subject to our partners marketing timelines. Embedded finance platform is close to completing the development of its first operational use case. We plan to announce at least one client in this area in 26. We also made continued progress in reducing our criticized assets which includes both substandard and special mention assets. These assets declined from 1 94.5 million to 163.1 million or 16% quarter. We expect more progress over the next few quarters. Lastly, we are maintaining our guidance at 590 EPS for 26 with $1.75 to share in the fourth quarter. Our expectation for 27 EPS is in a range of 810 to 830. 2026 buybacks are forecast to be 200 million total and 50 million a quarter in 26 with 27 buybacks equal to near 100% of net income in the year. Our three major fintech initiatives along with platform efficiency gains from restructuring and AI tools plus a high level of capital return through continued buybacks will be the driving forces beyond EPS accretion. EPS gains are subject to development implementation timelines in fintech and I'll turn the call over to our CFO Dominic Canuso. Dominic Canuso (Chief Financial Officer) Dominic thanks Damian. The first quarter builds on our momentum and strategy from 2025 and is setting up for a strong 2026 ending loans for the quarter are 7.75 billion which is a 9% non annualized linked quarter growth and 22% growth year over year. Credit sponsorship growth accounted for 88% of total loan growth linked quarter and 83% of total loan growth year over year bringing the segment to approximately 21% of total loans up from 15% prior quarter and 9% a year ago. Our strategy is to continue to shift the loan mix towards the higher returning lower cost credit sponsorship business. Average deposit growth was also a robust 9% non annualized linked quarter, fully funding the loan growth with an average deposit cost of 1.7% in the quarter which was a 7 basis point decrease from prior quarter and 53 basis points lower than the prior year quarter. We also ended the quarter with $1.34 billion in off balance sheet deposits comparing to $850 million at the end of the fourth quarter and $793 million prior year. Demonstrating the continued growth of our partnership based deposit franchise along with the strength of our overall liquidity position. Net Interest Margin (NIM) was 3.87 in the quarter, down 43 basis points from prior quarter and 20 basis points prior year's quarter. The decrease versus prior quarter is driven by both the mix shift in loans to credit sponsorship and the lagged impact of the lower short term rates on variable rate loans. For some additional context on NIM, especially as we continue to mix shift loans towards FinTech, our FinTech lending fees are the equivalent to an additional 24 basis points of net interest margin. In addition, given the volume of off balance sheet deposits, we generated $900,000 from deposit sweep fees which is recognized in other income which equates to another four basis points of net interest margin. Non interest income mix excluding credit enhancement was 33% compared to 30% in the fourth quarter and 29% in the first quarter of 2025. Fintech fee revenue is 29% compared to 27% for both prior quarter and prior year quarter. It is important to note that the growth in the credit sponsorship loans that we saw in the quarter is a leading indicator of fintech fee growth both in the lending fees and higher transaction fees due to the higher volume of churn in that portfolio. Regarding credit, we continue to see improvement in both our current and lending leading credit metrics with particular note in Rebel and Leasing, Rebel criticized loans are down 24 million or 29% to 59 million from prior quarter and down 75% over the last 18 months. When excluding fintech credit sponsorship loans which are supported by full credit enhancement, our traditional lending portfolio saw a provision reversal of 1.3 million even as the traditional lending portfolio grew in the quarter. The release of reserve was primarily driven by specific reserve reductions in our leasing portfolio that were established in the third quarter of 2025 as positive progress continues to be made with those borrowers. Non interest expense for the quarter was $55 million with an efficiency ratio of 41.5%. When excluding the credit enhancement revenue, we continue to invest in the fintech platform including building out embedded finance capabilities along with launching new products. At the same time we are leveraging AI and redeploying costs across the organization to continue to improve efficiency and allocate resources to support our fintech initiatives operator. You may now open the call for question. OPERATOR We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your first question comes from the line of Joe Yanchunis of Raymond James. Your line is now open. Joe Yanchunis (Equity Analyst at Raymond James) Thank you and good morning guys. Good morning, Joe. So with your 2026 EPS outlook reiterated, can you talk a little more about your embedded finance offering and this initiative's impact on 2026 results? I mean, how long will it take to onboard, you know, this first partner after announcement? Obviously partner delays are a thing in Damian Kozlowski (Chief Executive Officer) this space and I was just hoping to get a little more color on that from your end. Yeah, we have very little revenue for embedded finance in 26. We have more in 27. But you're exactly right, we're likely to announce at least one partner. It does take a while to fully build out the capability depending on what the use case is. You know, it could be very limited or it could be very broad. So that impact of embedded financial will be filled, fulfilled in 2027 and 2028. So very little revenue is in our own plan for 26 for embedded. Now we do have revenue in there for continued sponsored lending growth and for a potential announcement around two new partners. So that has more of an impact than the embedded would on our own budget. Joe Yanchunis (Equity Analyst at Raymond James) Got it. That's helpful. And in your prepared remarks, you discussed, you know, some metrics, you know, behind your off balance sheet deposit and that strategy. I mean, how should we expect this to evolve over the coming quarters? I assume the amount earned per deposit is based on, you know, the individual deposit costs and correct me if I'm wrong there, but will the biggest driver of revenue growth, you know, from this be moving more deposits off balance sheet or getting better economics per deposit? Damian Kozlowski (Chief Executive Officer) It's both. Right, so over time we take the higher cost deposits off the balance sheet and we do, depending on the program that we're taking off the balance sheet, we may get some spread on that. Right. It's in our own forecast. That's a small part. You know, it's, it's basically gravy the way we look at, you know, our own forecasting over the next three to five years. It wouldn't be as we grow the other parts, the main initiatives. That's, that's literally gravy on top of, you know, it's Not a big part of our own planning. And they, and they're volatile. Right. And it depends on the program, but they will grow. We'll have forced lower basis points on what we have to pay out as we take more higher yielding deposits off the balance sheet. And in select occasions we will get some spread on transferring those deposits through a network to other banks. Joe Yanchunis (Equity Analyst at Raymond James) Okay, I appreciate that. What about the Aubrey, what are your current thoughts on the timing of selling that property and has your expectation around the sale price changed given the recent softness that we've seen in rent prices? You know, and then additionally, has there been any thought behind redeploying those proceeds into share repurchases or will you just accrete that to capital? Damian Kozlowski (Chief Executive Officer) Well, we're going to return 100%, as we've said before, 100% of share buyback from our net income until, you know, we get a multiple that we think is appropriate for our roe and growth so that, you know, whatever we get in that income we'll distribute back to shareholder through buybacks. Dominic can give you a good Aubrey update. Sure. Dominic Canuso (Chief Financial Officer) Good morning. Yeah, so we continue to invest in the property, increase the occupancy rate as we do. The occupancy rate of available rooms has been 80% even as we doubled it. And there are plans to continue to finish the remaining 50 units that need to be upgraded. You know, we're just over 60% of occupancy on a total unit basis and we expect to hit near 70 in the very near term. We expect the property to be operating break even by the end of this quarter. So its impact to our financials should be neutral. And you know, we've shifted a bit given the significant progress and success in the continued occupancy from just removing it from the balance sheet to actually getting it to a stabilized valuation which may take a little longer but ultimately result in better economics for the bank when we exit. Joe Yanchunis (Equity Analyst at Raymond James) Okay, that was helpful, but I just want to kind of dig into something that you said said Damian. So I was under the impression the guidance implied 50 million of share repurchases per quarter in 26 and then you returning 100% of net income or putting up making the buyback 100% of net income in 27. So would that mean if you sold the Aubrey and does that mean you're gonna sell the Aubrey in 2027? Kind of. Damian Kozlowski (Chief Executive Officer) Based on your answer, we're looking to, I think we'll be totally full if we're going to go to stabilization. That would probably be a first quarter next Year event, we have close to 50 buildings on the property. Right. And there are nine left. And we're reconditioning those nine buildings over three phases over the next nine months. So if we get the stabilization, probably would occur at the end of next year where stabilization is in the high 80s, low 90s, and then we would be able at least to get obviously our, our basis covered. But the appraisals are in the low 50s. So. And if we were to, you know, monetize, it would be a rounding error to our buyback. You know, if we're looking at our buyback, we're a little bit less than net income this year because we did so many buybacks last year that we're just building a little bit of extra equity into the end of this year and then we would return 100%, you know, for the foreseeable future. We think depending on the multiple. So the exit on the Aubrey if stabilized, if someone doesn't come in and just write a check. But our current intention is to fix those nine buildings, get it up to high 80s, 90, and then monetize it at this current time because we've done so many, so much work already. Joe Yanchunis (Equity Analyst at Raymond James) Right, okay, great. And then one last one for me here. You know, how much of your balance sheet are you willing to dedicate to credit enhanced loans, you know, over time? Damian Kozlowski (Chief Executive Officer) All of it. All of it, okay. Oh, credit enhanced or credit sponsor loans? Which one do you mean? The credit sponsored loans. I thought that's what you meant. So there's two parts, right? There's credit enhanced loans and then there's also loans that we might do that are distributed or we might take, you know, parts of bigger origination slices of it. Right. And keep it on the balance sheet. But of the sponsorship loans, I mean, it's possible, you know, when we're looking at our pipeline, that'll be a much big bigger part of our business. Now that's, that's over many years. So we're going to. And many of remember any of our businesses like SBA, you know, the real estate business, which we have distributed before, are fairly liquid assets. The same is true their demand loans on the institutional. So this is a multi year thing and it really depends on the programs. Chime is a very unique situation where we're using a lot of balance sheet. That's very unlikely to happen. There'll be some balance sheet used for future programs. Some might be bigger than others. China is a very special case. So this is a very, you know, when we look at our apex 2030 strategy we might, you know, originally we were thinking 10% and then we thought more like 30 or 40% of the balance sheet possibly in the next three to four years. Joe Yanchunis (Equity Analyst at Raymond James) All right, that was helpful. Thank you for taking my questions. OPERATOR Your next question comes from the line of Manuel Navis, a Piper Sandler. Your line is now open. Grant Hey, good morning guys, this is Grant on for Manuel. I just wanted to ask could, could you talk a little bit more about the shift in loan loss reserves (LLR) for FinTech loans? It was came in at 1.1% this quarter and was 2.84% last quarter. Could you just talk a little bit more about what drove that shift? Did you do more secured credit cards that require less? So with the economics, I'll let Dominic handle it. The overall economics, the NIM of the entire program because it's in different places of the balance sheet and we fund it with non interest bearing deposits is around 3% NIM for the whole portfolio products. If you take a look at all the economics that may and the cost structure on that is not traditional lending. Right. So you're not supporting it with origination all the things that you would on a traditional business. So and it's credit secured. So we're getting a, you know the whole economics over the portfolio is around that would move up over time potentially with different product sets. And I'm only talking about chime but Dominic, do you want to dig a little deeper? Damian Kozlowski (Chief Executive Officer) Sure. Grant, to your question. You know the unsecured, the secured product did outperform the growth in the quarter and so there was a mix shift towards that product which does have a lower loan loss reserve relative to the other products but across all products continues to improve as you can see in those metrics. As you know the performance of customers along with the growth demonstrates the growth Dominic Canuso (Chief Financial Officer) potential of the programs. Understood, thank you. And I also wanted to ask what is kind of the pace of fintech loan growth from here? I see the, the goal was 2 billion by year end. You're now at 1.67 billion and you were at 1.1 at 4Q how does this adjust other metrics like fee income or nim? Grant The success in the quarter we were very pleased with and I think outrun ran our internal expectations. It does not change our full year targets or expectations. I think what it does is demonstrate the strength of the balance sheet we'll see in the near term along with the fees that we anticipate from the churn particularly in that higher volume portfolio so overall targets remain the same. I think there was just a little bit of a pull forward of volume that we anticipate, which is very positive and we're excited to see. So it just means that the balance sheet will be a little higher earlier in this year than originally expected. OPERATOR All right, thank you. That's it for me. Tim Twitzer (Equity Analyst at KBW) Your next question comes from the line of Tim Twitzer of KBW Airline is now open. Hey, good morning. Thanks for taking my questions. Good morning, Tim. So, so Damian, you mentioned your opening comments that the, the new Cash program has launched and will ramp up over the course of the year. It looks like we saw some acceleration in GDP. Was there any contribution at all this quarter? Damian Kozlowski (Chief Executive Officer) No. Very little. No, so very little. Right. So. So our partners are very, you know, they're meticulous and when they launch these programs in solar ways, so we go through a long testing phase and then you start, you were in the full, I would say turn the dial stage where everything is set. You know, we're watching you have incremental kind of gating issues. So we've already passed the first gate and we're ready to start turning up the dialogue. So a lot of work has been done, like I said, that by the end of the year it should be fairly meaningful to our financials. All predicated on the timelines. Right. Of that gating. It's going very well so far, but you know, things can, I think it's going to be good. So you'll see that dial turned up through 26 and then especially through the first part of 27. So everything's going well. And every, I think all the us, our partner are all pleased with the implementation. Awesome. Tim Twitzer (Equity Analyst at KBW) That's great to hear. So it sounds like the real acceleration, like an inflection point that kind of occurs in the beginning of 27. Damian Kozlowski (Chief Executive Officer) Well, it'll ramp up this year. It'll start being meaningful. You know, when we talk about our, our own forecast with our programs, you know, we, we see a bump in the fourth quarter.. That's part of the bump. Right. It's not embedded finance like we were saying before, but that is, you know, it's definitely the Chime lending, it's definitely CashApp, other programs that, you know, we will announce other lending programs, we'll also announce other Banking as a Service programs over the course of the year and all those things will start meaningfully contributing by the end of this year. But then 27, there will be multiple things ramping up together which will really lead us into that 20 that 27 guidance that we have. Tim Twitzer (Equity Analyst at KBW) Okay, nice. And so you talked about this earlier with Grant's question on the 3% NIM, but I'm not sure if that was just the secured card or all the fintech loans. But could you kind of help us with the economics? Yeah. Damian Kozlowski (Chief Executive Officer) The reason I said that is because I just wanted to give the. There's a lot of confusion because it's in different. You know, it's, it's, we don't break it out separately and it's in total economics. Right. So we're funding it. Right. With non interest bearing deposits. Right. There's multiple, you know, different products. There's four and it's growing different products. But if you look at the entire economics of it today to The Bancorp, right, it's around 3% NIM for us. Right. Because it's obviously being funded at zeroed card or all of the fintech, that's everything together. We don't provide independent economics but it's a blended economics. That's about what it is. Right. That that potentially will grow over time depending on the product mix. And it's a very, I think it's incredibly synergistic for both us and our partner. I think it's a, it's a, you know, works for us, for both of us. The programs have grown obviously it's been a great source of, a great source for, of revenue but also of relationship deepening for China and you know, we're trying to support their initiatives as you know by using our, by using our balance sheet. Now that's once again that's a very unique relationship. I'm not saying that we will have 10 like we do with Chime. That's very unique where we've, you know, we have a very deep relationship with them obviously for the issuance of their cards and new products and now they're lending products. So we look at the entire economics of the relationship that 3% doesn't include. Obviously all the interchange are part of the interchange that, that CHIME originates. on the secured card. No, not on secured card. That would be in the, if you look at all the products, the lending products that we. Yeah, we're talking about all products. Right. So at any of their, of their products where there's interchange involved we get a portion of that. Plus obviously they have deposits that are sitting in the bank that are in excess of the non interest bearing deposits. There's some of their saving deposits, some of those are off balance sheets. I would say there's the lending part where if you add all the economics together, it's around 3%. But it also has, it's secured, remember, as credit enhancement. Then separately there's a whole stream of revenue, obviously that appears in fees that's only linked to interchange. And then the third part of economics, there's other deposits that fund the bank, excess deposits that aren't lent out that provide deposits to the bank too. So that's, it's such a broad, deep relationship that there's multiple revenue streams from the Chime relationship. Lending is just one of them. Tim Twitzer (Equity Analyst at KBW) Yeah, okay, I get that. I'm getting a lot of questions about kind of the profitability on these loans because if we take the numbers that are, I guess disclosed and we can directly tie to those loans, if I take the fintech fees and the interest income and then those average balances, it looks like it's an annualized yield of about 2.7% and it's, you know, pushing off these non fintech loans yielding, you know, nearly seven. And I, I know obviously on credit risk, it's not a traditional loan where it costs as much to originate. Where, where are the, and maybe just the broader parts of that relationship with chimes. I know all of this ties in together like you mentioned, but. Damian Kozlowski (Chief Executive Officer) Well, you're not that far off. Right. So that's 2.7. We're saying it's around three today. Right. With the mix currently. Right, but the cost structure is radically different. It's only a fraction of traditional. Right. So you're getting a 3% NIM. That's once again a separate from the other two revenue streams. You're getting a 3% NIM. Right. But it's a fraction of the cost of traditional lending and it has no risk of loss. So think about that, right. So if you, if you kind of, that's like a, almost a, it's almost a bond. Right. You could think about a 3%, a short term bond that's yielding 3% and then you have all these other revenue streams that are coming off that, including increased spend. So if you think about it, we're lending money out to people that wouldn't have used it otherwise. And that creates interchange. Right. And the velocity there is extremely quick. Right. So we're talking about billions potentially every month that are going through those products, creating fees for Chime, obviously, but also creating economics for us. It's creating additional GDV spend. Dominic Canuso (Chief Financial Officer) This is. Dominic, just to add, I think the most important part here is the fact that each partner has unique expectations and Unique designs and given the ability to generate deposits, generate transaction fees, whether it's debit or credit, you know, parking loans on the balance sheet and potentially off balance sheet in the future. For loans off balance sheet deposits that are excess or funding other programs with deposits. We believe the economics to the partner are where they need to be for them to invest and grow in their programs and for us to see the returns on a total ROA and ROE basis that are accretive to where we are today. We which is why we expect and intend to continue to shift the balance sheet towards these products. Tim Twitzer (Equity Analyst at KBW) Got it. All that answered my question very clearly. Thank you. And in terms of like the velocity, can you maybe let us know like what was the volume on the loans this quarter or how long are you holding these on the balance sheet on average? And then how might that change in the future whether you guys change your strategy or you know, these two upcoming credit sponsorship programs sound like they might be shorter duration, you know, if you plan to transfer more securitizations, anything like that would be really helpful. Damian Kozlowski (Chief Executive Officer) It's hard to give you clarity on that because we haven't announced. There's a, there's a bunch of different use cases from wage access to longer term installment loans. And we intend to do all those things. Right. So we're, we tend to provide some on balance sheet, probably not as much as our current relationship with Chime to other partners. We intend to securitize a lot of it. So you'll get incredibly high velocity and you'll hold Those loans from three to 30 days probably at the most. Usually it's only a few days. They'll be purchased back by the tech partner and then securitized. And then there is definitely a situation where we'll be holding pieces of loans at a much higher yield. Right. So loans that we like or if it's important to the product for us to hold, excuse me, partner to hold the strip. We will and but those loans will be very, very high. So if you look at the NIM today of The Bancorp where it is today, right. We're around 4%. If you add back what Dominic was saying, the basis points and the fees that potentially could be viewed as interest. Right. So it's not that different. You know, we had some deterioration in our nim, but if you add back the increased fees from this quarter versus last year, it's you know, 12 basis, 13 basis points different in NIM. Your NIM is going to. Your net interest margin should go up over time. Right. If you Add back all those fees depending on the programs because you're going to obviously have pressure on deposits going down. Right. Because of our liquidity. So we'll take more high rent deposits off the balance sheet. And then if, when you look at these programs the CHIME situation is the lowest, probably the lowest NIM situation you would have because all this synergistic revenue so that over time once again adding back potential fees from the line that we have, that third line in our financials around fintech loan fees. Plus you look obviously the interest is, if there's any interest on those loans, it's already in our NIM calculation that after this initial stage should start moving up. Right. And then in many of these cases these are the velocity of loans, you'll be getting fees and so you'll get effective yields very short term loans very quick. Many of them will be backstopped or securitized. So you'll have a conversion of the balance sheet from traditional non traditional lending. There'll be less of a potentially of a traditional bank reserve. These are the structure of these loans. The velocity will go up very high. And if you add back the fees on these loans, the nim, the effective NIM on these loans over time will go up. Now in the near term they'll go down for the reasons that we've stated on the CHIME program. But that should turn around as we add new partners. Tim Twitzer (Equity Analyst at KBW) Great. Yeah, I mean that's really helpful. I mean you know, regardless of where the reported Nim Goes, Apex 2030 ROA, 4% ROTC at 40, you know, bottom line is moving up. Damian Kozlowski (Chief Executive Officer) Yeah, but just look at, just look at, this quarter. We had a 35 roe look at our roa. Right. And if you consider that the fact that we're going to re repatriating all our equity or equity stays the same. So any incredible. You know, as we, as our net income moves up, our obviously our ROE ROA will continue to move up and our efficiency ratio is likely to move down. Tim Twitzer (Equity Analyst at KBW) Yeah, that's great. Okay. Another area that has become a bigger and bigger opportunity in the fintech side of things for you guys is those off balance sheet deposits which I think have gotten to $1.3 billion right now your press release mentioned 900,000 earned on deposit sweep in other income. Is that where all the revenue from your off balance sheet deposits are reported? Just to make sure I'm capturing all the revenue? Damian Kozlowski (Chief Executive Officer) Yes, Dominic can answer that. But yes, that's correct, that's where it's located. Okay. Dominic Canuso (Chief Financial Officer) Now as Damian mentioned earlier on the call, you know, first quarter is seasonally high just because of tax season. We do expect it to contribute, but it's probably a secondary or tertiary, you know, benefit from all the strategies we just talked about. Tim Twitzer (Equity Analyst at KBW) Okay, yep, makes sense I think on the last analysis on this call. So I got a few more if that's okay on, on the Rebel book. Good to see another quarter of improvement in the credit metrics there. Could you give us an update on how the maturities and refinancing within the Rebel book are going right now? And like one thing I'm looking at is how the percentage of Rebel balances maturing over the next 12 months declined meaningfully for the first time in a while. In Q4 it's now less than 50%. Do you have that updated number for Q1? Because it kind of seems like they could indicate you're seeing less one year extensions and more actual payoffs. Damian Kozlowski (Chief Executive Officer) Yeah, so, but remember, we have great visibility. These are repositioning mostly of workforce, housing and they require work. So there's constant draws. Right. We have reserves and everything. So we don't. The reason that we had that bubble when we did was that because the origination period where we got back into the business, there were a lot of loans done at that time. Right. We haven't, we've maintained the portfolio, but that large bump in origination during that period that we resulted in classified assets has worked through the system. Right. So those were the, those were the buildings that were having issues due to the supply shock. Interest rate increases, sharp interest rate increases. So that's. That bubble has gone through the system. So that's dropping because we just haven't had as many originations. Right. So and, and if a project is completed, right. And it's on plan and everything, sometimes sponsors will want a year or two and that's built into our contracts to one year extensions and people take advantage of that sometime. It's at both of our agreement and they're stabilized loans at that point. They may want to do an exit and they're not exactly want to do it at this interest rate. So yeah, that's that the reason that was so high was because of that bubble. And that bubble is. I don't know the exact. Maybe Dominic has it on his fingertips, maybe we can, we can publish it in the future. But that, that is slowly working down quickly. Tim Twitzer (Equity Analyst at KBW) Okay, all right, that's helpful and kind of related to that. It looks like the average yield on the Rebel book has gone down from about 8 and a half percent to 7.6 in the last two quarters. It seems like a pretty quick decline. Could you talk about the drivers there in terms of maybe what new loans are coming on at versus rolling off and how much of that decline could be due to some of these extensions or modifications of that? Dominic Canuso (Chief Financial Officer) Go ahead, Dominic, you want to handle it? Sure, yeah. Well, just, you know, as a reminder, a third of that portfolio is variable. So you clearly see a step down with the short term interest rate environment that we've seen over the past year. But to the point that you just spoke about, which was that vintaging, that large vintaging roll through again, they were on 311 contracts, many of which came, you know, to that second term and were either recapped or refinan sold out. You know, those recaps and refinances were at lower rates because they were at more stable, you know, stabilized values, you know, previous investments, stronger, you know, investors. So those rates, by the quality of the positioning of those loans brought down the rate combined with the variable rate environment. You know, we do think we're at a good point now, having worked through that large vintage bubble and, and with the lower rates that we should see much more stability going forward. You'll continue to see loans rolling off in the low eights and being put on in the mid sixes. So you'll see that natural portfolio churn. But that's just the interest rate environment we're in, nothing more than that. Tim Twitzer (Equity Analyst at KBW) Okay, all right, that's helpful. And then the last one for me, thanks for taking all these questions. Is there any risk or even opportunity from the proposed executive order on banks being required to obtain citizenship info? It seems like that would be a big lift for a lot of the bas banks given like the third party relationships and how small some of these accounts are. And like, on the opportunity side, you know, would your prepaid card products be required to obtain citizen and like citizenship info as well? Because it seems like it could push a lot of people towards those sort of products. Damian Kozlowski (Chief Executive Officer) Well, I, that would be a very difficult thing to do since prepaid cards, you know, every prepaid card, that would be every incentive card, you know, that'd be cracker barrel, you know what I mean? That'd be a restaurant card. That would be very difficult. There are some. And those deposits on those type of cards in many cases are not even insured deposits because you don't know who it is. We do have, I think, versus many institutions, we have fairly good information in that area. If it gets implemented. If it becomes a requirement, everyone will have to do it. Right. I'm sure there will be an implementation phase. There might be new accounts. All those things aren't clear at this time, so we can't really comment on it. But we do collect a lot of depending on the type of account and the use. There is a lot of already information like Social Security numbers and everything for many of our. Not of our clients obviously, but of their clients that end up being, you know, deposits at our bank. So there is requirements already in place and we right now, we don't know how that has to play out, whether that. How that actually gets worked through the system. Obviously the regulators where everyone. It would be, you know, Fin said wouldn't be of everyone would have to be involved and it would have to be implemented over long periods of time. Tim Twitzer (Equity Analyst at KBW) Yeah, yeah. I mean I told. There's very little details exactly how it works. So appreciate it. Thanks for taking all my questions, dad. Damian Kozlowski (Chief Executive Officer) No problem. Thank you. OPERATOR Thank you. I would now like to hand the call back to Damian Kozlowski for closing remarks. Damian Kozlowski (Chief Executive Officer) Thank you for joining us today, everyone. Operator, you may disconnect the call. Disclaimer: This transcript is provided for informational purposes only. 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