The Bancorp, Inc. (NASDAQ:TBBK) Q1 2026 Earnings Call Transcript

The Bancorp, Inc. (NASDAQ:TBBK) Q1 2026 Earnings Call Transcript April 24, 2026

Operator: Hello, everyone, and welcome to the Bancorp Inc. First Quarter 2026 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] I’d now like to hand the call over to Andres Viroslav. Please go ahead.

Andres Viroslav: 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’ll be a replay of the call available via webcast on our website beginning approximately 12:00 p.m. 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 reflect management’s view 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’ll 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 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’d like to turn the call over to The Bancorp’s Chief Executive Officer, Damian Kozlowski. Damian?

Damian Kozlowski: 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, GDV 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 3 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. Cash at 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% nonannualized increase over the fourth quarter of ’25.

As previously said, we expect to launch at least 2 significant additional programs in ’26. Announcements are subject to our partners’ marketing time lines. 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 $194.5 million to $163.1 million, or 16% quarter-over-quarter. We expect more progress over the next few quarters. Lastly, we are maintaining our guidance of $5.90, EPS for ’26 with $1.75 per share in the fourth quarter. Our expectation for ’27 EPS is in a range $8.10 to $8.30.

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 3 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 and implementation time lines in fintech. I now turn the call over to our CFO, Dominic Canuso. Dominic?

Dominic Canuso: 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. 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 from $900,000 from deposit sweep fees, which is recognized in other income, which equates to another 4 basis points of net interest margin. Noninterest 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 leading credit metrics with particular note in REBL and leasing.

REBL 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. Noninterest 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 refilling 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 questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Joe Yanchunis of Raymond James.

Joseph Yanchunis: 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 this first partner after announcement? Obviously, partner delays are a thing in this space. I just was hoping to get a little more color on that from your end.

Damian Kozlowski: Yes. 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. It could be very limited or it could be very broad. So that impact of embedded finance will really be fulfilled in ’27 and ’28. 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 2 new partners. So that has more of an impact than the embedded would on our own budget.

Joseph Yanchunis: Got it. That’s helpful. And in your prepared remarks, you discussed some metrics behind your off-balance sheet deposit in 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 the individual deposit costs and correct me if I’m wrong there. But will the biggest driver of revenue growth from this be moving more deposits off balance sheet or getting better economics for deposit?

Damian Kozlowski: 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. It’s basically gravy. And the way we look at our own forecasting over the next 3 to 5 years, it wouldn’t be as we grow the other parts, the main initiatives, that’s literally gravy on top. It’s not a big part of our own planning. 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 our network to other banks.

Joseph Yanchunis: 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? And then additionally, has there been any thought on redeploying those proceeds into share repurchases? Or will you just accrete that capital?

Damian Kozlowski: Well, we’re going to return 100%, as we’ve said before, of share buyback from our net income until we get a multiple that we think is appropriate for our ROE and growth. So that — whatever we get in net income, we’ll distribute back to shareholders through buybacks. But Dominic can give you a good Aubrey update.

Dominic Canuso: Sure. Yes. So we’re continuing to invest in the property to increase the occupancy rate as we — the occupancy rate of variable 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. 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 breakeven by the end of this quarter. So its impact to our financials should be neutral. And 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.

Joseph Yanchunis: Okay. That was helpful. But I actually just want to kind of dig into something that you 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 — the buy back 100% of net income in ’27. So would that mean if you sold the Aubrey does that mean you’re going to sell the Aubrey in 2027 kind of based on your answer?

Damian Kozlowski: 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 — there’s close to 50 buildings on the property, right? And there are 9 left, and we’re reconditioning those 9 buildings over 3 phases over the next 9 months. So if we get the stabilization probably would happen 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 basis covered, but the appraisals are in the low 50s. So — and if we were to monetize, it would be a rounding error to our buyback. 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% 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 9 buildings, get it up to high 80s, 90 and then monetize it at this current time because we’ve done so much work already.

Joseph Yanchunis: Right. Okay. Great. And then one last one for me here. How much of your balance sheet are you willing to dedicate to credit-enhanced loans over time?

Damian Kozlowski: All of it?

Joseph Yanchunis: All of it, okay.

Damian Kozlowski: Credit enhanced or credit sponsored loans. Which one do you mean?

Joseph Yanchunis: The credit sponsored loans, the one that…

Damian Kozlowski: I thought that quite meant. So there’s 2 parts, right? There’s credit enhanced loans and then there’s also loans that we might do that are distributed or we might take 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 when we’re looking at our pipeline, that will be a much bigger part of our business. Now that’s over many years. So we’re going to — and many — remember, many of our businesses like SBA, the real estate business, which we have distributed before, are fairly liquid assets. The same is true with the demand loans on the institutional. So this is a multiyear 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 will be some balance sheet used for future programs. Some might be bigger than others. Chime is a very special case. So this is a very — when we look at our APEX 2030 strategy, we might — originally, we were thinking 10%. And then we thought more like 30% or 40% of the balance sheet possibly in the next 3 to 4 years.

Operator: Your next question comes from the line of Manuel Navas of Piper Sandler.

Unknown Analyst: This is Grant on for Manuel. I just wanted to ask, could you talk a little bit more about the shift in LLR for fintech loans that was — came in at 1.81% 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…

Damian Kozlowski: So 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 noninterest-bearing deposits is around 3% NIM. But the whole portfolio of products if we take a look at all the economics. That — and the cost structure on that is not traditional lending, right? So you’re not supporting it with origination and all the things that you would on a traditional business. So — and it’s credit secured. So we’re getting — the whole economics of 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?

Dominic Canuso: Sure. Grant, to your question, 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 our product, continues to improve, as you can see in those metrics as the performance of customers along with the growth demonstrates the growth potential of the programs.

Unknown Analyst: Understood. And I also wanted to ask what is kind of the pace of fintech loan growth from here? I see the goal was $2 billion by year-end. You’re now at $1.67 billion, and you were at $1.1 billion at 4Q. How does this adjust other metrics like fee income or NIM?

Dominic Canuso: The success in the quarter, we’re very pleased with, and I think outran 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: Your next question comes from the line of Timothy Switzer of KBW.

Timothy Switzer: So Damian, you mentioned in your opening comments that the new cash program has launched and will ramp up over the course of the year. And it looks like we saw some acceleration in GDV. Was there any contribution at all this quarter?

Damian Kozlowski: No, very little. No. So very little, right? So our partners are very — they’re meticulous when they launch these programs in solar way. So we go through a long testing phase. And then you start — we’re in the full I would say, turn the dial stage where everything is set. 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 dial. 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. So all predicated on the time lines, right, of that gating. It’s going very well so far, but 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 is going well. And I think all the — us, our partner are all pleased with the implementation.

Timothy Switzer: Awesome. That’s great to hear. So it sounds like the real acceleration, like an inflection point kind of occurs in the beginning of ’27.

Damian Kozlowski: Well, it will ramp up this year. It will start being meaningful. When we talk about our own forecast with our programs, 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 — it’s definitely the Chime lending, it’s definitely Cash App, other programs that we will announce other lending programs. We’ll also announce other lending 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 ’27 guidance that we have.

Timothy Switzer: 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 — the economics?

Damian Kozlowski: Yes. The reason I said that is because I just wanted to give the — there’s a lot of confusion because it’s a different — it’s — we don’t break it out separately, and it’s in total economics, right? So we’re funding it, right, with noninterest-bearing deposits, right? There’s multiple different products. There’s 4 and it’s growing, different products. But if you look at the entire economics of it today through the Bancorp, right, it’s around 3% NIM for us, right, because it’s obviously being funded.

Timothy Switzer: Card or all of the fintech.

Damian Kozlowski: That’s everything together. We don’t give independent economics, but the blended economics that’s about what it is, right? 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 works for us — for both of us. The programs have grown. Obviously, it’s been a great source for revenue, but also of relationship deepening for Chime, and we’re trying to support their initiatives by using our balance sheet. Now that’s — once again, that’s a very unique relationship. I’m not saying that we will have — like we do with Chime. That’s very unique where we have a very deep relationship with them, obviously, for the issuance of their cards and new products and now their lending products. So we look at the entire economics of the relationship. That 3% doesn’t include obviously all the interchange, our part of the interchange that Chime originates. So…

Timothy Switzer: On the secured card?

Damian Kozlowski: No, not on secured card. That would be in the — if you look at all the products, the lending product that we we’re talking about all products, right? So any 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 noninterest-bearing deposits. So some of the saving deposits, some of those are off balance sheet. So I would say there’s the lending part where if you add all the economics together, it’s around 3%, right? But it also has — it’s secured, remember, it’s credit enhancement. right? Then separately, there’s a whole stream of revenue. Obviously, that’s appears of fees that’s only linked to interchange.

And then the third party economics, there’s other deposits that fund the bank, excess deposits that are rent 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.

Timothy Switzer: Yes. Okay. I get that. And 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 pushing off these non-fintech loans yielding nearly 7%. And I know obviously credit risk, it’s not a traditional loan where it costs as much to originate. Where are the — and maybe just the broader part of that relationship with Chime, I know all of this ties together like you mentioned. But…

Damian Kozlowski: Well, you’re not that far off, right? So that’s 2.7%, we’re saying it’s around 3% 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. And this once again is separate from the other 2 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 kind of — that’s like almost — it’s almost a bond, right? You can 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: 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, 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, which is why we expect and intend to continue to shift the balance sheet towards these products.

Timothy Switzer: Got it. All that answers my question very clearly. And in terms of like the velocity, can you maybe let us know 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 these 2 upcoming credit sponsorship programs sound like they might be shorter duration. If you plan to transfer more securitizations, anything like that would be really helpful.

Damian Kozlowski: It’s hard to give you clarity on that because we haven’t announced. 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 intend 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 3 to 30 days probably at the most. Usually, it’s only a few days. It will be purchased back by the fintech 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 a strip, we will, 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 fee that potentially could be viewed as interest, right? So it’s not that different. We had some deterioration in our NIM. But if you add back the increased fees from this quarter versus last year, it’s 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 deposits off the balance sheet. And then when you look at these programs, the Chime situation is the lowest — probably the lowest NIM situation you would have because all the 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 is already in our NIM calculation, that after this initial stage should start moving up, right? And then in many of these cases, because of 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 on the balance sheet from traditional nontraditional 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 stated on the Chime program, but that should turn around as we add new partners.

Timothy Switzer: Great. Yes. I mean, that’s really helpful. I mean, regardless of where the reported NIM goes, APEX 2030 ROA 4%, ROTCE at 40%, bottom line is moving up.

Damian Kozlowski: Tim, just look at this quarter, we had a 35% ROE, look at our ROA, right? And if you consider the fact that we’re going to be repatriating our equity, our equity stays the same. So any — as we — as our net income moves up, obviously, our ROE, ROA will continue to move up and our efficiency ratio is likely to move down.

Timothy Switzer: Yes, that’s great. Okay. Another area that has become a bigger and bigger opportunity in the fintech side of things for you guys is off-balance sheet deposits, which I think is down 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 want to make sure I’m catching all the revenue.

Damian Kozlowski: Yes, Dominic can answer that, but yes.

Dominic Canuso: That’s correct. That’s where it’s located. As Damian mentioned earlier on the call, first quarter is seasonally high just because of tax season. We do expect it to contribute, but it’s probably a secondary or tertiary benefit from all the strategies we just talked about.

Timothy Switzer: Okay. Yes, makes sense. I think on the last on this call, I got a few more, if that’s okay. On the REBL book, good to see another quarter of improvement in the credit metrics there. Can you give us an update on how the maturities and refinancing within the REBL book are going right now? And one thing I’m looking at is the percentage of REBL 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 1-year extension and more actual payoffs.

Damian Kozlowski: Yes. So remember, we have great visibility. These are repositioning mostly at workforce housing, and they require works. 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 bump in — that large bump in origination during that period that we resulted in classified assets has worked through the system, right? So those were the buildings that were having issues due to the supply shock, interest rate increases, sharp interest rate increases. So that bubble has gone through the system.

So that’s dropping because we just haven’t had as many originations, right? So — and if a project is completed, right, it’s on plan and everything. Sometimes sponsors will want a year or 2, and that’s built into our contracts, 2 1-year extensions and people take advantage of that sometimes. It’s that 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 yes, 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 that on his fingertips, maybe we can publish it in the future. But that is slowly working down quickly.

Timothy Switzer: Okay. All right. That’s helpful. And kind of related to that, it looks like the average yield on the REBL book has gone down from about 8.5% to 7.6% in the last 2 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…

Damian Kozlowski: Go ahead, Dominic, do you want to handle that?

Dominic Canuso: Sure. Yes. Well, just as a reminder, 1/3 of that portfolio is variable. So you’d 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 the vintaging — that large vintage roll-through, again, they’re on 311 contracts, many of which came to that second term and were either recapped or refinanced or sold out. Those recaps and refinances were at lower rates because they were at more stabilized values, previous investments, stronger investors. So those rates by the quality of the positioning of those loans brought down the rate combined with the variable rate environment. We do think we’re at a good point now having worked through that large vintage bubble 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 8s and being put on in the mid-6s. So you’ll see that natural portfolio churn. But that’s just the interest rate environment we’re in nothing more than that.

Timothy Switzer: Okay. All right. That’s helpful. And then the last one for me. 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 fast banks given like the third-party relationships and how small some of these accounts are. And like on the opportunity side, would your prepaid card products be required to attain citizenship info as well? It seems like it could push a lot of people towards those sort of products.

Damian Kozlowski: Well, that would be a very difficult thing to do since prepaid cards, every prepaid card, that would be every incentive card. That would be Cracker Barrel. I mean that would 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, 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 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, everyone — it would be — everyone would have to be involved and it would have to be implemented over long periods of time.

Operator: I would now like to hand the call back to Damian Kozlowski for closing remarks.

Damian Kozlowski: Thank you for joining us today, everyone. Operator, you may disconnect the call.

Operator: Thank you for attending today’s call. You may now disconnect. Goodbye.