Joseph Yanchunis • Raymond James Financial, Inc.

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EVP & CFO Greg Sigrist stated that the company is in the 'middle to later innings' of the restatement process and pointed to the new eight-quarter financial data in the investor deck for preliminary impact details. CEO Brett Pharr clarified that the rise in non-performing loans was due to three isolated, well-collateralized commercial loans, not a systemic portfolio issue, and emphasized focusing on the net charge-off rate. Regarding AI, Mr. Pharr explained Pathward is exploring it for internal efficiencies and partner oversight but does not expect a dramatic P&L impact in the intermediate term.

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CEO Damian Kozlowski detailed that renovations at the Aubrey property have significantly improved occupancy and will be completed by The Bancorp if a near-term sale does not occur. He noted that while the Block partnership will require some incremental hiring, the company's infrastructure is highly leverageable. Kozlowski elaborated that 'Project Seven' relies on reallocating resources from traditional banking to the high-growth fintech segment, with AI expected to drive further efficiencies in 2026 and beyond.

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CEO Damian Kozlowski confirmed that conservative internal limits are in place for the credit program and that the bank has a clear path to over $1 billion in balances in 2025, driven mostly by an existing partner with new ones ramping up. He noted that recent contract talks are less price-sensitive as fintechs seek long-term, stable partners. Kozlowski stated the plan is to repay $96 million in senior debt from cash flow, which temporarily reduces the 2025 buyback, but affirmed a commitment to returning net income to shareholders, implying buybacks would likely increase again in 2026.

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CEO Damian Kozlowski stated that the bank has conservative internal limits and sees a clear path to over $1 billion in credit sponsorship balances in 2025, primarily from an existing partner. He noted that contract negotiations are less price-sensitive as partners seek long-term stability and broader product enablement. He confirmed the plan to repay the $96 million of senior secured debt from cash flow, after which the bank is 'dedicated 100% [to] repatriation of our net income' through buybacks, as there are no other major capital needs.

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CEO Kent Landvatter discussed using AI for back-office functions like fraud detection and compliance, and noted that while stablecoins are not a near-term initiative, the company is monitoring for a strong domestic use case. Bank CEO James Noone explained that credit enhanced loan balances grew late in the quarter, making a simple provision ratio extrapolation misleading, and confirmed that existing partners are healthy with strong loan demand, with a pipeline on track to add one to two more partners by year-end.

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Bank CEO James Noone confirmed the $50-$100 million year-end target for credit-enhanced loans is achievable with existing partners, noting the Backd program would likely scale up in Q4. CFO Robert Wahlman specified the credit-enhanced balance was just under $2 million at quarter-end. Wahlman also explained the extended held-for-sale product was a custom, low-risk solution for a partner needing temporary balance sheet capacity. Noone stated there are no current concerns about partner health but acknowledged a potential macroeconomic risk from a slowdown in consumer spending.

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CFO Bob Wahlman projected an exciting few years, highlighting substantial growth in the credit enhanced balance sheet, and provided specific 2025 guidance for it to increase by $50-$100 million. CEO Kent Landvatter noted that their expanded product suite is attracting more mature, established fintech partners. He identified cybersecurity, regulatory compliance, and fintech oversight as key areas of focus that require constant vigilance, though he feels confident in the company's risk management framework.

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Chairman, President & CEO John Bordelon stated that the new full-service Houston branch is expected to be highly productive in attracting more core deposits from commercial customers. He attributed the strong DDA growth to a deliberate strategic shift, including updated incentive plans that prioritize core deposits over loan growth and a slowdown in non-owner-occupied CRE lending, which typically carries lower deposit balances. Mr. Bordelon also confirmed that there were no significant one-time adjustments that artificially inflated the NIM for the quarter.

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Executive John Bordelon and CFO David Kirkley explained that they expect the NIM to continue expanding, driven by loan repricing, even without Fed rate cuts. Kirkley noted the March NIM was 3.95% and projected that a 25-basis-point rate cut would result in a stable to slightly increasing NIM due to offsetting factors. Bordelon provided details on the two non-accrual loans: a condominium development in Mississippi and a hotel renovation in Houston, expressing confidence in the underlying collateral and anticipating no material principal losses.

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Executive John Bordelon stated that Home Bank expects NIM to expand in both static and slight rate-cut scenarios, driven by the repricing of loans and CDs. He noted the bank's fixed-rate loan portfolio provides protection from Fed rate cuts. CFO David Kirkley added that deposit betas on non-maturity accounts might be slower as rates weren't raised aggressively. He clarified that the new Houston branch is a conversion of an existing LPO expected in late 2025, and the projected decrease in 2025 occupancy expense is due to exiting a separate, sizable lease from a prior acquisition.

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CFO David Kirkley reported Q3 new loan originations were about $80 million, with growth muted by higher payoffs, including a one-off $19 million C&I loan payoff. Executive John Bordelon noted that competitors are also lowering deposit rates, and Kirkley added that the bank's fixed-rate loan portfolio should provide downside protection for yields. Kirkley stated they are exploring options like overnight advances and term funding to replace the maturing BTFP borrowings. Both executives expressed confidence in their ability to stabilize or increase the Net Interest Margin (NIM) and achieve positive operating leverage in 2025, depending on the pace of Fed rate cuts.

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President of Payments & Banking Todd Ritterbusch noted mature Load Pay accounts can exceed $700 in annual revenue. CEO Aaron Graft detailed the competitive landscape, highlighting greenfield opportunities in payments. President of Factoring Kim Fisk clarified that current growth is from core factoring, with Factoring as a Service (FAS) volume expected to grow. President of Intelligence Dawn Salvucci-Favier stated there is no seasonality in the intelligence business.

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Executive William Voss projected "low to mid-single digits" growth in noninterest expense for the year, driven by compensation resets and investments. CEO Aaron Graft discussed FaaS economics, noting that as volume grows through the established "factory," operating margins should expand significantly. For LoadPay, Graft stated a successful 2025 would see 5,000 to 10,000 active users. Regarding factoring market share, he expressed that gaining only 1% would be disappointing and expects to do better, especially when the market turns. Executive Melissa Forman confirmed all FaaS volume will be reported within the Factoring segment.

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COO Kim Fisk and CEO Aaron Graft asserted that the small carrier market is cyclical and essential to the freight ecosystem, expressing confidence in its eventual recovery. President of TriumphPay Melissa Forman confirmed C.H. Robinson's volume is onboarding, with significant revenue impact expected in H2 2025. Graft addressed the factoring pipeline, attributing slow adoption to the 'innovator's dilemma' faced by legacy factors but noted that Triumph's superior, integrated technology is positioned to capture new market entrants.

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Executive Aaron Graft declined to provide specific revenue guidance but stated that transportation business revenue must 'go up materially' from the current quarter's $206 million. He identified Factoring and Payments as the largest near-term contributors. Executive Todd Ritterbusch added that the migration to the next-gen audit platform is in its 'early stages,' with 'well less than 50%' of the opportunity captured, and that it will continue to play out over the next several quarters.

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Executive David Taylor explained that DDRs will be piloted in the U.S. soon with a potential rollout by late 2025. He confirmed the current noninterest expense level is a reasonable, if not slightly conservative, run rate and stated that the initial USD 290 million target for U.S. RPP volume is 'easily attainable' as new partners are onboarded.

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James Mabry stated that due to better-than-expected deposit pricing, the outlook for NIM has shifted from modest compression to modest expansion. He also noted that new and renewed loan yields were around 7.35% for the quarter. CEO Mitchell Waycaster added that the loan pipeline remains strong at $174 million entering Q1, with robust production across all geographies and business lines, signaling optimism for continued growth.

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CFO Sharymar Calderon projected down-rate deposit betas to be around 40-45 basis points, noting the bank is acting quickly to reprice accounts while managing competitive pressures. She added that a significant portion of international deposits are noninterest-bearing and thus unaffected. CEO Jerry Plush stated that AUM growth is expected from both domestic and international clients, with the new focus on international banking being a key driver. He also noted that loan payoffs have not been material due to the bank's focus on full relationships.

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