The Bancorp (TBBK) Q4 2021 Earnings Call Transcript

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The Bancorp (NASDAQ:TBBK)Q4 2021 Earnings CallJan 28, 2022, 8:00 a.m. ET

Prepared Remarks:

Operator

Good day, and welcome to the fourth quarter 2021, The Bancorp, Inc. earnings conference call. At this time, all participants are on a listen-only mode. [Operator instructions] As a reminder, this call is being recorded.

I would like to turn the call over to Andres Viroslav. You may begin.

Andres Viroslav -- Investor Relations

Thank you, operator. Good morning, and thank you for joining us today for The Bancorp's fourth quarter and fiscal 2021 financial results conference call. On the call with me, today are Damian Kozlowski, chief executive officer; and Paul Frenkiel, 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, beginning at approximately 12:00 p.m. Eastern Time today. The dial-in for the replay is (855) 859 2056 with a confirmation code of 7390458. 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 Bancorp's filings with 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 released 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.

Participants may discuss non-GAAP financial measures in this call. Copy of The Bancorp, press release containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to The Bancorp's most recent current report on Form 8-K available at our website under investor relations. Bancorp's other SEC filings are also available through this link. And I would like to turn the call over to The Bancorp's chief executive officer, Damian Kozlowski.

Damian?

Damian Kozlowski -- Chief Executive Officer

Thank you, Andre. Good morning, everyone. In the fourth quarter, The Bancorp earned $27 million in net income or $0.46 per share from 7% year-over-year revenue growth and 3% expense growth. Interest income was flat reflecting the impact of CRE prepayments, while non-interest income increased 21% year over year.

Reflecting the impact of fees resulting from those prepayments. Total loan balances excluding loans up fair value originally generated for sale, grew 41% year over year and 19% quarter over quarter. Balance growth year over year was led by institutional banking, which includes securities, insurance, back lines of credit, and registered investment advisor financing with a 28% increase in balances. Quarter over quarter growth was led by new real estate bridge lending balances at 3.83% growth, institutional 7%, and leasing 3%, while SBA decreased slightly as a result of repayments.

Gross dollar volume from our cards business grew 11% year over year with payment-related fees approximately flat. For the full year, '21 GDV grew 12% even with the net impact of non-recurring stimulus and government payments in 2020. Our diluted EPS for 2021 was $1.88, exceeding our upward adjusted guidance for the year of $1.78 by $0.10 a share. With the many challenges of 2001, we kept focused on executing our strategic agenda, which we expect will drive long-term growth and innovation for our company.

Even with a challenging interest rate environment, we were able to maintain stability in our net interest margin in 2021. Our balance sheet continued to show significant loan growth and new product innovation. For example, our relaunched commercial real estate business exceeded our expectations and closed approximately 622 million new floating rate loans and new products in our institutional wealth management business, resulting in significant loan growth and the maintenance of net interest margins unlike many of our competitors. We also continue to invest in our fintech platform to create an ecosystem, we believe is second to none in the industry.

Our pipeline of new relationships and new products continues to grow with significant new implementations expected for 2022. Some of these relations have been announced previously, but we expect others will be announced as new programs come to market this year. In addition, we continue to focus on controlling expenses and better productivity while making significant investments in growth for the full year 2021 compared to our prior year. Our total expense base grew only 2% and we will continue to be rigorous in creating value by finding new ways to be better organized and efficient through the use of enhanced technology, tools, and training.

Lastly, we continue to see tailwinds that should drive continued growth in 2022 earnings and beyond. We are also issuing earnings guidance for 2022 up 2.15 per share, which excludes the net impact of share buybacks and the impact of rate increases. In addition, our board increased the amounts we may spend to buy back our common stock to 15 million a quarter in 2022, from 10 million a quarter in 2021. I now turn the call over to our CFO, Paul Frenkiel to give more details about the second quarter.

Paul Frenkiel -- Chief Financial Officer

Thank you, Damian. Return on assets and equity for fourth quarter 2021 were respectively 1.7% and 17%, compared to 1.6% and 17% in Q4 2020. Net interest income in Q4 2021 was comparable to Q4 2020 at $52 million. In the third quarter of 2021, you'll recall that we resumed the origination of non-SBA commercial real estate loans, which are intended to offset the impact of prepayments and payoffs on such loans originally generated for sale.

While there were approximately $500 million of such originations in Q4 2021, their impact on interest income was partially offset by approximately $4 million, as a result of prepayments on the loans originally generated for resale. However, fees related to those prepayments are recorded in net realized and unrealized gains on commercial loans, which increased $4.5 million in Q4 2021 compared to Q4 2020. Even with the impact of the CRE prepayments, year-end 2021, period-end loans and loans at fair value increased 14% over year-end 2020. Interest income in Q4 2021 reflected a reduction of $3.5 million in securities interest compared to Q4 2020.

Reflecting lower securities balances, prepayments of higher-yielding securities, and lower reinvestment rates. Our interest expense was reduced from 24 basis points during Q4 2020 to 19 basis points during Q4 2021. Most of our deposit interest expense is contractually tied to a portion of changes in market interest rates. Our net interest margin of 3.51% for Q4 2021 was slightly down from 3.58% in Q4 2020.

The reduction reflected a lower yield on the securities portfolio as higher-yielding securities matured or prepaid while yields on loans were also lower. They comprise a greater portion of interest-earning assets in 2021, which contributed positively to the 2021 margin. In the third quarter of 2021, we call that our NIM was 3.35%, which reflected higher balances at the Federal Reserve, earning nominal rates. The provision for credit losses increased to $1.6 million in Q4 2021 from $554,000 in Q4 2020.

The increase reflected the impact of loan growth on the CECL model. Including real estate bridge loans, which grew by almost 500 million during Q4 2021. Because SBLOC and IBLOC loans are respectively collateralized by marketable securities and the cash value of life insurance and have incurred only nominal credit losses. Management excludes those loans from the ratio of the allowance to total loans in its internal analysis.

We believe our loan portfolios generally are at lower risk than other forms of lending as a result of their charge-off history, which reflects the nature of related collateral. Our non-SBA CRE loans are at fair value and within real estate bridge lending is comprised primarily of apartment buildings. While our SBLOC and IBLOC portfolios are respectively collateralized by marketable securities with a cash value of life insurance. Our small business loan portfolio is comprised primarily of SBA loans, which are either 75% government-guaranteed or have 50% to 60% origination date loan-to-value.

For our leasing portfolio, we have recourse to underlying vehicles and a prolonged history of pricing leases to minimize losses. Tables contained in the earnings press release detailed the diversification of our loan portfolios. Prepaid debit and other payment-related accounts are the largest funding source and the primary driver of non-interest income. Total fees and related payments income in Q4 2021 were comparable to Q4 2020, as the exit of a client relationship offset growth in other relationships.

Non-interest expense for Q4 2021 was $43 million, reflecting an increase of 1.4 million, or 3% from Q4 2020. FDIC insurance expense was $1.8 million lower, primarily reflecting the cumulative impact of a lower rate resulting from the reclassification of certain deposits from broker to non-broker. The largest expense increase was $1.1 million in salaries, which were 4% higher than Q4 2020. Q4 2021 results also reflected the impact of a reduced tax rate of approximately 24% versus higher rates in recent years.

The reduction resulted from excess tax deductions related to stock-based compensation. The large deductions and tax benefits resulted from the increase in the company's stock price as compared to the original grant date. Book value per share of 2021 year-end increased 13% to $11.37, compared to $10.10 a year earlier, reflecting earnings per share and the net impact on stock repurchases. I will now turn the call back to Damien.

Damian Kozlowski -- Chief Executive Officer

Thanks, Paul. Operator, could you open the lines for questions?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Frank Schiraldi with Piper Sandler. Your line is open.

Frank Schiraldi -- Piper Sandler -- Analyst

Good Morning.

Damian Kozlowski -- Chief Executive Officer

Good morning, Frank.

Frank Schiraldi -- Piper Sandler -- Analyst

I wondered if -- you could mention the 215 without the benefit of buybacks or rate hikes. I wondered if you could talk a little bit about your expectations for pickup on NII? Or margin for a given 25 basis point rate hike in 2022?

Damian Kozlowski -- Chief Executive Officer

OK. So with -- it changes throughout the year because of the prepayment. There are floors on our legacy $1 billion securities -- securitization portfolio that we had, the floating rate loans. But those are rolling off very quickly, and those floors will be released.

So in a static environment, we don't get much benefit from the 25 basis point initially. But if you play out this scenario throughout the year, it gets better and better very quickly. So by the end of 2021, if we had three or four moves, it would have a significant impact on our run rate profitability. So I think the best way to look at it, probably for the first half of the year, it's kind of a wash because we're continuing to put on floating-rate assets.

But as you move through the midpoint of the year, it becomes a big positive. So it could be -- if you think about buybacks and you think about -- and this isn't guidance. And you think about interest rate increases, it could have anywhere from a three upward toward even a 10% impact on profitability by the end of the year. So there's a lot of variability in it.

It depends on how we put on assets if we continue to put on a lot of floating rates like we have and have an aggressive pay down in a CRE legacy portfolio. It will have a bigger impact, but it'll play out over the next few months and we'll see -- have more visibility. And we'll, of course, let everybody know what we think as the year moves forward.

Frank Schiraldi -- Piper Sandler -- Analyst

Got you. OK. And when you say, I know it's not guidance, but when you say when you throw a 3% to 10%, you're talking about more. So the run rate starting 2023.

So you pick up a 10% better-run rate, maybe by the end of this year. Going forward, is that what you meant? Not necessarily a 10% increase to 2022 fully [Inaudible].

Damian Kozlowski -- Chief Executive Officer

Well, that's what I'm saying. We just don't know how we're going to put on assets and our prepays are going to happen. I just want to note again that the $1 billion-plus securitization portfolio which is prepaying has fees embedded in it. So there are about $10 million to $12 million of fees that will be realized as that portfolio winds down.

But it's -- you think about buybacks that could have a couple of percent up to three-ish percent impact on earnings per share. And then depending on how the balance sheet plays out, it could have -- it could be more as a percentage of the guidance for 2022, right? So it definitely will impact if you get the interest rate increases in 2022. And it's we get a 10-year that's going to be 2.50% to 3%, 3%. It really will impact the fourth quarter and then going into 2023.

Frank Schiraldi -- Piper Sandler -- Analyst

OK. And then just on the securitizations. I mean, in general, if I add the total of those to the multifamily bridge loans that you guys are putting on, which I think of as a replacement for that stuff rolling off. Can you just remind us? I know you don't have -- you don't know exactly because you don't know how much or business is going to get done.

But -- well a range of that total portfolio, which I think is around 2 billion if you add those two together. What sort of levels do you expect that to be later this year?

Damian Kozlowski -- Chief Executive Officer

So, yes -- so we -- I think we're looking at about $400 that will be left at the end of the year. So about $600 million could be more, but depending on the rise of interest rates, because these are floating-rate loans. So if we get a steep rise in interest rates, there's a great incentive, obviously to prepay. So -- but we're predicting around $400 by the end of the year of that legacy portfolio and to about double the origination that we did this year.

So about $1.2 billion of new. So $1.2 billion of new and a roll off of about six.

Frank Schiraldi -- Piper Sandler -- Analyst

Great. OK. And overall is the average balance sheet size here a good, bogey for where it will remain through 2022 is there, significant growth on that front seems to get to a Guide?

Damian Kozlowski -- Chief Executive Officer

Well, I think you're -- if you're going to add 600 there, we have other growing portfolios. So, around $1 billion potentially increase. It depends, obviously, on a lot of things. It also depends on securities, too, because if you got if we got a much higher 10 years, we probably would do some reinvestment in our securities portfolio, too.

So it's going to be around $1 billion, probably.

Frank Schiraldi -- Piper Sandler -- Analyst

Got you. OK. And then just lastly, if I could on the payment-related fees, I know you've certainly emphasized the need for that line item to grow significantly to hit goals. But you had 11% GDV growth year over year, which is pretty good results off of the strong, relatively strong 2021.

And, card fees or payment-related fees were flat. So is there anything you can say to that? I know different programs provide different margins, but any sort of color around, what happened year over year? Or and or, expectations for growth from these levels going forward?

Damian Kozlowski -- Chief Executive Officer

Yes. So there's been a general conversion. There were two things going on, especially over the last 18 months. So we had program setting tiers, their higher tiers because they're growing so quickly and they have large volumes.

So that's a lower tier in pricing. Those have been met, right? That was the first thing that was putting some pressure on margin. The second is the conversion to debit versus general-purpose reloadable. So the general-purpose reloadable market is under stress because it's not as efficient for the customer because it's much higher fee-based.

So if there's been a lot of conversion to the debit area for programs like Chime? So those are generally a lower margin. So there's been those two things going on also with our GDV, we also had the borrower who left the bank after the first quarter of last year. That also put some pressure on our GDV growth. So those -- and plus the stimulus.

So as we move out of the first quarter of this year, we won't have those two factors the stimulus and borrow. And we've seen -- we'll have more new products and services coming on board with all the implementations we're doing. So you'll see that margin compression hopefully be alleviated as we move through the year. Plus, we have other things going on, like credit sponsorship.

So you'll see some of those programs start to be put on. That won't be in the fee area, but that might actually boost GDV because people obviously borrow within their account and use it. So we have a lot of things going on, but, from the payment envelope of activities. Obviously, plus the advantage of funding, there'll be a lot of economics driven out of that business in 2022 and going into '23.

Frank Schiraldi -- Piper Sandler -- Analyst

Got you. So just the first quarter is tough year over year comps, and then we should see some better growth through the of the year, year over year. Is that reasonable? Yeah, that's what you're saying?

Damian Kozlowski -- Chief Executive Officer

Yeah. Well, the first -- remember, we got a massive stimulus and it was $1.7 trillion that went through the economy at the end of really hit the first quarter in March. So that -- yeah. The first quarter -- and if we still had borrowed in there too.

So that's a very tough comparison to make -- to draw any conclusion. But right after that, both of those things stopped and we have no more comparison. And then you have borrowed out of it. So you're going to return to trend double-digit trend growth.

Frank Schiraldi -- Piper Sandler -- Analyst

GDV, double-digit GDV? Or is that --

Damian Kozlowski -- Chief Executive Officer

Yes. Yes, GDV growth. Yes

Frank Schiraldi -- Piper Sandler -- Analyst

Got you. OK. Thank you.

Operator

Our next question comes from Michael Perito with KBW. Your line is open.

Michael Perito -- KBW -- Analyst

Good morning, guys.

Damian Kozlowski -- Chief Executive Officer

Good morning, Mike.

Michael Perito -- KBW -- Analyst

Thanks for taking my questions. A couple of things I wanted to hit on. Just number one, on the cost side, you guys -- I think in the prepared remarks, we're talking about the hope to try to not have significant cost growth, and I know driving efficiencies is a critical element for you guys. But obviously, environmentally a bit challenging, a lot of the more traditional bank peers.

I think almost universally we're guiding up expenses this quarter. Just curious if you can give a little bit more color near term about how you think the expense run rate could trend given some of the environmental things going on out there inflationary and wage-related?

Damian Kozlowski -- Chief Executive Officer

Yes. Well, so we've tried to build a very scalable platform. And some of those scalability, especially in the payments, but also in the tech-enabled businesses we run, like the securities business, we've been focused on building an infrastructure that doesn't add a lot of incremental cost by using new tools and technology capabilities. And that's really been paying off for us.

And what we've said over the last four years is that will create jaws between revenue and expense of 10%. And we were able to do it again this year. And also, the expense growth in the fourth quarter was compensation related to the large size of loan growth. So we think, we can still have that hold true in '22 and maybe even '23.

Even with the current inflation in the workforce, right? So we saw within that workforce, if you look at the percentage of net income that we use for employees, our employee costs have gone up over the last four years. But as a percentage of our operating expenses, it's not moved up that much. And as a percentage of net income, obviously, it's moved way down. So we're where we know we're still playing out.

There's clearly going to be wage inflation, but we think we're going to be able to cover and maintain that jaw's relationship, even with the current inflationary environment.

Michael Perito -- KBW -- Analyst

Got it. And then if we think about your kind of relating that to your long-term targets correctly from those long-term targets really don't include interest rates, correct? So without getting too specific, is it fair to assume that the benefit of higher interest rates could pull forward? Some of those things, even if some of those targets theoretically?

Damian Kozlowski -- Chief Executive Officer

Well, it's once you get past the first 100 and we're in the world of 200 basis points and we get any type of normalization of interest rates, we're extremely asset sensitive and we have 70% plus of our balance sheet is floating. So it would have a -- and we don't do any CD funding and everything. So once we have, it's all tied to Fed funds. So it's a dramatic impact once you move.

Yeah, it would move forward. The rate -- the ROE would obviously go up and it would pull forward the targets. And everything we do is interest rate neutral. So all our planning around, whatever we do for managing our balance sheet, of course, we do scenario planning.

But when we talk to the market, it's neutral of any rise. So it would have a very significant impact, especially in 2023.

Michael Perito -- KBW -- Analyst

Got it. Helpful. And then just two more quick ones. One, Paul, I hope the commentary about some of the tax rate noise.

I'm just curious if you had a number you were budgeting for 2022 that we could use for a range?

Paul Frenkiel -- Chief Financial Officer

I think around 25% is a reasonable place to be. We can't really predict the exact amount of the tax benefit because it depends on the stock price as of the date of the vesting. So I think 25% for next -- for 2022 is a reasonable place.

Michael Perito -- KBW -- Analyst

Got it. And then just lastly, and I don't know if you guys can comment, but since it's kind of public information at this point, I'd figure I'd ask yours, obviously. SoFi formally got approved for the charter. Just wondering if you could help kind of throw some parameters or expectations around.

What the potential, if at all exit of that relationship, given that they'll have their own charter could mean for you guys moving forward?

Damian Kozlowski -- Chief Executive Officer

Well, it doesn't -- I don't think it affects. Well, of course, we love the partnership with SoFi. They have a great appreciation of wanting to grow their company in a safe and sound manner and using the right partnerships which we obviously appreciate. We haven't worked that out.

They haven't -- maybe they have. But there are a lot of ways we can participate together and provide the right technology and for middle office infrastructure, for SoFi. So, it's -- I don't--it would be love to build a very strong long-term relationship. I think we will have some sort of relationship going forward.

But I really can't -- regardless of that relationship. It's not big now. It doesn't really -- if we were to lose 100%. It really doesn't affect our plans going forward.

We have so many other programs and not all of them grow, right? So --

Michael Perito -- KBW -- Analyst

Right.

Damian Kozlowski -- Chief Executive Officer

We take on a lot of big programs and some of them are really, really successful and some of them aren't as successful. So I don't think it'll affect our growth and it won't really affect year-over-year comps if they decided, next quarter not to do business.

Michael Perito -- KBW -- Analyst

Got it, that's helpful. And then just one quick clarification on that, too. I mean, their deposit program is primarily sweep-related, correct? Right? So I think it's fair to assume that they're not big on bank balance sheet deposit partner of yours at this point is that it's kind of fair comment or can you not say?

Damian Kozlowski -- Chief Executive Officer

Well, I don't know if they've said exactly how they-- that mechanism works. But their part of our liquidity is small.

Michael Perito -- KBW -- Analyst

Yeah. Got it.

Damian Kozlowski -- Chief Executive Officer

So it's not -- it wouldn't impact our deposit base really.

Michael Perito -- KBW -- Analyst

That's what I figure, but thank you for clarifying all that, and thanks for taking my questions. Appreciate it.

Damian Kozlowski -- Chief Executive Officer

Thank you, Mike.

Operator

Our next question comes from William Wallace with Raymond James. Your line is open.

William Wallace -- Raymond James -- Analyst

Thanks.

Damian Kozlowski -- Chief Executive Officer

Good morning.

William Wallace -- Raymond James -- Analyst

So, Damian, I was -- good morning, Damian. I wanted to circle back to Frank's questioning on the CRE launch of the bridge loans. Just want to make sure I kind of put it all together. So if I add the bridge loans plus the held for sale on the portfolio, getting around $2 billion is your intention to ultimately shift everything from health for sale and originate new ones to about $2 billion?

Damian Kozlowski -- Chief Executive Officer

Yeah, about 300%. It might be shorter, more in the short term because we have these pre-payments. So well -- our target is really 300% of capital is the way to think about it, right? Our capital is obviously growing. So -- but we're filling up our balance sheet so depending on the opportunities we have in other areas.

This is a very flexible type of lending that's very low risk. So we -- they're short-term loans, the three-year loans, pretty much. They're floating and they can be sold to other banks or institutions that really like these types of loans. So it's a very flexible part of the balance sheet that we use with our other businesses in order to manage the total exposure, up to that $10 billion limit.

William Wallace -- Raymond James -- Analyst

OK. Great. And so you think that the held for sale portion, I believe are -- I heard -- do you think it would be down to about $400 million by the end of the year, but you're saying you might not necessarily be able to keep up with that pace in the origination side. But ultimately [Inaudible].

Damian Kozlowski -- Chief Executive Officer

No, we could. No. No, we can. I think our -- I think we'll do double what we did $622 million.

It's really $700 million we did because there are future funding parts of these loans. So we did $700 million this year and we expect to double that next year to footings of $1.2 billion, but it will be really $1.4 billion with future fundings. So we've expanded our ability to originate across the United States and moved into additional markets. And we've done really well, with the quality and the rate on the product that we're putting on in a very low-risk way.

So once again, our target is 300%. It might be a little bit higher than that in the next 12 months. And that's just because we have this roll-off happening. We don't know what it's going to be.

But we could get rid of all $1 billion of those held for sale this year because of interest rate increases because people will want to lock in fixed funding and we don't do that. We don't do that type of lending and don't perceive that as the right place for us in the marketplace. So but that would give us about $12 million or so in fees that would be on to come through the income statement, too, if that happened, because there's still fees that are on amortized, really. Because we put those held for sale loans on at 99.

So we're in a good position. We're in a very good position with that portfolio and we're very confident we'll be able to originate, approximately double what we did this year. And that will be able to any spread differential will be made up by the fees that will be amortized through the repayment of the loans. And if they don't repay us fast, that's good too, because we get additional interest income.

So we're fine, whatever. We're in a very good position with that portfolio.

William Wallace -- Raymond James -- Analyst

OK. Great. Yeah, all the new originations, they come on. Excuse me, they come on floating, right? They're not going to come on under floors or anything like that, right? But just come on the basis [Inaudible].

Damian Kozlowski -- Chief Executive Officer

No, no. There'll be a floor on it, but there's no way it can be under the floor, right? Because we're at zero interest rates. I guess if we turn to Germany or Japan it's possible. But otherwise, it's I think our inflation expectations ran any idea that we're going to be negative interest rates.

William Wallace -- Raymond James -- Analyst

Yeah. OK. In -- you just spoke a little bit about credit sponsor opportunities that you've kind of mentioned it, periodically over the last year or so as an opportunity for Bancorp. I'm wondering if you could maybe help us kind of start to focus in on that.

I'm assuming that any partnership would most likely be with an existing partner on the card side. Assuming you decide to implement a program. How long does it take to build out a program within the -- with an existing partner? And when do you think you might make an announcement of some sort of partnership?

Damian Kozlowski -- Chief Executive Officer

Well. Your conjecture is basically intellectually consistent, right? Of course, people that we've partnered with, that we've done business for a long period of time, and have developed a broad payments relationship are the likely first candidates. We're willing to use, as we've said with the credit roadmap, our own balance sheet. Not through securitization, but are -- on our own balance sheet under the right terms to facilitate reasonable programs that can be both good for our partner but also good for the marketplace and that they can provide, some credit capability for underbanked individuals.

So, we think we'll be announcing things sooner rather than later. But I can't really I don't want to front-run any of those programs because we're, going through a marketing process and we always leave it to our partners to lead that message. So I can't really go further than that, but we think we'll be able to announce things sooner rather than later.

William Wallace -- Raymond James -- Analyst

I guess maybe a different way of asking the question is, were there to be some sort of announcement, would you expect that the capabilities would have already been built out and an announcement would be made when the program might be ready to go live rather than when and when an agreement was struck?

Damian Kozlowski -- Chief Executive Officer

Oh, yeah. With these types of programs, there's a lot of work. In most cases, it's true . Not always, but mostly even on the payment side.

There's a lot of work that's already been done prior to an announcement, right? Because you have to work out all the different types of the envelope of activities, processors, regulations, what's your compliance? How are you going to handle compliance and BSA? So there's usually a lot of work for anything in the consumer space where there is another regulatory guidance that you need to follow. A lot of work you'll be at least in the beta phase, if not the full rollout by the time we announced it with a partner.

William Wallace -- Raymond James -- Analyst

OK. Great. Thanks for that. We'll look forward to a potential announcement.

I guess, sooner than later. The follow-up I would have just kind of maybe just bigger picture, kind of philosophically, we had [Inaudible] applying, get their charter, SoFi now apply and get their charter. And you guys have your finger on the pulse of the fintech probably better than most. I'm just kind of curious if you could talk a little bit about your views on whether or not there is a building desire for fintech to want to go that route? Or if these two that have occurred so far might be what you would deem kind of case-specific.

I'm just maybe your thoughts -- big picture, higher level on what the trend maybe three, five, ten years from now?

Damian Kozlowski -- Chief Executive Officer

I don't think that the -- I think there will be some large players. It could be SoFi, it could be somebody else that will drive toward being a very large institution. So, the top 10 banks today might include one of that fintech that started, recently and they could become big, universal banks in the United States and even challenged the larger banks. And I think, you've heard comments from even Jamie Dimon that that's a real threat.

So that's a possibility. And they'll need to build out very broad capabilities not only in deposits but in lending and potentially security. So I think that's the next decade. We'll see what happens.

But there's going to be a vast majority of innovations that are not going to seek licenses even if they're in a banking sphere because it's not as efficient as using somebody like us. And through the other verticals, which are also growing things like healthcare, etc, government, etc. There is no desire or you can't be a bank. So for a big part of our portfolio, it's not even affected by the charter.

I personally think right now they're both, real test cases. I think there are real costs to being a bank and there are real restrictions on capital through the interagency process or the camel's process where they rate each part of the bank. It's very difficult to be an of a high -- super high growing institution where you're trying to acquire large amounts of clients and be also a bank at its very early stages. So but we'll see how this plays out.

And it's fast-evolving and -- but I don't think the charter --fintech is getting charters is a threat to as banking as a service or ecosystem providers like ourselves. I don't think that's a threat that that's going to significantly affect our ability to grow.

William Wallace -- Raymond James -- Analyst

Great. Thanks, Damian, and just one last little kind of housekeeping question. You guys bought a ton of stock during the quarter and plan to continue doing so. I did notice that the period in share count was actually up in the quarter slightly.

I just wonder if you could tell us a little bit about what your expectations are on whatever vesting or issuance might be coming down the road? Or how much of the buyback should we anticipate can flow through to the tangible book side?

Damian Kozlowski -- Chief Executive Officer

Yeah, I'll give that to Paul. But what happened was, and I think it's good for especially good for people here, but for shareholders is that early on when we remediated the bank, we paid a lot in stock. And so those vestings are continuing to vest in the company. That's why you saw maybe a tick-up in shares and might see some mitigation from the buybacks.

But we've been paying far less stock recently and at a much higher price so that that dilution will more significant be will be significantly lower in the future. Paul, do you want to make a comment?

Paul Frenkiel -- Chief Financial Officer

Yeah. I would refer you to the -- we actually have a footnote, the stock compensation footnote, which we have -- which we show the -- every year and actually every quarter. Which we show the originations and the RSUs vest over a three-year period. So it's easily calculable.

As Damian noted, it's really -- we issued some in May 2020, when the stock price was low, was like $7. So that resulted in a larger number of shares. If you look at the stock price now at around $30, the number of shares being granted based on a specific dollar amount is only a fraction. So yes, it will have some impact this year, but it will continue to diminish because there's only a fraction of new shares being granted.

William Wallace -- Raymond James -- Analyst

OK. All right. Great. Thanks, Paul, appreciate the time.

Guys, I'll step out.

Operator

There are no further questions. I'd like to turn the call back over to Damian Kozlowski for closing remarks.

Damian Kozlowski -- Chief Executive Officer

Well, thank you, everyone, for attending and especially to analysts of the stock who ask some great questions today. I appreciate you all listening and we'll talk soon. Thank you, operator. Have a nice day.

Operator

[Operator signoff]

Duration: 42 minutes