Financial Data and Key Metrics Changes - The company reported net interest income of $25.1 million, up 6.6% from the previous quarter, and $26.3 million on a fully taxable equivalent basis, reflecting a strong performance [26][27] - Total operating revenue grew over 2% quarter-over-quarter and more than 22% year-over-year, driven by strong loan growth and declining deposit costs [8][9] - Net income for the quarter was $900,000, with diluted earnings per share of $0.11, significantly impacted by elevated provisions for loan losses [13][14] Business Line Data and Key Metrics Changes - Small business lending origination yields remained strong, with a weighted average rate on funded originations at 7.78%, up 50 basis points from the prior quarter [11][12] - The construction and commercial real estate team originated nearly $70 million in new commitments, contributing to an 8% annualized loan growth [17][19] - Noninterest income for the quarter was $10.4 million, down 35% from the previous quarter, primarily due to lower net servicing revenue [29][30] Market Data and Key Metrics Changes - Total deposits increased by $111 million or over 2% during the first quarter, driven by growth in FinTech partnership deposits [21][22] - Non-maturity deposits rose almost $335 million or 15%, reflecting the increase in FinTech partnership deposits [21][22] - Total FinTech partnership revenue was over $1.1 million in the first quarter, up 30% from the fourth quarter, indicating strong growth in this segment [22][94] Company Strategy and Development Direction - The company aims to continue diversifying revenue streams through embedded finance partnerships and expects to drive revenue growth and enhanced profitability [19][102] - The focus remains on controlling costs and managing credit quality, particularly in small business lending and franchise finance portfolios [9][16] - The company anticipates continued growth in net interest income and net interest margin throughout 2025, assuming no further rate actions from the Federal Reserve [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing improvement of loan origination yields and the ability to manage deposit costs effectively [10][34] - The economic environment remains uncertain, but there are signs of improvement in borrower interactions and delinquencies [56][74] - The company expects a temporary decline in gain on sale revenue due to changes in SBA loan processes but anticipates a return to normalized levels in the second half of the year [35][36] Other Important Information - The allowance for credit losses as a percentage of total loans was 1.11%, reflecting specific reserves taken on certain loan relationships [31] - The tangible common equity ratio was 6.55%, indicating solid capital levels despite a slight decline [33] - The company has a strong liquidity position with cash and unused borrowing capacity of $2.1 billion [25] Q&A Session Summary Question: Expected one-time impact on fees in Q2 - Management estimates a one-time impact on noninterest income for Q2 to be in the range of $5 million to $6 million, with a return to normal levels expected in the latter half of the year [43][45] Question: Average loan size in SBA and impact of reinstated fees - The average loan size is just over $1 million, meaning reinstated fees on smaller loans will not significantly impact the company [46][47] Question: Impact of a 25 basis point rate cut on net interest income - A 25 basis point rate cut would result in an annualized decrease of approximately $3.6 million in net interest income, with a gradual ramp-up effect over the year [48][49] Question: Updated thoughts on SBA loss assumptions - Management noted that while loss rates have been elevated, they expect a decline in charge-off activity moving forward, with current delinquencies showing improvement [56][59] Question: Share buyback plans - The company is considering share buybacks if the stock price remains below 50% of book value, indicating a potential opportunity to return capital to shareholders [62] Question: Update on fintech partnerships and pipeline - The company is experiencing strong growth in existing fintech partnerships and is cautiously optimistic about new opportunities, focusing on quality over quantity [91][94]

Group 1: Visa's Collaboration and Solution - Visa has partnered with four major Australian banks (ANZ, HAB, HSBC, Westpac) to launch Visa B2B Integrated Payments (VBIP) in Australia [1] - The VBIP solution, integrated into the SAP Business Technology Platform, automates B2B payments, reducing the need for reconciliation and enhancing productivity for administration and finance teams [2] - Visa plans to expand its partnerships with additional local banks in the future [2] Group 2: Benefits and Market Trends - The VBIP aims to alleviate pain points for business owners, making B2B payments as seamless as consumer transactions [3] - Automating payment processes can help growing companies manage supplier payments and cash flow more effectively, reducing the risk of late fees [4] - The rise of embedded finance solutions is transforming the B2B payment landscape, with digital marketplaces facilitating easier transactions between suppliers and buyers [5][6] Group 3: Challenges in B2B Payments - Historically, B2B payments have lagged behind consumer payments due to outdated systems, while consumer transactions benefit from digital wallets and real-time payments [7] - Legacy banking infrastructures, regulatory complexities, and entrenched business processes contribute to the inertia in B2B payment innovations [8]

Financial Data and Key Metrics Changes - Total Process Volume (TPV) reached $80 billion in Q4, a 29% increase compared to the same quarter of 2023 [7][22] - Q4 net revenue was $136 million, growing 14% year over year [7][25] - Gross profit for Q4 was $98 million, an 18% increase year over year, resulting in a gross margin of 72% [8][27] - Adjusted EBITDA was $13 million in Q4, translating into a 9% margin, marking new all-time highs for the company [29][30] Business Line Data and Key Metrics Changes - Financial services, lending (including buy now pay later), and expense management all grew at roughly the same rate in Q4, slightly faster than the overall company [24] - Non-block neo banking customers' TPV grew approximately 100% year over year [25] - Growth in expense management accelerated due to strong end-user acquisition as AP automation and modern corporate card platforms gained share [25] Market Data and Key Metrics Changes - The European business saw TPV growth well over 100% in Q4 [12] - The company secured a deal to provide commercial card processing and program management to a fast-growing technology company in Europe [12] - The pipeline for embedded finance customers has increased significantly, with roughly two-thirds of the current pipeline being embedded finance customers [55] Company Strategy and Development Direction - The company aims to establish itself as a preferred partner for embedded finance and fintech innovations through three strategic pillars: deepening platform breadth, expanding solutions, and strengthening leadership in payments innovation [15][44] - The acquisition of TransactPay is expected to enhance program management offerings in Europe and streamline operations [18][36] - The company plans to leverage the American Express network for credit and debit card programs starting later in 2025 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing compelling opportunities in the payment ecosystem while focusing on profitable growth and value creation [6][15] - The company anticipates net revenue growth of 16-18% for 2025, driven by TPV growth in the mid to high 20s [32] - Management highlighted the importance of maintaining a strong focus on compliance while driving profitable growth [21][43] Other Important Information - The company ended Q4 with $1.1 billion in cash and short-term investments [29] - A share buyback authorization of $300 million was approved, bringing the total authorization to $380 million [31] Q&A Session Summary Question: What exactly is being acquired with TransactPay? - TransactPay is a BIN sponsorship provider licensed with an eMoney institution, allowing the company to have more control over offerings in Europe [48][50] Question: How does the pipeline look now, especially after recent wins? - The pipeline is strong, with a significant increase in embedded finance customers, indicating growing momentum in the market [55][56] Question: Does Marketa have everything needed to win larger embedded finance deals? - Yes, the company has a full solution that includes money movement, issuer processing, and program management, which positions it well for larger deals [62][64] Question: Is the guidance for 2025 based on the acquisition of TransactPay? - Yes, the guidance assumes the acquisition will close around Q3 2025 [68] Question: What is the path to GAAP profitability by 2026? - The company expects to drive gross profit growth at a faster rate than expense growth, leading to GAAP profitability on a quarterly basis by 2026 [70][73]