Financial Data and Key Metrics Changes - The company reported a net interest margin of 7.43% for the quarter, an increase from 7.26% in the prior year, and an adjusted net interest margin of 5.98%, up from 5.76% [17] - Noninterest income grew by 11% year-over-year, with Tax Solutions outperforming the previous year's results [17] - The allowance for credit loss was 160 basis points, with an annualized net charge-off rate of 52 basis points for the quarter [19] Business Line Data and Key Metrics Changes - The yield on new originations for commercial finance loans was 9.55%, compared to an average of 8.24% in the previous quarter [19] - The company successfully redeployed nearly $1 billion generated from the sale of loans and securities in a shorter timeframe than initially expected [8] - The acquiring product experienced triple-digit revenue growth year-to-date, indicating strong performance in this business line [11] Market Data and Key Metrics Changes - Custodial deposits held at partner banks increased to $431 million from $353 million a year ago, reflecting growth in this area [19] - The company is targeting quarterly secondary market revenues in the range of $5 million to $7 million, benefiting from its balance sheet optimization strategy [18] Company Strategy and Development Direction - The company aims to be a trusted platform for partners, focusing on balance sheet optimization and offering unique financing structures that traditional banks may not provide [6][7] - Investments in technology are a priority, with ongoing efforts to evolve and scale product offerings, particularly in Partner Solutions [10] - The company has contracted for 11 opportunities to expand products with existing or new partners this year, indicating a robust pipeline [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the complexities of the industry and regulatory environment while continuing to invest in risk and compliance [14] - The preliminary EPS range for fiscal year 2025 is expected to be between $7.5 and $7.8, with a preliminary range for fiscal year 2026 of $8.25 to $8.75 [22] - Management noted that while the accounting change has been a distraction, they are in the later stages of addressing it and are comfortable with the methodologies used [27] Other Important Information - The company was recognized as one of the best companies to work for by U.S. News and World Report for 2025 to 2026, highlighting its strong culture and employee satisfaction [12] - Liquidity remains strong with nearly $2.7 billion available, an increase from the previous year [21] Q&A Session Summary Question: Discussion on accounting change distraction and timeline for resolution - Management indicated they are in the middle to later stages of resolving the accounting change and are comfortable with the preliminary numbers provided [27][28] Question: Quantification of incremental expenses related to accounting change - Management stated that full details will be available in the restated 10-K, but lower income is expected for 2022 and 2023 due to built provisions [30] Question: Credit quality and NPL increase explanation - Management clarified that the increase in non-performing loans (NPLs) was due to three distinct episodic events, not indicative of a broader trend [31][32] Question: AI strategy and its potential impact on P&L - Management is exploring AI for efficiency improvements but does not expect a significant impact on P&L in the near term [34][37] Question: Update on crypto-related products and services - The company provides access devices for partners with crypto-related digital wallets and is evaluating potential opportunities in the crypto space [43][46] Question: Credit trends in the commercial finance portfolio - Management reported that borrowers are generally doing well, with the NPL increase attributed to isolated incidents rather than systemic issues [47] Question: Update on the partner pipeline in banking as a service - The pipeline remains strong, with 11 contracts signed this year and ongoing evaluations of new opportunities [49]