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 [16] - Adjusted net interest margin was 5.98%, up from 5.76% year-over-year [16] - Noninterest income grew by 11% compared to the previous year, driven by strong performance in Tax Solutions and increased secondary market revenue [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 - Commercial Finance saw strong originations with solid yields, with the yield on new originations at 9.55%, up from 8.24% in the previous quarter [19] - The company successfully redeployed nearly $1 billion from earlier sales of loans and securities in a shorter timeframe than expected [8] - The acquiring product experienced triple-digit revenue growth year-to-date, indicating strong performance in Partner Solutions [10] Market Data and Key Metrics Changes - Custodial deposits held at partner banks increased to $431 million from $353 million a year ago [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 [5][6] - Investments in technology are being made to evolve and scale product offerings, with a focus on sustainable fee income growth [9] - The company has contracted for 11 opportunities to expand products with existing or new partners this year, indicating a robust pipeline [10] 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 [12] - The company expects a preliminary EPS range of $7.5 to $7.8 for fiscal year 2025, with a focus on maintaining strong growth and returns for shareholders [22] 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 [11] - Liquidity remains strong with nearly $2.7 billion available, higher than the previous year [21] Q&A Session Summary Question: Discussion on accounting change distraction for management - Management indicated that they are in the later stages of addressing the accounting methodology changes and are comfortable with the preliminary numbers provided [26][27] Question: Incremental expenses associated with accounting change - Management noted that the full impact of the accounting changes will be clearer once the restated 10-K is filed, with lower income expected in prior years due to built provisions [29] Question: Credit quality and NPL increases - Management clarified that the increase in non-performing loans (NPLs) was due to three distinct episodic events, not indicative of a broader credit issue [30][31] Question: AI strategy and its 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 [33][36] Question: Update on crypto-related products - The company provides access devices for partners offering crypto-related digital wallets and is evaluating potential internal developments in the crypto space [42][45] Question: Credit trends in the commercial finance portfolio - Management reported that borrowers are generally doing well, with the recent NPL increase being episodic and well-managed [46][47] Question: Update on partner pipeline in banking as a service - The partner pipeline remains strong, with significant opportunities in consumer lending marketplace sponsorship and embedded finance [48][49] Question: Expectations for share repurchases - Management confirmed plans to continue share repurchases, having already repurchased approximately 1.9 million shares this year [51]