Q1 2023 BM Technologies Inc Earnings Call

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Speaker 1: I did not see the most below average. Now there is only one. Scene shows what happened after the

Speaker 2: Good afternoon, everyone, and welcome to the BM Technologies First Quarter 2023 earnings call. Please note that this event is being recorded. Following management's prepared remarks, we will hold a question and answer session. For those joining on the webcast, you can submit your questions online.

Speaker 2: At this time, I'd like to turn the conference over to Brian Fernovo, Investor Relations for BEM Technologies. Please go ahead, Brian .

Speaker 3: Thank you, operator, and good afternoon, everyone. Thank you for joining us for Bm Technology's first quarter earnings call. Our earnings release and investor presentation were filed earlier this afternoon, and both are posted on the investor relations page of the company's website at ir.bmtxinc.com.

Speaker 3: Before we begin, we would like to remind you that some of the statements we make today may be considered forward-looking. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from what is currently anticipated.

Speaker 3: Please note that these forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update these forward-looking statements in light of new information or future events, except to the extent required by applicable securities law. Please refer to our SEC filings, including our Form 10-K and 10-Qs.

Speaker 3: for a more detailed description of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the investor relations section of the website. At this time, it is my pleasure to turn the call over to Lavleen Sidhu, VM Technologies CEO . Lavleen?

Speaker 4: Thank you, Brian , and good afternoon, everyone.

Speaker 4: On today's call, we'll discuss our first quarter financial results and provide updates on various initiatives. Additionally, we want to introduce you to our co-CEO, Raj Singh.

To begin, it is clear that the last six to nine months have been quite volatile for the broader market and specifically for fintech companies.

The effects of unprecedented interest rate increases, changes in the regulatory landscape, pressure on FinTech valuation, and the end of unprecedented stimulus into the system, just to name a few, have all impacted our business.

These changes have forced us to closely examine and in some ways reposition our business to adapt to the realities of today.

As we look back on the last few months, we are grateful for this change as we believe it is helping us build a stronger foundation for growth and increase shareholder value into the future.

We will talk more about some of these changes throughout our call today.

Before getting into that, I would like to briefly mention some financial highlights from the quarter. Operating revenues totaled $13.5 million, average service deposits totaled $1.2 billion, and debit card spend totaled $0.8 billion, a 16% increase from fourth quarter 2022.

As mentioned in our earnings release, first quarter 2023 tracked very closely to our expectations.

Our first quarter results were temporarily negatively impacted by the loss of Durbin exempt interchange until we transition our higher education business to a new sponsor bank.

Our spend and deposit metrics for this business have improved quarter over quarter, and these positive fundamentals will drive revenue growth once we transition to our new partner bank.

Regulatory review of our partnership with First Carolina Bank is underway, and we continue to receive positive progress today.

I would now like to recap some of the significant steps we took in the first quarter to help strengthen our business.

At the top of the year, we focused on establishing key agreements and renewals with Customers Bank, First Carolina Bank, and our largest FAST partnership to position our company for continued growth and margin expansion in today's high-rate environment.

Beginning in the second quarter, we expect servicing fee margins to improve by over 150 basis points at the current Fed funds rate due to our new variable rate deposit servicing agreement.

Additionally, significant work has been done to advance our profit enhancement plan.

to ensure profitability, positive cash flow, and reinforce our commitment to being a lean and efficient fintech.

We are on track to realize the benefits of our profit enhancement plan with a goal of cutting core operating costs by $15 million in 2023.

Initiatives completed during the first quarter collectively comprise nearly 50 percent of our targeted $15 million cost savings goal that will be realized throughout the remainder of 2023. Lastly, adding Raj as our co-CEO has helped strengthen our team and we see significant new opportunities on the horizon for our company.

In addition to investing in product upgrades to increase customer adoption and retention, we are also focusing on improving productivity and operational effectiveness throughout the business. We are accomplishing this through better leverage of technology and automation to streamline operations.

and the expanded use of data-driven decisioning. We believe these investments will lead to financial improvements, enhanced customer experiences, and continued value creation for our shareholders.

I will now turn the call over to our CFO , Jim Dollinger, to review our financial performance during the quarter. Jim? Thank you, Leslie. During the first quarter of 2023, the company earned $13.5 million of operating revenue, down from both the prior quarter $15.7 million and the prior year $25 million.

Servicing fees for the first quarter of 2023 totaled $6.6 million, while interchange and card revenue totaled $3.1 million for the same period.

These revenues were negatively impacted by reduced deposit servicing revenue associated with our current sixth grade agreements and the temporary loss of Durbin-exempt interchange fees.

Both limiting factors will be addressed in the near term.

Beginning March 31st, we expect servicing fee margins to improve by over 150 basis points at the current Fed funds rate due to the impact of the new variable rate deposit servicing agreements.

In addition, interchange fees will significantly increase upon the planned transition to a new Durbin-exempt partner bank in the second half of 2023.

Average service deposits totalled $1.2 billion for the first quarter of 2023, down slightly from the $1.4 billion for the fourth quarter of 2022.

and down significantly from the stimulus elevated balance of 2.1 billion for the first quarter of 2022. Most of this balance reduction occurred within our BAS vertical.

As discussed in our prior call.

We strategically allowed our highly interest rate sensitive deposit accounts to run off in late 2022 and year to date 2023 versus repricing at unprofitable levels.

We anticipate this runoff to moderate as interest rates begin to peak with deposit growth resuming in late 2023 and beyond.

Within our higher education vertical, average service deposits and organic deposits increased nine percent and 22 percent respectively from the fourth quarter of 2022, indicating continuing higher engagement of our student customer base.

Deposits for 90-day active account at March 31st.

Totaled $1,947.

within our higher education vertical, and $5,563 within our math vertical, both comparing favorably to market averages.

Spend totaled $787 million for the first quarter of 2023, up significantly from $679 million for the fourth quarter of 2022, and down slightly from $819 million for the first quarter of 2022. response.

Spend for 90-day active accounts increased both in total and reached vertical during the first quarter of 2023.

With $2,027 of spend per active account during the first quarter of 2023,

$1,713 of spend for active accounts during the fourth quarter of 2022.

and $1,888 of spent for active account during the first quarter of 2022.

Overall, we continue to see spend in our higher education vertical normalizing in 2023 to pre-COVID levels.

Of note, deposit and spend metrics for our higher education vertical have improved quarter over quarter, and these positive fundamentals will drive significantly higher deposit servicing revenue and interchange revenue once we realize the benefits of the new variable rate deposit servicing agreements. For more information, visit www.fema.gov

and transition to our new partner bank with Durban-exempt interchange fees. Annualized debit card spend for highly active BAF users.

Those with both direct deposits and a minimum of five customer-driven transactions per month was approximately $18,850 during the first quarter of 2023. This very attractive cohort makes up approximately 21 percent of active accounts at March 31, 2023.

as compared to 18% in the year-ago period. Account fees and university fees totaled $3.6 million for the first quarter of 2023, up from $3.4 million for the fourth quarter of 2022, and down from $4.2 million for the first quarter of 2022.

There were approximately 105,000 new account signups during the first quarter of 2023.

In our higher education vertical, new checking account sign-ups improve 12 percent year over year.

With our continued strategic focus in 2023, we anticipate continued growth in both the number of active accounts and account activity.

Two new colleges and universities signed on with BMTS during the first quarter of 2023, providing over 70,000 additional students access to bank mobile disbursements and the bank mobile vibe checking account.

This builds upon our approximately 750 existing college and university campus relationships.

We processed over $4 billion of student financial aid refund disbursements during the first quarter of 2023 as compared to $1.9 billion during the fourth quarter of 2022 and $4.9 billion during the first quarter of 2022.

Core operating expenses totaled $15.4 million for the first quarter of 2023, comparing favorably to the $17.6 million incurred for the fourth quarter of 2022, and the $15.8 million incurred for the first quarter of 2022, with sequential quarterly reductions since the third quarter of 2022.

As previously noted by Loveline, we completed cost reductions under our profit enhancement plan during the first quarter of 2023, yielding approximately $7 million of anticipated annualized cost savings. For those in print know, this format was used as a tool for coordinating actual sound Earl

The company is actively and aggressively implementing multiple operational efficiency improvements throughout its business operations to yield the expected profit enhancement plan savings totaling $15 million for 2023.

The full year 2023 charges to achieve the projected annual savings remain within the previously announced range of 1.5 million to 3 million with approximately 819,000 of these charges incurred during the first quarter of 2023.

Core EBITDA totaled negative 1.9 million for the first quarter of 2023.

flat with the fourth quarter of 2022, and down from the $9.2 million for the first quarter of 2022.

Substantially, all of this year-over-year decrease is driven by the reduction in revenue for the factors I noted a moment ago with expected improvement beginning in the second quarter of 2023.

We continue to expect poor UBITDA results for the first half of 2023 to be in line with the second half of 2022.

And for full year 2023, we estimate core unit up of approximately 14 million.

under the expectation that we will target the transfer of our higher education customer deposits to First Carolina Bank beginning on or about July 1st. Liquidity remains strong with 10.9 million of cash.

$12.6 million of working capital, and no debt on March 31. Use of cash during the first quarter of 2023 included $3.2 million for non-recurring items.

We expect our change in cash to correlate closely with our change in Core EBITDA over the remainder of 2023. With that update, we'd like to turn the call back to Loveline. Loveline? I've never heard of the..............

cash to correlate closely with our change in Core EBITDA over the remainder of 2023. With that update, we'd like to turn the call back to Loveline. Loveline? Thanks, Jim.

These past few months have also given us the opportunity to come together as a new management team with a renewed focus on our business. Many of the steps we've taken over the past quarter and continue to execute are foundation building and transformative at the same time.

Raj and I would like to share with you some of the initiatives we are working on and also have him introduce himself to all of you.

Raj? Good afternoon and thank you everyone for joining. I'm excited to introduce myself to all of you for the first time. As you know I've been the co-CEO role for almost two months now and have been closely partnering with Loveline and the rest of our team to integrate quickly and implement a variety of strategic initiatives.

It's been an absolute pleasure getting to know the broader team of the company and meeting collaborating with so many talented and dedicated individuals.

The question I'm asked most often is, why did I join DMTX? It's also a question I'm quite passionate about answering. This company is incredibly unique, particularly among the landscape of other fintech companies.

We are extremely fortunate to have a gigantic sales channel available to us. We don't need to look beyond our existing BAS partnership or our student business to have access to tens of millions of potential account holders.

Most peers are struggling to identify and win relationships to gain access to a scaled customer opportunity set. We are currently sitting on a massive pool and continue to work to expand that pool to other potential customers.

The challenge ahead of us is to improve our products, expand our product offerings, identify strategic partnerships or tuck-in acquisitions, and develop marketing strategies to increase growth through adoption and retention.

All these items are actively being focused on and I believe results will follow.

So the answer is simple. We have an incredibly large opportunity for growth within our existing channels and still have plenty of wood to chop to significantly propel our business even further. All this said, that documentary series is available on Amazon and

There is work ahead for our team and we're up for the challenge.

As Lavleen and Jim noted, there is an active focus on identifying and implementing operational efficiencies to lower costs. Some have been referenced in prior calls, but there remain several areas that are ripe for automation, technology enhancements, leveraging AI and machine-based learning, and process improvements that can improve functionality and efficiency. We have identified multiple areas to improve within the business.

and are actively working in that direction.

Under the right set of outcomes, this will result in higher quality output across the organization, improved efficiency, and improved financial performance.

Our consistent message across all areas is to leverage automation and the implementation of additional systems that result in faster and better data that will drive our decisions.

Data-driven decision-making and process improvement is one of our mantras to make gains we are striving for over the next 6 to 18 months, both in revenue generation and operations.

These significant moves will take time to reap benefits, but we do expect to begin realizing these benefits by the end of 2023.

I appreciate all of your support and you taking the time to join this call. I look forward to working with our executive team as we continue to execute our plan for long-term shareholder value creation. I'll turn the call back to Lillian.

Thank you, Raj.

It's been great working with Rod so far on a daily basis.

His background and experience are being immediately felt by the team with new ideas for improvements in products, user experience, and operations. I'm truly excited about what's to come.

I want to end by thanking all of our dedicated employees for working tirelessly through quite a tumultuous market and our investors who continue to support us.

Big changes for organizations are never easy and often take time. However, we see an exciting future driven by a massive opportunity set that to date remains largely untapped. Innovative solutions to everyday banking needs have been at the core of what we do.

We are excited about the changes in the company and the direction we are heading.

Thank you for your time today and I will return the call to the operator for your questions.

Thank you. If you would like to ask a question on the phone lines today, you can press star one on your telephone keypad. To remove yourself from the queue, you can press star one again.

We'll take our first question from Brian Dobson with Chardin Capital Markets.

Hey, Brian . Hi. Hey, how are you? Thanks for taking my question. So in your prepared remarks, you mentioned that the management team is now considering a new, call it data-driven or data-enhanced decision-making process. Do you think that you could elaborate on that a little bit?

Sure. I think the point that we're trying to make here, Brian , is that overall there's a renewed sense of looking at the efficiency. So when we talked at the end of the year and we pivoted from a bank model, we reoriented the market to really think of us as a lean and efficient fintech.

And that really is a multitude of different strategies that we've implemented all the way from looking at our people and having the right people in the right places, and then looking downwards to operational efficiencies, which includes, you know, process improvements, automation...

leveraging you know, bots, AI, and machine learning to really help with all of that. And additionally to your question, data. So as a financial services company, we're one of the unique companies that have access to a myriad of different data sources and a wealth and depth of...

of data. And so we just are getting better and better at extracting that data and being able to utilize and leverage it in ways that continue to create operational efficiencies for the company and in the future also on the revenue side how can we use that to better monetize as well. So I hope that's helpful.

Yeah, that is. Thank you. And, you know, as you look out over the broader landscape, in terms of banking as a service, how does the potential viewpoint of some of your call it new customers or potential customers changed over the past few months? Do you find them still eager to engage in that type of business?

Yeah, no, I appreciate that question. I think that, you know, as a business, we continue to explore BAS as a very interesting growth opportunity, and I think that the upside potential for BAS is actually huge. But I think that what's really important for us to be authentic about with the market is that the reality of many players that participate in the banking as a...

And so we continue to see interest. We continue to have a pipeline, a robust one, that we are working with our partner Helix on. But as I said before, we are only looking for deals that can be structured in a win-win way, and particularly where our program management and our technology platform can be a key differentiator in that deal.

And so we're really excited about the opportunity. As I said, it's quite untapped, but we also have to be grounded in the reality that we will only pick deals that are profitable or have a short roadmap to getting there.

Excellent. Thanks. That's very helpful. Thank you. We'll take our next question from Mike Grndahl with Northland Securities.

Hey, thank you guys and good afternoon.

Thank you guys and good afternoon.

The first question I think you guys said that from the Deposit Servicing Agreement you're going to benefit 150 basis points.

In 2Q, is that like April 1st? You know first could you just clarify that statement?

Yeah, Mike, this is Jim. How are you? April 1st effective date is the effective date of new agreements and that 150 basis point expected improvement in margin. Is based upon the current rate, so you are you are corrected and your statement.

Got it. So I mean, I think, but I want to bounce it off you, Jim.

If you had a billion two in deposit, all of 2Q

You know 150 basis points on a billion two of deposits is like 17 million annualized

We'll say like four and a quarter million of servicing revenue would be the potential all things being equal 2q benefit. Is that correct?

Yeah, I think the way to think about it, Mike, is if we look at it in the current rate environment, as our margins would increase by the 150 basis points, again, beginning with Q2 across the entire portfolio. And again, without getting into the pricing specifics.

is that would certainly yield that benefit for the remainder of fiscal year 2023. As long as rates remain at their current level. That will be correct.

Got it. And then...

Help me understand you get

Assuming you get set approval by July 1st, and I think there is another step up.

tied to the deposit servicing agreement the one with First Carolina Bank what is the step up July 1st then that we need to contemplate?

So we're not breaking up individually, Mike, between deposit servicing fee and interchange, but on an aggregate level, I would like to conservatively estimate that for every quarter, at least $2 million of revenue enhancement by moving over to First Carolina Bank.

The caveat to that is any you know significant fluctuations in deposit and spend relative to where we are today Okay, and so just so I'm clear the July 1st

That's incremental to the hundred and fifty basis points we're talking about.

I wouldn't say, no, we're not splitting it apart in that way. I gave you an aggregate number that at least $2 million a quarter of benefit primarily from the interchange, but again, we're not giving actual pricing on the deposit side, so I can't give you a flat out absolute number.

But a good proportion of that, a more significant proportion of that, is interchange revenue than deposit revenue.

A good proportion of that, a more significant proportion of that is interchange revenue than deposit revenue.

Well, I think, let me try to phrase it and you can tell me. To be safe and to be conservative, this 150 basis points starting in...

It sounds like that captures the benefit.

for the rest of the year, kind of all this stuff inclusive.

I think most of it, Mike, there is incremental benefits coming from the Durbin Exempt Interchange, but I think to answer your question, the number that Loveline mentioned, the 2 million per quarter, that's an all-in expectation. Again, that's the current rates and the current deposit level.

Got it. Can you comment the lack of a Durban exemption in 1Q?

what the revenue amount was that you lost out on by not having that?

Again, it's at least $2 million.

So if you look quarter over quarter, our revenue would have increased and that's not being shown because of the lack of Durban Exempt Interchange.

It's roughly a 50% cut in brake bike is the way to think about it of spent of the Durbin exempt versus the Durbin regulated. So if you took our spent for Q1 and applied the Q4 level in it, you could get what our interchange would have been all along the things being equal. It's kind of the way that I think about it.

Got it. Okay, thanks. And then, hey, lastly, I know two questions kind of tied to operating expenses. It sounds like you have achieved...

seven million of annualized savings on your way to try to achieve 15 million of annualized savings. The first question is kind of

What's left?

to get to go from 7 million to 15 million and then secondly

once you've run out these costs and gotten more efficient

whether it's gap or core, what is that rough goal of operating expenses?

you're targeting on a quarterly basis. Yeah, let me attack your first question first. Is, so you are correct, the seven million analyzed is where we are in the continuum of achieving the full 15 million for full year 2023. The majority of those costs are people related costs.

There are multiple other levers and multiple other operational areas that we are currently working and executing upon. We'll continue to over the remainder of the year. I think as we discussed in our last call, there are a variety of levers. But as you might expect, one of the big levers is obviously working with our

third-party partners and providers and initiating various procurement strategies with them in order to achieve further savings beyond the people cost we achieved in the first quarter. And Mike, the $70 million in core operating expenses.

at 12-31-20-22, so for the full year, we had, you know, we reported last quarter, right, $70 million of total core operating expenses. So the goal is this year that we see that $15 million reduction in that line item. So that's how you should quantify it. We're not ready to kind of give guidance on a quarterly basis.

Got it. Okay. Thank you. Okay.

We'll take our next question from Bill Deslom with Titan Capital.

Great, thank you. A couple of additional questions, please. First of all, relative to the banking as a service deposits, would you please talk about the trend throughout the quarter from December 31 forward? And...

through the end of Q1 and then whatever insights you can share from March 31 until today, that would also be helpful.

So from a standpoint of our overall deposits is, I think as we mentioned in our last call, is the first quarter is a period of stabilization. By the end of the first half, we expected overall to be stabilized.

Then we anticipate a return to growth in the second half of 2023, and growth will likely come first within the higher education vertical based upon our strategic investments and strategic initiatives. As you can see from our total deposit numbers, overall, there was

a slight reduction from Q4 into Q1, but we expect stabilization to occur by the end of the first half. And so let me continue with that. Did you see specifically in the BAS part of the business that the rate of deposit outflow...

slow as the quarter progressed then and that then leads to the stabilization in Q2? Or does that stabilization really happen from this point forward, so really the last half of the second quarter?

Hey, this is Raj. That is the interest rate sensitive portion of the overall portfolio. So we are going to see higher runoff as it relates to that portion. But I think what Jim is trying to articulate is the rate of runoff has declined and started to stabilize. So we are going to see higher runoff as it relates to that portion of the overall portfolio.

But, you know, we will have to continue to monitor that closely as we move into the next quarter. Great, thank you. And then relative to the student deposits, you had organic growth there. What have you been doing that's leading to that successful organic growth?

Withers. Sure, so I'll take that one. We're just deciding because we all want to answer all the questions. So for the student business, as I said before, the way that I think about the business is vast and very exciting. There's huge upside potential there.

but I wanted to ground everyone in the realities of, you know, there are deals that need to be structured, you know, and unique opportunities that come along that can be structured in hopefully profitable ways, but they're harder to come between. What we have refocused our efforts on in the meantime is really capitalizing and leveraging this awesome...

student business that we're so proud to be a part of and is much more under our control and being able to to pay the destiny for.

And so with a huge market of you know five million students that we serve that's a replenishing market every single year and you know we're really mission driven here because we want to give students who are always in the best interest of students and creating a financial foundation for them that is positive and affordable. So I want to just tell you our mission before getting into some of our tactics.

So our tactics is, you know, just to name a few. So on the product side, we're really focusing on unifying to one single technology platform, you know, across our business. And so making sure that our student business and that app experience that students have is really equivalent to our most modern, best technology. And so our goal is, by the end of the year, to make sure that our students are able to

products that could really help financially empower you and engage with you more and more. And given that it's an API-based platform, we'll be able to respond much more quickly to that and over time have a very customer-centric pipeline of feature enhancements to the product. That's what we're also looking at.

And then we're just revamping and reinvesting, as Raj said in his remarks, on the marketing side. So working on, you know, leveraging incentives to encourage primary banking relationships. We're working on communication revamp and segmentation and personalization of communicating to our student population.

We're in the process before year end to launch some type of rewards-based loyalty program for our students as well. So there's a whole list of activities that we're doing, but I just wanted to give you a flavor of what our marketing product and technology team here working on.

And that Loveline is on a go-forward basis. How about specifically what was the key driver or were the key drivers in Q1 for the success you had there?

So it's the beginning innings of some of the things that I just said. We also, you know, in all transparency do have a seasonal business and Q1 tends to be a stronger, you know, quarter for us. And so it was really a mix of both of those things. Great. Thank you. Yeah, thank you so much, Kevin, thank you so much for tonight's event, and thank the

A couple of additional questions. First of all, Lavleen and Raj, how are the two of you splitting the co-CEO responsibilities?

Sure. So, firstly, I'm so grateful to have Raj as a partner. And as I said in my prepared remarks, you know, his impact is being felt through the organization. And I think the employees, if you ever had a chance to talk to them, they would share that same, you know, excitement and enthusiasm for what he's bringing to the table.

But to more directly answer your question, I continue to focus on the vision, the strategies, innovation, and handling our customer relationships and sales. Raj continues to actually support me in these different functions. But additionally, he has risk, legal, HR, fraud, customer service reporting to him.

And he's really focused on helping us find operational efficiencies, as well as revenue opportunities to drive profitability, and also opportunistically looking at M&A opportunities for us as well. Great, thank you. And then relative to your guidance for the full year, for the second half...

will have how much cost savings built in to those numbers? Yeah, we would expect to achieve the remainder of our $15 million goal over the course of Q2 through the end of the year. I would expect that it would be.

roughly half of that would be achieved in the second half of the year. We've achieved, as we mentioned, about 7 million in the first quarter from the people initiatives. There will be continued savings in Q2, but I would expect that the bulk of the remaining 50% will be in the second half. And so by the end of, so by December , that's when the 50% will be in the second half.

with these proportions.

Perfect. Thank you all for the time.

Thank you. Thank you. Thank you and there are no further audio questions at this time. I'll turn the call over to Brian for the questions submitted via the web.

Thank you, operator. Our first question is, do you foresee the ongoing regional bank crisis potentially impacting the partnership with FCB, and do you have any update on that regulatory approval process? Sure.

We continue to have active dialogue with FCB on a weekly or more than weekly basis. They continue to provide us updates with respect to the process that they're going through and continue to remain optimistic based on the feedback, as well as their current standing that is proceeding as expected.

In terms of the bank crisis, obviously that's an extremely unfortunate set of events and continue to exist as we sit here today. And I think our existing key relationship with Customers Bank has been a tremendous asset to our company, just through financial strength, overall wellbeing.

and regulatory strength has been

steadfast and has continued to be able to provide us all the support and services that we need and continue to believe that differentiates us versus other FinTechs with a sponsor bank model. We also believe the process that we underwent with FCB in terms of selecting them.

with respect to their capitalization, their controls, their regulatory standing, similarly will well position us for ongoing stability. So in terms of our two primary relationships, I think we've done very, very well in terms of developing those relationships, but having partnerships that...

make a lot of sense to both parties economically and ensure ongoing stability of our programs. Great, thanks Raj. We have actually two questions on the repurchase program that was announced and

Yes, this is Jim again. So I think as I mentioned in my remarks is our expectation is to generate both positive poor EBITDA as well as positive cash flow over the remainder of 2023. As that positive cash flow is generated, obviously we look to opportunities.

to invest it for the maximum shareholder return. One of the opportunities, or one of the options for that is obviously the previously announced Pre-C Communicated Repurchase Program. That is one of many opportunities that we'd look at for the use of that cash.

Great, thank you. We have another question about the non-recurring expenses and the drop in cash balance. Could you expand on that and explain sort of the dip in cash?

Yes, yeah, I think as I mentioned in my remarks, there was included in Q1 non-recurring cash outlays. Part of that non-recurring nature relates to the profit enhancement plan and the activities that we took during the first quarter. So the payment of severance expenses being the single largest.

And then also there are some non-recurring items related to working capital that occurred in the first quarter as well. I would say that from an expectation of forward movement is as we achieve the improvement of core EBITDA, we would expect a very close correlation in cash.

for those improvements in Cori, but as we continue throughout the remainder of 2023. Thanks, Jim. And do you have any plans or what are the plans to organically grow deposits after the first Carolina bank merger? I'm sorry, not merger, partnership.

Yep, absolutely. Gotcha. That's probably among the most exciting parts of what we're seeing in the business at this time. I think Loveline had mentioned we have a variety of initiatives underway, which by changing the way that our products, technology platforms can be leveraged.

our ability to adapt those products, leveraging marketing initiatives and communication channels, which have already shown some positive effect, integrating some improved technology in in terms of signups and onboarding processes. I think there's a whole variety of different ways that we're actively looking at that.

And I think that it'll take a little bit of time, but during the second half of 2023, we'll start experiencing that impact. And I think longer term, there's just an enormous untapped market opportunity there, which will continue to strategize and implement various solutions around.

Thanks, Raj. I see no further questions on the webcast, so I'll turn the call back over to Loveline. Thank you, Brian . Thank you to everyone that joined today. As you can see that we're in a pivotal moment and there is a lot of excitement about the future and where we're going.

So appreciate your continued support and we'll touch base with you next quarter. Thank you

And that concludes today's presentation. Thank you for your participation and you may now disconnect.

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