Speaker #1: Hello and welcome. Hello and welcome to the GBank Financial
Operator: Hello, and welcome to the GBank Financial Holdings, Inc., Q4 2025 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. We appreciate you joining our earnings conference call. With me here today are Ed Nigro, Chairman and CEO, and Jeff Wicker, Chief Financial Officer of the company. The related Q4 earnings press release was filed with the U.S. Securities and Exchange Commission today and is available on the News and Media section of our website, gbankfinancialholdings.com.
Speaker #2: Good afternoon,
Operator: Hello, and welcome to the GBank Financial Holdings, Inc., Q4 2025 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. We appreciate you joining our earnings conference call. With me here today are Ed Nigro, Chairman and CEO, and Jeff Wicker, Chief Financial Officer of the company. The related Q4 earnings press release was filed with the U.S. Securities and Exchange Commission today and is available on the News and Media section of our website, gbankfinancialholdings.com.
Speaker #1: Holdings Inc. Q4, 2025 everybody. earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session.
Speaker #1: Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. We appreciate you joining our earnings conference call.
Speaker #1: Ed Nigro, Chairman and CEO, and Jeff Whicker, Chief Financial Officer of With me here today are the company. The related Q4 earnings press release was filed with the U.S.
Speaker #1: Securities and Exchange Commission today and is available on the news and media section of our website, that any forward-looking statements are gbankfinancialholdings.com. Before we begin, I'd like to remind everyone subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated future results.
Operator: Before we begin, I'd like to remind everyone that any forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated future results. Please see our safe harbor statements in our earnings press release. All comments, expressed or implied, made during today's call are subject to those safe harbor statements. Any forward-looking statements made during this call are made only as of today's date, and we do not undertake any duty to update such forward-looking statements except as required by law. Additionally, during today's call, we may discuss certain non-GAAP financial measures, which we believe are useful in evaluating our performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures can also be found in our earnings release. I'd now like to pass it over to Ed Nigro, Chairman and CEO.
Operator: Before we begin, I'd like to remind everyone that any forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated future results. Please see our safe harbor statements in our earnings press release. All comments, expressed or implied, made during today's call are subject to those safe harbor statements. Any forward-looking statements made during this call are made only as of today's date, and we do not undertake any duty to update such forward-looking statements except as required by law. Additionally, during today's call, we may discuss certain non-GAAP financial measures, which we believe are useful in evaluating our performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures can also be found in our earnings release. I'd now like to pass it over to Ed Nigro, Chairman and CEO.
Speaker #1: Please see our safe harbor statements in our earnings press release. All comments, expressed or implied, made during today's call are subject to those safe harbor statements.
Speaker #1: statements made during this call are made only as Any forward-looking of today's date, and we do not undertake any duty to update such forward-looking statements except as required by law.
Speaker #1: Additionally, during today's call, we may discuss certain non-GAAP financial measures, which we believe are useful in evaluating our performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures can also be found in our earnings release.
Speaker #1: I'd now like to pass it over to Ed Nigro, Chairman and
Speaker #1: CEO. Well, welcome,
Edward M. Nigro: Well, welcome, everybody. I'm Ed Nigro, and it's a pleasure to have the Q4 and some year-end numbers for you today, GBank Financial Holdings report. I almost feel like I have to do some disclosures, like, I'm live. This is not prerecorded. I'm not a bot, and I'm capable of making all kinds of mistakes. However, I hope today to avoid all of that and give you some insights into what has been going on in our world at GBank. Jeff is going to follow me with some of the more specifics and details, but I'm going to take us through some initial discussions, particularly in our gaming fintech arena and some of our core banking processes, particularly SBA. But I want to focus today very much on what's been going on in gaming fintech.
Edward Nigro: Well, welcome, everybody. I'm Ed Nigro, and it's a pleasure to have the Q4 and some year-end numbers for you today, GBank Financial Holdings report. I almost feel like I have to do some disclosures, like, I'm live. This is not prerecorded. I'm not a bot, and I'm capable of making all kinds of mistakes. However, I hope today to avoid all of that and give you some insights into what has been going on in our world at GBank. Jeff is going to follow me with some of the more specifics and details, but I'm going to take us through some initial discussions, particularly in our gaming fintech arena and some of our core banking processes, particularly SBA. But I want to focus today very much on what's been going on in gaming fintech.
Speaker #2: everybody. I'm Ed Nigro, and it's a pleasure quarter and some to have the fourth year-end numbers for you for today. GBank Financial Holdings Report.
Speaker #2: I almost feel like I have to do some disclosures, like I'm live. This is not pre-recorded. I'm not a bot. And I'm capable of making all kinds of mistakes.
Speaker #2: However, I hope today to avoid all of that and give you some insights into what has been going on in our world at GBank.
Speaker #2: Jeff is going to follow me with some of the more specifics and details, but I'm going to take us through some initial discussions particularly in our gaining fintech arena and some of our core banking processes, particularly SBA.
Speaker #2: But I want to focus today very much on what's been going on in gaining fintech. And my first comments are going to be focused around the credit card because it seems to be drawing the most attention and it has had the most fluctuation in the last several quarters.
Edward M. Nigro: And my first comments are going to be focused around the credit card because it seems to be drawing the most attention, and it has had the most fluctuation in the last several quarters. I wanted to give you some insight and things we've already listed or discussed at some length, but maybe not to the depth I want to go in today, so we can have a good understanding of what we're doing and where we believe that we are headed. First, I had reported that we had stopped our application process. We had two major events going on. We had an application automated product that wasn't working well, and actually our users were getting lost in the process and applications were being dropped.
Edward Nigro: And my first comments are going to be focused around the credit card because it seems to be drawing the most attention, and it has had the most fluctuation in the last several quarters. I wanted to give you some insight and things we've already listed or discussed at some length, but maybe not to the depth I want to go in today, so we can have a good understanding of what we're doing and where we believe that we are headed. First, I had reported that we had stopped our application process. We had two major events going on. We had an application automated product that wasn't working well, and actually our users were getting lost in the process and applications were being dropped.
Speaker #2: And I wanted to give you some insight and things we've already listed or discussed at some length, but maybe not to the depth I want to go into today.
Speaker #2: So we can have a good understanding of what we're doing and where we believe that we are headed. First, I had reported that we had stopped our application process.
Speaker #2: We had two major events going on. We had an application automated product that wasn't working well, and actually, our users were getting lost in the process.
Speaker #2: An application was being dropped. And then we had another direct mail piece, massive application process going on from a contract that I’ve always said in the past should have not been entered into, but it was.
Edward M. Nigro: And then we had another direct mail piece, massive application process going on from a contract that I've always said in the past should have not been entered into, but it was. And this was a direct mail piece that went out to 700,000 recipients. Well, between the two, the app not working and all of a sudden these massive applications coming in that were not designed or geared towards our primary gaming user, we were underwater very quickly with our entire app process. We shut it down, actually, and had to do what I call the redesign, development, engineering, and execution. And that took us until almost the end of October in Q4. And then we were able to gradually open up our application for real applicants. Naturally, this stopped all of our marketing.
Edward Nigro: And then we had another direct mail piece, massive application process going on from a contract that I've always said in the past should have not been entered into, but it was. And this was a direct mail piece that went out to 700,000 recipients. Well, between the two, the app not working and all of a sudden these massive applications coming in that were not designed or geared towards our primary gaming user, we were underwater very quickly with our entire app process. We shut it down, actually, and had to do what I call the redesign, development, engineering, and execution. And that took us until almost the end of October in Q4. And then we were able to gradually open up our application for real applicants. Naturally, this stopped all of our marketing.
Speaker #2: And this was a direct mail piece that went out to seven hundred thousand—the app not working—and all of the recipients. Well, between the two, all of a sudden these massive applications were coming in that were not designed or geared towards our primary gaming user. We were underwater very quickly with our entire app process.
Speaker #2: We shut it down, actually, and had to do what I call the redesign, development, engineering, and execution. And that took us until almost the end of October, in the fourth quarter.
Speaker #2: And then we were able to gradually open up our application for real applicants. Naturally, this stopped all of our marketing, so we had to accelerate it up to around $130 million in transactions for the second quarter.
Edward M. Nigro: So we had to, you know, accelerate it up to around $130 million in transactions for Q2, and then Q3 and Q4—excuse me, Q3. But we stopped it because we were accelerating quickly, but not with the controls we wanted in place. The fourth quarter you've just seen settled in around $99 million in transactions, but that was to be expected. It was to be expected by us anyway, and I know we may not have given guidance that it was going to decline some. But when we had these enormous fraud applications, we really shut down all applications to our credit card. We then relaunched it, and we relaunched it with some amazing KYC and fraud prevention metrics in place.
Edward Nigro: So we had to, you know, accelerate it up to around $130 million in transactions for Q2, and then Q3 and Q4—excuse me, Q3. But we stopped it because we were accelerating quickly, but not with the controls we wanted in place. The fourth quarter you've just seen settled in around $99 million in transactions, but that was to be expected. It was to be expected by us anyway, and I know we may not have given guidance that it was going to decline some. But when we had these enormous fraud applications, we really shut down all applications to our credit card. We then relaunched it, and we relaunched it with some amazing KYC and fraud prevention metrics in place.
Speaker #2: And then the third quarter and the fourth, excuse me, the third quarter, but we stopped it because we were accelerating quickly, but not with the controls we wanted in place.
Speaker #2: The fourth quarter, you've just seen, settled in around 99 million in transactions, but that was to be expected. It was to be expected by us anyway.
Speaker #2: And I know we may not have given guidance that it was going to decline some. But when we had these enormous fraud applications, we really shut down all applications to our credit card.
Speaker #2: We then relaunched it, and we relaunched it with some amazing KYC and fraud prevention metrics in place. We engaged Plaid. We now do fraud prevention with NeuroID and PreciseID.
Edward M. Nigro: We, where we engaged Plaid, we now do fraud prevention with NeuroID and Precise ID and multiple verifications of who you are to avoid fraud. We also learned, interestingly, that in the application process, bots are now becoming very active in loading these apps. But there is a way to determine the difference between a bot and human. I suppose one day that's going to become more important than many other things, but in credit cards, it's become a big issue. As an example, over, excuse me, the Martin Luther King holidays, we got bombarded with about 10,000 applications just over the weekend. 6 were approved, and all the others were fraud. Not one fraud has gotten through. Not one fraud has penetrated our app process in the last 60 days, so that is an accomplishment.
Edward Nigro: We, where we engaged Plaid, we now do fraud prevention with NeuroID and Precise ID and multiple verifications of who you are to avoid fraud. We also learned, interestingly, that in the application process, bots are now becoming very active in loading these apps. But there is a way to determine the difference between a bot and human. I suppose one day that's going to become more important than many other things, but in credit cards, it's become a big issue. As an example, over, excuse me, the Martin Luther King holidays, we got bombarded with about 10,000 applications just over the weekend. 6 were approved, and all the others were fraud. Not one fraud has gotten through. Not one fraud has penetrated our app process in the last 60 days, so that is an accomplishment.
Speaker #2: And multiple verifications of who you are, to avoid fraud. We also learned interestingly that in the application process, bots are now becoming very active in loading these apps.
Speaker #2: But there is a way to determine a difference between a bot and a human. I suppose one day that's going to become more important than many other things.
Speaker #2: But in credit cards, it's become a big issue. As an example, over Memorial over, excuse me, the Martin Luther King holidays, we got hit and bombarded with about 10,000 applications just over the weekend, six were approved.
Speaker #2: And all the others were fraud. Not one fraud has gotten through. Not one fraud has penetrated our app process in the last 60 days.
Speaker #2: So that is an accomplishment. But we also found the use by our customers to be problematic in the sense that we had high volume users; we had an ACH payment process, which was how most of our credit card players were paying off their card.
Edward M. Nigro: But we also found the use by our customers to be problematic in the sense that we had high-volume users. We had an ACH payment process, which was how most of our credit card players were paying off their card. They were paying it off with ACH. And for those of you who may be exposed to ACH, there's a delay, sometimes up to 3 business days in ACH clearing. There are also consumer rights on ACH that extend often out to as much as 60 days in terms of was that an authorized transaction? Well, our ACH, when it was launched for our credit card, was launched with a vendor through our processor, ITC. We determined very quickly that this ACH process must be brought inside GBank.
Edward Nigro: But we also found the use by our customers to be problematic in the sense that we had high-volume users. We had an ACH payment process, which was how most of our credit card players were paying off their card. They were paying it off with ACH. And for those of you who may be exposed to ACH, there's a delay, sometimes up to 3 business days in ACH clearing. There are also consumer rights on ACH that extend often out to as much as 60 days in terms of was that an authorized transaction? Well, our ACH, when it was launched for our credit card, was launched with a vendor through our processor, ITC. We determined very quickly that this ACH process must be brought inside GBank.
Speaker #2: They were paying it off with ACH. And for those of you who may be exposed to ACH, there's a delay sometimes up to three business days in ACH clearance.
Speaker #2: Also, consumer rights on there are ACH that extend off and out to as much as 60 days in terms of what's that unauthorized transaction.
Speaker #2: Well, our ACH, when it was launched for our credit card, was launched with a vendor through our processor, i2c. We determined very quickly that this ACH process must be brought inside GBank.
Speaker #2: We do ACH processing for our commercial clients, but to do it through a processor like I2C, with our ledger process and the batch processing and also to be the ODFI for this process, became a significant undertaking.
Edward M. Nigro: We do ACH processing for our commercial clients, but to do it through a processor like ITC, with our ledger process and the batch processing, and also to be the ODFI for this process, became a significant undertaking. However, we brought on the technology and payments experts in order to implement it, and we are very close to launching our own ACH transactions for our credit card players. Why this is important is that when you're doing $100 million a month or more in transactions, there are a lot of times the credit card is paid off multiple times through the month, and they're paid off by ACH. Question: Do we give that client instant credit for the payment of the ACH? Do we have that client wait 3 days? Do we put a 7-day wait on that client?
Edward Nigro: We do ACH processing for our commercial clients, but to do it through a processor like ITC, with our ledger process and the batch processing, and also to be the ODFI for this process, became a significant undertaking. However, we brought on the technology and payments experts in order to implement it, and we are very close to launching our own ACH transactions for our credit card players. Why this is important is that when you're doing $100 million a month or more in transactions, there are a lot of times the credit card is paid off multiple times through the month, and they're paid off by ACH. Question: Do we give that client instant credit for the payment of the ACH? Do we have that client wait 3 days? Do we put a 7-day wait on that client?
Speaker #2: However, we brought on the technology and payments experts in order to implement it, and we are very close to launching our own ACH transactions for our credit card.
Speaker #2: Players. Why this is important is that when you're doing 100 million a month or more in transactions, there are a lot of times the credit card is paid off multiple times through the month.
Speaker #2: And they're paid off by ACH. Question, do we give that client instant credit for the payment of the ACH? Do we have that client wait three days?
Speaker #2: Do we put a seven-day wait on that client? We have experienced some very valued clients that are deserving of instant credit for ACH, and others who are not.
Edward M. Nigro: We have experienced some very valued clients that are deserving of instant credit for ACH and others who are not. Well, when we saw some fraud penetrating ACH, and we knew we had to get control of our ACH payments, we also, in Q4, for a period of time, stopped and reduced transactions significantly and waited and watched ACH clearance patterns without giving more instant credit to some of our better users. Well, this caused a decline in our transactions, and we knew it would, but it was more important to verify our client base and verify that no fraud users had penetrated our user base. And we did, but it took time to do that.
Edward Nigro: We have experienced some very valued clients that are deserving of instant credit for ACH and others who are not. Well, when we saw some fraud penetrating ACH, and we knew we had to get control of our ACH payments, we also, in Q4, for a period of time, stopped and reduced transactions significantly and waited and watched ACH clearance patterns without giving more instant credit to some of our better users. Well, this caused a decline in our transactions, and we knew it would, but it was more important to verify our client base and verify that no fraud users had penetrated our user base. And we did, but it took time to do that.
Speaker #2: Well, when we saw some fraud, penetrating ACH, and we knew we had to get control of our ACH payments, we also in the fourth quarter for a period of time stopped and reduced transactions significantly and waited and watched ACH clearance patterns without giving more instant credit to some of our better users.
Speaker #2: Well, this caused a decline in our transactions. And we knew it would, but it was more important to verify our client base and verify that no fraud users had penetrated our user base—and we did.
Speaker #2: But it took time to do that. We have since relaunched and, of course, as I said, we're going to soon have the ODFI for all of our consumers that own our credit card.
Edward M. Nigro: We have since relaunched, and of course, as I said, we're gonna soon have the ODFI for all of our consumers that own our credit card, and we are ready to relaunch right now again, our marketing, which we stopped as well. It was very important that we do this right. We have high-volume users, but that has the potential... You've seen the growth patterns that we can have, and those growth patterns can, we believe, be reinstituted, but they are going to be reinstituted with our new KYC, our new fraud prevention, and our new payment systems. And we feel that we really have very good and very direct involvement with our customers. We've even started new host-style loyalty programs, meaning we look at our higher users and treat them with special premium offers.
Edward Nigro: We have since relaunched, and of course, as I said, we're gonna soon have the ODFI for all of our consumers that own our credit card, and we are ready to relaunch right now again, our marketing, which we stopped as well. It was very important that we do this right. We have high-volume users, but that has the potential... You've seen the growth patterns that we can have, and those growth patterns can, we believe, be reinstituted, but they are going to be reinstituted with our new KYC, our new fraud prevention, and our new payment systems. And we feel that we really have very good and very direct involvement with our customers. We've even started new host-style loyalty programs, meaning we look at our higher users and treat them with special premium offers.
Speaker #2: And we are ready to relaunch right now, again, our marketing, which we stopped as well. It was very important that we do this right.
Speaker #2: We have high volume users, but that has the potential, you've seen the growth patterns that we can have. And those growth patterns can we believe be reinstituted, but they are going to be
Speaker #1: We have to do new things with our KYC and payment systems. I do fraud prevention, KYC, and payment systems. We feel it, and really, our new changes have...
Speaker #1: We feel that we really have good and very direct involvement with our customers. We've started very new host-style loyalty programs, meaning we look at higher earners and users, and treat them with special premium offers.
Edward M. Nigro: We contact them, we make sure their accounts being managed properly, we make sure that they're getting the results they want when they want their card paid off. We have direct contact with them, and this is very important, as well. And we have also, you know, instituted our own AI system for answering calls. We've moved all calls away from a processor to ourselves, and this has been a transition processes indeed for us, but it's working, and we're getting closer to our customers, and our customers know us.... And we think that, and not only think, we believe that we are have a strong foundation now that we can scale, and we can begin to rescale. And I think you'll be seeing that in the not-too-distant future. There's been another couple of headwinds in the credit card business.
Edward Nigro: We contact them, we make sure their accounts being managed properly, we make sure that they're getting the results they want when they want their card paid off. We have direct contact with them, and this is very important, as well. And we have also, you know, instituted our own AI system for answering calls. We've moved all calls away from a processor to ourselves, and this has been a transition processes indeed for us, but it's working, and we're getting closer to our customers, and our customers know us.... And we think that, and not only think, we believe that we are have a strong foundation now that we can scale, and we can begin to rescale. And I think you'll be seeing that in the not-too-distant future. There's been another couple of headwinds in the credit card business.
Speaker #1: We contact them , we make sure their accounts being managed properly . We make sure that they're getting the results they want , when they want their card paid off .
Speaker #1: We have direct contact with them and this is very important well as we have also , you instituted our own . And for system answering calls , and we moved all calls away from a processor to .
Speaker #1: And this has been a transition ourselves process as indeed for us. But it's, and we're working, getting our closer to customers, and our customers know us, and we that we.
Speaker #1: we think And that we believe are have a strong now that foundation we can scale and we can begin to rescale . think And I you'll be seeing that in the not too distant future .
Speaker #1: There have been another couple of headwinds in the card credit business . Some of you noticed that may have DraftKings , about 60 days ago or so , stopped all credit cards and FanDuel just announced they're going to stop all credit direct card loans with credit cards because both of them have realized or have a situations where some states do .
Edward M. Nigro: Some of you may have noticed that DraftKings, about 60 days ago, or so, stopped all credit cards. FanDuel just announced they're gonna stop all credit card, direct loads with credit cards, because both of them have realized or have situations where some states do. There are about 7 states right now that do not allow credit cards to direct credit cards to load these sports betting apps. We know DraftKings got a fairly substantial fine from Massachusetts, and we know, we've read that FanDuel also got a fine, I believe, from, from the state of Iowa. So rather than face these, they're deciding to not do credit cards. Well, that's their decision, but we know that there are at least twenty- We have about 28 apps, sports betting, legal sports betting apps across the country.
Edward Nigro: Some of you may have noticed that DraftKings, about 60 days ago, or so, stopped all credit cards. FanDuel just announced they're gonna stop all credit card, direct loads with credit cards, because both of them have realized or have situations where some states do. There are about 7 states right now that do not allow credit cards to direct credit cards to load these sports betting apps. We know DraftKings got a fairly substantial fine from Massachusetts, and we know, we've read that FanDuel also got a fine, I believe, from, from the state of Iowa. So rather than face these, they're deciding to not do credit cards. Well, that's their decision, but we know that there are at least twenty- We have about 28 apps, sports betting, legal sports betting apps across the country.
Speaker #1: They're about seven states right now that do not allow credit cards to direct credit cards to load these . Sports betting apps . And we know DraftKings got a fairly substantial from Massachusetts .
Speaker #1: And we know we've read that also got a fine , I believe , from from the state of Iowa . So rather than face these , they're deciding to not do credit cards .
Speaker #1: Well , their that's decision . But we know that there are 20 . We at least have about 28 apps . Sports betting , legal sports betting apps country .
Edward M. Nigro: Our customers use 20 of them right now. When FanDuel announced they're gonna stop credit cards in the month of March, most of our players have already moved off of FanDuel that want to use their credit card. So credit card people will find a place to use their credit card for loading these apps because it is it is a a legal process in almost all the states, and it is a a very successful way of moving funds. I think that there's interesting note here, and we knew this some time ago, but I had to refresh my memory. Credit cards right now today account for about 30% of all our payments in this country, in the United States, which is about $6 trillion a year.
Edward Nigro: Our customers use 20 of them right now. When FanDuel announced they're gonna stop credit cards in the month of March, most of our players have already moved off of FanDuel that want to use their credit card. So credit card people will find a place to use their credit card for loading these apps because it is it is a a legal process in almost all the states, and it is a a very successful way of moving funds. I think that there's interesting note here, and we knew this some time ago, but I had to refresh my memory. Credit cards right now today account for about 30% of all our payments in this country, in the United States, which is about $6 trillion a year.
Speaker #1: Across the board, our customers use 20 of them right now. And when FanDuel announced they're going to stop credit cards in the month of March, most of our players have already moved off of Ban.do.
Speaker #1: If you go to use a credit card, so credit card will find a people place to use their credit card for loading these apps because it is.
Speaker #1: It is a legal process in almost all the states, and it is a very successful way of raising funds. I think moving there is interesting.
Speaker #1: Note here knew time this some ago , but I had to refresh my memory . cards Credit right now . Today about for , about 30% of all our payments in this country in the United States , which is about $6 trillion a year .
Edward M. Nigro: It is by far the single most in payments systems in the country alone. Now, that's excluding ACH, because ACH is, of course, everybody. But I'm talking about a payments method, and it's growing. So it's not to be ignored if you want an interesting market share, and we know that there will always be competition for market share and those that will be able to follow the law and make sure they don't compromise, you know, loads in certain states. Our customers are very smart, and they know how to move their apps and join different apps and take advantage of apps that will accept a credit card. And of course, that's direct credit card. Now, there's indirect credit card acceptance, too, which of course, debit cards. Someone says if you use a debit card, but you can load a debit card with a credit card.
Edward Nigro: It is by far the single most in payments systems in the country alone. Now, that's excluding ACH, because ACH is, of course, everybody. But I'm talking about a payments method, and it's growing. So it's not to be ignored if you want an interesting market share, and we know that there will always be competition for market share and those that will be able to follow the law and make sure they don't compromise, you know, loads in certain states. Our customers are very smart, and they know how to move their apps and join different apps and take advantage of apps that will accept a credit card. And of course, that's direct credit card. Now, there's indirect credit card acceptance, too, which of course, debit cards. Someone says if you use a debit card, but you can load a debit card with a credit card.
Speaker #1: It is by far the single most in payments systems in the country alone . Now , that's excluding ACH , ACH is worse .
Speaker #1: Everybody . But I'm talking a about payments method and it's growing . So it's not to be ignored . If you want an interesting market share .
Speaker #1: And we know that there will always be competition for market share and those that will be able to follow the law and make sure they don't compromise , you know , loads in certain states , our customers are very smart and they know how to move their apps in , join different apps and take advantage of will apps that accept our card course , that's .
Speaker #1: direct credit And of card . Now there's indirect credit card acceptance too , course debit card someone says if you use a card , but debit you can load a debit card with a card credit , you can load many payment systems with a credit card .
Edward M. Nigro: You can load many payment systems with a credit card. So it's, it's a system that is, widely used. Some of the direct applications, of course, change from time to time. And our players and our customers know where to go and know where they're, they're welcome. And we have not seen. Well, we saw when DraftKings did it abruptly, caught many of our players off guard, and it took them a week or two to realign with other apps and set up their accounts. But they did. And we saw the resultant volume pick right back up of those customers.
Edward Nigro: You can load many payment systems with a credit card. So it's, it's a system that is, widely used. Some of the direct applications, of course, change from time to time. And our players and our customers know where to go and know where they're, they're welcome. And we have not seen. Well, we saw when DraftKings did it abruptly, caught many of our players off guard, and it took them a week or two to realign with other apps and set up their accounts. But they did. And we saw the resultant volume pick right back up of those customers.
Speaker #1: So it's a system that is widely used . Some of the direct applications , of course , change from time to time . And our players and our customers know where to go and know where their they're welcome .
Speaker #1: And we have not seen—what we saw when DraftKings did it, it abruptly caught many of our players off guard. And it took them a week or two to realign with other apps and set up their accounts.
Speaker #1: But they did saw , and we the the resultant volume picked right back from those customers up . So I wanted to give you that insight where we on had been with the credit because you saw rapid growth and you saw and then saw you slow , decline , and now we feel comfortable with where we're headed , very and we're we're going to relaunch our marketing .
Edward M. Nigro: So I wanted to give you that insight on where we had been with the credit card, because you saw rapid growth, then you saw it slow, and then you saw a decline, and now we feel very comfortable with where we're headed, and we're gonna relaunch our marketing. As a matter of fact, you haven't seen Mike Tyson yet. We did an announcement on that, but you will be soon. I'd like to move on and talk next a bit about our focus and our PPA. It's a very important part of our gaming fintech operations. Bold Bets got licensed on 21 November 2025. They have received two approvals. The first one was for Bold Bets, and the second one from gaming was for Distill Taverns, authorizing them to use Bold Bets.
Edward Nigro: So I wanted to give you that insight on where we had been with the credit card, because you saw rapid growth, then you saw it slow, and then you saw a decline, and now we feel very comfortable with where we're headed, and we're gonna relaunch our marketing. As a matter of fact, you haven't seen Mike Tyson yet. We did an announcement on that, but you will be soon. I'd like to move on and talk next a bit about our focus and our PPA. It's a very important part of our gaming fintech operations. Bold Bets got licensed on 21 November 2025. They have received two approvals. The first one was for Bold Bets, and the second one from gaming was for Distill Taverns, authorizing them to use Bold Bets.
Speaker #1: And as a matter of fact, we haven't seen Tyson. Mike, we did an announcement on, he will— that. But be. I'd like to move on and talk next a bit about our focus and our PPA.
Speaker #1: It's a very important part of our gaming fintech operations , both ads got licensed on November 21st , 2025 . They received two approvals .
Speaker #1: The first one was for both bets and the second one from gaming was for distilled taverns , authorizing them to use both bets .
Edward M. Nigro: The interesting thing is the Bold Bets license from gaming. They are licensed as this, what's called an associated equipment provider. It, it's interesting because it's described as a software solution that allows players to create and fund a wagering account via a mobile app, and that's what was licensed. That's how they were licensed as an associated equipment provider. The second part, the license, was required by the gaming operator to use Bold Bets. So the Distill Taverns had applied, and this will become a more routine application for other gaming operators. Any system they want to use that touches any of their gaming platforms, they have to tell gaming about it and get their acknowledgment and approval that it's, it's an okay process. And of course, this will be an okay process for whoever applies, because Bold Bets have associated equipment provider license.
Edward Nigro: The interesting thing is the Bold Bets license from gaming. They are licensed as this, what's called an associated equipment provider. It, it's interesting because it's described as a software solution that allows players to create and fund a wagering account via a mobile app, and that's what was licensed. That's how they were licensed as an associated equipment provider. The second part, the license, was required by the gaming operator to use Bold Bets. So the Distill Taverns had applied, and this will become a more routine application for other gaming operators. Any system they want to use that touches any of their gaming platforms, they have to tell gaming about it and get their acknowledgment and approval that it's, it's an okay process. And of course, this will be an okay process for whoever applies, because Bold Bets have associated equipment provider license.
Speaker #1: The interesting thing is that both bets license from gaming their licensed as what's called an associated provider equipment . It's interesting because it's described as a software solution that allows players to create , fund wagering , accounts via mobile a , and that's what was licensed .
Speaker #1: And that's how they were licensed as an associated provider equipment. The second part, the license was required by the gaming operator to use both bets.
Speaker #1: So the distilled had cabbage , applied . And this will become a more routine application for other gaming operators . Any system they want to use that touches any of their gaming platforms , they have to tell gaming about it and get their acknowledgment and approval that it's it's an okay process .
Speaker #1: And of course , this will be an okay process we're alive , because it has associated for when provider equipment licenses . It is taverns license was interesting because the license went on to say how they are approved to use both bets , and it went on further to say in directly that gee Bank will be holding all and the funds not distilled .
Edward M. Nigro: The Distill Taverns license was interesting because the license went on to say how they are approved to use Bold Bets. It went on further to say, and directly, that GBank will be holding all the funds and not Distill, and as such, a reserve account is not necessary. Now, this is quite, I think, remarkable in that gaming understands that all the funds that are used to play slot machines go to the wagering account to be used to connect to Konami's casino management system are being held by GBank. That is held by our pooled player account, which is a patented system that BCS developed that is under agreement, utilized by GBank. Also, as you know, GBank Financial Holdings owns 32.99% of BCS.
Edward Nigro: The Distill Taverns license was interesting because the license went on to say how they are approved to use Bold Bets. It went on further to say, and directly, that GBank will be holding all the funds and not Distill, and as such, a reserve account is not necessary. Now, this is quite, I think, remarkable in that gaming understands that all the funds that are used to play slot machines go to the wagering account to be used to connect to Konami's casino management system are being held by GBank. That is held by our pooled player account, which is a patented system that BCS developed that is under agreement, utilized by GBank. Also, as you know, GBank Financial Holdings owns 32.99% of BCS.
Speaker #1: And as such , a reserve account is not necessary . Now , this is quite I think that , remarkable in gaming understands that all the funds that are used to play slot , to go to the account wagering , to be used to connect to Konami's casino management systems , are being held by eBay .
Speaker #1: And that is held by our pool player account , which is a patented system that is developed , that is under agreement utilized by TFA .
Speaker #1: Also , as you know , GBank Financial Holdings Inc. is 32.99% of LLC's , but having said that , what those funds do in KeyBank now we those go funds to to a Subledger account at bank and bank reconciles them , settles them , and distributes them .
Edward M. Nigro: But having said that, what those funds do in GBank, GBank now, we, those funds go to, to a sub-ledger account at GBank, and GBank reconciles them, settles them, and distributes them. So all the transactions that would have taken place at the gaming operator now take place at the bank. So no longer must the gaming operator with slot machines face the issue of managing cash, because the bank will just pay them weekly all their winnings. So it's a very, very... It's actually a very good system for the gaming operators, because the gaming operators, the bricks-and-mortar operators, are unlike the sports betting apps. Gaming operators have always paid a lot of money to have their cash managed, because cash is something that is a necessary evil. But here, for the, for the first time, they're not gonna have to manage cash in slot machines.
Edward Nigro: But having said that, what those funds do in GBank, GBank now, we, those funds go to, to a sub-ledger account at GBank, and GBank reconciles them, settles them, and distributes them. So all the transactions that would have taken place at the gaming operator now take place at the bank. So no longer must the gaming operator with slot machines face the issue of managing cash, because the bank will just pay them weekly all their winnings. So it's a very, very... It's actually a very good system for the gaming operators, because the gaming operators, the bricks-and-mortar operators, are unlike the sports betting apps. Gaming operators have always paid a lot of money to have their cash managed, because cash is something that is a necessary evil. But here, for the, for the first time, they're not gonna have to manage cash in slot machines.
Speaker #1: So all the transactions that would have taken place at the gaming operator take place at the bank now. So no longer must the gaming operator slot machines face the issue of managing cash, because the bank will just pay them weekly, all their winnings.
Speaker #1: So it's a very it's a very actually good system for gaming operators because the gaming operators , the bricks and mortar operators are unlike betting apps .
Speaker #1: operators Gaming have always paid a lot of money to have their cash managed because cash is something that is necessary . Evil . But here , for the first time , have to not going to manage cash in slot machines they're .
Edward M. Nigro: You know, there's a history here I thought was pretty interesting and why we, as a bank, have many people, I'm one of them, that understand gaming. But I was involved in gaming when the system in slot machines was coin in, coin out. It's a very simple system. Machines were mechanical. You put your coins in, you hit a jackpot, and the coins came clanging into the tray. You know, as a matter of fact, a little side story. I remember when Steve Wynn opened the Golden Nugget downtown, he put the coin noises over the loudspeakers, so when you walked in the casino, everybody would think everyone was winning because the coins were dropping into the trays. Pretty good marketing. But then, in the...
Edward Nigro: You know, there's a history here I thought was pretty interesting and why we, as a bank, have many people, I'm one of them, that understand gaming. But I was involved in gaming when the system in slot machines was coin in, coin out. It's a very simple system. Machines were mechanical. You put your coins in, you hit a jackpot, and the coins came clanging into the tray. You know, as a matter of fact, a little side story. I remember when Steve Wynn opened the Golden Nugget downtown, he put the coin noises over the loudspeakers, so when you walked in the casino, everybody would think everyone was winning because the coins were dropping into the trays. Pretty good marketing. But then, in the...
Speaker #1: You know, there's a history here. I thought it was pretty interesting. And why we, as a bank, have many people.
Speaker #1: I'm one of them that understand gaming . But I involved in when the system gaming had slot machines was coined in coin out .
Speaker #1: It's very simple . System machines were mechanical . You put your coins in , you hit a jackpot , and the coins clanging came into the tray .
Speaker #1: know , as You a matter of fact , a little side story . I remember when Steve Wynn opened the Golden Nugget downtown .
Speaker #1: He put the coin noises over the loudspeakers . So when he walked in the casino , everybody would think everyone was winning because the dropping coins were into the trays .
Speaker #1: Pretty good marketing . But then in the and then it changed when suddenly the digital machines and they were first to the poker put out machines were by IGT in international gaming technology , which was founded by Sirin and I started , but this also on his machines .
Edward M. Nigro: And then it changed when suddenly, digital machines, and they were first, the poker machines were put out by IGT, International Game Technology, was founded by Si Redd. And Si started this, but also on his machines, these receptacles that took cash. Now, you put a $5 bill on, a $20 bill on, and it would accept and give you credits on the machine. And when you were done playing, it gave you a slip, and you took that slip to the casino cage, and you cashed it in. And that was the process that existed for some time until the early 1990s. And then another thing came to change the world. It's called TITO. Ticket in, ticket out. And TITO was actually created by MGM, and MGM sold it to IGT. A lot of money.
Edward Nigro: And then it changed when suddenly, digital machines, and they were first, the poker machines were put out by IGT, International Game Technology, was founded by Si Redd. And Si started this, but also on his machines, these receptacles that took cash. Now, you put a $5 bill on, a $20 bill on, and it would accept and give you credits on the machine. And when you were done playing, it gave you a slip, and you took that slip to the casino cage, and you cashed it in. And that was the process that existed for some time until the early 1990s. And then another thing came to change the world. It's called TITO. Ticket in, ticket out. And TITO was actually created by MGM, and MGM sold it to IGT. A lot of money.
Speaker #1: These receptacles are to cash. Now you can put a $5 bill on it—would you accept, and could you send a machine?
Speaker #1: And when you were done playing, it gave you a slip and you took that slip to the casino cage and cashed it in.
Speaker #1: You could that was and the process that for some existed time until the early 90s . And another thing came to the change world .
Speaker #1: keto . Kick it in , kick it out was . created And Tito by MGM and MGM sold it to . lot of A money because IGT saw it and said , this is going to change world the .
Edward M. Nigro: Because IGT saw it and said, "This is gonna change the world." Instead of getting just a receipt to go to the cage and then to get cash, and then you went and took that cash to go to a different machine, this gave you a ticket. With that ticket, you could go to the machine next to it and put it in and get some credit for whatever was on that ticket. So it's called ticket in, ticket out, and you can play all the time as long as you had credits on that ticket. And then when you were done, you went and cashed it out at one of the kiosks or at the cage. So 1990, Si Redd said, "We're gonna change the world. Everyone's gonna have TITO," and everyone laughed at him. "What is TITO? With cash, people love cash.
Edward Nigro: Because IGT saw it and said, "This is gonna change the world." Instead of getting just a receipt to go to the cage and then to get cash, and then you went and took that cash to go to a different machine, this gave you a ticket. With that ticket, you could go to the machine next to it and put it in and get some credit for whatever was on that ticket. So it's called ticket in, ticket out, and you can play all the time as long as you had credits on that ticket. And then when you were done, you went and cashed it out at one of the kiosks or at the cage. So 1990, Si Redd said, "We're gonna change the world. Everyone's gonna have TITO," and everyone laughed at him. "What is TITO? With cash, people love cash.
Speaker #1: Instead of getting just a receipt to go to the cage and get cash, and then you went and took that cash to go to a different machine.
Speaker #1: Gave you a this ticket, but that ticket, you go to the machine next to it and put it in and get some credit for whatever was on that ticket.
Speaker #1: So it's called ticket in , ticket out . And you can play all the time as long as you had credits that ticket .
Speaker #1: And then, when you were done, you went and cast it out at one of the kiosks or the cage at the Inn. Said, we're in 1990 and the world.
Speaker #1: Going to change everyone's keto, and going to have everyone laughed at Tito with cash. People love cash. People never get to get away from it. Cheetos still involves cash, but only cash in and not cash out.
Edward M. Nigro: People are never gonna get away from cash." Well, TITO still involves cash, but only cash in and not cash out. And, and lo and behold, TITO took over the whole world. TITO is everywhere. Ticket in, ticket out. Well, now comes Bold Bets and our PPA. No longer does cash go in the machine, cash goes to the bank. No longer does the casino even touch the cash, it goes to the bank. And now everyone is licensed. The app is licensed, the gaming operator is licensed, and the bank needs no license. We're a bank. We're a federally insured, state-chartered bank, and we have a system to manage billions of transactions, which we will be capable, quite capable of doing.
Edward Nigro: People are never gonna get away from cash." Well, TITO still involves cash, but only cash in and not cash out. And, and lo and behold, TITO took over the whole world. TITO is everywhere. Ticket in, ticket out. Well, now comes Bold Bets and our PPA. No longer does cash go in the machine, cash goes to the bank. No longer does the casino even touch the cash, it goes to the bank. And now everyone is licensed. The app is licensed, the gaming operator is licensed, and the bank needs no license. We're a bank. We're a federally insured, state-chartered bank, and we have a system to manage billions of transactions, which we will be capable, quite capable of doing.
Speaker #1: And and lo and behold , keto took over the whole world . Keto is everywhere . Kick it in , kick it out .
Speaker #1: Well, now comes both bets, and RPA no longer does cash. Machine cash goes to the bank. No longer does the casino even touch the cash.
Speaker #1: goes to It the bank . And now everyone is licensed behalf is licensed gaming operator's license in the bank means no license . We're eBay , we're a federally insured , state chartered bay , and we have a system to manage billions of transactions , which will be controlled , capable of holding .
Edward M. Nigro: And holding, imagine holding all of the funds that are currently in slot machines, but we'll distribute them weekly because the gaming operators will want their funds, the player will be able to move funds instantly, and there is the management, the settlement, distribution that will be at the bank. And that's why we're excited. We think that this is one of those moments. It was coin in, coin out, it was cash in and slip out, it was TITO, and now there's GBank. Pretty interesting in Bold Bets in the PPA system.
Edward Nigro: And holding, imagine holding all of the funds that are currently in slot machines, but we'll distribute them weekly because the gaming operators will want their funds, the player will be able to move funds instantly, and there is the management, the settlement, distribution that will be at the bank. And that's why we're excited. We think that this is one of those moments. It was coin in, coin out, it was cash in and slip out, it was TITO, and now there's GBank. Pretty interesting in Bold Bets in the PPA system.
Speaker #1: Imagine holding all funds that are currently in Scotland . Of course , will distribute them weekly the gaming because operator will want their funds .
Speaker #1: The player will be able to move funds instantly , and there is a management . The settlement distribution that will be at the bank .
Speaker #1: that's why we're And excited . We think that this is one of those moments that coin in , coin out . It was cash in and slip out .
Speaker #1: It was Tito . And now there's T pretty interesting in both bets . And the system . So I wanted to give you that little bit of background on where we think and what is happening with them , because right now we know that .
Edward M. Nigro: So I wanted to give you that little bit of background on where we think and what is happening with them, because right now, we know that our second operator, and in the field, the operations just launched, and they're gonna launch it in all the fields, which it's not been done yet, but it's on its way. Each field has to be trained, staff have to be trained. By the way, the app is approved by gaming, where it even has a process where you can tip the bartender right from the app... Pretty amazing. And that's important for a lot of taverns where the slot machines are built into the bar.
Edward Nigro: So I wanted to give you that little bit of background on where we think and what is happening with them, because right now, we know that our second operator, and in the field, the operations just launched, and they're gonna launch it in all the fields, which it's not been done yet, but it's on its way. Each field has to be trained, staff have to be trained. By the way, the app is approved by gaming, where it even has a process where you can tip the bartender right from the app... Pretty amazing. And that's important for a lot of taverns where the slot machines are built into the bar.
Speaker #1: A second operator operator , much they don't want to skills , which is not done yet , but it's on its way . Used to still have be staff to be trained trained , by the way the app is approved by gaming .
Speaker #1: It even has the process where you can hit the right button from the app. Pretty amazing. And that's important for a lot of A into the bar.
Edward M. Nigro: We know that Terrible's has—we've had meetings and to start their process, and believes that they'll be launching in Q2, and they're making their application to the Gaming Control Board, as Sartini did, to be able to use the Bold Bets app. So that is all in process. Now, this is a process, and it's going to take integration with the players, and there's a pipeline of users that we'll be announcing in the future. But remember, the state of Nevada has 150,000 machines, so that's a big industry for us to tackle a little bit at a time with this process. But across the country, there's another 800,000 licensed slot machines, amongst when we start looking at all of the tribal gaming casinos and all of the other casinos in all the other states.
Edward Nigro: We know that Terrible's has—we've had meetings and to start their process, and believes that they'll be launching in Q2, and they're making their application to the Gaming Control Board, as Sartini did, to be able to use the Bold Bets app. So that is all in process. Now, this is a process, and it's going to take integration with the players, and there's a pipeline of users that we'll be announcing in the future. But remember, the state of Nevada has 150,000 machines, so that's a big industry for us to tackle a little bit at a time with this process. But across the country, there's another 800,000 licensed slot machines, amongst when we start looking at all of the tribal gaming casinos and all of the other casinos in all the other states.
Speaker #1: And we know that terrible is had we've had meetings and to start there process and believes that they'll be launching in the second quarter and they're making their application to the Gaming Control Board as to still did to be able to use the app .
Speaker #1: So, that is all in process. Now, this is a process, and it's going to take integration with the players. And there's a pipeline of users that we'll be announcing in the future.
Speaker #1: But remember the state of Nevada has 150,000 machines . So that's industry for a tackle . A us to little bit at a time with this process .
Speaker #1: across the But country , there's another slot machines amongst when we start looking at all of the tribal gaming casinos and all of the casinos and all the other states , now we are about talking bricks and mortar casinos , not physical casinos or apps .
Edward M. Nigro: Now, we are talking about bricks-and-mortar casinos, not digital casinos or apps. This is real slot machines in, across the country, and we think it's gonna be a great market, and we are anxious to see this process grow. So I've covered a bit about Bold Bets and hopefully brought you up to speed, and I'll be able to answer questions on both of them. And I want to close with some of my comments on our core banking and our gain on sale and our non-interest income. Because you're going to see our non-interest income, that's where our interchange fees drop, and you'll see where they went up about $7 million this last year alone, just from the interchange activity of the credit card. But you're also gonna notice our SBA gain on sales this year in particular, because we've changed an entire process there.
Edward Nigro: Now, we are talking about bricks-and-mortar casinos, not digital casinos or apps. This is real slot machines in, across the country, and we think it's gonna be a great market, and we are anxious to see this process grow. So I've covered a bit about Bold Bets and hopefully brought you up to speed, and I'll be able to answer questions on both of them. And I want to close with some of my comments on our core banking and our gain on sale and our non-interest income. Because you're going to see our non-interest income, that's where our interchange fees drop, and you'll see where they went up about $7 million this last year alone, just from the interchange activity of the credit card. But you're also gonna notice our SBA gain on sales this year in particular, because we've changed an entire process there.
Speaker #1: This is real slot machines and across the country , and we think it's going to be a great market . And we want are anxious to see this process .
Speaker #1: So I covered a bit about both s and hopefully brought you up to speed . And I'll be able to answer questions on both of them .
Speaker #1: And I want to close with some of my comments on our core banking and our gain on sale now . Noninterest income , because you're going to see our noninterest income .
Speaker #1: That's where our interchange fees drop. And you'll see where they went up about $7 million this last year alone, just from interchange activity of the credit card.
Speaker #1: But you’re also going to notice our gain on SBA sales this year in particular because of our process. Before, when we sold a guaranteed portion, the guaranteed portions were sold to the market, and the market would pay based on the spread.
Edward M. Nigro: Where before, when we sold guaranteed portions, the guaranteed portions were sold to the market, and the market would pay based on the spread. Well, our spread wasn't something that was being focused on on the basis of the incentive plans for our BDOs, our business development officers, and we changed that. We said, "Hey, we have to focus on the fact that the bank, sometimes this last year, our GAAP gain on sale, which means the gross price we were offered versus the price we realized after expensing the loan cost, was dropping below 3%." And that's quickly becoming a place where the value in selling the loan is questionable. 4% is where we like to live.
Edward Nigro: Where before, when we sold guaranteed portions, the guaranteed portions were sold to the market, and the market would pay based on the spread. Well, our spread wasn't something that was being focused on on the basis of the incentive plans for our BDOs, our business development officers, and we changed that. We said, "Hey, we have to focus on the fact that the bank, sometimes this last year, our GAAP gain on sale, which means the gross price we were offered versus the price we realized after expensing the loan cost, was dropping below 3%." And that's quickly becoming a place where the value in selling the loan is questionable. 4% is where we like to live.
Speaker #1: Spread well, ours wasn't something that was being focused on on the basis of incentive plans for our DOS, our business development offices, and we changed that.
Speaker #1: We said , hey , we have to focus on the fact that the bank sometimes this last year , our GAAP gain on sale , which means the gross price we were offered versus the price we realized after loan expensing the costs was dropping below 3% .
Speaker #1: And that's quickly becoming a place where the value in selling the loan is questionable. Four percent is where we like to live.
Edward M. Nigro: So we've now rechanged our entire incentivization program, where the spread is critical, and if we sell loans at above 1%, at least a 1.25% spread to prime, the gap gain is much larger. So we also took and put an incentive program in that started in January, where we were going to reward, the rewards would depend on the spread, and the commissions would depend on the spread. But we wanted the spread to be at least 1.25% or higher because we didn't want these 75 basis points or 100 basis point spread. Now, I want to share something with you, a little forward-looking. It's not forward-looking, it's actuals in January, which I can tell you today because we're on the call. We've sold 12 loans in January for about $32 million.
Edward Nigro: So we've now rechanged our entire incentivization program, where the spread is critical, and if we sell loans at above 1%, at least a 1.25% spread to prime, the gap gain is much larger. So we also took and put an incentive program in that started in January, where we were going to reward, the rewards would depend on the spread, and the commissions would depend on the spread. But we wanted the spread to be at least 1.25% or higher because we didn't want these 75 basis points or 100 basis point spread. Now, I want to share something with you, a little forward-looking. It's not forward-looking, it's actuals in January, which I can tell you today because we're on the call. We've sold 12 loans in January for about $32 million.
Speaker #1: So we've now changed our entire incentivization, where the spread program is critical, and we sell loans that are above 1%—at least a 1.25% spread to prime. The gain is much larger.
Speaker #1: So we took also and put it incentive program in that started in January , where we were to going reward the rewards would the depend on spread the and depend on commissions would the spread .
Speaker #1: But we wanted to spread that at least one in the quarter or higher, because we didn’t want these, we 75 basis, 100 basis points, or points spread.
Speaker #1: So, I want now to discuss something with you that's a little forward-looking. It's not forward-looking, it's actually in January, which I can tell you today because we're on the call.
Speaker #1: We sold 12 loans in January for $32 million. Of the 12 loans, eight were at one and a quarter spread or higher.
Edward M. Nigro: 12 of the 12 loans, 8 were at 1.25 spread or higher. Our gap gain has jumped significantly, and it will be a minimum or more than 4% every month now, and not dropping below 3%. So that's a significant, I think, occurrence. But one other thing came up that I want to share with you when I'm talking about SBA. We put in our report after the quarter closed, we closed on sub debt of $11 million. And we did that because we wanted to pay off a $6 million sub debt that was due in January, and the rates were going to go very high. So we raised $11 million to pay off that $6 million and have a little left over.
Edward Nigro: 12 of the 12 loans, 8 were at 1.25 spread or higher. Our gap gain has jumped significantly, and it will be a minimum or more than 4% every month now, and not dropping below 3%. So that's a significant, I think, occurrence. But one other thing came up that I want to share with you when I'm talking about SBA. We put in our report after the quarter closed, we closed on sub debt of $11 million. And we did that because we wanted to pay off a $6 million sub debt that was due in January, and the rates were going to go very high. So we raised $11 million to pay off that $6 million and have a little left over.
Speaker #1: Our GAAP has jumped significantly , and it will be a minimum or more 4% every month . Now . than And not dropping below 3% .
Speaker #1: So that's a significant . I think occurrence . But one of the things came up that I want to share with you when I'm talking about SBA , we put in our report a after after the quarter closed , we closed on Sunday at 11 million .
Speaker #1: And we did that because we wanted to pay off a $6 million debt that was due in January . And the rates were going to go very .
Speaker #1: So we raised 11 million to pay off that six . And have a little But over . one of the important things that came up when some of the other banks were us about asking our debt and our ability to repay , you have to we said , industry in the hotel , and I would several calls .
Edward M. Nigro: But one of the important things that came up when some of the other banks were asking us about our sub debt and our ability to repay, we said, "Hmm, you have a concentration in the hotel industry." And I would respond on several calls, "Yes, and we love it." "Oh, you do?" And I said, "Yes." I said, "Let me give you a little risk analysis we did for you," because we were getting this question. So we went back to June 2015, when we did our first SBA 7(a) loan. Since June 2015 through Q3, I have the ideas. I just didn't update my numbers for Q4.
Edward Nigro: But one of the important things that came up when some of the other banks were asking us about our sub debt and our ability to repay, we said, "Hmm, you have a concentration in the hotel industry." And I would respond on several calls, "Yes, and we love it." "Oh, you do?" And I said, "Yes." I said, "Let me give you a little risk analysis we did for you," because we were getting this question. So we went back to June 2015, when we did our first SBA 7(a) loan. Since June 2015 through Q3, I have the ideas. I just didn't update my numbers for Q4.
Speaker #1: respond on Yes , we love it . Oh , you do , and I said , yes . I said , let me give you a little risk analysis .
Speaker #1: We did for you because we were getting this question . So we went back to , to , let's see , went back to June 2015 when we did our first SBA seven loan since June of 2015 through the third quarter , I have that .
Speaker #1: I just didn't update my numbers for the fourth quarter , but for the third quarter of 2025 , we originated 2.473 billion in loans in dollars in hotel loans , seven a hotel loans .
Edward M. Nigro: But for Q3 2025, we originated $2.473 billion in dollars in 7(a) hotel loans. We love them because of the collateral. The total number of loans we did since commencement was 1,002 loans. The total hotel loans in default since the beginning. Now, default, remember I said on one other investor call, that when we have a loan that looks as if we're going to have to foreclose on it, we buy back the guaranteed portion. That's why our NPAs tend to jump up, because we buy back the loan immediately, goes to four times the value that's been on our books. So we buy back that so we can sell the asset and handle the closure. We have a great division within our SBA division to handle these.
Edward Nigro: But for Q3 2025, we originated $2.473 billion in dollars in 7(a) hotel loans. We love them because of the collateral. The total number of loans we did since commencement was 1,002 loans. The total hotel loans in default since the beginning. Now, default, remember I said on one other investor call, that when we have a loan that looks as if we're going to have to foreclose on it, we buy back the guaranteed portion. That's why our NPAs tend to jump up, because we buy back the loan immediately, goes to four times the value that's been on our books. So we buy back that so we can sell the asset and handle the closure. We have a great division within our SBA division to handle these.
Speaker #1: love them We because of the collateral . The total number of loans we did since the announcement commencement since was was 1002 , loans , the total hotel loans default was the beginning .
Speaker #1: default Now . Remember I said to one other investor call that when we loan have a that looks as if we're going to have to foreclose it , we on buy back the guaranteed portion .
Speaker #1: That's why our NPAs tend to jump up, because when we buy back the loan, it immediately goes to four times the value that's been on our books.
Speaker #1: So we buy back that so we can sell the asset and handle the exposure . We have a great provision within our SBA division to handle these well .
Edward M. Nigro: Well, of all the 1,002, we had a total default of 12 loans since our history began, that we resold. We re-bought back and resold. Of those 12 loans, the total charge-off after asset sale and payment of all the guaranteed portions since inception has been $2.8 million. That's right, $2.8 million. So when we were asked about our concentration and why we don't mind it, it's because of the collateral and the way we have in our broker assistance in liquidating collateral that sometimes we have to possess. Currently, as of Q3 last year, we had 592 active hotel loans. We had $1.622 billion current principal balance on- and off-balance sheet. We have $860 million hotel loans off-balance sheet.
Edward Nigro: Well, of all the 1,002, we had a total default of 12 loans since our history began, that we resold. We re-bought back and resold. Of those 12 loans, the total charge-off after asset sale and payment of all the guaranteed portions since inception has been $2.8 million. That's right, $2.8 million. So when we were asked about our concentration and why we don't mind it, it's because of the collateral and the way we have in our broker assistance in liquidating collateral that sometimes we have to possess. Currently, as of Q3 last year, we had 592 active hotel loans. We had $1.622 billion current principal balance on- and off-balance sheet. We have $860 million hotel loans off-balance sheet.
Speaker #1: Of all the 1,002, we had a total of 12 defaulted loans since our history began that we resold. We report back, and we sold off.
Speaker #1: Those 12 loans, total charge-off after asset sale and the payment of all guaranteed portions since inception has been $2.8 million. That's right.
Speaker #1: 2.8 million . So when we were asked about our concentration and why we mind it , it's don't because of the collateral and the way we have in our broker assistance in collateral that liquidating sometimes we have to be currently , as of the third quarter last year , we had 592 active hotel loans .
Speaker #1: We had $1.622 billion. Current principal, our balance on balance. We have $860 million hotel loans off balance, have over sheet. Off we balance sheet that we manage right now.
Edward M. Nigro: We have over $1 billion in loans off-balance sheet that we manage right now. So I guess we're really a $2.4 billion bank. But right. So today, we have $761.6 million of current principal balance on-balance sheet, of which $243 million is guarantee. And also, we have $10.5 million reserved for the loan loss reserve for those hotel loans. For the loans, we've had $2.8 million in losses since inception. I just thought I'd give a little color on that because some people ask us about our hotel business, and I love it. It's the seven-eight business of collateral, and we're going to see, you know, our participation in that grow. We're staying within our risk profiles very well with our capital.
Edward Nigro: We have over $1 billion in loans off-balance sheet that we manage right now. So I guess we're really a $2.4 billion bank. But right. So today, we have $761.6 million of current principal balance on-balance sheet, of which $243 million is guarantee. And also, we have $10.5 million reserved for the loan loss reserve for those hotel loans. For the loans, we've had $2.8 million in losses since inception. I just thought I'd give a little color on that because some people ask us about our hotel business, and I love it. It's the seven-eight business of collateral, and we're going to see, you know, our participation in that grow. We're staying within our risk profiles very well with our capital.
Speaker #1: So I guess we're really a $2.4 billion day . But . So to date , Right . we have 761.6 million of current principal balance on sheet , balance of which 243 million guaranteed also we .
Speaker #1: And have $10.5 million reserved for loan loss reserves. Of those hotel rooms for the loans, we've had $2.8 million in losses since inception.
Speaker #1: I just thought I'd give a little color on that some because people ask us about our hotel business and I love it . It's the seven day collateral , and we're going to see , you know , our participation in that grow .
Speaker #1: We're within our risk staying profiles with our very well capital . And I just wanted to give you that update because the things we're doing in our gaming fintech , the things looking to we're replace with I deposits , want to replace as can , soon as we 400 million in deposits that for we paid and 400 million in at no cost , is a big change .
Edward M. Nigro: And I just wanted to give you that update because the things we're doing in our gaming FinTech. The things we're looking to replace with deposits, I wanna replace as soon as we can, $400 million in deposits that we pay for. And $400 million in, at no cost is a big change, but then when we convert that to more SBA originations and more guaranteed loan sales and a portfolio that operates this strong, we think we have... And we're also looking at our CRE and our own bank individual loans, and we just, the other day, this is a little forward-looking, but we just approved it, and I can tell you that we increased our individual power to 70% of our legal limit for the bank, which now goes to $32 million to anyone power.
Edward Nigro: And I just wanted to give you that update because the things we're doing in our gaming FinTech. The things we're looking to replace with deposits, I wanna replace as soon as we can, $400 million in deposits that we pay for. And $400 million in, at no cost is a big change, but then when we convert that to more SBA originations and more guaranteed loan sales and a portfolio that operates this strong, we think we have... And we're also looking at our CRE and our own bank individual loans, and we just, the other day, this is a little forward-looking, but we just approved it, and I can tell you that we increased our individual power to 70% of our legal limit for the bank, which now goes to $32 million to anyone power.
Speaker #1: But then, converting when we add more SBA to originations and more guaranteed loan sales and a portfolio that this column thinks we have, and we are also looking at our CRE and our own bank individual loans.
Speaker #1: And we just, the other day, a little forward, and this is a forward. We just did it. And I approved to tell you that we increased our individual borrower to 70% of our legal limit for the bank, which now goes to $32 million to any one thousand.
Edward M. Nigro: So we're moving, and we're moving in anticipation of the kind of growth we believe we can have and the way we can manifest it in our own bank. With that, I want Jeff Wicker, our Chief Credit Officer. Oh, and there's just one last point. So Jeff, excuse me. Since this is recorded, I told you I would mess up. We have been investing a great deal in people and reorganization. We've reorganized in the last four months our entire credit card operations, new leadership, and of course, I spend a great deal of time on it. We also engaged our new General Counsel and Corporate Secretary, and she has joined us, and we had a press release about Hillary. We also have engaged a new Chief Technology Officer. We had a press release regarding Jason.
Edward Nigro: So we're moving, and we're moving in anticipation of the kind of growth we believe we can have and the way we can manifest it in our own bank. With that, I want Jeff Wicker, our Chief Credit Officer. Oh, and there's just one last point. So Jeff, excuse me. Since this is recorded, I told you I would mess up. We have been investing a great deal in people and reorganization. We've reorganized in the last four months our entire credit card operations, new leadership, and of course, I spend a great deal of time on it. We also engaged our new General Counsel and Corporate Secretary, and she has joined us, and we had a press release about Hillary. We also have engaged a new Chief Technology Officer. We had a press release regarding Jason.
Speaker #1: So we're and moving we're moving anticipation in of growth of the kind we have can and the way we can manifest it in our meeting .
Speaker #1: that , With I want Jeff Wicker , our chief credit officer . Oh , and there's just one last point , Jeff . Excuse me .
Speaker #1: Since this is recorded , I told you I would mess up . We have been investing a great deal in people and reorganization reorganized in the last four months .
Speaker #1: Our entire credit card and operations , leadership . And of course , I spend a it . time on great deal of We also engaged our new general counsel and corporate secretary , and she has joined us , and we had a press release about about Hillary .
Speaker #1: We also have engaged a chief technology new officer. We have a press release regarding Jason. We also have engaged a new payments technology director to help us get through this phase.
Edward M. Nigro: We also have engaged a new payments technology director to help us get through this payment. Remember the ACH I was talking about? She's leading that effort. But she's very talented and rated in ACAM and PCI ratings as well, or accreditations, that's very important to us. I think you're going to see that the manner in which we're moving and the way we want to grow our technology capabilities, and the way we want to accomplish our internal payments processes, and the way we want to grow our deposits and grow our gaming FinTech. Our plate is full, but we love it. We're working diligently to those objectives, and Jeff, to listen on more of the specifics.
Edward Nigro: We also have engaged a new payments technology director to help us get through this payment. Remember the ACH I was talking about? She's leading that effort. But she's very talented and rated in ACAM and PCI ratings as well, or accreditations, that's very important to us. I think you're going to see that the manner in which we're moving and the way we want to grow our technology capabilities, and the way we want to accomplish our internal payments processes, and the way we want to grow our deposits and grow our gaming FinTech. Our plate is full, but we love it. We're working diligently to those objectives, and Jeff, to listen on more of the specifics.
Speaker #1: Remember the ACH ? I was talking about ? She's leading that effort . She's very talented and and Arkham and PCI . Ratings as well .
Speaker #1: Or accreditations . There's important to us . I think you're going to see that the manner in which we're moving and the way we want to grow our technology capabilities and the way we want to accomplish our internal payments processes , the way we want to grow our deposits and grow our gaming fintech , our plate is full , but we love it .
Speaker #1: We're working diligently until the city's objectives. And Jeff, fill us in on more of the specifics.
Jeffery Whicker: Thank you, Ed, and good afternoon, everyone. The company reported record quarterly earnings of $7.4 million or $0.52 per diluted share. This is an increase of $3.1 million compared to the prior quarter earnings of $4.3 million. This includes record levels of net revenue and $247,000 in net one-time expenses. The one-time items include the tail end of the marketing campaign for the credit card that began in Q3, which have now all been satisfied and the program has been closed down. Net of the unusual and one-time items, the bank would have produced a diluted earnings per share of $1.66 for the year, up from $1.37 in the prior year.
Jeffrey Whicker: Thank you, Ed, and good afternoon, everyone. The company reported record quarterly earnings of $7.4 million or $0.52 per diluted share. This is an increase of $3.1 million compared to the prior quarter earnings of $4.3 million. This includes record levels of net revenue and $247,000 in net one-time expenses. The one-time items include the tail end of the marketing campaign for the credit card that began in Q3, which have now all been satisfied and the program has been closed down. Net of the unusual and one-time items, the bank would have produced a diluted earnings per share of $1.66 for the year, up from $1.37 in the prior year.
Speaker #2: I thank you and good afternoon , everyone . The company reported record quarterly earnings of or 7.4 million , $0.52 per diluted share .
Speaker #2: This is an increase of $3.1 million compared to the prior quarter earnings of $4.3 million. This includes record levels of net revenue and $247,000 in net one-time expenses.
Speaker #2: One time items include the tail end of the marketing for the campaign that began in the third quarter , which have now all been satisfied , and the program has been closed down , net of the unusual .
Speaker #2: And one-time items. The bank produced a diluted earnings per share of $1.66 for the year, up from $1.37 in the prior year period.
Jeffery Whicker: The bank continues to grow at a compound average growth rate of 28.3% over the last 8 years while maintaining top-tier earnings. In addition, as described by Ed, the company continues to develop the digital bank and payments products that will allow us to drive higher future revenue. We anticipate that one of the largest drivers of this will be related to the Bold Bets PPA product that is now launched and is beginning to gather steam. We anticipate that this will significantly grow our non-interest bearing deposits, resulting in an improved net interest margin, which was 4.33% for 2025, compared to an industry average of approximately 3.7%.
Jeffrey Whicker: The bank continues to grow at a compound average growth rate of 28.3% over the last 8 years while maintaining top-tier earnings. In addition, as described by Ed, the company continues to develop the digital bank and payments products that will allow us to drive higher future revenue. We anticipate that one of the largest drivers of this will be related to the Bold Bets PPA product that is now launched and is beginning to gather steam. We anticipate that this will significantly grow our non-interest bearing deposits, resulting in an improved net interest margin, which was 4.33% for 2025, compared to an industry average of approximately 3.7%.
Speaker #2: Continues to grow with a compound annual growth rate of 28.3% over the last eight years, while maintaining top-tier earnings. In addition, as described by Ed, the Company continues to develop the digital bank and payments products that will allow us to drive higher future revenue.
Speaker #2: We anticipate that one of the largest drivers of this will be related to the old PPA product that is now launched and is becoming, and is beginning to gather steam.
Speaker #2: We we anticipate that that this will significantly grow our noninterest bearing deposits , resulting in an improved net interest margin , which was 4.33% for 2025 compared to an industry average approximately 3.7% .
Jeffery Whicker: SBA had a record year for production, which wasn't easy given the recent government shutdown, and we continue to see strong year-over-year growth in loan production and have a healthy pipeline going into the new year. In addition, the company has implemented several changes that Ed addressed that will lead to improved gain on sale income in the future. We're currently seeing the impacts of these changes, as the GAAP gain on sale increased from 3.24% to 3.98% in Q4, and as Ed alluded to, we anticipate that to trend up above 4% in 2026. The credit card program is continuing to develop as most of the system changes are now implemented.
Jeffrey Whicker: SBA had a record year for production, which wasn't easy given the recent government shutdown, and we continue to see strong year-over-year growth in loan production and have a healthy pipeline going into the new year. In addition, the company has implemented several changes that Ed addressed that will lead to improved gain on sale income in the future. We're currently seeing the impacts of these changes, as the GAAP gain on sale increased from 3.24% to 3.98% in Q4, and as Ed alluded to, we anticipate that to trend up above 4% in 2026. The credit card program is continuing to develop as most of the system changes are now implemented.
Speaker #2: Now , SBA had a record year for production , which wasn't easy given the recent government shutdown , and we continue to see strong year over year growth in loan production a healthy and have pipeline going into the new In addition , the year .
Speaker #2: implemented company has several changes that had addressed that on sale improved gain will lead to in the income . We're currently seeing the impacts of these changes as the gap sale gain on increased from 3.24% to 3.98% in the fourth quarter , and as alluded to , we anticipate that to trend up above 4% in 2026 , the credit card program is continuing to develop as most of the system changes systems are now implemented .
Jeffery Whicker: Transaction volumes the last two quarters has been relatively flat, while we have worked to correct identified weaknesses of the system, and we are seeing much better results related to onboarding customers, as these new systems have been able to withstand all of the recent fraud attacks that continue to plague the industry. The most interesting thing about the credit card program is that despite the issues we have had related to credit and fraud in the last couple of quarters, the program is positively contributing to the bottom line of the bank on a consistent basis. This is very unusual for a program that's this young. You can see that the provision expense came down during the current quarter.
Jeffrey Whicker: Transaction volumes the last two quarters has been relatively flat, while we have worked to correct identified weaknesses of the system, and we are seeing much better results related to onboarding customers, as these new systems have been able to withstand all of the recent fraud attacks that continue to plague the industry. The most interesting thing about the credit card program is that despite the issues we have had related to credit and fraud in the last couple of quarters, the program is positively contributing to the bottom line of the bank on a consistent basis. This is very unusual for a program that's this young. You can see that the provision expense came down during the current quarter.
Speaker #2: Transaction volumes over the last two quarters have been relatively flat. While we have worked to correct identified weaknesses in the system, we are seeing much better results related to onboarding. As customers, these new systems have been able to withstand all of the recent fraud attacks that continue to plague the industry.
Speaker #2: The thing about the credit card program is that, despite the spicy issues we have had related to credit card fraud in the last couple of quarters, the program is positively contributing to the bottom line of the bank on a consistent basis.
Speaker #2: This is very unusual for a program that's this young. You can see that the provision expense came down during the current quarter, as discussed in our previous calls.
Jeffery Whicker: As discussed in our previous calls, we have seen a cresting in the non-performing assets over the quarter and have been able to make significant progress in working through the existing accounts, including the resolution of one of the non-performing assets in the first weeks of 2026, reducing the total balance by $3.6 million. In addition to the work that Special Assets is doing to resolve credit issues, recent rate reductions by the Federal Reserve Bank have allowed our customers with variable rate loans to see some relief from the unusual upward swing in rates that occurred from June 2022 to July 2023, and this has resulted in improved credit quality overall. The bank sold off about $52 million in investment securities during the quarter, which included both available for sale and held to maturity investments.
Jeffrey Whicker: As discussed in our previous calls, we have seen a cresting in the non-performing assets over the quarter and have been able to make significant progress in working through the existing accounts, including the resolution of one of the non-performing assets in the first weeks of 2026, reducing the total balance by $3.6 million. In addition to the work that Special Assets is doing to resolve credit issues, recent rate reductions by the Federal Reserve Bank have allowed our customers with variable rate loans to see some relief from the unusual upward swing in rates that occurred from June 2022 to July 2023, and this has resulted in improved credit quality overall. The bank sold off about $52 million in investment securities during the quarter, which included both available for sale and held to maturity investments.
Speaker #2: We have seen a cresting in the non-performing assets quarter and have been able to make significant progress in working through the existing accounts, including the resolution of one of the non-performing assets.
Speaker #2: first In the weeks of 2026 , reducing the total balance by In 3.6 million . addition to the work , the special Assets is doing to resolve the credit issues , recent rate reductions by the Federal Reserve Bank have allowed our customers with variable rate loans to see some relief from the unusual upward swing in rates that occurred from June 2022 to July 2023 , and this is results in improved credit quality overall , the bank sold off about 52 million in investment securities during the quarter , which included both for available sale to and held maturity .
Jeffery Whicker: Recent interest rate changes have tightened the spreads and impacted the long-term impacts of these securities on the bank's asset sensitivity, and management determined that it is in the best interest of the organization to move into securities that will better protect the organization in a rates down environment. As a note, all of the held to maturity investments were included in the sale, resulting in no on-balance sheet adjustments to AOCI related to the remaining securities. The AOCI was $17,000 as of December 31. Subsequent to year-end, the bank did announce a redemption of $6.5 million subordinated notes, as Ed talked about, that would have repriced from fixed to variable rate in January.
Jeffrey Whicker: Recent interest rate changes have tightened the spreads and impacted the long-term impacts of these securities on the bank's asset sensitivity, and management determined that it is in the best interest of the organization to move into securities that will better protect the organization in a rates down environment. As a note, all of the held to maturity investments were included in the sale, resulting in no on-balance sheet adjustments to AOCI related to the remaining securities. The AOCI was $17,000 as of December 31. Subsequent to year-end, the bank did announce a redemption of $6.5 million subordinated notes, as Ed talked about, that would have repriced from fixed to variable rate in January.
Speaker #2: Recent interest changes and rates have tightened spreads and impacted the term long impacts of these securities on the bank's assets. Sensitivity and management determined that it is in the best interest of the organization to move into securities that will better protect the organization in a rates down environment.
Speaker #2: As a note , all of the held to maturity investments were included in the sale , resulting in no on balance sheet adjustments to Aoci the related to remaining securities Altai .
Speaker #2: The balance was $17,000 as of December 31st. Subsequent to year-end, the bank had announced a redemption of $6.5 million subordinated notes.
Speaker #2: As then talked about that we would have repriced from that would have repriced from fixed to variable rate in January . This led to a would have increase of 350 basis points on the debt , resulting in a cost of over 8% .
Jeffery Whicker: This would have led to a rate increase of 350 basis points on the debt, resulting in a cost of over 8%. In addition, the bank issued $11 million of additional subordinated debt with a 10-year life and a fixed rate for the first 5 years of 7.25%. This provided additional potential capital for the bank while reducing costs. As the bank continues to work to develop new lines of business, the core bank continues to be one of the top performing organizations in its peer group. The balance sheet remains strong with above average liquidity and capital, and this provides the needed support to fund our growth initiatives as we move further into the digital bank and payments industry.
Jeffrey Whicker: This would have led to a rate increase of 350 basis points on the debt, resulting in a cost of over 8%. In addition, the bank issued $11 million of additional subordinated debt with a 10-year life and a fixed rate for the first 5 years of 7.25%. This provided additional potential capital for the bank while reducing costs. As the bank continues to work to develop new lines of business, the core bank continues to be one of the top performing organizations in its peer group. The balance sheet remains strong with above average liquidity and capital, and this provides the needed support to fund our growth initiatives as we move further into the digital bank and payments industry.
Speaker #2: In addition, the bank issued $11 million of additional subordinated debt, with an eleven-year life and a ten-year rate. For the first five years, the rate is 7.25%.
Speaker #2: This provided additional potential capital for the bank while reducing costs. As the bank continues to work to develop new lines of business, the bank core continues to be one of the top performing organizations in its peer group.
Speaker #2: The balance sheet remains strong and with above-average liquidity and capital, and this provides the needed support to fund our growth initiatives to move further digital banking payments into the industry.
Jeffery Whicker: While we have experienced a few hurdles along the way, the bank continues to be a top performer while we develop the new products and services to enhance shareholder value in the future. With that, I will turn it back over to you, Ed.
Jeffrey Whicker: While we have experienced a few hurdles along the way, the bank continues to be a top performer while we develop the new products and services to enhance shareholder value in the future. With that, I will turn it back over to you, Ed.
Speaker #2: While we have experienced a few hurdles along the way , Bank continues to be a top And while we performer . develop a new products services to and enhance shareholder value in the future , and with that , I will turn it back over to you .
Speaker #2: Ed .
Edward M. Nigro: Well, thank you. I believe we've covered everything that we wished to on the call, and we'll take questions at this time.
Edward Nigro: Well, thank you. I believe we've covered everything that we wished to on the call, and we'll take questions at this time.
Speaker #1: Well, you and I believe we've covered everything that we wished to on the call, and we'll take this time for questions.
Operator: At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host, allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question will come from Brett Rabatin with Hovde. You may now unmute your line and ask your question.
Operator: At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host, allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question will come from Brett Rabatin with Hovde. You may now unmute your line and ask your question.
Speaker #3: If you would like to ask a question at this time, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen.
Speaker #3: When it is your turn , you will receive a your screen message on from the host , allowing you to talk , and then you will hear your name called .
Speaker #3: Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question will come from Brett Rabatin, with whom you may now unmute your line and ask your question.
Brett Rabatin: Hey, guys. Good afternoon. Can you hear me?
Brett Rabatin: Hey, guys. Good afternoon. Can you hear me?
Speaker #4: Hey guys, good afternoon. Can you hear me?
Jeffery Whicker: Yeah, Brett, we can. Hi, it's Ed.
Jeffrey Whicker: Yeah, Brett, we can. Hi, it's Ed.
Speaker #1: Bradley . Okay . Yeah . Ken , It hi .
Speaker #1: said . , hey ,
Brett Rabatin: Hey, Ed. Thanks for all the detail between yourself and Jeff with what's going on with the company. Can we maybe just start... You know what? It might not be fair, just given, I'll call it the fits and starts of the programs that have meaningful potential. But I know we've talked about some fairly big numbers around credit card and what that platform could look like, you know, in 4 to 6 quarters. Can you maybe give us, you know, an idea, and I guess this would presume that the fraud, all of the fraud detection and all the stuff around fraud might be in the rearview mirror, which was my understanding from your conversation.
Brett Rabatin: Hey, Ed. Thanks for all the detail between yourself and Jeff with what's going on with the company. Can we maybe just start... You know what? It might not be fair, just given, I'll call it the fits and starts of the programs that have meaningful potential. But I know we've talked about some fairly big numbers around credit card and what that platform could look like, you know, in 4 to 6 quarters. Can you maybe give us, you know, an idea, and I guess this would presume that the fraud, all of the fraud detection and all the stuff around fraud might be in the rearview mirror, which was my understanding from your conversation.
Speaker #4: Ed for , thanks for all the detail between yourself and Jeff . With with what's going on with the company . Can you can we maybe just start , you know , and it might not be fair .
Speaker #4: Just given the, I'll call it, the fits and starts of the programs that have meaningful potential. But I know we've talked about some fairly big numbers around credit card and what that platform could look like.
Speaker #4: You know , in 4 to 6 quarters . Can you maybe give us , you know , an idea ? And I guess this would presume that the fraud , all the fraud detection and all the stuff around fraud might be in the rearview mirror , which is was my understanding from your conversation .
Brett Rabatin: But, you know, can we talk about credit card and what the potential for interchange might be this year in volumes, as you see it? And if you don't wanna give specific guidance, that's fine, but just, you know, directionally and volume-wise, as you see the year developing.
Brett Rabatin: But, you know, can we talk about credit card and what the potential for interchange might be this year in volumes, as you see it? And if you don't wanna give specific guidance, that's fine, but just, you know, directionally and volume-wise, as you see the year developing.
Speaker #4: But , you we talk know , can about credit card and what the potential for for , interchange might be this year ? And volumes , as you see it ?
Speaker #4: And if you don't want to give specific guidance , that's fine . But just , you , directionally and volume wise , as you year see , the developing .
Edward M. Nigro: Well, I think that when we look at the year-over-year growth that we just had, even with all of the breaks we've had in place. By breaks, I mean the stoppages we had. We went up to $400 million this year from about what were my numbers last year? I had-
Edward Nigro: Well, I think that when we look at the year-over-year growth that we just had, even with all of the breaks we've had in place. By breaks, I mean the stoppages we had. We went up to $400 million this year from about what were my numbers last year? I had-
Speaker #1: Well , I think that when we look at the year over year growth that we just had , even with all of the breaks we've had in breaks , place by I mean the stoppages we had , we went up 400 million this year from to about , well , my numbers last year I had 12 , 73 million .
Jeffery Whicker: Seventy-three.
Jeffrey Whicker: Seventy-three.
Edward M. Nigro: $73 million. So you can see that that's what, 500% growth. But I'm not placing 500% growth on $400 million. But you know, we feel that, and, and while I'm not going to be giving too much forward guidance today in any specific numbers, but if I were trying to put some projections on it, I think that we would probably-
Edward Nigro: $73 million. So you can see that that's what, 500% growth. But I'm not placing 500% growth on $400 million. But you know, we feel that, and, and while I'm not going to be giving too much forward guidance today in any specific numbers, but if I were trying to put some projections on it, I think that we would probably-
Speaker #1: So, you can see that that's a 500% growth. But I'm not placing 500% growth on $400 million. But you know, we feel that.
Speaker #1: And while I'm not going to be giving too much forward guidance today in any specific numbers . But if I were trying to put some on it , projections I think that we probably would .
Jeffery Whicker: I think we could at least,
Jeffrey Whicker: I think we could at least,
Speaker #2: I think we could at least.
Edward M. Nigro: If we don't-
Edward Nigro: If we don't-
Jeffery Whicker: Double that same-
Jeffrey Whicker: Double that same-
Speaker #1: If we .
Speaker #2: Don't .
Edward M. Nigro: If we don't double it, I mean, I think we would not be doing it justice, but that's, that's... But when you talk about going from $400 million to $800 million, you know, in originations a year, to where we-- that means by the end of the year, we've got to be doing, you know, $60 million, 40 or 50, $60 million a month. We see some good growth. We have-- we know we now have the capability to handle that kind of growth. So and, and we don't see that as an unreasonable number, you know, of cards to expand to get there, as long as we have and, and don't have the process of user fraud or user abuse, and we've managed to eliminate that. So we think there's, there's quite a pathway here.
Edward Nigro: If we don't double it, I mean, I think we would not be doing it justice, but that's, that's... But when you talk about going from $400 million to $800 million, you know, in originations a year, to where we-- that means by the end of the year, we've got to be doing, you know, $60 million, 40 or 50, $60 million a month. We see some good growth. We have-- we know we now have the capability to handle that kind of growth. So and, and we don't see that as an unreasonable number, you know, of cards to expand to get there, as long as we have and, and don't have the process of user fraud or user abuse, and we've managed to eliminate that. So we think there's, there's quite a pathway here.
Speaker #1: If we don't double it . I mean , I think we would not be doing it justice , but that's that's but when you talk about going from 400 million to 800 million , and originations a year to where we , that means by the end of the year , we've got to be doing , you know , 60,000,040 or 50 , 60 million a month .
Speaker #1: We see some good growth. We have. We know we now have the capability to handle that growth, kind of. So, and we don't see that as an unreasonable number.
Speaker #1: You know , of cards to expand , to get there . As long as we have and don't have the process of user fraud or user abuse , and we've managed to eliminate that .
Speaker #1: So we think there's there's quite a pathway here . Now , the other side is , you know , some of the big , big platforms like FanDuel and DraftKings not accepting credit cards .
Edward M. Nigro: Now, the other side is, you know, some of the big, big platforms like FanDuel and DraftKings are not accepting any credit cards. It'll remain to be seen because some of the others we know have seen significant increase in credit card use. So is that volume they want and the volume that is, is worth getting? We look at their public announcements, and it's pretty significant. So we think there is opportunity for some substantial growth, and of course, the interchange fees will be very important to us. I hope I've answered your question without sounding too evasive.
Edward Nigro: Now, the other side is, you know, some of the big, big platforms like FanDuel and DraftKings are not accepting any credit cards. It'll remain to be seen because some of the others we know have seen significant increase in credit card use. So is that volume they want and the volume that is, is worth getting? We look at their public announcements, and it's pretty significant. So we think there is opportunity for some substantial growth, and of course, the interchange fees will be very important to us. I hope I've answered your question without sounding too evasive.
Speaker #1: It will remain to be seen, because some of the others we know have seen significant increases in card use. So, is it credit that volume they want, and is the volume that is there worth getting at?
Speaker #1: We look at public announcements, and it's pretty significant. So we think there is opportunity for some substantial growth. And of course, the interchange fees will be very important to us.
Speaker #1: I hope I've answered you without sounding too evasive.
Brett Rabatin: No, you, you got in some good color to, you know, kind of what the year might look like, so I appreciate all that. And then, you know, the other thing, as we think about SBA, maybe an easier business to forecast, you know, given that that's a much more mature piece of your platform, you know, and some of this will depend on the market, but would you anticipate trying to grow volumes from here? And then I know last quarter, you did, we'll call it a revitalization or reorganization of that platform.
Brett Rabatin: No, you, you got in some good color to, you know, kind of what the year might look like, so I appreciate all that. And then, you know, the other thing, as we think about SBA, maybe an easier business to forecast, you know, given that that's a much more mature piece of your platform, you know, and some of this will depend on the market, but would you anticipate trying to grow volumes from here? And then I know last quarter, you did, we'll call it a revitalization or reorganization of that platform.
Speaker #4: No , you've added some good color to , you know , kind of what the year might look like . So appreciate all that .
Speaker #4: And then , you know , the other thing is we think about SBA , maybe an easier business to forecast . You know , given that that's a much more mature piece of your platform .
Speaker #4: You know, and some of this will depend on the market. But would you anticipate trying to grow volumes? And then, I did in the quarter.
Speaker #4: We'll call it a revitalization or reorganization of that platform. You know, should we expect continued improvement in gain on sale margins, that platform, etc.
Edward M. Nigro: Yes.
Edward Nigro: Yes.
Brett Rabatin: You know, should we expect continued improvement in gain on sale margins, et cetera, from that platform from here?
Brett Rabatin: You know, should we expect continued improvement in gain on sale margins, et cetera, from that platform from here?
Speaker #4: from , from here ?
Edward M. Nigro: Well, I think you'll love this because we've incentivized our team more with stock options than we have with some cash bonuses, and because we want the materialization of a higher gain on sale for the bank. And the materialization that will, selling a higher spread be more difficult? Well, it's always more difficult to sell a higher spread, but there are other factors involved. We have the most amazing broker network on Earth, I believe, because our key brokers are all significant shareholders of ours, and reside in Chicago, New York, North Carolina, and Florida. And I mean, they're amazing. So, yeah, we expect that growth pattern to continue with what it's been in the past. So, you know, you can sort of project that out. It's, but we really believe that we can sustain that kind of continued growth.
Edward Nigro: Well, I think you'll love this because we've incentivized our team more with stock options than we have with some cash bonuses, and because we want the materialization of a higher gain on sale for the bank. And the materialization that will, selling a higher spread be more difficult? Well, it's always more difficult to sell a higher spread, but there are other factors involved. We have the most amazing broker network on Earth, I believe, because our key brokers are all significant shareholders of ours, and reside in Chicago, New York, North Carolina, and Florida. And I mean, they're amazing. So, yeah, we expect that growth pattern to continue with what it's been in the past. So, you know, you can sort of project that out. It's, but we really believe that we can sustain that kind of continued growth.
Speaker #1: think Well , I you'll love this because we've our incentivized team more with stock options . And we have than than with some cash bonuses .
Speaker #1: And because we want the materialization of a higher caffeine on sale for the bank, and the materialization that will—selling a higher spread will be more difficult?
Speaker #1: Well, it's always more difficult to sell a higher spread. But there are other factors involved. We have the most amazing broker network.
Speaker #1: On Earth , I believe , because our our key brokers are all significant shareholders of ours and reside in Chicago , New York , North Florida .
Speaker #1: Carolina and And I mean , they're amazing . So we yeah , expect our growth pattern to continue with what it's been in the past .
Speaker #1: So , you know , you can sort of project that out . It's but we really believe that we can sustain that kind of continued growth .
Edward M. Nigro: With the lower interest rates, we think you're gonna see more hotel deals out there.
Edward Nigro: With the lower interest rates, we think you're gonna see more hotel deals out there.
Speaker #1: And with the lower interest rates, we're going to see—I think—more hotel deals out there.
Brett Rabatin: Okay. And if I could, just last one look—one last quick one, just around provisioning for the Q4. You know, you had a little, a little higher non-guaranteed NPAs, but charge-offs were lower. The negative reserve, you know, was there any change in the, in the Q factor for the, ACL or, or anything else that drove that negative provision? And then, you know, is there, is there anything that you see kinda changing with, you know, the criticized asset list?
Brett Rabatin: Okay. And if I could, just last one look—one last quick one, just around provisioning for the Q4. You know, you had a little, a little higher non-guaranteed NPAs, but charge-offs were lower. The negative reserve, you know, was there any change in the, in the Q factor for the, ACL or, or anything else that drove that negative provision? And then, you know, is there, is there anything that you see kinda changing with, you know, the criticized asset list?
Speaker #4: And Okay . if I could just ask one last quick one just provisioning for the fourth quarter , you know , you had a little a little higher non-guaranteed NPAs , but charge offs were lower .
Speaker #4: The negative reserve, you know, was there any change in the Q factor for the ACL or anything else that drove that negative provision?
Speaker #4: And then , you know , is there is there anything that you see kind of with changing , you know , the criticized asset list ?
Jeffery Whicker: Yeah, this is Jeff. There actually was a little bit of change in that analysis that we did on the SBA loans. So from the beginning of the SBA program, we've always kept a little higher reserve on SBA because of the concentration, and we call it concentration risk. But with the analysis that we did on the SBA program from the beginning of time, it doesn't really support us holding additional reserves on that portfolio anymore. So we actually did have some adjustments to the Q factors that did impact that number in the quarter.
Jeffrey Whicker: Yeah, this is Jeff. There actually was a little bit of change in that analysis that we did on the SBA loans. So from the beginning of the SBA program, we've always kept a little higher reserve on SBA because of the concentration, and we call it concentration risk. But with the analysis that we did on the SBA program from the beginning of time, it doesn't really support us holding additional reserves on that portfolio anymore. So we actually did have some adjustments to the Q factors that did impact that number in the quarter.
Speaker #2: This is Jeff. Yeah, actually, there was a little bit of a change in that analysis that we did on the SBA loans.
Speaker #2: So for the beginning of the SBA program, we've kept a little higher reserve on always because of the concentration. And we called it a concentration risk.
Speaker #2: But with the analysis that we did on the SBA program from the beginning of time, it doesn't really support us holding additional reserves on that portfolio anymore.
Speaker #2: So, we actually did have some adjustments to the key factors that did impact that number in the quarter.
Edward M. Nigro: Yeah, I think you saw the reserve I mentioned was so high based on our historical analysis. Remember the old days when we did our reserves only on historical analysis?
Edward Nigro: Yeah, I think you saw the reserve I mentioned was so high based on our historical analysis. Remember the old days when we did our reserves only on historical analysis?
Speaker #1: Yeah, I think you saw the reserve I mentioned was so high based on our historical analysis. Remember the old days when we did our reserves only on historical analysis?
Brett Rabatin: Yeah.
Brett Rabatin: Yeah.
Edward M. Nigro: Cecil kind of did some of that, but I think it's one of the demonstrations of how different it would have been.
Edward Nigro: Cecil kind of did some of that, but I think it's one of the demonstrations of how different it would have been.
Speaker #1: Kind of, Cecil, on that. But I think it's one of the demonstrations of how different it would be.
Brett Rabatin: ... Okay. All right, well, thanks for all the color. I'll let the other guys ask about Bold Bets, but, I'm sure that'll be addressed, too. Thanks, guys.
Brett Rabatin: ... Okay. All right, well, thanks for all the color. I'll let the other guys ask about Bold Bets, but, I'm sure that'll be addressed, too. Thanks, guys.
Speaker #4: Okay. All right. Well, thanks for all the color, all together, guys. I was going to ask about bold bets, but I'm sure that'll be addressed too.
Speaker #4: Thanks ,
Speaker #4: guys .
Edward M. Nigro: Thank you.
Edward Nigro: Thank you.
Speaker #1: Thank you
Operator: Our next question will come from Matthew Erdner with JonesTrading. You may now unmute your line and ask your question.
Operator: Our next question will come from Matthew Erdner with JonesTrading. You may now unmute your line and ask your question.
Speaker #1: .
Speaker #3: Our next question will come from Matthew Erdener with Jones Trading. Now, you may unmute your line and ask your question.
Matthew Erdner: Hey, good afternoon, guys. Can you hear me all right?
Matthew Erdner: Hey, good afternoon, guys. Can you hear me all right?
Speaker #5: Hey, good afternoon, guys. Can you hear me? All right.
Edward M. Nigro: Yeah, Matt, you're doing great.
Edward Nigro: Yeah, Matt, you're doing great.
Speaker #1: You hear? Yeah. Matt, great.
Matthew Erdner: Awesome. Thanks for the comments earlier, Ed. I, I appreciate it. So I'd, I'd like to kinda touch on the slot opportunity, you know, and kinda rehash some things from, from the prior quarter just to see if they, they stack up, you know, in today's environment. So, previously, per, you know, 100 slot machines are about $2.5 million in deposits. Does that still jive with what you guys are seeing as you start to onboard, some of the clients?
Matthew Erdner: Awesome. Thanks for the comments earlier, Ed. I, I appreciate it. So I'd, I'd like to kinda touch on the slot opportunity, you know, and kinda rehash some things from, from the prior quarter just to see if they, they stack up, you know, in today's environment. So, previously, per, you know, 100 slot machines are about $2.5 million in deposits. Does that still jive with what you guys are seeing as you start to onboard, some of the clients?
Speaker #5: Awesome . Thanks for the I appreciate it . So I'd like comments . to kind touch of on the slot opportunity , you know , and kind of rehash some things from , from the prior quarter just to see if they , they stack up , you know , in today's environment .
Speaker #5: So previously, you know, 100 slots per—you mentioned it's about $2.5 million in deposits. Is that still jive with what you guys are seeing as you start to onboard some of the—
Edward M. Nigro: The danger in that, and let me express, that that's a mature market. That's about 50% penetration of a mature market. So what that means is in order to generate those numbers, the customer base has to be there for the particular gaming operator. So let me give you an example. Let's suppose you're a gaming operator with a 100 slot machines, okay? In your customer base that utilizes those 100 slot machines, you have a customer base of about 10 or 15,000 people, players, that come more than, you know, once a month to play your slot machines. So if you do have that customer base, this analyzes your total drop, and then it analyzes your customer base. It analyzes a 50% penetration in your customer base and then comes up with a number.
Edward Nigro: The danger in that, and let me express, that that's a mature market. That's about 50% penetration of a mature market. So what that means is in order to generate those numbers, the customer base has to be there for the particular gaming operator. So let me give you an example. Let's suppose you're a gaming operator with a 100 slot machines, okay? In your customer base that utilizes those 100 slot machines, you have a customer base of about 10 or 15,000 people, players, that come more than, you know, once a month to play your slot machines. So if you do have that customer base, this analyzes your total drop, and then it analyzes your customer base. It analyzes a 50% penetration in your customer base and then comes up with a number.
Speaker #1: That danger in— and let me express that— that's a mature, that's about 50% penetration of a mature... So what— that market.
Speaker #1: What this means is that, in order to generate those numbers, the customer base has to be there for the particular gaming operator. So let me give you an example.
Speaker #1: Let's suppose you're a gaming operator with a machines . 100 slot Okay . And your customer base that that utilizes those 100 slot machines , you have a customer base of about 10 or 15,000 people .
Speaker #1: Players that come more than , you know , once a month to play your slot machines . So if you do have customer that base , this analyzes your your total drop .
Speaker #1: And then it analyzes your customer base. It analyzes a 50% penetration in your customer base, and then comes up with a number. So that means that of their customer base, half of them have to be users of the app.
Edward M. Nigro: So that means that of their customer base, half of them have to be users of the app. How long it's gonna take us? What we didn't give you was, okay, how long is it gonna take from the time we sign up a gaming operator till that deposit is realized? And that's how long does it take the gaming operator to onboard his customers. That's an unknown, and it's not gonna be instant. Like, right now, with—and it's particularly right now with, as an example, Distill, this is brand new, and they have to train their clients, they have to train their employees, they have to train their bartenders, they have to train, you know, and then they have to sign up and use it.
Edward Nigro: So that means that of their customer base, half of them have to be users of the app. How long it's gonna take us? What we didn't give you was, okay, how long is it gonna take from the time we sign up a gaming operator till that deposit is realized? And that's how long does it take the gaming operator to onboard his customers. That's an unknown, and it's not gonna be instant. Like, right now, with—and it's particularly right now with, as an example, Distill, this is brand new, and they have to train their clients, they have to train their employees, they have to train their bartenders, they have to train, you know, and then they have to sign up and use it.
Speaker #1: How long is it going to take us ? We get what we didn't give you was , okay , how long is it going to take from the time we sign up a gaming operator till that deposit is realized , and that's how long does it take the gaming operator onboard his customers ?
Speaker #1: That's an unknown, and it's not going to be instant, like right now with, and particularly right now with, as an example, the... Still, this is brand new.
Speaker #1: And they had to trained new clients . They have trained their their employees . They have to train their bartenders . They have to train , you know , and then they have to sign up and use it .
Edward M. Nigro: The interesting thing that I didn't say is that, you know, we hope that one of the preferred loans, and because we're marketing it right with it, is gonna be our credit card. So we're-- That, that's moving side by side with some of this. So what I can't tell you is how fast it ramps up to that. So we'll be having more and more information as quarters go by, and we have some history under our belt, but it's gonna take some time. Remember I told you about TITO? It took time. It wasn't something that was done overnight.
Edward Nigro: The interesting thing that I didn't say is that, you know, we hope that one of the preferred loans, and because we're marketing it right with it, is gonna be our credit card. So we're-- That, that's moving side by side with some of this. So what I can't tell you is how fast it ramps up to that. So we'll be having more and more information as quarters go by, and we have some history under our belt, but it's gonna take some time. Remember I told you about TITO? It took time. It wasn't something that was done overnight.
Speaker #1: The interesting thing that I didn't say is that , you know , we hope that one of the preferred loads and because we're marketing it right with it is going to be our credit card .
Speaker #1: So that's moving side by side with some of this. So what I can't tell you is how fast it ramps up to that.
Speaker #1: We'll be having more and more information as we go. And we have some quarters and some history under our belt, but it's going to take some time.
Speaker #1: Remember I told you about ? It took Tito time . It wasn't something that was done overnight . I , I joked with some of the the other , other day I when was saying .
Edward M. Nigro: I joked with somebody the other day when I was saying to someone, "You know, when Thomas Edison invented the light bulb, I wonder who the analyst was who asked him, 'Well, how many light bulbs are you gonna sell next quarter?'" So I think it's analogous in the sense that this has never been done before. It is new. The apps that are out there just don't work, and many customers have just said, "I'm not paying. Those apps don't work." So you gotta re-educate some, and you gotta spread it. But what we do know is this works amazingly. And then once they get on it, we've seen amazing feedback already. They love it.
Edward Nigro: I joked with somebody the other day when I was saying to someone, "You know, when Thomas Edison invented the light bulb, I wonder who the analyst was who asked him, 'Well, how many light bulbs are you gonna sell next quarter?'" So I think it's analogous in the sense that this has never been done before. It is new. The apps that are out there just don't work, and many customers have just said, "I'm not paying. Those apps don't work." So you gotta re-educate some, and you gotta spread it. But what we do know is this works amazingly. And then once they get on it, we've seen amazing feedback already. They love it.
Speaker #1: To someone you know , when Thomas Edison invented the light bulb , I wonder who the analyst was who asked him . Well , how many are you going to sell next quarter ?
Speaker #1: So I think it's it's analogous in the sense that this has never been done is new . The apps that are out there just don't work , and many customers have just said , I'm not paying .
Speaker #1: Those apps don't work. So, you got to re-educate some, and you got to spread it. But do know what we is, this works amazingly.
Speaker #1: that once they get on it , we've seen amazing feedback already . They love it . So I guess as we get a few quarters under our belt , we'll be able to tell you more the about how growth is going .
Edward M. Nigro: So I guess as we get a few quarters under our belt, we'll be able to tell you more about how the growth is going. But for right now, the number of machines are relatively small. The transition is gonna take place, but the market is, you know, dramatic. I said, you know, in our state, we have 154,000 slot machines, and across the country, there's another 800,000, Matt, that are legal machines. And the primary providers of that machines, Konami, is one who has 300,000 machines alone. Excuse me, 140,000 machines alone. Several of the others that we, you know, that are going to be seeing this app, have a lot more. So we know there's a good market out there.
Edward Nigro: So I guess as we get a few quarters under our belt, we'll be able to tell you more about how the growth is going. But for right now, the number of machines are relatively small. The transition is gonna take place, but the market is, you know, dramatic. I said, you know, in our state, we have 154,000 slot machines, and across the country, there's another 800,000, Matt, that are legal machines. And the primary providers of that machines, Konami, is one who has 300,000 machines alone. Excuse me, 140,000 machines alone. Several of the others that we, you know, that are going to be seeing this app, have a lot more. So we know there's a good market out there.
Speaker #1: But for the right now , number of machines are relatively small . The transition is take going to place , but market is the , you know , dramatic .
Speaker #1: I said, you know, in our state we have 154,000 slot machines. And across the country, there's another 800,000 that are legal machines.
Speaker #1: And the primary providers of that machines , Konami , is one who has 300,000 machines alone . Excuse me , 140,000 machines alone .
Speaker #1: Several of the others that you, we know, that are going to be seeing this app have a lot more. So we know there's a good market out there.
Edward M. Nigro: It's up to the gaming operator as well as the slot manufacturer, you know, and everyone to participate to get their players to use the app, but we think that the app is gonna be very convenient for the player, a very convenient wallet.
Edward Nigro: It's up to the gaming operator as well as the slot manufacturer, you know, and everyone to participate to get their players to use the app, but we think that the app is gonna be very convenient for the player, a very convenient wallet.
Speaker #1: It's up to the gaming operator, as well as the slot manufacturer, you know, and everyone, to participate to get their players to use the app.
Speaker #1: But we think the app is going to be very convenient for the player and a very convenient wallet.
Matthew Erdner: Yeah, that's great. I appreciate the color there. And I guess as a follow-up to that, you know, around the current deposit mix and net interest margin, you know, would we expect there to kind of be an inflection point, you know, on that net interest margin, you know, as these slots are started to, you know, more frequently get onboarded and really drive, you know, that increase in the non-interest bearing?
Matthew Erdner: Yeah, that's great. I appreciate the color there. And I guess as a follow-up to that, you know, around the current deposit mix and net interest margin, you know, would we expect there to kind of be an inflection point, you know, on that net interest margin, you know, as these slots are started to, you know, more frequently get onboarded and really drive, you know, that increase in the non-interest bearing?
Speaker #5: Yeah , that's great . I appreciate color there . And I guess as a as a follow up that , around the current you know , to deposit net and mix interest margin , you know , would we expect there to kind of be an inflection point , you know , on that net interest margin , you know , as these slots started to , you know , more are frequently get onboarded and really drive , you know that increase in the noninterest bearing .
Edward M. Nigro: Well, I think the slots is a great opportunity and a great path, and we're starting to see the pipeline of some very interesting players. But remember, our bank has 16 other PPA clients onboarded right now, and many of them are startups, and many of them have new programs, and some of them deal with sports apps that others deal with. We're dealing with one that's dealing with two big state lotteries. So there are other avenues for our PPA as well. And of course, sports betting is, we still believe that one day a sports betting app will say, we don't want to hold the cash anymore, that we do want to see, we do and would appreciate a system where we get the cash with this liability off our balance sheet.
Edward Nigro: Well, I think the slots is a great opportunity and a great path, and we're starting to see the pipeline of some very interesting players. But remember, our bank has 16 other PPA clients onboarded right now, and many of them are startups, and many of them have new programs, and some of them deal with sports apps that others deal with. We're dealing with one that's dealing with two big state lotteries. So there are other avenues for our PPA as well. And of course, sports betting is, we still believe that one day a sports betting app will say, we don't want to hold the cash anymore, that we do want to see, we do and would appreciate a system where we get the cash with this liability off our balance sheet.
Speaker #1: Well, I think this loss is a great opportunity and a great path. And we're starting to see the pipeline of some very interesting players.
Speaker #1: But remember, our bank has 16 other PPA clients onboarded right now. And many of them are startups, and many of them have new programs.
Speaker #1: And some of them deal with sports apps that others deal with . We're dealing with what is dealing with Toothpick state lotteries . So there's there are avenues for our other PPA as well .
Speaker #1: And , and of course , sports betting is we still believe one day a sports betting hold the app will say want to cash anymore , that we we , we don't want to see .
Speaker #1: We do, and would appreciate a system where we get the cash for this liability off our balance sheet right now. As they start to make more money, the management is going—cash is going to become more of a headache.
Edward M. Nigro: Right now, as they start to make more money, the cash management is gonna become more of a headache. When everybody was a start-up, everybody wanted to hold all the cash because they liked the flow, they liked it, you know, in their operational accounts. But will that change? And if that changes, we have the solution for it. We have a solution. If so the first sport app that goes under and costs the consumer some money, they're gonna be looking at us because we protect the consumer. Well, no matter what happens to the app, no matter what happens in bankruptcy or anything else, our consumers' money is protected because it's guaranteed by the FDIC, and we hold it, not the app. It can't be mixed with their funds.
Edward Nigro: Right now, as they start to make more money, the cash management is gonna become more of a headache. When everybody was a start-up, everybody wanted to hold all the cash because they liked the flow, they liked it, you know, in their operational accounts. But will that change? And if that changes, we have the solution for it. We have a solution. If so the first sport app that goes under and costs the consumer some money, they're gonna be looking at us because we protect the consumer. Well, no matter what happens to the app, no matter what happens in bankruptcy or anything else, our consumers' money is protected because it's guaranteed by the FDIC, and we hold it, not the app. It can't be mixed with their funds.
Speaker #1: When everybody was a startup , everybody wanted to hold all the because they liked the float . cash They liked it , you know , and their operational accounts .
Speaker #1: But will that change ? And if that we have the solution for changes , it . We have a solution that's first sport the app that goes under and costs the money consumers some .
Speaker #1: They're going to be looking at us because we protect the consumer. Well, no matter what happens to the app, no matter what happens in bankruptcy or anything else.
Speaker #1: Our consumers' money is protected because it's guaranteed by the FDIC, and we hold it, not the app. It can't be mixed with their funds.
Edward M. Nigro: It can't be mixed with, "Oh, we don't know where that money is." Well, believe me, because one thing banks are pretty good at is knowing where the money is.
Edward Nigro: It can't be mixed with, "Oh, we don't know where that money is." Well, believe me, because one thing banks are pretty good at is knowing where the money is.
Speaker #1: It can't be mixed with—oh, no, we don't know where that money is. Believe me. Because one thing that banks are pretty good at, is knowing where the money is.
Matthew Erdner: Right. Right, right. Yeah, that's, that's helpful there. And then one last quick one, and then I'll step out. As it relates to the SBA business, what impact did the government shutdown have on your Q4 origination numbers? And then, you know, as we're kind of staring down another government shutdown, what impact do you think that's gonna have for the Q1 of this year until that's resolved?
Matthew Erdner: Right. Right, right. Yeah, that's, that's helpful there. And then one last quick one, and then I'll step out. As it relates to the SBA business, what impact did the government shutdown have on your Q4 origination numbers? And then, you know, as we're kind of staring down another government shutdown, what impact do you think that's gonna have for the Q1 of this year until that's resolved?
Speaker #5: right . , right , right , . helpful That's there and one last then quick one and then I'll step out as it relates to SBA the business .
Speaker #5: Yeah .
Speaker #5: What impact did the government shutdown have on your fourth quarter origination numbers? And then, you know, as we're kind of staring down another government shutdown, what impact do you think that's going to have on the first quarter of this year until that's resolved?
Edward M. Nigro: Let me tell you, that's a great question because it was a little insidious for our SBA division, because we saw the closing coming, so we went and got as many PLPs as we could get pre-approved as possible. So we spent all our effort, you know, getting our loans in front of them for our PLPs, for applications. And then, once they reopened, we did our entire number of sales in the fourth quarter in December that we did. So our sales for the fourth quarter were, what, 9-
Edward Nigro: Let me tell you, that's a great question because it was a little insidious for our SBA division, because we saw the closing coming, so we went and got as many PLPs as we could get pre-approved as possible. So we spent all our effort, you know, getting our loans in front of them for our PLPs, for applications. And then, once they reopened, we did our entire number of sales in the fourth quarter in December that we did. So our sales for the fourth quarter were, what, 9-
Speaker #1: Let me tell you, that's a great question because it was a little insidious for the SBA division, because we saw the closing coming.
Speaker #1: Went and got as many people as we could, so we pre-approved as many as possible. So we spent all our effort, you know, getting our loans in front of them for our PLPs or applications.
Speaker #1: And then once they reopened did our number of entire , we sales in the fourth quarter in December that we . So did sales fourth quarter were what our for the , nine ?
Jeffery Whicker: About ninety-nine.
Jeffrey Whicker: About ninety-nine.
Edward M. Nigro: But what happened to them, our originations for Q4 dropped way down. And why the originations dropped way down, and I talked to our brokers directly, is because of the unknowns out there and the customers who are not sure whether to even apply for a loan. Because they knew the government was shut down, they knew they couldn't get it approved, so they said, "Well, we'll just wait and see." So deals didn't get done. And when deals don't get done, originations go down, and our originations went from $200 million plus in Q3 to less than $100 million in Q4.
Edward Nigro: But what happened to them, our originations for Q4 dropped way down. And why the originations dropped way down, and I talked to our brokers directly, is because of the unknowns out there and the customers who are not sure whether to even apply for a loan. Because they knew the government was shut down, they knew they couldn't get it approved, so they said, "Well, we'll just wait and see." So deals didn't get done. And when deals don't get done, originations go down, and our originations went from $200 million plus in Q3 to less than $100 million in Q4.
Speaker #1: But what happened was our originations for the fourth quarter dropped way down. And why the originations dropped way down, and I talked to our brokers directly, is because of the unknowns out there and the customers were not sure whether to even apply for a loan because they knew the government was shut down.
Speaker #1: They knew they couldn't get approved . So they it said , well , we'll just wait and see . deals didn't So get done .
Speaker #1: deals don't get done , And when originations go down and our originations went from 200 million plus the third quarter to less than 100 million in the fourth quarter , 100 , 100 what .
Jeffery Whicker: 118.
Jeffrey Whicker: 118.
Edward M. Nigro: Hundred and what?
Edward Nigro: Hundred and what?
Jeffery Whicker: $118 million.
Speaker #1: 118,000, 118 million. And our sales, for the first time in our history, in the fourth quarter, our gain on sales were less than the third quarter.
Jeffrey Whicker: $118 million.
Edward M. Nigro: $118 million. And our sales, for the first time in our history, in Q4, our gain on sales were less than Q3. It had never been that way before. So we figured that there was probably, you know, a couple of million dollars left on the table in gain on sales. But I believe that this, we're already hoarding, if you will, PLPs on the prospect of another shutdown. And the news we received from our association, which is NAGGL, which is the National Association of Guaranteed Government Lenders, they believe the shutdown is gonna happen.
Edward Nigro: $118 million. And our sales, for the first time in our history, in Q4, our gain on sales were less than Q3. It had never been that way before. So we figured that there was probably, you know, a couple of million dollars left on the table in gain on sales. But I believe that this, we're already hoarding, if you will, PLPs on the prospect of another shutdown. And the news we received from our association, which is NAGGL, which is the National Association of Guaranteed Government Lenders, they believe the shutdown is gonna happen.
Speaker #1: has never It been that way before . So we figured that there was probably , you know , a couple on million dollars left on and gain the table But sales .
Speaker #1: has never It been that way before . So we figured that there was probably , you know , a couple on million dollars left on and gain the table But sales . I believe that .
Speaker #1: This already we're recording , if you will , plps on the prospect of another shutdown and the news we received from our association , which is naval , which is the National Association of Guaranteed Government Lenders it shut down , , they believe is going to happen .
Jeffery Whicker: So if you think about the year as a whole, the government shutdown, I mean, should come out in the wash because if somebody's working on a loan today, they're not gonna not do the loan at some point. So even if volumes were to go down a little bit in the first quarter, they would-
Jeffrey Whicker: So if you think about the year as a whole, the government shutdown, I mean, should come out in the wash because if somebody's working on a loan today, they're not gonna not do the loan at some point. So even if volumes were to go down a little bit in the first quarter, they would-
Speaker #2: So if you think about the year as a whole , government the shut down . I should come mean , wash out the because if somebody I mean somebody is working on a loan today , they're not going to nod to the loan at some point .
Speaker #2: So even if volumes were to go down a little bit in the first quarter , . Oh they would yeah . Second .
Edward M. Nigro: Oh, this year, yeah.
Edward Nigro: Oh, this year, yeah.
Jeffery Whicker: Right.
Jeffrey Whicker: Right.
Edward M. Nigro: We will catch up this year. It was the fourth quarter last year that we had no catch up. We could do.
Edward Nigro: We will catch up this year. It was the fourth quarter last year that we had no catch up. We could do.
Speaker #1: This year, it was the fourth quarter. Last year, we had no catch up. We
Speaker #1: could do . About time
Jeffery Whicker: Yeah, we both have to catch up.
Jeffrey Whicker: Yeah, we both have to catch up.
Speaker #2: to catch up .
Speaker #1: Right .
Speaker #5: Got it . Yeah . That's helpful . There . Yeah I just wanted to that across and get your guys get thoughts . But I appreciate all the comments guys .
Matthew Erdner: Got it. Yeah, that, that's helpful there. Yeah, I just wanted to get that across and get your guys' thoughts, but I appreciate all the comments, guys. Thank you.
Matthew Erdner: Got it. Yeah, that, that's helpful there. Yeah, I just wanted to get that across and get your guys' thoughts, but I appreciate all the comments, guys. Thank you.
Speaker #5: Thank you .
Operator: Our last question will come from Tim Coffey with Janney Montgomery Scott. You may now unmute your line and ask your question.
Operator: Our last question will come from Tim Coffey with Janney Montgomery Scott. You may now unmute your line and ask your question.
Speaker #3: Our last question will come from Jenny Tim, Coffee, with Montgomery Scott. You may now unmute your line and ask your question.
Speaker #6: Afternoon , gentlemen
Tim Coffey: Afternoon, gentlemen.
Timothy Coffey: Afternoon, gentlemen.
Edward M. Nigro: Hey, Tim. Nice to hear your voice.
Edward Nigro: Hey, Tim. Nice to hear your voice.
Speaker #6: . nice .
Speaker #1: hear your To
Speaker #1: voice .
Speaker #6: Yeah , good to hear yours too , It's so I guess my first question has to do with the SBA . Let's follow up on the last one .
Tim Coffey: Yeah, good to hear yours, too, Ed. So I guess my first question has to do with the SBA. Let's follow up on the last one. So you sold more SBA of originations in Q4 than you had pretty much all year. Was that a function of the government shutdown or the change in incentives for originators?
Timothy Coffey: Yeah, good to hear yours, too, Ed. So I guess my first question has to do with the SBA. Let's follow up on the last one. So you sold more SBA of originations in Q4 than you had pretty much all year. Was that a function of the government shutdown or the change in incentives for originators?
Speaker #6: You sold more SBA SO originations in Q4 than you had pretty much all year. Was that a function of the government shutdown or the change in incentives for originators?
Speaker #1: We, when we had our most originations last year in Q3, which was 200, and.
Edward M. Nigro: Wait a minute. We had our most originations last year in Q3, which was 200 and-
Edward Nigro: Wait a minute. We had our most originations last year in Q3, which was 200 and-
Speaker #6: , well , no . Oh , so in the fourth quarter , you sold about , you know , 3 to 3 out of every four loans you originated SBA in the previous was three quarters .
Tim Coffey: Well, no.
Timothy Coffey: Well, no.
Edward M. Nigro: Seventy.
Edward Nigro: Seventy.
Tim Coffey: Oh, so in Q4, you sold about, you know, three out of every four loans you originated in SBA. The previous three quarters, it was about, say, one and two. So I'm trying to figure out, was the increase in the selling of your originations related to government shutdown and the market being closed, or was it the change in incentives for the originators?
Timothy Coffey: Oh, so in Q4, you sold about, you know, three out of every four loans you originated in SBA. The previous three quarters, it was about, say, one and two. So I'm trying to figure out, was the increase in the selling of your originations related to government shutdown and the market being closed, or was it the change in incentives for the originators?
Speaker #6: About, say, in Q1 and Q2. So I'm trying to figure out if it was an increase in the selling of your—related to the shutdown.
