Q1 2024 Bancorp Inc Earnings Call

Participants

Andres Viroslav; IR; Bancorp Inc

Damian Kozlowski; Chief Executive Officer, Director; President, Director of the Bank; Bancorp Inc

Paul Frenkiel; Chief Financial Officer, Executive Vice President, Secretary; Bancorp Inc

David Feaster; Analyst; Raymond James & Associates, Inc.

Tim Switzer; Analyst; Keefe, Bruyette & Woods, Inc.

Frank Schiraldi; Analyst; Piper Sandler & Co.

Presentation

Operator

Good day and welcome to The Bancorp, Inc. Q1 2024 earnings conference call. (Operator Instructions) Please note today's call will be recorded, and I will be standing by if you should need any assistance.
It is now my pleasure to turn the conference over to Andres Viroslav. Please go ahead.

Andres Viroslav

Thank you, operator. Good morning, and thank you for joining us today for The Bancorp's First Quarter 2024 financial results conference call. On the call with me today are Damian Kozlowski, Chief Executive Officer, and Paul Frenkiel, our Chief Financial Officer. This morning's call is being webcast on our website at www.stbancorp.com. There will be a replay of the call available via webcast on our website beginning at approximately 12 p.m. eastern time today. The dial-in for the replay is one 809 three eight two two four one with a confirmation code of Bancorp.
Before I turn the call over to Damian, I would like to remind everyone that when used in this conference call, the words believes, anticipates, expects and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties, which could cause actual results, performance or achievements to differ materially from those anticipated or suggested by such statements. For further discussion of these risks and uncertainties, please see The Bancorp's filings with the SEC. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Now I would like to turn the call over to The Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Damian Kozlowski

Thank you, Andres, and good morning, everyone. The Bancorp earned $1.6 a share with revenue growth of 8%. While expenses were 3% lower than first quarter of '23, ROE was 28%. NIM was 5.15 compared to 5.26 quarter-over-quarter, mostly due to the increase in Fed funds sold and towards 67 year over year. And the efficiency ratio improved from 42% in the first quarter of 23% to 38% in '24. Fintech Solutions group continue to expand relationships and show continued progress. Gdv increased 12% year over year, and total fees from all fintech activities increased seven after adjustment for a client termination fee and the realization of 22 revenue in the first quarter of 23 due to a processing delay fee growth was 16% year over year. We continue to add new partners, expand our product capabilities with existing partners, some of the highest growth areas of our our fintech neobank portfolio and corporate payments. We are pleased to announce block as a new partner to our fintech solutions ecosystem. The addition of this new relationship as well as the continued organic growth of the current portfolio should result in meaningful increases to the ACH card and other processing fees line item in a regulatory environment where many of our competitors have come under significant scrutiny, our focus continues to be helping our partners innovate their product sets while maintaining a rigorous approach to meeting regulatory requirements and improving the robustness of our ecosystem.
On the lending side, we had growth across the portfolio of 2% quarter over quarter, while our institutional book decreased quarter-over-quarter by 3.6%, the rate of decrease was less than in the past year. That was more than offset by growth in other higher-yielding categories, which are mostly fixed.
Lastly, with continued strong growth in our FinTech Solutions Group and growth across our lending portfolio we are reaffirming our guidance for 25 a share without the impact of $50 million per quarter of share buybacks in 24 and the additional second quarter buyback of $50 million.
And I now turn the call over to Paul Frenkiel for more color on the first quarter.

Paul Frenkiel

Thank you, Damian. As a result of its variable rate loans and securities Bancorp performance continues to benefit from the cumulative impact of Federal Reserve rate increases in April 2020 for the bank purchased approximately $900 million of fixed rate US government agency securities to significantly reduce exposure to future Federal Reserve rate decreases at an estimated average 5.11% yields.
Such purchases have modest impact on current income, while significant prepayment protection is reflected in estimated eight year weighted average lives. Additionally, the bank continues to emphasize fixed rate loans to continue to further reduce its exposure to two rate changes to modest levels in addition to the impact of the Federal Reserve rate increases, the Company benefited from loan growth with what with decreases in S. block and I. block significantly offset by increases in other higher-yielding lending categories accordingly, while s block and I block loans decreased $782 million in the past 15 months, other loan growth had approximately offset those reductions by March 31st, 2024, at which date total loans amounted to $5.5 billion. The impact of the aforementioned Federal Reserve rate increases on variable rate loans and securities growth in higher-yielding loan categories and lesser increases in deposit rates was reflected in a 10% increase in net interest income in Q1 2024 compared to Q1 2023.
As a result, in Q1 2020 for the yield on interest-earning assets had increased to 7.4% from 6.6% in Q1 2023 were an increase of 0.8%. The cost of deposits in those respective respective periods increased by only 0.3% to 2.4%. Those factors reflected in the 5.15% NIM. in Q1 2024. Provision for credit losses was $2.2 million in Q1 2024 compared to $1.9 million in Q1 2023. The provision for credit losses in Q1 2024 reflected the impact of 919,000 of leasing charge-offs, primarily in long haul and local trucking and related activities for which total exposure was approximately $39 million at March 31 2020 for nonperformers increased during the quarter by $7 million for leasing and SBL., but mostly as a result of an apartment building loan for $39.4 million, which compares to September '23 independent as is appraisal of $47.8 million or an 82%, as is LTV with additional potential collateral value as rehabilitation progresses and units are re-leased at stabilized rental rates for the $2.1 billion apartment bridge lending portfolio as a whole.
The weighted average original origination date as is LTV, is 70% based on third party appraisals further the weighted average origination date as stabilized LTV, which measures the estimated value of the apartments after the rehabilitation is complete, may provide even greater protection for the origination that origination date as stabilized LTV based on the third-party appraisals for the portfolio was 61% for the bank's Revel loans classified as substandard. Recent third party appraisals of those loans reflect a weighted average as is loan to value ratio of 79% and has stabilized LTV of 76%. Accordingly, even with higher interest rate environment and other stresses, we believe LTVs based upon third party appraisals continue to provide significant protection against potential loss.
Non-interest expense for Q1 2024 was $46.7 million, which was 3% lower than Q1 2023. A 2% increase in salaries and benefits was more than offset by decreases in other categories, including a $1.3 million decrease in other real estate owned related charges. Book value per share at quarter end increased 19% to $15.63 compared to $13.11 a year earlier reflecting the impact of retained earnings.
In summary, the bank's balance sheet has a risk profile enhanced by the special nature of the collateral supporting its loan niches and related underwriting. Those loan niches have contributed to increased earnings levels even during periods in which markets have experienced various economic stresses. Real estate bridge lending is comprised of workforce housing, which we consider to be working-class apartments at more affordable rental rates in selected states. We believe that underwriting requirements provide significant protection against loss supported by LTV ratios based upon third party appraisals as block and I block loans are respectively collateralized by marketable securities and the cash value of life insurance.
While SBA loans are either s set, SBA seven a. loans that come with significant government related guarantees were SBA for oh five loans that are made at 50% to 60% LTV. Additional details regarding our loan portfolios are included in the related tables in our press release as are the earnings contributions of our payments businesses, which further enhances our risk profile, the risk profile inherent in the Company's loan portfolios, payments, funding sources and earnings levels may present opportunities to further increase shareholder value while still prudently maintaining capital levels. Such opportunities include the recently increased planned share repurchases of $100 million for second quarter 2022 up from the original $50 million.
I'll now turn the call back to Damian.

Damian Kozlowski

Thank you, Paul. Operator, could you please open the line for questions?

Question and Answer Session

Operator

Yes, sir. At this time if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself at any time by pressing star two. Once again, if you would like to ask a question, please press star one. Our first question will come from David Feaster with Raymond James.

David Feaster

Maybe let's just start with the elephant in the room and touch on this Rebel credit. It looks like you all took that into REO this month and are planning to finish the rehab yourself. Could you could you maybe just talk about what led you to that decision rather than just selling it today? And any specifics that you can with this credit what you need to do the expenses, maybe that will come from that and just the time line and when you think you can be stabilized and sold at no loss.

Damian Kozlowski

Well, it's a challenge like that situation because we go through a process. And when the sponsor in this case has as it has an inability to raise more additional capital, finished the project and they've already put additional land. And so it goes through a process of whatever needs to be fixed over the next six to 12 months in order to lease up the entire property. So, you know, we were working with the property manager where I have a project plan in place and we'll finish it as quickly as possible during that entire process. We're not looking to monetize it for again. So if somebody would we're in discussions with people about taking over the property and do and completing the project. So that's that's ongoing, Paul?

Paul Frenkiel

Yes, I would add the construct. We actually added acted immediately to preserve the value. And that's really important because you want to keep the construction going, get the apartments released as quickly as possible. Construction has already begun. The rehabilitation has already begun on. There is a little bit of construction involved on as part of the rehabilitation and it's difficult to estimate, but it'll take at least several quarters for that to happen.

David Feaster

Okay. And any estimates on on capital that you might have or reserves that you've already got against this that you could use to fund funded? Just kind of curious that side of it?

Paul Frenkiel

Well, if you look at the at the LTV as is on which you would base a potential losses. The value continues to be there. So that's why we're going to finish up the construction ourselves and preserve that value and actually potentially increase the value as the as the property gets stabilized.

David Feaster

Could you maybe touch on the repo book maybe more broadly? Are you anticipating more issues like this one, are you hearing similar pressures from other borrowers? And maybe just touch on how that service and LTVs are broadly on this book and maybe what gives you confidence in the remainder of the portfolio.

Damian Kozlowski

Okay. First, the there was a bit of a low of what I would characterize as a wave that you see in our numbers today. And this was originated mostly from the 21 and 22 vintage of loans. So we restarted this. We've been in business since 2016. We've had very good performance. We even issued securities and from what happened was there were a couple of shocks that happened. We had the big inflation shock and we also had this interest rate shock.
Now the inflation shock, obviously for the business plans of people doing these deals have changed how much they had to pay for the materials in order to go into upgrade these apartments. And generally, people worked with that, some people got off plan, some people added additional capital and then you had this interest rate shock. So where that came in, it wasn't a takeout is the takeout even though it's maybe less sales of these properties, it's still there's a GSE where you're going to have refining rates in the 6%. It was where you got the trouble with your project because of the inflation shock, you had to raise more money, you probably did it once or twice at the higher interest rate level.
It became very expensive to have to add more capital to finish the project. So that's where we've been working with our borrowers in order to help them with their business plans and make sure the property gets stabilized and then can be refinanced. So we that wave has kind of come through. There might be some more. We haven't experienced a second wave. So there is some stabilization taking place place? Paul?

Paul Frenkiel

Yes, I would add that if you look at the substandard loans classified as substandard, which means they have some kind of an issue. And even after all the stresses that Damian just went through given the extra equity and other and the original and the original LTVs that the the updated and current more current appraisals still show an LTV as is of 79% and slightly better as stabilized. So again, we have significant protection against loss.

David Feaster

That's extremely helpful. And maybe let's switch gears to maybe the core business. Great to hear the new partnership with block. That's huge.
And could you touch a little bit on I'll elaborate what that relationship consists of and when do you expect it to start contributing to growth? And maybe also just touch on the pipeline of new partners and how that's trending, just given the regulatory challenges in this space and your position, I suspect you're seeing more partners look towards you all.

Damian Kozlowski

I'm just curious if that's the case and maybe how the pipeline shaping up so that Rapid Funds ecosystem, that's where our relationship with block is so that we haven't we've had a small fraction of that volume come into the first quarter, less than 15%. So you'll see that roll out over the next couple of quarters. The pipeline is extremely strong, very exciting things going on across our portfolio.
And like we've said in the past, we'll be announcing these things when appropriate, just as we have balanced block, we'll continue to announce these and partnerships as it becomes appropriate, but it's very strong. It's only with very large providers that today have significant volumes. So when we do add, you know, three, four partners a year up to five partners a year. They bring a lot of economics to the table and they're very accretive. So it hasn't changed the last few years. It's been like this the scrutiny on the industry that obviously allows us to get visibility on almost all on major programs that are looking to maybe change your provider. So it continues to be that the prospects of the business can continue to be very strong.

David Feaster

That's great to hear. Thanks, everybody.

Operator

Thank you. Our next question will come from Tim Switzer with KBW. Please go ahead.

Tim Switzer

Thank you for taking my questions. I had a I had a follow up on some road portfolio credit performance. We've seen there is the increase in NPAs. There's another it looks about $6 million that moved into nonperforming above that $39 million loan. Could you provide us some color on what also drove the increase beyond that? And then you know if there's any other kind of notable loans that have stopped paying but not yet in nonaccrual or shown up in other credit metrics yet. Can you provide some color there, please?

Paul Frenkiel

So on the $6 million that you're referencing is comprised of a variety of leasing and small business loan. Just various industries we have. We do have a lot of diversification that the the issue we've had is primarily in terms of charge-offs is primarily and the trucking and long haul transportation on. I think they just happened to hit like several of them just happened to hit this quarter. We're not expecting we don't really have knowledge of anything systemic that should increase those on the SBL. and the leasing nonperformers. But we obviously scrutinize the portfolio very carefully and we will provide more detail in the 10 Q in the in the tables that are why.

Tim Switzer

Okay. Great. Appreciate the color there. And it's good to see you guys that would be starting to purchase the securities $900 million in April. What how much do you plan to do more? I think last quarter you guys said anywhere between one to $1.5 billion. Is that still kind of the target and what's your new asset sensitivity as you're trying to close the gap to that 60% deposit beta?

Damian Kozlowski

Okay. Okay. So it's very these are broad strokes. And remember, we run models and things too get to our what we think the asset sensitivity is in different environments. But having said that in very broad terms, if you remember, we opened our balance sheet hadn't bought a bond and we got all the way down to about 25%. And then when the interest rate increases happened, obviously, it had a dramatic effect on our profitability now with us since the beginning of last year, putting on fixed rate assets and then the $900 million in bond purchases, we were about 50% fixed right so we've closed that gap substantially.
And originally, we were trying to get to 60% fixed rate because our deposit beta was 40. So it would totally offset our asset sensitivity so we've made great progress in doing that. So if you think about it, once again, very broad strokes, we were about seven or 8% for net interest income for 100 basis points move down exposed and we've lowered that to two or 3%. That's the magnitude that we've lowered our asset sensitivity. Now we obviously wait very long time to buy these purchases.
I've been looking at a broad set of indicators and they we just recently went very green for us and we started buying into the CPI. print because we thought that might actually be a little higher then forecast and there would be an overreaction in the market which there kind of was, but that CPI. print obviously was mostly due to housing and insurance. So when you look at broad indicators or indicators, the economy is definitely slowing.
And you saw that in the GDP print the other day. So we think interest rates have kind of, you know, gone their highs, they could go higher and that's why we're still asset sensitive. And if they did go into the 10-year treasury in the 5% range, we probably would buy additional $500 million of more like treasury securities and that would close their gap almost in its entirety if we don't do that over the next six months with the products that we have are originating in that alone and our it's some of the new credit sponsorship products that we're building on our balance sheet, you're going to close that gap meaningfully without the purchase of additional securities. So we think we're and once again, we weren't trying to make the most money. We're trying not to be greedy. We thought it was the right time to take the majority of the asset sensitivity off the table. And that's what we did with the $900 million and purchases.

Tim Switzer

Great. Thanks, Damian. Very clear strategy. And I'll jump back in the queue.

Operator

Thank you. Our next question will come from Frank Schiraldi with Piper Sandler. Please go ahead.

Frank Schiraldi

Hey, good morning. Just wondering if you can going back to the fee income growth on some of the noise year over year and on the DTV growth year over year on given pipelines, are you still comfortable in that generally you're going to be putting up gross dollar volume growth in the 15% plus range or given some of these partnerships and other areas is growth coming more outside that, that GDV framework at this point in GDV, it's very hard to predict any one quarter.

Damian Kozlowski

So we do think we still think that will be above trend above the 15%. Now the fee growth was 60%, very high if your GDP growth is 12, and that's exactly what you said, it's in ancillary businesses like the Rapid Funds environment. So we're seeing more of those ancillary revenues. So what I obviously, I would rather have 16% fee growth than 16% GDV growth. We were predicting more the other way around 16% GDV. and 12% fee growth. But we got the inverse, which is, yes, obviously better profitability. So but we still think it will trend upwards. And we'll especially with the addition of new partnerships like block, you're going to see enhanced fee growth realization on GDV, and it's surprising to see it actually above GDV, but that's because of the growth of the product set and especially in areas like Rapid Funds.

Frank Schiraldi

And then just on the Rapid Funds and on the block partnership. Sorry from just curious if you can provide a little more color on what does the timing? And usually I know it takes a while to get these partnerships up and running after announcement. So is this more of a 2025 maybe incremental boost to revenue growth?

Damian Kozlowski

The block partnerships, I know this is now up 15% or less of the transactional volume was in the first quarter and it's been ramping up. So you'll see an impact in this quarter and it will build throughout the year. But this is remember, Black is a large, obviously a large leading fintech with already significant volume. This is not this is the adoption of them into our ecosystem and then their continued growth structure.

Frank Schiraldi

Okay. And you said some of that revenue was actually in the first quarter. You are saying in the quarter know, the first quarter is a small amount of that revenue and yes.Okay. And then just on the revenue book, obviously bringing that loan into nonperformers was to be expected and now in Oreo and you talked about stabilizing it over some time. I guess just curious why obviously, you're as you noted, you're open to bids, if you know if you can move faster and move faster. I'm just curious, given the LTV on an as-is basis on why you don't think it doesn't sound like you believe that's the more likely scenario to sell in the near term before completing the improvements, if you could just kind of talk us through that a little bit.

Damian Kozlowski

We go down all pads. So obviously, things like this. We've done obviously, loan since 2016. We've had virtually no issues that were similar to this. This would happen because of the shocks that were experienced in 2021 and 22 and the markets are at a higher rate. So the buyers out there might not be as as numerous as they were in the past, but definitely we go down all tracks. So there is interest in the assets that we have. And if we can affect a reasonable sale, we will. But we can't wait for that. We have to we want to protect the value of the property and monetize it as quickly as possible.
And so when in these situations, when they do occur, you have to go very quickly to preserve property. You get in there immediately and complete the work remember, this is a project that's been out into a little troubled, but it's fairly far along. There's some work that needs to be completed. It's unfortunate we'd never want to get into a situation where we want our borrowers and our sponsors to be able to complete the project obviously and monetize the property either through a sale or through refinancing with the bank or the GSEs. And so we need to step in in the, you know, the last third of the project, we need to finish it and monetize it. If we can do it earlier through a sale. We'd be happy to do that.

Frank Schiraldi

Okay. And as you stabilize, as you know, finished improvements, how does the how are the costs there? How is that expense actually for the construction for the improvement, the carrying costs of the building, how is that accounted for in any sort of expectations along those lines of what that those numbers could look like.

Damian Kozlowski

Paul?

Paul Frenkiel

Yes. So we have a budget, a detailed budget. So we have the estimated cost. And in fact, some even after those expenditures, the 82% and loan to value will be preserved. So the costs they get capitalized on there are some reserves available, so it won't be dollar for dollar on. But as I said, the VLTV. will still be maintained. And as Damian said, as construction as construction as rehabilitation progresses as units are re-leased, the on the value to prospective buyers increases dramatically. And that's that's how we're planning to dispose of the property.

Frank Schiraldi

Okay. So are you saying just given the capital expenditures budget, the reserves that are still there in that in that term plan that we really shouldn't expect to see a tick-up anywhere else in terms of carrying be.

Paul Frenkiel

And then they'll be they'll be some increase on to the amount we have on the books because those expenses will get capitalized to the extent we don't have reserves, but it's not going to be disproportionately large. It will be at most. It will be under 10%.

Damian Kozlowski

Yes. And remember, as you lease up, obviously, the cap of the LTV actually goes down because as you expand you release units and they kind of offset each other.

Frank Schiraldi

Right. Okay.

Damian Kozlowski

So by the time you're done, you actually end up with this is why these portfolios are so good because when they do get it's not like the first day that these loans have an issue, they're going to have an issue at the end of the project at the beginning of the project. So obviously, if we get a position after a couple of years have to actually step in. There's probably a lot of work that's been completed, right? There might have been some problems, but then also the sponsors probably put additional capital it already and now has a problem raising additional capital.
So usually when we're stepping in, it's not necessarily and we don't want to do that. We want our borrowers and sponsors to renovate. These are very important units to the economy. These are workforce housing. This is they're very hard to replace these units. So this rehabilitation processes are essential to occur, whether it's through us or the government or from one of the third party government agencies. So it's a it's an important part for us to be, and we think as a bank to be involved in and we want our sponsors to be successful so they can go on and we have other buildings. It's unfortunate we have to step in. But we don't think we're going to take we look, we scrutinized the portfolio. We do not think there are losses in the portfolio.

Frank Schiraldi

And then just lastly on that front, obviously we'll get more information in the Q, which is a little ways out. But in terms of any specifics you can give us on the Revel book in terms of any other additional delinquencies you're seeing in that book that will pop up in numbers in the Q and any guide or any sort of detail you give us around criticized classified balances quarter-over-quarter.

Damian Kozlowski

So like I was saying before, I'll let Paul speak to until, but we had like a way of like a wave, right? And it was originating from the from the shocks I talked about, and this is towards the more the last third of these projects where people were the takeout is not the problem because GSEs are still taking out these loans in the 6% range. We know a little bit above that now, but so the takeout financing isn't the problem. It was the it was the inflation shock and the problem raising money and a higher interest environment, especially when you've already raised additional capital to make up for that interest rates, you have it for that inflation shock. So that wave has subsided substantially. So there may be a second wave, of course, but and it should while we might have some more credit migration, it should come it should come down as we complete these projects and and monetize these assets. Paul, would you like to add anything?

Paul Frenkiel

Yes. So Frank, the ones, the ones, the loans that are obviously the concern are the substandard, they have some issue and so forth. And so what we do is if there is an issue, we get an updated appraisal and as I said before, the LTV on our substandard loans based on the updated appraisals, still 79%, as is 76% on as stabilized, though, again, we have significant protection against loss and our experience and the experience of others in these portfolios. And if you look at the statistics you do see in difficult times and difficult stressed economies, you do see issues arise where you do have some increases in classified loans increases in delinquencies.
But the losses you don't have to take our word for it just look at the third party appraisals, they're still retain their value. And this is the portfolio we'd like. If you look at what some commercial real estate, it's going to be stress but still come out of this well, it's certainly not going to be office buildings and so forth. But if you just think that it's think about workforce housing, the housing shortages on the fact that these rents are very reasonable compared to obviously higher higher end rents.
This is one that we believe this is the category that we chose purposefully to be in two to resist losses and provide protection against losses even in these times and you don't have take our word for it. We've always been very open with the LTVs, the portfolio as a whole. We've been for years disclosing that that LTV is at origination of 70%. And even now with the stresses on these on the substandard loans, it's still been sustained at a 79% LTV. So that's a that's why we believe that, as Damian said, that we don't see losses in the portfolio.

Frank Schiraldi

Yes. No, I certainly appreciate. And I guess just obviously, NPA migration is something people pay attention to. And so people are going to start wondering what NPA balances could look like next quarter and so on. Delinquencies today could turn into NPAs tomorrow. So I'm just trying to get a sense if there's any any large, you know, obviously blessed the K, you had this large delinquency and now it's into NPAs, which makes sense. And so just curious if there's anything bulky in that book to call out on that delinquent now and you think it could potentially bonds and nonperforming flush OREO status next quarter?

Paul Frenkiel

Well, that $39.4 million is the big one. So and where we've been discussing that and and you have like all the information, I think that that we have two to ascertain that that there is not loss indicated in that or property?

Frank Schiraldi

Yes. Okay. So I guess we'll get the criticized classified the delinquency numbers.

Paul Frenkiel

We'll get that with the keel Yes, of course, not to guess.

Frank Schiraldi

And then just lastly on just buybacks, obviously, you doubled the authorization for this quarter. Just kind of curious how you think about buybacks going forward any sort of some color on, you know, it seems I guess it seems to me like the plan right now is to return to the more normalized $50 million in the third and fourth quarters, but just wanted to see if there's any color around your thoughts there around repurchases here?

Damian Kozlowski

So we, you know, obviously, we are very robust ability to generate capital and our ratios have been moving up even with the enhanced buybacks. So it became we're very, as you know, very into the systematic approach where we kind of give it to a third party and they buy the shares on a rigorous daily basis. That doesn't distort the market, but it became clear to us. We had enough capital that they had a significant increase in our metrics ROA.
And so it doesn't we don't think it aligns our P/E ratio being today under 10 and our ROE being 28% and obviously our efficiency ratio at 38%, ROA at 3%. It just doesn't historically at refresh, reflect PE. our ratios at this profitability. So it became very enticing. We think for our shareholders to to increase our buyback and we had plenty of capital ROE. So we wouldn't even with the 900 million of additional share repurchase and the growth in our balance sheet, we will have enough capital even with this buyback to have healthy capital ratios. So it became kind of obvious for us. It was the right thing to do even though we generally don't do one-offs, but it seems very appropriate to do it this quarter aren't.

Frank Schiraldi

Thanks for the color.

Operator

Thank you. At this time, I would like to turn the call back to Damian Kozlowski for any additional or closing remarks.

Damian Kozlowski

And thank you, operator, and thank you, everyone, for joining us today.

Operator

Operator, you can disconnect the call this does conclude the Bancorp Q1 24 earnings conference call. You may disconnect your line at this time and have a wonderful day.