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| We are also seeing a number of opportunities to reduce CRB's interest rate expense, for the simple reason that we are able to offer better terms than our customers are able to secure from our competitors |
| This was a strong quarter for our company, and we believe our ongoing financial institution partnerships are enhancing our position as the premier provider of banking solutions for companies operating within the legal cannabis industry |
| Going forward, we believe we will see a continued increase in loan activity based on our ability to consistently increase deposits and believe this business segment will become even larger contributor to our total revenue |
| Turning to our key metrics; following our record year first quarter deposit activity, we were equally successful in the second quarter, increasing total deposits by 36% to $1.1 billion in the second quarter |
| I am pleased to report that for a second consecutive year, we processed a record amount of quarterly deposits, over $1 billion, through our partner financial institutions, allowing us to further scale our business, which is driving our top line growth |
| In addition, our deposit growth is driving our ability to expand into new high-margin revenue channels and achieve greater levels of interest and investment income as depository, as well as depository fee income |
| We are excited to share the benefit of large regional banking access with our Safe Harbor clients |
| From a market standpoint, we are seeing solid credit opportunities, focusing on real estate deals where our loan-to-values are under 65% and range from $1 million to $10 million |
| One of the keys to Safe Harbor's long-term success is the growing strength of our partnerships with cannabis-friendly financial institutions |
| Also, given the current rise in interest rate environment, we are experiencing the benefit of increased investment income on deposits held at our financial institution partners with no additional risk |
| Given the significant increase in our access to deposit capacity combined with the record number of onboarded deposits this quarter, we have increased our balance from which to land, and are advancing a number of new opportunities to grow the number and value of CRB accounts |
| We expect these partnerships will continue to provide Safe Harbor with additional growth opportunities |
| Safe Harbor Financial, now in our 9th year, prides itself on being the most reliable long-term financial service provider to the cannabis industry, while building out our new services |
| In the second quarter, we strengthened our pipeline of nationwide lending opportunities to over $300 million and originated over $15 million of senior secured loans for CRPs |
| The lending arm of our business is rapidly growing, and we are seeing greater contribution of quarterly revenues coming from loan interest income and fees, reducing our dependence on depository income |
| And for the 6 months ending June 30, 2023, total revenue was $8.75 million, representing more than a 145% increase from total revenue of $3.5 million in the comparable prior year period |
| Our objective remains focused on establishing a solid foundation of real estate loans, building our relationships with our clients and then considering expanding the lending base, as they succeed and grow |
| Our second quarter fiscal 2023 total revenue was $4.6 million, representing a more than 145% increase from total revenue of $1.85 million in the comparable prior year period |
| Finally, I would like to share our plan to further scale our revenue and growth opportunities, that we believe will help drive us to the next stage of growth |
| A prime example of the strength of our growing banking network is the recent partnership we announced with Five Star Bank in May |
| Lending remains a high priority as we look to start doubling production between now and year-end, increasing revenue to support other growth activities |
| We have been deeply focused in the last quarter on leveraging the unique capabilities of our proven fintech platform and our expertise in providing licensed cannabis-related businesses or CRBs, access to the most robust suite of compliant financial solutions to support their financial growth |
| Account growth activities while having always been a primary focus, has been organized to increase the efficiencies, allowing our staff to double present production, while streamlining the entire onboarding process |
| We will certainly realize the benefits of such actions in our bottom line by year-end |
| The increase in total revenue was driven by higher investment income, loan interest income and deposit income |
| As a part of the ongoing Abaca integration, we have nearly completed our post-acquisition integration, which allowed for greater efficiencies and the reduction of redundancies |
| Currently, we are working diligently to ensure our shared customers with the Central Bank of Arkansas are properly supported through the transition and have uninterrupted access to all the Safe Harbor services upon which they've come to rely |
| M&A opportunities continue to present opportunities for our expansion, and we will continue to focus on acquiring other portfolios that will accelerate account growth, deposit growth and lending capacity |
| With our managed deposit base and number of active accounts continuing to grow during the second quarter of 2023, deposit fees increased by 90% to $2.56 million compared to $1.34 million in the same period last year |
| Not only does our relationship with this top-performing MSO advance our steady credit origination and placement activity into the third quarter, it also supports our effort to further diversify our collateral |
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| Despite the industry's strong growth, CRBs continue to face barriers due to the complexity of state-by-state cannabis regulations, a lack of management standards, high risk and banking limitations due to the Bank Secrecy Act |
| However, we will see some top line reduction at the revenue level |
| And for the 6 months ending June 30, 2023, the company reported a net loss of $19 million compared to net income of $838,000 in the first half of 2022 |
| While we are going to be taking a very conservative approach to how we view the potential revenue reduction due to the termination of our agreement with Central Bank over the next 2 quarters, we anticipate limited net effect for our overall business |
| This is particularly important, given the state of the industry, where lenders are scaling back their loan activity, especially acute in the cannabis industry |
| Consequently, net loss in the second quarter of 2023 was $17.6 million compared to net income of $336,000 in the comparable prior year period |
| The $16.9 million impairment charge in the second quarter stems from the termination of the relationship with Central Bank |
| It's also due to the fact we don't charge additional onerous fees or other hidden fees |
| We are confident these additional products and the revenues derived from them, were more than offset by any loss of revenue from the dissolution of the relationship with Central Bank of Arkansas |
| Each forward-looking statement discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements |
| While we continue to grow our financial institutions partner network with larger multibillion-dollar banks with national charters, we recently terminated our banking relationship with Central Bank of Arkansas |
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