The Bancorp, Inc. Q2 FY2025 earnings call

• The fintech ecosystem drove revenue growth, with GDV up 18% y-o-y and fee/interest income from fintech activities up 30%.
• Announced a 5-year expansion of the partnership with Block, adding debit and prepaid card issuance for Cash App customers, starting as early as Q1 2026.
• Increased share repurchase program to $500 million over 18 months, with $300 million planned to be purchased in 2025.
• Maintained 2025 EPS guidance at $5.25 and targeted at least a $7 EPS run rate by end of 2026 through fintech growth, share buybacks, and efficiency/productivity gains.
• Noninterest income excluding credit enhancement was up 32% y-o-y, with fintech fees contributing significantly. Loan balances grew, with consumer fintech loans seeing substantial increase, and average fintech deposits rose.

The Bancorp earned $1.27 per diluted share in Q2 2025 with year-over-year revenue growth of 11% (excluding fintech loan credit enhancement income) and expense growth of 11%. The fintech ecosystem was the driver of revenue growth, with GDV climbing 18% y-o-y and total fee and related interest income from fintech activities growing 30%. Noninterest income excluding consumer fintech loan credit enhancement was $40.5 million in Q2 2025, 32% higher than Q2 2024, with total fintech fees accounting for most of the increase. Loan balances grew 17% y-o-y, with consumer fintech loans increasing 871% y-o-y to $680.5 million. Average fintech solution deposits for the quarter increased 20% to $7.76 billion from $6.44 billion in Q2 2024. Net interest income was 4% higher than Q2 2024, and noninterest expense was $57.2 million, 11% higher than Q2 2024.

• Maintained 2025 EPS guidance at $5.25.
• Targeted at least a $7 EPS run rate by the end of 2026 through fintech revenue growth, share buybacks, and efficiency gains.
• Increased share repurchase program to $500 million over 18 months, with $300 million planned for purchase in 2025 and $200 million in 2026.

• Balance sheet management issues related to deposits, including tax receipts and savings deposits being taken off balance sheet.
• Challenges in the REBL portfolio with loan maturities, borrower extensions, and substandard loans; visibility into borrowers' business plans is important.
• Aubrey property challenges, including ongoing renovations, appraisal discrepancies, and deposit disputes.
• Minimal credit migration in the SBL book, but some minor tick up observed.

Q: Congratulations on the new partnership with Block and Cash App. Can you provide some details on if this is an entirely new product for them or if you are a new sponsor for a current product?

A: No, this is card issuance. Already do rapid funds transfer. This is one of the big programs with Block, expected to enhance GDV and fees.

Q: Was that kind of an action by you to manage the balance sheet? Or what was the driver there?

A: Lower deposits due to tax receipts, savings deposits off balance sheet, and insurance deposits running off.

Q: With respect to the Aubrey, I believe it was undergoing some renovations before the prior contract was terminated. Are those renovations continuing? And are you guys funding those?

A: Yes, renovations continuing, occupancy up, and funding some, with hope to recapture deposit and see gains if leased up.

Q: I have a few questions about the REBL portfolio. First is, given where interest rates are, would you expect that the majority of the $1.4 billion would be refinanced by third parties?

A: If borrowers are on their business plan, we're happy to extend loans; most stabilized properties can exit through GSEs or 5-year fixed, working through maturities diligently.

Q: I wanted to follow up on the question about the earnest money. How quickly should this earnest money litigation be resolved?

A: Hoping to resolve in the next quarter, believing it's clear cut that deposits should come to us.