The Bancorp, Inc. Q4 FY2025 earnings call

• Announced a new brand representing the future of the company. - EPS was $1.28 in the fourth quarter with 11% year-over-year growth. - GDV continued to grow above trend. - Credit sponsorship balances reached $1.1 billion, aiming to add 2 new partners. - Embedded finance platform development on track for early 2026 launch. - Cash App program on track. - Criticized assets and delinquency improved. - ROE was a record 30.4% in Q4 and 28.9% for the full year. - Assets and loan portfolio grew. - Liquidity remained strong. - Noninterest income from fintech was significant. - Provision for loans and net charge-offs decreased. - Noninterest expense included a legal settlement, with costs up 5% excluding the settlement. - Stock buybacks occurred in the fourth quarter.

The Bancorp earned $1.28 per share in the fourth quarter, with EPS growth of 11% year-over-year. GDV (Gross Dollar Volume) grew 16% quarter-over-quarter and 17% year-over-year. Revenue growth (excluding credit enhancement income) was 3% quarter-over-quarter. For the year, total fee growth was 21%. Credit sponsorship balances ended at $1.1 billion, up 40% from the third quarter and 142% year-over-year. Embedded finance platform development is on track for early 2026 launch. Cash App program is on track. Criticized assets declined from $268 million to $194 million (28% quarter-over-quarter). Delinquency decreased from 2.19% to 1.6%. Ending assets were $9.4 billion, up 7% year-over-year. The total loan portfolio increased to $7.26 billion, with consumer fintech loans constituting 15%. The investment portfolio was 18% of assets. Average deposits in the quarter were $7.6 billion with an average cost of 177 basis points, 95% from fintech and 92% short-term. Noninterest income (excluding credit enhancement) accounted for just over 30% of revenue, ~90% from fintech. Provision for loans was $858,000, net charge-offs were $629,000. Noninterest expense was $56.2 million, including $2 million from a legal settlement. The company purchased $150 million of stock in the fourth quarter, with full-year repurchases at $375 million.

• 2026 EPS guidance is $5.90. - Target for Q4 2026 is at least $1.75 per share. - Preliminary guidance for 2027 is $8.25 per share. - 2026 stock buybacks are forecast to be $200 million ($50 million quarterly). - Drivers include fintech initiatives, platform efficiency, productivity gains, and capital return via buybacks.

• Forward-looking statements subject to risks and uncertainties as per SEC filings. - Legal settlement with potential for recovery from the insurance company. - Impact of government shutdown on GDV and balance sheet mix. - Fintech partners obtaining bank charters, but no major impact expected. - Real estate loan criticized assets in various markets with no single concentration.

Q: Outlook and EPS ramp, revenue drivers.

A: Initiatives are on track, credit sponsorship announcements expected, embedded finance launch in early 2026, confident in 2026 Q4 target.

Q: Fourth quarter drivers.

A: Legal fees, government shutdown impact on GDV, credit sponsorship growth timing.

Q: Government shutdown impact on 2026 Q1.

A: Tax remittances positive, good tax season impact.

Q: Off-balance sheet deposits economics.

A: Continue generating deposit growth, optimize funding, potential revenue from excess liquidity.

Q: REBL book refinancings.

A: Some with new partners, recapitalizations, step down in yield but stronger positions.

Q: Aubrey plan.

A: Stabilizing, close to breakeven cash flow Q2, looking for exit opportunities.

Q: Fintechs obtaining bank charters threat.

A: Not a major impact, scalable platform, low cost, partners may use infrastructure.

Q: Off-balance sheet deposits economics.

A: Optimize funding now, potential revenue as deposits grow.

Q: REBL loans criticized.

A: Various markets, no single concentration.

Q: Credit sponsorship partners.

A: Target to add 2 partners, credit sponsorship loans could double, winding down lower-yielding portfolios.

Q: NIM volatility.

A: NIM variability due to deposits and balance sheet mix, expected compression but replaced by fee revenue growth.