Bancorp Q2 2025 Earnings Report

Bancorp EPS Results

• Actual EPS: $1.27
• Consensus EPS: $1.26
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Bancorp Revenue Results

• Actual Revenue: $138.00 million
• Expected Revenue: $94.87 million
• Beat/Miss: Beat by +$43.13 million
• YoY Revenue Growth: N/A

Bancorp Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: After Market Closes
• Conference Call Date: Friday, July 25, 2025
• Conference Call Time: 8:00AM ET

Bancorp (NASDAQ:TBBK) operates as the bank holding company for The Bancorp Bank, National Association that provides banking products and services in the United States. It offers a range of deposit products and services, including checking, savings, time, money market, and commercial accounts; overdrafts; and certificates of deposit. The company also provides securities-backed lines of credit and insurance policy cash value-backed lines of credit; investor advisor financing; lease financing for commercial and government vehicle fleets, including trucks and other special purpose vehicles; commercial real estate bridge loans; and small business administration loans. In addition, it offers bill and other payment services; debit and prepaid card issuing services; card and bill payment, and automated clearing house processing services; and internet banking services. The company was incorporated in 1999 and is headquartered in Wilmington, Delaware.

Bancorp Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The Bancorp delivered $1.27 EPS in Q2, representing 21% year-over-year earnings growth on 11% revenue growth (excluding FinTech credit enhancement).
• Positive Sentiment: FinTech volumes remain strong, with GDV up 18% and total FinTech fees and related interest up 30% year-over-year, and a new five-year Block partnership for debit and prepaid card issuance launching in early 2026.
• Positive Sentiment: The company expanded its $500 million share repurchase program, planning $300 million of buys in the remainder of 2025 and $200 million in 2026, funded by core earnings and debt roll-off.
• Neutral Sentiment: Management maintained 2025 guidance at $5.25 EPS and introduced “Project Seven,” targeting a $7 EPS run-rate by the end of 2026 through FinTech growth, buybacks, and productivity gains.
• Negative Sentiment: Credit metrics saw modest pressure in the RE specialty book, with a slight rise in special mention and nonaccrual loans—most notably the Aubrey Houston property dispute and related appraisal timing.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Bancorp, Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Andreas Broslav. Please go ahead.

[Andres Viroslav, Director - IR at The Bancorp]

Thank you, operator. Good morning, and thank you for joining us today for The Bancorp's Second Quarter twenty twenty five Financial Results Conference Call. On the call with me today are Damian Kozlowski, Chief Executive Officer and Marty Egan, our Interim Chief Financial Officer. This morning's call is being webcast on our website at www.thebankcorp.com. There will be a replay of the call available via webcast on our website beginning approximately twelve p.

[Andres Viroslav, Director - IR at The Bancorp]

M. Eastern today. The dial in for the replay is 80264 with a passcode of forty five thousand two hundred eighty five. Before I turn the call over to Damian, I would like to remind everyone that our comments and responses to questions reflects management's view as of today, 07/25/2025. Yesterday, we issued our second quarter earnings release and updated investor presentation.

[Andres Viroslav, Director - IR at The Bancorp]

Both are available on our Investor Relations website. We will make certain forward looking statements on this call. These statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mentioned today. These factors or uncertainties are discussed in our reports and filings with the Securities and Exchange Commission. In addition, we will be referring to certain non GAAP financial measures during this call.

[Andres Viroslav, Director - IR at The Bancorp]

Additional details and reconciliations of GAAP to adjusted non GAAP financial measures are in the earnings release and the investor presentation. Please note that The undertakes no obligation to publicly release the 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'd like to turn the call over to The Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Thank you, Andres. Good morning, everyone. The Bancorp earned $1.27 per diluted share in the second quarter on year over year revenue growth of 11%, excluding FinTech loan credit enhancement income with expense growth year over year of 11%. EPS growth was 21% year over year. Our FinTech ecosystem continued to be the driver of revenue growth.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

GDV climbed 18 year over year with total fee and related interest income growth from all FinTech activities grew 30%. On July 14, we announced a five year expansion of our relationship with Block in which we added debit and prepaid card issuance and related services for Cash App customers. Subject to program implementation timelines, the additional services are expected to begin as early as the first quarter of 'twenty six, and we expect this program to enhance growth of GDV and fees into the future. We also announced a substantial increase to our share repurchase program over the next eighteen months to $500,000,000 beginning in the third quarter of 'twenty five. This buyback will be funded by core earnings growth and the replacement of maturing senior unsecured debt at the Bancorp Holding Company of $100,000,000 aggregate outstanding with approximately 200,000,000 of new senior unsecured debt at the Bancorp holding company.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We anticipate that $300,000,000 of shares will be purchased for the remainder of 'twenty five. This is an increase of $225,000,000 or 300% over the current buyback of $75,000,000 for the last two quarters of twenty twenty five. In 2026, 200,000,000 worth of shares are planned to be purchased with $50,000,000 of purchases each quarter. Lastly, we are continuing to maintain our guidance of 5.25 earnings per share for 2025. We also are announcing Project seven, a project in which we are targeting at least a $7 earnings per share run rate by the end of 'twenty six.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We plan to accomplish this goal through fintech revenue growth, buybacks of shares and efficiency and productivity gains by reallocating and or reducing resources where appropriate. I now turn the call over to Marty Egan, our Interim CFO.

[Marty Egan, Interim CFO & Chief Accounting Officer at The Bancorp]

Thank you, Damian. Excluding consumer fintech loan credit enhancement income, noninterest income for the 2025 was $40,500,000, which was 32% higher than the second quarter of two thousand twenty four. Total fintech fees accounted for most of that increase. Prepaid debit card, ACH, and other payment fees increased 14% to $31,700,000 over that period, and consumer credit fintech fees increased $3,800,000 to $4,000,000. In the second quarter, credit enhancement income was $43,200,000 and the provision for consumer FinTech loans was also $43,200,000.

[Marty Egan, Interim CFO & Chief Accounting Officer at The Bancorp]

Overall, loan balances grew 17% year over year, while loan balances excluding consumer FinTech loans grew 6%. Consumer fintech loans increased 871% year over year to 6 and $80,500,000 and 19% over the linked quarter. Average fintech solution deposits for the quarter increased 20% to $7,760,000,000 from $6,440,000,000 in the second quarter of two thousand twenty four. Net interest income was 4% higher than second quarter two thousand twenty four. The second quarter net interest margin was 4.44% compared to four point o seven for the first quarter of two thousand twenty five.

[Marty Egan, Interim CFO & Chief Accounting Officer at The Bancorp]

The 2025 included a $3,100,000 of interest on CRE two, which was repaid in that quarter as a result of sales underlying collateral. Additionally, fees on the majority of our growing consumer fintech loan balances are recorded as noninterest income, which impacts both net interest income and net interest margin. Non interest expense for the 2025 was $57,200,000, which was 11% higher than the second quarter of two thousand twenty four. The increase included a 10% increase in salaries and benefits. Additional details regarding our loan portfolios are included in related tables in our press release as our earnings contributions of our payments business.

[Marty Egan, Interim CFO & Chief Accounting Officer at The Bancorp]

I'd now like to turn the call back to Damian.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Thank you, Marty. Operator, could you please open the lines for questions?

[Operator]

Yes. Thank answer session. And our first question is from Tim Switzer from KBW. Your line is now open.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Good morning. Thank you for taking my questions. 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? Then any color sorry. Go ahead.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

No. Go ahead.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

I was just gonna ask, like, any color you can provide on what exactly you'll be doing? Like, is this part of your rapid funds transfer offering like your other program with Block?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

No. So we no. This is the card issuance. So we already do the rapid funds transfer. There's 15 use cases that were transferred Wells Fargo during last year, and you saw that growth in our other payment and ACH line of our business.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

This is the entire portfolio of, you know, the card issuance per block. Whether they use us exclusively or, like, in many other cases, they use, you know, another bank, We'll see. But this is one of the big programs. You know, there are three dominant programs, Chime, PayPal, and Block. And so we now have the RFT business and the card issuance business.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

This is as everyone knows, this is one of the major players in the fintech world, and they have over 50,000,000 customers. So it it's very meaningful, to, it will be very meaningful in the future to both GDV and fee growth.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. So this is for the Cash App card Correct. Issuing. Okay. Okay.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Now are you supplementing Sutton Bank is currently the issuer or replacing them?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Well, the mandate is to, replace that volume over time.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. Okay. Great. And then I also wanted to ask about the lower deposits this quarter. Was that kind of an action by you to manage the balance sheet? Or what was the driver there?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Correct. That's, there was a couple of, that there's tax receipts during that part of the year, And we actually took some, savings deposits off balance sheet, and we also had $500,000,000 of, insurance deposits through our corporate payments partners for the California wildfire. So that's running off, plus the tax season. It was a very big tax season this year. And then we took some of the excess liquidity also off balance sheet. So that was all balance sheet management driven.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Got you. Okay. And then we saw the criticized loans and non accrual step up a little bit in the rebel book. Can you with the bulk of, that portfolio reaching maturity over the next year, can you provide some color on borrower's ability to make the balloon payment? How many have taken, you know, the one year extension versus paying off the loan entirely?

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

How how many needed to inject additional equity or find another lender?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. So this is it's not like a a point in time. We're always working with these borrowers, so we have a lot of visibility as to their business plans and whether they plan to recap, or do something else potentially if there's a problem or just simply to repay or extend the loan. So in the case where they're doing their business plan and need a little bit more time, there's kind of a natural extension, and that's gone up, over recent times just because of market conditions, which we're fine with, obviously, if you have a performing property and it's cash flowing and it's met all its requirements, extensions are are a good thing for us. In the case, where and and what what what happens is that you see this way before.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

While many of these loans were done in this vintage, we have a lot of visibility. So if there's any issues with that, they would have already appeared in the, criticized or substandard assets. So it's not like there's this the date, and then we don't know what's going on, and we don't know what's gonna happen with the borrower. So we've been working through that over the last last year. So you don't you don't we don't expect a big another spike in substandard assets.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We had kind of a spike in the third, fourth quarter of last year, went down a little bit in the fourth quarter, and it's been a little bit stable. Hopefully, we'll be able to work through that the next it's taken a little longer than we want. We had the Aubrey situation where we weren't able to close the property, but we are hoping over the next two quarters that will go down meaningfully.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay, great. Thank you, Damian.

[Operator]

Thank you. And our next question is from Joey and Janice from Raymond James. Your line is now open.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Good morning. Good morning, David.

[Joseph Yanchunis, Senior Equity Research Associate at Raymond James Financial]

So I I I was hoping to kinda continue the credit discussion there. I you know, with respect to the Aubrey, I believe it was undergoing some renovations before the prior contract was terminated. Are are those renovations continuing? And then are you guys funding those?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yes. So there there are about 20 units available to rent. So the occupancy has gone up dramatically over the last eight months from the mid thirties to the mid sixties. And so there's already 20 units that have been totally reconditioned that are ready to be leased out. There are some additional work to do, but we're in active discussions with potential purchases of the property, and that'll really depend over the next six weeks.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

If we don't get that traction to dispose of the property, then we'll probably finish the the balance of the units. I think about it's in the 10 to 15% range. We will fund it. Obviously, that we have the deposit, hopefully, we'll be able to recapture that. And then, the equation would be at that point if we levered, excuse me, fully, leased up the property, then, we would look not only to get out of the, base loan that we have, but we would also look to get a gain on the property at that point if we were able to lease it up to its to the 90% region.

[Joseph Yanchunis, Senior Equity Research Associate at Raymond James Financial]

I appreciate that. And one more on your expanded partnership with Block. Are are there gonna be any associated expenses leading up to the new card program?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We're very yes. So it's our base infrastructure is very leverageable in many of the categories, but there will be incremental hires. So there won't be a lot. We'll have to and we're getting a lot of efficiencies over time and productivity enhancements through through things like machine learning. Hopefully, AI will kick in in the next year or two, but there will be additional resources.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So there there might be a little bit extra in the third and fourth company quarters ramping up, but usually as the volume that's maybe a few, but when the volume starts kicking in, then we'll have to assess with adding additional resources. But then, of of course, we'll be getting large, you know, volume and revenue increases, so it'll be offset, obviously. So a little bit of build, maybe. But then when the volume comes in yet, we'll have to add additional resources depending on where we are with our productivity gains.

[Joseph Yanchunis, Senior Equity Research Associate at Raymond James Financial]

And then just kind of sticking with the productivity gains, you know, you mentioned in your release, you know, targeting, you know, 4Q twenty six EPS of at least a dollar 75, which will be driven by several factors, including, you know, these productivity gains. Can you talk about, you know, where you see the benefits of AI impacting your business? And it sounds like that might be a, you know, latter '26 event, if I kinda read the

[Damian Kozlowski, CEO, President & Director at The Bancorp]

tea leaves right in your prior answer. Well, there's two there's two things. That's one thing. The first thing, though, is that we really have had two diff two banks kind of app operating synergistically, but two banks. One was more of a traditional bank while we were levering up the bank spread, increases dominated kind of our profitability, but that's switching to our you know, it's not no longer a payments bank.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

It's really a a middle office fintech and technology platform, that ecosystem that we built for the fintech industry. And so that is rapidly, obviously, growing very, very quickly, adding new partners and product sets. And so we're becoming much more focused on that fintech bank. So as that happens, we've already said for years that we're gonna take some of the traditional bill businesses off the balance sheet that'll be lower, on balance sheet for those businesses, and we'll need to reallocate resources as the fintech business increases its use of the balance sheet. Right?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

In in many cases, that's just a reallocation. We wanna get to a situation in, three years, five years where we add a couple 100 people. We go from 800 to a thousand people. But when we double the net income, we're not gonna go from 800 people to 1,600 people. Right?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So some of that is that we reallocating resources from the traditional to the fintech bank. Now on the AI front, there's so much happening in this space. One of the key areas where it's likely that we're already using tools. It's in our we're using broad tools for people to get more productive, but we're using tools and say for legal contracts, etcetera, where AI is is is very well suited. But going into the future, there are things like SARS filing, you know, doing the initial work where there could be big productivity gains.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

And so we're not gonna be the first person to do it, but we're already studying those things, and we really want to lean into it in '26. So we're looking for use cases very aggressively. We we don't of course, these are models, so they have to be tested and they have to be robust. We have to make sure the quality control is there and testing is there, but we think it's gonna have an impact going into especially in part of '26 and '27. They're becoming just better tools.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We're finding out, you know, use cases are being tested in the industry, and we think it'll make good gains, which means that, obviously, as we grow to the first point, we won't have to go from doubling the amount of people into the future when we have sizable gains in GDV, which we expect. Right? We've been over trend for a while. Adding block is gonna add another leg to the GDV growth, and we wanna make sure that we can resource that very effectively and productive productively with the best use of tools in areas like AI.

[Joseph Yanchunis, Senior Equity Research Associate at Raymond James Financial]

Very thorough answer. I appreciate you taking my questions this morning.

[Operator]

Thank you. And your next question is from Eric Longach from Cygnus Capital. Your line is now open.

[Analyst]

Hey. Good morning, guys. Thanks for taking my call. I have a few questions about the Rebel Rebel portfolio. First is we haven't seen your June yet, but from March, the disclosure was roughly 1,400,000,000.0 of Rebel loans would be maturing within the next twelve months.

[Analyst]

And so my first question is, you know, given where, interest rates are, third party capital availability for these types of properties, would you expect that the majority of that 1,400,000,000.0 would be refinanced by third parties? Or could we instead expect that you guys will end up having to extend and and modify those loan maturities?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Well, once again, if they're on their business, we have two one year extensions available to borrowers. And if they're on their business with the vast majority are on their business plan, cash point properties, we're more than happy to extend those loans with the if they wanna wait for lower interest rates. Most of the exits of if they're stabilized properties, can exit, through the GSEs. So that's the main refinance, or the, you know, five year fixed. It's really about their when you have a maturing performing loan, that's really about their the sponsors planning.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

You know, are they waiting for an interest rate decrease or not, which is obviously on top of mind for everybody. The the ones once again, we're working with these borrowers all the time, so there's not while there is a lot of, kind of a maturity wall because a lot of these were done, a year pretty much into the pandemic when we restarted the business. It's it's a wall that we understand really well, and we've already identified. So you see the the universe of it's just a handful of loans that are the substandard category. Those already been identified if there's a real issue with the business plan.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So we we're working through it diligently. We don't expect there to be a lot of increases in substandard category. We think we've peaked, and we think that over the next few months, we'll work through that maturities, and, we'll also see a decline in substandard loans.

[Analyst]

Okay. Appreciate that. And since you mentioned the sort of peak in, you know, substandard, you know, loans, I'm going back to sort of q three of last year where I think you made some similar comments around not expecting to see, you know, a significant increase in criticized Rebel loans. But looking at the disclosure from the press release, it looks like non accrual loans did pick up sequentially as did special mention and substandard went down a little bit. To help us understand kind of, you know, versus six months ago when we were all together on the q three call, what's kind of driven the higher nonaccrual, higher special mention, loans versus your prior view around q three of being the prior peak?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. Well, that well, the first thing is the Aubrey. We expected that to be closed at off the books. There's a lot of momentum on that property, and we were holding, obviously, a deposit on that property, so that was a surprise. So that's the first thing.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So that would have rolled off and, obviously, substandard or or or e prop would have went down. The the nonaccrual is actually in a recap process, so we're hoping to get that off the books also next quarter. It took a little bit longer than we thought. And as a matter of prudence, we put it in nonaccrual until that recap was done. It's just taking longer than we had expected to reduce the sub standards.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

It hasn't really increased. The classified assets have gone down a touch, so we have a little bit of movement in other categories. But once again, we're working on it. It's a handful of loans. It's very manageable.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We have a lot of visibility. We're working very proactively. And when you you have these situations, sometimes they just take a little bit longer and to to resolve. So we're working very hard to do that.

[Analyst]

Okay. No. Appreciate that color. And just, last couple of questions, quick ones on the Aubrey. I noted the new appraisal that was done, 51,000,000 as is and ballpark 59,000,000 as stabilized.

[Analyst]

If if you could help us reconcile those higher appraised values versus the the prior one, which is something in the 40 millions range, reconcile, you know, why the appraisal went up in value when you've gone through a process now for the better part of fifteen months where you haven't been able to find a buyer at a value even at the outstanding loan amount. Meaning, what really what I'm asking is that market tests versus, you know, fund in a spreadsheet, you know, putting a cap rate on NOI, help us reconcile the appraisal versus market test process.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. Well, we had a buyer, and they put actually money into the property and put a sizable deposit and couldn't close the transaction, which is unfortunate. But during that time, we we substantially changed. A lot of investment went into the property. It went from a 35% occupancy all the way up to the mid sixties, and, obviously, a lot of visibility on the rents that are realized.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So what people have done, investors have actually done, and you can actually go on the Aubrey Houston website and see it. The property is business as usual. It's in a very different state than it was eight to twelve months ago. And so the appraisal is done totally on a third party basis looking at comps and everything else. So it went up from 48 to, I think, was 51.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So it went up $3,000,000 based on those criteria and, obviously, it stabilized, increased as the properties improved. So we don't obviously we're not the appraiser. That's done on a third party basis. And so because of those metrics, the rents realized, the occupancy, the market conditions, this property is in a good neighborhood. It's it's it's it's obviously in the top.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

At its current state, it's one of our better properties with good amenities and everything. So that is the appraiser's value. That's not ours.

[Analyst]

Okay. And then last question for me, please. You referenced the earnest money deposits, you know, in the dispute with the buyer around who gets that money since the deal didn't close. From a financial statement point of view, how have you accounted for that 3,000,000? Have you kind of reflected a receivable expecting to collect it, or is it somehow there's a reserve on it?

[Analyst]

If you can help us understand how you've accounted for that, please.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. So it would be a because of the appraisal at K Bin, it would be if we take that if we get that deposit, they've objected to it, which is, you know, we don't think we think we will get that deposit, but you can object to it in these situations. So it will be income. It hasn't been recognized as income yet, because of, it's been disputed, but we expect to get that, and that'll be realized in income.

[Analyst]

Okay. Thank you.

[Operator]

Thank you. And our next question is from Tim Switzer from KBW. Your line is now open.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Hey, guys. Thanks for letting me back in. I I wanted to follow-up on the question about the earnest money. How quickly should this earnest money litigation be resolved? And, like, what is the legal process for that?

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

You guys pretty confident you'll be retaining all the money currently in escrow?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We hope so. I mean, it was I think we think we have a clear it's very clear. I mean, there there was a deposit put down for the purchase of the property. The, of course, you get a situation, you're gonna get an objection. And so it's really up the court to weigh the evidence, but we believe it's pretty clear cut that, that the deposit should come to us without, you know, a lot of delay. We're hoping to resolve it in next quarter.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. Good to hear. And then outside of the Rebel book, there there's a little bit of an increase in NPAs. It looks like it was largely in the SBL book. Could you provide some color there? We've seen across the industry for small business lending. There there's been a little bit of credit migration.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. It was very little. It was one, you know, one or one big one, and it it really wasn't a lot. We're we aren't seeing a deterioration really in the portfolio. I mean, it's very low.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

And and, obviously, in these cases, there's many of these cases, there's backstops, obviously, through the SBA program. So we're not worried about that. There was a little pickup. The main focus really is, we think we're in good shape on the SBA and the leasing portfolio. We had a little trucking, like everyone else did, issues in the leasing portfolio, and that's kind of run off.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

We're not seeing the same thing anymore. That's kind of we don't have that much left either in that space. So those portfolios seem to be in very good shape. The the main focus has been getting those substandards down in the Rebel portfolio, but also the maturity. What people see as a wall, but we see more as a very you know, a twelve month process of working with buyers to refinance or extend their loans.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

So it's it's we think we're in good shape in that area at this point.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. And then if I get one more. You you guys are bringing on a lot of volume with the new programs with Chime, new partners like Block. How much more capacity do you have for your new partners and new programs? There's obviously a lot of demand out there.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

So just wondering, you know, if you guys are still able to continue taking share.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Yeah. Well, the share is determined by who you have in your portfolio. Do you have the, you know, the winners in the fintech space? A lot of this in in many of these areas, it's been decided. And so and you see it by looking at commercials during any sporting event.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

You'll see you'll see these commercials. Many times, our name will appear on the bottom. We have built an ecosystem where we could have five times the volume that we have today. We have a process to take the deposits off the balance sheet or way of working with our partners where we have clearing accounts. You know, we've had this we've been building this since 02/2018, really focused on building this very you know, we're doing the entire tech stack, we're doing our infrastructure so that we can accommodate dramatically higher gross dollar volume.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Now to be honest, we never envisioned five years ago that would be this much opportunity. And with the addition of Block, having the three largest really, the the three largest digital wallet neo banks, which dominate the marketplace with with marketing spend and everything, you know, and have other opportunities with those three that go beyond that, is really a big driver. Right? And but that's across our verticals. Do you have the winners in these fintech spaces?

[Damian Kozlowski, CEO, President & Director at The Bancorp]

In many cases, we do. And so they have disproportionate opportunity out there because they have the ability to invest in their businesses with marketing spend. And we we believe we can support it. You know, you know, we could have easily multitudes of volume, and we've been preparing for this for the better part of at least five years, if not more years.

[Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)]

Yes, makes sense. Appreciate all the color. Thank you.

[Operator]

Thank you. There are no further questions at this time. I will now hand the call back over to Damian Kozlowski for the closing remarks.

[Damian Kozlowski, CEO, President & Director at The Bancorp]

Thank you, everyone, for joining us today. Operator, you can disconnect the call.

[Operator]

Thank you. Ladies and gentlemen, the conference has now ended. You all for joining. You may all disconnect your lines.

Participants

Executives

• Andres Viroslav, Director - IR
• Damian Kozlowski, CEO, President & Director
• Marty Egan, Interim CFO & Chief Accounting Officer

Analysts

• Tim Switzer, Vice President at Keefe, Bruyette & Woods (KBW)
• Joseph Yanchunis, Senior Equity Research Associate at Raymond James Financial
• Analyst