Bancorp Q1 Earnings Call Highlights

Key Points

• Management reported strong fintech-driven results with $1.41 EPS (18% YoY), a 35.1% return on equity, and fintech gross dollar volume and revenue growth accelerating (GDV +18% YoY; revenue +15% YoY).
• Loan growth was led by credit sponsorship—ending loans of $7.75 billion (+22% YoY) with sponsorship activity accounting for ~88% of linked-quarter loan growth and rising to ~21% of total loans, with management targeting 30–40% of the balance sheet over the next 3–4 years.
• Management reiterated financial targets and capital plans, guiding to $5.90 EPS for 2026 and $8.10–$8.30 for 2027, and forecasting $200 million of buybacks in 2026 (≈$50M/quarter) with 2027 buybacks expected to be near 100% of net income.

Bancorp NASDAQ: TBBK management used its first-quarter 2026 earnings call to highlight continued growth in its fintech-focused businesses, rapid expansion in credit sponsorship lending, and reiterated full-year earnings and capital return targets, while also providing updates on asset quality and an owned real estate property.

Quarterly performance and fintech growth

Chief Executive Officer Damian Kozlowski said the company earned $1.41 per share and posted 18% year-over-year EPS growth. He added that first-quarter return on equity was 35.1% and return on assets was 2.57%.

Kozlowski said “fintech GDV continues to grow above trend at 18% year-over-year,” and that revenue growth for the quarter—combining fee and spread revenue—was 15% year-over-year. He also said the company’s “three main fintech initiatives continue to move forward quickly and are well-positioned for success,” supported by onboarding new programs and expanding existing ones.

Credit sponsorship lending drives loan growth

Chief Financial Officer Dominic Canuso said ending loans were $7.75 billion, reflecting 9% non-annualized linked-quarter growth and 22% growth year-over-year. Canuso emphasized that credit sponsorship was the primary driver, accounting for 88% of total linked-quarter loan growth and 83% of total year-over-year loan growth.

Canuso said credit sponsorship balances grew to roughly 21% of total loans, up from 15% in the prior quarter and 9% a year earlier. Kozlowski separately noted that “credit sponsorship balances soared in the first quarter to $1.65 billion.”

Management described the mix shift as strategic. Canuso said the company plans to continue moving the portfolio “towards the higher returning, lower cost credit sponsorship business.” Kozlowski told analysts that the share of the balance sheet dedicated to sponsorship loans could rise over time, stating the company originally envisioned about 10% and later “more like 30% or 40% of the balance sheet possibly in the next three to four years,” while noting the Chime relationship is “a very special case” and “very unlikely to happen” at the same scale with many other partners.

Deposits, margin trends, and fee contributions

Canuso said average deposits grew 9% non-annualized linked-quarter, fully funding loan growth, and average deposit cost was 1.7%, down 7 basis points from the prior quarter and 53 basis points lower than the year-ago quarter. He also cited $1.34 billion in off-balance-sheet deposits at quarter-end, up from $850 million at the end of the fourth quarter and $793 million a year earlier, which he said demonstrated continued growth in the partnership-based deposit franchise and liquidity.

Net interest margin (NIM) was 3.87%, down 43 basis points from the prior quarter and 20 basis points from the year-ago quarter. Canuso attributed the sequential decline to the loan mix shift toward credit sponsorship and “the lagged impact of the lower short-term rates on variable rate loans.”

He also provided additional context on how fintech-related fees intersect with margin:

• Fintech lending fees were “the equivalent to an additional 24 basis points of net interest margin,” according to Canuso.
• The company generated $900,000 from deposit sweep fees tied to off-balance-sheet deposits, recorded in other income, which Canuso said equated to another 4 basis points of net interest margin.

During Q&A, Canuso confirmed that deposit sweep fee revenue tied to off-balance-sheet deposits is reported in other income. He also said the first quarter is “seasonally high just because of tax season,” and described the sweep fee contribution as a “secondary or tertiary benefit” relative to other strategies.

On the revenue mix, Canuso said net interest income mix (excluding credit enhancement) was 33%, up from 30% in the fourth quarter and 29% in the year-ago quarter, while fintech fee revenue represented 29%, compared with 27% in both the prior quarter and year-ago quarter. He said the strong growth in credit sponsorship loans is a “leading indicator” of fintech fee growth, both for lending fees and transaction fees due to higher churn.

Program launches and embedded finance timeline

Kozlowski said the company has launched its Cash App program, which “will ramp up during 2026 and 2027 and show progressive accretion” to results. In response to a question about whether the launch contributed to the quarter’s acceleration in GDV, he said there was “very little” contribution in the first quarter due to testing and gating, but he expects it to become “fairly meaningful” by year-end, with additional ramp through early 2027.

Management also reiterated expectations for additional program launches. Kozlowski said the company expects to launch “at least two significant additional programs in 2026,” though announcements depend on partners’ marketing timelines.

On embedded finance, Kozlowski told Raymond James analyst Joe Yanchunis that there is “very little revenue in store for embedded finance in 2026” and that the impact would be felt in 2027 and 2028. He said the company is “close to completing the development of its first operational use case” and plans to announce at least one embedded finance client in 2026.

Credit quality improvements, The Aubrey update, and guidance

Management reported progress on criticized assets. Kozlowski said criticized assets (substandard and special mention) declined from $194.5 million to $163.1 million, or 16% quarter-over-quarter, and he said he expects further progress over the next few quarters.

Canuso highlighted improvement in certain portfolios, “with particular note in REBL and leasing.” He said REBL criticized loans fell $24 million, or 29%, to $59 million from the prior quarter and were down 75% over the last 18 months. Excluding fintech credit sponsorship loans that are supported by “full credit enhancement,” Canuso said the traditional lending portfolio recorded a $1.3 million provision reversal, which he attributed primarily to specific reserve reductions in the leasing portfolio tied to improving borrower performance.

During Q&A, Canuso said about a third of the REBL portfolio is variable rate, contributing to lower yields as short-term rates fell. He also said recapitalizations and refinancings occurred at lower rates because properties were at more stabilized values and involved stronger investors, adding that management expects “much more stability going forward” after working through what he described as a large vintage “bubble.”

On The Aubrey property, Canuso said the company continues to invest to increase occupancy and finish upgrades. He said occupancy of available rooms has been 80% even as capacity doubled, and the company is “just over 60% of occupancy on a total unit basis,” with expectations to reach “near 70% in the very near term.” Canuso said the property is expected to be operating break even by the end of the current quarter, making its impact “neutral.” Kozlowski said the company’s intention is to finish reconditioning remaining buildings, increase occupancy to a stabilized level in the high 80s to low 90s, and then monetize the asset, though he cautioned timing depends on stabilization and potential buyer interest.

Kozlowski reiterated guidance of $5.90 EPS for 2026, including $1.75 in the fourth quarter, and said expected 2027 EPS is $8.10 to $8.30. He also reiterated capital return plans, stating 2026 buybacks are forecast at $200 million total (or $50 million per quarter), with 2027 buybacks expected to be “near 100% of net income.” Kozlowski said the company’s fintech initiatives, efficiency gains (including restructuring and AI tools), and continued buybacks are expected to be key drivers of EPS accretion, while noting results depend on development and implementation timelines in fintech.

About Bancorp NASDAQ: TBBK

The Bancorp, Inc NASDAQ: TBBK is a Delaware-chartered bank holding company that provides a range of banking and financial services to individuals, businesses, and financial institutions across the United States. Through its subsidiary, The Bancorp Bank, the company offers FDIC-insured deposit accounts, cash management solutions and specialized lending products. Its business model focuses on partnering with fintech firms, asset managers and payment processors to deliver integrated banking-as-a-service (BaaS) capabilities.

The company's product suite includes interest-bearing and non-interest-bearing checking accounts, money market accounts, certificates of deposit and debit and credit card services.

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