Bancorp NASDAQ: TBBK reported third-quarter core earnings per share of $1.47, up 25% from a year earlier, as growth in fintech fees, sponsored lending and payment volumes supported results. The company also maintained its 2026 core EPS outlook while introducing preliminary guidance for 2027 and 2028 that reflects expected changes in its Chime relationship, its lending pipeline and interest-rate assumptions.
Chief Executive Officer Damian Kozlowski said gross dollar volume rose 23% year over year, while fintech fee revenue increased 19%. Including interest income, fintech-related revenue grew 27%, he said.
“Our three major fintech initiatives continue to show positive results and substantial momentum,” Kozlowski said, citing the ramp-up of Cash App, a newly signed fintech lending relationship and the launch of the company’s embedded-finance platform, Finetics.
Cash App Ramp and Chime Transition
Kozlowski said Bancorp expects Cash App volumes to make a greater contribution to financial results toward the end of 2026, with a “meaningful impact” beginning in the first quarter of 2027.
At the same time, the company is preparing for the impact of partner Chime’s proposed acquisition of Stride Bank. Bancorp said it plans to redeploy its balance sheet, manage costs and pursue other actions intended to mitigate the resulting profitability impact.
The company maintained 2026 core EPS guidance of $5.95 to $6.04. It established a 2027 core EPS baseline of $7.00 to $7.20 and preliminary 2028 core EPS guidance of $8.00 to $8.20. The outlooks include expected share repurchases.
Chief Financial Officer Dominic Canuso said the updated 2027 outlook incorporates expectations for Chime’s growth and transition timing, the company’s pipeline for embedded finance and other lending products, and the interest-rate environment. Those factors are partly offset by tax benefits and the impact of repurchasing shares at lower recent prices, he said.
Management said the company’s contractual arrangements with Chime remain in place. Kozlowski said a termination would involve a one-year notice period, followed by transition planning that could extend for up to six months. Chime may move new account originations to another bank during the transition, he said.
Bancorp said it is working cooperatively with Chime on possible timelines while seeking to preserve the economics of its contract. Kozlowski added that an expedited transition could allow the company to redeploy capital and resources into other lending and fintech opportunities.
Fintech Lending, Finetics and Balance-Sheet Strategy
The company said it signed a new major fintech lending relationship, though management said its partner will announce the initiative according to its product-marketing schedule. Kozlowski said Bancorp expects at least one additional program announcement, along with several potential announcements in coming months.
Management said newer lending programs are expected to carry higher spreads and more fee income than the Chime-related business. Kozlowski said Bancorp believes it can redeploy Chime-related balance-sheet capacity at spreads of at least 150 basis points higher through bonds and other measures.
Bancorp also formally launched Finetics, its bank-integrated embedded-finance platform. Kozlowski said Finetics is not expected to be a meaningful contributor to 2027 earnings but should have a larger impact in 2028. The company expects to begin announcing partnerships in coming months, he said.
Management characterized Chime as its only pure neobank client and said the anticipated transition could ultimately reduce concentration risk. Kozlowski said the company has more than 40 partners and expects its top-client revenue base to become more diversified as it adds lending, embedded-finance and other relationships.
Restructuring and Capital Returns
Bancorp initiated a restructuring during the third quarter that includes ending origination of its small-business lending, or SBL, loans by year-end. The existing SBL portfolio has an average life of more than seven years and will run off over time, management said. The company also said it could sell guaranteed portions of the portfolio if needed, potentially generating gains.
The restructuring and unfilled roles are expected to reduce positions by 80 and produce annualized run-rate savings of about $14 million. Anticipated restructuring costs are approximately $5 million, including a $4.3 million charge recognized in the third quarter and an additional roughly $750,000 expected in the fourth quarter.
Kozlowski said Bancorp aims to operate with approximately 700 employees over the next three years, reallocating resources toward fintech initiatives while using artificial intelligence and other tools to drive efficiencies.
The company expects fourth-quarter costs of around $55 million, including $2.9 million in quarterly run-rate restructuring savings. Canuso said the remaining $600,000 quarterly run-rate benefit is expected in the first quarter of 2027.
Bancorp forecast total 2026 buybacks of $200 million, or $50 million per quarter, and said its capital-return philosophy is to return nearly 100% of adjusted net income.
Quarterly Financial Performance
Canuso said third-quarter core return on assets was 2.42% and core return on equity was 34.7%. Average loans totaled $7.9 billion, up 3.7% from the second quarter and 18.2% from a year earlier.
- Average sponsored loans reached $1.55 billion, representing 20% of average loans, up 11.3% from the prior quarter and 141% year over year.
- Average deposits were $8.4 billion, flat sequentially and up 10.4% year over year.
- Net interest margin was 3.75%, down 10 basis points sequentially, reflecting a greater mix of sponsored loans and the timing of the September rate change.
- Core noninterest income excluding credit enhancements was $45.8 million, down $1.5 million from the second quarter, as lower loan-prepayment fees were partly offset by fintech fee growth.
- Total fees increased $5.2 million, or 12.8%, from a year earlier, driven by a $6.7 million increase in fintech fees.
Fintech fees represented more than 30% of core revenue, compared with 26% a year earlier, according to the company. Sponsored lending fees equated to an additional 32 basis points of net interest margin, while deposit sweep fees added an equivalent of 2 basis points.
Bancorp recorded a total provision of $40.6 million, largely associated with credit sponsorship loans supported by full credit enhancements. Excluding those loans, the traditional lending portfolio had a provision of $600,000, which management said was consistent with loan growth and overall credit performance.
The company also disclosed a tax-credit strategy involving purchases of transferable renewable-energy tax credits. Bancorp expects to purchase approximately $161 million of credits by year-end at an 8.5% discount, generating a projected 2026 tax benefit of $13.7 million. Going forward, Canuso said the company expects its core tax rate to be approximately 24%, about 100 basis points below its historical rate.
About Bancorp (NASDAQ:TBBK)
The Bancorp, Inc NASDAQ: TBBK is a financial technology-focused bank holding company headquartered in Wilmington, Delaware. Through its principal subsidiary, The Bancorp Bank, N.A., the company provides banking and payment services primarily through partnerships with fintech companies, businesses, and other institutional clients rather than through a traditional branch network.
The company's services include payment processing, prepaid and debit card programs, card issuance, automated clearing house (ACH) and other electronic payment solutions, deposit accounts, and commercial lending.
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