WILMINGTON, DE — The Bancorp Inc. (Nasdaq: TBBK) reported a 29.7% increase in third-quarter earnings per share and projected further gains through 2028, as expanding fintech lending and payment activity helped offset declining interest margins at the Wilmington-based financial holding company.
Net income reached $62.8 million, or $1.53 per diluted share, for the quarter ended Sept. 30, 2026. Adjusted net income increased 9.9% from a year earlier to $60.4 million, reflecting growth in the company’s underlying operations after excluding restructuring expenses, a legal settlement accrual and certain tax benefits.
The Bancorp maintained its 2026 core earnings guidance of $5.95 to $6.05 per share and established a baseline forecast of $7 to $7.20 for 2027. Preliminary guidance for 2028 calls for core earnings of $8 to $8.20 per share.
The projections reflect expectations for growth in three major fintech initiatives, operational improvements from restructuring and artificial intelligence tools, and continued share repurchases.
Chief Executive Officer Damian Kozlowski identified those initiatives as the principal drivers of future earnings growth, while acknowledging that results will depend on implementation schedules and the company’s stock price.
“We expect our three major Fintech initiatives along with platform efficiency and productivity gains from our organizational restructuring and adoption of AI tools, plus capital return through continued buybacks, will be the driving forces behind EPS accretion,” Kozlowski stated.
The Bancorp expects to repurchase $200 million of its shares during 2026, equivalent to $50 million per quarter. For 2027 through the first quarter of 2028, management is targeting repurchases approximately equal to 100% of adjusted net income.
The company repurchased 822,229 shares during the third quarter at an average price of $60.81, returning $50 million to shareholders. Through the first nine months of 2026, repurchases totaled $150 million, representing approximately 6% of shares outstanding at the beginning of the year.
The capital return strategy accompanies a shift in The Bancorp’s balance sheet toward lending programs sponsored by fintech partners.
Total loans reached $7.26 billion at the end of September, an 8.8% increase from $6.67 billion a year earlier and a 2.6% increase from the second quarter.
Fintech loans rose 19.3% year over year to $936.6 million, accounting for 12.7% of the total loan portfolio. Average fintech loans reached $1.55 billion, an increase of 141.4% from the third quarter of 2025.
The ending fintech portfolio included $259.8 million in secured credit card balances and $676.8 million in short-term liquidity products.
The secured credit card balances are backed by customer cash collateral and must be repaid monthly. Short-term liquidity loans carry maturities ranging from 30 to 365 days.
The Bancorp’s fintech lending arrangements also include credit enhancements from business partners intended to protect the bank against consumer credit losses.
Growth in fintech activity contributed to higher fee income but also changed the composition of the company’s earnings.
Total fintech fees increased 19.2% to $41.8 million, driven by higher transaction volumes and expansion within existing partner relationships.
Consumer credit fees from fintech lending rose 72% to $7.7 million, while prepaid card, debit card, automated clearinghouse and other payment fees increased 11.4% to $34.1 million.
Gross dollar volume on prepaid, debit and credit cards issued by The Bancorp Bank reached $54.33 billion, up 23.4% from $44.04 billion in the comparable quarter of 2025.
The growth in payment activity reflects the expanding scale of the company’s banking relationships with financial technology providers.
Core fintech fees accounted for 30.8% of total revenue, compared with 26% a year earlier. Core non-interest income represented 33.7% of revenue, up from 30.1%.
The shift toward fee-generating fintech lending also contributed to a decline in net interest margin, a key measure of lending profitability.
Net interest margin narrowed to 3.75% from 4.45% in the third quarter of 2025 and 3.85% in the preceding quarter.
Net interest income declined to $90.1 million from $94.2 million a year earlier, reflecting higher funding costs and a greater concentration of fintech loans that primarily generate fees rather than interest income.
Short-term borrowing costs increased $4.6 million from the prior-year quarter, while deposit interest expense declined $2.7 million.
The company also incurred $1.4 million in additional interest expense associated with senior debt issued in August 2025.
Average deposits increased 10.4% to $8.42 billion, largely because of growth in fintech relationships. The average cost of deposits declined to 1.72% from 2.04% a year earlier, although it increased from 1.63% in the second quarter.
Fintech partnerships generated 96% of total deposits, underscoring the company’s reliance on its technology-focused banking model.
At Sept. 30, approximately 94% of deposits were insured, while 3% consisted of low-balance accounts without individually identified depositors, including certain gift and incentive cards. The remaining 3% were other uninsured deposits.
The Bancorp also held $877.8 million in deposits swept to other financial institutions to manage its balance sheet and diversify deposit holdings.
Short-term borrowings under secured Federal Reserve Bank and Federal Home Loan Bank facilities totaled $1.11 billion at quarter-end. The company reported an additional $3.45 billion in available borrowing capacity based on pledged loans and securities.
Credit performance presented a mixed picture, with overall criticized loans declining substantially from a year earlier but increasing from the preceding quarter.
Criticized loans totaled $166.5 million at Sept. 30, down from $268.7 million a year earlier but up from $146.7 million at the end of June.
The annual improvement was primarily attributable to a reduction in criticized real estate bridge lending exposures, partly offset by increased criticized small-business loans.
The quarterly increase reflected additional criticized real estate bridge loans. In October, $27.6 million of those loans were recapitalized with new counterparties.
The company’s provision for credit losses totaled $40.6 million, compared with $45.1 million a year earlier and $26.1 million in the second quarter.
Fintech lending accounted for approximately $40 million of the third-quarter provision, with those loans supported by partner-provided credit enhancements.
Total net charge-offs were $40.7 million, compared with $40.8 million a year earlier and $25.7 million in the preceding quarter.
Fintech net charge-offs totaled $39.5 million, while non-fintech charge-offs were $1.1 million.
The annualized fintech net charge-off rate declined to 10.21% from 23.37% a year earlier, although it increased from 7.13% in the second quarter.
The Bancorp maintained a $63.5 million allowance for credit losses, including $31.2 million allocated to fintech loans and $32.3 million to non-fintech lending.
Outside lending operations, the company recorded $63.5 million in non-interest expenses, an increase of approximately $7.1 million from the prior-year quarter.
That amount included $4.3 million in costs associated with restructuring the small-business lending division and reducing staffing in other departments, along with a $1.9 million accrual for an estimated legal settlement.
Excluding those items, core non-interest expenses totaled $57.4 million, compared with $56.4 million a year earlier. The company’s core efficiency ratio increased to 42.2% from 41.8%.
The Bancorp also benefited from the purchase of transferable investment tax credits, which reduced its third-quarter income tax expense.
The credits generated $10.3 million in tax benefits, including $3 million related to 2026 and $7.3 million associated with prior tax periods.
The company’s effective tax rate declined to 12.5% from 24.9% a year earlier. Management expects an annual effective tax rate of approximately 23.9% in future periods as it continues investing in tax credits.
The Bancorp reported that its bank subsidiary remained above regulatory thresholds for well-capitalized institutions at the end of September.
The Bancorp Bank’s common equity Tier 1 capital ratio stood at 14.11%, while its total risk-based capital ratio was 15.12%.
At the holding company level, the corresponding ratios were 11.37% and 12.39%.
Book value per common share declined to $16.83 from $17.48 a year earlier, reflecting unrealized losses on available-for-sale securities and the effects of share repurchases.
Total shareholders’ equity fell $101.4 million year over year to $676.8 million. The decline included $57.7 million in unrealized investment portfolio losses associated with higher market interest rates and $302.7 million in share repurchases and related excise taxes, partly offset by earnings and stock-based compensation.
Outstanding shares declined by approximately 4.3 million over the 12-month period, primarily through repurchases.
The Bancorp’s outlook through 2028 rests on continued expansion of fintech lending and payments, improvements in operating efficiency and sustained capital returns, even as its changing business mix places pressure on traditional interest margins.
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