The Bancorp — Q3 2026 Earnings Summary

Financial Performance:

• Reported net income of $62.8 million and diluted EPS of $1.53 for Q3 2026, representing a 29.7% year-over-year increase from $1.18 in Q3 2025.
• Adjusted net income was $60.4 million, a 9.9% increase compared to $54.9 million in Q3 2025.
• Total revenue was $175.9 million; non-interest income totaled $85.8 million, with total fintech fees at $41.8 million (up 19.2% YoY).
• Net interest income was $90.1 million, down from $94.2 million in Q3 2025, driven by higher interest costs and portfolio mix shifts.
• Net interest margin was 3.75% in Q3 2026, compared to 4.45% in Q3 2025 and 3.85% in Q2 2026.
• Total non-interest expense was $63.5 million, up from $56.4 million in Q3 2025, primarily due to $4.3 million in restructuring costs and $1.9 million in legal settlement accruals.
• Core non-interest expense was $57.4 million, and the core efficiency ratio was 42.2%.
• Return on assets (ROA) was 2.51% and return on equity (ROE) was 36.0% for Q3 2026.
• Total loans, net of deferred fees and costs, were $7.26 billion at period end, an 8.8% increase from $6.67 billion in Q3 2025.
• Average deposits were $8.42 billion, a 10.4% increase from Q3 2025, with an average cost of deposits at 1.72%.
• Gross dollar volume (GDV) for prepaid, debit, and credit cards was $54.33 billion, a 23.4% increase from Q3 2025.
• Total provision for credit losses was $40.6 million, with Fintech loans accounting for $40.0 million and non-fintech loans at $0.7 million.
• Total net charge-offs were $40.7 million, resulting in an annualized net charge-off ratio of 2.09% of average loans.
• Allowance for credit losses was $63.5 million, representing 0.87% of total loans outstanding.

Guidance and Future Outlook:

• Maintained Core EPS guidance for 2026 in the range of $5.95 to $6.05 per share.
• Provided a Core EPS baseline range of $7.00 to $7.20 per share for 2027.
• Initiated preliminary Core EPS guidance for 2028 of $8.00 to $8.20 per share.
• Guidance for 2026, 2027, and 2028 includes the impact of stock buybacks.
• Expects to repurchase $200 million of shares in 2026 ($50 million per quarter).
• Targets buyback amounts for 2027 through Q1 2028 to be approximately 100% of Adjusted net income.
• Anticipates EPS accretion driven by three major Fintech initiatives, platform efficiency gains from organizational restructuring, AI tool adoption, and capital return via buybacks.
• Estimates an annual future effective tax rate of approximately 23.9%.

Business Segments and Product Lines:

• Fintech loans totaled $936.6 million at period end, representing 12.7% of the total loan portfolio, up 19.3% from Q3 2025.
• Average Fintech loans were $1.55 billion, a 141.4% increase from Q3 2025.
• Fintech loan portfolio consists of $259.8 million in secured credit card accounts and $676.8 million in short-term liquidity products.
• Real estate bridge lending (REBL) loans were $2.43 billion, up $295.4 million from Q3 2025.
• SBLOC/IBLOC loans were $1.83 billion, up $221.6 million from Q3 2025.
• Small business loans were $1.06 billion, up $76.1 million from Q3 2025.
• Consumer credit fees from Fintech loans were $7.7 million, a 72.0% increase from Q3 2025.
• Total prepaid, debit card, ACH, and other payment fees were $34.1 million, up 11.4% from Q3 2025.
• Restructuring costs of $4.3 million were incurred related to the Small Business Lending business line and other departmental reductions.

Market and Competitive Landscape:

• The Bancorp is ranked by the Nilson Report as the No. 1 issuer of prepaid cards in the U.S. and among the top 10 debit card issuers nationally.
• Fintech partnerships generate 96% of total deposits, which are primarily low balance, insured deposits.
• 94% of deposits are insured, 3% are low balance accounts (e.g., gift cards), and 3% are other uninsured deposits.
• The company maintains a "Well Capitalized" status under federal regulations with strong capital ratios exceeding benchmarks.
• Fintech loan credit enhancement agreements provide financial protection against consumer credit losses, with partners covering estimated losses.

Risks and Challenges:

• EPS gains are subject to development and implementation timelines in Fintech initiatives and the company's stock price for buybacks.
• Non-fintech provision in Q3 2025 was elevated due to estimated losses in the direct leasing portfolio.
• Criticized loans increased 14% to $166.5 million from Q2 2026, driven by a $17.8 million increase in criticized REBL loans, though down significantly from Q3 2025.
• Unrealized losses on the available-for-sale investment portfolio due to market rate increases contributed to a decrease in shareholders' equity.
• Forward-looking statements are subject to risks and uncertainties, including economic and political factors, as detailed in SEC filings.

Management Commentary and Tone:

• CEO Damian Kozlowski described the quarter as "very eventful" but noted strong momentum in Fintech and actions to support future growth and efficiency.
• Management expressed confidence in maintaining market-leading profitability and competitive position while enhancing the Fintech ecosystem.
• The tone indicates a strategic shift of the balance sheet towards sponsored lending and reliance on Fintech fee income.
• Management highlighted that Fintech loan provision and credit enhancement income correlate to the same estimates, reflecting the nature of the business model.

Other Key Points:

• Repurchased 822,229 shares in Q3 2026 for $50.0 million at an average cost of $60.81 per share.
• Year-to-date 2026 share repurchases totaled 2,535,419 shares for $150.0 million.
• Recognized $10.3 million in benefits from transferable tax credits, including $7.3 million related to carryback of credits to prior periods.
• Recorded a $1.9 million accrual for the estimated cost of a legal settlement.
• Outstanding shares decreased 4.308 million since September 30, 2025, primarily driven by share repurchases.
• Book value per common share was $16.83 at September 30, 2026, a decrease from $17.48 in Q3 2025.
• Conference call to review results was scheduled for October 30, 2026, at 8:00 AM ET.