The Bancorp, Inc. Reports First Quarter Financial Results

The Bancorp, Inc. ("The Bancorp" or the "Company" or "we" or "our") (NASDAQ:TBBK), a financial holding company, today reported its financial results for the first quarter of 2025.

Highlights

• The Bancorp reported net income of $57.2 million, or $1.19 per diluted share ("EPS"), for the quarter ended March 31, 2025, compared to net income of $56.4 million, or $1.06 per diluted share, for the quarter ended March 31, 2024, or an EPS increase of 12%. While net income increased 1% between these periods, outstanding shares were reduced as a result of increased repurchases that occurred during 2024.

• Return on assets and return on equity for the quarter ended March 31, 2025, amounted to 2.5% and 29%, respectively, compared to 3.0% and 28%, respectively, for the quarter ended March 31, 2024 (all percentages "annualized").

• Net interest income decreased 3% to $91.7 million for the quarter ended March 31, 2025, compared to $94.4 million for the quarter ended March 31, 2024. Certain loan fees on consumer fintech loans are recorded as non-interest income. Such non-interest income amounted to $3.6 million for the quarter ended March 31, 2025 and $0 for the quarter ended March 31, 2024.

• Net interest margin amounted to 4.07% for the quarter ended March 31, 2025, compared to 5.15% for the quarter ended March 31, 2024, and 4.55% for the quarter ended December 31, 2024.

• Loans, net of deferred fees and costs were $6.38 billion at March 31, 2025, compared to $5.46 billion at March 31, 2024 and $6.11 billion at December 31, 2024. Those changes reflected an increase of 4% quarter over linked quarter and an increase of 17% year over year.

• Gross dollar volume ("GDV"), representing the total amounts spent on prepaid and debit cards, increased $6.71 billion, or 18%, to $44.65 billion for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024. The increase reflected continued organic growth with existing partners and the impact of clients added within the past year. Total prepaid, debit card, ACH, and other payment fees increased 13% to $30.8 million for the first quarter of 2025 compared to the first quarter of 2024. Consumer credit fintech fees amounted to $3.6 million for the first quarter 2025.

• Small business loans ("SBLs"), including those held at fair value, amounted to $1.01 billion at March 31, 2025, or 12% higher year over year, and 3% higher quarter over linked quarter, excluding the impact of loans with related secured borrowings.

• Direct lease financing balances increased 1% year over year to $710.0 million at March 31, 2025, and increased 1% from December 31, 2024.

• Real estate bridge loans of $2.21 billion increased 5% compared to a $2.11 billion balance at December 31, 2024, and increased 5% compared to the March 31, 2024 balance of $2.10 billion. These real estate bridge loans consist entirely of rehabilitation loans for apartment buildings.

• Security backed lines of credit ("SBLOC"), insurance backed lines of credit ("IBLOC"), and investment advisor financing loans collectively increased 3% year over year and increased less than 1% quarter over linked quarter to $1.84 billion at March 31, 2025.

• The average interest rate on $8.44 billion of average deposits and interest-bearing liabilities during the first quarter of 2025 was 2.28%. Average deposits of $8.31 billion for the first quarter of 2025 increased $1.81 billion, or 28% over first quarter 2024.

• As of March 31, 2025, the Company's Tier 1 capital to average assets (leverage), Tier 1 capital to risk-weighted assets, total capital to risk-weighted assets and common equity Tier 1 to risk-weighted assets ratios were 8.93%, 13.94%, 14.86% and 13.94%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp Bank, National Association also remains well capitalized under banking regulations.

• Book value per common share at March 31, 2025, was $17.66 compared to $15.63 per common share at March 31, 2024, an increase of 13%.

• The Bancorp repurchased 684,445 shares of its common stock at an average cost of $54.79 per share during the quarter ended March 31, 2025. As a result of share repurchases, outstanding shares at March 31, 2025 amounted to 47.0 million, compared to 52.3 million shares at March 31, 2024, or a reduction of 10%.

• The Bancorp emphasizes safety and soundness, and its balance sheet has a risk profile enhanced by the special nature of the collateral supporting its loan niches, related underwriting, and the characteristics of its funding sources, including those highlighted in the bullets below. Those loan niches and funding sources have contributed to increased earnings levels, even during periods in which markets have experienced various economic stresses.

• The vast majority of The Bancorp's funding is comprised of FDIC-insured and/or small balance accounts, which adjust to only a portion of changes in rates. The Company also has lines of credit with U.S. government sponsored agencies totaling approximately $3.09 billion as of March 31, 2025, as well as access to other forms of liquidity.

• In its real estate bridge loans ("REBL") portfolio, the Company has minimal exposure to non-multifamily commercial real estate such as office buildings, and instead has a portfolio largely comprised of rehabilitation bridge loans for apartment buildings. These loans generally have three-year terms with two one-year extensions to allow for the rehabilitation work to be completed and rentals stabilized for an extended period, before being refinanced at lower rates through U.S. Government Sponsored Entities or other lenders. The REBL portfolio consists primarily of workforce housing, which we consider to be working class apartments at more affordable rental rates. Related collateral values should accordingly be more stable than higher rent properties, even in stressed economies. While the macro-economic environment has challenged the multifamily bridge space, the stability of the Company's REBL portfolio is evidenced by the estimated values of the underlying collateral. The Company's $2.2 billion REBL portfolio at March 31, 2025, has a weighted average origination date "as is" loan-to-value ratio of 70%, based on third-party appraisals. Further, the weighted average origination date "as stabilized" LTV, which measures the estimated value of the apartments after the rehabilitation is complete may provide even greater protection.

• As part of the underwriting process, The Bancorp reviews prospective borrowers' previous rehabilitation experience in addition to overall financial wherewithal. These transactions also include significant borrower equity contributions with required performance metrics. Underwriting generally includes, but is not limited to, assessment of local market information relating to vacancy and rental rates, review of post rehabilitation rental rate assumptions against geo-specific affordability indices, negative news searches, lien searches, visitations by bank personnel and/or designated engineers, and other information sources.

• Rehabilitation progress is monitored through ongoing draw requests and financial reporting covenants. This generally allows for early identification of potential issues, and expedited action to address on a timely basis.

• Operations and ongoing loan evaluation are overseen by multiple levels of management, in addition to the REBL team's experienced professional staff and third-party consultants utilized during the underwriting and asset management process. This oversight includes a separate loan committee specific to REBL, which is comprised of seasoned and experienced lending professionals who do not directly report to anyone on the REBL team. There is also a separate loan review department, a surveillance committee and additional staff which evaluate potential losses under the current expected credit losses methodology ("CECL"), all of which similarly do not report to anyone on the REBL team.

• SBLOC and IBLOC portfolios are respectively secured by marketable securities and the cash value of life insurance. The majority of SBA 7(a) loans are government guaranteed, while SBA 504 loans are made with 50%-60% LTVs.

• Additional details regarding our loan portfolios are included in the related tables in this press release, as is the summarization of the earnings contributions of our payments businesses, which further enhances The Bancorp's risk profile. The Company's risk profile inherent in its loan portfolios, funding and earnings levels, may present opportunities to further increase stockholder value, while still prudently maintaining capital levels.

• In the second quarter of 2024, the Company purchased approximately $900 million of fixed rate government sponsored entity backed commercial and residential mortgage securities of varying maturities, with an approximate 5.11% weighted average yield, and estimated weighted average lives of eight years, to reduce its exposure to lower levels of net interest income. Such purchases would also reduce the additional net interest income which will result if the Federal Reserve increases rates. While there are many variables and limitations to estimating exposure to changes in rates, such purchases and continuing fixed rate loan originations are projected to reduce such exposure to modest levels. In prior years, The Bancorp deferred adding fixed rate securities when yields were particularly low, which has afforded the flexibility to benefit from, and secure, more advantageous securities and loan rates.

"The Bancorp earned $1.19 a share in the first quarter of 2025 or a 12% increase in EPS over the first quarter of 2024," said Damian Kozlowski, CEO of The Bancorp. "While we had some pressure on revenue from rates, it was mitigated by our balance sheet strategy, and the growth of deposits. Fintech Solutions continues to show significant momentum in both GDV (up 18% year-over-year) and fee growth (up 26% year-over-year). We are confirming guidance of $5.25 a share for 2025. EPS guidance does not include the impact of $150 million of authorized stock buybacks in 2025."

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, April 25, 2025, by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com or you may dial 1.800.549.8228, conference ID 80395. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website (archived for one year) or telephonically until Friday, May 2, 2025, by dialing 1.888.660.6264, playback code 80395#.

About The Bancorp

The Bancorp, Inc. (NASDAQ:TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, National Association, provides a variety of services including providing non-bank financial companies with the people, processes, and technology to meet their unique banking needs. Through its Fintech Solutions, Institutional Banking, Commercial Lending, and Real Estate Bridge Lending businesses, The Bancorp provides partner-focused solutions paired with cutting-edge technology for companies that range from entrepreneurial startups to Fortune 500 companies. With over 20 years of experience, The Bancorp has become a leader in the financial services industry, earning recognition as the #1 issuer of prepaid cards in the U.S., a nationwide provider of bridge financing for real estate capital improvement plans, an SBA National Preferred Lender, a leading provider of securities-backed lines of credit, with one of the few bank-owned commercial vehicle leasing groups. By its company-wide commitment to excellence, The Bancorp has also been ranked as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600. For more about The Bancorp, visit https://thebancorp.com/.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp's business that are not historical facts, are "forward-looking statements." These statements may be identified by the use of forward-looking terminology, including, but not limited to the words "intend," "may," "believe," "will," "expect," "look," "anticipate," "plan," "estimate," "continue," or similar words. Forward-looking statements include, but are not limited to, statements regarding our anticipated 2025 results. Such forward-looking statements relate to our current assumptions, projections and expectations about our business and future events, including current expectations about important economic and political factors, among other factors, and are subject to risks and uncertainties, which could cause the actual results, events, or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Factors that could cause results to differ from those expressed in the forward-looking statements also include, but are not limited to the risks and uncertainties referenced or described in The Bancorp's filings with the Securities and Exchange Commission, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2024 and other documents that the Company files from time to time with the Securities and Exchange Commission. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake any duty to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this press release, except as may be required under applicable law.

Source: The Bancorp, Inc.

Commercial real estate loans, excluding SBA loans, are as follows including LTV at origination:

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While the value of equities has fallen in excess of 30% in recent years, the reduction in collateral value of brokerage accounts collateralizing SBLOC loans generally has been less, for two reasons. First, many collateral accounts are "balanced" and accordingly have a component of debt securities, which have either not decreased in value as much as equities, or in some cases may have increased in value. Second, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the percentage of principal to collateral.

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us. We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, fifteen insurance companies have been approved and, as of April 17, 2025, all were rated A- (Excellent) or better by AM BEST.