The Bancorp’s third quarter was met with a significant negative market reaction after revenues and non-GAAP profit both fell well short of Wall Street’s expectations. Management attributed the softer results primarily to lower projected balances in traditional lending and increased credit provisions, particularly linked to losses in the leasing portfolio. CEO Damian Kozlowski acknowledged these challenges, noting the company is “deemphasizing growth” in its institutional banking business to prioritize fintech sponsorship balances, and highlighted ongoing efforts to reduce criticized assets, especially in real estate-backed loans.
Is now the time to buy TBBK? Find out in our full research report (it’s free for active Edge members).
The Bancorp (TBBK) Q3 CY2025 Highlights:
- Revenue: $174.6 million vs analyst estimates of $193.9 million (38.8% year-on-year growth, 10% miss)
- Adjusted EPS: $1.18 vs analyst expectations of $1.33 (11.3% miss)
- Adjusted Operating Income: $73.22 million vs analyst estimates of $129.2 million (41.9% margin, 43.3% miss)
- Market Capitalization: $2.79 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From The Bancorp’s Q3 Earnings Call
- Timothy Switzer (KBW) asked for an update on the Cash App program’s timeline and revenue impact; CEO Damian Kozlowski said revenue is expected to begin in Q1 2026, with a ramp-up dependent on Block’s schedules.
- Joseph Yanchunis (Raymond James) inquired about the role of share repurchases in future guidance; Kozlowski explained that buybacks are included in forecasts but are subject to ongoing scenario analysis given market volatility.
- Arif Gangat (Cygnus Capital) questioned the increase in past-due REBL loans; Interim CFO Martin Egan responded that asset sales under contract should reduce these delinquencies in Q4.
- Switzer (KBW) also asked about volatility in fintech fee income, especially ACH fees; Kozlowski attributed fluctuations to seasonality and incentive arrangements, encouraging a long-term, year-over-year view.
- Gangat (Cygnus Capital) sought clarification on high charge-off rates in consumer fintech loans; Kozlowski noted that these loans are indemnified by partners like Chime, who use them for both financial and marketing reasons.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be focused on (1) the successful ramp and monetization of embedded finance and Cash App programs, (2) continued reductions in criticized real estate-backed assets, and (3) tangible expense savings from AI-powered tools and restructuring. We will also monitor the pace at which fintech fee income grows and whether cost efficiencies offset legacy lending headwinds.
The Bancorp currently trades at $62.69, down from $77.04 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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