Financial Data and Key Metrics Changes - The Bancorp reported earnings of $1.28 per share for Q4 2025, reflecting an 11% year-over-year growth in EPS [4] - GDV (Gross Deposit Volume) increased by 16% in Q4 compared to the prior year, with a total annual growth of 17% in 2025 [4][5] - Revenue growth for the quarter was 3% year-over-year, excluding credit enhancement income [4] Business Line Data and Key Metrics Changes - Credit sponsorship balances reached $1.1 billion, up 40% from Q3 and 142% year-over-year [5] - Consumer fintech loans increased by $644 million, now constituting 15% of the total loan portfolio, which grew to $7.26 billion [8] - Non-interest income, excluding credit enhancement, accounted for over 30% of revenue in the quarter, with approximately 90% of fees coming from the fintech business [9] Market Data and Key Metrics Changes - Average deposits in Q4 were $7.6 billion, with an average cost of 177 basis points [9] - Criticized assets decreased from $268 million to $194 million, a 28% decline quarter-over-quarter [6] - Delinquency rates improved from 2.19% to 1.6% of loans from Q3 to Q4 [6] Company Strategy and Development Direction - The Bancorp is focused on three main fintech initiatives aimed at creating significant shareholder value, including credit sponsorship, embedded finance platform development, and new program implementations [5] - The company is targeting a 2026 EPS guidance of $5.90, with a preliminary 2027 guidance of $8.25, which includes stock buybacks [12] - The strategy emphasizes optimizing funding costs and increasing revenue through off-balance sheet deposits and fintech partnerships [22][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the EPS targets for 2026 and 2027, citing strong tax season expectations and ongoing fintech initiatives [20][21] - The impact of the government shutdown on GDV was noted, but management does not foresee it affecting Q1 2026 significantly [20] - The company is optimistic about the growth of credit sponsorship and the overall fintech business, expecting substantial improvements in financial metrics [5][9] Other Important Information - Non-interest expense for Q4 was $56.2 million, which included $2 million from a legal settlement [10] - The Bancorp repurchased $150 million of its stock in Q4, totaling $375 million for the year [11] Q&A Session Summary Question: Can you provide more details on the EPS ramp and revenue drivers? - Management highlighted large revenue opportunities and confidence in upcoming announcements regarding credit sponsorship and the embedded finance platform [15][16] Question: What were the primary drivers affecting Q4 results? - Key drivers included legal fees, the unexpected duration of the government shutdown, and the timing of credit sponsorship growth [18][19] Question: What is the plan for off-balance sheet deposits? - The company expects to continue generating deposit growth while optimizing the mix of on and off-balance sheet deposits to enhance earnings [22][39] Question: Can you discuss the refinancing of REBL loans? - Some refinancings were with new partners, and the existing properties are in stronger positions than when originated, with lower interest rates due to the current environment [29] Question: How does the company view the threat of fintechs obtaining bank charters? - Management believes many partners will not seek licenses and emphasizes the scalability and low-cost benefits of their platform [36][38]

Financial Data and Key Metrics Changes - The Bancorp reported earnings per share (EPS) of $1.18, with revenue growth of 7% excluding consumer fintech loan credit enhancement income and expense growth of 6% [4] - EPS growth was 13% year over year, while fintech gross dollar volume (GDV) grew at 16% [4] - Non-interest income for Q3 2025 was $40.6 million, a 27% increase from Q3 2024, primarily driven by fintech fees [10] Business Line Data and Key Metrics Changes - Credit sponsorship balances reached $785 million, up 15% from Q2 and 180% year over year [4] - Non-interest expense for Q3 2025 was $56.4 million, a 6% increase from Q3 2024, with salaries and benefits rising by 10% [11] - The provision for credit losses on non-consumer fintech loans was $5.8 million, with $4.8 million related to the leasing portfolio [10] Market Data and Key Metrics Changes - Average FinTech Solutions deposits increased by 10% to $7.3 billion from $6.6 billion in Q3 2024 [11] - The company expects to see a ramp-up in deposits in Q4, traditionally a strong period due to tax season [18] Company Strategy and Development Direction - The Bancorp is focusing on three main fintech initiatives, including credit sponsorship, embedded finance platform development, and new program implementations, with expected revenue from Cash App in Q1 2026 [4][8] - The company is restructuring its institutional banking business to achieve a $7 EPS run rate by Q4 2026, which includes a headcount reduction and a projected $8 million reduction in run rate expenses [5][8] - The implementation of AI-powered tools is expected to enhance efficiency and productivity, with a $300,000 investment anticipated to save approximately $1.5 million in run rate expenses over time [6][7] Management's Comments on Operating Environment and Future Outlook - Management lowered guidance to $5.10 EPS for 2025 due to lower projected balances in traditional lending and increased credit provisions [8] - The company is confident in achieving a minimum $7 EPS run rate by the end of 2026 and is initiating preliminary guidance for 2027 at $8.25 EPS [8] - Management noted that the economic environment remains stable, with no significant stress observed in consumer spending [32] Other Important Information - The company is making progress in reducing criticized and substandard assets, which declined from $216 million to $185 million, a 14% decrease quarter over quarter [5] - The company is focused on managing deposits off the balance sheet to avoid volatility [18] Q&A Session Summary Question: Update on Square and Cash App program - Revenue from Cash App is expected in Q1 2026, with substantial fee revenue anticipated in the latter half of 2026 [13] Question: Update on the $27 million rebel loan - The loan is expected to close within the next five days [14] Question: Discussions with borrowers and new sponsors - The company is optimistic about progress in the fourth quarter and expects to resolve many criticized assets [16] Question: Deposits movement - Deposits fluctuate seasonally, but the company expects growth in Q4 [18] Question: Update on Aubrey property leasing - The property is being leased up, with ongoing refurbishments and interest from potential buyers [21] Question: Share repurchases in guidance - The 2025 guidance includes share repurchases, with a focus on achieving a $7 EPS run rate [25] Question: Trends in fintech fees - Year-over-year metrics are more reliable due to volatility in quarterly results [28] Question: Health of the consumer - No significant stress observed, with spending remaining stable [32] Question: Loan delinquency data - Some delinquency will be resolved with upcoming loan sales, and a decrease in past due loans is expected in Q4 [34] Question: Charge-off rates in consumer fintech loans - Charge-offs are primarily related to the partnership with Chime, which has its own strategies for managing losses [35] Question: Regulatory expectations for banking-as-a-service - The regulatory environment remains stable, with no significant changes impacting operations [44]