Sign in
BI

Bancorp, Inc. (TBBK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered $1.27 diluted EPS on net income of $59.8M; EPS was essentially in line with consensus ($1.28), while total revenue materially surpassed Street expectations, aided by strong fintech fee growth and higher sequential NIM . EPS est: $1.28*, actual: $1.27; Revenue est: $96.4M*, actual: $136.9M*.
  • Fintech KPIs were robust: GDV rose 18% YoY to $43.65B; total prepaid/debit/ACH/other payment fees increased 14% YoY to $31.7M; consumer credit fintech fees reached $4.0M .
  • Management maintained full-year 2025 EPS guidance of $5.25 and announced “Project 7,” targeting at least a $7.00 annualized run-rate by Q4 2026 (goal $1.75 EPS in Q4 2026) .
  • Strategic catalysts: expanded Block/Cash App card issuing partnership (initial 5-year term) expected to begin in 2026, and an enlarged buyback program to $500M over ~18 months ($300M in 2H25, $200M in 2026), supported by a planned ~$200M senior notes issuance in Q3 2025 .

What Went Well and What Went Wrong

What Went Well

  • Fintech momentum: “The Bancorp had another quarter of Fintech growth and momentum,” with maintained 2025 EPS guidance of $5.25 and launch of Project 7 to reach a $7.00 run-rate by Q4 2026 .
  • Sequential margin expansion: NIM improved to 4.44% from 4.07% in Q1 2025, aided by $3.1M of CRE-2 interest repayment and balance sheet mix; ROE/ROA remained strong at 28.4%/2.64% annualized .
  • Fee growth breadth: Total fintech fees rose to $35.6M (+28% YoY); prepaid/debit/ACH/other payment fees up 14% YoY to $31.7M; consumer credit fintech fees climbed to $4.0M .

What Went Wrong

  • Non-accruals and OREO dynamics: REBL non-accruals and criticized loans stepped up sequentially; the Aubrey property sale terminated with $3.0M earnest money in dispute (management expects release, but timing is uncertain) .
  • Sequential deposit decline: Average deposits decreased versus Q1 due to tax season flows, off-balance-sheet management of some savings deposits, and runoff of ~$500M insurance-related deposits for California wildfires .
  • NIM still below prior-year: 4.44% vs 4.97% in Q2 2024; non-interest expense rose 11% YoY (salaries/benefits +10%) as the platform scales .

Financial Results

Headline P&L and EPS

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($USD Millions)$93.8 $91.7 $97.5
Total Non-Interest Income ($USD Millions)$30.7 $83.6 $83.7
Net Income ($USD Millions)$53.7 $57.2 $59.8
Diluted EPS ($USD)$1.05 $1.19 $1.27

Note: Q1 and Q2 2025 total non-interest income figures include consumer fintech loan credit enhancement income with offsetting provisions (no net income impact) .

Margins and Ratios

MetricQ2 2024Q1 2025Q2 2025
Net Interest Margin (%)4.97% 4.07% 4.44%
ROA (annualized, %)2.77% 2.5% 2.64%
ROE (annualized, %)27.10% 29% 28.40%
Efficiency Ratio (%)41% —41%

Fintech Fees Breakdown

Metric ($USD Millions)Q2 2024Q1 2025Q2 2025
ACH, Card & Other Payment Processing Fees$3.0 $5.13 $5.56
Prepaid, Debit Card & Related Fees$24.76 $25.71 $26.11
Consumer Credit Fintech Fees$0.14 $3.60 $3.97
Total Fintech Fees$27.90 $34.45 $35.65

KPIs and Balance Sheet

MetricQ2 2024Q1 2025Q2 2025
GDV ($USD Billions)$37.14 $44.65 $43.65
Loans (net of deferred fees & costs, $USD Millions)$5,605.7 $6,380.2 $6,535.4
Deposits ($USD Millions)$7,155.7 $8,364.6 $7,765.9
Consumer Fintech Loans ($USD Millions)$70.1 $574.0 $680.5

Results vs. Estimates (S&P Global)

MetricConsensus (Q2 2025)Actual (Q2 2025)# of Estimates
Diluted EPS ($USD)1.28*1.27*2*
Total Revenue ($USD Millions)96.4*136.9*1*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (Diluted)FY 2025$5.25 per share $5.25 per share (maintained) Maintained
EPS Run-RateQ4 2026—$1.75 in Q4 2026 (annualized ~$7.00) New target (Raised long-term ambition)
Share Repurchases2H 2025–2026$150M for 2025 being considered $500M total (plan): ~$300M in remainder of 2025; ~$200M in 2026 Raised
Senior Notes IssuanceQ3 2025—Planned ~$200M issuance to fund buybacks New
Block/Cash App Card IssuingProgram start—Initial term 5 years; expected start in 2026 New partnership expansion

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
Fintech fee growth & GDVGDV +19% YoY in Q4; fees +29% YoY; credit sponsorship scaling GDV +18% YoY; total fees +26% YoY; credit sponsorship balances to >$1B by YE’25 GDV +18% YoY; total payment fees +14% YoY; consumer credit fintech fees $4.0M Sustained growth; broadening products
Credit sponsorship accounting/offsetsProvision and offset via credit enhancement; aiming for higher-yield programs Provision $45.9M offset by equal enhancement; mix impacts NIM/fees Provision $43.2M offset by equal enhancement; fees recorded in non-interest income Stable mechanics; scaling volumes
REBL credit & maturity wallPeak criticized assets; portfolio stabilized; low LTVs Reduced substandard/special mention QoQ; vigilant underwriting amid tariffs Some increase in non-accruals; Aubrey sale fell through; earnest money dispute Working through maturities; disposition delays
Deposits/liquidity managementStrong average deposits (+16% YoY) Tax season and insurance flows temporarily lifted deposits/cash; offloading high-cost deposits planned Sequential lower deposits due to tax season/runoff/off-balance-sheet actions; lines of credit ~$3.08B Active balance-sheet management
AI/productivity—Productivity focus; platform scale; future AI use cases contemplated AI/machine learning productivity gains targeted for 2026–2027 Building toward AI leverage
Partnerships/market positionBroad expansion across products; leaders in BaaS Expect 3–4 partners/year; embedded finance ambitions Block/Cash App card issuing addendum (5-year); potential share gains in neobanks Strengthening large-client footprint

Management Commentary

  • CEO: “We are continuing to maintain our guidance of $5.25 earnings per share for 2025. We are also announcing Project 7…targeting at least a $7 earnings per share run-rate by the fourth quarter of 2026.”
  • CEO on Block: “This is the entire portfolio of the card issuance for Block…one of the major players…over 50 million customers. It will be very meaningful in the future to both GDV and fee growth.”
  • CFO: “Excluding the consumer fintech loan credit enhancement income, non-interest income for the second quarter of 2025 was $40.5 million…Prepaid debit card, ACH, and other payment fees increased 14%…credit enhancement income was $43.2 million, and the provision…was also $43.2 million.”
  • CEO on capacity: “We have built an ecosystem where we could have five times the volume that we have today…prepared…to accommodate dramatically higher gross dollar volume.”

Q&A Highlights

  • Block/Cash App card issuing: TBBK plans to replace incumbent volume over time; program expected to begin in 2026; strategic for GDV and fees .
  • Deposits sequential decline: Driven by tax receipts, off-balance-sheet management of some savings deposits, and ~$500M insurance-related deposits runoff; balance-sheet optimization remains a focus .
  • REBL portfolio: Maturity extensions are acceptable for cash-flowing properties; management does not expect a spike in substandard assets; working through a manageable set of loans .
  • Aubrey OREO: Occupancy improved mid-30s → mid-60s; third-party appraisals raised “as is” to ~$51M and “as stabilized” ~$59M; $3M earnest money dispute expected to resolve in TBBK’s favor .
  • Productivity and AI: Incremental hires to support Block and scaling; using machine learning now and aiming for AI-driven efficiency gains in 2026–2027 .

Estimates Context

  • Q2 2025 EPS was essentially in line (1.27 vs 1.28 consensus); revenue was a significant beat ($136.9M vs $96.4M), reflecting stronger-than-modeled non-interest income contributions from fintech fees and credit sponsorship dynamics. EPS est: 1.28*, actual: 1.27*; Revenue est: 96.4M*, actual: 136.9M*.
  • With sequential NIM improvement and durable GDV growth, Street models may raise non-interest income and fee contribution assumptions while keeping credit enhancement/provision offsets neutral to earnings.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue outperformance and sequential NIM expansion signal operating leverage from fintech fees and optimized asset/liability mix; watch for sustainability as Block/Cash App ramps in 2026 .
  • Guidance confidence: FY25 EPS $5.25 reiterated; Project 7 targets $7 run-rate by Q4 2026, anchored by fintech growth, buybacks, and productivity gains .
  • Capital return accelerating: Buybacks lifted to $500M (~$300M in 2H25; $200M in 2026) funded with ~$200M senior notes and core earnings—supportive to per-share metrics .
  • Credit view: REBL non-accruals/criticized loans require monitoring, but low LTVs, extensions for performing assets, and OREO progress mitigate downside; escrow dispute is a near-term event to resolve .
  • Deposit/liquidity: Sequential decline reflects seasonal/tactical actions; insured deposits at ~94% and ~$3.08B borrowing capacity underpin liquidity resilience .
  • Fintech fee engine: GDV +18% YoY; diversified fee layers (card, ACH, credit sponsorship) support top-line growth; expect Street to raise fee forecasts post-quarter .
  • Trading setup: Revenue beat and expanded buybacks are positives; monitor credit headlines (Aubrey, REBL maturities) and 2H25 margin trajectory as balance sheet mix and fee/interest income balance evolves .