Executive Summary

Q4 delivered record diluted EPS of $1.15 and net income of $55.9M, with “total revenue” (NII + non-interest income) rising to $128.9M; NIM compressed to 4.55% on a $1.3M interest reversal tied to an $82M REBL sale, partly offset by stable NII and accelerating fintech fee growth .
Fintech momentum accelerated: GDV grew 19% YoY to $39.66B; fintech fees rose 16% YoY to $29.2M, and consumer credit fintech fees reached $3.0M as credit sponsorship scaled; management targets ~$1B of consumer credit balances by YE25, affirming FY25 EPS guidance of $5.25 .
REBL de-risking progressed: substandard loans fell 14% QoQ to $134.4M; a $12.3M substandard loan repaid on Jan. 2 without principal loss; an OREO apartment complex ($41.1M) is under contract with $1.6M earnest money deposits and expected proceeds covering balance plus improvements (no assurance of close) .
Liquidity/capital resilient: 94% of deposits are insured; average deposits rose 21% YoY; Tier 1 leverage stood at 9.41% (bank at 10.38%); planned 2025 buybacks cut to $150M to facilitate repayment of $96M senior secured debt—potential catalysts with guidance reaffirmation and credit sponsorship ramp outweighing short-term NIM pressure .

What Went Well and What Went Wrong

What Went Well
- Accelerating fintech growth: GDV +19% YoY to $39.66B and fintech fees +16% YoY to $29.2M; consumer credit fintech fees reached $3.0M in Q4 as sponsorship scaled (“fees on top of fees” with rapid funds and credit sponsorship) .
- EPS strength and guidance confidence: Diluted EPS $1.15 (up 42% YoY), driven by higher revenues and buybacks; FY25 EPS guidance of $5.25 affirmed, excluding 2025 buybacks .
- Credit de-risking: REBL substandard loans down 14% QoQ to $134.4M; a $12.3M substandard loan repaid without principal loss on Jan. 2; comprehensive third-party review supports view that criticized levels have peaked .
What Went Wrong
- Margin compression: NIM fell to 4.55% (from 4.78% in Q3), reflecting the $1.3M interest reversal on REBL sale and mix shift toward fee-based fintech products near term .
- Elevated noninterest expense growth: Q4 noninterest expense rose 14% YoY to $51.8M (staffing in financial crimes/IT and incentives); trucking category in leases remains a pressure point within credit costs .
- Accounting noise in noninterest income: $19.6M consumer fintech credit enhancement provision with a matched $19.6M noninterest income recognition (no net income impact) distorts GAAP noninterest income comparisons .

Financial Results

Consolidated financials (quarterly progression)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenue (NII + Non-Interest Income) ($M)	124.517	125.840	128.947
Net Interest Income ($M)	93.795	93.732	94.296
Non-Interest Income (GAAP) ($M)	30.722	32.108	54.270
Non-Interest Income ex. consumer fintech credit enhancement ($M)	—	—	34.651
Net Income ($M)	53.686	51.517	55.908
Diluted EPS ($)	1.05	1.04	1.15
Net Interest Margin (%)	4.97%	4.78%	4.55%
ROA (annualized, %)	2.77%	2.55%	2.60%
ROE (annualized, %)	27.10%	25.74%	27.71%
Avg. Total Deposits ($M)	6,717.598	7,007.108	7,554.539
Insured Deposit Mix (%)	93%	93%	94%

Year-over-year Q4 comparison

Metric	Q4 2023	Q4 2024
Total Revenue (NII + Non-Interest Income) ($M)	119.148	128.947
Net Interest Income ($M)	92.159	94.296
Non-Interest Income (GAAP) ($M)	26.989	54.270
Net Income ($M)	44.028	55.908
Diluted EPS ($)	0.81	1.15
Net Interest Margin (%)	5.26%	4.55%

Fintech KPIs and Payments

KPI	Q2 2024	Q3 2024	Q4 2024
GDV ($M)	37,139.200	37,898.006	39,656.909
ACH, card & other payment fees ($M)	3.000	3.892	4.740
Prepaid/debit fees ($M)	24.755	23.907	24.465
Consumer credit fintech fees ($M)	0.140	1.600	3.049
Total fintech fees ($M)	27.895	29.399	32.254

Loans and mix (period-end)

Category ($M)	Q3 2024	Q4 2024
Real Estate Bridge Loans (REBL)	2,189.761	2,109.041
Institutional Banking (SBLOC/IBLOC/Advisor)	1,792 (sum)	1,838 (sum)
Small Business Loans (total)	979.151	986.979
Direct Lease Financing	711.836	700.553
Consumer Fintech Loans	280.092	454.357

Notes: Q4 GAAP non-interest income includes a $19.6M consumer fintech credit enhancement offset matched by a $19.6M provision (no net income effect) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS (Diluted)	FY 2025	$5.25 (prelim, issued Q3’24)	$5.25 (affirmed)	Maintained
Share Repurchases	FY 2025	Indicated $150M planned in 2025 (down from $250M in 2024)	$150M planned in 2025; excludes impact from 2025 guidance	Maintained
Senior Secured Debt	FY 2025	Repay $96M noted (Q3)	Plan to repay $96M; potential reissue $100M+ depending on rates	Maintained/clarified

Assumptions: 2025 guidance excludes effect of 2025 share repurchases; management may reissue senior debt based on market conditions .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 → Q3)	Current Period (Q4)	Trend
Fintech credit sponsorship ramp	Initiated consumer fintech lending; balances $72.4M at Q2-end; Q3 balances $280M; targeting $900M–$1B by YE25	Q4 consumer credit balances $454M; fees +91% QoQ; “approach $1B by end of ’25”; aiming for diversified programs and possible securitizations	Accelerating
GDV and fee growth	GDV +13% YoY in Q2; +15% YoY in Q3; fee growth outpacing GDV	GDV +19% YoY; fintech fees +16% YoY; high-20% fee growth including credit sponsorship in 2025 (mgmt view)	Strengthening
NIM trajectory	Q2 NIM 4.97%; Q3 impacted by reversals; 2025 NIM expected stable ~4.90–5.00% per Q3 commentary	Q4 NIM 4.55% on $1.3M reversal and product mix; management expects near-term NIM erosion as fee-based products ramp, then recovery as interest-bearing programs scale	Transitory pressure
REBL credit quality	Q2/Q3: at/near peak criticized; third-party review performed; LTVs supportive	Substandard down 14% QoQ to $134.4M; $12.3M substandard repaid in Jan without principal loss; expect continued declines (with possible small inflows)	Improving
Capital allocation	Q2–Q3: heavy 2024 buybacks ($250M); 2025 planned $150M; potential debt reissue for buybacks	2025 buybacks $150M, repay $96M senior debt; may reissue debt depending on rates; guidance excludes buybacks	Prudent, flexible

Management Commentary

“The Bancorp earned $1.15 a share for the fourth quarter and $4.29 for the full year 2024… led by the growth of total fintech fees… and a significant reduction of shares year-over-year” .
“GDV has continued to be accelerated… January we’re still seeing 19%, 20% GDV growth… fee growth… at least in the high 20s if you include the credit sponsorship piece” .
“We are affirming ‘25 guidance of $5.25 a share… does not include $150 million of share buybacks for ’25… [reduced] $100 million in ’25 from ’24 to facilitate the repayment of $96 million of senior secured debt” .
On consumer fintech accounting: “$19.6 million provision for credit losses and $19.6 million in noninterest income, resulting in no impact to net income” .
On REBL: “We think we’re over the peak now… should show real good progress this quarter and going into next quarter” .

Q&A Highlights

GDV and fee outlook: Management cited sustained 19–20% GDV growth into January and expects high-teens to high-20s fee growth in 2025, with credit sponsorship additive to base ACH/card fees .
NIM vs fee mix: Near-term NIM may erode as fee-based products (e.g., MyPay) scale; later, interest-bearing fintech programs are expected to lift NIM as mix shifts .
REBL criticized assets: Leaders believe criticized/substandard have peaked; expect sequential reductions, acknowledging potential small inflows; strong LTVs and loan sales/modifications underpin outlook .
Credit sponsorship risk structure: Offsets, collateral, and interchange flows significantly mitigate losses; aim to tweak contracts to avoid accounting distortions going forward .
Capital deployment: Repay $96M senior secured debt; potential reissue if attractive; commitment to returning earnings via buybacks subject to valuation .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and Revenue was unavailable at query time; estimate comparisons are therefore not included.
Management’s reaffirmed FY25 EPS guidance of $5.25 (excluding 2025 buybacks) and accelerating fintech fee trajectory may prompt upward bias to fee-related revenue estimates, while near-term NIM pressure from product mix could temper net interest income expectations .

Key Takeaways for Investors

Fintech-led flywheel: Strong GDV (+19% YoY) and expanding product set (rapid funds, credit sponsorship) are driving double-digit fee growth and deposit inflows, supporting sustained EPS expansion .
EPS durability: Q4 EPS $1.15 with 2025 EPS $5.25 affirmed despite NIM headwinds, reflecting operating leverage, buybacks, and fee momentum .
Credit normalization: REBL substandard balances fell 14% QoQ; third-party review, supportive LTVs, and loan sales/mods reduce loss risk and headline risk into 1H25 .
Balance sheet strength: 94% insured deposits, diversified loan mix (SBLOC/IBLOC, SBA, leasing), and ample contingent liquidity (> $3.0B in lines) provide resilience .
Tactical capital plan: 2025 buybacks scaled to $150M to repay $96M debt; potential reissue offers optionality to accelerate repurchases on dislocations .
Trading setup: Near-term NIM pressure is transitory per management; watch for catalysts from consumer credit balances approaching ~$1B in 2025 and OREO monetization .
Monitor disclosures: Expect contract/accounting refinements to smooth consumer fintech credit enhancement presentation; follow REBL asset sales and securitization pace .

Bancorp, Inc. (TBBK)·Q4 2024 Earnings Summary