• Earnings Per Share (EPS): $1.50 for Q4 and $4.29 for the full year 2024; 41% increase for Q4 and 23% for the full year.
• Total Revenue Growth: 8% year-over-year, excluding $19.6 million of consumer fintech noninterest income.
• Fintech Fees Growth: 18% for the year, 29% in Q4 year-over-year.
• Gross Dollar Volume (GDV) Growth: 15% for the full year, 19% in Q4 year-over-year.
• Net Interest Margin: 4.55% in Q4 2024, compared to 4.78% in Q3 2024.
• Noninterest Income: $34.7 million in Q4 2024, 28% higher than Q4 2023.
• Noninterest Expense: $51.8 million in Q4 2024, 14% higher than Q4 2023.
• Year-End Deposits Growth: 16% year-over-year, reaching $6.99 billion.
• Credit Sponsorship Fee Growth: 91% quarter-over-quarter in Q4.
• Provision for Credit Losses: $2 million in Q4 2024, compared to $4.1 million in Q4 2023.
• Share Buyback: $250 million in 2024, with a planned $150 million in 2025.

• Warning! GuruFocus has detected 5 Warning Sign with TBBK.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Bancorp Inc (NASDAQ:TBBK) reported a significant year-over-year EPS increase of 41% for Q4 and 23% for the full year 2024.
• Fintech Solutions group drove profitability with a 16% year-over-year growth in deposits and a 19% growth in GDV for Q4.
• The company achieved a substantial reduction in shares by approximately 10% due to a $250 million buyback.
• Credit sponsorship fees grew 91% quarter over quarter, with loan balances increasing from $280 million to $454 million.
• The Bancorp Inc (NASDAQ:TBBK) affirmed its 2025 guidance of $5.25 EPS, excluding $150 million of planned share buybacks.

Negative Points

• The net interest margin decreased to 4.55% in Q4 from 4.78% in Q3 2024, partly due to interest reversals on rebel loans.
• Noninterest expense increased by 14% year-over-year, driven by a 22% rise in salaries and benefits.
• The company recorded a $19.6 million provision for credit losses, offset by noninterest income, resulting in no net income impact.
• There were two smaller nonaccrual loans post-quarter end, totaling just under $10 million, indicating potential credit quality concerns.
• Buybacks for 2025 are reduced by $100 million compared to 2024 to facilitate the repayment of $96 million of senior secured debt.

Q & A Highlights

Q: Can you provide insights on the acceleration of GDV in Q4 and expectations for 2025? How does this impact fee income? A: Damian Kozlowski, CEO: GDV growth remains strong, continuing at 19-20% in early 2025. Fee income is expected to grow in the high 20s, driven by expanded product offerings and credit sponsorship. The base fees, including ACH and card fees, are projected to grow in the high teens, supported by strong GDV growth.

Q: How do you foresee the net interest margin (NIM) evolving in 2025, given the current trends in interest income and fee income? A: Damian Kozlowski, CEO: Near-term NIM may see some compression due to strong deposit growth and fee-based products. However, as new lending programs are implemented, interest income will increase, balancing out the fee income. The economic benefit remains strong despite accounting categorizations.

Q: Can you elaborate on the recent nonaccrual loans and your confidence in managing criticized and classified loans? A: Damian Kozlowski, CEO: We believe we are past the peak of criticized loans and expect significant reductions in the coming quarters. The $10 million in nonaccruals is a developing situation, but we have strong protection against losses and expect overall improvements in loan quality.

Q: Could you explain the structure of your consumer fintech loan agreements and how credit provisions are managed? A: Damian Kozlowski, CEO: Our agreements are backed by client offsets, interchange, and collateral. We hold significant protection against losses, and the agreements are structured to minimize risk. Adjustments to technical accounting guidance are being considered to better reflect these protections.

Q: What are the expectations for the credit-enhanced program's growth, and how will it impact deposits? A: Damian Kozlowski, CEO: We anticipate reaching over $1 billion in credit sponsorship balances this year, primarily from existing partners. The associated deposits will vary, but the program's rolling nature ensures that balances remain manageable. The focus is on low-risk business initially, with diversification planned.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.