Bancorp Fintech Fees Rise as Mix Shifts From Interest

The Tip Desk · November 1, 2026 · 3 min read

Fintech fees were $41.8 million in the third quarter as net interest margin fell to 3.75% and average Fintech loans reached $1.55 billion.

The Bancorp, Inc. (TBBK), a financial holding company that has built its franchise around sponsored fintech lending and payments, reported net income of $62.8 million, or $1.53 a share, for the third quarter of 2026, up 29.7% from $1.18 a share a year earlier.

The year-over-year earnings lift included $10.3 million of tax benefits from transferable investment tax credits, of which $7.3 million related to carrybacks to prior periods and was treated as non-core. Adjusted net income, which excludes the $7.3 million non-core carryback benefit plus $4.3 million of restructuring costs and a $1.9 million legal-settlement accrual, was $60.4 million, up 9.9% from $54.9 million a year earlier. Core earnings were $1.47 a share.

Fintech remained the operating engine. Total fintech fees were $41.8 million, up 19.2% from $35.1 million a year earlier, which the company attributed to organic volume growth with existing partners. Gross dollar volume on prepaid, debit and credit cards was $54.33 billion. Consumer credit fees from fintech loans were $7.7 million. Payment fees of $34.1 million were little changed from the prior quarter.

The balance-sheet mix continued to tilt toward sponsored lending. Average fintech loans were $1.55 billion, up 141.4% from a year earlier. Ending fintech loans were $936.6 million, or 12.7% of the book, after a second-quarter drop the bank had tied to payment-processing timing. Those loans include $259.8 million of secured credit-card balances and $676.8 million of short-term liquidity products, all covered by partner credit enhancements.

That mix shift is what compressed the interest franchise. Net interest margin was 3.75%, down 10 bps from 3.85% in the second quarter. Net interest income was $90.1 million. The company said the year-over-year NII decline reflected higher funding costs, including $4.6 million more short-term borrowing interest, and a shift toward fintech loans, which primarily generate fee income. Average deposits of $8.42 billion were essentially unchanged from the prior quarter; the average deposit cost was 1.72%. Fintech partnerships generated 96% of deposits.

Total provision for the third quarter of 2026 was $40.6 million, up from $26.1 million in the prior quarter but down from $45.1 million a year earlier. Fintech provision was $40.0 million, up from $25.8 million in the prior quarter and nearly flat with $39.8 million a year earlier. Total net charge-offs were $40.7 million, or 2.09% of average loans annualized. Fintech net charge-offs were $39.5 million, a 10.21% annualized ratio. Non-fintech provision was $0.7 million. The allowance for credit losses ended at $63.5 million. Criticized loans were $166.5 million, up 14% from the second quarter, driven primarily by a $17.8 million increase in criticized real-estate bridge loans. In October, $27.6 million of those REBL criticized loans were recapitalized with new counterparties.

Core non-interest expense was $57.4 million, and the core efficiency ratio was 42.2%. The company said the slight expense increase was driven by higher legal costs.

The Bancorp repurchased $50.0 million of shares in the quarter, matching the prior two quarters, for a year-to-date $150.0 million. It is maintaining 2026 Core EPS guidance of $5.95 to $6.05 a share, including $200 million of 2026 buybacks. It provided a 2027 Core EPS baseline of $7.00 to $7.20 a share and initiated preliminary 2028 Core EPS guidance of $8.00 to $8.20 a share, and said it is targeting buybacks through the first quarter of 2028 of about 100% of adjusted net income. Management said three major fintech initiatives, restructuring and AI-driven productivity, and continued buybacks will drive EPS accretion.