Bancorp Q3 2026 earnings rise 14.3% to $62.8M
Fintech loans made up 19.6% of average loans in the third quarter, and the company expects further margin compression as their share grows.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Bancorp, Inc. (TBBK) reported third-quarter 2026 net income of $62.8 million, up from $54.9 million a year earlier; diluted earnings per share were $1.53 versus $1.18. Fintech fees increased to $41.8 million from $35.1 million. Income tax expense was $8.9 million, including a $10.3 million benefit from purchased transferable tax credits.
Net interest margin fell to 3.75% from 4.45%, as a larger share of fintech loans—which primarily generate fees rather than interest—lowered the margin. Operating cash flow was $144.9 million for the nine months ended September 30, 2026, compared with $196.2 million a year earlier. The company intends to discontinue retail and wholesale small-business-loan originations by the end of 2026 while managing the existing portfolio. Its board approved repurchases of up to $350.0 million from January 1, 2027 through March 31, 2028.
1 point · 0 major0 major · 1 point
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Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income rose 14.3% to $62.8 million.
Negative
- Moderate pointNine-month operating cash flow was $144.9 million, down from $196.2 million.
Filing Explained
The next $350 million repurchase authorization is only a ceiling; completed 2026 buybacks had already reduced outstanding shares by September 30.
By
The new
As of
Key Figures
Net income: $62.8 million
Diluted earnings per share: $1.53 per share
Fintech fees: $41.8 million
+3 more
6 metrics
Net income
$62.8 million
Three months ended September 30, 2026; $54.9 million in 2025
Diluted earnings per share
$1.53 per share
Three months ended September 30, 2026; $1.18 per share in 2025
Fintech fees
$41.8 million
Three months ended September 30, 2026; $35.1 million in 2025
Net interest margin
3.75%
Three months ended September 30, 2026; 4.45% in 2025
Net cash provided by operating activities
$144.9 million
Nine months ended September 30, 2026; $196.2 million in 2025
Repurchase authorization
Up to $350.0 million
January 1, 2027 through March 31, 2028
Key Terms
net interest margin, credit enhancement asset, Non-accrual loans, Level 3 measurement
4 terms
net interest margin financial
"Our net interest margin for the third quarter of 2026 was 3.75%"
Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.
credit enhancement asset financial
"The Company has recognized a credit enhancement asset on the Condensed Consolidated Balance Sheets"
Non-accrual loans financial
"non-accrual loans with and without a specific ACL"
A non-accrual loan is a loan a lender has decided is unlikely to produce the scheduled interest payments, so the lender stops counting future interest as income and may record the loan at a reduced value. Think of it like renting out a house where the tenant has stopped paying: you stop counting future rent as earnings because it’s uncertain you’ll get it. For investors, a rise in non-accrual loans signals worsening credit quality, lower reported income and higher potential losses that can weaken a bank’s capital and share price.
Level 3 measurement financial
"is a Level 3 measurement"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much did TBBK earn in Q3 2026?
Bancorp, Inc. reported third-quarter 2026 net income of $62.8 million, compared with $54.9 million in third-quarter 2025; diluted earnings per share were $1.53, versus $1.18.
How much can TBBK repurchase under its new authorization?
The board approved repurchases of up to $350.0 million from January 1, 2027 through March 31, 2028. The authorization does not obligate the company to repurchase shares, and the company may suspend, modify, or discontinue the program at any time.
What share of TBBK's average loan portfolio was fintech in Q3 2026?
Fintech loans represented 19.6% of the total average loan portfolio in the third quarter of 2026, compared with 9.6% in the third quarter of 2025. The company says these loans primarily generate fee income rather than interest income.
How much of TBBK's deposits came from fintech in September 2026?
As of September 30, 2026, 96.4% of total deposits were sourced from the Fintech Solutions business, primarily through program sponsorship. The company delivers payment, deposit, and lending products through partner relationships.
Is TBBK ending small-business lending?
Bancorp, Inc. intends to discontinue retail and wholesale small-business-loan originations by the end of 2026, while continuing to manage its existing small-business-loan portfolio.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | ||||||||
| SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended: September 30, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | ||||||||
| SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from: _____ to _____
Commission file number: 000-51018
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
( | ||||||||
| (Address of principal executive offices and zip code) | (Registrant's telephone number, including area code) | |||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1 ) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | Non-accelerated filer | o | |||||||||||||
| Smaller reporting company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of October 30, 2026, there were 39,930,401 outstanding shares of common stock, $1.00 par value.
Table of Contents
THE BANCORP, INC.
| Form 10-Q Index | ||
| Page | ||||||||
Part I Financial Information | ||||||||
Item 1. | Financial Statements | 3 | ||||||
Condensed Consolidated Balance Sheets – September 30, 2026 and December 31, 2025 | 3 | |||||||
Condensed Consolidated Statements of Operations – Three and nine months ended September 30, 2026 and 2025 | 4 | |||||||
Condensed Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2026 and 2025 | 5 | |||||||
Condensed Consolidated Statements of Changes in Shareholders’ Equity – Three and nine months ended September 30, 2026 and 2025 | 6 | |||||||
Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2026 and 2025 | 8 | |||||||
Notes to Condensed Consolidated Financial Statements | 9 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 55 | ||||||
Item 4. | Controls and Procedures | 55 | ||||||
Part II Other Information | ||||||||
Item 1. | Legal Proceedings | 56 | ||||||
Item 1A. | Risk Factors | 56 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 56 | ||||||
Item 3. | Default Upon Senior Securities | 56 | ||||||
Item 4. | Mine Safety Disclosures | 56 | ||||||
Item 5. | Other Information | 57 | ||||||
Item 6. | Exhibits | 57 | ||||||
Signatures | 58 | |||||||
Table of Contents
PART I – FINANCIAL INFORMATION
| Item 1. Financial Statements | ||
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in thousands, except share data) | (unaudited) | ||||||||||
| ASSETS: | |||||||||||
| Cash and cash equivalents | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Interest-earning deposits | |||||||||||
| Total cash and cash equivalents | |||||||||||
| Investment securities, available-for-sale, at fair value | |||||||||||
| Commercial loans, at fair value | |||||||||||
| Loans, net of deferred loan fees and costs | |||||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Loans, net | |||||||||||
| Stock in Federal Reserve, Federal Home Loan and Atlantic Central Bankers Banks | |||||||||||
| Premises and equipment, net | |||||||||||
| Accrued interest receivable | |||||||||||
| Other real estate owned | |||||||||||
| Deferred tax asset, net | |||||||||||
| Credit enhancement asset | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES: | |||||||||||
| Deposits | |||||||||||
| Demand and interest checking | $ | $ | |||||||||
| Savings and money market | |||||||||||
| Total deposits | |||||||||||
| Short-term borrowings | |||||||||||
| Senior debt | |||||||||||
| Subordinated debentures | |||||||||||
| Other long-term borrowings | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
Common stock - authorized, | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive (loss) income | ( | ||||||||||
Treasury stock at cost, | ( | ( | |||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated statements.
3
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in thousands, except share and per share data) | |||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||
| Loans, including fees | $ | $ | $ | $ | |||||||||||||||||||
| Investment securities | |||||||||||||||||||||||
| Interest-earning deposits | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||
| Long-term borrowings | |||||||||||||||||||||||
| Senior debt | |||||||||||||||||||||||
| Subordinated debentures | |||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Provision (reversal) for credit losses on non-fintech loans | ( | ||||||||||||||||||||||
| Provision for credit losses on Fintech loans | |||||||||||||||||||||||
| Provision (reversal) for unfunded commitments | ( | ( | ( | ||||||||||||||||||||
| Provision for credit losses, total | |||||||||||||||||||||||
| Net interest income after provision for credit losses | |||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||
| Fintech fees: | |||||||||||||||||||||||
| ACH, card and other payment fees | |||||||||||||||||||||||
| Prepaid, debit card and related fees | |||||||||||||||||||||||
| Consumer credit Fintech fees | |||||||||||||||||||||||
| Total fintech fees | |||||||||||||||||||||||
| Net realized and unrealized (losses) gains on commercial loans, at fair value | ( | ||||||||||||||||||||||
| Leasing related income | |||||||||||||||||||||||
| Fintech loan credit enhancement | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total non-interest income | |||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||
| Depreciation | |||||||||||||||||||||||
| Rent and related occupancy cost | |||||||||||||||||||||||
| Data processing expense | |||||||||||||||||||||||
| Audit expense | |||||||||||||||||||||||
| Legal expense | |||||||||||||||||||||||
| Legal settlement (reimbursement) | ( | ||||||||||||||||||||||
| FDIC insurance | |||||||||||||||||||||||
| Software | |||||||||||||||||||||||
| Insurance | |||||||||||||||||||||||
| Telecom and IT network communications | |||||||||||||||||||||||
| Consulting | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total non-interest expense | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share - basic | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share - diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares - basic | |||||||||||||||||||||||
| Weighted average shares - diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated statements.
4
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income, net— Investment securities available for sale: | |||||||||||||||||||||||
| Change in net unrealized (loss) gain | ( | ( | |||||||||||||||||||||
| Income tax (benefit) expense related to items of other comprehensive income | ( | ( | |||||||||||||||||||||
| Other comprehensive (loss) income, net | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated statements.
5
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
| (Dollars in thousands, except share data) | ||||||||||||||||||||||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock shares issued | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock | Total | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued from restricted units, net of tax benefits | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss net of reclassification adjustments and tax | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued from restricted units, net of tax benefits | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss net of reclassification adjustments and tax | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss net of reclassification adjustments and tax | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
(1)For each of the three months ended March 31, 2026, June 30, 2026 and September 30, 2026, common stock repurchases include 843,061 , 870,129 and 822,229 shares, respectively, repurchased in connection with the Company’s share repurchase program approved by its Board of Directors. See Note 8, “Shareholders’ Equity” in this Quarterly Report on Form 10-Q for further information.
The accompanying notes are an integral part of these consolidated statements.
6
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(CONTINUED)
| (Dollars in thousands, except share data) | ||||||||||||||||||||||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock shares issued | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock | Total | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued from restricted units, net of tax benefits | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income net of reclassification adjustments and tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued from restricted units, net of tax benefits | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income net of reclassification adjustments and tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued from option exercises, net of tax benefits | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income net of reclassification adjustments and tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases and excise tax(1) | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
(1)For each of the three months ended March 31, 2025, June 30, 2025 and September 30, 2025, common stock repurchases include 684,445 , 753,898 and 2,034,053 shares, respectively, repurchased in connection with the Company’s share repurchase program approved by its Board of Directors. See Note 8, “Shareholders’ Equity” in this Quarterly Report on Form 10-Q for further information.
The accompanying notes are an integral part of these consolidated statements.
7
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | |||||||||||
| Provision for credit losses, total | |||||||||||
| Fintech loan credit enhancement income | ( | ( | |||||||||
| Accretion of fees, premiums, and discounts, net | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
| Realized gains on commercial loans, at fair value | ( | ( | |||||||||
| Gain on sale of fixed assets | ( | ( | |||||||||
| Loss (gain) on sale of real estate owned | ( | ||||||||||
| Increase in accrued interest receivable | ( | ( | |||||||||
Increase in other assets(1) | ( | ||||||||||
| Increase (decrease) in other liabilities | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Purchase of investment securities available-for-sale | ( | ( | |||||||||
| Proceeds from redemptions and prepayments of securities available-for-sale | |||||||||||
| Net increase in Federal Home Loan Bank stock | ( | ( | |||||||||
| Capitalized investment in other real estate owned | ( | ( | |||||||||
| Sale of repossessed assets | |||||||||||
| Proceeds from sale of other real estate owned | |||||||||||
| Net increase in loans | ( | ( | |||||||||
| Credit enhancement agreement cash inflows | |||||||||||
| Proceeds from sale of fixed assets | |||||||||||
| Commercial loans, at fair value drawn during the period | ( | ( | |||||||||
| Payments on commercial loans, at fair value | |||||||||||
| Purchases of premises and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Net (decrease) in deposits | ( | ( | |||||||||
| Proceeds from short-term borrowings | |||||||||||
| Proceeds of senior debt offering, net | |||||||||||
| Redemption of senior notes | ( | ||||||||||
| Proceeds from the issuance of common stock | |||||||||||
| Repurchases of common stock and excise tax | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Transfers (from) to other real estate owned from commercial loans, at fair value, and loans, net | $ | $ | |||||||||
| Leased vehicles transferred to repossessed assets | $ | $ | |||||||||
(1)During the nine months ended September 30, 2026, the Company paid $74.8 million to acquire transferable tax credits from third parties. There were no transferable tax credits purchased in 2025.
The accompanying notes are an integral part of these consolidated statements.
8
Table of Contents
THE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Note 1. Organization and Nature of Operations | ||
The Bancorp, Inc. (the “Company”) is a Delaware corporation and a registered financial holding company. Its primary, wholly-owned subsidiary is The Bancorp Bank, National Association (the “Bank”), which is a federally chartered commercial bank located in Sioux Falls, South Dakota and is a Federal Deposit Insurance Corporation (“FDIC”) insured institution. As a federally chartered institution, its primary regulator is the Office of the Comptroller of the Currency (“OCC”). The Company has three reportable segments which consist of Fintech Solutions, Credit Solutions and Corporate.
Through partner relationships, Fintech Solutions delivers payment, deposit, and lending products that attract deposits and generate fee income. Deposits generated through these partner relationships are deployed into loan and lease products offered by both Fintech sponsored lending and the Credit Solutions business line. The Company primarily earns fee-based income from fintech products, and such products include sponsored issuance of deposit accounts and debit, credit, and prepaid cards; sponsored lending products for fintech partners; and payment processing solutions, including acquiring, ACH, and near-and real-time payment services in support of its partners.
Credit Solutions is our lending operation and makes the following types of loans: (i) Real estate bridge lending (“REBL”); (ii) Institutional Banking comprised of security-backed lines of credit (“SBLOC”), cash value insurance policy-backed lines of credit (“IBLOC”) and advisor financing; and (iii) Commercial Loans which includes direct lease financing and Small Business Loans (“SBL”) which are comprised primarily of Small Business Administration (“SBA”) loans. In September 2026, the Company announced its intentions to discontinue new SBL originations by the end of 2026.
The Company and the Bank are affected by state and federal legislation and regulations and are subject to regulation by certain state and federal agencies. Accordingly, they are examined periodically by those regulatory authorities.
| Note 2. Significant Accounting Policies | ||
Basis of Presentation
The financial statements of the Company, as of September 30, 2026 and for the three and nine-month periods ended September 30, 2026 and 2025, are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). However, in the opinion of management, these interim financial statements include all necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). The results of operations for the three and nine-month periods ended September 30, 2026 may not necessarily be indicative of the results of operations anticipated for the full year ending December 31, 2026.
Other than as noted below under "Income Taxes", there have been no significant changes as of September 30, 2026 from the Company’s significant accounting policies as described in the 2025 Form 10-K.
Income Taxes
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Subsequent Events
| Note 3. Earnings Per Share | ||
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period, assuming all potentially dilutive common shares were issued.
Diluted earnings per share considers the potential dilution that could occur if securities, including stock options and RSUs or other contracts to issue common stock were exercised and converted into common stock. Stock options are dilutive if their exercise prices are less than the current stock price. RSUs are dilutive because they represent grants over vesting periods which do not require employees to pay exercise prices. The dilution shown in the tables below includes the potential dilution from both stock options and RSUs. The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method excludes the effect of securities that would be anti-dilutive.
The calculation of weighted-average common shares outstanding during each respective period includes activity related to share repurchases made under the Company’s share repurchase programs, as discussed further in “Note 8. Shareholders’ Equity.”
The following table summarizes the calculation of earnings per share:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in thousands except share and per share data) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares - basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Common stock options and RSUs | |||||||||||||||||||||||
| Weighted average shares - diluted | |||||||||||||||||||||||
| Basic and diluted earnings per share: | |||||||||||||||||||||||
| Net income per share - basic | $ | $ | $ | $ | |||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Common stock options and RSUs | ( | ( | ( | ( | |||||||||||||||||||
| Net income per share - diluted | $ | $ | $ | $ | |||||||||||||||||||
| Included in the computation of diluted shares: | |||||||||||||||||||||||
| Stock options with exercise price below average market price | |||||||||||||||||||||||
| Share count | |||||||||||||||||||||||
| Minimum exercise price | $ | $ | $ | $ | |||||||||||||||||||
| Maximum exercise price | $ | $ | $ | $ | |||||||||||||||||||
| Excluded from the computation of diluted shares: Antidilutive securities | |||||||||||||||||||||||
| Outstanding stock-based compensation awards, shares | |||||||||||||||||||||||
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| Note 4. Investment Securities | ||
The Company’s investments in debt securities are classified as available-for-sale, and are summarized as follows (dollars in thousands):
| September 30, 2026 | |||||||||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||
| U.S. Government agency securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Tax-exempt obligations of states and political subdivisions | ( | ||||||||||||||||||||||
| Taxable obligations of states and political subdivisions | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Collateralized mortgage obligation securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||
| U.S. Government agency securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Tax-exempt obligations of states and political subdivisions | ( | ||||||||||||||||||||||
| Taxable obligations of states and political subdivisions | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Collateralized mortgage obligation securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
The amortized cost and fair value of the Company’s investment securities at September 30, 2026, by contractual maturity, are shown below (dollars in thousands). Expected maturities may differ from contractual maturities based on the timing of cashflows from the underlying collateral.
| Available-for-sale | |||||||||||
| Amortized cost | Fair value | ||||||||||
| Due before one year | $ | $ | |||||||||
| Due after one year through five years | |||||||||||
| Due after five years through ten years | |||||||||||
| Due after ten years | |||||||||||
| $ | $ | ||||||||||
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The table below indicates the length of time individual securities had been in a continuous unrealized loss position (dollars in thousands):
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized losses | Fair Value | Unrealized losses | Fair Value | Unrealized losses | |||||||||||||||||||||||||||||||||
| U.S. Government agency securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Tax-exempt obligations of states and political subdivisions | ( | ( | ||||||||||||||||||||||||||||||||||||
| Taxable obligations of states and political subdivisions | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligation securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total unrealized loss position investment securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized losses | Fair Value | Unrealized losses | Fair Value | Unrealized losses | |||||||||||||||||||||||||||||||||
| U.S. Government agency securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Tax-exempt obligations of states and political subdivisions | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Taxable obligations of states and political subdivisions | ( | ( | ||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligation securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total unrealized loss position investment securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Note 5. Loans, net | ||
The Company’s loans originate from several lending lines of business, including:
•SBLs, or small business loans, are comprised primarily of Small Business Administration “SBA” loans.
•Direct lease financing includes lease financing for commercial and government vehicle fleets and, to a lesser extent, provides lease financing for other equipment.
•SBLOC, or securities-backed lines of credit, are made to individuals, trusts and other entities and are secured by a pledge of marketable securities maintained in one or more accounts for which the Company obtains a securities account control agreement.
•IBLOC, or insurance policy cash value-backed lines of credit, are collateralized by the cash surrender value of eligible insurance policies.
•Advisor financing consists of loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession.
•REBL, or real estate bridge lending, are transitional commercial mortgage loans which are made to improve and rehabilitate existing properties which already have cash flow, and which are collateralized by those properties.
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•Fintech loans consist of short-term extensions of credit, including secured credit card loans, made in conjunction with marketers and servicers.
•Other loans include warehouse financing of REBL loan sales to third-party purchasers, and loans the Company generally no longer offers, including commercial loans, CRA loans and HELOC.
Major classifications of loans, excluding commercial loans at fair value, are as follows (dollars in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Loans recorded at amortized cost: | |||||||||||
| SBL non-real estate | $ | $ | |||||||||
| SBL commercial mortgage | |||||||||||
| SBL construction | |||||||||||
| SBLs | |||||||||||
| Direct lease financing | |||||||||||
| SBLOC / IBLOC | |||||||||||
| Advisor financing | |||||||||||
| Real estate bridge lending | |||||||||||
Fintech(1) | |||||||||||
Other loans(2) | |||||||||||
| Total loans | |||||||||||
| Unamortized loan fees and costs | |||||||||||
| Total loans, net of deferred loan fees and costs | $ | $ | |||||||||
_________
(1)As of September 30, 2026 and December 31, 2025, fintech loans included $259.8 million and $729.1 million of secured credit card accounts which are backed dollar for dollar by cash collateral provided by each individual cardholder and are required to be repaid in full monthly. For secured credit card accounts, we recognize a loan receivable and a deposit liability for the cash collateral that secures those accounts. The remaining fintech loans consist of cashflow underwritten short-term liquidity products to individual borrowers ranging in maturity from 30 to 365 days.
(2)As of September 30, 2026 and December 31, 2025, Other loans includes $109.9 million and $110.7 million, respectively, related to the warehouse financing of REBL sales to third-party purchasers.
During the nine months ended September 30, 2026 and 2025, the Company purchased $8.1 million and $23.1 million of SBLs, respectively, none of which were credit deteriorated. Additionally, in the nine months ended September 30, 2026 and 2025, the Company participated in SBLs with other institutions in the amount of $1.8 million and $15.4 million, respectively.
Non-Accrual and Delinquency
A detail of the Company’s delinquent and non-accrual loans by loan category is as follows (dollars in thousands):
| September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Past-due and Non-Accrual | |||||||||||||||||||||||||||||||||||||||||
| 30-59 days past due | 60-89 days past due | 90+ days still accruing | Non-accrual | Total past due and non-accrual | Current | Total loans | |||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||
| SBL construction | |||||||||||||||||||||||||||||||||||||||||
| Direct lease financing | |||||||||||||||||||||||||||||||||||||||||
| SBLOC / IBLOC | |||||||||||||||||||||||||||||||||||||||||
| Advisor financing | |||||||||||||||||||||||||||||||||||||||||
| Real estate bridge lending | |||||||||||||||||||||||||||||||||||||||||
| Fintech | |||||||||||||||||||||||||||||||||||||||||
| Other loans | |||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
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| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Past-due and Non-Accrual | |||||||||||||||||||||||||||||||||||||||||
| 30-59 days past due | 60-89 days past due | 90+ days still accruing | Non-accrual | Total past due and non-accrual | Current | Total loans | |||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||
| SBL construction | |||||||||||||||||||||||||||||||||||||||||
| Direct lease financing | |||||||||||||||||||||||||||||||||||||||||
| SBLOC / IBLOC | |||||||||||||||||||||||||||||||||||||||||
| Advisor financing | |||||||||||||||||||||||||||||||||||||||||
| Real estate bridge lending | |||||||||||||||||||||||||||||||||||||||||
| Fintech | |||||||||||||||||||||||||||||||||||||||||
| Other loans | |||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
The following table summarizes non-accrual loans with and without a specific ACL (dollars in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Non-accrual loans with a related ACL | Related ACL | Non-accrual loans without a related ACL | Total non-accrual loans | Non-accrual loans with a related ACL | Related ACL | Non-accrual loans without a related ACL | Total non-accrual loans | ||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL construction | |||||||||||||||||||||||||||||||||||||||||||||||
| Direct lease financing | |||||||||||||||||||||||||||||||||||||||||||||||
| SBLOC / IBLOC | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate bridge lending | |||||||||||||||||||||||||||||||||||||||||||||||
| Other loans | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Interest which would have been earned on loans classified as non-accrual for the nine months ended September 30, 2026 and 2025, was $2.7 million and $2.2 million, respectively. No
During the nine months ended September 30, 2026 amounts reversed from interest income totaled $0.9 million, and primarily consist of $0.4 million of REBL and $0.4 million of SBL commercial mortgage. During the nine months ended September 30, 2025 amounts reversed from interest income totaled $2.0 million and primarily consist of $1.2 million of REBL and $0.5 million of SBL commercial mortgage. The interest reversals represent interest receivable balance on loans at the time of transfer into non-accrual status.
Loan Modifications
Loans modified for borrowers experiencing financial difficulty, and related information are as follows (dollars in thousands):
| Three months ended September 30, 2026 | Nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payment deferral | Payment delay and term extension | Total | Percent of total loan category | Payment deferral | Payment delay and term extension | Total | Percent of total loan category | ||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||
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| Three months ended September 30, 2025 | Nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payment deferral | Interest rate reduction and payment deferral | Total | Percent of total loan category | Payment deferral | Interest rate reduction and payment deferral | Total | Percent of total loan category | ||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||
There were no loan modifications for the three months ended September 30, 2025. The following tables show an analysis of the delinquency status at the end of the respective periods for loans that were modified during the periods presented (dollars in thousands):
| Three months ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| 30-59 days past due | 60-89 days past due | 90+ days still accruing | Non-accrual | Total delinquent | Current | Total | |||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| 30-59 days past due | 60-89 days past due | 90+ days still accruing | Non-accrual | Total delinquent | Current | Total | |||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| 30-59 days past due | 60-89 days past due | 90+ days still accruing | Non-accrual | Total delinquent | Current | Total | |||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | |||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
The following tables describe the financial effect of modifications made during the periods presented:
| Three months ended September 30, 2026 | Nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||
| Combined Rate and Maturity | Combined Rate and Maturity | ||||||||||||||||||||||||||||||||||
| Weighted average interest reduction | Weighted average term extension (in months) | More-than-insignificant-payment delay | Weighted average interest reduction | Weighted average term extension (in months) | More-than-insignificant-payment delay | ||||||||||||||||||||||||||||||
| SBL non-real estate | — | % | % | ||||||||||||||||||||||||||||||||
| SBL commercial mortgage | — | — | % | ||||||||||||||||||||||||||||||||
| Three months ended September 30, 2025 | Nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Combined Rate and Maturity | Combined Rate and Maturity | ||||||||||||||||||||||||||||||||||
| Weighted average interest reduction | Weighted average term extension (in months) | More-than-insignificant-payment delay | Weighted average interest reduction | Weighted average term extension (in months) | More-than-insignificant-payment delay | ||||||||||||||||||||||||||||||
| SBL non-real estate | — | % | — | % | |||||||||||||||||||||||||||||||
| SBL commercial mortgage | — | — | % | ||||||||||||||||||||||||||||||||
The Company had no commitments to extend additional credit to loans classified as modified as of September 30, 2026, and there were $0.3 million specific reserves on the $2.8 million of loans classified as modified.
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Allowance for Credit Losses
The Company had no significant changes to its quantitative and qualitative measures used in measuring the allowance for credit losses as of September 30, 2026. For additional information regarding the Company’s allowance estimate, see Note 2, “Summary of Significant Accounting Policies” and Note 5, “Loans, net,” in the 2025 Form 10-K.
A summary of the Company’s primary portfolio pools and loans accordingly classified by year of origination is as follows (dollars in thousands):
| As of September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving | Total | ||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL construction, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Direct lease financing, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBLOC/IBLOC, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Advisor financing, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| REBL, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Fintech, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Other loans, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Total | ||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBL construction, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Direct lease financing, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| SBLOC/IBLOC, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Advisor financing, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| REBL, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Fintech, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-rated | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Other loans, total | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
In the above tables, the special mention classification indicates weaknesses that may, if not cured, threaten the borrower’s future repayment ability. A substandard classification reflects an existing weakness indicating the possible inadequacy of net worth and other repayment sources. These classifications are used both by regulators and peers, as they have been correlated with an increased probability of credit losses.
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A detail of the changes in the ACL is as follows (in thousands):
| September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | SBL commercial mortgage | SBL construction | Direct lease financing | SBLOC / IBLOC | Advisor financing | REBL | Fintech | Other loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Beginning 1/1/2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision (reversal) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | SBL commercial mortgage | SBL construction | Direct lease financing | SBLOC / IBLOC | Advisor financing | REBL | Fintech | Other loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Beginning 1/1/2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision (reversal) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
A summary of the Company’s gross charge-offs classified by portfolio segment and year of origination is as follows (dollars in thousands):
| Nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| SBL commercial mortgage | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Direct lease financing | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| SBLOC / IBLOC | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Fintech | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Total Charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||
| SBL non-real estate | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Direct lease financing | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Fintech | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Other loans | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total Charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
The Company has agreements with a partner to originate and service fintech loans, which includes credit enhancement provisions through which incurred losses on fintech loans are covered by the partner. The Company recognizes an estimate of loss on this portfolio through its allowance for credit losses on its fintech loans on the Condensed Consolidated Balance Sheets, with provision for credit losses on fintech loans recognized on the Condensed Consolidated Statements of Operations. In addition, the Company recognizes a corresponding amount of credit enhancement asset on the Condensed Consolidated Balance Sheets and non-interest income — fintech loan credit enhancement in the Condensed Consolidated Statements of Operations. The measurement of the expected loan losses and the related credit enhancement are based on the same estimate and are equal and correlate to like amounts in the Condensed Consolidated Statements of Operations. The Company has recognized a credit enhancement asset on the Condensed Consolidated Balance Sheets related to the estimated recovery of its realized losses on fintech loans of $31.2 million and $31.1 million as of September 30, 2026 and December 31, 2025, respectively. All fintech loans are covered by credit enhancement agreements as of September 30, 2026.
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Direct lease financing
The scheduled maturities of the direct financing leases reconciled to the total lease receivables as of September 30, 2026 is as follows (dollars in thousands):
| Remaining 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 and thereafter | |||||
| Total undiscounted cash flows | |||||
Residual value(1) | |||||
| Difference between undiscounted cash flows and discounted cash flows | ( | ||||
| Present value of lease payments recorded as lease receivables | $ | ||||
(1) Of the total residual value, $40.0 million is not guaranteed by the lessee or other guarantors.
Off-Balance Sheet Exposure
In addition to estimating credit loss for outstanding loans, the Company estimates expected credit losses over the entire period in which there is exposure to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The estimate of loss for unfunded loan commitments relates to our off-balance sheet credit exposure, and is adjusted through the provision for unfunded commitments. The estimate considers the likelihood that funding will occur over the estimated life of the commitment. The amount of the reserve on such exposures as of September 30, 2026 and as of December 31, 2025 was $1.5 million and $1.4 million, respectively, and is recognized within Other liabilities in the Condensed Consolidated Balance Sheets.
| Note 6. Debt | ||
The Company’s debt and borrowing arrangements consist of:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Senior debt: | |||||||||||
| Senior notes due 2030 | $ | $ | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Senior debt, net | $ | $ | |||||||||
| Subordinated debentures | $ | $ | |||||||||
| Other long-term borrowings | $ | $ | |||||||||
Assets pledged as collateral that are not available to pay the Company’s general obligations as of September 30, 2026 consisted of $5.12 billion of loans held for investment at amortized cost and $1.27 billion of investment securities that were pledged for short-term-borrowing agreements. In addition, there were $4.3 million of loans held for investment at amortized cost that were pledged for other long-term borrowings at September 30, 2026.
Short-term borrowings
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| Note 7. Fair Value Measurements | ||
Recurring Measurements
Assets measured at fair value on a recurring basis are outlined below, summarized by fair value hierarchy (dollars in thousands):
| September 30, 2026 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Investment securities, available-for-sale: | |||||||||||||||||||||||
| U.S. Government agency securities | $ | $ | $ | $ | |||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Obligations of states and political subdivisions | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Collateralized mortgage obligation securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Total investment securities, available-for-sale | |||||||||||||||||||||||
| Commercial loans, at fair value | |||||||||||||||||||||||
| Credit enhancement asset | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Investment securities, available-for-sale: | |||||||||||||||||||||||
| U.S. Government agency securities | $ | $ | $ | $ | |||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Obligations of states and political subdivisions | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Collateralized mortgage obligation securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Total investment securities, available-for-sale | |||||||||||||||||||||||
| Commercial loans, at fair value | |||||||||||||||||||||||
| Credit enhancement asset | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Activity in Level 3 Commercial loans at fair value is summarized below (dollars in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
Total net gains (realized/unrealized) included in earnings(1) | |||||||||||
| Purchases, advances, sales and settlements: | |||||||||||
| Advances | |||||||||||
| Settlements | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
| Amount included in earnings attributable to the change in unrealized gains (losses) related to assets still held at period end | $ | $ | |||||||||
(1)For commercial loans at fair value, gains or losses are recognized in Non-interest income—Net realized and unrealized gains on commercial loans, at fair value in the Condensed Consolidated Statement of Operations.
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Information related to assumptions used in the valuation of Level 3 instruments is as follows:
| Discount Rate Assumption | |||||||||||||||||||||||
| At September 30, 2026 | At December 31, 2025 | ||||||||||||||||||||||
| Range | Weighted average | Range | Weighted average | ||||||||||||||||||||
| Commercial loans, at fair value: | |||||||||||||||||||||||
| Commercial - SBA | % | % | % | % | |||||||||||||||||||
| Non-SBA commercial real estate | % | % | % | ||||||||||||||||||||
Non-Recurring Measurements
Assets measured at fair value on a nonrecurring basis consist of certain loans that are collateral-dependent with specific reserves that are recognized in Loans, net on our Condensed Consolidated Balance Sheets, and Other real estate owned.
Collateral-dependent loans were $25.8 million and $15.2 million as of September 30, 2026 and December 31, 2025, respectively. Loans recorded at amortized cost that are in non-accrual status are treated as collateral dependent to the extent they have resulted from borrower financial difficulty (and not from administrative delays or other mitigating factors) and are not brought current. For these loans, fair value is measured based on inputs including recent sales of similar collateral, and is a Level 3 measurement. At September 30, 2026, the Company’s basis in the non-accrual loans, or the loan principal of $31.3 million was reduced by specific reserves of $5.5 million within the ACL as of that date, representing the deficiency between principal and estimated collateral values, which were reduced by estimated costs to sell.
Other real estate owned (OREO) were $70.7 million and $60.7 million as of September 30, 2026 and December 31, 2025, respectively and are periodically measured for impairment based on any decline in fair value below carrying value. For OREO, fair value is based upon appraisals of the underlying collateral by third-party appraisers, reduced by 7 % to 10 % for estimated selling costs, and is a Level 3 non-recurring measurement. During the nine months ended September 30, 2026 , the Company recognized an unrealized loss of $0.4 million from the impairment of OREO and the Company did not have any realized gains or losses from the disposition of OREO. During the nine months ended September 30, 2025, the Company did not have any unrealized gains or losses on OREO, and the Company recognized a realized gain of $0.6 million from the disposition of OREO. Unrealized and realized gains or losses on OREO are recognized in Other Non-interest expense in the Condensed Consolidated Statements.
Fair Value of Other Financial Instruments
The following tables provide information regarding carrying amounts and estimated fair values of all the Company’s financial instruments (dollars in thousands):
| September 30, 2026 | |||||||||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||||||||
| Carrying amount | Total Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||
| Investment securities, available-for-sale | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial loans, at fair value | |||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and costs | |||||||||||||||||||||||||||||
| Stock in Federal Reserve, Federal Home Loan and Atlantic Central Bankers Banks | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Credit enhancement asset | |||||||||||||||||||||||||||||
| LIABILITIES: | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Demand and interest checking | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Savings and money market | |||||||||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||||||||
| Senior debt | |||||||||||||||||||||||||||||
| Subordinated debentures | |||||||||||||||||||||||||||||
| Other long-term borrowings | |||||||||||||||||||||||||||||
| Other liabilities: Accrued interest payable | |||||||||||||||||||||||||||||
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| December 31, 2025 | |||||||||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||||||||
| Carrying amount | Total Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||
| Investment securities, available-for-sale | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial loans, at fair value | |||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and costs | |||||||||||||||||||||||||||||
| Stock in Federal Reserve, Federal Home Loan and Atlantic Central Bankers Banks | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Credit enhancement asset | |||||||||||||||||||||||||||||
| LIABILITIES: | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Demand and interest checking | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Savings and money market | |||||||||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||||||||
| Senior debt | |||||||||||||||||||||||||||||
| Subordinated debentures | |||||||||||||||||||||||||||||
| Other long-term borrowings | |||||||||||||||||||||||||||||
| Other liabilities: Accrued interest payable | |||||||||||||||||||||||||||||
| Note 8. Shareholders’ Equity | ||
Share Repurchases
As a means of returning capital to shareholders, the Company implemented the stock repurchase programs described below. Under the repurchase programs, the Company intends to repurchase shares through open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
The planned amounts of repurchases are generally determined by assessing the impact of budgetary earnings projections on regulatory capital requirements. The excess of projected earnings over amounts required to maintain capital requirements is the maximum available for capital return to shareholders, barring any need to retain capital for other purposes. The Board of Directors' authorization represents the maximum amount shares that may be repurchased under the applicable program and does not obligate the Company to repurchase any shares. The Company may suspend, modify or discontinue the repurchase program at any time.
2027- Q1 2028 Repurchase Program
On October 28, 2026 the Board approved a common stock repurchase program of up to $350.0 million from January 1, 2027 through March 31, 2028 (the “2027- Q1 2028 Repurchase Program”).
2026 Repurchase Program
On July 7, 2025, the Board authorized a share repurchase program of up to $200.0 million for 2026 (the “2026 Repurchase Program”). During the three and nine months ended September 30, 2026, the Company repurchased 822,229 and 2,535,419 shares of its common stock in the open market under the 2026 Repurchase Program at an average price of $60.81 and $59.16 per share, respectively.
2025 Repurchase Program
On October 23, 2024, the Board approved a common stock repurchase program for the 2025 fiscal year (the “2025 Repurchase Program”), which authorizes the Company to repurchase $37.5 150.0 million. On July 7, 2025, the Board authorized the increase of the capacity of the Company’s existing share repurchase program for the third and fourth quarters of 2025 to $300.0 million.
During the three and nine months ended September 30, 2025, the Company repurchased 2,034,053 and 3,472,396 shares of its common stock in the open market under the 2025 Repurchase Program at an average price of $73.74 and $64.80 per share, respectively.
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Stock-Based Compensation
Restricted Stock Units (RSUs)
In the first quarter of 2026, the Company granted 388,821 RSUs, having a vesting period of three years . At issuance, the RSUs had a fair value of $62.05 per unit.
For additional information regarding the Company’s stock-based compensation plans, see Note 13, “Stock-Based Compensation,” in the 2025 Form 10-K.
| Note 9. Regulatory Matters | ||
It is the policy of the Federal Reserve that financial holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that a financial holding company should not maintain a level of cash dividends that undermines the financial holding company’s ability to serve as a source of strength to its banking subsidiaries.
Various federal and state statutory provisions limit the amount of dividends that subsidiary banks can pay to their holding companies without regulatory approval. Without the prior approval of the OCC, a dividend may not be paid if the total of all dividends declared by a bank in any calendar year is in excess of the current year’s net income combined with the retained net income of the two preceding years. Additionally, a dividend may not be paid in excess of a bank’s retained earnings. Moreover, an insured depository institution may not pay a dividend if the payment would cause it to be less than “adequately capitalized” under the prompt corrective action framework as defined in the Federal Deposit Insurance Act or if the institution is in default in the payment of an assessment due to the FDIC. Similarly, a banking organization that fails to satisfy regulatory minimum capital conservation buffer requirements will be subject to certain limitations, which include restrictions on capital distributions.
In addition to these explicit limitations, federal and state regulatory agencies are authorized to prohibit a banking subsidiary or financial holding company from engaging in an unsafe or unsound practice. Depending upon the circumstances, the agencies could take the position that paying a dividend would constitute an unsafe or unsound banking practice.
As of September 30, 2026, the Bank met all regulatory requirements for classification as well capitalized under the regulatory framework for prompt corrective action.
The following table sets forth our regulatory capital ratios for the periods indicated:
| Tier 1 capital to average assets ratio | Tier 1 capital to risk-weighted assets ratio | Total capital to risk-weighted assets ratio | Common equity Tier 1 to risk weighted assets | ||||||||||||||||||||
| As of September 30, 2026 | |||||||||||||||||||||||
| The Bancorp, Inc. | % | % | % | % | |||||||||||||||||||
| The Bancorp Bank, National Association | % | % | % | % | |||||||||||||||||||
| “Well capitalized” institution (under federal regulations-Basel III) | % | % | % | % | |||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||
| The Bancorp, Inc. | % | % | % | % | |||||||||||||||||||
| The Bancorp Bank, National Association | % | % | % | % | |||||||||||||||||||
| “Well capitalized” institution (under federal regulations-Basel III) | % | % | % | % | |||||||||||||||||||
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Table of Contents
| Note 10. Commitments and Contingencies | ||
The City Attorney of San Francisco Matter. On November 21, 2023, TBBK Card Services, Inc. (“TBBK Card”), a wholly-owned subsidiary of the Bank, was served with a complaint filed in the Superior Court of the State of California (the “California Superior Court”), captioned People of the State of California, acting by and through San Francisco City Attorney David Chiu, Plaintiff v. InComm Financial Services, Inc., TBBK Card Services, Inc., Sutton Bank, Pathward, N.A., and Does 1-10, Defendants. The complaint filed by the People of the State of California, acting by and through San Francisco City Attorney David Chiu (the “SF City Attorney”) principally alleges that the defendants engaged in unlawful, unfair, or fraudulent business acts and practices related to the packaging of “Vanilla” prepaid cards and the refund process for unauthorized transactions that occurred due to card draining practices. On December 14, 2023, the case was removed to the U.S. District Court for the Northern District of California. On March 26, 2024, the case was remanded to the California Superior Court. TBBK Card has vigorously defended against the claims. On May 6, 2024, TBBK Card filed a motion to quash service of the summons as to TBBK Card for lack of personal jurisdiction. TBBK Card’s motion to quash, and subsequent related appeals, were denied. On December 12, 2025, an amended complaint containing additional factual allegations was filed in the California Superior Court. On September 10, 2026, TBBK Card and the SF City Attorney entered into a settlement agreement which does not require a monetary payment to be made by TBBK Card. The case was subsequently dismissed with prejudice.
The Oxygen Matter. On November 25, 2024, the Bank commenced arbitration through the American Arbitration Association seeking approximately $1.808 million from Oxygen, Inc. (“Oxygen”) owed under a Private Label Account Program Agreement related to unpaid invoices and indemnification obligations owed by Oxygen. On January 13, 2025, Oxygen answered the Bank’s arbitration demand, generally denying the allegations made by the Bank, and filed a Counterclaim against the Bank. The Counterclaim alleges that (i) the termination of the Private Label Account Program Agreement was pretextual, (ii) the Bank breached its notification obligations in terminating the Private Label Account Program Agreement, (iii) the Bank breached the implied covenant of good faith and fair dealing, and (iv) conversion of $1.2 million by the Bank. The ad damnum clause of the Counterclaim also seeks compensatory damages in an amount not less than $40 million. The Bank believes it has meritorious defenses and intends to vigorously defend against the Counterclaim. An arbitration hearing was held in this matter during the third quarter of 2026 and the parties are currently engaged in post-hearing briefing. The Company is not yet able to determine whether the ultimate resolution of this matter will have a material adverse effect on the Company’s financial condition or operations.
The Putative Class Action Matter. On March 14, 2025, Nathan Linden filed a putative securities class action complaint captioned Nathan Linden v. The Bancorp, Inc., et al. in the U.S. District Court for the District of Delaware against the Company and certain of its current and former officers. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and purports to assert a class action on behalf of persons and entities that purchased or otherwise acquired Company securities between January 25, 2024 and March 4, 2025. The complaint alleges, among other things, that the defendants made materially false and/or misleading statements and omissions about the Company’s business, prospects, and operations, with a focus on the Company’s commercial real estate bridge loan (“REBL”) portfolio and related provision for credit losses. On September 29, 2025, the court appointed Southeastern Pennsylvania Transportation Authority (“SEPTA”) as lead plaintiff; the case is now captioned Southeastern Pennsylvania Transportation Authority v. The Bancorp, Inc., et al. On December 22, 2025, SEPTA filed its amended class action complaint, which alleges that between January 26, 2024 and March 25, 2025, the defendants made materially false and/or misleading statements and omissions about certain loans in the Company’s REBL portfolio and related provision for credit losses. The named plaintiff seeks unspecified damages, fees, interest, and costs. The Company intends to vigorously defend against the allegations in the amended complaint. On February 20, 2026, the Company filed its motion to dismiss the amended complaint. On April 21, 2026, SEPTA filed its opposition to the Company’s motion to dismiss. On June 5, 2026, the Company filed its reply in support of its motion to dismiss. The Court’s decision on the Company’s motion to dismiss the amended complaint remains pending. The Company is not yet able to determine whether the ultimate resolution of the matter will have a material adverse effect on the Company’s financial condition or operations.
The Ingenium Matter. On February 2, 2026, the Bank was made aware of a complaint filed in the Delaware Superior Court, Complex Commercial Litigation Division by Ingenium Capital Group, LLC (“Ingenium”) captioned as Ingenium Capital Group, LLC v. The Bancorp Bank, N.A., C.A. No. N26C-01-487 PAW CCLD. Prior to service of the complaint, on February 19, 2026, Ingenium filed its amended complaint. In the amended complaint, Ingenium alleges that the Bank committed fraud or breached a letter of understanding signed in January 2023 by inducing Ingenium to invest upwards of $10 million in Oxygen, Inc. (the same entity that the Bank is arbitrating against in the Oxygen Matter described above) and then by terminating its contract with Oxygen in February 2024. The amended complaint seeks not less than $10 million in damages, plus costs of litigation, and interest. The Bank intends to vigorously defend against the claims. On May 19, 2026, the Bank filed its motion to dismiss the amended complaint. On June 26, 2026, Ingenium filed its opposition to the Bank’s
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motion to dismiss. As of June 30, 2026, briefing on the Bank’s motion to dismiss had not yet been completed. On July 20, 2026, the Bank filed its reply in support of its motion to dismiss. The Court’s decision on the Bank’s motion to dismiss remains pending. The Company is not yet able to determine whether the ultimate resolution of the matter will have a material adverse effect on the Company’s financial condition or operations.
In addition, we are a party to various routine legal proceedings arising out of the ordinary course of our business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or operations.
| Note 11. Segment Financials | ||
The Company's operations are substantially all located in the United States, and are reported under three segments: Fintech, Credit Solutions (which has three sub-segments) and Corporate.
The following tables provide segment information for the periods indicated (dollars in thousands):
| Three months ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest allocation | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||
Provision for credit losses(1) | ( | ( | |||||||||||||||||||||||||||||||||
Non-interest income(1) | |||||||||||||||||||||||||||||||||||
| Direct non-interest expense: | |||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||||||||
| Data processing expense | |||||||||||||||||||||||||||||||||||
| Software | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Total direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Income before non-interest expense allocations | ( | ||||||||||||||||||||||||||||||||||
| Non-interest expense allocations: | |||||||||||||||||||||||||||||||||||
| Risk, financial crimes, and compliance | ( | — | |||||||||||||||||||||||||||||||||
| Information technology and operations | ( | — | |||||||||||||||||||||||||||||||||
| Other allocated expenses | ( | — | |||||||||||||||||||||||||||||||||
| Total non-interest expense allocations | ( | — | |||||||||||||||||||||||||||||||||
| Income before taxes | ( | ||||||||||||||||||||||||||||||||||
| Income tax expense | ( | ||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
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| Three months ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest allocation | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||
Provision for credit losses(1) | ( | ( | |||||||||||||||||||||||||||||||||
Non-interest income(1) | ( | ||||||||||||||||||||||||||||||||||
| Direct non-interest expense: | |||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||||||||||||||
| Data processing expense | |||||||||||||||||||||||||||||||||||
| Software | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Total direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Income before non-interest expense allocations | ( | ||||||||||||||||||||||||||||||||||
| Non-interest expense allocations: | |||||||||||||||||||||||||||||||||||
| Risk, financial crimes, and compliance | ( | — | |||||||||||||||||||||||||||||||||
| Information technology and operations | ( | — | |||||||||||||||||||||||||||||||||
| Other allocated expenses | ( | — | |||||||||||||||||||||||||||||||||
| Total non-interest expense allocations | ( | — | |||||||||||||||||||||||||||||||||
| Income before taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Nine months ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest allocation | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||
Provision for credit losses(1) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Non-interest income(1) | |||||||||||||||||||||||||||||||||||
| Direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||||||||
| Data processing expense | |||||||||||||||||||||||||||||||||||
| Software | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Total direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Income before non-interest expense allocations | ( | ||||||||||||||||||||||||||||||||||
| Non-interest expense allocations: | |||||||||||||||||||||||||||||||||||
| Risk, financial crimes, and compliance | ( | — | |||||||||||||||||||||||||||||||||
| Information technology and operations | ( | — | |||||||||||||||||||||||||||||||||
| Other allocated expenses | ( | — | |||||||||||||||||||||||||||||||||
| Total non-interest expense allocations | ( | — | |||||||||||||||||||||||||||||||||
| Income before taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
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| Nine months ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest allocation | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||
Provision for credit losses(1) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Non-interest income(1) | |||||||||||||||||||||||||||||||||||
| Direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||||||||||||||
| Data processing expense | |||||||||||||||||||||||||||||||||||
| Software | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Total direct non-interest expense | |||||||||||||||||||||||||||||||||||
| Income before non-interest expense allocations | ( | ||||||||||||||||||||||||||||||||||
| Non-interest expense allocations: | |||||||||||||||||||||||||||||||||||
| Risk, financial crimes, and compliance | ( | — | |||||||||||||||||||||||||||||||||
| Information technology and operations | ( | — | |||||||||||||||||||||||||||||||||
| Other allocated expenses | ( | — | |||||||||||||||||||||||||||||||||
| Total non-interest expense allocations | ( | — | |||||||||||||||||||||||||||||||||
| Income before taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
_______________
(1) The following table summarizes the Non-interest income of the Fintech segment from the above segment net income tables. Fintech loan credit enhancement income represents the estimated recovery from a Fintech partner for losses on Fintech loans, where the measurement of the expected loan loss recorded in Provision for credit losses and estimated recovery from credit enhancement are based on the same estimate. The remaining amount of Fintech non-interest income is other fee income.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Fintech loan credit enhancement | $ | $ | $ | $ | |||||||||||||||||||
| Fintech - other fee income | |||||||||||||||||||||||
| Fintech - Non-interest income, total | $ | $ | $ | $ | |||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Credit Solutions | |||||||||||||||||||||||||||||||||||
| Fintech | REBL | Institutional Banking | Commercial | Corporate | Total | ||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information about our results of operations, financial condition, liquidity and asset quality. This information is intended to facilitate your understanding and assessment of significant changes and trends related to our financial condition and results of operations. This MD&A should be read in conjunction with our financial information in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and the interim Condensed Consolidated Financial Statements and notes thereto contained in this Quarterly Report on Form 10-Q.
MD&A is organized in the following sections:
•Overview
•Executive Summary
•Results of Operations
•Financial Condition
•Liquidity and Capital Resources
•Asset and Liability Management
Important Note Regarding Forward-Looking Statements
When used in this Quarterly Report on Form 10-Q, statements regarding The Bancorp’s business, that are not historical facts, are “forward-looking statements.” These statements may be identified by the use of forward-looking terminology, including, but not limited to the words “intend,” “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “plan,” “estimate,” “continue,” or similar words. Forward-looking statements include but are not limited to, statements regarding our annual fiscal 2026 results, increased growth, profitability, and volumes, and our ability to reallocate or reduce resources, and relate to our current assumptions, projections, and expectations about our business and future events, including current expectations about important economic, political, and technological factors, among other factors, and are subject to risks and uncertainties, which could cause the actual results, events, or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Factors that could cause results to differ from those expressed in the forward-looking statements also include, but are not limited to, the risks and uncertainties referenced or described in The Bancorp’s filings with the Securities and Exchange Commission, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our 2025 Form 10-K and other documents that we file from time to time with the Securities and Exchange Commission as well as the following:
•an inconsistent recovery from an extended period of unpredictable economic and growth conditions in the U.S. economy may adversely impact our assets and operating results and result in increases in payment defaults and other credit risks, decreases in the fair value of some assets and increases in our provision for credit losses;
•weak economic and credit market conditions, either globally, nationally or regionally, may result in a reduction in our capital base, reducing our ability to maintain deposits at current levels;
•changes in the interest rate environment, particularly in response to inflation, could adversely affect our revenue and expenses and the availability and cost of capital, cash flows and liquidity;
•volatility in the banking sector (including perception of such conditions) and responsive actions taken by governmental agencies to stabilize the financial system could result in increased regulation or liquidity constraints;
•operating costs may increase;
•adverse legislation or governmental or regulatory policies may be promulgated;
•we may fail to satisfy our regulators with respect to legislative and regulatory requirements;
•management and other key personnel may leave or change roles without effective replacements;
•increased competition may reduce our client base or cause us to lose market share;
•the costs of our interest-bearing liabilities, principally deposits, may increase relative to the interest received on our interest-bearing assets, principally loans, thereby decreasing our net interest income;
•loan and investment yields may decrease, resulting in a lower net interest margin;
•geographic concentration could result in our loan portfolio being adversely affected by regional economic factors;
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•the market value of real estate that secures certain of our loans may be adversely affected by economic and market conditions and other conditions outside of our control such as lack of demand, natural disasters, changes in neighborhood values, competitive overbuilding, weather, casualty losses and occupancy rates;
•cybersecurity risks, including data security breaches, ransomware, malware, “denial of service” attacks and identity theft, could result in disclosure of confidential information, operational interruptions and legal and financial exposure;
•natural disasters, pandemics, other public health crises, acts of terrorism, geopolitical conflict, including trade disputes and tariffs, sanctions, war or armed conflict, such as the conflicts between Russia and Ukraine and the ongoing military operations involving the U.S., Israel and Iran, and the possible expansion of such conflicts in surrounding areas, or other catastrophic events could disrupt the systems of us or third-party service providers and negatively impact general economic conditions;
•we may not be able to sustain our historical growth rates in our loan, prepaid and debit card and other lines of business;
•our focus on growth in fintech solutions and investing in our infrastructure, including through artificial intelligence tools to gain efficiency and productivity, and the future potential impact on our operations and financial condition may result in new operational, legal and financial risks;
•our ability to obtain the anticipated benefits and cost savings of our organizational restructuring activities;
•risks related to actual or threatened litigation;
•our ability to maintain effective internal control over financial reporting;
•our internal controls and procedures may fail or be circumvented, and our risk management policies may not be adequate; and
•we may not be able to manage credit risk to desired levels, improve our net interest margin and monitor interest rate sensitivity, manage our real estate exposure to capital levels and maintain flexibility if we achieve asset growth.
We caution readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof and are based on information presently available to our management. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q except as required by applicable law.
Overview | ||
We are a Delaware financial holding company, and our primary, wholly owned subsidiary is The Bancorp Bank, National Association. The Bank is a federally chartered commercial bank located in Sioux Falls, South Dakota and is an FDIC insured institution. Most of our revenue and income is currently generated through the Bank. An overview of our operations follows, including discussion of Fintech Solutions and Credit Solutions.
Our business strategy is focused on Fintech Solutions, which partners with fintech companies and other technology focused payment-based providers (collectively “partners”) to deliver payment, deposit, and sponsored lending products that attract stable, lower-cost deposits and generate fee income. Our fintech services are provided to organizations with a pre-existing customer base, and the products are tailored to support or complement the services provided by these organizations to their customers. We typically provide these services under the name and through the facilities of each organization with whom we develop a relationship. Fintech services include:
Program sponsorship includes debit, credit and prepaid cards that we issue for companies that market directly to end users. Our card-accessed deposit account types are diverse and include: consumer and business debit, general purpose reloadable prepaid, pre-tax medical spending benefit, payroll, gift, government, corporate incentive, reward, business payment accounts and others. The Bank issues the cards, provides access to the card networks, maintains deposits, and is the sponsor bank of record for accounts.
Payment services delivers real-time, end-to-end payment processing, including automated clearing house (“ACH”) and Rapid Funds Transfer products. Our ACH accounts facilitate bill payments and our acquiring accounts provide clearing and settlement services for payments made to merchants which must be settled through associations such as Visa or Mastercard.
Sponsored lending, or Fintech loans, consist of secured credit cards and unsecured short-term extensions of credit that are originated by the Bank, with the marketing and servicing assistance of our partners. The revenue generated through fintech loan agreements is primarily fee revenue and not interest income.
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Deposits generated through these partner relationships are deployed into loan and lease products offered by both Fintech sponsored lending and the Credit Solutions business line. As of September 30, 2026, 96.4% of our total deposits were sourced from the Fintech Solutions business, primarily from program sponsorship.
Credit Solutions is our lending business and is focused on offering flexible, specialty credit solutions, and we develop customized products and programs to meet the needs of our clients. Our loan programs include: (i) Real estate bridge lending (REBL), which is comprised primarily of apartment building rehabilitation loans; (ii) Institutional Banking, which is comprised of security-backed lines of credit (SBLOC), cash value insurance policy-backed lines of credit (IBLOC) and advisor financing; and (iii) Commercial Loans which includes direct lease financing and Small Business Loans (“SBL”) which is comprised primarily of Small Business Administration (“SBA”) loans. As previously disclosed in a Current Report on Form 8-K filed with the SEC in September 2026, we implemented an organizational restructuring of our resources and business to align our strategic priorities. As part of the restructuring, we intend to discontinue the origination of retail and wholesale SBL loans by the end of 2026 while continuing to manage the existing SBL loan portfolio.
Our total loan portfolio also includes the Fintech loans generated by the Fintech Solutions business. The loans in our non-fintech portfolio are secured by collateral, and the fintech loans are backed by credit enhancement agreements from our partners.
Executive Summary | ||
As part of our long-term strategic plan, in September 2026, we announced that as part of our organizational restructuring, we intend to discontinue the origination of retail and wholesale SBL loans by the end of 2026. In addition, staffing adjustments were made across several other areas of the organization in connection with our efforts to refine workflows, expand automation and artificial intelligence, optimize costs and invest in our highest-value strategic priorities. We recognized restructuring costs of $4.3 million in the third quarter of 2026 in connection with those actions.
We remain focused on growing our fintech revenues through new partnerships, products and services. Fintech loans of $936.6 million as of September 30, 2026 increased 19.3% compared to the September 30, 2025 balance of $785.0 million. Certain loan fees on fintech loans are recorded as non-interest income and totaled $7.7 million for the quarter ended September 30, 2026, a 72.0% increase compared to $4.5 million for the quarter ended September 30, 2025.
We remain focused on returning capital through share repurchases, and repurchased 822,229 shares of our common stock at an average cost of $60.81 per share during the quarter ended September 30, 2026. Primarily driven by share repurchases, outstanding shares, net of treasury shares at September 30, 2026 decreased 5.04% to 40.221 million from 42.355 million shares at December 31, 2025.
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Financial Highlights | ||
Financial highlights include:
| (Dollars in millions, except per share data) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Results of Operations | |||||||||||||||||||||||
| Net income | $ | 62.8 | $ | 54.9 | $ | 183.5 | $ | 171.9 | |||||||||||||||
| Net income per share - basic | $ | 1.54 | $ | 1.20 | $ | 4.43 | $ | 3.69 | |||||||||||||||
| Net income per share - diluted | $ | 1.53 | $ | 1.18 | $ | 4.39 | $ | 3.64 | |||||||||||||||
| Key Performance Indicators | |||||||||||||||||||||||
| Return on assets | 2.51 | % | 2.50 | % | 2.52 | % | 2.54 | % | |||||||||||||||
| Return on equity | 36.04 | % | 26.60 | % | 35.91 | % | 29.32 | % | |||||||||||||||
| Equity to assets (as of period end) | n/a | n/a | 7.18 | % | 9.05 | % | |||||||||||||||||
| Net interest margin | 3.75 | % | 4.45 | % | 3.82 | % | 4.32 | % | |||||||||||||||
| Average deposits | $ | 8,419 | $ | 7,625 | $ | 8,384 | $ | 7,995 | |||||||||||||||
| Average loans and leases | $ | 7,908 | $ | 6,689 | $ | 7,600 | $ | 6,549 | |||||||||||||||
| Non-interest income: fintech fees | $ | 41.8 | $ | 35.1 | $ | 120.8 | $ | 105.2 | |||||||||||||||
Prepaid, debit and credit card gross dollar volume (GDV)(1) | $ | 54,328 | $ | 44,038 | $ | 160,294 | $ | 132,337 | |||||||||||||||
(1)Gross dollar volume represents the total dollar amount spent on prepaid, debit and credit cards issued by The Bancorp Bank, N.A.
Our net income increased to $62.8 million in the third quarter of 2026 from $54.9 million in the third quarter of 2025, an increase of $7.9 million, or 14.3%.
Earnings per diluted share increased to $1.53 in the third quarter of 2026 from $1.18 in the third quarter of 2025, an increase of 29.7%, driven both by the increase in net income and a 5.4 million decrease in weighted average diluted shares, primarily driven by our share repurchase activity during the year.
Key components of our change in net income between periods include:
•Income tax expense decreased $9.3 million to $8.9 million in the third quarter of 2026 from $18.2 million in the third quarter of 2025. The third quarter of 2026 was favorably impacted by $10.3 million of total benefits related to purchased transferable tax credits, of which $3.0 million relates to 2026 taxes and $7.3 million relates to the carryback of credits to prior periods.
•Non-interest income increased $5.4 million, to $85.8 million in the third quarter of 2026 from $80.4 million in the third quarter of 2025. That increase is driven by a $6.7 million increase in total fintech fees primarily driven by volume growth, partially offset by a $0.8 million decrease in other non-interest income.
•Provision for credit losses, total decreased $4.5 million, to $40.6 million in the third quarter of 2026, from $45.1 million in the third quarter of 2025, primarily driven by a $5.1 million decrease in provision for non-fintech loans from estimated losses for the direct leasing portfolio that were recognized in the third quarter of 2025.
The above positive impacts to net income were partially offset by:
•Net interest income decreased $4.1 million, driven by a $0.8 million decrease in interest income and a $3.3 million increase in interest expense. The increase in interest expense is primarily driven by higher interest expense of $1.4 million from senior debt due to the August 2025 facility upsizing and increase in rate and $2.0 million higher combined interest expense on short-term borrowings and deposit balances primarily due to higher average balances, partially offset by lower rates.
•Non-interest expense increased $7.1 million reflecting higher costs in the third quarter of 2026, including $4.3 million of costs related to the restructuring of our SBL business line and other departmental reductions, and $1.9 million related to an accrual for the estimated cost of a legal settlement.
A detailed discussion of our financial results and the drivers of these fluctuations follows in “Results of Operations.”
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Our strategic focus on growing our fintech business fee-based income and fintech loan portfolio had an impact on our KPIs as follows:
Average loans and leases grew to $7.91 billion in the third quarter of 2026 from $6.69 billion in the third quarter of 2025, an increase of $1.22 billion or 18.2%, primarily driven by a $906.7 million increase in our average fintech portfolio, reflecting our continued strategic shift towards sponsored lending.
Non-interest income—fintech fees increased $6.7 million, or 19.2%, to $41.8 million in the third quarter of 2026, which includes a $3.2 million increase in consumer credit fintech fees and a $3.5 million increase in prepaid, debit card, ACH and other fees. The growth in consumer credit fintech fees reflects continued organic volume growth with existing partners and products and the impact of new products launched within the past year. The growth in prepaid, debit card and related fees is driven by an increase in GDV to $54.3 billion, a 23.4% increase from $44.0 billion in the third quarter of 2025. GDV growth may not have a direct impact on the related fee income due to the different product fee structures within the total mix.
Net interest margin decreased to 3.75% in the third quarter of 2026 from 4.45% in the third quarter of 2025, driven by the shift in our loan portfolio to a greater percentage of fintech loans, for which we primarily earn fee income and not interest income, combined with the impact of Federal Reserve rate decreases from the fourth quarter of 2025. See further discussion of the growth in Fintech lending contributing to margin compression under “Results of Operations—Net Interest Income—Growth of Fintech Lending” in the following section.
At September 30, 2026, the ratio of equity to assets was 7.18%, compared to 7.38% at December 31, 2025, the decrease primarily driven by an accumulated other comprehensive loss in the year to date 2026 of $59.7 million from unrealized losses on our available for sale investment portfolio driven by market rate increases.
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| Results of Operations - Three Months Ended September 30, 2026 and 2025 | ||
Net Interest Income
Our net interest income for the third quarter of 2026 decreased $4.1 million, or 4.4%, to $90.1 million from $94.2 million in the third quarter of 2025.
Growth of Fintech Lending. Our strategy is to continue to drive growth in our Fintech lending business, as seen by the shift in mix to Fintech representing 19.6% of our total average loan portfolio in the third quarter of 2026, compared to 9.6% for the third quarter of 2025. A significant portion of these loans are zero percent interest and, as such, do not recognize interest income; however, we do generate fee revenue from these loans, through our partnership agreements. This mix shift to non-interest earning loans results in a reduction of the calculated average rate earned by total loans, average rate earned by our total interest-earning assets, and net interest margin in the above analysis. Offsetting these impacts is the growth in Consumer credit fintech fee income recognized within non-interest income in our Consolidated Statements of Operations which was $7.7 million and $4.5 million for the third quarters of 2026 and 2025, respectively.
We expect to continue to increase the proportion of Fintech loans in our portfolio through the remainder of 2026 and beyond, and therefore we expect to see continued compression in our average rate earned on loans, and net interest margin, as the mix of fintech loans continues to grow. However, we also expect growth in our fintech fees within non-interest income driven by the increase in that portfolio.
Interest Income
Interest income for the third quarter of 2026 was $135.6 million, a decrease of $0.8 million from $136.4 million in the third quarter of 2025, primarily driven by $3.0 million lower income on interest-earning deposits partially offset by $2.1 million higher income on investment securities. In the third quarter of 2025, average interest earning deposits on balance sheet of $355.0 million was significantly higher than $100.9 million in third quarter of 2026, driven by higher fintech on-balance sheet volumes.
Interest income from loans was $114.4 million in the third quarter of 2026, $0.6 million lower than $115.0 million in the third quarter of 2025, driven by $3.7 million lower interest earned on non-fintech loans partially offset by $3.1 million higher interest earned on fintech loans. For non-fintech loans, lower interest earned was primarily driven by lower rates, as the average rate decreased to 6.93% for the third quarter of 2026, compared to 7.53% for the third quarter of 2025, while average balance was 5.2% higher. The loan portfolio average rate reflects the impact of Federal Reserve rate decreases which continued in the third and fourth quarters of 2025. For fintech loans, higher interest income of $3.1 million was driven by higher volumes of interest-earning fintech loans. See “Growth of Fintech Lending” discussion above for further information.
Interest Expense
Interest expense for the third quarter of 2026 increased $3.3 million to $45.5 million from $42.2 million in the third quarter of 2025, driven by $4.6 million higher interest on short-term borrowings and $1.4 million higher interest expense on senior debt, partially offset by $2.7 million lower interest expense on deposits.
Interest expense on deposits was $2.7 million lower, primarily driven by lower rates in 2026. Interest expense on short-term borrowings was $4.6 million higher in 2026, as that funding source was utilized to fund higher average loans on balance sheet in the third quarter of 2026, compared to limited utilization in third quarter of 2025. Interest expense on senior debt was $1.4 million higher, due to higher outstanding principal and higher rate on senior debt. In August 2025, $200 million of 7.375% Senior Notes due 2030 were issued, the proceeds of which were used in part to repay at maturity the $100 million of outstanding 4.75% Senior notes due 2025.
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Average Daily Balances
The following table presents the average daily balances of assets, liabilities and shareholders’ equity and the respective interest earned or paid on interest-earning assets and interest-bearing liabilities, as well as average annualized rates, for the periods indicated:
| (Dollars in thousands) | Three months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Avg. Rate | Average Balance | Interest | Avg. Rate | Volume | Rate | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-fintech loans | $ | 6,360,234 | $ | 110,241 | 6.93% | $ | 6,048,270 | $ | 113,907 | 7.53 | % | $ | 5,875 | $ | (9,541) | $ | (3,666) | ||||||||||||||||||||||||||||||||||||
| Fintech loans | 1,547,735 | 4,202 | 1.09% | $ | 641,026 | 1,075 | 0.67 | % | 1,521 | 1,606 | 3,127 | ||||||||||||||||||||||||||||||||||||||||||
Loans, total(1) | 7,907,969 | 114,443 | 5.79% | 6,689,296 | 114,982 | 6.88 | % | 7,396 | (7,935) | (539) | |||||||||||||||||||||||||||||||||||||||||||
| Investment securities | 1,588,403 | 20,065 | 5.05% | 1,426,443 | 17,458 | 4.90 | % | 1,982 | 625 | 2,607 | |||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits | 100,918 | 1,042 | 4.13% | 354,991 | 3,954 | 4.46 | % | (2,830) | (82) | (2,912) | |||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 9,597,290 | 135,550 | 5.65% | 8,470,730 | 136,394 | 6.44 | % | 6,548 | (7,392) | (844) | |||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (52,589) | (59,166) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 371,601 | 308,654 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 9,916,302 | $ | 8,720,218 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand and interest checking | $ | 8,336,415 | $ | 35,365 | 1.70% | $ | 7,560,744 | $ | 38,233 | 2.02 | % | $ | 3,922 | $ | (6,790) | $ | (2,868) | ||||||||||||||||||||||||||||||||||||
| Savings and money market | 83,072 | 777 | 3.74% | 64,529 | 563 | 3.49 | % | 162 | 52 | 214 | |||||||||||||||||||||||||||||||||||||||||||
| Total deposits | 8,419,487 | 36,142 | 1.72% | 7,625,273 | 38,796 | 2.04 | % | 4,084 | (6,738) | (2,654) | |||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 511,321 | 5,135 | 4.02% | 45,067 | 495 | 4.39 | % | 5,121 | (481) | 4,640 | |||||||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | 4,316 | 74 | 6.86% | 13,866 | 197 | 5.68 | % | (136) | 13 | (123) | |||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 13,401 | 237 | 7.07% | 13,401 | 259 | 7.73 | % | — | (22) | (22) | |||||||||||||||||||||||||||||||||||||||||||
| Senior debt | 196,599 | 3,895 | 7.92% | 140,992 | 2,450 | 6.95 | % | 966 | 479 | 1,445 | |||||||||||||||||||||||||||||||||||||||||||
| Total deposits and liabilities | 9,145,124 | 45,483 | 1.99% | 7,838,599 | 42,197 | 2.15 | % | 10,035 | (6,749) | 3,286 | |||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 80,091 | 62,405 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 9,225,215 | 7,901,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 691,087 | 819,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 9,916,302 | $ | 8,720,218 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 90,067 | $ | 94,197 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.75% | 4.45 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
_________
(1)Loans, total includes Commercial loans, at fair value and Loans, net of deferred loan fees and costs. Non-accrual loans are included in the Average balance.
For the third quarter of 2026 compared to third quarter of 2025, average interest-earning assets increased $1.13 billion, reflecting a $1.22 billion increase in average loans and leases and a $162.0 million increase in average investment securities, partially offset by a decrease in average interest-earning deposits of $254.1 million. For those respective periods, average deposits and liabilities increased $1.31 billion, driven by a $794.2 million increase in deposits, a $466.3 million increase in short-term borrowings and a $55.6 million increase in senior debt.
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Net Interest Margin
Our net interest margin (calculated by dividing net interest income by average interest-earning assets) for the third quarter of 2026 was 3.75% compared to 4.45% for the third quarter of 2025, a decrease of 70 basis points. The average yield on interest-earning assets decreased 79 basis points, due to the shift of our portfolio mix to more fintech loans where we primarily earn fee income as discussed further under “Growth of Fintech Lending” above, plus lower market short-term interest rates. In addition, the cost of deposits and interest-bearing liabilities decreased 16 basis points, or a net change of 63 basis points, driven primarily by a 32 basis point decrease in average rate on deposits primarily due to a lower rate environment in the third quarter of 2026.
Provision for Credit Losses
Our provision for credit losses was $40.6 million for the third quarter of 2026, a decrease of $4.5 million compared to a provision of $45.1 million for the third quarter of 2025. In addition, the provision for credit losses on non-fintech loans was $0.7 million in the third quarter of 2026 compared to provision expense of $5.8 million in the third quarter of 2025 driven by estimated losses for the direct leasing portfolio in the third quarter of 2025.
The fintech loan provision correlates to the amount of related non-interest income from a credit enhancement contractually provided by a third party. Accordingly, there was no related net impact from these amounts. See further discussion of this program in “Financial Condition—Allowance for Credit Losses—Fintech Programs” in MD&A.
For more information about our provision, allowance and credit loss experience, see “Financial Condition—Portfolio Performance” below and “Note 5. Loans, net” to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Non-Interest Income
Non-interest income was $85.8 million in the third quarter of 2026, an increase of $5.4 million compared to $80.4 million in the third quarter of 2025. The increase between those respective periods is primarily driven by $6.7 million of higher total fintech fees, partially offset by $0.8 million of lower other non-interest income.
Total fintech fees increased $6.7 million, which includes a $2.5 million increase in prepaid, debit card and related fees, or 9.7%, to $28.0 million for the third quarter of 2026, compared to $25.5 million in the third quarter of 2025, driven by higher transaction volume from new clients and organic growth from existing clients. In addition, ACH, card and other payment processing fees increased $1.0 million, or 20.2%, to $6.1 million for the third quarter of 2026, compared to $5.1 million in the third quarter of 2025, reflecting an increase in rapid funds transfer volume. Consumer credit fintech fees increased $3.2 million, or 72.0%, to $7.7 million for the third quarter of 2026, compared to $4.5 million in the third quarter of 2025, reflecting increased loan volume.
Other non-interest income decreased $0.8 million for the third quarter of 2026, compared to the third quarter of 2025, primarily driven by $2.3 million recognized in the third quarter of 2025 from the forfeiture of an earnest money deposit for a terminated OREO sale agreement, partially offset by $1.2 million higher income in the third quarter of 2026, including $0.6 million higher other fee income from loans and $0.6 million of fees earned on deposit sweeps.
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Non-Interest Expense
The following table presents the principal categories of non-interest expense for the periods indicated:
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Salaries and employee benefits | $ | 36,124 | $ | 37,350 | $ | (1,226) | |||||||||||
| Restructuring costs | 4,276 | — | 4,276 | ||||||||||||||
| Depreciation | 1,296 | 1,152 | 144 | ||||||||||||||
| Rent and related occupancy cost | 1,676 | 1,592 | 84 | ||||||||||||||
| Data processing expense | 1,427 | 1,259 | 168 | ||||||||||||||
| Audit expense | 521 | 617 | (96) | ||||||||||||||
| Legal expense | 2,138 | 1,483 | 655 | ||||||||||||||
| Legal settlement | 1,900 | — | 1,900 | ||||||||||||||
| FDIC insurance | 1,709 | 905 | 804 | ||||||||||||||
| Software | 5,982 | 5,040 | 942 | ||||||||||||||
| Insurance | 1,128 | 1,194 | (66) | ||||||||||||||
| Telecom and IT network communications | 319 | 304 | 15 | ||||||||||||||
| Consulting | 152 | 430 | (278) | ||||||||||||||
| Other | 4,881 | 5,078 | (197) | ||||||||||||||
| Total non-interest expense | $ | 63,529 | $ | 56,404 | $ | 7,125 | |||||||||||
Total non-interest expense was $63.5 million for the third quarter of 2026, an increase of $7.1 million, or 12.6%, compared to $56.4 million for the third quarter of 2025. The increase is primarily driven by higher costs in the third quarter of 2026, including $4.3 million of costs related to the restructuring of our Small Business Lending business line and other departmental reductions, and $1.9 million related to an accrual for the estimated cost of a legal settlement.
Income Taxes
Income tax expense was $8.9 million for the third quarter of 2026 compared to $18.2 million in the third quarter of 2025. Our effective tax rate was 12.5% and 24.9% in the third quarters of 2026 and 2025, respectively, with each period based on a 21% federal tax rate, the impact of various state income taxes and the third quarter of 2026 was favorably impacted by purchased tax credits.
In third quarter of 2026, as part of our tax strategy, we purchased transferable tax credits to reduce our cash tax obligation for 2026 and certain eligible prior years. Income tax expense for the third quarter of 2026 includes $10.3 million of total benefits related to transferable investment tax credits, of which $3.0 million relates to 2026 taxes and $7.3 million relates to carryback of credits to prior periods. We expect to continue to invest in tax credits in future periods, resulting in an estimated annual future effective tax rate of approximately 23.9%, compared to the full year 2025 effective tax rate of 24.7%.
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| Results of Operations - Nine Months Ended September 30, 2026 and 2025 | ||
Net Interest Income
Our net interest income for the nine months ended September 30, 2026 decreased $14.1 million, or 5.0%, to $269.3 million from $283.4 million in the nine months ended September 30, 2025.
Growth of Fintech Lending. Our strategy is to continue to drive growth in our Fintech lending business, as seen in the shift in mix to Fintech representing 17.8% of our total average loan portfolio in the nine months ended September 30, 2026, compared to 8.4% for the nine months ended September 30, 2025. A significant portion of these loans are zero percent interest and, as such, do not recognize interest income; however, we do generate fee revenue from these loans, through our partnership agreements. The shift to non-interest earning loans results in a reduction of the calculated average rate earned by total loans, average rate earned by our total interest-earning assets, and net interest margin in the above analysis. Offsetting these impacts is the growth in Consumer credit fintech fee income recognized within non-interest income in our Consolidated Statements of Operations which was $19.9 million and $12.1 million for the nine months ended September 30, 2026 and 2025, respectively.
We expect to continue to increase the proportion of Fintech loans in our portfolio for the remainder of 2026 and beyond, and therefore we expect to see continued compression in our average rate earned on loans, and net interest margin, as the mix of fintech loans continues to grow. However, we also expect growth in our fintech fees within non-interest income driven by the increase in that portfolio.
Interest Income
Interest income for the nine months ended September 30, 2026 was $397.4 million, a decrease of $21.9 million from $419.3 million in the nine months ended September 30, 2025, primarily driven by $20.4 million lower income on interest-earning deposits and a one-time gain in 2025 of $3.0 million from a CRE-2 investment security which was repaid in full. In the nine months ended September 30, 2025, average interest earning deposits on balance sheet of $746.5 million was significantly higher than $168.3 million in nine months ended September 30, 2026, driven by one-time volumes in 2025 from wildfire insurance refunds and higher fintech on-balance sheet volumes.
Interest income from loans was $332.6 million in the nine months ended September 30, 2026, $3.6 million lower than $336.2 million in the nine months ended September 30, 2025, primarily driven by $10.7 million lower interest earned on non-fintech loans partially offset by $7.1 million higher interest earned on fintech loans. For non-fintech loans, lower interest earned was primarily driven by lower rates, as the average rate decreased to 6.91% for the nine months ended September 30, 2026, compared to 7.43% for the nine months ended September 30, 2025, while average balance was 4.1% higher. The loan portfolio average rate reflects the impact of Federal Reserve rate decreases which continued in the third and fourth quarters of 2025. For fintech loans, higher interest income of $7.1 million was driven by higher volumes of interest-earning fintech loans. See “Growth of Fintech Lending” discussion above for further information.
Interest Expense
Interest expense for the nine months ended September 30, 2026 decreased $7.9 million to $128.0 million from $135.9 million in the nine months ended September 30, 2025, driven by $23.3 million lower interest expense on deposits, partially offset by $9.0 million higher interest on short-term borrowings and $6.8 million higher interest expense on senior debt.
Interest expense on deposits was $23.3 million lower due to lower average rate of 1.68% in 2026 compared to 2.15% in 2025. Interest expense on short-term borrowings was $9.0 million higher in 2026, as that funding source was utilized to fund growth of loans on balance sheet in the nine months ended September 30, 2026, compared to limited utilization in 2025. Interest expense on senior debt was $6.8 million higher, due to higher outstanding principal and higher rate on senior debt. In August 2025, $200 million of 7.375% Senior Notes due 2030 were issued, the proceeds of which were used in part to repay at maturity the $100 million of outstanding 4.75% Senior Notes due 2025.
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Average Daily Balances
The following table presents the average daily balances of assets, liabilities and shareholders’ equity and the respective interest earned or paid on interest-earning assets and interest-bearing liabilities, as well as average annualized rates, for the periods indicated:
| (Dollars in thousands) | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Avg. Rate | Average Balance | Interest | Avg. Rate | Volume | Rate | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-fintech loans | $ | 6,246,850 | $ | 323,709 | 6.91% | $ | 6,000,321 | $ | 334,419 | 7.43 | % | $ | 13,740 | $ | (24,450) | $ | (10,710) | ||||||||||||||||||||||||||||||||||||
| Fintech loans | 1,352,831 | 8,862 | 0.87% | 548,909 | 1,801 | 0.44 | % | 2,638 | 4,423 | 7,061 | |||||||||||||||||||||||||||||||||||||||||||
Loans, total(1) | 7,599,681 | 332,571 | 5.83% | 6,549,230 | 336,220 | 6.84 | % | 16,378 | (20,027) | (3,649) | |||||||||||||||||||||||||||||||||||||||||||
Investment securities(2) | 1,630,893 | 60,195 | 4.92% | 1,464,085 | 58,164 | 5.30 | % | 6,627 | (1,579) | 5,048 | |||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits | 168,254 | 4,624 | 3.66% | 746,470 | 24,960 | 4.46 | % | (19,334) | (1,002) | (20,336) | |||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 9,398,828 | 397,390 | 5.64% | 8,759,785 | 419,344 | 6.38 | % | 3,671 | (22,608) | (18,937) | |||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (54,639) | (52,227) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 375,759 | 341,661 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 9,719,948 | $ | 9,049,219 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand and interest checking | $ | 8,246,396 | $ | 101,975 | 1.65% | $ | 7,906,597 | $ | 126,680 | 2.14 | % | $ | 5,444 | $ | (30,149) | $ | (24,705) | ||||||||||||||||||||||||||||||||||||
| Savings and money market | 137,360 | 3,790 | 3.68% | 88,687 | 2,454 | 3.69 | % | 1,347 | (11) | 1,336 | |||||||||||||||||||||||||||||||||||||||||||
| Total deposits | 8,383,756 | 105,765 | 1.68% | 7,995,284 | 129,134 | 2.15 | % | 6,791 | (30,160) | (23,369) | |||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 321,152 | 9,465 | 3.93% | 15,334 | 500 | 4.35 | % | 9,972 | (1,007) | 8,965 | |||||||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | 9,349 | 418 | 5.96% | 13,957 | 590 | 5.64 | % | (195) | 23 | (172) | |||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 13,401 | 708 | 7.04% | 13,401 | 771 | 7.67 | % | — | (63) | (63) | |||||||||||||||||||||||||||||||||||||||||||
| Senior debt | 196,399 | 11,687 | 7.93% | 111,354 | 4,917 | 5.89 | % | 3,755 | 3,015 | 6,770 | |||||||||||||||||||||||||||||||||||||||||||
| Total deposits and liabilities | 8,924,057 | 128,043 | 1.91% | 8,149,330 | 135,912 | 2.22 | % | 20,323 | (28,192) | (7,869) | |||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 112,596 | 115,916 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 9,036,653 | 8,265,246 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 683,295 | 783,973 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 9,719,948 | $ | 9,049,219 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 269,347 | $ | 283,432 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.82% | 4.32 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Loans, total includes Commercial loans, at fair value and Loans, net of deferred loan fees and costs. Non-accrual loans are included in the Average balance.
(2)Interest income in 2025 includes $3.0 million from a security that was known as “CRE-2” and which was related to the Company’s discontinued commercial real estate securitization business. CRE-2 was repaid in full in the second quarter of 2025, resulting in a one-time gain of $3.0 million, which was excluded from change due to rate in the above analysis.
For the nine months ended September 30, 2026 compared to nine months ended September 30, 2025, average interest-earning assets increased $639.0 million, reflecting a $1.1 billion increase in average loans and leases and a $166.8 million increase in average investment securities, partially offset by a decrease in average interest-earning deposits of $578.2 million. For those respective periods, average deposits and liabilities increased $774.7 million, primarily driven by a $388.5 million increase in average deposits, a $305.8 million increase in short-term borrowings and an $85.0 million increase in senior debt.
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Net Interest Margin
Our net interest margin (calculated by dividing net interest income by average interest-earning assets) for the nine months ended September 30, 2026 was 3.82% compared to 4.32% for the nine months ended September 30, 2025, a decrease of 50 basis points. The average yield on interest-earning assets decreased 74 basis points, due to the shift of our portfolio mix to more fintech loans where we primarily earn fee income as discussed further under “Growth of Fintech Lending” above, plus lower market short-term interest rates. In addition, the cost of deposits and interest-bearing liabilities decreased 31 basis points, or a net change of 43 basis points, driven primarily by a 47 basis point decrease in average rate on deposits primarily due to a lower rate environment in the nine months ended September 30, 2026.
Provision for Credit Losses
Our provision for credit losses was $94.3 million for the nine months ended September 30, 2026, a decrease of $42.0 million compared to a provision of $136.3 million for the nine months ended September 30, 2025. The decrease is primarily attributable to $34.3 million lower provision for fintech loans driven by improved performance of that loan portfolio. The lower fintech loan provision correlates to a lower amount of related non-interest income from a credit enhancement contractually provided by a third party. Accordingly, there was no related net impact from these amounts. See further discussion of this program in “Financial Condition—Allowance for Credit Losses—Fintech Programs” in MD&A.
In addition, the provision for credit losses on non-fintech loans was a release of $0.3 million in the nine months ended September 30, 2026 compared to provision expense of $8.1 million in the nine months ended September 30, 2025. The provision release in the nine months ended September 30, 2026 is primarily driven by improvements in credit quality of the direct lease financing portfolio.
For more information about our provision, allowance and credit loss experience, see “Financial Condition—Portfolio Performance” below and “Note 5. Loans” to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Non-Interest Income
Non-interest income was $231.4 million in the nine months ended September 30, 2026, a decrease of $16.4 million compared to $247.8 million in the nine months ended September 30, 2025. The decrease between those respective periods is primarily driven by a $34.3 million decrease in fintech loan credit enhancement income, which was partially offset by $15.6 million in higher total fintech fees and $4.0 million of higher other non-interest income.
Fintech loan credit enhancement income decreased $34.3 million driven by improved performance of fintech loans, which correlates to a like amount for provision for credit losses on fintech loans. See further discussion above under “Provision for Credit Losses.”
Total fintech fees increased $15.6 million, which includes a consumer credit fintech fees increase of $7.8 million to $19.9 million for the nine months ended September 30, 2026, compared to $12.1 million in the nine months ended September 30, 2025, reflecting increased loan volume. Prepaid, debit card and related fees increased $5.2 million, or 6.6%, to $82.5 million for the nine months ended September 30, 2026, compared to $77.3 million in the nine months ended September 30, 2025, driven by higher transaction volume from new clients and organic growth from existing clients. In addition, ACH, card and other payment processing fees increased $2.7 million, or 17.0%, to $18.5 million for the nine months ended September 30, 2026, compared to $15.8 million in the nine months ended September 30, 2025, reflecting an increase in rapid funds transfer volume.
Other non-interest income increased $4.0 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily driven by $3.1 million higher other fee income from loans and $2.2 million of fees earned on deposit sweeps, partially offset by $2.3 million recognized in third quarter of 2025 from the forfeiture of an earnest money deposit for a terminated OREO sale agreement.
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Non-Interest Expense
The following table presents the principal categories of non-interest expense for the periods indicated:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Salaries and employee benefits | $ | 110,102 | $ | 108,153 | $ | 1,949 | |||||||||||
| Restructuring costs | 5,201 | — | 5,201 | ||||||||||||||
| Depreciation | 3,771 | 3,381 | 390 | ||||||||||||||
| Rent and related occupancy cost | 5,035 | 4,877 | 158 | ||||||||||||||
| Data processing expense | 4,123 | 3,691 | 432 | ||||||||||||||
| Audit expense | 1,660 | 1,816 | (156) | ||||||||||||||
| Legal expense | 4,949 | 5,303 | (354) | ||||||||||||||
| Legal reimbursement | (100) | — | (100) | ||||||||||||||
| FDIC insurance | 4,066 | 3,160 | 906 | ||||||||||||||
| Software | 16,983 | 15,197 | 1,786 | ||||||||||||||
| Insurance | 3,379 | 3,596 | (217) | ||||||||||||||
| Telecom and IT network communications | 895 | 945 | (50) | ||||||||||||||
| Consulting | 509 | 1,322 | (813) | ||||||||||||||
| Other | 14,458 | 15,480 | (1,022) | ||||||||||||||
| Total non-interest expense | $ | 175,031 | $ | 166,921 | $ | 8,110 | |||||||||||
Total non-interest expense was $175.0 million for the nine months ended September 30, 2026, an increase of $8.1 million, or 4.9%, compared to $166.9 million for the nine months ended September 30, 2025. The increase is primarily driven by higher costs in the nine months ended September 30, 2026 including $5.2 million of costs related to the restructuring of our SBL business line and other departmental reductions, $1.9 million higher salaries and benefits expense primarily driven by higher costs from incentive compensation accruals and $1.8 million higher software expense primarily driven by increased adoption of artificial intelligence tools.
Income Taxes
Income tax expense was $47.9 million for the nine months ended September 30, 2026 compared to $56.1 million in the nine months ended September 30, 2025. Our effective tax rate was 20.7% and 24.6% in the nine months ended September 30, 2026 and 2025, respectively, based on a 21% federal tax rate and the impact of various state income taxes. The nine months ended September 30, 2026 was favorably impacted by purchased tax credits.
In third quarter of 2026, as part of our tax strategy, we invested in transferable tax credits to reduce our cash tax obligation for 2026 and certain eligible prior years. Income tax expense for the nine months ended September 30, 2026 includes $10.3 million of total benefits related to transferable investment tax credits, of which $3.0 million relates to 2026 taxes and $7.3 million relates to carryback of credits to prior periods. We expect to continue to invest in tax credits in future periods, resulting in an estimated annual future effective tax rate of approximately 23.9%, compared to the full year 2025 effective tax rate of 24.7%.
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Financial Condition | ||
Total Assets
Total assets at September 30, 2026 were $9.43 billion, relatively consistent with $9.35 billion at December 31, 2025.
We are managing our balance sheet to remain under $10 billion in assets in order to maintain our exemption from regulated limits on interchange fees, among other benefits, under the Durbin Amendment and the Federal Reserve’s implementing regulations. Our strategy in managing our balance sheet includes balancing our investments in our loan portfolio and investment securities to strategically direct the growth of our business, and sweeping deposits off-balance sheet to other financial institutions, as discussed further in “Financial Condition—Deposits” in MD&A.
Investment Securities
The following table presents a summary of our available-for-sale investment securities, by major category (dollars in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| U.S. Government agency securities | $ | 19,650 | $ | 25,109 | |||||||
| Asset-backed securities | 218,938 | 234,101 | |||||||||
| Tax-exempt obligations of states and political subdivisions | 13,397 | 9,636 | |||||||||
| Taxable obligations of states and political subdivisions | 12,077 | 18,927 | |||||||||
| Residential mortgage-backed securities | 399,325 | 464,323 | |||||||||
| Collateralized mortgage obligation securities | 47,466 | 57,580 | |||||||||
| Commercial mortgage-backed securities | 812,648 | 862,074 | |||||||||
| Total Investment securities available for sale, at fair value | $ | 1,523,501 | $ | 1,671,750 | |||||||
The following table shows the contractual maturity distribution and the weighted average yield of our investment securities as of September 30, 2026 (dollars in thousands). The weighted average yield was calculated by dividing the amount of individual securities to total securities in each category, multiplying by the yield of the individual security and adding the results of those individual computations.
| (Dollars in thousands) | Zero to one year | After one to five years | After five to ten years | Over ten years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | Average yield | Balance | Average yield | Balance | Average yield | Balance | Average yield | Total balance | ||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Government agency securities | $ | 650 | 2.40 | % | $ | 1,308 | 3.14 | % | $ | 11,729 | 4.73 | % | $ | 5,963 | 3.35 | % | $ | 19,650 | ||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 62 | 4.92 | % | 2,906 | 5.71 | % | 45,619 | 5.67 | % | 170,351 | 5.47 | % | 218,938 | |||||||||||||||||||||||||||||||||||||||||||
Tax-exempt obligations of states and political subdivisions(1) | 1,160 | 2.30 | % | — | — | 1,882 | 3.87 | % | 10,355 | 4.53 | % | 13,397 | ||||||||||||||||||||||||||||||||||||||||||||
| Taxable obligations of states and political subdivisions | 7,342 | 4.00 | % | 2,725 | 3.48 | % | — | — | 2,010 | 6.00 | % | 12,077 | ||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | — | — | — | — | 2,015 | 5.04 | % | 397,310 | 4.93 | % | 399,325 | |||||||||||||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligation securities | 10 | 1.85 | % | — | — | 2 | 2.92 | % | 47,454 | 4.16 | % | 47,466 | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 9,165 | 2.09 | % | 284,003 | 4.37 | % | 399,585 | 4.70 | % | 119,895 | 3.99 | % | 812,648 | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 18,389 | $ | 290,942 | $ | 460,832 | $ | 753,338 | $ | 1,523,501 | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average yield | 2.89 | % | 4.37 | % | 4.80 | % | 4.84 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(1)If adjusted to their taxable equivalents, yields would approximate 2.91%, 4.90%, and 5.73% for zero to one year, five to ten years, and over ten years, respectively, at a federal tax rate of 21%.
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Total Loan Portfolio
The following table summarizes our loan portfolio, by loan category (dollars in thousands):
| September 30 2026 | December 31 2025 | ||||||||||
| Loans recorded at amortized cost: | |||||||||||
| Small business loans (SBL) non-real estate | $ | 263,657 | $ | 235,282 | |||||||
| SBL commercial mortgage | 771,566 | 749,234 | |||||||||
| SBL construction | 27,920 | 22,382 | |||||||||
| SBLs | 1,063,143 | 1,006,898 | |||||||||
| Direct lease financing | 641,008 | 685,422 | |||||||||
SBLOC / IBLOC(1) | 1,830,690 | 1,669,985 | |||||||||
| Advisor financing | 196,858 | 294,236 | |||||||||
| Real estate bridge lending (REBL) | 2,427,108 | 2,188,952 | |||||||||
| Fintech | 936,577 | 1,097,998 | |||||||||
Other loans(2) | 147,799 | 157,416 | |||||||||
| 7,243,183 | 7,100,907 | ||||||||||
| Unamortized loan fees and costs | 14,466 | 15,769 | |||||||||
| Total loans, net of deferred loan fees and costs | $ | 7,257,649 | $ | 7,116,676 | |||||||
| Commercial loans, at fair value: | |||||||||||
| SBLs, at fair value | $ | 52,198 | $ | 68,374 | |||||||
| REBL, at fair value | 53,730 | 71,015 | |||||||||
| Total commercial loans, at fair value | $ | 105,928 | $ | 139,389 | |||||||
| Total loan portfolio | $ | 7,363,577 | $ | 7,256,065 | |||||||
(1)Includes Securities-backed lines of credit (SBLOC) and Insurance policy cash value-backed lines of credit (IBLOC).
(2) As of September 30, 2026 and December 31, 2025, Other loans includes $109.9 million and $110.7 million, respectively, related to warehouse financing of REBL loan sales to third-party purchasers.
The majority of our loan portfolio is recorded at amortized cost and recognized net of an allowance for credit losses. Loans, net of deferred loan fees and costs increased to $7.26 billion at September 30, 2026 from $7.12 billion at December 31, 2025. This $141.0 million increase is primarily driven by an increase in REBL of $238.2 million, and an increase of SBLOC/IBLOC of $160.7 million, partially offset by a decrease in fintech loans of $161.4 million. The decline in fintech loans was primarily attributable to a change in payment processing, which impacted period-end balances and did not reflect a change in underlying customer activity.
Commercial loans, at fair value are comprised of non-SBA commercial real estate loans and SBA loans which had been originated for sale or securitization through the first quarter of 2020, and which are now being held for investment on the balance sheet. These loans continue to be recognized at fair value, and this portfolio declined $33.5 million from December 31, 2025, as this portfolio continues to runoff. All originations are now being recognized at amortized cost.
The underlying nature of the collateral for our loan portfolio includes:
•SBL non-real estate loans are collateralized by business assets, which may include certain real estate;
•SBL commercial mortgage and construction loans are collateralized by real estate for small businesses;
•SBLOCs are collateralized by marketable investment securities while IBLOC are collateralized by the cash value of life insurance;
•Advisor financing loans are collateralized by investment advisors’ business franchises;
•REBL loans are primarily collateralized by apartment buildings, or other commercial real estate; and
•Direct lease financing is collateralized primarily by vehicles or equipment.
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Fintech loans include secured credit card accounts of $259.8 million and $729.1 million as of September 30, 2026 and December 31, 2025, respectively, which are backed dollar-for-dollar by cash collateral provided by each individual cardholder that are recognized as deposits on our Condensed Consolidated Balance Sheets, and these loans are required to be repaid in full monthly. The remaining fintech loans consist of cashflow underwritten short-term liquidity products to individual borrowers ranging in maturity from 30 to 365 days. All fintech loans are covered by credit enhancement agreements, as discussed further below under “Fintech Programs.”
The following table summarizes the concentration by state of our real estate bridge loans (dollars in thousands):
| As of September 30, 2026 | ||||||||||||||
| Balance | Origination date LTV | |||||||||||||
| REBL concentration by state: | ||||||||||||||
| Texas | $ | 619,508 | 71% | |||||||||||
| Georgia | 366,388 | 72% | ||||||||||||
| Florida | 277,044 | 67% | ||||||||||||
| Missouri | 105,780 | 74% | ||||||||||||
| Michigan | 98,499 | 64% | ||||||||||||
| Ohio | 97,380 | 71% | ||||||||||||
| Other States each <$90 million | 862,509 | 70% | ||||||||||||
| Total | $ | 2,427,108 | ||||||||||||
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Portfolio Estimated Maturities
The following table presents loan categories by contractual maturity for the period indicated. Actual repayments historically have, and will likely in the future, differ significantly from contractual maturities because individual borrowers generally have the right to prepay loans, with or without prepayment penalties. See “Asset and Liability Management” in this MD&A for a discussion of interest rate risk.
| September 30, 2026 | |||||||||||||||||||||||||||||
| Within one year | One to five years | After five but within 15 years | After 15 years | Total | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and costs: | |||||||||||||||||||||||||||||
| SBL non-real estate | $ | 300 | $ | 13,225 | $ | 250,132 | $ | — | $ | 263,657 | |||||||||||||||||||
| SBL commercial mortgage | 13,482 | 45,861 | 268,397 | 443,826 | 771,566 | ||||||||||||||||||||||||
| SBL construction | 2,398 | 106 | 13,476 | 11,940 | 27,920 | ||||||||||||||||||||||||
| Direct lease financing | 127,458 | 490,892 | 22,658 | — | 641,008 | ||||||||||||||||||||||||
| SBLOC / IBLOC | 1,830,690 | — | — | — | 1,830,690 | ||||||||||||||||||||||||
| Advisor financing | 3,293 | 99,093 | 94,472 | — | 196,858 | ||||||||||||||||||||||||
| Real estate bridge lending | 958,969 | 1,468,139 | — | — | 2,427,108 | ||||||||||||||||||||||||
| Fintech | 936,577 | — | — | — | 936,577 | ||||||||||||||||||||||||
| Other loans | 90,882 | 37,213 | 11,586 | 8,118 | 147,799 | ||||||||||||||||||||||||
| Commercial loans, at fair value | 12,367 | 53,249 | 12,544 | 27,768 | 105,928 | ||||||||||||||||||||||||
| Total | $ | 3,976,416 | $ | 2,207,778 | $ | 673,265 | $ | 491,652 | $ | 7,349,111 | |||||||||||||||||||
| Unamortized loan fees and costs | 14,466 | ||||||||||||||||||||||||||||
| Total loan portfolio | $ | 7,363,577 | |||||||||||||||||||||||||||
| Loan maturities after one year with: | |||||||||||||||||||||||||||||
| Fixed rates | |||||||||||||||||||||||||||||
| SBL non-real estate | $ | 665 | $ | — | $ | — | $ | 665 | |||||||||||||||||||||
| SBL commercial mortgage | 7,397 | 2,353 | — | 9,750 | |||||||||||||||||||||||||
| Direct lease financing | 490,892 | 19,847 | — | 510,739 | |||||||||||||||||||||||||
| Advisor financing | 97,655 | 94,472 | — | 192,127 | |||||||||||||||||||||||||
| Real estate bridge lending | 1,158,215 | — | — | 1,158,215 | |||||||||||||||||||||||||
| Other loans | 3,128 | 5,732 | 5,502 | 14,362 | |||||||||||||||||||||||||
| Commercial loans, at fair value | 42,326 | — | — | 42,326 | |||||||||||||||||||||||||
| Total loans with fixed rates | $ | 1,800,278 | $ | 122,404 | $ | 5,502 | $ | 1,928,184 | |||||||||||||||||||||
| Variable rates | |||||||||||||||||||||||||||||
| SBL non-real estate | $ | 12,560 | $ | 250,132 | $ | — | $ | 262,692 | |||||||||||||||||||||
| SBL commercial mortgage | 38,464 | 266,044 | 443,826 | 748,334 | |||||||||||||||||||||||||
| SBL construction | 106 | 13,476 | 11,940 | 25,522 | |||||||||||||||||||||||||
| Direct lease financing | — | 2,811 | — | 2,811 | |||||||||||||||||||||||||
| Advisor financing | 1,438 | — | — | 1,438 | |||||||||||||||||||||||||
| Real estate bridge lending | 309,924 | — | — | 309,924 | |||||||||||||||||||||||||
| Other loans | 34,085 | 5,854 | 2,616 | 42,555 | |||||||||||||||||||||||||
| Commercial loans, at fair value | 10,923 | 12,544 | 27,768 | 51,235 | |||||||||||||||||||||||||
| Total with variable rates | $ | 407,500 | $ | 550,861 | $ | 486,150 | $ | 1,444,511 | |||||||||||||||||||||
| Total maturities after one year | $ | 2,207,778 | $ | 673,265 | $ | 491,652 | $ | 3,372,695 | |||||||||||||||||||||
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Portfolio Performance
Loans are considered to be non-performing if they are on a non-accrual basis or are past due 90 days or more and still accruing interest. A loan which is past due 90 days or more and still accruing interest remains on accrual status only when it is both adequately secured as to principal and interest and is in the process of collection.
The following table summarizes our non-performing assets, with discussion of significant changes between periods to follow (dollars in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Non-accrual loans: | |||||||||||
| SBL non-real estate | $ | 12,296 | $ | 8,639 | |||||||
| SBL commercial mortgage | 24,809 | 21,977 | |||||||||
| SBL construction | 710 | 2,660 | |||||||||
| Direct lease financing | 7,149 | 12,066 | |||||||||
| SBLOC/IBLOC | — | 446 | |||||||||
| Real estate bridge lending | 12,700 | 9,755 | |||||||||
| Other loans | 248 | 142 | |||||||||
| Total non-accrual loans | 57,912 | 55,685 | |||||||||
| Loans past due 90 days or more and still accruing | 6,856 | 18,199 | |||||||||
| Total non-performing loans | 64,768 | 73,884 | |||||||||
| Other real estate owned (OREO) | 70,734 | 60,695 | |||||||||
| Total non-performing assets | $ | 135,502 | $ | 134,579 | |||||||
Non-accrual loans increased $2.2 million, from $55.7 million at December 31, 2025, primarily driven by a $2.9 million increase in REBL loans and a $4.5 million increase in SBL, partially offset by a $4.9 million decrease in direct lease financing.
Loans past due 90 days or more still accruing interest amounted to $6.9 million at September 30, 2026 and $18.2 million at December 31, 2025. The $11.3 million decrease is primarily driven by a $14.5 million REBL loan that left 90 days or more past due status after we entered into a loan agreement with a new borrower with greater financial capacity.
We evaluate loans under an internal loan risk rating system as a means of identifying problem loans. At September 30, 2026, there were $166.5 million of loans classified as special mention and substandard in total, a decrease of $27.9 million, or 14.4%, from $194.5 million at December 31, 2025. The decrease is primarily driven by a $19.4 million decrease in criticized Real estate bridge loans, a $7.8 million decrease in Direct lease financing and a $9.0 million decrease in SBL commercial mortgage, that was partially offset by an increase in SBL non-real estate criticized loans of $5.4 million.
See “Note 5. Loans” to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information on classified loans.
Asset Quality Ratios
The following tables summarize select asset quality ratios for the periods indicated:
| As of | ||||||||||||||||||||||||||||||||||||||
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Total | Fintech | Non-fintech | Total | Fintech | Non-fintech | |||||||||||||||||||||||||||||||||
| ACL to loans | 0.87% | 3.33% | 0.51% | 0.93% | 2.84% | 0.58% | ||||||||||||||||||||||||||||||||
| Non-performing loan ratios: | ||||||||||||||||||||||||||||||||||||||
| ACL to non-performing loans | 98.0% | n/m(1) | 53.3% | 89.6% | n/m(1) | 48.8% | ||||||||||||||||||||||||||||||||
Non-performing loans to total loans(2) | 0.89% | 0.45% | 0.96% | 1.04% | 0.18% | 1.19% | ||||||||||||||||||||||||||||||||
Non-performing assets to total assets | 1.44% | --- | --- | 1.44% | --- | --- | ||||||||||||||||||||||||||||||||
___________________
(1)ACL to non-performing loan ratio for Fintech is not meaningful primarily due to the short duration of those loans.
(2)Includes loans 90 days past due still accruing interest.
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| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| Total | Fintech | Non-fintech | Total | Fintech | Non-fintech | |||||||||||||||||||||||||||||||||
| Net charge-offs to average loans (annualized) | 1.73% | 9.32% | 0.05% | 2.47% | 27.32% | 0.12% | ||||||||||||||||||||||||||||||||
Allowance for Credit Losses (“ACL”) to total loans decreased to 0.87% at September 30, 2026 compared to 0.93% at December 31, 2025. The fintech ACL to Loans ratio increased to 3.33% as of September 30, 2026 from 2.84% at December 31, 2025.
Non-performing loan ratios are also calculated showing fintech and non-fintech separately, as fintech has a relatively small contribution to the non-performing loan population due to the short-term nature of those receivables, the majority of which are charged off before they reach 90 days past due. However, the fintech loan receivable portfolio growth does have an impact on the denominator of those ratios in total.
ACL to non-performing loans—Total increased to 98.0% at September 30, 2026 from 89.6% at December 31, 2025, and for non-fintech, the ratios are 53.3% and 48.8% for the respective periods. Non-performing loans are subject to specific review when preparing our allowance for credit losses estimate. We assess the collectability of the receivables, the nature of the non-performance status, the loan to collateral value, and other factors, when determining whether a specific reserve is required.
Non-performing loans to total loans decreased to 0.89% at September 30, 2026, from 1.04% at December 31, 2025.
Non-performing assets to total assets ratio was relatively consistent with 1.44% at September 30, 2026 and 1.44% at December 31, 2025.
See further discussion of the non-performing loan population directly above under “Portfolio Performance.”
Net charge-offs to average loans was 1.73% for the nine months ended September 30, 2026 compared to 2.47% for the nine months ended September 30, 2025.
Fintech net charge-offs to average loans of 9.32% for the nine months ended September 30, 2026 was an improvement from 27.32% for the nine months ended September 30, 2025, driven by improved performance of unsecured loans. Any net charge-offs on fintech loans are covered by credit enhancement agreements, through which a partner of the Fintech business covers incurred losses on such fintech loans. The measurement of the ACL for fintech loans and the related credit enhancement are based on the same estimate and are equal and correlate to like amounts in our income statement. See “Total Loan Portfolio—Fintech Programs” for further discussion of the credit enhancement.
Excluding fintech loans, net charge-offs to average loans was 0.05% for the nine months ended September 30, 2026 and 0.12% for the nine months ended September 30, 2025. The decline is primarily driven by improved performance of the direct lease financing portfolio.
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Non-Accrual and 90+ Days Past Due Loans
The following tables summarize non-accrual loans and loans past due 90 days or more still accruing interest, by year of origination (dollars in thousands):
| As of September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving | Total | ||||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Non-accrual | — | — | 1,353 | 5,534 | 4,480 | 929 | — | 12,296 | |||||||||||||||||||||||||||||||||||||||
| Total SBL non-real estate | — | — | 1,353 | 5,534 | 4,480 | 929 | — | 12,296 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | 692 | 8,500 | 9,372 | 6,245 | — | 24,809 | |||||||||||||||||||||||||||||||||||||||
| Total SBL commercial mortgage | — | — | 692 | 8,500 | 9,372 | 6,245 | — | 24,809 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | 710 | — | 710 | |||||||||||||||||||||||||||||||||||||||
| Total SBL construction | — | — | — | — | — | 710 | — | 710 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | 2,484 | 42 | — | — | — | 34 | — | 2,560 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | 452 | 35 | 676 | 3,789 | 1,796 | 401 | — | 7,149 | |||||||||||||||||||||||||||||||||||||||
| Total direct lease financing | 2,936 | 77 | 676 | 3,789 | 1,796 | 435 | — | 9,709 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total IBLOC | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | 12,700 | — | — | 12,700 | |||||||||||||||||||||||||||||||||||||||
| Total real estate bridge lending | — | — | — | — | 12,700 | — | — | 12,700 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | 4,098 | 113 | — | — | — | — | — | 4,211 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total fintech loans | 4,098 | 113 | — | — | — | — | — | 4,211 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | 85 | — | 85 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | 248 | — | 248 | |||||||||||||||||||||||||||||||||||||||
| Total other loans | — | — | — | — | — | 333 | — | 333 | |||||||||||||||||||||||||||||||||||||||
| Total 90+ Days past due | $ | 6,582 | $ | 155 | $ | — | $ | — | $ | — | $ | 119 | $ | — | $ | 6,856 | |||||||||||||||||||||||||||||||
| Total Non-accrual | $ | 452 | $ | 35 | $ | 2,721 | $ | 17,823 | $ | 28,348 | $ | 8,533 | $ | — | $ | 57,912 | |||||||||||||||||||||||||||||||
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| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Total | ||||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Non-accrual | — | 405 | 3,109 | 2,705 | 1,360 | 1,060 | — | 8,639 | |||||||||||||||||||||||||||||||||||||||
| Total SBL non-real estate | — | 405 | 3,109 | 2,705 | 1,360 | 1,060 | — | 8,639 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | 706 | 5,318 | 7,596 | 6,049 | 2,308 | — | 21,977 | |||||||||||||||||||||||||||||||||||||||
| Total SBL commercial mortgage | — | 706 | 5,318 | 7,596 | 6,049 | 2,308 | — | 21,977 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | 1,950 | 710 | — | 2,660 | |||||||||||||||||||||||||||||||||||||||
| Total SBL construction | — | — | — | — | 1,950 | 710 | — | 2,660 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | 120 | — | 92 | 98 | — | 1,147 | — | 1,457 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | 1,696 | 6,302 | 3,254 | 787 | 27 | — | 12,066 | |||||||||||||||||||||||||||||||||||||||
| Total direct lease financing | 120 | 1,696 | 6,394 | 3,352 | 787 | 1,174 | — | 13,523 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | — | 251 | 251 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | — | 446 | 446 | |||||||||||||||||||||||||||||||||||||||
| Total IBLOC | — | — | — | — | — | — | 697 | 697 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | 14,459 | — | — | 14,459 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | 9,755 | — | — | 9,755 | |||||||||||||||||||||||||||||||||||||||
| Total real estate bridge lending | — | — | — | — | 24,214 | — | — | 24,214 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | 2,030 | — | — | — | — | — | — | 2,030 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total fintech loans | 2,030 | — | — | — | — | — | — | 2,030 | |||||||||||||||||||||||||||||||||||||||
| 90+ Days past due | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||
| Non-accrual | — | — | — | — | — | 142 | — | 142 | |||||||||||||||||||||||||||||||||||||||
| Total other loans | — | — | — | — | — | 144 | — | 144 | |||||||||||||||||||||||||||||||||||||||
| Total 90+ Days past due | $ | 2,150 | $ | — | $ | 92 | $ | 98 | $ | 14,459 | $ | 1,149 | $ | 251 | $ | 18,199 | |||||||||||||||||||||||||||||||
| Total Non-accrual | $ | — | $ | 2,807 | $ | 14,729 | $ | 13,555 | $ | 19,901 | $ | 4,247 | $ | 446 | $ | 55,685 | |||||||||||||||||||||||||||||||
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Allowance for Credit Losses
We review the adequacy of our ACL on at least a quarterly basis to determine a provision for credit losses to maintain our ACL at a level we believe is appropriate to recognize current expected credit losses. A summary of loans recorded at amortized cost and the allowance follows (dollars in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Allowance for credit loss | Loans, net of deferred loan fees and costs | % of total loans | Allowance for credit loss | Loans, net of deferred loan fees and costs | % of total loans | ||||||||||||||||||||||||||||||
| SBL non-real estate | $ | 7,599 | $ | 263,657 | 3.64 | % | $ | 6,337 | $ | 235,282 | 3.31 | % | |||||||||||||||||||||||
| SBL commercial mortgage | 3,434 | 771,566 | 10.65 | % | 3,118 | 749,234 | 10.55 | % | |||||||||||||||||||||||||||
| SBL construction | 358 | 27,920 | 0.39 | % | 235 | 22,382 | 0.32 | % | |||||||||||||||||||||||||||
| Total SBLs | 11,391 | 1,063,143 | 14.68 | % | 9,690 | 1,006,898 | 14.18 | % | |||||||||||||||||||||||||||
| Direct lease financing | 11,024 | 641,008 | 8.85 | % | 15,675 | 685,422 | 9.65 | % | |||||||||||||||||||||||||||
| SBLOC / IBLOC | 915 | 1,830,690 | 25.27 | % | 1,041 | 1,669,985 | 23.52 | % | |||||||||||||||||||||||||||
| Advisor financing | 1,476 | 196,858 | 2.72 | % | 2,207 | 294,236 | 4.14 | % | |||||||||||||||||||||||||||
| Real estate bridge lending | 7,018 | 2,427,108 | 33.51 | % | 5,949 | 2,188,952 | 30.83 | % | |||||||||||||||||||||||||||
| Fintech | 31,207 | 936,577 | 12.93 | % | 31,137 | 1,097,998 | 15.46 | % | |||||||||||||||||||||||||||
| Other loans | 452 | 147,799 | 2.04 | % | 501 | 157,416 | 2.22 | % | |||||||||||||||||||||||||||
| Total loans | $ | 63,483 | $ | 7,243,183 | 100.00 | % | $ | 66,200 | $ | 7,100,907 | 100.00 | % | |||||||||||||||||||||||
| Deferred costs | — | 14,466 | — | 15,769 | |||||||||||||||||||||||||||||||
| Total loans, net of deferred costs | $ | 63,483 | $ | 7,257,649 | $ | 66,200 | $ | 7,116,676 | |||||||||||||||||||||||||||
Fintech Programs
Our fintech programs include consumer transaction accounts and fintech loans.
Consumer transaction accounts consist primarily of Bank-issued stored value prepaid or debit cards. For this program, we recognize a deposit liability for the current balance of the cards and recognize fee-based revenue in Non-interest income—Prepaid, debit card and related fees; we do not have any receivables or allowance risk related to the payment programs.
Fintech loans consist of short-term loans originated by our Bank, with the marketing and servicing assistance of third-party relationships. Loans receivable originated under these fintech agreements are governed by an agreement with the borrower and may include: secured credit cards and unsecured short-term extensions of credit. For the secured credit card program, we recognize a loan receivable and a deposit liability for the cash collateral that secures those accounts. Unsecured fintech loans include payroll advance and other short-term extensions of credit; those accounts are typically repaid within a year of origination.
As of September 30, 2026, and December 31, 2025, all fintech loans, both secured and unsecured, are covered by credit enhancement agreements. The third-party agreements governing the fintech loans include provisions for credit enhancements, through which the third party guarantees losses on such fintech loans (either in whole or in part). When a fintech loan meets a defined delinquency level, we recognize a charge-off of the receivable, and the incurred losses are covered by the third party. Any subsequent recoveries from the charged-off loan are credited to the third party.
The third-party relationship agreements governing fintech loans include requirements for pledging cash reserve accounts at the Bank as collateral for loss exposure, through which we can collect when losses occur. The reserve accounts are then replenished by the counterparties based on contractually required thresholds. In addition to the reserve accounts, the agreements also provide for the right to offset any cashflows we owe to the third parties (such as for monthly revenues) against any net realized loan losses. While we continually monitor the risk of these counterparties, establish the reserve thresholds at levels we consider appropriate to cover loss exposure on these short-term loan receivables, and we have additional protection from our rights to net realized loan losses against cashflows owed to the third party, if the third party defaults under their agreement and/or is unable to fulfill their contractual obligations to replenish the reserve account and cover losses, we may be exposed to loan losses in excess of our net reserve position.
The loan receivable agreement with the borrower and the third-party credit enhancement agreements are required to be accounted for separately as freestanding contracts in accordance with U.S. GAAP. As such, we recognize the separate units of account as follows:
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Fintech loans receivable from the borrower are recognized on the Balance sheet, along with an estimate of credit loss for fintech loans through the allowance. Provision for credit losses on fintech loans is recognized on the Statement of Operations.
A credit enhancement asset is recognized on the Balance Sheet for the estimated recovery under the third-party credit enhancement agreement, and the Company recognizes non-interest income—fintech loan credit enhancement on the Statement of Operations. In addition, deposit liability on our Balance Sheets includes amounts for reserve account collateral held to fund losses under the credit enhancement agreements.
The measurement of the estimated credit losses and the expected recovery from the credit enhancement are based on the same estimate and correlate to like amounts in our financial statements. We recognized credit enhancement assets of $31.2 million and $31.1 million on the Balance Sheets as of September 30, 2026, and December 31, 2025, respectively.
Net Charge-offs
The following tables present a ratio of net charge-offs to average loans outstanding, for each loan category. Average loans excludes commercial loans, at fair value. (dollars in thousands)
| Nine months ended September 30, 2026 | Nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Net charge-offs (recovery) | Average loan balance | Ratio | Net charge-offs | Average loan balance | Ratio | ||||||||||||||||||||||||||||||
| SBL non-real estate | $ | 41 | $ | 247,817 | 0.02 | % | $ | 473 | $ | 198,218 | 0.24 | % | |||||||||||||||||||||||
| SBL commercial mortgage | 486 | 746,993 | 0.07 | % | — | 695,437 | — | ||||||||||||||||||||||||||||
| SBL construction | — | 22,243 | — | — | 35,566 | — | |||||||||||||||||||||||||||||
| Direct lease financing | 1,987 | 673,112 | 0.30 | % | 3,841 | 702,590 | 0.55 | % | |||||||||||||||||||||||||||
| SBLOC / IBLOC | 446 | 1,758,894 | 0.03 | % | — | 1,584,404 | — | ||||||||||||||||||||||||||||
| Advisor financing | — | 255,231 | — | — | 273,945 | — | |||||||||||||||||||||||||||||
| Real estate bridge lending | — | 2,253,331 | — | — | 2,152,902 | — | |||||||||||||||||||||||||||||
| Fintech | 94,536 | 1,352,831 | 6.99 | % | 112,482 | 548,909 | 20.49 | % | |||||||||||||||||||||||||||
| Other loans | (501) | 153,773 | (0.33 | %) | 919 | 147,316 | 0.62 | % | |||||||||||||||||||||||||||
| Total | $ | 96,995 | $ | 7,464,225 | 1.30 | % | $ | 117,715 | $ | 6,339,287 | 1.86 | % | |||||||||||||||||||||||
Net charge-offs were $97.0 million for the nine months ended September 30, 2026, a decrease of $20.7 million from net charge-offs of $117.7 million during the nine months ended September 30, 2025.
For fintech, in the nine months ended September 30, 2026, $94.5 million of net charge-offs were recognized, or a 9.32% ratio to average loans (annualized), compared to $112.5 million, and 27.32% for the prior year period. The improved fintech charge-off levels reflect better credit performance of the unsecured fintech loans.
Excluding fintech, net charge-offs on the remaining portfolio were $2.5 million for the nine months ended September 30, 2026 and $5.2 million for the nine months ended September 30, 2025.
Deposits
Our primary source of funding is deposit acquisition. At September 30, 2026, we had total deposits of $7.34 billion compared to $8.17 billion at December 31, 2025, which reflected a decrease of $828.0 million, or 10.1%. Due to the nature of our deposit products, daily deposit balances are subject to variability, and deposits averaged $8.42 billion in the third quarter of 2026. As of September 30, 2026, 94% of the deposits are insured, 3% are low balance accounts (such as anonymous gift cards and corporate incentive cards for which there is no identified depositor) and 3% are other uninsured deposits.
Demand and interest checking is $7.26 billion of total deposits as of September 30, 2026, and primarily consists of balances from prepaid, debit and other payment card accounts that the Bank issues to fund payments for salary, medical spending, commercial, general purpose reloadable, corporate and other incentive, gift, government payments and transaction accounts. These accounts have an established history of stability and lower cost than certain other types of funding. Deposits also include payment processing balances, funds received as collateral supporting the secured credit card program of our Fintech segment, and a small population of traditional deposits.
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Savings and money market is $79.6 million of total deposits as of September 30, 2026.
We do not have a traditional branch banking system. Our deposit accounts are comprised primarily of millions of small transaction-based consumer balances which are obtained through and with the assistance of our partners. We have long-term contractual relationships with the partners of our Fintech business which sponsor such accounts as discussed further in Item 1. “Business—Our Strategies” in our 2025 Form 10-K.
Of our $8.42 billion average deposits for the third quarter of 2026, the top three affinity groups accounted for approximately $4.74 billion, the next three largest $1.39 billion, and the four subsequent largest $0.71 billion. The top ten partner relationships at September 30, 2026 consisted of $3.78 billion related to payroll, debit, and government-based accounts such as child support, and $3.07 billion related to consumer and business payment companies, including companies sponsoring incentive and gift card payments.
Of our $7.63 billion average deposits for the third quarter of 2025, the top three affinity groups accounted for approximately $4.04 billion, the next three largest $1.27 billion, and the four subsequent largest $0.71 billion. The top ten partner relationships at year end 2025 consisted of $3.19 billion related to payroll, debit, and government-based accounts such as child support, and $2.83 billion related to consumer and business payment companies, including companies sponsoring incentive and gift card payments.
In addition, we sweep deposits off our balance sheet to other institutions as part of our funding strategy, which totaled $877.8 million and $849.9 million as of September 30, 2026 and December 31, 2025, respectively. Such sweeps are utilized to manage our balance sheet composition and deposit portfolio diversity.
The following table presents the average balance and rates paid on deposits for the periods indicated (dollars in thousands):
| Nine months ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Average balance | Average rate | Average balance | Average rate | ||||||||||||||||||||
| Demand and interest checking | $ | 8,246,396 | 1.65 | % | $ | 7,906,597 | 2.14 | % | |||||||||||||||
| Savings and money market | 137,360 | 3.68 | % | 88,687 | 3.69 | % | |||||||||||||||||
| Total deposits | $ | 8,383,756 | 1.68 | % | $ | 7,995,284 | 2.15 | % | |||||||||||||||
Of the demand and interest checking balance shown above, $132.4 million and $134.8 million for 2026 and 2025, respectively, represented balances on which we paid interest. The remaining balance for each period reflects amounts subject to fees paid to third parties, which are based upon a contractual percentage applied to a rate index, generally the effective federal funds rate, and therefore classified as interest expense.
Short-term Borrowings
Short-term borrowings consist of amounts borrowed on our lines of credit with the Federal Reserve Bank or FHLB. There were $1.11 billion and $199.0 million of borrowings with FHLB at September 30, 2026 and December 31, 2025, respectively. Our use of short-term borrowings fluctuates based on our current funding needs for loans. We generally utilize overnight borrowings to manage our daily reserve requirements at the Federal Reserve.
The following table summarizes short-term borrowings (dollars in thousands):
| Nine months ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Short-term borrowings | ||||||||||||||
| Balance at period end | $ | 1,110,000 | $ | 200,000 | ||||||||||
| Average balance year-to-date | 321,152 | 15,334 | ||||||||||||
| Maximum month-end balance | 1,110,000 | 450,000 | ||||||||||||
| Weighted average rate year-to-date | 3.93 | % | 4.35 | % | ||||||||||
| Rate at period end | 4.26 | % | 4.30 | % | ||||||||||
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Liquidity and Capital Resources | ||
Liquidity defines our ability to generate funds at a reasonable cost to support asset growth, meet deposit withdrawals, satisfy borrowing needs and otherwise operate on an ongoing basis. Maintaining an adequate level of liquidity depends on the institution’s ability to efficiently meet both expected and unexpected cash flows without adversely affecting daily operations or financial condition. The Company’s liquidity management policy requirements include sustaining defined liquidity minimums, concentration monitoring and management, stress testing, contingency planning and related oversight. Based on our sources of funding and liquidity discussed below, we believe we have sufficient liquidity and capital resources available for our needs in the next 12 months and for the foreseeable future. We invest the funds we do not need for daily operations primarily in our interest-bearing account at the Federal Reserve. We actively monitor our positions and contingent funding sources daily.
Deposits. Our primary source of funding has been consumer deposits generated through partner relationships. Average total deposits increased by $794.2 million, or 10.4%, to $8.42 billion for the third quarter of 2026 compared to $7.63 billion in the third quarter of 2025. While we do not have a traditional branch system, we believe that our core deposits, which include our demand, interest checking, savings and money market accounts, have similar characteristics to those of a bank with a branch system, but are tied to long-term partner contracts. Certain components of our deposits experience seasonality, creating greater excess liquidity at certain times. The largest deposit inflows occur in the first quarter of the year when certain of our accounts are credited with tax refund payments from the U.S. Treasury.
As of September 30, 2026, 94% of the deposits are insured, 3% are low balance accounts (such as anonymous gift cards and corporate incentive cards for which there is no identified depositor) and 3% are other uninsured deposits. We do not believe that such uninsured accounts present a significant liquidity risk.
In addition, we sweep deposits off our balance sheet to other institutions as part of our funding strategy, which totaled $877.8 million and $849.9 million as of September 30, 2026 and December 31, 2025, respectively. Such sweeps are utilized to optimize diversity within our funding structure by managing the percentage of individual client deposits to total deposits. Deposit sweeps represent an amount of deposits that are greater than our current needs to fund our assets. The swept deposits serve as a source of contingent liquidity, as we may move a portion of those deposits back on balance sheet, at our election.
Other Funding Sources. While consumer deposit accounts, including prepaid and debit card accounts, comprise the vast majority of our funding sources, we maintain secured borrowing lines with the FHLB and the Federal Reserve that are collateralized by pledged loans and investment securities. Average short-term borrowings increased by $466.3 million to $511.3 million for the third quarter of 2026 compared to $45.1 million in the third quarter of 2025, as we utilized more short-term borrowings to fund growth in our loan portfolio.
As of September 30, 2026, we had $1.11 billion borrowed under these facilities, and based on the current amount of loans and securities pledged there is $3.45 billion of additional available capacity which we can access anytime, which is an increase from $199.0 million borrowed and $3.19 billion available capacity based on assets pledged as of December 31, 2025. We expect to continue to maintain our facilities with the FHLB and Federal Reserve.
Loans. We utilize the deposits that are primarily generated by our Fintech business to fund our credit solutions business and the sponsored lending loans of fintech. Historically, growth in deposits has funded growth of loans. Average loans and leases grew to $7.91 billion in the third quarter of 2026 from $6.69 billion in the third quarter of 2025, an increase of $1.22 billion representing a use of funds.
Investment Securities. One source of contingent liquidity is available-for-sale securities, which amounted to $1.52 billion at September 30, 2026, compared to $1.67 billion at December 31, 2025. In the nine months ended September 30, 2026, $19.1 million of securities purchased were exceeded by $91.3 million of securities cash inflows.
Cash. At September 30, 2026, our interest-earning deposits within cash and cash equivalents were $70.9 million, and primarily consisted of deposits with the Federal Reserve. Interest-earning deposit average balances decreased to $100.9 million in the third quarter of 2026 from $355.0 million in the third quarter of 2025.
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Funding Commitments and Uses. As a holding company conducting substantially all our business through our subsidiaries, our near-term need for liquidity consists principally of cash for required interest payments on debt, which includes semi-annual interest payments on the 2030 Senior Notes of $7.4 million, and quarterly interest payments on the subordinated debentures of $300,000, and cash required to fund operating costs.
We had outstanding commitments to fund loans, including unused lines of credit, of $2.54 billion as of September 30, 2026. The majority of our commitments are variable rate and originate with SBLOC. The amount of such commitments represents amounts unfunded under existing loan agreements, where there is capacity for the customer to borrow additional amounts as long as there is no violation of any condition of the contract. The funding requirements for such commitments occur on a measured basis over time and would be funded by normal deposit growth.
As of September 30, 2026, we had cash reserves of $10.9 million at the holding company. Stock repurchases along with interest payments on our debt instruments have historically been funded by dividends from the Bank, as have interest payments on the above debt instruments. Stock repurchases may be terminated at any time. The holding company’s sources of liquidity are primarily comprised of dividends paid by the Bank to the Company, and the issuance of debt.
Capital Resources and Requirements. We must comply with capital adequacy guidelines issued by our regulators. The following table sets forth our regulatory capital ratios and the required levels to be considered a “well capitalized” institution as of September 30, 2026:
| Tier 1 capital to average assets ratio | Tier 1 capital to risk-weighted assets ratio | Total capital to risk-weighted assets ratio | Common equity Tier 1 to risk weighted assets | ||||||||||||||||||||
| As of September 30, 2026 | |||||||||||||||||||||||
| The Bancorp, Inc. | 7.26% | 11.37% | 12.39% | 11.37% | |||||||||||||||||||
| The Bancorp Bank, National Association | 9.03% | 14.11% | 15.12% | 14.11% | |||||||||||||||||||
“Well capitalized” institution (under federal regulations-Basel III) | 5.00% | 8.00% | 10.00% | 6.50% | |||||||||||||||||||
At September 30, 2026, the Bank was “well capitalized” under banking regulations.
Asset and Liability Management | ||
Our principal market exposure is to interest rate risk, specifically changes in the Federal Reserve overnight federal funds rate, due to their impact on our net interest income and the market value of our interest-earning assets.
We assess our interest rate risk using both: (i) a Gap Analysis that outlines the estimated timing of when interest-bearing assets and liabilities mature, repay or reprice; and (ii) a Sensitivity Analysis that measures the potential impact on our net portfolio value based on hypothetical changes in interest rates.
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Gap Analysis
The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities that were outstanding at September 30, 2026 and the portions of each financial instrument that are anticipated, based upon certain assumptions, to mature or reset in each future period:
| 1-90 | 91-364 | 1-3 | 3-5 | Over 5 | |||||||||||||||||||||||||
| Days | Days | Years | Years | Years | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||
| Commercial loans, at fair value | $ | 48,242 | $ | 6,985 | $ | 45,672 | $ | 3,318 | $ | 1,711 | |||||||||||||||||||
| Loans, net of deferred loan fees and costs | 4,019,931 | 644,154 | 1,704,842 | 746,166 | 142,556 | ||||||||||||||||||||||||
| Investment securities | 284,016 | 24,203 | 198,387 | 270,280 | 746,615 | ||||||||||||||||||||||||
| Interest-earning deposits | 70,857 | — | — | — | — | ||||||||||||||||||||||||
| Total interest-earning assets | 4,423,046 | 675,342 | 1,948,901 | 1,019,764 | 890,882 | ||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||
| Deposits: Transaction accounts, as adjusted | 3,628,962 | — | — | — | — | ||||||||||||||||||||||||
| Deposits: Savings and money market | 79,583 | — | — | — | — | ||||||||||||||||||||||||
| Short-term borrowings | 1,110,000 | — | — | — | — | ||||||||||||||||||||||||
| Senior debt and subordinated debentures | 13,401 | — | — | 196,736 | — | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 4,831,946 | — | — | 196,736 | — | ||||||||||||||||||||||||
| Gap | $ | (408,900) | $ | 675,342 | $ | 1,948,901 | $ | 823,028 | $ | 890,882 | |||||||||||||||||||
| Cumulative gap | $ | (408,900) | $ | 266,442 | $ | 2,215,343 | $ | 3,038,371 | $ | 3,929,253 | |||||||||||||||||||
| Gap to assets ratio | (4) | % | 7 | % | 21 | % | 8 | % | 10 | % | |||||||||||||||||||
| Cumulative gap to assets ratio | (4) | % | 3 | % | 24 | % | 32 | % | 42 | % | |||||||||||||||||||
The above table provides an approximation of the projected repricing of assets and liabilities at period end on the basis of contractual terms, except for adjustments as noted:
•Loans at fair value and Loans, net – We do not assume any prepayment of fixed-rate loans.
•Investment securities – Prepayment adjustments are made for mortgage and asset backed securities based on historical data and current market trends.
•Deposits – Transaction accounts are comprised primarily of demand deposits. The majority of transaction and savings balances are assumed to be “core” deposits, or deposits that will generally remain with us regardless of market interest rates. We estimate the repricing characteristics of these deposits based on historical performance, past experience, judgmental predictions and other deposit behavior assumptions. However, we may choose not to reprice liabilities proportionally to changes in market interest rates for competitive or other reasons.
Additionally, while demand deposits are non-interest-bearing, related fees paid to affinity groups may reprice according to specified indices, and as such those fees are included in interest expense. We have adjusted the transaction account balances downward to better reflect the impact of their partial adjustment to changes in rates.
Although a gap analysis is a useful measurement device available to management in determining the existence of interest rate exposure, its static focus as of a particular date makes it necessary to utilize other techniques in measuring exposure to changes in interest rates. For example, gap analysis is limited in its ability to predict trends in future earnings and makes no assumptions about changes in prepayment tendencies, deposit or loan maturity preferences or repricing time lags that may occur in response to a change in the interest rate environment.
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Interest Rate Sensitivity Analysis
The following table shows impact of hypothetical instantaneous parallel shifts in the yield curve on our net portfolio value and annual net interest income:
| (Dollars in thousands) | Net portfolio value at | Net interest income | ||||||||||||||||||||||||
| September 30, 2026 | September 30, 2026 | |||||||||||||||||||||||||
| Rate scenario | Amount | Percent Change | Amount | Percent Change | ||||||||||||||||||||||
| +200 basis points | $ | 1,934,956 | 1.07% | $ | 368,222 | (1.51)% | ||||||||||||||||||||
| +100 basis points | 1,922,886 | 0.44% | 370,941 | (0.78)% | ||||||||||||||||||||||
| Flat rate | 1,914,398 | — | 373,860 | — | ||||||||||||||||||||||
| -100 basis points | 1,897,705 | (0.87)% | 378,782 | 1.32% | ||||||||||||||||||||||
| -200 basis points | 1,869,113 | (2.37)% | 382,352 | 2.27% | ||||||||||||||||||||||
These sensitivities are hypothetical and are presented for illustrative purposes only. Changes in fair value and the impact on our net interest income generally cannot be extrapolated because the relationship of the change in fair value may not be linear. Actual interest rate sensitivity could vary substantially from the above analysis if different assumptions are used or actual experience differs from presumed behavior of various deposit and loan categories.
Item 3. Quantitative and Qualitative Disclosures About Market Risk | ||
Information about market risk for the quarter ended September 30, 2026 is included in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset and Liability Management” of this Quarterly Report on Form 10-Q. Except for such information, there has been no material change to our assessment of our sensitivity to market risk as discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. Controls and Procedures | ||
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), as appropriate, to allow timely decisions regarding required disclosure. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.
Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of September 30, 2026.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings | ||
For a discussion of our material pending legal proceedings, see “Note 10. Commitments and Contingencies” to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Item 1A. Risk Factors | ||
There have been no material changes or additions to the risk factors disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||
Stock Repurchases
The following table sets forth information regarding the Company’s repurchases of its common stock during the quarter ended September 30, 2026:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs(1) | Approximate dollar value of shares that may yet be purchased under the plans or programs(2)(3) | ||||||||||||||||||||||
| July 1, 2026 - July 31, 2026 | 256,670 | $ | 66.43 | 256,670 | $ | 82,950 | ||||||||||||||||||||
| August 1, 2026 - August 31, 2026 | 204,176 | $ | 68.37 | 204,176 | $ | 68,991 | ||||||||||||||||||||
| September 1, 2026 - September 30, 2026 | 361,383 | $ | 52.55 | 361,383 | $ | 50,000 | ||||||||||||||||||||
| Total | 822,229 | $ | 60.81 | 822,229 | $ | 50,000 | ||||||||||||||||||||
(1)On July 7, 2025, our Board of Directors approved a common stock repurchase program for the 2026 fiscal year (the “2026 Repurchase Program”). Under the 2026 Repurchase Program, the Company was authorized to repurchase up to $200.0 million of repurchases depending on the share price, securities laws and stock exchange rules which regulate such repurchases, and repurchased shares may have been reissued for various corporate purposes.
(2)The Company may repurchase shares through open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 under the Exchange Act. The 2026 Repurchase Program may be suspended, amended or discontinued at any time. The 2026 Repurchase Program has an expiration date of December 31, 2026.
(3)Dollars in thousands.
Item 3. Default Upon Senior Securities | ||
None.
Item 4. Mine Safety Disclosures | ||
Not applicable.
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Item 5. Other Information | ||
During the quarter ended September 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
Item 6. Exhibits | ||
| Exhibit No. | Description | |||||||
| 31.1 | Rule 13a-14(a)/15d-14(a) Certifications* | |||||||
| 31.2 | Rule 13a-14(a)/15d-14(a) Certifications* | |||||||
| 32.1 | Section 1350 Certifications** | |||||||
| 32.2 | Section 1350 Certifications** | |||||||
| 101.INS | Inline XBRL Instance Document*** | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* | |||||||
| * | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
| *** | The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| THE BANCORP, INC. | ||||||||
| (Registrant) | ||||||||
November 5, 2026 | /S/ DAMIAN KOZLOWSKI | |||||||
| Date | Damian Kozlowski | |||||||
| Chief Executive Officer (principal executive officer) | ||||||||
November 5, 2026 | /S/ DOMINIC C. CANUSO | |||||||
| Date | Dominic C. Canuso Chief Financial Officer (principal financial and accounting officer) | |||||||
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