The Bancorp (TBBK)
We’d invest in The Bancorp. Its strong sales growth and returns on capital show it’s capable of quick and profitable expansion.― StockStory Analyst Team
1. News
2. Summary
Why We Like The Bancorp
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
- Annual revenue growth of 21.3% over the last five years was superb and indicates its market share increased during this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 33% over the last five years outstripped its revenue performance
- Impressive 12.5% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
We have an affinity for The Bancorp. The valuation seems fair in light of its quality, so this might be a good time to invest in some shares.
Why Is Now The Time To Buy The Bancorp?
At $65.41 per share, The Bancorp trades at 4.1x forward P/B. Yes, the stock’s seemingly high valuation multiple could mean short-term volatility. But given its business quality, we think the multiple is justified.
Entry price may seem important in the moment, but our work shows that time and again, long-term market outperformance is determined by business quality rather than getting an absolute bargain on a stock.
3. The Bancorp (TBBK) Research Report: Q3 CY2025 Update
Financial services company The Bancorp (NASDAQ:TBBK) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 38.8% year on year to $174.6 million. Its GAAP profit of $1.18 per share was 11.3% below analysts’ consensus estimates.
The Bancorp (TBBK) Q3 CY2025 Highlights:
- Net Interest Income: $94.2 million vs analyst estimates of $99.6 million (flat year on year, 5.4% miss)
- Net Interest Margin: 4.5% vs analyst estimates of 4.4% (in line)
- Revenue: $174.6 million vs analyst estimates of $193.9 million (38.8% year-on-year growth, 10% miss)
- Efficiency Ratio: 42% vs analyst estimates of 40.5% (150 basis point miss)
- EPS (GAAP): $1.18 vs analyst expectations of $1.33 (11.3% miss)
- Tangible Book Value per Share: $17.48 vs analyst estimates of $17.40 (3.6% year-on-year growth, in line)
- Market Capitalization: $3.58 billion
Company Overview
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
The Bancorp operates through two main segments: specialty lending and payments (also called Fintech Solutions). In its specialty lending business, the company offers securities-backed lines of credit, insurance policy-backed loans, commercial real estate bridge loans, and small business loans, many of which are backed by the Small Business Administration. It also provides vehicle fleet leasing services to businesses.
The payments segment generates most of The Bancorp's deposits and non-interest income. Here, the company issues debit and prepaid cards for various purposes—from general consumer spending to payroll, healthcare benefits, and corporate incentives. These cards are typically distributed through partnerships with fintech companies and other organizations that want to offer financial services to their customers without becoming banks themselves.
For example, when a fintech startup wants to offer banking services, it might partner with The Bancorp to handle the regulated banking functions while the startup focuses on the customer experience and technology. The Bancorp provides the necessary infrastructure, regulatory compliance, and payment processing capabilities behind the scenes.
The company also offers payment processing services for businesses, including ACH (Automated Clearing House) processing and card payment settlement. Through its Institutional Banking division, The Bancorp serves investment advisors, broker-dealers, and trust companies with specialized banking products.
The Bancorp's business model differs from traditional banks in that it focuses less on branch-based retail banking and more on providing banking-as-a-service infrastructure to other companies. This allows The Bancorp to reach customers nationwide without maintaining an extensive branch network.
4. Regional Banks
Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.
The Bancorp's competitors include Pathward Financial (NASDAQ:CASH) in the prepaid and debit card space, TriState Capital (acquired by Raymond James) for securities-backed lending, Live Oak Bank (NASDAQ:LOB) for SBA loans, and Bridge Investment Group (NYSE:BRDG) for real estate bridge lending.
5. Sales Growth
Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Over the last five years, The Bancorp grew its revenue at an incredible 21% compounded annual growth rate. Its growth surpassed the average banking company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. The Bancorp’s annualized revenue growth of 23% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, The Bancorp pulled off a wonderful 38.8% year-on-year revenue growth rate, but its $174.6 million of revenue fell short of Wall Street’s rosy estimates.
Net interest income made up 68.2% of the company’s total revenue during the last five years, meaning lending operations are The Bancorp’s largest source of revenue.
While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.
6. Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
The Bancorp’s EPS grew at an astounding 36.8% compounded annual growth rate over the last five years, higher than its 21% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For The Bancorp, its two-year annual EPS growth of 18.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q3, The Bancorp reported EPS of $1.18, up from $1.04 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects The Bancorp’s full-year EPS of $4.79 to grow 32.6%.
7. Tangible Book Value Per Share (TBVPS)
The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.
This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.
The Bancorp’s TBVPS grew at an incredible 12.6% annual clip over the last five years. TBVPS growth has recently decelerated a bit to 10.4% annual growth over the last two years (from $14.33 to $17.48 per share).
Over the next 12 months, Consensus estimates call for The Bancorp’s TBVPS to grow by 2.8% to $17.97, paltry growth rate.
8. Balance Sheet Assessment
Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.
Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.
This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.
New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.
Over the last two years, The Bancorp has averaged a Tier 1 capital ratio of 14.3%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.
9. Return on Equity
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, The Bancorp has averaged an ROE of 23%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows The Bancorp has a strong competitive moat.
10. Key Takeaways from The Bancorp’s Q3 Results
We struggled to find many positives in these results. Its revenue missed and its net interest income fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $77.20 immediately after reporting.
11. Is Now The Time To Buy The Bancorp?
Updated: December 4, 2025 at 11:25 PM EST
The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in The Bancorp.
The Bancorp is a rock-solid business worth owning. To begin with, its revenue growth was exceptional over the last five years, and its growth over the next 12 months is expected to accelerate. And while its declining net interest margin shows its loan book is becoming less profitable, its admirable net interest margin a wonderful starting point for the overall profitability of the business. On top of that, The Bancorp’s astounding EPS growth over the last five years shows its profits are trickling down to shareholders.
The Bancorp’s P/B ratio based on the next 12 months is 4.1x. You get what you pay for, and in this case, the higher valuation is warranted because The Bancorp’s fundamentals shine bright. We think the stock is attractive here.
Wall Street analysts have a consensus one-year price target of $76.50 on the company (compared to the current share price of $65.41), implying they see 17% upside in buying The Bancorp in the short term.