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Investing.com -- The Bancorp (NASDAQ: NASDAQ:TBBK) stock climbed 7.8% as the company's fourth-quarter total deposits surpassed estimates, reaching $7.75 billion against the Bloomberg estimate of $7.14 billion. The financial holding company reported Q4 earnings per share (EPS) of $1.15, aligning with analyst expectations, while revenue for the quarter was $148.56 million, exceeding the consensus estimate of $133.01 million.
The Bancorp's financial results for the last quarter and full year of 2024 were buoyed by the sale of an $82 million real estate bridge loan portfolio, which included a $32.5 million classified loan that was current with monthly payments. This sale contributed to a 14% reduction in total substandard loans, from $155.4 million at the end of the third quarter to $134.4 million at year-end.
Notably, the company's net income saw a significant year-over-year increase, rising from $44.0 million, or $0.81 per diluted share, in the fourth quarter of 2023, to $55.9 million, or $1.15 per diluted share, in the same period of 2024 – marking an EPS increase of 42%. This growth in net income of 27% was further accentuated by a reduction in outstanding shares due to increased repurchases throughout 2024.
In terms of performance metrics, The Bancorp's return on assets and equity for the quarter ended December 31, 2024, were 2.6% and 28% respectively, showing improvement from the 2.4% and 22% posted in the previous year's quarter. The company's net interest income also rose 2% to $94.3 million for the quarter, although it was slightly dampened by the reversal of $1.3 million in interest related to the aforementioned loan sale.
The Bancorp's loan portfolio continued to grow, with net loans increasing by 14% YoY to $6.11 billion. Gross dollar volume, representing spending on prepaid and debit cards, surged 19% YoY to $39.66 billion, reflecting organic growth and new client additions. This translated to a 16% increase in total prepaid, debit card, ACH, and other payment fees for the fourth quarter compared to the previous year.
Piper Sandler analyst Frank Schiraldi commented on the company's performance, stating, "The bear case here is credit, and a significant slowdown in credit migration in the REBL book was a positive." This statement underscores the positive market response to The Bancorp's credit management and the overall health of the company's loan portfolio.
Looking ahead, The Bancorp has reaffirmed its guidance of $5.25 per share for 2025, excluding the impact of $150 million in planned share buybacks. The company's strategic moves, including the sale of the REBL portfolio and the reduction in substandard loans, along with consistent growth in its payment processing segment, have positioned it for continued success in the coming year.
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