8-K: Bancorp Ratings Upgraded by KBRA to BBB+ and A-

The Bancorp, Inc. and its subsidiary, The Bancorp Bank, N.A., received multiple credit rating upgrades from Kroll Bond Rating Agency, LLC, reflecting strong financial performance and industry leadership.

Summary

• Kroll Bond Rating Agency, LLC (KBRA) upgraded several longand short-term credit ratings for both The Bancorp, Inc. and its wholly owned subsidiary, The Bancorp Bank, N.A.
• For The Bancorp, Inc., the senior unsecured debt rating was upgraded to BBB+ from BBB, the subordinated debt rating to BBB from BBB-, and the short-term debt rating to K2 from K3.
• For The Bancorp Bank, N.A., the deposit and senior unsecured debt ratings were upgraded to Afrom BBB+, and the subordinated debt rating to BBB+ from BBB, while short-term deposit and debt ratings of K2 were affirmed.
• KBRA revised its outlook for all long-term ratings to Stable from Positive.
• The upgrades are supported by The Bancorp's long-standing position as a leader in the Banking as a Service (BaaS) industry, particularly in the prepaid and debit card space, where the Bank ranks as the largest issuer by transaction volume.
• Non-interest income increased by 30% year-over-year in the first half of 2025, reaching $78 million, or 1.7% of average assets.
• The Bancorp has maintained above-peer capital levels, including a Common Equity Tier 1 (CET1) ratio of 14.4% as of the second quarter of 2025.

Sentiment

Score: 9

Explanation: The filing announces multiple credit rating upgrades from a reputable agency, reflecting strong financial performance, industry leadership, and a stable outlook. This is a highly positive development for the company's financial standing and market perception.

Positives

• Multiple credit rating upgrades from KBRA for both The Bancorp, Inc. and The Bancorp Bank, N.A., indicating improved creditworthiness.
• The Bancorp, Inc.'s senior unsecured debt rating upgraded to BBB+ from BBB, subordinated debt to BBB from BBB-, and short-term debt to K2 from K3.
• The Bancorp Bank, N.A.'s deposit and senior unsecured debt ratings upgraded to Afrom BBB+, and subordinated debt to BBB+ from BBB.
• Outlook for all long-term ratings revised to Stable from Positive, suggesting continued stability and positive trajectory.
• Recognized as an industry leader in the Banking as a Service (BaaS) sector, specifically as the largest issuer of prepaid cards by transaction volume.
• Strong non-interest income growth, with a 30% year-over-year increase in the first half of 2025, totaling $78 million, or 1.7% of average assets.
• Maintenance of above-peer capital levels, evidenced by a Common Equity Tier 1 (CET1) ratio of 14.4% as of the second quarter of 2025.

Risks

• Business risks
• Economic risks
• Competitive risks
• Regulatory risks
• Other uncertainties beyond the company's control

Future Outlook

KBRA revised its outlook for all long-term ratings to Stable from Positive in conjunction with the upgraded ratings.

Management Comments

• The Bancorp, Inc. announced that Kroll Bond Rating Agency, LLC (KBRA) upgraded multiple longand short-term credit ratings for both the Company and its wholly owned subsidiary, The Bancorp Bank, N.A.

Industry Context

The Bancorp's upgraded ratings reinforce its strong position as a leader in the Banking as a Service (BaaS) industry, particularly in the prepaid and debit card sector, where it is recognized as the largest issuer by transaction volume. This highlights the growing importance of specialized banking services for non-bank financial companies and The Bancorp's ability to generate significant fee revenues in this niche.

Comparison to Industry Standards

• The Bancorp generates above-peer fee revenues, with non-interest income reaching 1.7% of average assets in the first half of 2025.
• The company maintains capital levels that exceed its peers, demonstrated by a Common Equity Tier 1 (CET1) ratio of 14.4% as of the second quarter of 2025.
• The Bancorp is recognized as the #1 issuer of prepaid cards in the U.S. by transaction volume.
• The company is the third-largest bank by asset size in South Dakota.
• Recognized as the top-ranked publicly traded bank with assets between $5B-$50B by Bank Director Magazine.

Stakeholder Impact

• Shareholders: Likely positive impact due to improved creditworthiness, potentially lower borrowing costs, and enhanced market perception, which could lead to increased share price.
• Creditors: Reduced risk profile due to higher credit ratings, potentially leading to more favorable lending terms.
• Customers/Partners: Enhanced confidence in The Bancorp's stability and reliability as a financial partner, particularly for non-bank financial companies utilizing its BaaS solutions.
• Employees: Positive impact on morale and company reputation.

Next Steps

• The full KBRA rating report and press release are available at www.kbra.com.

Key Dates

Recommendation

The significant credit rating upgrades from KBRA, coupled with the stable outlook, underscore The Bancorp's robust financial health, strong capital position, and leading market presence in the high-growth Banking as a Service sector. The reported 30% year-over-year increase in non-interest income and above-peer CET1 ratio demonstrate strong operational performance and financial discipline. These factors collectively suggest a company with improving fundamentals and reduced risk, making it an attractive investment opportunity.

Keywords

The Bancorp, TBBK, KBRA, credit rating upgrade, banking as a service, BaaS, prepaid cards, debit cards, financial services, fintech, bank, credit ratings, senior unsecured debt, subordinated debt, Common Equity Tier 1, CET1, non-interest income, financial performance