The Bancorp quits SBA loans, cuts 64 jobs

The Bancorp Ends New Small-Business Loans by Year-End and Cuts 64 Jobs

What happened. The Bancorp Bank, N.A., the Sioux Falls national bank that the Nilson Report ranks as the largest U.S. prepaid card issuer and that sponsors card and lending programs for more than 40 fintechs, told the SEC on September 4 that it "intends to discontinue the origination of retail and wholesale Small Business Lending (“SBL”) loans by the end of 2026, and focus on managing its existing SBL loan portfolio."¹ ² ¹⁰ The restructuring, in force since September 1, eliminates 64 positions, about 9 percent of the bank’s staff, and its head of commercial lending leaves on October 1.¹ The book going into run-off was $1.034 billion at June 30 and is "comprised primarily of Small Business Administration" loans.³ Four days after the filing, Chime, whose member deposits sit at The Bancorp or at Stride Bank, agreed to buy Stride for $590 million in cash and said that "following the closing, Chime expects to consolidate its banking activities at Stride."⁵ The Bancorp’s own 10-K says three partner relationships it does not name supplied 47 percent of its deposits last year.⁴

Cutoff: new retail and wholesale SBL originations stop by December 31, 2026. The bank estimates $5.6 million of restructuring charges, $4.5 million of it in the third quarter, and about $14 million of annualized savings, more than $20 million counting its fourth-quarter 2025 Institutional Banking reorganization.¹ ²
Consequence: that concentration, next to a program that says it will leave, is the pair of numbers every lender renting a charter should be able to state about its own sponsor; the SBA cutoff removes about 137 7(a) approvals a year from a program that guaranteed 77,600 in fiscal 2025, and a $1.03 billion book with no disclosed disposition becomes a run-off asset to watch.⁴ ⁵ ¹¹ ¹² ¹³
Watch: the third-quarter release in late October for the charge and any held-for-sale move, the OCC and Federal Reserve applications for Chime’s purchase of Stride, and which programs fill the sponsor pipeline Chime says it will leave.⁵ ⁶

What Alternative Business Lenders Need to Know

What exactly did The Bancorp file on September 4?

Item 2.05, costs associated with exit or disposal activities, says the bank implemented an organizational restructuring on September 1 that eliminates "64 currently filled positions across the organization, representing approximately 9% of the Bank’s workforce," with the charges mostly cash for severance, benefits, outplacement and retention, the work substantially complete by the end of the fourth quarter, and 16 positions vacated since June left unfilled.¹ Item 5.02 says Jeff Nager, the bank’s head of commercial lending, is expected to depart on October 1, forfeiting 38,583 unvested restricted stock units.¹ The press release ties the staffing changes to efforts to "expand automation and artificial intelligence," and the April investor deck defines Apex 2030 as "maintain and grow sponsor bank market leadership" while continuing the credit businesses "on and off-balance sheet."² ¹⁰

How big is the small-business book it is walking away from?

SBLs stood at $1,034.3 million at June 30, 2026, up from $1,006.9 million at year-end: $757.2 million of SBL commercial mortgages, $255.4 million of non-real-estate SBLs and $21.7 million of SBL construction loans, on a $7.07 billion loan book and $9.2 billion of assets.³ ⁸ The 10-K shows the line growing every year since 2021, from $536.1 million to $1,006.9 million, and the fourth-quarter release put 2025 growth at $126.5 million.⁴ ⁹ The same 10-K says SBLs are "comprised primarily of Small Business Administration" loans, that the program depends on "our status as a Preferred Lender under the SBA loan programs," that "for SBA loans, our competitors include Live Oak Bank," and that recent charge-offs "have been primarily comprised of the non-guaranteed portion of SBA 7(a) loans and leases."⁴ Non-accrual SBLs were $40.3 million at June 30, about 3.9 percent of the book.³

SBA’s public loan-level FOIA file, in the vendor cut published by SBA Lender Data, shows the bank approving 854 7(a) loans for $743.6 million from FY2020 through the first quarter of FY2026, an average of $871,000 across 45 states, led by limited-service restaurants and by Texas, with a 0.64 percent charge-off rate; the dataset is public and any credit team can rerun it.¹¹ ¹² The exit lands in a record year for the program: SBA guaranteed 77,600 7(a) loans for $37 billion in fiscal 2025.¹³

What did Chime say four days later, and why does it land on The Bancorp?

On September 8 Chime agreed to buy Stride Bank, N.A., its bank partner for more than seven years, for $590 million in cash, and the release says: "Following the closing, Chime expects to consolidate its banking activities at Stride, which will focus primarily on supporting Chime’s consumer business." Chime expects "more than $100 million in net synergies, driven by sponsor bank fee savings, expansion of lending products, and a significantly lower cost of funds," will keep its assets below $10 billion, and targets a close in the first half of 2027 subject to OCC and Federal Reserve approval. The same release states that "member deposits are FDIC-insured through The Bancorp Bank, N.A. or Stride Bank, N.A."⁵ Banking Dive reported that Stride holds about $5.4 billion of assets, that the price is about 1.5 times tangible book, and that "The Bancorp Bank has been Chime’s other bank partner."⁶ Chief executive Chris Britt told the outlet that partner approvals added "redundant steps" and that "we need to have complete control of our destiny."⁷

The Bancorp discloses how concentrated its fintech business is without naming anyone: at year-end 2025 the top three partner relationships supplied $3.83 billion, or 47 percent, of deposits, and the same three produced $61.6 million, or 44 percent, of fintech fees plus all $169.3 million of fintech credit enhancement income.⁴ Fintech fees were $40.9 million in the second quarter, 25 percent of revenue, on $53.5 billion of gross dollar volume.⁸ The 10-K does not say whether Chime is among the three, and Chime’s release gives no date for moving programs off The Bancorp.⁴ ⁵

Which of the three channels to an MCA or factoring desk carries weight?

Three channels run to this audience, and the widest is not the loan book. The first is the counterparty. The Bancorp prints its top-three concentration for shareholders without naming the three, and this week its most visible program said it will consolidate at a charter it owns.⁴ ⁵ Most fintech lenders that rent a charter could not state the mirror image: their share of the sponsor’s deposits and fees, who else sits in the top three, and what happens to pricing and product approvals if one of those names leaves. The disclosure exists at the bank level; the program agreement decides whether a lender is entitled to it.⁴ Banking Dive notes that Upstart, Affirm and PayPal are on similar charter paths, so a sponsor’s biggest programs are the ones most likely to leave, and a bank cutting lending staff to protect its sponsor business will be shopping for new programs, which is where mid-size fintech lenders find capacity and price.⁷ ¹⁰

The second is the run-off book. The bank will "focus on managing" $1.03 billion of SBLs, three quarters of them SBA commercial mortgages, and the filing does not say whether it will hold them, sell the guaranteed portions or sell the book; a lender that shares a borrower should expect servicing without renewals or new draws, and a buyer of guaranteed pools or unguaranteed strips should treat the disposition as an open question.¹ ³ The Bancorp funds its loans with deposits, so there is no warehouse line of its own to unwind; the funding exposure sits with any buyer who carries SBA strips on a facility, and the 10-K says charge-offs have come from exactly those non-guaranteed portions.⁴

The third is supply, and it needs sizing before anyone acts on it. The 8-K stops both "retail and wholesale" origination, so a Preferred Lender whose 854 approvals over six and a quarter fiscal years work out to about 137 a year, about $119 million, is telling brokers and borrowers alike to go elsewhere by December 31.¹ ¹¹ That is about 0.2 percent of the loans and 0.3 percent of the dollars the program guaranteed in fiscal 2025; 345 of the 854 loans were franchise loans, and Texas, the top state, saw about 19 a year.¹¹ ¹³ Live Oak and the other SBA houses take a share the record does not show; what is left for working-capital funders, factors and equipment lenders is at most about a dozen files a month nationally, not a pipeline event for a desk clearing hundreds of deals a month.⁴ ¹¹ What those files change is intake, not volume: the SBA process retired here was built around a guaranteed, documented file, and applicants who arrive at an MCA or factoring desk after December 31 will come without it, which puts the weight on stacking checks, entity-status verification and a lien search before funding.¹ ¹¹

What does the 2025 accounting episode change about reading the guidance?

Nothing about the SBL decision, and something about how to weigh the savings and EPS targets. On March 4, 2025 the company filed a Form 8-K under Item 4.02 saying its financial statements for 2022 through 2024 "should no longer be relied upon" because Crowe LLP had not given "final approval to include the audit opinion" for 2024 and Grant Thornton LLP had not approved inclusion of its opinions for 2022 and 2023, pending "additional closing procedures related to accounting for consumer fintech loans in the allowance for credit losses."¹⁴ The amended annual report followed on April 7, 2025 with both auditors’ consents attached.¹⁵ A securities class action now captioned Southeastern Pennsylvania Transportation Authority v. The Bancorp, Inc. in the District of Delaware alleges, in a complaint amended December 22, 2025, that between January 26, 2024 and March 25, 2025 the defendants made materially false or misleading statements about the real estate bridge lending portfolio and its provision; the company is contesting it, and the 10-K says the 2024 material weaknesses were remediated and internal control was effective at December 31, 2025.⁴ Those allegations are untested.

The operating record since is not: 2025 net income was $228.2 million, or $4.92 a diluted share, up 15 percent; second-quarter 2026 EPS was $1.45 on a 34.7 percent return on equity, and 2026 guidance was raised to $5.95 to $6.05.⁴ ⁸ Read the exit as a profitable bank reallocating people and capital, and read the run-rate savings as management estimates from a company whose 2024 numbers needed a second filing.¹ ¹⁴

What should operators check before December 31?

Fintech lenders sponsored by any bank should pull their program agreement, map the termination, migration, exclusivity and concentration clauses against the reasons Chime gave (fees, cost of funds, control of product approvals), and ask their sponsor for the same top-three disclosure The Bancorp prints in its 10-K.⁵ ⁷ ⁴ Lenders that share borrowers with the bank should pull the SBA and UCC lien positions on any Bancorp SBA loan they sit behind, because the book stays on the bank’s balance sheet under a manage-only mandate.¹ ³ Buyers of guaranteed pools or unguaranteed strips should ask investor relations whether a portfolio sale is contemplated and watch the third-quarter release for a held-for-sale move.¹ Brokers and ISOs that referred SBA files to The Bancorp should redirect pipelines now; "by the end of 2026" is an origination cutoff, and a file that has not closed by then will need a new lender.¹ Everyone should watch the OCC and Federal Reserve applications for Chime’s purchase of Stride for the migration timetable.⁵

What the record does not yet show: whether The Bancorp will sell or hold the $1.03 billion SBL book, which three partners sit in its top three, when Chime’s programs would leave, and how much of the displaced 7(a) demand Live Oak and the other SBA lenders absorb; the FOIA-derived lender figures stop at the first quarter of fiscal 2026.¹ ⁴ ⁵ ¹¹ The filings carry the facts above; the inferences about where the demand goes are ours.

Our Opinion

The sentence in this week’s filings that travels furthest is a concentration number: three partners The Bancorp will not name are 47 percent of its deposits, and four days later Chime, which holds member deposits at The Bancorp and at Stride, said it will consolidate at the bank it is buying.⁴ ⁵ A lender that cannot put the same number on its own sponsor is carrying it blind, and a program agreement that does not entitle it to ask is the counterparty risk. That is the lesson to forward.

The sponsor-bank model has a graduation problem: the programs that succeed want a charter of their own, and The Bancorp’s answer is to become more of a sponsor, not less, paying for it by closing the one business where it competed with Live Oak for the borrower our readers fund.¹ ⁴ The SBA exit is the occasion, not the lesson. About 137 approvals a year does not move a pipeline that starts where a bank says no; what it says is that a national franchise book with a 0.64 percent charge-off rate cannot earn what renting a charter earns, and a bank with a 34.7 percent return on equity chose accordingly.⁸ ¹¹ ¹³ The $1.03 billion run-off book is where the next story lives: a bank with a cost plan to meet has reasons to sell, and nothing in the filing says it will.³ The class-action allegations are unproven, and the exit is a strategy call, not a retreat from bad credit.⁴ ⁸ Watch the third-quarter numbers, and watch which programs replace the one that is leaving.

1-Minute Video: RBF Underwriting: Cash Flow Does Not Prove Business Identity

Cash flow does not prove business identity in RBF underwriting

Bank and processor data can show deposits and recurring sales, but the model should not use those features until the legal entity, submitted EIN, revenue account, and financing recipient describe the same business.

Cobalt Intelligence supplies the TIN/EIN validation and adjacent Secretary of State data, while the lender owns account reconciliation, policy, and the final credit decision.

Schedule a FREE demo call

Free Tools for Lending Teams

Headlines You Don’t Want to Miss

Kapital Raises $125 Million From Tru Arrow and Fasanara to Take Its Business Lending Into the U.S.

Mexico City-based Kapital said on September 9 that Tru Arrow Partners and Fasanara Capital led $125 million of new financing to build out its AI platform and expand across Mexico, Colombia, Spain and the United States; the company reports first-half net income of about $50 million, a loan book up 220 percent to more than $1.7 billion and a 2.86 percent non-performing ratio, all its own unaudited figures, and it does not say whether the money is equity or debt.¹⁶ ¹⁷ Fasanara is the investment manager of the $400 million Tether StableFund vehicle carried in the September 10 edition, so this is its second SME-lending commitment in two weeks.²⁸ ²⁹ Kapital bought Banco Autofin in 2023 for its Mexican banking license and in 2025 took on the assets of Intercam Banco, which FinCEN had found in June 2025 to be "of primary money laundering concern" and barred from U.S. fund transmittals; Kapital said at the time that it was working with U.S. and Mexican authorities on compliance.¹⁸ ²⁷

Treasury and IRS Finalize the Car-Loan Interest Rules: Lenders File Form 1098-VLI for Every Loan Paying $600 of Interest

Final regulations published September 8 (T.D. 10054) implement the $10,000 deduction for qualified passenger vehicle loan interest in tax years 2025 through 2028 and, more durably for lenders, the section 6050AA return for anyone who in a trade or business receives $600 or more of interest in a year on a specified passenger vehicle loan: borrower name, address and TIN, interest received, principal at the start of the year, origination and acquisition dates and the vehicle’s year, make, model and VIN, with a borrower statement and penalties under sections 6721 and 6722, effective November 9.¹⁹ Treasury declined to drop the VIN, to consolidate returns or to replace the statement with a portal, and declined to make negative equity eligible; Notice 2025-57 waives penalties for 2025 if lenders make interest available through statements or portals, and dealer groups note that for most purchases the lender, not the dealership, files.¹⁹ ²⁰ ²¹ ²²

OCC and FDIC Define “Unsafe or Unsound” and Limit MRAs to Material Financial Risk From November 2

A joint final rule published September 1 (91 FR 56004) defines an unsafe or unsound practice as one contrary to prudent operation that, if continued, would be likely to materially harm the institution’s financial condition or present a material risk of loss to the Deposit Insurance Fund, limits matters requiring attention to such practices or actual violations of law, and tells examiners to prioritize "material financial risks over concerns related to policies, process, documentation, and other nonfinancial risks."²³ ²⁴ FDIC Chairman Travis Hill said a lookback found "a large majority of outstanding supervisory criticisms do not meet the standard under the final rule," while Klaros Group’s Todd Phillips told American Banker the rule "handcuffs the examiners."²⁵ ²⁶ For lenders that rent a bank charter, process findings leave the MRA channel but BSA, fair-lending and UDAAP violations do not; the Federal Reserve is not a party.²³

Schedule a FREE Demo Call with Jordan

Listen to the Beyond Banks Podcast

Listen on Apple Podcasts

Listen on Spotify

The Bancorp quits small-business loans