The Bancorp, Inc. Reports First Quarter 2023 Financial Results

The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2023.

Highlights

  • The Bancorp reported net income of $49.1 million, or $0.88 per diluted share, for the quarter ended March 31, 2023, compared to net income of $29.0 million, or $0.50 per diluted share, for the quarter ended March 31, 2022, or a 76% increase in income per diluted share.
  • Return on assets and equity for the quarter ended March 31, 2023 amounted to 2.6% and 28%, respectively, compared to 1.7% and 18%, respectively, for the quarter ended March 31, 2022 (all percentages “annualized”).
  • The increases in net income and return on assets and equity reflected increases in net interest income. Net interest income increased 62% to $85.8 million for the quarter ended March 31, 2023, compared to $52.9 million for the quarter ended March 31, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on the Bancorp’s variable rate loans and securities.
  • Net interest margin amounted to 4.67% for the quarter ended March 31, 2023, compared to 3.12% for the quarter ended March 31, 2022, and 4.21% for the quarter ended December 31, 2022.
  • Loans, net were $5.35 billion at March 31, 2023, compared to $5.49 billion at December 31, 2022 and $4.16 billion at March 31, 2022. Those changes reflected a decrease of 2% quarter over quarter and an increase of 29% year over year.
  • Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $5.45 billion, or 19%, to $34.01 billion for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022. The increase reflects continued organic growth with existing partners and the impact from new clients added throughout 2022. Total prepaid, debit card, ACH and other payment fees increased 24% to $25.5 million for first quarter 2023 compared to the first quarter of 2022.
  • Small business loans (“SBL”), including those held at fair value, grew 11% year over year to $785.8 million at March 31, 2023, and 3% quarter over quarter. That growth is exclusive of Paycheck Protection Program (“PPP”) loan balances which amounted to $4.0 million and $23.7 million, respectively, at March 31, 2023 and March 31, 2022.
  • Direct lease financing balances increased 21% year over year to $652.5 million at March 31, 2023, and 3% quarter over quarter.
  • At March 31, 2023, the $1.75 billion balance of real estate bridge loans, consisting entirely of apartment buildings, compared to $1.67 billion at December 31, 2022, reflecting quarter over quarter growth of 5%. At March 31, 2022, these loans totaled $803.5 million.
  • Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively increased 1% year over year and decreased 10% quarter over quarter to $2.24 billion at March 31, 2023.
  • The average interest rate on $6.77 billion of average deposits and interest-bearing liabilities during the first quarter of 2023 was 2.15%. Average deposits of $6.62 billion for the first quarter of 2023, reflected an increase of 8% from the $6.11 billion of average deposits for the quarter ended March 31, 2022.
  • The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of large numbers of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $3.3 billion as of April 27, 2023 and access to significant other liquidity.
  • As of March 31, 2023, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.88%, 14.34%, 14.84% and 14.34%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.
  • Book value per common share at March 31, 2023 was $13.11 per share compared to $11.41 per common share at March 31, 2022, an increase of 15%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.
  • The Bancorp repurchased 778,442 shares of its common stock at an average cost of $32.12 per share during the quarter ended March 31, 2023.

CEO and President Damian Kozlowski stated “The recent dislocation in the banking industry did not materially impact our company. With granular deposits spread across more than 130 million insured small accounts through our Fin-tech ecosystem, a low risk variable rate and short duration credit book and significant liquidity and borrowing capacity, TBBK was well positioned to manage the increased volatility exhibited in the beginning of 2023. Our performance expectations for the first quarter were significantly surpassed. We are raising guidance from $3.20 a share to $3.60 a share, without including the impact of anticipated share buy backs of $25 million per quarter in 2023.”

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, April 28, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.886.7786, conference code 02423750. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, May 5, 2023 by dialing 1.877.674.7070, access code 423750#.

About The Bancorp

The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, National Association, (or “The Bancorp Bank, N. A.”) provides non-bank financial companies with the people, processes, and technology to meet their unique banking needs. Through its Fintech Solutions, Institutional Banking, Commercial Lending, and Real Estate Bridge Lending businesses, The Bancorp provides partner-focused solutions paired with cutting-edge technology for companies that range from entrepreneurial startups to Fortune 500 companies. With over 20 years of experience, The Bancorp has become a leader in the financial services industry, earning recognition as the #1 issuer of prepaid cards in the U.S., a nationwide provider of bridge financing for real estate capital improvement plans, an SBA National Preferred Lender, a leading provider of securities-backed lines of credit, with one of the few bank-owned commercial vehicle leasing groups. By its company-wide commitment to excellence, The Bancorp has also been ranked as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600. For more about The Bancorp, visit https://thebancorp.com/.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp’s business which 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 , and are based on current expectations about important economic, political, and technological factors, among others, 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. For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see 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 those filings. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this press release, except as may be required under applicable law.

The Bancorp, Inc.

Financial highlights

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

March 31,

 

December 31,

Consolidated condensed income statements

2023 (unaudited)

 

2022 (unaudited)

 

2022

 

 

(Dollars in thousands, except per share and share data)

 

 

 

 

 

 

 

 

 

Net interest income

$

85,816

 

$

52,853

 

$

248,841

Provision for credit losses

 

1,903

 

 

1,507

 

 

7,108

Non-interest income

 

 

 

 

 

 

 

 

ACH, card and other payment processing fees

 

2,171

 

 

1,984

 

 

8,935

Prepaid, debit card and related fees

 

23,323

 

 

18,652

 

 

77,236

Net realized and unrealized gains on commercial

 

 

 

 

 

 

 

 

loans, at fair value

 

1,725

 

 

3,383

 

 

13,531

Leasing related income

 

1,490

 

 

973

 

 

4,822

Other non-interest income

 

280

 

 

120

 

 

1,159

Total non-interest income

 

28,989

 

 

25,112

 

 

105,683

Non-interest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

29,785

 

 

23,848

 

 

105,368

Data processing expense

 

1,321

 

 

1,189

 

 

4,972

Legal expense

 

958

 

 

794

 

 

3,878

Legal settlement

 

 

 

 

 

1,152

Civil money penalty

 

 

 

 

 

1,750

FDIC insurance

 

955

 

 

974

 

 

3,270

Software

 

4,237

 

 

3,864

 

 

16,211

Other non-interest expense

 

10,774

 

 

7,683

 

 

32,901

Total non-interest expense

 

48,030

 

 

38,352

 

 

169,502

Income before income taxes

 

64,872

 

 

38,106

 

 

177,914

Income tax expense

 

15,750

 

 

9,140

 

 

47,701

Net income

 

49,122

 

 

28,966

 

 

130,213

 

 

 

 

 

 

 

 

 

Net income per share - basic

$

0.89

 

$

0.51

 

$

2.30

 

 

 

 

Net income per share - diluted

$

0.88

 

$

0.50

 

$

2.27

Weighted average shares - basic

 

55,452,815

 

 

57,115,903

 

 

56,556,303

Weighted average shares - diluted

 

56,048,142

 

 

58,095,980

 

 

57,268,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated balance sheets

March 31,

 

December 31,

 

September 30,

 

March 31,

 

2023 (unaudited)

 

2022

 

2022 (unaudited)

 

2022 (unaudited)

 

 

(Dollars in thousands, except per share and share data)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

13,736

 

 

$

24,063

 

 

$

22,537

 

 

$

11,399

 

Interest earning deposits at Federal Reserve Bank

 

773,446

 

 

 

864,126

 

 

 

700,175

 

 

 

662,827

 

Total cash and cash equivalents

 

787,182

 

 

 

888,189

 

 

 

722,712

 

 

 

674,226

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities, available-for-sale, at fair value

 

787,429

 

 

 

766,016

 

 

 

790,594

 

 

 

907,338

 

Commercial loans, at fair value

 

493,334

 

 

 

589,143

 

 

 

818,040

 

 

 

1,180,885

 

Loans, net of deferred fees and costs

 

5,354,347

 

 

 

5,486,853

 

 

 

5,267,375

 

 

 

4,164,298

 

Allowance for credit losses

 

(23,794

)

 

 

(22,374

)

 

 

(19,689

)

 

 

(19,051

)

Loans, net

 

5,330,553

 

 

 

5,464,479

 

 

 

5,247,686

 

 

 

4,145,247

 

Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock

 

12,629

 

 

 

12,629

 

 

 

12,629

 

 

 

1,663

 

Premises and equipment, net

 

21,319

 

 

 

18,401

 

 

 

18,443

 

 

 

16,314

 

Accrued interest receivable

 

33,729

 

 

 

32,005

 

 

 

25,506

 

 

 

17,284

 

Intangible assets, net

 

1,950

 

 

 

2,049

 

 

 

2,149

 

 

 

2,348

 

Other real estate owned

 

21,117

 

 

 

21,210

 

 

 

18,873

 

 

 

18,873

 

Deferred tax asset, net

 

18,290

 

 

 

19,703

 

 

 

27,241

 

 

 

18,521

 

Other assets

 

99,427

 

 

 

89,176

 

 

 

93,201

 

 

 

99,961

 

Total assets

$

7,606,959

 

 

$

7,903,000

 

 

$

7,777,074

 

 

$

7,082,660

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

Demand and interest checking

$

6,607,767

 

 

$

6,559,617

 

 

$

5,934,591

 

 

$

5,506,083

 

Savings and money market

 

96,890

 

 

 

140,496

 

 

 

575,381

 

 

 

722,240

 

Time deposits, $100,000 and over

 

 

330,000

 

401,331

 

 

Total deposits

 

6,704,657

 

7,030,113

 

6,911,303

 

6,228,323

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

42

 

 

 

42

 

 

 

42

 

 

 

42

 

Senior debt

 

99,142

 

 

 

99,050

 

 

 

98,958

 

 

 

98,774

 

Subordinated debenture

 

13,401

 

 

 

13,401

 

 

 

13,401

 

 

 

13,401

 

Other long-term borrowings

 

9,972

 

 

 

10,028

 

 

 

38,928

 

 

 

39,318

 

Other liabilities

 

54,597

 

56,335

 

50,704

 

50,507

 

Total liabilities

$

6,881,811

 

$

7,208,969

 

$

7,113,336

 

$

6,430,365

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock - authorized, 75,000,000 shares of $1.00 par value; 55,329,629 and 57,155,028 shares issued and outstanding at March 31, 2023 and 2022, respectively

 

55,330

 

 

 

55,690

 

 

 

56,202

 

 

 

57,155

 

Additional paid-in capital

 

277,814

 

 

 

299,279

 

 

 

311,569

 

 

 

336,604

 

Retained earnings

 

418,441

 

 

 

369,319

 

 

 

329,078

 

 

 

268,072

 

Accumulated other comprehensive loss

 

(26,437

)

(30,257

)

(33,111

)

(9,536

)

Total shareholders' equity

 

725,148

 

 

 

694,031

 

 

 

663,738

 

 

 

652,295

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

7,606,959

 

$

7,903,000

 

$

7,777,074

 

$

7,082,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average balance sheet and net interest income

 

Three months ended March 31, 2023

 

 

Three months ended March 31, 2022

 

 

(Dollars in thousands; unaudited)

 

 

Average

 

 

 

 

 

Average

 

 

Average

 

 

 

 

Average

Assets:

 

Balance

 

 

Interest

 

 

Rate

 

 

Balance

 

 

Interest

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of deferred fees and costs*

$

5,987,179

 

 

$

106,204

 

 

7.10

%

 

$

5,136,377

 

 

$

50,508

 

3.93

%

Leases-bank qualified**

 

3,361

 

 

 

69

 

 

8.21

%

 

 

4,015

 

 

 

105

 

10.46

%

Investment securities-taxable

 

774,055

 

 

 

9,300

 

 

4.81

%

 

 

939,511

 

 

 

4,891

 

2.08

%

Investment securities-nontaxable**

 

3,343

 

 

 

41

 

 

4.91

%

 

 

3,559

 

 

 

32

 

3.60

%

Interest earning deposits at Federal Reserve Bank

 

580,058

 

 

 

6,585

 

 

4.54

%

 

 

686,614

 

 

 

347

 

0.20

%

Net interest earning assets

 

7,347,996

 

 

 

122,199

 

 

6.65

%

 

 

6,770,076

 

 

 

55,883

 

3.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

(22,533

)

 

 

 

 

 

 

 

 

(17,810

)

 

 

 

 

 

Other assets

 

237,721

 

 

 

 

 

 

 

 

 

224,312

 

 

 

 

 

 

 

$

7,563,184

 

 

 

 

 

 

 

 

$

6,976,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and interest checking

$

6,406,834

 

 

$

32,383

 

 

2.02

%

 

$

5,575,228

 

 

$

1,406

 

0.10

%

Savings and money market

 

132,279

 

 

 

1,219

 

 

3.69

%

 

 

532,047

 

 

 

200

 

0.15

%

Time deposits

 

84,333

 

 

 

858

4.07

%

 

 

 

 

 

 

Total deposits

 

6,623,446

 

 

 

34,460

 

 

2.08

%

 

 

6,107,275

 

 

 

1,606

 

0.11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

20,500

 

 

 

234

 

 

4.57

%

 

 

555

 

 

 

 

 

Repurchase agreements

 

42

 

 

 

 

 

 

 

 

41

 

 

 

 

 

Long-term borrowings

 

9,998

 

 

 

126

 

 

5.04

%

 

 

 

 

 

 

 

Subordinated debentures

 

13,401

 

 

 

261

7.79

%

 

 

13,401

 

 

 

116

3.46

%

Senior debt

 

99,092

 

 

 

1,279

5.16

%

 

 

98,724

 

 

 

1,279

5.18

%

Total deposits and liabilities

 

6,766,479

 

 

 

36,360

 

 

2.15

%

 

 

6,219,996

 

 

 

3,001

 

0.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

87,116

 

 

 

 

 

 

 

 

 

104,207

 

 

 

 

 

 

Total liabilities

 

6,853,595

 

 

 

 

 

 

 

 

 

6,324,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

709,589

 

 

 

 

 

 

 

 

 

652,375

 

 

 

 

 

 

 

$

7,563,184

 

 

 

 

 

 

 

 

$

6,976,578

 

 

 

 

 

 

Net interest income on tax equivalent basis**

 

 

 

$

85,839

 

 

 

 

 

$

52,882

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustment

 

 

 

23

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

85,816

 

 

 

$

52,853

Net interest margin **

 

 

 

 

 

 

 

4.67

%

 

 

 

 

 

 

 

3.12

%

* Includes commercial loans, at fair value. All periods include non-accrual loans.

** Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2023 and 2022.

 

NOTE: In the table above, interest on loans for 2023 and 2022 includes $10,000 and $440,000, respectively, of interest and fees on PPP loans.

 

 

 

 

 

 

 

 

Allowance for credit losses

 

Three months ended

 

Year ended

 

March 31,

 

March 31,

 

December 31,

 

2023 (unaudited)

 

2022 (unaudited)

2022

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Balance in the allowance for credit losses at beginning of period

$

22,374

 

$

17,806

$

17,806

 

 

 

 

 

 

 

 

 

Loans charged-off:

 

 

 

 

 

 

 

 

SBA non-real estate

 

214

 

 

98

 

 

885

Direct lease financing

 

905

 

 

191

 

 

576

Consumer - other

 

3

 

 

 

Total

 

1,122

 

 

289

 

1,461

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

SBA non-real estate

 

202

 

 

12

 

 

140

SBA commercial mortgage

 

75

 

 

 

 

Direct lease financing

 

67

 

 

19

 

 

124

Other loans

 

 

 

 

24

Total

 

344

 

 

31

 

288

Net charge-offs

 

778

 

 

258

 

 

1,173

Provision for credit losses, excluding commitment provision

 

2,198

 

 

1,503

 

5,741

 

 

 

 

 

 

 

 

 

Balance in allowance for credit losses at end of period

$

23,794

 

$

19,051

 

$

22,374

Net charge-offs/average loans

 

0.01%

 

 

0.01%

 

 

0.03%

Net charge-offs/average assets

 

0.01%

 

 

 

 

0.02%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan portfolio

March 31,

 

December 31,

 

September 30,

 

March 31,

 

2023 (unaudited)

 

2022

 

2022 (unaudited)

 

2022 (unaudited)

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

SBL non-real estate

$

114,334

 

$

108,954

 

$

116,080

 

$

122,387

SBL commercial mortgage

 

492,798

 

 

474,496

 

 

429,865

 

 

385,559

SBL construction

 

33,116

30,864

26,841

31,432

Small business loans

 

640,248

 

 

614,314

 

 

572,786

 

 

539,378

Direct lease financing

 

652,541

 

 

632,160

 

 

599,796

 

 

538,616

SBLOC / IBLOC *

 

2,053,450

 

 

2,332,469

 

 

2,369,106

 

 

2,067,233

Advisor financing **

 

189,425

 

 

172,468

 

 

168,559

 

 

146,461

Real estate bridge loans

 

1,752,322

 

 

1,669,031

 

 

1,488,119

 

 

803,477

Other loans ***

 

60,210

61,679

64,980

61,096

 

 

5,348,196

 

 

5,482,121

 

 

5,263,346

 

 

4,156,261

Unamortized loan fees and costs

 

6,151

4,732

4,029

8,037

Total loans, including unamortized fees and costs

$

5,354,347

$

5,486,853

$

5,267,375

$

4,164,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small business portfolio

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

March 31,

 

 

2023 (unaudited)

 

 

2022

 

 

2022 (unaudited)

 

 

2022 (unaudited)

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

SBL, including unamortized fees and costs

$

648,858

$

621,641

$

579,156

 

$

545,462

SBL, included in loans, at fair value

 

140,909

146,717

159,914

 

 

183,408

Total small business loans ****

$

789,767

$

768,358

$

739,070

 

$

728,870

* Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of eligible life insurance policies.

** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to 70% of the estimated business enterprise value, based on a third-party valuation, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.

*** Includes demand deposit overdrafts reclassified as loan balances totaling $4.8 million and $2.6 million at March 31, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

****The small business loans held at fair value are comprised of the government guaranteed portion of certain SBA loans at the dates indicated.

Small business loans as of March 31, 2023

 

 

 

 

 

 

 

 

 

Loan principal

 

 

(Dollars in millions)

U.S. government guaranteed portion of SBA loans (a)

 

$

380

Paycheck Protection Program loans (PPP) (a)

 

 

4

Commercial mortgage SBA (b)

 

 

257

Construction SBA (c)

 

 

11

Non-guaranteed portion of U.S. government guaranteed loans (d)

 

 

104

Non-SBA small business loans

 

 

23

Total principal

 

$

779

Unamortized fees and costs

 

 

11

Total small business loans

 

$

790

(a) This is the portion of SBA 7a loans (7a) and PPP loans that have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.

(b) Substantially all these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan to value percentages (LTV), generally 50-60%, to which the Bank adheres.

(c) Of the $11 million in Construction SBA loans, $9 million are 504 first mortgages with an origination date LTV of 50-60% and $2 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $104 million represents the unguaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.

Small business loans by type as of March 31, 2023

 

(Excludes government guaranteed portion of SBA 7a loans and PPP loans)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBL commercial mortgage*

 

SBL construction*

 

SBL non-real estate

 

Total

 

 

% Total

 

 

 

(Dollars in millions)

Hotels and motels

 

$

74

 

$

 

$

 

$

74

 

 

19%

Full-service restaurants

 

 

16

 

 

3

 

 

2

 

 

21

 

 

5%

Lessors of nonresidential buildings

 

 

19

 

 

 

 

 

 

19

 

 

5%

Car washes

 

 

17

 

 

2

 

 

 

 

19

 

 

5%

Child day care services

 

 

14

 

 

 

 

1

 

 

15

 

 

4%

Homes for the elderly

 

 

16

 

 

 

 

 

 

16

 

 

4%

Outpatient mental health and substance abuse centers

 

 

15

 

 

 

 

 

 

15

 

 

4%

Funeral homes and funeral services

 

 

15

 

 

 

 

 

 

15

 

 

4%

Gasoline stations with convenience stores

 

 

13

 

 

 

 

 

 

13

 

 

3%

Fitness and recreational sports centers

 

 

8

 

 

 

 

2

 

 

10

 

 

3%

Offices of lawyers

 

 

9

 

 

 

 

 

 

9

 

 

2%

Lessors of other real estate property

 

 

8

 

 

 

 

 

 

8

 

 

2%

General warehousing and storage

 

 

7

 

 

 

 

 

 

7

 

 

2%

Plumbing, heating, and air-conditioning companies

 

 

6

 

 

 

 

1

 

 

7

 

 

2%

Limited-service restaurants

 

 

1

 

 

2

 

 

3

 

 

6

 

 

2%

Lessors of residential buildings and dwellings

 

 

5

 

 

 

 

 

 

5

 

 

1%

Miscellaneous durable goods merchants

 

 

5

 

 

 

 

 

 

5

 

 

1%

Technical and trade schools

 

 

 

 

5

 

 

 

 

5

 

 

1%

Packaged frozen food merchant wholesalers

 

 

5

 

 

 

 

 

 

5

 

 

1%

Other amusement and recreation industry

 

 

4

 

 

 

 

 

 

4

 

 

1%

Offices of dentists

 

 

2

 

 

1

 

 

 

 

3

 

 

1%

Other warehousing and storage

 

 

3

 

 

 

 

 

 

3

 

 

1%

Vocational rehabilitation services

 

 

3

 

 

 

 

 

 

3

 

 

1%

Miscellaneous wood product manufacturing

 

 

3

 

 

 

 

 

 

3

 

 

1%

Other**

 

 

75

 

 

2

 

 

28

 

 

105

 

 

25%

Total

 

$

343

 

$

15

 

$

37

 

$

395

 

 

100%

* Of the SBL commercial mortgage and SBL construction loans, $90 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

**Loan types less than $3 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

State diversification as of March 31, 2023

 

(Excludes government guaranteed portion of SBA 7a loans and PPP loans)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBL commercial mortgage*

 

SBL construction*

 

SBL non-real estate

 

Total

 

 

% Total

 

 

 

(Dollars in millions)

California

 

$

71

 

$

3

 

$

3

 

$

77

 

 

19%

Florida

 

 

66

 

 

1

 

 

4

 

 

71

 

 

18%

North Carolina

 

 

34

 

 

7

 

 

2

 

 

43

 

 

11%

New York

 

 

26

 

 

 

 

5

 

 

31

 

 

8%

Pennsylvania

 

 

21

 

 

 

 

1

 

 

22

 

 

6%

Georgia

 

 

15

 

 

 

 

2

 

 

17

 

 

4%

New Jersey

 

 

12

 

 

 

 

4

 

 

16

 

 

4%

Illinois

 

 

14

 

 

 

 

1

 

 

15

 

 

4%

Texas

 

 

12

 

 

 

 

4

 

 

16

 

 

4%

Other States <$10 million

 

 

72

 

 

4

 

 

11

 

 

87

 

 

22%

Total

 

$

343

 

$

15

 

$

37

 

$

395

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Of the SBL commercial mortgage and SBL construction loans, $90 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

Top 10 loans as of March 31, 2023

 

 

 

 

 

 

 

 

Type

 

State

 

SBL commercial mortgage

 

 

 

 

(Dollars in millions)

Mental health and substance abuse center

 

 

FL

 

$

10

 

Hotel

 

 

FL

 

 

9

 

Lawyers office

 

 

CA

 

 

8

 

Hotel

 

 

NC

 

 

7

 

General warehousing and storage

 

 

PA

 

 

7

 

Hotel

 

 

FL

 

 

6

 

Hotel

 

 

NY

 

 

6

 

Hotel

 

 

NC

 

 

5

 

Mental health and substance abuse center

 

 

CT

 

 

5

 

Lessor of residential building

 

 

NC

 

 

5

 

Total

 

 

 

 

$

68

 

 

 

 

 

 

 

 

 

Commercial real estate loans, excluding SBA loans, are as follows including LTV at origination:

Type as of March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Type

 

 

# Loans

 

 

Balance

 

Weighted average

origination date

LTV

 

Weighted average

interest rate

 

 

 

(Dollars in millions)

Real estate bridge loans (multi-family apartment loans recorded at amortized cost)*

 

 

133

 

$

1,752

 

 

72%

 

8.40%

 

 

 

 

 

 

 

 

 

 

 

Non-SBA commercial real estate loans, at fair value:

 

 

 

 

 

 

 

 

 

 

Multi-family (apartment bridge loans)*

 

 

19

 

$

303

 

 

76%

 

8.20%

Hospitality (hotels and lodging)

 

 

3

 

 

30

 

 

65%

 

8.50%

Retail

 

 

2

 

 

12

 

 

72%

 

7.30%

Other

 

 

2

 

 

9

 

 

73%

 

5.20%

 

 

 

26

 

 

354

 

 

75%

 

8.11%

Fair value adjustment

 

 

 

 

 

(2

)

 

 

 

 

Total non-SBA commercial real estate loans, at fair value

 

 

 

 

 

352

 

 

 

 

 

Total commercial real estate loans

 

 

 

 

$

2,104

 

 

73%

 

8.36%

*In the third quarter of 2021, we resumed the origination of multi-family apartment loans. These are similar to the multi-family apartment loans carried at fair value, but at origination are intended to be held on the balance sheet, so are not accounted for at fair value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State diversification as of March 31, 2023

 

 

15 largest loans as of March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State

 

 

Balance

 

 

Origination

date LTV

 

 

State

 

 

 

Balance

 

Origination

date LTV

(Dollars in millions)

 

 

(Dollars in millions)

Texas

 

$

783

 

 

73%

 

 

Texas

 

 

$

42

 

75%

Florida

 

 

242

 

 

71%

 

 

Texas

 

 

 

40

 

72%

Georgia

 

 

239

 

 

70%

 

 

Texas

 

 

 

39

 

75%

Tennessee

 

 

99

 

 

72%

 

 

Texas

 

 

 

39

 

79%

Ohio

 

 

90

 

 

69%

 

 

Tennessee

 

 

 

37

 

72%

Michigan

 

 

68

 

 

70%

 

 

Texas

 

 

 

37

 

80%

Alabama

 

 

66

 

 

72%

 

 

Michigan

 

 

 

36

 

62%

Other States each <$55 million

 

 

517

 

 

75%

 

 

Florida

 

 

 

33

 

72%

Total

 

$

2,104

 

 

74%

 

 

Texas

 

 

 

32

 

67%

 

 

 

 

 

 

 

 

 

Michigan

 

 

 

32

 

79%

 

 

 

 

 

 

 

 

 

Texas

 

 

 

31

 

62%

 

 

 

 

 

 

 

 

 

Tennessee

 

 

 

30

 

71%

 

 

 

 

 

 

 

 

 

Indiana

 

 

 

30

 

76%

 

 

 

 

 

 

 

 

 

Ohio

 

 

 

29

 

74%

 

 

 

 

 

 

 

 

 

Texas

 

 

 

29

 

77%

 

 

 

 

 

 

 

 

 

15 Largest loans

 

 

$

516

 

73%

 

Institutional banking loans outstanding at March 31, 2023

 

 

 

 

 

Type

Principal

 

% of total

 

 

(Dollars in millions)

 

 

Securities backed lines of credit (SBLOC)

$

1,132

 

50%

Insurance backed lines of credit (IBLOC)

 

922

 

41%

Advisor financing

 

189

 

9%

Total

$

2,243

 

100%

 

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While equities have fallen in excess of 30% in recent years, the reduction in collateral value of brokerage accounts collateralizing SBLOCs generally has been less, for two reasons. First, many collateral accounts are “balanced” and accordingly have a component of debt securities, which have either not decreased in value as much as equities, or in some cases may have increased in value. Secondly, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the percentage of principal to collateral.

Top 10 SBLOC loans at March 31, 2023

 

 

 

 

 

 

Principal amount

 

% Principal to

collateral

 

(Dollars in millions)

 

$

20

 

54%

 

 

18

 

40%

 

 

13

 

28%

 

 

9

 

35%

 

 

9

 

65%

 

 

9

 

43%

 

 

9

 

61%

 

 

8

 

68%

 

 

7

 

69%

 

 

6

 

38%

Total and weighted average

$

108

 

49%

 

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us. We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, nine insurance companies have been approved and, as of March 31, 2023, all were rated A- or better by AM BEST.

Direct lease financing* by type as of March 31, 2023

 
 

 

 

Principal balance

 

% Total

 

 

(Dollars in millions)

 

 

Construction

$

112

 

17%

Waste management and remediation services

 

85

 

13%

Government agencies and public institutions**

 

81

 

12%

Real estate and rental and leasing

 

67

 

10%

Retail trade

 

47

 

7%

Finance and insurance

 

40

 

6%

Health care and social assistance

 

31

 

5%

Manufacturing

 

22

 

3%

Professional, scientific, and technical services

 

22

 

3%

Wholesale trade

 

18

 

3%

Transportation and warehousing

 

12

 

2%

Educational services

 

9

 

1%

Mining, quarrying, and oil and gas extraction

 

8

 

1%

Other

 

99

 

17%

Total

$

653

 

100%

* Of the total $653 million of direct lease financing, $575 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

** Includes public universities and school districts.

Direct lease financing by state as of March 31, 2023

 

 

 

 

 

State

 

Principal balance

 

% Total

 

 

(Dollars in millions)

 

 

Florida

$

91

 

14%

California

 

68

 

10%

Utah

 

64

 

10%

Pennsylvania

 

41

 

6%

New Jersey

 

40

 

6%

New York

 

33

 

5%

North Carolina

 

31

 

5%

Texas

 

29

 

4%

Maryland

 

28

 

4%

Connecticut

 

26

 

4%

Washington

 

16

 

2%

Georgia

 

16

 

2%

Idaho

 

15

 

2%

Ohio

 

13

 

2%

Illinois

 

12

 

2%

Other States

 

130

 

22%

Total

$

653

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital ratios

Tier 1 capital

 

Tier 1 capital

 

Total capital

 

Common equity

 

to average

 

to risk-weighted

 

to risk-weighted

 

tier 1 to risk

 

assets ratio

 

assets ratio

 

assets ratio

 

weighted assets

As of March 31, 2023

 

 

 

 

 

 

 

The Bancorp, Inc.

9.88%

 

14.34%

 

14.84%

 

14.34%

The Bancorp Bank, National Association

11.00%

 

15.94%

 

16.44%

 

15.94%

"Well capitalized" institution (under federal regulations-Basel III)

5.00%

 

8.00%

 

10.00%

 

6.50%

 

 

 

 

 

 

 

 

As of December 31, 2022

 

 

 

 

 

 

 

The Bancorp, Inc.

9.63%

 

13.40%

 

13.87%

 

13.40%

The Bancorp Bank, National Association

10.73%

 

14.95%

 

15.42%

 

14.95%

"Well capitalized" institution (under federal regulations-Basel III)

5.00%

 

8.00%

 

10.00%

 

6.50%

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

March 31,

 

December 31,

 

2023

 

2022

 

2022

Selected operating ratios

 

 

 

 

 

 

 

 

Return on average assets (1)

 

2.63%

 

 

1.68%

 

 

1.81%

Return on average equity (1)

 

28.07%

 

 

18.01%

 

 

19.34%

Net interest margin

 

4.67%

 

 

3.12%

 

 

3.55%

 

(1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share table

March 31,

 

December 31,

 

September 30,

 

March 31,

 

2023

 

2022

 

2022

 

2022

Book value per share

$

13.11

 

$

12.46

 

$

11.81

 

 

11.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan quality table

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

March 31,

 

 

2023

 

2022

 

2022

 

2022

 

 

(Dollars in thousands)

Nonperforming loans to total loans

 

0.26%

 

 

0.33%

 

 

0.16%

 

 

0.20%

Nonperforming assets to total assets

 

0.46%

 

 

0.50%

 

 

0.35%

 

 

0.38%

Allowance for credit losses to total loans

 

0.44%

 

 

0.41%

 

 

0.37%

 

 

0.46%

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

$

12,938

 

$

10,356

 

$

3,860

 

$

3,621

Loans 90 days past due still accruing interest

 

873

 

 

7,775

 

 

4,415

 

 

4,597

Other real estate owned

 

21,117

 

21,210

 

18,873

 

18,873

Total nonperforming assets

$

34,928

 

$

39,341

 

$

27,148

 

$

27,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross dollar volume (GDV) (1)

Three months ended

 

March 31,

 

December 31,

 

September 30,

 

March 31,

 

2023

 

2022

 

2022

 

2022

 

 

(Dollars in thousands)

Prepaid and debit card GDV

$

34,011,792

 

$

29,454,074

 

$

28,119,428

 

$

28,564,582

(1) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank, N.A.

 
 

Business line quarterly summary

Quarter ended March 31, 2023

(Dollars in millions)

 

Balances

% Growth

Major business lines

Average

approximate

rates(1)

Balances(2)

Year over

year

 

Linked

quarter

annualized

Loans

Institutional banking(3)

6.1%

$

2,243

1%

(42)%

Small business lending(4)

6.5%

 

790

11%

11%

Leasing

6.7%

 

653

21%

13%

Commercial real estate (non-SBA loans, at fair value)

8.1%

 

352

nm

nm

Real estate bridge loans (recorded at book value)

 

8.4%

 

 

1,752

 

118%

 

20%

 

 

 

 

 

Weighted average yield

7.0%

$

5,790

Non-interest income

% Growth

Deposits: Fintech solutions group

Current

quarter(5)

Year over

year

Prepaid and debit card issuance, and other payments

2.2%

$

5,968

9%

nm

$

25.5

24%

(1)Average rates are for the quarter ended March 31, 2023.

(2)Loan and deposit categories are respectively based on period-end and average quarterly balances.

(3)Institutional Banking loans are comprised of security backed lines of credit (SBLOC), collateralized by marketable securities, insurance backed lines of credit (IBLOC), collateralized by the cash surrender value of eligible life insurance policies, and investment advisor financing.

(4)Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans.

(5)Includes $1.4 million from termination of a partner contract and $0.6 million from reclassified fees. Adjusted Year over Year growth is 14%.

Summary of credit lines available

Notwithstanding that the vast majority of the Company’s funding is comprised of insured and small balance accounts, the Company maintains lines of credit exceeding potential liquidity requirements as follows. The Company also has access to other substantial sources of liquidity.

 

 

 

 

April 15, 2023

 

 

(Dollars in thousands)

Federal Reserve Bank

$

2,081,498

Federal Home Loan Bank

 

1,246,883

Total lines of credit available

$

3,328,381

 

Estimated insured vs Other uninsured deposits

The vast majority of the Company’s deposits are insured and low balance and accordingly do not constitute the liquidity risk experienced by certain institutions. Accordingly the deposit base is comprised as follows.

 

 

 

 

March 31, 2023

Insured

 

90%

Low balance stored value

 

5%

Other uninsured

 

5%

Total deposits

 

100%

 

Calculation of efficiency ratio(1)

 

 

 

 

 

 

 

Three months ended

 

March 31,

 

December 31,

 

2003

 

2022

 

(Dollars in thousands)

Net interest income

$

85,816

 

$

76,760

Non-interest income

 

28,989

 

 

25,740

Total revenue

$

114,805

 

$

102,500

Non-interest expense

$

48,030

 

$

43,475

 

 

 

 

 

 

Efficiency ratio

 

42%

 

 

42%

(1) The efficiency ratio is calculated by dividing GAAP total non-interest expense by the total of GAAP net interest income and non-interest income. This ratio compares revenues generated with the amount of expense required to generate such revenues, and may be used as one measure of overall efficiency.

 

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