EX-99.1 2 ex99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
The Bancorp, Inc. Reports First Quarter 2018 Financial Results

Wilmington, DE – April 26, 2018 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2018.

Highlights

·
Net income from continuing operations rose 122% to $14.0 million for the quarter ended March 31, 2018 compared to the quarter ended March 31, 2017 and net income overall rose 78% to $14.1 million between those periods.

·
Return on Average Equity annualized for the quarter was 17.54% and Return on Average Assets was 1.30%.

·
Net interest income increased 21% to $30.1 million for the quarter ended March 31, 2018, compared to $24.9 million for the quarter ended March 31, 2017.

·
Interest income on security backed lines of credit ("SBLOC") loans increased 48% to $6.5 million for the quarter ended March 31, 2018, compared to $4.4 million for the quarter ended March 31, 2017.

·
Net interest margin increased to 3.12% for the quarter ended March 31, 2018, compared to 2.70% for the quarter ended March 31, 2017.

·
Prepaid fees for the quarter ended March 31, 2018 increased to $14.3 million, or 5%, compared to the quarter ended March 31, 2017. Card payment and ACH processing fees increased 11% to $1.7 million during the same period.

·
Loans increased 16% to $1.46 billion at March 31, 2018, compared to $1.26 billion at March 31, 2017.

·
SBLOC loans increased 15% to $759.4 million at March 31, 2018, compared to $660.4 million at March 31, 2017.

·
Small Business Administration ("SBA") loans increased 15% to $424.5 million at March 31, 2018, compared to $369.8 million at March 31, 2017.

·
Direct lease financing increased 6% to $385.5 million at March 31, 2018, compared to $362.7 million at March 31, 2017.

·
The rate on $4.06 billion of average deposits and interest bearing liabilities in the first quarter of 2018 was 0.52% with a rate of 0.66% for $2.22 billion of average prepaid card deposits.

·
Consolidated leverage ratio was 7.69% at March 31, 2018. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

·
Book value per common share at March 31, 2018 was $5.87 per share.
 
Damian Kozlowski, The Bancorp's Chief Executive Officer, said, "The first quarter was a great start to a new year.  Bancorp earned $0.25 cents a share on net revenue of $59.0 million and expenses of $39.0 million.  The commitment of our team to execute on our business plan is having an impact on our operating performance and we continue to show momentum in our results.  Along with revenue and client progress in each of our business lines, we have continued to strengthen our overall platform with the goal of greater efficiency and productivity enhanced by a higher level of risk management across our enterprise." 
 
 
1

 
The Bancorp reported net income of $14.1 million, or $0.25 earnings per diluted share, for the quarter ended March 31, 2018, compared to net income of $8.0 million, or $0.14 income per diluted share, for the quarter ended March 31, 2017.  Income from continuing operations does not include any income which may result from the reinvestment of the proceeds from sales or repayment of the remaining assets in The Bancorp's discontinued operations.  Tier one capital to assets, tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 ratios were 7.69%, 18.43%, 18.82% and 18.43%, respectively, compared to well capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, April 27, 2018 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 4846178.  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 4, 2018 by dialing 855.859.2056, access code 4846178.

About The Bancorp

The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company's only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities-backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.thebancorp.com.

Forward-Looking Statements

Statements in this earnings release regarding Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. These statements may be identified by the use of forward-looking terminology, including but not limited to the words "may," "believe," "will," "expect," "look," "anticipate," "estimate," "continue," or similar words.  For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see Bancorp's filings with the SEC, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of those filings. These risks and uncertainties could cause actual results to differ materially from those projected in the forward-looking statements. 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 presentation, except as may be required under applicable law.

The Bancorp, Inc. Contact
Andres Viroslav
215-861-7990
aviroslav@thebancorp.com
 
2
 

The Bancorp, Inc.
Financial highlights
(unaudited)
 
   
Three months ended
    
Year ended
  
   
March 31,
    
December 31,
  
Condensed income statement
  
2018
    
2017
    
2017
  
   
(dollars in thousands except per share data)
  
                   
Net interest income
  
$
30,074
    
$
24,877
    
$
106,680
  
Provision for loan and lease losses
    
700
      
1,000
      
2,920
  
Non-interest income
                        
Service fees on deposit accounts
    
1,576
      
1,675
      
6,788
  
Card payment and ACH processing fees
    
1,692
      
1,528
      
6,318
  
Prepaid card fees
    
14,282
      
13,547
      
53,367
  
Gain on sale of loans
    
11,729
      
5,383
      
17,919
  
Gain on sale of investment securities
    
26
      
503
      
2,231
  
Change in value of investment in unconsolidated entity
    
(1,171
)
    
(19
)
    
(20
)
Leasing income
    
487
      
551
      
2,663
  
Affinity fees
    
102
      
1,021
      
1,545
  
Gain on sale of health savings accounts
    
-
      
-
      
2,538
  
Loss from sale of European prepaid card operations
    
-
      
-
      
(3,437
)
Other non-interest income
    
372
      
30
      
1,636
  
Total non-interest income
    
29,095
      
24,219
      
91,548
  
Non-interest expense
                        
Salaries and employee benefits
    
21,073
      
18,006
      
75,832
  
Data processing expense
    
2,005
      
3,480
      
10,159
  
One time fee to exit data processing contract
    
-
      
-
      
1,136
  
Legal expense
    
2,431
      
1,738
      
8,072
  
FDIC Insurance
    
2,219
      
2,065
      
10,097
  
Software
    
3,291
      
3,228
      
12,597
  
Losses and write downs on other real estate owned
    
45
      
-
      
-
  
Civil money penalty
    
(290
)
    
-
      
2,290
  
Other non-interest expense
    
8,275
      
9,266
      
34,731
  
Total non-interest expense
    
39,049
      
37,783
      
154,914
  
Income from continuing operations before income tax expense
    
19,420
      
10,313
      
40,394
  
Income tax expense
    
5,399
      
4,011
      
23,056
  
Net income from continuing operations
    
14,021
      
6,302
      
17,338
  
Discontinued operations
                        
Income from discontinued operations before income taxes
    
156
      
2,667
      
4,059
  
Income tax expense (benefit)
    
37
      
1,006
      
(276
)
Net income from discontinued operations, net of tax
    
119
      
1,661
      
4,335
  
Net income available to common shareholders
  
$
14,140
    
$
7,963
    
$
21,673
  
                         
Net income per share from continuing operations - basic
  
$
0.25
    
$
0.11
    
$
0.31
  
Net income per share from discontinued operations - basic
  
$
-
    
$
0.03
    
$
0.08
  
Net income per share - basic
  
$
0.25
    
$
0.14
    
$
0.39
  
                         
Net income per share from continuing operations - diluted
  
$
0.25
    
$
0.11
    
$
0.31
  
Net income per share from discontinued operations - diluted
  
$
-
    
$
0.03
    
$
0.08
  
Net income per share - diluted
  
$
0.25
    
$
0.14
    
$
0.39
  
Weighted average shares - basic
    
56,141,830
      
55,534,279
      
55,686,507
  
Weighted average shares - diluted
    
57,023,121
      
55,752,496
      
56,176,269
  
 
 
3

 
Balance sheet
  
March 31,
    
December 31,
    
September 30,
    
March 31,
  
   
2018
    
2017
    
2017
    
2017
  
    
(dollars in thousands)
  
Assets:
                        
Cash and cash equivalents
                        
Cash and due from banks
  
$
1,999
    
$
3,152
    
$
5,813
    
$
4,671
  
Interest earning deposits at Federal Reserve Bank
    
508,847
      
841,471
      
328,023
      
669,042
  
Securities sold under agreements to resell
    
64,312
      
64,312
      
65,095
      
65,248
  
     Total cash and cash equivalents
    
575,158
      
908,935
      
398,931
      
738,961
  
                                 
Investment securities, available-for-sale, at fair value
    
1,381,020
      
1,294,484
      
1,196,956
      
1,215,892
  
Investment securities, held-to-maturity
    
86,370
      
86,380
      
86,402
      
93,443
  
Loans held for sale, at fair value
    
349,806
      
503,316
      
380,272
      
480,913
  
Loans, net of deferred fees and costs
    
1,463,064
      
1,392,228
      
1,374,060
      
1,264,127
  
Allowance for loan and lease losses
    
(7,285
)
    
(7,096
)
    
(7,283
)
    
(7,294
)
Loans, net
    
1,455,779
      
1,385,132
      
1,366,777
      
1,256,833
  
Federal Home Loan Bank & Atlantic Community Bancshares stock
    
991
      
991
      
991
      
2,589
  
Premises and equipment, net
    
19,052
      
20,051
      
21,087
      
22,993
  
Accrued interest receivable
    
11,778
      
10,900
      
10,131
      
10,296
  
Intangible assets, net
    
4,995
      
5,377
      
5,185
      
5,844
  
Other real estate owned
    
405
      
450
      
-
      
104
  
Deferred tax asset, net
    
38,139
      
34,802
      
53,017
      
54,155
  
Investment in unconsolidated entity
    
70,016
      
74,473
      
107,711
      
125,982
  
Assets held for sale from discontinued operations
    
289,038
      
304,313
      
314,994
      
341,286
  
Other assets
    
86,553
      
78,543
      
51,164
      
55,351
  
     Total assets
  
$
4,369,100
    
$
4,708,147
    
$
3,993,618
    
$
4,404,642
  
                                 
Liabilities:
                                
Deposits
                                
Demand and interest checking
  
$
3,461,881
    
$
3,806,965
    
$
3,113,212
    
$
3,607,076
  
Savings and money market
    
493,288
      
453,877
      
452,183
      
428,723
  
     Total deposits
    
3,955,169
      
4,260,842
      
3,565,395
      
4,035,799
  
                                 
Securities sold under agreements to repurchase
    
182
      
217
      
180
      
273
  
Subordinated debenture
    
13,401
      
13,401
      
13,401
      
13,401
  
Long-term borrowings
    
42,157
      
42,323
      
42,482
      
-
  
Other liabilities
    
28,299
      
67,215
      
32,699
      
45,400
  
     Total liabilities
  
$
4,039,209
    
$
4,383,998
    
$
3,654,157
    
$
4,094,873
  
                                 
Shareholders' equity:
                                
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,307,088 and 55,757,559 shares issued at March 31, 2018 and 2017, respectively
    
56,307
      
55,861
      
55,860
      
55,758
  
Treasury stock (100,000 shares)
    
(866
)
    
(866
)
    
(866
)
    
(866
)
Additional paid-in capital
    
363,605
      
363,196
      
362,340
      
360,801
  
Accumulated deficit
    
(75,345
)
    
(89,485
)
    
(77,850
)
    
(103,978
)
Accumulated other comprehensive loss
    
(13,809
)
    
(4,557
)
    
(23
)
    
(1,946
)
Total shareholders' equity
    
329,891
      
324,149
      
339,461
      
309,769
  
                                 
     Total liabilities and shareholders' equity
  
$
4,369,100
    
$
4,708,147
    
$
3,993,618
    
$
4,404,642
  
 
 
4

Average balance sheet and net interest income
  
Three months ended March 31, 2018
    
Three months ended March 31, 2017
  
   
(dollars in thousands)
  
   
Average
          
Average
    
Average
          
Average
  
Assets:
  
Balance
    
Interest
    
Rate
    
Balance
    
Interest
    
Rate
  
Interest earning assets:
                                    
Loans net of unearned fees and costs **
  
$
1,947,320
    
$
23,039
      
4.73
%
  
$
1,634,136
    
$
17,371
      
4.25
%
Leases - bank qualified*
    
21,036
      
334
      
6.35
%
    
21,180
      
396
      
7.48
%
Investment securities-taxable
    
1,375,568
      
9,699
      
2.82
%
    
1,325,247
      
9,005
      
2.72
%
Investment securities-nontaxable*
    
9,893
      
75
      
3.03
%
    
15,423
      
111
      
2.88
%
Interest earning deposits at Federal Reserve Bank
    
502,233
      
1,832
      
1.46
%
    
771,529
      
1,516
      
0.79
%
Federal funds sold and securities purchased under agreement to resell
    
64,216
      
414
      
2.58
%
    
49,829
      
227
      
1.82
%
Net interest earning assets
    
3,920,266
      
35,393
      
3.61
%
    
3,817,344
      
28,626
      
3.00
%
                                                 
Allowance for loan and lease losses
    
(6,976
)
                    
(6,221
)
                
Assets held for sale from discontinued operations
    
294,708
      
2,527
      
3.43
%
    
335,929
      
3,361
      
4.00
%
Other assets
    
203,095
                      
280,505
                  
    
$
4,411,093
                    
$
4,427,557
                  
                                                 
Liabilities and Shareholders' Equity:
                                                
Deposits:
                                                
Demand and interest checking
  
$
3,535,791
    
$
4,301
      
0.49
%
  
$
3,657,413
    
$
2,787
      
0.30
%
Savings and money market
    
487,380
      
668
      
0.55
%
    
429,713
      
647
      
0.60
%
Total deposits
    
4,023,171
      
4,969
      
0.49
%
    
4,087,126
      
3,434
      
0.34
%
                                                 
Short-term borrowings
    
24,844
      
104
      
1.67
%
    
-
      
-
      
0.00
%
Securities sold under agreements to repurchase
    
205
      
-
      
0.00
%
    
275
      
-
      
0.00
%
Subordinated debentures
    
13,401
      
160
      
4.78
%
    
13,401
      
138
      
4.12
%
Total deposits and interest bearing liabilities
    
4,061,621
      
5,233
      
0.52
%
    
4,100,802
      
3,572
      
0.35
%
                                                 
Other liabilities
    
22,452
                      
20,234
                  
Total liabilities
    
4,084,073
                      
4,121,036
                  
                                                 
Shareholders' equity
    
327,020
                      
306,521
                  
    
$
4,411,093
                    
$
4,427,557
                  
Net interest income on tax equivalent basis*
          
$
32,687
                    
$
28,415
          
                                                 
Tax equivalent adjustment
            
86
                      
177
          
                                                 
Net interest income
          
$
32,601
                    
$
28,238
          
Net interest margin *
                    
3.12
%
                    
2.70
%
 
                                                
* Full taxable equivalent basis, using a 21% statutory tax rate.
                                          
** Includes loans held for sale.
                                                
 
 
5

Allowance for loan and lease losses:
  
Three months ended
    
Year ended
    
    
March 31,
    
March 31,
    
December 31,
    
   
2018
    
2017
    
2017
    
    
(dollars in thousands)
    
                     
Balance in the allowance for loan and lease losses at beginning of period (1)
  
$
7,096
    
$
6,332
    
$
6,332
    
                           
Loans charged-off:
                          
SBA non-real estate
    
388
      
-
      
1,171
    
SBA commercial mortgage
    
157
      
-
      
-
    
Direct lease financing
    
56
      
35
      
926
    
Other consumer loans
    
13
      
12
      
110
    
Total
    
614
      
47
      
2,207
    
                           
Recoveries:
                          
SBA non-real estate
    
40
      
-
      
18
    
SBA commercial mortgage
    
5
      
-
      
-
    
Direct lease financing
    
58
      
-
      
7
    
Other consumer loans
    
-
      
9
      
26
    
Total
    
103
      
9
      
51
    
Net charge-offs
    
511
      
38
      
2,156
    
Provision charged to operations
    
700
      
1,000
      
2,920
    
                           
Balance in allowance for loan and lease losses at end of period
  
$
7,285
    
$
7,294
    
$
7,096
    
Net charge-offs/average loans
    
0.03
%
    
0.00
%
    
0.12
%
  
Net charge-offs/average loans (annualized)
    
0.11
%
    
0.01
%
    
0.12
%
  
Net charge-offs/average assets
    
0.01
%
    
0.00
%
    
0.05
%
  
(1) Excludes activity from assets held for sale.
                          
 
Loan portfolio:
March 31,
    
December 31,
    
September 30,
    
March 31,
  
 
2018
    
2017
    
2017
    
2017
  
 
(dollars in thousands)
  
                       
SBA non-real estate
  
$
75,225
    
$
70,379
    
$
71,094
    
$
74,699
  
SBA commercial mortgage
    
149,227
      
142,086
      
132,997
      
114,703
  
SBA construction
    
20,143
      
16,740
      
14,205
      
12,985
  
Total SBA loans
    
244,595
      
229,205
      
218,296
      
202,387
  
Direct lease financing
    
385,467
      
377,660
      
368,661
      
362,688
  
SBLOC
    
759,369
      
730,462
      
720,279
      
660,423
  
Other specialty lending
    
45,729
      
30,720
      
36,664
      
12,443
  
Other consumer loans
    
17,416
      
14,133
      
20,107
      
16,318
  
     
1,452,576
      
1,382,180
      
1,364,008
      
1,254,259
  
Unamortized loan fees and costs
    
10,488
      
10,048
      
10,052
      
9,868
  
Total loans, net of deferred loan fees and costs
  
$
1,463,064
    
$
1,392,228
    
$
1,374,060
    
$
1,264,127
  
                                 
Small business lending portfolio:
   March 31,  
December 31,
  
September 30,
  
March 31,
     
2018
      
2017
      
2017
      
2017
  
 
(dollars in thousands)
  
                                 
SBA loans, including deferred fees and costs
    
252,457
      
236,724
      
225,909
      
209,980
  
SBA loans included in HFS
    
172,030
      
165,177
      
160,855
      
159,831
  
Total SBA loans
  
$
424,487
    
$
401,901
    
$
386,764
    
$
369,811
  
 
 
6

 

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, 2018
                        
The Bancorp, Inc.
    
7.69
%
    
18.43
%
    
18.82
%
    
18.43
%
The Bancorp Bank
    
7.31
%
    
17.84
%
    
18.23
%
    
17.84
%
"Well capitalized" institution (under FDIC regulations)
    
5.00
%
    
8.00
%
    
10.00
%
    
6.50
%
                                 
As of December 31, 2017
                                
The Bancorp, Inc.
    
7.90
%
    
16.73
%
    
17.09
%
    
16.73
%
The Bancorp Bank
    
7.61
%
    
16.23
%
    
16.59
%
    
16.23
%
"Well capitalized" institution (under FDIC regulations)
    
5.00
%
    
8.00
%
    
10.00
%
    
6.50
%

   
Three months ended
    
Year ended
        
   
March 31,
    
December 31,
        
   
2018
    
2017
    
2017
        
Selected operating ratios:
                        
Return on average assets (1)
    
1.30
%
    
0.73
%
    
0.52
%
      
Return on average equity (1)
    
17.54
%
    
10.54
%
    
6.96
%
      
Net interest margin
    
3.12
%
    
2.70
%
    
3.04
%
      
Book value per share
  
$
5.87
    
$
5.57
    
$
5.81
        
                               
(1) Annualized
                              
                               
   
March 31,
  
December 31,
  
September 30,
  
March 31,
     
2018
      
2017
      
2017
      
2017
  
Nonperforming loans to total loans (2)
    
0.42
%
    
0.30
%
    
0.39
%
    
0.55
%
Nonperforming assets to total assets (2)
    
0.15
%
    
0.10
%
    
0.13
%
    
0.16
%
Allowance for loan and lease losses to total loans
    
0.50
%
    
0.51
%
    
0.53
%
    
0.58
%
                                 
Nonaccrual loans
  
$
3,516
    
$
3,996
    
$
4,953
    
$
5,369
  
Other real estate owned
    
405
      
450
      
-
      
104
  
     Total nonperforming assets
  
$
3,921
    
$
4,446
    
$
4,953
    
$
5,473
  
                                 
Loans 90 days past due still accruing interest (3)
  
$
2,643
    
$
227
    
$
354
    
$
1,534
  
                                 
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.
  
   
(3) An uptick in delinquencies less than 90 days delinquent at March 31, 2018 reflected the maturity of a note for an $8 million loan in New York City which matured in January 2018. We are in the process of accumulating information for potential renewal or to otherwise address disposition. The estimated loan to value for this loan is 78% based upon a first quarter 2018 appraisal.
  
                                 
   
Three months ended
  
   
March 31,
  
December 31,
  
September 30,
  
March 31,
     
2018
      
2017
      
2017
      
2017
  
   
(in thousands)
  
Gross dollar volume (GDV) (4):
                                
Prepaid card GDV
  
$
13,402,496
    
$
10,963,456
    
$
10,970,085
    
$
13,342,180
  
                                 
(4) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp.
  
 
 
7
 

Business line quarterly summary:
                            
Quarter ended March 31, 2018
                            
(dollars in millions)
                            
                             
 
         
Balances
    
Non interest income
  
               
% Growth
          
% Growth
  
Major business lines
  
Average approximate rates
    
Balances*
    
Year
over year
    
Linked
quarter annualized
    
Current quarter
    
Year
over year
    
Linked
quarter annualized
  
Loans
                                          
Institutional banking**
    
3.50
%
  
$
759
      
15
%
    
16
%
  
$
1.5
      
16
%
  
nm
  
SBA
    
5.10
%
    
424
      
15
%
    
22
%
    
-
      
-
      
-
  
Leasing
    
5.80
%
    
385
      
6
%
    
8
%
    
0.5
      
-12
%
  
nm
  
Commercial real estate securitization
    
5.65
%
    
178
    
nm
    
nm
      
11.7
      
118
%
  
nm
  
Weighted average yield
    
4.61
%
  
$
1,746
                                          
                                                         
Deposits
                                                        
Payment solutions (primarily prepaid)
    
0.66
%
  
$
2,216
      
2
%
    
12
%
  
$
14.3
      
5
%
    
5
%
Card payment and ACH processing
    
0.33
%
    
900
      
3
%
    
28
%
    
1.7
      
11
%
  
nm
  
                                                         
* Loan categories based on period end balance and deposit categories based on average quarterly balances.
  
   
** Includes SBLOC loans and IRA fees.
  
 
 
 
8
 

Analysis of Walnut Street* marks:
            
             
   
Loan activity
    
Marks
  
   
(dollars in millions)
  
             
Original Walnut Street loan balance, December 31, 2014
  
$
267
        
Marks through December 31, 2014 sale date
    
(58
)
  
$
(58
)
Sales price of Walnut Street
    
209
          
Equity investment from independent investor
    
(16
)
        
December 31, 2014 Bancorp book value
    
193
          
Additional marks 2015 and 2016
    
(42
)
    
(42
)
2018 marks
    
(1
)
    
(1
)
Payments received
    
(80
)
        
March 31, 2018 Bancorp book value**
  
$
70
          
                 
Total marks
          
$
(101
)
Divided by:
                
Original Walnut Street loan balance
          
$
267
  
Percentage of total mark to original balance
            
38
%
                 
* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the Bank's investment in the securitization of certain loans from the Bank's discontinued loan portfolio.
  
   
** Approximately 26% of expected principal recoveries were from loans and properties pending liquidation or other resolutions.
  
                 
Walnut Street portfolio composition as of March 31, 2018
          
                 
Collateral type
  
% of Portfolio
          
Commercial real estate non-owner occupied
                
Retail
    
47.2
%
        
Office
    
15.1
%
        
Other
    
3.5
%
        
Construction and land
    
23.1
%
        
Commercial non real estate and industrial
    
0.5
%
        
First mortgage residential owner occupied
    
5.6
%
        
First mortgage residential non-owner occupied
    
4.2
%
        
Other
    
0.8
%
        
Total
    
100.0
%
        
 
 
9
 
 
Cumulative analysis of marks on discontinued commercial loan principal as of March 31, 2018
 
   
Discontinued
    
Cumulative
    
% to original
  
   
loan principal
    
marks
    
principal
  
   
(dollars in millions)
  
                      
Commercial loan discontinued principal before marks
  
$
210
               
Florida mall held in discontinued other real estate owned
    
42
      
27
        
Previous mark charges
    
33
      
33
        
Mark at March 31, 2018
            
15
        
Total
  
$
285
    
$
75
    
26%
  
 
 
Analysis of discontinued loan relationships of March 31, 2018
                                
                                     
   
Performing
    
Nonperforming
    
Total
    
Performing
    
Nonperforming
    
Total
  
   
loan principal(1)
    
loan principal(2)
    
loan principal
    
loan marks
    
loan marks
    
marks
  
   
(in millions)
  
                                     
8 loan relationships > $8 million
  
$
100
    
$
45
    
$
145
    
$
5
    
$
-
    
$
5
  
Loan relationships < $8 million
    
40
      
10
      
50
      
4
      
6
      
10
  
   
$
140
    
$
55
    
$
195
    
$
9
    
$
6
    
$
15
  
                                                 
(1) Performing discontinued loans included a $17 million loan which was delinquent 60 days as of March 31, 2018. The loan is secured by multiple commercial real estate properties which cumulatively have a 95% loan to value.
  
(2) The vast majority of the increase to $55 million in non-performing discontinued loans at March 31, 2018 from $16 million at year end 2017 resulted from the Bank's largest credit exposure. The loan has unpaid principal of $36.9 million and is collateralized by a hotel under construction and parking lot in the southeastern United States. Based upon an independent first quarter 2018 appraisal, the loan to value is approximately 80% on an as is basis, with personal guarantees of certain of the borrower's principals. The loan became delinquent in the first quarter of 2018 and the borrower, a development corporation, subsequently declared bankruptcy. The Bank is pursuing collection and we currently believe that there will be no loss of principal.
  
 
 
Quarterly activity for commercial loan discontinued principal
    
         
   
Commercial
    
   
loan principal
    
   
(in millions)
    
         
Commercial loan discontinued principal December 31, 2017 before marks
  
$
225
    
2018 net paydowns
    
(15
)
  
Commercial loan discontinued principal March 31, 2018 before marks
  
$
210
    
Marks March 31, 2018
    
(15
)
  
Net commercial loan exposure March 31, 2018
  
$
195
    
Residential mortgages
    
59
    
Net loans
  
$
254
    
Florida mall in other real estate owned
    
15
    
Other 29 properties in other real estate owned
    
19
    
Other assets related to discontinued operations
    
1
    
Total discontinued assets at March 31, 2018
  
$
289
    
 
 
10

 
Discontinued commercial loan composition March 31, 2018
  
                   
Collateral type
  
Unpaid principal balance
    
Mark March 31, 2018
    
Mark as % of portfolio
  
   
(dollars in millions)
  
Commercial real estate - non-owner occupied:
                  
Retail
  
$
11
    
$
0.7
      
6
%
Office
    
8
      
0.7
      
9
%
Other
    
42
      
0.7
      
2
%
Construction and land
    
80
      
1.3
      
2
%
Commercial non-real estate and industrial
    
14
      
1.9
      
13
%
1 to 4 family construction
    
25
      
4.4
      
18
%
First mortgage residential non-owner occupied
    
18
      
4.5
      
25
%
Commercial real estate owner occupied:
                        
Retail
    
9
      
0.4
      
4
%
Office
    
-
      
-
      
-
  
Other
    
1
      
-
      
0
%
Residential junior mortgage
    
1
      
-
      
0
%
Other
    
1
      
-
      
0
%
Total
  
$
210
                  
Less: mark
    
(15
)
                
Net commercial loan exposure March 31, 2018
  
$
195
    
$
14.6
      
7
%

 
 
11