EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

The Bancorp, Inc. Reports Second Quarter 2022 Financial Results and Updates Full Year 2022 Guidance

 

Wilmington, DE – July 28, 2022 – The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2022.

 

Highlights

 

·For the quarter ended June 30, 2022, The Bancorp earned pre-tax income of $41.1 million, compared to $37.0 million for the quarter ended June 30, 2021. The 2021 quarter included $4.3 million of Payroll Protection Program (“PPP”) related interest and fees, substantially all of which were eliminated in the current year quarter. For those respective periods, net income amounted to $30.4 million, or $0.53 diluted earnings per share, compared to net income of $29.4 million, or $0.50 diluted earnings per share.

 

·Return on assets and equity for the quarter ended June 30, 2022 amounted to 1.7% and 19%, respectively, compared to 1.7% and 19%, respectively, for the quarter ended June 30, 2021 (all percentages “annualized”).

 

·Net interest margin amounted to 3.17% for the quarter ended June 30, 2022, compared to 3.19% for the quarter ended June 30, 2021.

 

·Net interest income was $54.6 million for the quarter ended June 30, 2022, compared to $54.1 million for the quarter ended June 30, 2021. The 2021 quarter included $4.3 million of PPP related interest and fees, substantially all of which were eliminated in the current year quarter.

 

·Excluding commercial loans, at fair value, which were originally generated for sale, total loans increased to $4.75 billion at June 30, 2022, compared to $4.16 billion at March 31, 2022 and $2.92 billion at June 30, 2021. Those increases reflected growth of 13% quarter over quarter and 61% year over year. Those percentage increases exclude the impact of $55.6 million of June 30, 2022 balances previously included in discontinued assets which were reclassified to loans in the first quarter of 2022.

 

·Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $1.29 billion, or 5%, to $28.39 billion for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021. GDV was increased in 2021 by the impact of pandemic related government stimulus payments.

 

·SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 35% year over year and 10% quarter over quarter to $2.43 billion at June 30, 2022.

 

·Small Business Loans, including those held at fair value, grew 6% year over year to $729.8 million at June 30, 2022, and 3.5% quarter over quarter. That growth is exclusive of PPP loan balances which amounted to $10.3 million and $129.4 million, respectively, at June 30, 2022 and June 30, 2021.

 

·Direct lease financing balances increased 15% year over year to $583.1 million at June 30, 2022, and 8% quarter over quarter.

 

·We resumed non-SBA commercial real estate bridge lending in the third quarter of 2021. At June 30, 2022, the balance of such real estate bridge loans was $1.11 billion compared to $803.5 million at March 31, 2022, reflecting quarter over quarter growth of 38%.

 

·The average interest rate on $6.38 billion of average deposits and interest-bearing liabilities during the second quarter of 2022 was 0.44%. Average deposits of $6.25 billion for second quarter 2022, reflected a decrease of 0.1% from the $6.26 billion of average deposits for the quarter ended June 30, 2021, which had increased 17% over the June 30, 2020 quarter. Deposit levels during these periods reflected variability resulting from the pandemic and related government stimulus payments.

 

·As of June 30, 2022, 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 9.51%, 13.46%, 13.84% and 13.46%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, each remain well capitalized under banking regulations.

 

·Book value per common share at June 30, 2022 was $11.55 per share compared to $10.77 per share at June 30, 2021, an increase of 7%, primarily as a result of retained earnings. Increases resulting from retained earnings and reductions in shares from related repurchases were partially offset by reductions in the market value of securities, which are recognized through equity.

 

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·The Bancorp repurchased 577,926 shares of its common stock at an average cost of $25.95 per share during the quarter ended June 30, 2022.

 

“The second quarter continued to show strong growth across our platform.  With the anticipated continued increase in interest rates based on fed funds futures and strong business pipelines, we expect profitability to steadily increase over the next 18 months.  We are raising our guidance for 2022 from $2.15 per share to a range of $2.25 to $2.30 per share.  This range excludes the impact of 2022 share repurchases but includes interest rate assumptions based on fed funds expectations.”

 

The Bancorp reported net income of $30.4 million, or $0.53 per diluted share, for the quarter ended June 30, 2022, compared to net income of $29.4 million, or $0.50 per diluted share, for the quarter ended June 30, 2021.

 

Conference Call Webcast

 

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 29, 2022 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 866.374.5140, access code 81692741.  You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website.

 

About The Bancorp

 

The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, 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. in June 2021, 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. As evidence of its company-wide commitment to excellence, The Bancorp has also been ranked in October 2020 as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer in March 2021 by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600 in May 2021. 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. Contact

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

 

Source: The Bancorp, Inc. 

 

 

 

 

 

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The Bancorp, Inc.

Financial highlights

(unaudited)

 

 

                       
    Three months ended     Six months ended
    June 30,     June 30,
Consolidated condensed income statements 2022     2021     2022     2021  
    (in thousands, except per share data)      
                       
Net interest income $  54,569    $  54,069    $  107,422    $  107,826 
Provision for (reversal of) credit losses    (1,450)      (951)      3,509       (129)
Non-interest income                      
ACH, card and other payment processing fees    2,338       1,904       4,322       3,700 
Prepaid, debit card and related fees    20,038       19,447       38,690       38,655 
Net realized and unrealized gains on commercial                      
   loans, at fair value    3,682       2,579       10,517       4,575 
Leasing related income    1,545       1,767       2,518       2,732 
Other non-interest income    350       164       470       273 
Total non-interest income    27,953       25,861       56,517       49,935 
Non-interest expense                      
Salaries and employee benefits    25,999       27,087       49,847       52,745 
Data processing expense    1,246       1,146       2,435       2,272 
Legal expense    1,474       2,044       2,268       4,098 
Legal settlement    1,152       —      1,152       —
FDIC insurance    673       2,589       1,647       4,969 
Software    4,165       3,706       8,029       7,390 
Other non-interest expense    8,136       7,311       15,819       14,292 
Total non-interest expense    42,845       43,883       81,197       85,766 
Income from continuing operations before income taxes    41,127       36,998       79,233       72,124 
Income tax expense    10,725       7,840       19,865       16,906 
Net income from continuing operations    30,402       29,158       59,368       55,218 
Discontinued operations                      
Income from discontinued operations before income taxes    —      361       —      237 
Income tax expense    —      84       —      55 
Net income from discontinued operations, net of tax    —      277       —      182 
Net income $  30,402    $  29,435    $  59,368    $  55,400 
                       
Net income per share from continuing operations - basic $  0.54    $  0.51    $  1.04    $  0.96 
Net income per share from discontinued operations - basic $  —   $  —   $  —   $  0.01 
Net income per share - basic $  0.54    $  0.51    $  1.04    $  0.97 
                       
Net income per share from continuing operations - diluted $  0.53    $  0.49    $  1.03    $  0.93 
Net income per share from discontinued operations - diluted $  —   $  —   $  —   $  0.01 
Net income per share - diluted $  0.53    $  0.50    $  1.03    $  0.94 
Weighted average shares - basic    56,801,518       57,230,576       56,962,000       57,232,557 
Weighted average shares - diluted    57,453,730       59,022,925       57,772,538       59,086,956 

 

Note: Compared to higher rates in recent periods, the effective tax rate for the three months ended June 30, 2021 approximated 21% as a result of the impact of tax deductions related to stock-based compensation, recorded as discrete items. The large deductions and tax benefits resulted from the increase in the Company’s stock price as compared to the original various grant dates.

 

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Condensed consolidated balance sheets June 30,   March 31,   December 31,   June 30,
  2022 (unaudited)   2022 (unaudited)   2021   2021 (unaudited)
    (in thousands, except share data)
Assets:                      
Cash and cash equivalents                      
Cash and due from banks $  12,873    $  11,399    $  5,382    $  5,470 
Interest earning deposits at Federal Reserve Bank    329,992       662,827       596,402       583,498 
     Total cash and cash equivalents    342,865       674,226       601,784       588,968 
                       
Investment securities, available-for-sale, at fair value    826,616       907,338       953,709       1,106,075 
Commercial loans, at fair value    995,493       1,180,885       1,388,416       1,758,264 
Loans, net of deferred fees and costs    4,754,697       4,164,298       3,747,224       2,915,344 
Allowance for credit losses    (19,087)      (19,051)      (17,806)      (15,292)
Loans, net    4,735,610       4,145,247       3,729,418       2,900,052 
Federal Home Loan Bank and Atlantic Central Bankers Bank stock    1,643       1,663       1,663       1,667 
Premises and equipment, net    16,693       16,314       16,156       17,392 
Accrued interest receivable    19,264       17,284       17,871       18,668 
Intangible assets, net    2,248       2,348       2,447       2,646 
Other real estate owned    18,873       18,873       18,873       17,343 
Deferred tax asset, net    23,344       18,521       12,667       10,923 
Investment in unconsolidated entity, at fair value    —      —      —      24,988 
Assets held-for-sale from discontinued operations    —      —      3,268       12,105 
Other assets    124,511       99,961       96,967       91,516 
     Total assets $  7,107,160    $  7,082,660    $  6,843,239    $  6,550,607 
                       
Liabilities:                      
Deposits                      
Demand and interest checking $  5,394,562    $  5,506,083    $  5,561,365    $  5,225,024 
Savings and money market    486,189       722,240       415,546       459,688 
     Total deposits    5,880,751       6,228,323       5,976,911       5,684,712 
                       
Securities sold under agreements to repurchase    42       42       42       42 
Short-term borrowings    385,000       —      —      —
Senior debt    98,866       98,774       98,682       98,498 
Subordinated debenture    13,401       13,401       13,401       13,401 
Other long-term borrowings    39,125       39,318       39,521       39,901 
Other liabilities    33,439       50,507       62,228       94,944 
     Total liabilities $  6,450,624    $  6,430,365    $  6,190,785    $  5,931,498 
                       
Shareholders' equity:                      
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,865,494 and 57,458,287 shares issued and outstanding at June 30, 2022 and 2021, respectively    56,865       57,155       57,371       57,458 
Additional paid-in capital    323,774       336,604       349,686       363,241 
Retained earnings    298,474       268,072       239,106       183,853 
Accumulated other comprehensive (loss) income    (22,577)      (9,536)      6,291       14,557 
Total shareholders' equity    656,536       652,295       652,454       619,109 
                       
     Total liabilities and shareholders' equity $  7,107,160    $  7,082,660    $  6,843,239    $  6,550,607 

 

Note: Previous balance sheets included assets held-for-sale from discontinued operations, which were reclassified to continuing operations in the first quarter of 2022. Previous balance sheets also included investment in unconsolidated entity, which reflected Bancorp’s balance of the Walnut Street investment. Walnut Street was comprised of Bancorp loans sold to that entity, which was partially financed by an independent investor. In the third quarter of 2021, The Bancorp and that investor dissolved the entity, as the remaining balance did not warrant ongoing administrative and accounting expenses.

 

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Average balance sheet and net interest income   Three months ended June 30, 2022     Three months ended June 30, 2021
    (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** $  5,467,516   $  55,100       4.03%   $  4,572,712    $  49,378     4.32%
Leases-bank qualified*    3,665       63       6.88%      5,783       96     6.64%
Investment securities-taxable    879,112      5,432       2.47%      1,081,419       7,201     2.66%
Investment securities-nontaxable*    3,559       31       3.48%      3,878       32     3.30%
Interest earning deposits at Federal Reserve Bank    545,027      1,004       0.74%      1,120,039       300     0.11%
Net interest earning assets    6,898,879      61,630       3.57%      6,783,831       57,007     3.36%
                                 
Allowance for credit losses    (20,295)                  (16,406)          
Assets held-for-sale from discontinued operations    —      —      —      98,895       781     3.16%
Other assets    243,459                  201,539           
  $  7,122,043               $  7,067,859           
                                 
Liabilities and Shareholders' Equity:                                
Deposits:                                
Demand and interest checking $  5,697,507   $  4,390       0.31%   $  5,736,776    $  1,327     0.09%
Savings and money market    556,847       1,200       0.86%      526,112       192     0.15%
Total deposits    6,254,354      5,590       0.36%      6,262,888       1,519     0.10%
                                 
Short-term borrowings    11,593       32       1.10%      —      —    —
Repurchase agreements    41       —      —      41       —    —
Subordinated debentures    13,401       139       4.15%      13,401       112     3.34%
Senior debt    98,816       1,280       5.18%      100,239       1,280     5.11%
Total deposits and liabilities    6,378,205      7,041       0.44%      6,376,569       2,911     0.18%
                                 
Other liabilities    89,422                  83,353           
Total liabilities    6,467,627                  6,459,922           
                                 
Shareholders' equity    654,416                   607,937           
  $  7,122,043               $  7,067,859           
Net interest income on tax equivalent basis*       $  54,589                $  54,877     
                                 
Tax equivalent adjustment          20                   27     
                                 
Net interest income       $  54,569                $  54,850     
Net interest margin *                3.17%                3.19%

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2022 and 2021.

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

 

NOTE: In the table above, the 2021 interest on loans reflects $3.0 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund Payroll Protection Program (“PPP”) loans, which did not significantly increase average loans or assets and which are not expected to recur. Interest on loans for 2022 and 2021 includes $41,000 and $1.3 million, respectively, of interest and fees on PPP loans.

 

 

 

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Average balance sheet and net interest income Six months ended June 30, 2022   Six months ended June 30, 2021
    (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** $  5,302,850    $  105,638       3.98%   $  4,524,911    $  97,189     4.30%
Leases-bank qualified*    3,839       130       6.77%      6,379       214     6.71%
Investment securities-taxable    909,017       10,323       2.27%      1,136,631       16,009     2.82%
Investment securities-nontaxable*    3,559       62       3.48%      3,960       67     3.38%
Interest earning deposits at Federal Reserve Bank    616,865       1,351       0.44%      935,239       483     0.10%
Net interest earning assets    6,836,130       117,504       3.44%      6,607,120       113,962     3.45%
                                 
Allowance for credit losses    (19,075)                  (16,241)          
Assets held for sale from discontinued operations    —      —      —      103,983       1,634     3.14%
Other assets    232,402                   203,821           
  $  7,049,457                $  6,898,683           
                                 
Liabilities and Shareholders' Equity:                                
Deposits:                                
Demand and interest checking $  5,636,415    $  5,796       0.21%   $  5,619,608    $  2,944     0.10%
Savings and money market    544,515       1,400       0.51%      466,978       341     0.15%
Total deposits    6,180,930       7,196       0.23%      6,086,586       3,285     0.11%
                                 
Short-term borrowings    6,104       32       1.05%      6,491       8     0.25%
Repurchase agreements    41       —      —      41       —    —
Subordinated debentures    13,401       255       3.81%      13,401       225     3.36%
Senior debt    98,770       2,559       5.18%      100,190       2,559     5.11%
Total deposits and liabilities    6,299,246       10,042       0.32%      6,206,709       6,077     0.20%
                                 
Other liabilities    95,716                   91,837           
Total liabilities    6,394,962                   6,298,546           
                                 
Shareholders' equity    654,495                   600,137           
  $  7,049,457                $  6,898,683           
Net interest income on tax equivalent basis*       $  107,462                $  109,519     
                                 
Tax equivalent adjustment          40                   59     
                                 
Net interest income       $  107,422                $  109,460     
Net interest margin *                3.14%                3.26%

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2022 and 2021.

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

 

NOTE: In the table above, the 2021 interest on loans reflects $4.5 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund PPP loans, which did not significantly increase average loans or assets and which are not expected to recur. Interest on loans for 2022 and 2021 includes $481,000 and $3.7 million, respectively, of interest and fees on PPP loans.

 

 

6 
 

 

 

                 
Allowance for credit losses   Six months ended   Year ended
  June 30,   June 30,   December 31,
  2022 (unaudited)   2021 (unaudited)   2021 
  (dollars in thousands)
                 
Balance in the allowance for credit losses at beginning of period (1) $  17,806    $  16,082    $  16,082 
                 
Loans charged-off:                
SBA non-real estate    844       321       1,138 
SBA commercial mortgage    —      23       417 
Direct lease financing    199       193       412 
SBLOC    —      15       15 
Consumer - home equity    —      —      10 
Consumer - other    —      —      14 
Total    1,043       552       2,006 
                 
Recoveries:                
SBA non-real estate    33       15       51 
SBA commercial mortgage    —      —      9 
Direct lease financing    93       7       58 
Consumer - home equity    —      —      1,099 
Total    126       22       1,217 
Net charge-offs    917       530       789 
Provision for (reversal of) credit losses, excluding unfunded commitments    2,198       (260)      2,513 
                 
Balance in allowance for credit losses at end of period $  19,087    $  15,292    $  17,806 
Net charge-offs/average loans    0.02%      0.02%      0.03%
Net charge-offs/average assets    0.01%      0.01%      0.01%

 

 

 

(1) Excludes activity from discontinued operations.

 

 

7 
 

 

Loan portfolio June 30,   March 31,   December 31,   June 30,
  2022   2022   2021   2021
  (in thousands)
                       
SBL non-real estate $  112,854    $  122,387    $  147,722    $  228,958 
SBL commercial mortgage    425,219       385,559       361,171       343,487 
SBL construction    27,042       31,432       27,199       18,494 
Small business loans    565,115       539,378       536,092       590,939 
Direct lease financing    583,086       538,616       531,012       506,424 
SBLOC / IBLOC *    2,274,256       2,067,233       1,929,581       1,729,628 
Advisor financing **    155,235       146,461       115,770       72,190 
Real estate bridge loans    1,106,875       803,477       621,702       —
Other loans ***    63,514       61,096       5,014       5,840 
     4,748,081       4,156,261       3,739,171       2,905,021 
Unamortized loan fees and costs    6,616       8,037       8,053       10,323 
Total loans, including unamortized fees and costs $  4,754,697    $  4,164,298    $  3,747,224    $  2,915,344 
                         

 

Small business portfolio   June 30,     March 31,     December 31,     June 30,
    2022     2022     2021     2021
    (in thousands)
                       
SBL, including unamortized fees and costs $  571,559   $  545,462   $  541,437   $  593,401
SBL, included in loans, at fair value    168,579      183,408      199,585      225,534
Total small business loans **** $  740,138   $  728,870   $  741,022   $  818,935

 

* 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 loan-to-value ratios of 70%, based on third-party business appraisals, 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 $170,000 and $322,000 at June 30, 2022 and December 31, 2021, 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 (in thousands). A reduction in SBL non-real estate from $122.4 million to $112.9 million in the second quarter of 2022 resulted primarily from U.S. government repayments of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $10.3 million at June 30, 2022, $23.7 million at March 31, 2022 and $129.4 million at June 30, 2021.

 

Small business loans as of June 30, 2022

       
    Loan principal
    (in millions)
U.S. government guaranteed portion of SBA loans (a)   $  375
Paycheck Protection Program loans (PPP) (a)      10
Commercial mortgage SBA (b)      216
Construction SBA (c)      12
Non-guaranteed portion of U.S. government guaranteed loans (d)      100
Non-SBA small business loans (e)      21
Total principal   $  734
Unamortized fees and costs      6
Total small business loans   $  740

 

(a) This is the portion of SBA 7a loans (7a) and PPP loans which 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 $12 million in Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $1 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $100 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.

(e) The $21 million of non-SBA loans are primarily comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases.

 

8 
 

 

 

Small business loans by type as of June 30, 2022

 

(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 (except casino hotels) and motels   $ 69   $ —   $ —   $ 69      19%
Full-service restaurants     13     2     2     17      5%
Car washes     16     1     —     17      5%
Child day care services     15     —     1     16      4%
Outpatient mental health and substance abuse centers     15     —     —     15      4%
Baked goods stores     4     —     9     13      4%
Funeral homes and funeral services     10     —     —     10      3%
Fitness and recreational sports centers     5     2     2     9      3%
Offices of lawyers     9     —     —     9      3%
Assisted living facilities for the elderly     9     —     —     9      3%
Gasoline stations with convenience stores     8     —     —     8      2%
Lessors of nonresidential buildings     8     —     —     8      2%
General warehousing and storage     7     —     —     7      2%
Lessors of other real estate property     6     —     —     6      2%
All other amusement and recreation industries     5     —     1     6      2%
Limited-service restaurants     1     2     2     5      1%
Other miscellaneous durable goods merchant wholesalers     5     —     —     5      1%
Other technical and trade schools     —     5     —     5      1%
Other spectator sports     5     —     —     5      1%
Plumbing, heating, and air-conditioning contractors     3     —     1     4      1%
Offices of dentists     2     1     —     3      1%
Landscaping services     2     —     1     3      1%
Other warehousing and storage     3     —     —     3      1%
All other miscellaneous wood product manufacturing     3     —     —     3      1%
Offices of physicians (except mental health specialists)     3     —     —     3      1%
Vocational rehabilitation services     3     —     —     3      1%
Elementary and secondary schools     2     —     —     2      1%
All other miscellaneous general purpose machinery manufacturing     2     —     —     2      1%
Sewing, needlework, and piece goods stores     2     —     —     2      1%
Pet care (except veterinary) services     2     —     —     2      1%
Automotive body, paint, and interior repair and maintenance     2     —     —     2      1%
Amusement arcades     2     —     —     2      1%
Offices of real estate agents and brokers     2     —     —     2      1%
Other**     49     1     23     73      19%
Total   $  292   $  14   $  42   $  348      100%

 

 

* Of the SBL commercial mortgage and SBL construction loans, $79 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 $2 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

 

9 
 


State diversification as of June 30, 2022

 

(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)
Florida   $  67   $ —   $ 5   $  72      20%
California      48     2     3      53      15%
North Carolina      23     7     2      32      9%
New York      25     —     3      28      8%
Pennsylvania      22     —     2      24      6%
Colorado      11     4     1      16      5%
Illinois      15     —     2      17      5%
Texas      12     —     4      16      5%
New Jersey      7     —     7      14      4%
Virginia      9     —     1      10      3%
Connecticut      10     —     —      10      3%
Georgia      7     —     2      9      3%
Tennessee      8     —     —      8      2%
Ohio      6     —     —      6      2%
Michigan     3     —     —     3      1%
Other States      19     1     10      30      9%
Total   $  292   $  14   $  42   $  348      100%
                               

 

* Of the SBL commercial mortgage and SBL construction loans, $79 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 June 30, 2022

               
Type*   State   SBL commercial mortgage*  
      (in millions)
Mental health and substance abuse center     FL   $  10   
Hotel     FL      9   
Lawyer’s office     CA      9   
General warehousing and storage     PA      7   
Hotel     NY      6   
Hotel     NC      5   
Assisted living facility     FL      5   
Mental health and substance abuse center     CT      5   
Technical and trade school     NC      5   
Hotel     PA      5   
Total         $  66   
               
* All of the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value and are in the commercial mortgage category. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.

 

 

10 
 

 

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

 

Type as of June 30, 2022

                     
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 book value)*     95   $  1,107     74%    4.52%
                     
Non-SBA commercial real estate loans, at fair value:                    
Multi-family (apartment bridge loans)*      48    $  697     76%    4.74%
Hospitality (hotels and lodging)      8       71     65%    5.65%
Retail      4       52     71%    5.01%
Other      5       13     74%    5.06%
       65       833     74%    4.84%
Fair value adjustment            (6)        
Total non-SBA commercial real estate loans, at fair value            827         
Total commercial real estate loans         $  1,934     74%    4.67%

 

 

*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 June 30, 2022     15 largest loans as of June 30, 2022
                               
State     Balance     Origination date LTV     State       Balance   Origination date LTV
(dollars in millions)     (dollars in millions)
Texas   $ 678      76%     Texas     $  41    75%
Georgia     189      73%     Texas        39    79%
Ohio     115      72%     Texas        39    72%
Florida     103      73%     Tennessee        38    72%
Tennessee     101      70%     Texas        37    75%
Alabama     89      74%     Texas        37    80%
Arizona     56      72%     Michigan        31    79%
Other States each <$55 million     603      74%     Tennessee        30    62%
Total   $ 1,934      74%     Missouri        30    72%
                  Mississippi        29    79%
                  Texas        28   77%
                  Texas        27    77%
                  New Jersey        27    77%
                  Ohio        27    74%
                  Oklahoma        27    78%
                  15 Largest loans     $  487    75%

 

11 
 

 

Institutional banking loans outstanding at June 30, 2022

 

         
Type Principal   % of total
    (dollars in millions)    
Securities backed lines of credit (SBLOC) $  1,257   52%
Insurance backed lines of credit (IBLOC)    1,017   42%
Advisor financing    155   6%
Total $  2,429    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 June 30, 2022

 

         
  Principal amount   % Principal to collateral
  (dollars in millions)
  $  18    41%
     16    62%
     14    35%
     9    32%
     9    64%
     9    44%
     9    70%
     8    73%
     6    29%
     6    51%
Total and weighted average $  104    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, eight insurance companies have been approved and, as of April 21, 2022, all were rated Excellent (A or better) by AM BEST.

 

12 
 

 

Direct lease financing* by type as of June 30, 2022

         
    Principal balance   % Total
    (dollars in millions)    
Construction $  116     20%
Government agencies and public institutions**    91     16%
Waste management and remediation services    68     12%
Real estate and rental and leasing    60     10%
Retail trade    49     8%
Health care and social assistance    31     5%
Transportation and warehousing    31     5%
Professional, scientific, and technical services    20     3%
Wholesale trade    17     3%
Manufacturing    17     3%
Educational services    8     1%
Finance and insurance    7     1%
Arts, entertainment and recreation    4     1%
Other    64     12%
Total $  583     100%

 

* Of the total $583 million of direct lease financing, $500 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 June 30, 2022

         
State   Principal balance   % Total
    (dollars in millions)    
Florida $  93    16%
Utah    52    9%
California    49    8%
New Jersey    40    7%
Pennsylvania    39    7%
Texas    39    7%
New York    31    5%
North Carolina    26    4%
Maryland    24    4%
Connecticut    17    3%
Washington    17    3%
Georgia    14    2%
Idaho    12    2%
Alabama    10    2%
Illinois    10    2%
Other States    110    19%
Total $  583    100%

 

 

 

13 
 


 

               
               
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 June 30, 2022              
The Bancorp, Inc.  9.51%    13.46%    13.84%    13.46%
The Bancorp Bank  10.45%    14.84%    15.22%    14.84%
"Well capitalized" institution (under FDIC regulations-Basel III)  5.00%    8.00%    10.00%    6.50%
               
As of December 31, 2021              
The Bancorp, Inc.  10.40%    14.72%    15.13%    14.72%
The Bancorp Bank  10.98%    15.48%    15.88%    15.48%
"Well capitalized" institution (under FDIC regulations-Basel III)  5.00%    8.00%    10.00%    6.50%

 

 

  Three months ended   Six months ended
  June 30,   June 30,
  2022   2021   2022   2021
Selected operating ratios                      
Return on average assets (1)    1.71%      1.67%      1.70%      1.62%
Return on average equity (1)    18.63%      19.42%      18.29%      18.62%
Net interest margin    3.17%      3.19%      3.14%      3.26%

 

(1) Annualized

 

                       
Book value per share table June 30,   March 31,     December 31,   June 30,
  2022   2022   2021   2021
Book value per share $  11.55   $  11.41   $  11.37   $  10.77

 

 

                       
Loan quality table   June 30,     March 31,     December 31,     June 30,
    2022     2022     2021     2021
    (dollars in thousands)
Nonperforming loans to total loans    0.18%      0.20%      0.10%      0.31%
Nonperforming assets to total assets    0.39%      0.38%      0.33%      0.40%
Allowance for credit losses to total loans    0.40%      0.46%      0.48%      0.52%
                       
Nonaccrual loans $  3,698   $  3,621   $  3,161   $  7,346
Loans 90 days past due still accruing interest    4,848      4,597      461      1,550
Other real estate owned    18,873      18,873      18,873      17,343
     Total nonperforming assets $  27,419   $  27,091   $  22,495   $  26,239

 

 

                       
Gross dollar volume (GDV) (1) Three months ended
  June 30,   March 31,   December 31,   June 30,
  2022   2021   2021   2021
    (in thousands)
                       
Prepaid and debit card GDV $  28,394,897   $  28,564,582   $  24,821,576   $  27,106,763

 

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

 

 

14 
 

 

 

 

                           
                           
Business line quarterly summary                          
Quarter ended June 30, 2022                          
(dollars in millions)                          
                           
        Balances          
            % Growth          
Major business lines   Average approximate rates *   Balances **   Year over year   Linked quarter annualized          
Loans                          
Institutional banking ***   2.9%    $   2,429   35%   39%          
Small business lending****   4.9%   740   6%   14%          
Leasing   6.0%   583   15%   33%          
Commercial real estate (non-SBA loans, at fair value)   4.8%         827   nm   nm          
Real estate bridge loans (recorded at book value)   4.5%   1,107   nm   nm          
Weighted average yield   4.1%    $   5,686           Non-interest income
                        % Growth
Deposits: Fintech solutions group                   Current quarter   Year over year  
Prepaid and debit card issuance, and other payments 0.4%    $    5,650   (1%)   nm    $     22.4   5%  

 

 

* Average rates are for the quarter ended June 30, 2022.

** Loan and deposit categories are respectively based on period-end and average quarterly balances.

*** 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.

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

 

 

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