EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

 

Exhibit 99.1

 

The Bancorp, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results and Updates 2024 Guidance

 

Wilmington, DE – January 25, 2024 – The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter and full year of 2023.

 

Highlights

 

·The Bancorp reported net income of $44.0 million, or $0.81 per diluted share, for the quarter ended December 31, 2023, compared to net income of $40.2 million, or $0.71 per diluted share, for the quarter ended December 31, 2022. Excluding the tax effected impact of a $10.0 million provision for credit loss on its only trust preferred security, non-GAAP adjusted diluted earnings per share amounted to $0.95.*

 

·Return on assets and equity for the quarter ended December 31, 2023 amounted to 2.4% and 22%, respectively, compared to 2.1% and 24%, respectively, for the quarter ended December 31, 2022 (all percentages “annualized”).

 

·Net interest income increased 20% to $92.2 million for the quarter ended December 31, 2023, compared to $76.8 million for the quarter ended December 31, 2022. Net interest income increases reflected the impact of Federal Reserve rate increases on The Bancorp’s variable rate loans and securities.

 

·Net interest margin amounted to 5.26% for the quarter ended December 31, 2023, compared to 4.21% for the quarter ended December 31, 2022, and 5.07% for the quarter ended September 30, 2023.

 

·Loans, net of deferred fees and costs were $5.36 billion at December 31, 2023, compared to $5.20 billion at September 30, 2023 and $5.49 billion at December 31, 2022. Those changes reflected an increase of 3% quarter over linked quarter and a decrease of 2% year over year.

 

·Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $3.84 billion, or 13%, to $33.29 billion for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. The increase reflects continued organic growth with existing partners and the impact of clients added within the past year. Total prepaid, debit card, ACH and other payment fees increased 15% to $25.1 million for the fourth quarter of 2023 compared to the fourth quarter of 2022.

 

·Small business loans (“SBL”), including those held at fair value, amounted to $896.2 million at December 31, 2023, or 13% higher year over year, and 4% quarter over linked quarter, excluding $28.6 million of loans with related secured borrowings.

 

·Direct lease financing balances increased 8% year over year to $685.7 million at December 31, 2023, and 2% quarter over September 30, 2023.

 

·At December 31, 2023, real estate bridge loans of $2.00 billion had grown 8% compared to the $1.85 billion balance at September 30, 2023, and 20% compared to the December 31, 2022 balance of $1.67 billion. These real estate bridge loans consist entirely of apartment buildings.

 

·Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively decreased 26% year over year and decreased 4% quarter over linked quarter to $1.85 billion at December 31, 2023.

 

·The average interest rate on $6.37 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2023 was 2.51%. Average deposits of $6.25 billion for the fourth quarter of 2023 reflected a decrease of 6% from the $6.62 billion of average deposits for the quarter ended December 31, 2022, and a 1% decrease from $6.29 billion of average deposits for the quarter ended September 30, 2023. The decreases reflected the planned exit of $200 million of higher cost funds on July 1, 2023. Not included in deposit totals are deposits which are sold to other financial institutions totaling $300.7 million at December 31, 2023.

 

·The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $2.7 billion as of December 31, 2023, as well as access to other liquidity.

 

·As of December 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 11.19%, 15.66%, 16.23% and 15.66%, 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.

 

 

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·Book value per common share at December 31, 2023 was $15.17 compared to $12.46 per common share at December 31, 2022, an increase of 22%.

 

·The Bancorp repurchased 664,499 shares of its common stock at an average cost of $37.62 per share during the quarter ended December 31, 2023.

 

*The Bank purchased a $10.0 million trust preferred security in 2006, which is the only such security in its portfolios. In the fourth quarter of 2023, the Bank took a charge for the full amount of the security through a provision for credit loss. The following reconciliation of GAAP to non-GAAP adjusted net income and diluted earnings per share (“EPS”) for the fourth quarter of 2023, adjusts for the impact of that charge.

 

   Net Income (000’s)  EPS
GAAP  $44,028   $0.81 
Provision for credit loss on trust preferred security, net of tax effect   7,489    0.14 
As adjusted, non-GAAP  $51,517   $0.95 

  

CEO and President Damian Kozlowski commented, “In 2023, we rode the waves of market turmoil and interest rate hikes and demonstrated the superiority of our rigorous commitment to our business partners, safety and soundness and shareholder advocacy.  The strength of our business model and our comprehensive and integrated risk management showed that sound fundamental banking can reduce event risk and create opportunities for exemplar performance even in times of economic dislocations. We are confirming 2024 guidance of $4.25 a share without including the impact of share buybacks of $200 million for the year, or $50 million a quarter.”

 

Conference Call Webcast

 

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.259.6580, conference code 18545154. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 2, 2024 by dialing 1.877.674.7070, access code 545154#.

 

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.

  

 

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The Bancorp, Inc. Contact

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

 

Source: The Bancorp, Inc. 

  

 

The Bancorp, Inc.

Financial highlights

(unaudited)

 

 

   Three months ended  Year ended
   December 31,  December 31,
Consolidated condensed income statements  2023  2022  2023  2022
   (Dollars in thousands, except per share and share data)
             
Net interest income  $92,159   $76,760   $354,052   $248,841 
Provision for credit losses on loans   4,314    2,777    8,330    7,108 
Provision for credit loss on security   10,000    —      10,000    —   
Non-interest income                    
ACH, card and other payment processing fees   2,669    2,383    9,822    8,935 
Prepaid, debit card and related fees   22,404    19,371    89,417    77,236 
Net realized and unrealized (losses) gains on commercial loans, at fair value   (426)   2,269    3,745    13,531 
Leasing related income   1,556    1,256    6,324    4,822 
Other non-interest income   786    461    2,786    1,159 
Total non-interest income   26,989    25,740    112,094    105,683 
Non-interest expense                    
Salaries and employee benefits   27,628    27,520    121,055    105,368 
Data processing expense   1,324    1,245    5,447    4,972 
Legal expense   740    703    3,850    3,878 
Legal settlement   —      —      —      1,152 
Civil money penalty   —      —      —      1,750 
FDIC insurance   724    944    2,957    3,270 
Software   4,368    4,181    17,349    16,211 
Other non-interest expense   10,826    8,882    40,384    32,901 
Total non-interest expense   45,610    43,475    191,042    169,502 
Income before income taxes   59,224    56,248    256,774    177,914 
Income tax expense   15,196    16,007    64,478    47,701 
Net income   44,028    40,241    192,296    130,213 
                     
Net income per share - basic  $0.82   $0.72   $3.52   $2.30 
                     
Net income per share - diluted  $0.81   $0.71   $3.49   $2.27 
Weighted average shares - basic   53,549,138    55,885,015    54,506,065    56,556,303 
Weighted average shares - diluted   54,201,312    56,588,011    55,053,497    57,268,946 

 

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Condensed consolidated balance sheets  December 31,  September 30,  June 30,  December 31,
   2023 (unaudited)  2023 (unaudited)  2023 (unaudited)  2022
   (Dollars in thousands, except share data)
Assets:            
Cash and cash equivalents                    
Cash and due from banks  $4,820   $4,881   $6,496   $24,063 
Interest earning deposits at Federal Reserve Bank   1,033,270    898,533    874,050    864,126 
Total cash and cash equivalents   1,038,090    903,414    880,546    888,189 
                     
Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss   747,534    756,636    776,410    766,016 
Commercial loans, at fair value   332,766    379,603    396,581    589,143 
Loans, net of deferred fees and costs   5,361,139    5,198,972    5,267,574    5,486,853 
Allowance for credit losses   (27,378)   (24,145)   (23,284)   (22,374)
Loans, net   5,333,761    5,174,827    5,244,290    5,464,479 
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock   15,591    20,157    20,157    12,629 
Premises and equipment, net   27,474    28,978    26,408    18,401 
Accrued interest receivable   37,534    34,159    34,062    32,005 
Intangible assets, net   1,651    1,751    1,850    2,049 
Other real estate owned   16,949    18,756    20,952    21,210 
Deferred tax asset, net   21,219    20,379    19,215    19,703 
Other assets   133,126    127,107    122,435    89,176 
Total assets  $7,705,695   $7,465,767   $7,542,906   $7,903,000 
                     
Liabilities:                    
Deposits                    
Demand and interest checking  $6,630,251   $6,455,043   $6,554,967   $6,559,617 
Savings and money market   50,659    49,428    68,084    140,496 
Time deposits, $100,000 and over   —      —      —      330,000 
Total deposits   6,680,910    6,504,471    6,623,051    7,030,113 
                     
Securities sold under agreements to repurchase   42    42    42    42 
Senior debt   95,859    95,771    95,682    99,050 
Subordinated debenture   13,401    13,401    13,401    13,401 
Other long-term borrowings   38,561    9,861    9,917    10,028 
Other liabilities   69,641    68,533    51,646    56,335 
Total liabilities  $6,898,414   $6,692,079   $6,793,739   $7,208,969 
                     
Shareholders' equity:                    
Common stock - authorized, 75,000,000 shares of $1.00 par value; 53,202,630 and 55,689,627 shares issued and outstanding at December 31, 2023 and 2022, respectively   53,203    53,867    54,542    55,690 
Additional paid-in capital   212,431    234,320    256,115    299,279 
Retained earnings   561,615    517,587    467,450    369,319 
Accumulated other comprehensive loss   (19,968)   (32,086)   (28,940)   (30,257)
Total shareholders' equity   807,281    773,688    749,167    694,031 
                     
Total liabilities and shareholders' equity  $7,705,695   $7,465,767   $7,542,906   $7,903,000 

 

 

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Average balance sheet and net interest income  Three months ended December 31, 2023  Three months ended December 31, 2022
   (Dollars in thousands; unaudited)
Assets:  Average
Balance		  Interest(1)  Average
Rate		  Average
Balance		  Interest(1)  Average
Rate
                   
Interest earning assets:                              
Loans, net of deferred fees and costs(2)  $5,583,467   $112,334    8.05%  $6,083,587   $94,477    6.21%
Leases-bank qualified(3)   4,658    109    9.36%   2,952    50    6.78%
Investment securities-taxable   747,384    10,258    5.49%   782,046    8,483    4.34%
Investment securities-nontaxable(3)   2,895    49    6.77%   3,559    32    3.60%
Interest earning deposits at Federal Reserve Bank   677,524    9,356    5.52%   424,255    3,886    3.66%
Net interest earning assets   7,015,928    132,106    7.53%   7,296,399    106,928    5.86%
                               
Allowance for credit losses   (24,070)             (20,227)          
Other assets   356,785              223,692           
   $7,348,643             $7,499,864           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $6,204,048   $37,830    2.44%  $5,891,947   $21,350    1.45%
Savings and money market   46,428    392    3.38%   474,302    4,332    3.65%
Time deposits   —      —      —      257,231    2,193    3.41%
Total deposits   6,250,476    38,222    2.45%   6,623,480    27,875    1.68%
                               
Short-term borrowings   2,717    37    5.45%   26,847    271    4.04%
Repurchase agreements   41    —      —      42    —      —   
Long-term borrowings   10,144    125    4.94%   38,951    498    5.11%
Subordinated debentures   13,401    296    8.84%   13,401    226    6.75%
Senior debt   95,808    1,234    5.15%   99,005    1,280    5.17%
Total deposits and liabilities   6,372,587    39,914    2.51%   6,801,726    30,150    1.77%
                               
Other liabilities   185,572              19,254           
Total liabilities   6,558,159              6,820,980           
                               
Shareholders' equity   790,484              678,884           
   $7,348,643             $7,499,864           
Net interest income on tax equivalent basis(3)       $92,192             $76,778      
                               
Tax equivalent adjustment        33              18      
                               
Net interest income       $92,159             $76,760      
Net interest margin(3)             5.26%             4.21%

 

(1)Interest on loans for 2023 and 2022 includes $5,000 and $12,000, respectively, of interest and fees on PPP loans.
(2)Includes commercial loans, at fair value. All periods include non-accrual loans.
(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

 

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Average balance sheet and net interest income  Year ended December 31, 2023  Year ended December 31, 2022
   (Dollars in thousands; unaudited)
Assets:  Average
Balance		  Interest(1)  Average
Rate		  Average
Balance		  Interest(1)  Average
Rate
                   
Interest earning assets:                              
Loans, net of deferred fees and costs(2)  $5,724,679   $436,343    7.62%  $5,670,957   $275,651    4.86%
Leases-bank qualified(3)   4,106    388    9.45%   3,479    235    6.75%
Investment securities-taxable   766,906    39,078    5.10%   855,629    25,598    2.99%
Investment securities-nontaxable(3)   3,118    193    6.19%   3,559    125    3.51%
Interest earning deposits at Federal Reserve Bank   649,873    33,627    5.17%   479,791    6,762    1.41%
Net interest earning assets   7,148,682    509,629    7.13%   7,013,415    308,371    4.40%
                               
Allowance for credit losses   (23,412)             (19,374)          
Other assets   292,491              213,491           
   $7,417,761             $7,207,532           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $6,308,509   $144,814    2.30%  $5,670,818   $39,872    0.70%
Savings and money market   78,074    2,857    3.66%   510,370    8,524    1.67%
Time deposits   20,794    858    4.13%   86,907    2,740    3.15%
Total deposits   6,407,377    148,529    2.32%   6,268,095    51,136    0.82%
                               
Short-term borrowings   5,739    271    4.72%   60,312    1,538    2.55%
Repurchase agreements   41    —      —      41    —      —   
Long-term borrowings   9,995    507    5.07%   39,202    1,004    2.56%
Subordinated debentures   13,401    1,121    8.37%   13,401    658    4.91%
Senior debt   96,864    5,027    5.19%   98,865    5,118    5.18%
Total deposits and liabilities   6,533,417    155,455    2.38%   6,479,916    59,454    0.92%
                               
Other liabilities   133,688              54,374           
Total liabilities   6,667,105              6,534,290           
                               
Shareholders' equity   750,656              673,242           
   $7,417,761             $7,207,532           
Net interest income on tax equivalent basis(3)       $354,174             $248,917      
                               
Tax equivalent adjustment        122              76      
                               
Net interest income       $354,052             $248,841      
Net interest margin(3)             4.95%             3.55%

 

 
(1)Interest on loans for 2023 and 2022 includes $32,000 and $514,000, respectively, of interest and fees on PPP loans.
(2)Includes commercial loans, at fair value. All periods include non-accrual loans.
(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

 

 

 

 

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Allowance for credit losses Year ended
  December 31,   December 31,
  2023 (unaudited)   2022 
  (Dollars in thousands)
           
Balance in the allowance for credit losses at beginning of period $  22,374    $  17,806 
           
Loans charged-off:          
SBA non-real estate    871       885 
SBA commercial mortgage    76       —
Direct lease financing    3,666       576 
IBLOC    24       —
Consumer - other    3       —
Total    4,640       1,461 
           
Recoveries:          
SBA non-real estate    475       140 
SBA commercial mortgage    75       —
Direct lease financing    330       124 
Consumer - home equity    299       —
Other loans    —      24 
Total    1,179       288 
Net charge-offs    3,461       1,173 
Provision for credit losses, excluding commitment provision    8,465       5,741 
           
Balance in allowance for credit losses at end of period $  27,378    $  22,374 
Net charge-offs/average loans    0.07%      0.03%
Net charge-offs/average assets    0.05%      0.02%

 

 

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Loan portfolio December 31,   September 30,   June 30,   December 31,
  2023 (unaudited)   2023 (unaudited)   2023 (unaudited)   2022
  (Dollars in thousands)
                       
SBL non-real estate $  137,752    $  130,579    $  117,621    $  108,954 
SBL commercial mortgage    606,986       547,107       515,008       474,496 
SBL construction    22,627       19,204       32,471       30,864 
Small business loans    767,365       696,890       665,100       614,314 
Direct lease financing    685,657       670,208       657,316       632,160 
SBLOC / IBLOC(1)    1,627,285       1,720,513       1,883,607       2,332,469 
Advisor financing(2)    221,612       199,442       173,376       172,468 
Real estate bridge loans    1,999,782       1,848,224       1,826,227       1,669,031 
Other loans(3)    50,638       55,800       55,644       61,679 
     5,352,339       5,191,077       5,261,270       5,482,121 
Unamortized loan fees and costs    8,800       7,895       6,304       4,732 
Total loans, including unamortized fees and costs $  5,361,139    $  5,198,972    $  5,267,574    $  5,486,853 

 

Small business portfolio December 31,   September 30,   June 30,   December 31,
  2023 (unaudited)   2023 (unaudited)   2023 (unaudited)   2022
    (Dollars in thousands)
                       
SBL, including unamortized fees and costs $  776,867   $  705,790   $  673,667   $  621,641
SBL, included in loans, at fair value    119,287      126,543      134,131      146,717
Total small business loans(4) $  896,154   $  832,333   $  807,798   $  768,358

 

(1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At December 31, 2023 and December 31, 2022, IBLOC loans amounted to $646.9 million and $1.12 billion, respectively.

(2) In 2020 The Bancorp began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value (“LTV”) ratios of 70% of the 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.

(3) Includes demand deposit overdrafts reclassified as loan balances totaling $1.7 million and $2.6 million at December 31, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and are immaterial.

(4) The SBLs held at fair value are comprised of the government guaranteed portion of 7(a) Program loans at the dates indicated.

 

Small business loans as of December 31, 2023

 

    Loan principal
    (Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)   $  399 
PPP loans(1)      2 
Commercial mortgage SBA(2)      284 
Construction SBA(3)      12 
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)      113 
Non-SBA SBLs      46 
Other(5)      29 
Total principal   $  885 
Unamortized fees and costs      11 
Total SBLs   $  896 

 

(1) Includes the portion of SBA 7(a) Program loans and PPP loans which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.

(2) Substantially all these loans are made under the 504 Program, which dictates origination date LTV percentages, generally 50-60%, to which The Bancorp adheres.

(3) Includes $4.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $8.0 million in SBA interim loans with an approved SBA post-construction full takeout/payoff.

(4) Includes the unguaranteed portion of 7(a) Program loans which are 70% or more guaranteed by the U.S. government. SBA 7(a) Program 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 7(a) Program loans and 504 Program loans require the personal guaranty of all 20% or greater owners.

(5) Comprised of $29.0 million of loans sold that do not qualify for true sale accounting.

  8 

 

 

 

Small business loans by type as of December 31, 2023

 

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

 

    SBL commercial mortgage(1)   SBL construction(1)   SBL non-real estate   Total     % Total
      (Dollars in millions)
Hotels and motels   $  77   $ —   $ —   $  77      17%
Funeral homes and funeral services      41      —      —      41      9%
Full-service restaurants      24      6      2      32      7%
Car washes      19      —     —     19      4%
Child day care services      16      2      2      20      4%
Outpatient mental health and substance abuse centers      15     —     —      15      3%
Homes for the elderly     13     —     —     13      3%
Gasoline stations with convenience stores     12     —     —     12      3%
Fitness and recreational sports centers      8     —      2      10      2%
Lessors of other real estate property      9     —      1     10      2%
Offices of lawyers      9     —      —     9      2%
Limited-service restaurants      3      1      3     7      2%
Caterers      7     —      —     7      2%
General warehousing and storage      7     —      —      7      2%
Lessors of nonresidential buildings      6      —      —      6      1%
Plumbing, heating, and air-conditioning      6     —      1      7      2%
All other specialty trade contractors     5     —     —     5      1%
Lessors of residential buildings      5      —     —     5      1%
Miscellaneous durable goods merchants     5     —     —     5      1%
Packaged frozen food merchant wholesalers      5     —     —      5      1%
Technical and trade schools      5      —     —      5      1%
Amusement and recreation      4     —     —      4      1%
Offices of dentists      3      —     —     3      1%
Vocational rehabilitation services      —      3     —     3      1%
Other(2)      99      2      27      128      27%
Total   $  403   $  14   $  38   $  455      100%

 

(1) Of the SBL commercial mortgage and SBL construction loans, $121.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs. SBL Commercial excludes $29.0 million of loans sold that do not qualify for true sale accounting.

(2) Loan types of less than $3.0 million are spread over approximately one hundred different business types.

 

State diversification as of December 31, 2023

 

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

 

    SBL commercial mortgage(1)   SBL construction(1)   SBL non-real estate   Total     % Total
      (Dollars in millions)
California   $  82   $ 5   $ 3   $  90      20%
Florida      68     1     3      72      16%
North Carolina      38     1     2      41      9%
Pennsylvania      34     —     1      35      8%
New York      25     2     2      29      6%
New Jersey      17     3     4      24      5%
Texas      18     —     6      24      5%
Georgia      20     1     2      23      5%
Other States      101      1      15      117      26%
Total   $  403   $  14   $  38   $  455      100%

 

(1) Of the SBL commercial mortgage and SBL construction loans, $121.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs. SBL Commercial excludes $29.0 million of loans that do not qualify for true sale accounting.

  9 

 

 

 

Top 10 loans as of December 31, 2023

 

 

Type(1)   State   SBL commercial mortgage  
    (Dollars in millions)
Funeral homes and funeral services     PA   $  13   
Mental health and substance abuse center     FL      10   
Funeral homes and funeral services     ME      9   
Hotel     FL      8   
Lawyers office     CA      8   
Hotel     NC      7   
General warehousing and storage     PA      7   
Hotel     FL      6   
Hotel     NY      6   
Hotel     NC      5   
Total         $  79   

 

(1) The 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 December 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)(1)     148   $  2,000     71%    9.30%
                     
Non-SBA commercial real estate loans, at fair value:                    
Multi-family (apartment bridge loans)(1)      9    $  168     77%    8.82%
Hospitality (hotels and lodging)      2       27     65%    9.82%
Retail      2       12     72%    8.19%
Other      2       9     73%    4.97%
       15       216     75%    8.74%
Fair value adjustment            (3)        
Total non-SBA commercial real estate loans, at fair value            213         
Total commercial real estate loans         $  2,213     72%    9.26%

 

(1) 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 they are not accounted for at fair value.

 

State diversification as of December 31, 2023     15 largest loans as of December 31, 2023
                               
State     Balance     Origination date LTV     State       Balance   Origination date LTV
(Dollars in millions)     (Dollars in millions)
Texas   $  814     72%     Texas     $  46    75%
Georgia      247     69%     Texas        44    72%
Florida      221      70%     Tennessee        40    72%
Michigan      112     69%     Texas        39    75%
Indiana      92     73%     Texas        39    79%
New Jersey      78     69%     Texas        37    80%
Ohio      73     67%     Michigan        37    62%
Other States each <$63 million      576     73%     Texas        36    67%
Total   $  2,213     72%     Florida        35    72%
                  Indiana        34    76%
                  Texas        34    62%
                  Michigan        32    79%
                  Oklahoma        31    78%
                  New Jersey        30    62%
                  Georgia        29    69%
                  15 largest commercial real estate loans     $  543    72%
  11 

 

 

Institutional banking loans outstanding at December 31, 2023

 

Type Principal   % of total
    (Dollars in millions)    
SBLOC $  980   53%
IBLOC    647   35%
Advisor financing    222   12%
Total $  1,849    100%

 

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While the value of equities has 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. Second, 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 December 31, 2023

 

  Principal amount   % Principal to collateral
  (Dollars in millions)
  $  11    20%
     9    94%
     9    39%
     9    41%
     9    94%
     8    72%
     8    68%
     8    27%
     8    52%
     7    74%
Total and weighted average $  86    57%

 

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, fifteen insurance companies have been approved and, as of December 31, 2023, all were rated A- (Excellent) or better by AM BEST.

  12 

 

 

Direct lease financing by type as of December 31, 2023

 

 

  Principal balance(1)   % Total
  (Dollars in millions)    
Government agencies and public institutions(2) $  109     16%
Waste management and remediation services    106     15%
Construction    104     15%
Real estate and rental and leasing    76     11%
Manufacturing    35     5%
Finance and insurance    33     5%
Health care and social assistance    26     4%
Other services (except public administration)    26     4%
General freight trucking    25     4%
Professional, scientific, and technical services    22     3%
Wholesale trade    18     3%
Utilities    15     2%
Transportation and warehousing    14     2%
Other    77     11%
Total $  686     100%

 

(1) Of the total $686.0 million of direct lease financing, $611.0 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

(2) Includes public universities and school districts.

 

 

Direct lease financing by state as of December 31, 2023

 

State Principal balance   % Total
  (Dollars in millions)    
Florida $  98    14%
Utah    67    10%
California    57    8%
New York    51    7%
Pennsylvania    42    6%
New Jersey    39    6%
North Carolina    35    5%
Maryland    33    5%
Texas    31    5%
Connecticut    30    4%
Idaho    17    2%
Washington    15    2%
Georgia    14    2%
Ohio    13    2%
Alabama    12    2%
Other States    132    20%
Total $  686    100%

 

 

  13 

 


 

Capital ratios  Tier 1 capital to average  Tier 1 capital to risk-weighted  Total capital to risk-weighted  Common equity tier 1 to risk
  

assets

ratio

 

assets

ratio

 

assets

ratio

 

weighted

assets

As of December 31, 2023                    
The Bancorp, Inc.   11.19%    15.66%    16.23%    15.66% 
The Bancorp Bank, National Association   12.37%    17.35%    17.92%    17.35% 
"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
   December 31,  December 31,
   2023  2022  2023  2022
Selected operating ratios                    
Return on average assets(1)   2.38%    2.13%    2.59%    1.81% 
Return on average equity(1)   22.10%    23.52%    25.62%    19.34% 
Net interest margin   5.26%    4.21%    4.95%    3.55% 

 

(1)Annualized

 

Book value per share table December 31,   September 30,   June 30,   December 31,
  2023   2023   2023   2022
Book value per share $  15.17   $  14.36   $  13.74   $  12.46
                       

 

Loan quality table  December 31,  September 30,  June 30,  December 31,
   2023  2023  2023  2022
   (Dollars in thousands)
Nonperforming loans to total loans   0.25%    0.30%    0.28%    0.33% 
Nonperforming assets to total assets   0.39%    0.46%    0.47%    0.50% 
Allowance for credit losses to total loans   0.51%    0.46%    0.44%    0.41% 
                     
Nonaccrual loans  $11,525   $15,100   $14,027   $10,356 
Loans 90 days past due still accruing interest   1,744    677    563    7,775 
Other real estate owned   16,949    18,756    20,952    21,210 
     Total nonperforming assets  $30,218   $34,533   $35,542   $39,341 

 

Gross dollar volume (GDV) (1)  Three months ended
   December 31,  September 30,  June 30,  December 31,
   2023  2023  2023  2022
   (Dollars in thousands)
Prepaid and debit card GDV  $33,292,350   $32,972,249   $32,776,154   $29,454,074 
                     

 

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

 

  14 

 

  

Business line quarterly summary  
Quarter ended December 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)   6.8%    $   1,849   (26%)   (15%)          
Small business lending(4)   7.3%   896   13%   17%          
Leasing   7.4%   686   8%   9%          
Commercial real estate (non-SBA loans, at fair value)   8.7%         216   nm   nm          
Real estate bridge loans (recorded at book value)   9.3%   2,000   20%   33%          
Weighted average yield   7.9%    $   5,647           Non-interest income
                        % Growth
Deposits: Fintech solutions group                   Current quarter   Year over year  
Prepaid and debit card issuance, and other payments 2.5%    $    5,998   6%   nm    $     25.1   15%  

 

(1) Average rates are for the three months ended December 31, 2023.

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

(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. Growth rates exclude $29.0 million of loans that do not qualify for true sale accounting.

 

Summary of credit lines available

 

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

 

  December 31, 2023
    (Dollars in thousands)
Federal Reserve Bank $  1,947,513 
Federal Home Loan Bank    731,500 
Total lines of credit available $  2,679,013 

 

Estimated insured vs uninsured deposits

 

The vast majority of The Bancorp’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.

 

  December 31, 2023
Insured   91%
Low balance accounts   5%
Other uninsured   4%
Total deposits   100%

 

Calculation of efficiency ratio(1)

 

  Three months ended   Year ended
  December 31,   December 31,   December 31,   December 31,
  2023   2022   2023   2022
  (Dollars in thousands)
Net interest income $  92,159    $  76,760    $  354,052    $  248,841 
Non-interest income    26,989       25,740       112,094       105,683 
Total revenue $  119,148    $  102,500    $  466,146    $  354,524 
Non-interest expense $  45,610    $  43,475    $  191,042    $  169,502 
                       
Efficiency ratio    38%      42%      41%      48%

 

(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. 

 

  15