EX-99.1 2 ex99-1.htm EXHIBIT 99.1
 
The Bancorp, Inc. Reports Third Quarter 2018 Financial Results

Wilmington, DE – October 25, 2018 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the third quarter of 2018.

Highlights

Pretax income from continuing operations increased to $83.2 million for the quarter ended September 30, 2018 compared to $12.2 million for the quarter ended September 30, 2017. The increase reflected a $65.0 million gain on the sale of the Company’s Individual Retirement Account portfolio.

Diluted earnings per share for the quarter ended September 30, 2018 were $1.07 and $0.23, excluding the tax effected impact of the gain on sale of the IRA portfolio. That compares to $0.13 diluted earnings per share for the quarter ended September 30, 2017.

Net interest income increased 10% to $30.6 million for the quarter ended September 30, 2018, compared to $27.9 million for the quarter ended September 30, 2017.

Interest income on security backed lines of credit (“SBLOC”) loans increased 30% to $7.7 million for the quarter ended September 30, 2018, compared to $5.9 million for the quarter ended September 30, 2017.

Net interest margin increased to 3.22% for the quarter ended September 30, 2018, compared to 3.11% for the quarter ended June 30, 2018.

Total payments revenue, consisting of prepaid card fees and card payment and Automated Clearing House processing fees for the quarter ended September 30, 2018 increased to $15.5 million, or 10%, compared to the quarter ended September 30, 2017.  Of that total, prepaid fees for the quarter ended September 30, 2018 increased to $13.2 million, or 6%, and ACH, card and other processing fees increased to $2.3 million, or 46% compared to the quarter ended September 30, 2017, respectively.

Loans increased 9% to $1.50 billion at September 30, 2018, compared to $1.37 billion at September 30, 2017.

SBLOC loans increased 8% to $778.6 million at September 30, 2018, compared to $720.3 million at September 30, 2017.

Small Business Administration (“SBA”) loans increased 19% to $459.8 million at September 30, 2018, compared to $386.8 million at September 30, 2017.

Direct lease financing increased 7% to $396.0 million at September 30, 2018, compared to $368.7 million at September 30, 2017.

The rate on $3.88 billion of average deposits and interest-bearing liabilities in the third quarter of 2018 was 0.83% with a rate of 0.94% for $2.11 billion of average prepaid card deposits.

Non-interest expense decreased to $37.3 million for the quarter ended September 30, 2018, a 15% decrease from the third quarter of 2017. Year-to-date non-interest expense was $113.7 million compared to $119.0 million for year-to-date 2017, a decrease of 5%.

The benefit of the lower federal tax rate in 2018 compared to 2017 was increased in the third quarter, as the lower federal statutory rate of 21% (compared to 34% in 2017) was applied to the $65 million gain on sale of IRA portfolio.

Consolidated leverage ratio was 9.61% at September 30, 2018. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

Book value per common share at September 30, 2018 was $6.95 per share.
 
 
1
 

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “As previously announced, we sold our Safe Harbor IRA portfolio that generated $6 million in 2017 fees. The sale price was $65 million and added 84 cents a share to book value. The sale of our Safe Harbor IRA portfolio concludes our divestiture of non-core assets started when our new business plan was approved by our board in the third quarter of 2016.  Like our European and Health Savings Accounts franchises, our safe harbor IRA portfolio was sub-scale, carried regulatory risks and was unlikely to deliver longer-term growth or innovation to our business model.  Therefore, its sale for $65 million, or over 10 times 2017 fees, allowed us to complete the process of focusing and de-risking our institution, while significantly enhancing our capital position without diluting the equity ownership of our shareholders.”

The Bancorp reported net income of $61.3 million, or $1.07 income per diluted share, for the quarter ended September 30, 2018, compared to net income of $7.3 million, or $0.13 income per diluted share, for the quarter ended September 30, 2017. Pretax income from continuing operations for third quarter 2018 increased to $83.2 million compared to $12.2 million reported for third quarter 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 9.64%, 24.05%, 24.53% and 24.05%, 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, October 26, 2018 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 9061088.  You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 2, 2018 by dialing 855.859.2056, access code 9061088.

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 The 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 The 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
    
Nine months ended
  
   
September 30,
    
September 30,
  
Condensed income statement
  
2018
    
2017
    
2018
    
2017
  
   
(dollars in thousands except per share data)
  
                         
Net interest income
  
$
30,632
    
$
27,901
    
$
90,240
    
$
79,993
  
Provision for loan and lease losses
    
1,060
      
800
      
2,660
      
2,150
  
Non-interest income
                                
Service fees on deposit accounts
    
402
      
1,700
      
3,624
      
4,895
  
Card payment and ACH processing fees
    
2,281
      
1,564
      
6,275
      
4,596
  
Prepaid card fees
    
13,204
      
12,491
      
41,559
      
39,272
  
Gain on sale of loans
    
8,999
      
11,394
      
20,274
      
17,535
  
Gain on sale of investment securities
    
15
      
506
      
41
      
1,595
  
Change in value of investment in unconsolidated entity
    
(78
)
    
(4
)
    
(2,981
)
    
(20
)
Leasing income
    
758
      
705
      
2,353
      
2,088
  
Affinity fees
    
84
      
275
      
271
      
1,445
  
Gain on sale of IRA portfolio
    
65,000
      
-
      
65,000
      
-
  
Gain on sale of health savings accounts
    
-
      
-
      
-
      
2,538
  
Loss from sale of European prepaid card operations
    
-
      
-
      
-
      
(3,437
)
Other non-interest income
    
305
      
376
      
689
      
892
  
Total non-interest income
    
90,970
      
29,007
      
137,105
      
71,399
  
Non-interest expense
                                
Salaries and employee benefits
    
19,243
      
21,788
      
59,213
      
57,902
  
Data processing expense
    
1,380
      
1,926
      
4,741
      
8,047
  
Legal expense
    
1,610
      
2,744
      
5,811
      
5,909
  
FDIC Insurance
    
2,241
      
2,063
      
7,389
      
7,586
  
Software
    
3,593
      
3,088
      
9,879
      
9,328
  
Losses and write downs on other real estate owned
    
-
      
-
      
45
      
19
  
Civil money penalty
    
-
      
2,500
      
(290
)
    
2,500
  
Lease termination expense
    
-
      
-
      
395
      
-
  
Other non-interest expense
    
9,232
      
9,774
      
26,475
      
27,738
  
Total non-interest expense
    
37,299
      
43,883
      
113,658
      
119,029
  
Income from continuing operations before income taxes
    
83,243
      
12,225
      
111,027
      
30,213
  
Income tax expense (benefit)
    
21,942
      
5,455
      
29,550
      
(457
)
Net income from continuing operations
    
61,301
      
6,770
      
81,477
      
30,670
  
Discontinued operations
                                
Income (loss) from discontinued operations before income taxes
    
(370
)
    
829
      
(264
)
    
5,488
  
Income tax expense (benefit)
    
(346
)
    
318
      
(345
)
    
2,050
  
Net income (loss) from discontinued operations, net of tax
    
(24
)
    
511
      
81
      
3,438
  
Net income available to common shareholders
  
$
61,277
    
$
7,281
    
$
81,558
    
$
34,108
  
                                 
Net income per share from continuing operations - basic
  
$
1.09
    
$
0.12
    
$
1.45
    
$
0.55
  
Net income per share from discontinued operations - basic
  
$
-
    
$
0.01
    
$
-
    
$
0.06
  
Net income per share - basic
  
$
1.09
    
$
0.13
    
$
1.45
    
$
0.61
  
                                 
Net income per share from continuing operations - diluted
  
$
1.07
    
$
0.12
    
$
1.43
    
$
0.55
  
Net income per share from discontinued operations - diluted
  
$
-
    
$
0.01
    
$
-
    
$
0.06
  
Net income per share - diluted
  
$
1.07
    
$
0.13
    
$
1.43
    
$
0.61
  
Weighted average shares - basic
    
56,442,222
      
55,758,433
      
56,309,390
      
55,661,538
  
Weighted average shares - diluted
    
57,103,301
      
56,312,838
      
57,084,844
      
56,043,909
  
 
 
3
 

 
Balance sheet
  
September 30,
    
June 30,
    
December 31,
    
September 30,
  
   
2018
    
2018
    
2017
    
2017
  
    
(dollars in thousands)
  
Assets:
                        
Cash and cash equivalents
                        
Cash and due from banks
  
$
2,245
    
$
3,052
    
$
3,152
    
$
5,813
  
Interest earning deposits at Federal Reserve Bank
    
710,816
      
373,782
      
841,471
      
328,023
  
Securities sold under agreements to resell
    
64,518
      
64,216
      
64,312
      
65,095
  
     Total cash and cash equivalents
    
777,579
      
441,050
      
908,935
      
398,931
  
                                 
Investment securities, available-for-sale, at fair value
    
1,274,417
      
1,305,494
      
1,294,484
      
1,196,956
  
Investment securities, held-to-maturity
    
84,433
      
86,354
      
86,380
      
86,402
  
Commercial loans held for sale, at fair value
    
308,470
      
447,997
      
503,316
      
380,272
  
Loans, net of deferred fees and costs
    
1,496,773
      
1,506,812
      
1,392,228
      
1,374,060
  
Allowance for loan and lease losses
    
(8,092
)
    
(8,014
)
    
(7,096
)
    
(7,283
)
Loans, net
    
1,488,681
      
1,498,798
      
1,385,132
      
1,366,777
  
Federal Home Loan Bank & Atlantic Community Bancshares stock
    
1,113
      
1,113
      
991
      
991
  
Premises and equipment, net
    
17,686
      
18,275
      
20,051
      
21,087
  
Accrued interest receivable
    
11,621
      
11,810
      
10,900
      
10,131
  
Intangible assets, net
    
4,229
      
4,612
      
5,377
      
5,185
  
Other real estate owned
    
405
      
405
      
450
      
-
  
Deferred tax asset, net
    
40,991
      
39,779
      
34,802
      
53,017
  
Investment in unconsolidated entity
    
64,212
      
67,994
      
74,473
      
107,711
  
Assets held for sale from discontinued operations
    
226,026
      
241,694
      
304,313
      
314,994
  
Other assets
    
60,337
      
56,499
      
78,543
      
51,164
  
     Total assets
  
$
4,360,200
    
$
4,221,874
    
$
4,708,147
    
$
3,993,618
  
                                 
Liabilities:
                                
Deposits
                                
Demand and interest checking
  
$
3,540,605
    
$
3,287,682
    
$
3,806,965
    
$
3,113,212
  
Savings and money market
    
317,453
      
511,598
      
453,877
      
452,183
  
     Total deposits
    
3,858,058
      
3,799,280
      
4,260,842
      
3,565,395
  
                                 
Securities sold under agreements to repurchase
    
158
      
161
      
217
      
180
  
Subordinated debenture
    
13,401
      
13,401
      
13,401
      
13,401
  
Long-term borrowings
    
41,841
      
42,000
      
42,323
      
42,482
  
Other liabilities
    
54,868
      
34,485
      
67,215
      
32,699
  
     Total liabilities
  
$
3,968,326
    
$
3,889,327
    
$
4,383,998
    
$
3,654,157
  
                                 
Shareholders' equity:
                                
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,446,088 and 55,859,660 shares issued at September 30, 2018 and 2017, respectively
    
56,446
      
56,411
      
55,861
      
55,860
  
Treasury stock (100,000 shares)
    
(866
)
    
(866
)
    
(866
)
    
(866
)
Additional paid-in capital
    
365,749
      
364,460
      
363,196
      
362,340
  
Accumulated deficit
    
(7,936
)
    
(69,213
)
    
(89,485
)
    
(77,850
)
Accumulated other comprehensive loss
    
(21,519
)
    
(18,245
)
    
(4,557
)
    
(23
)
Total shareholders' equity
    
391,874
      
332,547
      
324,149
      
339,461
  
                                 
     Total liabilities and shareholders' equity
  
$
4,360,200
    
$
4,221,874
    
$
4,708,147
    
$
3,993,618
  
 
 
4

 

Average balance sheet and net interest income
  
Three months ended September 30, 2018
    
Three months ended September 30, 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 **
  
$
1,980,814
    
$
24,708
      
4.99
%
  
$
1,816,751
    
$
21,147
      
4.66
%
Leases - bank qualified*
    
19,343
      
346
      
7.16
%
    
20,787
      
419
      
8.06
%
Investment securities-taxable
    
1,362,529
      
10,906
      
3.20
%
    
1,235,615
      
8,847
      
2.86
%
Investment securities-nontaxable*
    
8,145
      
63
      
3.09
%
    
13,238
      
133
      
4.02
%
Interest earning deposits at Federal Reserve Bank
    
445,765
      
2,239
      
2.01
%
    
366,724
      
1,190
      
1.30
%
Federal funds sold and securities purchased under agreement to resell
    
64,186
      
480
      
2.99
%
    
65,008
      
371
      
2.28
%
Net interest earning assets
    
3,880,782
      
38,742
      
3.99
%
    
3,518,123
      
32,107
      
3.65
%
                                                 
Allowance for loan and lease losses
    
(7,971
)
                    
(6,961
)
                
Assets held for sale from discontinued operations
    
233,732
      
2,295
      
3.93
%
    
325,912
      
3,098
      
3.80
%
Other assets
    
141,204
                      
235,070
                  
    
$
4,247,747
                    
$
4,072,144
                  
                                                 
Liabilities and Shareholders' Equity:
                                                
Deposits:
                                                
Demand and interest checking
  
$
3,418,878
    
$
6,224
      
0.73
%
  
$
3,224,167
    
$
3,136
      
0.39
%
Savings and money market
    
419,121
      
1,466
      
1.40
%
    
439,688
      
552
      
0.50
%
Total deposits
    
3,837,999
      
7,690
      
0.80
%
    
3,663,855
      
3,688
      
0.40
%
                                                 
Short-term borrowings
    
25,602
      
148
      
2.31
%
    
51,413
      
175
      
1.36
%
Securities sold under agreements to repurchase
    
160
      
-
      
0.00
%
    
189
      
-
      
0.00
%
Subordinated debentures
    
13,401
      
186
      
5.55
%
    
13,401
      
150
      
4.48
%
Total deposits and liabilities
    
3,877,162
      
8,024
      
0.83
%
    
3,728,858
      
4,013
      
0.43
%
                                                 
Other liabilities
    
8,374
                      
8,046
                  
Total liabilities
    
3,885,536
                      
3,736,904
                  
                                                 
Shareholders' equity
    
362,211
                      
335,240
                  
    
$
4,247,747
                    
$
4,072,144
                  
Net interest income on tax equivalent basis*
          
$
33,013
                    
$
31,192
          
                                                 
Tax equivalent adjustment
            
86
                      
193
          
                                                 
Net interest income
          
$
32,927
                    
$
30,999
          
Net interest margin *
                    
3.22
%
                    
3.26
%
 
                                          
* Full taxable equivalent basis, using a statutory rate of 21% for 2018 and 35% for 2017.
  
** Includes loans held for sale.
  
 
 
5

 
Average balance sheet and net interest income
  
Nine months ended September 30, 2018
    
Nine months ended September 30, 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 **
  
$
1,918,950
    
$
69,451
      
4.83
%
  
$
1,740,655
    
$
58,266
      
4.46
%
Leases - bank qualified*
    
20,192
      
1,017
      
6.72
%
    
21,167
      
1,231
      
7.75
%
Investment securities-taxable
    
1,391,175
      
31,375
      
3.01
%
    
1,269,922
      
26,990
      
2.83
%
Investment securities-nontaxable*
    
8,907
      
201
      
3.01
%
    
14,423
      
351
      
3.24
%
Interest earning deposits at Federal Reserve Bank
    
468,691
      
6,166
      
1.75
%
    
532,223
      
3,961
      
0.99
%
 Federal funds sold and securities purchased under agreement to resell
    
64,234
      
1,369
      
2.84
%
    
60,119
      
931
      
2.06
%
Net interest earning assets
    
3,872,149
      
109,579
      
3.77
%
    
3,638,509
      
91,730
      
3.36
%
                                                 
Allowance for loan and lease losses
    
(7,378
)
                    
(6,793
)
                
Assets held for sale from discontinued operations
    
269,857
      
6,888
      
3.40
%
    
337,102
      
9,594
      
3.79
%
Other assets
    
197,114
                      
251,629
                  
    
$
4,331,742
                    
$
4,220,447
                  
                                                 
Liabilities and Shareholders' Equity:
                                                
Deposits:
                                                
Demand and interest checking
  
$
3,463,756
    
$
15,547
      
0.60
%
  
$
3,433,027
    
$
8,836
      
0.34
%
Savings and money market
    
469,511
      
2,751
      
0.78
%
    
434,768
      
1,718
      
0.53
%
Total deposits
    
3,933,267
      
18,298
      
0.62
%
    
3,867,795
      
10,554
      
0.36
%
                                                 
Short-term borrowings
    
17,367
      
261
      
2.00
%
    
19,498
      
197
      
1.35
%
Securities sold under agreements to repurchase
    
178
      
-
      
0.00
%
    
245
      
-
      
0.00
%
Subordinated debentures
    
13,401
      
524
      
5.21
%
    
13,401
      
432
      
4.30
%
Total deposits and liabilities
    
3,964,213
      
19,083
      
0.64
%
    
3,900,939
      
11,183
      
0.38
%
                                                 
Other liabilities
    
9,517
                      
431
                  
Total liabilities
    
3,973,730
                      
3,901,370
                  
                                                 
Shareholders' equity
    
358,012
                      
319,077
                  
    
$
4,331,742
                    
$
4,220,447
                  
Net interest income on tax equivalent basis*
          
$
97,384
                    
$
90,141
          
                                                 
Tax equivalent adjustment
            
256
                      
554
          
                                                 
Net interest income
          
$
97,128
                    
$
89,587
          
Net interest margin *
                    
3.15
%
                    
3.02
%
 
                                          
* Full taxable equivalent basis, using a statutory rate of 21% for 2018 and 35% for 2017.
  
** Includes loans held for sale.
  
 
 
 
6

 
Allowance for loan and lease losses:
  
Nine months ended
    
Year ended
        
    
September 30,
    
September 30,
    
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
    
1,081
      
344
      
1,171
        
SBA commercial mortgage
    
157
      
-
      
-
        
Direct lease financing
    
531
      
779
      
926
        
Other consumer loans
    
19
      
113
      
110
        
Total
    
1,788
      
1,236
      
2,207
        
                               
Recoveries:
                              
SBA non-real estate
    
46
      
12
      
18
        
SBA commercial mortgage
    
13
      
-
      
-
        
Direct lease financing
    
64
      
-
      
7
        
Other consumer loans
    
1
      
25
      
26
        
Total
    
124
      
37
      
51
        
Net charge-offs
    
1,664
      
1,199
      
2,156
        
Provision charged to operations
    
2,660
      
2,150
      
2,920
        
                               
Balance in allowance for loan and lease losses at end of period
  
$
8,092
    
$
7,283
    
$
7,096
        
Net charge-offs/average loans
    
0.09
%
    
0.07
%
    
0.12
%
      
Net charge-offs/average loans (annualized)
    
0.11
%
    
0.09
%
    
0.12
%
      
Net charge-offs/average assets
    
0.04
%
    
0.03
%
    
0.05
%
      
(1) Excludes activity from assets held for sale from discontinued operations.
                              
                               
Loan portfolio:
  
September 30,
    
June 30,
    
December 31,
    
September 30,
  
     
2018
      
2018
      
2017
      
2017
  
    
(in thousands)
  
                                 
SBA non-real estate
  
$
74,408
    
$
75,141
    
$
70,379
    
$
71,094
  
SBA commercial mortgage
    
166,432
      
156,268
      
142,086
      
132,997
  
SBA construction
    
17,978
      
17,781
      
16,740
      
14,205
  
Total SBA loans
    
258,818
      
249,190
      
229,205
      
218,296
  
Direct lease financing
    
395,976
      
389,387
      
377,660
      
368,662
  
SBLOC
    
778,552
      
795,823
      
730,462
      
720,279
  
Other specialty lending
    
40,799
      
48,253
      
30,720
      
36,664
  
Other consumer loans
    
12,172
      
13,174
      
14,133
      
20,107
  
     
1,486,317
      
1,495,827
      
1,382,180
      
1,364,008
  
Unamortized loan fees and costs
    
10,456
      
10,985
      
10,048
      
10,052
  
Total loans, net of deferred loan fees and costs
  
$
1,496,773
    
$
1,506,812
    
$
1,392,228
    
$
1,374,060
  
                                 
Small business lending portfolio:
  
September 30,
    
June 30,
    
December 31,
    
September 30,
  
     
2018
      
2018
      
2017
      
2017
  
    
(in thousands)
  
                                 
SBA loans, including deferred fees and costs
    
266,433
      
257,412
      
236,724
      
225,909
  
SBA loans included in HFS
    
193,372
      
182,072
      
165,177
      
160,855
  
Total SBA loans
  
$
459,805
    
$
439,484
    
$
401,901
    
$
386,764
  

 
7

 
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 September 30, 2018
                        
The Bancorp, Inc.
    
9.64
%
    
24.05
%
    
24.53
%
    
24.05
%
The Bancorp Bank
    
9.19
%
    
23.47
%
    
23.94
%
    
23.47
%
"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
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2018
    
2017
    
2018
    
2017
  
Selected operating ratios:
                        
Return on average assets (1)
    
5.72
%
    
0.71
%
    
2.52
%
    
1.08
%
Return on average equity (1)
    
67.12
%
    
8.62
%
    
30.46
%
    
14.29
%
Net interest margin
    
3.22
%
    
3.26
%
    
3.15
%
    
3.02
%
                                 
(1) Annualized
                                
                                 
Book value per share table:
  
September 30,
    
June 30,
    
December 31,
    
September 30,
  
     
2018
      
2018
      
2017
      
2017
  
Book value per share
  
$
6.95
    
$
5.91
    
$
5.81
    
$
6.09
  
                                 
                                 
Loan quality table:
  
September 30,
    
June 30,
    
December 31,
    
September 30,
  
     
2018
      
2018
      
2017
      
2017
  
Nonperforming loans to total loans (2)
    
0.35
%
    
0.42
%
    
0.30
%
    
0.39
%
Nonperforming assets to total assets (2)
    
0.13
%
    
0.16
%
    
0.10
%
    
0.13
%
Allowance for loan and lease losses to total loans
    
0.54
%
    
0.53
%
    
0.51
%
    
0.53
%
                                 
Nonaccrual loans
  
$
4,234
    
$
4,915
    
$
3,996
    
$
4,953
  
Other real estate owned
    
405
      
405
      
450
      
-
  
     Total nonperforming assets
  
$
4,639
    
$
5,320
    
$
4,446
    
$
4,953
  
                                 
Loans 90 days past due still accruing interest
  
$
1,015
    
$
1,459
    
$
227
    
$
354
  
                                 
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.
  
                                 
   
Three months ended
  
   
September 30,
    
June 30,
    
December 31,
    
September 30,
  
     
2018
      
2018
      
2017
      
2017
  
   
(in thousands)
  
Gross dollar volume (GDV) (3):
                                
Prepaid card GDV
  
$
12,525,527
    
$
12,799,531
    
$
10,963,456
    
$
10,970,085
  
                                 
(3) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.
  
 

 
8

Business line quarterly summary:
                                    
Quarter ended September 30, 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
  
Loans
                                    
Institutional banking **
      
4.1
%
    
$
779
        
8
%
      
-9
%
  
nm
    
nm
  
SBA
      
5.4
%
      
460
        
19
%
      
18
%
  
na
    
na
  
Leasing
      
6.2
%
      
396
        
7
%
      
7
%
      
0.8
        
8
%
Commercial real estate securitization
      
5.9
%
      
115
    
nm
    
nm
        
9.0
    
nm
  
Weighted average yield
      
5.0
%
    
$
1,750
                                          
                                                             
Deposits
                                                            
Payment solutions (primarily prepaid)
      
0.9
%
    
$
2,114
        
10
%
  
nm
      
$
13.2
        
6
%
Card payment and ACH processing
      
0.7
%
      
876
        
2
%
  
nm
        
2.3
        
46
%
                                                             
* Loan categories based on period end balance and Payment Solutions based on average quarterly balances.
  
** Comprised of SBLOC loans.
  
 
 
9

 
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 - 2017
    
(42
)
    
(42
)
2018 Marks
    
(3
)
    
(3
)
Payments received
    
(84
)
        
September 30, 2018 Bancorp book value**
  
$
64
          
                 
Total marks
          
$
(103
)
Divided by:
                
Original Walnut Street loan balance
          
$
267
  
Percentage of total mark to original balance
            
39
%
                 
* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the Bank's investment in a securitization of certain loans from the Bank’s discontinued loan portfolio.
  
** Approximately 45% of expected principal recoveries are from loans and properties pending liquidation or other resolution as of September 30, 2018.
  
                 
Walnut Street portfolio composition as of September 30, 2018
          
                 
Collateral type
  
% of Portfolio
          
Commercial real estate non-owner occupied
                
Retail
    
49.3
%
        
Office
    
12.8
%
        
Other
    
3.8
%
        
Construction and land
    
23.0
%
        
Commercial non real estate and industrial
    
0.6
%
        
First mortgage residential owner occupied
    
6.2
%
        
First mortgage residential non-owner occupied
    
3.5
%
        
Other
    
0.8
%
        
Total
    
100.0
%
        
                 
 
 
10

 

Cumulative analysis of marks on discontinued commercial loan principal as of September 30, 2018
  
                    
   
Discontinued
    
Cumulative
  
% to original
  
   
loan principal
    
marks
  
principal
  
   
(dollars in millions)
  
                    
Commercial loan discontinued principal before marks
  
$
149
    
$
-
      
Florida mall held in discontinued other real estate owned
    
42
      
27
      
Previous mark charges
    
14
      
14
      
Commercial loan mark at September 30, 2018
    
-
      
8
      
Total
  
$
205
    
$
49
  
24%
  


Analysis of discontinued commercial loan relationships as of September 30, 2018
                    
   
 
  
 
  
 
    
 
  
 
  
 
  
     
Performing
loan principal		      
Nonperforming
loan principal
      
Total
loan principal
        
Performing
loan marks
      
Nonperforming
loan marks
      
Total
marks
  
    (in millions)  
                                                     
7 loan relationships > $7 million
    
$
80
    
$
23
    
$
103
      
$
3
    
$
2
    
$
5
  
Loan relationships < $7 million
      
35
      
3
      
38
        
2
      
1
      
3
  
     
$
115
    
$
26
    
$
141
      
$
5
    
$
3
    
$
8
  

Quarterly activity for discontinued commercial loan principal
  
       
   
Commercial
  
   
loan principal
  
   
(in millions)
  
       
Commercial loan discontinued principal, June 30, 2018 before marks
  
$
167
  
Quarterly paydowns
    
(10
)
Quarterly charge downs
    
(8
)
Commercial loan discontinued principal, September 30, 2018 before marks
  
$
149
  
Marks, September 30, 2018
    
(8
)
Net commercial loan exposure, September 30, 2018
  
$
141
  
Residential mortgages
    
55
  
Net loans
  
$
196
  
Florida mall in other real estate owned
    
15
  
Other 21 properties in other real estate owned
    
14
  
Other assets related to discontinued operations
    
1
  
Total discontinued assets at September 30, 2018
  
$
226
  
 
11

 
Discontinued commercial loan composition September 30, 2018
  
                   
Collateral type
  
Unpaid
principal
balance
    
Mark
September 30,
2018
    
Mark as %
of portfolio
  
   
(dollars in millions)
  
Commercial real estate - non-owner occupied:
                  
Retail
  
$
7
    
$
0.6
      
9
%
Office
    
5
      
0.1
      
2
%
Other
    
38
      
1.7
      
5
%
Construction and land
    
43
      
0.2
      
-
  
Commercial non-real estate and industrial
    
11
      
0.7
      
6
%
1 to 4 family construction
    
22
      
3.5
      
16
%
First mortgage residential non-owner occupied
    
12
      
0.4
      
3
%
Commercial real estate owner occupied:
                        
Retail
    
9
      
0.3
      
-
  
Office
    
-
      
-
      
-
  
Other
    
-
      
-
      
-
  
Residential junior mortgage
    
1
      
-
      
-
  
Other
    
1
      
-
      
-
  
Total
  
$
149
                  
Less: mark
    
(8
)
                
Net commercial loan exposure, September 30, 2018
  
$
141
    
$
7.5
      
5
%

 
 
12