EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

 

Exhibit 99.1

 

The Bancorp, Inc. Reports Third Quarter 2021 Financial Results

 

Wilmington, DE – October 28, 2021 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the third quarter of 2021.

 

Highlights

 

·For the quarter ended September 30, 2021, The Bancorp earned net income of $28.3 million, or $0.48 diluted earnings per share.

 

·Return on assets and equity for the quarter ended September 30, 2021 amounted to 1.8% and 18%, respectively, compared to 1.5% and 17%, respectively, for the quarter ended September 30, 2020 (all percentages “annualized.”)

 

·Net interest margin amounted to 3.35% for the quarter ended September 30, 2021, compared to 3.37% for the quarter ended September 30, 2020 and 3.19% for the quarter ended June 30, 2021.

 

·Net interest income was $50.9 million for the quarter ended September 30, 2021 compared to $50.0 million for the quarter ended September 30, 2020. In third quarter 2021, growth in net interest income was significantly offset by the $1.9 million impact of loan prepayments on commercial real estate loan interest. However, net realized and unrealized gains on commercial loans increased $3.6 million in third quarter 2021 compared to third quarter 2020, which resulted primarily from fees related to those prepayments. In the third quarter of 2021, we recommenced the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs.

 

·Average loans and leases, including loans at fair value, increased 9% to $4.58 billion for the quarter ended September 30, 2021, compared to $4.21 billion for the quarter ended September 30, 2020.

 

·Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $428.7 million, or 2%, to $24.4 billion for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020. GDV for the 2020 quarter included the impact of significant government stimulus resulting from the Covid-19 pandemic.

 

·SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 32% year over year and 6% quarter over quarter to $1.92 billion at September 30, 2021.

 

·Small Business Loans, including those held at fair value, grew 12% year over year to $709.5 million at September 30, 2021. That growth and $709.5 million balance are exclusive of Paycheck Protection Program (“PPP”) loan balances of $71.3 million and $207.9 million, respectively, at September 30, 2021 and September 30, 2020.

 

·Direct lease financing balances increased 19% year over year to $514.1 million at September 30, 2021.

 

·The average interest rate on $5.66 billion of average deposits and interest-bearing liabilities during the third quarter of 2021 was 0.18%. Average deposits of $5.53 billion for the third quarter 2021, reflected a decrease of 1% from the $5.56 billion of average deposits for the quarter ended September 30, 2020.

 

·As of September 30, 2021, substantially all of the borrowers with Covid-19 related payment deferrals had recommenced making payments, with only approximately $1.3 million of non-U.S. guaranteed loan principal remaining in deferral.

 

·Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 9.82% and 10.24%, respectively, at September 30, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized.

 

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·Book value per common share at September 30, 2021 was $11.13 per share compared to $9.71 per share at September 30, 2020, an increase of 15%, primarily as a result of retained earnings.

 

·The Bancorp repurchased 440,887 shares of its common stock at an average cost of $22.68 per share during the quarter ended September 30, 2021.

 

“We continue to experience business momentum across our platform and strong pipelines that will support continued growth into 2022”, said CEO and President Damian Kozlowski. “We are issuing preliminary guidance of $2.15 a share for 2022 or approximately 21% growth over the current 2021 guidance of $1.78. The $2.15 does not include the impact of planned buybacks. In addition, in 2022, we intend to increase our stock buyback to $15 million a quarter from $10 million a quarter.”

 

The Bancorp reported net income of $28.3 million, or $0.48 per diluted share, for the quarter ended September 30, 2021, compared to net income of $23.3 million, or $0.40 per diluted share, for the quarter ended September 30, 2020. 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 9.82%, 15.69%, 16.10% and 15.69%, 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 29, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 9257937.  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 5, 2021 by dialing 855.859.2056, access code 9257937.

 

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., 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 “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. 

 

 

 

 

 

 

 

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The Bancorp, Inc.

Financial highlights

(unaudited)

 

   Three months ended  Nine months ended
   September 30,  September 30,
Condensed income statement  2021  2020  2021  2020
   (in thousands, except per share data)   
             
Net interest income  $50,893   $49,996   $158,719   $143,153 
Provision for credit losses   1,613    1,297    1,484    5,798 
Non-interest income                    
ACH, card and other payment processing fees   1,905    1,760    5,605    5,313 
Prepaid, debit card and related fees   18,223    19,434    56,878    56,647 
Net realized and unrealized gains (losses) on commercial loans, at fair value   4,306    684    8,881    (5,412)
Change in value of investment in unconsolidated entity   —      —      —      (45)
Leasing related income   1,968    1,519    4,700    2,795 
Other non-interest income   186    955    459    2,019 
Total non-interest income   26,588    24,352    76,523    61,317 
Non-interest expense                    
Salaries and employee benefits   25,094    26,417    77,839    74,650 
Data processing expense   1,209    1,192    3,481    3,538 
Legal expense   1,251    994    5,349    4,136 
FDIC insurance   266    2,180    5,235    7,687 
Software   4,045    3,595    11,435    10,458 
Other non-interest expense   7,519    7,648    21,811    22,595 
Total non-interest expense   39,384    42,026    125,150    123,064 
Income from continuing operations before income taxes   36,484    31,025    108,608    75,608 
Income tax expense   8,289    7,894    25,195    19,033 
Net income from continuing operations   28,195    23,131    83,413    56,575 
Discontinued operations                    
Income (loss) from discontinued operations before income taxes   87    (1,671)   324    (2,720)
Income tax expense (benefit)   21    (1,794)   76    (2,058)
Net income (loss) from discontinued operations, net of tax   66    123    248    (662)
Net income  $28,261   $23,254   $83,661   $55,913 
                     
Net income per share from continuing operations - basic  $0.49   $0.40   $1.45   $0.98 
Net income (loss) per share from discontinued operations - basic  $—     $—     $0.01   $(0.01)
Net income per share - basic  $0.49   $0.40   $1.46   $0.97 
                     
Net income per share from continuing operations - diluted  $0.48   $0.40   $1.41   $0.97 
Net income (loss) per share from discontinued operations - diluted  $—     $—     $0.01   $(0.01)
Net income per share - diluted  $0.48   $0.40   $1.42   $0.96 
Weighted average shares - basic   57,198,778    57,588,168    57,221,174    57,433,477 
Weighted average shares - diluted   58,628,306    58,471,192    58,932,146    58,051,833 

 

Note: Compared to higher rates in recent periods, the effective tax rate for the three and nine months ended September 30, 2021 approximated 23% as a result of the impact of excess 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 grant date.

 

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Balance sheet  September 30,  June 30,  December 31,  September 30,
  

2021

(unaudited)

 

2021

(unaudited)

 

2020

 

 

2020

(unaudited)

   (in thousands, except share data)
Assets:            
Cash and cash equivalents                    
Cash and due from banks  $6,687   $5,470   $5,984   $6,220 
Interest earning deposits at Federal Reserve Bank   310,642    583,498    339,531    294,758 
Total cash and cash equivalents   317,329    588,968    345,515    300,978 
                     
Investment securities, available-for-sale, at fair value   1,054,223    1,106,075    1,206,164    1,264,903 
Commercial loans, at fair value   1,550,025    1,690,216    1,810,812    1,849,947 
Loans, net of deferred fees and costs   3,136,662    2,915,344    2,652,323    2,488,760 
Allowance for credit losses   (16,159)   (15,292)   (16,082)   (15,727)
Loans, net   3,120,503    2,900,052    2,636,241    2,473,033 
Federal Home Loan Bank and Atlantic Central Bankers Bank stock   1,663    1,667    1,368    1,368 
Premises and equipment, net   16,602    17,392    17,608    15,849 
Accrued interest receivable   17,180    18,668    20,458    18,852 
Intangible assets, net   2,547    2,646    2,845    2,563 
Other real estate owned   2,145    —      —      —   
Deferred tax asset, net   12,237    10,923    9,757    7,952 
Investment in unconsolidated entity, at fair value   —      24,988    31,294    31,783 
Assets held-for-sale from discontinued operations   87,904    97,496    113,650    122,253 
Other assets   86,105    91,516    81,129    79,821 
Total assets  $6,268,463   $6,550,607   $6,276,841   $6,169,302 
                     
Liabilities:                    
Deposits                    
Demand and interest checking  $4,734,352   $5,225,024   $5,205,010   $4,882,834 
Savings and money market   378,160    459,688    257,050    505,928 
Total deposits   5,112,512    5,684,712    5,462,060    5,388,762 
                     
Securities sold under agreements to repurchase   42    42    42    42 
Short-term borrowings   300,000    —      —      —   
Senior debt   98,590    98,498    98,314    98,222 
Subordinated debenture   13,401    13,401    13,401    13,401 
Other long-term borrowings   39,715    39,901    40,277    40,462 
Other liabilities   66,226    94,944    81,583    69,954 
Total liabilities  $5,630,486   $5,931,498   $5,695,677   $5,610,843 
                     
Shareholders' equity:                    
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,330,846 and 57,490,874 shares issued and outstanding at September 30, 2021 and 2020, respectively   57,331    57,458    57,551    57,491 
Additional paid-in capital   357,528    363,241    377,452    375,985 
Retained earnings   212,114    183,853    128,453    104,282 
Accumulated other comprehensive income   11,004    14,557    17,708    20,701 
Total shareholders' equity   637,977    619,109    581,164    558,459 
                     
Total liabilities and shareholders' equity  $6,268,463   $6,550,607   $6,276,841   $6,169,302 

 

Note: Previous balance sheets 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. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.

 

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Average balance sheet and net interest income  Three months ended September 30, 2021  Three months ended September 30, 2020
   (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**  $4,573,431   $46,357    4.05%  $4,202,054   $44,318    4.22%
Leases-bank qualified*   5,031    87    6.92%   8,026    146    7.28%
Investment securities-taxable   1,012,007    6,882    2.72%   1,300,191    7,911    2.43%
Investment securities-nontaxable*   3,558    32    3.60%   4,041    35    3.46%
Interest earning deposits at Federal Reserve Bank   479,350    167    0.14%   413,259    106    0.10%
Net interest earning assets   6,073,377    53,525    3.53%   5,927,571    52,516    3.54%
                               
Allowance for credit losses   (16,277)             (14,587)          
Assets held-for-sale from discontinued operations   90,598    754    3.33%   124,916    890    2.85%
Other assets   214,715              195,125           
   $6,362,413             $6,233,025           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $5,124,189   $1,063    0.08%  $5,079,711   $1,591    0.13%
Savings and money market   404,775    146    0.14%   484,323    139    0.11%
Total deposits   5,528,964    1,209    0.09%   5,564,034    1,730    0.12%
                               
Short-term borrowings   13,097    7    0.21%   3,260    1    0.12%
Repurchase agreements   41    —      —      41    —      —   
Subordinated debentures   13,401    112    3.34%   13,401    118    3.52%
Senior debt   100,329    1,279    5.10%   53,260    633    4.75%
Total deposits and liabilities   5,655,832    2,607    0.18%   5,633,996    2,482    0.18%
                               
Other liabilities   78,038              53,260           
Total liabilities   5,733,870              5,687,256           
                               
Shareholders' equity   628,543              545,769           
   $6,362,413             $6,233,025           
Net interest income on tax equivalent basis*       $51,672             $50,924      
                               
Tax equivalent adjustment        25              38      
                               
Net interest income       $51,647             $50,886      
Net interest margin *             3.35%             3.37%

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.

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

 

NOTE: In the table above, interest on loans for 2021 includes $1.2 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.

 

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Average balance sheet and net interest income  Nine months ended September 30, 2021  Nine months ended September 30, 2020
   (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**  $4,541,262   $143,546    4.21%  $3,798,104   $124,924    4.39%
Leases-bank qualified*   5,925    301    6.77%   9,401    509    7.22%
Investment securities-taxable   1,094,633    22,891    2.79%   1,343,211    28,594    2.84%
Investment securities-nontaxable*   3,824    99    3.45%   4,537    110    3.23%
Interest earning deposits at Federal Reserve Bank   781,606    650    0.11%   444,323    1,836    0.55%
Net interest earning assets   6,427,250    167,487    3.47%   5,599,576    155,973    3.71%
                               
Allowance for credit losses   (16,254)             (13,225)          
Assets held for sale from discontinued operations   99,472    2,388    3.20%   130,880    3,259    3.32%
Other assets   225,802              243,629           
   $6,736,270             $5,960,860           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $5,452,604   $4,007    0.10%  $4,858,666   $9,676    0.27%
Savings and money market   446,016    487    0.15%   298,049    309    0.14%
Time deposits   —      —      —      106,113    1,483    1.86%
Total deposits   5,898,620    4,494    0.10%   5,262,828    11,468    0.29%
                               
Short-term borrowings   8,717    15    0.23%   25,419    181    0.95%
Repurchase agreements   41    —      —      51    —      —   
Subordinated debentures   13,401    337    3.35%   13,401    408    4.06%
Senior debt   100,237    3,838    5.11%   17,883    633    4.72%
Total deposits and liabilities   6,021,016    8,684    0.19%   5,319,582    12,690    0.32%
                               
Other liabilities   105,683              119,961           
Total liabilities   6,126,699              5,439,543           
                               
Shareholders' equity   609,571              521,317           
   $6,736,270             $5,960,860           
Net interest income on tax equivalent basis*       $161,191             $146,542      
                               
Tax equivalent adjustment        84              130      
                               
Net interest income       $161,107             $146,412      
Net interest margin *             3.29%             3.41%

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.

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

 

NOTE: In the table above, the 2021 interest on loans reflects $4.6 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 in 2021 also includes $4.9 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $3.7 million. Increases in interest earning deposits at the Federal Reserve Bank reflect increased deposits resulting from stimulus payments distributed to a large segment of the population, resulting from December 2020 federal legislation.

 

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Allowance for credit losses  Nine months ended  Year ended
   September 30,  September 30,  December 31,
   2021 (unaudited)  2020 (unaudited)  2020
   (dollars in thousands)
          
Balance in the allowance for credit losses at beginning of period (1)  $16,082   $12,875   $12,875 
                
Loans charged-off:               
SBA non-real estate   896    1,350    1,350 
SBA commercial mortgage   23    —      —   
Direct lease financing   248    2,178    2,243 
SBLOC   15    —      —   
Consumer - home equity   10    —      —   
Total   1,192    3,528    3,593 
                
Recoveries:               
SBA non-real estate   18    82    103 
SBA commercial mortgage   9    —      —   
Direct lease financing   50    502    570 
Total   77    584    673 
Net charge-offs   1,115    2,944    2,920 
Provision credited to allowance, excluding commitment provision   1,192    5,796    6,127 
                
Balance in allowance for credit losses at end of period  $16,159   $15,727   $16,082 
Net charge-offs/average loans   0.04%   0.08%   0.07%
Net charge-offs/average assets   0.02%   0.05%   0.05%

 

 

 

(1) Excludes activity from assets held-for-sale from discontinued operations.

 

 

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Loan portfolio  September 30,  June 30,  December 31,  September 30,
   2021  2021  2020  2020
   (in thousands)
             
SBL non-real estate  $171,845   $228,958   $255,318   $293,488 
SBL commercial mortgage   367,272    343,487    300,817    270,264 
SBL construction   23,117    18,494    20,273    27,169 
Small business loans *   562,234    590,939    576,408    590,921 
Direct lease financing   514,068    506,424    462,182    430,675 
SBLOC / IBLOC**   1,834,523    1,729,628    1,550,086    1,428,253 
Advisor financing ***   81,143    72,190    48,282    26,600 
Real estate bridge lending   128,699    —      —      —   
Other loans ****   4,917    5,840    6,426    6,003 
    3,125,584    2,905,021    2,643,384    2,482,452 
Unamortized loan fees and costs   11,078    10,323    8,939    6,308 
Total loans, net of unamortized fees and costs  $3,136,662   $2,915,344   $2,652,323   $2,488,760 

 

Small business portfolio  September 30,  June 30,  December 31,  September 30,
   2021  2021  2020  2020
   (in thousands)
             
SBL, including unamortized fees and costs  $566,472   $593,401   $577,944   $590,314 
SBL, included in commercial loans, at fair value   214,301    225,534    243,562    250,958 
Total small business loans  $780,773   $818,935   $821,506   $841,272 

 

* The preceding table shows small business loans and small business loans held at fair value. The small business loans held at fair value are comprised of the government guaranteed portion of SBA 7a loans at the dates indicated. A reduction in SBL non-real estate loans from $229.0 million at June 30, 2021 to $171.8 million at September 30, 2021 resulted from U.S. government repayments of $58.2 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $71.3 million at September 30, 2021 and $165.7 million at December 31, 2020, respectively.

** 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 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.

**** Included in the table above under Other loans are demand deposit overdrafts reclassified as loan balances totaling $272,000 and $663,000 at September 30, 2021 and December 31, 2020, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

 

Small business loans as of September 30, 2021

   Loan principal
   (in millions)
U.S. government guaranteed portion of SBA loans (a)  $370 
Paycheck Protection Program loans (PPP) (a)   71 
Commercial mortgage SBA (b)   195 
Construction SBA (c)   13 
Non-guaranteed portion of U.S. government guaranteed 7a loans (d)   104 
Non-SBA small business loans (e)   18 
Total principal  $771 
Unamortized fees and costs   10 
Total small business loans  $781 

 

(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 $13 million in Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $2 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $104 million represents the non-guaranteed 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 $18 million of non-SBA loans is comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators, are considered seasoned and have performed as agreed.

 

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Small business loans by type as of September 30, 2021

 

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

 

   SBL commercial mortgage*  SBL construction*  SBL non-real estate  Total  % Total
   (in millions)
Hotels and motels  $67   $4   $—     $71    21%
Full-service restaurants   16    1    3    20    6%
Baked goods stores   4    —      11    15    5%
Child day care services   14    —      1    15    5%
Car washes   10    2    —      12    4%
Lessors of nonresidential buildings (except miniwarehouses)   10    —      —      10    3%
Assisted living facilities for the elderly   10    —      —      10    3%
Offices of lawyers   9    —      —      9    3%
Funeral homes and funeral services   9    —      —      9    3%
General warehousing and storage   7    —      —      7    2%
Limited-service restaurants   2    1    3    6    2%
Fitness and recreational sports centers   —      4    2    6    2%
Amusement and recreation industries   5    —      1    6    2%
Outpatient mental health and substance abuse centers   5    —      —      5    1%
Spectator sports   5    —      —      5    1%
Perishable prepared food manufacturing   5    —      —      5    1%
Gasoline stations with convenience stores   5    —      —      5    1%
Offices of dentists   3    —      —      3    1%
Warehousing and storage   3    —      —      3    1%
New car dealers   3    —      —      3    1%
Miscellaneous wood product manufacturing   3    —      —      3    1%
Plumbing, heating, and air-conditioning contractors   3    —      —      3    1%
Offices of physicians (except mental health specialists)   3    —      —      3    1%
Technical and trade schools   —      3    —      3    1%
General purpose machinery manufacturing   2    —      —      2    1%
Pet care (except veterinary) services   2    —      —      2    1%
Landscaping services   1    —      2    3    1%
Sewing, needlework, and piece goods stores   2    —      —      2    1%
Automotive body, paint, and interior repair and maintenance   2    —      —      2    1%
Vocational rehabilitation services   2    —      2    4    1%
Amusement arcades   2    —      —      2    1%
Lessors of real estate property   2    —      —      2    1%
Other**   49    1    25    75    20%
Total  $265   $16   $50   $331    100%

 

* Of the SBL commercial mortgage and SBL construction loans, $62 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.

 

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State diversification as of September 30, 2021

 

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

 

   SBL commercial mortgage*  SBL construction*  SBL non-real estate  Total  % Total
   (in millions)
Florida  $56   $—     $8   $64    19%
California   42    1    4    47    14%
North Carolina   23    2    3    28    9%
Pennsylvania   23    4    3    30    8%
Illinois   22    —      3    25    8%
New York   14    4    3    21    6%
New Jersey   12    —      6    18    6%
Texas   12    —      4    16    5%
Virginia   9    —      2    11    3%
Tennessee   10    —      —      10    3%
Colorado   3    5    2    10    3%
Georgia   7    —      2    9    3%
Michigan   4    —      1    5    2%
Washington   3    —      —      3    1%
Ohio   3    —      —      3    1%
Other states   22    —      9    31    9%
Total  $265   $16   $50   $331    100%

 

* Of the SBL commercial mortgage and SBL construction loans, $62 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 September 30, 2021

 

Type*  State  SBL commercial mortgage*
   (in millions)
Hotel  FL  $9 
Lawyer's office  CA   9 
Warehouse  PA   7 
Hotel  NC   6 
Assisted living facility  FL   5 
Mental health and substance abuse centers  FL   5 
Hotel  NC   5 
Prepared food manufacturing  NJ   4 
Hotel  PA   4 
Hotel  TN   4 
Total     $58 
         

* All 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.

 

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

 

Type as of September 30, 2021

 

Type  # Loans  Balance  Weighted average origination date LTV  Weighted average interest rate
   (dollars in millions)
Real estate bridge lending (multi-family apartments)*   15   $129    75%   4.22%
                     
Commercial real estate loans, at fair value:                    
Multi-family (apartments)*   115   $1,193    76%   4.75%
Hospitality (hotels and lodging)   9    66    65%   5.69%
Retail   6    61    71%   4.33%
Other   8    21    73%   5.16%
    138    1,341    75%   4.78%
Fair value adjustment        (6)          
Total commercial real estate loans, at fair value        1,335           
Total commercial real estate loans       $1,464    75%   4.75%

 

*In the third quarter of 2021, we recommenced 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 September 30, 2021     15 largest loans (all multi-family) as of September 30, 2021
                               
State     Balance     Origination date LTV     State       Balance   Origination date LTV
(in millions)     (in millions)
Texas   $  459      77%     North Carolina     $ 44   78%
Georgia      193      76%     Texas        39   79%
Arizona      79      75%     Texas       36   80%
North Carolina      79      77%     Missouri        30    72%
Ohio      58      69%     Texas       30   75%
Alabama      57      76%     Nevada        29   80%
Virginia      57      73%     Texas       27   77%
Other states each <$55 million      482      73%     Arizona       27   79%
Total   $  1,464     75%     Mississippi       27   79%
                  North Carolina       25   77%
                  Texas       25   77%
                  Texas       24   77%
                  Alabama       23   77%
                  Texas       21   79%
                  Georgia        20   79%
                  15 Largest loans     $  427         78%

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Institutional banking loans outstanding at September 30, 2021

 

Type  Principal  % of total
    (in millions)      
Securities backed lines of credit (SBLOC)  $1,148    60%
Insurance backed lines of credit (IBLOC)   687    36%
Advisor financing   81    4%
Total  $1,916    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 September 30, 2021

 

  Principal amount   % Principal to collateral
  (in millions)
  $  19    65%
    17    37%
     14    27%
     12    29%
     9    33%
     9    36%
    9    53%
    8    71%
    8    23%
    8    46%
Total and weighted average $  113    43%

 

Insurance backed lines of credit (IBLOC)

 

IBLOC loans are backed by the cash value of life insurance policies which have been assigned to us.  We lend up to 100% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, seven insurance companies have been approved and, as of August 14, 2021, all were rated Superior (A+ or better) by AM BEST.

 

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Direct lease financing* by type as of September 30, 2021

 

  Principal balance   % Total
  (in millions)    
Construction $  95    18%
Government agencies and public institutions**    77    15%
Waste management and remediation services    64    12%
Real estate and rental and leasing    56    11%
Retail trade    47    9%
Wholesale purchase    34    7%
Transportation and warehousing    29    6%
Health care and social assistance    26    5%
Professional, scientific, and technical services    19    4%
Manufacturing    16    3%
Wholesale trade    14    3%
Educational services    8    2%
Other    29    5%
Total $  514    100%

 

* Of the total $514 million of direct lease financing, $464 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 September 30, 2021

 

State Principal balance   % Total
  (in millions)    
Florida $  93    18%
California    48    9%
New Jersey    39    8%
Utah    35    7%
New York    33    6%
Pennsylvania    32    6%
Maryland    25    5%
North Carolina    25    5%
Texas    19    4%
Connecticut   16    3%
Washington    15    3%
Georgia    12    2%
Idaho   11    2%
Tennessee    10    2%
Alabama   9    2%
Other states    92    18%
Total $  514    100%

 

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Capital ratios  Tier 1 capital to average assets ratio  Tier 1 capital to risk-weighted assets ratio  Total capital to risk-weighted assets ratio  Common equity tier 1 to risk weighted assets
As of September 30, 2021                    
The Bancorp, Inc.   9.82%   15.69%   16.10%   15.69%
The Bancorp Bank   10.24%   16.29%   16.69%   16.29%
"Well capitalized" institution (under FDIC regulations-Basel III)   5.00%   8.00%   10.00%   6.50%
                     
As of December 31, 2020                    
The Bancorp, Inc.   9.20%   14.43%   14.84%   14.43%
The Bancorp Bank   9.11%   14.27%   14.68%   14.27%
"Well capitalized" institution (under FDIC regulations-Basel III)   5.00%   8.00%   10.00%   6.50%

 

   Three months ended  Nine months ended
   September 30,  September 30,
   2021  2020  2021  2020
Selected operating ratios                    
Return on average assets (1)   1.76%   1.48%   1.66%   1.25%
Return on average equity (1)   17.84%   16.90%   18.35%   14.29%
Net interest margin   3.35%   3.37%   3.29%   3.41%

 

(1) Annualized

 

Book value per share table  September 30,  June 30,  December 31,  September 30,
   2021  2021  2020  2020
Book value per share  $11.13   $10.77   $10.10   $9.71 

 

Loan quality table  September 30,  June 30,  December 31,  September 30,
   2021  2021  2020  2020
   (dollars in thousands)
Nonperforming loans to total loans   0.24%   0.31%   0.48%   0.49%
Nonperforming assets to total assets   0.16%   0.14%   0.20%   0.20%
Allowance for credit losses to total loans   0.52%   0.52%   0.61%   0.63%
                     
Nonaccrual loans  $6,106   $7,346   $12,227   $12,275 
Loans 90 days past due still accruing interest   1,569    1,550    497    24 
Other real estate owned   2,145    —      —      —   
     Total nonperforming assets  $9,820   $8,896   $12,724   $12,299 

 

Gross dollar volume (GDV) (1)  Three months ended
   September 30,  June 30,  December 31,  September 30,
   2021  2021  2020  2020
   (in thousands)
                     
Prepaid and debit card GDV  $24,392,188   $27,106,763   $22,523,855   $23,963,508 

 

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

 

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Business line quarterly summary  
Quarter ended September 30, 2021  
(dollars in millions)  
                           
        Balances          
            % Growth          
Major business lines   Average approximate rates *   Balances **   Year over year   Linked quarter annualized          
Loans                          
Institutional banking ***   2.6%    $   1,916   32%   25%          
Small business lending****   5.0%   781   12%   12%          
Leasing   5.9%   514   19%   6%          
Commercial real estate (non-SBA at fair value)   4.7%         1,335   nm   nm          
Real estate bridge lending   4.2%   129   nm   nm          
Weighted average yield   4.0%    $   4,675           Non-interest income
                        % Growth
Deposits: Fintech solutions group                   Current quarter   Year over year  
Prepaid and debit card issuance, and other payments 0.1%    $    5,146   6%   nm    $     20.1   (5%)  

 

 

* Average rates are for the quarter ended September 30, 2021.

** 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 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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Dissolution of Walnut Street

 

Previous press releases included tables related to the Walnut Street investment, shown as investment in unconsolidated entity on the balance sheet. 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. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.

 

 

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Quarterly activity for commercial loan discontinued principal

 

   Commercial
   loan principal
    (in millions) 
      
Commercial loan discontinued principal June 30, 2021 before marks  $53 
Quarterly paydowns and other reductions   (5)
Commercial loan discontinued principal September 30, 2021 before marks   48 
Marks September 30, 2021   (3)
Net commercial loan exposure September 30, 2021   45 
Residential mortgages   25 
Net loans   70 
Florida mall in other real estate owned   15 
3 properties in other real estate owned   3 
Total discontinued assets at September 30, 2021  $88 

 

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Discontinued commercial loan composition as of September 30, 2021

 

Collateral type  Unpaid principal balance  Mark at
September 30, 2021		  Mark as % of portfolio
   (in millions)
Commercial real estate - non-owner occupied:               
Retail  $4   $(0.6)   15%
Office   2    —      —   
Other   18    (0.1)   1%
Construction and land   9    (0.1)   1%
Commercial non-real estate and industrial   2    (0.1)   5%
1 to 4 family construction   5    (2.3)   46%
First mortgage residential non-owner occupied   4    —      —   
Commercial real estate owner occupied:               
Retail   2    —      —   
Residential junior mortgage   1    —      —   
Other   1    —      —   
Total  $48   $(3.2)   7%
Less: mark   (3)          
Net commercial loan exposure September 30, 2021  $45   $(3.2)     

 

Loan payment deferrals related to Covid-19

 

Total non-U.S. guaranteed loan balances for borrowers with Covid-19 payment deferrals amounted to $1.3 million as of September 30, 2021.

 

 

 

 

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