EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

 

Exhibit 99.1

 

The Bancorp, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results and Updates 2023 Guidance

 

Wilmington, DE – January 26, 2023 – The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2022.

 

Highlights

 

·The Bancorp reported net income of $40.2 million, or $0.71 per diluted share, for the quarter ended December 31, 2022, compared to net income of $27.0 million, or $0.46 per diluted share, for the quarter ended December 31, 2021, or a 54% increase in income per diluted share.

 

·Return on assets and equity for the quarter ended December 31, 2022 amounted to 2.1% and 24%, respectively, compared to 1.7% and 17%, respectively, for the quarter ended December 31, 2021 (all percentages “annualized”).

 

·Net interest income increased 47% to $76.8 million for the quarter ended December 31, 2022, compared to $52.2 million for the quarter ended December 31, 2021.

 

·Net interest margin amounted to 4.21% for the quarter ended December 31, 2022, compared to 3.51% for the quarter ended December 31, 2021, and 3.69% for the quarter ended September 30, 2022.

 

·Excluding commercial loans, at fair value, which were originally generated for sale, total loans increased to $5.49 billion at December 31, 2022, compared to $5.27 billion at September 30, 2022 and $3.75 billion at December 31, 2021. Those increases reflected growth of 4% quarter over quarter and 45% year over year. Those percentage increases exclude the impact of $50.4 million of December 31, 2022 balances previously included in discontinued assets which were reclassified to loans held for investment in the first quarter of 2022.

 

·Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $3.25 billion, or 13%, to $28.07 billion for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021. Total prepaid, debit card, ACH and other payment fees increased 10% to $21.8 million for fourth quarter 2022 compared to the fourth quarter of 2021.

 

·SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 22% year over year and decreased 1% quarter over quarter to $2.50 billion at December 31, 2022.

 

·Small Business Loans, including those held at fair value, grew 10% year over year to $763.8 million at December 31, 2022, and 4% quarter over quarter. That growth is exclusive of PPP loan balances which amounted to $4.5 million and $44.8 million, respectively, at December 31, 2022 and December 31, 2021.

 

·Direct lease financing balances increased 19% year over year to $632.2 million at December 31, 2022, and 5% quarter over quarter.

 

·We resumed non-SBA commercial real estate bridge lending in the third quarter of 2021. At December 31, 2022, the balance of such real estate bridge loans, consisting of apartment buildings, was $1.67 billion compared to $1.49 billion at September 30, 2022, reflecting quarter over quarter growth of 12%. At December 31, 2021, these loans totaled $621.7 million.

 

·The average interest rate on $6.80 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2022 was 1.77%. Average deposits of $6.62 billion for the fourth quarter of 2022, reflected an increase of 25% from the $5.31 billion of average deposits for the quarter ended December 31, 2021.

 

·As of December 31, 2022, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.63%, 13.40%, 13.87% and 13.40%, 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.

 

·Book value per common share at December 31, 2022 was $12.46 per share compared to $11.37 per share at December 31, 2021, an increase of 10%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.

 

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·The Bancorp repurchased 553,003 shares of its common stock at an average cost of $27.12 per share during the quarter ended December 31, 2022.

 

“We finished 2022 with significant improvements in profitability, NIM and GDV growth" said CEO and President Damian Kozlowski. "Our team continues to be focused on further improving our arguably best fintech ecosystem in banking, maintaining a lower risk balance sheet than peers, continuing our rigorous risk management and increasing profitability. We believe 2023 will be another substantial move forward on all fronts and we confirm our guidance of $3.20 a share, an improvement of approximately 40% over 2022 EPS. We expect to increase our share repurchases to $25 million per quarter, or $100 million in 2023, from $15 million a quarter, or $60 million, in 2022.”

 

 

Conference Call Webcast

 

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 27, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.396.8049, access code 92735961. 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 3, 2023 by dialing 1.877.674.7070, access code 735961#.

 

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.

 

 

 

 

 

 

 

 

 

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  Year ended
   December 31,  December 31,
Consolidated condensed income statements  2022  2021  2022  2021
   (Dollars in thousands, except per share and share data)   
             
Net interest income  $76,760   $52,157   $248,841   $210,876 
Provision for credit losses   2,777    1,626    7,108    3,110 
Non-interest income                    
ACH, card and other payment processing fees   2,383    1,921    8,935    7,526 
Prepaid, debit card and related fees   19,371    17,776    77,236    74,654 
Net realized and unrealized gains on commercial loans, at fair value   2,269    6,004    13,531    14,885 
Leasing related income   1,256    1,757    4,822    6,457 
Other non-interest income   461    768    1,159    1,227 
Total non-interest income   25,740    28,226    105,683    104,749 
Non-interest expense                    
Salaries and employee benefits   27,520    28,159    105,368    105,998 
Data processing expense   1,245    1,183    4,972    4,664 
Legal expense   703    1,499    3,878    6,848 
Legal settlement   —      —      1,152    —   
Civil money penalty   —      —      1,750    —   
FDIC insurance   944    351    3,270    5,586 
Software   4,181    4,224    16,211    15,659 
Other non-interest expense   8,882    7,784    32,901    29,595 
Total non-interest expense   43,475    43,200    169,502    168,350 
Income from continuing operations before income taxes   56,248    35,557    177,914    144,165 
Income tax expense   16,007    8,529    47,701    33,724 
Net income from continuing operations   40,241    27,028    130,213    110,441 
Discontinued operations                    
(Loss) income from discontinued operations before income taxes   —      (36)   —      288 
Income tax expense   —      —      —      76 
Net (loss) income from discontinued operations, net of tax   —      (36)   —      212 
Net income  $40,241   $26,992   $130,213   $110,653 
                     
Net income per share from continuing operations - basic  $0.72   $0.47   $2.30   $1.93 
Net income per share from discontinued operations - basic  $—     $—     $—     $—   
Net income per share - basic  $0.72   $0.47   $2.30   $1.93 
                     
Net income per share from continuing operations - diluted  $0.71   $0.46   $2.27   $1.88 
Net income per share from discontinued operations - diluted  $—     $—     $—     $—   
Net income per share - diluted  $0.71   $0.46   $2.27   $1.88 
Weighted average shares - basic   55,885,015    56,966,661    56,556,303    57,190,311 
Weighted average shares - diluted   56,588,011    58,369,204    57,268,946    58,830,437 

 

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Condensed consolidated balance sheets  December 31,  September 30,  June 30,  December 31,
   2022 (unaudited)  2022 (unaudited)  2022 (unaudited)  2021
   (Dollars in thousands, except per share and share data)
Assets:            
Cash and cash equivalents                    
Cash and due from banks  $24,063   $22,537   $12,873   $5,382 
Interest earning deposits at Federal Reserve Bank   864,126    700,175    329,992    596,402 
Total cash and cash equivalents   888,189    722,712    342,865    601,784 
                     
Investment securities, available-for-sale, at fair value   766,016    790,594    826,616    953,709 
Commercial loans, at fair value   589,143    818,040    995,493    1,388,416 
Loans, net of deferred fees and costs   5,486,853    5,267,375    4,754,697    3,747,224 
Allowance for credit losses   (22,374)   (19,689)   (19,087)   (17,806)
Loans, net   5,464,479    5,247,686    4,735,610    3,729,418 
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock   12,629    12,629    1,643    1,663 
Premises and equipment, net   18,401    18,443    16,693    16,156 
Accrued interest receivable   32,005    25,506    19,264    17,871 
Intangible assets, net   2,049    2,149    2,248    2,447 
Other real estate owned   21,210    18,873    18,873    18,873 
Deferred tax asset, net   19,703    27,241    23,344    12,667 
Assets held-for-sale from discontinued operations   —      —      —      3,268 
Other assets   89,176    93,201    137,086    96,967 
Total assets  $7,903,000   $7,777,074   $7,119,735   $6,843,239 
                     
Liabilities:                    
Deposits                    
Demand and interest checking  $6,559,617   $5,934,591   $5,394,562   $5,561,365 
Savings and money market   140,496    575,381    486,189    415,546 
Time deposits, $100,000 and over   330,000    401,331    —      —   
Total deposits   7,030,113    6,911,303    5,880,751    5,976,911 
                     
Securities sold under agreements to repurchase   42    42    42    42 
Short-term borrowings   —      —      385,000    —   
Senior debt   99,050    98,958    98,866    98,682 
Subordinated debenture   13,401    13,401    13,401    13,401 
Other long-term borrowings   10,028    38,928    39,125    39,521 
Other liabilities   56,335    50,704    46,014    62,228 
Total liabilities  $7,208,969   $7,113,336   $6,463,199   $6,190,785 
                     
Shareholders' equity:                    
Common stock - authorized, 75,000,000 shares of $1.00 par value; 55,689,627 and 57,370,563 shares issued and outstanding at December 31, 2022 and 2021, respectively   55,690    56,202    56,865    57,371 
Additional paid-in capital   299,279    311,569    323,774    349,686 
Retained earnings   369,319    329,078    298,474    239,106 
Accumulated other comprehensive (loss) income   (30,257)   (33,111)   (22,577)   6,291 
Total shareholders' equity   694,031    663,738    656,536    652,454 
                     
Total liabilities and shareholders' equity  $7,903,000   $7,777,074   $7,119,735   $6,843,239 

 

 

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Average balance sheet and net interest income  Three months ended December 31, 2022  Three months ended December 31, 2021
   (Dollars in thousands; unaudited)
   Average     Average  Average     Average
Assets:  Balance  Interest  Rate  Balance  Interest  Rate
                   
Interest earning assets:                              
Loans, net of deferred fees and costs*  $6,083,587   $94,477    6.21%  $4,766,271   $48,792    4.09%
Leases-bank qualified**   2,952    50    6.78%   4,465    76    6.81%
Investment securities-taxable   782,046    8,483    4.34%   954,172    5,770    2.42%
Investment securities-nontaxable**   3,559    32    3.60%   3,558    31    3.49%
Interest earning deposits at Federal Reserve Bank   424,255    3,886    3.66%   208,120    65    0.12%
Net interest earning assets   7,296,399    106,928    5.86%   5,936,586    54,734    3.69%
                               
Allowance for credit losses   (20,227)             (17,108)          
Assets held-for-sale from discontinued operations   —      —      —      83,821    708    3.38%
Other assets   223,692              189,760           
   $7,499,864             $6,193,059           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $5,891,947   $21,350    1.45%  $4,931,891   $1,015    0.08%
Savings and money market   474,302    4,332    3.65%   373,381    114    0.12%
Time deposits   257,231    2,193    3.41%   —      —      —   
Total deposits   6,623,480    27,875    1.68%   5,305,272    1,129    0.09%
                               
Short-term borrowings   26,847    271    4.04%   53,315    34    0.26%
Repurchase agreements   42    —      —      41    —      —   
Long-term borrowings   38,951    498    5.11%   —      —      —   
Subordinated debentures   13,401    226    6.75%   13,401    112    3.34%
Senior debt   99,005    1,280    5.17%   100,419    1,280    5.10%
Total deposits and liabilities   6,801,726    30,150    1.77%   5,472,448    2,555    0.19%
                               
Other liabilities   19,254              75,395           
Total liabilities   6,820,980              5,547,843           
                               
Shareholders' equity   678,884              645,216           
   $7,499,864             $6,193,059           
Net interest income on tax equivalent basis**       $76,778             $52,887      
                               
Tax equivalent adjustment        18              22      
                               
Net interest income       $76,760             $52,865      
Net interest margin **             4.21%             3.51%

 

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

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

 

 

NOTE: In the table above, interest on loans for 2022 and 2021 includes $12,000 and $991,000, respectively, of interest and fees on PPP loans.

 

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Average balance sheet and net interest income  Year ended December 31, 2022  Year ended December 31, 2021
   (Dollars in thousands; unaudited)
   Average     Average  Average     Average
Assets:  Balance  Interest  Rate  Balance  Interest  Rate
                   
Interest earning assets:                              
Loans, net of deferred fees and costs*  $5,670,957   $275,651    4.86%  $4,597,977   $192,338    4.18%
Leases-bank qualified**   3,479    235    6.75%   5,557    377    6.78%
Investment securities-taxable   855,629    25,598    2.99%   1,059,229    28,661    2.71%
Investment securities-nontaxable**   3,559    125    3.51%   3,757    130    3.46%
Interest earning deposits at Federal Reserve Bank   479,791    6,762    1.41%   637,056    715    0.11%
Net interest earning assets   7,013,415    308,371    4.40%   6,303,576    222,221    3.53%
                               
Allowance for credit losses   (19,374)             (16,469)          
Assets held for sale from discontinued operations   —      —      —      95,527    3,096    3.24%
Other assets   213,491              217,476           
   $7,207,532             $6,600,110           
                               
Liabilities and Shareholders' Equity:                              
Deposits:                              
Demand and interest checking  $5,670,818   $39,872    0.70%  $5,321,283   $5,022    0.09%
Savings and money market   510,370    8,524    1.67%   427,708    601    0.14%
Time deposits   86,907    2,740    3.15%   —      —      —   
Total deposits   6,268,095    51,136    0.82%   5,748,991    5,623    0.10%
                               
Short-term borrowings   60,312    1,538    2.55%   19,958    49    0.25%
Repurchase agreements   41    —      —      41    —      —   
Long-term borrowings   39,202    1,004    2.56%   —      —      —   
Subordinated debentures   13,401    658    4.91%   13,401    449    3.35%
Senior debt   98,865    5,118    5.18%   100,283    5,118    5.10%
Total deposits and liabilities   6,479,916    59,454    0.92%   5,882,674    11,239    0.19%
                               
Other liabilities   54,374              100,627           
Total liabilities   6,534,290              5,983,301           
                               
Shareholders' equity   673,242              616,809           
   $7,207,532             $6,600,110           
Net interest income on tax equivalent basis**       $248,917             $214,078      
                               
Tax equivalent adjustment        76              106      
                               
Net interest income       $248,841             $213,972      
Net interest margin **             3.55%             3.35%

 

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

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

 

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 materially increase average loans or assets and which are not expected to recur. Interest on loans for 2022 and 2021 includes $514,000 and $5.8 million, respectively, of interest and fees on PPP loans.

 

 

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Allowance for credit losses  Year ended
   December 31,  December 31,
   2022 (unaudited)  2021
   (Dollars in thousands)
       
Balance in the allowance for credit losses at beginning of period (1)  $17,806   $16,082 
           
Loans charged-off:          
SBA non-real estate   885    1,138 
SBA commercial mortgage   —      417 
Direct lease financing   576    412 
SBLOC   —      15 
Consumer - home equity   —      10 
Consumer - other   —      14 
Total   1,461    2,006 
           
Recoveries:          
SBA non-real estate   140    51 
SBA commercial mortgage   —      9 
Direct lease financing   124    58 
Consumer - home equity   —      1,099 
Other loans   24    —   
Total   288    1,217 
Net charge-offs   1,173    789 
Provision for credit losses, excluding commitment provision   5,741    2,513 
           
Balance in allowance for credit losses at end of period  $22,374   $17,806 
Net charge-offs/average loans   0.03%   0.03%
Net charge-offs/average assets   0.02%   0.01%

 

 

 

(1) Excludes activity from discontinued operations.

 

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Loan portfolio  December 31,  September 30,  June 30,  December 31,
   2022 (unaudited)  2022 (unaudited)  2022 (unaudited)  2021
   (Dollars in thousands)
             
SBL non-real estate  $108,954   $116,080   $112,854   $147,722 
SBL commercial mortgage   474,496    429,865    425,219    361,171 
SBL construction   30,864    26,841    27,042    27,199 
Small business loans   614,314    572,786    565,115    536,092 
Direct lease financing   632,160    599,796    583,086    531,012 
SBLOC / IBLOC *   2,332,469    2,369,106    2,274,256    1,929,581 
Advisor financing **   172,468    168,559    155,235    115,770 
Real estate bridge loans   1,669,031    1,488,119    1,106,875    621,702 
Other loans ***   61,679    64,980    63,514    5,014 
    5,482,121    5,263,346    4,748,081    3,739,171 
Unamortized loan fees and costs   4,732    4,029    6,616    8,053 
Total loans, including unamortized fees and costs  $5,486,853   $5,267,375   $4,754,697   $3,747,224 

 

 

 

Small business portfolio  December 31,  September 30,  June 30,  December 31,
   2022 (unaudited)  2022 (unaudited)  2022 (unaudited)  2021
   (Dollars in thousands)
             
SBL, including unamortized fees and costs  $621,641   $579,156   $571,559   $541,437 
SBL, included in loans, at fair value   146,717    159,914    168,579    199,585 
Total small business loans ****  $768,358   $739,070   $740,138   $741,022 

 

* Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of eligible life insurance policies.

** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to 70% of the estimated 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.

*** Includes demand deposit overdrafts reclassified as loan balances totaling $2.6 million and $322,000 at December 31, 2022 and December 31, 2021, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

****The small business loans held at fair value are comprised of the government guaranteed portion of certain SBA loans at the dates indicated.

 

 

Small business loans as of December 31, 2022

 

   Loan principal
   (Dollars in millions)
U.S. government guaranteed portion of SBA loans (a)  $375 
Paycheck Protection Program loans (PPP) (a)   5 
Commercial mortgage SBA (b)   248 
Construction SBA (c)   10 
Non-guaranteed portion of U.S. government guaranteed loans (d)   100 
Non-SBA small business loans   23 
Total principal  $761 
Unamortized fees and costs   7 
Total small business loans  $768 

 

(a)       This is the portion of SBA 7a loans (7a) and PPP loans that 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 $10 million in Construction SBA loans, $9 million are 504 first mortgages with an origination date LTV of 50-60% and $1 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d)       The $100 million represents the unguaranteed portion of 7a loans which are generally 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.

 

 8 

 

 

 

Small business loans by type as of December 31, 2022

 

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

 

   SBL commercial mortgage*  SBL construction*  SBL non-real estate  Total  % Total
   (Dollars in millions)
Hotels and motels  $79   $—     $—     $79    21%
Car washes   18    1    —      19    5%
Full-service restaurants   12    3    2    17    4%
Lessors of nonresidential buildings   16    —      —      16    4%
Child day care services   14    —      1    15    4%
Outpatient mental health and substance abuse centers   15    —      —      15    4%
Funeral homes and funeral services   10    —      —      10    3%
Assisted living facilities for the elderly   10    —      —      10    3%
Offices of lawyers   9    —      —      9    2%
Packaged frozen food merchant wholesalers   9    —      —      9    2%
Gasoline stations with convenience stores   8    —      —      8    2%
Lessors of other real estate property   8    —      —      8    2%
Fitness and recreational sports centers   6    —      2    8    2%
General warehousing and storage   7    —      —      7    2%
Plumbing, heating, and air-conditioning contractors   6    —      1    7    2%
Limited-service restaurants   1    2    2    5    1%
Other miscellaneous durable goods merchant wholesalers   5    —      —      5    1%
Lessors of residential buildings and dwellings   5    —      —      5    1%
Other spectator sports   5    —      —      5    1%
All other amusement and recreation industries   4    —      —      4    1%
Gas stations   4    —      —      4    1%
Offices of dentists   3    1    —      4    1%
Other warehousing and storage   3    —      —      3    1%
Vocational rehabilitation services   3    —      —      3    1%
Other**   74    3    29    106    29%
Total  $334   $10   $37   $381    100%

 

 

* Of the SBL commercial mortgage and SBL construction loans, $85 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 $3 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 December 31, 2022

 

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

 

    SBL commercial mortgage*   SBL construction*   SBL non-real estate   Total     % Total
      (Dollars in millions)
Florida   $  65   $ —   $  4   $  69      18%
California      61      3      3      67      18%
North Carolina      40     7     2      49      13%
New York      25     —      5      30      8%
Pennsylvania      18     —      1      19      5%
Georgia      15      —      2      17      4%
Illinois      15     —      1      16      4%
New Jersey      12     —      3      15      4%
Texas      12      —      3      15      4%
Tennessee      14     —      —      14      4%
Colorado      12     —      1      13      3%
Ohio      11     —      1      12      3%
Connecticut      10     —      1      11      3%
Virginia      8     —      1      9      2%
Michigan      4     —      1      5      1%
Other States      12      —      8      20      6%
Total   $  334   $  10   $  37   $  381      100%
                               

 

* Of the SBL commercial mortgage and SBL construction loans, $85 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 December 31, 2022

 

 

Type   State   SBL commercial mortgage  
    (Dollars in millions)
Mental health and substance abuse center     FL   $  10   
Hotel     FL      9   
Lawyer's office     CA      8   
General warehousing and storage     PA      7   
Hotel     NC      7   
Hotel     FL      6   
Hotel     NY      6   
Hotel     NC      5   
Mental health and substance abuse center     CT      5   
Assisted living facility     FL      5   
Total         $  68   
               

 

 

 10 

 

 

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

 

Type as of December 31, 2022

 

Type     # Loans   Balance   Weighted average origination date LTV   Weighted average interest rate
      (Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)*     130   $  1,669     72%    7.69%
                     
Non-SBA commercial real estate loans, at fair value:                    
Multi-family (apartment bridge loans)*      22    $  354     76%    7.52%
Hospitality (hotels and lodging)      4       36     65%    8.00%
Retail      3       42     72%    7.30%
Other      3       11     73%    5.20%
       32       443     74%    7.48%
Fair value adjustment            (1)        
Total non-SBA commercial real estate loans, at fair value            442         
Total commercial real estate loans         $  2,111     73%    7.65%

 

*In the third quarter of 2021, we resumed the origination of multi-family apartment loans. These are similar to the multi-family apartment loans carried at fair value, but at origination are intended to be held on the balance sheet, so are not accounted for at fair value.

 

 

State diversification as of December 31, 2022   15 largest loans as of December 31, 2022  
                           
State   Balance     Origination date LTV   State     Balance   Origination date LTV
(Dollars in millions)   (Dollars in millions)  
Texas   $  760      74%   Texas     $  42    75%  
Georgia      232      71%   Texas        39    75%  
Florida      217      71%   Texas        39    79%  
Ohio      95      69%   Texas        39    72%  
Tennessee      98      72%   Tennessee        37    72%  
Alabama      62      72%   Texas        37    80%  
Michigan      72      70%   Michigan        36    62%  
Other States each <$55 million      575      74%   Florida        32    72%  
Total   $  2,111      74%   Texas        32    67%  
                Michigan        31    79%  
                Tennessee        30    71%  
                Missouri        30    72%  
                Texas        30    62%  
                Ohio        29    74%  
                Texas        29    77%  
                15 Largest loans     $  512    73%  

 

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Institutional banking loans outstanding at December 31, 2022

 

Type Principal % of total
   (Dollars in millions)     
Securities backed lines of credit (SBLOC) $1,209   48%
Insurance backed lines of credit (IBLOC)  1,124   45%
Advisor financing  172   7%
Total $2,505   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 December 31, 2022

 

  Principal amount   % Principal to collateral
  (Dollars in millions)
  $  20    55%
     18    41%
     13    32%
     9    34%
     9    66%
     9    45%
     9    62%
     8    73%
     7    38%
     6    39%
Total and weighted average $  108    48%

 

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, nine insurance companies have been approved and, as of December 31, 2022, all were rated A- or better by AM BEST.

 

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Direct lease financing* by type as of December 31, 2022

 

   Principal balance  % Total
   (Dollars in millions)     
Construction  $115   18%
Government agencies and public institutions**   99   16%
Waste management and remediation services   69   11%
Real estate and rental and leasing   59   9%
Retail trade   49   8%
Transportation and warehousing   33   5%
Health care and social assistance   32   5%
Finance and insurance   31   5%
Professional, scientific, and technical services   19   3%
Manufacturing   18   3%
Wholesale trade   18   3%
Educational services   8   1%
Mining, quarrying, and gas extraction   4   1%
Other   78   12%
Total  $632   100%

 

* Of the total $632 million of direct lease financing, $555 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 December 31, 2022

 

State Principal balance  % Total
  (Dollars in millions)     
Florida $88   14%
California  68   11%
Utah  65   10%
New Jersey  42   7%
Pennsylvania  41   6%
New York  29   5%
North Carolina  29   5%
Texas  28   4%
Maryland  27   4%
Connecticut  23   4%
Washington  16   3%
Idaho  15   2%
Georgia  14   2%
Illinois  12   2%
Ohio  11   2%
Other States  124   19%
Total $632   100%

 

 

 13 

 

 

Capital ratios  Tier 1 capital  Tier 1 capital  Total capital  Common equity
   to average  to risk-weighted  to risk-weighted  tier 1 to risk
   assets ratio  assets ratio  assets ratio  weighted assets
As of 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%
                     
As of December 31, 2021                    
The Bancorp, Inc.   10.40%   14.72%   15.13%   14.72%
The Bancorp Bank, National Association   10.98%   15.48%   15.88%   15.48%
"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,
   2022  2021  2022  2021
Selected operating ratios                    
Return on average assets (1)   2.13%   1.73%   1.81%   1.68%
Return on average equity (1)   23.52%   16.60%   19.34%   17.94%
Net interest margin   4.21%   3.51%   3.55%   3.35%

 

(1) Annualized

 

Book value per share table December 31,   September 30,   June 30,   December 31,
  2022   2022   2022   2021
Book value per share $  12.46   $  11.81   $  11.55   $  11.37

 

 

Loan quality table  December 31,  September 30,  June 30,  December 31,
   2022  2022  2022  2021
   (Dollars in thousands)
Nonperforming loans to total loans   0.33%   0.16%   0.18%   0.10%
Nonperforming assets to total assets   0.50%   0.35%   0.39%   0.33%
Allowance for credit losses to total loans   0.41%   0.37%   0.40%   0.48%
                     
Nonaccrual loans (1)  $10,356   $3,860   $3,698   $3,161 
Loans 90 days past due still accruing interest (2)   7,775    4,415    4,848    461 
Other real estate owned   21,210    18,873    18,873    18,873 
Total nonperforming assets  $39,341   $27,148   $27,419   $22,495 

 

(1)Of the $10.4 million of nonaccrual loans at December 31, 2022, $3.1 million were guaranteed under various SBA loan programs, with the majority of such loans classified as nonaccrual in the fourth quarter of 2022. The majority of the balance of the increase in that quarter resulted from $3.1 million representing 78 vehicles from one leasing relationship which were marked to their estimated market value.
(2)The majority of the fourth quarter increase resulted from $2.0 million for an IBLOC loan which is in process of pay-off from the cash value of life insurance, and $878,000 from an SBLOC loan which was brought current in January 2023. To the extent that IBLOC loans become non-performing or are not repaid by borrowers, the Bank can utilize the related cash value of life insurance collateral for loan repayment. Similarly, marketable securities collateralizing SBLOC loans may be sold to repay those loans.

 

Gross dollar volume (GDV) (1)     Three months ended
  December 31,   September 30,   June 30,   December 31,
  2022   2022   2022   2021
        (Dollars in thousands)
                       
Prepaid and debit card GDV $  28,066,895   $  28,119,428   $  28,394,897   $  24,821,576

 

(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, 2022
(Dollars in millions)

 

          Balances          
              % Growth          
Major business lines   Average approximate rates *   Balances **   Year over year   Linked quarter annualized          
Loans                            
Institutional banking ***   5.3%   $ 2,505   22%   (5)%          
Small business lending****   6.1%     768   10%   17%          
Leasing   6.3%     632   19%   22%          
Commercial real estate (non-SBA loans, at fair value)   7.3%     443   nm   nm          
Real estate bridge loans (recorded at book value)   7.4%     1,669   nm   nm          
Weighted average yield   6.2%   $ 6,017           Non-interest income
                          % Growth
Deposits: Fintech solutions group                     Current quarter   Year over year
Prepaid and debit card issuance, and other payments 1.8%   $ 5,685   15%   nm   $ 21.8   10 %
                               

 

* Average rates are for the quarter ended December 31, 2022.

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

*** Institutional Banking loans are comprised of security backed lines of credit (SBLOC), collateralized by marketable securities, insurance backed lines of credit (IBLOC), collateralized by the cash surrender value of eligible life insurance policies, and investment advisor financing.

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

 

 

 15