EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

The Bancorp, Inc. Reports First Quarter 2023 Financial Results

 

Wilmington, DE – April 27, 2023 – The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2023.

 

Highlights

 

·The Bancorp reported net income of $49.1 million, or $0.88 per diluted share, for the quarter ended March 31, 2023, compared to net income of $29.0 million, or $0.50 per diluted share, for the quarter ended March 31, 2022, or a 76% increase in income per diluted share.

 

·Return on assets and equity for the quarter ended March 31, 2023 amounted to 2.6% and 28%, respectively, compared to 1.7% and 18%, respectively, for the quarter ended March 31, 2022 (all percentages “annualized”).

 

·The increases in net income and return on assets and equity reflected increases in net interest income. Net interest income increased 62% to $85.8 million for the quarter ended March 31, 2023, compared to $52.9 million for the quarter ended March 31, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on the Bancorp’s variable rate loans and securities.

 

·Net interest margin amounted to 4.67% for the quarter ended March 31, 2023, compared to 3.12% for the quarter ended March 31, 2022, and 4.21% for the quarter ended December 31, 2022.

 

·Loans, net were $5.35 billion at March 31, 2023, compared to $5.49 billion at December 31, 2022 and $4.16 billion at March 31, 2022. Those changes reflected a decrease of 2% quarter over quarter and an increase of 29% year over year.

 

·Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $5.45 billion, or 19%, to $34.01 billion for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022. The increase reflects continued organic growth with existing partners and the impact from new clients added throughout 2022. Total prepaid, debit card, ACH and other payment fees increased 24% to $25.5 million for first quarter 2023 compared to the first quarter of 2022.

 

·Small business loans (“SBL”), including those held at fair value, grew 11% year over year to $785.8 million at March 31, 2023, and 3% quarter over quarter. That growth is exclusive of Paycheck Protection Program (“PPP”) loan balances which amounted to $4.0 million and $23.7 million, respectively, at March 31, 2023 and March 31, 2022.

 

·Direct lease financing balances increased 21% year over year to $652.5 million at March 31, 2023, and 3% quarter over quarter.

 

·At March 31, 2023, the $1.75 billion balance of real estate bridge loans, consisting entirely of apartment buildings, compared to $1.67 billion at December 31, 2022, reflecting quarter over quarter growth of 5%. At March 31, 2022, these loans totaled $803.5 million.

 

·Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively increased 1% year over year and decreased 10% quarter over quarter to $2.24 billion at March 31, 2023.

 

·The average interest rate on $6.77 billion of average deposits and interest-bearing liabilities during the first quarter of 2023 was 2.15%. Average deposits of $6.62 billion for the first quarter of 2023, reflected an increase of 8% from the $6.11 billion of average deposits for the quarter ended March 31, 2022.

 

·The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of large numbers of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $3.3 billion as of April 27, 2023 and access to significant other liquidity.

 

·As of March 31, 2023, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.88%, 14.34%, 14.84% and 14.34%, 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.

 

  1 

 

 

 

·Book value per common share at March 31, 2023 was $13.11 per share compared to $11.41 per common share at March 31, 2022, an increase of 15%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.

 

·The Bancorp repurchased 778,442 shares of its common stock at an average cost of $32.12 per share during the quarter ended March 31, 2023.

 

CEO and President Damian Kozlowski stated “The recent dislocation in the banking industry did not materially impact our company. With granular deposits spread across more than 130 million insured small accounts through our Fin-tech ecosystem, a low risk variable rate and short duration credit book and significant liquidity and borrowing capacity, TBBK was well positioned to manage the increased volatility exhibited in the beginning of 2023. Our performance expectations for the first quarter were significantly surpassed.  We are raising guidance from $3.20 a share to $3.60 a share, without including the impact of anticipated share buy backs of $25 million per quarter in 2023.”

 

Conference Call Webcast

 

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, April 28, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.886.7786, conference code 02423750. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, May 5, 2023 by dialing 1.877.674.7070, access code 423750#.

 

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. 

 

 

  2 

 

 

 

The Bancorp, Inc.

Financial highlights

 

 

 

  Three months ended   Year ended
  March 31,   December 31,
Consolidated condensed income statements 2023 (unaudited)   2022 (unaudited)   2022 
    (Dollars in thousands, except per share and share data)
                 
Net interest income $  85,816    $  52,853    $  248,841 
Provision for credit losses    1,903       1,507       7,108 
Non-interest income                
ACH, card and other payment processing fees    2,171       1,984       8,935 
Prepaid, debit card and related fees    23,323       18,652       77,236 
Net realized and unrealized gains on commercial                
   loans, at fair value    1,725       3,383       13,531 
Leasing related income    1,490       973       4,822 
Other non-interest income    280       120       1,159 
Total non-interest income    28,989       25,112       105,683 
Non-interest expense                
Salaries and employee benefits    29,785       23,848       105,368 
Data processing expense    1,321       1,189       4,972 
Legal expense    958       794       3,878 
Legal settlement    —      —      1,152 
Civil money penalty    —      —      1,750 
FDIC insurance    955       974       3,270 
Software    4,237       3,864       16,211 
Other non-interest expense    10,774       7,683       32,901 
Total non-interest expense    48,030       38,352       169,502 
Income before income taxes    64,872       38,106       177,914 
Income tax expense    15,750       9,140       47,701 
Net income    49,122       28,966       130,213 
                 
Net income per share - basic $  0.89    $  0.51    $  2.30 
                 
Net income per share - diluted $  0.88    $  0.50    $  2.27 
Weighted average shares - basic    55,452,815       57,115,903       56,556,303 
Weighted average shares - diluted    56,048,142       58,095,980       57,268,946 

 

  3 

 

 

 

 

Condensed consolidated balance sheets March 31,   December 31,   September 30,   March 31,
  2023 (unaudited)   2022   2022 (unaudited)   2022 (unaudited)
  (Dollars in thousands, except per share and share data)
Assets:                      
Cash and cash equivalents                      
Cash and due from banks $  13,736    $  24,063    $  22,537    $  11,399 
Interest earning deposits at Federal Reserve Bank    773,446       864,126       700,175       662,827 
Total cash and cash equivalents    787,182       888,189       722,712       674,226 
                       
Investment securities, available-for-sale, at fair value    787,429       766,016       790,594       907,338 
Commercial loans, at fair value    493,334       589,143       818,040       1,180,885 
Loans, net of deferred fees and costs    5,354,347       5,486,853       5,267,375       4,164,298 
Allowance for credit losses    (23,794)      (22,374)      (19,689)      (19,051)
Loans, net    5,330,553       5,464,479       5,247,686       4,145,247 
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock    12,629       12,629       12,629       1,663 
Premises and equipment, net    21,319       18,401       18,443       16,314 
Accrued interest receivable    33,729       32,005       25,506       17,284 
Intangible assets, net    1,950       2,049       2,149       2,348 
Other real estate owned    21,117       21,210       18,873       18,873 
Deferred tax asset, net    18,290       19,703       27,241       18,521 
Other assets    99,427       89,176       93,201       99,961 
Total assets $  7,606,959    $  7,903,000    $  7,777,074    $  7,082,660 
                       
Liabilities:                      
Deposits                      
Demand and interest checking $  6,607,767    $  6,559,617    $  5,934,591    $  5,506,083 
Savings and money market    96,890       140,496       575,381       722,240 
Time deposits, $100,000 and over    —      330,000       401,331       —
Total deposits    6,704,657       7,030,113       6,911,303       6,228,323 
                       
Securities sold under agreements to repurchase    42       42       42       42 
Senior debt    99,142       99,050       98,958       98,774 
Subordinated debenture    13,401       13,401       13,401       13,401 
Other long-term borrowings    9,972       10,028       38,928       39,318 
Other liabilities    54,597       56,335       50,704       50,507 
Total liabilities $  6,881,811    $  7,208,969    $  7,113,336    $  6,430,365 
                       
Shareholders' equity:                      
Common stock - authorized, 75,000,000 shares of $1.00 par value; 55,329,629 and 57,155,028 shares issued and outstanding at March 31, 2023 and 2022, respectively    55,330       55,690       56,202       57,155 
Additional paid-in capital    277,814       299,279       311,569       336,604 
Retained earnings    418,441       369,319       329,078       268,072 
Accumulated other comprehensive loss    (26,437)      (30,257)      (33,111)      (9,536)
Total shareholders' equity    725,148       694,031       663,738       652,295 
                       
Total liabilities and shareholders' equity $  7,606,959    $  7,903,000    $  7,777,074    $  7,082,660 

 

 

  4 

 

 

 

Average balance sheet and net interest income Three months ended March 31, 2023   Three months ended March 31, 2022
  (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* $  5,987,179   $  106,204      7.10%   $  5,136,377    $  50,508     3.93%
Leases-bank qualified**    3,361      69      8.21%      4,015       105     10.46%
Investment securities-taxable    774,055      9,300      4.81%      939,511       4,891     2.08%
Investment securities-nontaxable**    3,343      41      4.91%      3,559       32     3.60%
Interest earning deposits at Federal Reserve Bank    580,058      6,585      4.54%      686,614       347     0.20%
Net interest earning assets    7,347,996      122,199      6.65%      6,770,076       55,883     3.30%
                                 
Allowance for credit losses    (22,533)                  (17,810)          
Other assets    237,721                  224,312           
  $  7,563,184               $  6,976,578           
                                 
Liabilities and Shareholders' Equity:                                
Deposits:                                
Demand and interest checking $  6,406,834   $  32,383      2.02%   $  5,575,228    $  1,406     0.10%
Savings and money market    132,279      1,219      3.69%      532,047       200     0.15%
Time deposits    84,333      858      4.07%      —      —    —
Total deposits    6,623,446      34,460      2.08%      6,107,275       1,606     0.11%
                                 
Short-term borrowings   20,500      234      4.57%      555       —    —
Repurchase agreements   42      —      —      41       —    —
Long-term borrowings   9,998      126      5.04%      —      —    —
Subordinated debentures   13,401      261      7.79%      13,401       116     3.46%
Senior debt   99,092      1,279      5.16%      98,724       1,279     5.18%
Total deposits and liabilities    6,766,479      36,360      2.15%      6,219,996       3,001     0.19%
                                 
Other liabilities    87,116                  104,207           
Total liabilities    6,853,595                  6,324,203           
                                 
Shareholders' equity    709,589                  652,375           
  $  7,563,184               $  6,976,578           
Net interest income on tax equivalent basis**       $  85,839               $  52,882     
                                 
Tax equivalent adjustment          23                  29     
                                 
Net interest income       $  85,816               $  52,853     
Net interest margin **                4.67%                3.12%

 

* 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 2023 and 2022.

 

 

NOTE: In the table above, interest on loans for 2023 and 2022 includes $10,000 and $440,000, respectively, of interest and fees on PPP loans.

 

  

 

  5 

 

 

  

                 
Allowance for credit losses Three months ended   Year ended
  March 31,   March 31,   December 31,
  2023 (unaudited)   2022 (unaudited)   2022 
  (Dollars in thousands)
                 
Balance in the allowance for credit losses at beginning of period $  22,374    $  17,806    $  17,806 
                 
Loans charged-off:                
SBA non-real estate    214       98       885 
Direct lease financing    905       191       576 
Consumer - other    3       —      —
Total    1,122       289       1,461 
                 
Recoveries:                
SBA non-real estate    202       12       140 
SBA commercial mortgage    75       —      —
Direct lease financing    67       19       124 
Other loans    —      —      24 
Total    344       31       288 
Net charge-offs    778       258       1,173 
Provision for credit losses, excluding commitment provision    2,198       1,503       5,741 
                 
Balance in allowance for credit losses at end of period $  23,794    $  19,051    $  22,374 
Net charge-offs/average loans    0.01%      0.01%      0.03%
Net charge-offs/average assets    0.01%      —      0.02%

 

  6 

 

  

Loan portfolio March 31,   December 31,   September 30,   March 31,
  2023 (unaudited)   2022   2022 (unaudited)   2022 (unaudited)
  (Dollars in thousands)
                       
SBL non-real estate $  114,334    $  108,954    $  116,080    $  122,387 
SBL commercial mortgage    492,798       474,496       429,865       385,559 
SBL construction    33,116       30,864       26,841       31,432 
Small business loans    640,248       614,314       572,786       539,378 
Direct lease financing    652,541       632,160       599,796       538,616 
SBLOC / IBLOC *    2,053,450       2,332,469       2,369,106       2,067,233 
Advisor financing **    189,425       172,468       168,559       146,461 
Real estate bridge loans    1,752,322       1,669,031       1,488,119       803,477 
Other loans ***    60,210       61,679       64,980       61,096 
     5,348,196       5,482,121       5,263,346       4,156,261 
Unamortized loan fees and costs    6,151       4,732       4,029       8,037 
Total loans, including unamortized fees and costs $  5,354,347    $  5,486,853    $  5,267,375    $  4,164,298 

  

Small business portfolio   March 31,     December 31,     September 30,     March 31,
    2023 (unaudited)     2022     2022 (unaudited)     2022 (unaudited)
    (Dollars in thousands)
                       
SBL, including unamortized fees and costs $  648,858   $  621,641   $  579,156   $  545,462
SBL, included in loans, at fair value    140,909      146,717      159,914      183,408
Total small business loans **** $  789,767   $  768,358   $  739,070   $  728,870

 

* 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 $4.8 million and $2.6 million at March 31, 2023 and December 31, 2022, 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 March 31, 2023

 

    Loan principal
    (Dollars in millions)
U.S. government guaranteed portion of SBA loans (a)   $  380
Paycheck Protection Program loans (PPP) (a)      4
Commercial mortgage SBA (b)      257
Construction SBA (c)      11
Non-guaranteed portion of U.S. government guaranteed loans (d)      104
Non-SBA small business loans      23
Total principal   $  779
Unamortized fees and costs      11
Total small business loans   $  790

 

(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 $11 million in Construction SBA loans, $9 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 unguaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.

  7 

 

 

Small business loans by type as of March 31, 2023

 

(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   $ 74   $ —   $ —   $ 74      19%
Full-service restaurants     16     3     2     21      5%
Lessors of nonresidential buildings     19     —     —     19      5%
Car washes     17     2     —     19      5%
Child day care services     14     —     1     15      4%
Homes for the elderly     16     —     —     16      4%
Outpatient mental health and substance abuse centers     15     —     —     15      4%
Funeral homes and funeral services     15     —     —     15      4%
Gasoline stations with convenience stores     13     —     —     13      3%
Fitness and recreational sports centers     8     —     2     10      3%
Offices of lawyers     9     —     —     9      2%
Lessors of other real estate property     8     —     —     8      2%
General  warehousing and storage     7     —     —     7      2%
Plumbing, heating, and air-conditioning companies     6     —     1     7      2%
Limited-service restaurants     1     2     3     6      2%
Lessors of residential buildings and dwellings     5     —     —     5      1%
Miscellaneous durable goods merchants     5     —     —     5      1%
Technical and trade schools     —     5     —     5      1%
Packaged frozen food merchant wholesalers     5     —     —     5      1%
Other amusement and recreation industry     4     —     —     4      1%
Offices of dentists     2     1     —     3      1%
Other warehousing and storage     3     —     —     3      1%
Vocational rehabilitation services     3     —     —     3      1%
Miscellaneous wood product manufacturing     3     —     —     3      1%
Other**     75     2     28     105      25%
Total   $  343   $  15   $  37    $  395      100%

  

* Of the SBL commercial mortgage and SBL construction loans, $90 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.

 

  8 

 

 


State diversification as of March 31, 2023

 

(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)
California   $  71    $  3    $  3    $  77       19%
Florida      66       1       4       71       18%
North Carolina      34       7       2       43       11%
New York      26       —      5       31       8%
Pennsylvania      21       —      1       22       6%
Georgia      15       —      2       17       4%
New Jersey      12       —      4       16       4%
Illinois      14       —      1       15       4%
Texas      12       —      4       16       4%
Other States <$10 million      72       4       11       87       22%
Total   $  343    $  15    $  37    $  395       100%
                               

* Of the SBL commercial mortgage and SBL construction loans, $90 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 March 31, 2023 

 

Type   State   SBL commercial mortgage  
      (Dollars in millions)
Mental health and substance abuse center     FL   $  10   
Hotel     FL      9   
Lawyers office     CA      8   
Hotel     NC      7   
General warehousing and storage     PA      7   
Hotel     FL      6   
Hotel     NY      6   
Hotel     NC      5   
Mental health and substance abuse center     CT      5   
Lessor of residential building     NC      5   
Total         $  68   
               
 

 

 

  9 

 

 

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

 

Type as of March 31, 2023

 

Type     # Loans   Balance   Weighted average origination date LTV   Weighted average interest rate
      (Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)*     133   $  1,752     72%    8.40%
                     
Non-SBA commercial real estate loans, at fair value:                    
Multi-family (apartment bridge loans)*      19    $  303     76%    8.20%
Hospitality (hotels and lodging)      3       30     65%    8.50%
Retail      2       12     72%    7.30%
Other      2       9     73%    5.20%
       26       354     75%    8.11%
Fair value adjustment            (2)        
Total non-SBA commercial real estate loans, at fair value            352         
Total commercial real estate loans         $  2,104     73%    8.36%

 

*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 March 31, 2023     15 largest loans as of March 31, 2023
                           
State   Balance     Origination date LTV     State     Balance   Origination date LTV
(Dollars in millions)     (Dollars in millions)
Texas   $  783      73%     Texas     $  42    75%
Florida      242      71%     Texas        40    72%
Georgia      239      70%     Texas        39    75%
Tennessee      99      72%     Texas        39    79%
Ohio      90      69%     Tennessee        37    72%
Michigan      68      70%     Texas        37    80%
Alabama      66      72%     Michigan        36    62%
Other States each <$55 million      517      75%     Florida        33    72%
Total   $  2,104      74%     Texas        32    67%
                  Michigan        32    79%
                  Texas        31    62%
                  Tennessee        30    71%
                  Indiana        30    76%
                  Ohio        29    74%
                  Texas        29    77%
                  15 Largest loans     $  516    73%
  10 

 

 

Institutional banking loans outstanding at March 31, 2023

 

Type Principal   % of total
  (Dollars in millions)    
Securities backed lines of credit (SBLOC) $  1,132   50%
Insurance backed lines of credit (IBLOC)    922   41%
Advisor financing    189   9%
Total $  2,243    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 March 31, 2023

 

  Principal amount   % Principal to collateral
  (Dollars in millions)
  $  20    54%
     18    40%
     13    28%
     9    35%
     9    65%
     9    43%
     9    61%
     8    68%
     7    69%
     6    38%
Total and weighted average $  108    49%

 

Insurance backed lines of credit (IBLOC)

 

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us.  We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, nine insurance companies have been approved and, as of March 31, 2023, all were rated A- or better by AM BEST.

  11 

 

 

Direct lease financing* by type as of March 31, 2023 

 

  Principal balance   % Total
  (Dollars in millions)    
Construction $  112     17%
Waste management and remediation services    85     13%
Government agencies and public institutions**    81     12%
Real estate and rental and leasing    67     10%
Retail trade    47     7%
Finance and insurance    40     6%
Health care and social assistance    31     5%
Manufacturing    22     3%
Professional, scientific, and technical services    22     3%
Wholesale trade    18     3%
Transportation and warehousing    12     2%
Educational services    9     1%
Mining, quarrying, and oil and gas extraction    8     1%
Other    99     17%
Total $  653     100%

 

* Of the total $653 million of direct lease financing, $575 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 March 31, 2023

 

State Principal balance   % Total
  (Dollars in millions)    
Florida $  91    14%
California    68    10%
Utah    64    10%
Pennsylvania    41    6%
New Jersey    40    6%
New York    33    5%
North Carolina    31    5%
Texas    29    4%
Maryland    28    4%
Connecticut    26    4%
Washington    16    2%
Georgia    16    2%
Idaho    15    2%
Ohio    13    2%
Illinois    12    2%
Other States    130    22%
Total $  653    100%

 

 

  12 

 


 

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 March 31, 2023              
The Bancorp, Inc.  9.88%    14.34%    14.84%    14.34%
The Bancorp Bank, National Association  11.00%    15.94%    16.44%    15.94%
"Well capitalized" institution (under federal regulations-Basel III)  5.00%    8.00%    10.00%    6.50%
               
As of December 31, 2022              
The Bancorp, Inc.  9.63%    13.40%    13.87%    13.40%
The Bancorp Bank, National Association  10.73%    14.95%    15.42%    14.95%
"Well capitalized" institution (under federal regulations-Basel III)  5.00%    8.00%    10.00%    6.50%

 

 

  Three months ended   Year ended
  March 31,   December 31,
  2023   2022   2022
Selected operating ratios                
Return on average assets (1)    2.63%      1.68%      1.81%
Return on average equity (1)    28.07%      18.01%      19.34%
Net interest margin    4.67%      3.12%      3.55%

 

(1) Annualized

 

Book value per share table March 31,   December 31,   September 30,   March 31,
  2023   2022   2022   2022
Book value per share $  13.11   $  12.46   $  11.81      11.41

 

 

Loan quality table March 31,   December 31,   September 30,   March 31,
  2023   2022   2022   2022
    (Dollars in thousands)
Nonperforming loans to total loans    0.26%      0.33%      0.16%      0.20%
Nonperforming assets to total assets    0.46%      0.50%      0.35%      0.38%
Allowance for credit losses to total loans    0.44%      0.41%      0.37%      0.46%
                       
Nonaccrual loans $  12,938   $  10,356   $  3,860   $  3,621
Loans 90 days past due still accruing interest    873      7,775      4,415      4,597
Other real estate owned    21,117      21,210      18,873      18,873
     Total nonperforming assets $  34,928   $  39,341   $  27,148   $  27,091

 

Gross dollar volume (GDV) (1) Three months ended
  March 31,   December 31,   September 30,   March 31,
  2023   2022   2022   2022
  (Dollars in thousands)
Prepaid and debit card GDV $  34,011,792   $  29,454,074   $  28,119,428   $  28,564,582

 

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

  13 

 

  

Business line quarterly summary  
Quarter ended March 31, 2023  
(Dollars in millions)  
        Balances          
            % Growth          
Major business lines   Average approximate rates(1)   Balances(2)   Year over year   Linked quarter annualized          
Loans                          
Institutional banking(3)   6.1%    $   2,243   1%   (42)%          
Small business lending(4)   6.5%   790   11%   11%          
Leasing   6.7%   653   21%   13%          
Commercial real estate (non-SBA loans, at fair value)   8.1%         352   nm   nm          
Real estate bridge loans (recorded at book value)   8.4%   1,752   118%   20%          
Weighted average yield   7.0%    $   5,790           Non-interest income
                        % Growth
Deposits: Fintech solutions group                   Current quarter(5)   Year over year  
Prepaid and debit card issuance, and other payments 2.2%    $    5,968   9%   nm    $     25.5   24%  

 

(1) Average rates are for the quarter ended March 31, 2023.

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

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

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

(5) Includes $1.4 million from termination of a partner contract and $0.6 million from reclassified fees. Adjusted Year over Year growth is 14%.

 

Summary of credit lines available

 

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

 

  April 15, 2023
    (Dollars in thousands)
Federal Reserve Bank $  2,081,498 
Federal Home Loan Bank    1,246,883 
Total lines of credit available $  3,328,381 

 

Estimated insured vs Other uninsured deposits

 

The vast majority of the Company’s deposits are insured and low balance and accordingly do not constitute the liquidity risk experienced by certain institutions. Accordingly the deposit base is comprised as follows. 

 

  March 31, 2023
Insured   90%
Low balance stored value   5%
Other uninsured   5%
Total deposits   100%

 

Calculation of efficiency ratio(1) 

 

  Three months ended
  March 31,   December 31,
  2003   2022
  (Dollars in thousands)
Net interest income $  85,816    $  76,760 
Non-interest income    28,989       25,740 
Total revenue $  114,805    $  102,500 
Non-interest expense $  48,030    $  43,475 
           
Efficiency ratio    42%      42%

 

(1) The efficiency ratio is calculated by dividing GAAP total non-interest expense by the total of GAAP net interest income and non-interest income.  This ratio compares revenues generated with the amount of expense required to generate such revenues, and may be used as one measure of overall efficiency.  

  14