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

 

StatePrincipal 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 payments0.1%  $    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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