The Bancorp, Inc. Reports Fourth Quarter 2021 Financial Results

Rhea-AI Summary

The Bancorp, Inc. (NASDAQ: TBBK) reported Q4 2021 financial results with a net income of $27.0 million or $0.46 diluted EPS, up from $24.2 million or $0.41 diluted EPS in Q4 2020. The company's return on assets and equity were 1.7% and 17%, respectively. Total loans surged 41% to $3.75 billion. Net interest income slightly increased to $52.2 million, despite a dip in net interest margin to 3.51%. The Bank remains well-capitalized, with book value per share rising 13% to $11.37. The Bancorp reaffirmed its 2022 guidance of $2.15 per share.

Positive

• Net income increased to $27.0 million from $24.2 million year-over-year.
• Total loans rose 41% year-over-year to $3.75 billion.
• Book value per share grew 13% to $11.37.
• The company reaffirmed 2022 guidance at $2.15 per share.

Negative

• Net interest margin declined to 3.51% from 3.58% year-over-year.
• Growth in net interest income was offset by a $3.8 million reduction from non-SBA commercial loan prepayments.

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2021.

Highlights

• For the quarter ended December 31, 2021, The Bancorp earned net income of $27.0 million, or $0.46 diluted earnings per share.

• Return on assets and equity for the quarter ended December 31, 2021 amounted to 1.7% and 17%, respectively, compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020 (all percentages “annualized.”)

• Net interest margin amounted to 3.51% for the quarter ended December 31, 2021, compared to 3.58% for the quarter ended December 31, 2020.

• Net interest income was $52.2 million for the quarter ended December 31, 2021 compared to $51.7 million for the quarter ended December 31, 2020. In the fourth quarter of 2021, growth in net interest income was significantly offset by a reduction of $3.8 million resulting from non-SBA commercial loan prepayments. However, net realized and unrealized gains on commercial loans increased over $4 million over those respective periods, primarily as a result of fees related to those prepayments. We have resumed the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs, and grow the portfolio.

• Excluding loans at fair value, which were originally generated for sale, total loans increased 41% to $3.75 billion at December 31, 2021, compared to $2.65 billion at December 31, 2020.

• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $2.44 billion, or 11%, to $24.96 billion for the quarter ended December 31, 2021 compared to the quarter ended December 31, 2020.

• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 28% year over year and 7% quarter over quarter to $2.05 billion at December 31, 2021.

• Small Business Loans, including those held at fair value, grew 6% year over year to $696.2 million at December 31, 2021. That growth is exclusive of Paycheck Protection Program (“PPP”) loan balances of $44.8 million and $165.7 million, respectively, at December 31, 2021 and December 31, 2020.

• Direct lease financing balances increased 15% year over year to $531.0 million at December 31, 2021.

• We resumed non-SBA commercial real estate lending in the third quarter of 2021 classified as real estate bridge lending. As of December 31, 2021 total real estate bridge loans amounted to $621.7 million, collateralized by apartment buildings.

• The average interest rate on $5.47 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2021 was 0.19%. Average deposits of $5.31 billion for the fourth quarter 2021, reflected an increase of 1% from the $5.25 billion of average deposits for the quarter ended December 31, 2020.

• As of December 31, 2021, substantially all the borrowers with COVID-19 related payment deferrals had resumed making payments.

• As of December 31, 2021, 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 10.40%, 14.72%, 15.13% and 14.72%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and The Bank each remain well capitalized under banking regulations.

• Book value per common share at December 31, 2021 was $11.37 per share compared to $10.10 per share at December 31, 2020, an increase of 13%, primarily as a result of retained earnings.

• The Bancorp repurchased 350,431 shares of its common stock at an average cost of $28.54 per share during the quarter ended December 31, 2021.

“Our lending platform and fin-tech ecosystem will support continued growth into 2022,” said The Bancorp CEO and President Damian Kozlowski. “We continue to improve our performance, while delivering enhanced capabilities to our many innovative partners which are revolutionizing the financial services industry. Additionally, we reaffirm our 2022 guidance of $2.15 per share, which excludes the net impact of planned stock repurchases.”

The Bancorp reported net income of $27.0 million, or $0.46 per diluted share, for the quarter ended December 31, 2021, compared to net income of $24.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 28, 2022 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 7390458. 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 4, 2022 by dialing 855.859.2056, access code 7390458.

About The Bancorp

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. in June 2021, 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. As evidence of its company-wide commitment to excellence, The Bancorp has also been ranked in October 2020 as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer in March 2021 by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600 in May 2021. 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. Financial highlights (unaudited)
		Three months ended						Year ended
		December 31,						December 31,
Condensed income statement	2021			2020			2021			2020
		(in thousands, except per share data)
Net interest income	$	52,157		$	51,713		$	210,876		$	194,866
Provision for credit losses		1,626			554			3,110			6,352
Non-interest income
ACH, card and other payment processing fees		1,921			1,788			7,526			7,101
Prepaid, debit card and related fees		17,776			17,818			74,654			74,465
Net realized and unrealized gains (losses) on commercial
loans, at fair value		6,004			1,538			14,885			(3,874)
Change in value of investment in unconsolidated entity		—			—			—			(45)
Leasing related income		1,757			499			6,457			3,294
Other non-interest income		768			1,657			1,227			3,676
Total non-interest income		28,226			23,300			104,749			84,617
Non-interest expense
Salaries and employee benefits		28,159			27,087			105,998			101,737
Data processing expense		1,183			1,174			4,664			4,712
Legal expense		1,499			1,005			6,848			5,141
FDIC insurance		351			2,121			5,586			9,808
Software		4,224			3,570			15,659			14,028
Other non-interest expense		7,784			6,826			29,595			29,421
Total non-interest expense		43,200			41,783			168,350			164,847
Income from continuing operations before income taxes		35,557			32,676			144,165			108,284
Income tax expense		8,529			8,655			33,724			27,688
Net income from continuing operations		27,028			24,021			110,441			80,596
Discontinued operations
(Loss) income from discontinued operations before income taxes		(36)			(1,096)			288			(3,816)
Income tax (benefit) expense		—			(1,246)			76			(3,304)
Net (loss) income from discontinued operations, net of tax		(36)			150			212			(512)
Net income	$	26,992		$	24,171		$	110,653		$	80,084
Net income per share from continuing operations - basic	$	0.47		$	0.42		$	1.93		$	1.40
Net income (loss) per share from discontinued operations - basic	$	—		$	—		$	—		$	(0.01)
Net income per share - basic	$	0.47		$	0.42		$	1.93		$	1.39
Net income per share from continuing operations - diluted	$	0.46		$	0.41		$	1.88		$	1.38
Net income (loss) per share from discontinued operations - diluted	$	—		$	—		$	—		$	(0.01)
Net income per share - diluted	$	0.46		$	0.41		$	1.88		$	1.37
Weighted average shares - basic		56,966,661			57,597,124			57,190,311			57,474,612
Weighted average shares - diluted		58,369,204			59,146,222			58,830,437			58,411,222

Note: Compared to higher rates in recent periods, the respective effective tax rates for the three and twelve months ended December 31, 2021 approximated 24% and 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.

Balance sheet	December 31,			September 30,			June 30,			December 31,
	2021 (unaudited)			2021 (unaudited)			2021 (unaudited)			2020
		(in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	5,382		$	6,687		$	5,470		$	5,984
Interest earning deposits at Federal Reserve Bank		596,402			310,642			583,498			339,531
Total cash and cash equivalents		601,784			317,329			588,968			345,515
Investment securities, available-for-sale, at fair value		953,709			1,054,223			1,106,075			1,206,164
Commercial loans, at fair value		1,326,836			1,550,025			1,690,216			1,810,812
Loans, net of deferred fees and costs		3,747,224			3,136,662			2,915,344			2,652,323
Allowance for credit losses		(17,806)			(16,159)			(15,292)			(16,082)
Loans, net		3,729,418			3,120,503			2,900,052			2,636,241
Federal Home Loan Bank and Atlantic Central Bankers Bank stock		1,663			1,663			1,667			1,368
Premises and equipment, net		16,156			16,602			17,392			17,608
Accrued interest receivable		17,871			17,180			18,668			20,458
Intangible assets, net		2,447			2,547			2,646			2,845
Other real estate owned		1,530			2,145			—			—
Deferred tax asset, net		12,667			12,237			10,923			9,757
Investment in unconsolidated entity, at fair value		—			—			24,988			31,294
Assets held-for-sale from discontinued operations		82,191			87,904			97,496			113,650
Other assets		96,967			86,105			91,516			81,129
Total assets	$	6,843,239		$	6,268,463		$	6,550,607		$	6,276,841
Liabilities:
Deposits
Demand and interest checking	$	5,561,365		$	4,734,352		$	5,225,024		$	5,205,010
Savings and money market		415,546			378,160			459,688			257,050
Total deposits		5,976,911			5,112,512			5,684,712			5,462,060
Securities sold under agreements to repurchase		42			42			42			42
Short-term borrowings		—			300,000			—			—
Senior debt		98,682			98,590			98,498			98,314
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		39,521			39,715			39,901			40,277
Other liabilities		62,228			66,226			94,944			81,583
Total liabilities	$	6,190,785		$	5,630,486		$	5,931,498		$	5,695,677
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,370,563 and 57,550,629 shares issued and outstanding at December 30, 2021 and 2020, respectively		57,371			57,331			57,458			57,551
Additional paid-in capital		349,686			357,528			363,241			377,452
Retained earnings		239,106			212,114			183,853			128,453
Accumulated other comprehensive income		6,291			11,004			14,557			17,708
Total shareholders' equity		652,454			637,977			619,109			581,164
Total liabilities and shareholders' equity	$	6,843,239		$	6,268,463		$	6,550,607		$	6,276,841

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.

Average balance sheet and net interest income		Three months ended December 31, 2021									Three months ended December 31, 2020
		(dollars in thousands)
	Average						Average			Average						Average
Assets:	Balance			Interest			Rate			Balance			Interest			Rate
Interest earning assets:
Loans, net of deferred fees and costs**	$	4,766,271		$	48,792			4.09%		$	4,329,794		$	45,524		4.21%
Leases-bank qualified*		4,465			76			6.81%			7,346			138		7.51%
Investment securities-taxable		954,172			5,770			2.42%			1,239,062			9,229		2.98%
Investment securities-nontaxable*		3,558			31			3.49%			4,041			35		3.46%
Interest earning deposits at Federal Reserve Bank		208,120			65			0.12%			193,560			48		0.10%
Net interest earning assets		5,936,586			54,734			3.69%			5,773,803			54,974		3.81%
Allowance for credit losses		(17,108)									(15,804)
Assets held-for-sale from discontinued operations		83,821			708			3.38%			117,482			965		3.29%
Other assets		189,760									220,595
	$	6,193,059								$	6,096,076
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	4,931,891		$	1,015			0.08%		$	4,978,562		$	1,679		0.13%
Savings and money market		373,381			114			0.12%			270,820			134		0.20%
Total deposits		5,305,272			1,129			0.09%			5,249,382			1,813		0.14%
Short-term borrowings		53,315			34			0.26%			32,989			17		0.21%
Repurchase agreements		41			—			—			41			—		—
Subordinated debentures		13,401			112			3.34%			13,401			116		3.46%
Senior debt		100,419			1,280			5.10%			100,031			1,279		5.12%
Total deposits and liabilities		5,472,448			2,555			0.19%			5,395,844			3,225		0.24%
Other liabilities		75,395									130,420
Total liabilities		5,547,843									5,526,264
Shareholders' equity		645,216									569,812
	$	6,193,059								$	6,096,076
Net interest income on tax equivalent basis*				$	52,887								$	52,714
Tax equivalent adjustment					22									36
Net interest income				$	52,865								$	52,678
Net interest margin *								3.51%								3.58%

* 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 $991,000 of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.

Average balance sheet and net interest income	Year ended December 31, 2021									Year ended December 31, 2020
		(dollars in thousands)
	Average							Average		Average						Average
Assets:	Balance			Interest				Rate		Balance			Interest			Rate
Interest earning assets:
Loans, net of deferred fees and costs**	$	4,597,977		$	192,338			4.18%		$	3,931,758		$	170,449		4.34%
Leases-bank qualified*		5,557			377			6.78%			8,885			647		7.28%
Investment securities-taxable		1,059,229			28,661			2.71%			1,317,031			37,822		2.87%
Investment securities-nontaxable*		3,757			130			3.46%			4,412			145		3.29%
Interest earning deposits at Federal Reserve Bank		637,056			715			0.11%			381,290			1,885		0.49%
Net interest earning assets		6,303,576			222,221			3.53%			5,643,376			210,948		3.74%
Allowance for credit losses		(16,469)									(13,878)
Assets held for sale from discontinued operations		95,527			3,096			3.24%			127,519			4,222		3.31%
Other assets		217,476									226,210
	$	6,600,110								$	5,983,227
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,321,283		$	5,022			0.09%		$	4,864,236		$	11,356		0.23%
Savings and money market		427,708			601			0.14%			291,204			442		0.15%
Time deposits		—			—			—			79,439			1,483		1.87%
Total deposits		5,748,991			5,623			0.10%			5,234,879			13,281		0.25%
Short-term borrowings		19,958			49			0.25%			27,322			198		0.72%
Repurchase agreements		41			—			—			49			—		—
Subordinated debentures		13,401			449			3.35%			13,401			524		3.91%
Senior debt		100,283			5,118			5.10%			38,532			1,913		4.96%
Total deposits and liabilities		5,882,674			11,239			0.19%			5,314,183			15,916		0.30%
Other liabilities		100,627									137,983
Total liabilities		5,983,301									5,452,166
Shareholders' equity		616,809									531,061
	$	6,600,110								$	5,983,227
Net interest income on tax equivalent basis*				$	214,078								$	199,254
Tax equivalent adjustment					106									166
Net interest income				$	213,972								$	199,088
Net interest margin *								3.35%								3.45%

* 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 each of 2021 and 2020 also includes $5.8 million of interest and fees on PPP loans. 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.

Allowance for credit losses	Year ended
	December 31,			December 31,
	2021			2020
	(dollars in thousands)
Balance in the allowance for credit losses at beginning of period (1)	$	16,082		$	12,875
Loans charged-off:
SBA non-real estate		1,138			1,350
SBA commercial mortgage		417			–
Direct lease financing		412			2,243
SBLOC		15			–
Consumer - home equity		10			–
Consumer - other		14			–
Total		2,006			3,593
Recoveries:
SBA non-real estate		51			103
SBA commercial mortgage		9			–
Direct lease financing		58			570
Consumer - home equity		1,099			–
Total		1,217			673
Net charge-offs		789			2,920
Provision credited to allowance, excluding commitment provision		2,513			6,127
Balance in allowance for credit losses at end of period	$	17,806		$	16,082
Net charge-offs/average loans		0.03%			0.07%
Net charge-offs/average assets		0.01%			0.05%

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

Loan portfolio		December 31,			September 30,			June 30,			December 31,
		2021			2021			2021			2020
		(in thousands)
SBL non-real estate		$	147,722		$	171,845		$	228,958		$	255,318
SBL commercial mortgage			361,171			367,272			343,487			300,817
SBL construction			27,199			23,117			18,494			20,273
Small business loans *			536,092			562,234			590,939			576,408
Direct lease financing			531,012			514,068			506,424			462,182
SBLOC / IBLOC**			1,929,581			1,834,523			1,729,628			1,550,086
Advisor financing ***			115,770			81,143			72,190			48,282
Real estate bridge lending			621,702			128,699			–			–
Other loans ****			5,014			4,917			5,840			6,426
			3,739,171			3,125,584			2,905,021			2,643,384
Unamortized loan fees and costs			8,053			11,078			10,323			8,939
Total loans, net of unamortized fees and costs		$	3,747,224		$	3,136,662		$	2,915,344		$	2,652,323

Small business portfolio		December 31,			September 30,			June 30,			December 31,
		2021			2021			2021			2020
		(in thousands)
SBL, including unamortized fees and costs	$	541,437		$	566,472		$	593,401		$	577,944
SBL, included in commercial loans, at fair value		199,585			214,301			225,534			243,562
Total small business loans	$	741,022		$	780,773		$	818,935		$	821,506

* 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 certain SBA loans at the dates indicated (in thousands). A reduction in SBL non-real estate from $171.8 million to $147.7 million in the fourth quarter of 2021 resulted from U.S. government repayments of $26.5 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $44.8 million at December 31, 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 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 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 $322,000 and $663,000 at December 31, 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 December 31, 2021

		Loan principal
		(in millions)
U.S. government guaranteed portion of SBA loans (a)		$	371
Paycheck Protection Program loans (PPP) (a)			45
Commercial mortgage SBA (b)			183
Construction SBA (c)			17
Non-guaranteed portion of U.S. government guaranteed loans (d)			100
Non-SBA small business loans (e)			17
Total principal		$	733
Unamortized fees and costs			8
Total small business loans		$	741

(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 $17 million in Construction SBA loans, $13 million are 504 first mortgages with an origination date LTV of 50-60% and $4 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 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 $17 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.

Small business loans by type as of December 31, 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		$	65		$	4		$	—		$	69			22%
Full-service restaurants			13			2			3			18			6%
Child day care services			14			—			1			15			5%
Outpatient mental health and substance abuse centers			14			—			—			14			5%
Baked goods stores			4			—			9			13			4%
Lessors of nonresidential buildings			11			—			—			11			4%
Car washes			10			—			—			10			3%
Offices of lawyers			9			—			—			9			3%
Funeral homes and funeral services			8			—			—			8			3%
All other amusement and recreation industries			7			—			1			8			2%
General warehousing and storage			7			—			—			7			2%
Fitness and recreational sports centers			—			5			2			7			2%
Assisted living facilities for the elderly			6			—			—			6			2%
Limited-service restaurants			1			2			3			6			1%
Gasoline stations with convenience stores			4			—			—			4			1%
Other technical and trade schools			—			4			—			4			1%
Offices of dentists			3			—			—			3			1%
Other warehousing and storage			3			—			—			3			1%
All other miscellaneous wood product manufacturing			3			—			—			3			1%
Plumbing, heating, and air-conditioning contractors			3			—			—			3			1%
Other performing arts companies			3			—			—			3			1%
Offices of physicians			3			—			—			3			1%
Lessors of other real estate property			2			—			—			2			1%
All other miscellaneous general purpose machinery manufacturing			2			—			—			2			1%
Landscaping services			1			—			1			2			1%
Sewing, needlework, and piece goods stores			2			—			—			2			1%
Automotive body, paint, and interior repair and maintenance			2			—			—			2			1%
Pet care (except veterinary) services			2			—			—			2			1%
Amusement arcades			2			—			—			2			1%
Caterers			2			—			—			2			1%
Offices of real estate agents and brokers			2			—			—			2			1%
Other**			45			—			26			71			19%
Total		$	253		$	17		$	46		$	316			100%

* Of the SBL commercial mortgage and SBL construction loans, $65 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.

State diversification as of December 31, 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		$	59		$	—		$	6		$	65			21%
California			42			2			4			48			15%
North Carolina			23			5			3			31			10%
Pennsylvania			27			—			3			30			9%
New York			14			5			3			22			7%
Illinois			16			—			2			18			6%
Texas			12			—			4			16			5%
New Jersey			6			—			7			13			4%
Virginia			9			—			—			9			3%
Tennessee			10			—			—			10			3%
Colorado			3			5			1			9			3%
Michigan			4			—			1			5			2%
Georgia			3			—			1			4			1%
Ohio			3			—			1			4			1%
Washington			3			—			—			3			1%
Other States			19			—			10			29			9%
Total		$	253		$	17		$	46		$	316			100%

* Of the SBL commercial mortgage and SBL construction loans, $65 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, 2021

Type*		State			SBL commercial mortgage*
			(in millions)
Mental health and substance abuse center			FL		$	10
Hotel			FL			9
Lawyers office			CA			9
General warehousing and storage			PA			7
Hotel			NC			6
Assisted living facility			FL			5
Hotel			NY			5
Hotel			NC			5
Mental health and substance abuse center			PA			4
Hotel			PA			4
Total					$	64

* All of 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.

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

Type as of December 31, 2021

Type			# Loans			Balance		Weighted average origination date LTV		Weighted average interest rate
			(dollars in millions)
Real estate bridge lending (multi-family apartments)*			57		$	622		74%		3.99%
Commercial real estate loans, at fair value:
Multi-family (apartments)*			86		$	988		76%		4.75%
Hospitality (hotels and lodging)			9			69		65%		5.68%
Retail			6			61		71%		4.33%
Other			7			13		73%		5.12%
			108			1,131		75%		4.79%
Fair value adjustment						(4)
Total commercial real estate loans, at fair value						1,127
Total commercial real estate loans					$	1,749		75%		4.52%

*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, 2021									15 largest loans (all multi-family) as of December 31, 2021
State			Balance			Origination date LTV			State				Balance		Origination date LTV
(in millions)									(in millions)
Texas		$	607			76%			Texas			$	39		79%
Georgia			168			75%			Texas				37		75%
Ohio			111			72%			Texas				37		80%
Alabama			90			74%			Tennessee				30		62%
Florida			76			74%			Missouri				30		72%
Arizona			65			74%			Texas				30		75%
Tennessee			64			66%			Mississippi				29		79%
Other States each <$55 million			568			73%			Texas				29		77%
Total		$	1,749			74%			North Carolina				28		77%
									Texas				27		77%
									New Jersey				27		77%
									Oklahoma				27		78%
									Ohio				26		74%
									Texas				26		77%
									Ohio				22		75%
									15 Largest loans			$	444		76%

Institutional banking loans outstanding at December 31, 2021

Type	Principal			% of total
		(in millions)
Securities backed lines of credit (SBLOC)	$	1,141		56%
Insurance backed lines of credit (IBLOC)		788		39%
Advisor financing		116		5%
Total	$	2,045		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, 2021

	Principal amount			% Principal to collateral
	(in millions)
	$	18		37%
		14		25%
		9		31%
		9		56%
		9		35%
		8		70%
		8		65%
		7		13%
		7		44%
		6		32%
Total and weighted average	$	95		40%

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 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, eight insurance companies have been approved and, as of August 14, 2021, all were rated Excellent (A or better) by AM BEST.

Direct lease financing* by type as of December 31, 2021

		Principal balance		% Total
		(in millions)
Construction	$	100		19%
Government agencies and public institutions**		78		15%
Waste management and remediation services		62		12%
Real estate and rental and leasing		54		10%
Retail trade		46		9%
Wholesale purchase		39		7%
Health care and social assistance		30		6%
Transportation and warehousing		28		5%
Professional, scientific, and technical services		19		4%
Wholesale trade		16		3%
Manufacturing		16		3%
Educational services		8		2%
Other		35		5%
Total	$	531		100%

* Of the total $531 million of direct lease financing, $475 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, 2021

State		Principal balance		% Total
		(in millions)
Florida	$	92		17%
California		49		9%
Utah		42		8%
New Jersey		40		8%
Pennsylvania		34		6%
New York		32		6%
North Carolina		24		5%
Maryland		24		5%
Texas		20		4%
Connecticut		16		3%
Washington		15		3%
Georgia		12		2%
Idaho		11		2%
Alabama		10		2%
Tennessee		9		2%
Other States		101		18%
Total	$	531		100%

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, 2021
The Bancorp, Inc.	10.40%		14.72%		15.13%		14.72%
The Bancorp Bank	10.98%		15.48%		15.88%		15.48%
"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						Year ended
	December 31,						December 31,
	2021			2020			2021			2020
Selected operating ratios
Return on average assets (1)		1.73%			1.57%			1.68%			1.34%
Return on average equity (1)		16.60%			16.83%			17.94%			15.08%
Net interest margin		3.51%			3.58%			3.35%			3.45%

⁽¹⁾ Annualized

Book value per share table	December 31,			September 30,				June 30,		December 31,
	2021			2021			2021			2020
Book value per share	$	11.37		$	11.13		$	10.77		$	10.10

Loan quality table		December 31,			September 30,			June 30,			December 31,
		2021			2021			2021			2020
		(dollars in thousands)
Nonperforming loans to total loans		0.10%			0.24%			0.31%			0.48%
Nonperforming assets to total assets		0.08%			0.16%			0.14%			0.20%
Allowance for credit losses to total loans		0.48%			0.52%			0.52%			0.61%
Nonaccrual loans	$	3,161		$	6,106		$	7,346		$	12,227
Loans 90 days past due still accruing interest		461			1,569			1,550			497
Other real estate owned		1,530			2,145			—			—
Total nonperforming assets	$	5,152		$	9,820		$	8,896		$	12,724

Gross dollar volume (GDV) (1)	Three months ended
	December 31,			September 30,			June 30,			December 31,
	2021			2021			2021			2020
		(in thousands)
Prepaid and debit card GDV	$	24,964,135		$	24,392,188		$	27,106,763		$	22,523,855

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

Business line quarterly summary
Quarter ended December 31, 2021
(dollars in millions)
				Balances
						% Growth
Major business lines		Average approximate rates *		Balances **		Year over year		Linked quarter annualized
Loans
Institutional banking ***		2.6%		$ 2,045		28%		27%
Small business lending****		5.0%		741		6%		(8%)
Leasing		5.9%		531		15%		13%
Commercial real estate (non-SBA at fair value)		4.7%		1,127		nm		nm
Real estate bridge lending		4.0%		622		nm		nm
Weighted average yield		3.9%		$ 5,066						Non-interest income
												% Growth
Deposits: Fintech solutions group										Current quarter		Year over year
Prepaid and debit card issuance, and other payments		0.1%		$ 4,948		7%		nm		$ 19.7		1%

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

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.

Quarterly activity for commercial loan discontinued principal

	Commercial
	loan principal
	(in millions)
Commercial loan discontinued principal September 30, 2021 before marks	$	48
Quarterly paydowns and other reductions		(4)
Commercial loan discontinued principal December 31, 2021 before marks		44
Marks December 31, 2021		(3)
Net commercial loan exposure December 31, 2021		41
Residential mortgages		23
Net loans		64
Florida mall in other real estate owned		15
2 properties in other real estate owned		3
Total discontinued assets at December 31, 2021	$	82

Discontinued commercial loan composition as of December 31, 2021

Collateral type	Unpaid principal balance			Mark at December 31, 2021			Mark as % of portfolio
		(in millions)
Commercial real estate - non-owner occupied:
Retail	$	4		$	(0.6)			15%
Office		2			—			—
Other		17			(0.1)			1%
Construction and land		10			(0.1)			1%
Commercial non-real estate and industrial		2			(0.1)			5%
1 to 4 family construction		3			(2.3)			77%
First mortgage residential non-owner occupied		3			—			—
Commercial real estate owner occupied:
Retail		1			—			—
Residential junior mortgage		1			—			—
Other		1			—			—
Total	$	44		$	(3.2)			7%
Less: mark		(3)
Net commercial loan exposure December 31, 2021	$	41		$	(3.2)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126005705/en/

The Bancorp, Inc. Contact

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Source: The Bancorp, Inc.

FAQ

What were The Bancorp's earnings in Q4 2021?

The Bancorp reported a net income of $27.0 million, or $0.46 per diluted share, for Q4 2021.

How did The Bancorp's loan portfolio change in Q4 2021?

Total loans increased by 41% to $3.75 billion at December 31, 2021, compared to $2.65 billion at the same time last year.

What is The Bancorp's guidance for 2022?

The Bancorp reaffirmed its guidance of $2.15 per share for the year 2022.

What was the return on assets and equity for The Bancorp in Q4 2021?

The return on assets was 1.7%, and the return on equity was 17% for Q4 2021.

How did The Bancorp's book value per share change from 2020 to 2021?

The book value per common share increased by 13% from $10.10 to $11.37 between December 31, 2020, and December 31, 2021.