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

Rhea-AI Summary

The Bancorp, Inc. (NASDAQ: TBBK) reported a strong performance for Q4 2022, with net income rising 54% year-over-year to $40.2 million, or $0.71 per diluted share. Key metrics include a net interest income increase of 47% to $76.8 million, and a net interest margin of 4.21%. Total loans grew to $5.49 billion, reflecting a 45% annual increase. Gross dollar volume for prepaid and debit cards rose 13% to $28.07 billion. The company confirmed a 2023 EPS guidance of $3.20, indicating a 40% improvement. Share repurchases are set to increase to $25 million per quarter. The Bancorp remains well capitalized with a book value of $12.46 per share.

Positive

• Net income increased 54% year-over-year to $40.2 million.
• Net interest income rose 47% to $76.8 million.
• Total loans increased 45% year-over-year to $5.49 billion.
• 2023 EPS guidance of $3.20, a 40% increase from 2022.
• Share repurchases are set to increase to $25 million per quarter.

Negative

• None.

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2022.

Highlights

• The Bancorp reported net income of $40.2 million, or $0.71 per diluted share, for the quarter ended December 31, 2022, compared to net income of $27.0 million, or $0.46 per diluted share, for the quarter ended December 31, 2021, or a 54% increase in income per diluted share.
• Return on assets and equity for the quarter ended December 31, 2022 amounted to 2.1% and 24%, respectively, compared to 1.7% and 17%, respectively, for the quarter ended December 31, 2021 (all percentages “annualized”).
• Net interest income increased 47% to $76.8 million for the quarter ended December 31, 2022, compared to $52.2 million for the quarter ended December 31, 2021.
• Net interest margin amounted to 4.21% for the quarter ended December 31, 2022, compared to 3.51% for the quarter ended December 31, 2021, and 3.69% for the quarter ended September 30, 2022.
• Excluding commercial loans, at fair value, which were originally generated for sale, total loans increased to $5.49 billion at December 31, 2022, compared to $5.27 billion at September 30, 2022 and $3.75 billion at December 31, 2021. Those increases reflected growth of 4% quarter over quarter and 45% year over year. Those percentage increases exclude the impact of $50.4 million of December 31, 2022 balances previously included in discontinued assets which were reclassified to loans held for investment in the first quarter of 2022.
• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $3.25 billion, or 13%, to $28.07 billion for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021. Total prepaid, debit card, ACH and other payment fees increased 10% to $21.8 million for fourth quarter 2022 compared to the fourth quarter of 2021.
• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 22% year over year and decreased 1% quarter over quarter to $2.50 billion at December 31, 2022.
• Small Business Loans, including those held at fair value, grew 10% year over year to $763.8 million at December 31, 2022, and 4% quarter over quarter. That growth is exclusive of PPP loan balances which amounted to $4.5 million and $44.8 million, respectively, at December 31, 2022 and December 31, 2021.
• Direct lease financing balances increased 19% year over year to $632.2 million at December 31, 2022, and 5% quarter over quarter.
• We resumed non-SBA commercial real estate bridge lending in the third quarter of 2021. At December 31, 2022, the balance of such real estate bridge loans, consisting of apartment buildings, was $1.67 billion compared to $1.49 billion at September 30, 2022, reflecting quarter over quarter growth of 12%. At December 31, 2021, these loans totaled $621.7 million.
• The average interest rate on $6.80 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2022 was 1.77%. Average deposits of $6.62 billion for the fourth quarter of 2022, reflected an increase of 25% from the $5.31 billion of average deposits for the quarter ended December 31, 2021.
• As of December 31, 2022, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.63%, 13.40%, 13.87% and 13.40%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.
• Book value per common share at December 31, 2022 was $12.46 per share compared to $11.37 per share at December 31, 2021, an increase of 10%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.
• The Bancorp repurchased 553,003 shares of its common stock at an average cost of $27.12 per share during the quarter ended December 31, 2022.

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

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 27, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.396.8049, access code 92735961. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 3, 2023 by dialing 1.877.674.7070, access code 735961#.

About The Bancorp

The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, National Association, (or “The Bancorp Bank, N. A.”) provides non-bank financial companies with the people, processes, and technology to meet their unique banking needs. Through its Fintech Solutions, Institutional Banking, Commercial Lending, and Real Estate Bridge Lending businesses, The Bancorp provides partner-focused solutions paired with cutting-edge technology for companies that range from entrepreneurial startups to Fortune 500 companies. With over 20 years of experience, The Bancorp has become a leader in the financial services industry, earning recognition as the #1 issuer of prepaid cards in the U.S., a nationwide provider of bridge financing for real estate capital improvement plans, an SBA National Preferred Lender, a leading provider of securities-backed lines of credit, with one of the few bank-owned commercial vehicle leasing groups. By its company-wide commitment to excellence, The Bancorp has also been ranked as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600. For more about The Bancorp, visit https://thebancorp.com/.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp’s business which are not historical facts are "forward-looking statements." These statements may be identified by the use of forward-looking terminology, including but not limited to the words “intend,” “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “plan,” “estimate,” “continue,” or similar words , and are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results, events or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see The Bancorp’s filings with the Securities and Exchange Commission, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those filings. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this press release, except as may be required under applicable law.

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

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

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

* Includes commercial loans, at fair value. All periods include non-accrual loans.
** Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2022 and 2021.

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

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

* Includes commercial loans, at fair value. All periods include non-accrual loans.
** Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2022 and 2021.

NOTE: In the table above, the 2021 interest on loans reflects $4.6 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund PPP loans, which did not materially increase average loans or assets and which are not expected to recur. Interest on loans for 2022 and 2021 includes $514,000 and $5.8 million, respectively, of interest and fees on PPP loans.

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

⁽¹⁾ Excludes activity from discontinued operations.

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

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

* Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of eligible life insurance policies.
** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to 70% of the estimated business enterprise value, based on a third-party valuation, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.
*** Includes demand deposit overdrafts reclassified as loan balances totaling $2.6 million and $322,000 at December 31, 2022 and December 31, 2021, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.
****The small business loans held at fair value are comprised of the government guaranteed portion of certain SBA loans at the dates indicated.

Small business loans as of December 31, 2022

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

(a) This is the portion of SBA 7a loans (7a) and PPP loans that have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.
(b) Substantially all these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan to value percentages (LTV), generally 50-60%, to which the Bank adheres.
(c) Of the $10 million in Construction SBA loans, $9 million are 504 first mortgages with an origination date LTV of 50-60% and $1 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.
(d) The $100 million represents the unguaranteed portion of 7a loans which are generally 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.

Small business loans by type as of December 31, 2022

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

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

* Of the SBL commercial mortgage and SBL construction loans, $85 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.
**Loan types less than $3 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

State diversification as of December 31, 2022

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

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

* Of the SBL commercial mortgage and SBL construction loans, $85 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

Top 10 loans as of December 31, 2022

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

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

Type as of December 31, 2022

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

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

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

Institutional banking loans outstanding at December 31, 2022

Type	Principal			% of total
		(Dollars in millions)
Securities backed lines of credit (SBLOC)	$	1,209		48%
Insurance backed lines of credit (IBLOC)		1,124		45%
Advisor financing		172		7%
Total	$	2,505		100%

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While equities have fallen in excess of 30% in recent years, the reduction in collateral value of brokerage accounts collateralizing SBLOCs generally has been less, for two reasons. First, many collateral accounts are “balanced” and accordingly have a component of debt securities, which have either not decreased in value as much as equities, or in some cases may have increased in value. Secondly, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the percentage of principal to collateral.

Top 10 SBLOC loans at December 31, 2022

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

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us. We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, nine insurance companies have been approved and, as of December 31, 2022, all were rated A- or better by AM BEST.

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

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

* Of the total $632 million of direct lease financing, $555 million consisted of vehicle leases with the remaining balance consisting of equipment leases..
** Includes public universities and school districts.

Direct lease financing by state as of December 31, 2022

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

Capital ratios	Tier 1 capital		Tier 1 capital		Total capital		Common equity
	to average		to risk-weighted		to risk-weighted		tier 1 to risk
	assets ratio		assets ratio		assets ratio		weighted assets
As of December 31, 2022
The Bancorp, Inc.	9.63%		13.40%		13.87%		13.40%
The Bancorp Bank, National Association	10.73%		14.95%		15.42%		14.95%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%		8.00%		10.00%		6.50%
As of December 31, 2021
The Bancorp, Inc.	10.40%		14.72%		15.13%		14.72%
The Bancorp Bank, National Association	10.98%		15.48%		15.88%		15.48%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%		8.00%		10.00%		6.50%

	Three months ended						Year ended
	December 31,						December 31,
	2022			2021			2022			2021
Selected operating ratios
Return on average assets (1)		2.13%			1.73%			1.81%			1.68%
Return on average equity (1)		23.52%			16.60%			19.34%			17.94%
Net interest margin		4.21%			3.51%			3.55%			3.35%

⁽¹⁾ Annualized

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

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

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

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

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

Business line quarterly summary
Quarter ended December 31, 2022
(Dollars in millions)
				Balances
							% Growth
Major business lines		Average approximate rates *		Balances **			Year over year		Linked quarter annualized
Loans
Institutional banking ***		5.3%		$	2,505		22%		(5)%
Small business lending****		6.1%			768		10%		17%
Leasing		6.3%			632		19%		22%
Commercial real estate (non-SBA loans, at fair value)		7.3%			443		nm		nm
Real estate bridge loans (recorded at book value)		7.4%			1,669		nm		nm
Weighted average yield		6.2%		$	6,017						Non-interest income
														% Growth
Deposits: Fintech solutions group											Current quarter			Year over year
Prepaid and debit card issuance, and other payments		1.8%		$	5,685		15%		nm		$	21.8		10%

* Average rates are for the quarter ended December 31, 2022.
** Loan and deposit categories are respectively based on period-end and average quarterly balances.
*** Institutional Banking loans are comprised of security backed lines of credit (SBLOC), collateralized by marketable securities, insurance backed lines of credit (IBLOC), collateralized by the cash surrender value of eligible life insurance policies, and investment advisor financing.
**** Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230124005844/en/

The Bancorp, Inc.

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Source: The Bancorp, Inc.

FAQ

What were The Bancorp's financial results for Q4 2022?

The Bancorp reported net income of $40.2 million, or $0.71 per diluted share, for Q4 2022.

What is the net interest margin for The Bancorp in Q4 2022?

The net interest margin was 4.21% in Q4 2022.

How much did total loans grow for The Bancorp by the end of December 2022?

Total loans grew to $5.49 billion, a 45% increase year-over-year.

What guidance did The Bancorp provide for EPS in 2023?

The Bancorp confirmed a guidance of $3.20 per share for 2023, representing a 40% improvement over 2022.

How much does The Bancorp plan to use for share repurchase in 2023?

The Bancorp plans to increase its share repurchases to $25 million per quarter in 2023.