The Bancorp, Inc. Reports Second Quarter 2023 Financial Results

Rhea-AI Summary

The Bancorp, Inc. reported a 68% increase in net income per diluted share for the second quarter of 2023 compared to the same period in 2022. The company's net interest income increased by 60%, and gross dollar volume grew by 15% year over year. The Bancorp also emphasized strong capital ratios and an increase in book value per common share.

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2023.

Highlights

• The Bancorp reported net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023, compared to net income of $30.4 million, or $0.53 per diluted share, for the quarter ended June 30, 2022, or a 68% increase in income per diluted share.

• Return on assets and equity for the quarter ended June 30, 2023 amounted to 2.6% and 27%, respectively, compared to 1.7% and 19%, respectively, for the quarter ended June 30, 2022 (all percentages “annualized”).

• Net interest income increased 60% to $87.2 million for the quarter ended June 30, 2023, compared to $54.6 million for the quarter ended June 30, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on the Bancorp’s variable rate loans and securities.

• Net interest margin amounted to 4.83% for the quarter ended June 30, 2023, compared to 3.17% for the quarter ended June 30, 2022, and 4.67% for the quarter ended March 31, 2023.

• Loans, net were $5.27 billion at June 30, 2023, compared to $5.49 billion at December 31, 2022 and $4.75 billion at June 30, 2022. Those changes reflected a decrease of 2% quarter over linked quarter and an increase of 11% year over year.

• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.38 billion, or 15%, to $32.78 billion for the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022. The increase reflects continued organic growth with existing partners and the impact of clients added within the past year. Total prepaid, debit card, ACH and other payment fees increased 10% to $24.6 million for the second quarter of 2023 compared to the second quarter of 2022.

• Small business loans (“SBL”), including those held at fair value, grew 10% year over year to $804.0 million at June 30, 2023, and 2% quarter over linked quarter. That growth excludes Paycheck Protection Program (“PPP”) loan balances which amounted to $3.8 million and $10.3 million at June 30, 2023 and June 30, 2022, respectively.

• Direct lease financing balances increased 13% year over year to $657.3 million at June 30, 2023, and 1% quarter over linked quarter.

• At June 30, 2023, real estate bridge loans of $1.83 billion had grown 4% compared to the $1.75 billion balance at March 31, 2023, and 65% compared to the June 30, 2022 balance of $1.11 billion. These real estate bridge loans consist entirely of apartment buildings.

• Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively decreased 15% year over year and decreased 8% quarter over linked quarter to $2.06 billion at June 30, 2023.

• The average interest rate on $6.60 billion of average deposits and interest-bearing liabilities during the second quarter of 2023 was 2.37%. Average deposits of $6.48 billion for the second quarter of 2023 reflected an increase of 4% from the $6.25 billion of average deposits for the quarter ended June 30, 2022.

• The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $2.8 billion as of June 30, 2023, as well as access to other liquidity.

• As of June 30, 2023, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 10.42%, 14.97%, 15.47% and 14.97%, 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 June 30, 2023 was $13.74 per share compared to $11.55 per common share at June 30, 2022, an increase of 19%. 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 828,727 shares of its common stock at an average cost of $30.17 per share during the quarter ended June 30, 2023.

CEO and President Damian Kozlowski commented, “The Bancorp continued to produce record core profits and exemplar profitability in the second quarter. The outlook remains positive for 2023 and 2024 and we expect increasing profitability and earnings per share, while navigating a difficult market environment for most banks. We are maintaining guidance at $3.60 a share, without including the impact of anticipated share buy backs of $25 million per quarter in 2023.”

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 28, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.259.6580, conference code 93720317. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, August 4, 2023 by dialing 1.877.674.7070, access code 720317#.

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							Six months ended
	June 30,							June 30,
Consolidated condensed income statements	2023			2022				2023			2022
	(Dollars in thousands, except per share and share data)
Net interest income	$	87,195		$	54,569			$	173,011		$	107,422
Provision for (reversal of) credit losses		361			(1,450	)			2,264			3,509
Non-interest income
ACH, card and other payment processing fees		2,429			2,338				4,600			4,322
Prepaid, debit card and related fees		22,177			20,038				45,500			38,690
Net realized and unrealized gains on commercial
loans, at fair value		1,921			3,682				3,646			10,517
Leasing related income		1,511			1,545				3,001			2,518
Other non-interest income		1,298			350				1,578			470
Total non-interest income		29,336			27,953				58,325			56,517
Non-interest expense
Salaries and employee benefits		33,167			25,999				62,952			49,847
Data processing expense		1,398			1,246				2,719			2,435
Legal expense		949			1,474				1,907			2,268
Legal settlement		—			1,152				—			1,152
FDIC insurance		472			673				1,427			1,647
Software		4,317			4,165				8,554			8,029
Other non-interest expense		9,640			8,136				20,414			15,819
Total non-interest expense		49,943			42,845				97,973			81,197
Income before income taxes		66,227			41,127				131,099			79,233
Income tax expense		17,218			10,725				32,968			19,865
Net income		49,009			30,402				98,131			59,368
Net income per share - basic	$	0.89		$	0.54			$	1.78		$	1.04
Net income per share - diluted	$	0.89		$	0.53			$	1.76		$	1.03
Weighted average shares - basic		54,871,681			56,801,518				55,160,642			56,962,000
Weighted average shares - diluted		55,269,640			57,453,730				55,653,950			57,772,538

Condensed consolidated balance sheets	June 30,				March 31,				December 31,				June 30,
	2023 (unaudited)				2023 (unaudited)				2022				2022 (unaudited)
	(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	6,496			$	13,736			$	24,063			$	12,873
Interest earning deposits at Federal Reserve Bank		874,050				773,446				864,126				329,992
Total cash and cash equivalents		880,546				787,182				888,189				342,865
Investment securities, available-for-sale, at fair value		776,410				787,429				766,016				826,616
Commercial loans, at fair value		396,581				493,334				589,143				995,493
Loans, net of deferred fees and costs		5,267,574				5,354,347				5,486,853				4,754,697
Allowance for credit losses		(23,284	)			(23,794	)			(22,374	)			(19,087	)
Loans, net		5,244,290				5,330,553				5,464,479				4,735,610
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock		20,157				12,629				12,629				1,643
Premises and equipment, net		26,408				21,319				18,401				16,693
Accrued interest receivable		34,062				33,729				32,005				19,264
Intangible assets, net		1,850				1,950				2,049				2,248
Other real estate owned		20,952				21,117				21,210				18,873
Deferred tax asset, net		19,215				18,290				19,703				23,344
Other assets		122,435				99,427				89,176				137,086
Total assets	$	7,542,906			$	7,606,959			$	7,903,000			$	7,119,735
Liabilities:
Deposits
Demand and interest checking	$	6,554,967			$	6,607,767			$	6,559,617			$	5,394,562
Savings and money market		68,084				96,890				140,496				486,189
Time deposits, $100,000 and over		—				—				330,000				—
Total deposits		6,623,051				6,704,657				7,030,113				5,880,751
Securities sold under agreements to repurchase		42				42				42				42
Short-term borrowings		—				—				—				385,000
Senior debt		95,682				99,142				99,050				98,866
Subordinated debenture		13,401				13,401				13,401				13,401
Other long-term borrowings		9,917				9,972				10,028				39,125
Other liabilities		51,646				54,597				56,335				46,014
Total liabilities	$	6,793,739			$	6,881,811			$	7,208,969			$	6,463,199
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 54,542,284 and 56,865,494 shares issued and outstanding at June 30, 2023 and 2022, respectively		54,542				55,330				55,690				56,865
Additional paid-in capital		256,115				277,814				299,279				323,774
Retained earnings		467,450				418,441				369,319				298,474
Accumulated other comprehensive loss		(28,940	)			(26,437	)			(30,257	)			(22,577	)
Total shareholders' equity		749,167				725,148				694,031				656,536
Total liabilities and shareholders' equity	$	7,542,906			$	7,606,959			$	7,903,000			$	7,119,735

Average balance sheet and net interest income	Three months ended June 30, 2023												Three months ended June 30, 2022
	(Dollars in thousands; unaudited)
	Average							Average				Average							Average
Assets:	Balance				Interest(1)			Rate				Balance				Interest(1)			Rate
Interest earning assets:
Loans, net of deferred fees and costs(2)	$	5,730,384			$	107,299			7.49	%		$	5,467,516			$	55,100		4.03	%
Leases-bank qualified(3)		3,801				100			10.52	%			3,665				63		6.88	%
Investment securities-taxable		778,100				9,873			5.08	%			879,112				5,432		2.47	%
Investment securities-nontaxable(3)		3,234				53			6.56	%			3,559				31		3.48	%
Interest earning deposits at Federal Reserve Bank		701,057				8,997			5.13	%			545,027				1,004		0.74	%
Net interest earning assets		7,216,576				126,322			7.00	%			6,898,879				61,630		3.57	%
Allowance for credit losses		(23,895	)										(20,295	)
Other assets		231,035											243,459
	$	7,423,716										$	7,122,043
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,399,750			$	36,688			2.29	%		$	5,697,507			$	4,390		0.31	%
Savings and money market		78,252				728			3.72	%			556,847				1,200		0.86	%
Total deposits		6,478,002				37,416			2.31	%			6,254,354				5,590		0.36	%
Short-term borrowings		—				—			—				11,593				32		1.10	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		9,949				128			5.15	%			—				—		—
Subordinated debentures		13,401				271			8.09	%			13,401				139		4.15	%
Senior debt		96,890				1,280			5.28	%			98,816				1,280		5.18	%
Total deposits and liabilities		6,598,283				39,095			2.37	%			6,378,205				7,041		0.44	%
Other liabilities		88,276											89,422
Total liabilities		6,686,559											6,467,627
Shareholders' equity		737,157											654,416
	$	7,423,716										$	7,122,043
Net interest income on tax equivalent basis(3)					$	87,227										$	54,589
Tax equivalent adjustment						32											20
Net interest income					$	87,195										$	54,569
Net interest margin(3)									4.83	%									3.17	%

(1)Interest on loans for 2023 and 2022 includes $10,000 and $41,000, respectively, of interest and fees on PPP loans.

(2)Includes commercial loans, at fair value. All periods include non-accrual loans.

(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

Average balance sheet and net interest income	Six months ended June 30, 2023											Six months ended June 30, 2022
	(Dollars in thousands; unaudited)
	Average							Average				Average							Average
Assets:	Balance				Interest(1)			Rate				Balance				Interest(1)			Rate
Interest earning assets:
Loans, net of deferred fees and costs(2)	$	5,858,040			$	213,503			7.29	%		$	5,302,850			$	105,638		3.98	%
Leases-bank qualified(3)		3,582				169			9.44	%			3,839				130		6.77	%
Investment securities-taxable		776,089				19,173			4.94	%			909,017				10,323		2.27	%
Investment securities-nontaxable(3)		3,288				94			5.72	%			3,559				62		3.48	%
Interest earning deposits at Federal Reserve Bank		640,864				15,582			4.86	%			616,865				1,351		0.44	%
Net interest earning assets		7,281,863				248,521			6.83	%			6,836,130				117,504		3.44	%
Allowance for credit losses		(23,215	)										(19,075	)
Other assets		234,037											232,402
	$	7,492,685										$	7,049,457
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,401,678			$	69,071			2.16	%		$	5,636,415			$	5,796		0.21	%
Savings and money market		105,105				1,947			3.70	%			544,515				1,400		0.51	%
Time deposits		41,933				858			4.09	%			—				—		—
Total deposits		6,548,716				71,876			2.20	%			6,180,930				7,196		0.23	%
Short-term borrowings		10,193				234			4.59	%			6,104				32		1.05	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		9,973				254			5.09	%			—				—		—
Subordinated debentures		13,401				532			7.94	%			13,401				255		3.81	%
Senior debt		97,985				2,559			5.22	%			98,770				2,559		5.18	%
Total deposits and liabilities		6,680,309				75,455			2.26	%			6,299,246				10,042		0.32	%
Other liabilities		90,777											95,716
Total liabilities		6,771,086											6,394,962
Shareholders' equity		721,599											654,495
	$	7,492,685										$	7,049,457
Net interest income on tax equivalent basis(3)					$	173,066										$	107,462
Tax equivalent adjustment						55											40
Net interest income					$	173,011										$	107,422
Net interest margin(3)									4.75	%									3.14	%

(1)Interest on loans for 2023 and 2022 includes $20,000 and $481,000, respectively, of interest and fees on PPP loans.

(2)Includes commercial loans, at fair value. All periods include non-accrual loans.

(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

Allowance for credit losses	Six months ended								Year ended
	June 30,				June 30,				December 31,
	2023 (unaudited)				2022 (unaudited)				2022
	(Dollars in thousands)
Balance in the allowance for credit losses at beginning of period	$	22,374			$	17,806			$	17,806
Loans charged-off:
SBA non-real estate		871				844				885
Direct lease financing		1,439				199				576
Consumer - other		3				—				—
Total		2,313				1,043				1,461
Recoveries:
SBA non-real estate		298				33				140
SBA commercial mortgage		75				—				—
Direct lease financing		175				93				124
Consumer - home equity		49				—				—
Other loans		—				—				24
Total		597				126				288
Net charge-offs		1,716				917				1,173
Provision for credit losses, excluding commitment provision		2,626				2,198				5,741
Balance in allowance for credit losses at end of period	$	23,284			$	19,087			$	22,374
Net charge-offs/average loans		0.03	%			0.02	%			0.03	%
Net charge-offs/average assets		0.02	%			0.01	%			0.02	%

Loan portfolio		June 30,			March 31,			December 31,			June 30,
		2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
		(Dollars in thousands)
SBL non-real estate		$	117,621		$	114,334		$	108,954		$	112,854
SBL commercial mortgage			515,008			492,798			474,496			425,219
SBL construction			32,471			33,116			30,864			27,042
Small business loans			665,100			640,248			614,314			565,115
Direct lease financing			657,316			652,541			632,160			583,086
SBLOC / IBLOC(1)			1,883,607			2,053,450			2,332,469			2,274,256
Advisor financing(2)			173,376			189,425			172,468			155,235
Real estate bridge loans			1,826,227			1,752,322			1,669,031			1,106,875
Other loans(3)			55,644			60,210			61,679			63,514
			5,261,270			5,348,196			5,482,121			4,748,081
Unamortized loan fees and costs			6,304			6,151			4,732			6,616
Total loans, including unamortized fees and costs		$	5,267,574		$	5,354,347		$	5,486,853		$	4,754,697

Small business portfolio	June 30,			March 31,			December 31,			June 30,
	2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
	(Dollars in thousands)
SBL, including unamortized fees and costs	$	673,667		$	648,858		$	621,641		$	571,559
SBL, included in loans, at fair value		134,131			140,909			146,717			168,579
Total small business loans(4)	$	807,798		$	789,767		$	768,358		$	740,138

(1)SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At June 30, 2023 and December 31, 2022, IBLOC loans amounted to $806.1 million and $1.12 billion, respectively.

(2)In 2020 The Bancorp began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value (“LTV”) 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.

(3)Includes demand deposit overdrafts reclassified as loan balances totaling $403,000 and $2.6 million at June 30, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the ACL and are immaterial.

(4)The SBLs held at fair value are comprised of the government guaranteed portion of 7(a) Program loans at the dates indicated.

Small business loans as of June 30, 2023
		Loan principal
		(Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)		$	382
PPP loans(1)			4
Commercial mortgage SBA(2)			259
Construction SBA(3)			12
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)			105
Non-SBA SBLs			35
Total principal		$	797
Unamortized fees and costs			11
Total SBLs		$	808

(1)Includes the portion of SBA 7(a) Program loans and PPP loans which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.

(2)Substantially all these loans are made under the 504 Program, which dictates origination date LTV percentages, generally 50-60%, to which the Bancorp adheres.

(3)Includes $8.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $4.0 million in SBA interim loans with an approved SBA post-construction full takeout/payoff.

(4)Includes the unguaranteed portion of 7(a) Program loans which are 70% or more guaranteed by the U.S. government. SBA 7(a) Program 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 7(a) Program loans and 504 Program loans require the personal guaranty of all 20% or greater owners.

Small business loans by type as of June 30, 2023
(Excludes government guaranteed portion of SBA 7(a) Program and PPP loans)
		SBL commercial mortgage(1)			SBL construction(1)			SBL non-real estate			Total				% Total
		(Dollars in millions)
Hotels and motels		$	74		$	—		$	—		$	74			18%
Full-service restaurants			24			4			2			30			7%
Funeral homes and funeral services			27			—			—			27			7%
Car washes			17			2			—			19			5%
Child day care services			15			1			1			17			4%
Outpatient mental health and substance abuse centers			16			—			—			16			4%
Homes for the elderly			13			—			—			13			3%
Gasoline stations with convenience stores			12			—			—			12			3%
Offices of lawyers			9			—			—			9			2%
Fitness and recreational sports centers			8			—			2			10			2%
Lessors of other real estate property			8			—			1			9			2%
Limited-service restaurants			2			2			3			7			2%
General warehousing and storage			7			—			—			7			2%
Plumbing, heating, and air-conditioning companies			6			—			1			7			2%
Specialty trade contractors			5			—			1			6			1%
Lessors of residential buildings and dwellings			5			—			—			5			1%
Other miscellaneous durable goods merchant			5			—			—			5			1%
Technical and trade schools			—			5			—			5			1%
Packaged frozen food merchant wholesalers			5			—			—			5			1%
Amusement and recreation industries			4			—			—			4			1%
Offices of dentists			2			1			—			3			1%
Warehousing and storage			3			—			—			3			1%
Vocational rehabilitation services			3			—			—			3			1%
Miscellaneous wood product manufacturing			3			—			—			3			1%
Other(2)			88			—			24			112			27%
Total		$	361		$	15		$	35		$	411			100%

(1)Of the SBL commercial mortgage and SBL construction loans, $106.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs.

(2)Loan types of less than $3.0 million are spread over approximately one hundred different business types.

State diversification as of June 30, 2023
(Excludes government guaranteed portion of SBA 7(a) Program loans and PPP loans)
		SBL commercial mortgage(1)			SBL construction(1)			SBL non-real estate			Total				% Total
			(Dollars in millions)
California		$	74		$	4		$	3		$	81			20%
Florida			68			1			3			72			18%
North Carolina			33			7			2			42			10%
New York			26			—			3			29			7%
New Jersey			20			—			3			23			6%
Pennsylvania			21			—			—			21			5%
Georgia			16			—			1			17			4%
Illinois			14			—			1			15			4%
Texas			12			—			4			16			4%
Other States <$15 million			77			3			15			95			22%
Total		$	361		$	15		$	35		$	411			100%

(1)Of the SBL commercial mortgage and SBL construction loans, $106.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs.

Top 10 loans as of June 30, 2023
Type(1)		State			SBL commercial mortgage
					(Dollars in millions)
Mental health and substance abuse center			FL		$	10
Funeral homes and funeral services			ME			9
Hotel			FL			9
Lawyer's office			CA			8
Hotel			NC			7
General warehousing and storage			PA			7
Hotel			FL			6
Hotel			NY			6
Hotel			NC			6
Mental health and substance abuse center			NJ			5
Total					$	73

(1)All ten largest loans in our SBL portfolio are SBA 504 Program loans with 50%-60% origination date LTVs. The 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 June 30, 2023
Type			# Loans			Balance		Weighted average origination date LTV		Weighted average interest rate
			(Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)(1)			136		$	1,826		71%		8.90%
Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)(1)			12		$	216		76%		8.70%
Hospitality (hotels and lodging)			2			28		65%		9.10%
Retail			2			12		72%		7.30%
Other			2			9		73%		5.20%
			18			265		74%		8.55%
Fair value adjustment						(3)
Total non-SBA commercial real estate loans, at fair value						262
Total commercial real estate loans					$	2,088		72%		8.87%

(1)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 they are not accounted for at fair value.

State diversification as of June 30, 2023									15 largest loans as of June 30, 2023
State			Balance			Origination date LTV			State				Balance		Origination date LTV
(Dollars in millions)												(Dollars in millions)
Texas		$	768			73%			Texas			$	43		72%
Georgia			258			70%			Texas				42		75%
Florida			220			70%			Texas				39		75%
Ohio			91			69%			Tennessee				37		72%
Tennessee			84			70%			Michigan				37		62%
Michigan			69			70%			Florida				33		72%
Alabama			67			72%			Texas				33		67%
Other States each <$65 million			531			72%			Michigan				33		79%
Total		$	2,088			72%			Oklahoma				31		78%
									Texas				31		62%
									Indiana				30		76%
									Ohio				29		74%
									Georgia				29		69%
									Texas				29		77%
									New Jersey				28		77%
									15 largest commercial real estate loans			$	504		73%

Institutional banking loans outstanding at June 30, 2023
Type	Principal			% of total
		(Dollars in millions)
SBLOC	$	1,078		52%
IBLOC		806		39%
Advisor financing		173		9%
Total	$	2,057		100%

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While the value of equities has 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. Second, 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 June 30, 2023
	Principal amount			% Principal to collateral
	(Dollars in millions)
	$	18		41%
		16		62%
		14		35%
		10		32%
		9		64%
		9		44%
		8		70%
		8		73%
		6		29%
		6		51%
Total and weighted average	$	104		49%

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us. We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, fifteen insurance companies have been approved and, as of June 30, 2023, all were rated A- (Excellent) or better by AM BEST.

Direct lease financing by type as of June 30, 2023
		Principal balance(1)		% Total
		(Dollars in millions)
Construction	$	118		18%
Government agencies and public institutions(2)		82		12%
Waste management and remediation services		81		12%
Real estate and rental and leasing		71		11%
Retail trade		47		7%
Health care and social assistance		30		5%
Manufacturing		22		3%
Professional, scientific, and technical services		21		3%
Finance and insurance		18		3%
Wholesale trade		17		3%
Transportation and warehousing		12		2%
Educational services		9		1%
Mining, quarrying, and oil and gas extraction		8		1%
Other		121		19%
Total	$	657		100%

(1)Of the total $657.0 million of direct lease financing, $579.0 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

(2)Includes public universities and school districts.

Direct lease financing by state as of June 30, 2023
State		Principal balance		% Total
		(Dollars in millions)
Florida	$	93		14%
Utah		65		10%
California		61		9%
Pennsylvania		40		6%
New Jersey		39		6%
New York		33		5%
North Carolina		32		5%
Texas		30		5%
Maryland		29		4%
Connecticut		27		4%
Washington		16		2%
Idaho		16		2%
Georgia		14		2%
Iowa		13		2%
Ohio		12		2%
Other States		137		22%
Total	$	657		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 June 30, 2023
The Bancorp, Inc.	10.42%		14.97%		15.47%		14.97%
The Bancorp Bank, National Association	11.59%		16.67%		17.16%		16.67%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%		8.00%		10.00%		6.50%
As of December 31, 2022
The Bancorp, Inc.	9.63%		13.40%		13.87%		13.40%
The Bancorp Bank, National Association	10.73%		14.95%		15.42%		14.95%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%		8.00%		10.00%		6.50%

	Three months ended						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Selected operating ratios
Return on average assets(1)	2.65%			1.71%			2.64%			1.70%
Return on average equity(1)	26.67%			18.63%			27.42%			18.29%
Net interest margin	4.83%			3.17%			4.75%			3.14%

(1)Annualized

Book value per share table	June 30,			March 31,			December 31,			June 30,
	2023			2023			2022			2022
Book value per share	$	13.74		$	13.11		$	12.46			11.55

Loan quality table	June 30,			March 31,			December 31,			June 30,
	2023			2022			2022			2022
	(Dollars in thousands)
Nonperforming loans to total loans		0.28%			0.26%			0.33%			0.18%
Nonperforming assets to total assets		0.47%			0.46%			0.50%			0.39%
Allowance for credit losses to total loans		0.44%			0.44%			0.41%			0.40%
Nonaccrual loans	$	14,027		$	12,938		$	10,356		$	3,698
Loans 90 days past due still accruing interest		563			873			7,775			4,848
Other real estate owned		20,952			21,117			21,210			18,873
Total nonperforming assets	$	35,542		$	34,928		$	39,341		$	27,419

Gross dollar volume (GDV) (1)	Three months ended
	June 30,			March 31,			December 31,			June 30,
	2023			2022			2022			2022
	(Dollars in thousands)
Prepaid and debit card GDV	$	32,776,154		$	34,011,792		$	29,454,074		$	28,394,897

(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 June 30, 2023
(Dollars in millions)
				Balances
							% Growth
Major business lines		Average approximate rates(1)		Balances(2)			Year over year		Linked quarter annualized
Loans
Institutional banking(3)		6.4%		$	2,057		(15%)		(33%)
Small business lending(4)		6.8%			808		10%		9%
Leasing		6.9%			657		13%		2%
Commercial real estate (non-SBA loans, at fair value)		8.5%			262		nm		nm
Real estate bridge loans (recorded at book value)		9.0%			1,826		65%		17%
Weighted average yield		7.5%		$	5,610						Non-interest income
														% Growth
Deposits: Fintech solutions group											Current quarter			Year over year
Prepaid and debit card issuance, and other payments		2.3%		$	5,985		6%		nm		$	24.6		10%

(1)Average rates are for the three months ended June 30, 2023.

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

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

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

Summary of credit lines available

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

	June 30, 2023
	(Dollars in thousands)
Federal Reserve Bank	$	2,055,492
Federal Home Loan Bank		752,400
Total lines of credit available	$	2,807,892

Estimated insured vs uninsured deposits

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

	June 30, 2023
Insured		91%
Low balance accounts		5%
Other uninsured		4%
Total deposits		100%

Calculation of efficiency ratio(1)
	Three months ended
	June 30,			December 31,
	2023			2022
	(Dollars in thousands)
Net interest income	$	87,195		$	76,760
Non-interest income		29,336			25,740
Total revenue	$	116,531		$	102,500
Non-interest expense	$	49,943		$	43,475
Efficiency ratio		43%			42%

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726581251/en/

The Bancorp, Inc.

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Source: The Bancorp, Inc.

FAQ

What is The Bancorp's stock ticker?

The Bancorp's stock ticker is TBBK.

When is The Bancorp's Quarterly Earnings Conference Call?

The Bancorp's Quarterly Earnings Conference Call is scheduled for 8:00 AM ET on Friday, July 28, 2023.

What was The Bancorp's net income for the second quarter of 2023?

The Bancorp reported net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023.

How much did The Bancorp's net interest income increase by for the second quarter of 2023?

The Bancorp's net interest income increased by 60% to $87.2 million for the quarter ended June 30, 2023, compared to $54.6 million for the quarter ended June 30, 2022.