The Bancorp, Inc. Reports Third Quarter 2021 Financial Results

Rhea-AI Summary

The Bancorp, Inc. (TBBK) reported a net income of $28.3 million or $0.48 diluted EPS for Q3 2021, reflecting a year-over-year increase from $23.3 million or $0.40 EPS. Return on assets and equity improved to 1.8% and 18%, respectively. Net interest income rose to $50.9 million, while net interest margin was 3.35%. The company projected $2.15 EPS guidance for 2022, indicating a 21% growth from current guidance. The Bancorp also repurchased 440,887 shares at an average cost of $22.68.

Positive

• Net income increased by 21.5% year-over-year to $28.3 million.
• Diluted EPS rose to $0.48, up from $0.40 in the previous year.
• Projected guidance for 2022 EPS is $2.15, indicating a 21% increase.
• Shares repurchased totaled 440,887 at an average cost of $22.68.

Negative

• Net interest margin decreased slightly from 3.37% in Q3 2020 to 3.35% in Q3 2021.
• Average deposits dropped 1% year-over-year.

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

Highlights

• For the quarter ended September 30, 2021, The Bancorp earned net income of $28.3 million, or $0.48 diluted earnings per share.

• Return on assets and equity for the quarter ended September 30, 2021 amounted to 1.8% and 18%, respectively, compared to 1.5% and 17%, respectively, for the quarter ended September 30, 2020 (all percentages “annualized.”)

• Net interest margin amounted to 3.35% for the quarter ended September 30, 2021, compared to 3.37% for the quarter ended September 30, 2020 and 3.19% for the quarter ended June 30, 2021.

• Net interest income was $50.9 million for the quarter ended September 30, 2021 compared to $50.0 million for the quarter ended September 30, 2020. In third quarter 2021, growth in net interest income was significantly offset by the $1.9 million impact of loan prepayments on commercial real estate loan interest. However, net realized and unrealized gains on commercial loans increased $3.6 million in third quarter 2021 compared to third quarter 2020, which resulted primarily from fees related to those prepayments. In the third quarter of 2021, we recommenced the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs.

• Average loans and leases, including loans at fair value, increased 9% to $4.58 billion for the quarter ended September 30, 2021, compared to $4.21 billion for the quarter ended September 30, 2020.

• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $428.7 million, or 2%, to $24.4 billion for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020. GDV for the 2020 quarter included the impact of significant government stimulus resulting from the Covid-19 pandemic.

• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 32% year over year and 6% quarter over quarter to $1.92 billion at September 30, 2021.

• Small Business Loans, including those held at fair value, grew 12% year over year to $709.5 million at September 30, 2021. That growth and $709.5 million balance are exclusive of Paycheck Protection Program (“PPP”) loan balances of $71.3 million and $207.9 million, respectively, at September 30, 2021 and September 30, 2020.

• Direct lease financing balances increased 19% year over year to $514.1 million at September 30, 2021.

• The average interest rate on $5.66 billion of average deposits and interest-bearing liabilities during the third quarter of 2021 was 0.18%. Average deposits of $5.53 billion for the third quarter 2021, reflected a decrease of 1% from the $5.56 billion of average deposits for the quarter ended September 30, 2020.

• As of September 30, 2021, substantially all of the borrowers with Covid-19 related payment deferrals had recommenced making payments, with only approximately $1.3 million of non-U.S. guaranteed loan principal remaining in deferral.

• Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 9.82% and 10.24%, respectively, at September 30, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized.

• Book value per common share at September 30, 2021 was $11.13 per share compared to $9.71 per share at September 30, 2020, an increase of 15%, primarily as a result of retained earnings.

• The Bancorp repurchased 440,887 shares of its common stock at an average cost of $22.68 per share during the quarter ended September 30, 2021.

“We continue to experience business momentum across our platform and strong pipelines that will support continued growth into 2022”, said CEO and President Damian Kozlowski. “We are issuing preliminary guidance of $2.15 a share for 2022 or approximately 21% growth over the current 2021 guidance of $1.78. The $2.15 does not include the impact of planned buybacks. In addition, in 2022, we intend to increase our stock buyback to $15 million a quarter from $10 million a quarter.”

The Bancorp reported net income of $28.3 million, or $0.48 per diluted share, for the quarter ended September 30, 2021, compared to net income of $23.3 million, or $0.40 per diluted share, for the quarter ended September 30, 2020. Tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.82%, 15.69%, 16.10% and 15.69%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, October 29, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 9257937. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 5, 2021 by dialing 855.859.2056, access code 9257937.

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

Forward-Looking Statements

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

The Bancorp, Inc. Financial highlights (unaudited)
		Three months ended						Nine months ended
		September 30,						September 30,
Condensed income statement	2021			2020			2021			2020
		(in thousands, except per share data)
Net interest income	$	50,893		$	49,996		$	158,719		$	143,153
Provision for credit losses		1,613			1,297			1,484			5,798
Non-interest income
ACH, card and other payment processing fees		1,905			1,760			5,605			5,313
Prepaid, debit card and related fees		18,223			19,434			56,878			56,647
Net realized and unrealized gains (losses) on commercial
loans, at fair value		4,306			684			8,881			(5,412)
Change in value of investment in unconsolidated entity		—			—			—			(45)
Leasing related income		1,968			1,519			4,700			2,795
Other non-interest income		186			955			459			2,019
Total non-interest income		26,588			24,352			76,523			61,317
Non-interest expense
Salaries and employee benefits		25,094			26,417			77,839			74,650
Data processing expense		1,209			1,192			3,481			3,538
Legal expense		1,251			994			5,349			4,136
FDIC insurance		266			2,180			5,235			7,687
Software		4,045			3,595			11,435			10,458
Other non-interest expense		7,519			7,648			21,811			22,595
Total non-interest expense		39,384			42,026			125,150			123,064
Income from continuing operations before income taxes		36,484			31,025			108,608			75,608
Income tax expense		8,289			7,894			25,195			19,033
Net income from continuing operations		28,195			23,131			83,413			56,575
Discontinued operations
Income (loss) from discontinued operations before income taxes		87			(1,671)			324			(2,720)
Income tax expense (benefit)		21			(1,794)			76			(2,058)
Net income (loss) from discontinued operations, net of tax		66			123			248			(662)
Net income	$	28,261		$	23,254		$	83,661		$	55,913
Net income per share from continuing operations - basic	$	0.49		$	0.40		$	1.45		$	0.98
Net income (loss) per share from discontinued operations - basic	$	—		$	—		$	0.01		$	(0.01)
Net income per share - basic	$	0.49		$	0.40		$	1.46		$	0.97
Net income per share from continuing operations - diluted	$	0.48		$	0.40		$	1.41		$	0.97
Net income (loss) per share from discontinued operations - diluted	$	—		$	—		$	0.01		$	(0.01)
Net income per share - diluted	$	0.48		$	0.40		$	1.42		$	0.96
Weighted average shares - basic		57,198,778			57,588,168			57,221,174			57,433,477
Weighted average shares - diluted		58,628,306			58,471,192			58,932,146			58,051,833

Note: Compared to higher rates in recent periods, the effective tax rate for the three and nine months ended September 30, 2021 approximated 23% as a result of the impact of excess tax deductions related to stock-based compensation, recorded as discrete items. The large deductions and tax benefits resulted from the increase in the Company’s stock price as compared to the original grant date.

Balance sheet	September 30,				June 30,				December 31,				September 30,
	2021 (unaudited)				2021 (unaudited)				2020				2020 (unaudited)
		(in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	6,687			$	5,470			$	5,984			$	6,220
Interest earning deposits at Federal Reserve Bank		310,642				583,498				339,531				294,758
Total cash and cash equivalents		317,329				588,968				345,515				300,978
Investment securities, available-for-sale, at fair value		1,054,223				1,106,075				1,206,164				1,264,903
Commercial loans, at fair value		1,550,025				1,690,216				1,810,812				1,849,947
Loans, net of deferred fees and costs		3,136,662				2,915,344				2,652,323				2,488,760
Allowance for credit losses		(16,159	)			(15,292	)			(16,082	)			(15,727	)
Loans, net		3,120,503				2,900,052				2,636,241				2,473,033
Federal Home Loan Bank and Atlantic Central Bankers Bank stock		1,663				1,667				1,368				1,368
Premises and equipment, net		16,602				17,392				17,608				15,849
Accrued interest receivable		17,180				18,668				20,458				18,852
Intangible assets, net		2,547				2,646				2,845				2,563
Other real estate owned		2,145				—				—				—
Deferred tax asset, net		12,237				10,923				9,757				7,952
Investment in unconsolidated entity, at fair value		—				24,988				31,294				31,783
Assets held-for-sale from discontinued operations		87,904				97,496				113,650				122,253
Other assets		86,105				91,516				81,129				79,821
Total assets	$	6,268,463			$	6,550,607			$	6,276,841			$	6,169,302
Liabilities:
Deposits
Demand and interest checking	$	4,734,352			$	5,225,024			$	5,205,010			$	4,882,834
Savings and money market		378,160				459,688				257,050				505,928
Total deposits		5,112,512				5,684,712				5,462,060				5,388,762
Securities sold under agreements to repurchase		42				42				42				42
Short-term borrowings		300,000				—				—				—
Senior debt		98,590				98,498				98,314				98,222
Subordinated debenture		13,401				13,401				13,401				13,401
Other long-term borrowings		39,715				39,901				40,277				40,462
Other liabilities		66,226				94,944				81,583				69,954
Total liabilities	$	5,630,486			$	5,931,498			$	5,695,677			$	5,610,843
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,330,846 and 57,490,874 shares issued and outstanding at September 30, 2021 and 2020, respectively		57,331				57,458				57,551				57,491
Additional paid-in capital		357,528				363,241				377,452				375,985
Retained earnings		212,114				183,853				128,453				104,282
Accumulated other comprehensive income		11,004				14,557				17,708				20,701
Total shareholders' equity		637,977				619,109				581,164				558,459
Total liabilities and shareholders' equity	$	6,268,463			$	6,550,607			$	6,276,841			$	6,169,302

Note: Previous balance sheets included investment in unconsolidated entity, which reflected Bancorp’s balance of the Walnut Street investment. Walnut Street was comprised of Bancorp loans sold to that entity, which was partially financed by an independent investor. In the third quarter of 2021, The Bancorp and that investor dissolved the entity, as the remaining balance did not warrant ongoing administrative and accounting expenses. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.

Average balance sheet and net interest income		Three months ended September 30, 2021									Three months ended September 30, 2020
		(dollars in thousands; unaudited)
		Average						Average			Average					Average
Assets:		Balance			Interest			Rate			Balance			Interest		Rate
Interest earning assets:
Loans, net of deferred fees and costs**	$	4,573,431		$	46,357			4.05%		$	4,202,054		$	44,318		4.22%
Leases-bank qualified*		5,031			87			6.92%			8,026			146		7.28%
Investment securities-taxable		1,012,007			6,882			2.72%			1,300,191			7,911		2.43%
Investment securities-nontaxable*		3,558			32			3.60%			4,041			35		3.46%
Interest earning deposits at Federal Reserve Bank		479,350			167			0.14%			413,259			106		0.10%
Net interest earning assets		6,073,377			53,525			3.53%			5,927,571			52,516		3.54%
Allowance for credit losses		(16,277)									(14,587)
Assets held-for-sale from discontinued operations		90,598			754			3.33%			124,916			890		2.85%
Other assets		214,715									195,125
	$	6,362,413								$	6,233,025
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,124,189		$	1,063			0.08%		$	5,079,711		$	1,591		0.13%
Savings and money market		404,775			146			0.14%			484,323			139		0.11%
Total deposits		5,528,964			1,209			0.09%			5,564,034			1,730		0.12%
Short-term borrowings		13,097			7			0.21%			3,260			1		0.12%
Repurchase agreements		41			—			—			41			—		—
Subordinated debentures		13,401			112			3.34%			13,401			118		3.52%
Senior debt		100,329			1,279			5.10%			53,260			633		4.75%
Total deposits and liabilities		5,655,832			2,607			0.18%			5,633,996			2,482		0.18%
Other liabilities		78,038									53,260
Total liabilities		5,733,870									5,687,256
Shareholders' equity		628,543									545,769
	$	6,362,413								$	6,233,025
Net interest income on tax equivalent basis*				$	51,672								$	50,924
Tax equivalent adjustment					25									38
Net interest income				$	51,647								$	50,886
Net interest margin *								3.35%								3.37%

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value. All periods include non-accrual loans.

NOTE: In the table above, interest on loans for 2021 includes $1.2 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.

Average balance sheet and net interest income	Nine months ended September 30, 2021									Nine months ended September 30, 2020
		(dollars in thousands; unaudited)
	Average							Average		Average						Average
Assets:	Balance			Interest				Rate		Balance			Interest			Rate
Interest earning assets:
Loans, net of deferred fees and costs**	$	4,541,262		$	143,546			4.21%		$	3,798,104		$	124,924		4.39%
Leases-bank qualified*		5,925			301			6.77%			9,401			509		7.22%
Investment securities-taxable		1,094,633			22,891			2.79%			1,343,211			28,594		2.84%
Investment securities-nontaxable*		3,824			99			3.45%			4,537			110		3.23%
Interest earning deposits at Federal Reserve Bank		781,606			650			0.11%			444,323			1,836		0.55%
Net interest earning assets		6,427,250			167,487			3.47%			5,599,576			155,973		3.71%
Allowance for credit losses		(16,254)									(13,225)
Assets held for sale from discontinued operations		99,472			2,388			3.20%			130,880			3,259		3.32%
Other assets		225,802									243,629
	$	6,736,270								$	5,960,860
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,452,604		$	4,007			0.10%		$	4,858,666		$	9,676		0.27%
Savings and money market		446,016			487			0.15%			298,049			309		0.14%
Time deposits		—			—			—			106,113			1,483		1.86%
Total deposits		5,898,620			4,494			0.10%			5,262,828			11,468		0.29%
Short-term borrowings		8,717			15			0.23%			25,419			181		0.95%
Repurchase agreements		41			—			—			51			—		—
Subordinated debentures		13,401			337			3.35%			13,401			408		4.06%
Senior debt		100,237			3,838			5.11%			17,883			633		4.72%
Total deposits and liabilities		6,021,016			8,684			0.19%			5,319,582			12,690		0.32%
Other liabilities		105,683									119,961
Total liabilities		6,126,699									5,439,543
Shareholders' equity		609,571									521,317
	$	6,736,270								$	5,960,860
Net interest income on tax equivalent basis*				$	161,191								$	146,542
Tax equivalent adjustment					84									130
Net interest income				$	161,107								$	146,412
Net interest margin *								3.29%								3.41%

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value. All periods include non-accrual loans.

NOTE: In the table above, the 2021 interest on loans reflects $4.6 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund PPP loans, which did not significantly increase average loans or assets and which are not expected to recur. Interest on loans in 2021 also includes $4.9 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $3.7 million. Increases in interest earning deposits at the Federal Reserve Bank reflect increased deposits resulting from stimulus payments distributed to a large segment of the population, resulting from December 2020 federal legislation.

Allowance for credit losses	Nine months ended						Year ended
	September 30,			September 30,			December 31,
	2021 (unaudited)			2020 (unaudited)			2020
		(dollars in thousands)
Balance in the allowance for credit losses at beginning of period (1)	$	16,082		$	12,875		$	12,875
Loans charged-off:
SBA non-real estate		896			1,350			1,350
SBA commercial mortgage		23			–			–
Direct lease financing		248			2,178			2,243
SBLOC		15			–			–
Consumer - home equity		10			–			–
Total		1,192			3,528			3,593
Recoveries:
SBA non-real estate		18			82			103
SBA commercial mortgage		9			–			–
Direct lease financing		50			502			570
Total		77			584			673
Net charge-offs		1,115			2,944			2,920
Provision credited to allowance, excluding commitment provision		1,192			5,796			6,127
Balance in allowance for credit losses at end of period	$	16,159		$	15,727		$	16,082
Net charge-offs/average loans		0.04%			0.08%			0.07%
Net charge-offs/average assets		0.02%			0.05%			0.05%

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

Loan portfolio		September 30,			June 30,			December 31,			September 30,
		2021			2021			2020			2020
		(in thousands)
SBL non-real estate		$	171,845		$	228,958		$	255,318		$	293,488
SBL commercial mortgage			367,272			343,487			300,817			270,264
SBL construction			23,117			18,494			20,273			27,169
Small business loans *			562,234			590,939			576,408			590,921
Direct lease financing			514,068			506,424			462,182			430,675
SBLOC / IBLOC**			1,834,523			1,729,628			1,550,086			1,428,253
Advisor financing ***			81,143			72,190			48,282			26,600
Real estate bridge lending			128,699			–			–			–
Other loans ****			4,917			5,840			6,426			6,003
			3,125,584			2,905,021			2,643,384			2,482,452
Unamortized loan fees and costs			11,078			10,323			8,939			6,308
Total loans, net of unamortized fees and costs		$	3,136,662		$	2,915,344		$	2,652,323		$	2,488,760

Small business portfolio	September 30,			June 30,			December 31,			September 30,
	2021			2021			2020			2020
		(in thousands)
SBL, including unamortized fees and costs	$	566,472		$	593,401		$	577,944		$	590,314
SBL, included in commercial loans, at fair value		214,301			225,534			243,562			250,958
Total small business loans	$	780,773		$	818,935		$	821,506		$	841,272

* The preceding table shows small business loans and small business loans held at fair value. The small business loans held at fair value are comprised of the government guaranteed portion of SBA 7a loans at the dates indicated. A reduction in SBL non-real estate loans from $229.0 million at June 30, 2021 to $171.8 million at September 30, 2021 resulted from U.S. government repayments of $58.2 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $71.3 million at September 30, 2021 and $165.7 million at December 31, 2020, respectively.
** Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of insurance policies.
*** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value ratios of 70%, based on third-party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.
**** Included in the table above under Other loans are demand deposit overdrafts reclassified as loan balances totaling $272,000 and $663,000 at September 30, 2021 and December 31, 2020, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

Small business loans as of September 30, 2021
		Loan principal
		(in millions)
U.S. government guaranteed portion of SBA loans (a)		$	370
Paycheck Protection Program loans (PPP) (a)			71
Commercial mortgage SBA (b)			195
Construction SBA (c)			13
Non-guaranteed portion of U.S. government guaranteed 7a loans (d)			104
Non-SBA small business loans (e)			18
Total principal		$	771
Unamortized fees and costs			10
Total small business loans		$	781

(a) This is the portion of SBA 7a loans (7a) and PPP loans which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.
(b) Substantially all these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan-to-value percentages (“LTV”), generally 50-60%, to which the Bank adheres.
(c) Of the $13 million in Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $2 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.
(d) The $104 million represents the non-guaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.
(e) The $18 million of non-SBA loans is comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators, are considered seasoned and have performed as agreed.

Small business loans by type as of September 30, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)
		SBL commercial mortgage*			SBL construction*			SBL non-real estate			Total				% Total
			(in millions)
Hotels and motels		$	67		$	4		$	—		$	71			21%
Full-service restaurants			16			1			3			20			6%
Baked goods stores			4			—			11			15			5%
Child day care services			14			—			1			15			5%
Car washes			10			2			—			12			4%
Lessors of nonresidential buildings (except miniwarehouses)			10			—			—			10			3%
Assisted living facilities for the elderly			10			—			—			10			3%
Offices of lawyers			9			—			—			9			3%
Funeral homes and funeral services			9			—			—			9			3%
General warehousing and storage			7			—			—			7			2%
Limited-service restaurants			2			1			3			6			2%
Fitness and recreational sports centers			—			4			2			6			2%
Amusement and recreation industries			5			—			1			6			2%
Outpatient mental health and substance abuse centers			5			—			—			5			1%
Spectator sports			5			—			—			5			1%
Perishable prepared food manufacturing			5			—			—			5			1%
Gasoline stations with convenience stores			5			—			—			5			1%
Offices of dentists			3			—			—			3			1%
Warehousing and storage			3			—			—			3			1%
New car dealers			3			—			—			3			1%
Miscellaneous wood product manufacturing			3			—			—			3			1%
Plumbing, heating, and air-conditioning contractors			3			—			—			3			1%
Offices of physicians (except mental health specialists)			3			—			—			3			1%
Technical and trade schools			—			3			—			3			1%
General purpose machinery manufacturing			2			—			—			2			1%
Pet care (except veterinary) services			2			—			—			2			1%
Landscaping services			1			—			2			3			1%
Sewing, needlework, and piece goods stores			2			—			—			2			1%
Automotive body, paint, and interior repair and maintenance			2			—			—			2			1%
Vocational rehabilitation services			2			—			2			4			1%
Amusement arcades			2			—			—			2			1%
Lessors of real estate property			2			—			—			2			1%
Other**			49			1			25			75			20%
Total		$	265		$	16		$	50		$	331			100%

* Of the SBL commercial mortgage and SBL construction loans, $62 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.
**Loan types less than $2 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

State diversification as of September 30, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)
		SBL commercial mortgage*			SBL construction*			SBL non-real estate			Total				% Total
			(in millions)
Florida		$	56		$	—		$	8		$	64			19%
California			42			1			4			47			14%
North Carolina			23			2			3			28			9%
Pennsylvania			23			4			3			30			8%
Illinois			22			—			3			25			8%
New York			14			4			3			21			6%
New Jersey			12			—			6			18			6%
Texas			12			—			4			16			5%
Virginia			9			—			2			11			3%
Tennessee			10			—			—			10			3%
Colorado			3			5			2			10			3%
Georgia			7			—			2			9			3%
Michigan			4			—			1			5			2%
Washington			3			—			—			3			1%
Ohio			3			—			—			3			1%
Other states			22			—			9			31			9%
Total		$	265		$	16		$	50		$	331			100%

* Of the SBL commercial mortgage and SBL construction loans, $62 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

Top 10 loans as of September 30, 2021
Type*		State			SBL commercial mortgage*
			(in millions)
Hotel			FL		$	9
Lawyer's office			CA			9
Warehouse			PA			7
Hotel			NC			6
Assisted living facility			FL			5
Mental health and substance abuse centers			FL			5
Hotel			NC			5
Prepared food manufacturing			NJ			4
Hotel			PA			4
Hotel			TN			4
Total					$	58
* All the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value and are in the commercial mortgage category. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.

Commercial real estate loans, excluding SBA loans, are as follows including LTV at origination:
Type as of September 30, 2021
Type			# Loans			Balance		Weighted average origination date LTV		Weighted average interest rate
			(dollars in millions)
Real estate bridge lending (multi-family apartments)*			15		$	129		75%		4.22%
Commercial real estate loans, at fair value:
Multi-family (apartments)*			115		$	1,193		76%		4.75%
Hospitality (hotels and lodging)			9			66		65%		5.69%
Retail			6			61		71%		4.33%
Other			8			21		73%		5.16%
			138			1,341		75%		4.78%
Fair value adjustment						(6)
Total commercial real estate loans, at fair value						1,335
Total commercial real estate loans					$	1,464		75%		4.75%

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

State diversification as of September 30, 2021									15 largest loans (all multi-family) as of September 30, 2021
State			Balance			Origination date LTV			State				Balance		Origination date LTV
(in millions)									(in millions)
Texas		$	459			77%			North Carolina			$	44		78%
Georgia			193			76%			Texas				39		79%
Arizona			79			75%			Texas				36		80%
North Carolina			79			77%			Missouri				30		72%
Ohio			58			69%			Texas				30		75%
Alabama			57			76%			Nevada				29		80%
Virginia			57			73%			Texas				27		77%
Other states each <$55 million			482			73%			Arizona				27		79%
Total		$	1,464			75%			Mississippi				27		79%
									North Carolina				25		77%
									Texas				25		77%
									Texas				24		77%
									Alabama				23		77%
									Texas				21		79%
									Georgia				20		79%
									15 Largest loans			$	427		78%

Institutional banking loans outstanding at September 30, 2021
Type	Principal			% of total
		(in millions)
Securities backed lines of credit (SBLOC)	$	1,148		60%
Insurance backed lines of credit (IBLOC)		687		36%
Advisor financing		81		4%
Total	$	1,916		100%

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

Top 10 SBLOC loans at September 30, 2021
	Principal amount			% Principal to collateral
	(in millions)
	$	19		65%
		17		37%
		14		27%
		12		29%
		9		33%
		9		36%
		9		53%
		8		71%
		8		23%
		8		46%
Total and weighted average	$	113		43%

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of life insurance policies which have been assigned to us. We lend up to 100% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, seven insurance companies have been approved and, as of August 14, 2021, all were rated Superior (A+ or better) by AM BEST.

Direct lease financing* by type as of September 30, 2021
		Principal balance		% Total
		(in millions)
Construction	$	95		18%
Government agencies and public institutions**		77		15%
Waste management and remediation services		64		12%
Real estate and rental and leasing		56		11%
Retail trade		47		9%
Wholesale purchase		34		7%
Transportation and warehousing		29		6%
Health care and social assistance		26		5%
Professional, scientific, and technical services		19		4%
Manufacturing		16		3%
Wholesale trade		14		3%
Educational services		8		2%
Other		29		5%
Total	$	514		100%

* Of the total $514 million of direct lease financing, $464 million consisted of vehicle leases with the remaining balance consisting of equipment leases.
** Includes public universities and school districts.

Direct lease financing by state as of September 30, 2021
State		Principal balance		% Total
		(in millions)
Florida	$	93		18%
California		48		9%
New Jersey		39		8%
Utah		35		7%
New York		33		6%
Pennsylvania		32		6%
Maryland		25		5%
North Carolina		25		5%
Texas		19		4%
Connecticut		16		3%
Washington		15		3%
Georgia		12		2%
Idaho		11		2%
Tennessee		10		2%
Alabama		9		2%
Other states		92		18%
Total	$	514		100%

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 September 30, 2021
The Bancorp, Inc.	9.82%		15.69%		16.10%		15.69%
The Bancorp Bank	10.24%		16.29%		16.69%		16.29%
"Well capitalized" institution (under FDIC regulations-Basel III)	5.00%		8.00%		10.00%		6.50%
As of December 31, 2020
The Bancorp, Inc.	9.20%		14.43%		14.84%		14.43%
The Bancorp Bank	9.11%		14.27%		14.68%		14.27%
"Well capitalized" institution (under FDIC regulations-Basel III)	5.00%		8.00%		10.00%		6.50%

	Three months ended						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
Selected operating ratios
Return on average assets (1)		1.76%			1.48%			1.66%			1.25%
Return on average equity (1)		17.84%			16.90%			18.35%			14.29%
Net interest margin		3.35%			3.37%			3.29%			3.41%

⁽¹⁾ Annualized

Book value per share table	September 30,			June 30,				December 31,		September 30,
	2021			2021			2020			2020
Book value per share	$	11.13		$	10.77		$	10.10		$	9.71

Loan quality table	September 30,			June 30,			December 31,			September 30,
	2021			2021			2020			2020
		(dollars in thousands)
Nonperforming loans to total loans		0.24%			0.31%			0.48%			0.49%
Nonperforming assets to total assets		0.16%			0.14%			0.20%			0.20%
Allowance for credit losses to total loans		0.52%			0.52%			0.61%			0.63%
Nonaccrual loans	$	6,106		$	7,346		$	12,227		$	12,275
Loans 90 days past due still accruing interest		1,569			1,550			497			24
Other real estate owned		2,145			—			—			—
Total nonperforming assets	$	9,820		$	8,896		$	12,724		$	12,299

Gross dollar volume (GDV) (1)	Three months ended
	September 30,			June 30,			December 31,			September 30,
	2021			2021			2020			2020
		(in thousands)
Prepaid and debit card GDV	$	24,392,188		$	27,106,763		$	22,523,855		$	23,963,508

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

Business line quarterly summary
Quarter ended September 30, 2021
(dollars in millions)
				Balances
						% Growth
Major business lines		Average approximate rates *		Balances **		Year over year		Linked quarter annualized
Loans
Institutional banking ***		2.6%		$ 1,916		32%		25%
Small business lending****		5.0%		781		12%		12%
Leasing		5.9%		514		19%		6%
Commercial real estate (non-SBA at fair value)		4.7%		1,335		nm		nm
Real estate bridge lending		4.2%		129		nm		nm
Weighted average yield		4.0%		$ 4,675						Non-interest income
												% Growth
Deposits: Fintech solutions group										Current quarter		Year over year
Prepaid and debit card issuance, and other payments		0.1%		$ 5,146		6%		nm		$ 20.1		(5%)

* Average rates are for the quarter ended September 30, 2021.
** Loan and deposit categories are respectively based on period-end and average quarterly balances.
*** Institutional Banking loans are comprised of security backed lines of credit (SBLOC), collateralized by marketable securities, insurance backed lines of credit (IBLOC), collateralized by the cash surrender value of insurance policies, and investment advisor financing.
**** Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans.

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 June 30, 2021 before marks	$	53
Quarterly paydowns and other reductions		(5)
Commercial loan discontinued principal September 30, 2021 before marks		48
Marks September 30, 2021		(3)
Net commercial loan exposure September 30, 2021		45
Residential mortgages		25
Net loans		70
Florida mall in other real estate owned		15
3 properties in other real estate owned		3
Total discontinued assets at September 30, 2021	$	88

Discontinued commercial loan composition as of September 30, 2021
Collateral type	Unpaid principal balance			Mark at September 30, 2021			Mark as % of portfolio
		(in millions)
Commercial real estate - non-owner occupied:
Retail	$	4		$	(0.6)			15%
Office		2			—			—
Other		18			(0.1)			1%
Construction and land		9			(0.1)			1%
Commercial non-real estate and industrial		2			(0.1)			5%
1 to 4 family construction		5			(2.3)			46%
First mortgage residential non-owner occupied		4			—			—
Commercial real estate owner occupied:
Retail		2			—			—
Residential junior mortgage		1			—			—
Other		1			—			—
Total	$	48		$	(3.2)			7%
Less: mark		(3)
Net commercial loan exposure September 30, 2021	$	45		$	(3.2)

Loan payment deferrals related to Covid-19
Total non-U.S. guaranteed loan balances for borrowers with Covid-19 payment deferrals amounted to $1.3 million as of September 30, 2021.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006051/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 net income and EPS for Q3 2021?

The Bancorp reported a net income of $28.3 million, or $0.48 diluted EPS for Q3 2021.

How does the return on assets compare year-over-year for The Bancorp?

Return on assets increased to 1.8% for Q3 2021 compared to 1.5% for Q3 2020.

What is the projected EPS guidance for The Bancorp in 2022?

The projected EPS guidance for 2022 is $2.15, which reflects a 21% growth over 2021 guidance.

How many shares did The Bancorp repurchase in Q3 2021?

The Bancorp repurchased 440,887 shares at an average cost of $22.68 per share during Q3 2021.

What was the impact of loan prepayments on The Bancorp's financials?

Growth in net interest income was significantly offset by a $1.9 million impact from loan prepayments on commercial real estate loans.