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

Rhea-AI Summary

The Bancorp reported a net income of $30.6 million for Q3 2022, up from $28.3 million in Q3 2021. Diluted earnings per share rose to $0.54, despite a $1.75 million SEC penalty impacting earnings by $0.03 per share.

Net interest income surged 27% to $64.7 million, driven by increased lending volumes and a net interest margin of 3.69%. Total loans reached $5.27 billion, reflecting an 11% quarter-over-quarter growth.

Looking ahead, the company projects $3.20 earnings per share for 2023, a 40% increase from 2022.

Positive

• Net income increased by $2.3 million year-over-year.
• Net interest income rose 27% to $64.7 million in Q3 2022.
• Total loans grew to $5.27 billion, an 11% increase quarter-over-quarter.
• Projected earnings per share for 2023 at $3.20 indicates potential 40% growth.
• Return on equity projected to be in the mid-20s, with return on assets above 2% for 2023.

Negative

• A $1.75 million SEC civil penalty reduced earnings by $0.03 per share.
• $3.3 million net unrealized fair value loss affected financial results.

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

Highlights

• The Bancorp reported net income of $30.6 million, or $0.54 per diluted share, for the quarter ended September 30, 2022, compared to net income of $28.3 million, or $0.48 per diluted share, for the quarter ended September 30, 2021. The $0.54 was impacted by a reduction of approximately $0.03 per share resulting from a non-deductible $1.75 million SEC civil money penalty. Additionally, a $3.3 million net unrealized fair value loss was reflected in “Net realized and unrealized gains on commercial loans, at fair value”, which reduced diluted net income per share by approximately $0.04. The loss resulted primarily from the only movie theater loan in the Company’s portfolios. That loan was originated in 2015 and was a legacy loan from the initial entry into the CMBS securitization business which was subsequently discontinued in 2016. After discontinuance, non-SBA loan originations were primarily comprised of apartment building loans. Of the $2.15 billion of non-SBA commercial loans, at fair value and real estate bridge loans (“REBL”) which together comprise the non-SBA CRE portfolio, $2.05 billion are comprised of apartment building loans.
  
  

• For the quarter ended September 30, 2022, The Bancorp earned pre-tax income of $42.4 million, which reflected the aforementioned $1.75 million civil money penalty, compared to $36.5 million for the quarter ended September 30, 2021, which included $1.2 million of Payroll Protection Program (“PPP”) related interest and fees, which did not recur in the current year quarter.
  

• Return on assets and equity for the quarter ended September 30, 2022 amounted to 1.7% and 18%, respectively, compared to 1.8% and 18%, respectively, for the quarter ended September 30, 2021 (all percentages “annualized”).
  

• Net interest margin amounted to 3.69% for the quarter ended September 30, 2022, compared to 3.35% for the quarter ended September 30, 2021 and 3.17% for the quarter ended June 30, 2022.
  

• Net interest income increased 27% to $64.7 million for the quarter ended September 30, 2022, compared to $50.9 million for the quarter ended September 30, 2021. The 2021 quarter included $1.2 million of PPP related interest and fees, which did not recur in the current year quarter.
  

• Excluding commercial loans, at fair value, which were originally generated for sale, total loans increased to $5.27 billion at September 30, 2022, compared to $4.75 billion at June 30, 2022 and $3.14 billion at September 30, 2021. Those increases reflected growth of 11% quarter over quarter and 66% year over year. Those percentage increases exclude the impact of $54.2 million of September 30, 2022 balances previously included in discontinued assets which were reclassified to loans in the first quarter of 2022.
  

• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $3.73 billion, or 15%, to $28.12 billion for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021. Total prepaid, debit card, ACH and other payment fees increased 6% to $21.4 million for third quarter 2022 compared to third quarter 2021.
  

• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 32% year over year and 4% quarter over quarter to $2.54 billion at September 30, 2022.
  

• Small Business Loans, including those held at fair value, grew 3% year over year to $732.4 million at September 30, 2022, and 0.4% quarter over quarter. That growth is exclusive of PPP loan balances which amounted to $6.7 million and $71.3 million, respectively, at September 30, 2022 and September 30, 2021.
  

• Direct lease financing balances increased 17% year over year to $599.8 million at September 30, 2022, and 3% quarter over quarter.
  

• We resumed non-SBA commercial real estate bridge lending in the third quarter of 2021. At September 30, 2022, the balance of such real estate bridge loans was $1.49 billion compared to $1.11 billion at June 30, 2022, reflecting quarter over quarter growth of 34%.
  

• The average interest rate on $6.46 billion of average deposits and interest-bearing liabilities during the third quarter of 2022 was 1.19%. Average deposits of $6.11 billion for third quarter 2022, reflected an increase of 10.5% from the $5.53 billion of average deposits for the quarter ended September 30, 2021.
  

• As of September 30, 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 9.66%, 13.13%, 13.56% and 13.13%, 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 September 30, 2022 was $11.81 per share compared to $11.13 per share at September 30, 2021, an increase of 6%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities, which are recognized through equity.
  

• The Bancorp repurchased 663,934 shares of its common stock at an average cost of $22.59 per share during the quarter ended September 30, 2022.

CEO Damian Kozlowski stated “Revenue growth continues across our platform as lending volumes steadily increase and new payment partners are added to our ecosystem. The expansion of both net interest margin due to rising rates and payment fees across our verticals should support significantly increased profitability in 2023. We are issuing preliminary guidance for 2023 of $3.20 per share excluding the net impact of future share buybacks but including the expected impact of rate increases based on fed funds futures. We also reiterate $2.25 to $2.30 guidance for 2022. The $3.20 guidance for 2023 would represent approximately a 40% increase in earnings per share over 2022 and would result in an ROE percentage in the mid-20s and an ROA above 2%. 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, October 28, 2022 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.866.652.5200 and ask to join The Bancorp, Inc. call. 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 4, 2022 by dialing 1.877.344.7529, access code 5997176.

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						Nine months ended
		September 30,						September 30,
Consolidated condensed income statements	2022			2021			2022			2021
		(Dollars in thousands, except per share and share data)
Net interest income	$	64,659		$	50,893		$	172,081		$	158,719
Provision for credit losses		822			1,613			4,331			1,484
Non-interest income
ACH, card and other payment processing fees		2,230			1,905			6,552			5,605
Prepaid, debit card and related fees		19,175			18,223			57,865			56,878
Net realized and unrealized gains on commercial
loans, at fair value		745			4,306			11,262			8,881
Leasing related income		1,048			1,968			3,566			4,700
Other non-interest income		228			186			698			459
Total non-interest income		23,426			26,588			79,943			76,523
Non-interest expense
Salaries and employee benefits		28,001			25,094			77,848			77,839
Data processing expense		1,292			1,209			3,727			3,481
Legal expense		907			1,251			3,175			5,349
Legal settlement		—			—			1,152			—
Civil money penalty		1,750			—			1,750			—
FDIC insurance		679			266			2,326			5,235
Software		4,001			4,045			12,030			11,435
Other non-interest expense		8,200			7,519			24,019			21,811
Total non-interest expense		44,830			39,384			126,027			125,150
Income from continuing operations before income taxes		42,433			36,484			121,666			108,608
Income tax expense		11,829			8,289			31,694			25,195
Net income from continuing operations		30,604			28,195			89,972			83,413
Discontinued operations
Income from discontinued operations before income taxes		—			87			—			324
Income tax expense		—			21			—			76
Net income from discontinued operations, net of tax		—			66			—			248
Net income	$	30,604		$	28,261		$	89,972		$	83,661
Net income per share from continuing operations - basic	$	0.54		$	0.49		$	1.58		$	1.45
Net income per share from discontinued operations - basic	$	—		$	—		$	—		$	0.01
Net income per share - basic	$	0.54		$	0.49		$	1.58		$	1.46
Net income per share from continuing operations - diluted	$	0.54		$	0.48		$	1.56		$	1.41
Net income per share from discontinued operations - diluted	$	—		$	—		$	—		$	0.01
Net income per share - diluted	$	0.54		$	0.48		$	1.56		$	1.42
Weighted average shares - basic		56,429,425			57,198,778			56,782,524			57,221,174
Weighted average shares - diluted		57,008,224			58,628,306			57,510,986			58,932,146

Condensed consolidated balance sheets	September 30,				June 30,				December 31,				September 30,
	2022 (unaudited)				2022 (unaudited)				2021				2021 (unaudited)
		(Dollars in thousands, except per share and share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	22,537			$	12,873			$	5,382			$	6,687
Interest earning deposits at Federal Reserve Bank		700,175				329,992				596,402				310,642
Total cash and cash equivalents		722,712				342,865				601,784				317,329
Investment securities, available-for-sale, at fair value		790,594				826,616				953,709				1,054,223
Commercial loans, at fair value		818,040				995,493				1,388,416				1,615,312
Loans, net of deferred fees and costs		5,267,375				4,754,697				3,747,224				3,136,662
Allowance for credit losses		(19,689	)			(19,087	)			(17,806	)			(16,159	)
Loans, net		5,247,686				4,735,610				3,729,418				3,120,503
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock		12,629				1,643				1,663				1,663
Premises and equipment, net		18,443				16,693				16,156				16,602
Accrued interest receivable		25,506				19,264				17,871				17,180
Intangible assets, net		2,149				2,248				2,447				2,547
Other real estate owned		18,873				18,873				18,873				19,488
Deferred tax asset, net		27,241				23,344				12,667				12,237
Assets held-for-sale from discontinued operations		—				—				3,268				5,274
Other assets		93,201				137,086				96,967				86,105
Total assets	$	7,777,074			$	7,119,735			$	6,843,239			$	6,268,463
Liabilities:
Deposits
Demand and interest checking	$	5,934,591			$	5,394,562			$	5,561,365			$	4,734,352
Savings and money market		575,381				486,189				415,546				378,160
Time deposits, $100,000 and over		401,331				—				—				—
Total deposits		6,911,303				5,880,751				5,976,911				5,112,512
Securities sold under agreements to repurchase		42				42				42				42
Short-term borrowings		—				385,000				—				300,000
Senior debt		98,958				98,866				98,682				98,590
Subordinated debenture		13,401				13,401				13,401				13,401
Other long-term borrowings		38,928				39,125				39,521				39,715
Other liabilities		50,704				46,014				62,228				66,226
Total liabilities	$	7,113,336			$	6,463,199			$	6,190,785			$	5,630,486
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,201,560 and 57,330,846 shares issued and outstanding at September 30, 2022 and 2021, respectively		56,202				56,865				57,371				57,331
Additional paid-in capital		311,569				323,774				349,686				357,528
Retained earnings		329,078				298,474				239,106				212,114
Accumulated other comprehensive (loss) income		(33,111	)			(22,577	)			6,291				11,004
Total shareholders' equity		663,738				656,536				652,454				637,977
Total liabilities and shareholders' equity	$	7,777,074			$	7,119,735			$	6,843,239			$	6,268,463

Average balance sheet and net interest income		Three months ended September 30, 2022											Three months ended September 30, 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*	$	5,904,996			$	75,536			5.12	%		$	4,573,431			$	46,357		4.05	%
Leases-bank qualified**		3,299				55			6.67	%			5,031				87		6.92	%
Investment securities-taxable		824,178				6,792			3.30	%			1,012,007				6,882		2.72	%
Investment securities-nontaxable**		3,559				31			3.48	%			3,558				32		3.60	%
Interest earning deposits at Federal Reserve Bank		267,424				1,525			2.28	%			479,350				167		0.14	%
Net interest earning assets		7,003,456				83,939			4.79	%			6,073,377				53,525		3.53	%
Allowance for credit losses		(19,111	)										(16,277	)
Assets held-for-sale from discontinued operations		—				—			—				90,598				754		3.33	%
Other assets		212,078											214,715
	$	7,196,423										$	6,362,413
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,545,115			$	12,726			0.92	%		$	5,124,189			$	1,063		0.08	%
Savings and money market		479,260				2,792			2.33	%			404,775				146		0.14	%
Time deposits		87,562				547			2.50	%			—				—		—
Total deposits		6,111,937				16,065			1.05	%			5,528,964				1,209		0.09	%
Short-term borrowings		200,423				1,235			2.46	%			13,097				7		0.21	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		39,035				506			5.19	%			—				—		—
Subordinated debentures		13,401				177			5.28	%			13,401				112		3.34	%
Senior debt		98,910				1,279			5.17	%			100,329				1,279		5.10	%
Total deposits and liabilities		6,463,747				19,262			1.19	%			5,655,832				2,607		0.18	%
Other liabilities		72,539											78,038
Total liabilities		6,536,286											5,733,870
Shareholders' equity		660,137											628,543
	$	7,196,423										$	6,362,413
Net interest income on tax equivalent basis**					$	64,677										$	51,672
Tax equivalent adjustment						18											25
Net interest income					$	64,659										$	51,647
Net interest margin **									3.69	%									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, interest on loans for 2022 and 2021 includes $21,000 and $1.2 million, respectively, of interest and fees on PPP loans.

Average balance sheet and net interest income	Nine months ended September 30, 2022											Nine months ended September 30, 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*	$	5,531,902			$	181,174			4.37	%		$	4,541,262			$	143,546		4.21	%
Leases-bank qualified**		3,657				185			6.75	%			5,925				301		6.77	%
Investment securities-taxable		880,426				17,115			2.59	%			1,094,633				22,891		2.79	%
Investment securities-nontaxable**		3,559				93			3.48	%			3,824				99		3.45	%
Interest earning deposits at Federal Reserve Bank		499,104				2,876			0.77	%			781,606				650		0.11	%
Net interest earning assets		6,918,648				201,443			3.88	%			6,427,250				167,487		3.47	%
Allowance for credit losses		(19,087	)										(16,254	)
Assets held for sale from discontinued operations		—				—			—				99,472				2,388		3.20	%
Other assets		203,143											225,802
	$	7,102,704										$	6,736,270
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,598,028			$	18,522			0.44	%		$	5,452,604			$	4,007		0.10	%
Savings and money market		522,525				4,192			1.07	%			446,016				487		0.15	%
Time deposits		29,508				547			2.47	%			—				—		—
Total deposits		6,150,061				23,261			0.50	%			5,898,620				4,494		0.10	%
Short-term borrowings		71,589				1,267			2.36	%			8,717				15		0.23	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		39,286				506			1.72	%			—				—		—
Subordinated debentures		13,401				432			4.30	%			13,401				337		3.35	%
Senior debt		98,817				3,838			5.18	%			100,237				3,838		5.11	%
Total deposits and liabilities		6,373,195				29,304			0.61	%			6,021,016				8,684		0.19	%
Other liabilities		71,413											105,683
Total liabilities		6,444,608											6,126,699
Shareholders' equity		658,096											609,571
	$	7,102,704										$	6,736,270
Net interest income on tax equivalent basis**					$	172,139										$	161,191
Tax equivalent adjustment						58											84
Net interest income					$	172,081										$	161,107
Net interest margin **									3.32	%									3.29	%

* 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 significantly increase average loans or assets and which are not expected to recur. Interest on loans for 2022 and 2021 includes $502,000 and $4.9 million, respectively, of interest and fees on PPP loans.

Allowance for credit losses		Nine months ended					Year ended
	September 30,			September 30,			December 31,
	2022 (unaudited)			2021 (unaudited)			2021
	(Dollars in thousands)
Balance in the allowance for credit losses at beginning of period (1)	$	17,806		$	16,082		$	16,082
Loans charged-off:
SBA non-real estate		861			896			1,138
SBA commercial mortgage		—			23			417
Direct lease financing		312			248			412
SBLOC		—			15			15
Consumer - home equity		—			10			10
Consumer - other		—			—			14
Total		1,173			1,192			2,006
Recoveries:
SBA non-real estate		57			18			51
SBA commercial mortgage		—			9			9
Direct lease financing		108			50			58
Consumer - home equity		—			—			1,099
Total		165			77			1,217
Net charge-offs		1,008			1,115			789
Provision for credit losses, excluding commitment provision		2,891			1,192			2,513
Balance in allowance for credit losses at end of period	$	19,689		$	16,159		$	17,806
Net charge-offs/average loans		0.02%			0.04%			0.03%
Net charge-offs/average assets		0.01%			0.02%			0.01%

⁽¹⁾ Excludes activity from discontinued operations.

Loan portfolio		September 30,			June 30,			December 31,			September 30,
		2022 (unaudited)			2022 (unaudited)			2021			2021 (unaudited)
		(Dollars in thousands)
SBL non-real estate		$	116,080		$	112,854		$	147,722		$	171,845
SBL commercial mortgage			429,865			425,219			361,171			367,272
SBL construction			26,841			27,042			27,199			23,117
Small business loans			572,786			565,115			536,092			562,234
Direct lease financing			599,796			583,086			531,012			514,068
SBLOC / IBLOC *			2,369,106			2,274,256			1,929,581			1,834,523
Advisor financing **			168,559			155,235			115,770			81,143
Real estate bridge loans			1,488,119			1,106,875			621,702			128,699
Other loans ***			64,980			63,514			5,014			4,917
			5,263,346			4,748,081			3,739,171			3,125,584
Unamortized loan fees and costs			4,029			6,616			8,053			11,078
Total loans, including unamortized fees and costs		$	5,267,375		$	4,754,697		$	3,747,224		$	3,136,662

Small business portfolio		September 30,			June 30,			December 31,			September 30,
		2022 (unaudited)			2022 (unaudited)			2021			2021 (unaudited)
		(Dollars in thousands)
SBL, including unamortized fees and costs	$	579,156		$	571,559		$	541,437		$	566,472
SBL, included in loans, at fair value		159,914			168,579			199,585			214,301
Total small business loans ****	$	739,070		$	740,138		$	741,022		$	780,773

* Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of eligible life insurance policies.
** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value ratios of 70%, based on third-party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.
*** Includes demand deposit overdrafts reclassified as loan balances totaling $1.0 million and $322,000 at September 30, 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 September 30, 2022

		Loan principal
		(Dollars in millions)
U.S. government guaranteed portion of SBA loans (a)		$	371
Paycheck Protection Program loans (PPP) (a)			7
Commercial mortgage SBA (b)			223
Construction SBA (c)			10
Non-guaranteed portion of U.S. government guaranteed loans (d)			99
Non-SBA small business loans			21
Total principal		$	731
Unamortized fees and costs			8
Total small business loans		$	739

(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 Bancorp Bank N.A. 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 $99 million represents the unguaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.

Small business loans by type as of September 30, 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		$	61		$	—		$	—		$	61			17%
Car washes			17			1			—			18			5%
Full-service restaurants			13			3			2			18			5%
Lessors of nonresidential buildings			16			—			—			16			5%
Child day care services			14			—			1			15			4%
Outpatient mental health and substance abuse centers			15			—			—			15			4%
Funeral homes and funeral services			12			—			—			12			3%
Offices of lawyers			9			—			—			9			3%
Assisted living facilities for the elderly			9			—			—			9			3%
Gasoline stations with convenience stores			8			—			—			8			2%
Fitness and recreational sports centers			6			—			2			8			2%
General warehousing and storage			7			—			—			7			2%
Solar electric power generation			—			—			7			7			2%
Plumbing, heating, and air-conditioning contractors			6			—			1			7			2%
Baked goods stores			—			—			6			6			2%
Lessors of other real estate property			6			—			—			6			2%
All other amusement and recreation industries			5			—			1			6			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 technical and trade schools			—			5			—			5			1%
Other spectator sports			5			—			—			5			1%
Offices of dentists			3			1			—			4			1%
Other warehousing and storage			3			—			—			3			1%
Vocational rehabilitation services			3			—			—			3			1%
Other**			66			1			23			90			27%
Total		$	295		$	13		$	45		$	353			100%

* Of the SBL commercial mortgage and SBL construction loans, $74 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 September 30, 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		$	63		$	—		$	4		$	67			19%
California			50			3			4			57			16%
North Carolina			30			7			2			39			11%
New York			23			—			9			32			9%
Pennsylvania			18			—			2			20			6%
New Jersey			12			—			7			19			5%
Illinois			15			—			2			17			5%
Texas			12			—			3			15			4%
Colorado			11			2			1			14			4%
Connecticut			10			—			1			11			3%
Virginia			9			—			1			10			3%
Georgia			7			—			2			9			3%
Tennessee			8			—			—			8			2%
Ohio			6			—			1			7			2%
Michigan			3			—			—			3			1%
Other States			18			1			6			25			7%
Total		$	295		$	13		$	45		$	353			100%

* Of the SBL commercial mortgage and SBL construction loans, $74 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, 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			NY			6
Hotel			NC			6
Mental health and substance abuse center			CT			5
Assisted living facility			FL			5
Lessors of nonresidential buildings			NC			5
Lessors of residential buildings and dwellings			NJ			5
Total					$	66

* All of the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value and are in the commercial mortgage category. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.

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

Type as of September 30, 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)*			115		$	1,488			73	%		6.18	%
Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)*			35		$	564			76	%		5.82	%
Hospitality (hotels and lodging)			5			38			65	%		6.56	%
Retail			4			52			71	%		5.56	%
Other			5			14			73	%		5.07	%
			49			668			75	%		5.83	%
Fair value adjustment						(10	)
Total non-SBA commercial real estate loans, at fair value						658
Total commercial real estate loans					$	2,146			74	%		6.10	%

*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 September 30, 2022									15 largest loans as of September 30, 2022
State		Balance				Origination date LTV			State			Balance			Origination date LTV
(Dollars in millions)									(Dollars in millions)
Texas		$	815			74%			Texas			$	41		75%
Georgia			220			72%			Texas				39		79%
Florida			187			72%			Texas				39		72%
Ohio			100			71%			Tennessee				37		72%
Tennessee			92			70%			Texas				37		75%
Alabama			73			74%			Texas				37		80%
Michigan			73			74%			Michigan				36		71%
Other States each <$50 million			586			74%			Florida				33		72%
Total		$	2,146			74%			Texas				31		67%
									Michigan				31		79%
									Tennessee				30		62%
									Missouri				30		72%
									Texas				30		62%
									Texas				29		77%
									Texas				27		77%
									15 Largest loans			$	507		73%

Institutional banking loans outstanding at September 30, 2022

Type	Principal			% of total
		(Dollars in millions)
Securities backed lines of credit (SBLOC)	$	1,265		50%
Insurance backed lines of credit (IBLOC)		1,104		43%
Advisor financing		169		7%
Total	$	2,538		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, 2022

	Principal amount			% Principal to collateral
	(Dollars in millions)
	$	20		58%
		18		42%
		17		72%
		14		38%
		10		33%
		9		66%
		9		48%
		9		71%
		8		75%
		6		32%
Total and weighted average	$	120		54%

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, eight insurance companies have been approved and, as of August 2, 2022, all were rated A- or better by AM BEST.

Direct lease financing* by type as of September 30, 2022

		Principal balance		% Total
		(Dollars in millions)
Construction	$	110		18%
Government agencies and public institutions**		90		15%
Waste management and remediation services		68		11%
Real estate and rental and leasing		60		10%
Retail trade		48		8%
Health care and social assistance		32		5%
Transportation and warehousing		31		5%
Finance and insurance		27		5%
Professional, scientific, and technical services		20		3%
Manufacturing		17		3%
Wholesale trade		16		3%
Educational services		8		1%
Mining, Quarrying, and Oil and Gas Extractions for Oil and Gas Operations		4		1%
Other		69		12%
Total	$	600		100%

* Of the total $600 million of direct lease financing, $520 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, 2022

State		Principal balance		% Total
		(Dollars in millions)
Florida	$	97		16%
Utah		56		9%
California		52		9%
New Jersey		42		7%
Pennsylvania		39		7%
New York		30		5%
North Carolina		27		5%
Maryland		26		4%
Texas		26		4%
Connecticut		20		3%
Washington		16		3%
Georgia		15		3%
Idaho		14		2%
Illinois		11		2%
Alabama		10		2%
Other states and non-classified		119		19%
Total	$	600		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, 2022
The Bancorp, Inc.	9.66%		13.13%		13.56%		13.13%
The Bancorp Bank, National Association	10.79%		14.73%		15.15%		14.73%
"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						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Selected operating ratios
Return on average assets (1)		1.69%			1.76%			1.69%			1.66%
Return on average equity (1)		18.39%			17.84%			18.28%			18.35%
Net interest margin		3.69%			3.35%			3.32%			3.29%

⁽¹⁾ Annualized

Book value per share table		September 30,			June 30,			December 31,			September 30,
		2022			2022			2021			2021
Book value per share		$	11.81		$	11.55		$	11.37		$	11.13

Loan quality table		September 30,			June 30,			December 31,			September 30,
		2022			2022			2021			2021
		(Dollars in thousands)
Nonperforming loans to total loans		0.16%			0.18%			0.10%			0.24%
Nonperforming assets to total assets		0.35%			0.39%			0.33%			0.43%
Allowance for credit losses to total loans		0.37%			0.40%			0.48%			0.52%
Nonaccrual loans	$	3,860		$	3,698		$	3,161		$	6,106
Loans 90 days past due still accruing interest		4,415			4,848			461			1,569
Other real estate owned		18,873			18,873			18,873			19,488
Total nonperforming assets	$	27,148		$	27,419		$	22,495		$	27,163

Gross dollar volume (GDV) (1)	Three months ended
	September 30,			June 30,			December 31,			September 30,
	2022			2022			2021			2021
		(Dollars in thousands)
Prepaid and debit card GDV	$	28,119,428		$	28,394,897		$	24,821,576		$	24,392,188

⁽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 September 30, 2022
(Dollars in millions)
				Balances
						% Growth
Major business lines		Average approximate rates *		Balances **		Year over year		Linked quarter annualized
Loans
Institutional banking ***		4.2%		$ 2,538		32%		18%
Small business lending****		5.6%		739		3%		1%
Leasing		6.1%		600		17%		11%
Commercial real estate (non-SBA loans, at fair value)		5.4%		658		nm		nm
Real estate bridge loans (recorded at book value)		6.0%		1,488		nm		nm
Weighted average yield		5.1%		$ 6,023						Non-interest income
												% Growth
Deposits: Fintech solutions group										Current quarter		Year over year
Prepaid and debit card issuance, and other payments		1.1%		$ 5,397		5%		nm		$ 21.4		6%

* Average rates are for the quarter ended September 30, 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/20221026005704/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 earnings for Q3 2022?

The Bancorp reported net income of $30.6 million or $0.54 per diluted share.

How did The Bancorp's net interest income change in Q3 2022?

Net interest income increased by 27% to $64.7 million compared to Q3 2021.

What is The Bancorp's earnings guidance for 2023?

The Bancorp projects earnings per share of $3.20 for 2023, a 40% increase over 2022.

What is the total loan balance of The Bancorp as of September 30, 2022?

Total loans reached $5.27 billion as of September 30, 2022.

What was the impact of SEC penalties on The Bancorp's earnings?

The $1.75 million SEC civil penalty impacted earnings by $0.03 per share.