The Bancorp, Inc. Reports Third Quarter 2023 Financial Results

Rhea-AI Summary

The Bancorp reports net income of $50.1 million for Q3 2023, a 70% increase YoY. Net interest income increases 37% to $88.9 million. Loans decrease by 1% QoQ. GDV increases by 17% to $32.97 billion. Small business loans grow 13% YoY. The Bancorp initiates 2024 preliminary guidance of $4.25 per share.

Positive

• Net income increases by 70% YoY
• Net interest income increases by 37%
• GDV increases by 17%
• Small business loans grow by 13% YoY

Negative

• Loans decrease by 1% QoQ

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 2023.

Highlights

• The Bancorp reported net income of $50.1 million, or $0.92 per diluted share, for the quarter ended September 30, 2023, compared to net income of $30.6 million, or $0.54 per diluted share, for the quarter ended September 30, 2022, or a 70% increase in income per diluted share.
• Return on assets and equity for the quarter ended September 30, 2023 amounted to 2.7% and 26%, respectively, compared to 1.7% and 18%, respectively, for the quarter ended September 30, 2022 (all percentages “annualized”).
• Net interest income increased 37% to $88.9 million for the quarter ended September 30, 2023, compared to $64.7 million for the quarter ended September 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 5.07% for the quarter ended September 30, 2023, compared to 3.69% for the quarter ended September 30, 2022, and 4.83% for the quarter ended June 30, 2023.
• Loans, net of deferred fees and costs were $5.20 billion at September 30, 2023, compared to $5.49 billion at December 31, 2022 and $5.27 billion at September 30, 2022. Those changes reflected a decrease of 1% quarter over linked quarter and a decrease of 1% year over year.
• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.85 billion, or 17%, to $32.97 billion for the quarter ended September 30, 2023, compared to the quarter ended September 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 12% to $24.1 million for the third quarter of 2023 compared to the third quarter of 2022.
• Small business loans (“SBL”), including those held at fair value, grew 13% year over year to $830.1 million at September 30, 2023, and 3% quarter over linked quarter. That growth excludes Paycheck Protection Program (“PPP”) loan balances which amounted to $2.3 million and $6.7 million at September 30, 2023 and September 30, 2022, respectively.
• Direct lease financing balances increased 12% year over year to $670.2 million at September 30, 2023, and 2% quarter over linked quarter.
• At September 30, 2023, real estate bridge loans of $1.85 billion had grown 1% compared to the $1.83 billion balance at June 30, 2023, and 24% compared to the September 30, 2022 balance of $1.49 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 24% year over year and decreased 7% quarter over linked quarter to $1.92 billion at September 30, 2023.
• The average interest rate on $6.41 billion of average deposits and interest-bearing liabilities during the third quarter of 2023 was 2.50%. Average deposits of $6.29 billion for the third quarter of 2023 reflected an increase of 3% from the $6.11 billion of average deposits for the quarter ended September 30, 2022, and a 3% decrease from $6.48 billion of average deposits in the second quarter of 2023. The decrease reflected the planned exit of $200 million of higher cost funds on July 1, 2023. Not included in deposit totals are deposits which are sold to other financial institutions totaling $334.7 million at September 30, 2023.
• 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 $2.7 billion as of September 30, 2023, as well as access to other liquidity.
• As of September 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 10.92%, 15.53%, 16.04% and 15.53%, 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, 2023 was $14.36 per share compared to $11.81 per common share at September 30, 2022, an increase of 22%.
• The Bancorp repurchased 685,478 shares of its common stock at an average cost of $36.47 per share during the quarter ended September 30, 2023.

CEO and President Damian Kozlowski commented, “The Bancorp continues to produce record core profitability and exemplar financial performance in a challenging interest rate and macro environment for most financial institutions. We are initiating 2024 preliminary guidance of $4.25 a share without including the impact of share buybacks. The 2024 guidance is 18% earnings growth over 2023 guidance. In addition, as a result of our investments in growth and efficiency, the Bancorp’s increased ROE is driving a continued increase in our regulatory capital ratios. With the reg ii Durbin balance sheet limit of $10 billion, we are fast approaching the maximum equity capital needed to support our business growth into the future. Therefore, we are significantly increasing our planned buyback in 2024 by $100 million to $200 million or $50 million a quarter from $25 million a quarter.”

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, October 27, 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 63043391. 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 3, 2023 by dialing 1.877.674.7070, access code 043391#.

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	2023			2022			2023			2022
		(Dollars in thousands, except per share and share data)
Net interest income	$	88,882		$	64,659		$	261,893		$	172,081
Provision for credit losses		1,752			822			4,016			4,331
Non-interest income
ACH, card and other payment processing fees		2,553			2,230			7,153			6,552
Prepaid, debit card and related fees		21,513			19,175			67,013			57,865
Net realized and unrealized gains on commercial
loans, at fair value		525			745			4,171			11,262
Leasing related income		1,767			1,048			4,768			3,566
Other non-interest income		422			228			2,000			698
Total non-interest income		26,780			23,426			85,105			79,943
Non-interest expense
Salaries and employee benefits		30,475			28,001			93,427			77,848
Data processing expense		1,404			1,292			4,123			3,727
Legal expense		1,203			907			3,110			3,175
Legal settlement		—			—			—			1,152
Civil money penalty		—			1,750			—			1,750
FDIC insurance		806			679			2,233			2,326
Software		4,427			4,001			12,981			12,030
Other non-interest expense		9,144			8,200			29,558			24,019
Total non-interest expense		47,459			44,830			145,432			126,027
Income before income taxes		66,451			42,433			197,550			121,666
Income tax expense		16,314			11,829			49,282			31,694
Net income		50,137			30,604			148,268			89,972
Net income per share - basic	$	0.93		$	0.54		$	2.70		$	1.58
Net income per share - diluted	$	0.92		$	0.54		$	2.68		$	1.56
Weighted average shares - basic		54,175,184			56,429,425			54,828,547			56,782,524
Weighted average shares - diluted		54,738,610			57,008,224			55,336,354			57,510,986

Condensed consolidated balance sheets	September 30,				June 30,				December 31,				September 30,
	2023 (unaudited)				2023 (unaudited)				2022				2022 (unaudited)
		(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	4,881			$	6,496			$	24,063			$	22,537
Interest earning deposits at Federal Reserve Bank		898,533				874,050				864,126				700,175
Total cash and cash equivalents		903,414				880,546				888,189				722,712
Investment securities, available-for-sale, at fair value		756,636				776,410				766,016				790,594
Commercial loans, at fair value		379,603				396,581				589,143				818,040
Loans, net of deferred fees and costs		5,198,972				5,267,574				5,486,853				5,267,375
Allowance for credit losses		(24,145	)			(23,284	)			(22,374	)			(19,689	)
Loans, net		5,174,827				5,244,290				5,464,479				5,247,686
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock		20,157				20,157				12,629				12,629
Premises and equipment, net		28,978				26,408				18,401				18,443
Accrued interest receivable		34,159				34,062				32,005				25,506
Intangible assets, net		1,751				1,850				2,049				2,149
Other real estate owned		18,756				20,952				21,210				18,873
Deferred tax asset, net		20,379				19,215				19,703				27,241
Other assets		127,107				122,435				89,176				93,201
Total assets	$	7,465,767			$	7,542,906			$	7,903,000			$	7,777,074
Liabilities:
Deposits
Demand and interest checking	$	6,455,043			$	6,554,967			$	6,559,617			$	5,934,591
Savings and money market		49,428				68,084				140,496				575,381
Time deposits, $100,000 and over		—				—				330,000				401,331
Total deposits		6,504,471				6,623,051				7,030,113				6,911,303
Securities sold under agreements to repurchase		42				42				42				42
Senior debt		95,771				95,682				99,050				98,958
Subordinated debenture		13,401				13,401				13,401				13,401
Other long-term borrowings		9,861				9,917				10,028				38,928
Other liabilities		68,533				51,646				56,335				50,704
Total liabilities	$	6,692,079			$	6,793,739			$	7,208,969			$	7,113,336
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 53,867,129 and 56,201,560 shares issued and outstanding at September 30, 2023 and 2022, respectively		53,867				54,542				55,690				56,202
Additional paid-in capital		234,320				256,115				299,279				311,569
Retained earnings		517,587				467,450				369,319				329,078
Accumulated other comprehensive loss		(32,086	)			(28,940	)			(30,257	)			(33,111	)
Total shareholders' equity		773,688				749,167				694,031				663,738
Total liabilities and shareholders' equity	$	7,465,767			$	7,542,906			$	7,903,000			$	7,777,074

Average balance sheet and net interest income		Three months ended September 30, 2023											Three months ended September 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)	$	5,603,514			$	110,506			7.89	%		$	5,904,996			$	75,536		5.12	%
Leases-bank qualified(3)		4,585				110			9.60	%			3,299				55		6.67	%
Investment securities-taxable		768,364				9,647			5.02	%			824,178				6,792		3.30	%
Investment securities-nontaxable(3)		3,005				50			6.66	%			3,559				31		3.48	%
Interest earning deposits at Federal Reserve Bank		639,946				8,689			5.43	%			267,424				1,525		2.28	%
Net interest earning assets		7,019,414				129,002			7.35	%			7,003,456				83,939		4.79	%
Allowance for credit losses		(23,147	)										(19,111	)
Other assets		338,085											212,078
	$	7,334,352										$	7,196,423
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,229,668			$	37,913			2.43	%		$	5,545,115			$	12,726		0.92	%
Savings and money market		56,538				518			3.66	%			479,260				2,792		2.33	%
Time deposits		—				—			—				87,562				547		2.50	%
Total deposits		6,286,206				38,431			2.45	%			6,111,937				16,065		1.05	%
Short-term borrowings		—				—			—				200,423				1,235		2.46	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		9,889				128			5.18	%			39,035				506		5.19	%
Subordinated debentures		13,401				293			8.75	%			13,401				177		5.28	%
Senior debt		95,714				1,234			5.16	%			98,910				1,279		5.17	%
Total deposits and liabilities		6,405,251				40,086			2.50	%			6,463,747				19,262		1.19	%
Other liabilities		167,673											72,539
Total liabilities		6,572,924											6,536,286
Shareholders' equity		761,428											660,137
	$	7,334,352										$	7,196,423
Net interest income on tax equivalent basis(3)					$	88,916										$	64,677
Tax equivalent adjustment						34											18
Net interest income					$	88,882										$	64,659
Net interest margin(3)									5.07	%									3.69	%

(1)Interest on loans for 2023 and 2022 includes $7,000 and $21,000, 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	Nine months ended September 30, 2023											Nine months ended September 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)	$	5,772,266			$	324,009			7.48	%		$	5,531,902			$	181,174		4.37	%
Leases-bank qualified(3)		3,920				279			9.49	%			3,657				185		6.75	%
Investment securities-taxable		773,485				28,820			4.97	%			880,426				17,115		2.59	%
Investment securities-nontaxable(3)		3,193				144			6.01	%			3,559				93		3.48	%
Interest earning deposits at Federal Reserve Bank		640,554				24,271			5.05	%			499,104				2,876		0.77	%
Net interest earning assets		7,193,418				377,523			7.00	%			6,918,648				201,443		3.88	%
Allowance for credit losses		(23,192	)										(19,087	)
Other assets		269,072											203,143
	$	7,439,298										$	7,102,704
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,343,711			$	106,984			2.25	%		$	5,598,028			$	18,522		0.44	%
Savings and money market		88,738				2,465			3.70	%			522,525				4,192		1.07	%
Time deposits		27,802				858			4.11	%			29,508				547		2.47	%
Total deposits		6,460,251				110,307			2.28	%			6,150,061				23,261		0.50	%
Short-term borrowings		6,758				234			4.62	%			71,589				1,267		2.36	%
Repurchase agreements		41				—			—				41				—		—
Long-term borrowings		9,945				382			5.12	%			39,286				506		1.72	%
Subordinated debentures		13,401				825			8.21	%			13,401				432		4.30	%
Senior debt		97,220				3,793			5.20	%			98,817				3,838		5.18	%
Total deposits and liabilities		6,587,616				115,541			2.34	%			6,373,195				29,304		0.61	%
Other liabilities		117,822											71,413
Total liabilities		6,705,438											6,444,608
Shareholders' equity		733,860											658,096
	$	7,439,298										$	7,102,704
Net interest income on tax equivalent basis(3)					$	261,982										$	172,139
Tax equivalent adjustment						89											58
Net interest income					$	261,893										$	172,081
Net interest margin(3)									4.86	%									3.32	%

(1)Interest on loans for 2023 and 2022 includes $27,000 and $502,000, 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	Nine months ended								Year ended
	September 30,				September 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				861				885
Direct lease financing		2,804				312				576
Consumer - other		3				—				—
Total		3,678				1,173				1,461
Recoveries:
SBA non-real estate		446				57				140
SBA commercial mortgage		75				—				—
Direct lease financing		220				108				124
Consumer - home equity		299				—				—
Other loans		—				—				24
Total		1,040				165				288
Net charge-offs		2,638				1,008				1,173
Provision for credit losses, excluding commitment provision		4,409				2,891				5,741
Balance in allowance for credit losses at end of period	$	24,145			$	19,689			$	22,374
Net charge-offs/average loans		0.05	%			0.02	%			0.03	%
Net charge-offs/average assets		0.04	%			0.01	%			0.02	%

Loan portfolio		September 30,			June 30,			December 31,			September 30,
		2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
		(Dollars in thousands)
SBL non-real estate		$	130,579		$	117,621		$	108,954		$	116,080
SBL commercial mortgage			547,107			515,008			474,496			429,865
SBL construction			19,204			32,471			30,864			26,841
Small business loans			696,890			665,100			614,314			572,786
Direct lease financing			670,208			657,316			632,160			599,796
SBLOC / IBLOC(1)			1,720,513			1,883,607			2,332,469			2,369,106
Advisor financing(2)			199,442			173,376			172,468			168,559
Real estate bridge loans			1,848,224			1,826,227			1,669,031			1,488,119
Other loans(3)			55,800			55,644			61,679			64,980
			5,191,077			5,261,270			5,482,121			5,263,346
Unamortized loan fees and costs			7,895			6,304			4,732			4,029
Total loans, including unamortized fees and costs		$	5,198,972		$	5,267,574		$	5,486,853		$	5,267,375

Small business portfolio		September 30,			June 30,			December 31,			September 30,
		2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
		(Dollars in thousands)
SBL, including unamortized fees and costs	$	705,790		$	673,667		$	621,641		$	579,156
SBL, included in loans, at fair value		126,543			134,131			146,717			159,914
Total small business loans(4)	$	832,333		$	807,798		$	768,358		$	739,070

(1)SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At September 30, 2023 and December 31, 2022, IBLOC loans amounted to $712.6 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% of the business enterprise value based on a third-party valuation, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.

(3)Includes demand deposit overdrafts reclassified as loan balances totaling $215,000 and $2.6 million at September 30, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses 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 September 30, 2023

		Loan principal
		(Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)		$	392
PPP loans(1)			2
Commercial mortgage SBA(2)			273
Construction SBA(3)			11
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)			109
Non-SBA SBLs			35
Total principal		$	822
Unamortized fees and costs			10
Total SBLs		$	832

(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 $4.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $7.0 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 September 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 (except casino hotels) and motels		$	74		$	—		$	—		$	74			17%
Full-service restaurants			24			6			2			32			7%
Funeral homes and funeral services			27			—			—			27			6%
Car washes			19			—			—			19			4%
Child day care services			15			1			1			17			4%
Outpatient mental health and substance abuse centers			15			—			—			15			4%
Homes for the elderly			13			—			—			13			3%
Gasoline stations with convenience stores			12			—			—			12			3%
Fitness and recreational sports centers			8			—			2			10			2%
Lessors of other real estate property			9			—			1			10			2%
Offices of lawyers			9			—			—			9			2%
General warehousing and storage			7			—			—			7			2%
Plumbing, heating, and air-conditioning companies			6			—			1			7			2%
Caterers			6			—			—			6			1%
Limited-service restaurants			3			1			3			7			2%
Specialty trade contractors			5			—			—			5			1%
Lessors of residential buildings and dwellings			5			—			—			5			1%
Miscellaneous durable goods merchant			5			—			—			5			1%
Packaged frozen food merchant wholesalers			5			—			—			5			1%
Technical and trade schools			5			—			—			5			1%
All other amusement and recreation			4			—			—			4			1%
Offices of dentists			3			—			—			3			1%
Vocational rehabilitation services			—			3			—			3			1%
Other warehousing and storage			3			—			—			3			1%
Other(2)			96			1			28			125			30%
Total		$	378		$	12		$	38		$	428			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 September 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		$	78		$	4		$	3		$	85			20%
Florida			69			1			3			73			17%
North Carolina			39			1			2			42			10%
New York			24			1			3			28			7%
New Jersey			17			3			4			24			6%
Texas			19			—			4			23			5%
Pennsylvania			21			—			1			22			5%
Georgia			18			1			2			21			5%
Other States <$15 million			93			1			16			110			25%
Total		$	378		$	12		$	38		$	428			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 September 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			8
Offices of lawyers			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					$	72

(1)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 September 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)			139		$	1,848			71%		9.30%
Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)(1)			11		$	207			76%		8.80%
Hospitality (hotels and lodging)			2			27			65%		9.80%
Retail			2			12			72%		7.30%
Other			2			9			73%		5.00%
			17			255			75%		8.69%
Fair value adjustment						(2	)
Total non-SBA commercial real estate loans, at fair value						253
Total commercial real estate loans					$	2,101			72%		9.24%

(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 September 30, 2023									15 largest loans as of September 30, 2023
State			Balance			Origination date LTV			State				Balance		Origination date LTV
(Dollars in millions)									(Dollars in millions)
Texas		$	780			73%			Texas			$	46		75%
Georgia			243			69%			Texas				44		72%
Florida			204			70%			Tennessee				40		72%
Tennessee			88			70%			Texas				39		75%
Michigan			82			71%			Texas				39		79%
Ohio			72			67%			Texas				37		80%
Indiana			66			72%			Michigan				37		62%
Other States each <$65 million			566			73%			Florida				35		72%
Total		$	2,101			72%			Indiana				34		76%
									Texas				33		62%
									Texas				33		67%
									Michigan				33		79%
									Oklahoma				31		78%
									Tennessee				30		71%
									Georgia				29		69%
									15 largest commercial real estate loans			$	540		73%

Institutional banking loans outstanding at September 30, 2023

Type	Principal			% of total
		(Dollars in millions)
SBLOC	$	1,008		53%
IBLOC		713		37%
Advisor financing		199		10%
Total	$	1,920		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 September 30, 2023

	Principal amount			% Principal to collateral
	(Dollars in millions)
	$	12		25%
		9		39%
		9		44%
		9		62%
		9		95%
		8		77%
		8		71%
		8		28%
		7		75%
		7		34%
Total and weighted average	$	86		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, fifteen insurance companies have been approved and, as of September 30, 2023, all were rated A- (Excellent) or better by AM BEST.

Direct lease financing by type as of September 30, 2023

		Principal balance(1)		% Total
		(Dollars in millions)
Construction	$	118		18%
Waste management and remediation services		91		14%
Government agencies and public institutions(2)		89		13%
Real estate and rental and leasing		58		9%
Manufacturing		41		6%
Health care and social assistance		34		5%
Retail trade		34		5%
Finance and insurance		31		5%
Professional, scientific, and technical services		27		4%
Wholesale trade		16		2%
Transportation and warehousing		11		2%
Mining, quarrying, and oil and gas extraction		11		2%
Water supply and irrigation systems		9		1%
Other		100		14%
Total	$	670		100%

(1)Of the total $670.0 million of direct lease financing, $588.0 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 September 30, 2023

State		Principal balance		% Total
		(Dollars in millions)
Florida	$	100		15%
Utah		66		10%
California		60		9%
Pennsylvania		41		6%
New Jersey		38		6%
New York		35		5%
North Carolina		34		5%
Texas		31		5%
Maryland		31		5%
Connecticut		28		4%
Idaho		17		3%
Washington		15		2%
Georgia		14		2%
Ohio		13		2%
Alabama		11		2%
Other States		136		19%
Total	$	670		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, 2023
The Bancorp, Inc.	10.92%		15.53%		16.04%		15.53%
The Bancorp Bank, National Association	12.13%		17.26%		17.77%		17.26%
"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						Nine months ended
	September 30,						September 30,
	2023			2022			2023			2022
Selected operating ratios
Return on average assets(1)		2.71%			1.69%			2.66%			1.69%
Return on average equity(1)		26.12%			18.39%			27.01%			18.28%
Net interest margin		5.07%			3.69%			4.86%			3.32%
(1)Annualized

Book value per share table	September 30,			June 30,				December 31,		September 30,
	2023			2023			2022			2022
Book value per share	$	14.36		$	13.74		$	12.46		$	11.81

Loan quality table		September 30,			June 30,			December 31,			September 30,
		2023			2022			2022			2022
		(Dollars in thousands)
Nonperforming loans to total loans		0.30%			0.28%			0.33%			0.16%
Nonperforming assets to total assets		0.46%			0.47%			0.50%			0.35%
Allowance for credit losses to total loans		0.46%			0.44%			0.41%			0.37%
Nonaccrual loans	$	15,100		$	14,027		$	10,356		$	3,860
Loans 90 days past due still accruing interest		677			563			7,775			4,415
Other real estate owned		18,756			20,952			21,210			18,873
Total nonperforming assets	$	34,533		$	35,542		$	39,341		$	27,148

Gross dollar volume (GDV) (1)	Three months ended
	September 30,			June 30,			December 31,			September 30,
	2023			2023			2022			2022
		(Dollars in thousands)
Prepaid and debit card GDV	$	32,972,249		$	32,776,154		$	29,454,074		$	28,119,428

(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, 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)		6.7	%		$	1,920		(24	%)		(27	%)
Small business lending(4)		7.0	%			832		13	%		12	%
Leasing		7.1	%			670		12	%		8	%
Commercial real estate (non-SBA loans, at fair value)		8.7	%			253		nm			nm
Real estate bridge loans (recorded at book value)		9.3	%			1,848		24	%		5	%
Weighted average yield		7.8	%		$	5,523								Non-interest income
																	% Growth
Deposits: Fintech solutions group														Current quarter			Year over year
Prepaid and debit card issuance, and other payments		2.5	%		$	6,007		11	%		nm			$	24.1		12	%

(1)Average rates are for the three months ended September 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.

	September 30, 2023
		(Dollars in thousands)
Federal Reserve Bank	$	1,938,195
Federal Home Loan Bank		731,500
Total lines of credit available	$	2,669,695

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.

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

Calculation of efficiency ratio⁽¹⁾

	Three months ended
	September 30,			December 31,
	2023			2022
	(Dollars in thousands)
Net interest income	$	88,882		$	76,760
Non-interest income		26,780			25,740
Total revenue	$	115,662		$	102,500
Non-interest expense	$	47,459		$	43,475
Efficiency ratio		41%			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/20231024091378/en/

The Bancorp, Inc.

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Source: The Bancorp, Inc.

FAQ

What is the net income for Q3 2023?

The net income for Q3 2023 is $50.1 million.

What is the increase in net interest income?

Net interest income increased by 37%.

What is the growth rate of small business loans?

Small business loans grew by 13% YoY.

What is the decrease in loans?

Loans decreased by 1% QoQ.

What is the preliminary guidance for 2024?

The preliminary guidance for 2024 is $4.25 per share.