The Bancorp, Inc. Reports Second Quarter 2023 Financial Results

July 27, 2023 at 16:05 PM EDT

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

Highlights

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

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

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

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

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

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

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

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

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

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

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

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

As of June 30, 2023, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 10.42%, 14.97%, 15.47% and 14.97%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.

Book value per common share at June 30, 2023 was $13.74 per share compared to $11.55 per common share at June 30, 2022, an increase of 19%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.

The Bancorp repurchased 828,727 shares of its common stock at an average cost of $30.17 per share during the quarter ended June 30, 2023.

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

Conference Call Webcast

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

About The Bancorp

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

Forward-Looking Statements

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

The Bancorp, Inc. Financial highlights (unaudited)

	Three months ended					Six months ended
	June 30,					June 30,
Consolidated condensed income statements	2023		2022			2023		2022
	(Dollars in thousands, except per share and share data)

Net interest income	$	87,195	$	54,569		$	173,011	$	107,422
Provision for (reversal of) credit losses		361		(1,450	)		2,264		3,509
Non-interest income
ACH, card and other payment processing fees		2,429		2,338			4,600		4,322
Prepaid, debit card and related fees		22,177		20,038			45,500		38,690
Net realized and unrealized gains on commercial
loans, at fair value		1,921		3,682			3,646		10,517
Leasing related income		1,511		1,545			3,001		2,518
Other non-interest income		1,298		350			1,578		470
Total non-interest income		29,336		27,953			58,325		56,517
Non-interest expense
Salaries and employee benefits		33,167		25,999			62,952		49,847
Data processing expense		1,398		1,246			2,719		2,435
Legal expense		949		1,474			1,907		2,268
Legal settlement		—		1,152			—		1,152
FDIC insurance		472		673			1,427		1,647
Software		4,317		4,165			8,554		8,029
Other non-interest expense		9,640		8,136			20,414		15,819
Total non-interest expense		49,943		42,845			97,973		81,197
Income before income taxes		66,227		41,127			131,099		79,233
Income tax expense		17,218		10,725			32,968		19,865
Net income		49,009		30,402			98,131		59,368

Net income per share - basic	$	0.89	$	0.54		$	1.78	$	1.04

Net income per share - diluted	$	0.89	$	0.53		$	1.76	$	1.03
Weighted average shares - basic		54,871,681		56,801,518			55,160,642		56,962,000
Weighted average shares - diluted		55,269,640		57,453,730			55,653,950		57,772,538



Condensed consolidated balance sheets	June 30,			March 31,			December 31,			June 30,
	2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
	(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	6,496		$	13,736		$	24,063		$	12,873
Interest earning deposits at Federal Reserve Bank		874,050			773,446			864,126			329,992
Total cash and cash equivalents		880,546			787,182			888,189			342,865

Investment securities, available-for-sale, at fair value		776,410			787,429			766,016			826,616
Commercial loans, at fair value		396,581			493,334			589,143			995,493
Loans, net of deferred fees and costs		5,267,574			5,354,347			5,486,853			4,754,697
Allowance for credit losses		(23,284	)		(23,794	)		(22,374	)		(19,087	)
Loans, net		5,244,290			5,330,553			5,464,479			4,735,610
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock		20,157			12,629			12,629			1,643
Premises and equipment, net		26,408			21,319			18,401			16,693
Accrued interest receivable		34,062			33,729			32,005			19,264
Intangible assets, net		1,850			1,950			2,049			2,248
Other real estate owned		20,952			21,117			21,210			18,873
Deferred tax asset, net		19,215			18,290			19,703			23,344
Other assets		122,435			99,427			89,176			137,086
Total assets	$	7,542,906		$	7,606,959		$	7,903,000		$	7,119,735

Liabilities:
Deposits
Demand and interest checking	$	6,554,967		$	6,607,767		$	6,559,617		$	5,394,562
Savings and money market		68,084			96,890			140,496			486,189
Time deposits, $100,000 and over		—			—			330,000			—
Total deposits		6,623,051			6,704,657			7,030,113			5,880,751

Securities sold under agreements to repurchase		42			42			42			42
Short-term borrowings		—			—			—			385,000
Senior debt		95,682			99,142			99,050			98,866
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		9,917			9,972			10,028			39,125
Other liabilities		51,646			54,597			56,335			46,014
Total liabilities	$	6,793,739		$	6,881,811		$	7,208,969		$	6,463,199

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 54,542,284 and 56,865,494 shares issued and outstanding at June 30, 2023 and 2022, respectively		54,542			55,330			55,690			56,865
Additional paid-in capital		256,115			277,814			299,279			323,774
Retained earnings		467,450			418,441			369,319			298,474
Accumulated other comprehensive loss		(28,940	)		(26,437	)		(30,257	)		(22,577	)
Total shareholders' equity		749,167			725,148			694,031			656,536

Total liabilities and shareholders' equity	$	7,542,906		$	7,606,959		$	7,903,000		$	7,119,735



Average balance sheet and net interest income	Three months ended June 30, 2023									Three months ended June 30, 2022
	(Dollars in thousands; unaudited)
	Average					Average			Average					Average
Assets:	Balance			Interest⁽¹⁾		Rate			Balance			Interest⁽¹⁾		Rate

Interest earning assets:
Loans, net of deferred fees and costs⁽²⁾	$	5,730,384		$	107,299		7.49	%	$	5,467,516		$	55,100	4.03	%
Leases-bank qualified⁽³⁾		3,801			100		10.52	%		3,665			63	6.88	%
Investment securities-taxable		778,100			9,873		5.08	%		879,112			5,432	2.47	%
Investment securities-nontaxable⁽³⁾		3,234			53		6.56	%		3,559			31	3.48	%
Interest earning deposits at Federal Reserve Bank		701,057			8,997		5.13	%		545,027			1,004	0.74	%
Net interest earning assets		7,216,576			126,322		7.00	%		6,898,879			61,630	3.57	%

Allowance for credit losses		(23,895	)							(20,295	)
Other assets		231,035								243,459
	$	7,423,716							$	7,122,043

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,399,750		$	36,688		2.29	%	$	5,697,507		$	4,390	0.31	%
Savings and money market		78,252			728		3.72	%		556,847			1,200	0.86	%
Total deposits		6,478,002			37,416		2.31	%		6,254,354			5,590	0.36	%

Short-term borrowings		—			—		—			11,593			32	1.10	%
Repurchase agreements		41			—		—			41			—	—
Long-term borrowings		9,949			128		5.15	%		—			—	—
Subordinated debentures		13,401			271		8.09	%		13,401			139	4.15	%
Senior debt		96,890			1,280		5.28	%		98,816			1,280	5.18	%
Total deposits and liabilities		6,598,283			39,095		2.37	%		6,378,205			7,041	0.44	%

Other liabilities		88,276								89,422
Total liabilities		6,686,559								6,467,627

Shareholders' equity		737,157								654,416
	$	7,423,716							$	7,122,043
Net interest income on tax equivalent basis⁽³⁾				$	87,227							$	54,589

Tax equivalent adjustment					32								20

Net interest income				$	87,195							$	54,569
Net interest margin⁽³⁾							4.83	%						3.17	%

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

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

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



Average balance sheet and net interest income	Six months ended June 30, 2023								Six months ended June 30, 2022
	(Dollars in thousands; unaudited)
	Average					Average			Average					Average
Assets:	Balance			Interest⁽¹⁾		Rate			Balance			Interest⁽¹⁾		Rate

Interest earning assets:
Loans, net of deferred fees and costs⁽²⁾	$	5,858,040		$	213,503		7.29	%	$	5,302,850		$	105,638	3.98	%
Leases-bank qualified⁽³⁾		3,582			169		9.44	%		3,839			130	6.77	%
Investment securities-taxable		776,089			19,173		4.94	%		909,017			10,323	2.27	%
Investment securities-nontaxable⁽³⁾		3,288			94		5.72	%		3,559			62	3.48	%
Interest earning deposits at Federal Reserve Bank		640,864			15,582		4.86	%		616,865			1,351	0.44	%
Net interest earning assets		7,281,863			248,521		6.83	%		6,836,130			117,504	3.44	%

Allowance for credit losses		(23,215	)							(19,075	)
Other assets		234,037								232,402
	$	7,492,685							$	7,049,457

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,401,678		$	69,071		2.16	%	$	5,636,415		$	5,796	0.21	%
Savings and money market		105,105			1,947		3.70	%		544,515			1,400	0.51	%
Time deposits		41,933			858		4.09	%		—			—	—
Total deposits		6,548,716			71,876		2.20	%		6,180,930			7,196	0.23	%

Short-term borrowings		10,193			234		4.59	%		6,104			32	1.05	%
Repurchase agreements		41			—		—			41			—	—
Long-term borrowings		9,973			254		5.09	%		—			—	—
Subordinated debentures		13,401			532		7.94	%		13,401			255	3.81	%
Senior debt		97,985			2,559		5.22	%		98,770			2,559	5.18	%
Total deposits and liabilities		6,680,309			75,455		2.26	%		6,299,246			10,042	0.32	%

Other liabilities		90,777								95,716
Total liabilities		6,771,086								6,394,962

Shareholders' equity		721,599								654,495
	$	7,492,685							$	7,049,457
Net interest income on tax equivalent basis⁽³⁾				$	173,066							$	107,462

Tax equivalent adjustment					55								40

Net interest income				$	173,011							$	107,422
Net interest margin⁽³⁾							4.75	%						3.14	%

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

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

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


Allowance for credit losses	Six months ended						Year ended
	June 30,			June 30,			December 31,
	2023 (unaudited)			2022 (unaudited)			2022
	(Dollars in thousands)

Balance in the allowance for credit losses at beginning of period	$	22,374		$	17,806		$	17,806

Loans charged-off:
SBA non-real estate		871			844			885
Direct lease financing		1,439			199			576
Consumer - other		3			—			—
Total		2,313			1,043			1,461

Recoveries:
SBA non-real estate		298			33			140
SBA commercial mortgage		75			—			—
Direct lease financing		175			93			124
Consumer - home equity		49			—			—
Other loans		—			—			24
Total		597			126			288
Net charge-offs		1,716			917			1,173
Provision for credit losses, excluding commitment provision		2,626			2,198			5,741

Balance in allowance for credit losses at end of period	$	23,284		$	19,087		$	22,374
Net charge-offs/average loans		0.03	%		0.02	%		0.03	%
Net charge-offs/average assets		0.02	%		0.01	%		0.02	%



Loan portfolio	June 30,		March 31,		December 31,		June 30,
	2023 (unaudited)		2023 (unaudited)		2022		2022 (unaudited)
	(Dollars in thousands)

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



Small business portfolio	June 30,		March 31,		December 31,		June 30,
	2023 (unaudited)		2023 (unaudited)		2022		2022 (unaudited)
	(Dollars in thousands)

SBL, including unamortized fees and costs	$	673,667	$	648,858	$	621,641	$	571,559
SBL, included in loans, at fair value		134,131		140,909		146,717		168,579
Total small business loans⁽⁴⁾	$	807,798	$	789,767	$	768,358	$	740,138

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

⁽²⁾In 2020 The Bancorp began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value (“LTV”) ratios of 70%, based on third-party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.

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

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

Small business loans as of June 30, 2023

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

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

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

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

⁽⁴⁾Includes the unguaranteed portion of 7(a) Program loans which are 70% or more guaranteed by the U.S. government. SBA 7(a) Program loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7(a) Program loans and 504 Program loans require the personal guaranty of all 20% or greater owners.

Small business loans by type as of June 30, 2023

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

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

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

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

State diversification as of June 30, 2023

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

	SBL commercial mortgage⁽¹⁾		SBL construction⁽¹⁾		SBL non-real estate		Total		% Total
		(Dollars in millions)
California	$	74	$	4	$	3	$	81	20%
Florida		68		1		3		72	18%
North Carolina		33		7		2		42	10%
New York		26		—		3		29	7%
New Jersey		20		—		3		23	6%
Pennsylvania		21		—		—		21	5%
Georgia		16		—		1		17	4%
Illinois		14		—		1		15	4%
Texas		12		—		4		16	4%
Other States <$15 million		77		3		15		95	22%
Total	$	361	$	15	$	35	$	411	100%

Top 10 loans as of June 30, 2023

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

⁽¹⁾All ten largest loans in our SBL portfolio are SBA 504 Program loans with 50%-60% origination date LTVs. The table above does not include loans to the extent that they are U.S. government guaranteed.

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

Type as of June 30, 2023

Type	# Loans		Balance	Weighted average origination date LTV	Weighted average interest rate
	(Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)⁽¹⁾	136	$	1,826	71%	8.90%

Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)⁽¹⁾	12	$	216	76%	8.70%
Hospitality (hotels and lodging)	2		28	65%	9.10%
Retail	2		12	72%	7.30%
Other	2		9	73%	5.20%
	18		265	74%	8.55%
Fair value adjustment			(3)
Total non-SBA commercial real estate loans, at fair value			262
Total commercial real estate loans		$	2,088	72%	8.87%

⁽¹⁾In the third quarter of 2021, we resumed the origination of multi-family apartment loans. These are similar to the multi-family apartment loans carried at fair value, but at origination are intended to be held on the balance sheet, so they are not accounted for at fair value.


State diversification as of June 30, 2023				15 largest loans as of June 30, 2023

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

Institutional banking loans outstanding at June 30, 2023

Type	Principal		% of total
		(Dollars in millions)
SBLOC	$	1,078	52%
IBLOC		806	39%
Advisor financing		173	9%
Total	$	2,057	100%

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

Top 10 SBLOC loans at June 30, 2023

	Principal amount		% Principal to collateral
	(Dollars in millions)
	$	18	41%
		16	62%
		14	35%
		10	32%
		9	64%
		9	44%
		8	70%
		8	73%
		6	29%
		6	51%
Total and weighted average	$	104	49%

Insurance backed lines of credit (IBLOC)

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

Direct lease financing by type as of June 30, 2023

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

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

⁽²⁾Includes public universities and school districts.

Direct lease financing by state as of June 30, 2023

State		Principal balance	% Total
		(Dollars in millions)
Florida	$	93	14%
Utah		65	10%
California		61	9%
Pennsylvania		40	6%
New Jersey		39	6%
New York		33	5%
North Carolina		32	5%
Texas		30	5%
Maryland		29	4%
Connecticut		27	4%
Washington		16	2%
Idaho		16	2%
Georgia		14	2%
Iowa		13	2%
Ohio		12	2%
Other States		137	22%
Total	$	657	100%



Capital ratios	Tier 1 capital	Tier 1 capital	Total capital	Common equity
	to average	to risk-weighted	to risk-weighted	tier 1 to risk
	assets ratio	assets ratio	assets ratio	weighted assets
As of June 30, 2023
The Bancorp, Inc.	10.42%	14.97%	15.47%	14.97%
The Bancorp Bank, National Association	11.59%	16.67%	17.16%	16.67%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%	8.00%	10.00%	6.50%

As of December 31, 2022
The Bancorp, Inc.	9.63%	13.40%	13.87%	13.40%
The Bancorp Bank, National Association	10.73%	14.95%	15.42%	14.95%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%	8.00%	10.00%	6.50%


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

⁽¹⁾Annualized



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



Loan quality table	June 30,		March 31,		December 31,		June 30,
	2023		2022		2022		2022
	(Dollars in thousands)
Nonperforming loans to total loans		0.28%		0.26%		0.33%		0.18%
Nonperforming assets to total assets		0.47%		0.46%		0.50%		0.39%
Allowance for credit losses to total loans		0.44%		0.44%		0.41%		0.40%

Nonaccrual loans	$	14,027	$	12,938	$	10,356	$	3,698
Loans 90 days past due still accruing interest		563		873		7,775		4,848
Other real estate owned		20,952		21,117		21,210		18,873
Total nonperforming assets	$	35,542	$	34,928	$	39,341	$	27,419



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

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



Business line quarterly summary
Quarter ended June 30, 2023
(Dollars in millions)

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

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

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

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

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

Summary of credit lines available

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


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

Estimated insured vs uninsured deposits

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


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

Calculation of efficiency ratio⁽¹⁾

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

Efficiency ratio		43%		42%

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

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

Contacts

The Bancorp, Inc.

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com