Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries The Bancorp, Inc. Reports Second Quarter Financial Results By: The Bancorp, Inc. via Business Wire July 25, 2024 at 16:05 PM EDT The Bancorp, Inc. ("The Bancorp" “the Company” or “we” or “our”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2024. Recent Developments The Company entered into a purchase and sale agreement for an apartment property acquired by The Bancorp Bank through foreclosure in connection with a real estate bridge lending (“REBL”) loan. At June 30, 2024, the related $39.4 million balance, comprised the majority of our other real estate owned. The purchaser made an earnest money deposit of $125,000 in July 2024, with additional required deposits projected to total $500,000 prior to the December 31, 2024, closing deadline. The sales price is expected to cover the Company’s current other real estate owned balance plus the forecasted cost of improvements to the property. There can be no assurance that the purchaser will consummate the sale of the property, but if not consummated, earnest money deposits would accrue to the Company. One of the accounting estimates as described in the notes to our financial statements, is the allowance for credit losses (“ACL”), which is sensitive to a variety of inherent portfolio and external factors. REBL may be one of the more sensitive portfolios to such factors. In the second quarter of 2024, REBL loans classified as either special mention or substandard increased to $177.1 million from $165.2 million at March 31, 2024. Each classified loan was evaluated for a potential increase in the ACL on the basis of third-party appraisals of related apartment building collateral. On the basis of “as is” and “as stabilized” loan to values (“LTV’s”), increases to the allowance for specific loans was not required. The respective weighted average “as is” and “as stabilized” LTVs were 81% and 69%, based on third party appraisals, the majority of which were performed in 2024. The current allowance for credit losses for REBL, is primarily based upon historical industry losses for multi-family loans, in the absence of significant historical losses within the Company’s REBL portfolio. However, as a result of increasing amounts of loans classified as special mention and substandard, the Company will evaluate potential related sensitivity of that factor for REBL. This evaluation is inherently subjective as it requires material estimates that may be susceptible to change as more information becomes available. The Company has a single $12.6 million par value security in its investment portfolio, which is the only security remaining from its securitization business, which was exited in 2020. As a result of appraisals received from the servicer in the second quarter of 2024, the Company placed the security into non-accrual status, notwithstanding that those appraisals, with lower values than prior appraisals, exceeded principal and accrued interest. The following table reflects the related non-GAAP second quarter impact. Net Income (000’s) EPS GAAP $ 53,686 $ 1.05 Interest income impact of legacy security transferred to nonaccrual, net of tax 1,009 0.02 As adjusted, non-GAAP $ 54,695 $ 1.07 In the second quarter of 2024, the Company initiated its measured entry into consumer fintech lending, by which the Company makes consumer loans with the marketing and servicing assistance of its existing and planned new fintech relationships. While the $72.4 million of such loans at June 30, 2024 did not significantly impact income during the quarter, such lending is expected to meaningfully impact both the balance sheet and income in the future. We expect that impact will be reflected in a lower cost of funds for related deposits and increased transaction fees. Highlights The Bancorp reported net income of $53.7 million, or $1.05 per diluted share (“EPS”), for the quarter ended June 30, 2024, compared to net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023, or an EPS increase of 18%. While net income increased 10% between these periods, outstanding shares were decreased as a result of common share repurchases which were significantly increased in 2024. Return on assets and equity for the quarter ended June 30, 2024, amounted to 2.8% and 27%, respectively, compared to 2.6% and 27%, respectively, for the quarter ended June 30, 2023 (all percentages “annualized”). Net interest income increased 8% to $93.8 million for the quarter ended June 30, 2024, compared to $87.2 million for the quarter ended June 30, 2023. Net interest margin amounted to 4.97% for the quarter ended June 30, 2024, compared to 4.83% for the quarter ended June 30, 2023, and 5.15% for the quarter ended March 31, 2024. Loans, net of deferred fees and costs were $5.61 billion at June 30, 2024, compared to $5.36 billion at December 31, 2023 and $5.27 billion at June 30, 2023. Those changes reflected an increase of 3% quarter over linked quarter and an increase of 6% year over year. Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.36 billion, or 13%, to $37.14 billion for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. 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 13% to $27.8 million for the second quarter of 2024 compared to the second quarter of 2023. Small business loans (“SBL”), including those held at fair value, amounted to $964.4 million at June 30, 2024, or 16% higher year over year, and 4% higher quarter over linked quarter, excluding the impact of $28.6 million of loans with related secured borrowings. Direct lease financing balances increased 8% year over year to $711.4 million at June 30, 2024, and 1% over March 31, 2024. At June 30, 2024, real estate bridge loans of $2.12 billion had grown 1% compared to a $2.10 billion balance at March 31, 2024, and 16% compared to the June 30, 2023 balance of $1.83 billion. These real estate bridge loans consist entirely of rehabilitation loans for apartment buildings. Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”), and investment advisor financing loans collectively decreased 13% year over year and increased 1% quarter over linked quarter to $1.80 billion at June 30, 2024. The average interest rate on $6.96 billion of average deposits and interest-bearing liabilities during the second quarter of 2024 was 2.50%. Average deposits of $6.72 billion for the second quarter of 2024 increased $213 million over first quarter 2024, while historically, average deposits have tended to decrease between those periods, as tax refund related balances decline. As of June 30, 2024, 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 10.07%, 14.13%, 14.68% and 14.13%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp Bank, National Association, remains well capitalized under banking regulations. Book value per common share at June 30, 2024 was $15.77 compared to $13.74 per common share at June 30, 2023, an increase of 15%. The Bancorp repurchased 3,018,405 shares of its common stock at an average cost of $33.13 per share during the quarter ended June 30, 2024. As a result of the increase in the share repurchase in the second quarter of 2024, from $50.0 million to $100.0 million, outstanding shares at June 30, 2024 amounted to 49.3 million, compared to 53.2 million shares at December 31, 2023, or a reduction of 7.4% The Bancorp emphasizes safety and soundness and its balance sheet has a risk profile enhanced by the special nature of the collateral supporting its loan niches, related underwriting, and the characteristics of its funding sources, including those highlighted in the bullets below. Those loan niches and funding sources have contributed to increased earnings levels, even during periods in which markets have experienced various economic stresses. The vast majority of The Bancorp’s funding is comprised of FDIC-insured and/or small balance accounts, which adjust to only a portion of changes in rates. The Bancorp also has lines of credit with U.S. government sponsored agencies totaling approximately $3.1 billion as of June 30, 2024, as well as access to other forms of liquidity. In its real estate bridge lending portfolio, The Bancorp has minimal exposure to non-multifamily commercial real estate such as office buildings, and instead has a portfolio largely comprised of rehabilitation bridge loans for apartment buildings. These loans generally have three year terms with two one-year extensions to allow for the rehabilitation work to be completed and rentals stabilized for an extended period, before being refinanced at lower rates through U.S. Government Sponsored Entities or other lenders. The rehabilitation real estate lending portfolio consists primarily of workforce housing, which we consider to be working class apartments at more affordable rental rates. Related collateral values should accordingly be more stable than higher rent properties, even in stressed economies. While the macro-economic environment has challenged the multifamily bridge space, the stability of The Bancorp’s rehabilitation bridge loan portfolio is evidenced by the estimated values of underlying collateral. The Bancorp’s $2.1 billion apartment bridge lending portfolio at June 30, 2024 has a weighted average origination date “as is” LTV of 70%, based on third party appraisals. Further, the weighted average origination date “as stabilized” LTV, which measures the estimated value of the apartments after the rehabilitation is complete may provide even greater protection. As part of the underwriting process, The Bancorp reviews borrowers’ previous rehabilitation experience in addition to overall financial wherewithal. These transactions also include significant borrower equity contributions with required performance metrics. Underwriting generally includes, but is not limited to, assessment of local market information relating to vacancy and rental rates, review of post rehabilitation rental rate assumptions against geo-specific affordability indices, negative news and lien searches, visitations by bank personnel and/or designated engineers, and other information sources. Rehabilitation progress is monitored through ongoing draw requests and financial reporting covenants. This generally allows for early identification of potential issues, and expedited action to address on a timely basis. Operations and ongoing loan evaluation are overseen by multiple levels of management, in addition to the real estate bridge lending team’s experienced professional staff and third-party consultants utilized during the underwriting and asset management process. This oversight includes a separate loan committee specific to real estate bridge lending, which is comprised of seasoned and experienced lending professionals who do not directly report to anyone on the real estate bridge lending team. There is also a separate loan review department, a surveillance committee and additional staff which evaluate potential losses under the current expected credit losses methodology (“CECL”), all of which similarly do not report to anyone on the real estate bridge lending team. SBLOC and IBLOC portfolios are respectively secured by marketable securities and the cash value of life insurance. The majority of SBA 7(a) loans are government guaranteed, while SBA 504 loans are made with 50-60% LTV’s. Additional details regarding our loan portfolios are included in the related tables in this press release, as is the summarization of the earnings contributions of our payments businesses, which further enhances The Bancorp’s risk profile. The Company’s risk profile inherent in its loan portfolios, funding and earnings levels, may present opportunities to further increase shareholder value, while still prudently maintaining capital levels. Such opportunities include the recently increased planned stock repurchases noted above. In the second quarter of 2024, the Company purchased approximately $900 million of fixed rate government sponsored entity backed commercial and residential mortgage securities of varying maturities, with an approximate 5.11% weighted average yield, and estimated weighted average lives of eight years, to reduce its exposure to lower levels of net interest income, should the Federal Reserve begin decreasing rates. Such purchases would also reduce the additional net interest income which will result if the Federal Reserve increases rates. While there are many variables and limitations to estimating exposure to changes in rates, such purchases and continuing fixed rate loan originations are projected to reduce such exposure to modest levels. In prior years, The Bancorp deferred adding fixed rate securities when yields were particularly low, which has afforded the flexibility to benefit from, and secure, more advantageous securities and loan rates. “The second quarter, which usually reflects greater tax refund related runoff, instead showed continued broad based momentum in deposit volumes, and deposit stability,” said Damian Kozlowski CEO and President of The Bancorp.” Growth trends and the reduction of shares through buybacks should support continued strong EPS growth in 2024 and beyond. We are lifting our 2024 guidance to $4.35 a share from $4.25 a share without including the impact of $50 million of quarterly share buybacks. We intend to issue preliminary 2025 guidance in our 3rd quarter press release.” Conference Call Webcast You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.800.225.9448, conference code BANCORP. 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 2, 2024, by dialing 1.800.934.5153. 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 2024 2023 2024 2023 (Dollars in thousands, except per share and share data) Net interest income $ 93,795 $ 87,195 $ 188,213 $ 173,011 Provision for credit losses on loans 1,252 361 3,421 2,264 Non-interest income ACH, card and other payment processing fees 3,000 2,429 5,964 4,600 Prepaid, debit card and related fees 24,755 22,177 49,041 45,500 Net realized and unrealized gains on commercial loans, at fair value 503 1,921 1,599 3,646 Leasing related income 1,429 1,511 1,817 3,001 Consumer credit fintech fees 140 — 140 — Other non-interest income 895 1,298 1,543 1,578 Total non-interest income 30,722 29,336 60,104 58,325 Non-interest expense Salaries and employee benefits 33,863 33,167 64,143 62,952 Data processing expense 1,423 1,398 2,844 2,719 Legal expense 633 949 1,454 1,907 FDIC insurance 869 472 1,714 1,427 Software 4,637 4,317 9,126 8,554 Other non-interest expense 10,021 9,640 18,877 20,414 Total non-interest expense 51,446 49,943 98,158 97,973 Income before income taxes 71,819 66,227 146,738 131,099 Income tax expense 18,133 17,218 36,623 32,968 Net income 53,686 49,009 110,115 98,131 Net income per share - basic $ 1.05 $ 0.89 $ 2.12 $ 1.78 Net income per share - diluted $ 1.05 $ 0.89 $ 2.10 $ 1.76 Weighted average shares - basic 50,937,055 54,871,681 51,842,097 55,160,642 Weighted average shares - diluted 51,337,491 55,269,640 52,327,122 55,653,950 Condensed consolidated balance sheets June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands, except share data) Assets: Cash and cash equivalents Cash and due from banks $ 5,741 $ 9,105 $ 4,820 $ 6,496 Interest earning deposits at Federal Reserve Bank 399,853 1,241,363 1,033,270 874,050 Total cash and cash equivalents 405,594 1,250,468 1,038,090 880,546 Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss effective December 31, 2023 1,581,006 718,247 747,534 776,410 Commercial loans, at fair value 265,193 282,998 332,766 396,581 Loans, net of deferred fees and costs 5,605,727 5,459,344 5,361,139 5,267,574 Allowance for credit losses (28,575) (28,741) (27,378) (23,284) Loans, net 5,577,152 5,430,603 5,333,761 5,244,290 Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock 15,642 15,642 15,591 20,157 Premises and equipment, net 28,038 27,482 27,474 26,408 Accrued interest receivable 43,720 37,861 37,534 34,062 Intangible assets, net 1,452 1,552 1,651 1,850 Other real estate owned 57,861 19,559 16,949 20,952 Deferred tax asset, net 20,556 21,764 21,219 19,215 Other assets 149,187 109,680 133,126 122,435 Total assets $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Liabilities: Deposits Demand and interest checking $ 7,095,391 $ 6,828,159 $ 6,630,251 $ 6,554,967 Savings and money market 60,297 62,597 50,659 68,084 Total deposits 7,155,688 6,890,756 6,680,910 6,623,051 Securities sold under agreements to repurchase — — 42 42 Senior debt 96,037 95,948 95,859 95,682 Subordinated debenture 13,401 13,401 13,401 13,401 Other long-term borrowings 38,283 38,407 38,561 9,917 Other liabilities 65,001 60,579 69,641 51,646 Total liabilities $ 7,368,410 $ 7,099,091 $ 6,898,414 $ 6,793,739 Shareholders' equity: Common stock - authorized, 75,000,000 shares of $1.00 par value; 49,267,403 and 54,542,284 shares issued and outstanding at June 30, 2024 and 2023, respectively 49,268 52,253 53,203 54,542 Additional paid-in capital 72,171 166,335 212,431 256,115 Retained earnings 671,730 618,044 561,615 467,450 Accumulated other comprehensive loss (16,178) (19,867) (19,968) (28,940) Total shareholders' equity 776,991 816,765 807,281 749,167 Total liabilities and shareholders' equity $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Average balance sheet and net interest income Three months ended June 30, 2024 Three months ended June 30, 2023 (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(1) $ 5,749,565 $ 114,970 8.00% $ 5,730,384 $ 107,299 7.49% Leases-bank qualified(2) 4,621 117 10.13% 3,801 100 10.52% Investment securities-taxable 1,454,393 17,520 4.82% 778,100 9,873 5.08% Investment securities-nontaxable(2) 2,895 50 6.91% 3,234 53 6.56% Interest earning deposits at Federal Reserve Bank 341,863 4,677 5.47% 701,057 8,997 5.13% Net interest earning assets 7,553,337 137,334 7.27% 7,216,576 126,322 7.00% Allowance for credit losses (28,568) (23,895) Other assets 266,061 231,035 $ 7,790,830 $ 7,423,716 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,657,386 $ 39,542 2.38% $ 6,399,750 $ 36,688 2.29% Savings and money market 60,212 457 3.04% 78,252 728 3.72% Total deposits 6,717,598 39,999 2.38% 6,478,002 37,416 2.31% Short-term borrowings 92,412 1,295 5.61% — — — Repurchase agreements — — — 41 — — Long-term borrowings 38,362 685 7.14% 9,949 128 5.15% Subordinated debentures 13,401 291 8.69% 13,401 271 8.09% Senior debt 95,984 1,234 5.14% 96,890 1,280 5.28% Total deposits and liabilities 6,957,757 43,504 2.50% 6,598,283 39,095 2.37% Other liabilities 36,195 88,276 Total liabilities 6,993,952 6,686,559 Shareholders' equity 796,878 737,157 $ 7,790,830 $ 7,423,716 Net interest income on tax equivalent basis(2) $ 93,830 $ 87,227 Tax equivalent adjustment 35 32 Net interest income $ 93,795 $ 87,195 Net interest margin(2) 4.97% 4.83% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Average balance sheet and net interest income Six months ended June 30, 2024 Six months ended June 30, 2023 (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(1) $ 5,733,413 $ 229,130 7.99% $ 5,858,040 $ 213,503 7.29% Leases-bank qualified(2) 4,683 233 9.95% 3,582 169 9.44% Investment securities-taxable 1,093,996 27,154 4.96% 776,089 19,173 4.94% Investment securities-nontaxable(2) 2,895 100 6.91% 3,288 94 5.72% Interest earning deposits at Federal Reserve Bank 607,968 16,561 5.45% 640,864 15,582 4.86% Net interest earning assets 7,442,955 273,178 7.34% 7,281,863 248,521 6.83% Allowance for credit losses (27,862) (23,215) Other assets 323,244 234,037 $ 7,738,337 $ 7,492,685 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,553,107 $ 78,256 2.39% $ 6,401,678 $ 69,071 2.16% Savings and money market 55,591 904 3.25% 105,105 1,947 3.70% Time deposits — — — 41,933 858 4.09% Total deposits 6,608,698 79,160 2.40% 6,548,716 71,876 2.20% Short-term borrowings 46,892 1,314 5.60% 10,193 234 4.59% Repurchase agreements 6 — — 41 — — Long-term borrowings 38,439 1,371 7.13% 9,973 254 5.09% Subordinated debentures 13,401 583 8.70% 13,401 532 7.94% Senior debt 95,939 2,467 5.14% 97,985 2,559 5.22% Total deposits and liabilities 6,803,375 84,895 2.50% 6,680,309 75,455 2.26% Other liabilities 142,826 90,777 Total liabilities 6,946,201 6,771,086 Shareholders' equity 792,136 721,599 $ 7,738,337 $ 7,492,685 Net interest income on tax equivalent basis(2) $ 188,283 $ 173,066 Tax equivalent adjustment 70 55 Net interest income $ 188,213 $ 173,011 Net interest margin(2) 5.06% 4.75% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Allowance for credit losses Six months ended Year ended June 30, June 30, December 31, 2024 (unaudited) 2023 (unaudited) 2023 (Dollars in thousands) Balance in the allowance for credit losses at beginning of period $ 27,378 $ 22,374 $ 22,374 Loans charged-off: SBA non-real estate 417 871 871 SBA commercial mortgage — — 76 Direct lease financing 2,301 1,439 3,666 IBLOC — — 24 Consumer - home equity 10 — — Other loans 6 3 3 Total 2,734 2,313 4,640 Recoveries: SBA non-real estate 32 298 475 SBA commercial mortgage — 75 75 Direct lease financing 59 175 330 Consumer - home equity — 49 299 Total 91 597 1,179 Net charge-offs 2,643 1,716 3,461 Provision for credit losses, excluding commitment provision 3,840 2,626 8,465 Balance in allowance for credit losses at end of period $ 28,575 $ 23,284 $ 27,378 Net charge-offs/average loans 0.05% 0.03% 0.07% Net charge-offs/average assets 0.03% 0.02% 0.05% Loan portfolio June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands) SBL non-real estate $ 171,893 $ 140,956 $ 137,752 $ 117,621 SBL commercial mortgage 647,894 637,926 606,986 515,008 SBL construction 30,881 27,290 22,627 32,471 Small business loans 850,668 806,172 767,365 665,100 Direct lease financing 711,403 702,512 685,657 657,316 SBLOC / IBLOC(1) 1,558,095 1,550,313 1,627,285 1,883,607 Advisor financing(2) 238,831 232,206 221,612 173,376 Real estate bridge loans 2,119,324 2,101,896 1,999,782 1,826,227 Consumer fintech(3) 70,081 — — — Other loans(4) 46,592 56,163 50,638 55,644 5,594,994 5,449,262 5,352,339 5,261,270 Unamortized loan fees and costs 10,733 10,082 8,800 6,304 Total loans, including unamortized fees and costs $ 5,605,727 $ 5,459,344 $ 5,361,139 $ 5,267,574 Small business portfolio June 30, 2024 (unaudited) March 31, 2024 (unaudited) December 31, 2023 June 30, 2023 (unaudited) (Dollars in thousands) SBL, including unamortized fees and costs $ 860,226 $ 816,151 $ 776,867 $ 673,667 SBL, included in loans, at fair value 104,146 109,131 119,287 134,131 Total small business loans(5) $ 964,372 $ 925,282 $ 896,154 $ 807,798 (1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At June 30, 2024 and December 31, 2023, IBLOC loans amounted to $582.8 million and $646.9 million, 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) Consumer fintech loans consist primarily of secured credit card loans. (4) Includes demand deposit overdrafts reclassified as loan balances totaling $279,000 and $1.7 million at June 30, 2024 and December 31, 2023, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and are immaterial. (5) 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, 2024 Loan principal (Dollars in millions) U.S. government guaranteed portion of SBA loans(1) $ 400 PPP loans(1) 2 Commercial mortgage SBA(2) 336 Construction SBA(3) 14 Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4) 117 Non-SBA SBLs 56 Other(5) 28 Total principal $ 953 Unamortized fees and costs 11 Total SBLs $ 964 (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 $6 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $8 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. (5) Comprised of $29 million of loans sold that do not qualify for true sale accounting. Small business loans by type as of June 30, 2024 (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 $ 76 $ — $ — $ 76 15% Funeral homes and funeral services 22 — 25 47 9% Full-service restaurants 29 5 2 36 7% Child day care services 23 1 2 26 5% Car washes 17 1 — 18 3% General line grocery merchant wholesalers 17 — — 17 3% Homes for the elderly 16 — — 16 3% Outpatient mental health and substance abuse centers 15 — — 15 3% Gasoline stations with convenience stores 15 — — 15 3% Fitness and recreational sports centers 8 — 2 10 2% Nursing care facilities 9 — — 9 2% Lawyer's office 9 — — 9 2% Limited-service restaurants 4 1 3 8 2% Caterers 7 — — 7 1% All other specialty trade contractors 7 — — 7 1% General warehousing and storage 6 — — 6 1% Plumbing, heating, and air-conditioning contractors 5 — 1 6 1% Other accounting services 5 — — 5 1% Offices of real estate agents and brokers 5 — — 5 1% Other miscellaneous durable goods merchant 5 — — 5 1% Other technical and trade schools 5 — — 5 1% Packaged frozen food merchant wholesalers 5 — — 5 1% Lessors of nonresidential buildings (except miniwarehouses) 5 — — 5 1% All other amusement and recreation industries 4 — — 4 1% Other(2) 122 10 29 161 30% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans sold that do not qualify for true sale accounting. (2) Loan types of less than $4 million are spread over approximately one hundred different business types. State diversification as of June 30, 2024 (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 $ 117 $ 3 $ 5 $ 125 24% Florida 76 4 3 83 16% North Carolina 38 1 5 44 8% Pennsylvania 21 — 14 35 7% New York 28 2 2 32 6% Texas 22 2 6 30 6% Georgia 26 1 1 28 5% New Jersey 21 3 3 27 5% Other States 92 2 25 119 23% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans that do not qualify for true sale accounting. Top 10 loans as of June 30, 2024 Type(1) State SBL commercial mortgage (Dollars in millions) General line grocery merchant wholesalers CA $ 13 Funeral homes and funeral services PA 13 Outpatient mental health and substance abuse center FL 10 Funeral homes and funeral services ME 9 Hotel FL 8 Lawyer's office CA 8 Hotel NC 7 General warehousing and storage PA 6 Hotel FL 6 Hotel NY 6 Total $ 86 (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 June 30, 2024 Type # Loans Balance Weighted average origination date LTV Weighted average interest rate (Dollars in millions) Real estate bridge loans (multifamily apartment loans recorded at amortized cost)(1) 160 $ 2,119 70% 9.19% Non-SBA commercial real estate loans, at fair value: Multifamily (apartment bridge loans)(1) 7 $ 116 76% 9.20% Hospitality (hotels and lodging) 2 27 65% 9.82% Retail 2 12 72% 8.19% Other 2 9 73% 5.10% 13 164 74% 9.18% Fair value adjustment (3) Total non-SBA commercial real estate loans, at fair value 161 Total commercial real estate loans $ 2,280 70% 9.19% (1) In the third quarter of 2021, we resumed the origination of bridge loans for multi-family apartment rehabilitation which comprise these categories. Such loans held at fair value were originally intended for sale, but are now being retained on the balance sheet. In addition to “as is” origination date appraisals, on which the weighted average origination date LTVs are based, third party appraisers also estimated “as stabilized” values, which represents additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. The weighted average origination date “as stabilized” LTV was estimated at 61%. State diversification as of June 30, 2024 15 largest loans as of June 30, 2024 State Balance Origination date LTV State Balance Origination date LTV (Dollars in millions) (Dollars in millions) Texas $ 778 71% Texas $ 47 72% Georgia 259 69% Texas 46 75% Florida 245 69% Tennessee 40 72% Michigan 132 68% Michigan 38 62% Indiana 105 70% Texas 37 80% Ohio 73 67% Texas 36 67% New Jersey 71 68% Florida 35 72% Other States each <$60 million 617 71% Pennsylvania 34 63% Total $ 2,280 70% Indiana 34 76% Texas 33 62% New Jersey 32 62% Michigan 32 79% Oklahoma 31 78% Texas 31 77% Michigan 29 66% 15 largest commercial real estate loans $ 535 71% Institutional banking loans outstanding at June 30, 2024 Type Principal % of total (Dollars in millions) SBLOC $ 975 54% IBLOC 583 32% Advisor financing 239 14% Total $ 1,797 100% 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, 2024 Principal amount % Principal to collateral (Dollars in millions) $ 11 17% 9 48% 8 36% 8 68% 8 65% 8 80% 8 24% 8 34% 7 22% 7 44% Total and weighted average $ 82 43% 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 April 17, 2024, all were rated A- (Excellent) or better by AM BEST. Direct lease financing by type as of June 30, 2024 Principal balance(1) % Total (Dollars in millions) Government agencies and public institutions(2) $ 129 18% Construction 111 16% Waste management and remediation services 98 14% Real estate and rental and leasing 82 12% Health care and social assistance 28 4% Other services (except public administration) 23 3% Professional, scientific, and technical services 23 3% General freight trucking 21 3% Finance and insurance 13 2% Transit and other transportation 13 2% Wholesale trade 10 1% Educational services 7 1% Other 153 21% Total $ 711 100% (1) Of the total $711 million of direct lease financing, $642 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, 2024 State Principal balance % Total (Dollars in millions) Florida $ 106 15% New York 66 9% Utah 60 8% California 52 7% Pennsylvania 43 6% Connecticut 41 6% New Jersey 39 5% North Carolina 36 5% Maryland 34 5% Texas 28 4% Idaho 18 3% Washington 15 2% Georgia 15 2% Ohio 13 2% Alabama 12 2% Other States 133 19% Total $ 711 100% 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, 2024 The Bancorp, Inc. 10.07% 14.13% 14.68% 14.13% The Bancorp Bank, National Association 11.21% 15.69% 16.24% 15.69% "Well capitalized" institution (under federal regulations-Basel III) 5.00% 8.00% 10.00% 6.50% As of December 31, 2023 The Bancorp, Inc. 11.19% 15.66% 16.23% 15.66% The Bancorp Bank, National Association 12.37% 17.35% 17.92% 17.35% "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, 2024 2023 2024 2023 Selected operating ratios Return on average assets(1) 2.77% 2.65% 2.86% 2.64% Return on average equity(1) 27.10% 26.67% 27.95% 27.42% Net interest margin 4.97% 4.83% 5.06% 4.75% (1) Annualized Book value per share table June 30, March 31, December 31, June 30, 2024 2024 2023 2023 Book value per share $ 15.77 $ 15.63 $ 15.17 $ 13.74 Loan delinquency and other real estate owned June 30, 2024 30-59 days 60-89 days 90+ days Total Total past due past due still accruing Non-accrual past due Current loans SBL non-real estate $ 78 $ 311 $ 764 $ 2,448 $ 3,601 $ 168,292 $ 171,893 SBL commercial mortgage — 336 — 5,211 5,547 642,347 647,894 SBL construction — — — 3,385 3,385 27,496 30,881 Direct lease financing 4,575 4,415 2,224 3,870 15,084 696,319 711,403 SBLOC / IBLOC 12,448 2,101 1,284 — 15,833 1,542,262 1,558,095 Advisor financing — — — — — 238,831 238,831 Real estate bridge loans(1) — 12,300 — — 12,300 2,107,024 2,119,324 Consumer fintech — — — — — 70,081 70,081 Other loans 96 — 4 — 100 46,492 46,592 Unamortized loan fees and costs — — — — — 10,733 10,733 $ 17,197 $ 19,463 $ 4,276 $ 14,914 $ 55,850 $ 5,549,877 $ 5,605,727 (1) The $12.3 million shown in the 60-89 days past due column for real estate bridge loans is collateralized by apartment building property with 72% and 56% “as is” and “as stabilized” LTVs, respectively, based upon a May 2024 appraisal. “As stabilized” LTVs represent additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. See footnote (2) to the tables directly below for additional information on this loan. Other real estate owned year to date activity June 30, 2024 Beginning balance $ 16,949 Transfer from loans, net 40,032 Transfer from commercial loans, at fair value 880 Ending balance $ 57,861 June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Asset quality ratios: Nonperforming loans to total loans(1) 0.34% 1.05% 0.25% 0.28% Nonperforming assets to total assets(1) 0.95% 0.97% 0.39% 0.47% Allowance for credit losses to total loans 0.51% 0.53% 0.51% 0.44% (1) In the first quarter of 2024, a $39.4 million apartment building rehabilitation bridge loan was transferred to nonaccrual status. On April 2, 2024, the same loan was transferred from nonaccrual status to other real estate owned. We intend to complete the improvements, which have already begun, on the underlying apartment building. During the time that improvements are being completed, the Company intends to have a property manager lease improved units as they become available, prior to the sale of the property. The $39.4 million loan balance compares to a September 2023 third party “as is” appraisal of $47.8 million, or an 82% “as is” LTV, with additional potential collateral value as construction progresses, and units are re-leased at stabilized rental rates. (2) Borrowers for a $12.3 million apartment property real estate bridge loan which had a six month payment deferral granted in the fourth quarter of 2023 have not resumed payments, and are reflected in the 60-89 days past due column in the table above. The related “as is” and “as stabilized” LTVs based on a May 2024 appraisal were respectively 72% and 56%. The “as stabilized” loan to value measures the apartment property’s value after renovations have been completed and units have generally been released. The Company originated a new loan with a new borrower for a previously reported $9.5 million REBL loan that was 60 to 89 days delinquent at March 31, 2024. The new borrower has greater financial capacity to complete the related project and negotiated three quarters of payment deferrals and a lower rate. The “as stabilized” LTV is approximately 85% after considering additional estimated future fundings to complete renovations. The aforementioned LTVs are based on third party appraisals performed within the past year. Gross dollar volume (GDV)(1) Three months ended June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Prepaid and debit card GDV $ 37,139,200 $ 37,943,338 $ 33,292,350 $ 32,776,154 (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, 2024 (Dollars in millions) Balances % Growth Major business lines Average approximate rates(1) Balances(2) Year over year Linked quarter annualized Loans Institutional banking(3) 6.8% $ 1,797 (13%) 3% Small business lending(4) 7.4% 964 16% 17% Leasing 8.0% 711 8% 5% Commercial real estate (non-SBA loans, at fair value) 9.0% 161 nm nm Real estate bridge loans (recorded at book value) 9.2% 2,119 16% 3% Weighted average yield 8.0% $ 5,752 Non-interest income(5) % Growth Deposits: Fintech Solutions group Current quarter Year over year Prepaid and debit card issuance, and other payments 2.4% $ 6,441 8% nm $ 27.8 13% (1) Average rates are for the three months ended June 30, 2024. (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. Growth rates exclude $29 million of loans that do not qualify for true sale accounting. (5) Growth rate excludes Q1 2023 adjustments of $600,000 of fees related to a prior period and a $1.4 million termination fee from a client which formed its own bank. 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, 2024 (Dollars in thousands) Federal Reserve Bank $ 1,936,240 Federal Home Loan Bank 1,116,765 Total lines of credit available $ 3,053,005 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, 2024 Insured 93% Low balance accounts 4% Other uninsured 3% Total deposits 100% Calculation of efficiency ratio(1) Three months ended Year ended June 30, June 30, December 31, 2024 2023 2023 (Dollars in thousands) Net interest income $ 93,795 $ 87,195 $ 354,052 Non-interest income 30,722 29,336 112,094 Total revenue $ 124,517 $ 116,531 $ 466,146 Non-interest expense $ 51,446 $ 49,943 $ 191,042 Efficiency ratio 41% 43% 41% (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/20240723377870/en/Contacts The Bancorp, Inc. Contact Andres Viroslav Director, Investor Relations 215-861-7990 andres.viroslav@thebancorp.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
The Bancorp, Inc. Reports Second Quarter Financial Results By: The Bancorp, Inc. via Business Wire July 25, 2024 at 16:05 PM EDT The Bancorp, Inc. ("The Bancorp" “the Company” or “we” or “our”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2024. Recent Developments The Company entered into a purchase and sale agreement for an apartment property acquired by The Bancorp Bank through foreclosure in connection with a real estate bridge lending (“REBL”) loan. At June 30, 2024, the related $39.4 million balance, comprised the majority of our other real estate owned. The purchaser made an earnest money deposit of $125,000 in July 2024, with additional required deposits projected to total $500,000 prior to the December 31, 2024, closing deadline. The sales price is expected to cover the Company’s current other real estate owned balance plus the forecasted cost of improvements to the property. There can be no assurance that the purchaser will consummate the sale of the property, but if not consummated, earnest money deposits would accrue to the Company. One of the accounting estimates as described in the notes to our financial statements, is the allowance for credit losses (“ACL”), which is sensitive to a variety of inherent portfolio and external factors. REBL may be one of the more sensitive portfolios to such factors. In the second quarter of 2024, REBL loans classified as either special mention or substandard increased to $177.1 million from $165.2 million at March 31, 2024. Each classified loan was evaluated for a potential increase in the ACL on the basis of third-party appraisals of related apartment building collateral. On the basis of “as is” and “as stabilized” loan to values (“LTV’s”), increases to the allowance for specific loans was not required. The respective weighted average “as is” and “as stabilized” LTVs were 81% and 69%, based on third party appraisals, the majority of which were performed in 2024. The current allowance for credit losses for REBL, is primarily based upon historical industry losses for multi-family loans, in the absence of significant historical losses within the Company’s REBL portfolio. However, as a result of increasing amounts of loans classified as special mention and substandard, the Company will evaluate potential related sensitivity of that factor for REBL. This evaluation is inherently subjective as it requires material estimates that may be susceptible to change as more information becomes available. The Company has a single $12.6 million par value security in its investment portfolio, which is the only security remaining from its securitization business, which was exited in 2020. As a result of appraisals received from the servicer in the second quarter of 2024, the Company placed the security into non-accrual status, notwithstanding that those appraisals, with lower values than prior appraisals, exceeded principal and accrued interest. The following table reflects the related non-GAAP second quarter impact. Net Income (000’s) EPS GAAP $ 53,686 $ 1.05 Interest income impact of legacy security transferred to nonaccrual, net of tax 1,009 0.02 As adjusted, non-GAAP $ 54,695 $ 1.07 In the second quarter of 2024, the Company initiated its measured entry into consumer fintech lending, by which the Company makes consumer loans with the marketing and servicing assistance of its existing and planned new fintech relationships. While the $72.4 million of such loans at June 30, 2024 did not significantly impact income during the quarter, such lending is expected to meaningfully impact both the balance sheet and income in the future. We expect that impact will be reflected in a lower cost of funds for related deposits and increased transaction fees. Highlights The Bancorp reported net income of $53.7 million, or $1.05 per diluted share (“EPS”), for the quarter ended June 30, 2024, compared to net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023, or an EPS increase of 18%. While net income increased 10% between these periods, outstanding shares were decreased as a result of common share repurchases which were significantly increased in 2024. Return on assets and equity for the quarter ended June 30, 2024, amounted to 2.8% and 27%, respectively, compared to 2.6% and 27%, respectively, for the quarter ended June 30, 2023 (all percentages “annualized”). Net interest income increased 8% to $93.8 million for the quarter ended June 30, 2024, compared to $87.2 million for the quarter ended June 30, 2023. Net interest margin amounted to 4.97% for the quarter ended June 30, 2024, compared to 4.83% for the quarter ended June 30, 2023, and 5.15% for the quarter ended March 31, 2024. Loans, net of deferred fees and costs were $5.61 billion at June 30, 2024, compared to $5.36 billion at December 31, 2023 and $5.27 billion at June 30, 2023. Those changes reflected an increase of 3% quarter over linked quarter and an increase of 6% year over year. Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.36 billion, or 13%, to $37.14 billion for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. 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 13% to $27.8 million for the second quarter of 2024 compared to the second quarter of 2023. Small business loans (“SBL”), including those held at fair value, amounted to $964.4 million at June 30, 2024, or 16% higher year over year, and 4% higher quarter over linked quarter, excluding the impact of $28.6 million of loans with related secured borrowings. Direct lease financing balances increased 8% year over year to $711.4 million at June 30, 2024, and 1% over March 31, 2024. At June 30, 2024, real estate bridge loans of $2.12 billion had grown 1% compared to a $2.10 billion balance at March 31, 2024, and 16% compared to the June 30, 2023 balance of $1.83 billion. These real estate bridge loans consist entirely of rehabilitation loans for apartment buildings. Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”), and investment advisor financing loans collectively decreased 13% year over year and increased 1% quarter over linked quarter to $1.80 billion at June 30, 2024. The average interest rate on $6.96 billion of average deposits and interest-bearing liabilities during the second quarter of 2024 was 2.50%. Average deposits of $6.72 billion for the second quarter of 2024 increased $213 million over first quarter 2024, while historically, average deposits have tended to decrease between those periods, as tax refund related balances decline. As of June 30, 2024, 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 10.07%, 14.13%, 14.68% and 14.13%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp Bank, National Association, remains well capitalized under banking regulations. Book value per common share at June 30, 2024 was $15.77 compared to $13.74 per common share at June 30, 2023, an increase of 15%. The Bancorp repurchased 3,018,405 shares of its common stock at an average cost of $33.13 per share during the quarter ended June 30, 2024. As a result of the increase in the share repurchase in the second quarter of 2024, from $50.0 million to $100.0 million, outstanding shares at June 30, 2024 amounted to 49.3 million, compared to 53.2 million shares at December 31, 2023, or a reduction of 7.4% The Bancorp emphasizes safety and soundness and its balance sheet has a risk profile enhanced by the special nature of the collateral supporting its loan niches, related underwriting, and the characteristics of its funding sources, including those highlighted in the bullets below. Those loan niches and funding sources have contributed to increased earnings levels, even during periods in which markets have experienced various economic stresses. The vast majority of The Bancorp’s funding is comprised of FDIC-insured and/or small balance accounts, which adjust to only a portion of changes in rates. The Bancorp also has lines of credit with U.S. government sponsored agencies totaling approximately $3.1 billion as of June 30, 2024, as well as access to other forms of liquidity. In its real estate bridge lending portfolio, The Bancorp has minimal exposure to non-multifamily commercial real estate such as office buildings, and instead has a portfolio largely comprised of rehabilitation bridge loans for apartment buildings. These loans generally have three year terms with two one-year extensions to allow for the rehabilitation work to be completed and rentals stabilized for an extended period, before being refinanced at lower rates through U.S. Government Sponsored Entities or other lenders. The rehabilitation real estate lending portfolio consists primarily of workforce housing, which we consider to be working class apartments at more affordable rental rates. Related collateral values should accordingly be more stable than higher rent properties, even in stressed economies. While the macro-economic environment has challenged the multifamily bridge space, the stability of The Bancorp’s rehabilitation bridge loan portfolio is evidenced by the estimated values of underlying collateral. The Bancorp’s $2.1 billion apartment bridge lending portfolio at June 30, 2024 has a weighted average origination date “as is” LTV of 70%, based on third party appraisals. Further, the weighted average origination date “as stabilized” LTV, which measures the estimated value of the apartments after the rehabilitation is complete may provide even greater protection. As part of the underwriting process, The Bancorp reviews borrowers’ previous rehabilitation experience in addition to overall financial wherewithal. These transactions also include significant borrower equity contributions with required performance metrics. Underwriting generally includes, but is not limited to, assessment of local market information relating to vacancy and rental rates, review of post rehabilitation rental rate assumptions against geo-specific affordability indices, negative news and lien searches, visitations by bank personnel and/or designated engineers, and other information sources. Rehabilitation progress is monitored through ongoing draw requests and financial reporting covenants. This generally allows for early identification of potential issues, and expedited action to address on a timely basis. Operations and ongoing loan evaluation are overseen by multiple levels of management, in addition to the real estate bridge lending team’s experienced professional staff and third-party consultants utilized during the underwriting and asset management process. This oversight includes a separate loan committee specific to real estate bridge lending, which is comprised of seasoned and experienced lending professionals who do not directly report to anyone on the real estate bridge lending team. There is also a separate loan review department, a surveillance committee and additional staff which evaluate potential losses under the current expected credit losses methodology (“CECL”), all of which similarly do not report to anyone on the real estate bridge lending team. SBLOC and IBLOC portfolios are respectively secured by marketable securities and the cash value of life insurance. The majority of SBA 7(a) loans are government guaranteed, while SBA 504 loans are made with 50-60% LTV’s. Additional details regarding our loan portfolios are included in the related tables in this press release, as is the summarization of the earnings contributions of our payments businesses, which further enhances The Bancorp’s risk profile. The Company’s risk profile inherent in its loan portfolios, funding and earnings levels, may present opportunities to further increase shareholder value, while still prudently maintaining capital levels. Such opportunities include the recently increased planned stock repurchases noted above. In the second quarter of 2024, the Company purchased approximately $900 million of fixed rate government sponsored entity backed commercial and residential mortgage securities of varying maturities, with an approximate 5.11% weighted average yield, and estimated weighted average lives of eight years, to reduce its exposure to lower levels of net interest income, should the Federal Reserve begin decreasing rates. Such purchases would also reduce the additional net interest income which will result if the Federal Reserve increases rates. While there are many variables and limitations to estimating exposure to changes in rates, such purchases and continuing fixed rate loan originations are projected to reduce such exposure to modest levels. In prior years, The Bancorp deferred adding fixed rate securities when yields were particularly low, which has afforded the flexibility to benefit from, and secure, more advantageous securities and loan rates. “The second quarter, which usually reflects greater tax refund related runoff, instead showed continued broad based momentum in deposit volumes, and deposit stability,” said Damian Kozlowski CEO and President of The Bancorp.” Growth trends and the reduction of shares through buybacks should support continued strong EPS growth in 2024 and beyond. We are lifting our 2024 guidance to $4.35 a share from $4.25 a share without including the impact of $50 million of quarterly share buybacks. We intend to issue preliminary 2025 guidance in our 3rd quarter press release.” Conference Call Webcast You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.800.225.9448, conference code BANCORP. 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 2, 2024, by dialing 1.800.934.5153. 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 2024 2023 2024 2023 (Dollars in thousands, except per share and share data) Net interest income $ 93,795 $ 87,195 $ 188,213 $ 173,011 Provision for credit losses on loans 1,252 361 3,421 2,264 Non-interest income ACH, card and other payment processing fees 3,000 2,429 5,964 4,600 Prepaid, debit card and related fees 24,755 22,177 49,041 45,500 Net realized and unrealized gains on commercial loans, at fair value 503 1,921 1,599 3,646 Leasing related income 1,429 1,511 1,817 3,001 Consumer credit fintech fees 140 — 140 — Other non-interest income 895 1,298 1,543 1,578 Total non-interest income 30,722 29,336 60,104 58,325 Non-interest expense Salaries and employee benefits 33,863 33,167 64,143 62,952 Data processing expense 1,423 1,398 2,844 2,719 Legal expense 633 949 1,454 1,907 FDIC insurance 869 472 1,714 1,427 Software 4,637 4,317 9,126 8,554 Other non-interest expense 10,021 9,640 18,877 20,414 Total non-interest expense 51,446 49,943 98,158 97,973 Income before income taxes 71,819 66,227 146,738 131,099 Income tax expense 18,133 17,218 36,623 32,968 Net income 53,686 49,009 110,115 98,131 Net income per share - basic $ 1.05 $ 0.89 $ 2.12 $ 1.78 Net income per share - diluted $ 1.05 $ 0.89 $ 2.10 $ 1.76 Weighted average shares - basic 50,937,055 54,871,681 51,842,097 55,160,642 Weighted average shares - diluted 51,337,491 55,269,640 52,327,122 55,653,950 Condensed consolidated balance sheets June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands, except share data) Assets: Cash and cash equivalents Cash and due from banks $ 5,741 $ 9,105 $ 4,820 $ 6,496 Interest earning deposits at Federal Reserve Bank 399,853 1,241,363 1,033,270 874,050 Total cash and cash equivalents 405,594 1,250,468 1,038,090 880,546 Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss effective December 31, 2023 1,581,006 718,247 747,534 776,410 Commercial loans, at fair value 265,193 282,998 332,766 396,581 Loans, net of deferred fees and costs 5,605,727 5,459,344 5,361,139 5,267,574 Allowance for credit losses (28,575) (28,741) (27,378) (23,284) Loans, net 5,577,152 5,430,603 5,333,761 5,244,290 Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock 15,642 15,642 15,591 20,157 Premises and equipment, net 28,038 27,482 27,474 26,408 Accrued interest receivable 43,720 37,861 37,534 34,062 Intangible assets, net 1,452 1,552 1,651 1,850 Other real estate owned 57,861 19,559 16,949 20,952 Deferred tax asset, net 20,556 21,764 21,219 19,215 Other assets 149,187 109,680 133,126 122,435 Total assets $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Liabilities: Deposits Demand and interest checking $ 7,095,391 $ 6,828,159 $ 6,630,251 $ 6,554,967 Savings and money market 60,297 62,597 50,659 68,084 Total deposits 7,155,688 6,890,756 6,680,910 6,623,051 Securities sold under agreements to repurchase — — 42 42 Senior debt 96,037 95,948 95,859 95,682 Subordinated debenture 13,401 13,401 13,401 13,401 Other long-term borrowings 38,283 38,407 38,561 9,917 Other liabilities 65,001 60,579 69,641 51,646 Total liabilities $ 7,368,410 $ 7,099,091 $ 6,898,414 $ 6,793,739 Shareholders' equity: Common stock - authorized, 75,000,000 shares of $1.00 par value; 49,267,403 and 54,542,284 shares issued and outstanding at June 30, 2024 and 2023, respectively 49,268 52,253 53,203 54,542 Additional paid-in capital 72,171 166,335 212,431 256,115 Retained earnings 671,730 618,044 561,615 467,450 Accumulated other comprehensive loss (16,178) (19,867) (19,968) (28,940) Total shareholders' equity 776,991 816,765 807,281 749,167 Total liabilities and shareholders' equity $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Average balance sheet and net interest income Three months ended June 30, 2024 Three months ended June 30, 2023 (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(1) $ 5,749,565 $ 114,970 8.00% $ 5,730,384 $ 107,299 7.49% Leases-bank qualified(2) 4,621 117 10.13% 3,801 100 10.52% Investment securities-taxable 1,454,393 17,520 4.82% 778,100 9,873 5.08% Investment securities-nontaxable(2) 2,895 50 6.91% 3,234 53 6.56% Interest earning deposits at Federal Reserve Bank 341,863 4,677 5.47% 701,057 8,997 5.13% Net interest earning assets 7,553,337 137,334 7.27% 7,216,576 126,322 7.00% Allowance for credit losses (28,568) (23,895) Other assets 266,061 231,035 $ 7,790,830 $ 7,423,716 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,657,386 $ 39,542 2.38% $ 6,399,750 $ 36,688 2.29% Savings and money market 60,212 457 3.04% 78,252 728 3.72% Total deposits 6,717,598 39,999 2.38% 6,478,002 37,416 2.31% Short-term borrowings 92,412 1,295 5.61% — — — Repurchase agreements — — — 41 — — Long-term borrowings 38,362 685 7.14% 9,949 128 5.15% Subordinated debentures 13,401 291 8.69% 13,401 271 8.09% Senior debt 95,984 1,234 5.14% 96,890 1,280 5.28% Total deposits and liabilities 6,957,757 43,504 2.50% 6,598,283 39,095 2.37% Other liabilities 36,195 88,276 Total liabilities 6,993,952 6,686,559 Shareholders' equity 796,878 737,157 $ 7,790,830 $ 7,423,716 Net interest income on tax equivalent basis(2) $ 93,830 $ 87,227 Tax equivalent adjustment 35 32 Net interest income $ 93,795 $ 87,195 Net interest margin(2) 4.97% 4.83% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Average balance sheet and net interest income Six months ended June 30, 2024 Six months ended June 30, 2023 (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(1) $ 5,733,413 $ 229,130 7.99% $ 5,858,040 $ 213,503 7.29% Leases-bank qualified(2) 4,683 233 9.95% 3,582 169 9.44% Investment securities-taxable 1,093,996 27,154 4.96% 776,089 19,173 4.94% Investment securities-nontaxable(2) 2,895 100 6.91% 3,288 94 5.72% Interest earning deposits at Federal Reserve Bank 607,968 16,561 5.45% 640,864 15,582 4.86% Net interest earning assets 7,442,955 273,178 7.34% 7,281,863 248,521 6.83% Allowance for credit losses (27,862) (23,215) Other assets 323,244 234,037 $ 7,738,337 $ 7,492,685 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,553,107 $ 78,256 2.39% $ 6,401,678 $ 69,071 2.16% Savings and money market 55,591 904 3.25% 105,105 1,947 3.70% Time deposits — — — 41,933 858 4.09% Total deposits 6,608,698 79,160 2.40% 6,548,716 71,876 2.20% Short-term borrowings 46,892 1,314 5.60% 10,193 234 4.59% Repurchase agreements 6 — — 41 — — Long-term borrowings 38,439 1,371 7.13% 9,973 254 5.09% Subordinated debentures 13,401 583 8.70% 13,401 532 7.94% Senior debt 95,939 2,467 5.14% 97,985 2,559 5.22% Total deposits and liabilities 6,803,375 84,895 2.50% 6,680,309 75,455 2.26% Other liabilities 142,826 90,777 Total liabilities 6,946,201 6,771,086 Shareholders' equity 792,136 721,599 $ 7,738,337 $ 7,492,685 Net interest income on tax equivalent basis(2) $ 188,283 $ 173,066 Tax equivalent adjustment 70 55 Net interest income $ 188,213 $ 173,011 Net interest margin(2) 5.06% 4.75% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Allowance for credit losses Six months ended Year ended June 30, June 30, December 31, 2024 (unaudited) 2023 (unaudited) 2023 (Dollars in thousands) Balance in the allowance for credit losses at beginning of period $ 27,378 $ 22,374 $ 22,374 Loans charged-off: SBA non-real estate 417 871 871 SBA commercial mortgage — — 76 Direct lease financing 2,301 1,439 3,666 IBLOC — — 24 Consumer - home equity 10 — — Other loans 6 3 3 Total 2,734 2,313 4,640 Recoveries: SBA non-real estate 32 298 475 SBA commercial mortgage — 75 75 Direct lease financing 59 175 330 Consumer - home equity — 49 299 Total 91 597 1,179 Net charge-offs 2,643 1,716 3,461 Provision for credit losses, excluding commitment provision 3,840 2,626 8,465 Balance in allowance for credit losses at end of period $ 28,575 $ 23,284 $ 27,378 Net charge-offs/average loans 0.05% 0.03% 0.07% Net charge-offs/average assets 0.03% 0.02% 0.05% Loan portfolio June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands) SBL non-real estate $ 171,893 $ 140,956 $ 137,752 $ 117,621 SBL commercial mortgage 647,894 637,926 606,986 515,008 SBL construction 30,881 27,290 22,627 32,471 Small business loans 850,668 806,172 767,365 665,100 Direct lease financing 711,403 702,512 685,657 657,316 SBLOC / IBLOC(1) 1,558,095 1,550,313 1,627,285 1,883,607 Advisor financing(2) 238,831 232,206 221,612 173,376 Real estate bridge loans 2,119,324 2,101,896 1,999,782 1,826,227 Consumer fintech(3) 70,081 — — — Other loans(4) 46,592 56,163 50,638 55,644 5,594,994 5,449,262 5,352,339 5,261,270 Unamortized loan fees and costs 10,733 10,082 8,800 6,304 Total loans, including unamortized fees and costs $ 5,605,727 $ 5,459,344 $ 5,361,139 $ 5,267,574 Small business portfolio June 30, 2024 (unaudited) March 31, 2024 (unaudited) December 31, 2023 June 30, 2023 (unaudited) (Dollars in thousands) SBL, including unamortized fees and costs $ 860,226 $ 816,151 $ 776,867 $ 673,667 SBL, included in loans, at fair value 104,146 109,131 119,287 134,131 Total small business loans(5) $ 964,372 $ 925,282 $ 896,154 $ 807,798 (1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At June 30, 2024 and December 31, 2023, IBLOC loans amounted to $582.8 million and $646.9 million, 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) Consumer fintech loans consist primarily of secured credit card loans. (4) Includes demand deposit overdrafts reclassified as loan balances totaling $279,000 and $1.7 million at June 30, 2024 and December 31, 2023, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and are immaterial. (5) 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, 2024 Loan principal (Dollars in millions) U.S. government guaranteed portion of SBA loans(1) $ 400 PPP loans(1) 2 Commercial mortgage SBA(2) 336 Construction SBA(3) 14 Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4) 117 Non-SBA SBLs 56 Other(5) 28 Total principal $ 953 Unamortized fees and costs 11 Total SBLs $ 964 (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 $6 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $8 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. (5) Comprised of $29 million of loans sold that do not qualify for true sale accounting. Small business loans by type as of June 30, 2024 (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 $ 76 $ — $ — $ 76 15% Funeral homes and funeral services 22 — 25 47 9% Full-service restaurants 29 5 2 36 7% Child day care services 23 1 2 26 5% Car washes 17 1 — 18 3% General line grocery merchant wholesalers 17 — — 17 3% Homes for the elderly 16 — — 16 3% Outpatient mental health and substance abuse centers 15 — — 15 3% Gasoline stations with convenience stores 15 — — 15 3% Fitness and recreational sports centers 8 — 2 10 2% Nursing care facilities 9 — — 9 2% Lawyer's office 9 — — 9 2% Limited-service restaurants 4 1 3 8 2% Caterers 7 — — 7 1% All other specialty trade contractors 7 — — 7 1% General warehousing and storage 6 — — 6 1% Plumbing, heating, and air-conditioning contractors 5 — 1 6 1% Other accounting services 5 — — 5 1% Offices of real estate agents and brokers 5 — — 5 1% Other miscellaneous durable goods merchant 5 — — 5 1% Other technical and trade schools 5 — — 5 1% Packaged frozen food merchant wholesalers 5 — — 5 1% Lessors of nonresidential buildings (except miniwarehouses) 5 — — 5 1% All other amusement and recreation industries 4 — — 4 1% Other(2) 122 10 29 161 30% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans sold that do not qualify for true sale accounting. (2) Loan types of less than $4 million are spread over approximately one hundred different business types. State diversification as of June 30, 2024 (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 $ 117 $ 3 $ 5 $ 125 24% Florida 76 4 3 83 16% North Carolina 38 1 5 44 8% Pennsylvania 21 — 14 35 7% New York 28 2 2 32 6% Texas 22 2 6 30 6% Georgia 26 1 1 28 5% New Jersey 21 3 3 27 5% Other States 92 2 25 119 23% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans that do not qualify for true sale accounting. Top 10 loans as of June 30, 2024 Type(1) State SBL commercial mortgage (Dollars in millions) General line grocery merchant wholesalers CA $ 13 Funeral homes and funeral services PA 13 Outpatient mental health and substance abuse center FL 10 Funeral homes and funeral services ME 9 Hotel FL 8 Lawyer's office CA 8 Hotel NC 7 General warehousing and storage PA 6 Hotel FL 6 Hotel NY 6 Total $ 86 (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 June 30, 2024 Type # Loans Balance Weighted average origination date LTV Weighted average interest rate (Dollars in millions) Real estate bridge loans (multifamily apartment loans recorded at amortized cost)(1) 160 $ 2,119 70% 9.19% Non-SBA commercial real estate loans, at fair value: Multifamily (apartment bridge loans)(1) 7 $ 116 76% 9.20% Hospitality (hotels and lodging) 2 27 65% 9.82% Retail 2 12 72% 8.19% Other 2 9 73% 5.10% 13 164 74% 9.18% Fair value adjustment (3) Total non-SBA commercial real estate loans, at fair value 161 Total commercial real estate loans $ 2,280 70% 9.19% (1) In the third quarter of 2021, we resumed the origination of bridge loans for multi-family apartment rehabilitation which comprise these categories. Such loans held at fair value were originally intended for sale, but are now being retained on the balance sheet. In addition to “as is” origination date appraisals, on which the weighted average origination date LTVs are based, third party appraisers also estimated “as stabilized” values, which represents additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. The weighted average origination date “as stabilized” LTV was estimated at 61%. State diversification as of June 30, 2024 15 largest loans as of June 30, 2024 State Balance Origination date LTV State Balance Origination date LTV (Dollars in millions) (Dollars in millions) Texas $ 778 71% Texas $ 47 72% Georgia 259 69% Texas 46 75% Florida 245 69% Tennessee 40 72% Michigan 132 68% Michigan 38 62% Indiana 105 70% Texas 37 80% Ohio 73 67% Texas 36 67% New Jersey 71 68% Florida 35 72% Other States each <$60 million 617 71% Pennsylvania 34 63% Total $ 2,280 70% Indiana 34 76% Texas 33 62% New Jersey 32 62% Michigan 32 79% Oklahoma 31 78% Texas 31 77% Michigan 29 66% 15 largest commercial real estate loans $ 535 71% Institutional banking loans outstanding at June 30, 2024 Type Principal % of total (Dollars in millions) SBLOC $ 975 54% IBLOC 583 32% Advisor financing 239 14% Total $ 1,797 100% 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, 2024 Principal amount % Principal to collateral (Dollars in millions) $ 11 17% 9 48% 8 36% 8 68% 8 65% 8 80% 8 24% 8 34% 7 22% 7 44% Total and weighted average $ 82 43% 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 April 17, 2024, all were rated A- (Excellent) or better by AM BEST. Direct lease financing by type as of June 30, 2024 Principal balance(1) % Total (Dollars in millions) Government agencies and public institutions(2) $ 129 18% Construction 111 16% Waste management and remediation services 98 14% Real estate and rental and leasing 82 12% Health care and social assistance 28 4% Other services (except public administration) 23 3% Professional, scientific, and technical services 23 3% General freight trucking 21 3% Finance and insurance 13 2% Transit and other transportation 13 2% Wholesale trade 10 1% Educational services 7 1% Other 153 21% Total $ 711 100% (1) Of the total $711 million of direct lease financing, $642 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, 2024 State Principal balance % Total (Dollars in millions) Florida $ 106 15% New York 66 9% Utah 60 8% California 52 7% Pennsylvania 43 6% Connecticut 41 6% New Jersey 39 5% North Carolina 36 5% Maryland 34 5% Texas 28 4% Idaho 18 3% Washington 15 2% Georgia 15 2% Ohio 13 2% Alabama 12 2% Other States 133 19% Total $ 711 100% 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, 2024 The Bancorp, Inc. 10.07% 14.13% 14.68% 14.13% The Bancorp Bank, National Association 11.21% 15.69% 16.24% 15.69% "Well capitalized" institution (under federal regulations-Basel III) 5.00% 8.00% 10.00% 6.50% As of December 31, 2023 The Bancorp, Inc. 11.19% 15.66% 16.23% 15.66% The Bancorp Bank, National Association 12.37% 17.35% 17.92% 17.35% "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, 2024 2023 2024 2023 Selected operating ratios Return on average assets(1) 2.77% 2.65% 2.86% 2.64% Return on average equity(1) 27.10% 26.67% 27.95% 27.42% Net interest margin 4.97% 4.83% 5.06% 4.75% (1) Annualized Book value per share table June 30, March 31, December 31, June 30, 2024 2024 2023 2023 Book value per share $ 15.77 $ 15.63 $ 15.17 $ 13.74 Loan delinquency and other real estate owned June 30, 2024 30-59 days 60-89 days 90+ days Total Total past due past due still accruing Non-accrual past due Current loans SBL non-real estate $ 78 $ 311 $ 764 $ 2,448 $ 3,601 $ 168,292 $ 171,893 SBL commercial mortgage — 336 — 5,211 5,547 642,347 647,894 SBL construction — — — 3,385 3,385 27,496 30,881 Direct lease financing 4,575 4,415 2,224 3,870 15,084 696,319 711,403 SBLOC / IBLOC 12,448 2,101 1,284 — 15,833 1,542,262 1,558,095 Advisor financing — — — — — 238,831 238,831 Real estate bridge loans(1) — 12,300 — — 12,300 2,107,024 2,119,324 Consumer fintech — — — — — 70,081 70,081 Other loans 96 — 4 — 100 46,492 46,592 Unamortized loan fees and costs — — — — — 10,733 10,733 $ 17,197 $ 19,463 $ 4,276 $ 14,914 $ 55,850 $ 5,549,877 $ 5,605,727 (1) The $12.3 million shown in the 60-89 days past due column for real estate bridge loans is collateralized by apartment building property with 72% and 56% “as is” and “as stabilized” LTVs, respectively, based upon a May 2024 appraisal. “As stabilized” LTVs represent additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. See footnote (2) to the tables directly below for additional information on this loan. Other real estate owned year to date activity June 30, 2024 Beginning balance $ 16,949 Transfer from loans, net 40,032 Transfer from commercial loans, at fair value 880 Ending balance $ 57,861 June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Asset quality ratios: Nonperforming loans to total loans(1) 0.34% 1.05% 0.25% 0.28% Nonperforming assets to total assets(1) 0.95% 0.97% 0.39% 0.47% Allowance for credit losses to total loans 0.51% 0.53% 0.51% 0.44% (1) In the first quarter of 2024, a $39.4 million apartment building rehabilitation bridge loan was transferred to nonaccrual status. On April 2, 2024, the same loan was transferred from nonaccrual status to other real estate owned. We intend to complete the improvements, which have already begun, on the underlying apartment building. During the time that improvements are being completed, the Company intends to have a property manager lease improved units as they become available, prior to the sale of the property. The $39.4 million loan balance compares to a September 2023 third party “as is” appraisal of $47.8 million, or an 82% “as is” LTV, with additional potential collateral value as construction progresses, and units are re-leased at stabilized rental rates. (2) Borrowers for a $12.3 million apartment property real estate bridge loan which had a six month payment deferral granted in the fourth quarter of 2023 have not resumed payments, and are reflected in the 60-89 days past due column in the table above. The related “as is” and “as stabilized” LTVs based on a May 2024 appraisal were respectively 72% and 56%. The “as stabilized” loan to value measures the apartment property’s value after renovations have been completed and units have generally been released. The Company originated a new loan with a new borrower for a previously reported $9.5 million REBL loan that was 60 to 89 days delinquent at March 31, 2024. The new borrower has greater financial capacity to complete the related project and negotiated three quarters of payment deferrals and a lower rate. The “as stabilized” LTV is approximately 85% after considering additional estimated future fundings to complete renovations. The aforementioned LTVs are based on third party appraisals performed within the past year. Gross dollar volume (GDV)(1) Three months ended June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Prepaid and debit card GDV $ 37,139,200 $ 37,943,338 $ 33,292,350 $ 32,776,154 (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, 2024 (Dollars in millions) Balances % Growth Major business lines Average approximate rates(1) Balances(2) Year over year Linked quarter annualized Loans Institutional banking(3) 6.8% $ 1,797 (13%) 3% Small business lending(4) 7.4% 964 16% 17% Leasing 8.0% 711 8% 5% Commercial real estate (non-SBA loans, at fair value) 9.0% 161 nm nm Real estate bridge loans (recorded at book value) 9.2% 2,119 16% 3% Weighted average yield 8.0% $ 5,752 Non-interest income(5) % Growth Deposits: Fintech Solutions group Current quarter Year over year Prepaid and debit card issuance, and other payments 2.4% $ 6,441 8% nm $ 27.8 13% (1) Average rates are for the three months ended June 30, 2024. (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. Growth rates exclude $29 million of loans that do not qualify for true sale accounting. (5) Growth rate excludes Q1 2023 adjustments of $600,000 of fees related to a prior period and a $1.4 million termination fee from a client which formed its own bank. 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, 2024 (Dollars in thousands) Federal Reserve Bank $ 1,936,240 Federal Home Loan Bank 1,116,765 Total lines of credit available $ 3,053,005 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, 2024 Insured 93% Low balance accounts 4% Other uninsured 3% Total deposits 100% Calculation of efficiency ratio(1) Three months ended Year ended June 30, June 30, December 31, 2024 2023 2023 (Dollars in thousands) Net interest income $ 93,795 $ 87,195 $ 354,052 Non-interest income 30,722 29,336 112,094 Total revenue $ 124,517 $ 116,531 $ 466,146 Non-interest expense $ 51,446 $ 49,943 $ 191,042 Efficiency ratio 41% 43% 41% (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/20240723377870/en/Contacts The Bancorp, Inc. Contact Andres Viroslav Director, Investor Relations 215-861-7990 andres.viroslav@thebancorp.com
The Bancorp, Inc. ("The Bancorp" “the Company” or “we” or “our”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2024. Recent Developments The Company entered into a purchase and sale agreement for an apartment property acquired by The Bancorp Bank through foreclosure in connection with a real estate bridge lending (“REBL”) loan. At June 30, 2024, the related $39.4 million balance, comprised the majority of our other real estate owned. The purchaser made an earnest money deposit of $125,000 in July 2024, with additional required deposits projected to total $500,000 prior to the December 31, 2024, closing deadline. The sales price is expected to cover the Company’s current other real estate owned balance plus the forecasted cost of improvements to the property. There can be no assurance that the purchaser will consummate the sale of the property, but if not consummated, earnest money deposits would accrue to the Company. One of the accounting estimates as described in the notes to our financial statements, is the allowance for credit losses (“ACL”), which is sensitive to a variety of inherent portfolio and external factors. REBL may be one of the more sensitive portfolios to such factors. In the second quarter of 2024, REBL loans classified as either special mention or substandard increased to $177.1 million from $165.2 million at March 31, 2024. Each classified loan was evaluated for a potential increase in the ACL on the basis of third-party appraisals of related apartment building collateral. On the basis of “as is” and “as stabilized” loan to values (“LTV’s”), increases to the allowance for specific loans was not required. The respective weighted average “as is” and “as stabilized” LTVs were 81% and 69%, based on third party appraisals, the majority of which were performed in 2024. The current allowance for credit losses for REBL, is primarily based upon historical industry losses for multi-family loans, in the absence of significant historical losses within the Company’s REBL portfolio. However, as a result of increasing amounts of loans classified as special mention and substandard, the Company will evaluate potential related sensitivity of that factor for REBL. This evaluation is inherently subjective as it requires material estimates that may be susceptible to change as more information becomes available. The Company has a single $12.6 million par value security in its investment portfolio, which is the only security remaining from its securitization business, which was exited in 2020. As a result of appraisals received from the servicer in the second quarter of 2024, the Company placed the security into non-accrual status, notwithstanding that those appraisals, with lower values than prior appraisals, exceeded principal and accrued interest. The following table reflects the related non-GAAP second quarter impact. Net Income (000’s) EPS GAAP $ 53,686 $ 1.05 Interest income impact of legacy security transferred to nonaccrual, net of tax 1,009 0.02 As adjusted, non-GAAP $ 54,695 $ 1.07 In the second quarter of 2024, the Company initiated its measured entry into consumer fintech lending, by which the Company makes consumer loans with the marketing and servicing assistance of its existing and planned new fintech relationships. While the $72.4 million of such loans at June 30, 2024 did not significantly impact income during the quarter, such lending is expected to meaningfully impact both the balance sheet and income in the future. We expect that impact will be reflected in a lower cost of funds for related deposits and increased transaction fees. Highlights The Bancorp reported net income of $53.7 million, or $1.05 per diluted share (“EPS”), for the quarter ended June 30, 2024, compared to net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023, or an EPS increase of 18%. While net income increased 10% between these periods, outstanding shares were decreased as a result of common share repurchases which were significantly increased in 2024. Return on assets and equity for the quarter ended June 30, 2024, amounted to 2.8% and 27%, respectively, compared to 2.6% and 27%, respectively, for the quarter ended June 30, 2023 (all percentages “annualized”). Net interest income increased 8% to $93.8 million for the quarter ended June 30, 2024, compared to $87.2 million for the quarter ended June 30, 2023. Net interest margin amounted to 4.97% for the quarter ended June 30, 2024, compared to 4.83% for the quarter ended June 30, 2023, and 5.15% for the quarter ended March 31, 2024. Loans, net of deferred fees and costs were $5.61 billion at June 30, 2024, compared to $5.36 billion at December 31, 2023 and $5.27 billion at June 30, 2023. Those changes reflected an increase of 3% quarter over linked quarter and an increase of 6% year over year. Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.36 billion, or 13%, to $37.14 billion for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. 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 13% to $27.8 million for the second quarter of 2024 compared to the second quarter of 2023. Small business loans (“SBL”), including those held at fair value, amounted to $964.4 million at June 30, 2024, or 16% higher year over year, and 4% higher quarter over linked quarter, excluding the impact of $28.6 million of loans with related secured borrowings. Direct lease financing balances increased 8% year over year to $711.4 million at June 30, 2024, and 1% over March 31, 2024. At June 30, 2024, real estate bridge loans of $2.12 billion had grown 1% compared to a $2.10 billion balance at March 31, 2024, and 16% compared to the June 30, 2023 balance of $1.83 billion. These real estate bridge loans consist entirely of rehabilitation loans for apartment buildings. Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”), and investment advisor financing loans collectively decreased 13% year over year and increased 1% quarter over linked quarter to $1.80 billion at June 30, 2024. The average interest rate on $6.96 billion of average deposits and interest-bearing liabilities during the second quarter of 2024 was 2.50%. Average deposits of $6.72 billion for the second quarter of 2024 increased $213 million over first quarter 2024, while historically, average deposits have tended to decrease between those periods, as tax refund related balances decline. As of June 30, 2024, 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 10.07%, 14.13%, 14.68% and 14.13%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp Bank, National Association, remains well capitalized under banking regulations. Book value per common share at June 30, 2024 was $15.77 compared to $13.74 per common share at June 30, 2023, an increase of 15%. The Bancorp repurchased 3,018,405 shares of its common stock at an average cost of $33.13 per share during the quarter ended June 30, 2024. As a result of the increase in the share repurchase in the second quarter of 2024, from $50.0 million to $100.0 million, outstanding shares at June 30, 2024 amounted to 49.3 million, compared to 53.2 million shares at December 31, 2023, or a reduction of 7.4% The Bancorp emphasizes safety and soundness and its balance sheet has a risk profile enhanced by the special nature of the collateral supporting its loan niches, related underwriting, and the characteristics of its funding sources, including those highlighted in the bullets below. Those loan niches and funding sources have contributed to increased earnings levels, even during periods in which markets have experienced various economic stresses. The vast majority of The Bancorp’s funding is comprised of FDIC-insured and/or small balance accounts, which adjust to only a portion of changes in rates. The Bancorp also has lines of credit with U.S. government sponsored agencies totaling approximately $3.1 billion as of June 30, 2024, as well as access to other forms of liquidity. In its real estate bridge lending portfolio, The Bancorp has minimal exposure to non-multifamily commercial real estate such as office buildings, and instead has a portfolio largely comprised of rehabilitation bridge loans for apartment buildings. These loans generally have three year terms with two one-year extensions to allow for the rehabilitation work to be completed and rentals stabilized for an extended period, before being refinanced at lower rates through U.S. Government Sponsored Entities or other lenders. The rehabilitation real estate lending portfolio consists primarily of workforce housing, which we consider to be working class apartments at more affordable rental rates. Related collateral values should accordingly be more stable than higher rent properties, even in stressed economies. While the macro-economic environment has challenged the multifamily bridge space, the stability of The Bancorp’s rehabilitation bridge loan portfolio is evidenced by the estimated values of underlying collateral. The Bancorp’s $2.1 billion apartment bridge lending portfolio at June 30, 2024 has a weighted average origination date “as is” LTV of 70%, based on third party appraisals. Further, the weighted average origination date “as stabilized” LTV, which measures the estimated value of the apartments after the rehabilitation is complete may provide even greater protection. As part of the underwriting process, The Bancorp reviews borrowers’ previous rehabilitation experience in addition to overall financial wherewithal. These transactions also include significant borrower equity contributions with required performance metrics. Underwriting generally includes, but is not limited to, assessment of local market information relating to vacancy and rental rates, review of post rehabilitation rental rate assumptions against geo-specific affordability indices, negative news and lien searches, visitations by bank personnel and/or designated engineers, and other information sources. Rehabilitation progress is monitored through ongoing draw requests and financial reporting covenants. This generally allows for early identification of potential issues, and expedited action to address on a timely basis. Operations and ongoing loan evaluation are overseen by multiple levels of management, in addition to the real estate bridge lending team’s experienced professional staff and third-party consultants utilized during the underwriting and asset management process. This oversight includes a separate loan committee specific to real estate bridge lending, which is comprised of seasoned and experienced lending professionals who do not directly report to anyone on the real estate bridge lending team. There is also a separate loan review department, a surveillance committee and additional staff which evaluate potential losses under the current expected credit losses methodology (“CECL”), all of which similarly do not report to anyone on the real estate bridge lending team. SBLOC and IBLOC portfolios are respectively secured by marketable securities and the cash value of life insurance. The majority of SBA 7(a) loans are government guaranteed, while SBA 504 loans are made with 50-60% LTV’s. Additional details regarding our loan portfolios are included in the related tables in this press release, as is the summarization of the earnings contributions of our payments businesses, which further enhances The Bancorp’s risk profile. The Company’s risk profile inherent in its loan portfolios, funding and earnings levels, may present opportunities to further increase shareholder value, while still prudently maintaining capital levels. Such opportunities include the recently increased planned stock repurchases noted above. In the second quarter of 2024, the Company purchased approximately $900 million of fixed rate government sponsored entity backed commercial and residential mortgage securities of varying maturities, with an approximate 5.11% weighted average yield, and estimated weighted average lives of eight years, to reduce its exposure to lower levels of net interest income, should the Federal Reserve begin decreasing rates. Such purchases would also reduce the additional net interest income which will result if the Federal Reserve increases rates. While there are many variables and limitations to estimating exposure to changes in rates, such purchases and continuing fixed rate loan originations are projected to reduce such exposure to modest levels. In prior years, The Bancorp deferred adding fixed rate securities when yields were particularly low, which has afforded the flexibility to benefit from, and secure, more advantageous securities and loan rates. “The second quarter, which usually reflects greater tax refund related runoff, instead showed continued broad based momentum in deposit volumes, and deposit stability,” said Damian Kozlowski CEO and President of The Bancorp.” Growth trends and the reduction of shares through buybacks should support continued strong EPS growth in 2024 and beyond. We are lifting our 2024 guidance to $4.35 a share from $4.25 a share without including the impact of $50 million of quarterly share buybacks. We intend to issue preliminary 2025 guidance in our 3rd quarter press release.” Conference Call Webcast You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.800.225.9448, conference code BANCORP. 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 2, 2024, by dialing 1.800.934.5153. 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 2024 2023 2024 2023 (Dollars in thousands, except per share and share data) Net interest income $ 93,795 $ 87,195 $ 188,213 $ 173,011 Provision for credit losses on loans 1,252 361 3,421 2,264 Non-interest income ACH, card and other payment processing fees 3,000 2,429 5,964 4,600 Prepaid, debit card and related fees 24,755 22,177 49,041 45,500 Net realized and unrealized gains on commercial loans, at fair value 503 1,921 1,599 3,646 Leasing related income 1,429 1,511 1,817 3,001 Consumer credit fintech fees 140 — 140 — Other non-interest income 895 1,298 1,543 1,578 Total non-interest income 30,722 29,336 60,104 58,325 Non-interest expense Salaries and employee benefits 33,863 33,167 64,143 62,952 Data processing expense 1,423 1,398 2,844 2,719 Legal expense 633 949 1,454 1,907 FDIC insurance 869 472 1,714 1,427 Software 4,637 4,317 9,126 8,554 Other non-interest expense 10,021 9,640 18,877 20,414 Total non-interest expense 51,446 49,943 98,158 97,973 Income before income taxes 71,819 66,227 146,738 131,099 Income tax expense 18,133 17,218 36,623 32,968 Net income 53,686 49,009 110,115 98,131 Net income per share - basic $ 1.05 $ 0.89 $ 2.12 $ 1.78 Net income per share - diluted $ 1.05 $ 0.89 $ 2.10 $ 1.76 Weighted average shares - basic 50,937,055 54,871,681 51,842,097 55,160,642 Weighted average shares - diluted 51,337,491 55,269,640 52,327,122 55,653,950 Condensed consolidated balance sheets June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands, except share data) Assets: Cash and cash equivalents Cash and due from banks $ 5,741 $ 9,105 $ 4,820 $ 6,496 Interest earning deposits at Federal Reserve Bank 399,853 1,241,363 1,033,270 874,050 Total cash and cash equivalents 405,594 1,250,468 1,038,090 880,546 Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss effective December 31, 2023 1,581,006 718,247 747,534 776,410 Commercial loans, at fair value 265,193 282,998 332,766 396,581 Loans, net of deferred fees and costs 5,605,727 5,459,344 5,361,139 5,267,574 Allowance for credit losses (28,575) (28,741) (27,378) (23,284) Loans, net 5,577,152 5,430,603 5,333,761 5,244,290 Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock 15,642 15,642 15,591 20,157 Premises and equipment, net 28,038 27,482 27,474 26,408 Accrued interest receivable 43,720 37,861 37,534 34,062 Intangible assets, net 1,452 1,552 1,651 1,850 Other real estate owned 57,861 19,559 16,949 20,952 Deferred tax asset, net 20,556 21,764 21,219 19,215 Other assets 149,187 109,680 133,126 122,435 Total assets $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Liabilities: Deposits Demand and interest checking $ 7,095,391 $ 6,828,159 $ 6,630,251 $ 6,554,967 Savings and money market 60,297 62,597 50,659 68,084 Total deposits 7,155,688 6,890,756 6,680,910 6,623,051 Securities sold under agreements to repurchase — — 42 42 Senior debt 96,037 95,948 95,859 95,682 Subordinated debenture 13,401 13,401 13,401 13,401 Other long-term borrowings 38,283 38,407 38,561 9,917 Other liabilities 65,001 60,579 69,641 51,646 Total liabilities $ 7,368,410 $ 7,099,091 $ 6,898,414 $ 6,793,739 Shareholders' equity: Common stock - authorized, 75,000,000 shares of $1.00 par value; 49,267,403 and 54,542,284 shares issued and outstanding at June 30, 2024 and 2023, respectively 49,268 52,253 53,203 54,542 Additional paid-in capital 72,171 166,335 212,431 256,115 Retained earnings 671,730 618,044 561,615 467,450 Accumulated other comprehensive loss (16,178) (19,867) (19,968) (28,940) Total shareholders' equity 776,991 816,765 807,281 749,167 Total liabilities and shareholders' equity $ 8,145,401 $ 7,915,856 $ 7,705,695 $ 7,542,906 Average balance sheet and net interest income Three months ended June 30, 2024 Three months ended June 30, 2023 (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(1) $ 5,749,565 $ 114,970 8.00% $ 5,730,384 $ 107,299 7.49% Leases-bank qualified(2) 4,621 117 10.13% 3,801 100 10.52% Investment securities-taxable 1,454,393 17,520 4.82% 778,100 9,873 5.08% Investment securities-nontaxable(2) 2,895 50 6.91% 3,234 53 6.56% Interest earning deposits at Federal Reserve Bank 341,863 4,677 5.47% 701,057 8,997 5.13% Net interest earning assets 7,553,337 137,334 7.27% 7,216,576 126,322 7.00% Allowance for credit losses (28,568) (23,895) Other assets 266,061 231,035 $ 7,790,830 $ 7,423,716 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,657,386 $ 39,542 2.38% $ 6,399,750 $ 36,688 2.29% Savings and money market 60,212 457 3.04% 78,252 728 3.72% Total deposits 6,717,598 39,999 2.38% 6,478,002 37,416 2.31% Short-term borrowings 92,412 1,295 5.61% — — — Repurchase agreements — — — 41 — — Long-term borrowings 38,362 685 7.14% 9,949 128 5.15% Subordinated debentures 13,401 291 8.69% 13,401 271 8.09% Senior debt 95,984 1,234 5.14% 96,890 1,280 5.28% Total deposits and liabilities 6,957,757 43,504 2.50% 6,598,283 39,095 2.37% Other liabilities 36,195 88,276 Total liabilities 6,993,952 6,686,559 Shareholders' equity 796,878 737,157 $ 7,790,830 $ 7,423,716 Net interest income on tax equivalent basis(2) $ 93,830 $ 87,227 Tax equivalent adjustment 35 32 Net interest income $ 93,795 $ 87,195 Net interest margin(2) 4.97% 4.83% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Average balance sheet and net interest income Six months ended June 30, 2024 Six months ended June 30, 2023 (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(1) $ 5,733,413 $ 229,130 7.99% $ 5,858,040 $ 213,503 7.29% Leases-bank qualified(2) 4,683 233 9.95% 3,582 169 9.44% Investment securities-taxable 1,093,996 27,154 4.96% 776,089 19,173 4.94% Investment securities-nontaxable(2) 2,895 100 6.91% 3,288 94 5.72% Interest earning deposits at Federal Reserve Bank 607,968 16,561 5.45% 640,864 15,582 4.86% Net interest earning assets 7,442,955 273,178 7.34% 7,281,863 248,521 6.83% Allowance for credit losses (27,862) (23,215) Other assets 323,244 234,037 $ 7,738,337 $ 7,492,685 Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 6,553,107 $ 78,256 2.39% $ 6,401,678 $ 69,071 2.16% Savings and money market 55,591 904 3.25% 105,105 1,947 3.70% Time deposits — — — 41,933 858 4.09% Total deposits 6,608,698 79,160 2.40% 6,548,716 71,876 2.20% Short-term borrowings 46,892 1,314 5.60% 10,193 234 4.59% Repurchase agreements 6 — — 41 — — Long-term borrowings 38,439 1,371 7.13% 9,973 254 5.09% Subordinated debentures 13,401 583 8.70% 13,401 532 7.94% Senior debt 95,939 2,467 5.14% 97,985 2,559 5.22% Total deposits and liabilities 6,803,375 84,895 2.50% 6,680,309 75,455 2.26% Other liabilities 142,826 90,777 Total liabilities 6,946,201 6,771,086 Shareholders' equity 792,136 721,599 $ 7,738,337 $ 7,492,685 Net interest income on tax equivalent basis(2) $ 188,283 $ 173,066 Tax equivalent adjustment 70 55 Net interest income $ 188,213 $ 173,011 Net interest margin(2) 5.06% 4.75% (1) Includes commercial loans, at fair value. All periods include non-accrual loans. (2) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2024 and 2023. Allowance for credit losses Six months ended Year ended June 30, June 30, December 31, 2024 (unaudited) 2023 (unaudited) 2023 (Dollars in thousands) Balance in the allowance for credit losses at beginning of period $ 27,378 $ 22,374 $ 22,374 Loans charged-off: SBA non-real estate 417 871 871 SBA commercial mortgage — — 76 Direct lease financing 2,301 1,439 3,666 IBLOC — — 24 Consumer - home equity 10 — — Other loans 6 3 3 Total 2,734 2,313 4,640 Recoveries: SBA non-real estate 32 298 475 SBA commercial mortgage — 75 75 Direct lease financing 59 175 330 Consumer - home equity — 49 299 Total 91 597 1,179 Net charge-offs 2,643 1,716 3,461 Provision for credit losses, excluding commitment provision 3,840 2,626 8,465 Balance in allowance for credit losses at end of period $ 28,575 $ 23,284 $ 27,378 Net charge-offs/average loans 0.05% 0.03% 0.07% Net charge-offs/average assets 0.03% 0.02% 0.05% Loan portfolio June 30, March 31, December 31, June 30, 2024 (unaudited) 2024 (unaudited) 2023 2023 (unaudited) (Dollars in thousands) SBL non-real estate $ 171,893 $ 140,956 $ 137,752 $ 117,621 SBL commercial mortgage 647,894 637,926 606,986 515,008 SBL construction 30,881 27,290 22,627 32,471 Small business loans 850,668 806,172 767,365 665,100 Direct lease financing 711,403 702,512 685,657 657,316 SBLOC / IBLOC(1) 1,558,095 1,550,313 1,627,285 1,883,607 Advisor financing(2) 238,831 232,206 221,612 173,376 Real estate bridge loans 2,119,324 2,101,896 1,999,782 1,826,227 Consumer fintech(3) 70,081 — — — Other loans(4) 46,592 56,163 50,638 55,644 5,594,994 5,449,262 5,352,339 5,261,270 Unamortized loan fees and costs 10,733 10,082 8,800 6,304 Total loans, including unamortized fees and costs $ 5,605,727 $ 5,459,344 $ 5,361,139 $ 5,267,574 Small business portfolio June 30, 2024 (unaudited) March 31, 2024 (unaudited) December 31, 2023 June 30, 2023 (unaudited) (Dollars in thousands) SBL, including unamortized fees and costs $ 860,226 $ 816,151 $ 776,867 $ 673,667 SBL, included in loans, at fair value 104,146 109,131 119,287 134,131 Total small business loans(5) $ 964,372 $ 925,282 $ 896,154 $ 807,798 (1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At June 30, 2024 and December 31, 2023, IBLOC loans amounted to $582.8 million and $646.9 million, 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) Consumer fintech loans consist primarily of secured credit card loans. (4) Includes demand deposit overdrafts reclassified as loan balances totaling $279,000 and $1.7 million at June 30, 2024 and December 31, 2023, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and are immaterial. (5) 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, 2024 Loan principal (Dollars in millions) U.S. government guaranteed portion of SBA loans(1) $ 400 PPP loans(1) 2 Commercial mortgage SBA(2) 336 Construction SBA(3) 14 Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4) 117 Non-SBA SBLs 56 Other(5) 28 Total principal $ 953 Unamortized fees and costs 11 Total SBLs $ 964 (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 $6 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $8 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. (5) Comprised of $29 million of loans sold that do not qualify for true sale accounting. Small business loans by type as of June 30, 2024 (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 $ 76 $ — $ — $ 76 15% Funeral homes and funeral services 22 — 25 47 9% Full-service restaurants 29 5 2 36 7% Child day care services 23 1 2 26 5% Car washes 17 1 — 18 3% General line grocery merchant wholesalers 17 — — 17 3% Homes for the elderly 16 — — 16 3% Outpatient mental health and substance abuse centers 15 — — 15 3% Gasoline stations with convenience stores 15 — — 15 3% Fitness and recreational sports centers 8 — 2 10 2% Nursing care facilities 9 — — 9 2% Lawyer's office 9 — — 9 2% Limited-service restaurants 4 1 3 8 2% Caterers 7 — — 7 1% All other specialty trade contractors 7 — — 7 1% General warehousing and storage 6 — — 6 1% Plumbing, heating, and air-conditioning contractors 5 — 1 6 1% Other accounting services 5 — — 5 1% Offices of real estate agents and brokers 5 — — 5 1% Other miscellaneous durable goods merchant 5 — — 5 1% Other technical and trade schools 5 — — 5 1% Packaged frozen food merchant wholesalers 5 — — 5 1% Lessors of nonresidential buildings (except miniwarehouses) 5 — — 5 1% All other amusement and recreation industries 4 — — 4 1% Other(2) 122 10 29 161 30% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans sold that do not qualify for true sale accounting. (2) Loan types of less than $4 million are spread over approximately one hundred different business types. State diversification as of June 30, 2024 (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 $ 117 $ 3 $ 5 $ 125 24% Florida 76 4 3 83 16% North Carolina 38 1 5 44 8% Pennsylvania 21 — 14 35 7% New York 28 2 2 32 6% Texas 22 2 6 30 6% Georgia 26 1 1 28 5% New Jersey 21 3 3 27 5% Other States 92 2 25 119 23% Total $ 441 $ 18 $ 64 $ 523 100% (1) Of the SBL commercial mortgage and SBL construction loans, $109 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. SBL Commercial excludes $29 million of loans that do not qualify for true sale accounting. Top 10 loans as of June 30, 2024 Type(1) State SBL commercial mortgage (Dollars in millions) General line grocery merchant wholesalers CA $ 13 Funeral homes and funeral services PA 13 Outpatient mental health and substance abuse center FL 10 Funeral homes and funeral services ME 9 Hotel FL 8 Lawyer's office CA 8 Hotel NC 7 General warehousing and storage PA 6 Hotel FL 6 Hotel NY 6 Total $ 86 (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 June 30, 2024 Type # Loans Balance Weighted average origination date LTV Weighted average interest rate (Dollars in millions) Real estate bridge loans (multifamily apartment loans recorded at amortized cost)(1) 160 $ 2,119 70% 9.19% Non-SBA commercial real estate loans, at fair value: Multifamily (apartment bridge loans)(1) 7 $ 116 76% 9.20% Hospitality (hotels and lodging) 2 27 65% 9.82% Retail 2 12 72% 8.19% Other 2 9 73% 5.10% 13 164 74% 9.18% Fair value adjustment (3) Total non-SBA commercial real estate loans, at fair value 161 Total commercial real estate loans $ 2,280 70% 9.19% (1) In the third quarter of 2021, we resumed the origination of bridge loans for multi-family apartment rehabilitation which comprise these categories. Such loans held at fair value were originally intended for sale, but are now being retained on the balance sheet. In addition to “as is” origination date appraisals, on which the weighted average origination date LTVs are based, third party appraisers also estimated “as stabilized” values, which represents additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. The weighted average origination date “as stabilized” LTV was estimated at 61%. State diversification as of June 30, 2024 15 largest loans as of June 30, 2024 State Balance Origination date LTV State Balance Origination date LTV (Dollars in millions) (Dollars in millions) Texas $ 778 71% Texas $ 47 72% Georgia 259 69% Texas 46 75% Florida 245 69% Tennessee 40 72% Michigan 132 68% Michigan 38 62% Indiana 105 70% Texas 37 80% Ohio 73 67% Texas 36 67% New Jersey 71 68% Florida 35 72% Other States each <$60 million 617 71% Pennsylvania 34 63% Total $ 2,280 70% Indiana 34 76% Texas 33 62% New Jersey 32 62% Michigan 32 79% Oklahoma 31 78% Texas 31 77% Michigan 29 66% 15 largest commercial real estate loans $ 535 71% Institutional banking loans outstanding at June 30, 2024 Type Principal % of total (Dollars in millions) SBLOC $ 975 54% IBLOC 583 32% Advisor financing 239 14% Total $ 1,797 100% 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, 2024 Principal amount % Principal to collateral (Dollars in millions) $ 11 17% 9 48% 8 36% 8 68% 8 65% 8 80% 8 24% 8 34% 7 22% 7 44% Total and weighted average $ 82 43% 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 April 17, 2024, all were rated A- (Excellent) or better by AM BEST. Direct lease financing by type as of June 30, 2024 Principal balance(1) % Total (Dollars in millions) Government agencies and public institutions(2) $ 129 18% Construction 111 16% Waste management and remediation services 98 14% Real estate and rental and leasing 82 12% Health care and social assistance 28 4% Other services (except public administration) 23 3% Professional, scientific, and technical services 23 3% General freight trucking 21 3% Finance and insurance 13 2% Transit and other transportation 13 2% Wholesale trade 10 1% Educational services 7 1% Other 153 21% Total $ 711 100% (1) Of the total $711 million of direct lease financing, $642 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, 2024 State Principal balance % Total (Dollars in millions) Florida $ 106 15% New York 66 9% Utah 60 8% California 52 7% Pennsylvania 43 6% Connecticut 41 6% New Jersey 39 5% North Carolina 36 5% Maryland 34 5% Texas 28 4% Idaho 18 3% Washington 15 2% Georgia 15 2% Ohio 13 2% Alabama 12 2% Other States 133 19% Total $ 711 100% 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, 2024 The Bancorp, Inc. 10.07% 14.13% 14.68% 14.13% The Bancorp Bank, National Association 11.21% 15.69% 16.24% 15.69% "Well capitalized" institution (under federal regulations-Basel III) 5.00% 8.00% 10.00% 6.50% As of December 31, 2023 The Bancorp, Inc. 11.19% 15.66% 16.23% 15.66% The Bancorp Bank, National Association 12.37% 17.35% 17.92% 17.35% "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, 2024 2023 2024 2023 Selected operating ratios Return on average assets(1) 2.77% 2.65% 2.86% 2.64% Return on average equity(1) 27.10% 26.67% 27.95% 27.42% Net interest margin 4.97% 4.83% 5.06% 4.75% (1) Annualized Book value per share table June 30, March 31, December 31, June 30, 2024 2024 2023 2023 Book value per share $ 15.77 $ 15.63 $ 15.17 $ 13.74 Loan delinquency and other real estate owned June 30, 2024 30-59 days 60-89 days 90+ days Total Total past due past due still accruing Non-accrual past due Current loans SBL non-real estate $ 78 $ 311 $ 764 $ 2,448 $ 3,601 $ 168,292 $ 171,893 SBL commercial mortgage — 336 — 5,211 5,547 642,347 647,894 SBL construction — — — 3,385 3,385 27,496 30,881 Direct lease financing 4,575 4,415 2,224 3,870 15,084 696,319 711,403 SBLOC / IBLOC 12,448 2,101 1,284 — 15,833 1,542,262 1,558,095 Advisor financing — — — — — 238,831 238,831 Real estate bridge loans(1) — 12,300 — — 12,300 2,107,024 2,119,324 Consumer fintech — — — — — 70,081 70,081 Other loans 96 — 4 — 100 46,492 46,592 Unamortized loan fees and costs — — — — — 10,733 10,733 $ 17,197 $ 19,463 $ 4,276 $ 14,914 $ 55,850 $ 5,549,877 $ 5,605,727 (1) The $12.3 million shown in the 60-89 days past due column for real estate bridge loans is collateralized by apartment building property with 72% and 56% “as is” and “as stabilized” LTVs, respectively, based upon a May 2024 appraisal. “As stabilized” LTVs represent additional potential collateral value as rehabilitation progresses, and units are re-leased at stabilized rental rates. See footnote (2) to the tables directly below for additional information on this loan. Other real estate owned year to date activity June 30, 2024 Beginning balance $ 16,949 Transfer from loans, net 40,032 Transfer from commercial loans, at fair value 880 Ending balance $ 57,861 June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Asset quality ratios: Nonperforming loans to total loans(1) 0.34% 1.05% 0.25% 0.28% Nonperforming assets to total assets(1) 0.95% 0.97% 0.39% 0.47% Allowance for credit losses to total loans 0.51% 0.53% 0.51% 0.44% (1) In the first quarter of 2024, a $39.4 million apartment building rehabilitation bridge loan was transferred to nonaccrual status. On April 2, 2024, the same loan was transferred from nonaccrual status to other real estate owned. We intend to complete the improvements, which have already begun, on the underlying apartment building. During the time that improvements are being completed, the Company intends to have a property manager lease improved units as they become available, prior to the sale of the property. The $39.4 million loan balance compares to a September 2023 third party “as is” appraisal of $47.8 million, or an 82% “as is” LTV, with additional potential collateral value as construction progresses, and units are re-leased at stabilized rental rates. (2) Borrowers for a $12.3 million apartment property real estate bridge loan which had a six month payment deferral granted in the fourth quarter of 2023 have not resumed payments, and are reflected in the 60-89 days past due column in the table above. The related “as is” and “as stabilized” LTVs based on a May 2024 appraisal were respectively 72% and 56%. The “as stabilized” loan to value measures the apartment property’s value after renovations have been completed and units have generally been released. The Company originated a new loan with a new borrower for a previously reported $9.5 million REBL loan that was 60 to 89 days delinquent at March 31, 2024. The new borrower has greater financial capacity to complete the related project and negotiated three quarters of payment deferrals and a lower rate. The “as stabilized” LTV is approximately 85% after considering additional estimated future fundings to complete renovations. The aforementioned LTVs are based on third party appraisals performed within the past year. Gross dollar volume (GDV)(1) Three months ended June 30, March 31, December 31, June 30, 2024 2024 2023 2023 (Dollars in thousands) Prepaid and debit card GDV $ 37,139,200 $ 37,943,338 $ 33,292,350 $ 32,776,154 (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, 2024 (Dollars in millions) Balances % Growth Major business lines Average approximate rates(1) Balances(2) Year over year Linked quarter annualized Loans Institutional banking(3) 6.8% $ 1,797 (13%) 3% Small business lending(4) 7.4% 964 16% 17% Leasing 8.0% 711 8% 5% Commercial real estate (non-SBA loans, at fair value) 9.0% 161 nm nm Real estate bridge loans (recorded at book value) 9.2% 2,119 16% 3% Weighted average yield 8.0% $ 5,752 Non-interest income(5) % Growth Deposits: Fintech Solutions group Current quarter Year over year Prepaid and debit card issuance, and other payments 2.4% $ 6,441 8% nm $ 27.8 13% (1) Average rates are for the three months ended June 30, 2024. (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. Growth rates exclude $29 million of loans that do not qualify for true sale accounting. (5) Growth rate excludes Q1 2023 adjustments of $600,000 of fees related to a prior period and a $1.4 million termination fee from a client which formed its own bank. 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, 2024 (Dollars in thousands) Federal Reserve Bank $ 1,936,240 Federal Home Loan Bank 1,116,765 Total lines of credit available $ 3,053,005 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, 2024 Insured 93% Low balance accounts 4% Other uninsured 3% Total deposits 100% Calculation of efficiency ratio(1) Three months ended Year ended June 30, June 30, December 31, 2024 2023 2023 (Dollars in thousands) Net interest income $ 93,795 $ 87,195 $ 354,052 Non-interest income 30,722 29,336 112,094 Total revenue $ 124,517 $ 116,531 $ 466,146 Non-interest expense $ 51,446 $ 49,943 $ 191,042 Efficiency ratio 41% 43% 41% (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/20240723377870/en/
The Bancorp, Inc. Contact Andres Viroslav Director, Investor Relations 215-861-7990 andres.viroslav@thebancorp.com