The Bancorp, Inc. Reports Third Quarter 2023 Financial Results

October 26, 2023 at 16:05 PM EDT

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

Highlights

The Bancorp reported net income of $50.1 million, or $0.92 per diluted share, for the quarter ended September 30, 2023, compared to net income of $30.6 million, or $0.54 per diluted share, for the quarter ended September 30, 2022, or a 70% increase in income per diluted share.
Return on assets and equity for the quarter ended September 30, 2023 amounted to 2.7% and 26%, respectively, compared to 1.7% and 18%, respectively, for the quarter ended September 30, 2022 (all percentages “annualized”).
Net interest income increased 37% to $88.9 million for the quarter ended September 30, 2023, compared to $64.7 million for the quarter ended September 30, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on The Bancorp’s variable rate loans and securities.
Net interest margin amounted to 5.07% for the quarter ended September 30, 2023, compared to 3.69% for the quarter ended September 30, 2022, and 4.83% for the quarter ended June 30, 2023.
Loans, net of deferred fees and costs were $5.20 billion at September 30, 2023, compared to $5.49 billion at December 31, 2022 and $5.27 billion at September 30, 2022. Those changes reflected a decrease of 1% quarter over linked quarter and a decrease of 1% year over year.
Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.85 billion, or 17%, to $32.97 billion for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The increase reflects continued organic growth with existing partners and the impact of clients added within the past year. Total prepaid, debit card, ACH and other payment fees increased 12% to $24.1 million for the third quarter of 2023 compared to the third quarter of 2022.
Small business loans (“SBL”), including those held at fair value, grew 13% year over year to $830.1 million at September 30, 2023, and 3% quarter over linked quarter. That growth excludes Paycheck Protection Program (“PPP”) loan balances which amounted to $2.3 million and $6.7 million at September 30, 2023 and September 30, 2022, respectively.
Direct lease financing balances increased 12% year over year to $670.2 million at September 30, 2023, and 2% quarter over linked quarter.
At September 30, 2023, real estate bridge loans of $1.85 billion had grown 1% compared to the $1.83 billion balance at June 30, 2023, and 24% compared to the September 30, 2022 balance of $1.49 billion. These real estate bridge loans consist entirely of apartment buildings.
Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively decreased 24% year over year and decreased 7% quarter over linked quarter to $1.92 billion at September 30, 2023.
The average interest rate on $6.41 billion of average deposits and interest-bearing liabilities during the third quarter of 2023 was 2.50%. Average deposits of $6.29 billion for the third quarter of 2023 reflected an increase of 3% from the $6.11 billion of average deposits for the quarter ended September 30, 2022, and a 3% decrease from $6.48 billion of average deposits in the second quarter of 2023. The decrease reflected the planned exit of $200 million of higher cost funds on July 1, 2023. Not included in deposit totals are deposits which are sold to other financial institutions totaling $334.7 million at September 30, 2023.
The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $2.7 billion as of September 30, 2023, as well as access to other liquidity.
As of September 30, 2023, tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 10.92%, 15.53%, 16.04% and 15.53%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.
Book value per common share at September 30, 2023 was $14.36 per share compared to $11.81 per common share at September 30, 2022, an increase of 22%.
The Bancorp repurchased 685,478 shares of its common stock at an average cost of $36.47 per share during the quarter ended September 30, 2023.

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

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, October 27, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.259.6580, conference code 63043391. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 3, 2023 by dialing 1.877.674.7070, access code 043391#.

About The Bancorp

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

Forward-Looking Statements

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

The Bancorp, Inc.
Financial highlights
(unaudited)

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

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

Net income per share - basic	$	0.93	$	0.54	$	2.70	$	1.58

Net income per share - diluted	$	0.92	$	0.54	$	2.68	$	1.56
Weighted average shares - basic		54,175,184		56,429,425		54,828,547		56,782,524
Weighted average shares - diluted		54,738,610		57,008,224		55,336,354		57,510,986


Condensed consolidated balance sheets	September 30,			June 30,			December 31,			September 30,
	2023 (unaudited)			2023 (unaudited)			2022			2022 (unaudited)
		(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	4,881		$	6,496		$	24,063		$	22,537
Interest earning deposits at Federal Reserve Bank		898,533			874,050			864,126			700,175
Total cash and cash equivalents		903,414			880,546			888,189			722,712

Investment securities, available-for-sale, at fair value		756,636			776,410			766,016			790,594
Commercial loans, at fair value		379,603			396,581			589,143			818,040
Loans, net of deferred fees and costs		5,198,972			5,267,574			5,486,853			5,267,375
Allowance for credit losses		(24,145	)		(23,284	)		(22,374	)		(19,689	)
Loans, net		5,174,827			5,244,290			5,464,479			5,247,686
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock		20,157			20,157			12,629			12,629
Premises and equipment, net		28,978			26,408			18,401			18,443
Accrued interest receivable		34,159			34,062			32,005			25,506
Intangible assets, net		1,751			1,850			2,049			2,149
Other real estate owned		18,756			20,952			21,210			18,873
Deferred tax asset, net		20,379			19,215			19,703			27,241
Other assets		127,107			122,435			89,176			93,201
Total assets	$	7,465,767		$	7,542,906		$	7,903,000		$	7,777,074

Liabilities:
Deposits
Demand and interest checking	$	6,455,043		$	6,554,967		$	6,559,617		$	5,934,591
Savings and money market		49,428			68,084			140,496			575,381
Time deposits, $100,000 and over		—			—			330,000			401,331
Total deposits		6,504,471			6,623,051			7,030,113			6,911,303

Securities sold under agreements to repurchase		42			42			42			42
Senior debt		95,771			95,682			99,050			98,958
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		9,861			9,917			10,028			38,928
Other liabilities		68,533			51,646			56,335			50,704
Total liabilities	$	6,692,079		$	6,793,739		$	7,208,969		$	7,113,336

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 53,867,129 and 56,201,560 shares issued and outstanding at September 30, 2023 and 2022, respectively		53,867			54,542			55,690			56,202
Additional paid-in capital		234,320			256,115			299,279			311,569
Retained earnings		517,587			467,450			369,319			329,078
Accumulated other comprehensive loss		(32,086	)		(28,940	)		(30,257	)		(33,111	)
Total shareholders' equity		773,688			749,167			694,031			663,738

Total liabilities and shareholders' equity	$	7,465,767		$	7,542,906		$	7,903,000		$	7,777,074


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

Interest earning assets:
Loans, net of deferred fees and costs⁽²⁾	$	5,603,514		$	110,506	7.89	%	$	5,904,996		$	75,536	5.12	%
Leases-bank qualified⁽³⁾		4,585			110	9.60	%		3,299			55	6.67	%
Investment securities-taxable		768,364			9,647	5.02	%		824,178			6,792	3.30	%
Investment securities-nontaxable⁽³⁾		3,005			50	6.66	%		3,559			31	3.48	%
Interest earning deposits at Federal Reserve Bank		639,946			8,689	5.43	%		267,424			1,525	2.28	%
Net interest earning assets		7,019,414			129,002	7.35	%		7,003,456			83,939	4.79	%

Allowance for credit losses		(23,147	)						(19,111	)
Other assets		338,085							212,078
	$	7,334,352						$	7,196,423

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,229,668		$	37,913	2.43	%	$	5,545,115		$	12,726	0.92	%
Savings and money market		56,538			518	3.66	%		479,260			2,792	2.33	%
Time deposits		—			—	—			87,562			547	2.50	%
Total deposits		6,286,206			38,431	2.45	%		6,111,937			16,065	1.05	%

Short-term borrowings		—			—	—			200,423			1,235	2.46	%
Repurchase agreements		41			—	—			41			—	—
Long-term borrowings		9,889			128	5.18	%		39,035			506	5.19	%
Subordinated debentures		13,401			293	8.75	%		13,401			177	5.28	%
Senior debt		95,714			1,234	5.16	%		98,910			1,279	5.17	%
Total deposits and liabilities		6,405,251			40,086	2.50	%		6,463,747			19,262	1.19	%

Other liabilities		167,673							72,539
Total liabilities		6,572,924							6,536,286

Shareholders' equity		761,428							660,137
	$	7,334,352						$	7,196,423
Net interest income on tax equivalent basis⁽³⁾				$	88,916						$	64,677

Tax equivalent adjustment					34							18

Net interest income				$	88,882						$	64,659
Net interest margin⁽³⁾						5.07	%						3.69	%

⁽¹⁾Interest on loans for 2023 and 2022 includes $7,000 and $21,000, respectively, of interest and fees on PPP loans.

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

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


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

Interest earning assets:
Loans, net of deferred fees and costs⁽²⁾	$	5,772,266		$	324,009	7.48	%	$	5,531,902		$	181,174	4.37	%
Leases-bank qualified⁽³⁾		3,920			279	9.49	%		3,657			185	6.75	%
Investment securities-taxable		773,485			28,820	4.97	%		880,426			17,115	2.59	%
Investment securities-nontaxable⁽³⁾		3,193			144	6.01	%		3,559			93	3.48	%
Interest earning deposits at Federal Reserve Bank		640,554			24,271	5.05	%		499,104			2,876	0.77	%
Net interest earning assets		7,193,418			377,523	7.00	%		6,918,648			201,443	3.88	%

Allowance for credit losses		(23,192	)						(19,087	)
Other assets		269,072							203,143
	$	7,439,298						$	7,102,704

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	6,343,711		$	106,984	2.25	%	$	5,598,028		$	18,522	0.44	%
Savings and money market		88,738			2,465	3.70	%		522,525			4,192	1.07	%
Time deposits		27,802			858	4.11	%		29,508			547	2.47	%
Total deposits		6,460,251			110,307	2.28	%		6,150,061			23,261	0.50	%

Short-term borrowings		6,758			234	4.62	%		71,589			1,267	2.36	%
Repurchase agreements		41			—	—			41			—	—
Long-term borrowings		9,945			382	5.12	%		39,286			506	1.72	%
Subordinated debentures		13,401			825	8.21	%		13,401			432	4.30	%
Senior debt		97,220			3,793	5.20	%		98,817			3,838	5.18	%
Total deposits and liabilities		6,587,616			115,541	2.34	%		6,373,195			29,304	0.61	%

Other liabilities		117,822							71,413
Total liabilities		6,705,438							6,444,608

Shareholders' equity		733,860							658,096
	$	7,439,298						$	7,102,704
Net interest income on tax equivalent basis⁽³⁾				$	261,982						$	172,139

Tax equivalent adjustment					89							58

Net interest income				$	261,893						$	172,081
Net interest margin⁽³⁾						4.86	%						3.32	%

⁽¹⁾Interest on loans for 2023 and 2022 includes $27,000 and $502,000, respectively, of interest and fees on PPP loans.

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

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


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

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

Loans charged-off:
SBA non-real estate		871			861			885
Direct lease financing		2,804			312			576
Consumer - other		3			—			—
Total		3,678			1,173			1,461

Recoveries:
SBA non-real estate		446			57			140
SBA commercial mortgage		75			—			—
Direct lease financing		220			108			124
Consumer - home equity		299			—			—
Other loans		—			—			24
Total		1,040			165			288
Net charge-offs		2,638			1,008			1,173
Provision for credit losses, excluding commitment provision		4,409			2,891			5,741

Balance in allowance for credit losses at end of period	$	24,145		$	19,689		$	22,374
Net charge-offs/average loans		0.05	%		0.02	%		0.03	%
Net charge-offs/average assets		0.04	%		0.01	%		0.02	%


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

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

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

SBL, including unamortized fees and costs	$	705,790	$	673,667	$	621,641	$	579,156
SBL, included in loans, at fair value		126,543		134,131		146,717		159,914
Total small business loans⁽⁴⁾	$	832,333	$	807,798	$	768,358	$	739,070

⁽¹⁾SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At September 30, 2023 and December 31, 2022, IBLOC loans amounted to $712.6 million and $1.12 billion, respectively.

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

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

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

Small business loans as of September 30, 2023

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

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

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

⁽³⁾Includes $4.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $7.0 million in SBA interim loans with an approved SBA post-construction full takeout/payoff.

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

Small business loans by type as of September 30, 2023

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


	SBL commercial mortgage⁽¹⁾		SBL construction⁽¹⁾		SBL non-real estate		Total		% Total
		(Dollars in millions)
Hotels (except casino hotels) and motels	$	74	$	—	$	—	$	74	17%
Full-service restaurants		24		6		2		32	7%
Funeral homes and funeral services		27		—		—		27	6%
Car washes		19		—		—		19	4%
Child day care services		15		1		1		17	4%
Outpatient mental health and substance abuse centers		15		—		—		15	4%
Homes for the elderly		13		—		—		13	3%
Gasoline stations with convenience stores		12		—		—		12	3%
Fitness and recreational sports centers		8		—		2		10	2%
Lessors of other real estate property		9		—		1		10	2%
Offices of lawyers		9		—		—		9	2%
General warehousing and storage		7		—		—		7	2%
Plumbing, heating, and air-conditioning companies		6		—		1		7	2%
Caterers		6		—		—		6	1%
Limited-service restaurants		3		1		3		7	2%
Specialty trade contractors		5		—		—		5	1%
Lessors of residential buildings and dwellings		5		—		—		5	1%
Miscellaneous durable goods merchant		5		—		—		5	1%
Packaged frozen food merchant wholesalers		5		—		—		5	1%
Technical and trade schools		5		—		—		5	1%
All other amusement and recreation		4		—		—		4	1%
Offices of dentists		3		—		—		3	1%
Vocational rehabilitation services		—		3		—		3	1%
Other warehousing and storage		3		—		—		3	1%
Other⁽²⁾		96		1		28		125	30%
Total	$	378	$	12	$	38	$	428	100%

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

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

State diversification as of September 30, 2023

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


	SBL commercial mortgage⁽¹⁾		SBL construction⁽¹⁾		SBL non-real estate		Total		% Total
		(Dollars in millions)
California	$	78	$	4	$	3	$	85	20%
Florida		69		1		3		73	17%
North Carolina		39		1		2		42	10%
New York		24		1		3		28	7%
New Jersey		17		3		4		24	6%
Texas		19		—		4		23	5%
Pennsylvania		21		—		1		22	5%
Georgia		18		1		2		21	5%
Other States <$15 million		93		1		16		110	25%
Total	$	378	$	12	$	38	$	428	100%

Top 10 loans as of September 30, 2023


Type(1)	State		SBL commercial mortgage
		(Dollars in millions)
Mental health and substance abuse center		FL	$	10
Funeral homes and funeral services		ME		9
Hotel		FL		8
Offices of lawyers		CA		8
Hotel		NC		7
General warehousing and storage		PA		7
Hotel		FL		6
Hotel		NY		6
Hotel		NC		6
Mental health and substance abuse center		NJ		5
Total			$	72

⁽¹⁾The table above does not include loans to the extent that they are U.S. government guaranteed.

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

Type as of September 30, 2023


Type	# Loans		Balance		Weighted average origination date LTV	Weighted average interest rate
	(Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)⁽¹⁾	139	$	1,848		71%	9.30%

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

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


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

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

Institutional banking loans outstanding at September 30, 2023

Type	Principal		% of total
		(Dollars in millions)
SBLOC	$	1,008	53%
IBLOC		713	37%
Advisor financing		199	10%
Total	$	1,920	100%

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

Top 10 SBLOC loans at September 30, 2023

	Principal amount		% Principal to collateral
	(Dollars in millions)
	$	12	25%
		9	39%
		9	44%
		9	62%
		9	95%
		8	77%
		8	71%
		8	28%
		7	75%
		7	34%
Total and weighted average	$	86	54%

Insurance backed lines of credit (IBLOC)

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

Direct lease financing by type as of September 30, 2023

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

⁽¹⁾Of the total $670.0 million of direct lease financing, $588.0 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

⁽²⁾Includes public universities and school districts.

Direct lease financing by state as of September 30, 2023

State		Principal balance	% Total
		(Dollars in millions)
Florida	$	100	15%
Utah		66	10%
California		60	9%
Pennsylvania		41	6%
New Jersey		38	6%
New York		35	5%
North Carolina		34	5%
Texas		31	5%
Maryland		31	5%
Connecticut		28	4%
Idaho		17	3%
Washington		15	2%
Georgia		14	2%
Ohio		13	2%
Alabama		11	2%
Other States		136	19%
Total	$	670	100%


Capital ratios	Tier 1 capital	Tier 1 capital	Total capital	Common equity
	to average	to risk-weighted	to risk-weighted	tier 1 to risk
	assets ratio	assets ratio	assets ratio	weighted assets
As of September 30, 2023
The Bancorp, Inc.	10.92%	15.53%	16.04%	15.53%
The Bancorp Bank, National Association	12.13%	17.26%	17.77%	17.26%
"Well capitalized" institution (under federal regulations-Basel III)	5.00%	8.00%	10.00%	6.50%

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


	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Selected operating ratios
Return on average assets⁽¹⁾		2.71%		1.69%		2.66%		1.69%
Return on average equity⁽¹⁾		26.12%		18.39%		27.01%		18.28%
Net interest margin		5.07%		3.69%		4.86%		3.32%

⁽¹⁾Annualized


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


Loan quality table		September 30,		June 30,		December 31,		September 30,
		2023		2022		2022		2022
		(Dollars in thousands)
Nonperforming loans to total loans		0.30%		0.28%		0.33%		0.16%
Nonperforming assets to total assets		0.46%		0.47%		0.50%		0.35%
Allowance for credit losses to total loans		0.46%		0.44%		0.41%		0.37%

Nonaccrual loans	$	15,100	$	14,027	$	10,356	$	3,860
Loans 90 days past due still accruing interest		677		563		7,775		4,415
Other real estate owned		18,756		20,952		21,210		18,873
Total nonperforming assets	$	34,533	$	35,542	$	39,341	$	27,148


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

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


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

			Balances
					% Growth
Major business lines	Average approximate rates⁽¹⁾		Balances⁽²⁾		Year over year		Linked quarter annualized
Loans
Institutional banking⁽³⁾	6.7	%	$	1,920	(24	%)	(27	%)
Small business lending⁽⁴⁾	7.0	%		832	13	%	12	%
Leasing	7.1	%		670	12	%	8	%
Commercial real estate (non-SBA loans, at fair value)	8.7	%		253	nm		nm
Real estate bridge loans (recorded at book value)	9.3	%		1,848	24	%	5	%
Weighted average yield	7.8	%	$	5,523					Non-interest income
											% Growth
Deposits: Fintech solutions group									Current quarter		Year over year
Prepaid and debit card issuance, and other payments	2.5	%	$	6,007	11	%	nm		$	24.1	12	%

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

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

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

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

Summary of credit lines available

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

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

Estimated insured vs uninsured deposits

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

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

Calculation of efficiency ratio⁽¹⁾

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

Efficiency ratio		41%		42%

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20231024091378/en/

Contacts

The Bancorp, Inc.

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Penticton Herald

Penticton Herald

The Bancorp, Inc. Reports Third Quarter 2023 Financial Results

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