The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2020.
Highlights
- For the quarter ended June 30, 2020, The Bancorp earned net income of $20.3 million from continuing operations, and $0.35 diluted earnings per share from combined continuing and discontinued operations.
- Return on assets and equity for the quarter ended June 30, 2020 increased to 1.3% and 15.6%, respectively, compared to 1.0% and 10.2% for the quarter ended June 30, 2019.
- Net interest margin increased to 3.53% for the quarter ended June 30, 2020, compared to 3.41% for the quarter ended June 30, 2019 and 3.34% for the quarter ended March 31, 2020.
- Net interest income increased 45% to $50.2 million for the quarter ended June 30, 2020, compared to $34.5 million for the quarter ended June 30, 2019.
- Average loans and leases, including loans held for sale, increased 76% to $3.93 billion for the quarter ended June 30, 2020, compared to $2.23 billion for the quarter ended June 30, 2019.
- Prepaid, debit card and related fees increased 18% to $18.7 million for the quarter ended June 30, 2020, compared to $15.8 million for the quarter ended June 30, 2019. Gross dollar volume (GDV), representing total spend on cards, increased 43%.
- SBLOC (securities-backed lines of credit) and IBLOC (insurance backed lines of credit) loans increased 54% year over year and 11% quarter over quarter to $1.3 billion at June 30, 2020.
- Small Business Loans, including those held-for-sale, increased 16% year over year to $601.4 million at June 30, 2020, exclusive of $208 million of Paycheck Protection Program loans.
- As of June 30, 2020, we have originated approximately 1,250 Paycheck Protection Program loans, totaling approximately $208 million, which we expect will generate approximately $5.5 million of fees and interest. We believe that income will be recognized over eleven months, beginning in April 2020. The average loan size was approximately $165,000 with 92% of the loans under $350,000.
- The average rate on $5.4 billion of average deposits and interest-bearing liabilities in the second quarter of 2020 was 0.12%. Average prepaid and debit card account deposits of $3.9 billion for second quarter 2020, reflected an increase of 56% over the $2.5 billion for the quarter ended June 30, 2019.
- Consolidated leverage ratio was 8.48% at June 30, 2020. The Bancorp and its subsidiary, The Bancorp Bank (the “Bank”), remain well capitalized.
- Book value per common share at June 30, 2020 was $9.28 per share compared to $8.07 at June 30, 2019, an increase of 15%.
Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “We have continued to experience momentum in our core earnings driven by higher interest income with falling interest expense, increased loan balances and higher payment volumes. In the second quarter of 2020, the Bancorp earned 35 cents a share from both increased fee and spread revenue. While the pandemic continues to be a significant source of market uncertainty, we have been able to achieve better revenue productivity and operating efficiency during this time, while also making investments in our platform. Our earnings guidance for full year 2020 continues to be $1.25 per share.”
The Bancorp reported net income of $20.1 million, or $0.35 per diluted share, for the quarter ended June 30, 2020, compared to net income of $11.4 million, or $0.20 per diluted share, for the quarter ended June 30, 2019. 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 8.48%, 14.84%, 15.27% and 14.84%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 31, 2020 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 2755988. 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 7, 2020 by dialing 855.859.2056, access code 2755988.
The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company’s only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities-backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.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 “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “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. These risks and uncertainties include those relating to the on-going COVID-19 pandemic, the impact it will have on our business and the industry as a whole, and the resulting governmental and societal responses. 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 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 earnings 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, | ||||||||||||||
Condensed income statement | 2020 | 2019 | 2020 | 2019 | |||||||||||
(dollars in thousands except per share data) | |||||||||||||||
Net interest income | $ | 50,246 | $ | 34,539 | $ | 93,157 | $ | 68,549 | |||||||
Provision for loan and lease losses | 922 | 600 | 4,501 | 2,300 | |||||||||||
Non-interest income | |||||||||||||||
Service fees on deposit accounts | 5 | 14 | 15 | 61 | |||||||||||
ACH, card and other payment processing fees | 1,707 | 2,521 | 3,553 | 4,824 | |||||||||||
Prepaid, debit card and related fees | 18,673 | 15,840 | 37,213 | 32,003 | |||||||||||
Net realized and unrealized gains (losses) on commercial | |||||||||||||||
loans originated for sale | (940 | ) | (148 | ) | (6,096 | ) | 10,615 | ||||||||
Change in value of investment in unconsolidated entity | - | - | (45 | ) | - | ||||||||||
Leasing related income | 443 | 1,027 | 1,276 | 1,722 | |||||||||||
Other non-interest income | 478 | 495 | 1,049 | 889 | |||||||||||
Total non-interest income | 20,366 | 19,749 | 36,965 | 50,114 | |||||||||||
Non-interest expense | |||||||||||||||
Salaries and employee benefits | 25,492 | 21,826 | 48,233 | 45,666 | |||||||||||
Data processing expense | 1,177 | 1,223 | 2,346 | 2,492 | |||||||||||
Legal expense | 2,229 | 1,534 | 3,142 | 2,858 | |||||||||||
FDIC Insurance | 2,918 | 2,095 | 5,507 | 4,024 | |||||||||||
Software | 3,386 | 3,060 | 6,863 | 5,981 | |||||||||||
Lease termination expense | - | 908 | - | 908 | |||||||||||
Other non-interest expense | 7,418 | 8,873 | 14,947 | 16,819 | |||||||||||
Total non-interest expense | 42,620 | 39,519 | 81,038 | 78,748 | |||||||||||
Income from continuing operations before income taxes | 27,070 | 14,169 | 44,583 | 37,615 | |||||||||||
Income tax expense | 6,787 | 3,575 | 11,139 | 9,610 | |||||||||||
Net income from continuing operations | 20,283 | 10,594 | 33,444 | 28,005 | |||||||||||
Discontinued operations | |||||||||||||||
Income (loss) from discontinued operations before income taxes | (274 | ) | 919 | (1,049 | ) | 1,724 | |||||||||
Income tax expense (benefit) | (59 | ) | 163 | (264 | ) | 449 | |||||||||
Net income (loss) from discontinued operations, net of tax | (215 | ) | 756 | (785 | ) | 1,275 | |||||||||
Net income | $ | 20,068 | $ | 11,350 | $ | 32,659 | $ | 29,280 | |||||||
Net income per share from continuing operations - basic | $ | 0.35 | $ | 0.19 | $ | 0.58 | $ | 0.50 | |||||||
Net income (loss) per share from discontinued operations - basic | $ | - | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||||||
Net income per share - basic | $ | 0.35 | $ | 0.20 | $ | 0.57 | $ | 0.52 | |||||||
Net income per share from continuing operations - diluted | $ | 0.35 | $ | 0.19 | $ | 0.58 | $ | 0.49 | |||||||
Net income (loss) per share from discontinued operations - diluted | $ | - | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||||||
Net income per share - diluted | $ | 0.35 | $ | 0.20 | $ | 0.57 | $ | 0.51 | |||||||
Weighted average shares - basic | 57,489,719 | 56,702,182 | 57,355,282 | 56,612,596 | |||||||||||
Weighted average shares - diluted | 57,800,115 | 57,197,433 | 57,856,791 | 57,031,206 | |||||||||||
Balance sheet | June 30, | March 31, | December 31, | June 30, | |||||||||||||
2020 | 2020 | 2019 | 2019 | ||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | |||||||||||||||||
Cash and due from banks | $ | 5,094 | $ | 13,610 | $ | 19,928 | $ | 27,450 | |||||||||
Interest earning deposits at Federal Reserve Bank | 475,627 | 105,978 | 924,544 | 284,823 | |||||||||||||
Total cash and cash equivalents | 480,721 | 119,588 | 944,472 | 312,273 | |||||||||||||
Investment securities, available-for-sale, at fair value | 1,324,447 | 1,353,278 | 1,320,692 | 1,361,779 | |||||||||||||
Investment securities, held-to-maturity, at cost | - | - | 84,387 | 84,414 | |||||||||||||
Commercial loans held for sale, at fair value | 1,807,630 | 1,716,450 | 1,180,546 | 934,452 | |||||||||||||
Loans, net of deferred fees and costs | 2,322,737 | 1,985,755 | 1,824,245 | 1,561,451 | |||||||||||||
Allowance for credit losses | (14,625 | ) | (14,883 | ) | (10,238 | ) | (9,989 | ) | |||||||||
Loans, net | 2,308,112 | 1,970,872 | 1,814,007 | 1,551,462 | |||||||||||||
Federal Home Loan Bank & Atlantic Community Bancshares stock | 1,368 | 1,142 | 5,342 | 6,342 | |||||||||||||
Premises and equipment, net | 16,701 | 17,148 | 17,538 | 17,380 | |||||||||||||
Accrued interest receivable | 18,897 | 15,660 | 13,619 | 14,567 | |||||||||||||
Intangible assets, net | 2,710 | 2,857 | 2,315 | 3,081 | |||||||||||||
Deferred tax asset, net | 7,921 | 12,797 | 12,538 | 14,574 | |||||||||||||
Investment in unconsolidated entity | 34,064 | 34,273 | 39,154 | 58,012 | |||||||||||||
Assets held for sale from discontinued operations | 128,463 | 134,118 | 140,657 | 169,109 | |||||||||||||
Other assets | 83,003 | 79,925 | 81,696 | 76,123 | |||||||||||||
Total assets | $ | 6,214,037 | $ | 5,458,108 | $ | 5,656,963 | $ | 4,603,568 | |||||||||
Liabilities: | |||||||||||||||||
Deposits | |||||||||||||||||
Demand and interest checking | $ | 5,089,741 | $ | 4,512,949 | $ | 4,402,740 | $ | 3,964,905 | |||||||||
Savings and money market | 455,458 | 178,174 | 174,290 | 26,841 | |||||||||||||
Time deposits | - | - | 475,000 | - | |||||||||||||
Total deposits | 5,545,199 | 4,691,123 | 5,052,030 | 3,991,746 | |||||||||||||
Securities sold under agreements to repurchase | 42 | 42 | 82 | 93 | |||||||||||||
Short-term borrowings | - | 140,000 | - | 45,000 | |||||||||||||
Subordinated debenture | 13,401 | 13,401 | 13,401 | 13,401 | |||||||||||||
Long-term borrowings | 40,639 | 40,813 | 40,991 | 41,334 | |||||||||||||
Other liabilities | 81,677 | 74,625 | 65,962 | 53,862 | |||||||||||||
Total liabilities | $ | 5,680,958 | $ | 4,960,004 | $ | 5,172,466 | $ | 4,145,436 | |||||||||
Shareholders' equity: | |||||||||||||||||
Common stock - authorized, 75,000,000 shares of $1.00 par value;
| 57,555 | 57,426 | 56,941 | 56,875 | |||||||||||||
Treasury stock (100,000 shares) | (866 | ) | (866 | ) | (866 | ) | (866 | ) | |||||||||
Additional paid-in capital | 374,578 | 372,984 | 371,633 | 368,771 | |||||||||||||
Retained earnings | 81,028 | 60,960 | 50,742 | 28,463 | |||||||||||||
Accumulated other comprehensive income | 20,784 | 7,600 | 6,047 | 4,889 | |||||||||||||
Total shareholders' equity | 533,079 | 498,104 | 484,497 | 458,132 | |||||||||||||
Total liabilities and shareholders' equity | $ | 6,214,037 | $ | 5,458,108 | $ | 5,656,963 | $ | 4,603,568 | |||||||||
Average balance sheet and net interest income | Three months ended June 30, 2020 | Three months ended June 30, 2019 | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||
Assets: | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
Interest earning assets: | |||||||||||||||||||||
Loans net of deferred fees and costs ** | $ | 3,925,515 | $ | 41,448 | 4.22 | % | $ | 2,216,935 | $ | 29,737 | 5.37 | % | |||||||||
Leases - bank qualified* | 9,217 | 162 | 7.03 | % | 15,446 | 268 | 6.94 | % | |||||||||||||
Investment securities-taxable | 1,334,368 | 10,188 | 3.05 | % | 1,443,671 | 11,634 | 3.22 | % | |||||||||||||
Investment securities-nontaxable* | 4,402 | 35 | 3.18 | % | 6,610 | 54 | 3.27 | % | |||||||||||||
Interest earning deposits at Federal Reserve Bank | 426,174 | 107 | 0.10 | % | 420,153 | 2,455 | 2.34 | % | |||||||||||||
Net interest earning assets | 5,699,676 | 51,940 | 3.65 | % | 4,102,815 | 44,148 | 4.30 | % | |||||||||||||
Allowance for credit losses | (14,822 | ) | (9,963 | ) | |||||||||||||||||
Assets held for sale from discontinued operations | 130,530 | 1,094 | 3.35 | % | 154,057 | 1,659 | 4.31 | % | |||||||||||||
Other assets | 228,443 | 283,036 | |||||||||||||||||||
$ | 6,043,827 | $ | 4,529,945 | ||||||||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Demand and interest checking | $ | 5,140,167 | $ | 1,390 | 0.11 | % | $ | 3,847,623 | $ | 8,783 | 0.91 | % | |||||||||
Savings and money market | 234,201 | 120 | 0.20 | % | 26,497 | 40 | 0.60 | % | |||||||||||||
Total deposits | 5,374,368 | 1,510 | 0.11 | % | 3,874,120 | 8,823 | 0.91 | % | |||||||||||||
Short-term borrowings | 16,428 | 15 | 0.37 | % | 80,242 | 526 | 2.62 | % | |||||||||||||
Securities sold under agreements to repurchase | 41 | - | 0.00 | % | 92 | - | 0.00 | % | |||||||||||||
Subordinated debentures | 13,401 | 128 | 3.82 | % | 13,401 | 192 | 5.73 | % | |||||||||||||
Total deposits and liabilities | 5,404,238 | 1,653 | 0.12 | % | 3,967,855 | 9,541 | 0.96 | % | |||||||||||||
Other liabilities | 123,997 | 115,634 | |||||||||||||||||||
Total liabilities | 5,528,235 | 4,083,489 | |||||||||||||||||||
Shareholders' equity | 515,592 | 446,456 | |||||||||||||||||||
$ | 6,043,827 | $ | 4,529,945 | ||||||||||||||||||
Net interest income on tax equivalent basis* | $ | 51,381 | $ | 36,266 | |||||||||||||||||
Tax equivalent adjustment | 41 | 68 | |||||||||||||||||||
Net interest income | $ | 51,340 | $ | 36,198 | |||||||||||||||||
Net interest margin * | 3.53 | % | 3.41 | % | |||||||||||||||||
__________________________________ | |||||||||||||||||||||
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2020 and 2019. | |||||||||||||||||||||
** Includes loans held for sale. | |||||||||||||||||||||
Average balance sheet and net interest income | Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||
Assets: | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
Interest earning assets: | |||||||||||||||||||||
Loans net of deferred fees and costs ** | $ | 3,593,921 | $ | 80,607 | 4.49 | % | $ | 2,241,746 | $ | 59,898 | 5.34 | % | |||||||||
Leases - bank qualified* | 10,096 | 362 | 7.17 | % | 16,613 | 695 | 8.37 | % | |||||||||||||
Investment securities-taxable | 1,364,956 | 20,683 | 3.03 | % | 1,374,019 | 22,164 | 3.23 | % | |||||||||||||
Investment securities-nontaxable* | 4,788 | 75 | 3.13 | % | 7,075 | 114 | 3.22 | % | |||||||||||||
Interest earning deposits at Federal Reserve Bank | 460,025 | 1,730 | 0.75 | % | 421,580 | 4,957 | 2.35 | % | |||||||||||||
Net interest earning assets | 5,433,786 | 103,457 | 3.81 | % | 4,061,033 | 87,828 | 4.33 | % | |||||||||||||
Allowance for credit losses | (12,532 | ) | (9,305 | ) | |||||||||||||||||
Assets held for sale from discontinued operations | 133,903 | 2,368 | 3.54 | % | 163,874 | 3,684 | 4.50 | % | |||||||||||||
Other assets | 233,088 | 272,922 | |||||||||||||||||||
$ | 5,788,245 | $ | 4,488,524 | ||||||||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Demand and interest checking | $ | 4,746,928 | $ | 8,085 | 0.34 | % | $ | 3,838,868 | $ | 17,616 | 0.92 | % | |||||||||
Savings and money market | 203,888 | 170 | 0.17 | % | 28,931 | 77 | 0.53 | % | |||||||||||||
Time | 159,752 | 1,483 | 1.86 | % | - | - | - | ||||||||||||||
Total deposits | 5,110,568 | 9,738 | 0.38 | % | 3,867,799 | 17,693 | 0.91 | % | |||||||||||||
Short-term borrowings | 36,620 | 180 | 0.98 | % | 77,330 | 1,029 | 2.66 | % | |||||||||||||
Securities sold under agreements to repurchase | 57 | - | 0.00 | % | 91 | - | 0.00 | % | |||||||||||||
Subordinated debentures | 13,401 | 290 | 4.33 | % | 13,401 | 387 | 5.78 | % | |||||||||||||
Total deposits and liabilities | 5,160,646 | 10,208 | 0.40 | % | 3,958,621 | 19,109 | 0.97 | % | |||||||||||||
Other liabilities | 118,811 | 97,449 | |||||||||||||||||||
Total liabilities | 5,279,457 | 4,056,070 | |||||||||||||||||||
Shareholders' equity | 508,788 | 432,454 | |||||||||||||||||||
$ | 5,788,245 | $ | 4,488,524 | ||||||||||||||||||
Net interest income on tax equivalent basis* | $ | 95,617 | $ | 72,403 | |||||||||||||||||
Tax equivalent adjustment | 92 | 170 | |||||||||||||||||||
Net interest income | $ | 95,525 | $ | 72,233 | |||||||||||||||||
Net interest margin * | 3.43 | % | 3.43 | % | |||||||||||||||||
__________________________________ | |||||||||||||||||||||
* Full taxable equivalent basis, using a statutory rate of 21% for 2020 and 2019. | |||||||||||||||||||||
** Includes loans held for sale. | |||||||||||||||||||||
Allowance for loan and lease losses: | Six months ended | Year ended | |||||||||||
June 30, | June 30, | December 31, | |||||||||||
2020 | 2019 | 2019 | |||||||||||
(dollars in thousands) | |||||||||||||
Balance in the allowance for loan and lease losses at beginning of period (1) | $ | 12,874 | $ | 8,653 | $ | 8,653 | |||||||
Loans charged-off: | |||||||||||||
SBA non-real estate | 1,048 | 893 | 1,362 | ||||||||||
Direct lease financing | 1,552 | 185 | 528 | ||||||||||
Other consumer loans | - | 2 | 1,103 | ||||||||||
Total | 2,600 | 1,080 | 2,993 | ||||||||||
Recoveries: | |||||||||||||
SBA non-real estate | 54 | 100 | 125 | ||||||||||
Direct lease financing | 90 | 16 | 51 | ||||||||||
Other consumer loans | - | - | 2 | ||||||||||
Total | 144 | 116 | 178 | ||||||||||
Net charge-offs | 2,456 | 964 | 2,815 | ||||||||||
Provision credited to allowance, excluding commitment provision | 4,207 | 2,300 | 4,400 | ||||||||||
Balance in allowance for loan and lease losses at end of period | $ | 14,625 | $ | 9,989 | $ | 10,238 | |||||||
Net charge-offs/average loans | 0.06 | % | 0.04 | % | 0.12 | % | |||||||
Net charge-offs/average loans (annualized) | 0.12 | % | 0.09 | % | 0.12 | % | |||||||
Net charge-offs/average assets | 0.04 | % | 0.02 | % | 0.06 | % | |||||||
(1) Excludes activity from assets held for sale from discontinued operations. | |||||||||||||
Loan portfolio: | June 30, | March 31, | December 31, | June 30, | |||||||||
2020 | 2020 | 2019 | 2019 | ||||||||||
(in thousands) | |||||||||||||
SBL non-real estate | $ | 293,692 | $ | 84,946 | $ | 84,579 | $ | 75,475 | |||||
SBL commercial mortgage | 259,020 | 233,220 | 218,110 | 189,427 | |||||||||
SBL construction | 33,193 | 48,823 | 45,310 | 29,298 | |||||||||
Small business loans * | 585,905 | 366,989 | 347,999 | 294,200 | |||||||||
Direct lease financing | 422,505 | 445,967 | 434,460 | 407,907 | |||||||||
SBLOC / IBLOC** | 1,287,350 | 1,156,433 | 1,024,420 | 837,672 | |||||||||
Advisor financing *** | 15,529 | - | - | - | |||||||||
Other specialty lending | 2,706 | 2,711 | 3,055 | 3,432 | |||||||||
Other consumer loans **** | 4,003 | 4,023 | 4,554 | 7,898 | |||||||||
2,317,998 | 1,976,123 | 1,814,488 | 1,551,109 | ||||||||||
Unamortized loan fees and costs | 4,739 | 9,632 | 9,757 | 10,342 | |||||||||
Total loans, net of unamortized fees and costs | $ | 2,322,737 | $ | 1,985,755 | $ | 1,824,245 | $ | 1,561,451 | |||||
Small business portfolio: | June 30, | March 31, | December 31, | June 30, | |||||||||
2020 | 2020 | 2019 | 2019 | ||||||||||
(in thousands) | |||||||||||||
SBL, including unamortized fees and costs | 583,935 | 371,072 | 352,214 | 301,502 | |||||||||
SBL, included in held-for-sale | 225,401 | 223,987 | 220,358 | 215,064 | |||||||||
Total small business loans | $ | 809,336 | $ | 595,059 | $ | 572,572 | $ | 516,566 | |||||
* The preceding table shows small business loans and small business loans held-for-sale, which consist of the government guaranteed portion of SBA loans at the dates indicated (in thousands). |
** Securities Backed Lines of Credit (SBLOC) are collateralized by marketable securities, while Insurance Backed Lines of Credit (IBLOC) are collateralized by the cash surrender value of insurance policies. |
*** In 2020 we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan to value ratios of 70%, based on third party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate. |
**** Included in the table above under Other consumer loans are demand deposit overdrafts reclassified as loan balances totaling $361,000 and $882,000 at June 30, 2020 and December 31, 2019, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for loan and lease losses. |
Small business loans as of June 30, 2020 | |||
Loan principal | |||
(in millions) | |||
U.S. government guaranteed portion of SBA loans (a) | $ | 306 | |
Paycheck Protection Program Loans (PPP) (a) | 208 | ||
Commercial mortgage SBA (b) | 165 | ||
Construction SBA (c) | 16 | ||
Unguaranteed portion of U.S. government guaranteed loans (d) | 89 | ||
Non-SBA small business loans (e) | 22 | ||
Total principal | $ | 806 | |
Fair value adjustment (f) | 5 | ||
Unamortized fees | (2) | ||
Total small business loans | $ | 809 | |
(a) This is the portion of SBA 7a loans (7a) and PPP which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk. |
(b) Substantially all of these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan to value percentages (LTV), generally 50-60%, to which the bank adheres. |
(c) Of the $16 million Construction SBA loans, $12 million are 504 first mortgages with an origination date LTV of 50-60% and $4 million are SBA interim loans with an approved SBA post-construction full takeout/payoff. |
(d) The $89 million represents the unguaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners. |
(e) Of the $22 million in non-SBA loans, $3 million are bridge loans with permanent lender takeout commitments, $2 million is a secured conventional loan with an 80% origination date LTV and $17 million consist of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators and are considered seasoned and have performed as agreed. A $2 million guaranty by the seller, for an 11% first loss piece, is in place until August 2021. |
(f) The fair value adjustment applies to the U.S. government guaranteed portion of SBA loans. |
Additionally, the recently passed CARES Act of 2020 has provided significant support for SBA loans including funding intended to provide six months of interest payments on SBA loans, as well as other accommodations to provide for the payment of payroll and other operating expenses. |
Type as of June 30, 2020 | ||||||||||||||
(Excludes government guaranteed portion of SBA 7a and PPP loans) | ||||||||||||||
SBL commercial mortgage* | SBL construction* | SBL non-real estate | Total | % Total | ||||||||||
(in millions) | ||||||||||||||
Hotels | $ | 68 | $ | 7 | $ | - | $ | 75 | 26% | |||||
Professional services offices | 22 | - | 2 | 24 | 8% | |||||||||
Full-service restaurants | 15 | 1 | 5 | 21 | 7% | |||||||||
Child day care and youth services | 15 | - | 1 | 16 | 6% | |||||||||
Bakeries | 4 | - | 12 | 16 | 6% | |||||||||
Fitness/rec centers and instruction | 8 | - | 4 | 12 | 4% | |||||||||
General warehousing and storage | 11 | - | - | 11 | 4% | |||||||||
Limited-service restaurants and catering | 7 | - | 4 | 11 | 4% | |||||||||
Elderly assisted living facilities | 2 | 7 | 2 | 11 | 4% | |||||||||
Amusement and recreation industries | 5 | 1 | 1 | 7 | 2% | |||||||||
Car washes | 3 | 3 | - | 6 | 2% | |||||||||
Funeral homes | 5 | - | - | 5 | 2% | |||||||||
New and used car dealers | 4 | - | - | 4 | 1% | |||||||||
Automotive servicing | 3 | - | 1 | 4 | 1% | |||||||||
Other | 45 | 1 | 23 | 69 | 23% | |||||||||
Total | $ | 217 | $ | 20 | $ | 55 | $ | 292 | 100% | |||||
* Substantially all are SBA loans with 50-60% loan to value ratios at their origination.
State diversification as of June 30, 2020 | ||||||||||||||
(Excludes government guaranteed portion of SBA 7a and PPP loans) | ||||||||||||||
SBL commercial mortgage* | SBL construction* | SBL non-real estate | Total | % Total | ||||||||||
(in millions) | ||||||||||||||
Florida | $ | 33 | $ | 7 | $ | 7 | $ | 47 | 16% | |||||
California | 34 | 2 | 5 | 41 | 14% | |||||||||
Pennsylvania | 30 | - | 4 | 34 | 11% | |||||||||
Illinois | 28 | - | 4 | 32 | 11% | |||||||||
North Carolina | 24 | 1 | 3 | 28 | 10% | |||||||||
Texas | 11 | - | 5 | 16 | 6% | |||||||||
New York | 10 | 1 | 5 | 16 | 5% | |||||||||
Tennessee | 7 | 6 | 1 | 14 | 5% | |||||||||
New Jersey | 2 | 1 | 7 | 10 | 4% | |||||||||
Virginia | 8 | 1 | 2 | 11 | 4% | |||||||||
Georgia | 5 | - | 2 | 7 | 2% | |||||||||
Michigan | 3 | - | 1 | 4 | 2% | |||||||||
Colorado | 2 | - | 1 | 3 | 1% | |||||||||
Ohio | 3 | - | - | 3 | 1% | |||||||||
Other states | 17 | 1 | 8 | 26 | 8% | |||||||||
Total | $ | 217 | $ | 20 | $ | 55 | $ | 292 | 100% | |||||
* Substantially all are SBA loans with 50-60% loan to value ratios at their origination.
Top 10 loans as of June 30, 2020 | |||||||||||
Type* | State | SBL commercial mortgage* | SBL construction* | Total | |||||||
(in millions) | |||||||||||
Professional services office | CA | $ | 9 | $ | - | $ | 9 | ||||
Hotel | FL | 9 | - | 9 | |||||||
General warehouse | PA | 8 | - | 8 | |||||||
Hotel | NC | 6 | - | 6 | |||||||
Assisted living facility | FL | - | 5 | 5 | |||||||
Hotel | NC | 5 | - | 5 | |||||||
Fitness and rec center | PA | 4 | - | 4 | |||||||
Hotel | PA | 4 | - | 4 | |||||||
Hotel | TN | - | 4 | 4 | |||||||
Gas Station | VA | 3 | - | 3 | |||||||
Total | $ | 48 | $ | 9 | $ | 57 | |||||
* All of the top 10 loans are SBA and with the rest of the commercial real estate portfolio were originated with an approximate loan to value ratio between 50% and 60% at origination .
Commercial real estate loans held for sale which were originated for sale or securitization, excluding SBA loans, are as follows including LTV at origination:
Type as of June 30, 2020 | |||||||||
Type | # Loans | Balance | Origination date LTV | Weighted average minimum interest rate | |||||
(dollars in millions) | |||||||||
Multifamily (apartments) | 181 | $ | 1,450 | 76% | 4.77% | ||||
Hospitality (hotels and lodging)* | 11 | 60 | 65% | 5.70% | |||||
Retail | 7 | 52 | 72% | 4.96% | |||||
Other | 8 | 25 | 69% | 5.20% | |||||
207 | $ | 1,587 | 75% | 4.82% | |||||
Fair value adjustment * | (5) | ||||||||
Total | $ | 1,582 | |||||||
*Of the total $5 million fair value adjustment, $2 million was related to hospitality loans.
State diversification as of June 30, 2020 | 15 Largest loans (all multifamily) as of June 30, 2020 | |||||||||||||
State | Balance | Origination date LTV | State | Balance | Origination date LTV | |||||||||
(in millions) | (in millions) | |||||||||||||
Texas | $ | 407 | 77% | North Carolina | $ | 43 | 78% | |||||||
Georgia | 234 | 78% | Texas | 37 | 79% | |||||||||
Arizona | 121 | 76% | Texas | 35 | 80% | |||||||||
North Carolina | 109 | 78% | Pennsylvania | 31 | 77% | |||||||||
Nevada | 56 | 80% | Georgia | 31 | 80% | |||||||||
Alabama | 54 | 76% | Nevada | 28 | 80% | |||||||||
Other states each <$50 million | 606 | 73% | Texas | 28 | 75% | |||||||||
Total | $ | 1,587 | 75% | Texas | 27 | 77% | ||||||||
Arizona | 26 | 79% | ||||||||||||
Mississippi | 25 | 79% | ||||||||||||
Texas | 24 | 77% | ||||||||||||
North Carolina | 24 | 77% | ||||||||||||
Texas | 24 | 77% | ||||||||||||
California | 23 | 65% | ||||||||||||
Georgia | 23 | 79% | ||||||||||||
15 Largest loans | $ | 429 | 77% | |||||||||||
Institutional banking loans outstanding at June 30, 2020 | ||||||||
Type | Principal | % of total | ||||||
(in millions) | ||||||||
Securities backed lines of credit (SBLOC) | $ | 1,003 | 77 | % | ||||
Insurance backed lines of credit (IBLOC) | 284 | 22 | % | |||||
Advisor financing | 16 | 1 | % | |||||
Total | $ | 1,303 | 100 | % | ||||
For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While equities have fallen in excess of 30% in recent periods, the reduction in collateral value of brokerage accounts collateralizing SBLOCs generally has been less, for two reasons. First, many collateral accounts are “balanced” and accordingly have a component of debt securities, which have either not decreased in value as much as equities, or in some cases may have increased in value. Secondly, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the % principal to collateral. As a result, the accounts monitored by management and related information as of June 30, 2020 were as follows:
Top 10 SBLOC loans | ||||||
Principal amount | % Principal to collateral | |||||
(in millions) | ||||||
$ | 33 | 31 | % | |||
19 | 44 | % | ||||
14 | 23 | % | ||||
11 | 29 | % | ||||
11 | 80 | % | ||||
10 | 49 | % | ||||
10 | 27 | % | ||||
9 | 75 | % | ||||
8 | 22 | % | ||||
8 | 71 | % | ||||
Total | $ | 133 | 40 | % | ||
Insurance backed lines of credit (IBLOC)
IBLOC loans are backed by the cash value of life insurance policies which have been assigned to us. We lend up to 100% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, seven insurance companies have been approved and, as of January 21, 2020 all were rated Superior (A+ or better) by AM BEST. Moody’s ratings were at least A rated, and ranged from A3 to Aa2.
| Direct lease financing* by type as of June 30, 2020 | ||||||
Principal balance | % Total | |||||
(in millions) | ||||||
Government agencies and public institutions** | $ | 77 | 18 | % | ||
Construction | 74 | 18 | % | |||
Waste management and remediation services | 61 | 15 | % | |||
Retail trade | 39 | 9 | % | |||
Transportation and warehousing | 39 | 9 | % | |||
Real estate, rental and leasing | 33 | 8 | % | |||
Health care and social assistance | 26 | 6 | % | |||
Professional, scientific, and technical services | 19 | 5 | % | |||
Manufacturing | 13 | 3 | % | |||
Wholesale trade | 13 | 3 | % | |||
Educational services | 10 | 2 | % | |||
Arts, entertainment, and recreation | 5 | 1 | % | |||
Other | 14 | 3 | % | |||
Total | $ | 423 | 100 | % | ||
* Of the total $423 million of direct lease financing, $388 million consisted of vehicle leases with the remaining balance consisting of equipment leases. |
** Includes public universities and school districts |
Direct lease financing by state as of June 30, 2020 | ||||||
State | Principal balance | % Total | ||||
(in millions) | ||||||
Florida | $ | 99 | 23 | % | ||
New Jersey | 30 | 7 | % | |||
Pennsylvania | 27 | 6 | % | |||
New York | 27 | 6 | % | |||
North Carolina | 26 | 6 | % | |||
Maryland | 24 | 6 | % | |||
California | 21 | 5 | % | |||
Utah | 19 | 4 | % | |||
Washington | 16 | 4 | % | |||
Georgia | 15 | 4 | % | |||
Connecticut | 11 | 3 | % | |||
Alabama | 11 | 3 | % | |||
Illinois | 11 | 3 | % | |||
Texas | 10 | 2 | % | |||
Missouri | 7 | 2 | % | |||
Other states | 69 | 16 | % | |||
Total | $ | 423 | 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, 2020 | |||||||||||
The Bancorp, Inc. | 8.48 | % | 14.84 | % | 15.27 | % | 14.84 | % | |||
The Bancorp Bank | 8.34 | % | 14.56 | % | 14.98 | % | 14.56 | % | |||
"Well capitalized" institution (under FDIC regulations-Basel III) | 5.00 | % | 8.00 | % | 10.00 | % | 6.50 | % | |||
As of December 31, 2019 | |||||||||||
The Bancorp, Inc. | 9.63 | % | 19.04 | % | 19.45 | % | 19.04 | % | |||
The Bancorp Bank | 9.46 | % | 18.71 | % | 19.11 | % | 18.71 | % | |||
"Well capitalized" institution (under FDIC regulations-Basel III) | 5.00 | % | 8.00 | % | 10.00 | % | 6.50 | % | |||
Three months ended | Six months ended | |||||||||||
June 30, | June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Selected operating ratios: | ||||||||||||
Return on average assets (1) | 1.33 | % | 1.00 | % | 1.13 | % | 1.32 | % | ||||
Return on average equity (1) | 15.61 | % | 10.20 | % | 12.87 | % | 13.65 | % | ||||
Net interest margin | 3.53 | % | 3.41 | % | 3.43 | % | 3.43 | % | ||||
(1) Annualized | ||||||||||||
Book value per share table: | June 30, | March 31, | December 31, | June 30, | ||||||||||||
2020 | 2020 | 2019 | 2019 | |||||||||||||
Book value per share | $ | 9.28 | $ | 8.69 | $ | 8.52 | $ | 8.07 | ||||||||
Loan quality table: | June 30, | March 31, | December 31, | June 30, | ||||||||||||
2020 | 2020 | 2019 | 2019 | |||||||||||||
Nonperforming loans to total loans | 0.44 | % | 0.40 | % | 0.50 | % | 0.57 | % | ||||||||
Nonperforming assets to total assets | 0.17 | % | 0.14 | % | 0.16 | % | 0.19 | % | ||||||||
Allowance for loan and lease losses to total loans | 0.63 | % | 0.75 | % | 0.56 | % | 0.64 | % | ||||||||
Nonaccrual loans | $ | 9,957 | $ | 5,645 | $ | 5,796 | $ | 6,456 | ||||||||
Loans 90 days past due still accruing interest | 352 | 2,245 | 3,264 | 2,373 | ||||||||||||
Other real estate owned | - | - | - | - | ||||||||||||
Total nonperforming assets | $ | 10,309 | $ | 7,890 | $ | 9,060 | $ | 8,829 | ||||||||
Three months ended | ||||||||||||||||
June 30, | March 31, | December 31, | June 30, | |||||||||||||
2020 | 2020 | 2019 | 2019 | |||||||||||||
(in thousands) | ||||||||||||||||
Gross dollar volume (GDV) (2): | ||||||||||||||||
Prepaid and debit card GDV | $ | 23,680,749 | $ | 22,982,188 | $ | 19,104,327 | $ | 16,611,551 | ||||||||
(2) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank. | ||||||||||||||||
Business line quarterly summary: | ||||||||||||||||||
Quarter ended June 30, 2020 | ||||||||||||||||||
(dollars in millions) | ||||||||||||||||||
Balances | ||||||||||||||||||
% Growth | ||||||||||||||||||
Major business lines | Average approximate rates * | Balances ** | Year over year | Linked quarter annualized | ||||||||||||||
Loans | ||||||||||||||||||
Institutional banking *** | 2.5 | % | $ | 1,303 | 56 | % | 51 | % | ||||||||||
Small Business Lending**** | 5.0 | % | 601 | 16 | % | 4 | % | |||||||||||
Leasing | 5.8 | % | 422 | 4 | % | nm | ||||||||||||
Commercial real estate securitization | 4.8 | % | 1,582 | nm | nm | |||||||||||||
Weighted average yield | 4.2 | % | $ | 3,908 | Non-interest income | |||||||||||||
% Growth | ||||||||||||||||||
Deposits | Current quarter | Year over year | ||||||||||||||||
Payment solutions (prepaid and debit card issuance) | 0.1 | % | $ | 3,908 | 56 | % | nm | $ | 18.7 | 18 | % | |||||||
Card payment and ACH processing | 0.3 | % | 723 | -27 | % | nm | 1.7 | nm | ||||||||||
* Average rates are for the quarter ended June 30, 2020 | |
** Loan and deposit categories are respectively based on period-end and average quarterly balances. | |
*** Institutional Banking loans are comprised of Securities Backed Lines of Credit (SBLOC), collateralized by marketable securities, Insurance Backed Lines of Credit (IBLOC), collateralized by the cash surrender value of insurance policies, and Advisor financing | |
**** Small Business Lending is substantially comprised of SBA loans. The balance above excludes $208M Paycheck Protection Program loans. | |
Analysis of Walnut Street* marks: | ||||||
Loan activity | Marks | |||||
(dollars in millions) | ||||||
Original Walnut Street loan balance, December 31, 2014 | $ | 267 | ||||
Marks through December 31, 2014 sale date | (58 | ) | $ | (58 | ) | |
Sales price of Walnut Street | 209 | |||||
Equity investment from independent investor | (16 | ) | ||||
December 31, 2014 Bancorp book value | 193 | |||||
Additional marks 2015 - 2019 | (46 | ) | (46 | ) | ||
2020 Marks | - | |||||
Payments received | (113 | ) | ||||
June 30, 2020 Bancorp book value** | $ | 34 | ||||
Total marks | $ | (104 | ) | |||
Divided by: | ||||||
Original Walnut Street loan balance | $ | 267 | ||||
Percentage of total mark to original balance | 39 | % | ||||
* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the investment in a securitization of certain loans from the bank's discontinued loan portfolio. |
** Approximately 33% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of June 30, 2020. |
Walnut Street portfolio composition as of June 30, 2020 | ||
Collateral type | % of Portfolio | |
Commercial real estate non-owner occupied | ||
Retail | 58.0 | % |
Office | - | |
Other | 5.2 | % |
Construction and land | 28.1 | % |
First mortgage residential owner occupied | 7.4 | % |
First mortgage residential non-owner occupied | 1.3 | % |
Total | 100.0 | % |
Cumulative analysis of marks on discontinued commercial loan principal as of June 30, 2020 | ||||||||
Discontinued | Cumulative | % to original | ||||||
loan principal | marks | principal | ||||||
(dollars in millions) | ||||||||
Commercial loan discontinued principal before marks | $ | 67 | ||||||
Florida mall held in discontinued other real estate owned | 42 | (27 | ) | |||||
Previous mark charges | 10 | (10 | ) | |||||
Mark at June 30, 2020 | (4 | ) | ||||||
Cumulative mark at June 30, 2020 | $ | 119 | $ | (41 | ) | 34 | % | |
Analysis of discontinued commercial loan relationships as of June 30, 2020
Performing | Nonperforming | Total | Performing | Nonperforming | Total | ||||||||||||
loan principal | loan principal | loan principal | loan marks | loan marks | marks | ||||||||||||
(in millions) | |||||||||||||||||
5 loan relationships > $6 million | $ | 45 | $ | - | $ | 45 | $ | (3 | ) | $ | - | $ | (3 | ) | |||
Loan relationships < $6 million | 14 | 4 | 18 | - | (1 | ) | (1 | ) | |||||||||
$ | 59 | $ | 4 | $ | 63 | $ | (3 | ) | $ | (1 | ) | $ | (4 | ) | |||
Quarterly activity for commercial loan discontinued principal | ||||
Commercial | ||||
loan principal | ||||
(in millions) | ||||
Commercial loan discontinued principal March 31, 2020 before marks | $ | 72 | ||
Quarterly paydowns and other reductions | (5 | ) | ||
Commercial loan discontinued principal June 30, 2020 before marks | $ | 67 | ||
Marks June 30, 2020 | (4 | ) | ||
Net commercial loan exposure June 30, 2020 | $ | 63 | ||
Residential mortgages | 39 | |||
Net loans | $ | 102 | ||
Florida mall in other real estate owned | 15 | |||
11 properties in other real estate owned | 11 | |||
Total discontinued assets at June 30, 2020 | $ | 128 | ||
Discontinued commercial loan composition as of June 30, 2020
Collateral type | Unpaid principal balance | Mark June 30, 2020 | Mark as % of portfolio | ||||||
(in millions) | |||||||||
Commercial real estate - non-owner occupied: | |||||||||
Retail | $ | 4 | $ | (0.6 | ) | 15 | % | ||
Office | 2 | - | 0 | % | |||||
Other | 19 | (0.1 | ) | 1 | % | ||||
Construction and land | 11 | (0.1 | ) | 1 | % | ||||
Commercial non-real estate and industrial | 2 | - | - | ||||||
1 to 4 family construction | 11 | (2.8 | ) | 25 | % | ||||
First mortgage residential non-owner occupied | 9 | - | 0 | % | |||||
Commercial real estate owner occupied: | |||||||||
Retail | 7 | - | - | ||||||
Office | - | - | - | ||||||
Other | - | - | - | ||||||
Residential junior mortgage | 1 | - | - | ||||||
Other | 1 | - | - | ||||||
Total | $ | 67 | $ | (3.6 | ) | 5 | % | ||
Less: mark | (4 | ) | |||||||
Net commercial loan exposure June 30, 2020 | $ | 63 | $ | (3.6 | ) | ||||
Loan payment deferrals as of June 30, 2020 | |||||
Principal for loans with deferrals | Total principal by loan category | % of total loan principal with deferrals | |||
(in millions) | |||||
Commercial real estate loans held for sale (excluding SBA loans) | $ | 31 | $ | 1,587 | 2% |
Securities backed lines of credit, insurance backed lines of credit & advisor financing | 2 | 1,303 | <1% | ||
Small business lending, substantially all SBA loans | 187 | 806 | 23% | ||
Direct lease financing | 80 | 422 | 19% | ||
Discontinued operations | 18 | 106 | 17% | ||
Other consumer loans and specialty lending | - | 7 | 0% | ||
Total | $ | 318 | $ | 4,231 | 7.5% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005952/en/
Contacts:
Andres Viroslav
Director, Investor Relations
215-861-7990
aviroslav@thebancorp.com
