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The Bancorp, Inc. Reports Second Quarter Financial Results

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.

 

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