The Bancorp, Inc. Reports Fourth Quarter 2020 Financial Results

The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2020.

Highlights

  • For the quarter ended December 31, 2020, The Bancorp earned net income of $24.0 million from continuing operations, and $0.41 diluted earnings per share from combined continuing and discontinued operations.
  • Annualized return on assets and equity for the quarter ended December 31, 2020 amounted to 1.6% and 17%, respectively, compared to 1.5% and 17% (annualized), respectively, for the quarter ended September 30, 2020.
  • Net interest margin amounted to 3.58% for the quarter ended December 31, 2020, compared to 3.12% for the quarter ended December 31, 2019 and 3.37% for the quarter ended September 30, 2020.
  • Net interest income increased 47% to $51.7 million for the quarter ended December 31, 2020, compared to $35.2 million for the quarter ended December 31, 2019.
  • Average loans and leases, including loans at fair value, increased 72% to $4.34 billion for the quarter ended December 31, 2020, compared to $2.53 billion for the quarter ended December 31, 2019.
  • Prepaid, debit card and related fees increased 5% to $17.8 million for the quarter ended December 31, 2020, compared to $17.0 million for the quarter ended December 31, 2019. Gross dollar volume (GDV), representing total spend on cards, increased 18% between those periods.
  • SBLOC (securities-backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans increased 56% year over year and 10% quarter over quarter to $1.6 billion at December 31, 2020.
  • Small Business Loans, including those held at fair value, increased 14% year over year to $654 million at December 31, 2020, exclusive of $166 million of Paycheck Protection Program balances.
  • The average interest rate on $5.40 billion of average deposits and interest-bearing liabilities in the fourth quarter of 2020 was 0.24%. Average prepaid and debit card account deposits of $3.59 billion for fourth quarter 2020, reflected an increase of 33% over the $2.70 billion for the quarter ended December 31, 2019.
  • Consolidated leverage ratio was 9.20% at December 31, 2020. The Bancorp and its subsidiary, The Bancorp Bank (the “Bank”), remain well capitalized.
  • Book value per common share at December 31, 2020 was $10.10 per share compared to $8.52 at December 31, 2019, an increase of 19%, primarily as a result of retained earnings per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “We have completed our strategic business plan, strategic agenda and budget for 2021. The main focus continues to be product and platform expansion with a rigorous focus on building the best payments ecosystem in the financial services industry. Our plan includes a comprehensive and integrated analysis of the market and competitors, and the needed investments to build towards the future and create scalable core competencies that our partners can use to innovate and grow. We also continue to invest heavily in anti-money laundering and compliance to have best-in-class capabilities to meet regulatory guidance and expectations. Our guidance target for 2021 is $1.70 a share or approximately $100 million in net income, which does not include the impact of planned share repurchases.”

The Bancorp reported net income of $24.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020, compared to net income of $1.9 million, or $0.03 per diluted share, for the quarter ended December 31, 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 9.20%, 14.43%, 14.84% and 14.43%, 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, January 29, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 8952947. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 5, 2021 by dialing 855.859.2056, access code 8952947.

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,” “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. 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

Year ended

 

December 31,

December 31,

Condensed income statement

 

2020

2019

2020

2019

 

(dollars in thousands except per share data)

 

Net interest income

 

$

51,713

35,179

$

194,866

$

141,288

Provision for credit losses

 

554

1,450

6,352

4,400

Non-interest income

 

Service fees on deposit accounts

 

7

6

30

75

ACH, card and other payment processing fees

 

1,788

1,962

7,101

9,376

Prepaid, debit card and related fees

 

17,818

17,004

74,465

65,141

Net realized and unrealized gains (losses) on commercial

 

loans originated for sale

 

1,538

(247

)

(3,874

)

24,072

Change in value of investment in unconsolidated entity

 

(45

)

Leasing related income

 

499

932

3,294

3,243

Other non-interest income

 

1,650

841

3,646

2,220

Total non-interest income

 

23,300

20,498

84,617

104,127

Non-interest expense

 

Salaries and employee benefits

 

27,087

24,067

101,737

94,259

Data processing expense

 

1,174

1,210

4,712

4,894

Legal expense

 

1,005

995

5,141

5,319

FDIC insurance

 

2,121

2,141

9,808

7,025

Software

 

3,570

3,551

14,028

12,731

SEC settlement

 

7,500

8,900

Lease termination expense

 

908

Other non-interest expense

 

6,826

8,258

29,421

34,485

Total non-interest expense

 

41,783

47,722

164,847

168,521

Income from continuing operations before income taxes

 

32,676

6,505

108,284

72,494

Income tax expense

 

8,655

3,641

27,688

21,226

Net income from continuing operations

 

24,021

2,864

80,596

51,268

Discontinued operations

 

Income (loss) from discontinued operations before income taxes

 

(1,096

)

(1,365

)

(3,816

)

510

Income tax expense (benefit)

 

(1,246

)

(355

)

(3,304

)

219

Net income (loss) from discontinued operations, net of tax

 

150

(1,010

)

(512

)

291

Net income

 

$

24,171

$

1,854

$

80,084

$

51,559

 

Net income per share from continuing operations - basic

 

$

0.42

$

0.05

$

1.40

$

0.90

Net income (loss) per share from discontinued operations - basic

 

$

$

(0.02

)

$

(0.01

)

$

0.01

Net income per share - basic

 

$

0.42

$

0.03

$

1.39

$

0.91

 

Net income per share from continuing operations - diluted

 

$

0.41

$

0.05

$

1.38

$

0.89

Net income (loss) per share from discontinued operations - diluted

 

$

$

(0.02

)

$

(0.01

)

$

0.01

Net income per share - diluted

 

$

0.41

$

0.03

$

1.37

$

0.90

Weighted average shares - basic

 

57,597,124

56,924,543

57,474,612

56,765,635

Weighted average shares - diluted

 

59,146,222

57,847,509

58,411,222

57,338,985

 

 

Balance sheet

 

December 31,

September 30,

June 30,

December 31,

 

2020

2020

2020

2019

 

(dollars in thousands)

Assets:

 

Cash and cash equivalents

 

Cash and due from banks

 

$

5,984

$

6,220

$

5,094

$

19,928

Interest earning deposits at Federal Reserve Bank

 

339,531

294,758

475,627

924,544

Total cash and cash equivalents

 

345,515

300,978

480,721

944,472

 

Investment securities, available-for-sale, at fair value

 

1,206,164

1,264,903

1,324,447

1,320,692

Investment securities, held-to-maturity, at cost

 

84,387

Commercial loans, at fair value (held-for-sale at June 30, 2020 and December 31, 2019

 

1,810,812

1,849,947

1,807,630

1,180,546

Loans, net of deferred fees and costs

 

2,652,323

2,488,760

2,322,737

1,824,245

Allowance for credit losses

 

(16,082

)

(15,727

)

(14,625

)

(10,238

)

Loans, net

 

2,636,241

2,473,033

2,308,112

1,814,007

Federal Home Loan Bank & Atlantic Community Bancshares stock

 

1,368

1,368

1,368

5,342

Premises and equipment, net

 

17,608

15,849

16,701

17,538

Accrued interest receivable

 

20,458

18,852

18,897

13,619

Intangible assets, net

 

2,447

2,563

2,710

2,315

Deferred tax asset, net

 

10,611

7,952

7,921

12,538

Investment in unconsolidated entity

 

31,294

31,783

34,064

39,154

Assets held for sale from discontinued operations

 

113,650

122,253

128,463

140,657

Other assets

 

81,265

79,821

83,003

81,696

Total assets

 

$

6,277,433

$

6,169,302

$

6,214,037

$

5,656,963

 

Liabilities:

 

Deposits

 

Demand and interest checking

 

$

5,205,010

$

4,882,834

$

5,089,741

$

4,402,740

Savings and money market

 

257,050

505,928

455,458

174,290

Time deposits

 

475,000

Total deposits

 

5,462,060

5,388,762

5,545,199

5,052,030

 

Securities sold under agreements to repurchase

 

42

42

42

82

Senior debt

 

98,314

98,222

Subordinated debenture

 

13,401

13,401

13,401

13,401

Other long-term borrowings

 

40,277

40,462

40,639

40,991

Other liabilities

 

82,175

69,954

81,677

65,962

Total liabilities

 

$

5,696,269

$

5,610,843

$

5,680,958

$

5,172,466

 

Shareholders' equity:

 

Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,650,629 and 56,940,521 shares issued and outstanding at December 31, 2020 and 2019, respectively

 

57,651

57,591

57,555

56,941

Treasury stock (100,000 shares)

 

(866

)

(866

)

(866

)

(866

)

Additional paid-in capital

 

378,218

376,751

374,578

371,633

Retained earnings

 

128,453

104,282

81,028

50,742

Accumulated other comprehensive income

 

17,708

20,701

20,784

6,047

Total shareholders' equity

 

581,164

558,459

533,079

484,497

 

Total liabilities and shareholders' equity

 

$

6,277,433

$

6,169,302

$

6,214,037

$

5,656,963

 

 

Average balance sheet and net interest income

 

Three months ended December 31, 2020

Three months ended December 31, 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

 

$

4,329,794

$

45,524

4.21

%

$

2,514,401

$

31,177

4.96

%

Leases - bank qualified*

 

7,346

138

7.51

%

12,633

229

7.25

%

Investment securities-taxable

 

1,239,062

9,229

2.98

%

1,441,895

9,636

2.67

%

Investment securities-nontaxable*

 

4,041

35

3.46

%

5,825

47

3.23

%

Interest earning deposits at Federal Reserve Bank

 

193,560

48

0.10

%

569,804

2,505

1.76

%

Net interest earning assets

 

5,773,803

54,974

3.81

%

4,544,558

43,594

3.84

%

 

Allowance for credit losses

 

(15,804

)

(10,162

)

Assets held for sale from discontinued operations

 

117,482

965

3.29

%

149,301

1,416

3.79

%

Other assets

 

220,595

254,809

 

$

6,096,076

$

4,938,506

 

Liabilities and Shareholders' Equity:

 

Deposits:

 

Demand and interest checking

 

$

4,978,562

$

1,679

0.13

%

$

3,749,860

$

5,405

0.58

%

Savings and money market

 

270,820

134

0.20

%

66,151

51

0.31

%

Time

 

%

406,730

2,217

2.18

%

Total deposits

 

5,249,382

1,813

0.14

%

4,222,741

7,673

0.73

%

 

Short-term borrowings

 

32,989

17

0.21

%

102,832

507

1.97

%

Securities sold under agreements to repurchase

 

41

%

84

%

Subordinated debentures

 

13,401

116

3.46

%

13,401

177

5.28

%

Senior debt

 

100,031

1,279

5.12

%

%

Total deposits and liabilities

 

5,395,844

3,225

0.24

%

4,339,058

8,357

0.77

%

 

Other liabilities

 

130,420

115,112

Total liabilities

 

5,526,264

4,454,170

 

Shareholders' equity

 

569,812

484,336

 

$

6,096,076

$

4,938,506

Net interest income on tax equivalent basis*

 

$

52,714

$

36,653

 

Tax equivalent adjustment

 

36

58

 

Net interest income

 

$

52,678

$

36,595

Net interest margin *

 

3.58

%

3.12

%

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2020 and 2019.

 

 

Average balance sheet and net interest income

 

Year ended December 31, 2020

Year ended December 31, 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

 

$

3,931,758

$

170,449

4.34

%

$

2,402,686

$

126,176

5.25

%

Leases - bank qualified*

 

8,885

647

7.28

%

14,968

1,177

7.86

%

Investment securities-taxable

 

1,317,031

37,822

2.87

%

1,406,247

42,286

3.01

%

Investment securities-nontaxable*

 

4,412

145

3.29

%

6,533

215

3.29

%

Interest earning deposits at Federal Reserve Bank

 

381,290

1,885

0.49

%

472,279

10,007

2.12

%

Net interest earning assets

 

5,643,376

210,948

3.74

%

4,302,713

179,861

4.18

%

 

Allowance for credit losses

 

(13,878

)

(9,696

)

Assets held for sale from discontinued operations

 

127,519

4,222

3.31

%

169,986

6,710

3.95

%

Other assets

 

226,210

254,674

 

$

5,983,227

$

4,717,677

 

Liabilities and Shareholders' Equity:

 

Deposits:

 

Demand and interest checking

 

$

4,864,236

$

11,356

0.23

%

$

3,817,176

$

30,664

0.80

%

Savings and money market

 

291,204

442

0.15

%

37,671

181

0.48

%

Time

 

79,439

1,483

1.87

%

170,438

3,555

2.09

%

Total deposits

 

5,234,879

13,281

0.25

%

4,025,285

34,400

0.85

%

 

Short-term borrowings

 

27,322

198

0.72

%

129,031

3,131

2.43

%

Securities sold under agreements to repurchase

 

49

%

90

%

Subordinated debentures

 

13,401

524

3.91

%

13,401

750

5.60

%

Senior debt

 

38,532

1,913

4.96

%

%

Total deposits and liabilities

 

5,314,183

15,916

0.30

%

4,167,807

38,281

0.92

%

 

Other liabilities

 

137,983

104,233

Total liabilities

 

5,452,166

4,272,040

 

Shareholders' equity

 

531,061

445,637

 

$

5,983,227

$

4,717,677

Net interest income on tax equivalent basis*

 

$

199,254

$

148,290

 

Tax equivalent adjustment

 

166

292

 

Net interest income

 

$

199,088

$

147,998

Net interest margin *

 

3.45

%

3.32

%

 

* Full taxable equivalent basis, using a statutory rate of 21% for 2020 and 2019.

 

Allowance for credit losses:

 

Year ended

 

December 31,

December 31,

 

2020

2019

 

(dollars in thousands)

 

Balance in the allowance for loan and lease losses at beginning of period (1)

 

$

12,875

$

8,653

 

Loans charged-off:

 

SBA non-real estate

 

1,350

1,362

Direct lease financing

 

2,243

528

Other consumer loans

 

1,103

Total

 

3,593

2,993

 

Recoveries:

 

SBA non-real estate

 

103

125

Direct lease financing

 

570

51

Other consumer loans

 

2

Total

 

673

178

Net charge-offs

 

2,920

2,815

Provision credited to allowance, excluding commitment provision

 

6,127

4,400

 

Balance in allowance for credit losses at end of period

 

$

16,082

$

10,238

Net charge-offs/average loans

 

0.07

%

0.12

%

Net charge-offs/average assets

 

0.05

%

0.06

%

 

(1) Excludes activity from assets held for sale from discontinued operations. The beginning balance for the 2020 activity differs from the December 31, 2019 balance as a result of the implementation of Current Expected Credit Loss accounting.

 

Loan portfolio:

 

December 31,

September 30,

June 30,

December 31,

 

2020

2020

2020

2019

 

(in thousands)

 

SBL non-real estate

 

$

255,318

$

293,488

$

293,692

84,579

SBL commercial mortgage

 

300,817

270,264

259,020

218,110

SBL construction

 

20,273

27,169

33,193

45,310

Small business loans *

 

576,408

590,921

585,905

347,999

Direct lease financing

 

462,182

430,675

422,505

434,460

SBLOC / IBLOC**

 

1,550,086

1,428,253

1,287,350

1,024,420

Advisor financing ***

 

48,282

26,600

15,529

Other specialty lending

 

2,179

2,194

2,706

3,055

Other consumer loans ****

 

4,247

3,809

4,003

4,554

 

2,643,384

2,482,452

2,317,998

1,814,488

Unamortized loan fees and costs

 

8,939

6,308

4,739

9,757

Total loans, net of unamortized fees and costs

 

$

2,652,323

$

2,488,760

$

2,322,737

1,824,245

 

 

Small business portfolio:

 

December 31,

September 30,

June 30,

December 31,

 

2020

2020

2020

2019

 

(in thousands)

 

SBL, including unamortized fees and costs

 

577,944

590,314

583,935

352,214

SBL, included in commercial loans held at fair value

 

243,562

250,958

225,401

220,358

Total small business loans

 

$

821,506

$

841,272

$

809,336

$

572,572

* The preceding table shows small business loans and small business loans held at fair value. The small business loans held at fair value are comprised of the government guaranteed portion of SBA 7a loans at the dates indicated (in thousands). A reduction in SBL non-real estate from $293.5 million to $255.3 million in the fourth quarter resulted from the commencement of U.S. treasury repayments of PPP loans which totaled $42.1 million in fourth quarter 2020.

** 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 $663,000 and $882,000 at December 31, 2020 and December 31, 2019, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

Small business loans as of December 31, 2020

Loan principal

(in millions)

U.S. government guaranteed portion of SBA loans (a)

$

338

Paycheck Protection Program Loans (PPP) (a)

168

Commercial mortgage SBA (b)

176

Construction SBA (c)

14

Unguaranteed portion of U.S. government guaranteed loans (d)

101

Non-SBA small business loans (e)

18

Total principal

$

815

Unamortized fees and costs

7

Total small business loans

$

822

(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 $14 million Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $3 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $101 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) The $18 million non-SBA loans are mainly comprised 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.

Additionally, the CARES Act of 2020 provided six months of principal and interest payments on 7a loans which generally ended in fourth quarter 2020 or in first quarter 2021. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for at least an additional three months of such payments on 7a loans, with up to eight months of payments on hotel and restaurant loans. Unlike the six months of CARES Act payments, these additional payments will be capped at $9,000 per month.

Small business loans by type as of December 31, 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

$

66

$

3

$

$

69

22%

Full-service restaurants

12

1

3

16

5%

Baked goods stores

4

12

16

5%

Child day care services

14

1

1

16

5%

Car washes

10

1

11

4%

Offices of lawyers

10

10

3%

Assisted living facilities for the elderly

1

8

9

3%

Limited-service restaurants

4

4

8

2%

Funeral homes and funeral services

8

8

3%

Fitness and recreational sports centers

5

1

2

8

3%

General warehousing and storage

7

7

2%

All other amusement and recreation industries

5

1

6

2%

Outpatient mental health and substance abuse centers

5

5

2%

Gasoline stations with convenience stores

5

5

2%

Caterers

4

4

1%

Offices of dentists

4

4

1%

Other warehousing and storage

3

3

1%

New car dealers

3

3

1%

Drinking places (alcoholic beverages)

2

1

3

1%

Other**

66

32

98

32%

Total

$

238

$

15

$

56

$

309

100%

* Of the SBL commercial mortgage and SBL construction loans, $63.3 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

**Loan types less than $2 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

State diversification as of December 31, 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

$

45

$

8

$

8

$

61

20%

California

37

1

5

43

14%

Pennsylvania

30

4

34

11%

Illinois

25

1

3

29

9%

North Carolina

22

1

3

26

9%

New York

10

3

5

18

6%

Texas

12

5

17

6%

Tennessee

11

1

12

4%

New Jersey

4

7

11

4%

Virginia

9

2

11

4%

Georgia

5

2

7

2%

Colorado

3

1

2

6

2%

Michigan

3

1

4

1%

Ohio

3

1

4

1%

Washington

3

3

1%

Other States

16

7

23

6%

Total

$

238

$

15

$

56

$

309

100%

* Of the SBL commercial mortgage and SBL construction loans, $63.3 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.

Top 10 loans as of December 31, 2020

Type*

State

SBL commercial
mortgage*

SBL construction*

Total

(in millions)

Lawyers office

CA

$

9

$

$

9

Hotel

FL

9

9

General warehouse and storage

PA

7

7

Hotel

NC

6

6

Assisted living facility for the elderly

FL

5

5

Outpatient mental health and substance abuse center

FL

5

5

Hotel

NC

5

5

Fitness and recreation sports center

PA

4

4

Hotel

PA

4

4

Hotel

TN

4

4

Total

$

53

$

5

$

58

* All of the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.

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

Type as of December 31, 2020

Type

# Loans

Balance

Origination date
LTV

Weighted average
minimum interest
rate

(dollars in millions)

Multifamily (apartments)

161

$

1,427

76

%

4.77

%

Hospitality (hotels and lodging)

11

68

65

%

5.75

%

Retail

8

52

70

%

4.62

%

Other

7

25

70

%

5.22

%

187

$

1,572

76

%

4.82

%

Fair value adjustment

(5

)

Total

$

1,567

 

State diversification as of December 31, 2020

15 largest loans (all multifamily) as of December 31, 2020

 

State

Balance

Origination
date LTV

State

Balance

 

Origination
date LTV

(in millions)

(in millions)

Texas

$

419

77%

North Carolina

$

44

 

78%

Georgia

215

77%

Texas

38

 

79%

Arizona

123

76%

Texas

36

 

80%

North Carolina

114

77%

Pennsylvania

32

 

77%

Ohio

56

69%

Texas

29

 

75%

Alabama

55

76%

Nevada

28

 

80%

Other states

590

73%

Texas

27

 

77%

Total

$

1,572

76%

Arizona

27

 

79%

Mississippi

26

 

79%

North Carolina

25

 

77%

Texas

25

 

77%

Texas

24

 

77%

Georgia

23

 

79%

California

23

 

65%

Alabama

21

 

77%

15 Largest loans

$

428

 

77%

Institutional banking loans outstanding at December 31, 2020

 

Type

 

Principal

% of total

 

(in millions)

Securities backed lines of credit (SBLOC)

 

$

1,113

70%

Insurance backed lines of credit (IBLOC)

 

437

27%

Advisor financing

 

48

3%

Total

 

$

1,598

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 percentage of principal to collateral.

Top 10 SBLOC loans at December 31, 2020

 

 

Principal
amount

% Principal to
collateral

 

(in millions)

 

$

49

37%

 

17

38%

 

14

31%

 

12

25%

 

12

30%

 

10

42%

 

10

21%

 

9

28%

 

9

35%

 

8

73%

Total

 

$

150

35%

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 August 14, 2020, all were rated Superior (A+ or better) by AM BEST.

Direct lease financing* by type as of December 31, 2020

 

 

Principal balance

% Total

 

(in millions)

Government agencies and public institutions**

 

$

84

18%

Construction

 

77

17%

Waste management and remediation services

 

64

14%

Real estate, rental and leasing

 

52

11%

Retail trade

 

41

9%

Health care and social assistance

 

27

6%

Transportation and Warehousing

 

24

5%

Professional, scientific, and technical services

 

20

4%

Manufacturing

 

16

4%

Wholesale trade

 

16

3%

Educational services

 

9

2%

Arts, entertainment, and recreation

 

6

1%

Other

 

26

6%

Total

 

$

462

100%

* Of the total $462 million of direct lease financing, $421 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 December 31, 2020

 

State

 

Principal balance

% Total

 

(in millions)

Florida

 

$

94

20%

California

 

36

8%

New Jersey

 

33

7%

New York

 

32

7%

Pennsylvania

 

30

6%

North Carolina

 

25

5%

Maryland

 

24

5%

Utah

 

23

5%

Washington

 

16

4%

Connecticut

 

15

3%

Texas

 

13

3%

Missouri

 

13

3%

Georgia

 

11

2%

Alabama

 

10

2%

Idaho

 

9

2%

Other states

 

78

18%

Total

 

$

462

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 December 31, 2020

 

The Bancorp, Inc.

 

9.20%

14.43%

14.84%

14.43%

The Bancorp Bank

 

9.11%

14.27%

14.68%

14.27%

"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

Year ended

 

December 31, (1)

December 31,

 

2020

2019

2020

2019

Selected operating ratios:

 

Return on average assets

 

1.57%

0.15%

1.34%

1.09%

Return on average equity

 

16.83%

1.52%

15.08%

11.57%

Net interest margin

 

3.58%

3.12%

3.45%

3.32%

 

(1) Annualized

 

Book value per share table:

December 31,

September 30,

June 30,

December 31,

2020

2020

2020

2019

Book value per share

$

10.10

$

9.71

$

9.28

$

8.52

Loan quality table:

December 31,

September 30,

June 30,

December 31,

2020

2020

2020

2019

Nonperforming loans to total loans

0.48%

0.49%

0.44%

0.50%

Nonperforming assets to total assets

0.20%

0.20%

0.17%

0.16%

Allowance for credit losses

0.61%

0.63%

0.63%

0.56%

Nonaccrual loans

$

12,227

$

12,275

$

9,957

$

5,796

Loans 90 days past due still accruing interest

497

24

352

3,264

Other real estate owned

Total nonperforming assets

$

12,724

$

12,299

$

10,309

$

9,060

Three months ended

December 31,

September 30,

June 30,

December 31,

2020

2020

2020

2019

(in thousands)

Gross dollar volume (GDV) (2):

Prepaid and debit card GDV

$

22,523,855

$

23,964,508

$

23,680,749

$

19,104,327

 

(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 December 31, 2020

(dollars in millions)

Balances

% Growth

Major business lines

Average
approximate
rates *

Balances **

Year over
year

Linked
quarter
annualized

Loans

Institutional banking ***

2.5%

$

1,598

56%

39%

Small Business Lending****

4.9%

822

14%

13%

Leasing

6.4%

462

6%

29%

Commercial real estate (non SBA at fair value)

4.8%

1,567

nm

nm

Weighted average yield

4.2%

$

4,449

Non-interest income

% Growth

Deposits

Current
quarter

Year over
year

Payment solutions (prepaid and debit card issuance)

 

0.1%

$

3,586

33%

nm

$

17.8

5%

Card payment and ACH processing

0.3%

$

1,037

41%

nm

$

1.8

nm

* Average rates are for the quarter ended December 31, 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. Loan growth percentages exclude short-term PPP 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

 

(116

)

December 31, 2020 Bancorp book value**

 

$

31

 

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 34% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of December 31, 2020.

Walnut Street portfolio composition as of December 31, 2020

 

Collateral type

 

% of Portfolio

Commercial real estate non-owner occupied - Retail

 

67.4

%

Construction and land

 

24.3

%

Other

 

8.3

%

Total

 

100.0

%

Cumulative analysis of marks on discontinued commercial loan principal as of December 31, 2020

 

 

Discontinued

Cumulative

% to original

 

loan principal

marks

principal

 

(dollars in millions)

Commercial loan discontinued principal before marks

 

$

64

Florida mall held in discontinued other real estate owned

 

42

(27

)

Mark at December 31, 2020

 

(5

)

Cumulative mark at December 31, 2020

 

$

106

$

(32

)

30

%

Analysis of discontinued commercial loan relationships as of December 31, 2020

 

 

Performing

Nonperforming

Total

Performing

Nonperforming

Total

 

loan principal

loan principal

loan principal

loan marks

loan marks

marks

 

(in millions)

5 loan relationships > $5 million

 

$

42

$

$

42

$

(3

)

$

$

(3

)

Loan relationships < $5 million

 

9

9

18

(1

)

(1

)

 

$

51

$

9

$

60

$

(3

)

$

(1

)

$

(4

)

Quarterly activity for commercial loan discontinued principal

 

 

Commercial

 

loan principal

 

(in millions)

 

Commercial loan discontinued principal September 30, 2020 before marks

 

$

66

Quarterly paydowns and other reductions

 

(2

)

Commercial loan discontinued principal December 31, 2020 before marks

 

$

64

Marks December 31, 2020

 

(4

)

Net commercial loan exposure December 31, 2020

 

$

60

Residential mortgages

 

32

Net loans

 

$

92

Florida mall in other real estate owned

 

15

7 properties in other real estate owned

 

7

Total discontinued assets at December 31, 2020

 

$

114

Discontinued commercial loan composition as of December 31, 2020

 

Collateral type

 

Unpaid principal
balance

Mark
December 31, 2020

Mark as % of portfolio

 

(in millions)

Commercial real estate - non-owner occupied:

 

Retail

 

$

4

$

(0.6

)

15

%

Office

 

2

%

Other

 

18

(0.1

)

1

%

Construction and land

 

11

(0.1

)

1

%

Commercial non-real estate and industrial

 

3

(0.1

)

3

%

1 to 4 family construction

 

9

(2.5

)

28

%

First mortgage residential non-owner occupied

 

8

%

Commercial real estate owner occupied:

 

Retail

 

7

(0.7

)

10

%

Residential junior mortgage

 

1

%

Other

 

1

%

Total

 

64

$

(4.1

)

6

%

Less: mark

 

(4

)

Net commercial loan exposure December 31, 2020

 

$

60

$

(4.1

)

Loan payment deferrals as of December 31, 2020

Cumulative

Total

Total

% of

months

loan

loan

loan balances

deferred (1)

balance deferrals

balances

with deferrals

(dollars in millions)

Commercial real estate loans held at fair value (excluding SBA loans shown below)

6.8

$

50

$

1,572

3.2

%

Securities backed lines of credit, insurance backed lines of credit & advisor financing

1,598

%

SBL commercial mortgage

5.6

67

419

16.0

%

SBL construction

20

%

SBL non-real estate and PPP

4.5

24

382

6.3

%

Direct lease financing

3.0

1

462

0.2

%

Discontinued operations

6.2

6

96

6.3

%

Other consumer loans and specialty lending

7

%

Total

5.8

$

148

$

4,556

3.2

%

(1) Weighted average of cumulative months deferred for loans currently on deferral

Note: At December 31, 2020, SBA 7a loans, included in the three SBL loan balance categories above, totaled $439.0 million of which $101.0 million was not U.S. government guaranteed. The CARES Act of 2020, or (“the CARES Act”), provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for an additional three months of payments on SBA 7a loans which begin on February 1, 2021. Accordingly, we expect deferrals to decrease when those payments are reinstituted at that date.

SBA 7a deferral distribution by type as of December 31, 2020

(comprised of the unguaranteed portion of SBA 7a loans)

Total

% Total

(in thousands)

Hotels*

$

4,924

34

%

Sports and recreation instruction

1,157

8

%

Offices of dentists

1,096

7

%

Car washes

861

6

%

Child and youth services

810

5

%

Full-service restaurants*

763

5

%

Limited-service restaurants*

512

3

%

Sporting and athletic goods manufacturing

476

3

%

All other miscellaneous food manufacturing

434

3

%

Coin-operated laundries and drycleaners

405

3

%

Administrative management and general management consulting services

333

2

%

Commercial printing (except screen and books)

332

2

%

Pet care (except veterinary) services

308

2

%

Funeral homes and funeral services

308

2

%

Industrial machinery and equipment merchant wholesalers

302

2

%

Other

1,755

13

%

Total

$

14,776

100

%

* At December 31, 2020, SBA 7a loans, included in SBL, totaled $439.0 million of which $101.0 million was not U.S. government guaranteed. The CARES Act of 2020, or (“the CARES Act”), provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for an additional three months of payments on SBA 7a loans which begin on February 1, 2021. Accordingly, we expect deferrals to decrease when those payments are reinstituted at that date.

Contacts:

The Bancorp, Inc. Contact
Andres Viroslav
Director, Investor Relations
215-861-7990
aviroslav@thebancorp.com

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