WILMINGTON, Del.--(BUSINESS WIRE)--The Bancorp, Inc. ("The Bancorp" or "the Company" or "we" or "our") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2024.
Recent Developments
- The Bancorp has increased its share repurchase authorization for the second quarter of 2024 from $50.0 million to $100.0 million.
- In April 2024, the Company began purchasing additional fixed rate agency 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 would result should the Federal Reserve increase rates. Through April 26, 2024, the Company purchased approximately $900 million of such securities. 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.
- We are pleased to announce Block, Inc. ("Block") as a new partner to our fintech solutions ecosystem. The addition of this new relationship as well as the continued organic growth of the current portfolio should result in meaningful increases to the ACH, card and other processing fees line item.
Highlights
- The Bancorp reported net income of $56.4 million, or $1.06 per diluted share ("EPS"), for the quarter ended March 31, 2024, compared to net income of $49.1 million, or $0.88 per diluted share, for the quarter ended March 31, 2023, or an EPS increase of 20%. While net income increased 15% between these periods, outstanding shares were decreased as a result of common stock share repurchases which have been significantly increased in 2024.
- Return on assets and equity for the quarter ended March 31, 2024, amounted to 3.0% and 28%, respectively, compared to 2.6% and 28%, respectively, for the quarter ended March 31, 2023 (all percentages "annualized").
- Net interest income increased 10% to $94.4 million for the quarter ended March 31, 2024, compared to $85.8 million for the quarter ended March 31, 2023. Net interest income increases reflected the impact of Federal Reserve rate increases on The Bancorp's variable rate loans and securities.
- Net interest margin amounted to 5.15% for the quarter ended March 31, 2024, compared to 4.67% for the quarter ended March 31, 2023, and 5.26% for the quarter ended December 31, 2023. As noted above, the Company has begun purchasing fixed rate securities to reduce margin exposure to lower rate environments.
- Loans, net of deferred fees and costs were $5.46 billion at March 31, 2024, compared to $5.36 billion at December 31, 2023 and $5.35 billion at March 31, 2023. Those changes reflected an increase of 2% quarter over linked quarter and an increase of 2% year over year.
- Gross dollar volume ("GDV"), representing the total amounts spent on prepaid and debit cards, increased $3.93 billion, or 12%, to $37.94 billion for the quarter ended March 31, 2024, compared to the quarter ended March 31, 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 7% to $27.3 million for the first quarter of 2024 compared to the first quarter of 2023. After adjusting first quarter 2023 for $600,000 of fees related to a prior period and a $1.4 million termination fee from a client which formed its own bank, those fees increased 16%.
- Small business loans ("SBL"), including those held at fair value, amounted to $925.3 million at March 31, 2024, or 14% higher year over year, and 3% quarter over linked quarter, excluding the impact of $28.7 million of loans with related secured borrowings.
- Direct lease financing balances increased 8% year over year to $702.5 million at March 31, 2024, and 2% over December 31, 2023.
- At March 31, 2024, real estate bridge loans of $2.10 billion had grown 5% compared to the $2.00 billion balance at December 31, 2023, and 20% compared to the March 31, 2023 balance of $1.75 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 21% year over year and decreased 4% quarter over linked quarter to $1.78 billion at March 31, 2024.
- The average interest rate on $6.65 billion of average deposits and interest-bearing liabilities during the first quarter of 2024 was 2.49%. Average deposits of $6.50 billion for the first quarter of 2024 reflected a decrease of 2% from the $6.62 billion of average deposits for the quarter ended March 31, 2023. The decreases reflected the planned exit of $200 million of higher cost funds on July 1, 2023 and other planned exits of higher cost funds throughout the year.
- As of March 31, 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 10.87%, 15.76%, 16.35% and 15.76%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly-owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.
- Book value per common share at March 31, 2024 was $15.63 compared to $13.11 per common share at March 31, 2023, an increase of 19%.
- The Bancorp repurchased 1,262,212 shares of its common stock at an average cost of $39.61 per share during the quarter ended March 31, 2024.
- 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 agencies totaling approximately $2.7 billion as of March 31, 2024, as well as access to other forms of liquidity.
- 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 $2.1 billion apartment bridge lending portfolio 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.
- 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 collateral for loans that have been classified as substandard. Recent third party appraisals of those loans reflect a weighted average "as is" loan to value ratio ("LTV") of 79% and an "as stabilized" LTV of 76%. Accordingly, even with a higher interest rate environment and other stresses, LTVs for these loans have been significantly sustained and continue to provide protection against potential loss.
- 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.
CEO and President Damian Kozlowski commented, "We had another quarter of continued progress and a strong start to 2024 with earnings of $1.06 a share and an ROE of 28%," said Damian Kozlowski CEO and President of The Bancorp. "We expect continued increases in volumes and profitability throughout 2024 and beyond as we continue to invest and build our capabilities for the future, while adding new business partners and expanding our current client relationships. We are also reaffirming our 2024 guidance of $4.25 a share without the impact of $50 million per quarter of share buybacks and the additional $50 million buyback in the second quarter."
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, April 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.800.267.6316, 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, May 3, 2024 by dialing 1.800.938.2241, access code BANCORP.
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. These statements, including, without limitation, statements regarding our annual fiscal 2024 results, profitability, and increased volumes, relate to our current assumptions, projections, and expectations about our business and future events, including 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 the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and other documents that the Company files from time to time with the Securities and Exchange Commission. 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.
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Three months ended | Year ended | |||||||
March 31, | December 31, | |||||||
Consolidated condensed income statements | 2024 | 2023 | 2023 | |||||
(Dollars in thousands, except per share and share data) | ||||||||
Net interest income | $ | 94,418 | $ | 85,816 | $ | 354,052 | ||
Provision for credit losses on loans | 2,169 | 1,903 | 8,330 | |||||
Provision for credit loss on security | - | - | 10,000 | |||||
Non-interest income | ||||||||
ACH, card and other payment processing fees | 2,964 | 2,171 | 9,822 | |||||
Prepaid, debit card and related fees | 24,286 | 23,323 | 89,417 | |||||
Net realized and unrealized gains on commercial | ||||||||
loans, at fair value | 1,096 | 1,725 | 3,745 | |||||
Leasing related income | 388 | 1,490 | 6,324 | |||||
Other non-interest income | 648 | 280 | 2,786 | |||||
Total non-interest income | 29,382 | 28,989 | 112,094 | |||||
Non-interest expense | ||||||||
Salaries and employee benefits | 30,280 | 29,785 | 121,055 | |||||
Data processing expense | 1,421 | 1,321 | 5,447 | |||||
Legal expense | 821 | 958 | 3,850 | |||||
FDIC insurance | 845 | 955 | 2,957 | |||||
Software | 4,489 | 4,237 | 17,349 | |||||
Other non-interest expense | 8,856 | 10,774 | 40,384 | |||||
Total non-interest expense | 46,712 | 48,030 | 191,042 | |||||
Income before income taxes | 74,919 | 64,872 | 256,774 | |||||
Income tax expense | 18,490 | 15,750 | 64,478 | |||||
Net income | 56,429 | 49,122 | 192,296 | |||||
Net income per share - basic | $ | 1.07 | $ | 0.89 | $ | 3.52 | ||
Net income per share - diluted | $ | 1.06 | $ | 0.88 | $ | 3.49 | ||
Weighted average shares - basic | 52,747,140 | 55,452,815 | 54,506,065 | |||||
Weighted average shares - diluted | 53,326,588 | 56,048,142 | 55,053,497 | |||||
Condensed consolidated balance sheets | March 31, | December 31, | September 30, | March 31, | |||||||||||
2024 (unaudited) | 2023 | 2023 (unaudited) | 2023 (unaudited) | ||||||||||||
(Dollars in thousands, except share data) | |||||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | |||||||||||||||
Cash and due from banks | $ | 9,105 | $ | 4,820 | $ | 4,881 | $ | 13,736 | |||||||
Interest earning deposits at Federal Reserve Bank | 1,241,363 | 1,033,270 | 898,533 | 773,446 | |||||||||||
Total cash and cash equivalents | 1,250,468 | 1,038,090 | 903,414 | 787,182 | |||||||||||
Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss | 718,247 | 747,534 | 756,636 | 787,429 | |||||||||||
Commercial loans, at fair value | 282,998 | 332,766 | 379,603 | 493,334 | |||||||||||
Loans, net of deferred fees and costs | 5,459,344 | 5,361,139 | 5,198,972 | 5,354,347 | |||||||||||
Allowance for credit losses | (28,741 | ) | (27,378 | ) | (24,145 | ) | (23,794 | ) | |||||||
Loans, net | 5,430,603 | 5,333,761 | 5,174,827 | 5,330,553 | |||||||||||
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock | 15,642 | 15,591 | 20,157 | 12,629 | |||||||||||
Premises and equipment, net | 27,482 | 27,474 | 28,978 | 21,319 | |||||||||||
Accrued interest receivable | 37,861 | 37,534 | 34,159 | 33,729 | |||||||||||
Intangible assets, net | 1,552 | 1,651 | 1,751 | 1,950 | |||||||||||
Other real estate owned | 19,559 | 16,949 | 18,756 | 21,117 | |||||||||||
Deferred tax asset, net | 21,764 | 21,219 | 20,379 | 18,290 | |||||||||||
Other assets | 109,680 | 133,126 | 127,107 | 99,427 | |||||||||||
Total assets | $ | 7,915,856 | $ | 7,705,695 | $ | 7,465,767 | $ | 7,606,959 | |||||||
Liabilities: | |||||||||||||||
Deposits | |||||||||||||||
Demand and interest checking | $ | 6,828,159 | $ | 6,630,251 | $ | 6,455,043 | $ | 6,607,767 | |||||||
Savings and money market | 62,597 | 50,659 | 49,428 | 96,890 | |||||||||||
Total deposits | 6,890,756 | 6,680,910 | 6,504,471 | 6,704,657 | |||||||||||
Securities sold under agreements to repurchase | - | 42 | 42 | 42 | |||||||||||
Senior debt | 95,948 | 95,859 | 95,771 | 99,142 | |||||||||||
Subordinated debenture | 13,401 | 13,401 | 13,401 | 13,401 | |||||||||||
Other long-term borrowings | 38,407 | 38,561 | 9,861 | 9,972 | |||||||||||
Other liabilities | 60,579 | 69,641 | 68,533 | 54,597 | |||||||||||
Total liabilities | $ | 7,099,091 | $ | 6,898,414 | $ | 6,692,079 | $ | 6,881,811 | |||||||
Shareholders' equity: | |||||||||||||||
Common stock - authorized, 75,000,000 shares of $1.00 par value; 52,253,037 and 55,329,629 shares issued and outstanding at March 31, 2024 and 2023, respectively | 52,253 | 53,203 | 53,867 | 55,330 | |||||||||||
Additional paid-in capital | 166,335 | 212,431 | 234,320 | 277,814 | |||||||||||
Retained earnings | 618,044 | 561,615 | 517,587 | 418,441 | |||||||||||
Accumulated other comprehensive loss | (19,867 | ) | (19,968 | ) | (32,086 | ) | (26,437 | ) | |||||||
Total shareholders' equity | 816,765 | 807,281 | 773,688 | 725,148 | |||||||||||
Total liabilities and shareholders' equity | $ | 7,915,856 | $ | 7,705,695 | $ | 7,465,767 | $ | 7,606,959 | |||||||
Average balance sheet and net interest income | Three months ended March 31, 2024 | Three months ended March 31, 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) | $ | 5,717,262 | $ | 114,160 | 7.99 | % | $ | 5,987,179 | $ | 106,204 | 7.10 | % | ||||||||
Leases-bank qualified(2) | 4,746 | 116 | 9.78 | % | 3,361 | 69 | 8.21 | % | ||||||||||||
Investment securities-taxable | 733,599 | 9,634 | 5.25 | % | 774,055 | 9,300 | 4.81 | % | ||||||||||||
Investment securities-nontaxable(2) | 2,895 | 50 | 6.91 | % | 3,343 | 41 | 4.91 | % | ||||||||||||
Interest earning deposits at Federal Reserve Bank | 874,073 | 11,884 | 5.44 | % | 580,058 | 6,585 | 4.54 | % | ||||||||||||
Net interest earning assets | 7,332,575 | 135,844 | 7.41 | % | 7,347,996 | 122,199 | 6.65 | % | ||||||||||||
Allowance for credit losses | (27,158 | ) | (22,533 | ) | ||||||||||||||||
Other assets | 331,756 | 237,721 | ||||||||||||||||||
$ | 7,637,173 | $ | 7,563,184 | |||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand and interest checking | $ | 6,453,866 | $ | 38,714 | 2.40 | % | $ | 6,406,834 | $ | 32,383 | 2.02 | % | ||||||||
Savings and money market | 50,970 | 447 | 3.51 | % | 132,279 | 1,219 | 3.69 | % | ||||||||||||
Time deposits | - | - | - | 84,333 | 858 | 4.07 | % | |||||||||||||
Total deposits | 6,504,836 | 39,161 | 2.41 | % | 6,623,446 | 34,460 | 2.08 | % | ||||||||||||
Short-term borrowings | 1,373 | 19 | 5.54 | % | 20,500 | 234 | 4.57 | % | ||||||||||||
Repurchase agreements | 13 | - | - | 42 | - | - | ||||||||||||||
Long-term borrowings | 38,517 | 686 | 7.12 | % | 9,998 | 126 | 5.04 | % | ||||||||||||
Subordinated debentures | 13,401 | 292 | 8.72 | % | 13,401 | 261 | 7.79 | % | ||||||||||||
Senior debt | 95,894 | 1,233 | 5.14 | % | 99,092 | 1,279 | 5.16 | % | ||||||||||||
Total deposits and liabilities | 6,654,034 | 41,391 | 2.49 | % | 6,766,479 | 36,360 | 2.15 | % | ||||||||||||
Other liabilities | 171,116 | 87,116 | ||||||||||||||||||
Total liabilities | 6,825,150 | 6,853,595 | ||||||||||||||||||
Shareholders' equity | 812,023 | 709,589 | ||||||||||||||||||
$ | 7,637,173 | $ | 7,563,184 | |||||||||||||||||
Net interest income on tax equivalent basis(2) | $ | 94,453 | $ | 85,839 | ||||||||||||||||
Tax equivalent adjustment | 35 | 23 | ||||||||||||||||||
Net interest income | $ | 94,418 | $ | 85,816 | ||||||||||||||||
Net interest margin(2) | 5.15 | % | 4.67 | % | ||||||||||||||||
(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 | Three months ended | Year ended | |||||||||
March 31, | March 31, | 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 | 111 | 214 | 871 | ||||||||
SBA commercial mortgage | - | - | 76 | ||||||||
Direct lease financing | 919 | 905 | 3,666 | ||||||||
IBLOC | - | - | 24 | ||||||||
Consumer - other | 6 | 3 | 3 | ||||||||
Total | 1,036 | 1,122 | 4,640 | ||||||||
Recoveries: | |||||||||||
SBA non-real estate | 4 | 202 | 475 | ||||||||
SBA commercial mortgage | - | 75 | 75 | ||||||||
Direct lease financing | 32 | 67 | 330 | ||||||||
Consumer - home equity | - | - | 299 | ||||||||
Total | 36 | 344 | 1,179 | ||||||||
Net charge-offs | 1,000 | 778 | 3,461 | ||||||||
Provision for credit losses, excluding commitment provision | 2,363 | 2,198 | 8,465 | ||||||||
Balance in allowance for credit losses at end of period | $ | 28,741 | $ | 23,794 | $ | 27,378 | |||||
Net charge-offs/average loans | 0.02 | % | 0.01 | % | 0.07 | % | |||||
Net charge-offs/average assets | 0.01 | % | 0.01 | % | 0.05 | % | |||||
Loan portfolio | March 31, | December 31, | September 30, | March 31, | |||||||
2024 (unaudited) | 2023 | 2023 (unaudited) | 2023 (unaudited) | ||||||||
(Dollars in thousands) | |||||||||||
SBL non-real estate | $ | 140,956 | $ | 137,752 | $ | 130,579 | $ | 114,334 | |||
SBL commercial mortgage | 637,926 | 606,986 | 547,107 | 492,798 | |||||||
SBL construction | 27,290 | 22,627 | 19,204 | 33,116 | |||||||
Small business loans | 806,172 | 767,365 | 696,890 | 640,248 | |||||||
Direct lease financing | 702,512 | 685,657 | 670,208 | 652,541 | |||||||
SBLOC / IBLOC(1) | 1,550,313 | 1,627,285 | 1,720,513 | 2,053,450 | |||||||
Advisor financing(2) | 232,206 | 221,612 | 199,442 | 189,425 | |||||||
Real estate bridge loans | 2,101,896 | 1,999,782 | 1,848,224 | 1,752,322 | |||||||
Other loans(3) | 56,163 | 50,638 | 55,800 | 60,210 | |||||||
5,449,262 | 5,352,339 | 5,191,077 | 5,348,196 | ||||||||
Unamortized loan fees and costs | 10,082 | 8,800 | 7,895 | 6,151 | |||||||
Total loans, including unamortized fees and costs | $ | 5,459,344 | $ | 5,361,139 | $ | 5,198,972 | $ | 5,354,347 | |||
Small business portfolio | March 31, | December 31, | September 30, | March 31, | |||||||
2024 (unaudited) | 2023 | 2023 (unaudited) | 2023 (unaudited) | ||||||||
(Dollars in thousands) | |||||||||||
SBL, including unamortized fees and costs | $ | 816,151 | $ | 776,867 | $ | 705,790 | $ | 648,858 | |||
SBL, included in loans, at fair value | 109,131 | 119,287 | 126,543 | 140,909 | |||||||
Total small business loans(4) | $ | 925,282 | $ | 896,154 | $ | 832,333 | $ | 789,767 | |||
(1)SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At March 31, 2024 and December 31, 2023, IBLOC loans amounted to $595.6 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)Includes demand deposit overdrafts reclassified as loan balances totaling $239,000 and $1.7 million at March 31, 2024 and December 31, 2023, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and are immaterial. |
(4)The SBLs held at fair value are comprised of the government guaranteed portion of 7(a) Program loans at the dates indicated. |
Small business loans as of March 31, 2024 | |||
Loan principal | |||
(Dollars in millions) | |||
U.S. government guaranteed portion of SBA loans(1) | $ | 395 | |
PPP loans(1) | 2 | ||
Commercial mortgage SBA(2) | 311 | ||
Construction SBA(3) | 14 | ||
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4) | 114 | ||
Non-SBA SBLs | 49 | ||
Other(5) | 29 | ||
Total principal | $ | 914 | |
Unamortized fees and costs | 11 | ||
Total SBLs | $ | 925 | |
(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 $6.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $8.0 million in SBA interim loans with an approved SBA post-construction full takeout/payoff. |
(4)Includes the unguaranteed portion of 7(a) Program loans which are 70% or more guaranteed by the U.S. government. SBA 7(a) Program loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7(a) Program loans and 504 Program loans require the personal guaranty of all 20% or greater owners. |
(5)Comprised of $29.0 million of loans sold that do not qualify for true sale accounting. |
Small business loans by type as of March 31, 2024
| ||||||||||||||||
SBL commercial mortgage(1) | SBL construction(1) | SBL non-real estate | Total | % Total | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Hotels and motels | $ | 75 | $ | - | $ | - | $ | 75 | 15 | % | ||||||
Funeral homes and funeral services | 40 | - | - | 40 | 8 | % | ||||||||||
Full-service restaurants | 24 | 7 | 2 | 33 | 7 | % | ||||||||||
Car washes | 21 | - | - | 21 | 4 | % | ||||||||||
Child day care services | 17 | 1 | 2 | 20 | 4 | % | ||||||||||
General line grocery merchant wholesalers | 17 | - | - | 17 | 4 | % | ||||||||||
Homes for the elderly | 16 | - | - | 16 | 3 | % | ||||||||||
Outpatient mental health and substance abuse centers | 15 | - | - | 15 | 3 | % | ||||||||||
Gasoline stations with convenience stores | 12 | - | - | 12 | 2 | % | ||||||||||
Fitness and recreational sports centers | 8 | - | 2 | 10 | 2 | % | ||||||||||
Nursing care facilities | 10 | - | - | 10 | 2 | % | ||||||||||
Offices of lawyers | 9 | - | - | 9 | 2 | % | ||||||||||
Limited-service restaurants | 5 | 1 | 3 | 9 | 2 | % | ||||||||||
All other specialty trade contractors | 7 | - | - | 7 | 1 | % | ||||||||||
Caterers | 7 | - | - | 7 | 1 | % | ||||||||||
General warehousing and storage | 6 | - | - | 6 | 1 | % | ||||||||||
Plumbing, heating, and air-conditioning | 5 | - | 1 | 6 | 1 | % | ||||||||||
Other accounting services | 5 | - | - | 5 | 1 | % | ||||||||||
Other miscellaneous durable goods merchant | 5 | - | - | 5 | 1 | % | ||||||||||
Packaged frozen food merchant wholesalers | 5 | - | - | 5 | 1 | % | ||||||||||
Other technical and trade schools | 5 | - | - | 5 | 1 | % | ||||||||||
All other amusement and recreation | 4 | - | - | 4 | 1 | % | ||||||||||
Furniture merchant wholesalers | 4 | - | - | 4 | 1 | % | ||||||||||
Offices of Dentists | 3 | - | - | 3 | 1 | % | ||||||||||
Other(2) | 109 | 7 | 28 | 144 | 31 | % | ||||||||||
Total | $ | 434 | $ | 16 | $ | 38 | $ | 488 | 100 | % | ||||||
(1)Of the SBL commercial mortgage and SBL construction loans, $125.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs. SBL Commercial excludes $29.0 million of loans sold that do not qualify for true sale accounting. |
(2)Loan types of less than $3.5 million are spread over approximately one hundred different business types. |
State diversification as of March 31, 2024
| ||||||||||||||||
SBL commercial mortgage(1) | SBL construction(1) | SBL non-real estate | Total | % Total | ||||||||||||
(Dollars in millions) | ||||||||||||||||
California | $ | 103 | $ | 4 | $ | 4 | $ | 111 | 23 | % | ||||||
Florida | 73 | 2 | 3 | 78 | 16 | % | ||||||||||
North Carolina | 37 | 1 | 2 | 40 | 8 | % | ||||||||||
Pennsylvania | 35 | - | 1 | 36 | 7 | % | ||||||||||
New York | 28 | 2 | 2 | 32 | 6 | % | ||||||||||
Texas | 19 | 1 | 6 | 26 | 5 | % | ||||||||||
New Jersey | 17 | 3 | 3 | 23 | 5 | % | ||||||||||
Georgia | 21 | 1 | 2 | 24 | 5 | % | ||||||||||
Other States | 101 | 2 | 15 | 118 | 25 | % | ||||||||||
Total | $ | 434 | $ | 16 | $ | 38 | $ | 488 | 100 | % | ||||||
(1)Of the SBL commercial mortgage and SBL construction loans, $125.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs. SBL Commercial excludes $29.0 million of loans that do not qualify for true sale accounting. |
Top 10 loans as of March 31, 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 March 31, 2024 | |||||||||||||
Type | # Loans | Balance | Weighted average origination date LTV | Weighted average interest rate | |||||||||
(Dollars in millions) | |||||||||||||
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)(1) | 156 | $ | 2,102 | 70 | % | 9.27 | % | ||||||
Non-SBA commercial real estate loans, at fair value: | |||||||||||||
Multi-family (apartment bridge loans)(1) | 8 | $ | 129 | 77 | % | 9.15 | % | ||||||
Hospitality (hotels and lodging) | 2 | 27 | 65 | % | 9.82 | % | |||||||
Retail | 2 | 12 | 72 | % | 8.19 | % | |||||||
Other | 2 | 9 | 73 | % | 4.97 | % | |||||||
14 | 177 | 74 | % | 8.97 | % | ||||||||
Fair value adjustment | (3 | ) | |||||||||||
Total non-SBA commercial real estate loans, at fair value | 174 | ||||||||||||
Total commercial real estate loans | $ | 2,276 | 70 | % | 9.26 | % | |||||||
(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 March 31, 2024 | 15 largest loans as of March 31, 2024 | ||||||||||||||||
State | Balance | Origination date LTV | State | Balance | Origination date LTV | ||||||||||||
(Dollars in millions) | (Dollars in millions) | ||||||||||||||||
Texas | $ | 827 | 72 | % | Texas | $ | 47 | 72 | % | ||||||||
Georgia | 251 | 69 | % | Texas | 46 | 75 | % | ||||||||||
Florida | 244 | 69 | % | Tennessee | 40 | 72 | % | ||||||||||
Michigan | 131 | 68 | % | Texas | 39 | 75 | % | ||||||||||
Indiana | 105 | 71 | % | Michigan | 37 | 62 | % | ||||||||||
Ohio | 73 | 67 | % | Texas | 37 | 80 | % | ||||||||||
New Jersey | 69 | 68 | % | Texas | 36 | 67 | % | ||||||||||
Other States each <$60 million | 576 | 71 | % | Florida | 35 | 72 | % | ||||||||||
Total | $ | 2,276 | 70 | % | Indiana | 34 | 76 | % | |||||||||
Texas | 33 | 62 | % | ||||||||||||||
Michigan | 33 | 79 | % | ||||||||||||||
Oklahoma | 31 | 78 | % | ||||||||||||||
Texas | 31 | 77 | % | ||||||||||||||
New Jersey | 31 | 62 | % | ||||||||||||||
Michigan | 30 | 66 | % | ||||||||||||||
15 largest commercial real estate loans | $ | 540 | 72 | % | |||||||||||||
Institutional banking loans outstanding at March 31, 2024 | |||||
Type | Principal | % of total | |||
(Dollars in millions) | |||||
SBLOC | $ | 955 | 54 | % | |
IBLOC | 595 | 33 | % | ||
Advisor financing | 232 | 13 | % | ||
Total | $ | 1,782 | 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 March 31, 2024 | |||||
Principal amount | % Principal to collateral | ||||
(Dollars in millions) | |||||
$ | 11 | 18 | % | ||
9 | 43 | % | |||
9 | 38 | % | |||
8 | 70 | % | |||
8 | 67 | % | |||
8 | 24 | % | |||
7 | 74 | % | |||
7 | 22 | % | |||
7 | 42 | % | |||
7 | 32 | % | |||
Total and weighted average | $ | 81 | 42 | % | |
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 March 31, 2024, all were rated A- (Excellent) or better by AM BEST.
Direct lease financing by type as of March 31, 2024 | |||||
Principal balance(1) | % Total | ||||
(Dollars in millions) | |||||
Government agencies and public institutions(2) | $ | 122 | 17 | % | |
Construction | 114 | 16 | % | ||
Waste management and remediation services | 108 | 15 | % | ||
Real estate and rental and leasing | 70 | 10 | % | ||
Health care and social assistance | 29 | 4 | % | ||
General freight trucking | 25 | 4 | % | ||
Professional, scientific, and technical services | 25 | 4 | % | ||
Other services (except public administration) | 24 | 3 | % | ||
Wholesale trade | 19 | 3 | % | ||
Transportation and warehousing | 14 | 2 | % | ||
Finance and insurance | 11 | 2 | % | ||
Food manufacturing | 9 | 1 | % | ||
Other | 133 | 19 | % | ||
Total | $ | 703 | 100 | % | |
(1)Of the total $703.0 million of direct lease financing, $631.0 million consisted of vehicle leases with the remaining balance consisting of equipment leases. |
(2)Includes public universities and school districts. |
Direct lease financing by state as of March 31, 2024 | |||||
State | Principal balance | % Total | |||
(Dollars in millions) | |||||
Florida | $ | 101 | 14 | % | |
Utah | 68 | 10 | % | ||
New York | 61 | 9 | % | ||
California | 55 | 8 | % | ||
Pennsylvania | 41 | 6 | % | ||
New Jersey | 40 | 6 | % | ||
North Carolina | 36 | 5 | % | ||
Connecticut | 34 | 5 | % | ||
Maryland | 33 | 5 | % | ||
Texas | 29 | 4 | % | ||
Idaho | 18 | 3 | % | ||
Washington | 16 | 2 | % | ||
Georgia | 15 | 2 | % | ||
Ohio | 12 | 2 | % | ||
Alabama | 12 | 2 | % | ||
Other States | 132 | 17 | % | ||
Total | $ | 703 | 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 March 31, 2024 | |||||||||||
The Bancorp, Inc. | 10.87 | % | 15.76 | % | 16.35 | % | 15.76 | % | |||
The Bancorp Bank, National Association | 12.05 | % | 17.43 | % | 18.02 | % | 17.43 | % | |||
"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 | Year ended | ||||||||||
March 31, | December 31, | ||||||||||
2024 | 2023 | 2023 | |||||||||
Selected operating ratios | |||||||||||
Return on average assets(1) | 2.97 | % | 2.63 | % | 2.59 | % | |||||
Return on average equity(1) | 27.95 | % | 28.07 | % | 25.62 | % | |||||
Net interest margin | 5.15 | % | 4.67 | % | 4.95 | % | |||||
(1)Annualized |
Book value per share table | March 31, | December 31, | September 30, | March 31, | |||||||
2024 | 2023 | 2023 | 2023 | ||||||||
Book value per share | $ | 15.63 | $ | 15.17 | $ | 14.36 | $ | 13.11 | |||
Loan quality table | March 31, | December 31, | September 30, | March 31, | |||||||||||
2024 | 2023 | 2023 | 2023 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Nonperforming loans to total loans(1) | 1.05 | % | 0.25 | % | 0.30 | % | 0.26 | % | |||||||
Nonperforming assets to total assets(1) | 0.97 | % | 0.39 | % | 0.46 | % | 0.46 | % | |||||||
Allowance for credit losses to total loans | 0.53 | % | 0.51 | % | 0.46 | % | 0.44 | % | |||||||
| |||||||||||||||
Nonaccrual loans(1) | $ | 53,024 | $ | 11,525 | $ | 15,100 | $ | 12,938 | |||||||
Loans 90 days past due still accruing interest | 4,108 | 1,744 | 677 | 873 | |||||||||||
Other real estate owned | 19,559 | 16,949 | 18,756 | 21,117 | |||||||||||
Total nonperforming assets(1) | $ | 76,691 | $ | 30,218 | $ | 34,533 | $ | 34,928 | |||||||
(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. |
Gross dollar volume (GDV) (1) | Three months ended | |||||||||||
March 31, | December 31, | September 30, | March 31, | |||||||||
2024 | 2023 | 2023 | 2023 | |||||||||
(Dollars in thousands) | ||||||||||||
Prepaid and debit card GDV | $ | 37,943,338 | $ | 33,292,350 | $ | 32,972,249 | $ | 34,011,792 | ||||
(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 March 31, 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 | % | $ | 1,782 | (21 | %) | (14 | %) | |||||||||||
Small business lending(4) | 7.1 | % | 925 | 14 | % | 13 | % | ||||||||||||
Leasing | 8.0 | % | 703 | 8 | % | 10 | % | ||||||||||||
Commercial real estate (non-SBA loans, at fair value) | 9.0 | % | 174 | nm | nm | ||||||||||||||
Real estate bridge loans (recorded at book value) | 9.2 | % | 2,102 | 20 | % | 20 | % | ||||||||||||
Weighted average yield | 8.0 | % | $ | 5,686 | Non-interest income(5) | ||||||||||||||
% Growth | |||||||||||||||||||
Deposits: Fintech solutions group | Current quarter | Year over year | |||||||||||||||||
Prepaid and debit card issuance, and other payments | 2.5 | % | $ | 6,179 | 4 | % | nm | $ | 27.3 | 16 | % | ||||||||
(1)Average rates are for the three months ended March 31, 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 $29.0 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.
March 31, 2024 | ||
(Dollars in thousands) | ||
Federal Reserve Bank | $ | 1,945,876 |
Federal Home Loan Bank | 731,500 | |
Total lines of credit available | $ | 2,677,376 |
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.
March 31, 2024 | |||
Insured | 92 | % | |
Low balance accounts | 4 | % | |
Other uninsured | 4 | % | |
Total deposits | 100 | % | |
Calculation of efficiency ratio(1) | |||||||||||
Three months ended | Year ended | ||||||||||
March 31, | March 31, | December 31, | |||||||||
2024 | 2023 | 2023 | |||||||||
(Dollars in thousands) | |||||||||||
Net interest income | $ | 94,418 | $ | 85,816 | $ | 354,052 | |||||
Non-interest income | 29,382 | 28,989 | 112,094 | ||||||||
Total revenue | $ | 123,800 | $ | 114,805 | $ | 466,146 | |||||
Non-interest expense | $ | 46,712 | $ | 48,030 | $ | 191,042 | |||||
Efficiency ratio | 38 | % | 42 | % | 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. |
Contacts
The Bancorp, Inc.
Andres Viroslav
Director, Investor Relations
215-861-7990
andres.viroslav@thebancorp.com
