The Bancorp, Inc. (“The Bancorp” or the “Company” or “we” or
“our”) (NASDAQ: TBBK), a financial holding company, today reported
its financial results for the third quarter of 2024.
Net income for the third quarter of 2024 amounted to $51.5
million.
Factors Helpful to Understand Third Quarter Net
Income
- As explained under recent developments below, a new CECL factor
was added which increased the provision for credit losses and
resulted in an after-tax reduction in net income of $1.5
million.
- Prior period interest income reversals on real estate bridge
loans transferred to nonaccrual or modified, resulted in an
after-tax reduction in net income of $1.2 million.
- A loss resulting from a transaction processing delay increased
non-interest expense and resulted in an after-tax reduction in net
income of approximately $900,000.
Recent Developments
As noted in our second quarter press release, the Company
entered into a purchase and sale agreement for an apartment
property acquired by its wholly-owned subsidiary The Bancorp Bank,
National Association, (the “Bank”) through foreclosure in
connection with a real estate bridge lending (“REBL”) loan. At
September 30, 2024, the related $40.3 million balance, comprised
the majority of our other real estate owned. Subsequent to the
previously reported $125,000 earnest money deposit in July 2024,
the purchaser has made additional earnest money deposits of
$250,000 bringing the total of such deposits to $375,000 in 2024.
Additional required deposits are 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.
While real estate bridge loans classified as either special
mention or substandard increased during the quarter, we believe
that such classifications are at or near their peak. That
conclusion is based, at least in part, on an independent review of
a significant portion of the REBL portfolio performed during the
third quarter by a firm specializing in such analysis.
Additionally, the 50 basis point Federal Reserve rate reduction may
provide immediate cash flow benefits to borrowers, while the
further declining forward yield curve should support further
liquidity benefits, as fixed rates decline. Moreover, respective
weighted average “as is” and “as stabilized” loan-to-values ratios
(“LTVs”) of 77% and 68%, respectively, based upon appraisals in the
past twelve months, continue to provide significant protection
against loss. Underlying property values as supported by such
independent LTVs, continue to facilitate the recapitalization of
certain loans from borrowers experiencing cash flow issues, to
borrowers with greater financial capacity. At September 30, 2024,
real estate bridge loans classified as special mention and
substandard respectively amounted to $84.4 million and $155.4
million compared to $96.0 million and $80.4 million at June 30,
2024. Each classified loan was evaluated for a potential increase
in the allowance for credit losses (“ACL”) on the basis of the
aforementioned third-party appraisals of apartment building
collateral. On the basis of “as is” and “as stabilized” LTVs,
increases to the allowance were not required. The current allowance
for credit losses for REBL, is primarily based upon historical
industry losses for multi-family loans, in the absence of
significant charge-offs within the Company’s REBL portfolio.
However, as noted in our second quarter press release, as a result
of increasing amounts of loans classified as special mention and
substandard, the Company evaluated potential related sensitivity
for REBL in the third quarter. Such evaluation is inherently
subjective as it requires material estimates that may be
susceptible to change as more information becomes available. As a
result, the Company added the aforementioned new qualitative factor
to its quarterly ACL with a cumulative after-tax impact of
approximately $1.5 million ($2.0 million pre-tax).
Highlights
- The Bancorp reported net income of $51.5 million, or $1.04 per
diluted share (“EPS”), for the quarter ended September 30, 2024,
compared to net income of $50.1 million, or $0.92 per diluted
share, for the quarter ended September 30, 2023, or an EPS increase
of 13%. While net income increased 3% between these periods,
outstanding shares were decreased as a result of common share
repurchases, which significantly increased in 2024.
- Return on assets and return on equity for the quarter ended
September 30, 2024, amounted to 2.5% and 26%, respectively,
compared to 2.7% and 26%, respectively, for the quarter ended
September 30, 2023 (all percentages “annualized”).
- Net interest income increased 5% to $93.7 million for the
quarter ended September 30, 2024, compared to $88.9 million for the
quarter ended September 30, 2023. Third quarter 2024 net interest
income was reduced by the reversal of $1.6 million ($1.2 million,
net of tax) of prior period interest related to both real estate
bridge loans transferred to non-accrual status during the quarter
and loan modifications with retroactive rate reductions.
- Net interest margin amounted to 4.78% for the quarter ended
September 30, 2024, compared to 5.07% for the quarter ended
September 30, 2023, and 4.97% for the quarter ended June 30, 2024.
Net interest margin for third quarter 2024 was reduced by the prior
period interest reversals noted directly above.
- Loans, net of deferred fees and costs were $5.91 billion at
September 30, 2024, compared to $5.36 billion at December 31, 2023
and $5.20 billion at September 30, 2023. Those changes reflected an
increase of 5% quarter over linked quarter and an increase of 14%
year over year.
- Gross dollar volume (“GDV”), representing the total amounts
spent on prepaid and debit cards, increased $4.93 billion, or 15%,
to $37.90 billion for the quarter ended September 30, 2024,
compared to the quarter ended September 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 16% to $27.8 million
for the third quarter of 2024 compared to the third quarter of
2023. Consumer credit fintech fees amounted to $1.6 million for the
third quarter 2024, as a result of our initial entry into credit
sponsorship in 2024.
- Small business loans (“SBLs”), including those held at fair
value, amounted to $979.2 million at September 30, 2024, or 14%
higher year over year, and 2% higher quarter over linked quarter,
excluding the impact of $28.5 million of loans with related secured
borrowings.
- Direct lease financing balances increased 6% year over year to
$711.8 million at September 30, 2024, and less than 1% over June
30, 2024.
- At September 30, 2024, real estate bridge loans of $2.19
billion had grown 3% compared to a $2.12 billion balance at June
30, 2024, and 18% compared to the September 30, 2023 balance of
$1.85 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 7% year over year and less than 1% quarter
over linked quarter to $1.79 billion at September 30, 2024.
- The average interest rate on $7.23 billion of average deposits
and interest-bearing liabilities during the third quarter of 2024
was 2.54%. Average deposits of $7.01 billion for the third quarter
of 2024 increased $720.9 million, or 11% over third quarter
2023.
- As of September 30, 2024, tier 1 capital to average assets
(leverage), tier 1 capital to risk-weighted assets, total capital
to risk-weighted assets and common equity tier 1 to risk-weighted
assets ratios were 9.86%, 13.62%, 14.19% and 13.62%, 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 September 30, 2024 was $16.90
compared to $14.36 per common share at September 30, 2023, an
increase of 18%.
- The Bancorp repurchased 1,037,069 shares of its common stock at
an average cost of $48.21 per share during the quarter ended
September 30, 2024. As a result of share repurchases, outstanding
shares at September 30, 2024 amounted to 48.2 million, compared to
53.2 million shares at December 31, 2023, or a reduction of
9%.
- 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 Company also has lines of credit
with U.S. government sponsored agencies totaling approximately $3.1
billion as of September 30, 2024, as well as access to other forms
of liquidity.
- In its REBL portfolio, the Company 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 REBL
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 Company’s REBL portfolio is evidenced
by the estimated values of the underlying collateral. The Company’s
$2.2 billion apartment bridge lending portfolio at September 30,
2024, has a weighted average origination date “as is” loan-to-value
ratio 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
prospective 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 searches, 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 REBL 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 REBL, which is comprised of
seasoned and experienced lending professionals who do not directly
report to anyone on the REBL 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 REBL 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% LTVs.
- 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
stockholder value, while still prudently maintaining capital
levels.
- 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. 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.
“We saw strong growth in the third quarter across our Fintech
Solutions activities with a robust pipeline,” said Damian
Kozlowski, CEO of The Bancorp. “We expect this growth to support an
increase in profitability in 2025 and continued gains in EPS. We
are issuing preliminary guidance of $5.25 a share for 2025. This
2025 guidance does not include the impact of planned stock buybacks
of $150 million. Guidance for 2024 remains $4.35, which includes
the positive impact of buybacks during the year. Planned stock
buybacks are being reduced in 2025 by $100 million from 2024 levels
of $250 million to facilitate the currently planned repayment of
senior secured debt of $96 million.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly
Earnings Conference Call at 8:00 AM ET Friday, October 25, 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 (archived for
one year) or telephonically until Friday, November 1, 2024, by
dialing 1.800.839.1162.
About The Bancorp
The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington,
Delaware, through its subsidiary, The Bancorp Bank, National
Association provides a variety of services including providing
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 that 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.
Forward-looking statements include, but are not limited to,
statements regarding our annual fiscal 2024 results, our
anticipated 2025 profitability, increased growth and the impact of
stock buybacks, 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 other factors, 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. Factors that could cause results to differ from those
expressed in the forward-looking statements also include, but are
not limited to the risks and uncertainties referenced or described
in 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 Quarterly Reports
on Forms 10-Q for the periods ended March 31, 2024 and June 30,
2024, 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 any duty to publicly revise or update
forward-looking statements in this press release to reflect events
or circumstances that arise after the date of this press release,
except as may be required under applicable law.
The Bancorp, Inc.
Financial highlights
(unaudited)
Three months ended
Nine months ended
September 30,
September 30,
Consolidated condensed income
statements
2024
2023
2024
2023
(Dollars in thousands, except per
share and share data)
Net interest income
$
93,732
$
88,882
$
281,945
$
261,893
Provision for credit losses on loans
3,476
1,783
7,316
4,409
Provision (reversal) for unfunded
commitments
79
(31)
(340)
(393)
Non-interest income
Fintech fees
ACH, card and other payment processing
fees
3,892
2,553
9,856
7,153
Prepaid, debit card and related fees
23,907
21,513
72,948
67,013
Consumer credit fintech fees
1,600
—
1,740
—
Total fintech fees
29,399
24,066
84,544
74,166
Net realized and unrealized gains on
commercial
loans, at fair value
606
525
2,205
4,171
Leasing related income
1,072
1,767
2,889
4,768
Other non-interest income
1,031
422
2,574
2,000
Total non-interest income
32,108
26,780
92,212
85,105
Non-interest expense
Salaries and employee benefits
33,821
30,475
97,964
93,427
Data processing expense
1,408
1,404
4,252
4,123
Legal expense
1,055
1,203
2,509
3,110
FDIC insurance
904
806
2,618
2,233
Software
4,561
4,427
13,687
12,981
Other non-interest expense
11,506
9,144
30,383
29,558
Total non-interest expense
53,255
47,459
151,413
145,432
Income before income taxes
69,030
66,451
215,768
197,550
Income tax expense
17,513
16,314
54,136
49,282
Net income
51,517
50,137
161,632
148,268
Net income per share - basic
$
1.06
$
0.93
$
3.18
$
2.70
Net income per share - diluted
$
1.04
$
0.92
$
3.15
$
2.68
Weighted average shares - basic
48,759,369
54,175,184
50,807,021
54,828,547
Weighted average shares - diluted
49,478,236
54,738,610
51,361,104
55,336,354
Condensed consolidated balance
sheets
September 30,
June 30,
December 31,
September 30,
2024 (unaudited)
2024 (unaudited)
2023
2023 (unaudited)
(Dollars in thousands, except
share data)
Assets:
Cash and cash equivalents
Cash and due from banks
$
8,660
$
5,741
$
4,820
$
4,881
Interest earning deposits at Federal
Reserve Bank
47,105
399,853
1,033,270
898,533
Total cash and cash equivalents
55,765
405,594
1,038,090
903,414
Investment securities, available-for-sale,
at fair value, net of $10.0 million allowance for credit loss
1,588,289
1,581,006
747,534
756,636
Commercial loans, at fair value
252,004
265,193
332,766
379,603
Loans, net of deferred fees and costs
5,906,616
5,605,727
5,361,139
5,198,972
Allowance for credit losses
(31,004)
(28,575)
(27,378)
(24,145)
Loans, net
5,875,612
5,577,152
5,333,761
5,174,827
Federal Home Loan Bank, Atlantic Central
Bankers Bank, and Federal Reserve Bank stock
21,717
15,642
15,591
20,157
Premises and equipment, net
28,091
28,038
27,474
28,978
Accrued interest receivable
42,915
43,720
37,534
34,159
Intangible assets, net
1,353
1,452
1,651
1,751
Other real estate owned
61,739
57,861
16,949
18,756
Deferred tax asset, net
9,604
20,556
21,219
20,379
Other assets
157,501
149,187
133,126
127,107
Total assets
$
8,094,590
$
8,145,401
$
7,705,695
$
7,465,767
Liabilities:
Deposits
Demand and interest checking
$
6,844,128
$
7,095,391
$
6,630,251
$
6,455,043
Savings and money market
81,624
60,297
50,659
49,428
Total deposits
6,925,752
7,155,688
6,680,910
6,504,471
Securities sold under agreements to
repurchase
—
—
42
42
Short-term borrowings
135,000
—
—
—
Senior debt
96,125
96,037
95,859
95,771
Subordinated debenture
13,401
13,401
13,401
13,401
Other long-term borrowings
38,157
38,283
38,561
9,861
Other liabilities
70,829
65,001
69,641
68,533
Total liabilities
$
7,279,264
$
7,368,410
$
6,898,414
$
6,692,079
Shareholders' equity:
Common stock - authorized, 75,000,000
shares of $1.00 par value; 48,230,334 and 53,867,129 shares issued
and outstanding at September 30, 2024 and 2023, respectively
48,231
49,268
53,203
53,867
Additional paid-in capital
26,573
72,171
212,431
234,320
Retained earnings
723,247
671,730
561,615
517,587
Accumulated other comprehensive income
(loss)
17,275
(16,178)
(19,968)
(32,086)
Total shareholders' equity
815,326
776,991
807,281
773,688
Total liabilities and shareholders'
equity
$
8,094,590
$
8,145,401
$
7,705,695
$
7,465,767
Average balance sheet and net interest
income
Three months ended September 30,
2024
Three months ended September 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)
$
6,017,911
$
116,367
7.73%
$
5,603,514
$
110,506
7.89%
Leases-bank qualified(2)
5,151
146
11.34%
4,585
110
9.60%
Investment securities-taxable
1,575,091
19,767
5.02%
768,364
9,647
5.02%
Investment securities-nontaxable(2)
2,927
55
7.52%
3,005
50
6.66%
Interest earning deposits at Federal
Reserve Bank
247,344
3,387
5.48%
639,946
8,689
5.43%
Net interest earning assets
7,848,424
139,722
7.12%
7,019,414
129,002
7.35%
Allowance for credit losses
(28,254)
(23,147)
Other assets
222,646
338,085
$
8,042,816
$
7,334,352
Liabilities and Shareholders'
Equity:
Deposits:
Demand and interest checking
$
6,942,029
$
42,149
2.43%
$
6,229,668
$
37,913
2.43%
Savings and money market
65,079
549
3.37%
56,538
518
3.66%
Total deposits
7,007,108
42,698
2.44%
6,286,206
38,431
2.45%
Short-term borrowings
73,480
1,030
5.61%
—
—
—
Repurchase agreements
—
—
—
41
—
—
Long-term borrowings
38,235
689
7.21%
9,889
128
5.18%
Subordinated debentures
13,401
297
8.87%
13,401
293
8.75%
Senior debt
96,071
1,234
5.14%
95,714
1,234
5.16%
Total deposits and liabilities
7,228,295
45,948
2.54%
6,405,251
40,086
2.50%
Other liabilities
18,362
167,673
Total liabilities
7,246,657
6,572,924
Shareholders' equity
796,159
761,428
$
8,042,816
$
7,334,352
Net interest income on tax equivalent
basis(2)
$
93,774
$
88,916
Tax equivalent adjustment
42
34
Net interest income
$
93,732
$
88,882
Net interest margin(2)
4.78%
5.07%
(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
Nine months ended September 30,
2024
Nine months ended September 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)
$
5,828,938
$
345,497
7.90%
$
5,772,266
$
324,009
7.48%
Leases-bank qualified(2)
4,840
379
10.44%
3,920
279
9.49%
Investment securities-taxable
1,255,532
46,921
4.98%
773,485
28,820
4.97%
Investment securities-nontaxable(2)
2,905
155
7.11%
3,193
144
6.01%
Interest earning deposits at Federal
Reserve Bank
486,883
19,948
5.46%
640,554
24,271
5.05%
Net interest earning assets
7,579,098
412,900
7.26%
7,193,418
377,523
7.00%
Allowance for credit losses
(27,993)
(23,192)
Other assets
280,733
269,072
$
7,831,838
$
7,439,298
Liabilities and Shareholders'
Equity:
Deposits:
Demand and interest checking
$
6,684,671
$
120,405
2.40%
$
6,343,711
$
106,984
2.25%
Savings and money market
58,777
1,453
3.30%
88,738
2,465
3.70%
Time deposits
—
—
—
27,802
858
4.11%
Total deposits
6,743,448
121,858
2.41%
6,460,251
110,307
2.28%
Short-term borrowings
55,820
2,344
5.60%
6,758
234
4.62%
Repurchase agreements
4
—
—
41
—
—
Long-term borrowings
38,371
2,060
7.16%
9,945
382
5.12%
Subordinated debentures
13,401
880
8.76%
13,401
825
8.21%
Senior debt
95,983
3,701
5.14%
97,220
3,793
5.20%
Total deposits and liabilities
6,947,027
130,843
2.51%
6,587,616
115,541
2.34%
Other liabilities
73,507
117,822
Total liabilities
7,020,534
6,705,438
Shareholders' equity
811,304
733,860
$
7,831,838
$
7,439,298
Net interest income on tax equivalent
basis(2)
$
282,057
$
261,982
Tax equivalent adjustment
112
89
Net interest income
$
281,945
$
261,893
Net interest margin(2)
4.96%
4.86%
(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
Nine months ended
Year ended
September 30,
September 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
431
871
871
SBA commercial mortgage
—
—
76
Direct lease financing
3,625
2,804
3,666
IBLOC
—
—
24
Consumer - home equity
10
—
—
Other loans
6
3
3
Total
4,072
3,678
4,640
Recoveries:
SBA non-real estate
102
446
475
SBA commercial mortgage
—
75
75
Direct lease financing
279
220
330
Consumer - home equity
1
299
299
Total
382
1,040
1,179
Net charge-offs
3,690
2,638
3,461
Provision for credit losses on loans
7,316
4,409
8,465
Balance in allowance for credit losses at
end of period
$
31,004
$
24,145
$
27,378
Net charge-offs/average loans
0.07%
0.05%
0.07%
Net charge-offs/average assets
0.05%
0.04%
0.05%
Loan portfolio
September 30,
June 30,
December 31,
September 30,
2024 (unaudited)
2024 (unaudited)
2023
2023 (unaudited)
(Dollars in thousands)
SBL non-real estate
$
179,915
$
171,893
$
137,752
$
130,579
SBL commercial mortgage
665,608
647,894
606,986
547,107
SBL construction
30,158
30,881
22,627
19,204
Small business loans
875,681
850,668
767,365
696,890
Direct lease financing
711,836
711,403
685,657
670,208
SBLOC / IBLOC(1)
1,543,215
1,558,095
1,627,285
1,720,513
Advisor financing(2)
248,422
238,831
221,612
199,442
Real estate bridge loans
2,189,761
2,119,324
1,999,782
1,848,224
Consumer fintech(3)
280,092
70,081
—
—
Other loans(4)
46,586
46,592
50,638
55,800
5,895,593
5,594,994
5,352,339
5,191,077
Unamortized loan fees and
costs
11,023
10,733
8,800
7,895
Total loans, including
unamortized fees and costs
$
5,906,616
$
5,605,727
$
5,361,139
$
5,198,972
Small business portfolio
September 30,
June 30,
December 31,
September 30,
2024 (unaudited)
2024 (unaudited)
2023
2023 (unaudited)
(Dollars in thousands)
SBL, including unamortized fees and
costs
$
885,263
$
860,226
$
776,867
$
705,790
SBL, included in loans, at fair value
93,888
104,146
119,287
126,543
Total small business loans(5)
$
979,151
$
964,372
$
896,154
$
832,333
(1) SBLOC loans are collateralized by
marketable securities, while IBLOC are collateralized by the cash
surrender value of insurance policies. At September 30, 2024 and
December 31, 2023, IBLOC loans amounted to $554.0 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 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 $960,000 and $1.7 million at
September 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 September
30, 2024
Loan principal
(Dollars in millions)
U.S. government guaranteed portion of SBA
loans(1)
$
392
PPP loans(1)
2
Commercial mortgage SBA(2)
349
Construction SBA(3)
10
Non-guaranteed portion of U.S. government
guaranteed 7(a) Program loans(4)
114
Non-SBA SBLs
73
Other(5)
28
Total principal
$
968
Unamortized fees and costs
11
Total SBLs
$
979
(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 $9 million in 504 Program
first mortgages with an origination date LTV of 50%-60%, and $1
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 $28 million of loans sold
that do not qualify for true sale accounting.
Small business loans by type as of
September 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 (except casino hotels) and
motels
$
88
$
—
$
—
$
88
16%
Funeral homes and funeral services
20
—
28
48
9%
Full-service restaurants
29
2
2
33
6%
Child day care services
23
1
1
25
5%
Car washes
16
4
—
20
4%
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
14
—
—
14
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
1%
Caterers
7
—
—
7
1%
All other specialty trade contractors
7
—
—
7
1%
General warehousing and storage
6
—
—
6
1%
Appliance repair and maintenance
6
—
—
6
1%
Other accounting services
5
—
—
5
1%
Plumbing, heating, and air-conditioning
contractors
5
—
1
6
1%
Other miscellaneous durable goods
merchant
5
—
—
5
1%
Packaged frozen food merchant
wholesalers
5
—
—
5
1%
Lessors of nonresidential buildings
(except miniwarehouses)
5
—
—
5
1%
Other technical and trade schools
5
—
—
5
1%
All other amusement and recreation
industries
4
—
—
4
1%
Other(2)
136
8
29
173
30%
Total
$
464
$
16
$
66
$
546
100%
(1) Of the SBL commercial mortgage and SBL
construction loans, $121 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 $28
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 September
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
$
126
$
3
$
5
$
134
25%
Florida
76
5
4
85
16%
North Carolina
45
1
5
51
9%
New York
32
—
2
34
6%
Pennsylvania
20
—
13
33
6%
Texas
21
3
6
30
5%
New Jersey
21
—
7
28
5%
Georgia
25
2
1
28
5%
Other States
98
2
23
123
23%
Total
$
464
$
16
$
66
$
546
100%
(1) Of the SBL commercial mortgage and SBL
construction loans, $121 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 $28
million of loans that do not qualify for true sale accounting.
Top 10 loans as of September 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
8
Hotel
FL
8
Lawyer's office
CA
8
Hotel
VA
7
Hotel
NC
7
General warehousing and storage
PA
6
Appliance repair and maintenance
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 September 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)
172
$
2,190
70%
9.13%
Non-SBA commercial real estate loans, at
fair value:
Multifamily (apartment bridge
loans)(1)
7
$
113
74%
7.98%
Hospitality (hotels and lodging)
2
27
65%
9.82%
Retail
2
12
72%
8.19%
Other
2
9
72%
5.01%
13
161
72%
8.14%
Fair value adjustment
(3)
Total non-SBA commercial real estate
loans, at fair value
158
Total commercial real estate loans
$
2,348
70%
9.07%
(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
September 30, 2024
15 largest loans as of
September 30, 2024
State
Balance
Origination date LTV
State
Balance
Origination date LTV
(Dollars in millions)
(Dollars in millions)
Texas
$
735
71%
Texas
$
46
75%
Georgia
262
70%
Tennessee
40
72%
Florida
230
68%
Michigan
38
62%
Michigan
136
68%
Texas
37
64%
Indiana
108
70%
Texas
36
67%
New Jersey
107
69%
Florida
35
72%
Ohio
92
66%
Pennsylvania
34
63%
Other States each <$65 million
678
71%
Indiana
34
76%
Total
$
2,348
70%
New Jersey
34
62%
Texas
33
62%
Michigan
33
79%
Oklahoma
31
78%
Texas
31
77%
New Jersey
31
71%
Michigan
29
66%
15 largest commercial real estate
loans
$
522
70%
Institutional banking loans outstanding
at September 30, 2024
Type
Principal
% of total
(Dollars in millions)
SBLOC
$
989
55%
IBLOC
554
31%
Advisor financing
249
14%
Total
$
1,792
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 SBLOC
loans generally has been less, for two reasons. First, many
collateral accounts are “balanced” and accordingly have a component
of debt securities, which have either not decreased in value as
much as equities, or in some cases may have increased in value.
Second, many of these accounts have the benefit of professional
investment advisors who provided some protection against market
downturns, through diversification and other means. Additionally,
borrowers often utilize only a portion of collateral value, which
lowers the percentage of principal to collateral.
Top 10 SBLOC loans at September 30,
2024
Principal amount
% Principal to collateral
(Dollars in millions)
$
9
41%
8
84%
8
62%
8
63%
7
44%
5
57%
5
65%
5
58%
5
56%
5
43%
Total and weighted average
$
65
58%
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 October 17, 2024, all were
rated A- (Excellent) or better by AM BEST.
Direct lease financing by type as of
September 30, 2024
Principal balance(1)
% Total
(Dollars in millions)
Government agencies and public
institutions(2)
$
131
18%
Construction
112
16%
Waste management and remediation
services
97
14%
Real estate and rental and leasing
86
12%
Health care and social assistance
29
4%
Other services (except public
administration)
22
3%
Professional, scientific, and technical
services
22
3%
General freight trucking
21
3%
Finance and insurance
14
2%
Transit and other transportation
13
2%
Wholesale trade
10
1%
Educational services
7
1%
Other
148
21%
Total
$
712
100%
(1) Of the total $712 million of direct
lease financing, $648 million consisted of vehicle leases with the
remaining balance consisting of equipment leases.
(2) Includes public universities as well
as school districts.
Direct lease financing by state as of
September 30, 2024
State
Principal balance
% Total
(Dollars in millions)
Florida
$
108
15%
New York
70
10%
Utah
58
8%
California
49
7%
Connecticut
45
6%
Pennsylvania
42
6%
New Jersey
39
5%
North Carolina
36
5%
Maryland
36
5%
Texas
26
4%
Idaho
19
3%
Washington
16
2%
Ohio
14
2%
Georgia
14
2%
Alabama
13
2%
Other States
127
18%
Total
$
712
100%
Capital ratios
Tier 1 capital
Tier 1 capital
Total capital
Common equity
to average
to risk-weighted
to risk-weighted
tier 1 to risk
assets ratio
assets ratio
assets ratio
weighted assets
As of September 30, 2024
The Bancorp, Inc.
9.86%
13.62%
14.19%
13.62%
The Bancorp Bank, National Association
10.94%
15.11%
15.67%
15.11%
"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
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Selected operating ratios
Return on average assets(1)
2.55%
2.71%
2.76%
2.66%
Return on average equity(1)
25.74%
26.12%
26.61%
27.01%
Net interest margin
4.78%
5.07%
4.96%
4.86%
(1) Annualized
Book value per share table
September 30,
June 30,
December 31,
September 30,
2024
2024
2023
2023
Book value per share
$
16.90
$
15.77
$
15.17
$
14.36
Loan delinquency and other real estate
owned
September 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
$
72
$
322
$
758
$
3,047
$
4,199
$
175,716
$
179,915
SBL commercial mortgage
—
—
336
4,898
5,234
660,374
665,608
SBL construction
—
—
—
1,585
1,585
28,573
30,158
Direct lease financing
5,791
12,883
1,260
3,919
23,853
687,983
711,836
SBLOC / IBLOC
10,251
2,014
2,383
—
14,648
1,528,567
1,543,215
Advisor financing
—
—
—
—
—
248,422
248,422
Real estate bridge loans(1)
—
—
—
12,300
12,300
2,177,461
2,189,761
Consumer fintech
4,021
4
—
—
4,025
276,067
280,092
Other loans
—
—
—
—
—
46,586
46,586
Unamortized loan fees and costs
—
—
—
—
—
11,023
11,023
$
20,135
$
15,223
$
4,737
$
25,749
$
65,844
$
5,840,772
$
5,906,616
(1) The $12.3 million shown in the
non-accrual column for real estate bridge loans is collateralized
by apartment building property with respective 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. This loan had a prior
six-month payment deferral granted in the fourth quarter of 2024
and did not resume making payments. The table above does not
include an $11.2 million loan accounted for at fair value, and, as
such, not reflected in delinquency tables. In third quarter 2024,
the borrower notified the Company that he would no longer be making
payments on the loan, which is collateralized by a vacant retail
property. Based upon a July 2024 appraisal, the “as is” LTV is 84%
and the “as stabilized” LTV is 62%. Since 2021, real estate bridge
lending originations have consisted of apartment buildings, while
this loan was originated previously.
Other loan information
Of the $84.4 million special mention and $155.4 million
substandard loans at September 30, 2024, $55.3 million were
modified in the third quarter of 2024 and received reductions in
interest rates and payment deferrals. Included in that total was
$26.9 million which had been modified in first quarter 2024 with a
six-month payment deferral. The third quarter additional
modification was for an additional three-month payment deferral and
a partial nine-month payment deferral. Not included in that
modification total were $19.3 million which was recapitalized with
a new borrower, who negotiated a partial interest deferral and rate
reduction, and $37.3 million which is accounted for at fair value,
and as such, not reflected in modification totals. While payment
deferrals have generally been for three to twelve months, that loan
was granted a 15-month payment deferral, followed by a nine-month
partial payment deferral, in addition to an interest rate
reduction. Going forward, the Company will not be accruing interest
on this loan. The weighted average “as is” and “as stabilized” LTVs
for the $19.3 million balance were 72% and 68%, respectively, while
those LTVs for the $37.3 million were 73% and 65%, respectively.
Those respective LTVs for the $26.9 million loan were 65% and 61%.
These LTVs are based upon appraisals performed within the past
twelve months.
Other real estate owned year to date
activity
September 30, 2024
Beginning balance
$
16,949
Transfer from loans, net
42,120
Transfer from commercial loans, at fair
value
1,744
Advances
926
Ending balance
$
61,739
September 30,
June 30,
December 31,
September 30,
2024
2024
2023
2023
(Dollars in thousands)
Asset quality ratios:
Nonperforming loans to total loans(1)
0.52%
0.34%
0.25%
0.30%
Nonperforming assets to total
assets(1)
1.14%
0.95%
0.39%
0.46%
Allowance for credit losses to total
loans
0.52%
0.51%
0.51%
0.46%
(1) In the first quarter of 2024, a $39.4
million apartment building rehabilitation bridge loan with a
September 30, 2024 balance of $40.3 million 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 $40.3 million loan balance compares to a
September 2023 third-party “as is” appraisal of $47.8 million, or
an 84% “as is” LTV, with additional potential collateral value as
construction progresses, and units are re-leased at stabilized
rental rates. Please see “Recent Developments” which summarizes the
agreement of sale for this property.
Gross dollar volume (GDV)(1)
Three months ended
September 30,
June 30,
December 31,
September 30,
2024
2024
2023
2023
(Dollars in thousands)
Prepaid and debit card GDV
$
37,898,006
$
37,139,200
$
33,292,350
$
32,972,249
(1) Gross dollar volume represents the
total dollar amount spent on prepaid and debit cards issued by The
Bancorp Bank, N.A.
Business line quarterly summary
Quarter ended September 30, 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)
6.9%
$ 1,792
(7%)
(1%)
Small business lending(4)
7.5%
979
14%
6%
Leasing
8.1%
712
6%
—
Commercial real estate (non-SBA loans, at
fair value)
8.1%
158
nm
nm
Real estate bridge loans (recorded at book
value)
9.1%
2,189
18%
13%
Consumer fintech loans - interest
bearing
5.5%
10
nm
nm
Consumer fintech loans - non-interest
bearing(5)
—
270
nm
nm
Weighted average yield
7.6%
$ 6,110
Non-interest income
% Growth
Deposits: Fintech Solutions group
Current quarter
Year over year
Prepaid and debit card issuance, and other
payments
2.5%
$ 6,649
11%
nm
$ 27.8
16%
(1) Average rates are for the three months
ended September 30, 2024.
(2) Loan and deposit categories are based
on period-end and average quarterly balances, respectively.
(3) Institutional Banking loans are
comprised of SBLOC loans collateralized by marketable securities,
IBLOC loans collateralized by the cash surrender value of eligible
life insurance policies, and investment advisor financing.
(4) Small Business Lending is
substantially comprised of SBA-guaranteed loans. Growth rates
exclude $28 million of loans that do not qualify for true sale
accounting.
(5) Income related to non-interest-bearing
balances is included in non-interest income.
Summary of credit lines available
The Bancorp maintains lines of credit exceeding potential
liquidity requirements as follows. The Bancorp also has access to
other substantial sources of liquidity.
September 30, 2024
(Dollars in thousands)
Federal Reserve Bank
$
1,974,022
Federal Home Loan Bank
1,106,517
Total lines of credit available
$
3,080,539
Estimated insured vs uninsured deposits
The vast majority of The Bancorp’s deposits are insured and low
balance and accordingly do not constitute the liquidity risk
experienced by certain institutions. Accordingly, the deposit base
is comprised as follows.
September 30, 2024
Insured
93%
Low balance accounts
3%
Other uninsured
4%
Total deposits
100%
Calculation of efficiency
ratio(1)
Three months ended
Year ended
September 30,
September 30,
December 31,
2024
2023
2023
(Dollars in thousands)
Net interest income
$
93,732
$
88,882
$
354,052
Non-interest income
32,108
26,780
112,094
Total revenue
$
125,840
$
115,662
$
466,146
Non-interest expense
$
53,255
$
47,459
$
191,042
Efficiency ratio
42%
41%
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.
Segment Reporting
For the nine months ended
September 30, 2024
Payments
REBL
Institutional Banking
Commercial
Corporate
Total
Interest income
$
33
$
157,010
$
91,987
$
92,316
$
71,442
$
412,788
Interest allocation
196,251
(73,570)
(53,111)
(52,499)
(17,071)
—
Interest expense
117,884
—
2,607
25
10,327
130,843
Net interest income
78,400
83,440
36,269
39,792
44,044
281,945
Provision for credit losses
—
2,555
166
4,427
(172)
6,976
Non-interest income
84,639
2,646
214
4,251
462
92,212
Direct non-interest expense
Salaries and employee benefits
11,433
2,917
6,784
13,653
63,177
97,964
Data processing expense
1,155
125
1,771
5
1,196
4,252
Software
364
78
2,253
1,343
9,649
13,687
Other
6,728
2,601
1,663
5,836
18,682
35,510
Income before non-interest expense
allocations
143,359
77,810
23,846
18,779
(48,026)
215,768
Non-interest expense allocations
Risk, financial crimes, and compliance
20,150
1,621
2,248
3,665
(27,684)
—
Information technology and operations
10,151
539
4,449
5,533
(20,672)
—
Other allocated expenses
11,830
2,244
4,904
5,266
(24,244)
—
Total non-interest expense allocations
42,131
4,404
11,601
14,464
(72,600)
—
Income before taxes
101,228
73,406
12,245
4,315
24,574
215,768
Income tax expense
25,398
18,418
3,072
1,083
6,165
54,136
Net income
$
75,830
$
54,988
$
9,173
$
3,232
$
18,409
$
161,632
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241022908019/en/
The Bancorp, Inc. Contact Andres Viroslav Director,
Investor Relations 215-861-7990 andres.viroslav@thebancorp.com
Bancorp (NASDAQ:TBBK)
過去 株価チャート
から 10 2024 まで 11 2024
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から 11 2023 まで 11 2024
