The Bancorp, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results and Updates 2024 Guidance
The Bancorp, Inc. reported net income of $44.0 million, or $0.81 per diluted share, for the fourth quarter of 2023. Net interest income increased by 20% to $92.2 million. The company's small business loans and direct lease financing balances also showed positive growth, while the average interest rate on average deposits was 2.51%. The Bancorp emphasized safety and soundness, with well-capitalized ratios and an increase in book value per common share. The CEO confirmed 2024 guidance of $4.25 per share.
The Bancorp, Inc.'s reported net income of $44.0 million for Q4 2023, reflecting a 9.4% increase from Q4 2022, is a positive indicator of the company's profitability amidst a challenging economic environment. The adjusted EPS of $0.95, when accounting for the provision for credit loss, surpasses the reported $0.81, demonstrating the company's underlying earnings power. The net interest income surge by 20% is a direct consequence of the Federal Reserve's rate hikes, which have favorably impacted variable rate loans and securities. This significant increase in net interest margin to 5.26% from 4.21% year-over-year suggests a robust yield on earning assets, which is commendable given the competitive banking sector.
Furthermore, the reported growth in gross dollar volume (GDV) by 13% indicates strong consumer spending via prepaid and debit cards, which is a vital revenue stream for The Bancorp. The consistent growth in small business loans and real estate bridge loans, particularly in the apartment building sector, suggests a strategic focus on niche financing markets that may offer higher yields. However, the 26% decline in security backed and insurance backed lines of credit warrants attention, as it could signal a strategic shift or a response to market conditions.
Lastly, The Bancorp's emphasis on safety and soundness is evident in its well-capitalized status, with all capital ratios comfortably above regulatory minimums. The 22% increase in book value per common share is a strong indicator of the company's value growth over the year. The share repurchase program, which reduced outstanding shares, may also contribute to future EPS growth, providing an optimistic outlook for shareholders.
The Bancorp's performance, particularly the 15% increase in payment fees and the growth in GDV, reflects consumer resilience and the effectiveness of The Bancorp's partnership model in the payment space. The growth in prepaid and debit card usage aligns with broader industry trends towards digital and cashless transactions, which have been accelerated by the pandemic and changes in consumer behavior. The organic growth with existing partners and the onboarding of new clients within the past year suggest that The Bancorp is successfully expanding its market share in the fintech ecosystem.
Moreover, the increase in small business loans and direct lease financing balances indicates a strategic focus on sectors that may be less sensitive to economic downturns or that are experiencing growth despite broader economic challenges. The real estate bridge loan growth, specifically in apartment buildings, aligns with trends in the housing market where rental demand remains strong. This focus on real estate lending, particularly in the multifamily sector, could provide a stable source of revenue for The Bancorp, given the ongoing demand for housing.
The Bancorp's financial results are reflective of the broader macroeconomic environment, where interest rate hikes by the Federal Reserve have led to increased net interest margins for banks. The Bancorp's ability to leverage these rate hikes to improve its net interest income is indicative of sound asset-liability management. The decrease in average deposits, however, may be a result of the bank's strategy to exit higher-cost funds, which could be a prudent move to improve net interest margin in a rising rate environment.
Additionally, the bank's capital ratios, which are well above the regulatory requirements, provide a buffer against potential economic shocks and position the bank favorably for future growth or adverse economic conditions. The guidance for 2024, projecting $4.25 a share, suggests confidence in the bank's ability to maintain profitability and possibly benefit from ongoing market conditions. However, the exclusion of the impact of share buybacks in this guidance should be noted, as buybacks can artificially inflate EPS figures.
01/25/2024 - 04:05 PM
WILMINGTON, Del. --(BUSINESS WIRE)--
The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter and full year of 2023.
Highlights
The Bancorp reported net income of $44.0 million , or $0.81 per diluted share, for the quarter ended December 31, 2023, compared to net income of $40.2 million , or $0.71 per diluted share, for the quarter ended December 31, 2022. Excluding the tax effected impact of a $10.0 million provision for credit loss on its only trust preferred security, non-GAAP adjusted diluted earnings per share amounted to $0.95 .*
Return on assets and equity for the quarter ended December 31, 2023 amounted to 2.4% and 22% , respectively, compared to 2.1% and 24% , respectively, for the quarter ended December 31, 2022 (all percentages “annualized”).
Net interest income increased 20% to $92.2 million for the quarter ended December 31, 2023, compared to $76.8 million for the quarter ended December 31, 2022. 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 5.26% for the quarter ended December 31, 2023, compared to 4.21% for the quarter ended December 31, 2022, and 5.07% for the quarter ended September 30, 2023.
Loans, net of deferred fees and costs were $5.36 billion at December 31, 2023, compared to $5.20 billion at September 30, 2023 and $5.49 billion at December 31, 2022. Those changes reflected an increase of 3% quarter over linked quarter and a decrease of 2% year over year.
Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $3.84 billion , or 13% , to $33.29 billion for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. 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 15% to $25.1 million for the fourth quarter of 2023 compared to the fourth quarter of 2022.
Small business loans (“SBL”), including those held at fair value, amounted to $896.2 million at December 31, 2023, or 13% higher year over year, and 4% quarter over linked quarter, excluding $28.6 million of loans with related secured borrowings.
Direct lease financing balances increased 8% year over year to $685.7 million at December 31, 2023, and 2% quarter over September 30, 2023.
At December 31, 2023, real estate bridge loans of $2.00 billion had grown 8% compared to the $1.85 billion balance at September 30, 2023, and 20% compared to the December 31, 2022 balance of $1.67 billion . These real estate bridge loans consist entirely of apartment buildings.
Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively decreased 26% year over year and decreased 4% quarter over linked quarter to $1.85 billion at December 31, 2023.
The average interest rate on $6.37 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2023 was 2.51% . Average deposits of $6.25 billion for the fourth quarter of 2023 reflected a decrease of 6% from the $6.62 billion of average deposits for the quarter ended December 31, 2022, and a 1% decrease from $6.29 billion of average deposits for the quarter ended September 30, 2023. The decreases reflected the planned exit of $200 million of higher cost funds on July 1, 2023. Not included in deposit totals are deposits which are sold to other financial institutions totaling $300.7 million at December 31, 2023.
The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $2.7 billion as of December 31, 2023, as well as access to other liquidity.
As of December 31, 2023, 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 11.19% , 15.66% , 16.23% and 15.66% , 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 December 31, 2023 was $15.17 compared to $12.46 per common share at December 31, 2022, an increase of 22% .
The Bancorp repurchased 664,499 shares of its common stock at an average cost of $37.62 per share during the quarter ended December 31, 2023.
*The Bank purchased a $10.0 million trust preferred security in 2006, which is the only such security in its portfolios. In the fourth quarter of 2023, the Bank took a charge for the full amount of the security through a provision for credit loss. The following reconciliation of GAAP to non-GAAP adjusted net income and diluted earnings per share (“EPS”) for the fourth quarter of 2023, adjusts for the impact of that charge.
Net Income (000’s)
EPS
GAAP
$44,028
$0.81
Provision for credit loss on trust preferred security, net of tax effect
7,489
0.14
As adjusted, non-GAAP
$51,517
$0.95
CEO and President Damian Kozlowski commented, “In 2023, we rode the waves of market turmoil and interest rate hikes and demonstrated the superiority of our rigorous commitment to our business partners, safety and soundness and shareholder advocacy. The strength of our business model and our comprehensive and integrated risk management showed that sound fundamental banking can reduce event risk and create opportunities for exemplar performance even in times of economic dislocations. We are confirming 2024 guidance of $4.25 a share without including the impact of share buybacks of $200 million for the year, or $50 million a quarter.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 26, 2024 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com . Or you may dial 1.888.259.6580, conference code 18545154. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 2, 2024 by dialing 1.877.674.7070, access code 545154#.
About The Bancorp
The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware , through its subsidiary, The Bancorp Bank, National Association, (or “The Bancorp Bank, N.A.”) provides non-bank financial companies with the people, processes, and technology to meet their unique banking needs. Through its Fintech Solutions , Institutional Banking , Commercial Lending , and Real Estate Bridge Lending businesses, The Bancorp provides partner-focused solutions paired with cutting-edge technology for companies that range from entrepreneurial startups to Fortune 500 companies. With over 20 years of experience, The Bancorp has become a leader in the financial services industry, earning recognition as the #1 issuer of prepaid cards in the U.S. , a nationwide provider of bridge financing for real estate capital improvement plans, an SBA National Preferred Lender, a leading provider of securities-backed lines of credit, with one of the few bank-owned commercial vehicle leasing groups. By its company-wide commitment to excellence, The Bancorp has also been ranked as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600. For more about The Bancorp, visit https://thebancorp.com/ .
Forward-Looking Statements
Statements in this earnings release regarding The Bancorp’s business which are not historical facts are "forward-looking statements." These statements may be identified by the use of forward-looking terminology, including but not limited to the words “intend,” “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “plan,” “estimate,” “continue,” or similar words, and are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results, events or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see The Bancorp’s filings with the Securities and Exchange Commission, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those filings. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this press release, except as may be required under applicable law.
The Bancorp, Inc.
Financial highlights
(unaudited)
Three months ended
Year ended
December 31,
December 31,
Consolidated condensed income statements
2023
2022
2023
2022
(Dollars in thousands, except per share and share data)
Net interest income
$
92,159
$
76,760
$
354,052
$
248,841
Provision for credit losses on loans
4,314
2,777
8,330
7,108
Provision for credit loss on security
10,000
—
10,000
—
Non-interest income
ACH, card and other payment processing fees
2,669
2,383
9,822
8,935
Prepaid, debit card and related fees
22,404
19,371
89,417
77,236
Net realized and unrealized (losses) gains on commercial
loans, at fair value
(426)
2,269
3,745
13,531
Leasing related income
1,556
1,256
6,324
4,822
Other non-interest income
786
461
2,786
1,159
Total non-interest income
26,989
25,740
112,094
105,683
Non-interest expense
Salaries and employee benefits
27,628
27,520
121,055
105,368
Data processing expense
1,324
1,245
5,447
4,972
Legal expense
740
703
3,850
3,878
Legal settlement
—
—
—
1,152
Civil money penalty
—
—
—
1,750
FDIC insurance
724
944
2,957
3,270
Software
4,368
4,181
17,349
16,211
Other non-interest expense
10,826
8,882
40,384
32,901
Total non-interest expense
45,610
43,475
191,042
169,502
Income before income taxes
59,224
56,248
256,774
177,914
Income tax expense
15,196
16,007
64,478
47,701
Net income
44,028
40,241
192,296
130,213
Net income per share - basic
$
0.82
$
0.72
$
3.52
$
2.30
Net income per share - diluted
$
0.81
$
0.71
$
3.49
$
2.27
Weighted average shares - basic
53,549,138
55,885,015
54,506,065
56,556,303
Weighted average shares - diluted
54,201,312
56,588,011
55,053,497
57,268,946
Condensed consolidated balance sheets
December 31,
September 30,
June 30,
December 31,
2023 (unaudited)
2023 (unaudited)
2023 (unaudited)
2022
(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks
$
4,820
$
4,881
$
6,496
$
24,063
Interest earning deposits at Federal Reserve Bank
1,033,270
898,533
874,050
864,126
Total cash and cash equivalents
1,038,090
903,414
880,546
888,189
Investment securities, available-for-sale, at fair value, net of $10.0 million allowance for credit loss
747,534
756,636
776,410
766,016
Commercial loans, at fair value
332,766
379,603
396,581
589,143
Loans, net of deferred fees and costs
5,361,139
5,198,972
5,267,574
5,486,853
Allowance for credit losses
(27,378)
(24,145)
(23,284)
(22,374)
Loans, net
5,333,761
5,174,827
5,244,290
5,464,479
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock
15,591
20,157
20,157
12,629
Premises and equipment, net
27,474
28,978
26,408
18,401
Accrued interest receivable
37,534
34,159
34,062
32,005
Intangible assets, net
1,651
1,751
1,850
2,049
Other real estate owned
16,949
18,756
20,952
21,210
Deferred tax asset, net
21,219
20,379
19,215
19,703
Other assets
133,126
127,107
122,435
89,176
Total assets
$
7,705,695
$
7,465,767
$
7,542,906
$
7,903,000
Liabilities:
Deposits
Demand and interest checking
$
6,630,251
$
6,455,043
$
6,554,967
$
6,559,617
Savings and money market
50,659
49,428
68,084
140,496
Time deposits, $100,000 and over
—
—
—
330,000
Total deposits
6,680,910
6,504,471
6,623,051
7,030,113
Securities sold under agreements to repurchase
42
42
42
42
Senior debt
95,859
95,771
95,682
99,050
Subordinated debenture
13,401
13,401
13,401
13,401
Other long-term borrowings
38,561
9,861
9,917
10,028
Other liabilities
69,641
68,533
51,646
56,335
Total liabilities
$
6,898,414
$
6,692,079
$
6,793,739
$
7,208,969
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 53,202,630 and 55,689,627 shares issued and outstanding at December 31, 2023 and 2022, respectively
53,203
53,867
54,542
55,690
Additional paid-in capital
212,431
234,320
256,115
299,279
Retained earnings
561,615
517,587
467,450
369,319
Accumulated other comprehensive loss
(19,968)
(32,086)
(28,940)
(30,257)
Total shareholders' equity
807,281
773,688
749,167
694,031
Total liabilities and shareholders' equity
$
7,705,695
$
7,465,767
$
7,542,906
$
7,903,000
Average balance sheet and net interest income
Three months ended December 31, 2023
Three months ended December 31, 2022
(Dollars in thousands; unaudited)
Average
Average
Average
Average
Assets:
Balance
Interest(1)
Rate
Balance
Interest(1)
Rate
Interest earning assets:
Loans, net of deferred fees and costs(2)
$
5,583,467
$
112,334
8.05%
$
6,083,587
$
94,477
6.21%
Leases-bank qualified(3)
4,658
109
9.36%
2,952
50
6.78%
Investment securities-taxable
747,384
10,258
5.49%
782,046
8,483
4.34%
Investment securities-nontaxable(3)
2,895
49
6.77%
3,559
32
3.60%
Interest earning deposits at Federal Reserve Bank
677,524
9,356
5.52%
424,255
3,886
3.66%
Net interest earning assets
7,015,928
132,106
7.53%
7,296,399
106,928
5.86%
Allowance for credit losses
(24,070)
(20,227)
Other assets
356,785
223,692
$
7,348,643
$
7,499,864
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
6,204,048
$
37,830
2.44%
$
5,891,947
$
21,350
1.45%
Savings and money market
46,428
392
3.38%
474,302
4,332
3.65%
Time deposits
—
—
—
257,231
2,193
3.41%
Total deposits
6,250,476
38,222
2.45%
6,623,480
27,875
1.68%
Short-term borrowings
2,717
37
5.45%
26,847
271
4.04%
Repurchase agreements
41
—
—
42
—
—
Long-term borrowings
10,144
125
4.94%
38,951
498
5.11%
Subordinated debentures
13,401
296
8.84%
13,401
226
6.75%
Senior debt
95,808
1,234
5.15%
99,005
1,280
5.17%
Total deposits and liabilities
6,372,587
39,914
2.51%
6,801,726
30,150
1.77%
Other liabilities
185,572
19,254
Total liabilities
6,558,159
6,820,980
Shareholders' equity
790,484
678,884
$
7,348,643
$
7,499,864
Net interest income on tax equivalent basis(3)
$
92,192
$
76,778
Tax equivalent adjustment
33
18
Net interest income
$
92,159
$
76,760
Net interest margin(3)
5.26%
4.21%
(1) Interest on loans for 2023 and 2022 includes $5,000 and $12,000 , respectively, of interest and fees on PPP loans.
(2) Includes commercial loans, at fair value. All periods include non-accrual loans.
(3) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.
Average balance sheet and net interest income
Year ended December 31, 2023
Year ended December 31, 2022
(Dollars in thousands; unaudited)
Average
Average
Average
Average
Assets:
Balance
Interest(1)
Rate
Balance
Interest(1)
Rate
Interest earning assets:
Loans, net of deferred fees and costs(2)
$
5,724,679
$
436,343
7.62%
$
5,670,957
$
275,651
4.86%
Leases-bank qualified(3)
4,106
388
9.45%
3,479
235
6.75%
Investment securities-taxable
766,906
39,078
5.10%
855,629
25,598
2.99%
Investment securities-nontaxable(3)
3,118
193
6.19%
3,559
125
3.51%
Interest earning deposits at Federal Reserve Bank
649,873
33,627
5.17%
479,791
6,762
1.41%
Net interest earning assets
7,148,682
509,629
7.13%
7,013,415
308,371
4.40%
Allowance for credit losses
(23,412)
(19,374)
Other assets
292,491
213,491
$
7,417,761
$
7,207,532
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
6,308,509
$
144,814
2.30%
$
5,670,818
$
39,872
0.70%
Savings and money market
78,074
2,857
3.66%
510,370
8,524
1.67%
Time deposits
20,794
858
4.13%
86,907
2,740
3.15%
Total deposits
6,407,377
148,529
2.32%
6,268,095
51,136
0.82%
Short-term borrowings
5,739
271
4.72%
60,312
1,538
2.55%
Repurchase agreements
41
—
—
41
—
—
Long-term borrowings
9,995
507
5.07%
39,202
1,004
2.56%
Subordinated debentures
13,401
1,121
8.37%
13,401
658
4.91%
Senior debt
96,864
5,027
5.19%
98,865
5,118
5.18%
Total deposits and liabilities
6,533,417
155,455
2.38%
6,479,916
59,454
0.92%
Other liabilities
133,688
54,374
Total liabilities
6,667,105
6,534,290
Shareholders' equity
750,656
673,242
$
7,417,761
$
7,207,532
Net interest income on tax equivalent basis(3)
$
354,174
$
248,917
Tax equivalent adjustment
122
76
Net interest income
$
354,052
$
248,841
Net interest margin(3)
4.95%
3.55%
(1) Interest on loans for 2023 and 2022 includes $32,000 and $514,000 , respectively, of interest and fees on PPP loans.
(2) Includes commercial loans, at fair value. All periods include non-accrual loans.
(3) Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.
Allowance for credit losses
Year ended
December 31,
December 31,
2023 (unaudited)
2022
(Dollars in thousands)
Balance in the allowance for credit losses at beginning of period
$
22,374
$
17,806
Loans charged-off:
SBA non-real estate
871
885
SBA commercial mortgage
76
—
Direct lease financing
3,666
576
IBLOC
24
—
Consumer - other
3
—
Total
4,640
1,461
Recoveries:
SBA non-real estate
475
140
SBA commercial mortgage
75
—
Direct lease financing
330
124
Consumer - home equity
299
—
Other loans
—
24
Total
1,179
288
Net charge-offs
3,461
1,173
Provision for credit losses, excluding commitment provision
8,465
5,741
Balance in allowance for credit losses at end of period
$
27,378
$
22,374
Net charge-offs/average loans
0.07%
0.03%
Net charge-offs/average assets
0.05%
0.02%
Loan portfolio
December 31,
September 30,
June 30,
December 31,
2023 (unaudited)
2023 (unaudited)
2023 (unaudited)
2022
(Dollars in thousands)
SBL non-real estate
$
137,752
$
130,579
$
117,621
$
108,954
SBL commercial mortgage
606,986
547,107
515,008
474,496
SBL construction
22,627
19,204
32,471
30,864
Small business loans
767,365
696,890
665,100
614,314
Direct lease financing
685,657
670,208
657,316
632,160
SBLOC / IBLOC(1)
1,627,285
1,720,513
1,883,607
2,332,469
Advisor financing(2)
221,612
199,442
173,376
172,468
Real estate bridge loans
1,999,782
1,848,224
1,826,227
1,669,031
Other loans(3)
50,638
55,800
55,644
61,679
5,352,339
5,191,077
5,261,270
5,482,121
Unamortized loan fees and costs
8,800
7,895
6,304
4,732
Total loans, including unamortized fees and costs
$
5,361,139
$
5,198,972
$
5,267,574
$
5,486,853
Small business portfolio
December 31,
September 30,
June 30,
December 31,
2023 (unaudited)
2023 (unaudited)
2023 (unaudited)
2022
(Dollars in thousands)
SBL, including unamortized fees and costs
$
776,867
$
705,790
$
673,667
$
621,641
SBL, included in loans, at fair value
119,287
126,543
134,131
146,717
Total small business loans(4)
$
896,154
$
832,333
$
807,798
$
768,358
(1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At December 31, 2023 and December 31, 2022, IBLOC loans amounted to $646.9 million and $1.12 billion , 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 $1.7 million and $2.6 million at December 31, 2023 and December 31, 2022, 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 December 31, 2023
Loan principal
(Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)
$
399
PPP loans(1)
2
Commercial mortgage SBA(2)
284
Construction SBA(3)
12
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)
113
Non-SBA SBLs
46
Other(5)
29
Total principal
$
885
Unamortized fees and costs
11
Total SBLs
$
896
(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 $4.0 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 December 31, 2023
(Excludes government guaranteed portion of SBA 7(a) Program and PPP loans)
SBL commercial mortgage(1)
SBL construction(1)
SBL non-real estate
Total
% Total
(Dollars in millions)
Hotels and motels
$
77
$
—
$
—
$
77
17%
Funeral homes and funeral services
41
—
—
41
9%
Full-service restaurants
24
6
2
32
7%
Car washes
19
—
—
19
4%
Child day care services
16
2
2
20
4%
Outpatient mental health and substance abuse centers
15
—
—
15
3%
Homes for the elderly
13
—
—
13
3%
Gasoline stations with convenience stores
12
—
—
12
3%
Fitness and recreational sports centers
8
—
2
10
2%
Lessors of other real estate property
9
—
1
10
2%
Offices of lawyers
9
—
—
9
2%
Limited-service restaurants
3
1
3
7
2%
Caterers
7
—
—
7
2%
General warehousing and storage
7
—
—
7
2%
Lessors of nonresidential buildings
6
—
—
6
1%
Plumbing, heating, and air-conditioning
6
—
1
7
2%
All other specialty trade contractors
5
—
—
5
1%
Lessors of residential buildings
5
—
—
5
1%
Miscellaneous durable goods merchants
5
—
—
5
1%
Packaged frozen food merchant wholesalers
5
—
—
5
1%
Technical and trade schools
5
—
—
5
1%
Amusement and recreation
4
—
—
4
1%
Offices of dentists
3
—
—
3
1%
Vocational rehabilitation services
—
3
—
3
1%
Other(2)
99
2
27
128
27%
Total
$
403
$
14
$
38
$
455
100%
(1) Of the SBL commercial mortgage and SBL construction loans, $121.0 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 $3.0 million are spread over approximately one hundred different business types.
State diversification as of December 31, 2023
(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
$
82
$
5
$
3
$
90
20%
Florida
68
1
3
72
16%
North Carolina
38
1
2
41
9%
Pennsylvania
34
—
1
35
8%
New York
25
2
2
29
6%
New Jersey
17
3
4
24
5%
Texas
18
—
6
24
5%
Georgia
20
1
2
23
5%
Other States
101
1
15
117
26%
Total
$
403
$
14
$
38
$
455
100%
(1) Of the SBL commercial mortgage and SBL construction loans, $121.0 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 December 31, 2023
Type(1)
State
SBL commercial mortgage
(Dollars in millions)
Funeral homes and funeral services
PA
$
13
Mental health and substance abuse center
FL
10
Funeral homes and funeral services
ME
9
Hotel
FL
8
Lawyers office
CA
8
Hotel
NC
7
General warehousing and storage
PA
7
Hotel
FL
6
Hotel
NY
6
Hotel
NC
5
Total
$
79
(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 December 31, 2023
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)
148
$
2,000
71%
9.30%
Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)(1)
9
$
168
77%
8.82%
Hospitality (hotels and lodging)
2
27
65%
9.82%
Retail
2
12
72%
8.19%
Other
2
9
73%
4.97%
15
216
75%
8.74%
Fair value adjustment
(3)
Total non-SBA commercial real estate loans, at fair value
213
Total commercial real estate loans
$
2,213
72%
9.26%
(1) In the third quarter of 2021, we resumed the origination of multi-family apartment loans. These are similar to the multi-family apartment loans carried at fair value, but at origination are intended to be held on the balance sheet, so they are not accounted for at fair value.
State diversification as of December 31, 2023
15 largest loans as of December 31, 2023
State
Balance
Origination date LTV
State
Balance
Origination date LTV
(Dollars in millions)
(Dollars in millions)
Texas
$
814
72%
Texas
$
46
75%
Georgia
247
69%
Texas
44
72%
Florida
221
70%
Tennessee
40
72%
Michigan
112
69%
Texas
39
75%
Indiana
92
73%
Texas
39
79%
New Jersey
78
69%
Texas
37
80%
Ohio
73
67%
Michigan
37
62%
Other States each <$63 million
576
73%
Texas
36
67%
Total
$
2,213
72%
Florida
35
72%
Indiana
34
76%
Texas
34
62%
Michigan
32
79%
Oklahoma
31
78%
New Jersey
30
62%
Georgia
29
69%
15 largest commercial real estate loans
$
543
72%
Institutional banking loans outstanding at December 31, 2023
Type
Principal
% of total
(Dollars in millions)
SBLOC
$
980
53%
IBLOC
647
35%
Advisor financing
222
12%
Total
$
1,849
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 December 31, 2023
Principal amount
% Principal to collateral
(Dollars in millions)
$
11
20%
9
94%
9
39%
9
41%
9
94%
8
72%
8
68%
8
27%
8
52%
7
74%
Total and weighted average
$
86
57%
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 December 31, 2023, all were rated A- (Excellent) or better by AM BEST.
Direct lease financing by type as of December 31, 2023
Principal balance(1)
% Total
(Dollars in millions)
Government agencies and public institutions(2)
$
109
16%
Waste management and remediation services
106
15%
Construction
104
15%
Real estate and rental and leasing
76
11%
Manufacturing
35
5%
Finance and insurance
33
5%
Health care and social assistance
26
4%
Other services (except public administration)
26
4%
General freight trucking
25
4%
Professional, scientific, and technical services
22
3%
Wholesale trade
18
3%
Utilities
15
2%
Transportation and warehousing
14
2%
Other
77
11%
Total
$
686
100%
(1) Of the total $686.0 million of direct lease financing, $611.0 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 December 31, 2023
State
Principal balance
% Total
(Dollars in millions)
Florida
$
98
14%
Utah
67
10%
California
57
8%
New York
51
7%
Pennsylvania
42
6%
New Jersey
39
6%
North Carolina
35
5%
Maryland
33
5%
Texas
31
5%
Connecticut
30
4%
Idaho
17
2%
Washington
15
2%
Georgia
14
2%
Ohio
13
2%
Alabama
12
2%
Other States
132
20%
Total
$
686
100%
Capital ratios
Tier 1 capital
Tier 1 capital
Total capital
Common equity
to average
to risk-weighted
to risk-weighted
tier 1 to risk
assets ratio
assets ratio
assets ratio
weighted assets
As of December 31, 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%
As of December 31, 2022
The Bancorp, Inc.
9.63%
13.40%
13.87%
13.40%
The Bancorp Bank, National Association
10.73%
14.95%
15.42%
14.95%
"Well capitalized" institution (under federal regulations-Basel III)
5.00%
8.00%
10.00%
6.50%
Three months ended
Year ended
December 31,
December 31,
2023
2022
2023
2022
Selected operating ratios
Return on average assets(1)
2.38%
2.13%
2.59%
1.81%
Return on average equity(1)
22.10%
23.52%
25.62%
19.34%
Net interest margin
5.26%
4.21%
4.95%
3.55%
Book value per share table
December 31,
September 30,
June 30,
December 31,
2023
2023
2023
2022
Book value per share
$
15.17
$
14.36
$
13.74
$
12.46
Loan quality table
December 31,
September 30,
June 30,
December 31,
2023
2023
2023
2022
(Dollars in thousands)
Nonperforming loans to total loans
0.25%
0.30%
0.28%
0.33%
Nonperforming assets to total assets
0.39%
0.46%
0.47%
0.50%
Allowance for credit losses to total loans
0.51%
0.46%
0.44%
0.41%
Nonaccrual loans
$
11,525
$
15,100
$
14,027
$
10,356
Loans 90 days past due still accruing interest
1,744
677
563
7,775
Other real estate owned
16,949
18,756
20,952
21,210
Total nonperforming assets
$
30,218
$
34,533
$
35,542
$
39,341
Gross dollar volume (GDV) (1)
Three months ended
December 31,
September 30,
June 30,
December 31,
2023
2023
2023
2022
(Dollars in thousands)
Prepaid and debit card GDV
$
33,292,350
$
32,972,249
$
32,776,154
$
29,454,074
(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 December 31, 2023
(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%
$ 1,849
(26% )
(15% )
Small business lending(4)
7.3%
896
13%
17%
Leasing
7.4%
686
8%
9%
Commercial real estate (non-SBA loans, at fair value)
8.7%
216
nm
nm
Real estate bridge loans (recorded at book value)
9.3%
2,000
20%
33%
Weighted average yield
7.9%
$ 5,647
Non-interest income
% Growth
Deposits: Fintech solutions group
Current quarter
Year over year
Prepaid and debit card issuance, and other payments
2.5%
$ 5,998
6%
nm
$ 25.1
15%
(1) Average rates are for the three months ended December 31, 2023.
(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.
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.
December 31, 2023
(Dollars in thousands)
Federal Reserve Bank
$
1,947,513
Federal Home Loan Bank
731,500
Total lines of credit available
$
2,679,013
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.
December 31, 2023
Insured
91%
Low balance accounts
5%
Other uninsured
4%
Total deposits
100%
Calculation of efficiency ratio (1)
Three months ended
Year ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
(Dollars in thousands)
Net interest income
$
92,159
$
76,760
$
354,052
$
248,841
Non-interest income
26,989
25,740
112,094
105,683
Total revenue
$
119,148
$
102,500
$
466,146
$
354,524
Non-interest expense
$
45,610
$
43,475
$
191,042
$
169,502
Efficiency ratio
38%
42%
41%
48%
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240122830745/en/
The Bancorp, Inc.
Andres Viroslav
Director, Investor Relations
215-861-7990
andres.viroslav@thebancorp.com
Source: The Bancorp, Inc.
What was The Bancorp's net income for the fourth quarter of 2023?
The Bancorp reported net income of $44.0 million for the fourth quarter of 2023.
What was the increase in net interest income for The Bancorp?
Net interest income increased by 20% to $92.2 million.
What was the average interest rate on average deposits for The Bancorp?
The average interest rate on $6.37 billion of average deposits was 2.51%.
What is The Bancorp's 2024 guidance for earnings per share?
The CEO confirmed 2024 guidance of $4.25 per share.
When is The Bancorp's Quarterly Earnings Conference Call?
The Bancorp's Quarterly Earnings Conference Call is at 8:00 AM ET on Friday, January 26, 2024.