The Bancorp, Inc. Reports Third Quarter 2023 Financial Results
The Bancorp reports net income of $50.1 million for Q3 2023, a 70% increase YoY. Net interest income increases 37% to $88.9 million. Loans decrease by 1% QoQ. GDV increases by 17% to $32.97 billion. Small business loans grow 13% YoY. The Bancorp initiates 2024 preliminary guidance of $4.25 per share.
Positive
Net income increases by 70% YoY
Net interest income increases by 37%
GDV increases by 17%
Small business loans grow by 13% YoY
10/26/2023 - 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 third quarter of 2023.
Highlights
The Bancorp reported net income of $50.1 million , or $0.92 per diluted share, for the quarter ended September 30, 2023, compared to net income of $30.6 million , or $0.54 per diluted share, for the quarter ended September 30, 2022, or a 70% increase in income per diluted share.
Return on assets and equity for the quarter ended September 30, 2023 amounted to 2.7% and 26% , respectively, compared to 1.7% and 18% , respectively, for the quarter ended September 30, 2022 (all percentages “annualized”).
Net interest income increased 37% to $88.9 million for the quarter ended September 30, 2023, compared to $64.7 million for the quarter ended September 30, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on The Bancorp’s variable rate loans and securities.
Net interest margin amounted to 5.07% for the quarter ended September 30, 2023, compared to 3.69% for the quarter ended September 30, 2022, and 4.83% for the quarter ended June 30, 2023.
Loans, net of deferred fees and costs were $5.20 billion at September 30, 2023, compared to $5.49 billion at December 31, 2022 and $5.27 billion at September 30, 2022. Those changes reflected a decrease of 1% quarter over linked quarter and a decrease of 1% year over year.
Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.85 billion , or 17% , to $32.97 billion for the quarter ended September 30, 2023, compared to the quarter ended September 30, 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 12% to $24.1 million for the third quarter of 2023 compared to the third quarter of 2022.
Small business loans (“SBL”), including those held at fair value, grew 13% year over year to $830.1 million at September 30, 2023, and 3% quarter over linked quarter. That growth excludes Paycheck Protection Program (“PPP”) loan balances which amounted to $2.3 million and $6.7 million at September 30, 2023 and September 30, 2022, respectively.
Direct lease financing balances increased 12% year over year to $670.2 million at September 30, 2023, and 2% quarter over linked quarter.
At September 30, 2023, real estate bridge loans of $1.85 billion had grown 1% compared to the $1.83 billion balance at June 30, 2023, and 24% compared to the September 30, 2022 balance of $1.49 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 24% year over year and decreased 7% quarter over linked quarter to $1.92 billion at September 30, 2023.
The average interest rate on $6.41 billion of average deposits and interest-bearing liabilities during the third quarter of 2023 was 2.50% . Average deposits of $6.29 billion for the third quarter of 2023 reflected an increase of 3% from the $6.11 billion of average deposits for the quarter ended September 30, 2022, and a 3% decrease from $6.48 billion of average deposits in the second quarter of 2023. The decrease 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 $334.7 million at September 30, 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 September 30, 2023, as well as access to other liquidity.
As of September 30, 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 10.92% , 15.53% , 16.04% and 15.53% , 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 September 30, 2023 was $14.36 per share compared to $11.81 per common share at September 30, 2022, an increase of 22% .
The Bancorp repurchased 685,478 shares of its common stock at an average cost of $36.47 per share during the quarter ended September 30, 2023.
CEO and President Damian Kozlowski commented, “The Bancorp continues to produce record core profitability and exemplar financial performance in a challenging interest rate and macro environment for most financial institutions. We are initiating 2024 preliminary guidance of $4.25 a share without including the impact of share buybacks. The 2024 guidance is 18% earnings growth over 2023 guidance. In addition, as a result of our investments in growth and efficiency, the Bancorp’s increased ROE is driving a continued increase in our regulatory capital ratios. With the reg ii Durbin balance sheet limit of $10 billion , we are fast approaching the maximum equity capital needed to support our business growth into the future. Therefore, we are significantly increasing our planned buyback in 2024 by $100 million to $200 million or $50 million a quarter from $25 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, October 27, 2023 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 63043391. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 3, 2023 by dialing 1.877.674.7070, access code 043391#.
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
Nine months ended
September 30,
September 30,
Consolidated condensed income statements
2023
2022
2023
2022
(Dollars in thousands, except per share and share data)
Net interest income
$
88,882
$
64,659
$
261,893
$
172,081
Provision for credit losses
1,752
822
4,016
4,331
Non-interest income
ACH, card and other payment processing fees
2,553
2,230
7,153
6,552
Prepaid, debit card and related fees
21,513
19,175
67,013
57,865
Net realized and unrealized gains on commercial
loans, at fair value
525
745
4,171
11,262
Leasing related income
1,767
1,048
4,768
3,566
Other non-interest income
422
228
2,000
698
Total non-interest income
26,780
23,426
85,105
79,943
Non-interest expense
Salaries and employee benefits
30,475
28,001
93,427
77,848
Data processing expense
1,404
1,292
4,123
3,727
Legal expense
1,203
907
3,110
3,175
Legal settlement
—
—
—
1,152
Civil money penalty
—
1,750
—
1,750
FDIC insurance
806
679
2,233
2,326
Software
4,427
4,001
12,981
12,030
Other non-interest expense
9,144
8,200
29,558
24,019
Total non-interest expense
47,459
44,830
145,432
126,027
Income before income taxes
66,451
42,433
197,550
121,666
Income tax expense
16,314
11,829
49,282
31,694
Net income
50,137
30,604
148,268
89,972
Net income per share - basic
$
0.93
$
0.54
$
2.70
$
1.58
Net income per share - diluted
$
0.92
$
0.54
$
2.68
$
1.56
Weighted average shares - basic
54,175,184
56,429,425
54,828,547
56,782,524
Weighted average shares - diluted
54,738,610
57,008,224
55,336,354
57,510,986
Condensed consolidated balance sheets
September 30,
June 30,
December 31,
September 30,
2023 (unaudited)
2023 (unaudited)
2022
2022 (unaudited)
(Dollars in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks
$
4,881
$
6,496
$
24,063
$
22,537
Interest earning deposits at Federal Reserve Bank
898,533
874,050
864,126
700,175
Total cash and cash equivalents
903,414
880,546
888,189
722,712
Investment securities, available-for-sale, at fair value
756,636
776,410
766,016
790,594
Commercial loans, at fair value
379,603
396,581
589,143
818,040
Loans, net of deferred fees and costs
5,198,972
5,267,574
5,486,853
5,267,375
Allowance for credit losses
(24,145
)
(23,284
)
(22,374
)
(19,689
)
Loans, net
5,174,827
5,244,290
5,464,479
5,247,686
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock
20,157
20,157
12,629
12,629
Premises and equipment, net
28,978
26,408
18,401
18,443
Accrued interest receivable
34,159
34,062
32,005
25,506
Intangible assets, net
1,751
1,850
2,049
2,149
Other real estate owned
18,756
20,952
21,210
18,873
Deferred tax asset, net
20,379
19,215
19,703
27,241
Other assets
127,107
122,435
89,176
93,201
Total assets
$
7,465,767
$
7,542,906
$
7,903,000
$
7,777,074
Liabilities:
Deposits
Demand and interest checking
$
6,455,043
$
6,554,967
$
6,559,617
$
5,934,591
Savings and money market
49,428
68,084
140,496
575,381
Time deposits, $100,000 and over
—
—
330,000
401,331
Total deposits
6,504,471
6,623,051
7,030,113
6,911,303
Securities sold under agreements to repurchase
42
42
42
42
Senior debt
95,771
95,682
99,050
98,958
Subordinated debenture
13,401
13,401
13,401
13,401
Other long-term borrowings
9,861
9,917
10,028
38,928
Other liabilities
68,533
51,646
56,335
50,704
Total liabilities
$
6,692,079
$
6,793,739
$
7,208,969
$
7,113,336
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 53,867,129 and 56,201,560 shares issued and outstanding at September 30, 2023 and 2022, respectively
53,867
54,542
55,690
56,202
Additional paid-in capital
234,320
256,115
299,279
311,569
Retained earnings
517,587
467,450
369,319
329,078
Accumulated other comprehensive loss
(32,086
)
(28,940
)
(30,257
)
(33,111
)
Total shareholders' equity
773,688
749,167
694,031
663,738
Total liabilities and shareholders' equity
$
7,465,767
$
7,542,906
$
7,903,000
$
7,777,074
Average balance sheet and net interest income
Three months ended September 30, 2023
Three months ended September 30, 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)
$
5,603,514
$
110,506
7.89
%
$
5,904,996
$
75,536
5.12
%
Leases-bank qualified(3)
4,585
110
9.60
%
3,299
55
6.67
%
Investment securities-taxable
768,364
9,647
5.02
%
824,178
6,792
3.30
%
Investment securities-nontaxable(3)
3,005
50
6.66
%
3,559
31
3.48
%
Interest earning deposits at Federal Reserve Bank
639,946
8,689
5.43
%
267,424
1,525
2.28
%
Net interest earning assets
7,019,414
129,002
7.35
%
7,003,456
83,939
4.79
%
Allowance for credit losses
(23,147
)
(19,111
)
Other assets
338,085
212,078
$
7,334,352
$
7,196,423
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
6,229,668
$
37,913
2.43
%
$
5,545,115
$
12,726
0.92
%
Savings and money market
56,538
518
3.66
%
479,260
2,792
2.33
%
Time deposits
—
—
—
87,562
547
2.50
%
Total deposits
6,286,206
38,431
2.45
%
6,111,937
16,065
1.05
%
Short-term borrowings
—
—
—
200,423
1,235
2.46
%
Repurchase agreements
41
—
—
41
—
—
Long-term borrowings
9,889
128
5.18
%
39,035
506
5.19
%
Subordinated debentures
13,401
293
8.75
%
13,401
177
5.28
%
Senior debt
95,714
1,234
5.16
%
98,910
1,279
5.17
%
Total deposits and liabilities
6,405,251
40,086
2.50
%
6,463,747
19,262
1.19
%
Other liabilities
167,673
72,539
Total liabilities
6,572,924
6,536,286
Shareholders' equity
761,428
660,137
$
7,334,352
$
7,196,423
Net interest income on tax equivalent basis(3)
$
88,916
$
64,677
Tax equivalent adjustment
34
18
Net interest income
$
88,882
$
64,659
Net interest margin(3)
5.07
%
3.69
%
(1) Interest on loans for 2023 and 2022 includes $7,000 and $21,000 , 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
Nine months ended September 30, 2023
Nine months ended September 30, 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)
$
5,772,266
$
324,009
7.48
%
$
5,531,902
$
181,174
4.37
%
Leases-bank qualified(3)
3,920
279
9.49
%
3,657
185
6.75
%
Investment securities-taxable
773,485
28,820
4.97
%
880,426
17,115
2.59
%
Investment securities-nontaxable(3)
3,193
144
6.01
%
3,559
93
3.48
%
Interest earning deposits at Federal Reserve Bank
640,554
24,271
5.05
%
499,104
2,876
0.77
%
Net interest earning assets
7,193,418
377,523
7.00
%
6,918,648
201,443
3.88
%
Allowance for credit losses
(23,192
)
(19,087
)
Other assets
269,072
203,143
$
7,439,298
$
7,102,704
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
6,343,711
$
106,984
2.25
%
$
5,598,028
$
18,522
0.44
%
Savings and money market
88,738
2,465
3.70
%
522,525
4,192
1.07
%
Time deposits
27,802
858
4.11
%
29,508
547
2.47
%
Total deposits
6,460,251
110,307
2.28
%
6,150,061
23,261
0.50
%
Short-term borrowings
6,758
234
4.62
%
71,589
1,267
2.36
%
Repurchase agreements
41
—
—
41
—
—
Long-term borrowings
9,945
382
5.12
%
39,286
506
1.72
%
Subordinated debentures
13,401
825
8.21
%
13,401
432
4.30
%
Senior debt
97,220
3,793
5.20
%
98,817
3,838
5.18
%
Total deposits and liabilities
6,587,616
115,541
2.34
%
6,373,195
29,304
0.61
%
Other liabilities
117,822
71,413
Total liabilities
6,705,438
6,444,608
Shareholders' equity
733,860
658,096
$
7,439,298
$
7,102,704
Net interest income on tax equivalent basis(3)
$
261,982
$
172,139
Tax equivalent adjustment
89
58
Net interest income
$
261,893
$
172,081
Net interest margin(3)
4.86
%
3.32
%
(1) Interest on loans for 2023 and 2022 includes $27,000 and $502,000 , 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
Nine months ended
Year ended
September 30,
September 30,
December 31,
2023 (unaudited)
2022 (unaudited)
2022
(Dollars in thousands)
Balance in the allowance for credit losses at beginning of period
$
22,374
$
17,806
$
17,806
Loans charged-off:
SBA non-real estate
871
861
885
Direct lease financing
2,804
312
576
Consumer - other
3
—
—
Total
3,678
1,173
1,461
Recoveries:
SBA non-real estate
446
57
140
SBA commercial mortgage
75
—
—
Direct lease financing
220
108
124
Consumer - home equity
299
—
—
Other loans
—
—
24
Total
1,040
165
288
Net charge-offs
2,638
1,008
1,173
Provision for credit losses, excluding commitment provision
4,409
2,891
5,741
Balance in allowance for credit losses at end of period
$
24,145
$
19,689
$
22,374
Net charge-offs/average loans
0.05
%
0.02
%
0.03
%
Net charge-offs/average assets
0.04
%
0.01
%
0.02
%
Loan portfolio
September 30,
June 30,
December 31,
September 30,
2023 (unaudited)
2023 (unaudited)
2022
2022 (unaudited)
(Dollars in thousands)
SBL non-real estate
$
130,579
$
117,621
$
108,954
$
116,080
SBL commercial mortgage
547,107
515,008
474,496
429,865
SBL construction
19,204
32,471
30,864
26,841
Small business loans
696,890
665,100
614,314
572,786
Direct lease financing
670,208
657,316
632,160
599,796
SBLOC / IBLOC(1)
1,720,513
1,883,607
2,332,469
2,369,106
Advisor financing(2)
199,442
173,376
172,468
168,559
Real estate bridge loans
1,848,224
1,826,227
1,669,031
1,488,119
Other loans(3)
55,800
55,644
61,679
64,980
5,191,077
5,261,270
5,482,121
5,263,346
Unamortized loan fees and costs
7,895
6,304
4,732
4,029
Total loans, including unamortized fees and costs
$
5,198,972
$
5,267,574
$
5,486,853
$
5,267,375
Small business portfolio
September 30,
June 30,
December 31,
September 30,
2023 (unaudited)
2023 (unaudited)
2022
2022 (unaudited)
(Dollars in thousands)
SBL, including unamortized fees and costs
$
705,790
$
673,667
$
621,641
$
579,156
SBL, included in loans, at fair value
126,543
134,131
146,717
159,914
Total small business loans(4)
$
832,333
$
807,798
$
768,358
$
739,070
(1) SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At September 30, 2023 and December 31, 2022, IBLOC loans amounted to $712.6 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 $215,000 and $2.6 million at September 30, 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 September 30, 2023
Loan principal
(Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)
$
392
PPP loans(1)
2
Commercial mortgage SBA(2)
273
Construction SBA(3)
11
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)
109
Non-SBA SBLs
35
Total principal
$
822
Unamortized fees and costs
10
Total SBLs
$
832
(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 $7.0 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.
Small business loans by type as of September 30, 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 (except casino hotels) and motels
$
74
$
—
$
—
$
74
17%
Full-service restaurants
24
6
2
32
7%
Funeral homes and funeral services
27
—
—
27
6%
Car washes
19
—
—
19
4%
Child day care services
15
1
1
17
4%
Outpatient mental health and substance abuse centers
15
—
—
15
4%
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%
General warehousing and storage
7
—
—
7
2%
Plumbing, heating, and air-conditioning companies
6
—
1
7
2%
Caterers
6
—
—
6
1%
Limited-service restaurants
3
1
3
7
2%
Specialty trade contractors
5
—
—
5
1%
Lessors of residential buildings and dwellings
5
—
—
5
1%
Miscellaneous durable goods merchant
5
—
—
5
1%
Packaged frozen food merchant wholesalers
5
—
—
5
1%
Technical and trade schools
5
—
—
5
1%
All other amusement and recreation
4
—
—
4
1%
Offices of dentists
3
—
—
3
1%
Vocational rehabilitation services
—
3
—
3
1%
Other warehousing and storage
3
—
—
3
1%
Other(2)
96
1
28
125
30%
Total
$
378
$
12
$
38
$
428
100%
(1) Of the SBL commercial mortgage and SBL construction loans, $106.0 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.
(2) Loan types of less than $3.0 million are spread over approximately one hundred different business types.
State diversification as of September 30, 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
$
78
$
4
$
3
$
85
20%
Florida
69
1
3
73
17%
North Carolina
39
1
2
42
10%
New York
24
1
3
28
7%
New Jersey
17
3
4
24
6%
Texas
19
—
4
23
5%
Pennsylvania
21
—
1
22
5%
Georgia
18
1
2
21
5%
Other States <$15 million
93
1
16
110
25%
Total
$
378
$
12
$
38
$
428
100%
(1) Of the SBL commercial mortgage and SBL construction loans, $106.0 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.
Top 10 loans as of September 30, 2023
Type(1)
State
SBL commercial mortgage
(Dollars in millions)
Mental health and substance abuse center
FL
$
10
Funeral homes and funeral services
ME
9
Hotel
FL
8
Offices of lawyers
CA
8
Hotel
NC
7
General warehousing and storage
PA
7
Hotel
FL
6
Hotel
NY
6
Hotel
NC
6
Mental health and substance abuse center
NJ
5
Total
$
72
(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, 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)
139
$
1,848
71%
9.30%
Non-SBA commercial real estate loans, at fair value:
Multi-family (apartment bridge loans)(1)
11
$
207
76%
8.80%
Hospitality (hotels and lodging)
2
27
65%
9.80%
Retail
2
12
72%
7.30%
Other
2
9
73%
5.00%
17
255
75%
8.69%
Fair value adjustment
(2
)
Total non-SBA commercial real estate loans, at fair value
253
Total commercial real estate loans
$
2,101
72%
9.24%
(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 September 30, 2023
15 largest loans as of September 30, 2023
State
Balance
Origination date LTV
State
Balance
Origination date LTV
(Dollars in millions)
(Dollars in millions)
Texas
$
780
73%
Texas
$
46
75%
Georgia
243
69%
Texas
44
72%
Florida
204
70%
Tennessee
40
72%
Tennessee
88
70%
Texas
39
75%
Michigan
82
71%
Texas
39
79%
Ohio
72
67%
Texas
37
80%
Indiana
66
72%
Michigan
37
62%
Other States each <$65 million
566
73%
Florida
35
72%
Total
$
2,101
72%
Indiana
34
76%
Texas
33
62%
Texas
33
67%
Michigan
33
79%
Oklahoma
31
78%
Tennessee
30
71%
Georgia
29
69%
15 largest commercial real estate loans
$
540
73%
Institutional banking loans outstanding at September 30, 2023
Type
Principal
% of total
(Dollars in millions)
SBLOC
$
1,008
53%
IBLOC
713
37%
Advisor financing
199
10%
Total
$
1,920
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 September 30, 2023
Principal amount
% Principal to collateral
(Dollars in millions)
$
12
25%
9
39%
9
44%
9
62%
9
95%
8
77%
8
71%
8
28%
7
75%
7
34%
Total and weighted average
$
86
54%
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 September 30, 2023, all were rated A- (Excellent) or better by AM BEST.
Direct lease financing by type as of September 30, 2023
Principal balance(1)
% Total
(Dollars in millions)
Construction
$
118
18%
Waste management and remediation services
91
14%
Government agencies and public institutions(2)
89
13%
Real estate and rental and leasing
58
9%
Manufacturing
41
6%
Health care and social assistance
34
5%
Retail trade
34
5%
Finance and insurance
31
5%
Professional, scientific, and technical services
27
4%
Wholesale trade
16
2%
Transportation and warehousing
11
2%
Mining, quarrying, and oil and gas extraction
11
2%
Water supply and irrigation systems
9
1%
Other
100
14%
Total
$
670
100%
(1) Of the total $670.0 million of direct lease financing, $588.0 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 September 30, 2023
State
Principal balance
% Total
(Dollars in millions)
Florida
$
100
15%
Utah
66
10%
California
60
9%
Pennsylvania
41
6%
New Jersey
38
6%
New York
35
5%
North Carolina
34
5%
Texas
31
5%
Maryland
31
5%
Connecticut
28
4%
Idaho
17
3%
Washington
15
2%
Georgia
14
2%
Ohio
13
2%
Alabama
11
2%
Other States
136
19%
Total
$
670
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, 2023
The Bancorp, Inc.
10.92%
15.53%
16.04%
15.53%
The Bancorp Bank, National Association
12.13%
17.26%
17.77%
17.26%
"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
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
Selected operating ratios
Return on average assets(1)
2.71%
1.69%
2.66%
1.69%
Return on average equity(1)
26.12%
18.39%
27.01%
18.28%
Net interest margin
5.07%
3.69%
4.86%
3.32%
(1) Annualized
Book value per share table
September 30,
June 30,
December 31,
September 30,
2023
2023
2022
2022
Book value per share
$
14.36
$
13.74
$
12.46
$
11.81
Loan quality table
September 30,
June 30,
December 31,
September 30,
2023
2022
2022
2022
(Dollars in thousands)
Nonperforming loans to total loans
0.30%
0.28%
0.33%
0.16%
Nonperforming assets to total assets
0.46%
0.47%
0.50%
0.35%
Allowance for credit losses to total loans
0.46%
0.44%
0.41%
0.37%
Nonaccrual loans
$
15,100
$
14,027
$
10,356
$
3,860
Loans 90 days past due still accruing interest
677
563
7,775
4,415
Other real estate owned
18,756
20,952
21,210
18,873
Total nonperforming assets
$
34,533
$
35,542
$
39,341
$
27,148
Gross dollar volume (GDV) (1)
Three months ended
September 30,
June 30,
December 31,
September 30,
2023
2023
2022
2022
(Dollars in thousands)
Prepaid and debit card GDV
$
32,972,249
$
32,776,154
$
29,454,074
$
28,119,428
(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, 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)
6.7
%
$
1,920
(24
%)
(27
%)
Small business lending(4)
7.0
%
832
13
%
12
%
Leasing
7.1
%
670
12
%
8
%
Commercial real estate (non-SBA loans, at fair value)
8.7
%
253
nm
nm
Real estate bridge loans (recorded at book value)
9.3
%
1,848
24
%
5
%
Weighted average yield
7.8
%
$
5,523
Non-interest income
% Growth
Deposits: Fintech solutions group
Current quarter
Year over year
Prepaid and debit card issuance, and other payments
2.5
%
$
6,007
11
%
nm
$
24.1
12
%
(1) Average rates are for the three months ended September 30, 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. Loan growth percentages exclude short-term PPP loans.
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.
September 30, 2023
(Dollars in thousands)
Federal Reserve Bank
$
1,938,195
Federal Home Loan Bank
731,500
Total lines of credit available
$
2,669,695
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, 2023
Insured
91%
Low balance accounts
5%
Other uninsured
4%
Total deposits
100%
Calculation of efficiency ratio (1)
Three months ended
September 30,
December 31,
2023
2022
(Dollars in thousands)
Net interest income
$
88,882
$
76,760
Non-interest income
26,780
25,740
Total revenue
$
115,662
$
102,500
Non-interest expense
$
47,459
$
43,475
Efficiency ratio
41%
42%
(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/20231024091378/en/
The Bancorp, Inc.
Andres Viroslav
Director, Investor Relations
215-861-7990
andres.viroslav@thebancorp.com
Source: The Bancorp, Inc.
What is the net income for Q3 2023?
The net income for Q3 2023 is $50.1 million.
What is the increase in net interest income?
Net interest income increased by 37%.
What is the growth rate of small business loans?
Small business loans grew by 13% YoY.
What is the decrease in loans?
Loans decreased by 1% QoQ.
What is the preliminary guidance for 2024?
The preliminary guidance for 2024 is $4.25 per share.