The Bancorp, Inc. Reports Fourth Quarter 2021 Financial Results
01/27/2022 | 04:08pm EDT
The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2021.
Highlights
For the quarter ended December 31, 2021, The Bancorp earned net income of $27.0 million, or $0.46 diluted earnings per share.
Return on assets and equity for the quarter ended December 31, 2021 amounted to 1.7% and 17%, respectively, compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020 (all percentages “annualized.”)
Net interest margin amounted to 3.51% for the quarter ended December 31, 2021, compared to 3.58% for the quarter ended December 31, 2020.
Net interest income was $52.2 million for the quarter ended December 31, 2021 compared to $51.7 million for the quarter ended December 31, 2020. In the fourth quarter of 2021, growth in net interest income was significantly offset by a reduction of $3.8 million resulting from non-SBA commercial loan prepayments. However, net realized and unrealized gains on commercial loans increased over $4 million over those respective periods, primarily as a result of fees related to those prepayments. We have resumed the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs, and grow the portfolio.
Excluding loans at fair value, which were originally generated for sale, total loans increased 41% to $3.75 billion at December 31, 2021, compared to $2.65 billion at December 31, 2020.
Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $2.44 billion, or 11%, to $24.96 billion for the quarter ended December 31, 2021 compared to the quarter ended December 31, 2020.
SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 28% year over year and 7% quarter over quarter to $2.05 billion at December 31, 2021.
Small Business Loans, including those held at fair value, grew 6% year over year to $696.2 million at December 31, 2021. That growth is exclusive of Paycheck Protection Program (“PPP”) loan balances of $44.8 million and $165.7 million, respectively, at December 31, 2021 and December 31, 2020.
Direct lease financing balances increased 15% year over year to $531.0 million at December 31, 2021.
We resumed non-SBA commercial real estate lending in the third quarter of 2021 classified as real estate bridge lending. As of December 31, 2021 total real estate bridge loans amounted to $621.7 million, collateralized by apartment buildings.
The average interest rate on $5.47 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2021 was 0.19%. Average deposits of $5.31 billion for the fourth quarter 2021, reflected an increase of 1% from the $5.25 billion of average deposits for the quarter ended December 31, 2020.
As of December 31, 2021, substantially all the borrowers with COVID-19 related payment deferrals had resumed making payments.
As of December 31, 2021, 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 10.40%, 14.72%, 15.13% and 14.72%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and The Bank each remain well capitalized under banking regulations.
Book value per common share at December 31, 2021 was $11.37 per share compared to $10.10 per share at December 31, 2020, an increase of 13%, primarily as a result of retained earnings.
The Bancorp repurchased 350,431 shares of its common stock at an average cost of $28.54 per share during the quarter ended December 31, 2021.
“Our lending platform and fin-tech ecosystem will support continued growth into 2022,” said The Bancorp CEO and President Damian Kozlowski. “We continue to improve our performance, while delivering enhanced capabilities to our many innovative partners which are revolutionizing the financial services industry. Additionally, we reaffirm our 2022 guidance of $2.15 per share, which excludes the net impact of planned stock repurchases.”
The Bancorp reported net income of $27.0 million, or $0.46 per diluted share, for the quarter ended December 31, 2021, compared to net income of $24.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020.
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 28, 2022 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 7390458. 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 4, 2022 by dialing 855.859.2056, access code 7390458.
About The Bancorp
The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, 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. in June 2021, 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. As evidence of its company-wide commitment to excellence, The Bancorp has also been ranked in October 2020 as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer in March 2021 by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600 in May 2021. 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,
Condensed income statement
2021
2020
2021
2020
(in thousands, except per share data)
Net interest income
$
52,157
$
51,713
$
210,876
$
194,866
Provision for credit losses
1,626
554
3,110
6,352
Non-interest income
ACH, card and other payment processing fees
1,921
1,788
7,526
7,101
Prepaid, debit card and related fees
17,776
17,818
74,654
74,465
Net realized and unrealized gains (losses) on commercial
loans, at fair value
6,004
1,538
14,885
(3,874)
Change in value of investment in unconsolidated entity
—
—
—
(45)
Leasing related income
1,757
499
6,457
3,294
Other non-interest income
768
1,657
1,227
3,676
Total non-interest income
28,226
23,300
104,749
84,617
Non-interest expense
Salaries and employee benefits
28,159
27,087
105,998
101,737
Data processing expense
1,183
1,174
4,664
4,712
Legal expense
1,499
1,005
6,848
5,141
FDIC insurance
351
2,121
5,586
9,808
Software
4,224
3,570
15,659
14,028
Other non-interest expense
7,784
6,826
29,595
29,421
Total non-interest expense
43,200
41,783
168,350
164,847
Income from continuing operations before income taxes
35,557
32,676
144,165
108,284
Income tax expense
8,529
8,655
33,724
27,688
Net income from continuing operations
27,028
24,021
110,441
80,596
Discontinued operations
(Loss) income from discontinued operations before income taxes
(36)
(1,096)
288
(3,816)
Income tax (benefit) expense
—
(1,246)
76
(3,304)
Net (loss) income from discontinued operations, net of tax
(36)
150
212
(512)
Net income
$
26,992
$
24,171
$
110,653
$
80,084
Net income per share from continuing operations - basic
$
0.47
$
0.42
$
1.93
$
1.40
Net income (loss) per share from discontinued operations - basic
$
—
$
—
$
—
$
(0.01)
Net income per share - basic
$
0.47
$
0.42
$
1.93
$
1.39
Net income per share from continuing operations - diluted
$
0.46
$
0.41
$
1.88
$
1.38
Net income (loss) per share from discontinued operations - diluted
$
—
$
—
$
—
$
(0.01)
Net income per share - diluted
$
0.46
$
0.41
$
1.88
$
1.37
Weighted average shares - basic
56,966,661
57,597,124
57,190,311
57,474,612
Weighted average shares - diluted
58,369,204
59,146,222
58,830,437
58,411,222
Note: Compared to higher rates in recent periods, the respective effective tax rates for the three and twelve months ended December 31, 2021 approximated 24% and 23% as a result of the impact of excess tax deductions related to stock-based compensation, recorded as discrete items. The large deductions and tax benefits resulted from the increase in the Company’s stock price as compared to the original grant date.
Balance sheet
December 31,
September 30,
June 30,
December 31,
2021 (unaudited)
2021 (unaudited)
2021 (unaudited)
2020
(in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks
$
5,382
$
6,687
$
5,470
$
5,984
Interest earning deposits at Federal Reserve Bank
596,402
310,642
583,498
339,531
Total cash and cash equivalents
601,784
317,329
588,968
345,515
Investment securities, available-for-sale, at fair value
953,709
1,054,223
1,106,075
1,206,164
Commercial loans, at fair value
1,326,836
1,550,025
1,690,216
1,810,812
Loans, net of deferred fees and costs
3,747,224
3,136,662
2,915,344
2,652,323
Allowance for credit losses
(17,806)
(16,159)
(15,292)
(16,082)
Loans, net
3,729,418
3,120,503
2,900,052
2,636,241
Federal Home Loan Bank and Atlantic Central Bankers Bank stock
1,663
1,663
1,667
1,368
Premises and equipment, net
16,156
16,602
17,392
17,608
Accrued interest receivable
17,871
17,180
18,668
20,458
Intangible assets, net
2,447
2,547
2,646
2,845
Other real estate owned
1,530
2,145
—
—
Deferred tax asset, net
12,667
12,237
10,923
9,757
Investment in unconsolidated entity, at fair value
—
—
24,988
31,294
Assets held-for-sale from discontinued operations
82,191
87,904
97,496
113,650
Other assets
96,967
86,105
91,516
81,129
Total assets
$
6,843,239
$
6,268,463
$
6,550,607
$
6,276,841
Liabilities:
Deposits
Demand and interest checking
$
5,561,365
$
4,734,352
$
5,225,024
$
5,205,010
Savings and money market
415,546
378,160
459,688
257,050
Total deposits
5,976,911
5,112,512
5,684,712
5,462,060
Securities sold under agreements to repurchase
42
42
42
42
Short-term borrowings
—
300,000
—
—
Senior debt
98,682
98,590
98,498
98,314
Subordinated debenture
13,401
13,401
13,401
13,401
Other long-term borrowings
39,521
39,715
39,901
40,277
Other liabilities
62,228
66,226
94,944
81,583
Total liabilities
$
6,190,785
$
5,630,486
$
5,931,498
$
5,695,677
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,370,563 and 57,550,629 shares issued and outstanding at December 30, 2021 and 2020, respectively
57,371
57,331
57,458
57,551
Additional paid-in capital
349,686
357,528
363,241
377,452
Retained earnings
239,106
212,114
183,853
128,453
Accumulated other comprehensive income
6,291
11,004
14,557
17,708
Total shareholders' equity
652,454
637,977
619,109
581,164
Total liabilities and shareholders' equity
$
6,843,239
$
6,268,463
$
6,550,607
$
6,276,841
Note: Previous balance sheets included investment in unconsolidated entity, which reflected Bancorp’s balance of the Walnut Street investment. Walnut Street was comprised of Bancorp loans sold to that entity, which was partially financed by an independent investor. In the third quarter of 2021, The Bancorp and that investor dissolved the entity, as the remaining balance did not warrant ongoing administrative and accounting expenses. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.
Average balance sheet and net interest income
Three months ended December 31, 2021
Three months ended December 31, 2020
(dollars in thousands)
Average
Average
Average
Average
Assets:
Balance
Interest
Rate
Balance
Interest
Rate
Interest earning assets:
Loans, net of deferred fees and costs**
$
4,766,271
$
48,792
4.09%
$
4,329,794
$
45,524
4.21%
Leases-bank qualified*
4,465
76
6.81%
7,346
138
7.51%
Investment securities-taxable
954,172
5,770
2.42%
1,239,062
9,229
2.98%
Investment securities-nontaxable*
3,558
31
3.49%
4,041
35
3.46%
Interest earning deposits at Federal Reserve Bank
208,120
65
0.12%
193,560
48
0.10%
Net interest earning assets
5,936,586
54,734
3.69%
5,773,803
54,974
3.81%
Allowance for credit losses
(17,108)
(15,804)
Assets held-for-sale from discontinued operations
83,821
708
3.38%
117,482
965
3.29%
Other assets
189,760
220,595
$
6,193,059
$
6,096,076
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
4,931,891
$
1,015
0.08%
$
4,978,562
$
1,679
0.13%
Savings and money market
373,381
114
0.12%
270,820
134
0.20%
Total deposits
5,305,272
1,129
0.09%
5,249,382
1,813
0.14%
Short-term borrowings
53,315
34
0.26%
32,989
17
0.21%
Repurchase agreements
41
—
—
41
—
—
Subordinated debentures
13,401
112
3.34%
13,401
116
3.46%
Senior debt
100,419
1,280
5.10%
100,031
1,279
5.12%
Total deposits and liabilities
5,472,448
2,555
0.19%
5,395,844
3,225
0.24%
Other liabilities
75,395
130,420
Total liabilities
5,547,843
5,526,264
Shareholders' equity
645,216
569,812
$
6,193,059
$
6,096,076
Net interest income on tax equivalent basis*
$
52,887
$
52,714
Tax equivalent adjustment
22
36
Net interest income
$
52,865
$
52,678
Net interest margin *
3.51%
3.58%
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value. All periods include non-accrual loans.
NOTE: In the table above, interest on loans for 2021 includes $991,000 of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.
Average balance sheet and net interest income
Year ended December 31, 2021
Year ended December 31, 2020
(dollars in thousands)
Average
Average
Average
Average
Assets:
Balance
Interest
Rate
Balance
Interest
Rate
Interest earning assets:
Loans, net of deferred fees and costs**
$
4,597,977
$
192,338
4.18%
$
3,931,758
$
170,449
4.34%
Leases-bank qualified*
5,557
377
6.78%
8,885
647
7.28%
Investment securities-taxable
1,059,229
28,661
2.71%
1,317,031
37,822
2.87%
Investment securities-nontaxable*
3,757
130
3.46%
4,412
145
3.29%
Interest earning deposits at Federal Reserve Bank
637,056
715
0.11%
381,290
1,885
0.49%
Net interest earning assets
6,303,576
222,221
3.53%
5,643,376
210,948
3.74%
Allowance for credit losses
(16,469)
(13,878)
Assets held for sale from discontinued operations
95,527
3,096
3.24%
127,519
4,222
3.31%
Other assets
217,476
226,210
$
6,600,110
$
5,983,227
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking
$
5,321,283
$
5,022
0.09%
$
4,864,236
$
11,356
0.23%
Savings and money market
427,708
601
0.14%
291,204
442
0.15%
Time deposits
—
—
—
79,439
1,483
1.87%
Total deposits
5,748,991
5,623
0.10%
5,234,879
13,281
0.25%
Short-term borrowings
19,958
49
0.25%
27,322
198
0.72%
Repurchase agreements
41
—
—
49
—
—
Subordinated debentures
13,401
449
3.35%
13,401
524
3.91%
Senior debt
100,283
5,118
5.10%
38,532
1,913
4.96%
Total deposits and liabilities
5,882,674
11,239
0.19%
5,314,183
15,916
0.30%
Other liabilities
100,627
137,983
Total liabilities
5,983,301
5,452,166
Shareholders' equity
616,809
531,061
$
6,600,110
$
5,983,227
Net interest income on tax equivalent basis*
$
214,078
$
199,254
Tax equivalent adjustment
106
166
Net interest income
$
213,972
$
199,088
Net interest margin *
3.35%
3.45%
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value. All periods include non-accrual loans.
NOTE: In the table above, the 2021 interest on loans reflects $4.6 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund PPP loans, which did not significantly increase average loans or assets and which are not expected to recur. Interest on loans in each of 2021 and 2020 also includes $5.8 million of interest and fees on PPP loans. Increases in interest earning deposits at the Federal Reserve Bank reflect increased deposits resulting from stimulus payments distributed to a large segment of the population, resulting from December 2020 federal legislation.
Allowance for credit losses
Year ended
December 31,
December 31,
2021
2020
(dollars in thousands)
Balance in the allowance for credit losses at beginning of period (1)
$
16,082
$
12,875
Loans charged-off:
SBA non-real estate
1,138
1,350
SBA commercial mortgage
417
–
Direct lease financing
412
2,243
SBLOC
15
–
Consumer - home equity
10
–
Consumer - other
14
–
Total
2,006
3,593
Recoveries:
SBA non-real estate
51
103
SBA commercial mortgage
9
–
Direct lease financing
58
570
Consumer - home equity
1,099
–
Total
1,217
673
Net charge-offs
789
2,920
Provision credited to allowance, excluding commitment provision
2,513
6,127
Balance in allowance for credit losses at end of period
$
17,806
$
16,082
Net charge-offs/average loans
0.03%
0.07%
Net charge-offs/average assets
0.01%
0.05%
(1) Excludes activity from assets held-for-sale from discontinued operations.
Loan portfolio
December 31,
September 30,
June 30,
December 31,
2021
2021
2021
2020
(in thousands)
SBL non-real estate
$
147,722
$
171,845
$
228,958
$
255,318
SBL commercial mortgage
361,171
367,272
343,487
300,817
SBL construction
27,199
23,117
18,494
20,273
Small business loans *
536,092
562,234
590,939
576,408
Direct lease financing
531,012
514,068
506,424
462,182
SBLOC / IBLOC**
1,929,581
1,834,523
1,729,628
1,550,086
Advisor financing ***
115,770
81,143
72,190
48,282
Real estate bridge lending
621,702
128,699
–
–
Other loans ****
5,014
4,917
5,840
6,426
3,739,171
3,125,584
2,905,021
2,643,384
Unamortized loan fees and costs
8,053
11,078
10,323
8,939
Total loans, net of unamortized fees and costs
$
3,747,224
$
3,136,662
$
2,915,344
$
2,652,323
Small business portfolio
December 31,
September 30,
June 30,
December 31,
2021
2021
2021
2020
(in thousands)
SBL, including unamortized fees and costs
$
541,437
$
566,472
$
593,401
$
577,944
SBL, included in commercial loans, at fair value
199,585
214,301
225,534
243,562
Total small business loans
$
741,022
$
780,773
$
818,935
$
821,506
* The preceding table shows small business loans and small business loans held at fair value. The small business loans held at fair value are comprised of the government guaranteed portion of certain SBA loans at the dates indicated (in thousands). A reduction in SBL non-real estate from $171.8 million to $147.7 million in the fourth quarter of 2021 resulted from U.S. government repayments of $26.5 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $44.8 million at December 31, 2021 and $165.7 million at December 31, 2020, respectively.
** Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of eligible life insurance policies.
*** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value ratios of 70%, based on third-party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.
**** Included in the table above under Other loans are demand deposit overdrafts reclassified as loan balances totaling $322,000 and $663,000 at December 31, 2021 and December 31, 2020, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.
Small business loans as of December 31, 2021
Loan principal
(in millions)
U.S. government guaranteed portion of SBA loans (a)
$
371
Paycheck Protection Program loans (PPP) (a)
45
Commercial mortgage SBA (b)
183
Construction SBA (c)
17
Non-guaranteed portion of U.S. government guaranteed loans (d)
100
Non-SBA small business loans (e)
17
Total principal
$
733
Unamortized fees and costs
8
Total small business loans
$
741
(a) This is the portion of SBA 7a loans (7a) and PPP loans which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.
(b) Substantially all these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan-to-value percentages (“LTV”), generally 50-60%, to which the Bank adheres.
(c) Of the $17 million in Construction SBA loans, $13 million are 504 first mortgages with an origination date LTV of 50-60% and $4 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.
(d) The $100 million represents the unguaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners.
(e) The $17 million of non-SBA loans is comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators, are considered seasoned and have performed as agreed.
Small business loans by type as of December 31, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)
SBL commercial mortgage*
SBL construction*
SBL non-real estate
Total
% Total
(in millions)
Hotels and motels
$
65
$
4
$
—
$
69
22%
Full-service restaurants
13
2
3
18
6%
Child day care services
14
—
1
15
5%
Outpatient mental health and substance abuse centers
14
—
—
14
5%
Baked goods stores
4
—
9
13
4%
Lessors of nonresidential buildings
11
—
—
11
4%
Car washes
10
—
—
10
3%
Offices of lawyers
9
—
—
9
3%
Funeral homes and funeral services
8
—
—
8
3%
All other amusement and recreation industries
7
—
1
8
2%
General warehousing and storage
7
—
—
7
2%
Fitness and recreational sports centers
—
5
2
7
2%
Assisted living facilities for the elderly
6
—
—
6
2%
Limited-service restaurants
1
2
3
6
1%
Gasoline stations with convenience stores
4
—
—
4
1%
Other technical and trade schools
—
4
—
4
1%
Offices of dentists
3
—
—
3
1%
Other warehousing and storage
3
—
—
3
1%
All other miscellaneous wood product manufacturing
3
—
—
3
1%
Plumbing, heating, and air-conditioning contractors
3
—
—
3
1%
Other performing arts companies
3
—
—
3
1%
Offices of physicians
3
—
—
3
1%
Lessors of other real estate property
2
—
—
2
1%
All other miscellaneous general purpose machinery manufacturing
2
—
—
2
1%
Landscaping services
1
—
1
2
1%
Sewing, needlework, and piece goods stores
2
—
—
2
1%
Automotive body, paint, and interior repair and maintenance
2
—
—
2
1%
Pet care (except veterinary) services
2
—
—
2
1%
Amusement arcades
2
—
—
2
1%
Caterers
2
—
—
2
1%
Offices of real estate agents and brokers
2
—
—
2
1%
Other**
45
—
26
71
19%
Total
$
253
$
17
$
46
$
316
100%
* Of the SBL commercial mortgage and SBL construction loans, $65 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.
**Loan types less than $2 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.
State diversification as of December 31, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)
SBL commercial mortgage*
SBL construction*
SBL non-real estate
Total
% Total
(in millions)
Florida
$
59
$
—
$
6
$
65
21%
California
42
2
4
48
15%
North Carolina
23
5
3
31
10%
Pennsylvania
27
—
3
30
9%
New York
14
5
3
22
7%
Illinois
16
—
2
18
6%
Texas
12
—
4
16
5%
New Jersey
6
—
7
13
4%
Virginia
9
—
—
9
3%
Tennessee
10
—
—
10
3%
Colorado
3
5
1
9
3%
Michigan
4
—
1
5
2%
Georgia
3
—
1
4
1%
Ohio
3
—
1
4
1%
Washington
3
—
—
3
1%
Other States
19
—
10
29
9%
Total
$
253
$
17
$
46
$
316
100%
* Of the SBL commercial mortgage and SBL construction loans, $65 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values.
Top 10 loans as of December 31, 2021
Type*
State
SBL commercial mortgage*
(in millions)
Mental health and substance abuse center
FL
$
10
Hotel
FL
9
Lawyers office
CA
9
General warehousing and storage
PA
7
Hotel
NC
6
Assisted living facility
FL
5
Hotel
NY
5
Hotel
NC
5
Mental health and substance abuse center
PA
4
Hotel
PA
4
Total
$
64
* All of the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value and are in the commercial mortgage category. The top 10 loan 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, 2021
Type
# Loans
Balance
Weighted average origination date LTV
Weighted average interest rate
(dollars in millions)
Real estate bridge lending (multi-family apartments)*
57
$
622
74%
3.99%
Commercial real estate loans, at fair value:
Multi-family (apartments)*
86
$
988
76%
4.75%
Hospitality (hotels and lodging)
9
69
65%
5.68%
Retail
6
61
71%
4.33%
Other
7
13
73%
5.12%
108
1,131
75%
4.79%
Fair value adjustment
(4)
Total commercial real estate loans, at fair value
1,127
Total commercial real estate loans
$
1,749
75%
4.52%
*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 are not accounted for at fair value.
State diversification as of December 31, 2021
15 largest loans (all multi-family) as of December 31, 2021
State
Balance
Origination date LTV
State
Balance
Origination date LTV
(in millions)
(in millions)
Texas
$
607
76%
Texas
$
39
79%
Georgia
168
75%
Texas
37
75%
Ohio
111
72%
Texas
37
80%
Alabama
90
74%
Tennessee
30
62%
Florida
76
74%
Missouri
30
72%
Arizona
65
74%
Texas
30
75%
Tennessee
64
66%
Mississippi
29
79%
Other States each <$55 million
568
73%
Texas
29
77%
Total
$
1,749
74%
North Carolina
28
77%
Texas
27
77%
New Jersey
27
77%
Oklahoma
27
78%
Ohio
26
74%
Texas
26
77%
Ohio
22
75%
15 Largest loans
$
444
76%
Institutional banking loans outstanding at December 31, 2021
Type
Principal
% of total
(in millions)
Securities backed lines of credit (SBLOC)
$
1,141
56%
Insurance backed lines of credit (IBLOC)
788
39%
Advisor financing
116
5%
Total
$
2,045
100%
For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While equities have fallen in excess of 30% in recent 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. Secondly, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the percentage of principal to collateral.
Top 10 SBLOC loans at December 31, 2021
Principal amount
% Principal to collateral
(in millions)
$
18
37%
14
25%
9
31%
9
56%
9
35%
8
70%
8
65%
7
13%
7
44%
6
32%
Total and weighted average
$
95
40%
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 lend up to 100% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, eight insurance companies have been approved and, as of August 14, 2021, all were rated Excellent (A or better) by AM BEST.
Direct lease financing* by type as of December 31, 2021
Principal balance
% Total
(in millions)
Construction
$
100
19%
Government agencies and public institutions**
78
15%
Waste management and remediation services
62
12%
Real estate and rental and leasing
54
10%
Retail trade
46
9%
Wholesale purchase
39
7%
Health care and social assistance
30
6%
Transportation and warehousing
28
5%
Professional, scientific, and technical services
19
4%
Wholesale trade
16
3%
Manufacturing
16
3%
Educational services
8
2%
Other
35
5%
Total
$
531
100%
* Of the total $531 million of direct lease financing, $475 million consisted of vehicle leases with the remaining balance consisting of equipment leases.
** Includes public universities and school districts.
Direct lease financing by state as of December 31, 2021
(1) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.
Business line quarterly summary
Quarter ended December 31, 2021
(dollars in millions)
Balances
% Growth
Major business lines
Average approximate rates *
Balances **
Year over year
Linked quarter annualized
Loans
Institutional banking ***
2.6%
$ 2,045
28%
27%
Small business lending****
5.0%
741
6%
(8%)
Leasing
5.9%
531
15%
13%
Commercial real estate (non-SBA at fair value)
4.7%
1,127
nm
nm
Real estate bridge lending
4.0%
622
nm
nm
Weighted average yield
3.9%
$ 5,066
Non-interest income
% Growth
Deposits: Fintech solutions group
Current quarter
Year over year
Prepaid and debit card issuance, and other payments
0.1%
$ 4,948
7%
nm
$ 19.7
1%
* Average rates are for the quarter ended December 31, 2021.
** Loan and deposit categories are respectively based on period-end and average quarterly balances.
*** 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.
**** Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans.
Dissolution of Walnut Street
Previous press releases included tables related to the Walnut Street investment, shown as investment in unconsolidated entity on the balance sheet. Walnut Street was comprised of Bancorp loans sold to that entity, which was partially financed by an independent investor. In the third quarter of 2021, The Bancorp and that investor dissolved the entity, as the remaining balance did not warrant ongoing administrative and accounting expenses. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.
Quarterly activity for commercial loan discontinued principal
Commercial
loan principal
(in millions)
Commercial loan discontinued principal September 30, 2021 before marks
$
48
Quarterly paydowns and other reductions
(4)
Commercial loan discontinued principal December 31, 2021 before marks
44
Marks December 31, 2021
(3)
Net commercial loan exposure December 31, 2021
41
Residential mortgages
23
Net loans
64
Florida mall in other real estate owned
15
2 properties in other real estate owned
3
Total discontinued assets at December 31, 2021
$
82
Discontinued commercial loan composition as of December 31, 2021
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