8-K
Bancorp, Inc. (TBBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event
reported): 7/29/2021
The Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-51018
| Delaware | 23-3016517 |
|---|---|
| (State or other jurisdiction of | (IRS Employer |
| incorporation) | Identification No.) |
409 Silverside Road
Wilmington, DE 19809
(Address of principal executive offices, includingzip code)
302-385-5000
(Registrant’s telephone number, includingarea code)
(Former name or former address, if changed sincelast report)
Check the appropriate box below if the Form 8-K filing is intended tosimultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[_] Written communications pursuant to Rule 425 under theSecurities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under theExchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b)under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $1.00 per share | TBBK | Nasdaq Global Select |
Indicate by check mark whether the registrant is an emerging growthcompany as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company [_]
If an emerging growth company, indicate by check mark if the registranthas elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuantto Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and FinancialCondition
On July 29, 2021, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three and six months ended June 30, 2021. A copy of this press release is furnished with this report as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure
The Company hereby furnishes the information set forth in the presentation attached hereto as Exhibit 99.2, which is incorporated herein by reference.
The information being furnished pursuant to Item 2.02 and Item 7.01 in this Current Report, including the exhibits hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The exhibit furnished as part of this Current Report on Form 8-K is identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by reference.
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| EX-99.1 | Press release |
| EX-99.2 | Investor Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Bancorp, Inc. | ||
|---|---|---|
| Date: July<br> 29, 2021 | By: | /s/Paul Frenkiel |
| Paul Frenkiel | ||
| Chief Financial Officer and Secretary |
Exhibit 99.1
The Bancorp, Inc. Reports Second Quarter 2021 FinancialResults
Wilmington, DE – July 29, 2021 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2021.
Highlights
| · | For the quarter ended June 30, 2021, The Bancorp earned net income of $29.2 million from continuing operations, and $0.50 diluted<br>earnings per share from combined continuing and discontinued operations. |
|---|---|
| · | Return on assets and equity for the quarter ended June 30, 2021 amounted to 1.7% and 19%, respectively, compared to 1.3% and 16%,<br>respectively, for the quarter ended June 30, 2020 (all percentages “annualized.”) |
| --- | --- |
| · | Net interest margin amounted to 3.19% for the quarter ended June 30, 2021, compared to 3.53% for the quarter ended June 30, 2020 and<br>3.34% for the quarter ended March 31, 2021. |
| --- | --- |
| · | Net interest income increased 8% to $54.1 million for the quarter ended June 30, 2021, compared to $50.2 million for the<br>quarter ended June 30, 2020. |
| --- | --- |
| · | Average loans and leases, including loans at fair value, increased 16% to $4.58 billion for the quarter ended June 30, 2021,<br>compared to $3.93 billion for the quarter ended June 30, 2020. |
| --- | --- |
| · | Prepaid, debit card and other payment related fees increased 5% to $21.4 million for the quarter ended June 30, 2021, compared<br>to $20.4 million for the quarter ended June 30, 2020. |
| --- | --- |
| · | Gross dollar volume (GDV), representing the total amounts spent on prepaid and debit cards, increased 15% for the quarter ended June<br>30, 2021 compared to the quarter ended June 30, 2020. |
| --- | --- |
| · | SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans collectively increased<br>38% year over year and 7% quarter over quarter to $1.80 billion at June 30, 2021. |
| --- | --- |
| · | Small Business Loans, including those held at fair value, increased 15% year over year to $689.5 million at June 30, 2021. That<br>growth is exclusive of Paycheck Protection Program (PPP) loan balances of $129.4 million and $207.9 million, respectively, at June<br>30, 2021 and June 30, 2020. |
| --- | --- |
| · | Direct lease financing balances increased 20% year over year to $506.4 million at June 30, 2021. |
| --- | --- |
| · | The average interest rate on $6.38 billion of average deposits and interest-bearing liabilities during the second quarter of<br>2021 was 0.18%. Average deposits of $6.26 billion for the second quarter 2021, reflected an increase of 17% over the $5.37 billion<br>in average deposits for the quarter ended June 30, 2020. |
| --- | --- |
| · | Of the $48 million of loan balances with Covid related payment deferrals at March 31, 2021, only borrowers representing $2.6 million<br>of balances had not made their payments due on July 5, 2021, with an additional $968,000 remaining in deferral as of that date. Those<br>amounts represent .08% of total loans at June 30, 2021 compared to 1.0% at March 31, 2021. |
| --- | --- |
| · | Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 8.52% and 8.73%, respectively, at June 30, 2021. The<br>Bancorp and its subsidiary, The Bank, remain well capitalized. |
| --- | --- |
| · | Book value per common share at June 30, 2021 was $10.77 per share compared to $9.28 per share at June<br>30, 2020, an increase of 16%, primarily as a result of retained earnings per share. |
| --- | --- |
1
| · | The Bancorp repurchased 449,315 shares of its common stock at an average cost of $22.26<br>per share during the quarter ended June 30, 2021. |
|---|
Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “We had another strong quarter in both growth and profitability. Growth continues to be supported by the acquisition of new clients and the expansion of our capabilities and solutions in our payments ecosystem. Based on our year-to-date performance of $0.94 a share and our 2021 outlook, we are raising our guidance to $1.78 a share. The $1.78 does not include the impact of buybacks in the 3rd and 4th quarters. We continue to see tailwinds that should drive continued growth in 2021 earnings and beyond. We will issue preliminary 2022 per share guidance in our 3rd quarter earnings release. Current trends would suggest income growth for 2022 of 20% or more over our revised 2021 guidance.”
The Bancorp reported net income of $29.4 million, or $0.50 per diluted share, for the quarter ended June 30, 2021, compared to net income of $20.1 million, or $0.35 per diluted share, for the quarter ended June 30, 2020. 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 8.52%, 15.39%, 15.78% and 15.39%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 30, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 2868852. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, August 6, 2021 by dialing 855.859.2056, access code 2868852.
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., 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 “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. Contact
Andres Viroslav
Director, Investor Relations
215-861-7990
andres.viroslav@thebancorp.com
Source: The Bancorp, Inc.
2
The Bancorp, Inc.
Financial highlights
(unaudited)
| Three months ended | Six months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| Condensed income statement | 2021 | 2020 | 2021 | 2020 | ||||||||
| (dollars in thousands, except per share data) | ||||||||||||
| Net interest income | $ | 54,069 | $ | 50,246 | $ | 107,826 | $ | 93,157 | ||||
| Provision for credit losses | (951 | ) | 922 | (129 | ) | 4,501 | ||||||
| Non-interest income | ||||||||||||
| ACH, card and other payment processing fees | 1,904 | 1,707 | 3,700 | 3,553 | ||||||||
| Prepaid, debit card and related fees | 19,447 | 18,673 | 38,655 | 37,213 | ||||||||
| Net realized and unrealized gains (losses) on commercial loans, at fair value | 2,579 | (940 | ) | 4,575 | (6,096 | ) | ||||||
| Change in value of investment in unconsolidated entity | — | — | — | (45 | ) | |||||||
| Leasing related income | 1,767 | 443 | 2,732 | 1,276 | ||||||||
| Other non-interest income | 164 | 483 | 273 | 1,064 | ||||||||
| Total non-interest income | 25,861 | 20,366 | 49,935 | 36,965 | ||||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 27,087 | 25,492 | 52,745 | 48,233 | ||||||||
| Data processing expense | 1,146 | 1,177 | 2,272 | 2,346 | ||||||||
| Legal expense | 2,044 | 2,229 | 4,098 | 3,142 | ||||||||
| FDIC insurance | 2,589 | 2,918 | 4,969 | 5,507 | ||||||||
| Software | 3,706 | 3,386 | 7,390 | 6,863 | ||||||||
| Other non-interest expense | 7,311 | 7,418 | 14,292 | 14,947 | ||||||||
| Total non-interest expense | 43,883 | 42,620 | 85,766 | 81,038 | ||||||||
| Income from continuing operations before income taxes | 36,998 | 27,070 | 72,124 | 44,583 | ||||||||
| Income tax expense | 7,840 | 6,787 | 16,906 | 11,139 | ||||||||
| Net income from continuing operations | 29,158 | 20,283 | 55,218 | 33,444 | ||||||||
| Discontinued operations | ||||||||||||
| Income (loss) from discontinued operations before income taxes | 361 | (274 | ) | 237 | (1,049 | ) | ||||||
| Income tax expense (benefit) | 84 | (59 | ) | 55 | (264 | ) | ||||||
| Net income (loss) from discontinued operations, net of tax | 277 | (215 | ) | 182 | (785 | ) | ||||||
| Net income | $ | 29,435 | $ | 20,068 | $ | 55,400 | $ | 32,659 | ||||
| Net income per share from continuing operations - basic | $ | 0.51 | $ | 0.35 | $ | 0.96 | $ | 0.58 | ||||
| Net income (loss) per share from discontinued operations - basic | $ | — | $ | — | $ | 0.01 | $ | (0.01 | ) | |||
| Net income per share - basic | $ | 0.51 | $ | 0.35 | $ | 0.97 | $ | 0.57 | ||||
| Net income per share from continuing operations - diluted | $ | 0.49 | $ | 0.35 | $ | 0.93 | $ | 0.58 | ||||
| Net income (loss) per share from discontinued operations - diluted | $ | 0.01 | $ | — | $ | 0.01 | $ | (0.01 | ) | |||
| Net income per share - diluted | $ | 0.50 | $ | 0.35 | $ | 0.94 | $ | 0.57 | ||||
| Weighted average shares - basic | 57,230,576 | 57,489,719 | 57,232,557 | 57,355,282 | ||||||||
| Weighted average shares - diluted | 59,022,925 | 57,800,115 | 59,086,956 | 57,856,791 |
Note: Compared to higher rates in recent periods, the effective tax rate in the second quarter of 2021 approximated 21% as a result of the impact of excess tax deductions related to stock-based compensation, recorded as a discrete item in the second quarter. The large deductions and tax benefit resulted from the increase in the Company’s stock price as compared to the original grant date.
3
| Balance sheet | March 31, | December 31, | June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021<br><br> <br>(unaudited) | 2020 | 2020<br><br> <br>(unaudited) | |||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | |||||||||||
| Cash and due from banks | 5,470 | $ | 7,838 | $ | 5,984 | $ | 5,094 | ||||
| Interest earning deposits at Federal Reserve Bank | 583,498 | 1,738,749 | 339,531 | 475,627 | |||||||
| Total cash and cash equivalents | 588,968 | 1,746,587 | 345,515 | 480,721 | |||||||
| Investment securities, available-for-sale, at fair value | 1,106,075 | 1,128,459 | 1,206,164 | 1,324,447 | |||||||
| Commercial loans, at fair value (held-for-sale at June 30, 2020) | 1,690,216 | 1,780,762 | 1,810,812 | 1,807,630 | |||||||
| Loans, net of deferred fees and costs | 2,915,344 | 2,827,076 | 2,652,323 | 2,322,737 | |||||||
| Allowance for credit losses | (15,292 | ) | (16,419 | ) | (16,082 | ) | (14,625 | ) | |||
| Loans, net | 2,900,052 | 2,810,657 | 2,636,241 | 2,308,112 | |||||||
| Federal Home Loan Bank and Atlantic Central Bankers Bank stock | 1,667 | 1,368 | 1,368 | 1,368 | |||||||
| Premises and equipment, net | 17,392 | 17,196 | 17,608 | 16,701 | |||||||
| Accrued interest receivable | 18,668 | 20,164 | 20,458 | 18,897 | |||||||
| Intangible assets, net | 2,646 | 2,746 | 2,845 | 2,710 | |||||||
| Deferred tax asset, net | 10,923 | 10,900 | 9,757 | 7,921 | |||||||
| Investment in unconsolidated entity, at fair value | 24,988 | 31,047 | 31,294 | 34,064 | |||||||
| Assets held-for-sale from discontinued operations | 97,496 | 106,925 | 113,650 | 128,463 | |||||||
| Other assets | 91,516 | 90,530 | 81,129 | 83,003 | |||||||
| Total assets | 6,550,607 | $ | 7,747,341 | $ | 6,276,841 | $ | 6,214,037 | ||||
| Liabilities: | |||||||||||
| Deposits | |||||||||||
| Demand and interest checking | 5,225,024 | $ | 6,231,220 | $ | 5,205,010 | $ | 5,089,741 | ||||
| Savings and money market | 459,688 | 690,281 | 257,050 | 455,458 | |||||||
| Total deposits | 5,684,712 | 6,921,501 | 5,462,060 | 5,545,199 | |||||||
| Securities sold under agreements to repurchase | 42 | 42 | 42 | 42 | |||||||
| Senior debt | 98,498 | 98,406 | 98,314 | — | |||||||
| Subordinated debenture | 13,401 | 13,401 | 13,401 | 13,401 | |||||||
| Other long-term borrowings | 39,901 | 40,085 | 40,277 | 40,639 | |||||||
| Other liabilities | 94,944 | 77,142 | 81,583 | 81,677 | |||||||
| Total liabilities | 5,931,498 | $ | 7,150,577 | $ | 5,695,677 | $ | 5,680,958 | ||||
| Shareholders' equity: | |||||||||||
| Common stock - authorized, 75,000,000 shares of 1.00 par value; 57,458,287 and 57,455,308 shares issued and outstanding at June 30, 2021 and 2020, respectively | 57,458 | 57,248 | 57,551 | 57,455 | |||||||
| Additional paid-in capital | 363,241 | 370,481 | 377,452 | 373,812 | |||||||
| Retained earnings | 183,853 | 154,418 | 128,453 | 81,028 | |||||||
| Accumulated other comprehensive income | 14,557 | 14,617 | 17,708 | 20,784 | |||||||
| Total shareholders' equity | 619,109 | 596,764 | 581,164 | 533,079 | |||||||
| Total liabilities and shareholders' equity | 6,550,607 | $ | 7,747,341 | $ | 6,276,841 | $ | 6,214,037 |
All values are in US Dollars.
4
| Average balance sheet and net interest income | Three months ended June 30, 2021 | Three months ended June 30, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands; unaudited) | ||||||||||||||||
| Average | Average | Average | Average | |||||||||||||
| Assets: | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||
| Interest earning assets: | ||||||||||||||||
| Loans, net of deferred fees and costs** | $ | 4,572,712 | $ | 49,378 | 4.32 | % | $ | 3,925,515 | $ | 41,448 | 4.22 | % | ||||
| Leases-bank qualified* | 5,783 | 96 | 6.64 | % | 9,217 | 162 | 7.03 | % | ||||||||
| Investment securities-taxable | 1,081,419 | 7,201 | 2.66 | % | 1,334,368 | 10,188 | 3.05 | % | ||||||||
| Investment securities-nontaxable* | 3,878 | 32 | 3.30 | % | 4,402 | 35 | 3.18 | % | ||||||||
| Interest earning deposits at Federal Reserve Bank | 1,120,039 | 300 | 0.11 | % | 426,174 | 107 | 0.10 | % | ||||||||
| Net interest earning assets | 6,783,831 | 57,007 | 3.36 | % | 5,699,676 | 51,940 | 3.65 | % | ||||||||
| Allowance for credit losses | (16,406 | ) | (14,822 | ) | ||||||||||||
| Assets held-for-sale from discontinued operations | 98,895 | 781 | 3.16 | % | 130,530 | 1,094 | 3.35 | % | ||||||||
| Other assets | 201,539 | 228,443 | ||||||||||||||
| $ | 7,067,859 | $ | 6,043,827 | |||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Demand and interest checking | $ | 5,736,776 | $ | 1,327 | 0.09 | % | $ | 5,140,167 | $ | 1,390 | 0.11 | % | ||||
| Savings and money market | 526,112 | 192 | 0.15 | % | 234,201 | 120 | 0.20 | % | ||||||||
| Total deposits | 6,262,888 | 1,519 | 0.10 | % | 5,374,368 | 1,510 | 0.11 | % | ||||||||
| Short-term borrowings | — | — | — | 16,428 | 15 | 0.37 | % | |||||||||
| Repurchase agreements | 41 | — | — | 41 | — | — | ||||||||||
| Subordinated debentures | 13,401 | 112 | 3.34 | % | 13,401 | 128 | 3.82 | % | ||||||||
| Senior debt | 100,239 | 1,280 | 5.11 | % | — | — | — | |||||||||
| Total deposits and liabilities | 6,376,569 | 2,911 | 0.18 | % | 5,404,238 | 1,653 | 0.12 | % | ||||||||
| Other liabilities | 83,353 | 123,997 | ||||||||||||||
| Total liabilities | 6,459,922 | 5,528,235 | ||||||||||||||
| Shareholders' equity | 607,937 | 515,592 | ||||||||||||||
| $ | 7,067,859 | $ | 6,043,827 | |||||||||||||
| Net interest income on tax equivalent basis* | $ | 54,877 | $ | 51,381 | ||||||||||||
| Tax equivalent adjustment | 27 | 41 | ||||||||||||||
| Net interest income | $ | 54,850 | $ | 51,340 | ||||||||||||
| Net interest margin * | 3.19 | % | 3.53 | % |
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value for 2021 previously classified as held-for-sale at June 30, 2020. All periods include non-accrual loans.
NOTE: In the table above, the 2021 interest on loans reflects $3.0 million of 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. These fees are not expected to recur. Interest on loans also includes $1.3 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $1.6 million. 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.
5
| Average balance sheet and net interest income | Six months ended June 30, 2021 | Six months ended June 30, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands; unaudited) | ||||||||||||||||
| Average | Average | Average | Average | |||||||||||||
| Assets: | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||
| Interest earning assets: | ||||||||||||||||
| Loans, net of deferred fees and costs** | $ | 4,524,911 | $ | 97,189 | 4.30 | % | $ | 3,593,921 | $ | 80,607 | 4.49 | % | ||||
| Leases-bank qualified* | 6,379 | 214 | 6.71 | % | 10,096 | 362 | 7.17 | % | ||||||||
| Investment securities-taxable | 1,136,631 | 16,009 | 2.82 | % | 1,364,956 | 20,683 | 3.03 | % | ||||||||
| Investment securities-nontaxable* | 3,960 | 67 | 3.38 | % | 4,788 | 75 | 3.13 | % | ||||||||
| Interest earning deposits at Federal Reserve Bank | 935,239 | 483 | 0.10 | % | 460,025 | 1,730 | 0.75 | % | ||||||||
| Net interest earning assets | 6,607,120 | 113,962 | 3.45 | % | 5,433,786 | 103,457 | 3.81 | % | ||||||||
| Allowance for credit losses | (16,241 | ) | (12,532 | ) | ||||||||||||
| Assets held for sale from discontinued operations | 103,983 | 1,634 | 3.14 | % | 133,903 | 2,368 | 3.54 | % | ||||||||
| Other assets | 203,821 | 233,088 | ||||||||||||||
| $ | 6,898,683 | $ | 5,788,245 | |||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Demand and interest checking | $ | 5,619,608 | $ | 2,944 | 0.10 | % | $ | 4,746,928 | $ | 8,085 | 0.34 | % | ||||
| Savings and money market | 466,978 | 341 | 0.15 | % | 203,888 | 170 | 0.17 | % | ||||||||
| Time deposits | — | — | — | 159,752 | 1,483 | 1.86 | % | |||||||||
| Total deposits | 6,086,586 | 3,285 | 0.11 | % | 5,110,568 | 9,738 | 0.38 | % | ||||||||
| Short-term borrowings | 6,491 | 8 | 0.25 | % | 36,620 | 180 | 0.98 | % | ||||||||
| Repurchase agreements | 41 | — | — | 57 | — | — | ||||||||||
| Subordinated debentures | 13,401 | 225 | 3.36 | % | 13,401 | 290 | 4.33 | % | ||||||||
| Senior debt | 100,190 | 2,559 | 5.11 | % | — | — | — | |||||||||
| Total deposits and liabilities | 6,206,709 | 6,077 | 0.20 | % | 5,160,646 | 10,208 | 0.40 | % | ||||||||
| Other liabilities | 91,837 | 118,811 | ||||||||||||||
| Total liabilities | 6,298,546 | 5,279,457 | ||||||||||||||
| Shareholders' equity | 600,137 | 508,788 | ||||||||||||||
| $ | 6,898,683 | $ | 5,788,245 | |||||||||||||
| Net interest income on tax equivalent basis* | $ | 109,519 | $ | 95,617 | ||||||||||||
| Tax equivalent adjustment | 59 | 92 | ||||||||||||||
| Net interest income | $ | 109,460 | $ | 95,525 | ||||||||||||
| Net interest margin * | 3.26 | % | 3.43 | % |
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes commercial loans, at fair value for 2021 previously classified as held-for-sale at June 30, 2020. All periods include non-accrual loans.
NOTE: In the table above, the 2021 interest on loans reflects $4.5 million of 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. These fees are not expected to recur. Interest on loans also includes $3.7 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $1.6 million. 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.
6
| Allowance for credit losses | Six months ended | Year ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | December 31, | |||||||
| 2021<br><br> <br>(unaudited) | 2020<br><br> <br>(unaudited) | 2020 | |||||||
| (dollars in thousands) | |||||||||
| Balance in the allowance for credit losses at beginning of period (1) | $ | 16,082 | $ | 12,875 | $ | 12,875 | |||
| Loans charged-off: | |||||||||
| SBA non-real estate | 321 | 1,048 | 1,350 | ||||||
| SBA commercial mortgage | 23 | — | — | ||||||
| Direct lease financing | 193 | 1,552 | 2,243 | ||||||
| SBLOC | 15 | — | — | ||||||
| Total | 552 | 2,600 | 3,593 | ||||||
| Recoveries: | |||||||||
| SBA non-real estate | 15 | 60 | 103 | ||||||
| Direct lease financing | 7 | 84 | 570 | ||||||
| Total | 22 | 144 | 673 | ||||||
| Net charge-offs | 530 | 2,456 | 2,920 | ||||||
| (Reversal of) provision credited to allowance, excluding commitment provision | (260 | ) | 4,206 | 6,127 | |||||
| Balance in allowance for credit losses at end of period | $ | 15,292 | $ | 14,625 | $ | 16,082 | |||
| Net charge-offs/average loans | 0.02 | % | 0.06 | % | 0.07 | % | |||
| Net charge-offs/average assets | 0.01 | % | 0.04 | % | 0.05 | % |
(1) Excludes activity from assets held-for-sale from discontinued operations.
| Loan portfolio | June 30, | March 31, | December 31, | June 30, | ||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2021 | 2020 | 2020 | |||||
| (in thousands) | ||||||||
| SBL non-real estate | $ | 228,958 | $ | 305,446 | $ | 255,318 | $ | 293,692 |
| SBL commercial mortgage | 343,487 | 320,013 | 300,817 | 259,020 | ||||
| SBL construction | 18,494 | 20,692 | 20,273 | 33,193 | ||||
| Small business loans * | 590,939 | 646,151 | 576,408 | 585,905 | ||||
| Direct lease financing | 506,424 | 484,316 | 462,182 | 422,505 | ||||
| SBLOC / IBLOC** | 1,729,628 | 1,622,359 | 1,550,086 | 1,287,350 | ||||
| Advisor financing *** | 72,190 | 58,919 | 48,282 | 15,529 | ||||
| Other specialty lending | 2,092 | 2,251 | 2,179 | 2,706 | ||||
| Other consumer loans **** | 3,748 | 4,201 | 4,247 | 4,003 | ||||
| 2,905,021 | 2,818,197 | 2,643,384 | 2,317,998 | |||||
| Unamortized loan fees and costs | 10,323 | 8,879 | 8,939 | 4,739 | ||||
| Total loans, net of unamortized fees and costs | $ | 2,915,344 | $ | 2,827,076 | $ | 2,652,323 | $ | 2,322,737 |
| Small business portfolio | June 30, | March 31, | December 31, | June 30, | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2021 | 2020 | 2020 | |||||
| (in thousands) | ||||||||
| SBL, including unamortized fees and costs | $ | 593,401 | $ | 647,445 | $ | 577,944 | $ | 583,935 |
| SBL, included in commercial loans, at fair value | 225,534 | 234,908 | 243,562 | 225,401 | ||||
| Total small business loans | $ | 818,935 | $ | 882,353 | $ | 821,506 | $ | 809,336 |
* 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 SBA 7a loans at the dates indicated. A reduction in SBL non-real estate loans from $305.4 million at March 31, 2021 to $229.0 million at June 30, 2021 resulted from U.S. government repayments of $60.8 million of PPP loans authorized by The Consolidated Appropriations Act, 2021 and the repayment of $19.7 million of a line of credit to another institution related to PPP loans. PPP loans totaled $129.4 million at June 30, 2021 and $165.7 million at December 31, 2020, respectively.
** Securities Backed Lines of Credit (SBLOC) are collateralized by marketable securities, while Insurance Backed Lines of Credit (IBLOC) are collateralized by the cash surrender value of 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 consumer loans are demand deposit overdrafts reclassified as loan balances totaling $424,000 and $663,000 at June 30, 2021 and December 31, 2020, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.
7
Small business loans as of June 30, 2021
| Loan principal | ||
|---|---|---|
| (in millions) | ||
| U.S. government guaranteed portion of SBA loans (a) | $ | 358 |
| Paycheck Protection Program Loans (PPP) (a) | 129 | |
| Commercial mortgage SBA (b) | 189 | |
| Construction SBA (c) | 9 | |
| Non-guaranteed portion of U.S. government guaranteed 7a loans (d) | 106 | |
| Non-SBA small business loans (e) | 18 | |
| Total principal | $ | 809 |
| Unamortized fees and costs | 10 | |
| Total small business loans | $ | 819 |
(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 $9 million in Construction SBA loans, $8 million are 504 first mortgages with an origination date LTV of 50-60% and $1 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.
(d) The $106 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 $18 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. A $2 million guaranty by the seller, for an 11% first loss piece, is in place until August 2021.
Additionally, the CARES Act of 2020 (“the CARES Act”) provided for six months of principal and interest payments on 7a loans which generally ended in fourth quarter 2020 or in first quarter 2021. The Consolidated Appropriations Act, 2021, became law in December 2020 and provides for at least an additional two months of such payments on SBA 7a loans, with up to five months of payments on hotel, restaurant, and other more highly impacted loans. Unlike the six months of CARES Act payments, these additional payments are capped at $9,000 per month.
8
Small business loans by type as of June 30, 2021
(Excludes government guaranteed portion of SBA 7a loans, PPP loans, and a line of credit to initially fund PPP loans)
| SBL commercial mortgage* | SBL construction* | SBL non-real estate | Total | % Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | |||||||||||
| Hotels (except casino hotels) and motels | $ | 66 | $ | 3 | $ | — | $ | 69 | 22 | % | |
| Full-service restaurants | 16 | 1 | 3 | 20 | 6 | % | |||||
| Child day care services | 16 | — | 1 | 17 | 5 | % | |||||
| Baked goods stores | 4 | — | 11 | 15 | 5 | % | |||||
| Car washes | 10 | 2 | — | 12 | 4 | % | |||||
| Assisted living facilities for the elderly | 10 | — | — | 10 | 3 | % | |||||
| Offices of lawyers | 9 | — | — | 9 | 3 | % | |||||
| Lessors of nonresidential buildings (except miniwarehouses) | 9 | — | — | 9 | 3 | % | |||||
| Funeral homes and funeral services | 8 | — | — | 8 | 2 | % | |||||
| Limited-service restaurants | 2 | 1 | 5 | 8 | 2 | % | |||||
| General warehousing and storage | 7 | — | — | 7 | 2 | % | |||||
| All other amusement and recreation industries | 5 | — | 1 | 6 | 2 | % | |||||
| Outpatient mental health and substance abuse centers | 5 | — | — | 5 | 2 | % | |||||
| Other spectator sports | 5 | — | — | 5 | 1 | % | |||||
| Fitness and recreational sports centers | — | 2 | 2 | 4 | 1 | % | |||||
| Gasoline stations with convenience stores | 4 | — | — | 4 | 1 | % | |||||
| Offices of dentists | 3 | — | — | 3 | 1 | % | |||||
| Other warehousing and storage | 3 | — | — | 3 | 1 | % | |||||
| New car dealers | 3 | — | — | 3 | 1 | % | |||||
| All other miscellaneous wood product manufacturing | 3 | — | — | 3 | 1 | % | |||||
| Offices of physicians (except mental health specialists) | 3 | — | — | 3 | 1 | % | |||||
| All other miscellaneous general purpose machinery manufacturing | 3 | — | — | 3 | 1 | % | |||||
| Pet care (except veterinary) services | 2 | — | — | 2 | 1 | % | |||||
| Automotive body, paint, and interior repair and maintenance | 2 | — | — | 2 | 1 | % | |||||
| Sewing, needlework, and piece goods stores | 2 | — | — | 2 | 1 | % | |||||
| Caterers | 2 | — | — | 2 | 1 | % | |||||
| Amusement arcades | 2 | — | — | 2 | 1 | % | |||||
| Lessors of other real estate property | 2 | — | — | 2 | 1 | % | |||||
| Plumbing, heating, and air-conditioning contractors | 2 | — | — | 2 | 1 | % | |||||
| Landscaping services | — | — | 2 | 2 | 1 | % | |||||
| Offices of real estate agents and brokers | 2 | — | — | 2 | 1 | % | |||||
| Independent artists, writers, and performers | 2 | — | — | 2 | 1 | % | |||||
| Other** | 46 | 2 | 28 | 76 | 20 | % | |||||
| Total | $ | 258 | $ | 11 | $ | 53 | $ | 322 | 100 | % |
* Of the SBL commercial mortgage and SBL construction loans, $61.0 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 $2.0 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.
9
State diversification as of June 30, 2021
(Excludes government guaranteed portion of SBA 7a loans, PPP loans, and a line of credit to initially fund PPP loans)
| SBL commercial mortgage* | SBL construction* | SBL non-real estate | Total | % Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | |||||||||||
| Florida | $ | 54 | $ | — | $ | 8 | $ | 62 | 19 | % | |
| California | 42 | 1 | 4 | 47 | 15 | % | |||||
| North Carolina | 23 | 2 | 3 | 28 | 9 | % | |||||
| Pennsylvania | 23 | — | 3 | 26 | 8 | % | |||||
| New York | 17 | 3 | 5 | 25 | 8 | % | |||||
| Illinois | 22 | — | 3 | 25 | 8 | % | |||||
| Texas | 12 | — | 5 | 17 | 5 | % | |||||
| New Jersey | 7 | — | 6 | 13 | 4 | % | |||||
| Virginia | 9 | — | 2 | 11 | 3 | % | |||||
| Tennessee | 10 | — | 1 | 11 | 3 | % | |||||
| Georgia | 7 | — | 2 | 9 | 3 | % | |||||
| Colorado | 3 | 4 | 2 | 9 | 3 | % | |||||
| Michigan | 3 | — | 2 | 5 | 2 | % | |||||
| Washington | 3 | — | — | 3 | 1 | % | |||||
| Ohio | 3 | — | — | 3 | 1 | % | |||||
| Other states | 20 | 1 | 7 | 28 | 8 | % | |||||
| Total | $ | 258 | $ | 11 | $ | 53 | $ | 322 | 100 | % |
* Of the SBL commercial mortgage and SBL construction loans, $61.0 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 June 30, 2021
| Type* | State | SBL commercial mortgage* | ||
|---|---|---|---|---|
| (in millions) | ||||
| Lawyers' office | CA | $ | 9 | |
| Hotel | FL | 9 | ||
| General warehouse and storage | PA | 7 | ||
| Hotel | NC | 6 | ||
| Assisted living facility | FL | 5 | ||
| Outpatient mental health and substance abuse center | FL | 5 | ||
| Hotel | NC | 5 | ||
| Hotel | PA | 4 | ||
| Hotel | TN | 4 | ||
| Gasoline station | VA | 4 | ||
| Total | $ | 58 |
* 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.
10
Commercial real estate loans, at fair value, excluding SBA loans, are as follows including LTV at origination:
Type as of June 30, 2021
| Type | # Loans | Balance | Weighted average origination date LTV | Weighted average minimum interest rate | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | |||||||||||
| Multifamily (apartments) | 136 | $ | 1,323 | 76 | % | 4.75 | % | ||||
| Hospitality (hotels and lodging) | 11 | 75 | 65 | % | 5.74 | % | |||||
| Retail | 6 | 44 | 71 | % | 4.65 | % | |||||
| Other | 7 | 28 | 70 | % | 5.24 | % | |||||
| 160 | $ | 1,470 | 75 | % | 4.81 | % | |||||
| Fair value adjustment | (5 | ) | |||||||||
| Total | $ | 1,465 | |||||||||
| State diversification as of June 30, 2021 | 15 largest loans (all multifamily) as of June 30, 2021 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| State | Balance | Origination date LTV | State | Balance | Origination date LTV | ||||||
| (in millions) | (in millions) | ||||||||||
| Texas | 427 | 77% | North Carolina | $ | 44 | 78% | |||||
| Georgia | 174 | 77% | Texas | 38 | 79% | ||||||
| Arizona | 108 | 76% | Texas | 36 | 80% | ||||||
| North Carolina | 69 | 78% | Pennsylvania | 33 | 77% | ||||||
| Alabama | 56 | 76% | Texas | 30 | 75% | ||||||
| Ohio | 57 | 69% | Nevada | 28 | 80% | ||||||
| Other states each <55 million | 579 | 73% | Texas | 27 | 77% | ||||||
| Total | 1,470 | 75% | Arizona | 27 | 79% | ||||||
| Mississippi | 27 | 79% | |||||||||
| North Carolina | 25 | 77% | |||||||||
| Texas | 25 | 77% | |||||||||
| Texas | 24 | 77% | |||||||||
| Alabama | 23 | 77% | |||||||||
| Georgia | 21 | 79% | |||||||||
| Texas | 21 | 79% | |||||||||
| 15 Largest loans | $ | 429 | 78% |
All values are in US Dollars.
11
Institutional banking loans outstanding at June 30, 2021
| Type | Principal | % of total | |||
|---|---|---|---|---|---|
| (in millions) | |||||
| Securities backed lines of credit (SBLOC) | $ | 1,133 | 63 | % | |
| Insurance backed lines of credit (IBLOC) | 597 | 33 | % | ||
| Advisor financing | 72 | 4 | % | ||
| Total | $ | 1,802 | 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 June 30, 2021
| Principal amount | % Principal to collateral | ||
|---|---|---|---|
| (in millions) | |||
| $ | 60 | 41% | |
| 17 | 37% | ||
| 16 | 54% | ||
| 14 | 26% | ||
| 12 | 29% | ||
| 10 | 38% | ||
| 9 | 30% | ||
| 8 | 71% | ||
| 8 | 23% | ||
| 8 | 51% | ||
| Total and weighted average | $ | 162 | 40% |
Insurance backed lines of credit (IBLOC)
IBLOC loans are backed by the cash value of 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, seven insurance companies have been approved and, as of April 17, 2021, all were rated Superior (A+ or better) by AM BEST.
12
Direct lease financing* by type as of June 30, 2021
| Principal balance | % Total | ||
|---|---|---|---|
| (in millions) | |||
| Construction | $ | 83 | 16% |
| Government agencies and public institutions** | 77 | 15% | |
| Real estate and rental and leasing | 66 | 13% | |
| Waste management and remediation services | 63 | 12% | |
| Retail trade | 48 | 10% | |
| Wholesale trade | 40 | 8% | |
| Transportation and warehousing | 28 | 6% | |
| Health care and social assistance | 25 | 5% | |
| Professional, scientific, and technical services | 19 | 4% | |
| Educational services | 16 | 3% | |
| Manufacturing | 15 | 3% | |
| Finance and insurance | 7 | 1% | |
| Other | 19 | 4% | |
| Total | $ | 506 | 100% |
* Of the total $506 million of direct lease financing, $465 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 June 30, 2021
| State | Principal balance | % Total | |
|---|---|---|---|
| (in millions) | |||
| Florida | $ | 92 | 18% |
| California | 53 | 11% | |
| New Jersey | 37 | 7% | |
| New York | 33 | 6% | |
| Pennsylvania | 31 | 6% | |
| Utah | 31 | 6% | |
| Maryland | 24 | 5% | |
| North Carolina | 24 | 5% | |
| Texas | 17 | 3% | |
| Connecticut | 16 | 3% | |
| Washington | 16 | 3% | |
| Missouri | 14 | 3% | |
| Georgia | 11 | 2% | |
| Idaho | 9 | 2% | |
| Alabama | 9 | 2% | |
| Other states | 89 | 18% | |
| Total | $ | 506 | 100% |
13
| 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 June 30, 2021 | ||||||||||||
| The Bancorp, Inc. | 8.52 | % | 15.39 | % | 15.78 | % | 15.39 | % | ||||
| The Bancorp Bank | 8.73 | % | 15.75 | % | 16.14 | % | 15.75 | % | ||||
| "Well capitalized" institution (under FDIC regulations-Basel III) | 5.00 | % | 8.00 | % | 10.00 | % | 6.50 | % | ||||
| As of December 31, 2020 | ||||||||||||
| The Bancorp, Inc. | 9.20 | % | 14.43 | % | 14.84 | % | 14.43 | % | ||||
| The Bancorp Bank | 9.11 | % | 14.27 | % | 14.68 | % | 14.27 | % | ||||
| "Well capitalized" institution (under FDIC regulations-Basel III) | 5.00 | % | 8.00 | % | 10.00 | % | 6.50 | % | ||||
| Three months ended | Six months ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, | June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Selected operating ratios | ||||||||||||
| Return on average assets ^(1)^ | 1.67 | % | 1.33 | % | 1.62 | % | 1.13 | % | ||||
| Return on average equity ^(1)^ | 19.42 | % | 15.61 | % | 18.62 | % | 12.87 | % | ||||
| Net interest margin | 3.19 | % | 3.53 | % | 3.26 | % | 3.43 | % |
^(1)^ Annualized
| Book value per share table | June 30, | March 31, | December 31, | June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2021 | 2020 | 2020 | |||||||||
| Book value per share | $ | 10.77 | $ | 10.42 | $ | 10.10 | $ | 9.28 | ||||
| Loan quality table | June 30, | March 31, | December 31, | June 30, | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2021 | 2020 | 2020 | |||||||||
| (dollars in thousands) | ||||||||||||
| Nonperforming loans to total loans | 0.31 | % | 0.49 | % | 0.48 | % | 0.44 | % | ||||
| Nonperforming assets to total assets | 0.14 | % | 0.18 | % | 0.20 | % | 0.17 | % | ||||
| Allowance for credit losses | 0.52 | % | 0.58 | % | 0.61 | % | 0.63 | % | ||||
| Nonaccrual loans | $ | 7,346 | $ | 11,961 | $ | 12,227 | $ | 9,957 | ||||
| Loans 90 days past due still accruing interest | 1,550 | 1,762 | 497 | 352 | ||||||||
| Other real estate owned | — | — | — | — | ||||||||
| Total nonperforming assets | $ | 8,896 | $ | 13,723 | $ | 12,724 | $ | 10,309 | ||||
| Gross dollar volume (GDV) ^(1)^ | Three months ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| June 30, | March 31, | December 31, | June 30, | |||||||||
| 2021 | 2021 | 2020 | 2020 | |||||||||
| (in thousands) | ||||||||||||
| Prepaid and debit card GDV | $ | 27,106,763 | $ | 28,094,930 | $ | 22,523,855 | $ | 23,539,694 |
^(1)^Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.
14
| Business line quarterly summary | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter ended June 30, 2021 | |||||||||||||||
| (dollars in millions) | |||||||||||||||
| Balances | |||||||||||||||
| % Growth | |||||||||||||||
| Major business lines | Average approximate rates * | Balances ** | Year over year | Linked quarter annualized | |||||||||||
| Loans | |||||||||||||||
| Institutional banking *** | 2.5 | % | $ | 1,802 | 38 | % | 29 | % | |||||||
| Small Business Lending**** | 5.0 | % | 819 | 15 | % | 10 | % | ||||||||
| Leasing | 6.0 | % | 506 | 20 | % | 18 | % | ||||||||
| Commercial real estate (non-SBA at fair value) | 4.8 | % | 1,465 | nm | nm | ||||||||||
| Weighted average yield | 4.1 | % | $ | 4,592 | Non-interest income | ||||||||||
| % Growth | |||||||||||||||
| Deposits: Fintech solutions group | Current quarter | Year over year | |||||||||||||
| Prepaid and debit card issuance | 0.1 | % | $ | 4,836 | 24 | % | nm | $ | 19.4 | 4 | % | ||||
| Card payment and ACH processing | 0.2 | % | $ | 885 | 22 | % | nm | $ | 1.9 | nm |
* Average rates are for the quarter ended June 30, 2021.
** Loan and deposit categories are respectively based on period-end and average quarterly balances.
*** Institutional Banking loans are comprised of Securities Backed Lines of Credit (SBLOC), collateralized by marketable securities, Insurance Backed Lines of Credit (IBLOC), collateralized by the cash surrender value of insurance policies, and Advisor financing.
**** Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans. The linked quarter annualized percentage excludes a short-term line of credit to another institution to fund PPP loans, with a balance of $19.7 million at March 31, 2021, which was repaid in the second quarter.
15
Analysis of Walnut Street* marks
| Loan activity | Marks | |||||
|---|---|---|---|---|---|---|
| (dollars in millions) | ||||||
| Original Walnut Street loan balance, December 31, 2014 | $ | 267 | ||||
| Marks through December 31, 2014 sale date | (58 | ) | $ | (58 | ) | |
| Sales price of Walnut Street | 209 | |||||
| Equity investment from independent investor | (16 | ) | ||||
| December 31, 2014 Bancorp book value | 193 | |||||
| Additional marks 2015 - 2020 | (46 | ) | (46 | ) | ||
| 2021 Marks | — | |||||
| Payments received | (122 | ) | ||||
| June 30, 2021 Bancorp book value** | $ | 25 | ||||
| Total marks | $ | (104 | ) | |||
| Divided by: | ||||||
| Original Walnut Street loan balance | $ | 267 | ||||
| Percentage of total mark to original balance | 39 | % |
* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the investment in a securitization of certain loans from the Bank's discontinued loan portfolio.
** Approximately 21% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of June 30, 2021.
Walnut Street portfolio composition as of June 30, 2021
| Collateral type | % of Portfolio | ||
|---|---|---|---|
| Commercial real estate non-owner occupied - Retail | 80.0 | % | |
| Construction and land | 13.3 | % | |
| Other | 6.7 | % | |
| Total | 100.0 | % |
16
Cumulative analysis of marks on discontinued commercial loan principalas of June 30, 2021
| Discontinued | Cumulative | % to original | ||||
|---|---|---|---|---|---|---|
| loan principal | marks | principal | ||||
| (dollars in millions) | ||||||
| Commercial loan discontinued principal before marks | $ | 53 | ||||
| Florida mall held in discontinued other real estate owned | 42 | $ | (27) | |||
| Mark at June 30, 2021 | (4) | |||||
| Cumulative mark at June 30, 2021 | $ | 95 | $ | (31) | 33% |
Analysis of discontinued commercial loan relationships as of June 30,2021
| Nonperforming<br><br> <br>loan principal | Total<br><br> <br>loan principal | Performing<br><br> <br>loan marks | Nonperforming<br><br> <br>loan marks | Total<br><br> <br>marks | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4 loan relationships > 5 million | 33 | $ | — | $ | 33 | $ | (2 | ) | $ | — | $ | (2 | ) | |
| Loan relationships < 5 million | 12 | 4 | 16 | (1 | ) | (1 | ) | (2 | ) | |||||
| 45 | $ | 4 | $ | 49 | $ | (3 | ) | $ | (1 | ) | $ | (4 | ) |
All values are in US Dollars.
Quarterly activity for commercial loan discontinued principal
| Commercial | ||
|---|---|---|
| loan principal | ||
| (in millions) | ||
| Commercial loan discontinued principal March 31, 2021 before marks | $ | 61 |
| Quarterly paydowns and other reductions | (8) | |
| Commercial loan discontinued principal June 30, 2021 before marks | 53 | |
| Marks June 30, 2021 | (4) | |
| Net commercial loan exposure June 30, 2021 | 49 | |
| Residential mortgages | 27 | |
| Net loans | 76 | |
| Florida mall in other real estate owned | 15 | |
| 5 properties in other real estate owned | 6 | |
| Total discontinued assets at June 30, 2021 | $ | 97 |
17
Discontinued commercial loan composition as of June 30, 2021
| Collateral type | Unpaid principal balance | Mark at<br><br> <br>June 30, 2021 | Mark as % of portfolio | |||
|---|---|---|---|---|---|---|
| (in millions) | ||||||
| Commercial real estate - non-owner occupied: | ||||||
| Retail | $ | 4 | $ | (0.6) | 15% | |
| Office | 2 | — | — | |||
| Other | 18 | (0.1) | 1% | |||
| Construction and land | 10 | (0.1) | 1% | |||
| Commercial non-real estate and industrial | 3 | (0.1) | 3% | |||
| 1 to 4 family construction | 7 | (2.6) | 37% | |||
| First mortgage residential non-owner occupied | 5 | — | — | |||
| Commercial real estate owner occupied: | ||||||
| Retail | 2 | — | — | |||
| Residential junior mortgage | 1 | — | — | |||
| Other | 1 | — | — | |||
| Total | $ | 53 | $ | (3.5) | 7% | |
| Less: mark | (4) | |||||
| Net commercial loan exposure June 30, 2021 | $ | 49 | $ | (3.5) |
Loan payment deferrals related to Covid-19
Total non-U.S. guaranteed loan balances for borrowers with Covid-19 payment deferrals amounted to $48 million as of March 31, 2021. The vast majority of these borrowers had begun making their payments as of July 5, 2021. As of that date, $968,000 of discontinued operations loans were still in deferral, and small business (SBA) borrowers with unguaranteed principal balances totaling $2.6 million, have not made their payments due on that date. Of the $2.6 million, we are considering further deferrals for borrowers with unguaranteed balances of $1.7 million.
18
Exhibit 99.2
JULY 2021 THE BANCORP INVESTOR PRESENTATION
2 FORWARD LOOKING STATEMENTS & OTHER DISCLOSURES DISCLOSURES Statements in this presentation regarding The Bancorp, Inc.’s business that are not historical facts are “forward - looking statements”. These statements may be identified by the use of forward - looking terminology, including the words “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan," 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. These risks and uncertainties include those relating to the on - going COVID - 19 pandemic, the impact it will have on the company’s business and the industry as a whole, and the resulting governmental and societal responses. For further discussion of these risks and uncertainties, see the “risk factors” sections contained, in The Bancorp, Inc.’s Annual Report on Form 10 - K for the year ended December 31, 2020 and in its other public filings with the SEC. In addition, these forward - looking statements are based upon assumptions with respect to future strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward - looking statements. The forward - looking statements speak only as of the date of this presentation. The Bancorp, Inc. does not undertake to publicly revise or update forward - looking statements in this presentation to reflect events or circumstances that arise after the date of this presentation, except as may be required under applicable law. This presentation contains information regarding financial results that is calculated and presented on the basis of methodologies other than in accordance with accounting principles generally accepted in the United States (“GAAP”). This presentation may contain statistics and other data that in some cases has been obtained from or compiled from information made available by third - party service providers. The Bancorp, Inc. makes no representation or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of such information. Past performance is not indicative nor a guarantee of future results. Copies of the documents filed by The Bancorp, Inc. with the SEC are available free of charge from the website of the SEC at www.sec.gov as well as on The Bancorp, Inc.’s website at www.thebancorp.com . This presentation is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities. Neither the SEC nor any other regulatory body has approved or disapproved of the securities of The Bancorp, Inc. or passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense.
3 THE BANCORP HAS DELIVERED STRONG FINANCIAL PERFORMANCE 2019 2020 Q2 YTD 2021 PROFITABILITY ROE 12% 15% 19% 1 GROWTH REVENUE GROWTH 2 15% 15% 16% SCALABLE PLATFORM EFFICIENCY RATIO 69% 59% 54% KEY FINANCIAL METRICS Increasing levels of profitability Consistent double digit growth Platform delivering operating leverage FINANCIAL PERFORMANCE 1 Annualized for the six months ended June 30, 2021. 2 Revenue growth represents full year 2019 and 2020 over previous respective years and Q2 YTD 2021 over Q2 YTD 2020. 2020 reven ue adjusted for net losses on commercial loans at fair value. 2018 revenue adjusted for sale of safe harbor IRA portfolio and change in value of unconsolidated entit y, in 2019 growth calculation. SUSTAINED PERFORMANCE The Bancorp is continuing to deliver high quality financial performance across key financial metrics.
4 OUR BUSINESS PLAN OUTLINES THE PATH TO EXPAND OUR LEADERSHIP AMONG PEER BANKS AND IN THE PAYMENTS INDUSTRY $0.90 $1.37 $0.94 $1.78 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 2019 2020 Q2 YTD 2021 2021 Target EARNINGS PER SHARE INCREASED 2021 GUIDANCE 2021 EARNINGS GUIDANCE 2021 GUIDANCE We are increasing our 2021 guidance from $1.70 per share to $1.78 as we maintain strong momentum in our fintech solutions business and lending activities .
5 FINANCIAL INDUSTRY LEADER CIO OUTLOOK TOP PAYMENT & CARD SOLUTIONS PROVIDER JUL. 2020 FORTUNE 100 FASTEST GROWING COMPANY RANKED #28 OCT. 2020 CIO REVIEW TOP BANKING TECHNOLOGY SOLUTIONS PROVIDER FEB. 2020 IPA CONSUMER CHAMPION APR. 2021 NILSON REPORT RANKED #1 PREPAID CARD ISSUER JUNE 2021 EQUAL OPPORTUNITY PUBLICATION TOP EMPLOYER READERS CHOICE MAR. 2021 – RANKED #29 MAR. 2020 – RANKED #46 S&P SMALL CAP 600 ADDED TO RATING MAY 2021 INDUSTRY LEADERSHIP NILSON REPORT RANKED #7 DEBIT ISSUING BANK APRIL 2021 RECOGNIZED PERFORMANCE At The Bancorp, we strive for excellence and have been recognized in the market as a leader across a variety of industry rankings.
6 FINTECH LEADERSHIP THE BANCORP IS A KEY PLAYER IN THE PAYMENTS ECOSYSTEM FINTECH ECOSYSTEM Enabling fintech companies by providing industry leading card issuing, payments facilitation and regulatory expertise to a highly diversified portfolio of clients. PAYMENT NETWORKS FACILITATE payments between parties via the card networks. PROGRAM MANAGERS CLIENT FACING platforms deliver highly scalable banking solutions to customers with emphasis on customer acquisition and technology. REGULATORS OVERSIGHT of domestic banking and payments activities. PROCESSORS BACK - OFFICE support for program managers providing record keeping and core platform services. FINTECH ECOSYSTEM
7 SPECIALIZED LENDING BUSINESS LINES AND CREDIT ROADMAP Real Estate Bridge Lending $1.5B Emphasis on core business lines with expectation to add related products and enter adjacent markets Re - enter commercial real estate bridge lending business with focus on multi - family assets Remain positioned to capitalize on credit - linked payments opportunities Maintain balance sheet flexibility as we approach $10B in total assets Institutional Banking $1.8B Small Business $0.8B Leasing $ 0.5B CORE LENDING BUSINESSES AS OF Q2 2021 TOTAL $4.6B Established Operating Platform Scalable technology, operations and sales platforms across lending business to support sustained growth CREDIT ROADMAP CREDIT ROADMAP CREDIT ROADMAP We created a credit roadmap which outlines multi - year growth strategies across our specialized lending business lines.
8 OUR STRATEGIC POSITIONING SHOULD DRIVE EARNINGS AND PROFITABILITY HIGHLIGHTS Our platform can deliver growth from our specialized lending activities while remaining positioned to capitalize on new and higher - growth fintech partnerships. SPECIALIZED COMMERCIAL BANKS Efficient platforms Products in focused markets Higher growth than traditional banking We can achieve our long - term financial targets by maintaining flexibility to capitalize on growth opportunities in both fintech and specialty commercial banking. THE BANCORP BUSINESS MODEL We participate in the high - growth fintech markets by partnering with leading companies Our specialized lending businesses are supported by an established operating platform and have delivered meaningful growth NON - BANK FINANCIAL TECHNOLOGY COMPANIES (FINTECH) Rapid growth Technology driven Alternatives to traditional banking
9 FINANCIAL TARGETS Our multi - year plan outlines the path to deliver shareholder value by activating payments ecosystem 2.0, executing on our credit roadmap and enhancing our capital return program. CAPITAL RETURN INTRODUCING OUR 2025 PLAN VISION 500 Established the plan to optimize our balance sheet PAYMENTS ECOSYSTEM Enhance plan to maximize capital return to shareholders Activate Payments Ecosystem 2.0 TOTAL REVENUE >$500 Million CREDIT ROADMAP ROE >22% ROA >2% LEVERAGE 9% LONG - TERM FINANCIAL TARGETS FINANCIAL TARGETS
10 FINTECH SOLUTIONS GENERATES NON - INTEREST INCOME AND ATTRACTS STABLE, LOW - COST DEPOSITS DEPLOYED INTO LOWER RISK ASSETS IN SPECIALIZED MARKETS FINTECH SOLUTIONS Enabling fintech companies by providing card sponsorship and facilitating other payments activities INSTITUTIONAL BANKING Lending solutions for wealth management firms COMMERCIAL LENDING Small business lending and commercial fleet leasing + THE BANCORP BUSINESS MODEL PAYMENTS & DEPOSITS Market - leading payments activities generate non - interest income and stable, lower - cost deposits LENDING Highly specialized lending products in high - growth markets THE BANCORP BUSINESS MODEL Real Estate Bridge Lending Focus on multifamily assets in high - growth markets
DEPOSITS & FEES: PAYMENTS BUSINESS GENERATES NON - INTEREST INCOME AND STABLE, LOWER - COST DEPOSITS
12 FINTECH SOLUTIONS: FEE GENERATING ACTIVITIES % TOTAL BANK REVENUE Q2 YTD 2021 1 19 % GROSS DOLLAR VOLUME GROWTH 2 OUR FINTECH SOLUTIONS BUSINESS ENABLES LEADING FINTECH COMPANIES DEBIT PROGRAM MANAGERS (CHALLENGER BANKS) PREPAID/STORED VALUE PROGRAM MANAGERS • Provides physical and virtual card issuing • Maintains deposit balances on cards • Facilitates payments into the card networks as the sponsoring bank • Established risk and compliance function is highly scalable #7 Debit Issuing Bank 2020 #1 Prepaid Issuing Bank 2020 27 % GOVERNMENT HEALTHCARE CORPORATE SERVICES GIFT 1 Includes non - interest income from prepaid and debit card issuance plus ACH, card and other payments processing fees. 2 Q2 YTD 2021 vs Q2 YTD 2020.
13 FINTECH SOLUTIONS: ESTABLISHED OPERATING PLATFORM HIGHLY SCALABLE PLATFORM TO SUPPORT OUR STRATEGIC PARTNERS ESTABLISHED OPERATING PLATFORM • Infrastructure in place to support significant growth • Long - term relationships with multiple processors enables efficient onboarding • Continued technology investments without changes to expense base REGULATORY EXPERTISE • Financial Crimes Risk Management program with deep experience across payments ecosystem • Customized risk and compliance tools specific to the Fintech Industry OTHER PAYMENTS OFFERINGS • Rapid Funds instant payment transfer product • Potential to capitalize on credit - linked payments opportunities • Additional payments services include ACH processing for third parties INNOVATIVE SOLUTIONS Our platform supports a wide variety of strategic fintech partners through our established processor relationships, regulatory expertise and suite of other payments products.
14 DEPOSIT GROWTH FROM PAYMENTS BUSINESSES FINTECH SOLUTIONS: STABLE, LOWER - COST DEPOSIT GENERATOR 1 Time deposits have rarely been used due to lower cost deposit growth and previous balances are included in “Other”. 2 Average for Q2 YTD 2021 $3,819 $3,812 $3,862 $4,025 $5,564 $6,086 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 2016 2017 2018 2019 2020 Q2 YTD 2021 AVERAGE DEPOSITS BY PERIOD (MILLIONS) Fintech Solutions Group (Prepaid and Debit Card Issuance and other payments) Institutional Banking (checking and money market for higher net worth individuals) Other (Includes time deposits 1 and other legacy deposit programs) HIGHLIGHTS • Stable, lower - cost deposit base anchored by multi - year, contractual relationships in our payments businesses • Fintech Solutions growth driven by increased transactional volume due to favorable tailwinds from stimulus, electronic banking migration and overall savings increases among consumers DEPOSIT TYPE (AVG 2 .) BALANCE % TOTAL Demand & Int. checking $5.6B 92% Savings & money market 0.5B 8% Time deposits 1 - 0% Total $6.1B 100% Savings & Money Market 8% Time Deposits 0% Demand & Int. checking 92% COST OF DEPOSITS 0.30% 0.38% 0.67% 0.85% 0.12% 0.11%
LOANS & LEASES: HIGHLY SPECIALIZED LENDING WITH LOW LOSS HISTORIES
16 LOANS & LEASES: CREDIT ROADMAP CREDIT ROADMAP Delivering enterprise value from our balance sheet is an important element of our business strategy and a primary focus of our credit roadmap initiative. MANAGE CREDIT RISK TO DESIRED LEVELS IMPROVE NIM AND MONITOR INTEREST RATE SENSITIVITY MANAGE REAL ESTATE EXPOSURE TO CAPITAL LEVELS MAINTAIN FLEXIBILITY AS WE APPROACH $10B TOTAL ASSETS Building an asset mix that drives earnings and profitability while maintaining desired credit and interest rate risk characteristics KEY CONSIDERATIONS FOR GROWTH GUIDELINES WE CONSIDERED AS WE BUILT OUR CREDIT ROADMAP
17 LOWER CREDIT RISK LOAN PORTFOLIO LOANS & LEASES: STRONG COLLATERAL AND GOVERNMENT GUARANTEES BUSINESS LINE BALANCE SHEET CATEGORY Q2 2021 PRINCIPAL BALANCE ($ MILLIONS) % OF TOTAL PORTFOLIO Institutional Banking Securities - backed lines of credit (SBLOC) ( A) 1,133 25% Insurance - backed lines of credit (IBLOC) (B) 597 12% Advisor Financing 72 2% Total 1,802 39% Real Estate Bridge Lending Multifamily - commercial real estate (C) 1,323 29% Hospitality - commercial real estate 75 2% Retail - commercial real estate 44 <1% Other 28 <1% Total 1,470 32% Small Business Lending U.S. government guaranteed portion of SBA loans ( D) 358 8% Pay check Protection Program Loans (PPP) ( D) 129 3% Commercial mortgage SBA ( E) 189 4% Unguaranteed portion of U.S. govn’t guaranteed loans 106 2% Non - SBA small business loans 18 <1% Construction SBA 9 <1% Total 809 18% Commercial Fleet Leasing Leasing ( F) 506 11% Other Other 6 <1% Total principal $ 4,593 100% LOWER CREDIT LOSS NICHES A. SBLOC loans are backed by marketable securities with nominal credit losses B. IBLOC loans are backed by the cash value of life insurance policies with nominal credit losses C. Comprised of apartment buildings in carefully selected areas. Loans are on books at 99 dollar price D. Portion of small business loans fully guaranteed by the U.S. government E. 50% - 60% loan to value ratios at origination F. Recourse to vehicles
18 INSTITUTIONAL BANKING LOANS & LEASES: INSTITUTIONAL BANKING BUSINESS OVERVIEW : • Automated loan application platform, Talea, provides industry - leading speed and delivery • Securities - backed lines of credit provide fast and flexible liquidity for investment portfolios • Insurance - backed lines of credit provide fast and flexible borrowing against the cash value of life insurance • Advisor Finance product provides capital to transitioning financial advisors to facilitate M&A, debt restructuring, and the development of succession plans • Deposit accounts for wealth management clients • Nominal historical credit losses CREDIT ROADMAP: • Continue momentum across current SBLOC, IBLOC and Advisor Finance products • Evaluate new lending opportunities in adjacent markets • Market dynamics support business model • Advisors shifting from large broker/dealers to independent platforms • Sector shift to fee - based accounts • Emergence of new wealth management providers LENDING AND BANKING SERVICES FOR WEALTH MANAGERS The Bancorp’s Business Model allows us to build banking solutions to “spec” without competing directly with our partner firms. We do not have any associated asset managers, proprietary advisory programs, or related programs. Our singular focus is to help our partner firms stay competitive in the marketplace and to grow and retain assets. ALWAYS A PARTNER, NEVER A COMPETITOR $ 1.8 B PORTFOLIO SIZE 2.5 % 6/30/2021 EST. YIELD
19 INSTITUTIONAL BANKING PRIMARILY COMPRISED OF SECURITIES & CASH VALUE LIFE INSURANCE LENDING LOANS & LEASES: INSTITUTIONAL BANKING LOAN PORTFOLIO LOAN TYPE PRINCIPAL BALANCE % OF PORTFOLIO Securities - backed lines of credit (SBLOC) $ 1,133 63% Insurance - backed lines of credit (IBLOC) 597 33% Advisor Financing 72 4% Total $ 1,802 100% INSTITUTIONAL BANKING LOANS ($MILLIONS) 6/30/2021 SECURITIES - BACKED LINES OF CREDIT • Nominal historical credit losses • Underwriting standards of generally 50% to equities and 80% or more to fixed income securities PORTFOLIO ATTRIBUTES PRINCIPAL BALANCE % PRINCIPAL TO COLLATERAL $ 60 41% 17 37% 16 54% 14 26% 12 29% 10 38% 9 30% 8 71% 8 23% 8 51% Total $ 162 40% TOP 10 SBLOC LOANS ($MILLIONS) 6/30/2021 INSURANCE - BACKED LINES OF CREDIT • Nominal historical credit losses • Loans backed by the cash value of insurance policies
20 SMALL BUSINESS LENDING LOANS & LEASES : SMALL BUSINESS LENDING BUSINESS OVERVIEW: • Established a distinct platform within the fragmented SBA market • National portfolio approach allows pricing and client flexibility • Solid credit performance demonstrated over time • Client segment strategy tailored by market CREDIT ROADMAP: • Continue delivering growth within existing small business lending platform while entering new verticals and growing the SBAlliance Š • SBAlliance Š program provides lending support to banks and financial institutions who need SBA lending capabilities through products such as: • Wholesale loan purchases • Interim bridge financing for small business owners • Participated in the Payroll Protection Program (PPP) and originated ~$300M in short term loans, SBA AND OTHER SMALL BUSINESS LENDING $ 809 M PORTFOLIO SIZE 5.0 % 6/30/2021 EST. YIELD ~$ 700 K AVERAGE 7(a) LOAN SIZE
21 LOANS & LEASES: STRONG COLLATERAL & GOVERNMENT GUARANTEES SMALL BUSINESS LOANS BY TYPE 1 ($MILLIONS) 6/30/2021 1 Excludes the government guaranteed portion of SBA 7a loans and PPP loans. TYPE DISTRIBUTION • Diverse product mix • Commercial mortgage and construction are generally originated with 50% - 60% LTV’s GEOGRAPHIC DISTRIBUTION • Diverse geographic mix • Largest concentration in Florida representing 19% of total PORTFOLIO ATTRIBUTES SMALL BUSINESS LOANS BY STATE 1 ($MILLIONS) 6/30/2021 STATE SBL COMMERCIAL MORTGAGE SBL CONSTRUCTION SBL NON - REAL ESTATE TOTAL Florida $ 54 $ - $ 8 $ 62 California 42 1 4 47 North Carolina 23 2 3 28 Pennsylvania 23 - 3 26 New York 17 3 5 25 Illinois 22 - 3 25 Texas 12 - 5 17 New Jersey 7 - 6 13 Virginia 9 - 2 11 Tennessee 10 - 1 11 Georgia 7 - 2 9 Colorado 3 4 2 9 Michigan 3 - 2 5 Washington 3 - - 3 Ohio 3 - - 3 Other states 20 1 7 27 Total $ 258 $ 11 $ 53 $ 322 SMALL BUSINESS LENDING TYPE SBL COMMERCIAL MORTGAGE SBL CONSTRUCTION SBL NON - REAL ESTATE TOTAL Hotels $ 66 $ 3 $ - $ 69 Full - Service Restaurants 16 1 3 20 Child Day Care Services 16 - 1 17 Baked Goods Stores 4 - 11 15 Car Washes 10 2 - 12 Assisted Living Facilities 10 - - 10 Offices of Lawyers 9 - - 9 Lessors of Nonresidential Buildings 9 - - 9 Funeral Homes 8 - - 8 Limited - Service Restaurants 2 1 5 8 General Warehousing and Storage 7 - - 7 All Other Amusement and Recreation 5 - 1 6 Outpatient Mental Health Centers 5 - - 5 Other Spectator Sports 5 - - 5 Other 86 4 32 122 Total $ 258 $ 11 $ 53 $ 322
22 COMMERCIAL FLEET LEASING LOANS & LEASES : COMMERCIAL FLEET LEASING BUSINESS OVERVIEW: • Niche provider of vehicle leasing solutions • Focus on smaller fleets (less than 150 vehicles) • Direct lessor (The Bancorp Bank sources opportunities directly and provides value - add services such as outfitting police cars) • Historical acquisitions of small leasing companies have contributed to growth • Mix of commercial (~85%) and government - related business (~15%) CREDIT ROADMAP: • Continue enhancing platform and growing balances • Enhanced sales process and support functions • Pursuing technology enhancements to scale business with efficiency • Constantly evaluating organic and inorganic growth opportunities in the vehicle space NICHE - VEHICLE FLEET LEASING SOLUTIONS $ 506 M PORTFOLIO SIZE 6.0 % 6/30/2021 EST. YIELD
23 LOANS & LEASES: COMMERCIAL FLEET LEASING PORTFOLIO OVERVIEW • Largest concentration is construction sector • Of the $506M total portfolio, $465M is vehicle leases with the remaining $41M made up of equipment leases PORTFOLIO ATTRIBUTES TYPE BALANCE TOTAL Construction $ 83 16% Government agencies and public institutions** 77 15% Real Estate and Rental and Leasing 66 13% Waste management and remediation services 63 12% Retail Trade 48 10% Wholesale Trade 40 8% Transportation and Warehousing 28 6% Health Care and Social Assistance 25 5% Professional, Scientific, and Technical Services 19 4% Educational Services 16 3% Manufacturing 15 3% Finance and Insurance 7 1% Other 19 4% Total $ 506 100% DIRECT LEASE FINANCING BY STATE ($MILLIONS) 6/30/2021 COMMERCIAL FLEET LEASING STATE BALANCE TOTAL Florida $ 92 18% California 53 11% New Jersey 37 7% New York 33 6% Pennsylvania 31 6% Utah 31 6% Maryland 24 5% North Carolina 24 5% Texas 17 3% Connecticut 16 3% Washington 16 3% Missouri 14 3% Georgia 11 2% Idaho 9 2% Alabama 9 2% Other states 89 18% Total $ 506 100% DIRECT LEASE FINANCING BY TYPE ($MILLIONS) 6/30/2021
24 REAL ESTATE BRIDGE LENDING LOANS & LEASES: REAL ESTATE BRIDGE LENDING TYPE # LOANS BALANCE ORIGINATION DATE LTV WEIGHTED AVG MIN INTEREST RATE % TOTAL Multifamily (apartments) 136 $ 1,323 76% 4.8% 90% Hospitality (hotels and lodging) 11 75 65% 5.7% 5% Retail 6 44 71% 4.7% 3% Other 7 28 70% 5.2% 2% Total 160 $ 1,470 75% 4.8% 100% COMMERCIAL REAL ESTATE LOANS BY TYPE ($MILLIONS) 6/30/2021 BUSINESS OVERVIEW: • Restarted floating rate bridge lending business in Q3 2021 • Lending focus on multi - family assets in high - growth markets • New production targeting to replace runoff from existing portfolio • Long term the portfolio will be managed to remain below 300% of Tier 1 capital with no reliance on future securitizations Real estate bridge lending MULTI - FAMILY – 90% LODGING – 5% RETAIL – 3% OTHER - 2% ASSET CLASSES — % PORTFOLIO OVERVIEW • Vast majority of loans are multifamily including all of the top 15 exposures • Existing loans treated as held for sale in “Commercial loans, at fair value” category on balance sheet • Loans originated in 2021 and after will be held for investment and use the CECL methodology PORTFOLIO ATTRIBUTES
FINANCIAL REVIEW
26 3.2% NIM FOR Q2 2021 DESPITE 0% FRB RATE ENVIRONMENT 1 FINANCIAL REVIEW: INTEREST RATE SENSITIVITY 1 Loans are as of June 30, 2021 and deposits are average balance for Q2 YTD 2021. 2 Institutional Banking substantially comprised of securities backed loans and insurance backed loans. 3 Excludes $129M of short - term PPP loans which are government guaranteed and deferred costs and fees. Q2 BALANCE 1 ($MILLIONS) RATE SENSITIVITY Institutional Banking 2 $1,802 Majority of loan yields will increase as rates increase Real Estate Bridge Lending $1,470 4.8% avg. floor and yield will increase as rates exceed floors Small Business 3 $680 Majority of loan yields will increase as rates increase Leasing $506 Fixed rates but short average lives Total $4,458 Core Lending businesses account for 97% of the total $4,593 loans Total Deposits $6,086 A majority of deposits adjust to a portion of rate changes in line with partner contracts Core Lending Businesses HIGHLIGHTS x Floating rate lending businesses include Real Estate Capital Markets, SBLOC, IBLOC and the majority of Small Business x Deposits primarily comprised of prepaid and debit accounts, anchored by multi - year, contractual relationships x Interest income should increase in higher interest rate environments
27 REVENUE HAS GROWN CONSISTENTLY SINCE 2016 WHILE EXPENSES HAVE BEEN TIGHTLY MANAGED, CREATING OPERATING LEVERAGE FINANCIAL REVIEW: EARNINGS AND PROFITABILITY 1 Core revenue is net interest income plus non - interest income excluding net losses on commercial loans at fair value, gains/losse s from sales of securities, changes in valuation to Walnut Street and the sales of Health Savings Accounts, the European payments business, and the IRA portfolio. 2 Non - interest income as percentage of average assets ranks in top quartile of the uniform bank performance report peer group for 2020. $0 $50 $100 $150 $200 $250 2016 2017 2018 2019 2020 Q2 YTD 2020 Q2 YTD 2021 NON - INTEREST EXPENSE $ Millions REVENUE • Annual revenue growth driven by diverse product mix • Net interest income growth driven by growth in balances across business lines • Greater proportion of non - interest income compared to peers 2 EXPENSE • Expenses have been tightly managed since 2017 • Expense saves have continued to be realized and have funded critical BSA and other infrastructure which has attracted new clients • 2019 includes a $7.5M civil money penalty related to consent order remediation. In 2020, subsequent to the civil money penalty, the related consent order was lifted (17%) ’16 - ’20 $0 $50 $100 $150 $200 $250 $300 2016 2017 2018 2019 2020 Q2 YTD 2020 Q2 YTD 2021 CORE REVENUE 1 $ Millions +70% ’16 - ‘20
28 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2017 2018 2019 2020 Q2 2021 ALLOWANCE FOR CREDIT LOSSES REFLECTS OUR LOWER - RISK LOAN PORTFOLIO FINANCIAL REVIEW: LOAN LOSS RESERVE ALLOWANCE FOR CREDIT LOSSES ($MILLIONS) Small Business HELOC/Consumer/Other SBLOC/IBLOC/Advisor Financing Allowance for credit losses as % of loan balance 0.6% 0.6% 0.6% 0.6% 0.5% Allowance for credit losses as % of loan balance (excluding SBLOC & IBLOC) 1.2% 1.2% 1.2% 1.4% 1.2% HIGHLIGHTS CONTINUING OPERATIONS • Decreases in allowance in Q2 2021 due to reversal of COVID driven adjustments and continued solid credit performance DISCONTINUED OPERATIONS • Discontinued portfolio only 2% of total loans Leasing
29 CAPITAL POSITION FINANCIAL REVIEW: HISTORICAL CAPITAL POSITION HIGHLIGHTS • Established and executing share buyback program of $10M a quarter for 2021 • Corporate governance requires periodic assessment of capital minimums • Capital planning includes stress testing for unexpected conditions and events 0% 5% 10% 15% 20% 25% 2017 2018 2019 2020 Q2 2020 Tier 1 Leverage Ratio 7.9% 10.1% 9.6% 9.2% 8.5% 5.0% Tier 1 Risk - based Capital Ratio (RBC) 1 16% 20% 19% 14% 15% 8% Total Risk - based Capital Ratio 17% 21% 19% 15% 16% 10% Tier 1 Capital Ratio Total RBC Ratio Tier 1 Leverage Ratio THE BANCORP INC. CAPITAL RATIOS Q2 2021 1 Tier 1 risk - based ratio is identical to Common Equity Tier 1 to risk weighted assets and has a 6.5% well capitalized minimum Well - capitalized minimum
30 WE HAVE BEEN EXECUTING AGAINST OUR STRATEGIC PLAN AND IMPROVING FINANCIAL PERFORMANCE FINANCIAL REVIEW: EARNINGS AND PROFITABILITY PERFORMANCE METRICS 2017 2018 2019 2020 Q2 YTD 2021 LONG - TERM TARGETS ROE 7.0% 24.3% 11.6% 15.1% 18.6% 1 22% ROA 0.52% 2.07% 1.09% 1.34% 1.62% 1 > 2.0% EPS $0.39 $1.55 $0.90 $1.37 $0.94 Leverage Ratio 7.9% 10.1% 9.6% 9.2% 8.5% 9% Total Assets $4.7B $4.4B $5.7B $6.3B $6.6B <$10B Efficiency Ratio 2 79% 71% 69% 59% 54% 1 Annualized for the six months ended June 30, 2021. 2 Efficiency ratio calculated by dividing non - interest expense by the total of net interest income and non - interest income. Non - i nterest income excludes gains/losses from sales of securities, changes in valuation to Walnut Street, net losses on commercial loans at fair value, and the sales of the Health Savings Account port fol io, the European payments business and the IRA portfolio.