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): 4/29/2021
The Bancorp, Inc.
(Exact name of registrant as specified inits 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,including zip code)
302-385-5000
(Registrant’s telephone number, includingarea code)
(Former name or former address, if changedsince last report)
Check the appropriate box below if the Form 8-K filing is intendedto simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[_] Written communications pursuant toRule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuantto Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuantto 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 emerginggrowth company 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 theregistrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and FinancialCondition
On April 29, 2021, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three months ended March 31, 2021. A copy of this press release is furnished with this report as exhibit 99.1. The information in this Current Report, including the exhibit 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 |
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: April 29, 2021 | By: | /s/Paul Frenkiel |
| Paul Frenkiel | ||
| Chief Financial Officer and Secretary |
Exhibit 99.1
The Bancorp, Inc. Reports First Quarter2021 Financial Results
Wilmington, DE – April 29, 2021 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2021.
Highlights
| · | For<br> the quarter ended March 31, 2021, The Bancorp earned net income of $26.1 million<br> from continuing operations, and $0.44 diluted earnings per share from combined continuing<br> and discontinued operations. |
|---|---|
| · | Return<br> on assets and equity for the quarter ended March 31, 2021 amounted to 1.6% and 18%, respectively,<br> compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020. (all percentages<br> “annualized”.) |
| --- | --- |
| · | Net<br> interest margin amounted to 3.34% for the quarter ended March 31, 2021, compared to<br> 3.34% for the quarter ended March 31, 2020 and 3.58% for the quarter ended December 31,<br> 2020. |
| --- | --- |
| · | Net<br> interest income increased 25% to $53.8 million for the quarter ended March 31,<br> 2021, compared to $42.9 million for the quarter ended March 31, 2020. |
| --- | --- |
| · | Average<br> loans and leases, including loans at fair value, increased 37% to $4.48 billion for<br> the quarter ended March 31, 2021, compared to $3.27 billion for the quarter ended<br> March 31, 2020. |
| --- | --- |
| · | Prepaid,<br> debit card and related fees increased 4% to $19.2 million for the quarter ended March<br> 31, 2021, compared to $18.5 million for the quarter ended March 31, 2020. Gross<br> dollar volume (GDV), representing total spend on cards, increased 23% period over period. |
| --- | --- |
| · | SBLOC<br> (securities backed lines of credit), IBLOC (insurance backed lines of credit) and advisor<br> financing loans increased 45% year over year and 5% quarter over quarter to $1.68 billion<br> at March 31, 2021. |
| --- | --- |
| · | Small<br> Business Loans, including those held at fair value, increased 16% year over year to $692.1 million<br> at March 31, 2021, exclusive of $190.3 million of Paycheck Protection Program (PPP)<br> balances outstanding at that date. Those balances reflect payments on previously outstanding<br> PPP loans and $95 million of first quarter 2021 PPP loans. There were 630 PPP loans made<br> in first quarter 2021, generating approximate fees of $3.4 million, with 90% of such loans<br> under $350,000. Those fees will be recognized throughout full year 2021, which is the estimated<br> period of repayment by the U.S. government. |
| --- | --- |
| · | Leasing<br> increased 9% year over year to $484.3 million at March 31, 2021. |
| --- | --- |
| · | The<br> average interest rate on $6.04 billion of average deposits and interest-bearing liabilities<br> during the first quarter of 2021 was 0.21%. Average prepaid and debit card account deposits<br> of $4.28 billion for first quarter 2021, reflected an increase of 36% over the $3.15 billion<br> for the quarter ended March 31, 2020. |
| --- | --- |
| · | Consolidated<br> and The Bancorp Bank (“the Bank”) leverage ratios were 8.62% and 8.69%, respectively,<br> at March 31, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized. |
| --- | --- |
| · | Book<br> value per common share at March 31, 2021 was $10.42 per share compared to $8.69 at March 31,<br> 2020, an increase of 20%, primarily as a result of retained earnings per share. |
| --- | --- |
| · | The<br> Bancorp repurchased 594,428 shares of its common stock at an average cost<br> of $16.82 per share during the three months ended March 31, 2021. |
| --- | --- |
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Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Our business plan for 2021 is in full implementation. The main focus continues to be product and platform expansion with a rigorous focus on building the best payments ecosystem in the financial services industry. Our plan includes a comprehensive and integrated analysis of the market and competitors, and the needed investments to build towards the future and create scalable core competencies that our partners can use to innovate and grow. We also continue to invest heavily in anti-money laundering and compliance to have best-in-class capabilities to meet regulatory guidance and expectations. We are currently on track to meet or exceed our financial targets for 2021. We continue to closely watch the impact of the full reopening of the US economy, Fed policy, government stimulus, interest rates and the virtualization of consumer spending to understand the likely impacts on TBBK. Currently, those impacts are mostly positive for our business model and should drive continued growth in business volumes and profitability into 2022. Lastly, our guidance target for 2021 continues to be $1.70 a share or approximately $100 million in net income. The earnings per share estimates do not include share repurchases that have been previously announced.”
The Bancorp reported net income of $26.0 million, or $0.44 per diluted share, for the quarter ended March 31, 2021, compared to net income of $12.6 million, or $0.22 per diluted share, for the quarter ended March 31, 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 8.62%, 14.81%, 15.23% and 14.81%, 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, April 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 5792244. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, May 7, 2021 by dialing 855.859.2056, access code 5792244.
The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company’s only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.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. These risks and uncertainties include those relating to the on-going COVID-19 pandemic, the impact it will have on our business and the industry as a whole, and the resulting governmental and societal responses. 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 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 earnings release, except as may be required under applicable law.
The Bancorp, Inc. Contact
Andres Viroslav
Director, Investor Relations
215-861-7990
aviroslav@thebancorp.com
Source: The Bancorp, Inc.
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The Bancorp, Inc.
Financial highlights
| Three months ended | Year ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, | December, | ||||||||
| Condensed income statement | 2021 (unaudited) | 2020 (unaudited) | 2020 | ||||||
| (dollars in thousands, except per share data) | |||||||||
| Net interest income | $ | 53,757 | $ | 42,911 | $ | 194,866 | |||
| Provision for credit losses | 822 | 3,579 | 6,352 | ||||||
| Non-interest income | |||||||||
| ACH, card and other payment processing fees | 1,796 | 1,846 | 7,101 | ||||||
| Prepaid, debit card and related fees | 19,208 | 18,540 | 74,465 | ||||||
| Net realized and unrealized gains (losses) on commercial | |||||||||
| loans originated for sale | 1,996 | (5,156 | ) | (3,874 | ) | ||||
| Change in value of investment in unconsolidated entity | — | (45 | ) | (45 | ) | ||||
| Leasing related income | 965 | 833 | 3,294 | ||||||
| Other non-interest income | 109 | 581 | 3,676 | ||||||
| Total non-interest income | 24,074 | 16,599 | 84,617 | ||||||
| Non-interest expense | |||||||||
| Salaries and employee benefits | 25,658 | 22,741 | 101,737 | ||||||
| Data processing expense | 1,126 | 1,169 | 4,712 | ||||||
| Legal expense | 2,054 | 913 | 5,141 | ||||||
| FDIC insurance | 2,380 | 2,589 | 9,808 | ||||||
| Software | 3,684 | 3,477 | 14,028 | ||||||
| Other non-interest expense | 6,981 | 7,529 | 29,421 | ||||||
| Total non-interest expense | 41,883 | 38,418 | 164,847 | ||||||
| Income from continuing operations before income taxes | 35,126 | 17,513 | 108,284 | ||||||
| Income tax expense | 9,066 | 4,352 | 27,688 | ||||||
| Net income from continuing operations | 26,060 | 13,161 | 80,596 | ||||||
| Discontinued operations | |||||||||
| Loss from discontinued operations before income taxes | (124 | ) | (775 | ) | (3,816 | ) | |||
| Income tax benefit | (29 | ) | (205 | ) | (3,304 | ) | |||
| Net loss from discontinued operations, net of tax | (95 | ) | (570 | ) | (512 | ) | |||
| Net income | $ | 25,965 | $ | 12,591 | $ | 80,084 | |||
| Net income per share from continuing operations - basic | $ | 0.45 | $ | 0.23 | $ | 1.40 | |||
| Net loss per share from discontinued operations - basic | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |
| Net income per share - basic | $ | 0.45 | $ | 0.22 | $ | 1.39 | |||
| Net income per share from continuing operations - diluted | $ | 0.44 | $ | 0.23 | $ | 1.38 | |||
| Net loss per share from discontinued operations - diluted | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |
| Net income per share - diluted | $ | 0.44 | $ | 0.22 | $ | 1.37 | |||
| Weighted average shares - basic | 57,372,337 | 57,220,844 | 57,474,612 | ||||||
| Weighted average shares - diluted | 59,294,081 | 57,926,785 | 58,411,222 |
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| --- | | Balance sheet | | | December 31, | | | September 30, | | | March 31, | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 2020 | | | 2020 (unaudited) | | | 2020 (unaudited) | | | | | | | | | | | | | | | | | Assets: | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | Cash and due from banks | 7,838 | | $ | 5,984 | | $ | 6,220 | | $ | 13,610 | | | Interest earning deposits at Federal Reserve Bank | 1,738,749 | | | 339,531 | | | 294,758 | | | 105,978 | | | Total cash and cash equivalents | 1,746,587 | | | 345,515 | | | 300,978 | | | 119,588 | | | Investment securities, available-for-sale, at fair value | 1,128,459 | | | 1,206,164 | | | 1,264,903 | | | 1,353,278 | | | Commercial loans, at fair value (held-for-sale at March 31, 2020) | 1,780,762 | | | 1,810,812 | | | 1,849,947 | | | 1,716,450 | | | Loans, net of deferred fees and costs | 2,827,076 | | | 2,652,323 | | | 2,488,760 | | | 1,985,755 | | | Allowance for credit losses | (16,419 | ) | | (16,082 | ) | | (15,727 | ) | | (14,883 | ) | | Loans, net | 2,810,657 | | | 2,636,241 | | | 2,473,033 | | | 1,970,872 | | | Federal Home Loan Bank and Atlantic Central Bankers Bank stock | 1,368 | | | 1,368 | | | 1,368 | | | 1,142 | | | Premises and equipment, net | 17,196 | | | 17,608 | | | 15,849 | | | 17,148 | | | Accrued interest receivable | 20,164 | | | 20,458 | | | 18,852 | | | 15,660 | | | Intangible assets, net | 2,746 | | | 2,845 | | | 2,563 | | | 2,857 | | | Deferred tax asset, net | 10,900 | | | 9,757 | | | 7,952 | | | 12,797 | | | Investment in unconsolidated entity, at fair value | 31,047 | | | 31,294 | | | 31,783 | | | 34,273 | | | Assets held-for-sale from discontinued operations | 106,925 | | | 113,650 | | | 122,253 | | | 134,118 | | | Other assets | 90,530 | | | 81,129 | | | 79,821 | | | 79,925 | | | Total assets | 7,747,341 | | $ | 6,276,841 | | $ | 6,169,302 | | $ | 5,458,108 | | | Liabilities: | | | | | | | | | | | | | Deposits | | | | | | | | | | | | | Demand and interest checking | 6,231,220 | | $ | 5,205,010 | | $ | 4,882,834 | | $ | 4,512,949 | | | Savings and money market | 690,281 | | | 257,050 | | | 505,928 | | | 178,174 | | | Total deposits | 6,921,501 | | | 5,462,060 | | | 5,388,762 | | | 4,691,123 | | | Securities sold under agreements to repurchase | 42 | | | 42 | | | 42 | | | 42 | | | Short-term borrowings | — | | | — | | | — | | | 140,000 | | | Senior debt | 98,406 | | | 98,314 | | | 98,222 | | | — | | | Subordinated debenture | 13,401 | | | 13,401 | | | 13,401 | | | 13,401 | | | Other long-term borrowings | 40,085 | | | 40,277 | | | 40,462 | | | 40,813 | | | Other liabilities | 77,142 | | | 81,583 | | | 69,954 | | | 74,625 | | | Total liabilities | 7,150,577 | | $ | 5,695,677 | | $ | 5,610,843 | | $ | 4,960,004 | | | Shareholders' equity: | | | | | | | | | | | | | Common stock - authorized, 75,000,000 shares of 1.00 par value; 57,247,913 and 57,325,556 shares issued and outstanding at March 31, 2021 and 2020, respectively | 57,248 | | | 57,551 | | | 57,491 | | | 57,326 | | | Additional paid-in capital | 370,481 | | | 377,452 | | | 375,985 | | | 372,218 | | | Retained earnings | 154,418 | | | 128,453 | | | 104,282 | | | 60,960 | | | Accumulated other comprehensive income | 14,617 | | | 17,708 | | | 20,701 | | | 7,600 | | | Total shareholders' equity | 596,764 | | | 581,164 | | | 558,459 | | | 498,104 | | | Total liabilities and shareholders' equity | 7,747,341 | | $ | 6,276,841 | | $ | 6,169,302 | | $ | 5,458,108 | |
All values are in US Dollars.
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| --- | | Average balance sheet and net interest income | Three months ended March 31, 2021 | | | | | | | | Three months ended March 31, 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** | $ | 4,476,617 | | $ | 47,811 | | 4.27 | % | $ | 3,262,378 | | $ | 39,159 | | 4.80 | % | | Leases-bank qualified* | | 6,982 | | | 118 | | 6.76 | % | | 10,975 | | | 200 | | 7.29 | % | | Investment securities-taxable | | 1,193,009 | | | 8,808 | | 2.95 | % | | 1,395,545 | | | 10,495 | | 3.01 | % | | Investment securities-nontaxable* | | 4,042 | | | 35 | | 3.46 | % | | 5,174 | | | 39 | | 3.02 | % | | Interest earning deposits at Federal Reserve Bank | | 747,845 | | | 183 | | 0.10 | % | | 493,876 | | | 1,623 | | 1.31 | % | | Net interest earning assets | | 6,428,495 | | | 56,955 | | 3.54 | % | | 5,167,948 | | | 51,516 | | 3.99 | % | | Allowance for credit losses | | (16,069 | ) | | | | | | | (10,176 | ) | | | | | | | Assets held-for-sale from discontinued operations | | 109,128 | | | 853 | | 3.13 | % | | 137,286 | | | 1,275 | | 3.71 | % | | Other assets | | 214,171 | | | | | | | | 226,881 | | | | | | | | | $ | 6,735,725 | | | | | | | $ | 5,521,939 | | | | | | | | Liabilities and Shareholders' Equity: | | | | | | | | | | | | | | | | | | Deposits: | | | | | | | | | | | | | | | | | | Demand and interest checking | $ | 5,501,697 | | $ | 1,617 | | 0.12 | % | $ | 4,353,690 | | $ | 6,695 | | 0.62 | % | | Savings and money market | | 407,186 | | | 149 | | 0.15 | % | | 173,575 | | | 50 | | 0.12 | % | | Time deposits | | — | | | — | | — | | | 319,505 | | | 1,483 | | 1.86 | % | | Total deposits | | 5,908,883 | | | 1,766 | | 0.12 | % | | 4,846,770 | | | 8,228 | | 0.68 | % | | Short-term borrowings | | 13,055 | | | 8 | | 0.25 | % | | 56,813 | | | 165 | | 1.16 | % | | Repurchase agreements | | 41 | | | — | | — | | | 72 | | | — | | — | | | Subordinated debentures | | 13,401 | | | 113 | | 3.37 | % | | 13,401 | | | 162 | | 4.84 | % | | Senior debt | | 100,140 | | | 1,279 | | 5.11 | % | | — | | | — | | — | | | Total deposits and liabilities | | 6,035,520 | | | 3,166 | | 0.21 | % | | 4,917,056 | | | 8,555 | | 0.70 | % | | Other liabilities | | 111,241 | | | | | | | | 113,582 | | | | | | | | Total liabilities | | 6,146,761 | | | | | | | | 5,030,638 | | | | | | | | Shareholders' equity | | 588,964 | | | | | | | | 491,301 | | | | | | | | | $ | 6,735,725 | | | | | | | $ | 5,521,939 | | | | | | | | Net interest income on tax equivalent basis* | | | | $ | 54,642 | | | | | | | $ | 44,236 | | | | | Tax equivalent adjustment | | | | | 32 | | | | | | | | 50 | | | | | Net interest income | | | | $ | 54,610 | | | | | | | $ | 44,186 | | | | | Net interest margin * | | | | | | | 3.34 | % | | | | | | | 3.34 | % |
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020.
** Includes loans held-for-sale at March 31, 2020. All periods include commercial loans, at fair value and non-accrual loans.
NOTE: In the table above, the 2021 interest on loans reflects $1.4 million of fees which are not expected to recur. The fees 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. Interest on loans also includes $2.4 million of interest and fees on PPP loans, which represents the remaining recognition of fees on PPP loans made in 2020, and the initial recognition of fees on PPP loans made in 2021. Approximately $3.4 million of fees on the 2021 PPP loans is being recognized throughout full year 2021. 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.
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| --- | | Allowance for credit losses | Three months ended | | | | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | March 31, | | | March 31, | | | December 31, | | | | | 2021 (unaudited) | | | 2020 (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 | | 144 | | | 265 | | | 1,350 | | | Direct lease financing | | 97 | | | 1,193 | | | 2,243 | | | SBLOC | | 15 | | | — | | | — | | | Total | | 256 | | | 1,458 | | | 3,593 | | | Recoveries: | | | | | | | | | | | SBA non-real estate | | 4 | | | 19 | | | 103 | | | Direct lease financing | | 2 | | | 84 | | | 570 | | | Total | | 6 | | | 103 | | | 673 | | | Net charge-offs | | 250 | | | 1,355 | | | 2,920 | | | Provision credited to allowance, excluding commitment provision | | 587 | | | 3,363 | | | 6,127 | | | Balance in allowance for credit losses at end of period | $ | 16,419 | | $ | 14,883 | | $ | 16,082 | | | Net charge-offs/average loans | | 0.01 | % | | 0.04 | % | | 0.07 | % | | Net charge-offs/average assets | | — | | | 0.02 | % | | 0.05 | % |
(1) Excludes activity from assets held-for-sale from discontinued operations.
| Loan portfolio | March 31, | December 31, | September 30, | March 31, | ||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2020 | 2020 | |||||
| (in thousands) | ||||||||
| SBL non-real estate | $ | 305,446 | $ | 255,318 | $ | 293,488 | $ | 84,946 |
| SBL commercial mortgage | 320,013 | 300,817 | 270,264 | 233,220 | ||||
| SBL construction | 20,692 | 20,273 | 27,169 | 48,823 | ||||
| Small business loans * | 646,151 | 576,408 | 590,921 | 366,989 | ||||
| Direct lease financing | 484,316 | 462,182 | 430,675 | 445,967 | ||||
| SBLOC / IBLOC** | 1,622,359 | 1,550,086 | 1,428,253 | 1,156,433 | ||||
| Advisor financing *** | 58,919 | 48,282 | 26,600 | — | ||||
| Other specialty lending | 2,251 | 2,179 | 2,194 | 2,711 | ||||
| Other consumer loans **** | 4,201 | 4,247 | 3,809 | 4,023 | ||||
| 2,818,197 | 2,643,384 | 2,482,452 | 1,976,123 | |||||
| Unamortized loan fees and costs | 8,879 | 8,939 | 6,308 | 9,632 | ||||
| Total loans, net of unamortized fees and costs | $ | 2,827,076 | $ | 2,652,323 | $ | 2,488,760 | $ | 1,985,755 |
| Small business portfolio | March 31, | December 31, | September 30, | March 31, | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2020 | 2020 | |||||
| (in thousands) | ||||||||
| SBL, including unamortized fees and costs | $ | 647,445 | $ | 577,944 | $ | 590,314 | $ | 371,072 |
| SBL, included in commercial loans, at fair value | 234,908 | 243,562 | 250,958 | 223,987 | ||||
| Total small business loans | $ | 882,353 | $ | 821,506 | $ | 841,272 | $ | 595,059 |
* 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. An increase in SBL non-real estate loans from $255.3 million to $305.4 million in the first quarter of 2021 reflected an increase of $24.5 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $190.3 million at March 31, 2021 and $165.7 million at December 31, 2020. In addition, the Bank provided a short-term line of credit to another institution at March 31, 2021 in the amount of $14.6 million to initially fund PPP loans, which is included in the SBL non-real estate category.
** 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 $932,000 and $663,000 at March 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.
| 6 |
| --- |
Small business loans as of March 31, 2021
| Loan principal | ||
|---|---|---|
| (in millions) | ||
| U.S. government guaranteed portion of SBA loans (a) | $ | 349 |
| Paycheck Protection Program loans (a) | 190 | |
| Commercial mortgage SBA (b) | 180 | |
| Construction SBA (c) | 14 | |
| Unguaranteed portion of U.S. government guaranteed loans (d) | 105 | |
| Non-SBA small business loans (e) | 34 | |
| Total principal | $ | 872 |
| Unamortized fees and costs | 10 | |
| Total small business loans | $ | 882 |
(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 $14 million in Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $3 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.
(d) The $105 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 $34 million of non-SBA loans is comprised of a $15 million short-term line of credit to initially fund PPP loans with the remaining $19 million mainly 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.
| 7 |
| --- |
Small business loans by type as of March 31, 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 | $ | 66 | $ | 3 | $ | — | $ | 69 | 22% |
| Full-service restaurants | 15 | 1 | 3 | 19 | 5% | ||||
| Baked goods stores | 4 | — | 12 | 16 | 5% | ||||
| Child day care services | 15 | — | 1 | 16 | 5% | ||||
| Car washes | 10 | 1 | — | 11 | 5% | ||||
| Offices of lawyers | 10 | — | — | 10 | 3% | ||||
| Assisted living facilities for the elderly | 1 | 8 | — | 9 | 3% | ||||
| Limited-service restaurants | 4 | 1 | 4 | 9 | 3% | ||||
| Funeral homes and funeral services | 8 | — | — | 8 | 2% | ||||
| Fitness and recreational sports centers | 5 | 1 | 2 | 8 | 2% | ||||
| Lessors of nonresidential buildings (except miniwarehouses) | 8 | — | — | 8 | 2% | ||||
| General warehousing and storage | 7 | — | 1 | 8 | 2% | ||||
| All other amusement and recreation industries | 5 | — | — | 5 | 1% | ||||
| Outpatient mental health and substance abuse centers | 5 | — | — | 5 | 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% | ||||
| Offices of physicians (except mental health specialists) | 3 | — | — | 3 | 1% | ||||
| All other miscellaneous general purpose machinery manufacturing | 3 | — | — | 3 | 1% | ||||
| Automotive body, paint, and interior repair and maintenance | 2 | — | 1 | 3 | 1% | ||||
| All other specialty trade contractors | 1 | — | 1 | 2 | 1% | ||||
| Pet care (except veterinary) services | 2 | — | — | 2 | 1% | ||||
| Sewing, needlework, and piece goods stores | 2 | — | — | 2 | 1% | ||||
| Caterers | 2 | — | — | 2 | 1% | ||||
| Amusement arcades | 2 | — | 1 | 3 | 1% | ||||
| Plumbing, heating, and air-conditioning contractors | 2 | — | — | 2 | 1% | ||||
| Offices of real estate agents and brokers | 2 | — | — | 2 | 1% | ||||
| Landscaping services | — | — | 2 | 2 | 1% | ||||
| Independent artists, writers, and performers | 2 | — | — | 2 | 1% | ||||
| Drinking places (alcoholic beverages) | 1 | — | 1 | 2 | 1% | ||||
| All other miscellaneous food manufacturing | 1 | — | 1 | 2 | 1% | ||||
| Sports and recreation instruction | — | — | 2 | 2 | 1% | ||||
| Other** | 45 | 1 | 24 | 70 | 20% | ||||
| Total | $ | 246 | $ | 16 | $ | 56 | $ | 318 | 100% |
* Of the SBL commercial mortgage and SBL construction loans, $63.5 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 $1.5 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.
| 8 |
| --- |
State diversification as of March 31, 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 | $ | 45 | $ | 8 | $ | 8 | $ | 61 | 19% |
| California | 40 | 1 | 5 | 46 | 14% | ||||
| Pennsylvania | 30 | — | 4 | 34 | 11% | ||||
| Illinois | 23 | — | 3 | 26 | 8% | ||||
| North Carolina | 22 | 1 | 3 | 26 | 8% | ||||
| New York | 15 | 3 | 5 | 23 | 7% | ||||
| Texas | 12 | — | 5 | 17 | 5% | ||||
| Tennessee | 11 | — | 1 | 12 | 4% | ||||
| New Jersey | 4 | — | 7 | 11 | 3% | ||||
| Virginia | 9 | — | 2 | 11 | 3% | ||||
| Georgia | 7 | — | 2 | 9 | 3% | ||||
| Colorado | 3 | 2 | 1 | 6 | 2% | ||||
| Michigan | 3 | — | 1 | 4 | 1% | ||||
| Washington | 3 | — | — | 3 | 1% | ||||
| Ohio | 3 | — | — | 3 | 1% | ||||
| Other States | 16 | 1 | 9 | 26 | 10% | ||||
| Total | $ | 246 | $ | 16 | $ | 56 | $ | 318 | 100% |
* Of the SBL commercial mortgage and SBL construction loans, $63.5 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 March 31, 2021
| Type* | State | SBL commercial mortgage* | SBL construction* | Total | ||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | ||||||||
| Lawyers office | CA | $ | 9 | $ | — | $ | 9 | |
| Hotel | FL | 9 | — | 9 | ||||
| General warehouse and storage | PA | 7 | — | 7 | ||||
| Hotel | NC | 6 | — | 6 | ||||
| Assisted living facility | FL | — | 5 | 5 | ||||
| Outpatient mental health and substance abuse center | FL | 5 | — | 5 | ||||
| Hotel | NC | 5 | — | 5 | ||||
| Fitness and recreation sports center | PA | 4 | — | 4 | ||||
| Hotel | PA | 4 | — | 4 | ||||
| Hotel | TN | 4 | — | 4 | ||||
| Total | $ | 53 | $ | 5 | $ | 58 |
* All the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-values. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.
| 9 |
| --- |
Commercial real estate loans, at fair value, excluding SBA loans, are as follows including LTV at origination:
Type as of March 31, 2021
| Type | # Loans | Balance | Weighted average origination date LTV | Weighted average minimum interest rate | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | |||||||||||
| Multifamily (apartments) | 155 | $ | 1,405 | 76 | % | 4.77 | % | ||||
| Hospitality (hotels and lodging) | 11 | 71 | 65 | % | 5.75 | % | |||||
| Retail | 7 | 48 | 71 | % | 4.55 | % | |||||
| Other | 7 | 27 | 70 | % | 5.23 | % | |||||
| 180 | $ | 1,551 | 76 | % | 4.82 | % | |||||
| Fair value adjustment | (5 | ) | |||||||||
| Total | $ | 1,546 | |||||||||
| State diversification as of March 31, 2021 | 15 largest loans (all multifamily) as of March 31, 2021 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| State | Balance | Origination date LTV | State | Balance | Origination date LTV | ||||||
| (in millions) | (in millions) | ||||||||||
| Texas | 432 | 77% | North Carolina | $ | 44 | 78% | |||||
| Georgia | 211 | 77% | Texas | 38 | 79% | ||||||
| North Carolina | 114 | 77% | Texas | 36 | 80% | ||||||
| Arizona | 112 | 76% | Pennsylvania | 34 | 77% | ||||||
| Alabama | 57 | 76% | Texas | 30 | 75% | ||||||
| Ohio | 56 | 69% | Nevada | 29 | 80% | ||||||
| Other states each <50 million | 569 | 73% | Texas | 27 | 77% | ||||||
| Total | 1,551 | 76% | Arizona | 27 | 79% | ||||||
| Mississippi | 26 | 79% | |||||||||
| North Carolina | 25 | 77% | |||||||||
| Texas | 25 | 77% | |||||||||
| Texas | 24 | 77% | |||||||||
| Georgia | 23 | 79% | |||||||||
| Alabama | 23 | 77% | |||||||||
| Georgia | 20 | 79% | |||||||||
| 15 Largest loans | $ | 431 | 78% |
All values are in US Dollars.
| 10 |
| --- |
Institutional banking loans outstanding at March 31, 2021
| Type | Principal | % of total | |
|---|---|---|---|
| (in millions) | |||
| Securities backed lines of credit (SBLOC) | $ | 1,117 | 66% |
| Insurance backed lines of credit (IBLOC) | 505 | 30% | |
| Advisor financing | 59 | 4% | |
| Total | $ | 1,681 | 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 periods, 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 March 31, 2021
| Principal amount | % Principal to collateral | ||
|---|---|---|---|
| (in millions) | |||
| $ | 60 | 43% | |
| 17 | 38% | ||
| 14 | 27% | ||
| 12 | 29% | ||
| 10 | 40% | ||
| 10 | 20% | ||
| 10 | 32% | ||
| 8 | 72% | ||
| 8 | 23% | ||
| 8 | 34% | ||
| Total and weighted average | $ | 157 | 35% |
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.
| 11 |
| --- |
Direct lease financing* by type as of March 31, 2021
| Principal balance | % Total | ||
|---|---|---|---|
| (in millions) | |||
| Government agencies and public institutions** | $ | 79 | 16% |
| Construction | 75 | 16% | |
| Waste management and remediation services | 63 | 13% | |
| Real estate, rental and leasing | 56 | 12% | |
| Retail trade | 46 | 9% | |
| Transportation and warehousing | 29 | 6% | |
| Health care and social assistance | 26 | 5% | |
| Professional, scientific, and technical services | 18 | 4% | |
| Wholesale trade | 15 | 3% | |
| Manufacturing | 11 | 2% | |
| Educational services | 8 | 2% | |
| Arts, entertainment, and recreation | 6 | 1% | |
| Other | 52 | 11% | |
| Total | $ | 484 | 100% |
* Of the total $484 million of direct lease financing, $447 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 March 31, 2021
| State | Principal balance | % Total | |
|---|---|---|---|
| (in millions) | |||
| Florida | $ | 83 | 17% |
| California | 44 | 9% | |
| New Jersey | 34 | 7% | |
| New York | 31 | 6% | |
| Pennsylvania | 25 | 5% | |
| Utah | 25 | 5% | |
| North Carolina | 24 | 5% | |
| Maryland | 23 | 5% | |
| Washington | 15 | 3% | |
| Connecticut | 15 | 3% | |
| Texas | 13 | 3% | |
| Missouri | 12 | 2% | |
| Georgia | 10 | 2% | |
| Alabama | 9 | 2% | |
| Idaho | 9 | 2% | |
| Other states | 112 | 24% | |
| Total | $ | 484 | 100% |
| 12 |
| --- | | 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 March 31, 2021 | | | | | | | | | | | | | | The Bancorp, Inc. | | 8.62 | % | | 14.81 | % | | 15.23 | % | | 14.81 | % | | The Bancorp Bank | | 8.69 | % | | 14.95 | % | | 15.37 | % | | 14.95 | % | | "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 | | | | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | March 31, | | | | | | December | | | | | 2021 | | | 2020 | | | 2020 | | | | Selected operating ratios | | | | | | | | | | | Return on average assets ^(1)^ | | 1.56 | % | | 0.91 | % | | 1.34 | % | | Return on average equity ^(1)^ | | 17.88 | % | | 10.28 | % | | 15.08 | % | | Net interest margin | | 3.34 | % | | 3.34 | % | | 3.45 | % |
^(1)^Annualized
| Book value per share table | March 31, | December 31, | September 30, | March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2020 | 2020 | |||||||||
| Book value per share | $ | 10.42 | $ | 10.10 | $ | 9.71 | $ | 8.69 | ||||
| Loan quality table | March 31, | December 31, | September 30, | March 31, | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2020 | 2020 | |||||||||
| (dollars in thousands) | ||||||||||||
| Nonperforming loans to total loans | 0.49 | % | 0.48 | % | 0.49 | % | 0.40 | % | ||||
| Nonperforming assets to total assets | 0.18 | % | 0.20 | % | 0.20 | % | 0.14 | % | ||||
| Allowance for credit losses | 0.58 | % | 0.61 | % | 0.63 | % | 0.75 | % | ||||
| Nonaccrual loans | $ | 11,961 | $ | 12,227 | $ | 12,275 | $ | 5,645 | ||||
| Loans 90 days past due still accruing interest | 1,762 | 497 | 24 | 2,245 | ||||||||
| Other real estate owned | — | — | — | — | ||||||||
| Total nonperforming assets | $ | 13,723 | $ | 12,724 | $ | 12,299 | $ | 7,890 | ||||
| Gross dollar volume (GDV) ^(1)^ | Three months ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| March 31, | December 31, | September 30, | March 31, | |||||||||
| 2021 | 2020 | 2020 | 2020 | |||||||||
| (in thousands) | ||||||||||||
| Prepaid and debit card GDV | $ | 28,094,930 | $ | 22,523,855 | $ | 23,964,508 | $ | 22,752,931 |
^(1)^Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.
| 13 |
| --- | | Business line quarterly summary | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Quarter ended March 31, 2021 | | | | | | | | | | | | | | | | | | (dollars in millions) | | | | | | | | | | | | | | | | | | | | | | Balances | | | | | | | | | | | | | | | | | | | | % Growth | | | | | | | | | | | | Major business lines | Average approximate rates * | | | Balances ** | | Year over year | | | Linked quarter annualized | | | | | | | | | Loans | | | | | | | | | | | | | | | | | | Institutional banking *** | | 2.5 | % | $ | 1,681 | | 45 | % | | 21 | % | | | | | | | Small Business Lending**** | | 5.0 | % | | 882 | | 16 | % | | 22 | % | | | | | | | Leasing | | 6.4 | % | | 484 | | 9 | % | | 19 | % | | | | | | | Commercial real estate (non-SBA at fair value) | | 4.8 | % | | 1,546 | | nm | | | nm | | | | | | | | Weighted average yield | | 4.2 | % | $ | 4,593 | | | | | | | | Non-interest income | | | | | | | | | | | | | | | | | | | % Growth | | | | Deposits | | | | | | | | | | | | | Current quarter | | Year over year | | | Payment solutions (prepaid and debit card issuance) | | 0.1 | % | $ | 4,281 | | 36 | % | | nm | | $ | 19.2 | | 4 | % | | Card payment and ACH processing | | 0.2 | % | $ | 1,048 | | 32 | % | | nm | | $ | 1.8 | | nm | |
* Average rates are for the quarter ended March 31, 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.
| 14 |
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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 | (116 | ) | |||
| March 31, 2021 Bancorp book value** | $ | 31 | |||
| 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 34% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of March 31, 2021.
Walnut Street portfolio composition as of March 31, 2021
| Collateral type | % of Portfolio | ||
|---|---|---|---|
| Commercial real estate non-owner occupied - Retail | 67.4 | % | |
| Construction and land | 24.3 | % | |
| Other | 8.3 | % | |
| Total | 100.0 | % |
| 15 |
| --- |
Cumulative analysis of marks on discontinued commercial loan principalas of March 31, 2021
| Discontinued | Cumulative | % to original | ||||||
|---|---|---|---|---|---|---|---|---|
| loan principal | marks | principal | ||||||
| (dollars in millions) | ||||||||
| Commercial loan discontinued principal before marks | $ | 61 | ||||||
| Florida mall held in discontinued other real estate owned | 42 | $ | (27 | ) | ||||
| Mark at March 31, 2021 | (4 | ) | ||||||
| Cumulative mark at March 31, 2021 | $ | 103 | $ | (31 | ) | 30 | % |
Analysis of discontinued commercial loan relationships as of March 31,2021
| Nonperforming loan principal | Total loan principal | Performing loan marks | Nonperforming loan marks | Total marks | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 5 loan relationships > 5 million | 39 | $ | — | $ | 39 | $ | (3 | ) | $ | — | $ | (3 | ) | |
| Loan relationships < 5 million | 9 | 9 | 18 | — | (1 | ) | (1 | ) | ||||||
| 48 | $ | 9 | $ | 57 | $ | (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 December 31, 2020 before marks | $ | 64 | |
| Quarterly paydowns and other reductions | (3 | ) | |
| Commercial loan discontinued principal March 31, 2021 before marks | 61 | ||
| Marks March 31, 2021 | (4 | ) | |
| Net commercial loan exposure March 31, 2021 | 57 | ||
| Residential mortgages | 29 | ||
| Net loans | 86 | ||
| Florida mall in other real estate owned | 15 | ||
| 6 properties in other real estate owned | 6 | ||
| Total discontinued assets at March 31, 2021 | $ | 107 |
| 16 |
| --- |
Discontinued commercial loan composition as of March 31, 2021
| Collateral type | Unpaid principal balance | Mark at<br> March 31, 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 | (2.5 | ) | 36 | % | ||||
| First mortgage residential non-owner occupied | 8 | — | — | ||||||
| Commercial real estate owner occupied: | |||||||||
| Retail | 7 | (0.7 | ) | 10 | % | ||||
| Residential junior mortgage | 1 | — | — | ||||||
| Other | 1 | — | — | ||||||
| Total | $ | 61 | $ | (4.1 | ) | 7 | % | ||
| Less: mark | (4 | ) | |||||||
| Net commercial loan exposure March 31, 2021 | $ | 57 | $ | (4.1 | ) |
Loan payment deferrals as of March 31, 2021
| Cumulative months deferred (1) | Total loan balance deferrals | Total non-guaranteed loan balance deferrals | Total loan balances | % of total loan balances with deferrals | % of total non-guaranteed loan balances with deferrals | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | ||||||||||||||
| Commercial real estate loans held at fair value (excluding SBA loans shown below) | 6.0 | $ | 19 | $ | 19 | $ | 1,546 | 1.2 | % | 1.2 | % | |||
| Securities backed lines of credit, insurance backed lines of credit & advisor financing | — | — | — | 1,681 | — | — | ||||||||
| SBL commercial mortgage | 8.6 | 44 | 24 | 437 | 10.1 | % | 5.5 | % | ||||||
| SBL construction | — | — | — | 21 | — | — | ||||||||
| SBL non-real estate and PPP | 7.6 | 15 | 4 | 424 | 3.5 | % | 0.9 | % | ||||||
| Direct lease financing | — | — | — | 484 | — | — | ||||||||
| Discontinued operations | 8.5 | 1 | 1 | 90 | 1.1 | % | 1.1 | % | ||||||
| Other consumer loans and specialty lending | — | — | — | 7 | — | — | ||||||||
| Total | 7.8 | $ | 79 | $ | 48 | $ | 4,690 | 1.7 | % | 1.0 | % | |||
| (1) | Weighted average of cumulative months<br> deferred for loan payments currently on deferral. | |||||||||||||
| --- | --- |
Note: SBL balances above include loans reported in commercial loans, at fair value, in the balance sheet.
Note: At March 31, 2021, SBA 7a loans, included in the three SBL loan balance categories above, totaled $454.0 million of which $105.0 million was not U.S. government guaranteed. The CARES Act provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided 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 which began on February 1, 2021.
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SBA 7a deferral distribution by type as of March 31, 2021
(comprised of the unguaranteed portion of SBA 7a loans)
| Total | % Total | |
|---|---|---|
| (in thousands) | ||
| Full-service restaurants | 3,115 | 30% |
| Hotels* | 1,535 | 15% |
| Sports and recreation instruction | 1,157 | 11% |
| Services for the elderly and persons with disabilities | 947 | 9% |
| Offices of dentists | 829 | 8% |
| Drinking places (alcoholic beverages) | 726 | 7% |
| All other amusement and recreation industries | 580 | 6% |
| Administrative management services | 334 | 3% |
| Commercial printing | 333 | 3% |
| Automotive glass replacement shops | 315 | 3% |
| Cosmetology and barber schools | 244 | 2% |
| Clothing and furnishings merchant wholesalers | 220 | 2% |
| Janitorial services | 184 | 1% |
| Total | 10,519 | 100% |
| * At March 31, 2021, SBA 7a loans, included in SBL, totaled 454.0 million of which 105.0 million was not U.S. government guaranteed. The CARES Act provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided 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 which began on February 1, 2021. |
All values are in US Dollars.
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