The Bancorp, Inc. Reports First Quarter 2021 Financial Results

The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2021.

Highlights

For the quarter ended March 31, 2021, The Bancorp earned net income of $26.1 million from continuing operations, and $0.44 diluted earnings per share from combined continuing and discontinued operations.

Return on assets and equity for the quarter ended March 31, 2021 amounted to 1.6% and 18%, respectively, compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020. (all percentages “annualized”.)

Net interest margin amounted to 3.34% for the quarter ended March 31, 2021, compared to 3.34% for the quarter ended March 31, 2020 and 3.58% for the quarter ended December 31, 2020.

Net interest income increased 25% to $53.8 million for the quarter ended March 31, 2021, compared to $42.9 million for the quarter ended March 31, 2020.

Average loans and leases, including loans at fair value, increased 37% to $4.48 billion for the quarter ended March 31, 2021, compared to $3.27 billion for the quarter ended March 31, 2020.

Prepaid, debit card and related fees increased 4% to $19.2 million for the quarter ended March 31, 2021, compared to $18.5 million for the quarter ended March 31, 2020. Gross dollar volume (GDV), representing total spend on cards, increased 23% period over period.

SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans increased 45% year over year and 5% quarter over quarter to $1.68 billion at March 31, 2021.

Small Business Loans, including those held at fair value, increased 16% year over year to $692.1 million at March 31, 2021, exclusive of $190.3 million of Paycheck Protection Program (PPP) balances outstanding at that date. Those balances reflect payments on previously outstanding PPP loans and $95 million of first quarter 2021 PPP loans. There were 630 PPP loans made in first quarter 2021, generating approximate fees of $3.4 million, with 90% of such loans under $350,000. Those fees will be recognized throughout full year 2021, which is the estimated period of repayment by the U.S. government.

Leasing increased 9% year over year to $484.3 million at March 31, 2021.

The average interest rate on $6.04 billion of average deposits and interest-bearing liabilities during the first quarter of 2021 was 0.21%. Average prepaid and debit card account deposits of $4.28 billion for first quarter 2021, reflected an increase of 36% over the $3.15 billion for the quarter ended March 31, 2020.

Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 8.62% and 8.69%, respectively, at March 31, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized.

Book value per common share at March 31, 2021 was $10.42 per share compared to $8.69 at March 31, 2020, an increase of 20%, primarily as a result of retained earnings per share.

The Bancorp repurchased 594,428 shares of its common stock at an average cost of $16.82 per share during the three months ended March 31, 2021.

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.

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)

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)

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)

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

Balance sheet

March 31,

December 31,

September 30,

March 31,

2021 (unaudited)

2020

2020 (unaudited)

(dollars in thousands)

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

1,142

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

Short-term borrowings

—

140,000

Senior debt

98,406

98,314

98,222

—

Subordinated debenture

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

Average balance sheet and net interest income

Three months ended March 31, 2021

Three months ended March 31, 2020

(dollars in thousands; unaudited)

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

3.46%

5,174

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

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

0.25%

56,813

165

1.16%

Repurchase agreements

—

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

Net interest income

54,610

44,186

Net interest margin *

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.

Allowance for credit losses

Three months ended

Year ended

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

Loans charged-off:

SBA non-real estate

144

265

1,350

Direct lease financing

1,193

2,243

SBLOC

–

Total

256

1,458

3,593

Recoveries:

SBA non-real estate

103

Direct lease financing

570

Total

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

(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

(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.

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)

Unguaranteed portion of U.S. government guaranteed loans (d)

105

Non-SBA small business loans (e)

Total principal

872

Unamortized fees and costs

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.

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

—

22%

Full-service restaurants

Baked goods stores

—

Child day care services

—

Car washes

—

Offices of lawyers

—

Assisted living facilities for the elderly

—

Limited-service restaurants

Funeral homes and funeral services

—

Fitness and recreational sports centers

Lessors of nonresidential buildings (except miniwarehouses)

—

General warehousing and storage

—

All other amusement and recreation industries

—

Outpatient mental health and substance abuse centers

—

Gasoline stations with convenience stores

—

Offices of dentists

—

Other warehousing and storage

—

New car dealers

—

Offices of physicians (except mental health specialists)

—

All other miscellaneous general purpose machinery manufacturing

—

Automotive body, paint, and interior repair and maintenance

—

All other specialty trade contractors

—

Pet care (except veterinary) services

—

Sewing, needlework, and piece goods stores

—

Caterers

—

Amusement arcades

—

Plumbing, heating, and air- conditioning contractors

—

Offices of real estate agents and brokers

—

Landscaping services

—

Independent artists, writers, and performers

—

Drinking places (alcoholic beverages)

—

All other miscellaneous food manufacturing

—

Sports and recreation instruction

—

Other**

20%

Total

246

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.

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

19%

California

14%

Pennsylvania

—

11%

Illinois

—

North Carolina

New York

Texas

—

Tennessee

—

New Jersey

—

Virginia

—

Georgia

—

Colorado

Michigan

—

Washington

—

Ohio

—

Other States

10%

Total

246

318

100%

Top 10 loans as of March 31, 2021

Type*

State

SBL commercial mortgage*

SBL construction*

Total

(in millions)

Lawyers office

—

Hotel

—

General warehouse and storage

—

Hotel

—

Assisted living facility

—

Outpatient mental health and substance abuse center

—

Hotel

—

Fitness and recreation sports center

—

Hotel

—

Hotel

—

Total

* 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.

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)

65%

5.75%

Retail

71%

4.55%

Other

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)

Texas

432

77%

North Carolina

78%

Georgia

211

77%

Texas

79%

North Carolina

114

77%

Texas

80%

Arizona

112

76%

Pennsylvania

77%

Alabama

76%

Texas

75%

Ohio

69%

Nevada

80%

Other states each <$50 million

569

73%

Texas

77%

Total

1,551

76%

Arizona

79%

Mississippi

79%

North Carolina

77%

Texas

77%

Texas

77%

Georgia

79%

Alabama

77%

Georgia

79%

15 Largest loans

431

78%

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

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)

43%

38%

27%

29%

40%

20%

32%

72%

23%

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.

Direct lease financing* by type as of March 31, 2021

Principal balance

% Total

(in millions)

Government agencies and public institutions**

16%

Construction

16%

Waste management and remediation services

13%

Real estate, rental and leasing

12%

Retail trade

Transportation and warehousing

Health care and social assistance

Professional, scientific, and technical services

Wholesale trade

Manufacturing

Educational services

Arts, entertainment, and recreation

Other

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

17%

California

New Jersey

New York

Pennsylvania

Utah

North Carolina

Maryland

Washington

Connecticut

Texas

Missouri

Georgia

Alabama

Idaho

Other states

112

24%

Total

484

100%

Capital ratios

Tier 1 capital

Total capital

Common equity

to average

to risk-weighted

tier 1 to risk

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

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%

3.45%

(1)

Annualized

Book value per share table

March 31,

December 31,

September 30,

March 31,

2021

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

(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%

0.14%

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

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

(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.

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

19%

Commercial real estate (non-SBA at fair value)

4.8%

1,546

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%

$ 19.2

Card payment and ACH processing

0.2%

$ 1,048

32%

$ 1.8

* 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.

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)

Sales price of Walnut Street

209

Equity investment from independent investor

(16)

December 31, 2014 Bancorp book value

193

Additional marks 2015 - 2020

(46)

2021 Marks

—

Payments received

(116)

March 31, 2021 Bancorp book value**

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%

Cumulative analysis of marks on discontinued commercial loan principal as of March 31, 2021

Discontinued

Cumulative

% to original

loan principal

marks

principal

(dollars in millions)

Commercial loan discontinued principal before marks

Florida mall held in discontinued other real estate owned

(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

Performing

Nonperforming

Total

Performing

Nonperforming

Total

loan principal

loan marks

marks

(in millions)

5 loan relationships > $5 million

—

(3)

—

(3)

Loan relationships < $5 million

—

(1)

(3)

(1)

(4)

Quarterly activity for commercial loan discontinued principal

Commercial

loan principal

(in millions)

Commercial loan discontinued principal December 31, 2020 before marks

Quarterly paydowns and other reductions

(3)

Commercial loan discontinued principal March 31, 2021 before marks

Marks March 31, 2021

(4)

Net commercial loan exposure March 31, 2021

Residential mortgages

Net loans

Florida mall in other real estate owned

6 properties in other real estate owned

Total discontinued assets at March 31, 2021

107

Discontinued commercial loan composition as of March 31, 2021

Collateral type

Unpaid principal balance

Mark at March 31, 2021

Mark as % of portfolio

(in millions)

Commercial real estate - non-owner occupied:

Retail

(0.6)

15%

Office

—

Other

(0.1)

Construction and land

(0.1)

Commercial non-real estate and industrial

(0.1)

1 to 4 family construction

(2.5)

36%

First mortgage residential non-owner occupied

—

Commercial real estate owner occupied:

Retail

(0.7)

10%

Residential junior mortgage

—

Other

—

Total

(4.1)

Less: mark

(4)

Net commercial loan exposure March 31, 2021

(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

1,546

1.2%

Securities backed lines of credit, insurance backed lines of credit & advisor financing

—

1,681

—

SBL commercial mortgage

8.6

437

10.1%

5.5%

SBL construction

—

SBL non-real estate and PPP

7.6

424

3.5%

0.9%

Direct lease financing

—

484

—

Discontinued operations

8.5

1.1%

Other consumer loans and specialty lending

—

Total

7.8

4,690

1.7%

1.0%

(1)

Weighted average of cumulative months 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.

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

Offices of dentists

829

Drinking places (alcoholic beverages)

726

All other amusement and recreation industries

580

Administrative management services

334

Commercial printing

333

Automotive glass replacement shops

315

Cosmetology and barber schools

244

Clothing and furnishings merchant wholesalers

220

Janitorial services

184

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210429006055/en/

The Bancorp, Inc. Andres Viroslav Director, Investor Relations 215-861-7990 aviroslav@thebancorp.com

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