The Bancorp, Inc. (“The Bancorp” or the “Company” or “we” or
“our”) (NASDAQ: TBBK), a financial holding company, today reported
its financial results for the fourth quarter and full year of
2024.
Recent Developments
On December 31, 2024, the Company's wholly owned subsidiary, The
Bancorp Bank, National Association (the "Bank"), closed on the sale
of an $82 million real estate bridge loan (“REBL”) portfolio,
collateralized by apartment buildings. The sale included a $32.5
million classified loan, which was current with respect to monthly
payments. The Bank provided financing to a third-party purchaser,
which provided a 25% payment guaranty. The leverage and guaranty
provided were consistent with market terms, and the Bank’s general
underwriting standards for similar loans. The resulting weighted
average look-through loan to values (“LTVs”), of the related
mortgaged properties are no more than 57% as-is and 55%
as-stabilized, which are further supported by the 25% payment
guaranty. The look-through LTVs are the weighted average of LTVs
multiplied by the leverage provided by the Company, based upon
appraisals performed within the past 15 months. There was no loss
of principal in connection with the sale, although $1.3 million of
accrued interest was reversed in connection therewith. We believe
that the sale is an indication of the liquidity of the portfolio,
as further evidenced by “as is” and “as stabilized” LTVs,
respectively, of 77% and 68% for total special mention and
substandard REBL loans, based upon appraisals performed within the
past 12 months.
Primarily as a result of the aforementioned $32.5 million
substandard loan in that sale, total substandard loans decreased
14%, to $134.4 million at December 31, 2024, from $155.4 million at
September 30, 2024. Substandard loans were further reduced on
January 2, 2025 on which date a $12.3 million substandard loan was
repaid without loss of principal, as a result of the sale of the
underlying apartment building collateral in Plainfield New Jersey.
As noted in the third quarter earnings release, a significant
portion of the REBL portfolio was reviewed during that quarter by a
firm specializing in such analysis, which resulted in no
additional Special Mention or Substandard determinations.
Additionally, the 100 basis points of Federal Reserve rate
reductions may provide cash flow benefits to floating rate
borrowers. Underlying property values as supported by the LTVs
noted above, also continue to facilitate the recapitalization of
certain loans from borrowers experiencing cash flow issues, to
borrowers with greater financial capacity. At December 31, 2024,
special mention real estate bridge loans amounted to $84.4 million
which was unchanged from September 30, 2024.
The majority of the Company’s real estate owned is comprised of
an apartment complex, with a balance as of December 31, 2024 of
$41.1 million. That property is under agreement of sale with a
sales price that is expected to cover the Company’s current balance
plus the forecasted cost of improvements to the property. The
purchaser has increased the total of earnest money deposits to $1.6
million, from $500,000, in consideration of extending the closing
date to March 21, 2025. The Company believes that the purpose for
the extension is to allow time for this sale to be included in a
larger transaction. There can be no assurance that the purchaser
will consummate the sale of the property, but if not consummated,
the earnest money deposits of $1.6 million would accrue to the
Company.
Highlights
- The Bancorp reported net income of $55.9 million, or $1.15 per
diluted share (“EPS”), for the quarter ended December 31, 2024,
compared to net income of $44.0 million, or $0.81 per diluted
share, for the quarter ended December 31, 2023, or an EPS increase
of 42%. While net income increased 27% between these periods,
outstanding shares were reduced as a result of repurchases, which
were significantly increased in 2024.
- Return on assets and return on equity for the quarter ended
December 31, 2024, amounted to 2.6% and 28%, respectively, compared
to 2.4% and 22%, respectively, for the quarter ended December 31,
2023 (all percentages “annualized”).
- Net interest income increased 2% to $94.3 million for the
quarter ended December 31, 2024, compared to $92.2 million for the
quarter ended December 31, 2023. Fourth quarter 2024 net interest
income was reduced by the reversal of $1.3 million of interest
related to the sale of $82.0 million loans as described in “Recent
Developments” above.
- Net interest margin amounted to 4.55% for the quarter ended
December 31, 2024, compared to 5.26% for the quarter ended December
31, 2023, and 4.78% for the quarter ended September 30, 2024. Net
interest margin for fourth quarter 2024 was reduced by the interest
reversal noted directly above.
- Loans, net of deferred fees and costs were $6.11 billion at
December 31, 2024, compared to $5.36 billion at December 31, 2023
and $5.91 billion at September 30, 2024. Those changes reflected an
increase of 4% quarter over linked quarter and an increase of 14%
year over year.
- Gross dollar volume (“GDV”), representing the total amounts
spent on prepaid and debit cards, increased $6.36 billion, or 19%,
to $39.66 billion for the quarter ended December 31, 2024, compared
to the quarter ended December 31, 2023. The increase reflected
continued organic growth with existing partners and the impact of
clients added within the past year. Total prepaid, debit card, ACH,
and other payment fees increased 16% to $29.2 million for the
fourth quarter of 2024 compared to the fourth quarter of 2023.
Consumer credit fintech fees amounted to $3.0 million for the
fourth quarter 2024, as a result of our initial entry into credit
sponsorship in 2024.
- Small business loans (“SBLs”), including those held at fair
value, amounted to $987.0 million at December 31, 2024, or 12%
higher year over year, and 3% higher quarter over linked quarter,
excluding the impact of loans with related secured borrowings.
- Direct lease financing balances increased 2% year over year to
$700.6 million at December 31, 2024, and decreased 2% from
September 30, 2024.
- Reflecting the aforementioned sale of $82.0 million of loans on
December 31, 2024, real estate bridge loans of $2.11 billion
decreased 4% compared to a $2.19 billion balance at September 30,
2024, and increased 5% compared to the December 31, 2023 balance of
$2.00 billion. These real estate bridge loans consist entirely of
rehabilitation loans for apartment buildings.
- Security backed lines of credit (“SBLOC”), insurance backed
lines of credit (“IBLOC”), and investment advisor financing loans
collectively decreased 1% year over year and increased 3% quarter
over linked quarter to $1.84 billion at December 31, 2024.
- The average interest rate on $7.70 billion of average deposits
and interest-bearing liabilities during the fourth quarter of 2024
was 2.31%. Average deposits of $7.55 billion for the fourth quarter
of 2024 increased $1.30 billion, or 21% over fourth quarter
2023.
- As of December 31, 2024, tier 1 capital to average assets
(leverage), tier 1 capital to risk-weighted assets, total capital
to risk-weighted assets and common equity tier 1 to risk-weighted
assets ratios were 9.41%, 13.88%, 14.46% and 13.88%, respectively,
compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%,
respectively. The Bancorp Bank, National Association, remains well
capitalized under banking regulations.
- Book value per common share at December 31, 2024 was $16.55
compared to $15.17 per common share at December 31, 2023, an
increase of 9%.
- The Bancorp repurchased 919,584 shares of its common stock at
an average cost of $54.37 per share during the quarter ended
December 31, 2024. As a result of share repurchases, outstanding
shares at December 31, 2024 amounted to 47.7 million, compared to
53.2 million shares at December 31, 2023, or a reduction of
10%.
- The Bancorp emphasizes safety and soundness and its balance
sheet has a risk profile enhanced by the special nature of the
collateral supporting its loan niches, related underwriting, and
the characteristics of its funding sources, including those
highlighted in the bullets below. Those loan niches and funding
sources have contributed to increased earnings levels, even during
periods in which markets have experienced various economic
stresses.
- The vast majority of The Bancorp’s funding is comprised of
FDIC-insured and/or small balance accounts, which adjust to only a
portion of changes in rates. The Company also has lines of credit
with U.S. government sponsored agencies totaling approximately
$3.00 billion as of December 31, 2024, as well as access to other
forms of liquidity.
- In its REBL portfolio, the Company has minimal exposure to
non-multifamily commercial real estate such as office buildings,
and instead has a portfolio largely comprised of rehabilitation
bridge loans for apartment buildings. These loans generally have
three-year terms with two one-year extensions to allow for the
rehabilitation work to be completed and rentals stabilized for an
extended period, before being refinanced at lower rates through
U.S. Government Sponsored Entities or other lenders. The REBL
portfolio consists primarily of workforce housing, which we
consider to be working class apartments at more affordable rental
rates. Related collateral values should accordingly be more stable
than higher rent properties, even in stressed economies. While the
macro-economic environment has challenged the multifamily bridge
space, the stability of the Company’s REBL portfolio is evidenced
by the estimated values of the underlying collateral. The Company’s
$2.1 billion apartment bridge lending portfolio at December 31,
2024, has a weighted average origination date “as is” loan-to-value
ratio of 70%, based on third-party appraisals. Further, the
weighted average origination date “as stabilized” LTV, which
measures the estimated value of the apartments after the
rehabilitation is complete may provide even greater
protection.
- As part of the underwriting process, The Bancorp reviews
prospective borrowers’ previous rehabilitation experience in
addition to overall financial wherewithal. These transactions also
include significant borrower equity contributions with required
performance metrics. Underwriting generally includes, but is not
limited to, assessment of local market information relating to
vacancy and rental rates, review of post rehabilitation rental rate
assumptions against geo-specific affordability indices, negative
news searches, lien searches, visitations by bank personnel and/or
designated engineers, and other information sources.
- Rehabilitation progress is monitored through ongoing draw
requests and financial reporting covenants. This generally allows
for early identification of potential issues, and expedited action
to address on a timely basis.
- Operations and ongoing loan evaluation are overseen by multiple
levels of management, in addition to the REBL team’s experienced
professional staff and third-party consultants utilized during the
underwriting and asset management process. This oversight includes
a separate loan committee specific to REBL, which is comprised of
seasoned and experienced lending professionals who do not directly
report to anyone on the REBL team. There is also a separate loan
review department, a surveillance committee and additional staff
which evaluate potential losses under the current expected credit
losses methodology (“CECL”), all of which similarly do not report
to anyone on the REBL team.
- SBLOC and IBLOC portfolios are respectively secured by
marketable securities and the cash value of life insurance. The
majority of SBA 7(a) loans are government guaranteed, while SBA 504
loans are made with 50%-60% LTVs.
- Additional details regarding our loan portfolios are included
in the related tables in this press release, as is the
summarization of the earnings contributions of our payments
businesses, which further enhances The Bancorp’s risk profile. The
Company’s risk profile inherent in its loan portfolios, funding and
earnings levels, may present opportunities to further increase
stockholder value, while still prudently maintaining capital
levels.
- In the second quarter of 2024, the Company purchased
approximately $900 million of fixed rate government sponsored
entity backed commercial and residential mortgage securities of
varying maturities, with an approximate 5.11% weighted average
yield, and estimated weighted average lives of eight years, to
reduce its exposure to lower levels of net interest income. Such
purchases would also reduce the additional net interest income
which will result if the Federal Reserve increases rates. While
there are many variables and limitations to estimating exposure to
changes in rates, such purchases and continuing fixed rate loan
originations are projected to reduce such exposure to modest
levels. In prior years, The Bancorp deferred adding fixed rate
securities when yields were particularly low, which has afforded
the flexibility to benefit from, and secure, more advantageous
securities and loan rates.
“2024 was another year of significant Fintech business expansion
and earnings per share growth of 23%,” said Damian Kozlowski,
President and CEO of The Bancorp. “Led by the growth in our Fintech
solutions group, we are affirming 2025 guidance of $5.25 a share.
The guidance does not include $150 million share of planned
buybacks in 2025, or $37.5 million per quarter. Planned buybacks
have been reduced $100 million in 2025 from 2024 to facilitate the
repayment of $96 million of senior secured debt.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly
Earnings Conference Call at 8:00 AM ET Friday, January 31, 2025, by
clicking on the webcast link on The Bancorp's homepage at
www.thebancorp.com. or you may dial 1.800.549.8228, conference ID
18739. You may listen to the replay of the webcast following the
live call on The Bancorp's investor relations website (archived for
one year) or telephonically until Friday, February 7, 2025, by
dialing 1.888.660.6264, playback code 18739#.
About The Bancorp
The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington,
Delaware, through its subsidiary, The Bancorp Bank, National
Association provides a variety of services including providing
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 that are not historical facts, are “forward-looking
statements.” These statements may be identified by the use of
forward-looking terminology, including, but not limited to the
words “intend,” “may,” “believe,” “will,” “expect,” “look,”
“anticipate,” “plan,” “estimate,” “continue,” or similar words.
Forward-looking statements include, but are not limited to,
statements regarding our annual fiscal 2024 results, our
anticipated 2025 profitability, increased growth and the impact of
stock buybacks, relate to our current assumptions, projections and
expectations about our business and future events, including
current expectations about important economic, political, and
technological factors, among other factors, 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. Factors that could cause results to differ from those
expressed in the forward-looking statements also include, but are
not limited to the risks and uncertainties referenced or described
in 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 the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2023 and Quarterly Reports
on Forms 10-Q for the periods ended March 31, 2024, June 30, 2024
and September 30, 2024 and other documents that the Company files
from time to time with the Securities and Exchange Commission. The
forward-looking statements speak only as of the date of this press
release. The Bancorp does not undertake any duty to publicly revise
or update forward-looking statements in this press release to
reflect events or circumstances that arise after the date of this
press release, except as may be required under applicable law.
The Bancorp, Inc.
Financial highlights
(unaudited)
Three months ended
Year ended
December 31,
December 31,
Consolidated condensed income
statements
2024
2023
2024
2023
(Dollars in thousands, except per
share and share data)
Net interest income
$
94,296
$
92,159
$
376,241
$
354,052
Provision for credit losses on
non-consumer fintech loans
2,003
4,056
9,319
8,465
Provision for credit losses on consumer
fintech loans(1)
19,619
—
19,619
—
Provision (reversal) for unfunded
commitments
(256)
258
(596)
(135)
Provision (reversal) for credit loss on
security
(1,000)
10,000
(1,000)
10,000
Non-interest income
Fintech fees
ACH, card and other payment processing
fees
4,740
2,669
14,596
9,822
Prepaid, debit card and related fees
24,465
22,404
97,413
89,417
Consumer credit fintech fees
3,049
—
4,789
—
Total fintech fees
32,254
25,073
116,798
99,239
Net realized and unrealized gains (losses)
on commercial
loans, at fair value
527
(426)
2,732
3,745
Leasing related income
1,032
1,556
3,921
6,324
Consumer fintech loan credit
enhancement(1)
19,619
—
19,619
—
Other non-interest income
838
786
3,412
2,786
Total non-interest income
54,270
26,989
146,482
112,094
Non-interest expense
Salaries and employee benefits
33,633
27,628
131,597
121,055
Data processing expense
1,414
1,324
5,666
5,447
Legal expense
856
740
3,365
3,850
FDIC insurance
961
724
3,579
2,957
Software
4,226
4,368
17,913
17,349
Other non-interest expense
10,722
10,826
41,105
40,384
Total non-interest expense
51,812
45,610
203,225
191,042
Income before income taxes
76,388
59,224
292,156
256,774
Income tax expense
20,480
15,196
74,616
64,478
Net income
55,908
44,028
217,540
192,296
Net income per share - basic
$
1.17
$
0.82
$
4.35
$
3.52
Net income per share - diluted
$
1.15
$
0.81
$
4.29
$
3.49
Weighted average shares - basic
47,771,547
53,549,138
50,063,620
54,506,065
Weighted average shares - diluted
48,639,936
54,201,312
50,713,140
55,053,497
(1) Lending agreements related to consumer
fintech loans had certain provisions accounted for as freestanding
credit enhancements which resulted in the company recording a $19.6
million provision for credit losses and a correlated amount in
non-interest income resulting in no impact to net income.
Condensed consolidated balance
sheets
December 31,
September 30,
June 30,
December 31,
2024 (unaudited)
2024 (unaudited)
2024 (unaudited)
2023
(Dollars in thousands, except
share data)
Assets:
Cash and cash equivalents
Cash and due from banks
$
6,064
$
8,660
$
5,741
$
4,820
Interest earning deposits at Federal
Reserve Bank
564,059
47,105
399,853
1,033,270
Total cash and cash equivalents
570,123
55,765
405,594
1,038,090
Investment securities, available-for-sale,
at fair value, net of $10.0 million allowance for credit loss
effective December 31, 2023, and $0 at December 31, 2024
1,502,860
1,588,289
1,581,006
747,534
Commercial loans, at fair value
223,115
252,004
265,193
332,766
Loans, net of deferred fees and costs
6,113,628
5,906,616
5,605,727
5,361,139
Allowance for credit losses
(31,944)
(31,004)
(28,575)
(27,378)
Loans, net
6,081,684
5,875,612
5,577,152
5,333,761
Federal Home Loan Bank, Atlantic Central
Bankers Bank, and Federal Reserve Bank stock
15,642
21,717
15,642
15,591
Premises and equipment, net
27,566
28,091
28,038
27,474
Accrued interest receivable
41,713
42,915
43,720
37,534
Intangible assets, net
1,254
1,353
1,452
1,651
Other real estate owned
62,025
61,739
57,861
16,949
Deferred tax asset, net
18,874
9,604
20,556
21,219
Other assets
182,687
157,501
149,187
133,126
Total assets
$
8,727,543
$
8,094,590
$
8,145,401
$
7,705,695
Liabilities:
Deposits
Demand and interest checking
$
7,434,212
$
6,844,128
$
7,095,391
$
6,630,251
Savings and money market
311,834
81,624
60,297
50,659
Total deposits
7,746,046
6,925,752
7,155,688
6,680,910
Securities sold under agreements to
repurchase
—
—
—
42
Short-term borrowings
—
135,000
—
—
Senior debt
96,214
96,125
96,037
95,859
Subordinated debenture
13,401
13,401
13,401
13,401
Other long-term borrowings
14,081
38,157
38,283
38,561
Other liabilities
68,018
70,829
65,001
69,641
Total liabilities
$
7,937,760
$
7,279,264
$
7,368,410
$
6,898,414
Shareholders' equity:
Common stock - authorized, 75,000,000
shares of $1.00 par value; 47,713,481 and 53,202,630 shares issued
and outstanding at December 31, 2024 and 2023, respectively
47,713
48,231
49,268
53,203
Treasury stock at cost, 402,731 shares at
December 31, 2024 and 0 shares at December 31, 2023,
respectively
(22,681)
—
—
—
Additional paid-in capital
3,233
26,573
72,171
212,431
Retained earnings
779,155
723,247
671,730
561,615
Accumulated other comprehensive (loss)
income
(17,637)
17,275
(16,178)
(19,968)
Total shareholders' equity
789,783
815,326
776,991
807,281
Total liabilities and shareholders'
equity
$
8,727,543
$
8,094,590
$
8,145,401
$
7,705,695
Average balance sheet and net interest
income
Three months ended December 31,
2024
Three months ended December 31,
2023
(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(1)
$
6,193,762
$
112,908
7.29%
$
5,583,467
$
112,334
8.05%
Leases-bank qualified(2)
5,728
143
9.99%
4,658
109
9.36%
Investment securities-taxable
1,556,698
19,341
4.97%
747,384
10,258
5.49%
Investment securities-nontaxable(2)
5,221
82
6.28%
2,895
49
6.77%
Interest earning deposits at Federal
Reserve Bank
527,849
6,378
4.83%
677,524
9,356
5.52%
Net interest earning assets
8,289,258
138,852
6.70%
7,015,928
132,106
7.53%
Allowance for credit losses
(30,829)
(24,070)
Other assets
291,977
356,785
$
8,550,406
$
7,348,643
Liabilities and Shareholders'
Equity:
Deposits:
Demand and interest checking
$
7,443,308
$
41,436
2.23%
$
6,204,048
$
37,830
2.44%
Savings and money market
111,231
1,078
3.88%
46,428
392
3.38%
Total deposits
7,554,539
42,514
2.25%
6,250,476
38,222
2.45%
Short-term borrowings
9,673
125
5.17%
2,717
37
5.45%
Repurchase agreements
—
—
—
41
—
—
Long-term borrowings
25,886
360
5.56%
10,144
125
4.94%
Subordinated debentures
13,401
275
8.21%
13,401
296
8.84%
Senior debt
96,156
1,234
5.13%
95,808
1,234
5.15%
Total deposits and liabilities
7,699,655
44,508
2.31%
6,372,587
39,914
2.51%
Other liabilities
48,196
185,572
Total liabilities
7,747,851
6,558,159
Shareholders' equity
802,555
790,484
$
8,550,406
$
7,348,643
Net interest income on tax equivalent
basis(2)
$
94,344
$
92,192
Tax equivalent adjustment
48
33
Net interest income
$
94,296
$
92,159
Net interest margin(2)
4.55%
5.26%
(1) Includes commercial loans, at fair
value. All periods include non-accrual loans.
(2) Full taxable equivalent basis, using
21% respective statutory federal tax rates in 2024 and 2023.
Average balance sheet and net interest
income
Year ended December 31, 2024
Year ended December 31, 2023
(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(1)
$
5,920,643
$
458,405
7.74%
$
5,724,679
$
436,343
7.62%
Leases-bank qualified(2)
5,064
522
10.31%
4,106
388
9.45%
Investment securities-taxable
1,331,234
66,262
4.98%
766,906
39,078
5.10%
Investment securities-nontaxable(2)
3,487
237
6.80%
3,118
193
6.19%
Interest earning deposits at Federal
Reserve Bank
497,180
26,326
5.30%
649,873
33,627
5.17%
Net interest earning assets
7,757,608
551,752
7.11%
7,148,682
509,629
7.13%
Allowance for credit losses
(28,707)
(23,412)
Other assets
308,814
292,501
$
8,037,715
$
7,417,771
Liabilities and Shareholders'
Equity:
Deposits:
Demand and interest checking
$
6,875,368
$
161,841
2.35%
$
6,308,509
$
144,814
2.30%
Savings and money market
71,962
2,531
3.52%
78,074
2,857
3.66%
Time deposits
—
—
—
20,794
858
4.13%
Total deposits
6,947,330
164,372
2.37%
6,407,377
148,529
2.32%
Short-term borrowings
44,220
2,469
5.58%
5,739
271
4.72%
Repurchase agreements
3
—
—
41
—
—
Long-term borrowings
35,232
2,420
6.87%
9,995
507
5.07%
Subordinated debentures
13,401
1,155
8.62%
13,401
1,121
8.37%
Senior debt
96,027
4,935
5.14%
96,864
5,027
5.19%
Total deposits and liabilities
7,136,213
175,351
2.46%
6,533,417
155,455
2.38%
Other liabilities
102,970
133,698
Total liabilities
7,239,183
6,667,115
Shareholders' equity
798,532
750,656
$
8,037,715
$
7,417,771
Net interest income on tax equivalent
basis(2)
$
376,401
$
354,174
Tax equivalent adjustment
160
122
Net interest income
$
376,241
$
354,052
Net interest margin(2)
4.85%
4.95%
(1) Includes commercial loans, at fair
value. All periods include non-accrual loans.
(2) Full taxable equivalent basis, using
21% respective statutory federal tax rates in 2024 and 2023.
Allowance for credit losses
Year ended
December 31,
December 31,
2024 (unaudited)
2023
(Dollars in thousands)
Balance in the allowance for credit losses
at beginning of period
$
27,378
$
22,374
Loans charged-off:
SBA non-real estate
708
871
SBA commercial mortgage
—
76
Direct lease financing
4,575
3,666
IBLOC
—
24
Consumer - home equity
10
—
Consumer fintech(1)
19,619
—
Other loans
8
3
Total
24,920
4,640
Recoveries:
SBA non-real estate
229
475
SBA commercial mortgage
—
75
Direct lease financing
318
330
Consumer - home equity
1
299
Total
548
1,179
Net charge-offs
24,372
3,461
Provision for credit losses on
non-consumer fintech loans
9,319
8,465
Provision for credit losses on consumer
fintech loans(1)
19,619
—
Balance in allowance for credit losses at
end of period
$
31,944
$
27,378
Net charge-offs/average loans
0.43%
0.07%
Net charge-offs/average assets
0.30%
0.05%
Excluding the $19,619 of consumer fintech
loans:
Net charge-offs/average loans
0.08%
Net charge-offs/average assets
0.06%
(1) Lending agreements related to consumer
fintech loans had certain provisions accounted for as freestanding
credit enhancements which resulted in the company recording a $19.6
million provision for credit losses and a correlated amount in
non-interest income resulting in no impact to net income.
Loan portfolio
December 31,
September 30,
June 30,
December 31,
2024 (unaudited)
2024 (unaudited)
2024 (unaudited)
2023
(Dollars in thousands)
SBL non-real estate
$
190,322
$
179,915
$
171,893
$
137,752
SBL commercial mortgage
662,091
665,608
647,894
606,986
SBL construction
34,685
30,158
30,881
22,627
Small business loans
887,098
875,681
850,668
767,365
Direct lease financing
700,553
711,836
711,403
685,657
SBLOC / IBLOC(1)
1,564,018
1,543,215
1,558,095
1,627,285
Advisor financing(2)
273,896
248,422
238,831
221,612
Real estate bridge loans
2,109,041
2,189,761
2,119,324
1,999,782
Consumer fintech(3)
454,357
280,092
70,081
—
Other loans(4)
111,328
46,586
46,592
50,638
6,100,291
5,895,593
5,594,994
5,352,339
Unamortized loan fees and costs
13,337
11,023
10,733
8,800
Total loans, including unamortized fees
and costs
$
6,113,628
$
5,906,616
$
5,605,727
$
5,361,139
Small business portfolio
December 31,
September 30,
June 30,
December 31,
2024 (unaudited)
2024 (unaudited)
2024 (unaudited)
2023
(Dollars in thousands)
SBL, including unamortized fees and
costs
$
897,077
$
885,263
$
860,226
$
776,867
SBL, included in loans, at fair value
89,902
93,888
104,146
119,287
Total small business loans(5)
$
986,979
$
979,151
$
964,372
$
896,154
(1) SBLOC loans are collateralized by
marketable securities, while IBLOC are collateralized by the cash
surrender value of insurance policies. At December 31, 2024 and
December 31, 2023, IBLOC loans amounted to $548.1 million and
$646.9 million, respectively.
(2) In 2020 The Bancorp began originating
loans to investment advisors for purposes of debt refinancing,
acquisition of another firm or internal succession. Maximum loan
amounts are subject to loan-to-value ratios of 70% of the business
enterprise value based on a third-party valuation, but may be
increased depending upon the debt service coverage ratio. Personal
guarantees and blanket business liens are obtained as
appropriate.
(3) Consumer fintech loans consist of
$201.1 million of secured credit card loans, with the balance
comprised of other short-term extensions of credit.
(4) Includes demand deposit overdrafts
reclassified as loan balances totaling $1.2 million and $1.7
million at December 31, 2024 and December 31, 2023, respectively.
Estimated overdraft charge-offs and recoveries are reflected in the
allowance for credit losses and are immaterial.
(5) The SBLs held at fair value are
comprised of the government guaranteed portion of 7(a) Program
loans at the dates indicated.
Small business loans as of December 31,
2024
Loan principal
(Dollars in millions)
U.S. government guaranteed portion of SBA
loans(1)
$
385
PPP loans(1)
1
Commercial mortgage SBA(2)
354
Construction SBA(3)
12
Non-guaranteed portion of U.S. government
guaranteed 7(a) Program loans(4)
115
Non-SBA SBLs
100
Other(5)
9
Total principal
$
976
Unamortized fees and costs
11
Total SBLs
$
987
(1) Includes the portion of SBA 7(a)
Program loans and PPP loans which have been guaranteed by the U.S.
government, and therefore are assumed to have no credit risk.
(2) Substantially all these loans are made
under the 504 Program, which dictates origination date LTV
percentages, generally 50%-60%, to which The Bancorp adheres.
(3) Includes $11 million in 504 Program
first mortgages with an origination date LTV of 50%-60%, and $1
million in SBA interim loans with an approved SBA post-construction
full takeout/payoff.
(4) Includes the unguaranteed portion of
7(a) Program loans which are 70% or more guaranteed by the U.S.
government. SBA 7(a) Program loans are not made on the basis of
real estate LTV; however, they are subject to SBA's "All Available
Collateral" rule which mandates that to the extent a borrower or
its 20% or greater principals have available collateral (including
personal residences), the collateral must be pledged to fully
collateralize the loan, after applying SBA-determined liquidation
rates. In addition, all 7(a) Program loans and 504 Program loans
require the personal guaranty of all 20% or greater owners.
(5) Comprised of $9 million of loans sold
that do not qualify for true sale accounting.
Small business loans by type as of
December 31, 2024
(Excludes government guaranteed portion of
SBA 7(a) Program and PPP loans)
SBL commercial mortgage(1)
SBL construction(1)
SBL non-real estate
Total
% Total
(Dollars in millions)
Hotels (except casino hotels) and
motels
$
87
$
—
$
—
$
87
15%
Funeral homes and funeral services
36
—
34
70
12%
Full-service restaurants
29
2
2
33
6%
Child day care services
23
1
1
25
4%
Car washes
12
5
—
17
3%
Homes for the elderly
16
—
—
16
3%
Outpatient mental health and substance
abuse centers
15
—
—
15
3%
Gasoline stations with convenience
stores
15
—
—
15
3%
General line grocery merchant
wholesalers
13
—
—
13
2%
Fitness and recreational sports
centers
8
—
2
10
2%
Nursing care facilities
9
—
—
9
2%
Lawyer's office
9
—
—
9
2%
Plumbing, heating, and air-conditioning
contractors
8
—
1
9
2%
Used car dealers
7
—
—
7
1%
All other specialty trade contractors
6
—
1
7
1%
Caterers
7
—
—
7
1%
Limited-service restaurants
4
—
3
7
1%
General warehousing and storage
6
—
—
6
1%
Automotive body, paint, and interior
repair
5
—
—
5
1%
Appliance repair and maintenance
6
—
—
6
1%
Other accounting services
5
—
—
5
1%
Offices of dentists
5
—
—
5
1%
Other miscellaneous durable goods
merchant
5
—
—
5
1%
Packaged frozen food merchant
wholesalers
5
—
—
5
1%
Other(2)
147
12
29
188
30%
Total
$
488
$
20
$
73
$
581
100%
(1) Of the SBL commercial mortgage and SBL
construction loans, $141 million represents the total of the
non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans.
The balance of those categories represents SBA 504 Program loans
with 50%-60% origination date LTVs. SBL Commercial excludes $9
million of loans sold that do not qualify for true sale
accounting.
(2) Loan types of less than $5 million are
spread over approximately one hundred different business types.
State diversification as of December
31, 2024
(Excludes government guaranteed portion of
SBA 7(a) Program loans and PPP loans)
SBL commercial mortgage(1)
SBL construction(1)
SBL non-real estate
Total
% Total
(Dollars in millions)
California
$
131
$
3
$
6
$
140
24%
Florida
77
8
4
89
15%
North Carolina
44
—
4
48
8%
New York
34
—
2
36
6%
Pennsylvania
19
—
13
32
6%
Texas
23
3
6
32
6%
New Jersey
23
—
7
30
5%
Georgia
25
2
1
28
5%
Other States
112
4
30
146
25%
Total
$
488
$
20
$
73
$
581
100%
(1) Of the SBL commercial mortgage and SBL
construction loans, $141 million represents the total of the
non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans.
The balance of those categories represents SBA 504 Program loans
with 50%-60% origination date LTVs. SBL Commercial excludes $9
million of loans that do not qualify for true sale accounting.
Top 10 loans as of December 31,
2024
Type(1)
State
SBL commercial mortgage
(Dollars in millions)
General line grocery merchant
wholesalers
CA
$
13
Funeral homes and funeral services
ME
13
Funeral homes and funeral services
PA
12
Outpatient mental health and substance
abuse center
FL
10
Hotel
FL
8
Lawyer's office
CA
8
Hotel
VA
7
Hotel
NC
7
Used car dealer
CA
7
General warehousing and storage
PA
6
Total
$
91
(1) The table above does not include loans
to the extent that they are U.S. government guaranteed.
Commercial real estate loans, excluding SBA loans, are as
follows including LTV at origination:
Type as of December 31, 2024
Type
# Loans
Balance
Weighted average origination date
LTV
Weighted average interest
rate
(Dollars in millions)
Real estate bridge loans (multifamily
apartment loans recorded at amortized cost)(1)
169
$
2,109
70%
8.73%
Non-SBA commercial real estate loans, at
fair value:
Multifamily (apartment bridge
loans)(1)
5
$
94
70%
7.61%
Hospitality (hotels and lodging)
1
19
66%
9.75%
Retail
2
12
72%
8.19%
Other
2
9
71%
4.96%
10
134
70%
7.79%
Fair value adjustment
(1)
Total non-SBA commercial real estate
loans, at fair value
133
Total commercial real estate loans
$
2,242
70%
8.67%
(1) In the third quarter of 2021, we
resumed the origination of bridge loans for multi-family apartment
rehabilitation which comprise these categories. Such loans held at
fair value were originally intended for sale, but are now being
retained on the balance sheet. In addition to “as is” origination
date appraisals, on which the weighted average origination date
LTVs are based, third-party appraisers also estimated “as
stabilized” values, which represents additional potential
collateral value as rehabilitation progresses, and units are
re-leased at stabilized rental rates. The weighted average
origination date “as stabilized” LTV was estimated at 61%.
State diversification as of
December 31, 2024
15 largest loans as of
December 31, 2024
State
Balance
Origination date LTV
State
Balance
Origination date LTV
(Dollars in millions)
(Dollars in millions)
Texas
$
693
71%
Texas
$
46
75%
Georgia
276
70%
Tennessee
40
72%
Florida
236
68%
Michigan
38
62%
Indiana
128
71%
Texas
37
64%
New Jersey
121
69%
Texas
36
67%
Michigan
104
65%
Florida
35
72%
Ohio
85
70%
New Jersey
34
62%
Other States each <$65 million
599
70%
Pennsylvania
34
63%
Total
$
2,242
70%
Indiana
34
76%
Texas
33
62%
Oklahoma
31
78%
Texas
31
77%
New Jersey
31
71%
Michigan
31
66%
Georgia
29
69%
15 largest commercial real estate
loans
$
520
69%
Institutional banking loans outstanding
at December 31, 2024
Type
Principal
% of total
(Dollars in millions)
SBLOC
$
1,016
55%
IBLOC
548
30%
Advisor financing
274
15%
Total
$
1,838
100%
For SBLOC, we generally lend up to 50% of the value of equities
and 80% for investment grade securities. While the value of
equities has fallen in excess of 30% in recent years, the reduction
in collateral value of brokerage accounts collateralizing SBLOC
loans generally has been less, for two reasons. First, many
collateral accounts are “balanced” and accordingly have a component
of debt securities, which have either not decreased in value as
much as equities, or in some cases may have increased in value.
Second, many of these accounts have the benefit of professional
investment advisors who provided some protection against market
downturns, through diversification and other means. Additionally,
borrowers often utilize only a portion of collateral value, which
lowers the percentage of principal to collateral.
Top 10 SBLOC loans at December 31,
2024
Principal amount
% Principal to collateral
(Dollars in millions)
$
10
36%
9
53%
9
15%
8
86%
8
46%
7
21%
7
32%
6
21%
6
37%
6
42%
Total and weighted average
$
76
39%
Insurance backed lines of credit (IBLOC)
IBLOC loans are backed by the cash value of eligible life
insurance policies which have been assigned to us. We generally
lend up to 95% of such cash value. Our underwriting standards
require approval of the insurance companies which carry the
policies backing these loans. Currently, fifteen insurance
companies have been approved and, as of January 15, 2025, all were
rated A- (Excellent) or better by AM BEST.
Direct lease financing by type as of
December 31, 2024
Principal balance(1)
% Total
(Dollars in millions)
Government agencies and public
institutions(2)
$
133
19%
Construction
118
17%
Waste management and remediation
services
97
14%
Real estate and rental and leasing
87
12%
Health care and social assistance
29
4%
Professional, scientific, and technical
services
22
3%
Other services (except public
administration)
21
3%
Wholesale trade
20
3%
General freight trucking
19
3%
Finance and insurance
14
2%
Transit and other transportation
13
2%
Mining, quarrying, and oil and gas
extraction
9
1%
Other
119
17%
Total
$
701
100%
(1) Of the total $701 million of direct
lease financing, $640 million consisted of vehicle leases with the
remaining balance consisting of equipment leases.
(2) Includes public universities as well
as school districts.
Direct lease financing by state as of
December 31, 2024
State
Principal balance
% Total
(Dollars in millions)
Florida
$
109
16%
New York
65
9%
Utah
52
7%
Connecticut
48
7%
California
46
7%
Pennsylvania
43
6%
New Jersey
38
5%
North Carolina
37
5%
Maryland
37
5%
Texas
25
4%
Idaho
20
3%
Washington
15
2%
Ohio
14
2%
Georgia
14
2%
Alabama
13
2%
Other States
125
18%
Total
$
701
100%
Capital ratios
Tier 1 capital
Tier 1 capital
Total capital
Common equity
to average
to risk-weighted
to risk-weighted
tier 1 to risk
assets ratio
assets ratio
assets ratio
weighted assets
As of December 31, 2024
The Bancorp, Inc.
9.41%
13.88%
14.46%
13.88%
The Bancorp Bank, National Association
10.38%
15.29%
15.87%
15.29%
"Well capitalized" institution (under
federal regulations-Basel III)
5.00%
8.00%
10.00%
6.50%
As of December 31, 2023
The Bancorp, Inc.
11.19%
15.66%
16.23%
15.66%
The Bancorp Bank, National Association
12.37%
17.35%
17.92%
17.35%
"Well capitalized" institution (under
federal regulations-Basel III)
5.00%
8.00%
10.00%
6.50%
Three months ended
Year ended
December 31,
December 31,
2024
2023
2024
2023
Selected operating ratios
Return on average assets(1)
2.60%
2.38%
2.71%
2.59%
Return on average equity(1)
27.71%
22.10%
27.24%
25.62%
Net interest margin
4.55%
5.26%
4.85%
4.95%
(1) Annualized
Book value per share table
December 31,
September 30,
June 30,
December 31,
2024
2024
2024
2023
Book value per share
$
16.55
$
16.90
$
15.77
$
15.17
Loan delinquency and other real estate
owned
December 31, 2024
30-59 days
60-89 days
90+ days
Total
Total
past due
past due
still accruing
Non-accrual
past due
Current
loans
SBL non-real estate
$
229
$
—
$
871
$
2,635
$
3,735
$
186,587
$
190,322
SBL commercial mortgage
—
—
336
4,885
5,221
656,870
662,091
SBL construction
—
—
—
1,585
1,585
33,100
34,685
Direct lease financing
7,069
1,923
1,088
6,026
16,106
684,447
700,553
SBLOC / IBLOC
20,991
1,808
3,322
503
26,624
1,537,394
1,564,018
Advisor financing
—
—
—
—
—
273,896
273,896
Real estate bridge loans(1)
—
—
—
12,300
12,300
2,096,741
2,109,041
Consumer fintech
13,419
681
213
—
14,313
440,044
454,357
Other loans
49
—
—
—
49
111,279
111,328
Unamortized loan fees and costs
—
—
—
—
—
13,337
13,337
$
41,757
$
4,412
$
5,830
$
27,934
$
79,933
$
6,033,695
$
6,113,628
(1) The $12.3 million shown in the
non-accrual column for real estate bridge loans was repaid without
loss of principal in the first quarter of 2025. The table above
does not include an $11.2 million loan accounted for at fair value,
and, as such, not reflected in delinquency tables. In the third
quarter of 2024, the borrower notified the Company that he would no
longer be making payments on the loan, which is collateralized by a
vacant retail property. Based upon a July 2024 appraisal, the “as
is” LTV is 84% and the “as stabilized” LTV is 62%. Since 2021, real
estate bridge lending originations have consisted of apartment
buildings, while this loan was originated previously. In January
2025, two loans totaling $9.8 million were transferred to
non-accrual and were accordingly classified as substandard.
Other loan information
Of the $84.4 million special mention and $134.4 million
substandard loans at December 31, 2024, $13.2 million was modified
in the fourth quarter of 2024 and received a reduction in interest
rate and a combination of full and partial payment deferrals. Not
included in that modification total were $27.6 million of balances
which we recapitalized with a new borrower, who negotiated payment
deferrals and rate reductions. The “as is” and “as stabilized” LTVs
for the $13.2 million balance were 80% and 69%, respectively, while
weighted average LTVs for the $27.6 million were 79% and 70%,
respectively. These LTVs are based upon appraisals performed within
the past twelve months.
Other real estate owned year to date
activity
December 31, 2024
Beginning balance
$
16,949
Transfer from loans, net
42,120
Transfer from commercial loans, at fair
value
2,863
Sales
(1,602)
Advances
1,695
Ending balance
$
62,025
December 31,
September 30,
June 30,
December 31,
2024
2024
2024
2023
(Dollars in thousands)
Asset quality ratios:
Nonperforming loans to total loans(1)
0.55%
0.52%
0.34%
0.25%
Nonperforming assets to total
assets(1)
1.10%
1.14%
0.95%
0.39%
Allowance for credit losses to total
loans
0.52%
0.52%
0.51%
0.51%
(1) In the first quarter of 2024, a $39.4
million apartment building rehabilitation bridge loan with a
December 31, 2024 balance of $41.1 million was transferred to
nonaccrual status. On April 2, 2024, the same loan was transferred
from nonaccrual status to other real estate owned. We intend to
complete the improvements, which have already begun, on the
underlying apartment building. During the time that improvements
are being completed, the Company intends to have a property manager
lease improved units as they become available, prior to the sale of
the property. The $41.1 million loan balance compares to a
September 2023 third-party “as is” appraisal of $47.8 million, or
an 83% “as is” LTV, after considering the $1.6 million of earnest
money deposits in connections with the property’s sale in process.
Additional potential collateral value may further increase as
construction progresses, and units are re-leased at stabilized
rental rates. Please see “Recent Developments” which summarizes the
agreement of sale for this property.
Gross dollar volume (GDV)(1)
Three months ended
December 31,
September 30,
June 30,
December 31,
2024
2024
2024
2023
(Dollars in thousands)
Prepaid and debit card GDV
$
39,656,909
$
37,898,006
$
37,139,200
$
33,292,350
(1) Gross dollar volume represents the
total dollar amount spent on prepaid and debit cards issued by The
Bancorp Bank, N.A.
Business line quarterly
summary:
Quarter ended December 31, 2024
(Dollars in millions)
Balances
% Growth
Major business lines
Average approximate rates(1)
Balances(2)
Year over Year
Linked quarter annualized
Loans
Institutional banking(3)
6.5%
$ 1,838
(1%)
10%
Small business lending(4)
7.5%
987
12%
11%
Leasing
8.1%
701
2%
(6%)
Commercial real estate (non-SBA loans, at
fair value)
7.8%
133
nm
nm
Real estate bridge loans (recorded at book
value)
8.7%
2,109
5%
(15%)
Consumer fintech loans - interest
bearing
5.3%
19
nm
nm
Consumer fintech loans - non-interest
bearing(5)
—
435
nm
nm
Weighted average yield
7.2%
$ 6,222
Non-interest income
% Growth
Deposits: Fintech
solutions group
Current quarter
Year over Year
Prepaid and debit card issuance, consumer
fintech loan fees, and other payments
2.2%
$ 6,985
16%
nm
$ 32.3
29%
(1) Average rates are for the three months
ended December 31, 2024.
(2) Loan and deposit categories are based
on period-end and average quarterly balances, respectively.
(3) Institutional Banking loans are
comprised of SBLOC loans collateralized by marketable securities,
IBLOC loans collateralized by the cash surrender value of eligible
life insurance policies, and investment advisor financing.
(4) Small Business Lending is
substantially comprised of SBA-guaranteed loans. Growth rates
exclude the impact of $9 million of loans that do not qualify for
true sale accounting at December 31, 2024 compared to $29 million
at the prior year and prior quarter end.
(5) Income related to non-interest-bearing
balances is included in non-interest income.
Summary of credit lines available
The Bancorp maintains lines of credit exceeding potential
liquidity requirements as follows. The Bancorp also has access to
other substantial sources of liquidity.
December 31, 2024
(Dollars in thousands)
Federal Reserve Bank
$
1,987,218
Federal Home Loan Bank
1,015,541
Total lines of credit available
$
3,002,759
Estimated insured vs uninsured deposits
The vast majority of The Bancorp’s deposits are insured and low
balance and accordingly do not constitute the liquidity risk
experienced by certain institutions. Accordingly, the deposit base
is comprised as follows.
December 31, 2024
Insured
94%
Low balance accounts
3%
Other uninsured
3%
Total deposits
100%
Calculation of efficiency ratio
(non-GAAP)(1)
Three months ended
Year ended
December 31,
December 31,
December 31,
December 31,
2024
2023
2024
2023
(Dollars in thousands)
Net interest income
$
94,296
$
92,159
$
376,241
$
354,052
Non-interest income(2)
34,651
26,989
126,863
112,094
Total revenue
$
128,947
$
119,148
$
503,104
$
466,146
Non-interest expense
$
51,812
$
45,610
$
203,225
$
191,042
Efficiency ratio
40%
38%
40%
41%
(1)The efficiency ratio is calculated by
dividing GAAP total non-interest expense by the total of GAAP net
interest income and non-interest income. This ratio compares
revenues generated with the amount of expense required to generate
such revenues and may be used as one measure of overall
efficiency.
(2)Excludes $19.6 million in 2024. Lending
agreements related to consumer fintech loans had certain provisions
accounted for as freestanding credit enhancements which resulted in
the company recording a $19.6 million provision for credit losses
and a correlated amount in non-interest income resulting in no
impact to net income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250128036104/en/
The Bancorp, Inc. Contact Andres Viroslav Director,
Investor Relations 215-861-7990 andres.viroslav@thebancorp.com
Bancorp (NASDAQ:TBBK)
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