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Section 1: 8-K (THE BANCORP, INC. FORM 8-K)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  4/26/2018
 
The Bancorp, Inc.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  000-51018
 
Delaware
  
23-3016517
(State or other jurisdiction of
  
(IRS Employer
incorporation)
  
Identification No.)
 
409 Silverside Road
Wilmington, DE 19809
(Address of principal executive offices, including zip code)
 
302-385-5000
(Registrant's telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth 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 the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [ ]
 

 

 
  
Item 2.02.    Results of Operations and Financial Condition
 
On April 26, 2018, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three months ended March 31, 2018. 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
  

 

 

 
 
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 26, 2018
 
 
 
By:
 
/s/ Paul Frenkiel                                                    
 
 
 
 
 
 
 
 
Paul Frenkiel
 
 
 
 
 
 
 
 
Chief Financial Officer and Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1
 
The Bancorp, Inc. Reports First Quarter 2018 Financial Results

Wilmington, DE – April 26, 2018 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2018.

Highlights

·
Net income from continuing operations rose 122% to $14.0 million for the quarter ended March 31, 2018 compared to the quarter ended March 31, 2017 and net income overall rose 78% to $14.1 million between those periods.

·
Return on Average Equity annualized for the quarter was 17.54% and Return on Average Assets was 1.30%.

·
Net interest income increased 21% to $30.1 million for the quarter ended March 31, 2018, compared to $24.9 million for the quarter ended March 31, 2017.

·
Interest income on security backed lines of credit ("SBLOC") loans increased 48% to $6.5 million for the quarter ended March 31, 2018, compared to $4.4 million for the quarter ended March 31, 2017.

·
Net interest margin increased to 3.12% for the quarter ended March 31, 2018, compared to 2.70% for the quarter ended March 31, 2017.

·
Prepaid fees for the quarter ended March 31, 2018 increased to $14.3 million, or 5%, compared to the quarter ended March 31, 2017. Card payment and ACH processing fees increased 11% to $1.7 million during the same period.

·
Loans increased 16% to $1.46 billion at March 31, 2018, compared to $1.26 billion at March 31, 2017.

·
SBLOC loans increased 15% to $759.4 million at March 31, 2018, compared to $660.4 million at March 31, 2017.

·
Small Business Administration ("SBA") loans increased 15% to $424.5 million at March 31, 2018, compared to $369.8 million at March 31, 2017.

·
Direct lease financing increased 6% to $385.5 million at March 31, 2018, compared to $362.7 million at March 31, 2017.

·
The rate on $4.06 billion of average deposits and interest bearing liabilities in the first quarter of 2018 was 0.52% with a rate of 0.66% for $2.22 billion of average prepaid card deposits.

·
Consolidated leverage ratio was 7.69% at March 31, 2018. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

·
Book value per common share at March 31, 2018 was $5.87 per share.
 
Damian Kozlowski, The Bancorp's Chief Executive Officer, said, "The first quarter was a great start to a new year.  Bancorp earned $0.25 cents a share on net revenue of $59.0 million and expenses of $39.0 million.  The commitment of our team to execute on our business plan is having an impact on our operating performance and we continue to show momentum in our results.  Along with revenue and client progress in each of our business lines, we have continued to strengthen our overall platform with the goal of greater efficiency and productivity enhanced by a higher level of risk management across our enterprise." 
 
 
1


 
The Bancorp reported net income of $14.1 million, or $0.25 earnings per diluted share, for the quarter ended March 31, 2018, compared to net income of $8.0 million, or $0.14 income per diluted share, for the quarter ended March 31, 2017.  Income from continuing operations does not include any income which may result from the reinvestment of the proceeds from sales or repayment of the remaining assets in The Bancorp's discontinued operations.  Tier one capital to assets, tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 ratios were 7.69%, 18.43%, 18.82% and 18.43%, 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 27, 2018 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 4846178.  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 4, 2018 by dialing 855.859.2056, access code 4846178.

About The Bancorp

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 Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. 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," "estimate," "continue," or similar words.  For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see Bancorp's filings with the SEC, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of those filings. These risks and uncertainties could cause actual results to differ materially from those projected in the forward-looking statements. 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 presentation, except as may be required under applicable law.

The Bancorp, Inc. Contact
Andres Viroslav
215-861-7990
aviroslav@thebancorp.com
 
2

 

The Bancorp, Inc.
Financial highlights
(unaudited)
 
   
Three months ended
   
Year ended
 
   
March 31,
   
December 31,
 
Condensed income statement
 
2018
   
2017
   
2017
 
   
(dollars in thousands except per share data)
 
                   
Net interest income
 
$
30,074
   
$
24,877
   
$
106,680
 
Provision for loan and lease losses
   
700
     
1,000
     
2,920
 
Non-interest income
                       
Service fees on deposit accounts
   
1,576
     
1,675
     
6,788
 
Card payment and ACH processing fees
   
1,692
     
1,528
     
6,318
 
Prepaid card fees
   
14,282
     
13,547
     
53,367
 
Gain on sale of loans
   
11,729
     
5,383
     
17,919
 
Gain on sale of investment securities
   
26
     
503
     
2,231
 
Change in value of investment in unconsolidated entity
   
(1,171
)
   
(19
)
   
(20
)
Leasing income
   
487
     
551
     
2,663
 
Affinity fees
   
102
     
1,021
     
1,545
 
Gain on sale of health savings accounts
   
-
     
-
     
2,538
 
Loss from sale of European prepaid card operations
   
-
     
-
     
(3,437
)
Other non-interest income
   
372
     
30
     
1,636
 
Total non-interest income
   
29,095
     
24,219
     
91,548
 
Non-interest expense
                       
Salaries and employee benefits
   
21,073
     
18,006
     
75,832
 
Data processing expense
   
2,005
     
3,480
     
10,159
 
One time fee to exit data processing contract
   
-
     
-
     
1,136
 
Legal expense
   
2,431
     
1,738
     
8,072
 
FDIC Insurance
   
2,219
     
2,065
     
10,097
 
Software
   
3,291
     
3,228
     
12,597
 
Losses and write downs on other real estate owned
   
45
     
-
     
-
 
Civil money penalty
   
(290
)
   
-
     
2,290
 
Other non-interest expense
   
8,275
     
9,266
     
34,731
 
Total non-interest expense
   
39,049
     
37,783
     
154,914
 
Income from continuing operations before income tax expense
   
19,420
     
10,313
     
40,394
 
Income tax expense
   
5,399
     
4,011
     
23,056
 
Net income from continuing operations
   
14,021
     
6,302
     
17,338
 
Discontinued operations
                       
Income from discontinued operations before income taxes
   
156
     
2,667
     
4,059
 
Income tax expense (benefit)
   
37
     
1,006
     
(276
)
Net income from discontinued operations, net of tax
   
119
     
1,661
     
4,335
 
Net income available to common shareholders
 
$
14,140
   
$
7,963
   
$
21,673
 
                         
Net income per share from continuing operations - basic
 
$
0.25
   
$
0.11
   
$
0.31
 
Net income per share from discontinued operations - basic
 
$
-
   
$
0.03
   
$
0.08
 
Net income per share - basic
 
$
0.25
   
$
0.14
   
$
0.39
 
                         
Net income per share from continuing operations - diluted
 
$
0.25
   
$
0.11
   
$
0.31
 
Net income per share from discontinued operations - diluted
 
$
-
   
$
0.03
   
$
0.08
 
Net income per share - diluted
 
$
0.25
   
$
0.14
   
$
0.39
 
Weighted average shares - basic
   
56,141,830
     
55,534,279
     
55,686,507
 
Weighted average shares - diluted
   
57,023,121
     
55,752,496
     
56,176,269
 
 
 
3


 
Balance sheet
 
March 31,
   
December 31,
   
September 30,
   
March 31,
 
   
2018
   
2017
   
2017
   
2017
 
    
(dollars in thousands)
 
Assets:
                       
Cash and cash equivalents
                       
Cash and due from banks
 
$
1,999
   
$
3,152
   
$
5,813
   
$
4,671
 
Interest earning deposits at Federal Reserve Bank
   
508,847
     
841,471
     
328,023
     
669,042
 
Securities sold under agreements to resell
   
64,312
     
64,312
     
65,095
     
65,248
 
     Total cash and cash equivalents
   
575,158
     
908,935
     
398,931
     
738,961
 
                                 
Investment securities, available-for-sale, at fair value
   
1,381,020
     
1,294,484
     
1,196,956
     
1,215,892
 
Investment securities, held-to-maturity
   
86,370
     
86,380
     
86,402
     
93,443
 
Loans held for sale, at fair value
   
349,806
     
503,316
     
380,272
     
480,913
 
Loans, net of deferred fees and costs
   
1,463,064
     
1,392,228
     
1,374,060
     
1,264,127
 
Allowance for loan and lease losses
   
(7,285
)
   
(7,096
)
   
(7,283
)
   
(7,294
)
Loans, net
   
1,455,779
     
1,385,132
     
1,366,777
     
1,256,833
 
Federal Home Loan Bank & Atlantic Community Bancshares stock
   
991
     
991
     
991
     
2,589
 
Premises and equipment, net
   
19,052
     
20,051
     
21,087
     
22,993
 
Accrued interest receivable
   
11,778
     
10,900
     
10,131
     
10,296
 
Intangible assets, net
   
4,995
     
5,377
     
5,185
     
5,844
 
Other real estate owned
   
405
     
450
     
-
     
104
 
Deferred tax asset, net
   
38,139
     
34,802
     
53,017
     
54,155
 
Investment in unconsolidated entity
   
70,016
     
74,473
     
107,711
     
125,982
 
Assets held for sale from discontinued operations
   
289,038
     
304,313
     
314,994
     
341,286
 
Other assets
   
86,553
     
78,543
     
51,164
     
55,351
 
     Total assets
 
$
4,369,100
   
$
4,708,147
   
$
3,993,618
   
$
4,404,642
 
                                 
Liabilities:
                               
Deposits
                               
Demand and interest checking
 
$
3,461,881
   
$
3,806,965
   
$
3,113,212
   
$
3,607,076
 
Savings and money market
   
493,288
     
453,877
     
452,183
     
428,723
 
     Total deposits
   
3,955,169
     
4,260,842
     
3,565,395
     
4,035,799
 
                                 
Securities sold under agreements to repurchase
   
182
     
217
     
180
     
273
 
Subordinated debenture
   
13,401
     
13,401
     
13,401
     
13,401
 
Long-term borrowings
   
42,157
     
42,323
     
42,482
     
-
 
Other liabilities
   
28,299
     
67,215
     
32,699
     
45,400
 
     Total liabilities
 
$
4,039,209
   
$
4,383,998
   
$
3,654,157
   
$
4,094,873
 
                                 
Shareholders' equity:
                               
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,307,088 and 55,757,559 shares issued at March 31, 2018 and 2017, respectively
   
56,307
     
55,861
     
55,860
     
55,758
 
Treasury stock (100,000 shares)
   
(866
)
   
(866
)
   
(866
)
   
(866
)
Additional paid-in capital
   
363,605
     
363,196
     
362,340
     
360,801
 
Accumulated deficit
   
(75,345
)
   
(89,485
)
   
(77,850
)
   
(103,978
)
Accumulated other comprehensive loss
   
(13,809
)
   
(4,557
)
   
(23
)
   
(1,946
)
Total shareholders' equity
   
329,891
     
324,149
     
339,461
     
309,769
 
                                 
     Total liabilities and shareholders' equity
 
$
4,369,100
   
$
4,708,147
   
$
3,993,618
   
$
4,404,642
 
 
 
4


Average balance sheet and net interest income
 
Three months ended March 31, 2018
   
Three months ended March 31, 2017
 
   
(dollars in thousands)
 
   
Average
         
Average
   
Average
         
Average
 
Assets:
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Interest earning assets:
                                   
Loans net of unearned fees and costs **
 
$
1,947,320
   
$
23,039
     
4.73
%
 
$
1,634,136
   
$
17,371
     
4.25
%
Leases - bank qualified*
   
21,036
     
334
     
6.35
%
   
21,180
     
396
     
7.48
%
Investment securities-taxable
   
1,375,568
     
9,699
     
2.82
%
   
1,325,247
     
9,005
     
2.72
%
Investment securities-nontaxable*
   
9,893
     
75
     
3.03
%
   
15,423
     
111
     
2.88
%
Interest earning deposits at Federal Reserve Bank
   
502,233
     
1,832
     
1.46
%
   
771,529
     
1,516
     
0.79
%
Federal funds sold and securities purchased under agreement to resell
   
64,216
     
414
     
2.58
%
   
49,829
     
227
     
1.82
%
Net interest earning assets
   
3,920,266
     
35,393
     
3.61
%
   
3,817,344
     
28,626
     
3.00
%
                                                 
Allowance for loan and lease losses
   
(6,976
)
                   
(6,221
)
               
Assets held for sale from discontinued operations
   
294,708
     
2,527
     
3.43
%
   
335,929
     
3,361
     
4.00
%
Other assets
   
203,095
                     
280,505
                 
    
$
4,411,093
                   
$
4,427,557
                 
                                                 
Liabilities and Shareholders' Equity:
                                               
Deposits:
                                               
Demand and interest checking
 
$
3,535,791
   
$
4,301
     
0.49
%
 
$
3,657,413
   
$
2,787
     
0.30
%
Savings and money market
   
487,380
     
668
     
0.55
%
   
429,713
     
647
     
0.60
%
Total deposits
   
4,023,171
     
4,969
     
0.49
%
   
4,087,126
     
3,434
     
0.34
%
                                                 
Short-term borrowings
   
24,844
     
104
     
1.67
%
   
-
     
-
     
0.00
%
Securities sold under agreements to repurchase
   
205
     
-
     
0.00
%
   
275
     
-
     
0.00
%
Subordinated debentures
   
13,401
     
160
     
4.78
%
   
13,401
     
138
     
4.12
%
Total deposits and interest bearing liabilities
   
4,061,621
     
5,233
     
0.52
%
   
4,100,802
     
3,572
     
0.35
%
                                                 
Other liabilities
   
22,452
                     
20,234
                 
Total liabilities
   
4,084,073
                     
4,121,036
                 
                                                 
Shareholders' equity
   
327,020
                     
306,521
                 
    
$
4,411,093
                   
$
4,427,557
                 
Net interest income on tax equivalent basis*
         
$
32,687
                   
$
28,415
         
                                                 
Tax equivalent adjustment
           
86
                     
177
         
                                                 
Net interest income
         
$
32,601
                   
$
28,238
         
Net interest margin *
                   
3.12
%
                   
2.70
%
 
                                               
* Full taxable equivalent basis, using a 21% statutory tax rate.
                                         
** Includes loans held for sale.
                                               
 
 
5


Allowance for loan and lease losses:
 
Three months ended
   
Year ended
   
    
March 31,
   
March 31,
   
December 31,
   
   
2018
   
2017
   
2017
   
    
(dollars in thousands)
   
                     
Balance in the allowance for loan and lease losses at beginning of period (1)
 
$
7,096
   
$
6,332
   
$
6,332
   
                           
Loans charged-off:
                         
SBA non-real estate
   
388
     
-
     
1,171
   
SBA commercial mortgage
   
157
     
-
     
-
   
Direct lease financing
   
56
     
35
     
926
   
Other consumer loans
   
13
     
12
     
110
   
Total
   
614
     
47
     
2,207
   
                           
Recoveries:
                         
SBA non-real estate
   
40
     
-
     
18
   
SBA commercial mortgage
   
5
     
-
     
-
   
Direct lease financing
   
58
     
-
     
7
   
Other consumer loans
   
-
     
9
     
26
   
Total
   
103
     
9
     
51
   
Net charge-offs
   
511
     
38
     
2,156
   
Provision charged to operations
   
700
     
1,000
     
2,920
   
                           
Balance in allowance for loan and lease losses at end of period
 
$
7,285
   
$
7,294
   
$
7,096
   
Net charge-offs/average loans
   
0.03
%
   
0.00
%
   
0.12
%
 
Net charge-offs/average loans (annualized)
   
0.11
%
   
0.01
%
   
0.12
%
 
Net charge-offs/average assets
   
0.01
%
   
0.00
%
   
0.05
%
 
(1) Excludes activity from assets held for sale.
                         
 
Loan portfolio:
March 31,
   
December 31,
   
September 30,
   
March 31,
 
 
2018
   
2017
   
2017
   
2017
 
 
(dollars in thousands)
 
                       
SBA non-real estate
 
$
75,225
   
$
70,379
   
$
71,094
   
$
74,699
 
SBA commercial mortgage
   
149,227
     
142,086
     
132,997
     
114,703
 
SBA construction
   
20,143
     
16,740
     
14,205
     
12,985
 
Total SBA loans
   
244,595
     
229,205
     
218,296
     
202,387
 
Direct lease financing
   
385,467
     
377,660
     
368,661
     
362,688
 
SBLOC
   
759,369
     
730,462
     
720,279
     
660,423
 
Other specialty lending
   
45,729
     
30,720
     
36,664
     
12,443
 
Other consumer loans
   
17,416
     
14,133
     
20,107
     
16,318
 
     
1,452,576
     
1,382,180
     
1,364,008
     
1,254,259
 
Unamortized loan fees and costs
   
10,488
     
10,048
     
10,052
     
9,868
 
Total loans, net of deferred loan fees and costs
 
$
1,463,064
   
$
1,392,228
   
$
1,374,060
   
$
1,264,127
 
                                 
Small business lending portfolio:
  March 31,  
December 31,
 
September 30,
 
March 31,
     
2018
     
2017
     
2017
     
2017
 
 
(dollars in thousands)
 
                                 
SBA loans, including deferred fees and costs
   
252,457
     
236,724
     
225,909
     
209,980
 
SBA loans included in HFS
   
172,030
     
165,177
     
160,855
     
159,831
 
Total SBA loans
 
$
424,487
   
$
401,901
   
$
386,764
   
$
369,811
 
 
 
6


 

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, 2018
                       
The Bancorp, Inc.
   
7.69
%
   
18.43
%
   
18.82
%
   
18.43
%
The Bancorp Bank
   
7.31
%
   
17.84
%
   
18.23
%
   
17.84
%
"Well capitalized" institution (under FDIC regulations)
   
5.00
%
   
8.00
%
   
10.00
%
   
6.50
%
                                 
As of December 31, 2017
                               
The Bancorp, Inc.
   
7.90
%
   
16.73
%
   
17.09
%
   
16.73
%
The Bancorp Bank
   
7.61
%
   
16.23
%
   
16.59
%
   
16.23
%
"Well capitalized" institution (under FDIC regulations)
   
5.00
%
   
8.00
%
   
10.00
%
   
6.50
%

   
Three months ended
   
Year ended
       
   
March 31,
   
December 31,
       
   
2018
   
2017
   
2017
       
Selected operating ratios:
                       
Return on average assets (1)
   
1.30
%
   
0.73
%
   
0.52
%
     
Return on average equity (1)
   
17.54
%
   
10.54
%
   
6.96
%
     
Net interest margin
   
3.12
%
   
2.70
%
   
3.04
%
     
Book value per share
 
$
5.87
   
$
5.57
   
$
5.81
       
                               
(1) Annualized
                             
                               
   
March 31,
 
December 31,
 
September 30,
 
March 31,
     
2018
     
2017
     
2017
     
2017
 
Nonperforming loans to total loans (2)
   
0.42
%
   
0.30
%
   
0.39
%
   
0.55
%
Nonperforming assets to total assets (2)
   
0.15
%
   
0.10
%
   
0.13
%
   
0.16
%
Allowance for loan and lease losses to total loans
   
0.50
%
   
0.51
%
   
0.53
%
   
0.58
%
                                 
Nonaccrual loans
 
$
3,516
   
$
3,996
   
$
4,953
   
$
5,369
 
Other real estate owned
   
405
     
450
     
-
     
104
 
     Total nonperforming assets
 
$
3,921
   
$
4,446
   
$
4,953
   
$
5,473
 
                                 
Loans 90 days past due still accruing interest (3)
 
$
2,643
   
$
227
   
$
354
   
$
1,534
 
                                 
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.
 
   
(3) An uptick in delinquencies less than 90 days delinquent at March 31, 2018 reflected the maturity of a note for an $8 million loan in New York City which matured in January 2018. We are in the process of accumulating information for potential renewal or to otherwise address disposition. The estimated loan to value for this loan is 78% based upon a first quarter 2018 appraisal.
 
                                 
   
Three months ended
 
   
March 31,
 
December 31,
 
September 30,
 
March 31,
     
2018
     
2017
     
2017
     
2017
 
   
(in thousands)
 
Gross dollar volume (GDV) (4):
                               
Prepaid card GDV
 
$
13,402,496
   
$
10,963,456
   
$
10,970,085
   
$
13,342,180
 
                                 
(4) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp.
 
 
 
7

 

Business line quarterly summary:
                           
Quarter ended March 31, 2018
                           
(dollars in millions)
                           
                             
 
         
Balances
   
Non interest income
 
               
% Growth
         
% Growth
 
Major business lines
 
Average approximate rates
   
Balances*
   
Year
over year
   
Linked
quarter annualized
   
Current quarter
   
Year
over year
   
Linked
quarter annualized
 
Loans
                                         
Institutional banking**
   
3.50
%
 
$
759
     
15
%
   
16
%
 
$
1.5
     
16
%
 
nm
 
SBA
   
5.10
%
   
424
     
15
%
   
22
%
   
-
     
-
     
-
 
Leasing
   
5.80
%
   
385
     
6
%
   
8
%
   
0.5
     
-12
%
 
nm
 
Commercial real estate securitization
   
5.65
%
   
178
   
nm
   
nm
     
11.7
     
118
%
 
nm
 
Weighted average yield
   
4.61
%
 
$
1,746
                                         
                                                         
Deposits
                                                       
Payment solutions (primarily prepaid)
   
0.66
%
 
$
2,216
     
2
%
   
12
%
 
$
14.3
     
5
%
   
5
%
Card payment and ACH processing
   
0.33
%
   
900
     
3
%
   
28
%
   
1.7
     
11
%
 
nm
 
                                                         
* Loan categories based on period end balance and deposit categories based on average quarterly balances.
 
   
** Includes SBLOC loans and IRA fees.
 
 
 
 
8

 

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 and 2016
   
(42
)
   
(42
)
2018 marks
   
(1
)
   
(1
)
Payments received
   
(80
)
       
March 31, 2018 Bancorp book value**
 
$
70
         
                 
Total marks
         
$
(101
)
Divided by:
               
Original Walnut Street loan balance
         
$
267
 
Percentage of total mark to original balance
           
38
%
                 
* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the Bank's investment in the securitization of certain loans from the Bank's discontinued loan portfolio.
 
   
** Approximately 26% of expected principal recoveries were from loans and properties pending liquidation or other resolutions.
 
                 
Walnut Street portfolio composition as of March 31, 2018
         
                 
Collateral type
 
% of Portfolio
         
Commercial real estate non-owner occupied
               
Retail
   
47.2
%
       
Office
   
15.1
%
       
Other
   
3.5
%
       
Construction and land
   
23.1
%
       
Commercial non real estate and industrial
   
0.5
%
       
First mortgage residential owner occupied
   
5.6
%
       
First mortgage residential non-owner occupied
   
4.2
%
       
Other
   
0.8
%
       
Total
   
100.0
%
       
 
 
9

 
 
Cumulative analysis of marks on discontinued commercial loan principal as of March 31, 2018
 
   
Discontinued
   
Cumulative
   
% to original
 
   
loan principal
   
marks
   
principal
 
   
(dollars in millions)
 
                      
Commercial loan discontinued principal before marks
 
$
210
              
Florida mall held in discontinued other real estate owned
   
42
     
27
       
Previous mark charges
   
33
     
33
       
Mark at March 31, 2018
           
15
       
Total
 
$
285
   
$
75
   
26%
 
 
 
Analysis of discontinued loan relationships of March 31, 2018
                               
                                     
   
Performing
   
Nonperforming
   
Total
   
Performing
   
Nonperforming
   
Total
 
   
loan principal(1)
   
loan principal(2)
   
loan principal
   
loan marks
   
loan marks
   
marks
 
   
(in millions)
 
                                     
8 loan relationships > $8 million
 
$
100
   
$
45
   
$
145
   
$
5
   
$
-
   
$
5
 
Loan relationships < $8 million
   
40
     
10
     
50
     
4
     
6
     
10
 
   
$
140
   
$
55
   
$
195
   
$
9
   
$
6
   
$
15
 
                                                 
(1) Performing discontinued loans included a $17 million loan which was delinquent 60 days as of March 31, 2018. The loan is secured by multiple commercial real estate properties which cumulatively have a 95% loan to value.
 
(2) The vast majority of the increase to $55 million in non-performing discontinued loans at March 31, 2018 from $16 million at year end 2017 resulted from the Bank's largest credit exposure. The loan has unpaid principal of $36.9 million and is collateralized by a hotel under construction and parking lot in the southeastern United States. Based upon an independent first quarter 2018 appraisal, the loan to value is approximately 80% on an as is basis, with personal guarantees of certain of the borrower's principals. The loan became delinquent in the first quarter of 2018 and the borrower, a development corporation, subsequently declared bankruptcy. The Bank is pursuing collection and we currently believe that there will be no loss of principal.
 
 
 
Quarterly activity for commercial loan discontinued principal
   
         
   
Commercial
   
   
loan principal
   
   
(in millions)
   
         
Commercial loan discontinued principal December 31, 2017 before marks
 
$
225
   
2018 net paydowns
   
(15
)
 
Commercial loan discontinued principal March 31, 2018 before marks
 
$
210
   
Marks March 31, 2018
   
(15
)
 
Net commercial loan exposure March 31, 2018
 
$
195
   
Residential mortgages
   
59
   
Net loans
 
$
254
   
Florida mall in other real estate owned
   
15
   
Other 29 properties in other real estate owned
   
19
   
Other assets related to discontinued operations
   
1
   
Total discontinued assets at March 31, 2018
 
$
289
   
 
 
10


 
Discontinued commercial loan composition March 31, 2018
 
                   
Collateral type
 
Unpaid principal balance
   
Mark March 31, 2018
   
Mark as % of portfolio
 
   
(dollars in millions)
 
Commercial real estate - non-owner occupied:
                 
Retail
 
$
11
   
$
0.7
     
6
%
Office
   
8
     
0.7
     
9
%
Other
   
42
     
0.7
     
2
%
Construction and land
   
80
     
1.3
     
2
%
Commercial non-real estate and industrial
   
14
     
1.9
     
13
%
1 to 4 family construction
   
25
     
4.4
     
18
%
First mortgage residential non-owner occupied
   
18
     
4.5
     
25
%
Commercial real estate owner occupied:
                       
Retail
   
9
     
0.4
     
4
%
Office
   
-
     
-
     
-
 
Other
   
1
     
-
     
0
%
Residential junior mortgage
   
1
     
-
     
0
%
Other
   
1
     
-
     
0
%
Total
 
$
210
                 
Less: mark
   
(15
)
               
Net commercial loan exposure March 31, 2018
 
$
195
   
$
14.6
     
7
%

 
 
11
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