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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):  7/25/2019
 
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.  [ ]

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $1.00 per share
 
TBBK
 
Nasdaq Global Select




Item 2.02.    Results of Operations and Financial Condition
 
On July 25, 2019, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three and six months ended June 30, 2019. 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: July 25, 2019
 
 
 
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 Second Quarter 2019 Financial Results

Wilmington, DE – July 25, 2019 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2019.

Highlights


Reported earnings per share for the quarter ended June 30, 2019 were $0.20, compared to $0.11 for the quarter ended June 30, 2018, an increase of 82%. Adjusted diluted earnings per share increased to $0.21 for the quarter ended June 30, 2019, after consideration of the $0.01 impact of a $908,000 lease termination expense, which will yield $2.2 million of future savings.


Net income increased to $11.4 million for the quarter ended June 30, 2019, compared to $6.1 million for the quarter ended June 30, 2018, an increase of 85%.


Net interest margin increased to 3.41% for the quarter ended June 30, 2019, compared to 3.11% for the quarter ended June 30, 2018.


Net interest income increased 17% to $34.5 million for the quarter ended June 30, 2019, compared to $29.5 million for the quarter ended June 30, 2018.


Average loans and leases, including loans held for sale, increased 21% to $2.23 billion for the quarter ended June 30, 2019, compared to $1.85 billion for the quarter ended June 30, 2018.


Prepaid card and related fees increased 13% to $15.8 million for the quarter ended June 30, 2019, compared to $14.1 million for the quarter ended June 30, 2018.


ACH (Automated Clearing House), card and other payment processing fees increased 18%, to $2.5 million for the quarter ended June 30, 2019, compared to $2.1 million for the quarter ended June 30, 2018.


Small Business Administration (“SBA”) loans, including those held-for-sale, increased 18% to $516 million at June 30, 2019, compared to $439 million at June 30, 2018.


Linked quarter loan growth for SBA, security backed lines of credit (SBLOC) and leasing, respectively, was 5%, 6% and 6%; or 19%, 23% and 24% on an annualized basis.


The rate on $3.9 billion of average deposits and interest-bearing liabilities in the second quarter of 2019 was 0.96%.  Average prepaid card deposits of $2.5 billion for second quarter 2019, reflected an increase of 17% over the average of $2.1 billion for the quarter ended June 30, 2018.


Consolidated leverage ratio was 10.04% at June 30, 2019. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.


Book value per common share at June 30, 2019 was $8.07 per share from $5.91 a year earlier, an increase of 37%.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Revenue momentum was broad based in the second quarter, equally distributed between fee and net interest income growth.  These trends and our underlying pipelines suggest continued improvement in our earnings outlook.”

The Bancorp reported net income of $11.4 million, or $0.20 income per diluted share, for the quarter ended June 30, 2019, compared to net income of $6.1 million, or $0.11 income per diluted share, for the quarter ended June 30, 2018.  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 10.04%, 20.57%, 21.03% and 20.57%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.


1


Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 26, 2019 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 1391725.  You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, August 2, 2019 by dialing 855.859.2056, access code 1391725.

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 The 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 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. 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 earnings release, except as may be required under applicable law.

The Bancorp, Inc. Contact
Andres Viroslav
215-861-7990
[email protected]
2


The Bancorp, Inc.
 
Financial highlights
 
(unaudited)
 
                         
   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
Condensed income statement
 
2019
   
2018
   
2019
   
2018
 
   
(dollars in thousands except per share data)
 
                         
Net interest income
 
$
34,539
   
$
29,534
   
$
68,549
   
$
59,608
 
Provision for loan and lease losses
   
600
     
900
     
2,300
     
1,600
 
Non-interest income
                               
Service fees on deposit accounts
   
14
     
1,646
     
61
     
3,222
 
ACH, card and other payment processing fees
   
2,521
     
2,142
     
4,824
     
3,994
 
Prepaid card and related fees
   
15,840
     
14,073
     
32,003
     
28,355
 
Net realized and unrealized gains (losses) on commercial
                               
   loans originated for sale
   
(148
)
   
(454
)
   
10,615
     
11,275
 
Change in value of investment in unconsolidated entity
   
-
     
(1,732
)
   
-
     
(2,903
)
Leasing income
   
1,027
     
1,108
     
1,722
     
1,595
 
Affinity fees
   
-
     
85
     
-
     
187
 
Other non-interest income
   
495
     
172
     
889
     
410
 
Total non-interest income
   
19,749
     
17,040
     
50,114
     
46,135
 
Non-interest expense
                               
Salaries and employee benefits
   
21,826
     
18,897
     
45,666
     
39,970
 
Data processing expense
   
1,223
     
1,356
     
2,492
     
3,361
 
Legal expense
   
1,534
     
1,770
     
2,858
     
4,201
 
FDIC Insurance
   
2,095
     
2,929
     
4,024
     
5,148
 
Software
   
3,060
     
2,995
     
5,981
     
6,286
 
Civil money penalty
   
-
     
-
     
-
     
(290
)
Lease termination expense
   
908
     
395
     
908
     
395
 
Other non-interest expense
   
8,873
     
8,968
     
16,819
     
17,288
 
Total non-interest expense
   
39,519
     
37,310
     
78,748
     
76,359
 
Income from continuing operations before income taxes
   
14,169
     
8,364
     
37,615
     
27,784
 
Income tax expense
   
3,575
     
2,209
     
9,610
     
7,608
 
Net income from continuing operations
   
10,594
     
6,155
     
28,005
     
20,176
 
Discontinued operations
                               
Income (loss) from discontinued operations before income taxes
   
919
     
(50
)
   
1,724
     
106
 
Income tax expense (benefit)
   
163
     
(36
)
   
449
     
1
 
Net income (loss) from discontinued operations, net of tax
   
756
     
(14
)
   
1,275
     
105
 
Net income
 
$
11,350
   
$
6,141
   
$
29,280
   
$
20,281
 
                                 
Net income per share from continuing operations - basic
 
$
0.19
   
$
0.11
   
$
0.50
   
$
0.36
 
Net income per share from discontinued operations - basic
 
$
0.01
   
$
-
   
$
0.02
   
$
-
 
Net income per share - basic
 
$
0.20
   
$
0.11
   
$
0.52
   
$
0.36
 
                                 
Net income per share from continuing operations - diluted
 
$
0.19
   
$
0.11
   
$
0.49
   
$
0.36
 
Net income per share from discontinued operations - diluted
 
$
0.01
   
$
-
   
$
0.02
   
$
-
 
Net income per share - diluted
 
$
0.20
   
$
0.11
   
$
0.51
   
$
0.36
 
Weighted average shares - basic
   
56,702,182
     
56,340,816
     
56,612,596
     
56,241,873
 
Weighted average shares - diluted
   
57,197,433
     
57,141,219
     
57,031,206
     
57,083,297
 
3


Balance sheet
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2019
   
2019
   
2018
   
2018
 
   
(dollars in thousands)
 
Assets:
                       
Cash and cash equivalents
                       
Cash and due from banks
 
$
27,450
   
$
11,678
   
$
2,440
   
$
3,052
 
Interest earning deposits at Federal Reserve Bank
   
284,823
     
714,514
     
551,862
     
373,782
 
Securities sold under agreements to resell
   
-
     
-
     
-
     
64,216
 
     Total cash and cash equivalents
   
312,273
     
726,192
     
554,302
     
441,050
 
                                 
Investment securities, available-for-sale, at fair value
   
1,361,779
     
1,368,602
     
1,236,324
     
1,305,494
 
Investment securities, held-to-maturity
   
84,414
     
84,428
     
84,432
     
86,354
 
Commercial loans held for sale, at fair value
   
934,452
     
570,426
     
688,471
     
447,997
 
Loans, net of deferred fees and costs
   
1,561,451
     
1,510,395
     
1,501,976
     
1,503,828
 
Allowance for loan and lease losses
   
(9,989
)
   
(9,954
)
   
(8,653
)
   
(8,014
)
Loans, net
   
1,551,462
     
1,500,441
     
1,493,323
     
1,495,814
 
Federal Home Loan Bank & Atlantic Community Bancshares stock
   
6,342
     
1,113
     
1,113
     
1,113
 
Premises and equipment, net
   
17,380
     
18,056
     
18,895
     
18,275
 
Accrued interest receivable
   
14,567
     
13,907
     
12,753
     
11,810
 
Intangible assets, net
   
3,081
     
3,463
     
3,846
     
4,612
 
Other real estate owned
   
-
     
-
     
-
     
405
 
Deferred tax asset, net
   
14,574
     
18,423
     
21,622
     
39,779
 
Investment in unconsolidated entity
   
58,012
     
58,258
     
59,273
     
67,994
 
Assets held for sale from discontinued operations
   
169,109
     
188,025
     
197,831
     
241,694
 
Other assets
   
76,123
     
75,642
     
65,726
     
59,483
 
     Total assets
 
$
4,603,568
   
$
4,626,976
   
$
4,437,911
   
$
4,221,874
 
                                 
Liabilities:
                               
Deposits
                               
Demand and interest checking
 
$
3,964,905
   
$
3,993,828
   
$
3,904,638
   
$
3,287,682
 
Savings and money market
   
26,841
     
31,470
     
31,076
     
511,598
 
     Total deposits
   
3,991,746
     
4,025,298
     
3,935,714
     
3,799,280
 
                                 
Securities sold under agreements to repurchase
   
93
     
93
     
93
     
161
 
Short-term borrowings
   
45,000
     
-
     
-
     
-
 
Subordinated debenture
   
13,401
     
13,401
     
13,401
     
13,401
 
Long-term borrowings
   
41,334
     
41,499
     
41,674
     
42,000
 
Other liabilities
   
53,862
     
111,905
     
40,253
     
34,485
 
     Total liabilities
 
$
4,145,436
   
$
4,192,196
   
$
4,031,135
   
$
3,889,327
 
                                 
Shareholders' equity:
                               
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,874,956 and 56,410,525 shares issued and outstanding at June 30, 2019 and 2018, respectively
   
56,875
     
56,568
     
56,446
     
56,411
 
Treasury stock (100,000 shares)
   
(866
)
   
(866
)
   
(866
)
   
(866
)
Additional paid-in capital
   
368,771
     
367,483
     
366,181
     
364,460
 
Accumulated earnings (deficit)
   
28,463
     
17,113
     
(817
)
   
(69,213
)
Accumulated other comprehensive income (loss)
   
4,889
     
(5,518
)
   
(14,168
)
   
(18,245
)
Total shareholders' equity
   
458,132
     
434,780
     
406,776
     
332,547
 
                                 
     Total liabilities and shareholders' equity
 
$
4,603,568
   
$
4,626,976
   
$
4,437,911
   
$
4,221,874
 
4



Average balance sheet and net interest income
 
Three months ended June 30, 2019
   
Three months ended June 30, 2018
 
   
(dollars in thousands)
 
   
Average
         
Average
   
Average
         
Average
 
Assets:
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Interest earning assets:
                                   
Loans net of deferred fees and costs **
 
$
2,216,935
   
$
29,737
     
5.37
%
 
$
1,828,398
   
$
21,704
     
4.75
%
Leases - bank qualified*
   
15,446
     
268
     
6.94
%
   
20,214
     
337
     
6.67
%
Investment securities-taxable
   
1,443,671
     
11,634
     
3.22
%
   
1,435,598
     
10,770
     
3.00
%
Investment securities-nontaxable*
   
6,610
     
54
     
3.27
%
   
8,702
     
63
     
2.90
%
Interest earning deposits at Federal Reserve Bank
   
420,153
     
2,455
     
2.34
%
   
458,695
     
2,095
     
1.83
%
Federal funds sold and securities purchased under agreement to resell
   
-
     
-
     
-
     
64,300
     
475
     
2.95
%
Net interest earning assets
   
4,102,815
     
44,148
     
4.30
%
   
3,815,907
     
35,444
     
3.72
%
                                                 
Allowance for loan and lease losses
   
(9,963
)
                   
(7,168
)
               
Loans held for sale from discontinued operations
   
154,057
     
1,659
     
4.31
%
   
281,476
     
2,066
     
2.94
%
Other assets
   
283,036
                     
212,397
                 
   
$
4,529,945
                   
$
4,302,612
                 
                                                 
Liabilities and Shareholders' Equity:
                                               
Deposits:
                                               
Demand and interest checking
 
$
3,847,623
   
$
8,783
     
0.91
%
 
$
3,439,265
   
$
5,022
     
0.58
%
Savings and money market
   
26,497
     
40
     
0.60
%
   
502,783
     
617
     
0.49
%
Total deposits
   
3,874,120
     
8,823
     
0.91
%
   
3,942,048
     
5,639
     
0.57
%
                                                 
Short-term borrowings
   
80,242
     
526
     
2.62
%
   
1,648
     
9
     
2.18
%
Securities sold under agreements to repurchase
   
92
     
-
     
0.00
%
   
171
     
-
     
0.00
%
Subordinated debentures
   
13,401
     
192
     
5.73
%
   
13,401
     
178
     
5.31
%
Total deposits and liabilities
   
3,967,855
     
9,541
     
0.96
%
   
3,957,268
     
5,826
     
0.59
%
                                                 
Other liabilities
   
115,634
                     
14,124
                 
Total liabilities
   
4,083,489
                     
3,971,392
                 
                                                 
Shareholders' equity
   
446,456
                     
331,220
                 
   
$
4,529,945
                   
$
4,302,612
                 
Net interest income on tax equivalent basis*
         
$
36,266
                   
$
31,684
         
                                                 
Tax equivalent adjustment
           
68
                     
84
         
                                                 
Net interest income
         
$
36,198
                   
$
31,600
         
Net interest margin *
                   
3.41
%
                   
3.11
%
 
                                               
* Full taxable equivalent basis, using a statutory rate of 21% for 2019 and 2018.
             
** Includes loans held for sale.
            
                       

5


Average balance sheet and net interest income
 
Six months ended June 30, 2019
   
Six months ended June 30, 2018
 
   
(dollars in thousands)
 
   
Average
         
Average
   
Average
         
Average
 
Assets:
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Interest earning assets:
                                   
Loans net of deferred fees and costs **
 
$
2,241,746
   
$
59,898
     
5.34
%
 
$
1,887,511
   
$
44,743
     
4.74
%
Leases - bank qualified*
   
16,613
     
695
     
8.37
%
   
20,623
     
671
     
6.51
%
Investment securities-taxable
   
1,374,019
     
22,164
     
3.23
%
   
1,405,749
     
20,469
     
2.91
%
Investment securities-nontaxable*
   
7,075
     
114
     
3.22
%
   
9,294
     
138
     
2.97
%
Interest earning deposits at Federal Reserve Bank
   
421,580
     
4,957
     
2.35
%
   
480,343
     
3,927
     
1.64
%
Federal funds sold and securities purchased under agreement to resell
   
-
     
-
     
-
     
64,258
     
889
     
2.77
%
Net interest earning assets
   
4,061,033
     
87,828
     
4.33
%
   
3,867,778
     
70,837
     
3.66
%
                                                 
Allowance for loan and lease losses
   
(9,305
)
                   
(7,076
)
               
Loans held for sale from discontinued operations
   
163,874
     
3,684
     
4.50
%
   
288,050
     
4,593
     
3.19
%
Other assets
   
272,922
                     
199,981
                 
   
$
4,488,524
                   
$
4,348,733
                 
                                                 
Liabilities and Shareholders' Equity:
                                               
Deposits:
                                               
Demand and interest checking
 
$
3,838,868
   
$
17,616
     
0.92
%
 
$
3,487,205
   
$
9,323
     
0.53
%
Savings and money market
   
28,931
     
77
     
0.53
%
   
495,124
     
1,285
     
0.52
%
Total deposits
   
3,867,799
     
17,693
     
0.91
%
   
3,982,329
     
10,608
     
0.53
%
                                                 
Short-term borrowings
   
77,330
     
1,029
     
2.66
%
   
13,182
     
113
     
1.71
%
Securities sold under agreements to repurchase
   
91
     
-
     
0.00
%
   
188
     
-
     
0.00
%
Subordinated debentures
   
13,401
     
387
     
5.78
%
   
13,401
     
338
     
5.04
%
Total deposits and liabilities
   
3,958,621
     
19,109
     
0.97
%
   
4,009,100
     
11,059
     
0.55
%
                                                 
Other liabilities
   
97,449
                     
11,285
                 
Total liabilities
   
4,056,070
                     
4,020,385
                 
                                                 
Shareholders' equity
   
432,454
                     
328,348
                 
   
$
4,488,524
                   
$
4,348,733
                 
Net interest income on tax equivalent basis*
         
$
72,403
                   
$
64,371
         
                                                 
Tax equivalent adjustment
           
170
                     
170
         
                                                 
Net interest income
         
$
72,233
                   
$
64,201
         
Net interest margin *
                   
3.43
%
                   
3.11
%
 
                                               
* Full taxable equivalent basis, using a statutory rate of 21% for 2019 and 2018.
                 
** Includes loans held for sale.
               
                 
6


Allowance for loan and lease losses:
 
Six months ended
   
Year ended
       
   
June 30,
   
June 30,
   
December 31,
       
   
2019
   
2018
   
2018
       
   
(dollars in thousands)
       
                         
Balance in the allowance for loan and lease losses at beginning of period (1)
 
$
8,653
   
$
7,096
   
$
7,096
       
                               
Loans charged-off:
                             
SBA non-real estate
   
893
     
388
     
1,348
       
SBA commercial mortgage
   
-
     
157
     
157
       
Direct lease financing
   
185
     
244
     
637
       
Other consumer loans
   
2
     
15
     
21
       
Total
   
1,080
     
804
     
2,163
       
                               
Recoveries:
                             
SBA non-real estate
   
100
     
47
     
57
       
SBA commercial mortgage
   
-
     
11
     
13
       
Direct lease financing
   
16
     
64
     
64
       
Other consumer loans
   
-
     
-
     
1
       
Total
   
116
     
122
     
135
       
Net charge-offs
   
964
     
682
     
2,028
       
Provision charged to operations
   
2,300
     
1,600
     
3,585
       
                               
Balance in allowance for loan and lease losses at end of period
 
$
9,989
   
$
8,014
   
$
8,653
       
Net charge-offs/average loans
   
0.04
%
   
0.04
%
   
0.10
%
     
Net charge-offs/average loans (annualized)
   
0.09
%
   
0.07
%
   
0.10
%
     
Net charge-offs/average assets
   
0.02
%
   
0.02
%
   
0.05
%
     
(1) Excludes activity from assets held for sale from discontinued operations.
               
                               
Loan portfolio:
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2019
   
2019
   
2018
   
2018
 
   
(in thousands)
 
                                 
SBA non-real estate
 
$
75,475
   
$
76,112
   
$
76,340
   
$
75,141
 
SBA commercial mortgage
   
189,427
     
179,397
     
165,406
     
156,268
 
SBA construction
   
29,298
     
23,979
     
21,636
     
17,781
 
Total SBA loans
   
294,200
     
279,488
     
263,382
     
249,190
 
Direct lease financing
   
407,907
     
384,930
     
394,770
     
386,403
 
SBLOC / IBLOC*
   
837,672
     
791,986
     
785,303
     
795,823
 
Other specialty lending
   
3,432
     
34,425
     
31,836
     
48,253
 
Other consumer loans
   
7,898
     
9,301
     
16,302
     
13,174
 
     
1,551,109
     
1,500,130
     
1,491,593
     
1,492,843
 
Unamortized loan fees and costs
   
10,342
     
10,265
     
10,383
     
10,985
 
Total loans, net of deferred fees and costs
 
$
1,561,451
   
$
1,510,395
   
$
1,501,976
   
$
1,503,828
 
                                 
* 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.
 
                                 
Small business lending portfolio:
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2019
   
2019
   
2018
   
2018
 
   
(in thousands)
 
                                 
SBA loans, including deferred fees and costs
   
301,502
     
286,814
     
270,860
     
257,412
 
SBA loans included in held-for-sale
   
215,064
     
206,901
     
199,977
     
182,072
 
Total SBA loans
 
$
516,566
   
$
493,715
   
$
470,837
   
$
439,484
 

7


Capital ratios:
Tier 1 capital
 
Tier 1 capital
 
Total capital
 
Common equity
 
to average
 
to risk-weighted
 
to risk-weighted
 
tier 1 to risk
 
assets ratio
 
assets ratio
 
assets ratio
 
weighted assets
As of June 30, 2019
             
The Bancorp, Inc.
10.04%
 
20.57%
 
21.03%
 
20.57%
The Bancorp Bank
9.76%
 
20.16%
 
20.62%
 
20.16%
"Well capitalized" institution (under FDIC regulations)
5.00%
 
8.00%
 
10.00%
 
6.50%
               
As of December 31, 2018
             
The Bancorp, Inc.
10.11%
 
20.64%
 
21.07%
 
20.64%
The Bancorp Bank
9.70%
 
20.18%
 
20.61%
 
20.18%
"Well capitalized" institution (under FDIC regulations)
5.00%
 
8.00%
 
10.00%
 
6.50%

   
Three months ended
 
Six months ended
   
June 30,
 
June 30,
   
2019
 
2018
 
2019
 
2018
Selected operating ratios:
               
Return on average assets (1)
 
1.00%
 
0.57%
 
1.32%
 
0.94%
Return on average equity (1)
 
10.20%
 
7.44%
 
13.65%
 
12.46%
Net interest margin
 
3.41%
 
3.11%
 
3.43%
 
3.11%
                 
(1) Annualized
               
                 
Book value per share table:
 
June 30,
 
March 31,
 
December 31,
 
June 30,
   
2019
 
2019
 
2018
 
2018
Book value per share
 
 $              8.07
 
 $              7.70
 
 $              7.22
 
 $               5.91
                 
                 
Loan quality table:
 
June 30,
 
March 31,
 
December 31,
 
June 30,
   
2019
 
2019
 
2018
 
2018
Nonperforming loans to total loans
 
0.57%
 
0.55%
 
0.36%
 
0.42%
Nonperforming assets to total assets
 
0.19%
 
0.18%
 
0.12%
 
0.16%
Allowance for loan and lease losses to total loans
 
0.64%
 
0.66%
 
0.58%
 
0.53%
                 
Nonaccrual loans
 
 $            6,456
 
 $            5,863
 
 $            4,516
 
 $             4,915
Loans 90 days past due still accruing interest
 
               2,373
 
               2,483
 
                  954
 
                1,459
Other real estate owned
 
                       -
 
                       -
 
                       -
 
                   405
     Total nonperforming assets
 
 $            8,829
 
 $            8,346
 
 $            5,470
 
 $             6,779
                 
                 
                 
   
Three months ended
   
June 30,
 
March 31,
 
December 31,
 
June 30,
   
2019
 
2019
 
2018
 
2018
   
(in thousands)
Gross dollar volume (GDV) (3):
               
Prepaid card GDV
 
 $   16,611,551
 
 $   16,937,325
 
 $   13,526,647
 
 $    12,799,531
                 
(3) Gross dollar volume represents the total dollar amount spent on prepaid cards issued by The Bancorp Bank.
                 

8


Business line quarterly summary:
                                   
Quarter ended June 30, 2019
                                   
(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
 
Loans
                                   
Institutional banking **
   
4.4
%
 
$
838
     
5
%
   
23
%
 
na
   
na
 
SBA
   
5.7
%
   
517
     
18
%
   
19
%
 
na
   
na
 
Leasing
   
6.4
%
   
408
     
6
%
   
24
%
 
$
1.0
   
nm
 
Commercial real estate securitization
   
5.9
%
   
719
   
nm
   
nm
   
nm
   
nm
 
Weighted average yield
   
5.5
%
 
$
2,482
                               
                                               
Deposits
                                             
Payment solutions (primarily prepaid)
   
1.2
%
 
$
2,511
     
17
%
 
nm
   
$
15.8
     
13
%
Card payment and ACH processing
   
0.9
%
   
885
     
-2
%
 
nm
     
2.5
     
18
%
                                                 
* Loan categories based on period end balance and Payment Solutions based on average quarterly balances.
 
** Comprised of Securities Backed Lines of Credit (SBLOC), collateralized by marketable securities and Insurance Backed Lines of Credit (IBLOC), collateralized by the cash surrender value of insurance policies.
 
9



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 - 2018
   
(46
)
   
(46
)
2019 Marks
   
-
         
Payments received
   
(89
)
       
June 30, 2019 Bancorp book value**
 
$
58
         
                 
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 Bank's investment in a securitization of certain loans from the banks discontinued loan portfolio.
 
** Approximately 44% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of June 30, 2019.
 
                 
Walnut Street portfolio composition as of June 30, 2019
         
                 
Collateral type
 
% of Portfolio
         
Commercial real estate non-owner occupied
               
Retail
   
52.2
%
       
Office
   
13.2
%
       
Other
   
5.9
%
       
Construction and land
   
18.4
%
       
Commercial non real estate and industrial
   
0.5
%
       
First mortgage residential owner occupied
   
6.1
%
       
First mortgage residential non-owner occupied
   
2.8
%
       
Other
   
0.9
%
       
Total
   
100.0
%
       
                 
10


Cumulative analysis of marks on discontinued commercial loan principal as of June 30, 2019
                  
   
Discontinued
   
Cumulative
 
% to original
   
loan principal
   
marks
 
principal
   
(dollars in millions)
                  
Commercial loan discontinued principal before marks
 
$
99
          
Florida mall held in discontinued other real estate owned
   
42
   
$
(27
)
 
Previous mark charges
   
14
     
(14
)
 
Mark at June 30, 2019
           
(7
)
 
Total
 
$
155
   
$
(48
)
31%

Analysis of discontinued loan relationships as of June 30, 2019

   
Performing
   
Nonperforming
   
Total
   
Performing
   
Nonperforming
   
Total
 
   
loan principal
   
loan principal
   
loan principal
   
loan marks
   
loan marks
   
marks
 
   
(in millions)
 
                                     
6 loan relationships > $6 million
 
$
49
   
$
14
   
$
63
   
$
(3
)
 
$
(2
)
 
$
(5
)
Loan relationships < $6 million
   
27
     
2
     
29
     
(2
)
   
-
     
(2
)
   
$
76
   
$
16
   
$
92
   
$
(5
)
 
$
(2
)
 
$
(7
)

Quarterly activity for discontinued commercial loan principal
 
       
   
Commercial
 
   
loan principal
 
   
(in millions)
 
       
Commercial loan discontinued principal March 31, 2019 before mark
 
$
115
 
Quarterly paydowns
   
(16
)
Commercial loan discontinued principal June 30, 2019 before marks
 
$
99
 
Marks June 30, 2019
   
(7
)
Net commercial loan exposure June 30, 2019
 
$
92
 
Residential mortgages
   
50
 
Net loans
 
$
142
 
Florida Mall in other real estate owned
   
15
 
17 Properties in other real estate owned
   
12
 
Total discontinued assets at June 30, 2019
 
$
169
 
         


11


Discontinued commercial loan composition June 30, 2019
 
                   
Collateral type
 
Unpaid principal balance
   
Mark
June 30, 2019
   
Mark as % of portfolio
 
   
(dollars in millions)
 
Commercial real estate - non-owner occupied:
                 
Retail
 
$
4
     
(0.6
)
   
13
%
Office
   
3
     
-
     
-
 
Other
   
37
     
(3.0
)
   
8
%
Construction and land
   
12
     
(0.1
)
   
0
%
Commercial non-real estate and industrial
   
10
     
(0.2
)
   
2
%
1 to 4 family construction
   
11
     
(2.6
)
   
24
%
First mortgage residential non-owner occupied
   
12
     
(0.5
)
   
4
%
Commercial real estate owner occupied:
                       
Retail
   
8
     
-
     
-
 
Office
   
-
     
-
     
-
 
Other
   
-
     
-
     
-
 
Residential junior mortgage
   
1
     
-
     
-
 
Other
   
1
     
-
     
-
 
Total
 
$
99
                 
Less: mark
   
(7
)
               
Net commercial loan exposure June 30, 2019
 
$
92
   
$
(7.0
)
   
7
%

12
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