WILMINGTON, Del.--(BUSINESS WIRE)-- 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 | |||||||||||||||