The Bancorp, Inc.NASDAQ: TBBK

The Bancorp, Inc. Reports Third Quarter 2021 Financial Results

Oct 28, 2021 · Issued by The Bancorp, Inc. via Business Wire

Watch The Bancorp explain itThe Bancorp, Inc. (TBBK) Q2 2026 Earnings Call · Replay · Jul 31

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the third quarter of 2021.

Highlights

For the quarter ended September 30, 2021, The Bancorp earned net income of $28.3 million, or $0.48 diluted earnings per share.

Return on assets and equity for the quarter ended September 30, 2021 amounted to 1.8% and 18%, respectively, compared to 1.5% and 17%, respectively, for the quarter ended September 30, 2020 (all percentages “annualized.”)

Net interest margin amounted to 3.35% for the quarter ended September 30, 2021, compared to 3.37% for the quarter ended September 30, 2020 and 3.19% for the quarter ended June 30, 2021.

Net interest income was $50.9 million for the quarter ended September 30, 2021 compared to $50.0 million for the quarter ended September 30, 2020. In third quarter 2021, growth in net interest income was significantly offset by the $1.9 million impact of loan prepayments on commercial real estate loan interest. However, net realized and unrealized gains on commercial loans increased $3.6 million in third quarter 2021 compared to third quarter 2020, which resulted primarily from fees related to those prepayments. In the third quarter of 2021, we recommenced the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs.

Average loans and leases, including loans at fair value, increased 9% to $4.58 billion for the quarter ended September 30, 2021, compared to $4.21 billion for the quarter ended September 30, 2020.

Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $428.7 million, or 2%, to $24.4 billion for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020. GDV for the 2020 quarter included the impact of significant government stimulus resulting from the Covid-19 pandemic.

SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 32% year over year and 6% quarter over quarter to $1.92 billion at September 30, 2021.

Small Business Loans, including those held at fair value, grew 12% year over year to $709.5 million at September 30, 2021. That growth and $709.5 million balance are exclusive of Paycheck Protection Program (“PPP”) loan balances of $71.3 million and $207.9 million, respectively, at September 30, 2021 and September 30, 2020.

Direct lease financing balances increased 19% year over year to $514.1 million at September 30, 2021.

The average interest rate on $5.66 billion of average deposits and interest-bearing liabilities during the third quarter of 2021 was 0.18%. Average deposits of $5.53 billion for the third quarter 2021, reflected a decrease of 1% from the $5.56 billion of average deposits for the quarter ended September 30, 2020.

As of September 30, 2021, substantially all of the borrowers with Covid-19 related payment deferrals had recommenced making payments, with only approximately $1.3 million of non-U.S. guaranteed loan principal remaining in deferral.

Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 9.82% and 10.24%, respectively, at September 30, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized.

Book value per common share at September 30, 2021 was $11.13 per share compared to $9.71 per share at September 30, 2020, an increase of 15%, primarily as a result of retained earnings.

The Bancorp repurchased 440,887 shares of its common stock at an average cost of $22.68 per share during the quarter ended September 30, 2021.

“We continue to experience business momentum across our platform and strong pipelines that will support continued growth into 2022”, said CEO and President Damian Kozlowski. “We are issuing preliminary guidance of $2.15 a share for 2022 or approximately 21% growth over the current 2021 guidance of $1.78. The $2.15 does not include the impact of planned buybacks. In addition, in 2022, we intend to increase our stock buyback to $15 million a quarter from $10 million a quarter.”

The Bancorp reported net income of $28.3 million, or $0.48 per diluted share, for the quarter ended September 30, 2021, compared to net income of $23.3 million, or $0.40 per diluted share, for the quarter ended September 30, 2020. Tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.82%, 15.69%, 16.10% and 15.69%, 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, October 29, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 9257937. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 5, 2021 by dialing 855.859.2056, access code 9257937.

The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, provides 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 which are not historical facts are "forward-looking statements." These statements may be identified by the use of forward-looking terminology, including but not limited to the words “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “plan,” “estimate,” “continue,” or similar words , and are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results, events or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. 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 and Exchange Commission, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those filings. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this press release, except as may be required under applicable law.

The Bancorp, Inc. Financial highlights (unaudited)

		Three months ended				Nine months ended
		September 30,				September 30,
Condensed income statement	2021		2020		2021		2020
		(in thousands, except per share data)

Net interest income	$	50,893	$	49,996	$	158,719	$	143,153
Provision for credit losses		1,613		1,297		1,484		5,798
Non-interest income
ACH, card and other payment processing fees		1,905		1,760		5,605		5,313
Prepaid, debit card and related fees		18,223		19,434		56,878		56,647
Net realized and unrealized gains (losses) on commercial
loans, at fair value		4,306		684		8,881		(5,412)
Change in value of investment in unconsolidated entity		—		—		—		(45)
Leasing related income		1,968		1,519		4,700		2,795
Other non-interest income		186		955		459		2,019
Total non-interest income		26,588		24,352		76,523		61,317
Non-interest expense
Salaries and employee benefits		25,094		26,417		77,839		74,650
Data processing expense		1,209		1,192		3,481		3,538
Legal expense		1,251		994		5,349		4,136
FDIC insurance		266		2,180		5,235		7,687
Software		4,045		3,595		11,435		10,458
Other non-interest expense		7,519		7,648		21,811		22,595
Total non-interest expense		39,384		42,026		125,150		123,064
Income from continuing operations before income taxes		36,484		31,025		108,608		75,608
Income tax expense		8,289		7,894		25,195		19,033
Net income from continuing operations		28,195		23,131		83,413		56,575
Discontinued operations
Income (loss) from discontinued operations before income taxes		87		(1,671)		324		(2,720)
Income tax expense (benefit)		21		(1,794)		76		(2,058)
Net income (loss) from discontinued operations, net of tax		66		123		248		(662)
Net income	$	28,261	$	23,254	$	83,661	$	55,913

Net income per share from continuing operations - basic	$	0.49	$	0.40	$	1.45	$	0.98
Net income (loss) per share from discontinued operations - basic	$	—	$	—	$	0.01	$	(0.01)
Net income per share - basic	$	0.49	$	0.40	$	1.46	$	0.97

Net income per share from continuing operations - diluted	$	0.48	$	0.40	$	1.41	$	0.97
Net income (loss) per share from discontinued operations - diluted	$	—	$	—	$	0.01	$	(0.01)
Net income per share - diluted	$	0.48	$	0.40	$	1.42	$	0.96
Weighted average shares - basic		57,198,778		57,588,168		57,221,174		57,433,477
Weighted average shares - diluted		58,628,306		58,471,192		58,932,146		58,051,833

Note: Compared to higher rates in recent periods, the effective tax rate for the three and nine months ended September 30, 2021 approximated 23% as a result of the impact of excess tax deductions related to stock-based compensation, recorded as discrete items. The large deductions and tax benefits resulted from the increase in the Company’s stock price as compared to the original grant date.



Balance sheet	September 30,			June 30,			December 31,			September 30,
	2021 (unaudited)			2021 (unaudited)			2020			2020 (unaudited)
		(in thousands, except share data)
Assets:
Cash and cash equivalents
Cash and due from banks	$	6,687		$	5,470		$	5,984		$	6,220
Interest earning deposits at Federal Reserve Bank		310,642			583,498			339,531			294,758
Total cash and cash equivalents		317,329			588,968			345,515			300,978

Investment securities, available-for-sale, at fair value		1,054,223			1,106,075			1,206,164			1,264,903
Commercial loans, at fair value		1,550,025			1,690,216			1,810,812			1,849,947
Loans, net of deferred fees and costs		3,136,662			2,915,344			2,652,323			2,488,760
Allowance for credit losses		(16,159	)		(15,292	)		(16,082	)		(15,727	)
Loans, net		3,120,503			2,900,052			2,636,241			2,473,033
Federal Home Loan Bank and Atlantic Central Bankers Bank stock		1,663			1,667			1,368			1,368
Premises and equipment, net		16,602			17,392			17,608			15,849
Accrued interest receivable		17,180			18,668			20,458			18,852
Intangible assets, net		2,547			2,646			2,845			2,563
Other real estate owned		2,145			—			—			—
Deferred tax asset, net		12,237			10,923			9,757			7,952
Investment in unconsolidated entity, at fair value		—			24,988			31,294			31,783
Assets held-for-sale from discontinued operations		87,904			97,496			113,650			122,253
Other assets		86,105			91,516			81,129			79,821
Total assets	$	6,268,463		$	6,550,607		$	6,276,841		$	6,169,302

Liabilities:
Deposits
Demand and interest checking	$	4,734,352		$	5,225,024		$	5,205,010		$	4,882,834
Savings and money market		378,160			459,688			257,050			505,928
Total deposits		5,112,512			5,684,712			5,462,060			5,388,762

Securities sold under agreements to repurchase		42			42			42			42
Short-term borrowings		300,000			—			—			—
Senior debt		98,590			98,498			98,314			98,222
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		39,715			39,901			40,277			40,462
Other liabilities		66,226			94,944			81,583			69,954
Total liabilities	$	5,630,486		$	5,931,498		$	5,695,677		$	5,610,843

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,330,846 and 57,490,874 shares issued and outstanding at September 30, 2021 and 2020, respectively		57,331			57,458			57,551			57,491
Additional paid-in capital		357,528			363,241			377,452			375,985
Retained earnings		212,114			183,853			128,453			104,282
Accumulated other comprehensive income		11,004			14,557			17,708			20,701
Total shareholders' equity		637,977			619,109			581,164			558,459

Total liabilities and shareholders' equity	$	6,268,463		$	6,550,607		$	6,276,841		$	6,169,302

Note: Previous balance sheets included investment in unconsolidated entity, which reflected Bancorp’s balance of the Walnut Street investment. Walnut Street was comprised of Bancorp loans sold to that entity, which was partially financed by an independent investor. In the third quarter of 2021, The Bancorp and that investor dissolved the entity, as the remaining balance did not warrant ongoing administrative and accounting expenses. As a result of the dissolution, the investment in unconsolidated entity, which had a June 30, 2021 balance of $25.0 million, was reclassified as follows. Approximately $22.9 million of loans were reclassified to commercial loans, at fair value and $2.1 million was reclassified to other real estate owned, as those assets continue to be reported at fair value.



Average balance sheet and net interest income		Three months ended September 30, 2021					Three months ended September 30, 2020
		(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**	$	4,573,431	$	46,357	4.05%	$	4,202,054	$	44,318	4.22%
Leases-bank qualified*		5,031		87	6.92%		8,026		146	7.28%
Investment securities-taxable		1,012,007		6,882	2.72%		1,300,191		7,911	2.43%
Investment securities-nontaxable*		3,558		32	3.60%		4,041		35	3.46%
Interest earning deposits at Federal Reserve Bank		479,350		167	0.14%		413,259		106	0.10%
Net interest earning assets		6,073,377		53,525	3.53%		5,927,571		52,516	3.54%

Allowance for credit losses		(16,277)					(14,587)
Assets held-for-sale from discontinued operations		90,598		754	3.33%		124,916		890	2.85%
Other assets		214,715					195,125
	$	6,362,413				$	6,233,025

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,124,189	$	1,063	0.08%	$	5,079,711	$	1,591	0.13%
Savings and money market		404,775		146	0.14%		484,323		139	0.11%
Total deposits		5,528,964		1,209	0.09%		5,564,034		1,730	0.12%

Short-term borrowings		13,097		7	0.21%		3,260		1	0.12%
Repurchase agreements		41		—	—		41		—	—
Subordinated debentures		13,401		112	3.34%		13,401		118	3.52%
Senior debt		100,329		1,279	5.10%		53,260		633	4.75%
Total deposits and liabilities		5,655,832		2,607	0.18%		5,633,996		2,482	0.18%

Other liabilities		78,038					53,260
Total liabilities		5,733,870					5,687,256

Shareholders' equity		628,543					545,769
	$	6,362,413				$	6,233,025
Net interest income on tax equivalent basis*			$	51,672				$	50,924

Tax equivalent adjustment				25					38

Net interest income			$	51,647				$	50,886
Net interest margin *					3.35%					3.37%

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020. ** Includes commercial loans, at fair value. All periods include non-accrual loans.

NOTE: In the table above, interest on loans for 2021 includes $1.2 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.



Average balance sheet and net interest income	Nine months ended September 30, 2021					Nine months ended September 30, 2020
		(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**	$	4,541,262	$	143,546	4.21%	$	3,798,104	$	124,924	4.39%
Leases-bank qualified*		5,925		301	6.77%		9,401		509	7.22%
Investment securities-taxable		1,094,633		22,891	2.79%		1,343,211		28,594	2.84%
Investment securities-nontaxable*		3,824		99	3.45%		4,537		110	3.23%
Interest earning deposits at Federal Reserve Bank		781,606		650	0.11%		444,323		1,836	0.55%
Net interest earning assets		6,427,250		167,487	3.47%		5,599,576		155,973	3.71%

Allowance for credit losses		(16,254)					(13,225)
Assets held for sale from discontinued operations		99,472		2,388	3.20%		130,880		3,259	3.32%
Other assets		225,802					243,629
	$	6,736,270				$	5,960,860

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,452,604	$	4,007	0.10%	$	4,858,666	$	9,676	0.27%
Savings and money market		446,016		487	0.15%		298,049		309	0.14%
Time deposits		—		—	—		106,113		1,483	1.86%
Total deposits		5,898,620		4,494	0.10%		5,262,828		11,468	0.29%

Short-term borrowings		8,717		15	0.23%		25,419		181	0.95%
Repurchase agreements		41		—	—		51		—	—
Subordinated debentures		13,401		337	3.35%		13,401		408	4.06%
Senior debt		100,237		3,838	5.11%		17,883		633	4.72%
Total deposits and liabilities		6,021,016		8,684	0.19%		5,319,582		12,690	0.32%

Other liabilities		105,683					119,961
Total liabilities		6,126,699					5,439,543

Shareholders' equity		609,571					521,317
	$	6,736,270				$	5,960,860
Net interest income on tax equivalent basis*			$	161,191				$	146,542

Tax equivalent adjustment				84					130

Net interest income			$	161,107				$	146,412
Net interest margin *					3.29%					3.41%

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2021 and 2020. ** Includes commercial loans, at fair value. All periods include non-accrual loans.

NOTE: In the table above, the 2021 interest on loans reflects $4.6 million of interest and fees which were earned on a short-term line of credit to another institution to initially fund PPP loans, which did not significantly increase average loans or assets and which are not expected to recur. Interest on loans in 2021 also includes $4.9 million of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $3.7 million. Increases in interest earning deposits at the Federal Reserve Bank reflect increased deposits resulting from stimulus payments distributed to a large segment of the population, resulting from December 2020 federal legislation.


Allowance for credit losses	Nine months ended				Year ended
	September 30,		September 30,		December 31,
	2021 (unaudited)		2020 (unaudited)		2020
		(dollars in thousands)

Balance in the allowance for credit losses at beginning of period (1)	$	16,082	$	12,875	$	12,875

Loans charged-off:
SBA non-real estate		896		1,350		1,350
SBA commercial mortgage		23		–		–
Direct lease financing		248		2,178		2,243
SBLOC		15		–		–
Consumer - home equity		10		–		–
Total		1,192		3,528		3,593

Recoveries:
SBA non-real estate		18		82		103
SBA commercial mortgage		9		–		–
Direct lease financing		50		502		570
Total		77		584		673
Net charge-offs		1,115		2,944		2,920
Provision credited to allowance, excluding commitment provision		1,192		5,796		6,127

Balance in allowance for credit losses at end of period	$	16,159	$	15,727	$	16,082
Net charge-offs/average loans		0.04%		0.08%		0.07%
Net charge-offs/average assets		0.02%		0.05%		0.05%

(1) Excludes activity from assets held-for-sale from discontinued operations.



Loan portfolio	September 30,		June 30,		December 31,		September 30,
	2021		2021		2020		2020
	(in thousands)

SBL non-real estate	$	171,845	$	228,958	$	255,318	$	293,488
SBL commercial mortgage		367,272		343,487		300,817		270,264
SBL construction		23,117		18,494		20,273		27,169
Small business loans *		562,234		590,939		576,408		590,921
Direct lease financing		514,068		506,424		462,182		430,675
SBLOC / IBLOC**		1,834,523		1,729,628		1,550,086		1,428,253
Advisor financing ***		81,143		72,190		48,282		26,600
Real estate bridge lending		128,699		–		–		–
Other loans ****		4,917		5,840		6,426		6,003
		3,125,584		2,905,021		2,643,384		2,482,452
Unamortized loan fees and costs		11,078		10,323		8,939		6,308
Total loans, net of unamortized fees and costs	$	3,136,662	$	2,915,344	$	2,652,323	$	2,488,760



Small business portfolio	September 30,		June 30,		December 31,		September 30,
	2021		2021		2020		2020
		(in thousands)

SBL, including unamortized fees and costs	$	566,472	$	593,401	$	577,944	$	590,314
SBL, included in commercial loans, at fair value		214,301		225,534		243,562		250,958
Total small business loans	$	780,773	$	818,935	$	821,506	$	841,272

* The preceding table shows small business loans and small business loans held at fair value. The small business loans held at fair value are comprised of the government guaranteed portion of SBA 7a loans at the dates indicated. A reduction in SBL non-real estate loans from $229.0 million at June 30, 2021 to $171.8 million at September 30, 2021 resulted from U.S. government repayments of $58.2 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $71.3 million at September 30, 2021 and $165.7 million at December 31, 2020, respectively. ** Securities Backed Lines of Credit, or SBLOC, are collateralized by marketable securities, while Insurance Backed Lines of Credit, or IBLOC, are collateralized by the cash surrender value of insurance policies. *** In 2020, we began originating loans to investment advisors for purposes of debt refinance, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value ratios of 70%, based on third-party business appraisals, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate. **** Included in the table above under Other loans are demand deposit overdrafts reclassified as loan balances totaling $272,000 and $663,000 at September 30, 2021 and December 31, 2020, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses and have been immaterial.

Small business loans as of September 30, 2021

	Loan principal
	(in millions)
U.S. government guaranteed portion of SBA loans (a)	$	370
Paycheck Protection Program loans (PPP) (a)		71
Commercial mortgage SBA (b)		195
Construction SBA (c)		13
Non-guaranteed portion of U.S. government guaranteed 7a loans (d)		104
Non-SBA small business loans (e)		18
Total principal	$	771
Unamortized fees and costs		10
Total small business loans	$	781

(a) This is the portion of SBA 7a loans (7a) and PPP loans which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk. (b) Substantially all these loans are made under the SBA 504 Fixed Asset Financing program (504) which dictates origination date loan-to-value percentages (“LTV”), generally 50-60%, to which the Bank adheres. (c) Of the $13 million in Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $2 million are SBA interim loans with an approved SBA post-construction full takeout/payoff. (d) The $104 million represents the non-guaranteed portion of 7a loans which are 70% or more guaranteed by the U.S. government. 7a loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7a and 504 loans require the personal guaranty of all 20% or greater owners. (e) The $18 million of non-SBA loans is comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators, are considered seasoned and have performed as agreed.

Small business loans by type as of September 30, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)

	SBL commercial mortgage*		SBL construction*		SBL non-real estate		Total		% Total
		(in millions)
Hotels and motels	$	67	$	4	$	—	$	71	21%
Full-service restaurants		16		1		3		20	6%
Baked goods stores		4		—		11		15	5%
Child day care services		14		—		1		15	5%
Car washes		10		2		—		12	4%
Lessors of nonresidential buildings (except miniwarehouses)		10		—		—		10	3%
Assisted living facilities for the elderly		10		—		—		10	3%
Offices of lawyers		9		—		—		9	3%
Funeral homes and funeral services		9		—		—		9	3%
General warehousing and storage		7		—		—		7	2%
Limited-service restaurants		2		1		3		6	2%
Fitness and recreational sports centers		—		4		2		6	2%
Amusement and recreation industries		5		—		1		6	2%
Outpatient mental health and substance abuse centers		5		—		—		5	1%
Spectator sports		5		—		—		5	1%
Perishable prepared food manufacturing		5		—		—		5	1%
Gasoline stations with convenience stores		5		—		—		5	1%
Offices of dentists		3		—		—		3	1%
Warehousing and storage		3		—		—		3	1%
New car dealers		3		—		—		3	1%
Miscellaneous wood product manufacturing		3		—		—		3	1%
Plumbing, heating, and air-conditioning contractors		3		—		—		3	1%
Offices of physicians (except mental health specialists)		3		—		—		3	1%
Technical and trade schools		—		3		—		3	1%
General purpose machinery manufacturing		2		—		—		2	1%
Pet care (except veterinary) services		2		—		—		2	1%
Landscaping services		1		—		2		3	1%
Sewing, needlework, and piece goods stores		2		—		—		2	1%
Automotive body, paint, and interior repair and maintenance		2		—		—		2	1%
Vocational rehabilitation services		2		—		2		4	1%
Amusement arcades		2		—		—		2	1%
Lessors of real estate property		2		—		—		2	1%
Other**		49		1		25		75	20%
Total	$	265	$	16	$	50	$	331	100%

* Of the SBL commercial mortgage and SBL construction loans, $62 million represents the total of the non-guaranteed portion of SBA 7a loans and non-SBA loans. The balance of those categories represents SBA 504 loans with 50%-60% origination date loan-to-values. **Loan types less than $2 million are spread over a hundred different classifications such as Commercial Printing, Pet and Pet Supplies Stores, Securities Brokerage, etc.

State diversification as of September 30, 2021
(Excludes government guaranteed portion of SBA 7a loans and PPP loans)

	SBL commercial mortgage*		SBL construction*		SBL non-real estate		Total		% Total
		(in millions)
Florida	$	56	$	—	$	8	$	64	19%
California		42		1		4		47	14%
North Carolina		23		2		3		28	9%
Pennsylvania		23		4		3		30	8%
Illinois		22		—		3		25	8%
New York		14		4		3		21	6%
New Jersey		12		—		6		18	6%
Texas		12		—		4		16	5%
Virginia		9		—		2		11	3%
Tennessee		10		—		—		10	3%
Colorado		3		5		2		10	3%
Georgia		7		—		2		9	3%
Michigan		4		—		1		5	2%
Washington		3		—		—		3	1%
Ohio		3		—		—		3	1%
Other states		22		—		9		31	9%
Total	$	265	$	16	$	50	$	331	100%

Top 10 loans as of September 30, 2021

Type*	State		SBL commercial mortgage*
		(in millions)
Hotel		FL	$	9
Lawyer's office		CA		9
Warehouse		PA		7
Hotel		NC		6
Assisted living facility		FL		5
Mental health and substance abuse centers		FL		5
Hotel		NC		5
Prepared food manufacturing		NJ		4
Hotel		PA		4
Hotel		TN		4
Total			$	58
* All the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value and are in the commercial mortgage category. The top 10 loan 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 September 30, 2021

Type	# Loans		Balance	Weighted average origination date LTV	Weighted average interest rate
	(dollars in millions)
Real estate bridge lending (multi-family apartments)*	15	$	129	75%	4.22%

Commercial real estate loans, at fair value:
Multi-family (apartments)*	115	$	1,193	76%	4.75%
Hospitality (hotels and lodging)	9		66	65%	5.69%
Retail	6		61	71%	4.33%
Other	8		21	73%	5.16%
	138		1,341	75%	4.78%
Fair value adjustment			(6)
Total commercial real estate loans, at fair value			1,335
Total commercial real estate loans		$	1,464	75%	4.75%

*In the third quarter of 2021, we recommenced the origination of multi-family apartment loans. These are similar to the multi-family apartment loans carried at fair value, but at origination are intended to be held on the balance sheet, so are not accounted for at fair value.


State diversification as of September 30, 2021				15 largest loans (all multi-family) as of September 30, 2021

State		Balance	Origination date LTV	State		Balance	Origination date LTV
(in millions)				(in millions)
Texas	$	459	77%	North Carolina	$	44	78%
Georgia		193	76%	Texas		39	79%
Arizona		79	75%	Texas		36	80%
North Carolina		79	77%	Missouri		30	72%
Ohio		58	69%	Texas		30	75%
Alabama		57	76%	Nevada		29	80%
Virginia		57	73%	Texas		27	77%
Other states each