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The Bancorp, Inc. Reports Third Quarter 2021 Financial Results

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WILMINGTON, Del., October 28, 2021--(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

...