The Bancorp, Inc. Reports Fourth Quarter 2021 Financial Results

The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2021.

Highlights

• For the quarter ended December 31, 2021, The Bancorp earned net income of $27.0 million, or $0.46 diluted earnings per share.

• Return on assets and equity for the quarter ended December 31, 2021 amounted to 1.7% and 17%, respectively, compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020 (all percentages “annualized.”)

• Net interest margin amounted to 3.51% for the quarter ended December 31, 2021, compared to 3.58% for the quarter ended December 31, 2020.

• Net interest income was $52.2 million for the quarter ended December 31, 2021 compared to $51.7 million for the quarter ended December 31, 2020. In the fourth quarter of 2021, growth in net interest income was significantly offset by a reduction of $3.8 million resulting from non-SBA commercial loan prepayments. However, net realized and unrealized gains on commercial loans increased over $4 million over those respective periods, primarily as a result of fees related to those prepayments. We have resumed the origination of such loans, identified as real estate bridge loans, which are intended to offset the impact of prepayments and payoffs, and grow the portfolio.

• Excluding loans at fair value, which were originally generated for sale, total loans increased 41% to $3.75 billion at December 31, 2021, compared to $2.65 billion at December 31, 2020.

• Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $2.44 billion, or 11%, to $24.96 billion for the quarter ended December 31, 2021 compared to the quarter ended December 31, 2020.

• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and investment advisor financing loans collectively increased 28% year over year and 7% quarter over quarter to $2.05 billion at December 31, 2021.

• Small Business Loans, including those held at fair value, grew 6% year over year to $696.2 million at December 31, 2021. That growth is exclusive of Paycheck Protection Program (“PPP”) loan balances of $44.8 million and $165.7 million, respectively, at December 31, 2021 and December 31, 2020.

• Direct lease financing balances increased 15% year over year to $531.0 million at December 31, 2021.

• We resumed non-SBA commercial real estate lending in the third quarter of 2021 classified as real estate bridge lending. As of December 31, 2021 total real estate bridge loans amounted to $621.7 million, collateralized by apartment buildings.

• The average interest rate on $5.47 billion of average deposits and interest-bearing liabilities during the fourth quarter of 2021 was 0.19%. Average deposits of $5.31 billion for the fourth quarter 2021, reflected an increase of 1% from the $5.25 billion of average deposits for the quarter ended December 31, 2020.

• As of December 31, 2021, substantially all the borrowers with COVID-19 related payment deferrals had resumed making payments.

• As of December 31, 2021, 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 10.40%, 14.72%, 15.13% and 14.72%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and The Bank each remain well capitalized under banking regulations.

• Book value per common share at December 31, 2021 was $11.37 per share compared to $10.10 per share at December 31, 2020, an increase of 13%, primarily as a result of retained earnings.

• The Bancorp repurchased 350,431 shares of its common stock at an average cost of $28.54 per share during the quarter ended December 31, 2021.

“Our lending platform and fin-tech ecosystem will support continued growth into 2022,” said The Bancorp CEO and President Damian Kozlowski. “We continue to improve our performance, while delivering enhanced capabilities to our many innovative partners which are revolutionizing the financial services industry. Additionally, we reaffirm our 2022 guidance of $2.15 per share, which excludes the net impact of planned stock repurchases.”

The Bancorp reported net income of $27.0 million, or $0.46 per diluted share, for the quarter ended December 31, 2021, compared to net income of $24.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 28, 2022 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 7390458. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 4, 2022 by dialing 855.859.2056, access code 7390458.

About The Bancorp

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. in June 2021, 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. As evidence of its company-wide commitment to excellence, The Bancorp has also been ranked in October 2020 as one of the 100 Fastest-Growing Companies by Fortune, a Top 50 Employer in March 2021 by Equal Opportunity Magazine and was selected to be included in the S&P Small Cap 600 in May 2021. 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 “intend,” “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.

Note: Compared to higher rates in recent periods, the respective effective tax rates for the three and twelve months ended December 31, 2021 approximated 24% and 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.

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.

* 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 $991,000 of interest and fees on PPP loans. In 2020 the table above includes comparable PPP interest and fees of $2.1 million.

* 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 each of 2021 and 2020 also includes $5.8 million of interest and fees on PPP loans. 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.

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

* 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 certain SBA loans at the dates indicated (in thousands). A reduction in SBL non-real estate from $171.8 million to $147.7 million in the fourth quarter of 2021 resulted from U.S. government repayments of $26.5 million of PPP loans authorized by The Consolidated Appropriations Act, 2021. PPP loans totaled $44.8 million at December 31, 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 eligible life 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 $322,000 and $663,000 at December 31, 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 December 31, 2021

(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 $17 million in Construction SBA loans, $13 million are 504 first mortgages with an origination date LTV of 50-60% and $4 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $100 million represents the unguaranteed 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 $17 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 December 31, 2021

(Excludes government guaranteed portion of SBA 7a loans and PPP loans)

* Of the SBL commercial mortgage and SBL construction loans, $65 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 December 31, 2021

(Excludes government guaranteed portion of SBA 7a loans and PPP loans)