The Bancorp, Inc. 8K Reports Fourth Quarter 2020 Financial Results | TBBK 28 Jan 21

Exhibit 99.1

The Bancorp, Inc. Reports Fourth Quarter 2020 Financial Results

Wilmington, DE – January 28, 2021 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter of 2020.

Highlights

For the quarter ended December 31, 2020, The Bancorp earned net income of $24.0 million from continuing operations, and $0.41 diluted earnings per share from combined continuing and discontinued operations.

Annualized return on assets and equity for the quarter ended December 31, 2020 amounted to 1.6% and 17%, respectively, compared to 1.5% and 17% (annualized), respectively, for the quarter ended September 30, 2020.

Net interest margin amounted to 3.58% for the quarter ended December 31, 2020, compared to 3.12% for the quarter ended December 31, 2019 and 3.37% for the quarter ended September 30, 2020.

Net interest income increased 47% to $51.7 million for the quarter ended December 31, 2020, compared to $35.2 million for the quarter ended December 31, 2019.

Average loans and leases, including loans at fair value, increased 72% to $4.34 billion for the quarter ended December 31, 2020, compared to $2.53 billion for the quarter ended December 31, 2019.

Prepaid, debit card and related fees increased 5% to $17.8 million for the quarter ended December 31, 2020, compared to $17.0 million for the quarter ended December 31, 2019. Gross dollar volume (GDV), representing total spend on cards, increased 18% between those periods.

SBLOC (securities-backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans increased 56% year over year and 10% quarter over quarter to $1.6 billion at December 31, 2020.

Small Business Loans, including those held at fair value, increased 14% year over year to $654 million at December 31, 2020, exclusive of $166 million of Paycheck Protection Program balances.

The average interest rate on $5.40 billion of average deposits and interest-bearing liabilities in the fourth quarter of 2020 was 0.24%. Average prepaid and debit card account deposits of $3.59 billion for fourth quarter 2020, reflected an increase of 33% over the $2.70 billion for the quarter ended December 31, 2019.

Consolidated leverage ratio was 9.20% at December 31, 2020. The Bancorp and its subsidiary, The Bancorp Bank (the “Bank”), remain well capitalized.

Book value per common share at December 31, 2020 was $10.10 per share compared to $8.52 at December 31, 2019, an increase of 19%, primarily as a result of retained earnings per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “We have completed our strategic business plan, strategic agenda and budget for 2021. The main focus continues to be product and platform expansion with a rigorous focus on building the best payments ecosystem in the financial services industry. Our plan includes a comprehensive and integrated analysis of the market and competitors, and the needed investments to build towards the future and create scalable core competencies that our partners can use to innovate and grow. We also continue to invest heavily in anti-money laundering and compliance to have best-in-class capabilities to meet regulatory guidance and expectations. Our guidance target for 2021 is $1.70 a share or approximately $100 million in net income, which does not include the impact of planned share repurchases.”

The Bancorp reported net income of $24.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020, compared to net income of $1.9 million, or $0.03 per diluted share, for the quarter ended December 31, 2019. 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 9.20%, 14.43%, 14.84% and 14.43%, 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, January 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 8952947. 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 5, 2021 by dialing 855.859.2056, access code 8952947.

The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company’s only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities-backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.thebancorp.com.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp’s business which are not historical facts are "forward-looking statements." 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. These risks and uncertainties include those relating to the on-going COVID-19 pandemic, the impact it will have on our business and the industry as a whole, and the resulting governmental and societal responses. For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see The Bancorp’s filings with the Securities Exchange Commission, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those filings. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this earnings release, except as may be required under applicable law.

The Bancorp, Inc. Contact

Andres Viroslav

Director, Investor Relations

215-861-7990

aviroslav@thebancorp.com

The Bancorp, Inc.

Financial highlights

(unaudited)

	Three months ended						Year ended
	December 31,						December 31,
Condensed income statement	2020			2019			2020			2019
	(dollars in thousands except per share data)

Net interest income	$	51,713			35,179		$	194,866		$	141,288
Provision for credit losses		554			1,450			6,352			4,400
Non-interest income
Service fees on deposit accounts		7			6			30			75
ACH, card and other payment processing fees		1,788			1,962			7,101			9,376
Prepaid, debit card and related fees		17,818			17,004			74,465			65,141
Net realized and unrealized gains (losses) on commercial loans originated for sale		1,538			(247	)		(3,874	)		24,072
Change in value of investment in unconsolidated entity		—			—			(45	)		—
Leasing related income		499			932			3,294			3,243
Other non-interest income		1,650			841			3,646			2,220
Total non-interest income		23,300			20,498			84,617			104,127
Non-interest expense
Salaries and employee benefits		27,087			24,067			101,737			94,259
Data processing expense		1,174			1,210			4,712			4,894
Legal expense		1,005			995			5,141			5,319
FDIC insurance		2,121			2,141			9,808			7,025
Software		3,570			3,551			14,028			12,731
SEC settlement		—			7,500			—			8,900
Lease termination expense		—			—			—			908
Other non-interest expense		6,826			8,258			29,421			34,485
Total non-interest expense		41,783			47,722			164,847			168,521
Income from continuing operations before income taxes		32,676			6,505			108,284			72,494
Income tax expense		8,655			3,641			27,688			21,226
Net income from continuing operations		24,021			2,864			80,596			51,268
Discontinued operations
Income (loss) from discontinued operations before income taxes		(1,096	)		(1,365	)		(3,816	)		510
Income tax expense (benefit)		(1,246	)		(355	)		(3,304	)		219
Net income (loss) from discontinued operations, net of tax		150			(1,010	)		(512	)		291
Net income	$	24,171		$	1,854		$	80,084		$	51,559

Net income per share from continuing operations - basic	$	0.42		$	0.05		$	1.40		$	0.90
Net income (loss) per share from discontinued operations - basic	$	—		$	(0.02	)	$	(0.01	)	$	0.01
Net income per share - basic	$	0.42		$	0.03		$	1.39		$	0.91

Net income per share from continuing operations - diluted	$	0.41		$	0.05		$	1.38		$	0.89
Net income (loss) per share from discontinued operations - diluted	$	—		$	(0.02	)	$	(0.01	)	$	0.01
Net income per share - diluted	$	0.41		$	0.03		$	1.37		$	0.90
Weighted average shares - basic		57,597,124			56,924,543			57,474,612			56,765,635
Weighted average shares - diluted		59,146,222			57,847,509			58,411,222			57,338,985

Balance sheet	December 31,			September 30,			June 30,			December 31,
	2020			2020			2020			2019
	(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks	$	5,984		$	6,220		$	5,094		$	19,928
Interest earning deposits at Federal Reserve Bank		339,531			294,758			475,627			924,544
Total cash and cash equivalents		345,515			300,978			480,721			944,472

Investment securities, available-for-sale, at fair value		1,206,164			1,264,903			1,324,447			1,320,692
Investment securities, held-to-maturity, at cost		—			—			—			84,387
Commercial loans, at fair value (held-for-sale at June 30, 2020 and December 31, 2019		1,810,812			1,849,947			1,807,630			1,180,546
Loans, net of deferred fees and costs		2,652,323			2,488,760			2,322,737			1,824,245
Allowance for credit losses		(16,082	)		(15,727	)		(14,625	)		(10,238	)
Loans, net		2,636,241			2,473,033			2,308,112			1,814,007
Federal Home Loan Bank & Atlantic Community Bancshares stock		1,368			1,368			1,368			5,342
Premises and equipment, net		17,608			15,849			16,701			17,538
Accrued interest receivable		20,458			18,852			18,897			13,619
Intangible assets, net		2,447			2,563			2,710			2,315
Deferred tax asset, net		10,611			7,952			7,921			12,538
Investment in unconsolidated entity		31,294			31,783			34,064			39,154
Assets held for sale from discontinued operations		113,650			122,253			128,463			140,657
Other assets		81,265			79,821			83,003			81,696
Total assets	$	6,277,433		$	6,169,302		$	6,214,037		$	5,656,963

Liabilities:
Deposits
Demand and interest checking	$	5,205,010		$	4,882,834		$	5,089,741		$	4,402,740
Savings and money market		257,050			505,928			455,458			174,290
Time deposits		—			—			—			475,000
Total deposits		5,462,060			5,388,762			5,545,199			5,052,030

Securities sold under agreements to repurchase		42			42			42			82
Senior debt		98,314			98,222			—			—
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		40,277			40,462			40,639			40,991
Other liabilities		82,175			69,954			81,677			65,962
Total liabilities	$	5,696,269		$	5,610,843		$	5,680,958		$	5,172,466

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,650,629 and 56,940,521 shares issued and outstanding at December 31, 2020 and 2019, respectively		57,651			57,591			57,555			56,941
Treasury stock (100,000 shares)		(866	)		(866	)		(866	)		(866	)
Additional paid-in capital		378,218			376,751			374,578			371,633
Retained earnings		128,453			104,282			81,028			50,742
Accumulated other comprehensive income		17,708			20,701			20,784			6,047
Total shareholders' equity		581,164			558,459			533,079			484,497

Total liabilities and shareholders' equity	$	6,277,433		$	6,169,302		$	6,214,037		$	5,656,963

Average balance sheet and net interest income	Three months ended December 31, 2020								Three months ended December 31, 2019
	(dollars in thousands)
	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate

Interest earning assets:
Loans net of deferred fees and costs	$	4,329,794		$	45,524		4.21	%	$	2,514,401		$	31,177		4.96	%
Leases - bank qualified*		7,346			138		7.51	%		12,633			229		7.25	%
Investment securities-taxable		1,239,062			9,229		2.98	%		1,441,895			9,636		2.67	%
Investment securities-nontaxable*		4,041			35		3.46	%		5,825			47		3.23	%
Interest earning deposits at Federal Reserve Bank		193,560			48		0.10	%		569,804			2,505		1.76	%
Net interest earning assets		5,773,803			54,974		3.81	%		4,544,558			43,594		3.84	%

Allowance for credit losses		(15,804	)							(10,162	)
Assets held for sale from discontinued operations		117,482			965		3.29	%		149,301			1,416		3.79	%
Other assets		220,595								254,809
	$	6,096,076							$	4,938,506

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	4,978,562		$	1,679		0.13	%	$	3,749,860		$	5,405		0.58	%
Savings and money market		270,820			134		0.20	%		66,151			51		0.31	%
Time		—			—		—%			406,730			2,217		2.18	%
Total deposits		5,249,382			1,813		0.14	%		4,222,741			7,673		0.73	%

Short-term borrowings		32,989			17		0.21	%		102,832			507		1.97	%
Securities sold under agreements to repurchase		41			—		—%			84			—		—%
Subordinated debentures		13,401			116		3.46	%		13,401			177		5.28	%
Senior debt		100,031			1,279		5.12	%		—			—		—%
Total deposits and liabilities		5,395,844			3,225		0.24	%		4,339,058			8,357		0.77	%

Other liabilities		130,420								115,112
Total liabilities		5,526,264								4,454,170

Shareholders' equity		569,812								484,336
	$	6,096,076							$	4,938,506
Net interest income on tax equivalent basis*				$	52,714							$	36,653

Tax equivalent adjustment					36								58

Net interest income				$	52,678							$	36,595
Net interest margin *							3.58	%							3.12	%

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2020 and 2019.

Average balance sheet and net interest income	Year ended December 31, 2020								Year ended December 31, 2019
	(dollars in thousands)
	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate

Interest earning assets:
Loans net of deferred fees and costs	$	3,931,758		$	170,449		4.34	%	$	2,402,686		$	126,176		5.25	%
Leases - bank qualified*		8,885			647		7.28	%		14,968			1,177		7.86	%
Investment securities-taxable		1,317,031			37,822		2.87	%		1,406,247			42,286		3.01	%
Investment securities-nontaxable*		4,412			145		3.29	%		6,533			215		3.29	%
Interest earning deposits at Federal Reserve Bank		381,290			1,885		0.49	%		472,279			10,007		2.12	%
Net interest earning assets		5,643,376			210,948		3.74	%		4,302,713			179,861		4.18	%

Allowance for credit losses		(13,878	)							(9,696	)
Assets held for sale from discontinued operations		127,519			4,222		3.31	%		169,986			6,710		3.95	%
Other assets		226,210								254,674
	$	5,983,227							$	4,717,677

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	4,864,236		$	11,356		0.23	%	$	3,817,176		$	30,664		0.80	%
Savings and money market		291,204			442		0.15	%		37,671			181		0.48	%
Time		79,439			1,483		1.87	%		170,438			3,555		2.09	%
Total deposits		5,234,879			13,281		0.25	%		4,025,285			34,400		0.85	%

Short-term borrowings		27,322			198		0.72	%		129,031			3,131		2.43	%
Securities sold under agreements to repurchase		49			—		—%			90			—		—%
Subordinated debentures		13,401			524		3.91	%		13,401			750		5.60	%
Senior debt		38,532			1,913		4.96	%		—			—		—%
Total deposits and liabilities		5,314,183			15,916		0.30	%		4,167,807			38,281		0.92	%

Other liabilities		137,983								104,233
Total liabilities		5,452,166								4,272,040

Shareholders' equity		531,061								445,637
	$	5,983,227							$	4,717,677
Net interest income on tax equivalent basis*				$	199,254							$	148,290

Tax equivalent adjustment					166								292

Net interest income				$	199,088							$	147,998
Net interest margin *							3.45	%							3.32	%

* Full taxable equivalent basis, using a statutory rate of 21% for 2020 and 2019.

Allowance for credit losses:	Year ended
	December 31,			December 31,
	2020			2019
	(dollars in thousands)

Balance in the allowance for loan and lease losses at beginning of period (1)	$	12,875		$	8,653

Loans charged-off:
SBA non-real estate		1,350			1,362
Direct lease financing		2,243			528
Other consumer loans		—			1,103
Total		3,593			2,993

Recoveries:
SBA non-real estate		103			125
Direct lease financing		570			51
Other consumer loans		—			2
Total		673			178
Net charge-offs		2,920			2,815
Provision credited to allowance, excluding commitment provision		6,127			4,400

Balance in allowance for credit losses at end of period	$	16,082		$	10,238
Net charge-offs/average loans		0.07	%		0.12	%
Net charge-offs/average assets		0.05	%		0.06	%

(1) Excludes activity from assets held for sale from discontinued operations. The beginning balance for the 2020 activity differs from the December 31, 2019 balance as a result of the implementation of Current Expected Credit Loss accounting.

Loan portfolio:	December 31,		September 30,		June 30,		December 31,
	2020		2020		2020		2019
	(in thousands)

SBL non-real estate	$	255,318	$	293,488	$	293,692		84,579
SBL commercial mortgage		300,817		270,264		259,020		218,110
SBL construction		20,273		27,169		33,193		45,310
Small business loans *		576,408		590,921		585,905		347,999
Direct lease financing		462,182		430,675		422,505		434,460
SBLOC / IBLOC**		1,550,086		1,428,253		1,287,350		1,024,420
Advisor financing ***		48,282		26,600		15,529		—
Other specialty lending		2,179		2,194		2,706		3,055
Other consumer loans ****		4,247		3,809		4,003		4,554
		2,643,384		2,482,452		2,317,998		1,814,488
Unamortized loan fees and costs		8,939		6,308		4,739		9,757
Total loans, net of unamortized fees and costs	$	2,652,323	$	2,488,760	$	2,322,737		1,824,245

Small business portfolio:	December 31,		September 30,		June 30,		December 31,
	2020		2020		2020		2019
	(in thousands)

SBL, including unamortized fees and costs		577,944		590,314		583,935		352,214
SBL, included in commercial loans held at fair value		243,562		250,958		225,401		220,358
Total small business loans	$	821,506	$	841,272	$	809,336	$	572,572

* 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 (in thousands). A reduction in SBL non-real estate from $293.5 million to $255.3 million in the fourth quarter resulted from the commencement of U.S. treasury repayments of PPP loans which totaled $42.1 million in fourth quarter 2020.

** Securities Backed Lines of Credit (SBLOC) are collateralized by marketable securities, while Insurance Backed Lines of Credit (IBLOC) are collateralized by the cash surrender value of insurance policies.

*** 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 consumer loans are demand deposit overdrafts reclassified as loan balances totaling $663,000 and $882,000 at December 31, 2020 and December 31, 2019, 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, 2020

	Loan principal
	(in millions)
U.S. government guaranteed portion of SBA loans (a)	$	338
Paycheck Protection Program Loans (PPP) (a)		168
Commercial mortgage SBA (b)		176
Construction SBA (c)		14
Unguaranteed portion of U.S. government guaranteed loans (d)		101
Non-SBA small business loans (e)		18
Total principal	$	815
Unamortized fees and costs		7
Total small business loans	$	822

(a) This is the portion of SBA 7a loans (7a) and PPP which have been guaranteed by the U.S. government, and therefore are assumed to have no credit risk.

(b) Substantially all of 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 $14 million Construction SBA loans, $11 million are 504 first mortgages with an origination date LTV of 50-60% and $3 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $101 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 $18 million non-SBA loans are mainly comprised of approximately 20 conventional coffee/doughnut/carryout franchisee note purchases. The majority of purchased notes were made to multi-unit operators and are considered seasoned and have performed as agreed. A $2 million guaranty by the seller, for an 11% first loss piece, is in place until August 2021.

Additionally, the CARES Act of 2020 provided six months of principal and interest payments on 7a loans which generally ended in fourth quarter 2020 or in first quarter 2021. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for at least an additional three months of such payments on 7a loans, with up to eight months of payments on hotel and restaurant loans. Unlike the six months of CARES Act payments, these additional payments will be capped at $9,000 per month.

Small business loans by type as of December 31, 2020

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

	SBL commercial mortgage*		SBL construction*		SBL non-real estate		Total		% Total
	(in millions)
Hotels	$	66	$	3	$	—	$	69		22	%
Full-service restaurants		12		1		3		16		5	%
Baked goods stores		4		—		12		16		5	%
Child day care services		14		1		1		16		5	%
Car washes		10		1		—		11		4	%
Offices of lawyers		10		—		—		10		3	%
Assisted living facilities for the elderly		1		8		—		9		3	%
Limited-service restaurants		4		—		4		8		2	%
Funeral homes and funeral services		8		—		—		8		3	%
Fitness and recreational sports centers		5		1		2		8		3	%
General warehousing and storage		7		—		—		7		2	%
All other amusement and recreation industries		5		—		1		6		2	%
Outpatient mental health and substance abuse centers		5		—		—		5		2	%
Gasoline stations with convenience stores		5		—		—		5		2	%
Caterers		4		—		—		4		1	%
Offices of dentists		4		—		—		4		1	%
Other warehousing and storage		3		—		—		3		1	%
New car dealers		3		—		—		3		1	%
Drinking places (alcoholic beverages)		2		—		1		3		1	%
Other**		66		—		32		98		32	%
Total	$	238	$	15	$	56	$	309		100	%

* Of the SBL commercial mortgage and SBL construction loans, $63.3 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, 2020

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

	SBL commercial mortgage*		SBL construction*		SBL non-real estate		Total		% Total
	(in millions)
Florida	$	45	$	8	$	8	$	61		20	%
California		37		1		5		43		14	%
Pennsylvania		30		—		4		34		11	%
Illinois		25		1		3		29		9	%
North Carolina		22		1		3		26		9	%
New York		10		3		5		18		6	%
Texas		12		—		5		17		6	%
Tennessee		11		—		1		12		4	%
New Jersey		4		—		7		11		4	%
Virginia		9		—		2		11		4	%
Georgia		5		—		2		7		2	%
Colorado		3		1		2		6		2	%
Michigan		3		—		1		4		1	%
Ohio		3		—		1		4		1	%
Washington		3		—		—		3		1	%
Other States		16		—		7		23		6	%
Total	$	238	$	15	$	56	$	309		100	%

Top 10 loans as of December 31, 2020

Type*	State	SBL commercial mortgage*		SBL construction*		Total
	(in millions)
Lawyers office	CA	$	9	$	—	$	9
Hotel	FL		9		—		9
General warehouse and storage	PA		7		—		7
Hotel	NC		6		—		6
Assisted living facility for the elderly	FL		—		5		5
Outpatient mental health and substance abuse center	FL		5		—		5
Hotel	NC		5		—		5
Fitness and recreation sports center	PA		4		—		4
Hotel	PA		4		—		4
Hotel	TN		4		—		4
Total		$	53	$	5	$	58

* All of the top 10 loans are 504 SBA loans with 50%-60% origination date loan-to-value. The top 10 loan table above does not include loans to the extent that they are U.S. government guaranteed.

Commercial real estate loans, at fair value, excluding SBA loans, are as follows including LTV at origination:

Type as of December 31, 2020

Type	# Loans		Balance			Origination date LTV			Weighted average minimum interest rate
	(dollars in millions)
Multifamily (apartments)		161	$	1,427			76	%		4.77	%
Hospitality (hotels and lodging)		11		68			65	%		5.75	%
Retail		8		52			70	%		4.62	%
Other		7		25			70	%		5.22	%
		187	$	1,572			76	%		4.82	%
Fair value adjustment				(5	)
Total			$	1,567

State diversification as of December 31, 2020				15 largest loans (all multifamily) as of December 31, 2020

State		Balance	Origination date LTV	State		Balance	Origination date LTV
(in millions)				(in millions)
Texas	$	419	77%	North Carolina	$	44	78%
Georgia		215	77%	Texas		38	79%
Arizona		123	76%	Texas		36	80%
North Carolina		114	77%	Pennsylvania		32	77%
Ohio		56	69%	Texas		29	75%
Alabama		55	76%	Nevada		28	80%
Other states		590	73%	Texas		27	77%
Total	$	1,572	76%	Arizona		27	79%
				Mississippi		26	79%
				North Carolina		25	77%
				Texas		25	77%
				Texas		24	77%
				Georgia		23	79%
				California		23	65%
				Alabama		21	77%
				15 Largest loans	$	428	77%

Institutional banking loans outstanding at December 31, 2020

Type	Principal		% of total
		(in millions)
Securities backed lines of credit (SBLOC)	$	1,113	70%
Insurance backed lines of credit (IBLOC)		437	27%
Advisor financing		48	3%
Total	$	1,598	100%

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While equities have fallen in excess of 30% in recent periods, the reduction in collateral value of brokerage accounts collateralizing SBLOCs generally has been less, for two reasons. First, many collateral accounts are “balanced” and accordingly have a component of debt securities, which have either not decreased in value as much as equities, or in some cases may have increased in value. Secondly, many of these accounts have the benefit of professional investment advisors who provided some protection against market downturns, through diversification and other means. Additionally, borrowers often utilize only a portion of collateral value, which lowers the percentage of principal to collateral.

Top 10 SBLOC loans at December 31, 2020

	Principal amount		% Principal to collateral
	(in millions)
	$	49	37%
		17	38%
		14	31%
		12	25%
		12	30%
		10	42%
		10	21%
		9	28%
		9	35%
		8	73%
Total	$	150	35%

Insurance backed lines of credit (IBLOC)

IBLOC loans are backed by the cash value of life insurance policies which have been assigned to us. We lend up to 100% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, seven insurance companies have been approved and, as of August 14, 2020, all were rated Superior (A+ or better) by AM BEST.

Direct lease financing* by type as of December 31, 2020

		Principal balance	% Total
		(in millions)
Government agencies and public institutions**	$	84	18%
Construction		77	17%
Waste management and remediation services		64	14%
Real estate, rental and leasing		52	11%
Retail trade		41	9%
Health care and social assistance		27	6%
Transportation and Warehousing		24	5%
Professional, scientific, and technical services		20	4%
Manufacturing		16	4%
Wholesale trade		16	3%
Educational services		9	2%
Arts, entertainment, and recreation		6	1%
Other		26	6%
Total	$	462	100%

* Of the total $462 million of direct lease financing, $421 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

** Includes public universities and school districts

Direct lease financing by state as of December 31, 2020

State		Principal balance	% Total
		(in millions)
Florida	$	94	20%
California		36	8%
New Jersey		33	7%
New York		32	7%
Pennsylvania		30	6%
North Carolina		25	5%
Maryland		24	5%
Utah		23	5%
Washington		16	4%
Connecticut		15	3%
Texas		13	3%
Missouri		13	3%
Georgia		11	2%
Alabama		10	2%
Idaho		9	2%
Other states		78	18%
Total	$	462	100%

Capital ratios:	Tier 1 capital	Tier 1 capital	Total capital	Common equity
	to average	to risk-weighted	to risk-weighted	tier 1 to risk
	assets ratio	assets ratio	assets ratio	weighted assets
As of December 31, 2020
The Bancorp, Inc.	9.20%	14.43%	14.84%	14.43%
The Bancorp Bank	9.11%	14.27%	14.68%	14.27%
"Well capitalized" institution (under FDIC regulations-Basel III)	5.00%	8.00%	10.00%	6.50%

As of December 31, 2019
The Bancorp, Inc.	9.63%	19.04%	19.45%	19.04%
The Bancorp Bank	9.46%	18.71%	19.11%	18.71%
"Well capitalized" institution (under FDIC regulations-Basel III)	5.00%	8.00%	10.00%	6.50%

	Three months ended				Year ended
	December 31, ⁽¹⁾				December 31,
	2020		2019		2020		2019
Selected operating ratios:
Return on average assets		1.57%		0.15%		1.34%		1.09%
Return on average equity		16.83%		1.52%		15.08%		11.57%
Net interest margin		3.58%		3.12%		3.45%		3.32%

⁽¹⁾Annualized

Book value per share table:	December 31,		September 30,			June 30,	December 31,
	2020		2020		2020		2019
Book value per share	$	10.10	$	9.71	$	9.28	$	8.52

Loan quality table:		December 31,		September 30,		June 30,		December 31,
		2020		2020		2020		2019
Nonperforming loans to total loans		0.48%		0.49%		0.44%		0.50%
Nonperforming assets to total assets		0.20%		0.20%		0.17%		0.16%
Allowance for credit losses		0.61%		0.63%		0.63%		0.56%

Nonaccrual loans	$	12,227	$	12,275	$	9,957	$	5,796
Loans 90 days past due still accruing interest		497		24		352		3,264
Other real estate owned		—		—		—		—
Total nonperforming assets	$	12,724	$	12,299	$	10,309	$	9,060

	Three months ended
	December 31,		September 30,		June 30,		December 31,
	2020		2020		2020		2019
		(in thousands)
Gross dollar volume (GDV) ⁽²⁾:
Prepaid and debit card GDV	$	22,523,855	$	23,964,508	$	23,680,749	$	19,104,327

⁽²⁾Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.

Business line quarterly summary:
Quarter ended December 31, 2020
(dollars in millions)

		Balances
				% Growth
Major business lines	Average approximate rates *	Balances **		Year over year	Linked quarter annualized
Loans
Institutional banking ***	2.5%	$	1,598	56%	39%
Small Business Lending****	4.9%		822	14%	13%
Leasing	6.4%		462	6%	29%
Commercial real estate (non SBA at fair value)	4.8%		1,567	nm	nm
Weighted average yield	4.2%	$	4,449			Non-interest income
							% Growth
Deposits						Current quarter	Year over year
Payment solutions (prepaid and debit card issuance)	0.1%	$	3,586	33%	nm	$ 17.8	5%
Card payment and ACH processing	0.3%	$	1,037	41%	nm	$ 1.8	nm

* Average rates are for the quarter ended December 31, 2020.

** Loan and deposit categories are respectively based on period-end and average quarterly balances.

*** Institutional Banking loans are comprised of Securities Backed Lines of Credit (SBLOC), collateralized by marketable securities, Insurance Backed Lines of Credit (IBLOC), collateralized by the cash surrender value of insurance policies, and Advisor financing.

**** Small Business Lending is substantially comprised of SBA loans. Loan growth percentages exclude short-term PPP loans.

Analysis of Walnut Street* marks:

	Loan activity			Marks
	(dollars in millions)
Original Walnut Street loan balance, December 31, 2014	$	267
Marks through December 31, 2014 sale date		(58	)	$	(58	)
Sales price of Walnut Street		209
Equity investment from independent investor		(16	)
December 31, 2014 Bancorp book value		193
Additional marks 2015 - 2019		(46	)		(46	)
2020 Marks		—
Payments received		(116	)
December 31, 2020 Bancorp book value**	$	31

Total marks				$	(104	)
Divided by:
Original Walnut Street loan balance				$	267
Percentage of total mark to original balance					39	%

* Walnut Street is the investment in unconsolidated entity on the balance sheet which reflects the investment in a securitization of certain loans from the bank's discontinued loan portfolio.

** Approximately 34% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of December 31, 2020.

Walnut Street portfolio composition as of December 31, 2020

Collateral type	% of Portfolio
Commercial real estate non-owner occupied - Retail	67.4%
Construction and land	24.3%
Other	8.3%
Total	100.0%

Cumulative analysis of marks on discontinued commercial loan principal as of December 31, 2020

	Discontinued		Cumulative		% to original
	loan principal		marks		principal
		(dollars in millions)
Commercial loan discontinued principal before marks	$	64
Florida mall held in discontinued other real estate owned		42		(27)
Mark at December 31, 2020				(5)
Cumulative mark at December 31, 2020	$	106	$	(32)		30%

Analysis of discontinued commercial loan relationships as of December 31, 2020

	Performing		Nonperforming		Total		Performing		Nonperforming		Total
	loan principal		loan principal		loan principal		loan marks		loan marks		marks
		(in millions)
5 loan relationships > $5 million	$	42	$	—	$	42	$	(3)	$	—	$	(3)
Loan relationships < $5 million		9		9		18		—		(1)		(1)
	$	51	$	9	$	60	$	(3)	$	(1)	$	(4)

Quarterly activity for commercial loan discontinued principal

	Commercial
	loan principal
	(in millions)

Commercial loan discontinued principal September 30, 2020 before marks	$	66
Quarterly paydowns and other reductions		(2)
Commercial loan discontinued principal December 31, 2020 before marks	$	64
Marks December 31, 2020		(4)
Net commercial loan exposure December 31, 2020	$	60
Residential mortgages		32
Net loans	$	92
Florida mall in other real estate owned		15
7 properties in other real estate owned		7
Total discontinued assets at December 31, 2020	$	114

Discontinued commercial loan composition as of December 31, 2020

Collateral type	Unpaid principal balance			Mark December 31, 2020			Mark as % of portfolio
	(in millions)
Commercial real estate - non-owner occupied:
Retail	$	4		$	(0.6	)		15	%
Office		2			—			—%
Other		18			(0.1	)		1	%
Construction and land		11			(0.1	)		1	%
Commercial non-real estate and industrial		3			(0.1	)		3	%
1 to 4 family construction		9			(2.5	)		28	%
First mortgage residential non-owner occupied		8			—			—%
Commercial real estate owner occupied:
Retail		7			(0.7	)		10	%
Residential junior mortgage		1			—			—%
Other		1			—			—%
Total		64		$	(4.1	)		6	%
Less: mark		(4	)
Net commercial loan exposure December 31, 2020	$	60		$	(4.1	)

Loan payment deferrals as of December 31, 2020

	Cumulative months deferred (1)	Total loan balance deferrals		Total loan balances		% of loan balances with deferrals
	(dollars in millions)
Commercial real estate loans held at fair value (excluding SBA loans shown below)	6.8	$	50	$	1,572	3.2%
Securities backed lines of credit, insurance backed lines of credit & advisor financing	—		—		1,598	—%
SBL commercial mortgage	5.6		67		419	16.0%
SBL construction	—		—		20	—%
SBL non-real estate and PPP	4.5		24		382	6.3%
Direct lease financing	3.0		1		462	0.2%
Discontinued operations	6.2		6		96	6.3%
Other consumer loans and specialty lending	—		—		7	—%
Total	5.8	$	148	$	4,556	3.2%
(1) Weighted average of cumulative months deferred for loans currently on deferral

Note: At December 31, 2020, SBA 7a loans, included in the three SBL loan balance categories above, totaled $439.0 million of which $101.0 million was not U.S. government guaranteed. The CARES Act of 2020, or (“the CARES Act”), provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for an additional three months of payments on SBA 7a loans which begin on February 1, 2021. Accordingly, we expect deferrals to decrease when those payments are reinstituted at that date.

SBA 7a deferral distribution by type as of December 31, 2020

(comprised of the unguaranteed portion of SBA 7a loans)


		Total	% Total
		(in thousands)
Hotels*	$	4,924	34%
Sports and recreation instruction		1,157	8%
Offices of dentists		1,096	7%
Car washes		861	6%
Child and youth services		810	5%
Full-service restaurants*		763	5%
Limited-service restaurants*		512	3%
Sporting and athletic goods manufacturing		476	3%
All other miscellaneous food manufacturing		434	3%
Coin-operated laundries and drycleaners		405	3%
Administrative management and general management consulting services		333	2%
Commercial printing (except screen and books)		332	2%
Pet care (except veterinary) services		308	2%
Funeral homes and funeral services		308	2%
Industrial machinery and equipment merchant wholesalers		302	2%
Other		1,755	13%
Total	$	14,776	100%

* At December 31, 2020, SBA 7a loans, included in SBL, totaled $439.0 million of which $101.0 million was not U.S. government guaranteed. The CARES Act of 2020, or (“the CARES Act”), provided SBA 7a borrowers six months of principal and interest payments. The Consolidated Appropriations Act, 2021, became law in December 2020 and provided for an additional three months of payments on SBA 7a loans which begin on February 1, 2021. Accordingly, we expect deferrals to decrease when those payments are reinstituted at that date.

The Bancorp, Inc. (TBBK) 8-KThe Bancorp, Inc. Reports Fourth Quarter 2020 Financial Results