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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  July 27, 2023

 

The Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

Commission File Number:  000-51018

 

Delaware   23-3016517
(State or other jurisdiction of   (IRS Employer
incorporation)   Identification No.)

 

409 Silverside Road

Wilmington, DE 19809

(Address of principal executive offices, including zip code)

 

302-385-5000

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[_]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  

Trading

Symbol(s)

  Name of each exchange on which registered
Common Stock, par value $1.00 per share   TBBK   Nasdaq Global Select

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).

 

[_] Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

 

 

 

 

 


 

 

Item 2.02.    Results of Operations and Financial Condition

 

On July 27, 2023, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three and six months ended June 30, 2023. A copy of this press release is furnished with this report as Exhibit 99.1.

 

Item 7.01.    Regulation FD Disclosure.

 

The Company hereby furnishes the information set forth in the presentation attached hereto as Exhibit 99.2, which is incorporated herein by reference. 

 

The information in this Current Report, including the exhibits hereto, are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. 

 

 

Item 9.01.  Financial Statements and Exhibits

 

  (d) Exhibits
       
  99.1   Press Release
  99.2    Investor Presentation 
  104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
       

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date:  July 27, 2023 The Bancorp, Inc.
     
  By: /s/ Paul Frenkiel
  Name: Paul Frenkiel
  Title: Chief Financial Officer and
    Secretary

 

 

EX-99.1 2 ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

The Bancorp, Inc. Reports Second Quarter 2023 Financial Results

 

Wilmington, DE – July 27, 2023 – The Bancorp, Inc. ("The Bancorp" or “we”) (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2023.

 

Highlights

 

· The Bancorp reported net income of $49.0 million, or $0.89 per diluted share, for the quarter ended June 30, 2023, compared to net income of $30.4 million, or $0.53 per diluted share, for the quarter ended June 30, 2022, or a 68% increase in income per diluted share.

 

· Return on assets and equity for the quarter ended June 30, 2023 amounted to 2.6% and 27%, respectively, compared to 1.7% and 19%, respectively, for the quarter ended June 30, 2022 (all percentages “annualized”).

 

· Net interest income increased 60% to $87.2 million for the quarter ended June 30, 2023, compared to $54.6 million for the quarter ended June 30, 2022. Net interest income increases reflected the impact of continuing Federal Reserve rate increases on the Bancorp’s variable rate loans and securities.

 

· Net interest margin amounted to 4.83% for the quarter ended June 30, 2023, compared to 3.17% for the quarter ended June 30, 2022, and 4.67% for the quarter ended March 31, 2023.

 

· Loans, net were $5.27 billion at June 30, 2023, compared to $5.49 billion at December 31, 2022 and $4.75 billion at June 30, 2022. Those changes reflected a decrease of 2% quarter over linked quarter and an increase of 11% year over year.

 

· Gross dollar volume (“GDV”), representing the total amounts spent on prepaid and debit cards, increased $4.38 billion, or 15%, to $32.78 billion for the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022. The increase reflects continued organic growth with existing partners and the impact of clients added within the past year. Total prepaid, debit card, ACH and other payment fees increased 10% to $24.6 million for the second quarter of 2023 compared to the second quarter of 2022.

 

· Small business loans (“SBL”), including those held at fair value, grew 10% year over year to $804.0 million at June 30, 2023, and 2% quarter over linked quarter. That growth excludes Paycheck Protection Program (“PPP”) loan balances which amounted to $3.8 million and $10.3 million at June 30, 2023 and June 30, 2022, respectively.

 

· Direct lease financing balances increased 13% year over year to $657.3 million at June 30, 2023, and 1% quarter over linked quarter.

 

· At June 30, 2023, real estate bridge loans of $1.83 billion had grown 4% compared to the $1.75 billion balance at March 31, 2023, and 65% compared to the June 30, 2022 balance of $1.11 billion. These real estate bridge loans consist entirely of apartment buildings.

 

· Security backed lines of credit (“SBLOC”), insurance backed lines of credit (“IBLOC”) and investment advisor financing loans collectively decreased 15% year over year and decreased 8% quarter over linked quarter to $2.06 billion at June 30, 2023.

 

· The average interest rate on $6.60 billion of average deposits and interest-bearing liabilities during the second quarter of 2023 was 2.37%. Average deposits of $6.48 billion for the second quarter of 2023 reflected an increase of 4% from the $6.25 billion of average deposits for the quarter ended June 30, 2022.

 

· The Bancorp emphasizes safety and soundness, and liquidity. The vast majority of its funding is comprised of insured and small balance accounts. The Bancorp also has lines of credit with U.S. government agencies totaling approximately $2.8 billion as of June 30, 2023, as well as access to other liquidity.

 

· As of June 30, 2023, 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 10.42%, 14.97%, 15.47% and 14.97%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. The Bancorp and its wholly owned subsidiary, The Bancorp Bank, National Association, each remain well capitalized under banking regulations.

 

   1  

 

 

· Book value per common share at June 30, 2023 was $13.74 per share compared to $11.55 per common share at June 30, 2022, an increase of 19%. Increases resulting from retained earnings were partially offset by reductions in the market value of securities available for sale, which are recognized through equity.

 

· The Bancorp repurchased 828,727 shares of its common stock at an average cost of $30.17 per share during the quarter ended June 30, 2023.

 

CEO and President Damian Kozlowski commented, “The Bancorp continued to produce record core profits and exemplar profitability in the second quarter.  The outlook remains positive for 2023 and 2024 and we expect increasing profitability and earnings per share, while navigating a difficult market environment for most banks. We are maintaining guidance at $3.60 a share, without including the impact of anticipated share buy backs of $25 million per quarter in 2023.”

 

Conference Call Webcast

 

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 28, 2023 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or you may dial 1.888.259.6580, conference code 93720317. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, August 4, 2023 by dialing 1.877.674.7070, access code 720317#.

 

About The Bancorp

 

The Bancorp, Inc. (NASDAQ: TBBK), headquartered in Wilmington, Delaware, through its subsidiary, The Bancorp Bank, National Association, (or “The Bancorp Bank, N. A.”) 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 “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.

 

 

 

The Bancorp, Inc. Contact

Andres Viroslav

Director, Investor Relations

215-861-7990

andres.viroslav@thebancorp.com

Source: The Bancorp, Inc. 

 

   2  

 

 

The Bancorp, Inc.

Financial highlights

(unaudited)

 

 

    Three months ended   Six months ended
    June 30,   June 30,
Consolidated condensed income statements   2023   2022   2023   2022
    (Dollars in thousands, except per share and share data)    
                 
Net interest income   $ 87,195     $ 54,569     $ 173,011     $ 107,422  
Provision for (reversal of) credit losses     361       (1,450 )     2,264       3,509  
Non-interest income                                
ACH, card and other payment processing fees     2,429       2,338       4,600       4,322  
Prepaid, debit card and related fees     22,177       20,038       45,500       38,690  
Net realized and unrealized gains on commercial                                
   loans, at fair value     1,921       3,682       3,646       10,517  
Leasing related income     1,511       1,545       3,001       2,518  
Other non-interest income     1,298       350       1,578       470  
Total non-interest income     29,336       27,953       58,325       56,517  
Non-interest expense                                
Salaries and employee benefits     33,167       25,999       62,952       49,847  
Data processing expense     1,398       1,246       2,719       2,435  
Legal expense     949       1,474       1,907       2,268  
Legal settlement     —         1,152       —         1,152  
FDIC insurance     472       673       1,427       1,647  
Software     4,317       4,165       8,554       8,029  
Other non-interest expense     9,640       8,136       20,414       15,819  
Total non-interest expense     49,943       42,845       97,973       81,197  
Income before income taxes     66,227       41,127       131,099       79,233  
Income tax expense     17,218       10,725       32,968       19,865  
Net income     49,009       30,402       98,131       59,368  
                                 
Net income per share - basic   $ 0.89     $ 0.54     $ 1.78     $ 1.04  
                                 
Net income per share - diluted   $ 0.89     $ 0.53     $ 1.76     $ 1.03  
Weighted average shares - basic     54,871,681       56,801,518       55,160,642       56,962,000  
Weighted average shares - diluted     55,269,640       57,453,730       55,653,950       57,772,538  

 

   3  

 

 

 

Condensed consolidated balance sheets   June 30,   March 31,   December 31,   June 30,
    2023 (unaudited)   2023 (unaudited)   2022   2022 (unaudited)
    (Dollars in thousands, except share data)
Assets:                
Cash and cash equivalents                                
Cash and due from banks   $ 6,496     $ 13,736     $ 24,063     $ 12,873  
Interest earning deposits at Federal Reserve Bank     874,050       773,446       864,126       329,992  
     Total cash and cash equivalents     880,546       787,182       888,189       342,865  
                                 
Investment securities, available-for-sale, at fair value     776,410       787,429       766,016       826,616  
Commercial loans, at fair value     396,581       493,334       589,143       995,493  
Loans, net of deferred fees and costs     5,267,574       5,354,347       5,486,853       4,754,697  
Allowance for credit losses     (23,284 )     (23,794 )     (22,374 )     (19,087 )
Loans, net     5,244,290       5,330,553       5,464,479       4,735,610  
Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock     20,157       12,629       12,629       1,643  
Premises and equipment, net     26,408       21,319       18,401       16,693  
Accrued interest receivable     34,062       33,729       32,005       19,264  
Intangible assets, net     1,850       1,950       2,049       2,248  
Other real estate owned     20,952       21,117       21,210       18,873  
Deferred tax asset, net     19,215       18,290       19,703       23,344  
Other assets     122,435       99,427       89,176       137,086  
     Total assets   $ 7,542,906     $ 7,606,959     $ 7,903,000     $ 7,119,735  
                                 
Liabilities:                                
Deposits                                
Demand and interest checking   $ 6,554,967     $ 6,607,767     $ 6,559,617     $ 5,394,562  
Savings and money market     68,084       96,890       140,496       486,189  
Time deposits, $100,000 and over     —         —         330,000       —    
     Total deposits     6,623,051       6,704,657       7,030,113       5,880,751  
                                 
Securities sold under agreements to repurchase     42       42       42       42  
Short-term borrowings     —         —         —         385,000  
Senior debt     95,682       99,142       99,050       98,866  
Subordinated debenture     13,401       13,401       13,401       13,401  
Other long-term borrowings     9,917       9,972       10,028       39,125  
Other liabilities     51,646       54,597       56,335       46,014  
     Total liabilities   $ 6,793,739     $ 6,881,811     $ 7,208,969     $ 6,463,199  
                                 
Shareholders' equity:                                
Common stock - authorized, 75,000,000 shares of $1.00 par value; 54,542,284 and 56,865,494 shares issued and outstanding at June 30, 2023 and 2022, respectively     54,542       55,330       55,690       56,865  
Additional paid-in capital     256,115       277,814       299,279       323,774  
Retained earnings     467,450       418,441       369,319       298,474  
Accumulated other comprehensive loss     (28,940 )     (26,437 )     (30,257 )     (22,577 )
Total shareholders' equity     749,167       725,148       694,031       656,536  
                                 
     Total liabilities and shareholders' equity   $ 7,542,906     $ 7,606,959     $ 7,903,000     $ 7,119,735  

 

 

 

   4  

 

Average balance sheet and net interest income   Three months ended June 30, 2023   Three months ended June 30, 2022
    (Dollars in thousands; unaudited)
    Average       Average   Average       Average
Assets:   Balance   Interest(1)   Rate   Balance   Interest(1)   Rate
                         
Interest earning assets:                                                
Loans, net of deferred fees and costs(2)   $ 5,730,384     $ 107,299       7.49 %   $ 5,467,516     $ 55,100       4.03 %
Leases-bank qualified(3)     3,801       100       10.52 %     3,665       63       6.88 %
Investment securities-taxable     778,100       9,873       5.08 %     879,112       5,432       2.47 %
Investment securities-nontaxable(3)     3,234       53       6.56 %     3,559       31       3.48 %
Interest earning deposits at Federal Reserve Bank     701,057       8,997       5.13 %     545,027       1,004       0.74 %
Net interest earning assets     7,216,576       126,322       7.00 %     6,898,879       61,630       3.57 %
                                                 
Allowance for credit losses     (23,895 )                     (20,295 )                
Other assets     231,035                       243,459                  
    $ 7,423,716                     $ 7,122,043                  
                                                 
Liabilities and Shareholders' Equity:                                                
Deposits:                                                
Demand and interest checking   $ 6,399,750     $ 36,688       2.29 %   $ 5,697,507     $ 4,390       0.31 %
Savings and money market     78,252       728       3.72 %     556,847       1,200       0.86 %
Total deposits     6,478,002       37,416       2.31 %     6,254,354       5,590       0.36 %
                                                 
Short-term borrowings     —         —         —         11,593       32       1.10 %
Repurchase agreements     41       —         —         41       —         —    
Long-term borrowings     9,949       128       5.15 %     —         —         —    
Subordinated debentures     13,401       271       8.09 %     13,401       139       4.15 %
Senior debt     96,890       1,280       5.28 %     98,816       1,280       5.18 %
Total deposits and liabilities     6,598,283       39,095       2.37 %     6,378,205       7,041       0.44 %
                                                 
Other liabilities     88,276                       89,422                  
Total liabilities     6,686,559                       6,467,627                  
                                                 
Shareholders' equity     737,157                       654,416                  
    $ 7,423,716                     $ 7,122,043                  
Net interest income on tax equivalent basis(3)           $ 87,227                     $ 54,589          
                                                 
Tax equivalent adjustment             32                       20          
                                                 
Net interest income           $ 87,195                     $ 54,569          
Net interest margin(3)                     4.83 %                     3.17 %

 

 

(1)Interest on loans for 2023 and 2022 includes $10,000 and $41,000, respectively, of interest and fees on PPP loans.
(2)Includes commercial loans, at fair value. All periods include non-accrual loans.
(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

 

 

 

   5  

 

Average balance sheet and net interest income   Six months ended June 30, 2023   Six months ended June 30, 2022
    (Dollars in thousands; unaudited)
    Average       Average   Average       Average
Assets:   Balance   Interest(1)   Rate   Balance   Interest(1)   Rate
                         
Interest earning assets:                                                
Loans, net of deferred fees and costs(2)   $ 5,858,040     $ 213,503       7.29 %   $ 5,302,850     $ 105,638       3.98 %
Leases-bank qualified(3)     3,582       169       9.44 %     3,839       130       6.77 %
Investment securities-taxable     776,089       19,173       4.94 %     909,017       10,323       2.27 %
Investment securities-nontaxable(3)     3,288       94       5.72 %     3,559       62       3.48 %
Interest earning deposits at Federal Reserve Bank     640,864       15,582       4.86 %     616,865       1,351       0.44 %
Net interest earning assets     7,281,863       248,521       6.83 %     6,836,130       117,504       3.44 %
                                                 
Allowance for credit losses     (23,215 )                     (19,075 )                
Other assets     234,037                       232,402                  
    $ 7,492,685                     $ 7,049,457                  
                                                 
Liabilities and Shareholders' Equity:                                                
Deposits:                                                
Demand and interest checking   $ 6,401,678     $ 69,071       2.16 %   $ 5,636,415     $ 5,796       0.21 %
Savings and money market     105,105       1,947       3.70 %     544,515       1,400       0.51 %
Time deposits     41,933       858       4.09 %     —         —         —    
Total deposits     6,548,716       71,876       2.20 %     6,180,930       7,196       0.23 %
                                                 
Short-term borrowings     10,193       234       4.59 %     6,104       32       1.05 %
Repurchase agreements     41       —         —         41       —         —    
Long-term borrowings     9,973       254       5.09 %     —         —         —    
Subordinated debentures     13,401       532       7.94 %     13,401       255       3.81 %
Senior debt     97,985       2,559       5.22 %     98,770       2,559       5.18 %
Total deposits and liabilities     6,680,309       75,455       2.26 %     6,299,246       10,042       0.32 %
                                                 
Other liabilities     90,777                       95,716                  
Total liabilities     6,771,086                       6,394,962                  
                                                 
Shareholders' equity     721,599                       654,495                  
    $ 7,492,685                     $ 7,049,457                  
Net interest income on tax equivalent basis(3)           $ 173,066                     $ 107,462          
                                                 
Tax equivalent adjustment             55                       40          
                                                 
Net interest income           $ 173,011                     $ 107,422          
Net interest margin(3)                     4.75 %                     3.14 %

 

 

(1)Interest on loans for 2023 and 2022 includes $20,000 and $481,000, respectively, of interest and fees on PPP loans.
(2)Includes commercial loans, at fair value. All periods include non-accrual loans.
(3)Full taxable equivalent basis, using 21% respective statutory federal tax rates in 2023 and 2022.

 

  

 

   6  

 

 

Allowance for credit losses   Six months ended   Year ended
    June 30,   June 30,   December 31,
    2023 (unaudited)   2022 (unaudited)   2022
    (Dollars in thousands)
             
Balance in the allowance for credit losses at beginning of period   $ 22,374     $ 17,806     $ 17,806  
                         
Loans charged-off:                        
SBA non-real estate     871       844       885  
Direct lease financing     1,439       199       576  
Consumer - other     3       —         —    
Total     2,313       1,043       1,461  
                         
Recoveries:                        
SBA non-real estate     298       33       140  
SBA commercial mortgage     75       —         —    
Direct lease financing     175       93       124  
Consumer - home equity     49       —         —    
Other loans     —         —         24  
Total     597       126       288  
Net charge-offs     1,716       917       1,173  
Provision for credit losses, excluding commitment provision     2,626       2,198       5,741  
                         
Balance in allowance for credit losses at end of period   $ 23,284     $ 19,087     $ 22,374  
Net charge-offs/average loans     0.03 %     0.02 %     0.03 %
Net charge-offs/average assets     0.02 %     0.01 %     0.02 %

 

 

 

   7  

 

 

 

Loan portfolio   June 30,   March 31,   December 31,   June 30,
    2023 (unaudited)   2023 (unaudited)   2022   2022 (unaudited)
    (Dollars in thousands)
                 
SBL non-real estate   $ 117,621     $ 114,334     $ 108,954     $ 112,854  
SBL commercial mortgage     515,008       492,798       474,496       425,219  
SBL construction     32,471       33,116       30,864       27,042  
Small business loans     665,100       640,248       614,314       565,115  
Direct lease financing     657,316       652,541       632,160       583,086  
SBLOC / IBLOC(1)     1,883,607       2,053,450       2,332,469       2,274,256  
Advisor financing(2)     173,376       189,425       172,468       155,235  
Real estate bridge loans     1,826,227       1,752,322       1,669,031       1,106,875  
Other loans(3)     55,644       60,210       61,679       63,514  
      5,261,270       5,348,196       5,482,121       4,748,081  
Unamortized loan fees and costs     6,304       6,151       4,732       6,616  
Total loans, including unamortized fees and costs   $ 5,267,574     $ 5,354,347     $ 5,486,853     $ 4,754,697  

 

 

Small business portfolio   June 30,   March 31,   December 31,   June 30,
    2023 (unaudited)   2023 (unaudited)   2022   2022 (unaudited)
    (Dollars in thousands)
                 
SBL, including unamortized fees and costs   $ 673,667     $ 648,858     $ 621,641     $ 571,559  
SBL, included in loans, at fair value     134,131       140,909       146,717       168,579  
Total small business loans(4)   $ 807,798     $ 789,767     $ 768,358     $ 740,138  

 

(1)SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At June 30, 2023 and December 31, 2022, IBLOC loans amounted to $806.1 million and $1.12 billion, respectively.

(2)In 2020 The Bancorp began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value (“LTV”) 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.

(3)Includes demand deposit overdrafts reclassified as loan balances totaling $403,000 and $2.6 million at June 30, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the ACL and are immaterial.

(4)The SBLs held at fair value are comprised of the government guaranteed portion of 7(a) Program loans at the dates indicated.

 

 

Small business loans as of June 30, 2023

     
    Loan principal
    (Dollars in millions)
U.S. government guaranteed portion of SBA loans(1)   $ 382  
PPP loans(1)     4  
Commercial mortgage SBA(2)     259  
Construction SBA(3)     12  
Non-guaranteed portion of U.S. government guaranteed 7(a) Program loans(4)     105  
Non-SBA SBLs     35  
Total principal   $ 797  
Unamortized fees and costs     11  
Total SBLs   $ 808  

 

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

(2)Substantially all these loans are made under the 504 Program, which dictates origination date LTV percentages, generally 50-60%, to which the Bancorp adheres.

(3)Includes $8.0 million in 504 Program first mortgages with an origination date LTV of 50-60%, and $4.0 million in SBA interim loans with an approved SBA post-construction full takeout/payoff.

(4)Includes the unguaranteed portion of 7(a) Program loans which are 70% or more guaranteed by the U.S. government. SBA 7(a) Program loans are not made on the basis of real estate LTV; however, they are subject to SBA's "All Available Collateral" rule which mandates that to the extent a borrower or its 20% or greater principals have available collateral (including personal residences), the collateral must be pledged to fully collateralize the loan, after applying SBA-determined liquidation rates. In addition, all 7(a) Program loans and 504 Program loans require the personal guaranty of all 20% or greater owners.

 

 

   8  

 Small business loans by type as of June 30, 2023

 

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

 

    SBL commercial mortgage(1)   SBL construction(1)   SBL non-real estate   Total     % Total
      (Dollars in millions)
Hotels and motels   $ 74   $   $   $ 74      18%
Full-service restaurants     24     4     2     30      7%
Funeral homes and funeral services     27             27      7%
Car washes     17     2         19      5%
Child day care services     15     1     1     17      4%
Outpatient mental health and substance abuse centers     16             16      4%
Homes for the elderly     13             13      3%
Gasoline stations with convenience stores     12             12      3%
Offices of lawyers     9             9      2%
Fitness and recreational sports centers     8         2     10      2%
Lessors of other real estate property     8         1     9      2%
Limited-service restaurants     2     2     3     7      2%
General warehousing and storage     7             7      2%
Plumbing, heating, and air-conditioning companies     6         1     7      2%
Specialty trade contractors     5         1     6      1%
Lessors of residential buildings and dwellings     5             5      1%
Other miscellaneous durable goods merchant     5             5      1%
Technical and trade schools         5         5      1%
Packaged frozen food merchant wholesalers     5             5      1%
Amusement and recreation industries     4             4      1%
Offices of dentists     2     1         3      1%
Warehousing and storage     3             3      1%
Vocational rehabilitation services     3             3      1%
Miscellaneous wood product manufacturing     3             3      1%
Other(2)     88         24     112      27%
Total   $  361   $  15   $  35   $  411      100%

 

(1)Of the SBL commercial mortgage and SBL construction loans, $106.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs.

(2)Loan types of less than $3.0 million are spread over approximately one hundred different business types.

 

State diversification as of June 30, 2023

 

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

 

    SBL commercial mortgage(1)   SBL construction(1)   SBL non-real estate   Total     % Total
      (Dollars in millions)
California   $ 74   $ 4   $ 3   $ 81      20%
Florida     68     1     3     72      18%
North Carolina     33     7     2     42      10%
New York     26         3     29      7%
New Jersey     20         3     23      6%
Pennsylvania     21             21      5%
Georgia     16         1     17      4%
Illinois     14         1     15      4%
Texas     12         4     16      4%
Other States <$15 million     77     3     15     95      22%
Total   $  361   $  15    $  35   $  411      100%

 

(1)Of the SBL commercial mortgage and SBL construction loans, $106.0 million represents the total of the non-guaranteed portion of SBA 7(a) Program loans and non-SBA loans. The balance of those categories represents SBA 504 Program loans with 50%-60% origination date LTVs.

 

   9  

 

 

Top 10 loans as of June 30, 2023

 

Type(1)   State   SBL commercial mortgage  
      (Dollars in millions)
Mental health and substance abuse center     FL   $  10   
Funeral homes and funeral services     ME      9   
Hotel     FL      9   
Lawyer's office     CA      8   
Hotel     NC      7   
General warehousing and storage     PA      7   
Hotel     FL      6   
Hotel     NY      6   
Hotel     NC      6   
Mental health and substance abuse center     NJ      5   
Total         $  73   
               
 

(1)All ten largest loans in our SBL portfolio are SBA 504 Program loans with 50%-60% origination date LTVs. The table above does not include loans to the extent that they are U.S. government guaranteed.

 

   10  

 

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

 

Type as of June 30, 2023

 

Type     # Loans     Balance   Weighted average origination date LTV   Weighted average interest rate
      (Dollars in millions)
Real estate bridge loans (multi-family apartment loans recorded at amortized cost)(1)     136   $  1,826     71%    8.90%
                     
Non-SBA commercial real estate loans, at fair value:                    
Multi-family (apartment bridge loans)(1)      12    $  216     76%    8.70%
Hospitality (hotels and lodging)      2       28     65%    9.10%
Retail      2       12     72%    7.30%
Other      2       9     73%    5.20%
       18       265     74%    8.55%
Fair value adjustment            (3)        
Total non-SBA commercial real estate loans, at fair value            262         
Total commercial real estate loans         $  2,088     72%    8.87%

  

(1)In the third quarter of 2021, we resumed 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 they are not accounted for at fair value.

 

State diversification as of June 30, 2023     15 largest loans as of June 30, 2023
                               
State     Balance     Origination date LTV     State       Balance   Origination date LTV
(Dollars in millions)     (Dollars in millions)
Texas   $  768      73%     Texas     $  43    72%
Georgia      258     70%     Texas        42    75%
Florida      220      70%     Texas        39    75%
Ohio      91     69%     Tennessee        37    72%
Tennessee      84     70%     Michigan        37    62%
Michigan      69      70%     Florida        33    72%
Alabama      67      72%     Texas        33    67%
Other States each <$65 million      531     72%     Michigan        33    79%
Total   $  2,088     72%     Oklahoma        31    78%
                  Texas        31    62%
                  Indiana        30    76%
                  Ohio        29    74%
                  Georgia        29    69%
                  Texas        29    77%
                  New Jersey        28    77%
                  15 largest commercial real estate loans     $  504    73%
   11  

 

Institutional banking loans outstanding at June 30, 2023

 

Type Principal   % of total
    (Dollars in millions)    
SBLOC $  1,078   52%
IBLOC    806   39%
Advisor financing    173   9%
Total $  2,057    100%

 

For SBLOC, we generally lend up to 50% of the value of equities and 80% for investment grade securities. While the value of equities has fallen in excess of 30% in recent years, 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. Second, 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 June 30, 2023

 

  Principal amount   % Principal to collateral
  (Dollars in millions)
  $  18    41%
     16    62%
     14    35%
     10    32%
     9    64%
     9    44%
     8    70%
     8    73%
     6    29%
     6    51%
Total and weighted average $  104    49%

 

Insurance backed lines of credit (IBLOC)

 

IBLOC loans are backed by the cash value of eligible life insurance policies which have been assigned to us.  We generally lend up to 95% of such cash value. Our underwriting standards require approval of the insurance companies which carry the policies backing these loans. Currently, fifteen insurance companies have been approved and, as of June 30, 2023, all were rated A- (Excellent) or better by AM BEST.

   12  

 

Direct lease financing by type as of June 30, 2023

 

    Principal balance(1)   % Total
    (Dollars in millions)    
Construction $  118     18%
Government agencies and public institutions(2)    82     12%
Waste management and remediation services    81     12%
Real estate and rental and leasing    71     11%
Retail trade    47     7%
Health care and social assistance    30     5%
Manufacturing    22     3%
Professional, scientific, and technical services    21     3%
Finance and insurance    18     3%
Wholesale trade    17     3%
Transportation and warehousing    12     2%
Educational services    9     1%
Mining, quarrying, and oil and gas extraction    8     1%
Other    121     19%
Total $  657     100%

 

(1)Of the total $657.0 million of direct lease financing, $579.0 million consisted of vehicle leases with the remaining balance consisting of equipment leases.

(2)Includes public universities and school districts.

 

 

Direct lease financing by state as of June 30, 2023

 

State   Principal balance   % Total
    (Dollars in millions)    
Florida $  93    14%
Utah    65    10%
California    61    9%
Pennsylvania    40    6%
New Jersey    39    6%
New York    33    5%
North Carolina    32    5%
Texas    30    5%
Maryland    29    4%
Connecticut    27    4%
Washington    16    2%
Idaho    16    2%
Georgia    14    2%
Iowa    13    2%
Ohio    12    2%
Other States    137    22%
Total $  657    100%

 

 

   13  


 

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 June 30, 2023              
The Bancorp, Inc.  10.42%    14.97%    15.47%    14.97%
The Bancorp Bank, National Association  11.59%    16.67%    17.16%    16.67%
"Well capitalized" institution (under federal regulations-Basel III)  5.00%    8.00%    10.00%    6.50%
               
As of December 31, 2022              
The Bancorp, Inc.  9.63%    13.40%    13.87%    13.40%
The Bancorp Bank, National Association  10.73%    14.95%    15.42%    14.95%
"Well capitalized" institution (under federal regulations-Basel III)  5.00%    8.00%    10.00%    6.50%

 

 

  Three months ended   Six months ended
  June 30,   June 30,
  2023   2022   2023   2022
Selected operating ratios                      
Return on average assets(1)    2.65%      1.71%      2.64%      1.70%
Return on average equity(1)    26.67%      18.63%      27.42%      18.29%
Net interest margin    4.83%      3.17%      4.75%      3.14%

 

(1)Annualized

 

                       
Book value per share table June 30,   March 31,     December 31,   June 30,
  2023   2023   2022   2022
Book value per share $  13.74   $  13.11   $  12.46      11.55
                       

 

 

Loan quality table   June 30,     March 31,     December 31,     June 30,
    2023     2022     2022     2022
    (Dollars in thousands)
Nonperforming loans to total loans    0.28%      0.26%      0.33%      0.18%
Nonperforming assets to total assets    0.47%      0.46%      0.50%      0.39%
Allowance for credit losses to total loans    0.44%      0.44%      0.41%      0.40%
                       
Nonaccrual loans $  14,027   $  12,938   $  10,356   $  3,698
Loans 90 days past due still accruing interest    563      873      7,775      4,848
Other real estate owned    20,952      21,117      21,210      18,873
     Total nonperforming assets $  35,542   $  34,928   $  39,341   $  27,419

 

                       
Gross dollar volume (GDV) (1) Three months ended
  June 30,   March 31,   December 31,   June 30,
  2023   2022   2022   2022
    (Dollars in thousands)
Prepaid and debit card GDV $  32,776,154   $  34,011,792   $  29,454,074   $  28,394,897

 

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

 

   14  

 

Business line quarterly summary
Quarter ended June 30, 2023
(Dollars in millions)
                           
        Balances          
            % Growth          
Major business lines   Average approximate rates(1)   Balances(2)   Year over year   Linked quarter annualized          
Loans                          
Institutional banking(3)   6.4%    $   2,057   (15%)   (33%)          
Small business lending(4)   6.8%   808   10%   9%          
Leasing   6.9%   657   13%   2%          
Commercial real estate (non-SBA loans, at fair value)   8.5%         262   nm   nm          
Real estate bridge loans (recorded at book value)   9.0%   1,826   65%   17%          
Weighted average yield   7.5%    $   5,610           Non-interest income
                        % Growth
Deposits: Fintech solutions group                   Current quarter   Year over year  
Prepaid and debit card issuance, and other payments 2.3%    $    5,98 5 6%   nm    $     24.6   10%  

 

(1)Average rates are for the three months ended June 30, 2023.

(2)Loan and deposit categories are based on period-end and average quarterly balances, respectively.

(3)Institutional Banking loans are comprised of security backed lines of credit (SBLOC), collateralized by marketable securities, insurance backed lines of credit (IBLOC), collateralized by the cash surrender value of eligible life insurance policies, and investment advisor financing.

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

 

Summary of credit lines available

 

Notwithstanding that the vast majority of The Bancorp’s funding is comprised of insured and small balance accounts, The Bancorp maintains lines of credit exceeding potential liquidity requirements as follows. The Bancorp also has access to other substantial sources of liquidity.

 

  June 30, 2023
    (Dollars in thousands)
Federal Reserve Bank $  2,055,492 
Federal Home Loan Bank    752,400 
Total lines of credit available $  2,807,892 

 

Estimated insured vs uninsured deposits

 

The vast majority of The Bancorp’s deposits are insured and low balance and accordingly do not constitute the liquidity risk experienced by certain institutions. Accordingly the deposit base is comprised as follows.

 

  June 30, 2023
Insured   91%
Low balance accounts   5%
Other uninsured   4%
Total deposits   100%

 

Calculation of efficiency ratio(1)

 

  Three months ended
  June 30,   December 31,
  2023   2022
  (Dollars in thousands)
Net interest income $  87,195    $  76,760 
Non-interest income    29,336       25,740 
Total revenue $  116,531    $  102,500 
Non-interest expense $  49,943    $  43,475 
           
Efficiency ratio    43%      42%

  

(1) The efficiency ratio is calculated by dividing GAAP total non-interest expense by the total of GAAP net interest income and non-interest income.  This ratio compares revenues generated with the amount of expense required to generate such revenues, and may be used as one measure of overall efficiency.

 

   15  

EX-99.2 3 ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

 

J U L Y 2023 THE BANCORP INVESTOR PRESENTATION 2 FORWARD LOOKING STATEMENTS & OTHER DISCLOSURES D I S C L O S U R E S Statements in this presentation regarding The Bancorp, Inc.’s (“The Bancorp”) business that are not historical facts or concern our earnings guidance or 2030 plan are “forward - looking statements”. These statements may be identified by the use of forward - looking terminology, including the words “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan," 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 the company’s business and the industry as a whole, and the resulting governmental and societal responses. 2023 guidance and long - term financial targets in this presentation assume achievement of management’s credit roadmap growth goals as described herein and other growth goals. If such assumptions are not met, guidance and long - term financial targets might not be reached. For further discussion of these risks and uncertainties, see the “risk factors” sections contained, in The Bancorp’s Annual Report on Form 10 - K for the year ended December 31, 2022 and in its other public filings with the SEC. In addition, these forward - looking statements are based upon assumptions with respect to future strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward - looking statements. The forward - looking statements speak only as of the date of this presentation. The Bancorp does not undertake to publicly revise or update forward - looking statements in this presentation to reflect events or circumstances that arise after the date of this presentation, except as may be required under applicable law. This presentation contains information regarding financial results that is calculated and presented on the basis of methodologies other than in accordance with accounting principles generally accepted in the United States (“GAAP”), such as those identified in the Appendix. As a result, such information may not conform to SEC Regulation S - X and may be adjusted and presented differently in filings with the SEC. Any non - GAAP financial measures used in this presentation are in addition to, and should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP. Non - GAAP financial measures are subject to significant inherent limitations. The non - GAAP measures presented herein may not be comparable to similar non - GAAP measures presented by other companies. This information may be presented differently in future filings by The Bancorp with the SEC. This presentation may contain statistics and other data that in some cases has been obtained from or compiled from information made available by third - party service providers. The Bancorp makes no representation or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of such information. Past performance is not indicative nor a guarantee of future results. Copies of the documents filed by The Bancorp with the SEC are available free of charge from the website of the SEC at www.sec.gov as well as on The Bancorp’s website at www.thebancorp.com . This presentation is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities. Neither the SEC nor any other regulatory body has approved or disapproved of the securities of The Bancorp or passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense.

 

3 THE BANCORP HAS DELIVERED S TRONG FINANCIAL PERFORMANCE KEY FINANCIAL METRICS F I N A N C I A L P E R F O R M A N C E SUSTAINED PERFORMANCE The Bancorp is continuing to deliver high quality financial performance across key financial metrics 1 Please see Appendix slide 33 for reconciliation of revenue growth over comparable prior year period and efficiency ratio 2020 2021 2022 Q2 YTD 2023 GROWTH REVENUE GROWTH 1 14% 13% 12% 41% Capitalized on interest rate environment ROE 15% 18% 19% 27% PROFITABILITY Increasing levels of profitability ROA 1.3% 1.7% 1.8% 2.6% SCALABLE PLATFORM EFFICIENCY RATIO 1 59% 53% 48% Platform delivering 42% operating leverage 4 OUR BUSINESS PLAN OUTLINES THE PATH TO EXPAND OUR LEADERSHIP AMONG PEER BANKS AND IN THE PAYMENTS INDUSTRY $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 EARNINGS PER SHARE E A R N I N G S G U I D A N C E GUIDANCE Our 2023 guidance 1 is $3.60 per share as we maintain strong momentum across our platform $1.00 $0.50 $0.00 2020 2021 2022 2023 Guidance 1 2023 guidance assumes achievement of management’s credit roadmap growth goals as described elsewhere in this presentation, impact of realized and expected interest rate increases, and other budgetary goals.

 

$1.37 $1.88 $2.27 $3.60 Updated to $3.60 in Q1 2023

 

5 FINANCIAL INDUSTRY LEADER FORTUNE 100 FASTEST GROWING COMPANY RANKED #28 OCT. 2020 FORUM OF EXECUTIVE WOMEN Champion of Board Diversity Honoree OCT. 2022 IPA CONSUMER CHAMPION APR. 2021 NILSON REPORT RANKED #1 PREPAID CARD ISSUER APRIL 2023 EQUAL OPPORTUNITY PUBLICATION TOP EMPLOYER READERS CHOICE MAR. 2023 – RANKED #23 MAR. 2022 – RANKED #25 S&P SMALL CAP 600 ADDED TO RATING MAY 2021 I N D U S T R Y L E A D E R S H I P NILSON REPORT RANKED #6 DEBIT ISSUING BANK APRIL 2023 RECOGNIZED PERFORMANCE At The Bancorp, we strive for excellence and have been recognized in the market as a leader across a variety of industry rankings BANK DIRECTOR RANKING BANKING RANKED #1 >$5B Assets 1 1 Ranked #3 for full Bank Director Ranking Banking universe as of 2022 publication.

 

6 FINTECH LEADERSHIP THE BANCORP IS A KEY PLAYER IN THE PAYMENTS ECOSYSTEM FINTECH ECOSYSTEM Enabling fintech companies by providing industry leading card issuing, payments facilitation and regulatory expertise to a diversified portfolio of clients PAYMENT NETWORKS FACILITATE payments between parties via the card networks. PROGRAM MANAGERS CLIENT FACING platforms deliver highly scalable banking solutions to customers with emphasis on customer acquisition and technology . REGULATORS OVERSIGHT of domestic banking and payments activities. PROCESSORS BACK - OFFICE support for program managers providing record keeping and core platform services.

 

F I N T E C H E C O S Y S T E M 7 SPECIALIZED LENDING BUSINESS LINES AND CREDIT ROADMAP Emphasis on core business lines with expectation to add related products and enter adjacent markets Expand commercial real estate bridge lending business with focus on multi - family assets Remain positioned to capitalize on credit - linked payments opportunities Maintain balance sheet flexibility as we approach $10B in total assets Institutional Banking Real Estate Bridge Lending Small Business Leasing $2.1B $2.1B $0.8B $0.6B CORE LENDING BUSINESSES AS OF Q2 2023 TOTAL $5.6B Established Operating Platform Scalable technology, operations and sales platforms across lending business to support sustained growth CREDIT ROADMAP C R E D I T R O A D M A P CREDIT ROADMAP We created a credit roadmap which outlines multi - year growth strategies across our specialized lending business lines 8 OUR STRATEGIC POSITIONING SHOULD DRIVE EARNINGS AND PROFITABILITY HIGHLIGHTS Our platform can deliver growth from our specialized lending activities while remaining positioned to capitalize on new and higher - growth fintech partnerships SPECIALIZED COMMERCIAL BANKS Efficient platforms Products in focused markets Higher growth than traditional banking We can achieve our long - term financial targets by maintaining flexibility to capitalize on growth opportunities in both fintech and specialty commercial banking T H E B A N C O R P B U S I N E S S M O D E L We participate in the high - growth fintech markets by partnering with leading companies Our specialized lending businesses are supported by an established operating platform and have delivered meaningful growth NON - BANK FINANCIAL TECHNOLOGY COMPANIES (FINTECH) Rapid growth Technology driven Alternatives to traditional banking

 

 

9 FINANCIAL TARGETS We have amended our Vision 500 to include enhanced 2030 financial targets that can be achieved by unlocking the full potential of The Bancorp’s payments and lending businesses CAPITAL RETURN Established the plan to optimize our balance sheet Enhance plan to maximize capital return to shareholders PAYMENTS ECOSYSTEM Activate Payments Ecosystem 2.0 CREDIT ROADMAP LONG TERM FINANCIAL TARGETS 1 TOTAL REVENUE ROE ROA LEVERAGE >$700 Million >30% >2.5% > 9% F I N A N C I A L T A R G E T S 1 Long term guidance assumes achievement of management’s credit roadmap growth goals as described elsewhere in this presentation, impact of realized and expected interest rate increases, and other budgetary goals.

 

VISION 700 10 FINTECH SOLUTIONS GENERATES NON - INTEREST INCOME AND ATTRACTS STABLE, LOWER - COST DEPOSITS DEPLOYED INTO LOWER RISK ASSETS IN SPECIALIZED MARKETS FINTECH SOLUTIONS Enabling fintech companies by providing card sponsorship and facilitating other payments activities INSTITUTIONAL BANKING Lending solutions for wealth management firms + COMMERCIAL LENDING Small business lending and commercial fleet leasing T H E B A N C O R P B U S I N E S S M O D E L P A Y M EN TS & D E P O S I TS Market - leading payments activities generate non - interest income and stable, lower - cost deposits L E ND I NG Highly specialized lending products in high - growth markets T H E B A N C O R P B U S I N E S S M O D E L REAL ESTATE BRIDGE LENDING Focus on multi - family assets in high - growth markets DEPOSITS & FEES: FINTECH SOLUTIONS GENERATES NON - INTEREST INCOME AND STABLE, LOWER - COST DEPOSITS

 

 

12 F I N T E C H S O L U T I O N S : F E E G E N E R A T I N G A C T I V I T I E S OUR FINTECH SOLUTIONS BUSINESS ENABLES LEADING FINTECH COMPANIES DEBIT PROGRAM MANAGERS (CHALLENGER BANKS) PREPAID/STORED VALUE PROGRAM MANAGERS • Provides physical and virtual card issuing • Maintains deposit balances on cards • Facilitates payments into the card networks as the sponsoring bank • Established risk and compliance function is highly scalable #6 Debit Issuing Bank 2022 2 #1 Prepaid Issuing Bank 2022 2 22 % % T O T AL B ANK R E VE NU E Q 2 Y T D 2023 1 GR OS S D OL L A R V OL U ME GR OW T H Q 2 2023 V S Q 2 2022 15 % • GOVERNMENT • EMPLOYER BENEFITS • CORPORATE DISBURSEMENTS • PAYROLL • GIFT 1 Includes non - interest income from prepaid and debit card issuance plus ACH, card and other payments processing fees. 2 Nilson Report, April 2023.

 

13 F I N T E C H S O L U T I O N S : E S T A B L I S H E D O P E R A T I N G P L A T F O R M HIGHLY SCALABLE PLATFORM TO SUPPORT OUR STRATEGIC PARTNERS ESTABLISHED OPERATING PLATFORM • Infrastructure in place to support significant growth • Long - term relationships with multiple processors enable efficient onboarding • Continued technology investments without changes to expense base REGULATORY EXPERTISE • Financial Crimes Risk Management program with deep experience across payments ecosystem • Customized risk and compliance tools specific to the Fintech Industry OTHER PAYMENTS OFFERINGS • Rapid Funds instant payment transfer product • Potential to capitalize on credit - linked payments opportunities • Additional payments services include ACH processing for third parties INNOVATIVE SOLUTIONS Our platform supports a wide variety of strategic fintech partners through our established processor relationships, regulatory expertise and suite of other payments products 14 DEPOSIT GROWTH FROM PAYMENTS BUSINESS F I N T E C H S O L U T I O N S : S T A B L E , L O W E R - C O S T D E P O S I T G E N E R A T O R $2.0 $1.0 $0.0 $3.0 $4.0 $5.0 $6.0 $7.0 2019 2020 2021 2022 Q2 2023 A V E R A G E D E P O S I T S B Y P E R I O D ( $ B I L L I O N S ) Fintech Solutions Group (Prepaid and Debit Card Issuance and other payments) Institutional Banking (checking and money market for higher net worth individuals) Other (Includes time deposits and other legacy deposit programs) H I GH L I GH TS • Stable, lower - cost deposit base anchored by multi - year, contractual relationships in our Fintech Solutions business • Fintech Solutions growth driven by increased transactional volume due to electronic banking migration and the addition of new partners DEPOS IT TYPE ( Q 2 2023 AVG . ) B ALANC E % TOTAL Demand & Int. checking $6.4B 98% Savings & money market $0.1B 2% Total $6.5B 100% COST OF DEPOSITS 0.85% 0.25% 0.10% 0.82% 2.31% $4.0 $5.2 $5.7 $6.3 $6.5

 

 

15 STABLE DEPOSITS WITH SIGNIFICANT BALANCE SHEET LIQUIDITY F I N T E C H S O L U T I O N S : S T A B L E , L O W E R - C O S T D E P O S I T G E N E R A T O R ESTIMATED INSURED VS OTHER UNINSURED DEPOSITS June 30 , 2023 Insured 91% Low balance accounts 5% Other uninsured 4% Total deposits 100% SUMMARY OF CREDIT LINES AVAILABLE June 30 , 2023 (Dollars in millions) Federal Reserve Bank $ 2,055 Federal Home Loan Bank 752 Total l ines of credit available $ 2, 807 STRONG POSITIONING Our deposit base is primarily comprised of granular, FDIC insured accounts and we maintain significant borrowing capacity on our credit lines 91% INSURED DEPOSITS Primarily consist of small balance accounts 0% UTILIZATION At June 30, 2023 LOANS & LEASES: HIGHLY SPECIALIZED LENDING WITH LOW LOSS HISTORIES

 

 

 

17 L O A N S & L E A S E S : C R E D I T R O A D M A P CREDIT ROADMAP Delivering enterprise value from our balance sheet is an important element of our business strategy and a primary focus of our credit roadmap initiative MANAGE CREDIT RISK TO DESIRED LEVELS IMPROVE NIM AND MONITOR INTEREST RATE SENSITIVITY MANAGE REAL ESTATE EXPOSURE TO CAPITAL LEVELS MAINTAIN FLEXIBILITY AS WE APPROACH $10B TOTAL ASSETS Building an asset mix that drives earnings and profitability while maintaining desired credit and interest rate risk characteristics KEY CONSIDERATIONS FOR GROWTH GUIDELINES WE CONSIDERED AS WE BUILT OUR CREDIT ROADMAP 18 LOWER CREDIT RISK LOAN PORTFOLIO L O A N S & L E A S E S : S T R O N G C O L L A T E R A L A N D G O V E R N M E N T G U A R A N T E E S B USINESS LINE B ALANC E S HEET C ATEG ORY Q 2 2023 PRINC IPAL B ALANC E ( $ MILLIONS ) % OF TOTAL PORTF OLIO Securities - backed lines of credit (SBLOC) (A) $1,078 19% Institutional Banking Insurance - backed lines of credit (IBLOC) (B) $806 14% Advisor Financing $173 3% Total 2,057 36% Real Estate Bridge Lending Multifamily - commercial real estate (C) 2,042 36% Hospitality - commercial real estate 28 <1% Retail - commercial real estate 12 <1% Other 9 <1% Total 2,091 37% U.S. government guaranteed portion of SBA loans (D) 382 7% Paycheck Protection Program Loans (PPP) (D) 4 <1% Small Business Lending Commercial mortgage SBA (E) 259 5% Non - guaranteed portion of U.S. govn’t guaranteed 7(a) loans 105 2% Non - SBA small business loans 35 <1% Construction SBA 12 <1% Total 797 14% Commercial Fleet Leasing Leasing (F) 657 12% Other Other 56 1% Total principal $ 5,658 100% LOWER HISTORIC CREDIT LOSS NICHES A. SBLOC loans are backed by marketable securities with nominal credit losses B. IBLOC loans are backed by the cash value of life insurance policies with nominal credit losses C. Comprised of apartment buildings in carefully selected areas D. Portion of small business loans fully guaranteed by the U.S. government E. 50% - 60% loan to value ratios at origination F.

 

Recourse to vehicles 19 INSTITUTIONAL BANKING L O A N S & L E A S E S : I N S T I T U T I O N A L B A N K I N G B U S I N E S S O V E R V I E W : • Automated loan application platform, Talea, provides industry - leading speed and delivery • Securities - backed lines of credit provide fast and flexible liquidity for investment portfolios • Insurance - backed lines of credit provide fast and flexible borrowing against the cash value of life insurance • Advisor Finance product provides capital to transitioning financial advisors to facilitate M&A, debt restructuring, and the development of succession plans • Deposit accounts for wealth management clients • Nominal historical credit losses C R E D I T R O A D M A P : • Continue momentum across current SBLOC, IBLOC and Advisor Finance products • Evaluate new lending opportunities in adjacent markets • Market dynamics support business model • Advisors shifting from large broker/dealers to independent platforms • Sector shift to fee - based accounts • Emergence of new wealth management providers LENDING AND BANKING SERVICES FOR WEALTH MANAGERS The Bancorp’s Business Model allows us to build banking solutions to “spec” without competing directly with our partner firms. We do not have any associated asset managers, proprietary advisory programs, or related programs. Our singular focus is to help our partner firms stay competitive in the marketplace and to grow and retain assets AL WAYS A PAR T NE R , N EV ER A C OMP ET I T OR $ 2.1 B P OR T F OL I O SI Z E 6.4 % 6/ 30/ 2023 ES T .

 

Y I EL D 20 INSTITUTIONAL BANKING PRIMARILY COMPRISED OF SECURITIES & CASH VALUE LIFE INSURANCE LENDING L O A N S & L E A S E S : I N S T I T U T I O N A L B A N K I N G L O A N P O R T F O L I O LOAN TYPE PRINCIPAL BALANCE % OF PORTFOLIO Securities - backed lines of credit (SBLOC) $ 1,078 52% Insurance - backed lines of credit (IBLOC) 806 39% Advisor Financing 173 9% Total $ 2,057 100% I N ST I T U T I O N A L B A N KI N G LO A N S ( $ M I LL IO N S ) 6/ 30/ 2 0 23 SECURITIES - BACKED LINES OF CREDIT • Nominal historical credit losses • Underwriting standards of generally 50 % to equities and 80 % or more to fixed income securities POR T F OL I O A TTR I B U TES PRINCIPAL BALANCE % PRINCIPAL TO COLLATERAL $ 18 41% 16 62% 14 35% 10 32% 9 64% 9 44% 8 70% 8 73% 6 29% 6 51% Total $ 104 49% T O P 10 SB LO C LO A N S ( $ M I LL IO N S ) 6/ 30/ 2 0 23 INSURANCE - BACKED LINES OF CREDIT • Nominal historical credit losses • Loans backed by the cash value of insurance policies 21 SMALL BUSINESS LENDING L O A N S & L E A S E S : S M A L L B U S I N E S S L E N D I N G B U S I N E S S O V E R V I E W : • Established a distinct platform within the fragmented SBA market • National portfolio approach allows pricing and client flexibility • Solid credit performance demonstrated over time • Client segment strategy tailored by market C R E D I T R O A D M A P : • Continue delivering growth within existing small business lending platform while entering new verticals and growing the SBAlliance Ő • SBAlliance Ő program provides lending support to banks and financial institutions who need SBA lending capabilities through products such as: • Wholesale loan purchases • Vertical focus with expansion of funeral home lending program SBA AND OTHER SMALL BUSINESS LENDING $ 793 M P OR T F OL I O SI Z E 1 6.8 % 6/ 30/ 2023 ES T . Y I EL D ~$ 800 K AVE R AG E 7 ( a ) L OA N S I Z E 1 Excludes $4M PPP loans.

 

 

22 L O A N S & L E A S E S : S T R O N G C O L L A T E R A L & G O V E R N M E N T G U A R A N T E E S SM A LL B U SI N E S S LO A N S B Y T YP E 1 ( $ M IL LI O N S ) 6/ 30/ 2 0 23 1 Excludes the government guaranteed portion of SBA 7(a) loans and PPP loans. TYPE DISTRIBUTION • Diverse product mix • Commercial mortgage and construction are generally originated with 50% - 60% LTV’s GEOGRAPHIC DISTRIBUTION • Diverse geographic mix • Largest concentration in California representing 20% of total POR T F OL I O A TTR I B U TES SM A LL B U SI N E S S LO A N S B Y S TA TE 1 ( $ M ILL IO N S ) 6/ 30/ 2 0 23 STATE SBL COMMERCIAL MORTGAGE SBL CONSTRUCTION SBL NON - REAL ESTATE TOTAL California $ 74 $ 4 $ 3 $ 81 Florida 68 1 3 72 North Carolina 33 7 2 42 New York 26 - 3 29 New Jersey 20 - 3 23 Pennsylvania 21 - — 21 Georgia 16 - 1 17 Texas 12 - 4 16 Illinois 14 - 1 15 Other States <$15 million 77 3 15 95 Total $ 361 $ 15 $ 35 $ 411 SMALL BUSINESS LENDING TYPE SBL COMMERCIAL MORTGAGE SBL CONSTRUCTION SBL NON - REAL ESTATE TOTAL Hotels and motels $ 74 $ - $ - $ 74 Full - service restaurants 24 4 2 30 Funeral homes and funeral services 27 - - 27 Car washes 17 2 - 19 Child day care services 15 1 1 17 Outpatient mental health and substance abuse centers 16 - - 16 Homes for the elderly 13 - - 13 Gasoline stations with convenience stores 12 - - 12 Fitness and recreational sports centers 8 - 2 10 Offices of lawyers 9 - - 9 Lessors of other real estate property 8 - 1 9 Limited - service restaurants 2 2 3 7 General warehousing and storage 7 - - 7 Plumbing, heating, and air - conditioning companies 6 - 1 7 Other 123 6 25 154 Total $ 361 $ 15 $ 35 $ 411 23 L O A N S & L E A S E S : C O M M E R C I A L F L E E T L E A S I N G B U S I N E S S O V E R V I E W : • Niche provider of vehicle leasing solutions • Focus on smaller fleets (less than 150 vehicles) • Direct lessor (The Bancorp Bank, N . A . sources opportunities directly and provides value - add services such as outfitting police cars) • Historical acquisitions of small leasing companies have contributed to growth • Mix of commercial (~85%), government agencies and educational institutions (~15%) C R E D I T R O A D M A P : • Continue enhancing platform and growing balances • Enhanced sales process and support functions • Pursuing technology enhancements to scale business with efficiency • Constantly evaluating organic and inorganic growth opportunities in the vehicle space NICHE - VEHICLE FLEET LEASING SOLUTIONS COMMERCIAL FLEET LEASING $ 657 M P OR T F OL I O SI Z E 6.9 % 6/ 30/ 2023 ES T . Y I EL D

 

 

24 L O A N S & L E A S E S : C O M M E R C I A L F L E E T L E A S I N G P O R T F O L I O • Largest concentration is construction and government sectors • Of the $657M total portfolio, $579M are vehicle leases with the remaining $78M comprised of equipment leases POR T F OL I O A TTR I B U TES TYPE BALANCE TOTAL Construction $ 118 18% Government agencies and public institutions 82 12% Waste management and remediation services 81 12% Real estate and rental and leasing 71 11% Retail trade 47 7% Health care and social assistance 30 5% Manufacturing 22 3% Professional, scientific, and technical services 21 3% Finance and insurance 18 3% Wholesale trade 17 3% Transportation and warehousing 12 2% Educational services 9 1% Mining, quarrying, and oil and gas extractions 8 1% Other 121 19% Total $ 657 100% DI R E C T L E A S E F I N A N C I N G B Y S TA TE ( $ M I LL IO N S ) 6/ 30/ 2 0 23 COMMERCIAL FLEET LEASING STATE BALANCE TOTAL Florida 93 14% Utah 65 10% California 61 9% Pennsylvania 40 6% New Jersey 39 6% New York 33 5% North Carolina 32 5% Texas 30 5% Maryland 29 4% Connecticut 27 4% Washington 16 2% Idaho 16 2% Georgia 14 2% Iowa 13 2% Ohio 12 2% Other states 137 22% Total $ 657 100% DI R E C T L E A S E F I N A N C IN G B Y T YP E ( $ M IL LIO N S ) 6/ 30/ 2 0 23 25 COMMERCIAL REAL ESTATE BRIDGE LENDING L O A N S & L E A S E S : R E A L E S T A T E B R I D G E L E N D I N G TYPE # LOANS BALANCE ORIGINATION DATE LTV WEIGHTED AVG INTEREST RATE % TOTAL Multifamily (apartments) 148 $ 2,040 71% 8.9% 98% Hospitality (hotels and lodging) 2 27 65% 9.1% 1% Retail 2 12 72% 7.3% <1% Other 2 9 73% 5.2% <1% Total 154 $ 2,088 72% 8.9% 100% CO M M E R C I A L RE AL E S T A T E L O AN S B Y T YP E ( $ M I LLI O N S ) 6/ 30/ 2 0 23 B U S I N E S S O V E R V I E W : • Resumed floating rate bridge lending business in Q3 2021 • Lending focus on apartment buildings in carefully selected markets Real estate bridge lending APARTMENTS – 98% LODGING – 1% RETAIL – <1 % OTHER - <1 % A S S E T C L A S S E S — % P O R T F O L I O • Vast majority of loans are apartment buildings including all the top 30 exposures • Loans originated prior to Q3 2021 will continue to be accounted for at fair value • Loans originated in 2021 and after will be held for investment and use the CECL methodology POR T F OL I O A TTR I B U TES $ 1,826 M L OA N S OR I GI N A T ED S I N C E Q 3 2021 R ES U MP T I ON ( A L L A P A R T M E N T B U I L D I N G S )

 

 

FINANCIAL REVIEW

 

27 LOANS REPRICING TO HIGHER RATES HAVE POSITIVELY IMPACTED NIM AS BENCHMARK RATES HAVE CONTINUED TO RISE F I N A N C I A L R E V I E W : I N T E R E S T R A T E S E N S I T I V I T Y 1 Loans are as of June 30, 2023, and deposits are average balance for Q2 2023. 2 Institutional Banking substantially comprised of securities backed loans and insurance backed loans. 3 Excludes $4M of short - term PPP loans which are government guaranteed and deferred costs and fees. Please see Appendix slide 35 for reconciliation to total SBA Loans. Q2 2023 BALANCE 1 ( $ M ILLIO N S ) RATE SENSITIVITY Institutional Banking 2 $2,057 Majority of loan yields will increase as rates increase Real Estate Bridge Lending $2,088 8.9% wtd avg yield; rates will increase as rates increase Non - PPP Small Business 3 $793 Majority of loan yields will increase as rates increase Leasing $657 Fixed rates but short average lives Total $5,595 Q2 2023 Average Deposits 1 $6,478 A majority of deposits adjust to a portion of rate changes in line with partner contracts Core Lending Businesses HI G HL I G HTS x Floating rate lending businesses include Real Estate Bridge Lending, SBLOC, IBLOC and the majority of Small Business x Deposits primarily comprised of prepaid and debit accounts, anchored by multi - year, contractual relationships x Interest income is modeled to increase in higher rate environments 28 REVENUE GROWTH HAS SIGNIFICANTLY EXCEEDED EXPENSE GROWTH F I N A N C I A L R E V I E W : E A R N I N G S A N D P R O F I T A B I L I T Y 1 Revenue includes net interest income and non - interest income.

 

Please see Appendix slide 33. 2 Non - interest income as percentage of average assets ranks in top 8% of the uniform bank performance report peer group through Q1 2023. $0 $25 $50 $75 $100 $125 $150 $175 $200 2020 2021 2022 Q2 YTD 2022 Q2 YTD 2023 N O N - I N T E R E S T E X P E N S E $ Millions HI G HL I G HTS • Net interest income growth driven by increased NIM from heightened interest rate environment • Greater ratio of non - interest income to total assets compared to peers 2 $0 $50 $100 $150 $200 $250 $300 $350 2020 2021 2022 Q2 YTD 2022 Q2 YTD 2023 R E V E N U E 1 $ Millions $400 29 $0 $5 $10 $15 $20 $25 2019 2020 2021 2022 Q2 2023 ALLOWANCE FOR CREDIT LOSSES REFLECTS OUR LOWER - RISK LOAN PORTFOLIO F I N A N C I A L R E V I E W : L O A N L O S S R E S E R V E A L L O W A N C E F O R C R E D I T L O S S E S ( $ M I L L I O N S ) Small Business SBLOC/IBLOC/Advisor Financing HELOC/Consumer/Other Allowance for credit losses as % of loan balance 0.6% 0.6% 0.5% 0.4% 0.4% Adjusted allowance for credit losses as % of loan balance (excluding SBLOC & IBLOC) 1 1.2% 1.4% 0.9% 0.7% 0.7% HIG HL IG HT S • Nominal historical losses across SBLOC, IBLOC.

 

and Advisor Finance • Adoption of CECL methodology in 2020 Leasing Real Estate Bridge Lending 1 Please see Appendix slide 34 for GAAP to Non - GAAP reconciliation of adjusted allowance for credit losses to GAAP allowance for credit losses as % of adjusted loan balance (excluding SBLOC & IBLOC).

 

30 CAPITAL POSITION F I N A N C I A L R E V I E W : H I S T O R I C A L C A P I T A L P O S I T I O N HIG HL IG HT S • Increased the stock buyback program to $25M per quarter in 2023 2 • Corporate governance requires periodic assessment of capital minimums • Capital planning includes stress testing for unexpected conditions and events 6% 4% 2% 0% 8% 10% 12% 14% 16% 18% 20% 2020 2021 2022 Q2 2023 Tier 1 Leverage Ratio 9.1% 10.9% 10.7% 11.6% 5.0% Tier 1 Risk - based Capital Ratio (RBC) 1 14% 15% 15% 17% 8% Total Risk - based Capital Ratio 15% 16% 15% 17% 10% Tier 1 Capital Ratio Total RBC Ratio Tier 1 Leverage Ratio T H E B A N C O R P B A N K , N . A . C A P I T A L R A T I O S 1 Common Equity Tier 1 to risk weighted assets is identical to Tier 1 risk - based ratio and has a 6.5% well capitalized minimum. 2 Buyback may be modified without notice at any time.

 

Well - capitalized minimum 31 WE HAVE EXECUTED AGAINST OUR STRATEGIC PLAN AND CONTINUE TO IMPROVE FINANCIAL PERFORMANCE F I N A N C I A L R E V I E W : E A R N I N G S A N D P R O F I T A B I L I T Y P E R F O R M A N C E M E T R I C S 2 0 2 0 2 0 2 1 2 0 2 2 Q 2 Y T D 2 0 2 3 L O N G - T E R M T A R G E T S ROE 15.1% 17.9% 19.3% 27.4% >30% ROA 1.34% 1.68% 1.81% 2.64% > 2.5% EPS $1.37 $1.88 $2.27 $1.76 Bancorp Bank, N.A. Leverage Ratio 9.1% 10.9% 10.7% 11.6% >9% Total Assets $6.3B $6.8B $7.9B $7.5B <$10B Efficiency Ratio 1 59% 53% 48% 42% 1 Please see Appendix slide 33 for calculation of efficiency ratio. Decreases in the efficiency ratio indicate greater efficiency, i.e., lower expenses vs higher revenue.

 

APPENDIX

 

33 GAAP REVENUE AND EFFICIENCY RATIO CALCULATIONS A P P E N D I X ( $ m i l l i o n s ) The Bancorp 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 Q2 YTD 2022 Q2 YTD 2023 Net interest income $ 141,288 $ 194,866 $ 210,876 $248,841 $107,422 $173,011 Non - interest income 104,127 84,617 104,749 105,683 56,517 58,325 Total revenue 245,415 279,483 315,625 354,524 163,939 231,336 Growth (Current period over previous period) 14% 13% 12% 41% Non - interest expense $ 168,521 $ 164,847 $ 168,350 $169,502 $81,197 $97,973 Efficiency Ratio 1 69% 59% 53% 48% 49% 42% Payments non - interest income (Fintech Solutions business line) ACH, card and other payment processing fees $ 9,376 $ 7,101 $ 7,526 $8,935 $4,322 $4,600 Prepaid, debit card and related fees 65,141 74,465 74,654 77,236 38,690 45,500 Total payments (Fintech Solutions) non - interest income $ 74,517 $ 81,566 $ 82,180 $86,171 $43,012 $50,100 % of Total revenue 24% 26% 22% 1 The efficiency ratio is calculated by dividing GAAP total non - interest expense by the total of GAAP net interest income and non - interest income. This ratio compares revenues generated with the amount of expense required to generate such revenues, and may be used as one measure of overall efficiency.

 

34 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP A P P E N D I X ( $ m i l l i o n s ) 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 Q 2 2 0 2 3 Allowance for credit losses on loans and leases GAAP $ 10,238 $ 16,082 $ 17,806 $ 22,374 $ 23,284 Allowance for credit losses on SBLOC & IBLOC 553 775 964 1,167 942 Adjusted allowance for credit losses excluding SBLOC & IBLOC 9,685 15,307 16,842 21,207 22,342 Total loans and leases GAAP 1,824,245 2,652,323 3,747,224 5,486,853 5,267,574 SBLOC & IBLOC 1,024,420 1,550,086 1,929,581 2,332,469 1,883,607 Adjusted total loans and leases excluding SBLOC & IBLOC $ 799,825 $ 1,102,237 $ 1,817,643 $ 3,154,384 $ 3,383,967 Allowance for credit losses as % of total loans and leases balance GAAP 0.6% 0.6% 0.5% 0.4% 0.4% Adjusted allowance for credit losses as % of adjusted total loans and leases balance 1 1.2% 1.4% 0.9% 0.7% 0.7% 1 Management excludes SBLOC and IBLOC in certain of its internal analysis, due to the nature of the related loan collateral. SBLOC are collateralized by marketable securities, with loan to values based upon guideline percentages which vary based upon security type. IBLOC are collateralized by the cash value of life insurance.

 

35 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP A P P E N D I X ( $ m i l l i o n s ) Small Business Loans 1 Q 2 2 0 2 3 U.S. government guaranteed portion of SBA loans $ 382 Paycheck Protection Program Loans (PPP) 4 Commercial mortgage SBA 259 Construction SBA 12 Non - guaranteed portion of U.S. government guaranteed 7(a) loans 105 Non - SBA small business loans 35 Total principal $ 797 Unamortized fees and costs 11 Total small business loans $ 808 Total principal 797 Less: Paycheck Protection Program Loan (PPP) 4 Total Small Business Lending principal excluding PPP $ 793 1 Management provides a breakdown of small business loans, to afford a greater understanding of its components, including PPP loans.