The Bancorp, Inc. Reports Second Quarter 2020 Financial Results - Bancorp (NASDAQ:TBBK)

The Bancorp, Inc. ("The Bancorp") TBBK, a financial holding company, today reported financial results for the second quarter of 2020.

Highlights

For the quarter ended June 30, 2020, The Bancorp earned net income of $20.3 million from continuing operations, and $0.35 diluted earnings per share from combined continuing and discontinued operations.

Return on assets and equity for the quarter ended June 30, 2020 increased to 1.3% and 15.6%, respectively, compared to 1.0% and 10.2% for the quarter ended June 30, 2019.

Net interest margin increased to 3.53% for the quarter ended June 30, 2020, compared to 3.41% for the quarter ended June 30, 2019 and 3.34% for the quarter ended March 31, 2020.

Net interest income increased 45% to $50.2 million for the quarter ended June 30, 2020, compared to $34.5 million for the quarter ended June 30, 2019.

Average loans and leases, including loans held for sale, increased 76% to $3.93 billion for the quarter ended June 30, 2020, compared to $2.23 billion for the quarter ended June 30, 2019.

Prepaid, debit card and related fees increased 18% to $18.7 million for the quarter ended June 30, 2020, compared to $15.8 million for the quarter ended June 30, 2019. Gross dollar volume (GDV), representing total spend on cards, increased 43%.

SBLOC (securities-backed lines of credit) and IBLOC (insurance backed lines of credit) loans increased 54% year over year and 11% quarter over quarter to $1.3 billion at June 30, 2020.

Small Business Loans, including those held-for-sale, increased 16% year over year to $601.4 million at June 30, 2020, exclusive of $208 million of Paycheck Protection Program loans.

As of June 30, 2020, we have originated approximately 1,250 Paycheck Protection Program loans, totaling approximately $208 million, which we expect will generate approximately $5.5 million of fees and interest. We believe that income will be recognized over eleven months, beginning in April 2020. The average loan size was approximately $165,000 with 92% of the loans under $350,000.

The average rate on $5.4 billion of average deposits and interest-bearing liabilities in the second quarter of 2020 was 0.12%. Average prepaid and debit card account deposits of $3.9 billion for second quarter 2020, reflected an increase of 56% over the $2.5 billion for the quarter ended June 30, 2019.

Consolidated leverage ratio was 8.48% at June 30, 2020. The Bancorp and its subsidiary, The Bancorp Bank (the "Bank"), remain well capitalized.

Book value per common share at June 30, 2020 was $9.28 per share compared to $8.07 at June 30, 2019, an increase of 15%.

Damian Kozlowski, The Bancorp's Chief Executive Officer, said, "We have continued to experience momentum in our core earnings driven by higher interest income with falling interest expense, increased loan balances and higher payment volumes. In the second quarter of 2020, the Bancorp earned 35 cents a share from both increased fee and spread revenue. While the pandemic continues to be a significant source of market uncertainty, we have been able to achieve better revenue productivity and operating efficiency during this time, while also making investments in our platform. Our earnings guidance for full year 2020 continues to be $1.25 per share."

The Bancorp reported net income of $20.1 million, or $0.35 per diluted share, for the quarter ended June 30, 2020, compared to net income of $11.4 million, or $0.20 per diluted share, for the quarter ended June 30, 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 8.48%, 14.84%, 15.27% and 14.84%, 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, July 31, 2020 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 2755988. 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 7, 2020 by dialing 855.859.2056, access code 2755988.

The Bancorp, Inc. 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," "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.
Financial highlights
(unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
Condensed income statement	2020			2019			2020			2019
	(dollars in thousands except per share data)

Net interest income	$	50,246		$	34,539		$	93,157		$	68,549
Provision for loan and lease losses		922			600			4,501			2,300
Non-interest income
Service fees on deposit accounts		5			14			15			61
ACH, card and other payment processing fees		1,707			2,521			3,553			4,824
Prepaid, debit card and related fees		18,673			15,840			37,213			32,003
Net realized and unrealized gains (losses) on commercial
loans originated for sale		(940	)		(148	)		(6,096	)		10,615
Change in value of investment in unconsolidated entity		-			-			(45	)		-
Leasing related income		443			1,027			1,276			1,722
Other non-interest income		478			495			1,049			889
Total non-interest income		20,366			19,749			36,965			50,114
Non-interest expense
Salaries and employee benefits		25,492			21,826			48,233			45,666
Data processing expense		1,177			1,223			2,346			2,492
Legal expense		2,229			1,534			3,142			2,858
FDIC Insurance		2,918			2,095			5,507			4,024
Software		3,386			3,060			6,863			5,981
Lease termination expense		-			908			-			908
Other non-interest expense		7,418			8,873			14,947			16,819
Total non-interest expense		42,620			39,519			81,038			78,748
Income from continuing operations before income taxes		27,070			14,169			44,583			37,615
Income tax expense		6,787			3,575			11,139			9,610
Net income from continuing operations		20,283			10,594			33,444			28,005
Discontinued operations
Income (loss) from discontinued operations before income taxes		(274	)		919			(1,049	)		1,724
Income tax expense (benefit)		(59	)		163			(264	)		449
Net income (loss) from discontinued operations, net of tax		(215	)		756			(785	)		1,275
Net income	$	20,068		$	11,350		$	32,659		$	29,280

Net income per share from continuing operations - basic	$	0.35		$	0.19		$	0.58		$	0.50
Net income (loss) per share from discontinued operations - basic	$	-		$	0.01		$	(0.01	)	$	0.02
Net income per share - basic	$	0.35		$	0.20		$	0.57		$	0.52

Net income per share from continuing operations - diluted	$	0.35		$	0.19		$	0.58		$	0.49
Net income (loss) per share from discontinued operations - diluted	$	-		$	0.01		$	(0.01	)	$	0.02
Net income per share - diluted	$	0.35		$	0.20		$	0.57		$	0.51
Weighted average shares - basic		57,489,719			56,702,182			57,355,282			56,612,596
Weighted average shares - diluted		57,800,115			57,197,433			57,856,791			57,031,206

Balance sheet		June 30,			March 31,			December 31,			June 30,
		2020			2020			2019			2019
		(dollars in thousands)
Assets:
Cash and cash equivalents
	Cash and due from banks	$	5,094		$	13,610		$	19,928		$	27,450
	Interest earning deposits at Federal Reserve Bank		475,627			105,978			924,544			284,823
	Total cash and cash equivalents		480,721			119,588			944,472			312,273

Investment securities, available-for-sale, at fair value			1,324,447			1,353,278			1,320,692			1,361,779
Investment securities, held-to-maturity, at cost			-			-			84,387			84,414
Commercial loans held for sale, at fair value			1,807,630			1,716,450			1,180,546			934,452
Loans, net of deferred fees and costs			2,322,737			1,985,755			1,824,245			1,561,451
Allowance for credit losses			(14,625	)		(14,883	)		(10,238	)		(9,989	)
Loans, net			2,308,112			1,970,872			1,814,007			1,551,462
Federal Home Loan Bank & Atlantic Community Bancshares stock			1,368			1,142			5,342			6,342
Premises and equipment, net			16,701			17,148			17,538			17,380
Accrued interest receivable			18,897			15,660			13,619			14,567
Intangible assets, net			2,710			2,857			2,315			3,081
Deferred tax asset, net			7,921			12,797			12,538			14,574
Investment in unconsolidated entity			34,064			34,273			39,154			58,012
Assets held for sale from discontinued operations			128,463			134,118			140,657			169,109
Other assets			83,003			79,925			81,696			76,123
	Total assets	$	6,214,037		$	5,458,108		$	5,656,963		$	4,603,568

Liabilities:
Deposits
	Demand and interest checking	$	5,089,741		$	4,512,949		$	4,402,740		$	3,964,905
	Savings and money market		455,458			178,174			174,290			26,841
	Time deposits		-			-			475,000			-
	Total deposits		5,545,199			4,691,123			5,052,030			3,991,746

Securities sold under agreements to repurchase			42			42			82			93
Short-term borrowings			-			140,000			-			45,000
Subordinated debenture			13,401			13,401			13,401			13,401
Long-term borrowings			40,639			40,813			40,991			41,334
Other liabilities			81,677			74,625			65,962			53,862
	Total liabilities	$	5,680,958		$	4,960,004		$	5,172,466		$	4,145,436

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,555,308 and 56,874,956 shares issued and outstanding at June 30, 2020 and 2019, respectively			57,555			57,426			56,941			56,875
Treasury stock (100,000 shares)			(866	)		(866	)		(866	)		(866	)
Additional paid-in capital			374,578			372,984			371,633			368,771
Retained earnings			81,028			60,960			50,742			28,463
Accumulated other comprehensive income			20,784			7,600			6,047			4,889
Total shareholders' equity			533,079			498,104			484,497			458,132

	Total liabilities and shareholders' equity	$	6,214,037		$	5,458,108		$	5,656,963		$	4,603,568

Average balance sheet and net interest income		Three months ended June 30, 2020							Three months ended June 30, 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 **	$	3,925,515		$	41,448	4.22	%	$	2,216,935		$	29,737	5.37	%
	Leases - bank qualified*		9,217			162	7.03	%		15,446			268	6.94	%
	Investment securities-taxable		1,334,368			10,188	3.05	%		1,443,671			11,634	3.22	%
	Investment securities-nontaxable*		4,402			35	3.18	%		6,610			54	3.27	%
	Interest earning deposits at Federal Reserve Bank		426,174			107	0.10	%		420,153			2,455	2.34	%
Net interest earning assets			5,699,676			51,940	3.65	%		4,102,815			44,148	4.30	%

Allowance for credit losses			(14,822	)						(9,963	)
Assets held for sale from discontinued operations			130,530			1,094	3.35	%		154,057			1,659	4.31	%
Other assets			228,443							283,036
		$	6,043,827						$	4,529,945

Liabilities and Shareholders' Equity:
Deposits:
	Demand and interest checking	$	5,140,167		$	1,390	0.11	%	$	3,847,623		$	8,783	0.91	%
	Savings and money market		234,201			120	0.20	%		26,497			40	0.60	%
Total deposits			5,374,368			1,510	0.11	%		3,874,120			8,823	0.91	%

Short-term borrowings			16,428			15	0.37	%		80,242			526	2.62	%
Securities sold under agreements to repurchase			41			-	0.00	%		92			-	0.00	%
Subordinated debentures			13,401			128	3.82	%		13,401			192	5.73	%
Total deposits and liabilities			5,404,238			1,653	0.12	%		3,967,855			9,541	0.96	%

Other liabilities			123,997							115,634
Total liabilities			5,528,235							4,083,489

Shareholders' equity			515,592							446,456
		$	6,043,827						$	4,529,945
	Net interest income on tax equivalent basis*				$	51,381						$	36,266

	Tax equivalent adjustment					41							68

	Net interest income				$	51,340						$	36,198
	Net interest margin *						3.53	%						3.41	%
__________________________________
* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2020 and 2019.
** Includes loans held for sale.

Average balance sheet and net interest income		Six months ended June 30, 2020							Six months ended June 30, 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 **	$	3,593,921		$	80,607	4.49	%	$	2,241,746		$	59,898	5.34	%
	Leases - bank qualified*		10,096			362	7.17	%		16,613			695	8.37	%
	Investment securities-taxable		1,364,956			20,683	3.03	%		1,374,019			22,164	3.23	%
	Investment securities-nontaxable*		4,788			75	3.13	%		7,075			114	3.22	%
	Interest earning deposits at Federal Reserve Bank		460,025			1,730	0.75	%		421,580			4,957	2.35	%
Net interest earning assets			5,433,786			103,457	3.81	%		4,061,033			87,828	4.33	%

Allowance for credit losses			(12,532	)						(9,305	)
Assets held for sale from discontinued operations			133,903			2,368	3.54	%		163,874			3,684	4.50	%
Other assets			233,088							272,922
		$	5,788,245						$	4,488,524

Liabilities and Shareholders' Equity:
Deposits:
	Demand and interest checking	$	4,746,928		$	8,085	0.34	%	$	3,838,868		$	17,616	0.92	%
	Savings and money market		203,888			170	0.17	%		28,931			77	0.53	%
	Time		159,752			1,483	1.86	%		-			-	-
Total deposits			5,110,568			9,738	0.38	%		3,867,799			17,693	0.91	%

Short-term borrowings			36,620			180	0.98	%		77,330			1,029	2.66	%
Securities sold under agreements to repurchase			57			-	0.00	%		91			-	0.00	%
Subordinated debentures			13,401			290	4.33	%		13,401			387	5.78	%
Total deposits and liabilities			5,160,646			10,208	0.40	%		3,958,621			19,109	0.97	%

Other liabilities			118,811							97,449
Total liabilities			5,279,457							4,056,070

Shareholders' equity			508,788							432,454
		$	5,788,245						$	4,488,524
	Net interest income on tax equivalent basis*				$	95,617						$	72,403

	Tax equivalent adjustment					92							170

	Net interest income				$	95,525						$	72,233
	Net interest margin *						3.43	%						3.43	%
__________________________________
* Full taxable equivalent basis, using a statutory rate of 21% for 2020 and 2019.
** Includes loans held for sale.

Allowance for loan and lease losses:		Six months ended						Year ended
		June 30,			June 30,			December 31,
		2020			2019			2019
		(dollars in thousands)

Balance in the allowance for loan and lease losses at beginning of period (1)		$	12,874		$	8,653		$	8,653

Loans charged-off:
	SBA non-real estate		1,048			893			1,362
	Direct lease financing		1,552			185			528
	Other consumer loans		-			2			1,103
	Total		2,600			1,080			2,993

Recoveries:
	SBA non-real estate		54			100			125
	Direct lease financing		90			16			51
	Other consumer loans		-			-			2
	Total		144			116			178
Net charge-offs			2,456			964			2,815
Provision credited to allowance, excluding commitment provision			4,207			2,300			4,400

Balance in allowance for loan and lease losses at end of period		$	14,625		$	9,989		$	10,238
Net charge-offs/average loans			0.06	%		0.04	%		0.12	%
Net charge-offs/average loans (annualized)			0.12	%		0.09	%		0.12	%
Net charge-offs/average assets			0.04	%		0.02	%		0.06	%
	(1) Excludes activity from assets held for sale from discontinued operations.

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

SBL non-real estate	$	293,692	$	84,946	$	84,579	$	75,475
SBL commercial mortgage		259,020		233,220		218,110		189,427
SBL construction		33,193		48,823		45,310		29,298
Small business loans *		585,905		366,989		347,999		294,200
Direct lease financing		422,505		445,967		434,460		407,907
SBLOC / IBLOC**		1,287,350		1,156,433		1,024,420		837,672
Advisor financing ***		15,529		-		-		-
Other specialty lending		2,706		2,711		3,055		3,432
Other consumer loans ****		4,003		4,023		4,554		7,898
		2,317,998		1,976,123		1,814,488		1,551,109
Unamortized loan fees and costs		4,739		9,632		9,757		10,342
Total loans, net of unamortized fees and costs	$	2,322,737	$	1,985,755	$	1,824,245	$	1,561,451

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

SBL, including unamortized fees and costs		583,935		371,072		352,214		301,502
SBL, included in held-for-sale		225,401		223,987		220,358		215,064
Total small business loans	$	809,336	$	595,059	$	572,572	$	516,566

* The preceding table shows small business loans and small business loans held-for-sale, which consist of the government guaranteed portion of SBA loans at the dates indicated (in thousands).

** 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 $361,000 and $882,000 at June 30, 2020 and December 31, 2019, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for loan and lease losses.

Small business loans as of June 30, 2020

	Loan principal
	(in millions)
U.S. government guaranteed portion of SBA loans (a)	$	306
Paycheck Protection Program Loans (PPP) (a)		208
Commercial mortgage SBA (b)		165
Construction SBA (c)		16
Unguaranteed portion of U.S. government guaranteed loans (d)		89
Non-SBA small business loans (e)		22
Total principal	$	806
Fair value adjustment (f)		5
Unamortized fees		(2)
Total small business loans	$	809

(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 $16 million Construction SBA loans, $12 million are 504 first mortgages with an origination date LTV of 50-60% and $4 million are SBA interim loans with an approved SBA post-construction full takeout/payoff.

(d) The $89 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) Of the $22 million in non-SBA loans, $3 million are bridge loans with permanent lender takeout commitments, $2 million is a secured conventional loan with an 80% origination date LTV and $17 million consist 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.

(f) The fair value adjustment applies to the U.S. government guaranteed portion of SBA loans.

Additionally, the recently passed CARES Act of 2020 has provided significant support for SBA loans including funding intended to provide six months of interest payments on SBA loans, as well as other accommodations to provide for the payment of payroll and other operating expenses.

Type as of June 30, 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	$	68	$	7	$	-	$	75	26%
Professional services offices		22		-		2		24	8%
Full-service restaurants		15		1		5		21	7%
Child day care and youth services		15		-		1		16	6%
Bakeries		4		-		12		16	6%
Fitness/rec centers and instruction		8		-		4		12	4%
General warehousing and storage		11		-		-		11	4%
Limited-service restaurants and catering		7		-		4		11	4%
Elderly assisted living facilities		2		7		2		11	4%
Amusement and recreation industries		5		1		1		7	2%
Car washes		3		3		-		6	2%
Funeral homes		5		-		-		5	2%
New and used car dealers		4		-		-		4	1%
Automotive servicing		3		-		1		4	1%
Other		45		1		23		69	23%
Total	$	217	$	20	$	55	$	292	100%

* Substantially all are SBA loans with 50-60% loan to value ratios at their origination.

State diversification as of June 30, 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	$	33	$	7	$	7	$	47	16%
California		34		2		5		41	14%
Pennsylvania		30		-		4		34	11%
Illinois		28		-		4		32	11%
North Carolina		24		1		3		28	10%
Texas		11		-		5		16	6%
New York		10		1		5		16	5%
Tennessee		7		6		1		14	5%
New Jersey		2		1		7		10	4%
Virginia		8		1		2		11	4%
Georgia		5		-		2		7	2%
Michigan		3		-		1		4	2%
Colorado		2		-		1		3	1%
Ohio		3		-		-		3	1%
Other states		17		1		8		26	8%
Total	$	217	$	20	$	55	$	292	100%

* Substantially all are SBA loans with 50-60% loan to value ratios at their origination.

Top 10 loans as of June 30, 2020

Type*	State	SBL commercial mortgage*		SBL construction*		Total
	(in millions)
Professional services office	CA	$	9	$	-	$	9
Hotel	FL		9		-		9
General warehouse	PA		8		-		8
Hotel	NC		6		-		6
Assisted living facility	FL		-		5		5
Hotel	NC		5		-		5
Fitness and rec center	PA		4		-		4
Hotel	PA		4		-		4
Hotel	TN		-		4		4
Gas Station	VA		3		-		3
Total		$	48	$	9	$	57

* All of the top 10 loans are SBA and with the rest of the commercial real estate portfolio were originated with an approximate loan to value ratio between 50% and 60% at origination .

Commercial real estate loans held for sale which were originated for sale or securitization, excluding SBA loans, are as follows including LTV at origination:

Type as of June 30, 2020

Type	# Loans	Balance		Origination date LTV	Weighted average minimum interest rate
	(dollars in millions)
Multifamily (apartments)	181	$	1,450	76%	4.77%
Hospitality (hotels and lodging)*	11		60	65%	5.70%
Retail	7		52	72%	4.96%
Other	8		25	69%	5.20%
	207	$	1,587	75%	4.82%
Fair value adjustment *			(5)
Total		$	1,582

*Of the total $5 million fair value adjustment, $2 million was related to hospitality loans.

State diversification as of June 30, 2020				15 Largest loans (all multifamily) as of June 30, 2020

State	Balance		Origination date LTV	State	Balance		Origination date LTV
	(in millions)				(in millions)
Texas	$	407	77%	North Carolina	$	43	78%
Georgia		234	78%	Texas		37	79%
Arizona		121	76%	Texas		35	80%
North Carolina		109	78%	Pennsylvania		31	77%
Nevada		56	80%	Georgia		31	80%
Alabama		54	76%	Nevada		28	80%
Other states each <$50 million		606	73%	Texas		28	75%
Total	$	1,587	75%	Texas		27	77%
				Arizona		26	79%
				Mississippi		25	79%
				Texas		24	77%
				North Carolina		24	77%
				Texas		24	77%
				California		23	65%
				Georgia		23	79%
				15 Largest loans	$	429	77%

Institutional banking loans outstanding at June 30, 2020

Type	Principal		% of total
	(in millions)
Securities backed lines of credit (SBLOC)	$	1,003	77	%
Insurance backed lines of credit (IBLOC)		284	22	%
Advisor financing		16	1	%
Total	$	1,303	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 % principal to collateral. As a result, the accounts monitored by management and related information as of June 30, 2020 were as follows:

Top 10 SBLOC loans

	Principal amount		% Principal to collateral
	(in millions)
	$	33	31	%
		19	44	%
		14	23	%
		11	29	%
		11	80	%
		10	49	%
		10	27	%
		9	75	%
		8	22	%
		8	71	%
Total	$	133	40	%

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 January 21, 2020 all were rated Superior (A+ or better) by AM BEST. Moody's ratings were at least A rated, and ranged from A3 to Aa2.

*Direct lease financing by type as of June 30, 2020**

	Principal balance		% Total
	(in millions)
Government agencies and public institutions**	$	77	18	%
Construction		74	18	%
Waste management and remediation services		61	15	%
Retail trade		39	9	%
Transportation and warehousing		39	9	%
Real estate, rental and leasing		33	8	%
Health care and social assistance		26	6	%
Professional, scientific, and technical services		19	5	%
Manufacturing		13	3	%
Wholesale trade		13	3	%
Educational services		10	2	%
Arts, entertainment, and recreation		5	1	%
Other		14	3	%
Total	$	423	100	%

* Of the total $423 million of direct lease financing, $388 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 June 30, 2020

State	Principal balance		% Total
	(in millions)
Florida	$	99	23	%
New Jersey		30	7	%
Pennsylvania		27	6	%
New York		27	6	%
North Carolina		26	6	%
Maryland		24	6	%
California		21	5	%
Utah		19	4	%
Washington		16	4	%
Georgia		15	4	%
Connecticut		11	3	%
Alabama		11	3	%
Illinois		11	3	%
Texas		10	2	%
Missouri		7	2	%
Other states		69	16	%
Total	$	423	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 June 30, 2020
The Bancorp, Inc.	8.48	%	14.84	%	15.27	%	14.84	%
The Bancorp Bank	8.34	%	14.56	%	14.98	%	14.56	%
"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				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Selected operating ratios:
Return on average assets ⁽¹⁾	1.33	%	1.00	%	1.13	%	1.32	%
Return on average equity ⁽¹⁾	15.61	%	10.20	%	12.87	%	13.65	%
Net interest margin	3.53	%	3.41	%	3.43	%	3.43	%

⁽¹⁾Annualized

Book value per share table:	June 30,			March 31,			December 31,			June 30,
	2020			2020			2019			2019
Book value per share	$	9.28		$	8.69		$	8.52		$	8.07

Loan quality table:	June 30,			March 31,			December 31,			June 30,
		2020			2020			2019			2019
Nonperforming loans to total loans		0.44	%		0.40	%		0.50	%		0.57	%
Nonperforming assets to total assets		0.17	%		0.14	%		0.16	%		0.19	%
Allowance for loan and lease losses to total loans		0.63	%		0.75	%		0.56	%		0.64	%

Nonaccrual loans	$	9,957		$	5,645		$	5,796		$	6,456
Loans 90 days past due still accruing interest		352			2,245			3,264			2,373
Other real estate owned		-			-			-			-
Total nonperforming assets	$	10,309		$	7,890		$	9,060		$	8,829



	Three months ended
	June 30,			March 31,			December 31,			June 30,
	2020			2020			2019			2019
	(in thousands)
Gross dollar volume (GDV) ⁽²⁾:
Prepaid and debit card GDV	$	23,680,749		$	22,982,188		$	19,104,327		$	16,611,551

⁽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 June 30, 2020
(dollars in millions)

			Balances
					% Growth
Major business lines	Average approximate rates *		Balances **		Year over year		Linked quarter annualized
Loans
Institutional banking ***	2.5	%	$	1,303	56	%	51	%
Small Business Lending****	5.0	%		601	16	%	4	%
Leasing	5.8	%		422	4	%	nm
Commercial real estate securitization	4.8	%		1,582	nm		nm
Weighted average yield	4.2	%	$	3,908					Non-interest income
											% Growth
Deposits									Current quarter		Year over year
Payment solutions (prepaid and debit card issuance)	0.1	%	$	3,908	56	%	nm		$	18.7	18	%
Card payment and ACH processing	0.3	%		723	-27	%	nm			1.7	nm

* Average rates are for the quarter ended June 30, 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. The balance above excludes $208M Paycheck Protection Program 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		(113	)
June 30, 2020 Bancorp book value**	$	34

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 33% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of June 30, 2020.

Walnut Street portfolio composition as of June 30, 2020

Collateral type	% of Portfolio
Commercial real estate non-owner occupied
Retail	58.0	%
Office	-
Other	5.2	%
Construction and land	28.1	%
First mortgage residential owner occupied	7.4	%
First mortgage residential non-owner occupied	1.3	%
Total	100.0	%

Cumulative analysis of marks on discontinued commercial loan principal as of June 30, 2020

	Discontinued		Cumulative			% to original
	loan principal		marks			principal
	(dollars in millions)

Commercial loan discontinued principal before marks	$	67
Florida mall held in discontinued other real estate owned		42		(27	)
Previous mark charges		10		(10	)
Mark at June 30, 2020				(4	)
Cumulative mark at June 30, 2020	$	119	$	(41	)	34	%

Analysis of discontinued commercial loan relationships as of June 30, 2020

	Performing		Nonperforming		Total		Performing			Nonperforming			Total
	loan principal		loan principal		loan principal		loan marks			loan marks			marks
	(in millions)

5 loan relationships > $6 million	$	45	$	-	$	45	$	(3	)	$	-		$	(3	)
Loan relationships < $6 million		14		4		18		-			(1	)		(1	)
	$	59	$	4	$	63	$	(3	)	$	(1	)	$	(4	)

Quarterly activity for commercial loan discontinued principal

	Commercial
	loan principal
	(in millions)

Commercial loan discontinued principal March 31, 2020 before marks	$	72
Quarterly paydowns and other reductions		(5	)
Commercial loan discontinued principal June 30, 2020 before marks	$	67
Marks June 30, 2020		(4	)
Net commercial loan exposure June 30, 2020	$	63
Residential mortgages		39
Net loans	$	102
Florida mall in other real estate owned		15
11 properties in other real estate owned		11
Total discontinued assets at June 30, 2020	$	128

Discontinued commercial loan composition as of June 30, 2020

Collateral type	Unpaid principal balance			Mark June 30, 2020			Mark as % of portfolio
	(in millions)
Commercial real estate - non-owner occupied:
Retail	$	4		$	(0.6	)	15	%
Office		2			-		0	%
Other		19			(0.1	)	1	%
Construction and land		11			(0.1	)	1	%
Commercial non-real estate and industrial		2			-		-
1 to 4 family construction		11			(2.8	)	25	%
First mortgage residential non-owner occupied		9			-		0	%
Commercial real estate owner occupied:
Retail		7			-		-
Office		-			-		-
Other		-			-		-
Residential junior mortgage		1			-		-
Other		1			-		-
Total	$	67		$	(3.6	)	5	%
Less: mark		(4	)
Net commercial loan exposure June 30, 2020	$	63		$	(3.6	)

Loan payment deferrals as of June 30, 2020

	Principal for loans with deferrals		Total principal by loan category		% of total loan principal with deferrals
			(in millions)
Commercial real estate loans held for sale (excluding SBA loans)	$	31	$	1,587	2%
Securities backed lines of credit, insurance backed lines of credit & advisor financing		2		1,303	<1%
Small business lending, substantially all SBA loans		187		806	23%
Direct lease financing		80		422	19%
Discontinued operations		18		106	17%
Other consumer loans and specialty lending		-		7	0%
Total	$	318	$	4,231	7.5%

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