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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2022

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____ to _____

Commission file number: 000-51018

THE BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

23-3016517

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

409 Silverside Road, Wilmington, DE 19809

(302) 385-5000

(Address of principal executive offices and zip code)

(Registrant's telephone number, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 27, 2022, there were 55,981,560 outstanding shares of common stock, $1.00 par value.

1


THE BANCORP, INC

Form 10-Q Index

Page

Part I Financial Information

Item 1.

Financial Statements:

3

Consolidated Balance Sheets – September 30, 2022 (unaudited) and December 31, 2021

3

Unaudited Consolidated Statements of Operations – Three and nine months ended September 30, 2022 and 2021

4

Unaudited Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2022 and 2021

5

Unaudited Consolidated Statements of Changes in Shareholders’ Equity – Three and nine months ended September 30, 2022 and 2021

6

Unaudited Consolidated Statements of Cash Flows – Nine months ended September 30, 2022 and 2021

8

Notes to Unaudited Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

40

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

69

Item 4.

Controls and Procedures

69

Part II Other Information

Item 1.

Legal Proceedings

70

Item 1A.

Risk Factors

70

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 4.

Mine Safety Disclosures

70

Item 5.

Other Information

70

Item 6.

Exhibits

71

Signatures

72


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

THE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2022

2021

(Dollars in thousands, except per share and share data)

(unaudited)

ASSETS

Cash and cash equivalents

Cash and due from banks

$

22,537 

$

5,382 

Interest earning deposits at Federal Reserve Bank

700,175 

596,402 

Total cash and cash equivalents

722,712 

601,784 

Investment securities, available-for-sale, at fair value

790,594 

953,709 

Commercial loans, at fair value (includes $0 and $61.6 million of loans held for sale at lower of cost or fair value at September 30, 2022 and December 31, 2021, respectively)

818,040 

1,388,416 

Loans, net of deferred loan fees and costs

5,267,375 

3,747,224 

Allowance for credit losses

(19,689)

(17,806)

Loans, net

5,247,686 

3,729,418 

Federal Home Loan Bank, Atlantic Central Bankers Bank, and Federal Reserve Bank stock

12,629 

1,663 

Premises and equipment, net

18,443 

16,156 

Accrued interest receivable

25,506 

17,871 

Intangible assets, net

2,149 

2,447 

Other real estate owned

18,873 

18,873 

Deferred tax asset, net

27,241 

12,667 

Assets held-for-sale from discontinued operations

3,268 

Other assets

93,201 

96,967 

Total assets

$

7,777,074 

$

6,843,239 

LIABILITIES

Deposits

Demand and interest checking

$

5,934,591 

$

5,561,365 

Savings and money market

575,381 

415,546 

Time deposits, $100,000 and over

401,331 

Total deposits

6,911,303 

5,976,911 

Securities sold under agreements to repurchase

42 

42 

Senior debt

98,958 

98,682 

Subordinated debentures

13,401 

13,401 

Other long-term borrowings

38,928 

39,521 

Other liabilities

50,704 

62,228 

Total liabilities

7,113,336 

6,190,785 

SHAREHOLDERS' EQUITY

Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,201,560 and 57,370,563

shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

56,202 

57,371 

Additional paid-in capital

311,569 

349,686 

Retained earnings

329,078 

239,106 

Accumulated other comprehensive (loss) income

(33,111)

6,291 

Total shareholders' equity

663,738 

652,454 

Total liabilities and shareholders' equity

$

7,777,074 

$

6,843,239 

The accompanying notes are an integral part of these consolidated statements.


3


THE BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended September 30,

For the nine months ended September 30,

2022

2021

2022

2021

(Dollars in thousands, except per share data)

Interest income

Loans, including fees

$

75,579 

$

46,426 

$

181,320 

$

143,784 

Investment securities:

Taxable interest

6,792 

6,882 

17,115 

22,891 

Tax-exempt interest

25 

25 

74 

78 

Interest earning deposits

1,525 

167 

2,876 

650 

83,921 

53,500 

201,385 

167,403 

Interest expense

Deposits

16,065 

1,209 

23,261 

4,494 

Short-term borrowings

1,235 

7 

1,267 

15 

Long-term borrowings

506 

506 

Senior debt

1,279 

1,279 

3,838 

3,838 

Subordinated debentures

177 

112 

432 

337 

19,262 

2,607 

29,304 

8,684 

Net interest income

64,659 

50,893 

172,081 

158,719 

Provision for credit losses

822 

1,613 

4,331 

1,484 

Net interest income after provision for credit losses

63,837 

49,280 

167,750 

157,235 

Non-interest income

ACH, card and other payment processing fees

2,230 

1,905 

6,552 

5,605 

Prepaid, debit card and related fees

19,175 

18,223 

57,865 

56,878 

Net realized and unrealized gains

on commercial loans, at fair value

745 

4,306 

11,262 

8,881 

Leasing related income

1,048 

1,968 

3,566 

4,700 

Other

228 

186 

698 

459 

Total non-interest income

23,426 

26,588 

79,943 

76,523 

Non-interest expense

Salaries and employee benefits

28,001 

25,094 

77,848 

77,839 

Depreciation and amortization

685 

729 

2,224 

2,144 

Rent and related occupancy cost

1,268 

1,256 

3,831 

3,777 

Data processing expense

1,292 

1,209 

3,727 

3,481 

Printing and supplies

154 

81 

342 

277 

Audit expense

366 

356 

1,107 

1,110 

Legal expense

907 

1,251 

3,175 

5,349 

Legal settlement

1,152