The Bancorp, Inc. Reports First Quarter 2014 Financial Results

WILMINGTON, Del.--()--The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter 2014.

Net income for the first quarter of 2014 decreased to $298,000 compared to $7.4 million in first quarter 2013, or fully diluted earnings per share of $.01 in 2014 compared to $.20 in the comparable prior year period.

Financial Highlights

  • 20% increase in total quarterly revenues to $53.6 million compared to $44.5 million in first quarter 2013.
  • 26% increase in quarterly non-interest income, to $23.9 million compared to $18.9 million in first quarter 2014, excluding security gains and other than temporary impairment charges.
  • 13% increase in prepaid card fees to $13.5 million compared to $12.0 million in first quarter 2013.
  • 17% increase in quarterly net interest income to $26.6 million compared to $22.7 million in first quarter 2013.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “In the first quarter, we continued to post significant increases in non-interest income which increased 26% and net interest income which increased 17%. The quarter was significantly impacted by an additional loan loss provision of $11.8 million principally related to newly identified adversely classified loans. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income increased 13% to $13.5 million for the quarter, compared to first quarter 2013. Average deposits for the first quarter grew 20% between those periods and reflected growth in all major deposit categories. At March 31, 2014 our portfolio of loans and securities had grown to $3.8 billion, an increase of $833.9 million, or 28% over March 31, 2013. Outstanding loans on an annualized basis increased 17% over the linked quarter. Asset growth within our targeted lending segments – Small Business Administration (SBA), security backed lines of credit and small fleet leasing – contributed disproportionately. Our targeted lines of business grew over the prior year as follows: SBA loans by 39%, security backed lines of credit by 34% and small fleet leasing by 15%. Book value per share increased 5%, from $9.27 at March 31, 2013 to $9.71 at March 31, 2014.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended March 31, 2014 of $298,000, or diluted earnings per share of $0.01, based on 38,645,648 weighted average diluted shares outstanding, compared to net income available to common shareholders of $7.4 million, or diluted earnings per share of $0.20, based on 37,772,122 weighted average diluted shares outstanding, for the three months ended March 31, 2013.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EDT Thursday, April 24, 2014 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 800.688.0836, access code 67285667. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, May 1, 2014 by dialing 888.286.8010, access code 94498254.

About Bancorp

The Bancorp, Inc. is a financial holding company that operates The Bancorp Bank, an FDIC-insured commercial bank that delivers a full array of financial services both directly and through private-label affinity programs. The Bancorp Bank’s regional community bank operations serve the needs of small and mid-size businesses and their principals in the Philadelphia-Wilmington region.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp, Inc.’s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. 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. For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see The Bancorp, Inc.’s filings with the SEC, including the “Risk Factors” sections of The Bancorp Inc.’s filings. These risks and uncertainties could cause actual results to differ materially from those projected in the forward-looking statements. The forward-looking statements speak only as of the date of this presentation. The Bancorp, Inc. 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.

 
The Bancorp, Inc.
Financial highlights
(unaudited)
 
 
    Three months ended     Year ended
March 31, December 31,
2014     2013 2013
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 26,568 $ 22,684   $ 95,782  
Provision for loan and lease losses   17,300   5,500     29,500  
Non-interest income
Service fees on deposit accounts 1,210 1,060 4,977
Card payment and ACH processing fees 1,303 867 4,046
Prepaid card fees 13,468 11,974 45,339
Gain on sale of loans 5,484 2,178 17,225
Gain on sales of investment securities 241 267 1,889
Other than temporary impairment of investment securities - (20 ) (20 )
Leasing income 381 587 2,560
Debit card income 426 196 892
Affinity fees 534 856 2,986
Other non-interest income   1,108   1,167     3,536  
Total non-interest income 24,155 19,132 83,430
Non-interest expense
Losses and write downs on other real estate owned 62 251 1,461
Other non-interest expense   32,895   24,228     109,316  
Total non-interest expense   32,957   24,479     110,777  
Net income before income tax expense 466 11,837 38,935
Income tax expense   168   4,431     13,825  
Net income available to common shareholders $ 298 $ 7,406   $ 25,110  
 
Basic earnings per share $ 0.01 $ 0.20   $ 0.67  
 
Diluted earnings per share $ 0.01 $ 0.20   $ 0.66  
Weighted average shares - basic 37,680,914 37,291,820 37,425,197
Weighted average shares - diluted 38,645,648 37,772,122 38,121,084
 
               
Balance sheet March 31, December 31, September 30, March 31,
2014 2013 2013 2013
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 15,298 $ 33,883 $ 32,026 $ 14,108
Interest earning deposits at Federal Reserve Bank 796,385 1,196,515 657,618 1,102,217
Securities sold under agreements to resell   24,926     7,544     40,811     22,831  
Total cash and cash equivalents   836,609     1,237,942     730,455     1,139,156  
 
Investment securities, available-for-sale, at fair value 1,411,708 1,253,117 1,083,154 898,653
Investment securities, held-to-maturity 97,149 97,205 97,459 45,064
Loans held for sale, at fair value 222,024 69,904 25,557 28,402
Loans, net of deferred fees and costs 2,044,004 1,958,445 1,991,455 1,968,890
Allowance for loan and lease losses   (46,409 )   (38,182 )   (39,151 )   (34,883 )
Loans, net   1,997,595     1,920,263     1,952,304     1,934,007  
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 3,209 3,209 3,209 3,094
Premises and equipment, net 15,692 15,659 14,252 10,965
Accrued interest receivable 14,715 13,131 12,556 11,521
Intangible assets, net 7,407 7,612 6,253 6,753
Other real estate owned 27,763 26,295 20,111 4,543
Deferred tax asset, net 27,451 30,415 26,434 23,055
Other assets   38,301     31,313     28,538     26,882  
Total assets $ 4,699,623   $ 4,706,065   $ 4,000,282   $ 4,132,095  
 
Liabilities:
Deposits
Demand and interest checking $ 3,842,569 $ 3,722,602 $ 3,050,167 $ 3,197,039
Savings and money market 393,329 536,162 504,447 495,001
Time deposits 9,115 9,773 9,920 12,602
Time deposits, $100,000 and over   2,195     4,452     4,683     8,343  
Total deposits   4,247,208     4,272,989     3,569,217     3,712,985  
 
Securities sold under agreements to repurchase 16,491 21,221 22,057 16,672
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   56,353     38,850     42,274     42,961  
Total liabilities $ 4,333,453   $ 4,346,461   $ 3,646,949   $ 3,786,019  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,804,902 and 37,433,594 shares issued at March 31, 2014 and 2013, respectively 37,805 37,721 37,721 37,434
Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 )
Additional paid-in capital 295,824 294,576 292,715 285,009
Retained earnings (accumulated deficit) 27,424 27,615 20,291 14,753
Accumulated other comprehensive income   5,983     558     3,472     9,746  
Total shareholders' equity   366,170     359,604     353,333     346,076  
 
Total liabilities and shareholders' equity $ 4,699,623   $ 4,706,065   $ 4,000,282   $ 4,132,095  
 
                       
Average balance sheet and net interest income Three months ended March 31, 2014 Three months ended March 31, 2013
(dollars in thousands) Average Average Average Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned fees and costs ** $ 2,142,143 $ 21,220 3.96 % $ 1,928,786 $ 20,192 4.19 %
Leases - bank qualified* 18,288 247 5.40 % 14,393 200 5.56 %
Investment securities-taxable 1,020,135 5,137 2.01 % 682,676 3,487 2.04 %
Investment securities-nontaxable* 391,486 3,206 3.28 % 126,221 1,116 3.54 %
Interest earning deposits at Federal Reserve Bank 1,235,319 764 0.25 % 1,343,899 838 0.25 %
Federal funds sold/securities purchased under agreement to resell   30,545     106 1.39 %   20,380     24 0.47 %
Net interest earning assets 4,837,916 30,680 2.54 % 4,116,355 25,857 2.51 %
 
Allowance for loan and lease losses (38,419 ) (34,839 )
Other assets   155,646     83,902  
$ 4,955,143   $ 4,165,418  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 4,015,547 $ 2,237 0.22 % $ 3,257,692 $ 1,866 0.23 %
Savings and money market 498,185 504 0.40 % 506,174 578 0.46 %
Time   13,342     35 1.05 %   20,919     54 1.03 %
Total deposits 4,527,074 2,776 0.25 % 3,784,785 2,498 0.26 %
 
Short-term borrowings 22 - 0.00 % - - 0.00 %
Repurchase agreements 16,752 12 0.29 % 15,762 14 0.36 %
Subordinated debt   13,401     115 3.43 %   13,401     200 5.97 %
Total deposits and interest bearing liabilities 4,557,249 2,903 0.25 % 3,813,948 2,712 0.28 %
 
Other liabilities   32,950     11,344  
Total liabilities 4,590,199 3,825,292
 
Shareholders' equity   364,944     340,126  
$ 4,955,143   $ 4,165,418  
Net interest income on tax equivalent basis* $ 27,777 $ 23,145
 
Tax equivalent adjustment   1,209   461
 
Net interest income $ 26,568 $ 22,684
Net interest margin * 2.30 % 2.25 %
                   
* Full taxable equivalent basis using a 35% statutory tax rate.
** Includes loans held for sale.
 
           
Allowance for loan and lease losses: Three months ended Year ended
March 31,     March 31, December 31,
2014     2013 2013
(dollars in thousands)
 
Balance in the allowance for loan and lease losses at beginning of period $ 38,182   $ 33,040   $ 33,040  
 
Loans charged-off:
Commercial 4,247 2,073 14,771
Construction 4,633 1,608 10,295
Lease financing - - 30
Residential mortgage 108 - 54
Consumer   128     54     488  
Total   9,116     3,735     25,638  
 
Recoveries:
Commercial 25 35 180
Construction 4 - 1,019
Lease financing - - 8
Residential mortgage - - -
Consumer   14     43     73  
Total   43     78     1,280  
Net charge-offs 9,073 3,657 24,358
Provision charged to operations   17,300     5,500     29,500  
 
Balance in allowance for loan and lease losses at end of period $ 46,409   $ 34,883   $ 38,182  
Net charge-offs/average loans 0.42 % 0.19 % 1.21 %
Net charge-offs/average loans (annualized) 1.68 % 0.75 % 1.21 %
Net charge-offs/average assets 0.18 % 0.09 % 0.59 %
 
 
Loan portfolio: March 31, December 31, September 30, March 31,
2014 2013 2013 2013
(dollars in thousands)
 
Commercial $ 489,574 $ 450,113 $ 470,072 $ 477,690
Commercial mortgage (1) 610,990 625,810 654,456 673,916
Construction   283,928     258,889     255,272     263,579
Total commercial loans 1,384,492 1,334,812 1,379,800 1,415,185
Direct lease financing 181,007 175,610 177,797 157,508
Residential mortgage 95,397 94,850 94,564 94,238
Consumer and other loans   375,818     346,334     332,427     296,370
2,036,714 1,951,606 1,984,588 1,963,301
Unamortized loan fees and costs   7,290     6,839     6,867     5,589
Total loans, net of deferred loan fees and costs $ 2,044,004   $ 1,958,445   $ 1,991,455   $ 1,968,890
 
Supplemental loan data:
Construction 1-4 family $ 47,521 $ 48,394 $ 60,989 $ 65,669
Commercial construction, acquisition and development   236,407     210,495     194,283     197,910
  $ 283,928   $ 258,889   $ 255,272   $ 263,579
(1) At March 31, 2014 our owner-occupied loans amounted to $198 million, or 32.4% of commercial mortgages.
 
           
Capital Ratios Tier 1 capital Tier 1 capital Total capital
to average assets to risk-weighted assets to risk-weighted assets
As of March 31, 2014
Bancorp 7.39 % 13.01 % 14.26 %
The Bancorp Bank 6.19 % 10.87 % 12.12 %

"Well capitalized" institution (under FDIC regulations)

5.00 % 6.00 % 10.00 %
 
As of December 31, 2013
Bancorp 8.58 % 14.57 % 15.83 %
The Bancorp Bank 6.72 % 11.40 % 12.66 %
"Well capitalized" institution (under FDIC regulations) 5.00 % 6.00 % 10.00 %
 
               
Three months ended Year ended
March 31, December 31, December 31,
2014 2013 2013 2013
Selected operating ratios:
Return on average assets (annualized) 0.02 % 0.72 % 0.68 % 0.61 %
Return on average equity (annualized) 0.33 % 8.83 % 8.17 % 7.22 %
Net interest margin 2.30 % 2.25 % 2.54 % 2.44 %
Efficiency ratio (1) 65.28 % 58.92 % 63.93 % 62.47 %
Book value per share $ 9.71 $ 9.27 $ 9.56 $ 9.56
 
March 31, December 31, September 30, March 31,
2014 2013 2013 2013
Asset quality ratios:
Nonperforming loans to total loans (2) 2.20 % 2.08 % 2.46 % 1.80 %
Nonperforming assets to total assets (2) 1.55 % 1.42 % 1.73 % 0.97 %
Allowance for loan and lease losses to total loans 2.27 % 1.95 % 1.97 % 1.77 %
 
Nonaccrual loans $ 44,701 $ 40,551 $ 48,750 $ 34,063
Other real estate owned   27,763     26,295     20,111     4,543  
Total nonperforming assets $ 72,464   $ 66,846   $ 68,861   $ 38,606  
 
Loans 90 days past due still accruing interest $ 189   $ 110   $ 204   $ 1,291  
 
Gross dollar volume (GDV):
Prepaid card GDV $ 11,791,386   $ 7,720,554   $ 7,178,532   $ 9,138,880  
 
(1) As a supplement to GAAP, Bancorp has provided this non-GAAP performance result. The Bancorp believes that this non-GAAP financial measure is useful because it allows investors to assess its operating performance. Management utilizes the efficiency ratio to measure overhead as a percentage of revenue. Other companies may calculate the efficiency ratio differently. Although this non-GAAP financial measure is intended to enhance investors’ understanding of Bancorp’s business and performance, it should not be considered, and is not intended to be, a substitute for net income calculated pursuant to GAAP.
 
Three months ended Year ended
March 31, December 31, December 31,
2014 2013 2013 2013
Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a) $ 32,957 $ 24,479 $ 29,814 $ 110,777
 
Net interest income 26,568 22,684 25,402 95,782
Non-interest income 24,155 19,132 22,334 83,430
Less: Gain on sale of securities   (241 )   (267 )   (1,104 )   (1,889 )
Adjusted net interest and non-interest income (b) $ 50,482 $ 41,549 $ 46,632 $ 177,323
 
(a) divided by (b) 65.28 % 58.92 % 63.93 % 62.47 %
 
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.
 

Contacts

The Bancorp, Inc.
Andres Viroslav, 215-861-7990
aviroslav@thebancorp.com

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Contacts

The Bancorp, Inc.
Andres Viroslav, 215-861-7990
aviroslav@thebancorp.com