Press Release

The Bancorp, Inc. Reports Third Quarter 2020 Financial Results

Company Release - 10/29/2020 4:05 PM ET

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the third quarter of 2020.

Highlights

  • For the quarter ended September 30, 2020, The Bancorp earned net income of $23.1 million from continuing operations, and $0.40 diluted earnings per share from combined continuing and discontinued operations.
  • Return on assets and equity for the quarter ended September 30, 2020 amounted to 1.5% and 17% (annualized), respectively, compared to 1.3% and 16% for the quarter ended June 30, 2020.
  • Net interest margin amounted to 3.37% for the quarter ended September 30, 2020, compared to 3.35% for the quarter ended September 30, 2019 and 3.53% for the quarter ended June 30, 2020.
  • Net interest income increased 33% to $50.0 million for the quarter ended September 30, 2020, compared to $37.6 million for the quarter ended September 30, 2019.
  • Average loans and leases, including loans at fair value, increased 61% to $4.21 billion for the quarter ended September 30, 2020, compared to $2.62 billion for the quarter ended September 30, 2019.
  • Prepaid, debit card and related fees increased 20% to $19.4 million for the quarter ended September 30, 2020, compared to $16.1 million for the quarter ended September 30, 2019. Gross dollar volume (GDV), representing total spend on cards, increased 39%.
  • SBLOC (securities-backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans increased 58% year over year and 12% quarter over quarter to $1.5 billion at September 30, 2020.
  • Small Business Loans, including those held at fair value, increased 13% year over year to $633 million at September 30, 2020, exclusive of $208 million of Paycheck Protection Program loans.
  • As of September 30, 2020, The Bancorp originated approximately 1,250 Paycheck Protection Program loans, totaling approximately $208 million, which it expects will generate approximately $5.5 million of fees and interest. That income is being 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 $5.6 billion of average deposits and interest-bearing liabilities in the third quarter of 2020 was 0.18%. Average prepaid and debit card account deposits of $4.0 billion for third quarter 2020, reflected an increase of 62% over the $2.5 billion for the quarter ended September 30, 2019.
  • Consolidated leverage ratio was 8.62% at September 30, 2020. The Bancorp and its subsidiary, The Bancorp Bank (the “Bank”), remain well capitalized.
  • Book value per common share at September 30, 2020 was $9.71 per share compared to $8.52 at September 30, 2019, an increase of 14%, primarily as a result of retained earnings per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “We continued to add new card programs into our payments ecosystem in the 3rd quarter, as well as adding several new direct rapid funds partners. These new relationships will be announced as new products and services enter the marketplace. Our pipelines continue to be very robust and significantly above historic norms suggesting continued growth in transaction volumes. In the 3rd quarter, we made a strategic determination as to our securitization business. We have been evaluating our securitization platform and its loan portfolio. After assessing its current profitability, market conditions and credit risk, we have decided to discontinue future securitization activity. The loan portfolio, comprised almost entirely of multi-family loans that have experienced few deferrals and delinquencies, will amortize over the next 3-5 years and be replaced by loans originated in other areas. We expect income from the portfolio to be stable over the first 2 years. A portion of the portfolio may be sold as whole loans as space is needed on our balance sheet for other lending activities. Our real estate team in our commercial SBA business will continue to originate select transactions. For full year 2020, we believe we will achieve at least $1.25 earnings per share. We now believe we have enough information to issue preliminary guidance for 2021. We expect to earn between $1.65 and $1.70 per share. $1.70 per share or approximately $100 million in net income is our current company budget for 2021.”

The Bancorp reported net income of $23.3 million, or $0.40 per diluted share, for the quarter ended September 30, 2020, compared to net income of $20.4 million, or $0.36 per diluted share, for the quarter ended September 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 8.62%, 14.26%, 14.68% and 14.26%, 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, October 30, 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 5682938. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, November 6, 2020 by dialing 855.859.2056, access code 5682938.

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

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp’s business which are not historical facts are "forward-looking statements." These statements may be identified by the use of forward-looking terminology, including but not limited to the words “may,” “believe,” “will,” “expect,” “look,” “anticipate,” “plan,” “estimate,” “continue,” or similar words , and are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results, events or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. These risks and uncertainties include those relating to theon-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

 

Nine months ended

September 30,

 

September 30,

Condensed income statement

2020

 

2019

 

2020

 

2019

(dollars in thousands except per share data)

 

Net interest income

$

49,996

 

$

37,560

$

143,153

 

$

106,109

Provision for credit losses

 

1,297

 

 

650

 

5,798

 

 

2,950

Non-interest income

Service fees on deposit accounts

 

8

 

 

8

 

23

 

 

69

ACH, card and other payment processing fees

 

1,760

 

 

2,590

 

5,313

 

 

7,414

Prepaid, debit card and related fees

 

19,434

 

 

16,134

 

56,647

 

 

48,137

Net realized and unrealized gains (losses) on commercial loans originated for sale

684

 

 

 

13,704

(5,412

)

24,319

Change in value of investment in unconsolidated entity

 

-

 

 

-

 

(45

)

 

-

Leasing related income

 

1,519

 

 

589

 

2,795

 

 

2,311

Other non-interest income

 

947

 

 

490

 

1,996

 

 

1,379

Total non-interest income

 

24,352

 

 

33,515

 

61,317

 

 

83,629

Non-interest expense

Salaries and employee benefits

 

26,417

 

 

24,526

 

74,650

 

 

70,192

Data processing expense

 

1,192

 

 

1,192

 

3,538

 

 

3,684

Legal expense

 

994

 

 

1,466

 

4,136

 

 

4,324

FDIC Insurance

 

2,180

 

 

860

 

7,687

 

 

4,884

Software

 

3,595

 

 

3,199

 

10,458

 

 

9,180

SEC settlement

 

-

 

 

1,400

 

-

 

 

1,400

Lease termination expense

 

-

 

 

-

 

-

 

 

908

Other non-interest expense

 

7,648

 

 

9,408

 

22,595

 

 

26,227

Total non-interest expense

 

42,026

 

 

42,051

 

123,064

 

 

120,799

Income from continuing operations before income taxes

 

31,025

 

 

28,374

 

75,608

 

 

65,989

Income tax expense

 

7,894

 

 

7,975

 

19,033

 

 

17,585

Net income from continuing operations

 

23,131

 

 

20,399

 

56,575

 

 

48,404

Discontinued operations

Income (loss) from discontinued operations before income taxes

 

(1,671

)

 

151

 

(2,720

)

 

1,875

Income tax expense (benefit)

 

(1,794

)

 

125

 

(2,058

)

 

574

Net income (loss) from discontinued operations, net of tax

 

123

 

 

26

 

(662

)

 

1,301

Net income

$

23,254

$

20,425

$

55,913

 

$

49,705

 

Net income per share from continuing operations - basic

$

0.40

 

$

0.36

$

0.98

 

$

0.85

Net income (loss) per share from discontinued operations - basic

$

-

 

$

-

$

(0.01

)

$

0.02

Net income per share - basic

$

0.40

 

$

0.36

$

0.97

 

$

0.87

 

Net income per share from continuing operations - diluted

$

0.40

 

$

0.36

$

0.97

 

$

0.85

Net income (loss) per share from discontinued operations - diluted

$

-

 

$

-

$

(0.01

)

$

0.02

Net income per share - diluted

$

0.40

 

$

0.36

$

0.96

 

$

0.87

Weighted average shares - basic

 

57,588,168

 

 

56,907,815

 

57,433,477

 

 

56,712,084

Weighted average shares - diluted

 

58,471,192

 

 

57,413,297

 

58,051,833

 

 

57,152,371

 
 

Balance sheet

September 30,

 

June 30,

 

December 31,

 

September 30,

2020

 

2020

 

2019

 

2019

(dollars in thousands)

Assets:

Cash and cash equivalents

Cash and due from banks

$

6,220

 

$

5,094

 

$

19,928

 

$

24,068

 

Interest earning deposits at Federal Reserve Bank

 

294,758

 

 

475,627

 

 

924,544

 

 

932,440

 

Total cash and cash equivalents

 

300,978

 

 

480,721

 

 

944,472

 

 

956,508

 

 

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

 

1,264,903

 

 

1,324,447

 

 

1,320,692

 

 

1,382,437

 

Investment securities, held-to-maturity, at cost

 

-

 

 

-

 

 

84,387

 

 

84,399

 

Commercial loans, at fair value

 

1,849,947

 

 

1,807,630

 

 

1,180,546

 

 

489,240

 

Loans, net of deferred fees and costs

 

2,488,760

 

 

2,322,737

 

 

1,824,245

 

 

1,683,377

 

Allowance for credit losses

 

(15,727

)

 

(14,625

)

 

(10,238

)

 

(10,360

)

Loans, net

 

2,473,033

 

 

2,308,112

 

 

1,814,007

 

 

1,673,017

 

Federal Home Loan Bank & Atlantic Community Bancshares stock

 

1,368

 

 

1,368

 

 

5,342

 

 

4,342

 

Premises and equipment, net

 

15,849

 

 

16,701

 

 

17,538

 

 

17,857

 

Accrued interest receivable

 

18,852

 

 

18,897

 

 

13,619

 

 

13,898

 

Intangible assets, net

 

2,563

 

 

2,710

 

 

2,315

 

 

2,698

 

Deferred tax asset, net

 

7,952

 

 

7,921

 

 

12,538

 

 

13,006

 

Investment in unconsolidated entity

 

31,783

 

 

34,064

 

 

39,154

 

 

49,431

 

Assets held for sale from discontinued operations

 

122,253

 

 

128,463

 

 

140,657

 

 

162,098

 

Other assets

 

79,821

 

 

83,003

 

 

81,696

 

 

94,605

 

Total assets

$

6,169,302

 

$

6,214,037

 

$

5,656,963

 

$

4,943,536

 

 

Liabilities:

Deposits

Demand and interest checking

$

4,882,834

 

$

5,089,741

 

$

4,402,740

 

$

3,844,747

 

Savings and money market

 

505,928

 

 

455,458

 

 

174,290

 

 

25,950

 

Time deposits

 

-

 

 

-

 

 

475,000

 

 

475,000

 

Total deposits

 

5,388,762

 

 

5,545,199

 

 

5,052,030

 

 

4,345,697

 

 

Securities sold under agreements to repurchase

 

42

 

 

42

 

 

82

 

 

93

 

Senior debt

 

98,222

 

 

-

 

 

-

 

 

-

 

Subordinated debenture

 

13,401

 

 

13,401

 

 

13,401

 

 

13,401

 

Other long-term borrowings

 

40,462

 

 

40,639

 

 

40,991

 

 

41,166

 

Other liabilities

 

69,954

 

 

81,677

 

 

65,962

 

 

59,005

 

Total liabilities

$

5,610,843

 

$

5,680,958

 

$

5,172,466

 

$

4,459,362

 

 

Shareholders' equity:

Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,590,874 and 56,940,521 shares issued and outstanding at September 30, 2020 and 2019, respectively

 

57,591

 

 

57,555

 

 

56,941

 

 

56,911

 

Treasury stock (100,000 shares)

 

(866

)

 

(866

)

 

(866

)

 

(866

)

Additional paid-in capital

 

376,751

 

 

374,578

 

 

371,633

 

 

370,113

 

Retained earnings

 

104,282

 

 

81,028

 

 

50,742

 

 

48,888

 

Accumulated other comprehensive income

 

20,701

 

 

20,784

 

 

6,047

 

 

9,128

 

Total shareholders' equity

 

558,459

 

 

533,079

 

 

484,497

 

 

484,174

 

 
Total liabilities and shareholders' equity

$

6,169,302

 

$

6,214,037

 

$

5,656,963

 

$

4,943,536

 

 
 

Average balance sheet and net interest income

Three months ended

September 30, 2020

 

Three months ended

September 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 **

$

4,202,054

 

$

44,318

4.22

%

$

2,608,427

 

$

35,103

5.38

%

Leases - bank qualified*

 

8,026

 

 

146

7.28

%

 

14,067

 

 

252

7.17

%

Investment securities-taxable

 

1,300,191

 

 

7,911

2.43

%

 

1,429,222

 

 

10,485

2.93

%

Investment securities-nontaxable*

 

4,041

 

 

35

3.46

%

 

6,172

 

 

54

3.50

%

Interest earning deposits at Federal Reserve Bank

 

413,259

 

 

106

0.10

%

 

474,499

 

 

2,545

2.15

%

Net interest earning assets

 

5,927,571

 

 

52,516

3.54

%

 

4,532,387

 

 

48,439

4.27

%

 

Allowance for credit losses

 

(14,587

)

 

(9,988

)

Assets held for sale from discontinued operations

 

124,916

 

 

890

2.85

%

 

145,347

 

 

1,609

4.43

%

Other assets

 

195,125

 

 

298,191

 

$

6,233,025

 

$

4,965,937

 

 

Liabilities and Shareholders' Equity:

Deposits:

Demand and interest checking

$

5,079,711

 

$

1,591

0.13

%

$

3,829,457

 

$

7,644

0.80

%

Savings and money market

 

 

484,323

 

 

 

139

 

0.11

%

 

 

26,444

 

 

 

52

 

0.79

%

Time

 

-

 

 

-

 

0.00

%

 

269,464

 

 

1,338

1.99

%

Total deposits

 

5,564,034

 

 

1,730

 

0.12

%

 

4,125,365

 

 

9,034

0.88

%

 

Short-term borrowings

 

3,260

 

 

1

 

0.12

%

 

256,945

 

 

1,595

2.48

%

Securities sold under agreements to repurchase

 

41

 

 

-

 

0.00

%

 

93

 

 

-

0.00

%

Subordinated debentures

 

 

13,401

 

 

 

118

 

3.52

%

 

 

13,401

 

 

 

186

 

5.55

%

Senior debt

 

53,260

 

 

633

 

4.75

%

 

-

 

 

-

0.00

%

Total deposits and liabilities

 

5,633,996

 

 

2,482

 

0.18

%

 

4,395,804

 

 

10,815

0.98

%

 

Other liabilities

 

53,260

 

 

98,980

 

Total liabilities

 

5,687,256

 

 

4,494,784

 

 

 

 

 

 

Shareholders' equity

 

545,769

 

 

471,153

 

$

6,233,025

 

$

4,965,937

 

Net interest income on tax equivalent basis*

 

 

$

50,924

 

 

$

39,233

 

 

Tax equivalent adjustment

 

38

 

 

 

64

 

 

 

Net interest income

$

50,886

 

 

$

39,169

Net interest margin *

3.37

%

3.35

%

 

 

 

 

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

** Includes loans held at fair value.

 

 

Average balance sheet and net interest income

Nine months ended

September 30, 2020

Nine months ended

September 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 **

$

3,798,104

 

$

124,924

4.39

%

$

2,365,317

 

$

95,001

5.36

%

Leases - bank qualified*

 

9,401

 

 

509

7.22

%

 

15,755