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The Bancorp, Inc. Reports Second Quarter 2010 Financial Results

July 22, 2010

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a bank holding company, today reported results for the quarter ended June 30, 2010.

Financial Highlights

  • Period end loans at June 30, 2010 totaled $1.6 billion, an increase of $117 million or 8% over June 30, 2009 and $49 million, or 3% over March 31, 2010.
  • Transaction account balances increased $422 million or 32% at June 30, 2010 over June 30, 2009, growing to 92% of total deposit balances.
  • Core operating earnings, a non-GAAP measure, increased to $5.9 million in the second quarter of 2010 from $5.3 million in the second quarter of 2009, an increase of 13%. A reconciliation of core operating earnings to GAAP net income is presented below.
  • Non-interest income, excluding securities gains, increased 48% or $1.5 million over second quarter 2009, reflecting significant increases in prepaid card and merchant acquiring fee income, which includes fees earned by processing merchant credit and debit card and ACH transactions.
  • Net interest income increased $720,000, or 4.5% over second quarter 2009.
  • Total assets grew from $1.732 billion to $2.123 billion or 23% between June 30, 2009 and June 30, 2010.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “In the second quarter we began to see the results of our efforts to increase net loans. We added $89 million of new loans, and netted $49 million of new loans or 3% of outstanding loans, on a linked quarter basis. Our SBA (Small Business Administration) program approved its first franchisor and we expect that the program will add to further loan growth in the third quarter. Our health care deposit business also maintained its growth trajectory, with health care deposits growing 46% over deposits at June 30, 2009. This contributed to our decrease in deposit costs to 77 basis points in second quarter 2010, from 101 basis points in the same quarter of 2009.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended June 30, 2010 of $407,000 or diluted earnings per share of $0.02, based on 26,759,461 weighted average shares, compared to net income available to common shareholders of $125,000 or diluted earnings per share of $0.01, based on 15,351,843 weighted average shares, for the three months ended June 30, 2009. The following is a reconciliation of core operating earnings to net income available to common shareholders:

   
June 30, June 30,

2010

2009

 
Net income available to common shareholders $ 407 $ 125
Preferred stock dividend and accretion - 982
Income tax expense 197 632
Provision for loan and lease losses and losses on other real estate owned   5,806   4,200
Subtotal 6,410 5,939
Gains and losses on securities   469   670
Core operating earnings (1) $ 5,941 $ 5,269
 
 
(1)

As a supplement to GAAP, Bancorp has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful because it allows investors to assess its operating performance, specifically its overall earnings capacity. Other companies may calculate core earnings differently. Although this non-GAAP financial measure is intended to enhance investors’ understanding of the Company’s business and performance, it should not be considered, and is not intended to be, a substitute for GAAP.

 
           

Capital Ratios

 
Tier 1 capital Tier 1 capital Total capital
to average to risk-weighted to risk-weighted
assets ratio assets ratio assets ratio
 
As of June 30, 2010
The Company 9.76% 12.82% 14.07%
The Bancorp Bank 8.28% 10.90% 12.15%
"Well capitalized" institution (under FDIC regulations) 5.00% 6.00% 10.00%
 
As of December 31, 2009
The Company 12.68% 15.81% 17.06%
The Bancorp Bank 8.78% 10.97% 12.22%
"Well capitalized" institution (under FDIC regulations) 5.00% 6.00% 10.00%
 

Balance Sheet Summary

At June 30, 2010, Bancorp's total assets were $2.1 billion, an increase of $80.3 million or 4% over December 31, 2009. During that period, investments increased to $229.6 million, an increase of $114.6 million or 100%; net loans increased to $1.6 billion, an increase of $52.8 million or 3%; and total deposits increased to $1.9 billion, an increase of $227.1 million or 14%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 10:00 AM EDT Thursday, July 22, 2010 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.202.4367 using access code 88897175. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, July 29, 2010 by dialing 888.286.8010, access code 87682216.

About Bancorp

The Bancorp, Inc. is a bank holding company that operates The Bancorp Bank, an FDIC-insured commercial bank that delivers a full array of financial services and products both directly and through private-label affinity programs nationwide. 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   Six months ended
June 30, June 30,
2010   2009 2010   2009
(dollars in thousands (dollars in thousands
except per share data) except per share data)
Condensed income statement
Net interest income $ 16,689 $ 15,969 $ 32,969 $ 30,885
Provision for loan and lease losses 5,806 2,500 9,954 5,500
Non-interest income
Gain and losses on securities 469 670 1,219 670
Other non-interest income   4,490   3,039     9,234     6,296  
Total non-interest income 4,959 3,709 10,453 6,966
Non-interest expense
Loss on other real estate owned - 1,700 - 1,700
Other non-interest expense   15,238   13,739     29,445     26,921  
Total non-interest expense   15,238   15,439     29,445     28,621  
Net income before income tax expense 604 1,739 4,023 3,730
Income tax expense   197   632     1,430     1,413  
Net income 407 1,107 2,593 2,317
Less preferred stock dividends - (581 ) (433 ) (1,163 )
Less preferred stock accretion   -   (401 )   (5,809 )   (666 )
Net income (loss) available to common shareholders $ 407 $ 125   $ (3,649 ) $ 488  
 
Basic earnings (loss) per share $ 0.02 $ 0.01   $ (0.14 ) $ 0.03  
 
Diluted earnings (loss) per share $ 0.02 $ 0.01   $ (0.14 ) $ 0.03  
Weighted average shares - basic 26,181,291 14,563,919 26,181,291 14,563,919
Weighted average shares - diluted 26,759,461 15,351,843 26,181,291 15,035,205
 
       
Balance sheet June 30, March 31, December 31, June 30,
2010 2010 2009 2009
Assets:
Cash and cash equivalents
Cash and due from banks $ 92,620 $ 173,604 $ 135,246 $ 69,950
Interest bearing deposits 171,054 164,829 219,213 2,047
Federal funds sold   -     -     -     12,102  
Total cash and cash equivalents   263,674     338,433     354,459     84,099  
 
Investment securities, available-for-sale, at fair value 208,080 156,191 93,478 119,781
Investment securities, held-to-maturity 21,496 21,488 21,468 23,542
Loans, net of deferred costs 1,576,525 1,527,691 1,523,722 1,459,965
Allowance for loan and lease losses   (22,336 )   (20,357 )   (19,123 )   (18,080 )
Loans, net   1,554,189     1,507,334     1,504,599     1,441,885  
Premises and equipment, net 8,229 8,140 7,942 8,129
Accrued interest receivable 8,483 7,589 7,722 7,499
Intangible assets, net 9,505 9,755 10,005 10,505
Other real estate owned 459 648 459 -
Deferred tax asset, net 20,258 20,872 20,875 23,017
Other assets   29,497     22,063     22,527     13,121  
Total assets $ 2,123,870   $ 2,092,513   $ 2,043,534   $ 1,731,578  
 
Liabilities:
Deposits
Demand (non-interest bearing) $ 827,268 $ 973,116 $ 661,383 $ 530,446
Savings, money market and interest checking 903,599 875,511 850,306 778,319
Time deposits 1,178 1,317 125,255 155,888
Time deposits, $100,000 and over   149,562     12,339     17,565     20,420  
Total deposits   1,881,607     1,862,283     1,654,509     1,485,073  
 
Securities sold under agreements to repurchase 7,552 8,245 2,588 2,394
Short-term borrowings - - 100,000 41,000
Accrued interest payable 165 136 362 406
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   17,367     6,401     27,471     8,025  
Total liabilities $ 1,920,092   $ 1,890,466   $ 1,798,331   $ 1,550,299  
 
Shareholders' equity:
Preferred stock - authorized 5,000,000 shares, Series A, $0.01 par value; 0 and 108,136 shares issued and outstanding at June 30, 2010 and 2009 respectively; - - - 1
Series B, $1,000 liquidation value, 0 and 45,220 shares issued and outstanding at June 30, 2010 and 2009, respectively - - 39,411 38,610
Common stock - authorized, 50,000,000 shares of $1.00 par value; 26,181,291 and 14,563,919 shares issued and outstanding at June 30, 2010 and 2009, respectively 26,181 26,181 26,181 14,563
Additional paid-in capital 197,027 196,898 196,875 146,293
Accumulated deficit (20,824 ) (21,231 ) (17,175 ) (17,029 )
Accumulated other comprehensive (loss) gain   1,394     199     (89 )   (1,159 )
Total shareholders' equity 203,778 202,047 245,203 181,279
 
Total liabilities and shareholders' equity $ 2,123,870   $ 2,092,513   $ 2,043,534   $ 1,731,578  
 
   
Average balance sheet and net interest income Three months ended June 30, 2010 Three months ended June 30, 2009
(Dollars in thousands) Average     Average Average     Average
Assets:

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:
Loans net of unearned discount $ 1,572,787 $ 18,374 4.67 % $ 1,470,347 $ 18,213 4.95 %
Investment securities-taxable 173,447 1,702 3.92 % 107,435 1,381 5.14 %
Investment securities-nontaxable* 31,948 520 6.51 % 27,667 565 8.17 %
Interest bearing deposits at Federal Reserve Bank 179,874 82 0.18 % 2,047 2 0.39 %
Federal funds sold -   - 0.00 % 23,068   26 0.45 %
Net interest-earning assets 1,958,056 20,678 4.22 % 1,630,564 20,187 4.95 %
Allowance for loan and lease losses (21,094 ) (19,474 )
Other assets 166,798   138,007  
$ 2,103,760   $ 1,749,097  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing) $ 853,413 $ 279 0.13 % $ 543,335 $ 68 0.05 %
Interest bearing deposits
Interest checking 601,861 2,096 1.39 % 352,215 1,438 1.63 %
Savings and money market 290,447 1,039 1.43 % 384,078 1,790 1.86 %
Time 91,561   120 0.52 % 170,251   359 0.84 %
Total interest bearing deposits 983,869 3,255 1.32 % 906,544 3,587 1.58 %
Total deposits 1,837,282 3,534 0.77 % 1,449,879 3,655 1.01 %
 
Short-term Borrowings 34,835 59 0.68 % 93,610 171 0.73 %
Repurchase agreements 8,134 7 0.34 % 2,774 5 0.72 %
Subordinated debt 13,401   216 6.44 % 13,401   222 6.63 %
Net interest bearing liabilities 1,040,239 3,537 1.36 % 1,016,329 3,985 1.57 %
Other liabilities 7,230   6,816  
Total Liabilities 1,900,882 1,566,480
Shareholders' equity 202,878   182,617  
 
$ 2,103,760   $ 1,749,097  
Net interest income on tax equivalent basis* 16,862 16,134
Tax equivalent adjustment 173 165
Net interest income $ 16,689 $ 15,969
Net interest margin * 3.44 % 3.96 %
 
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 34% statutory tax rate
 
   
Average balance sheet and net interest income Six months ended June 30, 2010 Six months ended June 30, 2009
(Dollars in thousands) Average     Average Average     Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,545,859 $ 36,289 4.70% $ 1,463,752 $ 36,387 4.97%
Investment securities-taxable 152,060 3,010 3.96% 108,592 2,456 4.52%
 
Investment securities-nontaxable* 31,405 1,107 7.05% 13,910 567 8.15%
Interest bearing deposits at Federal Reserve Bank 327,096 434 0.27% 2,045 5 0.49%
Federal funds sold - - 0.00% 60,434 119 0.39%
Net interest-earning assets 2,056,420 40,840 3.97% 1,648,733 39,534 4.80%
Allowance for loan and lease losses (20,472) (18,689)
Other assets 178,762 152,803
$ 2,214,710 $ 1,782,847
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing) $ 985,453 $ 498 0.10% $ 609,003 $ 191 0.06%
Interest bearing deposits
Interest checking 570,980 4,020 1.41% 333,971 2,709 1.62%
Savings and money market 323,746 2,221 1.37% 382,954 3,015 1.57%
Time 71,029 253 0.71% 193,245 1,884 1.95%
Total interest bearing deposits 965,755 6,494 1.34% 910,170 7,608 1.67%
Total deposits 1,951,208 6,992 0.72% 1,519,173 7,799 1.03%
 
Short-term Borrowings 19,097 64 0.68% 59,196 220 0.74%
Repurchase agreements 6,464 14 0.43% 2,563 16 1.25%
Subordinated debt 13,179 431 6.54% 13,401 449 6.70%
Net interest bearing liabilities 1,004,495 7,003 1.39% 985,330 8,293 1.68%
Other liabilities 9,978 6,707
Total Liabilities 1,999,926 1,601,040
Shareholders' equity 214,784 181,807
 
$ 2,214,710 $ 1,782,847
Net interest income on tax equivalent basis* 33,339 31,050
Tax equivalent adjustment 370 165
Net interest income $ 32,969 $ 30,885
Net interest margin * 3.24% 3.77%
 
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 34% statutory tax rate
   
Six months ended

For the year ended

Allowance for loan and lease losses: June 30,   June 30, December 31,
  2010     2009     2009  
 
Balance in the allowance for loan and lease losses at beginning of period $ 19,123   $ 17,361   $ 17,361  
 
Loans charged-off:
Commercial 5,919 1,894 6,314
Construction 565 3,080 4,546
Lease financing - 49 49
Residential mortgage 223 - 328
Consumer   138     24     127  
Total   6,845     5,047     11,364  
 
Recoveries:
Commercial 79 227 53
Construction 3 14 32
Lease financing - 12 27
Residential mortgage 16 12 12
Consumer   6     1     2  
Total   104     266     126  
Net charge-offs 6,741 4,781 11,238
Provision charged to operations   9,954     5,500     13,000  
 
Balance in allowance for loan and lease losses at end of period $ 22,336   $ 18,080   $ 19,123  
Net charge-offs/average loans 0.44 % 0.33 % 0.76 %
       
Loan portfolio: June 30, March 31, December 31, June 30,
2010 2010 2009 2009
Amount Amount Amount Amount
 
Commercial $ 403,320 $ 413,361 $ 402,232 $ 363,524
Commercial mortgage (1) 580,542 557,713 569,434 522,510
Construction   207,846   206,275   207,184   255,504
Total commercial loans 1,191,708 1,177,349 1,178,850 1,141,538
Direct financing leases 96,319 81,904 78,802 80,774
Residential mortgage 95,542 89,005 85,759 64,934
Consumer loans and others   190,729   177,456   178,608   170,999
1,574,298 1,525,714 1,522,019 1,458,245
Unamortized costs (fees)   2,227   1,977   1,703   1,720
Total loans, net of unamortized fees and costs $ 1,576,525 $ 1,527,691 $ 1,523,722 $ 1,459,965
 
Supplemental loan data :
Construction 1-4 family 102,730 98,151 100,088 124,443
Construction commercial, acquisition and development   105,116   108,124   107,096   131,061
$ 207,846 $ 206,275 $ 207,184 $ 255,504
 
(1) At June 30, 2010 our owner-occupied loans amounted to $120 million, or 20.7% of commercial mortgages.
       

June 30, March 31, December 31, June 30,
  2010     2010     2009     2009  
Asset quality ratios:
Nonperforming loans to total loans (1) 1.82 % 1.44 % 1.66 % 2.09 %
Nonperforming assets to total assets(1) 1.37 % 1.08 % 1.27 % 1.76 %
Allowance for loan and lease losses to total loans 1.42 % 1.33 % 1.26 % 1.24 %
 
Nonaccrual loans $ 18,193   $ 17,863   $ 12,270   $ 8,716  
Total nonperforming loans 18,193 17,863 12,270 8,716
Other real estate owned 459 648 459 -
Total nonperforming assets $ 18,652   $ 18,511   $ 12,729   $ 8,716  
 
Loans 90 days past due still accruing interest $ 10,529   $ 4,071   $ 12,994   $ 21,779  
 
(1) Nonperforming loans are defined as nonaccrual loans and restructured loans. Loans 90 days past due and still accruing interest are also included in these ratios.
   
Three months ended Six months ended
June 30, June 30,
  2010       2009     2010       2009  
Selected operating ratios:
Return on average assets 0.08 % 0.25 % 0.23 % 0.26 %
Return on average equity 0.80 % 2.42 % 2.41 % 2.55 %
Net interest margin 3.44 % 3.96 % 3.24 % 3.77 %
Efficiency ratio (1) 71.95 % 72.28 % 69.77 % 72.41 %
Book value per share (2) $ 7.78 $ 9.27 $ 7.78 $ 9.27
 

(1) Excludes OREO loss in 2009.

(2) Excludes Series B Preferred Shares issued to the US Treasury and the associated book value.

Source: The Bancorp, Inc.

Contact:

The Bancorp, Inc.

Andres Viroslav, 215-861-7990

andres.viroslav@thebancorp.com

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