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The Bancorp, Inc. Reports Fourth Quarter 2010 Financial Results

January 26, 2011

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported results for the quarter ended December 31, 2010.

Financial Highlights

  • Fourth quarter 2010 diluted earnings per share of $0.08, as compared to diluted loss per share of $0.04 in the fourth quarter 2009.
  • Net income increased to $2.0 million in the fourth quarter of 2010 from $33,000 in fourth quarter 2009, before preferred stock dividends and accretion (TARP repaid March 10, 2010).
  • Non-interest income, excluding security gains and losses, increased to $5.4 million, representing a 64% increase over fourth quarter 2009.
  • Net interest income increased by 8% to $18.2 million over fourth quarter 2009.
  • Total non-performing loans and loans 90 days past due and accruing interest declined to 1.08% of total loans at December 31, 2010, compared to 1.66% at the prior year end.
  • Average loans for the fourth quarter totaled $1.6 billion, an increase of $85 million or 6% over fourth quarter 2009.
  • Average deposits for the fourth quarter totaled $2.1 billion, an increase of $524 million or 32% over fourth quarter 2009, while transaction accounts grew to 99% of total average deposits. The average cost of funds between those respective periods decreased to 0.61% from 0.86%.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “We are pleased to report meaningful increases in non-interest income and net interest income. Although the provision for loan and lease losses remained elevated during the quarter; operating earnings, excluding the provision, amounted to $7.2 million compared to $5.8 million in fourth quarter 2009. Additionally, improvement in several key asset quality indicators is reflected in the decrease in total non-performing assets and loans over 90 days past due still accruing. Those categories totaled $19.6 million at December 31, 2010, compared to $25.7 million at the prior year end, or a decrease of 24%, while the allowance for loan losses to total loans increased to 1.49% from 1.26% over that period. In a weak economy, we grew our average quarterly loans by 6%, and have begun closing Small Business Administration loans. We also have developed new relationships to market our security backed lines of credit and are optimistic about growth in that area. We continue to grow prepaid relationships with our pipeline of prepaid customers.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended December 31, 2010 of $2.0 million or $0.08 diluted earnings per share, on 26,181,354 weighted average shares, compared to a net loss available to common shareholders of $932,000 or a diluted loss per share of $0.04, based on 26,181,291 weighted average shares, for the three months ended December 31, 2009. Core operating earnings as shown below, a non-GAAP measure, increased to $7.2 million for the three months ended December 31, 2010 as compared to $5.8 million for the three months ended December 31, 2009. The following is a reconciliation of core operating earnings to GAAP net income available to common shareholders (for the three month periods):

  December 31,   December 31,
2010 2009
 
Net income (loss) available to common shareholders $ 2,041 $ (932 )
Preferred stock dividends and accretion - 965
Income tax expense 946 17
 
(Gains) and losses on securities 14 (436 )
Other than temporary impairment in securities - 2,225

Provision for loan and lease losses

  4,212   4,000  
Core operating earnings (1) $ 7,213 $ 5,839  
(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, 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 Bancorp’s business and performance, it should not be considered, and is not intended to be, a substitute for GAAP.

Balance Sheet Summary

At December 31, 2010, Bancorp's total assets were $2.4 billion, an increase of $350 million or 17% over December 31, 2009. During that period, investments increased to $253 million, an increase of $138 million or 120%; loans increased to $1.6 billion, an increase of $95 million or 6%; and deposits increased to $2.0 billion, an increase of $370 million or 22%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 10:30 AM EST Thursday, January 27, 2011 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.730.5769 using access code 21625636. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, February 3, 2011 by dialing 888.286.8010, access code 16943233.

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 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   Year ended
December 31, December 31,
2010   2009 2010   2009
(dollars in thousands except per share data) (dollars in thousands except per share data)
Condensed income statement  
Net interest income $ 18,174   $ 16,849   $ 68,193   $ 63,709  
Provision for loan and lease losses   4,212     4,000     19,287     13,000  
Non-interest income
Gain and losses on securities (14 ) 436 1,207 1,106
Other than temporary impairment of investment securities - (2,225 ) (135 ) (2,225 )
Other non-interest income   5,372     3,272     19,524     12,576  
Total non-interest income 5,358 1,483 20,596 11,457
Non-interest expense
Loss on other real estate owned - - 22 1,700
Other non-interest expense   16,333     14,282     61,726     54,116  
Total non-interest expense   16,333     14,282     61,748     55,816  
Net income before income tax expense 2,987 50 7,754 6,350
Income tax expense   946     17     2,532     2,248  
Net income 2,041 33 5,222 4,102
Less preferred stock dividends - (565 ) (433 ) (2,293 )
Less preferred stock accretion   -     (400 )   (5,809 )   (1,467 )
Net income (loss) available to common shareholders $ 2,041   $ (932 ) $ (1,020 ) $ 342  
 
Basic earnings (loss) per share $ 0.08   $ (0.04 ) $ (0.04 ) $ 0.02  
 
Diluted earnings (loss) per share $ 0.08   $ (0.04 ) $ (0.04 ) $ 0.02  
Weighted average shares - basic 26,181,281 26,181,291 26,181,281 18,794,590
Weighted average shares - diluted 26,181,354 26,181,291 26,181,281 19,324,335
 
       
Balance sheet December 31 September 30 June 30 December 31
2010 2010 2010 2009
Assets:
Cash and cash equivalents
Cash and due from banks $ 157,411 $ 164,948 $ 92,620 $ 135,246
Interest bearing deposits   314,908     584,857     171,054     219,213  
Total cash and cash equivalents   472,319     749,805     263,674     354,459  
 
Investment securities, available-for-sale, at fair value 231,165 249,342 208,080 93,478
Investment securities, held-to-maturity 21,364 21,354 21,496 21,468
Loans, net of deferred costs 1,619,195 1,590,507 1,576,525 1,523,722
Allowance for loan and lease losses   (24,063 )   (21,798 )   (22,336 )   (19,123 )
Loans, net   1,595,132     1,568,709     1,554,189     1,504,599  
Premises and equipment, net 8,767 8,602 8,229 7,942
Accrued interest receivable 8,878 8,396 8,483 7,722
Intangible assets, net 9,005 9,255 9,505 10,005
Other real estate owned 2,115 225 459 459
Deferred tax asset, net 21,872 19,434 20,258 20,875
Other assets   23,327     24,554     29,497     22,527  
Total assets $ 2,393,944   $ 2,659,676   $ 2,123,870   $ 2,043,534  
 
Liabilities:
Deposits
Demand (non-interest bearing) $ 945,605 $ 1,402,538 $ 827,268 $ 661,383
Savings, money market and interest checking 975,973 1,001,959 903,599 850,306
Time deposits 90,862 9,218 1,178 125,255
Time deposits, $100,000 and over   11,657     8,672     149,562     17,565  
Total deposits   2,024,097     2,422,387     1,881,607     1,654,509  
Securities sold under agreements to repurchase 14,383 9,429 7,552 2,588
Short-term borrowings 87,000 - - 100,000
Federal funds purchased 49,000 - - -
Accrued interest payable 124 109 165 362
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   7,033     12,918     17,367     27,471  
Total liabilities $ 2,195,038   $ 2,458,244   $ 1,920,092   $ 1,798,331  
 
Shareholders' equity:
Series B, $1,000 liquidation value, 0 and 45,220 shares issued and outstanding at December 31, 2010 and 2009, respectively - - - 39,411
Common stock - authorized, 50,000,000 shares of $1.00 par value; 26,181,281 issued and outstanding at December 31, 2010 and 2009, respectively 26,181 26,181 26,181 26,181
Additional paid-in capital 192,711 192,492 197,027 196,875
Accumulated deficit (18,195 ) (20,236 ) (20,824 ) (17,175 )
Accumulated other comprehensive (loss) gain   (1,791 )   2,995     1,394     (89 )
Total shareholders' equity 198,906 201,432 203,778 245,203
 
Total liabilities and shareholders' equity $ 2,393,944   $ 2,659,676   $ 2,123,870   $ 2,043,534  
 
     
Average balance sheet and net interest income Three months ended December 31, 2010 Three months ended December 31, 2009
(Dollars in thousands) Average     Average Average     Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,597,630 $ 19,048 4.77 % $ 1,515,632 $ 18,666 4.93 %
Leases – nontaxable* 2,646 48 7.26 % - -
Investment securities-taxable 192,716 1,530 3.18 % 111,548 1,198 4.30 %
Investment securities-nontaxable* 76,401 1,029 5.39 % 34,709 712 8.21 %
Interest bearing deposits at Federal Reserve Bank 332,010 207 0.25 % 79,122 51 0.26 %
Federal funds sold -   - 0.00 % 39,243   30 0.31 %
Net interest-earning assets 2,201,403 21,862 3.97 % 1,780,254 20,657 4.64 %
 
Allowance for loan and lease losses (22,660 ) (18,946 )
Other assets 200,647   157,708  
$ 2,379,390   $ 1,919,016  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing) $ 1,119,463 $ 417 0.15 % $ 741,239 $ 97 0.05 %
Interest bearing deposits
Interest checking 684,740 1,793 1.05 % 420,498 1,688 1.61 %
Savings and money market 303,749 823 1.08 % 375,530 1,297 1.38 %
Time 29,481   63 0.85 % 76,192   218 1.14 %
Total interest bearing deposits 1,017,970 2,679 1.05 % 872,220 3,203 1.47 %
Total deposits 2,137,433 3,096 0.58 % 1,613,459 3,300 0.82 %
 
Short-term borrowings 4,272 8 0.75 % 29,837 50 0.67 %
Repurchase agreements 12,126 9 0.30 % 1,602 4 1.00 %
Subordinated debt 13,401   216 6.45 % 13,401   216 6.45 %
Net interest bearing liabilities 1,047,769 2,912 1.11 % 917,060 3,473 1.51 %
Total cost of funds 2,167,232 3,329 0.61 % 1,658,299 3,570 0.86 %
 
Other liabilities 8,423   12,456  
Total Liabilities 2,175,655 1,670,755
 
Shareholders' equity 203,735   248,261  
$ 2,379,390   $ 1,919,016  
Net interest income on tax equivalent basis* 18,533 17,087
 
Tax equivalent adjustment 359 238
 
Net interest income $ 18,174 $ 16,849
Net interest margin * 3.36 % 3.84 %
             
* Taxable equivalent basis for comparability to other interest categories, using a 34% statutory tax rate
 
     
Average balance sheet and net interest income Year ended December 31, 2010 Year ended December 31, 2009
(Dollars in thousands) Average     Average Average     Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,567,947 $ 73,741 4.70 % $ 1,477,614 $ 73,074 4.95 %
Leases - bank qualified 1,038 48 4.62 % - - 0.00 %
Investment securities-taxable 164,238 6,181 3.76 % 107,695 5,017 4.66 %
Investment securities-nontaxable* 48,913 2,919 5.97 % 25,449 2,041 8.02 %
Interest bearing deposits at Federal Reserve Bank 327,943 817 0.25 % 39,271 87 0.22 %
Federal funds sold -   - 0.00 % 70,061   234 0.33 %
Net interest-earning assets 2,110,079 83,706 3.97 % 1,720,090 80,453 4.68 %
 
Allowance for loan and lease losses (21,676 ) (18,632 )
Other assets 183,850   135,917  
$ 2,272,253   $ 1,837,375  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing) $ 1,011,667 $ 1,311 0.13 % $ 529,477 $ 406 0.08 %
Interest bearing deposits
Interest checking 622,116 7,870 1.27 % 365,715 5,937 1.62 %
Savings and money market 311,251 3,921 1.26 % 516,356 5,959 1.15 %
Time 69,169   457 0.66 % 151,791   2,510 1.65 %
Total interest bearing deposits 1,002,536 12,248 1.22 % 1,033,862 14,406 1.39 %
Total deposits 2,014,203 13,559 0.67 % 1,563,339 14,812 0.95 %
 
Short-term Borrowings 13,464 89 0.66 % 44,895 329 0.73 %
Repurchase agreements 8,637 27 0.31 % 2,175 26 1.20 %
Subordinated debt 13,211   864 6.54 % 13,401   883 6.59 %
Net interest bearing liabilities 1,037,848 13,228 1.27 % 1,094,333 15,644 1.43 %
Total cost of funds 2,049,515 14,539 0.71 % 1,623,810 16,050 0.99 %
 
Other liabilities 9,569   7,608  
Total Liabilities 2,059,084 1,631,418
 
Shareholders' equity 213,169   205,957  
 
$ 2,272,253   $ 1,837,375  
Net interest income on tax equivalent basis* 69,167 64,403
 
Tax equivalent adjustment 974 694
 
Net interest income $ 68,193 $ 63,709
Net interest margin * 3.28 % 3.74 %
             
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 34% statutory tax rate
 
   
Allowance for loan and lease losses: For year ended For year ended
December 31, December 31,
2010     2009  
 
Balance in the allowance for loan and lease losses at beginning of period $ 19,123   $ 17,361  
 
Loans charged-off:
Commercial 12,948 6,314
Construction 565 4,546
Lease financing 3 49
Residential mortgage 1,254 328
Consumer 618     127  
Total 15,388     11,364  
 
Recoveries:
Commercial 254 53
Construction 29 32
Lease financing 10 27
Residential mortgage 742 12
Consumer 6     2  
Total 1,041     126  
Net charge-offs 14,347 11,238
Provision charged to operations 19,287     13,000  
 
Balance in allowance for loan and lease losses at end of period $ 24,063   $ 19,123  
Net charge-offs/average loans 0.92 % 0.76 %
 
       
Loan portfolio: December 31 September 30, June 30, December 31,
  2010 2010 2010 2009
       
 
Commercial $ 441,835 $ 409,697 $ 403,320 $ 402,232
Commercial mortgage (1) 580,780 580,491 580,542 569,434
Construction   203,120   206,551   207,846   207,184
Total commercial loans 1,225,735 1,196,739 1,191,708 1,178,850
Direct financing leases 103,289 103,278 96,319 78,802
Residential mortgage 93,004 93,833 95,542 85,759
Consumer loans and others   194,320   193,968   190,729   178,608
1,616,348 1,587,818 1,574,298 1,522,019
Unamortized costs (fees)   2,847   2,689   2,227   1,703
Total loans, net of unamortized fees and costs $ 1,619,195 $ 1,590,507 $ 1,576,525 $ 1,523,722
 
Supplemental loan data :
Construction 1-4 family 92,190 95,905 102,730 100,088
Construction commercial, acquisition and development   110,930   110,646   105,116   107,096
    $ 203,120 $ 206,551 $ 207,846 $ 207,184
(1) At December 31, 2010 our owner-occupied loans amounted to $127 million, or 22% of commercial mortgages.
 
         
December 31, September 30, June 30, March 31, December 31,
2010 2010 2010 2010 2009
Asset quality ratios:
Nonperforming loans to total loans (1) 1.08 % 1.51 % 1.82 % 1.44 % 1.66 %
Nonperforming assets to total assets (1) 0.82 % 0.91 % 1.37 % 1.08 % 1.26 %
Allowance for loan and lease losses to total loans 1.49 % 1.37 % 1.42 % 1.33 % 1.26 %
 
Nonaccrual loans $ 15,298   $ 19,640   $ 18,193   $ 17,863   $ 12,270  
Total nonperforming loans 15,298 19,640 18,193 17,863 12,270
Other real estate owned 2,115 225 459 648 459
Total nonperforming assets $ 17,413   $ 19,865   $ 18,652   $ 18,511   $ 12,729  
 
Loans 90 days past due still accruing interest $ 2,219   $ 4,352   $ 10,529   $ 4,071   $ 12,994  
(1) Nonperforming loans are defined as nonaccrual loans and restructure loans. Loans 90 days past due and still accruing interest are also included in these ratios.
 
   
Three months ended Year ended
December 31, December 31,
2010   2009 2010   2009
Selected operating ratios:
Return on average assets 0.34 % 0.01 % 0.23 % 0.22 %
Return on average equity 4.01 % 0.05 % 2.45 % 1.99 %
Net interest margin 3.36 % 3.84 % 3.28 % 3.74 %
Efficiency ratio (1) 69.37 % 71.11 % 70.52 % 73.29 %
Book value per share (2) $ 7.60 $ 7.64 $ 7.60 $ 7.64
 
(1) Excludes OREO loss in 2009.

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

 

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 December 31, 2010
The Company 8.37 % 11.99 % 13.24 %
The Bancorp Bank 7.39 % 10.60 % 11.85 %
"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 %

Source: The Bancorp, Inc.

Contact:

The Bancorp, Inc.

Andres Viroslav, 215-861-7990

andres.viroslav@thebancorp.com

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