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The Bancorp, Inc. Reports First Quarter 2013 Financial Results

April 24, 2013

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2013.

Net income for the first quarter of 2013 increased to $7.4 million compared to $4.0 million in the first quarter of 2012, an increase of 86%.

Financial Highlights

  • 67% increase in diluted earnings per share to $0.20 for the first quarter of 2013 versus $0.12 for the first quarter of 2012. The number of shares for diluted earnings per share increased to 37.8 million from 33.1 million in 2012.
  • 23% increase in total quarterly revenues to $44.5 million compared to $36.2 million in first quarter 2012.
  • 54% increase in quarterly non-interest income, primarily in prepaid card fees, to $18.9 million compared to $12.3 million in first quarter 2012, excluding security gains.
  • 8% increase in quarterly net interest income to $22.7 million compared to $20.9 million in first quarter 2012.
  • At March 31, 2013 our portfolio of loans and securities had grown to $2.9 billion, an increase of $692 million, or 31% over March 31, 2012. Outstanding loans increased 14% over that period.
  • Average deposits for the first quarter, net of terminations, grew 40% and reflected growth in all major deposit categories. After consideration of those terminations, our other deposits had grown 40% in the first quarter compared to the prior year first quarter. *

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “For the quarter ending March 31, 2013, Bancorp experienced increased operating earnings of $17.3 million, an increase of $4.5 million or 35% from the quarter ending March 31, 2012. This growth was propelled by increases both in net interest and non-interest income. These drivers resulted in growth of 86% in net income, 67% in earnings per diluted share and an efficiency ratio of 59% (down from 66% a year ago). Our leadership position in the prepaid card industry is the primary vector of growth. However, asset growth within our targeted lending segments – Small Business Administration (SBA), security backed lines of credit and small fleet leasing – contributed disproportionately. Although total loans increased by 14%, SBA grew 179%, security backed lines of credit by 42% and small fleet leasing by 21%. Despite the growth, the Company remains well capitalized, with book value per share increasing 10%, from $8.41 at March 31, 2012 to $9.27 at March 31, 2013.”

* First quarter deposits include seasonal deposits from tax refunds.

Financial Results

Bancorp reported net income available to common shareholders for the three months ended March 31, 2013 of $7.4 million, or diluted earnings per share of $0.20, based on 37,772,122 weighted average diluted shares outstanding, compared to net income available to common shareholders of $4.0 million, or diluted earnings per share of $0.12, based on 33,107,037 weighted average diluted shares outstanding, for the three months ended March 31, 2012. Adjusted operating earnings, a non-GAAP measure, increased to $17.3 million for the three months ended March 31, 2013 compared to $12.9 million for the three months ended March 31, 2012. The following is a reconciliation of net income available to common shareholders to adjusted operating earnings, a non-GAAP measure:

   
Three months ended
March 31,     March 31,

2013

2012

(in thousands)
Net income available to common shareholders $ 7,406 $ 3,972
Income tax expense 4,431 2,227
Gains on sales of investment securities (267 ) -
Losses and write-downs on other real estate owned 251 1,451
Provision for loan and lease losses   5,500     5,220
Adjusted operating earnings (1) $17,321   $12,870
 
       
(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 adjusted operating earnings to measure the combined impact of changes in net interest income, non-interest income and certain other expenses. Other companies may calculate adjusted operating 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 net income calculated pursuant to GAAP.
 

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EDT Thursday, April 25, 2013 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.277.1184, access code 72650408. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, May 2, 2013 by dialing 888.286.8010, access code 51978128.

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 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
March 31, December 31,
2013 2012 2012
Condensed income statement (dollars in thousands except per share data)
 
Net interest income $22,684   $20,916$85,444  
Provision for loan and lease losses   5,500     5,220   22,438  
Non-interest income
Gain on sales of investment securities 267 - 661
Other than temporary impairment of investment securities (20 ) - (202 )
Other non-interest income   18,885     12,290   49,138  
Total non-interest income 19,132 12,290 49,597
Non-interest expense
Losses and write downs on other real estate owned 251 1,451 2,508
Other non-interest expense   24,228     20,336   85,677  
Total non-interest expense   24,479     21,787   88,185  
Income before income tax expense 11,837 6,199 24,418
Income tax expense   4,431     2,227   7,794  
Net income available to common shareholders $7,406   $3,972$16,624  
 
Basic earnings per share $0.20   $0.12$0.50  
 
Diluted earnings per share $0.20   $0.12$0.50  
Weighted average shares - basic 37,291,820 33,097,325 33,227,755
Weighted average shares - diluted 37,772,122 33,107,037 33,288,278
 
               
March 31, December 31, September 30, March 31,
2013 2012 2012 2012
(dollars in thousands)
Balance sheets
 
Assets:
Cash and cash equivalents
Cash and due from banks $ 14,108 $ 19,982 $ 4,648 $ 142,123
Interest earning deposits at Federal Reserve Bank 1,102,217 948,111 540,010 1,663,664
Securities purchases under agreements to resell   22,831     -     -     -  
Total cash and cash equivalents   1,139,156     968,093     544,658     1,805,787  
 
Investment securities, available-for-sale, at fair value 898,011 718,065 634,894 481,553
Investment securities, held-to-maturity 45,179 45,179 22,707 17,971
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 3,621 3,621 4,160 4,836
Loans held for sale, at fair value 28,402 11,341 7,970 -
Loans, net of deferred costs and fees 1,968,890 1,902,854 1,856,992 1,748,867
Allowance for loan and lease losses   (34,883)   (33,040)   (33,071)   (31,500)
Loans, net   1,934,007     1,869,814     1,823,921     1,717,367  
Premises and equipment, net 10,965 10,368 9,802 8,514
Accrued interest receivable 11,521 9,857 10,061 9,032
Intangible assets, net 6,753 7,004 7,254 7,754
Other real estate owned 4,543 4,241 3,065 7,726
Deferred tax asset, net 23,055 22,789 19,708 20,804
Other assets   26,882     29,287     24,925     22,703  
Total assets $4,132,095   $3,699,659   $3,113,125   $4,104,047  
 
Liabilities:
Deposits
Demand and interest checking $ 3,197,039 $ 2,775,207 $ 2,300,025 $ 3,275,611
Savings and money market 495,001 517,098 459,725 468,183
Time deposits 12,602 12,582 12,606 20,637
Time deposits, $100,000 and over   8,343     8,334     8,819     9,447  
Total deposits   3,712,985     3,313,221     2,781,175     3,773,878  
 
Securities sold under agreements to repurchase 16,672 18,548 18,802 25,906
Accrued interest payable 95 103 100 129
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   42,866     17,709     10,662     12,500  
Total liabilities $3,786,019   $3,362,982   $2,824,140   $3,825,814  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,333,594 and 33,101,281 shares issued at March 31, 2013 and 2012, respectively 37,434 37,247 33,209 33,201
Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 )
Additional paid-in capital 285,009 282,708 243,954 242,661
Retained earnings (accumulated deficit) 14,753 7,347 2,110 (5,305 )
Accumulated other comprehensive income, net   9,746     10,241     10,578     8,542  
Total shareholders' equity 346,076 336,677 288,985 278,233
 
Total liabilities and shareholders' equity $4,132,095   $3,699,659   $3,113,125   $4,104,047  
 
                       
Average balance sheet and net interest income

(dollars in thousands)

Three months ended March 31, 2013 Three months ended March 31, 2012
Average Average Average Average
Assets:

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:
Loans net of unearned discount ** $ 1,928,786 $ 20,191 4.19 % $ 1,733,736 $ 18,823 4.34 %
Leases - bank qualified* 14,393 200 5.56 % 10,439 189 7.24 %
Investment securities-taxable 682,676 3,487 2.04 % 369,921 3,190 3.45 %
Investment securities-nontaxable* 126,221 1,116 3.54 % 96,384 1,066 4.42 %
Interest earning deposits at Federal Reserve Bank 1,343,899 838 0.25 % 1,698,456 1,053 0.25 %
Federal funds sold/securities purchased under agreement to resell   20,380     24 0.47 %   -     - 0.00 %
Net interest earning assets 4,116,355 25,856 2.51 % 3,908,936 24,321 2.49 %
 
Allowance for loan and lease losses (34,839 ) (30,638 )
Other assets   83,902     229,504  
$ 4,165,418   $ 4,107,802  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,257,692 $ 1,866 0.23 % $ 3,292,648 $ 1,994 0.24 %
Savings and money market 506,174 578 0.46 % 457,855 631 0.55 %
Time   20,919     54 1.03 %   31,355     97 1.24 %
Total deposits 3,784,785 2,498 0.26 % 3,781,858 2,722 0.29 %
 
Repurchase agreements 15,762 14 0.36 % 28,259 27 0.38 %
Subordinated debt   13,401     199 5.94 %   13,401     217 6.48 %
Total deposits and interest bearing liabilities 3,813,948 2,711 0.28 % 3,823,518 2,966 0.31 %
 
Other liabilities   11,344     10,598  
Total liabilities 3,825,292 3,834,116
 
Shareholders' equity   340,126     273,686  
$ 4,165,418   $ 4,107,802  
Net interest income on tax equivalent basis* $ 23,145 $ 21,355
 
Tax equivalent adjustment 461 439
 
Net interest income $ 22,684 $ 20,916
Net interest margin * 2.25%2.19%
 
* 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,
2013     2012 2012
(dollars in thousands)
 
Balance in the allowance for loan and lease losses at beginning of period $33,040   $29,568   $29,568  
 
Loans charged-off:
Commercial 2,073 2,448 9,508
Construction 1,608 702 11,318
Lease financing - 86 87
Residential mortgage - - -
Consumer   54     172     340  
Total   3,735     3,408     21,253  
 
Recoveries:
Commercial 35 36 2,093
Construction - 1 96
Lease financing - - 13
Residential mortgage - 83 85
Consumer   43     -     -  
Total   78     120     2,287  
Net charge-offs 3,657 3,288 18,966
Provision charged to operations   5,500     5,220     22,438  
 
Balance in allowance for loan and lease losses at end of period $34,883   $31,500   $33,040  
Net charge-offs/average loans 0.19 % 0.19 % 1.04 %
 
 
 
Loan portfolio:     March 31, December 31, September 30, March 31,
2013 2012 2012 2012
(dollars in thousands)
 
Commercial $ 477,690 $ 470,109 $ 453,444 $ 445,912
Commercial mortgage (1) 673,916 617,069 614,410 617,871
Construction   263,579   258,684     263,726     248,232  
Total commercial loans 1,415,185 1,345,862 1,331,580 1,312,015
Direct lease financing 157,508 156,697 146,728 130,321
Residential mortgage 94,238 97,717 97,589 94,438
Consumer loans and others   296,370   296,915     276,427     208,584  
1,963,301 1,897,191 1,852,324 1,745,358
Unamortized loan costs and fees   5,589   5,663     4,668     3,509  
Total loans, net of deferred loan costs and fees $1,968,890$1,902,854   $1,856,992   $1,748,867  
 
Supplemental loan data:
Construction 1-4 family $ 65,669 $ 60,343 $ 71,599 $ 85,461
Commercial construction, acquisition and development   197,910   198,341     192,127     162,771  
  $263,579$258,684   $263,726   $248,232  
 
(1) At March 31, 2013 our owner-occupied loans amounted to $199 million, or 29.5% 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, 2013
The Company 8.26% 15.52% 16.78%
The Bancorp Bank 6.36% 11.98% 13.24%
"Well capitalized" institution (under FDIC regulations) 5.00% 6.00% 10.00%
 
As of March 31, 2012
The Company 6.59% 14.94% 16.19%
The Bancorp Bank 5.41% 12.29% 13.54%
"Well capitalized" institution (under FDIC regulations) 5.00% 6.00% 10.00%
 
               
Three months ended Year ended
March 31, December 31, December 31,
2013201220122012
Selected operating ratios:
Return on average assets 0.72 % 0.39 % 0.62 % 0.48 %
Return on average equity 8.83 % 5.84 % 7.04 % 5.86 %
Net interest margin 2.25 % 2.19 % 2.73 % 2.58 %
Efficiency ratio (1) 58.89 % 65.61 % 63.01 % 65.53 %
Book value per share $ 9.27 $ 8.41 $ 9.06 $ 9.06
 
 
March 31, December 31, September 30, March 31,
2013 2012 2012 2012
Asset quality ratios:
Nonperforming loans to total loans (2) 1.80 % 1.56 % 1.63 % 1.42 %
Nonperforming assets to total assets (2) 0.97 % 0.92 % 1.07 % 0.79 %
Allowance for loan and lease losses to total loans 1.77 % 1.74 % 1.78 % 1.80 %
 
Nonaccrual loans $ 34,063 $ 25,190 $ 26,454 $ 20,929
Other real estate owned   4,543     4,241     3,065     7,726  
Total nonperforming assets $38,606   $29,431   $29,519   $28,655  
 
Loans 90 days past due still accruing interest $1,291   $4,435   $3,861   $3,914  
 
 
(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,
2013201220122012
Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a) $ 24,479 $ 21,787 $ 23,461 $ 88,185
Net interest income $ 22,684 $ 20,916 $ 22,086 $ 85,444
Non-interest income 19,132 12,290 15,625 49,597
Less: Gain on sale of securities (267 ) - (554 ) (661 )
Add: Other than temporary impairment   20     -     76     202  
Adjusted net interest and non-interest income (b) $ 41,569 $ 33,206 $ 37,233 $ 134,582
 
(a) divided by (b) 58.89 % 65.61 % 63.01 % 65.53 %
 

(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.

 

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

Source: The Bancorp, Inc.

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