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The Bancorp, Inc. Reports Second Quarter 2013 Financial Results

July 24, 2013

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

Net income for the second quarter of 2013 increased to $5.6 million compared to $3.9 million in the second quarter of 2012, an increase of 45%.

Financial Highlights

  • 72% increase in adjusted operating earnings, a non GAAP measure, to $18.7 million for the second quarter of 2013 versus $10.8 million for the quarter ended June 30, 2012.
  • 25% increase in diluted earnings per share to $0.15 for the second quarter of 2013 versus $0.12 for the second quarter of 2012. The number of shares used in calculating diluted earnings per share increased to 38.0 million from 33.1 million in 2012.
  • 41% increase in total quarterly revenues to $48.5 million compared to $34.4 million in second quarter 2012.
  • 107% increase in quarterly non-interest income, to $21.9 million compared to $10.6 million in second quarter 2012, excluding security gains and other than temporary impairment charges.
  • 63% increase in prepaid card fees, to $11.5 million compared to $7.1 million in second quarter 2012.
  • 13% increase in quarterly net interest income to $23.6 million compared to $20.9 million in second quarter 2012.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “Our earnings growth in the second quarter was propelled by increases both in net interest and non-interest income. These drivers resulted in growth of 72% in adjusted operating earnings, 45% in net income and 25% in earnings per diluted share. Our efficiency ratio of 61% was improved from 67% a year ago. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income which increased 63% to $11.5 million for the quarter, compared to the prior year quarter. Average deposits for the second quarter, net of terminations, grew 35% and reflected growth in all major deposit categories. At June 30, 2013 our portfolio of loans and securities had grown to $3.1 billion, an increase of $730 million, or 30% over June 30, 2012. Outstanding loans increased 12% over that period. 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 12%, SBA loans grew 111%, security backed lines of credit by 22% and small fleet leasing by 23%. Despite the growth, the Company remains well capitalized, with book value per share increasing 8%, from $8.54 at June 30, 2012 to $9.21 at June 30, 2013.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended June 30, 2013 of $5.6 million, or diluted earnings per share of $0.15, based on 37,974,814 weighted average diluted shares outstanding, compared to net income available to common shareholders of $3.9 million, or diluted earnings per share of $0.12, based on 33,147,791 weighted average diluted shares outstanding, for the three months ended June 30, 2012. Adjusted operating earnings, a non-GAAP measure, increased to $18.7 million for the three months ended June 30, 2013 compared to $10.8 million for the three months ended June 30, 2012. The following is a reconciliation of net income available to common shareholders to adjusted operating earnings, a non-GAAP measure:

       
Quarter ended For the six months ended
June 30,     June 30, June 30,     June 30,

2013

2012

2013

2012

 
Net income available to common shareholders $ 5,592 $ 3,854 $ 12,998 $ 7,826
Income tax expense 3,262 2,150 7,693 4,377
Gains on sales of investment securities (476 ) - (743 ) -
Other than temporary impairment on securities - 126 20 126
Losses and write-downs on other real estate owned 815 421 1,066 1,872
Provision for loan and lease losses   9,500     4,287   15,000     9,507
Adjusted operating earnings (1) $18,693   $10,838$36,034   $23,708
 
 
(1) As a supplement to GAAP, Bancorp has provided this non-GAAP performance measure. 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 8:00 AM EDT Thursday, July 25, 2013 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.788.0542, access code 92497956. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, August 1, 2013 by dialing 888.286.8010, access code 66571819.

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     Six months ended
June 30, June 30,
2013     2012 2013     2012
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 23,579 $ 20,881   $ 46,263   $ 41,797  
Provision for loan and lease losses   9,500   4,287     15,000     9,507  
Non-interest income
Gain on sales of investment securities 476 - 743 -
Other than temporary impairment of investment securities - (126 ) (20 ) (126 )
Other non-interest income   21,886   10,575     40,771     22,865  
Total non-interest income 22,362 10,449 41,494 22,739
Non-interest expense
Losses and write downs on other real estate owned 815 421 1,066 1,872
Other non-interest expense   26,772   20,618     51,000     40,954  
Total non-interest expense   27,587   21,039     52,066     42,826  
Income before income tax expense 8,854 6,004 20,691 12,203
Income tax expense   3,262   2,150     7,693     4,377  
Net income available to common shareholders $ 5,592 $ 3,854   $ 12,998   $ 7,826  
 
Basic earnings per share $ 0.15 $ 0.12   $ 0.35   $ 0.24  
 
Diluted earnings per share $ 0.15 $ 0.12   $ 0.34   $ 0.24  
Weighted average shares - basic 37,343,396 33,101,281 37,317,750 33,099,303
Weighted average shares - diluted 37,974,814 33,147,791 37,877,712 33,114,968
 
               
Balance sheetJune 30, March 31, December 31, June 30,
2013 2013 2012 2012
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 21,560 $ 14,108 $ 19,982 $ 5,560
Interest earning deposits at Federal Reserve Bank 622,989 1,102,217 948,111 692,582
Securities sold under agreements to repurchase   40,240     22,831     -     -  
Total cash and cash equivalents   684,789     1,139,156     968,093     698,142  
 
Investment securities, available-for-sale, at fair value 1,021,848 898,653 718,065 582,219
Investment securities, held-to-maturity 95,662 45,064 45,179 17,796
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 3,209 3,094 3,621 4,596
Loans held for sale, at fair value 49,355 28,402 11,341 -
Loans, net of deferred fees and costs 1,967,382 1,968,890 1,902,854 1,804,312
Allowance for loan and lease losses   (40,274 )   (34,883 )   (33,040 )   (31,171 )
Loans, net   1,927,108     1,934,007     1,869,814     1,773,141  
Premises and equipment, net 13,709 10,965 10,368 8,694
Accrued interest receivable 12,360 11,521 9,857 9,297
Intangible assets, net 6,503 6,753 7,004 7,504
Other real estate owned 6,308 4,543 4,241 4,919
Deferred tax asset, net 27,613 23,055 22,789 20,716
Other assets   28,031     26,882     29,287     23,178  
Total assets $ 3,876,495   $ 4,132,095   $ 3,699,659   $ 3,150,202  
 
Liabilities:
Deposits
Demand and interest checking $ 2,963,170 $ 3,197,039 $ 2,775,207 $ 2,335,960
Savings and money market 469,238 495,001 517,098 456,614
Time deposits 12,502 12,602 12,582 20,619
Time deposits, $100,000 and over   5,747     8,343     8,334     9,104  
Total deposits   3,450,657     3,712,985     3,313,221     2,822,297  
 
Securities sold under agreements to repurchase 19,059 16,672 18,548 21,948
Accrued interest payable 95 95 103 127
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   49,091     42,866     17,709     9,555  
Total liabilities $ 3,532,303   $ 3,786,019   $ 3,362,982   $ 2,867,328  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,462,939 and 33,196,281 shares issued at June 30, 2013 and 2012, respectively 37,463 37,434 37,247 33,201
Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 )
Additional paid-in capital 286,321 285,009 282,708 243,284
Retained earnings (accumulated deficit) 19,993 14,753 7,347 (1,451 )
Accumulated other comprehensive income   1,281     9,746     10,241     8,706  
Total shareholders' equity   344,192     346,076     336,677     282,874  
Total liabilities and shareholders' equity $ 3,876,495   $ 4,132,095   $ 3,699,659   $ 3,150,202  
 
                       
Average balance sheet and net interest income Three months ended June 30, 2013 Three months ended June 30, 2012
(dollars in thousands) Average Average Average Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned fees and costs** $ 1,991,622 $ 20,774 4.17 % $ 1,780,071 $ 19,125 4.30 %
Leases - bank qualified* 13,800 208 6.03 % 13,770 207 6.01 %
Investment securities-taxable 836,299 3,801 1.82 % 435,903 3,371 3.09 %
Investment securities-nontaxable* 206,629 1,342 2.60 % 105,869 1,096 4.14 %
Interest earning deposits at Federal Reserve Bank 841,315 505 0.24 % 954,213 605 0.25 %
Federal funds sold/securities purchased under agreement to resell   33,761     98 1.16 %   -    

-

-

Net interest earning assets 3,923,426 26,728 2.72 % 3,289,826 24,404 2.97 %
 
Allowance for loan and lease losses (36,596 ) (32,101 )
Other assets   85,476     126,547  
$ 3,972,306   $ 3,384,272  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,083,831 $ 1,901 0.25 % $ 2,580,647 $ 2,094 0.32 %
Savings and money market 482,722 528 0.44 % 448,571 626 0.56 %
Time   18,310     47 1.03 %   29,862     106 1.42 %
Total deposits 3,584,863 2,476 0.28 % 3,059,080 2,826 0.37 %
 
Repurchase agreements 17,057 12 0.28 % 22,255 24 0.43 %
Subordinated debt   13,401     118 3.52 %   13,401     217 6.48 %
Total deposits and interest bearing liabilities 3,615,321 2,606 0.29 % 3,094,736 3,067 0.40 %
 
Other liabilities   9,379     9,551  
Total liabilities 3,624,700 3,104,287
 
Shareholders' equity   347,606     279,985  
$ 3,972,306   $ 3,384,272  
Net interest income on tax equivalent basis*   24,122   21,337
 
Tax equivalent adjustment   543   456
 
Net interest income $ 23,579 $ 20,881
Net interest margin * 2.46 % 2.59 %
 
* Fully taxable equivalent basis, using a 35% statutory tax rate.
** Includes loans held for sale.
 
                       
Average balance sheet and net interest income Six months ended June 30, 2013 Six months ended June 30, 2012
(dollars in thousands) Average Average Average Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned fees and costs** $ 1,960,399 $ 40,964 4.18 % $ 1,756,910 $ 37,948 4.32 %
Leases - bank qualified* 14,096 407 5.77 % 12,105 397 6.56 %
Investment securities-taxable 759,899 7,288 1.92 % 402,949 6,561 3.26 %
Investment securities-nontaxable* 166,648 2,460 2.95 % 101,126 2,161 4.27 %
Interest earning deposits at Federal Reserve Bank 1,091,219 1,343 0.25 % 1,325,250 1,658 0.25 %
Federal funds sold/securities purchased under agreement to resell   27,107     122 0.90 %   -     -

-

Net interest-earning assets 4,019,368 52,584 2.62 % 3,598,340 48,725 2.71 %
 
Allowance for loan and lease losses (35,722 ) (31,388 )
Other assets   85,102     179,115  
$ 4,068,748   $ 3,746,067  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,170,543 $ 3,767 0.24 % $ 2,936,649 $ 4,088 0.28 %
Savings and money market 494,383 1,106 0.45 % 453,213 1,257 0.55 %
Time   19,607     101 1.03 %   30,608     203 1.33 %
Total deposits 3,684,533 4,974 0.27 % 3,420,470 5,548 0.32 %
 
Repurchase agreements 16,413 26 0.32 % 25,257 51 0.40 %
Subordinated debt   13,401     318 4.75 %   13,401     434 6.48 %
Total deposits and interest bearing liabilities 3,714,347 5,318 0.29 % 3,459,128 6,033 0.35 %
 
Other liabilities   10,455     10,078  
Total liabilities 3,724,802 3,469,206
 
Shareholders' equity   343,946     276,861  
$ 4,068,748   $ 3,746,067  
Net interest income on tax equivalent basis*   47,266   42,692
 
Tax equivalent adjustment   1,003   895
 
Net interest income $ 46,263 $ 41,797
Net interest margin * 2.35 % 2.37 %
 
* Fully taxable equivalent basis using a 35% statutory tax rate
** Includes loans held for sale.
 
               
Allowance for loan and lease losses: Six months ended For year ended
June 30, June 30, 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 3,733 4,099 9,508
Construction 4,382 4,838 11,318
Lease financing - 87 87
Residential mortgage 54 - -
Consumer   186     258     340  
Total   8,355     9,282     21,253  
 
Recoveries:
Commercial 51 1,272 2,093
Construction 481 9 96
Lease financing 8 12 13
Residential mortgage - 85 85
Consumer   49     -     -  
Total   589     1,378     2,287  
Net charge-offs 7,766 7,904 18,966
Provision charged to operations   15,000     9,507     22,438  
 
Balance in allowance for loan and lease losses at end of period $ 40,274   $ 31,171   $ 33,040  
Net charge-offs/average loans 0.39 % 0.45 % 1.04 %
Net charge-offs/average loans (annualized) 0.79 % 0.89 % 1.04 %
 
 
Loan portfolio:June 30, March 31, December 31, June 30,
2013 2013 2012 2012
(dollars in thousands)
 
Commercial $ 481,537 $ 477,690 $ 470,109 $ 441,167
Commercial mortgage (1) 651,034 673,916 617,069 596,639
Construction   266,911     263,579     258,684     269,636
Total commercial loans 1,399,482 1,415,185 1,345,862 1,307,442
Direct lease financing 172,250 157,508 156,697 140,012
Residential mortgage 93,960 94,238 97,717 97,226
Consumer loans and others   295,576     296,370     296,915     255,769
1,961,268 1,963,301 1,897,191 1,800,449
Unamortized loan fees and costs   6,114     5,589     5,663     3,863
Total loans, net of deferred loan fees and costs $ 1,967,382   $ 1,968,890   $ 1,902,854   $ 1,804,312
 
Supplemental loan data:
Construction 1-4 family $ 64,144 $ 65,669 $ 60,343 $ 79,546
Commercial construction, acquisition and development   202,767     197,910     198,341     190,090
  $ 266,911   $ 263,579   $ 258,684   $ 269,636
 
(1) At June 30, 2013 our owner-occupied loans amounted to $173 million, or 26.3% 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 June 30, 2013
Bancorp 8.83 % 14.47 % 15.73 %
The Bancorp Bank 6.83 % 11.23 % 12.48 %
"Well capitalized" institution (under FDIC regulations) 5.00 % 6.00 % 10.00 %
 
As of December 31, 2012
Bancorp 10.00 % 16.39 % 17.64 %
The Bancorp Bank 7.25 % 11.91 % 13.16 %
"Well capitalized" institution (under FDIC regulations) 5.00 % 6.00 % 10.00 %
 
                 
Three months ended Six months ended
June 30, June 30,

2013

2012

2013

2012

Selected operating ratios:
Return on average assets (annualized) 0.56 % 0.46 % 0.64 % 0.42 %
Return on average equity (annualized) 6.45 % 5.54 % 7.62 % 5.72 %
Net interest margin 2.46 % 2.59 % 2.35 % 2.37 %
Efficiency ratio (1) 60.68 % 67.15 % 59.84 % 66.36 %
Book value per share $ 9.21 $ 8.54 $ 9.21 $ 8.54
 
June 30, March 31, December 31, June 30,
2013 2013 2012 2012
Asset quality ratios:
Nonperforming loans to total loans (2) 2.16 % 1.80 % 1.56 % 1.55 %
Nonperforming assets to total assets (2) 1.26 % 0.97 % 0.92 % 1.04 %
Allowance for loan and lease losses to total loans 2.05 % 1.77 % 1.74 % 1.73 %
 
Nonaccrual loans $ 41,743 $ 34,063 $ 25,190 $ 24,815
Other real estate owned   6,308     4,543     4,241     4,919  
Total nonperforming assets $ 48,051   $ 38,606   $ 29,431   $ 29,734  
 
Loans 90 days past due still accruing interest $ 755   $ 1,291   $ 4,435   $ 3,105  
 
(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 Six months ended
June 30, June 30,

2013

2012

2013

2012

Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a) $ 27,587 $ 21,039 $ 52,066 $ 42,826
 
Net interest income $ 23,579 $ 20,881 $ 46,263 $ 41,797
Non-interest income 22,362 10,449 41,494 22,739
Less: Gain on sale of securities   (476 )   -     (743 )   -  
Adjusted net interest and non-interest income (b) $ 45,465 $ 31,330 $ 87,014 $ 64,536
 
(a) divided by (b) 60.68 % 67.15 % 59.84 % 66.36 %
 
(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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