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The Bancorp, Inc. Reports Third Quarter 2013 Financial Results

October 24, 2013

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

Net income for the third quarter of 2013 increased to $4.8 million compared to $3.6 million in the third quarter of 2012, an increase of 35%. Year to date net income increased to $17.8 million in 2013 from $11.4 million in 2012, an increase of 56%.

Financial Highlights

  • 34% increase in adjusted operating earnings, a non GAAP measure, to $15.2 million for the third quarter of 2013 versus $11.3 million for the quarter ended September 30, 2012.
  • 18% increase in diluted earnings per share to $0.13 for the third quarter of 2013 versus $0.11 for the third quarter of 2012. The number of shares used in calculating diluted earnings per share increased to 38.3 million from 33.2 million in 2012. On a year to date basis, diluted earnings per share increased to $0.47 in 2013 from $0.34 in 2012, an increase of 38%.
  • 30% increase in total quarterly revenues to $46.4 million compared to $35.6 million in third quarter 2012.
  • 76% increase in quarterly non-interest income, to $19.6 million compared to $11.1 million in third quarter 2012, excluding security gains and other than temporary impairment charges.
  • 36% increase in prepaid card fees, to $10.2 million compared to $7.5 million in third quarter 2012.
  • 12% increase in quarterly net interest income to $24.1 million compared to $21.6 million in third quarter 2012.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “Our earnings growth in the third quarter reflected increases both in net interest and non-interest income. These drivers resulted in growth of 35% in net income, 34% in adjusted operating earnings and 18% in earnings per diluted share. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income increased 36% to $10.2 million for the quarter, compared to the prior year quarter. Average deposits for the third quarter grew 31% and reflected growth in all major deposit categories. At September 30, 2013 our portfolio of loans and securities had grown to $3.2 billion, an increase of $675.1 million, or 27% over September 30, 2012. Outstanding loans increased 8% 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 8%, SBA loans grew 85%, security backed lines of credit by 27% and small fleet leasing by 21%. Despite the growth, the Company remains well capitalized, with book value per share increasing 8%, from $8.73 at September 30, 2012 to $9.39 at September 30, 2013.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended September 30, 2013 of $4.8 million, or diluted earnings per share of $0.13, based on 38,283,317 weighted average diluted shares outstanding, compared to net income available to common shareholders of $3.6 million, or diluted earnings per share of $0.11, based on 33,172,852 weighted average diluted shares outstanding, for the three months ended September 30, 2012. Adjusted operating earnings, a non-GAAP measure, increased to $15.2 million for the three months ended September 30, 2013 compared to $11.3 million for the three months ended September 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 nine months ended
September 30,   September 30, September 30,   September 30,
2013 2012 2013 2012
 
Net income available to common shareholders $ 4,788 $ 3,561 $ 17,786 $ 11,387
Income tax expense 2,034 1,795 9,727 6,172
Gains on sales of investment securities (42 ) (107 ) (785 ) (107 )
Other than temporary impairment on securities - - 20 126
Losses and write-downs on other real estate owned 403 533 1,469 2,405
Provision for loan and lease losses   8,000     5,540     23,000     15,047  
Adjusted operating earnings (1) $ 15,183   $ 11,322   $ 51,217   $ 35,030  
 
  (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 8:30 AM EDT Friday, October 25, 2013 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.318.8615, access code 46526535. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Friday, November 1, 2013 by dialing 888.286.8010, access code 65916585.

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   Nine months ended
September 30, September 30,
2013   2012 2013   2012
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 24,117 $ 21,561 $ 70,380   $ 63,358  
Provision for loan and lease losses   8,000   5,540   23,000     15,047  
Non-interest income
Gain on sales of investment securities 42 107 785 107
Other than temporary impairment of investment securities - - (20 ) (126 )
Other non-interest income   19,560   11,126   60,331     33,991  
Total non-interest income 19,602 11,233 61,096 33,972
Non-interest expense
Losses and write downs on other real estate owned 403 533 1,469 2,405
Other non-interest expense   28,494   21,365   79,494     62,319  
Total non-interest expense   28,897   21,898   80,963     64,724  
Net income before income tax expense 6,822 5,356 27,513 17,559
Income tax expense   2,034   1,795   9,727     6,172  
Net income available to common shareholders $ 4,788 $ 3,561 $ 17,786   $ 11,387  
 
Basic earnings per share $ 0.13 $ 0.11 $ 0.48   $ 0.34  
 
Diluted earnings per share $ 0.13 $ 0.11 $ 0.47   $ 0.34  
Weighted average shares - basic 37,440,838 33,105,194 37,359,230 33,101,281
Weighted average shares - diluted 38,283,317 33,172,852 37,978,108 33,133,307
 
       

Balance sheet

September 30, June 30, December 31, September 30,
2013 2013 2012 2012
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 32,026 $ 21,560 $ 19,982 $ 4,648
Interest earning deposits at Federal Reserve Bank 657,618 622,989 948,111 540,010
Securities sold under agreements to repurchase   40,811   40,240   -   -
Total cash and cash equivalents   730,455   684,789   968,093   544,658
 
Investment securities, available-for-sale, at fair value 1,083,154 1,021,848 718,065 634,894
Investment securities, held-to-maturity 97,459 95,662 45,179 22,707
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 3,209 3,209 3,621 4,160
Loans held for sale, at fair value 25,557 49,355 11,341 7,970
Loans, net of deferred fees and costs 1,991,455 1,967,382 1,902,854 1,856,992
Allowance for loan and lease losses   (39,151)   (40,274)   (33,040)   (33,071)
Loans, net   1,952,304   1,927,108   1,869,814   1,823,921
Premises and equipment, net 14,252 13,709 10,368 9,802
Accrued interest receivable 12,556 12,360 9,857 10,061
Intangible assets, net 6,253 6,503 7,004 7,254
Other real estate owned 20,111 6,308 4,241 3,065
Deferred tax asset, net 26,434 27,613 22,789 19,708
Other assets   28,538   28,031   29,287   24,925
Total assets $ 4,000,282 $ 3,876,495 $ 3,699,659 $ 3,113,125
 
Liabilities:
Deposits
Demand and interest checking $ 3,050,167 $ 2,963,170 $ 2,775,207 $ 2,300,025
Savings and money market 504,447 469,238 517,098 459,725
Time deposits 9,920 12,502 12,582 12,606
Time deposits, $100,000 and over   4,683   5,747   8,334   8,819
Total deposits   3,569,217   3,450,657   3,313,221   2,781,175
 
Securities sold under agreements to repurchase 22,057 19,059 18,548 18,802
Accrued interest payable 73 95 103 100
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   42,201   49,091   17,709   10,662
Total liabilities $ 3,646,949 $ 3,532,303 $ 3,362,982 $ 2,824,140
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,720,945 and 33,196,281 shares issued at September 30, 2013 and 2012, respectively 37,721 37,463 37,247 33,209
Treasury stock (100,000 shares) (866) (866) (866) (866)
Additional paid-in capital 292,715 286,321 282,708 243,954
Retained earnings (accumulated deficit) 20,291 19,993 7,347 2,110
Accumulated other comprehensive income   3,472   1,281   10,241   10,578
Total shareholders' equity   353,333   344,192   336,677   288,985
 
Total liabilities and shareholders' equity $ 4,000,282 $ 3,876,495 $ 3,699,659 $ 3,113,125
 
   
Average balance sheet and net interest income Three months ended September 30, 2013 Three months ended September 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 ** $ 2,037,879 $ 20,676 4.06% $ 1,827,348 $ 19,646 4.30%
Leases - bank qualified* 17,894 260 5.81% 15,012 217 5.78%
Investment securities-taxable 837,700 4,057 1.94% 519,377 3,507 2.70%
Investment securities-nontaxable* 297,301 2,040 2.74% 105,918 1,091 4.12%
Interest earning deposits at Federal Reserve Bank 702,492 438 0.25% 570,667 356 0.25%
Federal funds sold/securities purchased under agreement to resell 44,289 157 1.42% - - 0.00%
Net interest earning assets 3,937,555 27,628 2.81% 3,038,322 24,817 3.27%
 
Allowance for loan and lease losses (41,962) (32,385)
Other assets 89,135 78,241
$ 3,984,728 $ 3,084,178
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,096,247 $ 2,020 0.26% $ 2,296,193 $ 1,884 0.33%
Savings and money market 491,991 516 0.42% 436,484 574 0.53%
Time 16,038 42 1.05% 24,042 98 1.63%
Total deposits 3,604,276 2,578 0.29% 2,756,719 2,556 0.37%
 
Repurchase agreements 19,771 13 0.26% 20,489 24 0.47%
Subordinated debt 13,401 115 3.43% 13,401 218 6.51%
Total deposits and interest bearing liabilities 3,637,448 2,706 0.30% 2,790,609 2,798 0.40%
 
Other liabilities 2,954 8,462
Total liabilities 3,640,402 2,799,071
 
Shareholders' equity 344,326 285,107
$ 3,984,728 $ 3,084,178
Net interest income on tax equivalent basis* $ 24,922 $ 22,019
 
Tax equivalent adjustment 805 458
 
Net interest income $ 24,117 $ 21,561
Net interest margin * 2.53% 2.90%
         
* Full taxable equivalent basis using a 35% statutory tax rate.
** Includes loans held for sale.
 
   
Average balance sheet and net interest income Nine months ended September 30, 2013 Nine months ended September 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 ** $ 1,986,507 $ 61,640 4.14% $ 1,780,565 $ 57,594 4.31%
Leases - bank qualified* 15,376 668 5.79% 13,081 614 6.26%
Investment securities-taxable 785,973 11,345 1.92% 442,043 10,068 3.04%
Investment securities-nontaxable* 210,678 4,499 2.85% 102,736 3,252 4.22%
Interest earning deposits at Federal Reserve Bank 960,220 1,781 0.25% 1,073,305 2,014 0.25%
Federal funds sold/securities purchased under agreement to resell 32,897 279 1.13% - - 0.00%
Net interest-earning assets 3,991,651 80,212 2.68% 3,411,730 73,542 2.87%
 
Allowance for loan and lease losses (37,868) (31,728)
Other assets 87,046 143,839
$ 4,040,829 $ 3,523,841
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,145,748 $ 5,786 0.25% $ 2,721,620 $ 5,971 0.29%
Savings and money market 493,577 1,622 0.44% 447,596 1,832 0.55%
Time 18,404 144 1.04% 28,403 301 1.41%
Total deposits 3,657,729 7,552 0.28% 3,197,619 8,104 0.34%
 
Repurchase agreements 17,545 39 0.30% 23,656 75 0.42%
Subordinated debt 13,401 433 4.31% 13,401 652 6.49%
Total deposits and interest bearing liabilities 3,688,675 8,024 0.29% 3,234,676 8,831 0.36%
 
Other liabilities 8,020 9,526
Total liabilities 3,696,695 3,244,202
 
Shareholders' equity 344,134 279,639
$ 4,040,829 $ 3,523,841
Net interest income on tax equivalent basis* 72,188 64,711
 
Tax equivalent adjustment 1,808 1,353
 
Net interest income $ 70,380 $ 63,358
Net interest margin * 2.41% 2.53%
         
* Fully taxable equivalent basis using a 35% statutory tax rate.
** Includes loans held for sale.
 
     

Allowance for loan and lease losses:

 Nine months ended For year ended
September 30,   September 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 11,892 5,953 9,508
Construction 5,440 6,931 11,318
Lease financing - 87 87
Residential mortgage 54 - -
Consumer   398   299   340
Total   17,784   13,270   21,253
 
Recoveries:
Commercial 57 1,533 2,093
Construction 766 95 96
Lease financing 8 13 13
Residential mortgage - 85 85
Consumer   64   -   -
Total   895   1,726   2,287
Net charge-offs 16,889 11,544 18,966
Provision charged to operations   23,000   15,047   22,438
Balance in allowance for loan and lease losses at end of period $ 39,151 $ 33,071 $ 33,040
Net charge-offs/average loans 0.84% 0.64% 1.04%
Net charge-offs/average loans (annualized) 1.12% 0.86% 1.04%
 
Loan portfolio:September 30, June 30, December 31, September 30,
2013 2013 2012 2012
(dollars in thousands)
 
Commercial $ 470,072 $ 481,537 $ 470,109 $ 453,444
Commercial mortgage (1) 654,456 651,034 617,069 614,410
Construction   255,272   266,911   258,684   263,726
Total commercial loans 1,379,800 1,399,482 1,345,862 1,331,580
Direct lease financing 177,797 172,250 156,697 146,728
Residential mortgage 94,564 93,960 97,717 97,589
Consumer and other loans   332,427   295,576   296,915   276,427
1,984,588 1,961,268 1,897,191 1,852,324
Unamortized loan fees and costs   6,867   6,114   5,663   4,668
Total loans, net of deferred loan fees and costs $ 1,991,455 $ 1,967,382 $ 1,902,854 $ 1,856,992
 
Supplemental loan data:
Construction 1-4 family $ 60,989 $ 64,144 $ 60,343 $ 71,599
Commercial construction, acquisition and development   194,283   202,767   198,341   192,127
  $ 255,272 $ 266,911 $ 258,684 $ 263,726
(1) At September 30, 2013 our owner-occupied loans amounted to $181 million, or 27.7% 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 September 30, 2013
Bancorp 8.91% 14.54% 15.80%
The Bancorp Bank 6.86% 11.23% 12.49%
"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 Nine months ended
September 30, September 30,

2013

  

2012

2013

  

2012

Selected operating ratios:
Return on average assets (annualized) 0.48 % 0.46 % 0.59 % 0.43 %
Return on average equity (annualized) 5.52 % 4.97 % 6.91 % 5.44 %
Net interest margin 2.53 % 2.90 % 2.41 % 2.53 %
Efficiency ratio (1) 66.16 % 66.99 % 61.95 % 66.57 %
Book value per share $ 9.39 $ 8.73 $ 9.39 $ 8.73
 
September 30, June 30, December 31, September 30,

2013

2013

2012

2012

Asset quality ratios:
Nonperforming loans to total loans (2) 2.46 % 2.16 % 1.56 % 1.63 %
Nonperforming assets to total assets (2) 1.73 % 1.26 % 0.92 % 1.07 %
Allowance for loan and lease losses to total loans 1.97 % 2.05 % 1.74 % 1.78 %
 
Nonaccrual loans $ 48,750 $ 41,743 $ 25,190 $ 26,454
Other real estate owned   20,111     6,308     4,241     3,065  
Total nonperforming assets $ 68,861   $ 48,051   $ 29,431   $ 29,519  
 
Loans 90 days past due still accruing interest $ 204   $ 753   $ 4,435   $ 3,861  
 
(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 Nine months ended
September 30, September 30,

2013

  

2012

2013

  

2012

Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a) $ 28,897 $ 21,898 $ 80,963 $ 64,724
 
Net interest income 24,117 21,561 70,380 63,358
Non-interest income 19,602 11,233 61,096 33,972
Less: Gain on sale of securities   (42)   (107)   (785)   (107)
Adjusted net interest and non-interest income (b) $ 43,677 $ 32,687 $ 130,691 $ 97,223
 
(a) divided by (b) 66.16% 66.99% 61.95% 66.57%
 
(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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