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The Bancorp, Inc. Reports Fourth Quarter and Fiscal 2013 Financial Results

January 23, 2014

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

Net income for the fourth quarter of 2013 increased to $7.3 million compared to $5.2 million in fourth quarter 2012, an increase of 40%. Year to date net income increased to $25.1 million in 2013 from $16.6 million in 2012, an increase of 51%.

Financial Highlights

  • 27% increase in diluted earnings per share to $0.19 for the fourth quarter of 2013 versus $0.15 for the fourth quarter of 2012. The number of shares used in calculating diluted earnings per share increased to 38.3 million from 33.9 million in 2012. On a year to date basis, diluted earnings per share increased to $0.66 in 2013 from $0.50 in 2012, an increase of 32%.
  • 25% increase in total quarterly revenues to $50.5 million compared to $40.3 million in fourth quarter 2012.
  • 21% increase in adjusted operating earnings, a non GAAP measure, to $16.8 million for the fourth quarter of 2013 versus $13.9 million for the quarter ended December 31, 2012.
  • 40% increase in quarterly non-interest income, to $21.2 million compared to $15.1 million in fourth quarter 2012, excluding security gains and other than temporary impairment charges.
  • 20% increase in prepaid card fees to $11.7 million compared to $9.7 million in fourth quarter 2012.
  • 15% increase in quarterly net interest income to $25.4 million compared to $22.1 million in fourth quarter 2012.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “Our earnings growth in the fourth quarter reflected increases both in net interest and non-interest income. These drivers resulted in growth of 40% in net income, 21% in adjusted operating earnings and 27% in earnings per diluted share. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income increased 20% to $11.7 million for the quarter, compared to fourth quarter 2012. Average deposits for the fourth quarter grew 28% between those periods and reflected growth in all major deposit categories. At December 31, 2013 our portfolio of loans and securities had grown to $3.4 billion, an increase of $699.6 million, or 26% over December 31, 2012. Outstanding loans increased 6% 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. Our targeted lines of business grew as follows: SBA loans by 63%, security backed lines of credit by 25% and small fleet leasing by 12%. Book value per share increased 5%, from $9.06 at December 31, 2012 to $9.53 at December 31, 2013.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended December 31, 2013 of $7.3 million, or diluted earnings per share of $0.19, based on 38,349,802 weighted average diluted shares outstanding, compared to net income available to common shareholders of $5.2 million, or diluted earnings per share of $0.15, based on 33,921,763 weighted average diluted shares outstanding, for the three months ended December 31, 2012. Adjusted operating earnings, a non-GAAP measure, increased to $16.8 million for the three months ended December 31, 2013 compared to $13.9 million for the three months ended December 31, 2012. The following is a reconciliation of net income available to common shareholders to adjusted operating earnings, a non-GAAP measure:

   
Quarter ended Year ended
December 31,   December 31, December 31,   December 31,
2013 2012 2013 2012
 
Net income available to common shareholders $ 7,324 $ 5,237 $ 25,110 $ 16,624
Income tax expense 4,098 1,622 13,825 7,794
Gains on sales of investment securities (1,104 ) (554 ) (1,889 ) (661 )
Other than temporary impairment on securities - 76 20 202
Losses and write-downs on other real estate owned (8 ) 103 1,461 2,508
Provision for loan and lease losses   6,500     7,391     29,500     22,438  
Adjusted operating earnings (1) $ 16,810   $ 13,875   $ 68,027   $ 48,905  
(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 ET Friday, January 24, 2014 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.713.8563, access code 33866724. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Friday, January 31, 2014 by dialing 888.286.8010, access code 20461868.

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   Year ended
December 31, December 31,
2013   2012 2013   2012
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 25,402   $ 22,086   $ 95,782   $ 85,444  
Provision for loan and lease losses   6,500     7,391     29,500     22,438  
Non-interest income
Gain on sales of investment securities 1,104 554 1,889 661
Other than temporary impairment of investment securities - (76 ) (20 ) (202 )
Other non-interest income   21,230     15,147     81,561     49,138  
Total non-interest income 22,334 15,625 83,430 49,597
Non-interest expense
Losses and write downs on other real estate owned (8 ) 103 1,461 2,508
Other non-interest expense   29,822     23,358     109,316     85,677  
Total non-interest expense   29,814     23,461     110,777     88,185  
Net income before income tax expense 11,422 6,859 38,935 24,418
Income tax expense   4,098     1,622     13,825     7,794  
Net income available to common shareholders $ 7,324   $ 5,237   $ 25,110   $ 16,624  
 
Basic earnings per share $ 0.20   $ 0.15   $ 0.67   $ 0.50  
 
Diluted earnings per share $ 0.19   $ 0.15   $ 0.66   $ 0.50  
Weighted average shares - basic 37,521,647 33,603,879 37,425,197 33,227,755
Weighted average shares - diluted 38,349,802 33,921,763 38,121,084 33,288,278
 
       
Balance sheetDecember 31, September 30, June 30, December 31,
2013 2013 2013 2012
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 30,109 $ 32,026 $ 21,560 $ 19,982
Interest earning deposits at Federal Reserve Bank 1,196,515 657,618 622,989 948,111
Securities sold under agreements to resell   7,544     40,811     40,240     -  
Total cash and cash equivalents   1,234,168     730,455     684,789     968,093  
 
Investment securities, available-for-sale, at fair value 1,253,117 1,083,154 1,021,848 718,065
Investment securities, held-to-maturity 97,205 97,459 95,662 45,179
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 3,209 3,209 3,209 3,621
Loans held for sale, at fair value 68,193 25,557 49,355 11,341
Loans, net of deferred fees and costs 1,958,445 1,991,455 1,967,382 1,902,854
Allowance for loan and lease losses   (38,182 )   (39,151 )   (40,274 )   (33,040 )
Loans, net   1,920,263     1,952,304     1,927,108     1,869,814  
Premises and equipment, net 15,659 14,252 13,709 10,368
Accrued interest receivable 13,131 12,556 12,360 9,857
Intangible assets, net 7,612 6,253 6,503 7,004
Other real estate owned 26,295 20,111 6,308 4,241
Deferred tax asset, net 29,395 26,434 27,613 22,789
Other assets   35,087     28,538     28,031     29,287  
Total assets $ 4,703,334   $ 4,000,282   $ 3,876,495   $ 3,699,659  
 
Liabilities:
Deposits
Demand and interest checking $ 3,722,602 $ 3,050,167 $ 2,963,170 $ 2,775,207
Savings and money market 536,162 504,447 469,238 517,098
Time deposits 9,773 9,920 12,502 12,582
Time deposits, $100,000 and over   4,452     4,683     5,747     8,334  
Total deposits   4,272,989     3,569,217     3,450,657     3,313,221  
 
Securities sold under agreements to repurchase 21,221 22,057 19,059 18,548
Accrued interest payable 79 73 95 103
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   37,101     42,201     49,091     17,709  
Total liabilities $ 4,344,791   $ 3,646,949   $ 3,532,303   $ 3,362,982  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,720,945 and 37,246,655 shares issued at December 31, 2013 and 2012, respectively 37,721 37,721 37,463 37,247
Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 )
Additional paid-in capital 293,515 292,715 286,321 282,708
Retained earnings (accumulated deficit) 27,615 20,291 19,993 7,347
Accumulated other comprehensive income   558     3,472     1,281     10,241  
Total shareholders' equity   358,543     353,333     344,192     336,677  
 
Total liabilities and shareholders' equity $ 4,703,334   $ 4,000,282   $ 3,876,495   $ 3,699,659  
 
   
Average balance sheet and net interest income Three months ended December 31, 2013 Three months ended December 31, 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 ** $ 2,024,325 $ 20,808 4.11 % $ 1,888,755 $ 20,091 4.25 %
Leases - bank qualified* 18,680 243 5.20 % 15,030 211 5.62 %
Investment securities-taxable 886,975 4,654 2.10 % 602,749 3,310 2.20 %
Investment securities-nontaxable* 352,756 2,820 3.20 % 107,370 1,078 4.02 %
Interest earning deposits at Federal Reserve Bank 846,148 547 0.26 % 681,272 419 0.25 %
Federal funds sold/securities purchased under agreement to resell 39,610   146 1.47 % 1,689   7 1.69 %
Net interest earning assets 4,168,494 29,218 2.80 % 3,296,865 25,116 3.05 %
 
Allowance for loan and lease losses (40,586 ) (34,018 )
Other assets 133,819  

 

78,755  
$ 4,261,727   $ 3,341,602  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,305,332 $ 2,065 0.25 % $ 2,502,314 $ 1,719 0.27 %
Savings and money market 519,506 510 0.39 % 480,473 569 0.47 %
Time 14,590   39 1.07 % 21,323   55 1.03 %
Total deposits 3,839,428 2,614 0.27 % 3,004,110 2,343 0.31 %
 
Repurchase agreements 21,103 15 0.28 % 19,090 20 0.42 %
Subordinated debt 13,401   115 3.43 % 13,401   216 6.45 %
Total deposits and interest bearing liabilities 3,873,932 2,744 0.28 % 3,036,601 2,579 0.34 %
 
Other liabilities 32,049   9,157  
Total liabilities 3,905,981 3,045,758
 
Shareholders' equity 355,746   295,844  
$ 4,261,727   $ 3,341,602  
Net interest income on tax equivalent basis* $ 26,474 $ 22,537
 
Tax equivalent adjustment 1,072 451
 
Net interest income $ 25,402 $ 22,086
Net interest margin * 2.54 % 2.73 %
 
* Full taxable equivalent basis using a 35% statutory tax rate.
** Includes loans held for sale.
 
   
Average balance sheet and net interest income Year ended December 31, 2013 Year ended December 31, 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 ** $ 1,996,042 $ 82,449 4.13 % $ 1,807,770 $ 77,685 4.30 %
Leases - bank qualified* 16,209 910 5.61 % 13,571 826 6.09 %
Investment securities-taxable 811,440 15,999 1.97 % 482,463 13,378 2.77 %
Investment securities-nontaxable* 246,490 7,320 2.97 % 103,901 4,331 4.17 %
Interest earning deposits at Federal Reserve Bank 931,468 2,328 0.25 % 974,762 2,433 0.25 %
Federal funds sold/securities purchased under agreement to resell 34,589   425 1.23 % 425   7 1.65 %
Net interest-earning assets 4,036,238 109,431 2.71 % 3,382,892 98,660 2.92 %
 
Allowance for loan and lease losses (38,560 ) (32,320 )
Other assets 110,584   127,486  
$ 4,108,262   $ 3,478,058  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 3,185,919 $ 7,851 0.25 % $ 2,666,493 $ 7,691 0.29 %
Savings and money market 500,113 2,133 0.43 % 455,860 2,401 0.53 %
Time 17,443   182 1.04 % 26,624   356 1.34 %
Total deposits 3,703,475 10,166 0.27 % 3,148,977 10,448 0.33 %
 
Repurchase agreements 18,442 54 0.29 % 22,508 95 0.42 %
Subordinated debt 13,401   548 4.09 % 13,401   869 6.48 %
Total deposits and interest bearing liabilities 3,735,318 10,768 0.29 % 3,184,886 11,412 0.36 %
 
Other liabilities 25,277   9,440  
Total liabilities 3,760,595 3,194,326
 
Shareholders' equity 347,667   283,732  
$ 4,108,262   $ 3,478,058  
Net interest income on tax equivalent basis* 98,663 87,248
 
Tax equivalent adjustment 2,881 1,804
 
Net interest income $ 95,782 $ 85,444
Net interest margin * 2.44 % 2.58 %
 
* Fully taxable equivalent basis using a 35% statutory tax rate
** Includes loans held for sale.
 
       
Allowance for loan and lease losses: Year ended
December 31,   December 31,
2013   2012
(dollars in thousands)
 
Balance in the allowance for loan and lease losses at beginning of period $ 33,040   $ 29,568  
 
Loans charged-off:
Commercial 14,771 9,508
Construction 10,295 11,318
Lease financing 30 87
Residential mortgage 54 -
Consumer   488     340  
Total   25,638     21,253  
 
Recoveries:
Commercial 180 2,093
Construction 1,019 96
Lease financing 8 13
Residential mortgage - 85
Consumer   73     -  
Total   1,280     2,287  
Net charge-offs 24,358 18,966
Provision charged to operations   29,500     22,438  
 
Balance in allowance for loan and lease losses at end of period $ 38,182   $ 33,040  
Net charge-offs/average loans 1.21 % 1.04 %
Net charge-offs/average assets 0.59 % 0.55 %
 
Loan portfolio:December 31, September 30, June 30, December 31,
2013 2013 2013 2012
(dollars in thousands)
 
Commercial $ 450,113 $ 470,072 $ 481,537 $ 470,109
Commercial mortgage (1) 625,810 654,456 651,034 617,069
Construction   258,889     255,272     266,911   258,684
Total commercial loans 1,334,812 1,379,800 1,399,482 1,345,862
Direct lease financing 175,610 177,797 172,250 156,697
Residential mortgage 94,850 94,564 93,960 97,717
Consumer and other loans   346,334     332,427     295,576   296,915
1,951,606 1,984,588 1,961,268 1,897,191
Unamortized loan fees and costs   6,839     6,867     6,114   5,663
Total loans, net of deferred loan fees and costs $ 1,958,445   $ 1,991,455   $ 1,967,382 $ 1,902,854
 
Supplemental loan data:
Construction 1-4 family $ 48,394 $ 60,989 $ 64,144 $ 60,343
Commercial construction, acquisition and development   210,495     194,283     202,767   198,341
  $ 258,889   $ 255,272   $ 266,911 $ 258,684
(1) At December 31, 2013 our owner-occupied loans amounted to $197 million, or 31.4% of commercial mortgages.
 
     

Capital Ratios

 Tier 1 capital
to average assets 		Tier 1 capital
to risk-weighted assets 		Total capital
to risk-weighted assets
As of December 31, 2013
Bancorp 8.55% 14.56% 15.81%
The Bancorp Bank 6.69% 11.39% 12.64%
"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 Year ended
December 31, December 31,
2013   2012 2013   2012
Selected operating ratios:
Return on average assets (annualized) 0.68 % 0.62 % 0.61 % 0.48 %
Return on average equity (annualized) 8.17 % 7.04 % 7.22 % 5.86 %
Net interest margin 2.54 % 2.73 % 2.44 % 2.58 %
Efficiency ratio (1) 63.93 % 63.14 % 62.47 % 65.62 %
Book value per share $ 9.53 $ 9.06 $ 9.53 $ 9.06
 
December 31, September 30, June 30, December 31,
2013 2013 2013 2012
Asset quality ratios:
Nonperforming loans to total loans (2) 2.08 % 2.46 % 2.16 % 1.56 %
Nonperforming assets to total assets (2) 1.42 % 1.73 % 1.26 % 0.92 %
Allowance for loan and lease losses to total loans 1.95 % 1.97 % 2.05 % 1.74 %
 
Nonaccrual loans $ 40,551 $ 48,750 $ 41,743 $ 25,190
Other real estate owned   26,295     20,111     6,308     4,241  
Total nonperforming assets $ 66,846   $ 68,861   $ 48,051   $ 29,431  
 
Loans 90 days past due still accruing interest $ 110   $ 204   $ 753   $ 4,435  
 

Gross Dollar Volume (GDV):

Prepaid card GDV

$ 7,720,554   $ 7,178,532   $ 7,651,849   $ 6,139,791  
 
(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
December 31, December 31,
2013   2012 2013   2012
Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a) $ 29,814 $ 23,461 $ 110,777 $ 88,185
 
Net interest income 25,402 22,086 95,782 85,444
Non-interest income 22,334 15,625 83,430 49,597
Less: Gain on sale of securities   (1,104 )   (554 )   (1,889 )   (661 )
Adjusted net interest and non-interest income (b) $ 46,632 $ 37,157 $ 177,323 $ 134,380
 
(a) divided by (b) 63.93 % 63.14 % 62.47 % 65.62 %
 
(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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