News Details

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for third quarter 2014.

Bancorp reported net income from continuing operations of $1.5 million for third quarter 2014 compared to net income of $2.2 million from continuing operations in third quarter 2013, and respective diluted earnings per share of $.04 and $.06. Pretax income from continuing operations amounted to $1.5 million for third quarter 2014, and reflected $2.7 million of Bank Secrecy Act and look back consulting expenses. Income from continuing operations does not include any income which would result upon the reinvestment of the proceeds of the planned sale of $1.2 billion of commercial loans as explained in the chief executive officer’s comments below. As a result of discontinued operations in third quarter 2014, Bancorp recorded a loss of $16.8 million or $.45 diluted loss per share for that period, compared to net income of $4.8 million or $.13 diluted earnings per share in third quarter 2013.

Financial Highlights

Discontinued Operations:

• Bancorp has decided to discontinue its commercial lending operations. The loans which constitute that portfolio are in the process of disposition. This represents a strategic continuation of the shift to a focus on Bancorp’s specialty lending including small fleet leasing, security backed lines of credit (“SBLOC”), CMBS origination and SBA lending. The discontinuance resulted in a charge to earnings of $18.3 million, net of tax.

Continuing Operations:

• 44% increase in net interest income to $15.4 million compared to $10.7 million in third quarter 2013.
• 21% increase in prepaid card fees to $12.3 million compared to $10.2 million in third quarter 2013.
• 33% increase in card processing and ACH fees to $1.4 million.
• Increases over prior year targeted loan balances: SBA lending 65%, SBLOC 44%, Leasing 14%.
  Loans in continuing operations and loans held for sale totaled $1.0 billion at September 30, 2014.
• Tax equivalent yield on earning assets increased to 2.65% compared to 2.19% in third quarter 2013.
• Tier one capital to assets, tier one capital to risk assets and total capital to risk assets were 8.10%, 12.95% and 13.11% , compared to well capitalized minimums of 5%, 6% and 10%.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “As part of our strategic evaluation of the asset composition of the bank, we have decided to replace our commercial lending with a greater emphasis on the specialty lending segments which we have been describing over the last 12 months - small fleet leasing, security backed lines of credit and SBA lending. As a result of our greater emphasis on these targeted specialty lending segments, they have experienced substantial 12 month over 12 month growth rates as follows: SBA 65%, SBLOC (Security Backed Lines of Credit) 44% and leasing 14%. At September 30, 2014, the total outstanding for these continuing lines and the CMBS loans held for sale, on which we also earn a spread, exceeded one billion dollars. Our decision was based upon our expectation that the specialty lending segments will provide better risk adjusted yields, greater granularity compared to various types of commercial lending and, thus, a more predictable earnings stream. During the transition of our commercial lending operation to our targeted specialty lending operations, we expect that, on an interim basis, our investment securities portfolio will expand.

"In connection with the discontinuance of our commercial loan portfolio and the resulting charge to earnings, an independent third party expert has provided a fair value analysis of the commercial loan portfolio for purposes of reflecting discontinued assets on our balance sheet. This analysis resulted in a valuation of the approximate $1.2 billion discontinued portfolio, and the related valuation adjustment and the operations of this segment are reflected in the quarterly loss of $16.8 million. This valuation is an estimate only, based on current circumstances and the actual sales price could be significantly greater or lesser than the estimate, which could materially affect results of operations in future quarters. We have commenced the process of seeking buyers for our commercial loan portfolio. The income and other financial statements segregate discontinued operations from continuing operations. While continuing operations exclude interest income on the commercial loan portfolio, that line item does not include any income from reinvestment of proceeds from the sale of the commercial loan portfolio. Based upon the current interest rate environment, our investment advisor has modeled portfolio reinvestment at a 1.75% yield; however, that yield could be materially more or less at the actual time of reinvestment, as a result of the then-current interest rate environment, the sectors in which we invest or other economic factors. Book value at September 30, 2014 amounted to $9.45 compared to $9.39 at September 30, 2013. The Bank remains well capitalized.”

Financial Results

Bancorp reported net income from continuing operations of $1.5 million for third quarter 2014 compared to net income of $2.2 million from continuing operations in third quarter 2013, and respective diluted earnings per share of $.04 and $.06. After discontinued operations, Bancorp reported net loss to common shareholders for the three months ended September 30, 2014 of $16.8 million, or loss per share of $0.45, based on 37,708,862 weighted average shares outstanding, compared to net income available to common shareholders of $4.8 million, or diluted earnings per share of $0.13, based on 38,283,317 weighted average diluted shares outstanding, for the three months ended September 30, 2013. The $16.8 million loss reflected a 51% effective income tax benefit based upon an estimated annualized tax rate. That tax rate exceeds the 35% statutory tax rate primarily due to the impact of tax exempt municipal bond interest.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:00 AM EDT Friday, October 31, 2014 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 877.280.4962, access code 69319357. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Friday, November 7, 2014 by dialing 888.286.8010, access code 19205886.

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.

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

Source: The Bancorp, Inc.