The Bancorp, Inc. Reports Fourth Quarter And Fiscal 2012 Financial Results

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EDT Thursday, January 24, 2013 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.510.0676, access code 88069381. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, January 31, 2013 by dialing 888.286.8010, access code 81909498.

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.

		Three months ended							Year ended
		December 31,							December 31,
		2012				2011			2012				2011
		(dollars in thousands except per share data)
Condensed income statement
Net interest income		$	22,086			$	20,356		$	85,444			$	76,406
Provision for loan and lease losses			7,391				4,844			22,438				21,498
Non-interest income
Gain on sales of investment securities			554				136			661				759
Other than temporary impairment of investment securities			(76	)			-			(202	)			(75	)
Other non-interest income			15,147				8,246			49,138				29,841
Total non-interest income			15,625				8,382			49,597				30,525
Non-interest expense
Losses and write downs on other real estate owned			103				-			2,508				555
Other non-interest expense			23,358				19,224			85,677				71,649
Total non-interest expense			23,461				19,224			88,185				72,204
Net income before income tax expense			6,859				4,670			24,418				13,229
Income tax expense			1,622				1,382			7,794				4,311
Net income available to common shareholders		$	5,237			$	3,288		$	16,624			$	8,918
Basic earnings per share		$	0.15			$	0.10		$	0.50			$	0.28
Diluted earnings per share		$	0.15			$	0.10		$	0.50			$	0.28
Weighted average shares - basic			33,603,879				33,196,281			33,227,755				31,927,815
Weighted average shares - diluted			33,921,763				33,202,761			33,288,278				31,933,592

Balance sheet		December 31,				September 30,				June 30,				December 31,
		2012				2012				2012				2011
		(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks		$	19,982			$	4,648			$	5,560			$	96,228
Interest earning deposits at Federal Reserve Bank			948,111				540,010				692,582				652,946
Total cash and cash equivalents			968,093				544,658				698,142				749,174
Investment securities, available-for-sale, at fair value			718,065				634,894				582,219				448,204
Investment securities, held-to-maturity			45,179				22,707				17,796				18,044
Federal Home Loan Bank & Atlantic Central Bankers Bank stock			3,621				4,160				4,596				5,088
Loans held for sale, at fair value			11,341				7,970				-				-
Loans, net of deferred costs			1,902,854				1,856,992				1,804,312				1,744,828
Allowance for loan and lease losses			(33,040	)			(33,071	)			(31,171	)			(29,568	)
Loans, net			1,869,814				1,823,921				1,773,141				1,715,260
Premises and equipment, net			10,368				9,802				8,694				8,358
Accrued interest receivable			9,857				10,061				9,297				8,476
Intangible assets, net			7,004				7,254				7,504				8,004
Other real estate owned			4,241				3,065				4,919				7,405
Deferred tax asset, net			22,789				19,708				20,716				21,941
Other assets			29,287				24,925				23,178				20,727
Total assets		$	3,699,659			$	3,113,125			$	3,150,202			$	3,010,681
Liabilities:
Deposits
Demand and interest checking		$	2,775,207			$	2,300,025			$	2,335,960			$	2,192,938
Savings and money market			517,098				459,725				456,614				454,343
Time deposits			12,582				12,606				20,619				25,528
Time deposits, $100,000 and over			8,334				8,819				9,104				9,742
Total deposits			3,313,221				2,781,175				2,822,297				2,682,551
Securities sold under agreements to repurchase			18,548				18,802				21,948				33,177
Accrued interest payable			103				100				127				123
Subordinated debenture			13,401				13,401				13,401				13,401
Other liabilities			17,709				10,662				9,555				9,950
Total liabilities		$	3,362,982			$	2,824,140			$	2,867,328			$	2,739,202
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,246,655 and 33,196,281 shares issued at December 31, 2012 and 2011, respectively			37,247				33,209				33,201				33,196
Treasury stock (100,000 shares)			(866	)			(866	)			(866	)			(866	)
Additional paid-in capital			282,708				243,954				243,284				241,997
Retained earnings (accumulated deficit)			7,347				2,110				(1,451	)			(9,277	)
Accumulated other comprehensive gain			10,241				10,578				8,706				6,429
Total shareholders' equity			336,677				288,985				282,874				271,479
Total liabilities and shareholders' equity		$	3,699,659			$	3,113,125			$	3,150,202			$	3,010,681

Average balance sheet and net interest income		Three months ended December 31, 2012										Three months ended December 31, 2011
(dollars in thousands)			Average						Average				Average						Average
Assets:			Balance				Interest		Rate				Balance				Interest		Rate
Interest-earning assets:
Loans net of unearned discount **		$	1,888,755			$	20,091		4.25	%		$	1,722,161			$	19,082		4.43	%
Leases - bank qualified*			15,030				211		5.62	%			7,356				149		8.10	%
Investment securities-taxable			602,749				3,310		2.20	%			377,071				3,054		3.24	%
Investment securities-nontaxable*			107,370				1,078		4.02	%			86,259				1,044		4.84	%
Interest earning deposits at Federal Reserve Bank			681,272				419		0.25	%			678,768				420		0.25	%
Federal funds sold/securities purchased under agreement to resell			1,689				7		1.65	%			-				-		0.00	%
Net interest earning assets			3,296,865				25,116		3.05	%			2,871,615				23,749		3.31	%
Allowance for loan and lease losses			(34,018	)									(28,166	)
Other assets			78,755										211,356
		$	3,341,602									$	3,054,805
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking		$	2,502,314			$	1,719		0.27	%		$	2,287,085			$	2,046		0.36	%
Savings and money market			480,473				569		0.47	%			407,536				544		0.53	%
Time			21,323				55		1.03	%			35,390				113		1.28	%
Total deposits			3,004,110				2,343		0.31	%			2,730,011				2,703		0.40	%
Repurchase agreements			19,090				20		0.42	%			32,150				57		0.71	%
Subordinated debt			13,401				216		6.45	%			13,401				216		6.45	%
Total deposits and interest bearing liabilities			3,036,601				2,579		0.34	%			2,775,562				2,976		0.43	%
Other liabilities			9,157										9,712
Total liabilities			3,045,758										2,785,274
Shareholders' equity			295,844										269,531
		$	3,341,602									$	3,054,805
Net interest income on tax equivalent basis*						$	22,537									$	20,773
Tax equivalent adjustment							451										417
Net interest income						$	22,086									$	20,356
Net interest margin *									2.73	%									2.89	%
* 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, 2012										Year ended December 31, 2011
(Dollars in thousands)			Average						Average				Average						Average
Assets:			Balance				Interest		Rate				Balance				Interest		Rate
Interest-earning assets:
Loans net of unearned discount **		$	1,807,770			$	77,685		4.30	%		$	1,671,940			$	74,347		4.45	%
Leases - bank qualified*			13,571				826		6.09	%			4,976				438		8.80	%
Investment securities-taxable			482,463				13,378		2.77	%			289,002				9,682		3.35	%
Investment securities-nontaxable*			103,901				4,331		4.17	%			77,509				4,111		5.30	%
Interest earning deposits at Federal Reserve Bank			974,762				2,433		0.25	%			588,689				1,461		0.25	%
Federal funds sold/securities purchased under agreement to resell			425				7		1.65	%			-				-		0.00	%
Net interest-earning assets			3,382,892				98,660		2.92	%			2,632,116				90,039		3.42	%
Allowance for loan and lease losses			(32,320	)									(26,999	)
Other assets			127,486										255,444
		$	3,478,058									$	2,860,561
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking		$	2,666,493			$	7,691		0.29	%		$	2,175,972			$	8,035		0.37	%
Savings and money market			455,860				2,401		0.53	%			355,094				2,550		0.72	%
Time			26,624				356		1.34	%			31,066				354		1.14	%
Total deposits			3,148,977				10,448		0.33	%			2,562,132				10,939		0.43	%
Short-term borrowings			-				-		0.00	%			745				3		0.40	%
Repurchase agreements			22,508				95		0.42	%			23,113				231		1.00	%
Subordinated debt			13,401				869		6.48	%			13,401				863		6.44	%
Total deposits and interest bearing liabilities			3,184,886				11,412		0.36	%			2,599,391				12,036		0.46	%
Other liabilities			9,440										9,138
Total liabilities			3,194,326										2,608,529
Shareholders' equity			283,732										252,032
		$	3,478,058									$	2,860,561
Net interest income on tax equivalent basis*							87,248										78,003
Tax equivalent adjustment							1,804										1,597
Net interest income						$	85,444									$	76,406
Net interest margin *									2.58	%									2.96	%
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 35% statutory tax rate
** Includes loans held for sale.

Allowance for loan and lease losses:		Year ended
		December 31,			December 31,
		2012			2011
		(dollars in thousands)
Balance in the allowance for loan and lease losses at beginning of period		$	29,568		$	24,063
Loans charged-off:
Commercial			9,508			8,651
Construction			11,318			3,254
Lease financing			87			39
Residential mortgage			-			2,870
Consumer			340			1,280
Total			21,253			16,094
Recoveries:
Commercial			2,093			91
Construction			96			4
Lease financing			13			-
Residential mortgage			85			-
Consumer			-			6
Total			2,287			101
Net charge-offs			18,966			15,993
Provision charged to operations			22,438			21,498
Balance in allowance for loan and lease losses at end of period		$	33,040		$	29,568
Loan portfolio:		December 31,			September 30,			June 30,			December 31,
		2012			2012			2012			2011
		(dollars in thousands)
Commercial		$	470,109		$	453,444		$	441,167		$	450,411
Commercial mortgage (1)			617,069			614,410			596,639			609,487
Construction			258,684			263,726			269,636			246,611
Total commercial loans			1,345,862			1,331,580			1,307,442			1,306,509
Direct lease financing			156,697			146,728			140,012			129,682
Residential mortgage			97,717			97,589			97,226			96,110
Consumer loans and others			296,915			276,427			255,769			209,041
			1,897,191			1,852,324			1,800,449			1,741,342
Unamortized loan costs			5,663			4,668			3,863			3,486
Total loans, net of deferred loan costs		$	1,902,854		$	1,856,992		$	1,804,312		$	1,744,828
Supplemental loan data:
Construction 1-4 family		$	60,343		$	71,599		$	79,546		$	85,189
Commercial construction, acquisition and development			198,341			192,127			190,090			161,422
		$	258,684		$	263,726		$	269,636		$	246,611
(1) At December 31, 2012 our owner-occupied loans amounted to $173 million, or 28.0% 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 December 31, 2012
The Company		9.99%		16.39%		17.65%
The Bancorp Bank		7.24%		11.91%		13.16%
"Well capitalized" institution (under FDIC regulations)		5.00%		6.00%		10.00%
As of December 31, 2011
The Company		8.69%		14.64%		15.89%
The Bancorp Bank		6.13%		10.34%		11.60%
"Well capitalized" institution (under FDIC regulations)		5.00%		6.00%		10.00%

		Three months ended								Year ended
		December 31,								December 31,
		2012				2011				2012				2011
Selected operating ratios:
Return on average assets			0.62	%			0.43	%			0.48	%			0.31	%
Return on average equity			7.04	%			4.84	%			5.86	%			3.54	%
Net interest margin			2.73	%			2.89	%			2.58	%			2.96	%
Efficiency ratio (1)			63.01	%			67.21	%			65.53	%			67.96	%
Book value per share		$	9.06			$	8.18			$	9.06			$	8.18
		December 31,				September 30,				June 30,				December 31,
		2012				2012				2012				2011
Asset quality ratios:
Nonperforming loans to total loans (2)			1.56	%			1.63	%			1.55	%			1.24	%
Nonperforming assets to total assets (2)			0.92	%			1.07	%			1.04	%			0.97	%
Allowance for loan and lease losses to total loans			1.74	%			1.78	%			1.73	%			1.69	%
Net charge-offs/average loans			1.04	%			0.64	%			0.45	%			0.96	%
Nonaccrual loans		$	25,190			$	26,454			$	24,815			$	17,587
Other real estate owned			4,241				3,065				4,919				7,405
Total nonperforming assets		$	29,431			$	29,519			$	29,734			$	24,992
Loans 90 days past due still accruing interest		$	4,435			$	3,861			$	3,105			$	4,101
(1) Non-GAAP measure
Reconciliation of the efficiency ratio:
Non-interest expense		$	23,461			$	19,224			$	88,185			$	72,204
Net interest income			22,086				20,356				85,444				76,406
Non-interest income			15,625				8,382				49,597				30,525
Less: Gain on sale of securities			(554	)			(136	)			(661	)			(759	)
Less: Other than temporary impairment			76				-				202				75
			37,233				28,602				134,582				106,247
			63.01	%			67.21	%			65.53	%			67.96	%
(2) Nonperforming loans are defined as nonaccrual loans and restructure loans. Loans 90 days past due and still accruing interest are also included in these ratios.

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