The Bancorp, Inc. Reports Fourth Quarter And Fiscal 2011 Financial Results

The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported fourth quarter and fiscal 2011 financial results.

Financial Highlights

Net income for the fourth quarter of 2011 increased by 61%, to $3.3 million compared to $2.0 million in the same quarter of 2010. For the fiscal year ended December 31, 2011, net income increased 71% to $8.9 million compared to $5.2 million in the prior year. Diluted earnings per share for the fourth quarter of 2011 increased to $0.10 on 33.2 million shares versus $0.08 on 26.2 million shares in the same quarter of 2010. For the fiscal year ended December 31, 2011, diluted earnings per share amounted to $0.28 compared to a loss per share of $0.04 in the prior year.

Key factors driving these results were:
  • A 90% increase in quarterly prepaid card fees to $5.5 million compared to $2.9 million in fourth quarter 2010 with a 70% increase to $18.7 million for fiscal year 2011 from $11.0 million in the prior year.
  • A 12% increase in quarterly net interest income to $20.4 million compared to $18.2 million in fourth quarter 2010 with a 12% increase to $76.4 million for fiscal year 2011 from $68.2 million in the prior year.
  • A 54% increase in quarterly non-interest income (including prepaid card fees) to $8.2 million compared to $5.4 million in fourth quarter 2010 with a 53% increase to $29.8 million for fiscal year 2011 from $19.5 in the prior year, excluding security gains and OTTI.
  • At December 31, 2011 the portfolio of loans and securities had grown to $2.2 billion, an increase of $344 million, or 18% over the prior year. Outstanding loans increased 8% year over year.
  • Average deposits for full year 2011 totaled $2.6 billion, an increase of $548 million or 27% over 2010, reflecting growth in all of the major categories of deposits. The interest paid on deposits between those respective periods decreased to 0.43% from 0.67%

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “The fourth quarter saw a continuation in the growth of adjusted operating earnings, which increased 30% over the prior year fourth quarter resulting in a 61% increase for the quarter in net income. This was achieved while increasing the provision for loan losses. Loans and securities grew by an aggregate of 18% over the prior year including growth in our SBA loan initiative, and our pipeline for new SBA loans continues to increase. Another initiative, vehicle leasing, also exhibited strong growth of 26% on a year over year basis. These are areas in which we are comfortable in a difficult lending environment. Our focus on increasing non-interest income is also evident, especially for prepaid cards for which fee income increased 90% compared to the comparable prior year quarter. Our positioning as a leader in providing services in the prepaid card space continues to drive the increase. The Company is well capitalized and book value per share increased from $7.60 at December 31, 2010 to $8.18, or an increase of 8%, while outstanding shares increased to 33 million from 26 million.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended December 31, 2011 of $3.3 million or diluted earnings per share of $0.10, based on 33,202,761 weighted average shares outstanding, compared to net income available to common shareholders of $2.0 million or diluted earnings per share of $0.08, based on 26,181,354 weighted average shares outstanding, for the three months ended December 31, 2010. Adjusted operating earnings, a non-GAAP measure, increased to $9.4 million for the three months ended December 31, 2011 compared to $7.2 million for the three months ended December 31, 2010. The following is a reconciliation of adjusted operating earnings to net income available to common shareholders (for the three month period):
           
December 31, December 31,
2011 2010
 
Net income available to common shareholders $ 3,288 $ 2,041
Income tax expense 1,382 946
(Gains) and losses on sales of investment securities (136 ) 14
Provision for loan and lease losses and other credit costs   4,844     4,212
Adjusted operating earnings (1) $ 9,378   $ 7,213
 
     
(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 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 GAAP.
 

Balance Sheet Summary

At December 31, 2011, Bancorp's total assets were $3.0 billion, an increase of $615 million or 26% over total assets at December 31, 2010. During that period, investments increased to $471 million, an increase of $218 million or 87%; loans increased to $1.7 billion, an increase of $125 million or 8%; and deposits increased to $2.7 billion, an increase of $658 million or 33%. Total assets increased compared to December 31, 2010, primarily as a result of deposit growth.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EST Tuesday, January 24, 2012 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 800.659.2037, access code 69328656. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Tuesday, January 31, 2012 by dialing 888.396.8010, access code 45116921.

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.
 
The Bancorp, Inc.
Financial highlights
(unaudited)
 
 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 20,356 $ 18,174   $ 76,406   $ 68,193  
Provision for loan and lease losses   4,844   4,212     21,498     19,287  
Non-interest income
Gain on sales of investment securities 136 (14 ) 759 1,207
Other than temporary impairment of investment securities - - (75 ) (135 )
Other non-interest income   8,246   5,372     29,841     19,524  
Total non-interest income 8,382 5,358 30,525 20,596
Non-interest expense
Loss on other real estate owned - - 555 22
Other non-interest expense   19,224   16,333     71,649     61,726  
Total non-interest expense   19,224   16,333     72,204     61,748  
Net income before income tax expense 4,670 2,987 13,229 7,754
Income tax expense   1,382   946     4,311     2,532  
Net income 3,288 2,041 8,918 5,222
Less preferred stock dividends - - - (433 )
Less preferred stock accretion   -   -     -     (5,809 )
Net income (loss) available to common shareholders $ 3,288 $ 2,041   $ 8,918   $ (1,020 )
 
Basic earnings (loss) per share $ 0.10 $ 0.08   $ 0.28   $ (0.04 )
 
Diluted earnings (loss) per share $ 0.10 $ 0.08   $ 0.28   $ (0.04 )
Weighted average shares - basic 33,196,281 26,181,281 31,927,815 26,181,281
Weighted average shares - diluted 33,202,761 26,181,354 31,933,592 26,181,281
 
               
Balance sheet December 31, September 30, June 30, December 31,
2011 2011 2011 2010
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 96,228 $ 259,116 $ 168,957 $ 157,411
Interest bearing deposits   652,946     932,152     199,866     314,908  
Total cash and cash equivalents   749,174     1,191,268     368,823     472,319  
 
Investment securities, available-for-sale, at fair value 453,292 421,716 353,099 231,165
Investment securities, held-to-maturity 18,044 18,095 18,102 21,364

Loans, net of deferred costs
1,744,828 1,715,648 1,678,660 1,619,195
Allowance for loan and lease losses   (29,568 )   (27,671 )   (27,685 )   (24,063 )
Loans, net of deferred costs   1,715,260     1,687,977     1,650,975     1,595,132  
Premises and equipment, net 8,358 8,307 8,296 8,767
Accrued interest receivable 8,476 8,541 7,839 8,878
Intangible assets, net 8,004 8,254 8,504 9,005
Other real estate owned 7,405 6,415 3,764 2,115
Deferred tax asset, net 19,981 19,902 21,960 24,365
Other assets   22,687     22,538     24,477     22,613  
Total assets $ 3,010,681   $ 3,393,013   $ 2,465,839   $ 2,395,723  
 
Liabilities:
Deposits
Demand (non-interest bearing) $ 1,424,913 $ 1,866,259 $ 1,073,228 $ 945,605
Savings, money market and interest checking 1,222,368 1,171,349 1,076,654 975,973
Time deposits 25,528 25,552 1,394 90,862
Time deposits, $100,000 and over   9,742     10,341     11,427     11,657  
Total deposits   2,682,551     3,073,501     2,162,703     2,024,097  
 
Securities sold under agreements to repurchase 33,177 25,057 20,258 14,383
Short-term borrowings - - - 87,000
Federal funds purchased - - - 49,000
Accrued interest payable 123 113 131 124
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   9,950     12,262     7,109     8,812  
Total liabilities $ 2,739,202   $ 3,124,334   $ 2,203,602   $ 2,196,817  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,196,281 and 26,181,281 shares issued and outstanding at December 31, 2011 and 2010, respectively 33,196 33,196 33,196 26,181
Treasury Stock (866 ) - - -
Additional paid-in capital 241,997 241,473 241,011 192,711
Accumulated deficit (9,277 ) (12,565 ) (14,847 ) (18,195 )
Accumulated other comprehensive (loss) gain   6,429     6,575     2,877     (1,791 )
Total shareholders' equity 271,479 268,679 262,237 198,906
 
Total liabilities and shareholders' equity $ 3,010,681   $ 3,393,013   $ 2,465,839   $ 2,395,723  
 
       

Average balance sheet and net interest income

Three months ended December 31, 2011
Three months ended December 31, 2010
(dollars in thousands) Average         Average Average         Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,722,161 $ 19,082 4.43 % $ 1,597,630 $ 19,048 4.77 %
Leases - bank qualified* 7,356 149 8.10 % 2,646 48 7.26 %
Investment securities-taxable 377,071 3,054 3.24 % 192,716 1,530 3.18 %
Investment securities-nontaxable* 86,259 1,044 4.84 % 76,401 1,029 5.39 %
Interest earning deposits at Federal Reserve Bank   678,768     420 0.25 %   332,010     207 0.25 %
Net interest-earning assets 2,871,615 23,749 3.31 % 2,201,403 21,862 3.97 %
 
Allowance for loan and lease losses (28,166 ) (22,660 )
Other assets   211,356     200,647  
$ 3,054,805   $ 2,379,390  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing)** $ 1,493,970 $ 392 0.10 % $ 1,119,463 $ 417 0.15 %
Interest bearing deposits
Interest checking 793,115 1,558 0.79 % 684,740 1,793 1.05 %
Savings and money market 407,536 639 0.63 % 303,749 823 1.08 %
Time   35,390     113 1.28 %   29,481     63 0.85 %
Total interest bearing deposits 1,236,041 2,310 0.75 % 1,017,970 2,679 1.05 %
Total deposits 2,730,011 2,702 0.40 % 2,137,433 3,096 0.58 %
 
Short-term borrowings - - 0.00 % 4,272 8 0.75 %
Repurchase agreements 32,150 57 0.71 % 12,126 9 0.30 %
Subordinated debt   13,401     216 6.45 %   13,401     216 6.45 %
Net interest bearing liabilities 1,281,592 2,583 0.81 % 1,047,769 2,912 1.11 %
Total deposits and interest bearing liabilities 2,775,562 2,975 0.43 % 2,167,232 3,329 0.61 %
 
Other liabilities   9,712   8,423
Total liabilities 2,785,274 2,175,655
 
Shareholders' equity   269,531   203,735
$ 3,054,805   $ 2,379,390  
Net interest income on tax equivalent basis* $ 20,774 $ 18,533
 
Tax equivalent adjustment 418 359
 
Net interest income $ 20,356 $ 18,174
Net interest margin * 2.89 % 3.36 %
                   

* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 35% statutory tax rate.

** Interest includes fees paid to affinity groups.
 
       
Average balance sheet and net interest income Year ended December 31, 2011 Year ended December 31, 2010
(Dollars in thousands) Average         Average Average         Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,671,940 $ 74,334 4.45 % $ 1,567,947 $ 73,741 4.70 %
Leases - bank qualified* 4,976 451 9.06 % 1,038 64 6.17 %
Investment securities-taxable 289,002 9,682 3.35 % 164,238 6,181 3.76 %
Investment securities-nontaxable* 77,509 4,111 5.30 % 48,913 2,919 5.97 %
Interest earning deposits at Federal Reserve Bank   588,689     1,461 0.25 %   327,943     817 0.25 %
Net interest-earning assets 2,632,116 90,039 3.42 % 2,110,079 83,722 3.97 %
 
Allowance for loan and lease losses (26,999 ) (21,676 )
Other assets   255,442     183,850  
$ 2,860,559   $ 2,272,253  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing)** $ 1,421,021 $ 1,438 0.10 % $ 1,011,667 $ 1,311 0.13 %
Interest bearing deposits
Interest checking 754,949 6,094 0.81 % 622,116 7,870 1.27 %
Savings and money market 355,094 3,053 0.86 % 311,251 3,921 1.26 %
Time   31,066     354 1.14 %   69,169     457 0.66 %
Total interest bearing deposits 1,141,109 9,501 0.83 % 1,002,536 12,248 1.22 %
Total deposits 2,562,130 10,939 0.43 % 2,014,203 13,559 0.67 %
 
Short-term borrowings 745 3 0.40 % 13,464 89 0.66 %
Repurchase agreements 23,113 231 1.00 % 8,637 27 0.31 %
Subordinated debt   13,401     863 6.44 %   13,401     864 6.45 %
Net interest bearing liabilities 1,178,368 10,598 0.90 % 1,038,038 13,228 1.27 %
Total deposits and interest bearing liabilities 2,599,389 12,036 0.46 % 2,049,705 14,539 0.71 %
 
Other liabilities   9,138     9,569  
Total liabilities 2,608,527 2,059,274
 
Shareholders' equity   252,032     212,979  
 
$ 2,860,559   $ 2,272,253  
Net interest income on tax equivalent basis*   78,003   69,183
 
Tax equivalent adjustment 1,597 990
 
Net interest income $ 76,406 $ 68,193
Net interest margin * 2.96 % 3.28 %
                   

* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 35% statutory tax rate.

** Interest includes fees paid to affinity groups.
 
               
Allowance for loan and lease losses: For year ended For year ended
December 31, December 31,
2011 2010

 

(dollars in thousands)
 
Balance in the allowance for loan and lease losses at beginning of period $ 24,063   $ 19,123  
 
Loans charged-off:
Commercial 8,651 13,513
Construction 3,254 -
Lease financing 39 3
Residential mortgage 2,870 1,254
Consumer   1,280     618  
Total   16,094     15,388  
 
Recoveries:
Commercial 91 279
Construction 4 4
Lease financing - 10
Residential mortgage - 742
Consumer   6     6  
Total   101     1,041  
Net charge-offs 15,993 14,347
Provision charged to operations   21,498     19,287  
 
Balance in allowance for loan and lease losses at end of period $ 29,568   $ 24,063  
Net charge-offs/average loans 0.96 % 0.92 %
 
 
Loan portfolio: December 31, September 30, June 30, December 31,
2011 2011 2011 2010
(dollars in thousands)
 
Commercial $ 450,411 $ 461,679 $ 450,916 $ 441,799
Commercial mortgage (1) 609,487 577,237 593,842 580,780
Construction   246,611     242,806     205,730   203,120
Total commercial loans 1,306,509 1,281,722 1,250,488 1,225,699
Direct financing leases 129,682 129,400 127,016 103,289
Residential mortgage 96,110 96,139 98,113 93,004
Consumer loans and others   209,041     205,243     200,132   194,320
1,741,342 1,712,504 1,675,749 1,616,312
Unamortized costs (fees)   3,486     3,144     2,911   2,883
Total loans, net of deferred loan costs $ 1,744,828   $ 1,715,648   $ 1,678,660 $ 1,619,195
 
Supplemental loan data:
Construction 1-4 family $ 85,189 $ 91,783 $ 93,422 $ 92,190
Commercial construction, acquisition and development   161,422     151,023     112,308   110,930
  $ 246,611   $ 242,806   $ 205,730 $ 203,120
(1) At December 31, 2011 our owner-occupied loans amounted to $138 million, or 22.6% of commercial mortgages.
 
                   

Capital Ratios
Tier 1 capital Tier 1 capital Total capital
to average to risk-weighted to risk-weighted
assets ratio assets ratio assets ratio
 
As of December 31, 2011
The Company 8.69 % 14.64 % 15.89 %
The Bancorp Bank 6.13 % 10.35 % 11.60 %
"Well capitalized" institution (under FDIC regulations) 5.00 % 6.00 % 10.00 %
 
As of December 31, 2010
The Company 8.37 % 11.99 % 13.24 %
The Bancorp Bank 7.39 % 10.60 % 11.85 %
"Well capitalized" institution (under FDIC regulations) 5.00 % 6.00 % 10.00 %
 
 

 
Three months ended Year ended
December 31, December 31,
2011 2010 2011 2010
Selected operating ratios:
Return on average assets 0.43 % 0.34 % 0.31 % 0.23 %
Return on average equity 4.84 % 4.01 % 3.54 % 2.45 %
Net interest margin 2.89 % 3.36 % 2.96 % 3.28 %
Efficiency ratio 67.21 % 69.37 % 67.96 % 70.39 %
Book value per share $ 8.18 $ 7.60 $ 8.18 $ 7.60
 
 
 
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
Asset quality ratios:
Nonperforming loans to total loans (1) 1.24 % 1.33 % 1.43 % 1.05 % 1.08 %
Nonperforming assets to total assets (1) 0.97 % 0.86 % 1.12 % 0.73 % 0.82 %
Allowance for loan and lease losses to total loans 1.69 % 1.61 % 1.65 % 1.58 % 1.49 %
 
Nonaccrual loans $ 17,587 $ 17,201 $ 19,526 $ 14,228 $ 15,297
Other real estate owned   7,405     6,415     3,764     3,379     2,115  
Total nonperforming assets $ 24,992   $ 23,616   $ 23,290   $ 17,607   $ 17,412  
 
Loans 90 days past due still accruing interest $ 4,101   $ 5,550   $ 4,397   $ 3,028   $ 2,220  
 
(1) 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.
 

Copyright Business Wire 2010

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