The Bancorp, Inc. Reports Second Quarter 2012 Financial Results

The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the quarter ended June 30, 2012.

Financial Highlights
  • Net income for the second quarter of 2012 increased to $3.9 million compared to $660,000 in the second quarter of 2011. Diluted earnings per share increased to $0.12 versus $0.02, respectively, for those periods. Diluted earnings per share amounted to $0.24 for the six months ended June 30, 2012 compared to diluted earnings per share of $0.11 for the six months ended June 30, 2011.

Key factors driving these results were:
  • 61% increase in quarterly prepaid card fees to $7.1 million compared to $4.4 million in second quarter 2011.
  • 14% increase in quarterly net interest income to $20.9 million compared to $18.3 million in second quarter 2011.
  • 47% increase in quarterly non-interest income (including prepaid card fees) to $10.6 million compared to $7.2 million in second quarter 2011 excluding security gains and other than temporary impairment (OTTI).
  • At June 30, 2012 the portfolio of loans and securities had grown to $2.4 billion, an increase of $360 million, or 18% over second quarter 2011. Outstanding loans increased 7% over that period.
  • Average deposits for second quarter 2012 totaled $3.1 billion, an increase of $732 million or 31% over 2011, reflecting growth in all major deposit categories. The interest paid on deposits between those respective periods decreased to 0.37% from 0.50%.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “Second quarter 2012 saw a continuation in our earnings growth as a result of significant increases in both our non-interest and net interest income. Adjusted operating earnings, a non-GAAP measure, increased to $10.8 million, a $3.1 million, or 40% increase over the comparable prior year period. Our position as a leader in the prepaid card space continues to drive the increase in non-interest income. On the asset side, we grew our loans 7% over the year in a difficult lending environment. We continue to target what we believe to be lower risk assets including Small Business Administration (SBA) loans, security backed lines of credit and vehicle fleet leasing. Consumer loans, primarily security backed lines of credit, grew 28% over the past year, to $256 million. Due to the historically demonstrated strength of related collateral, losses on security backed loans have been virtually non-existent. The Company is well capitalized, and book value per share increased from $7.90 at June 30, 2011 to $8.54 at June 30, 2012, or an increase of 8%.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended June 30, 2012 of $3.9 million or diluted earnings per share of $0.12, based on 33,147,791 weighted average shares outstanding, compared to net income available to common shareholders of $660,000 or diluted earnings per share of $0.02, based on 33,205,741 weighted average shares outstanding, for the three months ended June 30, 2011. Adjusted operating earnings, a non-GAAP measure, increased to $10.8 million for the three months ended June 30, 2012 compared to $7.7 million for the three months ended June 30, 2011. The following is a reconciliation of adjusted operating earnings to net income available to common shareholders (for the three month period):
  Quarter ended   Six months ended
June 30,   June 30, June 30,   June 30,
  2012   2011     2012   2011  
 
Net income available to common shareholders $ 3,854 $ 660 $ 7,826 $ 3,348
Income tax expense 2,150 289 4,377 1,720
Gains on sales of investment securities - (603 ) - (603 )
Other than temporary impairment in securities 126 - 126 75
Losses and write downs on other real estate owned 421 439 1,872 491
Provision for loan and lease losses   4,287   6,963     9,507   11,635  
Adjusted operating earnings (1) $ 10,838 $ 7,748   $ 23,708 $ 16,666  
 
(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 June 30, 2012, Bancorp's total assets amounted to $3.2 billion, an increase of $684 million or 28% over total assets at June 30, 2011. The increase in assets primarily reflected increases in deposits, primarily in transaction accounts. During that period, investments increased to $600 million, an increase of $234 million or 64%; loans increased to $1.8 billion, an increase of $126 million or 7%; and deposits increased to $2.8 billion, an increase of $660 million or 30%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:00 AM EDT Tuesday, July 24, 2012 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 800.591.6945, access code 57226723. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Tuesday, July 31, 2012 by dialing 888.286.8010, access code 71622633.

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 Six months ended
June 30, June 30,
  2012       2011   2012       2011  
(dollars in thousands except per share data)
Condensed income statement
Net interest income $ 20,881   $ 18,257 $ 41,797   $ 36,455  
Provision for loan and lease losses   4,287     6,963   9,507     11,635  
Non-interest income
Gain on sales of investment securities - 603 - 603
Other than temporary impairment of investment securities (126 ) - (126 ) (75 )
Other non-interest income   10,575     7,184   22,865     14,942  
Total non-interest income 10,449 7,787 22,739 15,470
Non-interest expense
Losses and write downs on other real estate owned 421 439 1,872 491
Other non-interest expense   20,618     17,693   40,954     34,731  
Total non-interest expense   21,039     18,132   42,826     35,222  
Net income before income tax expense 6,004 949 12,203 5,068
Income tax expense   2,150     289   4,377     1,720  
Net income available to common shareholders $ 3,854   $ 660 $ 7,826   $ 3,348  
 
Basic earnings per share $ 0.12   $ 0.02 $ 0.24   $ 0.11  
 
Diluted earnings per share $ 0.12   $ 0.02 $ 0.24   $ 0.11  
Weighted average shares - basic 33,101,281 33,196,281 33,099,303 30,638,325
Weighted average shares - diluted 33,147,791 33,205,741 33,114,968 30,645,678
 
       
Balance sheet June 30, March 31, December 31, June 30,
  2012     2012     2011     2011  
(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks $ 5,560 $ 142,123 $ 96,228 $ 168,957
Interest earning deposits at Federal Reserve Bank   692,582     1,663,664     652,946     199,866  
Total cash and cash equivalents   698,142     1,805,787     749,174     368,823  
 
Investment securities, available-for-sale, at fair value 582,219 481,553 448,204 347,465
Investment securities, held-to-maturity 17,796 17,971 18,044 18,102
Federal Home Loan Bank & Atlantic Central Bankers Bank stock 4,596 4,836 5,088 5,634
Loans, net of deferred costs 1,804,312 1,748,867 1,744,828 1,678,660
Allowance for loan and lease losses   (31,171 )   (31,500 )   (29,568 )   (27,685 )
Loans, net   1,773,141     1,717,367     1,715,260     1,650,975  
Premises and equipment, net 8,694 8,514 8,358 8,296
Accrued interest receivable 9,297 9,032 8,476 7,839
Intangible assets, net 7,504 7,754 8,004 8,504
Other real estate owned 4,919 7,726 7,405 3,764
Deferred tax asset, net 20,716 20,804 21,941 21,960
Other assets   23,178     22,703     20,727     24,477  
Total assets $ 3,150,202   $ 4,104,047   $ 3,010,681   $ 2,465,839  
 
Liabilities:
Deposits
Demand and interest checking $ 2,335,960 $ 3,275,611 $ 2,192,938 $ 1,816,926
Savings and money market 456,614 468,183 454,343 332,956
Time deposits 20,619 20,637 25,528 1,394
Time deposits, $100,000 and over   9,104     9,447     9,742     11,427  
Total deposits   2,822,297     3,773,878     2,682,551     2,162,703  
 
Securities sold under agreements to repurchase 21,948 25,906 33,177 20,258
Accrued interest payable 127 129 123 131
Subordinated debenture 13,401 13,401 13,401 13,401
Other liabilities   9,555     12,500     9,950     7,109  
Total liabilities $ 2,867,328   $ 3,825,814   $ 2,739,202   $ 2,203,602  
 
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,201,281 and 33,196,281 shares issued at June 30, 2012 and 2011, respectively 33,201 33,201 33,196 33,196
Treasury stock (100,000 shares) (866 ) (866 ) (866 ) -
Additional paid-in capital 243,284 242,661 241,997 241,011
Accumulated deficit (1,451 ) (5,305 ) (9,277 ) (14,847 )
Accumulated other comprehensive gain   8,706     8,542     6,429     2,877  
Total shareholders' equity 282,874 278,233 271,479 262,237
 
Total liabilities and shareholders' equity $ 3,150,202   $ 4,104,047   $ 3,010,681   $ 2,465,839  
 
   
Average balance sheet and net interest income Three months ended June 30, 2012 Three months ended June 30, 2011
(dollars in thousands) Average     Average Average     Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets:
Loans net of unearned discount $ 1,780,071 $ 19,125 4.30 % $ 1,642,867 $ 18,084 4.40 %
Leases - bank qualified* 13,770 207 6.01 % 4,820 100 8.30 %
Investment securities-taxable 435,903 3,369 3.09 % 270,535 2,340 3.46 %
Investment securities-nontaxable* 105,869 1,097 4.14 % 76,123 1,007 5.29 %
Interest earning deposits at Federal Reserve Bank 954,213   605 0.25 % 389,794   230 0.24 %
Net interest earning assets 3,289,826 24,403 2.97 % 2,384,139 21,761 3.65 %
 
Allowance for loan and lease losses (32,101 ) (26,463 )
Other assets 126,547   271,564  
$ 3,384,272   $ 2,629,240  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 2,580,647 $ 2,094 0.32 % $ 1,978,071 $ 2,188 0.44 %
Savings and money market 448,571 625 0.56 % 336,244 654 0.78 %
Time 29,862   106 1.42 % 12,812   43 1.34 %
Total deposits 3,059,080 2,825 0.37 % 2,327,127 2,885 0.50 %
 
Repurchase agreements 22,255 24 0.43 % 19,832 26 0.52 %
Subordinated debt 13,401   217 6.48 % 13,401   216 6.45 %
Total deposits and interest bearing liabilities 3,094,736 3,066 0.40 % 2,360,360 3,127 0.53 %
 
Other liabilities 9,551   9,668  
Total liabilities 3,104,287 2,370,028
 
Shareholders' equity 279,985   259,212  
$ 3,384,272   $ 2,629,240  
Net interest income on tax equivalent basis* $ 21,337 $ 18,634
 
Tax equivalent adjustment 456 377
 
Net interest income $ 20,881 $ 18,257
Net interest margin * 2.59 % 3.13 %
           
* Full taxable equivalent basis, using a 35% statutory tax rate.
 
   
Average balance sheet and net interest income Six months ended June 30, 2012 Six months ended June 30, 2011
(Dollars in thousands) Average     Average Average     Average
Assets:

Balance

Interest

Rate

Balance

Interest

Rate
Interest-earning assets:
Loans net of unearned discount $ 1,756,910 $ 37,948 4.32 % $ 1,635,432 $ 36,344 4.44 %
Leases - bank qualified* 12,105 397 6.56 % 3,589 150 8.36 %
Investment securities-taxable 402,949 6,561 3.26 % 228,302 3,897 3.41 %
Investment securities-nontaxable* 101,126 2,161 4.27 % 76,854 2,018 5.25 %
Interest earning deposits at Federal Reserve Bank 1,325,250   1,658 0.25 % 610,215   745 0.24 %
Net interest-earning assets 3,598,340 48,725 2.71 % 2,554,392 43,154 3.38 %
 
Allowance for loan and lease losses (31,388 ) (25,648 )
Other assets 179,115   279,032  
$ 3,746,067   $ 2,807,776  
 
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking $ 2,936,649 $ 4,088 0.28 % $ 2,169,238 $ 4,033 0.37 %
Savings and money market 453,213 1,257 0.55 % 328,899 1,310 0.80 %
Time 30,608   203 1.33 % 29,567   147 0.99 %
Total deposits 3,420,470 5,548 0.32 % 2,527,704 5,490 0.43 %
 
Short-term borrowings - - 0.00 % 1,503 3 0.40 %
Repurchase agreements 25,257 51 0.40 % 18,439 42 0.46 %
Subordinated debt 13,401   434 6.48 % 13,401   431 6.43 %
Total deposits and interest bearing liabilities 3,459,128 6,033 0.35 % 2,561,047 5,966 0.47 %
 
Other liabilities 10,078   9,553  
Total liabilities 3,469,206 2,570,600
 
Shareholders' equity 276,861   237,176  
 
$ 3,746,067   $ 2,807,776  
Net interest income on tax equivalent basis* 42,692 37,188
 
Tax equivalent adjustment 895 733
 
Net interest income $ 41,797 $ 36,455
Net interest margin * 2.37 % 2.91 %
 
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 35% statutory tax rate
 
     
Allowance for loan and lease losses: Six months ended For year ended
June 30,   June 30, December 31,
  2012       2011     2011  
(dollars in thousands)
 
Balance in the allowance for loan and lease losses at beginning of period $ 29,568   $ 24,063   $ 24,063  
 
Loans charged-off:
Commercial 4,099 4,804 8,651
Construction 4,838 2,496 3,254
Lease financing 87 - 39
Residential mortgage - 49 2,870
Consumer   258     681     1,280  
Total   9,282     8,030     16,094  
 
Recoveries:
Commercial 1,272 15 91
Construction 9 2 4
Lease financing 12 - -
Residential mortgage 85 - -
Consumer   -     -     6  
Total   1,378     17     101  
Net charge-offs 7,904 8,013 15,993
Provision charged to operations   9,507     11,635     21,498  
 
Balance in allowance for loan and lease losses at end of period $ 31,171   $ 27,685   $ 29,568  
Net charge-offs/average loans 0.45 % 0.49 % 0.96 %
 
 
Loan portfolio: June 30, March 31, December 31, June 30,
  2012     2012     2011     2011
(dollars in thousands)
 
Commercial $ 441,167 $ 445,912 $ 450,411 $ 450,916
Commercial mortgage (1) 596,639 617,871 609,487 593,842
Construction   269,636     248,232     246,611     205,730
Total commercial loans 1,307,442 1,312,015 1,306,509 1,250,488
Direct lease financing 140,012 130,321 129,682 127,016
Residential mortgage 97,226 94,438 96,110 98,113
Consumer loans and others   255,769     208,584     209,041     200,132
1,800,449 1,745,358 1,741,342 1,675,749
Unamortized loan costs   3,863     3,509     3,486     2,911
Total loans, net of deferred loan costs $ 1,804,312   $ 1,748,867   $ 1,744,828   $ 1,678,660
 
Supplemental loan data:
Construction 1-4 family $ 79,546 $ 85,461 $ 85,189 $ 93,422
Commercial construction, acquisition and development   190,090     162,771     161,422     112,308
  $ 269,636   $ 248,232   $ 246,611   $ 205,730
(1) At June 30, 2012 our owner-occupied loans amounted to $142 million, or 23.8% 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 June 30, 2012
The Company 8.16% 14.63% 15.88%
The Bancorp Bank 6.71% 12.04% 13.30%
"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
June 30,   December 31, December 31,

2012
 

2011

2011

2011
Selected operating ratios:
Return on average assets 0.46 % 0.10 % 0.43 % 0.31 %
Return on average equity 5.54 % 1.02 % 4.84 % 3.54 %
Net interest margin 2.59 % 3.13 % 2.89 % 2.96 %
Efficiency ratio 67.15 % 71.27 % 67.21 % 67.96 %
Book value per share $ 8.54 $ 7.90 $ 8.18 $ 8.18
 
 
 
 
June 30, March 31, December 31, June 30,
  2012     2012     2011     2011  
Asset quality ratios:
Nonperforming loans to total loans (1) 1.55 % 1.42 % 1.24 % 1.43 %
Nonperforming assets to total assets (1) 1.04 % 0.79 % 0.97 % 1.12 %
Allowance for loan and lease losses to total loans 1.73 % 1.80 % 1.69 % 1.65 %
 
Nonaccrual loans $ 24,815 $ 20,929 $ 17,587 $ 19,526
Other real estate owned   4,919     7,726     7,405     3,764  
Total nonperforming assets $ 29,734   $ 28,655   $ 24,992   $ 23,290  
 
Loans 90 days past due still accruing interest $ 3,105   $ 3,914   $ 4,101   $ 4,397  
(1) Nonperforming loans are defined as nonaccrual loans and restructured loans. Loans 90 days past due and still accruing interest are also included in these ratios.
 

Copyright Business Wire 2010

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