NEW YORK (TheStreet) -- The Bancorp (TBBK) shares are down dramatically, -30.3% to $11.29, after the bank entered into a Stipulation and Consent to the Issuance of a Consent Order with the FDIC.
The order became effective on June 5 and requires the bank to correct the weaknesses in its Bank Secrecy Act Compliance Program.
Analysts at BTIG and Sterne Agee both downgraded the bank's shares to "neutral" from "buy" today following the news.
"Insofar as our bullish thesis on TBBK was based in large part on growth generated by the launch of new prepaid card programs, we are moving to the sidelines for now until we gain more clarity on when the restrictions on the company may be lifted," said analysts at BTIG.
The bank entered into the consent order without admitting or denying FDIC charges of unsafe banking practices.
TheStreet Ratings team rates BANCORP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BANCORP INC (TBBK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 20.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for BANCORP INC is rather high; currently it is at 62.32%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TBBK's net profit margin of 0.55% is significantly lower than the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- Net operating cash flow has significantly decreased to -$135.83 million or 7501.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: TBBK Ratings Report