The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial
holding company, today reported financial results for third quarter
2016.
Highlights
- Net interest income increased 32% to
$23.5 million for the quarter ended September 30, 2016 compared to
$17.8 million for the quarter ended September 30, 2015.
- Net interest margin increased to 2.69%
for the quarter ended September 30, 2016 compared to 2.34% for the
quarter ended September 30, 2015.
- Loans and continuing operations loans
held for sale increased 31% to $1.76 billion at September 30, 2016
compared to $1.35 billion at September 30, 2015.
- Direct lease financing increased 49% to
$332.6 million from $223.9 million at September 30, 2015.
- Small Business Administration (“SBA”)
loans increased 24% to $349.6 million from $280.9 million at
September 30, 2015.
- Security backed lines of credit
(“SBLOC”) increased 15% to $621.5 million from $539.2 million at
September 30, 2015.
- Prepaid card fee income increased 7% to
$12.2 million for the quarter ended September 30, 2016 from $11.5
million for the quarter ended September 30, 2015.
- Gross dollar volume (“GDV”) (1)
increased 11% to $10.5 billion for Q3 2016 from $9.5 billion for Q3
2015.
- Assets held for sale from discontinued
operations decreased 34% from December 31, 2015 reflecting a $64
million sale of discontinued loans during the quarter.
- The rate on our average deposits and
interest bearing liabilities of $3.83 billion in Q3 2016 was 0.33%
with a rate of 0.12% for $1.81 billion of average prepaid card
deposits.
- Average prepaid card deposits, which
are among the lowest cost of our deposits, grew 18% in third
quarter 2016 compared to third quarter 2015.
- Completion of the BSA lookback
consultant engagement.
- Reduction in staff positions by
approximately 20% at the end of the quarter.
- Consummation of common equity offering
of approximately $75 million.
- Book value per common share at
September 30, 2016 of $6.13 per share. The Bancorp and its
subsidiary, The Bancorp Bank, remain well capitalized.
The Bancorp reported a net loss of $25.5 million, or $0.54 loss
per diluted share, for the quarter ended September 30, 2016
compared to net loss of $5.6 million, or $0.15 loss per diluted
share, for the quarter ended September 30, 2015. Net loss from
continuing operations for the quarter ended September 30, 2016 was
$1.5 million or a loss of $0.03 per diluted share compared to net
loss from continuing operations of $7.6 million or a loss of $0.20
per diluted share for the quarter ended September 30, 2015. Loss
from continuing operations does not include any income which may
result from the reinvestment of the proceeds from sales of the
remaining assets in The Bancorp’s discontinued operations. Tier one
capital to assets, tier one capital to risk-weighted assets,
total capital to risk-weighted assets and common equity-tier 1
ratios were 7.81%, 15.12%, 15.40% and 15.12% compared to well
capitalized minimums of 5%, 8%, 10% and 6.5%.
Damian Kozlowski, The Bancorp’s Chief Executive Officer, said,
“Last quarter on my first earnings call, I committed to the
completion of a business plan which would emphasize continuing
revenue growth and expense reductions, and thereby support
increased earnings and reduced volatility. We have completed that
integrated and comprehensive business plan and are focused on
accelerating related expense reductions while supporting continued
strong revenue growth. We are moving ahead in multiple areas to
achieve the related goal of a 20 to 25% reduction in non interest
expense. In the fourth quarter, we should see the impact of the end
of third quarter staff reductions. The business plan also
comprehensively addresses the completion of resolving regulatory
requirements and expectations. We made related progress with our
regulatory issues with the completion of the BSA lookback which
will no longer impact earnings. Strong revenue growth continued
this quarter, and our core lending businesses drove a 32% increase
over prior year quarter net interest income. Our non-interest
income reflected 7% growth in prepaid card fees to $12.2 million.
Credit losses in our continuing operations which we believe to be
lower risk lines of business, continue to be low. We were extremely
disappointed that an issue arose with a large lending relationship
in discontinued operations which resulted in a third quarter loss.
The results of the third quarter reflected a fair value
mark in connection with a secured commercial real estate
loan held in discontinued operations. That loan, in the principal
amount of $41.9 million, became non-performing after quarter end
due to the failure to make required principal payments. Based on a
preliminary estimate of the collateral value by an independent
certified appraiser, the fair value was reduced by $23.9 million
and that amount was recorded as a charge to earnings. The appraisal
estimate is preliminary, possibly subject to change based upon a
full appraisal which is in process. The appraiser is considering
recent market changes and pending lease renewals.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly
Earnings Conference Call at 8:00 AM ET Friday, October 28, 2016 by
clicking on the webcast link on Bancorp's homepage at
www.thebancorp.com. Or, you may dial 844.775.2543, access code
96088598. You may listen to the replay of the webcast following the
live call on The Bancorp's investor relations website or
telephonically until Friday, November 4, 2016 by dialing
855.859.2056, access code 96088598.
About The Bancorp
With operations in the US and Europe, The Bancorp, Inc. (NASDAQ:
TBBK) is dedicated to serving the unique needs of non-bank
financial service companies, ranging from entrepreneurial start-ups
to those on the Fortune 500. The company’s chief financial
institution, The Bancorp Bank (Member FDIC, Equal Housing Lender),
has been repeatedly recognized in the payments industry as the Top
Issuer of Prepaid Cards (US), a top merchant sponsor bank, and a
top ACH originator. Specialized lending distinctions include
National Preferred SBA Lender, a leading provider of
securities-backed lines of credit, and one of the few bank-owned
commercial leasing groups in the nation. For more information
please visit www.thebancorp.com.
Forward-Looking Statements
Statements in this earnings release regarding Bancorp’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 Bancorp’s filings
with the SEC, including the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of those 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 press
release. The Bancorp does not undertake to publicly revise or
update forward-looking statements in this press release 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 Nine
months ended September 30, September 30,
Condensed income
statement 2016 2015 2016 2015 (dollars in
thousands except per share data) Net interest income $
23,542 $ 17,798 $ 64,988 $ 51,349
Provision for loan and lease losses 750 625
1,810 1,800 Non-interest income
Service fees on deposit accounts 1,510 1,919 3,335 5,579 Card
payment and ACH processing fees 1,459 1,493 4,183 4,242 Prepaid
card fees 12,249 11,492 39,333 35,752 Gain (loss) on sale of loans
903 (830 ) 809 6,747 Gain on sale of investment securities 981 (335
) 3,131 (62 ) Change in value of investment in unconsolidated
entity 811 1,040 (12,313 ) 3,141 Leasing income 588 552 1,456 1,727
Debit card income (45 ) 427 (202 ) 1,358 Affinity fees 1,091 1,083
3,507 2,391 Other non-interest income 886 458
5,422 1,925 Total non-interest
income 20,433 17,299 48,661 62,800 Non-interest expense Bank
Secrecy Act and lookback consulting expenses 1,340 11,687 29,076
26,643 Other non-interest expense 43,370
36,108 127,908 108,446 Total
non-interest expense 44,710 47,795
156,984 135,089 Loss from continuing
operations before income tax expense (1,485 ) (13,323 ) (45,145 )
(22,740 ) Income tax expense (benefit) 55
(5,706 ) (15,324 ) (10,817 ) Net loss from continuing
operations (1,540 ) (7,617 ) (29,821 ) (11,923 ) Net income (loss)
from discontinued operations, net of tax (23,993 )
2,042 (37,984 ) 6,736 Net loss
available to common shareholders $ (25,533 ) $ (5,575 ) $ (67,805 )
$ (5,187 ) Net loss per share from continuing operations -
basic $ (0.03 ) $ (0.20 ) $ (0.73 ) $ (0.32 ) Net income (loss) per
share from discontinued operations - basic $ (0.51 ) $ 0.05
$ (0.93 ) $ 0.18 Net loss per share – basic $ (0.54 ) $
(0.15 ) $ (1.66 ) $ (0.14 ) Net loss per share from
continuing operations - diluted $ (0.03 ) $ (0.20 ) $ (0.73 ) $
(0.32 ) Net income (loss) per share from discontinued operations -
diluted $ (0.51 ) $ 0.05 $ (0.93 ) $ 0.18 Net loss
per share - diluted $ (0.54 ) $ (0.15 ) $ (1.66 ) $ (0.14 ) Common
stock shares outstanding 55,319,204 37,758,322 55,319,204
37,758,322 (a) For loss periods the weighted averages
shares - basic is used in both the basic and diluted computations.
Balance sheet September
30, June 30, December 31, September 30, 2016 2016 2015 2015
(dollars in thousands)
Assets: Cash and cash equivalents
Cash and due from banks $ 4,061 $ 4,006 $ 7,643 $ 4,002 Interest
earning deposits at Federal Reserve Bank 312,605 528,094 1,147,519
995,441 Securities sold under agreements to resell 39,463
39,360 - 37,970
Total cash and cash equivalents 356,129
571,460 1,155,162 1,037,413
Investment securities, available-for-sale, at fair value
1,334,927 1,328,693 1,070,098 1,316,705 Investment securities,
held-to-maturity 93,495 93,537 93,590 93,604 Loans held for sale,
at fair value 562,957 441,593 489,938 354,600 Loans, net of
deferred fees and costs 1,198,237 1,182,106 1,078,077 994,518
Allowance for loan and lease losses (6,058 ) (5,398 )
(4,400 ) (4,194 ) Loans, net 1,192,179
1,176,708 1,073,677 990,324
Federal Home Loan Bank & Atlantic Community Bancshares
stock 11,014 12,289 1,062 1,063 Premises and equipment, net 21,797
22,429 21,631 18,893 Accrued interest receivable 10,496 10,271
9,471 11,232 Intangible assets, net 5,682 6,074 4,929 5,248
Deferred tax asset, net 29,765 28,870 36,207 33,857 Investment in
unconsolidated entity 157,396 162,275 178,520 186,656 Assets held
for sale from discontinued operations 386,155 487,373 583,909
611,729 Other assets 55,435 60,203
47,629 53,123 Total assets $ 4,217,427
$ 4,401,775 $ 4,765,823 $ 4,714,447
Liabilities: Deposits Demand and interest checking $
3,364,103 $ 3,569,669 $ 3,602,376 $ 4,002,638 Savings and money
market 402,832 389,851 383,832 376,577 Time deposits -
101,160 428,549 -
Total deposits 3,766,935 4,060,680
4,414,757 4,379,215 Securities
sold under agreements to repurchase 353 318 925 1,034 Short-term
borrowings 70,000 - - - Subordinated debenture 13,401 13,401 13,401
13,401 Other liabilities 27,744 37,094
16,739 7,100 Total liabilities $
3,878,433 $ 4,111,493 $ 4,445,822 $ 4,400,750
Shareholders' equity: Common stock -
authorized, 75,000,000 shares of $1.00 par value; 55,419,204 and
37,858,237 shares issued at September 30, 2016 and 2015,
respectively 55,419 37,945 37,861 37,858 Treasury stock (100,000
shares) (866 ) (866 ) (866 ) (866 ) Additional paid-in capital
359,793 301,680 300,549 299,470 Accumulated deficit (83,253 )
(57,721 ) (15,449 ) (33,429 ) Accumulated other comprehensive
income (loss) 7,901 9,244 (2,094
) 10,664 Total shareholders' equity 338,994
290,282 320,001 313,697
Total liabilities and shareholders' equity $
4,217,427 $ 4,401,775 $ 4,765,823 $ 4,714,447
Average balance sheet and net interest income Three months
ended September 30, 2016 Three months ended September 30, 2015
(dollars in thousands) Average Average Average Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets: Loans net of unearned fees and costs ** $
1,661,807 $ 17,425 4.19 % $ 1,292,533 $ 12,466 3.86 % Leases - bank
qualified* 21,006 418 7.96 % 30,091 530 7.05 % Investment
securities-taxable 1,373,776 8,350 2.43 % 940,590 4,562 1.94 %
Investment securities-nontaxable* 48,683 218 1.79 % 518,691 4,765
3.67 % Interest earning deposits at Federal Reserve Bank 324,179
397 0.49 % 957,078 580 0.24 % Federal funds sold and securities
purchased under agreement to resell 39,392 146
1.48 % 40,705 143 1.41 % Net interest earning
assets 3,468,843 26,954 3.11 % 3,779,688 23,046 2.44 %
Allowance for loan and lease losses (5,267 ) (4,385 ) Assets held
for sale from discontinued operations 459,400 3,891 3.39 % 627,806
6,343 4.04 % Other assets 259,375 286,839
$ 4,182,351 $ 4,689,948
Liabilities
and Shareholders' Equity: Deposits: Demand and interest
checking $ 3,249,801 $ 2,379 0.29 % $ 3,998,798 $ 2,850 0.29 %
Savings and money market 392,045 423 0.43 % 337,793 426 0.50 % Time
76,931 104 0.54 % 410 1
0.98 % Total deposits 3,718,777 2,906 0.31 % 4,337,001 3,277 0.30 %
Short-term borrowings 102,243 153 0.60 % - - 0.00 %
Repurchase agreements 376 - 0.00 % 1,606 1 0.25 % Subordinated debt
13,401 131 3.91 % 13,401
117 3.49 % Total deposits and interest bearing liabilities
3,834,797 3,190 0.33 % 4,352,008 3,395 0.31 % Other
liabilities 19,670 12,957 Total
liabilities 3,854,467 4,364,965 Shareholders' equity
327,884 324,983 $ 4,182,351 $ 4,689,948
Net interest income on tax equivalent basis* $ 27,655 $
25,994 Tax equivalent adjustment 222 1,853
Net interest income $ 27,433 $ 24,141 Net interest margin *
2.69 % 2.34 % * Full taxable equivalent
basis, using a 35% statutory tax rate. ** Includes loans held for
sale.
Average balance sheet and net interest income Nine months
ended September 30, 2016 Nine months ended September 30, 2015
(dollars in thousands) Average Average Average Average
Assets: Balance Interest Rate Balance Interest Rate
Interest-earning assets: Loans net of unearned fees and costs ** $
1,543,448 $ 48,061 4.15 % $ 1,192,939 $ 34,231 3.83 % Leases - bank
qualified* 20,618 1,334 8.63 % 23,936 1,247 6.95 % Investment
securities-taxable 1,280,692 22,782 2.37 % 983,557 14,628 1.98 %
Investment securities-nontaxable* 59,892 983 2.19 % 524,913 14,443
3.67 % Interest earning deposits at Federal Reserve Bank 490,037
1,677 0.46 % 1,001,027 1,759 0.23 % Federal funds sold and
securities purchased under agreement to resell 27,414
301 1.46 % 43,724 465 1.42 % Net
interest-earning assets 3,422,101 75,138 2.93 % 3,770,096 66,773
2.36 % Allowance for loan and lease losses (4,538 ) (4,089 )
Assets held for sale 528,168 15,037 3.80 % 743,594 22,275 3.99 %
Other assets 291,973 293,561 $
4,237,704 $ 4,803,162
Liabilities and
Shareholders' Equity: Deposits: Demand and interest checking $
3,325,047 $ 7,217 0.29 % $ 4,122,409 $ 8,293 0.27 % Savings and
money market 390,202 1,028 0.35 % 323,307 1,286 0.53 % Time
103,624 447 0.58 % 1,066 12 1.50
% Total deposits 3,818,873 8,692 0.30 % 4,446,782 9,591 0.29 %
Short-term borrowings 58,056 263 0.60 % - - 0.00 %
Repurchase agreements 812 1 0.16 % 6,598 14 0.28 % Subordinated
debt 13,401 383 3.81 % 13,401
328 3.26 % Total deposits and interest bearing liabilities
3,891,142 9,339 0.32 % 4,466,781 9,933 0.30 % Other
liabilities 21,306 9,702 Total
liabilities 3,912,448 4,476,483 Shareholders' equity
325,256 326,679 $ 4,237,704 $ 4,803,162
Net interest income on tax equivalent basis* 80,836
79,115 Tax equivalent adjustment 811
5,491 Net interest income $ 80,025 $ 73,624 Net interest
margin * 2.57 % 2.32 % * Full taxable
equivalent basis, using a 35% statutory tax rate. ** Includes loans
held for sale.
Allowance for loan
and lease losses: Nine months ended Year ended September 30,
September 30, December 31, 2016 2015
2015 (dollars in thousands) Balance in
the allowance for loan and lease losses at beginning of period (1)
$ 4,400 $ 3,638 $ 3,638 Loans
charged-off: SBA non real estate - 65 111 SBA commercial mortgage
76 - - Direct lease financing 63 9 30 Other consumer loans
39 1,177 1,220 Total 178
1,251 1,361 Recoveries:
SBA non real estate 1 - - Direct lease financing 17 - - Other
consumer loans 8 7 23
Total 26 7 23 Net
charge-offs 152 1,244 1,338 Provision charged to operations
1,810 1,800 2,100 Balance
in allowance for loan and lease losses at end of period $ 6,058
$ 4,194 $ 4,400 Net charge-offs/average loans
0.01 % 0.10 % 0.11 % Net charge-offs/average loans (annualized)
0.01 % 0.14 % 0.11 % Net charge-offs/average assets 0.00 % 0.03 %
0.03 % (1) Excludes activity from assets held for sale
Loan portfolio: September 30, June 30, December 31,
September 30, 2016 2016 2015
2015 (dollars in thousands) SBA non
real estate $ 74,262 $ 71,596 $ 68,887 $ 64,988 SBA commercial
mortgage 117,053 116,617 114,029 116,545 SBA construction
6,317 3,751 6,977 5,191
Total SBA loans 197,632 191,964 189,893 186,724 Direct lease
financing 332,632 315,639 231,514 223,929 SBLOC 621,456 607,017
575,948 539,240 Other specialty lending 20,076 40,543 48,315 12,119
Other consumer loans 19,375 20,005
23,180 23,502 1,191,171 1,175,168
1,068,850 985,514 Unamortized loan fees and costs 7,066
6,938 9,227 9,004
Total loans, net of deferred loan fees and costs $ 1,198,237
$ 1,182,106 $ 1,078,077 $ 994,518
Small business lending portfolio: September 30, June
30, December 31, September 30, 2016 2016
2015 2015 (dollars in thousands)
SBA loans, including deferred fees and costs 203,196 197,544
197,966 194,612 SBA loans included in HFS 146,450
136,660 109,174 86,245
Total SBA loans $ 349,646 $ 334,204 $ 307,140
$ 280,857
Capital ratios:
Tier 1 capital Tier 1 capital Total capital Common equity to
average to risk-weighted to risk-weighted tier 1 to risk assets
ratio assets ratio assets ratio weighted assets As of September 30,
2016 The Bancorp, Inc. 7.81 % 15.12 % 15.40 % 15.12 % The Bancorp
Bank 7.41 % 14.56 % 14.83 % 14.56 % "Well capitalized" institution
(under FDIC regulations) 5.00 % 8.00 % 10.00 % 6.50 % As of
December 31, 2015 The Bancorp, Inc. 7.17 % 14.67 % 14.88 % 14.67 %
The Bancorp Bank 6.90 % 13.98 % 14.18 % 13.98 % "Well capitalized"
institution (under FDIC regulations) 5.00 % 8.00 % 10.00 % 6.50 %
Three months ended Nine months ended September 30,
September 30, 2016 2015
2016 2015
Selected operating
ratios: Return on average assets (annualized) nm nm nm nm
Return on average equity (annualized) nm nm nm nm Net interest
margin 2.69 % 2.34 % 2.57 % 2.32 % Book value per share $ 6.13 $
8.31 $ 6.13 $ 8.31 September 30, June 30, December 31,
September 30, 2016 2016 2015
2015
Asset quality ratios:
Nonperforming loans to total loans (2) 0.58 % 0.53 % 0.22 % 0.25 %
Nonperforming assets to total assets (2) 0.16 % 0.14 % 0.05 % 0.05
% Allowance for loan and lease losses to total loans 0.51 % 0.46 %
0.41 % 0.42 % Nonaccrual loans $ 4,021 $ 3,147 $ 1,927 $
2,157 Other real estate owned - -
- - Total nonperforming assets $ 4,021
$ 3,147 $ 1,927 $ 2,157 Loans 90
days past due still accruing interest $ 2,933 $ 3,172
$ 403 $ 294
(2)
Nonperforming loan and asset ratios
include nonaccrual loans and loans 90 days past due still accruing
interest.
Three months ended September 30, June 30,
December 31, September 30, 2016 2016 2015 2015 (in
thousands)
Gross dollar volume (GDV) (1)
: Prepaid
card GDV $ 10,459,097 $ 11,442,294 $ 9,839,782 $ 9,465,687
(1)
Gross dollar volume represents the total
dollar amount spent on prepaid and debit cards issued by The
Bancorp.
Cumulative Analysis of Marks on
Discontinued Commercial Loan Principal (dollars in millions)
Commercial Mark Loan Principal
Cumulative Chargedowns Cumulative 9.30.16 Marks 6.30.16
Marks % to Principal 16 Largest relationships $ 248 $
248 Add back mark chargedowns to principal 35
Total principal to compare to cumulative marks $ 283 $ 38 $
35 $ 73 26 % Other loans 92
7 - 7 8 % Total
discontinued loan principal $ 340 $ 45 $ 35 $ 80
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027007009/en/
The Bancorp, Inc.Andres Viroslav,
215-861-7990aviroslav@thebancorp.com
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