The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for fourth quarter and fiscal 2016.

Highlights

  • Net interest income increased 34% to $25.0 million for the quarter ended December 31, 2016 compared to $18.6 million for the quarter ended December 31, 2015. Year over year, net interest income increased 29% to $90.0 million from $69.9 million.
  • Net interest margin increased to 2.84% for the quarter ended December 31, 2016 compared to 2.52% for the quarter ended December 31, 2015. Year over year, the net interest margin was 2.74% compared to 2.37%.
  • Loans, excluding loans held for sale, increased 14% to $1.23 billion at December 31, 2016 compared to $1.08 billion at December 31, 2015.
  • Direct lease financing increased 50% to $346.6 million from $231.5 million at December 31, 2015.
  • Small Business Administration (“SBA”) loans increased 20% to $369.8 million from $307.1 million at December 31, 2015.
  • Security backed lines of credit (“SBLOC”) increased 9% to $630.4 million from $575.9 million at December 31, 2015.
  • Prepaid card fee income increased 2% to $12.0 million for the quarter ended December 31, 2016 from $11.7 million for the quarter ended December 31, 2015. Year over year, prepaid card fee income increased 8% to $51.3 million.
  • Gross dollar volume on prepaid cards (“GDV”) (1) increased 8% to $10.6 billion for Q4 2016 from $9.8 billion for Q4 2015. Year over year, GDV increased over 12%.
  • Assets held for sale from discontinued operations decreased 38% from $583.9 million at December 31, 2015 to $360.7 million at December 31, 2016.
  • The rate on our average deposits and interest bearing liabilities of $3.88 billion in Q4 2016 was 0.30% with a rate of 0.14% for $1.86 billion of average prepaid card deposits.
  • The $1.86 billion of average Q4 2016 prepaid card deposits, which are among the lowest cost of our deposits, reflected a 16% increase over fourth quarter 2015.
  • Book value per common share at December 31, 2016 of $5.40 per share. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

(1) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp.

The Bancorp reported a net loss of $29.0 million, or $0.52 loss per diluted share, for the quarter ended December 31, 2016 compared to net income of $18.6 million, or $0.49 income per diluted share for the quarter ended December 31, 2015. Net loss from continuing operations for the quarter ended December 31, 2016 was $24.0 million or a loss of $0.43 per diluted share compared to net income from continuing operations of $17.3 million or income of $0.46 per diluted share for the quarter ended December 31, 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 7.06%, 13.84%, 14.13% and 13.84% compared to well capitalized minimums of 5%, 8%, 10% and 6.5%.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Discontinued operations and Walnut Street were reevaluated with updated values, which resulted in a significant charge during the fourth quarter. We’ve reviewed the related loan processes and enhanced related governance. A commercial credit, in the discontinued loan portfolio, was impacted by suspected fraud leading to a write-down and loss in discontinued operations. We’ve added additional details in this release on our credits from discontinued operations including a chart detailing the types of assets and other related information. Our goal, as stated before, is to reduce risk in the portfolios and complete an orderly wind-down with the least amount of future volatility. Our continuing operations results, excluding the charge to Walnut Street which resulted from the 2014 financing of the sale of certain discontinued operations loans, showed improvement this quarter. This improvement reflected the elimination of the BSA lookback expense which terminated in the prior quarter. It also reflected continuing revenue growth, while expense cuts and restructuring are also beginning to have an impact on profitability. While certain of the expense cuts are not immediate, we have targeted total 2017 expense reductions of $20 million.”

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, February 10, 2017 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 51403334. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 17, 2017 by dialing 855.859.2056, access code 51403334.

About The Bancorp

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   Year ended December 31, December 31, Condensed income statement 2016   2015 2016   2015 (dollars in thousands except per share data)   Net interest income $ 24,978   $ 18,582   $ 89,966   $ 69,931 Provision for loan and lease losses   1,550     300     3,360     2,100 Non-interest income Service fees on deposit accounts 1,789 1,889 5,124 7,468 Card payment and ACH processing fees 1,343 1,489 5,526 5,731 Prepaid card fees 11,993 11,744 51,326 47,496 Gain (loss) on sale of loans 2,092 3,333 2,901 10,080 Gain on sale of investment securities 40 14,497 3,171 14,435 Gain on sale of health savings portfolio - 33,531 - 33,531 Change in value of investment in unconsolidated entity (24,720 ) (1,412 ) (37,033 ) 1,729 Leasing income 551 564 2,007 2,291 Debit card income 202 253 - 1,611 Affinity fees 1,056 967 4,563 3,358 Other non-interest income   508     3,412     5,401     5,337 Total non-interest income (5,146 ) 70,267 42,986 133,067 Non-interest expense Bank Secrecy Act and lookback consulting expenses 5 14,801 29,081 41,444 Other non-interest expense   42,123     44,198     169,492     152,644 Total non-interest expense   42,128     58,999     198,573     194,088 Income (loss) from continuing operations before income tax expense (23,846 ) 29,550 (68,981 ) 6,810 Income tax expense (benefit)   153     12,267     (15,171 )   1,450 Net income (loss) from continuing operations (23,999 ) 17,283 (53,810 ) 5,360 Net income (loss) from discontinued operations, net of tax   (5,044 )   1,336     (42,953 )   8,072 Net income (loss) available to common shareholders $ (29,043 ) $ 18,619   $ (96,763 ) $ 13,432   Net income (loss) per share from continuing operations - basic $ (0.43 ) $ 0.46   $ (1.21 ) $ 0.14 Net income (loss) per share from discontinued operations - basic $ (0.09 ) $ 0.03   $ (0.96 ) $ 0.21 Net income (loss) per share - basic $ (0.52 ) $ 0.49   $ (2.17 ) $ 0.35   Net income (loss) per share from continuing operations - diluted $ (0.43 ) $ 0.46   $ (1.21 ) $ 0.14 Net income (loss) per share from discontinued operations - diluted $ (0.09 ) $ 0.03   $ (0.96 ) $ 0.21 Net income (loss) per share - diluted $ (0.52 ) $ 0.49   $ (2.17 ) $ 0.35 Weighted average shares - basic 55,419,204 37,759,975 44,567,357 37,755,588 Weighted average shares - diluted 55,790,543 37,813,345 44,776,138 38,074,218   (a) For loss periods the weighted averages shares - basic is used in both the basic and diluted computations. Balance sheet   December 31,   September 30,   June 30,   December 31,   2016 2016 2016 2015 (dollars in thousands) Assets: Cash and cash equivalents Cash and due from banks $ 4,127 $ 4,061 $ 4,006 $ 7,643 Interest earning deposits at Federal Reserve Bank 955,733 312,605 528,094 1,147,519 Securities sold under agreements to resell   39,199     39,463     39,360     -   Total cash and cash equivalents   999,059     356,129     571,460     1,155,162     Investment securities, available-for-sale, at fair value 1,248,613 1,334,927 1,328,693 1,070,098 Investment securities, held-to-maturity 93,467 93,495 93,537 93,590 Loans held for sale, at fair value 663,140 562,957 441,593 489,938 Loans, net of deferred fees and costs 1,222,911 1,198,237 1,182,106 1,078,077 Allowance for loan and lease losses   (6,332 )   (6,058 )   (5,398 )   (4,400 ) Loans, net   1,216,579     1,192,179     1,176,708     1,073,677   Federal Home Loan Bank & Atlantic Community Bancshares stock 1,614 11,014 12,289 1,062 Premises and equipment, net 24,125 21,797 22,429 21,631 Accrued interest receivable 10,589 10,496 10,271 9,471 Intangible assets, net 6,906 5,682 6,074 4,929 Other real estate owned 104 - - - Deferred tax asset, net 37,862 29,765 28,870 36,207 Investment in unconsolidated entity 127,430 157,396 162,275 178,520 Assets held for sale from discontinued operations 360,711 386,155 487,373 583,909 Other assets   50,683     55,519     60,203     47,629   Total assets $ 4,840,882   $ 4,217,511   $ 4,401,775   $ 4,765,823     Liabilities: Deposits Demand and interest checking $ 3,816,524 $ 3,364,103 $ 3,569,669 $ 3,602,376 Savings and money market 421,780 402,832 389,851 383,832 Time deposits   -     -     101,160     428,549   Total deposits   4,238,304     3,766,935     4,060,680     4,414,757     Securities sold under agreements to repurchase 274 353 318 925 Short-term borrowings - 70,000 - - Long-term borrowings 263,099 - - - Subordinated debenture 13,401 13,401 13,401 13,401 Other liabilities   27,112     27,744     37,094     16,739   Total liabilities $ 4,542,190   $ 3,878,433   $ 4,111,493   $ 4,445,822     Shareholders' equity: Common stock - authorized, 75,000,000 shares of $1.00 par value; 55,419,204 and 37,861,303 shares issued at December 31, 2016 and 2015, respectively 55,419 55,419 37,945 37,861 Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 ) Additional paid-in capital 360,564 359,793 301,680 300,549 Accumulated deficit (112,212 ) (83,169 ) (57,721 ) (15,449 ) Accumulated other comprehensive income (loss)   (4,213 )   7,901     9,244     (2,094 ) Total shareholders' equity   298,692     339,078     290,282     320,001     Total liabilities and shareholders' equity $ 4,840,882   $ 4,217,511   $ 4,401,775   $ 4,765,823   Average balance sheet and net interest income   Three months ended December 31, 2016   Three months ended December 31, 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 ** $ 1,717,927 $ 18,374 4.28 % $ 1,416,176 $ 14,502 4.10 % Leases - bank qualified* 21,018 414 7.88 % 28,658 487 6.80 % Investment securities-taxable 1,371,209 8,437 2.46 % 1,022,914 5,290 2.07 % Investment securities-nontaxable* 37,529 156 1.66 % 248,662 2,203 3.54 % Interest earning deposits at Federal Reserve Bank 403,834 560 0.55 % 751,126 595 0.32 % Federal funds sold and securities purchased under agreement to resell 39,485   151 1.53 % 31,406   112 1.43 % Net interest earning assets 3,591,002 28,092 3.13 % 3,498,942 23,189 2.65 %   Allowance for loan and lease losses (5,781 ) (4,178 ) Assets held for sale from discontinued operations 377,044 3,238 3.44 % 617,983 6,650 4.30 % Other assets 257,469   321,170   $ 4,219,734   $ 4,433,917     Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 3,405,296 $ 2,182 0.26 % $ 3,518,223 $ 2,689 0.31 % Savings and money market 407,039 498 0.49 % 378,301 581 0.61 % Time -   - 0.00 % 174,530   263 0.60 % Total deposits 3,812,335 2,680 0.28 % 4,071,054 3,533 0.35 %   Short-term borrowings 55,913 96 0.69 % 18,152 12 0.00 % Repurchase agreements 304 - 0.00 % 1,148 1 0.35 % Subordinated debt 13,401   137 4.09 % 13,401   120 3.58 % Total deposits and interest bearing liabilities 3,881,953 2,913 0.30 % 4,103,755 3,666 0.36 %   Other liabilities 18,896   13,313   Total liabilities 3,900,849 4,117,068   Shareholders' equity 318,885   316,849   $ 4,219,734   $ 4,433,917   Net interest income on tax equivalent basis* $ 28,417 $ 26,173   Tax equivalent adjustment 200 942   Net interest income $ 28,217 $ 25,231 Net interest margin * 2.84 % 2.52 %               * 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, 2016   Year ended December 31, 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 ** $ 1,587,306 $ 66,436 4.19% $ 1,245,189 $ 48,733 3.91% Leases - bank qualified* 20,718 1,748 8.44% 25,126 1,734 6.90% Investment securities-taxable 1,303,445 31,219 2.40% 989,705 19,918 2.01% Investment securities-nontaxable* 54,271 1,139 2.10% 452,526 16,646 3.68% Interest earning deposits at Federal Reserve Bank 466,728 2,237 0.48% 935,093 2,354 0.25% Federal funds sold and securities purchased under agreement to resell 30,448 450 1.48% 40,402 578 1.43% Net interest-earning assets 3,462,916 103,229 2.98% 3,688,041 89,963 2.44%   Allowance for loan and lease losses (4,741) (4,111) Assets held for sale 490,115 18,275 3.73% 715,116 28,925 4.04% Other assets 266,777 311,501 $ 4,215,067 $ 4,710,547   Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 3,347,191 $ 9,399 0.28% $ 3,975,475 $ 10,982 0.28% Savings and money market 394,434 1,526 0.39% 337,168 1,867 0.55% Time 77,576 447 0.58% 44,789 275 0.61% Total deposits 3,819,201 11,372 0.30% 4,357,432 13,124 0.30%   Short-term borrowings 57,517 359 0.62% 4,575 12 0.26% Repurchase agreements 685 2 0.29% 5,224 15 0.29% Subordinated debt 13,401 520 3.88% 13,401 448 3.34% Total deposits and interest bearing liabilities 3,890,804 12,253 0.31% 4,380,632 13,599 0.31%   Other liabilities 14,916 10,403 Total liabilities 3,905,720 4,391,035   Shareholders' equity 309,347 319,512 $ 4,215,067 $ 4,710,547 Net interest income on tax equivalent basis* 109,251 105,289   Tax equivalent adjustment 1,010 6,433   Net interest income $ 108,241 $ 98,856 Net interest margin * 2.74% 2.37%               * Full taxable equivalent basis, using a 35% statutory tax rate. ** Includes loans held for sale. Allowance for loan and lease losses:   Year ended       December 31,   December 31, 2016 2015 (dollars in thousands)   Balance in the allowance for loan and lease losses at beginning of period (1) $ 4,400   $ 3,638     Loans charged-off: SBA non real estate 128 111 SBA commercial mortgage - - Direct lease financing 119 30 Other consumer loans   1,211     1,220   Total   1,458     1,361     Recoveries: SBA non real estate 1 - Direct lease financing 17 - Other consumer loans   12     23   Total   30     23   Net charge-offs 1,428 1,338 Provision charged to operations   3,360     2,100     Balance in allowance for loan and lease losses at end of period $ 6,332   $ 4,400   Net charge-offs/average loans 0.09 % 0.11 % Net charge-offs/average assets 0.03 % 0.03 % (1) Excludes activity from assets held for sale   Loan portfolio: December 31, September 30, June 30, December 31, 2016 2016 2016 2015 (dollars in thousands)   SBA non real estate $ 74,644 $ 74,262 $ 71,596 $ 68,887 SBA commercial mortgage 126,159 117,053 116,617 114,029 SBA construction   8,826     6,317     3,751   6,977 Total SBA loans 209,629 197,632 191,964 189,893 Direct lease financing 346,645 332,632 315,639 231,514 SBLOC 630,400 621,456 607,017 575,948 Other specialty lending 11,073 20,076 40,543 48,315 Other consumer loans   17,374     19,375     20,005   23,180 1,215,121 1,191,171 1,175,168 1,068,850 Unamortized loan fees and costs   7,790     7,066     6,938   9,227 Total loans, net of deferred loan fees and costs $ 1,222,911   $ 1,198,237   $ 1,182,106 $ 1,078,077   Small business lending portfolio: December 31, September 30, June 30, December 31, 2016 2016 2016 2015 (dollars in thousands)   SBA loans, including deferred fees and costs 215,786 203,196 197,544 197,966 SBA loans included in HFS   154,016     146,450     136,660   109,174 Total SBA loans $ 369,802   $ 349,646   $ 334,204 $ 307,140 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 December 31, 2016 The Bancorp, Inc. 7.06 % 13.84 % 14.13 % 13.84 % The Bancorp Bank 6.83 % 13.31 % 13.60 % 13.31 % "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   Year ended December 31, December 31, 2016   2015 2016   2015 Selected operating ratios: Return on average assets (annualized) nm 1.67 % nm 0.28 % Return on average equity (annualized) nm 23.31 % nm 4.19 % Net interest margin 2.84 % 2.52 % 2.74 % 2.37 % Book value per share $ 5.40 $ 8.47 $ 5.40 $ 8.47   December 31, September 30, June 30, December 31, 2016 2016 2016 2015 Asset quality ratios: Nonperforming loans to total loans (2) 0.30 % 0.58 % 0.53 % 0.22 % Nonperforming assets to total assets (2) 0.08 % 0.16 % 0.14 % 0.05 % Allowance for loan and lease losses to total loans 0.52 % 0.51 % 0.46 % 0.41 %   Nonaccrual loans $ 2,972 $ 4,021 $ 3,147 $ 1,927 Other real estate owned   104     -     -     -   Total nonperforming assets $ 3,076   $ 4,021   $ 3,147   $ 1,927     Loans 90 days past due still accruing interest $ 661   $ 2,933   $ 3,172   $ 403     (2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.   Three months ended December 31, September 30, June 30, December 31, 2016 2016 2016 2015 (in thousands) Gross dollar volume (GDV) (1): Prepaid card GDV $ 10,647,520   $ 10,459,097   $ 11,442,294   $ 9,839,782     (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 Cumulative Mark loan principal marks chargedowns Cumulative 12.31.16 12.31.16   6.30.16   marks   % to principal 12 loan relationships >$8 million $ 232 $ 232 Add back mark chargedowns to principal   20 Total principal to compare to cumulative marks $ 252 $ 40 $ 20 $ 60 24 %   Other loans   92       10   -   10   11 % Total discontinued loan principal * $ 324 $ 50 $ 20 $ 70   * Of the $324 million commercial loan principal at 12.31.16, $93.5 million was non performing. Discontinued operations portfolio composition 12/31/2016:       Collateral type  

Unpaid principalbalance

  Mark 12.31.16  

Mark as % ofportfolio

(dollars in millions) Commercial real estate - non-owner occupied: Retail $ 60 $ 24.5 41 % Other 51 0.2 - Office 15 0.2 1 % Construction and land 83 2.1 3 %

Commercial non-real estate and industrial

38 15.5 41 % 1 to 4 family construction 31 1.3 4 % First mortgage residential non-owner occupied 21 5.2 25 % Commercial real estate owner occupied: Retail 11 0.2 2 % Other 2 -

-

Office - -

-

First mortgage residential owner occupied 4 0.2 5 % Multifamily 3 - - Residential junior mortgage 3 0.1 3 % Other     2     -   -   Total $ 324 $ 49.5 15 % Analysis of Walnut Street marks:       Loan activity   Marks (dollars in millions)   Original Walnut Street loan balance 12.31.14 $ 267 Marks through 12.31.14 sale date   (58 ) $ (58 ) Sales price of Walnut Street 209 Equity investment from independent investor   (16 ) 12.31.2014 Bancorp book value 193 Additional marks 2015 and 2016 (42 ) (42 ) Payments received   (24 ) 12.31.2016 Bancorp book value* $ 127   Total marks $ (100 ) Divided by: Original Walnut Street loan balance $ 267 Percentage of total mark to original balance 37 %   * Approximately 21% of expected principal recoveries were classified as non performing as of 12.31.16. Walnut Street portfolio composition 12/31/2016:     Collateral type   % of Portfolio Commercial real estate non-owner occupied Retail 25.2 % Other 23.4 % Office 19.7 % Construction and land 19.7 % Commercial non real estate and industrial 4.7 % First mortgage residential owner occupied 3.5 % First mortgage residential non-owner occupied 2.7 % Other   1.1 % Total 100.0 %

The Bancorp Investor RelationsAndres Viroslav, Director, Investor Relations215-861-7990aviroslav@thebancorp.comorThe Bancorp Media RelationsRob Tacey, Director, Public Relations302-385-1418rtacey@thebancorp.com

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