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 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170209006287/en/
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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