The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial
holding company, today reported financial results for second
quarter 2017.
Highlights
- Net income of $18.9 million and
earnings per diluted share of $0.34 which includes an approximate
$12.0 million tax benefit resulting primarily from reversal of
valuation allowances.
- Net interest income increased 30% to
$27.2 million for the quarter ended June 30, 2017, compared to
$20.9 million for the quarter ended June 30, 2016.
- Net interest margin increased to 3.10%
for the quarter ended June 30, 2017, compared to 2.73% for the
quarter ended June 30, 2016.
- Loans and loans held for sale from
continuing operations increased 18% to $1.91 billion at June 30,
2017, compared to $1.62 billion at June 30, 2016.
- Direct lease financing increased 18% to
$371.0 million at June 30, 2017 from $315.6 million at June 30,
2016.
- Small Business Administration (“SBA”)
loans increased 13% to $376.6 million at June 30, 2017, from $334.2
million at June 30, 2016.
- The rate on our average deposits and
interest bearing liabilities of $3.90 billion in the second quarter
of 2017 was 0.37% with a rate of 0.40% for $2.06 billion of average
prepaid card deposits.
- Assets held for sale from discontinued
operations decreased 31% to $336.1 million at June 30, 2017, from
$487.4 million at June 30, 2016.
- Non-interest expense was reduced by
$6.4 million, to $37.4 million for the quarter ended June 30, 2017,
compared to $43.7 million for the quarter ended June 30, 2016,
excluding Bank Secrecy Act lookback expense for 2016.
- Consolidated leverage ratio increased
to 7.75% at June 30, 2017.
- Book value per common share at June 30,
2017, of $5.94 per share. The Bancorp and its subsidiary, The
Bancorp Bank, remain well capitalized.
The Bancorp reported net income of $18.9 million, or $0.34
earnings per diluted share, for the quarter ended June 30, 2017,
compared to a net loss of $31.4 million, or $0.83 loss per diluted
share for the quarter ended June 30, 2016. Net income from
continuing operations for the quarter ended June 30, 2017, was
$17.6 million, or $0.32 earnings per diluted share, compared to a
net loss of $17.8 million from continuing operations, or $0.47 loss
per diluted share, for the quarter ended June 30, 2016. Income from
continuing operations does not include any income which may result
from the reinvestment of the proceeds from sales or repayment 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 7.75%, 15.54%, 15.89% and 15.54%
respectively, compared to well capitalized minimums of 5%, 8%, 10%
and 6.5%, respectively.
Damian Kozlowski, The Bancorp’s Chief Executive Officer, said,
“The first quarter of 2017 was a turning point for our company and
our second quarter demonstrates that we have turned the corner on
our financial performance. Our run-rate earnings continue to
improve, reflecting further revenue momentum and the positive
results from our on-going restructuring and expense management
efforts.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp's Quarterly
Earnings Conference Call at 8:00 AM ET Friday, July 28, 2017 by
clicking on the webcast link on Bancorp's homepage at
www.thebancorp.com. Or, you may dial 844.775.2543, access code
51244121. You may listen to the replay of the webcast following the
live call on The Bancorp's investor relations website or
telephonically until Friday, August 4, 2017 by dialing
855.859.2056, access code 51244121.
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 Six months
ended June 30, June 30,
Condensed income statement
2017 2016 2017
2016 (dollars in thousands except per share data)
Net interest income $ 27,215 $ 20,890 $ 52,092
$ 41,446 Provision for loan and lease losses
350 1,060 1,350 1,060
Non-interest income Service fees on deposit accounts 1,520
978 3,195 1,825 Card payment and ACH processing fees 1,504 1,457
3,032 2,724 Prepaid card fees 13,234 13,510 26,781 27,084 Gain
(loss) on sale of loans 758 1,339 6,141 (94 ) Gain on sale of
investment securities 586 124 1,089 2,150 Change in value of
investment in unconsolidated entity 3 (13,936 ) (16 ) (13,124 )
Leasing income 832 464 1,383 868 Affinity fees 149 1,322 1,170
2,416 Gain on sale of health savings accounts 2,538 - 2,538 -
Loss from sale of European prepaid
operations
(3,437 ) - (3,437 ) - Other non-interest income 486
4,282 516 4,379 Total
non-interest income 18,173 9,540 42,392 28,228 Non-interest expense
Bank Secrecy Act and lookback consulting expenses - 13,421 - 27,736
Other non-interest expense 37,363 43,715
75,146 84,538 Total non-interest
expense 37,363 57,136 75,146
112,274 Income (loss) from continuing
operations before income tax expense 7,675 (27,766 ) 17,988 (43,660
) Income tax benefit (9,923 ) (10,004 ) (5,912
) (15,276 ) Net income (loss) from continuing operations
17,598 (17,762 ) 23,900 (28,384 ) Net income (loss) from
discontinued operations, net of tax 1,266
(13,598 ) 2,927 (13,888 ) Net income (loss)
available to common shareholders $ 18,864 $ (31,360 ) $
26,827 $ (42,272 ) Net income (loss) per share from
continuing operations - basic $ 0.32 $ (0.47 ) $ 0.43
$ (0.75 ) Net income (loss) per share from discontinued operations
- basic $ 0.02 $ (0.36 ) $ 0.05 $ (0.37 ) Net income
(loss) per share - basic $ 0.34 $ (0.83 ) $ 0.48 $
(1.12 ) Net income (loss) per share from continuing
operations - diluted $ 0.32 $ (0.47 ) $ 0.43 $ (0.75
) Net income (loss) per share from discontinued operations -
diluted $ 0.02 $ (0.36 ) $ 0.05 $ (0.37 ) Net income
(loss) per share - diluted $ 0.34 $ (0.83 ) $ 0.48 $
(1.12 ) Weighted average shares - basic 55,689,439 37,745,250
55,612,288 37,824,996 Weighted average shares - diluted 56,030,035
37,910,575 55,889,985 37,934,548 For loss periods the
weighted averages shares - basic is used in both the basic and
diluted computations.
Balance
sheet June 30, March 31, December 31, June 30, 2017
2017 2016 2016
(dollars in thousands)
Assets: Cash and cash equivalents
Cash and due from banks $ 6,458 $ 4,671 $ 4,127 $ 4,006 Interest
earning deposits at Federal Reserve Bank 475,387 669,042 955,733
528,094 Securities sold under agreements to resell 65,076
65,248 39,199 39,360
Total cash and cash equivalents 546,921
738,961 999,059 571,460
Investment securities, available-for-sale, at fair value 1,149,116
1,215,892 1,248,614 1,328,693 Investment securities,
held-to-maturity 93,419 93,443 93,467 93,537 Loans held for sale,
at fair value 542,819 480,913 663,140 441,593 Loans, net of
deferred fees and costs 1,370,263 1,264,127 1,222,911 1,182,106
Allowance for loan and lease losses (7,353 ) (7,294 )
(6,332 ) (5,398 ) Loans, net 1,362,910
1,256,833 1,216,579 1,176,708
Federal Home Loan Bank & Atlantic Community Bancshares
stock 6,211 2,589 1,613 12,289 Premises and equipment, net 22,004
22,993 24,125 22,429 Accrued interest receivable 10,880 10,296
10,589 10,271 Intangible assets, net 5,515 5,844 6,906 6,074 Other
real estate owned 104 104 104 - Deferred tax asset, net 53,226
54,155 55,666 28,870 Investment in unconsolidated entity 120,862
125,982 126,930 162,275 Assets held for sale from discontinued
operations 336,142 341,286 360,711 487,373 Other assets
53,563 55,351 50,611
60,203 Total assets $ 4,303,692 $ 4,404,642 $
4,858,114 $ 4,401,775
Liabilities:
Deposits Demand and interest checking $ 3,437,482 $ 3,607,076 $
3,816,524 $ 3,569,669 Savings and money market 438,602 428,723
421,780 389,851 Time deposits - -
- 101,160 Total deposits
3,876,084 4,035,799 4,238,304
4,060,680 Securities sold under agreements to
repurchase 273 273 274 318 Subordinated debenture 13,401 13,401
13,401 13,401 Long-term borrowings 42,680 - 263,099 - Other
liabilities
40,235
45,400 44,073 37,094
Total liabilities $
3,972,673
$ 4,094,873 $ 4,559,151 $ 4,111,493
Shareholders' equity: Common stock - authorized,
75,000,000 shares of $1.00 par value; 55,857,645 and 37,945,323
shares issued at June 30, 2017 and 2016, respectively 55,858 55,758
55,419 37,945 Treasury stock (100,000 shares) (866 ) (866 ) (866 )
(866 ) Additional paid-in capital 361,478 360,801 360,564 301,680
Accumulated deficit
(85,114
) (103,978 ) (111,941 ) (57,721 ) Accumulated other comprehensive
income (loss) (337 ) (1,946 ) (4,213 )
9,244 Total shareholders' equity
331,019
309,769 298,963 290,282
Total liabilities and shareholders' equity $
4,303,692
$ 4,404,642 $ 4,858,114 $ 4,401,775
Average balance sheet and net interest income
Three months ended June 30, 2017 Three months ended June 30, 2016
(dollars in thousands) Average Average Average
Average
Assets: Balance Interest Rate Balance
Interest Rate Interest-earning assets: Loans net of unearned fees
and costs ** $ 1,770,226 $ 19,748 4.46% $ 1,458,980 $ 15,080 4.13%
Leases - bank qualified* 21,539 415 7.71% 20,603 435 8.45%
Investment securities-taxable 1,249,890 9,138 2.92% 1,317,902 7,900
2.40% Investment securities-nontaxable* 14,632 107 2.93% 55,271 270
1.95% Interest earning deposits at Federal Reserve Bank 480,417
1,255 1.04% 348,150 378 0.43% Federal funds sold and securities
purchased under agreement to resell 65,355 333 2.04% 35,297 128
1.45% Net interest earning assets 3,602,059 30,996 3.44% 3,236,203
24,191 2.99% Allowance for loan and lease losses (7,190)
(4,313) Assets held for sale from discontinued operations 348,452
3,135 3.60% 537,252 5,327 3.97% Other assets 274,335 326,407 $
4,217,656 $ 4,095,549
Liabilities and Shareholders'
Equity: Deposits: Demand and interest checking $ 3,437,845 $
2,912 0.34% $ 3,264,909 $ 2,397 0.29% Savings and money market
434,792 520 0.48% 390,889 379 0.39% Time - - 0.00% 27,842 39 0.56%
Total deposits 3,872,637 3,432 0.35% 3,683,640 2,815 0.31%
Short-term borrowings 6,516 22 1.35% 71,440 110 0.62% Repurchase
agreements 273 - 0.00% 1,210 1 0.33% Subordinated debt 13,401 144
4.30% 13,401 128 3.82% Total deposits and interest bearing
liabilities 3,892,827 3,598 0.37% 3,769,691 3,054 0.32%
Other liabilities 4,434 22,922 Total liabilities 3,897,261
3,792,613 Shareholders' equity 320,395 302,936 $ 4,217,656 $
4,095,549 Net interest income on tax equivalent basis* $ 30,533 $
26,464 Tax equivalent adjustment 183 247 Net interest
income $ 30,350 $ 26,217 Net interest margin * 3.10% 2.73% *
Full taxable equivalent basis, using a 35% statutory tax rate. **
Includes loans held for sale.
Average balance
sheet and net interest income Six months ended June 30, 2017
Six months ended June 30, 2016 (dollars in thousands) Average
Average Average Average
Assets:
Balance Interest Rate Balance Interest Rate Interest-earning
assets: Loans net of unearned fees and costs ** $ 1,700,508 $
37,119 4.37 % $ 1,471,327 $ 30,636 4.16 % Leases - bank qualified*
21,361 811 7.59 % 20,422 916 8.97 % Investment securities-taxable
1,287,360 18,143 2.82 % 1,233,639 14,432 2.34 % Investment
securities-nontaxable* 15,025 218 2.90 % 65,558 765 2.33 % Interest
earning deposits at Federal Reserve Bank 616,345 2,771 0.90 %
573,595 1,280 0.45 % Federal funds sold and securities purchased
under agreement to resell 57,635 560 1.94 % 21,360
155 1.45 % Net interest-earning assets 3,698,234 59,622 3.22 %
3,385,901 48,184 2.85 % Allowance for loan and lease losses
(6,708 ) (4,356 ) Assets held for sale 340,900 6,496 3.81 % 562,860
11,146 3.96 % Other assets 285,428 312,405 $
4,317,854 $ 4,256,810
Liabilities and
Shareholders' Equity: Deposits: Demand and interest checking $
3,547,820 $ 5,699 0.32 % $ 3,373,084 $ 4,839 0.29 % Savings and
money market 432,267 1,167 0.54 % 389,270 604 0.31 % Time -
- 0.00 % 117,117 343 0.59 % Total deposits 3,980,087 6,866
0.35 % 3,879,471 5,786 0.30 % Short-term borrowings 3,276 22
1.34 % 35,720 110 0.62 % Repurchase agreements 274 - 0.00 % 1,033 1
0.19 % Subordinated debt 13,401 282 4.21 % 13,401 252
3.76 % Total deposits and interest bearing liabilities 3,997,038
7,170 0.36 % 3,929,625 6,149 0.31 % Other liabilities 5,824
22,043 Total liabilities 4,002,862 3,951,668
Shareholders' equity 314,992 305,142 $ 4,317,854
$ 4,256,810 Net interest income on tax equivalent
basis* 58,948 53,181 Tax equivalent adjustment 360 589
Net interest income $ 58,588 $ 52,592 Net interest margin *
2.90 % 2.56 % * Full taxable equivalent basis, using a 35%
statutory tax rate. ** Includes loans held for sale.
Allowance for loan and lease losses: Six months ended
Year ended June 30, June 30, December 31, 2017 2016 2016
(dollars in thousands) Balance in the allowance for loan and
lease losses at beginning of period (1) $6,332 $4,400 $4,400
Loans charged-off: SBA non real estate 136 - 128 Direct lease
financing 202 50 119 Other consumer loans 16 28 1,211 Total 354 78
1,458 Recoveries: SBA non real estate 2 1 1 Direct lease
financing - 10 17 Other consumer loans 23 5 12 Total 25 16 30 Net
charge-offs 329 62 1,428 Provision charged to operations 1,350
1,060 3,360 Balance in allowance for loan and lease losses
at end of period $7,353 $5,398 $6,332 Net charge-offs/average loans
0.02% 0.00% 0.09% Net charge-offs/average loans (annualized) 0.04%
0.01% 0.09% Net charge-offs/average assets 0.01% 0.00% 0.03% (1)
Excludes activity from assets held for sale.
Loan
portfolio: June 30, March 31, December 31, June 30, 2017 2017
2016 2016 (dollars in thousands) SBA non real estate $74,511
$75,800 $74,644 $71,596 SBA commercial mortgage 126,224 114,703
126,159 116,617 SBA construction 11,057 12,985 8,826 3,751 Total
SBA loans 211,792 203,488 209,629 191,964 Direct lease financing
371,002 363,172 346,645 315,639 SBLOC 718,707 660,423 630,400
607,017 Other specialty lending 44,389 12,443 11,073 40,543 Other
consumer loans 15,858 16,318 17,374 20,005 1,361,748 1,255,844
1,215,121 1,175,168 Unamortized loan fees and costs 8,515 8,283
7,790 6,938 Total loans, net of deferred loan fees and costs
$1,370,263 $1,264,127 $1,222,911 $1,182,106
Small
business lending portfolio: June 30, March 31, December 31,
June 30, 2017 2017 2016 2016 (dollars in thousands) SBA
loans, including deferred fees and costs 218,391 209,980 215,786
197,544 SBA loans included in HFS 158,252 159,831 154,016 136,660
Total SBA loans $376,643 $369,811 $369,802 $334,204
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 June 30, 2017 The Bancorp, Inc. 7.75% 15.54% 15.89% 15.54% The
Bancorp Bank
7.62%
15.29%
15.64%
15.29%
"Well capitalized" institution (under FDIC regulations) 5.00% 8.00%
10.00% 6.50% As of December 31, 2016 The Bancorp, Inc. 6.90%
13.34% 13.63% 13.34% The Bancorp Bank 6.84% 13.24% 13.53% 13.24%
"Well capitalized" institution (under FDIC regulations) 5.00% 8.00%
10.00% 6.50% Three months ended Six months ended June
30, June 30, 2017 2016
2017 2016
Selected operating
ratios: Return on average assets (annualized) 1.79 % nm 1.25 %
nm Return on average equity (annualized)
23.62
% nm
17.17
% nm Net interest margin 3.10 % 2.73 % 2.90 % 2.56 % Book value per
share $ 5.94 $ 7.67 $ 5.94 $ 7.67 June 30, March 31,
December 31, June 30, 2017 2017
2016 2016
Asset quality ratios:
Nonperforming loans to total loans (1) 0.41 % 0.55 % 0.30 % 0.53 %
Nonperforming assets to total assets (1) 0.13 % 0.16 % 0.08 % 0.14
% Allowance for loan and lease losses to total loans 0.54 % 0.58 %
0.52 % 0.46 % Nonaccrual loans $ 5,115 $ 5,369 $ 2,972 $
3,147 Other real estate owned 104 104
104 - Total nonperforming assets $
5,219 $ 5,473 $ 3,076 $ 3,147
Loans 90 days past due still accruing interest $ 494 $ 1,534
$ 661 $ 3,172 (1) Nonperforming loan
and asset ratios include nonaccrual loans and loans 90 days past
due still accruing interest. Three months ended June 30,
March 31, December 31, June 30, 2017 2017
2016 2016 (in thousands)
Gross dollar volume (GDV) (1)
: Prepaid card GDV $
11,894,601 $ 13,342,180 $ 10,647,520 $
11,442,294 (1) Gross dollar volume represents the
total dollar amount spent on prepaid and debit cards issued by The
Bancorp.
Analysis of Walnut Street marks:
Loan activity Marks (dollars in millions)
Original Walnut Street loan balance, December 31, 2014 $ 267 Marks
through December 31, 2014 sale date (58 ) $ (58 ) Sales
price of Walnut Street 209 Equity investment from independent
investor (16 ) December 31, 2014 Bancorp book value 193
Additional marks 2015 and 2016 (42 ) (42 ) Payments received
(30 ) June 30, 2017 Bancorp book value* $ 121 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 6/30/17.
Walnut Street
portfolio composition as of June 30, 2017 Collateral
type % of Portfolio Commercial real estate non-owner
occupied Retail 26.1 % Office 22.8 % Other 19.1 % Construction and
land 20.7 % Commercial non real estate and industrial 3.8 % First
mortgage residential owner occupied 3.5 % First mortgage
residential non-owner occupied 3.3 % Other 0.7 %
Total 100.0 %
Cumulative analysis of marks on
discontinued commercial loan principal as of June 30, 2017
Discontinued Cumulative % to original loan
principal marks principal (dollars in millions)
Commercial loan discontinued principal before marks $ 261
Florida mall held in discontinued OREO 42 24 Previous mark charges
25 25 Mark at June 30, 2017 22 Total $
328 $ 71 22 %
Analysis of large loan
relationship principal, non performing loans and distribution of
marks as of June 30, 2017
Performing Non performing Total Performing Non performing Total
loan principal loan principal loan principal
loan marks loan marks marks (in millions) 12
loan relationships > $8 million $ 159 $ 25 $ 184 $ 3 $ 8 $ 11
Loan relationships < $8 million 34 21
55 5 6 11 $ 193
$ 46 $ 239 $ 8 $ 14 $ 22
Quarterly activity for commercial loan discontinued
principal Commercial loan principal (in millions)
Commercial loan discontinued principal December 31, 2016 before
marks $ 324 Transfer of Florida mall to other real estate owned (42
) Net paydowns (16 ) Mark charges (5 ) Commercial loan
discontinued principal June 30, 2017 before marks $ 261 Marks at
June 30, 2017 (22 ) Net commercial loan exposure June 30,
2017 $ 239 Residential mortgages 64 Net loans $ 303
Florida mall in other real estate owned 18 Other 28 properties in
other real estate owned 15 Total discontinued assets
at June 30, 2017 $ 336
Discontinued
commercial loan composition as of June 30, 2017
Collateral type
Unpaidprincipalbalance
Mark June 30,2017
Mark as % ofportfolio
(dollars in millions) Commercial real estate - non-owner occupied:
Retail $ 16 $ 0.8 5 % Office 14 0.2 1 % Other 50 0.1 - Construction
and land 82 2.7 3 % Commercial non-real estate and industrial 32
11.7 37 % 1 to 4 family construction 28 1.3 5 % First mortgage
residential non-owner occupied 20 4.7 24 % Commercial real estate
owner occupied: Retail 10 0.1 1 % Office - - - Other 2 0.1 5 %
First mortgage residential owner occupied 4 0.2 5 % Residential
junior mortgage 1 0.1 10 % Other 2 - - Total $
261 $ 22.0 8 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006506/en/
The Bancorp, Inc. ContactAndres Viroslav,
215-861-7990aviroslav@thebancorp.com
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