TBBK Bancorp Inc

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