The Bancorp, Inc. Reports Third Quarter 2012 Financial Results

The Bancorp, Inc. Reports Third Quarter 2012 Financial Results

WILMINGTON, Del.--(BUSINESS WIRE)-- The Bancorp, Inc. ("Bancorp") (NAS: TBBK) , a financial holding company, today reported financial results for the third quarter of 2012.

Net income for the third quarter of 2012 increased to $3.6 million compared to $2.3 million in the third quarter of 2011, an increase of 56%.


Financial Highlights

  • 21% increase in total revenues to $35.6 million compared to $29.4 million in third quarter 2011.

  • 57% increase in diluted earnings per share to $0.11 for the third quarter of 2012 versus $0.07 for the third quarter of 2011. Diluted earnings per share amounted to $0.34 for the nine months ended September 30, 2012 compared to diluted earnings per share of $0.18 for the nine months ended September 30, 2011.

  • 85% increase in quarterly prepaid card fees to $7.5 million compared to $4.0 million in third quarter 2011.

  • 67% increase in quarterly non-interest income (including prepaid card fees) to $11.1 million compared to $6.7 million in third quarter 2011 excluding security gains and other than temporary impairment (OTTI).

  • 10% increase in quarterly net interest income to $21.6 million compared to $19.6 million in third quarter 2011. On a linked quarter basis, net interest income grew at an annualized 13% rate, primarily reflecting higher loan income.

  • The linked quarter net interest margin increased to 2.90% from 2.59%.

  • At September 30, 2012 the portfolio of loans and securities had grown to $2.5 billion, an increase of $372 million, or 17% over third quarter 2011. Outstanding loans increased 9% over that period.

  • Average deposits for third quarter 2012 totaled $2.8 billion, an increase of $295 million or 12% over 2011, reflecting growth in all major deposit categories. The interest paid on deposits between those respective periods decreased to 0.37% from 0.45%.

Betsy Z. Cohen, Bancorp's Chief Executive Officer, said, "Third quarter 2012 saw a continuation in our earnings growth as a result of significant increases in both our non-interest and net interest income. Adjusted operating earnings, a non-GAAP measure, increased to $11.3 million, a $2.8 million, or 32% increase over the comparable prior year period. Our position as a leader in the prepaid card space continues to drive the increase in non-interest income. On the asset side, we grew our loans 9% over the year in a difficult lending environment. We continue to target what we believe to be lower risk assets including Small Business Administration (SBA) loans, security backed lines of credit and vehicle fleet leasing. Consumer loans, primarily security backed lines of credit, grew 35% over the past year, to $276 million. Due to the historically demonstrated strength of related collateral, losses on security backed loans have been virtually non-existent. The Company is well capitalized, and book value per share increased from $8.09 at September 30, 2011 to $8.73 at September 30, 2012, or an increase of 8%."

Financial Results

Bancorp reported net income available to common shareholders for the three months ended September 30, 2012 of $3.6 million or diluted earnings per share of $0.11, based on 33,172,852 weighted average shares outstanding, compared to net income available to common shareholders of $2.3 million or diluted earnings per share of $0.07, based on 33,203,662 weighted average shares outstanding, for the three months ended September 30, 2011. Adjusted operating earnings, a non-GAAP measure, increased to $11.3 million for the three months ended September 30, 2012 compared to $8.6 million for the three months ended September 30, 2011. The following is a reconciliation of adjusted operating earnings to net income available to common shareholders (for the three month period):

Quarter ended

Nine months ended

September 30,

September 30,

September 30,

September 30,

2012

2011

2012

2011

Net income available to common shareholders

$

3,561

$

2,282

$

11,387

$

5,630

Income tax expense

1,795

1,209

6,172

2,929

Gains on sales of investment securities

(107

)

(20

)

(107

)

(623

)

Other than temporary impairment in securities

-

-

126

75

Losses and writedowns on other real estate owned

533

64

2,405

555

Provision for loan and lease losses

5,540

5,019

15,047

16,654

Adjusted operating earnings (1)

$

11,322

$

8,554

$

35,030

$

25,220

(1)

As a supplement to GAAP, Bancorp has provided this non-GAAP performance result. The Bancorp believes that this non-GAAP financial measure is useful because it allows investors to assess its operating performance. Management utilizes adjusted operating earnings to measure the combined impact of changes in net interest income, non-interest income and certain other expenses. Other companies may calculate adjusted operating earnings differently. Although this non-GAAP financial measure is intended to enhance investors' understanding of Bancorp's business and performance, it should not be considered, and is not intended to be, a substitute for GAAP.

Balance Sheet Summary

At September 30, 2012, Bancorp's total assets amounted to $3.1 billion, a decrease of $280 million or 8% over total assets at September 30, 2011. During the year ended September 30, 2012, Bancorp terminated two large balance deposit relationships which totaled $1.1 billion at September 30, 2011. The relationships were terminated to eliminate certain seasonal deposit fluctuations and reduce interest expense. During that period, investments increased to $658 million, an increase of $223 million or 51%; loans increased to $1.9 billion, an increase of $149 million or 9%; and deposits decreased to $2.8 billion, a decrease of $292 million or 10%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EDT Wednesday, October 24, 2012 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.700.7101, access code 85269151. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Wednesday, October 31, 2012 by dialing 888.286.8010, access code 85079916.

About Bancorp

The Bancorp, Inc. is a financial holding company that operates The Bancorp Bank, an FDIC-insured commercial bank that delivers a full array of financial services both directly and through private-label affinity programs nationwide. The Bancorp Bank's regional community bank operations serve the needs of small and mid-size businesses and their principals in the Philadelphia-Wilmington region.

Forward Looking Statements

Statements in this earnings release regarding The Bancorp, Inc.'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 The Bancorp, Inc.'s filings with the SEC, including the "Risk Factors" sections of The Bancorp Inc.'s 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 presentation. The Bancorp, Inc. does not undertake to publicly revise or update forward-looking statements in this presentation to reflect events or circumstances that arise after the date of this presentation, except as may be required under applicable law.

Three months ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

(dollars in thousands except per share data)

Condensed income statement

Net interest income

$

21,561

$

19,595

$

63,358

$

56,050

Provision for loan and lease losses

5,540

5,019

15,047

16,654

Non-interest income

Gain on sales of investment securities

107

20

107

623

Other than temporary impairment of investment securities

-

-

(126

)

(75

)

Other non-interest income

11,126

6,653

33,991

21,595

Total non-interest income

11,233

6,673

33,972

22,143

Non-interest expense

Losses and write downs on other real estate owned

533

64

2,405

555

Other non-interest expense

21,365

17,694

62,319

52,425

Total non-interest expense

21,898

17,758

64,724

52,980

Net income before income tax expense

5,356

3,491

17,559

8,559

Income tax expense

1,795

1,209

6,172

2,929

Net income available to common shareholders

$

3,561

$

2,282

$

11,387

$

5,630

Basic earnings per share

$

0.11

$

0.07

$

0.34

$

0.18

Diluted earnings per share

$

0.11

$

0.07

$

0.34

$

0.18

Weighted average shares - basic

33,105,194

33,196,281

33,101,281

31,500,347

Weighted average shares - diluted

33,172,852

33,203,662

33,133,307

31,506,808

Balance sheet

September 30,

June 30,

December 31,

September 30,

2012

2012

2011

2011

(dollars in thousands)

Assets:

Cash and cash equivalents

Cash and due from banks

$

4,648

$

5,560

$

96,228

$

259,116

Interest earning deposits at Federal Reserve Bank

540,010

692,582

652,946

932,152

Total cash and cash equivalents

544,658

698,142

749,174

1,191,268

Investment securities, available-for-sale, at fair value

634,894

582,219

448,204

416,362

Investment securities, held-to-maturity

22,707

17,796

18,044

18,095

Federal Home Loan Bank & Atlantic Central Bankers Bank stock

4,160

4,596

5,088

5,354

Loans held for sale, at fair value

7,970

-

-

-

Loans, net of deferred costs

1,856,992

1,804,312

1,744,828

1,715,648

Allowance for loan and lease losses

(33,071

)

(31,171

)

(29,568

)

(27,671

)

Loans, net

1,823,921

1,773,141

1,715,260

1,687,977

Premises and equipment, net

9,802

8,694

8,358

8,307

Accrued interest receivable

10,061

9,297

8,476

8,541

Intangible assets, net

7,254

7,504

8,004

8,254

Other real estate owned

3,065

4,919

7,405

6,415

Deferred tax asset, net

19,708

20,716

21,941

19,902

Other assets

24,925

23,178

20,727

22,538

Total assets

$

3,113,125

$

3,150,202

$

3,010,681

$

3,393,013

Liabilities:

Deposits

Demand and interest checking

$

2,300,025

$

2,335,960

$

2,192,938

$

2,649,005

Savings and money market

459,725

456,614

454,343

388,603

Time deposits

12,606

20,619

25,528

25,552

Time deposits, $100,000 and over

8,819

9,104

9,742

10,341

Total deposits