The Bancorp, Inc. Reports Fourth Quarter and Fiscal 2013 Financial Results

WILMINGTON, Del.--(BUSINESS WIRE)--

The Bancorp, Inc. ("Bancorp") TBBK, a financial holding company, today reported financial results for the fourth quarter and fiscal 2013.

Net income for the fourth quarter of 2013 increased to $7.3 million compared to $5.2 million in fourth quarter 2012, an increase of 40%. Year to date net income increased to $25.1 million in 2013 from $16.6 million in 2012, an increase of 51%.

Financial Highlights

• 27% increase in diluted earnings per share to $0.19 for the fourth quarter of 2013 versus $0.15 for the fourth quarter of 2012. The number of shares used in calculating diluted earnings per share increased to 38.3 million from 33.9 million in 2012. On a year to date basis, diluted earnings per share increased to $0.66 in 2013 from $0.50 in 2012, an increase of 32%.
• 25% increase in total quarterly revenues to $50.5 million compared to $40.3 million in fourth quarter 2012.
• 21% increase in adjusted operating earnings, a non GAAP measure, to $16.8 million for the fourth quarter of 2013 versus $13.9 million for the quarter ended December 31, 2012.
• 40% increase in quarterly non-interest income, to $21.2 million compared to $15.1 million in fourth quarter 2012, excluding security gains and other than temporary impairment charges.
• 20% increase in prepaid card fees to $11.7 million compared to $9.7 million in fourth quarter 2012.
• 15% increase in quarterly net interest income to $25.4 million compared to $22.1 million in fourth quarter 2012.

Betsy Z. Cohen, Bancorp's Chief Executive Officer, said, “Our earnings growth in the fourth quarter reflected increases both in net interest and non-interest income. These drivers resulted in growth of 40% in net income, 21% in adjusted operating earnings and 27% in earnings per diluted share. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income increased 20% to $11.7 million for the quarter, compared to fourth quarter 2012. Average deposits for the fourth quarter grew 28% between those periods and reflected growth in all major deposit categories. At December 31, 2013 our portfolio of loans and securities had grown to $3.4 billion, an increase of $699.6 million, or 26% over December 31, 2012. Outstanding loans increased 6% over that period. Asset growth within our targeted lending segments – Small Business Administration (SBA), security backed lines of credit and small fleet leasing – contributed disproportionately. Our targeted lines of business grew as follows: SBA loans by 63%, security backed lines of credit by 25% and small fleet leasing by 12%. Book value per share increased 5%, from $9.06 at December 31, 2012 to $9.53 at December 31, 2013.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended December 31, 2013 of $7.3 million, or diluted earnings per share of $0.19, based on 38,349,802 weighted average diluted shares outstanding, compared to net income available to common shareholders of $5.2 million, or diluted earnings per share of $0.15, based on 33,921,763 weighted average diluted shares outstanding, for the three months ended December 31, 2012. Adjusted operating earnings, a non-GAAP measure, increased to $16.8 million for the three months ended December 31, 2013 compared to $13.9 million for the three months ended December 31, 2012. The following is a reconciliation of net income available to common shareholders to adjusted operating earnings, a non-GAAP measure:

		Quarter ended								Year ended
		December 31,				December 31,				December 31,				December 31,
		2013				2012				2013				2012
Net income available to common shareholders		$	7,324			$	5,237			$	25,110			$	16,624
Income tax expense			4,098				1,622				13,825				7,794
Gains on sales of investment securities			(1,104	)			(554	)			(1,889	)			(661	)
Other than temporary impairment on securities			-				76				20				202
Losses and write-downs on other real estate owned			(8	)			103				1,461				2,508
Provision for loan and lease losses			6,500				7,391				29,500				22,438
Adjusted operating earnings (1)		$	16,810			$	13,875			$	68,027			$	48,905

(1)		As a supplement to GAAP, Bancorp has provided this non-GAAP performance measure. 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 net income calculated pursuant to GAAP.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM ET Friday, January 24, 2014 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.713.8563, access code 33866724. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Friday, January 31, 2014 by dialing 888.286.8010, access code 20461868.

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. 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.

The Bancorp, Inc.
Financial highlights
(unaudited)
		Three months ended								Year ended
		December 31,								December 31,
		2013				2012				2013				2012
		(dollars in thousands except per share data)
Condensed income statement
Net interest income		$	25,402			$	22,086			$	95,782			$	85,444
Provision for loan and lease losses			6,500				7,391				29,500				22,438
Non-interest income
Gain on sales of investment securities			1,104				554				1,889				661
Other than temporary impairment of investment securities			-				(76	)			(20	)			(202	)
Other non-interest income			21,230				15,147				81,561				49,138
Total non-interest income			22,334				15,625				83,430				49,597
Non-interest expense
Losses and write downs on other real estate owned			(8	)			103				1,461				2,508
Other non-interest expense			29,822				23,358				109,316				85,677
Total non-interest expense			29,814				23,461				110,777				88,185
Net income before income tax expense			11,422				6,859				38,935				24,418
Income tax expense			4,098				1,622				13,825				7,794
Net income available to common shareholders		$	7,324			$	5,237			$	25,110			$	16,624
Basic earnings per share		$	0.20			$	0.15			$	0.67			$	0.50
Diluted earnings per share		$	0.19			$	0.15			$	0.66			$	0.50
Weighted average shares - basic			37,521,647				33,603,879				37,425,197				33,227,755
Weighted average shares - diluted			38,349,802				33,921,763				38,121,084				33,288,278

Balance sheet		December 31,				September 30,				June 30,				December 31,
		2013				2013				2013				2012
		(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks		$	30,109			$	32,026			$	21,560			$	19,982
Interest earning deposits at Federal Reserve Bank			1,196,515				657,618				622,989				948,111
Securities sold under agreements to resell			7,544				40,811				40,240				-
Total cash and cash equivalents			1,234,168				730,455				684,789				968,093
Investment securities, available-for-sale, at fair value			1,253,117				1,083,154				1,021,848				718,065
Investment securities, held-to-maturity			97,205				97,459				95,662				45,179
Federal Home Loan Bank & Atlantic Central Bankers Bank stock			3,209				3,209				3,209				3,621
Loans held for sale, at fair value			68,193				25,557				49,355				11,341
Loans, net of deferred fees and costs			1,958,445				1,991,455				1,967,382				1,902,854
Allowance for loan and lease losses			(38,182	)			(39,151	)			(40,274	)			(33,040	)
Loans, net			1,920,263				1,952,304				1,927,108				1,869,814
Premises and equipment, net			15,659				14,252				13,709				10,368
Accrued interest receivable			13,131				12,556				12,360				9,857
Intangible assets, net			7,612				6,253				6,503				7,004
Other real estate owned			26,295				20,111				6,308				4,241
Deferred tax asset, net			29,395				26,434				27,613				22,789
Other assets			35,087				28,538				28,031				29,287
Total assets		$	4,703,334			$	4,000,282			$	3,876,495			$	3,699,659
Liabilities:
Deposits
Demand and interest checking		$	3,722,602			$	3,050,167			$	2,963,170			$	2,775,207
Savings and money market			536,162				504,447				469,238				517,098
Time deposits			9,773				9,920				12,502				12,582
Time deposits, $100,000 and over			4,452				4,683				5,747				8,334
Total deposits			4,272,989				3,569,217				3,450,657				3,313,221
Securities sold under agreements to repurchase			21,221				22,057				19,059				18,548
Accrued interest payable			79				73				95				103
Subordinated debenture			13,401				13,401				13,401				13,401
Other liabilities			37,101				42,201				49,091				17,709
Total liabilities		$	4,344,791			$	3,646,949			$	3,532,303			$	3,362,982
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,720,945 and 37,246,655 shares issued at December 31, 2013 and 2012, respectively			37,721				37,721				37,463				37,247
Treasury stock (100,000 shares)			(866	)			(866	)			(866	)			(866	)
Additional paid-in capital			293,515				292,715				286,321				282,708
Retained earnings (accumulated deficit)			27,615				20,291				19,993				7,347
Accumulated other comprehensive income			558				3,472				1,281				10,241
Total shareholders' equity			358,543				353,333				344,192				336,677
Total liabilities and shareholders' equity		$	4,703,334			$	4,000,282			$	3,876,495			$	3,699,659

Average balance sheet and net interest income			Three months ended December 31, 2013										Three months ended December 31, 2012
(dollars in thousands)			Average						Average				Average						Average
Assets:			Balance				Interest		Rate				Balance				Interest		Rate
Interest-earning assets:
Loans net of unearned fees and costs **		$	2,024,325			$	20,808		4.11	%		$	1,888,755			$	20,091		4.25	%
Leases - bank qualified*			18,680				243		5.20	%			15,030				211		5.62	%
Investment securities-taxable			886,975				4,654		2.10	%			602,749				3,310		2.20	%
Investment securities-nontaxable*			352,756				2,820		3.20	%			107,370				1,078		4.02	%
Interest earning deposits at Federal Reserve Bank			846,148				547		0.26	%			681,272				419		0.25	%
Federal funds sold/securities purchased under agreement to resell			39,610				146		1.47	%			1,689				7		1.69	%
Net interest earning assets			4,168,494				29,218		2.80	%			3,296,865				25,116		3.05	%
Allowance for loan and lease losses			(40,586	)									(34,018	)
Other assets			133,819										78,755
		$	4,261,727									$	3,341,602
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking		$	3,305,332			$	2,065		0.25	%		$	2,502,314			$	1,719		0.27	%
Savings and money market			519,506				510		0.39	%			480,473				569		0.47	%
Time			14,590				39		1.07	%			21,323				55		1.03	%
Total deposits			3,839,428				2,614		0.27	%			3,004,110				2,343		0.31	%
Repurchase agreements			21,103				15		0.28	%			19,090				20		0.42	%
Subordinated debt			13,401				115		3.43	%			13,401				216		6.45	%
Total deposits and interest bearing liabilities			3,873,932				2,744		0.28	%			3,036,601				2,579		0.34	%
Other liabilities			32,049										9,157
Total liabilities			3,905,981										3,045,758
Shareholders' equity			355,746										295,844
		$	4,261,727									$	3,341,602
Net interest income on tax equivalent basis*						$	26,474									$	22,537
Tax equivalent adjustment							1,072										451
Net interest income						$	25,402									$	22,086
Net interest margin *									2.54	%									2.73	%
* 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, 2013										Year ended December 31, 2012
(dollars in thousands)			Average						Average				Average						Average
Assets:			Balance				Interest		Rate				Balance				Interest		Rate
Interest-earning assets:
Loans net of unearned fees and costs **		$	1,996,042			$	82,449		4.13	%		$	1,807,770			$	77,685		4.30	%
Leases - bank qualified*			16,209				910		5.61	%			13,571				826		6.09	%
Investment securities-taxable			811,440				15,999		1.97	%			482,463				13,378		2.77	%
Investment securities-nontaxable*			246,490				7,320		2.97	%			103,901				4,331		4.17	%
Interest earning deposits at Federal Reserve Bank			931,468				2,328		0.25	%			974,762				2,433		0.25	%
Federal funds sold/securities purchased under agreement to resell			34,589				425		1.23	%			425				7		1.65	%
Net interest-earning assets			4,036,238				109,431		2.71	%			3,382,892				98,660		2.92	%
Allowance for loan and lease losses			(38,560	)									(32,320	)
Other assets			110,584										127,486
		$	4,108,262									$	3,478,058
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking		$	3,185,919			$	7,851		0.25	%		$	2,666,493			$	7,691		0.29	%
Savings and money market			500,113				2,133		0.43	%			455,860				2,401		0.53	%
Time			17,443				182		1.04	%			26,624				356		1.34	%
Total deposits			3,703,475				10,166		0.27	%			3,148,977				10,448		0.33	%
Repurchase agreements			18,442				54		0.29	%			22,508				95		0.42	%
Subordinated debt			13,401				548		4.09	%			13,401				869		6.48	%
Total deposits and interest bearing liabilities			3,735,318				10,768		0.29	%			3,184,886				11,412		0.36	%
Other liabilities			25,277										9,440
Total liabilities			3,760,595										3,194,326
Shareholders' equity			347,667										283,732
		$	4,108,262									$	3,478,058
Net interest income on tax equivalent basis*							98,663										87,248
Tax equivalent adjustment							2,881										1,804
Net interest income						$	95,782									$	85,444
Net interest margin *									2.44	%									2.58	%
* Fully 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,
			2013				2012
			(dollars in thousands)
Balance in the allowance for loan and lease losses at beginning of period			$	33,040			$	29,568
Loans charged-off:
Commercial				14,771				9,508
Construction				10,295				11,318
Lease financing				30				87
Residential mortgage				54				-
Consumer				488				340
Total				25,638				21,253
Recoveries:
Commercial				180				2,093
Construction				1,019				96
Lease financing				8				13
Residential mortgage				-				85
Consumer				73				-
Total				1,280				2,287
Net charge-offs				24,358				18,966
Provision charged to operations				29,500				22,438
Balance in allowance for loan and lease losses at end of period			$	38,182			$	33,040
Net charge-offs/average loans				1.21	%			1.04	%
Net charge-offs/average assets				0.59	%			0.55	%
Loan portfolio:			December 31,				September 30,				June 30,			December 31,
			2013				2013				2013			2012
			(dollars in thousands)
Commercial			$	450,113			$	470,072			$	481,537		$	470,109
Commercial mortgage (1)				625,810				654,456				651,034			617,069
Construction				258,889				255,272				266,911			258,684
Total commercial loans				1,334,812				1,379,800				1,399,482			1,345,862
Direct lease financing				175,610				177,797				172,250			156,697
Residential mortgage				94,850				94,564				93,960			97,717
Consumer and other loans				346,334				332,427				295,576			296,915
				1,951,606				1,984,588				1,961,268			1,897,191
Unamortized loan fees and costs				6,839				6,867				6,114			5,663
Total loans, net of deferred loan fees and costs			$	1,958,445			$	1,991,455			$	1,967,382		$	1,902,854
Supplemental loan data:
Construction 1-4 family			$	48,394			$	60,989			$	64,144		$	60,343
Commercial construction, acquisition and development				210,495				194,283				202,767			198,341
			$	258,889			$	255,272			$	266,911		$	258,684
(1) At December 31, 2013 our owner-occupied loans amounted to $197 million, or 31.4% of commercial mortgages.

Capital Ratios		Tier 1 capital to average assets		Tier 1 capital to risk-weighted assets		Total capital to risk-weighted assets
As of December 31, 2013
Bancorp		8.55%		14.56%		15.81%
The Bancorp Bank		6.69%		11.39%		12.64%
"Well capitalized" institution (under FDIC regulations)		5.00%		6.00%		10.00%
As of December 31, 2012
Bancorp		10.00%		16.39%		17.64%
The Bancorp Bank		7.25%		11.91%		13.16%
"Well capitalized" institution (under FDIC regulations)		5.00%		6.00%		10.00%

			Three months ended								Year ended
			December 31,								December 31,
			2013				2012				2013				2012
Selected operating ratios:
Return on average assets (annualized)				0.68	%			0.62	%			0.61	%			0.48	%
Return on average equity (annualized)				8.17	%			7.04	%			7.22	%			5.86	%
Net interest margin				2.54	%			2.73	%			2.44	%			2.58	%
Efficiency ratio (1)				63.93	%			63.14	%			62.47	%			65.62	%
Book value per share			$	9.53			$	9.06			$	9.53			$	9.06
			December 31,				September 30,				June 30,				December 31,
			2013				2013				2013				2012
Asset quality ratios:
Nonperforming loans to total loans (2)				2.08	%			2.46	%			2.16	%			1.56	%
Nonperforming assets to total assets (2)				1.42	%			1.73	%			1.26	%			0.92	%
Allowance for loan and lease losses to total loans				1.95	%			1.97	%			2.05	%			1.74	%
Nonaccrual loans			$	40,551			$	48,750			$	41,743			$	25,190
Other real estate owned				26,295				20,111				6,308				4,241
Total nonperforming assets			$	66,846			$	68,861			$	48,051			$	29,431
Loans 90 days past due still accruing interest			$	110			$	204			$	753			$	4,435
Gross Dollar Volume (GDV):
Prepaid card GDV			$	7,720,554			$	7,178,532			$	7,651,849			$	6,139,791

(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 the efficiency ratio to measure overhead as a percentage of revenue. Other companies may calculate the efficiency ratio 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 net income calculated pursuant to GAAP.

			Three months ended								Year ended
			December 31,								December 31,
			2013				2012				2013				2012
Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense (a)			$	29,814			$	23,461			$	110,777			$	88,185
Net interest income				25,402				22,086				95,782				85,444
Non-interest income				22,334				15,625				83,430				49,597
Less: Gain on sale of securities				(1,104	)			(554	)			(1,889	)			(661	)
Adjusted net interest and non-interest income (b)			$	46,632			$	37,157			$	177,323			$	134,380
(a) divided by (b)				63.93	%			63.14	%			62.47	%			65.62	%

(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.