The Bancorp, Inc. (TBBK) 8-K The Bancorp, Inc. Reports Second Quarter 2010 Financial Results

The Bancorp, Inc. Reports Second Quarter 2010 Financial Results

Wilmington, Delaware – July 22, 2010 - The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a bank holding company, today reported results for the quarter ended June 30, 2010.

Financial Highlights

-   Period end loans at June 30, 2010 totaled $1.6 billion, an increase of $117 million or 8% over June 30, 2009 and $49 million, or 3% over March 31, 2010.

-   Transaction account balances increased $422 million or 32% at June 30, 2010 over June 30, 2009, growing to 92% of total deposit balances.

-   Core operating earnings, a non-GAAP measure, increased to $5.9 million in the second quarter of 2010 from $5.3 million in the second quarter of 2009, an increase of 13%. A reconciliation of core operating earnings to GAAP net income is presented below.

-   Non-interest income, excluding securities gains, increased 48% or $1.5 million over second quarter 2009, reflecting significant increases in prepaid card and merchant acquiring fee income, which includes fees earned by processing merchant credit and debit card and ACH transactions.

-   Net interest income increased $720,000, or 4.5% over second quarter 2009.

-   Total assets grew from $1.732 billion to $2.123 billion or 23% between June 30, 2009 and June 30, 2010.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “In the second quarter we began to see the results of our efforts to increase net loans. We added $89 million of new loans, and netted $49 million of new loans or 3% of outstanding loans, on a linked quarter basis. Our SBA (Small Business Administration) program approved its first franchisor and we expect that the program will add to further loan growth in the third quarter.  Our health care deposit business also maintained its growth trajectory, with health care deposits growing 46% over deposits at June 30, 2009. This contributed to our decrease in deposit costs to 77 basis points in second quarter 2010, from 101 basis points in the same quarter of 2009.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended June 30, 2010 of $407,000 or diluted earnings per share of $0.02, based on 26,759,461 weighted average shares, compared to net income available to common shareholders of $125,000 or diluted earnings per share of $0.01, based on 15,351,843 weighted average shares, for the three months ended June 30, 2009.  The following is a reconciliation of core operating earnings to net income available to common shareholders:

	June 30,		June 30,
	2010		2009
Net income available to common shareholders	$	407	$	125
Preferred stock dividend and accretion		-		982
Income tax expense		197		632
Provision for loan and lease losses and losses on other real estate owned		5,806		4,200
Subtotal		6,410		5,939
Gains and losses on securities		469		670
Core operating earnings (1)	$	5,941	$	5,269

(1)   As a supplement to GAAP, Bancorp has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful because it allows investors to assess its operating performance, specifically its overall earnings capacity .Other companies may calculate core earnings differently.  Although this non-GAAP financial measure is intended to enhance investors’ understanding of the Company’s business and performance, it should not be considered, and is not intended to be, a substitute for GAAP.

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Capital Ratios

	Tier 1 capital			Tier 1 capital			Total capital
	to average			to risk-weighted			to risk-weighted
	assets ratio			assets ratio			assets ratio
As of June 30, 2010
The Company		9.76	%		12.82	%		14.07	%
The Bancorp Bank		8.28	%		10.90	%		12.15	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%
As of December 31, 2009
The Company		12.68	%		15.81	%		17.06	%
The Bancorp Bank		8.78	%		10.97	%		12.22	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%

Balance Sheet Summary

At June 30, 2010, Bancorp's total assets were $2.1 billion, an increase of $80.3 million or 4% over December 31, 2009. During that period, investments increased to $229.6 million, an increase of $114.6 million or 100%; net loans increased to $1.6 billion, an increase of $52.8 million or 3%; and total deposits increased to $1.9 billion, an increase of $227.1 million or 14%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 10:00 AM EDT Thursday, July 22, 2010 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.202.4367 using access code 88897175.  You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, July 29, 2010 by dialing 888.286.8010, access code 87682216.

About Bancorp

The Bancorp, Inc. is a bank holding company that operates The Bancorp Bank, an FDIC-insured commercial bank that delivers a full array of financial services and products 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.

The Bancorp, Inc. Contact

Andres Viroslav

215-861-7990

andres.viroslav@thebancorp.com

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The Bancorp, Inc.
Financial highlights
(unaudited)
	Three months ended					Six months ended
	June 30,					June 30,
	2010		2009			2010			2009
	(dollars in thousands except per share data)					(dollars in thousands except per share data)
Condensed income statement
Net interest income	$	16,689	$	15,969		$	32,969		$	30,885
Provision for loan and lease losses		5,806		2,500			9,954			5,500
Non-interest income
Gain and losses on securities		469		670			1,219			670
Other non-interest income		4,490		3,039			9,234			6,296
Total non-interest income		4,959		3,709			10,453			6,966
Non-interest expense
Loss on other real estate owned		-		1,700			-			1,700
Other non-interest expense		15,238		13,739			29,445			26,921
Total non-interest expense		15,238		15,439			29,445			28,621
Net income before income tax expense		604		1,739			4,023			3,730
Income tax expense		197		632			1,430			1,413
Net income		407		1,107			2,593			2,317
Less preferred stock dividends		-		(581	)		(433	)		(1,163	)
Less preferred stock accretion		-		(401	)		(5,809	)		(666	)
Net income (loss) available to common shareholders	$	407	$	125		$	(3,649	)	$	488
Basic earnings (loss) per share	$	0.02	$	0.01		$	(0.14	)	$	0.03
Diluted earnings (loss) per share	$	0.02	$	0.01		$	(0.14	)	$	0.03
Weighted average shares - basic		26,181,291		14,563,919			26,181,291			14,563,919
Weighted average shares - diluted		26,759,461		15,351,843			26,181,291			15,035,205

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Balance sheet	June 30,			March 31,			December 31,			June 30,
	2010			2010			2009			2009
Assets:
Cash and cash equivalents
Cash and due from banks	$	92,620		$	173,604		$	135,246		$	69,950
Interest bearing deposits		171,054			164,829			219,213			2,047
Federal funds sold		-			-			-			12,102
Total cash and cash equivalents		263,674			338,433			354,459			84,099
Investment securities, available-for-sale, at fair value		208,080			156,191			93,478			119,781
Investment securities, held-to-maturity		21,496			21,488			21,468			23,542
Loans, net of deferred costs		1,576,525			1,527,691			1,523,722			1,459,965
Allowance for loan and lease losses		(22,336	)		(20,357	)		(19,123	)		(18,080	)
Loans, net		1,554,189			1,507,334			1,504,599			1,441,885
Premises and equipment, net		8,229			8,140			7,942			8,129
Accrued interest receivable		8,483			7,589			7,722			7,499
Intangible assets, net		9,505			9,755			10,005			10,505
Other real estate owned		459			648			459			-
Deferred tax asset, net		20,258			20,872			20,875			23,017
Other assets		29,497			22,063			22,527			13,121
Total assets	$	2,123,870		$	2,092,513		$	2,043,534		$	1,731,578
Liabilities:
Deposits
Demand (non-interest bearing)	$	827,268		$	973,116		$	661,383		$	530,446
Savings, money market and interest checking		903,599			875,511			850,306			778,319
Time deposits		1,178			1,317			125,255			155,888
Time deposits, $100,000 and over		149,562			12,339			17,565			20,420
Total deposits		1,881,607			1,862,283			1,654,509			1,485,073
Securities sold under agreements to repurchase		7,552			8,245			2,588			2,394
Short-term borrowings		-			-			100,000			41,000
Accrued interest payable		165			136			362			406
Subordinated debenture		13,401			13,401			13,401			13,401
Other liabilities		17,367			6,401			27,471			8,025
Total liabilities	$	1,920,092		$	1,890,466		$	1,798,331		$	1,550,299
Shareholders' equity:
Preferred stock - authorized 5,000,000 shares,  Series A,  $0.01 par value;  0 and 108,136 shares issued and outstanding at June 30, 2010 and 2009 respectively;		-			-			-			1
Series B, $1,000 liquidation value, 0 and 45,220 shares issued and outstanding at June 30, 2010 and 2009, respectively		-			-			39,411			38,610
Common stock - authorized, 50,000,000 shares of $1.00 par value; 26,181,291 and 14,563,919 shares issued and outstanding at June 30, 2010 and 2009, respectively		26,181			26,181			26,181			14,563
Additional paid-in capital		197,027			196,898			196,875			146,293
Accumulated deficit		(20,824	)		(21,231	)		(17,175	)		(17,029	)
Accumulated other comprehensive (loss) gain		1,394			199			(89	)		(1,159	)
Total shareholders' equity		203,778			202,047			245,203			181,279
Total liabilities and shareholders' equity	$	2,123,870		$	2,092,513		$	2,043,534		$	1,731,578

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Average balance sheet and net interest income	Three months ended June 30, 2010								Three months ended June 30, 2009
(Dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned discount	$	1,572,787		$	18,374		4.67	%	$	1,470,347		$	18,213		4.95	%
Investment securities-taxable		173,447			1,702		3.92	%		107,435			1,381		5.14	%
Investment securities-nontaxable*		31,948			520		6.51	%		27,667			565		8.17	%
Interest bearing deposits at Federal Reserve Bank		179,874			82		0.18	%		2,047			2		0.39	%
Federal funds sold		-			-		0.00	%		23,068			26		0.45	%
Net interest-earning assets		1,958,056			20,678		4.22	%		1,630,564			20,187		4.95	%
Allowance for loan and lease losses		(21,094	)							(19,474	)
Other assets		166,798								138,007
	$	2,103,760							$	1,749,097
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing)	$	853,413		$	279		0.13	%	$	543,335		$	68		0.05	%
Interest bearing deposits
Interest checking		601,861			2,096		1.39	%		352,215			1,438		1.63	%
Savings and money market		290,447			1,039		1.43	%		384,078			1,790		1.86	%
Time		91,561			120		0.52	%		170,251			359		0.84	%
Total interest bearing deposits		983,869			3,255		1.32	%		906,544			3,587		1.58	%
Total deposits		1,837,282			3,534		0.77	%		1,449,879			3,655		1.01	%
Short-term Borrowings		34,835			59		0.68	%		93,610			171		0.73	%
Repurchase agreements		8,134			7		0.34	%		2,774			5		0.72	%
Subordinated debt		13,401			216		6.44	%		13,401			222		6.63	%
Net interest bearing liabilities		1,040,239			3,537		1.36	%		1,016,329			3,985		1.57	%
Other liabilities		7,230								6,816
Total Liabilities		1,900,882								1,566,480
Shareholders' equity		202,878								182,617
	$	2,103,760							$	1,749,097
Net interest income on tax equivalent basis*					16,862								16,134
Tax equivalent adjustment					173								165
Net interest income				$	16,689							$	15,969
Net interest margin *							3.44	%							3.96	%
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 34% statutory tax rate

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Average balance sheet and net interest income	Six months ended June 30, 2010								Six months ended June 30, 2009
(Dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned discount	$	1,545,859		$	36,289		4.70	%	$	1,463,752		$	36,387		4.97	%
Investment securities-taxable		152,060			3,010		3.96	%		108,592			2,456		4.52	%
Investment securities-nontaxable*		31,405			1,107		7.05	%		13,910			567		8.15	%
Interest bearing deposits at Federal Reserve Bank		327,096			434		0.27	%		2,045			5		0.49	%
Federal funds sold		-			-		0.00	%		60,434			119		0.39	%
Net interest-earning assets		2,056,420			40,840		3.97	%		1,648,733			39,534		4.80	%
Allowance for loan and lease losses		(20,472	)							(18,689	)
Other assets		178,762								152,803
	$	2,214,710							$	1,782,847
Liabilities and Shareholders' Equity:
Deposits:
Demand (non-interest bearing)	$	985,453		$	498		0.10	%	$	609,003		$	191		0.06	%
Interest bearing deposits
Interest checking		570,980			4,020		1.41	%		333,971			2,709		1.62	%
Savings and money market		323,746			2,221		1.37	%		382,954			3,015		1.57	%
Time		71,029			253		0.71	%		193,245			1,884		1.95	%
Total interest bearing deposits		965,755			6,494		1.34	%		910,170			7,608		1.67	%
Total deposits		1,951,208			6,992		0.72	%		1,519,173			7,799		1.03	%
Short-term Borrowings		19,097			64		0.68	%		59,196			220		0.74	%
Repurchase agreements		6,464			14		0.43	%		2,563			16		1.25	%
Subordinated debt		13,179			431		6.54	%		13,401			449		6.70	%
Net interest bearing liabilities		1,004,495			7,003		1.39	%		985,330			8,293		1.68	%
Other liabilities		9,978								6,707
Total Liabilities		1,999,926								1,601,040
Shareholders' equity		214,784								181,807
	$	2,214,710							$	1,782,847
Net interest income on tax equivalent basis*					33,339								31,050
Tax equivalent adjustment					370								165
Net interest income				$	32,969							$	30,885
Net interest margin *							3.24	%							3.77	%
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 34% statutory tax rate

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	Six months ended						For the year ended
Allowance for loan and lease losses:	June 30,			June 30,			December 31,
	2010			2009			2009
Balance in the allowance for loan and lease losses at beginning of period	$	19,123		$	17,361		$	17,361
Loans charged-off:
Commercial		5,919			1,894			6,314
Construction		565			3,080			4,546
Lease financing		-			49			49
Residential mortgage		223			-			328
Consumer		138			24			127
Total		6,845			5,047			11,364
Recoveries:
Commercial		79			227			53
Construction		3			14			32
Lease financing		-			12			27
Residential mortgage		16			12			12
Consumer		6			1			2
Total		104			266			126
Net charge-offs		6,741			4,781			11,238
Provision charged to operations		9,954			5,500			13,000
Balance in allowance for loan and lease losses at end of period	$	22,336		$	18,080		$	19,123
Net charge-offs/average loans		0.44	%		0.33	%		0.76	%

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Loan portfolio:	June 30,		March 31,		December 31,		June 30,
	2010		2010		2009		2009
	Amount		Amount		Amount		Amount
Commercial	$	403,320	$	413,361	$	402,232	$	363,524
Commercial mortgage (1)		580,542		557,713		569,434		522,510
Construction		207,846		206,275		207,184		255,504
Total commercial loans		1,191,708		1,177,349		1,178,850		1,141,538
Direct financing leases		96,319		81,904		78,802		80,774
Residential mortgage		95,542		89,005		85,759		64,934
Consumer loans and others		190,729		177,456		178,608		170,999
		1,574,298		1,525,714		1,522,019		1,458,245
Unamortized costs (fees)		2,227		1,977		1,703		1,720
Total loans, net of unamortized fees and costs	$	1,576,525	$	1,527,691	$	1,523,722	$	1,459,965
Supplemental loan data :
Construction 1-4 family		102,730		98,151		100,088		124,443
Construction commercial, acquisition and development		105,116		108,124		107,096		131,061
	$	207,846	$	206,275	$	207,184	$	255,504
(1) At June 30, 2010 our owner-occupied loans amounted to $120 million, or 20.7% of commercial mortgages.

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	June 30,			March 31,			December 31,			June 30,
	2010			2010			2009			2009
Asset quality ratios:
Nonperforming loans to total loans (1)		1.82	%		1.44	%		1.66	%		2.09	%
Nonperforming assets to total assets(1)		1.37	%		1.08	%		1.27	%		1.76	%
Allowance for loan and lease losses to total loans		1.42	%		1.33	%		1.26	%		1.24	%
Nonaccrual loans	$	18,193		$	17,863		$	12,270		$	8,716
Total nonperforming loans		18,193			17,863			12,270			8,716
Other real estate owned		459			648			459			-
Total nonperforming assets	$	18,652		$	18,511		$	12,729		$	8,716
Loans 90 days past due still accruing interest	$	10,529		$	4,071		$	12,994		$	21,779
(1) Nonperforming loans are defined as nonaccrual loans and restructured loans. Loans 90 days past due and still accruing interest are also included in these ratios.

	Three months ended						Six months ended
	June 30,						June 30,
	2010			2009			2010			2009
Selected operating ratios:
Return on average assets		0.08	%		0.25	%		0.23	%		0.26	%
Return on average equity		0.80	%		2.42	%		2.41	%		2.55	%
Net interest margin		3.44	%		3.96	%		3.24	%		3.77	%
Efficiency ratio (1)		71.95	%		72.28	%		69.77	%		72.41	%
Book value per share  (2)	$	7.78		$	9.27		$	7.78		$	9.27
(1) Excludes OREO loss in 2009.
(2) Excludes Series B Preferred Shares issued to the US Treasury and the associated book value.

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