The Bancorp, Inc. (TBBK) 8-K The Bancorp, Inc. Reports Second Quarter 2012 Financial Results

The Bancorp, Inc. Reports Second Quarter 2012 Financial Results

Wilmington, DE – July 23, 2012 – The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the quarter ended June 30, 2012.

Financial Highlights

·   Net income for the second quarter of 2012 increased to $3.9 million compared to $660,000 in the second quarter of 2011.  Diluted earnings per share increased to $0.12 versus $0.02, respectively, for those periods.  Diluted earnings per share amounted to $0.24 for the six months ended June 30, 2012 compared to diluted earnings per share of $0.11 for the six months ended June 30, 2011.

Key factors driving these results were:

·   61% increase in quarterly prepaid card fees to $7.1 million compared to $4.4 million in second quarter 2011.

·   14% increase in quarterly net interest income to $20.9 million compared to $18.3 million in second quarter 2011.

·   47% increase in quarterly non-interest income (including prepaid card fees) to $10.6 million compared to $7.2 million in second quarter 2011 excluding security gains and other than temporary impairment (OTTI).

·   At June 30, 2012 the portfolio of loans and securities had grown to $2.4 billion, an increase of $360 million, or 18% over second quarter 2011. Outstanding loans increased 7% over that period.

·   Average deposits for second quarter 2012 totaled $3.1 billion, an increase of $732 million or 31% over 2011,   reflecting growth in all major deposit categories. The interest paid on deposits between those respective periods decreased to 0.37% from 0.50%.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “Second 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 $10.8 million, a $3.1 million, or 40% 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 7% 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 28% over the past year, to $256 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 $7.90 at June 30, 2011 to $8.54 at June 30, 2012, or an increase of 8%.”

Financial Results

Bancorp reported net income available to common shareholders for the three months ended June 30, 2012 of $3.9 million or diluted earnings per share of $0.12, based on 33,147,791weighted average shares outstanding, compared to net income available to common shareholders of $660,000 or diluted earnings per share of $0.02, based on 33,205,741 weighted average shares outstanding, for the three months ended June 30, 2011.  Adjusted operating earnings, a non-GAAP measure, increased to $10.8 million for the three months ended June 30, 2012 compared to $7.7 million for the three months ended June 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					Six months ended
	June 30,		June 30,			June 30,		June 30,
	2012		2011			2012		2011
Net income available to common shareholders	$	3,854	$	660		$	7,826	$	3,348
Income tax expense		2,150		289			4,377		1,720
Gains on sales of investment securities		-		(603	)		-		(603	)
Other than temporary impairment in securities		126		-			126		75
Losses and write downs on other real estate owned		421		439			1,872		491
Provision for loan and lease losses		4,287		6,963			9,507		11,635
Adjusted operating earnings (1)	$	10,838	$	7,748		$	23,708	$	16,666

(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 June 30, 2012, Bancorp's total assets amounted to $3.2 billion, an increase of $684 million or 28% over total assets at June 30, 2011. The increase in assets primarily reflected increases in deposits, primarily in transaction accounts.  During that period, investments increased to $600 million, an increase of $234 million or 64%; loans increased to $1.8 billion, an increase of $126 million or 7%; and deposits increased to $2.8 billion, an increase of $660 million or 30%.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:00 AM EDT Tuesday, July 24, 2012 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 800.591.6945, access code 57226723.  You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Tuesday, July 31, 2012 by dialing 888.286.8010, access code 71622633.

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.

The Bancorp, Inc. Contact

Andres Viroslav

215-861-7990

aviroslav@thebancorp.com

	Three months ended					Six months ended
	June 30,					June 30,
	2012			2011		2012			2011
	(dollars in thousands except per share data)
Condensed income statement
Net interest income	$	20,881		$	18,257	$	41,797		$	36,455
Provision for loan and lease losses		4,287			6,963		9,507			11,635
Non-interest income
Gain on sales of investment securities		-			603		-			603
Other than temporary impairment of investment securities		(126	)		-		(126	)		(75	)
Other non-interest income		10,575			7,184		22,865			14,942
Total non-interest income		10,449			7,787		22,739			15,470
Non-interest expense
Losses and write downs on other real estate owned		421			439		1,872			491
Other non-interest expense		20,618			17,693		40,954			34,731
Total non-interest expense		21,039			18,132		42,826			35,222
Net income before income tax expense		6,004			949		12,203			5,068
Income tax expense		2,150			289		4,377			1,720
Net income available to common shareholders	$	3,854		$	660	$	7,826		$	3,348
Basic earnings per share	$	0.12		$	0.02	$	0.24		$	0.11
Diluted earnings per share	$	0.12		$	0.02	$	0.24		$	0.11
Weighted average shares - basic		33,101,281			33,196,281		33,099,303			30,638,325
Weighted average shares - diluted		33,147,791			33,205,741		33,114,968			30,645,678

Balance sheet	June 30,			March 31,			December 31,			June 30,
	2012			2012			2011			2011
	(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks	$	5,560		$	142,123		$	96,228		$	168,957
Interest earning deposits at Federal Reserve Bank		692,582			1,663,664			652,946			199,866
Total cash and cash equivalents		698,142			1,805,787			749,174			368,823
Investment securities, available-for-sale, at fair value		582,219			481,553			448,204			347,465
Investment securities, held-to-maturity		17,796			17,971			18,044			18,102
Federal Home Loan Bank & Atlantic Central Bankers Bank stock		4,596			4,836			5,088			5,634
Loans, net of deferred costs		1,804,312			1,748,867			1,744,828			1,678,660
Allowance for loan and lease losses		(31,171	)		(31,500	)		(29,568	)		(27,685	)
Loans, net		1,773,141			1,717,367			1,715,260			1,650,975
Premises and equipment, net		8,694			8,514			8,358			8,296
Accrued interest receivable		9,297			9,032			8,476			7,839
Intangible assets, net		7,504			7,754			8,004			8,504
Other real estate owned		4,919			7,726			7,405			3,764
Deferred tax asset, net		20,716			20,804			21,941			21,960
Other assets		23,178			22,703			20,727			24,477
Total assets	$	3,150,202		$	4,104,047		$	3,010,681		$	2,465,839
Liabilities:
Deposits
Demand and interest checking	$	2,335,960		$	3,275,611		$	2,192,938		$	1,816,926
Savings and money market		456,614			468,183			454,343			332,956
Time deposits		20,619			20,637			25,528			1,394
Time deposits, $100,000 and over		9,104			9,447			9,742			11,427
Total deposits		2,822,297			3,773,878			2,682,551			2,162,703
Securities sold under agreements to repurchase		21,948			25,906			33,177			20,258
Accrued interest payable		127			129			123			131
Subordinated debenture		13,401			13,401			13,401			13,401
Other liabilities		9,555			12,500			9,950			7,109
Total liabilities	$	2,867,328		$	3,825,814		$	2,739,202		$	2,203,602
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,201,281 and 33,196,281 shares issued at June 30, 2012 and 2011, respectively		33,201			33,201			33,196			33,196
Treasury stock (100,000 shares)		(866	)		(866	)		(866	)		-
Additional paid-in capital		243,284			242,661			241,997			241,011
Accumulated deficit		(1,451	)		(5,305	)		(9,277	)		(14,847	)
Accumulated other comprehensive gain		8,706			8,542			6,429			2,877
Total shareholders' equity		282,874			278,233			271,479			262,237
Total liabilities and shareholders' equity	$	3,150,202		$	4,104,047		$	3,010,681		$	2,465,839

Average balance sheet and net interest income	Three months ended June 30, 2012								Three months ended June 30, 2011
(dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned discount	$	1,780,071		$	19,125		4.30	%	$	1,642,867		$	18,084		4.40	%
Leases - bank qualified*		13,770			207		6.01	%		4,820			100		8.30	%
Investment securities-taxable		435,903			3,369		3.09	%		270,535			2,340		3.46	%
Investment securities-nontaxable*		105,869			1,097		4.14	%		76,123			1,007		5.29	%
Interest earning deposits at Federal Reserve Bank		954,213			605		0.25	%		389,794			230		0.24	%
Net interest earning assets		3,289,826			24,403		2.97	%		2,384,139			21,761		3.65	%
Allowance for loan and lease losses		(32,101	)							(26,463	)
Other assets		126,547								271,564
	$	3,384,272							$	2,629,240
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	2,580,647		$	2,094		0.32	%	$	1,978,071		$	2,188		0.44	%
Savings and money market		448,571			625		0.56	%		336,244			654	��	0.78	%
Time		29,862			106		1.42	%		12,812			43		1.34	%
Total deposits		3,059,080			2,825		0.37	%		2,327,127			2,885		0.50	%
Repurchase agreements		22,255			24		0.43	%		19,832			26		0.52	%
Subordinated debt		13,401			217		6.48	%		13,401			216		6.45	%
Total deposits and interest bearing liabilities		3,094,736			3,066		0.40	%		2,360,360			3,127		0.53	%
Other liabilities		9,551								9,668
Total liabilities		3,104,287								2,370,028
Shareholders' equity		279,985								259,212
	$	3,384,272							$	2,629,240
Net interest income on tax equivalent basis*				$	21,337							$	18,634
Tax equivalent adjustment					456								377
Net interest income				$	20,881							$	18,257
Net interest margin *							2.59	%							3.13	%
* Full taxable equivalent basis, using a 35% statutory tax rate.

Average balance sheet and net interest income	Six months ended June 30, 2012								Six months ended June 30, 2011
(Dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned discount	$	1,756,910		$	37,948		4.32	%	$	1,635,432		$	36,344		4.44	%
Leases - bank qualified*		12,105			397		6.56	%		3,589			150		8.36	%
Investment securities-taxable		402,949			6,561		3.26	%		228,302			3,897		3.41	%
Investment securities-nontaxable*		101,126			2,161		4.27	%		76,854			2,018		5.25	%
Interest earning deposits at Federal Reserve Bank		1,325,250			1,658		0.25	%		610,215			745		0.24	%
Net interest-earning assets		3,598,340			48,725		2.71	%		2,554,392			43,154		3.38	%
Allowance for loan and lease losses		(31,388	)							(25,648	)
Other assets		179,115								279,032
	$	3,746,067							$	2,807,776
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	2,936,649		$	4,088		0.28	%	$	2,169,238		$	4,033		0.37	%
Savings and money market		453,213			1,257		0.55	%		328,899			1,310		0.80	%
Time		30,608			203		1.33	%		29,567			147		0.99	%
Total deposits		3,420,470			5,548		0.32	%		2,527,704			5,490		0.43	%
Short-term borrowings		-			-		0.00	%		1,503			3		0.40	%
Repurchase agreements		25,257			51		0.40	%		18,439			42		0.46	%
Subordinated debt		13,401			434		6.48	%		13,401			431		6.43	%
Total deposits and interest bearing liabilities		3,459,128			6,033		0.35	%		2,561,047			5,966		0.47	%
Other liabilities		10,078								9,553
Total liabilities		3,469,206								2,570,600
Shareholders' equity		276,861								237,176
	$	3,746,067							$	2,807,776
Net interest income on tax equivalent basis*					42,692								37,188
Tax equivalent adjustment					895								733
Net interest income				$	41,797							$	36,455
Net interest margin *							2.37	%							2.91	%
* Full taxable equivalent basis to be comparable to the interest income of all other categories, using a 35% statutory tax rate

Allowance for loan and lease losses:	Six months ended						For year ended
	June 30,			June 30,			December 31,
	2012			2011			2011
	(dollars in thousands)
Balance in the allowance for loan and lease losses at beginning of period	$	29,568		$	24,063		$	24,063
Loans charged-off:
Commercial		4,099			4,804			8,651
Construction		4,838			2,496			3,254
Lease financing		87			-			39
Residential mortgage		-			49			2,870
Consumer		258			681			1,280
Total		9,282			8,030			16,094
Recoveries:
Commercial		1,272			15			91
Construction		9			2			4
Lease financing		12			-			-
Residential mortgage		85			-			-
Consumer		-			-			6
Total		1,378			17			101
Net charge-offs		7,904			8,013			15,993
Provision charged to operations		9,507			11,635			21,498
Balance in allowance for loan and lease losses at end of period	$	31,171		$	27,685		$	29,568
Net charge-offs/average loans		0.45	%		0.49	%		0.96	%
Loan portfolio:	June 30,			March 31,			December 31,			June 30,
		2012			2012			2011			2011
	(dollars in thousands)
Commercial	$	441,167		$	445,912		$	450,411		$	450,916
Commercial mortgage (1)		596,639			617,871			609,487			593,842
Construction		269,636			248,232			246,611			205,730
Total commercial loans		1,307,442			1,312,015			1,306,509			1,250,488
Direct lease financing		140,012			130,321			129,682			127,016
Residential mortgage		97,226			94,438			96,110			98,113
Consumer loans and others		255,769			208,584			209,041			200,132
		1,800,449			1,745,358			1,741,342			1,675,749
Unamortized loan costs		3,863			3,509			3,486			2,911
Total loans, net of deferred loan costs	$	1,804,312		$	1,748,867		$	1,744,828		$	1,678,660
Supplemental loan data:
Construction 1-4 family	$	79,546		$	85,461		$	85,189		$	93,422
Commercial construction, acquisition and development		190,090			162,771			161,422			112,308
	$	269,636		$	248,232		$	246,611		$	205,730
(1) At June 30, 2012 our owner-occupied loans amounted to $142 million, or 23.8% 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 June 30, 2012
The Company		8.16	%		14.63	%		15.88	%
The Bancorp Bank		6.71	%		12.04	%		13.30	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%
As of December 31, 2011
The Company		8.69	%		14.64	%		15.89	%
The Bancorp Bank		6.13	%		10.34	%		11.60	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%

	Three months ended									Year ended
	June 30,						December 31,			December 31,
	2012			2011			2011			2011
Selected operating ratios:
Return on average assets		0.46	%		0.10	%		0.43	%		0.31	%
Return on average equity		5.54	%		1.02	%		4.84	%		3.54	%
Net interest margin		2.59	%		3.13	%		2.89	%		2.96	%
Efficiency ratio		67.15	%		71.27	%		67.21	%		67.96	%
Book value per share	$	8.54		$	7.90		$	8.18		$	8.18
	June 30,			March 31,			December 31,			June 30,
		2012			2012			2011			2011
Asset quality ratios:
Nonperforming loans to total loans (1)		1.55	%		1.42	%		1.24	%		1.43	%
Nonperforming assets to total assets (1)		1.04	%		0.79	%		0.97	%		1.12	%
Allowance for loan and lease losses to total loans		1.73	%		1.80	%		1.69	%		1.65	%
Nonaccrual loans	$	24,815		$	20,929		$	17,587		$	19,526
Other real estate owned		4,919			7,726			7,405			3,764
Total nonperforming assets	$	29,734		$	28,655		$	24,992		$	23,290
Loans 90 days past due still accruing interest	$	3,105		$	3,914		$	4,101		$	4,397
(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.