The Bancorp, Inc. (TBBK) 8-K The Bancorp, Inc. Reports Second Quarter 2014 Financial Results

The Bancorp, Inc. Reports Second Quarter 2014 Financial Results

Wilmington, DE – July 23, 2014 – The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter 2014.

The Bancorp, Inc. reported a net loss of $5.5 million for the second quarter of 2014 compared to net income of $5.6 million in second quarter 2013, or a loss per share of $0.15 in 2014 compared to $0.15 earnings per share in the comparable prior year period.  An 18% effective income tax rate was utilized in second quarter 2014, based upon an estimated annualized tax rate.  With a statutory 35% tax rate which approximates the Company’s historical tax rate, the loss per share would have been approximately $0.12.

Financial Highlights

· 18% increase in net interest income to $27.9 million compared to $23.6 million in second quarter 2013.

· 12% increase in prepaid card fees to $12.9 million compared to $11.5 million in second quarter 2013.

· Increases over prior year targeted loan balances as follows:  SBA lending 69%, SBLOC 53%, Leasing 8%.

· An increase in the net interest margin to 2.69% from 2.46% in second quarter 2013.

Betsy Z. Cohen, Bancorp’s Chief Executive Officer, said, “During the quarter, we received an order from the FDIC which specified additional enhanced controls related to BSA. We have acted to address those and engaged consultants to implement such controls. During the second quarter approximately $9.2 million of related one-time consulting and other expenses were accrued. The Bank’s provision for loan losses amounted to $15.5 million reflecting the impact of certain loan relationships in its commercial loan portfolios. We continue to emphasize loan growth in Small Business Administration (SBA), Security Backed Lines of Credit (SBLOC) and vehicle leasing portfolios, for which historical losses are lower than our other commercial lines of business. SBA and SBLOC exhibited year over year growth rates of 69% and 53% respectively. The total of those three targeted portfolios now amounts to approximately $745 million. Net interest income grew 18% or $4.3 million over second quarter 2013, reflecting growth in those targeted loan portfolios and the investment portfolio, which is also targeted for growth. At June 30, 2014 our total loans and securities amounted to $3.8 billion, or 20% higher than June 30, 2013. Additionally we have made progress in lowering excess deposit balances maintained at the Federal Reserve Bank, and as a result of these factors, our net interest margin improved to 2.69% from 2.46% in second quarter 2013. Our prepaid card fees increased 12%, and our card payment and ACH increased 26%, representing continued growth in these two areas. Book value per share at June 30, 2014 was $9.72 compared to $9.21 at June 30, 2013.”

Financial Results

Bancorp reported a net loss available to common shareholders for the three months ended June 30, 2014 of $5.5 million, or a loss per share of $0.15, based on 37,706,491weighted average shares outstanding, compared to net income available to common shareholders of $5.6 million, or diluted earnings per share of $0.15, based on 37,974,814 weighted average diluted shares outstanding, for the three months ended June 30, 2013.

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Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:00 AM EDT Thursday, July 24, 2014 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.318.8612, access code 72448153.  You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Thursday, July 31, 2014 by dialing 888.286.8010, access code 81705798.

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. Contact

Andres Viroslav

215-861-7990

aviroslav@thebancorp.com

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The Bancorp, Inc.
Financial highlights
(unaudited)
	Three months ended					Six months ended
	June 30,					June 30,
	2014			2013		2014			2013
	(dollars in thousands except per share data)
Condensed income statement
Net interest income	$	27,915		$	23,579	$	54,483		$	46,263
Provision for loan and lease losses		15,500			9,500		32,800			15,000
Non-interest income
Service fees on deposit accounts		1,377			1,084		2,587			2,144
Card payment and ACH processing fees		1,317			1,046		2,620			1,913
Prepaid card fees		12,898			11,531		26,366			23,505
Gain on sale of loans		5,212			5,748		10,696			7,926
Gain on sales of investment securities		159			476		400			743
Other than temporary impairment of investment securities		-			-		-			(20	)
Leasing income		1,015			642		1,396			1,229
Debit card income		456			201		882			397
Affinity fees		668			850		1,202			1,706
Other non-interest income		608			784		1,716			1,951
Total non-interest income		23,710			22,362		47,865			41,494
Non-interest expense
Losses and write downs on other real estate owned		(92	)		815		(30	)		1,066
BSA and lookback consulting  expenses		9,204			-		9,204			-
Other non-interest expense		33,753			26,772		66,648			51,000
Total non-interest expense		42,865			27,587		75,822			52,066
Net income (loss) before income tax expense		(6,740	)		8,854		(6,274	)		20,691
Income tax (benefit) expense		(1,194	)		3,262		(1,026	)		7,693
Net income (loss) available to common shareholders	$	(5,546	)	$	5,592	$	(5,248	)	$	12,998
Basic earnings (loss) per share	$	(0.15	)	$	0.15	$	(0.14	)	$	0.35
Diluted earnings (loss) per share	$	(0.15	)	$	0.15	$	(0.14	)	$	0.34
Weighted average shares - basic		37,706,491			37,343,396		37,693,624			37,317,750
Weighted average shares - diluted		37,706,491			37,974,814		37,693,624			37,877,712

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Balance sheet	June 30,			March 31,			December 31,			June 30,
	2014			2014			2013			2013
	(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks	$	15,192		$	15,298		$	33,883		$	21,560
Interest earning deposits at Federal Reserve Bank		441,422			796,385			1,196,515			622,989
Securities sold under agreements to resell		15,906			24,926			7,544			40,240
Total cash and cash equivalents		472,520			836,609			1,237,942			684,789
Investment securities, available-for-sale, at fair value		1,459,626			1,411,708			1,253,117			1,021,848
Investment securities, held-to-maturity		97,130			97,149			97,205			95,662
Loans held for sale, at fair value		154,474			222,024			69,904			49,355
Loans, net of deferred fees and costs		2,049,561			2,044,004			1,958,445			1,967,382
Allowance for loan and lease losses		(46,945	)		(46,409	)		(38,182	)		(40,274	)
Loans, net		2,002,616			1,997,595			1,920,263			1,927,108
Federal Home Loan Bank & Atlantic Central Bankers Bank stock		3,409			3,209			3,209			3,209
Premises and equipment, net		16,236			15,692			15,659			13,709
Accrued interest receivable		14,508			14,715			13,131			12,360
Intangible assets, net		6,988			7,407			7,612			6,503
Other real estate owned		26,781			27,763			26,295			6,308
Deferred tax asset, net		24,606			27,451			30,415			27,613
Other assets		36,270			38,301			31,313			28,031
Total assets	$	4,315,164		$	4,699,623		$	4,706,065		$	3,876,495
Liabilities:
Deposits
Demand and interest checking	$	3,563,447		$	3,842,569		$	3,722,602		$	2,963,170
Savings and money market		307,927			393,329			536,162			469,238
Time deposits		8,962			9,115			9,773			12,502
Time deposits, $100,000 and over		1,474			2,195			4,452			5,747
Total deposits		3,881,810			4,247,208			4,272,989			3,450,657
Securities sold under agreements to repurchase		17,481			16,491			21,221			19,059
Accrued Interest Payable		-			-			-			95
Subordinated debenture		13,401			13,401			13,401			13,401
Other liabilities		35,862			56,353			38,850			49,091
Total liabilities	$	3,948,554		$	4,333,453		$	4,346,461		$	3,532,303
Shareholders' equity:
Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,708,777 and 37,462,939 shares issued at June 30, 2014 and 2013, respectively		37,809			37,805			37,721			37,463
Treasury stock (100,000 shares)		(866	)		(866	)		(866	)		(866	)
Additional paid-in capital		296,523			295,824			294,576			286,321
Retained earnings		21,878			27,424			27,615			19,993
Accumulated other comprehensive income		11,266			5,983			558			1,281
Total shareholders' equity		366,610			366,170			359,604			344,192
Total liabilities and shareholders' equity	$	4,315,164		$	4,699,623		$	4,706,065		$	3,876,495

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Average balance sheet and net interest income	Three months ended June 30, 2014								Three months ended June 30, 2013
(dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned fees and costs **	$	2,177,072		$	21,767		4.00	%	$	1,991,622		$	20,774		4.17	%
Leases - bank qualified*		18,293			244		5.34	%		13,800			208		6.03	%
Investment securities-taxable		1,062,951			5,356		2.02	%		836,299			3,801		1.82	%
Investment securities-nontaxable*		459,164			4,548		3.96	%		206,629			1,342		2.60	%
Interest earning deposits at Federal Reserve Bank		651,002			411		0.25	%		841,315			505		0.24	%
Federal funds sold/securities purchased under agreement to resell		24,133			85		1.41	%		33,761			98		1.16	%
Net interest earning assets		4,392,615			32,411		2.95	%		3,923,426			26,728		2.72	%
Allowance for loan and lease losses		(49,193	)							(36,596	)
Other assets		132,332								85,476
	$	4,475,754							$	3,972,306
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	3,698,142		$	2,298		0.25	%	$	3,083,831		$	1,901		0.25	%
Savings and money market		332,973			364		0.44	%		482,722			528		0.44	%
Time		10,844			33		1.22	%		18,310			47		1.03	%
Total deposits		4,041,959			2,695		0.27	%		3,584,863			2,476		0.28	%
Repurchase agreements		16,620			11		0.26	%		17,057			12		0.28	%
Subordinated debt		13,401			113		3.37	%		13,401			118		3.52	%
Total deposits and interest bearing liabilities		4,071,980			2,819		0.28	%		3,615,321			2,606		0.29	%
Other liabilities		15,007								9,379
Total liabilities		4,086,987								3,624,700
Shareholders' equity		388,767								347,606
	$	4,475,754							$	3,972,306
Net interest income on tax equivalent basis*				$	29,592							$	24,122
Tax equivalent adjustment					1,677								543
Net interest income				$	27,915							$	23,579
Net interest margin *							2.69	%							2.46	%
* Full taxable equivalent basis using a 35% statutory tax rate.
** Includes loans held for sale.

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Average balance sheet and net interest income	Six months ended June 30, 2014								Six months ended June 30, 2013
(dollars in thousands)	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest-earning assets:
Loans net of unearned fees and costs **	$	2,159,727		$	42,987		3.98	%	$	1,960,399		$	40,964		4.18	%
Leases - bank qualified*		18,290			490		5.36	%		14,096			407		5.77	%
Investment securities-taxable		1,041,218			10,493		2.02	%		759,899			7,288		1.92	%
Investment securities-nontaxable*		425,512			7,756		3.65	%		166,648			2,460		2.95	%
Interest earning deposits at Federal Reserve Bank		951,983			1,175		0.25	%		1,091,219			1,343		0.25	%
Federal funds sold/securities purchased under agreement to resell		27,321			191		1.40	%		27,107			122		0.90	%
Net interest-earning assets		4,624,051			63,092		2.73	%		4,019,368			52,584		2.62	%
Allowance for loan and lease losses		(43,900	)							(35,722	)
Other assets		137,776								85,102
	$	4,717,927							$	4,068,748
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	3,857,839		$	4,535		0.24	%	$	3,170,543		$	3,767		0.24	%
Savings and money market		415,122			868		0.42	%		494,383			1,106		0.45	%
Time		12,086			69		1.14	%		19,607			101		1.03	%
Total deposits		4,285,047			5,472		0.26	%		3,684,533			4,974		0.27	%
Short-term borrowings		11			-		0.00	%		-			-		0.00	%
Repurchase agreements		16,686			23		0.28	%		16,413			26		0.32	%
Subordinated debt		13,401			228		3.40	%		13,401			318		4.75	%
Total deposits and interest bearing liabilities		4,315,145			5,723		0.27	%		3,714,347			5,318		0.29	%
Other liabilities		18,593								10,455
Total liabilities		4,333,738								3,724,802
Shareholders' equity		384,189								343,946
	$	4,717,927							$	4,068,748
Net interest income on tax equivalent basis*					57,369								47,266
Tax equivalent adjustment					2,886								1,003
Net interest income				$	54,483							$	46,263
Net interest margin *							2.48	%							2.35	%
* Fully taxable equivalent basis using a 35% statutory tax rate
** Includes loans held for sale.

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Allowance for loan and lease losses:	Six months ended						Year ended
	June 30,			June 30,			December 31,
	2014			2013			2013
	(dollars in thousands)
Balance in the allowance for loan and lease losses at beginning of period	$	38,182		$	33,040		$	33,040
Loans charged-off:
Commercial		15,218			3,733			14,771
Construction		8,546			4,382			10,295
Lease financing		1			-			30
Residential mortgage		108			54			54
Consumer		561			186			488
Total		24,434			8,355			25,638
Recoveries:
Commercial		61			51			180
Construction		317			481			1,019
Lease financing		-			8			8
Residential mortgage		-			-			-
Consumer		19			49			73
Total		397			589			1,280
Net charge-offs		24,037			7,766			24,358
Provision charged to operations		32,800			15,000			29,500
Balance in allowance for loan and lease losses at end of period	$	46,945		$	40,274		$	38,182
Net charge-offs/average loans		1.10	%		0.39	%		1.21	%
Net charge-offs/average loans (annualized)		2.21	%		0.79	%		1.21	%
Net charge-offs/average assets		0.51	%		0.19	%		0.59	%
Loan portfolio:	June 30,			March 31,			December 31,			June 30,
		2014			2014			2013			2013
	(dollars in thousands)
Commercial	$	476,799		$	489,574		$	450,113		$	481,537
Commercial mortgage (1)		593,622			610,990			625,810			651,034
Construction		264,667			283,928			258,889			266,911
Total commercial loans		1,335,088			1,384,492			1,334,812			1,399,482
Direct lease financing		185,878			181,007			175,610			172,250
Residential mortgage		96,009			95,397			94,850			93,960
Consumer and other loans		422,835			375,818			346,334			295,576
		2,039,810			2,036,714			1,951,606			1,961,268
Unamortized loan fees and costs		9,751			7,290			6,839			6,114
Total loans, net of deferred loan fees and costs	$	2,049,561		$	2,044,004		$	1,958,445		$	1,967,382
Supplemental loan data:
Construction 1-4 family	$	40,226		$	47,521		$	48,394		$	64,144
Commercial construction, acquisition and development		224,441			236,407			210,495			202,767
	$	264,667		$	283,928		$	258,889		$	266,911
(1) At June 30, 2014 our owner-occupied loans amounted to $219 million, or 36.9% of commercial mortgages.

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Capital Ratios	Tier 1 capital			Tier 1 capital			Total capital
	to average assets			to risk-weighted assets			to risk-weighted assets
As of June 30, 2014
Bancorp		8.08	%		13.17	%		14.43	%
The Bancorp Bank		6.73	%		10.91	%		12.17	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%
As of December 31, 2013
Bancorp		8.58	%		14.57	%		15.83	%
The Bancorp Bank		6.72	%		11.40	%		12.66	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Selected operating ratios:
Return on average assets (annualized)		N/A			0.56	%		N/A			0.64	%
Return on average equity (annualized)		N/A			6.45	%		N/A			7.62	%
Net interest margin		2.69	%		2.46	%		2.48	%		2.35	%
Efficiency ratio (1)		65.40	%		60.68	%		65.35	%		59.84	%
Book value per share	$	9.72		$	9.21		$	9.72		$	9.21
	June 30,			March 31,			December 31,			June 30,
		2014			2014			2013			2013
Asset quality ratios:					��
Nonperforming loans to total loans (2)		1.94	%		2.20	%		2.08	%		2.16	%
Nonperforming assets to total assets (2)		1.54	%		1.55	%		1.42	%		1.26	%
Allowance for loan and lease losses to total loans		2.29	%		2.27	%		1.95	%		2.05	%
Nonaccrual loans	$	38,714		$	44,701		$	40,551		$	41,743
Other real estate owned		26,781			27,763			26,295			6,308
Total nonperforming assets	$	65,495		$	72,464		$	66,846		$	48,051
Loans 90 days past due still accruing interest	$	1,031		$	189		$	110		$	755
	Three months ended
	June 30,			March 31,			December 31,			June 30,
		2014			2014			2013			2013
Gross dollar volume (GDV):
Prepaid card GDV	$	10,025,213		$	11,791,386		$	7,720,554		$	7,651,849
(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						Six months ended
	June 30,						June 30,
		2014			2013			2014			2013
Reconciliation of the efficiency ratio, a non-GAAP measure:
Non-interest expense	$	42,865		$	27,587		$	75,822		$	52,066
Less: BSA and lookback consulting expenses		(9,204	)		-			(9,204	)		-
Adjusted non-interest expense (a)		33,661			27,587			66,618			52,066
Net interest income		27,915			23,579			54,483			46,263
Non-interest income		23,710			22,362			47,865			41,494
Less: Gain on sale of securities		(159	)		(476	)		(400	)		(743	)
Adjusted net interest and non-interest income (b)	$	51,466		$	45,465		$	101,948		$	87,014
(a) divided by (b)		65.40	%		60.68	%		65.35	%		59.84	%
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.

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