The Bancorp, Inc. (TBBK) 8-K The Bancorp, Inc. Reports Fourth Quarter and Fiscal 2013 Financial Results

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

Wilmington, DE – January 23, 2014 – The Bancorp, Inc. ("Bancorp") (NASDAQ: 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 38,349,802weighted 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:

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	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 EDT 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. Contact

Andres Viroslav

215-861-7990

aviroslav@thebancorp.com

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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

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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

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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.

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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.

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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.

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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 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.

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