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The Bancorp, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results

The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter and full year of 2019.

Highlights

  • For the quarter ended December 31, 2019, The Bancorp earned net income of $2.9 million from continuing operations and $0.03 diluted earnings per share from combined continuing and discontinued operations. That net income adjusted for a $7.5 million non-deductible FDIC civil money penalty, was $10.3 million, or $0.18 per diluted share. This compares to $0.11 diluted earnings per share from continuing operations for the quarter ended December 31, 2018.
  • Net interest margin increased to 3.32% for the year ended December 31, 2019, compared to 3.19% for the year ended December 31, 2018.
  • Net interest income increased 15% to $35.2 million for the quarter ended December 31, 2019, compared to $30.6 million for the quarter ended December 31, 2018.
  • Average loans and leases, including loans held for sale, increased 31% to $2.5 billion for the quarter ended December 31, 2019, compared to $1.9 billion for the quarter ended December 31, 2018.
  • Prepaid, debit card and related fees increased 30% to $17.0 million for the quarter ended December 31, 2019, compared to $13.1 million for the quarter ended December 31, 2018. Gross dollar volume (GDV), representing total spend on cards, increased 41%.
  • Total year-end SBLOC (securities-backed lines of credit) and IBLOC (insurance backed lines of credit) loans increased 30% year over year and 11% quarter over third quarter 2019 to $1.0 billion at December 31, 2019.
  • Small Business Loans, including those held-for-sale, increased 22% year over year to $572.6 million at December 31, 2019.
  • The average rate on $4.3 billion of average deposits and interest-bearing liabilities in the fourth quarter of 2019 was 0.77%. Average prepaid card deposits of $2.7 billion for fourth quarter 2019, reflected an increase of 22% over the $2.2 billion for the quarter ended December 31, 2018.
  • Consolidated leverage ratio was 9.65% at December 31, 2019. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.
  • Book value per common share at December 31, 2019 was $8.52 per share compared to $7.22 a year earlier, an increase of 18%.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, "This quarter we again experienced across the board increases in both spread and fee income driven by significantly higher loan balances and GDV growth. Performance in the 4th quarter positioned us well for continued progress in 2020. Based on our current momentum, we reaffirm a minimum of $1.25 earnings per share and a $1.34 EPS target for 2020."

The Bancorp reported net income of $1.9 million, or $0.03 income per diluted share, for the quarter ended December 31, 2019, compared to net income of $7.1 million, or $0.13 income per diluted share, for the quarter ended December 31, 2018. Results for the fourth quarter of 2019 reflect a $7.5 million non-deductible FDIC civil money penalty. Tier one capital to assets (leverage), tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 to risk-weighted assets ratios were 9.65%, 18.94%, 19.34% and 18.94%, respectively, compared to well-capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 31, 2020 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 7997238. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 7, 2020 by dialing 855.859.2056, access code 7997238.

The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company’s only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities-backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.thebancorp.com.

Forward-Looking Statements

Statements in this earnings release regarding The Bancorp’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’s filings with the Securities Exchange Commission, including the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" sections of those filings. These risks and uncertainties could cause actual results, performance or achievements to differ materially from those projected in the forward-looking statements. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this earnings release, except as may be required under applicable law.

Financial highlights

(unaudited)

 

Three months ended

 

Year ended

December 31,

 

December 31,

Condensed income statement

2019

 

2018

 

2019

 

2018

(dollars in thousands except per share data)

 

Net interest income

$

35,179

$

30,609

$

141,288

$

120,849

Provision for loan and lease losses

 

1,450

 

925

 

4,400

 

3,585

Non-interest income

Service fees on deposit accounts

 

6

 

-

 

75

 

3,622

ACH, card and other payment processing fees

 

1,962

 

2,378

 

9,376

 

8,653

Prepaid, debit card and related fees

 

17,004

 

13,068

 

65,141

 

54,627

Net realized and unrealized gains (losses) on commercial loans originated for sale

 

(247)

 

 

224

 

 

24,072

 

 

20,498

Change in value of investment in unconsolidated entity

 

-

 

(708)

 

-

 

(3,689)

Leasing related income

 

932

 

718

 

3,243

 

3,071

Affinity fees

 

-

 

10

 

-

 

281

Gain on sale of IRA portfolio

 

-

 

-

 

-

 

65,000

Other non-interest income

 

841

 

1,000

 

2,220

 

1,732

Total non-interest income

 

20,498

 

16,690

 

104,127

 

153,795

Non-interest expense

Salaries and employee benefits

 

24,067

 

20,603

 

94,259

 

79,816

Data processing expense

 

1,210

 

1,446

 

4,894

 

6,187

Legal expense

 

995

 

2,034

 

5,319

 

7,845

FDIC Insurance

 

2,141

 

1,430

 

7,025

 

8,819

Software

 

3,551

 

3,425

 

12,731

 

13,304

Civil money penalties (recoveries)

 

7,500

 

-

 

8,900

 

(290)

Prepaid relationship exit expense

 

-

 

672

 

-

 

672

Lease termination expense

 

-

 

-

 

908

 

395

Other non-interest expense

 

8,258

 

8,010

 

34,485

 

34,530

Total non-interest expense

 

47,722

 

37,620

 

168,521

 

151,278

Income from continuing operations before income taxes

 

6,505

 

8,754

 

72,494

 

119,781

Income tax expense

 

3,641

 

2,691

 

21,226

 

32,241

Net income from continuing operations

 

2,864

 

6,063

 

51,268

 

87,540

Discontinued operations

Income (loss) from discontinued operations before income taxes

 

(1,365)

 

1,755

 

510

 

1,491

Income tax expense (benefit)

 

(355)

 

699

 

219

 

354

Net income (loss) from discontinued operations, net of tax

 

(1,010)

 

1,056

 

291

 

1,137

Net income

$

1,854

$

7,119

$

51,559

$

88,677

 

Net income per share from continuing operations - basic

$

0.05

$

0.11

$

0.90

$

1.55

Net income (loss) per share from discontinued operations - basic

$

(0.02)

$

0.02

$

0.01

$

0.02

Net income per share - basic

$

0.03

$

0.13

$

0.91

$

1.57

 

Net income per share from continuing operations - diluted

$

0.05

$

0.11

$

0.89

$

1.53

Net income (loss) per share from discontinued operations - diluted

$

(0.02)

$

0.02

$

0.01

$

0.02

Net income per share - diluted

$

0.03

$

0.13

$

0.90

$

1.55

Weighted average shares - basic

 

56,924,543

 

56,446,088

 

56,765,635

 

56,343,845

Weighted average shares - diluted

 

57,847,509

 

56,964,074

 

57,338,985

 

57,068,306

Balance sheet

December 31,

 

September 30,

 

June 30,

 

December 31,

2019

 

2019

 

2019

 

2018

(dollars in thousands)

Assets:

Cash and cash equivalents

Cash and due from banks

$

19,928

$

24,068

$

27,450

$

2,440

Interest earning deposits at Federal Reserve Bank

 

924,544

 

932,440

 

284,823

 

551,862

Total cash and cash equivalents

 

944,472

 

956,508

 

312,273

 

554,302

 

Investment securities, available-for-sale, at fair value

 

1,320,692

 

1,382,437

 

1,361,779

 

1,236,324

Investment securities, held-to-maturity

 

84,387

 

84,399

 

84,414

 

84,432

Commercial loans held for sale, at fair value

 

1,177,118

 

489,240

 

934,452

 

688,471

Loans, net of deferred fees and costs

 

1,827,673

 

1,683,377

 

1,561,451

 

1,501,976

Allowance for loan and lease losses

 

(10,238)

 

(10,360)

 

(9,989)

 

(8,653)

Loans, net

 

1,817,435

 

1,673,017

 

1,551,462

 

1,493,323

Federal Home Loan Bank & Atlantic Community Bancshares stock

 

5,342

 

4,342

 

6,342

 

1,113

Premises and equipment, net

 

17,538

 

17,857

 

17,380

 

18,895

Accrued interest receivable

 

13,619

 

13,898

 

14,567

 

12,753

Intangible assets, net

 

2,315

 

2,698

 

3,081

 

3,846

Deferred tax asset, net

 

14,145

 

13,006

 

14,574

 

21,622

Investment in unconsolidated entity

 

39,154

 

49,431

 

58,012

 

59,273

Assets held for sale from discontinued operations

 

140,657

 

162,098

 

169,109

 

197,831

Other assets

 

81,696

 

94,605

 

76,123

 

65,726

Total assets

$

5,658,570

$

4,943,536

$

4,603,568

$

4,437,911

 

Liabilities:

Deposits

Demand and interest checking

$

4,402,740

$

3,844,747

$

3,964,905

$

3,904,638

Savings and money market

 

174,290

 

25,950

 

26,841

 

31,076

Time deposits

 

475,000

 

475,000

 

-

 

-

Total deposits

 

5,052,030

 

4,345,697

 

3,991,746

 

3,935,714

 

Securities sold under agreements to repurchase

 

82

 

93

 

93

 

93

Short-term borrowings

 

-

 

-

 

45,000

 

-

Subordinated debenture

 

13,401

 

13,401

 

13,401

 

13,401

Long-term borrowings

 

40,991

 

41,166

 

41,334

 

41,674

Other liabilities

 

67,569

 

59,005

 

53,862

 

40,253

Total liabilities

$

5,174,073

$

4,459,362

$

4,145,436

$

4,031,135

 

Shareholders' equity:

Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,940,521 and 56,446,088 shares issued and outstanding at December 31, 2019 and 2018, respectively

 

56,941

 

56,911

 

56,875

 

56,446

Treasury stock (100,000 shares)

 

(866)

 

(866)

 

(866)

 

(866)

Additional paid-in capital

 

371,633

 

370,113

 

368,771

 

366,181

Accumulated earnings (deficit)

 

50,742

 

48,888

 

28,463

 

(817)

Accumulated other comprehensive income (loss)

 

6,047

 

9,128

 

4,889

 

(14,168)

Total shareholders' equity

 

484,497

 

484,174

 

458,132

 

406,776

 
Total liabilities and shareholders' equity

$

5,658,570

$

4,943,536

$

4,603,568

$

4,437,911

Average balance sheet and net interest income

Three months ended December 31, 2019

 

Three months ended December 31, 2018

(dollars in thousands)

Average

 

 

 

Average

 

Average

 

 

 

Average

Assets:

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

Interest earning assets:

Loans net of deferred fees and costs **

$

2,514,401

 

$

31,177

4.96

%

$

1,905,089

 

$

24,782

5.20

%

Leases - bank qualified*

 

12,633

 

 

229

7.25

%

 

19,531

 

 

353

7.23

%

Investment securities-taxable

 

1,441,895

 

 

9,636

2.67

%

 

1,329,249

 

 

10,619

3.20

%

Investment securities-nontaxable*

 

5,825

 

 

47

3.23

%

 

7,814

 

 

60

3.07

%

Interest earning deposits at Federal Reserve Bank

 

569,804

 

 

2,505

1.76

%

 

436,501

 

 

2,571

2.36

%

Federal funds sold and securities purchased under agreement to resell

 

-

 

 

-

-

 

 

44,093

 

 

340

3.08

%

Net interest earning assets

 

4,544,558

 

 

43,594

3.84

%

 

3,742,277

 

 

38,725

4.14

%

 

Allowance for loan and lease losses

 

(10,162

)

 

(7,973

)

Loans held for sale from discontinued operations

 

149,301

 

 

1,416

3.79

%

 

204,354

 

 

1,921

3.76

%

Other assets

 

254,809

 

 

178,770

 

$

4,938,506

 

$

4,117,428

 

 

Liabilities and Shareholders' Equity:

Deposits:

Demand and interest checking

$

3,749,860

 

$

5,405

0.58

%

$

3,602,089

 

$

7,522

0.84

%

Savings and money market

 

66,151

 

 

51

0.31

%

 

44,029

 

 

127

1.15

%

Time

 

406,730

 

 

2,217

2.18

%

 

-

 

 

-

-

 

Total deposits

 

4,222,741

 

 

7,673

0.73

%

 

3,646,118

 

 

7,649

0.84

%

 

Short-term borrowings

 

102,832

 

 

507

1.97

%

 

29,184

 

 

190

2.60

%

Securities sold under agreements to repurchase

 

84

 

 

-

0.00

%

 

156

 

 

-

0.00

%

Subordinated debentures

 

13,401

 

 

177

5.28

%

 

13,401

 

 

190

5.67

%

Total deposits and liabilities

 

4,339,058

 

 

8,357

0.77

%

 

3,688,859

 

 

8,029

0.87

%

 

Other liabilities

 

115,112

 

 

29,244

 

Total liabilities

 

4,454,170

 

 

3,718,103

 

 

Shareholders' equity

 

484,336

 

 

399,325

 

$

4,938,506

 

$

4,117,428

 

Net interest income on tax equivalent basis*

$

36,653

$

32,617

 
Tax equivalent adjustment

 

58

 

87

 
Net interest income

$

36,595

$

32,530

Net interest margin *

3.12

%

3.32

%

 

 

 

 

* Full taxable equivalent basis, using a statutory Federal tax rate of 21% for 2019 and 2018.

** Includes loans held for sale.

Average balance sheet and net interest income

Year ended December 31, 2019

 

Year ended December 31, 2018

(dollars in thousands)

Average

 

 

 

Average

 

Average

 

 

 

Average

Assets:

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

Interest earning assets:

Loans net of deferred fees and costs **

$

2,402,686

 

$

126,176

5.25

%

$

1,915,456

 

$

94,232

4.92

%

Leases - bank qualified*

 

14,968

 

 

1,177

7.86

%

 

20,025

 

 

1,370

6.84

%

Investment securities-taxable

 

1,406,247

 

 

42,286

3.01

%

 

1,375,566

 

 

41,994

3.05

%

Investment securities-nontaxable*

 

6,533

 

 

215

3.29

%

 

8,631

 

 

262

3.04

%

Interest earning deposits at Federal Reserve Bank

 

472,279

 

 

10,007

2.12

%

 

460,577

 

 

8,737

1.90

%

Federal funds sold and securities purchased under agreement to resell

 

-

 

 

 

-

 

-

 

 

 

59,157

 

 

 

1,708

 

...