The Bancorp, Inc. (NASDAQ:TBBK), a financial holding company, today reported financial results for third quarter 2016.
Highlights
| · | Net interest income increased 32% to $23.5 million for the quarter ended September 30, 2016 compared to $17.8 million for the quarter ended September 30, 2015. |
| · | Net interest margin increased to 2.69% for the quarter ended September 30, 2016 compared to 2.34% for the quarter ended September 30, 2015. |
| · | Loans and continuing operations loans held for sale increased 31% to $1.76 billion at September 30, 2016 compared to $1.35 billion at September 30, 2015. |
| · | Direct lease financing increased 49% to $332.6 million from $223.9 million at September 30, 2015. |
| · | Small Business Administration (“SBA”) loans increased 24% to $349.6 million from $280.9 million at September 30, 2015. |
| · | Security backed lines of credit (“SBLOC”) increased 15% to $621.5 million from $539.2 million at September 30, 2015. |
| · | Prepaid card fee income increased 7% to $12.2 million for the quarter ended September 30, 2016 from $11.5 million for the quarter ended September 30, 2015. |
| · | Gross dollar volume (“GDV”) (1) increased 11% to $10.5 billion for Q3 2016 from $9.5 billion for Q3 2015. |
| · | Assets held for sale from discontinued operations decreased 34% from December 31, 2015 reflecting a $64 million sale of discontinued loans during the quarter. |
| · | The rate on our average deposits and interest bearing liabilities of $3.83 billion in Q3 2016 was 0.33% with a rate of 0.12% for $1.81 billion of average prepaid card deposits. |
| · | Average prepaid card deposits, which are among the lowest cost of our deposits, grew 18% in third quarter 2016 compared to third quarter 2015. |
| · | Completion of the BSA lookback consultant engagement. |
| · | Reduction in staff positions by approximately 20% at the end of the quarter. |
| · | Consummation of common equity offering of approximately $75 million. |
| · | Book value per common share at September 30, 2016 of $6.13 per share. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized. |
The Bancorp reported a net loss of $25.5 million, or $0.54 loss per diluted share, for the quarter ended September 30, 2016 compared to net loss of $5.6 million, or $0.15 loss per diluted share, for the quarter ended September 30, 2015. Net lossfrom continuing operations for the quarter ended September 30, 2016 was $1.5 million or a loss of $0.03 per diluted share compared to net loss from continuing operations of $7.6 million or a loss of $0.20 per diluted share for the quarter ended September 30, 2015. Loss from continuing operations does not include any income which may result from the reinvestment of the proceeds from sales of the remaining assets in The Bancorp’s discontinued operations. Tier one capital to assets, tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 ratios were 7.81%, 15.12%, 15.40% and 15.12% compared to well capitalized minimums of 5%, 8%, 10% and 6.5%.
Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Last quarter on my first earnings call, I committed to the completion of a business plan which would emphasize continuing revenue growth and expense reductions, and thereby support increased earnings and reduced volatility. We have completed that integrated and comprehensive business plan and are focused on accelerating related expense reductions while supporting continued strong revenue growth. We are moving ahead in multiple areas to achieve the related goal of a 20 to 25% reduction in non interest expense. In the fourth quarter, we should see the impact of the end of third quarter staff reductions. The business plan also comprehensively addresses the completion of resolving regulatory requirements and expectations. We made related progress with our regulatory issues with the completion of the BSA lookback which will no longer impact earnings. Strong revenue growth continued this quarter, and our core lending businesses drove a 32% increase over prior year quarter net interest income. Our non-interest income reflected 7% growth in prepaid card fees to $12.2 million. Credit losses in our continuing operations which we believe to be lower risk lines of business, continue to be low. We were extremely disappointed that an issue arose with a large lending relationship in discontinued operations which resulted in a third quarter loss. The results of the third quarter reflected a fair value mark in connection with a secured commercial real estate loan held in discontinued operations. That loan, in the principal amount of $41.9 million, became non-performing after quarter end due to the failure to make required principal payments. Based on a preliminary estimate of the collateral value by an independent certified appraiser, the fair value was reduced by $23.9 million and that amount was recorded as a charge to earnings. The appraisal estimate is preliminary, possibly subject to change based upon a full appraisal which is in process. The appraiser is considering recent market changes and pending lease renewals.”
Conference Call Webcast
You may access the LIVE webcast of The Bancorp’s Quarterly Earnings Conference Call at 8:00 AM ET Friday, October 28, 2016 by clicking on the webcast link on Bancorp’s homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 96088598. You may listen to the replay of the webcast following the live call on The Bancorp’s investor relations website or telephonically until Friday, November 4, 2016 by dialing 855.859.2056, access code 96088598.
About The Bancorp
With operations in the US and Europe, 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 chief financial institution, 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 leasing groups in the nation. For more information please visit www.thebancorp.com.
