TBBK Bancorp Inc

The Bancorp, Inc. ("Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter and fiscal 2014.

Bancorp reported a net loss from continuing operations of $537,000 for fourth quarter 2014 compared to net income of $4.8 million from continuing operations in fourth quarter 2013, and respective diluted loss per share of $0.01 and earnings per share of $0.12. Year to date net income from continuing operations was $8.8 million in 2014 compared to $14.2 million in 2013, and respective diluted earnings per share was $0.23 and $0.37. Pre tax loss from continuing operations amounted to $3.3 million for fourth quarter 2014, and reflected $3.9 million of Bank Secrecy Act (“BSA”) and look back consulting expenses. Income from continuing operations does not include any income which would result upon the reinvestment of the proceeds of the planned sale of approximately $900 million of commercial and residential loans in the Bank’s discontinued operations.

Financial Highlights

Continuing Operations:

• 34% increase in net interest income to $15.8 million compared to $11.8 million in fourth quarter 2013.
• 8% increase in prepaid card fees to $12.6 million compared to $11.7 million in fourth quarter 2013.
• 27% increase in card processing and ACH fees to $1.4 million compared to $1.1 million in fourth quarter 2013.
• Increases over prior year targeted loan balances: SBA 43%, SBLOC 44%, Leasing 11%.Loans and CMBS loans held for sale in continuing operations totaled $1.1 billion at December 31, 2014.
• Tax equivalent yield on earning assets increased to 2.58% compared to 2.20% in fourth quarter 2013.
• Tier one capital to assets, tier one capital to risk assets and total capital to risk assets were 8.04%, 12.58% and 12.71%, compared to well capitalized minimums of 5%, 6% and 10%.

Frank M. Mastrangelo, Bancorp’s Chief Executive Officer, said, “Fourth quarter results reflect both challenges and progress in transitioning the bank’s business. BSA related consulting expenses, investments in personnel, a volatile CMBS market, and an increase in our FDIC insurance assessment contributed to a loss for the quarter. In the fourth quarter, our FDIC insurance expense increased approximately $1 million over the prior quarter. While reductions in that expense are dependent upon future FDIC evaluations of the Bank, the BSA new hires and consulting expenses reflect our intense efforts toward satisfying all BSA regulatory requests. We believe we are making progress. Additionally, the fourth quarter was absent a previous contributor to earnings in gains on the sale of loans to secondary CMBS markets, due to volatility in these markets which the Bank had not previously experienced. The volatility has since subsided and we look forward to a return to the level of contribution in prior periods. For the year, gain on such sales still amounted to $12.5 million, net of the fourth quarter $926,000 loss. As a result of our greater emphasis on our targeted specialty lending, those segments have experienced substantial year over year growth as follows: SBA 43%, SBLOC (Security Backed Lines of Credit) 44% and Leasing 11%. Prior to year end and with the assistance of advisors, we sold a portion of the discontinued loan portfolio to an entity managed by an independent investor, which contributed $16 million to that entity. The loans had a principal balance of $267.6 million and had previously been marked to $213.5 million with an additional $3.9 million loss recognized upon the sale. The Bank retains a 49% interest in the purchaser and provided financing of two notes. The first was for $178.2 million of notes at 1.5% and the second was for $15.4 million of subordinate notes at 10% per year and both mature in December, 2024. We continue to work with intermediaries to sell our approximate $900 million discontinued loan portfolio, so that sales proceeds may be reinvested in our continuing operations, including our targeted lending segments and investment securities. Book value at December 31, 2014 amounted to $9.44 compared to $9.53 at December 31, 2013. The Bank remains well capitalized.”

Financial Results

Bancorp reported a net loss from continuing operations of $537,000 for fourth quarter 2014 compared to net income of $4.8 million from continuing operations in fourth quarter 2013, and respective diluted loss per share of $0.01 and earnings per share of $0.12. After discontinued operations, Bancorp reported net loss to common shareholders for the three months ended December 31, 2014 of $2.2 million, or loss per share of $0.06, based on 37,708,862 weighted average shares outstanding, compared to net income available to common shareholders of $7.3 million, or diluted earnings per share of $0.19, based on 38,349,802 weighted average diluted shares outstanding, for the three months ended December 31, 2013.

Conference Call Webcast

You may access the LIVE webcast of Bancorp's Quarterly Earnings Conference Call at 8:30 AM EST Friday, January 30, 2015 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 866.318.8612, access code 14154902. You may listen to the replay of the webcast following the live call on Bancorp's investor relations website or telephonically until Friday, February 6, 2015 by dialing 888.286.8010, access code 63783831.

About Bancorp

The Bancorp, a leading provider of private-label banking and technology solutions for non-bank companies in the U.S., delivers a wide range of banking services to its customers, including the issuance of prepaid and debit cards, ACH payments, private label banking, healthcare accounts, and merchant payment processing. The Bancorp also engages in specialty lending, such as automobile-fleet leasing, the origination and sale of commercial real estate loans, Small Business Administration (“SBA”) lending and security backed lines of credit. With operations in the U.S. and now in Europe, The Bancorp is dedicated to setting a new standard in financial services and payments innovation. Since its formation in 2000, The Bancorp has become the leading issuer of prepaid cards, a National Preferred SBA Lender, a top custodian of Health Savings Accounts, a top ACH Originator, and one of the nation’s largest credit card transaction acquirers. For more information please visit www.thebancorp.com.

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. Financial highlights (unaudited)   Three months ended   Year ended December 31, December 31, 2014   2013 2014   2013 (dollars in thousands except per share data) Condensed income statement Net interest income $ 15,818   $ 11,826   $ 59,936   $ 41,149   Provision for loan and lease losses   150     (220 )   3,570     241   Non-interest income Service fees on deposit accounts 2,020 1,504 6,166 4,800 Card payment and ACH processing fees 1,413 1,106 5,402 4,046 Prepaid card fees 12,614 11,657 51,287 45,339 Gain (loss) on sale of loans (926 ) 4,560 12,542 17,225 Gain on sales of investment securities 85 1,104 450 1,889 Other than temporary impairment of investment securities - - - (20 ) Leasing income 663 707 2,899 2,560 Debit card income 383 337 1,679 892 Affinity fees 745 558 2,596 2,986 Other non-interest income   638     243     1,855     2,179   Total non-interest income 17,635 21,776 84,876 81,896 Non-interest expense Bank Secrecy Act and lookback consulting expenses 3,883 - 8,801 - Other non-interest expense   32,684     27,126     125,830     101,817   Total non-interest expense   36,567     27,126     134,631     101,817   Income (loss) from continuing operations before income tax expense (3,264 ) 6,696 6,611 20,987 Income tax expense (benefit)   (2,727 )   1,943     (2,154 )   6,797   Net income (loss) from continuing operations (537 ) 4,753 8,765 14,190 Net income (loss) from discontinued operations, net of tax   (1,654 )   2,571     (27,125 )   10,920   Net income (loss) available to common shareholders $ (2,191 ) $ 7,324   $ (18,360 ) $ 25,110     Net income (loss) per share from continuing operations - basic $ (0.01 ) $ 0.13   $ 0.23   $ 0.38   Net income (loss) per share from discontinued operations - basic $ (0.04 ) $ 0.07   $ (0.72 ) $ 0.29   Net income (loss) per share - basic $ (0.06 ) $ 0.20   $ (0.49 ) $ 0.67     Net income (loss) per share from continuing operations - diluted $ (0.01 ) $ 0.12   $ 0.23   $ 0.37   Net income (loss) per share from discontinued operations - diluted $ (0.04 ) $ 0.07   $ (0.72 ) $ 0.29   Net income (loss) per share - diluted $ (0.06 ) $ 0.19   $ (0.49 ) $ 0.66   Weighted average shares - basic 37,708,862 37,521,647 37,701,306 37,425,197 Weighted average shares - diluted 37,708,862 38,349,802

37,701,306(a)

 

38,121,084  

a) For net income per share from continuing operations - diluted weighted averages shares total 38,329,744.

        Balance sheet December 31, September 30, June 30, December 31, 2014 2014 2014 2013 (dollars in thousands) Assets: Cash and cash equivalents Cash and due from banks $ 8,665 $ 9,913 $ 13,288 $ 31,890 Interest earning deposits at Federal Reserve Bank 1,059,320 430,117 441,422 1,196,515 Securities sold under agreements to resell   46,250     55,450     15,906     7,544   Total cash and cash equivalents   1,114,235     495,480     470,616     1,235,949     Investment securities, available-for-sale, at fair value 1,493,639 1,442,049 1,459,626 1,253,117 Investment securities, held-to-maturity 93,765 96,951 97,130 97,205 Loans held for sale, at fair value 217,080 136,115 154,474 69,904 Loans, net of deferred fees and costs 879,533 866,765 812,164 655,320 Allowance for loan and lease losses   (3,638 )   (4,390 )   (4,082 )   (2,163 ) Loans, net   875,895     862,375     808,082     653,157   Federal Home Loan Bank & Atlantic Central Bankers Bank stock 1,002 3,409 3,409 3,209 Premises and equipment, net 17,697 17,536 16,236 15,659 Accrued interest receivable 11,251 11,272 10,692 8,747 Intangible assets, net 6,228 6,573 6,988 7,612 Other real estate owned - 725 - - Deferred tax asset, net 22,019 41,601 24,606 30,415 Investment in unconsolidated entity 193,595 - - - Assets held for sale 926,278 1,143,380 1,227,215 1,299,914 Other assets   45,305     39,046     36,090     31,177   Total assets $ 5,017,989   $ 4,296,512   $ 4,315,164   $ 4,706,065     Liabilities: Deposits Demand and interest checking $ 4,152,143 $ 3,412,593 $ 3,424,719 $ 3,585,241 Savings and money market 247,008 241,518 226,085 434,834 Time deposits - 24 24 142 Time deposits, $100,000 and over   -     -     -     100   Total deposits   4,399,151     3,654,135     3,650,828     4,020,317     Securities sold under agreements to repurchase 19,414 21,496 17,481 21,221 Subordinated debenture 13,401 13,401 13,401 13,401 Liabilities held for sale 223,154 227,898 231,587 253,203 Other liabilities   6,838     23,192     29,373     38,319   Total liabilities $ 4,661,958   $ 3,940,122   $ 3,942,670   $ 4,346,461     Shareholders' equity: Common stock - authorized, 50,000,000 shares of $1.00 par value; 37,808,862 and 37,720,945 shares issued at December 31, 2014 and 2013, respectively 37,809 37,809 37,809 37,721 Treasury stock (100,000 shares) (866 ) (866 ) (866 ) (866 ) Additional paid-in capital 297,987 297,122 296,523 294,576 Retained earnings 8,766 10,957 27,762 27,615 Accumulated other comprehensive income   12,335     11,368     11,266     558   Total shareholders' equity   356,031     356,390     372,494     359,604     Total liabilities and shareholders' equity $ 5,017,989   $ 4,296,512   $ 4,315,164   $ 4,706,065         Average balance sheet and net interest income Three months ended December 31, 2014 Three months ended December 31, 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 ** $ 1,036,760 $ 9,869 3.81 % $ 670,385 $ 7,070 4.22 % Leases - bank qualified* 16,341 229 5.61 % 18,680 243 5.20 % Investment securities-taxable 1,014,491 4,859 1.92 % 886,975 4,654 2.10 % Investment securities-nontaxable* 530,431 4,843 3.65 % 352,756 2,820 3.20 % Interest earning deposits at Federal Reserve Bank 504,612 332 0.26 % 846,148 547 0.26 % Federal funds sold/securities purchased under agreement to resell 49,250   167 1.36 % 39,610   146 1.47 % Net interest earning assets 3,151,885 20,299 2.58 % 2,814,554 15,480 2.20 %   Allowance for loan and lease losses (8,028 ) (2,320 ) Assets held for sale 1,234,255 11,161 3.62 % 1,342,093 13,738 4.09 % Other assets 64,904   107,400   $ 4,443,016   $ 4,261,727     Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 3,564,952 $ 2,272 0.25 % $ 3,083,382 $ 2,043 0.27 % Savings and money market 232,490   286 0.49 % 380,799   409 0.43 % Total deposits 3,797,442 2,558 0.27 % 3,464,181 2,452 0.28 %   Repurchase agreements 18,191 13 0.29 % 21,103 15 0.28 % Subordinated debt 13,401   135 4.03 % 13,401   115 3.43 % Total deposits and interest bearing liabilities 3,829,034 2,706 0.28 % 3,498,685 2,582 0.30 %   Liabilities held for sale 238,709 100 0.17 % 375,284 162 0.17 % Other liabilities 20,868   32,012   Total liabilities 4,088,611 3,905,981   Shareholders' equity 354,405   355,746   $ 4,443,016   $ 4,261,727   Net interest income on tax equivalent basis* $ 28,654 $ 26,474   Tax equivalent adjustment 1,775 1,072   Net interest income $ 26,879 $ 25,402 Net interest margin * 2.62 % 2.54 %               * Full taxable equivalent basis using a 35% statutory tax rate. ** Includes loans held for sale.       Average balance sheet and net interest income Year ended December 31, 2014 Year ended December 31, 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 ** $ 903,681 $ 35,849 3.97 % $ 626,158 $ 27,048 4.32 % Leases - bank qualified* 17,400 938 5.39 % 16,209 910 5.61 % Investment securities-taxable 1,031,584 20,662 2.00 % 811,440 15,999 1.97 % Investment securities-nontaxable* 477,384 17,454 3.66 % 246,490 7,320 2.97 % Interest earning deposits at Federal Reserve Bank 720,240 1,792 0.25 % 931,468 2,328 0.25 % Federal funds sold/securities purchased under agreement to resell 33,814   462 1.37 % 34,589   425 1.23 % Net interest-earning assets 3,184,103 77,157 2.42 % 2,666,354 54,030 2.03 %   Allowance for loan and lease losses (3,521 ) (2,320 ) Assets held for sale 1,251,834 49,891 3.99 % 1,348,599 55,400 4.11 % Other assets 115,003   95,629   $ 4,547,419   $ 4,108,262     Liabilities and Shareholders' Equity: Deposits: Demand and interest checking $ 3,568,481 $ 8,996 0.25 % $ 2,971,014 $ 7,766 0.26 % Savings and money market 261,757   1,259 0.48 % 357,342   1,632 0.46 % Total deposits 3,830,238 10,255 0.27 % 3,328,356 9,398 0.28 %   Short-term borrowings 5 - 0.00 % - - 0.00 % Repurchase agreements 17,496 50 0.29 % 18,442 54 0.29 % Subordinated debt 13,401   478 3.57 % 13,401   548 4.09 % Total deposits and interest bearing liabilities 3,861,140 10,783 0.28 % 3,360,199 10,000 0.30 %   Liabilities held for sale 290,883 512 0.18 % 375,170 768 0.20 % Other liabilities 17,692   25,226   Total liabilities 4,169,715 3,760,595   Shareholders' equity 377,704   347,667   $ 4,547,419   $ 4,108,262   Net interest income on tax equivalent basis* 115,753 98,662   Tax equivalent adjustment 6,437 2,880   Net interest income $ 109,316 $ 95,782 Net interest margin * 2.60 % 2.44 %   * Fully taxable equivalent basis using a 35% statutory tax rate ** Includes loans held for sale.       Allowance for loan and lease losses: Year ended December 31,   December 31, 2014 2013 (dollars in thousands)   Balance in the allowance for loan and lease losses at beginning of period (1) $ 2,163 $ 2,381   Loans charged-off: SBA non real estate 307 44 Direct lease financing 323 30 SBLOC 3 - Other consumer loans   1,521   446 Total   2,154   520   Recoveries: SBA non real estate 12 - Direct lease financing 25 8 Other consumer loans   22   53 Total   59   61 Net charge-offs 2,095 459 Provision charged to operations   3,570   241   Balance in allowance for loan and lease losses at end of period $ 3,638 $ 2,163 Net charge-offs/average loans 0.23% 0.07% Net charge-offs/average assets 0.05% 0.01% (1) Excludes activity from assets held for sale   Loan portfolio: December 31, September 30, June 30, December 31, 2014 2014 2014 2013 (dollars in thousands)   SBA non real estate $ 62,425 $ 61,363 $ 59,029 $ 53,324 SBA commercial mortgage 82,317 95,492 90,316 75,666 SBA construction   20,392   16,472   9,936   51 Total SBA loans 165,134 173,327 159,281 129,041 Direct lease financing 194,464 201,825 185,877 175,610 SBLOC 421,862 399,153 367,353 293,109 Other specialty lending 46,990 34,716 38,416 67 Other consumer loans   42,743   49,344   53,068   52,594 871,193 858,365 803,995 650,421 Unamortized loan fees and costs   8,340   8,400   8,169   4,899 Total loans, net of deferred loan fees and costs $ 879,533 $ 866,765 $ 812,164 $ 655,320   Small business lending portfolio: December 31, September 30, June 30, December 31, 2014 2014 2014 2013 (dollars in thousands)   SBA loans, net of deferred fees and costs 172,660 180,991 166,139 133,401 SBA loans included in HFS   38,704   31,332   25,174   14,708 Total SBA loans $ 211,364 $ 212,323 $ 191,313 $ 148,109         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, 2014 Bancorp 8.04% 12.58% 12.71% The Bancorp Bank 7.25% 11.67% 11.81% "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 Year ended December 31, December 31, 2014   2013 2014   2013 Selected operating ratios: Return on average assets (annualized) nm 0.68 % nm 0.61 % Return on average equity (annualized) nm 8.17 % nm 7.22 % Net interest margin 2.62 % 2.54 % 2.60 % 2.44 % Book value per share $ 9.44 $ 9.53 $ 9.44 $ 9.53   December 31, September 30, June 30, December 31, 2014 2014 2014 2013 Asset quality ratios: Nonperforming loans to total loans (1) 0.23 % 0.55 % 0.43 % 0.25 % Nonperforming assets to total assets (1) 0.04 % 0.13 % 0.08 % 0.03 % Allowance for loan and lease losses to total loans 0.41 % 0.51 % 0.50 % 0.33 %   Nonaccrual loans $ 1,907 $ 4,495 $ 3,413 $ 1,524 Other real estate owned   -     725     -     -   Total nonperforming assets $ 1,907   $ 5,220   $ 3,413   $ 1,524     Loans 90 days past due still accruing interest $ 149   $ 264   $ 119   $ 110     (1) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.   Three months ended December 31, September 30, June 30, December 31, 2014 2014 2014 2013 Gross dollar volume (GDV): Prepaid card GDV $ 9,119,682   $ 9,323,312   $ 10,025,213   $ 7,720,554    

The Bancorp, Inc.Andres Viroslav, 215-861-7990aviroslav@thebancorp.com