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Section 1: 8-K (THE BANCORP, INC. FORM 8-K)



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  7/26/2018
 
The Bancorp, Inc.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  000-51018
 
Delaware
  
23-3016517
(State or other jurisdiction of
  
(IRS Employer
incorporation)
  
Identification No.)
 
409 Silverside Road
Wilmington, DE 19809
(Address of principal executive offices, including zip code)
 
302-385-5000
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [ ]
 
 

 
  
Item 2.02.    Results of Operations and Financial Condition
 
On April 26, 2018, The Bancorp, Inc. (the "Company") issued a press release regarding its earnings for the three and six months ended June 30, 2018. A copy of this press release is furnished with this report as exhibit 99.1. The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
  
Item 9.01.    Financial Statements and Exhibits
 
(d) Exhibits
 
The exhibit furnished as part of this Current Report on Form 8-K is identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by reference.
 
 
 
 EXHIBIT INDEX
 
Exhibit No.
  
Description
 
EX-99.1
  
 
 
 

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
The Bancorp, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date: July 26, 2018
 
 
 
By:
 
/s/Paul Frenkiel                                                    
 
 
 
 
 
 
 
 
Paul Frenkiel
 
 
 
 
 
 
 
 
Chief Financial Officer and Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1
 
The Bancorp, Inc. Reports Second Quarter 2018 Financial Results

Wilmington, DE – July 26, 2018 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the second quarter of 2018.

Highlights

·
Pretax income from continuing operations increased 9% to $8.4 million for the quarter ended June 30, 2018 compared to $7.7 million for the quarter ended June 30, 2017.

·
Net interest income increased 9% to $29.5 million for the quarter ended June 30, 2018, compared to $27.2 million for the quarter ended June 30, 2017.

·
Interest income on security backed lines of credit (“SBLOC”) loans increased 43% to $7.4 million for the quarter ended June 30, 2018, compared to $5.2 million for the quarter ended June 30, 2017.

·
Net interest margin increased to 3.11% for the quarter ended June 30, 2018, compared to 3.10% for the quarter ended June 30, 2017.

·
Total prepaid and other payments revenue for the quarter ended June 30, 2018 increased to $16.1 million, or 9%, compared to the quarter ended June 30, 2017.  Of that total, prepaid fees for the quarter ended June 30, 2018 increased to $14.1 million, or 6%, and card payment and ACH processing fees increased to $2.0 million, or 34% compared to the quarter ended June 30, 2017, respectively.

·
Loans increased 10% to $1.51 billion at June 30, 2018, compared to $1.37 billion at June 30, 2017.

·
SBLOC loans increased 11% to $795.8 million at June 30, 2018, compared to $718.7 million at June 30, 2017.

·
Small Business Administration (“SBA”) loans increased 17% to $439.5 million at June 30, 2018, compared to $376.6 million at June 30, 2017.

·
Direct lease financing increased 5% to $389.4 million at June 30, 2018, compared to $370.6 million at June 30, 2017.

·
The rate on $3.96 billion of average deposits and interest-bearing liabilities in the second quarter of 2018 was 0.59% with a rate of 0.8% for $2.14 billion of average prepaid card deposits.

·
Consolidated leverage ratio was 8.06% at June 30, 2018. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

·
Book value per common share at June 30, 2018 was $5.91 per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “The sale of our Safe Harbor IRAs in July 2018 concludes our divestiture of non-core assets started when our new business plan was approved by our board of directors in the 3rd quarter of 2016.  Like our European and HSA franchises, our safe harbor business was sub scale, carried regulatory risks and was unlikely to deliver longer-term growth or innovation to our business model.  Therefore, its sale for $65 million or over 10 times 2017 fees will allow our company to likely hit long-term capital targets in the 3rd quarter of this year and provide capital and management focus for growth of our core strategic businesses.”

The Bancorp reported net income of $6.1 million, or $0.11 earnings per diluted share, for the quarter ended June 30, 2018, compared to net income of $18.9 million, or $0.34 income per diluted share, for the quarter ended June 30, 2017. Net income for 2017 included a $9.9 million net tax benefit resulting from the reversal of deferred tax valuation allowances which more than offset the impact of statutory tax rates. Pretax income from continuing operations for second quarter 2018 increased to $8.4 million, or approximately 9% higher than the $7.7 million reported for second quarter 2017.  Income from continuing operations does not include any income which may result from the reinvestment of the proceeds from sales or repayment 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 8.06%, 18.60%, 19.02% and 18.60%, respectively, compared to well capitalized minimums of 5%, 8%, 10% and 6.5%, respectively.
 
 
1

 
Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, July 27, 2018 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 1095334.  You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, August 3, 2018 by dialing 855.859.2056, access code 1095334.

About The Bancorp

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 SEC, 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 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 presentation, except as may be required under applicable law.

The Bancorp, Inc. Contact
Andres Viroslav
215-861-7990
aviroslav@thebancorp.com
 
 
2

 

The Bancorp, Inc.
 
Financial highlights
 
(unaudited)
 
   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
Condensed income statement
 
2018
   
2017
   
2018
   
2017
 
   
(dollars in thousands except per share data)
 
                         
Net interest income
 
$
29,534
   
$
27,215
   
$
59,608
   
$
52,092
 
Provision for loan and lease losses
   
900
     
350
     
1,600
     
1,350
 
Non-interest income
                               
Service fees on deposit accounts
   
1,646
     
1,520
     
3,222
     
3,195
 
Card payment and ACH processing fees
   
2,014
     
1,504
     
3,706
     
3,032
 
Prepaid card fees
   
14,073
     
13,234
     
28,355
     
26,781
 
Gain (loss) on sale of loans
   
(454
)
   
758
     
11,275
     
6,141
 
Gain on sale of investment securities
   
-
     
586
     
26
     
1,089
 
Change in value of investment in unconsolidated entity
   
(1,732
)
   
3
     
(2,903
)
   
(16
)
Leasing income
   
1,108
     
832
     
1,595
     
1,383
 
Affinity fees
   
85
     
149
     
187
     
1,170
 
Gain on sale of health savings accounts
   
-
     
2,538
     
-
     
2,538
 
Loss from sale of European prepaid card operations
   
-
     
(3,437
)
   
-
     
(3,437
)
Other non-interest income
   
300
     
486
     
672
     
516
 
Total non-interest income
   
17,040
     
18,173
     
46,135
     
42,392
 
Non-interest expense
                               
Salaries and employee benefits
   
18,897
     
18,108
     
39,970
     
36,114
 
Data processing expense
   
1,356
     
2,641
     
3,361
     
6,121
 
Legal expense
   
1,770
     
1,427
     
4,201
     
3,165
 
FDIC Insurance
   
2,929
     
3,458
     
5,148
     
5,523
 
Software
   
2,995
     
3,012
     
6,286
     
6,240
 
Losses and write downs on other real estate owned
   
-
     
19
     
45
     
19
 
Civil money penalty
   
-
     
-
     
(290
)
   
-
 
Lease termination expense
   
395
     
-
     
395
     
-
 
Other non-interest expense
   
8,968
     
8,698
     
17,243
     
17,964
 
Total non-interest expense
   
37,310
     
37,363
     
76,359
     
75,146
 
Income from continuing operations before income taxes
   
8,364
     
7,675
     
27,784
     
17,988
 
Income tax expense (benefit)
   
2,209
     
(9,923
)
   
7,608
     
(5,912
)
Net income from continuing operations
   
6,155
     
17,598
     
20,176
     
23,900
 
Discontinued operations
                               
Income (loss) from discontinued operations before income taxes
   
(50
)
   
1,992
     
106
     
4,659
 
Income tax expense (benefit)
   
(36
)
   
726
     
1
     
1,732
 
Net income (loss) from discontinued operations, net of tax
   
(14
)
   
1,266
     
105
     
2,927
 
Net income available to common shareholders
 
$
6,141
   
$
18,864
   
$
20,281
   
$
26,827
 
                                 
Net income per share from continuing operations - basic
 
$
0.11
   
$
0.32
   
$
0.36
   
$
0.43
 
Net income per share from discontinued operations - basic
 
$
-
   
$
0.02
   
$
-
   
$
0.05
 
Net income per share - basic
 
$
0.11
   
$
0.34
   
$
0.36
   
$
0.48
 
                                 
Net income per share from continuing operations - diluted
 
$
0.11
   
$
0.32
   
$
0.36
   
$
0.43
 
Net income per share from discontinued operations - diluted
 
$
-
   
$
0.02
   
$
-
   
$
0.05
 
Net income per share - diluted
 
$
0.11
   
$
0.34
   
$
0.36
   
$
0.48
 
Weighted average shares - basic
   
56,340,816
     
55,689,439
     
56,241,873
     
55,612,288
 
Weighted average shares - diluted
   
57,141,219
     
56,030,035
     
57,083,297
     
55,889,985
 
 
 
 
3


 
Balance sheet
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2018
   
2018
   
2017
   
2017
 
    
(dollars in thousands)
 
Assets:
                       
Cash and cash equivalents
                       
Cash and due from banks
 
$
3,052
   
$
1,999
   
$
3,152
   
$
6,458
 
Interest earning deposits at Federal Reserve Bank
   
373,782
     
508,847
     
841,471
     
475,387
 
Securities sold under agreements to resell
   
64,216
     
64,312
     
64,312
     
65,076
 
     Total cash and cash equivalents
   
441,050
     
575,158
     
908,935
     
546,921
 
                                 
Investment securities, available-for-sale, at fair value
   
1,305,494
     
1,381,020
     
1,294,484
     
1,149,116
 
Investment securities, held-to-maturity
   
86,354
     
86,370
     
86,380
     
93,419
 
Loans held for sale, at fair value
   
447,997
     
349,806
     
503,316
     
542,819
 
Loans, net of deferred fees and costs
   
1,506,812
     
1,463,064
     
1,392,228
     
1,370,263
 
Allowance for loan and lease losses
   
(8,014
)
   
(7,285
)
   
(7,096
)
   
(7,353
)
Loans, net
   
1,498,798
     
1,455,779
     
1,385,132
     
1,362,910
 
Federal Home Loan Bank & Atlantic Community Bancshares stock
   
1,113
     
991
     
991
     
6,211
 
Premises and equipment, net
   
18,275
     
19,052
     
20,051
     
22,004
 
Accrued interest receivable
   
11,810
     
11,778
     
10,900
     
10,880
 
Intangible assets, net
   
4,612
     
4,995
     
5,377
     
5,515
 
Other real estate owned
   
405
     
405
     
450
     
-
 
Deferred tax asset, net
   
39,779
     
38,139
     
34,802
     
53,226
 
Investment in unconsolidated entity
   
67,994
     
70,016
     
74,473
     
120,862
 
Assets held for sale from discontinued operations
   
241,694
     
289,038
     
304,313
     
336,246
 
Other assets
   
56,499
     
86,553
     
78,543
     
53,888
 
     Total assets
 
$
4,221,874
   
$
4,369,100
   
$
4,708,147
   
$
4,304,017
 
                                 
Liabilities:
                               
Deposits
                               
Demand and interest checking
 
$
3,287,682
   
$
3,461,881
   
$
3,806,965
   
$
3,437,482
 
Savings and money market
   
511,598
     
493,288
     
453,877
     
438,602
 
     Total deposits
   
3,799,280
     
3,955,169
     
4,260,842
     
3,876,084
 
                                 
Securities sold under agreements to repurchase
   
161
     
182
     
217
     
273
 
Subordinated debenture
   
13,401
     
13,401
     
13,401
     
13,401
 
Long-term borrowings
   
42,000
     
42,157
     
42,323
     
42,680
 
Other liabilities
   
34,485
     
28,299
     
67,215
     
40,560
 
     Total liabilities
 
$
3,889,327
   
$
4,039,208
   
$
4,383,998
   
$
3,972,998
 
                                 
Shareholders' equity:
                               
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,410,525 and 55,757,559 shares issued at June 30, 2018 and 2017, respectively
   
56,411
     
56,307
     
55,861
     
55,858
 
Treasury stock (100,000 shares)
   
(866
)
   
(866
)
   
(866
)
   
(866
)
Additional paid-in capital
   
364,460
     
363,605
     
363,196
     
361,478
 
Accumulated deficit
   
(69,213
)
   
(75,345
)
   
(89,485
)
   
(85,114
)
Accumulated other comprehensive loss
   
(18,245
)
   
(13,809
)
   
(4,557
)
   
(337
)
Total shareholders' equity
   
332,547
     
329,892
     
324,149
     
331,019
 
                                 
     Total liabilities and shareholders' equity
 
$
4,221,874
   
$
4,369,100
   
$
4,708,147
   
$
4,304,017
 
                                 
 
 
4

 

Average balance sheet and net interest income
 
Three months ended June 30, 2018
   
Three months ended June 30, 2017
 
   
(dollars in thousands)
 
   
Average
         
Average
   
Average
         
Average
 
Assets:
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Interest earning assets:
                                   
Loans net of unearned fees and costs **
 
$
1,828,398
   
$
21,704
     
4.75
%
 
$
1,770,226
   
$
19,748
     
4.46
%
Leases - bank qualified*
   
20,214
     
337
     
6.67
%
   
21,539
     
415
     
7.71
%
Investment securities-taxable
   
1,435,598
     
10,770
     
3.00
%
   
1,249,890
     
9,138
     
2.92
%
Investment securities-nontaxable*
   
8,702
     
63
     
2.90
%
   
14,632
     
107
     
2.93
%
Interest earning deposits at Federal Reserve Bank
   
458,695
     
2,095
     
1.83
%
   
480,417
     
1,255
     
1.04
%
Federal funds sold and securities purchased under agreement to resell
   
64,300
     
475
     
2.95
%
   
65,355
     
333
     
2.04
%
Net interest earning assets
   
3,815,907
     
35,444
     
3.72
%
   
3,602,059
     
30,996
     
3.44
%
                                                 
Allowance for loan and lease losses
   
(7,168
)
                   
(7,190
)
               
Assets held for sale from discontinued operations
   
281,476
     
2,066
     
2.94
%
   
348,452
     
3,135
     
3.60
%
Other assets
   
212,397
                     
274,335
                 
    
$
4,302,612
                   
$
4,217,656
                 
                                                 
Liabilities and Shareholders' Equity:
                                               
Deposits:
                                               
Demand and interest checking
 
$
3,439,265
   
$
5,022
     
0.58
%
 
$
3,437,845
   
$
2,912
     
0.34
%
Savings and money market
   
502,783
     
617
     
0.49
%
   
434,792
     
520
     
0.48
%
Total deposits
   
3,942,048
     
5,639
     
0.57
%
   
3,872,637
     
3,432
     
0.35
%
                                                 
Short-term borrowings
   
1,648
     
9
     
2.18
%
   
6,516
     
22
     
1.35
%
Securities sold under agreements to repurchase
   
171
     
-
     
0.00
%
   
273
     
-
     
0.00
%
Subordinated debentures
   
13,401
     
178
     
5.31
%
   
13,401
     
144
     
4.30
%
Total deposits and liabilities
   
3,957,268
     
5,826
     
0.59
%
   
3,892,827
     
3,598
     
0.37
%
                                                 
Other liabilities
   
14,124
                     
4,434
                 
Total liabilities
   
3,971,392
                     
3,897,261
                 
                                                 
Shareholders' equity
   
331,220
                     
320,395
                 
    
$
4,302,612
                   
$
4,217,656
                 
Net interest income on tax equivalent basis*
         
$
31,684
                   
$
30,533
         
                                                 
Tax equivalent adjustment
           
84
                     
183
         
                                                 
Net interest income
         
$
31,600
                   
$
30,350
         
Net interest margin *
                   
3.11
%
                   
3.10
%
 
                                             
* Full taxable equivalent basis, using a statutory rate of 21% for 2018 and 35% for 2017, respectively.
                                       
** Includes loans held for sale.
                                       
 
 
 
5

 

Average balance sheet and net interest income
 
Six months ended June 30, 2018
   
Six months ended June 30, 2017
 
   
(dollars in thousands)
 
   
Average
         
Average
   
Average
         
Average
 
Assets:
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Interest earning assets:
                                   
Loans net of unearned fees and costs **
 
$
1,887,511
   
$
44,743
     
4.74
%
 
$
1,700,508
   
$
37,119
     
4.37
%
Leases - bank qualified*
   
20,623
     
671
     
6.51
%
   
21,361
     
811
     
7.59
%
Investment securities-taxable
   
1,405,749
     
20,469
     
2.91
%
   
1,287,360
     
18,143
     
2.82
%
Investment securities-nontaxable*
   
9,294
     
138
     
2.97
%
   
15,025
     
218
     
2.90
%
Interest earning deposits at Federal Reserve Bank
   
480,343
     
3,927
     
1.64
%
   
616,345
     
2,771
     
0.90
%
Federal funds sold and securities purchased under agreement to resell
   
64,258
     
889
     
2.77
%
   
57,635
     
560
     
1.94
%
Net interest earning assets
   
3,867,778
     
70,837
     
3.66
%
   
3,698,234
     
59,622
     
3.22
%
                                                 
Allowance for loan and lease losses
   
(7,076
)
                   
(6,708
)
               
Assets held for sale from discontinued operations
   
288,050
     
4,593
     
3.19
%
   
340,900
     
6,496
     
3.81
%
Other assets
   
199,981
                     
285,428
                 
    
$
4,348,733
                   
$
4,317,854
                 
                                                 
Liabilities and Shareholders' Equity:
                                               
Deposits:
                                               
Demand and interest checking
 
$
3,487,205
   
$
9,323
     
0.53
%
 
$
3,547,820
   
$
5,699
     
0.32
%
Savings and money market
   
495,124
     
1,285
     
0.52
%
   
432,267
     
1,167
     
0.54
%
Total deposits
   
3,982,329
     
10,608
     
0.53
%
   
3,980,087
     
6,866
     
0.35
%
                                                 
Short-term borrowings
   
13,182
     
113
     
1.71
%
   
3,276
     
22
     
1.34
%
Securities sold under agreements to repurchase
   
188
     
-
     
0.00
%
   
274
     
-
     
0.00
%
Subordinated debentures
   
13,401
     
338
     
5.04
%
   
13,401
     
282
     
4.21
%
Total deposits and liabilities
   
4,009,100
     
11,059
     
0.55
%
   
3,997,038
     
7,170
     
0.36
%
                                                 
Other liabilities
   
11,285
                     
5,824
                 
Total liabilities
   
4,020,385
                     
4,002,862
                 
                                                 
Shareholders' equity
   
328,348
                     
314,992
                 
    
$
4,348,733
                   
$
4,317,854
                 
Net interest income on tax equivalent basis*
         
$
64,371
                   
$
58,948
         
                                                 
Tax equivalent adjustment
           
170
                     
360
         
                                                 
Net interest income
         
$
64,201
                   
$
58,588
         
Net interest margin *
                   
3.11
%
                   
2.90
%
 
                                       
* Full taxable equivalent basis, using a statutory rate of 21% for 2018 and 35% for 2017.
                                       
** Includes loans held for sale.
                                       
 
 
 
6


 
Allowance for loan and lease losses:
 
Six months ended
   
Year ended
       
   
June 30,
   
June 30,
   
December 31,
       
   
2018
   
2017
   
2017
       
    
(dollars in thousands)
       
                         
Balance in the allowance for loan and lease losses at beginning of period (1)
 
$
7,096
   
$
6,332
   
$
6,332
       
                               
Loans charged-off:
                             
SBA non-real estate
   
388
     
136
     
1,171
       
SBA commercial mortgage
   
157
     
-
     
-
       
Direct lease financing
   
244
     
202
     
926
       
Other consumer loans
   
15
     
16
     
110
       
Total
   
804
     
354
     
2,207
       
                               
Recoveries:
                             
SBA non-real estate
   
47
     
2
     
18
       
SBA commercial mortgage
   
11
     
-
     
-
       
Direct lease financing
   
64
     
-
     
7
       
Other consumer loans
   
-
     
23
     
26
       
Total
   
122
     
25
     
51
       
Net charge-offs
   
682
     
329
     
2,156
       
Provision charged to operations
   
1,600
     
1,350
     
2,920
       
                               
Balance in allowance for loan and lease losses at end of period
 
$
8,014
   
$
7,353
   
$
7,096
       
Net charge-offs/average loans
   
0.04
%
   
0.02
%
   
0.12
%
     
Net charge-offs/average loans (annualized)
   
0.07
%
   
0.04
%
   
0.12
%
     
Net charge-offs/average assets
   
0.02
%
   
0.01
%
   
0.05
%
     
(1) Excludes activity from assets held for sale from discontinued operations.
                             
                               
Loan portfolio:
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
     
2018
     
2018
     
2017
     
2017
 
    
(dollars in thousands)
 
                                 
SBA non-real estate
 
$
75,141
   
$
75,225
   
$
70,379
   
$
73,476
 
SBA commercial mortgage
   
156,268
     
149,227
     
142,086
     
126,224
 
SBA construction
   
17,781
     
20,143
     
16,740
     
11,057
 
Total SBA loans
   
249,190
     
244,595
     
229,205
     
210,757
 
Direct lease financing
   
389,387
     
385,467
     
377,660
     
370,556
 
SBLOC
   
795,823
     
759,369
     
730,462
     
718,707
 
Other specialty lending
   
48,253
     
45,729
     
30,720
     
44,389
 
Other consumer loans
   
13,174
     
17,416
     
14,133
     
15,858
 
     
1,495,827
     
1,452,576
     
1,382,180
     
1,360,267
 
Unamortized loan fees and costs
   
10,985
     
10,488
     
10,048
     
9,996
 
Total loans, net of deferred loan fees and costs
 
$
1,506,812
   
$
1,463,064
   
$
1,392,228
   
$
1,370,263
 
                                 
Small business lending portfolio:
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
     
2018
     
2018
     
2017
     
2017
 
    
(dollars in thousands)
 
                                 
SBA loans, including deferred fees and costs
   
257,412
     
252,457
     
236,724
     
218,253
 
SBA loans included in HFS
   
182,072
     
172,030
     
165,177
     
158,389
 
Total SBA loans
 
$
439,484
   
$
424,487
   
$
401,901
   
$
376,642
 
 
 
 
7


 
Capital ratios:
 
Tier 1 capital
   
Tier 1 capital
   
Total capital
   
Common equity
 
   
to average
   
to risk-weighted
   
to risk-weighted
   
tier 1 to risk
 
   
assets ratio
   
assets ratio
   
assets ratio
   
weighted assets
 
As of June 30, 2018
                       
The Bancorp, Inc.
   
8.06
%
   
18.60
%
   
19.02
%
   
18.60
%
The Bancorp Bank
   
7.69
%
   
18.11
%
   
18.54
%
   
18.11
%
"Well capitalized" institution (under FDIC regulations)
   
5.00
%
   
8.00
%
   
10.00
%
   
6.50
%
                                 
As of December 31, 2017
                               
The Bancorp, Inc.
   
7.90
%
   
16.73
%
   
17.09
%
   
16.73
%
The Bancorp Bank
   
7.61
%
   
16.23
%
   
16.59
%
   
16.23
%
"Well capitalized" institution (under FDIC regulations)
   
5.00
%
   
8.00
%
   
10.00
%
   
6.50
%


   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2018
   
2017
   
2018
   
2017
 
Selected operating ratios:
                       
Return on average assets (1)
   
0.57
%
   
1.79
%
   
0.94
%
   
1.25
%
Return on average equity (1)
   
7.44
%
   
23.62
%
   
12.46
%
   
17.17
%
Net interest margin
   
3.11
%
   
3.10
%
   
3.11
%
   
2.90
%
Book value per share
   
-
     
-
   
$
5.91
   
$
5.94
 
                                 
(1) Annualized
                               
                                 
   
June 30,
   
March 31,
   
December 31,
   
June 30,
 
     
2018
     
2018
     
2017
     
2017
 
Nonperforming loans to total loans (2)
   
0.42
%
   
0.42
%
   
0.30
%
   
0.41
%
Nonperforming assets to total assets (2)
   
0.16
%
   
0.15
%
   
0.10
%
   
0.13
%
Allowance for loan and lease losses to total loans
   
0.53
%
   
0.50
%
   
0.51
%
   
0.54
%
                                 
Nonaccrual loans
 
$
4,915
   
$
3,516
   
$
3,996
   
$
5,115
 
Other real estate owned
   
405
     
405
     
450
     
104
 
     Total nonperforming assets
 
$
5,320
   
$
3,921
   
$
4,446
   
$
5,219
 
                                 
Loans 90 days past due still accruing interest
 
$
1,458
   
$
2,643
   
$
227
   
$
494
 
                                 
(2) Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.
 
                                 
   
Three months ended
 
   
June 30,
   
March 31,
   
December 31,
   
June 30,
 
     
2018
     
2017
     
2017
     
2017
 
   
(in thousands)
 
Gross dollar volume (GDV) (3):
                               
Prepaid card GDV
 
$
12,799,531
   
$
13,402,496
   
$
10,963,456
   
$
11,894,601
 
                                 
(3) Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp.
 
 
 
 
8


 
Business line quarterly summary:
                                   
Quarter ended June 30, 2018
                                   
(dollars in millions)
                                   
                                     
         
Balances
   
Non interest income
 
               
% Growth
         
% Growth
 
Major business lines
 
Average approximate
rates
   
Balances*
   
Year
over year
   
Linked
quarter
annualized
   
Current
quarter
   
Year
over year
 
Loans
                                   
Institutional banking **
   
3.8
%
 
$
796
     
11
%
   
19
%
 
$
1.6
   
nm
 
SBA
   
5.2
%
   
439
     
17
%
   
14
%
   
-
     
-
 
Leasing
   
6.1
%
   
389
     
5
%
   
4
%
   
1.1
     
33
%
Commercial real estate securitization ***
   
5.6
%
   
266
   
nm
   
nm
     
-
   
nm
 
Weighted average yield
   
4.8
%
 
$
1,890
                                 
                                                 
Deposits
                                               
Payment solutions (primarily prepaid)
   
0.8
%
 
$
2,138
     
4
%
   
-4
%
 
$
14.1
     
6
%
Card payment and ACH processing
   
0.4
%
   
905
     
3
%
   
1
%
   
2.0
     
34
%
                                                 
* Loan categories based on period end balance and deposit categories based on average quarterly balances.
 
** Includes SBLOC loans; includes safe harbor individual retirement fee income prior to sale.
 
*** Balances reflect timing of related sales.
 
 
 
 
9


 
Analysis of Walnut Street* marks:
           
             
   
Loan activity
   
Marks
 
   
(dollars in millions)
 
             
Original Walnut Street loan balance, December 31, 2014
 
$
267
       
Marks through December 31, 2014 sale date
   
(58
)
 
$
(58
)
Sales price of Walnut Street
   
209
         
Equity investment from independent investor
   
(16
)
       
December 31, 2014 Bancorp book value
   
193
         
Additional marks 2015 - 2017
   
(42
)
   
(42
)
2018 Marks
   
(3
)
   
(3
)
Payments received
   
(80
)
       
June 30, 2018 Bancorp book value**
 
$
68
         
                 
Total marks
         
$
(103
)
Divided by:
               
Original Walnut Street loan balance
         
$
267
 
Percentage of total mark to original balance
           
39
%
                 
* Walnut Street is the “investment in unconsolidated entity” on the balance sheet and is comprised of notes from the sale of certain loans from the discontinued loan portfolio to a third party.
 
** Approximately 47% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of June 30, 2018.
 
                 
Walnut Street portfolio composition as of June 30, 2018
         
                 
Collateral type
 
% of Portfolio
         
Commercial real estate non-owner occupied
               
Retail
   
47.4
%
       
Office
   
12.7
%
       
Other
   
4.4
%
       
Construction and land
   
23.4
%
       
Commercial non real estate and industrial
   
1.3
%
       
First mortgage residential owner occupied
   
5.6
%
       
First mortgage residential non-owner occupied
   
4.4
%
       
Other
   
0.8
%
       
Total
   
100.0
%
       
 
 
 
10

 

Cumulative analysis of marks on discontinued commercial loan principal as of June 30, 2018
                    
 
Discontinued
 
Cumulative
 
% to original
 
loan principal
 
marks
 
principal
 
(dollars in millions)
                    
Commercial loan discontinued principal before marks
 
$
167
   
$
-
   
Florida mall held in discontinued other real estate owned
   
42
     
27
   
Previous mark charges
   
10
     
10
   
Commercial loan mark at June 30, 2018
   
-
     
14
   
Total
 
$
219
   
$
51
 
23%


Analysis of discontinued commercial loan relationships as of June 30, 2018
                         
                                     
   
Performing
   
Nonperforming
   
Total
   
Performing
   
Nonperforming
   
Total
 
   
loan principal
   
loan principal
   
loan principal
   
loan marks
   
loan marks
   
marks
 
   
(in millions)
 
                                     
7 loan relationships > $8 million
 
$
82
   
$
25
   
$
107
   
$
4
   
$
-
   
$
4
 
Loan relationships < $8 million
   
37
     
9
     
46
     
4
     
6
     
10
 
   
$
119
   
$
34
   
$
153
   
$
8
   
$
6
   
$
14
 

Quarterly activity for discontinued commercial loan principal
 
       
   
Commercial
 
   
loan principal
 
   
(in millions)
 
       
Commercial loan discontinued principal March 31, 2018 before marks
 
$
210
 
Quarterly paydowns
   
(41
)
Quarterly charge downs
   
(2
)
Commercial loan discontinued principal June 30, 2018 before marks
 
$
167
 
Mark June 30, 2018
   
(14
)
Net commercial loan exposure June 30, 2018
 
$
153
 
Residential mortgages
   
57
 
Net loans
 
$
210
 
Florida mall in other real estate owned
   
15
 
Other 25 properties in other real estate owned
   
16
 
Other assets related to discontinued operations
   
1
 
Total discontinued assets at June 30, 2018
 
$
242
 
 
 
 
11


 
Discontinued commercial loan composition June 30, 2018
 
                   
Collateral type
 
Unpaid
principal
balance
   
Mark June 30, 2018
   
Mark as %
of portfolio
 
   
(dollars in millions)
 
Commercial real estate - non-owner occupied:
                 
Retail
 
$
10
   
$
0.7
     
6
%
Office
   
8
     
0.7
     
9
%
Other
   
41
     
0.6
     
1
%
Construction and land
   
43
     
1.2
     
3
%
Commercial non-real estate and industrial
   
12
     
1.6
     
13
%
1 to 4 family construction
   
25
     
4.7
     
19
%
First mortgage residential non-owner occupied
   
17
     
4.5
     
27
%
Commercial real estate owner occupied:
                       
Retail
   
9
     
0.3
     
-
 
Office
   
-
     
-
     
-
 
Other
   
-
     
-
     
-
 
Residential junior mortgage
   
1
     
-
     
-
 
Other
   
1
     
-
     
-
 
Total
 
$
167
                 
Less: mark
   
(14
)
               
Net commercial loan exposure June 30, 2018
 
$
153
   
$
14.3
     
9
%

 
 
 
12
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