The Bancorp, Inc. Reports First Quarter 2021 Financial Results

Rhea-AI Summary

The Bancorp, Inc. (NASDAQ: TBBK) reported strong Q1 2021 results with net income of $26.1 million and diluted earnings per share of $0.44. Key metrics included a return on assets of 1.6% and return on equity of 18%. Net interest income rose 25% to $53.8 million, driven by a 37% increase in average loans and leases totaling $4.48 billion. The company anticipates meeting its $100 million net income target for 2021, driven by positive market trends and a focus on enhancing its payments ecosystem.

Positive

• Net income increased 107% year-over-year to $26.1 million.
• Diluted earnings per share rose 100% to $0.44.
• Net interest income grew 25% to $53.8 million.
• Average loans and leases increased 37% to $4.48 billion.
• Book value per share increased 20% to $10.42.

Negative

• Net interest margin decreased to 3.34% from 3.58% the previous quarter.

The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter of 2021.

Highlights

• For the quarter ended March 31, 2021, The Bancorp earned net income of $26.1 million from continuing operations, and $0.44 diluted earnings per share from combined continuing and discontinued operations.

• Return on assets and equity for the quarter ended March 31, 2021 amounted to 1.6% and 18%, respectively, compared to 1.6% and 17%, respectively, for the quarter ended December 31, 2020. (all percentages “annualized”.)

• Net interest margin amounted to 3.34% for the quarter ended March 31, 2021, compared to 3.34% for the quarter ended March 31, 2020 and 3.58% for the quarter ended December 31, 2020.

• Net interest income increased 25% to $53.8 million for the quarter ended March 31, 2021, compared to $42.9 million for the quarter ended March 31, 2020.

• Average loans and leases, including loans at fair value, increased 37% to $4.48 billion for the quarter ended March 31, 2021, compared to $3.27 billion for the quarter ended March 31, 2020.

• Prepaid, debit card and related fees increased 4% to $19.2 million for the quarter ended March 31, 2021, compared to $18.5 million for the quarter ended March 31, 2020. Gross dollar volume (GDV), representing total spend on cards, increased 23% period over period.

• SBLOC (securities backed lines of credit), IBLOC (insurance backed lines of credit) and advisor financing loans increased 45% year over year and 5% quarter over quarter to $1.68 billion at March 31, 2021.

• Small Business Loans, including those held at fair value, increased 16% year over year to $692.1 million at March 31, 2021, exclusive of $190.3 million of Paycheck Protection Program (PPP) balances outstanding at that date. Those balances reflect payments on previously outstanding PPP loans and $95 million of first quarter 2021 PPP loans. There were 630 PPP loans made in first quarter 2021, generating approximate fees of $3.4 million, with 90% of such loans under $350,000. Those fees will be recognized throughout full year 2021, which is the estimated period of repayment by the U.S. government.

• Leasing increased 9% year over year to $484.3 million at March 31, 2021.

• The average interest rate on $6.04 billion of average deposits and interest-bearing liabilities during the first quarter of 2021 was 0.21%. Average prepaid and debit card account deposits of $4.28 billion for first quarter 2021, reflected an increase of 36% over the $3.15 billion for the quarter ended March 31, 2020.

• Consolidated and The Bancorp Bank (“the Bank”) leverage ratios were 8.62% and 8.69%, respectively, at March 31, 2021. The Bancorp and its subsidiary, The Bank, remain well capitalized.

• Book value per common share at March 31, 2021 was $10.42 per share compared to $8.69 at March 31, 2020, an increase of 20%, primarily as a result of retained earnings per share.

• The Bancorp repurchased 594,428 shares of its common stock at an average cost of $16.82 per share during the three months ended March 31, 2021.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Our business plan for 2021 is in full implementation. The main focus continues to be product and platform expansion with a rigorous focus on building the best payments ecosystem in the financial services industry. Our plan includes a comprehensive and integrated analysis of the market and competitors, and the needed investments to build towards the future and create scalable core competencies that our partners can use to innovate and grow. We also continue to invest heavily in anti-money laundering and compliance to have best-in-class capabilities to meet regulatory guidance and expectations. We are currently on track to meet or exceed our financial targets for 2021. We continue to closely watch the impact of the full reopening of the US economy, Fed policy, government stimulus, interest rates and the virtualization of consumer spending to understand the likely impacts on TBBK. Currently, those impacts are mostly positive for our business model and should drive continued growth in business volumes and profitability into 2022. Lastly, our guidance target for 2021 continues to be $1.70 a share or approximately $100 million in net income. The earnings per share estimates do not include share repurchases that have been previously announced.”

The Bancorp reported net income of $26.0 million, or $0.44 per diluted share, for the quarter ended March 31, 2021, compared to net income of $12.6 million, or $0.22 per diluted share, for the quarter ended March 31, 2020. 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 8.62%, 14.81%, 15.23% and 14.81%, 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, April 30, 2021 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 5792244. You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, May 7, 2021 by dialing 855.859.2056, access code 5792244.

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." 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,” “plan,” “estimate,” “continue,” or similar words , and are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results, events or achievements to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. These risks and uncertainties include those relating to the on-going COVID-19 pandemic, the impact it will have on our business and the industry as a whole, and the resulting governmental and societal responses. 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. 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.

The Bancorp, Inc. Financial highlights
		Three months ended						Year ended
		March 31,						December,
Condensed income statement	2021 (unaudited)			2020 (unaudited)			2020
		(dollars in thousands, except per share data)
Net interest income	$	53,757		$	42,911		$	194,866
Provision for credit losses		822			3,579			6,352
Non-interest income
ACH, card and other payment processing fees		1,796			1,846			7,101
Prepaid, debit card and related fees		19,208			18,540			74,465
Net realized and unrealized gains (losses) on commercial
loans originated for sale		1,996			(5,156)			(3,874)
Change in value of investment in unconsolidated entity		—			(45)			(45)
Leasing related income		965			833			3,294
Other non-interest income		109			581			3,676
Total non-interest income		24,074			16,599			84,617
Non-interest expense
Salaries and employee benefits		25,658			22,741			101,737
Data processing expense		1,126			1,169			4,712
Legal expense		2,054			913			5,141
FDIC insurance		2,380			2,589			9,808
Software		3,684			3,477			14,028
Other non-interest expense		6,981			7,529			29,421
Total non-interest expense		41,883			38,418			164,847
Income from continuing operations before income taxes		35,126			17,513			108,284
Income tax expense		9,066			4,352			27,688
Net income from continuing operations		26,060			13,161			80,596
Discontinued operations
Loss from discontinued operations before income taxes		(124)			(775)			(3,816)
Income tax benefit		(29)			(205)			(3,304)
Net loss from discontinued operations, net of tax		(95)			(570)			(512)
Net income	$	25,965		$	12,591		$	80,084
Net income per share from continuing operations - basic	$	0.45		$	0.23		$	1.40
Net loss per share from discontinued operations - basic	$	—		$	(0.01)		$	(0.01)
Net income per share - basic	$	0.45		$	0.22		$	1.39
Net income per share from continuing operations - diluted	$	0.44		$	0.23		$	1.38
Net loss per share from discontinued operations - diluted	$	—		$	(0.01)		$	(0.01)
Net income per share - diluted	$	0.44		$	0.22		$	1.37
Weighted average shares - basic		57,372,337			57,220,844			57,474,612
Weighted average shares - diluted		59,294,081			57,926,785			58,411,222

Balance sheet	March 31,			December 31,			September 30,			March 31,
	2021 (unaudited)			2020			2020 (unaudited)			2020 (unaudited)
		(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks	$	7,838		$	5,984		$	6,220		$	13,610
Interest earning deposits at Federal Reserve Bank		1,738,749			339,531			294,758			105,978
Total cash and cash equivalents		1,746,587			345,515			300,978			119,588
Investment securities, available-for-sale, at fair value		1,128,459			1,206,164			1,264,903			1,353,278
Commercial loans, at fair value (held-for-sale at March 31, 2020)		1,780,762			1,810,812			1,849,947			1,716,450
Loans, net of deferred fees and costs		2,827,076			2,652,323			2,488,760			1,985,755
Allowance for credit losses		(16,419)			(16,082)			(15,727)			(14,883)
Loans, net		2,810,657			2,636,241			2,473,033			1,970,872
Federal Home Loan Bank and Atlantic Central Bankers Bank stock		1,368			1,368			1,368			1,142
Premises and equipment, net		17,196			17,608			15,849			17,148
Accrued interest receivable		20,164			20,458			18,852			15,660
Intangible assets, net		2,746			2,845			2,563			2,857
Deferred tax asset, net		10,900			9,757			7,952			12,797
Investment in unconsolidated entity, at fair value		31,047			31,294			31,783			34,273
Assets held-for-sale from discontinued operations		106,925			113,650			122,253			134,118
Other assets		90,530			81,129			79,821			79,925
Total assets	$	7,747,341		$	6,276,841		$	6,169,302		$	5,458,108
Liabilities:
Deposits
Demand and interest checking	$	6,231,220		$	5,205,010		$	4,882,834		$	4,512,949
Savings and money market		690,281			257,050			505,928			178,174
Total deposits		6,921,501			5,462,060			5,388,762			4,691,123
Securities sold under agreements to repurchase		42			42			42			42
Short-term borrowings		—			—			—			140,000
Senior debt		98,406			98,314			98,222			—
Subordinated debenture		13,401			13,401			13,401			13,401
Other long-term borrowings		40,085			40,277			40,462			40,813
Other liabilities		77,142			81,583			69,954			74,625
Total liabilities	$	7,150,577		$	5,695,677		$	5,610,843		$	4,960,004
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 57,247,913 and 57,325,556 shares issued and outstanding at March 31, 2021 and 2020, respectively		57,248			57,551			57,491			57,326
Additional paid-in capital		370,481			377,452			375,985			372,218
Retained earnings		154,418			128,453			104,282			60,960
Accumulated other comprehensive income		14,617			17,708			20,701			7,600
Total shareholders' equity		596,764			581,164			558,459			498,104
Total liabilities and shareholders' equity	$	7,747,341		$	6,276,841		$	6,169,302		$	5,458,108

Average balance sheet and net interest income		Three months ended March 31, 2021									Three months ended March 31, 2020
		(dollars in thousands; unaudited)
		Average						Average			Average					Average
Assets:		Balance			Interest			Rate			Balance			Interest		Rate
Interest earning assets:
Loans, net of deferred fees and costs**	$	4,476,617		$	47,811			4.27%		$	3,262,378		$	39,159		4.80%
Leases-bank qualified*		6,982			118			6.76%			10,975			200		7.29%
Investment securities-taxable		1,193,009			8,808			2.95%			1,395,545			10,495		3.01%
Investment securities-nontaxable*		4,042			35			3.46%			5,174			39		3.02%
Interest earning deposits at Federal Reserve Bank		747,845			183			0.10%			493,876			1,623		1.31%
Net interest earning assets		6,428,495			56,955			3.54%			5,167,948			51,516		3.99%
Allowance for credit losses		(16,069)									(10,176)
Assets held-for-sale from discontinued operations		109,128			853			3.13%			137,286			1,275		3.71%
Other assets		214,171									226,881
	$	6,735,725								$	5,521,939
Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	5,501,697		$	1,617			0.12%		$	4,353,690		$	6,695		0.62%
Savings and money market		407,186			149			0.15%			173,575			50		0.12%
Time deposits		—			—			—			319,505			1,483		1.86%
Total deposits		5,908,883			1,766			0.12%			4,846,770			8,228		0.68%
Short-term borrowings		13,055			8			0.25%			56,813			165		1.16%
Repurchase agreements		41			—			—			72			—		—
Subordinated debentures		13,401			113			3.37%			13,401			162		4.84%
Senior debt		100,140			1,279			5.11%			—			—		—
Total deposits and liabilities		6,035,520			3,166			0.21%			4,917,056			8,555		0.70%

FAQ

What were The Bancorp's earnings results for Q1 2021?

The Bancorp reported net income of $26.1 million and diluted earnings per share of $0.44 for Q1 2021.

How much did The Bancorp's net interest income increase in Q1 2021?

Net interest income increased by 25% to $53.8 million compared to Q1 2020.

What is The Bancorp's guidance for earnings per share in 2021?

The guidance target for 2021 is $1.70 per share.

What is The Bancorp's average loans and leases for Q1 2021?

Average loans and leases rose 37% to $4.48 billion for Q1 2021.

What is the current return on equity for The Bancorp?

The return on equity for Q1 2021 was 18%.