The Bancorp (TBBK) Tops Q3 EPS by 6c

The Bancorp (NASDAQ: TBBK) reported Q3 EPS of $0.23, $0.06 better than the analyst estimate of $0.17.

• Pretax income from continuing operations increased to $83.2 million for the quarter ended September 30, 2018 compared to $12.2 million for the quarter ended September 30, 2017. The increase reflected a $65.0 million gain on the sale of the Company’s Individual Retirement Account portfolio.
• Diluted earnings per share for the quarter ended September 30, 2018 were $1.07 and $0.23, excluding the tax effected impact of the gain on sale of the IRA portfolio. That compares to $0.13 diluted earnings per share for the quarter ended September 30, 2017.
• Net interest income increased 10% to $30.6 million for the quarter ended September 30, 2018, compared to $27.9 million for the quarter ended September 30, 2017.
• Interest income on security backed lines of credit (“SBLOC”) loans increased 30% to $7.7 million for the quarter ended September 30, 2018, compared to $5.9 million for the quarter ended September 30, 2017.
• Net interest margin increased to 3.22% for the quarter ended September 30, 2018, compared to 3.11% for the quarter ended June 30, 2018.
• Total payments revenue, consisting of prepaid card fees and card payment and Automated Clearing House processing fees for the quarter ended September 30, 2018 increased to $15.5 million, or 10%, compared to the quarter ended September 30, 2017. Of that total, prepaid fees for the quarter ended September 30, 2018 increased to $13.2 million, or 6%, and ACH, card and other processing fees increased to $2.3 million, or 46% compared to the quarter ended September 30, 2017, respectively.
• Loans increased 9% to $1.50 billion at September 30, 2018, compared to $1.37 billion at September 30, 2017.
• SBLOC loans increased 8% to $778.6 million at September 30, 2018, compared to $720.3 million at September 30, 2017.
• Small Business Administration (“SBA”) loans increased 19% to $459.8 million at September 30, 2018, compared to $386.8 million at September 30, 2017.
• Direct lease financing increased 7% to $396.0 million at September 30, 2018, compared to $368.7 million at September 30, 2017.
• The rate on $3.88 billion of average deposits and interest-bearing liabilities in the third quarter of 2018 was 0.83% with a rate of 0.94% for $2.11 billion of average prepaid card deposits.
• Non-interest expense decreased to $37.3 million for the quarter ended September 30, 2018, a 15% decrease from the third quarter of 2017. Year-to-date non-interest expense was $113.7 million compared to $119.0 million for year-to-date 2017, a decrease of 5%.
• The benefit of the lower federal tax rate in 2018 compared to 2017 was increased in the third quarter, as the lower federal statutory rate of 21% (compared to 34% in 2017) was applied to the $65 million gain on sale of IRA portfolio.
• Consolidated leverage ratio was 9.61% at September 30, 2018. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.
• Book value per common share at September 30, 2018 was $6.95 per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “As previously announced, we sold our Safe Harbor IRA portfolio that generated $6 million in 2017 fees. The sale price was $65 million and added 84 cents a share to book value. The sale of our Safe Harbor IRA portfolio concludes our divestiture of non-core assets started when our new business plan was approved by our board in the third quarter of 2016. Like our European and Health Savings Accounts franchises, our safe harbor IRA portfolio 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, allowed us to complete the process of focusing and de-risking our institution, while significantly enhancing our capital position without diluting the equity ownership of our shareholders.”

For earnings history and earnings-related data on The Bancorp (TBBK) click here.

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