Raymond James Downgrades The Bancorp (TBBK) to Market Perform
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Raymond James downgraded The Bancorp (NASDAQ: TBBK) from Strong Buy to Market Perform.
Analyst William Wallace comments "While the presentation of the Call Report differs from GAAP reporting, it appears that the company has taken another significant mark against the discontinued loan portfolio ($5.0 million loss in discontinued operations) and its investment in an unconsolidated entity, Walnut Street ($13.2 million decline in value of unconsolidated entity). Combined, we estimated a consolidated loss (continuing and discontinued operations) of $16.5 million, net of tax, at the bank level. Unfortunately, credit metrics deteriorated, as nonperforming assets (NPAs) increased to 5.3% of loans and other real estate owned from 3.6% at 3Q16. With the company’s bank-level Tier 1 Leverage ratio declining to 7.1% from 7.4% following the loss in 4Q, our concern turns back to capital and the potential need for another capital raise to boost this ratio closer to management’s targeted 8.5-9.0% range. Given the increased likelihood of a capital raise following another quarter of significant credit marks, we do not believe having a positive bias on shares is appropriate."
Shares of The Bancorp closed at $5.99 yesterday.
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