The Bancorp, Inc. Reports First Quarter 2019 Financial Results

Wilmington, DE – April 25, 2019 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the first quarter 2019.

Highlights

·	Diluted earnings per share increased to $0.32 for the quarter ended March 31, 2019, compared to $0.25 for the quarter ended March 31, 2018, an increase of 27%.

·	Net income increased to $17.9 million for the quarter ended March 31, 2019, compared to $14.1 million for the quarter ended March 31, 2018, an increase of 27%.

·	Net interest margin increased to 3.41% for the quarter ended March 31, 2019, compared to 3.12% for the quarter ended March 31, 2018.

·	Net interest income increased 13% to $34.0 million for the quarter ended March 31, 2019, compared to $30.1 million for the quarter ended March 31, 2018.

·	Average loans and leases, including loans held for sale, increased 16% to $2.28 billion for the quarter ended March 31, 2019, compared to $1.97 billion for the quarter ended March 31, 2018.

·	Prepaid card fees increased to $16.2 million for the quarter ended March 31, 2019, or 13%, compared to $14.3 million for the quarter ended March 31, 2018.

·	ACH (Automated Clearing House), card and other payment processing fees increased 36%, to $2.3 million for the quarter ended March 31, 2019, compared to $1.7 million for the quarter ended March 31, 2018.

·	Small Business Administration (“SBA”) loans increased 16% to $493.7 million at March 31, 2019, compared to $424.5 million at March 31, 2018.

·	The rate on $3.92 billion of average deposits and interest-bearing liabilities in the first quarter of 2019 was 0.98%. Average prepaid deposits of $2.54 billion for first quarter 2019 reflected an increase of 14.7% compared to $2.22 billion for the quarter ended March 31, 2018.

·	Consolidated leverage ratio was 9.9% at March 31, 2019. The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

·	Book value per common share at March 31, 2019 was $7.70 per share.

Damian Kozlowski, The Bancorp’s Chief Executive Officer, said, “Our strategic agenda in 2019 encompasses nine items that should further position our institution for revenue growth and profitability. Most of the initiatives focus on new products or reengineering of our platform to be best in class and highly efficient. The balance of initiatives include finishing our remediation process with our regulators and building a stronger community with all our Bancorp partners. Impact from all these initiatives should mostly be felt in increased revenue growth as expenses remain rigorously managed and reengineering has improved productivity and reduced unit costs in many areas.”

The Bancorp reported net income of $17.9 million, or $0.32 income per diluted share, for the quarter ended March 31, 2019, compared to net income of $14.1 million, or $0.25 income per diluted share, for the quarter ended March 31, 2018. 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 9.90%, 23.61%, 24.15% and 23.61%, 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 26, 2019 by clicking on the webcast link on The Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 1496107. 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 3, 2019 by dialing 855.859.2056, access code 1496107.

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

Financial highlights
(unaudited)

	Three months ended					Year ended
	March 31,					December 31,
Condensed income statement	2019		2018			2018
	(dollars in thousands except per share data)

Net interest income	$	34,010	$	30,074		$	120,849
Provision for loan and lease losses		1,700		700			3,585
Non-interest income
Service fees on deposit accounts		47		1,576			3,622
ACH, card and other payment processing fees		2,303		1,692			8,653
Prepaid card fees		16,163		14,282			54,627
Net realized and unrealized gains on commercial
loans originated for sale		10,763		11,729			20,498
Gain on sale of investment securities		-		26			41
Change in value of investment in unconsolidated entity		-		(1,171	)		(3,689	)
Leasing income		695		487			3,071
Affinity fees		-		102			281
Gain on sale of IRA portfolio		-		-			65,000
Other non-interest income		394		372			1,691
Total non-interest income		30,365		29,095			153,795
Non-interest expense
Salaries and employee benefits		23,840		21,073			79,816
Data processing expense		1,269		2,005			6,187
Legal expense		1,324		2,431			7,845
FDIC Insurance		1,929		2,219			8,819
Software		2,921		3,291			13,304
Losses and write downs on other real estate owned		-		45			-
Civil money penalty		-		(290	)		(290	)
Prepaid relationship exit expense		-		-			672
Lease termination expense		-		-			395
Other non-interest expense		7,946		8,275			34,530
Total non-interest expense		39,229		39,049			151,278
Income from continuing operations before income taxes		23,446		19,420			119,781
Income tax expense		6,035		5,399			32,241
Net income from continuing operations		17,411		14,021			87,540
Discontinued operations
Income from discontinued operations before income taxes		805		156			1,491
Income tax expense		286		37			354
Net income from discontinued operations, net of tax		519		119			1,137
Net income available to common shareholders	$	17,930	$	14,140		$	88,677

Net income per share from continuing operations - basic	$	0.31	$	0.25		$	1.55
Net income per share from discontinued operations - basic	$	0.01	$	-		$	0.02
Net income per share - basic	$	0.32	$	0.25		$	1.57

Net income per share from continuing operations - diluted	$	0.31	$	0.25		$	1.53
Net income per share from discontinued operations - diluted	$	0.01	$	-		$	0.02
Net income per share - diluted	$	0.32	$	0.25		$	1.55
Weighted average shares - basic		56,522,015		56,141,830			56,343,845
Weighted average shares - diluted		56,876,662		57,023,121			57,068,306

Balance sheet	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
	(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks	$	11,678		$	2,440		$	2,245		$	1,999
Interest earning deposits at Federal Reserve Bank		714,514			551,862			710,816			508,847
Securities sold under agreements to resell		-			-			64,518			64,312
Total cash and cash equivalents		726,192			554,302			777,579			575,158

Investment securities, available-for-sale, at fair value		1,368,602			1,236,324			1,274,417			1,381,020
Investment securities, held-to-maturity		84,428			84,432			84,433			86,370
Commercial loans held for sale, at fair value		570,426			688,471			308,470			349,806
Loans, net of deferred fees and costs		1,510,395			1,501,976			1,493,932			1,459,881
Allowance for loan and lease losses		(9,954	)		(8,653	)		(8,092	)		(7,285	)
Loans, net		1,500,441			1,493,323			1,485,840			1,452,596
Federal Home Loan Bank & Atlantic Community Bancshares stock		1,113			1,113			1,113			991
Premises and equipment, net		18,056			18,895			17,686			19,052
Accrued interest receivable		13,907			12,753			11,621			11,778
Intangible assets, net		3,463			3,846			4,229			4,995
Other real estate owned		-			-			405			405
Deferred tax asset, net		18,423			21,622			40,991			38,139
Investment in unconsolidated entity		58,258			59,273			64,212			70,016
Assets held for sale from discontinued operations		188,025			197,831			226,026			289,038
Other assets		75,642			65,726			63,178			89,736
Total assets	$	4,626,976		$	4,437,911		$	4,360,200		$	4,369,100

Liabilities:
Deposits
Demand and interest checking	$	3,993,828		$	3,904,638		$	3,540,605		$	3,461,881
Savings and money market		31,470			31,076			317,453			493,288
Total deposits		4,025,298			3,935,714			3,858,058			3,955,169

Securities sold under agreements to repurchase		93			93			158			182
Subordinated debenture		13,401			13,401			13,401			13,401
Long-term borrowings		41,499			41,674			41,841			42,157
Other liabilities		111,905			40,253			54,868			28,299
Total liabilities	$	4,192,196		$	4,031,135		$	3,968,326		$	4,039,208

Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 56,568,004 and 56,307,088 shares issued and outstanding at March 31, 2019 and 2018, respectively		56,568			56,446			56,446			56,307
Treasury stock (100,000 shares)		(866	)		(866	)		(866	)		(866	)
Additional paid-in capital		367,483			366,181			365,749			363,605
Accumulated earnings (deficit)		17,113			(817	)		(7,936	)		(75,345	)
Accumulated other comprehensive loss		(5,518	)		(14,168	)		(21,519	)		(13,809	)
Total shareholders' equity		434,780			406,776			391,874			329,892

Total liabilities and shareholders' equity	$	4,626,976		$	4,437,911		$	4,360,200		$	4,369,100

Average balance sheet and net interest income	Three months ended March 31, 2019								Three months ended March 31, 2018
	(dollars in thousands)
	Average					Average			Average					Average
Assets:	Balance			Interest		Rate			Balance			Interest		Rate
Interest earning assets:
Loans net of deferred fees and costs **	$	2,266,834		$	30,161		5.32	%	$	1,947,320		$	23,039		4.73	%
Leases - bank qualified*		17,793			428		9.62	%		21,036			334		6.35	%
Investment securities-taxable		1,303,491			10,530		3.23	%		1,375,568			9,699		2.82	%
Investment securities-nontaxable*		7,546			59		3.13	%		9,893			75		3.03	%
Interest earning deposits at Federal Reserve Bank		423,024			2,502		2.37	%		502,233			1,832		1.46	%
Federal funds sold and securities purchased under
agreement to resell		-			-		-			64,216			414		2.58	%
Net interest earning assets		4,018,688			43,680		4.35	%		3,920,266			35,393		3.61	%

Allowance for loan and lease losses		(8,638	)							(6,976	)
Loans held for sale from discontinued operations		173,800			2,025		4.66	%		276,370			2,527		3.66	%
Other assets		234,174								221,433
	$	4,418,024							$	4,411,093

Liabilities and Shareholders' Equity:
Deposits:
Demand and interest checking	$	3,798,837		$	8,833		0.93	%	$	3,535,791		$	4,301		0.49	%
Savings and money market		31,392			37		0.47	%		487,380			668		0.55	%
Total deposits		3,830,229			8,870		0.93	%		4,023,171			4,969		0.49	%

Short-term borrowings		74,386			503		2.70	%		24,844			104		1.67	%
Securities sold under agreements to repurchase		90			-		0.00	%		205			-		0.00	%
Subordinated debentures		13,401			195		5.82	%		13,401			160		4.78	%
Total deposits and liabilities		3,918,106			9,568		0.98	%		4,061,621			5,233		0.52	%

Other liabilities		79,140								22,452
Total liabilities		3,997,246								4,084,073

Shareholders' equity		420,778								327,020
	$	4,418,024							$	4,411,093
Net interest income on tax equivalent basis*				$	36,137							$	32,687

Tax equivalent adjustment					102								86

Net interest income				$	36,035							$	32,601
Net interest margin *							3.41	%							3.12	%

* Full taxable equivalent basis, using a statutory rate of 21% for 2019 and 2018.
** Includes loans held for sale.

Allowance for loan and lease losses:	Three months ended						Year ended
	March 31,			March 31,			December 31,
	2019			2018			2018
	(dollars in thousands)

Balance in the allowance for loan and lease losses at beginning of period (1)	$	8,653		$	7,096		$	7,096

Loans charged-off:
SBA non-real estate		322			388			1,348
SBA commercial mortgage		-			157			157
Direct lease financing		106			56			637
Other consumer loans		-			14			21
Total		428			615			2,163

Recoveries:
SBA non-real estate		17			40			57
SBA commercial mortgage		-			6			13
Direct lease financing		12			58			64
Other consumer loans		-			-			1
Total		29			104			135
Net charge-offs		399			511			2,028
Provision charged to operations		1,700			700			3,585

Balance in allowance for loan and lease losses at end of period	$	9,954		$	7,285		$	8,653
Net charge-offs/average loans		0.02	%		0.03	%		0.10	%
Net charge-offs/average loans (annualized)		0.07	%		0.11	%		0.10	%
Net charge-offs/average assets		0.01	%		0.01	%		0.05	%
(1) Excludes activity from assets held for sale from discontinued operations.

Loan portfolio:	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
	(in thousands)

SBA non-real estate	$	76,112		$	76,340		$	74,408		$	75,225
SBA commercial mortgage		179,397			165,406			166,432			149,227
SBA construction		23,979			21,636			17,978			20,143
Total SBA loans		279,488			263,382			258,818			244,595
Direct lease financing		384,930			394,770			393,135			382,284
SBLOC		791,986			785,303			778,552			759,369
Other specialty lending		34,425			31,836			40,799			45,729
Other consumer loans		9,301			16,302			12,172			17,416
		1,500,130			1,491,593			1,483,476			1,449,393
Unamortized loan fees and costs		10,265			10,383			10,456			10,488
Total loans, net of deferred fees and costs	$	1,510,395		$	1,501,976		$	1,493,932		$	1,459,881

Small business lending portfolio:	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
	(in thousands)

SBA loans, including deferred fees and costs		286,814			270,860			266,433			252,457
SBA loans included in HFS		206,901			199,977			193,372			172,030
Total SBA loans	$	493,715		$	470,837		$	459,805		$	424,487

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 March 31, 2019
The Bancorp, Inc.		9.90	%		23.64	%		24.18	%		23.64	%
The Bancorp Bank		9.63	%		23.17	%		23.71	%		23.17	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		8.00	%		10.00	%		6.50	%

As of December 31, 2018
The Bancorp, Inc.		10.11	%		20.64	%		21.07	%		20.64	%
The Bancorp Bank		9.70	%		20.18	%		20.61	%		20.18	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		8.00	%		10.00	%		6.50	%

	Three months ended						Year ended
	March 31,						December 31,
	2019			2018			2018
Selected operating ratios:
Return on average assets ⁽¹⁾		1.65	%		1.30	%		2.07	%
Return on average equity ⁽¹⁾		17.28	%		17.54	%		24.26	%
Net interest margin		3.41	%		3.12	%		3.19	%

⁽¹⁾Annualized

Book value per share table:	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
Book value per share	$	7.70		$	7.22		$	6.95		$	5.87


Loan quality table:	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
Nonperforming loans to total loans⁽²⁾		0.55	%		0.36	%		0.35	%		0.42	%
Nonperforming assets to total assets ⁽²⁾		0.18	%		0.12	%		0.13	%		0.15	%
Allowance for loan and lease losses to total loans		0.66	%		0.58	%		0.54	%		0.50	%

Nonaccrual loans	$	5,863		$	4,516		$	4,234		$	3,516
Other real estate owned		-			-			405			405
Total nonperforming assets	$	5,863		$	4,516		$	4,639		$	3,921

Loans 90 days past due still accruing interest	$	2,483		$	954		$	1,015		$	2,643

⁽²⁾ Nonperforming loan and asset ratios include nonaccrual loans and loans 90 days past due still accruing interest.

	Three months ended
	March 31,			December 31,			September 30,			March 31,
	2019			2018			2018			2018
	(in thousands)
Gross dollar volume (GDV) ⁽³⁾:
Prepaid card GDV	$	16,937,325		$	13,526,647		$	12,525,527		$	13,402,496

⁽³⁾Gross dollar volume represents the total dollar amount spent on prepaid and debit cards issued by The Bancorp Bank.

Business line quarterly summary:
Quarter ended March 31, 2019
(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 **		4.4	%	$	792		4	%		4	%	na		na
SBA		5.6	%		494		16	%		19	%	na		na
Leasing		6.3	%		395		-			-		$	0.7		43	%
Commercial real estate securitization		5.9	%		364	nm			nm				10.8		-
Weighted average yield		5.3	%	$	2,045

Deposits
Payment solutions (primarily prepaid) ***		1.2	%	$	2,542		15	%	nm			$	16.2		13	%
Card payment and ACH processing		0.8	%		893		-		nm				2.3		36	%

* Loan categories based on period end balance and Payment Solutions based on average quarterly balances.
** Comprised of SBLOC loans.
*** Includes $900,000 of fee income related to 2018 incentives.

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 - 2018		(46	)		(46	)
2019 Marks		-			-
Payments received		(89	)
March 31, 2019 Bancorp book value**	$	58

Total marks				$	(104	)
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 which reflects the Bank's investment in a securitization of certain loans from the Bank's discontinued loan portfolio.
** Approximately 44% of expected principal recoveries were from loans and properties pending liquidation or other resolution as of March 31, 2019.

Walnut Street portfolio composition as of March 31, 2019

Collateral type	% of Portfolio
Commercial real estate non-owner occupied
Retail		52.2	%
Office		13.2	%
Other		5.9	%
Construction and land		18.4	%
Commercial non real estate and industrial		0.5	%
First mortgage residential owner occupied		6.1	%
First mortgage residential non-owner occupied		2.8	%
Other		0.9	%
Total		100.0	%

Cumulative analysis of marks on discontinued commercial loan principal as of March 31, 2019

	Discontinued		Cumulative		% to original
	loan principal		marks		principal
	(dollars in millions)

Commercial loan discontinued principal before marks	$	115
Florida mall held in discontinued other real estate owned		42	$	27
Previous mark charges		14		14
Mark at March 31, 2019				7
Total	$	171	$	48	28%

Analysis of discontinued loan relationships as of March 31, 2019

	Performing		Nonperforming		Total		Performing		Nonperforming		Total
	loan principal		loan principal		loan principal		loan marks		loan marks		marks
	(in millions)

6 loan relationships > $7 million	$	61	$	14	$	75	$	3	$	2	$	5
Loan relationships < $7 million		28		5		33		2		-		2
	$	89	$	19	$	108	$	5	$	2	$	7

Quarterly activity for discontinued commercial loan principal

	Commercial
	loan principal
	(in millions)

Commercial loan discontinued principal December 31, 2018 before marks	$	125
Quarterly paydowns		(10	)
Commercial loan discontinued principal March 31, 2019 before marks	$	115
Marks March 31, 2019		(7	)
Net commercial loan exposure March 31, 2019	$	108
Residential mortgages		51
Net loans	$	159
Florida Mall in other real estate owned		15
18 Properties in other real estate owned		14
Total discontinued assets at March 31, 2019	$	188

Discontinued commercial loan composition March 31, 2019

Collateral type	Unpaid principal balance			Mark March 31, 2019		Mark as % of portfolio
	(dollars in millions)
Commercial real estate - non-owner occupied:
Retail	$	4		$	0.6		14	%
Office		4			0.0		-
Other		38			1.9		5	%
Construction and land		24			0.1		-
Commercial non-real estate and industrial		10			0.5		4	%
1 to 4 family construction		13			3.8		30	%
First mortgage residential non-owner occupied		12			0.4		4	%
Commercial real estate owner occupied:
Retail		8			-		-
Office		-			-		4	%
Other		-			-		1	%
Residential junior mortgage		1			-		-
Other		1			-		-
Total	$	115
Less: mark		(7	)
Net commercial loan exposure March 31, 2019	$	108		$	7.3		6	%