Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of The Bancorp (NASDAQ:TBBK), a banking products and services provider to retail and commercial markets, as well as small and mid-sized business within the U.S., dipped as much as 17% after reporting its first-quarter results after the closing bell last night.
So what: For the quarter, The Bancorp saw revenue increase a robust 20% to $53.6 million on the heels of a 26% increase in non-interest income and a 17% jump in net interest income. Outstanding loans also grew by 17% from the year-ago period. Where the wheels fell off the wagon was when it reported an adjusted profit of just $0.01 per share, down 95% from the $0.20 per share recorded during this quarter last year, and well below Wall Street's forecast of $0.28 per share. As noted by CEO Besty Cohen, "an additional loan loss provision of $11.8 million principally related to newly identified adversely classified loans" adversely affected its bottom line.
Now what: Overall, it wasn't as terrible of a quarter as it might appear on the surface. There were a few mild concerns, such as a rise in the number of commercial and construction loan charge-offs and a sizable increase in the number of loans 90 or more days past due collecting interest from the year-ago quarter (189 versus 110). However, there were also a number of positives, including a five basis point improvement in net interest margin from the prior year, a 5% improvement to book value, and the aforementioned robust revenue growth. While the loan loss surprise wasn't pleasant for shareholders, it's likely a one-time event, meaning if the stock continues to drop it could actually become a bargain for investors seeking a small-cap bank with double-digit growth potential.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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