The Bancorp's stock fell nearly 15% Friday after the Wilmington, Del., company reported a large quarterly loss tied to a bad commercial real estate loan.
The $4.2 billion-asset company said in a press release late Thursday that it lost $25.5 million in the third quarter, or more than quadruple what it lost a year earlier. For more than a year, the company has been struggling with a range of issues, including strengthening its anti-money laundering compliance.
Chief Executive Damian Kozlowski said in a the release that he was "extremely disappointed" that an issue arose with "a large lending relationship in discontinued operations" that lead to the third-quarter loss.
The quarter included a fair value mark in connection with a secured CRE loan with a principal amount of $41.9 million. The loan became nonperforming because of the borrower's failure to make principal payments. Based on a preliminary estimate of collateral value, the fair value was reduced by $23.9 million and the amount was recorded as a charge to earnings.
Though the large writedown was disappointing, it's unlikely a sign about larger problems in The Bancorp's loan portfolio, William Wallace, an analyst at Raymond James, wrote in a note to clients.
"We believe the borrower may have attempted to force management's hand around a potential concession … to which management decided to take a hard-line stance in order to refrain from setting a precedent for other borrowers," Wallace wrote. "As a result, we tend to believe management's stance that the issue is one-time in nature and not indicative of wholesale credit deterioration."
The Bancorp has implemented a plan to emphasize revenue and cost cutting, Kozlowski said. In September, the company said it would
Noninterest expense fell about 6% to $44.7 million. Consulting costs tied to a Bank Secrecy Act lookback fell more than 88% to $1.3 million. Kozlowski said the company had completed the BSA lookback and that it should no longer affect earnings.
Net interest income rose 32% to $23.5 million. Noninterest income increased 18% to $20.4 million.