The Bancorp, Inc. · NASDAQ:TBBK
The Bancorp — Bancorp — FY2021 Earnings Presentation
34 slides from The Bancorp's earnings presentation, Jan 27, 2022
Slide 1: The Bancorp Investor Presentation
JANUARY 27 th 2022 THE BANCORP INVESTOR PRESENTATION
Slide 2: Forward Looking Statements & Other Disclosures
2 FORWARD LOOKING STATEMENTS & OTHER DISCLOSURES DISCLOSURES Statements in this presentation regarding The Bancorp, Inc.’s (“The Bancorp”) business that are not historical facts or concern our earnings guidance or 2025 plan are “forward - looking statements”. These statements may be identified by th
Slide 3: The Bancorp Has Delivered Strong Financial Performance
3 THE BANCORP HAS DELIVERED STRONG FINANCIAL PERFORMANCE 2020 2021 PROFITABILITY ROE 15% 18% GROWTH REVENUE GROWTH 1 14% 13% SCALABLE PLATFORM EFFICIENCY RATIO 1 59% 53% KEY FINANCIAL METRICS Increasing level of profitability Double digit growth Platform delivering operating leverage FINANCIAL PERFO
Slide 4: Our Business Plan Outlines the Path to Expand Our Leadership
4 OUR BUSINESS PLAN OUTLINES THE PATH TO EXPAND OUR LEADERSHIP AMONG PEER BANKS AND IN THE PAYMENTS INDUSTRY $0.90 $1.37 $1.88 $2.15 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 2019 2020 2021 2022 Guidance EARNINGS PER SHARE EARNINGS GUIDANCE GUIDANCE Our 2022 guidance 1 is $2.15 per
Slide 5: Recognized Performance: Industry Leadership
5 FINANCIAL INDUSTRY LEADER CIO OUTLOOK TOP PAYMENT & CARD SOLUTIONS PROVIDER JUL. 2020 FORTUNE 100 FASTEST GROWING COMPANY RANKED #28 OCT. 2020 CIO REVIEW TOP BANKING TECHNOLOGY SOLUTIONS PROVIDER FEB. 2020 IPA CONSUMER CHAMPION APR. 2021 NILSON REPORT RANKED #1 PREPAID CARD ISSUER JUNE 2021 EQUAL
Slide 6: Fintech Leadership: Key Player in the Payments Ecosystem
6 FINTECH LEADERSHIP THE BANCORP IS A KEY PLAYER IN THE PAYMENTS ECOSYSTEM FINTECH ECOSYSTEM Enabling fintech companies by providing industry leading card issuing, payments facilitation and regulatory expertise to a highly diversified portfolio of clients. PAYMENT NETWORKS FACILITATE payments betwee
Slide 7: Specialized Lending Business Lines and Credit Roadmap
7 SPECIALIZED LENDING BUSINESS LINES AND CREDIT ROADMAP Real Estate Bridge Lending $1.7B Emphasis on core business lines with expectation to add related products and enter adjacent markets Expand commercial real estate bridge lending business with focus on multi - family assets Remain positioned to
Slide 8: Our Strategic Positioning Should Drive Earnings and Profitability
8 OUR STRATEGIC POSITIONING SHOULD DRIVE EARNINGS AND PROFITABILITY HIGHLIGHTS Our platform can deliver growth from our specialized lending activities while remaining positioned to capitalize on new and higher - growth fintech partnerships. SPECIALIZED COMMERCIAL BANKS Efficient platforms Products i
Slide 9: Financial Targets
9 FINANCIAL TARGETS Our multi - year plan outlines the path to deliver shareholder value by activating payments ecosystem 2.0, executing on our credit roadmap and enhancing our capital return program. CAPITAL RETURN INTRODUCING OUR 2025 PLAN VISION 500 Established the plan to optimize our balance sh
Slide 10: The Bancorp Business Model
10 FINTECH SOLUTIONS GENERATES NON - INTEREST INCOME AND ATTRACTS STABLE, LOWER - COST DEPOSITS DEPLOYED INTO LOWER RISK ASSETS IN SPECIALIZED MARKETS FINTECH SOLUTIONS Enabling fintech companies by providing card sponsorship and facilitating other payments activities INSTITUTIONAL BANKING Lending s
Slide 11: Deposits & Fees: Fintech Solutions
DEPOSITS & FEES: FINTECH SOLUTIONS GENERATES NON - INTEREST INCOME AND STABLE, LOWER - COST DEPOSITS
Slide 12: Fintech Solutions: Fee Generating Activities
12 FINTECH SOLUTIONS: FEE GENERATING ACTIVITIES % TOTAL BANK REVENUE 2021 1 12 % GROSS DOLLAR VOLUME GROWTH 2 OUR FINTECH SOLUTIONS BUSINESS ENABLES LEADING FINTECH COMPANIES DEBIT PROGRAM MANAGERS (CHALLENGER BANKS) PREPAID/STORED VALUE PROGRAM MANAGERS • Provides physical and virtual card issuing
Slide 13: Fintech Solutions: Established Operating Platform
13 FINTECH SOLUTIONS: ESTABLISHED OPERATING PLATFORM HIGHLY SCALABLE PLATFORM TO SUPPORT OUR STRATEGIC PARTNERS ESTABLISHED OPERATING PLATFORM • Infrastructure in place to support significant growth • Long - term relationships with multiple processors enables efficient onboarding • Continued technol
Slide 14: Fintech Solutions: Stable, Lower-Cost Deposit Generator
14 DEPOSIT GROWTH FROM PAYMENTS BUSINESS FINTECH SOLUTIONS: STABLE, LOWER - COST DEPOSIT GENERATOR 1 Time deposits have rarely been used due to lower cost deposit growth and previous balances are included in “Other”. 2 Average for 2021 $3,819 $3,812 $3,862 $4,025 $5,235 $5,749 $0 $500 $1,000 $1,500
Slide 15: Loans & Leases: Highly Specialized Lending with Low Loss Histories
LOANS & LEASES: HIGHLY SPECIALIZED LENDING WITH LOW LOSS HISTORIES
Slide 16: Loans & Leases: Credit Roadmap
16 LOANS & LEASES: CREDIT ROADMAP CREDIT ROADMAP Delivering enterprise value from our balance sheet is an important element of our business strategy and a primary focus of our credit roadmap initiative. MANAGE CREDIT RISK TO DESIRED LEVELS IMPROVE NIM AND MONITOR INTEREST RATE SENSITIVITY MANAGE REA
Slide 17: Lower Credit Risk Loan Portfolio
17 LOWER CREDIT RISK LOAN PORTFOLIO LOANS & LEASES: STRONG COLLATERAL AND GOVERNMENT GUARANTEES BUSINESS LINE BALANCE SHEET CATEGORY Q4 2021 PRINCIPAL BALANCE ($ MILLIONS) % OF TOTAL PORTFOLIO Institutional Banking Securities - backed lines of credit (SBLOC) ( A) $ 1,141 23% Insurance - backed lines
Slide 18: Institutional Banking
18 INSTITUTIONAL BANKING LOANS & LEASES: INSTITUTIONAL BANKING BUSINESS OVERVIEW : • Automated loan application platform, Talea, provides industry - leading speed and delivery • Securities - backed lines of credit provide fast and flexible liquidity for investment portfolios • Insurance - backed lin
Slide 19: Institutional Banking Loan Portfolio
19 INSTITUTIONAL BANKING PRIMARILY COMPRISED OF SECURITIES & CASH VALUE LIFE INSURANCE LENDING LOANS & LEASES: INSTITUTIONAL BANKING LOAN PORTFOLIO LOAN TYPE PRINCIPAL BALANCE % OF PORTFOLIO Securities - backed lines of credit (SBLOC) $ 1,141 56% Insurance - backed lines of credit (IBLOC) 788 39% Ad
Slide 20: Small Business Lending
20 SMALL BUSINESS LENDING LOANS & LEASES : SMALL BUSINESS LENDING BUSINESS OVERVIEW: • Established a distinct platform within the fragmented SBA market • National portfolio approach allows pricing and client flexibility • Solid credit performance demonstrated over time • Client segment strategy tail
Slide 21: Strong Collateral & Government Guarantees
21 LOANS & LEASES: STRONG COLLATERAL & GOVERNMENT GUARANTEES SMALL BUSINESS LOANS BY TYPE 1 ($MILLIONS) 12/31//2021 1 Excludes the government guaranteed portion of SBA 7a loans and PPP loans. TYPE DISTRIBUTION • Diverse product mix • Commercial mortgage and construction are generally originated with
Slide 22: Commercial Fleet Leasing
22 COMMERCIAL FLEET LEASING LOANS & LEASES : COMMERCIAL FLEET LEASING BUSINESS OVERVIEW: • Niche provider of vehicle leasing solutions • Focus on smaller fleets (less than 150 vehicles) • Direct lessor (The Bancorp Bank sources opportunities directly and provides value - add services such as outfitt
Slide 23: Commercial Fleet Leasing Portfolio Overview
23 LOANS & LEASES: COMMERCIAL FLEET LEASING PORTFOLIO OVERVIEW • Largest concentration is construction sector • Of the $531M total portfolio, $475M are vehicle leases with the remaining $56M made up of equipment leases PORTFOLIO ATTRIBUTES TYPE BALANCE TOTAL Construction $ 100 19% Government agencie
Slide 24: Real Estate Bridge Lending
24 REAL ESTATE BRIDGE LENDING LOANS & LEASES: REAL ESTATE BRIDGE LENDING TYPE # LOANS BALANCE ORIGINATION DATE LTV WEIGHTED AVG INTEREST RATE % TOTAL Multifamily (apartments) 143 $ 1,610 75% 4.5% 92% Hospitality (hotels and lodging) 9 69 65% 5.7% 4% Retail 6 61 71% 4.3% 3% Other 7 13 73% 5.1% 1% Tot
Slide 25: Financial Review
FINANCIAL REVIEW
Slide 26: 3.5% NIM for Q4 2021 Despite 0% FRB Rate Environment
26 3.5% NIM FOR Q4 2021 DESPITE 0% FRB RATE ENVIRONMENT FINANCIAL REVIEW: INTEREST RATE SENSITIVITY 1 Loans are as of December 31, 2021 and deposits are average balance for Q4 2021. 2 Institutional Banking substantially comprised of securities backed loans and insurance backed loans. 3 Excludes $45M
Slide 27: Revenue Has Grown Consistently Since 2016
27 REVENUE HAS GROWN CONSISTENTLY SINCE 2016 WHILE EXPENSES HAVE BEEN TIGHTLY MANAGED, CREATING OPERATING LEVERAGE FINANCIAL REVIEW: EARNINGS AND PROFITABILITY 1 Revenue includes net interest income and non - interest income. Please see Appendix slide 32 for these amounts. Lighter shade of blue in 2
Slide 28: Allowance for Credit Losses Reflects Lower-Risk Loan Portfolio
28 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2017 2018 2019 2020 2021 ALLOWANCE FOR CREDIT LOSSES REFLECTS OUR LOWER - RISK LOAN PORTFOLIO FINANCIAL REVIEW: LOAN LOSS RESERVE ALLOWANCE FOR CREDIT LOSSES ($MILLIONS) Small Business HELOC/Consumer/Other SBLOC/IBLOC/Advisor Financing Allowance for credit l
Slide 29: Capital Position
29 CAPITAL POSITION FINANCIAL REVIEW: HISTORICAL CAPITAL POSITION HIGHLIGHTS • Established and executed share buyback program of $10M a quarter for 2021 • 2022 Plan for $15M share buyback per quarter • Corporate governance requires periodic assessment of capital minimums • Capital planning includes
Slide 30: Executing Against Our Strategic Plan and Improving Financial Performance
30 WE HAVE BEEN EXECUTING AGAINST OUR STRATEGIC PLAN AND IMPROVING FINANCIAL PERFORMANCE FINANCIAL REVIEW: EARNINGS AND PROFITABILITY PERFORMANCE METRICS 2017 2018 2019 2020 2021 LONG - TERM TARGETS ROE 7.0% 24.3% 11.6% 15.1% 17.9% 22% ROA 0.52% 2.07% 1.09% 1.34% 1.68% > 2.0% EPS $0.39 $1.55 $0.90 $
Slide 31: Appendix
a (a Vii APP
Slide 32: GAAP Revenue and Efficiency Ratio Calculations
32 GAAP REVENUE AND EFFICIENCY RATIO CALCULATIONS APPENDIX ($ millions) The Bancorp 2017 2018 2019 2020 2021 Net interest income $ 106,680 $ 120,849 $ 141,288 $ 194,866 $ 210,876 Non - interest income 91,548 153,795 1 104,127 84,617 104,749 Total 198,228 274,644 245,415 279,483 315,625 Growth (Year
Slide 33: Reconciliation of Non-GAAP Financial Metrics to GAAP
33 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP APPENDIX ($ millions) 2017 2018 2019 2020 2021 Allowance for credit losses on loans and leases GAAP $ 7,096 $ 8,653 $ 10,238 $ 16,082 $ 17,806 Allowance for credit losses on SBLOC & IBLOC 365 393 553 775 964 Adjusted allowance for credit loss
Slide 34: Reconciliation of Non-GAAP Financial Metrics to GAAP: Small Business Loans
34 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP APPENDIX ($ millions) Small Business Loans 1 Year End 2021 U.S. government guaranteed portion of SBA loans $ 371 Paycheck Protection Program Loans (PPP) 45 Commercial mortgage SBA 183 Construction SBA 17 Non - guaranteed portion of U.S. gover