The Bancorp, Inc. · NASDAQ:TBBK
The Bancorp — Bancorp — Investor Presentation (February 2023)
34 slides from The Bancorp's investor presentation, Feb 2, 2023
Slide 1: The Bancorp Investor Presentation January 2023
JANUARY 2023 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 2030 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 2022 PROFITABILITY ROE 15% 18% 19% ROA 1.3% 1.7% 1.8% SCALABLE PLATFORM EFFICIENCY RATIO 1 59% 53% 48% KEY FINANCIAL METRICS Increasing levels of profitability Platform delivering operating leverage FINANCIAL PERFORMANCE SUSTAINED PE
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 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 2019 2020 2021 2022 2023 Guidance EARNINGS PER SHARE EARNINGS GUIDANCE GUIDANCE Our 2023 guidance 1 is $3.20 per share as we maintain strong mo
Slide 5: Financial Industry Leader: Recognized Performance
5 FINANCIAL INDUSTRY LEADER FORTUNE 100 FASTEST GROWING COMPANY RANKED #28 OCT. 2020 FORUM OF EXECUTIVE WOMEN Champion of Board Diversity Honoree OCT. 2022 IPA CONSUMER CHAMPION APR. 2021 NILSON REPORT RANKED #1 PREPAID CARD ISSUER JUNE 2021 EQUAL OPPORTUNITY PUBLICATION TOP EMPLOYER READERS CHOICE
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 diversified portfolio of clients PAYMENT NETWORKS FACILITATE payments between partie
Slide 7: Specialized Lending Business Lines and Credit Roadmap
7 SPECIALIZED LENDING BUSINESS LINES AND CREDIT ROADMAP Real Estate Bridge Lending $2.1B 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 in
Slide 9: Financial Targets
9 FINANCIAL TARGETS We have amended our vision 500 to include enhanced 2030 financial targets that can be achieved by unlocking the full potential of The Bancorp’s payments and lending businesses CAPITAL RETURN VISION 500 700 Established the plan to optimize our balance sheet PAYMENTS ECOSYSTEM Enha
Slide 10: Fintech Solutions Generates Non-Interest Income and Lower-Cost Deposits
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 2022 1 OUR FINTECH SOLUTIONS BUSINESS ENABLES LEADING FINTECH COMPANIES DEBIT PROGRAM MANAGERS (CHALLENGER BANKS) PREPAID/STORED VALUE PROGRAM MANAGERS • Provides physical and virtual card issuing • Maintains deposit balances on ca
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 enable efficient onboarding • Continued technolo
Slide 14: Deposit Growth from Payments Business
14 DEPOSIT GROWTH FROM PAYMENTS BUSINESS FINTECH SOLUTIONS: STABLE, LOWER - COST DEPOSIT GENERATOR $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 2018 2019 2020 2021 2022 AVERAGE DEPOSITS BY PERIOD ($ BILLIONS) Fintech Solutions Group (Prepaid and Debit Card Issuance and other payments) Institutional Banki
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 REAL
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 2022 PRINCIPAL BALANCE ($ MILLIONS) % OF TOTAL PORTFOLIO Institutional Banking Securities - backed lines of credit (SBLOC) ( A) $ 1,209 20% 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 line
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) $ 1,209 48% Insurance - backed lines of credit (IBLOC) 1,124 45%
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: Small Business Loans: Strong Collateral & Government Guarantees
21 LOANS & LEASES: STRONG COLLATERAL & GOVERNMENT GUARANTEES SMALL BUSINESS LOANS BY TYPE 1 ($MILLIONS) 12/31/2022 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
23 LOANS & LEASES: COMMERCIAL FLEET LEASING PORTFOLIO • Largest concentration is construction and government sectors • Of the $632M total portfolio, $555M are vehicle leases with the remaining $77M comprised of equipment leases PORTFOLIO ATTRIBUTES TYPE BALANCE TOTAL Construction $ 115 18% Governmen
Slide 24: Commercial Real Estate Bridge Lending
24 COMMERCIAL REAL ESTATE BRIDGE LENDING LOANS & LEASES: REAL ESTATE BRIDGE LENDING TYPE # LOANS BALANCE ORIGINATION DATE LTV WEIGHTED AVG INTEREST RATE % TOTAL Multifamily (apartments) 152 2,023 73% 7.7% 96% Hospitality (hotels and lodging) 4 36 65% 8.0% 2% Retail 3 42 72% 7.3% 2% Other 3 11 73% 5.
Slide 25: Financial Review
REVIEW The Bancorp:
Slide 26: Loans Repricing to Higher Rates Will Positively Impact NIM
26 LOANS REPRICING TO HIGHER RATES WILL POSITIVELY IMPACT NIM AS BENCHMARK RATES CONTINUE TO RISE FINANCIAL REVIEW: INTEREST RATE SENSITIVITY 1 Loans are as of December 31, 2022, and deposits are average balance for Q4 2022. 2 Institutional Banking substantially comprised of securities backed loans
Slide 27: Revenue Has Grown Consistently While Expenses Tightly Managed
27 REVENUE HAS GROWN CONSISTENTLY 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. 2 Non - interest income as percentage of average assets
Slide 28: Allowance for Credit Losses Reflects Lower-Risk Loan Portfolio
28 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 2018 2019 2020 2021 2022 ALLOWANCE FOR CREDIT LOSSES REFLECTS OUR LOWER - RISK LOAN PORTFOLIO FINANCIAL REVIEW: LOAN LOSS RESERVE ALLOWANCE FOR CREDIT LOSSES ($MILLIONS) Small Business HELOC/Consumer/Other SBLOC/IBLOC/Advisor Financing Allowance for
Slide 29: Capital Position
29 CAPITAL POSITION FINANCIAL REVIEW: HISTORICAL CAPITAL POSITION HIGHLIGHTS • Executed common stock buyback program of $15M per quarter throughout 2022 • We expect to increase the stock buyback program to $25M per quarter in 2023 2 • Corporate governance requires periodic assessment of capital mini
Slide 30: We Have Executed Against Our Strategic Plan
30 WE HAVE EXECUTED AGAINST OUR STRATEGIC PLAN AND CONTINUE TO IMPROVE FINANCIAL PERFORMANCE FINANCIAL REVIEW: EARNINGS AND PROFITABILITY PERFORMANCE METRICS 2019 2020 2021 2022 LONG - TERM TARGETS ROE 11.6% 15.1% 17.9% 19.3% 30% ROA 1.09% 1.34% 1.68% 1.81% > 2.5% EPS $0.90 $1.37 $1.88 $2.27 Bancorp
Slide 31: Appendix
The Bancorp:
Slide 32: GAAP Revenue and Efficiency Ratio Calculations
32 GAAP REVENUE AND EFFICIENCY RATIO CALCULATIONS APPENDIX ($ millions) The Bancorp 2019 2020 2021 2022 Net interest income $ 141,288 $ 194,866 $ 210,876 $248,841 Non - interest income 104,127 84,617 104,749 105,683 Total revenue 245,415 279,483 315,625 354,524 Growth (Current period over previous p
Slide 33: Reconciliation of Non-GAAP Financial Metrics to GAAP
33 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP APPENDIX ($ millions) 2019 2020 2021 2022 Allowance for credit losses on loans and leases GAAP $ 10,238 $ 16,082 $ 17,806 $22,374 Allowance for credit losses on SBLOC & IBLOC 553 775 964 1,167 Adjusted allowance for credit losses excluding SB
Slide 34: Reconciliation of Non-GAAP Financial Metrics to GAAP: Small Business Loans
34 RECONCILIATION OF NON - GAAP FINANCIAL METRICS TO GAAP APPENDIX ($ millions) Small Business Loans 1 Q4 2022 U.S. government guaranteed portion of SBA loans $ 375 Paycheck Protection Program Loans (PPP) 5 Commercial mortgage SBA 248 Construction SBA 10 Non - guaranteed portion of U.S. government g