Slide 1: Investor Presentation Fourth Quarter, 2015
Investor presentation Fourth Quarter, 2015
Slide 2: Safe Harbor Statement / Forward looking statements
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:Statements in this presentation regarding The Bancorp, Inc.’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. These statements may be identified by the use o
Slide 3: The Bancorp: Empowering the World's Most Successful Companies
The Bancorp: Empowering the World’s Most Successful Companies 3 $4.5 Billion in Assets 700+ Employees 80,000,000 Prepaid Cards in U.S. Distribution 1.1+ Billion Merchant Card Transactions Processed Annually $2.2+ Trillion in Institution Banking Partner AUM $232 Billion Combined Annual Processing Vol
Slide 4: Investment Highlights
Investment Highlights 4 Depressed trading price compared to tangible book value and peers creates significant upside potential A leading innovative force in the fast-growing payment space; substantial investment in our senior management teams and infrastructure to take on industry dynamics prudently
Slide 5: Our business model reflects a distinct business strategy
Our Business model REFLECTS a distinct business strategY... 5 Specialty Finance Payments Securities Portfolio Primarily highly rated government obligations & corporate securitiesInterest Income Government Guaranteed Lending (GGL)Includes loans to franchisees; many of which have a 75% guaranty by the
Slide 6: Looks to capitalize on the paradigm shift in banking
…That LOOKS TO CAPITALIZE ON THE paradigm shift in banking 6 Consumer Distribution Channel PenetrationPercent of U.S. Households, 1980-2013 Sources: Federal Reserve, FRB Boston, FRB Philadelphia, SRI Consulting, University of Michigan, Mintel, Celent, Bank of America, comScore, Nielsen Mobile, Wall
Slide 7: 2015: A year of considerable investment and progress
2015: A year of Considerable investment and progress 7 Significant overhaul of BSA/AML Compliance functionOver 70 people dedicated to function; ~10% of total workforce$41.4 million in lookback BSA/AML expenses in 2015Created company-wide Strategic risk management frameworkEstablished Risk Committee
Slide 8: Strategic enterprise risk management framework
Strategic enterprise risk management framework 8 Implemented a company-wide Strategic Risk Management framework focused on 5 key areas Bank Secrecy Act / Anti-Money Laundering Compliance 3rd Party Risk Management Cyber-Security Credit Risk Invested in significant personnel and software to address re
Slide 9: Executive Management Team
9 Executive Management Team Daniel Cohen – Executive Vice President and Chairman of the Board[Currently President of Cohen and Company; Chief Executive Officer of FinTech Acquisition Corp] John Chrystal – Interim Chief Executive Officer[Current Board of Directors member; prior experience at DiMaio A
Slide 10: Primary asset-generating strategies: business line overview
CATEGORY Q4 2015 BALANCE Q4 2014 BALANCE YoY ’14-’15 Growth Q4 2015 AVG. YIELD(1) (in thousands) Corporate Investment Securities $1,163,688 1,587,404 (26.7%) 2.60% Specialty Finance Institutional Banking 575,948 421,862 36.5% 2.70% CMBS & CLO 380,764 178,376 113.5% 5.40% Government Guaranteed Lendin
Slide 11: Overview of discontinued operations
Overview of discontinued operations In an effort to free up capital and de-risk the Bank’s loan portfolio from larger, more outsized real estate credits, the Company decided to discontinue its Philadelphia-based commercial real estate operation in 2014 Company has made significant progress in “windi
Slide 12: Lower risk securities portfolio
Lower risk securities portfolio 12 Total Portfolio: $1.2B as of 12/31/15 Securities Portfolio Overview Lower risk securities portfolio; primarily highly rated government obligations & corporate securities95% of portfolio rated [A] or better, no securities below investment gradePortfolio managed by h
Slide 13: Primary deposit-generating strategies: business line overview
13 Primary deposit-generating strategies: business line overview Total Deposits: $4.4 billionAverage Cost: 0.30%(Aggregate US Banks Average Cost: 0.31%) (1)Aggregate US Banks data as of Q4 2015, source: BankRegData.com CATEGORY Q4 2015 BALANCE(in thousands) Q4 2015 AVG. COST Prepaid Cards $2,081,064
Slide 14: Prepaid gross dollar volume and cardholder growth
Prepaid gross dollar volume (GDV)(1) and cardholder growth 14 Gross Dollar Volume (GDV) is the total amount spent on all cards outstanding within a given period. GDV is further broken out according to volume by contract year.Compound annual growth rate is calculated for the years 2010 through 2015.
Slide 15: Revenue composition
Revenue composition 15 Post Provision Income (1) (dollars in thousands) $ For reconciliation detail, please see Appendix, (page 25).Compound annual growth rate is calculated for the years 2010 through 2015.Not including one-time gain on sale of HSA portfolio in Q4 2015 for $33.5M.
Slide 16: Non-interest income-generating strategies: growth and sustainability
Non-interest income-generating strategies: growth and sustainability 16 39% Increase $ (dollars in thousands) $84,599 (2) Compound annual growth rate is calculated for the years 2010 through 2015.Excludes gains on sales of investment securities and gain on sale of heath savings portfolio. For reconc
Slide 17: Balance sheet initiatives leading to increased net interest income
While interest rates are compressed, balance sheet initiatives by the bank are leading to increased net interest income 17 (dollars in thousands) Compound annual growth rate is calculated for the years 2010 through 2015. $
Slide 18: Strong asset quality metrics – continuing operations
Strong asset quality metrics – continuing operations 18 Asset Quality Highlights Continuing operations portfolio has historically maintained industry-low nonperforming metricsAttributable to The Bancorp’s focus on niche lending segments which traditionally have low credit riskCommitted to maintainin
Slide 19: Investment Highlights
Investment Highlights 19 Depressed trading price compared to tangible book value and peers creates significant upside potential A leading innovative force in the fast-growing payment space; substantial investment in our senior management teams and infrastructure to take on industry dynamics prudentl
Slide 20: Appendix
APPENDIX
Slide 21: Normalized earnings analysis
Normalized earnings analysis 21 Normalized pre-tax earnings of ~$25 million in 2015 FY ($000s) 2015 Q4 2015 FY Pre-tax income - continuing operations $31,156 $6,810 Pre-tax income - discontinued operations 3,607 12,793 Non-recurring continuing operations Gain on sale of health savings portfolio ($33
Slide 22: Capital Ratios and Selected Financial Data
22 Capital Ratios and Selected Financial Data As of or for the three months endedDecember 31, 2015(dollars in thousands) As of or for the three months endedDecember 31, 2014(dollars in thousands) Selected Capital and Asset Quality Ratios: Equity/assets 6.71% 6.40% Tier 1 capital to average assets 7.
Slide 23: Current Loan Portfolio and Asset Quality Overview
23 Current Loan Portfolio and Asset Quality Overview at 12/31/2015 Category(dollars in thousands) Balance % of Total Loans Nonaccrual Loans Nonaccrual/Total Loans OREO 30-89 Days Delinquent 90+ Days Delinquent Q4 2015 Quarterly Charge-offs (net) SBA $189,893 12% $733 0.4% $- $- $- $46 SBA held for s
Slide 24: Revenue by Segment Reconciliation
Specialty Finance Payments Corporate Category (dollars in thousands) Institutional Banking GGL CMBS & CLO Leasing Prepaid Payment Acceptance Investment Securities Interest income $12,997 $11,213 $11,226 $13,009 $- $10 $33,669 Interest expense 5,037 - - - 2,971 4,474 - Non interest income 2,914 3,097
Slide 25: Post Provision Income Reconciliation
25 Post Provision Income Reconciliation(1) Category (dollars in millions) 2010 2011(2) 2012 2013 2014 2015 Q4 2014 Q4 2015 Interest income $24.3 $31.0 $39.4 $51.1 $70.7 $83.5 $18.5 $22.2 Interest expense 14.5 12.0 11.4 10.8 11.3 13.6 2.8 3.7 Net interest income 9.8 19.0 28.0 40.3 59.4 69.9 15.7 18.5
Slide 26: The Bancorp Board of Directors
26 The Bancorp Board of Directors Board of Directors Daniel G. CohenChairman of the Board Daniel Gideon Cohen has been the Chairman of Bancorp, Inc. (the “Company”); he was also named Chairman of the Board of Directors of the Company’s wholly-owned subsidiary, Bancorp Bank (the “Bank”), effective Ja
Slide 27: The Bancorp Board of Directors (cont'd)
27 The Bancorp Board of Directors (cont’d) Board of Directors Michael J. BradleyDirector Michael J. Bradley has been a Director of The Bancorp, Inc. and Bancorp Bank since 2005. Mr. Bradley has been a Co-Owner and Managing Director of BF Healthcare, Inc., since 1998. Mr. Bradley serves on the Board
Slide 28: The Bancorp Board of Directors (cont'd)
28 The Bancorp Board of Directors (cont’d) Board of Directors William H. LambDirector William H. Lamb has served as a Director of the Bancorp, Inc. and Bancorp Bank since 2004. Mr. Lamb currently serves as Chairman of Lamb McErlane PC and directs the firm's Post-Trial and Appellate Advocacy Group. F
Slide 29: The Bancorp Board of Directors (cont'd)
29 The Bancorp Board of Directors (cont’d) Board of Directors Mei-Mei TuanDirector Mei-Mei Tuan has been a Director of both The Bancorp, Inc. and U.S. subsidiary The Bancorp Bank since 2013. Ms. Tuan is the Co-Founder and Managing Partner of Notch Partners LLC, a firm providing leadership capital an
Slide 30: oO w = ° z
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Slide 31: The Bancorp
The Bancorp www.thebancorp.com 3