INVESTOR PRESENTATION
Second Quarter, 2014
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995:
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 of forward-looking terminology, including the words “may,” “believe,” “will,” “expect,”
“anticipate,” “estimate,” “intend,” “plan," or similar words. These forward-looking statements are based
upon the current beliefs and expectations of The Bancorp, Inc.’s management and are inherently
subject to significant business, economic, regulatory, and competitive uncertainties and contingencies,
many of which are difficult to predict and beyond our control. For further discussion of these risks and
uncertainties, see the “risk factors” sections of The Bancorp, Inc.’s Annual Report on Form 10-K for
the year ended December 31, 2013, Quarterly Report on Form 10-Q for the three and six months ended
June 30, 2014, and other of its public filings with the SEC. In addition, these forward-looking statements
are subject to assumptions with respect to future strategies and decisions that are subject to change.
Actual results may differ materially from the anticipated results discussed in these forward-looking
statements. The forward-looking statements speak only as of the date of this presentation.
statements. The forward-looking statements speak only as of the date of this presentation.
The Bancorp, Inc. does not undertake to publicly revise or update forward-looking statements in this
presentation to reflect events or circumstances that arise after the date of this presentation, except
as may be required under applicable law.
FORWARD LOOKING STATEMENTS
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• Strategic Goal:
– Create and grow a stable, profitable institution with the optimum reliance on capital,
risk management and technology, and manage it with knowledgeable and experienced
risk management and technology, and manage it with knowledgeable and experienced
management and senior officers
• Tactical Approach:
– Deposits - Utilize a branchless banking network to gather scalable deposits through
strong contractual relationships at costs significantly below peers
strong contractual relationships at costs significantly below peers
– Assets - Focus on asset classes including loans and securities appropriate to our
expertise to achieve returns above risk-adjusted peer net interest margins
expertise to achieve returns above risk-adjusted peer net interest margins
– Non-Interest Income - Grow non-interest income disproportionately in relation to non
-interest expense through our deposit and asset approaches
-interest expense through our deposit and asset approaches
– Operating Leverage - Leverage infrastructure investment to grow earnings by
creating efficiencies of scale
creating efficiencies of scale
PLANNING FOR GROWTH WITH SAFETY AND SOUNDNESS
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PLANNING FOR GROWTH
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Sources: Federal Reserve, FRB Boston, FRB Philadelphia, SRI Consulting, University of
Michigan, Mintel, Celent, Bank of America, comScore, Nielsen Mobile, Wall Street Journal,
Michigan, Mintel, Celent, Bank of America, comScore, Nielsen Mobile, Wall Street Journal,
AlixPartners, Pew Research Center
NON-INTEREST INCOME-GENERATING STRATEGIES:
GROWTH AND SUSTAINABILITY
GROWTH AND SUSTAINABILITY
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(1)Compound annual growth rate is calculated for the years 2010 through 2013.
(2)Excludes gains on sales of investment securities. For reconciliation detail,
please refer to the Non-Interest Income section of Post Provision Income
Reconciliation, in the Appendix.
please refer to the Non-Interest Income section of Post Provision Income
Reconciliation, in the Appendix.
8%
Increase
Increase
$
12%
58%
26%
27%
127%
-9%
-22%
$47,465
(2)
SCALABLE BUSINESS MODEL:
NON-INTEREST INCOME / NON-INTEREST EXPENSE
NON-INTEREST INCOME / NON-INTEREST EXPENSE
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(1) Compound annual growth rate is calculated for the years 2010 through 2013.
(2) Excludes gains on sales of investment securities and expenses we believe to be mostly nonrecurring, such as
lookback consulting expenses; 2011 includes a one-time gain of $718,000 related to a legal settlement. For
reconciliation detail, please refer to Appendix.
lookback consulting expenses; 2011 includes a one-time gain of $718,000 related to a legal settlement. For
reconciliation detail, please refer to Appendix.
(3) Peers are comprised of insured commercial banks having assets greater than $3 billion; Data Source: Uniform
Bank Performance Report; Peer data for YTD 6/30/2014 is as of Q1 2014.
Bank Performance Report; Peer data for YTD 6/30/2014 is as of Q1 2014.
Columns represent TBBK (2)
COMPRESSED INTEREST RATE ENVIRONMENT:
NET INTEREST INCOME GENERATORS
NET INTEREST INCOME GENERATORS
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(2)
$
(1) Compound annual growth rate is calculated for the years 2010 through 2013.
(2) Other is comprised of net interest income produced by the following areas: Investment Securities, Leasing, Government Guaranteed
Lending, Institutional Banking, and CMBS.
Lending, Institutional Banking, and CMBS.
OPERATING LEVERAGE: ADJUSTED OPERATING EARNINGS
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(1) Compound annual growth rate is calculated for the second quarters of 2010 through 2014.
(2) For reconciliation detail, please see Appendix.
$
ASSET QUALITY OVERVIEW
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Reserves/Loans |
(1) Texas Ratio = (Non-accrual Loans + Restructured Loans + Loans 90+ days past due + OREO)/(Loss Reserves +
Tangible Equity). TBBK computed with consolidated capital. Sources: SNL Financial; FDIC Call Reports.
Tangible Equity). TBBK computed with consolidated capital. Sources: SNL Financial; FDIC Call Reports.
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PRIMARY DEPOSIT-GENERATING STRATEGIES: BUSINESS LINE
OVERVIEW
OVERVIEW
Total Deposits: $3.9 billion
Average Cost: 0.28%
(Aggregate US Banks Average Cost: 0.36%)(1)
(1) Aggregate US Banks data as of Q1 2014
CATEGORY | Q2 2014 BALANCE (in thousands) | Q2 2014 AVG. COST |
$1,679,583 | 0.02% | |
953,165 | 0.40% | |
382,248 | 0.74% | |
445,616 | 0.49% | |
360,489 | 0.19% | |
60,709 | 0.11% |
DEPOSIT-GENERATING STRATEGIES: STICKY AND LONG-TERM
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(1) Percentages shown include deposits associated with private label
agreements in the Healthcare, Institutional Banking, Prepaid and
Payments Acceptance groups. Data is as of the end of the second
quarter of 2014.
(2) Contracts associated with 98% of deposits in this segment are
structured with an automatic renewal.
The Bancorp has long-
term, often exclusive
agreements in place with
term, often exclusive
agreements in place with
its private label banking
partners.
(2)
• Strategic Goal:
– Create and grow a stable, profitable institution with the optimum reliance on capital,
risk management and technology, and manage it with knowledgeable and experienced
risk management and technology, and manage it with knowledgeable and experienced
management and senior officers
• Tactical Approach:
– Deposits - Utilize a branchless banking network to gather scalable deposits through
strong contractual relationships at costs significantly below peers
strong contractual relationships at costs significantly below peers
– Assets - Focus on asset classes including loans and securities appropriate to our
expertise to achieve returns above risk-adjusted peer net interest margins
expertise to achieve returns above risk-adjusted peer net interest margins
– Non-Interest Income - Grow non-interest income disproportionately in relation to non
-interest expense through our deposit and asset approaches
-interest expense through our deposit and asset approaches
– Operating Leverage - Leverage infrastructure investment to grow earnings by
creating efficiencies of scale
creating efficiencies of scale
PLANNING FOR GROWTH WITH SAFETY AND SOUNDNESS
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APPENDIX
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21
Scalable Business Model Reconciliation
Category (dollars in millions) | 2010 | 2011 (1) | 2012 | 2013 | YTD 6/30/2014 | Q2 2013 | Q2 2014 |
Total Non-Interest Income | $20.6 | $30.6 | $49.6 | $83.4 | $47.9 | $22.4 | $23.7 |
Gain on Sales of Investment Securities | (1.2) | (0.8) | (0.7) | (1.9) | (0.4) | (0.5) | (0.1) |
Other Than Temporary Impairment | 0.1 | - | 0.2 | - | - | - | - |
Non-Interest Income | 19.5 | 29.8 | 49.1 | 81.5 | 47.5 | 21.9 | 23.6 |
Total Non-Interest Expense | $61.7 | $72.2 | $88.2 | $110.8 | $68.8 | $27.6 | $35.8 |
BSA & lookback consulting expenses | - | - | - | - | (2.2) | - | (2.2) |
Non-Interest Expense | 61.7 | 72.2 | 88.2 | 110.8 | 66.6 | 27.6 | 33.6 |
Non-interest income/Non- interest expense | 31.6% | 41.3% | 55.7% | 73.6% | 71.3% | 79.3% | 70.2% |
(1) 2011 includes a one-time gain of $718,000 related to a legal settlement
NOTES
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www.thebancorp.com
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