Executive Summary

Executive Summary

From the analysis of Bancorp, the principal finding on the company’s financial performance revolves around asset investments, residential mortgages, covered loans, and asset earnings. The company should invest in the projections that coincide with potential risks in the industry. Conducting a strength, weaknesses, opportunities, and threats (SWOT) analysis for its current situation can help realize the critical areas of consideration. It needs to focus on human resource welfare, which encompasses motivating the employees, skilled labor, and marketing services.

The potential audience for Bancorp in the front line comes as the customers who invest with the company. They invest in buying shares since they see the company’s future growth in growing with their small business and loan lending. The vital consultants for a noble solution in curbing the struggling performance include the Chief Executive officers of thriving industry and financial firms that provide similar services and have the same organization structure as Bancorp.

Financial Performance and Health

Organizational Context

The services offered by Reliant Bancorp Inc., which is a bank holding company, are lending, deposit, and mortgage services to its customers and business enterprises (Zhuet al., 2020). The main branch is located in Brentwood, TN, and has several other components in different counties in Tennessee, which includes Cheatham, Hickman, Rutherford, and Williamson. The services such as loans help customers to start and boost the growth of the businesses.

The bank’s finances and strategic priorities define the functions and structure of businesses in accounting procedures and business decisions. The companies observe strict account methods and have flexibility in decision making to achieve more profits and ensure the business’s success (Chowdhury & Nehal, 2020).

The management structure of the Bancorp Bank comprises of the chairman of the board, Chief Executive Officer, and board of directors as the umbrella of the organization. The individual branches in the counties operated under directors, managers, and workers. The functions offered by The Bancorp Bank are deposits, lending, and mortgage services products and services to its customers and businesses(Raykov&Silva-Buston, 2020).

The Bancorp bank structure affects the organization’s processes in the accounting and financial information system, which correlates directly to the subsequent business decisions. The bank structure offers services through its subsidiaries acquired via acquisition, a standard expansion method among American financial organizations, thus enhancing competitiveness.

Recent Financial Performance

Table 1: Source; Bancorp Net interest income statement 2020

Generally, from Table 1the consolidated income for the past there years 2017, 2018, and 2019 according to the income statement report for the year 2020, depict that the bank of Bancorp had positive growth in different areas of focus. The component of net interest income includes income on earning assists for the taxable equipment basis wherein the year 2017, it was approximately $14,559, $16,298 in 2018, and $17,607 for the year 2019. Comparing the years, there was an increase of $1,739:$1,309 for 2017/2018 to the years 2018/2019, respectively (Chowdhury & Nehal, 2020).

The organization’s average yield and rates paid that entailed taxable equivalent basis and equal taxable basis escalated, which predicted a company performanceannually on positive growth. The average results for both taxable earning assets yield and rates paid on interest-bearing liabilities averaged on; the year 2017 at 3.10%, 3.14% in 2018, and 3.06% in 2019 slight depreciation. In comparison for the three financial years 2017/2018 and 2018/2019, the change was 0.04% to 0.08% decrease.

Graph 1:Net Income, Source; Bancorp income statement 2020

From graph 1, the company’s financial track records on net income revenue increased gradually for two years, 2017 and 2018, while it dropped in the year 2019. The comparison of 2017/2018 to 2018/2019 stood at a profit of $878 and a loss of $182, respectively. The operating income decreased significantly for the financial 2018/2019 compared to the previous years. The net income stood out as a decrease due to the possibility of world health pandemics such as COVID 19.

Graph 2: Net Interest Margin.  Source; Bancorp 2020 income Cash flow

Table 2: Source; Bancorp Net interest income statement 2020

From graph 2, Bancorp’s cash flow on interest increases from 2017 and 2018, with a percentage of 3.10 and 3.14, respectively. The company experiences a decrease in the net interest margin of 0.08% from the 2018 financial report (Zhuet al., 2020).

From Table 2, the expenditure on operating activities reduced from $450 to $120 in the years 2017/2018 to 2018/2019, respectively. Cash from investments and financing reduced in 2018/2019 in the investment securities and loans from mortgages. The total cash flow shows a decrease in total earning assets for the three years and whole loans. On the other hand, the Net Interest Margin increased for two consecutive years of 2017 and 2018 but faced a decrease in 2019. The items that stood out include the number of borrowers who increased significantly, as indicated by the number of covered loans in table 2 (Zhuet al., 2020).

The organizations underlying financial performance has been doing well for the past years compared to the current financial statement release, 2019. From the analysis in table 1, the interest liabilities increased in the year 2017/2018 and the year 2018/2019 from $12302 to $18152, respectively. From graph 1, the company’s net income was on the increase for years 2017, 2018, and decreased in 2019 due to the impacts of the COVID 19 pandemic. The business is struggling in its banking industry because of the following evidence. In graph1, the performance based on net income for the company showed inconsistency. It is because of a decrease in total earnings from the asset investments in the financial years 2017/2018 and 2018/2019 in table 2.

Current Financial Health

Graph 3: Total risk-based capital Source: BancorpFinancial statement 2020

From table 2, the organization capitalized on debts and low rate of investments due to narrow interest margin rates from the assets. The company’s financial health is unstable, as evidence by the total risk-based capital or the past three years in graph 3. It led to an increase in total debts to stabilize the struggling operations like employees’ payment (Baumöhl et al., 2020).

Graph 4: Dividends per common share;  Source: Bancorp 2020

The shareholders’ dividends increased due to the high rating of clients seeking loans for their business, which were at risk of collapsing from unusual events of COVID 19. It led to an increase in the cost of the organization’s shares dividends in the stock market, as evidence in graph 4 (Baumöhl et al., 2020).

The company lacks a sufficient amount of cash and resources; it relies on loans and assets to maintain technologies. Bancorp’s future growth depends on the reputation behind its performance in the banking industry and proper investment, a vital fuel for its future development. The business decisions revolve around the welfare of the company running rather than profit-making and workers engagements.

The assessment of the business on the current market value is at risk due to the instability of the profit margins, net income, and assets investments, which are the source of the organization’s net income as in table 1.the price to earnings ratio have the potential of increase in the urgent situation of COVID 19 due to high dividends per share returns in graph 4. It suggests that an investor can consider buying shares in the current time, 2020, but for future investment, the situation is unpredictable based on previous years.

Success Factors and Risks

Strategic Priorities

The organization’s financial and strategic priorities affect the accounting procedures and business decisions by altering its strategized long-term financial plans to rescue the current situations of struggling operations. The business success might face challenges in achievement due to the high cost of management and little capital allocated to developments. The management growth of the company is efficacy oriented for maintenance and narrow profit margin. The organization significantly base on short term planning to navigate the COVID 19 effects (Chowdhury & Nehal, 2020).

Capitalization on Non-Financial Factors

From the analysis of graph 4, the organization might think of capitalizing on non-financial factors due to the high rate of investors buying the company shares and redeeming them at low interests for loans, which will correspond to an increased number of clients and building of a better reputation. The investment in human resources for its service delivery, which includes the employees’ training and motivations, increases its productivity and brand (Raykov&Silva-Buston, 2020).

Significant Internal Risks

According to the analysis of the company struggling nature the operation arising from financial constraints, the personnel management thrives under risk of motivation. Technologically based departments face the risk of failure due to low maintenanceand upgrade for the company’s information systems and data security. The financial statements predict the organization operating under a shortage of labor and workers having low morale. For example, in table 2, the company invested little in asset security.

Projections

Projected Consolidated Financial Opportunities

The future of Bancorp dramatically lies in the financial performance of the company. For the last three years, the company operations revolve on narrow profit margin and decreased investment on interest assets and non-financial factors. In the year 2020, the company might have a significant drop in performance and net income compared to the previous years due to the high impacts of COVID 19 in 2020. Nevertheless, in the year 2021, the company might adapt to the situation prevailing in 2020 and invest in the technicalities of handling them for the future. In the year 2022, Bancorp will either be stable based on the foundation it will have laid in the year 2020. Failure to safeguard its future, Bancorp might face the risk of slow growth or operate under significant debts (Chowdhury & Nehal, 2020).

Projections for best and worst-case scenarios.

The scenario for the incoming year based on the best plan involving investing in the previous year’s weakness more so 2019, the company might face performance. The best scenario’s potential area includes shared dividends, which many people decided to invest in 2019 (Zhuet al., 2020).

The worst scenario in the year 2020 might be lying under the unpredictable impacts o COVID 19, which had started manifesting in 2019. The company might lack sufficient capital for investing in working under risky conditions of the global pandemic. Closure of Bancorp might be projected as one of the major scenarios for the year 2020 as the company decides to wait for better and safe environments for its operations.

Discussion of finding

The discussions of assumptions basing Bancorp’s future for the next three years on its projection; first, the company investing in its failure and the challenges faced in the previous years, I might realize performance. The information gaps underlying the projections might drag their efforts behind, including natural disasters such as the health pandemic experienced in the year 2020, a rare case, and a gap. Since most of the projections aimed to address the current effects caused by COVID 19 pandemic, they might not be in line with the company’s missions and priorities. The predictions might seem aggressive, but they have the capability of the company achieving them for financial freedom.

Changing the assumptions would change the company projection for the long term plan since based on solving a short term problem.

Business Opportunities

Likely Investment Opportunities for the Organization

Bancorp’s potential investment opportunities in the current times for their future performance include selling shares to the stock market. The venture proved its potentiality in business growth for the past three years, where it kept on increasing. Secondly, the organization can consider investing in physical assets such as the real estate industry for diversification(Baumöhl et al., 2020).

Lastly, the company should consider investing in human resource, which covers the workers and the entire staff. The process might seem costly, but the repercussions of motivated workers correlate directly to the company. They should focus on client needs by assisting them in recovering from the effects of COVID 19 by offering low-interest-rate loans for a start-up and boosting their businesses.

Cost and Benefits of the New Investment

The possible costs and benefits of investing in the outlined sectors on human resources, physical assists, and customer assistance in recovery from the pandemic might amount to large capital and help from the company. The corresponding output from the investment will serve as a long-term investment in both the business’s external and internal environments. The competition with other companies offering the same services as Bancorp will be handled effectively from the human resource personnel’s proper training. Furthermore, considering a physical investment that requires minimal maintenance cost guarantees the organization a wider profit margin.

Impact on Budgeting Decisions

The potential investment will affect the business decisions for the coming year since the projection never existed in the company’s mission and priorities (Raykov&Silva-Buston, 2020). The process involves massive capital investment for the acquisition of proper resources and trained personnel. The benefits correlate to the assets in both the short and long term. Short and long-term spending priorities might be affected due to changing the terms of allocating resources to the projections. The output will overdo the input for the benefit of the company in the long run.

 

 

References

Baumöhl, E., Bouri, E., Hoang, T. H. V., Shahzad, S. J. H., &Výrost, T. (2020). Increasing systemic risk during the Covid-19 pandemic: A cross-quantilogram analysis of the banking sector.

Chowdhury, A. Y., & Nehal, M. N. (2020). Effect of Corporate Social Responsibility Expenditures on Financial Performance in the Banking Sector of Bangladesh.

Raykov, R., & Silva-Buston, C. (2020). Holding company affiliation and bank stability: Evidence from the US banking sector. Journal of Corporate Finance, 65,

Zhu, Q., Li, X., Li, F., &Amirteimoori, A. (2020). Data-driven approach to find the best partner for mergers and acquisitions in the banking industry. Industrial Management & Data Systems.

Executive Summary

From the analysis of Bancorp, the principal finding on the company’s financial performance revolves around asset investments, residential mortgages, covered loans, and asset earnings. The company should invest in the projections that coincide with potential risks in the industry. Conducting a strength, weaknesses, opportunities, and threats (SWOT) analysis for its current situation can help realize the critical areas of consideration. It needs to focus on human resource welfare, which encompasses motivating the employees, skilled labor, and marketing services.

The potential audience for Bancorp in the front line comes as the customers who invest with the company. They invest in buying shares since they see the company’s future growth in growing with their small business and loan lending. The vital consultants for a noble solution in curbing the struggling performance include the Chief Executive officers of thriving industry and financial firms that provide similar services and have the same organization structure as Bancorp.

Financial Performance and Health

Organizational Context

The services offered by Reliant Bancorp Inc., which is a bank holding company, are lending, deposit, and mortgage services to its customers and business enterprises (Zhuet al., 2020). The main branch is located in Brentwood, TN, and has several other components in different counties in Tennessee, which includes Cheatham, Hickman, Rutherford, and Williamson. The services such as loans help customers to start and boost the growth of the businesses.

The bank’s finances and strategic priorities define the functions and structure of businesses in accounting procedures and business decisions. The companies observe strict account methods and have flexibility in decision making to achieve more profits and ensure the business’s success (Chowdhury & Nehal, 2020).

The management structure of the Bancorp Bank comprises of the chairman of the board, Chief Executive Officer, and board of directors as the umbrella of the organization. The individual branches in the counties operated under directors, managers, and workers. The functions offered by The Bancorp Bank are deposits, lending, and mortgage services products and services to its customers and businesses(Raykov&Silva-Buston, 2020).

The Bancorp bank structure affects the organization’s processes in the accounting and financial information system, which correlates directly to the subsequent business decisions. The bank structure offers services through its subsidiaries acquired via acquisition, a standard expansion method among American financial organizations, thus enhancing competitiveness.

Recent Financial Performance

Table 1: Source; Bancorp Net interest income statement 2020

Generally, from Table 1the consolidated income for the past there years 2017, 2018, and 2019 according to the income statement report for the year 2020, depict that the bank of Bancorp had positive growth in different areas of focus. The component of net interest income includes income on earning assists for the taxable equipment basis wherein the year 2017, it was approximately $14,559, $16,298 in 2018, and $17,607 for the year 2019. Comparing the years, there was an increase of $1,739:$1,309 for 2017/2018 to the years 2018/2019, respectively (Chowdhury & Nehal, 2020).

The organization’s average yield and rates paid that entailed taxable equivalent basis and equal taxable basis escalated, which predicted a company performanceannually on positive growth. The average results for both taxable earning assets yield and rates paid on interest-bearing liabilities averaged on; the year 2017 at 3.10%, 3.14% in 2018, and 3.06% in 2019 slight depreciation. In comparison for the three financial years 2017/2018 and 2018/2019, the change was 0.04% to 0.08% decrease.

Graph 1:Net Income, Source; Bancorp income statement 2020

From graph 1, the company’s financial track records on net income revenue increased gradually for two years, 2017 and 2018, while it dropped in the year 2019. The comparison of 2017/2018 to 2018/2019 stood at a profit of $878 and a loss of $182, respectively. The operating income decreased significantly for the financial 2018/2019 compared to the previous years. The net income stood out as a decrease due to the possibility of world health pandemics such as COVID 19.

Graph 2: Net Interest Margin.  Source; Bancorp 2020 income Cash flow

Table 2: Source; Bancorp Net interest income statement 2020

From graph 2, Bancorp’s cash flow on interest increases from 2017 and 2018, with a percentage of 3.10 and 3.14, respectively. The company experiences a decrease in the net interest margin of 0.08% from the 2018 financial report (Zhuet al., 2020).

From Table 2, the expenditure on operating activities reduced from $450 to $120 in the years 2017/2018 to 2018/2019, respectively. Cash from investments and financing reduced in 2018/2019 in the investment securities and loans from mortgages. The total cash flow shows a decrease in total earning assets for the three years and whole loans. On the other hand, the Net Interest Margin increased for two consecutive years of 2017 and 2018 but faced a decrease in 2019. The items that stood out include the number of borrowers who increased significantly, as indicated by the number of covered loans in table 2 (Zhuet al., 2020).

The organizations underlying financial performance has been doing well for the past years compared to the current financial statement release, 2019. From the analysis in table 1, the interest liabilities increased in the year 2017/2018 and the year 2018/2019 from $12302 to $18152, respectively. From graph 1, the company’s net income was on the increase for years 2017, 2018, and decreased in 2019 due to the impacts of the COVID 19 pandemic. The business is struggling in its banking industry because of the following evidence. In graph1, the performance based on net income for the company showed inconsistency. It is because of a decrease in total earnings from the asset investments in the financial years 2017/2018 and 2018/2019 in table 2.

Current Financial Health

Graph 3: Total risk-based capital Source: BancorpFinancial statement 2020

From table 2, the organization capitalized on debts and low rate of investments due to narrow interest margin rates from the assets. The company’s financial health is unstable, as evidence by the total risk-based capital or the past three years in graph 3. It led to an increase in total debts to stabilize the struggling operations like employees’ payment (Baumöhl et al., 2020).

Graph 4: Dividends per common share;  Source: Bancorp 2020

The shareholders’ dividends increased due to the high rating of clients seeking loans for their business, which were at risk of collapsing from unusual events of COVID 19. It led to an increase in the cost of the organization’s shares dividends in the stock market, as evidence in graph 4 (Baumöhl et al., 2020).

The company lacks a sufficient amount of cash and resources; it relies on loans and assets to maintain technologies. Bancorp’s future growth depends on the reputation behind its performance in the banking industry and proper investment, a vital fuel for its future development. The business decisions revolve around the welfare of the company running rather than profit-making and workers engagements.

The assessment of the business on the current market value is at risk due to the instability of the profit margins, net income, and assets investments, which are the source of the organization’s net income as in table 1.the price to earnings ratio have the potential of increase in the urgent situation of COVID 19 due to high dividends per share returns in graph 4. It suggests that an investor can consider buying shares in the current time, 2020, but for future investment, the situation is unpredictable based on previous years.

Success Factors and Risks

Strategic Priorities

The organization’s financial and strategic priorities affect the accounting procedures and business decisions by altering its strategized long-term financial plans to rescue the current situations of struggling operations. The business success might face challenges in achievement due to the high cost of management and little capital allocated to developments. The management growth of the company is efficacy oriented for maintenance and narrow profit margin. The organization significantly base on short term planning to navigate the COVID 19 effects (Chowdhury & Nehal, 2020).

Capitalization on Non-Financial Factors

From the analysis of graph 4, the organization might think of capitalizing on non-financial factors due to the high rate of investors buying the company shares and redeeming them at low interests for loans, which will correspond to an increased number of clients and building of a better reputation. The investment in human resources for its service delivery, which includes the employees’ training and motivations, increases its productivity and brand (Raykov&Silva-Buston, 2020).

Significant Internal Risks

According to the analysis of the company struggling nature the operation arising from financial constraints, the personnel management thrives under risk of motivation. Technologically based departments face the risk of failure due to low maintenanceand upgrade for the company’s information systems and data security. The financial statements predict the organization operating under a shortage of labor and workers having low morale. For example, in table 2, the company invested little in asset security.

Projections

Projected Consolidated Financial Opportunities

The future of Bancorp dramatically lies in the financial performance of the company. For the last three years, the company operations revolve on narrow profit margin and decreased investment on interest assets and non-financial factors. In the year 2020, the company might have a significant drop in performance and net income compared to the previous years due to the high impacts of COVID 19 in 2020. Nevertheless, in the year 2021, the company might adapt to the situation prevailing in 2020 and invest in the technicalities of handling them for the future. In the year 2022, Bancorp will either be stable based on the foundation it will have laid in the year 2020. Failure to safeguard its future, Bancorp might face the risk of slow growth or operate under significant debts (Chowdhury & Nehal, 2020).

Projections for best and worst-case scenarios.

The scenario for the incoming year based on the best plan involving investing in the previous year’s weakness more so 2019, the company might face performance. The best scenario’s potential area includes shared dividends, which many people decided to invest in 2019 (Zhuet al., 2020).

The worst scenario in the year 2020 might be lying under the unpredictable impacts o COVID 19, which had started manifesting in 2019. The company might lack sufficient capital for investing in working under risky conditions of the global pandemic. Closure of Bancorp might be projected as one of the major scenarios for the year 2020 as the company decides to wait for better and safe environments for its operations.

Discussion of finding

The discussions of assumptions basing Bancorp’s future for the next three years on its projection; first, the company investing in its failure and the challenges faced in the previous years, I might realize performance. The information gaps underlying the projections might drag their efforts behind, including natural disasters such as the health pandemic experienced in the year 2020, a rare case, and a gap. Since most of the projections aimed to address the current effects caused by COVID 19 pandemic, they might not be in line with the company’s missions and priorities. The predictions might seem aggressive, but they have the capability of the company achieving them for financial freedom.

Changing the assumptions would change the company projection for the long term plan since based on solving a short term problem.

Business Opportunities

Likely Investment Opportunities for the Organization

Bancorp’s potential investment opportunities in the current times for their future performance include selling shares to the stock market. The venture proved its potentiality in business growth for the past three years, where it kept on increasing. Secondly, the organization can consider investing in physical assets such as the real estate industry for diversification(Baumöhl et al., 2020).

Lastly, the company should consider investing in human resource, which covers the workers and the entire staff. The process might seem costly, but the repercussions of motivated workers correlate directly to the company. They should focus on client needs by assisting them in recovering from the effects of COVID 19 by offering low-interest-rate loans for a start-up and boosting their businesses.

Cost and Benefits of the New Investment

The possible costs and benefits of investing in the outlined sectors on human resources, physical assists, and customer assistance in recovery from the pandemic might amount to large capital and help from the company. The corresponding output from the investment will serve as a long-term investment in both the business’s external and internal environments. The competition with other companies offering the same services as Bancorp will be handled effectively from the human resource personnel’s proper training. Furthermore, considering a physical investment that requires minimal maintenance cost guarantees the organization a wider profit margin.

Impact on Budgeting Decisions

The potential investment will affect the business decisions for the coming year since the projection never existed in the company’s mission and priorities (Raykov&Silva-Buston, 2020). The process involves massive capital investment for the acquisition of proper resources and trained personnel. The benefits correlate to the assets in both the short and long term. Short and long-term spending priorities might be affected due to changing the terms of allocating resources to the projections. The output will overdo the input for the benefit of the company in the long run.