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The Bancorp Inc. Q1 2010 Earnings Call Transcript

The Bancorp Inc. Q1 2010 Earnings Call Transcript

The Bancorp Inc. (TBBK)

Q1 2010 Earnings Call

April 26, 2010 10:00 am ET


Betsy Cohen - Chief Executive Officer

Paul Frenkiel - Chief Financial Officer

Frank Mastrangelo - President

Andres Viroslav - Director of Corporate Communication


John Hecks - JMP Securities

Bob Ramsey - FBR Capital Markets

Frank Schiraldi, - Sandler O'Neill

Andy Stapp - B. Riley

Matthew Kelley - Sterne, Agee & Leach



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Good day ladies and gentlemen, and welcome to the first quarter 2010, The Bancorp earnings conference call. My name is Caressa and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call, Mr. Andres Viroslav, Director of Corporate Communication; please proceed.

Andres Viroslav

Thank you, Caressa. Good morning, and thank you for joining us today to review The Bancorp’s first 2010 financial results. On the call with me today are Betsy Cohen, Chief Executive Officer; Frank Mastrangelo, President; and Paul Frenkiel, our Chief Financial Officer.

This morning's call is being webcast on our website at

. There will be a replay of the call beginning at approximately 01:00pm Eastern Time today. The dial-in for the replay is 888-286-8010, with a confirmation code of 31649563.

Before I turn the call over to Betsy, I would like to remind everyone that when used in this conference call the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated or suggested by such statements. For a further discussion of these risks and uncertainties, please see The Bancorp's filings with the SEC.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release the results of any revisions to forward-looking statements, which maybe made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Now I’d like to turn the call over to Betsy Cohen. Betsy.

Betsy Cohen

Thank you very much Andres, and thank you all for joining us. The first quarter 2010 included many indicators that progressed for TBBK. On the credit side, on a linked quarter basis we reduced the non-performing loans to total loans from 1.66 to 1.44, and an even greater increase if you do it on an annual basis.

Non-performing assets to total assets decreased on a linked quarter basis from 1.26 to 1.08. 90-day loans plus, still accruing increased $4 million from about $13 million and overall NPA’s were up slightly from $13 million to $17 million in aggregate, a decrease by about 12%. Further information on that bucket of loans indicates that $7 million of the approximately $21 million in 90 days plus and non-accrual are under agreement of sales scheduled to close this quarter.

We did not only do work on loans that are past due, but also have generated new loans. Some of the net loan growth is masked by our conscious run-off of residential construction loans, and some other components of the portfolio, but new loans in the first quarter aggregated about $36 million, and they had been $50 million in the fourth quarter of 2009.

In addition to that, we closed the first $2 million of loans under our new SVA program, which launched at the very beginning of April. We have great hope for that program in terms of loan growth, given the initial response that we’ve had from our partners.

We also increased on the asset side, increased securities on a linked quarter basis by over $50 million. In-part we are responding to the significant growth in deposits. If one looks at this on a seasonal basis as it has been shown in the past, we have some uncertainty in the first quarter when deposits grew significantly as to the exact amount of the retention of those deposits, and so we have traditionally helped them on a very short-term basis, primarily in FED funds.

We are though adding, we gained more confidence on the average deposit level in the second quarter and have been able to grow assets in a corresponding way. That will offset, we believe the decrease in net interest margin which is totally a result of those asset deposits. In a low interest free environment such as we have, it’s very difficult to sustain the margins when the deposits start to flush in.

Our deposit strategy continues to be successful. As you know we are interested in market penetration within our several lines of business; one, to have a better customer base and better customer opportunities, but also to have what we think is a better pricing control.

We’ve achieve a top 10 position in healthcare and Frank will talk more about these in a bit; and we are making progress in merchant acquiring where we moved year-over-year from about 48


in the country to 21


; and in ACH [donation] where we moved from 54


to 44


and joined as a principal bank of North Shore. The cost of those deposits though do reflect the influx of significant low cost deposits, and year-over-year that cost moved from 106 basis points to 65 basis points.

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