The Bancorp, Inc. (TBBK)

Q2 2010 Earnings Conference Call

July 22, 2010 10:00 AM ET


Andres Viroslav – Director of Corporate Communication

Betsy Cohen – CEO

Frank Mastrangelo – President

Paul Frenkiel – CFO


John Hecks – JMP Securities

Mike Laudus – FBR Capital Markets

Frank Schiraldi – Sandler O'Neill

Matthew Breese of Sterne, Agee



Good day ladies and gentlemen and welcome to second quarter 2010 The Bancorp Inc. earnings conference call. My name is (Josh) and I will be your coordinator for today.

At this time all participants are in a listen-only mode. We'll be facilitating a question-and-answer session towards the end of this conference. If at any time during the call you require assistance please press star followed by zero and a coordinator will be happy to assist you. I'd now like to turn the presentation over to our host for today's call Director of Corporate Communications, Andres Viroslav you may proceed.

Andres Viroslav

Thank you Josh. Good morning, and thank you for joining us today to review The Bancorp's second quarter 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 11:00 a.m. Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 8768221.

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 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 may be 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 Andres and thank you all for joining us today for the second quarter call for TBBK. As we remind you each time The Bancorp has seasonality encrypted in its annual cycle and the second quarter of the year is the lowest quarter both in terms of deposits and deposit growth. The funds of various lines of business that we have that what we provided you primarily in the release are what we think are the relevant comparisons to the second quarter of 2009.

We're pleased to provide you with what we think are not only achievements in this quarter but markers for future performance.

We have had growth in loans since the end of the second quarter of 2009 of 8%, 3% on a linked quarter basis. Our efforts within the SBA Program that we have begun are beginning to be realized. We are writing our first programs and we have a very full pipeline.

Our Fleet Leasing Program – more Fleet Leasing Program, which is primarily to school districts and universities and other such entities has also shown growth.

We've had (inaudible) expansions and we discussed on our first quarter call the impact on (inaudible) provided by the inflow of significance on a relatively seasonal basis and therefore our inability to invest in long term and that gets reflected in the movement from 3.09 for the first quarter to 3.44 for the second quarter and I think that's an annual pattern if you look back at 2009 as well.

We had significant growth in non-interest income, 48%. It reflects both new customers plus growth in existing relationship and Frank will add more color to that when he speaks about not only our deposit growth but what might interest many of you which is the impact or lack of impact of the regulatory reform position.

We are also delighted that we are very, very pleased with our healthcare deposit business being $400 million in deposits and as you know, there is a long-term very (inaudible) deposits.

We also had growth in interest income on a year-over-year basis and assets through by 23% even after the repayment of the TARP Funds.

On the credit side there are several factors imbedded in our current credit report. One we continue to be aggressive in terms of writing off loans, we may have recovery or may not have recoveries later but we feel that we'd like to put this cycle behind us.

Imbedded in that write off number this quarter is a large $900,000 in the nature of a check kiting loss that we took and it's run through the loan loss numbers under very peculiar circumstances where such loss is taken at 8 years and we think it's even nature of a nonrecurring event. There is at the end of the day a higher position coverage.

On the deposit front, transaction accounts direct 32% and we continue to grow in all lines of business. We had reverting that to credit; we had some movement from our 30-89 day delinquencies, which were roughly $15 million at the end of 03/31, the first quarter 03/31/2010. They're now 8 million so they've been reduced by $7 million but that $7 million migrated to 90 days plus in this quarter. We hope and anticipate to get most of that results within this upcoming quarter.

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