The Bancorp Inc. ( TBBK)

Q4 2010 Earnings Call Transcript

January 27, 2011 10:30 pm ET


Andres Viroslav - Director of Corporate Communications

Betsy Cohen - CEO

Frank Mastrangelo - President

Paul Frenkiel - CFO


John Hecht - JMP Securities

Frank Schiraldi - Sandler O’Neill

Bob Ramsey - Capital Market

Matt Kelley - Stern, Agee & Leach



Good day ladies and gentlemen, and welcome to the Fourth Quarter 2010, The Bancorp Inc. Earnings Conference Call. My name is [Carmen], and I will be your coordinator for today. At this time, all participants are in a listen-only mode. (Operator Instructions).

I would now like to turn the call over to your host for today, Mr. Andres Viroslav, Director of Corporate Communications. Please proceed, sir

Andres Viroslav

Thank you, Carmen. Good morning and thank you for joining us today to review The Bancorp's fourth quarter and fiscal 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 12:00 pm Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 16943233.

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 very much, Andres and thank you all for joining us. On the east coast there seems to be a great deal of snow outside and so we are particularly greatful for you making the effort to join us this morning.

The fourth quarter was one in which we began to perhaps see some light at the end of the tunnel. The drivers of increased earnings per share continued to be inflicted elements of our business model.

The non-interest income which many of you remember that we have been focusing on as an important element of growth over the course of the last 18 months was up on a year-over-year basis by 64%. The net interest margin on a linked quarter basis was up by 13 basis points.

Net interest income reflecting a growth in the asset portfolio, partially in investment, but also in loans was up on a year-to-year basis. And non-interest income was relatively flat, as one compares it with the growth on the income side. Salaries actually were flat for the entire year.

Quarter earnings which we view as an important test of our lease that our earnings continues to be vibrant, moved from $5.8 million to $7.3 million, what we consider to be a significant growth on a year-to-date basis.

There were also important advances in the credit metrics. We call them advances even though they are reflected as leases. Our assets quality improved significantly, and I guess one of the major measures is that over the course of the year, we were able to reduce to 1.08% of assets or loans that are in the non-performing category, from 1.66 on a linked quarter basis and higher over the course of the year.

Loan originations and which is why we are seeing this as an important quarter. Loan origination for the year continued at what we’d think for this economy with a relatively brisk pace of $320 million, about $90 million – a little better than $90 million in the fourth quarter and we think that that’s important because generally we see that in the net numbers, but the business continues to be vibrant and that number we anticipate we’ll ratchet up with the SBA loan portfolio, which is beginning to get traction and which should reduce a significant contribution to originations in the first quarter of 2011.

Non-interest income grew across our lines of business, but for a greater detail I am going to ask Frank to talk a little bit about how that banged out.

Frank Mastrangelo

Sure. Thank you, Betsy. The stored value non-interest income for the fourth quarter came in a little shy of $2.9 million, up a little over 46% year-over-year from the fourth quarter of 2009, up 3.5% from previous quarter Q3, 2010.

Merchant income ended the quarter at about $520,000, up almost 200% year-over-year from Q4 2009, primarily due to large additions we made during the calendar year of new clients. That’s also up 8.9% on a quarter-to-quarter basis from Q3, 2010.

Overall for the year, non-interest income Q4, 2010 to 2009 was up almost 60% year-over-year and on a quarter-to-quarter basis, Q3 to Q4, up 9.1% in total.

Betsy Cohen

As I think you can hear our emphasis on the road (inaudible) non-interest income on (inaudible) basis has continued to be with us. But I think we can’t forget the contribution that our various programs make to the cost of our funds, which during this quarter 61-basis points. I think a low for us in terms of its cycle.

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