Good day, ladies and gentlemen. And welcome to the second quarter 2009 Bancorp, Incorporated earnings conference call. My name is Katina, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this presentation. (Operator instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr. Andres Viroslav, Director of Corporate Communications. Please proceed.

Thank you, Katina, and good morning. And thank you for joining us today to review The Bancorp’s second quarter 2009 financial results. On the call with me today are Betsy Cohen, Chief Executive Officer; Frank Mastrangelo, President; and, Marty Egan, our Chief Financial Officer. This morning’s call is being webcast on our Web site at www.thebancorp.com. There will be a replay of the call beginning at approximately 12:00 p.m. Eastern Time today. The dial-in for the replay is 888-286-8010, with a confirmation code of 541-093-15. 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 would like to turn the call over to Betsy Cohen. Betsy?

Thank you, Andres. And thank you everyone for joining us today. I know that this is a busy earnings day, and so I appreciate your taking the time. During this quarter, the second quarter of 2009, we believed that we've matured and improved our deposit franchise. As you can see on a year-over-year basis, transaction accounts increased by 67%, and even 15% to 60% on an annualized basis -- excuse me, 30% on an annualized basis since December 31st of 2008. More importantly, at this time, transaction accounts represent 88% of total deposits. And that's a very significant number. You may remember that we've always targeted somewhere around 65%. So we're growing a low cost deposit base, which has resulted in cost of funds for this quarter of $1.13 in contrast to the second quarter of 2008, in which they were $2.90. And I recognized there some interest rate variations that occurred during that period. Corollary to that is that time deposits have decreased 67% over the same quarter of last year and 54% since year-end. That has resulted in an increase in net interest margin, which is significant, and for this quarter was $3.96, up from $3.34 at the same quarter of 2008. On the asset side, we have what we think is some good news, which is all that one can hope for during this period of time. And that is that during this quarter we saw a decrease in non-accrual loans from approximately $12 million to about $8.5 million. Of that $8.5 million, $2.8 million, approximately, are under -- loans that are under agreement of sale that we hope to make further progress. The other piece of the asset improvement resides in the OREO component, and that is that we currently have no OREO. Although, as you can see from the earnings, during the period of time that it took us to get our arms around this property, the market in which it was located deteriorated. And so we took, in this quarter $1,700,000 loss in that OREO piece. The other bit of news or noise around the earnings was indeed the FDIC assessment, which was $775,000. In addition to that, we added to the loan loss provision beyond our normal allocation. On the 90-days and past due, we had a tic up from about $13 million to $21 million. About $9 million, a little bit less. The $9 million represents properties that are under agreement of purchase. And so we believe that that number will come down during the quarter. Although one can never be predictive about when these things actually settle. Back to the deposit side, I think we've made a good progress in the number of different lines of business. And Frank, maybe you'd like to just talk about health care and our prepaid business and the progress you've made there.

Sure. Thank you, Betsy. As Betsy mentioned, core deposits now make up 88% of the banks total deposits. Our affinity program comprises a little over 68% of that core number today. That's really been driven from the growth in deposits in our health care project clients and prepaid segments of our business where you've seen year-to-date growth in private client deposits of just about 52%, 14% in our prepaid business line, and 26% in our health care business line. And then as we talked about in the past, Q2 is specifically a seasonal lull for as in each of these lines of business. We’re pretty pleased with the growth that we’ve been able to achieve to date on the deposit side of the business.

Thank you, Frank. I'm just going to mention one other item in our -- on the asset side and then open this for questions. The construction loans, the composite of both commercial and residential construction was reduced since year-end by about 16% to -- from about $309 million to $255 million as a result of a variety of circumstances. But one of which -- and you can see it in the numbers that was dropped down for the residential portfolio, which is down to about a $125 million from the prior quarter March 31st, of about a $159 million. And that represented the traditional summer cycle, which we hadn't had the benefit of for a while, of projects getting completed together with agreements of sale on residential projects. As of June30, we had -- of course we see agreements being signed during the course of the quarter, but we used the quarter end -- prior quarter year end assuming a 90-day cycle for closing. As of June 30th we had agreements of sale which would represent an additional $13 million reduction in our residential construction portfolio. And of course we have projects on the commercial side which are coming to completion and are ready for refinance. I think the housing numbers that were put out yesterday are reflective of what we’re seeing in our area, which is an up tic of sales not only for us in existing homes, but also in new construction. With that, Katina I’m going to turn it back to you to ask for questions.

Thank you. (Operators instructions) Your first question comes from the line of Andy Stapp, representing B. Riley. Please proceed.

Good morning.

Hi, Andy.

Would you happen to have the balance of 30 to 89-day delinquencies at quarter-end?

I don’t have that with me. But we’ll be glad to get it to you.

Okay. Do you recall that how it -- what the trend was?

I’d rather not comment without having it in front of me.

Sure. What about the watch list? Do you happen to have the trend there?

The watch list remained in number, static, although there were ins and outs.

Okay. But it is--?

It did not grow. And if you go back to the 90-plus plus OREO and non-accrual, actually when you’d look at that and aggregate that number, it did not move either. It was about last quarter -- the total of those three items were about $30 million. And I think that it’s about the same this quarter, although distributed differently.

Sure. And could you give me some color on opportunities for further net interest margin expansion?

Sure. I think that we believe that two things, one, that we continue to have lending opportunities, and we may feel ourselves in a position to take advantage of them on a going forward basis, which is our traditional method of increasing the asset base. And then, the impact of that particularly with this high level of transaction accounts would be immediate. We also had bought some tax exempt funds which did not settle completely through the second quarter at an average tax exempt rate of about 5.25%, sort of immunizing or offsetting the cost of the TARP financing. And they have -- we’ll have another small up tic from that, assuming that the cost of funds remains constant.

Okay. And the loan growth you mentioned, is that an internal with existing clients or are gaining market share?

Well, I think our first choice would be to lend to people we know well.

Right. Okay. And what do you see with regards to TARP? Are you going to hang on to that until there’s more clarity on the economy or -- what are your thoughts?

I think that we will be cautious about asking for repayments, which does not mean that we will not be eager to put ourselves in a position in which we could repay. So I think we are pursuing both paths.

Okay. All right. Thank you.

Thank you, Andy.

Your next question will come from the line of Matthew Kelly representing Sterne, Agee. Please proceed.

Hi, Matt.

Yes, hi. Any renegotiated loans during the quarter that got moved into held for sale or we should be thinking about in terms of the total asset (inaudible)?

No.

Okay. And then on the loans that were under agreement for sale, the $2.8 million in the NPO balance this quarter, as well as the $9 million in the 90-day plus bucket, what are the current marks or write downs that have been taken and what are the nature -- what is the nature of that collateral?

Well, in the 90-day plus, you wouldn’t have any write or else there would be on non-accrual. In the non-accrual, we have taken through this quarter and the prior quarters of what we thought is the appropriate mark to market based on those agreements of sale. So I’m not sure--

Are they commercial loans or mortgage -- residential mortgages?

They are a combination, actually.

Okay. I’m just trying to get a sense of--

One is there are two -- actually two components to that $2.8 million number. One is a residential loan and one is the commercial.

Okay. I’m just trying to get a sense of the magnitude of the write downs that you’re taking on, loans that are moving off of your books.

I don’t think we’ve had enough. I think that you can take a look at the unfortunate experience we had as we’ve been talking about over the course of the year more, with that one piece of OREO. We don’t think that that’s an appropriate marker for marking those residential loans, as we’ve said, because it involves more than one thing. And another, our experience in selling residential loans is that they haven't been, and we should have picked this up from our book of construction loans that are being sold and how close were they to our original underwriting. And so, that’s one marker for us. And they were in the 10% to 12% off the original underwriting, which goes back in some cases to 2007.

Okay. Okay, got you. In the construction--

In our geographic area, mid-Atlantic, specifically the 12 counties around Philadelphia, the issue has not been so much on price as you’ve seen in other areas of the country, but really it's a wild (inaudible).

In the residential construction portfolio, the $124 million balance at period end, what are the largest projects in terms of the number of homes being built in certain developments?

I’ll be happy to provide you with that information.

Okay. And then on the construction -- in the commercial construction portfolio, as those loans mature and the projects are completed, who’s taken the permanent financing out on those?

Some of them that are actually getting refinanced, and some on which we have -- we had and have many firm commitments. And it may take over the course of the next six to twelve months for them to be refinanced away from us. So it’s a combination.

Okay. So some of that will be going into your essentially permanent commercial real estate book then?

It will be. Of course, in order to qualify for the permanent, for the mini-perm , they have to have achieved income goals.

Right. And what of the largest collateral sectors or what’s the nature of the assets in the commercial construction book? Is it retails? Is it office? Is it industrial? What are the exposures there?

We have a relatively -- at Vanilla, we have some multi-family, some neighborhood shopping centers, small. And those are the primary categories.

Okay. All right. Thank you

Your next question comes from the line of Bob Ramsey, representing FBR Capital Markets. Please proceed.

Good morning. This is a quick follow-up to Matt’s question. So the $9 million of properties that are under agreements of sale, agreed sales price would suggest that there will be no losses on this lends. Is that correct?

If there were to be we would have put them in non-accrual.

Okay. Great. And then it looks to me like your net charge-offs were about $3.4 million this quarter--

I’m sorry. I missed the first part of your -- it must have been a microphone miss.

I’m sorry?

I missed the first part of the sentence.

Yes. It looks like your net charge-offs this quarter were about $3.4 million. Is that right because I couldn’t actually find the number on the release?

That sounds about right.

Okay. And is there anything lumpy or notable on that amount?

Yes. I think that the vast majority, and I can’t give you an exact percentage, is represented by a single loan that is being worked through now and that is currently under agreement of sale at a lower price. That’s in non-accrual.

Okay. And then you also took down the allowance relative to loans this quarter. And I know last quarter you had talked about the building of the allowance that you--

Yes. I think that the $3.4 million was a bit more than we thought that very late in the quarter. If you look at the averages, you’ll see over the average, although I’m not sure exactly what that means, that the average was up from last quarter on the allocation if you look at the average balance sheet. But we came to a conclusion late in the quarter about some elements and decided that it didn’t work (inaudible) at the mid-write off.

Okay. And so then will you be building up provision as we move forward to the allowance?

Absolutely, absolutely. We continue to be committed to that.

Okay. I think that’s all I’ve got. Thank you.

Your next question comes from the line of Eric Swergeld [ph] representing Groover & McBain. Please proceed. Eric Swergeld - Groover & McBain: Good morning, Betsy.

Hi, Eric. Eric Swergeld - Groover & McBain: Congratulations on a good quarter and making progress working through these loans, obviously, a difficult environment. One of the reasons we took such a big stake at the end of last year and early this year is we saw the value in the business services part of your business. And with the bank still trading well below price to book level, it seems like the market is still not affording you any multiple for the business services, payment services part of your business. Has some thought been given by the Board as to floating a separate issue for that segment of the business so that that value is better recognized in the overall share price and maybe taking the proceeds of selling the portion to that division to the public market and using it to buy back stock here below book? Thank you.

I think it’s certainly a good and creative suggestion. We have not yet found a way to do that. We think we’ve always treated the business services unit as an important component in recognizing the value of the franchise upon this position. And during the course of our holding it, a big contributor to the net interest margins through the low cost of funds. And I think that that’s still where we are. We think that these deposits, which have resulted from the business lines to which you allude, the business services lines, provide us with inherent value and continued earnings power. And so in the bank model, we have not chosen to pursue a sale of the business services unit as a separate unit. Eric Swergeld - Groover & McBain: Okay. I guess what got me thinking in that regard was a few months back seeing Advent International, the Boston-based private equity firm, buyout Fifth Third’s processing business at a reasonable to healthy valuation.

No. We hear you. And we’re not adverse to it. I’m sorry there’s some-- Eric Swergeld - Groover & McBain: I’ll mute my phone.

Thank you very much. I think that took care of it and I’m sorry that he’s on mute. I do think that the business comparables are very compelling. As Eric just pointed out, and they remain an unquantified value within the bank, for which we’re not getting credit at this time. We hope that the increase in net interest margin, which is another expression of the value of those business service units, will provide the market with an opportunity to reward us to some extent. But tangible common equity is $8.59 a share. And so we think that potentially there is a more aggregate value in the bank that could be expressed by having the stock price trade closer to that value. Eric Swergeld - Groover & McBain: Thank you much, Betsy.

Your next question comes from the line of Allan Bortel representing Inverness Management. Please proceed.

Hi, Betsy. How are you?

Hi Allan. Fine, thank you.

Okay, a couple of questions, the trend of the efficiency ratio, what’s that due to?

It’s due to the fact that we have been muting our operating earnings through a series of contributions to the loan loss division together with one time events such as the FDIC assessment. We think that it is also a factor of the way in which we categorize expenses in our business services unit, which is different from what was part of the traditional bank computation of expenses. And so we’re looking at that to see what we can do to normalize it, because we think that the efficiency ratio is in fact higher in statement than perhaps it should be. And it’s really a categorization of the expense items.

Okay. Great. Do you see any change in July? I’ve heard from a couple of institutions that they’re feeling better about the non-performers or the trend of new non-performers in July? I know it’s early.

It’s only three weeks, Allan. And I think it would be (inaudible) to answer that question.

Okay. Thanks. That’s it.

Okay. Thank you.

Your final question comes as a follow-up from the line of Matt Kelley representing Sterne, Agee. Please proceed

Yes. Just a follow-up on the question regarding the payment services business, just taking a look at what Fifth Third paid. It looks like it valued that business at $1.1 billion. I have to go back and take a look at the multiples on EBITDA and net income of revenues. But can you help us quantify your business so that we have -- we can take that comp and make a rough estimate of what that business might be worth to you guys? Help us break out those items so that we can maybe do a little bit or some of the parts here.

I very much appreciate your question, Matt. And I don’t have all the numbers either on Fifth Third right in front of me. But we will do that analysis, and we think you’ll be favorably impressed by it. And we will get it out. We will get it into the public domain.

Yes. I think the things that will be helpful will be the capital committed there, the Ebitda netting, and the full income statement cash flows so we can make some comparisons of it.

Sure. But I can’t make comparisons at the Fifth Third numbers.

All right. That’d be great. Thank you.

Thank you.

With no further questions in queue. I would now like to turn the call back to Ms. Cohen for closing remarks.

Thank you, Katina. And thanks to all of you again for taking time during a busy day to join with us this morning. We hope we have shown you that we’ve made some progress during the course of the quarter, that sustaining numbers like net interest margin and cost of funds, which have been, we think, very favorable over the last several quarters, and which show us our ability to continue to generate what we think are good net interest margin numbers. I give you comfort in that we are working our way through a difficult credit environment, although in a part of the country, which has not been as severely hit by property declines as have others. So again, we look forward to reporting more progress next quarter -- or this next quarter. Thank you.