Good day, ladies and gentlemen. And welcome to the Q1 2012 The Bancorp Inc. Earnings Conference Call. My name is Cheney, and I’ll be the coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (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, Mr. Andres Viroslav, Director of Corporate Communications. Please proceed, sir.

Thank you, Cheney. Good morning. And thank you for joining us today to review The Bancorp’s first quarter 2012 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 www.thebancorp.com. There will be a replay of the call beginning at approximately 10:30 a.m. Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 65379042. Before I turn the call over to Betsy, I would like to remind everyone that when using 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 all for joining us for this Q1 call. We’re delighted to report to you to date $0.12 per share earnings, which is the high-end of the analysts’ estimates. It is driven as it has been in past quarters by our increases in non-interest income and specifically within that category our prepaid income. We believe that this validates our business model and provides us with confidence that new programs which are currently launched and I think we have spoken about in the past the time between initiating or signing a new client and actually launching that program and having some impact on the P&L or the balance sheet and so you begin to see the implementation or the launching of programs in this quarter. The 90% increase in prepaid is a very high number and as it was last quarter. It’s been two quarters in which it has exceeded 90%. But we don’t believe that that’s a reasonable continued expectation although we do believe that the growth will be significant, all of this growth is organic. And in that regard, we need to focus on the fact that we terminated some nine, almost nine months ago one of our large programs, the program effective date for termination is the beginning of May and so you’ll see several factors which occur as a result of that. First in retrospect, if we were to have eliminated those deposits from our deposit base in each of 2000 -- 03/31/2011 and 03/31/2012, the growth in deposits would have been 50%. This is organic growth from new and existing programs, and we are very cheered by that fact. The program that’s been terminated does not have non-interest income associated with it. So you will not see an impact on non-interest…

Thank you, Betsy. As was mentioned earlier, store value our prepaid unit continued to be the major driver of non-interest income increases with 90% year-over-year increase, 65% quarter-to-quarter increase. Other areas were also contributors to the total 58% year-over-year non-interest income increased. Our savings account is up 66% year-over-year and merchant up 18% year-over-year, primarily driven by strong growth of our ACH business. We look at the breakdown of prepaid income, though we continue to see that deals we have, relationships that we had signed in previous years continued to drive the majority of gross dollar volume and therefore non-interest income. Deals we signed in 2010 or prior comprising 83% of that volume and income, yet you can begin to see the impact of some of those relationships we signed in 2011, which now comprise 17% of the group’s volume and gross dollar volume in non-interest income. Lastly, what’s propelling that forward is very, very healthy growth of total gross dollar volume in the prepaid business segment. Gross dollar volume in first quarter 2012 was just over $8.8 billion that’s up from round to $3 billion in the first quarter of 2011.

Thank you, Frank. As you can hear from Frank’s report, our emphasis which we began as long go 2009 when we became convinced that interest rates would remain low over a long period of time on non -- the generation of non-interest income versus generation of deposits even zero based deposits and just by way I’ve mentioned, the cost of deposits continues to decrease. Paul may be you would like to speak to that?

Sure. While we -- similar to the rest of the industry has continued to lower deposit rate. We actually have room to continue to do that and we just went into another round and the impact won’t be as much as it was in prior round. But we do find that the expectation of depositors is really adjusting and has adjusted to what basically is zero rate environment. So we have a significant service component and relationship component with our depositors as part of our business model. So we feel we can continue to lower deposit rate and you should see that impact throughout the rest of the year as well.

Thank you. I think Paul is really talking to the validation of our business model, part of which is to generate low cost the key deposits. We view deposit generation as part of our business solution rather than just gathering deposits. And so as Paul indicated many of those deposits are not interest rate sensitive but rather based on an integrated processing relationship with or what we think of as partners. So it makes them both sticky and subject to reduction in cost. With that, I’m going to turn it back to Cheney and ask for questions.

(Operator Instructions) Your first question comes from the line of Frank Schiraldi with Sandler O’Neill. Please proceed. Frank Schiraldi – Sandler O’Neill: Good morning. I wondered if, Frank, I think you mentioned that deals you guys have done since the end of 2010 accounted for I think you said 17% of gross dollar volume. Is this just the tip of the iceberg really in terms of what we’ve seen fall into revenues from those programs. And where do you think that percentage could be say by the end of the year?

So keep in mind, Frank. As we’ve talked about in the past, I think a good metric is that it really -- as we diagnose this or takes about almost a year if -- where one of these relationships begins to contribute meaningful volume and meaningful income. But it takes almost another whole year for a new relationship to really ramp up and hit it -- let’s say mature volume and mature income and then after that most of the relationships will continue one at some, more than nominal but lower growth rate, either something equating to the prepaid industries growth rate of somewhere between 25%, 35%. Some outperform that, some underperform that, but ultimately what it means is, that as we’ve talked about, there will be continued layering effect through 2012. As we signed new relationships all through 2011, they will continue to be layered on into 2012 begin to ramp that volume but ultimately it won’t be fully mature likely until some time in 2013.

And Frank, if I might just add and I think it’s implicative what Frank Mastrangelo said that the percentage of growth is impart dependent upon the mix of new and old programs or new and mature programs and so that may shift from time-to-time. There maybe a spurt of new programs launching in a particular quarter and additional growth from maturing programs. But the balance between those two can shift overtime as a sort of portfolio. Frank Schiraldi – Sandler O’Neill: If looking at the programs you put on 2011, I would think it might be a bit different between programs that may have been taken away from a competitor, let’s say, they were already in place in terms of how long it takes them to mature versus programs that have just been begun. So what sort of percentages are we talking? First of all, is that right, is that correct? And then, what sort of percentage above business put out in 2011 of new programs to the Bancorp, where programs that were in place with the competitor?

The answer to the first question is that’s absolutely correct. The program that is already existing that’s being transferred from another issuing institution obviously makes instant impact where you know a new startup program has to ramp from a zero bips. I don’t know the answer to your second question, I don’t have that number at my fingertips, Frank. But I can get back to you on this.

I think also it’s important to remember that programs are not single in their characteristic. We will transfer an existing block of business where a customer has a way of opening that relationship, but the customer is adding additional programs as well as volume to existing programs. So, it is a bit of a mix but we’ll give you as much clarity as we can. Frank Schiraldi – Sandler O’Neill: Okay. Great. And then, I guess just I guess, it will be fair to say but tell me if it is fair to say that given the ramp up in growth you guys saw in 2011 that growth in prepaid processing fees should continue to outstrip the overall industry growth and in prepaid cards, is that fair?

I think that’s very fair. Frank Schiraldi – Sandler O’Neill: Okay. And then, just finally, just wanted to ask a question on expenses, Betsy, if you exclude the $1.5 million in OREO in the quarter, I think you had said, well, you get to around 60%, little bit higher than 60% efficiency ratio. I missed your comments after that, is that a fair efficiency ratio going forward for let’s say just the short-term the next few quarters or should we see it migrate down from those levels?

Well, I’ll ask Frank-- excuse me -- I will ask Paul to answer that on the first round and then you know I always reserve the right to elaborate. Yeah. Paul?

Well, to answer your question Frank, we are expecting to see an improvement in the efficiency ratio. However, the first quarter is our strongest quarter so far from the fee income level, which obviously contributes a lot to that decrease. So it won’t be as low as that level in the second quarter but as we continue to improve it, obviously that’s what we are targeting to continue improvements to get down to that level. Frank Schiraldi – Sandler O’Neill: Okay. So maybe it’s more fair to look at year-over-year and say that it will be down, the thinking would be migrate downwards year-over-year from that level?

Absolutely, it’s why we continuing and you took the words right out of my mouth that we continue to impose upon you the discipline of looking first quarter to first quarter of a previous year simply because the characteristics of the quarter remain consistent on a quarter-by-quarter basis but not on a linked-quarter basis. Frank Schiraldi – Sandler O’Neill: Okay. That’s all I have. Thank you very much.

Thank you.

Your next question comes from the line of Matthew Kelley with Sterne Agee. Please proceed. Matthew Kelley – Sterne Agee: Yeah. Hi. I was wondering if you might be able to give just a little bit more detail on the impact on the balance sheet if that large affinity relationship was not there. I mean, what would the deposits have been at period end or an average for the quarter?

Well, I think that we have said to you in the past and I’m trying to give you some guidance here that we look at -- we look at the Federal Reserve balance. But I’m not sure that in this quarter that that’s a good guide. In the -- I’m a little bit hesitant Matt to provide that information because we don’t provide that information on a customer-by-customer basis. What we’ve tried to say to you is that if you were to remove that -- the deposits of that partner at 3/31/2011 and at 3/31/2012, the growth in deposits would have been about 50%. Matthew Kelley – Sterne Agee: Right.

Okay. And I think that is all that we can say about it. I’m sorry to be... Matthew Kelley – Sterne Agee: I guess the challenge is trying to figure out how much is coming out. I think it’s kind of 350-type level on a margin guidance or 350, 360 whatever it is. It seems like the amount that would have to come off the balance sheet that is currently sitting in Fed funds and really weighing on the margin is bigger than what you’ve talked about historically, which I think on average is about $500 million to $600 million for the year with seasonal spikes to close to $1 billion.

Yeah. And remember, we have a seasonal spike in the first quarter... Matthew Kelley – Sterne Agee: Right.

…from ex programs and other things. So, that’s why I’m just -- I’m not giving you that numbers easily as I could give it to you in the second or third quarter. It would be much more -- it would have been a much more direct relationship. Matthew Kelley – Sterne Agee: Let me ask you in a different way. In the past, clearly this is a big transition year with this relationship kind of rolling off the balance sheet and one of the ways that we’ve talked through it is a goal of trying to rebuild the deposit base back to where it was at year end 2011 which was $2.7 billion, match that by year end 2012 where it appears that the rate of growth of kind of the core Bancorp business, it was much stronger. And so my question would be given...

Would we exceed that? Matthew Kelley – Sterne Agee: Yeah. Did you exceed that?

Yeah. That I know, could we exceed that? We could. But by how much? I can’t really say. Matthew Kelley – Sterne Agee: Okay. Got you. All right. Moving to the fee income components, if you look at 2011, you guys had $18.7 million as fee income on gross dollar volume of $14.1 billion. So, it’s basically 13 basis points, is that relationship there? How should we be thinking about that relationship going forward?

Frank?

I’m sorry, Matt, the question again?

The question was the relationship of the fee... Matthew Kelley – Sterne Agee: (Inaudible) fee income in 2011 stored value, you did $19 million on gross dollar volume of $14 billion that was a slide in your deficit and how should we be thinking about that relationship going forward?

Is that a 13 basis point relationship?

I think we’ve talked about this in the past, Matt. Some of the new larger deals, new larger relationships that we’ve signed that have been transitions from other institutions that don’t necessarily have the same risk profile associated with them. We’ll be coming in thinner than -- thinner than that additional margin. So, I don’t know whether we’ll be able to maintain 13 basis points on GDV that’s growing, significantly as it is. But there is continued positive non-interest income associated with every new dollar of GDV. I would expect just because of the size, scale and scope the players that were signing, were transitioning volume in or starting new program at that 13 basis points will come in a bit.

Matt, I know this is not helpful [the stupid] modeling, but it goes back to the answer that I provided to Frank Schiraldi, which is that, we really have to look at the mix of the portfolio. And it maybe heavy on the large customer transfer in component, during these next six or eight months, but on the less mature programs are also growing. So where we are in the second quarter may -- because of that maybe very different 2012, maybe very different from where we will be in the second quarter of 2013. Matthew Kelley – Sterne Agee: Sure.

And I just -- but I know that’s not helpful, but it’s in fact true. Matthew Kelley – Sterne Agee: And just to be clear, you guys said $8.8 billion just in the quarter. So you have not annualized [the 35.2] of GDV at the start of the year?

Well, well, well. Yeah. Well, it was $8.8 billion in the first quarter. Matt, I know you understand there is seasonality related to that. So you can’t really just multiply that by four to come up with the total year GDV. I think we’ve spoken about and still anticipate gross dollar volume $20 billion and $30 billion for the year in that business line. Matthew Kelley – Sterne Agee: Okay.

I know that’s a widespread, but. Matthew Kelley – Sterne Agee: Okay. And then, just off of the kind of the core expense based ex the OREO write-down, what are you anticipating for the core expense growth in the year ahead off of this quarter’s number?

And excluding as well the seasonal impact of first quarter non-interest expense, which is actually -- it should be a net out of non-interest income. Paul, do you want to talk to that?

Yeah. Year-over-year if you take out the OREO expense, it was a 19% quarter-over-quarter increase. And of course, we’re going to try to for the year this year for the remaining three quarters, we are going to try to continue to improve that and slow that growth rate. We do -- we are investing expenses in various items that as Frank and Betsy noted are not producing income yet and in some cases are at a negative, but we’re confident in those programs. And so, where we feel that we can justify those expenses for future revenues, we’ll continue to do that. But we’re getting improvements in the rate of growth in the expenses. Matthew Kelley – Sterne Agee: Okay. And then just one last question on the margins, so this third quarter this year with that big relationship fully transitioned out and no impact for the full third quarter. Do you anticipate that a margin would definitely be above three in a quarter 330, I mean definitely a there handle on that margin?

We normalized the margin for this quarter at 357 and if I were to look back to the third quarter of 2011, it was 362. So it’s been pretty consistent. Matthew Kelley – Sterne Agee: Okay. All right. Thank you very much.

I would now like to turn the call over to Ms. Betsy Cohen for closing remarks.

Thank you very much Cheney, and thank everyone for taking time during this busy reporting season to join us today. We bring to you a complicated but we think very exciting story about our business model that is in fact working in the banking business together with anticipated growth. And so we look forward to talking with you again.