Andres Viroslav – Director of Corporate Communications Betsy Cohen – Chief Executive Officer Frank Mastrangelo – President Paul Frenkiel – Chief Operating Officer

Frank Schiraldi – Sandler O'Neill Bob Ramsey – FBR Capital Markets Andy Stapp – B. Riley & Company [Joe Steven - Steven Capital]

Welcome to the Third Quarter 2009 The Bancorp Incorporated Earnings conference call. (Operator Instructions) At this time, I would like to turn the call over to your host for today's conference Mr. Andres Viroslav, Director of Corporate Communications.

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 1:00 pm Eastern time today. The dial in for the replay is 888-286-8010 with a confirmation code of 80415540. 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 risk 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 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.

I'd just like to take a moment to introduce you to Paul Frenkiel who's joining us today for the first time as CFO. Paul, as many of you know, has worked with this team previously and we're delighted to welcome him back. Today I would like to underscore the continuing success of our deposit strategy, which you can see has if we measure it on a September to September basis since our business is seasonal, has increased transaction accounts by 57%. It's helped to decrease the cost of deposits on a link-quarter basis from [1.02 to 94] basis points and we continue to see an inflow. We've crossed asset guidelines of $2 billion in part due to the inflow of deposits at this time and in part due to the additional capital, which has again spending just a minute on that has raised our tangible common equity to 9.71% from 7.68% prior to our offering, which we think is a number with which we can feel comfortable. Frank will talk more about the makeup of the deposits and where we see our opportunities and challenges. But I think that I will move directly to the asset side of the balance sheet and report to you in what we think has been progress during this quarter. If we take into account 30 to 89 day delinquencies which decreased from $10 million to $5 million, these are approximate numbers, total delinquencies that decreased by a little over 21% on a link-quarter basis. If we look at only at the commercial real estate segment, the CRE delinquencies decreased on a link-quarter basis by a little over 27% and stand now at about 1.67% of total CRE loans. We continue to have pay downs in our construction portfolio for the quarter. The aggregate is about $27 million a little over 10% of the portfolio paying down, and that's after there are the normal advances on loans in the construction portfolio of almost $10 million. Loans that paid off were in the $14 million range, which I think is right in the ballpark of what we suggested on our last call that you would see for this quarter. In the commercial construction loan segment of the business we're down to just a little over $100 million. Some of those loans in accordance with their terms became mini-perm loans, and over half of the increase actually that you saw in commercial real estate during the nine months has been as a result of new loans. Where we see new opportunities at very decreased prices where the borrowers whom we have known over a very long period of time, have the opportunity to buy their loans out at quite significant discounts due to the distress of other borrowers. And we think that that is a good place for us to cautiously do business and do business with people that we've known in the 12 county areas around Philadelphia for a long time. That MSA is continuing to do better than many, many parts of the country. The stability or lack of volatility that we have seen over the 30, 40 years certainly that I've been in banking in that segment is in that geography continues to be helpful during a difficult period of time. That combined with the fact that the drivers of the economy are in education and health care, both of which are growing segments, makes the unemployment rate in that Philadelphia MSA lower then that nationally. We continue to press forward on the reduction of our residential loans portfolio, and so during this quarter closed about 42 loans. We see that number increasing meaning that we're actually getting to closing not just getting agreements of sales. But agreements of sales stayed exceedingly strong and we would anticipate again another $14 million decline from the settlement of a portion of those existing agreements of sale during the fourth quarter. I think that I will now ask Frank to talk a little bit about the deposits and then we'll come back to the asset side thereafter.

As Betsy mentioned and as those of you who have been following us might recall, we have business lines that are very, very seasonal. The third quarter tends to be seasonality where deposits grow substantially, so we think the right comparison is to actually look back to Q3 2008. We compare Q3 2008 to Q3 2009 we see that deposits transactional accounts are up 57% across that period of time about $670 million in aggregate total funds. That's helped drive down the cost of funds from the institution from 251 basis points where it stood in Q3 2008 down to 94 basis points as we've continued to replace higher cost funding mechanisms with these organically generated deposits through our private label business lines. At the end of the third quarter 2009, bank had in excess of $850 million in deposits priced under a total of 20 basis points and transactional accounts comprised 95% of the total deposit book.

Coming back again because the growth in deposits and assets therefore and capital has been so strong, and primarily in the second half of this quarter, if you were to look at for example, the average Fed funds sold you would see it at $119 million and the period ending at $210 million because the inflow was so strong we didn't have an opportunity to deploy those funds in a mature way and certainly feel that we should do that with a measured approach. In this low rate environment that put pressure on our net interest margins, but if we were to remove those excess fund service fees the net interest margin was steady at 396 and compressed specifically as a result of this very quick inflow, which we were not able to deploy as effectively as the rest of the portfolio. I think that that's where I would like to stop and to open it up to questions.

(Operator Instructions) Your first question comes from Frank Schiraldi – Sandler O'Neill. Frank Schiraldi – Sandler O'Neill: Just a couple of questions on the, and I apologize if I missed this, but on the commercial real estate and C&I loan growth, could you just talk a little bit about what's driving that and if there was any constructions loans that were moved over to permanent financing in the quarter that be the reason for the jump in CRE and the decline in construction balances?

I did mention that and I don't know that I gave specific numbers, but a little over $20 million I think it's $21 million was moved from construction to permanent which – excuse me represents part of the growth that was not moved. Of the amounts in commercial, and I'm not talking about C&I but commercial real estate, Frank, is that where you're focused on as well? Frank Schiraldi – Sandler O'Neill: Yes, I'm focused on actually the growth in both categories.

Well, the growth in C&I is really just a growth in doing some additional business in the community. I don't think it's specific to our existing – I mean it may be specific to our existing customers, but not specific to particular loans being put on a permanent basis, if that's what you're asking. If what you're referring to is the loans which have moved from construction to a mini-perm in accordance with their terms, there were five such loans, and they went from construction to mini-perm in accordance with their terms with the appropriate valuations and debt service coverage. There were pay downs of about $3.6 million on the commercial loan portfolio and advances on existing loans, in accordance again with their terms, of about $3.2 million. So I don't know if that gives you any color. Additionally, there were new loans generated which represented I'm saying roughly half of the increase. Frank Schiraldi – Sandler O'Neill: And those five loans that moved over to mini-perm, I'm just curious – I don't know how put this.

They were intended to be moved to a permanent status. They were either, and I don't have all of the details right here, but they were either improvements on property which then allowed the property to be used or leased in a certain way with debt service coverage or for the owner. I mean they were very standard things. Frank Schiraldi – Sandler O'Neill: And all of those are performing?

They would not have been moved if they weren't performing. Frank Schiraldi – Sandler O'Neill: Is there any classification? Are they classified in any way or no?

No. They would not have been moved otherwise. Frank Schiraldi – Sandler O'Neill: Then just on the C&I growth, is there any additional color you can give just in terms of size, if there was any very bulky loans maybe that–

I don't think so. I'll get back to you, but not to the best of my knowledge. I think it's really just ordinary course of business. And remember that for a long period of time we, among others, were not lending virtually at all and so there is some demand out there. Frank Schiraldi – Sandler O'Neill: Do you think is maybe playing a little bit of catch-up in terms of demand? I mean is the pipeline strong to the point where you could potentially see similar size growth going forward?

I would say that we can see as much growth as we would choose and that depends upon appetite and credit quality. Frank Schiraldi – Sandler O'Neill: So there is enough good quality credit out there to just – there's a lot of business.

I am saying there's enough volume out there which we then have to dice for both appetite within a particular area and credit quality. Frank Schiraldi – Sandler O'Neill: Lastly, I wanted to ask and maybe it's a question for Frank, but in terms of the seasonality of deposits, how do you match up those deposits against loan balances? Is it that as these deposits runoff you'll have to fill the coffers with brokered CDs? Is there some sort of a – there's got to be a mismatch, I would think, between the deposits and the loans that they're funding given just how seasonal the deposits are this quarter.

Frank is going to suggest that I answer that for you, Frank. This is Paul Frenkiel the CFO. That answer is in several parts. The first part is that the deposits have grown so significantly that notwithstanding some of the volatility and fluctuations within the deposits the core deposits have actually grown and most of the growth that you've seen is in fact in the core. But you're making a good point that what we're in now is the peak of the deposits and those will run down to some degree. To the extent that it's not replaced with core growth in the various products, then there are options for the bank. For instance, now the bank has no outstanding Federal Home Loan Bank advances, but virtually the whole banking environment uses that type of borrowed money for some percentage of its funds. And as you know, FHLB overnight is extremely low. So the bank has some capacity within that. And then it does have other sources of liquidity and one of those of course is brokered deposits which it relied on heavily in prior years but no longer needs to. But even if it has to go to brokered deposits, brokered still represents among the lowest cost funds that's available. So you can get short-term brokered for 50 basis points. So regardless of which alternative funding source is used, the cost of funds will remain low and will continue to decrease. Frank Schiraldi – Sandler O'Neill: Finally, is there any sort of numbers we can think about in terms of how much is likely to roll off in the next month, two months, three months of the transaction deposits?

I think that, and Frank can follow up on this, but I think that many of these are new customers and growing customers. And so as we get better historical experience with them, we may be able to do that on a projected basis, but I think we would be hard-pressed to give you an exact number now.

Your next question comes from Bob Ramsey – FBR Capital Markets. Bob Ramsey – FBR Capital Markets: Could you give me just a little more information on the five loans that were transferred from construction to mini-perm? What is the debt service coverage and LTD ratios for those loans?

I don't have that information in front of me but their underwritten, I think, on a very standard basis and I will get that information to you offline. Bob Ramsey – FBR Capital Markets: Then could you maybe give a little color too on the net charge-offs you all had this quarter?

I'm sorry I lost the word that you just said, Bob. Bob Ramsey – FBR Capital Markets: The net charge-offs this quarter, is it a little bit over $3 million and could you just talk about what was in that?

I think that we had felt that we should be aggressive in writing things off as quickly as we identified the issues, and these were estimates of loans across the board that we think will result – remember we don't do unsecured lending. We don't do consumer lending where it's statistical, credit cards or any of that stuff. So what we're talking about is a loan-by-loan analysis of what we think net of expenses we can recover and if we recover more than that, we'll put it back in. But we're trying to work whatever issues we have or problems that are part of the macroeconomics events of our time down as quickly as possible. Bob Ramsey – FBR Capital Markets: So were they commercial real estate or construction or C&I type credits and was it a pretty granular mix.

I think it was granular.

Your next question comes from Andy Stapp – B. Riley & Company. Andy Stapp – B. Riley & Company: Were there any security gains or items of unusual nature or nonrecurring nature during the quarter?

No. Andy Stapp – B. Riley & Company: Okay. Your NPAs were up you're 90 plus and still accruing were down. Could you give some color on the movements there, what was driving those movements?

We decided that one of the 90 days profit accruing, which is the disposition of a piece of property in which we have substantial interest, was because of the complexity of the borrower was just taking too long and we were concerned that continuing to accrue interest might take it beyond what we thought was fair value, so we moved it over. Andy Stapp – B. Riley & Company: Okay. Do you happen to have what tangible book value per share was at the end of the quarter?

The percentage was 971 and tangible, I do have that number and I'll come back to you with it. I will come back to you with it, I'm sorry. Paul, do you have that available?

Well, we don't have that. It's not that different from the regular book value.

Yes, I mean we don't have a lot of other stuff. We may have $10 million of other stuff so it's in the 760 range I just don't have the pennies.

It would be around 760. Andy Stapp – B. Riley & Company: Okay. Could you provide some more color on how you plan to deploy the funds from the offering? Would it be a laddered approach short-term in anticipation of interest rates rising or would you use it to fund loan growth given the possibility of a seasonal decline in deposits?

We think that we should look across the board to our areas of expertise, or what we used to think were our areas of expertise. I don't know whether anybody's left with areas of expertise these days, but anyway the things that we know and to incrementally could invest both increase the books of business in our various asset lines. We've always felt that we should only be doing what we know and we don't think we're smart enough to make a single bet in any one area. We're trying to be prudent lenders across a number of lines of business with maybe the ability to purchase some additional securities, but really it's a very incremental step. We will do a certain amount of what we think is short-term or shorter term investing and [building] our maturities or duration in that way. We don't see rates rising precipitously within the next 12 to 18 months. But that being said our liabilities are priced on a variable basis and we tried to match those with our loans on a variable basis so that we'll retain the spread. Many of our liabilities are priced at 75% of Fed funds and so if the target rises for the Fed, which would impact prime and other indices, we would expect we would get a little benefit from the liabilities being priced only at a percentage of that increase. So we try to keep it pretty well matched. Andy Stapp – B. Riley & Company: Okay. Do you happen to have what the [inaudible] margin was in September?

I don't have the month itself broken out, I'm sorry.

Betsy, it was comparable to the 374, which actually keeping in mind the influx of deposits and seasonal variations really would have been the 396, which was mentioned earlier. So it was around that level in September.

Your next question comes from [Joe Steven - Steven Capital]. [Joe Steven - Steven Capital]: One housekeeping number, you gave the 30 the 89 quickly for September and June 30. Could you give those in dollar amounts again the 30-day and 90-day delinquents?

At June 30, 30 to 89 was, these are approximate numbers, $10 million and September 30 approximately $5 million. [Joe Steven - Steven Capital]: Okay. Then second question, I joined late but did you talk about or can you talk about the concepts of The Bancorp looking at some of the assisted transactions that are starting to happen with a higher speed out there right now?

Yes, I can. We feel that our opportunity and one of the reasons that we thought it was a good thing to raise additional capital was that there are tremendous number of portfolios which fit our lines of business, and they may not be whole bank acquisitions because buying the bank with seven branches in Tacoma, Washington really doesn't do anything for us. We think that we're better served – I mean I did that just by making that up. But we're better served by looking at banks that have distress that have portfolios either in merchant acquiring in other areas in which we have strengths and making acquisitions of divisions of institutions. One of the examples that we give and that we did place a small bid on was a portion of the Silverton portfolios. We are very skilled in the business of servicing agent banks and service some 800 agent banks in one way or another. So we will have opportunities among banks that are primarily correspondent banks who face that community and make that kind of acquisition. We have a depth of experience, as you know, in the prepaid area and there are banks in the country which have been in the southwest traditionally for state law purposes, which had distress on their asset side and, therefore, provide us, we think, with an opportunity of two things, one to acquire customers and two, to acquire divisions. So we think that there is tremendous opportunity for growth, although it may not be a traditional whole sales bank acquisition.

There are no more questions. At this time, I would like to turn the call back over to Betsy Cohen for closing remarks.

Thank you to all of you for your interest and good questions and we look forward to making more progress during the fourth quarter.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and everyone have a wonderful day.