UPDATE: CEO Cohen responds, as Bancorp shares fall on U.S. action

Shares of Wilmington- and Philadelphia-based Bancorp Inc. fell more than $4 in trading this morning, to below $12 a share for the first time in more than a year, after the business loan, payment-card services and specialty deposit bank founded by veteran Philadelphia lender Betsy Cohen said it has received a Federal Deposit Insurance Corp. consent order demanding better compliance with the federal Bank Secrecy Act. The act is an anti-money-laundering law which forces lenders to report transactions of over $10,000 and other potentially "suspicious activity" to the government.

"We were greatly surprised" by Bancorp's claim "that this order should not impact revenues," wrote analyst Frank Schiraldi, managing director at Sandler O'Neill + Partners in New York, in a report to clients. The order will prevent the bank from adding new clients in the fast-growing reloadable debit card market, which "reduces longer-term growth prospects," Schiraldi added. Schiraldi has cut the stock to "hold" from "buy" and doubts it will regain its recent $16-plus share value over the next year at least.  Bancorp says it hired a consultant to improve its secrecy reporting procedures, and pay what it calls "significant initial consulting fees," and has improved systems. 

But "there's no basis" for expecting the FDIC order will cut deeply into sales or profits, Cohen told me. The action "does not affect our entire portolio," only restricting about one-third of Bancorp's prepaid-cards business and 20 percent of automatic-clearinghouse business -- which aren't listed among the company's banking assets because they have "no tangible book value," she added. And similar business units have sold for "huge prices," which remains an option for Bancorp. Cohen also noted that Metabank owner Meta Financial and other companies that operate under "stricter" FDIC orders have shown continued healthy growth.