The Bancorp warns of potential hit from ACH transaction
The Bancorp in Wilmington, Del., is facing a possible earnings hit after an $11.2 million automated clearing house transaction was returned.
The $4.9 billion-asset company, which learned of the issue on Oct. 22, made the disclosure late Thursday in its third-quarter earnings release.
The Bancorp said it should be able to offset some of the disputed amount with $5.5 million of funds on deposit. The company said it is working to resolve the dispute, though it warned that any funds it can’t recover, or its insurance carrier won’t reimburse, will result in a loss.
The issue resulted from an ACH customer’s failure to properly fund disbursements, The Bancorp said.
Management was reluctant to discuss the ACH issue during The Bancorp's earnings call Friday, only noting that there was an issue at the other financial institution and adding the exposure represented a minor part of the company's business.
"We can’t speak to it for various reasons that we can’t disclose," Damian Kozlowski, The Bancorp's president and CEO, said during the call.
The company's earnings rose by 80% from a quarter earlier, to $20.4 million. The results included double-digit increases in loans and fee income from its prepaid card business.