Bancorp (TBBK) Increases Provision For Consumer Fintech Loan Credit Losses, Acknowledges Internal Control Weaknesses – Hagens Berman

Core Viewpoint - The Bancorp, Inc. has faced escalating investor concerns due to the belated filing of its amended annual report, which disclosed previously omitted crucial information and highlighted issues related to asset quality, leading to a securities class action suit against the company [1][4]. Financial Disclosures - On April 7, 2025, Bancorp filed an amended annual report on Form 10-K/A, revising its financial statements and disclosures from the previous month [3]. - The amended filing indicated that the original annual report filed on March 3, 2025, should no longer be relied upon due to significant discrepancies in financial reporting [3]. - The company revealed that neither its former auditor, Grant Thornton LLP, nor its current auditor, Crowe LLP, had provided final approval for the inclusion of their audit opinions in the report [3]. Legal Actions - A securities class action suit, Linden v. The Bancorp, Inc., was filed, representing investors who purchased Bancorp securities between January 25, 2024, and March 4, 2025, alleging false and misleading statements by the company [2][4]. - The suit was triggered by Bancorp's March 4 disclosure, which raised concerns about the company's financial practices and asset quality [4]. Asset Quality Concerns - A report by short-seller Culper Research on March 21, 2024, accused Bancorp of misrepresenting the quality of its real estate bridge loan portfolio and under-reserving for potential loan losses [4]. - Bancorp's Q3 2024 financial results were disappointing, with a provision for credit losses for consumer fintech loans revised from $19.6 million to $30.7 million in the amended report [5]. - The amended report also stated that the company's internal control over financial reporting was not effective, contradicting earlier claims [5]. Internal Control and Compliance Issues - The company underrepresented the significant risk of default or loss on its real estate bridge loan portfolio and had an insufficient current expected credit loss methodology [6]. - There were material weaknesses identified in its internal control over financial reporting, leading to the conclusion that its financial statements could not be relied upon by investors [6].