LOS ANGELES--(BUSINESS WIRE)-- The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of investors who purchased The Bancorp, Inc. (“TBBK” or the “Company”) (NASDAQ: TBBK) securities between January 25, 2024 and March 4, 2025, inclusive (the “Class Period”). TBBK investors have until May 16, 2025 to file a lead plaintiff motion.

IF YOU SUFFERED A LOSS ON YOUR BANCORP INVESTMENTS, CLICK HERE TO SUBMIT A CLAIM TO POTENTIALLY RECOVER YOUR LOSSES IN THE ONGOING SECURITIES FRAUD LAWSUIT.

You can also contact the Law Offices of Frank R. Cruz to discuss your legal rights by email at info@frankcruzlaw.com, by telephone at (310) 914-5007, or visit our website at www.frankcruzlaw.com.

What Happened?

On March 21, 2024, at approximately 9:45 a.m. EST, Culper Research issued a report, alleging that the Company had underrepresented significant risks of default and/or loss on certain real estate bridge loans (“REBLs”). The report alleged the Company’s loan book is “rife with unsophisticated syndicated borrowers” who were “coaxed by promises of generational wealth through passive income” with “get rich quick” promises. The report alleged that the Company’s REBL loan portfolio is filled with apartments which are “quite literally, crumbling,” with high vacancies and multiple condemnations. The report stated the Company “blindly reassures investors that its book contains ‘no substantial risk of default or loss,’” but, in reality, the Company’s “REBL portfolio faces meaningful risks and will result in meaningful losses.” The report concluded that the Company’s reserve of only “$4.7 million in REBL loan allowances, representing a mere 0.24% of the total REBL book” is “short by an order of magnitude or more.”

On this news, the Company’s share price fell $3.63, or 10.15%, to close at $32.12 per share on March 21, 2024, on unusually heavy trading volume.

Then, on October 24, 2024, after the market closed, the Company announced its third quarter 2024 financial results in a press release for the period ended September 30, 2024, reporting $51.5 million in net income. The Company attributed the results in part, to “a new CECL [current expected credit losses methodology] factor” to the Company’s analysis of REBL loans classified as either special mention or substandard “which increased the provision for credit losses and resulted in an after-tax reduction in net income of $1.5 million.” The Company further explained its results also reflected “prior period interest income reversals on real estate bridge loans transferred to nonaccrual or modified” which “resulted in an after-tax reduction in net income of $1.2 million.”

On this news, the Company’s share price fell $7.95, or 14.47%, to close at $47.01 per share on October 25, 2024, on unusually heavy trading volume.

Finally, on March 4, 2025, after the market closed, Bancorp disclosed that its “financial statements for the fiscal years ended December 31, 2022 through 2024 as shown in the Annual Report should no longer be relied upon.” The Company explained that its auditors for those years “did not provide approval to include [the] audit opinion . . . or [the] consent to the incorporation by reference of their audit report in certain registration statements.” The Company further revealed it is “working expeditiously to perform and complete additional closing procedures related to accounting for consumer fintech loans in the allowance for credit losses” in order to file an amended annual report. The Company also revealed it “is evaluating the impact of this non-reliance on its conclusions regarding disclosure controls and procedures and internal control over financial reporting.” As a result of the foregoing, the Company stated it would be unable to file timely its fiscal year 2024 annual report.

On this news, the Company’s share price fell $2.34, or 4.38%, to close at $51.25 per share on March 5, 2025, on unusually heavy trading volume.

What Is The Lawsuit About?

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Bancorp had underrepresented the significant risk of default or loss on its REBL loan portfolio; (2) that the Company’s current expected credit loss methodology was insufficient to account for the provision and/or allowance of credit losses; (3) that, as a result of the foregoing, the Company was reasonably likely to increase its provision for credit losses; (4) that there were material weakness in its internal control over financial reporting; (5) that its financial statements had not been approved by its independent auditor; (6) that, as a result of the foregoing, the Company’s financial statements could not be relied upon; and (7) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

Contact Us To Participate or Learn More:

If you purchased Bancorp securities, wish to learn more about this action, or have any questions concerning this announcement or your rights or interests with respect to these matters, please click HERE or contact us at:

Law Offices of Frank R. Cruz
2121 Avenue of the Stars, Suite 800
Telephone: 310-914-5007
Email: info@frankcruzlaw.com
Visit our website at: www.frankcruzlaw.com

This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250318496792/en/