The Bancorp, Inc. (TBBK) Investigation

On Mar. 21, 2024, The Bancorp shares sharply declined after activist short seller Culper Research took aim at the bank holding company, alleging that TBBK has misrepresented the quality of its real estate bridge loan (“REBL”) portfolio and contending that TBBK’s related loss reserves are woefully inadequate.

Culper’s detailed allegations have led prominent investors’ rights law firm, Hagens Berman, to open an investigation into possible securities law violations.

The report, entitled “The Bancorp Inc. (NASDAQ TBBK): Bridge to Nowhere,” is based on Culper’s loan-by-loan analysis, visits to 21 different TBBK-funded properties in the past 2 weeks, conversations with former TBBK employees including a REBL underwriter, and conversations with several TBBK borrowers/syndicators.

As but one example, Culper points out that even though an unnamed borrower on a $39.4 million REBL loan collateralized by an apartment complex in Texas had not made interest-only payments for the past 3 months, TBBK nonetheless has made zero reserves against this loan. Culper observed that the Texas complex is only 47% occupied, rendering agency refinancing a non-starter.

Culper further states that “TBBK’s book also appears rife with unsophisticated syndicated borrowers[]” with “‘get rich quick dreams’ who believed that they could easily rehab units, fill them with tenants, increase rents, and cash out for quick ‘passive’ returns.” But, the analyst continues, “for these properties, none of these things have happened: costs have skyrocketed, vacancies remain high, rents have remained relatively stagnant, and interest rates have more than doubled.” In Culper’s view “TBBK’s $4.7 million in reserves, at just 0.24% of its REBL book, are a total farce.”

In addition, Culper said “[w]e also spoke with a former TBBK REBL underwriter who told us that they might expect TBBK’s losses to be anywhere from 10x to 15x higher than the Company’s actual reserves[.]”

In response, the price of TBBK shares fell $3.63, or down about 10%, on Mar. 21, 2024.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the TBBK investigation about?

We are investigating whether TBBK may have misrepresented or concealed known risks in its real estate bridge loan portfolio.

WHAT SHOULD I DO?

I worked at TBBK. What should I do?

If you were an employee of TBBK, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICPATE?

Am I affected? What do I need to do to participate?

If you were an investor in TBBK, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any TBBK investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.