ADMINISTRATIVE PROCEEDING
File Nos. 3-19477, 3-19478, and 3-19479

September 20, 2019 -The Securities and Exchange Commission today announced settled charges against bank holding company The Bancorp, Inc. and two of its officers stemming from the company's reporting, recordkeeping, and internal controls failures in connection with its commercial loan portfolio.

According to the SEC's order against Bancorp, between April 2012 and September 2014, Bancorp failed to properly classify certain loans and take appropriate charges for individually impaired loans, resulting in the company materially understating its Allowance for Loan and Lease Losses and its Provision for Loan and Lease Losses in its periodic reports filed with the Commission. During this same time period, Bancorp also failed to devise or maintain internal accounting controls for credit file maintenance and for identifying Troubled Debt Restructurings. As a result of these failures, Bancorp's Provision for Loan and Lease Losses for its fiscal years 2010 through 2013 was understated by an aggregate amount of approximately $138.6 million, and its Allowance for Loan and Lease Losses for each of 2012 and 2013 was understated by over 70%. The SEC's order found that Bancorp violated Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 13a-1 and 13a-13 thereunder. Without admitting or denying the findings, Bancorp consented to a cease-and-desist order and agreed to pay a $1.4 million penalty.

According to the SEC's order against James David Hilty, a Delaware resident and Bancorp's former Chief Risk Officer, Hilty knew or should have known that risk ratings for certain loans had not been reevaluated, downgraded, or impaired, in spite of indicators of financial distress. Nevertheless, Hilty used the ratings when he estimated Bancorp's Allowance for Loan and Lease Losses and Provision for Loan and Lease Losses. The SEC's order found that Hilty caused Bancorp's violations of Sections 13(a) and 13(b)(2)(B) of the Exchange Act, and Rules 13a-1 and 13a-13 thereunder, and directly violated Rule 13b2-1 thereunder. Without admitting or denying the findings, Hilty consented to a cease-and-desist order and agreed to pay a $50,000 penalty.

According to the SEC's order against Donald F. McGraw, Jr., a Pennsylvania resident and Bancorp's Chief Credit Officer, McGraw had ultimate responsibility for Bancorp's credit file maintenance, but failed to provide reasonable assurances that Bancorp's credit files contained necessary and current documentation and failed to provide the Bancorp committee tasked with identifying Troubled Debt Restructurings with sufficient information. The SEC's order found that McGraw caused Bancorp's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and directly violated Rule 13b2-1 thereunder. Without admitting or denying the findings, McGraw consented to a cease-and-desist order and agreed to pay a $50,000 penalty.

The SEC’s investigation was conducted by Elisabeth M. Grimm and Ivan J. Snyder with assistance from George Spanos. The case was supervised by David Frohlich and Carolyn M. Welshhans. The SEC appreciates the assistance of the Public Company Accounting Oversight Board.