8-K: The Bancorp Discloses Non-Reliance on Past Financial Statements Due to Audit Opinion Issues

The Bancorp's Audit Committee determined that the company's financial statements for fiscal years 2022-2024 should no longer be relied upon due to a lack of audit opinion approvals from its independent accounting firms.

Summary

• The Bancorp, Inc. has announced that its previously filed financial statements for the fiscal years ended December 31, 2022, 2023, and 2024 should no longer be relied upon.
• This decision was made by the Audit Committee of the Board of Directors on March 4, 2025.
• The reason for this non-reliance is that the company's independent public accounting firm, Crowe LLP, did not provide final approval to include the audit opinion for the fiscal year ended December 31, 2024.
• Additionally, Crowe LLP did not consent to the incorporation by reference of the audit report in certain registration statements included with the Annual Report.
• The company's prior independent public accounting firm, Grant Thornton LLP, also did not provide approval to include its audit opinion for the fiscal years ended December 31, 2023 and 2022.
• Grant Thornton LLP also did not consent to the incorporation by reference of their audit report in certain registration statements, in the Annual Report.
• The company is working to complete additional closing procedures related to accounting for consumer fintech loans in the allowance for credit losses.
• The Bancorp intends to file an amended Annual Report on Form 10-K/A to issue its financial statements for the fiscal years ended December 31, 2022 through 2024, including the audit opinions and related consents from Crowe LLP and Grant Thornton LLP.
• The company is evaluating the impact of this non-reliance on its conclusions regarding disclosure controls and procedures and internal control over financial reporting.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the non-reliance on past financial statements and the potential implications for investor confidence and regulatory compliance.

Positives

• The company is actively working to rectify the situation by performing additional closing procedures and filing an amended Annual Report.
• The Audit Committee is engaged with both Crowe LLP and Grant Thornton LLP to resolve the issues.

Negatives

• The non-reliance on previously issued financial statements raises concerns about the accuracy and reliability of the company's financial reporting.
• The lack of audit opinion approvals from both current and prior independent accounting firms is a significant issue.
• The delay in filing the amended Annual Report could negatively impact investor confidence.

Risks

• The delay in filing the amended Annual Report could lead to regulatory scrutiny or penalties.
• The evaluation of the impact on disclosure controls and procedures and internal control over financial reporting could reveal further weaknesses.
• The market may react negatively to the restatement of financial statements, potentially impacting the company's stock price.

Future Outlook

The company is focused on completing the necessary procedures to file an amended Annual Report, but the timing and outcome of this process are uncertain.

Management Comments

• The Company is working expeditiously to perform and complete additional closing procedures related to accounting for consumer fintech loans in the allowance for credit losses and to file an amended Annual Report on Form 10-K/A.

Industry Context

In the financial services industry, the reliability of financial statements is paramount. Any issues with audit opinions or internal controls can significantly impact investor confidence and regulatory compliance. This event highlights the importance of robust financial reporting processes and strong relationships with independent auditors.

Comparison to Industry Standards

• When compared to industry standards, the non-reliance on financial statements is a serious deviation.
• Companies like JPMorgan Chase, Bank of America, and Citigroup maintain rigorous internal controls and audit processes to ensure the accuracy and reliability of their financial reporting.
• Similar situations have occurred in the past with other companies, such as Enron and WorldCom, which led to significant consequences and regulatory reforms.
• The Bancorp's situation will be closely monitored to ensure compliance with SEC regulations and industry best practices.

Stakeholder Impact

• Shareholders may experience a decline in stock value due to the uncertainty surrounding the financial statements.
• Employees may face increased scrutiny and potential changes in internal controls.
• Customers and suppliers may have concerns about the company's financial stability.
• Creditors may reassess the company's creditworthiness.

Next Steps

• The company will perform and complete additional closing procedures related to accounting for consumer fintech loans.
• The company will file an amended Annual Report on Form 10-K/A.
• The company will evaluate the impact of this non-reliance on its conclusions regarding disclosure controls and procedures and internal control over financial reporting.

Key Dates