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8-K Filing Shows Bancorp Closes On Sale Of Commercial Loan Portfolio To Walnut Street For $3.9M Realized Loss


n December 30, 2014, the Bancorp Bank (the “Bank”), a wholly owned subsidiary of the Company, entered into an agreement for, and closed on, the sale of a portion of its commercial loan portfolio, which the Company had previously disclosed it was in the process of selling. The purchaser of the loan portfolio was a newly formed entity, Walnut Street 2014-1 Issuer, LLC (“Walnut Street”). The price paid to the Bank for the loan portfolio was approximately $209.6 million, of which approximately $193.6 million was in the form of two notes issued by Walnut Street to the Bank; a senior note in the principal amount of approximately $178.2 million bearing interest at 1.5% per year and maturing in December 2024 and a subordinate note in the principal amount of approximately $15.4 million, bearing interest at 10.0% per year and maturing in December 2024. The Company realized a loss of approximately $3.9 million as a result of the sale of the portfolio, which will be recorded in the fourth quarter of 2014. For information regarding the discontinuance of the Bank's related commercial lending operations and related portfolio please see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

Walnut Street is 51% owned and controlled by AG Mortgage Value Partners, L.P. and its affiliate AG TCDRS, L.P., and 49% owned by the Bank. The Company has determined that Walnut Street is a variable interest entity and that the sold loan portfolio should be deconsolidated.

The sold loan portfolio had an outstanding principal balance of approximately $267.6 million, which had been adjusted on the books of the Bank to estimated fair market value in the third quarter of 2014 upon the classification of the Bank's related commercial lending operation as a discontinued operation and the transfer of the related portfolio to “held for sale” status. As a result of the estimated fair market value adjustment, the carrying value of the portfolio, as of September 30, 2014, was $213.5 million.

Item 2.01 Completion of Acquisition or Disposition of Assets.

The discussion in Item 1.01, above, is incorporated herein by this reference.

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